BUSINESS IN BRIEF 12/11 PVN seeks import tax cut to compete with imports Viet Nam Oil and Gas Group (PVN) is seeking approval to lower tax rates for the Dung Quat Oil Refinery because of its inability to compete with imported fuel. PVN claimed in a report to the Government Office that tax policies are having a negative impact on the Dung Quat Refinery's operations. According to PVN, the oil refinery was facing high inventories because its products could not compete with imported goods. Diesel and mazut import taxes from ASEAN countries were cut to 5 per cent and 0 per cent from January 1, 2015 in accordance with the ASEAN Trade in Goods Agreement (ATIGA). However, products from Dung Quat are still subject to an import tax of 10 per cent, forcing a number of local businesses that bought petroleum from Dung Quat to choose other sources. Since March, several big customers, including Petrolimex, have reduced their orders. Since mid-August, the demand for diesel in Viet Nam has been on a downward trend, and businesses prefer imported options because of the tax incentives. Dung Quat is facing challenges because diesel is its main product. The refinery produces 3.3 million tonnes per year, accounting for half of its total output. According to Binh Son Refining and Petrochemical, the operator of Dung Quat, the refinery plant is expected to produce about 620,000-630,000 tonnes of petrol in December. Meanwhile, the refinery has made contracts to sell 520,000 tonnes monthly. It is estimated that the inventory at Dung Quat will reach 110,000 cubic metres. If customers postpone their orders until next year, the inventory will reach 190,000 cubic metres, while the capacity of Dung Quat's inventory remains at only 150,000 cubic metres. Dung Quat, the country's first refinery, opened in 2009 and became operational in May 2010, with a capacity of refining 148,000bpd of crude oil, meeting 30 per cent of the nation's demand for petroleum products.  AIA Vietnam, ACB sign bancassurance deal The Asia Commercial Bank (ACB) and AIA Life Insurance Limited have officially signed a strategic agreement on distributing life insurance products through the bank's network (bancassurance). Under the deal, the two organisations will provide customers with a wide range of financial and insurance services. They can buy AIA Vietnam's life insurance products at ACB's 346 branches, transaction offices, and priority customer centres nationwide, and pay the premium through the bank. AIA Vietnam CEO Wayne Besant said the cooperation will increase convenience for customers, diversify AIA’s distribution channel and expand ACB service portfolio. Up to now, AIA Vietnam has set up more than 130 offices in 53 provinces and cities nationwide and provided service for over 520,000 customers. By the end of September, AIA Vietnam has paid a total VND2,000 billion worth of insurance benefits to more than 280,000 customers.  HCM City, Canadian province tighten investment, trade links A letter of intent on trade and investment cooperation was inked between Ho Chi Minh City’s Department of Industry and Trade and the Ministry of International Trade of Canada’s British Columbia province on November 9.  Accordingly, the two sides will facilitate their businesses’ information exchange, mutual working visits and trade and economic relation consolidation. They will also share information on investment and trade policies of their respective Governments and provide supports for each other’s investors and partners.  Prior to the signing ceremony in HCM City, Chairman of the municipal People’s Committee Le Hoang Quan hosted a reception for British Columbia Minister of International Trade and Minister Responsible for Asia Pacific Strategy and Multiculturalism Teresa Wat.  The local official said there have been 59 Canadian projects worth 115 million USD in his city so far. HCM City exported 230 million USD worth of goods to Canada, mostly British Columbia, in the first 10 months of this year, a year-on-year increase of 20 percent. Meanwhile, its import turnover from Canada surged by 70 percent yearly to reach 124 million USD.  He said that he hopes the two sides will strengthen economic bonds to fuel trade between the Vietnamese municipality and Canada to 500 million USD in 2016 and 1 billion USD by 2020, which are completely realizable since both HCM City and British Columbia house sea ports and major import-export gateways of their countries.  Wat also said Canada and Vietnam hold numerous advantages and collaboration opportunities as both join in the Trans-Pacific Partnership agreement.  The signing of the letter of intent is just an initial step and the two sides should swiftly take action to grasp chances and strengthen investment and trade ties, she added, noting that British Columbia could enhance partnership with HCM City and Vietnam in forestry, mining, agriculture and seafood which it has strengths in.  Firms expect customs improvements Businesses expect further improvements in customs clearance to promote management efficiency while creating convenience in cross border trade, a conference heard yesterday. Held by the General Department of Customs, Japan International Co-operation Agency (JICA) and USAID's Governance for Inclusive Growth Programme, the conference aimed to review the Viet Nam Automated Cargo and Port Consolidated System (VNACCS/VCIS) after one and a half years in operation and listen to the opinions of firms to improve the system. According to Dao Thi Thu Thuy from the General Department of Customs, a survey of more than 300 businesses revealed that 95 per cent of them were satisfied and very satisfied with the automated customs clearance system. A representative from Brother Industries Viet Nam said that the system helped save time, human resource and money spent in customs declaration, estimated to save around 100 hours and more than US$12,000 per month for his company. Still, the system needed to be further improved as businesses found some inconveniences such as limited space for customs declaration, slow feedback and support. Thuy said that the system currently operated only 50 per cent of its functions and needed the co-ordination of relevant ministries and organisations to ensure that all procedures were conducted online. Au Anh Tuan, deputy director of the Customs Control and Supervision Department, said the system would be improved to reduce time for customs clearance and tighten management of imports and exports. The system including e-customs declaration, e-invoicing and e-payment among others, was put into operation on April 1, 2014 and now all customs departments nationwide conducted customs procedures through the system. E-customs and e-tax payment systems were among administrative reform efforts of Viet Nam to improve its business climate. Statistics from the Finance Ministry revealed that as of October 26, more than 90 per cent of businesses registered to pay tax online and that 98 per cent registered to conduct tax filings online. In the latest report on the ease of doing business announced late last month, the World Bank ranked Viet Nam 90th out of 189 countries, moving three grades up.  White-leg shrimp much sought after in Germany Vietnam is the top shrimp supplier for Germany, accounting for 18.4% of Germany’s total shrimp import revenue, according to the International Trade Centre (ITC). The Vietnam Association of Seafood Exporters and Producers (VASEP) reported that Vietnam shrimp exports to Germany hit US$84.4 million in the first nine months of this year, down 16.5% against the corresponding period last year. Of the figure, white-leg shrimp made up 73.5% while prawn held 19.9%. Among shrimp exports to Germany, white-leg shrimp always accounted for a large proportion, for example 35.7% of total export value in 2011, 46.6% in 2012, 53.4% in 2013 and 58% in 2014. According to VASEP, Germany remained the biggest importer of Vietnamese shrimps among EU countries from 2011 to 2014. In the first half of this year, Germany’s total shrimp imports dipped 18.2% to US$252.8 million. However, Vietnam’s shrimp exports to the market still rose by 12.5%. VASEP has predicted that German shrimp consumption is stable this year. After the recovery of German economy, its demand for seafood, including shrimp, will increase.  The Gioi Di Dong listed as second leading retailer in Vietnam Retail Asia Publishing and Euromonitor International Ltd has unveiled top 500 leading retailers in the Asia-Pacific region in 2015 and honoured local phone retailer The Gioi Di Dong (Mobile World Co. Ltd.) as Vietnam’s top ten retailers in the field of electronics and mobile communications.  This is the sixth time Mobile World is listed in the Top 500 leading retailers in Asia-Pacific. The local phone retailer now ranks 274th, a rise from the position of 409th last year. This Asia’s leading prestigious retail prize selected businesses basing on their revenue, growth, retail space and the number of shops. Mobile World.is the largest second retailer in Vietnam after Saigon Co.op. By now, Mobile World has increased the number of its supermarkets to more than 500 in 63 provinces and cities in Vietnam. Recently, Mobile World has been listed among top 50 most valuable brands by Brand Finance. New special consumption tax on 24-seater cars The government will levy a special consumption tax on cars with 24 seats and below from January 1, 2016, according to the prime minister's new decree. According to details in a number of new articles of the revised law, under the decree 108/2015/ND-CP, the new special consumption tax, which will be set equal to the importers' price, will replace the current one. It has been is calculated keeping in mind their cost, insurance, and freight (CIF) value plus current import tariff. The new calculation is expected to ensure fairness between automobile importers and domestic assemblers and producers, preventing tax fraud and tax losses to the State's budget. The tax for imported cars with 24 seats and below will be equal to the importer's price but not lower than 105 per cent of the cost price, which includes the car's import price plus import tax and special consumption tax. If it is lower than this level, the tax will be fixed by a tax agency following regulations on tax management. As for the 24-seater cars assembled and manufactured in Viet Nam, the tax will be equal to the carmakers' wholesale price but this price will not be lower than 7 per cent compared with the average prices of automobile businesses. According to the General Statistics Office, Viet Nam imported an estimated 95,000 cars in the first ten months of this year at a cost of US$2.31 billion – making year-on-year increases of 82.8 per cent and 100.2 per cent, respectively. As is normal, people's demand of cars will increase in the last few months of the year. Therefore, the businesses are expecting to import reach more than 100,000 cars by the end of this year with the total price exceeding $2.5 billion. Meanwhile, the total import turnover of auto spare parts reached $4.8 billion in the ten months, 64.4 per cent higher than the same period last year. Imported automobiles is expected to add to the boom in the domestic market in the near future as Viet Nam will reduce its car-import tax to zero per cent by 2018, under the ASEAN Trade in Goods Agreement. Japanese firms set sights on Ips Drawing upon its vast wealth of experience, Japan has offered Vietnam sterling advice to help it attract a greater number of foreign investors. Minister of Planning and Investment Bui Quang Vinh met with leaders of Japan’s Saitama prefecture last week. The guests said many Japanese investors, and both small and big enterprises, wanted to do business in Vietnam. The Japanese side suggested that they would co-ordinate with local authorities in the southern province of Dong Nai to build an industrial park (IP) for the supporting industries to attract Japanese small and medium-sized enterprises (SMEs). Dong Nai and Saitama finally agreed that the former would build its existing 180 hectare Nhon Trach 2 IP under the latter’s requirements. After this, Dong Nai would lease the park to Saitama, which will attract Japanese SMEs. “We are appraising this investment model. If it is deemed effective, it can be multiplied nationwide,” Vinh said at last week’s third joint meeting between Vietnam’s Ministry of Planning and Investment and the Japan Chamber of Commerce and Industry (JCCI). The meeting was attended by many Japanese big firms, including Itagaki Iron Works, Japan Air, Sojitz, Itochu, Tokyo Seiden, Set Software, Toyota, ANA Holdings, and Mitsubishi. These firms told the MPI they wanted to both expand business and open more factories in Vietnam, and that Vietnam should build specialised IPs for Japanese firms, with a special focus on IPs for Japanese SMEs. “SMEs will become a key driver of Vietnam’s economy. Japanese SMEs also want to be part of the economy,” said Yoichi Kobayashi, chairman of the Mekong-Japan Business Co-operation Committee. He introduced Japan’s “Maru” lending system to the MPI, currently conducted by the JCCI in favour of Japanese SMEs. These SMEs are given loans from this system without having to make asset deposits or be guaranteed. The loan’s maximum value is 20 million yen ($166,000), with the maximum lending rate of 1 per cent per year, within 7-10 years. “We hope the Vietnamese government can study this system to develop it in Vietnam,” he said. “We also want to co-operate with the Vietnamese government to build its policy to support SMEs.” Kobayashi said that as of this year’s end, when the ASEAN Economic Community was established, Japanese firms would greatly benefit from cementing investment ties with Vietnam, where they could boost exports to regional markets. The Japan External Trade Organisation will support a large group of Japanese firms to enter Vietnam to seek investment opportunities this November. It is reported that 42 per cent of Japanese firms in China wish to relocate their production to other nations. This means that Vietnam will have many opportunities to lure more Japanese investment. Arakawa Yoshio, managing director of Universal Computer System, said that his firm wanted to establish a company in Vietnam to provide IT solutions. So far, it has found several local partners. “Still, Vietnamese partners cannot provide us with value added tax invoices for products purchased from some online channels. Also, Vietnam still doesn’t allow the opening of credit cards with names of enterprises.” New plants power up grid With a series of build-operate-transfer coal-fired power plants due to come online in the near future, manufacturers in Vietnam are looking forward to a more stable power supply. A series of upcoming coal-fired power plants are set to ease the strain on the national power grid Last week, AES-VCM Mong Duong Power Company Limited held a ceremony to mark the successful operation of the Mong Duong 2 build-operate-transfer (BOT) coal-fired power plant, which began full commercial operation in April 2015, approximately six months ahead of schedule. The Mong Duong 2 power plant is the largest foreign invested power project in Vietnam and the country’s first new private sector power plant to be commissioned in the last ten years. Initiated in December 2010 in the northern province of Quang Ninh, it has two units with the total generation capacity of 1,240 megawatt and the total investment capital of approximately $2.1 billion. The plant was built under a BOT agreement and will be transferred to the government after 25 years. The plant is expected to add more than 7.6 billion kWh of electricity annually to the national power grid. Deputy Minister of Industry and Trade Cao Quoc Hung hailed the completion of the Mong Duong 2 power plant as a meaningful and important milestone for Vietnam’s power industry. “The successful completion of this project is a positive move forward, and has once again raised the hopes of boosting power investment under the BOT model,” said Tran Viet Ngai, chairman of the Vietnam Energy Association. Last month, the consortium of Japan’s Marubeni Corporation and Korea Electric Company started construction on the Nghi Son 2 coal-fired power plant in the central province of Thanh Hoa. The BOT project has the total investment capital of $2.3 billion. The first turbine of the Nghi Son 2 thermal power plant is expected to come online in 2019, and it is scheduled for completion sometime in 2020. Meanwhile, after several false starts with other partners, the Hai Duong thermal power plant, which is mainly invested by Malaysia’s Jaks Resources, has been brought back on track with the participation of China’s Power Engineering Consulting Group. In a recent press release, Jaks Resources said, “With the financing secured, we believe there is now a higher likelihood that we would meet the project’s financial deadline of October 31.” In past years, only seven power plants have been licensed to foreign investors under the BOT model. They are Phu My 3, Phu My 2.2, Mong Duong 2, Hai Duong, Vinh Tan 1, Nghi Son 2, and Duyen Hai 2. The list of foreign-invested BOT power projects looks set to increase, as several foreign companies are currently in negotiations, or are conducting feasibility studies for developing power plants nationwide, such as South Korea’s Samsung C&T Corporation, India’s Tata Power, Singapore’s Sembcorp Industries, and Thailand’s EGATI. According to the Vietnam Institute of Energy and the National Centre for Socio-Economic Information and Forecast, Vietnam’s power demand and GDP are expected to grow by 11 per cent and 7 per cent, respectively, over the next five years. The Vietnamese government has plans to increase the country’s installed capacity by more than 60GW over this period. Thanh Hoa approves 117 projects in nine months Thanh Hoa Province approved the investment policy for 117 projects, including five foreign direct investment (FDI) projects, worth VND7.4 trillion ($331.4 million) in the first nine months of this year. This was announced by the central province's people's committee at an annual press conference hosted by the Thanh Hoa department of information and communication and the Thanh Hoa department of propaganda on November 3. The implementation of the direct investment projects was worth about VND58.2 trillion ($2.6 billion), achieving 74.4 per cent of the province's target and 2.3 times higher than the same period last year. The province's economic growth was estimated at 10.6 per cent, the highest in four years. New Circular on SME support The Ministry of Planning and Investment (MPI) recently issued Circular No. 13/2015/TT-BKH on defining priority areas and the criteria to receive support from the development fund for small and medium-sized enterprises (SMEs). Priority areas include three sectors: agriculture, forestry and fisheries; manufacturing and processing; and water supply and waste / wastewater treatment and management. To access the funds SMEs need to meet at least one of the following criteria: have high quality products with new energy or materials; be involved in equipment innovation / new technology / high-technology; create jobs, especially for women; have energy-saving / environmental friendly products; or use clean technologies and clean and renewable energy. Corporate governance capacity and management experience and a sound credit rating are also considered necessary to access the fund if the SME is not on the list of priority areas. The Circular will take effect from December 13. MPI also issued Circular No. 09/2015 /TT-BKH, prescribing 16 procedures for foreign investment under the provisions of Decree No. 83/2005 /ND-CP dated September 25, 2015, on overseas investment and procedures and State management. This Circular will take effect from December 8. Energy efficiency needed to meet future demand Enhancing efficient energy use, expanding renewable energy resources, and strengthening power exchange in Asia would help Vietnam meet the growing demand for electricity, put at 7 per cent to 10 per cent annually to 2030, and reduce carbon emissions to promote long-term economic growth. The comments were among the expert opinions presented at the “Shaping Vietnam’s Sustainable Power Sector Development” conference held on November 4 in central Da Nang city, attended by Deputy Prime Minister Hoang Trung Hai, Deputy Minister of Industry and Trade Hoang Quoc Vuong, Mr. Axel van Trotsenburg, Vice President of World Bank in Charge of East Asia and the Pacific, and Ms. Anita Marangoly George, World Bank Senior Director for Energy & Extractives. Mr. van Trotsenburg said that Vietnam has done well in providing access to electricity, with almost 100 per cent of the population now connected. Access to power has also been accompanied by improvements in operational efficiency and service quality. “The key question today is how to meet future demand, while also complying with the government’s commitments to reducing greenhouse gas emissions in the context of climate change,” he said. Vietnam has a high share of renewable energy in its total generation mix, with hydropower accounting for 42 per cent of power generation; much higher than in many other countries. The conference highlighted that Vietnam can further develop its solar and wind potential but this will require improvements in the regulatory framework. However, even if Vietnam fully taps into its potential in renewable energy it may still not be able to fully meet future energy demand. Greater efficiency in the generation, transmission, and distribution of energy will be critical. Regional power trade also offers potential benefits. The conference was also told a low-carbon development scenario should not adversely affect economic growth in Vietnam and may instead boost growth in the long run. Vietnam continues to be committed to supporting competition in the power sector and the government has set out a clear roadmap for developing a wholesale electricity market, which is to be fully operational by 2021.   Traffic jam, flooding challenge real estate businesses Many real estate businesses have calculated anti flooding measures for next decades while building their projects unless they will be outdated, because rapid increase of immigrants together with private vehicle volume has put heavy pressure on urban traffic system in Ho Chi Minh City.  According to the Department of Transport, the city had about 6.4 million motorbikes and 600,000 automobiles, taking the lead in the number of motorbikes in Vietnam last year. Vehicle volume rockets 10 percent while the rate of built or upgraded roads and bridges reaches only 2 percent a year. Increasing immigrants and private vehicles will continue overloading urban traffic infrastructure, the department has said. Previously, house buyers usually chose projects in the eastern and southern parts of the city because roads there were quite clear and there were many routes to reach center areas. However, they have not been like that any more. Traffic jam has occurred everyday in the eastern entrance gateway. The condition has also taken place recently in broadened and built Hanoi Highway and Pham Van Dong street because they have been developed asynchronously with surrounding roads. Similar condition has occurred in the Nguyen Van Linh-Nguyen Huu Tho crossroads in District 7 in the south although there are not many number of real estate projects being developed there. Urbanism expert Dr. Nguyen Minh Hoa said that besides traffic jam, the low-lying southern and eastern areas are considered to be ‘water containers’ in the city, where urbanization has progressed quickly while irrigation reservoir and drainage projects have not been implemented appropriately. First Vietnamese vegetable farm with US and EU organic standards recognised Vietnamese organic food development and distributor system – Organica on November 4 received organic farming certification under standards of the US Department of Agriculture (USDA organic) and the European Union (EU) for its organic vegetable farm in Long Thanh, southern Dong Nai province. It is the first tropical vegetables farm in Vietnam certified with organic standards from the two organisations. The 1,8ha farm grows nearly 100 tropical fruits and vegetables including leafy vegetables, edible flowers, fruit vegetables, root vegetables, herbs and fruit trees. According to Director Pham Phuong Thao of Mua (season) JSC, the owner Organica chain stores, prior to the vegetable farm, Organica only conducted distribution of organic products but faced difficulties in finding stable supply sources. In 2013, Organica developed its own organic farm with the support from the Control Union, a global network of inspection operations and dedicated laboratories. "We have overcome the difficulties in land rehabilitation, weed management and pest control. As with conventional cultivation using chemical fertilisers, pesticides and herbicide, organic farming requires living with other species. We must use traditional methods such as using herbs (chilli and garlic) for repelling insects, or new methods of using plastic tarpaulin to prevent grass and using biological pesticides (allowed by USDA and EU)," said Thao. After nearly three years of following strict requirements on organic farming processes from the US and EU, Control Union experts assessed and certified organic standards for Organica last October. Organic certification is considered the highest hygiene standards for food safety in the world today. Not only ensuring the products’ safety by not using chemical fertilisers, pesticides, stimulants, growth hormones or genetically modified seeds, organic farming also secures environment-friendly elements, biodiversity and sustainable development. More than 400 different organic products by Organica are sold at two stores at No. 130 Nguyen Dinh Chieu Street, Ward 6, District 3 and No. 54 Hoang Van Thu Street, Ward 9, Phu Nhuan District, Ho Chi Minh City. Currently the company plans to expand connections with individuals and businesses interested in organic agricultural production to share experiences on farming techniques, support solutions and output for organic products. 2015 cashew exports forecast at US$2.5 billion While the outbound sales of coffee and rice have dropped, the export of cashew products has been faring well and expected to bring in some US$2.5 billion for the country this year. Data of the Ministry of Agriculture and Rural Development (MARD) showed Vietnam earned US$1.97 billion from exporting 272,000 tons of cashew nuts in the first ten months, up 6% in volume and 18% in value. Dang Hoang Giang, vice chairman of the Vietnam Cashew Association (Vinacas), said cashew exports could bring in a record revenue of US$2.5 billion this year owing to higher selling price. Cashew nuts were shipped abroad at an average price of US$7,263 per ton in the January-September period, rising by 12% compared to the same period last year. Last year’s export turnover of cashew stood at US$2.2 billion, including US$2 billion from the export of 306,000 tons of cashew nuts and the US$200 million from cashew oil and cashew shell shipments. A ton of cashew nuts was sold at an average price of US$6,553 in the January-November period last year. Despite a rise in cashew nut exports in the year to October, Vietnam imported 780,000 tons of unprocessed cashew worth more than US$1 billion, increasing 54.5% in volume and around 86% in value compared to last year’s same period. Giang said value-added products of the 272,000 tons of cashew nuts exported over the past ten months account for less than 10%. VIFA Home 2015 set for November Vietnam Furniture & Home Accessories Fair (VIFA Home 2015) will kick off in HCMC on  November 12 with the participation of 130 enterprises in the industry. The HCMC Handicraft and Wood Industry Association (Hawa) will be the organizer of the four-day event at the Tan Binh Exhibition and Convention Center (TBECC) at 446 Hoang Van Thu Street. The 500-booth fair will feature indoor and outdoor products including furniture for the living rooms, dining rooms, bedrooms, bathrooms, kitchens, gardens, offices, restaurants, hotels, coffee shops, resorts, villas and luxury apartments. The exhibits include decorative products such as curtains, fabrics, carpets, flooring materials, wallboards, wallpapers, kitchen appliances, decorative lamps, paintings, sculptures, ornamental rocks and trees. Vietnam will have to cut tariffs on goods imported from other ASEAN countries to 0% in line with commitments to ASEAN Free Trade Area agreements including the Common Effective Preferential Tariff (CEPT). This means domestic producers will cope with fiercer competition in terms of prices and designs on the home market. Therefore, the organizer expected VIFA Home 2015 will be a good chance for domestic companies in the industry to strengthen cooperation and seek solutions to enhance the competitiveness of their products and establish a complete product supply chain to better serve local consumers. VIFA Home 2015 will have a display section for the outstanding designs of gifts and decorative products. As part of the fair, there will be dialogues for enterprises, designers, architects and visitors who are interested in interior, exterior and architecture. More realty products launched in HCMC The real estate market in HCMC has turned bustling since the middle of October this year as real estate enterprises have launched more products in different segments. Dat Xanh Group introduced apartments and land lots at 20 new projects at the Dat Xanh Expo 2015 organized late last month. For the high-class segment, the enterprise launched a number of projects such as Opal Riverside and Zen Riverside in Thu Duc District, Luxcity in District 7, Auris City, Cara Riverview and Square Plaza in District 8. The group has plans to develop townhouse and ecological residential projects in the southern province of Dong Nai. They include Viva City and Sakura Valley and villa projects like Grand World on Phu Quoc Island off mainland Kien Giang Province and Hoi An Luxury Village in Hoi An City in the central province of Quang Nam. Meanwhile, SonKim Land Corp. has joined forces with Hong Kong Land to launch The Nassim project in Thao Dien Ward in District 2, comprising 238 flats of one to four bedrooms each and penthouses. Singapore’s Genesis Global Capital and Phuc Khang Corp. have signed an agreement to develop Diamond Lotus - a residential building developed by Phuc Khang in District 8. Genesis Global Capital will acquire 30% of the project to sell and lease to overseas Vietnamese and foreigners living and working in Vietnam. For the budget home segment, Hoang Quan Real Estate Joint Stock Co. (HQC) has just commenced work on two condo projects in the central province of Binh Thuan and HCMC. Located in Binh Thuan Province’s Ham Kiem Industrial Zone, HQC Ham Kiem project offers nearly 3,200 low-priced condos. The VND2-trillion (US$89.6 million) project is set for completion in the second quarter of 2018. Last Saturday, HQC and the HCMC Housing Development Fund (HOF) started construction of HOF-HQC Ho Hoc Lam condo project in Binh Tan District. Both sides will cooperate in developing the project under a product sharing format. HOF will take two blocks equivalent to the investment capital and land value for construction of the underground and the foundation. HQC will build the remaining works to complete the project and take the remaining four blocks. Speaking to the Daily, Nguyen Vinh Tran, general director of Jen Capital Fund, said that some 97% of property products have been snapped up by domestic clients. Foreigners have been allowed to own properties in Vietnam but it takes time for the new law to come into reality. Besides, Tran said housing demand in Vietnam is very huge and can match the supply on the market but price is a major factor for demand to meet supply. When properties are overpriced, customers cannot afford to buy the products and the market will see an oversupply, Tran explained. More preferential loans planned for homebuyers The Government will consider launching more low-interest credit programs for low-income earners to buy houses after the VND30-trillion home loan package ends, Minister of Construction Trinh Dinh Dung said at the ongoing meeting of the 13th National Assembly in Hanoi on November 3. He unveiled the planned loan packages to ease concerns of many residents that whether they will continue to get financial support to purchase houses after VND30 trillion (more than US$1.34 billion) of the current home credit package has been disbursed. Dung said the Government has policies to assist realty firms in developing social housing projects and citizens in acquiring homes in accordance with the Construction Law and circulars guiding the implementation of the law. Eligible people can take out loans with preferential interest rates and the central bank will assign credit institutions and Vietnam Bank for Social Policies to provide such loans for them. Dung also confirmed that the Government will continue to grant houses to families with great contribution to the nation’s independence. But the minister noted that due to financial constraints, supporting policies for them will be implemented step by step.    The number of these families stands at over 70,000 at present, according to the National Assembly. Meanwhile, provinces and cities put the number at 330,000.  The ministry is going to help 8,000 of the families construct houses and will allocate funds for other households in the years to come. Dung also spent time clarifying problems with the building at 8 Le Truc Street in Hanoi’s Ba Dinh District. He said the structure’s height of 69 meters is 15 meters higher than licensed. The building was developed by Le Truc Garment JSC.    The ministry inspected and worked out solutions to violations at the building. Dung said after meetings with the ministries of defense, public security and construction and the authorities of Hanoi, the Prime Minister said the enterprise seriously violated regulations on construction and ordered the Hanoi government to take punitive measures against the company.   The minister has requested leaders of localities, especially Hanoi and HCMC, to strengthen management on urban construction, planning and design to protect urban landscape and architecture. The ministry will coordinate with localities to inspect and deal with violation cases. Agriculture sector urged to prepare for drought, saltwater intrusion Weather and agriculture experts have called on the agricultural sector to be well prepared to counter the impact of drought and saltwater intrusion caused by the El Nino phenomenon in different regions in late this year and 2016. The Cultivation Department under the Ministry of Agriculture and Rural Development estimated drought and saltwater intrusion would hit some 100,000 hectares of paddy of the coming winter-spring crop in the Mekong Delta region. The department reported at a review meeting on cultivation in Can Tho City over the weekend that drought and saltwater intrusion were forecast to wreak havoc on some 100,000 hectares out of 620,000 hectares of paddy in the Mekong Delta region’s coastal provinces of Tien Giang, Ben Tre, Tra Vinh, Soc Trang, Bac Lieu and Ca Mau. Saltwater is forecast to hit farming land which is about 25-35 kilometers from estuaries in the region in January and 40-65 kilometers in March and April.   Dang Van Dung, deputy director of the Southern Center for Hydrometeorology Forecasting, said rainfalls in the Mekong Delta in the first months of the rainy season are 30-50% lower than the average of previous years and water flows in rivers in the region are 35-48% lower than the average of years before. To prepare for unfavorable weather developments, Dung called for localities in the region to work out measures to minimize the impact of saltwater intrusion and water shortfalls in the 2015-2016 dry season. Pham Van Du, deputy head of the Cultivation Department, suggested localities in the Mekong Delta region to begin the winter-spring rice crop 20 days earlier than usual to avoid losses. In addition to the south, the El Nino phenomenon is also predicted to trigger drought and saltwater intrusion in the central and Central Highlands regions, according to the National Steering Committee for Natural Disaster Prevention and Control. The El Nino phenomenon affected many parts of Vietnam last year and could extend its impact until next year, the center said at a web conference on measures to ease the impact of drought last Saturday. Drought has withered up to 122,000 hectares of crops and caused water shortages to dozens of thousands of residents in many localities across the countries this year.            Rainfalls in the South-Central, Central Highlands and Southwestern regions this year are much lower than the average of previous years. Temperatures nationwide in the next six months are likely to be 0.5-1.5oC higher than the average of the same period of previous years, according to the National Steering Committee for Natural Disaster Prevention and Control. The center warned that farms which use water from rivers and streams could lack water for crop production. To help counter the impact of drought and saltwater intrusion, the center has proposed the Government provide more support for affected localities to draw up prevention measures and make the most of reservoirs to ensure sufficient water supplies for local people and agricultural production. The power sector has felt the pinch of water shortfalls for hydropower plants in the upcoming dry season, especially those in the central region. Vietnam Electricity Group (EVN) calculated that water flows into the hydropower dams in the central and southern regions this year have been 11.1 billion cubic meters lower than the average of previous years and 11.4 billion cubic meters lower than the same period last year. The Ministry of Industry and Trade has told EVN to draw up plans to ensure sufficient power supply for 2016. EVN estimated new power plants with a combined 3,893 megawatts would be commissioned next year including 2,081 megawatts from hydropower facilities and 1,380 megawatts from thermal power plants. The generators planned to be put into operation next year include those at Lai Chau and Huoi Quang hydropower plants, and Duyen Hai 3 thermal power plant. Shopping demand picks up Shopping demand for foods, clothing, footwear and household appliances has increased, sending prices up, according to data of the General Statistics Office (GSO). Figures of the GSO showed prices of clothing, shoes and household appliances, which were stable in the first months of this year, started to edge up in October and higher demand is one of the reasons. Foodstuffs recorded a 0.34% rise in price in October, the highest in recent months. In HCMC, the price of this product climbed 0.77% compared to September.   Meanwhile, prices of apparel, footwear and hats spiked by 0.2% month-on-month as people bought clothes before the year 2015 is out. Beverage and cigarette prices rose by 0.11% and household appliances by 0.12%. The GSO said retail sales had changed for the better in the past 10 months as provinces and cities launched many promotion programs to spur consumption. Retail sales of goods amounted to VND211 trillion in October, up 1.3% against September and 9.9% year-on-year. The figure in the January-October period exceeded VND2,026 trillion, increasing 10.7% year-on-year and accounting for 76.1% of total retail sales of goods and services.  Sales of food and foodstuff products inched up by 14.6%, household appliances by 12.7%, apparel by 12.1%, vehicles by 9.8% and culture-entertainment items by 8.6%. In HCMC, retail sales of goods totaled some VND46.6 trillion last month, sending the total in the year to October up to VND438.9 trillion, an 11.3% increase against the same period last year. Of which, sales of foods and foodstuffs went up by 9.2%, apparel by 8.2%, household appliances by 10.5%, autos by 98% and jewelry items by 31.4%.      Supermarkets, stores and electronics centers reported better sales in October than a month ago after they launched promotions. Huge demand for resettlement apartments in HCMC The HCMC Department of Construction said the city will need more than 40,000 apartment units for resettlement of households who will relocate to make room for investment projects in the coming years. The city will have to ensure the availability of around 28,168 apartments for families affected by 462 key infrastructure projects, public works and reconstruction of old housing buildings between now and 2020, according to the department. Tran Trong Tuan, director of the department, told a press briefing in HCMC last week that 20,000 resettlement units will be needed for the relocation of households living in the slums by the canals alone by 2025. Therefore, demand for resettlement apartments in the city will grow strongly in the coming years, Tuan told the press briefing for issues in the areas under the management of the department in the third quarter of this year. Tuan said HCMC has arranged resettlement apartments for around 36,000 families affected by urban rehabilitation projects over the past 20 years including major environmental rehabilitation projects for Nhieu Loc-Thi Nghe, Tan Hoa-Lo Gom and Tau Hu-Ben Nghe canals. Tuan said HCMC is reviewing the number of resettlement apartments available here in the city and will hand them over to residents in need. A number of resettlement housing projects are underway including Thu Thiem with 12,500 apartments in District 2 and Vinh Loc B with 2,000 units in Binh Chanh District. More projects are in the offing. Some 41,700 resettlement apartments and land lots have been handed over to households in various districts in the city. According to the current regulations, resettlement apartments must be built before a project is implemented to enable affected families to select units in locations they want and in line with their financial capability.   Regarding the projects that have impacted on water flows in canals in the city, Tuan said the city has licensed 159 canal reclamation projects since 2007. He said the directors of the departments of transport and agriculture-rural developments are responsible for such projects.    Of the 159 projects, 111 have not been implemented while the remaining 48 projects have got off the ground but investors of some of the projects have not observed regulations and agreements between them and the city. The HCMC government will focus more on dealing with 297 violations including 57 canal and 88 sewer reclamation cases this month. These violations have obstructed water flows of canals, causing flooding in many residential areas in the city in heavy rains.  As for old apartment buildings, Do Phi Hung, deputy director of the HCMC Department of Construction, told the press briefing that the city has 178 deteriorating apartment buildings and plans to demolish 32 out of 67 crumbling blocks. Hung said the department has established inspection teams to check 30 old condo buildings while district-level authorities are inspecting deteriorating apartment buildings and finding solutions. Experts highlight pioneering role of SOEs Experts have stressed the importance of State-owned enterprises’ pioneering role in developing the domestic market and that this role should be maintained in the coming time. Tran Hung Viet, general director of Saigontourist Holding Company, said SOEs are important to help drive economic growth when he discussed the role of SOEs at a seminar in HCMC last week. Viet took the case of Saigontourist as example, saying that the company had only 236 employees 40 years ago but the number has amounted to 17,000. He said Saigontourist, which has expanded operations to northern localities and islands, is considered as the leading hospitality company in Vietnam. Viet noted the private sector plays a crucial role in economic development but the leading role of SOEs at the initial stages of development is of paramount importance. Nguyen Chi Hai, lecturer at HCMC-based University of Economics and Law, said SOEs have well played their role of driving HCMC’s economic growth. Hai said in developed countries like France and the United States, hundreds of years ago, State enterprises invested in risky fields which private firms did not want to invest, and they sold operations to private companies after they had made profits in such fields. Hai said allowing SOEs in HCMC to continue taking the role of pioneering and orienting the market was a right policy. However, statistics recorded between 2005 and 2014 showed the private and the foreign-invested sectors contributed to the city’s gross domestic product (GDP) much more than that of SOEs. In 2005 when HCMC’s GDP was around VND165 trillion (US$7.39 billion), the contribution of the State business sector neared VND58 trillion compared to VND43.3 trillion of the private sector and some VND36 trillion of the foreign-invested sector. Nearly ten years later, of the city’s GDP of around VND852 trillion, foreign-invested and private enterprises made up VND202 trillion (up nearly six times) and VND422 trillion (up nearly ten times) respectively while SOEs accounted for nearly VND150 trillion (up almost three times). Data of the HCMC Institute for Development Studies indicated the non-State sector accounted for 61% of total investments in the city in the 2011-2015 period while the State and foreign-invested sectors made up 21% and 18% respectively. According to economic experts, fixed assets and investments of SOEs are high but their contribution to GDP is not proportional. In HCMC, though the State business sector still plays an important role in driving the city’s development, its growth rates, business efficiency and contribution remain limited compared to the non-State and foreign-invested sectors. According to Vuong Duc Hoang Quan, a deputy of the HCMC People’s Council, in 2013 when the local economy coped with a slowdown, the foreign-invested sector recorded higher growth than that of the State and private sectors. Quan questioned why foreign-invested enterprises still grew amid economic difficulties and whether good governance helped them weather challenges and well adapt to tough market conditions. Quan said it is necessary to learn from foreign-invested enterprises to map out suitable measures to help local enterprises compete in the long term. Member states need time to detail TPP Member states of the Trans-Pacific Partnership (TPP) agreement will not be able to announce the trade pact in detail early this month as expected since they need time to settle some issues, Luong Hoang Thai, head of the Ministry of Industry and Trade’s Multilateral Trade Policy Department said. The announcement should be approved by all member states, Thai told the Daily on Monday after Tuoi Tre newspaper quoted Thai as saying that Vietnam and other 11 Pacific Rim nations planned to publicize details of the TPP on the same day. New Zealand is expected to disclose the TPP commitments to all sectors firstly before others will make them available on their official websites. However, as they have not totally agreed on some issues, it is impossible for them to announce the TPP trade pact in detail early this month. Some member states have announced part of the comprehensive agreement after they struck a deal to conclude negotiations in the U.S. in early October. Deputy Minister of Industry and Trade Tran Quoc Khanh, the chief negotiator of Vietnam, has unveiled some of the TPP contents at a number of press briefings and conferences.  The U.S.’s Department of Agriculture on October 15 released a summary of the TPP agreement for over 20 agricultural products. Meanwhile, Japan made clear some of the TPP negotiation results for farm produce and industrial products last month. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR