BUSINESS IN BRIEF 27/6 Agricultural businesses set to increase by 10% each year   The agricultural sector is striving to increase the number of businesses operating in the sector by 10% annually during the 2017-2020 period, with 20-30% of them showing innovation and creativity. To realise the target, the Ministry of Agriculture and Rural Development (MARD) has issued an action plan for the implementation of the Government’s Resolution 19-2016/NQ-CP on missions and measures to improve the business environment and national competitiveness for 2016-2017 with a vision to 2020 and Resolution 35/NQ-CP, which aims to assist enterprises until 2020. Under the action plan, the MARD will improve the agricultural business environment while developing mechanisms and policies on assisting, attracting investment and improving competitiveness for agricultural businesses. Solutions include the restructuring of the agricultural sector in terms of production planning and State-owned enterprises as well as drawing social engagement in providing public services. The ministry will assist enterprises in accessing resources and markets, and protect the domestic market from the adverse impacts of the integration process. It will also implement policies encouraging small- and medium-sized enterprises to form production and business links while maintaining dialogues with businesses to promptly address their difficulties. Administrative reform will be stepped up in all fields, alongside the strengthening of inspection activities and the implementation of anti-corruption measures. PM okays abolition of three planned IPs in Hung Yen The Prime Minister has approved a revised zoning plan for development of industrial parks towards 2020 in the northern province of Hung Yen in which three projects will be cancelled and six others downsized. The three IPs are the 150-hectare Bai Say, the 150-hectare Dan Tien and the 400-hectare Tho Hoang, according to the Government website chinhphu.vn. For the downsized IPs, Vinh Khuc will be scaled down from 380 hectares to 180 hectares, Yen My II from 230 hectares to 190 hectares, Ngoc Long from 150 hectares to 100 hectares, Minh Quang from 350 hectares to 150 hectares, and Minh Duc from 200 hectares to 198 hectares. Pho Noi B IP will be downsized to 467.01 hectares from 480.94 hectares and split into two IPs, namely Pho Noi IP covering 121.81 hectares for textile and garment firms and Thang Long 345.2 hectares. The Prime Minister has permitted Pho Noi A IP to be expanded to 594 hectares from 596.44 hectares and no size change for 100-hectare Kim Dong IP, 300-hectare Ly Thuong Kiet IP and 200-hectare Tan Dan IP. The government of Hung Yen Province is told to ask Vietnam Infrastructure Development and Finance Investment Joint-stock Company (Vidifi) to develop Tan Dan and Ly Thuong Kiet IPs as scheduled. The province should urge relevant agencies to draw up detailed zoning plans and streamline investment procedures for IP projects as well as speed up housing projects and public works at the IPs. Public investment disbursements slow Just over 33% of more than VND251.45 trillion (around US$11.3 billion) in public investments approved as of mid-May by the Prime Minister has been disbursed in the year to date, showed data of the Ministry of Planning and Investment. According to the ministry, the National Assembly set this year’s total investment capital at VND254.95 trillion, the Vietnam News Agency reported. At a meeting held on Tuesday to find ways to accelerate public investment disbursements, Minister of Planning and Investment Nguyen Chi Dung said capital in most projects and programs of national significance planned for implementation in the first five months of this year has not been disbursed in the absence of official approval and guidance from the ministry. Regarding proceeds from government bond sales, the Prime Minister has approved VND40.59 trillion out of the planned VND60 trillion for public investments. However, ministries, agencies and localities have so far disbursed a total of over VND6.08 trillion (15.4%). Disbursements of proceeds from G-bonds sales remained low in the five-month period, with the Ministry of Transport reaching 6.2% of the target, Hanoi a mere 3% and the Mekong Delta province of Kien Giang only 4%. Dung ascribed slow disbursements of public investments in the year to date to a number of ministries, agencies and localities being late in issuing capital allocation plans. The disbursement process is also obstructed by improper guiding documents for project evaluation, unclear roles of investors and project management units, and the absence of special management units in some localities. In addition, slow site clearance and poor capacities of contractors are to blame. Competent ministries and agencies pledged to focus on completing guiding documents and speeding up the disbursement process in the coming time. Deputy Prime Minister Vuong Dinh Hue, who is also head of the steering committee for disbursements of public investments, urged ministries and agencies to put the disbursement process on fast track to fuel job generation and economic growth. Speaking at the meeting, Hue requested ministries to amend guidelines for the implementation and control the quality of public investment projects, speed up capital allocations, and use public spending effectively. With programs of national significance, relevant agencies were told to solve remaining problems so that the ministries of planning-investment and finance could work out specific capital allocation plans. Vietnam exports 16,000 tonnes of fresh lychee to China The Tan Thanh border gate has processed customs clearance for 16,430 tonnes of fresh lychee, or about 4,000 tonnes per day, since the beginning of the season of lychee, according to Doan Tuan Anh, deputy head of the Tan Thanh customs department. At the Tan Thanh border gate, the main gate for transporting fruit to China, the trucks loaded with fresh lychee have priority for customs clearance, which helps accelerate the trading process, and reduce congestion and the waiting time of the drivers and fruit owners. For the export markets of Vietnamese lychees, last year, China was the largest export market with an export volume at 100,000 tonnes, accounting for 50 per cent to 60 per cent of total export volume. The phytosanitary agencies in Lao Cai and Lang Son provinces have been asked to create favourable conditions for issuing export licences to lychees as soon as possible. At present, Vietnam has negotiated with China to accord the highest priority to export lychee to China after other fruits. Authorities pledged to facilitate administrative procedures, ensure transport safety, and enhance market management to reduce fraud in the trade of the fruit. Officials from Vietnam and China have agreed to keep the border gates open till 10pm to help accelerate the trading process. Beside fresh lychee, every day the Tan Thanh border gate processes customs clearance for about 80 trucks loaded mostly with peanuts, onions, garlics, bananas, mangos and green dragon fruits, totaling 1,600 tonnes of agricultural products. Thai Nguyen emerges as Vietnam’s third largest exporter The northern province of Thai Nguyen has surpassed Dong Nai and Binh Duong provinces, key exporters in the Southeastern region, to become the locality with the third largest export turnover in Vietnam in the opening months of 2016. As updated by the General Department of Vietnam Customs, Thai Nguyen earned US$7.433 billion in total export revenues from January to May, just behind Ho Chi Minh City with US$11.968 billion and Bac Ninh province at US$9.474 billion. Thai Nguyen also witnessed the largest growth rate in export turnover among 63 cities and provinces across the country, surging by US$1.087 billion compared to the same period of last year. The figure of HCM City only rose slightly by about US$5 million, while Bac Ninh recorded a year-on-year increase of US$867 million. On the contrary, Binh Duong saw a US$223 million decline in its five-month export revenues. The Samsung Electronics Vietnam Thai Nguyen Co. Ltd, which has been operational since early 2014, contributed the most to the province’s export hike, making it from some hundred million US dollars to billions of US dollars. According to the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, Thai Nguyen is striving to export US$27 billion worth of commodities by 2020. The province is also targeting an annual average export revenue of US$20,000 per capita and an export growth rate of 9% per year, as stipulated in the provincial economic development strategy for the 2016-2020 period. Vietnam rice export to hit over 2.7 million tonnes in H1 Vietnam’s rice export is estimated to hit 2.732 million tonnes in the first half of this year, according to the Vietnam Food Association (VFA). According to the VFA, the country’s rice export in the later half is likely to reach 2.97 million tonnes with priority given to fragrant and high-quality rice. Huynh The Nang, General Director of the Southern Food Corporation, said in the first six months, the export of Jasmine rice has increased from 22 to 29 percent of the total export volume. Nang recommended provinces and cities to apply technologies into farming, establish production-sale connections and increase the use of recognised high-quality rice varieties. Deputy Minister of Agriculture and Rural Development Le Quoc Doanh recommended localities pay attention to strengthening dykes to protect rice areas from flood. He also agreed on the increase of the rice production area in the Autumn-Winter crop but asked localities to make detailed planning on which areas are used for high-quality rice and which are for commodity rice. Capital requirements drafted for new airlines  The Ministry of Transport has submitted a draft decree on conditional business lines. According to the draft, a new airline must have capital of at least VND100 billion (US$4.66 million). Under the draft, if the airline registers one to 10 airplanes, investors will have to guarantee charter capital of at least VND700 billion for international services and VND300 billion for domestic services. If the airline registers 10 to 30 aircraft, investors are required to guarantee at least VND1 trillion for international flights and VND600 for domestic flights. New airlines registering more than 30 aircraft will have to secure at least VND1.3 trillion for international flights and VND700 billion for domestic flights. The draft stipulates that for foreign-invested businesses in aviation, foreign ownership is not allowed to exceed 30 per cent of the charter capital, while Vietnamese individuals or investors are not permitted to hold more than 49 per cent of charter capital. If they want to sell their shares to foreign investors, it can be done after two years since the date of issuing the business license for aviation. The draft decree also sets out the principles and responsibility of agencies and units to manage, plan and operate airports. The draft offers two business methods. The first method requires that the minimum capital for establishing and maintaining the operation of airport enterprises that provide aviation service is VND100 billion for domestic airports and VND200 billion for international airports. Foreign ownership is not allowed to exceed 30 per cent in companies that manage passenger terminals, goods terminals, gas and oil supply, as well as ground commercial technical services. Airlines are not allowed to own more than 30 per cent of charter capital in airport enterprises and enterprises that manage passenger and goods terminals. The second method requires that companies that manage apron areas, news services, navigation aid and supervision, as well as weather observation, must be at least 65 per cent State-owned. Minister of Transport Trương Quang Nghĩa said the draft regulation on the charter capital ratio was adapted according to the equitization plan for the Airports Corporation of Vietnam (ACV), which was approved by the government. ACV, which operates airports across Việt Nam, is allowed to sell part of the State's stake in the corporation and issue more shares to increase its charter capital. Catfish exports to U.S. face higher anti-dumping duty Frozen catfish exporters to the U.S. will face higher anti-dumping tax as the U.S. Court of International Trade has decided to select Indonesia as surrogate country for catfish from Vietnam in the latest anti-dumping lawsuit. That is result of the 9th administrative review by the U.S. Department of Commerce to frozen catfish fillet consignments imported from Vietnam for the phase of 2011-2012. Vietnamese businesses will face higher anti-dumping rate than previous administrative reviews because Indonesia’s farming process is not similar to Vietnam’s. They have one month to appeal against the decision at the U.S. Court of Appeals for the Federal Circuit. At present, 57 Vietnamese businesses are licensed to export catfish products to the U.S. Exports to this market brought US$115.1 million in the first four months this year, up 7.2 percent over the same period last year and accounting for 23 percent of Vietnam’s total export value of the products. Vietnam imports 100,000 tons of sugar to stabilize market The government asked the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development to import a quantity of sugar to meet the demand and now it should buy 100,000 tons of sugar. The Ministry of Industry and Trade said that last time, these enterprises which have demand of sugar as material and sugar plants complained that they can not manufacture sugar to meet the increased demand of consumption and production as sugar cane price hiked continuously. In addition, sugar companies speculated the commodity. Accordingly, commercial and production enterprises which need sugar and sugar manufacturers sent its document to the Ministry asking for permission to import 100,000 tons of sugar. The government asked the two ministries to give quota for importing more sugar to stabilize the domestic market. Korean CJ Group invests US$2.1 million in growing chilli in Vietnam The CJ Group - the leading group of food material distribution from the Republic of Korea –has decided to officially plant chilli in Vietnam after six months successfully conducting a pilot project in southern Binh Thuan province. It will spend US$2.1 million and cooperate with the Korea International Cooperation Agency (KOICA) and farmers to grow chilli on 10 hectares in Ninh Thuan. The new crops will start in July. CJ Group will supply chilli varieties and fertilisers and send its experts to assist Ninh Thuan farmers in farming and caring techniques. CJ is expected to yield around 200 tons of fresh chilli from the 10ha cultivation area annually. CJ has operated in Vietnam since 1998 and set up CJ Vina Agri in Vietnam, specializing in the production and trading of animal feed. It now owns has three animal feed processing plants in Long An, Vinh Long and Hung Yen provinces and two subsidiary companies CJ IMC and CJ Korean Express, which supply logistics services. CJ became popular in 2014 after purchasing the Megastar cinema system and renamed it CJ CGV. Firms must update technology The fast-growing number of foreign investors has led to an expansion of industrial manufacturing in Viet Nam, especially for local production. To remain competitive and take part in the global value chain, local companies, especially small- and medium-sized enterprises (SMEs), must invest in modern technology, said Tran Viet Dung, deputy director of VCCI Exhibition Service Ltd, at a news conference yesterday. The Trans-Pacific Partnership Agreement together with other Free Trade Agreements (FTAs) are likely to maintain Viet Nam as a promising destination for foreign direct investment ((FDI), he said. According to the Foreign Investment Agency, total new investment capital and increased investment capital of foreign investors in Viet Nam was worth US$10.15 billion in the first five months of the year, an increase of 136.4 per cent, he said. The manufacturing and processing sectors attracted the largest FDI capital in the period, accounting for 65.1 per cent of the country's total FDI capital, he told the press conference. FTAs provide opportunities as well as challenges for Vietnamese firms, especially SMEs, he said, adding that with their lack of capital, technical equipment and advanced technology, many small- and medium-sized enterprises have faced competitive pressure from foreign counterparts. It is thus ever more critical for locally based manufacturers to not only invest and upgrade their industrial technologies, but also scale up their knowledge and capabilities to improve productivity, enhance competitive advantage and move up the value chain, he said. Trade exhibitions can help them achieve that goal because they are an effective business platform and can provide face-to-face contacts for buyers and sellers, said BT Tee, Deputy Chief, Viet Nam Representative Office, Singapore Exhibition Services. Tee said he hoped local firms would attend the MTA Viet Nam 2016, the large-scale exhibition of precision engineering, machine tools and metalworking to be held in HCM City from July 5 to 8. The 14th International Precision Engineering, Machine Tools and Metalworking Exhibition and Conference (MTA Viet Nam 2016), will feature 416 exhibitors from 24 countries and territories, with 13 international group pavilions showcasing state-of-the-art technologies and engineering solutions, he said. Samsung will take part in the expo to find component suppliers, offering a good opportunity for Vietnamese SMEs, he said. Conferences and seminars will be held throughout the show. Featuring an impressive line-up of speakers from local and regional organizations, the conferences will help delegates expand their knowledge, stay relevant and up-to-date with the current trends and issues facing the manufacturing industry, he said. Dung said the mechanical engineering industry is the foundation and motivation for the development of other industrial sectors. According to the Ministry of Industry and Trade, currently, foreign firms hold 80 per cent of the domestic mechanical engineering market, he said. Demand for machinery and equipment is expected to remain high until 2020 and after, he added. HCMC seeks to step up PPP projects The HCMC government is finding ways to clear obstacles to public-private partnership (PPP) investment projects to quicken their implementation. In a recent report sent to the Ministry of Planning and Investment on PPP investment activity, the city government said investors committed to 17 PPP projects with total capital of VND33.54 trillion (US$1.5 billion) from April 2015 and March 2016. Of the total, the build-transfer (BT) projects numbered 11, mainly in the fields of transport infrastructure, heath, flood control and environment. Four projects were registered for the build-own-operate (BOO) format, including a smart ticketing system for public buses, a waterway transport project and two underground parking lots. The build-operate-transfer (BOT) model attracted two projects, which are a road linking Vo Van Kiet Highway and HCMC-Trung Luong Expressway, and a cinema at the Cultural Center in District 12. According to the city government, the HCMC Department of Planning and Investment is coordinating with relevant units in making a list of projects for PPP investment in multiple sectors. So far the number of projects seeking approval, being prepared or evaluated in the list has amounted to 66 and these projects need a total of VND480.4 trillion (US$215 billion). However, the city government in the report pinpointed a slew of problems with the implementation of PPP projects. The problems relate to land rent incentives and the selection of investors for projects which directly affect the lives of people and need to be carried out urgently. The city government, therefore, is asking for the Prime Minister’s approval to offering no-bid contracts for such projects. In addition, inflation should be factored into periodic payments for investors of PPP projects, the city government said. The city government considered attracting capital via the PPP model as a good solution at a time when the city is struggling with an overstretched budget. However, many investors have asked for more specific and clearer legal grounds to ensure benefits for investors and the State, and ease the paperwork burden when they access such projects. An investor once described a PPP project as a marriage, which requires mutual trust. Besides, information about projects in need of private capital should be provided transparently. Jan-May CBU imports from Thailand surge Completely-built-up (CBU) auto imports from Thailand in the first five months of this year rose 50.8% year-on-year to 12,500 units, showed data of the General Department of Customs. But the country’s CBU auto imports from abroad dipped in the January-May period. The country imported 41,230 autos worth US$968 million, dropping 9.5% and 19.6% respectively over the same period last year. Vietnam bought 9,340 trucks from Thailand from January to May, soaring 41.7% year-on-year, while truck imports from South Korea inched down 8.2% to 4,000 units and trucks from China dropped 47.6% to 2,500. A majority of vehicles imported from Thailand in the period were pickup trucks, which have become popular among families and enterprises in Vietnam in recent years. Most of the world’s major automakers have invested in pickup truck production and assembly lines in Thailand. Vietnam imports pickup models such as Toyota Hilux, Ford Ranger, Nissan Navara, Chevrolet Colorado, Mazda BT50, Isuzu D-Max, and Mitsubishi Triton from Thailand. Pickup trucks are subject to an import duty of only 5% while 40-50% tariffs are slapped on other models. This is why many auto assembly joint ventures in Vietnam have shifted to importing pickup trucks from the ASEAN country. However, imports of vehicles with less than nine seats from Thailand surged but slid from other markets. Particularly, car imports from India in the first five month dropped by 18.7% to 5,400 units but those from Thailand rocketed by a staggering 92.4% over the same period a year earlier to 3,100 units. In the first five months, Thailand surpassed South Korea, China, and India to become Vietnam’s biggest auto exporter. Last year, the country ranked fourth after China, South Korea, and India. Auto imports from Thailand are projected to increase when the import tax on autos originating in ASEAN countries is down, piling pressure on joint ventures that assemble vehicles in Vietnam.   The tariff on autos imported from ASEAN markets was brought down to 40% from 50% early this year and will fall to 0-5% in 2018 in line with the ASEAN Free Trade Area (AFTA). A couple of well-known auto brands from Japan and the U.S. have plans to choose Thailand as their main production base in Southeast Asia. Experts have forecast that imports of autos with engine displacement of 2.0 liters or smaller from Thailand could surge in the coming years. Maximum risk provision period for VAMC bonds extended The State Bank of Vietnam (SBV) has allowed credit institutions to set aside risk provisions for special bonds of Vietnam Asset Management Company (VAMC) for a maximum period of 10 years instead of five years. The maximum risk provision period for VAMC bonds is specified in Circular 08/2016/TT-NHNN issued last week by the SBV to amend Circular 19/2013/TT-NHNN on bad debt trading and settlement by VAMC. The new circular will become effective on August 1. This applies to those banks conducting restructuring plans but encountering financial problems caused by risk provisions for VAMC bonds. They can ask the central bank for permission to extend to the maximum period.   According to regulations on VAMC operation, credit institutions must set aside 20% of VAMC bonds’ value a year after selling debts to the debt trading firm. The SBV later allowed certain institutions to extend the period of risk provisions to 10 years, and now this treatment is open to all banks.    The new circular stipulates that credit institutions getting SBV approval for the maximum period of risk provisions must not pay dividends to shareholders until special bonds fall due. This will affect 41 institutions which have sold debts to VAMC. By end-April, VAMC had spent some VND209.23 trillion buying 24,560 debts from 41 credit institutions, with original amounts worth over VND244.68 trillion (US$10.9 billion). Bank for Investment and Development of Vietnam (BIDV) has sold around VND20 trillion of bad debts to VAMC so far. According to the prevailing regulations, the lender must use some VND4 trillion sourced from its profit a year for risk provisions during the five-year period. Last year, BIDV obtained consolidated pre-tax profit of VND7.4 trillion.      If the lender seeks permission for the maximum period of risk provisions for VAMC bonds to 10 years, its shareholders will not get dividends until all of the debts are paid.    The SBV’s Circular 08 enables VAMC to adjust interest rates for all debts acquired via the issuance of special bonds. Earlier, only customers meeting a couple of requirements can have their interest rates reduced. In addition, VAMC can adjust terms of debts and extend payment deadlines. The company can auction bad debts, set prices and negotiate with debt buyers. VAMC can negotiate to sell debts to banks that owned the debts before if VAMC special bonds have yet to reach maturity. Fuel imports from S.Korea soar in Jan-May Fuel imports from South Korea in the first five months of this year stood at 713,000 tons, a nine-fold increase compared to the same period last year, according to the General Department of Customs. Statistics of the department showed imports of gasoline and other fuels from Korea made up 13.2% of Vietnam’s total in January-May. Local enterprises enjoy a preferential tariff of 10% for their fuel imports from the Northeast Asian country, 10 percentage points lower than from many other markets.   Tran Minh Ha, deputy general director of Saigon Petro, told the Daily that local fuel trading companies have not been able to increase fuel imports from Korea due to its limited supply. Korea has only three oil refineries and its gasoline is subject to the low tariff when it is shipped to Vietnam. Therefore, Vietnamese firms cannot order more from these refineries. Ha said to meet domestic demand, local fuel trading enterprises buy petrol from other ASEAN markets and Dung Quat Oil Refinery in Vietnam’s Quang Ngai Province with an import duty of 20%. They mostly oil products from ASEAN to enjoy a tariff exemption compared to the respective rates of 5% and 7% imposed on those from Korea and other markets. Vietnam had spent US$1.96 billion importing a total of 5.4 million tons of fuels by the end of May, down 20.2% and 27.6% year-on-year respectively. Shipments from the markets with preferential tariffs accounted for a large proportion, including 2.18 million tons from Singapore, up 7.4%, and 1.49 million tons from Malaysia, a five-fold rise. On the home market, fuel traders have still found it hard to sell E5 biofuel. A representative of a fuel trading firm told the Daily that consumption of the bio-gasoline has slid and now accounts for 7% of total gasoline sales compared to the previous 10%. Despite good discount rates for E5 biofuel, gas station owners have placed smaller orders for E5 this year due to low demand. A couple of gas station owners said they enjoy an average discount of VND1,200 a liter on gasoline and VND900 a liter on oil products. Tra fish trading platform to prop up related sectors The Vietnam Pangasius Association (VN Pangasius) is pinning high hopes that establishing an online trading platform for tra fish from the Mekong Delta in the 2016-2019 period would help support growth of processing enterprises and related industries. Vo Hung Dung, vice chairman and general secretary of VN Pangasius, said the trading platform could enable tra fish processing firms to promote their products and find more customers online. With the current traditional trading method, domestic enterprises rely heavily on importers who have worked with them for a long time but through intermediaries, so a large number of importers have not known about Vietnamese suppliers, Dung said. Things will change when the tra fish exchange comes into existence as it will enable exporters to approach hundreds of customers and sell their products at higher prices. It will boost growth in the logistics sector and create more jobs for local laborers.   Dung said exporters may get small orders via the exchange but packing these small orders for delivery to importers will prop up the development of the packaging industry. However, Dung said the trading platform should be weighed carefully as it is new in Vietnam. Post-harvest tech sought for litchi Nguyen Ngoc Hoa, deputy director of the HCMC Department of Industry and Trade, has called for competent agencies to find appropriate post-harvest technology to help farmers in the nation’s north maintain the quality and value of litchi. Hoa told a conference held in HCMC on Monday to promote consumption of litchi in southern provinces that the quality of litchi grown in the northern provinces of Hai Duong and Bac Giang could fall only one day after harvest if it is not properly stored. To keep the fruit fresh until consumption in the south, logistics problems should be solved as well, he said. Hoa also proposed sorting and packaging litchi in terms of quality and size. This year, the industry and trade departments of HCMC, Bac Giang, and Hai Duong have gauged litchi demand in southern and northern markets. The HCMC Department of Industry and Trade will continue playing a central role in connecting modern retail channels that sell litchi in this litchi season. Nguyen Trong Tue, director of the Hai Duong Department of Industry and Trade, said the ministries of science-technology and agriculture-rural development should aid the province in finding post-harvest technology to ensure the good quality of litchi. Nguyen Thanh Ha, deputy director of Thu Duc Farm Produce Wholesale Market Co in HCMC, said the market in Thu Duc District has sold 5,900 tons of litchi in the year to date, dropping 30% year-on-year, though it does not cut litchi sales. Representatives of major supermarket chains in HCMC such as Big C, Co.opmart and Metro said they will boost consumption of litchi grown in northern provinces. Particularly, Big C expects to sell 200 tons of litchi this year, up a staggering 30% over last year, while Saigon Co.op, the owner of the Co.opmart supermarket chain, plans to retail 350-500 tons of the fruit. Tran Quang Tan, director of the Bac Giang Department of Industry and Trade, said the province’s litchi acreage totals 30,000 hectares this year, down 1,000 hectares compared to last year. Total output is projected to ebb by 65,000 tons this year to around 130,000 tons. Tan said 23,000 tons or 17.7% of the total has ripened before the litchi season peaks. The province hopes around 55,000 tons could be consumed in the south in 2016. This year, Hai Duong Province has 11,000 hectares under litchi farming, Tue said, and output could dip nearly 30% against last year to 36,000 tons. State firms save VND12.3 trillion in 2015 Nearly VND12.3 trillion (US$549.7 million) was the amount which 22 State corporations and groups saved last year for the State budget, according to a Ministry of Finance review report. Vietnam Electricity Group (EVN) topped the list with VND5.03 trillion saved from investment and construction management, four times higher than in 2014. Vietnam Oil and Gas Group (PetroVietnam) spent VND2.1 trillion less than planned on production and saved an additional VND2.09 trillion from new investments. Its total saved in 2015 was VND558 billion higher than in the previous year. Vietnam Rubber Group and Vietnam National Tobacco Corporation reported respective savings of VND704 billion and VND593 billion. Others such as the Vietnam Paper Corporation, Vietnam Airlines, Vietnam Steel Corporation, Vietnam National Coffee Corporation and Vietnam National Petroleum Group saved hundreds of billions of dong. Meanwhile, 36 ministries and agencies in 2015 cut costs by VND3.09 trillion and spending on construction works by VND24.98 trillion. The combined figure amounted to VND28.08 trillion. The ministries of transport, national defense and natural resources-environment were the best savers in this field. All of the country’s 63 provinces and cities saved almost VND6.2 trillion from expenditures and an additional VND3.66 trillion from public investments. Hanoi, Lao Cai, Can Tho, Bac Giang and Binh Duong carried out spending plans more efficiently than other localities. Government agencies are told to slash their regular expenditures by 10% to facilitate salary reform and cut their spending on meetings, conferences, anniversary celebrations, receptions and energy costs, among others, by at least 12%. Budget discipline lax, balance difficult: experts The economy has been on recovery momentum easing the pressure on budget balance this year and following years. Still, overspending in 2014 and 2015 has not been solved while revenue has faced with many difficulties in short term because of a reduction in some major income sources. According to reports by the Ministry of Finance at the 49th session of the Standing Committee of the National Assembly, budget deficit hit VND260,145 billion accounting for 6.61 percent gross domestic product (GDP) in 2014 despite economic difficulties. That is VND36,145 billion higher than the NA’s decided level with many expense items out of estimates. The Government allocated VND10 trillion official development assistance (ODA) funds to some projects of Vietnam Expressway Corporation instead of re-loaning as per plan, showing lax budget discipline: spending before reporting. Of these, VND1,255 billion was spent on speeding up the progress of Da Nang-Quang Ngai expressway, VND6,231 billion on HCMC-Long Thanh-Dau Giay and VND838 billion on Noi Bai-Lao Cai. ODA capital disbursement highly increased in 2014-2015 because the Government will no longer allocate but re-loan this source from 2017 forcing localities to think about using it. Associate professor and Dr. Tran Hoang Ngan, director of Ho Chi Minh City Cadre Institute, said that overspending is a chronic disease in Vietnam and consequence of lax and irresponsible spending in localities. The adjusted Budget Law has been passed but will just take effect in 2017 while public debt has hit ceiling level and continued increasing. Therefore, the Government should have a serious view and decisive actions to settle overspending, he said. Budget discipline must be placed on top. The role, duty and responsibility of localities should be underlined and responsibilities of agencies should be specified instead of being as vague as they have been. It is too late to discuss 2014 accounting by mid 2016 as everything has been done causing it impossible to make any adjustments. The NA has remained passive as everything has been done and reversible and had no sanctions to handle overspending, Mr. Ngan said. Dr. Do Thien Anh Tuan, from Fulbright economic program, said that budget revenue was improved by the end of last year to reach VND884,800 billion accounting for 97.1 percent estimates. Of these, domestic income hit VND657 trillion, 2.9 percent exceeding estimates. The highest increase was from environmental protection tax, agricultural land use tax and other housing and land incomings. However their contribution ratio was not high. Meantime, crude oil revenue reached only VND62.4 trillion accounting for 67.1 percent of estimates. Exploitation output increase was unable to make up price fall, resulting in crude oil income drop, equivalent to only 7 percent of 2015 budget revenue. According to Dr. Tuan, regular spending increased to 80 percent of total budget expenditure last year and the rest 20 percent was for development investment excluding debt payment. The budget structure has leaned towards consumption rather than investment. Spending estimates approved by the NA was VND767 trillion but the practical number surged by VND112 trillion to VND879 trillion. Expenses on investment and development was estimated to hit VND203 trillion, 4.2 higher than estimates. Total expenditure thus neared VND1,100 trillion far exceeding the total revenue of VND927.5 trillion as per reported by the Ministry of Finance, leaving VND154.5 trillion in budget deficit, holding 3.45 percent GDP. The number excludes debt payment and aid amounts touching VND150 trillion. After adjustment, budget deficit might raise to 6.8 percent GDP not 5 percent as per the NA’s estimate. Total budget revenue is estimated to approximate VND1,000 trillion for the first time in 2016, equivalent to 20 percent of the year’s forecast. Of the number, crude oil is estimated to contribute only 5.4 percent of total revenue and export import income reduction is likely because many tax lines will be cut for international integration. Domestic revenue is forecast to reach VND785 trillion, up 23 percent over estimates and 20 percent against 2015. This is a good signal but also portends difficulties for businesses and the economy. Meantime, spending is forecast rather high with over VND1,270 trillion, up 11 percent over estimates. Positive sign is that the government has increased spending on development investment from 20 percent last year to nearly 24 percent this year and cut regular expenditure from 80 percent to 76 percent in budget balance excluding debt payment. Debt payment and aid amounts will be equivalent to 2015 of VND155.1 trillion, a rather high level amid current budget balance conditions. In addition, the Government will spend VND13,055 billion, up VND10 trillion over 2015, on wage reform and regular workforce streamlining. Hence, budget deficit is estimated to hit 4.95 percent GDP, down 0.05 percent over 2015. The reduction rate is not significant but still shows the Government’s effort to slash overspending. However the long term problem of Vietnamese budget is low discipline and transparency. For instance, if budget deficit is VND254 trillion, the Government will be permitted to get loans of similar amount. Still according this year plan, the Government is expected to mobilize up to VND409 trillion including 254 trillion to make up the overspending including funds for debt payment, VND95 trillion to pay off-budget debts and VND60 trillion to finance government bond investment programs. Binh Dinh revokes licence of delayed tourism projects The south central coastal province of Binh Dinh has withdrawn the licences of four delayed tourism projects so far this year. According to Director of the provincial Department of Culture-Sports and Tourisms Nguyen Van Dung, the projects will be transferred to more capable investors. The revoked projects include Hoi Van-Phu Cat hot spring resort and a service and a trade complex in Ngo May- Quy Nhon. The two projects will be transferred to Hoa Sen Group for investment survey. Along with this, a part of Quy Nhon- Cau River tourism route will also be reclaimed. In addition, the province has instructed authorities to adjust the detailed plan for the first phase of the Ghenh Rang tourism site. The province has been home to 43 tourism investment projects with a total investment capital of tens of trillion VND. In the first six months of this year, the locality has received nearly 1.66 million visitors. Foreign travelers numbered over 119,350 international arrivals, up 18 percent compared to the same period in 2015, while domestic visitors reached 1.54 million, a year-on-year increase of 31 percent. The province has earned more than VND721 billion (US$32.3 million) in tourism revenues since the beginning of this year, a surge of 57 percent against the same period in 2015. Belgium’s garment technologies introduced to Vietnamese businesses New technologies used by Belgian enterprises in the garment and apparel sector were introduced to their Vietnamese counterparts at a forum in Hanoi on June 21. The event, jointly held by the Vietnam Textile and Apparel Association (VITAS), the Flanders Investment and Trade (FIT) and the Belgian Textile Machinery Association, attracted the participation of 15 leading groups and companies in garment technology solutions from Belgium. VITAS Vice Chairman Truong Van Cam said that the Vietnamese garment and textile sector is one of the industries to benefit most from freshly-signed free trade agreements like the Trans-Pacific Partnership (TPP) and the EU-Vietnam free trade agreement. Vietnam is currently attracting a number of foreign-invested projects in garment and textile production, while domestic businesses are also paying more attention to this sector. Therefore, the forum is organised to help develop the garment and textile production in Vietnam, stated Cam. It also opens up more cooperation opportunities for both Vietnamese and Belgian enterprises, while offering a chance for local firms to learn from the latest technologies from Belgium. Vietnamese shrimp exporters face challenges Vietnamese shrimp exporters could lose their markets due to the insufficient supply of shrimp, which is partially attributed to direct purchases from local farmers by Chinese traders. Many shrimp processing companies in the Mekong Delta are working at half of their capacity because of a shortage of shrimp. If the situation doesn’t improve, Vietnamese shrimp exporters may lose market share. Vietnam’s biggest shrimp breeding and exporting hub of Cau Mau Province, was estimated to have produced just 134,000 tonnes of shrimp, meeting just 40% of the yearly target. Nguyen Van Tuan, a resident from Thoi Binh District, said that the prolonged drought had increased water salinity, affecting shrimp development. Ngo Thanh Linh, General Secretary of the Ca Mau Association of Seafood Exporters and Producers, said that Chinese traders have bought more shrimp directly from Vietnamese farmers, leaving exporters struggling. "Ecuador has been the main raw shrimp supplier for China, but recent earthquakes has led to a sharp fall in their shrimp output. So they’ve been looking for more supplies from Vietnam,” Linh added. Truong Dinh Hoe, General Secretary of Vietnam Association of Seafood Exporters and Producers, said farmers would obviously sell shrimp to whoever offers higher prices. But if Chinese traders continued to buy shrimp in Vietnam, it would deal a hard blow to the local shrimp processing industry. The association’s vice chairman Le Van Quang said that injecting impurities into shrimp has been a thorny issue in Vietnam, which has seriously damaged the country's prestige. "On my recent business trip to Japan, some of Japanese customers said to me that they did not want to buy Vietnamese shrimp products any more because they found impurities and even pieces of toothpick, and they would instead turn to Indonesia or the Philippines," Quang said. The rate of returns of Vietnamese seafood shipments also rose in 2015. In only the first nine months of the year, the number of seafood shipments returned due to high antibiotics and micro-nutrient residues, along with other types of contamination, was equivalent to the rate recorded in 2014. Among them, 27 consignments were rejected by Japan, and similar moves had been taken by authorities in the EU, the US and other overseas markets, the association said, citing a report of the Ministry of Agriculture and Rural Development. The association estimates that Vietnam's shrimp will still be affected by widespread price cuts by competitors, and that exports of seafood to the US, the biggest market for the Southeast Asian country, would continue to face hurdles this year. New taxes insufficient to deter burgeoning car market Dealers are seeing growth in the local car market, especially for small cars as tax hikes will take effect from July 1. Small cars are getting more attention and will have the fastest growth. Audi Vietnam reported that the sales in the first half of the year increased by 35% compared to previous year. BMWs sale increased by 40% in the first five months. May and June saw sales double. Mercedes-Benz Vietnam also reported that their sales in May tripled previous months while Lexus Vietnam reported 92% over the first five months of this year compared to the same period in 2015. Many people are rushing to buy cars now as tax rates will increase from July. Taxes on cars with 1.5 to 2.5 litre engines will remain at 45-50%, while those between 2.5-three litres will increase from 50% to 55% and those between three to four litres will increase to 90%. However, a dealer in Hanoi said the number of customers has increased despite the tax hike because of increasing number of rich people in Vietnam. They also claimed that orders for some cars would only be met at the end of this year. Luxury cars with engines ranging from 2.5 to 3 litres are selling well as the tax increase wasn’t sufficient to deter well-off families. A VND1bn car will increase in price by just VND200m. Customers who previously showed interest in cars with engines over three litres are now considering smaller cars. Manufacturers have also focused more on smaller cars. BMW, Mercedes-Benz and Audi in in Hanoi have promoted the sale of less than 3-litre cars. As SUVs have seen good growth worldwide, some manufacturers have also shift focus on the SUVs and crossovers for family trips. This is proved by the sales of Audi Q series, BMW X series and the Mercedes-Benz GL-Class. Samsung increases its supply chain localization Samsung has announced that the number of local companies participating in its supply chain has spiralled upwards to approximately 130, more than three-fold the number at the beginning of the year. “Local businesses have an equal shot for supplying raw materials and components to our manufacturing plants with foreign businesses, said Han Myoung-sup, chief executive officer of Samsung Vietnam, in making the announcement. Mr Myoung-sup assured local business that if they meet with Samsung’s strict requirements in terms of quality, delivery times and price, they will have an equal chance with foreign rivals at becoming a supplier. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR