Vietnam urged to grab opportunities when joining AEC

Vietnam’s membership in the ASEAN Economic Community (AEC) offers new opportunities for businesses to enjoy benefits from trade liberalisation, said Deputy Minister of Industry and Trade Nguyen Cam Tu at a seminar in Danang on August 14.

However, Vietnam will be facing fierce competition from regional rivals in terms of consumer goods, services and investment attraction, while low-cost production will be no longer Vietnam’s competitive advantage, Tu warned.

During the seminar, experts agreed that when the AEC is established in 2015, ASEAN will become a single market without tariffs, non-tariff barriers will be removed gradually, and the community will be more dynamic and competitive.

Tu said Vietnamese businesses should be able to boost exports in many advantageous areas such as electronics and components, means of transport, equipment and machinery and steel after the AEC is realised.

He added export businesses that have met the market demand will have greater opportunities for stronger growth. In addition, deeper integration in the field of trade, service and investment will open up prospects for economic development.

To fulfil the tasks, there should be active co-ordination between management agencies and businesses, Tu stressed.

Ministry of Industry and Trade leaders also warned Vietnamese businesses need to update information, improve capacity and build new policies to stand firm in a highly competitive environment.

Southern region to lure foreign investors

Each province must define their competitive advantages and economic potential to assist the government in its foreign-investment decision-making, heard a seminar held in Can Tho on August 14.

The southern region has the greatest economic proportion and largest contribution to the State budget. It is necessary to know the potential development of each province, Do Nhat Hoang, head of the Ministry of Planning and Investment's Foreign Investment Agency said.

He was speaking at a Foreign Investment Conference, attracting representatives of 21 southern provinces' Planning and Investment Departments, Investment Promotion Centres, Economic Zones, and Industrial and Processing Parks.

As the Mekong Delta has high potential in agriculture, seafood and fruit trees, each province should give detailed information about the kinds of seafood or fruit it can raise or grow best, he said.

"From such details, the Foreign Investment Department will introduce and invite the proper foreign investors," he added.

At present, the department is trying to guide foreign investment into suitable industries in order to ensure quality and effectiveness.

At the conference, solutions to support enterprises in dealing with economic difficulties and attracting more foreign investment were discussed.

Another topic concerned guidelines for setting up new investment promotion programme based on recent Government new decision (No 03) related to State management and investment promotion.

Since early this year to mid-July, 889 FDI projects have received investment licences with registered capital of US$6.8 billion. Another 300 projects have expanded their capital with more US$2.6 billion.

New and expanded capital accounted for 80% of investment compared with the same period last year.

The Foreign Investment Agency targets US$20 billion in foreign investment for the year.

According to statistics from the department, there are around 16,800 foreign invested projects — with total registered capital of US$242.2 billion and disbursed capital of US$118 billion – operating in Vietnam.

The manufacturing industry comprises 54% while real estate is 20.6% and agriculture-forestry-marine is 1.4%.

Japan, the Republic of Korea (RoK), Singapore and Taiwan are the top four investors in Vietnam.

Good signs for handicraft exports

A pick up in the pace of handicraft orders from Japan and China have flooded the Vietnamese market recently, creating an opportunity for the industry to achieve its export turnover target of US$1.6 billion this year.

Do Kim Lang, deputy head of the Trade Promotion Agency under the Ministry of Industry and Trade, said that the influx of handicraft orders to Vietnam are attributed to the impact of China’s minimum wage increase program, leading to a rise in production costs.

In addition, long time delivery and tough requirements of orders forced importers from Australia and Japan to leave China and eye Vietnam, Lang said.

Le Ba Ngoc, general secretary of the Vietnam Handicraft Exporting Association (Vietcraft) in turn said that in fact, importers have placed increased trust in the quality of Vietnamese handicrafts.

In recent years, local businesses selected high-end and mid-end market segments to devise investment strategies and sharpen competitiveness to improve product quality and promote Vietnamese handicrafts to the world.

The US, EU and Japan remain Vietnam’s traditional markets, making a major proportion out of the sector’s total export turnover. Local businesses are currently seeking to fully tap emerging markets in the BRICS nations (Brazil, Russia, India, China, and South Africa).

Within the BRICS bloc, Vietnam exports wood products worth some US$100 million to the Chinese market each year.

Ngoc warned that small-scale businesses are likely to suffer losses if investing in low-cost products. Therefore, to increase export turnover, he suggested they should focus on the mid-end market segment in accordance with production capacity, working skills and material sources.

Vietnam-UK trade volume at record highs

Two-way trade between Vietnam and the UK has gathered steam after a period of stagnation, hitting more than US$2.13 billion in the first six months of the year.

The Ministry of Industry and Trade (MoIT) reports that key Vietnamese exports were garment and textiles (US$246 million), footwear (US$265 million), mobile phones and spare parts (US$670 million) and wood products (US$134 million).

The country’s principal imports were machinery and spare parts (US$110 million) and pharmaceuticals (US$60 million).

However, the Vietnamese trade office in the UK said Vietnamese products find it difficult to enter this market due to disparities in development levels and business culture.

The UK market has a close-knit distribution network, forcing businesses to spend more time exploring and penetrating it, said the office.  

In addition, it said, Vietnamese exports to the UK are facing high competitiveness from India, China and Brazil, as well as other countries in Europe.

To increase their market share in the UK, experts suggested Vietnamese businesses should study the market and develop proper strategies, use e-commerce services, and maintain good business relationships along with steps to increase product quality.

Thai products marketed in Hanoi

More than 150 Thai leading businesses are showcasing their products at a fair in Hanoi in an effort to further penetrate the Vietnamese market.

As many as 180 pavilions at the Thai Retail Fair 2014 introduce food, drinks, fruits, household utensils, garments and textiles, jewellery, electronics, cosmetics, automobiles, decorations, souvenirs, and aviation equipment.

Addressing the opening ceremony on August 14, Thai ambassador to Vietnam Panyarak Poolthup affirmed that the four-day fair has opened up plenty of opportunity for businesses of both nations to boost import-export turnover.

Thailand and Vietnam strive to increase their trade value by 20% annually, aiming to gross US$15 billion in value by 2020, he said.

Ta Hoang Linh, deputy head of the Trade Promotion Agency under the Ministry of Industry and Trade said that over the past years, Vietnam-Thai trade ties have increased impressively.

Two-way trade turnover reached over US$1 billion in 2000 for the first time and amounted to US$9.4 billion in 2013. In the first four months of the year, bilateral trade was US$3 billion.

Vietnam is now Thailand’s second largest trade partner in ASEAN and its ninth biggest trade partner in the world.

Time for Vietnam to integrate substantially

Vietnam should undertake stronger economic restructuring measures, targeting a more comprehensive and transparent effort, allowing for more effective allocation of resources, according to Deputy Minister of Industry and Trade Tran Quoc Khanh.

In terms of multilateral relations, Vietnam has become an official member of the World Trade Organisation (WTO) since 2007 after more than 11 years of negotiations.

In the region, Vietnam became a full member of ASEAN and then the ASEAN Free Trade Area (AFTA) in the 90s. Together with ASEAN, Vietnam has participated in free trade agreements between ASEAN and China, India, the Republic of Korea, Japan, Australia and New Zealand.

On bilateral relations, Vietnam has signed a series of important agreements,  including a bilateral trade agreement with the US and an economic partnership agreement with Japan, and actively negotiated other FTAs with the EU and the Customs Union.

International economic integration milestones have helped raise Vietnam’s regional and international status. Economic integration at different levels demonstrates Vietnam’s great efforts in grasping new opportunities, however, it poses huge challenges to the country.

Simultaneously opening trade door for many partners will create high pressure on competition and urgent needs for legal system reform and commitment enforcement.

The FTA with the EU and the Trans-Pacific Partnership Agreement (TPP) are new multilateral agreements with higher liberalisation. When joining these agreements, Vietnam needs to give stronger commitments to traditional fields- goods and services and non-traditional fields like labour, the environment, and e-commerce.

Deputy Minister Khanh says to successfully integrate into the global economy, Vietnam should boost  substantial integration, aiming to restructure the economy and reallocate resources in a more effective and transparent manner.

Former Trade Minister Truong Dinh Tuyen argues that international economic integration should go along with domestic reform under which reform will create a premise for integration and vice versa integration will help boost domestic reform.

Economic reforms and integration should be considered as key tasks, Tuyen says adding that reform should also expand to other social fields, especially in the political system because political reform will pave the way for better economic reform.

Sharing the same view, former WTO Director General Lamy said Vietnam should further raise its socio-economic status to integrate sustainably in the new period. In addition to macro reforms, the role of businesses must be heightened in the next phase of the economic integration, says Nguyen Thu Trang from the Vietnam Chamber of Commerce and Industry (VCCI).

Under a Prime Minister decision issued in 2012 on consultation regulation, agencies  involving in international trade agreement negotiations have to directly collect proposals from the business community or through VCCI.

However, the business community’s proposals and contributions during international negotiations have been   limited so far, Trang says.

Businesses’ participation in negotiations and the implementation of bilateral and multilateral agreements will be very productive to Government agencies in negotiations on important agreements in the near future, she notes.

Secutech Vietnam 2014 to kick off in HCM City

The 7th International Security, Fire and Safety Exhibition and Conference (Secutech Vietnam 2014) is set to take place at the Saigon Exhibition & Convention Centre(SECC), in Ho Chi Minh City from August 20-22.

The event, co-organized by Vietnam Advertisement & Fair Exhibition JSC (VIETFAIR) and Messe Frankfurt New Era Business Media Ltd, is expected to attract 200 booths of corporations and businesses from ten countries and territories including the UK, Australia, Taiwan, HongKong, Singapore, Turkey and Vietnam.

The event will showcase thousands of the latest products and applications in the fields of security, safety, fire prevention, search and rescue including video surveillance system, entry-exit controls, biometrics, electric locks, auto fire alarm and intrusion detection systems and integrated solutions for the industrial, transport, banking and retail sectors.

Secutech Vietnam offers a great opportunity for businesses to expand operations and introduce their products as well as assist Vietnamese businesses access the latest technologies.

Localities play key role in international cooperation

All localities may become an attractive destination for foreign businesses, said Japan External Trade Organisation (JETRO) Chief Representative Atsusuke Kawada at a seminar in Hanoi on August 13.

Japan, with over 2,000 businesses, is one of the largest foreign investors in Vietnam, Atsusuke said, adding that over 90% of the investment is concentrated in the larger metropolitan and urban areas.

Recently, however, investment has started to branch out into the less densely populated and rural areas as evidenced by the construction of manufacturing facilities in  Quang Ninh, Thai Binh, Hoa Binh, Nam Dinh and Nghe An.

"Japanese businesses are bullish on expanding investment throughout Vietnam,” Atsusuke said.

Tomiyuki Kimmura, Asian Development Bank (ADB) Country Director to Vietnam, in turn said provinces want to attract resources from outside, such as technology and materials to develop comprehensively. ADB has offered US$8.3 billion loans to Vietnam and at least 25% of which have been implemented through local administration.

Ho Chi Minh City municipal Department of External Affairs Director Nguyen Hong Linh said as the leading economic hub of the country, HCM City has actively expanded cooperation with many localities at home and abroad, including Japan.

Two-way trade turnover between the city and Japan reached nearly US$2 billion in the first seven months of this year. Japan is also the fifth largest foreign investor in the city with 688 projects.

“The impressive figures demonstrate the important role of international cooperation in local socio-economic development,” Linh said.

To iron out snags in attracting investment capital at localities, Atsusuke said representatives from provincial departments should coordinate with relevant agencies to deal with difficulties in infrastructure and labour forces. In addition, localities should actively promote their strength, incentive policies and prominent features.

Vietnam is RoK top shrimp supplier

Vietnamese shrimp exports to the Republic of Korea (RoK) skyrocketed 92.2% since the start of the year, according to the Vietnam Association of Seafood Exporters and Processors (VASEP).

As of the end of June, the RoK was the fourth largest export market for Vietnamese shrimp, accounting for 7.7% of the sector’s total export value.

In the six month period, exports of white-leg shrimp rose 17% while prawn exports declined by 17.9% and other shrimp products saw a modest rise of 1.2%.

The average price of Vietnamese shrimp hovered around US$11 per kilo.

According to the latest data from Korean Customs, Vietnam remained the top supplier of shrimp for the RoK, comprising 44.54% of the country’s imports.

Vietnamese shrimp imports were 3.6 fold higher than neighbouring China, the second largest supplier.

Plan to lure foreign investors

Each province must define their competitive advantages and economic potential to assist the government in its foreign-investment decision-making, heard a seminar held in Can Tho yesterday.

"The southern region has the greatest economic proportion and largest contribution to the State budget. It is necessary to know the potential development of each province," Do Nhat Hoang, head of the Ministry of Planning and Investment's Foreign Investment Agency said.

He spoke at a Foreign Investment Conference with the attendance of 21 southern provinces' Planning and Investment Departments, Investment Promotion Centres, Economic Zones, and Industrial and Processing Parks.

He said the Mekong Delta had high potential in agriculture, seafood and fruit trees. Each province should give detailed information about the kinds of seafood or fruit it can raise or grow best.

"From such details, the Foreign Investment Department will introduce and invite the proper foreign investors," he added.

At present, the department is trying to guide foreign investment into suitable industries in order to ensure quality and effectiveness.

"We are trying to reform the investment environment by reducing time and procedures for investment registrations. We will make simple and precise procedures, but, of course, will still be able to manage enterprises," he said.

At the conference, solutions to support enterprises dealing with economic difficulties and attract more foreign investment were discussed.

Another topic concerned guidelines for setting up new investment promotion programme based on recent Government new decision (No 03) related to State management and investment promotion.

Since early of this year to mid-July, 889 FDI projects have received investment licences with registered capital of US$6.8 billion. Another 300 projects have expanded their capital with more $2.6 billion.

New and expanded capital accounted for 80 per cent of investment compared with the same period last year.

The Foreign Investment Agency targets $20 billion in foreign investment for the year.

According to statistics from the department, there are around 16,800 foreign invested projects — with total registered capital of $242.2 billion and disbursed capital of $118 billion – operating in Viet Nam.

The manufacturing industry comprises 54 per cent while real estate is 20.6 per cent and agriculture-forestry-marine is 1.4 per cent.

Japan, South Korea, Singapore and Taiwan are the top four investors in Viet Nam.

Law strengthens tender process

The Revised Bidding Law, which took effect in July, has ushered in great improvement in monitoring bids for public projects and tackling violations, a seminar organised by the Viet Nam International Arbitration Centre (VIAC) heard in HCM City yesterday.

Dr Tran Trinh Tuong, former director of the Institute of Construction Economics, said the law, which superseded the 2005 Bidding Law, spells out in greater detail the process of selecting contractors.

It requires more categories of projects to call for tenders than in the past — like public firms — he said.

It stipulates that winning bids should be based only on a full-package contract, which refers to a fixed-price contract in which the bid must also include possible costs emerging from risk factors and escalation of prices during the implementation of the contract, he said.

This would stop contractors from making very cheap bids that result in poor quality, he said.

Tran Huu Huynh, president of VIAC, said, "This will also stop the practice of making cheap tenders to win a contract and then negotiating with investors to adjust prices."

The law stipulates that assessment of tenders should be made based not only on price but also bidders' technical competence and experience, he said.

"When looking at bid results in the past time, we [realise] we mainly ran after cheap prices. That would be completely wrong under the new law."

Enterprises should learn about the changes to the law to change to their working methods and avoid risks, he counselled.

Truong said the law encourages application of international norms for bid applications and contracts.

Soh Lip San, partner at Singapore-based law firm Rajah & Tann LLP, and Chau Quang Huy, a lawyer at the firm's Viet Nam office, said as a developing country Viet Nam needs foreign bidders to take part in its infrastructure development process.

But since this may cause disputes over contracts because of culture and language differences, getting the contract well drafted right at the beginning is important, Soh said.

Huynh said Vietnamese arbitration centres are competent enough to settle disputes, adding that businesses should take their disputes to them to get justice and save cost and time.

Banks still sceptical of corporate credit ratings

Corporate creditworthiness rating is a good platform facilitating banks in risk management, non-collateral loans and quick capital disbursement, but lenders are still sceptical about the degree of transparency in ratings.

Late last month, the State Bank of Viet Nam told credit institutions and rating agencies to improve their capacity of assessing creditworthiness of companies so as to increase non-collateral loans. The move was made keeping in mind Viet Nam's 12 per cent credit growth in 2014 which is likely to rest on the second half.

Banks are struggling to increase lending, which is indicated by a low credit growth of only 3.68 per cent in the first seven months.

"Lending without collateral is a decision made after many good transactions. It is impossible to grant trust loans at first sight," Tran Dao Vu, Deputy General Director of DongA Bank told baodautu.vn.

Enterprises might also gain the confidence of banks if they improved transparency in their financial reports, Vu said.

It is said that companies prepare two financial reports, the bare copy for them and the other one polished for banks, which they use to while applying for loans.

Banks said that only 1 to 2 per cent of enterprises get financial reports audited.

Under current regulations, only credit institutions, finance, securities and insurance companies, foreign-invested companies and public companies must have reports audited. There are only 1,200 public companies out of 400,000 companies in Viet Nam.

In a situation where bad debts are mounting, banks are more likely to insist on collateral, preferably in the form of property.

Director of an HCM City-based bank said that some enterprises didn't have many properties and they would like to set stocks and input sources as collateral for bank loans. However, there were risks like product circulation with this kind of collateral.

From the company's perspective, the requirement of collateral by some enterprises has made it difficult to arrange funding.

Pham Van Dung, Director of Hung Dung Honey Company in Ha Noi said that his company has a bad debt-free status with banks. He could not borrow more money to expand his business as banks already held his assets as collateral.

Tran Quy Lam, Director of Phu Tho-based Trung Kien Bottled Water Company was quoted by baodautu.vn as saying that since banks had so many bad debts they generally tightened the loan disbursement process, which in turn had an adverse impact on other performing companies.

In the document No 5342/NHNN-TTGSNH, dated July 24, the central bank urged commercial banks to employ solutions to help enterprises get access to more capital to finance production.

Experts said that both, banks and companies need each other to spend capital, but they may have to build trust before going any further.

Domestic gold demand posts sharp drop in second quarter

The demand for gold declined sharply by 42 per cent in volume and 48 per cent in value in the second quarter over the same period last year.

According to the latest report from the World Gold Council (WGC), Viet Nam registered consumption of 19.3 tonnes worth US$799 million.

The country's demand for jewellery was 2.8 tonnes worth $116 million, down 17 per cent, while the figures for gold bars and coins were 16.5 tonnes worth $683 million, down 45 per cent.

The WGC's report on global gold consumption in Q2 also showed that in the year ending June, Viet Nam consumed 86.3 tonnes of gold worth $3.6 billion, down 4 per cent in volume and 21 per cent in value.

The WGC ranked Viet Nam as the world's seventh largest gold consumer last year with 92.2 tonnes worth $4.16 billion, up 20 per cent against the previous year.

Viet Nam, this year, is seeing a decline in the demand for gold as decelerating inflation and more attractive opportunities in stocks, property and bank deposits have driven the interest away from it.

Experts said that this trend clearly showed the increasing trust that the country's expanding middle class had in the economy at large.

Traditionally, many saw gold as the only safe way to store their money, but now they are much more willing to keep their money in banks and invest in businesses, stocks and other types of financial instruments.

Nguyen Thanh Long, Chairman of the Viet Nam Gold Traders Association, said that this trend was new to Viet Nam.

Long explained that when the economy was unstable and inflation high, people only trusted gold. Now people are seeking investment in stocks and property, and even simply depositing money in banks could give them good returns, so demand for gold had dropped sharply, he said.

Experts forecast that gold consumption in Viet Nam, the largest Southeast Asian gold consumer after Thailand, was likely to shrink by half this year to between 25 and 30 tonnes.

Under the WGC's Q2 report, the world's total gold demand in Q2 was 964 tonnes, down 16 per cent against the same period last year. Demand for jewellery accounted for half that total.

India and China remained the world's top gold consumers with $154 and $143 tonnes, respectively.

Central banks of countries worldwide in Q2 bought 118 tonnes of gold, up 28 per cent against the same period last year.

Real estate association against looser foreign property ownership rules

The head of the HCMC Real Estate Association said authorities should not allow foreigners to buy homes in Vietnam even though the Ministry of Construction has been considering looser restrictions.

Le Hoang Chau, chairman of the HCMC Real Estate Association, confirmed the association's stand. According to Chau, many countries only allow foreigners to buy apartments in specific locations during the first stages of opening their markets.

"For the first five years, Singapore allowed foreigners to buy only apartments. The ban was gradually lifted over the next five years, but buyers still have to pay higher taxes. We shouldn't allow foreigners buy villas and houses yet while external security threats to Vietnam still exist. This would make the situation difficult to control in the future," he said.

Overseas Vietnamese and other foreign passport holders will be permitted to own apartments for a maximum period of 50 years. The Ministry of Construction proposed allowing foreigners buy more types of housing in order to relieve the real estate market slump.

Minister of Planning and Investment Bui Quang Vinh said that investment in the housing market by foreigners could provide a huge boost to the sector.

"The maximum term of ownership for residential property will still range from 50 to 70 years. A lot of people will buy homes if we open this market. We have about 130,000 South Koreans renting apartments in Vietnam because they can't buy houses. Those renters may try to find ways to evade taxes such as claiming lesser rental fees," he said.

Prime Minister Nguyen Tan Dung also gave his support to the proposal.

Japan quickly disburses FDI in Binh Duong

Japan remains the largest foreign investor of southern Binh Duong province with more than 220 projects and foreign direct investment (FDI) disbursements of nearly US$5 billion.

Most Japan-invested projects are in the areas of high-tech, electronic outsourcing, medical equipment, high-quality food processing, infrastructure and urban areas.

Mai Hung Dung, Director of the Binh Duong provincial Department of Planning and Investment, said Japanese investors strictly complied with their commitments to quickly disburse FDI of projects which were licensed late last year.

Typical examples include Aeon Binh Duong trade, services and real estate project with FDI disbursements of US$95 million and Tokyu Binh Duong urban area with disbursements of US$1.2 billion.

The Aeon Calary Binh Duong Commercial Centre is in the final phase and is expected to enter operation early November 2014. It was constructed on an area of 6h at a cost of US$95 million. Once completed, it will generate stable jobs for more than 1,500 local workers.

Yasuo Nishitohge, Aeon Vietnam Director General, said the project is carried out smoothly in line with the group’s business and investment strategy.

The US$1.2 billion real estate project (Sora Gardens) was erected by Tokyu Group and Becamex Corporation on an area of 110ha, and includes around 7,500 flats, houses, entertainment sites, trade and office buildings.

Sora Garden is expected for completion later this year.  The important project in Binh Duong will help attract other foreign direct investment (FDI) from Japanese investors in the future.

According to the provincial People’s Committee, Binh Duong has attracted more than 2,300 FDI projects with a cumulative FDI of nearly US$19.8 billion.

PM advances VND3.6 trillion to speed up ODA projects

Prime Minister Nguyen Tan Dung has approved an advance of VND3.6 trillion (US$169.2 million) as counterpart funding for projects financed by official development assistance (ODA).

The money is expected to expedite the progress of many transport projects which are falling behind schedule due to a lack of counterpart funding.

The prime minister asked the Ministry of Planning and Investment to quickly announce the list of projects and their respective allocated funds as well as instructing relevant agencies to implement the PM’s order in a timely fashion.

At a meeting on August 2, Deputy PM Hoang Trung Hai stated that ODA disbursement in the first half of 2014 has so far shown improvements from the previous year but the distribution has not been even between all sectors and recipients.

Foreign-invested firms dominate local wood market

Foreign-invested enterprises currently hold a lion’s share of Vietnam’s wooden furniture market and leave a 20% share to domestic companies, according to the Handicraft and Wood Industry Association of HCMC (HAWA).

Figures released by HAWA at a seminar in HCMC last week showed each household in Vietnam spends VND6 million (less than US$300) buying wooden products a year and up to 80% of these products are made by foreign-invested enterprises in this market.

HAWA explained that the local wood industry has developed dramatically with high export revenues but local firms mainly outsource and semi-process wooden products due to their small-scale production. This is the reason why their profit and added value remain modest.

Doan Anh Tuan, director of business development for small- and medium-scaled enterprises (SME) at Vietnam Prosperity Bank (VP Bank), said SMEs account for 90% of the nearly 3,000 companies operating in the wood processing sector in Vietnam.

Foreign-invested firms make up only 10% of the total number but contribute 35% of the country’s wooden goods export turnover, Tuan said at the seminar on Vietnam’s economy and prospects for the local woodworking industry in 2014.

According to a survey of the World Bank (WB), most enterprises in the wood processing industry are household businesses with small-scale production and capital. Therefore, they are easily affected by market changes and macro-economic factors. Labor productivity at these firms is low as each Vietnamese worker can make 1.9 chairs a day, much lower than China’s 4.5 chairs.

According to HAWA, Vietnam is now the top wooden products exporter in the ASEAN region, second in Asia and sixth in the world in terms of export revenue. The country has exported wooden products to 120 markets, including Japan and those in Europe and North America.

However, the local sector has to import 80% of material needs.

Aid packages remain out of SMEs’ reach

Small and medium enterprises (SMEs) have found it difficult to benefit from the Government’s financial assistance packages, heard a seminar held by the 2030 Businessmen Club in HCMC last week.

At the seminar on empowering SMEs to enter global markets, Nguyen Bach Phuc, chairman of the HCMC Association of Consultants in Science Technology and Management (Hascon), said local SMEs have not got sufficient support over the years and dozens of trillions of dong in aid has been channeled into real estate and construction giants or State corporations like Vinashin and Vinalines instead of SMEs.

Phuc said it was unreasonable to hear that an enterprise has recently sought to borrow VND1.5 trillion to buy fishing boats that have been in use for 30 years in South Korea while many SMEs have been unable to reach preferential loans.

Sharing Phuc’s view, Ma Thi Thanh, vice chairwoman of the business association in Soc Trang Province, said around 70% of the enterprises in the Mekong Delta province have not been able to find loans for their production and trading activities.

Thanh added that SMEs have struggled to weather a host of difficulties and much pressure in the past three years, and it is hard to say how long they can bear more if there are no practical supporting policies for them this year.

In addition to assistance from the Government, according to business people and economic researchers at the seminar, SMEs have to join forces if they want to survive and grow strong on both domestic and global markets.

Sunil D Sharma, general secretary of the International Society for Small and Medium Enterprises (ISSME), said it is inevitable for SMEs in Vietnam to make prudent changes and improvements before they are strong enough to enter global markets. In the current situation, enterprises have to enhance their competitiveness by investing in governance and technological renovations.

ISSME is a non-governmental organization based in India’s city of New Delhi. Its aims are to boost sustainable and comprehensive development.

250 firms to attend Vietstock 2014

Around 250 enterprises from 30 countries and territories are expected to put their names down to participate in Vietstock 2014 Expo & Conference, which is a major feed and livestock event in Vietnam set to kick off in HCMC this October.

The 7th exhibition at the Saigon Exhibition and Convention Center in District 7 from October 15 to 17 will feature products of the husbandry industry as well as technologies for feed processing.

Organizers said Vietstock 2014 Expo will be for local and foreign enterprises in the industry to meet and explore opportunities for their partnership.

As part of the exhibition, Vietnam Livestock Industry Awards 2014 will be organized on October 15 to honor individuals and organizations having initiatives and great contribution to the development of the country’s livestock industry. Awards will be granted to 14 enterprises that have excellent achievements in management and development of livestock, poultry, egg production, feed production, and sales of livestock products.

Conferences will be held in conjunction with the exhibition for delegates to discuss major issues of the livestock industry, including prospects of the meat processing industry in Vietnam, opportunities and challenges for the domestic livestock industry when Vietnam signs the Trans-Pacific Partnership (TPP) agreement, animal health, the effective monitoring processes for import and export of animal feed and materials to minimize the use of antibiotics in animal feed.

Automakers drum up sales promotions

A number of automakers and dealerships have launched sales promotion and discount programs to woo customers and obtain sales targets this month, which coincides with the seventh month of the lunar calendar.

Automakers said many people see the month of wandering souls as bad for buying things, especially those of high value such as cars and homes. This is why automobile manufacturers and assemblers have to carry out promotions to attract customers.

Mazda assembler and importer VinaMazda has decided to revise down the price of Mazda 6 2.0L by VND126 million to less than VND1.16 billion and VND111 million to VND998 million for the 2.5L type.

In addition, consumers are given complementary accessories, including DVD players with bluetooth connection, global positioning systems (GPS) and automated door lock devices.

Ford Vietnam has reduced retail prices of Focus and Fiesta cars, with a VND20 million cut for Titanium and 1.0 Ecoboost Fiesta, VND50 million and VND40 million for Titanium and Sport+ versions of Ford Focus respectively.

The U.S. company also offers VND5 million to VND10 million discounts for XL 4x4 MT and XLT 4x4 versions of Ford Ranger pickups.

On the occasion of the 20,000th Civic car sold, Honda Vietnam is offering iPhone 5S smartphones to the first 100 buyers of Civic cars and high-class leather bags to those purchasing CR-V and City cars. Besides, the owners of Honda cars will get free check services and a 10% discount on maintenance fee extension.

Mitsubishi Vietnam is in the promotion race as well by discounting VND10 million and giving VND10-million service vouchers for buyers of Mirage hatchbacks. Meanwhile, the Triton GLS, GLS and GL versions of gasoline-fueled Pajero Sport have been marked down by VND30 million.

Toyota Vietnam, which dominates the local auto market, has extended a program of giving insurance worth VND15 million to buyers of Altis until the end of this month. Dealerships of the Japanese company are selling Camry and Prado cars at over VND10 million lower than before.

Purchasers of Avante and Accent cars of Hyundai Vietnam between now and September 15 will get VND15 million worth of accessories or in cash.

Car dealerships projected auto sales this month would retreat against previous months because people tend to spend less on valuable products in the month of wandering souls. Last August, auto sales decreased 16% compared to the preceding month.

The local auto market is expected to bounce back in September and continue its upward momentum toward the year-end as demand is always high in the final months of a year.

HCM City firms take out VND20 trillion of soft loans

Many enterprises in HCMC have borrowed preferential loans amounting to a combined VND20 trillion within the bank-business connectivity program organized by local authorities.

Last Friday, 39 borrowers including enterprises, traders and traditional wet market management boards clinched credit contracts worth over VND3.5 trillion. This is part of the program organized by the central bank’s HCMC branch and the HCMC Department of Industry and Trade.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said there had been 22 credit contract signing ceremonies in 24 districts in the first seven months of this year, with 649 enterprises, 41 family-run businesses and six cooperatives lent over VND15.6 trillion.

Minh said the loans carried short-term interest rates of 7-8% per annum and a maximum 11% per annum for medium and long tenors.

In June, the central bank’s HCMC branch also cooperated with the HCMC Export Processing and Industrial Zones Authority (Hepza) to make arrangements for 23 enterprises to borrow VND917.6 billion.

Speaking at the signing ceremony last Friday, HCMC vice chairwoman Nguyen Thi Hong said the city wanted to see businesses taking out new bank loans totaling at least VND10 trillion in the last five months of this year to bring the total in the program to VND30 trillion this year.

HCM City to loosen construction rules

The HCMC government does not require a construction license for houses of up to 500 square meters and no more than seven levels in urban and housing development projects whose detailed 1/500 scale zoning plans have been approved.

The change is part of a decision issued by the HCMC People’s Committee last week to regulate construction licensing in the city. The decision will take effect this Thursday.

The new rules clarify licenses will also be exempted for construction works at export processing zones, and industrial and hi-tech parks with scale 1/500 zoning plans already approved.

Citizens can get temporary licenses to build houses of no more than three levels outside the areas already zoned for urban and residential areas with approved scale 1/500 zoning plans, but administering agencies have not issued any decision withdrawing the land lots on which the houses are built.

The licensed duration of these temporary houses should be from three to five years from the date of the zoning plans for the areas are announced and depending on annual land usage plans of local authorities.

Citizens will be allowed to repair, renovate and build the houses which are partly or entirely located in the areas already announced for the planned expansion sections of transport projects, but relevant agencies have not issued decisions taking back land in these areas. The licenses for such new houses are limited to three years.

According to statistics from the HCMC government, the city has 1,386 housing projects with a total area of more than 11,770 hectares. Only 13% of the total area has been completed, 15% under construction, 61.6% suspended and the rest taken back or having investment certificates revoked.

Farm produce exports to Saudi Arabia jump

The Africa, Western and South Asia Markets Department under the Ministry of Industry and Trade said exports of Vietnamese agricultural products to the Saudi Arabia market in the Middle East has increased strongly.

Updated statistics from the General Department of Customs indicated Vietnam’s exports of farm produce to Saudi Arabia in the first half of this year surpassed US$30 million, up a staggering 34.4% compared to the same period last year.

The export revenue included US$16.6 million from pepper contribution, US$3.8 million from vegetables, US$3 million from rice, US$2.2 million from cashew nuts, and US$2.1 million from tea, rubber and cassava.  

The period saw latex shipments to Saudi Arabia up 300% over the first half of last year, tea 13.7% and vegetables 5.6%. Particularly, pepper exports gained a year-on-year growth rate of over 88%, making Saudi Arabia the second largest importer of Vietnamese pepper in the first six months of this year.

Saudi Arabia is a major market in the Middle East and has to import large volumes of agricultural products for domestic demand as its harsh weather conditions are not suitable for agricultural development, especially production of essential items.

The Ministry of Industry and Trade said Saudi Arabia is a market of great potential for Vietnamese enterprises, particularly producers and exporters of farm produce.

Complexity hinders local firms to capitalize on FTAs

A survey by the Economist Intelligence Unit indicated term complexity is the top hurdle for Vietnamese enterprises to make the most of bilateral and multilateral free trade agreements (FTA) the nation has joined so far.

The HSBC-sponsored survey found that 52% of respondents in Vietnam pointed out the complexity of the agreement terms as the main reason that prevents them from benefiting from FTAs.

Following the term complexity are unattractive markets to enter (40%), benefits not enough to compensate for the difficulties in using the FTAs (38%), a lack of internal expertise (30%), already duty-free access offered to respondents’ products (29%) and no substantial new market access provided (24%).

The bank last week released the findings of the survey, which the Economist Intelligence Unit conducted among senior executives from 100 companies in each of Australia, China, Hong Kong, India, Indonesia, Malaysia, Singapore and Vietnam in the first quarter of this year.

The companies participating in the survey have annual revenues of between US$50 million and US$150 million. They operate in information technology and telecoms, consumer goods and retail, financial services and manufacturing among others.

Despite the term complexity, up to 80% of respondents in Vietnam said the FTAs they used have led to more trade facilitation and investment opportunities, followed by wide client base (70%), new business opportunities (67%), entirely-opened new markets (63%), wide choices of suppliers (58%), increased efficiencies in supply chain, and better access to talent pool in key markets (43%).

According to the survey, 37% of Vietnam’s exporters make full use of each FTA the country has signed and Vietnam is ranked second in Asia for FTA usage after Indonesia (42%) and above Hong Kong (33%), India (27%) and China (23%).

In Asia, although each FTA in the region is capitalized on by only 26% of exporters, 86% of respondents said their outbound sales have jumped as a result of the FTAs they use and 79% agree that singing more trade pacts will help push up their exports.

The survey showed 78% of all respondents across Asia want their governments to sign more FTAs and 78% of them want FTA with more comprehensive provisions.

Vietnam has joined rounds of negotiations for a number of FTAs, including the Trans-Pacific Partnership (TPP) and the pact with the European Union. Many local enterprises expected these two trade agreements would be concluded soon for them to further cash in on Vietnam’s top export markets, including Europe, the United States and Japan.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR