BUSINESS IN BRIEF 2/7 Survey shows many local firms upbeat about business   A majority of domestic processing and manufacturing enterprises have expressed optimism about business prospects in the third quarter and the second half of this year as shown in a recent survey of the General Statistics Office (GSO). The survey showed 87.8% of respondents predicted their production would remain stable or grow in the third quarter. For the final six months of this year, 55.4% of firms expected their production to increase while 35.4% said it would remain stable. Only 12.2% and 9.3% of enterprises forecast their production to dip in the third quarter and the second half of the year respectively. Notably, 53.3% and 58% of respondents projected production in the foreign direct investment (FDI) sector would expand in the third quarter over quarter two and the last six months over the first half of last year respectively. Corresponding proportions are 50.5% and 54.2% for State-owned enterprises and 47.7% and 54.4% for non-State firms. Enterprises in many sectors are pinning hopes on a production pickup in the third quarter, with 70% of respondents in the pharmaceutical sector holding this view, 63.8% in beverage, 62.4% in uniform production and 61.9% in vehicle manufacturing, and 61.2% in electronics, computer and optical production. The survey indicated 88% and 90.5% of businesses hoped for more orders to come in the third quarter and the July-December period. Meanwhile, only 12% of respondents are pessimistic about fewer orders in the third quarter while the proportion for the second half is 9.5%. Sectors with better order forecasts in the last six months include tobacco with 72.7%, pharmaceuticals with 69.2% and electronics, computers and optical products with 67.7%. Regarding exports, 38.2%, 49.7% and 12.1% of respondents forecast export orders to be better, stable and worse in the third quarter respectively. Regarding employment, 18.2% and 73.8% of firms plan to hire more and keep their payrolls unchanged in the third quarter respectively. About 93% of businesses expected their headcount to increase or remain stable in the next six months. According to the survey, 55.6% of respondents forecast inventories of finished products would be stable, 29.7% expected a decline and 14.7% predicted an increase in the third quarter. Sofitel Saigon Plaza has new executive chef Sofitel Saigon Plaza has announced the appointment of German Marko Rankel as the hotel’s new executive chef. Born and raised in Hannover, Rankel started to lure public attention after winning eight gold medals at a cooking contest in Nurnberg in 1997 before shining himself with more gold medals at international competitions such as World Cup Le Salon Culinaire Mondial and International Culinary Competition. He is currently one of the most talented chefs of Germany. His career as an executive chef was boosted during the seven years leading chefs of Mercure Atrium Accor Hotels Hannover. He helped make the hotel’s restaurant one of the most prestigious in the region and win Accor-Azubi Award four consecutive times. He was honored with “Silver Bernache Award” by Accor Group in 2007 before moving to Sofitel Philippine Plaza Manila a year later, where he helped Spiral Interactive Buffet One Restaurant win the titles of best restaurant in Asia and best buffet restaurant in the Philippines. Six-month industrial production decelerates year on year The Index of Industrial Production (IIP) in the first half of 2016 grew by 7.5 percent from a year earlier, compared to the 9.7 percent recorded for the same period last year, according to the General Statistics Office. The lower growth rate is attributable to contraction of the mining industry, which forms the biggest proportion of the industrial sector. The industry saw a 2.2 percent decrease from January through June, mainly due to a 6.1-percent decline in crude oil exploitation. That cut the IIP down by 0.5 percentage point. The IIP growth was also dragged down by slowdown in consumer demand and political instability in some other countries that resulted in shrunken export markets, the General Statistics Office said. Meanwhile, the processing and manufacturing industry, with a 10.1 percent increase, was the biggest contributor (7.1 percentage points) to the six-month industrial production. Although expanding by 11.7 percent and 8.1 percent, electricity production and distribution, along with water supply and waste and waste water treatment only made up 0.8 and 0.1 percentage point of the total figure, respectively. However, the prospect in the second half of the year is bright, as the processing and manufacturing industry continued to attract foreign investment this year, with a total of 8.06 billion USD poured into 488 new projects and 405 existing ones. The expansion of processing and manufacturing will also stimulate the development of support industries, thus contributing to overall industrial growth. Interflour to launch malting plant in Vietnam Interflour, one of the largest flour millers in Asia, has started to build its first malting plant in Vietnam to meet the demands of domestic beer companies, according to the project’s official. The plant is expected to open in March 2017 with capacity reaching about 184,000 tonnes, and replacing 40 percent of malt currently imported each year by Vietnam, Nguyen Hoang Ngan, assistance of the project, told the Vietnam’s News Agency’s national English-language daily. Interflour, which is owned by Australia's biggest wheat exporter and co-operative CBH Group and Indonesian company Salim Group, has nine processing facilities in five countries, including Indonesia, Malaysia, Vietnam and Turkey, processing approximately 1.5 million tonnes of flour per year. The company has two flour plants in Vietnam, of which, the plant in Da Nang has a capacity of 70,000 tonnes of flour per year and the factory in Cai Mep Industrial Zone amounts to 250,000 tonnes per year which is in the southern Ba Ria-Vung Tau province. Can Tho’s economy makes big strides in first half The Mekong Delta city of Can Tho made big strides in economic development over the first half of this year, according to the municipal Department of Planning and Investment. Nguyen Van Hong, the department’s director, reported at a meeting of the municipal Party Committee’s Executive Board on June 29 that Can Tho’s Gross Regional Domestic Product (GRDP) was estimated at 28.8 trillion VND (1.3 billion USD) in the reviewed period, up 6.82 percent against the same period last year and 1.3 percent higher than the average national GDP. The industrial production index expanded by about 24.6 percent year-on-year and industrial production value stood at more than 44 trillion VND (1.98 billion USD), up 8.6 percent over the corresponding time last year. Such successes were attributable to enterprises’ efforts in improving production and business conditions, updating technologies and implementing consumption stimulus packages, he said. Besides, municipal leaders paid heed to removing difficulties facing businesses and promoting trade at home and abroad, Hong added. Of note, the tourism sector grew outstandingly during January-June, raking in 940 billion VND (42.3 million USD), fulfilling 67.2 percent of the set yearly target and up 27 percent year-on-year. Progresses were also made in other realms like investment attraction, start-ups, infrastructure construction disbursement and State budget collection, the official reported. Hong said the city will review failed objectives while providing more support for businesses in order to meet yearly targets, focusing on attracting big investors and foreign direct investment (FDI) enterprises. Banking sector kick-starts actions to support businesses The banking sector will apply comprehensive monetary policies and banking operations to improve credit access, focusing on enhancing national credit ratings, according to the State Bank of Viet Nam (SBV). SBV Governor Le Minh Hung made the statement as part of Decision No 1355/QD-NHNN, dated Tuesday, while issuing a directive to kick-start an action plan to support the domestic business environment and national competitiveness with a vision towards 2020. The decision said banking services must be improved in terms of availability and transparency, so that enterprises and individuals from every economic sector have equal access to bank loans. Procedures must be simplified and costs must be cut for transactions between credit institutions and their customers, it said. To enhance national credit ratings, Hung said the SBV would operate monetary policies flexibly in tight conjunction with fiscal and other macro-economic policies. This will help control inflation, stabilise the economy and ensure the operational security of credit institutions, besides supporting national foreign reserves and facilitating production and business activities. The central bank will also closely monitor developments in the gold and foreign exchange markets and intensify co-ordination with the relevant agencies to guarantee financial stability. For improved availability of banking services, Hung said the banking sector would continue to complete the legal framework for payment activities, upgrade the infrastructure and technology and enhance the efficiency of inter-bank payment networks. Banking authorities will create regulations for commercial banks to provide derivatives, reducing the risk for enterprises using the banks' products. They will encourage more co-operation with international financial organisations to help low-income individuals and small and medium-sized enterprises (SMEs) acquire loans more easily. Local credit institutions must strengthen their financial capacity and renew their management methods to meet Basel II, a set of international banking regulations set forth by the Basel Committee on Banking Supervision. Banking authorities are expected to promptly design a plan for the continuing re-organisation of credit institutions between now and 2020 to create a future banking system with multiple functions, secure operations and sustained efficiency. They were also urged to build schemes to develop a system of credit funds and complete a legal framework for the development of micro-finance institutions. They must work to gradually form a market for debt trading, helping maintain national bad debt ratios at below 3 per cent of the overall outstanding loans. Hung asked credit institutions to continue to extend loans in prioritised areas, including agriculture and rural development, exports, support industries and SMEs, as well as start-ups and hi-tech businesses. Programmes connecting banks and businesses and measures supporting struggling firms are to be promoted, he said. VN firms urged to learn more about trade defence  Vietnamese firms should learn more about trade defence instruments allowed under the WTO and jointly use them to protect themselves, a seminar heard in HCM City yesterday. Nguyen Phuong Nam, deputy head of the Viet Nam Competition Authority (VCA), said with tariffs eliminated under a series of free trade agreements the country has signed and would sign in future, Vietnamese firms would have huge opportunities to boost exports. On the other hand, the country has to open up to imports, an imminent challenge for local industry, he told the seminar organised by VCA and the HCM-WTO Centre. The WTO permits members to impose trade remedies or trade defence measures like anti-dumping, anti-subsidy and safeguards against imports to protect their domestic industry from unfair practices such as dumping and subsidies or to cope with a sudden surge in foreign goods. Pham Huong Giang, deputy head of the VCA's Trade Remedies Board, said according to WTO statistics, members investigated 311 safeguards in 1995-2015 and 4,757 anti-dumping cases and 380 anti-subsidy cases between 1995 and 2014. Viet Nam set up a legal framework for trade defence more than 10 years ago, she said. But the country has launched only two anti-dumping and four safeguard investigations into imports. Nam said the trade defence instruments are among the last tools recognised by the world to protect domestic production. Though a law on this was promulgated over 10 years ago, knowledge about trade defence instruments among Vietnamese manufacturers, business associations and State agencies remains limited, making it very difficult to apply or initiate lawsuits against imports, he said. Nguyen Thi Thu Trang, director of the Viet Nam Chamber of Commerce and Industry's WTO and Integration Centre, said a recent VCCI survey on the understanding rate among Vietnamese firms about the trade defence instruments found that 15 per cent of polled firms do not know about them, 63 per cent have heard about them but do not understand thoroughly, almost 20 per cent have cursory knowledge, and only 1.89 per cent did a detailed study. In addition, limited financial and human resources and difficulty in collecting evidence are among other factors preventing firms from initiating lawsuits using trade defence, she said. Vu Van Thanh, Hoa Sen Group's deputy general director, said foreign markets have 62 trade defence-related measures against steel products imported from Viet Nam, causing difficulties for Vietnamese companies. On the other hand, the Vietnamese market is flooded with cheap steel imports, he said. He called on businesses and business groups to co-operate to protect domestic products against imports. To effectively use the trade defence instruments, Trang said businesses should study them properly. Besides, they should remain aware of unfair competition in the domestic market and the risks of trade defence lawsuits against their exports, she said. VN remains among fastest emerging retail markets Viet Nam has continuously been listed among the world's top 30 fastest emerging global retail markets since 2008, according to the Global Retail Development Index (GFDI) ranking. The index is prepared by the United States' AT Kearney Company. The study is based on all relevant macroeconomic and retail-specific variables. It is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential. According to the study, Viet Nam has low market saturation and its GDP growth is highest among Southeast Asian countries in the GRDI. Viet Nam is at 11th spot in the GRDI ranking. Its GDP has grown 5.2 per cent annually since 2013, the highest among its Southeast Asian peers also ranked in the GRDI. Export growth and a 17 per cent increase in foreign direct investment has spurred economic growth, underpinned by Viet Nam's geographic advantage and low labour costs. This foundation led to impressive growth in 2015 in the retail sales area (22 per cent) and in retail sales (9.5 per cent). Convenience stores have become a phenomenon in Viet Nam, according to the study, with estimated growth of more than 260 per cent in the number of stores since 2012. Also, consumers are willing to pay a premium for the convenience of having stores that open earlier and closed later in more locations, as in most cities, 80 per cent of people eat away from home. Companies seeking to tap into these trends include domestic operator Vingroup, which opened 93 stores in 2015 and plans to open twice as many in 2016; Japan's FamilyMart, which will open more than 100 stores in 2016; and 7-Eleven, which is entering the market through a franchise agreement with Seven System Vietnam. Some global heavyweights have also entered the scene. Apple opened a subsidiary in Viet Nam, which allows it to import and distribute cellphones directly to a market that now has more than 150 million mobile phone subscribers who increasingly desire smartphones. South Korean hypermarket operator E-mart launched its first Vietnamese store in the Go Vap District of HCM City, before announcing further plans to expand its network to 52 stores by 2020. AEON also introduced Topvalu to Viet Nam in late 2015, tapping into the popularity of Japanese culture to offer authentic Japanese ingredients and home cooking kits. These prospects have spurred significant acquisition activities, particularly by local and regional players. Viet Nam's Vingroup purchased Maximark, a local retailer, rebranding it under the VinMart+ banner. Earlier this year, Thai companies TCC and Central Group acquired Metro's cash-and-carry business and Casino's Big C grocery chain, respectively. E-commerce in Viet Nam is expected to grow as the use of mobile phones spreads and online shopping becomes more common. E-commerce campaigns are ramping up, including Online Friday, held by onlinefriday.vn, which attracted 1.1 million visitors and close to 2,000 participating retailers. From 2011 to 2015, Viet Nam saw a continuous growth in retail turnover, worth VND2.47 trillion (US$111 trillion), accounting for 76.2 per cent of the total retail and consumption value, according to a workshop discussing challenges facing the domestic retail sector in international integration held in HCM City on June 28. Many market research companies and experts forecast that the retail market of Viet Nam has great prospects for high growth in the future, driven by a population of 91.7 million with high consumption demands. President of the Vietnam Retailers Association Dinh Thi My Loan underlined the challenges facing domestic retailers in international integration. Echoing Loan's opinion on the increasing competition in the market, Nguyen Thi Thu Trang, director of the Centre for WTO and Integration of the Vietnam Chamber of Commerce and Industry (VCCI), called for incentives to ensure the sector's sustainable development. For the first five months this year, Viet Nam's total retail sales and services revenue reached VND1,430 trillion, a year-on-year increase of 9.1 per cent. Meanwhile, the purchasing power of goods retailers witnessed high growth of 9.5 per cent in the period, amounting to VND1,920 trillion, accounting for two-thirds of the total retail sales and services revenue. SHB offers $133 million in preferential loans Sai Gon–Ha Noi Bank (SHB) has reserved VNĐ3 trillion (US$133.3 million) for customers seeking liquid capital for a term of six months between now and September 30. The loan package is accessible nationwide, with a preferential interest rate of between 7 per cent and 9 per cent per year. The bank said the programme would be applied to customers seeking funds for medicines and pharmaceuticals, rubber, plastic, fertilisers and chemical substances. It will also be applied to computing and telecommunications equipment, garments and textiles, footwear, farm produce and food. Based on the bank's development strategies, small- and medium-sized enterprises are reportedly among its target customers. MBS's year on year revenue up 77 per cent MB Securities Corp's (MBS) five-month revenue increased by nearly 77 per cent year on year to nearly VND153 billion (US$6.8 million). The company recorded a profit of VND18.8 billion in the first five months of 2016, a six-fold increase from last year. The company said it recorded such high earnings because its core businesses achieved better results. The company's brokerage unit increased its results by 1.5 times, and its banking investment unit recorded a nine-fold jump in income. Yarn producer Damsan trades over 16m shares Yarn producer Damsan traded over 16 million shares (ADS) on the HCM Stock Exchange at the reference price of VND17,000 (75 cents)  per share on Wednesday. Set up in 2006 in the northern province of Thai Binh, Damsan manufactures yarn and cotton and also works does real estate business. With charter capital of VND160.7 billion, Damsan earns over 60 per cent of its revenue from yarn and cloth production. VLC allows GTN to purchase 65 per cent Viet Nam Livestock Corporation JSC (VLC) announced that it allowed local food maufacturer GTNFoods (GTN) to buy a 65 per cent stake in the company at the 2016 general shareholder meeting. VLC plans to increase its chartered capital from more than VND600 billion (US$27 million) to about VND1.3 trillion by selling shares to existing shareholders. Currently the Ministry of Agrculture and Rural Development is its largest shareholder, with a 77 per cent stake in the company. GTN was the second largest shareholder, with nearly an 8 per cent stake. Marquardt to build auto parts factory in Da Nang Marquardt Group of Germany expects to invest US$35-50 million to build an auto parts manufacturing factory in central Da Nang City. The information was released by Vice President Asia at Marquardt Group, Peter Schaumann, during a meeting with Da Nang authorities on June 28. Construction of the plant will be carried out over two to three years and employ some 600 workers, 200 of them being engineers and high-end technicians. Deputy Chairman of Da Nang municipal People's Committee Tran Van Mien said the city had sufficient infrastructure, such as industrial parks and high-tech zones, which have been systematically developed and is prepared to receive new investors. Mien noted that Da Nang has always opened its door to large business groups, especially investors from Germany. Earlier, the Marquardt Group worked with representatives of local departments to discuss future issues related to the proposed auto parts factory. Six-month industrial production decelerates year on year The Index of Industrial Production (IIP) in the first half of 2016 grew by 7.5% from a year earlier, compared to the 9.7% recorded for the same period last year, according to the General Statistics Office. The lower growth rate is attributable to contraction of the mining industry, which forms the biggest proportion of the industrial sector. The industry saw a 2.2% decrease from January through June, mainly due to a 6.1% decline in crude oil exploitation. That cut the IIP down by 0.5 percentage point. The IIP growth was also dragged down by slowdown in consumer demand and political instability in some other countries that resulted in shrunken export markets, the General Statistics Office said. Meanwhile, the processing and manufacturing industry, with a 10.1% increase, was the biggest contributor (7.1 percentage points) to the six-month industrial production. Although expanding by 11.7% and 8.1%, electricity production and distribution, along with water supply and waste and waste water treatment only made up 0.8 and 0.1 percentage point of the total figure, respectively. However, the prospect in the second half of the year is bright, as the processing and manufacturing industry continued to attract foreign investment this year, with a total of US$8.06 billion poured into 488 new projects and 405 existing ones. The expansion of processing and manufacturing will also stimulate the development of support industries, thus contributing to overall industrial growth. Vietnam may remove airfare cap as market becomes 'competitive': official The Vietnamese government is reportedly considering removing the maximum limit on air ticket prices for domestic flights. The airline market has become very competitive with multiple players and it is time for the government to give businesses their freedom, Lai Xuan Thanh, chief of the Civil Aviation Authority of Vietnam (CAAV), is quoted as saying by the government website on June 29. The airfare ceiling was introduce to protect passengers, Thanh said, without giving any timeframe for a removal. He promised that his agency will continue to keep a close watch on air ticket prices offered and "only intervene when airlines collude to increase prices." A one-way economy ticket for a domestic flight cannot cost more than VND3.75 million (US$165). The government adjusted that cap down by 4 percent last September in response to falling fuel costs. In a recent letter to the aviation authority, national carrier Vietnam Airlines tried to lobby for the price cap to be scrapped, describing it as unnecessary. It argued that most tickets now cost much less than that maximum level, with the exception of some routes. While it is still the biggest play in the domestic passenger air market, Vietnam Airlines has been facing increasing competition from private low-cost Vietjet Air. Their respective market shares are 40.8 percent and 36.3 percent, according to latest figures. Jetstar Pacific Airlines, another low-cost carrier run by Vietnam Airlines and Australian-owned Qantas, controls 14.9 percent. The national airline's short-haul carrier VASCO owns the rest. It remains to be seen if the competition among Vietnam Airlines and Vietjet can keep prices from increasing. Some believe airfares will rise this year anyway due to an increase in airport fees. State-controlled Airports Corporation of Vietnam, which manages 22 airports around the country, reportedly will seek the transport ministry's permission to increase service fees for domestic flights such as runway and passenger surcharges. The corporation expects increased revenues to help it upgrade the airports over the next two years at an estimated cost of more than VND26.2 trillion ($1.16 billion). Vietnam's air market is forecast to see a rise of 19 percent to 45 million passengers this year. Vinamilk’s going organic Vinamilk, the nation’s largest dairy producer, has announced it is expanding its domestic operations into the niche organic milk market. Phan Minh Tien, director of marketing, unveiled the news by issuing a statement saying the company has just received a shipment of 220 certified organic dairy cows from overseas. Organic dairies can bring in double the profits of a conventional dairy per gallon of milk, said Ms Tien, and the price of organic milk is more stable than regular milk, which fluctuates widely at times. There is a great demand for more organic dairies, she said, and Vinamilk aims to capitalize on the opportunities this niche market presents and introduce organic products that meet all US standards to the domestic market. Nielsen: Beverages the star in FMCG sales Beverages (including beer) saw 10 per cent growth in the first quarter of this year, the highest increase for two years and mainly led by volume increases (+8.1 per cent), according to Nielsen’s FMCG Market Pulse report for the first quarter released on June 29. When looking deeper into the seven super FMCG categories - beverages (including beer), food, milk base, household care, personal care, cigarettes and baby care - beverages continued to contribute the most to total FMCG sales, with 39 per cent in the first quarter. For eight quarters in a row beverages have recorded healthy growth. Other super categories weren’t so dynamic, with most stagnating, the report noted. According to the Product Innovation Report released by Nielsen in June last year, Vietnam had the highest score for trying new products in Southeast Asia, with 88 per cent of Vietnamese consumers saying they had purchased a new product on their last grocery-shopping trip, 19 percentage points higher than the regional average of 69 per cent. This presents a challenge for manufacturers to provide true innovations for consumers. Only beverages and beer can currently keep pace with consumers’ “thirst for the new” via impressive product innovation that serves new needs, according to Mr. Nguyen Anh Dung, Director of Retail Measurement Services at Nielsen Vietnam. “Beverage and beer manufactures run intensive marketing campaigns that create new emotional bonding and exciting emerging premium channels (for e.g. beer gardens) that provide a new consumption environment,” Mr. Dung added. “More importantly, manufacturers also need to gain retailers support when introducing new products or promotions.” FMCG growth in the six key cities in Vietnam - Hanoi, Ho Chi Minh City, Hai Phong, Can Tho, Nha Trang and Da Nang - dipped in the first quarter, with 3.6 per cent growth compared to 5.7 per cent in the previous quarter, mainly due to an increase of only 3 per cent in volume growth vs. 4.9 per cent in the fourth quarter of 2015, according to FMCG Market Pulse. The report is based on the results of the Nielsen Retail Measurement study of FMCG. The study provides continuous tracking of product movement through defined retail outlets. The data are used to measure manufacturer and retailer efforts as well as consumer off-take. Apartment for sale price up in Hanoi The apartments for sale market in Hanoi saw a slight increase in pricing in the second quarter, mostly in the high-end and mid-end segments. Some projects increased prices by 4-6 per cent during the quarter compared to the end of last year, in particular those with good locations, within a relative short distance of the city center, and in the vicinity of infrastructure projects now under construction, according to CBRE’s quarterly report released on June 28. In the high-end sector, prices went up in large-scale projects with well-known investors and providing sufficient facilities and amenities, according to Ms. Nguyen Hoai An, Director of CBRE Vietnam. “In the mid-end sector, projects with reasonable prices and good locations were in favor as there were great opportunities to increase the resale price to investors,” she added. The price of real estate projects and infrastructure are closely related, with property values increasing or remaining idle depending on the development pace of new infrastructure, according to a report from the Vietnam National Real Estate Association (VNREA) released in June. “Many developers, therefore, tend to choose areas with well-developed infrastructure or in areas that can benefit from overall planning,” it wrote. In the secondary market, the average secondary prices went up 1 per cent quarter-on-quarter but was down 1.3 per cent year-on-year. By sector, the luxury sector increased 2.5 per cent year-on-year, high-end and mid-end decreased by 1.6 per cent and 1.3 per cent, respectively, while the low-end remained stable. Compared with the previous quarter the low-end sector saw a strong increase of 3.8 per cent, while other sectors fluctuated by 0.5 to 0.9 per cent, CBRE’s report noted. There are still problems in the market, including the quality of projects as well as housing products as Vietnam’s real estate market is still young, with a history of just 20 years of development, Ms. An said in response to questions from VET. “Compared with other markets like Singapore, Hong Kong and Thailand, housing prices in Vietnam are still much lower,” she said. In Bangkok, for example, high-end apartments are priced at around $8,000 per sq m but in Vietnam are around $2,000 per sq m. “Problems around the quality of projects is part of the development cycle and could improve over time,” she added. Vietnam’s real estate market has become more mature nowadays compared to previous times and homebuyers are wiser and tend to seek developments belonging to reputable developers. In the second quarter a total of 6,100 new units were launched from 17 projects, an increase of 19 per cent compared to the first quarter but falling 23 per cent year-on-year. Notably, high-end apartments came back, with a project first launched at the beginning of 2015 and two newly-launched projects providing the market with about 700 units. Most of the total launch was taken up by mid-end apartments, supplying up to 82 per cent. Moving forward, the market is expected to continue to remain positive in 2016, CBRE believes. Sales activity will keep growing and newly-launched or re-launched projects will continue to contribute to the market. Luxury and high-end projects are likely to attract costumers with real demand for accommodation, together with investors and foreigners, while mid-end and low-end projects tend to target end-users. Q2 growth lowest in 5 years Vietnam’s GDP growth in the second quarter of 2016 was 5.55 per cent; the lowest quarterly result in two years, the General Statistics Office (GSO) said on June 28. GDP in the first half reached 5.52 per cent year-on-year, down from the 6.32 per cent growth rate in the same period last year, according to GSO. “The first quarter of 2016 saw steady growth but was not as high as in the same period of 2015,” Director of the National Accounts System Department (NASD) at the GSO, Mr. Dao Quang Tuyen, said at its quarterly press briefing. Vietnam’s economy in the second quarter grew 0.07 per cent against the first quarter, lower than the growth of 0.2 per cent to 0.3 per cent in previous years. “This means that growth in the second quarter of 2016 is down year-on-year,” he said. Adverse weather, including drought in the coffee belt of the central highlands and salinity in the food basket of the Mekong Delta has affected industrial and agricultural production as well as exports and imports. Agriculture output fell 0.8 per cent in the first six months of the year against the same period of 2015, the GSO report noted. Vietnam has targeted GDP of 6.7 per cent this year, meaning growth in the second half will need to be around 7.6 per cent if the target is to be met, Mr. Tuyen said. “This may be difficult given the current state of the economy,” he said. Analysts from the International Monetary Fund have also acknowledged that Vietnam’s economy has been hit by drought, which has affected agriculture. “Vietnam’s 2016 growth will be moderate, at around 6 per cent, reflecting the adverse agriculture shock, lower external demand and spillovers of tighter global financial conditions,” its analysts wrote in its most recent assessment on Vietnam, released on June 27. Meanwhile, the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI) has reported that disbursement of foreign direct investment (FDI) was $7.25 billion as at June 20, a 15 per cent increase year-on-year. The FIA also reported that, as at June 20, there were 1,145 FDI projects registered this year with total investment of $7.497 billion, up 95.3 per cent in capital compared to the same period last year. There were also 535 projects that adjusted their investment, by a total of $3.785 billion, up 129 per cent year-on-year. “We predict that from now to the end of the year the number of FDI projects registered will only increase by 10 to 15 per cent against last year,” Deputy Director of the FIA Nguyen Noi was quoted as saying. “Disbursement will be around $15 billion.” According to GSO reports for the first half of the year, exports stood at $82.2 billion and imports $80.7 billion, for a trade surplus of around $1.5 billion. Vietnam exported some $37.4 billion worth of heavy industry goods and mining commodities, some $33.5 billion worth of light industry goods and handicrafts in the first half, accounting for 45.5 per cent and 40.7 per cent, respectively of the country’s total export value. Conversely, the country mainly imported machinery and manufacturing materials, accounting for 91.3 percent of the total import value, while consumption goods made up only 8.7 per cent. The domestic sector is likely to see a trade deficit of $9.7 billion while the foreign sector will post a surplus of $11.2 billion. Vietnam’s economy grew 6.68 per cent in 2015, the fastest pace since 2007 and extending the growth momentum that began i KAfe accused of delaying debt payment Vietnamese F&B startup the KAfe Group has been accused by the Gia Tuong Company of delaying debt repayments of more than VND4 billion ($179,000). “We have sent written documents and made phone calls to ask the CEO of KAfe, Ms. Dao Chi Anh, to work on resolving the debts but have received no response,” Gia Tuong told local media. A representative from KAfe confirmed with VET that it has debts with Gia Tuong after the two companies ceased their cooperation earlier this year. “The debts have not been paid as the two parties have failed to agree on the amount,” she said. “Gia Tuong has not cooperated with KAfe in clarifying the debt.” KAfe is working with local authorities to resolve the issue legally as soon as possible. “Solving problems arising from disputed debts is not complicated if there is cooperation from both sides,” KAfe’s representative said, while acknowledging that it has made many personnel changes. “These changes have created difficulties for the two parties in resolving the debts,” she added. Gia Tuong’s accusations were focused on Ms. Dao Chi Anh, claiming that “Ms. Anh has neglected the debts”, even though KAfe’s representative has contacted Gia Tuong many times in an effort to resolve the problem. Founded in 2013, the KAfe Group Limited was the first urban fusion cafe chain in Vietnam offering fresh, affordable, and quality international casual dining for affluent consumers. It secured a $5.5 million Cassia Investments-led Series A funding arrangement in October last year and acquired local cupcake chain Mint Cupcakes Creations (MCC) early this year. The company currently operates 19 outlets in Hanoi and Ho Chi Minh City under four brands - The KAfe, KAfe Village, KAfe Box, and The Burger Box, as well as its beverage merchandise The KAfe Cup, The KAfe Pressed, and MCC. This year the Group plans to continue to expand the KAfe chain to more cities while providing new models like Burger Box, KAfe Box, and Mint in Ho Chi Minh City. StoxPlus signs deal with State Securities Commission The StoxPlus Corporation has struck a deal with the State Securities Commission (SSC) to improve the transparency of Vietnam’s stock market and upgrade its status. The two signed a Memorandum of Understanding (MoU) at the SSC’s head office on June 24. The ultimate goal of the cooperation is to increase the stability and sustainability of the stock market and enhance its prestige on the international financial market. Vietnam’s stock market is evaluated by Morgan Stanley Capital International (MSCI) as a Frontier Market (FM), so this cooperation will work towards it being upgraded to Emerging Market (EM) status, allowing it to attract more cash flows from foreign funds and large investment companies. Stoxplus will help the SSC to develop the stock market by improving the quality of information disclosure by listed public companies, processing data for both listed and unlisted public companies, and helping public companies with information disclosure in English, which are part of the information disclosure criteria for EM status. StoxPlus will also provide the SSC with access to the FinnPro Platform for statistics and research reports. Speaking at the signing ceremony for the MoU, Ms. Nguyen Thi Lien Hoa, Vice Chairwoman of the SSC, highlighted the importance of the FiinPro Platform’s macro, industry and corporate data in the preparation of the SSC’s annual report and other regular reports. Mr. Nguyen Quang Thuan, CEO of StoxPlus, said the company was proud to support improvements to information disclosure by public companies and market members, increase market transparency and development, and attract more foreign capital into Vietnam stock market. As at the end of May, 19,150 foreign investors, 15.3 per cent of which are corporate investors, were trading on the Ho Chi Minh City Stock Exchange (HoSE) and the Hanoi Stock Exchange (HSE), an increase of 7.1 per cent year-on-year, Vietnam Securities Depository reported. Vietnam’s two stock exchanges posted a combined market capitalization of over $62.17 billion as at June 24, with the HSE accounting for more than 89 per cent, according to official data.   StoxPlus was established in 2008 and became a strategic partner of the Nikkei Corporation and Quick Inc of Japan in 2014. Vietnam plans to merge the two bourses, with the headquarters to be located in Ho Chi Minh City, HoSE Chairman Tran Khac Sinh revealed on June 27. HBC wins $112 million EPC contract The Hoa Binh Construction and Real Estate Corporation (HBC) secured an Engineering Procurement and Construction (EPC) contract on June 29 worth VND2.5 trillion ($112 million) for Imperia Sky Garden, a high-end apartment project in Hanoi.   As the general design and build contractor, HBC will complete the design, supply the equipment and facilities, and construct all the commercial, service and housing areas of the building. The HBI Joint Stock Company is the investor and the M.I.K Group Vietnam the developer. Located in Minh Khai Street in Hai Ba Trung district, the project covers an area of 3 ha with four buildings of 28 floors. It is expected to be completed within 23 months. Imperia Sky Garden is the second project where HBC has cooperated with HBI and M.I.K Group Vietnam, after Imperia Garden Hanoi, which is under construction and expected to be completed by May next year. In 2015 HBC’s consolidated revenue was VND 5.078 trillion ($227.6 million), a 44.3 per cent increase against 2014 and reaching about 96 per cent of the target. Construction made the greatest contribution, of 99 per cent. After-tax profit was VND 83.47 billion ($3.7 million), however, down 17.7 per cent compared to 2014 and equal to just 46.4 per cent of the target. Reasons behind the failure to reach the target include high borrowings from banks creating high financial costs, investing long-term in construction with complex technology bearing risks in costs, and the general difficulties in the real estate market. CEO Le Viet Hai stressed that their investment extends for decades and is not short term.   For 2016 HBC targets revenue of VND7.2 trillion ($322.7 million) and after-tax profit of VND252 billion ($11.29 million), increases of 42 per cent and 200 per cent, respectively, compared to 2015. This year it has dozens of contracts with major partners such as Vingroup, Novaland, SunGroup, Hoa Lam, REE, and M.I.K, valued at VND15.2 trillion ($681.4 million), giving its Board of Directors reason to believe targets will be met. Established in 1987, HBC is the only company in the southern region selected by the government to participate in the national brand program. It has 6,000 employees and has completed 80 buildings around the country and is finishing another 50. First-half FDI approvals double y-o-y Fresh foreign direct investment (FDI) approvals in Vietnam have amounted to nearly US$11.3 billion in the first half of this year, over two times higher than in the same period last year. The figure includes over US$1.1 billion this month, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment. The agency said 1,145 new FDI projects worth US$7.5 billion had been approved in the year to June 20, up a staggering 95.3% against the year-earlier period. In the period, foreign companies had registered a total of US$3.79 billion for 535 operational projects, a 129% leap. Monthly FDI pledges in the January-June period have registered positive growth, a good sign for foreign investment attraction this year. Experts credited the strong growth to improvement in the investment environment and new opportunities from the nation’s further international integration. Processing and manufacturing has remained the most attractive sector in the first six months, with US$8.06 billion, or 71.4% of the total, pledged in 488 new and 405 operational projects. Real estate is ranked second with US$604.8 million (5.3%) going to fresh and existing projects. Science and technology comes third with US$562.3 million (4.9%). FDI disbursements in the January-June period have reached US$7.25 billion, up 15.1% year-on-year, according to the FIA. Vietnam has attracted companies from 61 countries and territories in the period. South Korea has taken the lead with nearly US$4 billion, accounting for 35.37% of the total, followed by Japan with US$1.23 billion (10.8%) and Singapore with US$1.13 billion (10%).    Govt-business relationship gap still wide There remains a big gap in the relationship between Government agencies and enterprises, Minister of Planning and Investment Nguyen Chi Dung said, adding this problem should be solved to facilitate business operations. Dung told a dialogue on 2016 investment policy jointly organized by the Vietnam Association of Foreign-Invested Enterprises (VAFIE) and KPMG Vietnam in Hanoi on June 28 that agencies have kept setting up obstacles to business operations and that some have managed to make life difficult for enterprises for their own benefits. Dung stressed the urgency to improve the relationship between Government agencies and enterprises. “Once enterprises feel confident in the agencies, they will decide to take out money to invest,” Dung told the dialogue with the business community. The event was the first of its kind Dung attended as a speaker in his capacity as Minister of Planning and Investment. According to Dung, the Government has issued important resolutions 19 and 35 with an aim to boost the reform of administrative procedures and further improve the investment environment. The Government tended to put enterprises under control in the past but will shift to serving them, Dung said. Enterprises are allowed to do business in areas which are not banned by law. More than 3,000 out of 6,000 sub-licenses were eliminated during the Government’s recent reviews of business conditions. “After July 1, new decrees will be issued and come into force, but such reviews (of business conditions) will continue,” Dung said. At the dialogue, Dung also called for more cooperation between foreign-invested and domestic enterprises. He noted that competition is not about eliminating each other but helping each other grow. Jan-Jun veggie and fruit exports leap 33% y-o-y Fruit and vegetable exports have soared to US$1.17 billion in the first half of this year, up 33% compared to the same period in 2015, showed data of the Vietnam Fruit and Vegetables Association (Vinafruit). In the first five months of 2016, China was Vietnam’s biggest importer of fruits and vegetables with total turnover of US$692 million, accounting for 70% of the total and soaring nearly 80% year-on-year. The U.S. market came second with US$37 million, up nearly 63% over the same period a year earlier but making up about 3.74% of the total, followed by South Korea. The Northeast Asian country bought US$35.4 million worth of vegetables and fruits from Vietnam in the period, up 25.7% year-on-year and accounting for about 3.61%. Fruit and vegetable shipments to the Netherlands grew 60% year-on-year to US$23 million while exports to Australia rose by nearly 30%. Of the top ten vegetable and fruit importers of Vietnam, only Japan showed a slight decline by almost 7% compared to the year-earlier period. Hoang Trung, head of the Plant Protection Department under the Ministry of Agriculture and Rural Development, said vegetable and fruit exports are more promising in 2016 than last year as when many foreign markets have opened their doors to Vietnamese products. Fruit exports to choosy markets have gone up sharply in the first six months of this year owing to good controls of diseases, stable product quality and increased demand. Vietnam is now in negotiations with more countries over fruit and vegetable exports. Shipments of Vietnam’s dragon fruit to Taiwan have resumed this month after five years of disruption due to the melon fly disease. This is a good sign though it is hard for Vietnam to sell 14,000 to 16,000 tons of dragon fruit to that market as in the years before the halt. Litchis, apples and mangoes will be shipped to many other demanding markets, including Japan, the U.S. and South Korea in the near future. Trung said it is expected that fruit exports in 2016 will surpass the US$1.8 billion mark of last year. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR