BUSINESS IN BRIEF 17/8 EU enterprises positive on Vietnam’s business climate European Union enterprises have indicated positive sentiment on the business environment in Vietnam, with many of them planning to increase investment, according to a Business Climate Index (BCI) survey for quarter 2, 2016, conducted by the European Chamber of Commerce in Vietnam (EuroCham). Accordingly, the majority of European enterprises acknowledged that the country’s macroeconomic stability will likely continue, with 56.3 percent of respondents forcasting “stabilisation and improvement” and just 9.4 percent of respondents expecting deterioration . The chamber revealed that about 49 percent of the respondents expect the number of orders or revenue to increase slightly in the next quarter. 15.6 percent of them were even more optimistic. Therefore, when they were asked about investment and personnel development plans, responses were also positive, consistent with the expected business orders. The trend is considered as a good sign for the implementation of the European Union-Vietnam free trade agreement (EUVFTA), that is expected to boost business and investment activities by foreign enterprises in Vietnam. Statistics from the Ministry of Industry and Trade (MoTT) showed that two-way trade between Vietnam and the EU reached 21.2 billion USD in the first seven months of this year, up 9.05 percent compared the same period last year. Of this figure, Vietnam shipped 16.2 billion USD worth of goods to the EU, a year on year increase of 8.68 percent while importing over 4.97 billion USD worth of goods, up 10.28 percent against the same period in 2015. Tran Ngoc Quan, deputy head of the EU Market Department under the MoTT said in the country’s export strategy to 2020, with a vision to 2030, the EU is considered one of the key trade and economic development partners, but in order to make the most of the preferential treatment offered from the EUVFTA, the local business community should take the initiative on all spheres, including market orientation, partnerships, manufacturing renovation and business culture. IFC helps VI Group boost governance and performance More than 20 board members and senior investment and portfolio executives of Vietnam Investments Group (VI Group) attended a corporate governance workshop in HCM City on August 15. Hosted by VI Group and IFC, a member of the World Bank Group, the workshop sought to improve corporate governance practices among VI Group portfolio companies, in a bid to boost the company's performance, increase access to finance, and encourage sustained economic growth. At the workshop, experts reviewed best practices on creating more effective boards and control mechanisms to raise transparency and accountability. Chris Razook, IFC Corporate Governance Lead for East Asia and the Pacific, noted, "Good corporate governance can help increase shareholder value. We are working with our investment client, VI Group, to further improve governance practices among its portfolio companies to raise their performance and sustainability levels." The workshop also provided an update on the latest corporate governance requirements of Vietnam's 2014 Law on Enterprises, which took effect in July 2015. The law clearly defines the role of an independent director in a company board and states that, subject to requirements, Vietnamese joint-stock companies are allowed to set up audit committees based on international practices without having a supervisory board. "We begin working with our portfolio companies at an early stage to add value to them for the long term," said David Do, Managing Director of VI Group, which mainly invests in Vietnamese high-growth businesses in consumer goods and services, manufacturing, and logistics. Founded in 2006, VI Group is a private equity firm that focuses on high growth businesses in Vietnam. With US$400million under management across three funds, the group's investment can take the form of straight equity, performance-linked equity or convertible debt. IFC has been working with the Vietnamese government since 2007 to further improve the country's regulations and investment climate, raise public awareness about corporate governance, build the capacity of its partners, and provide governance advice to individual companies.  MARD: Shaping pepper’s food safety culture In the fresh fruit and vegetable supply chain of today, foodborne disease is a major challenge for growers who take pride in providing nutritious and healthful produce to consumers. mard: shaping pepper’s food safety culture  hinh 0 Pepper growers, for one, said the Ministry of Agriculture and Rural Development (MARD) at a recent conference in Pleiku, have made significant strides during the past decade to reduce the likelihood of foodborne illnesses.    However, judging from the ongoing prevalence of recalls much more can and should be done on this front. MARD speakers noted that from the beginning of 2015 through mid-2016, a total of 17 shipments of pepper to the EU exceeded the maximum residue levels (MRLs) for pesticides and were rejected. In this regard, MARD joins with pepper growers in welcoming the new EU regulations amending the MRLs for pesticides in or on food and feed of plant and animal origin that have gone into effect as of August 10 for all produce entering the market. On the heels of these recently enacted rules, MARD is now in the process of amending and publicizing food safety laws and regulations along with policies and procedures benchmarking its own standards and requirements to the new EU rules. MARD, wants to be confident that the country's pepper farmers comply with the new EU standards and ensure there is robust evidence that Vietnamese farmers and other actors in the industry certifiably abide by them. Consequently, speakers told those in attendance that MARD has determined that compliance requires mandatory worker training for work forces industrywide on how to use pesticides safely and the importance thereof. Most importantly, the speakers highlighted, the training will encompass the broader connection between welfare and produce safety and the link between improper use of pesticides resulting in disease and death of pepper industry workers. Overuse of MRLs also results in an ‘invisible’ erosion of the soil resulting in a decrease in the soils productivity resulting in lower crop yields as they contaminate soil, water, and other vegetation and kill a host of other organisms including birds, fish, beneficial insects, and non-target plants. MARD representatives noted workers who are trained to recognize and address the most common sources of abuse of MRLs are the first line of defence against foodborne diseases. When these workers understand the intent of preventive protocols and have channels to signal problems with implementation, they can then help verify the country’s compliance with food safety measures. Our ultimate goal, the MARD reps continued, is to increase consumer assurance in the EU that safety protocols are followed in the Vietnam pepper industry on a thorough and continuous basis.  Pepper they said is principally grown in the Central Highlands and the South Eastern Region of Vietnam. It is a vitally important agriculture commodity, having produced 133,000 metric tons of product in 2015. The volume of exports in 2015 was down significantly from the range of 140,000-150,000 metric tons for the three period 2012-2014 primarily as a result of the invisible erosion caused by overuse of MRLs. Nguyen Quy Duong, deputy head of the Plant Protection Department under MARD, suggested that growers and other actors in the segment of the economy need a new vision. Imagine what the industry would be like if workers had received adequate training to understand the connection between their use of MRLs and the safety of the produce they are growing, he said. Imagine an industry where workers were encouraged to identify common threats to produce safety not only from MRLs but from animal waste to fungal infestation to handling procedures. An industry where workers and management directly communicate to develop solutions that are best for the growers and others in the industry and one that ultimately serves the best interest of the final consumer. This is the vision that MARD has and wants to instil in the pepper industry, Mr Duong emphasized. Vietnamese farmworkers are extremely skilled, said Mr Duong, and their experience and knowledge can be refined and tapped into, to serve as a vital component of an effective strategy to prevent foodborne disease, he noted. 126 businesses attend Business Meeting Asia 2016 Around 126 businesses operating in ICT, biotech, electronics, robotics, healthcare and machinery from the Republic of Korea, Taiwan and Vietnam shared investment experiences at the Business Meeting Asia in Hanoi on August 16. 126 businesses attend business meeting asia 2016 hinh 0 Deputy Minister of Science and Technology and head of the Hoa Lac Industrial Park (IP) managing board Pham Dai Duong said the annual meeting is an important event of the Asian Science Park Association (ASPA). It provides a good chance for ASPA members to meet and share development experiences and for domestic IPs to seek partners to strengthen their technological capacity. The Ministry of Science and Technology will support and accompany with IPs and ASPA members to expand investment and cooperation and improve their scientific and technological capacity in Vietnam, Mr Duong noted. During the meeting, the Korean Mobile Training and Technology Centre (MTTC), the Health System Development and Performance in the RoK and the Hoa Lac IP managing board signed a memorandum of understanding on the development of Internet of Things (IoT) in health care and cooperation in information and trade exchange, investment promotion, and technology transfer. FMCG growing in urban and rural areas Vietnam’s fast-moving consumer goods (FMCG) market is posting growth in both urban and rural areas, according to the latest report from Kantar Worldpanel Vietnam. Growth in the urban market, which includes Ho Chi Minh, Hanoi, Da Nang, and Can Tho, is rising while growth in the rural market has eased. For the one-year period ending on July 17 the urban market grew 4.3 per cent year-on-year, much higher than the 1.7 per cent in the previous period, while the rural market grew 4.6 per cent, down from 8.5 per cent. Buyer numbers is the key driver of brand growth, with the number of times they buy having little impact. Growth in FMCG in six key cities, including Ho Chi Minh City Hanoi, Hai Phong, Can Tho, Nha Trang and Da Nang hit a three-year high in the second quarter of 6.3 per cent after coming in at just 3.6 per cent in the first quarter, according to Nielsen’s Market Pulse report released on August 10. The six key cities saw strong momentum in FMCG growth in the quarter, mainly driven by an increase of 5.2 per cent in volume growth. Despite the potential, expanding into rural areas in Vietnam also poses many challenges, in particular the high cost of serving geographically dispersed districts, Nielsen noted. Vietnam’s consumer price index (CPI) rose a modest 0.13 per cent month-on-month in July, the lowest increase since February, the General Statistics Office (GSO) announced. The year-on-year figure was 2.39 per cent. In the first seven months of this year it grew 1.81 per cent compared with the same period last year. Da Nang struggling with investment Central Da Nang city licensed five FDI projects with capital of $8.3 million and seven domestic projects with $13 million in the first half of this year. “The city’s investment activities in industrial development are yet to be successful,” Mr. Ho Ky Minh, Deputy Chairman of the Da Nang City People’s Committee, told a meeting on August 9. It has only attracted 12 projects in industry, mostly of small and medium size. These projects have focused on sectors such as textiles, machinery and engineering, and food processing. Four have increased their capital by nearly $5.7 million, he added. The city’s Gross Regional Domestic Product (GRDP) in the first half reached $1.1 billion, a year-on-year increase of 7.9 per cent. Annual growth has been targeted at 9-10 per cent. According to a report from the Economics and Budget Board of the Da Nang City People’s Council, the city still has many shortcomings and limitations in economic development. After 20 years as a municipality its economy remains marked by micro and small enterprises. Few local enterprises record export turnover in excess of $100 million. Production capacity and product competitiveness are low. The city has introduced a range of support policies, plans and programs but they have been largely ineffective. Only a small number of businesses have accessed these policies, plans and programs. The report noted that the city’s Provincial Competitiveness Index (PCI), Public Administration Reform (PAR) Index, and Information and Communications Technology (ICT) Index have continually lead the country but efforts at attracting investment capital, especially foreign investment, are still unsatisfactory. The situation is not improving, as the first half saw declines in both the number of projects and registered capital. There were 22 newly-licensed projects in the first half with total registered capital of just $10 million, while one project reduced its capital by $14.3 million. Total project numbers now stand at 409 with registered capital of $3.67 billion, of which less than 50 per cent has been disbursed. The figures reveal that most are small-scale projects. Besides factors such as land, incentive policies, and human resources, there are many other causes behind the low investment attraction, particularly investment promotions being unfocused, coordination among relevant agencies being loose, information provided to investors being inconsistent, and administrative procedures still being time-consuming, the report said. Regarding land management, public opinion has been raised about foreigners buying real estates via Vietnamese people. The issue is problematic for long-term management by authorities and the Economics and Budget Board proposed the city direct related authorities to control the situation. The implementation of the pilot sale of social housing and land use rights auctions has been slow. The task of reviewing and retrieving coastal projects has been limited, with only one project withdrawn in 2015. Most delayed projects have now committed to an implementation schedule. 2016's 'hottest' IPO approaching The Vietnam Engine and Agricultural Machinery Corporation (VEAM) has been negotiating with companies that have expressed an interest in becoming its strategic investor, following its upcoming IPO on August 29. There has been no official announcement to date and VEAM "is currently preparing a list of potential strategic investors to submit to MoIT, with an approval deadline of August 22", a representative from VEAM told VET. VEAM - the big local partner in joint ventures with foreign auto manufacturers such as Japan's Honda and Toyota and US's Ford - and its consulting unit the Saigon-Hanoi Securities Joint Stock Company held a roadshow on August 12 to announce the investment opportunities in its August 29 IPO. Under the Ministry of Industry and Trade (MoIT), VEAM secured the Prime Minister’s approval in April to divest 49 per cent of the State’s holding. VEAM will publicly auction 167 million shares, equal to a stake of 12.57 per cent, which will reap VND2.3 trillion ($103.2 million) at an initial share price of VND14,290 ($0.64). It will also sell 36 per cent to strategic investors, or 478 million shares. Post-equitization VEAM’s charter capital will be VND13.3 trillion ($597 million), with the State holding 678 million shares, or 51 per cent. Employees will hold 0.43 per cent, or 5.7 million shares. The IPO is considered the “hottest” of the year, not only because of VEAM’s revenue but also its holdings in joint ventures. VEAM currently holds 30 per cent of Honda Vietnam and 20 per cent of Toyota Vietnam. It also holds a total of 50 per cent in Ford Vietnam when taking into account the holding of a subsidiary, Song Cong Diesel Company (DISOCO), in the automaker. According to VEAM officials the dividends will continue for 20 more years. VEAM’s 2015’s financial statement saw the majority of its profit coming from dividends in these three joint ventures. Last year it reported after-tax profit of VND3.3 trillion ($148.1 million), with dividend revenue at VND3.4 trillion ($152.6 million).  The Vietnam N.A Motor Company (Vinamco) has been reported by local media as having expressed an interest in becoming VEAM’s strategic investor and securing the 36 per cent on offer. PR Manager of Vinamco, Ms. Tran Thi Hieu Thao, told VET that the company would not confirm the media reports. Vinamco acquired 97.7 per cent of shares in the State-owned automaker Vietnam Motors Industry Corporation (Vinamotor) in early 2016 for VND1.25 trillion ($55.6 million). It has been rumored that Vinamco has a tight relationship with the BRG Group, the property developer that has been actively seeking a slice of several other State-owned entities. Since its establishment in 1990 VEAM has led the domestic engine and agricultural machinery market with a market share of 15 to 25 per cent. It also distributes engines and accessories for motor cars and to motor vehicle manufacturers via its subsidiaries. Phu Yen encouraged to develop medical tourism South-central Phu Yen province should pay attention to medical tourism, offering treatment methods to cure illnesses via absorbing biological energy and universal energy, Mr. Nguyen Quoc Hung, Deputy Director of the Vietnam National Administration of Tourism (VNAT), suggested at the International Seminar on Tourism Development held in the province on August 12. Ms. Sinlvana Grante Harova, Director of the Human Universal Energy and Spirituality Academy (HUESA), recognizes that precious natural resources are present in the province and believes that visitors can receive clean energy from nature and the universe to improve their health. Other representatives from HUESA also recognize the potential in Phu Yen to develop resorts and medical and adventure tourism. In the 2011-2015 period tourists to Phu Yen increased about 20 per cent each year. International tourist numbers rose about 10 per cent and tourism revenue by 30 per cent in the period. Total tourist arrivals to the province stood at about 900,000 last year, up 19.2 per cent year-on-year, with international arrivals at about 45,000. Revenue was VND850 billion ($38.11 million), up 33.3 per cent. However, compared to central Quang Binh and south-central Binh Dinh province, which have been attempting to develop their tourism sectors in recent years, tourism in Phu Yen remains quite modest. In 2015 tourist arrivals to Binh Dinh stood at 2.602 million, up 25 per cent year-on-year, with international arrivals at 205,905, or 20 per cent higher. Total tourism revenue was VND1.037 trillion ($46.49 million), up 31 per cent up compared to 2014. Total tourist arrivals to Quang Binh province in 2015 were 2.86 million, a 3.9 per cent increase year-on-year. International tourists totaled 46,900, up 8.9 per cent, while revenue was VND1.93 trillion ($86.54 million), or 19 per cent higher.   Phu Yen is estimated to have about 125 hotels with 2,550 rooms. About 500 rooms are in three- to five-star hotels. It also boasts many seafood specialties, such as tuna, but only has a handful of stand-alone restaurants, mainly serving tourists. Most other restaurants are in hotels and are wedding reception centers.   Mr. Vo Khanh Ngoc, Director of the Phu Yen Center of Information and Tourism Promotion, said that large tourist groups only select hotels of three to five-star standard, but Phu Yen is short of such hotels. With large tourist groups of hundreds of people, guests must stay at several hotels and this is not always convenient. According to Decision No. 128, by 2020 Phu Yen is expected to welcome from 1.8 to 1.85 million tourists, including from 90,000 to 100,000 foreigners. It also targets having 8,500 rooms, 3,000 of which are from one-star to five-star standard. Prioritized projects in the tourism plan for 2016-2020 include a luxury resort at Tu Nham Beach in Tuy An district, an ecotourism zone at the Phu Sen mineral springs in Phu Hoa district, and the Lac Sanh mud bath resort, which combines relaxation and healing, in Tay Hoa district. Firm faces counter-accusation from famous singer's husband The company of Otto De Jager, husband of Vietnamese diva Thu Minh, has countered the Gia Han Company with accusations of his own. The Gia Han Ltd. Company submitted a letter of complaint to the Dong Nai Province Police's Economic Crime Investigation Department, saying that Czech citizen Otto De Jager, husband of singer Thu Minh and director of Global Home SRO headquartered in the Czech Republic, had violated a contract. According to the petition, Jager signed a contract with Gia Han to import batches of wooden furniture totalling VND11 billion (USD493,000). However, to date, Jager had not settled the payment. Gia Han claimed all of the products met the quality standards set by Global Home SRO. On August 15, Global Home SRO sent a press release, claiming that Gia Han had actually violated contracts. According to the Global Home SRO, they worked with Gia Han from 2012 to June 2015. However, in their latest transactions, Gia Han faked Global Home's verified mark of quality for products. Gia Han Company is accused of passing on low-quality products and materials to Global Home. As a result, Global Home had to pay customers USD250,000 in compensation and lost several contracts due to damaged reputation. "The negotiations with the Gia Han Company didn't reach any consensus so we had no choice but to terminate the contract, return the faulty products, and stop paying Gia Han in order to offset our losses," Global Home said in the statement. Global Home emphasised that they only stopped paying for low-quality shipments and demanded Gia Han pay compensation for their losses. The release went on to say that the police in Dong Nai Province had also investigated and concluded that the firm had not violated any contract terms or committed fraud. "This is a civil dispute about obligations to fulfil a business contract. If Gia Han Company thinks that we owe them money, they should follow proper procedures to sue us. But in fact, they haven’t filed any lawsuit even more than a year after the contract was terminated," it said. Global Home suggested that Gia Han knew about their wrongdoings and wouldn't achieve their desired result if they started a lawsuit. In addition, the press release claimed Global Home still had good relationships with many furniture manufacturers that Gia Han thought were suing Global Home. "We strongly criticise such dishonest and illegal activities by the Gia Han Company, the owner of the Gia Han Company and other related members. We won't make any concession on this case." State budget revenue reaches VND 584 trillion in seven months State budget revenue in the first seven months reached about VND 584 trillion, equal to 57.5% of the forecast, according to a recent report released by the Ministry of Finance (MoF) on August 10. In particular, State budget revenue in July reached 102 trillion, up 26.6% against June, of which domestic budget revenue made up VND 86 trillion (up 34.8%). Total domestic budget revenue reached VND 477.7 trillion, making up 60.2% of the year’s estimate. According to statistics, the total revenue from crude oil in seven months was VND 23.9 trillion, equivalent to 43.9% of the estimate and 43.4% less than the same period of last year. The budget revenue from exports and imports after seven months of this year attained VND 150 trillion, accounting for 55.7% of the estimate. The total budget spending reached over VND 662 trillion, a year-on-year increase of 4.9%. Thereby, the budget deficit in the first seven months obtained VND 78.5 trillion, accounting for 31% of the year’s estimates. Cutting interest rate is feasible in year end Stable current liquidity in the banking system ensured money supply for the economy in 2016 and provides room for cutting interest rates in the rest of 2016, assessed a senior banking expert. Tran Hoang Ngan, a member of the National Financial Supervisory Commission (NFSC) mentioned a series of reasons for lower interest rates, including declining Government bond interest rate (about VND 250,000 billion);  lower pressures on interest rate hikes, as well as low inflation rates (3.5-4%), To the end of the year, the monetary policies should continue to sticking to the objectives of macro-economic stability and coordinating with fiscal policy to control inflation rate and reduce the interest rate in favor of business development. The SBV will keep close watch on macro-economic developments, currency and banking operations to run synchronously and flexibly tools of monetary policy; adjust mainly through open market operations, refinance with reasonable terms, volume and interest rates to support the liquidity and capital to credit institutions but ensure inflation control target. The SBV will also continue directing credit institutions to balance between the capital usage and stable interest rates, as well as reducing operating costs and improving business efficiency to reduce lending rates. In addition, the exchange rate from the beginning of the year was quite stable. Year-end exchange rate is forecasted in the range of expectations (3%); commercial banks’ profit in the first six months of 2016 was relatively positive, create conditions for handling bad debts and reducing system’s operating costs. Besides the good liquidity thanks to the high mobilization’s increase rate compared to credit’s growth (10.2% and 8.16% against the beginning of the year; 6% and 7.86% against the same period of 2015), the credit structure has shifted to the five priority areas, in accordance with the policy of the Government. Thus, there are many favorable conditions to reduce interest rates, but to maintain it, the banking system needs to proactively reduce operating costs and handle bad debt, said the NFSC expert. The lending interest rates have fallen sharply and  no longer pose obstacles to business’ production activities, said a State Bank of Viet Nam (SBV) leader. Viet Nam’s annual lending interest rate which is about 6-11% remained at relatively reasonable compared to other countries in the region such as Myanmar (13%), Indonesia (12.7%), India (10.3%), Thailand (6.6%), the Philippines (5.5%) and Singapore (5.4%), he added. Vietnam-EU trade value increases 9 percent Trade value between Vietnam and the European Union (EU) in the first half of this year has gained a year-on-year growth of 9.05 percent to 21.2 billion USD. According to the Ministry of Industry and Trade’s European Market Department, during the period, export value from Vietnam to the EU increased by 8.68 percent to 16.2 billion USD and import value to Vietnam from the EU surged by 10.28 percent to 5 billion USD. Vietnam mainly exported traditional products to the EU, including textile, garment, footwear, and coffee, in addition to seafood and computer. Vietnam especially started exporting telephone and its components to the EU in 2011, but the export value of those products in 2015 reached 9.7 billion USD and accounted for 75 percent of its total national export value to EU, it was reported on the ministry’s website on August 10. In addition, some other products retained growth of between 5 percent and 10 percent per year in export value though they did not have large export value, including plastic products, wood and wooden products, handbag, suitcase, and umbrella, apart from pepper, and cashew. In the first six months, Vietnam mainly imported from most of EU member countries products that the nation had not produced, or which they lacked, such as machines, equipment, tools and pharmaceutical products, in addition to milk and milk products. Over the past years, the trade relationship between Vietnam and the EU has gained rapidly and developed efficiently. The bilateral trade value increased by 10 times from 4.1 billion USD in 2000 to 41.2 billion USD in 2015. Of this, the export value from Vietnam to the EU surged 11 times from 2.8 billion USD to 30.8 billion USD while import value from the EU to Vietnam rose eight times from 1.3 billion USD to 10.4 billion USD. Banking system takes action to assist businesses Supporting businesses is among the focal tasks of the banking system till 2020, Deputy Governor of the State Bank of Viet Nam (SBV) Dao Minh Tu has said. He and bankers across Viet Nam conducted a teleconference late last week on enforcing the Government's Resolution 19-2016/NQ-CP on tasks and solutions to improve the business climate, and Resolution 35/NQ-CP on supporting and developing businesses till 2020. In late June, the central bank issued an action plan on implementing the resolutions across the banking system, focusing on improving credit access for enterprises and assisting their development. Nguyen Hoang Minh, deputy director of the SBV's HCM City branch, said banks in the southern city co-ordinated with local district people's committees to survey companies that wanted to get bank loans to provide help. No firm has complained about facing obstacles while accessing bank loans so far, he said, adding that the SBV branch and commercial banks have considered loans for companies that did not meet some conditions of eligibility, such as having collateral, but had feasible business plans. Minh said though current lending interest rates were rather reasonable, businesses still wanted stable mid- and long-term rates, which have been ensured by some banks. Khuc Van Hoa, deputy general director of Tien Phong Bank (TPBank), said as most small- and medium-sized enterprises had a collateral problem, his bank was ready to give loans, regardless of their collateral status, provided they had effective business plans. However, one hindrance was that businesses' internal strength remained modest, making banks reluctant to provide loans, he said, while asking for co-ordination between banks and ministries to promote companies' capacity. Meanwhile, SBV Deputy Governor Tu told banks to regularly overhaul their relevant policies to improve the business climate and assist enterprises, especially by simplifying administrative procedures. Banks also needed to offer reasonable loan interest rates, promote their own loan verification capacity, and diversify credit products to facilitate credit access for firms, he said.  New decree for SOE subsidiaries Employees of State-owned enterprises' subsidiaries will be able to buy shares of the parent companies at preferential prices when those State-owned enterprises (SOEs) are equitised. This is part of the draft decree, developed by the Ministry of Finance to replace Decree 59/2011/ND-CP, issued by the Government in July 2011 on transforming an enterprise entirely owned by the State to a joint stock company. The new regulation aims to bring more benefits to the employees in the subsidiaries of SOEs. The equitisation of the Viet Nam Rubber Group (VRG), which is scheduled for January 2017, could be the first opportunity for employees of VRG's subsidiaries to buy shares of the State-owned rubber producer. The draft decree will enable the employees in SOEs' subsidiaries to buy a maximum 100 shares for every working year of their career in the State-owned industry at the price equal to 60 per cent of the share's face value of VND10,000 (US$0.44). According to existing regulations, only employees of the parent SOEs can buy preferential shares when the companies are equitised. Under Decree 59/2011/ND-CP, each employee, who appears on the pay-roll of the SOE when the company announces its total value for equitisation, can buy 100 shares for every working year of his career in the company. The buying price is equal to 60 per cent of the lowest selling price at the initial public offering (IPO) if the company decides to organise an IPO first, or equal to 60 per cent of the lowest selling price to strategic investors if the company decides to sell parts of the company to strategic investors first. Under Decree 116/2015/ND-CP, the SOE can sell shares to its employees at the price equal to 60 per cent of the starting price in the equitisation plan before the equitisation takes place. Therefore, the State basically has given the SOE's employees a 40-per-cent discount of the share selling price, and the employees need to wait until the equitisation is disclosed to know how much they have to pay for their ownership. SOE's employees will have to pay a large amount of money for the ownership if the company's shares are sold at a very high price.  Workers in SOE subsidiaries may buy parent companies’ preferential shares Employees of State-owned enterprises’ subsidiaries will be able to buy shares of the parent companies at preferential prices when those State-owned enterprises (SOEs) are equitised. This is part of the draft decree, developed by the Ministry of Finance to replace Decree 59/2011/NĐ-CP, issued by the Government in July 2011 on transforming an enterprise entirely owned by the State to a joint stock company. The new regulation aims to bring more benefits to the employees in the subsidiaries of SOEs. The equitisation of the Việt Nam Rubber Group (VRG), which is scheduled for January 2017, could be the first opportunity for employees of VRG’s subsidiaries to buy shares of the State-owned rubber producer. The draft decree will enable the employees in SOEs’ subsidiaries to buy a maximum 100 shares for every working year of their career in the State-owned industry at the price equal to 60 per cent of the share’s face value of VNĐ10,000 (US$0.44). According to existing regulations, only employees of the parent SOEs can buy preferential shares when the companies are equitised. Under Decree 59/2011/NĐ-CP, each employee, who appears on the pay-roll of the SOE when the company announces its total value for equitisation, can buy 100 shares for every working year of his career in the company. The buying price is equal to 60 per cent of the lowest selling price at the initial public offering (IPO) if the company decides to organise an IPO first, or equal to 60 per cent of the lowest selling price to strategic investors if the company decides to sell parts of the company to strategic investors first. Under Decree 116/2015/NĐ-CP, the SOE can sell shares to its employees at the price equal to 60 per cent of the starting price in the equitisation plan before the equitisation takes place. Therefore, the State basically has given the SOE’s employees a 40-per-cent discount of the share selling price, and the employees need to wait until the equitisation is disclosed to know how much they have to pay for their ownership. SOE’s employees will have to pay a large amount of money for the ownership if the company’s shares are sold at a very high price. Central Bank hints at rate cut Credit rose 8.54 per cent by July 29 against late last year while mobilised capital surged 9.94 per cent, the State Bank of Viet Nam reported yesterday. At a meeting held in Ha Noi yesterday to review banking operations in H1 and outline plans for the rest months of the year, SBV deputy governor Nguyen Thi Hong said that liquidity of the banking system was good and abundant while the inter-bank interest rate dropped compared to the end of last year. According to Hong, since the beginning of this year, keeping lending interest rate steady has been a tough task for the central bank due to a forecast of rising inflation. However, the central bank will try to keep the rate stable in the late months of the year in a move to support business and production. To meet the target, the central bank has so far taken measures to stabilise the deposit interest rates, which would help commercial banks cut the lending rate. She said that in the remaining months of the year SBV would continuously instruct commercial banks to balance their mobilised capital sources and lending capital sources to stabilise deposit interest rates. Besides, Hong said, better business performance and lower input costs are also required for maintaining lower lending rates in the remaining months. Hong reported that the non-performing loans (NPL) ratio of the entire banking system by the end of June stood at 2.58 per cent, down against 2.78 per cent in May. Commercial banks reported that they handled VND59.71 trillion (US$2.66 billion) of NPLs in the first half of the year, of which VND8.8 trillion were sold to the Viet Nam Asset Management Company. It is possible to reach the central bank's target to cut lending interest rates in the final months of the year to support business and production, according to the National Financial Supervisory Committee (NFSC). Under the latest macro-economic report released this week, the Government's financial watchdog NFSC noted that the cuts were possible due to many favourable conditions. As noted in the report, liquidity at commercial banks is abundant, supporting the banks in lowering lending rates next month. NFSC analysts attributed the high liquidity to rising mobilised capital in the first half of this year. By the end of June, mobilised capital in the banking system rose 10.2 per cent against early this year, while credit rose only 8.16 per cent. Statistics from the State Bank of Viet Nam (SBV) also showed that overnight inter-bank rates, as of July 18, also fell 0.14 percentage points against June, the lowest level in recent years. Further, SBV continued to withdraw more than VND26 trillion within some three weeks, from July 1 to July 22. Other positive macroeconomic indicators, including G-bonds, inflation and foreign exchange rates, have also backed banks in lowering lending rates. According to the NFSC report, pressure on interest rates has also been reduced thanks to positive results in G-bond issuances this year. The State Treasury of Viet Nam has, so far, successfully issued total G-bonds worth roughly VND212 trillion, meeting 85 per cent of the annual plan. G-bond interest rates have also been continuously reduced, staying at roughly 6.1-6.5 per cent per year for five-year bonds, 7.65 per cent per year for 11-year bonds and 8 per cent for 30-year bonds. Also, though inflation this year is forecast to be higher than last year, it is expected to remain at the low level of roughly 3.5 to 4 per cent, according to NFSC analysts. The foreign exchange market this year has also been relatively stable and the forex rate is expected to rise by around 3 per cent in the second half of this year. In addition, commercial banks have, so far, reported positive business performance results in the first half of the year, which will help the banks handle non-performing loans and cut operational costs. According to NFSC analysts, thanks to the favourable conditions, commercial banks can cut lending rates in the last months of 2016. However, banks must also cut operating costs and speed up the handling of bad debts to better reduce costs, they said.  Hoa Phat Group to pay 30% dividend Steelmaker Hoa Phat Group (HPG) will pay the dividend for 2015, half in cash and half in shares, on September 14. Shareholders should register for the dividend by August 26, the Viet Nam Depository Centre said. On August 12, each of the nearly 733 million HPG shares was listed at VND46,600 on the HCM Stock Exchange. Thus, apart from the issuance of 110 million new shares for the dividend, HPG will pay more than VND1 trillion in cash. In the first half of the year, HPG saw a surge in revenue and profits, announcing a 12.4 per cent higher revenue of VND15.4 trillion (US$691 million) and net profit of VND3.05 trillion. During the period, HPG sold 785,000 million tonnes of steel, accounting for 20.5 per cent of the domestic market share. Steel pipe sales reached 211,000 tonnes. The firm reported net profit of more than VND3.5 trillion ($157 million). Its undistributed profits were VND5.5 trillion ($247 million) by the end of 2015. With capitalisation of more than VND33.7 trillion, the Hoa Phat Group was among the 10 largest listed firms on the HCM Stock Exchange. After the additional issue of nearly 110 million shares for dividends, its charter capital will touch VND8.43 trillion. Along with increase in global steel prices, its share price has climbed almost 48 per cent since the beginning of the year, hitting VNDD43,200 ($1.94) a share on July 27. According to the group, the decision to impose an anti-dumping tax on certain stainless steel products imported from China, Malaysia, Indonesia and Taiwan by the industry and trade ministry in May would be a huge boost for domestic steel makers as well as the shares of listed steel companies in the future. Customs sector launches ten specialised inspection units The customs sector has put into operation 10 specialised inspection units in eight areas, an official told a press conference in Hanoi on August 16 on improving the efficiency of inspection on imports and exports. The areas include Hai Phong port’s border gate, Noi Bai and Tan Son Nhat airports, Tan Thanh border gate in northern Lang Son province, Mong Cai border gate in northern Quang Ninh province, Da Nang port, Kim Thanh international border gate in bordering Lao Cai province, and Dung Quat customs agency in central Quang Ngai province. Nguyen Quang Son from the General Department of Customs’ Department of Customs Supervision and Management said the units will help cut customs clearance time, business costs and contribute to administrative reform. Launched in September 2015, the national single window (NSW) has so far connected with 10 ministries and agencies with 33 procedures out of hundreds involving imports and exports. The NSW is designed to reduce customs clearance time for businesses by 15-30 percent and increase their connectivity and information exchanges with State-run management agencies. Vietnam has conducted successful technical connection with Indonesia, Malaysia, Thailand and Singapore through the ASEAN Single Window Dung Quat EZ marks 20th anniversary The Management Board of the Dung Quat Economic Zone in the central province of Quang Ngai received the Labour Order, first class, during a ceremony to mark the 20th anniversary of the zone, one of the country’s largest, on August 16.  Addressing the event, head of the board Nguyen Minh Tai reviewed the development of the zone over the past two decades.  In 1994, the Prime Minister chose the zone to locate the country’s first oil refinery. The 2006-2010 period saw speedy growth of the zone with the implementation of the refinery and a number of large-scale projects, forming a large economic zone with total investment of over 4 billion USD, which helped Quang Ngai’s exports and industrial value soar and make the province one of the 10 leading localities in budget collection.  So far, the zone has attracted 132 projects totalling 10.5 billion USD, including 28 FDI projects with a total registered capital of nearly 4 billion USD. As many as 82 projects have become operational with a total investment of about 5 billion USD.  Last year, its total industrial, trade and service value reached 87.6 trillion VND (39 billion USD), while exports hit 230 million USD and budget collection was 24.07 trillion VND. Projects in the zone are employing 15,000 labourers, 78 percent of whom are locals.  The infrastructure system of the zone, including 130km of roads and bridges, a sewage system, re-settlement areas, dykes, ports, power and water supply, as well as hospitals and vocational training schools, has also been basically competed.  Meanwhile, Vice Chairman of the Quang Ngai People’s Committee Dang Van Minh asked the board to give more advice to the local government on how to complete the management mechanism of the zone to strongly improve its investment environment and attract capital and high quality human resources.  He asked for faster construction of major infrastructure works, while requesting the board to focus on supporting investors in developing projects, including the expansion of the Dung Quat Refinery, and re-organising its management system after it was merged with the Quang Ngai management board of industrial parks. Binh Duong aims for 8.3 percent annual growth in 2016-2020 The People’s Council of the southern industrial hub Binh Duong Province has adopted a resolution on the province’s socio-economic development for 2016-2020 with the goal of an annual Gross Regional Domestic Product (GRDP) growth of 8.3 percent.  The resolution also envisions an economic structure with industry accounting for 63.2 percent, services 26 percent, agriculture 3 percent.  The province will focus on improving growth quality while expanding the local economic scale, thus ensuring suitable and sustainable growth.  Seven groups of tasks and solutions have been drafted in order to achieve the set targets, including policy measures, investment solutions, economic restructuring, human resource training, science-technology development and environmental protection, state apparatus efficiency, and mobilisation of social resources.  Other issues high on the agenda for the province in the coming time are food safety, educational infrastructures and sustainable poverty reduction.  The province will also strive to attract more than 7 billion USD of foreign investment in the five-year period.  Binh Duong recorded a trade surplus of 1.9 billion USD in the first half of 2016, according to the provincial People’s Committee.  One of the major industrial hubs in the southern region, the province contributed 21 billion USD to the country’s export revenue of 162.1 billion USD in 2015. Binh Duong has so far attracted 2,713 foreign-invested projects with a total capital of around 25 billion USD.  In the first six months of this year, the province licensed over 1.14 billion in FDI in 126 new and 68 underway projects, a rise of over 12.5 percent year on year. Phu Tho province works to promote sustainable agriculture The northern province of Phu Tho has earmarked more than 230 billion VND (10.3 million USD) for agricultural restructuring towards the sector’s sustainable development until 2020.  The sum will be used to support tea, Dien grapefruit and high-quality rice cultivation, aquaculture and afforestation. Land consolidation, livestock waste treatment and good agricultural practices will also be assisted during the period, said the provincial Department of Agriculture and Rural Development.  Beneficiaries are cooperatives, cooperation groups, farms and farming households which are part of concentrated agricultural production areas.  Those who replace old tea varieties with new high-quality ones will be provided with as much as 8 million VND (nearly 360 USD) per hectare.  While a similar financial aid model will help the cultivation of the renowned Dien grapefruit. Up to 200 million VND (over 8,960 USD) will be allocated for building each seedling production garden of this variety.  Farmers who connect with one another to produce high-quality rice on at least 10 hectares of conjoined farmland and apply advanced machinery will be assisted by 900,000 VND (about 40 USD) per hectare to buy quality seeds, the department said.  It added that Phu Tho will finance 50 percent of biogas facility construction expenses to a maximum of 40 million VND (nearly 1,800 USD) for each farm raising at least 300 pigs.  Those farming aquatic species on at least 2.1 hectares of water surface can gain financial help, up to 5 million VND (224 USD) per hectare, to purchase juvenile fish.  Money will also be provided to support land consolidation and people who hire land to plant perennial trees or carry out large-scale agricultural production.  Between 2011 and 2015, Phu Tho spent 205 billion VND (9.2 million USD) on assisting key agricultural production programmes, the provincial department said.  It noted crop and aquatic production value reached 90 million VND (over 4,000 USD) per hectares last year, 1.7 times higher than that in 2010. As a result, local agriculture posted an annual growth rate of 5.09 percent during the period, contributing to local socio-economic development. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR