BUSINESS IN BRIEF 16/9 Subaru recalls Forester, Impreza over wiring malfunction Subaru Forester and Impreza cars imported into Vietnam are being recalled due to a wiring malfunction. Vietnam Register said in a statement that 35 Forester SUVs in the Vietnamese market are being recalled to have their wiring in the steering column tested and fixed free of charge. The vehicles subject to the recall were manufactured in 2013 and 2014. Motor Image Vietnam Co., Ltd, the importer and distributor of Subaru cars in Vietnam, is in charge of recalling, testing and repairing the defect. According to Fuji Heavy Industries (FHI), the producer of Subaru-brand cars, the recall results from a potential friction between a wire harness and a metal plate in the steering column, which may lead to a short circuit and disable control of the wipers and horn. In some cases, power supply for the engine control unit is disrupted. In addition to the Forester, Impreza models of Subaru manufactured between 2012 and 2014 are included in the recall campaign. However, the owners of those Subaru cars not distributed by Motor Image can still get support from the company. The recall program runs until October 30. The defect of each car will be inspected and repaired in 0.5-7.3 hours. T&T picked as strategic investor of transport hospital The Ministry of Transport has chosen T&T Group to negotiate a deal for a strategic stake at the Central Transport Hospital in Dong Da District in Hanoi. The firm will hold talks with the ministry to buy 30% of the hospital’s shares before an initial public offering (IPO) slated for October. Bao Son Group and T&T Group were the only two to register to bid for the strategic stake at the Central Transport Hospital, the first public service unit under the management of the ministry to go public. Those eligible to bid must be active in the field of health care or health services with equity in their latest audited financial statements no less than VND200 billion (US$8.8 million) and with no accumulated losses; or must have minimum equity of VND1 trillion if they operate in other sectors. According to the Ministry of Transport, T&T Group is chosen as it meets all requirements. In addition, the firm has pledged to retain existing employees, and buy additional shares issued by the hospital to raise its chartered capital from VND158 billion to VND430 billion. The ministry has decided a price of VND10,000 per share, equivalent to the IPO starting price, to negotiate with T&T Group for the share acquisition. The State is expected to hold a 30% stake in the hospital after it goes public. T&T Group may become the biggest shareholder at the hospital if it owns a 30% stake and acquires more shares at the IPO auction or from other investors to scale up its holding to 65%. The Central Transport Hospital is the first among a dozen of public service units under the umbrella of the transport ministry to be equitized. The hospital’s major source of revenue comes from the patients having health insurance cards. This hospital has put into use a seven-storey building worth US$15 million funded by official development assistance (ODA) loans in its premises on 21,000 square meters in Hanoi’s Dong Da District. SNP to build ICD to ease overload at Cai Lai Port Saigon Newport Corporation (SNP) will develop an inland clearance depot (ICD) with an annual capacity of up to 150,000 TEUs to cope with rising overload at Cat Lai Port in HCMC. Earlier this month, SNP got approval from the Ministry of Transport to build the Tan Cang-Nhon Trach facility in an area of more than 11 hectares in Phu Thach Commune in the southern province of Dong Nai. The new facility will comprise 3.54 hectares for occupied containers, 1.32 hectares for empty containers, a warehouse covering 1.38 hectares and 0.2 hectare for offices. Customs clearance procedures will be done at the inland clearance depot. The ministry noted SNP would be only licensed to open the new depot after it had completed all relevant procedures. In May this year, SNP struck an agreement to lease facilities at Phu Huu Port in HCMC’s District 9 for cargo storage to reduce backlogs at Cat Lai Port in District 2. The corporation will use the new venue for handling containerized and bulk cargo and invest in equipment upgrades at Phu Huu for handling vessels of 30,000-40,000 DWT later this year. SNP will build 280 meters of pier at Phu Huu and put it into use next year. New facilities at Phu Huu and the new depot will help Cat Lai Port deal with growing overload, which results in heavy traffic congestion on the roads around the port. Condo management boards required to take training courses Members of management boards at apartment buildings nationwide would have to take training courses on knowledge and skills for managing such buildings as per a draft rule prepared by the Ministry of Construction. The Ministry of Construction has drafted a circular requiring apartment building management boards to undergo training. The draft has attracted mixed reactions at a meeting held last Friday in HCMC to collect comments. Under the draft, members of apartment building management boards or owners of apartments must take courses on condo management to get certificates of attendance from the ministry. The certificate is valid for five years. Representatives of several condo management boards in HCMC told the meeting that it would be difficult to implement the regulation because many condo buildings do not even have management boards as no one is interested in board membership. Phan Tu Lap, a member of the management board of Hung Vuong condo building in District 5, described the regulation as unnecessary because members of condo management boards are all elected by residents. Meanwhile, some threw support behind the regulation, saying people who manage apartment buildings should be trained as their knowledge of good management are vital for the well-being of apartment owners. Management boards should be equipped with knowledge of managing financial matters, handling contracts, operating condo apartments, managing public and private places, and fire prevention and fighting, they said. Many people showed disagreement over the five-year validity of the certificate, saying it would be a waste of time if board members take refresher courses in every five years. “Members of condo management boards have their own jobs and do not have much time for training, and if authorities do not manage this issue well, people could get certificates under the counter,” a member of a condo management board said. Nguyen Manh Khoi, deputy head of the Housing and Real Estate Market Management Department, said the circular drafting committee would take those comments into account to refine the draft. Japanese firms keen on healthcare sector Many Japanese healthcare firms have expressed interest in the Vietnamese market as Vietnamese people with rising incomes prefer quality healthcare, according to the HCMC Office of the Japan External Trade Organization (JETRO). Electricity, electronics and engineering in Vietnam have attracted great attention of Japanese investors over the years. Now the Japanese government promotes the healthcare sector, Hirotaka Yasuzumi, managing director of the office, told local media after the opening ceremony of an exhibition of healthy Japanese living in HCMC on September 13. As the economy of Vietnam is growing, the Vietnamese have developed new habits that expose them to health risks. Therefore, Japanese enterprises want to introduce healthcare services including care for elderly people. According to Hirotaka Yasuzumi, healthcare enterprises of Japan entered Vietnam ten years ago but introduced their products in a haphazard way. As a result, the Japanese government wants to promote those enterprises wishing to do business in Vietnam in a more organized way. Thirty-five Japanese enterprises producing childcare, beauty, healthcare, drink and food products attended the three-day exhibition on Japanese living that ended on September 13. Some of those products have been distributed in Vietnam like Omron and Tanita. According to Hirotaka Yasuzumi, in addition to the healthcare sector, food and agriculture have attracted the attention of Japanese businesses, which have technology and knowhow to produce safe farm items at reasonable prices. Around 20 Japanese enterprises are now active the agriculture sector in Vietnam and more are expected to come in the future. Hirotaka Yasuzumi said if the Trans-Pacific Partnership (TPP) was signed, Vietnam’s textile-garment sector would grow attractive to foreign investors, including from Japan. Binh Thuan eyes more Cambodian and Lao tourists A tourism exhibition was organized over the weekend in Phan Thiet City, Binh Thuan Province to feature the development triangle of Vietnam, Laos and Cambodia. Speaking at the “Three Nations, One Destination” exhibition on Friday and Saturday, Binh Thuan chairman Le Tien Phuong said the exhibition introduced the potential of each locality and region to call for investments and provide an opportunity for investors and travel agencies to build business links. Binh Thuan, which looks to lure 4.5 million tourists this year, has been calling for investors to get involved in a number of major tourism projects including luxury resorts, golf courses, recreational facilities and services like casino, cruise travel, tourism healthcare, sports on sand dunes and water sports. Visothy So, Under Secretary of State of the Cambodia Ministry of Tourism, told the Daily on the sidelines of the event that last year saw about one million Vietnamese coming to Cambodia for travel while around 300,000 Cambodians visited Vietnam. He said northeastern Cambodia holds lots of tourism growth potential thanks to natural heritage landscapes. With convenient transportation between the two countries, Cambodia expects to more Vietnamese to come this year. He said tourism promotion activities among the three countries would help attract more Cambodians to Vietnam, especially to Binh Thuan which is home to hundreds of beautiful beach resorts. As part of the program, the province on Saturday held a conference on cooperation among provinces in Vietnam’s central coastal, southeastern and Central Highlands regions as well as cooperation with provinces in southern Laos and northeastern Cambodia. The event was attended by 500 representatives of State agencies, businesses, and domestic and foreign tourism organizations, among others. Outbound tours sell well at travel fair Many visitors to the International Travel Expo (ITE) 2015 in HCMC’s District 7 have placed deposits to purchase tours, especially those to foreign countries, according to participating travel firms. The first two days of the September 10-12 travel fair were designed for domestic and foreign businesses to find partners and the final day for the public. However, tourism firms said many individuals came to the event in the first two days to explore tour programs on offer. On the final day the fair became more crowded. “Our revenue amounted to VND1 billion on September 13, as tour buyers placed deposits. Sales are expected to rise on September 14,” Tran Thi Viet Huong, Vietravel’s communications manger, told the Daily Saturday morning. Besides Vietravel, other travel firms said many customers such as young and high-income people placed deposits or even made full payments for tours to local and overseas destinations. “Some asked for information about tours to the northwestern region and a large number of visitors showed interest in tours to the U.S.,” said Tran Thi Bao Thu, marketing and communications director of Fiditour JSC. She added the company rolled out more promotional products at the event thanks to high demand. Huong of Vietravel said three-fourths of sales revenue at the travel fair came from tours to the U.S. and the Europe as the enterprise took 40% off prices of certain tours to lure buyers. At the booth of T.S.T Tourism Service and Commercial Corporation, many people were seen waiting to place deposits for package tours. Some of them luckily bought tours to Thailand and Malaysia at a price of less than VND4 million each.     Tourism promotion agencies of Malaysia, Thailand, South Korea and the Philippines held many interesting activities and attracted several people. Though many Vietnamese cancelled tours to South Korea due to fears of the Middle East Respiratory Syndrome (MERS) there, the number of Vietnamese visitors to South Korea had reached over 101,000 as of August 17, up 7% year-on-year. DATC raises chartered capital to buy more debt The Ministry of Finance has issued a circular allowing Vietnam Debt and Asset Trading Company (DATC), a debt trading arm of the ministry, to add VND3.6 trillion (US$160 million) to raise its chartered capital to VND6 trillion so that it can handle more bad debt. DATC has proposed increasing its chartered capital for years to deal with huge amounts of bad debt. Under Circular No. 135/2015/TT-BTC, which will take effect on November 1 this year, the enterprise’s activities such as purchasing bad debt and dealing with collateral will not change remarkably. Since its establishment, DATC has focused on settlements of bad debt owed by State-owned enterprises (SOEs) in the pre- and post-equitization processes. Under the circular, DATC can trade bad debts with credit institutions. Commercial banks will be able to sell bad debts at market prices to DATC and the latter can use cash to make payments. The ministry said on its website that DATC had helped 33 State-owned businesses settle bad debts and assets in the first six months of this year. The firm recovered VND62.4 billion of debt, a five-fold increase against the same period last year. DATC contributed VND68.3 billion to the State budget in January-June, four times higher than the same period last year. The company has been coordinating with courts to boost the handling of corporate debtors being sued. DATC has coordinated closely with steering committees for enterprise reform and development at ministries and agencies, local authorities and firms to take over the debts and assets excluded from the corporate value of enterprises concerned. It has dealt with bad debts of a number of big SOEs like Shipbuilding Industry Corporation (SBIC), Vietnam National Shipping Lines (Vinalines) and Haprocimex JSC.  In the first six months of 2015, DATC divested capital from 11 of 24 SOEs. DATC’s leaders said the company had boosted bad debt purchases from banks this year but the process has been slow because some banks have complicated procedures for sale of bad debt. More Korea satellite companies to enter Vietnam Investment expansions by South Korea’s big companies in Vietnam will help attract more Korean satellite companies and components suppliers to this market, said Martin Tricaud, President and CEO at HSBC in Korea. Tricaud told local reporters in HCMC on September 10 that the Vietnamese Government has shifted its foreign direct investment (FDI) attraction policy from labor-intensive industries to high value-added industries and more South Korean investors are turning out high value-added items to bank on the policy. Samsung is a case in point. The group started to invest in Vietnam in 1995 and is now the biggest investor in Vietnam with total investment pledges of up to US$11.3 billion. Last May, LG opened a US$1.5-billion factory to manufacture and assemble household appliances at Trang Due Industrial Park in the northern city of Haiphong. This is expected to become LG’s largest production base in Southeast Asia. Tricaud said as the number of satellite companies and component suppliers from Korea in Vietnam is growing as large Korean companies in this market are expanding investments. “We expect that this trend will continue,” he said. More Korean investments are flowing into retail and wholesale and the services sectors in Vietnam as these sectors have been opened wider to foreign investors. Pham Hong Hai, CEO of HSBC Vietnam, said in addition to investment flows from South Korea’s small and medium companies in Vietnam, South Korean investments in the retail sector are forecast to rise as Vietnam with a population of 92 million people is an attractive market for Korean-made consumer goods. When asked if increasing investments of Korean small and medium companies will prevent local firms from joining the supply chains of big companies, Hai said Korean investors welcome suppliers of other countries. Hai called for Vietnamese companies to ensure product quality, stable prices and delivery time so as to join the supply chains of Korea’s groups. Local firms have an advantage in providing legal consultation for Korean enterprises. Tricaud said Vietnam is an attractive investment destination for companies from Korea thanks to tax incentives, stable economic growth and skilled young workers. A recent survey conducted by the Korea International Trade Association (KITA) showed 49% of respondents picked Vietnam as their most preferred investment destination. Vietnam was the fourth biggest offshore destination for Korean investments last year with total registered capital of US$7.3 billion. Around 4,000 Korean enterprises are doing business in Vietnam. In the January-August period, South Korea was Vietnam’s biggest foreign investor with combined investment pledges of US$5.26 billion, accounting 39.5% of Vietnam’s total foreign direct investment approvals, according to the Foreign Investment Agency. Two-way trade between Vietnam and South Korea neared US$30 billion last year, with Vietnam importing nearly US$22 billion worth of products. The two countries expect their bilateral free trade agreement will push the bilateral trade to US$70 billion in 2020. ACV submits Long Thanh Airport plans The Airport Corporation of Viet Nam (ACV) has submitted to the transport ministry two plans outlining the research report on the Long Thanh International Airport Project's first phase feasibility. The first plan, estimated to cost US$35.1 million, will be divided into two parts. The first part will include data collection, field work, calculation of the air traffic and distribution of the capacity between Long Thanh and Tan Son Nhat airports, as well as the project's scale and division of investment into periods, and finance and valuation on refund possibilities. The second part will divide the project into items of work and set up the feasible research report. Chairman of the ACV Nguyen Ngoc Hung said the funds for the report would be mobilised from the ACV's development fund. It's scheduled to be carried out in 18 months. The second plan, costing $6.9 million, will set up the concept design. It's expected to be funded by the Japan International Co-operation Agency (JICA) and will be carried out in 15 months. The ACV has also asked the transport ministry to allow it to organise competitive examinations to select the design for the airport's terminal and air traffic control tower. At the same time, it will also select the contractor to prepare up a feasible research report. Hung asked the government to allow the ACV to implement the designs and begin construction right after the feasible research report was approved. The airport project was approved by the National Assembly in June this year. Once it's completed, the airport will be able to handle 100 million passengers and five million tonnes of freight a year. The construction is scheduled to begin in 2019 and the airport is likely to become operational by 2023. As per the plan, the project has been divided into three phases. The first phase, expected to be completed in 2025, will allow the airport to handle 25 million passengers and 1.2 million tonnes of freight a year, and will include the construction of a runway, a terminal and supporting infrastructure. The second phase is set to raise the airport's capacity to handle 50 million passengers and 1.5 million tonnes of freight a year. After the airport's third phase is completed, it will have a yearly capacity of handling 100 million passengers and five million tonnes of cargo. The total cost of the three-phase project is estimated to be VND336.63 trillion (US$14.95 billion). The project's funding is expected to come from the state budget, the Official Development Assistance (ODA), corporate investment and public–private partnership, (PPP) besides other resources. Seven additional investment projects roll into Binh Thuan Seven additional investment projects will be carried out in the central province of Binh Thuan, as agreed between local authorities and investors at a promotion conference held in the locality on September 12. Most of the large-scale projects focus on the province’s strengths, including the Hoa Thang 1 Wind Power Plant, a solar power plant, the Vietnam-Cambodia friendship tourism site and a milk processing plant. Chairman of the provincial People’s Committee Le Tien Phuong affirmed that Binh Thuan is one of the most attractive destinations for investors in Vietnam, especially for tourism and the energy industry, given the favourable investment climate in the locality. He highlighted that thanks to the Government’s direction as well as concerted efforts made by the provincial authorities and business community, the local economy has continued to grow by over 10 percent annually. At the conference, participants discussed preferential policies, the investment climate and feasible projects with provincial leaders while recommending solutions to tackle difficulties and facilitate enterprises to land projects in the province. Binh Thuan is now home to 1,156 projects, 104 of which are foreign-invested projects from 24 countries and territories with total registered capital of nearly 1.7 billion USD. HCM City, Cuba exchange experience on financial management Vice Chairman of the Ho Chi Minh City People’s Committee Tat Thanh Cang received a delegation from Cuba’s Ministry of Finance and Prices on September 14. Cang briefed the guest of the city’s financial management structure, which is in compliance with the country’s general system and with the Law on State Budget and the Law on Public Investment. Representative of the municipal Department of Finance introduced some points on financial management model while sharing experience on building financial self-reliance mechanism, ways of attracting foreign direct investment, cooperation and investment programmes, calling for investments and establishing finance companies. Cuban Minister of Finance and Prices Olina Pedraza Rodriguez said HCM City’s experience on financial management would be useful for Cuba. Host and guest discussed issues on financial mechanism and policies and ways of drawing investment in infrastructure, specially traffic infrastructure. Vietnam, Cyprus spotlight trade, investment ties Trade and investment have been defined as the cornerstone of the relationship between Vietnam and Cyprus in the coming time during Deputy Foreign Minister Bui Thanh Son’s Cyprus working visit on September 11-12. At his meeting with the host country’s Foreign Minister Ioannis Kasoulides, Son delivered the country’s wish to broaden friendship and cooperation with Cyprus, given a lot of untapped potential that could bring mutual benefits for development. Minister Ioannis Kasoulides said his country is interested in newly emerging markets like Vietnam and wants to establish result-oriented partnership. To realise these wishes, both sides agreed to increase visit exchanges and take measures facilitating business contacts and connectivity in such areas as labour, trade, tourism service and forest product processing. Son thanked Cyprus for its close coordination in settling properly the issues pertaining to Vietnamese labourers working in Cyprus, expressing his hope that negotiations on a related agreement would be launched and signed soon to provide a legal foundation for increased cooperation in the field. The Cyprus side confirmed that their Ministry of Labour and Social Welfare and Insurance is ready to work together with the Ministry of Labour, Invalids and Social Affairs in facilitating bilateral long-term labour cooperation. It handed over a draft agreement on double taxation avoidance to the Vietnamese side and expressed hope for the early signing of the document in 2015 as it could come up with a legal ground to accelerate trade between the two countries in the years to come. Cyprus’s relevant agencies showed their support for Vietnam and the European Union signing a free trade agreement since they believed the document would contribute to boosting economic and trade ties between Vietnam and the EU generally and Cyprus in particular. The two sides hailed bilateral collaboration in the organisation of culture, trade and investment promotion activities marking the 40th anniversary of bilateral diplomatic ties and pledged to increase the work. They discussed regional and international issues of mutual concerns. Regarding the East Sea issue, the Cyprus side showed its support for Vietnam’s approaches in addressing dispute by peaceful means in compliance with international law, especially the 1982 Convention on the Law of the Sea. During the visit, Minister Ioannis Kasoulides and Deputy Minister Son inked an agreement on exempting visa for holders of diplomatic and official passports. Thai garment, footwear firms boost investment in Vietnam Thai businesses are promoting investment in Vietnam in sectors that are expected to benefit from free trade agreements, including garment-textile and footwear. In the near future, 40 Thai enterprises will focus investments on clothing, apparel material and fashion, leatherware through direct investment and cooperation with Vietnamese partners. Commenting on investment advantages in Vietnam, a representative from the Department of International Trade Promotion under the Thai Ministry of Commerce said Thailand has yet to join a number of free trade agreements. As such, the hunt for investment and development opportunities in Vietnam is critical to increase their competitiveness. This is also considered a vital factor given many countries have signed free trade agreements, including Vietnam, and are moving to eliminate tariffs. Choosing Vietnam as a primary investment destination means Thai firms will optimise opportunities presented by import tariff reductions in trade pacts. Moreover, Vietnam boasts abundant labour resources, skilled workers and plentiful land areas, especially in the southeast and western regions. The Vietnam Textile and Garment Association (VTGA) said Vietnam and Thailand share similarities in terms of science-technology and consumer tastes. Thai firms are strong in weaving and designing and the nations’ bilateral cooperation will hence enable the two to reduce the amount of imported apparel materials while increasing product value and competitiveness. As Vietnam has signed a number of free trade pacts in recent years, many garment businesses from the Republic of Korea, Japan, and China are shifting their investments to the Southeast Asian country. Cooperation in the field between Vietnam and Thailand is significant, particularly in preparation for the establishment of the ASEAN Economics Community (AEC) by the end of this year. Representatives from the Thai Government said in addition to enhancing cooperation between the two business communities, Thailand hopes to receive Vietnamese workers, raising the current 50,000 to 500,000 in the coming time. Construction begins on industrial, urban complex in Binh Phuoc Construction began on an industrial and urban complex in Chon Thanh district, the southern province of Binh Phuoc on September 14. The Becamex – Binh Phuoc Industrial and Urban Complex has a total investment of roughly 20 trillion VND (910 million USD) by the Becamex – Binh Phuoc Infrastructure Development Joint Stock Company, a joint venture between the Becamex Industrial Development and Investment Corporation (IDC), the Song Be Rubber Company and others. It will cover more than 4,633 hectares in Chon Thanh town and the three communes of Minh Thanh, Thanh Tam and Nha Bich in Chon Thanh district. The industrial zone will account for more than 2,448 hectares and the remaining will be dedicated to residential and resettlement areas. The project is expected to create jobs for 200,000 local labourers, improving local living conditions and infrastructure facilities. General Director of the Becamex IDC Nguyen Van Hung said the investment aims to contribute to the stable and sustainable development of the province as well as the key southern economic zone. MOIT sets export turnover target for 2016 The Ministry of Industry and Trade (MOIT) has set an export turnover target of 181.5 billion USD for 2016, a 10 percent increase compared with 2015. The growth rate has been set in the ministry's report on development targets for industrial production and trade activities in 2016. In the first eight months of this year, the export turnover touched 106.3 billion USD, which was lowered than expected due to a strong decrease in the demand for agricultural, seafood and mineral products. The foreign direct investment (FDI) sector has been the main momentum for growth, with an export turnover of 74.6 billion USD, up 14.7 percent, while Vietnamese firms contributed 31.7 billion USD, down 2.3 percent. These figures show that local firms still face difficulties. The ministry said the country should continue to promote market expansion and exports to achieve the target set for 2016. MOIT will focus on diversifying markets to reduce the risks from depending on some markets, while continuing the negotiations to penetrate new markets. Vietnamese agricultural and seafood products will need tax reduction and the removal of unnecessary trade and technical barriers to get favourable conditions for exports. The ministry will raise awareness on the signed free trade agreements in specific sectors. In addition, it will provide information about the negotiations on other FTAs to help businesses take advantage of the opportunities for higher export turnover. It said the relevant agencies should implement administrative reforms and improve the business environment to facilitate firms' production, trade and exports. Exporters have been asked to actively co-operate with associations as well as large firms in the processing sector and FDI companies to exchange information on exports. This could help to quickly resolve the difficulties faced by domestic businesses. The ministry had earlier set an export target of 160.3 billion USD for 2015. Binh Thuan keen to develop tourism Binh Thuan’s Tourism Association worked with an international delegation of travel agencies and reporters on September 13 in a bid to promote the central province’s popular services and products. Pristine beaches in Mui Ne and traditional festivals, such as Nghinh Ong and Kate, have long drawn visitors. In the past eight months, Binh Thuan welcomed 2.6 million tourists including 294,000 foreign arrivals, a 10 percent annual climb. The province is currently home to 289 facilities that offer almost 11,000 rooms. Foreign guests commented on local improvements in transportation, proposing the construction of new routes to shorten travelling time to and from Ho Chi Minh City as well as diversifying modes of transport. They also urged the expeditious opening of the Phan Thiet airport. The delegation, grouping travel agencies and reporters from Russia, the UK, India and the Republic of Korea, among others, toured famous destinations and experienced tourism services in Binh Thuan from September 12-14.- Services lift HCM City growth The service industry accounts for nearly 60 percent of HCM City's economy now, exceeding the target of 57 percent - and four percentage points higher than in 2010. Investment in the sector has risen by 73.2 per cent since 2010. According to the municipal People's Committee, from 2011- 15 the sector's average revenue grew by 11.2 percent a year and the aim is to increase the proportion of high value-added services. Finance, banking, insurance and trade, transportation and logistics account for more than 34 percent of the city's economic output. Science and technology consultancy is the fastest growing service, achieving annual growth of nearly 17 percent in recent years compared with 5.4 percent in 2006 –10. The sector accounts for 9.5 percent of total services turnover thanks to intensive efforts by the city to establish research – production – market links and create programmes to bolster domestic research, design, manufacture and transfer capability to replace import of technology and products. The service that is growing at the second fastest clip is information and communications technology (16.5 percent). It accounts for 5.8 percent of services sales. The city has firmly established its leading position and brand in software programming and outsourcing in the country. In third place is healthcare, which is growing at a yearly rate of 14.8 percent, and makes up 5.7 percent of the services sector. Transport – ports – logistics ranks fourth in growth (around 13 percent) but is the third biggest service segment - accounting for 15.9 per cent of revenues - benefiting greatly from large investment in infrastructure and many new key highways. Quang Ninh promotes tourism in UK The northern province of Quang Ninh, home to the World Natural Heritage Ha Long Bay, organised numerous activities to promote its tourism in the UK within the framework of the Vietnam Discovery event from September 10-13. At a seminar on Quang Ninh tourism, Vietnamese Ambassador to the UK and North Ireland Nguyen Van Thao emphasised that Quang Ninh holds huge competitive advantage to intensify tourism cooperation with UK partners. Visiting UK enterprises will also discover many business and investment opportunities. He affirmed that UK tourists are an important bridge to foster cooperation and exchange between the two sides. Permanent Vice Chairman of the provincial People’s Committee Dang Huy Hau said that Quang Ninh recently developed several new tourism varieties to promote its UNESCO-recognised natural heritage and other beautiful sites. According to him, half of the 150,000 UK visitors to Vietnam each year come to Quang Ninh and Ha Long Bay. However, potential for cooperation in this field has yet to be fully tapped, he added. He affirmed that Quang Ninh continues simplifying administrative procedures and applying preferential policies in order to attract more UK investors and tourists. At the seminar, the provincial People’s Committee signed Memoranda of Understanding (MoUs) on tourism promotion with the Vietnamese Students’ Association and the Vietnamese Association in the UK, and on tourism development connectivity with the Vietnamese Airlines representative office in the UK and the Thien Minh group. Quang Ninh also organised a booth to promote its tourism at the Vietnam Festival event near the Tower Bridge on September 12 and 13.- First safe farm produce market in HCM City A market selling Vietnamese products and safe farm produce was held in Ho Chi Minh City for the first time on September 12-13 to facilitate linkages between local businesses. The event was jointly organised by the Business Association of High-Quality Vietnamese Goods and the Business Research and Support Agency (BSA). The market provided a chance for both retailers and customers to get their hands on local specialties such as Dong Thap simmered fish, Ninh Thuan grapefruits, and Ben Tre coconuts. Alongside farm produce, high-quality Vietnamese products such as Tam Lan tea, Tan Quang Minh soft drink, Vinh Thuan flour, and SG Anpha swallow’s nest were available at the market. President of the Business Association of High-Quality Vietnamese Goods Vu Kim Hanh said the fair is one of the activities to help local businesses access the market and set up links between producers and retailers in the city. It also helps the business community build strategy to expand the distribution network, seek distributors and get feedbacks from customers, thus securing their market share and increasing competitiveness in the domestic market, she added.- Vietnam, Japan foster agricultural cooperation Besides new official development assistance (ODA) commitments, Vietnam and Japan expect to sign a number of important cooperation deals in agriculture during Party General Secretary Nguyen Phu Trong’s visit to Japan on September 15-18. The thriving Vietnam-Japan relations have reached a Strategic Partnership for Peace and Prosperity in Asia as from March 2014. Japan is Vietnam’s leading economic partner with a total investment of nearly US$38 billion and a bilateral trade value of nearly US$28 billion. It is also Vietnam’s largest ODA donor country. Atsusuke Kawada, chief representative of the Japan External Trade Organisation (JETRO) said the number of Japanese investment projects into Vietnam has increased despite a decline in investment capital. According to the Foreign Investment Agency under the Ministry of Planning and Investment, Japan is the second biggest foreign investor in Vietnam with 2,661 valid projects worth US$37.7 billion. Japanese investors and local government leaders have held many meetings in recent times. It’s noteworthy that more Japanese investors are keen on investing in agriculture, especially hi-tech agriculture. Yasuzumi Hirotaka, JETRO managing director in HCM City, stressed the special attention paid by Japanese businesses to Vietnam’s agriculture, saying that Japanese firms have carefully moved towards comprehensive cooperation with Vietnamese partners. A representative from Fujitsu Group, which supplies Akisai Cloud services in agricultural management, said there is a huge potential for agricultural cooperation between Japanese and Vietnamese businesses such as management technology, processing, packing and distribution. However, to turn the opportunity into reality requires strong reform in investment environment, particularly administration procedures, customs, tax, and human resources, he said. Vietnam should give out clear messages in agricultural investment policy, particularly incentives for investors in the sector, he added. Bilateral agricultural cooperation has witnessed significant breakthroughs in recent times. Vietnam’s Ministry of Agriculture and Rural Development (MARD) signed a cooperation agreement with Japan’s Ministry of Agriculture, Forestry and Fisheries and Ibaraki Prefecture in March 2014. The two countries are developing a medium-and long-term vision on agricultural cooperation to further enhance bilateral ties. Currency stabilises following devaluation In the last two weeks the dong-dollar exchange rate has stabilised after a brief frisson caused by the State Bank of Vietnam (SBV)'s decision to depreciate the currency after China did so. The return to calm has been attributed to the SBV's announcement it would not adjust the forex rate until at least early 2016. But many remain chary, fearing renewed pressure if the US raises its interest rates this month, or the yuan depreciates further. Many analysts, however, have dismissed fears the FED would hike interest rates sharply since the sudden and sharp depreciation of the yuan has made the US cautious about raising interest rates soon. Besides, the US's inflation rate is low, and most countries around the world are trying to loosen monetary policy to boost their economies, they point out. Even if the US adjusts interest rates, the change would be minor, meaning there would not be much pressure to depreciate the dong. Bankers also reassured that the central bank's recent adjustments had given the exchange rate enough room to cope with unfavourable changes in both the domestic and overseas markets. With its plentiful foreign exchange reserves, the central bank would be ready to sell the greenback to support the dong and keep it within a permissible band, they said. A Viet Capital Securities analyst said the SBV had so far this year sold around US$3 billion to support the Vietnamese currency. The bankers said though the country's balance of payments was slightly hit in the first eight months because exports were tepid, the central bank would be able to meet the demand for dollars this year and even in the first quarter of next year. The country has foreign exchange reserves of around US$37 billion and 10 tonnes of physical gold. The Ho Chi Minh City Housing Development Bank (HDB) recently unveiled a VND4 trillion (US$178.17 million) preferential credit package for businesses against dong and dollar deposits they may have at any bank. The loans carry an interest rate starting at 6.5%. VPBank has earmarked VND2 trillion (US$88.9 million) for preferential loans to small and medium-sized enterprises, ABBank has set aside VND1 trillion (US$44.44 million) long- and medium-term loans to enterprises. VietinBank has designated VND10 trillion for individual customers who want to do business or buy consumer goods, BIDV hopes to lend VND12 trillion worth of personal loans. Analysts said many banks are hoping to increase loans to businesses in the last few months of the year, when traditionally there is a spike in business activities. According to the SBV, in the first eight months banking credit grew at 10.23% compared to 4.33% in the same period last year. In Ho Chi Minh City the figure was 6.5%, the highest in the last three years. Analysts attributed the strong credit growth to the clear signs of economic recovery, which has sharply demanded for funds. There are also some worries over the spike. The fact that some banks have recently hiked their deposit interest rates is a pointer to their liquidity status, and this is causing concern about their loan to deposit ratio. The rates for three-month deposits have risen by 0.3-0.4 percentage points to 5.5% at many banks. For 13 months the rate averages 7.3%, a 0.3 percentage point rise. Analysts said the sharp increase in credit also means monetary policy has been loosened. Loosening is necessary to some extent at this juncture for the country to achieve its economic targets, but in Viet Nam the spectre of inflation and currency volatility is never far away. To ensure sustainable growth in the long term, analysts said the economy should stop depending so overwhelmingly on bank credit, which now accounts for 80% of gross capital formation, and develop the capital market and make it the main source of funding. The banking sector should act more as a supplier of financial services and working capital, and partly support businesses' long-term investments, they said. Three months ago investments flowed mainly into the stock market and then the housing market after gold had fallen out of favour. But now many investors do not know where to park their money since the financial markets have turned volatile. Gold should not be attractive for at least a year or two, according to analysts. Global gold prices are expected to continue falling and the prognosis is it could go down to $800 per ounce by the end of 2016. The dong-dollar exchange market again stabilised in the last week of August after the SBV assured it would not devalue the currency again until at least year-end. But analysts said the dollar is a good long-term proposition since the FED is likely to raise interest rates in the coming time, strengthening the greenback. The housing market does seem to have better prospects, but its inventories are so huge it will need at least five years to liquidate it. The low-income housing segment seems to be the most attractive because housing demand remains really huge and the Government as well as banks are offering a slew of cheap-credit programmes for the benefit of low-income buyers. The recent depreciation of the dong has helped improve sales of medium- and high-end apartments. In Ho Chi Minh City alone 2,300 of these apartments were sold in the second quarter, three times the number sold a year earlier. Many analysts agreed that investing in stocks is not a great idea at the moment because of the implicit risks due to the shaky recovery of the economy and companies. Yet they chose this asset class over all others, recommending the stocks of listed housing developers. They were confident these companies would benefit from the governments' efforts to revive the real estate market. Their lands are mostly "clean" and so it would be easy to sell them at attractive prices, they added. Some major foreign funds have recently bought heavily into listed property companies. Dragon Capital, for instance, has bought stocks of KBC, Phat Dat, Khang Dien, Vingroup, and DIG. Other property firms like CEO, DXG, and VIC are also seeing strong buying interest. Other sectors that are recommended are building materials and securities. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR