HCM City, Japan sign a metro contract

The Ho Chi Minh City Management Authority for Urban Railways and Japanese consortium contractor Shimizu-Meada on July 21 signed a contract (bidding package 1B) to build two metro stations in HCM City.

The JPY23.7 billion contract is part of the metro route No. 1 project connecting Ben Thanh Market with Suoi Tien Theme Park. Two underground stations dubbed Municipal Opera Theatre and Ba Son, will be built, using the top-down approach.

Municipal Opera House station construction will start in late July and is scheduled for completion in April 2015.

The metro route No.1 has a total length of 19.7km, including a 2.6km underground section.

The underground section travelling past the Municipal Opera Theatre will be built, using the tunnel boring machine (TBM) technology.

Construction work on the overground section began in August 2012.

The route will be given a test run in 2019 before being officially put into operation in the following year.

Hanoi’s CPI increases by 0.18% in July

The Consumer Price Index (CPI) in Hanoi for July accelerated 0.18% over the previous month and 6.39% over the same period last year, according to the Municipal Statistics Office.

There were across the board increases in the prices of goods and services in all the baskets of goods for the month, with the exception of the post and telecom group, which remained relatively unchanged.

Foodstuffs and dining-out services rose by 0.42% and 0.21% against June, respectively.

Prices of housing-electricity-fuel-construction materials went up 0.53%.

Transport costs also surged 0.51% on the back of an increase in the price of petroleum and gas.

By contrast, food prices nosedived 2.26% due to an oversupply on the market.

Both gold and the US dollar prices increased slightly, 1.97% and 0.56% compared to the previous month, respectively.

Vietnam, Venezuela localities boost economic cooperation

A Ho Chi Minh City business delegation recently paid a five-day visit to Venezuela, where they sought cooperation opportunities and shared experience in urban development and management.

During their stay, they attended a July 17 gathering more than 40 Venezuela businesses operating in a variety of sectors including garment, construction, the environment, tourism, and food.

At the event, Vice Chairman of the HCM City People’s Committee Nguyen Huu Tin and Vietnamese Ambassador Ngo Tien Dung emphasised the importance of the friendship ties and the great potential the two countries have for heightened trade and investment cooperation.

HCM City businesses briefed their hosts on the city’s development and cooperative opportunities, especially in the garment, construction, tourism and food industries.

Venezuelan business representatives expressed much interest in cooperation in the construction of social housing projects and their desire to receive Vietnam’s assistance in applying new technologies and alternative construction materials to keep social housing prices more affordable.

Businesses from two countries agreed that they will continue to exchange information of mutual concern and policies of each country in anticipation of signing some cooperation deals in the future.

Trade surplus with Australia reaches US$924 million

Two-way trade between Vietnam and Australia in the first six months of the year peaked at over US$2.86 billion, resulting in a trade surplus of US$924 million, according to Vietnam Customs statistics.

Of the total, Vietnam’s export earnings hit US$1.89 billion, up 24.3% year-on-year, and its imports fetched US$971.56 million, up 37.3%.

Key Vietnamese exports included crude oil, mobile handsets and components, seafood, cashew nuts, timber, garment and textiles, footwear, machinery, and equipment.

Crude oil topped the list of export items, bringing home US$989 million, a year-on-year increase of 44.1%. It was followed by mobile handsets and components (nearly US$184.75 million, up 21%), and fisheries (US$104.55 million, 36.5%).

Notably, gross exports from iron and steel to Australia saw the highest growth rate over the past six months, up 215.6% over the previous year.

Other items maintaining steady growth included confectionery and cereals, handbags, purses, suitcases, hats, umbrellas, and rattan and bamboo products.

Computers, electronic products, coffee, and plastic materials also saw sharp increases in the first half of 2014.

Meanwhile, Vietnam’s major imports were wheat, metals, iron and steel scrap, coal, textile materials, leather shoes, machinery, equipment, tools, spare parts, ore and other minerals, and chemical products.

Support industry needs policy support

Better policies are needed to improve the capacity of support-industry companies, particularly electronics firms, said Deputy Minister of Industry and Trade Cao Quoc Hung.

Hung told a recent conference on developing the electronic industry that the ministry is prepared to actively connect domestic firms with multinational companies so that they can take advantage of bigger supply chains.

The ministry plans to promote Vietnamese electronics on its website and open three centres promoting the electronics industry.

He asked firms to diversify their products and pursue co-operation with experienced and technology-savvy foreign investors to improve production of spare parts and accessories.

With nearly 500 companies, Vietnam's electronics industry has seen steady growth in export sales, pocketing US$6.9 billion in 2011, US$20.5 billion in 2012 and US$32.1 billion last year. Exports of mobile phones and mobile components accounted for 67% of electronic export revenues last year.

The Chairman of the Vietnam Electronics Industries Association, Luu Hoang Long, said that despite increases in exports, the country's electronics industry is struggling to develop value-adding production and is only a modest contributor to national GDP.

Long said foreign direct investment (FDI) companies account for only a third of electronics companies in Vietnam. He added that FDI firms possess newer technologies, a domestic market share of more than 80% and contribute more than 90% to electronics export turnover.

Few Vietnamese firms in support industries were able to supply inputs to FDI companies, hampered by a lack of experience, capital, technology and marketing.

"Most domestic firms are specialised in processing and assembling," Long said, citing that 80% of electronic products made in Vietnam were electrical appliances, including TVs, computers and telephones. Around 20% of products are made for specialised use.

"This has resulted in an imbalance in the categories of products," he said.

The General Director of Viettronic Tan Binh, Vu Duong Ngoc Duy, urged the Government to guide domestic companies towards better projects.

Policies are needed to attract foreign firms and encourage domestic companies to tap into the potential of support industries, said Duy. Additionally, any administrative support for firms must be transparent and accessible to firms in the market, he said

Olmix to build a factory in Binh Duong

France-based Olmix Group plans to invest EUR5 million in building a factory at the Song Than 2 Industrial Park in the southern province of Binh Duong to produce nutritional products for animals and plants.

Olmix General Director Herve Balusson unveiled the decision at a recent working session with provincial leaders.

The facility is designed to churn out between 5,000-10,000 tonnes of products per year for domestic use and export. In the next stage, the company will establish a research centre in the locality, he said.

The provincial leaders welcomed the company’s plan and said the project conforms to Binh Duong’s high-tech agriculture development orientations.

They also pledged to create favourable conditions for the investor to carry out their project efficiently.

Founded in 1995, Olmix is operating in more than 60 countries and territories worldwide. This is the company’s first project in Binh Duong province.

Burdensome customs requirements cost US$37 billion annually

Cumbersome and complicated import-export procedures cost firms doing business in Vietnam an estimated US$37 billion annually.

The figure was unveiled in a report released by the US Agency for International Development (USAID).

Compared to international standards, the time to complete import procedures alone in Vietnam is 16 days longer than the average of the top ten countries, causing a commercial loss of US$19 billion.

Similarly, it takes nearly half of a month to complete all export procedures, pushing losses up past the US$17 billion mark.

A representative from the Central Institute for Economic Management (CIEM) said if proposed customs clearance changes are approved, it is estimated that Vietnam’s GDP would increase by 30%.

Japanese SMEs keen to invest in Vietnam

With the Government’s open door policy, stable political environment and vast economic potential, many Japanese small-and medium-sized enterprises (SMEs) find Vietnam an attractive destination for business in Southeast Asia.

Approximately 30% of Japanese firms with plans to expand their overseas operations unhesitatingly consider Vietnam as the top choice for conducting business, says Atsusuke Kawada, Chief Representative of the Japan External Trade Organisation (JETRO) Office in Hanoi.

Vietnam’s investment environment has and continues to improve day by day.   Provincial authorities throughout the country are pouring huge investment into industrial zones and infrastructure in a bid to attract foreign investment.

They are also aggressively developing attractive incentive packages designed to catch the eye of the most discriminating foreign investors and lure them to do business in their localities.

However, there are a number of obstacles to overcome in attracting huge inflows from Japan, says says Hirokazu Yamaoka, Director, Overseas Business Support Division under the JETRO.

Labour costs in some parts of the country are surging too rapidly (around 20% annually). Yet  the rise in labour costs is not resulting in a concurrent increase with productivity.

Without a corresponding increase in productivity, the overall price of the products increases, negatively affecting competitiveness in the global marketplace, Yamaoka says.

This phenomenon is leading many Japanese investors to pay more attention to newly emerging markets like Cambodia and Myanmar and, if wages continue to rise too rapidly out of alignment with productivity, it will more difficult to call on foreign investment, Hirokazu confides.

Some Japanese businesses are also finding it exceedingly difficult and costly to import input and other raw materials from outside the country as the support industry in Vietnam is in its infancy.

The need to import input and raw materials also push production costs up and lower business competitiveness and is a situation that Vietnam can rectify, if it pumps the necessary resources into support industry development. Unfortunately,  currently the development of the support industry is unfolding much too slowly.

The majority of Japanese SMEs also are not financially strong and lack adequate capital resources or ready access to capital resources, making it difficult for them to invest overseas, Hirokazu says.

There are far too many cumbersome administrative procedures and hoops that Japanese firms must jump through in order to do business in Vietnam.  Time is money and prolonged administrative procedures place a serious strain on already limited capital resources

The hope is that Vietnam will continue to simplify and streamline flexible policies for Japanese firms to operate more efficiently, he says.

Although 2013 and the first months of this year have witnessed an overall decline in Japanese investment in Vietnam, it is not necessary to raise the red flag of concern as of yet, adds Hirokazu.

The decline in investment is most likely the result of normal investment cycles, he says, adding that Japanese investment will most likely rebound and come on strong in the remaining months of the year and carry over into next year.

Recently, a delegation comprised of 26 Japanese SMEs operating in the support industry made a fact-finding tour of Vietnamese localities to seek investment opportunities. It is noteworthy that a few businesses operating in China joined the delegation.

These businesses which supply products to major groups are facing numerous difficulties at home, such as increased production costs and shrinking market. As a result, they  are eying shifting their investment overseas.

In this context, SMEs are looking for proper markets to invest in and Vietnam is a definitely a bright destination on the horizon for them.

As of the end of April 2014, Japan was the largest foreign investor in Vietnam with 2,266 projects totaling US$35.51 billion, according to the Foreign Investment Agency.

Japanese firms are operating in 18 fields, mainly the processing and manufacturing industry (1,227 projects worth US$29.9 billion), real estate (30 projects worth US$1.4 billion) and construction (56 projects worth US$1.06 billion).

Investment is spread throughout 49 provinces and cities. Thanh Hoa province tops the list with 9 projects capitalized at US$9.68 billion, followed by Binh Duong, Hanoi, Ho Chi Minh City, Haiphong and Dong Nai.

Vietnam bank to provide services in Myanmar

The Central Bank of Myanmar (CBM) has authorised 25 foreign banks, including one from Vietnam, to offer a wide range of domestic and cross-border collection and payment services to foreign investors in Myanmar.

Mizzima News said 25 banks are affected by the new regulations, including one each from Vietnam, China, India, Mauritius, Australia and France, three each from Malaysia, Singapore, Taiwan (China), the Republic of Korea and Japan, and four from Thailand.

Ten foreign banks will be granted licences in the third quarter of this year to operate in Myanmar.

Granted banks must have at least US$75 million capital, US$40 million of which will be monitored by the CBM.

The country currently has more than 20 private banks and 3 State-owned banks.

Gov't greenlights auto industry plan

The Government has approved a new development strategy for the auto industry to enable it to meet domestic demand and join world production.

Vehicles defined in the strategy include trucks, cars with more than 10 seats, cars with up to nine seats, and specialised vans.

Small and multifunctional vans for agricultural use and serving customers in rural and mountainous areas will also be encouraged.

The support industry for the sector will use advanced technologies and enter partnerships with leading world manufacturers to be eligible to supply spare parts for global vehicles.

By 2020, the auto support industry is expected to be able to meet about 35% of the demand for domestic spare parts and accessories. It should also be able to satisfy more than 65% of local needs between 2026 and 2035.

The strategy also targets the export of about 90,000 made-in-Vietnam cars by 2035, encouraging the production of environmentally friendly vehicles.

Meanwhile, technology will be upgraded to make products meet international standards.

Several auto industry centres will also be concentrated into one.

The strategy underscores the need to boost linkages and co-operation among auto makers and assemblers, enterprises engaging in support industry, research and training centres in all economic sectors.

The PM's Decision 1168/QD-TTg dated July 16 approving the strategy will replace Decision 175/2002/QD-TTG on December 3, 2002.

However, Vietnam's automotive industry could face major difficulties under commitments to the ASEAN Free Trade Area (AFTA), which will abolish auto import taxes in 2018.

ASEAN + will waive taxes on car imports between ASEAN member countries, as well as Japan, the Republic of Korea and China, that are parties to the agreement.

The tax cut poses a direct threat to Vietnam's fledgling auto industry, which will be unable to compete with the price and quality of imports. This means the country has only five years to develop its auto industry to compete with an impending influx of imports after 2018.

However, the local auto industry is behind on most of its targets, according to the Industry and Trade Ministry's report.

While the target for local diesel production was set to reach 100,000 units by 2010, Truong Hai is the only company to invest in a factory making diesel engines. It began production in 2014.

As many as 100,000 gearboxes and 100,000 transmission systems were forecast for production in 2010, but no investment was made.

Meanwhile, Vietnam plays host to only 210 auto parts manufacturers, one fifth of Indonesia's production base and one fifteenth of Thailand's.

Adding insult to injury, most of these companies produce simple and low technology products with low local contents.

Car imports from ASEAN countries in fact already have increased in volume in recent months.

According to the Customs Office, Vietnam imported 4,282 cars worth US$65 million from ASEAN's members in the first five months of this year, up 1,104 units in volume and US$12 million in value.

Of these, car imports from Thailand and Indonesia accounted for 3,575 units and 707 units, worth US$58.5 million and US$6.8 million, respectively.

World Bank finance project benefits rural regions of Vietnam

Vietnam is the most successful country to deploy the rural finance project and is seen as a development model by financial institutions and donors.

The assessment was made by donors at a workshop on completion assessment of the Third Rural Finance Project in Hanoi on July 21.

The project is reported to have generated VND9.8 trillion (US$487) million for rural areas in Vietnam, thanks to the initial finance of US$200 million from the World Bank (WB).

After five years of implementation, the project completed its first stage. By December 31, 2013, a total US$200 million funded by the WB was disbursed, thus helping to increase income for farmers and rural businesses.

According to a representative of Mekong Economics (MKE), a leading economic consulting company in the Greater Mekong sub-region, finance from the WB created a large investment of the whole society for the agriculture sector in Vietnam.

The MKE reported that 94% of end-borrowers said their incomes improved after lending.

Specifically, the project, with additional funding from local banks and people's credit institutions and contribution from end-borrowers, created total investment of up to US$487 million. Of this figure, 90% are medium and long-term investments.

It is estimated that more than 135,000 people and businesses in rural areas have access to loans. The project has generated more than 140,000 new jobs.

At the workshop, Victoria Kwakwa, WB Country Director for Vietnam, said what they saw in this project is that financial institutions contributed their own resources into this project. Simultaneously, they also managed projects and ensured that they could do a good job of developing agriculture and rural development, reducing poverty and generating profit.

Deputy PM Hoang Trung Hai appreciated the implementation of this project noting that it is a model one. He said the third finance project has done a good job noting that local relevant bodies need to strictly review ODA funding by learning from this project.

He also called on donors to continue assisting Vietnam in developing its economy, elevating poverty, and stated that the Vietnamese Government is committed to using this funding in a transparent and effective manner.

The objective of the Third Rural Finance Project for Vietnam is to increase economic benefits to rural private enterprises and households by increasing their access to finance.

The project aims at helping the Vietnamese Government to raise the economic benefits for rural private businesses and households by enhancing their access to financial resources.

The Bank for Investment and Development of Vietnam (BIDV) was assigned with managing and implementing this important phase of the project. Totally, with this loan, the WB’s funding reached US$548 million for the rural finance project.

After the end of the disbursement period, the project's funding will continue to up to 2033. It is estimated that it will help generate a total social investment of up to US$5 billion from the revolving fund managed by BIDV.

French businesses keen on HCM City infrastructure investment

A senior French official said she will encourage French businesses to invest in large infrastructure construction projects in HCM City, including metro routes, water drainage systems and Long Thanh airport.

Fleur Pellerin, Secretary of State for Foreign Trade, Tourism Promotion and French overseas of the French government, made the commitment at a July 21 reception given Le Hoang Quan, Chairman of the Municipal People’s Committee.

She told her host that French businesses that are currently operating in the city are satisfied with the sound, healthy investment environment in the locality.

She hailed HCM City’s dynamic development and said she will ask the French Development Agency (AFD) to work closely with HCM City to draw up cooperation programmes, especially between the two business communities.

The French official welcomed effective cooperation between Lyon city of the Rhône-Alpes region and HCM City, noting both localities have many things in common that supports their future ties.

Briefing Pellerin on the city’s key infrastructure projects, Quan expressed hope the French government and businesses will assist the city in providing financial and technical assistance for these projects.  

He said HCM City and France have great potential for increasing cooperation in the areas of French strength such as transport infrastructure, education, health care, urban management, culture and arts.

HCM City will create the best possible conditions for the two sides’ business communities to strengthen investment cooperation for mutual benefit, he assured his guest.

Pellerin is leading a delegation of French companies to HCM City to explore the local investment environment.

Seafood exports encounter numerous barriers

Vietnamese seafood exporters are facing innumerable difficulties as overseas markets are imposing a variety of trade barriers and challenges, including levying anti-dumping tariffs on imports from Vietnam.

Among the most significant challenges are the European Union (EU)’s anti-dumping measures from the Agreement on Technical Barriers to Trade (TBT), and the US’s Sanitary and Phytosanitary Standards (SPS) and Food Safety Modernization Act (FSMA).

Additionally, the US is likely to reopen and reinvestigate its anti-dumping lawsuits against Vietnamese tra fish, causing great losses to local exporters.

Vo Hung Dung, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI)’s Can Tho branch, said apart from major markets, some regional countries such as Indonesia and Malaysia are also putting anti-dumping pressures on Vietnamese exports.

“It is essential to support businesses and set up technical groups to deal with lawsuits. Moreover, businesses should pay particular attention to evaluating their production situation and studying the export market carefully to avoid anti-dumping lawsuits” he noted.

Dung also suggested Vietnamese businesses raise their competitiveness both in price and product quality.  Cultivation methods should be adjusted to ensure food safety, he said, adding chemicals should be banned in post-harvest and the preservation process.

Japan builds 180 composite fishing boats for Vietnam

Japan’s Yanmar Company is implementing a pilot project to supply 180 composite vessels to Vietnamese fishermen to help them increase tuna yield and quality.

The company’s director Yukio Kikuchi said the project will benefit fishermen in Khanh Hoa, Phu Yen and Binh Dinh provinces.

By using composite boats, Vietnamese fishermen can raise their yield, reduce fuel spending and improve their overall stock quality by utilising better preservation technologies, Director Kikuchi said.

According to the executive, 10 teams of 36 labourers using 60 boats will be set up in each of the three provinces. Each fishing trip will last 15 days and the 60 boats should haul in roughly 150 tonnes of tuna per trip.

The fresh tuna will be shipped to Japanese seafood auction markets at an average price of US$10 per kilogram, five times higher than the current price of Vietnamese frozen tuna.

Yanmar hopes that as from 2015, around 4,500 tonnes of ocean tuna will be exported to Japan annually.

The company is coordinating with the University of Nha Trang Ship Institute (UNINSHIP) to design and manufacture the first composite boats, each costing VND8 billion. The first vessel of its kind will be launched in Khanh Hoa early next month.

Bad debt settlement still an uphill battle

The rate of nonperforming loans (NPLs) in Vietnamese commercial banks rose in the first half of the year from 3.61% in late 2013 to 4.84% in late June 2014, and the State Bank of Vietnam (SBV) reports total bad debts stand at VND240,000 billion.

The escalating ratio of NPLs is going, requiring banks to set up provisions funds which in turn negatively impacts their ability to increase lending activities and get badly needed money commercial loans provide into the coffers of businesses to fuel the nation’s economic expansion.

Leading economists largely attribute the increase in bad debts to slow lending growth in the banking system, gloomy improvement in corporate financing in the context of the slow paced economic recovery and settlements by the central bank-run Vietnam Asset Management Company (VAMC) that are below expectations.

VAMC statistics show that through the end of June, the company had purchased only VND11,414 billion worth of bad debts, a somewhat modest figure when compared to its purchase plan of VND70,000-100,000 billion for the whole year.

Experts from BIDV Securities Company (BSC) emphasised that the VAMC’s purchase of bad debts might also be rather slow in the third quarter but should increase again in the fourth quarter as the deadline for the classification of debts approaches.

BSC experts added that VAMC’s purchase target of VND70,000-VND100,000 billion of bad debts this year is also highly dependent on incentive measures in association with economic benefits which will be applied to credit institutions.

The legal corridors to resolve bad debts are also hindering the resolution. Recently, the National Assembly approved an amended bankruptcy law and eliminated a number of highly complex regulations to supplement to the real estate business law, but at the same time the legislation erected some new barriers to the settlement of bad debts.

In the first half of the year, the SBV's freshly issued documents have effected the classification of the banking sector’s debts.

The recent issuance of two complex circulars in June stipulated that credit institutions should not implement the classification of debts or make adjustments of their classification according to the results of the Credit Information Centre (CIC) until the end of the year. This has created an impasse in resolving the bad debts issue and needs clarification.

SBV former governor Cao Sy Khiem said that commercial banks have been negatively affected by bad debts, principally overdue debts in the field of real estate and state-owned enterprises.

“Although VAMC is implementing the purchase of bad debts, its efforts can not reduce NPLs at commercial banks entirely,” Khiem said, adding that ”The SBV’s two recent circulars have forced commercial banks to use available funds to increase loss reserves, which further exacerbates their efforts to increase lending.”

BSC experts said that the purchase of NPLs is not final solution to settle bad debts as VMAC needs to deal with or sell NPLs, especially to foreign partners.

There have not been adequate legal corridors to sell NPLs in the first six months of the year, they say.

Therefore, VAMC needs to clarify with specificity the details on the subjects, methods and mechanism of selling bad debts, which will continue to become a challenge for the national economy in the coming time.

BSC experts underscore that a clear road map should be devised to avoid an ever worsening situation, causing greater losses.

Ministry offers tax breaks to lift recovery

The Ministry of Finance (MOF) has proposed to erase tax dues, associated interests and overdue charges worth VND6.53 trillion (US$297 million) from struggling enterprises, Tuoi Tre (Youth) newspaper reported.

This move is an attempt to boost the slow business recovery.

"Tax debt eradication now is understandable because many enterprises have financial constraints, due to which they are unable to pay primary debts. Moreover, the overdue charge rate of 0.05 per cent per day, or 18 per cent per year, is too high," said Do Hoang Anh Tuan, Deputy Minister of finance, cited by the newspaper.

"However, it is the National Assembly which will decide on the issue," Tuan said.

If the Government approves, MoF will submit the proposal to the National Assembly for consideration.

In the first half of 2014, about 50,263 enterprises shut shop and 18,271 others were dissolved, which saw tax debts rising nationwide.

Debt-to-tax collection ratio was 6.3 per cent in 2011, 8.1 per cent in 2012, and 15 per cent in H1 2013.

The overdue charge for bad tax debts was an estimated VND3 trillion ($136 million) in Ha Noi and VND3.14 trillion ($143 million) in HCM City.

The ministry reported that on an average, the overdue charge had increased by VND2 trillion ($90 million) every year since 2009.

Non-State enterprises pay 62 per cent of the total overdue charge, equivalent to VND5.1 trillion ($233 million)

In a similar attempt to support the business community, the Ministry of Finance has also proposed to the Government that enterprises which launch investment projects in industrial zones in rural areas be exempted from corporate income tax (CIT) for the first two years, and then get a 50 per cent reduction in the following four years.

The ministry proposed that enterprises should be given two months to pay value added tax, instead of immediate payment, for a minimal VND100 billion ($4.5 million) purchase and import of equipment.

Trade with Israel surges 53 per cent in H1

Trade between Viet Nam and Israel increased significantly during the first half of this year, reaching US$426 million or increasing 53 per cent year-on-year.

According to the Ministry of Industry and Trade's of Africa-West-South Asia Markets Department, of the total, Viet Nam exported $261 million worth of goods to Israel.

These included mobile phones and components ($190 million), seafood products ($22 million), and footwear ($15 million). Meanwhile, it mainly imported fertilisers, machinery and equipment from the country.

According to trade experts, Israel was considered a lucrative market for Vietnamese exporters in the Middle East. Currently, Israel was Viet Nam's fourth largest trading partner in the bloc, trailing behind the United Arab Emirates (UAE), Turkey, and Saudi Arabia.

At a meeting in Ha Noi earlier this week, delegates heard that besides trade, bilateral co-operation in agriculture between the two countries, also had scope to develop further.

During a Viet Nam - Israel Agriculture Business Forum, the Viet Nam Chamber of Commerce and Industry (VCCI) Vice Chairman Dao Duy Khuong praised Israel's development of science and technology in the agriculture sector.

He suggested that both nations devise common mechanisms and streamline administrative formalities in order to facilitate businesses.

The Israeli Ambassador to Viet Nam, Meirav Eilon Shahar said Israel was keen on expanding co-operation in agriculture with Viet Nam.

She said this co-operation would support expanded business partnerships and expressed her hope that the two governments would work closely to create the best possible conditions for growth in their respective businesses.

According to VCCI, Viet Nam's agriculture has shown strong growth over the past two decades and the country's agro-forestry and fishery products are now shipped to 160 countries worldwide.

Meanwhile, Israel boasts of advanced agriculture that uses state-of-the-art technology.

Trade promotion programme to help firms expand markets

The Viet Nam Trade Promotion Agency (Vietrade) and localities would strengthen trade promotion programmes to help local firms expand their markets, a meeting heard yesterday in HCM City.

Bui Thi Thanh An, deputy director of Vietrade, said 28 trade promotion projects were approved this year for the southern region with a total budget of VND9.1 billion (US$428,638).

Many activities, including trade fairs and exhibitions were organised in the first half of the year to support local enterprises to promote their products both in and outside the country, she said.

In addition, 12 business trips were held to help local firms promote farm produce exports in potential markets, including the US, Japan, China, Cambodia, Myanmar and Singapore.

Many foreign business delegations visited HCM City and An Giang, Tien Giang and other provinces to seek business opportunities.

At these exhibitions and fairs and business trips, firms signed contracts, which had helped expand export markets, she said.

In the latter half of the year, exhibitions, trade fairs, business trips, and seminars to connect producers and distributors will be organised so that companies can find outlets for businesses.

Minister of Industry and Trade Do Thang Hai said that the "Vietnamese give priority to use Vietnamese goods" campaign as well as the "Bringing Vietnamese goods to rural areas" programme will continue to be implemented to help domestic firms expand their distribution in the domestic market.

Viet Nam is expected to conclude three free trade agreements with the EU, South Korea and the Customs Union of Belarus, Kazakhstan and Russia this year, all of which will open up more opportunities for local producers, he said.

However, Ngo Minh Hung, deputy director of Binh Thuan Province Department of Industry and Trade, said local authorities as well as businesses were still unclear about opportunities and challenges emerging from free trade agreements, saying that agencies should provide more information to them.

The trade promotion programmes should pay more attention to seeking new export markets for agricultural products, he said.

Mai Thi Anh Tuyet, director of An Giang Department of Industry and Trade, suggested that local producers focus more on improving their product quality to enable more Vietnamese goods to penetrate fastidious markets.

Hai said that, besides existing trade promotion centres in Hong Kong, Dubai and Russia, a system of overseas trade promotion centres would be set up in the coming time, not only in Asia but also in the Middle East and America, to help local firms promote their exports.

The national trade promotion programme made positive contributions to exports, he said, adding that export revenue reached US$70.9 billion in the first half of the year, a year-on-year increase of 14.9 per cent.

Confusion surrounds land use fees

The new decree, No 7, which requires home buyers to pay for land use rights when buying an apartment, has stirred up a debate in the past few days.

However, Tran Duc Thang, head of the Ministry of Finance's Public Asset Management Department said people had misunderstood the decree.

Thang said home buyers would not have to pay for land use rights while buying apartments as the Government had already collected the money from property investors.

He said the decree stipulated that land use right money would be paid at apartment projects which the Government directly manages and operates.

Only those people who buy houses belonging to the State after a rental period would have to pay.

The misunderstanding, however, has become a sore point for home buyers while giving new hope to property investors.

Nguyen Van Hai, a resident in Hoang Mai District who had paid 70 per cent for an apartment, questioned the efficiancy of the decree.

Hai said investors added money for land use rights to the selling price. If the regulation was correct, customers would have to pay double for the apartment.

He said selling prices would rise if the fee was added. The freeze in the real estate market was due to high selling prices which did not suit people's incomes, he added.

However, property investors were happy with the regulation.

Nguyen The Diep, Chairman of the Reenco Song Hong Company, told Dat Viet newspaper that the decree would facilitate businesses which have been in the doldrums.

Hua Vinh Cuong, Deputy General Director of Song Da Thang Long Company added that this would be good news and reduce the burden for investors as land use rights accounted for 15 to 20 per cent of a project's total investment.

Ministry of Construction projects per capita living areas to rise by 2020

Average per capita living areas would reach 25 square metres in 2020, of which the rate would be 29 square metres in the urban areas and 22 square metres in the rural areas, according to the Ministry of Construction's draft on real estate market development strategy by 2020.

Between 2015 and 2020, there will be a total floor area of 425 million square metres to meet the basic demand of people.

Under the development strategy, the domestic property market would have stable development, ensure structure of the market was suitable with the demand and complete the legal formalities for the property market.

FLC starts construction of residential complex in Thanh Hoa

The FLC Group begins construction of a residential complex today in Thanh Hoa City with a total investment of VND1.2 trillion (US$57 million).

This is a project that includes a trading and service centre and apartments on a total area of 16,022 square metres in the centre of the city.

FLC General Director Doan Van Phuong has said the group is building the complex here because of the high demand for homes and also high property prices.

The project is expected to be completed in two years. It will supply 400 apartments with an area between 45 and 100 square metres per unit.

Ha Noi market prepares for exchange-traded fund launch

The Ha Noi Stock Exchange has issued a new regulation to guide the management of certificate transactions of exchange-traded funds (ETFs), paving the way for ETFs to list fund certificates on the exchange.

Decision No 383/QD-SGDHN, issued on Wednesday, includes provisions on conditions of listing, transaction management, information disclosure and treatment of violations.

Fund certificates of eligibility must be issued by ETFs registered with the State Securities Commission (SSC) and Vietnam Securities Depository (VDS).

One of the two founding members of the funds must be a member of the exchange.

Funds must submit valid listing documents to the exchange. The body will issue approval within 10 working days of receiving the application document.

One positive score is that if funds make additional issues or buy back their certificates through swap activities, the exchange will automatically make adjustments on the number of listings within one working day after receiving the notice of VDS. ETFs do not need procedures filed.

In other cases, funds must submit applications and adjustments will be made within two working days from the date of receipt of valid documents.

The regulation lists nine cases under which ETF certificates will be put under warning and eight cases under which their certificates will be brought under control.

Notable cases include net asset value of funds declining below VND30 billion (US$1.4 million) within three and six consecutive months, or less than VND10 billion ($474,000) in one and three months; tracking error exceeding 80 per cent of the maximum deviation (15 per cent); and violations on disclosure of information.

In case of serious violation on disclosing information, the Ha Noi bourse can suspend trading of their fund certificates to protect investors.

The body will consider lifting bans when fund management companies move to overcome their shortcomings.

In addition, ETFs can make voluntary delistings and can be forced to leave the exchange if they fail to satisfy listing conditions or violate listing regulations.

Late last month, Nguyen Thi Hoang Lan, the exchange's deputy chairwoman, said the infrastructure to support ETF transactions was ready.

She expected the first ETF listing would be late in the third quarter or early in the fourth quarter of this year.

Airport held up by land clearance

The port city of Hai Phong plans to raise VND2 trillion (US$95.2 million) through a bond issue next year for key infrastructure projects, including an ongoing one to expand Cat Bi Airport.

The only thing holding up work at the moment is the refusal of five households to move out of the proposed construction site for the new runway.

Passenger traffic through Cat Bi Airport has grown by more than 38 per cent during the 2005-11 period to nearly one million passengers a year, the highest growth by any Vietnamese airport.

Do Tuan Anh, from the city's Bridges Project Management Board, said that the city would mobilise capital from different sources.

A total of more than VND3.66 trillion (US$173.4 million) will be used to lift Cat Bi Airport to international standards by the end of next year.

When work is completed, the airport should be able to handle two million passengers a year - or 800 passengers per hour.

Tuan Anh said that the airport project kicked off in March last year with VND900 billion ($42.9 million) for preliminary work, including building foundations.

Construction of the runway will begin by September this year.

"The biggest difficulty lies in land clearance," Tuan Anh said. Five households still refuse to remove to allow runways and an airport apron to be built.

Le Manh Hung, director general of the Airports Corporation of Viet Nam, an investor in the project, said clearance was supposed to have been completed by the middle of this month.

"If the problem is solved, the project could be completed by the end of next year as planned," he said.

Vice chairman of the municipal People's Committee Le Khac Nam said that local authorities had negotiated with the households many times.

"Local authorities will force them to move if they refuse," Nam said.

Funding for the project is drawn from auctions of land-usage rights, the city budget and other sources. The Civil Aviation Authority of Viet Nam, the Ministry of Transport and ACC Airport Construction Company Ltd. are partners in the process.

Can Tho offers interest assistances to attract investors

Nguyen Thanh Son, deputy chairman of the People’s Committee in the Mekong Delta city of Can Tho, has signed a regulation on interest assistance to projects calling for investment.

The city authorities will aid investors with 20 percent of interest rate of a certain loan amount to carry out projects.

140-hectare Con Au eco-tourist site in Cai Rang District, Con Son tourist site in Binh Thuy, technical infrastructure construction and trading projects in Hung Phu 1, 2A and 2B, O Mon and Bac O Mon industrial zones will enjoy the interest assistance on a maximum loan of VND10 billion (US$472,000) each.

It will not exceed VND5 billion (US$236,000) to technical infrastructure construction at Vinh Thanh Industrial Zone, industrial and handicraft small industrial zones in districts and a logistics center projects.

Can Tho conference center, five-star hotels and resorts in Ninh Kieu and Cai Rang Districts will get the assitance on maximum loans of VND3 billion.

The 20 percent interest assistance will be applied on VND2 billion loans to production and trading projects in local industrial zones with minimum capital of VND60 billion.

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