BUSINESS IN BRIEF 17/3

Vietnam increases cooperation with Italian region

A Vietnam Office will be established in Emilia-Romagna, an administrative region in North Italy, to promote trade and economic cooperation between the two sides.

An agreement to this effect was signed in Bologna, the capital city of Emilia-Romagna on March 12 by Vietnamese ambassador to Italy Nguyen Hoang Long and representatives of the administrative region. They also signed another document to increase bilateral cooperation in economics and trade.

The office, a Vietnamese-run model, will be allowed to have direct access to Italy’s business connectivity system.  The facility, which is funded by Emilia-Romagna, will help local and Vietnamese companies seek business partnerships in each other’s markets, as well as attracting investment capital and technology from Emilia-Romagna into Vietnam.

Both sides discussed a number of measures to increase cooperation between Vietnam and Emilia-Romagna after both countries agreed to raise their relationship to the strategic partnership level in January 2013.

The Italian region will prioritise technology transfer and human resources training for Vietnam to support the country’s growth renewing model.

It will provide vocational training services for Vietnamese workers, primarily in the mechanical engineering and manufacturing industries, as part of the Vietnam-Italy efforts to establish exemplary research and training centres at the national level.

The representatives of Emilia-Romagna announced their decision to select Vietnam as one of the region’s key markets for investment cooperation in 2013.

Both sides agreed to work closely to celebrate 40 years of diplomatic ties between Vietnam and Italy in 2013. Accordingly, a Vietnam Week will be held in Bologna from May 3-11 to feature a diverse range of activities, including photo and cultural space exhibitions, talkshows on Vietnam’s land and people, and art performances.

During his working trip to Bologna, ambassador Long met with former Italian Prime Minister and former EC President Romano Prodi who is scheduled to visit Vietnam on March 17-18.

Austria, Vietnam foster trade ties

The Vietnam Chamber of Commerce and Industry (VCCI) and the Carinthia Economic Chamber (CEC) jointly held a business forum in Hanoi on March 13.

VCCI Deputy Chairman Doan Duy Khuong pledged to create favourable conditions for Austrian businesses to invest and expand operation in Vietnam, a country with more than 80 million people- close to other large markets operating in the ASEAN-China, ASEAN-Japan and ASEAN-Korea Free Trade Areas.

He said Vietnam remains to be an attractive destination for foreign investors, including those from Austria, as its government is set to encourage the development of the private economic sector while completing the legal frameworks for the market economy to grow steadily.

Tran Ngoc Quan, Deputy Head of the Europe Market Units, said the two countries’ bilateral trade turnover has risen sharply from US$175 million in 2007 to US$1.3 billion in 2012.

Austrian Ambassador Georg Heindl said Austria has a good opportunity to increase investment and trade cooperation with Vietnam which enjoys political stability and strong growth in many sectors.

He expressed his hope that the business forum will help lift Austria-Vietnam relations to a higher level.

Canada to help Vietnam reform banking system

Canada will help Vietnam modernize and strengthen its banking system and financial regulations, said Canadian Foreign Minister John Baird on his visit to the country on March 12.

Baird said Canada wants to intensify the two countries’ relations, boost employment growth, bilateral investment and trade cooperation.

Canada ’s assistance to Vietnam is through the Banking Regulation and Supervision Support (BRASS) project, an initiative worth US$14 million.

It will help the State Bank of Vietnam (SBV) improve and modernize the country’s banking system and financial regulations in accordance with international standards. SBV’s banking management and supervision capacity will also be enhanced, contributing to the safe and effective operations of individual credit institutions as well as Vietnam’s financial and banking system as a whole, he added.

A Canadian consulting group, including Cowater International Inc. and CRC Sogema Inc., will soon work with the SBV’s Banking Supervisory Agency and other relevant departments to implement the BRASS project.

Vietnam facilitates US operations

The Vietnamese Government is committed to protecting the legitimate rights of foreign investors, including US enterprises.

Deputy PM Vu Van Ninh made the affirmation at a reception for US-ASEAN Business Council President, Alexander Feldman, and his entourage in Hanoi on March 13.

If foreign businesses encounter difficulties, the Vietnamese Government is willing to co-ordinate to remove them. Vietnam is also prioritising the Trans-Pacific Partnership (TPP) Agreement negotiations which will help attract further foreign investment, said Ninh.

He also applauded the multi-faceted cooperation between Vietnam and the US in recent years, especially in the field of economics. More and more US businesses are investing in Vietnam with great success.

The Deputy PM said he expects the US intensify its Vietnamese investment in the areas of banking and finance. The US now ranks seventh among foreign investors in Vietnam.

The US-ASEAN Business Council President, Alexander Feldman, said Vietnam and the US should learn more about each others’ advantages and challenges in promoting economic cooperation through the TPP negotiation process.

In the future, the US will focus on investment in the fields Vietnam has demand, such as energy, health and telecommunications.

Mr Feldman said that around 70 small and medium-sized Vietnamese and American businesses are expected to attend a trade seminar scheduled in HCM City on March 18.

Vietnam Petroleum Association makes its debut

Phan The Rue has been elected as the President of the Vietnam Petroleum Association (VINPA), which made its debut in Hanoi on March 13.

According to the association’s regulations, VINPA will serve as a link for its members to study, make recommendations on petro-related policies, and disseminate information and consumer right.

President Rue said that in the 2013-2018 period, the association will be proactive in implementing a market mechanism-based roadmap for petro business under the state management, co-ordinate with relevant ministries and localities in the planning of infrastructure and storage and, build a nationwide network of agents and retail stores.

In addition, VINPA will work hand in hand with relevant agencies to ensure the quality of petroleum in accordance with national standards and combat smuggling and fraud.

Cashew exports likely to fall

Vietnam’s cashew exports are declining due to lower output and storage, according to the Vietnam Cashew Association (Vinacas).

It cited three main challenges for the sector such as a shortage of raw materials, fierce competition and wild fluctuations in price.

In the first two months of the year, the country exported 33,000 tonnes worth US$240 million, representing an increase of 60.7 percent in volume and 35.3 percent in value year-on-year, Vinacas Chairman Nguyen Duc Thanh said.

Vietnam had earned US$1.7 billion from exports of 200,000 tonnes of cashew nut and cashew-based products last year, he said.

The value can be the same as last year, but volumes will definitely be down, he said, adding that due to prolonged hot weather, cashew output is forecast to fall.

Domestic businesses have recently had to import cashew from Cambodia, Ivory Coast, and other African countries to reprocess for export but there are risks inherent in raw product quality, Thanh said.

As the average price of raw cashew nuts in the domestic market is just VND29.000-30.000 per kilo.

Not a few export companies might incur losses if they failed to receive bulk orders in time.

How to attract Japanese investors to industry?

Vietnam needs to modernise infrastructure, generate high-quality human capital and finalise legal reforms to attract more investment to industry, experts have said.

The country needs to restructure its industrial sector to make it more competitive and highly efficient, Japanese ambassador Yasuaki Tanizaki told a workshop in Hanoi on March 14.

A robust industrial sector is a must to develop support industries, he said, suggesting priority industries should be taken into account in the process.

Japan is helping Vietnam perfect its legal system and infrastructure to support cargo transportation which is expected to boom in the coming years.   

Japan is also increasing its investment in the Hanoi University of Industry, Hanoi University of Science and Technology, and other vocational training schools to improve the quality of human resources for industrial and export processing zones.

The aid aims to boost industrial production, and support Japanese small- and medium-sized businesses operating in Vietnam.

According to Deputy Minister of Industry and Trade Tran Tuan Anh, Vietnam and Japan are entering the fourth phase of their Joint Initiative to Improve the Business Environment, with a focus on developing the energy and support industries.

The initiative helps Vietnam with expertise and solutions to improve its business-investment environment, and ease difficulties in economic infrastructure development, including the power and support industries, said Anh.

The national industrialisation plan is one of the key cooperation projects between Vietnam and Japan that has received a lot of attention from the Vietnamese government.

Vietnam hopes to receive Japanese consultants and experts to draw up a development plan for a number of key industries, aiming to realise its industrialisation strategy by 2020 and its vision for 2030.

At the workshop, ambassador Tanizaki reaffirmed the Japanese government’s commitment to maintain official development assistance (ODA) to Vietnam, including assistance for industrial development.

Delegates also examined the impact of Japanese investment on Vietnam’s industrial development, as well as challenges and solutions to industrial production in the country.

The same day, the Tuoi Tre (Youth) newspaper and Japan’s Mainichi newspaper held a joint workshop on the Vietnamese market through the eyes of Japanese investors.

It was reported that two-way trade reached US$25 billion last year, making Japan the third largest trade partner of Vietnam. Japan is currently the largest foreign investor in Vietnam, with 1,800 projects valued at US$29 billion in operation.

However, Japan’s reliance on Vietnamese exports remains modest, with the latter contributing just 11.7 percent to total Japanese import.

To raise the bilateral trade figure to US$29 billion by the end of this year, Nguyen Trung Dung, a trade counsellor of the Vietnamese Embassy in Japan suggested that their respective business communities take advantage of the Vietnam-Japan cooperation agreements and increase trade promotions.

Yakabe Yoshinoro, Deputy General Consul to HCM City, said that Japan considers Vietnam to be one of its key trade partners and is willing to share its development expertise with the Southeast Asian nation.

He expressed his hope that the growing strategic partnership between Japan and Vietnam will open up more opportunities for cooperation between their business communities.  

Representatives from leading Japanese corporations such as Tokyo Metro, Japan Tobacco, and House Food also attended the workshop.

Facilitating Vietnam-Germany trade relations

Minister of Industry and Trade Vu Huy Hoang held a working session with Vietnamese-born Philipp Roesler, Germany’s Vice Chancellor and Federal Minister of Economics on March 13.

The two sides expressed their pleasure at the signing of Government-level agreements on the design, construction and operation of the German House in Ho Chi Minh City, as well as visa exemptions for diplomatic passport holders.

German Vice Chancellor Philipp Roesler revealed that a delegation from the Federal Minister of Economics will visit Vietnam and attend the ground-breaking ceremony for the HCM City-based German House.

Vietnamese delegates called for further German support in the negotiation process for the signing of the Vietnam-European Union Free Trade Agreement (FTA), as well as the building of the Vietnam House (Viethaus) in Berlin.

Both sides pledged to remove obstacles and create more favourable conditions to boost bilateral trade ties.

They also agreed to make thorough preparations for the successful organisation of a Germany-Asia Pacific meeting to be held in Hanoi next year.

The event was part of the framework for an official visit to Germany by Vietnamese National Assembly Chairman Nguyen Sinh Hung.

Mekong Expo 2013 to open in Can Tho

Local and foreign businesses will showcase products at a trade fair to be held in Can Tho City from April 26 to May 2.

Mekong Expo 2013 will focus on boosting investment cooperation and trade promotion in the Mekong River Delta region.

The fair will be divided into sections to display local specialities, industrial products, household utensils, handicrafts and even goods for children.

A range of activities will be run during the event, including trade promotions, contract signing, customer conferences, a seminar on tourism development in the Mekong River Delta, and entertainment programmes.

ADB, EIB fund HCMC’s metro line

The Asian Development Bank (ADB) and the European Investment Bank (EIB) will provide EUR200 million (US$260 million) for Ho Chi Minh City to build its fifth metro line.

To this effect, a memorandum of understanding (MoU) was signed between Vice Chairman of the municipal People’s Committee Nguyen Huu Tin and representatives from the two banks in the city on March 13.

The 17km route will link Saigon Bridge and the new Can Giuoc bus station. A depot that serves engine maintenance will be built on an area of 25 ha.

In the first phase of the project, an 8.8 km section from Bay Hien crossroads in Tan Binh district to Saigon Bridge in Binh Thanh district will be constructed at a cost of more than US$857 million.

Once completed, the new metro is expected to handle about 526,000 passengers every day, according to the HCM City Management Authority for Urban Railway.

Vietnam, Austria strengthen business links

Vietnamese and Austrian businesses gathered at a forum in Ho Chi Minh City on March 14 to seek ways to strengthen links.

The event was jointly held by the city’s chapter of the Vietnam Chamber of Commerce and Industry (VCCI-HCM), and Austria’s Carinthia Economic Chamber (CEC).

The Austrian businesses at the forum chiefly operate in sound device manufacturing, consultancy services, timber production, delivery service, and mechanical engineering.

Addressing the event, VCCI-HCM Chairman Vo Tam Thanh said although trade between Vietnam and Austria has been increasing, there is room for the two sides to further boost cooperation.

Vietnam can supply Austria with numerous products that it has high demand for, such as wooden products, transportation, foodstuff, spices and electrical parts, he said.

Thanh added that Vietnam also hopes to learn from Austria’s experience in energy, manufacturing, consultancy services in construction, railway links and waste water treatment.

Two-way trade between Vietnam and Austria increases by an average of 15-20 percent per year. Last year, the figure hit US$1.222 billion, up 195 percent from 2011.

Austrian businesses have 21 projects worth US$27 million in Vietnam, mostly on manufacturing, processing, services and entertainment.

Crab exports to EU increase sharply

In the first months of 2013, crab exports to the European Union (EU) enjoyed a dramatic year-on-year rise of nearly 200 percent. The export of crab and other crustaceans to the EU generated US$8.3 million, up 18 percent from last year.

Statistics from the Vietnam Association of Seafood Exporters and Producers (VASEP) show that exports to the UK, France, Holland and Belgium saw the highest growth rate.

Experts said that seafood is now one of the most popular dishes in the EU. However, to fully penetrate the market, Vietnam’s businesses should clarify their products’ price, quality, sample and labelling.

Crab exports are expected to enjoy accelerated growth in the second and third quarters of this year as consumer demand from Vietnam’s traditional markets tends to increase.

Crab exporters were asked to obtain a firm grasp of the EU market, and improve the quality of their products to increase Vietnam’s competitiveness.

Local cities boost ties with Berlin

Vietnam wishes to receive Germany’s assistance in urban planning, infrastructure, environmental protection, waste treatment and human resource training.

The statement was made by Chairwomen of the Hanoi and Ho Chi Minh City People’s Councils, Ngo Thi Doan Thanh and Nguyen Thi Quyet Tam, at their working session with President of the Berlin State Parliament Ralf Wieland in Berlin on March 13.

The two Vietnamese officials hoped Germany will continue to create more favourable conditions for overseas Vietnamese to live and work in the host society.

Wieland expressed his desire that Vietnam will enhance the teaching and study of the German language at schools, adding that Mayor of Berlin Klaus Wowereit, accompanied by business representatives, will visit Vietnam this November.

The two sides also discussed the promotion of ties between Berlin and Vietnam’s major cities based on each side’s strength and potential. They suggested enhancing their strategic partnership in economics and socio-culture.

Vietnamese tra, basa fish at disadvantage in US market

The US Department of Commerce (DOC) has decided to impose anti-dumping taxes on tra and basa fish imports from Vietnam which is the third country after Indonesia and Bangladesh.

Following its decision on March 14, Vietnam’s frozen fillets of tra and basa fish exporters will have to pay the duties ten times more than before, from at least US$0.19 to US$0.77-3.87 per kilo.

Last year, Vietnam earned US$358 million from its frozen fillets of tra and basa exports to the US-its second largest market.

The DOC’s new decision will take effect as of next week until early 2014 before the Department’s next administrative review.

FDI efficiency needs improving

Foreign direct investment (FDI) projects have made important contributions to Vietnam’s socio-economic development despite several shortcomings in the slow capital disbursement process.

Deputy Minister of Planning and Investment Dao Quang Thu said over the past 25 years FDI inflows have helped boost economic growth and increase the effective use of investment funds in Vietnam.

The FDI sector achieves its highest growth of 8.12 percent in 2012 while the nation’s GDP grew by just 6.78 percent. Most of FDI projects have paid off well, with their contributions rising from 2 percent in 1992 to 18.9 percent in 2011.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, Vietnam had more than 14,5 FDI projects in operation by the end of last year, with a total capitalization of US$210.5 billion mainly in the manufacturing and processing industries ( 50.3 percent), and the real estate sector ( 23.6 percent).

Among 100 countries and territories investing in Vietnam, Japan ranks first (US$28.6 billion), followed by Taiwan, Singapore, and the Republic of Korea.

Ho Chi Minh tops the list of localities in terms of FDI attraction (US$32.2 billion) and its runner-up are Ba Ria-Vung Tau, Hanoi, Dong Nai and Binh Duong.

Deputy Minister Dao Quang Thu emphasized that FDI projects provided a huge amount of capital for social investment estimated at US$20.67 billion or 24.32 percent of the total finding in the 1991-2000 period, then at US$69.47 billion or 22.75 percent in the following decade.

Their contribution to the nation’s economic structure in general accounted for 5.4 percent in 2001-2011, he added.

Since 2003, FDI projects have proved to be a key factor in increasing export turnover, accounting for around 64 percent of Vietnam’s total export earnings. They have helped boost the export of processed goods instead of raw products.

Thu highlighted the FDI sector’s fast approach to potential markets overseas, particularly to the European Union and the US and its positive contribution to stabilizing the domestic market and reducing the trade deficit.

It contributed to the State budget US$1.8 billion in 1994-2000 to US$14.2 billion in 2001-2011, and US$3.7 billion in 2012 alone, helping shift Vietnam’s economic structure towards industrialization and modernization. Most of its projects focused on improving human resource training, boosting technology transfer, creating a healthy business climate, and speeding up the process of international economic integration.

However, Deputy Minister Thu said the efficiency of FDI projects is still below par as seen in the industrial construction, agro-forestry and aquaculture sector, which are considered to be Vietnam’s strengths.

He was also worried about the wasteful use of capital and land in some FDI projects, and called for increasing investment in the education, health care and environmental protection.

Thu suggested FDI projects give priority to disadvantaged areas, close to industrial or high-tech parks, and economic zones.

He said most foreign investors in Vietnam are from Asia and only keen on medium-size projects, and the rate of capital disbursement remains modest.

Only 5 or 6 percent of FDI projects apply leading-edge technologies while more than 80 percent of them still use the existing ones in the world.

In addition, the FDI sector accounts for only 3.4 percent of the country’s total employed workers, much lower than the State-owned sector.

Ukraine inspects Vietnamese seafood processors

Ukrainian seafood experts are inspecting seafood farms in Vietnam to ensure aquatic exports meet their food safety and hygiene standards.

On March 13 they held working sessions with the National Agro Forestry Fisheries Quality Assurance (NAFIQAD), Animal Health Department, Directorate of Fisheries, and the Vietnam Association of Seafood Exporters and Producers (VASEP), focusing on hygiene and quality control for aquatic products in Vietnam.

NAFIQAD leaders briefed Ukraine experts on Vietnam’s seafood management system and proposed the European nation increase the number of Vietnamese businesses eligible to ship seafood products to Ukraine.

They also proposed that the Ukrainian side publicise food hygiene and safety criteria and inform NAFIQAD about any changes in its regulations.

The Ukraine experts started inspections at Tra fish processing factories in Can Tho and Dong Thap in southern Vietnam on March 14.

Their four-day fact-finding trip will end on March 16.

PetroVietnam construction arms crumble in crisis

Several unwanted records were bestowed onto four PetroVietnam construction companies as a result of last year’s poor performance in the stock market, including worst losses, lowest share price and highest debt to equity ratio.

The companies in question were PetroVietnam Construction (PVX), Petroleum Saigon Construction And Investment (PSG), PetroVietnam – Nghe An Construction (PVA) and Mien Trung Petroleum Construction (PXM).

Shares in the oil and gas industry are typically assumed to be gold mines for both companies and investors. However, last year’s economic crisis hit this sector almost as hard as the property industry.

Among PetroVietnam’s listed construction arms, PVX is the largest in terms of capital and is also the parent company of the other three businesses. As a result, excluding banks and financial institutions, PVX carried the largest 2012 loss in the stock market, a staggering VND1.22 trillion (US$58 million).

Meanwhile, PSG topped the list last month, losing VND250 billion ($11.9 million).

The two other firms both reported losses of over VND100 billion ($4.7 million) in 2012.

Each company had its own reasons for the failures, such as high provisioning or increasing costs, but generally the deadlock in the construction sector was the key factor affecting business.

Another common issue was high debt to equity ratios. Use of financial leverage can often help businesses take advantage of their capital, boosting both revenue and profits. However, as the crisis hit, debt burdens became increasingly vulnerable, leading to large losses .

In PSG, last year’s accumulated loss ate almost all of its capital, leaving only VND16 billion ($761,900) in equity, causing the debt to equity ratio ballon to 63:1.

With unsecured business operations and financial indicators, PSG was among the top 10 lowest share prices at just VND1,200 (5.7 US cents). Inthe past six months, the price has never exceeded VND2,000.

PVA and PXM closed yesterday’s session priced at VND5,600 and VND2,400 per share respectively.

As the largest firm in terms of scale, PVX shares remained slightly more expensive at VND6,000 (28.5 US cents) yesterday.

Central bank extends gold policy

The State Bank of Viet Nam will also buy and sell non-SJC-made gold bars, according to a circular it issued on Tuesday.

The circular, which took effect yesterday and provides guidelines for the trading of gold bullion, stipulates that 99.99 per cent pure SJC gold will retain pride of place, but the bank will trade other bullion licensed to be produced.

The central bank directly trades gold bars with banks and enterprises and through auctions.

All transactions with the businesses are done on spot delivery basis with payment and delivery made not later than the next day.

Also on March 12 the central bank decided to set up a team to monitor the process of casting ingots from its gold reserves.

This week SJC (the Saigon Jewellery Company) will start making bullion according to the bank’s specifications to prepare for an upcoming auction.

By the close yesterday the price of SJC gold bullion was VND43.9 million per tael of 37.5 grammes, VND3.9 million higher than the global rate.

Western Bank to merge with PetroVietnam Finance

The merger between Western Bank and PetroVietnam Finance (PVF) is moving ahead after Western Bank released the merging scheme prior to its shareholder meeting this Saturday.

Domestic media recently reported on the possibility of the merger, but both sides had declined to comment. Meanwhile, the document shows that the State Bank of Viet Nam and the Vietnam National Oil and Gas Group (PetroVietnam) approved the merger a year ago.

Accordingly, in May last year, PVF and Western Bank signed a deal on restructuring the bank. According to the agreement, PVF would comprehensively restructure Western Bank, including restructuring of capital, assets and liquidity support.

Also in May, the two parties agreed on a preliminary plan so that PetroVietnam could approve auditing procedures and hire consultants.

In July, WesternBank started to restructure its assets to improve profitability and mitigate risks and ensure the success of the merger at the central bank’s request.

As the two parties were transferring shares a month later, information about the merger leaked out, catching investor attention. However, PVF at the time denied news on any merger or acquisition.

The process of preparing for the consolidation continued in the following months resulting in a detailed plan, a contract and a draft charter of the new entity signed by PVF and Western Bank chairmen and submitted to PetroVietnam in late November.

Sources familiar with the matter said the merger could be completed in the second quarter of this year.

Meanwhile, in order to ensure the liquidity of PVF before the merger, PVF asked PetroVietnam for support in working with partners and competent agencies. PVF also asked for a loan of VND7 trillion (US$333.3 million) with a minimum term of six months.

The financial firm also asked its parent company to encourage other businesses to use the services of the entity after the merger.

Both PVF and Western Bank asked for loans worth VND30 trillion ($1.4 billion) from the central bank in 3 to 5 years. Lending rates were proposed to be 6 per cent lower than deposit rates to cover costs during the merger.

PVF has total assets of VND90 trillion ($4.2 billion), much higher than several commercial banks. However, it is a financial company that is unable to raise capital from individuals.

After the merger, the organisation will function as a bank while enjoying the significant advantage of having the PVF brand and its links with the oil and gas industry.

PetroVietnam currently holds a 72 per cent stake in PVF, but the ratio will decline to 48 per cent after the merger. Morgan Stanley’s stake will also be reduced from 10 to 6.7 per cent.

Furniture exporters told to shape up

Furniture exporters must establish new standards and acquire professional certificates in order to successfully tap into the EU and US markets, speakers said at a conference yesterday held in HCM City by the city’s Handicraft and Wood Industry Association (HAWA).

Huynh Van Hanh, deputy chairman of HAWA, said that many markets, including the EU and the US, had limited their imports by setting trade barriers that create obstacles for Vietnamese exporters.

He said that Vietnamese exporters would have to be even more well-prepared as there would be many more new regulations in the pipeline.

Requirements and standards mentioned in the conference include the chain of custody (COC) certification system provided by the Forest Stewardship Council (FSC).

Conference speakers said that Vietnamese furniture exporters should use these standards if they wanted to broaden their markets in Europe and the US.

According to experts, this is a leading global certification system that promotes environmentally appropriate, socially beneficial and economically viable forest management and products worldwide.

As of now, about 21,000 companies in the world have such certificates, while only 314 companies in Viet Nam have it.

Doan Van Khai, head of management services under TUV-SUC-PSB Viet Nam Company Ltd, said there might be several reasons why Vietnamese companies did not care much about these certificates.

“High costs are one reason. However, the other important thing is that they have not understood much about the certificates. They have not recognised the importance of COC,” he said.

Khai said that most export orders in Viet Nam were for companies that had COC certificates. So, other companies that want to expand their exports should get it also, he added.

At the conference, HAWA and its partners said they would help Vietnamese companies learn about the certificate and apply it to their operations.

Also at the conference, a representative of the US Consumer Product Safety Commission discussed the requirements needed to export wood products to the US market.

According to HAWA, exports of handicraft and furniture to the EU and US continues to increase, with turnover jumping 10 times within the decade from 2002 to 2012.

HAWA expects exports to continue to rise if companies meet the standards set by importers.

Growing accustomed to e-customs

As many as 28,948 enterprises nationwide, or nearly 93 per cent of those importing and exporting, have used Viet Nam’s e-customs service since it was launched earlier this year.

The procedures were processed by all 34 customs departments across the country during the first two months of the year, according to the General Department of Customs.

A total of 696,218 customs declarations were computerised, helping with an import-export volume of US$33.454 billion, which accounted for almost 92 per cent of the country’s total figure.

HCM City boosts trade promotion

The HCM City Investment and Promotion Centre on Tuesday introduced a wide range of programmes supporting local businesses’ global economic integration.

The initiatives focus on effectively penetrating the Cambodia, Laos and Myanmar markets and boosting promotions in the US, EU and Middle East.

It will futher improve the city’s business environment to attract more investment for specific projects and strengthen links with domestic, regional, and foreign organisations and businesses that are interested in investing abroad.

Last year, the centre organised 18 trade promotions in Myanmar, Laos, Cambodia, Japan, Germany, China and the Philippines.

Bac Ninh attracts German investors

A delegation of German business representatives and experts sounded out investment opportunities in Bac Ninh Province on Tuesday.

At a meeting with local leaders, Nguyen Nhan Chien, chairman of the provincial People’s Committee, outlined Bac Ninh’s socio-economics and the geological advantages that have fuelled its rapid development.

He said the province last year boasted an economic growth rate of 12 per cent along with sharp improvements in the industrial, construction, trade and service sectors.

Its industrial production is among the top three in the country and its export earnings account for 12 per cent of Viet Nam’s total export revenue.-

Viet Nam a top target for Canon

Viet Nam is a very important market for Canon, its president and CEO for South and Southeast Asia, Kensaku Konishi, told the Vietnam News Agency.

At the launch of Canon Business Services in Singapore this week, Konishi, who is responsible for leading and overseeing the operations in Singapore and 18 other Asian countries, said Canon Vietnam was one of the five subsidiaries in the region achieving record growth. In 2012, its operations were up 30 per cent from the previous year, after only Canon India.

He attributed this to a good distribution network in Viet Nam. Konishi confirmed that Viet Nam remained a market that Canon is strategically prioritising in the next five to ten years.

Cashew exports to fall on less output

Global cashew demand is expected to be stronger than last year, but Viet Nam’s exports are likely to diminish due to lower output and stocks, according to the Viet Nam Cashew Association (Vinacas).

In the first two months of the year the country exported 33,000 tonnes worth US$240 million, representing an increase of 60.7 per cent in volume and 35.5 per cent in value year-on-year, Nguyen Duc Thanh, Vinacas chairman, said.

Viet Nam had earned $1.7 billion from exports of 200,000 tonnes of cashew nut and cashew-based products last year, he said.

The value could be the same as last year, but volumes would definitely be down, he said.

Due to prolonged hot weather, cashew output is forecast to fall, he said.

“Unlike last year when more than 200,000 tonnes of inventories were carried over from 2011, [there is] less than 100,000 tonnes this year.”

The cashew industry faces three main difficulties: a shortage of raw materials, too many exporters, and volatile prices.

Unable to meet demand, processors import raw cashew from Cambodia, Ivory Coast, and other African countries to process for export.

But importing from African countries caused risks, especially with regard to quality because they had a lot of old cashew still in stock, Thanh said.

“Importers should therefore strengthen quality checks,” he said.

The prices of raw cashew nut in the domestic market were at VND29,000-VND30,000 a kilo depending on quality.

This means companies could incur losses if they do not have good export contracts.

Last year some 330 businesses exported cashew, making the industry unwieldy and hard to oversee.

The association plans to work with relevant agencies to resolve this problem.

VN footwear set to enjoy EU preferences

Vietnamese footwear exports to the European Union will enjoy its Generalised Scheme of Preferences (GSP) starting next January.

As the result of a recent European Commission regulation that suspends tariff preferences for a number of GSP beneficiary countries, Vietnamese footwear products from Sections 12a and 12b were removed from the suspended products list.

To qualify for such a removal, products must originate in a GSP beneficiary country where the average value of union imports of that product over three consecutive years exceeds 17.5 per cent of total imports of the same product from all other GSP beneficiary countries.

Key Vietnamese exports to the EU include cell phones (43 per cent), footwear (36 per cent), personal computers (19 per cent) and garment and textile products (16 per cent).

Seminar examines industrialised Asia

Viet Nam should take advantage of new opportunities offered by Japan and make its industries more competitive before free trade agreements are fully implemented, urged Professor Tran Van Tho from Japan’s Waseda University at a seminar in Ha Noi on Tuesday.

The seminar, which focused on economic development in Japan and other Asian countries, sought to provide researchers and businesspeople with information that would help the country integrate into the world economy, according to Dr. Vo Dai Luoc, General Director of the Viet Nam Asia-Pacific Economic Centre (VAPEC), which organised the event.

Professor Harada Yutaka, also from Waseda University, analysed the impact of credit policies on Japan’s stagnant economy.

Meanwhile, Professor Tho described the multi-layered process of industrialization in Asia. Led by Japan, the process also involved South Korea, Malaysia, Thailand, China and Viet Nam in that order.

The countries lagging behind could well catch up with – or surpass – the current leaders, he said, making East Asia the world’s major industrial centre.

He also advised Viet Nam to take into account FDI policies as well as the improving infrastructure and administrative reform procedures in other Asian countries.

Bullion demand to fall 22-25% this year

Viet Nam’s demand for goods will likely fall by 22-25 per cent this year as the Government tightens its grip on the bullion market to stabilise the country’s currency, according to a source from Sai Gon Tiep Thi newspaper.

Viet Nam’s consumer gold demand, including gold jewelery and bullion last year, dropped to 77 tonnes from 100.8 tonnes, a year-on-year decrease of 24 per cent, after the Government moved to curb gold speculation that had contributed to the dong volatility, according to a a report from metals consultancy GFMS, as quoted in a Reuters news source.

Gold demand is made based on scrap supply and an inflow of gold unofficially pumped into the country.

To date, Viet Nam still ranks fourth in the Asian region in gold consumption after India, China and Thailand. People in Viet Nam tend to store gold as a hedge against inflation, once among the highest in Asia. The Vietnamese dong currency is often pressured by the accumulation of US dollars for use in smuggling the metal, given the absence of official imports.

To date, there are no accurate figures about the amount of gold traded on the Vietnamese market each day or each month. The figures of gold traded at SJC and PNJ companies cannot represent the entire market.

After the Tet (Lunar New Year) holiday, the public’s trend to buy gold bullion for storage remains, thus increasing gold demand sharply. As a result, about 1,000 taels of gold are traded each day at the SJC and PNJ companies, of which sold gold accounted for 60 to 70 per cent.

Developing Phu Quoc upgraded to city status

Phu Quoc Island District met all the criteria to be upgraded into a city, said Lam Minh Thanh, chairman of the district’s People’s Committee.

Since the Prime Minister approved an overall development scheme for Phu Quoc in 2004, the area has seen rapid development, with a new international airport and seaports and an average annual economic growth of 22 per cent – nearly a 500 per cent increase from a decade ago.

GDP per capita in 2012 rose to VND50 million (US$2,480), another enormous increase over 2004, said Le Van Thi, chairman of the Kien Giang People’s Committee.

More tourists also headed to Phu Quoc, with the number of visitors increasing by about 13 per cent per year. Consequently, the fields of trade and services, construction and transport (sea, air and road) all saw hasty development.

Local authorities suggest the Government support the development of infrastructure in order to attract investors, Thanh said.

A VND8.1 trillions (US$389 million) Government bond will be invested in the main North-South routes around the island, Nguyen Trung Truc Bridge and An Thoi Port.

Of the sum, nearly VND1.6 trillion ($75.7 million) was distributed in 2012, while VND6.5 trillions ($313 million) will be allocated during the 2013-15 period.

According to a recent decision by the Prime Minister, the Government will also invest in roads connecting the main routes with the route around the island as well as residential areas.

The project will require VND5 trillion ($240 million) before 2015, which the province seeks to obtain half from the State budget.

Local authorities have also proposed several strategies for attracting investment into new projects in the island district.

Under the master plan for development until 2030 proposed by the Ministry of Construction, the 567 square-km. island will become a center for not only tourism but also conservation of the area’s rich biodiversity.

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

BUSINESS IN BRIEF 17/3