BUSINESS IN BRIEF 14/5 Over VND4.9 trillion for RoK-Tra Vinh wind power plant’s second phase Woojin Construction Co.,Ltd from the Republic of Korea (RoK) will pour more than 4.9 trillion VND (247.6 million USD) into construction of the second phase of the RoK-Tra Vinh wind power plant in Truong Long Hoa commune, Duyen Hai town, the Mekong Delta province of Tra Vinh. The 96-megawat plant will span nearly 2,500 hectares of land and water surface. It has 48 wind turbines, which are expected to generate more than 332,438 MWh of power per year. The project aims to support the national power grid and ensure energy security for the province and neighbouring localities. Construction of the project’s first plant was launched on February 24. The plant, worth 130 million USD, was designed with a total capacity of 48 megawatts. Upon completion in next February, it will generate over 173,000 MWh of power every year. According to Tran Anh Dung, Vice Chairman of the provincial People’s Committee, the Ministry of Industry and Trade approved a plan to develop wind power in Tra Vinh province through 2020 and with a vision towards 2030, targeting wind power output of 634 million kWh by 2020. The province has planned six wind power projects in coastal areas in Duyen Hai district and Duyen Hai town, including three in Truong Long Hoa commune, two in Hiep Thanh commune and one in Dong Hai commune. Toyota Vietnam recalls imported Lexus for brake problems Toyota Viet Nam (TMV) on May 12 issued a recall notice for 113 Lexus ES250 and ES350 cars it imported and distributed in Vietnam for brake problems. The programme began the same day at the company’s major outlets in Hanoi and Ho Chi Minh City. The car owners will receive invitation letters or telephone calls to bring their cars to the outlets for examinations and replacements free of charge. The move is part of a global recall that Japanese Toyota launched for several models of its cars. The 113 Lexus ES250 and ES350 cars in Vietnam were manufactured in Japan between September 10, 2015 and February 18, 2016.- WB lends Vietnam 150 million USD to boost competitiveness The World Bank has freshly approved a loan worth 150 million USD for Vietnam to improve local development policy related to economic management and competitiveness. The loan provides flexible budget support for the Government while reinforcing selected structural reform priorities in its socio-economic development plan. It aims to help the Government maintain macroeconomic stability, create a more transparent, efficient and accountable public sector, and improve the business climate. In a press release on May 12, Achim Fock, the World Bank’s Acting Country Director for Vietnam, said: “During the last five years, there has been steady progress in advancing structural reforms in critical areas such as the banking sector, SOE management, and the business climate. These reforms need to be sustained during the implementation of the new five-year 2011-2016 plan to unlock Vietnam’s full growth potential." The loan concludes a series of three focusing on boosting Vietnam’s development policy operation. It is financed by the World Bank’s International Bank for Reconstruction and Development, the financing window for middle-income countries. Vietcombank receives three Asian Banker awards The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has been honoured with three prestigious awards of the Asian Banker at the 17th Asian Banker Summit held in Hanoi recently. Three awards were “Transaction Banking Awards”, “Best Bank for Trade Finance” and “Best Credit Card Product”. The 17th Asian Banker Summit drew more than 1,000 delegates and 200 organisations from 30 Asian countries, including Standard Chartered, ANZ, and HSBC. This year, many Vietnamese banks received prestigious awards from the Asian Banker. Vietcombank has bagged many national and international awards, such as top 2,000  world’s biggest public companies, top 500 world’s leading banks, top 500 world’s most valuable banking brands and the best bank in Vietnam. Vietcombank is expected to become the No1 bank in Vietnam in 2020. Vietnam misses many opportunities from WTO membership   Vietnam’s World Trade Organization (WTO) membership has brought basic changes in the country’s legal framework, economic and commercial policies and institutions and management mode. However the country has missed many opportunities and failed to meet expectations from the integration. Gross domestic product (GDP) growth rate reached 7 percent a year during the phase of 2006-2010 and 5.88 percent in the next five years, high in the world but still low compared to expectations in Vietnam during the integration phase. Agriculture has been negatively affected. Average growth rate in this field was 3.4 percent per year in the phase of 2007-2011 and 3.1 percent during the next five year phase. The rate continued dropping to 2.21 percent in 2015, lower compared to 4 percent during 2001-2006 when Vietnam was not a member of WTO. Export - import structure has showed problems. Key export fields include those using natural resources, agriculture and labor intensive processing industries. Trade deficit has been high and strongly increased post WTO membership. The notable point in export is a strong contribution by foreign direct investment (FDI) sector to GDP, which has been on the rise since 2007. According to Government reports, export value by this sector averaged US$56 billion a year during 2007-2014, accounting for 61 percent of the country’s total. It was $13.48 billion in the phase of 2001-2006 accounting for 54 percent. Samsung Vietnam has been a major contributor to Vietnam’s trade surplus for recent years. Some ministries, local and central agencies and business communities have not been fully aware of and inappropriately paid attention to international integration. The effectiveness of law enforcement has not been high and economic polices have been asynchronous. Vietnam was ranked 68th out of 148 nations in global competitiveness index in 2014-2015, higher compared to grade 75 out of 144 countries in 2012-2013 but lower than 2011-2012 and 2010-2011, when it was ranked 65th and 59th in 144 nations respectively. The grade was 80 a year after Vietnam attending WTO. The index’s down trend shows that changes in Vietnam’s national competitiveness have failed to meet increasing requirements from international economic integration. WTO director general Roberto Azevedo said that Vietnam has well taken advantage of many opportunities but economic institution reform must be considered to be necessary. It should be a driving force for the country’s development in the upcoming time. Integration has put pressure on Vietnam to reform, he said. He urged the Government to speed up institutional reform, improve policy implementation, create competitive and transparent environment to help businesses develop. Deputy Minister of Industry and Trade Tran Quoc Khanh said that businesses have complained about institution and business environment however they should recognize that there have basic changes which are results of WTO membership. For instance, enterprises no longer get license and quota to import cars and motorbikes as they used to before 2006. The government’s collection of businesses’ opinions before releasing regulations is natural now not before 2007. Material shortage cripples shrimp processing factories Shrimp-processing factories in the southernmost province of Ca Mau have been running well below their design capacity because of a shortage of raw materials, according to the Ca Mau Association of Seafood Exporters and Producers (CASEP). According to Ngo Thanh Linh, General Secretary of the CASEP, the current raw shrimp supply just meets 42 percent of the factories’ combined design capacity. According to industry experts, prolonged drought and the high salinity in local water have had adverse impact on the growth of shrimp, resulting in the reduction both in shrimp-farming area and output of shrimp. “Ca Mau currently has 9,700 hectares of industrial shrimp farming but only 3,000 hectares are being used,” said Le Van Su, Director of the Ca Mau Department of Agriculture and Rural Development. Cai Nuoc, Thoi Binh, U Minh districts and Ca Mau city witnessed the greatest decline in shrimp output. Doan Van Chinh, Deputy Head of the Cai Nuoc District’s Division of Agriculture and Rural Development, said the district’s shrimp-farming area continued diminishing despite the increasing price of shrimp on the market. In Dam Doi District, the Division of Agriculture and Rural Development reported that over 1,600 hectares of extensive shrimp farming and more than 50 hectares of industrial shrimp farming have been damaged by scorching weather. To minimise risks of shrimp dying, Dam Doi District’s agricultural authorities have guided farmers in preventing diseases, improving water in ponds and the quality of breeding shrimp and food. The province’s agricultural sector advised farmers to temporarily suspend releasing shrimp fry because of high risk.- Saigon Port lowers target for 2016, plans divestment The Bank for Industry and Trade of Vietnam (VietinBank) and Vietnam Prosperity Bank (VPBank), strategic investors of Saigon Port JSC, asked to sell their holdings in the port at a recent shareholders general meeting. VietinBank and VPBank bought a 9.07 percent stake and 7.44 percent stake, respectively, when the port underwent equitisation last year. Although the regulations applied to the purchase included restrictions on transferring the port’s shares for at least five years, the buyers asked the board to permit sales in less than one year. As of 2016, the port expects 775 billion VND (34.7 million USD) in turnover and profit of 50 billion VND. The target is much lower than last year’s recorded revenue of more than 1 trillion VND and profit of 85.5 billion VND. This year, according to the port, it must relocate Nha Rong-Khanh Hoi Port under the city’s infrastructure plan by the end of December and must hand over part of the port by the middle of April. Thus, all services at the parent ports as well as their five subsidiaries will be affected, resulting in reduced output, revenue and profits. The port also said the Tan Thuan 1 and Tan Thuan 2 ports were restructured within the year, while construction work on Sai Gon-Hiep Phuoc Port was incomplete. The port has been adjusted retroactively for after-tax profit calculations, with accumulated losses of more than 1 trillion VND for 2015, as it failed to report losses of this amount from its associated companies, deep sea container terminal SP-PSA and SP-SSA International Terminal (SSIT), last year. As a result, the port owners’ equity fell by almost half. So, due to these difficulties, the board must lower the current annual target and will not pay a dividend, in accordance with last year’s equitisation plan. Also at the meeting, the port said it would sell its shares in Ngoc Vien Dong JSC, which is developing the Vinhomes Khanh Hoi project in HCM City. Previously, the port was asked to contribute more capital to keep its current stake of 26 percent in the company when it raises the charter capital to 5 trillion VND in the future. Based in HCM City since 1860, the port has been a key transport hub for the country, connecting the city to the southern region, the Mekong Delta and the neighbouring country of Cambodia. Saigon Port operates important ports in the southern part of Vietnam, including the Nha Rong Khanh Hoi, Tan Thuan 1, Tan Thuan 2 and Phu My Steel ports. The port accounts for 10.5 percent of the overall throughput in the South. Currently, the port has five subsidiaries offering logistics, commerce, transport and investment services in the city. The board said it would concentrate this year on upgrading Tan Thuan 2 Port, establishing the Hiep Phuoc Service Zone in Nha Be district and cooperating with Khahomex Company to build an office building on Nguyen Tat Thanh Street in the inner city. Investors must be cautious with penny stocks: experts  With bad business results, stocks of some firms were trading at just half or one third of a glass of iced tea priced at VND3,000 (13 US cents). However, some investors still seek their luck in such penny stocks. The local trend is that the VN-Index was for the first time this year rising above 600 points, and some investors continue to hold onto their "iced tea" stocks, waiting for a miracle that will push their prices up. When asked about basic indicators to buy stocks such as EPS (earnings per share) or P/E (price/ earnings per share), most investors said they never buy such penny stocks because bad business results from the firms would never lift their stock price. However, in some cases, there were winners. Nguyen Hoang Son, an investor in HCM City said he earned VND200 million from just Resources JSC (TNT) stocks. Son bought those stocks at VND4,000 each which he then sold for VND14,000. The shares have increased more than 10-fold from VND2,500 in 2015. Son earned far from what he could have expected with a profit margin of 250 per cent. Another investor in HCM City bought Dream House JSC (DRH) at VND6,000 last year, and sold them when they reached VND 23,600 in early January, pocketing nearly VND100 million. She still regrets selling too soon as the shares are now worth VND45,000. These two examples are among those that can encourage investors, especially those with tiny budgets, to spend on the local penny stocks despite those stocks receiving officially warnings due to accumulated losses from issuing firms. However, according to Nguyen Thi Ngan Tuyen, head of the analysis section at Maybank Kim Eng Securities JSC, who has experience with penny stock followers, winners in the field could be counted on fingers. She said normally, low prices reflected firms' continuous losses or even more serious problems, so in most the cases, investors would lose when prices went down. According to stock market statistics, the number of stocks trading below par value (VND10,000 each) on the Ha Noi Stock Exchange (HNX) was 171 out of a total of 367. Of which, 65 stocks were trading below VND5,000, 25 stocks were traded below VND3,000 dong, and 10 shares were traded below VND2,000 each. Also, having more than 60 codes traded at penny prices, low-price stocks in the HCM Stock Exchange still maintained liquidity while most of the penny stocks in the northern bourse failed to have any liquidity for months. Nguyen Hoang Hai, General Secretary of the Vietnam Association of Financial Investment (VAFI), said investors should be very careful of very low price stocks as they reflected the health of the business. They should learn about the health of the firms carefully from their financial statements and check their transparency of business information before buying. He warned that those investors with "no experience in the market" would be most disadvantaged. Some leaders of the HoSE, would strengthen the disclosure activities of firms in the future to help local investors grasp the situation of issuers of stocks they might buy. They would require all listed firms to explain and clarify all the required information for transparency. Those firms with continuous losses would be delisted in the bourse. Vietnamese prefer to patronize foreign-made goods The vast majority of the nation’s consumers say they prefer to purchase foreign made products instead of lower priced local alternatives, according to Dinh Thi My Loan, president of the Vietnam Retailers Association. Speaking at a recent conference in Hanoi, Mr Loan told guests that consumers are reporting they buy foreign goods because they perceive them as having higher quality and because they have upscale brand names. “The brand names carry with them a certain prestige that similar locally produced products don’t possess,” said Mr Loan. “In the past, far too many businesses automatically assumed that the lower prices of locally produced goods were a positive and would drive their competitiveness with foreign goods entering the market,” said Mr Loan. “But now they are finding out they were dead wrong,” he said. For some consumers in the nation, especially the younger ones, current fashions and trends are an important consideration when making the decision to acquire a product, said Mr Loan. Through television, these consumers are becoming increasingly aware of the fashions and trends in other parts of the world. Hence, the global fashions and trends dictate the preference for foreign goods for these individuals. But increasing numbers of people are going for international brands rather than local ones, he said, because the product changes the image these consumers have of themselves. It makes them feel proud, more beautiful or handsome, and smarter when they buy imported items because, to them, the purchase is a status symbol that depicts social acceptability and class. At the Metro, Aeon and Lotte supercentres, which are rapidly gaining in domestic market share, foreign produced goods are pushing Vietnamese made products right off the shelves. Currently, over 90% of all instant noodles at these stores come from Thailand, the RoK, Japan or Malaysia. Mr Loan said even though a foreign package of noodles costs up to US$.80 (VND16,000), three-fold that of a Vietnamese packet of noodles, many consumers still prefer them. “When respect to glass housewares you won’t find many stores selling Vietnamese made products,” said Mr Loan. “Most plates, bowls, cups and other glassware products are imported from Thailand, Germany or China.” Overflowing with all sorts of imported goods, the Vietnam market is grappling with a serious lack of locally manufactured products in many retail establishments and product lines. The attitudes and perceptions of consumers toward their choice of goods is sometimes fickle, said Mr Loan. For example, electronic goods from Italy may be perceived as of poor quality but Italian clothing is perceived as fashionable and high quality. Meanwhile, electronic goods made in Thailand are perceived with positive attitudes while their clothing and footwear is negatively perceived, he said. Echoing similar sentiments, Nguyen Thi Thuy, deputy general director of Saigon Co.op said: “The problem with patronizing local products is that they are usually of inferior quality and in many instances downright shabby.” If you check out a foreign product, you will quickly realize that what they offer for a little higher price is generally of substantially better quality. I don’t find this encouraging for local companies, he said, unless they further improve their products durability and quality and institute brand building strategies to fully meet the needs of the nation’s consumers. Firms bemoan rule on old machine imports Many enterprises at a seminar in HCMC last week complained about a strict Ministry of Science and Technology circular that allows import of machines that have been used for less than 10 years. Do Phuoc Tong, chairman of Duy Khanh Engineering Company, said machines that are less than 10 years old account for about 1% of total supplies on global markets and that only bankrupt companies sell those secondhand machines. Most secondhand machines available for purchase are 15-30 years old and are replaced by large companies. They are still in good condition because they were produced in developed countries, Tong told the seminar organized by the HCMC Department of Science and Technology and the HCMC Business Association. Nguyen Minh Van, director of MTC Mechanical Equipment Company, said private firms should be permitted to buy used machines that fit their finances. Small and medium enterprises with limited capital cannot afford to buy brand-new machinery, and it is not easy for them to take out bank loans. A representative of a firm specializing in trading old machinery said advanced countries do not have as strict regulations in this regard as in the ministry’s Circular 23/2015/TT-BKHCN, but only require certificates of environmental protection and machine efficiency. He said over the last 10 years the number of customers buying machines that are 15-25 years old has accounted for over 90% of more than 1,000 customers. Trinh Xuan Ky from Thien Nam Elevator Company said the company once imported new machines from China but these machines mostly became rubbish after two to three years. The company shifted to buying used machinery from Japan as Japanese and German machines are still in good condition even though they are 20 to 30 years old. Some enterprises said Circular 23 only benefits Chinese machine traders because firms can only afford to buy new machines from the northern neighbor. This is not true, said Do Quoc Nam, director of the Assessment, Evaluation and Inspection Department under the Ministry of Science and Technology. He said Circular 23 stipulates that imported old equipment must meet standards of the Vietnam National Technical Regulation, Vietnam Standards or standards of the G7 countries in terms of safety, energy saving and environmental protection. Issued on November 13, 2015 and scheduled to take effect from July 1 this year, the circular regulates that only machines which have been used for 10 years or less can be imported into Vietnam, instead of five years as required in Circular 20 earlier. Nam said through Circular 23, the Government wants to promote technological innovation, improve production capacity and avoid turning the country into a dumpsite of world’s technology garbage. The Ministry of Science and Technology has collected comments from relevant ministries, agencies and enterprises in different fields on Circular 23 but has not won a consensus from firms. The ministry continues gathering proposals for the circular before it comes into force in July. Mekong Delta drought and salination hurt rice production If drought continues until June, farmers in the Mekong Delta would not be able to sow paddy on around 500,000 hectares for the summer-autumn crop as in previous years, accounting for 30% of the total rice acreage in the region, the Ministry of Agriculture and Rural Development said According to the ministry, farmers in the country’s key rice producing region are waiting for rain to help reduce salination in some 350,000 hectares in eight out of the delta’s 13 provinces before they can sow paddy. Therefore, more than 50% of the rice farming area in the region has been impacted by drought and salination. Since the end of 2015, some 178,000 hectares of rice has been damaged by drought, with output on 90,000 hectares slumping 70%. The Ministry of Industry and Trade estimated this year’s paddy output at 44.6 million tons, dropping 824,000 tons compared to last year, and rice exports at 7.85 million tons. Export prices of Vietnamese rice in Asian markets have dropped slightly while those of Thailand’s are high thanks to the appreciation of baht. Particularly, the current price of Vietnam’s 5% broken rice is quoted at US$375 per ton, falling US$15 per ton against the previous month, while Thailand’s 5% broken rice has risen to US$382-390 per ton from US$370-380. India exports its 5% broken rice at US$380 per ton, up US$5 per ton, while Pakistan sells rice of the same type at US$355 per ton, up US$10 per ton, and Cambodia US$455 per ton, increasing US$25. Ford Vietnam, Chu Lai-Truong Hai recall defective autos Ford Vietnam will recall 8,355 cars with faulty software for the transmission control module of automatic gearboxes while Chu Lai-Truong Hai Truck Production and Assembly Co Ltd will take back 661 vehicles for fixing design and manufacturing errors. The passenger cars subject to Ford Vietnam’s recall include 4,195 Ford Fiestas assembled from November 2, 2010 to December 29, 2014, 2,010 Ford Focus units made from April 15, 2012 to June 11, 2015, and 2,150 Ford EcoSport cars produced from May 19, 2015 to January 16, 2016. According to the automaker, the reason for the recall is to update the software to early detect possible circuit faults at the transmission control module (TCM) of automatic gearboxes installed into the cars to help drivers get early warnings about problems that may occur. Ford Vietnam called for car owners to bring their autos to its authorized dealerships nationwide for checking and repairing the software error at no charge under the recall campaign scheduled to end on September 30, 2016. It would take about six hours for checking and repairing the software error. Chu Lai-Truong Hai will recall 661 Thaco Auman C2400A/P230-MB1 trucks manufactured from January 16, 2015 to December 9, 2015. The company will recall the vehicles to check and fix design and manufacturing errors relating to cockpit spoiler and trunk, and replace the fuel tank in accordance with the registered 200-liter tank. Chu Lai-Truong Hai and its authorized dealerships will check and fix the errors of affected vehicles for free with a total time of about 29 hours per truck. The recall is expected to start from May 16 and last until July 30, 2016. SMEs urged to use factoring service Vietnamese small and medium enterprises (SMEs) should get access to factoring service (Accounts Receivable Finance) - one of the most favoured tools in the international trade, to increase their competitive capacity. Kyle Kelhofer, Country Director of Vietnam, Cambodia and Laos at the International Financial Corporation (IFC) made the remark at a conference held in Ho Chi Minh City on May 10. He said that factoring service is designed to bring utmost benefits to international trade by using tools to eliminate risks and create liquidity, which promotes trade between importers and exporters. It also helps ease much of the credit burden created by international business while avoiding language barriers during transactions with foreign partners, he highlighted, adding that factoring also serves as a useful tool for the enterprises due to its deferred payment terms. However, he said that sale of factoring service in Vietnam is still weaker than regional nations such as Indonesia, Malaysia, Singapore and Thailand. According to PhD Tran Thi Hong Hanh, General Secretary of the Vietnam Banks Association, numerous SMEs worldwide said that factoring service provides them a quick boost to their cash flow, contributing to creating a sustainable business environment for both sellers and buyers. She underscored that Vietnamese enterprises need to study and use modern financial products like factoring service to improve their operations and take advantage of cross-border business to expand connections with foreign partners. The inked free trade agreements like the Trans-Pacific Partnership deal and the establishment of the ASEAN Economic Community have opened up opportunities for Vietnam in production and consumption. They also create favourable conditions for domestic commercial banks to branch out safe, efficient payment services, she said. Asia’s dropping rice output threatens food security Nearly a decade after a spike in global food prices sent shockwaves around the world, Asia's top rice producers are suffering from a blistering drought that threatens to cut output and boost prices of a staple for half the world's population. World rice production is expected to decline for the first time this year since 2010, as failing rains linked to an El Nino weather pattern cut crop yields in Asia's rice bowl. A heat wave is sweeping the top rice exporter India, while the second largest supplier Thailand is facing a second year of drought. Swathes of farmland in Vietnam, the third-biggest supplier, are also parched as irrigation fed by the Mekong River runs dry. The three account for more than 60 percent of the global rice trade. James Fell, an economist at the International Grains Council (IGC) said there has been no a large price reaction to hot and dry weather thanks to surplus stocks in India and Thailand. But that can't last forever. Rice inventories in the three top exporters are set to fall to 19 million tonnes at the end of 2016, the biggest year-on-year drop since 2003, according to Reuters calculations based on US Department of Agriculture data. According to Bruce Tolentino of the Philippines-based International Rice Research Institute, in general prices are still stable right now. They're inching up though, and what will drive things over the edge will be a major calamity in one of the major producing countries, he said. Although India's rice output in 2015 was largely stable, extremely hot temperatures are threatening a second crop in India. Traders see further price gains by June as India's next big crop is not due until September and Thailand's main crop by year end. The IGC sees a 2016 world harvest of 473 million tonnes, down from 479 million tonnes in 2015 and the first decline in six years. Thailand's last main crop was only about half of the peak production a few years ago and the USDA has forecast output will drop by more than a fifth to 15.8 million tonnes this year. Thai farmers were asked not to plant rice as there is little water in the reservoirs after two years of drought. In Vietnam, output could fall 1.5 percent this year to 44.5 million tonnes, while exports would be 8.7 million tonnes, steady on a previous projection. As much as 240,000 hectares of paddy have been destroyed by drought and salination in the central area and southern Mekong Delta region. Against the backdrop, some Asian countries are already looking to raise imports. Indonesia is expected to see 2016 purchases jump by more than 60 percent to two million tonnes from a few years ago. China, the world's top importer, taking about 5 million tonnes annually, is expected to continue this buying pace. IGC has forecast China's 2016 production will fall short of consumption for a third consecutive year. The Philippines had the lowest stocks since October in March despite importing 750,000 tonnes and its procurement agency has standby authority to ship an additional 500,000 tonnes. Philippine Economic Planning Secretary Emmanuel Esguerra said although El Nino has entered its weakening stage, the risk of higher food prices remains given the onset of the summer season. Rice price in early April hit 389.50 USD per tonne, the strongest since July and up 13 percent from an eight-year low of 344 USD last September. Travails of Korean securities firm in Viet Nam It is not uncommon for foreign manufacturers to run operations in low-cost countries, but it is usually for a financial company. If you want to enter less industrialised economies, you must have complete confidence in the potential and future growth of your target country. A manufacturer can expect cost savings in wages, but a financial company may have more losses than benefits in the early days. A foreign stock brokerage house made a bold decision to enter Viet Nam eight years ago with a positive outlook for its growth. It is Korea Investment & Securities, one of the top-ranked Korean securities companies. People were sceptical about the company's entrance into Viet Nam, but their feedback could not weaken the spirit of the company's management team who had confidence about the future of the country. The rationale for the confidence was that there are many young citizens who work faithfully and diligently and the entire population has the desire to be well off. But as expected, challenges were evident in the early days of the company. Back then, not many used banks. There were fewer people who participated in the securities market. A Vietnamese employee who works at Korea Investment & Securities Vietnam said, "Most Vietnamese are not yet interested in buying and selling stocks. Some 1.5 million retail investors make up a mere 2 percent of the 90 million population. They are aware of banks, but they do not know much about securities and insurance plans. We often have to explain securities business to young people when we hire them." Korea Investment & Securities spent two years exploring the country's financial market conditions and in December 2010 it acquired EPS, a small Vietnamese stock brokerage firm that ranked in the 70 to 80 range at that time. But the Korean brokerage house had a hard time due to bad economic conditions in Viet Nam after the transaction. A sharp fall in the yields of Vietnamese funds began to sell to Korean customers when it entered Viet Nam led to strong criticism that its investment into Viet Nam was wrong altogether. Nevertheless, the Korean company stuck to its belief that the Vietnamese economy will rebound one day. It continued investment into business development there despite some losses. It tried to expand the scope of business by further understanding the nature of Vietnamese consumers and the characteristics of the local market. The company is headquartered in HCM City and has one branch in Hanoi and two sales offices each in HCM City and Hanoi. Only three of a total of 169 employees are Korean. But the company's IT and operating systems are inspired by Korean technology. During this process, the company put more weight on the Vietnamese government, its people and customer trust than anything else. Korea Investment & Securities had already built up trust with the local government before its entrance into the country, working together with Vietnamese government officials for more than 10 years, who visited Korea to learn advanced financing in Korea. Vietnamese financial authorities recognized efforts of this company, giving extra permission to its plan to increase the upper limit in foreign investment. In 2014, the company was able to increase its 49 percent interest to up to 92.3 percent, completing its plan to stabilise its management control. That is the outcome of trust Vietnamese financial authorities showed to Korea Investment & Securities. An official at Korea Investment & Securities said, "Viet Nam has high self-esteem. It was not ruled by China in history, gained independence from France and won the war with the US. We understood that well before approaching it. After the acquisition, we did not forcefully apply our home country policy for business because it could provoke resistance. Rather, we listened to the Vietnamese and explained Korean situations and shared advanced business practices, letting them follow the company policy voluntarily." Under the management of Korea Investment & Securities, EPS grew to become one of the country's top 10 brokerage houses in 2015, just five years after the transaction. Still, they have a long way to go. The Vietnamese financial market should develop further so the company can expand its business. This can be solved as time goes by, but what matters is that the Vietnamese need to change first. A local employee at Korea Investment & Securities Vietnam said, "Those who begin to work at a financial company after college graduation are mostly highly educated, but they often regard market openings to foreigners as something lost to foreigners. The country's high-ranking officials, including the prime minister and president, vowed to lift regulations on the limit of foreign investors on individual stocks during their visits to the US three years ago, but the market remains half-closed. Supervisory authorities always consider the public's feelings when the country tries to change a system or introduce new financial products." Korean companies operating in Viet Nam also feel a barrier in the country's laws and regulations. For example, someone who wants to get a license as a stock investment consultant should have a college diploma. Korea has no such rule. In Korea, one can do anything except what is prohibited by law, while in Viet Nam one should not do what is not clearly stipulated by laws. Korea Investment & Securities Vietnam has a plan to add two more branches and increase its sales force to 200 this year with a goal to represent 6 per cent of the local securities market. It also wants to diversify business into equities, fixed assets and IPO deals. "Once we come up with a successful business model in overseas markets, it will not be difficult to apply the model to other emerging markets. We will introduce our success formula in Viet Nam to Indonesia," Korea Investment & Securities President Sang-ho Yoo, who headed the entrance into Viet Nam, said. The company's success in Viet Nam is significant because it means the company will be able to reach its potential in other Asian markets. Ho Tram Project inaugurates Hanoi office Ho Tram Project Company today cut the ribbons on its new Hanoi office, expanding the reach of the company into the nation's capital. The new office will support the company's sales and leasing efforts for its resort, golfing and residential developments, as well as provide a base for ongoing liaison with government as the nation's gaming decree continues to take shape. Ho Tram Project Company is the developer of Vietnam's leading entertainment destination, $4.2 billion The Grand, which is 541 room integrated resort that features ten restaurants and bars, award winning spa, three swimming pools, as well as the nation's first international standard casino. The first phase of the resort opened in 2013, and construction is well under way on the resort's second tower, which will add another 559 rooms to the property. The resort also includes Vietnam's best golf course, and the first course in Vietnam to be featured in Golf Digest's Top 100 courses in the world - The Bluffs. Work is also under way on a beachside condominium tower and a golf-course villa development. "Hanoi is an important market for us, both as a source of potential tourists, potential investors into our residential offering as people look for beachfront homes, and the base for the nation's government. It is an honour then to be cutting the ribbon on this new office today," said Michael Kelly, executive chairman of The Grand Ho Tram Strip. "This represents another milestone in our commitment to delivering on a truly world class entertainment destination to Vietnam." The Hanoi opening was presided over by The Grand's majority shareholder, Harbinger Capital's principal Phil Falcone and was attended by U.S. Ambassador Ted Osius, Vice Minister of Culture, Sports and Tourism Huynh Vinh Ai, Monetary and Financial Securities Department General Nguyen Hung Linh among others. Falcone earlier reiterated his commitment to the development saying: "Nearly ten years ago, I made my first investment in what would become The Grand Ho Tram Strip, in beautiful Ba Ria-Vung Tau. I had an instinct that Vietnam was quickly on the path to becoming one of the world’s premier destinations for inbound international investment and have seen the country’s promise firsthand. I am still as bullish today as I was a decade ago about Vietnam’s future and as an investor, I’m all-in." Textile exports facing harsher competition Textile export turnover in southern Dong Nai province reached nearly $543 million in the first four months of 2016, up 1.4 per cent year-on-year, according to the Dong Nai Department of Industry and Trade. The province’s and the country’s textile sectors, however, are dealing with fierce competition from Chinese and Indian products. Footwear, textiles and wooden products account for the largest export turnover in Dong Nai province, but while footwear and wooden product export turnover increased over 16 per cent year-on-year in the first four months the figures for textile exports fall short of expectations. The three industries are forecast to benefit most from free trade agreements (FTAs) Vietnam has signed but textiles growth is actually falling due to difficulties caused by higher input costs and stagnant prices. Export markets are also subject to increasingly fierce competition from China and India, with most textile exporters in Dong Nai acknowledging that their competitive position is on the decline. Vietnam’s textile industry remains largely in the hands of foreign companies, with more domestic enterprises focusing on garments than textiles. The majority, however, simply process products under requests from foreign partners and only a few produce goods under their own brand name for export. “Garments from India and China in many markets have ousted Vietnamese equivalents because of their advantages in lower prices and raw materials, while Vietnam must import 60 to 90 per cent of raw materials,” said Mr. Nguyen Van Hoang, Deputy General Director of the Dong Tien Joint Stock Company. “The two countries also record high workplace productivity, while Vietnam’s is very low.” Vietnam has signed many new FTAs in which textile tariffs are cut or eliminated, such as those with South Korea, Chile, Japan, and ASEAN. Domestic textile enterprises, however, still face a host of difficulties as lower tariffs can’t compensate for rapidly increasing input costs. “Our garments, which are mainly exported to Russia and European markets, are facing major competition in the market,” said Mr. Nguyen Huu Tri, Chairman of the Tan Mai Joint Stock Company. “In five to ten years, when the advantages from FTAs have passed, if workplace productivity does not rise and logistics costs do not come down, Vietnam’s garment enterprises will have serious problems.” He added that the government should support textile enterprises with practical policies in credit, provide specific market information, and hold trade promotion activities. Multi-level marketers in Hanoi fined $70 million last year Fines imposed on 17 multi-level marketing companies in Hanoi during 2015 totaled VND1.561 trillion ($70 million), according to the Hanoi Department of Industry and Trade. Inspections on companies conducted in 2015 and the first quarter of this year revealed that all had violated certain administrative procedures and many exhibited signs of fraudulent behavior. Most do not have a business license even though they have sold products. One enterprise was fined VND180 million ($8,074) after selling functional food supplements that did not meet food safety standards. It was forced to return VND2 billion ($89,720) worth of goods to wholesalers. Many companies were fined between VND80 million ($3,588) and VND100 million ($4,486) for violations in labeling and conducting business without a license. The department has requested leaders of people’s committees around the country to adopt solutions to control and limit multi-level marketing activities. It also proposed that the Vietnam Competition Authority cease to issue licenses to new multi-level marketing companies and review and assess the operations of existing companies. It has asked the Ministry of Industry and Trade and the Ministry of Public Security to investigate multi-level marketing companies exhibiting signs of fraudulent behavior and to publish its results so that consumers are aware of the issues. Fruit, car parts imports surge in Jan-Apr The first four months saw vegetable and fruit imports picking up 37.3% and auto parts imports surging 24.3% compared to the same period last year, showed a report of the Ministry of Industry and Trade. The ministry said imports of vegetables and fruits, and auto parts should be put under control. The ministry noted this group of items posted average import growth of 11.3% in the period, higher than 9.1% in the same period of 2015. Nearly US$2.2 billion was spent on the group of import goods, making up 4.3% of total imports in the first four months. Imports of other goods also surged in January-April, with coal up 125.9%, urea up 163.7% and steel ingots up 64.1%. The group of items subject to import limits grew 8.9% over the same period last year. However, the group of goods whose import is encouraged was put at US$44.8 billion in the first four months, down 2.3% year-on-year. Vietnam enjoyed a trade surplus of US$1.46 billion in January-April. The foreign-invested sector registered a surplus of US$7.06 billion (excluding crude oil) and contributed 70% of Vietnam’s total exports in the period, while local firms ran a trade deficit of US$5.6 billion. Dalat sees more foreigners arriving in Jan-Apr The Central Highlands city of Dalat welcomed over 77,000 foreign tourists in the first four months of this year, a 60% jump over last year’s same period, according to the Department of Culture, Sports and Tourism of Lam Dong Province. A majority of foreign visitors came from China, Thailand, South Korea, Japan, Germany, the U.S. and Canada. China topped the list with over 16,000 arrivals, surging 150%, followed by Thailand with nearly 7,000, up 111%, the U.S. with over 5,000, up nearly 43%, and Germany with over 4,500, up 300%. Hoang Ngoc Huy, head of the tourism office at the department, said in a phone interview with the Daily that this was the first time Dalat had registered record highs of foreign visitor arrivals. He credited the upsurge to Dalat’s diversification of tourist products and services as well as its promotions abroad over the years. “It would be hard to attract and retain tourists with just natural landscapes. Dalat has invested in more products to meet the needs of guests from different markets,” Huy said. He noted the hilly resort city has golf tournaments for South Korean and Japanese tourists and terrain races for those from Europe. Huy pointed out underdeveloped infrastructure as one of the challenges for the city to woo international tourists. There are no train services and direct domestic flights to Dalat. He expected more foreign visitors would come to the city if there are air routes connecting Dalat and other tourist attractions nationwide. In January, the New York Times ranked Dalat 30th on the list of “52 Places to Go in 2016” with compliments on landscapes, food and outdoor activities like golfing, water rafting and mountain biking. BCCI mulls VND1.15 trillion for IP expansion Binh Chanh Construction Investment Shareholding Company (BCCI) plans to spend nearly VND1.15 trillion (US$51.6 million) expanding Le Minh Xuan Industrial Park (IP) in HCMC’s Binh Chanh District by nearly 110 hectares. The HCMC government has asked the Ministry of Planning and Investment to seek the Prime Minister’s approval for the IP expansion project as it would help the city collect VND354 billion in taxes and land rent a year and create 10,000 jobs. The project is expected to fuel economic growth in the city. Of nearly VND1.15 trillion planned for the project, BCCI’s equity will account for 47.92%, and the remainder will be sourced from bank loans and deposits to be placed by future tenants. The existing 100-hectare Le Minh Xuan IP, developed by BCCI, has been leased out to 175 projects with combined capital pledges of nearly US$200 million. The IP has a central wastewater treatment plant. BCCI has had equity of around VND1.9 trillion as of the end of 2015 and is the investor of many residential projects in HCMC. They are Section A of Tan Tao residential area, Phong Phu 2 residential area and An Lac Plaza apartment building with a total investment of over VND7.9 trillion, as well as Binh Hung, Phong Phu 5 and Nam Hung Vuong. In the 2015-2020 period, HCMC plans to set aside 500 hectares in Hiep Phuoc IP, Le Minh Xuan, Automotive Mechanical IP and Saigon Hi-Tech Park for investors in supporting industries. The city has started a pilot plan to build multi-storey factory buildings with total floor space of 100,000 square meters for small and medium-sized enterprises in supporting industries and develop an 89-hectare industrial complex in Binh Chanh District for textile and garment enterprises. HCMC will speed up the development of supporting industries in the next five years with an aim to achieve an annual index of industrial production growth of 7%. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR