BUSINESS IN BRIEF 13/8 Local firms hailed for investing in Singapore Minister of Industry and Trade Vu Huy Hoang hailed active and creative Vietnamese firms for investing in Singapore in the context of globalisation and regional and international integration. During a meeting with Singapore-based Vietnamese firms on August 9 as part of Prime Minister Nguyen Tan Dung’s visit to Singapore to attend celebrations of the country’s 50 th Independence Day, Minister Hoang praised their contributions to introducing Vietnam to international friends. The firms’ achievements have helped consolidate the Vietnam-Singapore strategic partnership, particularly in economics and trade, he added. The Government continually strives to offer incentives for Vietnamese firms operating at home and abroad, he affirmed, hoping that domestic investment will expand in overseas markets in the future. Representatives from Vietnamese firms in Singapore pledged utmost efforts towards reaping greater successes. Singapore is Vietnam’s second biggest trade partner among Southeast Asian nations and sixth globally. Trade between Vietnam and Singapore posted nearly 15 billion USD in 2014 and reached 9 billion USD in the first six months this year, up 20 percent from the same period last year. Singapore is also the third biggest investor in Vietnam with total investment of nearly 33 billion USD. Consultants predict more investments next year Consulting firm Grant Thornton (Vietnam) has released a report on private equity that shows an encouraging improvement in respondents' belief in higher investment activities in the next 12 months. In the bi-annual survey conducted in the second quarter of 2015, 86% (compared to 72% in the previous survey) of respondents, who are from investment funds, advisory/legal firms, securities companies, ad private and institutional investors, forecast investments to rise. They cited several reasons. First is the recovery in the economy that is boosting consumer confidence and potential for growth across industries. Secondly, joining global and regional partnerships like the TransPacific Partnership and the Asian Free Trade Area (AFTA) provides many investment opportunities that benefit both local businesses and foreign investors. Thirdly, the improvement in legislation shows a positive commitment towards investors, with the government addressing the need for reform in both private and public sectors. This is providing opportunities for investors to make investments in strong local enterprises which have good operating systems, market share, and a trained workforce in place. It is expected that the total value of M&A deals this year will beat the 2012 record of US$5.2 billion. The figure could reach US$20 billion between 2015 and 2018. Oil and gas, food and beverages, and clean technologies are the leading sectors which are seen as especially attractive for investment. For 72% of PE respondents, the outlook is positive, unchanged from the previous survey two quarters earlier, thanks to a lot of positive news during the first half of this year. Significant legislative changes and increasing opportunities for foreign investments have boosted investors' confidence in the recovery of the economy. In the previous survey, the outlook was negative for 12% of respondents, but the figure has fallen to 7% now. In the first quarter GDP growth reached 6%, a milestone that has been eluding Vietnam since 2011. In the second quarter GDP growth was 6.44%, further confirming the economic recovery. With regard to the legal framework, two significant positive changes were introduced in H1 — the Public Investment Law followed by a decree on public-private partnership strengthening the legal framework for partnerships between the government and enterprises in infrastructure investment and the increase in foreign ownership limits in listed companies to 60%. Nevertheless, long-standing problems still exist, including slow reform of SOEs, inadequate infrastructure, corruption, and red tape. Government red tape remains the most critical obstacle for PE investors, according to 85% of respondents. Though there is a slight decrease of 3 percentage points since the last survey, it appears there has not been any major improvement in this regard. A similar situation is noted with regard to corruption, voted by 83%, which has been repeatedly marked as the most critical obstacle in the last few years' reports. Shrimp sales to US may slump The Vietnam Association of Seafood Exporters and Producers (VASEP) has forecast shrimp exports to the US to fall by 40% this year to US$638 million. It expects increased demand in the US in the second half of 2015 thanks to lower anti-dumping taxes and falling supply from India, Thailand, and Ecuador due to shrimp diseases, rising cost of farming and lower export prices. However, it said Vietnam is unlikely to benefit because of the dong's strength. Many other currencies have fallen against the greenback, making their products more attractive, it said. As a result of the devaluation, shrimp import prices in the US fell 20% in the first half of this year to US$10 per kilogramme. While economists have been calling for a devaluation of the dong by another 7-10%, the State Bank of Vietnam said it would not weaken the dong any more than the 2% by which it already has this year to protect the country's interests. Thus, though the prices of Vietnamese exports to the US have declined by US$1.5-2 per kilogramme this year, they remain US$1.5-2 higher than products from competitors like India, Indonesia, and Thailand. Vietnam's other two major importers, Japan and the EU, have also cut imports by 18.6% and 15.2% respectively and are looking for cheaper products. Exports to China and the Republic of Korea also fell sharply, with demand in the former market being hit by the recent crash in the stock market, which has caused belt-tightening among the middle class. By July 15 Vietnam's year-to-date shrimp exports to the US were worth a mere US$284.6 million, or down by more than half year-on-year. The association said the US, the biggest importer of the country's shrimp products, accounts for 20% of shrimp exports from Vietnam. Overall shrimp exports were down 28% to US$1.4 billion. Handbag sector told demand increasing The domestic handbag industry must increase investment and quality to meet the rising demand from importers under new bilateral and multilateral trade agreements, an industry official has said. Nguyen Duc Thuan, chairman of Vietnam Leather and Footwear Association (Lefaso), said "with these trade agreements, Vietnamese businesses are finding it hard to cope with the increase in orders from the US, EU and Japan." Famous handbag brands with production in China are now seeking cooperation contracts with Vietnamese businesses to do outsourcing work. "If domestic enterprises make investments to meet orders from large markets, expanded relations with major importers will not be difficult," Thuan said. Lefaso said that handbag export turnover could reach US$2.5-2.6 billion this year. Export turnover of handbags for the first seven months of the year reached US$1.67 billion, an increase of 15-17% compared to the beginning of the year, according to the Ministry of Industry and Trade's Light Industrial Department. The US was the key importer of handbags, wallets, purses, suitcases, hats and umbrellas in the first six months of the year, with total value of US$608 million, an increase of 15.7% compared to the same period last year. This was followed by the EU (US$384 million) and Japan (US$154 million), with a year-on-year increase of 16.7% and 12.6%, respectively. The Hoang Gia Garment Ltd Co, for example, said many orders had been received from foreign partners. The company has exported handbag products since 2008, with total export turnover so far of nearly US$5 million. This year, the company targets to reach a value of US$500,000, with half of that coming from its own designed and produced items. The company also does outsourcing work for brands such as Eastpak, Lammer, Bauer, Adidas, Nike and Redbook. Thai Binh Production and Investment Joint Stock Company (TBS Group) said it recently signed a contract worth US$10 million on producing luxury handbags for export to the US. To increase production, the company will build a production factory in Binh Duong Province with 3,000 workers. Nguyen Quoc Huy, marketing director of Xuan Phong Trading Joint Stock Co, said that a Japanese company wanted to become a partner in a contract worth more than US$1 million per year. Huy said the handbag sector has great potential, and that small-scale Vietnamese enterprises, even those with only 50 sewing machines, could also benefit from the race. Decree to guide enterprise law expected this month A decree to guide implementation of the Enterprise Law is expected to be issued this month, a Ministry of Planning and Investment official said amid complaints from businesses that the law's implementation is being up held due to lack of clarity. Tran Thi Hong Minh, director of the ministry's Agency for Business Registration, said the draft decree was submitted to the National Assembly for approval last May, two months before the law took effect. "The draft decree has gone through all essential steps, including examination and assessment, and it will be approved and issued this month," she said. While waiting for the circular to be issued to guide the implementation, some businesses have complained about the problems they face. Le Thanh Kinh, head of Le Nguyen Law Office in Ho Chi Minh City, told Thoi bao Kinh te Sai Gon (Saigon Times) that a number of documents his clients submitted for registering businesses in HCM City and Tien Giang Province have been returned, with officials saying they are waiting for guidance to implement the new law. Hong Van Phi Suu of the HCM City-based Avery Dennison Ltd. Co told Tuoi Tre (Youth) newspaper that he has been to the local Department of Planning and Investment many times to complete procedures for changing information about his company, but the job remains undone because of the lack of guidance for the new law. But Minh claimed that many provisions in the law do not need guidance and can be applied straightaway. In fact, the new law is designed to safeguard the business freedom of enterprises and has many conditions that are conducive for the establishment of new enterprises as well as for the operation of businesses, she said. But it would take time for businesses to get acquainted with them, she said. "The fact that more than 7,000 new companies were set up in July, within a month of the law taking effect, proves the openness of the new law." The figure represents an increase of 15% from June and 60% year-on-year. Some difficulties are bound to arise while both businesses and authorities are familiarising themselves with the law's provisions, she pointed out. To help businesses and authorities prepare for the new law, the Ministry of Planning and Investment had sent guiding documents to cities and provinces and provided training for more than 500 officials before the law took effect, she said. "We also visited some localities where there is high demand for registration of new businesses to directly guide and help tackle difficulties." Businesses and officials could seek help directly by telephone or email or through the ministry's website at www.mpi.gov.vn, she added. The 2014 Enterprise Law, which took effect on July 1 this year, represents a major step forward in liberalising the business environment, giving companies the right "to freely do business in areas not prohibited by law". With this being the guiding principle, the law removes the need to specify business activities in the business registration certificate. However, companies need to register their lines of business with competent authorities and make the same available to the National Information Gate of Enterprise Registration. The law also scraps the need for professional certificates, reduces the time taken to register a business. Another important provision is that companies can make more than one seals. The new seals have to be submitted to the National Business Registration Portal for public display on the National Information Gate of Enterprise Registration. Companies now also have the right to determine the form and content of their seal. Technology boosts coffee sector growth Applying advanced technology has helped Vietnam’s coffee sector develop sustainably, making the country the world’s second largest coffee producer, following Russia, and the top Robusta coffee exporter. The total coffee crop area is estimated at 641,700 hectares, 90% of which are in the Central Highlands region. Last year, the country shipped more than 1.6 million tonnes of coffee beans abroad for US$3.4 billion. It is also among the countries with the highest coffee productivity of 2.3-2.5 tonnes of beans every hectare, currently three times higher than the global average. To achieve these results, the Central Highlands Agriculture and Forestry Science Institute (CASI) have guided farmers to apply technological advances in farming and production. CASI Director Le Ngoc Bau said over the past decade, the institute has focused its resources on researching key cultivation methods for seedling production, growing techniques and low-yield tree improvement. The institute successfully created 13 Robusta varieties and three Arabica varieties by cross-breeding. The new Robusta varieties generate about 4.5-7 tonnes of beans per hectare every crop, 30% more productive than traditional varieties and with bigger beans (17-23 grams every 100 beans). Most importantly, they are capable of resisting leaf rust (Hemileia vastatrix), a disease that can cause serious damage to coffee trees. The varieties have been provided to local farmers to replace old trees, the director added. CASI has also developed and instructed the use of effective watering and fertilising methods, farming techniques and harvesting and processing technologies to farmers. In the years ahead, his institute will continue developing high-yield and high-quality varieties and more effective growing techniques while conducting in-depth studies on coffee diseases and pests to help Vietnam’s coffee sector develop sustainably, Bau noted. He also stressed the importance of connecting single households, producers and businesses to increase the competitiveness of Vietnamese coffee products in international markets. Vietnam unlocks e-commerce potential Everyday more Vietnamese businesses are starting to sell their products online and are joining the millions of entrepreneurs around the globe who have carved out a niche in the world of e-commerce. At its core, e-commerce refers to the purchase and sale of goods or services via computer networks, according to the Vietnam E-Commerce and Information Technology Agency (VECITA). E-commerce includes functions such as marketing, manufacturing, finance, selling, and negotiations and is very important technology for businesses to maintain competitiveness in this rapid period of integration, said VECITA Director Tran Huu Linh. However, to specifically meet the needs of small businesses for building their e-commerce online sales, VESITA has laid out plans to provide training for an estimated 25,000 participants over the next five years. The training courses will be held in Hanoi and Ho Chi Minh City with class sizes limited to 50 each Linh said, adding that 70% of the cost for each participant will be paid out of the state budget and the remainder by the participating business and/or individuals. A recent VECITA survey shows that the use of e-commerce is blooming in Vietnam with roughly 80.2% of consumers saying they have purchased at least one item shopping online over the past three months. In addition right at 93% of those same consumers reported in the survey that they plan to make at least one online purchase during the next six months the VECITA Director said. It’s fair to say that online shopping, though still in its infancy, is truly taking off with researchers concluding that Vietnam has a growth rate trajectory for online sales of 11.8%, which ranks second out of all nations in the Asia-Pacific region. Looking back a few years, it was very difficult to find a Vietnamese business online but now look at Lazada Vietnam with roughly 50% of sales carried out through m-commerce (mobile phones). In 2014, the figure was only 22%. M-commerce, a type of e-commerce, is very important to distinguish because the browsing and buying habits of someone who uses a computer and a mobile phone are decisively different and advertising must adjust accordingly. Traditional ‘bricks and mortar’ businesses that have been slow to embrace online shopping have suffered said VECITA Director Linh and by resisting investing in online channels, they will simply be unable to cater to the rapidly changing demands of savvy online shoppers. In the first six months of this year, at Lazada Vietnam, the number of orders through mobile phones increased 2.5 fold and its overall sales volume soared fourfold compared to the same period last year. Lazada Vietnam forecasts that its online shopping orders will further explode in the future and therefore plans to pour more investment in its m-commerce marketing strategy to cater to the convenience of its mobile consumers. Online shopping is all about the exciting challenge of looking at consumer buying behaviour that has paved the way for many small businesses to open online-only stores and operate competitively with traditional high street style shops. Even retailers that have been in business for decades that have built up a loyal customer base are feeling the effects of online shopping and are seeking ways to develop this new model of trading to get on board with the trend today. Satyajit Ghosh, head of Media at Unilever Vietnam, shared that his company has online sales plans for every market, with plans to use smartphone marketing as the spearhead to develop Internet applications and online advertisements. The training classes are a dynamic example of how the government is working hand in hand with business so that e-commerce can become a modern technology for any business in the country stressed VECITA Director Linh. Strong dollar improves car import profits Local auto import distrbutors could record high growth in the second half of the year as the US dollar has recently raised its value against other foreign currencies. The Japanese yen has dropped 13.2 per cent compared with the US dollar since the beginning of this year, and that difference may increase after the Federal Reserve System (FED) raises the interest rate in September. Moreover, the State Bank of Viet Nam (SBV) has committed to keep the exchange rate between the US dollar and the dong stable within a margin of 2 per cent. Such moves have strengthened the dong against the Japanese yen and benefited those who use the yen and US dollar to import cars. Truong Long Engineering and Auto Joint Stock Company (HTL) – a business that imports and distributes Japanese Hino trucks and auto parts – improved its combined profit margin from 9.2 per cent in the fourth quarter of last year to 11.1 per cent in the second quarter of this year. In the first six months, HTL recorded a net profit of VND62.3 billion ($2.86 million), six times the company's profit in the first half of last year. Its shares rose from VND26,000 on January 5 to VND93,000 at the end of yesterday's session. Two companies, TMT Motor Joint Stock Company (TMT) and Hoang Huy Investment Services Joint Stock Company (HHS), used US dollars to import completely built cars and improved their business results in the first half. TMT recorded a net profit of VND143 billion ($6.56 million) in the first half – seven times the company's figure last year. HHS earned a net profit of VND335.6 billion ($15.4 million) after the first six months, and its shares rose from VND17,600 at the beginning of this year to VND22,000 after yesterday. Viet Dragon Securities Corporation (VDSC) said HHS and TMT expected to achieve high sales growth in the last two quarters after HHS expanded the distribution of US international freight trucks and TMT started to distribute the Indian TATA travelling buses. According to the Viet Nam Auto Manufacturers' Association (VAMA), the auto sector's sales increased 58 per cent in the first half over last year's first half. This includes increases of 136 per cent, 75 per cent and 45 per cent for sales of trucks, business vehicles and travel buses, respectively. Viet Nam invests $155m overseas Viet Nam has poured a total of US$155 million into 47 projects in 22 countries and territories in the first six months of the year, according to the Ministry of Planning and Investment's Foreign Investment Agency. Laos remained the top investment destination for Viet Nam. It attracted nearly $54 million in four new projects and two existing projects with capital increases. The US ranked second. It attracted $50.8 million investment from Viet Nam, and was followed by Germany with $26.5 million. Viet Nam invested in mining, wholesale and retail services, automobile repair, financial service and insurance. Banking assets reach $302b The banking industry's total assets reached VND6,600 quadrillion (US$302 billion) by the end of June, according to statistics from the State Bank of Viet Nam. Total assets rose by 1.52 per cent, compared with the figure at the beginning of this year, but joint stock banks' assets declined by VND40 trillion ($1.834 billion) or 0.47 per cent. State-owned commercial banks' capital adequacy ratios were at 9.38 per cent and 13.1 per cent for joint stock banks. Thai week 2015 to open in Ha Noi The Thailand Trade Exhibition – Thailand Week 2015 – will take place from August 12 to 16 in the capital city. Nearly 200 Thai companies and agents will participate in the event, which will exhibit famous foods, household products, textiles, auto parts and other products from Thailand. Usa Wijarurn, the Thai ambassador to Viet Nam, said in a press briefing that the event would help connect customers to Thai products globally and in Viet Nam. Vinamilk to raise dairy cow herd to 24,000 The Vietnam Dairy Products Joint Stock Company (Vinamilk) kicked off construction on a project to raise dairy cows at Thong Nhat Farm in the central province of Thanh Hoa yesterday. The company will import 16,000 cows during the first stage and the rest will bring the entire number to 24,000 cows. According to the provincial People's Committee, the project covers 2,500ha in Ngoc Lac, Tho Xuan, Cam Thuy and Yen Dinh communes with a total investment of VND1.6 trillion ($73 million). It aims to produce 36 million litres of milk per year and will start operating in 2017. Vinamilk will build a milk processing factory here to reduce costs and provide 1,000 jobs for locals. Quang Nam gets 233-room Muong Thanh hotel The Muong Thanh Hotel Group opened a four-star hotel in Tam Ky, the central province's capital, yesterday, marking its second hotel in Quang Nam and 34th landmark in Viet Nam. The group said at the opening ceremony of the Grand Muong Thanh Hotel on August 10 that the hotel had 233 rooms and conference halls to accommodate more than 2,000 visitors at a time. The opening of the hotel has increased the number of hotels rooms in the province to 7,000. Earlier this year, the seven-storey Muong Thanh Hotel was opened in Cua Dai Beach in Hoi An City. Last September, the group opened the VND400-billion (US$19 million) Muong Thanh Da Nang hotel in Son Tra Peninsula in Da Nang. According to the latest reports, the Muong Thanh Group is developing 50 hotel projects to provide 6,000 rooms nationwide, which will account for 10 per cent of the country's tourist accommodation. Last year, the central Quang Nam Province also granted an investment licence to a five-star hotel chain for constructing a VND500-billion ($24 million) beach resort in Hoi An City. The province, which is home to the world heritage sites of Hoi An, My Son sanctuary and Cham Island biosphere reserve, has attracted 110 tourist projects since 1997. Investors have built nearly 100 international-standard hotels and resorts with 7,000 rooms, while the provincial tourism industry has created 15,000 jobs. Laos receives biggest share of Vietnam’s outbound investment in first half of 2015 Vietnamese investors channeled a huge part of their outbound investment in the first half of this year into the neighboring country of Laos, the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment said. In the first six months, the ministry licensed 47 overseas projects worth a total of US$155.4 million in 22 countries and territories, with the biggest share going to Laos, the FIA said in a report earlier this month. Vietnamese investors pledged four new projects and adjusted capital for two existing ones in Laos, with a total investment of $53.9 million in the six-month period, constituting nearly 35 percent of the total, according to the agency. The U.S. was the second biggest destination for Vietnamese businesses to invest abroad, with seven newly registered projects and one existing one, collectively worth $50.8 million, or 32.7 percent of the total figure. Vietnam’s investment in Germany accounted for 17 percent of the total, topping $26.5 million. There is no available data on Vietnam’s overseas investment in the first half of last year for comparison. But the FIA reported on the outbound investment between January and July 2014, which was $894 million, far greater than the figure in the six-month period of this year. As of the end of last year, Vietnam had 930 licensed overseas projects with a total capital of $19.78 billion, according to the FIA. On the other hand, Vietnam received $5.49 billion in foreign direct investment in the first six months of this year, a 19.8 percent decline from the same period last year, the FIA said in a separate report on June 26. Decrees on way for Enterprises and Investment laws The government has asked the Ministry of Planning and Investment (MPI) to work with the Office of the Government before September 15 on improving draft decrees guiding the Law on Enterprises and the Law on Investment. The two laws came into effect on July 1 but neither have official guidance as yet. Enterprises and investors therefore face a range of difficulties in registering their investment and the issue has attracted lots of concern in recent times. The Vietnam M&A Forum 2015, held on August 8 in Ho Chi Minh City, heard of problems facing enterprise due to the lack of guidance for the two laws. The absence of detail on legal business conditions was said to be an obstacle slowing down integration into other markets. Deputy Minister of Planning and Investment Dang Huy Dong said that the draft decrees on the two laws have been submitted to the Prime Minister for approval, but he considered they were in need of improvement. Their absence has not been an obstacle for integration into markets, he added, as everything has been proceeding smoothly. The new decrees are expected to clarify stipulations on investment in overseas countries, as well as announcements of information by companies in which the State holds 100 per cent and the management of State-owned enterprises that serve national defense and security. The government has also asked State agencies to review and evaluate the legal business conditions and report to the MPI before December 15. Foreign funds look positively at stock market Bloomberg has reported that leaders of Asia Frontier Capital and Coeli Asset Management have spoken highly of the prospects for Vietnam’s stock market given plans to remove foreign ownership limits on listed companies and its strengthening economy attracting foreign inflows. The VN-Index has climbed 11 per cent this year to August 7, close to its highest point in five years relative to the MSCI Southeast Asia Index, which has tumbled 12 per cent. Even after the gains the Vietnamese gauge is valued at an 18 percent discount to the MSCI regional measure. Foreign investors had purchased $223.1 million of the country’s stocks this year as at August 6. While plunging commodity prices and the prospect of higher US interest rates hammer shares from Indonesia to Thailand, frontier fund managers are more optimistic about the outlook for Vietnam, where the economy is growing at the fastest pace in two years and the government is preparing to allow foreigners to increase stakes in certain industries. “We are generally very positive about the market,” said Mr. Thomas Hugger, CEO at the Hong Kong-based Asia Frontier Capital. “We continue to buy Vietnamese stocks, since we see good economic figures coming out of Vietnam and at the same time the stock market is trading at a discount.” “The liberalization of foreign ownership limits is a hugely significant event for the development of Vietnamese capital markets,” said Mr. James Bannan, who runs the $130-million Frontier Markets Fund at Coeli in Sweden. “The next critical step in opening up the markets is for the government to sell down its ownership in a large number of listed companies. Governments are rarely good owners of companies.” He is continuing, he went on, to add Vietnamese stocks and prefers companies reliant upon consumer spending. Vinamilk kicks off Thanh Hoa dairy project On August 10 Vinamilk and the Thanh Hoa Provincial People’s Committee held a breaking ground ceremony for new high-tech dairy farms in the northern province’s Yen Dinh district. Total investment for the project is VND1.6 trillion ($75.1 million), with an area of 2,500 ha, of which 147 ha will be used to build farms and 1,600 ha will be for forage material for the cattle. The dairy farms have high technology and modern machinery, which will help optimize operations when the farms come into operation and will meet ISO 9001-2008 and GLOBAL GAP standards. After opening, expected in 2017, Vinamilk will import 16,000 cows from Australia in the first phase and perhaps 24,000 in the second phase. Average milk output is to reach 98,630 liters per day and more than 36 million liters per year. Speaking at the ceremony, General Director of Vinamilk Ms. Mai Kieu Lien said that the project will create jobs for local workers and transfer technology in the dairy industry to local farmers to achieve greater efficiency. In addition to eight large-scale farms, Vinamilk also currently has links to nearly 8,000 dairy farmers with 100,000 heads of cattle throughout the country, purchasing an average of about 650 tons of milk per day, creating jobs and building a stable and sustainable dairy industry in the country.   From 2015 it will invest more than VND2.4 trillion ($112.6 million) in high-tech dairy farms and aims to increase its heads of cattle to 140,000 - 160,000 by 2020. Vietcombank & Vinatex come together The Bank for Foreign Trade of Vietnam (Vietcombank) and the Vietnam National Textile and Garment Group (Vinatex) have held a signing ceremony for a comprehensive cooperation agreement. Speaking at the signing ceremony, Ms. Ho Thi Kim Thoa, Deputy Minister of Industry and Trade, appreciated the efforts of both sides to reach a conclusion to the agreement. She believes that Vietcombank will provide more concessional resources to help Vinatex sustain its production and business resources. The comprehensive cooperation agreement takes the relationship between the two to a new level, opening up the opportunity to work closely and use the advantages held by either side. According to Mr. Nghiem Xuan Thanh, Chairman of the Board at Vietcombank, the bank appreciates the role of Vinatex as a leader in Vietnam’s garment market, with exports estimated at $3.6 billion to the end of 2015 and targeted at $5 billion by 2020, and he committed to continuing to provide support. The collaboration is a step towards both sides preparing for the Trans-Pacific Partnership (TPP), in which textiles are set to benefit the most. 100 young entrepreneurs honored for excellent starting business The Vietnam Young Entrepreneurs Association in coordination with the Vietnam Youth Federation awarded 100 young entrepreneurs for their excellent starting a business in Hanoi on Sunday. The awards were granted for the first time this year to encourage the young businessmen with good performances in starting a business, create an emulation movement among them, and contribute in boosting production and trading. Right after being launched, the awards had attracted attention of nationwide young entrepreneurs. The organization board selected 100 most outstanding ones out of 250 nominations. The awardees yielded a revenue of nearly VND9 trillion (US$413 million) in 2014, submitted the state budget VND225 billion, and provided jobs to 16,000 workers. The top ten entrepreneurs posted a revenue of VND2,150 billion (US$98.56 million) and created 1,500 jobs. HCMC banks' bad debts at 5.49% As at the end of July the bad debts of banks in Ho Chi Minh City stood at VND62.2 trillion ($2.85 billion), or 5.49 per cent of total outstanding loans, down from 5.6 per cent at the end of June, according to Mr. Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam’s Ho Chi Minh City branch. If the bad debts of the three banks purchased by the central bank (VNCB, OceanBank, and GPBank) were to be excluded, the bad debts of banks in the city would total VND41.7 trillion ($1.91 billion), or 3.7 per cent. The target for handling bad debts of banks in Ho Chi Minh City is VND25.3 trillion ($1.15 billion), which includes VND3.1 trillion ($142.07 million) that banks must handle themselves and VND22.2 trillion ($1.01 billion) they are required to sell to the Vietnam Asset Management Company (VAMC). As the end of July banks located in Ho Chi Minh City had sold VND13.9 trillion ($637.03 million) to VAMC and have also nearly completed their own handling of bad debts. With such moves, Mr. Minh said, the bad debt ratio of banks in Ho Chi Minh City is expected to be lower than 3 per cent. Hai Phong Port to list The Hanoi Stock Exchange has approved the listing of Hai Phong Port, owned by the Hai Phong Joint Stock Company, with trading to start on August 12. Its stock code will be “PHP” with an opening price set at VND10,000 ($0.45). The number of shares is 326.96 million and its charter capital is VND3.27 trillion ($149.86 million). After listing the price is expected to rise to VND16,500 ($0.75), for capitalization of VND5.3 trillion ($247.2 million). In the first half of the year about 11.39 million tonnes of cargo was handled at the port, a 17.5 per cent increase year-on-year. Its revenue was almost VND837 billion ($38.35 million) and pre-tax profit some VND191 million ($8.75 million), an 11 per cent increase year-on-year. This year it expects to handle 23.5 million tones of cargo, 19 per cent more than last year. Total revenue is estimated at VND1.72 trillion ($78.8 million) with profit of VND380 billion ($17.4 million). State capital now accounts for 95 per cent, held by Vinalines. A Prime Ministerial decision in November 2014 allows Vinalines to continue to hold 65 to 75 per cent. SHF to divest from PetroVietnam Securities The Saigon - Hanoi Fund Management JSC (SHF) has registered to divest all of its shares in PetroVietnam Securities Incorporated (PSI). Over the last five years it had acquired 1,159,000 shares in PSI, for a 1.94 per cent stake. The transaction will be conducted from August 12 to September 10 via negotiations and matching order trading. PSI shares are now trading around VND8,000 ($0.37), making the value of the transaction VND9.3 billion ($426,312). The second quarter financial report of PSI put revenue at VND18 billion ($825,139), a fall of around 11 per cent compared to the second quarter of last year. Accumulated losses in the second quarter were VND7.3 billion ($334,632). Foreign investors rush to garment, textile field Many foreign firms have sped up investment in garment and textile industry in Vietnam recently to take advantage of opportunities from free trade agreements such as the Trans-Pacific Partnership (TPP) and VN-EU Free Trade Agreement. Japanese Consul General to HCMC Nakajima Satoshi said that many Japanese firms had made moves to invest in the garment and textile industry in Vietnam. Sixty percent of 500 Japanese businesses under a recent survey affirmed that they were working the plan to invest in Vietnam. Their most chosen areas comprise industrial zones in southern provinces of Long An, Binh Duong, Dong Nai and Tay ninh. The garment and textile field has also attracted businesses from South Korea, China, Hong Kong (China) and Taiwan (China). The representative of Long Hau Industrial Zone (IZ) in Long An said that it had received over 20 oversea companies coming to learn about investment there since early this year. Rach Bap and An Dien IZs in Binh Duong reported the number of foreign firms seeking investment opportunities top 100 since last year-end, it was only 20-30 from a year back. Of the 100 companies, 25 have promoted investment procedures and 20 have registered to invest in these IZs. The HCMC Enterprise Association said that many delegations of foreign firms had come to learn about Vietnam investment environment. Many wanted to build garment and textile plants about 50 kilometers from the center of the city. The Foreign Investment Agency under the Ministry of Planning and Investment reported FDI attraction drop in the first half this year but rocket in the garment and textile industry, which held US$1 billion out of the total capital of US$5.85 billion. The three largest projects included a US$600 million fibre plant in Dong Nai, a US$247 million project to make support industry items in Binh Duong, and a US$160.8 million fibre plant in Tay Ninh. Explaining why investors choose HCMC neighboring provinces, Mr. Nakajima Satoshis said that field surveys by Japanese trade promotion agencies in Vietnam showed that it is easier for them to find land species with area of from 20 hectares or larger each. Moreover, labor cost and rent are still low and do not increase quickly there. Binh Duong province People’s Committee said that they had built large industrial zones to attract big garment and textile projects, for instance, 300 hectare Trang Bang IZ. Another reason for foreign firms to flock into the garment and textile industry is because Vietnamese businesses have vacated their playing field. The country has over 2,000 companies operating in the industry. However most of them have just done outwork and exported. Their material sources mainly come from nations without incentives from free trade agreements. The garment and textile export turnover of Vietnam to the Eurasian Economic Union (EAEU) reached only US$300 million a year when the Vietnam-EAEU Free Trade Agreement was not signed, according to the Trade Promotion Department under the Ministry of Industry and Trade. It is expected to grow 50 percent in the first year after the agreement takes effect and 20 percent in the following year. In addition, once TPP and VN-EU FTA are signed, Vietnamese garment and textile products exported to the US and European nations will enjoy 0 percent tax rates instead of 10-30 percent as present. Experts: More supporting policies for M&A activity Experts at a forum in HCMC last week expressed optimism that merger and acquisition (M&A) activity would surge in the coming years owing to the availability of more supporting policies and regulations. M&A activity has surged in terms of both transaction and value this year, Bui Ngoc Hong, partner at LNT & Partners, told the Vietnam M&A Forum called “Countdown to the Next Market Boom.” John Ditty, deputy general director at KPMG Vietnam, shared Hong’s view, saying that the number of M&A deals in Vietnam in the first half of the year accounted for around 75% of last year’s total figure and is forecast to keep rising. According to Ditty, M&A transactions have expanded to more fields but a majority of deals have taken place in the areas of consumer goods, shopping mall, retail, production and real estate. Masataka “Sam” Yoshida, senior managing director at Japan’s Recof Corporation, said Japanese investors have got involved in M&A transactions in more fields. With a young and large population and growing market, Vietnam is luring more Japanese companies in the sectors of dining, retail, finance, fast-moving consumer goods and logistics. The Government’s strong commitement to further reforms, economic restructuring and market openness has given a boost to M&A transactions. An investment environment improvement and sustainable growth would make foreign investors more confident to step up their investments in this market, according to Ditty. Hong said more liberal regulations have made life easier for foreign investors. Previously, foreign firms were required to apply for acquiring a 1% stake at Vietnamese enterprises but new regulations allow them to own less than 49% of local firms. This encourages more foreign investors to buy into Vietnamese businesses via M&A deals. Vu Bang, chairman of the State Securities Commission, said M&A activity in Vietnam has been buoyed by structural reform, restructuring of the banking sector and Decree 60 on removal of the foreign ownership cap at most listed Vietnamese firms. Those favorable conditions will offer foreign companies more opportunities to invest in various potential fields including steel production and retail. A recovery of the stock market will also spur the equitization of State-owned enterprises (SOEs) and M&A activity in the coming years. According to investors and representatives of management agencies at the forum, recent policy changes have supported investment and business activities of enterprises and M&A activity. Deputy Minister of Planning and Investment Dang Huy Dong said M&A activity in Vietnam has been backed by the country’s economic restructuring and further opening of the local market to foreign investors. Dong also credited increasing M&A transactions to new important laws aimed to improve economic institutions like the law on public investment, the revised laws on investment, enterprise, investment and management of State capital at enterprises, housing and real estate trading business. In addition, Vietnam’s deeper international integration and equitization at SOEs are presenting new chances for more M&A deals, Dong added. Though SOE equitization is processing slower than expected, it has attracted M&A investors to the initial public offerings of big transport, telecom, consumer goods and food enterprises. Besides, the growing M&A market is promoted by the rising private sector as many businesses have outlined M&A deals as part of their strategies to boost restructuring to obtain sustainable growth. Importanlty, the Southeast Asian region has turned into an appealing destination for foreign investors who are seeking to bank on oppourunities in the regional market with more than 600 million consumers when the ASEAN community is launched at the end of this year. Vietnam Air, Techcombank ink partnership Vietnam Airlines and Techcombank have clinched a comprehensive partnership deal in Hanoi to strengthen competiveness and better serve their customers. Techcombank will give priorities to Vietnam Airlines when the latter uses its financial services and products such as loans, wage payments, cash management, international payments and foreign exchanges, among others. The two sides will cooperate to offer services to their clients by issuing co-branded cards and setting up points of sale (POS) and automated teller machines (ATM). Meanwhile, Vietnam Airlines will support Techcombank to provide banking products and services to its subsidiaries.  In addition, the airline will offer Techcombank priority services and products, including passenger and cargo transportation by air. Pham Viet Thanh, chairman of Vietnam Airlines, said the deal will enable the two businesses to enhance cooperation in the sectors of mutual benefits to spur their growth and bring more benefits to their customers. Shareholders yet to inject more money into iron firm Major shareholders of Thach Khe Iron Company (TIC) failed to contribute more money to raise the company’s chartered capital by July 15 as required by the Government. Previously, the company was set to have chartered capital of VND2.4 trillion (US$110.2 million) contributed by nine stakeholders. After the Government banned State corporations from investing in non-core businesses, the number of stakeholders dropped to five, including Vietnam National Coal and Mineral Industries Group (Vinacomin), Vietnam Steel Corporation and Bitexco. TIC was formed eight years ago to extract iron ores from Thach Khe mine in the north-central province of Ha Tinh, which is touted as the biggest iron mine in ASEAN. The project is now mired in difficulties as the existing shareholders contributed just 57.7% of TIC’s chartered capital. But some of them said they would not be able to pump more money into TIC as told by the Government. In a document sent to the Ministry of Industry and Trade, Dang Thuc Khang, chairman of Vietnam Steel Corporation, said the enterprise decided not to contribute more capital to TIC after considering its financial capability as well as the implementation process, efficiency and risks of the iron mine project. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR