BUSINESS IN BRIEF 26/9 VN’s coal imports doubled this year   Việt Nam imported more than 9.7 million tonnes of coal valued at US$600 million over the past eight months, almost double the quantity in the same period last year, according to the latest statistics from the General Department of Customs. This was an increase of 191 per cent in volume and 107 per cent in value over the same period last year and triple the target set earlier this year by the Ministry of Industry and Trade. The country imported an average of 1.2 million tonnes of coal, worth over $75 million each month, according to the data. Russia remained the biggest seller of coal to Việt Nam with 2.8 million tonnes. Indonesia ranked second with 1.8 million tonnes and China third with 1.4 million tonne. Typically, the coal imported from Russia costs Việt Nam only $63 per tonne, lower than Chinese coal at $71 per tonne. The period’s high import volume was attributable to rising domestic demand, industry insiders said. Increases in coal imports are unavoidable as local coal output might not increase significantly, they added. According to a new master development plan for the coal sector by 2020 with a vision towards 2030, coal output will reach 47-50 million tonnes by 2020 and 55-57 million tonnes by 2030. But, domestic demand for coal would be double the local production output, around 112.3 million tonne by 2020 and 220.3 million by 2030. Earlier this month, the ministry said the Government would consider gradually reducing overall imports as well as certain types of coal that were not in high demand. Firms would be encouraged to import coal if they met with regulations, it said.  VN foreign currency reserves at record high So far this year the State Bank of Việt Nam has bought over US$10 billion in foreign exchange, increasing the country’s reserves to a record high of more than $40 billion. The figure is up sharply from $28.6 billion (equivalent to 1.9 month of imports) late last year.  One of the reasons for the huge foreign exchange buying is banks’ massive liquidity. For instance, as of late July broad money supply was VNĐ7,489 trillion ($334.33 billion), a 12.5 per cent increase from the end of 2015. Of the figure, 74.9 per cent was in the banking sector. In the period, bank deposits rose 11 per cent while lending grew at only 9.2 per cent. To mop up some of the money, the central bank has consistently bought the greenback and also stepped up issuance of short-term treasury bonds in đồng. It has also mobilised more than VNĐ128 trillion through open market operations, buying $97 million equivalent on September 9 and $101 million three days later.  Through all these measures, the đồng has remained steady against the dollar at VNĐ22,300-22,350. In addition, credit default swap (CDS) rates tended to slightly decrease and forward rates have remained unchanged for several months. From these, the conclusion is the current exchange rate is rather stable. Another reason for the foreign exchange rate stability is the plentiful availability of the greenback. By August 20 disbursements for the year by foreign investors topped $9.8 billion, an 8.9 per cent rise from the same period last year.   Meanwhile, demand for foreign exchange has shown no signs of increasing because imports have tended to go down in recent months. As of August 15 imports for the year were $102.36 billion, down 0.4 per cent year-on-year. All this means there will not be too much pressure on the foreign exchange market during the rest of the year. Analysts expect no volatility in exchange rates during the period.  But they said the Government and the central bank should identify the targets that need to be given priority and regulate exchange rates based on them. They suggested that the central bank should consider greater use of derivatives such as options to create tools to support risk prevention and management. By doing this, it would also diversify the financial tools available in the market, bringing it in line with the rest of the world, they said. Firms hail new decree The long-awaited Government Decree No 60/2015/NĐ-CP providing guidance for a number of articles in the Law on Securities, especially foreign participation in the stock market, was issued in June last year. One of the most welcome points in the decree, which took effect this month, is the removal of the 49 per cent cap on foreign ownership of public companies. But it lists certain cases where foreign ownership will still be restricted, such as certain sectors under Việt Nam’s international treaties and those restricted under the Law on Investment. If specific foreign ownership caps for such sectors have not been announced yet, they will remain at 49 per cent. Many securities experts hail Decree 60 since it provides a complete policy framework for attracting foreign investment. After the decree took effect, many companies have begun increasing their foreign ownership. In May Việt Nam Diary Products Joint Stock Company (Vinamilk) decided to scrap the 49 per cent limit at its annual shareholders meeting. It also eased the criteria for choosing foreign investors to create more favourable conditions for the imminent divestment by the Government. After the foreign ownership limit went at Vinamilk, many foreign investors vied with each other to invest in the company, most of them exchange –traded funds (ETFs). An ETF is an investment fund traded on stock exchanges, much like stocks, that holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. The FTSE ETF Fund, for instance, has announced it has added VNM and HSG to its portfolio. Nguyễn Hữu Bình, head of the research division at the Việt Nam Investment Securities Company (IVS) said V.N.M ETF will also put VNM into its category . Foreign investors own 48.72 per cent of VNM, with the State Capital Investment Corporation, Việt Nam’s sovereign fund, owning 45.06 per cent. It is expected that the two ETFs might buy 10 million shares of VNM, which will have a positive effect on the share as well as the VN-Index. Market observers said to raise money to buy VNM, the ETFs had to sell some of their blue chips since its price is high. Domestic Medical Import-Export Company (Domesco, or DMC) is also in a similar situation. It said recently it has completed necessary procedures to allow foreign investors to own 100 per cent of the company. Soon after the information was released, Abbott, through CRF International SPA (Chile), a subsidiary, registered to buy two million shares. What is the likely outcome if foreign investors are allowed to buy 100 per cent of Vietnamese companies? Recently VNM shares were relentlessly sold by foreign investors. An analyst from MB explained that foreign investors who have kept VNM shares for several years found it is high time for them to sell and book profits since the price has risen to record levels after the foreign ownership cap was scrapped. The large sums of money they will get from selling VNM will help them restructure their portfolios by buying other potentially lucrative stocks like Sabeco and Habeco. However, pharmaceutical companies such as DMC may have the most things to say after the foreign ownership limit was lifted there.    Grant Thornton’s healthcare and pharmaceuticals industry survey carried out in July shows the pharmaceutical industry ranked third in the list of most attractive sectors behind only retail and food and beverages. Institutional investors and foreign strategic investors greatly appreciate the pharmaceutical industry thanks to its growth potential given that consumers are paying more attention to healthcare, food safety and the environment. The prices of shares in this sector have gone up sharply this year. DHG has risen by 65.4 per cent, TRA by 78.8 per cent, and Domesco by 191.3 per cent. After DMC shareholders voted to scrap the foreign ownership limit, many other drug companies are expected to follow suit. But there are conflicting opinions about the benefits of lifting the foreign ownership cap. Leading pharmaceutical companies like DMC, DHG, IMP and TRA always interest foreign investors since they have a nation-wide distribution network, which is considered a very important factor for foreigners to quickly integrate into the Vietnamese market. Many experts have in fact expressed concern that local drug companies could be snapped up by foreign investors with the removal of the ownership cap. They fear many big Vietnamese brands could be wiped out as a result of this decision. They cite the example of DMC. They point out that Abbott succeeds in buying the two million shares, its ownership ratio will increase to 51.7 per cent and turn the company into its subsidiary. DMC shareholders alone have registered to sell 750,000 shares. Other experts are happy to have foreign investors fully owning domestic companies, saying this will improve funding, management and technologies. They say the most important goal is to provide consumers with high quality products at reasonable prices, and allowing 100 per cent foreign ownership will help realise this.       This will also result down the line in creating employment and fostering economic growth, they add. Cumbersome customs leads to lack of competitiveness Despite being simplified, Vietnam’s customs procedures remain much more complicated compared to regional countries, affecting business competitiveness.    At a recent meeting with the participation of Deputy Prime Minister Vu Duc Dam, Deputy Minister of Finance Do Hoang Anh Tuan said that around 74,000 companies in Vietnam currently operate in import and export areas. The average clearance customs time for imports is 10 days and 12 days for exports, which has been cut from 21 days last year; but this was still twice as long as the regional average. Meanwhile, every year, 36% of shipments in Vietnam have to go through technical checks which are related to different agencies and ministries. The rate is two and a half to three times higher than in Asia Pacific and Europe respectively. This is among reasons to make the clearance customs processes are more complicated. However, the long and complicated technical checks haven’t even proven effective; as a very small rate of checked goods were found to have violated regulations, while the majority has been approved to pass. At the meeting, Deputy Prime Minister Vu Duc Dam said that if clearance customs time is reduced by one day, companies could USD200 each consignment, or USD800 million for the whole country annually. Dam also urged concerned agencies and ministries to simplify procedures to cut the rate of goods which have to go through technical checks by 15% by the end of this year under the government's instruction. Household businesses backed to become firms A draft law on support for small and medium-sized enterprises (SMEs) provides policy incentives for around 5.6 million household businesses to turn into enterprises, Deputy Prime Minister Vuong Dinh Hue said on September 22. Hue was speaking at a commitment signing ceremony yesterday between the Vietnam Chamber of Commerce and Industry (VCCI) and leaders of 21 northern provinces and cities to create an enabling environment for businesses. Earlier, VCCI has inked commitments with other 42 provinces and cities across the country. VCCI chairman Vu Tien Loc underlined the Government’s determination to improve the business environment in the past three months. He said that according to the signed commitment, there will be 500,000 and 370,000 firms in HCMC and Hanoi in 2020, respectively, doubling the current numbers. Loc said the goal of having one million businesses nationwide by 2020 is obtainable. Hue told local leaders to propose ways and take action to realize the commitment. The provinces must have specific targets for enterprise development as three localities out of 21 signatories have not set up goals and some have but their objectives are modest. He said the Government has told relevant agencies to work out indicators to evaluate business development based on establishment, dissolution and performance. They include a very important indicator for companies’ contribution to creating jobs and incomes for workers. The Deputy Prime Minister mentioned some tasks of improving the investment and business environment including a draft law amending many laws on business with a plan to amend 15 laws relating to customs procedures to remove obstacles to customs clearance. He said the law on support for SMEs will help not only startups but also support the conversion of household businesses  into firms as they must register as companies when having 10 or more employees in line with the existing regulations. Statistics showed that the country has 5.6 million household businesses. Hue said a venture capital fund would be established to support startups and urged local governments to support the establishment of more enterprises. Report shows much improvement in social perception of entrepreneurs The social perception of entrepreneurs in Vietnam has improved significantly and better than in other regional countries, according to the “Vietnam Entrepreneurship Index 2015-16” report released by the Vietnam Chamber of Commerce and Industry (VCCI). The report showed the good social perception of entrepreneurs in Vietnam has got better than in other countries in Southeast Asia and other developing countries with 75.8% respondents saying that successful entrepreneurs have been increasingly valued by society and 73.5% considering doing business a desirable career option. The rate of Vietnamese people afraid of business failures dropped from 56.7% in 2013 to 50.1% in 2014 and 45.6% last year, according to the report, which is part of the Global Entrepreneurship Monitor (GEM) survey. The GEM index was initiated in 1999 with coordination of the Global Entrepreneurship Research Association (GERA) to assess the startup status and business development in countries to provide updated and accurate information on global business operations for policymakers, researchers, entrepreneurs and interested people worldwide. After 17 years, GEM has attracted more than 100 countries to participate. The countries are divided in terms of geography and levels of development. Vietnam belongs to the group of countries whose development relies on resources (phase one of startup), below the groups of countries with development based on performance (phase two) and countries with development based on innovation (phase three). GEM 2015 was the third consecutive report involving VCCI’s survey of 2,000 adults and 36 professionals in many areas across the country. The percentage of adults aware of business opportunities was 56.8% last year, up from 39.4% in 2014 and 36.8% in 2013. The respective average ratio in countries dependent on resources for development is 53.8%. The proportion of Vietnamese intending to start up businesses in the next three years is 22.3%, up from 18.2% in 2014 but still well below the average rate of 36.5 % in other countries of the same group. Startup motivations can be divided into two categories: essential needs (37.4%) and opportunity leverage (62.6%). Essential needs refer to those who do not have jobs and start up businesses to earn a living and grasping opportunities is used for people who are already working but want to do business when opportunities come up. Data showed the percentage of startups run by women in 2015 was 15.5%, higher than 11.6% by men. However, the rate of startups by women for essential needs amounted to 43.8%, much higher than 28.3% by men. GEM 2015 drafting committee made a number of recommendations to promote startups, including continuing to improve the business environment by removing barriers; building curricula for schools and universities to equip students with creative skills, and promote their independence and teamwork; encourage converting household businesses into companies; enhance the dissemination of information on the country’s integration commitments; and prop up social enterprises. VNR seeking Govt help to settle debts The Vietnam Railways Corporation (VNR) has suggested the Government allow the Ministry of Transport to allocate it VND471 billion (US$21.1 million) to pay debts owed to bridge contractors, local media reported. The sum will be used to pay debts owed to contractors of Dong Nai Bridge in the province of the same name, Tam Bac Bridge in the northern city of Haiphong and Thi Cau Bridge in Bac Ninh Province. These projects were completed in 2013. Due to economic difficulties in the past years, those contractors are now in dire need of getting the payments to avoid operation suspension, VNR said in a document sent to the Government. The three contractors used to operate under VNR but they have gone public. However, they are now mired in difficulties, so the corporation has to ask for the Government’s help to pay its debts for those contractors. A large number passengers of the railway sector have shifted to airlines and autos after more new roads are opened to traffic. Therefore, VNR said large investment will be needed in the coming years to improve infrastructure facilities and service quality to draw guests back to the railway sector. Last year, VNR registered some VND2.65 trillion in revenue, a reduction by half against the previous year, and VND93 trillion in after-tax profit. PM okays high-tech shrimp farming park in Bac Lieu The Prime Minister has approved a project to open a high-tech agricultural park for shrimp farming in the Mekong Delta province of Bac Lieu. The park is planned to cover 200 hectares in phase one and become the first of its kind in Vietnam. The Bac Lieu Department of Agriculture and Rural Development said the province has drawn up a high-tech shrimp farming project based on its strength in aquaculture after the Ministry of Agriculture and Rural Development announced a restructuring scheme for the agricultural sector. The province aims at developing advanced shrimp farming so that it would become a center of Vietnam’s shrimp industry. Three seafood enterprises in Bac Lieu were awarded certificates of high-tech agricultural application last year and the locality is the first in Vietnam to apply a super-intensive shrimp farming model to greenhouses with much higher output than conventional methods. This is the foundation for Bac Lieu to move on with the high-tech agricultural park project. According to the department, the province used nearly eight hectares of water surface for super-intensive shrimp farming last year with output five to 10 times higher than other farming methods. Average output of super-intensive shrimp farming is 40-50 tons per hectare per crop. The area under this farming model in Bac Lieu can reach more than 28 hectares this year with estimated output of about 2,540 tons per year. The agriculture ministry said Bac Lieu and Ca Mau provinces have the largest shrimp farming areas nationwide, and 19,000 out of 130,000 hectares of aquaculture in Bac Lieu is used for shrimp rearing. Dong-dollar exchange rate turns volatile The exchange rate between the Vietnam dong and the U.S. dollar has fluctuated strongly on the local currency market over the past days.  The dollar yesterday skidded slightly against the Vietnam dong after its strong rises last week, following news that the Federal Reserved (Fed) decided to keep U.S. interest rates unchanged.   Vietcombank bought one dollar at VND22,275 and sold it at VND22,345 yesterday morning, down VND5 against the end of Wednesday’s trade and falling VND15 compared to morning trade the same day. The dollar buying price fell to VND22,270 and selling price to VND22,340 at the end of yesterday’s trade. Both Vietinbank and ACB quoted the dollar buying price at VND22,265 and their respective selling prices stood at VND22,350 and VND22,345 yesterday morning, a drop of VND10-15 from the day earlier.  When the trading day ended, Vietinbank’s respective dollar buying and selling prices were VND22,270 and VND22,350 while those quoted by ACB were VND22,260 and VND22,340. The State Bank of Vietnam (SBV) yesterday announced the average daily interbank exchange rate between the two currencies at VND21,944 a dollar, down VND9 from the day earlier and dipping VND15 versus Monday. This means local banks could trade the dollar in a range of VND21,286 and VND22,602.  The SBV move led the dollar to depreciate when yesterday morning’s trade ended.  The greenback got firmer against the dong at the end of last week as investors awaited the outcome of the Fed policy meeting on September 20-21. Besides, the SBV acquired a large volume of dollars to increase the nation’s foreign exchange reserves. A dollar was sold for VND22,324-22,328 on Wednesday morning and climbed to VND22,337-22,338 later the same day, the highest since the beginning of this year. However, commercial banks sold the greenback in the afternoon to take profit, leading it to drop to VND22,319-22,321 a dollar. At the end of the day, it bounced back slightly to VND22,325-22,326.    On Tuesday, the dong-dollar exchange rate stood at VND22,317-22,318 but inched up to VND22,325-22,326 at the end of the day. Last week saw the average daily interbank exchange rate hovering around VND21,914-21,932.  On the informal market, the greenback appreciated against the Vietnam dong.   The annual overnight rate for dollar loans on the interbank market stands at 0.4%, the one-week rate 0.5%, the two-week rate 0.6%, the three-week rate 0.7%, the one-month rate 1% and the three-month rate 1.5%. Dollar supply has been ample and stable at banks in recent months.    Credit institutions said the dollar strengthened against the domestic currency due to huge demand of certain customers and banks. Besides, interbank rates for Vietnam dong loans with short tenors have stayed low, at less than 0.5% per annum, which is seen as a good reason for banks to hold on to the greenback.    Data of the General Department of Customs showed Vietnam ran a trade deficit of US$322 million in the first half of this month. In addition, the dollar has dipped sharply against other currencies on world markets following to Fed’s decision to keep interest rates unchanged but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. Vietcombank Securities Company forecast the greenback would weaken in the coming time and remain stable until the first half of the fourth quarter.    Pham Hong Hai, chief executive officer of HSBC Vietnam, told a recent conference that the dong-dollar exchange rate has stayed low and would not rise significantly until the end of the year.  According to Bao Viet Securities Company, liquidity in the banking system is expected to remain ample and low inflation in the January-August period would remain this month, so the exchange rate might hover around VND22,300 a dollar in the short term. Gold rose strongly following the Fed’s move. It climbed 1.4% to US$1,333.21 an ounce on the New York market. At home, Saigon Jewelry Company acquired a tael of gold at VND36.05 million and sold it at VND36.3 million. The gap between the global and local gold prices was more than VND300,000 a tael. A tael equals to 1.2 troy ounces. At the end of yesterday’s trade, SJC’s buying price went up to VND36.1 million a tael and its selling price climbed to VND36.36 million. Firms asked to join environment protection effort The Government has called for enterprises to join hands to protect the environment and help the nation achieve sustainable development. Businesses should think about their role in the country’s sustainable development and launch solutions for pollution prevention. Besides, they should suggest ways for the Government to deal with the current environmental problems, said Nguyen Van Tai, head of the Vietnam Environment Administration under the Ministry of Natural Resources and Environment, at a conference in Hanoi on September 22. At present, Vietnam is in the same stage of development as Japan of the 1960s and 1970s and Singapore of the 1970s and 1980s, and they also faced the same environmental issues as Vietnam does at the moment. The important thing for Vietnam is to find the right way to escape the situation, Tai said. Around 10 years ago, Vietnam sped up investment attraction without due care about environmental protection. Some projects developed from 2008 to 2010 have been put into operation and their outdated technologies have polluted the environment. Pollution has become a critical issue in Vietnam and put a dampener on the country’s sustainable growth. Recently, several polluters have been found, stirring public outcries and causing bad impact on local people’s livelihoods. At the conference on sustainable development, Heineken Vietnam Brewery was named as one of the contributors to the country’s sustainable development. Having operated for 25 years in Vietnam with four factories, the firm has invested around VND200 billion (US$8.96 million) in wastewater treatment and recycling. It has also applied a slew of effective solutions to sustain its operation like the use of clean energy. Domestic coffee price shoots up The domestic coffee price has shot up from VND33,000-35,000 per kilogram in April to VND40,000-41,000 owing to higher global prices of the commodity. Statistics of the Ministry of Agriculture and Rural Development showed the average export price of coffee was US$1,698 per ton in April, up nearly 18% year-on-year, and reached US$1,713 per ton in May and US$1,754 per ton in July. Vietnam shipped abroad 1.27 million tons of coffee worth US$2.25 billion in the first eight months of this year, soaring nearly 40% in volume and 21% in value over the same period last year. Nguyen Nam Hai, vice president of the Vietnam Coffee and Cacao Association (Vicofa), said the coffee price has rebounded after a period of decline, encouraging local farmers and firms to step up sales. As a result, coffee stocks are down at the end of the 2015-2016 crop. He said last year many businesses stocked up on coffee beans in anticipation of a price hike but the price dropped. This year, traders sold out their beans when prices increased as the new crop will start soon. The coffee crop in Vietnam usually starts from October and harvest ends the following year. Some coffee farmers in the Central Highlands province of Lam Dong said the 2016-2017 crop may start several weeks later than usual due to drought in the Central Highlands. Vicofa said it is difficult to forecast the coffee price at the beginning of the next crop. The association predicted that coffee output in the 2016-2017 crop would drop by 20-25% year-on-year due to drought. Coffee often rises when the world’s leading exporting countries such as Brazil and Vietnam announce output falls. Its price is also driven by speculation. However, Vicofa said the coffee price on global markets cannot be decided by producing countries only. State to retain controlling share after equitising Song Da Corporation The state will hold a 51 per cent stake in domestic construction firm and materials producer Song Da Corporation after its equitisation, which it will reduce to 36 per cent by 2020. This schedule was included in the equitisation plan designed for Song Da Corporation by the Ministry of Construction, along with criteria to choose strategic investors. The plan is awaiting the prime ministerial approval, according to newswire Vneconomy.vn. Accordingly, Song Da Corporation will issue 450 million shares, equalling an 18.82 per cent stake, at the initial price of VND10,000 ($0.45) per unit. The corporation expects to acquire VND2.89 trillion ($129.7 million) in revenue and VND160 billion ($7.2 million) in pre-tax profit in 2016 after the sales. Previously, Song Da Corporation planned to launch its initial public offering (IPO) in July 2016, but was forced to delay by circumstances. Regarding the strategic investors, the criteria stipulate that candidates have to register to buy at least 5 per cent of the 30 per cent stake set aside for strategic investors. In addition, aspiring investors must have experience and capacity in the sectors of electricity, construction, and real estate. It is particularly important for candidates to have a total asset value of at least VND1 trillion ($44.9 million) as of 2015 and an equity of VND300 billion ($13.5 million). In addition, candidates must operate with profit and without bad debts. The equitisation of the corporation will occur in the context of its massive losses. Notably, according to the company’s financial report, its debts of VND10.2 trillion ($457.6 million) far outweighed its equity of VND2.6 trillion ($116.7 million) at the end of 2015. Earlier in August, Song Da Corporation reportedly sold its entire 53.04 per cent holding, equalling 26.1 million shares, in Vietnam-Italy Steel Company (VIS). The VIS shares were traded at VND12,800 ($0.57) apiece, bringing the transaction value over VND334 billion ($14.85 million). Since November 2015 Song Da Corporation had registered three times to sell its entire holding in VIS, but transactions were not successful as the payment of the steel producer's share prices were not high enough. Established in 1961, Song Da Corporation specialises in developing thermal power plants, traffic infrastructure, industrial factories, and real estate projects as well as manufacturing construction materials. It is the major contractor of almost all thermal power plants in Vietnam, including Son La, Hoa Binh, Lai Chau, among other. Besides, it expanded operations to Laos through developing Xekaman 1 and 3 thermal power plants. Air New Zealand to fly Dreamliner for second Vietnam season Air New Zealand has confirmed it will operate a second season of non-stop services between Auckland and Vietnam from June to October next year and this time passengers will be able to enjoy the comfort of the airline’s state of the art Dreamliner aircraft. For the 2017 season, Air New Zealand will operate two non-stopservices a week from Auckland to Ho Chi Minh City using the302 seat Boeing 787-9 Dreamliner offering a choice of lie flat Business Premier, Premium Economy, Economy and Economy Skycouch™seating options. Air New Zealand Chief Sales and Commercial Officer Cam Wallace saysKiwi travellers who’ve experienced the non-stop service to Vietnam this season are hugely enthusiastic about the destination. “Ho Chi Minh City in the south is a great gateway to Vietnam’s tourism experience which includes great food, fascinating history, charming French influence and 3,000 kilometres of coastline to explore.” Air New Zealand’s 2017 Vietnam season will operate between 24 June and 25 October.  Tariffs cut for Japanese imports Vietnam’s new import tariff, part of the Vietnam-Japan Economic Partnership Agreement (VJEPA) for 2016-19, has come into force. Decree No 125/2016/NĐ-CP, which was issued on September 1 and came into effect the same day, states that the tariff is to be applied for goods directly transported from Japan into Vietnam. Accordingly, the duty for lip and eye make-up products of Japanese exporters will fall from 11% to 4% by the end of March 2019. The duty will decline from 4-7% to 1-3% for shampoo and from 8-15% to 3-11% for toothpaste. Tax rates for clothes and accessories for children will be cut from 5.5% to 2% and the rates for blanket, bedspreads and table covers will decline to 1% from 3%. Several goods such as vitamin, weed killers and emergency aid toolkits will continue to enjoy a zero% import tax rate. Special treatment is also given to Vietnam, in case goods listed under the tariff are imported from non-tariff zones into the domestic market. Goods must also meet origin regulations, as stated in the agreement, and exporters are to have certificates of origin, in a form stipulated by the Ministry of Industry and Trade. VJEPA was the first bilateral free trade agreement that Vietnam entered into after the country joined the World Trade Organisation in January 2007. The agreement covers comprehensive contents, including trade in goods and services, investment and improvement of the business environment. When VJEPA came into effect in October 2009, Vietnam committed to eliminate some 90.6% of tariff lines for Japan within 16 years, while Japan pledged to eliminate some 94% of tariff lines for Vietnam within 10 years. Kyohei Takahashi, president of the Japan-Vietnam Economic Committee, said while its working group met Vietnam’s senior leaders in Hà Nội late last month that trade between the two countries had quadrupled since the agreement came into effect. Among ASEAN member countries, Japan had poured the largest amount of investment into Vietnam, he added. Earlier this year, a survey conducted by the Japan Business Federation, or Keidanren, showed that Vietnam topped the list of countries where Japanese firms intend to invest in the next five to 10 years. Decrees carrying new tariffs for several other trade deals, including the ASEAN Trade in Goods Agreement and an agreement between Vietnam and Laos, have also come into force this month. New tariffs for ASEAN-India, ASEAN-Australia-New Zealand, ASEAN-China and ASEAN-South Korea trade deals are also available. Sabeco beer shares soar on stock listing plan The price of Sai Gon Beer-Alcohol-Beverage Joint Stock Company (Sabeco) shares have soared in recent days on the over-the-counter (OTC) market after the company announced its listing plan on the HCM Stock Exchange. The number of offers to buy shares of Viet Nam's biggest beer producer have perked up rapidly since early this week with the bid volume reaching over one million shares a day. The tender prices are currently around VND100,000-102,000 (US$4.48-4.57) per share, up 25 per cent over August. Increased investor interest was attributed to Sabeco's listing plan this year. Last week, Sabeco asked the Ministry of Industry and Trade to debut its shares on the HCM Stock Exchange in the future. The company said it was working with a consulting securities firm and the procedures would take at least two months to be completed. Shares of Sabeco is being traded on the OTC market, a decentralised and off-exchange trading floor where stocks are traded through a dealer network. In August, the Government asked Sabeco and Ha Noi Beer-Alcohol-Beverage Joint Stock Company (Habeco), the country's two biggest breweries, to list their shares on the local stock exchange, saying it is "mandatory" for State-owned enterprises to list on the stock market after equitisation. Both Sabeco and Habeco made  initial public offerings in 2008. According to the divestment plan, the State will sell its entire 82 per cent of capital, equivalent to VND9 trillion at the Habeco this year. As for Sabeco, the divestment will consist of two tranches in which around 54 per cent of capital will be sold this year while another 36 per cent will be put up on sale in 2017, after Sabeco shares are listed on the stock exchange. Based on OTC prices, Sabeco is valued at around VND65 trillion and the divestment value amounts to VND57.5 trillion, or $2.6 billion. In the OTC market, the bid prices of Habeco are around VND47,000 and VND48,000 a share, slightly higher than that in early August. Sabeco and Habeco hold a combined market share of 60 per cent in the local beer market. The local beer market has seen an annual growth rate of 35-40 per cent in recent years. Viet nam is forecast to consume 4.04 billion litres of beer in 2016, the highest in the ASEAN region.  VCCI, 21 localities jointly offer support to businesses The Vietnam Chamber of Commerce and Industry (VCCI) and 21 municipal and provincial authorities signed an agreement in Hanoi on September 22 to jointly create a favourable business environment.  The agreement is to realise the Government’s Resolution 35 on enterprise development until 2020 detailing the simplification of administrative procedures, increased dialogues between businesses and all-level authorities, among others.  VCCI President Vu Tien Loc said since the resolution was put into place in May 2016, more than 100,000 new start-ups are expected to be born within a year. At such speed, 150,000-200,000 new ones will debut each year and the goal of 1 million ones by 2020 is within reach.  He also took the occasion to call on localities to launch start-up campaigns and pledge to assist enterprises in improving their competitiveness. Speaking at the event, Deputy Prime Minister Vuong Dinh Hue, who is also head of the Central Steering Committee for Enterprise Reform and Development, said with the signing, all 63 localities have so far reached the deal with the VCCI.  The Deputy PM made it clear that the Party and State always appreciate businesses and businesspeople, adding that the amendments to the Law on Investment and the Enterprise Law, and other laws are also meant to generate an environment conducive to business operations.  After the resolution was issued, more than 9,000 new firms are established per month.  Hanoi recorded 15,530 firms in the past eight months and expects to have at least 400,000 ones by 2020.  He suggested building an annual business development index which also covers corporate revenues and workers’ income, making it easier for the State management.  Early this year, the PM approved a project on supporting start-up ecosystem and national renovation by 2025. The government is preparing for proposed revisions to 15 laws regarding the business environment to submit to the legislature for consideration, as well as devising a bill to assist small and medium-sized enterprises (SMEs), start-ups and start-up ecosystem.  Localities were asked to attract foreign direct investment, encourage trading households to register as businesses, provide more credit for SMEs, and establish venture funds at local and central levels. Vietnam, Cambodia hold substantial cooperation potential Vietnam and Cambodia hold substantial potential for cooperation in economy, trade, investment, tourism and other fields, Vietnamese Ambassador to Cambodia Thach Du said. Speaking at the Vietnam-Cambodia Business Forum on September 22 in Cambodia, the ambassador said Vietnam is one of Cambodia’s leading economic partners with two-way trade reaching 3.4 billion USD in 2015. Vietnam is running 182 projects with a total registered capital of 2.85 billion USD in Cambodia, he said, adding Vietnam has the largest number of tourists in the neighbouring country with 988,000. The diplomat asked businesses to seriously and fully abide by regulations and laws of the respective countries. Chea Vuthy, Vice Secretary General of the Council for Development of Cambodia, briefed the participants on Cambodia’s investment climate and policies, saying the country’s economy grows 7 percent annually. He said Vietnam ranks fifth among countries investing in Cambodia, after China, Japan, the Republic of Korea and Malaysia, with the most noteworthy projects focusing on agriculture and industry, valued at 958 million USD. The official applauded Vietnamese businesses’ contributions to his country’s socio-economic development as well as economic cooperation between the two countries. Hor Siv Yong from the Cambodian Ministry of Commerce said Vietnam is Cambodia’s largest trade partner. The two countries aim to raise the bilateral trade to 5 billion USD in 2017. Nearly 70 pct of agricultural machines are imported Nearly 70 percent of agricultural machines are imported, mostly from Japan, China, the Republic of Korea and Taiwan (China), heard a September 22 conference on speeding up mechanisation in agriculture and agricultural machine manufacturing technologies.  Recently, agricultural mechanisation has seen rapid progress due to demand of production and the Government support, said Bach Quoc Khang from the Institute for Agricultural Electromechanics and Post-Harvest Technology. However, he held that the development is not sustainable and comprehensive yet.  It has only focused on rice cultivation in some stages, with low effectiveness, leading to high post-harvest losses, said Khang, adding that the domestic mechanic sector has yet to meet requirements of production, while there is a high demand for many agricultural machines, including sewing machine and combined harvester.  He noted that the number of machines used in agriculture has increased 1.6 times over the past 10 years. Currently, mechanisation in land tilling reaches 90 percent, planting and sewing 30 percent, and caring 60 percent.  Especially, mechnisation in the post-harvest stage remains low, resulting in high losses.  A Government decision on support for post-harvest loss reduction in agriculture has solved difficulties facing both farmers and businesses in the field, but it is a step backwards in developing the domestic mechanic sector, stated Khang.  Meanwhile, Chu Van Thien, also from the institute, stressed the importance of investment in manufacturing of agricultural machines, with support policies in finance, infrastructure and science and technology. High credit growth set for northwestern Vietnam The Vietnam Bank for Social Policy has set an annual credit growth rate of 14-15% for the northwestern part of the nation in the coming years to fuel growth in this poor region. Le Minh Hung, governor of the State Bank of Vietnam and chairman of the Vietnam Bank for Social Policy, unveiled the target at a review conference in Lao Cai Province on September 21 on credit for the northwestern region. Hung said the bank will continue the Government’s policy of providing preferential loans for poor households and other eligible beneficiaries. The region is home to 11.6 million residents of more than 30 ethnic groups in four northwestern provinces, eight northeastern provinces and 21 districts west of Thanh Hoa and Nghe An provinces. Speaking at the conference, Nguyen Van Binh, head of the Party Central Committee’s Economic Commission, said the State-owned Vietnam Bank for Social Policy should strive to achieve credit growth of 10% a year in line with its development strategy approved by the Prime Minister.   Binh proposed adjusting policies for the poor in the region in a way which channels more preferential loans to the poor and encourages them to be self-reliant. He suggested more capital from the State budget be provided for the bank to enable it to carry out the designated programs. A report released at the conference said the number of poor households in the northwestern region declined to 15% last year from 34% in 2010. “The achievement is contributed by the Vietnam Bank for Social Policy, which is an important tool for the Government to execute poverty eradication and reduction programs,” Binh said. Outstanding loans for social programs in the northwestern region had surpassed VND29.8 trillion (US$1.34 billion) by end-2015, surging 62.8% over 2010, and neared VND32.2 trillion as of the end of August. Average credit growth in the region was 10.3% a year in the 2010-2015 period, higher than 9.8% of the nation’s average. Overdue loans  accounted for a mere 0.25% of the total. Binh said the northwestern region is considered the poorest region in Vietnam as the number of poor households is nearly three times higher than the country’s average in line with new poverty criteria. The ratio of poor households in some provinces is more than 40-50%. Therefore, it is important to increase lending and efficiency of loans for the region in the coming years, Binh suggested. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR