VN retail petrol prices fall

The retail price of petrol was reduced by VND260 to VND20,120 (93 US cents)per litre starting from 3pm yesterday, in the wake of falling global fuel prices, the Ministry of Industry and Trade (MOIT) said.

The price of biofuel E5 RON 92 was reduced by VND425 to VND19,625 (90 cents) per litre, while the price of diesel has come down by VND1,112 to VND14,681 (67 cents) per litre.

The price of kerosene was reduced by VND1,128 per litre to VND13,750 (63 cents), while that of mazut was reduced by VND872 per kilo to VND11,434 (52 cents) per kilo.

In addition, MOIT and the Ministry of Finance said in a joint statement that they had decided to keep the petrol price stabilisation fund unchanged.

Statistics from MOIT show that petrol prices have been increased four times and reduced three times so far this year. The largest hike was on May 5, when the price increased by VND1,950 (9 cents) per litre. The four price hikes have increased the price of petrol by a total of VND5,040 (23 cents) per litre since last year. The three price cuts, meanwhile, reduced the petrol price by a total of VND2,540 (11 cents) per litre.

Domestic gold prices continue to decline

The gold buying price fell further in the local market on July 20.

Sai Gon Jewellery JSC bought one tael, or 1.205 ounces, of the state-owned SJC's gold for VND32.6 million (US$1,493), which was a drop of VND400,000 ($18.3) from two days ago.

The selling price continued to be VND33 million ($1,511.3) per tael, a three-year low in Vietnam.

Bao Tin Minh Chau Gold and Jewellery Company, Doji Gold and Gems Group and Phu Nhuan Jewellery JSC also listed their gold buying price at VND32.6 million ($1,493) to VND32.9 million ($1,506) and selling price at VND33 million ($1,511) to VND33.1 million ($1,515).

Bao Tin Minh Chau Gold and Jewellery Company recorded a larger number of gold buyers, with a buying/selling ratio of 75/25. Normally, the rate was about 60/40.

Meanwhile, Phu Nhuan Jewellery JSC said gold prices might fall further due to global price fluctuations.

On the global gold trading website Kitco.com, the price of gold slipped $5.4 per ounce. The site listed one ounce of gold at $1,114 or $1,383 per tael.

Reuters.com also said gold plunged four per cent, a five-year low, yesterday, as sellers in China, the top consumer market, sold the metal in a matter of minutes, just as bullion's safe-haven status took a fresh knock from mounting expectations of a rate hike in the United States.

Nguyen Thanh Long, former director of Sai Gon Jewellery JSC, said it was normal for the gold price to fluctuate. He said buyers should be patient and not adopt a herd mentality that makes them sell their gold when prices drop.

Long said some Vietnamese people would feel insecure if the prices of gold dropped, and would sell their gold. Others would follow the trend. The same thing happens when prices rise, and the people flock to buy expensive things for the highest price.

He suggested that people should not do the same, and said they should buy gold when the price falls to its lowest and should sell when the prices jump to record highs.

Long added the lower prices of gold would not influence the domestic economy because the State Bank of Vietnam had interfered appropriately and controlled the gold market in the last two years.

On July 20, the gap between the local gold prices and the international prices was $128.

Gold has been a popular form of savings in Vietnam for many years. The saving of gold as a hedge engaged against uncertainty, pushed domestic prices much higher than the world price.

In October 2012, local prices soared to VND48.3 million ($2,300) when the global prices for one tael were $2,048. (One tael is equal to 1.205 ounce ).

The central bank, started its strong intervention since March 2013. SBV often told media that it was keeping track of the changes in gold prices and would intervene, if needed.

Vietnam’s only nickel project loses US$55 million

Ban Phuc, the only nickel project in Vietnam, had racked up losses of around US$55 million by the end of May, according to a draft on natural resources tax adjustment the Ministry of Finance will submit to the Government.

The ministry in the draft said that nickel duty ranges from 7-25%. However, it suggested maintaining the current duty on nickel at 10% as the Son La Province-based project had lost around US$55 million by May 30.

Therefore, a tax increase in the current circumstances will severely impact the company and investment environment, the ministry said.

Ban Phuc Nickel Mines Co. involves Asian Mineral Resources Limited (AMR) - a global mining group listed in Canada. The foreign partner holds a 90% stake in the firm whereas the remaining 10% is held by local partner Son La Mechanical Engineering Joint Stock Co.

The US$136-million project started operating in July 2013 with a capacity of 360,000 tons of nickel ore and 70,000 tons of refined nickel ore a year, mainly for export.

According to a report issued by the National Assembly Standing Committee in October 2012, Vietnam had nickel reserves of around 4.5 million tons, mainly in Ban Phuc - a poverty-stricken area with underdeveloped infrastructure. The nickel project had yet to fetch economic results in its first stage of operation.

Investment in a nickel refiner is infeasible due to high cost and an effective project requires nickel reserves from 18 million tons. There are 12 nickel refining projects in the world, including one in Vietnam, the ministry commented.

In 2008, when the project started construction, raw nickel fetched US$28,890 per ton. It slipped to a mere US$19,640 in 2012 and further plunged to US$13,216 in mid-2014.

In June 2014, the enterprise reported to the ministry that it would lose nearly US$20 million in the year alone due to tumbling world prices. Besides, taxes and fees in Vietnam were high and accounted for 32% of the company’s revenues.

The ministry at the time rejected the firm’s proposal for an export duty reduction, saying the Government did not encourage exports of natural resources.

Last year, Ban Phuc’s refined nickel ore export was 74,800 tons worth US$87.3 million, with export tax totaling around VND375.6 billion. Domestic nickel demand is expected to stay low, at around 5,300 tons in 2020 and 6,700 tons in 2025.

Nickel price is estimated to remain low this year. On June 30, it stood at US$10,795 per ton on the London Metal Exchange, the lowest since April 2009.

Listed firms report mixed earnings results

Listed enterprises reported mixed business results in the first quarter of this year, with firms on the Hanoi market posting strong profit rises and those on the HCMC bourse seeing important indicators increasing slightly or declining.

Ending the first quarter, enterprises listed on the Hochiminh Stock Exchange (HOSE) saw their after-tax profit growing 2.25% against the same period of 2014 whereas the total profit of firms on the Hanoi Stock Exchange (HNX) surged 31.9%.

According a recent report of HOSE, member enterprises reported revenue rises of 9.05%. However, enterprises in the VN30 group reported a 9.84% decrease in profit.

Besides, the return on asset (ROA) of companies on the southern bourse dropped 10.2% year-on-year and that of VN30 tickers lost around 22.5%. But the return on equity (ROE) of the entire market increased 2.85% and that of the VN30 group rose 2.92%.

Explaining the profit decrease of VN30 companies, Tran Anh Dao, deputy general director of HOSE, said many listed enterprises raised capital in the first quarter, so profit indexes (which are calculated based on capital) fell. Besides, net profit growth of this group also decreased mildly.

Enterprises in the VN30 basket reported ROA and ROE at 0.62% and 2.92% at the end of the first quarter. While the combined profit of VN30 enterprises lost 9.84%, their total assets and equity surged 16.3% and 31.6% respectively.

The indexes were calculated on data of 184 out of 301 enterprises listed on HOSE.

Meanwhile, HNX said that 355 out of 362 listed enterprises saw profit surging 31.9% year-on-year in the first quarter.

According to a report of HNX, enterprises continued to post better business and production results than 2014’s first quarter. Aside from positive impacts of the macro economy, enterprises took measures to cut management costs and focus on core businesses.

Enterprises in the report obtained over VND2.99 trillion (US$137.4 million) in after-tax profit, surging by 31.9%. Of which, 302 profitable companies registered total net profit of over VND3.1 trillion, up 20.6% year-on-year, while 53 firms reported total losses at over VND163 billion, falling 53%.

Businesses in the industrial sector had the most positive results with 100 firms reporting gains, followed by the finance sector with 25 firms and the fuel and mining industry with 22 companies.

Among loss-making firms, the industrial sector made up the largest ratio with 12 enterprises losing VND40.7 billion, followed by finance and construction with VND39.1 billion and VND38.9 billion respectively.

Additional 20 FDI projects land in Haiphong

The northern port city of Haiphong granted investment certificates to 20 foreign direct investment (FDI) projects worth US$240.67 million in industrial zones and economic zones in the first six months of the year.

The province also agreed to add a combined US$139.96 million in capital to nine projects.

According to Mai Xuan Hoa, Deputy Head of the Hai Phong Economic Zone Management Board, most of the FDI projects invested in Vietnam- Singapore Industrial Park (VSIP) and Trang Due industrial park are small-scale supporting industry production to provide spare parts for other groups like LGE, Kyocera and Fuji Xerox.

Heangsung Electronics Co., Ltd’s project assembling electronic circuits is the largest new project with US$100 million in investment across 10 hectares.

In a bid to fulfil the 2015 FDI attraction plan, the municipal People’s Committee has requested the management board and the Investment Promotion Centre further their promotion activities and supportive services to lure more investment to the city.

In addition, the Hai Phong Economic Zone is upgrading its web portal to offer English and Japanese along with Vietnamese with a focus on the investment climate in the city as well as in industrial parks and economic zones.

Vice Chairman of the municipal People’s Committee Dan Duc Hiep said that the city has implemented a number of key projects, creating breakthroughs in infrastructure and serving as driving forces to motivate socio-economic development.

The projects include the Lach Huyen port and the upgrades of Cat Bi International Airport and the Hanoi-Hai Phong highway.

More efforts needed to increase use of local goods

Despite consumers increasingly placing their trust in products made in Vietnam, a number of barriers are holding local products back on the domestic market, heard a seminar in Ho Chi Minh City on July 16.

Vice Minister of Industry and Trade Ho Thi Kim Thoa told participants that after five years of implementing Instruction 494/CT-TTg on the use of locally-produced materials and goods for State-funded projects, Vietnamese enterprises have increased the use of locally-manufactured goods, thus reducing their production and business costs.

According to the Vice Minister, the instruction contributed to reducing the trade deficit-export turnover ratio from 17.47 percent in 2010 to 10.16 percent in 2011, and achieving a trade surplus from 2012 onwards. It also helped to improve the competitiveness of Vietnamese goods.

In the first six months of 2015, the manufacturing and processing sector grew by 9.6 percent compared to the same period last year.

Huynh Dac Thang, Deputy Head of the Planning Department under the Ministry of Industry and Trade (MoIT), said the Instruction had helped boost the production of a number of new products to replace imported ones.

The instruction has been well implemented in State-run corporations and helped change investors’ attitudes towards domestically-produced goods.

The business community, however, pointed out a number of challenges faced in selling products and winning contracts.

According to Dinh Van Thanh, General Director of the Bach Khoa Mechanical And Refrigeration Engineering Company Limited, most enterprises which produce equipment for the entire beverage industry are too small in scale to be able to compete effectively with international contractors.

The quality and design of local products often does not meet investors’ requirements. In this regard, Thanh suggested that the country should remove technical barriers and create support policies to reduce the cost of technological transfers in a bid to improve Vietnamese products.

Meanwhile, Tran Tho Huy, General Director of the Thien Nam Elevator Joint Stock Company, said local manufacturers and suppliers still faced challenges in winning tenders given that many investors required goods to be of foreign origin.

Huynh Dac Thang emphasised that increasing the effectiveness of Instruction 494 in the future was key to increasing the country’s strengths and competitive edge.

In addition to enterprises’ efforts to improve the quality and diversify products, Thang said Government agencies would create a legal framework to promote and assist the development of local supporting, manufacturing and hi-tech industries

Vietnam urged to improve sugar industry’s competiveness edge

An international conference was held in the central coastal province of Khanh Hoa on July 16 to discuss measures to improve the Vietnamese sugar industry’s competitiveness competency as Vietnam and neighbouring countries are speeding up the regional integration process.

The event attracted the participation of more than 200 managers and leaders of major domestic and foreign enterprises operating in the sector.

Delegates at the event outlined challenges hindering the sector’s progress such as epidemics, climate change, drought and high prices of raw materials, which account for 70-80 percent of the production prices.

According to the Ministry of Agriculture and Rural Development, Vietnam currently has 41 sugar factories with total capacity of 140.000 tonnes of sugar per day. Each year, the sector sells about 1.5 million tonnes of sugar in the domestic market and exports 300.000 tonnes.

Pham Hong Duong, a representative of the Thanh Thanh Cong Group, said Vietnam is expected to join the ASEAN Free Trade Area (AFTA) in the near future, mandating the need for the country to accelerate agricultural and technological renovations and reduce production costs in a bid to gain a firm foothold in the regional market during the integration process.

Business policy overhauls lead to positive outcomes

A string of recent moves to reform mechanisms and tax and customs policies have resulted in encouraging outcomes, evidenced by a number of improved business indexes.

Dang Phuong Dung, General Secretary of the Vietnam Textiles and Garment Association, said cumbersome customs and payment procedures which once hampered the sector’s exports have been simplified and processed via e-channels.

The piloted granting of certificates of origin through the Internet, conducted by the Ministry of Industry and Trade and the General Department of Vietnam Customs, has also helped businesses save time and expenses, she said, considering the reforms as initial steps to be expanded upon.

Deputy Director General of the General Statistics Office (GSO) Pham Quang Vinh said the number of newly established companies increased significantly, demonstrating the business circle’s effective efforts and the efficiency of measures taken by the Government, ministries, and sectors to improve the business environment.

In the first half of 2015, 45,406 enterprises registered for establishment with a total registered capital of over VND282.39 trillion (US$12.98 billion), representing respective gains of 21.7% and 22.3% from a year before.

The number of those suspending operations or dissolving was equivalent to only 5.9% of the total operational firms, much lower than the usual figure of between 12 and 14%, data from the GSO shows.

According to a recent GSO survey, 40.5% of the 3,389 companies questioned perceived their business situation in the second quarter to be more positive than the previous three months. Another 39.4% said the situation remained stable while the remaining 20.1% reported difficulties.

Director of the GSO’s Industrial Statistics Department Pham Dinh Thuy partly attributed such an upbeat situation to the promulgation of the amended Law on Enterprises which breaks down regulation obstacles.

He considered 2015 a business recovery period fostered by the implementation of Government Decree 19/NQ-CP dated March 12, 2015 on solutions to improve the business climate and national competiveness.

Three months since the decree’s enforcement, the Ministry of Planning and Investment proposed the removal of nearly 3,300 business conditions stipulated in 170 ministerial circulars and decisions, Minister Bui Quang Vinh said.

Relevant agencies also streamlined 4,431 of 4,723 administrative procedures specified in 25 Government decrees, accounting for 93.8%. A number of ministries and sectors have also connected to the national single-window system and applied information technology in handling procedures.

Business associations expect more concrete solutions from the Government, such as reducing taxes and rescheduling tax and charge payment deadlines, to help them reduce input expenses. Authorised agencies should also avoid unannounced policy changes and facilitate companies’ access to concessional bank loans.

Deputy Prime Minister Vu Van Ninh said the Cabinet is willing to engage in dialogues with enterprises to provide support as practically as possible.

Experts highlight need to increase information on integration

Government officials and economic experts came together for a conference in Ho Chi Minh City on July 16 to share their opinions on a plan to increase the dissemination of information about international economic integration.

The event also provided updates on a number of free trade agreements (FTAs) recently signed between Vietnam and foreign partners.

Deputy Minister of Industry and Trade Nguyen Cam Tu stressed that the plan would analyse the limitations and shortcomings in the field and propose priorities and directions for the future.

The plan is expected to help local enterprises and citizens gain an insight into integration, thus helping them develop appropriate business strategies, Tu said, adding that ministries, sectors, localities and businesses should cooperate together closely in the field.

Participants underlined the need to renew methods used to inform the public of the country’s ongoing international integration process. They urged the Ministry of Industry and Trade (MoIT) to intensify its efforts in this regard.

Vice Chairwoman of the Ho Chi Minh City People’s Committee Nguyen Thi Hong said FTAs with strong and comprehensive commitments on trade, services, investment and institutional reform would provide opportunities as well as challenges to Vietnam’s integration efforts.

The Government, ministries, sectors and localities should collaborate to map out specific measures to help enterprises and trade associations take advantage of FTAs and deal with challenges effectively, she stressed. Hong also stated that the municipal People’s Committee was working hard to provide assistance in and information on the integration process.

Australia grabs Vietnam cattle market by the horns

Traditionally, cattle were not reared for their meat in Vietnam but were principally draught animals, culled and used for food at the end of their useful working lives.

Today however, the beef cattle industry is the third largest money maker in the livestock industry, after pigs and poultry, and as such, makes an important contribution to the rural economy.  

According to the Ministry of Agriculture and Rural Development (MARD), the nation’s largest and more advanced beef cattle farms (with herds in excess of 100 head), are mainly located in the south eastern provinces of Binh Phuoc, Binh Thuan and Ninh Thuan and in the Central Highlands area.

These commercial cattle fattening operations have largely been well funded and primarily aimed at servicing the strong demand for beef that exists in the Ho Chi Minh City market.

However with the advent of Vietnam opening up its markets in line with World Trade Organization (WTO) commitments, the beef cattle market is today facing stiff competition with foreign rivals, particularly the Australian cattle industry.

According to official statistics, Vietnam has on average imported about US$100 million of beef cattle for slaughter over the past three years.

More specifically, the country imported 70,000 head in 2013, 150,000 head in 2014 and 115,242 head in first quarter of this year, with plans to import a cumulative total of 460,000 head for 2015.

The government levies an import duty of 5% on live cattle imports as opposed to a much higher 15-20% duty on frozen beef. However, the sales price of Australian beef on the store shelves is generally about the same as Vietnamese beef.

According to MARD, this has arisen because a change in demand from the urban area markets has resulted in better pricing for crossbred cattle of these advanced beef cattle farms that can meet specific purchasing criteria on minimum body weight, lean meat content and animal age.  

MARD has also forecast this trend will continue and likely intensify into the long term, driven by more sophisticated demand of the food service industry, modern trade retailers and the modern domestic consumer (middle income and younger), who is more focused on food health, safety and quality.

Local cattle no longer are in demand in the lucrative urban area markets like HCM City as cattle traders will generally no longer buy their cattle or will only pay a very low price for them.

Visan, a leading Vietnamese supplier of meat, began importing Australian beef in September 2013.

“The biggest advantage Australian beef has over Vietnamese beef is consistency in both quality of the meat and size of the animal,” a representative of Visan recently told a reporter.

“Australian beef is generally of a better quality,” he said adding on average the weight of domestic cattle is roughly 250 kg on the hoof while that of Australian cattle is twice the size at 500kg.

Australian beef is also more widely available in the larger cities and can be found not only in the larger restaurants and supermarkets but also in smaller shops and traditional markets.

Australian beef had a 60-70% share of the market in HCM City last year, according to a representative of Fresfoco Company, a major exporter to the Vietnam market.

Fresfoco revealed that it will start supplying Vietnamese customers ‘speciality’ beef products like omasum (beef stomach) and open a chain of steakhouses featuring Australian beef in the coming time.

Although no one knows exactly what the future will hold, it certainly appears that for now at least, Australian cattle ranchers have got a solid grip on the Vietnam live beef cattle market.

Pacific Rim nations drive growth in Vietnam textiles

Vietnam’s clothing and textile exports to the 12 Pacific Rim countries currently negotiating the Trans Pacific Partnership (TPP) agreement have thrived in the five months leading up to June, spiking nearly 70% against last year’s corresponding period.

Statistics from the Vietnam Textile and Garment Association (VITAS) show that shipments to the 12 Pacific Rim nations accounted for 66.8% of the sector’s exports for the January-May period.

The sharpest growth was seen in the US market, which hit US$4.050 billion for the five-month period.

Economists at VITAS have forecast the sector will set a record for 2015, generating total revenues of US$27.5-28 billion for the year.

The 12 Pacific Rim nations include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

Thailand, Vietnam target US$20 billion in trade volume

The Vietnam-Thailand joint committee on bilateral trade will meet in Bangkok on July 20 to discuss ways to boost agricultural trade.

The Thai Ministry of Commerce has said that the two countries are aiming for US$20 billion in two-way trade turnover by 2020.

Thailand is planning to step up transportation co-operation with Vietnam through Laos, increase investment in Vietnamese commercial banks, enhance co-operation in intellectual property, and outline an action plan on trade and investment co-operation.

During the 3-day meeting, Thailand will ask Vietnam to open its fruit market before the ASEAN Economic Community is established.

The meeting will be held on the eve of a visit to Thailand by Vietnamese Prime Minister Nguyen Tan Dung, who will co-chair the 3rd Vietnam-Thailand joint cabinet meeting on July 23.

Lam Dong’s Oolong tea meets int’l standards

A recent inspection acknowledged that all kinds of Lam Dong’s Oolong tea exported to Taiwan meet quality standards.

The Lam Dong provincial Plant Protection Department said on July 15 that Taiwan consumes 95% of Oolong tea output produced in the province.

At a recent inspection, the Taiwanese side took 148 samples from 968 tonnes of tea made by 40 tea processing and production companies in Lam Dong to analyse pesticide residues.

The results showed no excessive pesticide residues.

Earlier in late April, the Taiwanese management agency warned that tea imported from Vietnam has excessive pesticide residues and 22 batches of tea (around 80 tonnes) were returned to Vietnam.

State budget collection to reach 20 pct of GDP

State budget collection for the next five years is expected to make up 20-21 percent of the GDP, Deputy Minister of Finance Do Hoang Anh Tuan said at a meeting of the Ministry’s Party Committee on July 17.

Tax and fee collections are expected to range between 19-20 percent of the GDP and domestic collection (excluding collections from crude oil) is set to reach 80 percent of the state budget revenue by 2020, according to Tuan.

The sector also aims to keep the budgetary overspending at four percent of GDP and the public debt below 65 percent of GDP by 2020.

In order to realise the targets, the sector needs to pursue a tight and effective fiscal policy, improve the management of tax collections to reduce the impact of decreasing budget revenues from natural and mineral resources, Tuan said.

He also underlined the importance of the private sector in increasing investment resources for the society.

Meanwhile, Minister Dinh Tien Dung highlighted the opportunities and challenges faced by the sector in international integration from 2015-2020.

The sector needs to build synchronous and transparent financial institutions in line with the development of the market economy and international integration.

Administrative procedure reform in the financial sector is a priority of the period to ensure a favourable business climate and enhance the competitiveness of the economy, Dung said.

He also urged science and technology application in the sector to improve effectiveness in tax collections, customs and stocks as well as strengthening the role of monitoring and supervision of public finances to ensure security of the public budget and prevent corruption and waste.

Reports at the meeting showed that state budget collections from 2011-2015 nearly doubled those from the previous five-year period.

Power development offers both opportunities and challenges

Opportunities and challenges to electricity development in the Mekong Delta region were discussed at a conference held in Can Tho city on July 17.

Thanks to its favourable terrain and convenient water transport, Mekong Delta provinces have focused on building a raft of thermo-electricity plants to serve the increasing demand of local residents and ensure energy security in the region and its vicinity, according to Nguyen Quoc Viet, Deputy Head of the Steering Committee for the Southwest Region.

However, the construction and operation of thermo-power plants has had great impacts on the environment and local lives, he added.

At the conference, scientists and experts overviewed the blueprint to develop electricity by 2030 in the country and the Mekong Delta region as well as the influences of coal-fuelled power plants on community health while recommending alternative energy sources to protect the environment.

Nguyen Duc Cuong, Director of the Centre for Renewable Energy and Clean Development Mechanism under the Ministry of Industry and Trade’s Institute of Energy, said that the Mekong Delta region has a total power capacity of over 2,000 megawatts, currently making up 6 percent of the nation’s power capacity but is expected to increase to 16 percent by 2030.

He added that the region has huge potential to develop renewable energy plants using biomass resources such as rice husk, sugar cane bagasse, wind and sun.

Wind farms with a total capacity of 16 megawatts are being operated in the region; additional turbines will be installed to bring the total capacity to 83 megawatts. Nine other biomass plants with a combined capacity of 30 megawatts are to be constructed in the locality.

According to Tran Dinh Sinh, Vice Director of the Green Innovation and Development Centre (GreenID), air pollution caused by power plants in the Mekong Delta region indirectly leads to 8,000 deaths every year as a result of higher risks of heart strokes, lung cancer and respiratory diseases.

He said that while planning power, industrial and transport development, relevant authority need to evaluate plan impacts on the environment and resident health. He also recommended the Government further invest in clean energy and installing equipment to control emissions.

Long An border gate economic zone plan announced

The Ministry of Construction, in collaboration with the People’s Committee of the southern province of Long An, held a ceremony on July 17 to announce a broad plan for developing the Long An border gate economic zone through 2030.

Accordingly, the 13,000-hectare economic zone bordering the Cambodian province of Svay Rieng will comprise the Binh Hiep International Border Gate and the Long Khot Auxiliary Border Gate, covering seven communes and one provincial town.

By 2020, land used for construction in the zone is intended to reach 1,000 hectares with a population of 58,000 people.

This is expected to increase to 2,000 hectares with a population of over 100,000 people by 2030.

The economic zone is hoped to become one of the most important commercial and industrial hubs in the Mekong Delta region.

SVB interest rate management benefits businesses

The State Bank of Vietnam (SBV) has flexibly managed the interest rate policy to suit the market and currency exchange demand and support businesses, stated SBV Deputy Governor Nguyen Thi Hong.

Currently, interest rates are at an ideal level, the same level as in 2005-2006, she noted, adding that both deposit and lending interest rates have dropped compared to those at the end of 2014.

Specifically, deposit interest rates fell 0.2-0.5 percent per year, mostly for over six-month terms, while lending interest rates declined by 0.2-0.3 percent per year, standing at about 6-9 percent annually for short-term loans and 9-11 percent for middle- and long-term ones.

Recently, inter-bank interest rates have decreased sharply to about 3-3.5 percent per month, which is relatively low and stable, she said.

Through the rest of the year, the SBV will continue flexibly introducing and withdrawing money from the market for banks to boost credit growth and better meet market demand, said Hong.

The bank will also keep interest rate at a stable level while keeping a close eye on the operation of commercial banks for timely monetary adjustments, ensuring management targets set earlier this year.

Hong re-affirmed that the SBV will keep fluctuations of the VND/USD exchange rate at a maximum of 2 percent in 2015, as set in its policy for the year, despite the fact that the rate has already been adjusted by 1 percent twice this year.

This is part of efforts to guide the market and help import and export enterprises actively define their production plan in line with developments of the domestic and global currency market.

Hong said that although the devaluation of the VND may benefit exporters, it would negatively affect manufacturers of export products made from imported materials, since the cost of raw materials will be higher.

She noted that the textile and garment sector had to import 82.5 percent of materials in 2013, the wood sector - 70 percent, and footwear - 60 percent.

Although the devaluation might benefit farmers in exporting agro-forestry and fishery products, it would also raise the price of fertilizers, pesticide and agricultural equipment and machinery. As such, exchange rate adjustments to improve price competitiveness would only be slightly effective in supporting exports, she held.

At the same time, total imports of Vietnam account for as much as 80 percent of the country’s GDP, evidence of the country’s deep dependence on machinery and equipment imports. Thus, the devaluation of VND would pose additional difficulties for import enterprises.

Statistics show that about 90 percent of Vietnam ’s import products are machines, equipment and materials and only 10 percent are consumer products.

After careful analysis and assessment, the SBV will stick to the policy of maintaining the fluctuation of the VND/USD exchange rate in 2015 at 2 percent as set earlier this year, Hong concluded.

Seminar discusses challenges for oil

Oil and gas industry players should optimise operations and costs to sustain their margins as prices continue to decline, Steven Yap, consulting firm Deloitte's Southeast Asia energy and resources leader, told a seminar in Ho Chi Minh City on July 17.

While a number of oil and gas operations would be suspended temporarily, others could increase production as the cost of input services tend to reduce due to the impact of the falling oil prices, he said.

"Companies drilling for oil and gas in Vietnam, both local and foreign, should reassess prudently the economic effects of every project to defer and/or cut costs.

"A more sustainable strategy would be to pursue innovative means of investing and managing capital and operational expenditures that would include stress testing current processes and collaboration through multiple means."

He reminded participants, who were from the oil and gas industry, service providers and bank, that they should consider mergers.

Pham Van Thinh, country managing partner of Deloitte Vietnam, said the falling global prices pose a challenge as well as opportunity for companies in the industry globally and in Vietnam.

"The challenge is how to cut costs while maintaining the efficient performance of a project as prices have declined more than 50 percent but the opportunity is that as input costs reduce, the operating costs will also be lower.

"Despite the price fall that began in late 2014, M&A activities in the industry have been hectic."

He said businesses could suspend or defer some projects to focus on key ones to replenish funds for investing when the marker recovers.

"The cycle of an oil and gas field is relatively long, which requires a large capital source for investing in exploration and development before gaining profit.

"Though the short- and medium-term goals are cutting costs to improve efficiency, businesses need to think of sustainable growth."

The seminar, titled "Managing the New Challenges of Oil and Gas Projects", was organised by Deloitte Vietnam.

Vietnam to benefit from RCEP market region

Vietnam will be able to access a huge market of 3.4 billion people when it joins the Regional Comprehensive Economic Partnership (RCEP).

Countries in RCEP will have a combined GDP of 21 trillion USD, accounting for 29 percent of the world's GDP, said Nguyen Anh Duong, Deputy Director of the Central Institute for Economic Management (CIEM).

Speaking during a workshop held in Hanoi on July 17 on the impact of RCEP on Vietnam's economy and the opportunities and challenges it would pose, Duong said regulations on origin in RCEP would be simpler and more liberal than in other economic pacts. In addition, the parties would make more commitments on freedom of trade in goods and services and investment.

Negotiations on RCEP officially began in 2012 with six countries: Australia, China, India, Japan, the Republic of Korea and New Zealand. The pact aims to build a regional free trade area. The RCEP states' total GDP will be higher than the combined GDP of countries in the Trans-Pacific Partnership (TPP), which will account for 26 percent of the world's GDP, and it will have a rapidly growing middle class.

According to Duong, RCEP is expected to offer major opportunities to Vietnam by improving its access to investment and export markets in the member states of the Association of Southeast Asian Nations (ASEAN), as well as partners with demand for diverse goods. At the same time, it could make imports of technology and machinery cheaper, thus creating opportunities for Vietnam to join the region's production value chain, Duong said.

The pact could also help Vietnam reduce transaction fees, create a friendly business environment and enhance its role in resolving trade and investment disputes, he said.

Sectors such as seafood, agriculture, construction, garments and textiles, as well as leather footwear, would have additional opportunities for growth, he added. For example, the country would have major opportunities in distribution and in the hotel and restaurant business in the countries in RCEP, especially in Japan and the ASEAN states, besides opportunities in providing services to Australia, Duong said.

However, Vietnam would also face challenges in banking services as the RCEP countries in the region, such as Singapore, Japan, the RoK and Australia, have highly developed banking sectors.

Vo Tri Thanh, CIEM's deputy director, said RCEP and TPP would not clash but support each other to help Vietnam integrate further into the world economy.

"The two pacts have a common feature of commitment to freedom in trading goods and services, and in investment. Talks on both RCEP and TPP are expected to end this year," Thanh said.

In RCEP, ASEAN is looking for cooperation and equal development. The TPP is a free trade agreement aimed at resolving the issues of labour standards, a competitive environment, State-owned enterprises, State purchases and intellectual property.

"Some people thought that TPP and RCEP will compete with each other and overlap. However, in my view, the two pacts could supplement each other," Thanh added.

Vietnam would have more benefits than challenges by joining RCEP, he noted.

Earlier, an ANZ Bank report said that Vietnam and Thailand would be the countries to benefit the most from RCEP.

Vietnam's GDP is expected to grow 8 percent in five years after signing the RCEP, while Thailand's GDP is expected to grow 13 percent. The RCEP states will account for 85 percent of the world FDI flow.

Thanh suggested that Vietnam should take advantage of RCEP by improving the competitiveness of domestically produced items and focusing on some industries that could benefit from the deal.

BTA, TPP: important deals to strengthen Vietnam-US trade

The signing of the Vietnam-US bilateral trade agreement (BTA) in 2001 marked the start of booming trade between the two countries, which hit 35 billion USD by the end of 2014 from only 1.51 billion USD in 2001.

Twenty years since the normalisation of diplomatic ties between the two nations, Vietnam is now the leading ASEAN exporter to US with a 13-fold export turnover increase while the US is the seventh largest foreign investor in Vietnam.

According to Nguyen Dinh Luong, former Head of the negotiating team on the Vietnam-US BTA, the content of the agreement focused on goods trade, intellectual property, investment relationships and service trade and was designed based on the principles of the World Trade Organisation.

Thanks to the BTA, Vietnam’s export value to the US experienced a 36-fold increase from 800 million USD in 2000 to nearly 29 billion USD in 2014.

Besides trade, Vietnam is currently an attractive investment option for US businesses. Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment (MoIT) show that by March 20, 2015, there were 735 valid US investment projects in Vietnam with total registered capital of around 11.06 billion USD, ranking the US seventh among 101 countries and territories investing in Vietnam.

In the first quarter of this year, Vietnam granted investment certificates to 8 new US projects while two others registered to add combined capital of nearly 70 million USD.

Vietnam was running 124 projects worth 426.74 million USD in the US as of the end of August 2014.

The number of US visitors to Vietnam is on the rise, reaching nearly 444,000 in 2014 and nearly 256,000 in the first six months of this year.

While the BTA laid the foundation for bilateral economic-trade ties, the pending Trans-Pacific Partnership (TPP) agreement is hoped to give a new boost to the ties. It is expected to help Vietnam boost its economic growth and make the Vietnam-US economic ties more comprehensive.

The two countries are aiming to complete bilateral negotiations of the TPP and sign the deal by the end of this year.

The American Chamber of Commerce in Vietnam (AmCham) forecasted that Vietnam’s export turnover to the US will likely hit 57 billion USD by 2020. Once the pact is inked, tariffs on Vietnam’s exports such as textiles, footwear and aquatic products will be reduced to zero percent.

Speaking at a forum held at the Washington D.C.-based Centre for Strategic and International Studies (CSIS) in March this year, US Ambassador to Vietnam Ted Osius stressed that Vietnam and the US need to push their trade ties to lift bilateral relations to a higher level.

The TPP is a great opportunity for Vietnam to make a new stride forward in global integration efforts and realise the goal to double trade with the US, he said.

According to AmCham, Vietnam’s involvement in TPP negotiations makes the nation more attractive for foreign investors, including the US. The TPP will also help distinguish the Vietnamese market from others in ASEAN. At present, a number of leading US companies such as Nike, Mast Industries and P&G plan to shift production to Vietnam.

On the occasion of his recent visit to the US, Party General Secretary Nguyen Phu Trong affirmed Vietnam will work closely with the US and other countries to accelerate negotiations on the pact.

Vietnam fosters trade ties with Paraguay

Vietnam’s Trade Office in Paraguay met with local businesses in the framework of an international trade fair on July 17 in Paraguay with the aim of introducing Vietnamese goods to Paraguayan importers.

The trade representatives are looking to promote the export of Vietnamese footwear, electric home appliances, garments, rubber, coffee, cashew nuts and pottery and ceramic products to the South American market.

At the same time, the Trade Office also wants to seek Paraguayan partners who can sell high quality cows, soy bean, green bean, and cotton to Vietnam.

The annual Expo 2015 held in Asuncion drew the participation of 1,700 local and international exhibitors.

Last year, the event saw the signing of a great number of deals, worth a total of 200 million USD.

Paraguay is the world’s fourth largest exporter of soy bean and tapioca, and the sixth among the world’s top exporters of beef.

In 2014, trade value between Vietnam and Paraguay reached nearly 86 million USD, with Vietnam’s export to the nation exceeding 26 million USD, nearly doubling that of 2013.

For the first five months this year, Vietnam earned 26 million USD from exporting its products to the nation.

MobiFone H1 profit hits 182 million USD

The MobiFone Telecommunications Corporation's aggregate income in the first half of this year is estimated at 18.7 trillion VND (860 million USD), a year-on-year increase of 7.85 percent.

The corporation's aggregate profit reached 3.96 trillion VND (182 million USD), increasing 7.96 percent year on year, MobiFone's General Director Cao Duy Hai said at a conference on July 15 to review the firm's first-half performance.

The company has earned 49.28 percent of the profit it has targeted this year, Hai said.

The market share of MobiFone has increased by 0.4 percent compared to the same period last year, with the company attracting 5,937,905 new subscribers, taking the total number of its subscribers to 48,998,091.

The corporation aims to develop five million new subscribers in the last six months of this year and earn a profit of 3,340 billion VND (153.6 million USD).

However, the corporation faces some challenges in the second half of the year. They are related to implementing 4G (fourth-generation network) technology, completing its plan to issue shares, diversifying its products and services and expanding its international business, Le Nam Tra, chairman of the corporation, said.

Power development offers both opportunities and challenges

Opportunities and challenges to electricity development in the Mekong Delta region were discussed at a conference held in Can Tho city on July 17.

Thanks to its favourable terrain and convenient water transport, Mekong Delta provinces have focused on building a raft of thermo-electricity plants to serve the increasing demand of local residents and ensure energy security in the region and its vicinity, according to Nguyen Quoc Viet, Deputy Head of the Steering Committee for the Southwest Region.

However, the construction and operation of thermo-power plants has had great impacts on the environment and local lives, he added.

At the conference, scientists and experts overviewed the blueprint to develop electricity by 2030 in the country and the Mekong Delta region as well as the influences of coal-fuelled power plants on community health while recommending alternative energy sources to protect the environment.

Nguyen Duc Cuong, Director of the Centre for Renewable Energy and Clean Development Mechanism under the Ministry of Industry and Trade’s Institute of Energy, said that the Mekong Delta region has a total power capacity of over 2,000 megawatts, currently making up 6 percent of the nation’s power capacity but is expected to increase to 16 percent by 2030.

He added that the region has huge potential to develop renewable energy plants using biomass resources such as rice husk, sugar cane bagasse, wind and sun.

Wind farms with a total capacity of 16 megawatts are being operated in the region; additional turbines will be installed to bring the total capacity to 83 megawatts. Nine other biomass plants with a combined capacity of 30 megawatts are to be constructed in the locality.

According to Tran Dinh Sinh, Vice Director of the Green Innovation and Development Centre (GreenID), air pollution caused by power plants in the Mekong Delta region indirectly leads to 8,000 deaths every year as a result of higher risks of heart strokes, lung cancer and respiratory diseases.

He said that while planning power, industrial and transport development, relevant authority need to evaluate plan impacts on the environment and resident health. He also recommended the Government further invest in clean energy and installing equipment to control emissions.

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