BUSINESS IN BRIEF 27/5 Vinacafe’s new coffee maker pays homage to Vietnam-style coffee Instant coffee producer Vinacafe Bien Hoa JSC (HOSE: VCF) yesterday launched the coffee maker CAFÉ de NAM “Phin Dien”, an innovative solution aiming to restore the unique experience of traditional Vietnamese “phin” coffee. CAFÉ de NAM “Phin Dien” was inspired by the unique and traditional Vietnamese “phin” coffee filters but with the added convenience and hygiene of contemporary coffee preparation. With a single capsule and a push of a button, consumers will be able to enjoy, within 45 seconds, a cup of genuine coffee in three Vietnamese-style coffee flavors: ice dark coffee, strong hot coffee, and ice coffee with condensed milk. “Currently, the world has two popular coffee cultures: espresso and Americano. With CAFÉ de NAM “Phin Dien”, we have successfully captured the original flavor of traditional Vietnamese-style coffee while introducing a unique and convenient way of enjoying our heritage drink to the world,” said Nguyen Tan Ky, CEO of Vinacafé. CAFÉ de NAM “Phin Dien” will first be made available exclusively through select coffee shops. In connection with the launch, Vinacafé acquired an 85 per cent equity interest in CDN Production Trading Corporation for a total consideration of VND35 billion ($1.6 million) to expand its coffee R&D platform and increase its production capacity. Vinacafé Bien Hoa JSC, a member of Masan Group Corporation (HOSE: MSN), currently manufactures and distributes a range of beverage products, including instant coffee, instant cereal and bottle beverages. The company commenced operations in 1968. Its portfolio includes consumer brands such as Vinacafé, Wake-Up, Phinn, Wake-Up 247 and Kachi. Masan Group Corporation operates in the branded food and beverage sector and in the animal nutrition value chain. Masan’s businesses include Masan Consumer Holdings, the producer of brands such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi, Kokomi, Vinacafe, Wake-up, Vinh Hao and Su Tu Trang, and animal feed producer Masan Nutri-Science, with brands such as Proconco and ANCO. The company’s other businesses include Masan Resources, one of the world’s largest producers of tungsten and strategic industrial minerals, and associate joint stock commercial bank Techcombank. Khang Dien joins forces with Coteccons and Khai Hoan Land Domestic developer Khang Dien is seeking to plant a firmer foothold in the real estate market by teaming up with Coteccons and Khai Hoan Land. On Monday, Khang Dien inked cooperation agreements with Ho Chi Minh City-based construction company Coteccons to implement construction for its upcoming projects. Meanwhile, the company signed an investment deal with Khai Hoan Land, which is currently one of Vietnam’s leading property consulting, brokerage, and investment firms in real estate. Nguyen Dinh Bao, deputy director of Khang Dien, emphasised that the tie-up with a prestigious builder like Coteccons will help his firm accelerate the launch of new projects, while at the same time ensuring good quality. In the meantime, joining up hooking up with Khai Hoan Land could help expand Khang Dien’s distribution channels and diversify new product lines. Accordingly, Coteccons will become the main contractor for 100 villas at the Lucasta project in the fast-growing District 9 of Ho Chi Minh City. Khai Hoan Land agreed to co-develop and roll out the villas to the market. This year, Khang Dien has set the target of VND400 billion ($18 million) in consolidated net profits, which it hopes to attain through its products at Mega Village, Melosa Garden, The Venica, Lucasta, and Merito projects. For the next two years, Khang Dien will continue to exploit its projects in the east of Ho Chi Minh City, as well as complete legal procedures for its projects in the west. The company currently owns a 500­-hectareland plot, and has aims to acquire more cleared land in the city’s south-eastern districts. Rice export prices edge up   Member companies of the Vietnam Food Association (VFA) exported rice at an average price of US$467.54 per ton last month, rising by US$65.67 compared to March. VFA credited the increase to limited supplies of the staple food in exporting countries due to drought and stronger demand of importing countries, including the Philippines, Indonesia and China. The Philippines plans to resume rice imports, according to VFA. The U.S. Department of Agriculture (USDA) forecast that the Philippines would import 1.8 million tons of rice this year. Besides, China can import around five million tons of rice this year, equivalent to the volume last year, according to USDA. In the first four months of this year, China imported 1.9 million tons of rice from Vietnam, up a staggering 25.63% against the same period last year and accounting for 33.23% of Vietnam’s total rice shipments, according to VFA. Indonesia has not announced any new plan to buy rice from abroad. The ASEAN country often starts rice imports in the third quarter and is expected to import two million tons this year, according to USDA.   Although the world’s demand for rice slowed in the first months of this year, the offered rice prices in key exporting countries inched up as drought has taken a toll on paddy output, according to a report of VFA. Particularly, rice shipments of the world’s five biggest exporters: Thailand, India, Vietnam, Pakistan, and the U.S. exceeded 11.9 million tons in the first quarter this year, rising by only 3.6% year-on-year. Of them, Thailand took the lead with 3.7 million tons, up 30.75%; followed by India with 3.2 million tons, down 20%; Vietnam with over 2.1 million tons, up 14.94%; Pakistan more than 1.7 million tons, up 14.94%; and the U.S. over one million tons, down 9.82%. The prices offered by key exporting countries like Thailand, India, Pakistan, and Vietnam rose in the first months of this year. Particularly, Thailand’s 5% broken rice was sold at US$420 per ton in May 13, well above US$395 on May 6. Its price of 15% broken rice was up from US$380 on May 6 to US$395 per ton on May 13 and 25% broken rice went to US$390 on May 13 from US$375 on May 6. Meanwhile, India’s 5% broken rice was offered at US$375 per ton on May 13, US$5 higher than the price on May 6. Its export price of 15% broken rice rose by US$5 to US$360 per ton and 25% broken rice inched up by US$5 to US$345. Pakistan adjusted up its export rice prices by US$5. Company classification for tax management sparks concern Experts have expressed concerns over the legality and viability of criteria drafted by the General Department of Taxation to classify and manage enterprises over tax law compliance. For the tentative criteria, enterprises would be divided into good, average and low groups in terms of tax law compliance, with different management measures applying to each group. Companies classified as good should meet nine criteria and 15 indexes relating to observance of tax regulations, obligation fulfillment and payable taxes to equity, and average revenue of the sectors in which enterprises operate. Businesses that do not meet one of the criteria and 10 indexes would be put in the low compliance group. The remaining group would consist of companies that do not meet nine criteria of good compliance and do not have any one of the low compliance errors. However, Phan Thuy Tuong Vi, a lecturer at the University of Economics and Law under the Vietnam National University HCMC, stressed the urgent need to consider the legality and impact of the criteria as enterprises now have to struggle with many tax regulations. The tax authority said enterprises would be prioritized for value-added tax (VAT) refunds if they are classified as good. But Vi asked whether enterprises could get priority for VAT refunds if they meet all the conditions for VAT refunds under the VAT Law and the Law on Tax Management but are rated as low in terms of tax law compliance by the tax authority. Tran Duc Thinh from the association of science, technology and management advisory said the evaluation of corporate tax payers should fall in line with relevant laws and the actual business environment. Meanwhile, businesses bemoaned that it is irrational to classify an enterprise as good or not based on the ratio of tax payments to equity. Nguyen Khanh Toan, head of the Risk Management Department at the General Department of Taxation, said the criteria for assessing tax law compliance of enterprises is a management technique applied internally by tax agencies. However, as the criteria impact businesses, tax authorities should gather comments to improve the draft criteria. The criteria would be piloted in certain provinces for the tax authority to assess their viability and make adjustments before they are applied nationwide. Toan noted the most important thing is to determine the precise criteria for assessing and classifying corporate tax payers; otherwise, the criteria could cause risks for them. Phan Duc Hieu, vice president of the Central Institute of Economic Management (CIEM), shared enterprises’ worries, saying the agency responsible for drafting the criteria should listen to enterprises to avoid leaving any negative impact. HCM City tax agency to monitor big enterprises * Enterprises which were formed in HCMC after October 10, 2015 and had chartered capital of at least VND100 billion (US$4.48 million) will be put under the management of the municipal Department of Tax instead of district-level tax offices. The change is in line with a recent decision issued by the HCMC government. The department will manage enterprises with State holding and foreign stakes exceeding 30%, build-operate-transfer (BOT) or build-transfer (BT) firms, and those under the authorities of industrial parks, export processing zones and hi-tech parks including Quang Trung Software City. The department will be responsible for enterprises whose main operations involve coal, crude oil, natural gas, iron ore and precious metal exploitation; passenger transport on coastal routes; finance, investment fund and insurance sectors; and lottery and gambling activities. The agency will manage manufacturing and exporting firms which often get value-added-tax refunds. The department will be in charge of the enterprises until December 31, 2016. After that, management will be implemented as directed by the Ministry of Finance. The HCMC government’s decision came out after the municipal People’s Council issued a resolution on duties of tax authorities for new enterprises in the city as specified in the ministry’s Circular No. 127/2015/TT-BTC. The ministry’s circular aims to make tax regulations and adjustments compatible with the 2014 laws on investment and enterprise and the Government’s Resolution 19 on improving the national competitiveness via support for startups. Samsung picks three local suppliers Samsung on May 23 said it had chosen three HCMC-based companies to help improve production and supply parts to the Samsung Electronics HCMC CE Complex (SEHC) at the Saigon Hi-Tech Park (SHTP) in District 9. Phuoc Thanh Plastic Co Ltd, Ngan Ha Printing Packaging Co. and Minh Dat Co are the first enterprises in HCMC to get support from Samsung’s experts to raise capability and improve production lines. This is good news for domestic enterprises because Samsung previously complained  about difficulties in seeking Vietnamese-owned suppliers. On the same day, representatives of Samsung and the HCMC Department of Industry and Trade visited the three enterprises to help them identify and fix shortcomings. Chu Manh Cuong, director of Ngan Ha Printing Packaging Co, said the enterprise has upgraded its production process thanks to Samsung’s backing. It has developed a process to evaluate product quality, production capability and the indexes will be checked regularly to secure smooth operations. Chau Phuoc, chairman of Phuoc Thanh Plastic Co, said Samsung experts have participated in training and instructed the firm to upgrade its factory, prevent cost and manpower wastefulness and simplify unnecessary processes. Samsung has also supported it in quality control. Phuoc Thanh Co is building a new factory at SHTP with a total investment of over US$70 million to serve the SEHC alone. The factory will start operating next month to meet around 30% of the complex’s demand for plastic parts. With the US$2-billion SEHC put into operation from the second quarter of this year, Samsung expects to turn Vietnam into its international TV set and electronic home appliance production base. The project will also create opportunities for firms in supporting industries in Vietnam to join its supply chain. HCM City collects higher tax revenue from property sector The HCMC Tax Department has collected more revenue from real estate firms in the first five months of this year owing to the recovery of the property market, heard a meeting on May 23 between leaders of the department and the city’s vice chairman Tran Vinh Tuyen. Realty developer Novaland has paid VND400 billion (US$17.9 million) in value added tax in the year to date thanks to increasing sales of apartments. Besides, other real estate enterprises have been able to pay their tax arrears. As of May 19, the tax office of District 3 had collected over VND2.4 trillion, meeting 76% of the full-year target.    Le Xuan Duong, deputy head of the HCMC Tax Department, told the meeting that thanks to the property market recovery, local tax authorities have collected VND82.85 trillion in January-May, equivalent to 42.4% of the 2016 estimate and up 9.7% from the year-earlier period. Of the amount, tax revenue from domestic sources (except for crude oil) has exceeded VND76.9 trillion, a 17.7% year-on-year pickup. Duong said revenues from special consumption tax edged up 24.7%, value added tax up 17%, corporate income tax up 13.56% and personal income tax up nearly 16%. Tax collections from foreign-invested enterprises and the non-State business sector have increased significantly. Notably, tax revenue from the non-State business sector has jumped over 34%, backed by the equitization of many State-owned companies and production expansion.   The department expects tax revenue from domestic sources (except for crude oil) will meet 52% of the full-year estimate in the first half of 2016. The amount is projected to rise by VND4 trillion against the target to offset tumbling revenue of the Department of Customs. Duong said the tax department will monitor exceptional tax revenue rises such as capital transfers among investors to collect tax promptly. In addition, the department will boost collections of tax arrears and streamline procedures.     HCMC vice chairman Tuyen said the property market recovery has led tax revenue to climb in the five-month period. However, the tax department should expect difficult scenarios to work out coping solutions. He said district tax offices have to launch investigations and simplify procedures to support businesses. Local car market sees rise in Thai imports Thailand has become the leading exporter of automobiles to Vietnam in the first four months of this year, with 10,155 units, accounting for 35 percent of total car imports, according to the Vietnamese Ministry of Industry and Trade. The increase was buoyed by preferential import tax policies, under Vietnam’s commitments to the ASEAN Trade in Goods Agreement, the Ministry said. Under the agreement, the import tax on automobiles from ASEAN members to Vietnam would fall from 50 percent to 40 percent by 2016, to 30 percent by 2017 and zero percent by 2018. Vietnam's special consumption tax on cars will fall to 40 percent from 45 percent on July 1. PVN signs cooperation deals with US companies The Vietnam National Oil and Gas Group (PVN) has signed two Memoranda of Understanding on cooperation with the US’s Honeywell and Murphy oil and gas companies. Accordingly, PVN and Honeywell will seek cooperation to carry out joint projects in oil refining, petrochemicals, gas measurement and treatment, software solutions, and cyber security. The two sides plan to set up a working group to study and promote the implementation of feasible projects. Meanwhile, PVN and Murphy will look for win-win business opportunities in oil and gas exploration projects in Vietnam, the US, and other countries. The signing of the documents took place during US President Barack Obama’s visit to Vietnam from May 23-25. HCM City to host international Metalex exhibit Metalex Vietnam, an international exhibition on machine tools and metalworking solutions for production, will return to HCM City this October, offering opportunities for manufacturers to update new technology, expand business networks and exchange experiences with experts at seminars. Organised at the Saigon Exhibition and Convention Centre in HCM City from October 6-8, the exhibition will feature the widest range of latest technology and know-how provided by 500 brands from 25 countries and is expected to attract 10,000 industry professionals. Kasinee Phantteeranurak, Project Manager of Reed Tradex Co., Ltd, the exhibition's organiser, said: "Total foreign investment in Vietnam was just 3 billion USD in 2006. It shot up to more than 12.5 billion USD in 2015 and most of the total foreign investment has been in the manufacturing sector. "Fast forward to 2015 and Vietnam has become one of the most attractive destinations in the world for multinationals to set up a global manufacturing base." Multinationals that have invested in factories expect to have more local parts suppliers to reduce transport costs and risks. "Manufacturers will need to adapt and develop new skills, know-how, and technologies to be able to respond to the need for quality parts. This means there are a wealth of opportunities for technology providers to tap the market," said Pham Van Truong, Vice Manager of Z751 Co., Ltd. Agro-forestry-fishery exports earn 12 bln USD in five months The total agro-forestry-fishery export turnover in the first five months of this year is estimated to reach 12.18 billion USD, a year-on-year increase of 4.9 percent, according to the Ministry of Agriculture and Rural Development. In the reviewed period, rice export is calculated to hit over one billion USD with 2.35 million tonnes, up 1.2 percent in value but down 2.1 percent in volume compared with the same period in 2015. Nguyen Chi Kien from the Institute of Policy and Strategy for Agriculture and Rural Development said despite pressure from Thailand’s announcement on selling 11.4 million tonnes of stockpiled rice, the domestic rice price has started to rise recently. The export of coffee in the first five months has seen a surge with 797,000 tonnes, an increase of nearly 34 percent year-on-year, which generated a revenue of 1.36 billion USD (up 10.7 percent). Meanwhile, cashew nut exports are estimated at 119,000 tonnes, fetching over 910 million USD, an expansion of 2 percent in volume and 9.8 percent in value compared with the same period in 2015. Meanwhile, the country has shipped 391,000 tonnes of rubber, earning 561 million USD in revenue, up 20.5 percent and 19.7 percent, respectively. Pepper exports are expected to achieve 87,000 tonnes and 627 million USD, a 19 percent increase in volume but down 7.3 percent in value against the same period last year. Alongside this, the seafood export turnover is estimated at 2.43 billion USD, up 1.1 percent year-on-year, while exports of key forestry products are forecast to bring home 2.69 billion USD, representing a year-on-year decrease of 1.8 percent. Deal to help VN textile companies go global TUV SUD, one of the world's leading service providers in testing, inspection, audit and certification on May 25 signed a memorandum of understanding with the HCM City Association of Garment Textile Embroidery and Knitting (AGTEK) to help its members access global markets. Under the MOU, the two sides will co-organise quality and safety workshops and awareness programmes related to the textile and garment industry, Sathish Kumar Somuraj, general director of TUV SUD Vietnam, said. The in-house training sessions would aim to provide local manufacturers an updated and more in-depth understanding of stringent international quality and safety standards, he said. Pham Xuan Hong, AGTEK chairman, said Viet Nam has improved its business opportunities by signing free trade agreements with some key global players like the EU, US, Japan, Korea, and ASEAN, he said. While these agreements would bring global market access to Vietnamese businesses, it also means that Vietnamese manufacturers have to comply with more stringent quality and safety regulations, he said. "International government safety and quality regulations on textile and garment products are changing constantly, especially in today's free trade business landscape. "Global buyers, especially those in Europe and the US, are increasingly demanding with respect to the kind and quality of products they want." Somuraj said quality and safety control are essential for companies in Viet Nam, especially those looking to take their products to international markets. The MOU also includes a special promotion for the association's members, who are mainly small and medium-sized enterprises for whom cost is a concern, he said. The agreement is expected to immensely benefit member companies and take their business to the next level, he added. PVcomBank finances power project The Viet Nam Public Bank (PVcomBank) will lend the PetroVietnam Power Corporation (PVPower) VND2 trillion (US$88.9 million) to develop a power project. The two affiliates of the Viet Nam Oil and Gas Group (PetroVietnam) signed the credit contract in Ha Noi on Monday. The Government has designated PetroVietnam, along with Electricity of Viet Nam (EVN) and Viet Nam National Coal–Mineral Industries Holding Corporation, as the key electricity producers of the country. This is in accordance with a national power development strategy until 2020, with vision until 2050. As of mid-May, PVPower supplied the nation with 117.3 billion kWh of electricity, gaining nearly VND125.4 trillion in total turnover and roughly VND4.8 trillion in pre-tax profits. It contributed about VND7.1 trillion to the State budget. PVPower is a single unit of PetroVietnam that operates in the electric power industry, while PetroVietnam plans to become the second largest electricity producer in the country after EVN, by 2025. PVPower was established in 2007 with a charter capital of VND7.6 trillion, and its equity reached nearly VND21.8 trillion at the end of last year. PVcomBank has VND100 trillion in total assets and VND9 trillion in equity. It has provided financial services to PetroVietnam and its subsidiaries with a committed amount of up to $2.7 billion. The bank also underwrites activities related to payment, tender and contract performance, as well as bond issuance and capital borrowing of other units in the oil and gas sector. Bank card market sees strong growth The bank card market in Viet Nam has seen remarkable development in all activities of issuance, payment, card usage, and network growth over the past few years. The Viet Nam Bank Card Association (VBCA) told the annual bank card conference 2016 held in the southern Khanh Hoa Province last week that domestic cards always accounted for 90 per cent of the total issuance in the market. By the end of last year, the market has 40 out of a total 51 banks in the country issuing more than 81.85 million cards of which most were credit cards. The number of prepaid credit cards issued by 14 banks was over two million. More than 256,000 local credit cards were also issued in the market. More than 9.24 million of international debit cards were issued last year, posting 16.23 per cent from the previous year. The card payment turnover has also seen continuous development. In 2015, the turnover was VND1.68 quadrillion, increasing 88 per cent from that of VND724 trillion in 2011. The transactions through ATM saw slight increase as banks have focused on installing Point of Sale (POS). By the end of 2015, the market had 16,573 ATMs and 217,470 POS, posting an increase of 23 per cent and 181 per cent respectively in comparison with those of 2011. Speaking at the ceremony, Dao Minh Tuan, VBCAs chairman said over the past 20 years of development, the association has supported its members while limiting unhealthy competition, contributing to the sustainable development of commercial banks. In addition, the association has contributed to the development of non-cash payments according to the government and the State Bank of Viet Nams rules. FM proposes higher import tax for used tractor-trucks  The Ministry of Finance plans to raise the import tax on second-hand tractor-trucks, according to a document dispatched to the relevant ministries and sectors to gather their feedback. The move would raise the import tax from five per cent to 30 per cent. The ministry also wants to reduce the import tax on the components and parts of tractor-trucks and semi-trailers for domestic assembly and manufacturing to zero per cent from the current 7.5 per cent. The adjustment of these import taxes is aimed at avoiding losses for the State budget, encouraging domestic assembly and production and creating fair competition among domestic auto businesses. According to the Customs Office, the Vietnamese people paid US$675 million to import tractor-trucks and semi-trailers in 2015, of which $427 million was spent on importing vehicles from China. Most of the imported tractor-trucks and semi-trailers were from China because the import tax on such vehicles is now zero per cent under the ASEAN-China Free Trade Agreement. It is easier for Chinese vehicles, well-known for their reasonable prices, to penetrate the Vietnamese market more deeply than vehicles from other markets. The import tax on new and second-hand tractor-trucks and semi-trailers was five per cent and 20 per cent, respectively, for members of the World Trade Organisation, of which Viet Nam is one. Vietnam keen on sustainable cashew nut processing Sustainable development of the cashew nut processing sector was discussed at a workshop in Ho Chi Minh City on May 23. Domestic supply of raw cashew nut meets only half of processing capacity, said Nguyen Duc Thanh, President of the Vietnam Cashew Association (VINACAS). The shortages are forecast to remain for the next ten years, Thanh said, adding that the sector will have to import raw cashew nuts, mostly from Africa and Cambodia, to meet processing demand. In 2016, domestic enterprises are forecast to import 870 tonnes of raw cashew nuts, worth over 1.1 million USD, according to VINACAS. However, VINACAS also points to the fierce competition among enterprises from China, India, and the Ivory Coast amid rising cashew nut prices. Director General of the Long Son JSC Vu Thai Son said VINACAS needs to better connect domestic business to ensure sustainable development. Floor selling and ceiling buying prices of raw nut should be established to help create fair competition among domestic enterprises, Son said. Participants also urged strengthening connections between processors and farmers. They also called for simplified administrative procedures. AccorHotels manages first five-star hotel in Hoi An Hotel Royal Hoi An, MGallery by Sofitel, invested by Hoi An Royal Group and managed by AccorHotels was unveiled last week in the ancient town of Hoi An in the central coast province of Quang Nam. This is the first five-star hotel to be managed and operated by AccorHotels in Hoi An and also the first and only MGallery property in the locality. The hotel is located next to the UNESCO World Heritage town of Hoi An and bordered by the tranquil Thu Bon River. It has 120 rooms classified into five categories: deluxe, grand deluxe, royal deluxe, deluxe suite and presidential suite. Other facilities and services include an Art-Nouveau poolside restaurant, Japanese restaurant Wakaku, Woosah spa, meeting rooms and a limousine service. With a combination of Indochinese and Japanese architecture, the hotel’s design was inspired from the rich heritage of Hoi An and the love story between Sotaro Araki, a merchant from Nagasaki and Princess Ngoc Hoa, a member of Nguyen royal family in Hue whose Japanese name was Wakaku, living in the late 16th and early 17th century. On the occasion, the investor announced a design for the second phase of the hotel to have further development for guests’ accommodations and F&B services. It is expected that the groundbreaking ceremony for the second phase will take place by the year-end. MGallery by Sofitel is a collection of historic luxury hotels, many of which have hosted historic figures or iconic poets and authors. Others are modern design hotels, utterly unique in the cities they inhabit. In Vietnam, there are five MGallery by Sofitel hotels, including Hotel Royal Hoi An, La Residence Hue, Hotel de L’opera Hanoi, La Veranda Phu Quoc and Hotel des Arts Saigon. The BOT nightmare Despite high growth, the competitiveness of Vietnam’s economy is still lower than that of others in the Southeast Asian region given a slew of factors, especially exorbitant transportation costs. Transportation costs in Vietnam are among the highest in the region, making local producers less competitive at home and abroad. There are a lot of reasons for the high transportation costs but one of them is the mushrooming of BOT road toll stations in many parts of the nation. Transporters have complained about all sorts of fees on the road, which have pushed up domestic goods prices and thus eroded the competitiveness of the economy. They say they have to pay the annual road fee while they find themselves besieged by tollgates at the same time. Bui Danh Lien, chairman of the Hanoi Transport Association, told a seminar in Hanoi last week on toll fees at build-operate-transport road development projects that investors of such projects have the right to recoup their investment capital. But the high concentration of tollgates on certain roads has delivered a blow to transportation firms, manufacturers and the general public. HCMC now has six toll stations and will build four more in the 2016-2025 period. Moreover, around HCMC area, there will be 10 more. Up in the north, there are four toll stations between Hanoi and neighboring Thai Binh Province. Take a 42-seat sleep bus for example, Lien says. The bus running from Hanoi to Nghe An through Ben Thuy Bridge will have to pay return toll fees totaling VND24 million a month, plus VND21 million in monthly bus station fees if it makes a round trip a day. He says this is a heavy financial burden because the bus is not always full. Deputy Minister of Transport Nguyen Hong Truong told the seminar that financial plans for BOT road projects are carefully crafted to ensure the benefits of the investor, the lender bank and the road user. But Lien said BOT road construction contracts mostly protect the interests of developers. He called for BOT road developers to weigh the interests of individual and corporate road users. Otherwise, the Vietnamese economy will continue lagging behind others in the region. New rule for tuna exports to U.S. Vietnam’s tuna exported to the U.S. must bear a ‘dolphin safe’ label under a new regulation of the U.S. Department of Commerce (DOC), according to the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad). Nafiqad said the National Marine Fisheries Service (NMFS) under the DOC has informed the Vietnamese embassy in the U.S. of the new regulation on tuna shipped stateside. Therefore, local export firms are advised to observe the regulation to avoid unexpected problems when exporting tuna to the market. The Vietnam Association of Seafood Exporters and Producers (VASEP) explained that dolphin protection is a priority for the U.S. so the regulation is to ensure that the fishing of tuna does not impact on dolphins. The U.S. has issued the Dolphin Protection Consumer Information Act (DPCIA) and one of its objectives is to build a national program to track tuna origin. Last year, tuna exports to the U.S. rose by 8.5% year-on-year to US$190 million, making that country the biggest importer of Vietnamese tuna, according to VASEP. The figure exceeded US$36 million in the first quarter of this year, dropping 4.4% compared to the same period last year. Firms encouraged to report illegal business conditions to PM Enterprises need to report business conditions that ministries and agencies issue beyond their authority to the Prime Minister, vice chairman of the Government Office Le Manh Ha said at a conference in Hanoi last week. “The PM has the right to suspend and abolish documents signed by ministers and provincial chairpersons if they run counter to the prevailing laws. Enterprises should submit complaints to the PM to help shorten the time to deal with their problems,” Ha said. The Government Office and the Central Institute for Economic Management (CIEM) organized the conference to discuss ways to implement the Government’s Resolution 19 on improving national business climate and competitiveness. The event was also held to collect comments of enterprises on Vietnam’s business environment. Truong Van Cam, vice chairman of the Vietnam Textile and Apparel Association, said the labor union fee at 2% of employees’ base wages is a burden for enterprises. Cam also complained that cotton trading firms must wait up to ten days for the customs to clear their imports. They have to spend much time applying for a quarantine certificate and completing procedures for opening a customs declaration form. Garment firms have to import processed feather and animal fur to make jackets for export and those products have gone through a strict quarantine process and had certificates of origin (C/O) from the exporting countries before being imported into Vietnam. But importers must ask for animal quarantine checks from veterinary agencies and send samples to the Institute of Ecology and Biological Resources for product category identification, and the time for completing all the procedures for these processes is 10-15 days. “We have reported those problems to relevant State agencies but nothing has happened so far,” Cam said. Nguyen Son from the Vietnam Cotton and Spinning Association said that last year local enterprises imported over one million tons of cotton and samples of 35% of the total volume were taken for testing. Enterprises have to spend tens of billions of dong on quarantine tests and thousands of people must to go to ports to complete quarantine procedures in a week, Son said. “Such procedures are nightmarish for enterprises. Why can’t we recognize the origins of products which the U.S. authorities have already done that for us?” he said. CIEM president Nguyen Dinh Cung said State agencies seem to have been addicted to checks. CIEM cited a recent survey conducted by the World Bank as saying that the business environment in Vietnam has not been as favorable as in many other regional countries. In specifics, tax and social insurance payments account for 39.4% of total revenues of enterprises in Vietnam. Meanwhile, the percentage is 24.8% for social, healthcare and unemployment insurance in other regions, and 14.5% for corporate income tax and stake transfer tax. The number of procedures for registering asset ownership and use has risen to five from four and the average time for completing the procedures is 57.5 days, which are much higher than the target of 14 days set in Resolution 19. It takes as long as 400 days to deal with contract disputes, far above the goal of 200 days in the resolution. Jan-Apr exports to U.S. up 15.8% y-o-y Vietnam shipped goods worth US$11.45 billion to the U.S. in January-April, accounting for 21.6% of the total and rising by 15.8% over the year-earlier period, according to the General Department of Customs. Foreign-invested enterprises contributed US$8.35 billion of the total shipments to the U.S., increasing 17.7% compared to the same period last year. Major products exported to the U.S. in the first four months were apparel, which accounted for US$3.4 billion of the total, up 6.7%, followed by cellphones and phone parts rising by 83.8% to US$1.46 billion, and footwear by 8.6% to US$1.33 billion. Vietnam earned US$826 million from shipping wooden products to the U.S., US$408 million from seafood and US$225 million from cashew nuts in the period. The U.S. was Vietnam’s second largest trading partner in the first four months after China, with bilateral trade of US$13.92 billion, making up 13.3% of the total export-import turnover and growing 13.5% year-on-year. The U.S. was the market with which Vietnam had the biggest trade surplus in the four-month period, at US$8.98 billion, according to the customs department. The U.S. has always been one of Vietnam’s biggest export markets in the past ten years. Two-way trade between the two countries grew from US$8.81 billion in 2006 to US$41.26 billion last year, with Vietnam enjoying a trade surplus of US$6.85 billion in 2006 and US$25.67 billion last year. HCMC seeks special mechanism to fuel growth The HCMC government needs a special governance mechanism to achieve higher growth and contribute more to the nation. HCMC vice chairman Le Thanh Liem mentioned the need for mechanism reform at a meeting with Deputy Prime Minister Vuong Dinh Hue and representatives of ministries here in the city last Friday. Liem said HCMC should be granted more favorable conditions to better act as a driving force for the country’s economic growth. To achieve this, the city needs to retain 8-12% of total import and export tax revenues for 10 years to fund transport infrastructure and port projects. To have more funding for development, the city wants to collect surcharges in certain sectors and business areas and enjoy 50% of the land use fee for the assets managed by central-level agencies and half of the after-tax profit of centrally State-run enterprises in the city. Liem suggested the Government allow the city to retain VND10 trillion in surplus tax and fee revenue it collected last year and locate the planned Vietnam stock exchange in the city. “With its pivotal role, HCMC needs a special mechanism and proper financial and budgetary decentralization to grow faster and contribute more to the nation,” Liem said. Liem noted the city was allowed to retain only 23% of its total budget revenues in the 2011-2015 period compared 26% in 2007-2010 and 29% in 2001-2006. The fall has made it hard for the city to secure sufficient funding for development investment and generate more revenues. In reply to the city’s proposals, Deputy Minister of Finance Nguyen Huu Chi said it would take more time to consider a special financial mechanism for the city as ministries and agencies need to review and discuss it before seeking the Prime Minister’s nod. Chi said only 13 out of the city’s 63 provinces and cities contribute to the central State budget while the remainder are financially dependent on the central Government. The Government is struggling with budget constraints as more provinces spend more than what they collect so HCMC should share with the Government. Chi noted that localities must transfer all tax and fee revenues from imports and exports to the central State budget as required by the State budget law and there is no exception for a locality. Chi threw his support behind HCMC’s proposals but said, “We need to sit down together to weigh and discuss proposals that are not yet governed by laws.” Dinh La Thang, secretary of the HCMC Party Committee, said Resolution 16 issued by the Politburo in 2012 mentions plans to adjust the proportion of the total budget collections that the city is allowed to retain from 2015 or increase funding of the central State budget for its major programs and projects with priority given to transport infrastructure. The objective is to help the city grow stronger and act as a key driver for the southern region and the nation as a whole. In his closing remarks, Deputy Prime Minister Hue requested the city to prepare a pilot plan to deal with new issues by itself that have not been specified in the prevailing regulations to speed up its growth for submission to the Prime Minister. Besides, the city government was told to work with the Ministry of Planning and Investment and the Central Economic Commission over mapping out coordination mechanisms between the southern key economic zone and the city as well as between localities in the region. The city should work with ministries over the formulation of plans that enable the city to be more active in solving financial, planning, investment and personnel issues, Hue said. Hue stressed the Prime Minister’s view that certain autonomy would be given to provinces and cities to help them cope with their own problems. He said he expected the city to become a place for startups with the number of enterprises in 2020 doubling the current figure. To realize this target, the city needs to have a proper mechanism to set up a fund for startups and attract private venture capital funds. HCM City equitizes 32 SOEs in 2014-2015 HCMC had 32 State-owned enterprises (SOEs) going public and VND2.53 trillion (US$113.5 million) in State capital divested from non-core business operations in 2014-2015, according to a recent report of the city government. As part of an SOE restructuring plan for the period, the city sold two enterprises, and let three go bankrupt, two be dissolved, two be merged, one be turned into a joint stock concern, and eight one-member limited companies be converted into member companies of HCMC Finance and Investment Company (HFIC), said the report on equitization of SOEs managed by the city government. The HCMC government expects 33 SOEs to go public in 2017-2018 and 20 others in 2017-2018 and seven enterprises to remain as SOEs. In April last year, a number of SOEs in the city pledged to pull State capital out of non-core businesses. They included Saigon Industry Corporation (CNS), Saigon Trading Group (Satra), Saigon Jewelry Holding Co. (SJC), Saigon Agriculture Incorporation, Ben Thanh Group, Saigontourist Holding Company, Saigon Real Estate Corporation (Resco), Tan Thuan Industrial Promotion Company Limited (IPC), Saigon Pharmaceutical Company (Sapharco), Liksin Package Printing Industry Corporation, Saigon Water Corporation (Sawaco), and Saigon Construction Corporation. The city sought the Government’s nod to retain revenue from equitizing wholly-owned SOEs and State capital divestments from enterprises in the city to finance key infrastructure projects and others. Le Manh Ha, vice chairman of the Government Office, said the city beat the target of equitizing 31 SOEs in the 2014-2015 period. In the coming time, the city should make greater effort to boost the equitization process and keep around one to two SOEs, instead of seven as planned, Ha said at a meeting between Deputy Prime Minister Vuong Dinh Hue and the city’s leaders last Friday. Ha asked the city to let the remaining six firms subject to bankruptcy go bust, as well as restructure public utilities which require big funding from the city’s budget. Experts warn of hack attacks on banks Experts have warned banks that hackers could launch attacks, saying such attacks are worse than bad debt the banking system is facing. At the Banking Vietnam 2016, which was jointly organized by the State Bank of Vietnam and International Data Group (IDG) in Hanoi last week, Mauro Israel from French cybersecurity company ISMSecure said banks in Vietnam should take measures against cyberattacks. Israel said hack attacks on banks can cause bigger consequences than those of bad debt, so banks should pay special attention to this. He said more than US$80 million was stolen from Bangladesh’s account at the Federal Reserve Bank of New York. Deputy Minister of Information and Communications Nguyen Thanh Hung said the Bangladesh heist is a lesson for Vietnamese banks. According to Hung, the banking sector has invested heavily in information technology. However, there are risks out there concerning information security that banks should attend to, even though they have deployed modern information technology systems. Besides the Bangladeshi heist, Hung mentioned a recent hack attack on a Vietnamese bank. In a related development, the State Bank of Vietnam is investigating an attack on TPBank. A Reuters report said TPbank was able to prevent an attempted cyber heist relating to fraudulent SWIFT messages, the same technique used for the theft at the bank of Bangladesh. Banks are facing more cyberattack risks as the frequency of attacks has increased. Therefore, Vietnamese banks should be on high alert, according to Israel. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR