BUSINESS IN BRIEF 15/1 Farmers face obstacles selling organic foods Farmers and enterprises have met many difficulties in producing and selling organic produce due to the shortage of good seeds, training and cultivated land, said agricultural experts. Organic agriculture is a production system that sustains the health of soil, ecosystems and people, according to the International Federation of Organic Agriculture Movements (IFOAM). Nguyen Thi Lien, owner of the Tue Vien organic farm, told the Kinh te do thi (Economics and Urban) newspaper that as farmers do not use fertilisers or chemical plant protection substances to grow organic crops, they need varieties that can resist pestilent insects. The State should invest more in research on strains for the cultivation of organic vegetables, Lien said. Hoang Thi Hau, chairwoman of the Thanh Xuan Commune Farmers' Association in Hanoi's Soc Son District, said that customers' demand for organic vegetables is greater, but expanding the cultivation area is difficult. Farmers need more training on the growth of organic vegetables as well as funding to expand their cultiva tion area. The Ministry of Agriculture and Rural Development should popularise technology for the cultivation of organic vegetables, she said. The municipal authorities should support the farmers with funding to join fairs and support enterprises in spreading information about organic vegetables' quality so that they could bring the produce to customers more effectively, said Hau. Dao Duy Tam, deputy director of the municipal Department of Agriculture and Rural Development, said that in the future, the department would focus on giving training to farmers and help them change from traditional farming to organic crops cultivation. Coupled with providing information on organic crops' value to customers, the department plans to ask city authorities to enact policies that encourage enterprises to invest in organic cultivation. Nguyen Duy Hong, director of the Hanoi Department of Plant Protection, said that IFOAM and the Vietnam Association of Organic Agriculture should support Hanoi with manpower to set up a model of organic vegetables cultivation. Consumer credit boom expected in next five years Consumer credit was expected to develop rapidly in Vietnam in the next five years, driven by rising demand from a recovering economy with a young population. Dao Van Hung, member of the National Financial and Monetary Policy Advisory Council, said that there is huge potential for development of consumer credit in Vietnam. Financial firms and commercial banks providing this kind of service still largely ignore the outskirts and rural areas, where there are a large number of people who don't qualify for banking loans, who are potential customers for consumer credit. The central bank's statistics showed that outstanding consumer loans account for 8 percent of the economy's total outstanding loans, which is modest in comparison with the regional average of around 20 percent and 40 percent in developed financial markets. The percentage is expected to rise to more than 15 percent of the total outstanding loans in the next five years, or an average annual rise of 20 percent, promising a busy market with a diversification of consumer lending packages. According to Truong Thanh Duc, Chairman of the legal club of the Vietnam Banking Association, more financial companies under commercial banks are expected to join the consumer lending race in the coming years. Vietnam now has only six financial companies specialising in consumer financial services, with several banks which provide this kind of service still failing to meet the demand. Duc said that consumer lending procedures are more flexible and simpler than banking, and coupled with rising demand for consumer credit will fuel the boom. According to Duc, interests from consumer lending remain higher than banking rates. This is understandable because it is difficult for financial companies to raise capital, while their lending costs are higher and loans are mainly trust-based. As the market has not developed, risks remained high, Duc said, and added that the development of consumer lending will promote competition, which is expected to lower interest rates with regard to consumer lending. Still, experts said that interest rates from consumer lending are much lower than black credit. The development of consumer lending will bring a lot of benefits not only to the consumers but also to the economy, they said. Hung said consumer lending will promote purchase, stimulate production and growth, and policy-making must be based on that approach. Only 30 percent of SMEs have access to bank loans Only about 30 percent of small and medium-sized enterprises (SMEs) have gained access to bank loans, while the rest have to borrow from other sources at high interest rates, according to the Science Institute of SMEs Management (SISME). The figure, part of results of a SISME survey, was released at a conference held in Ho Chi Minh City on January 13 to seek ways to improve SMEs’ access to loans. Experts attributed this to the SMEs’ lack of collateral which they said, has made it difficult for them to borrow. SMEs contribute nearly 40 percent of the gross domestic product, and generate 50 percent of jobs nationwide, they said. Do Tan Truc, head of the business support office under the Ho Chi Minh City Credit Guarantee Fund for SMEs, said the city is taking measures to address the problem through programmes on demand stimulation and linking businesses with banks. He said his office is ready to provide consultation to the SMEs. Social policy bank targets 8 percent growth The Vietnam Bank for Social Policy (VBSP) set this year’s credit growth rate of 8 percent, according to the bank’s plan for 2016. The bank will give priority to provinces with a high rate of poor and near-poor households in accordance with the poverty line for the 2016-2020 period, as well as disadvantaged districts and communes in border areas and islands. The bank’s General Director Duong Quyet Thang has requested all the VBSP units and branches to strive to meet the demand for loans to poor households and social beneficiaries, while continuing to raise credit quality and paying attention to new credit programmes . From 2011 to 2015, the VBSP provided preferential loans for 11 million customers, helping 1.9 million households escape poverty. The bank also helped build 5.1 million clean water supply and sanitation facilities in rural areas, as well as 206,000 houses and 6,000 flood-proof houses. Nearly 1.2 million disadvantaged students were provided loans to pursue study in the review period. Last year, the bank’s capital reached 148 trillion VND (over 6.4 billion USD), an increase of 56 trillion VND (2.43 billion USD) compared to 2011. By the end of the 2011-2015 period, total outstanding loans were estimated at 142 trillion VND (nearly 6.2 billion USD) with annual average growth of 11.9 percent. By the end of 2015, overdue debts accounted for only 0.78 percent of the outstanding loans. Symposium spotlights integration’s opportunities, challenges A national symposium was held in Hanoi on January 13 to review Vietnam’s economy last year, and point out the opportunities and challenges of international integration. 2015 is considered a special year for Vietnam’s global integration, with the successful conclusion of the Trans-Pacific Partnership (TPP) negotiations, and the formation of the ASEAN Economic Community. The intensive integration into the region and the world is believed to generate a host of opportunities and challenges for society overall, the economy, and each individual person. Prof. Tran Tho Dat and Assoc. Prof. To Trung Thanh from the National Economic University said from 2016 and in following years, Vietnam must drastically reform its growth model, restructure its economy, renovate FDI attraction policies, and foster support industries. The State should design policies that help the private economic sector reach a higher position in the global value chain, apply a more flexible exchange rate control mechanism, closely control budget deficit and public debt, and effectively monitor financial and monetary security, they added. 2016 is the first year of implementing the five-year socio-economic development plan, which will be issued at the upcoming 12th National Party Congress, along with a number of new-generation free trade agreements. Hence, the country must realise its commitments to improving local business climates and economic institutions, symposium participants said. Dr Nguyen Manh Hung from the Party Central Committee’s Commission for Economic Affairs noted that the Politburo should issue a directive on the TPP implementation. It will serve as a foundation for all-level Party committees, the National Assembly, the Government, ministries, localities and businesses to design their own action plans to optimise chances and minimise risks. He also called for accelerated institutional reforms, as well as increased communication to raise State agencies, enterprise and the public’s awareness of international integration, TPP and other free trade agreements. Thai company not qualify for exporting parent shrimp to Vietnam The Aromnat Co., Ltd of Thailand fails to meet requirements for exporting parent white-legged shrimp to Vietnam, according to Vietnam’s Directorate of Fisheries. Deputy General Director of the Directorate Nguyen Huy Dien said that was the outcome of an inspection of the Bangkok-based company’s operation conducted by the agency’s team late December last year. In addition, the team found that Aromnat belongs to the same owner of Phuket-based Winaiphonoi company, which has been banned from selling parent white-legged shrimp to Vietnam since 2013. The Directorate of Fisheries has requested the Animal Health Department to stopped issuing quarantine certificate to Aromnat’s shrimp until the company can prove their shrimp meet all the quality requirements. Aromnat was one of four Thai companies exporting parent white-legged shrimp to Vietnam in 2014 and 2015. The other three were CP Merchandising Co.,Ltd, Aquaculture Promotion Co., Ltd and SyAqua Co., Ltd. According to Deputy General Director Nguyen Huy Dien, the production facilities and breeding process at the other three exporters meet Vietnam’s quality requirement. He added that the Directorate of Fisheries will send more inspection teams abroad in 2016 to check the quality of parent white-legged shrimp that foreign exporters ship to Vietnam. Nghe An sees investment of 6.6 billion USD The central province of Nghe An attracted a positive investment flow totalling 150 trillion VND (more than 6.6 billion USD) during the 2010-15 period. This was announced by Director of the provincial Department of Planning and Investment Nguyen Van Do. In the 2010-15 period, levels of investment capital registered in the province more than doubled the figure seen in the two previous years, with some large-scale projects licensed, such as Hoa Sen steel sheet factory, Quynh Lap 1 thermo-electricity plant, the Song Lam cement factory, the Vingroup trade and service complex, and the Vietnam-Singapore Industrial Park (VSHIP) Nghe An, according to the director, as quoted by baodautu.vn. He attributed this encouraging performance to greater efforts by local authorities and other sectors in accelerating administrative reforms, especially reducing the time and expense required to complete investment procedures, in order to better assist investors. In the future, the province will focus on attracting projects that can use high-end technology and create more local jobs, while seeking investors with sufficient financial capacities and a commitment to corporate social responsibility, he added. Earlier, the central province said it had set a target of attracting some 100 trillion VND (more than 4.44 billion USD) in investment from now until 2020, including 50 trillion VND in foreign direct investment (FDI). To achieve this aim, the province will carry out measures to lure investment, as Nghe An considers it a key task in spurring local socio-economic development. Besides facilitating the operations of investors by zoning land for them, offering them incentives and assisting them in recruiting workers and sourcing building material, the province will continue improving its investment environment with the aim of becoming one of the top 30 provinces and cities in the country, based upon the provincial competitiveness index. Banks hike rates to meet capital demands Some commercial banks have increased interest rates on dong deposits to meet rising capital demands towards the end of the lunar year. The increase in interest rates was between 0.2 percent and 0.8 percent per year. LienVietPostBank, on the first days of 2016, announced a 0.2 percent rise in the rate for short-term deposits, lifting a monthly deposit to 4.4 percent per year. The rate for 3-month deposits has also been adjusted up to 4.8 percent. Previously, Sacombank also inched up the rate for deposits between three months and five months ranging from between 0.1 percent and 0.2 percent, to 7.5 percent. BIDV also increased the rates for monthly deposits by 0.5 percent to 0.8 percent, from 4 percent to 4.8 percent per year, two-month deposits from 4.3 percent to 5 percent, and 3-month deposits from 4.7 percent to 5.2 percent. Besides, some banks have also offered promotional programmes to attract depositors. VIB, for example, offered a bonus rate of 2 percent per year for half-yearly deposits worth more than 100 million VND (4,360 USD), lifting the rate to 7.5 percent. Commercial banks expected that the rise would help them attract more deposits to balance their capital source and meet lending demands in the year-end. Besides deposits, banks also have to increase their borrowings from each other to meet the demands, statistics from the State Bank of Vietnam (SBV) revealed. In the last week of December 2015, total transaction turnover in the inter-bank market reached 162.278 trillion VND (7.1 billion USD), up 33.275 trillion VND (1.45 billion USD) against the previous week. Most of the transactions were overnight and for a one week term. According to experts, capital mobilisation at banks in 2015 was busier than previous years as the credit of the entire banking system has increased to its highest level since 2012, causing a temporary shortage of liquidity in some banks. Credit in 2015 surged 18 percent, compared with 12 percent in 2011, 10.9 percent in 2012, 12.51 percent in 2013, and 14.16 percent in 2014. The central bank in 2016 is also targeting a credit growth rate of 20 percent, and SBV Governor Nguyen Van Binh said the central bank would find it difficult to further drop interest rates as demand for funds would stay high, and the SBV needed to balance its efforts to keep the foreign exchange rate stable. To guarantee credit expansion, mobilisation needs to grow parallel while banks have to allocate resources to buy government bonds, thus putting pressure on interest rates. However, Binh said that the SBV would act to keep interest rates stable like in 2015 and strive to lower interest rates of medium and long term deposits by an additional 0.3 to 0.5 percentage points. Modular gas processing plant to be built in Ca Mau Honeywell UOP has announced that it will cooperate with PetroVietnam Gas Joint Stock Corporation (PV Gas) to build a modular gas processing plant with daily capacity of 7 million cu.m. PV Gas will use the plant to separate liquefied petroleum gas (PLG) from natural gas at its processing plant in the southernmost province of Ca Mau. Honeywell Process Solutions will also serve as a main integrated main automation contractor (I-MAC) and supply integrated controls and safety systems for PV Gas’s production plants and terminals. Posco Engineering Co., Ltd and Petrovietnam Technical Services Corporation (PTSC) were selected as contractors for engineering, procurement, construction of the project. The plant is scheduled to become operational by 2017. Honeywell UOP is a global leading group in gas processing. It has helped its customers meet the demand for natural gas for more than 60 years. The firm’s gas processing solutions focus on contaminant removal and natural gas liquids recovery to help maximise the value of its customers’ gas streams. Plant modules are assembled quickly, significantly reducing construction time and expense, and enhancing reliability after startup. HCM City targets 6 percent growth in agro-forestry, fisheries HCM City will strive to maintain 6 percent growth in agro-forestry and fisheries outputs this year, according to its Department of Agriculture and Rural Development. It also targets increasing average agricultural revenue per hectare from 375 million VND (16,700 USD) last year to 420 million VND this year. Speaking at a review meeting held on January 13, the department's deputy director, Huynh Thi Kim Cuc, said despite many difficulties agro-forestry and fisheries production grew by 6 percent last year, or 2.3 times the national rate. Crop production grew by 4.4 percent, animal husbandry by 4.9 percent, agricultural services by 11.8 percent, forestry by 4.6 percent, and fisheries by 8.6 percent, she said. This was the result of following an urban agricultural model, which meant reducing low-yield rice growing areas and increasing the area under high-value ornamental trees and safe vegetables as well as dairy farming, she said. The area under vegetables last year increased by 2.7 percent to 14,500ha, and output was 366,704 tonnes. The city had around 2,250ha under flowering plants and ornamental trees last year, up 5.6 percent, she said. The city had a total of 160,000 cows, a year-on-year increase of 25.7 percent, including 103,000 dairy cows that produced 275,000 tonnes of fresh milk, accounting for 42.6 percent of the country's output. The number of pigs and seafood output went up by 30 percent and 6.3 percent, she said. City companies exported 262 tonnes of corn and vegetable seeds to several countries, including the US, Japan, and Israel, besides large quantities of fruits and vegetables, flowers, ornamental trees and fishes, and crocodiles, she said. But the agricultural sector also faces difficulties like high risk of natural disasters, diseases and demand volatility, she said. Besides, small scale of production and failure to use advanced technologies precluded sustainable development, she said. To achieve this year's targets, she said the city would continue to move towards urban agriculture, especially in increasing use of high-tech methods, including bio-technology, to provide safe and high-quality products. It would strive to develop linkages between production and consumption to ensure steady demand, she said. Le Thanh Liem, Deputy Chairman of the municipal People's Committee, called on the agricultural sector to focus on certain products in which the city has advantages and improving rural infrastructure. Raising awareness among farmers about the application of good agricultural practices is imperative, he added. Le Dinh Duc, Deputy Chairman of the rural Cu Chi District's People's Committee, said the city should improve its forecast of agricultural supply and demand to avoid price volatility. Only 30 per cent of SMEs able to secure bank loans Small- and medium-sized enterprises (SMEs) are struggling to get bank credit, a big drawback at a time when the ASEAN Economic Community has come into being and many free trade agreements are in the works, a conference heard in HCM City yesterday. Speaking at the conference, which discussed among other things providing unsecured loans to SMEs, Tran Ngoc Liem, deputy director of the Viet Nam Chamber of Commerce and Industry's HCM City chapter, said small businesses face many difficulties in borrowing from banks. Despite a myriad of support policies from the Government and banks, only 30 per cent of SMEs are able to regularly borrow from banks, he said. The others use their own funds or borrow from other sources at high interest rates, he said. He blamed this on the tough demands imposed by banks with regard to mortgage, financial capability and steady operation. Do Tan Duc, head of the SME support department under the Credit Guarantee Fund for SMEs, said banks are trying hard to reduce bad debts meaning more and stringent conditions would come into effect. Many experts attending the conference agreed that there would also be many other challenges for SMEs in 2016 like the devaluation of the dong and trade deficit. They feared this would cause more and more SMEs to go bust. Liem said banks and SMEs have to sit down together to find solutions to help the latter amid the country's rapid and deep integration into the regional and global markets. SMEs contribute 40 per cent to Viet Nam's gross domestic product and create 50 per cent of the jobs in the economy. At the conference, authorities also counselled SMEs on how to get loans and apprised them about the city's various programmes to hook up banks and SMEs. SMEs account for nearly 97 per cent of the 800,000 companies in the country. Dong Nai to recruit 31,000 workers The southern Dong Nai Province's enterprises plan to recruit an additional 31,000 workers from February to June this year. These labourers will work to increase manufacturing and replace those who quit their jobs after Tet (Lunar New Year) in foreign direct investment firms. "The enterprises will pay attention to employing workers mostly in February and March because many of their employees will possibly quit their jobs after the Lunar New Year," Pham Van Cong, vice-director of Dong Nai department of labour, invalids and social affairs, said. Unskilled workers or those trained in vocational schools for the garment, footwear and mechanical sectors will be given priority. He said about 20,000 enterprises were operating in the province, and the demand for recruitment was from the large firms. In previous years, the plan for employing workers was made for the whole year. However, supply could not keep up with demand and so, the enterprises have set short-term recruitment targets this year. The province expects to recruit more than 60,000 labourers in 2016. Pico not giving up on electronics market Pico failed to close the merger and acquisition deal with Central Group, but has not yet given up on the electronics retail market. According to Trinh Duc Tuan, deputy director of Pico, the deal fell through but Pico was ready to cooperate with domestic or foreign partners in any way, and that many have already proposed Pico and are being considered. “We are ready to welcome investors but the sides need to evaluate each other. We only choose partners with the same views and strategy,” he said, adding that Pico wanted to expand its scale of operation. Tuan said that in 2016 Pico was going to expand in Hanoi, where Pico was already strong. He said the north and Ho Chi Minh City were also in the plan, but the company had yet to choose specific cities. Pico is also considering developing a separate chain for mobile and telecommunication equipment. It plans to have 30 stores in Hanoi by the end of the year and develop ecommerce at the same time. The Vietnamese electronics retail market is still posting steady growth. According to market research company GfK, in 2015, the market grew by 20 per cent. Mobiles and tablets currently accounts for 50 per cent of sales and grew by 25 per cent last year. This market segment holds the best growth prospects in the mid to long-term. Some products that used to be considered high-end, such as 3D LED TVs, heating machines, and air filters, are now considered necessities. This means that the market still holds a great potential for growth. However,  now consumers have a larger choice of retailers. Besides Nguyen Kim, Vinpro is also expanding, along with other electronics retailers. In the context of fierce competition, companies need to reinvent themselves to survive. These days, electronics retailers in Vietnam are almost indistinguishable. Because they are so similar, they are forced to compete in price, which hurts their profit and is not sustainable on the long run. Experts say that current market dynamics will lead to the disappearance of some retailers. At the beginning of 2015, Thai company Central Group bought 49 per cent of NKT New Solution and Technology Development Investment JSC, the owner of 21 Nguyen Kim electronics shopping centres in Vietnam. After the purchase, Central Group targeted to expand Nguyen Kim to have more than 50 stores in the whole country by 2019. However, Nguyen Kim is only strong in the south of Vietnam, prodding Central Group to try and find a strong partner in the north, making Pico a potential candidate. Ten years ago, Pico was a pioneer of electronics retailing. At a time when people still bought electronics from small stores on “electronics streets”, such as Hai Ba Trung and Hang Bai, Pico appeared and changed consumption habits. However, facing increasing pressure from similar electronics shopping centres, Pico is scaling back and has the smallest number of stores in the market: a mere six, four in Hanoi and two in nearby northern provinces, compared to the 76 Dien May Xanh stores owned by Mobile World Group, or the 14 HC stores or 22 Media Mart stores. Flexible exchange rate management – a priority in 2016 economic operations Vietnam’s banking sector has pursued a flexible monetary policy, helping to drop interest rates and increase credit to an appropriate level. The exchange rate has been stabilized with an increase in the foreign reserve, supporting business production. In 2016, the sector will continue proactive and flexible measures in monetary policy management matching market growth.   In 2015, the State Bank of Vietnam (SBV)'s money supply increased 13.5%, harmonizing interest rate reduction, reasonable credit increase, and bad debt settlement. Although the interest rate was cut, capital mobilization remained high, enabling credit institutions to provide credit capital for the economy.   Stabilization of the monetary market was also due to other central bank measures to support the liquidity of credit institutions, restructure assets, and give high priority to liquidity risk management. Vietnam adjusted the average inter-bank VND/USD exchange rate 1% and expanded the exchange rate margin to 3%. Bui Ngoc Bao, President and General Director of the Vietnam National Petroleum Corporation (Petrolimex), said stabilization of the exchange rate and forex market will increase confidence in Vietnam’s currency and support the international integration of domestic enterprises during the current devaluation of the Chinese Yuan and the current decline of petroleum prices. He explained the corporation’s “financial expenses in 2011 were about US$90 million. Last year we spent only US$22.5 million. That means our expenditures are smaller and more stable, creating more favorable conditions for the enterprise.” This year the sector will continue to focus on monetary policy, hold inflation under 5%, and ensure an economic growth of about 6.7%. Flexibility in the exchange rate adjustment will be given priority. SBV Deputy Governor Nguyen Thi Hong said, “Management of the exchange rate and the interest rate should be in accordance with the macro-economic balance and the development of the global financial market enabling us to raise the status of Vietnam’s currency." "Credit management should increase credit strictly in line with safety and effectiveness. In the future, the SBV will apply a new, more flexible method of managing the exchange rate towards stabilizing the foreign exchange market and the national macro-economy,” she added. The State Bank of Vietnam will continue restructuring credit organizations and settling bad debts as set in the plans which have been submitted to the government. Inspection and supervision will be strengthened and focus placed on improving credit quality. In 2016, the central bank will also apply safe standards in line with international norms to enhance the safety of the national monetary system, which will go along with the market-ruled exchange rate management. The monetary policy will be flexibly implemented to stabilize the Vietnamese dong and the macro economy, control inflation, and utilize capital resources efficiently. Fighting $40bn food fraud to protect food supply Fraudsters will find it harder to infiltrate supply chains and profit from food fraud with the release of a new industry tool to help food companies assess their food fraud vulnerabilities and protect consumers. The tool, developed by SSAFE in partnership with PwC, Wageningen University, VU University Amsterdam and food industry leaders around the world, can be used free-of-charge to provide companies with a basis for developing mitigation and control strategies to reduce their risk to fraudulent attacks. “Recent food fraud incidents have increased the need to strengthen the food industry’s ability to detect and combat fraud across food supply chains,” said SSAFE executive director Quincy Lissaur. “As a non-profit organisation SSAFE believes protecting consumers is vital. By developing this free tool we hope to help strengthen companies’ internal controls while reducing opportunities to adulterate food for economic gain,” Lissaur added. Food fraud affects consumer confidence and is estimated to cost the global industry $30 to $40 billion a year. PwC research has found more than one in three of all organisations are victimised by fraud. “By clearly understanding the conditions and situations that provide fraudsters with opportunities, companies can target resources and actions to detect and prevent food fraud before affected products reach consumers, “Collaborating with PwC, who has a strong tradition of helping companies manage risks and improve processes, greatly improves the proposition and reach of this tool,” said Lissaur. According to Craig Armitage, PwC’s global leader of Food Supply and Integrity Services, current food safety practices are not always designed for fraud mitigation, “Beyond the economic cost, food fraud can harm public health and damage consumer trust. Food frauds, such as horse meat being passed off as minced beef or the addition of melamine in dairy, have increased the urgency with which the food industry is taking action,” Armitage said. SSAFE and PwC’s food fraud vulnerability assessment tool comes ahead of new food safety requirements being introduced by the Consumer Goods Forum’s Global Food Safety Initiative (GFSI), as well as several regulatory authorities around the world. “Food may be about taste and nutrition for most of us, but for fraudsters it’s always about using food as a pawn to make easy money. We hope to help food companies strike at the heart of this motivation so fraudsters are less willing and less able to profit from food fraud,” Armitage noted. SSAFE is a global non-profit membership driven organisation that aims to foster the continuous improvement and global acceptance of internationally recognised food protection systems and standards through public-private partnerships. PwC is a global professional assurance, advisory and tax services firm with expansive network in 157 countries employing more than 208,000 people. PV Gas selects Honeywell’s technology to produce LPG Honeywell (NYSE: HON) announced today that it will supply a 250 million standard cubic feet per day (mmscfd) modular gas processing plant and advanced automation systems to PetroVietnam subsidiary, PV Gas. PV Gas, Vietnam’s primary gas provider, will use Honeywell UOP’s modular gas processing plant to separate liquefied petroleum gas (LPG) from natural gas at its Ca Mau facility near the southern tip of Vietnam. Honeywell Process Solutions (HPS) will serve as the integrated main automation contractor (I-MAC) and supply the integrated controls and safety systems for the facility and terminal. PV Gas supplies natural gas to generate nearly 40 per cent of the nation’s electricity, and local production accounts for more than 55 per cent of Vietnam’s domestic demand for LPG. The Honeywell UOP modular plant will separate LPG, a compressed mix of propane and butane, from natural gas. LPG is used as a fuel for heating and transportation, and to manufacture plastics and synthetic rubber. Globally, LPG consumption is growing rapidly due to its versatility, low carbon emissions and energy efficiency. Within Asia, LPG demand is expected to grow at about 8.5 per cent per year through 2020. “As part of the largest oil and gas provider in Vietnam, PV Gas is making smart investments in infrastructure and innovative technology to meet the country’s goal of increasing the utilisation and profitability of natural gas, and this solution from Honeywell will help us achieve that,” said Huynh Quang Hai, general manager of Ca Mau Gas Processing Plant’s management board. “Honeywell’s modular gas plant and advanced automation controls offer a high recovery liquid efficiency, increasing the production of valuable products from natural gas.” The factory-built modular gas plant will be installed on site and is expected to begin production in 2017. The consortium of Posco Engineering Co., Ltd and PetroVietnam Technical Services Co. is the engineering, procurement and construction (EPC) contractor for the project. “Honeywell UOP has worked with PetroVietnam for more than 20 years in refining and petrochemicals, and this project will help Vietnam meet its growing energy demands,” said John Gugel, vice president and general manager of Honeywell UOP’s Gas Processing and Hydrogen business. “Our modular gas processing plants are a proven solution for high-quality, fast and efficient gas processing anywhere in the world, helping companies generate revenue sooner and more cost-effectively than with stick-built plants.” As the I-MAC, Honeywell will provide the front-end engineering and design (FEED) to design, deliver and install the automation, instrumentation, controls, safety and security for the gas processing units as well as for the terminal operations. This unified approach will be critical to help the project start up quickly and meet operational and business readiness goals. “Honeywell is uniquely qualified to supply both the process and controls for major projects like this,” said Pieter Krynauw, vice president for HPS’s Projects and Automation Solutions business. “UOP provides the processes that make the facility work, and HPS automation controls will keep it running efficiently and safely. PV Gas will see lifecycle benefits from this approach, beginning with fast installation and startup and sustained through training and site services – all from a single supplier.” Honeywell UOP’s modular process equipment efficiently delivers technology to treat and process natural gas, and can be shipped easily to remote locations. Plant modules are assembled quickly, significantly reducing construction time and expense, and enhancing reliability after startup. For multiple units, the standardised design simplifies training, operations and maintenance due to common parts, skid and installation layouts, and spares. Remittances revive real estate Real estate attracted one-fifth of remittances to Ho Chi Minh City in 2015, signalling a steady revival of the sector. According to reports by the State Bank of Vietnam (SBV), banks in Ho Chi Minh City have received $4.76 billion in remittances over the past eleven months. This figure is expected to reach $5.5 billion after the upcoming Lunar New Year. “Our statistics show that 21.6 per cent of remittances in 2015 have been spent on real estate projects, equalling a 0.8 per cent increase year-on-year. With the $5.5 billion forecast, we expect to see at least $1.2 billion of overseas money flowing into the property sector,” said Nguyen Hoang Minh, deputy head of the SBV’s Ho Chi Minh City branch. Minh noted that this percentage was still small compared to the heyday of real estate in 2011, when realty accounted for a staggering 42 per cent of remittances. He recalled that after this frenzy cooled down, the property market suffered from a supply glut and its appeal to remittances’ owners was dampened. However, as the industry slowly recovered in 2015, Vietnamese citizens have once again invested their remittances in realty projects. Economics expert Nguyen Tri Hieu was also upbeat about the flow of overseas money into real estate. According to Hieu, there is a trend among Vietnamese people living abroad to purchase homes in Vietnam as the year draws to a close, thus prompting a higher property demand at this time. Many locals now also regard real estate as an attractive investment channel and use remittances as their capital. Vo Kim Khanh, a Ho Chi Minh City resident living in Phu Nhuan district, agreed with this observation. For the past ten years, Khanh has received monthly remittances from her two sons who are working in France, and a daughter living in the US. “In the past, I used to invest some of my remittances in a Vung Tau-based housing project and unfortunately, I made a great loss when the market collapsed. Afterwards, scared of wasting more of my children’s money, I shied away from any property investments,” Khanh told VIR. However, as the property sector warms up again in 2016, Khanh revealed that she would consider returning to the realty market. This time, however, she will be more careful when selecting projects to invest in. According to the latest reports by the Ministry of Construction, there were 1,650 successful property deals in Ho Chi Minh City last December – a 20 per cent rise year-on-year. For the whole year of 2015, the city recorded 18,700 completed transactions, equivalent to an 82 per cent increase compared to 2014. Preferential loans helping low-income families A credit policy that allows families who have just escaped from poverty within the last three years to receive preferential loans is proving effective in localities nationwide. Under Prime Minister's decision 28/2015/QD-TTg that took effect last September, families that just escaped poverty are eligible to borrow a maximum amount of VND50 million ($2,250) from Viet Nam Bank for Social Policy (VBSP) with a yearly preferential interest rate of 8.25 percent for five years to develop production and business. The credit programme creates favourable conditions for the borrowers, due to its simple borrowing procedures. The head of the bank branch in Central Highland Province of Gia Lai, Le Van Chi, said that in the last four months, the bank offered loans of VND90 billion ($4 million) to 2,300 borrowers eligible for decision 28. He said that the funding was very helpful and meaningful to low-income families because without money to develop farming or business, they would return to poverty again and even poorer due to debts. In central Ha Tinh Province, the VBSP offered loans of VND49 billion ($2.2 million) to 1,600 families hovering near the poverty line. In the period 2011 to 2015, the country's poverty line is VND400,000 ($17.9) per person per month in rural areas and VND500,000 ($22.4) per person per month in urban areas. However, the Ministry of Labour, Invalids and Social Affairs (MoLISA) will replace the single-dimensional approach to poverty with the multidimensional measurement method for the 2016–2020 period, the ministry announced late last year. The new multi-dimensional measurement, taking effect from January 1, 2016, will not only be based on people's income but also on under-privileged people's access to the necessities of life such as healthcare, education, housing and so on. Vice head of Women Association of the province's Xuan Hoi Commune, Bui Thi Hai, said that hundreds of families there earned their living by small-scale fishing and they were vulnerable to become poor if facing shocks like bad weather or damage to fishing boats. Local fisherman Nguyen Dinh Van said that previously, his family could only afford to buy a small boat with capacity of 15 CV for inshore fishing. "My boat was too old and partly broken. I could not borrow a loan at the normal market interest rate," he said. "I have borrowed VND30 million ($1,300) from the bank of social policies thanks to Decision 28," he said, adding that he used the loan to fix the boat and buy more fishing tools. The implementation of Decision 28 also brought positive results in other localities, chinhphu.vn reported. Last year, more than 750 families in southernmost Ca Mau Province got preferential loans worth more than VND17 billion ($756,500). Almost 1,500 families in southern Tien Giang Province received loans worth VND45 billion ($2 million). Bank for Social Policies in northern Bac Ninh Province offered VND64.2 billion ($2.9 million) to those who have escaped poverty and want to develop production and business. According to the VBSP's statistics, of roughly 700,000 households having just escaped from poverty nationwide, 500,000 have not yet repaid loans taken under credit programs for poor and near-poor households. Hence, the new policy, in the immediate future, will benefit around 200,000 households who have never borrowed capital from, or have repaid all their debts to the VBSP. Banks hike rates to meet capital demands Some commercial banks have increased interest rates on dong deposits to meet rising capital demands towards the end of the lunar year. The increase in interest rates was between 0.2 per cent and 0.8 per cent per year. LienVietPostBank, on the first days of 2016, announced a 0.2 per cent rise in the rate for short-term deposits, lifting a monthly deposit to 4.4 per cent per year. The rate for 3-month deposits has also been adjusted up to 4.8 per cent. Previously, Sacombank also inched up the rate for deposits between three months and five months ranging from between 0.1 per cent and 0.2 per cent, to 7.5 per cent. BIDV also increased the rates for monthly deposits by 0.5 per cent to 0.8 per cent, from 4 per cent to 4.8 per cent per year, two-month deposits from 4.3 per cent to 5 per cent, and 3-month deposits from 4.7 per cent to 5.2 per cent. Besides, some banks have also offered promotional programmes to attract depositors. VIB, for example, offered a bonus rate of 2 per cent per year for half-yearly deposits worth more than VND100 million (US$4,360), lifting the rate to 7.5 per cent. Commercial banks expected that the rise would help them attract more deposits to balance their capital source and meet lending demands in the year-end. Besides deposits, banks also have to increase their borrowings from each other to meet the demands, statistics from the State Bank of Viet Nam (SBV) revealed. In the last week of December 2015, total transaction turnover in the inter-bank market reached VND162.278 trillion ($7.1 billion), up VND33.275 trillion ($1.45 billion) against the previous week. Most of the transactions were overnight and for a one week term. According to experts, capital mobilisation at banks last year was busier than previous years as the credit of the entire banking system has increased to its highest level since 2012, causing a temporary shortage of liquidity in some banks. Credit in 2015 surged 18 per cent, compared with 12 per cent in 2011, 10.9 per cent in 2012, 12.51 per cent in 2013, and 14.16 per cent in 2014. The central bank in 2016 is also targeting a credit growth rate of 20 per cent, and SBV Governor Nguyen Van Binh said the central bank would find it difficult to further drop interest rates as demand for funds would stay high, and the SBV needed to balance its efforts to keep the foreign exchange rate stable. To guarantee credit expansion, mobilisation needs to grow parallel while banks have to allocate resources to buy government bonds, thus putting pressure on interest rates. However, Binh said that the SBV would act to keep interest rates stable like in 2015 and strive to lower interest rates of medium and long term deposits by an additional 0.3 to 0.5 percentage points. Canadian insurance firm buys 35% BIC stake Fairfax Asia Limited, a subsidiary of Canadian insurance and reinsurance firm Fairfax Financial Holdings Limited, bought 41 million shares in the BIDV Insurance Corporation (BIC) on January 5. With this 35 per cent stake, Fairfax Asia will become a strategic investor of the BIC. Fairfax Asia and BIDV had signed an agreement to this effect on May 4, 2015. The finance ministry on August 8, 2015, approved in principle Fairfax Asia's plan to become a strategic shareholder of BIC. BIC holds a 65 per cent stake in Lao Viet Insurance Company and a 51 per cent stake in Cambodia Viet Nam Insurance Plc. It established a representative office in Myanmar in June 2015. As of the third quarter of 2015, BIC earned VND765.4 billion (US$34 million) in revenue and VND94 billion ($4.17 million) in pre-tax profits. Fairfax Financial Holdings, established in 1985, has assets worth $42 billion and earned $550.4 million in pre-tax profits in the first nine months of 2015. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR