BUSINESS IN BRIEF 8/2

Local market to see stronger competition

There is nothing to worry about Vietnam’s export performance this year but local enterprises should heed competition on the home market, said economic expert Tran Du Lich at the 2015 Business Forum in HCMC last Saturday.

Dr. Lich told the  “Grasp Opportunities – Overcome Challenges” forum, held by the Binh Dinh Businessmen Club, that local businesses would have great chance of boosting exports as Vietnam has signed and will sign key bilateral and multilateral trade pacts with other countries.

Vietnamese products are not widely present on global markets, so it is not tough to increase exports by 10-15% this year. The U.S., one of Vietnam’s major export markets, is expected to grow further this year on the improving world economic outlook.

On the other hand, the export of the country’s key products such as consumer goods, textiles, footwear, farm produce and seafood has remained stable.

Domestic companies have made tremendous effort over the years to find customers abroad, so they now have experiences in market expansion.

However, Lich is concerned that the domestic market is not yet well managed, leaving room for fake and smuggled goods to flood the market.

Meanwhile, the trading of goods smuggled from neighboring countries such as China is on the rise. What is more worrying is these goods are labeled as Vietnamese-made items. Lich said if the problem was not swiftly solved, local producers could go bust.

Therefore, Lich said the Government should take strong actions to suppress trade fraud to support local businesses.

Goods made by Vietnamese firms have yet to make a widespread presence at modern supermarkets and shopping centers, he said.

Domestic retail systems have remained weak, thus affecting the competitiveness of local producers even on the home market, he noted, while retail systems play an important role in the development of domestic production, local retailers have yet to be as competitive as foreign ones.

A number of major companies have even sold their retail chains to foreign investors, making it even harder for local producers to distribute their goods to consumers, he said.

Many local firms have grown into huge businesses but they have not paid attention to getting involved in developing distribution networks. The Government, he proposed, should encourage them to do that.

On the economic front, he said, the economy could recover this year thanks to falling oil prices and declining interest rates for loans, said Lich.

Economic specialist Tran Si Chuong shared Lich’s views, saying the Enterprise Law and the Investment Law taking effect in July will allow firms to engage in all business activities that are not prohibited by the laws.

Lich said he expected some of the companies that suspended operations last year might consider resuming operations this year.

Dalat Milk to stop buying milk with 4%-plus water

Dalat Milk Joint Stock Company recently said it would not purchase unprocessed milk from dairy farmers who have signed sale contracts with the firm if their cow milk has a water content of over 4% after six tests.

In line with the contracts signed with farmers on January 1, Dalat Milk will deduct VND8,000 (37.4 U.S. cents) per kilogram of milk when it detects water in milk irrespective of percentage, the company said in a statement signed on January 28 by its general director Ngo Minh Hai.

However, in order to prevent losses for farmers, the company based in the Central Highlands city of Dalat said it had decided to adjust the deduction level. In specifics, it will deduct VND200 for each kilogram of milk with a water ratio of 0.1%. For milk having more than 4% water content, the company will issue warnings to farmers and after six tests over three days, if the quality of milk is not improved, the company will suspend milk buying from violating farmers.

The statement is designed to set milk prices, effective from January 3.

A dairy farmer who has a sale contract with Dalat Milk said according to the announcement, the company will stop purchasing milk with water accounting for more than 4%, meaning farmers cannot sell their milk if they do not meet the firm’s quality requirements.

But milk always contains water, he said, adding he did not know why the company had set out such quality requirements, so the move could be seen as a tactic to stop buying milk from farmers who have contracts with it.

According to an expert in the dairy sector, water makes up the largest proportion in unprocessed fresh milk, at 80-90% of the total milk content depending on cow varieties. The rest includes sugar, protein, minerals and fat.

Dalat Milk limits milk purchases at 16 kilograms per day for each cow in the contracts it signed in early January this year with dairy farming households.

The requirement has faced strong criticisms by angry farmers who have discharged their milk in front of the company’s buying stations.

After that, the company met with local authorities and withdrew its requirement. Therefore, it came up with a new decision on price deductions for water-containing milk.

Lam Dong Province has a total of 10,000 cows, soaring 50% against a year ago.

Number of operating businesses highest since 2011

As of December 31, 2014, more than 400,000 enterprises were operating, the highest figure recorded since 2011, according to the General Statistics Office.

Of the figure, 3,100 belonged to the State sector, 11,300 from the foreign-invested sector and 387,000 from the non-State sector.

A total number of 11.8 million people were working at these enterprises with 1.4 million in the State sector, 3.4 million in the foreign-invested sector and more than 7 million in the non-State sector.

The non-State sector held the largest capital sum with VND117 trillion, followed by the foreign-invested sector and the State sector with VND54.1 trillion and VND48.7 trillion, respectively.

In 2014, the three sectors obtained VND71 trillion, VND38 trillion, and VND34 trillion in revenues, respectively.

Russia’s Inter RAO to develop $2.4bn thermal power plant in central Vietnam

A Russian energy firm will invest US$2.4 billion to develop a thermal power plant in the central Vietnamese province of Quang Binh, a local official said Tuesday.

Inter RAO Group and the Quang Binh administration closed a memorandum of understanding following a meeting on January 28, according to the province’s website.

Phan Van Thuong, director of the provincial Department of Industry and Trade, confirmed the MoU with The Saigon Times Onlineyesterday, adding the province will submit the project proposal to the government within the first quarter.

The Quang Trach 2 thermal power plant will be constructed at the Quang Trach Power Center in the eponymous district, and will have a total capacity of 2,400MW, according to the Quang Binh administration’s website.

The $2.4 billion project will be developed under the BOT (build – operate – transfer) scheme.

During the January 28 meeting, Quang Binh promised to create conditions to facilitate Inter RAO, whereas the Russian company also said it will arrange capital and implement the project as committed.

Thuong was quoted by The Saigon Times Online as saying that the facility is scheduled to be commissioned somewhere between 2024 and 2025.

Quang Trach District is also home to the Quang Trach 1 thermal power plant project, developed by the state-run oil and gas giant PetroVietnam, according to the Ho Chi Minh City-based economic newswire.

The $1.7 billion facility has a design capacity of 1,200MW and is expected to add 8.5 billion kWh a year to the national grid.

The Quang Trach 1 project has been progressing behind schedule, with Quang Binh and PetroVietnam trying to put it into operation by 2020, according to the Vietnam News Agency.

Inter RAO Group is headquartered in Moscow, and operates in the fields of electric power and heat generation, retail electricity sales, international power trading, power industry engineering, export of power industry equipment and management of distribution grids outside of Russia, according to its website.

The company’s total installed capacity of generation facilities is about 35 GW. In 2013, the company’s plants produced over 146 billion KWh of electric power.

Inter RAO is also a leading energy export and import operator in Russia, which supplies electricity to Azerbaijan, Belarus, China, Finland, Georgia, Kazakhstan, Lithuania, Mongolia, Ukraine and South Ossetia, according to the website.

In 2014, it exported 14 billion kWh and imported 3.5 billion kWh of electric power.

LienVietPostBank to fund macadamia plant cultivation project

Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) will lend VND18,600 billion (US$865 million) to the Him Lam joint stock company for a macadamia cultivation project in the Central Highlands.

The macadamia nut is dubbed the "Queen of Nuts" for its outstanding nutritional value and high concentration of mono-unsaturated fats. - Photo vccinews.vn

The money will be invested in the first phase of the project to grow macadamia plants on 100,000ha of land by 2020.

It is expected that another VND18,600 billion ($865 million) will be invested in the project's second phase to expand the area for cultivating the plant to 200,000ha between 2020 and 2024.

This is the first project to grow macadamias on a large scale in Viet Nam. The Him Lam Company will supply farmers with seeds, fertiliser, and plant protection products and will teach them proper planting techniques.The macadamia nut is dubbed the "Queen of Nuts" for its outstanding nutritional value and high concentration of mono-unsaturated fats.

The plant, indigenous to Australia, was introduced to Viet Nam in 2002 for trial cultivation in some central provinces, including Lam Dong, Dac Nong and Dac Lac. After more than 10 years under trial cultivation, it was found that Viet Nam produced a higher yield of macadamias than other countries.

Local scientists have tested and found that the north-western and Central Highlands regions have conditions best suited for the plant's growth.

By September 2014, the plant covered 1,600ha in the Central Highlands region.

However, a representative from LienVietPostBank told online news portalnld.com.vn that the plant is now growing spontaneously. He said that the project aims to turn the plant into a key industrial plant in the Central Highlands region, attract a stable source of income for the farmers and turn the region into a "macadamia kingdom" in Southeast Asia.

A seminar on macadamia planting in the Central Highlands region will be held on February 7 by the Lam Dong's People's Committee, the Central Economics Committee and the Central Highlands Steering Committee to introduce a roadmap for the project's implementation.

German firm invests in Vietnam’s Google-rivaling startup

One of Germany's largest media groups has invested in Coc Coc, a Vietnamese startup whose products ambitiously seek to challenge the search and browser market share of Internet giant Google in Vietnam.

Hubert Burda Media, which is responsible for over 400 print and digital consumer brands, announced the investment in a press release on its website on Tuesday, but did not elaborate on the scale of the investment.

“We are really pleased to welcome Coc Coc to be a part of our portfolio in Asia and are expecting further development of the company in the near future,” Peter Kennedy, executive chairman with Hubert Burda Media in Asia, said in a statement.

The Hanoi-based tech company launched its main products, including the Coc Coc Browser, Coc Coc Search engine, Coc Coc advertising, and a geo location application called “Nha Nha”, in April 2013 and has acquired leading positions in the Vietnamese market, according to Hubert Burda Media.

"Coc Coc already reaches a very big audience, shows remarkable technological competitiveness and strong growth,” Kennedy said.

“We are convinced of its ability to rapidly develop and launch new features and products that are welcomed by Vietnamese users.”

Coc Coc currently employs more than 200 specialists from all around the world.

Its CEO, Victor Lavrenko, said he is “very excited” to have Hubert Burda Media as a business partner.

Lavrenko believes the German investor’s money will “help us to strengthen our position in the Vietnamese market and roll out to the rest of South-East Asia.”

Coc Coc, whose name is onomatopoeia for the sound of knocking at a door, was founded by Lavrenko and three Vietnamese co-founders.

The team has managed to acquire developers from some of the biggest Russian Internet companies, such as Yandex, Mail.ru and Parallels.

Coccoc.com has the highest daily audience in Vietnam, with eight million daily users, Hubert Burda Media said, citing data from U.S. Internet analytics company Comscore.

The Coc Coc browser, meanwhile, surpassed Firefox and Internet Explorer to become the second most popular web browser in Vietnam, only behind Google Chrome, Vietnamese-language tech websiteICTNews cited data from web traffic analysis tool StatCounter.

ICTNews also quoted sources as speculating that the German firm would invest hundreds of billions of dong in Coc Coc. (VND1 billion = US$46,603).

But sides involved have refused to comment on the figure.

Le Van Thanh, one of the Vietnamese co-founders of Coc Coc, toldICTNews that the specific investment will be publicized at “a suitable time.”

Hubert Burda Media has been active in Asia since 1997 and currently manages magazine businesses in Taiwan, Thailand, Hong Kong, Singapore, Malaysia, Indonesia and India, according to the company’s profile.

The company considers Asia one of its most exciting avenues of growth for the next few years and invests in digital and media companies.

January’s on-year hike in FDI points to a bumper year ahead

Foreign direct investment accelerated in Vietnam in January both in commitment and disbursement capital, highlighting the growing momentum of inward investment inflows into the country.

The Ministry of Planning and Investment’s (MPI) Foreign Investment Agency last week reported that foreign investors had poured $505 million of fresh investments into Vietnam during January, up 8.6 per cent from a year earlier. Meanwhile, the new commitment of investments  in the period reached $663 million, strongly increasing 67 per cent year-on-year.

The industrial manufacturing remains the largest recipient of foreign direct investment, accounting 91.3 per cent of the total foreign direct investment (FDI) commitment in the month, followed by the retail and distribution industry. China’s garment and textile firm Shenzhou International Group Holdings Limited, through its affiliate Worldon Company, last month registered to build a $300 million factory in Ho Chi Minh City. Another Chinese garment and textile company, Regina Miracle International, also decided to invest an additional $90 million to its existing factory in the northern port city of  Haiphong.

The rise in the FDI disbursement highlights the growing momentum in foreign investment expansion in Vietnam during 2013-2014. Last year, the total commitment of inward investments in the country reached $20.2 billion, with disbursement of $12.3 billion.

“I believe FDI will keep on increasing in Vietnam, as the nation has become increasingly competitive,” said Hong Sun, secretary general at Korea’s Chamber of Business in Vietnam. He said many South Korean companies were studying investment opportunities in Vietnam, especially small and medium enterprises, following electronic giants like Samsung and LG. In addition, he said, the upcoming free trade agreements with the European Union, South Korea and Customs Union of Russia, Belarus and Kazakhstan would also boost investments into the country. Sun added that FDI this year would benefit from the amended laws on Investment and Enterprises, which will take effect from the middle of this year.

“We expect FDI this year will exceed last year. We’re already working hard on introducing locations for foreign investors who plan to build factories here,” said Tran Duy Dong, director of the MPI’s Economic Zones Management Department.

India’s Tata Group, for instance, is thinking of producing its Titan watch in Vietnam this year, and also expands its investments in car manufacturing. The Indian group is now negotiating with the Ministry of Industry and Trade for a $2 billion coal-fired power plant in the southern province of Soc Trang.

Aeon secures footing in Vietnam

Japan’s largest retailer Aeon, in addition to building its own stores in Hanoi, Ho Chi Minh City, and Binh Duong, has recently expanded its presence in the Vietnamese market through the acquisition of two local retailers.

The retail giant announced last week that it had reached an agreement on a capital and business tie-up with two Vietnam’s leading domestic retailers of Fivimart and Citimart. Aeon president Motoya Okada was quoted by the Nikkei Asian Review as saying that Aeon would acquire a 30 per cent stake in Fivimart and a 49 per cent interest in Citimart. He did not say how much this acquisition would cost Aeon.

This is the latest move in the Japanese retailer’s “Shift to Asia” strategy under their 2014-2016 medium-term management plan.

“In order to achieve rapid growth in the Vietnamese market, we believe that partnerships with Fivimart and Citimart are of great significance, as these companies have strong business foundations in two of the largest cities in north and south of the country, as well as knowledge of the varying regionally-oriented customer needs,” Aeon noted in an announcement.

Fivimart is the largest supermarket chain in Hanoi, operating 20 stores in the capital. Advocating  locally-based  management,  the  company  offers  products  that  meet  local  needs. Furthermore, the products such as all-in-one plate of stir-fried or stewed dishes combined with matching sub-meals represent their product planning capabilities.

Citimart  is  the  largest  supermarket  operator  in  southern  Vietnam,  operating  27  stores mainly in Ho Chi Minh City. The company boasts its strong suit as being freshness and quality of its perishable foods, and being able to offer a wide selection in products like cut fruits and items sold by weight.   

Annual revenue at both companies ranges between $45.1 million to $47.6 million.

“Aeon, Fivimart and Citimart will co-operate closely in promoting their businesses which include comprehensive financial services and convenience stores that contribute to the modernisation of the retail industry, and the enrichment of people’s lives in Vietnam,” Aeon stated.

While working together to jointly develop the Aeon brand “TOPVALU,” Aeon will inherit local knowledge from these two companies, including product procurement and customer needs.  Likewise, Aeon will provide them with know-how regarding logistics, IT, development of human resources, and quality control for ensuring safety and security in the supermarket business.        

According to Aeon, towards the launch of the ASEAN Economic Community scheduled for the end of this year, Vietnam is making steady growth, which is backed by a population in excess of 90 million, and a high economic growth rate that has contributed to an expanding middle class.

In Vietnam, Aeon Financial Service Company in 2008 became the first Japanese company to engage in installment sales in the country, followed by MINISTOP, which launched its CVS  convenience store business in 2011.

In January 2014, Aeon opened its first shopping mall in Vietnam – the Aeon Mall Tan Phu Celadon, in Ho Chi Minh City, which is one of the country’s largest shopping malls. This was followed by the Aeon Mall Binh Duong Canary, which opened in the southern province of Binh Duong in November 2014.

With plans to open the third mall in Hanoi this year as well as other proactive initiatives in the pipeline, Aeon looks set to continue broadening its business scope in Vietnam.

Amata pleas for extra incentives

Thailand’s Amata Corporation has asked for special incentives from the Vietnamese government for investment projects located inside its proposed $2 billion hi-tech park and township complex in the northern province of Quang Ninh.

The Thai industrial developer claimed that such incentives would be necessary to compete with surrounding industrial parks (IPs) such as VSIP Haiphong and Dinh Vu.

Somhatai Panichewa, president of Amata (Vietnam) JSC, the developer of the Amata Bien Hoa industrial complex, and CEO of Amata VN Plc., which is listed on Thailand’s stock exchange, and the developer of all future projects in Vietnam, held a meeting last week with Minister of Planning and Investment Bui Quang Vinh to put forward the request.

Under the proposal, Amata requested that the normal incentive rate for corporate income tax (CIT) of 10 per cent be extended over 18 years, with the first five years fully exempt, 5 per cent paid over the next eleven years, and 10 per cent paid over the final two years of this period. In addition, it requested an 8 per cent CIT for hi-tech companies for the entirety of the project’s lifetime, and reducing by half the personal income tax (PIT) rate for people working in the site. Amata also asked for an exemption on their land and water rental fees.

Amata’s requested incentive far exceeds the existing preferential incentives that the Vietnamese government granted to companies investing in the country’s economic zones (EZs). Currently, EZ businesses enjoy the highest incentives in the country, with a 10 per cent CIT over a 15 year period, with the first four years exempt and the following nine years at a 50 per cent reduction.

Under the legal regulations on tax incentives for IP projects, companies investing in Amata’s future projects can get only two years of tax exemption and four years of a 50 per cent reduction. There is no PIT reduction for employees in IPs.

Panichewa explained that Amata asked for this support package from the Vietnamese government because it wished to increase its competitiveness against VSIP Haiphong – which is situated only 16 kilometres from the proposed Amata site, and which is a part of the Dinh Vu EZ in the northern port city of Haiphong.

She affirmed Amata was determined to pursue this project.

Amata has been investing in Vietnam since 1994, with the maiden project of Amata Bien Hoa, in the southern province of Dong Nai. Two years ago, it proposed to develop the project in Quang Yen district in Quang Ninh, on a 6,400 hectare site. This area includes industrial land, education and science facilities, as well as logistics and exhibition facilities.

Amata estimated that this project would create 300,000 jobs and attract around $5 billion in investments from foreign and domestic companies.

At the meeting, Minister of Planning and Investment Bui Quang Vinh said that the incentive request was beyond the authority of the government. As tax incentives are regulated by laws such as the Law on Corporate Income Tax and the Law on Investment, only the National Assembly can amend them.

“Amata’s project is just an IP. We cannot provide more incentives to companies investing there. If Amata wishes to have more incentives, it must establish an EZ and prove its feasibility as well as explain the effectiveness of the zone,” said Vinh, adding that this measure was also likely an impossible task because most of EZs already in existence throughout the country had a wealth of space yet to be filled.

Vinh cited the case of Rent-A-Port, which had been refused by the government when seeking the highest incentive rate for its newly-licensed IP also in Quang Ninh.

HSBC warns of subdued export growth

HSBC Bank has forecast Vietnam’s export growth would continue slowing this year and would decelerate to 12% from the 13.6% recorded last year due to the impact of slowing commodity prices, falling external demand and waning currency competitiveness.

In a macro economics report released on February 3, the bank said although exports have achieved double-digit growth in recent years, the rates have declined.

Last year, the country’s exports reached the US$150-billion milestone, expanding by 13.6% versus 2013. However, that is a deceleration from 15.2% growth in 2013 and 18.2% growth in 2012.

The drop was attributable to the decline in commodity shipments in value and volume, especially crude, rubber, coal and rice. Meanwhile, footwear, apparel, aqua products, phones, and computer parts exports rose sharply, primarily thanks to Vietnam’s relative labor cost competitiveness (up 22%, 16%, 18%, 13% and 10% respectively in 2014).

“We believe the same trend will dominate export growth in 2015 – manufacturing exports will outperform, while commodity-based shipments will slow,” HSBC said in the report.

Regarding currency competitiveness, a recent directive of the central bank stated that currency stability is a priority and the central bank will only devalue Vietnam dong by a maximum of 2% against the U.S. dollar this year.

The central bank already adjusted up the reference rate by 1% in early January, leaving room for only another 1% devaluation in the rest of the year. Since December last year, the currency has actually appreciated while other currencies, including the euro and the Chinese yuan, depreciated.

The question is whether Vietnam’s exports will lose competitiveness if its nominal effective exchange rate continues to appreciate.

“Given Vietnam’s still comfortably low wage costs, we believe the cost competitiveness issue will only weigh on exports if China and ASEAN countries weaken their currencies. Vietnam’s exports are negatively correlated with the U.S., the EU and Japan, making them complimentary trade partners. Therefore, the depreciation of the euro and the Japanese yen will unlikely weigh on export competitiveness meaningfully,” it said.

China, on the other hand, still has a large labor-intensive manufacturing share globally. As a result, Vietnam and China’s trade correlation index (TCI) are well correlated, suggesting that a sharp depreciation of the yuan may hurt Vietnam’s export competitiveness.

While HSBC’s forex team does not forecast a sharp weakening of the yuan-dollar exchange rate by year-end 2015, this remains the largest risk to Vietnam’s exports.

Dalat Milk, farmers argue over water ratio in milk

Conflict has arisen between dairy farmers and Dalat Milk Joint Stock Company after the latter announced that it will not buy unprocessed milk with a water content of over 4%.

At a meeting with representatives of Dalat Milk on Monday, dairy farmers in the Central Highlands province of Lam Dong said it would be a suicidal decision to pour water into cow milk for sale to the company.

Meanwhile, Dalat Milk insisted on checking water content in milk it buys from farmers and will suspend purchases if milk quality is not improved after three tests. The company will buy unprocessed milk at lower prices than normal for the product containing water content of less than 4%.

Ngo Minh Hai, general director of Dalat Milk, told the Daily that the company applies such a rule as it wants farmers to review and improve their cow raising process and for the company to better control milk quality as this is a matter of life and death.

“We are not sure whether dairy farmers have added water to unprocessed milk or not but we have devices to test the water ratio and will make decisions depending on testing results because input materials decide the quality of our finished products,” Hai said.

Hai said the company has to strictly check input milk, which must be processed within 36 hours or it is spoiled. “If Dalat Milk grows well, farmers will have a chance to sell their cow milk,” Hai said.

According to a dairy farmer, the devices used by Dalat Milk to test milk ingredients allow a margin of error of up to 5% but the company makes decisions based on the final results and does not care about the error. The margin of error of just 0.1% already costs farmers dearly.

Hai said the requirement for the water ratio has nothing to do with the imbalance between supply and demand, as the supply of cow milk is now abundant on the market.

Prices of powdered milk halved to US$2,500 per ton on global markets in January and many companies have since reduced fresh milk purchases and increase milk imports.

However, Hai said Dalat Milk still honors its contracts with dairy farmers but has to strictly control the quality of unprocessed milk to ensure the quality of its finished products.

EVN puts power demand growth at 12.6% in Tet months

Vietnam Electricity Group (EVN) has estimated electricity demand will jump 12.6% in the first two months of this year against the same period last year as the Lunar New Year holiday, better known as Tet, will fall this month.

Duong Quang Thanh, deputy general director of EVN, gave the forecast at a meeting with the Ministry of Industry and Trade in Hanoi yesterday. Despite the strong growth, Thanh said EVN would mull solutions to guarantee sufficient power supply during the holiday, according to VietnamPlus.

The State utility has prepared backup power facilities and upgraded transmission lines to ease overloads and prevent outages during Tet.

EVN reported that the nation’s total commercial power supply neared 10.9 billion kWh last month, rising by 12.6% year-on-year. Of the volume, supply for industry and construction grew 12.9% to 6.1 billion kWh, and for administering agencies and households soared 24.5% to more than 3.7 billion kWh.

The corporation commissioned the first 622-MW generator of Vinh Tan 2 thermal electricity plant last month and plans to put into use the first generator with a capacity of 80 MW at Mong Duong 1 thermo-power plant by the end of the first quarter.

Thanh said EVN has estimated total electricity output at 9.8 MW this month and will upgrade transmission lines to ensure stable supply for consumers.

At the meeting, Minister of Industry and Trade Vu Huy Hoang told EVN to do all it can to meet rising demand, and coordinate with the General Department of Energy under the ministry and the Electricity Regulatory Authority of Vietnam to ensure sufficient supply during the country’s biggest holiday.

Hoang also requested the group to find ways to transmit electricity to more rural areas and islands to support socio-economic development of these localities and help protect the nation’s sovereignty.

Last year, EVN extended the national power grid to Van Don and Co To islands of Quang Ninh Province, Phu Quoc Island of Kien Giang Province and Ly Son Island of Quang Ngai Province. The group is working on a project to transmit electricity to Kien Hai Island off mainland Kien Giang Province.

Central Power Corporation under EVN has completed assessment documents for the environmental impact of a power supply project for Cu Lao Cham Island off mainland Quang Nam Province. The project is scheduled for completion this year.

EVN said at the end of last year, the nation’s power grid had been extended to all districts nationwide as well as nearly 99.6% communes and around 98.2% households in rural areas last year.

Nguyen Kim targets over 50 stores

Nguyen Kim Trading Joint Stock Co. has unveiled its business strategy to operate more than 50 electronics outlets across the country in 2019 after the local company agreed to sell a 49% stake to Power Buy under Thailand’s Central Group.

Currently, 21 Nguyen Kim electronics stores in the country mainly sell home appliances. The company targets to obtain 30-40% local appliances market share this year and will diversify products at its stores.

Nguyen Kim and Central Group last night informed suppliers, partners and shareholders of Nguyen Kim of their strategic cooperation deal with effect from January including the stake acquisition.

The two sides aim for a leading position in the home appliances and electronics retail market not only in Vietnam but also in Southeast Asia.

Philippe Broianigo, new chief executive officer of Nguyen Kim, said in a statement that cooperation between the local enterprise and the Thai company would bring success to both sides and enable Nguyen Kim to better compete with foreign counterparts in the context of Vietnam’s further integration into the regional and global economies.

Nguyen Kim posted sales of more than VND8.4 trillion and profit of VND352 billion in its fiscal year 2014. The company targets an increase of 50% in online sales and improvements in customer and after-sale services in its new business strategy.

Nguyen Van Kim still serves as chairman of Nguyen Kim Trading Joint Stock Co. since a source from Central Group told the Daily last month that a representative of the Thai group would hold the post of CEO at Nguyen Kim while the local company will retain the post of chairman after the acquisition.

With its investment in Nguyen Kim, Central Group is expanding its operations to more sectors in Vietnam after years of investing in commercial centers. The group now operates a Robins department store in Hanoi and another in HCMC.

SuperSports, Crocs and New Balance stores have been operational in Vietnam via Central Group’s subsidiaries and franchised partners. The Thai retailer has also brought Britain’s fashion brand Marks & Spencer to a store at a shopping mall on Dong Khoi Street in HCMC’s District 1, and plans to open 20 M&S shops nationwide.

Vietnam becomes largest shrimp exporter to RoK

Vietnam was the largest shrimp exporter to the Republic of Korea in 2014 in terms of both volume and value, according to the Vietnam Association Seafood Exporters and Producers.

Vietnamese shrimp accounted for nearly half of the RoK’s imports last year, with 27,791 tonnes, ahead of China at 13,936 tonnes.

Vietnam’s shrimp export volume to the RoK increased by 36 percent last year compared to 2013, while export value reached 290.2 million, increasing by 60 percent.

Vietnamese tourism to Republic of Korea booms

The Republic of Korea (RoK) is attracting increasing numbers of Vietnamese travellers thanks to its scenic landscapes, distinctive culture and simplified visa procedures.

Last year, there were approximately 140,000 Vietnamese visitors to the RoK, a 20 percent increase from 2013, according to the Hanoi Moi (New Hanoi) newspaper.

The Ho Chi Minh City-based BenThanh Tourist, through its cooperation with the Korea Tourism Organisation (KTO), Vietnam Airlines and VietJet Air, is offering tours to the RoK at 17.99 million VND (850 USD) per person, a 30 percent reduction.

The discounted tours leave from either Hanoi or Ho Chi Minh City during March.

The itinerary includes visits to Kyeongbok palace and the Lotte World park in Seoul, strolls on poetic Nami island, and the exploration of ethnic groups in Seongeup village on Jeju island.-

Viettel launches switchboard for Lao customers

The Vietnamese Military Telecom Corporation (Viettel) and the Lao Ministry of Post and Telecommunication (MPT) officially launched a system to standardise the Lao language font for mobile devices and computers on February 5.

Accordingly, the font system of the Lao language for mobile phones as well as the process for entering characters on devices using Android and iOS operating systems and computers using Windows will be widely deployed.

Speaking at the event, a representative from the MPT said the product aims to facilitate Lao people’s ability to use their native language on electronic devices.

It also contributes to promoting the nation’s socio-economic development as well as preserving and developing their language and traditions.

The system will be used by nearly 5 million subscribers and make telecom services accessible to 7 million people across the country.

Binh Duong joins forces with FDI firms

Authorities of southern Binh Duong province have paid a visit to foreign direct investment (FDI) firms in the My Phuoc 3 and My Phuoc 1 industrial parks to inquire about their operations so as to take prompt assistance measures.

Chairman of the provincial People’s Committee Tran Van Nam lauded effective FDI firm activities in recent years, particularly Kumho Tire Co. Ltd and Panko Vina Co. Ltd, both invested by the Republic of Korea.

At the Kumho Tire Co. Ltd, Nam spoke of its activities for workers and charitable work and pledged to continue fostering favourable conditions in terms of land for worker accommodation.

Meanwhile, the chairman suggested the Panko Vina Co. Ltd specialising in garment and dyeing invest in relevant industries to support their own manufacturing efforts.

Operating since 2008, Khumho Tire Vietnam has an investment capital of 260 million USD, manufacturing 3.46 million tires a year and creating jobs for over 900 local workers.

Operating within the My Phuoc 1 Industrial Park, Panko Vina was established in 2002. It posted a growth rate of 25 percent in 2014. This year, the company plans to install an additional production line in 2015, employing 1,500 more workers, and build a kindergarten for its workers’ children.

Firms told to better prepare for increased trade with Russia

The targeted 10 billion USD two-way trade between Vietnam and Russia by 2020 will be feasible if domestic businesses work out thorough market research and marketing strategies.

The local firms were warned of the market’s inaccessible distribution network, particularly big supermarket chains, the fierce competition from other countries, the tough negotiation on means of payment, and time-consuming goods transport.

They were advised to update their technology so as to improve product quality and enhance brand and product promotion and take part in more fairs and exhibitions to seek trustworthy partners and distributors. The two countries’ trade turnover hit 3 billion USD for the first time in 2014, data from the Vietnamese Ministry of Industry and Trade (MoIT) show.

The MoIT’s Europe Market Department said Russia is a traditional market of Vietnam, buying mainly agro-products like seafood, coffee, pepper, tea, vegetables, cashew, and rice.

However, bilateral trade accounts for only a small proportion in both sides’ total trade revenue while their direct investment into each other remains modest.

Vietnam and Russia had reached an agreement on building the first nuclear power plant in Vietnam. Besides, their oil and gas production affiliation has been productive.

The bilateral economic and trade relations will be fostered with the conclusion of the negation on a free trade agreement between Vietnam and the Eurasian Union, which groups Russia, Belarus and Kazakhstan. The deal is expected to be signed this year.

Poor infrastructure hinders border trade development

International economic integration, the ASEAN Community formation, and trade and transportation cooperation within the Great Mekong Sub-region are offering Vietnam the opportunity to serve as a gateway between China and the ASEAN.

However, degrading infrastructure, including storehouses and roads, and insufficient equipment for inspection and control initiative pose barriers to the growth of cross-border trade by increasing transaction costs and reducing the quality of products due to long transaction durations.

In addition, the lack of services such as information, business consultations and market study services leads them to frequently face difficulties in response to market fluctuations.

At a recent International Development Partnership Forum on Cross-border Trade, 25 border provinces proposed improving 61 border gates, building four border economic zones, upgrading or building 122 markets, and expanding 93 roads and bridges.

However, completing these proposed upgrades requires substantial investment, leading Economist Vo Dai Luoc to suggest altering policies to attract the involvement of the private sector in upgrading infrastructure.

Meanwhile, Deputy Head of the Mountainous and Border Trade Department under the Ministry of Industry and Trade Nguyen Van Hoi said the ministry is proposing the Government design an investment mechanism using the State budget while simultaneously calling for additional foreign investments in cross-border trade.

He also stressed the need to develop the East-West Economic Corridor to facilitate trade exchange activities through the border.

Industry and Trade Minister Vu Huy Hoang said the Central Steering Committee for Cross-border Trade will negotiate with bordering countries to sign agreements on cross-border trade and services.

Vietnam shares over 4,500 kilometres of its national borders with China, Laos and Cambodia, encompassing 25 provinces.

Along the border, there are 23 international border gates, 27 main border gates and 65 auxiliary gates, serving travellers and the exchange of goods between Vietnam and its neighbours.

Vietnam’s trade revenue across its land border gates exceeded 72 billion USD between 2008 and 2013 with an average increase of more than 10 percent a year. The revenue reached 19.6 billion USD in 2013 and approximately 10.3 billion USD in the first half of 2014.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR