BUSINESS IN BRIEF 3/6 Vietnam, EU optimise opportunities from free trade deal A negotiation delegation from the EU is on a working visit to Vietnam to raise public awareness of how to optimise the benefits and opportunities from the freshly-concluded free trade agreement between two sides (EVFTA). He said the EU and Vietnamese experts will review the agreement to ensure all of its contents are legally built. The conclusion of the EVFTA is a significant stride in the bilateral economic, trade and investment relations, he said, describing the deal as an inclusive, high-quality one that balances benefits for both the EU and Vietnam. Particularly, the two sides’ import-export structure is supplementary rather than competitive, thus opening opportunities for businesses to penetrate into the respective markets, he said. Regarding EU’s trade policy for ASEAN and Vietnam in the coming time, he said, the EU is running a trade deficit with many countries . Therefore, the union is seeking opportunities to expand its markets and promote import-export activities in the global arena. He highlighted ASEAN as an attractive destination to the EU’s supply chain, but the negotiations for an FTA between EU and ASEAN have not been successful, adding that EU has to implement its strategies to negotiate an FTA with each member in the association. After Singapore and Vietnam, the EU will continue to conduct bilateral FTA negotiations with other ASEAN member states such as the Philippines and Malaysia, he revealed. The EU is currently the second biggest trade partner of Vietnam with two-way trade reaching over US$$41.2 billion. As of 2015, the EU run 1,809 investment projects in Vietnam with a total capital of US$23.16 billion. Integration poses risks to wood exporters   Vietnam’s increased international integration is offering opportunities but also posing challenges and risks to enterprises, so good preparations are needed to cope, heard a seminar in HCMC on Monday. At the seminar on integration-induced risks to wooden goods exporters, Dr. To Xuan Phuc from non-profit organization Forest Trends said a Vietnamese wood processing firm that imports wood from Laos to make furniture for export to the U.S. would find it hard to do so in future. U.S. authorities would not allow in this firm’s furniture shipments as wood originates in a hydropower project whose licensing and implementation processes reportedly implicated irregularities. Since 2012, Forest Trends, together with the Vietnam Chamber of Commerce and Industry (VCCI), the Vietnam Timber and Forest Products Association (VIFORES), the Forest Products Association of Binh Dinh (FPA Binh Dinh) and the Handicraft and Wood Industry Association of HCMC (HAWA), has done some analyses into the wood processing industry, which show integration risks are looming. The deeper Vietnam integrates into the global economy through the free trade agreements like the Trans-Pacific Partnership (TPP) and the one with the European Union (EU), the stricter rules local wood firms will have to observe. Vietnam’s wooden products are now present in more than 100 countries and territories and strict regulations are being imposed by major importers including the U.S. and the EU. Therefore, wood processors must comprehend the U.S. Lacey Act, the EU Timber Regulation and the EU Forest Law Enforcement, Governance and Trade. Under the Lacey Act issued in 2008, wood is deemed as illegal if it originates in national and reserve parks, is exploited without license, and is planted without paying land rent and fees. In addition, wood processing firms must pay attention to labor and environment issues, exchange rate risks and trade fraud. Salt found safe in central provinces Tests have shown salt made in central Vietnam is safe for humans, the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) said, allaying public concerns over salt safety prompted by the recent mysterious mass fish deaths on the central coast. At the request of the Ministry of Agriculture and Rural Development, Nafiqad’s labs had tested salt samples taken in the 2016 harvest in a number of central provinces struck by the fish deaths, and the samples had been found safe. In Ha Tinh Province, salt taken from three producing areas has been determined safe as it meets the national standards for heavy metals in food. Test results also showed salt from nine areas in Nghe An, Khanh Hoa and Ninh Thuan provinces is fine. Salt production in Quang Binh Province has been suspended since tons of fish were found dead on beaches. Quang Tri and Thua Thien-Hue provinces were also hit by the mass fish deaths but they are not salt producing areas. HCMC attractive to Japanese investors HCMC and the nation’s south as a whole are increasingly attractive to Japanese companies, Koji Maeno, new chairman of the Japanese Business Association of HCMC (JBAH), said, citing improvements in the investment and living environments. Speaking at a meeting on Monday with HCMC chairman Nguyen Thanh Phong, Koji Maeno, who is also general director of JFE Steel Vietnam, said annual dialogues between the city government and JBAH have over the years helped remove a lot of obstacles to operations of Japanese firms in the city. He said Japanese experts had come here with family as living conditions in the city and neighboring provinces have improved. There are 834 Japanese firms operating in HCMC as members of the association and they employ 3,000 Japanese and 220,000 Vietnamese. JBAH became the fourth largest Japanese business association in the world behind the associations in Shanghai (China), Bangkok (Thailand) and Singapore. The Japanese Business Association in Hanoi has 632 member companies. This demonstrates the appeal of the city to Japanese enterprises, Maeno said. Phong said Japan is one of the most important partners of HCMC in various fields including economy, trade, investment, culture and education. The city is committed to maintaining the annual meetings to solve any issues faced by Japanese firms. Phong said the association could do more to contribute to strengthening cooperation between the two sides, especially in sectors in which Japan is strong such as supporting industries, high-tech and agriculture. Phong said the city will hold a meeting from September 6 to 8 with the participation of about 14 cities. The conference will feature business matching sessions and a supporting industries fair, which Phong said JBAH could ask its members to join. Central bank biased toward growth The central bank has issued new circulars biased toward gross domestic product (GDP) growth rather than the banking system, according to financial institutions and banks. A foreign investment fund told local media that the State Bank of Vietnam’s (SBV) circulars 06 and 07 would ultimately support growth as Vietnam’s first-quarter GDP growth was lower than in the same period last year and credit growth stayed low. Circular 06/2016/TT-NHNN, which amended and supplemented a number of provisions in Circular 36/2014/TT-NHNN, reduces adequacy ratios at banks to ease pressure on banks and support interest rate cuts this year to boost loan growth.   Speaking to the Daily, a senior source from a bank said the central bank is trying to buoy GDP growth in the coming time. The economy did grow in quarter one but not as strongly as expected, making the Government’s GDP growth target of 6.7% for this year hard to obtain. The two pro-growth circulars give enterprises access to foreign currency loans, channel more loans into the market and allow banks to have time to prepare to meet the requirements for adequacy ratios set by the SBV. A couple of macroeconomic targets could improve significantly in the second quarter, the source said. He noted joint stock banks have an edge over banks that are majority-owned by the State. Besides, the capital adequacy ratio (CAR) at banks is expected to edge down at the end of this year. According to a Bank for Investment and Development of Vietnam (BIDV) report released on May 31, GDP growth is projected at 6% to 6.2% in quarter two and at 5.7-5.8% in the first half of this year. Vietnam’s economy is projected to expand 6.5-6.7% in all of 2016. The report was based on factors like the Government’s resolve to support businesses, positive export growth, higher foreign direct investment approvals, a surge in startups in quarter one, an oil price recovery and good growth prospects backed by the free trade agreements the country has joined.      Credit is forecast to grow 10-11% in the third quarter. Deposit rates may be revised up to attain a desirable credit growth rate and match Government bond coupons and inflation, the report said. In the first half, export revenue is projected at US$82.5 billion and the import bill at US$80.5 billion, hence a trade surplus of US$2 billion. These positive figures result from good economic prospects of some major economies like the U.S. and the European Union and Vietnam’s deeper international integration.    BIDV said the equity market would perform well. The foreign ownership limit (FOL) hike would lead foreign investors to remain net buyers in the coming time. According to the report, if credit growth stays high but lower than the rise of capital mobilization at banks, the currency market would be stable. As of April 24, credit had grown 3.57% against the end of 2015 and amounted to VND4,830 trillion. Meanwhile, capital mobilization had grown 4.5%. By end-March, banks had mobilized over VND5,390 trillion from depositors.     Meanwhile, Circular 07/2016/TT-NHNN, which was issued by the central bank to amend Circular 24/2015/NHNN and takes effect from on June 1, permits exporters to take out short-term loans in foreign currency at low interest rates and convert them into Vietnam dong funds to finance their production of goods for export. Another investment fund in HCMC said Circular 06 eases concerns among banks and real restate firms. On Monday, realty firms like VIC, DXG and KDH and banks such as VCB, BID, MBB and CTG edged up on the HCMC exchange, backing the market rally. The BIDV report noted the SBV and the Government should order credit institutions to streamline procedures, ensure safety of loans and create favorable conditions for businesses to borrow. The Government must act to prevent dollar hoarding and encourage dollar buy and sell transactions in a way that does not affect production costs. Phase two of a banking sector restructuring plan in 2016-2020, especially ailing banks, will be executed to improve financial capacity of banks, those majority-owned by the State, settle bad debt and increase transparency in the banking system. Sembcorp brings “innovation park” to Ho Chi Minh City Singaporean company Sembcorp Development, whose joint venture Vietnam-Singapore Industrial Park (VSIP) has been developing integrated townships and industrial parks in Vietnam, has officially expressed interest in developing a high-tech park in Ho Chi Minh City. At a meeting with Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong late last week, Sembcorp Development CEO and VSIP co-chairman Kelvin Teo said the “innovation park” is going to be different from VSIP’s usual model. The park is going to include a commercial centre, research facilities, and residential quarters, and is intended to be a place for scientists, developers, and investors to research and develop technologies and products with higher added values for international companies. According to Teo, Ho Chi Minh City is a suitable location for the park because the city has been attracting a lot of foreign direct investment from big technology companies and its infrastructure and the quality of labour force has been improving at a breathtaking speed. Chairman Phong commented that the project is welcomed by the city as it falls in line with its development orientation. He added that Saigon Hi-Tech Park (SHTP) has a 200 hectare zone that is just perfect for the park. SHTP has a modern infrastructure and has attracted many big investors in the field of technology. In the near future SHTP is going to be a stop along Metro line no. 1 (Ben Thanh-Suoi Tien), further appreciating its business worth. Phong carried on requesting Sembcorp to work with SHTP’s management authority. Sembcorp is going to receive the investment license to develop the park in September or October if the parties can reach an agreement and complete all procedures by then. Vietnam-Singapore Industrial Park is a joint venture between Becamex IDC Corporation and a consortium of three companies from Singapore which is majority led by Sembcorp Development. Other partners holding a stake in VSIP are Mitsubishi Corporation Development Asia and KPM Vietnam Investment. So far, VSIP has been successfully developing integrated townships and industrial parks in Binh Duong, Bac Ninh, Haiphong, Nghe An, and Quang Ngai. It has recently started construction of one such project in Hai Duong. Footwear investors stepping up game in Vietnam The Nam Dinh Department of Planning and Investment has recently granted an investment certificate for Hong Kong-based Bunda Footwear Company Limited to develop a $47.5 million footwear production factory in Nam Truc district, according to local media. The 30-hectare project’s construction is expected to start in September. The factory is expected to begin its test run sometime between August and September 2018 and officially come into operation in October 2018. Upon entering full operation, the factory will have an output of 15 million products per year and create between 10,000 and 12,000 jobs. According to Trieu Duc Hanh, Secretary of the Nam Truc District Party Committee, the project plays an important role in the district’s socio-economic development, making it imperative for the authority to support the investor in site clearance as well as deal with problems arising during the implementation process. The district will try to complete the site clearance and hand over the ground for the investor before June 30. Bunda’s project is not the sole large-scale footwear production projects invested in Vietnam in the first five months of this year. On March 7, the Can Tho City Export Processing and Industrial Zone Management Authority licensed South Korean Taekwang Industrial to implement a $171 million shoe-manufacturing factory in 2B Hung Phu Industrial Park in Cai Rang district of Can Tho. The factory covers an area of 62 hectares, 52 of which is reserved for the production area, while the remaining 10 is set aside as a service and commercial area and warehouses for lease. The factory’s construction is divided into three phases. The first phase’s construction is expected to be kicked off in 2016 and last until 2019, with the second and third phases to be finished by 2022 and 2025, respectively. The factory constructed during the first phase will start operation in the first quarter of 2017, while the second phase will be inaugurated in 2020, and the third phase in 2023. Once the factory comes into operation, it will have a total capacity of 100 million products per year and create 30,000 jobs. VILAF triumphant at the ALB SE Asia Law Awards 2016 Two months after winning the prestigious IFLR awards, Vietnam National Law Firm of the Year and Project Finance Deal of the Year, VILAF- one of the largest law firms in Vietnam- recently took home more awards from Asian Legal Business (ALB) South East Asia Law Awards 2016. The ALB hosts each year the presentation of 36 awards before the Southeast Asia legal circle. This year, VILAF emerged as the ALB 2016 Vietnam Law Firm of the Year over 11 other short-listed domestic and international law firms from Vietnam. VILAF also won the ALB Project Finance Deal of the Year for the Vinh Tan 1 BOT Power Project. VILAF won the Vietnam Law Firm of the Year award as the law firm from Vietnam with the most nominated deals this year at ALB: financing for Vinh Tan 1 BOT Power Project, financing for Cam Lo – Tuy Loan Highway, Mondelez International’s acquisition of the food business of Kinh Do Corporation, Chow Tai Fook’s and VMS Investment’s acquisition of integrated casino, hotel and residential South Hoi An Project, and CPECC’s acquisition of a joint venture equity interest in JAKS Hai Duong BOT Power Project. “We are delighted to be recognised at the ALB Asia Law Awards again,” said Vo Ha Duyen, VILAF’s chairperson, “We owe these awards to our clients and friends for their loyal support and are committed to continue our strongest dedication to their business and their investment objectives in Vietnam. We are always there for them.” VILAF is one of the largest law firms in Vietnam primarily advising foreign investors and financial institutions in their investment and operations in Vietnam, and has consistently been ranked as a first tier law firm by global legal editorials (eg, IFLR1000, Chambers and Partners, Legal 500, ALB, and AsiaLaw). Hai Duong targets sustainable growth The northern province of Hai Duong is aiming at developing its economy in a sustainable manner, according to the provincial Department of Planning and Investment at a meeting on June 1. It wishes to see an annual increase of 8-8.5 percent in the local GDP from 2016 to 2020, with the focus on industry and construction, and services, accounting for 56 percent and 33 percent, respectively. Budget collection is expected to gain 10 percent each year, and annual per capita income to reach 55 million VND (2,475 USD) by 2020. A number of key projects will be implemented in the period, including a major provincial road, eco-tourism sites and public facilities. The locality will focus on enhancing the competitiveness of the economy, boosting hi-tech agriculture and developing concentrated breeding areas. Development of the support industry and advanced technology will be given priority in local industrial parks and clusters. Administrative procedure reform, human resources development and infrastructure upgrades will be among the key targets, in tandem with managing natural resources and protecting the environment. Between 2011 – 2015, the province’s annual economic growth rate reached 7.7 percent. By the end of 2015, as many as 64 communes had met all 19 criteria of the new-style rural area building scheme. Dong Nai likely to double FDI this year The southern province of Dong Nai is likely to attract double the targeted 1 billion USD foreign direct investment (FDI) this year. As of May 31, total FDI had reached 883 million USD, including 332 million USD in 50 new projects and the remaining added to 38 existing projects, said Director of the provincial Department of Planning and Investment Cao Tien Dung. The province has so far drawn more than 1,600 FDI projects capitalised at nearly 29 billion USD, including 1,200 now operating with a combined worth of more than 24 billion USD, mostly from Japan, the Republic of Korea and Taiwan (China), who specialise in support industry, electronics and high technology. Mai Van Nhon, deputy head of the provincial management board for industrial parks, attributed the positive FDI attraction to the province’s location in the southern key economic zone and its access to National Highways 1A, 51, 20 and the Ho Chi Minh City – Long Thanh – Dau Giay expressway and north-south railway. It is also thanks to the administrative reforms that have taken place, including the application of the national single window mechanism, he added. The duration for investment licensing in Dong Nai lasts no later than 10 days, and 90 percent of investment certificates are granted to investors on schedule. The time for processing other procedures online has been halved. The board also serves as a bridge to connect firms with State management agencies, Nhon said. Dong Nai has increased investment promotion in many countries, particularly in Japan. With the launch of Kansai Table in the locality three years ago, Japanese capital inflows to Dong Nai have soared, accounting for half of newly-licensed projects. Dung said the ongoing construction of the Ben Luc-Long Thanh highway and Long Thanh airport, and other transport routes is also an advantage to attracting FDI. Disease free cattle zones boost agricultural exports Being the country’s top performer in veterinary services, Ho Chi Minh City is vying for the World Organisation for Animal Health (OIE)’s certificates of disease-free cattle and poultry zones, which helps promote the city’s agricultural exports. The information was heard at a conference held in the southern hub on June 1. According to Huynh Tan Phat, deputy head of the city’s Department of Animal Health, 64 breeding farms in the city were recognised as non-pandemic zones during 2011-2015 period. The department is setting up two koi herpes virus-free ornamental fish breeding zones that meet the OIE’s requirements, aiming to enhance ornamental fish shipments to the European market. The city has also set the target of having one breeding zone in Cu Chi district which is free of foot-and-mouth disease by 2018 and then duplicate the model in Binh Chanh and Hoc Mon districts by post 2020. In addition, VietGap certification will be branched out to breeding communes in Cu Chi and Hoc Mon districts. By the end of May, 2016, businesses in Ho Chi Minh City had shipped 792 tonnes of eggs, 34 tonnes of quail eggs and 16 tonnes of salted duck eggs to such fastidious markets as Australia, Japan and the United Arab Emirates. Honda Vietnam sees increase in motorbike sale Honda Vietnam (HVN) sold 2.03 million motorbikes in the fiscal year 2016 (which ended in March), 120,000 units more than the previous year, according to General Director of Honda Vietnam Minoru Kato. The figure accounts for 70 percent of the total domestic market with nearly 2.9 million motorbikes sold. In the reviewed period, HVN shipped abroad nearly 128,000 completely built units (CBU), up 40 percent from last year, generating 293 million USD. The company is expected to earn 312 million USD in 2017 from its motorbike exports, up 6.5 percent from the 2016 fiscal year. The Company said it plans to introduce several new models and versions to meet the market demand.- Opportunities, challenges lie ahead under EU-Vietnam FTA Opportunities and challenges for Vietnam under the EU-Vietnam Free Trade Agreement (EVFTA) were highlighted at a workshop held in Ho Chi Minh City on June 1. Vietnam and the EU have agreed to push the ratification process to make the agreement effective in 2018. Both parties expect the EVFTA will allow them to boost economic growth, stimulate trade and investment cooperation and create more job opportunities. It is crucial for Vietnam to review and make amendments to its relevant laws and regulations in order to ensure consistency with the FTA commitments. As doing so may have a huge impact on domestic businesses as well as the country’s key sectors. The EVFTA will help Vietnamese enterprises improve their competitiveness and gain more access to the EU markets, said George Berczely, Chairman of the Transportation and Logistics Sector Committee of the European Chamber of Commerce in Vietnam (EuroCham). To enjoy tariff and customs incentives under the deal, Vietnam needs to comply with its commitments regarding rules of origin and intellectual property rights, he added. Each industry will have its own tariff elimination schedule after the FTA comes into force in 2018. However, enterprises should be preparing themselves from now with the equipment and materials required to form complete supply chains, especially those in the garment & textiles, and footwear sectors. They should also be less dependent on imported materials and have a diverse supplier base to ensure their sustainable development. Speaking of trade facilitation, Nicolas Audier from EuroCham said the EVFTA will provide simplified customs procedures with pre-arrival processing that will enable the release of goods on arrival, but it also requires both parties to maintain transparency and responsibility to the commitments.- Quang Nam: Fine art products receive local branding As many as 34 fine art products made from silk, rattan, bamboo and wood in the central coastal province of Quang Nam were granted the branding: “Crafted in Quang Nam”, at a conference held in Hoi An city on May 31. This is the result of the first selection round hosted by the provincial Fine Art Association from March this year. The chosen products have to embody local specific traditional values and receive the province’s standout rural industry award. Quang Nam province has been a pioneer in the country, in building and branching out the branding for its fine art products, which was designed for domestic and foreign tourists to identify high-quality goods of the locality. The move aims to develop traditional craft villages while creating jobs for local labours, and making contributions to building new-style rural areas. According to Vice Chairman of the provincial Cooperative Alliance Vo Bay, the traditional fine art villages in the province are facing difficulties in launching their products into the market while the customers want to know the products’ exact origin. He added that the branding will help businesses, villages and cooperatives to increase their fine art products as well as expand consumer markets. The branding contributes to developing sustainable tourism in the province, a representative from the United Nations Educational, Scientific and Cultural Organisation’s Vietnamese Office said, noting that the fine art association needs to complete criteria for the branded products, while local businesses should promote the branding and popularise it among tourists. Quang Nam province is currently home to 65 traditional craft villages with hundreds of fine art products. The provincial fine art association will join hands with relevant agencies to choose additional standardised products in the coming time. Hai Phong remains among top FDI destinations The northern port city of Hai Phong still holds its position among the country’s top performers in foreign direct investment (FDI) attraction with 31 newly-registered and capital adjusted projects valued at more than 1.74 billion USD in the first five months of the year. Large economic groups from Japan, the Republic of Korea (RoK) and Belgium chose Hai Phong to land their investments thanks to the city’s favourable geographical location and potentials. The city is housing more than 450 valid FDI projects with a total registered capital of over 12 billion USD. The RoK LG Display Co.Ltd’s OLED display project at Trang Due Industrial Park is among the largest foreign-invested projects. Kicked off in May, covering 40.2 hectares, the 1.5 billion USD factory will come on stream next year and is expected to provide jobs for some 6,000 local people. The robust results in FDI attraction represents the municipal authority’s concerted efforts to improve administrative procedures and the business investment climate, as well as further investment promotion activities, said Secretary of the municipal Party Committee Le Van Thanh. He highlighted that prompt land clearance and policies to attract a high-quality workforce are also significant contributors to the city’s FDI attraction. Such projects as Cat Bi International Airport and Hai Phong International Container Terminal (Component B) together with a comprehensive and modern transport infrastructure will give huge advantages to the city to lure more FDI capital and tap its position in the northern coastal region to the fullest extent, in the coming years, he noted. Vietnam – Canada trade revenue grows in Q1 Vietnam leads ASEAN members in bilateral trade revenue with Canada, with the figure hitting 928.97 million USD in the first quarter of 2016, up 11.8 percent year-on-year. According to Statistics Canada, Canada exported 92.9 million USD worth of goods to Vietnam, an annual decrease of 38.7 percent during the period. The country spent 836.1 million USD on Vietnamese imports – mainly machinery, electronic devices, apparel and footwear, 23 percent higher than last year. Vietnam secured a trade surplus of 743.2 million USD, with an annual surge of 123 percent in the overall value of machinery and electronic devices exported to Canada. Canada bought less seafood from Vietnam, leading to a drop of 22.4 percent in revenue compared to last year. Vietnam mostly imported fertilizer, nuts, seafood, machinery-spare parts and fur from Canada. Vietnam ranked fifth in ASEAN in terms of imports from Canada but exports the most to the country. In the period, the ten ASEAN state members together recorded almost 2.9 trillion USD worth of exports to Canada and more than 1 trillion USD worth of imports from the country. HAGL seeks to change land purpose The debt-ridden HAGL Group has been given approval to change the purpose of two of its projects planting grass for cattle feed to planting fruit trees for its fruit company. The Gia Lai Provincial People’s Committee in the central highlands permitted HAGL to change the purpose of two land plots of 195.8 ha and 488.8 ha in late May, under an official document from Deputy Chairman Kpa Thuyen. The document was in response to a HAGL letter sent in the middle of February. HAGL decided previously to terminate another cattle feed project, which applied high technology and had investment of VND1.6 trillion ($71.48 million), in the central highlands province of Kon Tum, and the Kon Tum Provincial People’s Committee has given in-principle approved to the project being terminated. HAGL is a large privately-owned agriculture and real estate company with debts totaling $1.25 billion as at the end of March, equal to 0.6 per cent of Vietnam’s GDP in 2015. The change of purpose it to reorganize its business activities and ease the pressure of debt repayments. Vietnam Customs, meanwhile, is consulting with the Ministry of Industry and Trade to cut import taxes on HAGL’s sugar produced in Laos and imported by the Hoang Anh Gia Lai Import-Export Trading Company. HAGL is also well known in the rubber industry and has suffered from falling prices. Mr. Eugene Tarzimanov, Vice President and Senior Credit Officer of Moody’s Investors Service, told VET that “on agriculture sector exposures, the rubber industry was more negatively affected in 2015 because of material price decreases.” Recently, ten banks, who are creditors of HAGL, proposed a debt restructuring plan that includes lower interest rates and loosened debt maturity. The debt restructuring, which has the potential to be the largest in Vietnam since Vinalines’ in 2013, is credit negative for Vietnamese banks exposed to HAGL because it will reduce and extend the cash flows of HAGL’s debt obligations and lower loss-absorption buffers, according to Moody’s Investors Service. According to Mr. Tarzimanov, “the negative impact on the profitability of the banks will come from possibly lower interest rates on HAGL loans and bonds - thereby banks will earn less on these assets or maybe even earn nothing - if interest rates are reduced significantly.” HAGL has confirmed its total debts amounted to VND27.099 trillion ($1.21 billion) as at the end of last year, an increase of 50 per cent compared to the VND18.126 trillion ($824 million) reported for 2014. At the end of the first quarter of 2016 HAGL’s revenue had increased to VND1.97 trillion ($84.7 million). However, due to credit costs of VND304 billion ($13.55 million), the group recorded profit of just VND90 billion ($4.01 million); significantly lower than the VND303 billion ($13.5 million) reported in the first quarter of 2015. In late April, at the annual general meeting of the Bank for Investment and Development of Vietnam (BIDV), BIDV Chairman Tran Bac Ha said that HAGL should be allowed to sort out its affairs without comment from other parties. Thanh Hoa commits to enterprise assistance The Thanh Hoa People’s Committee committed to making improvements to its business and investment environment with the Vietnam Chamber Commerce and Industry (VCCI) on May 31. Firstly, leaders in agencies of local authorities must take responsibility for issues facing enterprises and investors and be flexible in resolving problems. Secondly, the Committee will cooperate with VCCI to organize annual meetings between local authorities and enterprises to understand and immediately resolve any and all difficulties. The meetings will also ensure that enterprises are aware of all new policies and guidance. Thirdly, the province will provide information every month to enterprises on the province’s plans, especially land use plans. Fourthly, the province will build e-government and encourage enterprises to conduct all administrative procedures online. It commits to making strong reform in administrative procedures such as business registration, tax, and customs. Fifthly, the province will reduce the time needed for processing administrative procedures by 30 to 50 per cent compared to standard times. The time for issuing construction permits and related procedures is to be less than 77 days. In particular, the time taken for business registration will be reduced by 30 per cent compared to the provisions of the Law on Investment. The time taken to complete procedures to establish enterprises, validate the company seal, and register the bank account information of enterprises will be cut by 50 per cent compared to current stipulations. Sixthly, enterprises will have more support from the province, especially in improving human resource quality, technology, and scientific application. Finally, the province will enhance the professional capacity and responsibility of provincial staff to better support enterprises. Under a direction from the Prime Minister, by the third quarter all cities and provinces must make commitments with VCCI to support enterprises. Thanh Hoa is the third to do so, after Hanoi and Ho Chi Minh City. CEO Group makes a mark on Phu Quoc Island The CEO Group is now focusing on developments along Truong Beach in the west of the Phu Quoc island, targeting to turn it into a highlight of Vietnam’s tourism and hospitality market. With three projects on a total area of 300 ha,the local property developer is one of the largest developers on the Island of southern Kien Giang province. Located near Phu Quoc International Airport and Duong Dong Town, Truong Beach is one of the most beautiful on the island with sand stretching 20 km. Among the 200 projects invested on Phu Quoc around 50 are located on Truong Beach, with a total area of over 1,800 ha. The CEO Group has invested up to VND3 trillion ($133.7 million) on developing Sonasea Villas & Resort in the center of Truong Beach. Construction has involved dozens of contractors and 1,800 construction workers. Novotel Phu Quoc Resort, with 400 rooms, was completed after one year of construction and meets all standards and requirements of the Accor Group. The resort was officially opened in January. The resort is the largest under the Novotel brand on Phu Quoc and within the Accor network in Vietnam. Occupancy has been over 90 per cent since the opening. During holidays such as Lunar New Year or April 30 and May 1 the resort is usually filled to capacity, proving the attractiveness of an international-class resort on Phu Quoc Island. The first large-scale resort on Truong Beach, Novotel Phu Quoc Resort is part of the Sonasea Villas & Resort real estate complex developed by the CEO Group. With a total area of 80 ha on a 1 km stretch of beach, Sonasea Villas & Resort is one of the two largest hospitality projects with the longest beaches on Truong Beach. To meet increasing demand for investment in hospitality real estate, the CEO Group will launch 1,000 resort shophouses and villas in the time to come. It also revealed that most shophouses have been purchased. Villas in Sonasea Villas will be handed over to buyers this year. All are on 270-713 sq m with a private garden and swimming pool. With competitive sales prices offered by the CEO Group, more than half of those launched on the market at the end of 2015 have been purchased. In the center of the villa cluster it is also developing facilities such as a large swimming pool, a promenade, landscaping, a clubhouse, and restaurants, among others. The CEO Group plans to begin construction of the high-end Sonasea Resodences villas on 62 ha at Truong Beach this year. It will expand its land area, especially in hospitality, by conducting M&A deals in the time to come and has agreed to become the largest shareholder of a company who owns two projects with a total area of 150 ha on Phu Quoc, Mr. Doan Van Binh, Chairman of CEO Group, told its 2016 annual shareholders meeting. The CEO Group is also negotiating with a partner to secure an 8 ha project in Nha Trang. With experience of 15 years in developing real estate projects and strengths in term of land, capacity and brand, the CEO Group is gradually developing a chain of hospitality products under its own brand, contributing to the development of Phu Quoc Island’s tourism and hospitality sector. Vietjet heads to Malaysia Low-cost carrier Vietjet Air officially launched its latest international route on the first day of June, connecting Ho Chi Minh City with the Malaysian capital of Kuala Lumpur. The inaugural flight, coded VJ825, landed in Kuala Lumpur yesterday at around midday local time and received a warm welcome from the people and senior leaders of the governments of Malaysia and Vietnam, including Deputy Prime Minister Trinh Dinh Dung, senior leaders from the Ministries of Transport of both countries, and representatives from both aviation authorities. Deputy Prime Minister Dung expressed his appreciation of the determination of Vietjet Air - a new age airline - to create a new bridge connecting Vietnam and Malaysia. He also applauded Vietjet for its efforts to offer safe aviation services that benefit people in both countries. Flights on the new route will be conducted daily. Flight time is about one hour and 55 minutes, departing Ho Chi Minh City at 9.30am and arriving in Kuala Lumpur at 12.25 pm. The return leg takes off from Kuala Lumpur at 1pm and arrives in Ho Chi Minh City at 1.55pm (all local times). To celebrate the launch, Vietjet will give away hundreds of thousands of promotional tickets starting from $0 (terms and conditions apply) in its “Enjoy Your Summer” campaign. “It is Time to Vietjet”, the latest promotion running from May 31 to June 2, applies to all tickets on the airline’s routes and are sold from midday to 2pm (Vietnam time) every day during the promotion period for travel between August 15 and December 31 (excluding public holidays). With its developing fleet of modern aircraft, passengers will experience the full suite of Vietjet’s high-quality services, including the SkyBoss club, as well as have the opportunity to win economical fares and receive special surprises from the airline’s promotional campaigns. New Zealand Experience Expo for HCMC The New Zealand Experience Expo will be held from June 2 to 4 on Nguyen Hue Street in Ho Chi Minh City and is expected to draw thousands of visitors who will be able to try a New Zealand virtual reality wine tour, sample New Zealand food and beverages, learn about studying in New Zealand, and be in New Zealand photos. The event, organized by the New Zealand Embassy in Vietnam, who are honored to be granted approval to be one of the first to hold a showcase on Nguyen Hue Street, is to celebrate the first Air New Zealand flight between Auckland and Vietnam. The grand opening ceremony will be held at 6pm on June 2. After that the Expo will open twice a day, from 7.30am to 9.30am and 5.30pm to 9.30pm on June 3 and 4. The expo is free to attend. “We are pleased to be able to celebrate increasing connections between New Zealand and Vietnam,” New Zealand Consul General, Mr. Tony Martin, said. “Vietnam is New Zealand’s fastest growing export market and we see this popularity continuing to grow, particularly amongst those who are looking for top class international education and delicious, safe, traceable, high quality food and beverages.” Vietnam is already New Zealand’s second-largest source of international students from within ASEAN, with more than 2,000 Vietnamese students currently studying in the country. Kenan & Diageo Vietnam empower hospitality workers Kenan Institute Asia and Diageo Vietnam held a function on May 31 to announce the results of training programs for 712 female hospitality workers in Hanoi. The “Building Interpersonal Skills for Female Hospitality Workers in Vietnam” project is part of Diageo’s “Plan W” - a long term commitment to the community throughout the Asia Pacific region. Mr. Richard Bernhard, Executive Director of Kenan said: “The program results demonstrate the positive impact the training has had on participants, increasing their specific awareness of critical workplace challenges as well as providing them with the tools to effectively manage them.” The training began in February and finished in May with 20 training courses conducted to empower hospitality workers from 12 high-end hotels in Hanoi, including those of Accor, Hilton, Melia and others. The training helped to improve workplace performance and promote the psychological well-being of female hospitality workers by developing their interpersonal skills, including teamwork, problem-solving and effective communication. Participants have also increased their awareness about the DRINKiQ program, which is a responsible drinking initiative being implemented by Diageo in collaboration with relevant ministries and agencies in Vietnam. Mr. Shivam Mirsa, General Director of Diageo Vietnam said: “Sustainable growth can only be achieved if women can unleash their potential and impact their own life, their families, their children and their community. We will continue our Plan W journey to empower women in achieving their dreams in both work and life.” Diageo Vietnam is 100 per cent owned by Diageo Plc., a global leader in the alcoholic beverage industry. Feedback from senior leaders of hotels that sent their staff to the training has been encouraging. “The tools our employees gained not only enable them to have greater autonomy in their personal lives but also improved their abilities in career development,” said Mr. Andrew Nisbet, General Manager of Hilton Hanoi Opera and Hilton Garden Inn. Kenan Institute Asia is a knowledge and capacity building organization implementing results oriented, social and economic development programming on a not-for-profit basis. In the last 18 months Kenan in Vietnam has provided services to 11,470 direct beneficiaries. Vietnam pledges favourable conditions for foreign investors Vietnam would continue to facilitate foreign businesses and investors to operate in the country whilst upholding its consistent policy of improving the business environment, a Vietnam official has said. Vietnamese Deputy Minister of Industry and Trade Hoang Quoc Vuong was speaking at the opening of the ASEAN Conference 2016 taking place in Singapore on May 31 under the theme of ‘New Mindsets, Right Strategies, Effective Collaborations’. Held by the Singapore Business Federation (SBF), the conference attracted the participation of over 600 delegates representing government agencies, embassies and the business community from ASEAN member countries and ASEAN partners including China, Japan, the EU, and the US. The event focused on introducing business co-operation and investment opportunities in Vietnam, Indonesia, and Myanmar for Singapore’s business community and enterprises from countries attending the conference, while exchanging experience in business and trading in the three countries and other ASEAN members. The three nations are currently the most attractive investment destinations in ASEAN for Singapore businesses. Speaking at the conference, Deputy Minister Vuong updated the group on Vietnam’s economic development situation and investment opportunities in the country, especially as Vietnam is participating in the ASEAN Economic Community and is preparing to execute a series of new-generation FTAs. He informed delegates of new policies from the Government of Vietnam in supporting businesses, creating a favourable environment for their operations and improving national competitiveness. Vuong also announced incentives to encourage investments in Vietnam, urging businesses to seize opportunities and advantages to develop business strategies and make wise investment decisions in Vietnam. At the meeting, heads of the delegations of participating countries presented information on the business environment and mechanisms of their respective governments for foreign investors. They discussed business and investment activities in ASEAN countries, the development of new technologies, digitisation, automation, new business methods, and business co-operation between the US, the EU, Japan, and China’s enterprises with ASEAN. Shrimp exports to Korea expected to rise sharply Exports of Vietnamese seafood products to South Korea are expected to increase strongly this year thanks to the free trade agreement between the two countries that took effect last December, according to the Korea Fishery Trade Association. Under the FTA, Korea has committed to clear taxes for 10,000 metric tonnes of Vietnamese shrimp in the first year and 15,000 metric tonnes in the next five years. Choi Dug-Boo, managing director of the association, said shrimp was the favourite seafood item in South Korea. Tilapia and pangasius are also popular. Dug-Boo spoke at a press conference held on May 31 in HCM City to introduce the Busan International Seafood and Fisheries Expo 2016 (BISFE). Viet Nam earned US$580 million from seafood exports to South Korea last year, with revenue from shrimp accounting for $250 million, he said. The main seafood items of Viet Nam exported to South Korea are shrimp, octopus, squid, pangasius and other fish. Korea imported 77,000 metric tonnes of shrimp in 2015, with Viet Nam being the largest supplier of 30,000 metric tonnes. Dug-Boo has encouraged Vietnamese seafood exporters of shrimp, tilapia, pangasius and other products to take part in BISFE, the largest international seafood trade exhibition in Korea. The organisers will apply special preferential prices for Vietnamese exporters who register to participate in the show via the Viet Nam Association of Seafood Exporters and Producers, he said. "We will strive to do our best to introduce potential exporters to Vietnamese exhibitors at BISFE to create conditions for the two sides to develop business connections and come up with a trade agreement right at the fair," he said. To be held at the BEXCO Exhibition Centre I in Busan from October 27-29, the exhibition will feature 850 booths of 400 exhibitors from 30 countries. Products on display will include seafood products, fisheries equipment, marine biotechnology and fishing tools. In addition, business meetings and international conferences on the seafood sector and aquaculture technology workshops will also be held on the sidelines of the show. Thirteen Vietnamese companies participated in the expo last year. Viet Nam's seafood export to Korea reached $95.48 million in the first two months of the year, a year-on-year increase of 7.4 per cent, according to VASEP. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR