BUSINESS IN BRIEF 17/11 AEC boons yet to show Though the ASEAN Economic Community is expected to significantly benefit Vietnamese exports via import tariff slashes, domestic enterprises are finding it difficult to boost exports for various reasons. This week, Nguyen Van Minh, deputy director of locally-owned farm produce exporter Clean Food Co., Ltd., will visit Thailand and Indonesia for the fourth time seeking opportunities to export, in a strategy to expand the company’s regional markets.  Minh told VIR that he has been trying to expand exports in regional markets, such as Thailand, Singapore, Cambodia, and Indonesia. “However, it is difficult. Though the ASEAN Economic Community (AEC) offers tax cuts, these nations have their own technical barriers to protect their local production bases.”  Since January, Minh’s firm has only been exporting fruit products to Myanmar and the Philippines, with the turnover rising 15 per cent year-on-year. These two nations are importing 22 per cent of his firm’s export volume from the over 15 markets in Asia.  Nguyen Ton Quyen, chairman of Timber and Forest Product Association of Vietnam, also claimed local wood product exporters find it challenging to enter the ASEAN markets. Despite AEC tax cuts, firms cannot increase exports to these markets due to their low demand for Vietnamese products. Deputy Minister of Planning and Investment Nguyen Chi Dung said that even though the AEC has been effective for ten months, local enterprises still encounter difficulties when trying to expand exports and have yet to reap the benefits of the community.  Over the past ten months since the establishment of the AEC, Vietnam suffered from a trade deficit of over $4.9 billion towards other ASEAN nations, higher than the $4.2 billion in the same period last year.  In the first ten months of this year, Vietnam’s intra-ASEAN export turnover hit $14.2 billion, down 7.6 per cent on-year, when the figure reached over $15.4 billion (down 3.1 per cent against 2014). According to the General Statistics Office, since early this year, in addition to technical barriers erected in ASEAN markets, the price of many key Vietnamese items in these markets have also been reduced by low demand. This brought down the export turnover of many items, such as mobile phones and spare parts (5 per cent), transportation equipment (27.2 per cent), vegetable and fruits (17.9 per cent), and steel (27.7 per cent). “Local products are often less competitive than those from regional markets in terms of prices and samples, and even quality. This is why local firms are finding it difficult to boost exports to these markets,” Dung said. According to the Ministry of Planning and Investment, since early this year, Vietnam has enjoyed on-year export growth in only three ASEAN markets, Myanmar (up 21.1 per cent), the Philippines (up 13.8 per cent), and Thailand (up 11.6 per cent). Meanwhile, Vietnam’s ten-month export turnover reduced in other regional markets, such as Indonesia, Malaysia, Singapore, Laos, Cambodia, and Brunei.  Nguyen Vu Loc, CEO of locally-owned farm produce exporter WestFood,  said that while firms from other ASEAN nations are supported by their governments in expanding export markets, it is not the case in Vietnam.  For example, if Thai firms export fruit products to the EU, they enjoy a preferential import tariff of 0 per cent, as agreed by both sides. Meanwhile, the rate on the same products can reach up to 17 per cent for Vietnam. Binh Son Company to produce over 1 mln tonnes of products by year-end The Binh Son Refining and Petrochemical Company (BSR) will produce more than 1 million tonnes of products between now and the year-end, increasing its total yearly output to 6.91 million tonnes of products, 100,000 tonnes higher than the 2015 volume. Earlier on November 9, BSR announced it had fulfilled this year’s output target of 5.8 million tonnes of products, 52 days ahead of the schedule.  According to the company, the early fulfilment is attributed to the safe and stable operation of Dung Quat Refinery at an optimal capacity of 105 to 107 percent. In addition, this year’s favourable weather has facilitated crude oil imports and product sales. After six years of operation, Dung Quat Refinery has contributed 133 trillion VND (6 billion USD) to the State budget and earned 785 trillion VND (35 billion USD) in revenue. The factory has sold about 43 million tonnes of products, meeting 40 percent of domestic petrol demand. BSR is focusing on upgrading and expanding the factory to raise its capacity from 6.5 million to 8.5 million tonnes per year, which is scheduled to be completed in 2022. The factory will be equitised in 2017. US’s Riverside city, Can Tho seek partnerships Authorities in the Mekong Delta city of Can Tho discussed investment and trade cooperation with William Bailey III, visiting mayor of Can Tho’s twin US city Riverside, on November 15. At the working session, Nguyen Minh Toai, Director of the municipal Industry and Trade Department, proposed that companies from the two localities should ramp up joint projects in a numbers of sectors, including logistics, rice production and trade, fisheries, garment and pharmacy. Toai expected Riverside to be a gateway to the US market for goods from Can Tho. For his part, Bailey said he will discuss and delve into the proposal with US firms back home. He introduced the Riverside development programme on sustainable farming and welcomed businessmen from Can Tho to establish their agribusiness in his city. He said many tertiary and higher education facilities in Riverside are willing to share their findings on advanced agricultural technologies and models of high-tech incubator with Can Tho. Riverside is boosting the import of new types of Asian rice to serve increasing local demand, mostly from Asian overseas students and immigrants, noted Bailey. He added that Can Tho’s quality and tasty rice varieties will always be a top option of his city. Riverside is an emerging logistics hub of California State, opening great opportunities for cooperation with the Mekong Delta city in the field, said the US mayor. Dao Anh Dung, Vice Chairman of the Can Tho People’s Committee stressed that bilateral investment and trade ties will give a boost to the two cities’ amity and the Vietnam-US relations as well. In 2015, Can Tho and Riverside signed a cooperation pact and officially set up the twining relations. Vietnamese, German parties hold dialogue on SMEs The fifth dialogue between the Communist Party of Vietnam and the Social Democratic Party of Germany (SPD), themed “Developing small and medium-sized enterprises in Vietnam and Germany”, took place in Hanoi on November 15.  Speaking at the opening ceremony, head of the Party Central Committee’s Commission for External Relations Hoang Binh Quan said the Vietnamese Party and State highly value SMEs, evidenced by the issuance of support policies and incentives.  The 14 th NA is discussing the promulgation of the Law on SMEs support, he said, adding that the dialogue is a good chance for mutual reference and learning.  Vice President of the German parliament Edelgal Bulmahn, for her part, said SMEs are a driver of German economy as they account for 90 percent of the total.  With three sessions, the dialogue focused its discussion on the significance of SMEs in the economy, experience in SMEs development, opportunities and challenges to SMEs, relevant policies and guidelines of each Party.  Participants proposed practical measures for SMEs innovation in the new period.  At the closing ceremony, both sides shared the view that discussions at the event provide them a source of reference for sustainable development and make practical contributions to the implementation of the Hanoi Joint Statement on the Vietnam-Germany strategic partnership issued in October 2011. Phu Lac wind power plant switches on The Phu Lac wind power plant located in the Tuy Phong district, central coastal Binh Thuan province, will be completed on November 25 after 14 months of construction. The project has a total investment of nearly 1.1 trillion VND (49.3 million USD), including 85 percent of loans from the German Development Bank (KfW). This is the first project that the BinhThuan wind power JSC has borrowed with interest from Denmark via KfW Bank. In September, the plant successfully put its first turbine into operation and connected with the national power grid. The Phu Lac Wind Power Plant, in its first phase, has a total capacity of 24MW which uses the technology of Denmark-based Vestas brand with 12 piers. After going through Phu Lac transformer station, the power source was officially connected with the 110KV Ninh Phuoc-Tuy Phong transmission line of the national power grid, supplying additional power for Binh Thuan province and the southern provinces. Pharma sector urged to tap big growth potential Vietnam’s pharmaceutical sector has tremendous potential for growth, its numerous structural weaknesses notwithstanding, experts say. Le Van Truyen, a former deputy health minister, told a recent seminar in HCM City that the country’s drug market had expanded at 17-20 percent a year in 2010-15, the 17 th fastest growth rate in the world. It is expected to maintain a growth rate of over 17 percent next year, he said. According to the Vietnam Industry Research and Consultant , per capita drug consumption was worth 4.2 billion USD last year, double the 2010 figure. “Vietnam is considered an emerging market (Pharmerging). Currently, there is a big difference in p er capita consumption between developed and emerging countries (609 USD versus 91 USD), which means that Vietnam’s pharmaceutical market has more room to grow,” he said. Domestic production met only 45 percent of demand last year, and the country had to import a large volume of products, he said. "Local producers import 90 percent of raw materials they need for drug production. But they focus mainly on generic drugs, with very low expenditure on R&D," he said. Despite challenges, the country’s growing population, heightened health awareness among the middle class, and the Government’s policy to develop the industry provide ample stimulus for growth, according to Truyen. Besides, with costs increasing in developed countries, many multinational drug companies are looking for cooperation with Vietnamese companies to outsource production, with many eyeing stakes in local companies.  Dang Tran Hai Dang, deputy director of research at Vietinbank Securities, said pharmaceutical products are an essential item. He quoted the Business Monitor International as saying the industry would continue to enjoy double-digit growth of 11.8 percent for the next five years. "The industry’s potential is reflected in pharmaceutical stocks, with the sector always topping growth rates and every listed firm seeing an increase in price," he said.  All listed firms achieved good growth in terms of both revenue and profit in the first nine months of this year, he said. For the reasons mentioned above, pharmaceutical stocks have remained attractive to investors though most of the listed firms have run out of room for foreign ownership.  Of the 15 listed pharmaceutical companies, only Domesco Medical Import Export Corporation (DMC) in September removed its limit on foreign ownership while the others, including DHG Pharmaceutical JSC (DHG) and Traphaco JSC (TRA) are yet to make any decisions.  Foreign investors now own 51.7 percent of DMC, and less than 49 per cent in the other two firms.  Foreign investors’ expectations have boosted these companies’ stocks since Decree 60/2015/NĐ-CP was issued in June 2015, allowing the removal of foreign ownership limits in listed companies. The stocks have gone up by 70 percent in the last 12 months. Housing market keeps developing         The housing market will continue to develop, especially the mid-range apartment and townhouse segments, thanks to the improved quality of the country’s economic growth, experts told a conference in HCM City yesterday. Le Anh Tuan, head of research at Dragon Capital Group Limited, told the conference titled “Real-estate: Building the future” that Viet Nam is among top emerging markets in terms of GDP growth. Furthermore, its quality of growth is good as seen from the reducing credit growth and inflation in 2015-16 compared with 2004-11. Private consumption has also surged, he said. Other factors that would boost the housing market include the rapid growth of the middle-class, which is expected to jump from 12 million in 2012 to 33 million by 2020, he said. The rise of the private sector and the resultant boost to productivity, the rapid infrastructure development and the stable economy would be other important factors, he added. Nguyen Tran Nam, chairman of the Viet Nam Real Estate Market, concurred saying, “Demand and supply will continue to grow like they have since the beginning of 2014.” Nguyen Thi My Phuong, CEO of Tien Phuoc Real Estate Joint Stock Company, said she is totally optimistic about the future of the housing market. “Since the beginning of this year, the market has witnessed strong growth in all segments -- apartments, villas, townhouses, and land. “Prices have increased in all segments. The number of transactions has risen sharply at projects with a good location and developed by prestigious developers.” A Savills Vietnam executive was also optimistic about the market saying it would be healthy in 2017. Participants agreed that while both supply and demand would increase in all segments, the mid-range and townhouse categories would rise the fastest. Tuan said sales of luxury housing peaked in the fourth quarter of last year, and demand and prices are set to fall while supply has kept increasing. In the first nine month of this year sales in this segment has been down 10 per cent, he said. Supply, demand and prices of mid-range apartments and townhouses would rise from now through 2018, he said. Nam said with the growing population, every year the country needs around 100 millions square metres of housing. Rapid urbanisation has brought huge numbers of people to cities, pushing demand up there, he said. But he warned that there is still a mismatch between demand and supply. “Supply has increased, demand is growing, but they do not meet each other because they are in different segments.” Developers are focusing greatly on the high-end segment while 70-80 per cent of the demand is in the low and mid-end segments, he pointed out. “There is a discrepancy in the property products structure.” An executive from a construction company said projects with high quality and affordable prices are winners whatever segment they are in.       Seafood exports to hit US$8 billion this year Aquatic product exports are expected to reach US$8 billion this year, forecast Ha Cong Tuan, Deputy Minister of Agriculture and Rural Development. Mr Tuan attributed the results to good export prices and reasonable prices of input materials. Minister of Agriculture and Rural Development Nguyen Xuan Cuong said seafood is a key sector that helps the agriculture achieve the set growth. The General Department of Fisheries has actively implemented measures to remove difficulties and promote production. The Department staff have worked with four central provinces to iron out obstacles to accelerate aquaculture development and discuss measures to raise natural seafood resources and to ensure safety for the exported shrimps. Earlier, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe forecast that seafood exports will reach around US$7 billion this year. However, Mr Hoe also cautioned domestic businesses to be prepared to confront a fierce competition on the global seafood market where many countries are promoting seafood exports. According to the MARD report, in the first ten months of this year seafood exports increased by 5.9% to US$5.7 billion against the same period last year. The US, Japan, China and the Republic of Korea were the four largest importers of Vietnam seafood in the first nine months of this year, accounting for 54.1% of total exports value. In the reviewed period, export markets which saw a sharp growth included China (up 51.1%), the Netherlands (14.14%), the US (14.3%) and Thailand (10.8%).      In Vietnam, cheap cosmetics pose risk Cheap cosmetics that are ‘unofficially’ imported into Vietnam have increasingly become consumer favorites, yet are more than likely low-quality, counterfeit versions of famous brands. Locally referred to as ‘my pham xach tay,’ which means portable goods flown into the country in carry-on luggage, they are not subject to expensive import tariffs. With Vietnamese people paying more attention to their appearance, such cosmetics have been in high demand despite their risks. The beauty goods are sold openly at markets, overwhelming buyers with the sheer variety of products claimed to be imported from the US, the Republic of Korea, Japan, or elsewhere. At one corner stall in Tan Dinh Market in District 1, Ho Chi Minh City, lipsticks, eyeliners, face powders and body lotions are all among the products on offer. “Japanese face powder is sold for VND60,000 [US$2.65] per box while American equivalents are offered for sale at VND100,000 [US$4.41] a jar,” one merchant explained. She directed her buyer’s attention to the Japanese letters on the product labels to guarantee their origin, reiterating that they were of high quality. At another stall in Vuon Chuoi Market in District 3, one type of body lotion cost VND550,000 (US$24.28), half of what its official price is. The quality is similar to that offered in official stores, the vendor asserted, explaining that it was sold at a cheaper price because it was ‘hang xach tay.’ Quynh Chi, owner of an online cosmetics shop, said that the products are often brought to Vietnam in passenger luggage or through transport services. Some people even organized trips to foreign countries to buy their merchandise, Chi continued. According to Chi, who lived in Japan for a period of time, beauty products in the East Asian country can be faked, but the quality is not always the same as the official goods. Consumers are sold on the authenticity of the products when they look at the foreign labels, not realizing that these product guarantees can be counterfeited as well, said Thanh Thinh, director of a distributor of imported products. Consumers' blind preference for foreign merchandise has contributed to many being unaware of the potential for the goods being of low quality, Thinh elaborated. Fake goods are hard to identify without the evaluation of competent authorities, she added. According to other experts, purchasing portable beauty products from online shops in Vietnam also poses other risks, including non-existent refund policies and incorrect orders in terms of sizes and colors.   Auto manufacturer Truong Hai hopes for policies to protect domestic industry As the 2018 deadline to remove tariffs on completely built cars imported from the ASEAN bloc looms, domestic auto manufacturers are banking on the possibility that the government will have some measures to control imports of completely built cars. "When there are sound development policies, including controlling imports of completely built cars and protecting domestic assembling and manufacturing industries, and when the domestic market is big enough, the automobile industry will bring huge economic, societal, and technological gains,” said Tran Ba Duong, chairman of the board of directors of Truong Hai Auto Corporation. In 2018, as part of its commitments under the ASEAN Economic Community, Vietnam will remove all tariffs on completely built cars imported from the ASEAN. The domestic automobile industry has only a year to gear up for the expected competition.  “If policies are unclear, many car manufacturers and assembly plants will switch over to importing. And when the domestic car market explodes, completely built units will be imported to meet the demand, causing significant trade deficit. The automobile, mechanical, and other supporting industries will fail to meet their objectives, and society will be affected as workers lose their jobs,” Duong added. In its expansion plan of Chu Lai-Truong Hai Complex for 2016-2018, Truong Hai plans investing nearly US$1.4 billion to expand or build new car and part manufacturing plants as well as research and development centres. According to design, by 2018 the complex will have eight assembly plants, 19 supporting industrial plants, five logistical companies, and several other service companies, which will employ 150,000 workers compared to the 60,000 today. Duong said the company has invested a total of US$1.4 billion from 2002 to October 2016 in five lines of vehicles, including buses, trucks, and cars carrying the Mazda, Kia, and Peugeot brands.  “We picked international brands that had no plants in the ASEAN or are hoping to expand in the region. We want to target both the Vietnamese and foreign markets,” he said. Amidst the disconcerting uncertainty, another automaker is also expanding production. Huyndai Thanh Cong Auto Company and Korean Hyundai Corporation have just reached an agreement on establishing an auto assembly joint venture in the northern province of Ninh Binh.  The JV will operate manufacturing activities, while Hyundai Thanh Cong will continue to run the distribution, according to Le Ngoc Duc, general director at Hyundai Thanh Cong. The deal will bring a US$450-million auto manufacturing cluster to Ninh Binh that will employ 8,000 workers to make Hyundai cars for both the domestic and foreign markets. Many car producers in Vietnam are hesitant to make large investments because the import tariff on car parts is currently at 10-30% and there is no sign of an upcoming change. The sentiment persists despite the oncoming erasal of import tariff on completely built units in 2018. “If the government leaves companies to fend for themselves, they may go bankrupt. When they stop operations, there will be no domestic jobs and imports will dominate,” said Truong Trong Nghia, a National Assembly deputy of Ho Chi Minh City. Car sales reached a record in 2015 with 245,000 units, an increase of 55% from 2014, according to data compiled by the Vietnam Automobile Manufacturers’ Association (VAMA). Total sales as of October, 2016 also went up 30% on-year. Imports are also on the rise. Imports of completely built cars in the first ten months of this year were up 22% on-year. With taxes lowered to zero in 2018, this trend might snowball. Thanks to a growing middle class, the Vietnamese car market is promising, both to domestic and foreign carmakers. However, it remains to be seen whether Vietnam could benefit from this demand.  There is heavy competition to attract auto manufacturers within the ASEAN, with some countries far ahead of Vietnam. After 50 years of development, the Thai auto industry now consists of 17 auto assembly companies and up to 2,400 domestic and foreign supporting companies. Vietnam, by comparison, has 13 auto manufacturing and assembly companies but only 160 firms providing parts. With a population of 60 million people – far smaller than Vietnam’s – Thailand’s annual output of 2.1-2.4 million cars is in the world’s top 10, far exceeding the 200,000-300,000  cars per year produced in Vietnam. Malaysia and Indonesia are also vying for a larger share of the business. The Indonesian auto industry is growing 20% on annum, selling over 1.2 million cars in 2013. It considers automobiles a core industry in its 2011-2015 economic masterplan, known as MP3EI. Meanwhile, Malaysia has created its own range of car brands. The Philippines, on the other hand, offers a lesson to the contrary. Lacking government support, its auto industry with an output of 200,000 cars per year was squeezed by imports, as low taxes on completely built cars from the ASEAN and its trading partners forced companies to switch from manufacturing. Big C announces upgrades in 13 stores Big C has announced that it will make significant investments in 13 supermarkets nationwide to upgrade them to retail trade centres as part of a strategic plan to rebrand its image and position the company for future success. Specifically, the retailer said it will invest roughly US$30 million over the next few years to upgrade and rebrand 13 out of its current portfolio of 34 supermarkets to that of a high-end commercial centre. The move will allow the company to expand its traditional supermarket offerings to new contemporary shopping venues spanning an array of specialty shops, fashion boutiques and fine-dining restaurants. The new centres will feature an all-new blend of contemporary styling coupled with traditional ambiance, offering customers lower prices and access to expanded first-rate quality products, including the company's private label products. Cashew nut prices increasing on tight supplies Prices of cashew nuts are going through the roof worldwide due to adverse weather conditions earlier this year, said speakers at an industry seminar on November 15 in the central city of Danang. Excessive heat and drought conditions linked to climate change have affected cashew production throughout Africa and Asia, while processing plants in India have been shuttered due to rising labour and other costs. Vietnam suffered its worst drought in nearly a decade resulting in the cashew crop down about 10% this year compared to a typical year, resulting in growers demanding and getting much higher prices. The International Nut and Dried Fruit Council has forecast worldwide production of cashews for 2016 to dip by about 4% to 708,000 metric tons with both the quality and quantity of the crop declining as well. Consequently, prices have shot up on the global market by about 20% to roughly US$4.20 a pound, said the speakers and it is likely the shortages and higher prices will carry over into next year as well. Vietnam and India are the two largest producers and exporters of cashew nuts. The two countries process raw nuts that they produce as well as the raw material they import from Africa, including the Ivory Coast, Tanzania and Benin. The poor yields meant that packers in Vietnam, who had overcommitted their sales, were forced to delay shipments. This in turn caused a shortage on the European market, further driving up prices. Traders are now nervous about the cashew rally, noting that the higher prices will most likely incentivise more production for next year, leading to a sharp fall in prices, said the speakers. The high prices are likely to worry cashew buyers including large US and EU supermarkets and other retailers and food processors who use cashew nuts for a range of foods including biscuits, cereals and sauces such as pesto. On the demand side, they forecast reduced demand from large retailers, who will next month start tendering their purchase orders for 2017 at current prices, which will force them to reduce the quantities they contract for. A decent crop next year combined with reduced purchases could set up next year’s market up for a drastic drop in sales prices, which could result in massive losses for growers in Vietnam if they are not careful. Meanwhile, nut lovers may take comfort from the expected bumper almond harvest in California, which on average produces about 80% of the world’s supply. Almond prices have dropped 50% from last year. Almonds are now the cheapest tree nut, priced between US$2.25 and US$3 a pound depending on the grade, compared with cashews, pecans, Brazil nuts, walnuts and pistachios that are all above US$3.50. This is a complete 180-degree-turnround from last year, said the speakers, adding that they expect good sales of almonds for 2017 as supermarkets will start substituting almonds for cashews in their tenders due to the lower sales price. Schneider Electric Vietnam opens “Green Electrician” Lab Schneider Electric, the global specialist in energy management and automation, with the support of the Schneider Electric Foundation, DEG - a subsidiary of the German Development Bank, and ASSIST, a non-governmental international capacity building organisation, today opened the “Green Electrician” lab at Ly Tu Trong Technical College in Ho Chi Minh City. This lab will be used to train local youth within the framework of the project “Green Electrician, Education in Electricity for Employment” which aims to improve vocational training in the energy industry in Vietnam. This project focuses on technical and vocational education in electricity, sustainable energy management and entrepreneurship. The training programmes are directed towards local youths to help them gain access to stable employment opportunities. With state-of-the-art facility at the new lab, each year a minimum of 500 students are expected to get hands-on experience on energy training. “Schneider Electric believes that access to energy is a basic human right, and we are committed to put safe, reliable, efficient and sustainable energy within reach of every one,” Yoon Young Kim, country president of Schneider Electric Vietnam, Myanmar and Cambodia, said at the opening ceremony. “Currently in Vietnam, there are 1.4 million technicians entering the labour force each year, but only 15 per cent of them have formal vocational training, which could lead to energy inefficiencies and electrical safety issues. This lab is testament of Schneider’s collaboration with like-minded local partners who share the same vision and who want to make a difference.” To build teaching capabilities under the project’s criteria and requirements, Schneider Electric and ASSIST will train the teachers of Ly Tu Trong Technical College by the end of this year and the students will start their first courses in January 2017. As part of the project, a promotional campaign will be run in 2017 to create awareness and promote this vocational training programme. "The “Green Electrician" is one more success on the list of such co-operations between European companies and DEG in Vietnam. The funds for co-financing this Green Electrician project came from the develoPPP.de-programme of DEG. The programme encourages entrepreneurial commitment which achieves a particular development sustainability and broad effect. To date DEG has realised 53 develoPPP.de projects in Vietnam providing 10 million euros of develoPPP.de funds,” said Daniela Söhngen - Senior Investment Manager of DEG. “The idea behind is to promote private-sector initiatives that drive development. The project with Schneider Electric is a great concept that shows how entrepreneurial interest and developmental aims can complement each other perfectly.” Petrolimex doubles profit and about to go public Vietnam National Petroleum Group (Petrolimex), in which Nippon Oil and Energy Corporation holds 8 per cent, reported a significant rise in profit in the third quarter and is going to submit all documents needed to list its stocks by the end of this year. Petrolimex’s consolidated financial report for the third quarter showed that revenue decreased by 11 per cent on-year to VND29.27 trillion ($1.31 billion), but the cost of goods sold decreased by 13 per cent to VND25.9 trillion ($1.16 billion), compared to the VND29.76 trillion ($1.33 billion) in the same period last year. As a result, the corporation's net profit doubled to VND1.06 trillion ($47.5 million). In the first nine months of the year, Petrolimex’s revenue decreased by 22 per cent on-year because the WTI crude price averaged at $41.31 per barrel, down 19 per cent compared to the same period last year. The parent company's net profit was VND2.96 trillion ($132.7 million), up 55 per cent on-year. The consolidated pretax profit was VND4 trillion ($179.3 million), up 60 per cent on-year. Of this, gasoline trading contributed VND2.3 trillion ($103 million), accounting for 57.3 per cent. Return on equity was 15.8 per cent.  As of the end of September, Petrolimex's asset value stood at VND51 trillion. It invested VND2.3 trillion ($103.13 million) in its subsidiaries.  In the remainder of 2016, besides finishing procedures to list, leaders of the company said it would divest from its real estate arm PLAND JSC. They would also propose to the owner a plan to restructure Petrolimex’s gasoline and fuel distribution operations. The company is also preparing a new gasoline and fuel sales plan to meet the requirements stated in prime ministerial Decision 49/2011/QD-TTg on the emission criteria for new cars and motorbikes. In April, Petrolimex reached an agreement to sell an 8 per cent stake to Japanese JX Nippon Oil and Energy Corporation.  Petrolimex currently holds 55 per cent of the domestic petroleum retail market. The Ministry of Industry and Trade earlier decided that it would decrease the state's stake in the company to somewhere between 65 and 75 per cent. Tetra Pak invests $100 million in new Vietnam-based packaging facility Tetra Pak®, the world's leading food processing and packaging solutions company, today announced its $110 million investment in a state-of-the-art regional manufacturing facility near Ho Chi Minh City, Vietnam, to serve customers across the region. The investment is prompted by increasing consumption volumes, with the 2016 total packed liquid dairy and fruit-based beverages intake at 70 billion litres across ASEAN, South Asia, Japan, Korea, Australia and New Zealand. Additionally, over the next three years, these markets are likely to grow at a healthy 5.6 per cent per annum, with products packed in Tetra Pak cartons projected to grow at a much faster rate as compared to other packaging formats such as bottles and cans. “Over the years, we have seen substantial growth of our products, driven by a wide portfolio and a number of innovations that we have introduced in the market. Hence our investment in a new plant, which will be our fourth packaging material factory in the region, providing us expansive coverage and scale, allowing us to serve our customers faster and better,” said Michael Zacka, regional vice president, Tetra Pak South Asia, East Asia and Oceania. “This decision is a strong reflection of our commitment to the region and our firm belief in its future potential.” The greenfield factory is expected to start commercial operations by early 2019. Situated near Ho Chi Minh City, the country’s economic hub, it will be ideally positioned to meet the demand for packaging material of food and beverage manufacturers in Vietnam, other ASEAN countries, Australia and New Zealand. “For manufacturers based in Vietnam, the new factory will bring a host of unprecedented benefits such as consistent supply, reduced lead time, efficiency and flexibility,” said Robert Graves, managing director of Tetra Pak Vietnam. The factory will have an expandable production capacity of approximately 20 billion packs per annum, across a variety of packaging formats, including the popular Tetra Brik Aseptic and Tetra Fino Aseptic. With a strong focus on sustainability, the site will adopt a host of global best practices to minimise the environmental footprint, including the utilisation of a high proportion of renewable energy sources. This investment will complement Tetra Pak’s three long-standing production facilities in Singapore, India and Japan, building on the wealth of experience collected throughout the company’s historical tenure. Together, the factories will enable the company to offer more innovations, efficiency and customer service to meet the rapid growth in Asia and in Vietnam in particular. “The new factory reflects Tetra Pak’s confidence in the local economy, and will cater to a rise in domestic consumption for healthy, ready-to-drink beverages among the country’s growing middle class,” said Graves. “Two key attributes to this are the Vietnam’s real wage increase (the largest in Asia at 7.3 per cent), and growing consciousness among consumers on health issues and food safety.” In Vietnam, the dairy category, the country’s biggest category and a core business for Tetra Pak is projected to grow steadily, with per capita consumption potentially doubling to 28 litters by 2020 from 15 liters in 2010. Tetra Pak estimates the country will consume a total of 3.3 billion litres of packed liquid dairy and fruit based beverages in 2016. It foresees an average growth of 6.5 per cent per annum during the 2016- 2019 period. “Packaging is critical to the industry, and the new factory will definitely be a boost to the development of the local food and beverage industry, contributing to Vietnam’s socio-economic growth and integration progress into the regional supply chain,” said Graves. SCG Packaging starts building 2nd paper factory in VN SCG Packaging – a subsidiary of SCG, is pleased to announce the successful start-up of the second paper production line in Vietnam. The first paper reel of corrugated medium paper was rolled out in end of October 2016, which was initially set to be the second quarter of 2017. Mr. Sangchai Wiriyaumpaiwong, General Director of Vina Kraft Paper Co., Ltd. (Vietnam) said, “The success reaffirms SCG Packaging’s strong leadership in high-growth Vietnam market as the largest high-quality packaging paper producer. The new machine allows SCG Packaging to add more 243,500 tons per annum to its portfolio through the newly-installed capacity and gains from efficiency optimization, which is doubling its existing capacity in Vietnam and results in SCG Packaging’s total packaging paper capacity of 2.6 million tons per annum across strategic ASEAN countries including Thailand, Vietnam and Philippines.” “In addition, with strong commitment in sustainability, we put environmental awareness at the forefront. The new facility is mindfully carried out along with environmentally friendly self-sufficient co-generator power plant, raw material preparation and high-standard effluent treatment plant”, emphasized Mr. Sangchai.  The factory of Vina Kraft Paper Company Limited (VKPC) is a 70:30 joint venture between Siam Kraft Industry Company Limited (a subsidiary of SCG Packaging) and Rengo Company Limited (Japan). It is located at My Phuoc 3Industrial Park, Binh Duong (45 kilometers from Ho Chi Minh City) and has been the leading producer in Vietnam since 2009. Hai Phong Urban Transport Development Project gets longer The PM has approved to extend the Hai Phong Urban Transport Development Project till August 31, 2018. The project is invested with US$276.61 million, of which the total capital sponsored by the International Development Association (IDA) makes up US$175 million. The PM assigned the Hai Phong City’s People’s Committee to coordinate with the State Bank of Viet Nam and the Ministries of Foreign Affairs and Justice to complete legal procedures to extend the deadline of the project. The objective of the Hai Phong Urban Transport Development Project for Viet Nam is to improve urban accessibility and strengthen capacity for urban transport management and planning in Hai Phong. There are three components to the project, the first component being urban main road development. This component will increase urban accessibility through construction of a new east-west link (connected to main north-south links) for cross town traffic within Hai Phong and longer distance freight to and from Haiphong's port system. The second component is the transport improvement. This component supports transformation of the public transportation services along the Tam Bac-Kien An urban corridor, including measures to strengthen institutional development for public transport management, piloting of transformative approaches to fleet management, acquisition of new buses, and upgrading of infrastructure and facilities. Finally, the third component is involved capacity-building. FDI inflow in HN increases 2.6 fold The capital city of Ha Noi attracted a total registered capital of US$2.8 billion in 445 Foreign Direct Investment (FDI) projects over the recent 10 months of 2016, 2.6 times higher than the same period in 2015. Large FDI projects include the US$300-million research and development centre of the Samsung Electronics Viet Nam, the US$227-million Duong River Surface Water Treatment Plant and the Vietnamobile's capital increasing plan of US$208 million. The city has launched 98 Official Development Assistance (ODA) projects with the committed capital of US$4.8 billion and disbursed US$1.05 billion, accounting for 33.38% of the signed value and 22.1% of the commitment. Most of the ODA projects focus on urban traffic infrastructure development (56%) and waste water treatment (31.8%). In 2016 only, as many as 22,000 newly-established enterprises are expected to be set up in the city,  registering the capital of VND203,000 billion, up  19% and 42%, respectively. The capital’s gross regional domestic product is estimated to rise 8.03% in the year, the highest figure set over the recent six years. The growths of the construction and industry sectors will witness respective increases of 8.8% and 7.1%. The city will contribute VND173,846 billion to the State budget, 2.6% more than the set plan and up 16.2% year on year. In term of the Provincial Competitiveness Index (PCI), Ha Noi will rank 24th, jumping two steps compared to the previous year. Maybank Kim Eng and State Securities Commission of Vietnam renew collaboration Maybank Kim Eng and State Securities Commission (SSC) has renewed its collaborative cooperation and technical support framework agreement to advance the sustainable growth and long-term development of Vietnam’s capital market. Under the scope of the new three-year agreement, Maybank Kim Eng and SSC will collaborate to develop Vietnam’s securities market to elevate its status to an MSCI Emerging Market. This includes the sharing of best practices and standards on areas of risk management and controls, corporate governance and compliance, product development, standard accounting and reporting system.  “We are honoured to collaborate with SSC again. Vietnam, with its attractive demographics and rising economy, is not only an important market for us, but also an attractive one for global investors looking to tap into the ASEAN opportunity,” Maybank Kim Eng’s chief executive officer, Dato’ John Chong said. “With six local branches, Maybank Kim Eng is deeply entrenched and invested in the Vietnamese market. We are keen to share our regional expertise and experience gleaned from our operations in six ASEAN countries, to help contribute to the development of Vietnam’s securities market.” The new agreement strengthens the existing alliance forged in 2013 where a similar agreement was signed by the two parties.  “The joint efforts for the past three years have made significant inroads in the development of Vietnam’s securities market but the new agreement symbolises our intent to intensify that collaboration to further strengthen the infrastructure, efficiency and liquidity of the capital market to enhance its attractiveness to investors,” said vice chairwoman of SSC, Nguyen Thi Lien Hoa. Maybank Kim Eng is the first 100 per cent foreign-owned brokerage firm approved by SCC. Operating in Vietnam since 2008, Maybank Kim Eng offers a full range of financial services including brokerage, internet and mobile trading and research, investment banking and corporate finance advisory services. PVCombank registers to buy 4.1 million PSI shares PVCombank has registered to purchase 4.1 million shares of PetroVietnam Securities Incorporated (PSI) via matching order and negotiation-based trading from November 14 to December 8. The bank currently owns 6.13 million PSI shares, or a 10.26 per cent holding. The new purchase is a further step by PVCombank in acquiring 50.21 per cent and turning the securities company into a subsidiary. Mr. Nguyen Anh Tuan, Chairman of PSI, told VET on October 19 that being a subsidiary of PVCombank would be of mutual benefit, as PSI would have access to the bank’s customer network, including transaction points and office systems, which would improve its product diversification and cross-selling opportunities. From October 26 to November 7 PVCombank purchased almost 500,000 PSI shares to increase its holding from 9.32 per cent to 10.26 per cent. PVCombank has plans to purchase shares from four previous shareholders: 22.5 per cent from Vietinbank Capital, 6.7 per cent from the Vietnam Investment and Asset Trading Joint Stock Company (VNassets), 6.6 per cent from the PetroVietnam Trade Union Finance Investment Corporation (PVFI), and 4.6 per cent from the My Khe Vietnam Joint Stock Company (MKV), The swap ratio between PVCombank and PSI is set at 1:1, according to a resolution from PSI’s 2016 annual general meeting. PSI’s business plan is unlikely to undergo any significant change in the short term. “The business plan from earlier in the year will continue to be implemented,” Mr. Tuan said. “From 2017 the plan will be based on market circumstances and the general plan of PVCombank.” He added that PSI has secured all the benefits of investors, both local and international, and there is no change to its Board of Management. PSI targeted total revenue of VND88 billion ($3.94 million) and profit of VND5 billion ($224,150) this year. In the first quarter the government approved PVCombank continuing to restructure in the 2016-2020 period and the State Bank of Vietnam (SBV) will replace PetroVietnam (PVN) in representing State ownership. On June 3 the SBV officially approved a PVCombank restructuring plan that makes it one of the seven largest banks in Vietnam by assets. As at the end of 2015, PVN held 52 per cent of charter capital of PVCombank, or VND4.68 trillion ($209.43 million). SBV is now the largest shareholder. Financial protection strategy would improve natural disaster resilience Vietnam should have financial protection strategy to better protect its population and budget against the cost incurred from natural disasters, a workshop on Disaster Risk Finance and Insurance held in Hanoi on November 15 by the Ministry of Finance and the World Bank in Vietnam heard. Bringing together different financial instruments to fund response and reconstruction, such a strategy would be one component of a broader disaster risk management and climate change plan. Developed for the first time in Vietnam, the model provides the government with a better assessment of the likelihood and severity of losses from natural disasters. It can also be used to plan for the financial impact before they occur. The final model will be delivered by December. According to the catastrophe risk model presented at the workshop, Vietnam is likely to incur, on average, VND30.2 trillion ($1.4 billion) in physical damage every year due to floods, typhoons and earthquakes. Residential and public assets (buildings and infrastructure) would account for 65 per cent and 11 per cent of total damage, respectively. It shows that in the next 50 years, Vietnam has a 40 per cent chance of experiencing damage exceeding VND141.2 trillion ($6.7 billion) from typhoons, floods or earthquakes. Provinces in the north-central region that experience higher poverty rates are more likely to face higher economic losses. “Vietnam is one of the countries badly affected by natural hazards and climate change, resulting in heavy economic losses, mostly to the poor,” said Mr. Sebastian Eckardt, Lead Economist at the World Bank in Vietnam. “A strategic approach to improving the country’s resilience to such shocks will help safeguard livelihoods and sustain economic growth and development.” He added that supporting the development of this strategy is part of the World Bank’s priorities in its engagement with the Government of Vietnam. Participants at the workshop also discussed disaster risk financing instruments currently in use by the government as well as international experience. The government currently relies on a number of funding sources to finance disaster response and recovery, including contingency budgets at the central and local levels, specific budget allocations, in-kind State reserves, financial reserve funds, disaster prevention and control funds, risk transfer instruments such as insurance, and donor grants. There is, however, a heavy reliance on State budgets at all levels to fund post-disaster costs. Disaster prevention and control funds established at the provincial level are still subject to a number of constraints that prevent them from being fully operationalized across provinces, while innovative risk transfer instruments are in their infancy. “Establishing a financial system for risk management and disaster risk transfer is essential for Vietnam’s development,” said Mr. Nguyen Huu Chi, Deputy Minister of Finance. “Insurance in particular would be an effective solution, not only to ease the burden on the State budget and transfer risks to international markets but also to help raise awareness about the importance of planning to mitigate the effects of climate hazards and natural disasters.” Participants also discussed a number of options for the government to strengthen financial resilience, including developing a cost-effective financial protection strategy, making disaster risk finance an integral part of a broader disaster risk management and climate change plan, reviewing the policy, legal, institutional and operational frameworks for the fund for natural disaster prevention and control to strengthen the financial resilience of the provinces, and recognizing that the private sector is an essential partner. Vietbuild 2016 international exhibition kicks off in Hanoi The third Vietbuild 2016 international exhibition, one of the most prestigious events of the construction industry, opened in Hanoi on November 16, with the participation of 420 domestic and international enterprises. The event features 1,350 booths displaying a wide range of building materials, machinery and technologies, interior-exterior decorations, and real estate. According to Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association, the exhibition offers a chance for firms and management agencies to assess the property market. It also helps enterprises find drawbacks in their business activities, he added. The event will run through November 20 at the National Construction Exhibition Centre in Nam Tu Liem District.- Vietnam renewable energy week opens The Vietnam Renewable Energy Week took place for the first time in the Mekong Delta city of Can Tho on November 15-16. The event, co-hosted by the Steering Committee for the Southwestern Region, the Vietnam Sustainable Energy Alliance, and the Green Innovation and Development Centre (GIDC), featured an energy model exhibition, film screenings, two seminars on renewable energy development strategy for the Mekong Delta and practical initiatives for renewable energy. Participating experts and scientists at home and abroad were updated on the development of the renewable energy industry and interacted with policymakers, businesspeople and activists from social organisations in the field. Speaking at the event, member of the Steering Committee for the Southwestern Region Tran Huu Hiep said under the development goal until 2030 with orientations to 2050, the Mekong Delta is expected to become a centre for agro-fishery processing, electricity, support industry for agriculture, eco-tourism and services. To that end, the region should not rely on only fossil fuel but have to seek new and green energy sources. According to Hiep, the Mekong Delta holds the greatest potential of biomass energy thanks to its abundant amount of agricultural by-products, including straw, bran, risk husk and cattle droppings. More than 20 million tonnes of straw are being wasted each year since over 70 percent of them are burnt. In 2013, the Ministry of Industry and Trade issued a decision approving a master plan for biomass power development for the Mekong Delta until 2030 when 300MW of electricity will be generated from straw, sugar cane bagasse and husk. GIDC Director Nguy Thi Khanh suggested more incentives be provided for investment in renewable energy while the construction on new thermoelectric coal and nuclear power plants be stopped. JICA helps Hoa Binh with native pig breeding Authorities of northern Hoa Binh province and a JICA delegation reviewed the progress of a project on establishing a gene bank for Vietnamese native pig species and developing sustainable pig farming to conserve bio-diversity in the province at a meeting on November 16. The project, funded by JICA (Japan International Cooperation Agency) and the Japan Science and Technology Agency, is being carried out in Hanoi and Hoa Binh from 2015 to 2020 at a projected cost of 143.6 billion VND (6.52 million USD), with 100.7 billion VND sourced from the Japanese government’s non-refundable aid. It aims to conserve and develop genes of domestic pigs, contributing to sustainable breeding in Vietnam. In Hoa Binh, a preliminary survey will be conducted on native pig breeding along with experiments on food and nutrition. Furthermore, the project will also offer technical guidance to vets and Japan’s experience in brand marketing to farmers. Nguyen Thanh Son, Director of the Institute of Livestock Breeding and head of the project management board, asked Hoa Binh to arrange the counterpart capital worth nearly 8.6 billion VND for the project. Vice Chairman of the provincial People’s Committee Nguyen Van Dung said the province is determined to build trademarks for local outstanding produce, including pork, and will soon devise specific plans to ensure the project’s progress. Vietnam Foodexpo 2016 opens in HCM City The Vietnam International Food Industry Exhibition 2016 (Vietnam Foodexpo 2016) kicked off on November 16 at the Sai Gon Exhibition and Convention Centre (SECC) in Ho Chi Minh City. The event, held by the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, is the biggest trade promotion event of agro-fishery and food industry so far in the country. It featured 550 booths of 400 businesses from 30 Vietnamese localities and 15 countries and territories. The event introduced development of food industry over the past time, said Ho Thi Kim Thoa, Deputy Minister of Industry and Trade, at the opening ceremony, noting that the expo allowed firms to promote their brands and gain access to domestic and foreign markets. It focused on marketing Vietnam’s key export products such as rice, coffee, peppers and cashews, said Bui Huy Son, Vietrade Director, adding black garlic, brown rice milk and avocado oil were also displayed for the first time. Participants could also connect with wholesale and retail distributors and potential food importers and investors, he added. Information on the latest technologies in processing high-quality foodstuffs is also available at Vietnam Foodtech, which coincides with the Vietnam Foodexpo. Italia is selected as the Country of Honour at this year’s event. According to Cecicia Piccioni, Italian Ambassador to Vietnam, over 30 Italian food businesses showcased modern processing technology and unique food at the event. Through the expo, Vietnam-Italy trade promotion activities in food industry will be boosted, she added. The event runs through November 19. HCM City attends trade, tourism fair in Japan A delegation from Ho Chi Minh City participated in a fair to promote trade, tourism and business connectivity held by the Tourism Promotion Organisation for Asia Pacific Cities (TPO) in Japan on November 15. At the event, Le Truong Hien Hoa, Director of HCM City’s Tourism Promotion Centre, said the fair offered an opportunity for the city to connect with other TPO members and expand its tourism promotion. Over the past year, HCM City has signed two cooperation agreements with Incheon and Tongyeong cities of the Republic of Korea, thus promoting its tourism and receiving support in this field, he added. Representative of the organising board Shin Yeon-sung, TPO General Secretary, highlighted the bright future of tourism of Vietnam in general and HCM City in particular. He also praised HCM City for its active contributions to the development of the TPO as a member. Held by the TPO, the annual fair is a platform for Asia Pacific cities and travel agencies to seek partners, introduce their tour packages and expand business cooperation. It also provides a chance for TPO members to exchange information, conduct research projects and surveys as well as enhance cultural exchange and friendship between Asia Pacific countries and cities. Within the event’s framework, the regular meeting of the 29th TPO Executive Board is scheduled to take place on November 16. The TPO was established in 2002, of which HCM City is a co-founder and member of the Executive Board. Currently, the organisation consists of 78 cities and 38 businesses and non-government organisations from 10 Asia-Pacific countries and territories. Int’l conference promotes product safety, local exporters’ compliance Product safety and compliance to export markets’ requirements were discussed at an international conference in Ho Chi Minh City on November 15. The event was organised by the American Chamber of Commerce in Vietnam - HCM City chapter and the American Apparel & Footwear Association (AAFA ). Speaking at the event, Director General of German TUV Rheinland Vietnam Frank Juettner, said Vietnamese enterprises need to comply with legal regulations and the requirements of each export market. Vietnamese exporters need to focus on developing brand names and labeling to ensure their products meet international safety standards, Juettner said. He suggested that ministries, sectors and businesses develop a management system for a supply chain from materials to finished products, especially for apparel and footwear. AAFA Senior Vice President, Supply Chain Nate Herman said all stakeholders in a supply chain, such as producers, exporters and partners need to communicate closely with one another and comply with legal regulations. According to experts, Vietnam will need to join global supply chains and customs reform to fulfill its commitments it has made to join the free trade agreements (FTA), such as the Trans Pacific Partnership and the Vietnam – Europe FTA. Business representatives pointed to difficulties facing them in meeting the US requirements, particularly the safety requirements of each state. ASEAN finance ministers work to promote regional investment Finance ministers from ASEAN member nations gathered at a seminar in Jakarta, Indonesia, on November 15 to discuss investment opportunities in the region. Themed “ASEAN: Dynamic, Resilient and Inclusive Growth”, the 11th ASEAN Finance Minister’s Investor Seminar (AFMIS) brought together the ASEAN finance ministers and investors in and outside the region. Addressing the plenary session, Vietnamese Deputy Finance Minister Đỗ Hoàng Anh Tuấn shared his views on challenges facing Việt Nam and other regional countries and put forth possible solutions to the issues. These measures include the promotion of regional and international integration and economic reform to boost competitiveness and attract investment in the long term, which were widely supported officials and investors at the event. He also mentioned three major challenges of the global economy, which consist of its uncertain recovery from a periodical downturn, political instability and climate change impacts. Right after the opening ceremony, heads of the delegation held a dialogue with investors. ASEAN is now the 7th biggest economy in the world with a combined GDP of US$2,500 billion and a population of more than 600 million. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR