Vietnam imports more autos from Japan, Germany

Japan and Germany overtook other countries to become Vietnam’s biggest exporters of completely build-up (CBU) autos of under nine seats in the January-June period.

According to the General Department of Customs, 50,000 CBU autos worth US$1.21 billion were imported into Vietnam in the first six months, dropping 9.1% in volume and 19.3% in value compared to the same period last year.

Particularly, the country imported 20,400 under-nine-seat cars worth US$375 million, 21,900 trucks worth US$458 million, and 7,600 other vehicles worth US$379 million in the six-month period.

Japan took the lead with 3,700 units worth US$143 million in the first half, rising by 62% and 103.3% year-on-year, respectively. This was the first time in years Japan has emerged as Vietnam’s biggest exporter of under-nine-seat autos as local firms previously imported more cars from India, Thailand, and South Korea.

Japan was followed by Germany with 1,600 autos worth US$51 million, up 83.8% in volume and 65% in value.

Japan and Germany are major manufacturers of luxury cars with popular brands like Lexus, Infiniti, BMW, Mercedes-Benz, Audi, and Porsche.

Industry watchers said consumers rushed to buy luxury cars to avoid a higher special tax consumption tax which took effect early this month. Particularly, the tax on autos with engine displacement of 2.5-3 liters was revised up to 55%, three to four liters to 90%, five to six liters to 130%, and over six liters to 150%.

However, the tax rate imposed on autos of less than 1.5 liters were lowered to 40% from the previous 45% while the rate for vehicles of 1.5-2 liters remained at 45%.

Luxury car trading firms reported strong sales in the first six months. For example, more than 1,170 units sold were sold, two times higher than in the same period last year.

The first half saw a strong rise in under-nine-seat auto imports from Thailand with 3,600 units worth US$41 million, up 79.5% and 93.5% respectively.

However, imports from other markets slid sharply. Particularly, imports from South Korea reached 3,200 cars worth US$20 million, declining 24.6% and 16.3% respectively, and imports from India reached 5,400 units worth US$21 million, down 19.2% and 20%.

According to the Vietnam Automobile Manufacturers Association (VAMA), auto sales in June alone were 24,400 units, up 31% year-on-year. The number included 12,900 under-nine-seat passenger cars, 10,300 commercial vehicles, and 1,180 other vehicles were sold.  

However, sales of passenger and special-use autos went down by 8% and 30% over May, respectively.

Overall, auto sales in the January-June period grew 31% year-on-year to 135,860 products, with passenger cars rising by 24%, commercial cars by 40% and special-use autos by 50%.

Auto sales are forecast to slide in the coming months while prices of luxury cars would increase remarkably as a result of the new special consumption tax. However, consumption of popular cars priced at below VND800 million each is projected to inch up in the coming time.

Duties on autos imported from ASEAN countries were slashed to 40% from 50% early this year and will go down to 0-5% in 2018 under the ASEAN Free Trade Area (AFTA).

HCMC leads southern region in IP land rent

The average annual rental at industrial parks (IPs) in HCMC is estimated at VND2.8 million (US$125.6) per square meter for a lease term of 50 years, about two times higher than in the neighboring provinces of Binh Duong and Dong Nai.

The rent at IP in HCMC was released by real estate service firm Cushman & Wakefield.

High land costs and developed infrastructure are behind the higher IP land rent in HCMC, according to another property service company, Jones Lang LaSalle.

Jones Lang LaSalle reported that the city is leading the market, with IP land rent at around US$115.2 per square meter.

In comparison, IPs in the southern provinces of Binh Phuoc, Tay Ninh and Dong Nai offer lower rents, at US$40 to US$70 per square meter on average, the firm said.

According to Cushman & Wakefield, 65% of space available for lease at IPs across the city is occupied. That was down six percentage points on both quarterly and annual bases, due mainly to low occupancy at new projects and a 2% increase in the average rent.

The rent for ready-to-use workshops covering 2,000-3,000 square meters now ranges from US$2.5 to US$3.5 per square meter per annum, excluding value-added tax.

The city now has 19 IPs in operation. In the second quarter, an IP of 300 hectares in Binh Chanh District entered the market, bringing the city’s total IP space for rent to 3,940 hectares.

Industrial land in the city is expected to expand by about 2,600 hectares by 2030 with 10 new IPs, up a staggering 66% compared to the current level. However, a majority of future projects are still in the site clearance or compensation stages and construction delays are expected.

Construction has commenced on phase two of Northwestern Cu Chi IP in Cu Chi District and phase three of Le Minh Xuan IP in Binh Chanh District. Site clearance and compensation procedures are being carried out for two other IPs – the third phase of Hiep Phuoc IP in Nha Be District and Vinh Loc IP’s phase three in Binh Chanh.

Cushman & Wakefield forecast demand for industrial land would go up and that this segment would become an attractive investment channel, especially when Vietnam has participated in many free trade agreements.

Transfer of oil-gas services IP slow

The transfer of Soai Rap Oil and Gas Services Industrial Park in Tien Giang Province from Vietnam National Oil and Gas Group (PVN) to the provincial authority has fallen behind schedule due to an incomplete evaluation of the project.

Early this year, the Prime Minister approved the transfer of the industrial park (IP) covering 285 hectares in Go Cong Dong District in the Mekong Delta province.

In 2014, former Deputy Prime Minister Hoang Trung Hai gave in-principle approval to Tien Giang to manage the IP in accordance with the country’s master zoning plan for industrial park development until 2015 and a vision towards 2020.  

Given the latest instruction of the Government, PVN must speed up the IP transfer, solve financial issues relating to PetroVietnam Construction Corporation (PVC) and audit the project value before the transfer.

The Ministry of Finance is assigned to guide relevant agencies to evaluate the project while the Ministry of Industry and Trade is responsible for overseeing the implementation process.

Nguyen Van Cuong, deputy director of the provincial investment promotion center, affirmed that so far the project had not been eligible for the transfer as planned because valuation work is still underway.

“We will hire an independent auditing unit to assess the project before the province takes it over,” Cuong told the Daily.

As instructed by the Government, after the transfer, Tien Giang will select a capable investor to develop infrastructure for the IP.

The IP has favorable conditions for marine economic development, and companies in the oil-gas industry.

Vietnam likely to import more sugar in new crop

Vietnam may have to import a larger volume of refined sugar than the quota the country has committed to the World Trade Organization (WTO) in the 2016-2017 sugarcane crop due to a possible domestic undersupply.

Local sugar production and imports were discussed at a conference on the 2015-2016 sugarcane crop and market forecasts for the 2016-2017 crop held by the Vietnam Sugar and Sugarcane Association (VSSA) in HCMC on Tuesday.

Producers estimated sugar output in the 2016-2017 crop would total 1.5 million tons, unchanged from the previous crop.

Drought and saltwater intrusion in the Mekong Delta will impact sugar output and quality in the next crop, according to the Agro-Forestry-Fisheries Processing and Salt Production Department. Therefore, market and price elements on the domestic market would become unpredictable as the El Nino phenomenon is forecast to hit global supply.

As a result, Vietnam may have to import around 30,000 tons of sugar to meet local demand in addition to the WTO quota of 89,000 tons for the next crop. The department requested sugar mills to assess sugarcane supply to draw up appropriate production plans for the coming crop.

Earlier the ministries of industry-trade and agriculture-rural development sought Government approval to import 200,000 tons of sugar besides the WTO quota of 85,000 tons. The trade ministry issued Circulars 09 importing an additional 100,000 tons of sugar.

Vietnam has this year imported 215,000 tons of sugar, including the extra 100,000 tons, 30,000 tons produced in Laos by Hoang Anh Gia Lai Group, and 85,000 tons under the WTO commitment.  

Big spend proposed for IT, e-govt

The Ministry of Information and Communications has proposed spending VND8 trillion (US$358.7 million) on a national program to develop the information technology (IT) sector and an e-government system in the next five years.

Most of the spending will come from the State budget, the ministry said at a recent meeting in Hanoi. Deputy Minister of Information and Communications Nguyen Thanh Hung said the 2016-2020 program also aims at improving information security.

Hung said the ministry has been requested by the Ministry of Planning and Investment to conduct a feasibility study for this program, which is much needed to help solve difficulties faced by the IT industry and to advance the application of IT to governance.

According to the proposal, the program will promote the adoption of IT at State agencies, build an e-government system, provide online public services at all government levels, strengthen the national capacity to ensure information security and e-authentication, and develop the IT industry through the development of key IT parks and products.

Regarding the use of IT in governance, the main goal is that by 2020 all ministries, ministerial-level agencies, provinces and top-tier cities will have a shared platform connecting over half of their information systems. Many administrative procedures will be handled online via the one-stop-shop window.

As for information security, the program is designed to bring Vietnam out of the list of 20 countries with the highest malware infection rates in the world. Over 80% of information systems at level three or higher will be equipped with high standard security technologies; 100% of online public services at level four will have centralized e-authentication solutions; and a minimum of 50% of the provincial and city portals will be put under network safety surveillance.

To develop the IT industry, the program plans to build at least seven IT parks and support research and development for at least three hardware products in the integrated circuits (IC) and semiconductor chips sectors, at least six network platforms for Government and social agencies, and at least one digital content product to serve State agencies.

VCOSA warns yarn exporters against reliance on China

The Vietnam Cotton and Spinning Association (VCOSA) has warned local yarn exporters against their heavy dependence on China’s market, saying they should turn to the local market if they want to avoid risks.

VCOSA chairman Nguyen Van Tuan told reporters that Vietnam, which exports two-thirds of its yarn output, has increased shipments to China in recent years since Turkey slapped anti-dumping duties on Vietnamese yarn. Prior to this, Turkey accounted for one-third of Vietnam’s yarn exports.

The problem is China is developing its own cotton and yarn industry, Tuan said. A special economic zone in Xinjiang in northwestern China provides Chinese enterprises with incentives such as cutting electricity prices by half and subsidizing one-third of labor cost. The zone’s spinning capacity is now huge, with 10 million spindles installed in the last couple of years.

Given the current pace of expansion, the Chinese industry will be able to offset the volume it currently imports from Vietnam within the next few years, he said.

Tuan noted that Vietnam barely has an edge over India and Pakistan, the two other major suppliers of China, except for a free trade agreement between ASEAN and China. Under the pact, local firms enjoy a zero tariff when selling yarn to China while the rate is 3% for shipments from India, which account for 30% of China’s yarn imports.

This favorable condition could mean nothing if Indian exporters lower their prices, he said.

Yarn producers should focus on the domestic market, he said, adding the textile industry would need to grow to boost consumption of the material as well.

Tuan said better infrastructure, policy incentives and human resources are needed to prop up the entire textile and apparel sector in Vietnam.

Statistics of the General Department of Customs showed that in the first half of 2016, yarn shipments to China exceeded 288,000 tons worth US$721 million, 55% of all Vietnamese yarn exports.

Safeguard measures against steel imports from China sought

 The Vietnam Competition Authority has got a petition from domestic steel producers to impose safeguard duties on H-shaped steel imports from China.

The authority under the Ministry of Industry and Trade confirmed the petition is in line with anti-dumping regulations on imports into Vietnam. Within 45 days from last Tuesday, the agency will evaluate the request before forwarding it to the Minister of Industry and Trade to decide whether an investigation into H-shaped steel imports from China would be launched or not.

Domestic firms which manufacture and trade the same product are encouraged to provide related information and documents to the authority until August 2 to help it with the evaluation of the case and protect their interests.

This is the fifth time Vietnam-based steel mills have sought safeguard measures against steel imports. Previously, local firms filed anti-dumping lawsuits against imported cold-rolled stainless steel, steel ingots and long steel, and coated and color-coated steel sheets.

Vietnam will slap respective official safeguard duties of 23.3% and 15.4% on imported steel ingots and long steel from August 2 after the levy of temporary tariffs. Such taxes will gradually go down in the coming years.

In 2014, Vietnam decided to impose anti-dumping tariffs on cold-rolled stainless steel imports from China, Indonesia, Malaysia and Taiwan.

HCMC, Dong Nai to promote trade in Russia

HCMC and neighboring Dong Nai Province will arrange Russia trips in September and October for local businesses to explore trade and investment prospects there.

At a conference in HCMC on July 21, the HCMC Department of Industry and Trade said a nine-day fair for HCMC-made goods is scheduled to take place in Moscow starting on October 6. The event will be held at the Hanoi-Moscow Culture-Trade Complex (Incentra) in Moscow.

Nguyen Phuong Dong, deputy director of the department, said the event would be a good opportunity for local enterprises to introduce high-quality Vietnamese goods to consumers in Russia and seek to invest in that market.

Nguyen Thi Lan, director of the Dong Nai Trade Promotion Center, told the Daily that representatives of around 30 firms in the province would visit Russia this September to attend a trade conference organized for firms based in Dong Nai and Russia. They will also survey the market for export of apparel, footwear, handicrafts, farm produce and food.

Many products made in Dong Nai are favored by Russian consumers.

Vuong Bich Thu, communications director of the Hanoi-Moscow Trade Center Investment Joint Stock Company, said the high-quality Vietnamese goods fair last November was attended by 163 Vietnamese firms, including 42 from HCMC. The event saw 128 tons of goods sold.

Thu said to support firms with the upcoming fair in Moscow, Incentra would sponsor all booth rentals, halve room rates at its hotel and propose Vietnam Airlines offer a 50% discount to goods transport fees and two roundtrip air-tickets for each company joining the fair. Firms are advised to register for participation before August 10.

According to the fair’s organizers, Russia is among Vietnam’s traditional markets and has high demand for apparel, footwear, handicrafts, farm products, processed food and wooden products.

Expressway maintenance failing to keep up

The lack of legal framework for expressway maintenance has hindered road maintenance tasks, affecting road quality and posing high risks for drivers.

Seven expressways have been put into operation since 2010 with a total length of 750km, contributing to the socio-economic development of the country, but the maintenance of these roads fails to meet real-world demand.

The Ha Noi-Bac Giang highway, for example, started toll collection one month ago but maintenance tasks revealed shortcomings. Wild grass and trees along many parts of the barriers separating lanes of the highway have grown too high, stretching out onto the roadway, threatening driver safety.

Deputy Director of the Ha Noi-Bac Giang BOT Company, Quoc Anh, explained that since the road was put into operation there remains a lot of work to do and the company could not focus on the maintenance tasks.

He also said that the rainy season had started, creating conditions for the rapid growth of wild grass so it would take time for the company's workers to cut the grass.

Nguyen Tuan Anh, Deputy Director of the Directorate for Roads of Viet Nam's Road Management Department, said the department often sent officials to check the Ha Noi-Bac Giang road and asked the road investor to pay attention to road maintenance tasks to ensure good road quality.

If investors failed to carry out the maintenance as required, they would be punished and could even be ordered to stop collecting road maintenance fees from vehicles, he said.

The situation is similar on the Ha Noi-Hai Phong highway with some stretches of the road meridian covered in rubbish, while sand and gravel was strewn on roads. Also, wild grass and trees have grown along the edge of the road and stretched onto the roadway.

Deputy Head of the Ha Noi-Hai Phong Highway Exploitation Management Board Le Xuan Tu said that road maintenance was carried out once every two months but they would check sections that were said to have wild grass stretching onto roadways.

At present, many investors complained that the lack of technical and legal foundations to calculate road maintenance costs was one of the key reasons leading to shortcomings in maintenance tasks. Unreasonable road maintenance costs could lead to problems relating to road quality and road maintenance fees paid by drivers.

A representative from the Viet Nam Infrastructure Development and Finance Investment Joint Stock Company, investor of the Ha Noi-Hai Phong highway, said the estimated maintenance cost for this 105-km road is VND50 billion (US$2.25 million) per year, equivalent to nearly VND50 million ($2,240) per km per month (including the maintenance of the road surface and the electricity system along the road).

The Viet Nam Expressway Corporation has submitted to the Directorate for Roads of Viet Nam for approval a maintenance plan for three expressways, including Cau Gie-Ninh Binh, Noi Bai- Lao Cai and HCM City-Trung Luong, at an estimated cost of VND74.4 billion ($3.32 million) in 2016.

Le Hong Diep, Head of the Road Maintenance Department, said the department was compiling regulations on road maintenance quality and cost calculation for issuance in the coming months.

While waiting for the regulations, these expressways would be still kept under maintenance normally, he said, adding that maintenance costs and standards for each expressway would depend on its specific structure.

Farmers, agricultural firms must boost ties: seminar

Delegates at a seminar in HCM City yesterday called for developing close links between stakeholders in the agricultural production chain to improve the sector's competitiveness globally.

Dr Le Van Banh, head of the Department of Agro, Forestry and Seafood Processing and Salt Production, said linkages in agricultural production are necessary to ensure quality products and traceability.

Despite calls to develop links between farmers and businesses for many years, they remain tenuous, he said.

In rice production, for instance, the links between farmers and businesses in the large-scale rice field model remain modest five years after it was first adopted, he said.

Thus, the area under the model is only 500,000ha out of the country's total of 7.2 million hectares of cultivable land, he pointed out.

Many farmers sign contracts with businesses, who provide them with inputs, but after the harvest they flout the contracts and sell to other businesses who offer them higher prices, Bui Thi Quy, general director of Van Phat Wine Company in Phu Yen, which has a sugar factory, said.

It is very hard for companies to develop close linkages with farmers in the Cuu Long (Mekong) Delta since the latter only sell their sugarcane to traders, not directly to factories, she said.

Dr Vo Tong Xuan, an agricultural expert, said the Government has policies to encourage linkages in agricultural production but they have shortcomings, including a lack of regulations to deal with farmers or businesses violating contracts.

The Government should review them and resolve the shortcomings, he said.

Banh said agricultural production and co-operatives must be restructured with better links between farmers and businesses to improve efficiency.

He called on businesses to invest more in processing technologies to add value to farm produce.

Xuan said farmers need to apply good agricultural practices to sustain quality.

Companies should be more active in expanding their markets, and develop close linkages with farmers to create a stable supply source for themselves, he said.

Tran Van Lam of the Viet Nam Farmers' Union said with deeper international integration Vietnamese farm produce is expected to encounter fierce competition in both the domestic and export markets.

The agricultural sector must seek ways to improve product quality and reduce production costs to bolster its competitiveness, he added.

Dozens of business laws urged to be revised

Nearly 40 laws involved in investment and business activities need to be revised to suit practical operations of enterprises, a seminar in Ha Noi was told yesterday.

According to the Việt Nam Chamber of Commerce and Industry (VCCI), these include laws on commerce, land, construction, environmental protection, science and technology.

They also include laws regulating taxes, accounting and advertisement, as well as telecommunications, prices and the use of State capital in production and business activities.

Experts said there is a need for continuing legal revisions, although about 50 new decrees have become effective earlier this month, providing guidelines for the enterprise and investment laws, which took effect in mid-2015.

Dau Anh Tuan, director of VCCI's legislation department, said further revisions were needed to remove barriers to the development of enterprises. Unnecessary business conditions must be eliminated to create a transparent and equal environment for all firms.

More revisions would also help resolve conflicts among laws and foster general administrative reforms that were being accelerated in the country.

Le Manh Ha, vice chairman of the Government Office, said the Government had made significant efforts in improving the business environment in recent years.

The endeavour could be seen in the renewal of the enterprise and investment laws in 2014, and recent Government resolutions on supporting businesses and intensifying national competitiveness.

However, he said, unreasonable and incompatible rules within laws remain a hindrance to businesses.

Le Ai Thu, chairman of the Viet Nam Geological Economics Association, said the incompatibility between the environmental protection and mineral laws led to different regulations on the inspection of enterprises operating in these areas.

"An enterprise may be inspected several times a year. Why don't the authorities adopt a single regulation to minimise the burden on businesses?" he asked.

Lam Chi Quang, a representative of the Viet Nam Automobile Manufacturers' Association, said Circular No 20/2011/TT-BTC of the Ministry of Finance was troubling member companies of the association.

As the circular stipulated certain supplemental procedures for importers of cars with nine seats or less, some small companies sensed that bigger firms were favoured in the automobile market.

The VCCI suggested that business conditions should be removed for a variety of areas such as car maintenance, insurance agent training, joint stock company evaluation, driving examinations and debt trading.

It also proposed the removal of conditions for tenement management, common infrastructure exploitation, radio engineering receiver and transmitter import, bids retraining and project assessment.

Social housing misused: audit

The state audit of Viet Nam has revealed the misuse of many social housing apartments in major cities.

The audit of the social housing programme in HCM City and Da Nang City showed that 16.7 per cent of the audited social housing apartments in the southern city were being used for unauthorised purposes or by illegal beneficiaries. In the central city, 35.5 per cent of the social housing apartments have been similarly affected.

The findings are alarming as the supply of social housing apartments is far below demand, even as the existing ones are being rampantly misused.

The state audit also found that the efforts of local authorities in developing social housing projects were inadequate, with social housing development by 2015 meeting just a modest 22 per cent and 43 per cent of the targets in HCM City and Da Nang City, respectively.

In addition, the two local authorities have not paid enough attention to designating land for social housing development. HCM City has not allotted land for social housing development in the plans for urban areas and industrial zones, the audit said.

There are also unreasonable expenses in social housing project development, making these apartments unaffordable to low-income earners.

For example, the audit said the prices of two social housing projects, audited in Da Nang City, should be 10 to 17 per cent lower than they were.

The audit said unclear regulations regarding the eligibility of buyers of social housing apartments and in fixing prices were problems in social housing development.

According to the construction ministry, Viet Nam needs about one million social housing apartments by 2020, while the supply currently is a mere 10,000 units per year.

How the national social housing development programme can benefit low-income earners properly rather than being a mere concept, remains a headache for Viet Nam.

Vtv.vn recently reported it was not difficult to find advertisements about the sale of social housing apartments on several property websites, while several low-income earners, who were really in need of houses, struggled to buy one.

Under current regulations, social housing apartments can be transferred after a minimum five years after payment.

Expert Pham Sy Liem said the problems in evaluating the eligibility for buying social housing projects were to be blamed. The evaluation depended on property developers who, he said, paid a lot of attention to their sales results.

Promoting REITs in VN requires changes

Improving legal frameworks and incentives are critical to promote the development of real estate investment trusts (REITs) in Viet Nam, chairman of the first domestic REIT said.

Nguyen Xuan Minh, chairman of the REIT launched by Techcom Capital last year (TCREIT), said there was significant room for the development of REITs in Viet Nam, given the developing domestic realty market with a young population who have a high demand for investing and owning property assets.

REITs would enable individuals to invest in the property market, such as trade centres, office buildings, hotels and resorts, which used to be the land of investments from large or institutional investors.

"REITs will generate stable returns for investors as 90 per cent of the funds' assets must be invested in finished property products under the current regulation," Minh said, adding that this would make investments in REITs less risky than investments in property companies. REITs must spend 90 per cent of its profits to pay dividends to investors.

Although regulations on REITs were promulgated four years ago, the development of REITs and their operation remained modest in Viet Nam while active REITs were mainly foreign ones.

"REITs remain a new thing to individual Vietnamese investors despite being popular in the world for a long time," Minh said. He said that this was partly because the development of the financial market in Viet Nam was still at the infant stage with a significant absence of investment products for individual investors.

To attract investors, it was important that REITs operate with transparency and efficiency, Minh said,

Nguyen Hoai An, head of market research and consultancy at CBRE Viet Nam, was quoted by Dau Tu Bat Dong San (Property Investment) newspaper as saying that it would take some more time for REITs to develop in Viet Nam due to the shortage of experience as well as the quality of property products.

"Incentives to encourage investors to pour money into REITs should also be raised," An said.

REITs were expected to become a new source of capital for property development.

Tran Ngoc Quang, general secretary of the Viet Nam Real Estate Association, said in a story published on Dien Dan Doanh Nghiep (Business Forum) online newspaper that it has become pressing to restructure the capital sources for the real estate market, in which property finance products such as REITs would be a solution.

Quang cited statistics from the Nomura Research Institute showing that the scale of the Viet Nam property market was small, estimated at US$21 billion, compared to Singapore's $241 billion, Indonesia's $189 billion and Thailand's $89 billion.

However, more than 70 per cent of capital in the property market was banking loans. Other capital sources came from residents, foreign direct investment, foreign indirect investment and official development assistance.

In other countries, funds were a important capital source for property development, according to Quang.

Quang said that improving the legal framework coupled with a thorough understanding of Viet Nam property market was important to promote the development of REITs in the country.

HCM City to scrap three IPs

The HCMC Department of Zoning and Architecture has proposed the city government cancel three planned industrial parks (IPs) in Cu Chi District following requests by local residents.

The IPs proposed for removal are Tan Quy A, Phuoc Hiep for pharmaceutical and chemical firms, and Bau Dung.

In a document sent to the city government last week, the department said local people proposed scrapping the 65-hectare Tan Quy A as it has been delayed for years, causing difficulties in construction, conversion of land use, and production for local residents.

The department said Cu Chi District and relevant agencies have agreed to remove Tan Quy A from the city’s master zoning plan for IP development by 2025 with a vision toward 2030. The Department of Industry and Trade is preparing to submit a report on the revised zoning plan for IP development to the city government.

The planning agency asked the city government to seek the Prime Minister’s approval for scrapping Phuoc Hiep and Bau Dung IPs from the city’s IP development plan. It plans to inform locals of the cancellation of the two IPs at the end of this month.

HCMC plans to cancel 17 IPs and industrial clusters covering a combined 900 hectares by 2020, bringing down the total number to 13 IPs which occupy a total of nearly 764 hectares.

Experts said the downsizing of the  IP plan is necessary given the city’s rapid urbanization and limited available land. A handful of IPs are still located inside residential areas.

HSG plans big-ticket steel complex in Ninh Thuan

Hoa Sen Group (HSG) plans to develop a multi-billion-dollar steel complex with an annual capacity of up to 15 million tons in Ca Na Industrial Park (IP) in the central coastal province of Ninh Thuan.

Le Phuoc Vu, chairman of HSG, told an export promotion conference organized in HCMC on July 19 by the Ministry of Industry and Trade that the Prime Minister and the authority of Ninh Thuan Province have given the go-ahead to the project.

Vu said HSG will be able to raise sufficient finances for the steel project and execute it in phases. He added that the group can now buy production equipment at prices which are 50% lower than before.

HSG said on its website that the steel would require 1,700 hectares and a total investment cost of US$3.8 billion.

HSG plans to hold an extraordinary shareholder meeting in HCMC in September to seek shareholders’ nod for the steel complex and issues of the 2015-2016 fiscal year. It will ask for their approval of investment phases, capital for each phase, scale, investment form, technology, partners and suppliers of the project.

Vu said at a meeting with leaders of Ninh Thuan in October last year that the group had picked the province to carry out the project as it has advantages in iron and steel transport, especially by sea, as well as policy incentives to woo investors.

The province said on its website that the steel project is in line with its investment attraction policy and the Government’s plan to develop Ca Na IP and Ca Na deep-water port. The province pledged to create favorable conditions for the group to implement the project.

However, leaders of the province told HSG to develop a modern steel complex to minimize its impact of the environment.

HSG can turn out 1.2 million tons of steel per year. The group is moving on with a number of new projects in different parts of the country, including a big investment in Dong Hoi IP in Dong Nam Economic Zone in the north-central province of Nghe An.

Vu said HSG looks to export more than US$1 billion worth of steel products in the next five years.

Yields of sugarcane declines in 2015-16 season

Drought and saline intrusion this year caused a drop in the cultivation area and yield of sugarcane in the 2015-16 season, but farmers nationwide reaped profits from their harvests, though sugar quality was still considered insufficient.

Speaking at a seminar held in HCM City on July 19, Phạm Quang Vinh, Deputy General Director of the Can Tho Sugar Joint-Stock Company, said that production of higher-quality products was the most significant problem faced by the sugarcane and sugar sector.

The Mekong Delta produces a high yield of sugarcane, but it is of low quality, according to Vinh.

The area of sugarcane affected by drought and salt-water intrusion, especially in the Mekong Delta, is expected to yield a lower output and quality in the next harvest, according to the Ministry of Agriculture and Rural Development’s (MARD) Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production.

MARD has asked sugar mills to work with local authorities to devise rezoning plans for cultivation areas, which are usually located near sugar factories, and develop policies to support farmers.

MARD has also told localities and sugar mills to increase investment in sugarcane areas to increase yield and quality by at least 10 percent to meet domestic demand.

Tran Thanh Nam, MARD Deputy Minister, said the rezoning of sugarcane areas played an important role in preventing sugar mills from fighting over raw sugarcane materials.

MARD is currently drafting a decree on the production and trade of sugarcane and sugar.

The degree will regulate sugarcane zones, support mechanisation in farming, and establish large-scale sugarcane fields, according to Nam.

Vu Thi Huyen Duc, General Director of Sugarcane and Sugar Corporation No 1, said that better zoning for cultivation areas in the Mekong Delta was needed to stabilise sugarcane input for sugar mills.

More than 284,300ha of sugarcane was planted in the 2015-16 sugarcane season, down 22,000ha against the 2014-15 sugarcane season, according to MARD. The yield was 64.4 tonnes per ha, down 0.9 tonnes.

The price of sugarcane with 10CCS (commercial content sugar) purchased at fields was 850,000-950,000 VND per tonne, up about 100,000-150,000 VND against the price in the 2014-15 sugarcane season.

The 41 sugar mills in the country bought all the sugarcane harvested in the 2015-16 season, producing more than 1.23 million tonnes of sugar, down 180,500 tonnes against the 2014-15 season.

The 2016-17 sugarcane season harvest begins in a few months. During this time, the country’s sugar mills plan to produce about 1.5 million tonnes of sugar, equal to the 2015-16 season.

The sugar mills have also signed contracts with farmers to invest in sugarcane fields and guarantee outlets for farmers cultivating 239,100ha in the 2016-17 sugarcane season, up by 1,630ha compared to the 2015-16 season.

Support for enterprises participating in trade fair in Russia

Domestic enterprises will receive support for their participation in the Ho Chi Minh City Products Week, which will take place from October 6-14 in Moscow, Russia.

The information was heard at a July 21 conference jointly organised by the municipal Department of Industry and Trade (DoIT), the municipal Centre for Trade and Investment Promotion, the Embassy of Vietnam in Russia, and the Hanoi-Moscow Trade Centre Investment JSC (INCENTRA) to launch the trade fair.

They will enjoy free-of-charge booths, discounts for accommodation, air tickets, and brand name promotion, according to Vuong Binh Thu from INCENTRA.

DoIT Deputy Director Nguyen Phuong Dong said the trade fair is expected to boost export to and investment in Russia and the Eurasian Economic Union.

Major products to be showcased during the week include garments, leather footwear, handicrafts, wood products, agricultural products, tourism and financial services.

Apparel exports reach 12.6 bln USD in 6 months

Vietnam’s garment and textile exports in the first half of this year reached 12.6 billion USD, a year on year increase of 4.72 percent and accounted for 41 percent of the sector’s target for 2016.

The information was heard at a press conference on reviewing the sector’s performance in the first six month of this year, held by the Vietnam Textile and Apparel Association (VITAS) in Hanoi on July 21.

According to the association, growth of the sector in the reviewed period was largely attributed to foreign direct investment (FDI) firms. It warned and that the situation could worsen from August this year, and many small and medium sized firms may have to shut down due to slow consumption in foreign markets.

VITAS warned the sector might earn only 29 billion USD from exports this year, down two billion USD from the set target, if the situation does not get any better.

Deputy Chairman of VITAS Truong Van Cam said, Vietnamese garment and textile enterprises are facing difficulties due to the pressure of competing for a lower number of orders, and also buying power in foreign markets.

He acknowledged that one of the reasons that caused difficulty for enterprises is the Vietnamese Dong (VND) stability policy against the USD, reducing competitiveness of goods from Vietnam to other countries such as India, Bangladesh, ASEAN countries and China.

Vietnamese steel producers demand anti-dumping measures

The Viet Nam Competition Authority (VCA) said it has received an appeal from domestic steel enterprises, demanding imposition of anti-dumping measures on H-shaped Chinese steel products.

The petition aimed to prevent the products from being dumped in Viet Nam, which seriously affected local businesses, the enterprises said.

According to the VCA, under the industry and trade ministry, it received satisfactory legal dossiers of the case on Tuesday, adding that it would evaluate the dossiers within 45 days before submitting it to the industry and trade ministry for a decision whether an anti-dumping probe should be launched.

To aid the investigation, the VCA asked the petitioners to provide their firms' information related to design capacity and the output of H-shaped steel in the past three years and the first half of this year.

Currently, the VCA is carrying out an anti-dumping probe into colour-coated steel sheets imported from China and South Korea.

Recently, the Ministry of Industry and Trade also decided to impose additional tariffs on imported alloys and non-alloy steel ingots and steel rods to safeguard against cheap imports that were allegedly threatening the domestic industry.

Budget revenue far behind estimates in first half this year

Budget revenue was estimated to reach VND476.8 trillion (US$21.39 billion) in the first six months of 2016 accounting for only 47 percent of the estimates of VND1,015 trillion ($45.67 billion), according to a Government’s report.

The revenue was a year on year increase of 6.1 percent, the lowest increase level during the same period for the last two years.

Industrial and commercial earnings from non-state sector reached 53.8 percent of estimates, foreign invested firms 49.1 percent, personal income tax 56 percent and land use fee 75.2 percent. They are all higher than the same period last year.

Because oil and gas exploitation and processing companies have still faced with difficulties, some incomings were lower than forecast. Earnings from state own firms’ accounted for only 37 percent of estimates.

Revenue from Dung Quat Refinery and PetrolVietnam Gas Joint Stock Corporation reached 36.4 percent and 19.1 percent of estimates respectively, down 60 percent equivalent to VND9.3 trillion ($417 million) and VND 75 percent equivalent to VND1.4 trillion ($63 million) over a year before.

Ca Mau Gas-Power-Fertilizer Complex brought only 30 percent of estimates, reducing VND280 billion ($12.56 million).

Crude oil income was expected to reach VND20.3 trillion ($910 million), making up 37.2 percent of estimates and down 44.8 percent over the first half of 2015.

In general, budget revenue in 2016 is possible to exceed estimates as per the National Assembly’s target. Of these, local revenue might be satisfactory but central budget collection must drastically strive to get the target.

Training required for staff of money changers

Employees of money changers must be trained by commercial banks to distinguish between real and counterfeit bills and master other relevant skills as regulated by the Government’s Decree 89/2016/ND-CP dated July 1, 2016.

The decree also specifies that credit institutions can provide money exchange service after they get approval from the State Bank of Vietnam (SBV).

Organizations that want to offer the service must meet a number of requirements. They must be established or get business registration certificates in line with the prevailing regulations. They are required to arrange suitable places for money changers and equip these facilities with computers, telephones and fax machines.

In addition, the decree requires organizations to sign contracts with foreign partners on receiving and paying foreign currencies.  

Money changers must be authorized by credit institutions and have measures to ensure safety and security for their operations.

At present, Vietnam has thousands of money changers in HCMC and a number of others in other cities and provinces, particularly at places frequented by foreign travelers.    

According to competent agencies, many entities are not licensed to exchange foreign currencies.

Insurance premiums up 26% in H1

The domestic insurance market performed well in the first half with premiums revenues shooting up almost 26%, the highest since 2011.

Pham Thu Phuong, deputy head of the Insurance Supervisory Authority under the Ministry of Finance, told a review conference last week that the insurance market has regained growth momentum after a few years of slowing down.

In the first six months of the year, premiums revenues amounted to around VND38.61 trillion (US$1.7 billion), a 25.9% rise year-on-year, with the non-life insurance segment accounting for VND17.58 trillion (up 15%) and the life insurance segment for VND21.03 trillion (up 36.78%).   

Total assets of insurance enterprises neared VND218.22 trillion with non-life insurers making up VND61 trillion and life insurers VND157.22 trillion.

Insurers had invested over VND175 trillion in the economy in the year to June, especially by purchasing Government bonds with tenors of 15, 20 and 30 years.

To execute a restructuring plan for the insurance sector, the finance ministry launched inspections into three insurance firms including Liberty Insurance Vietnam, Bao Long Insurance Corporation and Saigon-Hanoi Insurance Corporation.

Besides, the ministry checked the implementation of inspection results at Fubon Life; Hanwha Life and Gras Savoye Willis.

Meanwhile, VASS Assurance Corporation (VASS) was forced to restructure and put under special surveillance in the past. Phuong said the Insurance Supervisory Authority submitted to the ministry a report on VASS’s operation, finance, investment, equity, solvency and risk provision.

The authority also sought the ministry’s approval to allow VASS to continue measures to regain its payment ability, concentrate on the capital injection plan, recover investment capital, handle debt and adjust credit insurance products.  

VASS has completed procedures to increase its chartered capital from VND300 billion to VND500 billion and got approval for its regulations and prices of credit insurance products.

According to the Ministry of Finance, the local insurance market still has much room for further growth. The ratio of premiums revenue to gross domestic product (GDP) stands at a mere 2%, compared to 3.35% in ASEAN, 5.37% in Asia and 6.3% in the world.

Unhealthy competition and fraud do exist while finance and risk management remains ineffective.

In January-June, premiums collected by brokerages surpassed VND3.03 trillion, unchanged from a year earlier. Total commissions were VND277 billion, up 6.7% year-on-year.

Firms paid VND16.04 trillion to the insured, including VND7.73 trillion for the non-life insurance segment and VND8.31 trillion for the life insurance segment.

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