BUSINESS IN BRIEF 15/5 Jan-Apr apparel, footwear exports fetch US$10.5 billion   Apparel and footwear brought total export turnover of US$10.5 billion in January-April. Textile and garment shipments neared US$2 billion in April, up over 5% against the same period last year. The industry registered outbound sales of nearly US$7 billion in the first four months, a year-on-year rise of over 6%. The Vietnam Textile and Garment Association (VITAS) said orders mainly came from major markets like the U.S., the European Union, Japan and South Korea. Export prices remained stable in the period. A VITAS representative said the fall in fuel prices has led to lower input costs at apparel firms as prices of materials like fibers and cotton are relatively low at present. According to the Ministry of Industry and Trade, a large number of enterprises have got sufficient orders for the second quarter while some have already secured enough orders for all of this year. The textile and garment sector is highly expected to achieve its export target for 2016. Meanwhile, the footwear sector fared well in the first four months, with 78 million pairs shipped abroad, up over 2% year-on-year, and obtained export revenue of nearly US$3.7 billion, a year-on-year rise of nearly 5%. The Vietnam Leather, Footwear and Handbag Association (LEFASO) said many footwear exporters have received orders for production until the end of June. Rice prices stable despite Thailand’s selloff Domestic prices of rice and paddy have remained stable despite concerns that they would drop sharply after Thailand unveiled a plan in late April to sell 11.4 million tons of rice in government stockpiles over two months. Pham Thanh Tho, a rice trader at Ba Dac food wholesale market in Cai Be District in the Mekong Delta province of Tien Giang, said fresh IR 50404 paddy has been sold at VND4,750-4,850 per kilogram over the past two weeks. Rice processing and exporting enterprises at Ba Dac and in Sa Dec in Dong Thap Province buy unprocessed IR 50404 rice at VND6,700-6,900 per kilogram, the same as the level a fortnight ago. Ngo Ngoc Yen, director of Yen Ngoc Company in HCMC, told the Daily that Thailand’s plan to sell off its rice stocks has not affected Vietnam’s rice export activity because the quality of most of the volume has deteriorated. Meanwhile, major importing countries, including the Philippines and Indonesia, need new rice. Nguyen Thanh Phong, director of Tien Giang-based Van Loi Company, said Indonesia, the Philippines and other traditional rice importers of Vietnam are expected to continue importing the staple food in the coming time though they said earlier that they would not buy rice from abroad. Demand from the countries and shrinking rice output due to the impact of El Nino on major rice exporting countries like Vietnam, Thailand and India have kept domestic prices stable in the past weeks, Phong explained. Moreover, local enterprises have won contracts to export one million tons of rice. Vo Tong Xuan, president of Nam Can Tho University, said low prices of Thai rice would certainly pile pressure on Vietnamese rice exporters. However, Vietnam cannot lower prices because Thailand could follow suit, affecting incomes of farmers. The Vietnam Food Association (VFA) said its members exported 453,275 tons of rice worth nearly US$212 million in April. Rice exports in the first four months exceeded 1.8 million tons worth nearly US$789 million. Work on Lao Cai airport to start in Q3 The VND5.8 trillion (US$261 million) Lao Cai airport project is scheduled to get off the ground in the third quarter of this year and be ready in late 2018 or early 2019, a source from the Ministry of Transport said. The source said representatives of the ministries of transport and planning-investment and Lao Cai Province met leaders of Sun Group, the investor of the project, to discuss construction plans for the project last Sunday. The provincial government expects the airport in Bao Yen District to meet 4C standards of the International Civil Aviation Organization (ICAO) and handle Airbus A320 and A321 airplanes or equivalents. So far, the province has zoned the area for clearance to make room for the project. The province proposed implementing the project in two phases. The first phase, which will be implemented until 2020 at a cost of VND4.7 trillion (US$210.8 million), comprises an air traffic control tower to be developed under the build-transfer (BT) form with funding from the State. Lao Cai proposed building other components of phase one including roads, electricity and water supply systems, fuel storage facilities, and a drainage system worth VND1.6 trillion (US$71.8 million) under the build-operate-own (BOO) form. Around VND750 billion (US$33.6 million) for compensation, site clearance, and resettlement will be funded by the provincial and central budgets. Phase two will require an estimated VND1 trillion (US$44.9 million), including VND792 billion (US$35.6 million) for a flight operation building and VND215 billion (US$9.7 million) for a passenger terminal. The flight management building will be constructed under the BT form while the terminal will be built under the BOO format. At the meeting, the province and related authorities were requested to clarify the impact of the project on socio-economic development, defense and security, and the environment.      Nguyen Van Vinh, secretary of Lao Cai Province’s Party Committee, said the project will support activities in the flooding season and the development of tourism as well as bolster trade between the province and other parts of the nation and foreign countries. Vinh called for the Government and ministries to create favorable conditions for the airport project to be developed from the next quarter and put into use in late 2018 or early 2019. Once in place, the airport is expected to serve flights linking Lao Cai, Haiphong, Vinh, Danang and HCMC as well as services between Lao Cai and airports in the southwestern region of China and Northeast Asia. Earlier, the Ministry of Transport planned to build Lao Cai airport on nearly 140 hectares. The airport was designed to handle ATR72 turbo-prop planes or equivalents to meet demand of passengers for travel to and from Sapa. In 2013, the ministry reviewed zoning plans for airports nationwide with priority given to construction of highly viable projects. The ministry decided to add Tho Xuan airport in the north-central province of Thanh Hoa to the implementation plan until 2020 and delay construction of Lao Cai airport until 2030. The Civil Aviation Authority of Vietnam (CAAV) explained that demand for air travel between the north-central region and HCMC was growing while that for the northwestern region was not high at that time. This was behind delays in small airport projects, including Lao Cai, Lai Chau and Quang Ninh until after 2020. But at a tourism investment promotion conference for the northwestern region held in HCMC in November 2015, Sun Group pledged over VND20 trillion (US$897.2 million) for projects in Lao Cai, including the airport worth over VND5.6 trillion (US$251.2 million). Therefore, the ministry considered adjusting its plan to build the airport earlier than scheduled. Balance of fuel price stabilization fund still high The balance of the country’s fuel price stabilization fund had reached VND3.8 trillion (US$170.5 million) by the end of quarter one, giving the ministries of industry-trade and finance sufficient ammunition to regulate fuel prices amid world oil price volatility. A Ministry of Finance report showed fuel trading enterprises collected almost VND1.3 trillion (US$58.3 million) from consumers for the fund in the first quarter as VND300 was added to the fund for every liter of fuel sold. The fund disbursed VND1.5 trillion (US$67.3 million) to cover the deferentials between the base and retail prices of fuels in the first quarter. Over the past months, the ministries of industry-trade and finance have used the fund and at the same time adjusted the retail prices of fuels to help stabilize prices on the domestic market. Fuel trading firms have been allowed to get more from the fund than the amount they collect from fuel buyers for it since May 5. Particularly, the ministries permitted them to get VND639 from the fund for every liter of A92 gasoline sold, VND672 for E5 bio-fuel, VND846 for diesel, VND1,029 for kerosene, and VND323 for heavy fuel oil. Renewable energy development needs support policy The Government needs to promptly issue a national strategy and policy on sustainable development of green energy in Vietnam, an expert said. According to Dr. Tran Quang Minh, Director of the Institute for Northeast Asian Studies under the Vietnam Academy of Social Sciences , a legal framework will lay legal foundations for ministries, sectors and localities at all levels to work together on developing renewable energies in the long run. Long- and medium-term plans should also be developed with specific goals for each period of socio-economic development. Human resources training, technology transferring and international cooperation should be focused on. Incentives are also needed to mobilise resources from the private sector as well as international aid. Communications should be enhanced to raise public awareness on using renewable energy and promoting saving energy in society. According to the General Department of Energy under the Ministry of Industry and Trade, as of the end of 2013, green energy accounted for 6.3 percent of Vietnam’s total energy, or a total output of 3,990MW. The total capacity of renewable energy is expected to reach 4,200MW by 2020 and 13,799MW by 2030. The Vietnamese Government adopted the National Strategy on Energy Development through 2020 with a vision towards 2030 which aims to raise the proportion of renewable energy from 3 percent of the total power generation output in 2010 to 5 percent in 2020 and 11 percent in 2050. To meet these goals, the Government has outlined various preferential measures to support investors such as tax exemptions for equipment imports and land use for projects in this field. Domestic cement consumption on the rise Cement and clinker consumption in the country from the outset of this year grew over 15 percent to 24 million tonnes, meeting 32 percent of the whole year’s target, according to the Department of Building Materials under the Ministry of Construction. Local consumption in April alone reached 6.07 million tonnes, surging 17 percent compared to the same month last year. Of the total, 2.4 million tonnes of cement were sold by the Vietnam Cement Industry Corporation (Vicem), 31 percent higher than its sales in the corresponding period in 2015. Meanwhile, cement export remained stable with 5.15 million tonnes, a year-on-year increase of 0.4 million tonnes, 1.06 million tonnes of which were shipped abroad by Vicem. According to the Department, thriving cement consumption in Q2 was spurred by improvements in the real estate market. However, cement prices still stay stable, it said. The cement industry sector plans to produce 75-77 million tonnes of cement this year. Factoring services crucial: VNBA Factoring services for merchandise exports in Viet Nam will become more essential than ever before as the country integrates more deeply into the international economy, the secretary general of Viet Nam Banks Association (VNBA) said yesterday at an international factoring conference held in HCM City. Tran Thi Hong Hanh said that total factoring volume remained modest and underdeveloped in Viet Nam compared to other ASEAN countries, including Singapore, Indonesia, Malaysia and Thailand. She said that a series of free trade agreements, including the Trans Pacific Partnership (TPP), had opened up opportunities for Vietnamese businesses to increase production and exports, but many of the country's producers and traders lacked the financial means to expand. Peter Mulroy, the secretary general of Factors Chain International (FCI), explained that factoring is a package of services designed to ease international trade by offering risk-mitigation tools and liquidity together to support growth in trade between importers and exporters. "If you want to expand foreign sales, you will have to offer buyer-friendly terms such as an open account, which factoring can support without reducing your security or affecting your cash flow," he added. Mulroy said that global trade was moving toward open accounts, and that because of intense competition for export markets, foreign buyers often encouraged exporters to ship on open account terms. "In addition, the extension of credit by the seller to the buyer is more common abroad," he said. "Therefore, exporters who are reluctant to extend credit may face the possibility of the loss of the sale to their competitors." Hanh of VBSA said that factoring services would allow businesses to take advantage of imminent trade growth opportunities, both at home and abroad, by providing short-term funding against receivables, together with management solutions, such as risk protection and collection services. Kyle Kelhofer, country manager in Viet Nam for International Finance Corporation, Cambodia and Laos, said, "The increased trend of globalised markets and falling trade barriers are leading to multiplication of cross-border business opportunities." "Vietnamese small- and medium-sized enterprises can increasingly leverage new trade finance facilities such as factoring to improve competitiveness and attract foreign partners so that they can expand trade volume and grow business," he added. Also speaking at the conference, Jinchang Lai, principal operations officer for Finance and Market Global Practices at IFC, said factoring would be necessary to help enterprises manage their accounts receivable and provide working capital to these enterprises. According to FCI, in 2014, factoring in Viet Nam handled by FCI members amounted to 100 million euros, a fraction of the total volume of business handled by its factoring companies worldwide, which neared 2,373 billion euros. Factoring services in Viet Nam are offered by eight official providers, three of which are members of FCI, a global network of leading factoring players. Nguyen Thi Thanh Hang, deputy head of the State Bank of Viet Nam's Department for Banking Prudential Regulations, said Viet Nam's regulations for the development of international factoring services were inadequate, causing difficulties for the supply and use factoring services in the country. SBV plans to complete a legal framework governing factoring. With an annual international trade volume of about US$300 billion, Viet Nam has significant potential for the development of international factoring, according to Hang. Jinchang Lai said recently that the Government of Viet Nam had decided to increase the number of enterprises to one million by 2020 from the current 530,000. Experts, however, are concerned about how the country will provide financial services to the one million enterprises in only a few years' time, and whether the financial industry will be prepared by that time. He said that IFC would work with the Government and the lending industry in Viet Nam, including banks as well as non-bank lenders in this area, to develop factoring services. Once businesses realise the full benefits of factoring services, the demand will increase, conference delegates said. Sustainable models needed in VN Building sustainable business models in Viet Nam is challenging, and for Vietnamese and international companies the road to sustainable development is still bumpy, according to experts at a seminar. The Embassy of the Kingdom of the Netherlands and Viet Nam Chamber of Commerce and Industry (VCCI)'s Viet Nam Business Council for Sustainable Development, organised a seminar on "Building Sustainable Business Models in Viet Nam" yesterday in Ha Noi. This seminar was part of the "Tomorrow is Green" campaign initiated by the Embassy and Consulate General of the Netherlands in Viet Nam. The campaign calls for joint solutions for a sustainable and prosperous future. The seminar was an opportunity for participants to get inspired and learn experiences from real Dutch and Vietnamese business cases and to discuss how to build sustainable business models, which were the first factors to develop and retain competitive ability. Doan Duy Khuong, VCCI deputy chairman, said that in fact, many Vietnamese enterprises faced difficulties in building sustainable business models, due to lack of capital, low management ability and lack of policies of the State. Exchange of views and experiences on developing sustainable business was necessary and contributed important parts to improve knowledge of the local enterprises about social responsibility and friendly-environmental production activities, he said. During the seminar, as pioneers in building sustainable business models in Viet Nam, FrieslandCampina, Unilever and Viettel, shared their first hand insights on their achievements and challenges. ING bank also shared its experiences in financing circular business models. At an interactive discussion under the seminar, participants questioned and debated with policy makers, business leaders and civil society representatives on how to overcome challenges in developing sustainable businesses. The seminar attracted local and foreign socio-economic organisations, the Dutch Business Association Viet Nam, leading Dutch companies in Viet Nam, including FrieslandCampina, Unilever, ING bank, and Viet Nam's telecommunication group, Viettel. Vinatex Nam Dinh gets first export order from Turkey The fibre factory Vinatex Nam Dinh under the Vietnam National Garment and Textile Group (Vinatex) has just been put into operation and got the first export order from a Turkish client. Cao Huu Hieu, a Vinatex official, said the factory will ship around 100 tons of CVC48/52 fibre to Turkey. Vinatex Nam Dinh was built by Vinatex at an investment of VND465 billion. It was equipped with the world’s most modern production lines to produce materials for the garment and textile industry. This key project of Vinatex aims to grasp opportunities brought about by free trade agreements. According to Hieu, Vinatex Nam Dinh considers exports and domestic markets to be of equal importance.   Masan Resources Q1 revenue slides year-on-year  Metal mining business Masan Resources, a member of consumer goods producer Masan Group, has recorded revenue of VND806 billion (US$35.8 million) in the first quarter of the year. The revenue is slightly lower than the same period last year as income from fluorite and copper sales declined on global exchanges, the company said in its financial statement. Copper sales dropped 37 per cent year-on-year despite copper mining volume jumping 43 per cent and the fluorite sales decreasing by 7.2 per cent. However, wolfram sales showed an improvement compared with the same period last year. Wolfram sales rose 7.2 per cent to reach more than VND450 billion, more than half of the company's first-quarter revenue, as production increased by 10 per cent. At the end of the first three months, Masan Resources earned a net profit of VND11 billion, a big improvement from the loss of VND89 billion incurred in last year's first quarter. The improvement was a result of the company successfully cutting costs incurred during the sale of goods and bringing down the cost of management by 34 per cent and 78 per cent, respectively. In the first quarter of 2016, Masan Resources reported short-term debt was nearly VND3 trillion and long-term debt was more than VND8.1 trillion. According to the quarterly report issued by Masan Resources, the market may see a rebalance sooner than expected as demand for the company's products had risen since the beginning of April, bringing the price of wolfram to some $190 per tonne, at present. Analysts also expect the recovery of wolfram price to extend in the future. Masan Resources claims it is one of the leading mining and processing corporations in Viet Nam. The company operates the Nui Phao Mine, the largest wolfram mine in the world, with a total capacity of 66 million tones. The company has taken over 36 per cent of the world's wolfram market share and aims to occupy 50 per cent of the global market by 2020. This year, Masan Resources is targeting revenue of VND4.5 trillion-VND5.1 trillion and profit after tax of VND220 billion-VND660. Masan Resources also traded under the name MSR on the Unlisted Public Company (UPCoM) market in September 2015 with more than 703.5 million shares. MSR is currently at VND16,900 per share. Ca Mau: Aquatic export records promising start in 2016 The southernmost province of Ca Mau earned nearly 275 million USD from aquatic exports, mostly shrimp, in the first four months of 2016, up three percent from last year. In April, overseas shipments of aquatic products rose by 11 percent, month on month. The Ca Mau Association of Seafood Exporters and Producers (CASEP) considers those figures a promising start to the year for the local fishery industry. The province targets 1.3 billion USD in aquatic export revenue in 2016. It plans to increase shipments to key markets (the US, Japan, the EU, China, the Republic of Korea and Russia) as well as emerging markets (Australia and Canada), the CASEP said. Ca Mau will also promote processing capacity to improve product quality and quantity, the association noted. Aussie cow imports slide Cow imports from Australia have declined this year as domestic supply has improved and local firms have imported more cows from other markets, according to traders. Vo Xuan Hoa, chief executive officer of Ket Phat Thinh Joint Stock Co, one of the major importers of Australian cows, said the company has bought less than 10,000 Australian cows since the Lunar New Year holiday (Tet), dropping 20% year-on-year. These cows weighing 350-400 kilos each will be raised at farms within three to four months before they go to slaughterhouses. Hoa said around this time last year the company, which is based in the Mekong Delta province of in Long An, distributed 300-350 cows a day nationwide on normal days but the current number is only 200. Phung Duy Linh, strategy director of Trung Dong Ltd Co in Dong Nai Province, said the company has imported around 13,000 Australian cows since early this year. Though the Bien Hoa City-based company has steadily imported cows from Australia since its establishment in 2011, the number of Australian cows imported into Vietnam this year has waned, Linh said. Linh ascribed the decline to a pickup in cow imports from Cambodia, Laos and Thailand, and in domestic supply. Hoa of Ket Phat Thinh said local farmers have invested more in farming high-quality cows. In addition, the number of cows imported from Laos, Cambodia, and Thailand has surged. “Australian cow orders by local importers have shown signs of slowing down after a period of strong import. Cow importers are now keeping a close watch on market demand,” Linh said. Hoa said lower demand has lead to a reduction in prices of Australian cows. The current price is US$2.8 per kilo, well below US$3-3.05 per kilo last year, due to an ample domestic supply of more than 100,000 cows and the fact that Indonesian importers have demanded lower import prices of Australian cows. Hoa said Indonesia is the largest importer of Australian cows with 700,000 head last year, followed by Vietnam with 360,000 head. Australian cow exporters have offered lower prices for Vietnamese importers as they have done to Indonesian importers. Hoa said with the current market demand and prices, the company expects to import around 72,000 Australian cows this year. If imported cows are taken good care of, the company can earn monthly profit of VND500,000 (US$22.3) a cow so importing cows and raising them for a while is no longer an attractive business way as risks are high. Importers of cows are coping with tougher competition with imported frozen beef as prices of this product are competitive and importers face less risk than cow importers do. Trade leader acts to reverse disappointing exports Minister of Industry and Trade Tran Tuan Anh has asked his ministry’s affiliates to review and simplify procedures to facilitate exports in the context of the country’s disappointing export performance in the first four months of the year. The move is part of concerted efforts to carry out the Prime Minister’s instructions in the event of stalling industrial production and a slowing export growth rate, which is standing at 6 percent, well below the target of 10 percent. Minister Anh said the ministry would shake up and supervise the granting of licences to create favourable conditions for drawing investment, as well as for domestic enterprises to step up their production and business. At a video conference among Hanoi, Da Nang and HCM City on May 6, Phan Van Chinh, Head of the ministry’s Import-Export Department, released figures showing that April’s export reached 14.1 billion USD, up 4.5 percent from one year ago. For the whole first four months this year, Vietnam exported an amount of goods worth 52.87 billion USD, up 6 percent against the same period last year. Of the total, foreign companies shipped 37.1 billion USD worth of commodities and local firms15.1 billion USD. The country’s import value reached 51.4 billion USD by the end of April, down 1.2 percent year-on-year. During the period, Vietnam enjoyed a trade surplus of 1.46 billion USD, accounting for 2.8 percent of the export turnover. Ca Mau: Aquatic export records promising start in 2016 The southernmost province of Ca Mau earned nearly 275 million USD from aquatic exports, mostly shrimp, in the first four months of 2016, up three percent from last year. In April, overseas shipments of aquatic products rose by 11 percent, month on month. The Ca Mau Association of Seafood Exporters and Producers (CASEP) considers those figures a promising start to the year for the local fishery industry. The province targets 1.3 billion USD in aquatic export revenue in 2016. It plans to increase shipments to key markets (the US, Japan, the EU, China, the Republic of Korea and Russia) as well as emerging markets (Australia and Canada), the CASEP said. Ca Mau will also promote processing capacity to improve product quality and quantity, the association noted. PNJ beats out SJC in profit margin The country's biggest gold bar trader in Viet Nam, Sai Gon Jewellery Joint Stock Company (SJC), recorded more than VND18 trillion (US$806 million) in sales in 2015, but its gross profit margin was only 0.57 per cent, much lower than the margin of competitor Phu Nhuan Jewellery (PNJ) at 15 per cent. PNJ reported sales of VND7.7 trillion – about half of SJC's sales - but it gained a gross profit of VND1.17 trillion last year. While SJC's main revenue still came from gold bar trading, experienced gold traders said gold bar trading often yields low profits compared to trading gold jewellery and gem products. Traders said the gross profit margin of gold bars was between 0.1 per cent and 0.5 per cent. Therefore, to those traders, it was not surprising to see SJC earn such a low profit. The best time for gold bar trading was in 2011 when gold reached its peak at $1,900 per ounce. SJC, which dominated the gold bar market, reported sales totalling more than VND111 trillion. At that time, gold bars were considered a valuable commodity that could be traded for the best profit or be saved in the bank for a good interest rate. After prices fell, gold was often traded at about $1,200 per ounce on the global market. The State Bank of Viet Nam intervened in the gold market in 2012 with the issuance of Decree No 24, which banned widespread gold bar trading in the country except for gold firms and credit institutions licenced by the central bank. With the aim of controlling the market, which had been largely manipulated by speculators for years, the intervention introduced a State monopoly on gold bar production and gold material imports and exports, and also put an end to the practice of saving gold at banks. It has re-organised a disordered gold market and helped match the local prices of gold with global ones to prevent investors from benefitting by trading gold bars at different prices. As a result, many local people do not want to invest in gold anymore and have found other investment channels, such as real estate investment, bank savings and the stock market. Over the last four years, SJC revenue has continued to drop from VND111 trillion in 2011 to VND16 trillion in 2014. However, last year, the firm saw growth of 12.5 per cent from 2014 and was able to recover revenue. Meanwhile, Phu Nhuan Jewellery JSC has found success by specialising in gold jewellery and gem products that are handmade or made-to-order. In PNJ's revenue structure, gold bars accounted for 20 per cent, equivalent to VND1.55 trillion. The gross profit of the segment only accounted for 1 per cent of the firm's total gross profit. PNJ could produce 4 million products each year. Currently, it sells between 2.7 million to 3 million products to the local market. With a retail chain of nearly 200 shops across the country, PNJ also plans to open another 25 shops to serve the growing demand for gold jewellery. In the first quarter, PNJ reached VND2.3 trillion, an increase of 9.03 per cent over last term, and gross profit hit VND421 billion, an increase of 42.9 per cent. It also forecast VND8.8 trillion in revenue and 1.3 trillion in profits this year. FPT earns $384 million in first quarter, exceeds goal Viet Nam's giant software FPT earned revenue of VND8.56 trillion ($384.4 million) in the first quarter of this year, exceeding its target. Profit before tax was VND563 billion, 10 per cent higher than targeted. Profit after tax was VND346 billion, or 104 per cent of the target, while earnings per share stood at VND870 ($0.039), or 104 per cent of the target. While revenue and profit results all exceeded the year-to-date target they are lower than last year due to greater investments in telecom infrastructure and saturation in the domestic market. The company expects that from the third quarter investment in telecom infrastructure will be lower and domestic-related segments, including software solutions, systems integration and IT services will record higher revenue. Businesses suspending operations up 40% in Jan-Apr According to a report from the Ministry of Planning and Investment (MPI) there were 9,450 businesses suspending operations in the first four months, up 40.5 per cent against the same period last year, and around 15,685 that are waiting to wind up operations, an increase of 27.4 per cent year-on-year. More than 92 per cent are small businesses, with registered capital of less than $450,000. MPI said the many businesses are facing difficulties and that access to development policies, locations, and loans from credit institutions, especially for small and medium enterprises, still present obstacles. There were 11,311 enterprises that suspended operations and are now operating again, a rise of 79.4 per cent year-on-year. In the first four months there were also 34,721 newly-established enterprises with registered capital of approximately VND248.244 trillion ($11.08 billion), a year-on-year increase of 22.9 per cent in number and 52.8 per cent in capital. Average registered capital was more than VND7.1 billion ($300,000), a year-on-year increase of 24.2 per cent. FPT overseas revenue up 36% in Q1 FPT earned revenue of VND8.567 trillion ($384.4 million) in the first quarter of the year, reaching 101 per cent of its target. Profit before tax (PBT) was VND563 billion ($25.2 million), 10 per cent higher than targeted. Profit after tax was VND346 billion ($15.5 million), or 104 per cent of the target, while earnings per share (EPS) stood at VND870 ($0.039), or 104 per cent of the target. While revenue and profit results have all exceeded the year-to-date target they are lower than last year due to greater investments in telecom infrastructure and saturation in the domestic market. Such factors were anticipated and reflected in the first quarter’s plan. The company expects that from the third quarter investment in telecom infrastructure will be lower and domestic-related segments, including software solutions, systems integration and IT services will record higher revenue. Software outsourcing and the retail segment continued to be highlights in the corporation’s business performance in the first quarter, with the former seeing revenue and PBT increasing 42 per cent and 18 per cent, respectively, equal to 104 per cent and 100 per cent of the year-to-date target. The retail segment delivered impressive growth of 35 per cent in revenue and 47 per cent in PBT, equal to 107 per cent and 105 per cent of the targets, respectively. In Japan, which is FPT’s largest overseas market, growth of 57 per cent growth year-on-year has been recorded in recent years. The Going Global strategy continued to bring positive results, with overseas revenue rising by 36 per cent year-on-year to VND1.242 trillion ($55.72 million). PBT from overseas markets was VND175 billion ($7.85 million), an impressive increase of 53 per cent year-on-year. E5 gasoline accounts for 6.3 percent of consumption in HCMC Ethanol gasoline blend E5 accounted for 6.3 percent of consumption in Ho Chi Minh City at the end of April, reported the city Department of Industry and Trade. The blend was available at 279 out of 526 filling stations in the city at that time. Total consumption averaged 8,000 cubic meters a month, up 20 percent over the end of last year. Consumers have still been in the habit of filling A92 and A95 gasoline, resulting in ineffective trading of E5 product and discouraging businesses. The Government has instructed eight provinces and cities including Hanoi, Hai Phong, Da Nang, Quang Nam, Quang Ngai, Can Tho, Ba Ria-Vung Tau and HCMC to sell E5 gasoline at all filling stations in their localities and stop providing Ron 92 by June 1 this year. Other provinces and cities have been asked to provide the blend at 50 percent of their stations and replace 50 percent of Ron 92 with E5 by the time. VND2,100 bil invested in HCMC Highway The Management Board of the Ho Chi Minh Highway Project proposed an investment of VND2,100 billion (US$ 94.4 million) for the Chon Thanh-Duc Hoa Highway. The Ho Chi Minh Highway for Chon Thanh – Duc Hoa section linking the southern provinces of Binh Phuoc, Binh Duong, Tay Ninh and Long An under the BOT (build-operate-transfer) contract is expected to invest over VND 2,100 billion. Under the plan, the project will start construction in the end of 2016 and be completed in 2018. In the first phase, the road having two lanes is 12.25 meter wide. Vehicles can travel at maximum speed of 100 km per hour. The road will have two toll stations. Trade surplus hits US$1.46 billion in first four months Vietnam has a trade surplus of US$1.46 billion for the first four months of 2016, with export turnover of more than US$52.87 billion and import value of over US$51.4 billion, according to the Ministry of Industry and Trade. Domestic enterprises exported products worth US$15.1 billion, or 2.9% more than in the same period last year with a trade surplus US$5.6 billion. Meanwhile, foreign direct investment (FDI) enterprises exported products worth US$37.1 billion, or 9.8% more than in the same period of last year, recording a trade surplus of US$6.39 billion. The United States was the country’s largest export market in the first four months, accounting for US$11.4 billion in exports, or 15.5% more than that of the same period last year. Other significant export markets include the European Union with US$10.3 billion in exports, or a 10.4% rise from that of last year; China with US$5.8 billion, or a 16.5% rise; and the Republic of Korea with US$3.3 billion, up 36.5%. A total of 30 key export products saw a strong increase in export value in the first four months. These included vegetables and fruits with a growth of 43.3% to US$741 million; telephones and components, up 23.8% to US$474 million; gemstones and precious metals, up by 22.8% to US$260 million; and machines and equipment, up by 15.8% to US$2.86 billion, in addition to petrol products, up by 12.6% to US$259 million; and handbags, hats and umbrellas, up by 10.8% to US$1.36 billion. However, other key export products faced low growth or even a reduction in export value such as seafood (up by 3.8%), bamboo and rattan (up by 2.6%), footwear (up by 4.8%), and tea (down by 14.2%), in addition to cassava (down by 23.5%). The products with the biggest reduction in import value included animal feed (down by 17.7%), petrol (33.3%), and completely built-up automobiles (23.5%). Vietnam remains favourable destination for real estate investors Despite the volatility of global economy, real estate markets in Southeast Asia, particularly Vietnam, will see growth in the coming year thanks to the continuous inflow of foreign direct investment, strengthening domestic business cycle and a supportive policy environment, said a new survey by CBRE of global corporate real estate (CRE) executives. More than 400 corporate real estate executives from around the world participated in the CBRE survey. Of the survey respondents, 49% cited economic uncertainty as their greatest challenge—with Asia Pacific respondents being particularly sensitive to this issue compared to Europe, the Middle East, Africa and the Americas—while 43% noted cost escalation as their greatest challenge. According to Chief Executive Officer, Global Workplace Solutions, CBRE Asia Pacific, Phil Rowland, the volatility of today’s global economy is beginning to weigh on business confidence, challenging executives to align long-term real estate strategies with short-term corporate agendas. Effective workplace strategies are striking the right balance between helping to expand business capabilities, while limiting spikes in both capital investment and operational expense, he added. Forty-eight percent of survey respondents projected a stable real estate footprint for this year. Global corporate executives favored emerging markets as destinations for growth, with Southeast Asia and India as top locations for expansion. 56% of respondents indicated interest in expanding their corporate portfolios in the next three years in Southeast Asian markets where economic opportunities are emerging. Despite weakening business confidence, along with decelerating growth in China and its uncertain effects on regional and global markets, the Asia Pacific region still provides opportunities for multinational companies in the medium to long term, said Head of Research, CBRE Asia Pacific, Henry Chin. Several emerging markets in Asia—notably India and Southeast Asia, including Vietnam and the Philippines—expect to report growth in the coming year due to the continuous inflow of foreign direct investment, strengthening domestic business cycle and a supportive policy environment, Chin added. Enterprises - driver of economic growth According to the Vietnam Chamber of Commerce and Industry, over 941,000 enterprises have been established over the past 15 years, but as of last year only 54.5% were still active while the rest have ceased operating or were dissolved. Business closure is a natural process in a market economy, but it is noteworthy that nearly half of all closures took place in the past three years, with the number still rising. The first quarter of 2016 saw the shutdown and dissolution of nearly 23,000 enterprises, up 14% over the same period last year. Among enterprises currently in operation, data at the end of 2015 showed that only 42% reported profits while the remaining 58% were operating at a loss or generated zero earnings. Although the 42% figure was an improvement compared with 32% and 35% in the previous two years, it is an abnormal phenomenon for less than half of total enterprises to be making profits. This suggests that efficiency remains low and the business environment unfavourable. The make-up of enterprises is also a cause for concern with small and ultra-small businesses accounting for up to 96% of all businesses, not including household businesses. Less than 2% are large enterprises and only 2% are medium-sized. These figures show that Vietnamese enterprises are recovering at a very slow pace, and sluggishness and a lack of breakthroughs remain a dominant theme for local businesses. Productivity and business efficiency have improved little and have even become worse in some aspects. The next five years will be a critical period for Vietnam’s development as the country is deepening its integration into the global economy. As such, in the future Vietnam needs to move towards intensive growth on the foundations of innovation, knowledge and technology, and by regarding enterprises as the driver to boost economic growth and enhance the competitiveness of the economy. The government, ministries, agencies and local authorities must place priority on stabilising the economy and creating a favourable business environment, in which institutional and administrative reforms are the key. A total review of business regulations, requirements and licences is needed to remove redundancies that are hampering the right to do business and increasing the risk and costs for enterprises. State regulations must facilitate the people and the business community, and State agencies must take on a difficult role, ensuring that the State offers services to the people and regards the people and businesses as their customers. The State must protect the legitimate rights and interests of enterprises and ensure their right to do business in line with the law. With this, the State should not abuse power and criminalise economic and civil relationships, and will severely punish the arbitrary criminalisation of economic activities as well as negative acts and harassment on the part of civil servants. Lastly, the State should ensure the stability and longevity of polices so that investors and enterprises can be at ease with their business decisions. Ministries and agencies should push through administrative reform to facilitate investors and enterprises; make the new investment and enterprise laws and relevant laws to be compatible with each other; and quickly complete the institution for the development of small and medium-sized enterprises. In addition, the government should consider granting tax exemptions, breaks and deferments to enterprises, as well as focus on connecting Vietnamese enterprises with foreign ones so that domestic businesses can participate in global value chains. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR