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BUSINESS IN BRIEF 5/5
VNPT provides e-invoice for telecommunication services in Ha
Noi
The Viet Nam Post and Telecommunication Group (VNPT) starts to
officially provide e-invoice for postpaid mobile phone and Internet
subscribers across Ha Noi from May 4.
VNPT provides e-invoice for telecommunication services in Ha
Noi from May 4.
Accordingly, when using e-invoice, subscribers just need to
access to http://hanoi.vnpt.vn, log in and follow the instruction to download
telecommunication invoice easily.
The application of e-invoice is valued as a payment method
that brings in many utilities to customers. Using this utility, customers
will also avoid the risk of loss, damage or time consuming in searching
invoice.
With corporate customers, this e-invoice is also fully valid
in accordance with legal regulations, so it would be used for accounting and
tax statement.
The use of the e-billing system also helps businesses save
costs on printing, delivering and storing paper invoices, which in turn helps
to simplify accounting procedures.
The e-invoices were issued on a trial basis in Cau Giay
District last November with more than 300,000 invoices. Four more districts
started to use this system from March this year, including Ba Dinh, Tay Ho
and North Tu Liem and South Tu Liem Districts.
Gov't to fine more listed firms for failing to register
The State Securities Committee (SSC) has fined several
companies which had failed to register themselves with the SSC and the Viet
Nam Securities Depository (VSD) in time for trading, further action will also
follow, stockbiz.vn reported last Thursday.
On April 4, the Ha Noi Construction Corporation (HANCORP) was
fined VND7.5 million (US$347) when it was found guilty of delay in
registering itself as a public limited company within a year of its initial
public offering (IPO) for 203 individual investors last March. Currently, the
company has VND1.41 trillion (US$65.3 million) of chartered capital.
Last month also, the SSC had fined five other companies,
including Nha Trang Post Hotel JSC and Thai Trung Steel Rolling JSC which had
to pay the highest charge of VND340 million ($15,740) for delaying for more
than a year to register with the VSD and the SSC after privatisation.
Between 2011 and 2014, these two companies had organised the
IPO to increase their chartered capital from VND306 billion to VND508 billion
and from VND10.2 billion to VND21.3 billion, respectively, but neither of
them registered with the SSC.
The problem arises since companies that go in for public
equity have some time before registering their stocks with the SSC and the
VSD for trading. It means that investors cannot protect their rights and
benefits, and their shares cannot be traded on the market until the companies
finished registering.
Under the Decision 51/2014 issued by the Prime Minister last
September, state-owned companies that were equitised after November 1, 2014
would have only 90 days to register with VSD and SSC for trading. Companies
that were equitised before that date would have one year to register for
trading.
However, investors think the fines are only warnings, and want
protecting of their investments by reducing the time span during which
companies must register their stocks with the VSD and the SSC after issues an
IPO.
Viet Nam takes part in trade forum in Argentina
Representatives from the Vietnamese Commercial Affairs mission
to
Trade turnover between
New enterprises surge in first four months 2015
In the first four months of the year, 28,235 new enterprises
were recorded nationwide, likely generating jobs for 427,900 labourers, the
General Statistics Office has said.
The new businesses’ total registered capital accounted for
162.5 trillion VND (7.74 billion USD), up 13.3 percent compared to the same
period last year.
Notably, 9,186 new enterprises with a total registered capital
of 51.3 trillion VND (2.4 billion USD) were registered in April alone, up
73.9 percent in the volume of new enterprises and 52.2 percent of registered
capital compared to March.
Meanwhile, another 6,834 businesses adjusted their registered
capital to a combined 223 trillion VND (10.6 billion USD). The average
registered capital density of an enterprise accounted for 5.7 billion VND
(271,000 USD), up 1.8 percent against the same period last year.
The number of enterprises returning to their operations in the
period stood at 6,316, an increase of 7.7 percent compared to the same period
last year.
These upward trends suggest positive economic prospects, with
more investment and business opportunities being created for enterprises.
Building materials set for rapid growth
The Ministry of Construction has set a 10-15 percent annual
growth target for exports of building materials so that they can reach 2-2.5
billion USD by 2020 under a plan to develop the industry it has submitted to
the Government for approval.
In envisages that by 2020 the country will export 20-28
million tonnes of cement, 100-130 million tonnes of ceramic tiles and 6-7.5
million tonnes of granite tiles, 6-8 million sanitary products and 100-110
million square metres of glass.
To achieve them the ministry will help the industry's exports
become competitive, consolidate traditional overseas markets and seek new
outlets for products like cement, granite tiles, porcelain tiles, and
sanitary ware.
A ministry official, who asked not to be named, said the
targets were predicated on the recent recovery in both the domestic building
materials and construction industries.
In 2014 the building materials industry registered growth of
10.2 percent and is expected to grow by at least 10 percent this year.
Insiders said conditions are very favourable for the building
materials industry to achieve its growth plans this year.
They referred to the fact that many large construction
projects are due this year in
A total of 169 transport projects are also scheduled to get
underway this year, including some key projects like the Ninh Binh-Thanh
Hoa-Vung Ang Expressway and Trung Luong-My Thuan Expressway.
Several factories and warehouses are set to be built across
the country in anticipation of an economic recovery and increase in foreign
direct investment flows.
Cement producers will have the opportunity to pare inventories
and get decent prices because demand has tended to rise in recent times and
new supply is limited.
As of the end of last year the country had 74 cement plants
with a combined capacity of 77.35 million tonnes a year. Domestic market was
70.6 million tonnes after rising by 15 percent, helping significantly narrow
the gap between supply and demand.
This year demand is expected to rise by 3 million tonnes,
helping reduce inventories.
In the construction plastics sector, competition is fierce.
There are four major producers of construction plastics, all of them listed,
namely Binh Minh Plastics (BMP), Tien Phong Plastics (NTP), Da Nang Plastics,
and Dong Nai Plastics.
BMP and NTP, among them, account for 50 percent of the market
share.
To compete with them, smaller companies have had to increase
commissions for agents and reduce prices if they want to bid for projects,
affecting both their profits and the industry's growth.
The 40 percent drop in fuel prices has been a boon for
building materials producers, especially those that make plastic pipes and
stones for construction since they are based in areas far away from the
market.
Analysts said major building materials producers with wide distribution
networks, good management and the ability to expand production could develop
further and expand their market share since demand was rising again.
Nghe An licenses 49 new FDI projects in four months
Eight other projects also received the local authority’s nod
to add a combined 237.1 billion VND (11 million USD) to their investment
capital.
Nghe An province has increased its effort to lure more foreign
investments by not only preferential policies but also timely support to help
investors solve difficulties, notably in public administration, land
clearance and planning.
From 2015 onwards, the locality will focus on land clearance
for key projects, including the Vietnam-Singapore Industrial Park 6 (VSIP6),
Vinh - Cua Lo Avenue, General Hospital and Tuan Loc Industrial Park.
The province has enhanced coordination with the Foreign
Investment Agency and foreign investment promotion bodies, for example the
Korea Trade-Investment Promotion Agency (KOTRA) and Japan External Trade
Organisation (JETRO) in order to improve efficiency of its investment
promotion efforts.
Japan's Nitori Holdings to build factory in VN
Nitori Holdings, the owner of the Japan's biggest chain of
furniture supermarkets, will build a furniture factory in Viet Nam in 2017.
Nitori Holdings plans to expand its furniture production in
Viet Nam. Its products will be exported. Photo Bloomberg.com
As planned, the factory will assemble and produce materials
and parts of furniture products. Most of the products will be exported and sold
in the Japanese market.
The factory will be located on a 400,000sq.m plot in the
southern province of Ba Ria–Vung Tau. Its production capacity has not been
decided yet, but it will target manufacturing the corporation's key products,
such as kitchen cupboards, sofas and buffers.
The construction work involving an estimated investment
capital of billions of Japanese yen, will be operational by February 2018.
Its production will be expanded in the future.
The factory will be the second of its kind in Viet Nam. The
first one is in Ha Noi. Nitori Holdings owns a chain of 346 furniture
supermarkets in Japan, and 27 supermarkets in the United States, China and
Taiwan.
During the fiscal year of 2015, the corporation plans to open
an additional 40 supermarkets in Japan and 14 others abroad. It is aiming to
boost the total store count to 1,000 by 2022.
Operator of Vietnam's sole refinery seeks for further tax cut
for imported diesel oil
Binh Son Refining and Petrochemical JSC (BSR), the operator of
Vietnam's sole operational oil refinery of Dung Quat, has sought for further
reduction in import tax levied on diesel oil because without the tax cut,
diesel oil churned out by the facility cannot compete with that imported from
ASEAN countries.
In a document submitted to the Ministry of Finance earlier
this week, Dinh Van Ngoc, general director of the company, proposed a
reduction of diesel import duties to below 10 percent.
Currently, diesel oil produced by the US$3 billion refienry is
subject to a 20 percent import tax, a 10-percent drop from the previous rate,
though it is domestically made following a special financial mechanism
applied to the refinery, which was commissioned in 2010.
Meanwhile, the import duties imposed on the similar petroleum
product imported from ASEAN countries has dropped to 15 percent since this
year following the integration roadmap in ASEAN Economic Community of
Vietnam.
ASEAN members include Indonesia, Malaysia, the Philippines,
Singapore, Thailand, Brunei, Myanmar, Cambodia, Laos, and Vietnam
Thus, the price of diesel made by Dung Quat will be around
US$10 per barrel more expensive than its regionally produced rivals, Ngoc
said in the document.
With the current tax regime, diesel oil refined by Dung Quat
cannot compete with that imported from other ASEAN countries, he added.
Diesel oil is the main product of the Dung Quat oil refinery,
as it accounts for about 50 percent of the total output of the plant. As a
result, if it is not sold well, the revenue of the plant will be affected,
thus badly influencing state revenue.
Earlier this month, BRS also sent a document with the same
import tax cut proposal for many kinds of petroleum products, stressing that
the plant will shut down if there is no change in tax policies for those
products.
BSR said in the document that many of its customers may switch
to buying from other ASEAN countries, whose products are now cheaper thanks
to the tax cut taking effect since the beginning of this year.
BSR’s parent company, state-run oil and gas giant PetroVietnam,
has also lodged a similar complaint to the finance ministry, saying the ASEAN
preferential tax treatment has caused Dung Quat fuel to be more expensive
than imported products, thus reducing its competitiveness right on home soil.
On April 13, the Ministry of Finance issued a circular
reducing the import taxes levied on gasoline and kerosene (from 35 percent to
20 percent), diesel oil (from 30 percent to 20 percent), fuel oil (from 35
percent to 25 percent) and jet fuel (from 25 percent to 10 percent).
Dung Quat currently produces 140,000 barrels of oil a day, or
6.5 million tons a year. Once it produces 10 million tons of oil per year,
Dung Quat will account for 50 percent of Vietnam’s fuel supply. BSR reported
VND150.41 trillion ($7.08 billion) in revenue in 2013.
Can Tho looks to revive IZs allure
A comprehensive suite of measures are urgently needed to help
ramp up the appeal of Can Tho’s export processing and industrial zones in the
eyes of investors.
Compared to other cities and provinces across the country, the
Mekong Delta’s Can Tho city established its export processing and industrial
zones (IZs) very early. Less than a year after the Council of Ministers (now
the government) enacted Decree 322/HDBT dated October 18, 1991
governing export processing zones’(EPZ) operations, Can Tho received
approval to establish the Tra Noc EPZ, one of the first four EPZs in
the country.
Can Tho is now home to eight IZs with construction planned
along the Hau River and the National Highway 91. These IPs - Tra Noc 1, Tra
Noc 2, Hung Phu 1, Hung Phu 2A, Hung Phu 2B, Thot Not, O Mon and Bac O Mon,
now occupy 2,371 hectares in the total area.
The IZs are well-situated in the Mekong Delta region with easy
access to seaports and the Mekong Delta region’s international airport and
they sit in the centre of huge agricultural and seafood material sources.
Thanks to these favourable conditions, from late 1999, Tra Noc 1 IZ reported
an occupancy rate reaching 90 per cent, one of the highest rates among the
country’s IZs. Its success at that time was regarded as ‘the bright spot in
the Mekong Delta’s investment landscape’.
According to the Can Tho Export Processing and Industrial
Zones Management Authority (CEPIZA), Can Tho’s EPZs and IZs are now home to
218 projects leasing 588ha of industrial land with the total committed
investment capital of $1.92 billion.
The realised capital came to $866 million, tantamount to 46
per cent of the total committed capital fund. Domestic investment projects
now number 188 and are worth $1.69 billion in the total committed capital
while 23 foreign invested projects have been registered $203 million.
Can Tho’s IZs have provided jobs to 31,382 workers from the
city and surrounding provinces. Of the IZs, only Tra Noc 1 and 2, with the
combined area of 300ha, have reported almost full land occupancy rate whereas
Hung Phu 1 IP, covering 262ha, has filled just 12.5 per cent of its land for
industrial production and Hung Phu 2A, with 134ha area, has only leased out
13 per cent of the land to investors.
Thot Not IZ, covering 600ha, has reported a better leased rate
of 54 per cent in its first-phase development which occupies 150ha.
The 67ha Hung Phu 2B is in the stage of revising its planning
scheme and working on compensation so it can progress with infrastructure
construction.
The 600ha O Mon IZ is working on planning at 1/2,000 scale
while Bac O Mon IZ, covering 400ha, is to revise its planning scheme as it
needs to relocate to a new location in light of Can Tho city’s revised
planning.
Investment flows into Can Tho city’s IZs, however, has slowed
in recent years.
Last year, the local IZs attracted less than $50 million
whereas in the first quarter this year, only four new projects were
registered and three projects revised their investment certificates with the
total committed investment capital of slightly more than $5.3 million.
Apart from some objective factors such as ongoing difficulties
facing the world and the local economy, some following factors have badly
influenced the local IZs’ competitiveness.
Specifically, as Can Tho has grown into a
centrally-governed first-class city, corporate tenants inside the city’s IZs
now enjoy fewer investment incentives than those located in other
neighbouring provinces. Businesses specifically no longer benefit from the
incentives based on investment location and IZ infrastructure investors no
longer enjoy the preferable corporate income tax policy.
The administrative procedures, such as the one-stop shop
mechanism, for IZ businesses seems to be increasingly complicated whereas the
transport infrastructure is characterised by uneven development between
localities in the city and the surrounding areas.
In addition, though there are big ports in Can Tho city at Cai
Cui and Can Tho, they are unable to receive large tonnage ships due to the
shallow channels, therefore goods in the region must be transported to ports
in Ho Chi Minh City and other eastern locations, driving up transportation
costs.
It is also a waste that Can Tho international airport,
launched in January 2011 with the designed capacity of serving three to five
million passengers per year, only serves domestic flights.
In order for Can Tho to encourage greater investment inflows,
improvements are needed to the region’s infrastructure, particularly
transport infrastructure, while simultaneously introducing specific
mechanisms and policies to fully tap the city’s advantages as the Mekong
Delta’s economic hub.
In respect to administrative procedures, efforts must be made
to boost efficiency of the one-stop shop mechanism at the CEPIZA to
facilitate operations of local investors and businesses.
The authority needs to act as a supporting arm to the city’s
management authorities in overseeing the operations of city-based IZs and
take the initiative in co-operating with relevant state agencies in tackling
issues facing IZ businesses, to ensure they feel comfortable investing in the
region.
According to the CEPIZA, businesses based in Can Tho IZs
reported $128.6 million in the total revenue in March 2015, increasing their
total revenue in this year’s first quarter to $401.6 million, similar to the
same period last year.
Of this, industrial production values have reached $312.7
million, trade and services revenue came to $88.8 million and export value
amounted to $156.8 million.
Foreign invested businesses in Can Tho IZs saw a 4 per cent
on-year decline in their first quarter revenue which fell to $80 million.
Their export value during the period also sank 5 per cent on-year to $36.5
million.
New decree to resolve barriers to FIE operations
A decree that the Ministry of Planning and Investment is
drafting to guide the implementation of the 2014 Law on Investment includes a
separate chapter on how the rules will be applied specifically to foreign
investors.
The ministry’s drafting committee hopes to abolish conditions
that do not fit the current context, and remove policies issued by government
agencies that are not within their authority to issue, as well as amend and
add conditions in order to ensure the freedom for foreign investors to do
business in sectors they are entitled to operate in.
Besides conditions that are common for both domestic and
foreign-invested enterprises (FIEs), FIEs have to satisfy a range of other
conditions. According to Deputy Minister of Planning and investment Nguyen
Van Trung, that’s because before setting up an economic entity the foreign
investor also has to have an investment project and secure an investment
certificate and in order to do so they have to meet a list of other
requirements such as providing capital and being able to meet the
requirements of specific investment projects.
“These requirements are very necessary, not only to formalise
the application of conditions to do business for foreign investors but to
also contribute to raising the transparency of the legal system concerning
investment and business,” Trung said.
Of the 267 sectors and fields subject to conditions stipulated
in the new Law on Investment, there are 72 for which Vietnamese laws already
stipulated conditions to do business and invest, 46 for which Vietnam’s
international agreements have stipulated conditions to invest applying to
FIEs, 128 for which no law has stipulated conditions for investment for FIEs
and 21 for which no law has stipulated conditions to invest and to do
business for FIEs.
In addition, there are 35 sectors which international
agreements stipulate limited participation by FIEs but Vietnamese laws still
do not.
As a result, there has been much confusion over the current
list of conditions. For example, one of the many conditions for the insurance
and reinsurance sector requires foreign non-life insurers wishing to set up a
branch in Vietnam to have the total asset of at least $2 billion and have
operated in the non-life insurance business for at least 10 years. But these
conditions do not meet Vietnam’s commitments in free trade agreements and the
Trans-Pacific Partnership. Will these conditions be changed?
Plastic surgery is one of the 21 sectors and fields that have
yet to have any conditions to invest and do business. According to Vietnam’s
WTO commitments, foreign plastic surgery service providers are allowed to
provide this service by establishing a 100 per cent foreign-owned hospital, a
joint-venture hospital with a Vietnamese partner or by entering a
co-operation contract with a Vietnamese partner. The minimum investment for a
hospital is $20 million, while that for a clinic is $2 million. But as of now
Vietnam has yet to have any conditions on business in this field. What will
regulate plastic surgery and the remaining 20 sectors and fields?
Casinos are on the list of 128 sectors and fields for which no
law has stipulated conditions for investment for FIEs. As of now, the decree
on casinos is still being drafted.
Investment strategy in May: Sell and go away?
"Sell in May and go away" is a well-known trading
adage that warns investors to sell their stock holdings in May to avoid a
seasonal decline in the equity market, while returning to trade in autumn.
Although this is not always true in the Vietnamese market, it still causes
investors to be cautious each May.
According to market statistics, May is not a lucky month for
Viet Nam's stock market, as the benchmark VN-Index plummeted over nine years
and increased just four out of its 15 years of trading. VNS Photo Nguyen Manh
Ha
According to market statistics, May is not a lucky month for
Viet Nam's stock market, as the benchmark VN-Index plummeted over nine years
and increased just four out of its 15 years of trading.
Stock analysts believe such declines could be the result of a
lack of information each May. Most important macroeconomic news is released
during the first quarter, while corporate earnings of listed companies are
often reported in April.
Apart from this, foreign trading is also a significant factor
that has affected the market in May. Traders often buy robustly in the early
stage and in the end of the year, while unloading stocks at mid-year. This
caused negative impacts in the psychology of domestic investors in previous
years.
However, trading by this sector is going against the common
trend this year, as foreigners have been collecting shares since the
beginning of April. One of the main reasons could be the possible delay in
interest rate hikes by the US Federal Reserve (Fed), expected in the third
quarter, in order to support the growing momentum of the US economy.
"Market developments in the last week before the holiday
season clearly reflected this concern. It's rare to see investors who were so
lethargic, despite strong buys by foreign investors," said Nguyen Trung
Du, director of the business development section at VNDirect Securities Co.
In the past five years, stocks only rose in May of 2013, while
declining during the other four years. With the absence of current support
information, Trung predicted the market would continue to experience another
downtrend in May this year.
However, many analysts have more optimistic views about the
market in May, based on positive developments in the economy, as well as
encouraging reports of business revenues released so far.
The economic expansion reached 6.03 per cent in the first
quarter of this year, which is a good result compared with often slow growth
in the same period during previous years. Thanks to this, the planned growth
of 6-6.2 per cent for 2015, as set by the Government, will likely be achieved
by year-end.
In addition, the nation's inflation remained at a relatively
low level, with the average consumer price index (CPI) during the first four
months of the year rising only 0.8 per cent against the same period last
year. This will likely help reduce lending rates in the near future.
"In my opinion, trading in May will not be so bad and the
market can increase or accumulate value," said Phan Dung Khanh, head of
Investment Strategy Division at KimEng Securities Co.
In the past, the decline in May fell in those years that the
market saw strong growth during the first four months, creating room for
profit-taking and downward adjustments in the coming month. However, in 2015
the market advanced strongly in January and February, but plunged steeply in
March and was flat in April.
"The current stock values are rather low and the
profit-taking pressure will not be too strong, compared with that of recent
years. I think the market will continue to accumulate and rise in May,"
Khanh said.
He added that strong net buys by foreign investors, good
economic growth and drastic restructuring in the financial system, as well as
investors' expectations to buy superior stocks at cheap prices in May, were
optimistic factors that would support the market.
According to Ngo The Hien, deputy head of the analysis
department at SHB Securities Co, the price-earnings (P/E) ratio of Vietnamese
stocks is the lowest among markets in the region (about 12x compared with the
average of 17-18x in the region), which could attract additional foreign
inflows.
"Along with low deposit interest rates, healthy economic
growth and strong indirect investment inflows (FII), I believe we're having a
big opportunity this year," Hien said.
FLC Group invests US$162 million in Binh Dinh complex
The southern Binh Dinh Province has awarded an investment
licence to the FLC Group to build the Nhon Ly resort, villas and high-end
entertainment complex in the province's Quy Nhon City.
A view of the sea in Quy Nhon City. The FLC's US$162 million
project would have golf courses, six-star villas, hotels, five-star
restaurants, an international convention centre and high-class entertainment
area. Photo vnexpress
Covering an area of around 300ha, the VND3.5 trillion (US$162
million) project would have golf courses, six-star villas, hotels, five-star
restaurants, an international convention centre and high-class entertainment
area.
The complex is scheduled to become operational during the
first quarter of 2016.
Speaking at the hand-over ceremony on April 25, Doan Van
Phuong, FLC's general director said the group highly valued the tourism
potential of the locality and had decided to choose it as an investment
location.
"The project will not only contribute to changing the
province's tourism situation, but also the local State budget, thus promoting
socio-economic development. In will also create a foundation for attracting
foreign investment to the province," Phuong added.
Ho Quoc Dung, chairman of the provincial People's Committee,
said they would help the group invest in the province.
Dung said the province had adequate conditions for tourism
development with its natural landscape and intangible cultural forms.
He urged the local residents to support and create favourable
conditions for the investors.
Sharing the same ideas, Le Kim Toan, deputy general secretary
of the People's Committee, said FLC had committed to the investment with
experiences from several projects nationwide.
In April, FLC Group, the provincial People's Committee and the
Bank for Investment and Development of Viet Nam (BIDV) also signed a
co-operation agreement.
Accordingly, the project would be given the maximum tax
preferential as it is located in the Nhon Hoi Economic Zone and also a poor
area.
BIDV also committed to finance the project up to 70 per cent
of the total investment.
In recent years, FLC Group's turnover, profits and assets have
seen rapid growth. In the 2014 financial year, its aggregate profit reached
VND3 trillion ($139 million) and annual profit of VND454 billion ($21
million). The group's charter capital was VND4 trillion ($185 million).
FLC has invested in property projects nationwide, such as FLC
Samson Beach and Golf Resort and the FLC Complex in Thanh Hoa.
Life insurance profitable but tough to penetrate
Vietnam has been estimated to be an emerging market with a lot
of potentials for life insurance companies. However they have been able to
exploit a small part of this market because most residents have not paid
attention to life insurance.
According to data from the Insurance Supervisory Department,
total premium turnover reached VND52,680 billion (US$2.44 billion) last year,
up 14.2 percent over the previous year. Of these, life insurance premium grew
nearly 18 percent.
The life insurance market continued positive growth trend with
a year on year increase of 25 percent touching VND3,075 billion (US$142.23
million) in the first two months this year. Of these, the number of new
contracts reached nearly 180,000, up 44.39 percent over the same period last
year.
Businesses said that they have got more and more customers.
However the number is still modest compared to Vietnam’s population now.
Head of the Insurance Supervisory Department Phung Ngoc Khanh
forecast stable development in the insurance market this year. The total
premium turnover would grow 12 percent over last year.
Statistics by the Vietnam Insurance Association showed that
life insurance companies are competing in the segment of 30 percent
population in urban areas. However it has not been easy to convince this
group to buy insurance.
Companies have noticed fruit or seafood farm owners but faced
challenge in taking take up this segment.
A report by Ernst & Young Company on the insurance market
in emerging countries, Vietnam is one of quickly growing markets with many
prospects. The country is among top two attracting markets to foreign
underwriters.
Still, even experienced giants have also been embarrassed to
penetrate this market.
Director General of AIA Stephen Clark said that the number of
life insurance buyers was very low in Vietnam. Besides issues in payment
ability, another reason is that residents have been unaware of the importance
and necessity of insurance.
This challenge has made the race to gain the insurance market
share fierce, he added.
The life insurance market has been developed in Vietnam for 20
years. However it has been estimated to be young. Businesses have
continuously launched new products but the number of buyers is still modest.
That is a chance but also a challenge for businesses that have
to make residents understand real benefits from insurance purchase.
Insurance companies have broadened their agencies and
consultant group to ram up the market share.
Many agencies and consultants have not clearly explained
contract terms to buyers aiming to attract customers as many as possible for
more percentage. This has caused losses for the buyers when accidents occur
and created a barrier in many people’ thought of insurance.
The Insurance Supervisory Department said that they would
intensify inspecting and handling violations at insurance companies this year
and encouraged them to purify their staff to recover customers’ belief.
23 provinces have no new FDI projects in first quarter
There were no new Foreign Direct Investment (FDI) projects
being licensed in the first four months this year in 23 provinces and cities,
reported the Foreign Investment Agency under the Ministry of Planning and
Investment.
Provinces failing to attract more FDI concentrate in the
northern mountainous region such as Lang Son, Tuyen Quang, Dien Bien, Lao
Cai, Cao Bang and Bac Kan.
Of the rest 40 provinces and cities, 15 attracted only one FDI
project and many just lured 2-3 projects.
The southern province of Dong Nai received most FDI capital
with US$916.75 million, accounting for 24.6 percent of the country’s total.
It was followed by Ho Chi Minh City with US$784.93 million
accounting for 21.1 percent.
Four-month budget revenue meets 34.5% of year's estimate
The State budget revenue in the first four months of 2015 was
posted at VND314.1 trillion (US$14.4 billion), equivalent to 34.5% of
estimated figures for the whole year and up 9.4% against the same period in
2014, according to the Ministry of Finance.
Of the total figure, four-month domestic collection recorded
at VND238.7 trillion (US$10.98 billion), equal to 37.4% of the year's
estimate and up 17% over the same period last year.
According to the Finance Ministry, the high figures from
domestic revenue were mainly driven by the positive development of the
domestic economy, the stability of domestic production and business
activities, higher corporate tax collection and the recovery of the real
estate market.
Revenue from crude oil was estimated at VND23 trillion (US$1.1
billion), a year-on-year decrease of 32.6% while revenue from import-export
activities was reported at VND51.5 trillion (US$2.4 billion), a year-on-year
increase of 7.3%.
In the meantime, the budget spending in four months was
VND362.7 trillion (US$16.7 billion), resulting in the budget overspending of
over VND48 trillion (US$2.2 billion), equivalent to 21.5% of the year's
estimate.
Statistics from the Finance Ministry also showed that 55 of 63
provinces and cities nationwide recorded higher budget revenues than that of
the same period in 2014 while 49 provinces reported revenues equivalent to or
higher than 33% of the year's estimate.
Coffee processing industry developed
The Ministry of Agriculture and Rural Development (MARD) is
carrying out its master plan to develop the coffee processing system by 2020
in a bid to increase the added value of domestic coffee products, said a
senior official.
Vo Thanh Do, Deputy Head of the ministry’s Agro- Forestry,
Seafood Processing and Salt Industry Department, said that although Vietnam
is the leading country in robusta coffee production and exports, the
processing industry still has numerous restrictions limiting the added value
in the coffee sector.
According to the master plan, the coffee sector targets an
export capacity of 1 million tonnes of coffee beans annually through
upgrading and modernising current production lines to improve product
quality.
The ministry is also focused on improving the quality and food
security of the existing roasted and ground coffee products consumed
domestically while increasing the total yearly productivity to 50,000 tonnes
(90 percent of the designed capacity) in 2020 from the current 26,000 tonnes
(50 percent of the designed capacity).
Another priority is elevating instant coffee to become a high
value-added product for exports and domestic consumption with total output of
55,000 tonnes in 2020 and 120,000 tonnes in 2030. Mixed coffee products like
three-in-ones and two-in-ones are expected to reach over 200,000 tonnes by 2020
and 230,000 tonnes by 2030.
Over the next 15 years, processed coffee commodities for
export and domestic consumption are targeted to generate 1 billion USD,
accounting for 25 percent of the production value.
The ministry is especially encouraging instant coffee
processing in the Central Highlands, Southeast and Mekong Delta regions as
well as developing mixed instant coffee in the southern central coastal and
northern mountainous areas along with the three above-mentioned regions.
Do said domestic market development is of special importance,
particularly in northern localities, to increase the consumption rate to 25
percent by 2030 from the current rate below 10 percent.
Furthermore, trade promotion activities have been fostered to
enhance coffee penetration in international markets with the focus on
Northeast Asia, Eastern Europe and ASEAN nations.
The coffee sector aims to increase the rate of coffee beans
process at industrial scale to 40 percent this year, 70 percent by 2020 and
80 percent by 2030.
The ministry has set its sights on yearly revenues of 3.8
million to 4.2 billion USD from coffee exports by 2020 and 4.5 billion USD by
2030.
Vietnam agriculture benefits from Australian trade deals
Vietnam domestic agribusinesses have new opportunities to boost
exports and break into key Australian markets with the implementation of
landmark trade agreements in 2015.
The Australian Department of Agriculture has agreed in
principle to allow Vietnam fresh litchi to enter the market effective this
June and will announce the specifics of the agreement later this month.
This agreement comes into force on the heels of other trade
agreements under which the Australian government has authorized a variety of
agriculture products to flow into the market.
This is a huge opportunity for the Vietnam agribusinesses as
Australia is Vietnam’s eighth largest export market valued at US$3.99 billion
for 2014, according to the Vietnam Trade Office in Australia
In the three months leading up to April of this year alone,
Vietnam’s exports to the Australian market hit an all-time record high of
US$742.8 million, the trade office reported.
These trade agreements will deliver new jobs and expansion
opportunities across the Vietnam economy with major openings for not only agriculture
but aquaculture and the seafood industries as well.
However, Australia is a demanding market the trade office
reported and the government imposes strict requirements on quality, origin
along with food hygiene and safety.
If domestic businesses face up to the challenges and innovate,
adapt and grasp the new opportunities presented in the Australian market they
have a bright future to prosper and make further inroads.
If businesses pay more effort to advertise products on the
market, exports to the market will further increase in the future, according
to the Vietnam Trade Office in Australia.
Agro-fishery sector seeks to overcome challenges
The Ministry of Industry and Trade held a conference in Hanoi
on May 4 to discuss a number of possible solutions for difficulties faced by
the agro-fishery sector.
According to a report from the Ministry, the sector’s export
revenue totalled US$8.5 billion within the first four months, a 5.1%
reduction from 2014.
During the conference, agro-fishery associations complained
about the inadequate market information feedback from overseas representative
offices which negatively affected the operation of domestic enterprises.
Vice General Secretary of the Vietnam Association of Seafood
Exporters and Producers Nguyen Hoai Nam proposed that trade promotion, whose
public budget has shrunk, receive a boost through improved methods.
The sector needs to become a national priority during
negotiation rounds for trade pacts between Vietnam and other countries across
the world, he said.
Agreeing with Nam, General Secretary of the Vietnam Coffee and
Cocoa Association Nguyen Viet Vinh suggested increasing international visits
and market research surveys of business delegations supported by the Ministry
of Industry and Trade.
Taking the participants’ comments into account, Deputy
Minister Tran Tuan Anh confirmed his agency will focus on seeking new markets
and consolidating the consultation role of domestic businesses in several
trade negotiations.
The Ministry will assess the competitiveness of local firms
and consider adjusting production costs, he noted, saying the agency will
work with the Ministry of Finance to devise related incentives.
Suitable incentives needed for automotive support industry
Suitable incentives are essential to enhance the
competitiveness of enterprises in the support industry to develop the
domestic automotive sector, according to Chairman of the Vietnam Federation
of Civil Engineering Association Do Huu Hao.
Hao, who is also former Deputy Minister of Industry and Trade,
highlighted the potential to expand the domestic automotive market with its
90 million people.
He stressed the need for the domestic automobile industry to
enhance its competitiveness as integration encourages importing assembled
vehicles in the regional countries with zero percent tariffs.
The most efficient way for local businesses to join the global
production chain is to connect with renowned international brands in the
support industry, Hao said.
President of the Xuan Kien Automobile Joint Stock Company
(Vinaxuki) Bui Ngoc Huyen called for more specific tax and financial
incentives. He confidently stated that with right tax incentives and credit
from the State, Vinaxuki can raise the domestic manufacturing rate to 50
percent and build “Made-in-Vietnam” passenger cars and trucks for export.
The company has invested more than VND600 billion (US$28
million) in a number of projects to produce automobile spare parts, Huyen
said.
They are expected to enhance the competitiveness of Vinaxuki
products in a number of product lines by 2018, including pick-up trucks,
cars, taxis and up to 28-seat public vehicles, he added.
Huyen also expressed his hope that incentives would be
provided to domestic manufacturers targeting low-income consumers.
In August last year, the Ministry of Industry and Trade
introduced a new strategy and plan for the automotive industry, but many of
the relevant policies and mechanism are still pending.
At the same time, foreign-invested enterprises in the
automobile industry are concerned about their future operation once import
tariffs in Southeast Asia reduce to zero percent in 2018.
Toyota has said it may stop manufacturing and assembling in
Vietnam and instead import finished products from regional countries.
Many FDI businesses may withdraw from the industry if Vietnam
cannot issue suitable and specific assistance.
According to Vietnam Customs, more than 71,000 vehicles were
imported in 2014, up 102% year on year and the highest ever.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Ba, 5 tháng 5, 2015
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