BUSINESS IN BRIEF 6/5 Fuel prices gain over 600 VND per litre The prices of RON 92 petrol and bio-fuel E5 were raised 646 VND and 634 VND per litre from 3:00 pm on May 5. Following a joint decision by the Ministry of Industry and Trade and the Ministry of Finance, the prices of diesel 0.05S and kerosene also increased 650 VND and 550 VND per litre, respectively. It is the third fuel price hike since the beginning of this year with a total increase of 1,800 VND per litre. Accordingly, RON 92 and E5 are sold at no more than 15,586 VND (0.7 USD) and 15,076 VND (0.68 USD) per litre, while the ceiling prices of diesel and kerosene went up to 11,023 VND (0.49 USD) and 9,455 VND (0.42 USD) per litre. The two ministries also decided to cut down subsidies on RON 92 from 800 VND to 639 VND per litre and on E5 from 830 VND to 672 VND per litre. Meanwhile, subsidies on diesel and kerosene were increased 846 VND and 1,029 VND per litre, respectively. The ministries announce the base fuel prices every 15 days, depending on the fluctuation of world oil and gas prices since the previous announcement. Vingroup reports doubled sales and tripled profits Realty developer Vingroup (VIC) has announced consolidated sales of over VND15 trillion (US$671 million) in Q1 of this year, a two-fold increase over the same period last year. The group also reported a gross profit of VND4.3 trillion and a profit-after-tax of over VND1 trillion, or a three-fold increase over the same period last year. Sales from real estate contributed VND10.5trillion and sales from retail contributed VND2.2 trillion, an increase of 146 per cent and 363 per cent, respectively. The group said the income from the shopping centre and the leased office accounted for VND802 billion, up 56 per cent. The hotel and tourism business revenue reached VND984 billion, up 54 per cent, education services contributed VND172 billion, up 45 per cent, and hospital service revenue reached VND216 billion, up 42 per cent. As of March 31, 2016, the total assets of the group reached VND150.6 trillion, an increase of nearly VND5.2 trillion. Equity reached VND40.7 trillion, an increase of nearly VND3.2 trillion, compared with December 31, 2015. At present, the group has six projects which are being developed – the Vinhomes Gardenia in Cau Dien Ward in Ha Noi, the Vinhomes Riverside No. 2 in Long Bien District, the combination Metropolis project on Pham Hung Street in Tu Liem District and the Vinhomes Central Park project in Binh Thanh District in HCM City, as well as the Vinhomes Hai Phong in Hai Phong City and the Vinhomes Dragon Bay in Ha Long City. The total investment in these projects is VND4.85 trillion , VND4.9 trillion, some VND4.8 trillion, VND37.7 trillion, VND4.9 trillion and VND12 trillion, respectively. The group is also expected to open some 15 trading centres and launch 19 shophouse projects across the country this year. In April, Vingroup bagged three important titles at the Real Estate Asia-Pacific Awards in Malaysia -- best urban complex for Vinhomes Central Park, best high-rise buildings for Landmark 81 in HCM City and best landscape design for Vinhomes Times City Park Hill in Ha Noi. On May 5, each VIC share rose 2 per cent to reach VND52,000 on the HCM Stock Exchange. Thai business to develop IPs in Nghe An Hemaraj Land And Development Public Company Limited, one of Thailand's leading developers, will develop industrial parks in central Nghe An province. The agreement was reached at a May 4 meeting between Nghe An provincial leaders and Hemaraj Company. Hemaraj is considering two projects in Nghe An, namely WHA Hemaraj 1 Industrial Park – Nghe An on 2,000ha in  Nam Cam, Nghe Loc district and WHA Hemaraj 2 Industrial Park – Nghe An on more than 1,100ha in  Tho Loc, Dien Chau district. At the meeting, Nguyen Dac Vinh, Secretary of Nghe An Provincial Party Committee, introduced the investor to Nam Cam and Tho Loc economic zones in the province’s south-eastern part and asserted that the province will mobilise all resources for land acquisition and create the best possible conditions for the investor to implement the project. Hemaraj Company is expected to fulfil investment procedures in July. Also on May 4, Hemaraj Company and Civil Engineering Construction Corporation No.4 (Cienco 4) signed a cooperation deal to develop industrial parks in Nghe An. Technical assistance project for improving public finance approved The Prime Minister has just approved the contents of a technical assistance project on consultation and analysis of public finance management in Vietnam funded by the Swiss Economic Cooperation and Development (SECO) and the Global Affairs Canada through the World Bank (WB). The project aims to improve the public finance system in Vietnam in terms of efficiency and effectiveness of public expenditure and public service. The project comprises five components: improving the connection between planning and state budget, improving the efficiency of controlling budget use, improving the provision of budget information, improving systems to ensure budget stability and determining and managing fiscal-year risks. The Ministry of Finance (MoF) will implement the project over five years. The total cost of the project is 6.33 million USD, of which 5.73 million USD is sourced by non-refundable aid from SECO and the Global Affairs Canada sponsored, and the remaining 600,000 USD comes from Vietnam’s budget. The PM assigned the MoF to finalise documents for the project and be accountable for the appraisal and implementation of the project. FMCG market contracts in rural areas The first quarter saw the fast-moving consumer goods (FMCG) market contracting in rural areas for the first time in three years but posting stable growth in cities, showed a report of market research firm Kantar Worldpanel Vietnam. The FMCG market in major cities including HCMC, Hanoi, Danang, and Can Tho expanded slightly in quarter one compared to the final quarter last year. Dairy products and beverages were major goods that fueled the FMCG growth in cities. Meanwhile, the FMCG market in rural areas slumped in both value and volume. A contraction was seen in most sectors, especially personal care and household care sectors with a decline of 6% and 5% in volume respectively. Regarding shopping channels, the FMCG market in cities grew thanks to the grocery segment and others like specialty stores, mini marts, and convenience stores. Meanwhile, traditional markets gradually lost their appeal in rural areas. Small grocery stores in rural areas rose 5% in value in quarter one against the same period last year while traditional markets and provision stores declined 9% and 13% in value respectively, according to the FMCG Monitor report. Overall, the FMCG market in cities in a one-year period starting from March 2015 rose by 3.1%, higher than 2.6% in the previous year and 5.7% in rural areas, much lower than 9.7% in the previous year. In the first quarter of this year, Vietnam achieved gross domestic product (GDP) growth of 5.46%, lower than the growth of 6.12% in the same period last year. FMCG, or consumer package goods, are consumer products that are sold quickly at low prices and have short expiry dates like beverages, toilet paper, and bathroom cosmetic products. What will be the fate of Valeant’s Vietnam venture? Investor William Ackman, whose Pershing Square Capital Management owns 9% of troubled Canadian drug maker Valeant Pharmaceuticals, said earlier this week that the company would not sell its “crown jewel” assets. However, Ackman did not mention assets that are not classified as “crown jewel”, which may include its 65% stake in Vietnamese drug company Euvipharm, which it acquired for US$20 million in 2013. No Euvipharm representative was available for immediate comment. In July 2013 Euvipharm became a subsidiary of Valeant. At that point, then Valeant CEO Mike Pearson said Vietnam, with its young and dynamic population and demographic trends, was one of the most attractive pharmaceutical markets in Southeast Asia. The Vietnamese healthcare sector is forecast to continue to grow faster than that of many other countries. He said the joint venture would not only serve the Vietnamese market, but would also be built towards exporting its products to Southeast Asia. It would act as a key manufacturing centre and play a vital part in Valeant’s regional strategy. Headquartered in Laval, Quebec, Valeant has approximately 17,000 employees worldwide. Its markets are the United States, Canada, Europe, the Middle East, Latin America, Russia, Africa, and Asia Pacific. Valeant reported an increase in sales in Asia in 2015. Valeant, which is currently under fire from politicians and investors for its governance and drug-pricing practices, had US$30 billion in outstanding debt as of April 2016. The company saw its stock price decrease from the peak of US$257.53 on July 31, 2015 to the bottom of US$26.98 per share on March 18, 2016, before rising to US$35.78 per share on May 4. Australia initiates AD investigation on Vietnam’s quicklime The Australian Anti-Dumping Commission (ADC) has initiated an anti-dumping investigation on quicklime imported from Vietnam and two other countries, the Vietnam Competition Authority (VCA) announced on May 4. The plaintiff - Cockburn Cement Limited – accused exporters of selling products at lower prices, causing significant damages to the Australian industry. According to the plaintiff, Vietnam shipped around 39,214 tons of quicklime to Australia in 2014 and 2015, accounting for 33.9% of market shares. The investigation period is from January 1 to December 31, 2015, however, the ADC considered data on imports from January 1, 2012 to analyse damages. The VCA said the plaintiff proposed dumping margins from 64.4% to 86.1% while the ADC just proposed 18%. Sacombank links up with Japan banks Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) will work with three Japanese counterparts including Resona Bank Ltd, Saitama Resona Bank Ltd and The Kinki Osaka Bank Ltd to provide banking services for Sacombank's customers in Viet Nam, Japan and other countries the bank operates in. The consensus followed a Memorandum of Understanding (MoU) inked by the four banks in HCM City on Wednesday. The MoU will also facilitate co-operation between the sides in offering loans, currency transfer, international payments as well as financial services for Japanese clients in Viet Nam. Viet Nam has become a popular destination for Japanese companies to expand their businesses, said Kazuhiro Higashi, chairman of Japanese Resona Holdings, the mother company of the three above-mentioned banks. The number of Japanese firms which required investment consultancy in Viet Nam has increased year-by-year, he said. Resona Holdings is the fourth largest financial group in Japan with total assets reaching 46 trillion yen. Purchasing power increases slightly   The purchasing power in the total national retail value of goods and services until April 2016 reached nearly 1.14 trillion VND, the General Statistics Office (GSO) reported. This is equivalent to 51.7 billion USD, and a year-on-year increase of 8.8 percent. The increase is estimated at 7.5 percent if the price factor is excluded, lower than the growth of the first four months of last year at 8.3 percent, and the lowest growth since the beginning of this year. In particular, the growth of January is 11 percent, of the first two months is 8.3 percent, and of the first three months is 7.9 percent. GSO expert Vu Manh Ha attributed the decrease in purchasing power of the first four months of this year to the significant growth of the consumer price index (CPI) of the first four months compared to the same period last year. However, total sales have still seen a fairly positive increase. Of these, the total revenue of retail goods, which account for more than 75 percent of the total revenue, hit 39.5 billion USD, up nine percent. Of these, food and foodstuff retail increased 13 percent, garment retail increased 10.6 percent, transportation services 10 percent, home appliances 9.2 percent and retail of culture and education products increased 1.3 percent. The total revenue of accommodation and restaurant service sales, which accounts for 11.2 percent of the total revenue, increasing eight percent in the first four months. Localities which have a high growth in the sector’s revenue include Thanh Hoa (15 percent), Ninh Binh (9 percent), Hanoi (nearly 9 percent) and HCM City (nearly 8 percent). The total revenue of tourism and travel sector, which accounts for only 0.8 percent, also reached a growth of 8 percent in the first four months. Of these, tourism of Lam Dong Province has the highest increase in revenue of 16.5 percent, followed by Can Tho Province (12 percent), Hanoi (8.1 percent) and HCM City (6.5 percent). Binh Trieu No2 second phase to cost 88.7 million USD The Ho Chi Minh City Department of Transport has asked for approval of the city People’s Committee for the Binh Trieu No2 project’s second phase by the HCM City Infrastructure Investment Joint Stock Company (CII). The petition also asks for the department to co-ordinate with the city’s Interdisciplinary Working Group to negotiate the Build-Operate-Transfer contract with CII, along with appraising and ratifying subprojects. According to CII’s proposal, the subproject No1 will enlarge the existing Ong Dau Bridge with two bridge units on both sides of the existing one, each with 5.25 metres in width and 160 metres in length. The subproject No4 will enlarge and reverse the War Memorial intersection and build a traffic tunnel toward Xo Viet Nghe Tinh-National Highway 13; reconstruct Chu Van An Road and enlarge other roads connecting the intersection. The subproject No5 will expand the adjacent Ung Van Khiem Road to 30 metres in width and 1.8 kilometres in length. Total investment of all construction, including clearance compensation, is estimated to reach more than 1.98 trillion VND (88.7 million USD). CII will start collecting tolls at toll stations in Binh Trieu 1 and Binh Trieu 2 bridges after enlarging the Ong Dau Bridge and War Memorial intersection. Return on investment is expected to be reached in 23 years and 9 months. Vietnamese market sees oversupply of Australian cattle Australian cattle have flooded Vietnam’s market, leading to dropping live-cattle prices, reported Australian ABC radio. Vietnam imported 311,523 head from Australia in 2015 and more than 20,000 so far this year. The figures have caused domestic sale prices for feedlotters to fall significantly. A Vietnamese feedlot operator who has imported Australian cattle for the last three years said his home market is over-supplied. Vo Xuan Hoa, operating director of Ket Phat Thinh (KPT) - one of Vietnam's largest cattle importers that began operations in 2012 – noted local business is hurt by the large number of cattle in the supply chain, which surpasses domestic demand. He said the number should be between 200,000-250,000 head this year. In 2014, the volume of exported cattle to Vietnam began to soar, with Australian producers targeting the market for heavier stock. Hoa said his company had so far imported nearly 300,000 head. Feeding the stock had become vital to return a profit, as import prices have risen to 3 AUD per kilogramme compared to around 2.1 AUD at the beginning of the company’s operations, Hoa added. He noted that KPT could make some profit by importing cattle to then sell to abattoirs, but this is impossible now. Under standards set by Australian exporters, CCTV cameras have been installed in all facilities handling Australian stock. Hoa claimed the roll-out of the system in his company was smooth, but stressed its costly maintenance. Imported goods on the rise Imported goods, including home appliances and food, have begun to dominate shelves in malls and specialty shops. In Ho Chi Minh City’s District 7, for example, housewife Minh Phuong can find imported products from Thailand, Japan and the US at supermarkets and shopping malls. “These products are on many shelves at Lotte Mart and Giant near my house. Many smaller stores specialising in products from one country have opened in District 7, especially in Phu My Hung City Centre,” she said. In the past, imported products were mostly clothes, footwear and cosmetics, but they now range from instant noodles to canned food and home appliances. Fresh fruit imports are also common. E-mart, Korean shopping mall in Go Vap District, which opened late last year, has attracted many customers. One consumer told Sai Gon Giai Phong (Liberated Saigon) newspaper said that her family visits the supermarket and has dinner there five times a week. “The products are diverse while the price is competitive. The space and decor are clean and beautiful,” she explained. At Metro An Phu in Ho Chi Minh City, the volume of Thai products increased from the day it was sold to Thailand’s Berli Jucker Public Company Ltd. A source from Metro told Vietnam News that although Thailand products accounted for only 2% of goods, the total number had increased after Berli Jucker’s acquisition. A report from Sai Gon Giai Phong (Liberated Saigon) also found that Thai products dominated shelves. Shopping malls like the Japanese-owned Aeon Mall and Korean-owned Lotte Mart also offer many Japanese and Korean products. Imported products are also being offered online, as e-commerce has developed rapidly in Vietnam. Customers can easily buy fruit and fresh meat from Australia, the US and New Zealand by just picking up a phone and placing an order. Technician Kieu Oanh said her news feed on Facebook has many daily notifications from sellers of imported fruit. She said that buying imported fruit was a better alternative as local fruit had become more expensive and the quality varied from shop to shop. On Ly Thuong Kiet Street in Ho Chi Minh City, the owner of a shop that imports 30 boxes of foreign fruits a day usually sells out by 2pm. Daiso stores selling Japanese products and small convenience shops selling Thai products have also become more popular. In Ho Chi Minh City, several shops selling Japanese products on Le Thanh Ton Street have opened to meet increased demand. SBV urges banks to switch to chip cards The State Bank of Vietnam has instructed banks to quickly carry out a plan to convert all magnetic cards into chip cards to prevent fraud. Late last year the central bank announced that all ATM cards would be EMV-standard chip cards by 2020 to ensure safety for banks and their customers and reduce risks in e-commerce for both buyers and sellers. Napas has been assigned to work with domestic banks to implement this scheme based on a road map. Napas is the new name of the National Payment Corporation of Vietnam, which was formed through a merger of the Vietnam National Financial Switching JSC and Smartlink Card Services JSC. Its major shareholder is the SBV, which manages and operates the national card switching system. According to the latest statistics, there are 90 million cards issued by 43 banks, of which 80 million are ATM cards. Napas director Nguyen Tu Anh told the online Vietnam Breaking News that most cards did not meet international security standards. Many nations such as the US and China have switched to chip cards. “If Vietnam does not carry out the conversion, cardholders will easily fall victim to data loss and fraud,” Anh warned. Besides security, the conversion to the new card is also meant to get infrastructure ready for the application of new payment technologies in the near future, according to Anh. Chip cards, e-wallets and bank accounts are tools to help people make payments without using cash. Five banks will be chosen to trial the conversion and other banks follow suit. The five will have to gradually collect magnetic cards from cardholders and replace them with the new ones, and upgrade ATMs and credit card readers to make them compatible with the chip technology. The banks will announce their replacement road maps and launch programmes to encourage customers to change their cards by 2020. A spokesperson for Saigon Commercial Joint Stock Bank (SCB), who asked not to be named, said the lender issued nearly 240,000 cards of all kinds. “The bank is making all necessary preparations for replacing magnetic cards with chip cards according to a road map outlined by the central bank. “SCB, together with all other banks, the central bank and relevant agencies, will set standards for domestic chip cards and seek to apply those standards in 2017.” SCB plans to upgrade its chip card issuance and chip card-based payment systems before replacing customers’cards 12 or 18 months before the SBV’s deadline. But a spokesman for the Ho Chi Minh City Development Commercial Joint Stock Bank (HDB) said banks could not make the switch immediately since standards for chip cards had not yet been announced. A senior expert with experience in bank cards agreed with the need to shift to chip cards since they offer more advantages including higher level of anti-fraud capabilities. But they cost VND23,000-VND35,000 compared to only VND3,000-VND4,000 for magnetic cards. “The replacement should be done gradually to reduce the cost burden for both issuers and holders.” Vietnam engineering growth stymied The Government needs to adopt comprehensive policies to develop the country’s mechanical engineering industry, an industry business group has said. Đao Phan Long, deputy chairman and general secretary of the Vietnam Association of Mechanical Industry (VAMI), said after 15 years of growth, the engineering and metallurgy industries only have a competitive edge in Vietnam’s neighbourhood in manufacturing structural steel and assembling construction machinery. The industry is capable of building large ships, transformers, electric motors, small capacity petrol engines, and agricultural machinery like grinders and harvesters of rather good quality, he said. Many domestic firms are part of the motorbike and automobile production chains, but they mainly assemble imported parts, he said. An industry insider said the mechanical engineering sector’s exports topped US$15 billion in 2014, but imports were over US$26.5 billion. Nguyen Van Thu, VAMI chairman, told Lao Đong (Labour) newspaper that major projects mostly hire foreign general contractors, especially Chinese, though domestic businesses have the capability. These contractors bring not only old machinery but also their workers to Vietnam, leaving the local mechanical industry out in the cold, he said. The industry is worried about losing market share in the domestic market, especially when the Trans-Pacific Partnership agreement takes effect. Le Van Tuan, general director of Vietnam Lilama Corporation, said Vietnam’s partners in the TPP are developed countries and therefore require high product quality standards. To enter these markets, Vietnamese companies must offer consistent quality, timely delivery, and reasonable prices, he said, but many do not meet these requirements. Not much progress has been made by the mechanical engineering industry over the past years due to low investment and unplanned development, Long said. Besides, each locality developed the industry on its own terms without following a master plan, he said. These factors mean resources, research and training in the industry have been spread too thin, he said. He said the Government should have comprehensive and precise plans to encourage investment in the industry. The country should identify certain key mechanical engineering products for development to improve the industry’s competitiveness and keep pace with the latest development and technologies, he said. Focus should be on a small group of industries like shipbuilding and steel, he said. The Government should continue to encourage domestic firms to take part in automobile assembly and manufacturing, with a focus on light and medium trucks, agricultural vehicles, special purpose vehicles, passenger cars and buses of international standards with over 5% local content, he said. But they should not produce passenger vehicles with fewer than 16 seats because it would be hard to take on established global companies, he added. TPP ‘yarn forward rules’ indirectly benefit Vietnam textiles Though passage of the Trans-Pacific Partnership (TPP) trade pact is bogged down in the US and most certainly not assured, many companies with stakes in Vietnam textiles have begun making investments as if it were already in full force. “These moves suggest how much the business community expects the clothing industry in the country to benefit from passage of the trade accord,” says Dr Tran Thi Minh Huong from the National Economics University. Dr Huong says one of the lesser understood provisions of the TPP, known as the ‘yarn forward rules’, requires a member country that exports clothing to other TPP markets to use textiles that are either made locally or imported from another member country. While the nation is one of the top clothing manufacturers across the globe, it has historically sourced the largest share, about 88%, of its textiles from China and the Republic of Korea (RoK). “After import, factories in the country then cut and sew the fabric in the final stage of production prior to exporting finished garments to overseas markets such as the US, Canada and Mexico,” says Dr Huong. Signing on to the TPP means that clothing exporters would technically no longer be able to import their materials from China if they hope to benefit from lower tariffs afforded under the agreement. The yarn forward requirements were put in place in large part to protect the US yarn and textile producers, which lobbied the US government extensively on the issue as part of an effort to maintain stringent TPP rules of origins. Contrarily, US retailers, continue to argue that clothing and textiles (as well as footwear) are part of the larger global supply network like so many other commercial goods and therefore should not be hampered by such provisions. The apparel industry in Vietnam has for some time been aware that it would have trouble complying with the rules of origin of the TPP, in the absence of investors in textiles sinking significant funds into production facilities up front. “Vietnamese negotiators had pushed for a ‘cut and sew’ rule of origin,” says Dr Huong, which, as its name suggests, only requires that the final cutting and sewing would take place in a TPP member country. However, currently, both domestic and foreign companies have begun making upstream investments in manufacturing plant and equipment in Vietnam to take advantage of the preferential treatment that garment exporters from Vietnam may potentially enjoy under the agreement. This means, says Dr Huong, that not only would the clothing industry gain preferential access to the US market, it would also be able to capture greater added value in the supply chain, should the TPP be ultimately ratified. Dr Huong says when and if the TPP comes into effect, the industry leaders expects tariffs on the nation’s clothing exports to other members such as the US to eventually fall to near zero from the current level of roughly 17%. Vinatex, the largest local textile company in the country, last year signed an agreement with a Japanese trading firm named Itochu to invest in several textile manufacturing plants in Vietnam. Vinatex had announced plans to invest more than US$714 million to upgrade and expand its supply chain, including in weaving and dying operations, in an effort to comply with the TPP requirements. A year ago April, Vinatex closed on a US$12 million deal with a Japanese partner named Toms Limited to construct a multi-million US dollar textile-dyeing-garment manufacturing complex in central Vietnam. Other foreign investors have followed suit. Dong-IL Corp out of the RoK began erecting a US$52 million yarn factory in southern Vietnam as of last year, while Forever Glorious based out of Taiwan announced plans for a US$50 million weaving-dyeing-garment factory. Meanwhile, several Chinese textile companies, such as Esqual Group and Jiangsu Yulun Textile Group, have either opened or are in the process of constructing large textile plants in Vietnam. Since ratification (and hence negotiations) for the TPP seem to be far from over, and farther still from implementation, it remains to be seen how negotiators will finally decide to settle the issue of yarn forward. The final outcome of these negotiations is crucial for the clothing and textile industry in Vietnam, which last year grossed tens of US billions of dollars of revenue, employing about 2.5 million workers in more than 6,000 factories nationwide. Earlier studies, such as those by the World Bank, that showed that Vietnam is likely to be one of the biggest winners from the TPP, have largely been discredited due to the application of faulty assumptions related to the labour resources. However, Dr Huong says the moves by foreign and local companies to invest in or expand operations in the textiles in Vietnam provide solid evidence the TPP ‘yarn forward rules’ indirectly at least are providing some limited indirect benefit for textiles.   Online transport trade site flops The Transport Ministry called on municipal People’s Committees, transport firms and relevant agencies to promote VinaTrucking, the first e-commerce transport trading floor in Việt Nam. VinaTrucking was launched by the ministry late last year, aiming to allow transport companies, logistics service providers and commodities owners to post information about services and commodities. The ministry also urged financial and tax agencies to boost price management to ensure economical and transparent transport prices, Giao thông (Transport) newspaper reported. Over the last four months of operation, the floor registered 473 members including 326 transport service providers, 97 commodity owners and 50 guests. More than 500 trips were posted on the floor, recording 219 attempted transactions of which only 36 were successful, the VinaTrucking Director General Tạ Công Thuận said. Thuận said that the floor helped connect transport firms and commodity owners and cut the number of empty trucks on roads, reducing transport costs. However, Thuận said that transport firms were not as interested in the transport trading floor as finding few clients. “VinaTrucking is still quite new in Việt Nam, so both goods owners and transport service providers are cautious to find partners, resulting in few successful transactions,” Thuận said. They visited the online trading floor mostly to check prices, he said. Thuận said that many transport firms and goods owners were still unaware of VinaTrucking. Đỗ Công Thủy, vice head of Transport Department under the Directorate for Roads of Việt Nam, said that VinaTrucking operators need to attract more goods owners to the trading floor. Nguyễn Công, director of a container transport firm in northern Hải Phòng City said that finding goods that needed to be transported was key to increasing the effectiveness of VinaTrucking. He said at present, almost all transport deals between transport service providers and goods owners were done in traditional ways. “So, it’s not easy to make such transactions online,” Công said, adding that Government’s assistance was needed to boost the e-commerce trading floor. FDI helps boost industrial infrastructure Foreign direct investment (FDI) capital poured into industrial zones (IZs) has rapidly increased recently, bringing large profits for infrastructure development companies. According to the Management Board of HCM City Export Processing and Industrial Zone Authority (Hepza), from the beginning of this year, export processing and IZs have received a large volume of FDI capital. Of the total US$128 million poured into export processing and IZs in the first two months, FDIs accounted for $80 million and the remainder came from domestic companies. Hepza also reported that the huge influx of FDI capital allowed the ratio of filled land in export processing and IZs in the city to reach 80 per cent. The neighboring Binh Duong and Dong Nai provinces have also seen an increase in FDI. In the first three months of this year, Binh Duong Province granted licences to 28 FDI projects, with a total investment capital of over $680 million. After registering to add more capital, investors have actively expanded plans to build new factories in the Song Than 1, Song Than 2 and Nam Tan Uyen IZs. By March 18, Dong Nai Province's registered investment capital and newly added capital for FDI projects reached some $488 million, or a year-on-year increase of 311 per cent. Foreign investors have not only focused on developing industrial parks in Bien Hoa City but have also expanded land lease agreements and have invested in many factories and warehouses in new IZs such as Long Duc, Long Thanh and Bau Xeo. Local experts attributed the increase in investment in IZs since October last year to the official conclusion of trade agreements such as the Trans-Pacific Partnership (TPP). Many investors from England, Japan, South Korea and Thailand have started investing in IZs. In HCM City alone, investors have an ambitious plan to develop a Silicon Valley-style high-tech zone in District 9, with total investment capital of $1.5 billion. By the end of 2016, the business results of five listed infrastructure development companies all showed a profit. Accordingly, Long Hau JSC in the southern Long An province reported its revenue rose VND10.67 billion ($476,339). Of this figure, revenue from land leases accounted for VND6.69 billion. The company's after-tax profits reached VND20.33 billion, or a 20-fold increase over the same period last year. Sonadezi Long Thanh in Dong Nai Province reported its total revenue of $46.23 billion in the first half of this year. Of this figure, revenue from land leases in IZs accounted for $18.54 billion. In the northern provinces, Vinh Phuc Infrastructure Development Company reported revenue of $33 billion in the first quarter of this year, or a 3.7-fold increase over the same timeframe last year. The Thoi Bao Ngan Hang (Banking Times) reported that all businesses are now involved in infrastructure development in IZs, with four businesses expecting strong growth in profits this year. They are Tan Tao, Long Hau, Kinh Bac and Viinh Phuc. With these high profit targets for this year, industry insiders have predicted that fierce competition between these companies will prompt them to offer new incentives to attract FDI enterprises. Instead of concentrating on land leases only, as in previous years, they will take advantage of spending their own money to build warehouses, offices, retail space, serviced apartments and high-rise apartments. Hepza reports that this tendency will see major growth in the next 1 or 2 years as the TPP officially comes into effect. Supply chain needed for food safety While unsafe food was a growing threat, it was critical to develop a food supply chain to improve control quality from the farm to table, experts said yesterday. Food safety violations, which were posing serious threats to the health of the community as well as the country's economic development, have never been as alarming, the experts said at an online conference held by Dien Dan Doanh Nghiep (Business Forum) newspaper. Vu Vinh Phu, president of Ha Noi Supermarket Association, said that unsafe food must be addressed as a national problem. Unsafe food was being sold not only at traditional markets or vendors but also on shelves of even supermarkets while consumers were in the dark about the quality of food and foodstuff, and it was difficult to differentiate between what was safe and what was unsafe, he said. "The State management agencies should be blamed. The efforts are not adequate and appropriate," Phu said, adding that measures to protect consumers must be increased. Currently, the quality control remained at the distribution phase, Phu said. "It should go from production, processing and distribution. If no improvements are made, unsafe food will remain a threat in the next decade," he said and estimated that 95 per cent of food on the shelves was now unsafe. It was important that businesses must be aware of producing and distributing safe food products to protect not only consumers but also their brands, Phu said. According to Le Duc Thinh, deputy director of the Ministry of Agriculture and Rural Development's Department of Co-operatives and Rural Development, food safety would involve the participation of not only the government agencies but also farmers, companies and consumers. Food safety must be ensured from the production stage which must get businesses to link with farmers to build a supply chain, Thinh said. In addition, awareness of consumers must be enhanced and they should play their roles in the fight against unsafe food while penalties must be stricter to prevent deliberate violations, he said. Thinh said the agriculture ministry was making efforts to restructure the agricultural sector towards high value-adds and sustainable development, which would encourage farmers to produce safe food. Vu Doan Huy, deputy director of Food Viet Nam Joint Stock Company, producers should co-operate with each other to produce safe food and foodstuff, such as founding an association in Australia, and implementing cross-checking of quality. The co-operation among food producers to build a brand and cross checking to ensure quality would be necessary, Le Van Giang, deputy director of the Ministry of Health's Department of Food Safety, said at the conference. Le Van Hung, from the Viet Nam Association of Organic Agriculture said that a State agency in charge of certifying safe food products should be established. FDI key to high trade surplus Vietnam’s economy is experiencing a record four-month trade surplus, the highest in the past four years, mostly driven by foreign-backed firms. The General Statistics Office reported that Vietnam’s total export turnover in the first four months of 2016 is estimated to be $52.87 billion, up 6 per cent year-on-year. Total import turnover hit $51.4 billion, down 1.2 per cent year-on-year, leading to a trade surplus of $1.47 billion over this period. “The four-month trade surplus is a very good sign for the economy in general,” senior economic expert Nguyen Mai told VIR. The economy suffered from a trade deficit of $3 billion in the same period last year, and a trade surplus of $683 million, $722 million, and $176 million in the first four months of 2014, 2013, and 2012, respectively. However, Mai said that this year’s four-month trade surplus was driven by foreign-invested enterprises (FIEs), which tactitly reflects the weak performance of locally-owned enterprises. Specifically, FIEs held a trade surplus of $7.1 billion, while locally-owned companies suffered a trade deficit of $5.6 billion. “Many types of goods have had a very high export turnover, such as electronics, computers, and mobile phones,” Mai said. “Of these, Samsung, Nokia, and LG have had impressive export turnover, occupying over 20 per cent of Vietnam’s total export turnover.” According to LG Electronics Vietnam, their export and import turnover reached $151.33 million and $155.34 million, respectively, in this year’s first two months. The firm’s two-month revenue hit $212.15 million. “FDI has helped offset a trade deficit from locally-owned enterprises,” Mai noted. “Many are lamenting that an increase in FDI in Vietnam is controlling the local economy. However, this is a competitive market. Without FDI, the economy couldn’t develop as rapidly, and Vietnam wouldn’t enjoy a trade surplus.” Mai also noted that this year’s first four months included many days off due to the traditional Tet celebration and other national holidays. “If there had been no days off, the trade surplus would have been much larger,” he said. FocusEconomics Consensus, which features economic forecasts from the world’s leading economists, announced last week that Vietnam’s economy was expected to continue growing at a solid pace of 6.5 per cent this year, “supported by robust export growth, buoyant private consumption, and higher FDI inflows.” Predicting that investment in Vietnam would rise 8.9 per cent this year, the firm also estimated that Vietnam’s industrial output, which is mostly financed by FDI, would grow 9.7 per cent. FocusEconomics Consensus also predicted that thanks to major FDI contributions, Vietnam’s export and import turnover for 2016 would be $175 billion and $177 billion, respectively. Shining some light on delayed infrastructure works in second city After several impressive ground-breaking ceremonies a string of infrastructure projects in Ho Chi Minh City have reported little or no progress. Why is this? Starting work from April, 2015 with a total investment capital exceeding VND1.3 trillion ($59.7 million), the build-operate-transfer (BOT) project to build a new Binh Loi railway bridge crossing Binh Thanh-Thu Duc districts, replacing the old one which is over 100 years old, has seen no progress made. After repeated warnings, the developer- Green Urban Investment and Development JSC and STD Construction and Investment JSC- promised to continue the project in October 2015. To date, no progress has been made, even though concerns remain that the old bridge could collapse at anytime. Another BOT project, developed by Ho Chi Minh City Infrastructure Investment JSC (CII) to expand a 15.7km section of Hanoi Highway, an arterial route heading Ho Chi Minh City centre and Cat Lai port, is in a similar situation. Despite holding its ground breaking ceremony six years ago, the project has yet to begin construction. With such a delay, the initial total investment cost of VND2.28 trillion ($104 million) faces a cost overrun threat. The work starting ceremony of another project to build a 2.7km road linking Pham Van Dong road and the Go Dua bridge in Thu Duc district took place in early December 2015, but no further progress has been made. The project, developed by a consortium consisted of HNS Vietnam Investment JSC and Van Phu Investment JSC and Bac Ai Investment and Construction Consulting JSC, reports VND1.13 trillion ($52 million) in total investment capital for phase 1 construction (not including land acquisition cost) and will go under a build-transfer (BT) format. The projects’ delay was mainly attributed to difficulties in site clearance and compensation. In some cases, construction occurs parallel to site clearance. For instance, regarding the project to build the road connecting Pham Van Dong street and Go Dua bridge, the developer is currently still involved in negotiations regarding compensation costs with the local residents. Regarding the project to build the new Binh Loi railway bridge, the cause of delay, according to the city’s Department of Transport, involved site clearance impediments. Another delayed project, the $100 million-plus scheme to build an underground parking area beneath Le Van Tam Park, the holdup was caused by a design change to the fire prevention and cure system to meet new regulations, according to Le Tuan, general director of Underground Space Investment Development Corporation (IUS), the project developer. Industry experts speculated that the developers’ lack of experience was also a cause leading to project delays. For example, the developers of the projects to build the new Binh Loi railway bridge and the Hanoi Highway expansion section were in fact operating in housing construction and so lacked experience in implementing large transport infrastructure projects. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR