BUSINESS IN BRIEF 5/3 Coffee firms expand Asian markets through Singapore   Singapore is expected to be an important gateway for Vietnamese coffee and other farm produce to increase their presence in the Asian market in addition to traditions ones like Europe and the US. Vietnam’s coffee exports to Singapore record an average growth of 37 percent per year, Trade Counselor at the Vietnamese Embassy in Singapore Nguyen Viet Chi said on the sidelines of the 2016 International Coffee & Tea Industry Expo (ICT) in Singapore on March 3-5. According to Singapore’s Department of Statistics, exports of Vietnam’s coffee and tea to Singapore were valued at 88 million USD in 2015, making up 21 percent of the country’s imports on the two products. The figures illustrate that Vietnamese firms are expanding exports to Singapore - a trade hub in Asia and the world. The ICT houses 140 pavilions from 20 countries and territories. The event creates a good chance for Vietnam to introduce its potential products to foreign businesses and seek partners. RoK firms interested in Vietnam’s garment market: KOTRA expert Free trade agreements (FTAs) help attract the investment of enterprises from the Republic of Korea (RoK) to Vietnam’s garment market, said Vice President of the Korea Trade-Investment Promotion Agency (KOTRA) Roh Inho. Speaking at a ceremony to launch the Korea-Vietnam FTA Support Centre in HCM City on March 4, Roh Inho said there is great potential for Vietnam to boost exports to the RoK, especially its key goods such as textiles, agricultural and aquatic products. He noted that his country has committed to opening its market to Vietnam’s tropical fruits and removing tariffs on apparel. Vice Chairwoman of the municipal People’s Committee Nguyen Thi Thu appreciated the RoK’s promotion agencies speeding up trade and investment links between the two countries’ firms, stressing that HCM City always willingly welcomes foreign investors. On the occasion at KOTRA’s office in HCM City, KOTRA and the HCM City High-Tech Zone, signed an agreement aiming to enhance information exchange to foster export-import activities. The FTA between Vietnam and the Republic of Korea (VKFTA) came into effect on December 20 last year. It covers matters from the reduction or elimination of customs duties, rules of origin, customs administration and trade facilitation; to sanitary and phytosanitary measures, technical barriers to trade, competition, intellectual property and transparency. The centre aims to provide enterprises with not only accurate information on the VKFTA but also support enterprises who face difficulties, particularly in terms of non-tariff trade barriers and granting of certificate’s of origin. According to economic experts, the enforcement of FTAs will help Vietnamese exporters to expand their business, as well as promote economic cooperation between Vietnamese and RoK firms. Bilateral trade between Vietnam and the RoK has increased significantly over the past few decades, from 500 million USD in 1992 to 28.8 billion USD in 2014. The RoK is now the largest among 62 foreign investors in Vietnam with about 3,000 enterprises in operation, creating jobs for more than 400,000 locals. According to Statistics from KOTRA in Hanoi, quoted by the Korean news agency Yonhap, the RoK’s total investment in Vietnam had reached 44.9 billion USD by the end of 2015. Ho Chi Minh City welcomes UK investors Ho Chi Minh City welcomes investors coming from the UK, especially given that Vietnam and the European Union (EU) have completed the signing of a free trade agreement. Chairman of the municipal People’s Committee Nguyen Thanh Phong made the statement while hosting Lord David Puttnam, special envoy of the UK Prime Minister in charge of trade with Vietnam, Laos, Cambodia and Myanmar, in the city on March 3. Phong said the visit would further tighten the Vietnam – UK relationship, following the UK Prime Minister’s Vietnam visit last July. He also thanked the UK for its support for Vietnam and Ho Chi Minh City in particular, especially in the fields of education-training, public-private partnership and Thu Thiem new urban area planning. The city identifies transport infrastructure and business climate improvement as key tasks, he stated. Puttnam suggested the city adopt technological advances, a strength of the UK, to complete infrastructure projects. With a young entrepreneur base, expertise and modern technology, Ho Chi Minh City’s infrastructure projects will be completed soon, he said. Cement exported to South Africa The Xuan Thanh Cement Joint Stock Company, a member of Xuan Thanh Group, will export 20 million tonnes of cement to South Africa over the next 10 years, under a recent agreement signed in Hanoi. The agreement was inked with its United Kingdom partner on March 2. As the company contracted with Ores&Minerals UK Ltd, the export deal is worth 1.2 billion USD and all shipments will be insured by Xuan Thanh Insurance Joint Stock Corporation. Xuan Thanh Cement General Director Nguyen Xuan Thuy told Dau tu (Vietnam Investment Review) that his firm currently exports cement to Australia, Papua New Guinea, the Philippines, Bangladesh and Chile. The firm has rapidly enhanced production capacity at its facilities in northern Ha Nam province and central Quang Nam province, and will do the same in southern Binh Phuoc province in the future. The Xuan Thanh Group, which runs both cement and insurance companies, is preparing procedures to invest in the Kaito Ha Tien cement factory in Binh Phuoc's Hon Quang district, about 90km away from Ho Chi Minh City. The group plans to pour more than 12 trillion VND (533.3 million USD) into Kaito Ha Tien, which was formerly named Minh Tam with an investment capital of roughly 4 trillion VND. The Mien Dong Joint Stock Company, a construction firm listed on the HCM City Stock Exchange began construction of Minh Tam, in late 2011, and was expected to roll out its first product in late 2013. However, Mien Dong suffered business losses and failed to assure progress of the project. It then transferred the plant to the ThaiGroup. In a broader context, the Ministry of Construction reported that cement businesses in Vietnam sold 9.4 million tonnes of cement in the first two months of this year, an increase of 6 percent over the same period last year. In February alone, the cement export volume rose by 7 percent month-on-month at 0.75 million tonnes, compensating for a fall in domestic sales. The quantity of cement sold domestically in February reached 2.27 million tonnes, less than half of January's volume, as a result of a lengthening Lunar New Year holiday. Industry insiders said cement consumption is expected to improve in the coming months following rallies in the real estate market, and this will support the sector's goal of selling 75 million tonnes to 77 million tonnes of cement this year. Revisions needed in IP compliance Revision of the legal framework on intellectual property to ensure compliance with the EU – Vietnam Free Trade Agreement (EVFTA) during enforcement should focus on efficiency as violations remained rampant. The initial review by the Vietnam Chamber of Commerce and Industry (VCCI) found that the differences between Vietnam's jurisdiction and the EVFTA's commitments on intellectual property were amazingly minor. Nguyen Thi Thu Trang, Director of the Centre for WTO and Economic Integration, said at a conference held on March 1 by the VCCI that general provisions and principles, and standards and enforcement of intellectual property rights were found largely compliant with the EVFTA's commitments. She said that there were only four incompliant points, which included exclusive rights to public announcements of performers and sound/video producers; protection of 169 EU's geographical indications listed in the FTA; commitments to offset pharmaceutical patents in case of delayed licensing; and the principle about rights of people named on a work. Trang said that revisions were recommended for incompliances to ensure the enforcement of intellectual property rights. According to Trang, the difficulty now was to ensure the enforcement could be efficient in reality amidst the condition that violations to intellectual property remained rampant in the country. Pham Vu Khanh Toan from Pham & Associates Law Firm said that the co-ordination between relevant ministries and organisations should be enhanced to better control the enforcement as well as balance the social, community and holders' benefits. An expert said that firms, especially those of small and medium sizes, must enhance knowledge about intellectual property. Vietnam's legal system on intellectual property was currently implemented in line with the Agreement of Trade-Related Aspects of Intellectual Property of the World Trade Organisation (TRIPS). State budget revenue tops 7.27 bln USD in two months The total State budget revenue topped 160 trillion VND (7.27 billion USD) in the first two months of this year, up 2.4 percent annually, according to the Finance Ministry. Of the figure, the domestic budget collection neared 140 trillion VND (6.36 billion USD), or 17.8 percent of the estimate. Revenue from crude oil was on the decrease, reaching 5.77 trillion VND (262.2 million USD), equivalent to 10.6 percent of the estimate and 43.1 percent of the total reached in the same period last year. Meanwhile, State budget collection from export-import activities stood at 31.2 trillion VND (1.41 billion USD), down 17.6 percent year-on-year. Also according to the ministry, the State spent nearly 185.6 trillion VND (8.4 billion USD), or 14.6 percent of the estimate, resulting in a budget deficit of 25.47 trillion VND (1.15 billion USD), or 10 percent of the estimate. Binh Duong lures 386 mln USD in first two months Southern Binh Duong province lured 386 million USD in foreign direct investment (FDI) during the first two months of 2016. Over 71 percent of the funds, or 274.6 million USD, were pumped into 27 newly-registered projects, while the remaining was added to operational ones. According to the provincial Department of Planning and Investment, the locality has so far attracted 24 billion USD for 2,614 FDI projects by investors from 40 countries and territories. Japan led the way, followed by Taiwan (China), the Republic of Korea and Singapore. The province expects to welcome a new wave of investment from overseas, particularly in textile and garments over the next five years, as the Trans-Pacific Partnership takes effect. Binh Duong’s success story in investment attraction is owed to the province’s effort to improve local transportation infrastructure and develop the infrastructure of dozens of industrial parks, said Chairman of the provincial People’s Committee Tran Thanh Liem. The locality has also focused on simplifying administration, notably with a one-stop-shop model which has benefited foreign investors in obtaining investment and land use rights licenses, he added. Vietjet Air pampers female passengers on special flights Thousands of greetings and luxurious gift-sets will be offered from Vietjet Air to its female passengers on special flights to honour International Women’s Day on March 8. Alongside this, the Ayor boy band from the Vietnamese X-Factor Competition appearing in the carrier’s clothes will also bring intriguing performances on those flights. On the occasion, Vietjet has announced a “golden hour” week staring from March 1 to 8 with two million low cost tickets from zero dong (excluding VAT, fees and other surcharges) at the website www.vietjetair.com for all domestic and international routes to Seoul, Taipei, Singapore, Bangkok, Yangon for the travel period from March 15 to December 31, excluding public holidays. Additionally, passengers will have the chance to receive lucky gifts on VietJet’s Facebook at www.facebook.com/vietjetvietnam if they sign up for a competition from March 5 – 8. Founded in 2007, Vietjet currently has a fleet of 34 aircraft, including A320s and A321s and operates about 200 flights daily. The airline has to date carried 20 million passengers on 47 domestic and international routes to Singapore, the Republic of Korea, Taiwan, China, Thailand and Myanmar. Da Nang city wants to boost cooperation with Italy The central coastal city of Da Nang hopes to expand cooperation with Italian localities, organisations and businesses in the spirit of mutual benefit and development. Vice Chairman of the municipal People’s Committee Phung Tan Viet told a workshop held in the city on March 3 that the city pays much attention to promoting trade-investment and improving policy-making and the business climate to facilitate foreign operations. Local authorities have pledged to create the best conditions for Italian investors to do business in the city, he confirmed. Representatives from the Italian Trade Office in Vietnam hailed Da Nang as a driving force of the central region and hoped that the workshop will open up numerous prospects for bilateral economic collaboration. Italy ’s Livorno Port and Da Nang Port have signed a Memorandum of Understanding on establishing bilateral ties. In 2015, Da Nang exported 3.6 million USD worth of goods to Italy and imported 3.5 million USD from the market. Italy is running three investment projects in the city, focusing on processing, manufacturing and services with a total capital of 1.1 million USD. Taiwan, RoK top foreign investors in Dong Nai Taiwan (China) and the Republic of Korea (RoK) have been the leading foreign investors in the southern province of Dong Nai with investment capital surpassing 5 billion USD, according to the provincial Department of Planning and Investment. Taiwan topped the list of over 40 countries and territories investing in the province with 283 projects worth nearly 5.13 billion USD, followed by the RoK with 312 projects capitalised at over 5 billion USD. Their investment is focusing mainly on footwear, garment, wooden products, electronics, and products serving support industries. In February, local industrial parks attracted 14 foreign direct investment (FDI) projects with registered capital of 170 million USD, 2.6 times higher than that of the same period last year, according to the Management Board of the Dong Nai Industrial Zones. Also during the month, 17 FDI projects registered additional capital worth 299 million USD, up 4.2 times, the board added. In the first two months of 2016, the total FDI capital pouring into the local industrial zones reached 464 million USD. This year, Dong Nai targets to attract 1 billion USD in investment. RoK firms wish to expand investment in Dong Nai Enterprises from the Republic of Korea (RoK) want to expand investment in the southern province of Dong Nai, said President of the Association of Korean Businesses in Dong Nai Park Hyun Bae. In a working session with representatives from the provincial People’s Committee on March 2, Park Hyun Bae praised policies devised by the local authorities to attract investors, adding that Dong Nai boasts advantages with its location in the centre of the southern economic zone and convenient transport system. RoK firms hope the local authorities will continue with administrative procedure reform to facilitate their operations in the locality, he said. Vice Chairman of the provincial People’s Committee Tran Van Vinh said Dong Nai gives priority to high-tech and environmentally-friendly investment with low demand of labourer. He affirmed that the local authorities will create the best favourable conditions for RoK enterprises to operate profitably in the locality. The RoK now ranks second among 35 countries and territories investing in Dong Nai, with 264 projects worth over 5 billion USD. These generated jobs for more than 150,000 workers. Foreign investment needed to develop part suppliers Industries thriving due to free trade agreements (FTAs) should seek foreign investment to develop domestic suppliers of parts or materials for manufacturing, experts said. Ho Thi Kim Thoa, deputy minister of industry and trade, said those industries include garment, textile, and leather­ and footwear. The FTAs will create many opportunities and conditions in developing markets, as well as challenges due to origin rules for textiles and garments. To deal with these challenges, industries should seek foreign investment to take advantage of the FTAs, she urged. Meanwhile, Phan Chi Dung, deputy head of the light industry department, said the textile, garment, leather, footwear, milk and paper industries have seen large billings for their exports, but materials for their production have been mainly imported. For instance, Viet Nam's manufacturers need 8 million sq.m of cloth, but local producers can only provide 1.8 million sq.m, while the remaining cloth must be imported, according to the Ministry of Industry and Trade. The local market supplies only 1 per cent of the domestic demand for cotton, while 99 per cent of cotton used in homes must be imported. Vietnamese enterprises lack investment and technology to develop the textile industry, so they need foreign investment. The leather and footwear industry gained a year-on-year increase of 15 per cent in its export value in 2015, to US$14.9 billion, but the industry still struggles with low supplies of leather for the local market. They currently import 70 per cent of the needed leather. Some foreign enterprises have developed leather suppliers in Viet Nam. But these suppliers have had just enough material for their parent companies, the ministry said. The leather tanning industry is often responsible for high levels of environmental pollution. So the provinces remain hesitant to grant investment licences for leather tanning projects. The dairy industry also imports 85-90 per cent of materials needed for dairy production, the ministry said. Therefore, those industries need to call on foreign investment for developing suppliers for their industries. However, there are still many difficulties for foreign investors in working in Viet Nam's market, according to Viet Nam's trade counselors. Le Phu Cuong, a Vietnamese trade counselor in Turkey, said Viet Nam and Turkey had great potential for cooperation in the textile, garment, leather and footwear industries. Large industrial companies in Turkey have promoted investment in the garment and textile industry in foreign countries. Further, Turkish enterprises have planned to move their production from China to Viet Nam due to high production costs in China and available materials in Viet Nam, according to Cuong. But they have not had many projects in Viet Nam, due to difficulties in getting Viet Nam visas and the lack of information about local markets, the investment environment, incentives and commercial mechanisms for Turkish enterprises. They have also been worried about competition with Korean, Japanese and Taiwanese enterprises in Viet Nam. Therefore, Viet Nam's trade office and industries should promote information about projects, the investment environment and industrial zones for Turkish enterprises through exhibitions and seminars. Nguyen Duy Phu, Viet Nam's trade counselor in Taiwan, said Taiwanese enterprises would promote investment in the textile and garment industries in Viet Nam to take advantage of FTAs, and especially the Trans Pacific Partnership (TPP). But there were difficulties in obtaining locations for new projects because provinces are worried about environmental pollution. "Viet Nam needs special regions for investment to develop parts suppliers for the textile and garment industry, so the nation can control environmental pollution from such projects", he said. Meanwhile, deputy minister of industry and trade Ho Thi Kim Thoa said the ministry had built the Pho Noi Industrial Zone in Hung Yen Province and Rang Dong Textile and Garment Industrial Zone in Nam Dinh Province to attract foreign investors. The ministry plans to establish two other industrial zones in Dong Nai and Binh Duong provinces. Those industrial zones will offer incentives for foreign parts suppliers in the textile, garment, leather and footwear industries. Processing exhibition opens Technological advances in food, drink and pharmaceutical processing and packaging made by leading global brands are on show at the 2016 Propak Vietnam which opened yesterday in HCM City. Germany, the world leader in processing and packaging equipment and technologies, has 16 companies at the German pavilion besides 25 independent exhibitors specialising in material handling systems; machinery for food and meat processing, bakeries, and packaging; automation and printing technologies; and components and other auxiliary equipment. Many machines and solutions have been handpicked for the Viet Nam market, a release from the Singapore Exhibition Services Pte Ltd and VCCI, the organisers, said. Vera Fritsche, VDMA Food Processing and Packaging Machinery, Frankfurt, the host of the German pavilion, said her country was one of the most important partners in the food processing and packaging machinery industries in 2014, just behind China. "Germany is a strong partner when it comes to plastics and rubber machinery – it is one of the top five supplying countries." John Tang, director of the Taiwan External Trade Development Council's representative office in HCM City and the host of the Taiwan pavilion, said, "Many buyers from the packaging industry have flocked to HCM City to source high-quality processing and packaging equipment as well as turnkey services and solutions for the food and pharmaceutical market. "Twenty two Taiwanese exhibitors are taking part in the event." There are 292 exhibitors from 28 countries and regions, including international group pavilions from Italy, Germany, mainland China, South Korea, Taiwan, Thailand, and Singapore, making this year's event the biggest ever. The 2016 Propak Vietnam has seen 9 per cent exhibitor growth, according to BT Tee, deputy chief, Vietnam representative office, Singapore Exhibition Services Pte Ltd, said. "The impressive growth is a reflection of the increasing demands placed on product packaging needs driven by both exports and domestic consumption. "We see many recent press announcements on supermarkets and malls being built. They are key drivers for packaging technology growth in Viet Nam and we foresee a positive future for those serving the industry." The expo at the Saigon Exhibition and Convention Centre will go on until tomorrow. The sixth Plastics and Rubber Vietnam, which runs simultaneously, has attracted six group pavilions from Austria, Italy, Germany, China, Singapore and the UK and individual exhibitors from 20 countries and territories. Italy and Germany are the world leaders in machinery and technologies for the plastics and rubber sectors. Germany was one of five largest plastics and rubber machinery exporters to Viet Nam in 2014 with exports of 473 million euros (US$514 million). Propak Vietnam and Plastics & Rubber Vietnam are the most important platforms for German companies to acquaint Vietnamese companies with their products and solutions, Fritsche said. Stephen Hunt, membership director of the British Plastics Federation, said this is the second time his federation has led a group of exhibitors from the UK. "British exhibitors at the show this year range from machinery manufacturers and materials suppliers to a recycling company, and of course the BPF itself will represent over 500 members covering all sectors of the industry." Nam Thang Long Hospital privatisation plan approved Strategic investors could own up to 52.7 per cent of Nam Thang Long Hospital now that the Ministry of Transport has approved the hospital's privatisation plan. Dau tu Chung khoan (Investment Securities) reported yesterday that Nam Thang Long Hospital has a capital of VND30 billion (US$1.3 million), equal to 3 million shares with a share value of VND10,000, with the government's stake at VND11.9 billion. The hospital has a capacity of 100 beds and is classified as a second-class hospital by the health ministry. During the privatisation, the Ministry of Transport, on behalf of the government, will sell 26 per cent of the shares to the strategic investor under a private placement, 26.7 per cent of the shares to other investors in public auctions, and 17.3 per cent of shares to employees in the hospital with a favourable price. After the privatisation, the government will own 30 per cent of the hospital. The strategic investor can purchase the shares that are offered in public auctions in order to raise the ownership to 52.7 per cent, which is enough to take control of the hospital's operation, before buying the remaining government's stake in the hospital. According to the Transport Health Department under the Ministry of Transport, the strategic investor should be an enterprise that also works in the health sector with a similar business scale, which is equal to a minimum of 120 beds, and has equity of at least VND50 billion. The enterprise should have no accumulated loss and a pre-tax profit of at least 10 per cent of the revenue. If the strategic investor is not operating in the health sector, it should have equity of at least VND200 billion, no accumulated losses, and a pre-tax profit of at least 10 per cent of the revenue. All investors are required to not sell their stakes within at least five years after privatisation, provide plans to improve the quality of the hospital's performance, and maintain and attract high-quality employees to the hospital. The number of investors that are interested in the privatisation of Nam Thang Long Hospital has increased recently after the transport ministry approved the privatisation plan, Nguyen Hong Truong, Deputy Minister of Transport, told local media at a meeting last week. So far, more than 10 enterprises have registered in the competition to become the strategic investor of Nam Thang Long Hospital, Dau tu Chung khoan reported. Among those companies, Viet Phu An Real Estate Co Ltd has been considered a strong candidate to become a strategic investor of the hospital. Viet Phu An Real Estate Co Ltd has a capital of VND650 billion and operates in both real estate and health industry. The company also holds 3 per cent of the Lien Viet Post Bank and is investing in at least four hospital building projects such as Tri Duc Hospital and Hung Viet Tumour Hospital in Ha Noi. Gap between VN gold price, global market price narrows The Vietnamese market yesterday narrowed the gap between local and global gold prices for the first time since local prices reached their peak in 2010. Since the difference was recorded at its peak to be between VND5 million and VND6 million per tael, Vietnamese prices for gold were always higher than global prices. However, the gap was strongly narrowed yesterday thanks to a rise in the global price of the yellow metal and the stability of local prices. Sai Gon Jewellery Joint Stock Company yesterday sold one tael of SJC gold at VND33.64 million (US$1,506). At the same time, the global gold trading floor listed one ounce of gold at $1,244.9 (also at VND33.6 million per tael or 1.2 ounces). The stability of the local market had been the result of the Government's effort to put the market under stricter management. In 2012, the Government issued Decree No 24, which states that gold bar trading is only permitted at gold firms and credit institutions licensed by the central bank. The decree was expected to reorganise the disordered gold market, which had been largely manipulated by speculators for years, and introduce a state monopoly in gold bar production and gold material imports and exports. In addition, local gold shops, many of which have stopped trading gold bars as required by the decree, have seen much lower demand for gold bars. Customers now mostly trade in jewellery instead. A representative of Sai Gon Jewellery Company said they received more sellers of gold than buyers recently, explaining that increased supply and lower demand could not raise the local gold prices. Banking expert Nguyen Tri Hieu told Viet Nam News that in the local market the demand for gold was less because people had found other investment channels such as real estate investment, which was looking up, and bank savings, which were enjoying better interest rates. Hieu said the central bank's management of the exchange rate, though it was not a direct factor, was also a good tool to correct gold prices. Hieu said the buying and selling rates for each dollar were listed between VND22,350 and VND22,410, since this year's rates were lower than the ceiling prices last year, adding that the stable rate helped to improve the public trust in the dong. As the result, they won't put their money on dollars or gold. In the global market, according to reuters.com, gold jumped for a second straight session yesterday, bolstered by a safe-haven demand for the metal, after weak Chinese data stoked concerns about the global economy, with the volume of assets in the top bullion fund climbing to its highest level since 2014. Nguyen Hoang Minh, deputy director of the State Bank in the HCM City branch, said while the matching of the local and global gold prices could help reduce gold speculation and gold smuggling, it also would contribute to the stabilisation of the exchange rate and the general macro-economic situation. Duong Anh Vu, deputy head of the analysis desk in Viet Nam Gold Investment and Trading Joint Stock Company (VGB), said it is unlikely for the local gold prices to further reduce. He said lower local gold prices could only happen if the world prices unexpectedly rose, while the people flocked to sell their gold in the local market. However, Vu said it was difficult for the world gold prices to be kept that high if the next meeting of the US Federal Reserve System considered another interest rate hike. On the other hand, many people in Viet Nam still considered gold an asset because of its high liquidity despite low demand, he added, saying that it was highly unlikely that Viet Nam would see lower gold prices, compared with the world market's level. Local consumer Nguyen Minh Ngoc, 33, said she bought gold instead of selling it as she did not consider the metal as a trading tool, adding, "It is my own savings. I can use it when I want." Bloomberg.com said global bullion prices rallied 16 per cent this year, topping the gauges of high-yield and investment-grade corporate bonds, the American treasury, currencies and major stock indexes, as global growth concerns spurred the demand for the metal as a safe investment. Viet Nam's PMI declines in Feb The Purchasing Managers' Index (PMI) of Viet Nam dipped to 50.3 in February, down from 51.5 in January, but remained above the 50.0 no-change mark, according to a Nikkei report released yesterday. February saw a further modest improvement in business conditions in the Vietnamese manufacturing sector, as growth continued in output, new orders and employment. But the respective increases in each of these areas were weaker than seen in January. Meanwhile, lower oil prices contributed to a sharper reduction in input costs, while output prices decreased again. The health of the sector strengthened over the last three months. But the latest improvement proved the weakest in this sequence. Vietnamese manufacturing output increased for the third month running, albeit only slightly and at a weaker pace than in January. This slowdown helped lead to a reduction in the stock prices of finished goods as firms used inventories to fulfill new orders. Moreover, post-production inventories fell to the greatest extent since February 2014. A slower rise in new orders was recorded in February. Where new business increased, improved customer demand proved responsible. Meanwhile, new export orders also rose, and at a slightly faster pace than in the previous month. More new orders contributed to a second successive monthly accumulation of outstanding business, although the rise in February was only fractional. Similarly, employment remained broadly unchanged during the latest survey period, as hiring in support of production growth at some firms contrasted with resignations at others. Input prices fell at the fastest pace in three months in February, extending the current sequence of deflation to eight months. According to respondents, lower oil prices was the main factor leading costs to decline. Both the intermediate and investment goods sectors posted falling input prices. In response to falling input costs, as well as to fragile client demand, manufacturers lowered their output prices. The latest decrease was solid, but reflected the slowest decline since last July. In line with the trends for output and new orders, purchasing activity rose at a slight pace visibly weaker than in the previous month. The Vietnamese manufacturing sector saw growth weaken in February, as fragile global demand hampered efforts to sustain the momentum gained at the start of the year, according to Andrew Harker of Markit, which compiles the survey comments on the data. Meanwhile, costs continued to fall sharply on the back of lower prices for commodities, particularly oil, he adds. Vietnam cow farmers in dire straits over high domestic milk prices Although domestic dairy products supply only a small proportion of demand in Vietnam, cow farmers in the southern region still cannot sell their milk to dairy companies and face severe hardship unless something is done to reduce the price of domestic milk. About 800 households raising cows in Cu Chi District, Ho Chi Minh City are unable to sell their milk to dairy firms as no trading contracts have been signed between them. This happens despite a recent statement by Dinh La Thang, Secretary of the Ho Chi Minh City Party Committee, encouraging dairy farmers to do so. Nearly 40,000 cows are raised in the district, and about ten thousand have recently been sold due to their milk products securing no buyers. Not only is this the case in Cu Chi, but similar situations also exist at other cow husbandry locales in the metropolis and in other provinces like Lam Dong and Long An. The amount of milk being sold is only sufficient for 30 percent of total demand, said the Husbandry Branch of Vietnam’s Ministry of Agriculture and Rural Development. But milk firms here refuse to source dairy products from local cow farmers. “What a paradox!” exclaimed Hoang Thanh Van, head of the branch. Nguyen Dang Vang, chairman of the Animal Husbandry Association of Vietnam (AHAV), said prices of milk sourced from cow farmers in Vietnam are now about VND12,000-14,000 (US$0.54-0.63) per kilo, nearly double that of milk shipped from the US., Australia, New Zealand, and European countries, which sells for about VND7,000-9,000 (US$0.3-0.4) per kilo. Therefore, priority is given to buying milk powder from these countries over fresh milk from local farmers, Vang said. According to dairy experts, global milk prices have dropped significantly in recent times, which is one of the reasons why cow farmers are finding it difficult to sell their products. If no appropriate measures are taken to lower domestic milk rates, Vietnam’s dairy industry and cow raisers in particular could lose their competitive edge and find themselves in a worsening predicament when the Trans-Pacific Partnership agreement comes into effect in 2018, experts have warned. Luu Van Tan, chief of dairy product development at FrieslandCampina Vietnam Co., argued that integration means accepting competition, not asking any agency for support in any form. “We encourage farmers in places that are difficult to raise cows to switch to a more profitable occupation,” Tan said. K+ launches online television app MyK+ Vietnam Satellite Television (VSTV) today launched the online television application - myK+, which allows subscribers to watch its satellite TV service K+ on mobile devices such as smart phones, tablets or laptops over the internet. All K+ subscribers will be able to register for myK+ for free. Currently, myK+, available on Android and iOS, allows subscribers to watch four K+ channels: K+1, K+PM, K+PC, K+NS and nine national VTV channels. K+ will continue to expand the number of channels broadcasted on MyK+ and other utilities. The application also allows customers to manage their account and renew their subscription package online. Also, from March 1, K+ will offer only one service package - Premium+ at a monthly subscription fee of VND125,000 ($5.6), down from VND230,000. Premium+ allows subscribers to enjoy up to 130 SD and HD TV channels including quality local and international channels and especially the four exclusive channels – K+1, K+PM, K+PC and K+NS. Starting mid-January 2016, during the launching by K+ of its life-time promotion, many subscribers have upgraded to Premium+ to enjoy the monthly subscription fee of VND125,000 ($5.6). “Service quality is K+’s top priority in order to maintain our constant and sustainable development. With the new price, we guarantee the best service package in the market for customers,” said Le Chi Cong, general director of Vietnam Satellite Television (VSTV), adding that VSTV was target at 1 million subscribers. Established in May 2009, Vietnam Satellite Digital Television (VSTV) Co., Ltd is a joint venture between state-owned broadcaster VTV and CANAL/Canal+ Overseas, the foreign distribution arm of Canal+ Group, which operates seven satellite platforms covering five continents with millions of subscribers around the world. K+ is the trademark of VSTV. Survey: Japanese companies plan to expand in Vietnam Roughly 64% of Japanese companies operating in Vietnam plan to expand their operations over the coming year, according to a survey conducted by the Japan External Trade Organization (JETRO). The findings of the survey of 20 markets entitled ‘Business Condition of Japanese Companies in Asia and Oceania 2015’ were released by JETRO senior officials at a recent seminar in Hanoi. The survey, conducted from October to November of last year, includes the opinions and views of 4,635 Japanese companies operating in the region, including 557 of those with operations in Vietnam. In a keynote address at the seminar, Chief Representative Atsusuke Kawada of JETRO in Vietnam said the expansion outlook of the respondents with business operations in the Southeast Asian nation is the highest in the region. Mr Kawada said Indonesia, Thailand, the Philippines, China, and Malaysia round out the top five countries in the survey for expansion outlook, with percentages of 52, 49, 55, 38 and 45, respectively. The survey indicates the main reason companies are sanguine on expanding operations is that 85% of them report revenue growth over the past year and are optimistic for further growth in 2016. For 2015, nearly 60% of the those responding report earnings (down 3% compared to the prior year’s survey) with the remaining 40% reporting losses for the year. The number of companies doing business in Vietnam reporting earnings in 2015 is 326. Vietnam ranks third in ease of recruitment of employees, with respondents saying "market scale and growth ability" and the "stable social-political situation" of the country, are positive factors. The responses show that respondents report Vietnam's labour costs are relatively low in comparison to other markets. For example, labour costs in the manufacturing sector are less than a half of that in China, Thailand and Malaysia. Roughly 80% of Japanese firms doing business in Vietnam cite an "increase in employee wages," over the past year. In term of risks, 60% of the survey respondents said administrative formalities, customs formalities, the tax system, laws and increasing wages in Vietnam pose the greatest risk to them. Vietnam's localization rate, or the percent of raw materials and intermediary goods that can be sourced locally, is 32%, down 1% from the prior year’s survey. This rate is higher than the Philippines (26%). However, it is much lower than China, Thailand, Indonesia and Malaysia, which are 65%, 56%, 41 %, and 36%, respectively. Mr Kawada suggests that in order to increase competitiveness in terms of cost, Vietnam should strengthen its localization rate facilitating cost reduction for Japanese companies and thereby increasing profitability. ADB signs $100m deal with more Vietnamese banks Asian Development Bank (ADB), Ho Chi Minh City Development Bank (HDBank), and Sai Gon-Ha Noi Commercial Joint Stock Bank (SHB), signed mutually beneficial agreements on March 2. These agreements enable the trade finance programme (TFP) to provide guarantees of up to US$100 million per year. The beneficiaries are exporting and importing companies, including small and medium–sized enterprises in the country, Steven Beck, ADB's head of trade finance, said at the signing ceremony held in Ha Noi. "The agreements will help increase economic growth and create jobs," Beck said. HDBank Chairman Le Thi Bang Tam said joining the ADB's TFP programme was part of her bank's determined effort to improve its financial management capacity and service quality. "This is a golden opportunity for HDBank to expand its business into the world market," Tam said. TFP's loans and guarantees will be complemented by workshops and seminars to increase knowledge and expertise on trade finance, resulting in more support for export and import companies in Viet Nam. Previously, ADB had signed onto the programme with nine other Vietnamese banks, including Military Joint Stock Bank, Việt Nam Export Import Commercial Joint Bank and Saigon Thuong Tin Commercial Joint Stock Bank. ADB's TFP has been operating in Viet Nam since 2009. The programme has conducted more than 4,300 transactions and supported $6.5 billion in trade in the country. Across Southeast Asia, the TFP has supported more than 6,000 small and medium-sized enterprises since 2009, through some 10,000 transactions valued at over $20 billion in sectors ranging from commodities and capital goods to medical supplies and consumer goods. HDBank has more than 20 years of experience in the banking sector and has total assets worth more than VND100 trillion ($4.47 billion), with 220 offices nationwide. SHB had total assets worth VND205 trillion as of December 31, with 7,000 employees in Viet Nam, Laos and Cambodia. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR