BUSINESS IN BRIEF 6/3 New speedway racing school opens in the south Ho Chi Minh City-based Khang Thong Group, which is developing the mega-theme park Happyland, last week launched its first speedway school according to international standards, in the southern province of Long An’s Ben Luc commune. Covering a total area of 139,000 square metres, the speedway school can accommodate up to 25,000 spectators on various tracks. Khang Thong and Red Wing Co., Ltd will join together to organise professional-standard racing in Vietnam, sponsored by partners like RedBull, Yokohama, Yamaha, Honda, Suzuki, and Pirelli. The Happyland school offers safe and professional training courses for bicycle, car, and motorbike racers. The school will open in March this year, with courses for training in racing and technical skills. It will host its first competition in April. Director of Happyland School Nguyen Ngoc Hoan said that the school was a healthy, safe, and professional playground for racing enthusiasts in Vietnam. “Based on racing competitions, we expect to select talented riders to nurture and develop professional Vietnamese racers for regional and international tournaments,” he said. In 2011, Khang Thong broke ground on the Happyland entertainment complex, considered the biggest tourism project in Southeast Asia. Developed on a 338ha area in Ben Luc district, the multibillion-dollar project, inspired by Disneyland, will include a $600 million theme park , a 3.7 kilometre boardwalk, a shopping centre, three- to five-star hotels, water parks, studios, indoor and outdoor theaters, restaurants, a floating market, and other facilities. Fraudulent network marketing firms spoil it for the bunch in Vietnam While multilevel marketing is legal in Vietnam, fraudulent variants of the scheme have blindsided a lot of people with promises of easy earnings before eventually appropriating large sums of money from them. As of the end of last year, there were 65 licensed multilevel marketing firms, 11 of which were foreign owned, across the country, according to the Vietnam Multi Level Marketing Association (MLMA). In 2015, Vietnam’s multilevel marketing sector reported more than VND7 trillion (US$312.5 million) in revenue, with 1.4 million distributors receiving a total of VND2.1 trillion ($93.75 million) in commission, according to the Ministry of Industry and Trade. For most network marketing firms, salespeople not only sell their products but also encourage others to join the companies as a distributor. A person will receive commission not only for the sales they generate, but also for the sales of the other distributors they recruit. However there are firms in Vietnam that only urge people to buy their products and recruit as many distributors as possible without pressuring them to sell anything. There are also companies that promise to pay commissions to distributors even when they do not receive any products to re-sell, or those that recruit salespeople to do nothing. “These are all illegal forms of network marketing,” said Truong Thi Nhi, chairwoman of the MLMA. In legitimate multilevel marketing business, selling goods is a must, and a person is only compensated on the sales they generate, or the new distributors they recruit, Nhi explained. “But many firms do not focus on selling products and instead seek to recruit as many salespeople as possible,” she said. Another kind of fraudulent multilevel marketing company is those that sell poor-quality products at exorbitant prices and offer hefty commissions to newly recruited distributors. At workshops to recruit salespeople, these firms talk little about their products, but blind people with promises of a bright future for doing nothing and still being able to rake in dozens of millions of dong per month. (VND1 million = $45) Most fraudulent network marketing companies usually encourage people to buy their products without a proper contract, enabling them to easily swindle distributors out of money. “Another sign in recognizing a fraudulent multilevel marketing firm is them not allowing salespeople to return the purchased products,” Nhi said. According to the law on multilevel marketing, a distributor is permitted to return the goods and take back their money within 30 days from purchase for any reason, Nhi explained. Kon Tum, a mountainous province in the Central Highlands with a large population of the Gie Trieng ethnic minority, has emerged as a lucrative destination for multilevel marketing firms. A Lan, residing in the province’s Dak Glei District, has paid VND36.6 million ($1,634) to buy four packs of coffee and a pack of tea from a pyramid selling firm, in exchange for a “VIP membership.” Lan said the company had promised to pay him back the initial investment, plus VND99 million ($4,420) in commission after nine months, which he never received. In Kon Tum, the number of these companies rose to 19 in 2015, with 4,190 people recruited as distributors. Vietnam has recently cracked down on many networking marketing firms for swindling, most recently the Hanoi-based Lien Ket Viet Co. On February 20, leaders of Lien Ket Viet were arrested and initial police reports show that the company has appropriated a total of VND1.9 trillion ($85 million) from 45,000 people. “Firms like Lien Ket Viet make use of the multilevel marketing scheme for fraudulent purposes and are not real network marketing companies,” said Phan Duc Que, head of the unhealthy competition office at the Vietnam Competition Authority. “People who want easy money have fallen victim to such companies, and there are also those who know it is an illegal scheme but still join because they are so thirsty for profit.” Nhi from the MLMA suggested the Criminal Code be amended to “criminally charge those who take advantage of the network marketing scheme for fraud.” “This will deter swindlers and kick fraudulent firms out of the multilevel marketing market,” she said. Viettel aims to widen global footprints Viettel, Vietnam’s number one telecommunications group, is making major efforts to explore new markets and optimise efficiency. The military-run company was the only representative of Vietnam attended the recent Mobile World Congress (MWC) 2016 in Barcelona, the largest event in the mobile industry, drawing 85,000 telecommunications and information technology companies from around the world. At the four-day event, Viettel presented new information technology solutions and communications services as well as searching for opportunities to expand globally. “Visitors to our booth at the MWC were surprised to learn that Viettel has succeeded in popularising mobile services, even 3G, in very poor areas without electricity in Vietnam, as well as in distant African countries. They wanted to know how we did it,” shared one of Viettel’s MWC representatives. Regarding the company’s latest business achievements in tapping foreign markets, Viettel deputy general director Tao Duc Thang revealed that the group posted record growth in two new African markets in 2015. In Burundi, Viettel’s Lumitel brand jumped from the fourth largest to the largest mobile service provider after less than three months in operation, while in Tanzania the group’s Halotel brand reached one million subscribers after three months. “In Vietnam as well as in other countries, we pursue the strategy of embedding telecommunications and information technology into every facet of life. This will transform the way we live, learn, work, and entertain, enabling us to lead smarter lives with more rapid social development,” said Thang. Thus far, Viettel has made forays into 10 foreign markets. In most of them the company made profits after two years of operations, taking the largest market slice. Of these, Viettel’s operations in Timor Leste started generating profits after six months, while its Movitel brand in Mozambique brought sweeping changes to the telecommunications sector there and was dubbed the “African miracle”. “Telecommunications, and particularly mobile services, provides the fastest way to shorten the gap in development between nations. Viettel has gone out of its way to transform the telecommunications industry landscape in the markets we have invested in,” explained a Viettel spokesperson. Thang shared that Viettel plans to boost presence in 20-25 countries by 2020, serving about 600-800 million subscribers, and hopes to become one of the top 10 telecommunications companies in outbound investment worldwide. PM okays expansion of road to Cambodia The HCM City government has got the Prime Minister’s nod for a plan to call for investment to expand National Highway 22 that runs through the city and Tay Ninh Province and connects to Cambodia under the build-operate-transfer (BOT) form. In December last year, the city government wrote to the Prime Minister seeking approval for the investment plan as National Highway 22 is a major road that connects localities in the Southern Key Economic Zone of Vietnam and some other ASEAN nations but it is narrow.   The city said National Highway 22 plays a vital role in fueling economic development in the Southern Key Economic Zone and facilitating cargo transportation from the southeastern and southwestern provinces to Cambodia and other ASEAN nations through Moc Bai border gate in Tay Ninh Province. Therefore, it is urgent to upgrade and expand the highway. The Prime Minister told HCMC to closely work with the Ministry of Transport, Tay Ninh and relevant agencies to implement the road expansion project in accordance with the prevailing regulations. The ministry has thrown support behind the HCMC government’s proposal to find only one investor for the project. The reason is that if the project is carried out by two investors, there should be two toll stations on the 58-kilometer road. The current regulations require the minimum distance between two BOT tollgates to be 70 kilometers. Vietnam Macadamia Association comes into being The Vietnam Macadamia Association, co-founded by LienVietPostBank and the Him Lam Joint Stock Company, has been officially established under Decision No. 124/QD-BNV from the Ministry of Home Affairs (MHA). The Vietnam Macadamia Association is an occupational - social organization operating under the Association Charter approved by MHA, complying with legal regulations and being under State management by the Ministry of Agriculture and Rural Development and other ministries related to the field. According to Mr. Nguyen Duc Huong, Deputy Chairman of LienVietPostBank’s Board of Directors, “LienVietPostBank, Him Lam, and other macadamia planting - processing enterprises will implement numerous activities in 2016 in order to quickly reach the target of making the central highlands a macadamia center in Southeast Asia,” he said. During this foundation process, LienVietPostBank and Him Lam deployed a range of effective activities under the framework of a macadamia development program, for it to become a new strategic agricultural, forestry, and industrial crop in Vietnam, organized practical delegations domestically and visits to leading countries in the macadamia sector (Australia, China, South Africa, and the US), recruited Vietnamese and foreign experts to consult on planning development strategies, obtained sponsorship for macadamia research, set rules on loans to promote macadamia planting, and conducted public communications on the value and potential of the plant. LienVietPostBank and Him Lam will continue with tasks such as holding a competition on designing the Association’s logo, organizing meetings, and presenting the Association’s website. Both bodies have played an important role in realizing the potential of and seeking new opportunities for developing a macadamia industry in Vietnam. GEOTEC conference for Hanoi The Foundation Engineering and Underground Construction JSC (FECON) will organize the 3rd international “Geotechnics for Sustainable Infrastructure Development” conference on November 24 and 25 at the JW Marriot Hotel Hanoi. The main purposes of the conference is to exchange updated information, knowledge, and experience on the design, foundation and construction of infrastructure in order to ensure sustainable targets for all types of infrastructure projects, especially in the context of Vietnam’s global integration and climate change. “In recent years the role and importance of underground construction, foundations, and geotechnics have been increasingly highlighted and of concern at many national and international conferences,” said Mr. Pham Viet Khoa, Chairman of FECON and Chief Organizer of GEOTEC Hanoi 2016. “Beside the latest research projects on underground construction, foundations and geotechnics, a great number of new problems have appeared along with differing complexity, of local, national, and international scale,” Mr. Khoa added. There are five principle themes of the conference: deep foundations, underground construction and tunneling, ground improvement for infrastructure projects, coastal geotechnics for climate change, and monitoring, inspection, and maintenance. The conference will present various high quality science and technology reports on underground construction, foundations and geotechnics, which will bring benefits to projects and the development of geotechnics in Vietnam and will contribute to stable infrastructure. It is expected 500 participants will attend, based on the experience gained from the two previous conferences. On the sidelines of the conference the Organizing Board will hold an exhibition with 50 stalls, for domestic and international companies and enterprises to introduce their related offerings. The conference will now be held every three years to meet demand for scientific exchange and updates in technological advances from local and international scientists. Masan Beverage increases ownership in Vinacafe Bien Hoa Masan Beverage (MSB) under the Masan Group purchased 1.85 million shares of Vinacafe Bien Hoa (VCF) in late February, according to the published trading results of the two. Each share was worth VND157,000 ($7.03), meaning MSB parted with VND290.45 billion ($13.01 million) to make the purchase. The shares account for 6.86 per cent of the total, with MSB therefore increasing its holding in VCF to 15.99 million shares, or 60.16 per cent of charter capital. In 2015 VCF recorded profit of VND295 billion ($13.21 million) but earnings per share was VND11,112 ($0.49). Besides holding shares in VCF, MSB also holds about 65 per cent of the Quang Ninh Mineral Water Joint Stock Company and 63.95 per cent of the Vinh Hao Mineral Water Joint Stock Company. Masan Group is one of Vietnam’s largest companies, focused on domestic consumption and building leading businesses in the branded food and beverage sector and in the animal nutrition value chain. Its businesses include Masan Consumer Holdings, the producer of some of Vietnam’s most trusted and loved brands in many food and beverage categories (such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi, Kokomi, Vinacafe, Wake-up, Vinh Hao and Su Tu Trang), and Masan Nutri-Science, Vietnam’s largest local animal feed company (with brands such as Proconco and Anco). The Group’s other businesses include Masan Resources, one of the world’s largest producers of tungsten and strategic industrial minerals, and a major shareholding Techcombank, a leading joint stock commercial bank in Vietnam. Finance Ministry plans to boost domestic revenues Domestic tax collections should go up by 10% annually in the 2016-2020 period, instead of 8% registered by local authorities, to ensure budget revenue targets could be realized, Deputy Minister of Finance Do Hoang Anh Tuan said. Speaking at a meeting in Hanoi last week, Tuan told cities and provinces to draw up plans with higher domestic revenue than 8% as in previous years so that tax and fee revenues from domestic sources could account for over 80% of the total, up from 70% in the past five years. To realize the target, Tuan told cities and provinces not to set the domestic revenue increase target of only 8% in their reports to be submitted to the ministry in 2016. Tuan called on tax authorities to make sure that revenues will account for at least 21-22% of gross domestic product (GDP) this year, with taxes and fees making up 20-21% of the total. On top of that, budget deficit must be kept at below 4% of GDP and public debt at below 65% of GDP. He urged provinces and cities to try to meet the Prime Minister’s requirement that their budget collection rise is equivalent to the combined economic and consumer price index (CPI) growth. For example, the People’s Council of Dong Nai Province has issued a resolution targeting economic growth of 9% and CPI rise of below 5%, so the province’s budget collections should inch up 14%, he said. The General Department of Taxation reported that it collected nearly VND806.38 trillion (US$35.95 billion) last year, 10.2% higher than targeted and up 17.7% compared to 2014. Of the total, collections from crude oil were VND67.51 trillion, 72.6% of the target and 67.6% of 2014. Meanwhile, domestic collections neared VND738.87 trillion, higher than the target and the year before. The ministry reported at a conference in Hanoi in 2015 that this year’s budget collection target would be VND1,014 trillion, including VND785 trillion from domestic sources, and VND172 trillion from imports and exports.   The ministry estimated this year’s budget spending at VND1,273 trillion, VND126 trillion higher than in 2015. Of the total, development investments near VND255 trillion, routine expenditures VND824 trillion, and debt payments and aid over VND155 trillion. According to the ministry, this year’s budget deficit could be VND254 trillion, or 4.95% of GDP, up by VND28 trillion compared to last year. Last year saw budget collections exceeding over VND957 trillion (US$42.59 billion), 5% higher than the target and 3.1% higher than the target reported to the National Assembly (NA) earlier last year. Of which, revenues from domestic collections were nearly 11% higher than targeted and import-export activities over 98% of the target. Taxman collects more debt than targeted last year Tax agencies collected tax arrears of over VND39.1 trillion last year, up 27% against the previous year and 3% higher than targeted. As of December 31 last year, tax debt neared VND70 trillion, down 11% from December 31, 2014, according to the General Department of Taxation. Twenty-two localities reported lower tax arrears last year than in 2014, including Soc Trang with a decline of 83%, Lao Cai 50%, Hoa Binh 44%, Can Tho 39% and Kien Giang 33%. High tax debt increases of over 20% to 30% were recorded in 10 localities while seven localities reported lower rises of 20-30%. Deputy Minister of Finance Do Hoang Anh Tuan told a review meeting on tax collections in Hanoi last week that the existing regulations cannot meet the needs for writing off tax debts of enterprises. Therefore, the National Assembly is drafting a resolution on this and fines for late tax payers. Under the current regulations, in order to continue borrowing from banks, enterprises must settle all tax arrears. According to the General Statistics Office, 16,471 enterprises have had to suspend operation in the year’s first two months, up 17% against the same period a year earlier. According to the deputy minister, failures of enterprises in the initial period are not risks as up to 62% of firms worldwide fail or go bankrupt in the first one or two years. Supporting industries key to FDI attraction in 2016 Vietnam’s manufacturing and processing industry continued to take the lead in foreign direct investment (FDI) capital attraction, according to 2015 data. In Ba Ria-Vung Tau Province, capital inflows in supporting industries are expected to improve strongly in 2016, the first year of implementation of the provincial Party Congress’s resolution (for the 2015-2020 tenure). Last year saw the first projects licensed into Phu My 3 Industrial Zone exclusively catering to Japanese investors in supporting industries. Among them is Nitori Ba Ria-Vung Tau Company, a subsidiary of Japan’s Nitori Holdings. The firm got an investment certificate for its project there in November 2015. Speaking at an investment certificate award ceremony, Nitori Akio, CEO of Notori Holdings, said some US$150 million would be spent on a 40-hectare factory to manufacture and assemble furniture and furnishing items, mostly for export to Japan. The project has a capacity of around two million products per year. Work on the project will start in June 2016 and it will be operational one year later, creating around 1,000 jobs. “Nitori’s project in Ba Ria-Vung Tau Province will create new jobs and industrial products and help lure more Japanese investment into the province,” said the province’s chairman Nguyen Van Trinh. Toshio Kazama, an expert from the Japan Desk, said the southern province has strengths in deepwater seaport services and natural resources such as oil and gas, which are a foundation for material production like steel, petrochemicals and energy. The province’s basic material sector is high in the supply chain in the southern region with Dong Nai, Binh Duong and HCMC at the lower end, so it is expected to help raise localization and competitiveness. Ba Ria-Vung Tau is different from other provinces in the supply chain, so it can lure capital into supporting industries in the coming time. Bui Thi Dung, director of the Department of Industry and Trade, said Ba Ria-Vung Tau is on the Government’s target for supporting industries development. The resolution of the sixth  Party Committee Congress of the province still treats supporting industries as a priority for investment attraction. Considering Japan as a strategic partner in supporting industries development, the province arranged many investment promotion delegations, held seminars and joined forums and exhibitions in Japan last year. Local government also set up a connection window in Kawasaki City, continued running a Japanese website for Japanese firms, established the Japan Desk with support from Japanese consultants and trained 1,000 technicians for supporting industries. In 2016, Vietnam will see more free trade agreements signed or taking effect. Notably, the signing in early February of the Trans-Pacific Partnership (TPP) agreement will bring a lot of trade opportunities, and fuel FDI capital inflows. There has been a large investment shift from China (which is not a TPP member) to Southeast Asia, including Vietnam, as investors are looking to benefit from the TPP. In recent times, many Japanese business delegations have surveyed Vietnam to sound out business opportunities in supporting industries. Hirotaka Yasuzumi, chief representative of the Japan External Trade Organization (JETRO) in HCMC, affirms that Japan is one of the strategic partners of Ba Ria-Vung Tau with many Japanese firms showing interest in the locality. The southern province is now home to 23 Japanese-invested projects, especially in the steel, glass and petrochemical fields. “To speed up economic and trade ties between Japanese businesses and Ba Ria-Vung Tau, we always supply adequate information about the province for Japanese firms,” Hirotak says. According to the province’s chairman Trinh, the province will continue completing the list of industrial products and supporting industries in tandem with its development strategy in 2016, investor selection criteria and restricted sectors, which will be sent to the provincial Party Standing Committee for approval. More support will be given to construction of industrial zones and clusters with a focus on Phu My 3 Specialized Industrial Zone and the first phase of Da Bac Industrial Zone and to investors of the Long Son Petrochemical Complex, which is expected to start construction in the first quarter. Nguyen Hong Linh, alternate member of the Party Central Committee, Party secretary and chairman of the People’s Council of Ba Ria-Vung Tau, said top priority will be given to supporting industries when it comes to attracting capital. Local government will focus on large-scale projects using advanced technologies, and making value-added products. Supporting industries for engineering-manufacturing, plastic-chemistry, petro-chemistry and maritime equipment will be prioritized to gradually turn Ba Ria-Vung Tau into a basic material production center of the region. Major hotel-condo complex to go up in Danang A hotel-condo complex worth VND10 trillion (around US$448.2 million) will be developed in Danang to meet demand for more high-end apartments and five-star hotel rooms in the central coast city. The Anh Duong-Soleil Danang project was unveiled by developer PPC An Thinh Danang Company in Hanoi last week. Situated in a prime site of 21,800 square meters near a beach, the project consists of a 47-floor hotel tower and three condotel towers, with two of 58 floors and one of 47 floors. The investor looks set to break ground for the 47-floor condotel tower next month. The project will have total floor space of 170,000 square meters and a maximum height of 196 meters. The investor has joined hands with VietinBank to arrange loans for the project and guarantee the legitimate rights of customers at the project at the intersection of Pham Van Dong, Vo Nguyen Giap, Truong Sa-Hoang Sa roads. Vinalines wants to sell unused floating dock State-owned Vietnam National Shipping Lines (Vinalines) is seeking the Ministry of Transport’s nod to sell a long-unused floating dock of its subsidiary VNLSY for VND34.8 billion, or US$1.5 million, to partly recover the huge sum spent on this deteriorating dock. Floating dock 83M which was purchased in 2008 is currently anchored at Go Dau port in the southern province of Dong Nai. It has been abandoned since its purchase and costs relating to the dock had amounted to more than VND50 billion (US$2.2 million) by December 31, 2015. According to the Vietnam News Agency, since late 2012, Vinalines has told the ministry its plans of teaming up with capable investors to operate it or leasing it. However, despite Vinalines’ attempts to find investors, the fate of the dock has remained undecided. As of December 31, 2015, the book value of the dock was over VND500 billion (over US$22 million), covering the dock’s value, port service and maintenance costs. Last November, VNLSY signed a deal with a local consulting firm to evaluate the floating dock. The value was then put at only VND34.8 billion as the steel structure of the dock has deteriorated. Therefore, Vinalines has proposed selling the floating dock with the starting price equivalent to the appraised price. Vinalines bought the floating dock, 180 meters by 30 meters, which was manufactured in Japan in 1965. According to a conclusion of the Government Inspectorate in 2012, the then Vinalines chairman, Duong Chi Dung, approved the purchase of the dock for US$26.3 million, double the earlier estimate, using bank loans and equity. Dung was found guilty of graft and intentional violations of regulations at the court and sentenced to death. Ministry names ship breaking units The Ministry of Transport has released a list of six units allowed to demolish old ships in the next five years, with four of them located in northern Vietnam and the remainder in the central region. Of these, Ben Rung in Haiphong City is expected to break up 100,000-DWT vessels and have an annual capacity of 111,600 light displacement tons (LDTs), equivalent to 600,000 tons a year. Also located in Haiphong, An Hong in An Duong District is designed to dismantle 30,000-DWT ships and will have a capacity of 3,720 LDTs a year, equivalent to 20,000 tons a year. Phuong Nam in Uong Bi City in Quang Ninh Province will have an annual capacity of 27.900 LDTs, equivalent to 150,000 tons a year. The business can break up 40,000-DWT ships. Tien Phong, another old ship dismantling facility in the northern province of Quang Ninh, is designed to have an annual capacity of 65,100 LDTs, equivalent to 350,000 tons a year. Ben Thuy and Dung Quat are the two remaining ship breaking facilities in the central region. Ben Thuy in the north-central province of Ha Tinh will have a capacity of 7,440 LDTs or 40,000 tons per year and can dismantle 10,000-DWT ships. Meanwhile, Dung Quat in Dung Quat Economic Zone in Quang Ngai Province is expected to have a capacity of 65,100 LDTs or 350,000 tons per year. Ben Rung, An Hong, Phuong Nam and Ben Thuy are scheduled to begin pilot plans to dismantle old ships in the 2016-2017 period. Other facilities will be put into operation in the 2018-2020 period based on results of the pilot plans and their impact on the environment. More ship breaking firms will come into existence in 2020-2030, including two at Tan Trao and Quang Phuc industrial parks in Haiphong, two in Xuan Truong Industrial Zone and Ninh Co Economic Zone in Nam Dinh Province, and some others in Chu Lai Economic Zone in Quang Nam Province. Besides, a ship dismantling establishment will go up in Cai Lan Industrial Park if it meets environmental protection requirements. According to a master zoning plan for ship dismantling until 2020, all firms can dismantle ships of up to 100,000 DWT and meet Vietnam’s regulations on environmental protection. Their combined capacity can reach 280,860 LDTs or 1.5 million tons per year and steel scrap totals 238,731 tons a year, meeting 8% of steel scrap import demand for the domestic steel industry. Total capacity is expected to amount to 556,140 LDTs or three million tons a year in the 2020-2030 period. Steel scrap is forecast to reach 472,719 tons per year, meeting 15.8% of steel scrap import demand for the domestic steel industry. Japanese investment in agriculture up Japanese firms have stepped up investment in Vietnam’s agricultural sector, according to the Japan External Trade Organization (JETRO). Yasuzumi Hirotaka, managing director of the JETRO office in HCMC, told the Daily recently that of total Japanese investment in Vietnam last year, the agro-forestry-fisheries sector made up a substantial proportion. While the sector attracted Japanese investors to a few projects in previous years, it drew 6% of nearly US$1.3 billion foreign direct investment (FDI) registered by enterprises from the Northeast Asian country for new projects in Vietnam last year. According to Hirotaka, Japan invested in 82 agro-forestry-fishery projects last year, including two big cultivation ventures in the Central Highlands city of Dalat. More Japanese firms have invested in the sector to tap into huge potential of agricultural production. Vietnam and Japan have also signed cooperation agreements on agriculture, Hirotaka said. Many Japanese hi-tech agricultural enterprises are seeking partners in Vietnam to transfer technologies. In addition, the Trans-Pacific Partnership trade agreement will also require Japan to remove certain protection for its agriculture. Regarding Japanese investment in Vietnam’s property market to capitalize on its recovery, Hirotaka said it is not easy for the sector to attract direct investment of Japanese enterprises for now. Japanese enterprises are cautious and want market information to be transparent and accurate. They find real estate investments in Vietnam full of risks. Besides, Japan’s technical standards in the property sector are higher than in Vietnam, so Japanese firms are hard to succeed in real estate projects here if they observe such standards, according to the JETRO official. Statistics of the Foreign Investment Agency showed there were 165 property projects invested by Japan in Vietnam in 2014, making up 12% of Japan’s total pledged capital. The respective figures dropped to 76 projects and 6% in 2015. Up to 87.3% of Japan’s investment projects registered in Vietnam last year had capital smaller than US$5 million while projects worth under US$1 million each made up 66.2%. Last year, Japanese firms registered a total of more than US$1.84 billion for new and operational projects in Vietnam, plunging nearly 20% over 2014, and accounting for 8.1% of total FDI approvals in 2015. Most enterprises mull expansion this year More than 76% of enterprises in Vietnam have plans to expand operations this year to make full use of new growth opportunities as shown in a recent survey conducted by Vietnam Report. Respondents with expansion plans believe more growth opportunities will come from Vietnam’s further international integration, especially after the ASEAN Economic Community (AEC) was established and the Trans-Pacific Partnership (TPP) agreement was signed. The survey, which was carried out in January, indicated that 22.1% of respondents will maintain their operations like last year and a mere 1.6% of them intend to scale down business. The survey found that this year businesses see revenue growth, profit, cost cut and launch of new products and services as their priorities. More businesses are optimistic about the coming years given their improved business results in 2011-2015, positive economic forecasts for 2016 and opportunities from the TPP trade pact and the AEC establishment. When asked about international integration and competition, more than 80% of respondents confidently said they had got ready for the country’s deeper international integration. However, the report noted that many firms used to make hasty investments, raise capital and expand markets without good preparations. As a result, they suffered losses and even bankruptcy. Businesses need to take prudent steps for operation and investment expansion, improve productivity and product quality, enhance the effectiveness of marketing, and draw up plans to cope with potential risks. The report also showed that the Top 10 average compound annual growth rate (CAGR) for 500 fastest growing companies in Vietnam in 2016 is 127.5% and the rate for 500 fastest growing small and medium-sized Vietnamese enterprises in 2016 is 133.1%. Vietnam concerned about U.S.’s tra fish inspection rule Representatives of Vietnamese businesses and agencies have expressed concern about the U.S.’s rule establishing an inspection program for fish under the order Siluriformes, including tra and basa fish that are widely farmed in Vietnam. They said the rule will hurt millions of farmers, processors and exporters in the country. During working sessions with experts of the United States Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS) over the past days, relevant agencies and businesses said that the rule would also affect U.S. consumers and disturb bilateral trade in farm produce between the two countries. The U.S. delegation is paying a visit to Vietnam from February 24 to 26 to clarify regulations and respond to questions over the issue. Earlier this month, a Vietnamese delegation led by Deputy Minister of Agriculture and Rural Development Vu Van Tam had a working trip to the U.S. to discuss the rule and prepare for implementation in Vietnam. The final rule, released by the USDA in 2015, will be applied on locally raised and imported Siluriformes fish. The rule has been formulated to implement provisions of the 2014 Farm Bill. The rule will become effective in March 2016, 90 days after it is published in the Federal Register. From March 2016, an 18-month transitional implementation period for both domestic and international producers will begin, and all Siluriformes fish, including catfish, will be under the regulatory jurisdiction of FSIS and not the United States Food and Drug Administration (FDA). The Vietnamese delegation suggested the U.S. provide technical support and create favorable conditions for Vietnam to meet requirements. Local businesses also complained there is a wide gap in production conditions and development levels between the two countries. The rule may hit Vietnam’s tra and basa fish exports to the U.S., which now generate around US$340 million in revenue a year. Besides, the rule is contrary to regulations of the World Trade Organization (WTO). It is unnecessary as Vietnamese fish products have been exported to the U.S. for nearly 20 years with no food safety risks found. The new rule is considered a barrier to Vietnam’s tra and basa fish exports to the U.S. Besides, it goes against WTO regulations and commitments stipulated in the Trans-Pacific Partnership (TPP) trade pact. If Vietnam’s fish exports to the U.S. are affected, the country may consider bringing the case to the WTO. However, Vietnam still expects the U.S. to review and lift this rule, according to a delegation of the Ministry of Agriculture and Rural Development. Meanwhile, the USDA pledged not to cause interruption in Vietnam’s fish exports to the U.S. and expressed its good will for better cooperation in implementation of the rule. Both sides will also discuss contents of a technical support program to help Vietnam meet the requirements soon. The USDA and the Vietnamese agriculture ministry plan to hold an international seminar on fish inspection in HCMC in April. Representatives of 17 countries affected by the rule are invited to the event. Firms may be forced to pay for environmental risk fund Fuel trading enterprises may have to set aside 0.5% of their annual net sales for an environmental risk fund if a draft circular of the Ministry of Finance is passed. Enterprises can stop paying for the fund only when its balance is equivalent to 25% of their chartered capital, according to the draft circular guiding the law on environmental protection fee. The fund is intended to cope with the consequences of environmental incidents that happen in the course of production at enterprises. For example, the fund would be disbursed when water and soil used for the conservation, living, entertainment and production purposes are polluted and the ecosystem deteriorates. The fund is planned for applying to enterprises exploring and exploiting oil and gas, producers and traders of chemicals, enterprises using ships to transport fuels and hazardous products, and firms storing, transporting and treating hazardous waste. Regarding rumors that the environmental protection fee on gasoline and diesel will be hiked to from VND3,000 to VND4,000 and from VND1,500 to VND2,000 per liter respectively, the Ministry of Finance has denied them. Under the law on environmental protection fee, the specific fee rates at different times will be determined by the National Assembly Standing Committee. Hi-tech agriculture searching for investors Vietnam’s agricultural sector is looking for foreign and domestic investors, especially those using advanced technology, according to Minister of Agriculture and Rural Development Cao Duc Phat. Speaking at an opening ceremony of the FPT-Fujitsu smart agricultural cooperation center in Hanoi on Wednesday, Phat said Vietnam’s agricultural sector should be modernized to enhance its competitiveness given the country’s stronger international integration. He noted that the application of modern technology is pivotal. Phat hoped many more local and foreign investors will join the sector and support farmers to apply advanced technology to increase yields and turn out quality produce for sale at home and abroad.   Speaking to the Daily on the sidelines of the event, Phat said the Government encourages investment in this sector as specified in Resolution No. 19.    He added that the Government has issued Decree 210 with detailed policies, and the ministry is coordinating with the Ministry of Planning and Investment and localities to implement the decree. The agriculture ministry will propose the Government add incentives to the decree in the coming time.     Asked about FPT Corporation’s complaints about procedures to import green houses and seedlings from Japan for the smart agricultural cooperation center, Phat said Resolution No. 19 requires management agencies to streamline procedures, including customs procedures for import of materials and farm produce. The agriculture ministry has assigned plant protection and husbandry departments to cut by half the time and cost of import procedures.   Phat told the ceremony that the center is considered a good model to boost hi-tech agricultural growth in Vietnam. The FPT-Fujitsu smart agricultural cooperation center is applying the greenhouse and vegetable factory models for medium-sized tomato and less-potassium lettuce farming. These Japanese agricultural models are executed for the first time in Vietnam.   The difference between these models and others are the first focuses on producing clean and toothsome vegetables rather than productivity. These models allow farmers to manage and monitor their farms via an IT system. Sensors will be used for the two models to collect all necessary information about temperature, humidity and rainfall, among others, to help farmers make timely adjustments. Lettuce grown under the vegetable factory model has potassium content of one-fifth of normal lettuce and is suitable for kidney patients and vegetarians. No chemicals are used in the growing process. Meanwhile, tomato will have high nutritional values than normal products. Notably, the IMEC technology, a method of farming on sheets of film that allow water and nutrients to absorb and prevent all bacteria, enables tomato growers to plant 4,00-6,000 tomato trees per 1,000 square meters and harvest all year round.     After the test-run period, FPT and Fujitsu will discuss suitable models so that enterprises and organizations can apply across Vietnam. Truong Gia Binh, chairman of FPT, said the firm wants to join hands with individuals and organizations to develop smart agricultural models in the country. CBRE: Office market to attract more foreign investors More foreign firms are projected to invest in the office market, especially in HCMC and Hanoi, to bank on the opportunities from the new free trade agreements (FTAs) signed by Vietnam, CB Richard Ellis Vietnam (CBRE) said. The projection is seen in a recent report on prospects for the real estate market this year. CBRE said last year saw no significant development in the office market as Vietcombank Tower was the only Grade-A office building to be put into operation in downtown HCMC. This year, there will not be new office supply in this segment in HCMC while the current supply is limited. However, thanks to the steady economic recovery and more foreign direct investment (FDI) flows into Vietnam, demand of foreign companies for Grade-A office space will increase. With positive economic prospects, companies in HCMC are expected to expand operations, so they will need bigger offices measuring 1,000-2,000 square meters each, particularly in the downtown area. Meanwhile, in Hanoi, strong growth in office supply in the past four years has resulted to lower rental. CBRE Vietnam said the current absorption rate of Grade-A office space is lower than the growth in new supply, so the vacancy of offices in this segment in the capital could rise to 24.7% this year. Besides, landlords of Grade-A offices in the west of Hanoi as well as Dong Da and Ba Dinh districts will have to offer lower rents compared to the downtown area to attract tenants. CBRE Vietnam forecast the office market in Hanoi will become active owing to operation expansion of multinationals and domestic firms as well in the coming years. Investments in Yen Bai to rise Authorities in the northern mountainous province of Yen Bai will enhance measures to improve the local investment climate, aiming to facilitate the operation of enterprises – especially foreign-invested ones. During a new year meeting with foreign direct investment (FDI) firms operating in Yen Bai on February 29, Chairman of the Provincial People's Committee, Pham Thi Thanh Tra, said the locality will focus on improving administrative procedures and resolving difficulties facing enterprises. The province will also work to better its state management over businesses, including FDI enterprises, thus ensuring benefits for investors, Tra affirmed, adding efforts will be promoted to lift the locality's competitiveness index. The provincial Department of Planning and Investment will work with relevant sectors to devise action plans to raise the province's competitiveness index. The FDI-enterprise community is required to abide by Viet Nam's policies and laws on investment and business, especially those related to taxes, land, environmental protection and the rights of employees. Representatives from FDI firms asked local authorities to provide more preferential policies and to continue building a transport infrastructure system. They also called for greater support from the locality in recruiting employees, seeking partners and expanding markets. The local authorities should pay more attention to vocational training for the local workforce, and solving land-related disputes in order to ensure enterprises' stable development, they said. Foreign investors, mainly from India, Singapore, Taiwan, mainland China and Japan, have poured over US$204.8 million into 21 projects in Yen Bai. The export value of FDI enterprises in the locality reached $30.96 million in 2015, up 10.6 per cent over the yearly target. Foreign-invested businesses have brought jobs to 1,484 labourers and contributed VND124.4 billion ($5.58 million) to the state budget. Remittances flow to HCM City The remittances to HCM City, which is one of the top localities nationwide receiving the largest volume, reached more than US$900 million in the first two months this year. According to the State Bank of Viet Nam (SBV)'s HCM City branch, most of the remittances flew into production and business. Industry insiders said that the remittances were poured significantly into the city thanks to the recovery of domestic investment channels, especially real estate, where the government has so far not allowed foreigners to own houses in Viet Nam. Nguyen Hoang Minh, deputy director of the SBV's HCM City branch, said that a significant amount of the remittances had been sold to commercial banks thanks to the stability of the local foreign exchange rate. Last year, more than 22 per cent of the remittances were sold to the banks. Experts forecast that the remittances to HCM City this year would continue to be optimistic, reaching roughly $5.5 billion, the same as last year, thanks to the city's economic growth. To attract more remittances, besides the government's policies to encourage overseas Vietnamese to invest in their homeland, domestic commercial banks have also put on many promotional programmes for their money transfer services. According to a recent World Bank report entitled "Migration and remittances fact book 2016," Viet Nam received nearly $12.3 billion in remittances in 2015. The country is the 11th largest recipient of remittances worldwide, and ranks third in the Asia-Pacific region after China and the Philippines, according to the report. Statistics from the State Committee for Overseas Vietnamese Affairs under the Ministry of Foreign Affairs showed that some five million Vietnamese are residing in 103 countries and territories around the world. Between 1993 and 2015, Viet Nam received total remittances of about $109 billion, accounting for 6.8 per cent of the country's gross domestic product (GDP) over the period. Remittances into Viet Nam have increased about 22.4 per cent annually in the past two decades, with an exception in 1997 and 2009 when economies in the world faced a financial crisis. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR