Kinhbac English

BUSINESS IN BRIEF 5/9

World’s longest gondola breaks ground in Phu Quoc

A ground-breaking ceremony on September 4 signalled the start of construction on the first phase of what is expected to be the world’s longest urban gondola once completed.

The 7-km long cable car linking An Thoi Town and Hon Thom Isle on Phu Quoc Island is part of an overall US$458.4 million hotel and entertainment complex of SunGroup.

The US$225 million first phase is scheduled for completion by 2017.

The cable cars will reach speeds of 8.5 metres per second and carry 3,500 passengers each hour. It will have a total of 70 gondolas, each with a capacity of 30 passengers.

Scientific forum seeks further reforms for economic growth

A scientific forum titled “Vietnam’s Economy 2016-2020: development breakthroughs” was held in Hanoi on September 4 by the Party Central Committee’s Economic Commission in coordination with the Vietnam Union of Scientific and Technological Associations (VUSTA) .

The forum aimed to make clear scientific grounds and the realities for the building of a social-economic development plan for 2016-2020 and contribute to the drafting of documents for the 12th National Party Congress.

Although Vietnam has reaped important achievements in the past five years, the country failed to fulfil some of set goals, such as the uncertain stability of the macro-economy, the slower-than-expected economic growth and the slow-paced improvement in the economy’s quality and competitiveness.

The building of institutions for the socialist-orientated market economy has not kept pace with the realities, and the quality of human resources and infrastructure are still an obstacle to development.

Weaknesses in the fields of education, science and technology, culture, social affairs and environmental protection have been slow to be repaired while new threats to peace, stability and national sovereignty have surfaced.

Based on the analysis of limitations and problems of the economy in past years, the forum focused on issues relating to institutions and the ways of thinking about economic development; economic restructuring; and reforms of growth models, productivity and total factor productivity.

Participants recommended switching to a growth model based on productivity and efficiency, which combines both intensive and extensive development with intensive development being the key.

Private sector to hold central role in economic development

Enhancing the role of the private sector was the focus of discussions at a forum on September 4 to boost economic growth from 2016-2020.

The event, jointly organized by the Party Central Committee’s Economic Commission and the Vietnam Union of Science and Technology Associations, aimed to collect comments on the plan for socio-economic development over the next five years.

Director of the Vietnam Institute of Economics Tran Dinh Thien said the private sector should be made the main driving force for economic growth.

Participants stressed the need for productivity-based approaches to ensure effective and sustainable economic development during international integration.

Meanwhile, former Director of the National Economics University Le Du Phong underlined agriculture production and rural development, saying that rural labourers account for 46.8 percent of the total labour force.

Investment should be focused on the agricultural sector and rural development in order to ensure breakthroughs in the national economy over the next five years, Phong underscored.

Other experts also called for fostering the application of science and technology in tandem with environmental protection and climate change adaptation to drive the national economy.

Foreign retailers struggle to get accurate information

Gaining access to accurate information on land, buildings and other factors needed for the investment making-decision process has been one of the greatest challenges facing foreign retailers in Vietnam, according to Hong Won Sik, General Director of LotteMart in Vietnam.

The lack of such information has made it difficult for investors to make decisions quickly on investment plans, Hong Won Sik said in an interview with the Vietnam News Agency.

He added that finding experienced staff is also not easy, and if found, the wage level is too high to hire them.

It will be very useful if clear and correct information is available for foreign enterprises, the general director said, adding that improved transparency and time reduction in handling administrative procedures by State agencies will also strongly appeal to foreign businesses.

The prospect of the retail market in Vietnam, according to Hong Won Sik, is promising, given Vietnam’s population is expected to reach 100 million and 70 percent are participating in the economy with income increasing each year.

The Vietnamese Government has been investing heavily in infrastructure, helping the economy to grow quickly, he said.

He said he is confident in LotteMart’s chances in Vietnam and welcomes competition from other international retailers.

The general director said LotteMart has a number of subsidiaries which provide a wide range of services, such as supermarkets, cinemas, fast-food chains, coffee shops and hotels, and will strive to win trust from Vietnamese consumers.

Work begins on Hon Thom-Phu Quoc resort complex

The Sun Group held a ceremony on September 4 to commence construction on a resort complex on Hon Thom Island and a cable car line linking it with Phu Quoc Island off the southern province of Kien Giang.

Prime Minister Nguyen Tan Dung attended the ceremony and issued an order to kick off the project.

According to the Sun Group, the three-track cable car project is 8-kilometres in length, connecting An Thoi town in Phu Quoc district and Hon Thom island.

Once completed, it is expected to be the world’s longest line, even longer than the 1.5-kilometre Mt. Fansipan cable which currently holds the world record.

The cable car runs at an average speed of 8.5 metres per second and is capable of carrying 3,500 passengers per hour.

The first phase of the project costs approximately 4.9 trillion VND (218 million USD) and uses the most modern type of cable car technology imported from Austria-based producer, Doppelmayr Geraventa Group, who is renowned for building thousands of aerial ropeways worldwide, including those in the Alps (France) and Table Mountain (South Africa).

The Hon Thom complex will be built into a world-class resort with a marina, hydro plane service, marine and cuisine villages alongside an entertainment park featuring adventurous games and scuba diving.

The Sun Group will make its utmost efforts to launch the cable car project on April 30, 2017 and believes the resort complex will help improve local incomes and boost the province’s economic growth, said its General Director Dang Minh Truong.-

Japanese firm to develop organic vegetable project in Ha Nam

Japan

’s Nippon Vietnam Agreen (NVA) company had a working session on September 4 with leaders of the northern province of Ha Nam to conduct a survey on an organic vegetable project in the locality.

NVA General Director Yajima Takahirosaid that Ha Nam with favourable agricultural conditions will give the company authority to implement planting trials using Japanese technology and quality-management processes.

At the working session, Secretary of the provincial Party Committee Mai Tien Dung agreed to allocate 2 hectares in Phu Van commune, Phu Ly city for planting trials.

During the trial period, the province will waive land use fees and support the company in overcoming difficulties.

The secretary also suggested the NVA expand production capacity and transfer technologies for local farmers once the planting trials are successful.

Currently, Ha Nam is striving to apply modern technology in agricultural production in tandem with attracting more Japanese investment in the field.

Hanoi’s eight-month industrial production index rises 7.4 percent

The industrial production index (IPI) in Hanoi in the first eight months of this year grew by 7.4 percent from the same period last year, according to the General Statistics Office (GSO).

The largest year-on-year increase was recorded in the electrical production and distribution sector with 9 percent, followed by the processing & manufacturing and water supply & waste water collection and treatment sectors with respective rises of 7.6 percent and 1.6 percent.

In August alone, Hanoi’s IPI increased by 1.3 percent against July and 7.1 percent year-on-year.

A number of industrial sectors with high proportions reaping remarkable growth during January-July included engine vehicle manufacturing (40.9 percent), furniture (30.3 percent), pharmaceuticals and medicine (25.7 percent), wooden and rattan processing (19.3 percent), garments (17.8 percent), wood and paper (17.1 percent), mineral and non-metallic production (11.2 percent) and chemicals (9 percent).

Meanwhile, key industrial products with strong surges during the last eight months were spare parts for engine vehicles (32.9 percent), stone for building (31 percent), refrigerators (22.3 percent) and commercial electricity (9 percent).

The figures show a gradual recovery of production sectors after a long stagnation caused by economic downturns.

The situation is expected to be maintained during the remaining months of this year.

Corporate governance essential to investment attraction: experts

Corporate governance, besides other sustainable development factors, is pivotal to attracting investors and promoting the capital market, practically benefiting ASEAN economies and Vietnam in particular, said Chris Razook – Head of the Corporate Governance in East Asia and Pacific under the International Finance Corporation.

At a forum in Ho Chi Minh City on September 4, Razook said the ASEAN Corporate Governance Scorecard (ACGS) was introduced in 2011, which was a substantial effort from regional countries to implement the ASEAN Capital Markets Forum action plan, designed to develop integrated capital markets and establish the bloc as a promising investment destination of the world.

The scorecard is expected to help improve the practice of corporate governance at the region’s publicly listed companies and their competitiveness while popularising their image among foreign investors, he added.

Although Vietnam has applied the ACGS for the past four years, the number of listed businesses assessed according to ACGS criteria was only 50 in 2014, far below the required minimum of 100, experts at the forum said.

They noted that the country has continually ranked at the bottom position among nations using the ACGS: the Philippines, Thailand, Malaysia, Singapore and Indonesia.

Corporate governance specialist Nguyen Thu Hien said the biggest challenge currently facing Vietnam is altering enterprise awareness of the ACGS, which will help them popularise their image to international investors.

Vice Chairman of the State Securities Commission Nguyen Thanh Long said the ACGS is attracting more and more interest from businesses and investors as it illustrates companies’ commitment to corporate governance transparency and sustainable development while helping investors examine firms’ potential.

He urged domestic enterprises to make the best use of the ACGS to advertise themselves, attract investment and foster the capital market in Vietnam and the ASEAN region as a whole.

Ca Mau facilitates offshore fishing

The southernmost province of Ca Mau is creating favourable conditions for fishermen in Khanh Hoi commune in U Minh district to develop offshore fishing, according to Chau Minh Dam, Deputy Chairman of the communal People’s Committee.

Accordingly, the province will focus on developing the Khanh Hoi port from 2015 to 2020 into an aquaculture centre of U Minh district.

Ca Mau also plans to dredge estuaries and upgrade fishing port entrances to allow boats of 90 CV or more to enter the waterways.

In addition, the province will facilitate fishermen access to preferential credit under Government Decree 67/2014/ND-CP to build and upgrade vessels for offshore fishing. Investments in logistics centres will also be enhanced.

Khanh Hoi commune, located about 40 kilometres from Ca Mau city, is the second largest fishing port in the locality. It has about 400 fishing boats with nearly 1,000 fishermen, yielding about 20,000 tonnes of marine products annually.

Businesses anticipate opportunities to increase exports to RoK

Farm produce exporters in Vietnam are being urged to study the Republic of Korea (RoK) market thoroughly to gain a firm foothold, especially given the two countries recently signed a free trade agreement.

According to Vietnamese export businesses, the RoK is a choosy market in Asia since all products allowed to enter the market must overcome a strict quality control process.

According to Le An Hai, Deputy Head of the Ministry of Industry and Trade’s Asian-Pacific Markets Department, fresh fruits and vegetables imported by the RoK must receive plant quarantine certificates issued by the country’s authorised agencies while processed fruits and vegetables must meet requirements on production lines, processing and product preservation.

Unimpressive packing is also affecting the choice of Korean consumers.

As such, Vietnamese businesses need to strictly follow production processes and procedures in accordance with RoK criteria in order to bring their products closer to RoK consumers.

According to Lotte Mart Administration Director Yoon Byung Soo, there are a number of vegetable and fruit varieties available in Vietnam but not in the RoK due to climate dissimilarities.

He suggested Vietnamese exporters pay attention to the RoK market to uncover which products have high demand but insufficient supply, invest more in packaging, and ensure delivery time.

Inviting RoK purchasing companies to inspect Vietnam’s production areas is also a way to increase their trust in local products, he added.

Vietnamese businesses can gain access to the RoK market through the country’s major distribution channels like Lotte Mart and Imart supermarket chains and Dole company, said Hai.

Vietnam attends int’l trade fair in Mozambique

Vietnamese businesses are participating in the ongoing 2015 Maputo International Fair (FACIM) in the Mozambican capital city of Maputo.

Taking place from August 31 to September 6, the event, one of the largest trade fairs in the country, has attracted 680 enterprises from 31 countries and territories together with about 1,900 domestic producers.

At the fair, Vietnam’s pavilion, which is reopened after five years of absence, features a wide range of consumer goods such as rice, dried noodles, coffee, and tea. Some of these products have been sold on a trial basis in the Mozambican market.

Additionally, mobile phones, telephones, and other telecommunication services supplied by Movitel, a joint venture between the Vietnamese military-run telecom group Viettel and a Mozambican partner, have also received special attention from local customers.

Mozambique

’s businesses have showed their interest in importing devices and construction materials from Vietnam as well as forming joint ventures to process wooden products and food.

The re-appearance of Vietnamese businesses in the FACIM marks their first step in accessing potential markets in southern Sahara, the most dynamic economic region in Africa.

Hanoi ranks third in FDI attraction

Hanoi is one of the three leading localities nationwide in foreign direct investment (FDI) attraction, accounting for 17.3 percent in the number of projects and 9.32 percent in the amount of registered FDI in the country, said the Ministry of Planning and Investment.

The city’s economy has recorded stable development and remarkable results since Vietnam joined the World Trade Organisation (WTO) in 2007.

At present, more than 2,000 local enterprises are engaging in import-export activities in over 200 countries and territories. The city’s average gross regional domestic product (GRDP) growth reached 9.85 percent during 2007-2014.

Hanoi’s economic structure saw positive changes with the proportion of service and industry-construction sectors increased, while that of agriculture sector declined.

The municipal authorities have paid special attention to assisting businesses in accessing capital sources, while promoting administrative reform, especially in tax procedure, in order to facilitate enterprises’ production and business activities.

While working with municipal leaders on September 3, Deputy Head of the National Assembly's Economic Committee Nguyen Van Phuc spoke highly of recent achievements made by the city.

He asked the local authorities to focus on building more trade names while fully tapping existing ones, and upgrading infrastructure facilities, thus effectively serving the city’s integration.

According to statistics from the municipal People’s Committee, by the end of 2014 , Hanoi attracted 3,169 FDI projects with total investment of 26.3 billion USD.

As of June 20 this year, the city was home to 3,206 foreign-invested projects with a combined investment capital of more than 24 billion USD.

HCM City metro on schedule

The first line of the subway in HCM City, the Ben Thanh – Suoi Tien metro, is quickly taking shape, three years after construction kicked off.

Together with the construction of underground stations near the municipal Opera House and Ben Thanh Market, the above-ground part of the route is developing quickly near Hanoi Highway from the Saigon Bridge to Suoi Tien Theme Park.

The project broke ground in August 2012. It is expected that in a few years, the route will connect with urban areas, the National University and a new Eastern Bus Station.

Tuoi Tre (Youth) newspaper has quoted Chu Son Binh, Deputy Director of Ben Thanh – Suoi Tien Metro Project Management Board, as saying that with advanced technology from Japan, the installation of girders on the route would be completed by 2017.

At the Thao Dien Metro Station, one of 14 stations on the metro route, more than 80 engineers and workers prepared to cast concrete for the station, 26m wide and 130m long.

As the workers have three months to complete station construction, they have divided their work in three shifts.

Ben Thanh will be the central station connecting other lines and Suoi Tien will be considered the point that links eastern parts of the city and neighbouring provinces.

According to the plan, from Suoi Tien, the line will extend to the proposed Long Thanh Airport in Dong Nai province.

The North – South Railway from Hanoi to HCM City will connect with the Suoi Tien station on the metro.

All of the 14 stations will be built with different architectural designs.

Of the 11 above-ground stations, the Tan Cang Station will receive most passengers with loading capacity of 154,000 passengers per day, and Suoi Tien with 147,000 passengers per day.

The Rach Chiec Station is designed to receive 107,000 passengers per day.

Construction of underground stations is also going well. Concrete casting has been in progress at Opera House Station.

Tran Van Hieu, 42, one of 100 workers at the site, said he expected the metro to significantly change the city's infrastructure.

"My son is now studying high school in my hometown. I'm very happy that he will be able to ride the subway when he comes here to study at university," Hieu said.

In January 2007, the Prime Minister published a decision outlining the transport development plan for HCM City up to 2020.

The objective is to build a network of eight urban railways and three other lines which will be either light rail or monorail.

The plan was modified in 2009, with Line 3 being split into two.

It was also decided to connect Lines 1, 3A and 3B to provide a through service in the future. However, so far only two projects have begun, despite several studies and interest from investors.

VAMC to buy bad loans from lenders

The State Bank of Vietnam has issued a circular with new regulations on encouraging credit institutions to handle non-performing loans (NPLs).

Under Circular 14/2015/TT-NHN, which will take effect from October 15 this year, the Vietnam Asset Management Company (VAMC) will directly issue a new type of bonds to purchase NPLs at market value from credit institutions.

The new bonds are allowed to transfer between the central bank and credit institutions, as well as among credit institutions.

Currently, the VAMC also issues special bonds in return for bad debts from credit institutions, but the bonds are not allowed to be transferred. The special bonds may be used only as collateral to secure funding from the central bank.

VAMC will continue to implement its bad debt handling process via the special bonds it issued in the past. According to the new regulations, credit institutions will no longer have to make risk provisions for NPLs which have been sold to the VAMC. Currently, the lenders still have to establish yearly provision funds amounting to 20 percent of the value of the bonds they received from VAMC.

Credit institutions will also have more benefits as the new type of bond is defined as having a risk ratio of zero percent when calculating the Capital Adequacy Ratio (CAR), while the special bond has a risk ratio of 20 percent.

For credit institutions that are under restructuring or facing financial difficulties, the VAMC new bonds will help reduce pressure on them as the expiry date of the bonds can be extended to 10 years from the 5 years of special bonds.

The VAMC targets buying roughly 500-700 billion VND (22.5-31.1 million USD) of NPLs at market value this year to boost the implementation of the new method next year.

Credit institutions are now required to sell a minimum amount of bad debts fixed by the central bank by September 30 in a move to cut bad debts to below 3 percent by the end of September, a target previously set for the year end.

VAMC Chairman Nguyen Quoc Hung said banks had registered to sell bad debts worth 64 trillion VND (2.84 billion USD) in the first seven months of this year, and the VAMC had agreed to buy 59 trillion VND (2.62 billion USD) of it for 54 trillion VND (2.4 billion USD). Deputy director of the central bank's HCM City branch Nguyen Hoang Minh said HCM City banks would have to sell another 22 trillion VND (977.7 million USD) worth of bad debts to reduce the ratio to below 3 percent from nearly 5 percent in June.

FDI boon for HCM City property

The HCM City property sector has attracted more than 1.42 billion USD worth of foreign direct investment this year, the city's Statistics Office has reported.

The amount accounts for almost 62 percent of total FDI in the period.

The city has granted licences for 327 projects with total registered capital of more than 2.31 billion USD.

The city continued to overwhelmingly top the country in terms of FDI in property, accounting for nearly 78.5 percent of the total investment of 1.82 billion USD in 18 new projects and seven existing ones that are expanding.

They include a 1.2 billion USD joint venture in HCM City between several local firms and Denver Power Ltd of the UK.

Experts forecast a torrent of FDI in the property sector by year-end thanks to the changes to the Law on Housing and Real Estate Business that allow foreigners and overseas Vietnamese to buy houses in Vietnam.

Sales of steel products increase by 25 percent

The domestic structural steel market has seen a growth rate of between 25 and 30 percent in sales thanks to the strong recovery of the domestic real estate market, according to independent market watch-dogs.

The analysts said that the market's demand for building materials, especially structural steel products, had strongly increased since the beginning of the year.

According to a source from the Vietnam Steel Association (VSA), in the first seven months of the year, VSA member companies sold 3.57 million tonnes of steel products, registering a year-on-year increase of 30 percent.

To meet the market's demand, VSA steel companies have had to operate at nearly full capacity.

As a result, in July alone the companies produced 613,000 tonnes of structural steel, up by nearly 51 percent compared with the same period last year.

Industry insiders said the figure set a record for the last decade, when the property market began to slow down.

A representative of the Hoa Phat Steel Joint Stock Company in Hanoi said the company sold 785,000 tonnes of steel products in the first seven months of the year, a year-on-year increase of 51 percent.

Meanwhile, the Hoa Sen Group in the southern province of Binh Duong, which holds the biggest share of the steel sheet market, said it had targeted selling 900,000 tonnes in the first nine months of this year, up by 17 percent.

Dinh Cong Khuong, Chairman of the Khuong Mai Steel Trading Service Company, which specialises in steel imports, said the company's imports increased by 25 and 30 percent. Analysts attributed the domestic steel industry's strong consumption growth to the recovery of the economy and the real estate market.

According to the National Financial Supervisory Commission (NFSC), the country's GDP in the first six months reached 6.28 percent compared with the same period of 2014 and is on a trajectory towards recovery.

It is predicted to be 6.4 percent in the first nine months of this year and 6.5 percent for the entire year.

Analysts also said that revised laws on housing and real estate businesses had made the Vietnam's property market more attractive.

CBRE Vietnam has reported that hundreds of apartments in HCM City were sold to foreigners right after the Housing Law took effect in July, with Vingroup's Vinhomes Central Park alone having 112 apartments sold to foreigners.

Real estate developer Novaland said that overseas Vietnamese made up 10 percent of the company's total transactions in July, according to news website VnExpress.

Another major housing developer in HCM City, Phu My Hung, also reported over 100 successful transactions with foreigners and overseas Vietnamese in the last month.

Analysts said that while the market demand for building materials, including steel products, was increasing strongly, the price of products fell significantly, particularly after the Chinese yuan was devalued.

Figures from the General Department of Customs show that by mid-August, Vietnam had imported nearly 9.22 million tonnes worth 4.832 billion USD, of which 5 million tonnes, or 60 percent came from China.

Meanwhile, the prices of imported steel products fell by 21.3 percent, the office reported.

This benefited both builders and consumers, but placed pressure on domestic building materials manufacturers, experts said.

Vietnam

’s cassava exports up 26 percent

The country exported 3.05 million tonnes of cassava, worth 951 million USD, in the first eight months of the year.

This amounts to 26 percent and 29 percent year-on-year increases in terms of quantity and value, respectively.

Statistics from the Ministry of Agriculture and Rural Development showed that China was still the largest cassava importer, accounting for 89 percent of the total exports, posting a year-on-year increase of 53 percent and 46 percent in quantity and value, respectively.

However, the volume of exports to Japan and Taiwan (China) grew 10 times and 64 times, respectively, posting the highest level of growth.

Nghiem Minh Tien, Vice-Chairman of the Vietnam Cassava Association, told Hai Quan (Customs) newspaper that the average export price of cassava remained about 420 USD to 430 USD per tonne and was relatively stable. In the past few years, Vietnam's cassava exports faced fierce competition from Thailand as that country provided subsidies to the product. However, that policy was scrapped as Thailand's baht was devalued against US dollar, making Vietnam's cassava again competitive.

He said 80 percent of the country's total cassava exports this year would be shipped to China, adding that too much dependence on the market has been the shortcoming of the sector.

In addition, low productivity will also make the sector less competitive. The cassava sector has an average productivity of 17.6 tonnes per ha, which needs to be increased to 25 tonnes per ha.

Businesses should link the areas cultivating the raw material to production to increase productivity, Tien said.

Vietnamese cassava is exported to several markets such as Japan, the Republic of Korea, the Middle East and Malaysia.

In the future, Vietnam plans to head to the United States and the European Union.

The vice-chairman said the export potential of cassava was large and the sector aimed for an export turnover of 2 billion USD by 2020.

The association has cooperated with the Ministry of Science and Technology to build quality standards for cassava cultivation. The standards will follow the criteria of the Food and Agriculture Organisation (FAO) to penetrate strict and demanding markets.

He said the economy has integrated deeply with the world market through free trade agreements that could help the sector as tariffs would not be a barrier.

The association has implemented trade promotion activities to reduce dependence on the Chinese market.

They will cooperate with the Vietnam Chamber of Commerce and Industry to organise an international conference in October to introduce Vietnamese cassava products.

Hanoi ready to ship first late-ripening longan batch to US

Procedures are being processed for the export of Hanoi’s first late-ripening longan batch to the US, the municipal Department of Agriculture and Rural Development said at a meeting on September 3.

About 1,880 of the 15,161 hectares of fruit trees in Hanoi are under longan trees. Late-ripening longan varieties cover 500 hectares of land with 200 hectares in Quoc Oai and Hoai Duc districts.

Ninety hectares of late-ripening longan trees have been recognised as meeting standards of the Vietnamese Good Agricultural Practices (VietGAP), the department said, adding that it negotiated with importing countries to facilitate the sale of this type of longan.

By last April, the US Department of Agriculture granted regional codes for the 18.7-hectare qualified areas managed by the Hoai Duc association of late-ripening longan producers.

The Hanoi department said favourable conditions are now in place for the local fruit to be shipped to many foreign markets in the coming time.

The US Department of Agriculture approved the import of fresh longan and lychee from Vietnam in 2014.

Vietnam

hopes to export 1,200 tonnes of longan and 600 tonnes of lychee to the US every year.