BUSINESS IN BRIEF 5/10 Local firms urged to make apparel materials Vietnamese garment enterprises would not be able to fully benefit from the Trans-Pacific Partnership (TPP) if they do not secure sufficient materials through their own production or supply by their local partners.  Vietnam is expected to sign a free trade agreement (FTA) with the European Union and the TPP this year and next. Under these FTAs, Vietnamese apparel will enjoy lower tariffs when being exported to the EU and the United States.  At present, the U.S. imposes tariffs of 12.4-20% on apparel imports from Vietnam while the EU applies taxes of 9.2% to 9.4%. If these import duties are slashed to 0%, local producers could step up exports to these huge markets. Last year, Vietnam got US$24.7 billion from apparel exports.  The apparel export revenue target is US$36-38 billion in the coming years, Phan Chi Dung, head of the Light Industry Department under the Ministry of Industry and Trade, said at a conference on opportunities and challenges from the country’s international integration in Hanoi on September 30. To realize the target, apparel enterprises will have to make drastic changes, especially raising the proportion of local materials in their finished products. Around 5,028 companies are active in the sector but the number of firms able to make materials is only 604. The remaining 4,424 are apparel makers which can gain low profit margins in the supply chain as they mainly rely on outsourcing contracts with foreign partners. To benefit from FTAs, more foreign enterprises have got involved in projects to produce materials for the garment industry. For instance, a South Korean firm has injected US$40 million in phase one of a project to make yarn in Binh Duong Province and plans more investment. Investors from Hong Kong, Japan, South Korea and Turkey have also carried out projects to turn out materials for the garment sector to meet increasing demand.    Many manufacturers have relocated their apparel factories from China to Vietnam to earn more profit due to an upsurge in production costs in the northern neighbor. Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam (BIDV), said the bank is willing to lend to producers of materials for the clothing sector, especially local businesses. BIDV considers apparel as one of the important sectors it will boost lending to. The bank’s total outstanding loans for the sector neared VND7.2 trillion at the end of 2014, up 44.5% year-on-year, while the bad debt ratio was a mere 0.4%.     Vietcombank last month also inked a comprehensive agreement with Vietnam National Textile and Garment Group (Vinatex), and the deal covered loans for the enterprise. Tran Quang Nghi, chairman of Vinatex, said Vietnam imports 80% of materials for apparel production. Foreign direct investment companies account for 60% of Vietnam’s total textile-garment exports. Ha said thousands of hectares of land were needed to develop a major material production area for the industry, but many localities do not want to allocate big land lots to apparel material producers for fear of environmental pollution. GSO: Economy grows 6.5% in Jan-Sept Vietnam’s gross domestic product (GDP) has grown 6.5% in the first nine months of this year compared to the same period last year, according to the General Statistics Office (GSO). Data of the GSO released on September 29 showed that the highest January-September GDP growth rate since 2011 is contributed by steady quarterly economic expansion and significant improvements of key sectors in the period, the Vietnam News Agency reports.  The GSO said the nation’s GDP expansion is 6.81% in quarter three of this year while the rate was 6.47% in quarter two and 6.12% in quarter one. The GDP growth is higher than the January-September rate of 5.53% in 2014, 5.14% in 2013, 4.73% in 2012 and 5.76% in 2011.  The nine-month period has seen the manufacturing and construction sectors expanding by 9.57% and services by 6.17%. The manufacturing and construction sectors account for 3.12 percentage points while the contribution of services is 2.38 percentage points.  Particularly, the manufacturing sector has grown 9.69% over the year-earlier period, and the growth is much higher than that of the same period in previous years. The respective growth rates of processing and mining industries are 10.15% and 8.15%. In the first nine months, the construction industry has gone up by 9%, the highest January-September growth in five years. As for services, retail and wholesale, repair and consumer products have risen by 8.4%, accommodation and catering by 3.83%, banking, finance and insurance by 6.7%. By September 21, credit growth had reached an estimated 10.78% compared to late last year while property business had inched up 2.9%, above 2.71% in the same period of 2014. According to the GSO, the index of industrial production has grown 9.8% in the year to date compared to the same period last year and total retail sales of goods and services have been up by 9.8% year-on-year, or 9.1% if price factors are excluded. Nguyen Bich Lam, general director of the GSO, was quoted by the local news site VnExpress.vn as saying that effective macro policies and supporting solutions of the Government for domestic enterprises have buoyed production of domestic enterprises in the first nine months of this year.  Lam said that the local economy has achieved a reasonable growth rate and inflation has stayed low despite unfavorable developments on global goods and financial markets. Of the local economic structure, the agro-aqua-forestry sector makes up 16.30%, manufacturing and construction nearly 34%, services 40.52%, and others the remainder. Speaking at the Vietnam Business Forum in Hanoi in June this year, Prime Minister Nguyen Tan Dung said the Government would create favorable conditions for investors and enterprises to contribute to Vietnam’s GDP growth of 6.2% this year and higher in the following years. Dung said Vietnam targeted higher but sustainable economic growth of 6.5-7% in 2016-2020. Power price hike proposal rejected The Ministry of Industry and Trade has turned down a proposal of State-run energy firms to increase electricity tariffs to offset their losses caused by the recent fall of the Vietnam dong against the U.S. dollar. The ministry’s rejection was notified by the Electricity Regulatory Authority of Vietnam at a seminar on electricity pricing held by the Government’s portal in Hanoi on September 29. The exchange rate is just one of the factors constituting the production cost of electricity, said the authority’s head, Nguyen Anh Tuan. Vietnam Electricity Group (EVN), Vietnam National Coal and Mineral Industries Group (Vinacomin) and Vietnam National Oil and Gas Group (PVN) have proposed hiking electricity prices to compensate for the losses resulting from exchange rate volatility. The electricity generation cost is decided by prices of oil, gas or coal, exchange rate and transmission cost, among others. The Ministry of Industry and Trade will take these into account when considering electricity tariff increases, according to Tuan. Generation cost has dropped owing to lower oil and coal prices. Therefore, it is not reasonable to hike electricity tariffs due to the impact of the volatile exchange rate. Talking about the electricity retail prices of 2016 and 2017, Hoang Van Thuy, deputy head of the finance department at EVN, said EVN had drawn up a retail pricing scheme for the ministries of industry-trade, finance and the State Bank of Vietnam to consider. Goods producers, distributors strike cooperation deals More than 40 memorandums of understanding and cooperation agreements were signed in HCMC on September 29 between distributors like Big C, Lotte Mart and Aeon Mall and goods producers in southern provinces. The deals were struck at a conference on supply-demand connectivity between firms in rural areas and distributors was co-held by trade and market management agencies including the HCMC Department of Industry and Trade as requested  by the Ministry of Industry and Trade. The connectivity program is part of the Vietnamese Goods Identity Week-Pride of Vietnamese Goods taking place from September 27 to October 4 in HCMC with over 83 businesses participating. Of them, 70 are producers of handicrafts and agro-forestry-aquatic products and the remainder are distributors in the south.     Deputy Minister of Industry and Trade Ho Thi Kim Thoa said the conference aimed to boost consumption of domestic goods and enhance cooperation among management agencies, producers and distributors to form an effective supply chain. The program aims to make Vietnamese products account for over 70% of total goods sold nationwide in 2015 and 90% by 2020. Truong Thanh Su, director of the agricultural encouragement center in the Mekong Delta province of Vinh Long, hoped the program would assist enterprises in the province to sell their products in modern distribution systems. Mai Thi Anh Tuyet, director of the An Giang Department of Industry and Trade, said the domestic market, especially the HCMC market, had much potential for local businesses. Supply-demand connectivity programs have supported An Giang-based enterprises to have bigger domestic market share. In 2013-2014, An Giang Province sold goods worth a total of VND240 billion to distribution systems in HCMC and Hanoi, up 1.5 times against 2012. Tuyet proposed the industry ministry launch more programs to help domestic businesses sell products at traditional markets and supermarkets. Tran Lam Hong, deputy general director of Saigon Co.op, described the program as a win-win deal for both producers and distributors as it enables retailers like Saigon Co.op to have stable goods supplies and control product quality at the very first stage of production.    Kim Tae Ho, strategic director of Lotte Mart, said the supermarket chain had boosted consumption of Vietnamese goods since 2014 and pledged to support local firms to sell products at home and abroad. Ministry proposes delaying ice-to-fish ratio rule The Ministry of Agriculture and Rural Development has proposed the Government delay the rule governing ice and moisture contents in tra fish fillets until January 1, 2019 instead of next year. Under Article 6 of Decree 36/2014/ND-CP on farming, processing and exporting tra fish, the ice-to-fish ratio of exported tra fish fillets must meet requirements of importing countries. In other cases, the ratio must not exceed 10% and the maximum moisture ratio is 83% of net weight of tra fish fillets. However, according to the agriculture ministry, the Vietnam Association of Seafood Exporters and Producers (VASEP) and enterprises in the sector complained that the regulation is not appropriate and will make life tough for exporters. In addition, the ministry’s inspections of frozen tra fish fillets at 26 enterprises in April and May found only 3.03% of total tra fish fillets had the moisture ratio of below 83% while the high ratio of over 86% was found in 75.32% of total products. Besides, the products with the ice-to-fish ratio of less than 10% accounted for 49.35% and ones whose ratio is over 20% made up 16.02%. VASEP said in a report on the ice-to-fish and moisture ratios released on September 29 that the ratio limits of 10% and 83% would help ensure product quality but push up production cost, making tra fish fillets less competitive on global markets. Meanwhile, the number of markets requiring Vietnam’s tra fish fillets to meet such ratios is small, accounting for just 10% of total export markets for Vietnam’s tra fish fillets. Therefore, the regulation limiting the ice-to-fish and moisture ratios will make it difficult for enterprises to export their tra fish products. With those reasons, the ministry requested maintaining the ratio limits regulated by the decree but stressed the importance of drawing up a road map to realize the required ratios. In particular, the maximum ice-to-fish ratio of 20% and the highest moisture ratio of 86% will be applied until the end of 2018 before the 10% and 83% ratios are applied in 2019. At a meeting on enhancing production capacity, quality and competitiveness of agro-forestry-aquatic products held by the National Assembly’s Economic Committee late last year, Minister of Agriculture and Rural Development Cao Duc Phat said the Government had decided to postpone the ratio limits from January 1 this year to January 1, 2016. Besides, the ministry seeks the Government’s approval to extend the deadline for tra fish farms to get VietGAP certification or equivalent international certification to December 31, 2016 in lieu of December 31, 2015. Vietnam promotes overseas investment In recent years, Vietnam’s overseas direct investment has increased. Vietnamese enterprises have expanded their markets contributing greatly to national growth and raising Vietnam’s prestige in international economic integration. So far, Vietnam has invested in 63 countries and territories in 891 projects worth nearly US$20 billion.  Laos ranks first among Vietnam’s investment partners with 249 Vietnamese projects worth US$7.4 billion, followed by Cambodia with 161 projects with registered capital of US$3.4 billion.  Vietnam has 55 projects in Singapore, 22 in Myanmar and 19 in Russia. Most of the projects focus on mining, agriculture, forestry, fisheries, telecommunications and technology.  Viettel, Vinamilk, FPT, the Vietnam Rubber Group and state-funded banks are the largest investors, but overseas investment by the private sector and SMEs has been rising. In recent years, Vietnamese enterprises have increased investment in Laos, Cambodia, and Myanmar through bilateral cooperation mechanisms. Many Vietnamese projects in Laos have been profitable. These include rubber and sugar cane plantations of the Hoang Anh Gia Lai Group, Vietnam Rubber Group, Dak Lak Rubber Tree Company, and a number of other projects of Vietttel, the Lao Viet Joint Venture Bank and some Vietnamese banks. The two countries’ governments have accelerated a number of strategic projects including a pipeline from Hon La port in Vietnam’s Quang Binh province to Laos’ Khammuon province, and an electricity-grid project between Vietnam’s Pleiku city and Laos’ Xekaman province.  In September, Vietnamese Prime Minister Nguyen Tan Dung and his Lao counterpart Thoongxinh Thamavong attended the groundbreaking ceremony of a kali salt mining which the Vietnam Chemical Group is supporting in Khammuon province.  This is Vietnam’s largest investment project overseas, with total capital of US$522 million.  Prime Minister Nguyen Tan Dung said,“Vietnam is fully aware that Vietnamese investment projects in Laos are not just for mutual profit but also a sign of the Vietnamese Party, State and people’s respect for Laos and its people. Vietnam wants to contribute to Laos’s socio-economic development”. Vietnam’s investment projects in Cambodia are concentrated in agriculture, energy, finance, banking, and insurance. These projects have contributed to the economic growth of both countries, especially their border provinces, and have generated thousands jobs.  A number of Cambodian agricultural products exported to Europe, Japan, and the Republic of Korea are supported by Vietnamese enterprises. Of the 30 largest investors in Myanmar, Vietnam ranks 8th in invested capital-US$513 million. Vietnamese investment in Myanmar is concentrated in finance, banking, insurance, and telecommunications.  Vietnam Post and Telecommunications and Viettel Military Telecommunication Group participated in the first telecommunication bidding in Myanmar. The FPT group established the FPT Myanmar Company in 2013. Vietnam has 19 investment projects worth US$2.47 billion in Russia focused on oil, gas, and trade. They include Rusvietpetro, Gazpromviet and the Hanoi Trade Center in Moscow.  Vietnam has 2 investment projects valued at US$1.8 billion in Venezuela and a number energy, oil, gas and telecommunications projects in Peru which are worth US$1.3 billion.  Tran Kim Chung, Chairman of the CT Group, said overseas investment will help Vietnamese enterprises improve their competitive edge in the context of international economic integration. “In the context of globalization and the establishment of ASEAN Economic Community by the end of this year, ASEAN countries have increased their overseas investment. They have organized a number of seminars and conferences in preparation for integration but Vietnamese enterprises have not prepared for this trend. Their overseas investment is on their own. They need to be more proactive in the integration process,” noted Chung. Overseas investment has contributed to Vietnam’s economic growth, helped Vietnamese enterprises to expand their markets and brought opportunities to gain new technologies and experience in investment management. Vietnamese customers continue drinking expensive milk despite declining global price Vietnamese customers, who expect to buy milk at cheaper prices after the world price drop began earlier this year, have swallowed a bitter pill when realizing that they had paid more than they should have for the dairy liquid. Milk prices on the world market have fallen steadily since March this year, dropping by at least 20-25 percent, or nearly 50 percent for some time. The rates were at their peak at US$5,100 per ton in April 2014. But retail milk prices in Vietnam have a tendency to surge, which distributors, producers, and the price management agency claim is due to rising costs. Imported milk, worth at nearly $1 billion annually, make up about 70 percent of the local demand, from milk used as material for producers to that for direct consumption, according to the Vietnam Dairy Association. Milk price is forecast to continue to decline by 5-10 percent from now to 2018 in accordance with what Vietnam has committed when entering into many regional and international trade agreements, especially with milk powerhouses like New Zealand and Australia, the association said. In addition, demand in some major markets, such as China, is declining, which leads to surplus supply on the global market. Many parents who are raising children told Tuoi Tre (Youth) newspaper that they have heard about the declining world price, but their monthly spending on milk for their children has yet to go down, and it has even inched up. Minh Hang from District 7, Ho Chi Minh City said buying milk for two kids costs her VND3 million ($132) a month. The amount of money set aside for baby formula is still equal to that a year ago even though she has chosen cheaper milk for her first kid, she said. Hoang, a milk shop owner on Nguyen Thong Street in District 3, affirmed milk prices have never decreased since the beginning of the year, and the prices of some imported dairy products have even risen slightly. In Hanoi, many milk types, from those for children under six to those for pregnant women and the elderly, have seen their prices increase by VND15,000-30,000 per can compared to the rates in June 2015. Explaining the reasons for such price hikes, a milk shop owner on Le Hong Phong Street, Ha Dong District said the devaluation of the dong is to blame. Vietnam last month depreciated the dong for the third time this year and widened the trading band for VND-USD transactions from one percent to three percent, a move the State Bank made to cope with the devaluation of the Chinese yuan. All this technically caused the Vietnamese dong to lose five percent of its value. Previously, those dairy firms that targeted to guarantee sales to grow 10-12 percent annually only needed to increase their retail price and yield by 7-10 percent and 5-10 percent, respectively. However, according to dairy companies, the consumption of milk in the Vietnamese has declined in both volume and value, with powdered milk leading the drop. This is somewhat unexpected because powdered milk is an essential product for children, and according to statistics, 65 percent of milk consumers in Vietnam nowadays are children. The deputy director of a dairy company in Vietnam told Tuoi Tre that plummeting imported milk prices cannot help businesses as other expenses, such as staff salaries and management costs, are escalating. As the property rent and utility bills of wholesalers continue to go up, the profits allocated by the manufacturers have to be raised to offset the costs, he said. The director of external affairs of a foreign dairy company also said cost has risen continuously in the context of the dong’s depreciation, while sales continue to go down. Talking to Tuoi Tre, Nguyen Anh Tuan, director of the Price Management Department under the Ministry of Finance, said the prices of some sorts of milk on the global market have plummeted since April, citing data from the Department of Agriculture. But it takes a certain period of time for dairy producers to negotiate prices to reach a deal to import milk, and then manufacture the products and sell them to the market, Tuan said. So a price reduction will not take effect immediately, he added. According to statistics, a Vietnamese person consumes about 14 liters of milk per year, a figure which is quite low compared to other regional countries, whose consumption ranges from 20 to 30 liters per person per annum. The prices of milk for Vietnamese children remain the highest in Southeast Asia despite the falling cost of raw milk, Dinh Tien Dung, Minister of Finance, said in a meeting in Hanoi in June. The average price of formula milk products for children under six years old in Vietnam is around US$16 per kilogram, considerably higher than that in other Southeast Asian countries, including Thailand (14 percent), the Philippines (24 percent), Malaysia (46 percent), and Indonesia (60 percent), Minister Dung said. It’s time to rethink Vietnam’s agriculture system A workshop bringing together several hundred of the smartest and most innovative minds in agriculture recently convened in Hanoi to tackle the tough issues surrounding sustainability. “I feel impatient with agriculture at this juncture,” said Chairman Dr Nguyen Quoc Vong from RMIT University, because the industry in Vietnam today is still plagued by decades old problems. Since Vietnam’s accession to the World Trade Organization (WTO) in 2006 a sweeping effort to transform farming methods and improve staple crops has helped to quadruple food production. Vietnam’s agriculture is one of the largest producers of fruits and vegetables around the globe with exports having hit US$30 billion last year, he said. “Yet due to poor handling, post-harvest losses were excessively high.” In addition, the profits on agricultural commodities remains low with the cost of agricultural inputs having increased faster than the value of outputs and as a result farmers are worse off today, even after taking into account the increase in productivity. In this era of tougher competition brought about by the ASEAN Economic Community (AEC) and other free trade agreements it’s time for the nation to rethink its overall strategy towards agriculture. “Most notably, the commitment of the farmers and others within the industry to producing a quality product just isn’t there,” underscored Vong. “Vietnam rice quality is inferior to Thai rice, Philippine bananas are more eye-catching and better preserved, the quality of Indonesian watermelon, coffee and cocoa is higher and Japanese seed is just plain better.” As a result, businesses face insurmountable challenges attempting to tap into new markets because they are mainly exporting raw commodities with little to no added value— incapable of assuming a dominant role in today’s global marketplaces. The lack of emphasis on quality not only hampers expansion into new markets but has taken its toll on traditional markets as the nation’s farmers continue to lose market share Vong stressed.  “In 2012 Vietnam rice exports accounted for a 65% market share in China, whereas today the market share has dropped to only 47% to the benefit of Myanmar and Thailand who have made advances in the market.” Vietnam has had to share the Philippine market with rival Thailand instead of monopolizing rice supply via Government to Government contracts as historically has been the case. Lastly, Vietnamese agriculture has failed to make the transition to large scale production that can benefit from economies of scale and remains largely characterized by inefficient smallholders Vong said. Associate Professor Ho Thanh Phong, a principle of the International University in turn picked up on Vong’s point on post-harvest losses and introduced a survey that showed those losses are excessively high. Large scale operations are inherently more efficient as they benefit from investing in costly handling machinery and high-tech postharvest equipment and other technology that are not feasible for small-scale farms. Phong pointed out the application of advanced science and technology to lengthen the preservation and storage time for farm produce and increasing the diversity of products are key solutions for the industry. “The lack of an established value chain in agriculture moving products from the farm to the final consumer is the number one problem the industry faces,” said Chair Vu Kim Hanh of the High Quality Vietnamese Goods Association. Production is simply uncoordinated, haphazard and out of sync. She proposed the development of sophisticated distribution channels bridging the movement of farm products through agriculture cooperatives. Lastly, Associate Professor Vo Thi Thanh Loc from Can Tho University suggested tackling agriculture problems by moving to larger scale farms, better post-harvest methods and development of more added value products. Shrimp exports to UK turn up While shrimp exports to most markets saw a decline, exports to the UK have increased significantly in recent months. The Vietnam Association of Seafood Exporters and Producers (VASEP) said the UK is considered the most potential market for Vietnamese shrimp in the EU. Since May, the UK has surpassed Germany to become the largest importer of Vietnamese shrimp in the EU. Regarding shrimp import revenue, the UK was the sole market in the EU recording a positive growth (24.4%) in eight months while Germany and the Netherlands spiralled downwards 20.7% and 29.7%, respectively.  In August, shrimp exports to the UK accounted for 4.7% of Vietnam’s total shrimp export revenue while those to Germany made up 3.1%. According to statistics released by the Vietnam Customs, shrimp exports to the UK rose by 7% to US$12.7 million in August, bringing the total export value in eight months to US$72.4 million, up 24.4% against the same period last year. India, Thailand and Indonesia are Vietnam’s major rivals in the UK market. However, in the first 7 months, shrimp imports from these countries to the market dipped 20%, 38% and 7%, respectively. VASEP forecast that in the remaining months of this year, Vietnam’s shrimp exports to the EU, particularly the UK will continue to turn up, however, the growth won’t so high due to impact of the economic downturn in Europe. Foreign furniture firms shift businesses to Viet Nam A number of foreign furniture firms have shifted their businesses from Indonesia to Viet Nam since early this year. General Secretary of the Association of Indonesian Furniture and Crafts (AMKRI) Abdul Sobur told Republika Online of Indonesia that six foreign furniture companies had moved their factories from Indonesia to Viet Nam since the beginning of 2015. One of the largest furniture companies of Taiwan, which invested in East Java Province in Indonesia, has also decided to shift its factory to Viet Nam in early 2016, he said. Sobur said some Taiwanese furniture companies, which have been operating in Indonesia for three years, wanted to shift their production to Viet Nam because of labour costs and minimum wage issues. He said the minimum wage in Indonesia had risen 150 per cent over the past three years and that these firms have decided to shift their business to Viet Nam to operate more effectively. Abdul was quoted by Metrotvnews.com of Indonesia as saying that the Vietnamese furniture industry has earned more than the Indonesian industry in terms of export value. "The Indonesian furniture industry earned US$2.8 billion, while Viet Nam's export value income last year was US$5.6 billion. It has reached US$7.6 billion, while our target this year has fallen to just US$2 billion," he said. Viet Nam was being favored in the global market, he said, due to its competitiveness. "Viet Nam has 30 per cent more efficient competitiveness, compared to us," he said. Viet Nam currently ranks fourth in the world, second in Asia and first in Southeast Asia in the export of wood furniture and furnishings. The Vietnam Wood and Wood Product Association said it was aware of no less than 26 countries that were planning, or have made moves, to expand to Viet Nam's furniture industry, such as China, Thailand, Japan and the Republic of Korea, besides the United Kingdom. Malaysia offers niche medical treatment to the Vietnamese Malaysia Healthcare Travel Council (MHTC) is strengthening its presence in Vietnam bringing world-class healthcare facilities and service offerings. Malaysia is set to pave the way in further positioning itself as a healthcare travel destination by propositioning potential Vietnamese customers, offering a unique healthcare system providing quality care, ease of accessibility and affordability. The new healthcare office shall serve as a medical travel assistance and information centre providing end-to-end facilitation service. Malaysian Consul General in Ho Chi Minh City Sofian Akmal Abd Karim said that, “Through the Malaysia Healthcare Centre in Ho Chi Minh City, we would be able to address inquiries and facilitate our Vietnamese friends who are seeking quality healthcare and treatment in Malaysia.” MHTC CEO Sherene Azli added that, "By establishing a physical presence in Ho Chi Minh City, we hope to reach out better to Vietnamese healthcare seekers in a timely manner, allowing us to serve them better, hence strengthening our vision to be the preferred healthcare travel destination in the region. We are confident that the number of healthcare travellers from Vietnam will increase with our physical presence in Vietnam, furthering us in our quest to offer healthcare seekers a seamless end-to-end service”. Malaysia Healthcare (MHTC) follows strict regulatory guidelines in its medical practice, ensuring quality care combined with the commitment and backing of its government, strong public-private sector partnerships and the unwavering support of its people in providing the warm Malaysian hospitality. Amongst others, the Malaysia Healthcare centre in Ho Chi Minh will offer information on hospitals offering niche treatment which are most sought by the Vietnamese. The office will also facilitate inquiries pertaining to medical treatments that are  inaccessible or expensive in Vietnam, such as IVF and PGD, cancer treatments, stem cell, heart related treatments and so on. Established in 2009 by the government of Malaysia, MHTC is the primary agency tasked to develop the healthcare travel industry and promote Malaysia as the preferred destination for healthcare travel in the region. In Vietnam, MHTC has appointed Insmart, an insurance service manager, healthcare provider and one of the leading Third Party Administrator (TPA) providers as its key strategic partner. HDBank conferred Best Managed Company award by Euromoney Thanks to its coherent, effective and transparent strategies and focused management, Ho Chi Minh City-based HDBank has won the Best Managed Company Award 2015 by UK-based prestigious financial magazine Euromoney. HDBank is the first bank in Vietnam to win this coveted prize and the only Vietnamese enterprise to make it to Euromoney’s prize list this year. HDBank was rated  best-managed company because it met all the criteria set out by the contest organisers.  The winners were chosen through a survey of 500 analysts at leading banks around the world. The survey was done between February 26 and July 3 this year. Last year, HDBank and its subsidiary companies posted a combined pre-tax profit of VND700 billion ($32.4 million); a year-on year increase of 15.4 per cent in terms of total asset value to VND99.5 trillion ($4.6 billion); and a 16 per cent growth in capital mobilisation.  Its outstanding credit balance was VND54 trillion ($2.5 billion), up 10 per cent over 2013. The bank kept its bad debt ratio at 1.4 per cent, return-on-assets (ROA) at around 0.6 per cent and return-on-equity (ROE) at 6.9 per cent. Kenan Institute Asia provides IT workforce support Kenan Institute Asia officially launched the “Microsoft Youthspark Techsperts” program on October 1, funded by Microsoft Vietnam, to support young Vietnamese in the information technology (IT) field. “Via the program young Vietnamese will be trained in the necessary skills and knowledge to enhance their ability to work in technology trading,” said Ms. Phan Kieu Anh, Director of the program. “Vietnam is gradually increasing the power of its IT sector to create jobs, improve education, and promote a culture of creativity,” according to Ms. Duong Thi Kim Anh, Human Resources Manager at Microsoft Vietnam. “The IT sector is not just a single industrial sector but also a essential sector in helping the development of other sectors. As a developing economy, Vietnam is under pressure from youth unemployment, especially fresh graduates from vocational colleges, who still lack practical skills for employment.” In the program students will be provided with job training connected to a practical job environment. It is a pilot program that aims to create a workforce selling software and is an opportunity for young people with a passion for the IT business and who want to start up a business selling products for large corporations. Students will be provided with basic knowledge on Microsoft’s IT products and will learn about Office 365 and Windows 10 by Microsoft, and be taught soft skills in selling products, such as communication, negotiation, and team work, from Kenan’s lecturers, and do an internship in IT stores such as Tran Anh, MediaMart, Pico, Phuc Anh, and Viettel Store. September PMI down to 49.5 The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, dropped below the 50.0 no-change mark in September, posting 49.5, following a reading of 51.3 in August. This marginal deterioration brought an end to a two-year sequence in which the health of the sector had improved continuously, according to the latest report from Nikkei and Markit Economics. “After seeing growth slow in recent months, the situation took a turn for the worse in September as the Vietnamese manufacturing sector posted contractions in both new orders and production,” said Mr. Andrew Harker from Markit. New orders decreased for the first time in just over a year in September amid deteriorating market conditions. However, the rate of decline was only slight. Meanwhile, new export orders fell for the fourth successive month, and at the second-fastest pace in the series’ history. Some panelists mentioned particular demand weakness from other countries in the region. Falling new orders contributed to a slight reduction in manufacturing output, the first in two years. The completion of projects was also mentioned as a factor leading production to decrease, according to the report. “Lower new business was also reportedly behind a solid fall in backlogs of work, the fastest in six months,” the report stated. Despite declines in output and new work, firms continued to raise employment during September. That said, the rate of job creation was modest and the slowest in three months. The latest data pointed to a sharp and accelerated decline in input prices in the sector, largely due to falling fuel costs that outweighed the inflationary impact of a weaker currency. The reduction in input prices was the joint second-fastest in the series’ history, behind only that seen in January. With input costs decreasing sharply, manufacturers continued to lower their output prices. Moreover, the rate of decline quickened for the third month in a row, to the sharpest since July 2012. Vietnamese manufacturers lowered their purchasing activity for the first time in 25 months amid reduced production requirements. “This enabled suppliers to improve their delivery times again during September, the second successive month in which lead times have shortened,” the report said. Reduced purchasing activity contributed to a third consecutive monthly decline in stocks of purchases, and the most marked since March. On the other hand, stocks of finished goods increased, reflective of a drop in sales. The rise was the first in four months, according to the report. Vietnam raises gasoline prices slightly Vietnam on October 3 increased gasoline prices again after only two weeks, as the Ministry of Industry and Trade said global fuel prices have seen “irregular fluctuations.” The retail price of 92RON, the country’s most popular gasoline grade, went up 1% to VND18,139 a liter, while its bio alternative E5 rose to VND17,644 (78 US cents) a liter. Diesel however went down 1.2% to VND13,723 a liter and kerosene fell slightly to VND12,725 a liter. Vietnam increased gas prices by 4% on September 18, after five consecutive cuts in three months. Fuel price hikes have to be at least 15 days apart, according to a rule that was introduced late last year.  Vietjet Air offers discounts to Southeast Asian destinations Low-cost carrier Vietjet Air on October 3 announced the offering of more than 100,000 tickets priced from 0 VND for some Southeast Asian routes.  The discount tickets are on sale on three days from October 5-7 as part of the campaign “It’s 12 o’clock, let’s Vietjet”.  Customers can buy the tickets online at www.vietjetair.com , or on smart phone at https://m.vietjetair.com and www.facebook.com/vietjetvietnam .  The tickets are applied to flights to Yangon (Myanmar), Singapore and Bangkok (Thailand) between October 15 and December 31.  Also under the campaign “It’s 12 o’clock, let’s Vietjet”, the carrier is offering 500,000 low fares from 199,000 VND (8.85 USD), 299,000 VND (13.29 USD) and 399,000 VND (17.74 USD) for all domestic flights and international flights to the Republic of Korea (RoK), Myanmar, Singapore and Thailand until April 22, 2016.  Vietjet Air has so far operated 33 air routes inside Vietnam and between Vietnam and cities in Thailand, Singapore, the Republic of Korea, Taiwan (China), Cambodia and China. HCMC especial economic zone proposed to establish in four districts The Ho Chi Minh City Institute for Development Studies on Thursday submitted a draft platform detailing establishment of a special economic zone to the city People’s Committee. According to the draft platform, the special economic zone (SEZ) will be established in four districts including 7, Nha be, Can Gio and Binh Chanh. It will be built over 35.46 square kilometers in District 7; 48.49 square kilometers in Binh Hung, Phong Phu and Da Phuoc communes of Binh Chanh district; 100.56 square kilometers in Nha Be and 704.22 square kilometers in Can Gio.  The zone will create a development lever for the southeastern region and the Mekong Delta, provide jobs and improve income for local residents, said the institute. The project will pay attention to climate change adaptation, protection and preservation of mangrove forests and historic relic sites as well as old architectures in the city. Locating in the southern main development direction of the city towards the East Sea, it is expected to turn the currently agricultural area with low economic effectiveness into a modern and sustainably developing urban area. This area is especially suitable with development of sea economy and logistics service with Hiep Phuoc Seaport. The institute forecast some risks in the SEZ’s establishment, for instance, construction will be costly in the low lying area, especially Hiep Phuoc-Nha be site with many canals. This will be a challenge to the city budget as the economy has fully not recovered. Local traffic infrastructure have been incomplete, there is a sole route to enter Hiep Phuoc Seaport from Nguyen Van Tao Street. SEZ model will take at least ten years to prove its effectiveness, so it will be disadvantageous if the zone construction falls in economic crisis phase. The institute proposed to build the project in three phases. In 2016-2018, the institute will build a project and construction plan, do large scale surveys, contact local and international investors and seek strategic investors. In 2018-2025, a mechanism framework, management apparatus, regulations and commitments, and develop social and technical infrastructure in the area will be set up. The third phase 2025-2035 will complete the zone’s infrastructures. ASEAN firms eye Vietnamese market Vietnam will be the first destination for trade and promotional activities to be conducted by the ASEAN Business Club, the club decided at its forum which opened in Thailand on October 1 night.  In his keynote speech at the forum, Minister Counsellor Pham Thanh Nam at the Vietnamese Embassy in Thailand emphasised that Vietnam has continuously created incentives for foreign investment.  The diplomat briefed the participants on Vietnam’s recent achievements in economic development and international integration.  He took the occasion to highlight the potential of the Vietnamese market for regional enterprises, saying that now is a good time to invest in Vietnam.  The ASEAN Business Club aims to develop cooperative opportunities for regional firms.  The club’s first fact-finding tour is scheduled to take place in Ho Chi Minh City from October 29-30.- Thai Binh hosts Vietnam-South Africa trade conference A Vietnam-South Africa conference on trade, investment and tourism was organised in the Red River province of Thai Binh on October 2.  At the event, representatives from South Africa’s Embassy in Vietnam and the Thai Binh province introduced their socio-economic and political situations; development potential; and policies and strategic orientations in cooperation, trade and tourism development.  Maria Van Der Westhuizen-Nel, First Secretary of the South African Embassy in Vietnam, emphasised South Africa is a leading force in driving the development of 14 countries in the South African Development Community.  South Africa is rich in natural resources and its agricultural and industrial sectors are highly developed. South Africa’s industrial production accounts for 40 percent of Africa’s total industrial output.  South Africa is also the leading country in gold, diamond, mangan and chrome mining.  Speaking at the event, Vice Chairman of the Thai Binh People’s Committee Nguyen Hoang Giang expressed his willingness to expand comprehensive cooperation with South Africa in the future.  Thai Binh will create favourable conditions for investors and businesses from South Africa to search for opportunities in investment, trade and tourism, said Giang.  Vietnam-South Africa diplomatic relations have developed considerably since they were formed in 1993 with the total trade value reaching nearly one billion USD in 2014, of which Vietnam’s exports and imports were 793 million USD and 144 million USD, respectively.  The South African delegation also visited a number of local businesses. Vietnam, Mexico trade flourishes Soaring shipments from Vietnam into Mexico led to a hike in bilateral trade revenue within the first eight months of 2015.  According to the Vietnam Embassy’s Trade Office in Mexico, the eight-month turnover hit 1.32 billion USD, an annual climb of 51 percent.  During the period, Vietnam exported nearly 1.07 billion USD worth of commodities to Mexico, up 38 percent year on year. The former also imported goods valued at 320.94 million USD from the latter, increasing 215 percent from the 149 million USD seen in 2014.  Income from phones and components captured the lion’s share of the Vietnamese export revenue breakdown with 38.48 percent or 384.88 million USD, followed by footwear, computer/electronic devices, garment-textiles, vehicles and spare parts, fisheries products and machinery.  Meanwhile, Vietnam mainly consumed electronic equipment, iron and steel, and animal feed from Mexico.  Transactions made in September are expected to add 166 million USD to the bilateral trade revenue.  In 2014, trade turnover between the two nations hit 2.26 billion USD, climbing 40 percent from 2013, reported the Mexican central bank and economics ministry. Financial regulator lowers inflation forecast to 2% The National Financial Supervisory Commission (NFSC) has downgraded its inflation forecast for 2015 from 3% to below 2%, citing lower oil prices. According to the NFSC, headline inflation in September fell to 0% but core inflation, which excludes food and energy prices, remained steady at 2.4%. The commission, however, is keeping its economic growth forecast unchanged at 6.5% despite many adverse external factors, which it says do not exert a major impact on the Vietnamese economy. In the first nine months of 2015, GDP expanded by 6.5%, primarily driven by industrial production and construction, in which manufacturing was the main growth engine. During the said period, industrial production and construction grew by 9.57%, compared with 5.75% from a year earlier, while services largely stayed flat and agriculture increased at a slower pace than the previous year. The index of industrial production from January to September rose by 9.8%, much higher than the 6.3% in the first nine months of 2014, with the manufacturing sector posting an increase of 10.2%. Work begins on VND900 billion-bridge crossing Lam River Construction of the Yen Xuan Bridge spanning the Lam River in Hung Xa commune, Hung Nguyen district, Nghe An province was kicked off by the Ministry of Transport and Nghe An authorities on October 2. The bridge measures 9m in width and 3.6km in length including the approaches of 1.8km. It is invested with over VND900 billion (US$39.6 million) as part of the build-operate-transfer (BOT) project on building Vinh city's belt road and expanding the national highway 1A. Upon its completion scheduled for May 2017, the bridge will help connect the transportation in the south of Nghe An with the north of Ha Tinh and provide access to nine isolated communes in Nghe An's Nam Dan district and five communes in Ha Tinh's Duc Tho district during the rainy season. The new bridge, along with existing highways and bridges, will create the shortest road network linking Vinh city with Cau Treo International Border Gate. Local people currently have to cross the Lam River by Yen Xuan Rail Bridge which is about 2.5km from the recently commenced bridge. 120 contracts signed at Vietnamese Goods Identity Week Around 120 contracts were signed at three business conferences in Ho Chi Minh City, Da Nang and Hanoi during the Vietnamese Goods Identity Week which concluded on October 1. The event, held by the Ministry of Industry and Trade, drew the attention of over 20,000 visitors to 500 booths in Hanoi and 300 booths in Ho Chi Minh City displaying diverse garments, footwear, mechanic machines, industrial support products, farm produce and pharmaceutical products, among others. Nearly 300 enterprises groups and associations also showcased their products during the Vietnamese Goods Identity Week - Pride of Vietnamese Goods fair, which opened on September 27 in Hanoi, Da Nang and Ho Chi Minh City. In addition, 1,000 vouchers worth VND50,000 each were also handed out to visitors during the fair. A number of prizes for the most popular Vietnamese products and the most impressive booths were also presented to enterprises joining the event. According to Deputy Minister of Industry and Trade Ho Thi Kim Thoa, the event aimed to foster the dissemination of high-quality Vietnamese products among domestic consumers while increasing Vietnamese commodities’ competitive capacity. The fair also created a good opportunity for consumers to access Vietnamese products and link enterprises to establish a Vietnamese goods channel distribution nationwide, she added. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR