BUSINESS IN BRIEF 13/12 Ca Mau targets 1.1 billion USD in export revenue for 2017   The southernmost coastal province of Ca Mau aims to achieve 1.1 billion USD worth of export revenue in 2017, said Pham Bach Dang, standing vice secretary of the provincial Party Committee. To realise the goal, Ca Mau prioritises improving business climate and administrative procedures, intensifying trade promotion activities and expanding export markets. The province expects to earn 1 billion USD from exports in 2016, or only 77 percent of the year’s plan. This is the second year in a row the province has failed to meet its export target. Dang attributed the failure to the low value of some major currency earners, particularly fertilizers and fishery products. The recovery of the shrimp industry in many countries coupled with fluctuated exchange rate of the US dollar have reduced prices of Vietnamese export shrimp, he explained. Local seafood producers are working to shake up technologies and assembly lines for better processing capacity and product quality. In addition to developing concentrated shrimp farming, Ca Mau is implementing a range of eco-farming models that provide clean materials for local seafood processors. DATC to sell 3.7m shares of Cosevco Việt Nam Debt and Asset Trading Corporation (DATC) will sell 3.7 million shares of Cosevco Ceramic Tiles Joint Stock Company at an auction on January 6 next year at the Hà Nội Stock Exchange. Việt Nam Debt and Asset Trading Corporation (DATC) will sell 3.7 million shares of Cosevco Ceramic Tiles Joint Stock Company at an auction next month. - Photo Cosevco According to the exchange, the initial price at the auction will be VNĐ10,178 per share. Registration to take part in the auction is from December 9 to 29, 2016. Foreign investors are allowed to buy 3.315 million shares. DATC currently holds 3.7 million shares, or 56.77 per cent, of Cosevco’s charter capital. Cosevco curently has two major shareholders -- DATC (56.77 per cent) and Central Construction Corporation (27.39 per cent). Thanh Thanh Joint Stock Co also holds 4.62 per cent of Cosevco’s charter capital. Cosevco reported a profit of more than VNĐ6.5 billion last year. The company’s after-tax profit in the first nine months of this year was nearly VNĐ2.46 billion. The company is targeting a turnover of VNĐ209.75 billion in 2017 with after-tax profit of VNĐ4.12 billion. Unlocking FX hedge may be next in reform agenda Vietnam is committed to opening the doors to foreign investors and improving market access, and  unlocking its foreign exchange hedging market is what the country can consider to do first hand. Foreign investors who decide to invest in Vietnam, according to ANZ Vietnam’s head of markets Phan Thi Thanh Binh, often have concerns over their currency exposure, and thus wish to manage the exposure through foreign exchange (FX) hedging products. Many foreign investors, however, must leave their capital investments or dividend stream unhedged due to Vietnam’s FX regulations. The cost of an unhedged FX exposure is part of the financial cost calculation that foreign investors need to consider when investing in Vietnam. According to Binh, to lower the cost and entry barriers, one of the things that Vietnam should consider is to have a roadmap that allow offshore investors to penetrate more in the local forex hedging market. “As Vietnam’s economy and foreign currency reserves get stronger, Vietnam should consider providing foreign investors with some basis of foreign currency risk management products to help them hedge their capital investments,” she suggested. While FX risk management products have long been available in developed markets around the world, the hedging market in Vietnam is still underdeveloped due to limited understanding of the risk, lack of hedging corporate governance, and lack of financial planning. The old FX regime, where FX daily fixing only changed when there was a planned devaluation, was an obstacle for the development of the hedging market. This has now been replaced by the new FX daily fixing method. Binh sees the new FX daily fixing mechanism, implemented by the State Bank of Vietnam earlier in January, as a major development for Vietnam’s FX hedging market. The new fixing, based on a basket of currencies, is more market-oriented and closer to the international market practice of open economies. A key advantage of the new FX administration, according to  Binh, is to help Vietnam better cope with external financial volatilities. “The recent spike of USD/VND after Trump’s victory more or less reflected how external sentiment and volatility can impact the FX market in Vietnam,” she said. The new FX administration urges corporates and individuals to look at both internal and external factors when considering their hedging strategies. “It is indeed harder for corporates and individuals to predict what is in the mind of policy makers [the case under the old FX regime] than predict the market [as it stands under the new FX regime], as we have seen the unpredictability in both Brexit and Trump events,” Binh said. As the global economy is likely to remain volatile in the remaining months of 2016 and in 2017, ANZ expects to see its clients actively working on FX hedging strategies to manage their currency risks through FX hedging products, as well as their assets and liabilities management strategies. “At ANZ, we leverage our global expertise and local knowledge to provide a comprehensive FX product suite, including FX spot, FX forward, FX swap, and FX options,” Binh said. CIMB set its first branch in Hanoi CIMB Group has made itself more visible in Vietnam through the official launch of its first branch in Hanoi today, which will be followed by another in Ho Chi Minh City next year.  “We are opening a branch in Hanoi and then hopefully we will have a branch in Ho Chi Minh City early next year, and we will then expand into multiple segments,” Nariz Rarak, chairman of CIMB Group, told VIR ahead of the official launch of CIMB Vietnam on Friday, on the side-lines of the Bloomberg ASEAN Business Summit in Hanoi last Thursday. “We want to look at the consumer space, but we will pipe into our international investment banking and corporate financing platform, as well,” noted Rarak.  Rarak added that they are going to focus on these two branches to then use them as bases to expand operations. “It is a long-term game and we do not want to rush.” When asked on how CIMB Vietnam would compete with a raft of local banks on their home turf, Razak stressed that, “We are too small to compete with local banks, so we will focus on a niche affluent market and compete for customers who do lots of business in ASEAN. That’s the whole competitive advantage of CIMB.”  In September, Malaysia’s second-biggest lender by assets, CIMB Bank, became the latest ASEAN bank to receive a licence from the State Bank of Vietnam (SBV) to operate a 100 per cent foreign-owned subsidiary in the country.  CIMB Bank will now join fellow Malaysian lenders Public Bank Berhad and Hong Leong Bank in establishing a presence in the country. Public Bank Berhad obtained approval to operate from the SBV earlier in the year, while Hong Leong Bank began to offer a full suite of banking products in Ho Chi Minh City in 2009, covering a wide spectrum of regional investors and customers coming in and out of Vietnam for business and investment activities. Luxury hotel Okura Prestige to open in HCMC Hotel Okura Co., Ltd has announced its agreement with the Saigon Trading Group (SATRA) to develop and manage The Okura Prestige Saigon in Ho Chi Minh City in 2020. The Okura Prestige Saigon will be the Okura Prestige brand’s first property in Vietnam, Hotel Okura Co., Ltd said in a statement sent to VET on December 12. The hotel will be part of Satra Tax Plaza, a 40-story, multipurpose commercial complex under construction on the site of the former Saigon Tax Trade Center. The complex, situated in District 1, one of the city’s prime locations, will offer direct connection to the Ben Thanh-Suoi Tien metro line currently under development. It is about six kilometers (3.7 miles) north of Tan Son Nhat International Airport, the nation’s major gateway. Facilities will include 250 spacious guest rooms, Japanese restaurants, all-day dining, rooftop bar, multipurpose banquet/meeting rooms, gymnasium and outdoor pool. “The Okura Prestige Saigon will combine meticulous Japanese hospitality with state-of-the-art facilities to deliver our signature Okura Prestige’s quality and ambience.” said Hotel Okura’s President Toshihiro Ogita. “We hope that The Okura Prestige Saigon will be well received by people in its host community.” The move is part of an ambitious undertaking by Hotel Okura, whose subsidiary Okura Nikko Hotel Management Co., Ltd. operates Okura Hotels & Resorts, Nikko Hotels International and Hotel JAL City, to expand its global portfolio to 100 properties, primarily in Asia, by 2020. “We are focusing on hotel development in Vietnam because of its stable and highly promising GDP growth rate, which is Rendition of The Okura Prestige Saigon averaging 6.5 percent annually, and its affluent and youthful population up to age 30, which accounts for half the nation’s population,” Mr Ogita added. “Vietnam suits our business strategy of expanding the scope of our loyal customers’ travel destinations, growing our brand awareness, and further strengthening our customer base and thus competitive advantages in promising markets,” he said. The Okura Prestige Saigon will be the third hotel in Vietnam managed by Okura Nikko Hotel Management following Hotel Nikko Hanoi and Hotel Nikko Saigon operated under the Nikko brand. Hotel Okura’s partner, SATRA, is a public enterprise owned by Ho Chi Minh City. Incorporated in 1995, SATRA employs more than 16,000 people and owns more than 70 subsidiaries, affiliates and joint ventures in a wide range of businesses spanning trading, distribution and food manufacturing. Okura Hotels & Resorts will also add Okura Spa & Resort Cappadocia in Turkey in 2017 and The Hotel Okura Manila Bayshore and The Okura Prestige Phnom Penh in 2019. The next Nikko Hotels International property scheduled to open will be Hotel Nikko Bangkok in 2018. Hotel Okura Co., Ltd. was founded in 1958 and opened its flagship hotel, Hotel Okura Tokyo, in 1962. The company has extensive expertise in hospitality-related industries, including asset ownership and consulting on hotel development and operations. The Hotel Okura subsidiary Okura Nikko Hotel Management Co., Ltd. operates three hotel groups: Okura Hotels & Resorts with 25 member hotels, Nikko Hotels International with 37 member hotels and Hotel JAL City with 12 members. Huawei funding Vietnam's ICT resource The Chinese telecoms giant, Huawei, will invest $1 million into Vietnam’s information-communication-telecommunication (ICT) industry in the 2017-2019 period, a Huawei top leader has said. This package includes three major programs of creative application, ICT human resource training and public utility, Mr. David Sun, President and CEO of the Huawei, Southeast Asia Region said. "With the investment, Huawei commits itself to long-term development and the training of more ICT talent in order to boost Vietnam’s ICT industry," Mr. Sun said at the press release meeting in Hanoi on December 7. The company will cooperate with the Ministry of Information and Communications (MIC) to launch the programs and plans to expand its collaboration with universities in the near future. Mr. David Sun, President and CEO of the Huawei, Southeast Asia Region When asked about Huawei’s plan to launch its factory in Vietnam like Samsung, Mr. Sun said that as a global company, Huawei needs to integrate the capacity of each country and assemble qualified human resources to be successful in all the industries, including in Vietnam. The Vietnamese youth, according to Mr. Sun, have a high potential for development but there is a lack of ICT talent. “We will focus on training the local ICT workforce, as well as building and expanding the management staff,” said Mr. Sun. “We won’t expand the market with low standards but focus on quality and devote ourselves to Vietnam’s society in the long term. The next step is to increase the portfolio of employees’ in Huawei’s Vietnamese office.” Huawei Vietnam has now 272 employees with the ratio of local staff of up to 82 per cent well over the average local employment around the globe of 75 per cent. The company expects to create opportunities for promotion and include benefits as well as other opportunities for Vietnamese employees. Huawei is a global ICT solutions provider and partners with 170 nations and regions, serving one-third of the population around the world. The provider invests more than 10 per cent of its total turnover into research and development (R&D), and 45 per cent of  the total employees work for R&D. Huawei opened in Vietnam in 1998 but it was not until 2008 that it officially established Huawei Technologies (Vietnam) Co., Ltd with its head office in Hanoi, a representative office in Ho Chi Minh City and a technology centre in Da Nang. Rice exports drop to decade low in 2016 Vietnam’s rice export has reduced to a ten-year record low this year, reported the Ministry of Agriculture and Rural Development. Export volume was estimated to reach 4.54 million tons for the last 11 months, dropping 25 percent compared to the same period last year. Value was down 20 percent. Most businesses have failed to obtain their export targets with a huge volume of rice in stock. The Vietnam Food Association has been forced to lower this year export target to 5.7 million tons, a reduction of 800,000 tons over plan. However experts said that the country was unlikely to reach the adjusted norm. At present, China is still the top import market of Vietnamese rice. Vietnam spends $906,000 on pesticide import from China a day Vietnam is spending VND20.5 billion (US$906,000) on importing pesticides from China a single day, the Ministry of Industry and Trade reported. The country’s import turnover of this item in October increased over 48 percent against the previous month to $73.3 million. China was the largest market supplying 47.5 percent of the total import turnover of Vietnam with the value hitting $273.2 million during the first ten months this year. Mr. Nguyen Xuan Hong, former head of the Plant Protection Department under the Ministry of Agriculture and Rural Development, said that 85-90 percent of import volume has been from China recently. It is the largest pesticide supplier in the world accounting for 40 percent. Vietnamese businesses have imported pesticides for sales and mixture to bottle and packaged for export. Besides China, they have purchased pesticide products and materials from Germany and Singapore. Business climate needs further improvement to support growth    Vietnam’s business environment has continued to improve markedly over the past year as seen by the higher positions gained by Vietnam in the business rankings of international organisations. The World Bank’s 2017 Doing Business report placed Vietnam at number 82 out of 189 economies, up nine places from the previous year. The country also jumped 14 notches to number 73 out of 136 economies on the Global Enabling Trade Report 2016 by the World Economic Forum (WEF). In fact Vietnam has made significant efforts to improve transport infrastructure, border management, customs procedures, intellectual property protection and the efficiency of government agencies. The total time required for paying taxes had been reduced from 573 hours to 117 hours earlier this year and to 110 hours by the end of 2016. Electronic tax declaration and payment have also been applied nationwide. According to the Vietnam Chamber of Commerce and Industry, 71% of taxpayers are satisfied with the reforms made by tax agencies in the past year. But it is still a long way for Vietnam to reach international standards and efforts to improve the business environment will continue by building a facilitating and action-oriented government. The entire government system from the central to local levels must reform themselves to work for the benefit of the people and enterprises. On top of that, laws and decrees hindering growth must be revised, the banking system cleaned up and exchange rates stabilised. Moreover, efforts to improve the business climate must come aligned with public investment, state budget and public debt restructuring. It is also necessary to fine-tune mechanisms to contain the spread of false information, prevent environmental disasters from happening, severely discipline violating officials and rein in personnel appointments. Vietnamese market heats up as Christmas, New Year near The Vietnamese market is warming up as local customers have been paying more attention to decorative products to prepare for the upcoming Christmas and New Year celebrations, while more businesses have geared up for the festivities. Aside from familiar merchandise, namely Christmas lights and ornaments, new products such as imported real Christmas pine trees have also emerged and quickly become a favorite in the Southeast Asian country. During an interview with Tuoi Tre (Youth) newspaper on December 10, Bich Diep, manager of a business in Ho Chi Minh City, said her company has just imported 200 such real pine trees from Oregon, the US. “We placed the order back in August due to complicated procedures,” Diep said. The pine trees can be kept from six to eight weeks in favorable environments and need to be watered daily, the businesswoman explained, adding that half of the imported plants had already been sold via online orders. Most of the buyers are expats or rich Vietnamese families as the trees are rather expensive, selling from VND3.7 million (US$164) each depending on their height,Diep continued. Artificial pine trees are also among the best-selling products during the weeks before Christmas, which have been flooding local supermarkets and shopping centers. At a mall in District 1, Ho Chi Minh City, a Christmas tree is offered at VND1.5 million (US$66) to VND3 million (US$133) depending on its height and thickness. Meanwhile, Ho Thi Minh Tam, owner of a shop in District 5, said that about 20 such pine trees and 1,000 ornaments, which had been shipped from Thailand for the first time, are all sold out after only a week. At some other stores in the vicinity, decorative products have attracted an increasing number of customers as Christmas and New Year are drawing near. According to business insiders, Christmas gifts and ornaments originating from Thailand have been widely offered and purchased in the Vietnamese market due to affordable prices. Christmas adornments made in Vietnam have also been selling at a fast pace, including garlands on sale at VND12,000 (US$0.5) a string, decorative snowmen offered at VND120,000 (US$5) to VND600,000 (US$27) each, and other ornaments priced at VND60,000 (US$2.5) per box of six pieces. Domestically-made Christmas costumes have been favored by shoppers thanks to varied designs and low prices. Such an outfit sells for VND20,000 (US$0.9) to VND80,000 (US$3.5), a shopkeeper said, adding that the number of buyers this year has risen by 40%. According to the Ho Chi Minh City Handicraft and Wood Industry Association (HAWA), its members have manufactured thousands of products to meet the high demand during Christmas and New Year. Luu Kiet Binh, a representative from a company in Ho Chi Minh City, said that Vietnamese products can lose to imported rivals in terms of design but are chosen for their safety and eco-friendly materials. Steel sector to grow 10-12% next year The steel industry is likely to enjoy 10-12% growth next year, said the Vietnam Steel Association (VSA) at a workshop in HCM City last week. According to Chu Duc Khai, VSA General Secretary, steel consumption depends on the country’s gross domestic product (GDP) growth.  With expected GDP growth of 6.2%  this year, and the operation of 10 steel projects in 2017, the sector’s growth is expected to further expand, Khải said.  However, he warned of challenges ahead as cheap steel from China would continue to flood the domestic market.  Vietnam also has to meet strict technical standards when it exports steel.  To cope with difficulties, the country will have to apply trade protection measures and technical barriers to restrict steel imports, he noted.  The VSA has filed petitions to the Government demanding anti-dumping measures be imposed on several steel imports. The VSA has sent a document to the Ministry of Industry and Trade (MoIT) to propose some changes in the draft zoning plan for Vietnam’s steel sector until 2025 with a vision towards 2035. Accordingly, the association suggested the ministry that propose the Government a stop in managing the steel industry by planning. Regarding the current practices, a steel project cannot be approved if it is not named in the master plan for the industry. VSA Vice Chairman Nguyen Van Sua, said that economic sectors including steel should not be managed by planning. Instead, the zoning plan for Vietnam’s steel sector should be used as a reference for businesses before deciding their investment, he said. According to the Law on Planning which has been discussed in the National Assembly since September, 21 sectors would need planning at national level as they relate maritime resources and large scale infrastructure. But most opinions against the planning for the steel industry, yet the ministry has still drafted planning and gathered opinions. Besides, the issuance of investment certificates should be done with the agreements of relevant ministries, not just the MoIT. The association noted that the MoIT’s draft has shortcomings as it did not provide development targets for hot rolled and high quality steel, as Vietnam has imported 100%  of these products. The ministry still put the expansion of the Thai Nguyen Iron and Steel Corporation phase 2 in the draft zoning plan despite losses. The VSA proposed that the MoIT resolve issues with the projects which have not started their construction or are unfeasible between 2017 and 2025. At a recent Q&A session of the National Assembly, Minister of Industry and Trade Tran Tuan Anh said the country would not implement industrial projects that harm the environment and that no groups could influence the project approval process. The ministry wants sustainable growth for industrial sectors and to use natural resources efficiently.  The minister reiterated that Vietnam needs more steel projects, because by 2020 the country will have to spend US$15 billion a year on imported steel. VSA figures revealed that last year Vietnam imported more than 14 million tonnes of steel. It is estimated that this year the country will import about 17.5 million tonnes. Hai Phong builds $175 million industrial zone      Hai Phong People’s Committee and Shenzen Investment Holdings Co Ltd last Friday began construction of the An Duong Industrial Zone in this nothern city. The Chinese company said it will invest roughly VND4 trillion (US$175 million) to build the zone in Bac Son Commune to attract hi-tech and environmentally-friendly investment projects, which will produce high added value products. Specifically, the zone is expected to roll out electronic products, home appliances and high-end consumer goods. The land needed for the firm to develop the zone will be available in the first quarter of next year, said Nguyen Van Tung, chairman of the committee.                Gov’t targets 5 ineffective projects      The Government has asked the Ministry of Industry and Trade to take prompt action on five ineffective investment projects, to ensure maximum protection of the State’s capital and assets. A Government resolution adopted last month shows investments worth thousands of billions of dong, but flawed calculations and predictions on demand, or weak management, caused losses of State capital. The five projects are the Dinh Vu Polyester Fibre Plant, with an investment worth VND7 trillion (US$311 million) from the Viet Nam Oil and Gas Group’s PetroVietnam Petrochemical and Textile Fiber Company, VND2.2 trillion in the Dung Quat Bio-Ethanol Plant by PetroVietnam Central Biofuels JSC, and Phase 2 of the Thai Nguyen Iron and Steel Corporation’s (TISCO) Production Expansion Project with a capital of VND8 trillion. The Phuong Nam wood pulp mill in southern Long An Province with an investment of VND3 trillion by the Transport, Communication, Development and Investment Corporation (Tracodi). This project was handed over to Viet Nam Paper Corporation (Vinapaco) in 2009 in accordance with a prime ministerial decision. The final one is by the Viet Nam Chemical Group’s Ninh Binh Fertiliser Plant which invested VND12 trillion in the Ninh Binh Nitrogenous Fertiliser Plant. Minister of Industry and Trade Tran Tuan Anh said investments had been made in the five projects since 2008. All had failed to meet deadlines set for completion.             Tan Cang Song Than to list on UPCoM      Ha Noi Stock Exchange has accepted Inland Clearance Depot Tan Cang Song Than LLC (Tan Cang Song Than)’s proposal to list over 12 million shares on its Unlisted Public Company Market (UPCoM). The company will be listed under the stock symbol IST. It will also be liable to publish all the information for its shareholders in compliance with the laws. Saigon New Port Corporation is currently Tan Cang Song Than’s largest shareholder with 51 per cent of charter capital. Tan Cang Song Than was previously a container parking space used by the Saigon Military Port in 1995 and was a mainland clearance depot since 2000. In 2007, it was upgraded to a one member limited liability company and was financially independent in a branch and holding company model with initial charter capital of VND80 billion (US$3.615 million). The company had its initial public offering session in March 2016, with 960,694 shares sold at an average of VND10,608 per share. In June, Tan Cang Song Than officially operated as an incorporated company with charter capital of VND120 billion and has yet to increase the said capital. The company now specialises in storage, transportation and related services. As of September 27, 2016, Tan Cang Song Than had 200 stock holders, with two major holders holding 86.25 per cent of total charter capital. Tan Cang Song Than has a total area of 387,870sq.m, including 205,000sq.m of storage. The majority of its revenue comes from leasing the storage space, followed by the storage and transportation fee. Vinacomin power to debut 680 million shares on UPCoM      Vinacomin Power Holding Corporation Limited, a State-owned subsidiary of Viet Nam National Coal and Mineral Industries Group (Vinacomin), will debut 680 million shares on the Unlisted Public Company Market (UPCoM) on December 15. This was announced by the Hà Nội Stock Exchange. The shares, under code DTK, will start the first trading day at VND14,000 (US$0.62) per share. At this price, the company’s market capitalisation will reach VND9.52 trillion, making it among the highest-valued stocks on the UPCoM. The power company made its initial public offering (IPO) last year, with 236.4 million shares put up for sale, a record in terms of volume of shares put up for auction at that time. However, only 1.2 million shares, equivalent to less than 1 per cent, were sold. Vinacomin, currently, still holds over 99 per cent of the company’s charter capital. The power company, established in 2009, engages in development, construction and management of thermal and hydro power plants. It is a major electricity producer in the local power market and is implementing 14 power projects with a total capacity of 5,880MW. It has five subordinate companies, two subsidiary firms and four associate companies with holdings of less than 50 per cent of capital. Ending September 2016, Vinacomin Power reported a loss of VND228 billion, lifting its cumulative losses to VND1.14 trillion. Its equity capital was nearly VND5.8 trillion and total asset value reached VND26.4 trillion. The UPCoM, which went live on June 2010, is the market for unlisted or delisted public companies under the management of the Ha Noi Stock Exchange. There are currently 387 stocks here with daily trading volume of some five million shares worth over VND100 billion.                                     Mobile World turnover estimated at $1.9b in 2016      Mobile World Investment Corporation (MWG) estimated its turnover this year to reach VNĐ44 trillion (US$1.938 billion), according to company chairman Nguyễn Đức Tài. MWG’s turnover last year was VNĐ25.25 billion. Tài said the company’s turnover this month alone would reach VNĐ5 trillion, adding that the turnover would come from existing and new stores, as well as online sales. Next year, MWG is targeting a turnover of VNĐ60 trillion with the expansion of online sales. Tài said MWG does not plan to sell its store chain Dienmayxanh, while it would take a final decision on the development strategy of another chain Bachhoaxanh by the end of this year. MWG’s shares on Friday closed at VNĐ155,500 per unit.  Vietjet offers 50% discount on Thai domestic routes Passengers booking flight tickets from HCM City, Hà Nội and Hải Phòng to Bangkok (Thailand) will enjoy a 50 per cent discount on all Vietjet’s domestic flights in Thailand. The offer is valid from now until December 20, the airline announced on Saturday. The discounted flights will be available on several Thai routes, including Bangkok-Phuket, Bangkok-Chiang Mai and Chiang Rai-Phuket. Meanwhile, flyers who buy flight tickets from Bangkok to HCM Ctiy, Hà Nội and Hải Phòng will get a 50 per cent discount on all Vietjet’s domestic flights in Việt Nam. “Thailand and Việt Nam have been the favourite destinations of world travelers. While Thailand is attractive thanks to a series of “shocking” promotions during the year-end holidays, Việt Nam is well known for its typical and diversified culture and cuisine,” Vietjet said. According to the Việt Nam Administration of Tourism, nearly 240,000 Thai tourists travelled to Việt Nam in the 11 months of this year, up 30 per cent year-on-year. That has helped Thailand become Việt Nam’s sixth largest tourism market for the period.  Viet Dragon divests stake in TAC, earns $15m Viet Dragon Fund Management (VDFM) has reportedly earned VNĐ334 billion (US$15 million) from selling 23.44 per cent stake in Tường An Vegetable Oil Company (TAC). TAC is a listed firm on the HCM Stock Exchange. The transaction was conducted off-exchange on December 6. It is believed that the buyer is Kido Corporation (KDC). In a filing to the State Securities Commission, the fund management company reported that it has sold 4.45 million shares, equivalent to 23.44 per cent, of TAC’s capital, and reduced its ownership to 0.56 per cent. The fund is no longer a major shareholder of the oil company. The selling price has not been disclosed, but it is speculated to be around VNĐ75,000 per share, the TAC’s closing price on December 6. In September, the confectionery giant had submitted a tender to purchase 12.33 million shares of TAC, or 65 per cent stake, at a bid price of VNĐ78,000 per share. VDFM had bought 4.5 million TAC shares on July 4 at VNĐ62,000 per share. If these shares were sold at VNĐ75,000, the fund has earned a profit of VNĐ55 billion after five months of holding. Last Friday, TAC shares were traded at VNĐ73,000 per share. VIB shares deposited at Vietnam Securities Depository     More than 564.4 million shares of Vietnam International Bank (VIB) were deposited at the Vietnam Securities Depository under code VIB as of December 12. According to the Vietnam Securities Depository, value of the registered shares is worth more than VNĐ5.644 trillion (US$248.63 million), equal to VNĐ5.644 trillion of the bank’s charter capital. The move was the first procedure made by the bank to list on the stock exchange next year. Previously, in November, VIB said it was implementing procedures to get listed on UPCoM early next year instead of 2018 as previously planned. The bank's representatives said getting listed on UPCoM will increase its value for VIB investors, owing to good liquidity. The bank said it has completed procedures to increase its charter capital to VNĐ5.644 trillion, as approved by the State Securities Commission and the State Bank of Việt Nam. In April, at the VIB shareholders meeting, the plan to increase charter capital from VNĐ4.85 trillion to VNĐ5.644 trillion by issuing share dividends of 16.5 per cent was approved. According to the bank's financial report, its total assets touched VNĐ93 trillion at the end of October. Its capital adequacy ratio and non-performing loans were at 14.46 per cent and 1.49 per cent, respectively. The Commonwealth Bank of Australia continues to be a strategic partner of the VIB, holding 20 per cent share. VIB, currently, serves some 1.6 million individual customers and 34,000 corporate customers. Rubber exports to reach US$4.36 billion in 2016 Vietnam’s rubber exports this year are expected to reach a total value of US$4.36 billion, according to the Ministry of Agriculture and Rural Development. Specifically, Vietnam’s total exports of natural rubber are to reach US$1.66 billion by the year’s end. In addition, the country is also to export US$1.5 billion of rubber products such as tyres, rubber accessories and conveyors, in addition to US$1.2 billion from products made from rubber wood. According to Tran Ngoc Thuan, Chairman of the Vietnam Rubber Association (VRA), the domestic sector, as well as global natural rubber exports, has been faced with a range of difficulties due to a continued decline in prices lasting from 2012 to 2016. Consumption of natural rubber increased slowly while the surplus in output resulted in oversupply, making rubber inventories increase and putting pressure on continuously declining prices. Even at some times, rubber prices fell below production costs, negatively affecting rubber producers and leading rubber plantations to switch to other crops. However, most Vietnamese enterprises and rubber farmers have sought to maintain production while increasing the efficiency of land use and diversifying sources of income from rubber, plus applying advanced technologies to lower costs and increase productivity. Thanks to the efforts of the rubber industry, Vietnam continues to hold the number-two spot in rubber productivity and ranks third globally in output and exports. In 2015, rubber plantation areas across the country reached more than 981,000ha with production reached 1 million tonnes. It is forecast that rubber production in 2016 will exceed 1.2 million tonnes. The year 2016 also marked an important milestone for Vietnam’s rubber industry. For the first time, the certification mark “Vietnam Rubber” was officially announced after two years of licensing and constructing related legal documents. Accordingly, VRA is the legal owner of the “Vietnam Rubber” certification mark. The brand is used with Vietnamese rubber products that the enterprise has committed to meeting quality standards and other related criteria applied to Vietnam’s rubber industry. Thuan said that in the context of fiercer competition among rubber-exporting countries, Vietnam’s rubber industry is faced with a range of difficulties and challenges due to uneven product quality and lack of a brand for the whole industry. So, the use of the “Vietnam Rubber” trademark would help improve the sector’s competitiveness and Vietnamese enterprises’ reputation, in addition to building trust among foreign partners selecting rubber imported from Vietnam. Currently, with 80% of its exports coming from raw materials, Vietnam’s rubber sector relies heavily on the constantly fluctuating rubber prices on the world market. To support the rubber industry’s restructuring towards higher added value and sustainable development, the country has planned to increase the consumption of natural rubber on the domestic market to 30% and to facilitate the processing of rubber and rubber wood products. Cigarette smuggling causes huge losses Illicit cigarette trade brings huge lost tax revenue for the State, said Nguyen Dinh Truong, director of the Vietnam Tobacco Research Institute. Speaking at a seminar on the impact of chemicals on pregnant women and fetuses held at Hung Vuong Hospital in HCMC last Friday, Truong said cigarette smuggling is forecast to cause annual tax losses of VND7 trillion (US$310 million). In the first 20 days of July this year, the National Steering Committee 389 and the Anti-Smuggling Police Department (C74 B), in cooperation with law enforcement in Long An and Tay Ninh provinces, busted three cases smuggling cigarettes from Cambodia to Vietnam, with more than 130,000 packs of cigarettes seized. Some smuggled cigarettes in Vietnam contain coumarin which is banned in food by the health ministry). Coumarin is one of the causes of miscarriage or birth defects if mothers are exposed to the substance during pregnancy. This chemical is also banned by the Food and Drug Agency (FDA) because it can cause dangerous diseases for the liver, nervous system and heart. Stable sugar prices expected ahead of holiday season Domestic sugar prices in November have edged up over the previous month but the Vietnam Sugar and Sugarcane Association (VSSA) has predicted that they would stabilize from now to the upcoming Lunar New Year holiday (Tet) owing to abundant supply. The association said last month’s sugar prices ranged from VND16,600 to VND17,300 per kilo for white sugar, and from VND17,200 to VND17,800 per kilo for refined sugar, up a slight VND100-200 against October. As of December 2, sugar inventories had totaled around 170,000 tons at factories and nearly 3,500 tons at trading companies. Sugar production this month is estimated at around 250,000 tons, and 300,000 tons next month, according to VSSA. Therefore, ample sugar supply can meet demand, which is put at 130,000-140,000 tons per month, in the run up to Tet. Global sugar prices are projected to stay flat or inch down slightly. Sugar production in Brazil and India is higher than previously forecast while Thailand, one of the world’s largest sugar producing countries, has started another sugar-producing season. VSSA estimated stable sugar retail prices would make sugarcane prices stable, at about VND1.1 million (US$48) per ton. Interbank rate hikes continue Interest rates for Vietnam dong loans have nudged up over the past two weeks, hitting a seven-month high on the interbank market. These lending rates rose by 20-30 basis points last Friday, taking the spike in all of last week to 70-80 basis points. In the week earlier, interbank rates for tenors of less than one month soared 1.34 -1.49 percentage points. They have leapt 2.2-3.2 percentage points for different tenors over the past two weeks and touched a seven-month high of over 4% per annum, showed statistics of a couple of banks. The annual overnight rate for Vietnam dong loans was 4.03% last Friday while the one-week rate stood at 4.15% per year, the two-week rate at 4.38% per year and the one-month rate at 4.7% per annum. Despite the interbank rate hikes, liquidity in the banking system has been stable. Such increases are unsurprising as banks are improving their Vietnam dong liquidity ahead of their year-end earnings releases and as borrowing demand and loan disbursements are inching up. Lenders such as Vietcombank and Agribank have ample Vietnam dong liquidity at the moment as they have hiked interest rates for depositors. According to the State Bank of Vietnam, credit had grown 15.8% and capital mobilization had surged 15.2% on average by end-November, thus causing liquidity in the banking system to drop slightly and interbank rates to go up. A number of banks said interbank rates for Vietnam dong loans would likely stay high in the next few weeks and hover in a range of 3% and 4% per annum. PM: ADB plans to buy ailing Vietnamese bank The Asian Development Bank (ADB) and a Vietnamese private partner are planning to buy an ailing local bank, said Prime Minister Nguyen Xuan Phuc at the Vietnam Development Forum in Hanoi last Friday. Phuc said the Government is coping with bad debt in the banking system and working on regulations on the handling of mortgaged assets at banks. Banks are told to settle bad debts and improve their operations to meet global standards. He said the Government had asked International Finance Corporation (IFC) under the World Bank to help Vietnam settle bad debt. ADB and a Vietnamese private partner are planning to acquire a domestic weak lender, Phuc said, adding ADB may introduce other partners to support Vietnam to deal with bad debt and the debt-laden banks taken over by the State Bank of Vietnam. According to the Government portal (chinhphu.vn), Phuc reiterated at the forum his determination to build an effective administrative system and an enabling Government as his top priority in the 2016-2020 tenure. To this end, the Government will improve institutions and legal system, facilitate production and business activities, strengthen the State administrative apparatus, streamline administrative procedures and prevent corruption and wastefulness. The Government will improve the business and investment environment, raise competitiveness by amending, supplementing and accomplishing mechanisms and policies on planning and investment, and encourage innovation, startups and the private sector. Besides, it will restructure the economy in line with the transformation of the growth model and raise productivity, quality, efficiency and competitiveness. The Government will step up the restructuring of State-owned enterprises and the withdrawal of State capital from non-core businesses. The Government will build a legal framework for Vietnam Asset Management Company, develop a debt trading market and efficiently handle non-performing loans. The nation will continue to integrate into the world economy and fulfill its commitments to the 12 free trade agreements it has signed. HCMC sets budget targets for next year The People’s Council of HCMC last Friday passed a resolution on a fiscal plan for 2017, with budget revenue set at VND347.88 trillion and spending at VND70.64 trillion. The revenue target for 2017 is 15.79% than the 2016 estimate and probably 13.62% higher than the actual figure this year. Domestic revenue will contribute nearly VND226.5 trillion, import-export tariffs VND109 trillion and crude oil exports VND12.4 trillion. Meanwhile, the city’s major expenditures include development investment with VND25.16 trillion, regular expenses with VND34.2 trillion and interest payments with VND1.51 trillion. Budget deficit next year is projected at VND2.9 trillion. The city expects to repay more than VND6.37 trillion in loan principal and borrow an additional VND9.27 trillion. The city also intends to issue up to VND5.14 trillion of debt. The city government will draw up a bond sale scheme and submit it to the Ministry of Finance. On the same day, the HCMC People’s Council gave approval in principle to a project for dredging Ba Lon Canal in District 8 and Binh Chanh District at a total cost of VND1.85 trillion. In addition, 55 projects of Group B worth some VND20 trillion to be funded by the city budget were passed by the council. City leaders said HCMC would tighten fiscal spending and mobilize capital from all sources for investment and development next year. The city will streamline its apparatus and cut spending as revenue from import tariffs will fall in line with the nation’s international integration roadmap and as the city will have a smaller share of budget revenue with the central Government in 2017-2020. Toyota Vietnam sets auto sales record in November Toyota Vietnam has obtained the highest monthly auto sales of 6,130 units last month, 39% higher than in the same period last year. The southern market took 2,759 units, followed by the north with 2,660 and the central region with 711. The two best-selling models of Toyota were Vios with 2,447 units and Fortuner with 1,219 units. Sales of luxury model Lexus shot up a staggering 89% year-on-year to 106 units. In January-November, Toyota Vietnam sold more than 50,700 autos, up 13% year-on-year, of which Lexus made up 1,570 units, up 78%. Local coffee price stable over output fall This year has seen a sharp fall of local coffee output due to severe drought in the Central Highlands, the nation’s largest coffee producing area, thus helping the coffee price stay stable in the coming time, said the Vietnam Coffee and Cocoa Association (Vicofa). Vicofa was speaking at a conference on the future of the coffee industry from now to 2030 held as part of the Vietnam Coffee Day event in HCMC from December 8-11. According to Vicofa, coffee output in the 2016-2017 crop is estimated to reach 24 million 60-kilo bags, falling over 3.5 million bags against the previous crop. Vicofa forecast the country’s coffee exports in the 2016-2017 crop could amount to 25.1 million bags, 2.1 million bags lower than forecast by the U.S. Department of Agriculture. This year, coffee growers have suffered huge losses. Due to the protracted drought, many coffee farms in Daklak province are now still in blossom while October is the normal harvest time. Heavy rains in Central Highlands provinces have also affected thousands of hectares of coffee. Therefore, the coffee price in the region has shot up over VND40,000 per kilo since the end of November. On December 9 it climbed to VND41,800-42,500 per kilo, and the price is expected to stay unchanged in the coming years. Auto sales seen hitting new record this year Auto sales are forecast to reach an all-time high of 300,000 units this year after more than 271,100 autos found buyers in the January-November period, according to the Vietnam Automobile Manufacturers Association (VAMA). The January-November sales figure represents a 26% year-on-year rise and is well above 245,000 autos sold in all of 2015. There were 205,355 units domestically assembled, up 33%, and 65,768 completely-built-up (CBU) cars, up 7%. As year-end auto consumption usually picks up, VAMA said, around 25,000 units could be sold this month, taking to 300,000 the year’s total. In November alone, auto firms sold 24,442 units, down 4% year-on-year but up 1% against October. According to the Industrial Policy and Strategy Institute (IPSI), Vietnam, Indonesia and the Philippines are seen as the three biggest growth markets for automakers in Southeast Asia. In a report, IPSI said that if a country has less than 250 autos in every 1,000 people, it is deemed as a potential growth market. Malaysia now has 400/1,000 and Thailand more than 250/1,000. Meanwhile, it is 50/1,000 in Indonesia and lower than that in Vietnam and the Philippines. The institute said the Vietnamese auto market has posted strong growth in the past two years as demand for private auto ownership has kept rising. Thanks to the golden population structure, which is expected to last until 2030, the growing middle class, and the rising per capita income, auto sales would continue to edge up in Vietnam. Traffic infrastructure has been improved with a range of inter-provincial and north-south expressways under construction, thereby fueling demand for auto ownership, the institute explained. However, the auto industry is facing challenges, especially in attracting foreign firms to come to Vietnam to produce parts for automakers. Vietnam is still far behind Thailand and Indonesia in terms of supporting industries and auto production costs, said IPSI. Vehicle prices in Vietnam are 23% higher than in these two regional countries. Moreover, the institute pointed out a new problem faced by the domestic auto sector. Import duties on CBU vehicles from ASEAN countries will fall from the current 40% to 30% next year and zero in 2018. By then, auto parts producers may not choose to set up shop in Vietnam. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR