BUSINESS IN BRIEF 13/8 CIEM: Drastic reforms key to growth Vietnam must take bold measures to boost reforms and ensure all businesses can compete fairly if it is to return to its high growth path and catch up with regional countries, said the president of the Central Institute for Economic Management (CIEM). Nguyen Dinh Cung told a conference in Hanoi on Wednesday that Vietnam has little scope for more growth after 30 years of economic reform, so the country would have to work harder to achieve higher growth. He said a comprehensive policy for building up a competitive business environment is essential for the next phase of reform. According to the Government’s Resolution 19, CIEM is tasked with drafting and submitting the policy next year. Cung said the policy would be ready on time. A CIEM report showed Vietnam’s economic growth has steadily cooled, from an average of 7.8% in the 1990-2007 period to 6.7% in 2007-2012, and just 5.8% from 2012 till now. The macro economy has also been less stable. Cung said that at a time of deeper global integration, Vietnam could only narrow its gap with other regional countries by getting back to growth of 7-7.5%. However, he said Vietnam cannot continue to adopt demand-side tools, such as expansionary fiscal and monetary policies to drive growth, because they can entail macroeconomic instability. Instead, better solutions including improving labor productivity and more efficient use of resources are required for sustainable economic development, he said. Cung pointed out that the distribution of resources is currently distorted by administrative decisions and interest groups. Many businesses are facing many barriers to market entry and land access, he added. Meanwhile, SOEs have engaged in unfair competitive practices by buying businesses at high prices and selling them at low prices, which runs counter to market rules, sends out misleading market signals and leads to the inefficient use of resources. Lanchlan Rosalie from the Australian Productivity Commission said the sectors currently dominated by SOEs such as electricity and telecommunications should be opened up to private firms. Incentives for SOEs need to be removed to foster a competitive environment, she said. Accordingly, SOEs should not be offered tax incentives and have to bear the same costs as other enterprises. Besides, the Government must ensure that its budget is used to create fair opportunities for all firms. According to the World Economic Forum (WEF), of 140 economies, Vietnam ranks 71st in terms of local competition and 77th on effectiveness of anti-monopoly policy. Vietnam’s rice exports dwindle 18.4 percent in seven months Vietnam exported 2.93 million tonnes of rice with a value of 1.32 billion USD in the first seven months of the year, a year-on-year plunge of 18.4 percent in volume and 14.4 percent in value, according to the Ministry of Agriculture and Rural Development (MARD). Low rice production, caused by drought and saline intrusion in the Mekong Delta region, led to the fall in exports, the MARD said. Besides, a significant decline in rice consumption were seen in such traditional markets as the Philippines (54.3 percent) and Malaysia (59.2 percent). China remained the largest importer of Vietnamese rice, accounting for 35 percent of the market share. Indonesia was second with 11.6 percent. The country’s rice export is estimated to fall to 5.65 million tonnes in 2016, down 14 percent against the previous year and 800,000 tonnes lower than initial forecasts. This stems from decreases in production and fierce competition from other exporters like Thailand and India.  According to the Vietnam Food Association (VFA), this is the first time since 2009 Vietnam’s rice exports may fall below 6 million tonnes. HCM City to host manufacturing exhibition Nepcon Vietnam 2016, an international exhibition on SMT, testing technologies, equipment and support industries for electronics manufacturing, will be held in HCM City in October.  To be held at the Sai Gon Exhibition and Convention Centre from October 6-8, the ninth exhibition promises to be a bridge connecting support companies and technology providers.  Exhibitors will present technology, machines and solutions to over 10,000 visitors looking to improve their SMT lines and the country's electronic manufacturing sector. Kasinee Phantteeranurak, project manager of Reed Tradex Co Ltd, the exhibition's organiser, said "The influx of foreign electronics manufacturers to Vietnam has enabled transfer of technology and skills. More than ever, it's time for the country to develop its own ability and production base to sustain the trend." NEPCON Vietnam, having been in Vietnam for nine years, will continue playing its role as a business-matching platform, returning to HCM City this year to meet the demands of the market, especially in the Southern area, she said. Delayed project annoys residents’ life The project consolidating the Thao River’s left bank and Lô River’s right bank in northern Phú Thọ Province is expected to be completed this year and stop plaguing locals with dust and noise. The project, with more than VNĐ264 billion (US$11.8 million) of investment, was initiated by the province’s Department of Agriculture and Rural Development and was meant to be finished last year. However, up to now, the project is only half finished. Head of the agriculture department’s project management board Nguyễn Đức Lương said progress was slowed in 2013 when the province could not arrange resettlement areas for locals. As of March 2015, infrastructure in the resettlement area was available but residents refused to move due to low compensation, he said. The compensation rate which was approved in 2013 did not meet residents’ current needs. Lương said that to speed up the dyke embankment project, the provincial People’s Committee late last month agreed to offer higher compensation for residents. The project also affects the daily lives of residents living on the road on which trucks carrying materials to work run. Nguyễn Quyết Chiến, living in Bến Gót Ward, the province’s Việt Trì City said that for the last six years, hundreds of families living on Thạch Khanh Street suffered from dust and noise from the trucks. “Trucks run noisily around the clock,” he said, adding that they closed doors and windows most of the time because of dust. Local residents blocked roads with rocks and trees, he said. The project constructor and transport company sprayed water to tackle the dust a few times but this had little affect. Vice chairman of Bến Gót Ward People’s Committee Trần Anh Đức said that the project had negatively impacted locals. The committee called for relevant parties to keep a clean environment and complete the work soon, he said. ASEAN investors keen on VN's manufacturing, processing industry Foreign investors from the Association of Southeast Asian Nations (ASEAN) are showing interest in the processing and manufacturing industry in Viet Nam, the Foreign Investment Agency has said. As of July 20, ASEAN investors have pumped US$27.68 billion into 1,176 projects in the industry, accounting for nearly 43 per cent of their investments in Viet Nam, the agency, which is under the Ministry of Planning and Investment, said. In addition to processing and manufacturing, these investors are also interested in real estate, injecting $19 billion, electricity production and distribution, investing $3.37 billion and construction, pumping $2.9 billion. During the reviewed period, Singapore tops the bloc in investing in Viet Nam with 1,663 projects worth $38.1 billion, followed by Malaysia with $13.8 billion, and Thailand with $9.4 billion. Among areas nationwide, HCM City and Ha Noi attracted the lion's share of ASEAN investment, drawing $17.33 billion and $8.39 billion, respectively, or equivalent to 26.8 per cent and 13 per cent of the bloc's total investment in Viet Nam. According to the ministry, the two reviewed cities, besides southern Binh Duong and Dong Nai provinces, remained attractive destinations for ASEAN investors thanks to their sufficient infrastructure.  Liquidity is a key strength of Vietcombank: Moody's The Bank for Foreign Trade of Viet Nam's (Vietcombank) B1 issuer rating and stable outlook are underpinned by its baseline credit assessment (BCA) of b2. This was the highest BCA among banks that Moody's rates in Viet Nam (B1, stable), Moody's Investors Service said on August 3. According to Moody's, the BCA reflects in turn Vietcombank's above-peer financial fundamentals on a standalone basis. "Vietcombank's strong legacy franchise as a trade-oriented state-owned bank, with leading positions in trade finance, foreign exchange and international settlement, has provided a competitive advantage and attracted a superior client base that has supported its asset performance," Daphne Cheng, a Moody's analyst, said. "Liquidity represents another key strength of Vietcombank," Cheng said. "Structurally, the bank will continue to benefit from its strong deposit franchise and its role in the national payments system." Moody's analysis is contained in its just-released report on Vietcombank, entitled "Strong Funding Franchise and Client Base to Support Gradual Shift in Loan Mix," and is authored by Cheng. Cyclically, Moody's expects Vietcombank to grow its loan book at or below the system average, as it shifts increasingly to smaller borrowers. This situation will further boost its liquidity position. Moody's said Vietcombank's stronger liquidity and funding metrics were key factors driving its BCA to a level above that of its closest peer, Viet Nam Bank for Industry and Trade (Vietinbank, B1 stable, b3). Moody's report points out that Viet Nam's sustained economic growth should continue to support Vietcombank's large corporate borrowers and maintain the bank's good asset performance. Moody's report also says that Vietcombank's modest capitalisation is its key weakness. Nevertheless, the bank has kept loan growth rates closely in line with the industry average, which should help alleviate pressures from capital consumption. Moody's therefore sees the bank's recently announced capital raising plan as an upside risk that could raise its Tier 1 ratio to 10.1 per cent by the end of 2016, from a projected 7.7 per cent compared with a reported 8.5 per cent for the quarter ended March 31, 2016. On the bank's high growth rates in retail loans since 2011, Moody's says that this development poses underwriting risks and could lead to an accumulation of unseasoned loans. Nonetheless, such risks are mitigated by the bank's conservative approach to bad debt management.  Mekong Capital invests in logistics firm ABA Corp Private Equity firm Mekong Capital unveiled on August 4 that it led at the funding round for Vietnam-based logistics firm ABA Corporation, marking the second investment from its fourth fund. Financial details of the deal were not disclosed, but Mekong Capital typically invests between US$6-12 million in each company it invests in from its Mekong Enterprise Fund III. Mekong Capital also generally takes both minority stake purchases and buyouts in the companies it invests in, which hit final close of $112 million. ABA was founded in 2008 as a temperature-controlled transport provider. It recently entered the cold storage business through the acquisition of a cold storage facility in Hanoi. The company provides integrated cold chain solutions for industries such as pharmaceuticals, foods, dairy products and frozen goods. Its customers include several large retailers and consumer goods companies in Vietnam like Big C, VinMart, METRO, Unilever and BEL. Australian firm eyes degraded apartment blocks in Ho Chi Minh City Australian property developer Sakkara Group expressed interest in renovating old and degraded apartment blocks in Ho Chi Minh City to acquire the potential land bank gained from these blocks. The company’s intentions were announced by Sakkara’s chairman Neil Wilson at his meeting with Chairman of the Ho Chi Minh City People’s Committee, Nguyen Thanh Phong, on August 2. According to Sakkara’s representative, during the investigation progress, the group found numerous old and degraded apartment blocks in the city which could be turned into a sizeable land bank for exploitation. Chairman Nguyen Thanh Phong said that there are 474 apartment blocks in the city, 50 per cent of which is in a degraded condition. The city proposed the government to call for the involvement of both domestic and foreign investors in these projects. Along with renovating degraded apartment blocks, Sakkara and its partners, namely Dragon Capital and GIC, also want to find investment opportunities and acquire land plots suitable for shopping centres, office buildings, apartments, and multifunctional buildings. Phong stated that the city offers investors abundant opportunities, since it is currently  calling for investment in new urban projects as well as subway trading zones. Setting foot in Vietnam in 2004, through its subsidiary Sakkara Asia Pacific Project Holding Investment Real Estate JSC (Sapphire), Sakkara implemented numerous projects, including Holm (a residential community), Sanctuary Resort (a luxury beachfront residential community) as well as City Garden, President Place, and Centre Point. HCMC announces support package for enterprises The Ho Chi Minh City People’s Committee is to set VND3 trillion ($136 million) aside to support the development of local enterprises. The city’s People’s Committee will separate the funding into two packages. A package of VND2 trillion ($91 million) will be used to kick-off investment and support and encourage enterprises in renovating equipment and applying science and technology, while another package of VND1 trillion ($45 million) will be used for startups and individual businesses developing into enterprises. The city has a specific plan and has requested relevant agencies to reform administrative procedures and create favorable conditions for local enterprises. Agencies must guarantee the rights of businesses and their equal access to resources and opportunities, especially from the two packages. City leaders have directed the Department of Natural Resources and Environment to study cutting costs in land leasing and converting land use purposes. They have also directed related departments and district people’s committees to protect the rights and legal interests of enterprises. Ho Chi Minh City Chairman Nguyen Thanh Phong believes the packages will support at least 500,000 enterprises by 2020. Many will increase their scale and resources so the city’s business community will be competitive and stable. City leaders also aim for the private sector to contribute about 65 per cent of total production in the city and account for about 64 per cent of the country’s total investment capital. Total factor productivity (TFP) is to rise about 36 per cent and social labor productivity by 6.5 per cent a year. More importantly, Ho Chi Minh City will have 30 to 35 per cent of its enterprises undertaking greater innovation activities. In late June the city announced the introduction of a VND1 trillion ($45 million) credit support package for startups, providing them with support in management, technology, and access to bank credit. Businesspeople under 35 years of age will be prioritized. The city will also hold exchanges between youngsters, undergraduate students, and successful businesspeople and also organize startup clubs. Vpresso targets 50 coffee shops South Korea’s May Emerald Co., the owner of the Vpresso Coffee chain in Vietnam, is planning to increase its number of coffee shops to 50 in the time to come after launching its 12th outlet on August 1 in Hanoi. Ms. So Yeon Kim, PR Manager at May Emerald, said the company wishes to expand in Hanoi and move into Ho Chi Minh City, Da Nang, and Nha Trang. “We are also in the process of exporting high quality Vietnamese coffee beans and Vietnam’s coffee culture to other countries, including South Korea,” she told VET. Vietnam is a leader in the production of coffee and its coffee market holds a lot of development potential, Mr. Sung Seung Hoon, CEO of May Emerald, said at the opening of the new outlet. “Many other brands are growing very well in traditional coffee but in order to develop faster we aim to diversify our types of coffee to meet increasing demand,” he added. Arriving in Vietnam in 2011, Vpresso has increased its initial capital from $100,000 to $500,000 and has become a familiar brand for many young people. Though viewing Vietnam’s coffee market as holding potential, many investors face a host of difficulties due to the tough competition. The Singaporean coffee and dessert chain New York Dessert Coffee (NYDC) withdrew from Vietnam recently after seven years in the country after failing to establish a customer base. With investment from its parent company, the SUTL Group, NYDC arrived in Vietnam in 2009 and young people were quickly attracted to its modern drinks menu and tasty American desserts such as cheesecakes and mud-pies. But due to the tough competition the Singaporean coffee chain couldn’t maintain business. Trung Nguyen, Highlands Coffee and Starbucks are the three biggest names in Vietnam. Trung Nguyen has the most number of outlets but the other two also attract many customers.  After ten years in Vietnam, Highlands Coffee now has about 100 coffee shops, mostly in major cities. From the very beginning it positioned itself as the coffee shop for businesspeople and high-income earners.  Starbucks, which arrived in Vietnam two years ago, has over ten shops in Ho Chi Minh City and Hanoi, which is small compared to its 12,000 shops worldwide. Vietnam’s Trung Nguyen has over 1,000 coffee shops all over the country, with its flavor being its most outstanding characteristic. Vinacafe Bien Hoa now holds 40 per cent of the instant coffee market share but has been quiet since the failure of its “real coffee” marketing campaign. Nestle is the only major player to stand firm. Its Nescafe brand ranks second in the market in revenue but first in sales of 3-in-1 instant coffee. Eximbank's 1H pre-tax profit down 88% The Vietnam Commercial Export and Import Bank (Eximbank) recorded poor business results during the first half of 2016 following internal conflict between the main shareholder groups. The bank has recently released its second quarter consolidated financial statement, with bad debts standing at 5.3 per cent of total debts as at June 30 while first half pre-tax profit was down 88 per cent year-on-year. As at June 30 the bank’s lending balance stood at VND80.8 trillion ($3.6 billion), down 4.62 per cent compared to the end of 2015. Its credit balance was VND100.7 trillion ($4.5 billion), up 2.33 per cent compared to the end of 2015, with total assets at VND121.7 trillion ($5.4 billion), down 3.3 per cent compared to the end of 2015. Net operating profit in the second quarter was VND372 billion ($16.7 million), up 90 per cent year-on-year. However, credit risk provisions also doubled the figure in the second quarter of 2015, at VND324 billion ($14.5 million) as at June 30. After deducting costs and credit risk provisions, Eximbank’s pre-tax profit for the quarter stood at VND49 billion ($2.2 million), a 69 per cent increase year-on-year. Despite the positive result, pre-tax profit for the first half reached only VND79 billion ($3.5 million), a decline of 88 per cent year-on-year. Bad debts stood at VND4.3 trillion ($192.8 million) as at June 30, equal to 5.3 per cent of the total and up significantly from the 2 per cent recorded at the end of last year. As at June 30, sub-prime debts were VND2.4 billion ($107.6 million), accounting for more than half of all bad debts and 13-times higher than at the end of 2015. Doubtful debts stood at VND797 billion ($35.7 million), up 34.8 per cent compared to the end of last year while potentially irrecoverable debts were reported at VND1.07 trillion ($48 million). On July 18 the bank announced adjustments to its 2016’s financial targets. Pre-tax profit was adjusted to VND400 billion ($18 million), down 44 per cent from the initial target of VND720 billion ($32.3 million). The target for total assets for the year was adjusted to VND134 trillion ($6 billion), down 6 per cent from the initial VND142.5 trillion ($6.4 billion). The credit balance target was adjusted to VND108 trillion ($4.8 billion), down from the initial VND113.5 trillion ($5.1 billion), while the lending balance target was adjusted to VND100 trillion ($4.5 billion), down from the initial VND105.8 trillion ($4.7 billion). These adjustments were expected to be announced to shareholders at an extraordinary shareholders meeting. However, the State Bank of Vietnam (SBV) on July 29 requested Eximbank check information regarding shareholders group rights to nominate candidates for its board. Eximbank was therefore forced to postpone the extraordinary shareholders meeting, which was to be held on August 2.     The meeting has been postponed to a date to be decided, according to a document signed by CEO and Board Member Mr. Le Van Quyet and posted on the State Securities Commission and the Ho Chi Minh Stock Exchange websites.   “The most important issue for the bank right now is the reform of its high-ranking members,” according to Board Member Mr. Ngo Thanh Tung. “A transparent board with a sense of justice is critical right now for the bank to overcome this tough period.” However, as Board Member Mr. Dang Thanh Mai told local media, “the most difficult task right now is to be able to reach a mutual agreement between shareholder groups, in order to hold a successful shareholders meeting.” Eximbank’s Board of Directors now consists of nine members, including Mr. Cao Xuan Ninh, an official from the central bank. Mr. Ninh joined Eximbank in mid-December last year but tendered his resignation due to personal reasons at the end of March. His resignation has not been ratified as yet since the first two annual board meetings earlier this year failed to gain a quorum of 65 per cent of shareholders. HoREA proposes lower fees for changing land-use purpose The Ho Chi Minh City Real Estate Association (HoREA) has proposed the city’s People’s Committee agree to a 50 per cent fee being imposed for converting agricultural land into residential land. The city’s Department of Finance has previously proposed an 80 per cent fee in an attempt to increase the local budget. There is currently no fee imposed on converting land-use purposes. HoREA believes that its proposal would help the sustainable development of the real estate market. “While investors try to cut prices to give the customers the chance to buy an apartment, the city should apply a reasonable fee level of 50 per cent to support real estate companies,” Mr. Le Hoang Chau, HoREA’s Chairman, told VET. According to the city’s Department of Finance, investments in the fields of manufacturing, industrial zones and export processing zones earn lower profit than those in the fields of housing, trade and services. “The finance department’s proposal is unreasonable at a time when many large industrial developers are recording higher profits and stability than property developers,” Mr. Chau added. “Real estate enterprises have to meet a range of obligations when implementing projects, and it is the buyer who bears these costs when buying an apartment.” A recent report from HoREA revealed that the city’s property market has experienced some instability. Market transactions fell slightly in the second quarter, it wrote, while at the beginning of the third quarter it has seemed unusually crowded after a wide range of products from large projects have been launched. Additionally, many real estate projects and deposit contracts from customers are being used as collateral for loans for investment capital at commercial banks. According to HoREA, instability has also been due to developers being incompetent, lacking in professionalism, or using deposits and credit for the wrong purposes. There has also been loose management by credit organizations. According to figures from Cushman & Wakefield’s second quarter review released in June, the total increase in industrial land in Ho Chi Minh up to 2030 is projected at approximately 2,600 ha from ten new industrial parks, an increase of 66 per cent against current stock. In the office segment, over 80,000 sq m of new Grade B supply are expected to be completed in 2016 but limited Grade A supply, particularly large spaces, will keep average rents in the segment stable with a moderate increase likely by the end of the year.  From the second half of 2016 onwards, approximately 80,000 units are expected to be launched in Ho Chi Minh City. Future supply tends to be concentrated in southern and eastern regions, accounting for nearly 60 per cent of total future stock. Govt okays toll cuts for four groups of vehicles The Government has approved a Ministry of Finance proposal to slash tolls on national highways and expressways by 10-20% for four groups of vehicles in a bid to bring down high transport costs, according to the Government portal. Toll reductions of 10-15% will benefit vehicles in group four which contains trucks of 10-18 tons or those transporting 20-foot containers, and group five which consists of trucks weighing over 18 tons or carrying 40-foot containers. The new rates will be applied at 29 toll stations currently charging the maximum tolls as regulated in the ministry’s Circular 159/2013/TT-BTC. Tolls will also be lowered by 10-20% for vehicles in group one which includes cars under 12 seats, trucks of less than two tons and buses, and group two that comprises coaches of 12-30 seats and two-to-four-ton trucks. Five toll gates that apply the highest fees permissible will have to adjust accordingly. No cuts are approved for other toll stations that collect lower fees in accordance with Circular 90/2004/TT-BTC. Deputy Prime Minister Vuong Dinh Hue, who approved the Ministry of Finance proposal for toll reductions, told the ministry to issue a circular on the fee cuts and bring them into force at the beginning of a certain month or quarter to avoid causing inconveniences for users of monthly and quarterly tickets. According to the Ministry of Transport, there are now 45 toll stations collecting money from users of roads constructed under the build-operate-transfer (BOT) model. Among them, 16 are operating under Circular 90, which sets toll fees within a range of VND10,000-80,000 per vehicle. The 29 other stations collect higher fees according to Circular 159, with rates ranging from VND15,000-52,000 to VND80,000-200,000 per vehicle. Five toll gates are charging the maximum level, including two on National Highway 1A and two others on National Highway 5. The Deputy Prime Minister has also ordered the toll gates that began operating before 2014 not to raise their fees. Provincial governments have been told to review fees at stations under their management and at least keep them unchanged. The Ministry of Transport will work with investors to adjust tolls on roads that are nearly finished if they are too high. The blooming of BOT projects in the past five years has led to a large number of toll gates going up, which have driven up transport costs and commodity prices. To solve the issue, the ministries of finance and transport in June proposed the Government reduce road fees for certain groups of vehicles to maintain the competitiveness of local goods. Apparel firms worry about 2017 wage hike plan A number of enterprises in the labor-intensive textile-garment industry have expressed concern over the National Wage Council’s plan to increase the region-based minimum wages by 7.3% on average next year, saying the cost burden would be heavier for them.   Under the council’s plan which will be submitted to the Government for approval, the minimum monthly wage for region one would be adjusted up by VND250,000 next year to VND3.75 million. Meanwhile, the rises for regions two, three and four would be VND220,000, VND200,000 and VND180,000 respectively, taking the minimum wages for these regions up to VND3.32 million, VND2.9 million and VND2.58 million per month.  Asked by the Daily about the pay raise plan, Nguyen Dinh Ngo, director of Can Tho City-based Viet Thanh Garment Export Co Ltd, said textile-garment enterprises are grappling with a host of difficulties and desperately finding ways to cut costs. The 2016 minimum wage spike of 12.4% has hit Tay Do Garment Company hard as the firm’s wage fund has fallen short of VND6 billion. “The salary hike for next year would definitely make life more difficult for the company,” said deputy general director Nguyen Hau Giang. According to Giang, while minimum wages go up, labor productivity does not. In other words, the performance of workers has not improved in line with wage hikes, and his company has to set aside an additional VND1 billion a month for the salary spike. Giang noted that insurance payment and labor union fees would increase proportionally. As a result, though sales may inch up slightly, profit would skid. Tay Do paid VND1.6 billion in monthly insurance premiums last year and the figure has risen to VND1.8 billion this year. The amount will be higher next year if the council’s final plan is approved, he said.  Meanwhile, Ngo of Viet Thanh said workers at his company would not benefit from the 2017 wage rise as their wages are already higher than the minimum levels. “But the point is the financial burden would be heavier for us,” Ngo said. Nguyen Thai Hung, president of the Song Hau Textile-Garment Sub-Association, shared the point, saying the minimum wages by region for 2017 should not be revised up to help enterprises focus on stabilizing their production and improving competitiveness. Outsourcing fees have remained unchanged, according to Hung. In a document issued on July 22, the Vietnam Textile and Apparel Association (VITAS) said the 2016 minimum wage hike already placed great impact on enterprises, especially in terms of labor cost. Therefore, the association proposed no minimum wage hike next year, suggesting that the salary adjustment should be made once every two or three years. According to Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan, a technical team of the National Wage Council had prepared two reports assessing the minimum wage hike’s impacts and inspected actual conditions of laborers. Huan said with the 7.3% rise, minimum wages can meet 90% of workers’ minimum living costs. However, the Vietnam General Confederation of Labor was not pleased with the increase and would face higher pressure from laborers, the confederation’s vice president Mai Duc Chinh said. Local firms to spend more on unprocessed seafood imports Domestic enterprises will have to import more unprocessed seafood to turn out products for export due to an undersupply at home, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). VASEP said at a meeting in HCMC on Tuesday that to fulfill export orders, Vietnam last year had to spend roughly US$1 billion importing unprocessed seafood from 84 markets, with shrimp accounting for 40% of the total.  VASEP chairman Ngo Van Ich said importing more unprocessed seafood is essential to realize the export target of US$10 billion by 2020. The association said climate change has dealt a blow to aquaculture this year. The area under tiger and white-leg prawn farming has been hit hard, leading to a plunge in output. Therefore, many local processors have relied on shrimp from foreign sources. According to the Ministry of Agriculture and Rural Development, brackish water shrimp output in the Mekong Delta dipped in the first six months, leading prices to go up. Many processing plants ran at 50-60% capacity in the period due to material shortages. In the second half, shrimp and tra fish output is projected to slide due to unfavorable weather conditions. The import price of unprocessed shrimp is US$1-2 per kilogram lower than that of local shrimp, so firms will buy shrimp overseas to raise the competitiveness of their products on foreign markets.   Local seafood companies have imported unprocessed shrimp from India and tuna from the Philippines and Indonesia. Due to an undersupply of unprocessed shrimp, VASEP has revised down its forecast for shrimp exports by US$300 million to US$3 billion this year. VASEP secretary general Truong Dinh Hoe was quoted by the Vietnam News Agency as saying that the recent saltwater intrusion would send down shrimp supply in the remaining months of this year. Hoe said shrimp shipments to the U.S. climbed by 13.8% in the first six months, to China and Hong Kong by 41.8%, and the European Union (EU) by 6.5%. However, exports fell by 9% a year-on-year from Japan, which made up 17.1% of Vietnam’s total shrimp exports in the first half. Vietnam accounts for 12.4% of the total shrimp imports into the U.S., ranking fourth after Indonesia, India and Thailand. Exports to the choosy market are expected to jump after the Ministry of Industry and Trade clinched an agreement on anti-dumping duty on shrimp imports from Vietnam with the U.S. Department of Commerce and the U.S. Trade Representative. This year, Vietnam has sold shrimp to 75 markets, down from 81 in 2015. The top 10 importers are the U.S., the EU, Japan, China, South Korea, Canada, Australia, ASEAN, Taiwan, and Switzerland. These markets account for 95% of Vietnam’s total shrimp exports. Seafood exports brought US$3.15 billion in the January-June period, up 4% year-on-year. Of the total, shrimp contributed US$1.4 billion, rising by nearly 5% versus the year-earlier period. Nidec mulls R&D center Japan’s Nidec Corporation looks to open a research and development (R&D) center at Saigon Hi-Tech Park (SHTP) in HCMC’s District 9 as part of its expansion plan. Nidec’s first senior vice president Go Watanabe mentioned the R&D project at a meeting with HCMC chairman Nguyen Thanh Phong early this week. Watanabe said the company has decided to expand operation in the city owing to the great support from the local government and the SHTP Authority. For the planned R&D center, Nidec will need skilled labor and assistance from the city government in human resource development. As part of the expansion plan, the company will build another workshop at SHTP. Phong threw his weight behind Nidec’s expansion plan, saying a number of universities in the city can supply human resources for the R&D center. He also pledged to facilitate the Japanese corporation’s expansion. Le Hoai Quoc, head of the SHTP Authority, told the Daily after the meeting that Nidec has five investment projects worth a total of more than US$380 million at SHTP.  Inspection of Nui Phao Mining is normal: official The Minister and Chairman of the Government Office has confirmed environmental inspectors will look into operations of Nui Phao Mining Co Ltd in Thai Nguyen Province this month, and that it is a standard practice for relevant authorities to thoroughly examine business. Mai Tien Dung told reporters in Hanoi on Tuesday that authorities have annual inspection plans. As for Nui Phao Mining, the Ministry of Natural Resources and Environment will collaborate with Thai Nguyen’s government to check the company’s practices. “In case violations are found at its mining project, authorities will handle the case in line with law,” he said. In November last year, the ministry approved an inspection plan for 2016. Under the plan, inspectors will look into several facilities and industrial parks in the northern province of Thai Nguyen, including Nui Phao Mining. The ministry passed the environmental impact assessment report for Nui Phao project in Decision 233 issued on February 28, 2005, and Decision 370 issued on March 6, 2008, meaning it is responsible to conduct announced and snap checks on the project. Last month, local people in Ha Thuong Commune, Dai Tu District lodged complaints against Nui Phao Mining and gathered in protest against environmental pollution, allegedly caused by the company’s mining project. After receiving reports from Thai Nguyen authorities on July 14 regarding the case, the ministry decided to start the inspection in Thai Nguyen and at Nui Phao Mining this month, earlier than previously scheduled. PVI leads non-life insurance market PVI Holdings continued to maintain its top position in the field of non-life insurance with revenue hitting 4.17 trillion VND (187.65 million USD) in the first half of 2016.  The figure surpassed the six-month target by 3 percent and fulfilled 52.5 percent of the yearly goal.  PVI reinsurance was estimated at 953 billion VND (42.88 million USD). Its pre-tax profit stood at 455 billion VND (20.47 million USD), exceeding the half-year target by 13 percent.  Formerly known as PetroVietnam Insurance Company, PVI was founded in 1996 and was one of the first enterprises in Vietnam to implement equitisation to become PetroVietnam Insurance Joint Stock Corporation in 2006. It was listed on the stock market in 2007 with stock code PVI.  PVI was named in the 50 best brands in Vietnam in 2015 by Brand Finance, a London-based brand valuation organisation.  In June 2016, it was honoured by the Vietnamese edition of Forbes Magazine as one of the 40 most valuable brands nationwide and leading in the fields of finance and insurance. The magazine also listed PVI among the 50 best companies in the Vietnamese stock market. Rambutan a hit on Dong Nai farms Farmers in the southern province of Dong Nai are growing Thai rambutan because of its high profit, according to the Dong Nai Agriculture and Rural Development Department. The department said Dong Nai has 11,000ha of rambutan trees, making it the largest rambutan producer in Viet Nam. The total area for growing rambutan trees has not increased over the years, but the structure of the area has changed. The area for growing Thai rambutan has increased, while the area for Vietnamese rambutan has been reduced. Le Thi Lan, a farmer in Binh Loc Commune, Dong Nai Province, said her family grew 5ha of Vietnamese rambutan before 2014, but now she has cut down local rambutan trees on 3ha to grow Thai rambutan. She said her family might grow Thai rambutan trees on the remaining 2ha in the future if the selling price of Thai rambutan remains high. Currently, the wholesale price of Thai rambutan stands at VND18,000 (US$0.8) per kilo, while the price of Vietnamese rambutan is between VND5,000 and VND15,000 per kilo depending on the kind of rambutan, according to Tin tuc (News) newspaper. The demand for Thai rambutan has also increased recently, said Phung Thanh Tam, director of the Binh Loc Agricultural, Service and Trade Cooperative in Binh Loc Commune. However, Thai rambutan prices have not been as stable as local rambutan prices. That is a great risk for local farmers, he said. In addition, the higher supply of Thai rambutan would drive down the selling price for the fruit. The Dong Nai Agriculture and Rural Development Department warned that farmers should be careful when switching from local rambutan trees to Thai rambutan. Local rambutan profits might not be as high as Thai rambutan profits, but Vietnamese rambutan trees have been developed in Dong Nai for many years, and land and natural conditions are suitable for growing Vietnamese rambutan trees, the department said. The department also echoed warnings about prices going down once more farmers switch to Thai rambutan crops. In related news, Long Khanh rambutan received a geographical indication certificate in June, which would create more chances for local rambutan to enter new markets, the department said.  Bao Viet Holdings' H1 profit rises 8% Bao Viet Holdings (BVH) has reported higher six-month revenues and profits as the domestic insurance market saw a six-year high in the first half of this year. The insurance company earned VND11.7 trillion (US$525 million) in revenue and VND789 billion as profit in the first half of 2016, a rise of 20.2 per cent and eight per cent, respectively, over the same period last year. Insurance continued to provide the largest support for the company's takings. Life insurance revenue reached nearly VND6.1 trillion, up 31.9 per cent year-on-year, while non-life insurance proceeds amounted to more than VND3.2 trillion, up 5.6 per cent. Viet Nam's insurance industry grew nearly 26 per cent in the first six months of this year, the highest growth rate since 2011, the finance ministry said. Among its subsidiaries, Bao Viet Life Corporation saw the largest expansion with total revenues hitting almost VND7.8 trillion, a year-on-year increase of 27.7 per cent, of which insurance premium comprised VND6.1 trillion, up 31.9 per cent year-on-year. Bao Viet Life continued to be the market leader with its new business premium taking in more than VND1.2 trillion, a year-on-year rise of 40.3 per cent. The company's net profit touched VND389 billion. Bao Viet Insurance Corporation also saw a six-per-cent rise in revenues in the first six months, amounting to VND3.5 trillion. Its net profit was VND160 billion, equivalent to 53 per cent of the company's yearly target. In its financial and investment arms, Bao Viet Fund saw encouraging figures with revenues rising 78.9 per cent year-on-year to reach VND44 billion and net profit soaring 93.6 per cent to touch VND14 billion. The fund is managing total assets worth almost $1.6 billion. Bao Viet Securities Co reported total revenues of VND150 billion in the first half, up 2.6 per cent year-on-year, and net profit of VND56 billion. It is the second largest brokerage in terms of market shares on the HCM Stock Exchange, at 33.5 per cent. Bao Viet Holdings spent more than VND544 billion, equivalent to 54.3 per cent of its 2015 net profit, to pay cash dividend. Its share price has climbed more than 11 per cent since the beginning of this year. BVH is being traded at VND59,000 per share this morning. Can Tho seeks export growth Can Tho authorities plan to ensure export value by promoting processing and manufacturing projects, including garment factories, footwear plants and the Viet Nam-South Korean Industrial Technology Incubation project. "From now to the end of this year, the volume of key exports like rice, fruit and seafood in Can Tho will be limited due to bad weather," Truong Quang Hoai Nam, deputy chairman of the Can Tho People's Committee, said at a meeting late last week with the city's Export Steering Committee. "Can Tho should attract more export enterprises in garment, footwear, tobacco, manufacturing, and processed agricultural products to create jobs and develop the local economy," he said. He said the city should strengthen logistics, expand credit and payment services and provide customs services to serve export enterprises to reduce expenditures and increase competitiveness. "Such issues are known as weak points for Can Tho in comparison with HCM City and other localities," Nam added. Only 39 enterprises complete export procedures at Can Tho Customs Department while 142 enterprises do so in other provinces. The city plans to invite logistics companies to invest in the city, and open Cai Cui port with capacity of 10,000-tonne ships. "If we can bring 10,000-tonne ships to Cai Cui port through Quan Bo Chanh channel to directly receive imports and exports, expenditures will significantly decline," he added. According to the Can Tho Industry and Trade Department, since the beginning of July, the rice export situation in the city has improved as local enterprises have signed more contracts. From now to the end of this year, the price for rice and seafood exports will improve thanks to the Christmas and New Year season. "Rice capacity for three crops in Can Tho is expected to reach 1.4 million tonnes, 100,000 tonnes higher than the 2016 plan. This will be enough to export," Nguyen Ngoc He, director of the Agriculture and Rural Development Department, said. He also said that the area and volume of seafood had fallen in comparison with the same period last year because of low prices, especially for catfish. But capacity could reach the same volume as last year if prices increase. Fruit areas have increased 9.24 per cent by 15,800 hectares as local residents have invested more in gardens and eco-tourism. "Raw materials for fruit exports will be enough," He said. According to the Can Tho's Industry and Trade Department, for the first seven months of this year, the city earned US$891.2 million from exports and services that were paid in foreign currency, making up 54 per cent of the yearly plan. Of that amount, export turnover was $686.2 million, about 47 per cent of the 2016 plan, and foreign currency earnings (sea transport, insurance, international telecommunications, international payment transactions, overseas currency exchange) totalled $205 million, passing the $180 million target expected for the year. An increase in foreign-exchange collections has compensated for a decline in key export products like rice, seafood and garments. For the year, the city plans to reach total export value and foreign currency earnings of $1.65 billion, with foreign currency collections accounting for $300 million. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR