BUSINESS IN BRIEF 4/11 VN to build more transparent gov’t, continue restructuring economy Deputy Prime Minister Phạm Bình Minh said yesterday at the Việt Nam Summit 2016 that the country would continue to focus on restructuring the economy, renewing its growth model and integrating into the global production and value chain. Minh, who is also Minister of Foreign Affairs, said: "With a young and reasonably well-educated population, Việt Nam is poised to become an innovation hub in Southeast Asia." He said the country also attached great importance to "building a more transparent Government to serve its people and businesses". To create ideal conditions for investors, the Government has pledged to improve infrastructure, develop human resources and promote fair competition, he added. Minh said the two-day international summit in HCM City would act as a platform to help local and foreign businesses as well as global financial institutes better understand Việt Nam’s integration policies and development. Summit chairman Jon Fasman, who is bureau chief of The Economist magazine in Southeast Asia, said that Việt Nam’s economy was still going strong, even though growth in emerging markets appeared to be slowing. The Economist Intelligence Unit expects the country’s real GDP to grow by 6.8 per cent this year, and growth should be even higher next year, he said. Once one of the poorest countries in the world, Việt Nam has become a solid middle-income performer, while foreign direct investment (FDI) is surging, thanks to the government’s record of stable long-term economic planning.  Investment is poised to increase further as Việt Nam will benefit from a number of impending trade deals, including the Trans-Pacific Partnership (TPP), Fasman noted. The 12-country pact involves the US and Japan, two of Việt Nam’s most important trading partners. Policymakers are also paying close attention to climate change, particularly in the Mekong Delta, which could become a centre for research and investment in sustainable business practices. However, drought has put the agriculture sector and water resources under severe stress, according to Fasman. However, there is still room for improvement on the economic front. The government has promised to privatise some state-owned enterprises, but private-sector efficiency has slumped, Fasman said. In addition, an escalation in geopolitical tensions could undermine strong economic ties throughout the region, he added. Andrew Staples, director of The Economist in Southeast Asia, said Việt Nam, with a young population and relatively low wages, was well positioned to develop into a global manufacturing powerhouse. But tech-driven innovations such as automation, digitisation and artificial intelligence are radically reshaping the manufacturing sector around the world, he said. Factories of the future won’t much resemble the labour-intensive plants of the past, so new production capacity is unlikely to drive mass employment. Thus, Việt Nam should be prepared for the shift and try its best to be at the forefront of the tech-focused manufacturing revolution, Staples said. In agriculture, Fasman pointed out that the Mekong Delta, which provides the country with most of its food supply and is a significant source of export income, remained under severe stress. The country’s agricultural products are often of poor quality and its supply chains lack transparency, leading to popular concerns about its low added-value position in the global supply chain. Việt Nam’s produce is widely exported, but it has not successfully created a globally recognised brand, he said, adding that the conference would discuss how to make Vietnamese rice, coffee and shrimp internationally recognised premium brands. Addressing the relationship between Việt Nam and China, Bùi Thanh Sơn, deputy minister of Foreign Affairs, said in spite of the East Sea dispute, Việt Nam and China had the potential to co-operate in many fields.    “Việt Nam strongly supports resolution of the disputes in the East Sea by peaceful means, including diplomatic and legal processes. It also supports refraining from the use or threats to use force, in accordance with international law,” Sơn said. Last year, Việt Nam’s GDP topped US$200 billion and its per capita income was $2,100. Organised by the Ministry of Foreign Affairs and The Economist, the Việt Nam 2016 summit brings together leading voices from Government, business and finance, civil society and academia to discuss the opportunities and challenges facing Việt Nam. Featured topics included Việt Nam in the global economy, the future of manufacturing, feeding Việt Nam, building "Việt Nam Inc", the relationship between Việt Nam and China, geopolitics and the role of technology and social media to fight poverty.  Summit seeks “smooth sailing” for Vietnam’s economy The Vietnam Summit 2016, an annual conference on external economics, was opened in Ho Chi Minh City on November 3 morning under the theme “Smooth Sailing Ahead”.  The event, co-organised by the Foreign Ministry and the UK’s The Economist magazine, brought together leading voices from ministries, localities, international financial organisations, domestic and foreign businesses, and economists.  Opening the summit, Jons Fasman, Southeast Asian bureau chief for The Economist, said Vietnam Summit 2016 is a chance for the Vietnamese Government, enterprises, experts and scholars to learn about the country’s most pressing issues, discuss opportunities and challenges facing Vietnam, and seek answers to its development future.  Speaking on the Vietnamese Government’s policy viewpoints, Deputy Prime Minister and Foreign Minister Pham Binh Minh said the three decades of reforms have brought about enormous economic achievements, including high growth rates maintained for a long time.  However, Vietnam is facing a need for changes to ensure sustainable development, the Deputy PM said, adding that the Government wants to maintain a reasonable growth rate, at about 6.5 – 7 percent annually, in the next five years.  He stressed that to that end, it is necessary to promote productivity and application of advanced technologies and techniques to raise quality. Vietnam should also boost foreign trade, stimulate domestic market and production activities, and accelerate State-owned enterprise equitisation.  Minh said the Vietnamese Government is committed to designing transparent policies and providing the best possible conditions to ensure an equal and fair playground for enterprises and people. It has also encouraged localities to attract foreign investment, especially in industries using high technology, and create an effective competition environment.  At the summit, participants discussed issues pertaining to macro-economic policies and business climate in Vietnam such as the country in relation to the global economic situation, the future of manufacturing industry, business breakthroughs, building an industrialised Vietnam, and its position in the regional and global geopolitics.- Vietnam, EU firms seek to boost farm produce export Vietnamese and European businesses have shared their information about food safety standards and opportunities for farm produce and beverage products to enter in each other’s market once the Vietnam-EU Free Trade Agreement (EVFTA) becomes effective.  Vietnamese Deputy Minister of Industry and Trade Cao Quoc Hung told participants at a workshop in Hanoi on November 3 that Vietnam and the EU are scheduled to officially sign the deal in the next few months following the conclusion of negotiations in late 2015 and the announcement of the full text of the document in February 2016.  The agreement is expected to motivate bilateral trade and investment ties thanks to tax reduction and commitments regarding market access, he said.  The official added that the conference is a chance for businesses of both sides to update information about commitments in the EVFTA as well as the tax reduction roadmap and current regulations of both markets in terms of food safety, investment, distribution and licensing for food and beverage products.  Meanwhile, EU Commissioner for Agriculture and Rural Development Phil Hogan asserted that the EVFTA is a high quality deal that brings balanced benefits to both sides. Vietnam and the EU are economies that can supplement to each other for mutual benefit, he said.  Hogan also shared information related to the EU’s requirements for agricultural products and foodstuff, including their origins and production methods, along with food safety and environment-friendly standards.  Deputy Director of the Agro-Forestry-Fishery Quality Management Department Phung Huu Hao said Vietnamese farm produce has been sold in 160 countries and territories all over the world.  He expressed his hope to receive more support from the EU in upgrading equipment in quality control labs, as well as in training officials for the labs as well as inspectors in agriculture and food.  Participants at the conference also discussed various issues related to the import of plant and animal-originated products of Vietnam, the promotion of sustainable agriculture, the import and distribution of alcohol and spirits in Vietnam, as well as opportunities to invest in agriculture once the EVFTA takes effect.  Speaking at a press conference during his three-day visit to Vietnam from November 2-4, Hogan said that his entourage includes senior leaders of more than 40 European firms operating in agriculture and food processing, who want to seek partners in Vietnam.  The enterprises, coming from various countries such as Belgium, Bulgaria, Denmark, Finland, France, Italy, Spain and the UK, will introduce various agricultural products, foodstuff and beverage to local customers and importers.  He underscored that the EVFTA will generate specious chances for Vietnamese and European producers to seek growing markets for their high quality farm produce.  In 2015, the EU earned 129 billion EUR from agricultural product and food exports, making it the world’s biggest exporter.  The delegation is scheduled to visit the southern largest economic hub of Ho Chi Minh City, where they will attend a workshop on food quality norms such as geographic indication and business opportunities in Vietnam. Over 120 products run for “most favourite award” More than 120 made-in-Vietnam products have been named in the short-list to run for the “most favourite award” 2016 selected by customers under a programme called “Vietnamese prioritise Vietnamese goods”.  The programme aims to promote high-quality products to customers and encourage enterprises to produce the best goods so as to establish a firm foothold right in the domestic market.  The products must satisfy certain criteria in terms of quality, origin and price and comply with the regulations on consumers and workers’ rights, environmental protection, food safety and legal competition.  The one-month voting programme, starting from November 15, will be conducted online. Customers can also vote directly at walking areas on November 19-20 and December 3-4.  Businesses can access to the official website of the programme at www.binhchonhangviet.com.vn for application forms and send their applications to the organisers by November 10.  The final result will be announced from December 25-30. Thai firm values long-term support from Vietnamese Government The Vietnamese Government has created favorable conditions for Amata to operate in the country in more than 20 years, said Vikrom Kromadit, Chairman of the Thai-based industrial estates group.  Vikrom Kromadit expressed his appreciation at a meeting with Deputy Prime Minister Trinh Dinh Dung in Hanoi on November 3.  He said Amata’s success in the Vietnamese market has brought benefits to both the company and local socio-economic development.  He unveiled the corporation’s intention to build smart cities and high-tech industrial parks in Vietnam.  The business executive also proposed measures to accelerate project implementation and attract capital from Thai and other foreign investors in Vietnam.  Deputy PM Dung said the Vietnam-Thailand strategic partnership is thriving in all fields, particularly trade and investment, adding that the operation of Amata in Vietnam has significantly contributed to the ties.  He requested the corporation work to further improve the local construction sector, particularly the building of industrial parks.  Dung stated the Vietnamese Government always encourage foreign companies, including those from Thailand, to seek partnerships, operate and expand business in the country. Ben Tre hopes to earn 190 million USD from exports in Q4 The Mekong Delta province of Ben Tre’s export turnover in the last quarter of 2016 is estimated to reach 190 million USD, according to the provincial Department of Industry and Trade. The figure is expected to lift the locality’s export turnover in the year to 725 million USD, up 11 percent from the previous year, fulfilling 92 percent of the target set for 2016. In the first nine months of this year, the province’s export recorded stable growth, achieving about 535 million USD, a year-on-year increase of 13 percent. However, the locality witnessed drops in export volume and prices of several key exports such rice, coconut fiber, and aquatic products, making it difficult for Ben Tre to hit its export turnover target. Truong Minh Nhut, Director of the department, attributed the problem to a shortage of materials for processing and strict import requirements in food safety. Ben Tre ships products to 115 countries ad territories worldwide, with the Asian market accounting for the largest proportion of its total export turnover at 68 percent. American and European markets make up 16 percent and 13 percent, respectively. ASEAN-Korea trade blooms With the current increase in trade between ASEAN and Korea, the goal of increasing it to US$200 billion is expected to be achieved before the 2020 deadline, according to the Vietnamese Ministry of Industry and Trade. Speaking at the ASEAN-Korea Economic Partnership Forum in HCM City yesterday, Nguyen Son, deputy general director of the ministry's Inter-agency Steering Committee for International Economic Integration, said ASEAN and Korea were key partners in many sectors, including trade, investment, tourism, culture, and construction. Trade between the two sides increased from $8.2 billion in 1989 to $138 billion in 2014. The bloc surpassed the US, EU and Japan to become Korea's second largest trade partner after China, he said, adding that country was ASEAN's fifth largest partner. ASEAN is the leading investment destination for Korean firms. Last year Korea invested $5.7 billion in ASEAN member countries to rank fifth among investing countries and territories, though it was the largest in some, including Viet Nam. Jeong-in Suh, Korean Ambassador Extraordinary Plenipotentiary to ASEAN, said ASEAN was not only a market but also a production base for Korean firms. ASEAN offers opportunities but also challenges to Korean firms, he said, adding that Korean firms needed to have a long-term strategy for a market of 630 million people. Prof Bunsoon Park of Korea University said with its young population and rapid growth, ASEAN was a promising market for all investors. Since Japanese firms had begun investing in the region a long time ago, they have the upper hand over the Korean firms, which therefore need to make more efforts to penetrate the market, he said. Developing partnerships with local businesses is an important factor in penetrating in the ASEAN market, delegates said. Viet Nam-Korea trade Son said Viet Nam was one of Korea's most important trade partners in the ASEAN bloc. Since the free trade agreement between South Korea and ASEAN came into effect in 2007, trade between Viet Nam and Korea has been growing at around 19 per cent a year, and this was sustained even during the global economic crisis, he said. The number of Korean firms investing in the high-tech and services sectors has increased consistently, which has helped change the economic structure in many localities, he said. "We expect that large projects by leading Korean groups like Samsung and LG will help develop Viet Nam's part supply industries and enable Viet Nam to take part in the global value chain." The Viet Nam-South Korea FTA, which took effect this year, would boost bilateral trade, he said. Viet Nam has signed 12 FTAs, of which 10 have taken effect, with nearly 60 economies, he said. Investors in the Vietnamese market would automatically enjoy the attendant benefits when doing business with Viet Nam's FTA partners, he said. Pham Khac Tuyen from the Ministry of Industry and Trade's Asia Pacific Market Department said besides large groups many Korean SMEs were also exploring investment opportunities in Viet Nam. He urged Korean firms to invest in supporting industries and transfer technologies to Vietnamese firms. Agriculture and seafood are among the promising sectors for Korean firms, he said. Viet Nam and Korea target bilateral trade of $70 billion by 2020, up from $36.5 billion last year.  EU FTA requires customs reform Researchers have urged that the legal framework on specialised checks on imports and exports be improved for compatibility with commitments to the European Union-Viet Nam Free Trade Agreement (EVFTA). Pham Thanh Binh, an expert of the Viet Nam Chamber of Commerce and Industry's project on reviewing Viet Nam's legal framework on specialised checks, said at a consultation workshop yesterday that there were regulations which were incompatible or partly compatible with commitments to EVFTA. For example, regarding regulations on customs simplification, if based on the targets of creating trade facilitation, it can be said that the specialised check procedures were incompatible with commitments to the trade deal, Binh said. "Several regulations are still complicated and burdening firms," he said. Legal framework on specialised checks on imports and exports were the focus of the Government's reform process raised in Resolution 19 on improving business climate and national competitiveness. Experts said greater efforts were required to speed up time taken for customs clearance and for facilitating trade flow. The Ministry of Planning and Investment recently said that very-tightly controlled specialised checks were causing difficulties for firms, and was a waste of time and costs. A recent report by the Ministry of Finance revealed that the ratio of batches of goods on which specialised checks were carried out remained high, averaging 30 per cent of the total batches. The Government of Viet Nam was pushing for the simplification of specialised check procedures and gradually abolishing unreasonable regulations, especially by the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade. On October 24, the agriculture ministry issued a circular allowing quarantine checks to be carried out after fisheries companies transported products to the warehouse. Previously, firms could only transport their fisheries products to the warehouse after quarantine checks were completed. The Ministry of Industry and Trade on October 12 also abolished the regulation on the inspection of formaldehyde content in textile and garment products.  Pact with EU holds promise The Viet Nam and EU Free Trade Agreement (EVFTA) offers tremendous opportunities for both Vietnamese and European producers to find growing markets for higher quality products, said EU Commissioner for Agriculture and Rural Development Phil Hogan at a seminar held in Ha Noi on November 3. Hogan also said that European authorities and businesses would offer support for Vietnamese producers in placing emphasis on safety and quality in production methods. "This would apply to the final product as well as the production process itself, and the welfare of farm animals and workers, the soil and the environment, so that Vietnamese products could meet EU's stringent requirements in environmental protection, the use of pesticides and veterinary drugs," said Hogan. The recently signed agreement is a high-level and comprehensive agreement ensuring a balance of interests for both sides in terms of trade, customs practice and facilitation, food safety and animal quarantine regulations, intellectual property, investment, stable development, and more. On his visit to Viet Nam, Hogan also met with senior officials, including Prime Minister Nguyen Xuan Phuc to discuss links with the EU in the agriculture and food trade sector, based on EVFTA. Viet Nam currently requires technological support from the EU in various areas, from equipment to personnel training, in order to inspect and develop agricultural products on a par with strict European import standards. Viet Nam needs experience and aid from European agencies that have an established system from production to packaging and distribution. According to Phung Huu Hao, Deputy Director General of the National Agro-Forestry-Fisheries Quality Assurance Department under the Ministry of Agriculture and Rural Development, EVFTA will be a needed boost for agricultural trade relations between Viet Nam and European nations. The agreement negotiation process concluded on December 2, 2015. An official signing ceremony has yet to take place, though the necessary procedures have been undertaken for it to go into effect in early 2018. As of now, the remaining concern for Vietnamese exporters to European markets stems from uncertainty about the origin of products, competitiveness and legal procedures. The EU is one of Viet Nam's top trade and investment partners. According to the Department of Statistics, Viet Nam has enjoyed significant growth in the EU market in recent years, as evidenced by Viet Nam's 20 billion euro trade surplus with the EU in 2015, owing in large to the agriculture and food sectors.  EU provides food safety training for local companies As a result of ever-increasing food trade between Vietnam and the EU, sanitary and phytosanitary controls and food safety have become a critical issue, said experts at a seminar on November 3 in Hanoi. Speaking at the seminar, EU Commissioner for Agriculture and Rural Development Phil Hogan, said it’s important for the EU members to have uniform food standards in place for the protection of consumers against sanitary and phytosanitary hazards. The training ensures harmonization of food safety control procedures between EU and Vietnamese partners and guarantees an equally competitive marketplace for food companies from both economies. Considering the Vietnam, EU free trade agreement that is in the offing and most likely to come into force in 2018, it is imperative for Vietnamese companies to get up to speed, thoroughly understand and comply with the EU sanitary and phytosanitary regimes for food safety. This EU sponsored training paves the way, said Mr Hogan, for Vietnamese businesses to access the EU food market, take advantage of the opportunities it presents to them and increase their competitiveness with EU counterparts. S&P upgrades Vingroup credit outlook Standard&Poor’s Global Ratings (S&P) has revised its rating outlook on Vingroup Joint Stock Co. (Vingroup) to positive from stable. “We revised the outlook to reflect our view of the potential for Vingroup's capital structure to strengthen on sound operating cash flow, despite hefty outlays to support growth,” said the S&P report. At the same time, the rating agency affirmed the 'B' long-term corporate credit rating and the 'axBB-' ASEAN regional scale rating for the Vietnam-based property developer. It also affirmed a 'B' long-term issue rating on the senior unsecured notes issued by Vingroup. According to S&P, Vingroup's brand name and execution record ensures its leading position on the Vietnamese property market.  The developer's property sales in January to July 2016 totalled VND40 trillion (US$1.8 billion), with most of its current projects under construction at least 60% sold. This is similar to the sales of roughly VND44 trillion (US$2 billion) one year ago.  For the first 9th month of 2016, Vingroup recorded a net after-tax profit of VND3.1 trillion (US$141.5 million), thrice the figure in the same period in 2015, and achieved 103% of the profit target approved during the 2016 Annual General Meeting.  With a market capitalization of VND118 trillion (US$5.38 billion) as of September 30, 2016, Vingroup is one of the largest listed companies in Vietnam. The company's projects now look more diversified between Hanoi and Ho Chi Minh City after the launch of Vinhomes Central Park and Vinhomes Golden River in Ho Chi Minh City.  Beyond property development, Vingroup is expanding its retail mall portfolio. Currently it has about 25 operating projects, up from the nine a year ago, with plans to increase to 66 by the end of 2017.  "The company is aggressively growing its consumer retail footprint in various formats," said S&P Global Ratings credit analyst Kah Ling Chan. "On top of better earnings diversity, consumer retail adds stability in cash flow and income to Vingroup's portfolio. Vingroup has indicated that, in the longer-term, it targets to have 50% of its revenue from more stable recurring income sources.” Given the aggressive expansion in various divisions, S&P expects Vingroup's capital expenditure to remain elevated at close to VND100 trillion over the 2016-2018 period, mostly for land purchases.  S&P believes Vingroup will partly finance the spending using its growing cash flows and that reported debt will peak in 2017 at about VND53 trillion (US$2.4 billion).  "We affirmed the rating because Vingroup continues to have significant exposure to cyclical and volatile cash flows from development properties, even as its property investment and consumer retail activities continue to grow,” Chan said.  However, Chan also pointed out that the group has shown the ability to weather a property downturn in 2012-2014, owing to differentiated projects, including complementary services, such as schools, retail, and hospitals, for a comprehensive lifestyle for Vietnam's young population and rising middle class.  The positive outlook reflects the prospects for an upgrade in the next 12-18 months if Vingroup consolidates its record of rolling out its property development and retail operations, translating into a more prudent and predictable leverage. However, downward pressure could also emerge if Vingroup's property sales fall substantially short of expectations, with continued, debt-funded capital spending or acquisitions without commensurate incremental cash flows. Rethinking innovation in electronics manufacturing National prosperity depends on the capacity of the domestic sector to manufacture and innovate new products, said Luu Hoang Long, president of the Vietnam Electronics Industries Association. Speaking at a recent business forum in Hanoi he told the audience that the country’s national strategy over the long-term should be to bolster it competitive advantage by creating a highly localized electronics manufacturing segment. Prosperity does not grow out of a cheap labour pool, said Mr Long, nor low interest rates, the value of the Vietnamese dong or the inherent beauty of the country’s landscapes as many economists around the country have suggested. Rather, it results from the country’s ability to innovate and fabricate new and novel electronic products for consumers around the globe. Mr Long noted that roughly 30% of the country’s total exports for 2015 were generated by the electronics industry, which is dominated by foreign sector giants Samsung, Intel and LG. However, the localization rate for Samsung is currently only 12%, according to official statistics from the Ministry of Industry and Trade, which means that foreign companies working for Samsung are outperforming the domestic sector by more than seven-fold. The large electronics exports of companies like Samsung to the rest of the globe may be impressive. However, the country needs to pause and take into consideration the paucity of the domestic sector contribution. Yasuzumi Hirotaka, a representative of Japan’s trade promotion agency Jetro agreed with Mr Long, noting that Japanese manufacturers operating in Vietnam have only a 14% localization rate. This obviously means that the domestic sector is losing 86% of the market for intermediary goods and raw materials to the foreign competition, which is a highly lucrative long-term market that it should set its sights on. Vu Tien Loc, president of the Vietnam Chamber of Commerce and Industry made the point that to achieve a higher localization rate local companies must acquire a competitive advantage through acts of innovation. They must approach innovation in its broadest sense, he said, including achieving both new technologies and new ways of doing things. Innovation can be manifested in a new product design, a new production process, a new marketing approach, or a new way of conducting training. Much innovation, said Mr Loc, is mundane and incremental, depending more on accumulation of small insights and advances than on a single, major technological breakthrough. It most often involves ideas that may have been around for a while, but never vigorously pursued. It always involves an investment in skills and the acquisition of knowledge, as well as in investment in physical assets and brand development. With few exceptions, innovation is the result of unusual effort. Once a company achieves competitive advantage through an innovation, it can then sustain it only through relentless improvement. In an era of increased global competition, stimulating the country’s electronics manufacturing will require a commitment to public-private partnerships that deliver on the key driver of industrial competitiveness—a highly trained workforce that can use technology to translate basic and applied research and development to large-scale commercial innovations. $50 million Malaysian telecom acquisition on ice Vietnam Infrastructure Limited (VNI), asset management firm VinaCapital’s infrastructure investment fund, has announced delaying the sale of Southeast Asia Telecommunications Holdings (SEATH) to Malaysian telecom network provider OCK Group Bhd. (OCK) due to the complexity of closing the process, according to newswire Dealstreetasia. The sale, which was expected to be completed by the end of October 2016, will be delayed by no later than the end of this year. “This is a complex transaction that has taken more time to close than initially anticipated. However, we are on track to wrap it up shortly,” said Tony Hsun, managing director of VNI. Previously, through its subsidiary OCK Vietnam Towers, OCK sought its shareholders’ approval to acquire 42.04 million shares in SEATH from VNI. The deal would be worth $50 million, paving the way for OCK to expand its operations in Vietnam, one of the biggest telecom markets in the ASEAN offering numerous growth opportunities.  Singapore-based SEATH operates as an independent tower operator focusing on the construction and leasing of towers to network operators in Vietnam. It is the largest independent BTS-owner in Vietnam, with 1,938 telecommunications towers throughout the country. SEATH holds 100 per cent of three mobile phone base stations (BTS) in Vietnam, VNC-55 Infrastructure JSC, Mobile Information Service JSC, and Global Infrastructure Investment JSC, which altogether constitutes almost 70 per cent of VNI’s net asset value, equalling $83.9 million as of September 30, 2016. Meanwhile, OCK ventured into four major business divisions that expound their business footprint in the industry: telecommunication network services, trading of telco and network products, green energy and power solutions, as well as M&E engineering services. As a network facilities provider, OCK builds, owns, and rents telecommunication towers and rooftop structures to the eight telecommunication operators in Malaysia. Following the acquisition, OCK will have approximately 3,000 towers across the ASEAN region by the end of 2016. U.S. supports innovation in VN through maker movement promotion forums The second of two 2016 Maker Movement Promotion Forums, including interactive forums and exhibitions that support the developing innovation and entrepreneurship ecosystem in Viet Nam, was concluded in the southern city of Can Tho on November 3. Earlier on November 1, U.S. Ambassador to Viet Nam Ted Osius and Deputy Minister of Science and Technology Tran Van Tung launched the first 2016 Maker Movement Promotion Forum in Ha Noi. The forums, which are organized by Arizona State University with support from the U.S. Consulate General Ho Chi Minh, connect entrepreneurs, small business owners, startups, educators, makers and inventors with government representatives responsible for developing and administering innovation and entrepreneurship policy. During the forums, participants collaborated to identify challenges and solutions to support the burgeoning ecosystem and create economic value, driving science, technology, engineering, arts and mathematics (STEAM) development in Viet Nam. This marks the second year that Arizona State University has hosted the Maker Movement Promotion Forums. In 2015, forums in Ho Chi Minh City and Da Nang City brought together entrepreneurs and representatives of small and medium enterprises, industry, government, academia, and a large number of students. Jan-Oct sees more market entrants The January-October period saw more than 114,200 enterprises newly established and resuming operation after a period of suspension, according to the Business Registration Agency under the Ministry of Planning and Investment. Data of the agency showed the country had over 91,760 startups with total registered capital of VND710.62 trillion (US$31.8 billion) in the first 10 months of this year, up 18.3% and 46.2% year-on-year, respectively. Meanwhile, nearly 22,500 businesses had returned to business in the year to October after a period of interruption. Operational firms registered an additional VND1,345 trillion (US$60.26 billion) to carry out their expansion plans in the period, taking to over VND2,055 trillion the total capital registered by businesses in the ten-month period. The average registered capital of a startup was VND7.7 billion, a 23.5% pickup from a year earlier. These companies were planning to employ more than one million people, down 8.3% year-on-year. The sectors that generated the most jobs in the period were processing and manufacturing with nearly 498,400 jobs; wholesale, retail, auto and motorcycle services with 192,145 jobs; construction 94,899 jobs; and storage and transport 45,500 jobs. According to the agency, there was a strong pickup in the number of firms that resumed business operations in almost all sectors such as education and training with 382 companies, up 64.7%, culture and entertainment with 232 firms, up 63.4%, accommodation and catering services with 1,186, up 51.7%, processing and manufacturing industry with over 3,000, up 47.3%, wholesale, retail, auto and motorcycle service with 8,404, up 40.4%, and property with 380, up 39.7%. Data of the agency indicated 17,574 enterprises registered for suspension in the first ten months, 9,295 completed procedures for dissolution and 33,131 others halted operation without registration or waited for dissolution. NA deputies bemoan small budget appropriations Many deputies at a National Assembly (NA) meeting have asked for a bigger slice of State budget appropriations as the localities they represent are facing serious shortages of funds. Minister of Planning and Investment Nguyen Chi Dung said on Tuesday that there are two perspectives on budget appropriations given the nation’s overstretched budget. The first is the State budget must go to priority sectors, provinces and cities to fuel economic growth and thus generate revenues for the State. The second is those provinces in socio-economic distress need financial assistance to grow and narrow their development gap with the rest of the country. Deputy Nguyen Thi Kim Be from Kien Giang Province said climate change has dealt a heavy blow to the Mekong Delta. Around two-thirds of the region might be submerged under seawater by 2050. However, the State budget will fund few projects to cope with salinity intrusion in the delta in the next five years though the delta has a labyrinth of rivers and canals and is the nation’s biggest rice producer. The Mekong Delta is tasked with ensuring national food security so its irrigation, dyke and water projects must be conducted and a zoning plan for seafood farming done. She noted drought and salinity had forced around 80% of young people to leave the delta to seek jobs elsewhere. Deputy Phan Van Tuong from Thai Nguyen Province said the northern part of the country is in need of huge funds. Residents in rural and mountainous areas are extremely poor, he noted. Many have left for major cities in the country or for neighboring countries to earn a living. Deputy Luu Duc Long from Vinh Phuc Province said the province generated big budget revenues in the past. However, Toyota and Honda alone account for nearly 93% of the province’s budget revenues from domestic sources. He said motorcycle sales would not edge up sharply in the future due to a saturated market and that Honda Vietnam was running at full capacity with its sales inching down. Besides, import tariffs on autos will plunge to zero in 2018, placing pressure on auto assemblers and producers in Vietnam. In such a scenario, Vinh Phuc’s budget revenues will certainly dip in the coming years, he said, but the province will need huge sums to develop infrastructure and implement welfare programs. He said the province was allowed to retain 67% of its budget revenues in 2007-2010 and 60% in 2011-2016. But the percentage would drop to 53% in 2017-2020, or a decline of some VND2 trillion. He said the central Government may order Vinh Phuc to collect a huge sum next year. Deputy Do Thi Lan from Quang Ninh Province said the province could keep 65% of its budget revenues in the next five years and that it would run short of money to carry our its investment projects. HoREA backs tax on second-home owners The HCMC Real Estate Association (HoREA) has thrown its support behind a proposed tax on second-home owners, saying it would help thwart speculation and at the same time increase tax revenue. The tax would also compel retail investors on the secondary market to establish real estate trading businesses. According to HoREA, other countries tax both residential land and homes, instead of only land as in Vietnam. In the U.S., the tax is about 1.2% per year in California and 4% in Texas. For South Korea, it is 0.15-0.5% for landed houses, 0.25% for condo units, 4% for villas and homes in golf course and entertainment areas, and 5% for houses in major urban areas. In Singapore, the tax on second homes is 7% of a unit’s value and 10% for the third home. British authorities require owners to pay a tax of 3% if their second homes cost more than 40,000 pounds each. The duty rises to 15% if the value of the house is over 1.5 million pounds. In urban Vietnam, the tax on residential land ranges from 0.03% to 0.15%. Moreover, the land tax is based on the State-set land prices which are often 30% of actual market prices. So land owners are subject to a very low tax. For a 100-square-meter house on Dong Khoi Street, District 1, HCMC, the officially approved price of land there is only VND162 million (US$198.63 million) per square meter while the market price is up to VND1 billion per square meter. With a 0.03% tax, the home owner has to pay VND4.86 million per year for that piece of land, said HoREA. But the association suggested not taxing social, resettlement and commercial homes worth less than VND1 billion, and exempting those families buying a second home because their first home is far smaller than the approved minimum space for each person. However, this second home should be less than 200 square meters. Ford Vietnam recalls over 1,000 defective vehicles Ford Vietnam will recall 521 Ford Everest and 539 Ford Focus automobiles due to defects. Vietnam Register has approved a Ford Vietnam plan to recall 520 Ford Everest UW 151-7 cars manufactured from May 27 to October 29, 2008, and one completely built-up Everest produced in 2007 as their automatic gearboxes need checking and repairing. The automaker advised owners to bring their autos to any authorized dealerships nationwide for checks and repairs at no charge. The plan is slated to be complete on August 1, 2019. The check and repair procedure takes about an hour for each auto.  In addition, the company is recalling 539 Ford Focus cars produced from August 8, 2013 to April 14, 2014 for brake booster replacement until August 1, 2019. Vietnam set to step up SOE equitization The equitization of State-owned enterprises (SOEs) and the divestment of State capital from businesses will be intensified so that total assets of those firms over 50% owned by the State will have slid to US$120 billion by 2020. This is one of the remarkable points in the economic restructuring plan deliberated by the National Assembly (NA) on November 2. Divestment of State capital from enterprises should be accelerated, with a full withdrawal from those SOEs active in the sectors where State ownership of over 50% is not needed, and with a reduction to the lowest level possible in the other sectors. The proportion of the assets of enterprises with State ownership of more than 50% in the total assets of the State corporate sector should be brought down to 20% from the current 30%. The list of areas where the State holds a majority stake should be cut.  State discipline, market rules and best corporate governance practices based on international norms should be effectively enforced at SOEs and those with State holdings. The Government will set quantitative targets for State capital divestment from large SOEs. Criteria for SOE classification should be modified with a reduction in State ownership in enterprises. A law on promotion of SOE equitization and State capital divestment should be soon enacted to make clear which agencies are responsible for SOE equitization promotion and roadmap, and divestment of State capital. Restructuring of public investment, State budget For the restructuring of public investment, the quality of management institutions must be improved to international standards. Resources should be further mobilized to keep total investments in the economy at 32-34% of GDP, in which State investments account for 35-38%. The annual budget for investment should be increased, with 24-25% of the budget in 2016-2020 going to development investment projects. Regarding State budget restructuring, the budget deficit should be brought down below 4% of GDP by 2020 and below 3% thereafter. Management should be strengthened to ensure public debt will be kept at safe levels, 65% of GDP and less than 60% in 2021-2030. Efforts should be made to keep the national financial situation healthy and maintain the foreign exchange reserves at 4-5 months of import cover. With regard to public service restructuring, charges of services funded by the State should be fully and accurately calculated. In addition, a comprehensive reform should be carried out, with full autonomy to be accorded to public service entities, which have little leeway to maneuver under the prevailing rules. A clear legal framework will be created for these public service entities to operate in line with market rules. 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