BUSINESS IN BRIEF 3/10 US rejects rice because of pesticide residues Vietnam may lose its foothold in the US if it can't address the overuse of pesticides by farmers.  Vo Thanh Do, deputy head of Department of Processing and Trade for Agro, Forestry and Fisheries Products and Salt Production, under the Ministry of Agriculture and Rural Development, said they had to issue a warning on September 30 about the situation as 95 containers of rice shipments weighing 1,700 tonnes, have been returned in the first four months of 2016 because of pesticide residues. Firms that have shipments returned repeatedly will be banned from exporting to the US. Pham Thai Binh, director of export company Trung An, said, "Companies that are compromising rice quality are endangering Vietnam's reputation in the US and the world. If this can't be fixed, Vietnam may lose markets and be banned from exporting." According to Binh, both farmers and firms should take the blame. Farmers still abuse pesticides and fertilisers while many firms don't follow Vietnamese or global good agricultural practices. After years of exporting huge volumes of goods to China and Africa, which don't require high-quality rice, farmers are used to pursuing quantity, not quality. "Europe, Japan or the US require high-quality products and will even ban rice that contains pesticides. These markets require lower amounts of high-quality produce, so the farmers aren't really concerned," Binh said. A representative from Vietnam Food Association further explained that there was a time when farmers were encouraged to increase crops through the use of fertilisers. As a result, they had to face even more diseases and farmers were forced to use even more pesticides. Vietnam is now losing out to Thailand, Cambodia and Myanmar. Cambodia uses the same rice seeds but they have successfully exported produce to the US and Germany. On the other hand, dependency on pesticides and other chemicals to increase the grain rice size is costing Vietnam the chance to make high-quality rice. In addition, some firms also mix different types of rice together and are rejected. Vietnam continues importing huge amounts of pesticide, mostly from China. During the first three quarters of this year, Vietnam spent USD496m on pesticides and other materials. In reality, many people are still using banned chemicals. The Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade and Ministry of Health are responsible for managing this issue, but the results are ineffective. Director of Viet Hung Company Nguyen Van Don said, "About 10 companies are able to export quality rice to the US. And those are companies that plant their own rice instead of buying produce from small farmers." Don suggested establishing co-operatives as a solution. The co-operatives will rent farm land to plant crops so that they will have full control over the process. Director of Trung An Company Pham Thai Binh agreed that firms must have closer relationships with farmers in order to set up high-quality material areas. He went on to say that Vietnam should invite consultants from Japan or the US to help. KIDO granted license to buy 65% of TAC    The KIDO Group Corporation (KIDO) has been granted a license by State Audit of Vietnam (SAV) to bid to purchase a 65 per cent stake, representing 12,337,130 shares, in cooking oil giant the Tuong An Vegetable Oil Company (TAC). The bidding period lasts 45 days, from October 3 to November 15. With a bidding price of VND78,000 ($3.47) per share, KIDO will have to part with around VND960 billion ($42.7 million) to complete the deal. On September 14 KIDO sent a statement to TAC about bidding for the 65 per cent, which was accepted in a TAC statement on September 22. KIDO’s move “is considered a long-term commitment by KIDO with TAC to strengthen the development of TAC’s core businesses activities,” according to TAC’s statement. TAC’s shareholding structure changed significantly in July, with nearly 65 per cent changing hands. The Viet Long Securities Investment Fund Management Corporation (VLFM) purchased 4.55 million shares, or 24 per cent, from the Vegetable Oils Industry Corporation (Vocarimex). A total of 7.6 million shares, or 40 per cent, were traded in 32 separate transactions at VND62,000 ($2.8) per share on July 13, totaling VND471 billion ($21.1 million). KIDO’s financial statement for the second quarter of 2016 mentioned that the company had placed an advance payment of nearly VND440 billion ($19.7 million) for the TAC shares. TAC is the second-largest cooking oil company in Vietnam, with a 22 per cent market share. It reported total 2015 revenue of VND3.6 trillion ($161.3 million). During the CEO Forum 2016 held on September 30 in Ho Chi Minh City, KIDO’s General Director Mr. Tran Le Nguyen revealed that Unilever, who sold the ice cream brand Wall’s to KIDO 13 years ago, is now willing to pay up to $200 million to get the famous ice cream brand back, which is nearly half of KIDO’s market value. “When we first acquired the brand, revenue stood at only VND90 billion ($4 million),” Mr. Nguyen said. “It has now increased to VND2 trillion ($89 million).” The first half of 2016 saw revenue from ice cream make up 75 per cent of KIDO’s total. In the first seven months of this year KIDO’s profit from ice cream was VND160 billion ($7.1 million), higher than its total profit of VND110 billion ($4.9 million) in 2015. Ice cream is expected to take its profit to some VND230-240 billion ($10.2-$10.6 million) for 2016 as a whole. It was reported in late August that KIDO had finished transferring the remainder of its confectionary business to Mondelēz International from the US. After selling 80 per cent of its subsidiary, the Kinh Do Binh Duong JSC (BKD), to Mondelēz International in the second quarter of last year KIDO is expected to reap VND2 trillion ($89.7 million) from the sale of the remaining 20 per cent. Exports increase 6.7 percent so far this year Vietnam’s exports are estimated to reach 128 billion USD in the first nine months of this year, up 6.7 percent year-on-year, according to the latest statistics from the General Statistics Office (GSO). Of which, the domestic sector contributed 37 billion USD, up 5 percent, and the foreign-invested sector (including crude oil) made up 91.1 billion USD, up 7.4 percent.  However, in September alone, exports plunged 6.8 percent to an estimated 15 billion USD compared to August due to a turnover reduction in several key export items such as telephones and components (down 17.4 percent to 506 million USD), footwear (down 18.2 percent to 200 million USD) and garments (down 7.1 percent to 175 million USD.) From January to September, the country spent 125.4 billion USD on imports, surging 1.3 percent over same period of last year, with the foreign-invested sector making up 74 billion USD and the domestic sector accounting for 51.4 billion USD. A slight increase seen in both sector’s imports in nine months proved that local production was well on track to recover, the GSO said.  In the period, Vietnam enjoyed a trade surplus of 2.7 billion USD. Unsurprisingly, the foreign-invested sector obtained a trade surplus of 17.1 billion USD while the domestic sector suffered a trade deficit of 14.4 billion USD.  Agro-forestry-fisheries exports fetched an estimated 2.5 billion USD in September, lifting the total nine-month turnover to 23.3 billion USD, up 6 percent year-on-year. According to the Ministry of Agriculture and Rural Development, agricultural exports during the reviewed period experienced a yearly rise of 7.2 percent to 11.1 billion USD. Of this, coffee recorded the highest increase of some 40 percent in volume and 22 percent in value compared with same period of last year. Up to 1.39 million tonnes of coffee, valued at 2.48 billion USD, was shipped to overseas markets from January to September. Pepper came next with 146,000 tonnes for 1.19 billion USD, up 31.5 percent in volume and 13.1 percent in value, respectively. After suffering a temporary downtrend, tea and rubber bounced back, enjoying positive growth of 0.2 percent and one percent, earning 152 million USD and 1.1 billion USD, respectively.  However, the export of rice, which is a key farm produce in the country, dropped 16.4 percent in volume and 12.5 percent in value to 3.76 million tonnes and 1.69 billion USD, respectively. China remained the largest importer of Vietnamese rice with a 35.5 percent market share, followed by Ghana with 11 percent and Indonesia with 9.4 percent.  In this year’s nine-month period, shipment of seafood products brought home more than 4.9 billion USD, surging 4.3 percent year-on-year. The US, Japan, China and the Republic of Korea were the four main importers of Vietnamese seafood, making up 53.7 percent of the total export revenue. At the same time, forestry exports raked in 5.1 billion USD, equivalent to the value during the same time last year.- Kazakhstan offers opportunities for Vietnamese goods Changes in Kazakhstan’s economic structure as well as high demand for agriproducts offer opportunities for Vietnamese exporters in the country, according to Vietnam’s Ambassador to Kazakhstan Doan Thi Xuan Hien.  In a recent interview with Vietnam News Agency, Ambassador Hien noted that Vietnam and Kazakhstan have boosted trade but volume has not met potential as well as both sides’ demand.  She said enterprises of both countries are eager to take advantage of low tariffs once the Vietnam-Eurasia Free Trade Agreement (VEFTA) takes effect on October 5.  In addition, Kazakhstan’s President Nursultan Nazarbayev has been reforming the Central Asian country’s economy to reduce dependence on oil and gas, including welcoming investors from all over the world, including Vietnamese investors.  According to the ambassador, the embassy has helped arrange a working trip for PetroVietnam Oil and Gas Exploration PVEP to study business opportunities in Kazakhstan.  The embassy is also working to connect several major Vietnamese companies such as Interserco and Viettel with potential partners in the Central Asia country.  Kazakhstan will hold the International fair Expo Astana from June to September 2017, Hien said. This is a good chance for Vietnamese firms to promote their brands in Kazakhstan.  Vietnam will have a 400sq.m national hall and 300sq.m for commercial display at the expo.- Australia to import fresh Vietnamese dragon fruit The Ministry of Agriculture and Rural Development announced that Australia has completed a draft assessment on fresh Vietnamese dragon fruit. The fruit is expected to be exported to Australia in 2017. According to the draft, risk evaluation will be completed by the end of this year. Australia plans to certify and allow the fruit to enter its market in early 2017. If it receives certification, Vietnam will be the first and only country to export dragon fruit to Australia. Previously, Australia has allowed Vietnamese mango imports. Tien Giang province posts 14.6 percent export rise The Industry and Trade Department of the Mekong Delta province of Tien Giang reported export earnings of 1.48 billion USD in the past nine months of this year, a surge of 14.6 percent from the same period last year. The figure, which accounted for 70 percent of the yearly plan, is expected to help the province reach its export value target of 2.1 billion USD set for this year. Foreign-invested businesses continued asserting their leading role in the activity by making up 63 percent of the total export, with such products as handbags, shoes, apparels, processed aquatic products, vegetables and fruits, and plastic items. Businesses have been striving to expand their export markets beyond the traditional European ones, said the Department. As that, the US, which is a new, potential market, accounted for 90 percent of the locality’s export earnings from the American region. Export outcomes reflected the local administration’s effort to constantly improve the business and investment environment, accelerate trade promotion activities, and encourage the start-up spirit. That effort allowed the province to reel in 17 new investment projects capitalizing at over 9.2 trillion VND (414 million USD) over the past nine months, a rise of 4 and 3.6 times in terms of the number and value of projects in compared with the same period last year. In addition, eight operating projects asked to increase their capital by over 1.35 trillion VND (60.75 million USD), 4 projects more and 75 percent higher in registered capital year on year. Tran Hoang Phong, Vice Director of the Planning and Investment Department, noted that more effort should focus on bettering the investment and business climate, hastening the administrative reform, building complete technical infrastructure, and boosting dialogues between local agencies with businesses and investors to timely tackle obstacles to their production and export. Labeling slows appliance imports The complicated procedures required to issue energy rating labels before custom clearance have caused troubles for many enterprises that import electric appliances. According to a Government Decree in 2011, most electrical products are required to carry energy rating labels before being sold on the market. These labels help provide consumers with information about power consumption and the product’s level of energy efficiency. This enables consumers to compare products and make informed purchases. The products also need to be certified so they meet the Minimum Energy Performance Standard (MEPS) before being able to pass custom clearance. Regulations issued by the Ministry of Industry and Trade (MoIT) require that when a consignment of electrical appliances is imported to Việt Nam, the importing enterprise needs to take a sample product to a designated testing centre for a certification of energy efficiency. The same procedure needs to be repeated for every consignment of the same product that is later imported. Although the Việt Nam Customs have asked the MoIT’s General Directorate of Energy, which is in charge of the issue, to change the regulation so that the result of the first test is allowed to certify for similar consignments that are imported later, so far nothing has changed. On top of that, experts say the insufficiency of eligible testing centres in the country have prolonged the testing times and raised costs for enterprises. Currently, there are only six eligible testing centres across the country, and each centre is only eligible to test a certain group of products. A nation-wide survey conducted by the USAID Governance for Inclusive Growth Program shows that the time needed for testing a product varies from several days to several months, depending on the product type. In a recent document on this issue sent to the Government and MoIT, the American Chamber of Commerce in Việt Nam (AmCham Vietnam) said thousands of products were being kept in storage for several months before passing custom clearance to wait for the labels, causing considerable damage to manufactures and importers. The Hải Quan (Customs) newspaper has reported a case where an enterprise had to pay VNĐ5-6 million (US$225-270) and waited for weeks to get an energy efficiency test result for an imported electric motor worth about VNĐ2 million ($90). Experts also say the requirement of meeting the MEPS should not be imposed on products made in developed countries such as EU countries, Japan and the US as these countries already impose much higher energy efficiency standards than Việt Nam. They say the testing procedure on these products are a waste of time and increases the input costs for enterprises. In AmCham Vietnam’s document, the organisation also proposed that products made by world-known enterprises using advanced technologies be exempt from the MEPS tests in Việt Nam. This is because these products have already passed tests conducted by internationally recognised certification organisations before being sold on the market, the document said. During an inspection on customs-related issues last month, Deputy Prime Minister Vũ Đức Đam also asked the MoIT to adjust or abandon irrelevant regulations on this issue. The aim is to reduce the time of custom clearance and ease enterprises’ difficulties, in order to comply with Government Resolution 19, issued in April this year, which aims to improve the business environment and increase national competitiveness. VN firms urged: talk to each other The Vietnamese business community is known as a group of hard-working and creative people, but linkages among the community's members and connections between the business community and authorities are not developed enough to internationally integrate and compete. Opening the fifth CEO Forum 2016 with the theme: "Linking Viet Strengths – Time to Walk the Talk", HCM City's Party General Secretary Dinh La Thang said "The city authorities welcome all development contributions from the business community and investors, and pledge to promote innovation for a better business environment." At the forum, the secretary asked the business community: "How can you connect with local authorities in order to create better, more transparent and fair policies for the healthy development of businesses?" Referring to connections among local authorities and the business community, Nguyen Thanh Phong, chairman of HCM City People's Committee, admitted that somewhere, somehow the connection was weak, but he confirmed that local authorities would like to support the business community with detailed policies and activities. "The responsibility of the authorities is to create policies and the responsibility of businesses is to maximise the advantages of these policies," Phong said. Lawyer Truong Trong Nghia, a member of the Government Advisory Lawyer Board, stressed that local businesses must unite immediately to compete well in the context of deeper international integration. "One of weakest points of the Vietnamese business community is they don't work together and we must fix this problem," he said. Nghia also requested the Government stop all kinds of "buddy" relationships in business. "The Government should be the captain of the local business community in international markets, but a fair referee in domestic ones. It should create a healthy business environment with healthy competition," he added. Chairman and CEO of the U&I Investment Corporation   Mai Huu Tin confirmed that "Vietnamese businesses are fully able to work together. At present, there are hundreds of projects implemented to boost linkages among businesses." "But a transparent, fair, effective and explainable Government is what we expect," he added. In Viet Nam, where 96 per cent of businesses are small- or medium-sized and with limited competitiveness, linkages to strengthen competitiveness are particularly necessary, especially in the context of international integration. By 2020, Viet Nam would like to have one million enterprises, in which, half are expected to be located in HCM City. "The city won't focus only on the number of enterprises but also quality. Vietnamese businesses should be based on three foundations: national pride, business ethics and obeying the law," chairman Phong stressed. There were nearly 1,000 CEOs from HCM City and other provinces at the forum. The annual event is organised by the HCM City Young Business Association, Leading Business Association, 2030 Businessmen Club and Business Association of Viet Nam High-quality Products.  October gas price hiked Gas price in HCM City and the southern provinces has been increased by VND15,000 per 12kg cooking gas canister since October 1. The retail price of a 12kg cooking gas canister now ranges from VND274,000 ($12.2) to VND280,000. Saigon Petro's Head of Sales, Tran Van Phuc, acknowledged that the recently announced increase in October world gas price of $47.5 per tonne, making it a total of $355 per tonne, was the reason behind Viet Nam's gas price hike. The hike required domestic gas companies to adjust accordingly.  Ministry of Construction says property market steady There is an abundant supply of housing, prices are steady, lending to developers and home buyers is increasing, and bad debts are low, according to a quarterly report issued by the Ministry of Construction in September. The supply of apartments in Ha Noi and HCM City is high, with many major projects in the pipeline. In Ha Noi, they are mostly in the medium-priced and luxury segments, and include projects like Thanh Xuan Complex and Legend in Thanh Xuan District, Centre Home in Hai Ba Trung District, and Ha Noi Aqua Central Complex in Ba Dinh District. There are no new projects in the low-priced segment. In September developers did not cut prices but offered promotions to attract customers. In HCM City, individual developers are partnering for large projects. An Gia Real Estate Development and Investment JSC and Phat Dat Real Estate Development JSC have joined hands with Japanese Creed Group Investment Fund to develop the US$500 million River City in District 7. The project will have 8,000 apartments. Nam Long Investment JSC has tied up with two Japanese investors to develop Fuji Residence in District 9 with 87 villas and 800 apartments. Property prices are steady. The ministry's report said the resort segment is seeing plenty of activity. In Da Nang, luxury resorts and tourism-linked real estate projects are attracting lots of interest from large players like VinGroup, SunGroup, HB Group, Novaland. In Nha Trang, a series of new resorts like Vinpearl Beachfront Condotel, Vinpearl Resort & Villas – Nha Trang, and Movenpick Cam Ranh Resort have started to sell units. The report also noted that as of the end of July outstanding loans given to developers and mortgages were worth VND420 trillion ($19 billion), an increase of 6.8 per cent from the end of 2015 but a fall of 1.31 per cent comparing with a year earlier. Banks' property-related bad debts were estimated at VND17.55 trillion ($800 million) or 4.18 per cent of loans given to the sector. While the Government designated an amount of VND30 trillion ($1.345 billion) for mortgages at low interest rates, banks have earmarked 32.9 trillion for the programme and lent VND28.3 trillion so far. The report forecasted the property sector would continue to be steady but with an over supply of luxury apartments a shortage of budget apartments.  Vietnam enjoys trade surplus with India Vietnam recorded a trade surplus of US$25.72 million in August with India, elevating the total export revenue in eight months to US$59 million, according to the General Department of Vietnam Customs. Total trade turnover between the two countries during the eight-month period inched up 1.23% to US$3.47 billion, including US$1.76 billion (up 7.6%) for Vietnam’s exports and US$1.7 billion (down 4.4%) for its imports.  Export items witnessing sharp increases in export turnover included tea, cashew nuts, metal, apparel and footwear materials, and coffee. It is worth noting that garment exports in August tripled to US$7.22 million compared to July, lifting total export revenue for eight months to US$22.81 million. However, exports of some products dipped, for example coal, confectionery, cereal products, material plastics, telephones and components. Additionally, Vietnam bolstered import turnover of fruit and vegetables, gemstones, precious metal, computers and components and steel products from India while reducing imports of plant and animal oil, animal feed and fertilizer. Especially, the country has no longer imported corn from India for the past few months due to its failure to compete with other nations in prices.   In Africa, Vietnam's rice exporters see a rising market Shipments to African countries surged while the Chinese market became more and more challenging. The Vietnam Food Association (VFA) is planning to increase rice exports to African countries to make up for a sharp decline in the Chinese market. China remains the biggest buyer of Vietnamese rice, accounting for a third of all shipments. However, exports to this market in the first eight months fell 21.4% year-on-year to 1.18 million tons, according to the agriculture ministry. Sales to some African markets, on the other hand, increased significantly. Exports to Ghana, now the second largest buyer of Vietnamese rice, surged nearly 37% to 343,000 tons during the period. Shipments to Angola, another potential market, rose 4.6 times in volume and 3.6 times in value. According to VFA, Ghana’s demand for rice is around 1.6 million tons per year and the country depends on imports to cover more than half of that amount. Among its suppliers, Vietnam offers lower prices than Thailand and India. Hoang Lam, manager of Hung Lam Joint Stock Company, one of the first Vietnamese rice companies that sell to Ghana, said the West African nation as well as other African countries favor affordable, medium-quality varieties.  This means Vietnamese companies have good chances to expand their market share in Africa over the next few years. VFA said it’s necessary to turn to Africa to ease the dependence on the Chinese market, where the management of border trade has been tightened and there’s a strong competition from a number of suppliers. Preliminary data from the agriculture ministry showed that Vietnam’s rice exports fell 16.4% year-on-year to 3.76 million tons in the first nine months. The value also went down by 12.5% to US$1.69 million. For the first time in eight years, VFA has lowered its annual forecast for rice exports. Shipments of the whole year are now expected to be around 5.6 million tons, compared 6.6 million tons last year. Rice farmers meet with slew of risks in granary of Vietnam After suffering heavy damage due to drought, salt intrusion and lasting rains in the previous rice crops this year, farmers in the Mekong Delta have entered autumn winter crop hoping a better situation of income and living conditions but they faced with poor harvest and price drop. Ms. Le Thi Cam Giang from Vinh Thanh district, Can Tho City said that after unprofitable winter spring and summer autumn crops, her family continued experiencing output reduction because their rice fields have been ravaged with rats, insects and diseases.  Output has reduced from 150-200 kilograms per hectare in the autumn winter crop last year to 600-650 kilograms this year. Adding to the woes, price has dropped to the unprofitable level of VND4,000-4,300 a kilogram. Mr. Nguyen Van Xiem Nho from Tam Nong district, Dong Thap province says that this year autumn winter rice has seen the lowest ever productivity of less than five tons a hectare. The same crop in the previous years reaped at least 5.5-6 tons. Reasons for the productivity decrease include unfavorable weather and insects which have rocketed up input costs while selling prices have been too low.  Farmers in Hau Giang and Kien Giang provinces have concerned about the bad harvest. Mr. Lam Van Sau from Giong Rieng district, Kien Giang province said that there were no factories in rural areas for locals to apply for a job. Hence, many households have got loans to hire land for rice farming at the price of VND40 million (US$1,794) a hectare a year. Unexpectedly, they continued facing loss in the autumn winter crop after yielding no profit in the previous  two crops of the year. Many farmers have fallen into debts and left their hometowns for HCMC to earn their living, according to Mr. Danh Hau, head of Giong Ke hamlet, Binh Giang commune, Hon Dat district, Kien Giang province. Scientists expressed worry about alluvium shortage because floodwater level has drastically fallen in the Mekong Delta this year. This has also permitted insects and diseases to rage and portended severer drought and salt intrusion to raise difficulties for rice farming. The Vietnam Food Association has been anxious about difficult rice exports this year. During the first eight months, export volume reached only 3.37 million tons, turnover US$1.51 billion, down 16.6 percent and 13 percent respectively. Professor Nguyen Ngoc Tran, former chairman of the NA Foreign Relations Committee, said that Vietnamese rice prices have been reducing in the world market affecting the agricultural industry and resulting in its minus growth rate. It was time for the industry to find a new heading, he said. Secretary of the Party Committee in Soc Trang province Nguyen Van The said that Mekong Delta farmers contributed significantly to food security and rice export for the last several years. However not many households have been able to enrich thanks to rice production, which has been tougher because of hash weather condition and salt intrusion. The province has advised farmers to base on their local conditions to choose rice or other crops such as fruits and shrimp which have yielded much higher profit than rice. The People’s Committee in An Giang province said that rice farming has touched its peak of nearly 3 crops a year and been difficult to increase further. Hence, it is necessary to consider reducing the grain's farming area and changing into other crops, apply science and technology to raise rice value and profit. Mr. Nguyen Van Duong, chairman of the Dong Thap province People’s Committee said that the traditional method of rice production had had high cost price and put farmers under lot of risks so it should be changed. In its agricultural structure, the province determines five key lines of products. Rice is one out of the five besides ornamental plants, mango and duck breeding. The province has also intensified connecting rice farmers with businesses, encouraged the farmers to join cooperatives to reduce costs and improve farming techniques and efficiency. Deputy Minister of Agriculture and Rural Development Nguyen Xuan Cuong said that because the economic value of rice has not been high, the agricultural industry should change its goal focusing on other profitable products such as fruits and seafood in accordance with the world market's demand and climate change adaptation. Int'l arrivals to Vietnam increase 25 percent over last year According to the information from General Directorate of Tourism, Vietnam received more than 7, 2 million international tourists in the first nine months of 2016, increasing 25, 7 percent in comparison with the same period last year. Total tourism turnover from the foreign visitors attained US$ 8 billion. Accordingly, most of international visitor markets has reached a rapid growth rate, including Hong Kong (up 79 percent), China (57, 7 percent), Korea (nearly 40 percent), Thailand (34 percent), New Zealand (31, 7 percent), Italia (31 percent), Spain (nearly 28 percent), Russia (nearly 26, 5 percent), Netherlands (24, 4 percent) and Sweden (23, 8 percent)  Besides that, the number of domestic travelers reached 48, 8 million with its total turnover of VND 121, 800. Total turnover from domestic and international arrivals were nearly VND 297, 200 billion, an increase of 20 percent over the same period last year. VN runs trade surplus in first nine months Viet Nam enjoys a trade surplus of US$ 2.76 billion in the first nine months, the General Statistics Office (GSO) reported. The GSO announced that while goods marked a value surplus of US$ 2.76 billion in thr January-September period, services suffered a trade deficit of US$ 3.4 billion.  In the first nine months, overseas shipment of goods was estimated at US$ 128.2 billion, representing a year-on-year increase of 6.7% including US$ 37 billion of the domestic sector and US$ 91.2 billion of the FDI sector (including crude oil).   In the reviewed time, imports valued at US$ 125.4 billion, up 1.3% against the same period last year. The domestic sector imported US$ 51.4 billion of goods and the FDI sector US$ 74 billion.   Service export was estimated at US$ 9.2 billion, representing a year-on-year increase of 12.8%. Tourism export hit US$ 6.3 billion, accounting for 68.2% of the total and up 17.9%. Service import value was US$ 12.6 billion, up 3.4% against the same period last year. Of which, import value of transport services amounted to US$ 6.6 billion, accounting for 52.2% of the total and up 2.2%. Number of newly-established enterprises surges sharply Newly-established firms numbered 81,451 in the first nine months, up 19.2% in number and 49.5% in value, according to the General Statistics Office (GSO). The GSO reported that an enterprise was born in less than five minutes on average in the reviewed time. The new companies recruited 928,7000 laborers, accounting for 92.9% of the same period last year. In the January-September period, 20,510 enterprises resumed operation, posting a year-on-year surge of 59.6%. Experts attributed the surges to the introduction of the new legal framework  and the Government’s effective measures in favor of business development. Up to 80.3% of processing and manufacturing enterprises responded that their business performance were more stable and better in Q3. Only 19.7% of respondents reported difficulties. Business operation was forecast more positive in the last quarter. Especially, 85.6% were upbeat about business prospects. Meanwhile, 14.4% responded pessimistic outlook. The GSO also reported that in September, industrial production index jumped 7.6% against the same period last year. Banks not planning loan interest rate hike The director of a bank in HCM City says lenders have no plans as of now to increase loan interest rates, though they find it difficult to cut capital costs since deposit interest rates are tending to increase. But he said loans are only given to customers in “good health” to reduce risks and avoid bad debts. The competition to lend to borrowers with a good credit history is intense, and banks are vying with each other to offer them attractive interest rates. They are even ready to lend at below deposit interest rates to prime borrowers, most of them being strong companies. The common rates now are 6-7 % for loans with a three-month tenor. But analysts said banks are lending at various rates depending on the creditworthiness of the borrowers. Thus, those more likely to default have to borrow at higher rates. Many bank executives said with the credit market becoming highly competitive, risks come with the territory. Besides, most of the least creditworthy customers are small- and medium-sized enterprises (SMEs), which play a very crucial role in the economy. According to the Ministry of Planning and Investment, Vietnam now has 435,800 SMEs, or 97 % of all companies. Because of the prolonged global economic crisis, the SMEs’ registered capital fell sharply from VND569.5 trillion (US$25.5 billion) in 2008 to VND430.6 trillion now. To support them, the Government has rolled out several incentives to create favourable conditions for them to develop, including tax breaks and easy credit. But not all SMEs can borrow from banks’preferential credit packages. One of the main problems is red tape, which makes it very hard for small enterprises, including household businesses, to borrow. Another important reason is their low efficiency, which prevents them from finding good projects. History also shows that banks have struggled to recover loans from small businesses, increasing their bad debts in the process, and so are understandably wary. But the biggest problem is their inability to provide assets for mortgage, something on which banks insist. Credit institutions also often lack the information required to appraise the health of an SME or its actual capital needs. To enable SMEs to borrow, experts stressed the need for the Government to simplify administrative procedures. They also said banks have to start providing unsecured loans to support, especially when they have transparent accounts and feasible projects. The SMEs for their part should be transparent with their information to make banks feel secure about lending, they said. Government determined to sell stakes in large firms The Government will sell out its stake in the Vietnam Diary Products Joint Stock Company (Vinamilk) this year and in nine other large State-owned enterprises (SOEs) next year. This is part of a plan to divest its holdings in 12 SOEs that was announced by Dang Quyet Tien, a Ministry of Finance official. He said there would be a roadmap for the stake sales to safeguard the interest of the Government, spur equity market growth and avoid an adverse impact on its pullout from smaller businesses. The 12 companies are Bao Minh Insurance Corporation in which the Government has a 50.7 % stake, FPT Corporation and FPT Telecom (50.2 %), Vietnam Infrastructure Investment and Development Corporation (47.6 %), Hà Giang Mineral and Mechanics Joint Stock Company (46.6 %), Vinamilk (45.1 %), Vietnam National Reinsurance Corporation (40.4 %), Tiền Phong Plastics Joint Stock Company (37.1 %), Bình Minh Plastics Joint Stock Company (38.4 %), Samimexco (49.9 %), Sài Gòn Beer-Alcohol-Beverage Corporation (Sabeco - 89.59 %) and Hà Nội Alcohol Beer and Beverage Company (Habeco - 81.79 %). Among others, the Government plans to speed up its pullout from the two companies in which it has the biggest stakes and are also the country’s two biggest brewers, Habeco based in Hà Nội and Sabeco in HCM City. Sabeco is the biggest Vietnamese beer maker, producing 1.3 billion litres a year and having a 46 % market share. Habeco is the second largest, brewing 657 million litres. The schedule for listing Sabeco and Habeco has already been announced, with the former to go public and get on the HOSE board in December this year and the latter in the first quarter of 2017. Many Vietnamese and foreign investors have already expressed interest in becoming strategic shareholders of the two beer companies, with the beer market attracting more foreign interest than most other sectors thanks to its growth prospects. Vietnamese spent at least $3.4 billion on beer in 2015, excluding imported beers, a 41 % jump from 2010. But Sabeco and Habeco are also of great interest to foreign investors because they own massive assets like land and nation-wide distribution networks. For instance, Sabeco’s breweries alone add up to 573,718 square metres of land. Habeco has properties in many cities and provinces like Hanoi and northern provinces of Vinh Phuc, Phu Tho, Bac Ninh and Hung Yen. Can foreign investors acquire majority stakes in the two brewers? There is a catch. According to the latest law, real estate is a conditional business meaning foreign investors can hold no more than 49 % in a property company. This means foreign investors can buy stakes in them only if the two relinquish their real estate trading business, which is in their business licence. All this means the Government could struggle somewhat to sell its shares in the two brewers. Banks remain main buyers of company bonds In June last year Masan Consumer Holdings (MCH), a wholly-owned subsidiary of Masan Group Corporation (MSN), successfully issued five-year bonds worth VND9 trillion ($412.8 million). This was the largest ever private sector corporate bond issuance in Vietnam. The buyers were Vietcombank, which bought VND5.4 trillion worth, and other local banks like VIB (VND1 trillion) and BIDV (VND900 billion). Vietcombank Securities Company arranged the deal. Masan is one of several companies to issue bonds in the last few years, and the main buyers have been banks. By late June this year many commercial banks had invested considerable sums of money in corporate bonds. Vietinbank has invested VND54.11 trillion, Vietcombank, VND13.72 trillion and BIDV, nearly VND25.96 trillion. The main reason apparently for banks’ interest in buying corporate bonds is that their securities firms can manage the bond issuance for fees that are usually equivalent 2 % of the issue.   Besides, it is easier for the banks to sell the bonds than loans. For the issuing companies too, it is relatively straightforward to sell their bonds to the banks compared to other investors. This is because corporate bonds have moderate liquidity and the buyers need to have deep pockets. Mekong delta region restructures agricultural production for cattle breeding The Mekong River Delta’s livestock production did not seem to suffer much damage from the recent drought, unlike the cultivation and fishery sectors. To overcome the consequences of the drought and reduce the adverse impacts of climate change, many provinces in the Mekong River Delta have shifted to livestock production to earn a living. Agriculture is a spearhead economic sector of the Mekong delta region, but for a long time local provinces have only paid attention to developing cultivation and fishery.  Livestock production hasn’t received its due concern and is carried out by households on a scattered scale, resulting in low economic effectiveness. Nguyen Van Tranh, Deputy Director of Ca Mau Province’s Agriculture and Rural Development Department, said, “Ca Mau has identified a number of species for livestock production. Raising bees for honey is an advantage for the province. We can also raise swallows, which aren’t affected by either drought or salt water intrusion. We’ll also focus on raising sea ducks.” In the current situation, Mekong delta farmers have raised their awareness of restructured domestic animals from traditional species, including poultry, cows, and pigs, to the ones which don’t depend as much on water resources, like sea ducks, goats, rabbits, swallows, bees, and snakes, and take full advantage of natural food sources. In past years, sea ducks have been bred as part of pilot schemes in Tien Giang, Bac Lieu, and Kien Giang province, which have proven to be able to adapt to drought and salty water intrusion hit areas. Nguyen Van Trong, the Deputy Director of the Department of Livestock Production of the Ministry of Agriculture and Rural Development, said, “The Mekong delta region has advantages for livestock production regarding diverse species. We now need to focus on technical solutions and agricultural extension measures. The most important solution is to choose the right species for salt water intrusion areas.” Recently, the Institute of Animal Sciences for Southern Vietnam proposed that the government encourage people, cooperatives, and enterprises to invest in new technology to improve productivity and called for more studies on purebred breeds on a large scale.   Deputy Minister of Agriculture and Rural Development Vu Van Tam insisted that the ministry would ask the government to increase the budget allocation for the industry and put forward more technical solutions to develop livestock production in the Mekong River Delta. He added, “The Ministry of Agriculture and Rural Development has realized that the Mekong delta needs to tap its advantages in animal husbandry to compensate the losses caused by salt water intrusion and drought. Livestock production should become a promising sector that helps us turn difficulties into advantages.” Developing animal husbandry should be considered an advantage for the Mekong delta region. Local farmers should attach importance to the industry as much as to the cultivation and aquaculture. Closed production models should be built to link value chains from production to food processing, breeding, and product selling.  Linking for economic development in Vietnam’s southeastern region The southeastern region is one of Vietnam’s key economic hubs and a gateway linking Vietnam and the world. It has many advantages in developing industry and services. During the current international integration, its provinces should enhance their links to share sustainable growth.    In recent years, southeastern provinces have developed dynamically with high economic growth in electronics, software, commercial services, logistics, finance, telecommunications, and tourism. The region comprises HCMC, Ba Ria-Vung Tau, Binh Duong, Binh Phuoc, Dong Nai, Tay Ninh, Long An, and Tien Giang. The region leads Vietnam in transportation expansion and economic cooperation with other countries in Southeast Asia. In the first half of this year, the region attracted the most foreign direct investment with almost 52% of newly registered projects, 62.5% of projects to increase investment capital, and more than 42% of the total investment capital of Vietnam. Its export revenues account for nearly 60% of the nation’s total. The region’s economic openness index, measured by average-trade-to-GDP, was nearly 110%, compared to Vietnam’s 70%.  Its ratio of investment to GDP is 50%, 1.5 times higher than the national average, and its economic growth rate is 1.4 to 1.6 times higher than the national average. The southeastern economic zone has developed a satellite network around Ho Chi Minh City linked by open corridor routes. It has connected to industrial zones and industries including oil and gas exploitation and processing, steel rolling, electricity, IT, chemicals, fertilizers, and raw materials. Although the region has many clear advantages, its current growth remains modest. At a recent Southeast Region Economic Forum in Ho Chi Minh City, Vo Van Tu, Director of Lam Dong province’s Center for Trade Promotion, said: “First we need a competent steering committee which includes central ministries and agencies to conduct master-planning to ensure the region’s future growth. We lack a mechanism and policies to realize such planning. Our current situation is that provinces do what they want instead of following a master-plan.” To improve the quality of the region’s economic growth, human resources, and infrastructure, Do Ha Nam, General Director of Intimex Group, which exports pepper, cashew, coffee, and other farm produce, said: “Why don’t we connect transportation between the region’s cities and provinces to attract more investors.  For instance, a number of provinces like Binh Duong now have good industrial infrastructure and want to expand investment in other localities. But they can’t realize these plans due to a lack of transportation and poor infrastructure.” To turn the southeastern region into a hub of the garment and textile industry, which accounts for 60% of Vietnam’s export revenues, provinces should invest more in human and material resources. Doctor Vu Thanh Tu Anh, Director of Research at the Fulbright Economics Teaching Program, said “Ho Chi Minh City and enterprises should invest in new designs, schools, and personnel training institutes for the sector to create fashion brands.” VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR