Kinhbac English

BUSINESS NEWS IN BRIEF 20/7

PM calls for more measures to reduce logistics costs

Industry real estate to grow, Ca Mau to expand seafood exports, Indian, Vietnamese leather companies seek stronger ties, Public Bank Viet Nam to expand, Developers look to foreign investors

Prime Minister Nguyen Xuan Phuc has signed a directive on reducing logistics costs and connect the transport infrastructure system.

The directive noted that the Government leader approved an action plan to increase competitiveness and develop logistics services in Vietnam until 2025 on February 14, 2017. After more than a year of implementation, offices and units have exerted efforts to achieve set targets.

However, the transport infrastructure system has developed unevenly, while links between modes of transportation have remained ineffective. Logistics centres to connect Vietnam with other countries have yet to be built, leading to high logistics costs, harming the competitiveness of the Vietnamese economy.

To cut logistics costs and promote the connectivity of the transport infrastructure system, the Prime Minister asked ministries, sectors and localities to focus on six main task groups under the action plan. The task groups are: completing policies and laws on logistics services, increasing the quality of logistics infrastructure, improving the capacity of enterprises and quality of services, developing the logistics market, increasing the quality of human resources and raising public awareness of the importance of logistics services.

The Government leader assigned the Transport Ministry to tweak legal documents, reform administrative procedures, cut business conditions, simplify inspection procedures and intensify connectivity between modes of transportation.

The ministry was also urged to speed up the restructuring of the domestic transportation market by reducing the market share of road transportation and increasing the market shares of sea, railway and internal waterway transportation.

The PM requested the Ministry of Industry and Trade to continue working with related ministries and sectors to complete policies attracting investment in logistics infrastructure, and develop logistics infrastructure in combination with e-commerce.

The Ministry of Planning and Investment was ordered to draw investment in key logistics centres.

Indian, Vietnamese leather companies seek stronger ties

A visiting delegation of 30 executives from Indian leather companies have met with their Vietnamese counterparts in HCM City.

The meeting on Thursday between two of the world’s top three footwear producers was organised by the Indian consulate in HCM City and the Viet Nam Leather Footwear and Handbag Association (LEFASO) in HCM City.

The visitors, led by India’s Council for Leather Export, became acquainted with their Vietnamese counterparts and showcased their products as they sought potential partners.

Diep Thanh Kiet, deputy chairman of LEFASO, said Viet Nam’s exports of footwear and handbags were worth US$17.96 billion last year, and this year’s target is $19.5 billion.

The country is the second largest exporter of footwear, he said.

Viet Nam imported around $92 million worth of leather from India last year, or 5 per cent of its total leather imports. It plans to import $115 million worth this year.

Dr K Srikar Reddy, the Indian consul general in HCM City, said: “Indian companies’ interest in investing in and co-operating with Viet Nam is constantly rising.”

Leather is one of India’s major industries. It is the fifth largest exporter of leather, accounting for almost 13 per cent of the world’s output.

According to India’s Ministry of Commerce and Industry, the country imported around $121.63 million worth of footwear and other leather goods from Viet Nam from April 2017 to March 2018.

Viet Nam imports around 60 per cent of the leather it requires for footwear production, which offers potential for strengthening the partnership between the two countries, Reddy said.

Villa, house supply in HCM City cannot meet demand

Supply in HCM City’s new villa and townhouse segment has been too low in recent months to meet demand and prices have been rising as a result.

In May Phu Long Property Company held the second phase of sales of its Dragon Village project in District 9. The 21ha project has over 400 houses and 300 villas, all of which were sold within two hours, it said.

The US$2 billion Van Phuc City in Thu Duc District has also been in high demand.

Nguyen Huong, general director of Dai Phuc Lan, the developer, told Dau Tu (Investment Review) newspaper that nearly 300 houses have been sold so far.

Dang Phuong Hang, managing director of CBRE Vietnam, told Viet Nam News that supply is limited due to a shortage of land.

In the first quarter of this year only four projects entered the market with 635 houses and villas, one each in districts 2, 9, Binh Chanh, and Thu Duc.

Projects elsewhere have only condos and not villas and townhouses, she said.

She attributed the high demand to the Vietnamese preference for houses rather than apartments.

A report from market researcher JLL Vietnam said in the second quarter of this year new villa and townhouse supply topped 1,550 units, with the latter accounting for 73 per cent.

Two-thirds of the townhouses were priced at $350,000-550,000.

JLL said 1,483 units have been sold, and another 1,900 are expected to be added in the second half of this year, mostly in districts 9, 2 and Go Vap.

It said there is a shortage of villas and townhouses both in the primary and secondary markets due to a scarcity of land in prime locations.

Tran Duc Vinh, general director of Tran Anh Group, said last year his company built 400 villas and houses and sold them in quick time.

The market has looked up since 2015 and incomes have improved, adding up to increased demand for villas and townhouse, he said. But since not all developers can build them, demand is constantly unsated, he said.

Researchers said villa and townhouse prices have increased sharply due to the short supply.

In districts 2 and Go Vap, prices are up by 80-150 per cent this year. In districts 7, Binh Thanh and Nha Be District, they are up by 5-10 per cent.

Lilama to withdraw all capital from Sông Vàng Hydropower

The Viet Nam Construction and Machinery Installation Corp (Lilama) has decided to withdraw all capital from Song Vang Hydropower JSC (SVH).

Under the plan, Lilama will withdraw 7.9 million shares by order matching and settlement on the Unlisted Public Company Market (UPCoM) trading floor. The divestment plan is expected to be conducted in the last six months of 2018.

Da Nang-based SVH was established in 2004 by three shareholders of Lilama, PetroVietnam Power Corporation (PV Power) and Civil Engineering Construction Joint Stock Company No 586.

In the first quarter of 2018, SVH’s revenue reached VND19.2 billion (US$842,000) and after-tax profit was more than VND7.57 billion, down 8.5 per cent and 13.3 compared with the same period last year, respectively.

SVH attributed the fall in revenue and profit in Q1 this year to the decrease in the water volume flowing into the company’s lake, due to unfavourable weather in the central region.

Siemens signs deal with VN solar plant

Siemens has won a contract to supply electrical equipment for the country’s largest solar plant, which is being developed by Trung Nam Group in the south central province of Ninh Thuan.

The deliverables include inverters, power and distribution transformers, gas-insulated medium-voltage switchgear, circuit-breakers and a monitoring and control system.

The plant is the first solar project for Siemens in Southeast Asia. It will deliver up to 425 Gigawatt hours (GWh) per year once become operational. This is enough to supply approximately 200,000 households with electricity and saves around 250,000 tonnes of CO2, Siemens said in a statement.

“Viet Nam’s need for energy is rapidly growing. To cover this demand, we must increase the share of renewables, among other things,” Nguyen Tam Tien, general director of Trung Nam Group said.

“With a capacity of 204MW, Trung Nam solar power plant is the largest single plant of its kind in Viet Nam, thus making Trung Nam a true pioneer in solar energy in the country,” Siemens Vietnam president and CEO Pham Thai Lai.

The plant is expected to begin operations by mid-2019.

Seeking FiT hike for bagasse power

The sugar industry is calling for increased feed-in tariffs for bagasse-fired power in hopes of luring additional investment to such renewable energy projects.

Lam Son Sugar JSC – one of Vietnam’s largest sugar companies – hesitates to expand its current bagasse-fired power generation activities, as the firm has been making a loss of VND600 (2.5 US cents) for every kilowatt-hour (kWh) of electricity it sells to Electricity of Vietnam (EVN).

A part of its integrated sugar production line, the company’s (Lasuco) bagasse-fired power generation system, designed with a capacity of 33.5 megawatts (MW), can generate more than 20MW at the peak of sugarcane crushing. Half of the output serves the sugar mills’ production, while the rest is sold to the national grid through EVN.

The feed-in tariff (FiT) for bagasse-fired power stands at only 5.8 cents per kWh after an adjustment prompted by petitions submitted to the government. Meanwhile, the total cost for each kWh generated by the firm amounts to VND1,900 (8.3 US cents), Lasuco’s general director Le Van Phuong told VIR.

“We are willing to increase our current bagasse-fired power output by doubling the power generation period from 150 days to 300 days per year, once the price for bagasse-fired power equals those set for other renewable energy sources like wind power and solar power,” said Le Van Tam, chairman of Lasuco.

The benefits of bagasse-fired power generation to companies like Lasuco cannot be denied, as it provides electricity for sugar production and enables the firm to sell the redundant power output to the national grid.

Additionally, the power generation helps handle the environmental impacts bagasse could have, as tonnes of bagasse were used as fertilizer in the 1990s, but were unpopular due to the unpleasant smell.

Notably, Lasuco, with its environmentally friendly power generation, gained a carbon credit deal in 2012 at a price of 7.8 euros ($9) per tonne of CO2 under the Clean Development Mechanism (CDM). The deal, which lasts for 20 years, enables Lasuco to earn an additional income of some VND10 billion ($430.000) every year.

Opportunities for boosting bagasse-fired power generation are abundant, as the combined sugarcane planting area of sugar mills nationwide amounts to 330,000ha, yielding at least 30 million tonnes of sugar cane a year. “Let’s imagine each tonne of sugar cane could generate 100 kWh of electricity; thousands of MW would be generated,” Lasuco’s Tam said.

However, not many sugar mills could profit from such plans. Only nine of the 40 sugar mills across the country have poured money into bagasse-fired power capabilities, with a total installed capacity of 400MW, and only 100MW are sold to the national grid, said Vu Ngoc Duc from the Institute of Energy under the Ministry of Industry and Trade (MoIT).

Insiders, sugar firms, and experts all blame the low FiT for blocking the rise of bagasse-fired power.

Pham Quoc Doanh, chairman of the Vietnam Sugarcane and Sugar Association (VSSA), told VIR that the FiT of 5.8 cents for bagasse-fired power was fixed in an “unusual way”, as the price was proposed and determined after MoIT delegations made fact-finding tours to evaluate bagasse-fired power generation at sugar mills.

MoIT officials called the bagasse-fired power generated by sugar mills a kind of co-generation, which allows sugar mills to benefit from producing electricity for their own production as well as selling the redundant output to the national grid. That is why bagasse-fired power must suffer the FiT of 5.8 cents, Doanh noted.

“That’s unfair for bagasse-fired power as the FiT is much lower than the level of 7.4 cents set for power fired by other biomass materials such as straw or sawdust”.

This is a waste of opportunities for bagasse-fired power to help in meeting Vietnam’s increasing electricity demand, Doanh lamented, asserting that it is a great pity that Vietnam has no power plants fired by straw or sawdust as of yet, regardless of the FiT of 7.4 cents.

The chairman claimed that efforts should have been made to build bagasse-fired power plants in order to make full use of the available input materials.

Bagasse-fired power has been treated unfairly in comparison with other kinds of biomass-fired power, Doanh went on to say. Hence, the VSSA submitted a petition to the Government Office and the MoIT last year to increase the FiT for bagasse-fired power, but no relevant feedback or directions have been given so far, Doanh added.

“At a FiT of 5.8 cents, no one dares to make an investment in building bagasse-fired power plants which are self-contained and have no financial and technical linkages with sugar mills,” said Lasuco’s general director Phuong.

Lasuco still embraces bagasse-fired power, because the annual revenue [some VND40 billion ($1.76 million) per year] it brings can be used to make up for some costs of sugar production, Phuong added.

Phuong assumed that such an investment turns feasible and profitable if the FiT rises to at least 7.4 cents – equivalent to the existing price of other biomass-fired energy sources. However, even this level would be rather low compared to the FiT of 10.8 cents set in Thailand.

Adam Ward, country representative of the Global Green Growth Institute (GGGI) in Vietnam, said that an expansion of bagasse-fired power generation and biomass energy in general is needed to meet Vietnam’s electricity demand as well as to help the Vietnamese sugar industry further increase its competitiveness with overseas rivals, including those from Thailand.

Ward said Vietnam needs to increase the current FiT for bagasse-fired power to a minimum of 7.4 cents, to be consistent with other biomass energy sources, which would help smooth the progress of the market.

In a bid to support the promotion of bagasse-fired power generation in Vietnam, the German Agency for International Cooperation (GIZ) has implemented the Climate Finance Readiness Programme over the

past three years, a part of which GIZ and GGGI jointly carried out pre-feasibility studies of bagasse-fired power generation at five sugar mills.

Nam Long corporates with Japanese Nishi Nippon Railroad in $306.5 million project

Nam Long Group on July 14 signed the strategic agreement with Japanese investors joining in phase 1 development of Waterpoint Township in the southern province of Long An, a 45-minute drive from Ho Chi Minh City downtown.

According to the agreement, Nam Long, Japanese investors - Nishi Nippon Railroad, TBS Group and Tan Hiep Investment Co Ltd will contribute to the total investment capital of VND6.9 trillion ($306.5 million)

to implement phase 1 of Waterpoint Township with the estimated stake holdings of 50 per cent, 35 per cent, 10 per cent and 5 per cent respectively.

This project will secure the sustainable development of Nam Long in the next 5-10 years.

According to Steven Chu Chee Kwang, general director of Nam Long, this was one of the most significant milestones of the corporation, proving internal strength, the ability to develop the real estate ecosystem, the ability to unlock the land fund and attract investment capital of Nam Long.

Kwang said that the preparation for Waterpoint has been carried out for almost 15 years, from land clearance and compensation process, to research, design and planning according to international standards.

“The process takes into consideration the sustainability, the solutions for preserving the nature and protecting the local ecological environment, including the whole water surface and 50-metre wide natural vegetation corridor along the bank of the Vam Co Dong River. We strongly believe that Waterpoint will become one of the most desirable urban areas in the southern Vietnam,” he said.

Toru Shigemizu, executive officer of Housing Business Division and deputy director of Nishi Nippon Railroad, said that so far, two sides have continuously partnered in five projects.

“We strongly believe in Nam Long by the way they make its commitments to us in particular, and our customers in general. This sixth project of 165-hectare Waterpoint continues to be our cooperation in depth and width. Not only sharing the capital contribution, we will be working together to exchange experiences in real estate development, how to manage resident communities to create added value for the real estate market in Vietnam,” Shigemizu said.

Waterpoint is located at the front of Provincial Road 830, extended from Duc Hoa town to Saigon - Trung Luong Highway and Highway No.1 and Ben Luc town. This project owns the important traffic knots of roadway, waterway and railway connecting directly Ho Chi Minh City and the Mekong Delta.

Cushman & Wakefield, an international real estate consulting firm, has reportedly revalued the property value of the 165-hectare, which is equivalent to 45 per cent of the Waterpoint project (355ha).

In phase 1, the Waterpoint development includes a central park of over 20ha, 17ha for university and international school, 3ha for healthcare services, and 2.5ha of accommodation area.

MBLand Holdings comes under fire for sub-par premium apartments

MBLand Holdings has promised to apply automatic parking technology in the basement floors of the Golden Field My Dinh project to increase parking slots, but has not followed up on its commitments, while

the walls of several apartments were cracked a couple of months after being finished.

Residents could move in to the thirty-storey Golden Field My Dinh building with 389 premium apartments on the corner of Nguyen Co Thach-Ham Nghi streets, South Tu Liem district, Hanoi from the first quarter of 2018.

However, the local authorities have pointed out a number of violations of the fire code. Additionally, residents of the building complained about the quality of building, service fees, and compliance with the project design.

According to a complaint letter of Golden Field My Dinh residents, the developer of this building has violated regulations of Decision No.1969/QD-UBND dated April 22, 2016. In essence, the communal area—including 6,775 square metres of parking area in the three basement floors, 315sq.m of community living room at the fourth floor, and 14,655sq.m of traffic and technical support for the whole building—should be under joint ownership.

However, in the purchase contract between the developer and residents, all of these areas have been determined to belong to MBLand.

Also according to Decision 1969, MBLand has to develop resolutions of automatic parking to increase parking space. However, the developer has yet to do so, while the building has already been put into operation, and the number of residents has been increasing. This makes residents worry about a potential overload at the basement parking lot.

There are only 200 parking slots now, while the number of apartments is 389. Pham Viet Cong, a resident of Golden Field My Dinh, told infonet.vn: “If the building does not apply automatic parking, there will not be enough parking slots for all, and the building cannot guarantee a slot for each apartment. We do not know why the developer has not complied with the decision of the Hanoi’s People’s Committee yet.”

In last April, the fire department checked the building and detected numerous issues related to fire safety. The building did not pass the pre-acceptance test. Thereby, the agency has fined the developer and recommended all organisations, individuals, and households not to move into this unsafe building.

Additionally, residents of Golden Field My Dinh also raised various problems in building quality. The walls of several apartments numbered XX12, XX18, and XX19 have been cracked, and the plaster is starting to break.

Moreover, air from the ventilation system is directly discharged onto balconies and the corridor on every floor, instead of the designated discharge method. Corridors on all floors and basement floors lack fresh air, giving residents a feeling of suffocation.

The quality of this building’s services is too bad. Corridors and elevators are always busy, the smell of garbage permeates residential areas as waste is not moved out regularly, and basement B1 still has construction waste.

All these problems have been noted and sent to the developer and the local authorities via documents, but residents have not receive a response yet. The representative of residents said that if MBLand Holdings does not deign to issue feedback or resolve the issues after receiving the third complaint letter, they will resort to stronger action to claim their legitimate rights after they have spent billions of Vietnamese dongs for these “premium apartments.”

Earlier, on May 9, another project of MBLand Holdings JSC, MB Grand Tower on Le Van Luong street caught fire. The fire started at the technical room and eight fire engines were sent to the scene.

Fortunately, the tower had yet to be put into operation and the fire did not have any casualties.

Foreign investors offered maximum 49 per cent stake in Cenland

Foreign investors are offered a maximum of 49 per cent stake in Century Land JSC (CenLand), the first real estate brokerage firm listed on the Ho Chi Minh City Stock Exchange (HSX).

This was announced by Nguyen Tho Tuyen, general director of Cenland, at the roadshow on July 3 to introduce investment opportunities in Cenland.

Tuyen released that the firm will move the time to list 50 million shares to the third quarter of this year, instead of the middle of this month as initially planned. Accordingly, the reference price will be VND50,000-60,000 ($2.17-2.61).

Cenland was founded in 2002 as an affiliated company of Century Group Joint Stock Company (Cen Group). The company now owns the Real Estate Project Supermarket System (STDA). In 2017 the company was reconstructed and acquired Worldstar Land JSC (nghemoigioi.vn), CEN SaiGon Real Estate Joint, and Rising Star Media JSC.

In 2017, Cenland staged its initial public offering (IPO) and offered shares to increase capital in early 2018. Specifically, the company conducted three stock sales, increasing its charter capital from VND250 billion ($10.9 million) to VND500 billion ($21.8 million).

At present, Cenland has two strategic investors namely VinaCapital and Dragon Capital with a total stake of 25 per cent.

Previously, in April, two large foreign investment funds managed by VinaCapital and Dragon Capital have spent $21 million buying a 25 per cent stake in Cenland. Notably, VinaCapital, through Vietnam Opportunity Fund (VOF), bought 12 per cent for $10 million, while Dragon Capital acquired 13 per cent for $11 million.

Cenland is currently prominent in the northern real estate brokerage market. The company is the pioneer in marketing Vietnamese real estate to foreign customers via its representative office.

In 2017, the firm reported VND1.115 trillion ($48.39 million) in revenue and VND253.3 billion ($10.99 million) in net profit, doubling the figures of 2016.

This year, Cenland set the target to earn VND1.67 trillion ($72.49 million) in consolidated revenue, up 50 per cent on-year, and VND320 billion ($13.89 million) in net profit, up 26 per cent on-year. VND1.326 trillion ($57.55 million) in revenue and VND238 billion ($10.33 million) in profit are expected to come from business operations in Hanoi.

Haiphong backtracks on hasty promise to $800 million paper project

Due to concerns about environmental pollution, the Haiphong Party Committee decided to withdraw its announcement related to the Haiphong People’s Committee’s support to Nine Dragons Paper (Holdings) Limited to develop a $800 million paper and pulp mill complex South Dinh Vu Industrial Zone.

According to Le Thanh, Secretary of the Haiphong Party Committee, issuing the approval to Nine Dragons Paper (Holdings) Limited to develop the project right after the firm expressed its intention was a rushed decision by the Haiphong People’s Committee, drawing the public’s ire, according to diendandoanhnghiep.vn.

Thus, the Haiphong Party Committee decided to withdraw the previous announcement and will organise a press meeting to issue an official opinion on the incident.

Previously at a working session with leaders of the Haiphong People’s Committee on July 5, representatives of Nine Dragons Paper (Holdings) Limited outlined its plan to develop a complex, including a paper manufacturing factory and a pulp mill with a total investment capital of $800 million.

The firm promised to equip the most modern manufacturing line, machinery, and wastewater treatment system for the complex.

At the meeting, Chairman of the Haiphong People’s Committee Nguyen Van Tung agreed with Nine Dragons Paper (Holdings)’ investment plan and stated that after having the environmental impact assessment report approved by the Ministry of Natural Resources and Environment, the city will assign departments and relevant authorities to support the investor to complete procedures for the license.

At the time, the leader of Sao Do Group, the investor of South Dinh Vu IZ, told local media that the group arrived to the IZ to study the investment place and stated that South Dinh Vu IZ would be an ideal place to develop the project.

Responding to the concerns over environmental pollution, the representative of Sao Do Group stated that the US and Finland also lure paper and pulp mill projects. The problem is the technology installed at the mills. In case the investors affirm equipping the most modern technology meeting the 4.0 standard of the European Union for the projects, they will be approved to develop the projects.

Vietnamese farm produce see big chances in Korean market

Warm bilateral ties coupled with significant spending by the Republic of Korea on farm produce imports are creating great opportunities for Vietnamese exporters.

According to Do Kim Lang, Vice Director of the Trade Promotion Agency under the Ministry of Industry and Trade, thanks to the Vietnam-RoK free trade agreement taking effect in December 2015, the RoK has become the third biggest trade partner of Vietnam after China and the US.

In the first two months of 2018, Vietnam earned US$2.79 million from the RoK, up 44% compared to the same time last year.

The Vietnam Embassy in the RoK said Vietnam holds strength in seafood and fruit-vegetable exports to the Asian country, an advantage given the country spends US$33 billion importing farm produce and seafood per year.

The Trade Promotion Agency has organised trips for Vietnamese business delegations in the food industry to visit the RoK to carry out transactions and take part in local exhibitions and trade fairs.

Two major retail firms of the RoK – K-holdings and Coupang – have reportedly sent representatives to Vietnam looking for product supply sources. The firms were interested in importing spices, instant noodles, packed products made of rice, frozen seafood, dried fruits, coffee, chocolate and cashew, among other processed food products.

Kim Dae Youn, director of the food distribution section at Coupang, said apart from Vietnamese fresh tropical fruit, Korean consumers favour the country’s processed farm produce of the country.

Coupang, a leading online shopping company of the RoK, will give a space in its website to introduce Vietnamese food. It aims to sell about 1,800 Vietnamese products online in 2019.

Amid these opportunities, Vietnamese firms have focused on the strict quality standards demanded by the market, particularly with processed food.

Dinh Thi Anh Tuyet, Chairwoman of the Board at the VietED Group, said the Korean market is demanding with high standards, challenging Vietnamese companies.

Small- and medium-sized companies see this as a big challenge, as they lack capital, technologies and human resources.

Le Huy Bay, head of a company processing farm produce, said his start-up is a couple of years old and still faces lots of difficulties.

He said the company is confident of its dried fruit quality but packet design remains unattractive, adding that it has not been able to learn about consumer demand and other market information in the RoK.

He suggested communications agencies offer information on the market and Korean businesses for local companies.

Vietnam a ‘transit stop’ for China-bound exports of Thai fruit

Vietnam’s impressive fruit export revenue in the first half of this year adds little value to the country’s economic growth as most of the shipment were re-exports of produce from Thailand.

Vietnam raked in some US$2 billion from exporting vegetables and fruits in H1/2018, a solid 20.3% increase from the same period last year, according to data from the Ministry of Industry and Trade.

However, the majority of the export value was generated by temporary import for re-export of produce, mostly from Thailand.

Re-exports are exports of foreign goods in the same state as previously imported, revenue generated from which is still counted as the country’s exports.

As in Vietnam’s case, some Thai fruits were temporarily imported into Vietnam and then all exported to China.

Particularly, Vietnam has imported US$266 million worth of Thai fruit in the first five month of this year, and the country’s fruit export to China in the same period was also US$266 million, according to the General Department of Customs.

Four types of fruit have been imported to Vietnam and immediately exported to China, with the conditions of the shipment unchanged - fresh longan, durian, mango and dried longan.

The re-exports were all done via the Huu Nghi international border gate in the northern province of Lang Son.

Shipments of this kind, which go from Thailand to China with a ‘transit stop’ in Vietnam, are not subject to any duties in the intermediary country, according to Tran Bang Toan, a customs official at Huu Nghi international border gate.

The re-exports are only charged with some fees and transport services costs.

“This really adds insignificant value to Vietnam, which functions as an intermediary for the China-bound fruit exports from Thailand,” Toan said.

Momentum for economic growth for the rest of the year

In the first half of the year, Vietnam’s economy recorded impressive growth in comparison with previous years. The result is partly due to the government’s drastic measures to attain the year’s targets.

Despite global economic uncertainty and possible inflation before the end of the year, Vietnam’s economy has seen encouraging signs.

Vietnam’s economy is expected to continue growth momentum thanks to the government’s resolute determination and wise management, production recovery, and the advantages of new free trade agreements (FTAs).

In order to attain Vietnam’s economic growth target of 6.7% this year, all sectors have to make the most of opportunities inside and outside Vietnam. The processing and manufacturing industry continues to provide the driving force.

Minister of Planning and Investment Nguyen Chi Dung is hopeful about the Nghi Son Oil Refinery. “If we can put the project into operation, it will create a motive power. We need to promptly resolve problems and speed up progress on major projects.”

Business indexes and the number of newly established enterprises show that Vietnam’s economy has prospered. The implementation of free trade agreements will create a new environment and motivation for investment.

Minister of Industry and Trade Tran Tuan Anh said, “Markets of FTAs and preferential mechanisms with China, the Republic of Korea, Russia, and ASEAN have been better exploited. The target of 10% export growth in 2018 is feasible. Export revenue in the second half of the year should reach US$20 billion per month. It’s possible. If the National Assembly’s year-end meeting ratifies the Comprehensive and Progressive Trans-Pacific Partnership, we’ll have good conditions to attract investment and expand markets.”

Foreign experts have made positive comments about Vietnam’s economic growth. Ousmane Dione, World Bank Country Director for Vietnam, said Vietnam's medium-term prospects continue to improve and GDP is expected to grow 6.8% this year.

Eric Sidgwickl, ADB Director in Vietnam, said Vietnam’s rapid growth is due to many factors, including the expansion of manufacturing and export, higher domestic demand, strong foreign direct investment, and improved agriculture.

Japan’s Nikkei said employment in Vietnam is at a record high. Vietnam’s Purchasing Managers’ Index (PMI) increased from 53.9 points in May to 55.7 points in June, while ASEAN’s PMI fell from 51.4 to 51 points.