BUSINESS IN BRIEF 2/5 Hanoi's exports post 0.2% growth   The capital city generated approximately US$3.4 billion from exports in the first four months of the year, marking a modest increase of 0.2 per cent against the same period last year, according to the municipal Statistics Office. In April alone, the city's exports were estimated at $852 million, down 1 per cent month-on-month and 4 per cent year-on-year, the office said. Products recording high export growth in the reviewed period included garments, up 23 per cent and means of transport and tools, up 21 per cent. Items witnessing export decline were farm produce, down 19.5 per cent and computer components and peripheral equipment, down 20 per cent. Meanwhile, the city imported an estimated $1.75 billion worth of goods in April, surging 2.3 per cent against the previous month but decreasing 13 per cent against last year's corresponding period. The latest addition has brought the city's import turnover in four months up to $7.33 billion, down 5.1 per cent year-on-year. From January to April, the import of most products tended to decline compared to same period last year, such as chemicals, down 25 per cent, plastics (16 per cent) and fertilisers (6 per cent). The office also reported that the city's total revenue from the retail trade and services saw a yearly increase of 9.7 per cent to reach nearly VND172 trillion ($7.61 billion) in April. In the four months, the retail sale of goods and services topped VND682 trillion (about $30.3 billion), 9.7 per cent higher than same period last year. Of which, the State-owned sector recorded a retail sales growth of 7.6 per cent while the non-State owned and foreign sectors witnessed rises of 11 per cent and 10 per cent, respectively. UK ideal for shrimp exports Vietnamese enterprises should foster their shrimp exports to the United Kingdom as exports to other markets were tending to slow down, the Viet Nam Association of Seafood Exporters and Producers (Vasep) has suggested. According to Vasep, the UK demand of warm-water shrimp would continue to rise in the time to come. That would result in many opportunities for Vietnamese firms, who had advantages in producing value-added shrimp products, to expand their market share. Vietnamese shrimp exports to the UK have enjoyed remarkable growth in recent months, Vasep said. The association cited statistics from the General Department of Customs showing that exports of Vietnamese shrimp to the market reached US$17.3 million in the first two months, up 38 per cent year-on-year. In that period, the UK accounted for 4.6 per cent of Viet Nam's total shrimp export turnover. It also surpassed Germany to become Viet Nam's biggest shrimp importer in the EU. The impressive shrimp exports to the UK was attributed to the market's greater demand of warm-water shrimp and the competitive price of exported Vietnamese shrimp. Baocongthuong.com.vn quoted statistics from the International Trade Centre as saying that the price of Vietnamese shrimp in this market was about $11.5 per kilo, lower than that of Canada, Thailand and Bangladesh – the UK's other main shrimp suppliers. Viet Nam's shrimp export turnover was expected to reach $3.3 billion this year, a year-on-year increase of 12 per cent. CIC should use other industries' data The Credit Information Centre (CIC) under the State Bank of Viet Nam should use data from other industries instead of information just from credit institutions to bring customers to banks. Other industries could be electricity, water, telephone, and television, in addition to telecommunications, experts said at a workshop held in Ha Noi early this week. According to CIC General Director Do Hoang Phong, the CIC's credit information database is currently mainly based on data from credit institutions. It means that only customers who have had credit ties with credit institutions have credit ratings at the CIC, Phong said, and added that credit institutions were based on the CIC's ratings to decide their lending. The use of ‘traditional credit information' or information mainly provided by credit institutions, therefore, limits the number of customers for credit institutions. Experts estimated that the proportion of Vietnamese who did not have access to credit was very high. Le Tuan Anh, director of the CIC's Research and Development Division, reported that by 2015, 41.7 million out of 67.1 million Vietnamese adults did not have access to credit. The amount accounted for 44.9 per cent of the country's population of 93.4 million. In the US, according to IFC/WBG expert Hung Hoang, only 54 million out of 360 million Americans do not have access to credit. To have more people access credit, Hung suggested to the CIC that it uses information from other industries instead of only data from credit institutions. This would give banks access to people who do not have credit ties with them yet. He said information from services of electricity, water, television, telephone and especially telecommunications should be feasible options. According to Hung, enterprises can have the same customers even while working with different industries. Therefore, he said, payment information data from industries providing necessary goods and services would be an important input information source to help credit institutions appraise their customers though the customers have not had credit ties with them. Based on the bills of the services, customers with a good payment history of the services will find it easier to access credit and vice versa. HDBank among three to support small firms HCM City Development Bank (HDBank) has been selected as one of the three banks that will support the newly established small and medium-sized enterprises (SMEs) support foundation. HDBank will act as a conduit for credit the foundation will provide SMEs in the sectors of agriculture, forestry and fishery; processing; manufacturing; water supply; waste treatment; and supporting industries. The SMEs will enjoy a priority interest rate of 7 per cent for medium- and long-term loans. HDBank said it is committed to strongly supporting SMEs in the form of consultancy and ensuring quick and simple procedures. The other two authorised banks are BIDV and Vietcombank. The foundation was launched by the Ministry of Planning and Investment with a capital of VND2 trillion (US$91 million). Effective use of State assets urged Deputy Prime Minister Vuong Dinh Hue urged the State Capital Investment Corporation (SCIC) to strengthen operations for more effective use of State assets during a working session in Ha Noi yesterday. SCIC is a strategic investment arm of the Government. Its assigned task is to manage the State's interests in companies and projects, aiming to strengthen the dominant role of the State sector while respecting market rules. Since the corporation began operations 10 years ago, it has disbursed capital worth more than VND24.3 trillion (US$1.1 billion) for investments in key sectors and essential industries, according to a SCIC report. It currently manages enterprises that work in financial services, energy, manufacturing, telecommunications, transportation, consumer products, healthcare and information technology. It gave out nearly VND8.5 trillion, or more than 30 per cent of the total disbursement, during the last two years alone. The company reported average annual growth rates of 56 per cent for turnover, 31 per cent for ownership capital and 36 per cent for total assets. Its after-tax profits grew by 56 per cent on average per year, and its financial contribution to the State budget has nearly doubled each year. The establishment of SCIC has been seen as a bold move by the Government during the height of economic and State-owned-enterprise (SOE) reforms, which aimed to reduce the burden on the State budget. Hue said the company should consolidate its organisation by applying international management standards, improving human resources and ensuring efficiency in internal supervision. He asked the company to closely track Government directives in divesting from SOEs and investing in strategic areas, such as start-ups involved in new high-tech products. He said the Government expected the firm to become a major financial group that helped enhance the efficiency of the domestic economy and integrate it into the international market. Viet Nam News reported earlier this year that SCIC would increase investments in 2016 through participation in initial public offerings of economic groups, as well as business mergers and acquisitions. In 2015, it earned more than VND8.4 trillion in pre-tax profits, exceeding the yearly plan by 36 per cent. Its return on equity was 25.6 per cent last year, 1.6 times higher than the annual target. As of December 30, 2015, the company represented the State's shareholding rights in 230 enterprises. It held stakes of 30 per cent to more than 50 per cent in many large companies, such as Vinamilk, FPT Telecom and Bao Minh Insurance Corporation. On Monday, Hue also urged the National Financial Supervisory Commission (NFSC) to intensify its capacity in macro-condition forecasts to give the government timely advice on running the economy. He asked the agency to collaborate with the Ministry of Planning and Investment to figure out measures to accelerate economic growth and assure economic stability. He also asked the commission to co-ordinate with the Ministry of Finance and the State Bank of Viet Nam to study policies to guarantee public debt security and handle bad debt, and restructure the financial market in balance with monetary policies. The focus should be on reorganising credit institutions, and stock and insurance markets, he said. Viettel Global revenue from international investment up 9% The total revenue from Viettel Global Investment JSC (Viettel Global)'s international investment increased 9 per cent to reach nearly US$1.4 billion last year, while maintaining a pre-tax profit of $58 million. Meanwhile, the total number of Viettel Global subscribers hit 16.5 million, according to the company's 2015 financial report. The company on April 16 also announced its goal of achieving revenue of $1.5 billion for eight markets. The company plans to open two new markets this year, bringing in 8.35 million new customers. This would bring the cumulative subscribers in the overseas markets to more than 25 million. The company also set a target of $51.4 million in combined pre-tax profit, accounting for 90 per cent of that in 2015. This year, Viettel expects to implement construction projects in Myanmar, a potential market with the largest population scale among Viettel's invested markets. It is also growing quickly, and demand for data usage in the country is increasing, with more than 60 per cent of its population using smartphones. At its shareholders' meeting the same day, the company proposed a dividend payment of 10 per cent by cash, 1.5 times higher than the 12-month banking interest rate. The management board of Viettel Global also submitted a plan to increase its chartered capital by VND8 trillion by selling shares for Viettel Group. SGP lowers target for 2016, plans divestment The Bank for Industry and Trade of Việt Nam (VietinBank) and Việt Nam Prosperity Bank (VPBank), strategic investors of Sài Gòn Port JSC, asked to sell their holdings in the port at the shareholders general meeting last week. VietinBank and VPBank  bought a 9.07 per cent stake and 7.44 per cent 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 VNĐ775 billion (US$34.7 million) in turnover and profit of VNĐ50 billion. The target is much lower than last year’s recorded revenue of more than VNĐ1 trillion and profit of VNĐ85.5 billion. This year, according to the port, it must relocate Nhà Rồng-Khánh Hội Port under the city’s infrastructure plan by the end of December and must hand over part of the port by the middle of this month. 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 Tân Thuận 1 and Tân Thuận 2 ports were restructured within the year, while construction work on Sài Gòn-Hiệp Phước Port was incomplete. The port has been adjusted retroactively for after-tax profit calculations, with accumulated losses of more than VNĐ1 trillion for 2015, as it failed to report losses of this amount from its associated companies, deepsea 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 Ngọc Viễn Đông JSC which is developing the Vinhomes Khánh Hội project in HCM City. Previously, the port was asked to contribute more capital to keep its current stake of 26 per cent in the company when it raises the charter capital to VNĐ5 trillion 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.   Sài Gòn Port operates important ports in the southern part of Việt Nam, including the Nhà Rồng Khánh Hội, Tân Thuận 1, Tân Thuận 2 and Phú Mỹ Steel ports. The port accounts for 10.5 per cent 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 Tân Thuận 2 Port, establishing the Hiệp Phước Service Zone in Nhà Bè District and co-operating with Khahomex Company to build an office building on Nguyễn Tất Thành Street in the inner city. On April 25, more than 21.6 million shares for the port (SGP) were listed on the unofficial market, making it the fifth-largest firm in UPCoM. After two trading days, SGP shares rose nearly 15 per cent to close at VND16,400 yesterday. Reforms needed to achieve 6.7% growth Vietnam’s GDP growth rate increased 5.46% in the first quarter of this year, less than in the same period last year. But economists predict the national economy may achieve the goal of 6.7% GDP growth rate if reforms are undertaken aggressively. Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management, says it’s important to tighten unnecessary public-invested projects and focus on the truly effective projects with solid economic impact. Economist Le Dang Doanh shares the view that membership in the ASEAN community will strongly affect Vietnam’s trade balance beginning in the 2nd quarter. Obtaining Official Development Assistance (ODA) loans will be more difficult, resulting in reduced ODA. Dr. Doanh recommends strong reforms by changing the method of selecting public-invested projects, seizing opportunities of trade liberalization and pushing administrative reforms. Dr. Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research, calls on the government to go ahead with its macro-economic stabilization goal: “The government should restrain spending but adopt a strategy for spending cut rather than hard landing. Without this, the budget deficit problem can’t be solved and that will affect the implementation of goals set by the NA. At the same time, we hope that the economy will recover, bringing in more revenues”. Dr. Dao Van Hung, Director of the Academy of Policy and Development, stressed the need to continue strong institutional and administrative reforms, particularly reforms of state-owned enterprises. Some economists point to optimistic signals in Vietnam’s economy. Dr. Vu Dinh Anh says the growth target of 6.7% is within reach, adding that the economic restructuring since 2011 plus the reform of the growth model will boost Vietnam’s growth this year.   Can Van Luc, senior advisor at the Bank for Investment and Development of Vietnam, says “There are many factors that impact growth. For example, this year’s average oil price will return to a higher level than last year. This year’s food prices will also be higher than last year. Another factor is the high credit growth, about 18%. We are hopeful about Vietnam’s high economic growth rate”. Heus harbours big plans for Vietnam The Netherlands' Royal De Heus, an international organisation with a leading position in the animal feed industry, has boosted its presence in Vietnam with the installation of its seventh animal feed plant. Located in Mang Thit district in the Mekong Delta province of Vinh Long and costing over $30 million, the new factory is the Dutch firm's second facility of this kind in the area. The new facility, called Vinh Long 2, will produce feed for cattle, pigs, and poultry at a capacity of 250,000 tonnes a year in the first phase, thus helping increase De Heus Vietnam's total output to one million tonnes a year. Vinh Long 2 is the first plant with a river port. Utilising the water ways, the logistics of incoming raw materials and outgoing finished products can be organized in a more efficient way between Vietnam, Cambodia, and the Mekong Delta region. "The new facility is an important step in our ambition to contribute to the agricultural development of Vietnam,” said Gabor Fluit, De Heus Asia’s business group director. Coinciding with the operation of its seventh plant, De Heus Vietnam announced that Vietnam had been selected as the official headquarters of of its Asia branch. Operating in Vietnam for eight years now, De Heus has continued expanding its operations in the country to become one of the five biggest animal feed producers in the country. The Vietnamese animal feed market has developed rapidly, with an average growth rate of 10-13 per cent a year. The animal feed market is expected to reach $10.55 billion by 2022. According to a recent report released by the Ministry of Industry and Trade, foreign companies account for a smaller quantity but hold 60-65 per cent of the domestic market. Thai CP Vietnam Livestock Corporation and the US’ Cargill Vietnam Co., Ltd. hold the largest market share, with a combined 30 per cent. Industry insiders said that, together with the increasing involvement of Vietnamese firms, the expansion of foreign players would make competition in the local animal feed market fiercer in the months to come. Taekwang eyes second thermal power plant in Vietnam Korea’s Taekwang Power Holdings, which is the investor of Nam Dinh 1 thermal power plant, is keen to add a coal-fired power project in central Quang Tri province to their list of Vietnamese investments. General director of Taekwang Power Holdings Sang Yuon Yoo, in a meeting with Quang Tri authorities, expressed the firm’s interest in the Quang Tri 2 thermal power project in the Quang Tri Southeast Economic Zone. Vice Chairman of Quang Tri’s provincial People’s Committee Nguyen Quan Chinh said the local province was seeking investors to finance the project, which will be carried out under build-operate-transfer (BOT) or build-own-operate (BOO) methods, with an estimated total investment of $1.5 billion. The thermal power project is one of 17 incentivised projects for which the province is actively seeking investment over the 2016-2020 period. A consortium of Taekwang Power Holdings and ACWA Power is the investor of the $2 billion Nam Dinh 1 power project. Nam Dinh 1 is an independent greenfield project that will be developed on a BOT basis. It is part of the 2,400MW Nam Dinh thermal power complex in northern Nam Dinh province. According to a source from the Ministry of Industry and Trade (MoIT), after negotiations on the BOT contract, the consortium and the MoIT reached an agreement on most of the contract’s content. The investment licence for this project is anticipated to be granted this year. The Nam Dinh coal-fired power plant is the largest foreign-invested project in the province. When the plant begins operating, it will create more than 1,000 jobs for Nam Dinh, contributing to the province’s economic shift towards industrialisation. Also in Quang Tri province, Thailand’s EGATi is to develop the $2.26 billion Quang Tri thermal power plant. The investor is negotiating with the MoIT. The project will be built under the BOT model over a 25-year period, and use imported coal as feed material. The Vietnamese energy sector is expected to be the next big driver for foreign direct investment growth in the country this year. Foreign direct investment in this sector will likely reach a record high of about $4 - 5 billion in 2016, while other BOO and independent power producers are speeding up the construction of their projects. Foreign petroleum firms penetrate local markets The participation of foreign investors in the distribution of petroleum products in Vietnam is breaking the monopoly previously held by domestic companies, and is increasing the overall competitiveness of the market. Japanese company Idemitsu Kosan Co., Ltd and Kuwait Petroleum International Ltd (KPI) have recently applied to register a joint-venture company to distribute petroleum products in Vietnam. The joint venture, named Idemitsu Q8 Petroleum Limited Liability Company, will operate in the import, wholesale, and retail of petroleum products, mainly through the construction and management of service stations across Vietnam. This will be the first foreign-invested partnership to participate in fuel distribution and retailing in Vietnam. Idemitsu stated that through the establishment of this petroleum product distribution company, the two companies will supply the growing Vietnamese market, “where demand for petroleum products is expected to follow a steady upward trend”. KPI and Idemitsu currently hold 35.1 per cent each in the project to set up Nghi Son Petrochemical Complex in Thanh Hoa province. The remainder is held by state-owned PetroVietnam. The products distributed by the joint venture will come from the Nghi Son complex, which is currently under construction and will be put into operation in 2017. Last week, JX Nippon Oil and Energy Corporation (JX Nippon), another oil and gas giant from Japan, announced that it had officially agreed to purchase an eight per cent stake from the state-run Petrolimex, which holds 55 per cent of the local petroleum retail market share. This move will help JX Nippon secure business opportunities in Vietnam, where the current demand for petroleum products is approximately 350,000 barrels per day and is rising steadily. The acquisition shifts JX Nippon one step closer to building its first overseas oil refinery in Vietnam, and may even position it in the nationwide petrol distribution market. “As part of our co-operation strategy, JX Nippon and Petrolimex have signed a memorandum of understanding to start a joint study for the construction of a refinery in Van Phong Economic Zone,” said JX Nippon president Tsutomu Sugimori. According to economic expert Ngo Tri Long, the participation of foreigners in petrol distribution will increase the competitiveness of the market and ultimately benefit end-users by expanding the petrol retail sector. With an increased profile in the oil and gas industry, foreign investors would not merely bring greater financial resources to the domestic sector, they would also offer experience in management and distribution, Long said. However, under current regulations, foreigners can only become distributors if they are investing in oil and gas refineries in Vietnam. The $8-billion Nam Van Phong oil refinery project, which is expected to come online by mid-2020 at the earliest, will produce approximately five million tonnes of crude oil per year. According to the Ministry of Industry and Trade, Vietnam currently has 24 fuel wholesalers, which import fuel, or buy it from the country’s sole operating refinery Dung Quat, and then sell it on the domestic market. Currently, Petrolimex, PetroVietnam’s PV Oil, and Saigon Petro are dominating nationwide petrol distribution with a combined market share of around 75 per cent. Kinh Bac in search of foreign partners Kinh Bac City Development Holding Corporation considers seeking investors to co-develop its long list of projects in Vietnam. In its shareholders’ meeting held recently in the northern province of Bac Ninh, Kinh Bac City Development Holding Corporation chairman Dang Thanh Tam said that foreign funds from Singapore, Hong Kong, Malaysia, Thailand, and Finland had advised the company to find more foreign partners to co-invest in its current projects. All these funds are operating mostly in Asian countries and are keenly interested in Vietnam’s market. “By inviting foreign partners to co-invest in our project, Kinh Bac could balance both short- and long-term benefits,” Tam said, adding that apart from the traditional business of industrial leasing, Kinh Bac still had a large fund of residential land and this could be used to entice more foreign investors with a wealth of financial management experience. Kinh Bac now owns 600 hectares of cleared land in the northern port city of Haiphong. Tam plans to either transfer part of this land to other investors, or develop housing projects here. “2016 is the right time for housing development, so Kinh Bac will reserve a fund of land for this purpose,” he said. Kinh Bac has a total of 4,500ha earmarked for industrial zoning, and another 1,300ha for residential development nationwide. With more than ten years of experience in the real estate market, Kinh Bac’s portfolio features a wide range of development projects, including industrial zones in Que Vo in Bac Ninh, Trang Cat and Trang Due in Haiphong, Quang Chau in the northern province of Bac Giang, and residential areas in Phuc Ninh and Quang Chau in Bac Giang. Kinh Bac is also the owner of a 6-star hotel, office, and trading centre complex in Hanoi’s My Dinh area. Five years ago, Kinh Bac assumed control of the Diamond Rice Flower complex from a Japanese investor who could not implement it. Although the company has plans to invest $1 billion into this project, so far the site remains a vacant plot littered with broken glass. As of April 2016, Kinh Bac had disbursed VND119 billion ($5.6 million) in the development of this project. However, this  has remained frozen for the last four years. Brokerage: Attract more FDI into infrastructure Maybank Kim Eng Securities Company has urged Vietnam to call for more foreign direct investment (FDI) into infrastructure projects to address the country’s rapid urbanization amid falling official development assistance (ODA) loans. In its ASEAN Infrastructure: The New Old Thing report released at the Invest ASEAN 2016 conference last week, the brokerage said Vietnam has relied heavily on the State budget to develop infrastructure. The nation still faces a serious lack of infrastructure for the transport, energy, power, water and telecom sectors. In 2016-2020, the country will need over US$200 billion for infrastructure development, and at least the same amount in the following five-year period. This is more than double the annual investment in the last decade. Vietnam’s fiscal deficit has widened to over 5% again in the last five years as spending increased faster than revenue. The country has had to borrow more to offset the deficit, leading public debt to nearly touch the ceiling of 65% of gross domestic product (GDP) approved by the National Assembly. ODA loans used to account for 30% of its infrastructure financing but a majority of this cheap financing will be lifted by 2018. The Government said the State budget and other forms of development assistance can meet 40-50% of its infrastructure funding needs in the next 10 years. The shortfall may be met partly by private investors, including foreign ones. The securities company stressed that public-private partnership (PPP) is now a must. Though Vietnam has issued decrees and laws backing PPP since 2010, the nation should help investors in terms of land clearance, pricing mechanism, budget support and stability of regulations so that foreign investors can be confident to join big-ticket projects that need a long time to recover capital. This is necessary as other ASEAN nations like Myanmar, Bangladesh and Pakistan are also seeking foreign investment for their infrastructure projects. Maybank Kim Eng said in the report that funds for the transport sector should be used to build roads as Vietnamese still rely heavily on roads, predominantly local roads, and not so much on urban roads or highways. The country’s railway system is outdated and air transport has improved in recent times but they cannot meet demand for socioeconomic development. Therefore, road development via the PPP format will be essential in the coming time. Power should be prioritized after transport. Vietnam has imported electricity to meet rising local demand and deal with a shortfall in the domestic market. The shortage could worsen in the next 2-3 years and more incentives would have to be rolled out to accelerate investments in new plants. Maybank Kim Eng said slow land clearance has long been the main impediment to most infrastructure projects in Vietnam. Therefore, the company suggested the Government further assist businesses in site clearance to boost the implementation process of infrastructure projects.   Maybank Kim Eng is an investment bank under Malaysia-headquartered Maybank, and operates in 11 nations in sectors like stock brokerage and debt and capital markets. In Vietnam, Maybank Kim Eng is the first 100% foreign-owned securities company and provides stock brokerage and consulting services. Firms adapt to anti-dollar drive Domestic firms have taken the first measures in an effort to adapt to the State Bank of Viet Nam (SBV)'s new regulation on tightening foreign currency credit. Under Circular 24/2015/TT-NHNN, commercial banks are no longer allowed to provide lending in foreign currency to firms which do not need it for offshore payments since March 31 this year. The tightening in foreign currency credit is aimed to step up the central bank's anti-dollarisation drive. SBV said that the new regulation affects only those firms which often obtained foreign currency loans from banks and would later convert them into dong to fund their domestic production. The new rules on foreign currency loans are expected to stabilise exchange rates and strengthen the dong. However, it also has side effects on firms, especially agriculture and seafood exporters, which often take loans in foreign currencies to meet their great funding demand. Banking expert Nguyen Tri Hieu estimated that without foreign currency loans, interest rates for which were often roughly 6 per cent to 9 per cent lower than that of the dong, input costs could increase for exporters. To adapt with the new rule, many exporters have paid more attention to the movement of the dong - US dollar exchange rate. They are even hunting for high ranking personnel specialising in finance and foreign exchange. Previously only FDI firms were interested in such activities. A high-ranking official of an HMC City-based human resource consulting company, who declined to be named, said that her company had received urgent orders from five major domestic companies to recruit senior personnel in finance and capital resources. Recruitment positions are required to have experiences in finance, foreign exchange, capital resource management and structured products. The executive, with nearly 20 years of experience in finance and human resources, forecast that this was only the beginning of the ‘thirst' for senior personnel to service transactions of firms in foreign currency derivatives and interest rate besides normal forward transactions currently. Besides, banking experts said that the exporters had also paid more attention to insurance services of exchange rate and interest rate. Bidding demand of firms for dollar forward contracts surged sharply against early this year, they said. Representatives from Sacombank and Maritime Bank told Nhip cau dau tu (Bridge for Investment) newspaper that more firms had been interested in financial products. Bids for interest rate swap (IRS), forward rate agreement (FRA), or interest rate option (IRO) products in the inter-bank market, were heating up due to rising consultancy demands from firms. To offset the capital source that was previously transferred from foreign currency loans, some major listed companies are also preparing plans to call for new funds or issue corporate bonds in wake of the tightening of foreign currency credit and the high dong lending interest rate. STEM festival to be held in Ha Noi  The Festival of Science, Technology, Engineering and Mathematics (STEM) will be organised in Ha Noi on May 14-15. The festival, part of the activities to celebrate Vietnam Science and Technology Day (May 18), is aimed at bringing science and technology closer to the public and highlighting its role in socio-economic development, said Le Xuan Dinh, director of the National Agency for Science and Technology Information. Themed "Time Machine", the festival comprising experiments and practical activities will take students on a journey from the past into future with corresponding scientific events from human history, said Dinh, who is also head of the festival's organising board. The lessons are designed to apply knowledge and skills in line with STEM education standards in solving practical problems. $51.7m needed for traffic project Đà Nẵng is seeking a US$51.74 million loan to fund the Traffic Infrastructure Improvement Project for 2016-19. The People’s Committee secretariat said the improvement of the busy intersection west of the Rồng (Dragon) Bridge and the construction of a bridge and road system over the Co Co River was part of the project. The project will ease traffic congestion and accidents in the city centre and boost connectivity with Hội An city. The bridge over the Cổ Cò River and the road leading to it will cover a distance of 1.2km and result in a smooth traffic flow from the city to tourism hub Hội An. The city also plans to complete the construction of a 2.6km road on Trần Hưng Đạo Street and create a key traffic system on the Hàn River bank connecting the city’s North-South key roads. There are also plans to build two road tunnels at some busy junctions and a tunnel through the Hàn River to ease traffic congestion, with a total investment of $172.88 million. Đà Nẵng has received funding from the World Bank for infrastructure development projects for the period 2008-19. The World Bank had funded 70 per cent of the project, with a total investment of $218.4 million in 2008-13. The project had helped upgrade urban infrastructure, develop bridges and roads, and focus on issues related to resettlement areas, the environment, waste water treatment, staff training and city management. In 2013, the World Bank agreed to undertake a major sustainable development project in the city with a total investment of $272.1 million, of which $202.4 million was donated by the World Bank. The project will add sewage drainage systems, Bus Rapid Transit (BRT) routes and resettlement areas, as well as two key urban roads and bridges to aid the city’s future development. Banks to shift to issuing chip cards Banks will gradually replace all domestic debit, or ATM, cards with chip ones with higher security features between this year and 2020 in a project of National Payment Corporation of Vietnam (Napas). Nguyen Tu Anh, general director of Napas, told the Daily that all magnetic cards will be replaced by EMV-standard chip cards by 2020 as envisaged in a road map prepared by Napas and commercial banks. It will be submitted to the central bank for approval.   Anh said EMV, which stands for Europay, MasterCard and Visa, is a global standard for cards equipped with chips and has long been approved by international card organizations. Five banks will launch pilot programs for the replacement this year before many other banks follow suit next year. Banks will gradually collect magnetic cards from cardholders and replace them with chip ones. Vietnam now has around 90 million cards.   Banks will have to upgrade ATM machines and points of sale (POS) terminals to make them compatible with chip cards, Anh explained. Banks will announce their replacement road maps and launch programs to encourage customers to change their cards but 2020 is the deadline set by the central bank.   In Vietnam, the SBV has assigned Napas to set standards for domestic debit cards. The conversion to chip cards is part of a plan to upgrade and standardize Vietnam’s card market. Anh said apart from Vietnam, other nations such as the U.S. and China have switched to using chip cards. If Vietnam does not carry out the conversion, cardholders will easily fall victim to data loss and abuse. In addition to information security, the card conversion is to prepare infrastructure for the application of new payment technologies in Vietnam in the coming years. Chip card, e-pocket and bank accounts are tools to help people make payments without using cash. Anh said that ATM cards issued by many banks do not meet international standards. Napas is the merged firm of Vietnam National Financial Switching JSC and Smartlink Card Services JSC. The two businesses completed the merger deal in April last year. Napas is the intermediate organization offering payment, financial switching and electronic clearing services in Vietnam. Napas’s major shareholder is the SBV, which manages and operates the national card switching system. The system is connected to 16,800 ATM and 220,000 POS machines to serve 90 million cardholders of 43 commercial banks. Napas also provides e-payment services for over 200 businesses in the sectors of aviation, telecommunication, hotel and tourism. ODA of critical importance Guaranteeing the effective use of ODA and concessional loans is now more pressing than ever, writes Mr. Mori Mutsuya, Chief Representative of the JICA Vietnam Office. To maintain growth of 6.5 to 7 per cent over the next five years, from 2016 to 2020, Vietnam needs to secure around $480 billion for national investment, about 25 per cent of which will be met by foreign capital, including overseas development assistance (ODA) and concessional loans, foreign direct investment, and other foreign indirect investment, according to information provided by the Ministry of Planning and Investment. Vietnam is not dependent on ODA. In the five years from 2011 to 2015, total disbursement of ODA and concessional loans accounted for only around 3 per cent of GDP and just under 10 per cent of national investment. However, these funds accounted for a significant proportion of total investment from the State budget, at nearly 50 per cent in the same period. Given the undeniable role of ODA in the development of the country over recent years and the large capital needs for the development of infrastructure as a foundation for sustainable development, ODA and concessional loans will certainly remain important sources of public investment. It is foreseen that at least in the next five to ten years Vietnam will not be ready to attract alternative sources of capital to entirely replace ODA for public investment, either from the domestic market or abroad. Moreover, with the rise of Vietnam’s economy preferential ODA and concessional loans will also decline and gradually be replaced by funds with higher commercial components. Improving the efficiency of ODA and concessional loans therefore becomes critical. Projects using ODA in Vietnam must comply with both domestic regulations on public investment as well as the requirements of different donors, and as a result the delay in implementing ODA projects is the greatest obstacle hindering the effective use of these funds. For the 20 years ODA has been provided, development partners have worked closely with the Vietnamese Government in its efforts to harmonize the country’s regulations with donors’ guidelines and international best practice at each stage of the project cycle, aiming at having projects implemented smoothly, on schedule and with adequate quality and efficiency. Vietnam’s regulations on procurement have gradually improved to increase competitiveness, transparency and accountability in the selection process of consultants and contractors. The new Land Law reflects donors’ guidelines on resettlement and accepts the application of these guidelines when implementing projects using ODA and concessional loans. This helps to significantly accelerate the process of site handover for construction work, which has always been considered one of the most critical issues behind project delays and in some cases has even led to disputes between employers and contractors. To mitigate scattered and overlapping investment and lack of coordination between localities, the Law on Public Investment was enacted in 2014. Once strictly enforced the law is expected to generate breakthroughs in increasing the efficiency of public investment by appropriate project selection that is in line with national priorities, contributing to curbing public debt growth to within the range set by the National Assembly. The government has continued many other efforts to improve the efficiency of ODA and concessional loans, such as amending regulations on ODA management and utilization making it consistent with the Law on Public Investment in the project selection process, enhancing the accountability of local government in the use of ODA funds by applying on- lending instead of budget allocation. However, the amendment or issuance of new regulations as mentioned above is not enough to improve the efficient use of ODA and concessional loans, for which the most obvious indicator is the completion of the project on schedule. It is necessary to strengthen the management capacity of government agencies and the project implementation capacity of executing agencies. In current regulations and practice, the strengthening of State management is primarily shown in consultations with concerned agencies while there is a lack of accountability and a clear demarcation of the rights and responsibilities of these management bodies. For instance, with regard to projects using ODA and concessional loans, almost all decisions at the project preparation stage must obtain opinions from related ministries but it is not yet defined who will be responsible and how responsible they will be if this consultation process is not done on time, which hinders the decision making process. This is also one of the main reasons slowing down implementation progress if there is a change in project documents, which is often the case. There exists a solution but it requires strong political commitment in public administration reform. The requirement of consultation with stakeholders should be minimal, only for a few key issues, but, more importantly, there should be rules setting a clear standard for the comment period along with measures ensuring compliance with the standard. It is noted that in some cases the regulations issued by ministries provide guidance inclined towards increasing the authority of management bodies, even for matters under the jurisdiction of the implementing agencies. A further weakness in State management is the lack of close and effective coordination among relevant authorities, and an improvement to this would reduce the overlapping and inconsistencies in regulations for effective implementation. Obvious examples are seen in contract management, where two contract forms exist, issued by the Ministry of Planning and Investment and the Ministry of Construction, putting executing agencies into a difficult position regarding compliance, or inconsistent guidance on variations set by the Ministry of Finance and the Ministry of Construction cause delays in payments to contractors, etc. Another matter is actual compliance with regulations. Taking site clearance as an example, land acquisition has been always a major barrier to project progress. Though the new Land Law has been issued and contains with many positive items, as mentioned above, strict monitoring to ensure transparency in making compensation plans as well as allocating sufficient funds for compensation remain challenges. Over the last few years a lack of counterpart funding for land acquisition has often been cited as a reason for delays in ODA projects.    The project management capacity of executing agencies and project management units (PMUs) has always been an issue at any discussion on enhancing the efficiency of ODA and concessional loans. Given the specific nature of compliance with both national regulations and the requirements of donors, the benefit of using professional PMUs, whether they are in-house or outsourced, is clear. There is a need to strengthen overall regulations and the supervision of PMUs to make sure they possess sufficient capacity and their performance should be regularly evaluated so that only capable PMUs are eligible to continue performing the work and are assigned new projects. Improving the effective use of ODA and concessional loans in Vietnam has become more critical than ever. Development partners, including JICA, have been working closely with the Vietnamese Government in this regard with the ultimate goal of making ODA fulfill its inherent mission of contributing to the development of a prosperous Vietnam. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR