BKAV wins award for customer service

The internet security BKAV company was honoured as one of the top 10 "Good Vietnamese products – Perfect Service". Others included VietinBank and BIDV.

The listing was organised by the Viet Nam Standards and Consumers Association. It was based on a nationwide customer research over a six-month period. Criteria included quality, competitiveness and environmentally-friendly products and services.

BKAV is well-known for its anti-virus software that sells for VND299,000 (US$14). It has 17 million users throughout Viet Nam and other countries.

In 2013, BKAV was included by Gartner, an American information technology research and advisory firm, as one of the "Coolest Vendors in Emerging Markets".

Long An seeks to build racecourse

The People's Committee of the southern province of Long An has petitioned the Government for building a racecourse with betting services, reported Dien dan Doanh nghiep (The Business Forum).

If allowed, the racecourse will be developed in Duc Hoa District by the Hong Phat Real Estate Joint Stock Company. It will have an investment capital of US$160 million, cover an area of 324 hectares, and accommodate 30,000 people.

The committee said that the sport and entertainment complex is suitable to the local master plan for socio-economic development. It is expected to create more jobs and increase State budget revenues for the province.

HQC sets firms for private placement

Hoang Quan Consulting Trading Service Real Estate Corporation (HQC) announced it has selected three strategic investors, all domestic construction companies, for a sale of 50 million shares.

The property developer plans to issue 110 million shares to raise its charter capital to VND2 trillion (US$95 million) this year, of which 50 million will be offered to strategic investors in a private placement at the face value of VND10,000 ($0.48) a share.

Bao Linh Housing Development&Construction Investment Joint Stock Company will be offered 10 million shares, while both Indochina Real Estate Development Investment Company Limited and Binh Thuan Construction and House Trading Joint Stock Company will buy 20 million shares each.

The placement will be carried out in the next three months and HQC expects to raise VND500 billion ($24 million) from this issue.

As shares are issued at par value, transfer will be restricted to one year.

In addition, the company will issue 30 million shares to its existing shareholders at the price of VND10,000 per share. Proceeds of these two issues will be put into four apartment construction projects in HCM City.

HQC shares are being traded below par value. The shares hit the ceiling price yesterday at VND7,900 ($0.38) per share.

HQC posted a net profit of just VND6.5 billion ($308,000) in the first half of this year, only half of the same period last year. This number is far below the yearly after-tax profit target of VND150 billion ($7.1 million).

Fewer firms established than last year

Nearly 42,400 enterprises were established in the country in the first seven months of the year, down 7 per cent in the number of new businesses as compared to 2013.

Data from the Ministry of Planning and Investment, however, showed that with total registered capital of VND262.4 trillion (US$12.33 billion), the figures were up 17.8 per cent as compared with the same period last year.

Last month alone, the number of newly established enterprises went over 5,000 with total registered capital of VND31.5 trillion ($1.5 billion), reducing 16.5 per cent against the previous month.

The average registered capital per newly established business was VND6.19 billion ($290,930), representing 26.7 per cent year-on-year increase. More than 629,000 labourers are expected to earn employment at the new companies, increasing 6.5 per cent against last year.

The period also saw 37,612 enterprises dissolved and suspending operations, representing an increase of 9.8 per cent against the previous year. Of this, 5,610 enterprises were dissolved while 6,774 businesses temporarily halted operations with registration. The remaining 25,228 ceased their operations in wait for payment of enterprise code or without registration.

Total registered capital of those in difficulties which are bound to stop operations reached VND291.6 trillion ($13.7 billion), accounting for 84.5 per cent of the total capital supplemented during the period.

As many as 9,428 businesses have resumed operations in seven months, decreasing by 6.4 per cent against the same period last year.

FPT to create rail e-ticket system

Vietnam Railways (VNR) and the Corporation for Financing and Promoting Technology Corporation (FPT) signed a contract for an electronic booking system for VNR in Ha Noi yesterday.

The US$9.3-million project will be completed in three stages over a period of seven years.

In the first stage, FPT will install the electronic booking system within 120 days of the date of signing of the agreement.

In the second stage, electronic tickets will be sold on the website for a year to serve the demands for Tet (Lunar New Year) holiday 2015, starting from November 21 of this year.

In the final stage, the system will be installed at all stations in the country over six years, starting from November 21, 2015.

According to VNR CEO Tran Ngoc Thanh, the electronic booking system aims to improve the quality of service and provide passengers with flexible adjustment of ticket prices depending on the route and duration of the journey, and increase the demand for railway transportation.

The system provides customers with all information about trains and publishes the availability of tickets, especially on holidays and special occasions.

The online tickets can be purchased anytime and anywhere, through various means including messages, emails, electronic boards, smartphones and tablets.

Commuters can use domestic and international credit cards to make their payments.

The system also calculates the number of bookings and passengers, and helps VNR develop appropriate business tactics to meet the demand and improve the business efficiency and quality of available railway infrastructure.

The contract says that VNR is capable of using the electronic booking system to sell tickets.

FPT is responsible for establishing the system and will make profit from a part of the ticket sales that will be given by VNR.

"The electronic booking system helps passengers to buy tickets easily with only a smartphone or a tablet. This is also an essential improvement for VNR to regain its position in the national transportation system," CEO Tran Ngoc Thanh said.

"The co-operation between VNR and FPT will make a significant improvement by applying information technology to VNR's operations, raise its efficiency and credibility among customers, and support the company to make a great contribution to the development of the country," FPT chairman Truong Gia Binh said.

HCM City urges industrial zones to improve

HCM City authorities have exhorted industrial parks and export processing zones to further develop their infrastructure to attract more investment.

Speaking at a meeting with the HCM City EPZ Authority (HEPZA) on Wednesday, Le Hoang Quan, the People's Committee chairman, urged IP and EPZ developers to provide better services to investors and connect their tenants with Government agencies to be more competitive.

Local and foreign firms should better connect with each other to make their products better known and foster development of supporting industries, he said.

He hailed HEPZA's efforts to attract investments this year and, especially, to ensure security in mid-May when many of their tenants were attacked by rioters following China's placement of an oil rig in Viet Nam's territorial waters.

Speaking at the meeting, Nguyen Bach Hoang Phung, deputy head of HEPZA, said this year the city's EPZs and IPs have attracted investments of US$333.47 million, a 55.5 per cent increase over the same period last year.

Phung said development of infrastructure at EPZs and IPs has "a positive impact" on investments, especially from foreign sources.

In the first half of this year nearly 69.5ha of land in EPZs and IPs was leased out, a 4.5-fold increase year-on-year.

Also during the period 36,711sq.m of factory and warehouse space was leased, mainly at Cat Lai IP and Tan Thuan EPZ, a 76.27 per cent rise, he added.

Shoe, leather firms encouraged to be more competitive

Exports of the country's leather and footwear sector have long depended upon foreign direct investment (FDI) businesses, as 77 per cent of the total export value came from foreign enterprises.

Phan Thi Thanh Xuan, general secretary of the Viet Nam Leather and Footwear Association (Lefaso) told news portal ndh.vn that domestic leather and footwear firms have mainly manufactured for exports.

Competitive labour costs have attracted FDI inflows, as well as orders from Taiwan and South Korea.

Xuan said it could not be denied that contributions from the FDI sector promoted export growth in the industry and provided jobs for labourers.

Local firms have received management experiences, modernising technologies and deeply joining in the value chain.

However, she said the significant presence of FDI companies in footwear exports reflected the low level of competition exhibited by domestic businesses.

The sector should put in place effective and long-term solutions to balance the portion of exports between Vietnamese and FDI enterprises, as the FDI sector has an advantage in capital, experience and technology.

In addition, these businesses have markets they supply throughout the world.

Viet Nam has been negotiating several trade pacts, which were expected to bring benefits to the sector. This was the reason that local footwear firms should take advantage of such trade pacts to promote their exports.

Diep Thanh Kiet, the association's vice chairman, was reported as saying by the newspaper that another reason for the situation was the limited support industry in the sector, noting that the industry supplies only 30 per cent of its needed raw materials, while spending US$1.1-1.5 billion each year for imports of leather for production.

Kiet said local producers should be more active in supplying materials, while setting strategies and studies to meet consumers' tastes, thus increasing the value of exported products.

Phan Chi Dung, head of the Ministry of Industry and Trade's Light Industry Department, said commercial agreements have strict regulations about the origin of products.

Dung proposed that localities should provide favourable conditions for the footwear industry to build concentrated industrial parks and become involved in supplying materials.

Lefaso's figures revealed that the leather and footwear sector has always had high growth rates, with export values at the top of the processing group.

In the first half of the year, the sector earned $6.09 billion from exports, of which shoes reached $4.84 billion, increasing 22 per cent, and the value of exported bags was $1.25 billion, posting a 38 per cent year-on-year increase.

It added that the target of export revenues of $12 billion this year would be possible.

Gold loans fall as prices dip

Gold loans at 10 commercial banks in HCM City stood at 157,317 taels by the end of June, representing an 11 per cent decrease over last June.

Each tael equals 1.2 troy ounces.

Thoi bao Ngan hang (The Banking Times) reported that the volume of gold loans may require more attempts to encourage clients to convert gold into Vietnamese dong, which the State Bank of Viet Nam would like to see.

In principle, the central bank ordered commercial banks to close accounts of deposit and loans on gold on June 30th, 2013. However, it was not bankers who could make that decision. Terms of gold loan contracts were quite long and clients often did not want to end contracts before their maturity.

To wipe the slate clean, banks offered to exempt charges for overdue interest payment for clients who borrowed gold at 5 to 7 per cent yearly in 7 to 10 years.

However, banks reported that such a solution was not working out since a large number of clients were jewellery processing firms and real estate developers. They were supposed to pour capital into projects and ran out of money to pay the loans.

A representative of an HCM City based bank said that the picture might get brighter if gold prices fell. At lower gold prices, clients would benefit from the lower values of gold loans.

Local gold yesterday dipped by 0.2 per cent to set at a one-month low between VND36.56 and 36.68 million (US$1,724-1,730) per tael.

The loss was driven by a decline in world gold prices to below $1,300 per ounce, as investors nervously awaited the end of US Federal Reserve's two-day policy meeting yesterday to see if the central bank would raise interest rates faster than expected.

Spot gold was down 0.4 per cent at $1,299.10 an ounce after rising to as high as $1,312.10 earlier in the day.

Banks quoted the US dollar between VND21,195 and 21,270, up VND5 to 10 against Tuesday.

Wood export value rises, but so do costs

Viet Nam gained a year-on-year increase of 13.4 per cent in the value of exported wood and wooden products.

According to the Ministry of Agriculture and Rural Development, exported wooden products were valued at US$3.35 billion during the first seven months of this year.

Further, during the first six months, exports of wood and wooden products increased in most export markets, excluding China where wood exports fell 1.38 per cent, reported the Hai Quan (Customs) online newspaper.

Meanwhile, exports to the US and Japan grew 15.92 per cent and 24.29 per cent, respectively, against the same period last year.

The US, China and Japan are the three largest export markets for Vietnamese wood and wooden products, the ministry said.

Nguyen Manh Dung, head of the Processing Division from the Department of Processing and Trading Agricultural, Forestry, Seafood Products and Salt, said Viet Nam has seen strong growth in its exports of wooden products for many years, but this strong development is not sustainable because the wood processing industry has not had close cooperation between forestry companies and wood processors. Indeed, processors have often depended upon imports of wood for export processing.

Additionally, in the first seven months of 2014, the ministry said, Viet Nam had a year-on-year increase of 74.3 per cent in imports of wood for export processing, at a cost of $1.37 billion.

Many experts have said, if the country is to create sustainable development, the industry must have modern technology to use in production and increase the efficiency of using material wood products, while meeting the demands of both local and foreign markets.

According to the Trade Office of Viet Nam in the UK, the European country is a large market and has a significant demand for importing wood and wooden products, which is currently valued at $9.9 billion annually.

Further, Viet Nam is one of the largest exporters of wood and wooden furniture to the UK, reported the Cong Thuong (Industry& Trade) newspaper.

In first five months of this year, Viet Nam saw a year-on-year export value of 14 per cent to 68.36 million pounds ($115.38 million), according to the Customs Office of the UK.

Nguyen Thi Hong Thuy, commercial counselor of the Viet Nam Trade Office in the UK, said Viet Nam's wooden products were marketable because of competitive prices and their good quality.

Some large companies in the UK wood industry have signed cooperation contracts with Vietnamese producers to provide designs, maintain standards, assist with market information and distribution systems for Vietnamese producers, she said.

Thuy said Vietnamese wooden products should increase their market share in the UK in the years ahead.

Local firms should join international fairs and exhibitions for wooden products in the UK and build distribution systems to increase exports.

Workshop looks into ways to improve Vietnam’s competitiveness

The Central Institute of Economic Management (CIEM) on July 31 held a workshop on the implementation of the Government’s Resolution 19/2014/NQCP on improving Vietnam’s business environment index.

The function was organised in coordination with the Governance for Inclusive Growth programme of the US Agency for International Development (USAID/GIG).

Vietnam ranks 99 th among 189 countries in terms of the business environment, which is based on respondents’ opinions on start-up entrepreneurship, business licensing, capital access, tax payment and cross-border trade, among others.

Resolution 19/2014/NQCP, issued on March 18, 2014, targets key competitiveness indices of Vietnam equalling the average figures of six other ASEAN countries, namely Indonesia, Thailand, the Philippines, Malaysia, Brunei and Singapore.

To translate the document into action, State agencies need to cut down administrative procedures and business expenses so as to improve cross-border trade, taxation and access to electricity.

At the workshop, relevant agencies, including the General Department of Taxation, the General Department of Vietnam Customs, the Vietnam Social Insurance and the Vietnam Electricity Group, pledged every effort to raise the three indices from now to 2015.

Deputy Minister of Finance Do Hoang Anh Tuan said his ministry is amending some circulars so that the procedure handling duration complies with international accounting standards.

He said the on-going tax declaration change can help cut the tax payment duration down by 201 hours.

CIEM Director Nguyen Dinh Cung said CIEM is working with the business circle to devise measures addressing challenges regarding business environment and competitiveness.

With the help of USAID/GIG, the institute will carry out action plans to facilitate foreign investment and the growth of small- and medium-sized enterprises, he added.

Hanoi honours outstanding enterprises, entrepreneurs

The Hanoi People’s Committee and the municipal Labour Federation on July 31 honoured 150 local enterprises for their remarkable business and production achievements as well as their active contributions to social work.

More than 200 individuals also received certificates of merit in recognition of initiatives and creative ideas they contributed to their units.

Ha Thanh Concrete Joint Stock Co., the Military Petrochemical Joint Stock Co. and the Korea-Vietnam Co. Ltd were among the most outstanding units.

Meanwhile, pharmacist Le Thi Binh, Chairman and CEO of the Tam Binh Pharmaceutical Co., Ltd, and Pham Van Kiem, Chairman and CEO of the Thai Binh Joint Stock Corporation, were the best names in the pack of outstanding entrepreneurs.

Addressing the event, Chairman of Hanoi People’s Committee Nguyen The Thao asked agencies and sectors to focus on removing difficulties for enterprises and create favourable conditions for them to access capital sources and expand market.

He also urged enterprises to promote the application of scientific advance and latest technologies in production in order to increase productivity and product quality, thus improving their competitiveness in the world market.

Binh Duong sees high industrial production, export growths

The industrial production value of southern Binh Duong province in the first seven months of this year hit 98 trillion VND (4.6 billion USD), up 12.8 percent year on year.

Of the figure, the foreign-invested sector made up 67.5 percent, a rise of 13 percent.

In July alone, the figure was nearly 14.6 trillion VND (685.73 million USD), a 3.9 percent growth over the previous month, of which the foreign-invested sector contributed 9.97 trillion VND (468.59 million USD), up 4.4 percent.

Meanwhile, Binh Duong posted an export turnover of 1.3 million USD in the month, up 4.4 percent against the previous month, pushing the January-July figure to over 8 billion USD, rising 13.3 percent.

According to a recent survey by the provincial Department of Statistics, almost all 387 asked local enterprises asserted the locality’s favourable business environment in 2014 with production recovery in most businesses.

In 2014, 72.3 percent of the local enterprises forecast they will enjoy revenue growths, while 76.2 percent expect to see a rise in pre-tax profits, according to the survey.

It also revealed that 45.7 percent of enterprises will increase labour force while 42.8 percent plan to increase capital.

At the same time, 48.3 percent of 108 export firms expect to enjoy higher export turnover than that of 2013, it added.-

Tay Ninh sees booming border trade with Cambodia

Cross-border trade between Vietnam and Cambodia through 16 border gates in the southern province of Tay Ninh hit 650 million USD in the first seven months of this year, according to the provincial Department of Industry and Trade.

Of the total, Vietnam ’s export value reached 350 million USD while imports stood at 300 million USD.

Main exports included instant noodle, plastic products, detergent, batteries, cooking oil, cosmetics, construction materials, pigs and chickens, while major import items were cassava, soybean, buffaloes, cows and material cashew nuts.

Notably, in the last seven months, Vietnam bought from Cambodia 25,000 buffaloes and cows, as well as 50,000 tonnes of fresh cassava, said the department.

Meanwhile, total trade in the period at 20 markets in 16 border communes was estimated at about 200 billion VND (more than 9.5 million USD).

In order to create favourable condition for border trade activities, the province has invested in upgrading the road and bridge at the Tan Nam (Tay Ninh)-Mean Cheay (Prey Veng, Cambodia ) border gate pair.

The province is also drafting a 1 trillion VND (47 million USD) project to build and upgrade road systems leading to auxiliary border gates in a bid to boost border trade.

Sustainable solutions for sugarcane industry

Vietnam's sugarcane production will face tough challenges when the tax rate cut down to zero percent by 2015, according to the Vietnam Business Forum Magazine (VBF).

According to calculations, the cost of sugarcane production in Vietnam is the highest level in the world.

If a timely and effective solution is not found, thousands of households and businesses in the sector will be miserable, said Nguyen Trong Thua, Head of Agro-forestry-fisheries and Salt production Department under the Ministry of Agriculture and Rural Development.

According to Chairman of the Vietnam Sugarcane Association Nguyen Van Loc, there are now more than 310,000 hectares of sugarcane. From 2009 - 2010 crop year to present, the country's sugarcane output has increased steadily, reaching an average of 200,000 tonnes per year.

Particularly in 2013 – 2014 crop year, sugar production reached the record of 1.6 million tonnes. In this crop, sugar productivity reached the highest level ever of 5.47 tonnes a hectare.

Loc said that the sugarcane cultivation areas are scatter while technology for manufacturing process is very poor. Besides these, manual harvesting and transport which have not followed proper technique has led to the loss of 10-15 percent of the sugar, while the loss percentage in other countries has accounted for only 1-2 percent.

Loc added that comparing competitive advantage in this industry between Vietnam and Thailand , the gap is quite large. Specifically, while the cost of land rent is higher in the South-East of Vietnam than in Thailand , Thailand has lower fertilizer costs, higher sugar yield and lower sugarcane purchase price. In Thailand , they harvest sugar at foot with no impurities; ripe sugarcane is with no exposure time and transported by mechanical means so the loss is just under 5 percent. In Vietnam , farmers harvest young sugarcane by hand; transport time takes between 24 and 48 hours and led to the loss of 15-20 percent of sugar in sugarcane. These factors have pushed up the price; therefore there must be solutions to reduce production costs and increase productivity so that Vietnamese sugarcane can be able to compete.

According to Loc, the issue of development plan of Vietnam ’s sugarcane industry is that the price is too high while competitive capacity remains low. Although the sugarcane yield reached 64.2 tonnes a hectare on average during the 2013-2014 crop, only 10 percent of material area reached the level of productivity of the region and currently 42 percent of the raw material areas of Southeast region is at risk of turning into other crops due to low sugarcane yield.

One important reason is that existing sugar processing technology in Vietnam is still too backward, leading to low productivity. Currently, Vietnam 's sugarcane yield is only 5.47 tonnes per hectare while in Thailand and Australia it is 8 and 12 tonnes per hectare, respectively. These restrictions have led to limited income for Vietnamese farmers. Specifically, according to the Vietnam Association for Sugarcane, sugarcane profits of the Southeast region and the central Highlands is 5,16 million VND and 8,432 million VND per hectare, respectively while it is 20,645 million VND per hectare in Thailand.

As an expert, Prof. Dr. Vo Tong Xuan said that to cut the production cost, Vietnam needs to deploy automatic sugarcane irrigation system as it is one of the most important factors to improve the productivity of sugarcane.

In addition, farmers and businesses need to calculate when applying science and technology in choosing sugarcane breed for stable development of the sugarcane cultivation areas.

G-bond market remains attractive

The Government bond market is expected to be more active this year as investors have shown increasingly strong interest in bond auctions despite falling coupons.

At an auction of the State Treasury on Tuesday, investors bid for VND20 trillion worth of G-bonds compared to VND8 trillion put up for sale, marking the biggest bidding volume ever.

At the close of the bidding, investors snapped up VND1 trillion of two-year bonds, VND2 trillion of three-year bonds, VND3 trillion of five-year bonds and VND2 trillion of 10-year bonds. Despite a strong decline in coupons of tenors of five years or shorter, banks were still strongly interested in the debt paper.

According to the Hanoi Stock Exchange (HNX), the organizer of G-bond auctions, the winning coupon of two-year bonds was 5.25% per annum, dropping by 0.12 percentage point against the previous session on July 11.

Meanwhile, three-year bonds reported a winning coupon of 5.68% per annum, or 0.11 percentage point lower than on July 17. The winning coupons for five and 10-year tenors were 6.68% and 8.48% per annum respectively.

Since early this year, the State Treasury has mobilized VND139.6 trillion from G-bond sales, exceeding the total in all of 2013.

As Moody’s suddenly upgraded Vietnam’s sovereign bond rating from B2 to B1 on Tuesday, investors are expected to flock to the G-bond market while other investment channels have turned sluggish. The stable exchange rate and low inflation have also bolstered investor confidence.

The State Treasury estimates to launch VND50 trillion worth of treasury bills and bonds onto the market in the third quarter, higher than the VND47 trillion in the second quarter but lower than the VND75 trillion in the first quarter.

Three- and five-year bonds will make up the largest ratio of the third quarter bond volume, followed by one year, two years and 10 years.

Experts from Bao Viet Securities Company said that there is a shift from short to long tenors in this quarter.

The volume of two-year bonds issued has dropped repeatedly since early this year from VND17.6 trillion in the first quarter to VND9.5 trillion in the second quarter and an estimated VND6 trillion in the third quarter. Meanwhile, five-year bond issues are expected to bounce back strongly.

The move suggests that banks, which are active on the bond market, will improve their capital structure by raising their medium-term capital ratio, the experts said.

July retail growth slows despite multiple promotions

A report by the General Statistics Office showed that the retail market has grown slowly this month though retailers have launched numerous promotion programs to fuel consumption.

The GSO put total retail sales of goods and services in July at VND238.7 trillion, up a mere 0.3% over the

previous month. Goods revenues inched up only 0.3% while sales of catering and accommodation services rose by 3%.

On the contrary, travel service revenues dropped by 3.8% as the summer holiday season is coming to an end, with tourism revenues of the coastal localities like Binh Dinh, Phu Yen, Haiphong, Danang and Ha Tinh falling by 5.2%, 3.2%, 2.7%, 1.9% and 55.1% respectively.

Accumulated sales of goods and services in January-July reached around VND1,655 trillion, up 11.4% year-on-year and rising only 6.3% if price factors are excluded.

Despite the good growth in the first seven months of this year, representatives of supermarkets and commercial centers said consumption has not improved much though they have offered a range of promotions and discounts.

Some modern retailers like supermarket chains said their sales growth resulted mainly from their expanding networks. In fact, the revenue of each supermarket and store did not rise or even declined.

Retailers attributed the situation to economic difficulties which have eaten into incomes of consumers and forced them to tighten their spending. Consumers still focus on buying essential goods for their families.

Sales would not improve next month as August is the seventh month of the lunar calendar when consumers are advised not to buy stuff in a month of wandering souls.

A recent report of Nielsen on global consumer confidence and spending indicated that the confidence index of Vietnamese consumers in quarter two fell slightly by one point against the first quarter to 98 points as they were more concerned about finance and jobs in the next 12 months.

Vietnamese consumers, according to the report, are trying to cut their spending on clothes and entertainment services to save money.

Vietnam Airlines sees US$1.3bil revenue

The Vietnam Airlines Corporation gained total revenue of nearly VND28 trillion (US$1.32 billion) for the first half of this year, according corporation report released on July 31.

In H1, the domestic economy continued to recover, interest rates for loans remained low and inflation was controlled, while Vietnam continued to be a safe and attractive destination for international visitors, said the corporation.

Vietnam Airlines, the national flag carrier and also subsidiary of the corporation, registered revenue of VND27.8 trillion (US$1.31 billion) in reviewed period, or 48.5% of the carrier's target for this year, it said.

The corporation expected to gain VND100 billion (US$4.72 million) in pre-tax profits, including VND82.3 billion (US$3.88 million) from Vietnam Airlines.

The corporation ferried around 8 million passengers, 8.5% higher than the same period last year, including about five million local passengers.

However, it continued facing many challenges in the first half of this year that affected its operations and business. These included difficulties in the domestic economy, fierce competition from the domestic and foreign markets, adverse impact of the conflict on the East Sea with China and the political crisis in Thailand and Ukraine, it said.

To meet the target set for 2014, the corporation will continue its restructuring plans, ensure security, safety and proper management of flights and improve quality of service for passengers.

FDI flows to processing, manufacturing industries

Processing and manufacturing industries have attracted the most foreign direct investment (FDI) capital so far this year, with 448 newly-licensed projects and a new registered and additional capital of 6.66 billion USD, accounting for about 70 percent of the total FDI.

They were followed by the real estate and construction sectors, with 1.13 billion USD and 547 million USD, respectively.

According to the Ministry of Planning and Investment's Foreign Investment Agency, total registered capital of FDI projects in the first seven months this year decreased by 20 percent year-on-year to 9.53 billion USD.

In the reviewed period, as many as 889 new FDI projects were licensed with total registered capital of 6.85 billion USD, representing 0.9 percent year-on-year decrease. About 300 projects increased their investment by 2.67 billion USD, falling 46 percent compared to a year earlier.

The Republic of Korea topped the list of 46 countries and territories investing in Vietnam, with a total registered investment of around 3.13 billion USD, accounting for nearly 33 percent of the country's total FDI inflow. Hong Kong (China) ranked second with 1.15 billion USD, followed by Japan, 1.11 billion USD.

Northern Bac Ninh province led the country in FDI attraction with 1.33 billion USD, making up 14 percent of the country's total inflow. Ho Chi Minh City was second with total registered and additional capital of 1.07 billion USD, followed by Binh Duong, Dong Nai, Hai Phong and Hanoi.

Some big FDI projects that were granted licences in July included the RoK investor's Samsung Display Company in Bac Ninh Province with 1 billion USD, Thang Long Cement Factory funded by an Indonesian investor in north-eastern Quang Ninh province with 325.75 million USD and Dai An Vietnam – Canada International Hospital Company in northern Hai Duong province with 225 million USD.

In the period, the country’s FDI disbursement increased by 2.3 percent against the same period last year to 6.8 billion USD.

The export value of the FDI sector (including crude oil) hit 55.83 billion USD, up 15 percent year-on-year and making up 66.8 percent of the total export turnover.

Vietnam Railways Corporation undergoes restructuring

A number of subsidiaries of the Vietnam Railways Corporation are being equitised, including two major companies, Hanoi Railway Passenger Transport and Saigon Railway Passenger Transport.

The two companies will be renamed Hanoi Railway Transport Company and Saigon Railway Transport Company. Restructuring of these two companies is expected to be complete in 2015.

Di An Railway Company, Gia Lam Railway Company and about 20 others that specialise in railway infrastructure maintenance will also be equitised by the end of 2015. All the affected firms will go into operations on January 1, 2016.

Vietnam Railway Vocational College has a target of being financially independent by 2020, while the Railway Medical Centre will be independent by 2016.

Executives at Vietnam Railways Corporation have ordered further research on the process and proposed reducing stakes in their consulting and construction companies to less than 30%.

The Vietnam Railways Corporation will submit an organisation, management and operational plan for the national railway system to the prime minister and the Ministry of Transport in July.

Vietnam Report survey shows enterprise optimism

A new report has shown that many enterprises are optimistic about Vietnam and see big prospects in the country.

Locally-owned Vietnam Report has conducted a survey of over 300 of Vietnam’s biggest enterprises, including foreign invested firms. Results showed that 95 per cent of respondents are bullish on their revenue outlook for this year; 84 per cent said their 2014 revenue would exceed that of last year. Only 11 per cent said they expected unchanged revenue.

“The figures show that most enterprises are confident in their performance and economic outlook. They are also expecting significant business recovery this year,” noted the survey.

According to the results, priorities for this year included customer care (65.6 per cent), human resources development (60.7 per cent), upgrading technology (50.8 per cent), local and overseas market expansion (45.9 per cent), and research and development (41 per cent).

In late January US-backed global management consulting firm Boston Consulting Group reported that the middle and affluent class in Vietnam would double between 2014-2020, from 12 to 33 million. It also said that the number of consumers with a monthly income of VND15 million ($714) was growing fast.

Tibor Novakm, country manager and chief representative of Hungarian-backed pharmaceutical firm Gedeon Richter’s representative office in Vietnam, told VIR that the firm was looking for opportunities to produce pharmaceuticals in the country.

“Vietnamese people are spending more on medicine and we are researching the market. If it meets our conditions, we might consider building a factory here,” he said.

The Vietnamese pharmaceutical market was valued at $3.34 billion this year, up from $2.94 billion in 2012.

Anuvat Chalermchai, brand director of Thai-backed SCG Cement Building Materials, told VIR that Vietnamese consumers’ spending on eco-friendly building materials was growing strongly. “That’s a very favourable factor for us in Vietnam.”

In this year’s first quarter, SCG Vietnam earned revenue of $133 million, impressively up 76 per cent on-year. This year SCG will market several new products and technologies in Vietnam, such as concrete roof tiles and fibre cement board, COTTO bathroom products, and COTTO Italian ceramics.

SCG’s latest innovations seen for first time in Vietnam include SCG Smartwood Modeena Series - “Style your wall unique”, which makes your walls distinctive as it embraces multiple layers within the same plank. SCG Smartboard Modeena Series is ideal for creating big dimensions for walls unlike any other wood substitute.

András Somos, CEO of Hungary’s consulting firm SKC-Consulting also told VIR he was quite upbeat about business opportunities for SKC in Vietnam thanks to rising consumption. “We’re providing consultancy for many Hungarian firms wishing to do business in Vietnam, like Prigram operating in automatisation, General Com operating in water treatment and medical equipment maker Meditech.”

Fears rise as credit flow slows to a trickle

Experts have expressed concerns over the continued slowdown in total credit flow since the end of June.

Total credit growth as of July 18 marked a new low of just 3 per cent while growth for the year’s first half increased just 3.52 per cent against the figure for the end of 2013.

The Hanoi Statistics Office estimated July’s outstanding loans equalled VND927 trillion ($44 billion), down 2 per cent against the year-end of 2013. The figure for the first half of 2014 was announced at VND967 trillion ($46 billion) – a rise of 2.4 per cent in comparison with the 2013’s year-end figure.

“Credit growth in July will be much lower than the previous month,” said a local bank leader who declined to be named.

Nguyen Hoang Minh, deputy director of State Bank of Vietnam (SBV) branch in Ho Chi Minh City, said without the contribution made by Ho Chi Minh City’s growth, the scenario would be even more worrisome.

Minh revealed that the city’s credit volume rose 2.84 per cent in the first half. About 40 per cent of the $0.74 billion contracted with 700 businesses was successfully disbursed within June and July.

The fast downward trend in credit growth has been blamed on weak market demand and supposed ‘adjustments’ by banks in their released figures.

“The economy is still facing a lot of challenges, ranging from weak demand to modest capital-absorption capacity, leaving credit growth at a low level,” said Vo Tan Hoang – Saigon Commercial Bank’s general director.

Under data published by the Ho Chi Minh and Hanoi Statistics Offices, the consumer price index (CPI) in July rose only 0.12 per cent and 0.18 per cent month-on month, respectively.

An anonymous deputy director of a bank also suggested massaged figures weren’t uncommon in the banking sector. “Banks often provide more positive figures for their first-half reports, the real figures might not be so positive…the rebalance in July could account for the downward trend,” he added.

According to another financial expert, part of the reason for a slowdown in credit growth might stem from interbank transactions, which only offers improvement to the bank’s individual results, not the sector’s actual growth.

“In fact, the SBV had announced an on-year fall of 2 per cent in the whole fund balance, with this first half figure at only VND18 trillion ($0.86 billion),” said the expert.

SBV Governor Nguyen Van Binh earlier admitted that the year-end target of 12-14 per cent growth would be a major challenge for the sector. He added, however, that there was an official determination to achieve at least 10 per cent growth.

SBV urges banks to boost lending

The State Bank of Vietnam (SBV) has told local banks, foreign bank branches and rating agencies to improve their capacity of assessing creditworthiness so as to boost loans without collateral.

In Document No. 5342 recently released, SBV urges local banks to adopt solutions to help enterprises gain easier access to more capital to spur production. The document is aimed at realizing the Government’s Directive No. 11 on solving difficulties faced by the corporate sector and promoting production and business development, according to Vietnamplus.vn.

Banks are told to actively approach companies in need of capital, support them in finalizing loan applications and expand lending to major projects in priority sectors. Priority sectors include agriculture and rural areas, exports, small and medium enterprises, and supporting industries.

The central bank also asks corporate rating agencies and internal creditworthiness bodies at credit institutions to build a comprehensive and consistent creditworthiness assessment system, thus simplifying paperwork for loan application processing and boosting lending to enterprises without assets used as collateral.

Besides, banks must speed up restructuring of their finance leasing firms by helping them improve governance and extend loans to enterprises.

The central bank reported the overall credit growth in the first six months was only 2.3%. The banking system now has five more months to achieve 12% credit growth as targeted.

In Directive No. 11 issued in May, Prime Minister Nguyen Tan Dung noted that enterprises are facing many difficulties and challenges. Therefore, the Government told ministries and local authorities to create mechanisms for close and effective coordination among State agencies, further step up administrative reforms, especially those in the fields of market entry, import and export, access to capital and credit, tax, land, investment, construction, natural resources, environment and labor. The moves aim to create the most favorable climate for enterprises.

Dragon fruit has greater chance of going abroad

Vietnam now has more opportunities to ship dragon fruit, or thanh long in Vietnamese, to some choosy markets such as the U.S., Japan, South Korea and Taiwan in the coming time as local scientists have found a new way to protect the fruit from melon fly disease.

The Plant Protection Department is cooperating with local scientists in a study on sterilizing male flies which harm the dragon fruit.

Male flies will be irradiated in laboratories before being released into the environment, which make them infertile, meaning they could not reproduce offspring when mating with female ones.

To ensure the success of the method, scientists will make a calculation on the number of male flies living in the environment in order to release a greater amount of infertile male flies to compete with natural ones.

Le Duc Khanh, head of the Division of Entomology under the Plant Protection Department, said that the method helps prevent dragon fruit from melon fly disease without using insecticide.

In 2013, only 2,600 tons of 400,000 tons of dragon fruit were exported to the U.S., Japan and South Korea as those markets impose strict regulations on insecticide residues, according to Nguyen Van Ky, general secretary of the Vietnam Fruits and Vegetables Association (Vinafruit).

Vinafruit said a kilo of dragon fruit exported to those selective markets is paid several times higher than to China; however, local exporters have had difficulty meeting stringent requirements.

For instance, dragon fruit must be irradiated before delivery to the U.S or must undergo heat treatment before being shipped to Japan. If Japanese importers find out melon fly disease in any fruit, all batches of the product will be sent back to exporters.

Up to 90% of dragon fruit harvested in Vietnam each year are exported to China. However, recently, the General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) said it found insecticide residues in some batches of fruit from Vietnam which are higher than allowed.

According to Vinafruit, to diversify export markets of dragon fruit, melon fly disease must be eliminated. Therefore, local farmers expect the new method from scientists would help the fruit go to more markets.

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