BUSINESS IN BRIEF 29/3

Exhibition to bring new foreign technology to town

Local manufacturers will have a chance to learn new foreign machinery and technology at an international exhibition on plastics, rubber, packaging, printing, food technologies and automation to be held in HCMC from September 3 to 6.

VietnamPlas, VnPackPrint, VnFoodtech, VnPrintLabel Linkage Vietnam 2013 will take place at Saigon Exhibition Convention Center in District 7, with nearly 460 booths set up by over 260 companies from 15 nations and territories.

Vietnamese participants are mainly sales agents of foreign firms or those importing components for assembly, said Pham Quynh Giang, deputy general director of Vietnam National Trade Fair Advertising Company (VINEXAD), at a press conference on Wednesday.

The exhibition is co-organized by VINEXAD, Chan Chao International Co. of Taiwan, Yorkers Trade Marketing Service Co. of Hong Kong, Paper Communication Exhibition Services Co. of Hong Kong, Vietnam Plastics Association (VPA) and Vietnam Rubber Association (VRA).

Advanced technology products and services will go on display at the exhibition, offering chances for trade, market approach, partner search and technology exchange.

Huynh Thi My, general secretary of VPA, said the exhibition would give local firms access to modern machinery.

Despite the tough times, plastics makers have still invested in machinery and technology to improve their competitiveness. In the first half of 2013, plastics exports generated over US$1 billion, up 9.3% year-on-year.

Tran Thi Thuy Hoa, secretary general of VRA, said the event would help Vietnamese businesses introduce their natural rubber production capacity and locally-made rubber products.

Vietnam can become a destination for rubber production given a rich source of natural rubber and an abundant workforce. Vietnam is currently the fifth largest natural rubber producer and the fourth largest rubber exporter in the world, with a natural rubber output of 863,000 tons.

Hoa said export of products made from rubber like tires, rubber gloves and mattresses had recorded good growth despite the shrinking demand from the Chinese market. In 2012, exports of rubber products brought in over US$1 billion.

VPA members will have 10 booths at the exhibition. VRA members will also set up 10 booths to display their products.

Annual Report Awards show class

Vietnam’s 2013 Annual Report Awards competition will wrap up this week embracing a new development phase with international heavyweight backers climbing onboard to promote corporate social responsibility.

The awards offer recognition to companies creating quality end of year reports in an effort to highlight the need for corporate transparency

The award ceremony will take place at Ho Chi Minh City’s Sheraton hotel on July 25 to honour 50 out of the competing 694 companies listed on the Ho Chi Minh Stock Exchange (HoSE) and Hanoi Stock Exchange (HNX).

The World Bank’s private sector arm IFC and the Britain-based Association of Chartered Certified Accountants (ACCA) joined the judging panel for the first-time as part of the Sustainability Reporting Awards, which will honour those performing best in terms of environmental and social issues.

VIR Editor-in-chief Dr.Nguyen Anh Tuan, co-head of the organising board, said this year’s competition saw almost 40 companies enter sustainability reports, despite the fact that sustainability reporting is yet to be made compulsory under Vietnamese law.

“This illustrates the fact that more listed companies have recognised the inherent value of making an annual report closer to international standards. Doing so honestly and professionally is the best way to build their image and investor trust in both difficult and benign market climates,” he said.

Another new element in this year’s programme, he added, was that listed companies had to observe standards stipulated by Ministry of Finance circular 52/2012/TT-BTC replacing the ministry’s 09/2010/TT-BTC as guidelines on publishing information in the stock market. The new circular is viewed as higher level in terms of information publishing.

He also said some specialists and regulators suggested the annual competition should be extended to publicly-traded unlisted companies, and even to state-run groups and corporations. “This shows the programme’s expansions and the widespread and urgent calls to improve transparency.”

Having started in 2008, the programme aims to encourage listed companies in Vietnam to further improve their professionalism, norms and transparency in making annual reports. It is co-organised by HoSE, HNX and VIR’s sister publication Dau tu Chung khoan, and exclusively sponsored by fund management Dragon Capital Group.

Dragon Capital CEO Dominic Scriven said: “Responsible investment is the backbone of Dragon Capital’s investment philosophy. International institutional and individual investors are showing increasing interest in understanding the approach and commitment of companies in managing sustainability aspects of their operations, particularly providing stakeholders real insight into how environmental, social and corporate governance practices are being integrated into their core business process and strategy.

“Thus, sustainability reporting is needed to further strengthen the company’s competitiveness to attract stable and long-term capital flows,” he said.

This year’s contest saw 132 entries qualify for the final round, 11 more than that last year. The top 10 showed more sustainable development content and more corporate governance details, said Phan Thi Tuong Tam, head of the judging panel and CEO of HoSE.

However, there were entries that failed to meet the basic regulations of the circular, she said, adding that those reports did not include insightful information and featured poor layout. “I think an annual report should include analyses on other companies in its sector and on the whole industry. It also needs to show an overall picture of business operations, governance, mid-term and long-term strategies, as well as the company’s sustainable development targets.”

She added, “As for next year’s judging, we’ll give more prominence to publicity and transparency. The contestants will be required to include sustainability reporting and detailed corporate governance. We’ll announce the norms for next year before we start advertising the 2014 contest.”

Explaining why sustainability performance matters, Ian Crosby, East Asia and Pacific business line manager for Sustainable Business Advisory, IFC, said there was a clear link between good environmental, social, and governance performance and the ability of companies to be profitable and survive turbulent times.

“As our research and global experience show, companies that see beyond the immediate equation of shareholders-management-customer-profit to consider their business in a broader context of many stakeholders – including society and the environment – are better able to spot long term trends and opportunities, better able to operate in an increasingly complex and interlinked world, and better able to attract top talent, employees and customers.”

“Never before have international capital markets been so interested in how management responds to issues relating to environmental and societal change,” he elaborated. “With clear links between good environmental and social performance and long-term profitability, it will be those companies that take the lead in sustainability reporting that are better positioned for greater investment and engagement from international investors.”

Last year, IFC, in collaboration with the State Securities Commission of Vietnam launched the Handbook on Sustainability Reporting for listed companies. It acts as a guideline for companies to follow common environmental, social and governance standards.

The IFC, in partnership with ACCA Vietnam, is providing technical assistance to the development and promotion of the evaluation criteria and processes for the sustainability section in the annual reports of listed firms.

ACCA Vietnam member Nguyen Viet Thinh, advisory partner at PwC Vietnam, said this year’s competition saw reports mentioning environmental and social issues, not just charity activities as seen previously. He added various reports include details on the use of electricity, oil, gas, water use and re-cycling, together with waste. In addition to these were sections on salary, bonuses, development policies and working conditions. Some companies even made a separate sustainability report outside the annual report. The guidelines used are those of the Global Reporting Initiative (GRI) and IFC’s guiding principles.

About corporate governance, Nguyen Nguyet Anh, an officer at IFC Vietnam’s corporate governance programme, said the criteria for this year’s contest were more detailed and stricter, reflecting new regulations from Circular 52. The entries were largely more satisfactory in both the quantity and quality of information disclosed.

As an example, she cited, information on shareholder structure, composition and structure of the board of directors, supervisory board, senior management, and detailed remuneration for these members has been well reflected by many companies in their annual reports.

“We realise that some companies seem to have been aware of the importance of disclosure through the annual report in line with the best international practices on corporate governance as they have demonstrated the commitment to approaching these best practices in the reports,” said Anh.

Nevertheless, many other companies still adopted a stereotypical approach to report-based disclosure of information, and unfortunately, a few companies even confused corporate governance with management’s day-to-day routine, according to Anh. Some companies failed to provide information on the supervisory board’s activities and their reviews, and provided little information on related parties as well as detailed remuneration of the members of the board of directors, supervisory board, senior management, and as a result, lost significant points in the assessment.

Meanwhile, Dr. Tran Ngoc Tho from the University of Economics Ho Chi Minh City, a member of the 2013 annual report selection panel, said for next year and later, the organising board should work out ways to rank the reports in the award winning group because this would help the winning companies keep improving their entries year after year.

More sluice gates to get off ground in city next year

Four sluice gates costing a total of nearly VND2.6 trillion are scheduled to get off the ground in the southern part of HCMC next year and be completed in 2017.

These works are designed to reduce flooding triggered by rising tide in the low-lying areas along the Ben Nghe Canal in districts 1 and 4, the Te Canal in districts 4 and 7, the Phu Xuan River in District 7 and Nha Be District, and to control water levels and regulate water transportation.

Funding for these sluice gates will be sourced from the municipal and central budgets, says a report the Steering Center of the HCMC Urban Flood Control Program sent to the Daily on Wednesday.

Currently, the city is developing a sluice gate to reduce flooding in the areas along the Nhieu Loc-Thi Nghe Canal in District 1 and Binh Thanh District, with total investment of VND290 billion from the city’s budget. Some 75% of the workload has been done and the sluice gate is expected to be operational in late 2013.

In addition to the four sluice gates scheduled to get going in 2014, three others are set for groundbreaking in 2015 and completion in 2017, namely Song Kinh, Rach Tra and Vam Thuat sluice gates. The total cost of these three projects is nearly VND2.3 trillion.

The above sluice gate projects are named in the plan for irrigation and flood prevention in HCMC approved in 2008. Under the plan, 13 sluice gates, with a length of 20-120 meters each, and a 173-km dike running along the Saigon River from HCMC and Long An will be developed.

Do Tan Long, head of the drainage unit under the Steering Center of the HCMC Urban Flood Control Program, said seven flood-prone sites in HCMC had been eradicated. The remaining 11 sites will be dealt with in 2014 and 2015.

To tackle flooding triggered by rain and high tide in the populated areas, nearly 6,000 kilometers of sewers must be completed soon, but so far, the city has had only 3,200 kilometers, said the center.

Son Kim Land attracts $37m finance boost

EXS Capital, an independent investment firm dedicated to the Asia Pacific based in Hong Kong and Japan recently announced its first investment of $37 million into domestic real estate firm Son Kim Land.

Kiyoshi Hirasawa, CEO of EXS Capital based in Japan told VIR that the company had interviewed around 30 companies active in the real estate sector in Ho Chi Minh City and decided to choose Son Kim Land for its first investment in Vietnam.

“While Son Kim Land is not as large as some other companies, we valued Son Kim’s good reputation, the integrity of the company’s chairman Nguyen Hoang Tuan, and the quality of the management team and company’s projects in Ho Chi Minh City’s Districts 1 and 2,” Hirasawa said.

He said that as always, location was a prime consideration when it came to real estate. “We will be interested to see how the new metro lines will change traffic flows around Ho Chi Minh City,” he said.

The investment, Hirasawa said, would be used to fund existing Son Kim Land projects as well as other opportunities, including the acquisition of projects from other developers.

“This is our first allocation, after spending more than 12 months studying the market and putting together investment terms that work for the company and our investors. The first case is always the most time-consuming, and we expect to be able to move very quickly from now on,” he added.

“We think the demographics of Vietnam and the recent emergence of Vietnam as a preferred manufacturing location and logistics hub in Southeast Asia for international corporations support potential high growth in the real estate sector,” said Hirasawa.

Over the past few years, he said, the real estate sector had suffered turmoil in the financial markets, but in the longer term he believed that the natural strengths of the Vietnamese market should shine through.

EXS Capital began focusing on Vietnam in late 2011, viewing it as a fundamentally strong economy suffering from temporary market dislocations. It saw similarities between Vietnam’s capital crisis of 2010-2012 and China’s economic crises in 1994-1995 and 2003-2004, when China’s strong demographics and growth story were obscured by challenging fiscal policies and financial dislocation.

In addition to the initial $37 million, EXS Capital may increase its investment to $50 million, with an option to increase investment to $80 million based on the potential of the Vietnamese real estate market.

“Further investment will be used to fund Son Kim Land’s real estate projects which will include hotels, retail and office space in addition to housing. In addition to that, we will be interested to consider opportunities in other sectors where growth will be driven by demographics and economic development,” Hirasawa said.

Son Kim Land is the real estate development arm of the Son Kim Group, which originally found fame as a Vietnamese clothing dynasty which was founded in the 1950s. Today the Son Kim Group is a leading retailer with over 400 stores across Vietnam, and an OEM manufacturer of women’s lingerie for brand names such as Jockey, Vera, J.Buss and WOW. It currently has a joint venture partnership with South Korea’s GS Shop to operate one of the leading home shopping networks in Vietnam, and is the local operator of SB Furniture.

Son Kim Land has six development projects in the pipeline, including two large scale mixed-use developments comprised of apartments, serviced apartments, retail and office space located in the centre of Ho Chi Minh City. Son Kim Land is also developing a high-end residential building in the city’s District 2. Son Kim’s other pipeline projects include a hotel and a mixed-use commercial and office development in District 1, and a luxury beach resort.

Taiwanese target MA deals

Vietnam’s real estate market has seen increasing interest from foreign investors in the first half of the year.

According to CBRE Vietnam, investment enquiries increased by 20 to 30 per cent over last year. Amongst these, old favourites Japan and Korea remained keen on Vietnam, while Taiwan was increasingly on the lookout for opportunities.

Large conglomerates from Japan and Korea have remained consistent in their interest in Vietnam throughout the downturn. Such groups are seeking to acquire existing assets, as well as development opportunities – particularly in the residential segment.

According to Marc Townsend, managing director of CBRE, there was a growing abundance of new capital beginning to again look at Vietnam. A range of investors were looking for both direct asset deals, taking secondary positions in existing joint ventures, or looking to establish new joint venture arrangements as the market enters a new cycle.

Meanwhile Taiwanese investors are another potential source of capital for the Vietnamese investment market.

“The opening of the Taiwanese insurance regulations has paved the way for real estate investment outside of Taiwan – where competition for assets, owing to growing amounts of cash, has pushed yields to historically low levels,” Townsend stressed in his latest market view on Vietnam’s capital market.

Ho Chi Minh City, according to Townsend, was one of six cities identified by the Taiwanese for outbound investment with several groups already stepping up their level of interest in the market.

Meanwhile according to Joseph Lin, managing director CBRE Taiwan, Taiwanese insurance companies which is managing more than $450 billion in capital had received permission for the first time to consider overseas real estate investments, opening up the possibility of forays into the global investment market as the insurers look to diversify from the overcrowded domestic market.

CBRE Taiwan highlighted Shanghai, Ho Chi Minh City, London, Frankfurt, New York, and Toronto as high priority destinations for those seeking initial overseas investment.

Neil Alexander MacGregor, managing director of Savills Vietnam also stated that the recent lifting of restrictions for Taiwanese insurers to invest in foreign property markets also offered new capital sources.

“Given that the market is only commencing its recovery now, it is fair to expect many more MA transactions in the real estate sector,” MacGregor said.

He added that for international investors, the Vietnam property market still offered attractive yields compared to regional alternatives.

“The lasting turbulence in the European market and the slower-than-expected recovery in the US will potentially support further capital inflows,” he added.

Compared to other regional destinations, Vietnam still stands out for its political stability and demographics which support stable long term demand. However, the immature legal framework, low market transparency, complicated licensing procedures and differences in price expectations, according to experts, often lead to missed opportunities.

“This is where project owners who wish to align with foreign partners will need to study and present their projects with carefully considered projections supported by strong market comparables,” according to MacGregor.

Farmers in Ben Tre Province chop down cocoa trees

In recent months, farmers in the Mekong Delta province of Ben Tre have chopped down more than 1,000 hectares of cocoa plants, either to switch to other cultivation or leaving land abandoned.

Farmers in Giong Trom District in Ben Tre Province have cut down more than 1,000 hectares of cocoa plants while their counterparts in Chau Thanh District have uprooted 400 hectares and in Ben Tre Town more that 100 hectares.

Farmers say that cocoa trees alternated with coconut trees eat up more fertilizer and hence reduce productivity of coconut trees.

In addition, cocoa leaves are hard to decompose after they fall to the ground.

Moreover, price of cocoa has also dropped from VND5,000 to VND3,000 a kilogram.

Since 2005, farmers growing cocoa trees had been expanding their area. At the beginning of 2013, the area for growing cocoa tree in Ben Tre province was nearly 11,000 hectares, the maximum area under cocoa plantation in the South, with the province producing world class quality cocoa.

PM allows duty free shopping on arrival

Prime Minister Nguyen Tan Dung has signed a Decision that will permit international visitors and overseas Vietnamese to purchase duty free goods on arrival in Vietnam from September 15.

The Decision revised some clauses on an earlier regulation for duty free shopping on arrival in Vietnam. Accordingly, duty free shops under management of Vietnamese Customs at border gates, airports, seaports, roads and railways will allow for duty free shopping from September 15.

Henceforth, visitors arriving into Vietnam from overseas can make purchases at duty free shops after clearing customs, but not after exiting customs security area.

The duty free shops will maintain a photocopy of their passport and make necessary entry on purchase receipts.

Price of subsidized goods drop in HCMC

The Department of Finance in Ho Chi Minh City announced that from July 24, the price of foods and foodstuffs under the price subsidized program in the City will be reduced by an average VND200-500 per kilogram.

Accordingly, 5-percent-broken white rice will drop from VND10,200 to VND10,000 per kilo; packed 5-percent-broken white rice from VND11,000 to VND10,800 per kilo; one-kilo pack of extra refined sugar from VND19,800 to VND19,500; ten-pack first-grade chicken eggs from VND25,500 to VND25,000.

Vissan is also running a promotional program on some fresh meat products in the City, offering a discount of VND5,000 per kilo on retail price of pork products. The program is applicable in the City until July 31.

Nguyen Nguyen Phuong, Head of Trade Management Office under the Department of Industry and Trade in Ho Chi Minh City, said that in the last few months, the price of raw materials has increased, but firms under the price subsidized program had pledged to continue to sell at existing price and run many promotions to stimulate consumer demand.

Italy shares experience in business equitisation

Italy is willing to share experience with Vietnam in the equitisation of State-owned enterprises.

General Director of the Treasury Department of the Italian Ministry of the Economy and Finance (MEF), Lorenzo Codogno, made the statement at a working session with the visiting Vietnamese delegation led by Deputy Minister of Finance Tran Van Hieu in Italy on July 24.

Lorenzo briefed the guests on Italy’s current economic situation, the impact of the global economic downturn on its national economy and the equitisation of State-owned enterprises in the country.

He said the Italian MEF can also assist Vietnam to promote and manage overseas investment.

In reply, Hieu said since 1986 Vietnam has made great strides in its renewal process and achieved its deeper international economic integration.

At the working session, the two sides discussed issues of mutual concern, such as business management and supervision mechanisms, internal management between State-owned groups and its subsidiary companies, after-tax profits, and how to use money collected from equitised businesses.

They pledged closer cooperation between the two countries in establishing ties of strategic partnership.

He expressed keen interest in the economic development of Italy in the euro zone and hope that the MEF will introduce Vietnam’s investment environment, incentive policies on tax and land and labour training to Italian businesses and help Vietnamese businesses to approach Italian and European markets.

Local production needs protection

Vietnam should actively apply trade defence instruments to protect domestic production in accordance with World Trade Organisation (WTO) regulations to ensure healthy competition.

According to Dinh Thi My Loan, chairwoman of the Advisory Board on International Trade Defence under the Vietnam Chamber of Commerce and Industry, only a few Vietnamese enterprises have used  trade defence mechanisms since the legal framework for them was established ten years ago.

Loan said the application of trade defence mechanisms is becoming common in developing countries with struggling economies. Some of Vietnam’s top five imports had been subject to lawsuits in others markets, she wanted.

China, the Republic of Korea, India, Indonesia and the US are among the top ten exporters in the world, but they also have the most anti-dumping and anti-subsidy lawsuits against them, Loan pointed out, saying that Vietnam imports huge volumes of products from these markets.

Le Sy Giang from the Ministry of Industry and Trade’s Competition Authority said his organisation will provide support to help enterprises handle documents for anti-dumping suits, stressing that careful preparations for arguments are critical.

A representative from the Government Inspectorate said that enterprises need support from State management agencies such as the General Statistics Office and the General Department of Customs for figures and information to prepare for their suits.

However, accessing information from these agencies remains difficult.

In many countries, governments have clear mechanisms for companies to access information about import volumes, prices and market share changes that can be used to develop defence mechanisms.

Experts urged enterprises to increase their understanding and awareness of the WTO’s trade defence laws.

Trade defence mechanisms include anti-dumping, anti-subsidy and safe-guarding measures.

Phu Bai International Airport to reopen soon

Phu Bai International Airport in the central province of Thua Thien-Hue is expected to resume operating on September 20 after closure for runway repair.

The reopening time is two months ahead of schedule.

With the runway of 2,800 metres in length and 45 metres in width, Phu Bai airport is capable of handling mid-range planes like Airbus A320s and Boeing 747s.

Under a plan approved by the Government, Phu Bai will be upgraded to accommodate up to 20 planes during peak hours and five million passengers per year by 2020.

By 2030, it is expected to receive 26 planes during peak hours and cater for nine million passengers and 200,000 tonnes of cargoes per year.

Before the temporary closure, Phu Bai airport served over one million passengers each year, ranking fourth among airports in Vietnam.

Woodworking brands to gather at HCM City int’l fair

As many as 260 businesses from 19 countries and territories will take part in the 10th Vietnam International Woodworking Industry Fair in Ho Chi Minh City from September 25-28.

Spreading over more than 500 pavilions, businesses will introduce modern woodworking machinery to an expected 20,000 visitors.

A number of renowned Vietnamese businesses will attend the event, including Thuan Hien, Quoc Duy, Vetta, Van Su Loi and Thien Thanh Phat.

Also present at the fair will be the European Federation of Woodworking Machinery Manufacturers, along with similar associations from Germany, Italy, the US and Taiwan.

In the first half of 2013, Vietnam exported US$2.46 billion worth of wood products, a year-on-year increase of 12.5%. The figure is forecast to hit US$5.5 billion this year, according to Dang Quoc Hung, Vice Chairman of the HCM City Handicraft and Wood Industry Association.

July CPI sees slight increase

The national Consumer Price Index (CPI) in July went up by a modest 0.27% against the previous month and 6.81% over the same period last year, the General Statistics Office (GSO) announced on July 24.

Ten out of 11 categories of the goods basket experienced price rises from 0.05% to 1.34%, with the highest seen in transport while the group of medicine and health services registered the lowest price increase.

Prices of restaurants and catering services, which accounted for almost 40% in the goods basket, edged up only 0.1% and the price of telecommunication services remained stable.

Head of the GSO’s Price Statistics Nguyen Duc Thang said two petrol price adjustments this month resulted in a 0.09% increase in the CPI. In addition, the increase in the minimum wage for civil servants pushed up the overall price level.

July also marked the university entrance exams and summer holidays which fuelled demands for food, beverages, travelling and accommodation.

Not included in the CPI, the price of gold dropped by 6.38% while the USD price saw a slight rise of 0.68%.

In the country’s two largest cities, CPI in Hanoi rose 0.22% over June and in Ho Chi Minh City, 0.17%, which were both a five-month high.

HCM City Int’l Expo targets green energy

More than 100 domestic and foreign businesses are introducing the latest technologies in electricity and electrical appliances at two exhibitions in HCM City, encouraging consumers to conserve and use renewable energy.

The sixth Vietnam International Electrical Technology and Equipment Exhibition (Vietnam ETE) and the International Exhibition on Power Saving Products and Green Energies (Enertec Expo), which opened on July 24, have attracted businesses from Japan, India, the Republic of Korea, China, Spain, Turkey, Malaysia, Singapore, Australia, Taiwan, and host Vietnam.

Also on display are power-saving products, high-tech electrical equipment, energy saving solutions and products using environmentally friendly technology and renewable energy.

There will be a number of seminars and forums to be held in the four-day event, which focus on developing renewable energy in Vietnam, formulating energy saving policies, using power-saving products, and sharing Japanese and Indian experience in green energy development .

Other activities will also take place, such as a communication project on the green quarter, “Moving together with green energy” program in Can Gio District, riding bikes to promote power saving and a photo contest on energy saving, green energy and environmental protection.

ADB supports Vietnam’s public investment reform

The Asian Development Bank (ADB) and the Ministry of Planning and Investment (MPI) are working a technical assistance project to improve regional cooperation and integration (RCI) coordination and public investment planning in Vietnam.

In December 2012, ADB approved a technical assistance (TA) worth US$800,000 to be financed by the Japan Fund for Poverty Reduction to help Vietnam improve the coordination of RCI activities and strengthen the capacity for regional cooperation investment planning, and maximize RCI’s contribution to national development objectives

At a workshop in Hanoi on July 24, Hiroyki Kato, First Secretary of the Embassy of Japan, said the support reflects Japan’s commitment to help enhance the coordination of regional and subregional initiatives covering the Mekong region countries.

Representatives from central government agencies, provinces and development partners discussed issues and challenges constraining in-country effective coordination and investment planning of RCI activities, and agreed on the TA objectives, approach, key activities and work plan to enhance the efficiency of public investments involving RCI initiatives.

Though Vietnam is involved in a large number of RCI initiatives, the weakness in coordination, information sharing, and capacity has been hindering the complementarities and synergy between and among RCI programs and projects, affecting the achievement of their intended results and the efficiency of public investments.

The need for improvement is urgent as RCI remains to be one of the key elements of Vietnam’s medium-term development strategy; and the efficiency of public investments is among the most critical factors in ensuring Vietnam’s sustainable growth, given the country’s significant demand for infrastructure improvement and social services.

These are not easy tasks, but absolutely necessary if Vietnam is to achieve its aim set under the Socio-Economic Development Plan 2011-2015 to create collective strengths of economic development under different subregional initiatives, stated Yumiko Tamura, Principal Country Economist, ADB.

Insurance sector to restructure for stronger growth

The insurance sector will focus on restructuring the market as well as its businesses so as to maintain stability and sustainable development.

The industry expects to see a total premium of VND43.711 trillion (US$2.082 billion) this year, a rise of 6.5% over last year, according to the Ministry of Finance’s Insurance Supervisory Authority (ISA).

Non-life insurance is hoping for a record growth rate of 5%, to reach VND23.9 trillion while life insurance is aiming at VND19.7 trillion, an increase of 9% year-on-year.

The total investment made by the insurance sector is projected at VND7.3 trillion, up 10% over last year.

To meet these targets, several insurance firms have consented on becoming more professional and improving the quality of their services.

The Post and Telecommunications Insurance Joint Stock Company (PTI) says that it will improve the quality of its key products.

The AIA Insurance Company plans to develop its agencies into a standard.

The Bao Minh Insurance Joint Stock Company says it wants to develop its distribution network, restructure its range of products and investments structure, and improve the quality of services.

The sector experienced a lower rate of growth in the first half of this year because of economic difficulties.

Statistics from the ISA show that non-life insurance premiums in the first six month of this year stood at VND11.8 trillion (US$562 million), up only 2.2% over the same period last year.

Life insurance also struggled to maintain a growth rate of 13%, making just VND9.1 trillion (US$434 million).

In total, insurance premiums experienced a growth rate of 6.86% over the same period last year.

Prospects for Vietnam’s farm produce exports to Ukraine

Judging from Ukraine’s great potential for agricultural and industrial development, Vietnamese businesses need to achieve deeper penetration into this market, said Nguyen Tien Tiep, Vice President of the Vietnam-Ukraine Friendship Association.

In recent years, Ukraine’s demand for imported consumer goods, especially agricultural and seafood products has risen sharply.

Following the signing of more than 20 agreements on economic and trade cooperation between the two sides the volume of seafood, garment and textiles, footwear, hats and handicrafts products exported to Ukraine has grown considerably and two-way trade turnover is estimated at around US$2.4 billion.

Since early this year, Ukraine’s investment in Vietnam has reached nearly US$400 million and is expected to hit US$600 million soon. Ukraine has 12 valid investment projects in Vietnam with a total capitalization of more than US$27 million, ranking 60th among 98 nations and territories investing in Vietnam.

The Ukraine ambassador to Vietnam, Oleksiv Shovkoplias, says Vietnam remains a reliable partner of Ukraine businesses despite its geographical distance.

The exchange of goods and services between the two nations rise from US$324.5 million in 2011 to US$456 million in 2012, but its turnover almost doubled in both sectors.

In the context of global economic downturn, Ukraine and Vietnam are yet to iron out certain snags in updating forecasts on market trends.

Duong Hoang Minh, Deputy Head of the European Market Department under the Ministry of Industry and Trade, admits that Vietnamese businesses are not fully aware Ukraine’s import-export policy due and its local consumer tastes.

Minh insists that domestic businesses get advice from the Vietnam trade office in Russia and the website of the Vietnam Chamber of Commerce and Industry to seek proper partners.

Prestigious business brand names honoured

Vice President Nguyen Thi Doan has used a July 23 reception honouring 100 prestigious enterprise trademarks and brands in Hanoi to urge all domestic businesses to redouble their efforts at promoting their Vietnamese and international reputations.

Businesses should publicise their achievements, uphold the spirit of Vietnamese entrepreneurs, actively involve themselves in the “Vietnamese people  priotize using Vietnamese goods” campaign, and develop their brand profiles.

Doan told the reception that even in the ongoing economically depressing, many enterprises have managed to maintain their growth, advancing production and business activities to ensure jobs for labourers and fulfill their State-assigned responsibilities.

Businesses have also contributed to social welfare and the country’s socio-economic development.

Doan highlighted businesses’ great efforts to overcome obstacles, create high quality products tailored to consumer demand, and make the “Vietnamese people give priority to using Vietnamese goods” campaign a presence in everyday life.

The State Vice President is confident the size of Vietnam’s industrious labour force will inevitably attract foreign investors. If Vietnamese businesses are slow to realise their advantages, international competitors will conquer the domestic market.

Local businesses should embrace dynamism and adaptability to respond to the market’s needs and win consumers’ trust.

Steel businesses threatened by insolvency

The Vietnam Steel Association (VSA) has warned Vietnam’s domestic steel industry could be driven into bankruptcy if the State does not immediately intervene.

The association blames the industry’s dire state on the real estate market’s extended freeze and the dominance of Chinese steel in Vietnam.

Businesses are also grappling with the anti-dumping taxes several importing countries have imposed on steel.

VSA businesses have produced 2.26 million tonnes of construction steel during the first half of 2013, down 2.08 percent  from the same period last year.

As of June 30, almost 326,000 tonnes of this production total had yet to be sold, but businesses are forced to continue production to create jobs for their workers.

In addition, competition from imported foreign steel has pushed prices down VND300–500 per kilo.

Businesses also reported a large amount of imported Chinese alloy steel has been declared as construction steel to dodge tax liabilities and undercut domestic steel producers.

Vietnamese firms seek trademark protection in foreign markets

Vietnamese enterprises have started actions to protect and take back their brand names which were used illegally overseas.

After three years, Phu Quoc Fish Sauce has officially received Protected Designation of Origin (PDO) recognition by the European Commission. Chairwoman of the Association of Phu Quoc Fish Sauce Producers, Nguyen Thi Tinh, said this is their chance to expand their market-share. Phu Quoc Fish Sauce is the first Vietnamese product that is protected in 28 countries in the EU.

According to Tinh, the association is also preparing documents to seek protection in other markets such as Thailand and Hong Kong. In addition, they plan to sue the producers in Thailand who have illegally used the Phu Quoc brand name in the EU.

According to the National Office of Intellectual Property, Vietnam has thousands of agricultural products that can be registered for geographic indication protection. However, only 35 products have registered in Vietnam and three registered overseas. Economists said they should not have too many problems in Vietnam’s major markets including, EU, US, Japan and China. Depending on the country involved, the protection can last from one year to several years.

In past years, several Vietnamese brand names have been illegally registered for monopoly overseas– such as Trung Nguyen Coffee and Phan Thiet Fish Sauce. It’s extremely costly and time-consuming to take back the names and as a result, only a few Vietnamese firms are able to regain their brand names.

Earlier this year, the Beijing Commercial Court ruled in favour of the Vietnamese dried fruit manufacturer, Vinamit’s, ownership of the Duc Thanh brand name over its use by a rival Chinese firm.

“It took us four years and hundreds of thousands of USD, but losing our brand name meant that we lost a serious amount of market share. The fee for trademark protection is small compared to what we lost during this time.” Nguyen Lam Vien, Chairman of Vinamit said. “We usually release several kinds of products under different brands in China, so we hired a special firm to monitor the market in order to inform us if they detected any infringement.”

Vien advised other firms to establish a team to deal with trademark infringement cases efficiently.

Trademark registration is very important when a company wants to expand its business overseas, but many Vietnamese firms still do not understand its importance.

Real estate remains the most attractive investment for overseas Vietnamese

The Vietnamese real estate market is showing signs of recovery as more capital came from overseas Vietnamese in the first half of this year.

The State Bank of Vietnam branch in HCM City reported that, by the end of June, overseas remittances that were sent via banks reached USD1.9 billion, an increase of 3% compared to the same period last year.

Experts have said that because the world economy is recovering, remittances this year may increase by 15-20%.  The amount of overseas remittance in HCM City is forecast to be as high as USD4.8 billion.

Real estate investment accounted for 15% of all remittances, however people are turning their attention back to real estate market. In 2011 Vietnam received USD9 billion in remittances, 50% of which was invested in property market.

Nguyen Duc Tuan, returned from Japan temporarily to buy houses so his whole family, including the grandparents and siblings, could live near each other. “This project near Long Thanh Airport will make it easier for me to visit my family whenever I return to Vietnam.” Tuan said.

The Kim Oanh Real Estate Company, the investor of the project where Tuan bought the homes, said 30% of their customers are overseas Vietnamese. Many customers also made transactions for their relatives overseas.

Many in the real estate sector are hoping for a turnaround given the slower inflation, lower interest rates and remittances from overseas Vietnamese.

Government urges Vinashin to hasten restructuring process

Deputy Prime Minister Hoang Trung Hai has requested that Vinashin–Vietnam Shipbuilding Industry Group– speed up its restructuring process and pay immediate attention to resolving its financial problems.

The Deputy Prime Minister recently presided over a meeting about this situation with leaders from the Ministries of Transport, Finance, Planning and Investment, as well as the State Bank of Vietnam, the Vietnam Development Bank and Vinashin.

Hai directed Vinashin to concentrate on dealing with its financial problems since its unsettled debts have resulted in serious consequences for domestic financial institutions as well as the national economy overall.

“Vinashin must step up the re-arrangement of its subsidiaries as well as pay proper attention to business plans for remaining enterprises,” Hai requested.

He urged that Vinashin  actively seek domestic shipbuilding clients, with particular attention to tourism ships and small-sized seagoing ships, in order to ensure jobs for their employees.

“It’s necessary for Vinashin to prevent any new financial setbacks,” he emphasised.

He assigned the Ministry of Transport to co-ordinate with the Ministry of Industry and Trade and other relevant agencies to study the situation and propose plans to increase the market share of import-export shipping for the Vietnamese shipping fleet. And they should make a progress report to the Prime Minister as soon as possible.

Relevant ministries and branches were requested to analyse Vinashin’s proposals with a view to gradually supporting it in overcoming the challenges ahead.

Hanoi tightens control over ad banners

Inspectors of the Hanoi Department of Culture, Sports and Tourism will take action to control advertising banners illegally hung over city streets.

At a recent press conference, the department’s chief inspector, Nguyen Thanh Phong, said the city has banned the hanging of banners across streets since July 15.

The move followed a recent case in which banners for a music show entitled “The Hanoian” in front of Hanoi Opera House were cut by someone, causing public concerns.

Nguyen My Trang, Director of My Thanh Company which organised the programme, said that it was the action of competitors and that those who cut the banners were trying to damage the image for the programme.

According to Mr. Phong, currently such banners are almost non-existent on the electric poles and trees in Hoan Kiem District.

For a long time, the front and sides of Hanoi Opera House were covered with banners advertising various art programmes. However, in recent years Hanoi’s streets have been full of of advertising banners resulting in waste. On July 19, Tran Quoc Chiem, Deputy Director of the local Department of Culture, Sports and Tourism said companies that legally hang their banners leave them there for months despite the allowed time of 15 days.

He added that in 2011 the department inspectors cut down banners advertising a show by overseas Vietnamese singer Che Linh, however they reappeared the very next day.

The city does have areas where it is legal to advertise, but since the expansion of Hanoi in 2008 the demand have increased greatly and the available advertising space is not enough.

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

BUSINESS IN BRIEF 29/3