BUSINESS IN BRIEF 7/11 Thai SCB to open branch in Vietnam Siam Commercial Bank Pcl , Thailand's third largest lender, said it has received a licence from Vietnam's central bank to open a full branch in Ho Chi Minh City as part of its expansion into one of Southeast Asia's fastest growing markets. The approval was on condition that SCB would buy a combined 67% stake in the Vinasiam Bank joint venture from the Vietnam Bank for Agriculture and Rural Development and Thai conglomerate Charoen Pokphand Group, SCB chief executive officer Arthid Nanthawithaya said in a statement on November 4. SCB will spend US$45.77 million to buy the stake, and the new branch is expected to be set up by early 2016, the statement said. The Thai lender has operated in Vietnam for more than 20 years through Vinasiam Bank, in which it holds 33%. Vinasiam Bank's licence will expire on Dec. 31, 2015 and the Vietnamese central bank does not plan to extend the licence, the statement added. SCB, 21.3% owned by the investment arm of the Thai royal family's Crown Property Bureau, will have 11 foreign branches and representative offices in eight countries after opening the new one in Vietnam, the statement said. CMIT handles many more cargo vessels Cai Mep International Terminal (CMIT) reported that it handled 936 vessels in the first nine months this year, up 40% versus the same period last year. Deputy Minister of Transport Nguyen Van Cong gave the figure at a welcome ceremony of the 157,000-DWT container vessel CSCL Star at the terminal in Ba Ria-Vung Tau Province last week. Cong said cargo throughput at ports across the country had grown 10-15% a year in the past five years. The volume in the January-September period was 343 million tons, an 11% year-on-year rise. In particular, CMIT handled more cargo in the year to September with throughput rising by 20% compared to the same period last year. More than 280 ships to the terminal in the period were large with capacity of over 80,000 DWT. The Ministry of Transport will increase investments in port development in Vietnam to attract more big vessels in the coming years, Cong said. CMIT is one of the few ports in Southeast Asia which can handle ships that are as large as the CSCL Star. CSCL Star came to CMIT last week to upload 130 containers of cargo from Thailand bound for northern Europe. Cap Mep International Terminal is part of Cai Mep-Thi Vai port complex. The port complex was operating at only 15% capacity in the January-September period though it got more cargo and vessels than the same period last year, according to Bui Thien Thu, deputy head of the Vietnam Maritime Administration. Thu said the administration will propose the transport ministry limit the volume of cargo going through ports in HCMC to help the Cai Mep-Thi Vai port complex ports to cope with undercapacity. CMIT is a joint venture between Vietnam National Shipping Lines (Vinalines), Saigon Port and APM Terminals of Denmark. The deep-water terminal covers 48 hectares in Tan Thanh District in Ba Ria-Vung Tau. The terminal has a 600-meter pier with a handling capacity of more than 1.1 million TEUs and can accommodate vessels of 160,000 DWT. Sapporo Vietnam turns all Japanese-owned Sapporo Vietnam Co. Ltd. has become a wholly Japanese-owned concern after Sapporo International Inc. acquired a 29% stake from Vietnam National Tobacco Corporation (Vinataba) in the enterprise. Mikio Masawaki, new general director of Sapporo Vietnam, told reporters in HCMC last week that the year 2015 marks an important milestone for the company as it has become a wholly Japanese-owned firm. With the conversion, the company will take an initiative in business development and marketing strategies to meet demand of customers in this fast-changing market. “This vital acquisition is intended to boost corporate readiness and flexibility in all aspects, such as strategic planning, growth orientation, and targeted audience outreach, in addition to enriching customer experience and adding newness to local gourmets,” Masawaki said. He noted Vinataba had contributed a great part to the brewery enterprise in the first years of operation, especially in procedures.  As part of a new long-term business development strategy, Sapporo Vietnam launched renewed 330ml bottles and cans of Sapporo beer and changed the flavor to deliver new experiences for the customers, but quality standards remain unchanged. “We have made changes after conducting surveys on Vietnamese consumers’ experiencing in beer in the past five years,” Masawaki said. “We still maintain quality and traditional values of Sapporo in its history of 140 years.”   The company explained some adjustments have been made in extracts and amount of hops to increase Sapporo beer’s aroma and make it easier to drink and offer customers a more joyful experience. Masawaki expected the two renewed beer lines, the 330ml cans and 330ml bottles, would be available for purchase at all distribution channels this month. Sapporo Vietnam will invest in doubling the number of sales points nationwide to 8,000. In addition to HCMC, the company plans to expand its presence in Hanoi, Danang and Nha Trang cities. Currently, the company has 4,000 sales points, including those at restaurants, beer clubs, stores and supermarkets; 400 employees and over 700 persons in charge of taking care of customers.   Sapporo beer now holds 10% market share at hotels, restaurants and beer clubs in HCMC, and the ratio is projected to rise to 20% in the near future. In addition to the new product images and flavors, Sapporo publicized “Japan’s Promise” as its new brand message to ensure its quality commitments to Vietnamese beer consumers. This is the company’s confirmation to make long-term investments in Vietnam. Besides beer, Sapporo Vietnam has plans to foray into beverage and restaurant segments in the Vietnamese market in the next 10 years.    “A consumer-centric approach is our policy. In other words, our development strategy is to follow the market’s demand and we grow step by step,” Masawaki said. Sapporo Vietnam operates a US$50-million brewery on an area of 6.5 hectares in the Mekong Delta province of Long An. The facility has an annual capacity of 40 million liters in the first phase and 100 million liters per year in the second phase. Currently, Sapporo Vietnam offers the market four main product lines, namely Sapporo Premium can 330ml, Sapporo Premium bottle 330ml, Sapporo Premium can 650ml, and Sapporo Premium Draft Beer 20l. More supporting policies sought for SMEs The Japan Chamber of Commerce and Industry (JCCI) has proposed Vietnam provide more supporting policies for domestic small and medium enterprises (SMEs) to help fuel economic growth and develop supporting industries. The Japan-Mekong Business Cooperation Committee under JCCI made the proposal at meetings with representatives of the HCMC government and the Ministry of Planning and Investment. Yoichi Kobayashi, chairman of the committee, told a meeting with HCMC vice chairman Tat Thanh Cang last week that SMEs made up a majority of the enterprises in the economy and are in dire need of supporting policies to grow. SMEs need capital and proper measures to make the most of their finances and develop sustainably, Kobayashi said. Vietnam’s supporting industries remain underdeveloped and SMEs are the driving force for these industries to thrive. In order for SMEs to play a key role in supporting industries, besides improving lending procedures, it is important to draw up an effective management consulting mechanism. According to Kobayashi, SMEs account for up to 99.7% of total businesses in Japan and the sector’s labor force contributes greatly to Japan’s economic growth. The Japanese government has issued many incentive policies for them. For instance, as many as 514 branches of JCCI across Japan have assigned around 5,600 experts to assist enterprises. Since 1973 JCCI branches have helped strengthen the capacities of SMEs. Individuals run small businesses with financial support including low-interest loans. In Vietnam, supporting SMEs is crucial to economic growth, Kobayashi said, adding Vietnam should learn about the support mechanism of Japan to find ways to assist domestic enterprises. The Japan-Mekong Business Cooperation Committee pointed out the low local content of products made in Vietnam as producers depend heavily on imported materials. Vietnam should train manpower in terms of foreign language proficiency, skills and management as well as build a system of standards and certifications to increase the quality of products. JCCI signed a memorandum of understanding with the Ministry of Planning and Investment in September 2012 on assisting Japanese SMEs in investing in Vietnam and organizing regular meetings to seek ways to improve the business environment and promote cooperation. JCCI set up the Japan-Mekong Business Cooperation Committee in March 2013 and together with the Vietnamese ministry held the first meeting in October of the same year. At the third meeting with the ministry, JCCI called for Vietnam to make greater effort to make the investment environment better so that the country can remain attractive to Japanese enterprises, especially after the ASEAN Economic Community is established and the Trans-Pacific Partnership (TPP) agreement takes effect. Ministry told to mull trade defense measures against steel ingot imports Deputy Prime Minister Hoang Trung Hai has told the Ministry of Industry and Trade to help the Vietnam Steel Association (VSA) and local producers propose trade defense measures against imported steel ingots containing chromium if surging imports of this product have stoked unhealthy competition on the home market. Vietnam has not taken trade defense measures against imported steel imports though local steel makers previously claimed steel products containing boron imported from China caused injury to them. Now, they are dealing with cheap steel ingots from the northern neighbor as these ingots enjoy an import tariff of 0% for being labeled as alloy steel instead of 9% for normal products. According to the VSA, August and September saw a whopping year-on-year increase of 290% in the volume of steel ingots with chromium that local firms imported from China to turn out steel products. Vietnam imported 1.13 million tons of steel ingots worth VND421 billion in the period with 75% of the total import from China. According to the Deputy Prime Minister’s document sent to the industry ministry last week, imports of alloy and non-alloy steel ingots with chromium have jumped but their prices have fallen sharply. To prevent trade fraud and ensure healthy competition, Hai assigned the industry and trade ministry to work with relevant agencies to inspect steel imports. They are told to get tough on violators, especially the companies which have not used imported steel ingots as registered or sold substandard steel products to construction projects.   The ministry is required to report the inspection results to the Government before November 30. It should help local steel producers suggest trade defense measures if necessary. Earlier, the ministries of industry-trade and science-technology jointly issued Circular No. 44/2013 intended to control the quality of domestic and imported steel products. However, a revised circular is expected to be in place soon to enable relevant agencies to deal with soaring and tax-dodging steel imports. The Ministry of Finance collected comments from ministries and agencies on a plan to slap an import tariff of 10% on alloy steel ingots with or without chromium instead of 0%. The Government told local manufacturers to manage to cut costs and lower their product prices as well as improve competitiveness since more steel items will be imported into Vietnam in the years to come when more free trade agreements between the nation and partners take effect.   In recent years, steel makers in the U.S., Indonesia and India have filed anti-dumping lawsuits against steel products imported from Vietnam. More seafood export shipments fail to meet food safety requirements Vietnam’s seafood exports found to contain banned antibiotics and unable to meet food safety requirements in importing markets in the first nine months exceeded the volume in all of 2014, according to the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad). The department under the Ministry of Agriculture and Rural Development reported at a meeting on controls on seafood exports in HCMC on October 29 that 165 seafood shipments failed to meet food safety requirements and 78 shipments were detected to contain higher-than-allowed residues of chemicals and antibiotics in the period, up six and 10 shipments compared to last year respectively. The Nafiqad report said in the January-September period, domestic seafood exporters got food safety warnings for their shipments in the United States, Japan and the European Union (EU), the three leading seafood markets of Vietnam. In particular, 35 shipments were warned of violating chemical and antibiotic residues by the U.S., six times higher than in 2014. For the Japanese market, 27 shipments were detected mainly for banned and restricted antibiotics while the EU sounded an alarm bell over 27 shipments with 18 (67%) found to have microbial infections. Nafiqad found out that many farmers had not strictly followed regulations on using permitted chemicals and antibiotics before harvest. Testing was also to blame as seafood samples were recognized as meeting food safety requirements in Vietnam but failed in tests in foreign markets. Quang Tri finds investors for 18 projects The government of Quang Tri Province needs a total investment of VND87 trillion (US$3.9 billion) for 18 key projects in trade, tourism, processing and power generation sectors. Leaders of Quang Tri Province unveiled the list of 18 projects at a meeting with 20 private investors in Hanoi on Wednesday. The meeting was organized by the central province in cooperation with the Bank for Investment and Development of Vietnam (BIDV) in the lead up to an investment promotion conference slated for next month. Projects in need of investments in the tourism sector comprise seaside hotels and resorts, a golf course in Huong Hoa District and Truong Son tourist area.  Tran Van Hung, Party chief of Quang Tri Province, said the province still has much land for investors to set up shop. Meanwhile, the province’s chairman Nguyen Duc Chinh pledged to offer investors incentives and support for site clearance and worker training as well as infrastructure development for projects outside the industrial parks in the province. At the meeting, a representative of Binh Ha Company said the company plans to spend VND3.6 trillion raising cows and planting grass in the province, but cannot find a suitable area due to a lack of a master zoning plan in this sector. Vingroup said it would seek locations in the province for its shopping mall, hotel and farming projects. Tran Bac Ha, chairman of BIDV, said the bank would consider providing a credit package of VND15 trillion for the province to implement its socio-economic development plans in the 2016-2020 period, particularly those in seafood processing, trade and services, and energy sectors. Quang Tri is an undeveloped province with more than 75% of its population still depending on agriculture. India probes battery imports from Vietnam The Vietnam Competition Authority said India has decided to launch an anti-dumping investigation into AA dry cell batteries imported from China and Vietnam. The Directorate General of Anti-Dumping & Allied Duties (DGAD) under India’s Ministry of Commerce and Industry announced the probe on October 20 after it got requests from the Association of Indian Dry Cell Manufactures as well as Eveready Industries India Ltd., Panasonic Energy India Co. Ltd. and Indo National Ltd. India will look into AA dry cell batteries coded HS 8506.10 imported from China and Vietnam from April 1, 2014 to March 31 this year.  According to the authority under the Ministry of Industry and Trade, the association and companies claimed an upsurge in dry cell battery imports, particularly from China after April 2013 when India lifted an anti-dumping tariff on the product imported from China. In early August 2001, India imposed an anti-dumping tariff on AA dry cell batteries imported from China and the rate was equivalent to the differential of the price of US$75.25 for 1,000 batteries and the import price of 1,000 dry batteries imported from China. India conducted anti-dumping investigations into wooden MDF product imports from Vietnam and Indonesia in May and stainless steel from some countries including Vietnam in September 2014. However, India ended the investigations due to a lack of evidence. ANZ: Vietnam bucks global trade slowdown A strong and broad increase in consumer sentiment in October has signaled that the Vietnamese economy continues to uniquely weather the global trade slowdown, said Glenn Maguire, ANZ chief economist for South Asia, ASEAN & Pacific. Maguire commented on the performance of Vietnam’s economy in a statement on October 28 whenthe ANZ-Roy Morgan Vietnam Consumer Confidence for October was released. Maguire said the strong ongoing performance of the external sector is having positive spillover effects on the broader economy, particularly for domestic-facing sectors though the global backdrop will continue to remain on a weakening trend. “Thus, it is important that domestic demand in Vietnam emerges as a further stabilizer to growth. Our consumer confidence index clearly confirms that this is happening,” Maguire said. The strong increase in perceptions about both current and expected personal financial situations suggests that Vietnamese households are starting to enjoy positive economic spillovers, for instance higher income, from the strong continued performance of the external sector. The ANZ-Roy Morgan Vietnam Consumer Confidence has gained 5.8 percentage points to 141.1 in October, well above the long-term average of 135.9 and 6.4 percentage points higher than a year ago. Improving consumer confidence indicates increased optimism about personal finances as well as future economic conditions in Vietnam, according to results of ANZ Bank’s latest survey. The survey found 34% (up five percentage points month-on-month) of respondents said their families are better off financially than the same period last year. Meanwhile, a record low 16% (down six percentage points) said their families are worse off financially. Some 57% (up two percentage points) expect their families to be better off financially this time next year. Only 4% (down two percentage points) expect to be worse off, the lowest ever recorded for the indicator since the survey started. In addition, 57% (up seven percentage points) expect Vietnam to experience good times financially during the next 12 months but 10% (down two percentage points) expect bad times. In the longer term, 64% (up three percentage points) of respondents expect Vietnam to have good times economically in the next five years. In contrast, 5% (down two percentage points) expect the domestic economy to have bad times. Separately, the number of respondents who felt that now is a good time to buy major household items edged lower to 40% (down one percentage point), the lowest value recorded for the indicator since November 2014. On the other hand, the number of respondents who felt now is a bad time to buy also slipped to 11% (down one percentage point), the lowest level since February 2015. “As the question on whether ‘now was a good time’ to purchase a major household item received the only negative response in an otherwise very strong report, we believe that the positive income backdrop that is now falling into place in Vietnam will continue to ensure that the recovery broadens and strengthens,” Maguire said. HCM City seeks approval for revised metro project HCMC has asked the Government to present a revised investment plan for the city’s fifth metro line to the National Assembly Standing Committee for approval. The city has submitted the investment plan to the Government after it was revised based on comments from relevant ministries and agencies. Metro Line No.5 is one of the eight outlined in a development scheme for urban railways in the city. The 24-kilometer line is designed to start from Can Giuoc Coach Station, go parallel with National Highway 50, Tung Thien Vuong, Ly Thuong Kiet, Hoang Van Thu, Phan Dang Luu, Bach Dang and Dien Bien Phu streets, and end at Saigon Bridge. Total investment capital for the two-phase project has been revised up to VND99.7 trillion (3.75 billion euros). In phase one, the section from Bay Hien Intersection to the Saigon Bridge will require VND41.6 trillion (1.56 billion euros) including 275 million euros from the Spanish government, 475 million euros from the Asian Development Bank (ADB), 200 million euros from German development bank KfW and 150 million euros from the European Investment Bank (EIB). The funding for phase one has been reviewed by consulting firm Haskoning as requested by the foreign lender banks and they have pledged to finance construction of the section. The city has committed to finding 462.71 million euros in reciprocal capital for the first phase of the section to ensure the project could progress on schedule. More than VND57.1 trillion (nearly 2.2 billion euros) will be needed to develop the section from Bay Hien Intersection to Can Giuoc Coach Station in phase two. The South Korean government is considering technical assistance for the pre-feasibility and feasibility studies for the metro line in phase two through the Korea International Corperation Agency (KOICA). The city’s eight planned metro lines are Ben Thanh-Suoi Tien (No.1), Ben Thanh-Tham Luong (No.2), Ben Thanh-Tan Kien (No.3A), Cong Hoa Intersection-Hiep Binh Phuoc (No.3B), Ben Cat Bridge-Nguyen Van Linh Parkway (No.4A), Gia Dinh Park-Lang Cha Ca Roundabout (No.4B), Saigon Bridge-Can Giuoc Coach Station (No.5) and Ba Queo-Phu Lam Roundabout (No. 6). Land handover for airport expansion slow The Ministry of Defense has transferred just three of 7.63 hectares to Airports Corporation of Vietnam (ACV) to carry out an apron expansion project at Tan Son Nhat airport though the handover should have been finished in April last year.  The slow land handover was one of the issues discussed at a meeting held in HCMC on Tuesday for agencies under the ministries of transport and defense to find solutions to site clearance at Tan Son Nhat and Danang airports.  At the meeting chaired by Minister of Transport Dinh La Thang, the Civil Aviation Administration of Vietnam (CAAV) said Tan Son Nhat International Airport is upgrading taxiways and widening the apron and international terminal. Of 7.63 hectares needed for the apron expansion, the defense ministry has handed over around three hectares.   Due to a lack of parking spaces at the airport, ACV had to start work on the project in the area received from the defense ministry.  ACV planned to develop a taxiway and 10 parking slots for aircraft on the 7.63 hectares to meet part of the demand since the airport needs parking space for 70 aircraft instead of the current 41. Danang airport has problems with site clearance and land handover, heard the meeting. Site clearance for an international terminal project is almost complete except for the area under the overlapping management of the Danang government and the defense ministry.   Lieutenant General Vo Van Tuan, Deputy Chief of the General Staff of the Vietnam People’s Army, said CAAV has yet to transfer money to the defense ministry for building new facilities so land has not been handed over as planned. “After this meeting, the Ministry of Defense will review and speed up procedures to hand over land to constructors,” Tuan said.    Minister of Transport Dinh La Thang proposed the defense ministry approve the zoning plans for airports used for both commercial and military purposes. This will help put infrastructure projects at airports on fast track to help ease overload, especially at Tan Son Nhat in HCMC.  Private investor sought for Dalat-Trai Mat railway The Ministry of Transport is proceeding with a plan to transfer the operation right to a railway section between the center of Dalat City and Trai Mat, a tourist area on the outskirts of the hilly resort town in Lam Dong Province. The ministry wants to start the pilot plan to transfer the operation right to routes and facilities in the railway sector to private firms with the Dalat-Trai Mat section as it is just seven kilometers long. As reported by the Vietnam Railway Authority, at least two enterprises have shown interest in operating the railway section. They include Bach Dang Hotel Complex Service & Trading Joint Stock Company and a joint venture between Saigon Railway Transport One Member Co. Ltd. and Indochina Railway Trading Investment Joint Stock Company. In mid-September, Bach Dang Hotel Complex Service & Trading Joint Stock Company proposed operating the Dalat-Trai Mat route and related facilities including stations, warehouses and workshops for a maximum period of 49 years. The company registered to buy all locomotives, wagons and related assets at a price suggested by a financial valuation institution assigned by the transport ministry. At a meeting held on Tuesday to discuss the plan, Deputy Minister of Transport Nguyen Ngoc Dong requested relevant agencies to work with investors interested in the Dalat-Trai Mat railway section over the operation objective and conditions of the railway.  Dalat-Trai Mat is part of the railway linking between Phan Rang City in the central province of Ninh Thuan and Lam Dong Province but this railway was suspended due to losses. The Dalat-Trai Mat section was resumed in 1991 to serve tourists but its revenue is not sufficient to cover expenses and the State has to provide an average of VND1.2 billion per year for its operation. The Ministry of Transport plans to lease out railway passenger and cargo stations to the private sector and transfer the operation right to the railway sections Hanoi-Vinh, Vinh-Dong Hoi, Dong Hoi-Danang, Danang-Nha Trang, Nha Trang-HCMC, Lao Cai-Hanoi-Haiphong and Kep-Halong-Cai Lan. The ministry’s plan has attracted a number of local enterprises. For example, Vingroup has proposed investing in three railway stations while T&T Group wants to buy the operation right to Hanoi Railway Station. Saigon Co.op forms foodstuff venture with S’pore firm Saigon Union of Trading Cooperatives (Saigon Co.op) and Singapore-based Wilmar International Limited (Wilmar Group) have struck a deal to establish a foodstuff joint venture. Saigon Co.op will own 49% of Nam Duong International Foodstuff Corporation and Wilmar Group the remaining 51%. The joint venture will invest VND577.2 billion (US$25.9 million) in a factory at Hiep Phuoc Industrial Park in HCMC’s Nha Be District to make sauces and condiments for domestic sale and export. The facility is scheduled to come online in end-2016 and will replace Saigon Co.op’s factory in District 7 to manufacture sauces and condiments bearing the Nam Duong brand. Saigon Co.op’s Nam Duong brand is among the leading brands for sauces and condiments in Vietnam and includes soy, chilli and tomato sauces. These products are sold on the domestic market and exported to the U.S., Canada and Europe. The joint venture is expected to leverage on Saigon Co.op’s strength in distribution and Wilmar’s extensive experience in production, research and development in the field of food technology and global network for product export. Tran Lam Hong, deputy general director of Saigon Co.op, said Saigon Co.op will be in talks to sell the Nam Duong brand to the new joint venture, which plans to develop more product lines under this brand. Hong said Saigon Co.op has focused more on retail and less on investment in sauces and condiments. Therefore, the joint venture is important to keep the brand developing amidst fierce competition on the domestic market. Thai Kim Son, Wilmar’s sales director in the south, said the domestic sauce market still holds huge growth potential despite the presence of many players. Wilmar holds a 76% stake in Cai Lan Oils and Fats Industries Company (Calofic). It also owns Wilmar Agro Vietnam Co. Ltd. in Can Tho Province with two bran oil extraction plants and has invested in two wheat mills in Ba Ria-Vung Tau and Quang Ninh provinces. Nielsen survey reveals consumers trust word-of-mouth advertising   A recent Nielsen report has revealed that 89% of Vietnamese consumers follow word-of-mouth recommendations from people they know when it comes to brands. Nielsen's Global Trust in Advertising survey, which polled 30,000 online respondents in 60 countries, reveals that the Philippines led the list with 91% of people trusting word-of-mouth recommendations from people they know. Second place were Vietnam and Indonesia with 89%. According to the survey, 93% said they would buy products based on recommendations, 89% made their decision based on branded websites and 82% would decide based on TV ads. Craig Johnson, Managing Director of Nielsen's Marketing Effectiveness and Reach Portfolio in Southeast Asia, North Asia and Pacific, said marketers would see powerful results if they know how to engage advocates in their marketing plans. Word-of-mouth advertising requires high quality products and transparency from firms since they can attract praise and criticism alike. Lots of small firms believe that word-of-mouth advertising is a vital marketing strategy. Even with the popularity of social networks, word-of-mouth advocacy still wins by large margins due to its low cost and viral nature. Branded websites are also considered credible sources and 75% of Vietnamese trust opinions from other online buyers. Among online paid ads, 55% of Vietnamese trust results from search engines the most and 48% trust ads on social networks. While online paid ads are gaining attention, traditional paid ads on TVs, and in magazines and newspapers are also still going strong and garner trust from 69% of people. EU invests US$4.3 billion in HCM City Ho Chi Minh City has always regarded the EU as one of its key partners, especially when the EU-Viet Nam Free Trade Agreement negotiations were concluded in August. Vice Chairman of the municipal People’s Committee made that statement at his meeting with the European Chamber of Commerce (Eurocham) in Viet Nam on November 3. The city has facilitated the foreign business community's operation, including those from the EU, in the city, he said, adding that authorities have taken measures to tackle difficulties for foreign and domestic enterprises. Eurocham Chairwomen Nicola Connolly said that the meeting created an opportunity for the Eurocham and the business associations from the EU to discuss and propose measures to the city’s authorities. As of October this year, the EU poured US$4.3 billion in 656 projects in the city. The trade turnover between the city and the EU reached US$6 billion in 2014. When the domestic market becomes a battlefield In recent years Vietnam has been speeding up international economic integration with the most recent milestone being the conclusion of the Trans-Pacific Partnership (TPP), which is expected to bring both opportunities and challenges for the agricultural sector. Vietnam’s produce will have wider market access with lower tariffs, but at the same time will face more intense competition from countries with advanced agricultural technology. The domestic agricultural sector needs to reflect and re-assess its strengths in order to come up with appropriate measures to accommodate a new playing field. The 12 TPP member countries have a population of around 600 million, accounting for 40% of global GDP and 30% of global trade. With the participation of large markets such as Japan and the United States, this trade agreement promises to provide ample opportunities with the establishment of new supply chains. As a TPP member, Vietnam can adjust its agricultural export and import structure in a more flexible manner. Benefits from a new wave of investment The TPP membership will draw more foreign investment in agriculture as a wide range of tariffs will be eliminated. In fact, investment in agriculture in Vietnam has been meagre and on the decline in recent years. In 2014, pledges in 513 agricultural projects accounted for only a tiny 1.4% of total foreign direct investment. According to some economists, when the TPP comes into effect, countries which do not have an advantage in agricultural development will shift their investment to Vietnam, given that the barriers to protect local agricultural production will be removed. In addition to creating jobs and increasing income, foreign investment projects will help Vietnam’s agricultural sector adopt new technology to replace ineffective traditional methods. Former Vice Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Huu Dung says free trade agreements, including the TPP, will not bring many benefits in terms of tariffs because most of Vietnam’s seafood exports to 165 countries around the world are raw or pre-processed and already enjoy very low or even zero tax rates. However, since the TPP will lower the tariffs on processed products, seafood enterprises can benefit if they focus on adding more value to their exports. The TPP could also offer bigger opportunities for importers of raw seafood from other member countries because Vietnam has nearly 500 processing plants equipped with advanced technology but is woefully short of raw materials. Vietnamese enterprises can also capitalise on new technology and substantial financial resources from potential investors in other TPP member countries. New approaches to corporate management are another aspect of the TPP that can benefit local businesses. However, this means that domestic enterprises will have to cede part of their market share and hand over the advantages to their foreign partners. It might be even worse when struggling enterprises could be acquired partly or completely by foreign companies. The former VASEP vice chairman is upbeat that the greatest benefit to Vietnam is the substantive change to domestic businesses in terms of technology, quality, product, management and marketing, thanks to cooperation with foreign partners within the TPP. Pressure from a fierce battlefield Big opportunities always come together with big challenges. The numerous weaknesses of Vietnam’s agricultural sector will be revealed when the TPP comes into effect and the domestic market will turn into a real battlefield with a great deal of pressure from foreign enterprises. One of the greatest challenges to Vietnam’s agricultural exports is the creation of stricter non-tariff barriers which come in line with import duty reductions. In order to penetrate large markets, Vietnam’s major exports such as rice, coffee, pepper, cashew and seafood need to overcome stringent technical barriers and safety checks. Otherwise, Vietnam’s goods will not be able to find a way into these markets even when the tariffs are eliminated. In the seafood industry, price is now a fresh challenge. India’s shrimps are much cheaper than Vietnam’s thanks to lower breeding and raising costs; Vietnam can hardly compete with India even if the tariffs are cut to zero. The scenario looks even bleaker when non-tariff barriers are taken into account in which Vietnamese shrimps will face more stringent safety requirements as well as anti-dumping and countervailing measures. Vietnam’s animal husbandry will also face many difficulties because of its small-scale production, high costs and low quality, according to Dr Hoang Thanh Van, head of the Department of Animal Husbandry at the Ministry of Agriculture and Rural Development. Greater competition could knock out local enterprises on their home turf, especially those heavily reliant on government subsidies and those with out-of-date technology and business plans, which could lead to an even smaller number of agricultural businesses. According to some estimates, there are around 35,000 enterprises operating in the farming sector, accounting for only 1% of total enterprises in Vietnam. What is worth noting is that most of them are small and ultra-small enterprises, which do not have enough resources to compete with bigger companies from abroad. If these companies are not quick to adapt themselves, they are destined for failure and bankruptcy when in the face of giants in the TPP region. The TPP facilitates the export of Vietnamese farming produce to many countries, but at the same time makes it easier for foreign produce to enter the Vietnamese market. Opportunities aside, deeper integration also means greater challenges because the quality of many agricultural products from regional countries is much better than those from Vietnam. It is projected that domestically produced meat, fruits and dairy products will hardly be able to compete even in the domestic market. Farming sector projected to grow 2.21% in 2015 Growth in Vietnam’s farming sector is forecast to fall sharply to 2.21% in 2015 due to unfavourable weather and exchange rates. The projection was announced at a press briefing of the Ministry of Agriculture and Rural Development (MARD) on November 4. However, average growth during the 2011-2015 period could still reach 3.1%, surpassing the target of between 2.3% and 3%, said Nguyen Thi Hong, head of the MARD’s Planning Department. She said revenues from farming exports in 2015 were expected to reach US$30 billion, with rice, coffee, rubber, pepper, cashew, cassava, fruit, timber, shrimp and catfish each earning more than US$1 billion. Hong said severe drought has adversely affected crop farming and aquaculture while the stable US dollar-Vietnamese dong exchange rate, despite recent devaluations, has made Vietnamese agricultural exports less competitive than those from other countries. She added that Vietnamese exports were also struggling due to stricter technical barriers and food safety requirements. For the remaining months of the year, the MARD will work with trade associations and monitor the markets closely so that appropriate measures can be introduced to boost the export of major products. Auto firms secure nearly 2,500 orders at VMS 2015 Customers signed contracts to buy nearly 2,500 autos under 18 brands at the 2015 Vietnam Motor Show (VMS 2015), with Truong Hai Auto JSC (Thaco) accounting for half of the orders. The five-day exhibition, which ended over the weekend, featured 18 brands including Chevrolet, Ford, FUSO, Hino Motors, Honda, Hyundai, Infiniti, Kia, Lexus, Mazda, Mercedes-Benz, Mitsubishi Motors, Nissan, Peugeot, Suzuki, Toyota, Kamaz and MAN. Organizers said this year’s show recorded the biggest number of auto orders since the annual event took place 11 years ago. The event last year saw just 560 contracts signed between exhibitors and clients. Thaco, which assembles and distributes Kia, Mazda and Peugeot auto brands, clinched 1,250 contracts including 600 for Kia, 550 for Mazda and 100 for Peugeot. Mercedes-Benz Vietnam said it posted sales growth of 20% this year compared to the previous exhibition. More than 200 customers are expected to place orders for this luxury car brand.   Other auto enterprises did not unveil the number of their cars sold at the biggest auto exhibition in Vietnam. Many exhibitors said they participated in the event to display their new car models rather than selling products. A record number of 178,000 visitors came to VMS 2015 at the Saigon Exhibition & Convention Center (SECC) in HCMC’s District 7 to scrutinize 150 auto models on display. VMS 2015 was organized by the Vietnam Auto Manufacturers Association (VAMA) in cooperation with Asia Trade Fair and Business Promotion JSC and T&A Ogilvy Co. Exhibitors struck a total of more than 170 contracts to sell imported cars at the Vietnam International Motor Show (VIMS 2015) in Hanoi two weeks ago. VIMS 2015 highlighted more than 50 autos of nine brands, namely Audi, BMW, Porsche, Renault, MINI, Jaguar, Land Rover, Luxgen and BAIC brands. The event for importers and distributors of foreign brands attracted over 70,000 visitors. Vietnam Organica grows certified organic foods Vietnam Organica, a food distributor based out of Ho Chi Minh City, announced on November 4 that it has received US Department of Agriculture and EU certification for the fruit and vegetables it grows. According to the company, it took three years to obtain the certification for the nearly 100 types of produce that it cultivates on a farm located in the Long Thanh district of Dong Nai province. As consumers are starting to care more about what’s in their food, Vietnam Organica have risen to the challenge and are doing our part to propel the food industry forward with certified organic products, said the company. It said the long-term vision of the company is to harmoniously honour the connection between personal well-being and the well-being of the environment which sustains us all and provide chemical free food for consumers. Vietnam, Italy to sign customs-related cooperation agreement The Prime Minister has approved the content of a draft cooperation agreement on mutual administrative assistance in customs between the Governments of Vietnam and Italy.  The PM authorizes the Finance Ministry leader to sign the agreement with Italy’s competent representative.  Italy is currently Vietnam’s 18th largest export market and 15th biggest import market. Two-way trade reached over 4 billion USD in 2014, of which 2.7 billion USD came from Vietnam’s exports.  As of March, Italian investors run 64 projects totaling 386.2 million USD, ranking 28th among 101 nations and territories investing in Vietnam.  Signing the agreement will improve the efficiency of collaboration between the two Governments, while creating favourable conditions for their customs agencies to exchange information and technical assistance, and detect and address any violations of customs regulations during the enforcement of State management on customs.-VNA Forum discusses Vietnam-US energy cooperation A forum on energy partnership between Vietnam and the US took place in Washington DC on November 3. Representatives from relevant US agencies, 40 US enterprises and 12 Vietnamese firms participated in the event. Their discussion revolved around capital sources and technological solutions for energy development. A range of latest technologies applied in tidal power, energy-saving measures for buildings, and the smart battery system were presented. Addressing the forum, Vietnamese Ambassador to the US Pham Quang Vinh said the two governments have worked closely at several forums concerning environmental issues and green energy, including APEC, EAS, and Mekong sub-region. Giant US companies, such as Exxon Mobil, Murphy Oil, General Electric, and Westinghouse, are active in doing business in Vietnam, while US agencies, including the US Trade and Development Agency (USTDA) and the Overseas Private Investment Corporation (OPIC), have aided Vietnam in carrying out several energy projects. Vinh urged US energy companies to assist Vietnam in expanding and modernising energy infrastructure, particularly amid favourable conditions created by the implementation of the Trans-Pacific Partnership, of which both nations are members. Officials from the US Departments of State and Energy, and the USTDA acknowledged collaborative potentials in the field with Vietnam. The US Department of Energy considers Vietnam an important partner in the fields of energy and sustainable growth at global forums, they said. The USTDA said it has thus far sponsored 80 projects on developing infrastructure, diversifying energy sources and improving electricity distribution in Vietnam. The forum was co-organised by the Vietnam Embassy and the Business Association of Overseas Vietnamese in the US. Hanoi pledges to facilitate UK investment Hanoi will create favourable conditions for UK enterprises to expand their investment in the capital city, said Chairman of the municipal People’s Committee Nguyen The Thao. During a reception for Lord David Puttman, the UK Prime Minister’s Trade Envoy for Vietnam, in Hanoi on November 4, Chairman Thao affirmed in its development, Hanoi needs to learn UK’s experiences in various fields, such as infrastructure construction and environmental management. The two sides discussed the Duong River water supply project, and proposed using the credit aid package provided by the UK Export Credit Department to develop Hanoi’s infrastructure facilities. For his part, Lord David Puttnam hailed the city’s fast development potential. He hoped that Hanoi would continue fostering cooperation with the UK, thus tightening friendship between the two nations. The UK is now Vietnam’s leading partner within the European Union in terms of investment, trade and education. The country also ranks 15th among 105 foreign investors in Vietnam with a total capital of 4.5 billion USD. Vietnam, Belgium foster business community links Vietnam and Belgium have agreed to foster links between their business communities towards greater affiliation, including in the form of public-private partnership (PPP) at their recent annual political consultation at deputy foreign ministerial level in Brussels, Belgium. The links will be geared towards areas of Belgium’s strength and which Vietnam needs to develop, such as logistics-sea port, science-technology, green growth, satellite, environment, health care, education and tourism, Deputy Foreign Minister Bui Thanh Son and Secretary General at the Federal Public Service Foreign Affairs of Belgium Dirk Achten said at their consultation in early November. The Belgian side said they wish to further strengthen multi-faceted ties with Vietnam which is playing an increasingly important role and position in the Southeast Asia and ASEAN. Both sides pledged to facilitate the exchange of visits, especially those at high level, and work closely together at the United Nations, the Asia-Europe Meeting, the ASEAN – European Union (EU) and the Vietnam – EU frameworks. The Vietnamese side thanked Belgium for backing its bid for a seat at the United Nations Economic and Social Council (ECOSOC). The European country, in response, affirmed its support of stronger ties between Vietnam and the EU as well as the early signing of the Vietnam – EU free trade agreement. They believed that the third meeting of the Vietnam – Belgium Joint Committee on Economic Cooperation slated for November 23 in Brussels would devise practical measures to further boost investment between the two nations. On regional and global issues of shared concern, the Belgium side expressed its approval of Vietnam’s stance on settling disputes in the East Sea by peaceful means, refraining from the use of or threat to use force, and oberving international law, particularly the 1982 United Nations Convention on the Law of the Sea, in order to ensure security, safety and freedom of navigation and aviation in the region. Deputy Foreign Minister Bui Thanh Son visited Belgium for the annual political consultation on November 3 and 4. Two-way trade between Vietnam and Belgium hit 2.3 billion USD last year, up 27.7 percent from 2013. As of August 2015, the figure was 1.5 billion USD, including 1.16 billion USD worth of Vietnam’s exports. Also by the end of August, Belgium invested in 57 projects worth 420 million USD in Vietnam, notably the Dinh Vu – Cat Hai industrial park. “Vietnam Day” held at int’l fair in Cuba A “Vietnam Day” was organised on November 3 in the framework of the 33rd Havana International Fair 2015 (FIHAV 2015) to promote Vietnamese goods. At the event, Bui Thi Thanh An, deputy head of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade (MoIT), highlighted the great opportunities to strengthen bilateral economic cooperation created by Cuba’s process of economic model updating. Vietnamese Ambassador to Cuba Duong Minh stressed the great significance of economic cooperation to the traditional and friendly relations between the two countries. Antonio Carricarte, Cuban Deputy Minister of Foreign Trade and Investment, emphasized the business opportunities for Vietnamese enterprises in Cuba, especially in construction, renewable energy, foods, and software products. The Cuban official suggested that Vietnamese enterprises should invest in the Cuba’s key priority fields, including healthcare, pharmaceutical products, and biotechnology. 24 Vietnamese businesses are joining 4,500 foreign exhibitors from 60 countries and territories worldwide at the 33rd Havana International Fair 2015 (FIHAV), which is taking place in Havana from November 2-7. According to the statistics released by the MoIT, Vietnam-Cuba trade turnover reached 205 million USD in 2014, of which, Vietnam exported goods worth 199.5 million USD. Vietnam mainly exports to Cuba cereals, confectionary, footwear, ceramics and sanitary products, building materials, coal, garments, and chemical products, while importing pharmaceutical products. Statistics Law seeks data built on accuracy The ongoing session of the National Assembly (NA) on November 4 in Hanoi discussed that statistical data must be built on factors such as accuracy, entirety, punctuality and transparency. Deputy Do Van Ve told the NA that he agreed with the issuance of the revised draft Law on Statistics, in which the scope of the draft law is expanded to both State and non-State statistical activities. Ve added that the adjustment of the law also aimed to meet the demand for improving the effectiveness of the State management on statistical work. By doing so, it would help the Government to assess or forecast the economic condition as well as work out strategies for macro-economic administration so as to spur the country's economic development. The expansion of the scope of the law to all entities will help promote the development of statistical work with an aim to meet the need of organisations and individuals in the use of statistical information for their research, production and business or other legal demands. Ve said the draft law also stipulated additional specific regulations on statistical work and that the use of statistical information was adaptable. He said the statistics office was financed by the State and it aimed to provide statistical information for State agencies to conduct their assessment, forecast analysis and strategy planning and meet the demand of organisations and individuals for the use of statistical information. Ve also said he agreed with the revised law to stipulate specific deadlines and responsibilities of State statistics office to announce and disseminate statistical information so as to ensure provide information timely, accurately, scientifically and practicably. Deputy Tran Ngoc Vinh, of Haiphong City, suggested that statistical calculation must be kept under strict discipline and follow mandatory regulations so as to provide accurate statistical information for users. Vinh said statistical works made by cities, provinces, ministries, and central statistical agencies played an important role in providing statistical data for the Government to outline planning and ministries to get actual data to make their reports. He said if inaccurate statistical data was made that would be risky. He noted that the NA wanted the revised law to stipulate regulations on statistic works strictly. Currently, the General Statistics Office (GSO) managed by the Ministry of Planning and Investment (MPI) was a body to help the Government in policy planning. If the GSO was an individual agency and was responsible for appraising statistical data of ministries and sectors it would improve the quality of statistical information, he said. According to the MPI, many ministries and central statistics offices publish one statistical indicator using two different types of data or GDP differences between central and local agencies that lead to discrepancy, contradiction and duplication of statistical information. These shortcomings are a result of lack of awareness of provincial leaders who only excessively care about local economic development achievements. Besides, another reason that leads to data difference is the provision of varied data, usually far from accurate, by ministries and sectors for statistics agencies, thus resulting in misleading production and business data. Another reason for the statistical difficulty is the self-contained, unshared information of ministries and sectors. Vietnam optimises trade ties with Israel The Foreign Ministry will organise additional activities to boost commercial connectivity between Vietnamese localities and enterprises and their Israel partners.  Foreign Deputy Minister Le Hoai Trung made the statement during a conference dubbed “Meet Israel”. The meeting was held in Hanoi on November 5 gathering 130 representatives of provincial agencies and businesses from both countries.  According to the Deputy Minister, the bond between Vietnam and Israel has grown substantially since it was established in 1993.  A fivefold increase was recorded in two-way trade revenue within the last five years, from 200 million USD in 2009 to almost 1.1 billion USD in 2014. Bilateral partnership has been forged and expanded, particularly in science and technology.  Vietnamese Ambassador to Israel Cao Tran Quoc Hai said Vingroup, TH True Milk and Hoang Anh Gia Lai are among leading Vietnamese businesses, who are applying technology transferred from Israel to improve agricultural produce quality. They have achieved positive outcomes thus far.  Meanwhile, Israel’s drip irrigation technology, male shrimp breeding production and medical equipment are capturing the interest of Vietnamese firms, added the diplomat.  Agreeing with the Vietnamese officials, Israeli Ambassador to Vietnam Meirav Eilon Shahar expected the two countries’ localities and businesses would advance their cooperation in trade and investment to fully tap their potential. Technology supply-demand connection fair underway A trade fair was kicked off in Vung Tau city, Ba Ria-Vung Tau province on November 5 to demonstrate latest technologies and connect technological supply and demand in southern Vietnam. The two-day event, co-organised by the Ministry of Science and Technology and the provincial People’s Committee, has attracted delegates from the Netherlands, Japan and the Republic of Korea as well as representatives from enterprises in southern provinces. It also looks to support businesses in technological development and innovation and ramp up technological application and transfer of regional localities and enterprises. In his opening remarks, Minister of Science and Technology Nguyen Quan said science-technology is the youngest among markets in Vietnam with four components – supply, demand, intermediate institutions and legal framework. In the past, little attention was paid to intermediate institutions, making it difficult for scientists to access businesses and their research results to be applied in production, he said. He noted that his ministry has basically completed a legal environment for the sci-tech market and stepped up the building of intermediate institutions through technology trading floors in major cities, international, national and regional techmarts, and trade fairs to connect supply and demand. A wide range of consultancy services for technology application, upgrade and management as well as financial support are introduced to participating businesses during the event. Workshops are also scheduled at the fair to give an overview of Vietnam economy amid global integration and discuss challenges facing local firms, in terms of technology. Pham Duc Thao, Director General of the Ba Ria-Vung Tau Urban Sewerage and Development Co., Ltd, urged the government to facilitate cooperation among businesses in technological research and application. Pacific trade pact tackles Malaysia trafficking, Vietnam labor Malaysia will have to fully implement measures to combat human trafficking and Vietnam must allow independent labor unions before reaping the benefits of a new Pacific trade deal, details of the pact released on November 5 showed. The Trans-Pacific Partnership (TPP) will require countries to legislate for minimum wages and hours of work, discourage trade in goods made by forced labor and maintain labor protections in designated export zones as a condition of membership. The pact, which will open new markets for Malaysian electronics companies and Vietnamese clothing firms, imposes additional obligations on those two countries and Brunei on workers' rights. Bilateral agreements with the US lay out specific conditions for each country, including affected domestic laws and a mechanism to police implementation for seven to 10 years. "Being tied to entry into force means we have the ability to certify whether or not a country has met those standards so it gives us significant leverage," US Trade Representative Michael Froman said.  In Malaysia, required reforms will make it clear that it is illegal for employers to hold workers' passports, ensure employment levies are paid by employers and not workers, extend protections against excessive recruitment fees to all recruitment agencies and employers, and stop agencies which violate labor laws from bringing in new overseas workers. Earlier this year, Malaysian authorities discovered dozens of suspected mass migrant graves and human rights groups reported continued forced labor in the nation's lucrative palm oil, construction and electronics industries. Malaysia must fully implement reforms to allow victims of human trafficking to travel, work and live outside government shelters and remove long-standing restrictions on unions and strikes, the summary of the text showed. The country's record came into focus earlier this year after Washington upgraded Malaysia in its annual trafficking scorecard, sidestepping a law which would have barred the TPP from a fast track through Congress. Lawmakers demanded an investigation after a Reuters examination found the U.S. State Department office set up to independently rate countries' efforts was repeatedly overruled by senior US diplomats. Vietnam, which has been targeted by critics concerned that low wages and weak worker protections will entice US manufacturers, will have to allow workers to form their own autonomous unions. Other reforms will increase penalties against forced labor and protect against discrimination. The labor chapter requires all TPP countries to grant workers the right to form unions and bargain collectively and ban forced and child labor and discrimination in employment, as well as new commitments to legislate working conditions. Breaches can be punished by trade sanctions. But the deal stops short of setting a floor for minimum wages or ceilings on working hours. The US federal minimum wage is US$7.25 per hour.  Minimum wages in Vietnam in 2014 ranged from US$85 to US$121 per month. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR