BUSINESS IN BRIEF 1/8

Positive outlook for German businesses in Vietnam

A recent survey reveals that 70% of German businesses operating in Vietnam hold a positive outlook on the economy in 2014 and are sanguine on prospects for continued buoyancy in the upcoming year.

The results of the survey, made public on July 29 by the German ASEAN Chamber Network (GACN), reflect the opinions of German invested businesses operating in –industry (48%), services (35%), business (9%), consultancy (6%) and auditing (3%).

The survey shows that 50% of the respondents report overall improved success in the past year and this positive outlook is being translated into ongoing plans to invest and recruit. Over 60% of the businesses plan to expand their workforce over the next 12 months.

However, 70% of the companies surveyed report they find it extremely burdensome to locate qualified engineers while 46% said it is essential for the country to develop a better skilled workforce.

Most of the companies have provided continuing education and organised training courses for their staff and workers, with 70% believing that the German vocational training model is a good choice for Vietnam.

A shortage of skilled workers was the number one obstacle reported in the survey followed by import barriers, corruption, inflation, and tax burden.

The survey reaffirmed the importance of the huge lucrative retail market in Vietnam to German businesses and the importance of free trade agreements (FTAs) contributing to their  optimism on the nation’s economic development.

Consumer confidence up in July

The ANZ-Roy Morgan Vietnam Consumer Confidence Index posted another strong gain, increasing by 3.1 points to reach 134.1 in July, to stand well above the 2014 average of 131.

ANZ Bank economists announced this in a report dated July 30, adding that easing of political tensions appear to have contributed to the increase in confidence during the month.

In terms of personal finances, 34% (up 2%) of the Vietnamese people say that their families are “better off” than a year ago, while 19% (down 1%) say that their families are “worse off”.

About 55% (up 7%) expect their families to be “better off” financially this time next year, compared to 6% (down 2%) who expect their families to be “worse off”.

As much as 61% (up 4%) of the Vietnamese people expect Vietnam to have “good times” economically over the next five years, compared to 7% (down 4%) who expect “bad times”.

However, 47% (down 2%) expect the country will have “good times” financially during the next twelve months, while 15% (down 1%) expect “bad times”.

Thirty-seven percent (down 1%) of the Vietnamese people say now is a “good time to buy” major household items, compared to 17% (up 3%) who say it is a “bad time to buy”.

“We believe the economic backdrop will be one of sure-and-steady recovery, rather than a V-shaped rebound,” said Glenn Maguire, the chief economist of ANZ in Asia-Pacific.

Consumer confidence sitting above the 2014 average is aligned with Vietnam’s ongoing economic momentum. However, further strong gains in confidence will need to be propelled either via wealth effects from higher equity and gold prices, or a faster improvement in the economy.

“We would now assess confidence as being more likely to move sideways at elevated levels rather than continue to make strong gains,” said Glenn.

The ANZ Bank and Roy Morgan Research launched the monthly private consumer index for Vietnam earlier this month, with surveys covering major cities and provinces across the nation.

The consumer index jumped 7.7 points in June.

Dong Nai cashew nut exports up in volume, value

Southern Dong Nai province exported 3,000 tonnes of raw cashew nuts earning US$19.7 million in July, up 7.1% in volume and 11.9% in value on-year.

The average price of raw cashew nut exports for the month hovered around US$6,588 per tonne, 6.2% higher than same period last year’s same period.

In the first seven months of the year, the province exported a total of 15,200 tonnes of raw cashew nuts, grossing revenues of US$98.6 million, up 22.5% in volume and 30.6% in value.

Key cashew nut export markets include the US (US$42 million), China (US$22 million), Canada (US$6 million), the UK (US$4 million), the Netherlands (US$4 million), Australia (US$4 million) and Thailand (US$2 million).

Markets showing a decline included Canada (down 14.3%) and New Zealand (47%).

Advanced fisheries surveillance ship handed over

Vietnam’s second most advanced surveillance ship was handed over on July 30 to the Vietnam Fisheries Surveillance Force in northern Quang Ninh province by Ha Long Shipbuilding Co, Ltd.

The vessel – coded KN-782 – is 90.5m-long, 14m-wide and 7m-high and has been under construction since October 2012. It has a displacement of 2,500 tonnes and a maximum speed of 21 nautical miles per hour with a total capacity of 12,016 horse power.

Speaking at the handover ceremony, vice chairman of the provincial People’s Committee Do Thong said the Party and State have paid special attention to ensuring the fisheries surveillance forces and coast guard are adequately armed to protect sea and islands’ sovereignty, implement rescue work and assist fishermen at sea.

Nguyen Van Trung, deputy head of the Vietnam Fisheries Surveillance Department emphasised that the KN-782 ship helps instil confidence in fishermen that they will be adequately protected.

HCM City targets higher budget revenue in 2015

The Ho Chi Minh City local government has mapped out a plan to boost budget collections for 2015, with domestic revenues targeted to rise 14 -16% and earnings from export and import to increase 6-8 percent, the Saigon Times Daily reported on July 30.

The target was pointed out in the city’s budget plan for 2015 issued by the HCM City government last weekend.

In 2014, the total revenue of HCM City is estimated at VND226.3 trillion, or 0.53% lower than in 2013. Of the figure, domestic revenues are expected to contribute VND124.2 trillion, while some VND74.8 trillion will come from exports and imports, and VND27.3 trillion from crude oil.

The total revenue this year to date has amounted to VND148.5 trillion, or 14.3% higher than the same period last year. Domestic sources generated VND 81.89 trillion and export-import tax collections contributed VND48.5 trillion, rising 17.2% and 15.8 percent compared to 2013, respectively.

According to the HCM City Department of Finance, the increasing amount of tax collections is attributed to greater efforts to attract foreign investment, high consumption of consumer goods, cars, and oil and gas revenues. Other sources such as personal income tax, registration charges and land use fees are also higher.

Besides, the recovery of many manufacturing firms had positive impacts on the city’s revenues.

Speaking at a conference in June on the city’s socio-economic performance in this year’s first half, Chairman of the HCM City People’s Committee Le Hoang Quan expected the local economic recovery since 2013 will continue to gain tempo in the coming years.

Vietnam-UK trade gathering steam

Trade turnover between Vietnam and the UK picked up the pace in the first five months of the year, striking US$2 billion, according to statistics from the Vietnamese Trade Office in the UK.

Vietnamese exports to the UK totalled US$1.6 billion, consisting principally of mobile phones (accounting for 40%), garments and textile (12.5%), interior decoration accessories (9%), machinery and components (7%), plastic products (3%), coffee, tea, spices (2.5%), seafood (2%), and fruits (1%).

Major imports of Vietnam included turbine, machinery and equipment (24%), pharmaceutical products (11%), mobile phone accessories recording equipment (9%), chemicals (7.5%), healthcare equipment (6%), plastic products (5%), iron and steel (4%),  cattle feed (4%), molluscs and aquatic invertebrates (3%), and ink, dyes, detergents, and paint (2.5%).

Vietnamese Trade Counsellor Nguyen Thi Hong Thuy noted though trade ties between the two countries are enjoying fruitful development, Vietnamese enterprises are still confronted with a number of difficulties competing with Europe, India, China, and Brazil.

A series of trade and investment promotional activities are being organised in the UK and Vietnam including conferences, seminars, and cultural exchanges to address these shortcomings in hopes of increasing Vietnamese competitiveness in the UK market, she said.

Thuy revealed that the UK has spent GBP8 billion (US$13.6 billion) in recent times on investment and trade promotions, aiming to boost exports and investment in highly prospective markets, including Vietnam.

However, differences in development levels and business culture are a big obstacle to increasing Vietnamese exports to the UK.

She pointed out the fact that most Vietnamese businesses are small and medium-sized in terms of financial and management capacity, finding it hard to market their products in the UK.

That’s why Vietnamese businesses need more time to carefully explore, penetrate and find a firm foothold in a well-organised distribution network in the UK.

Trade surplus tops $1.3b in first 7 months

The country’s trade surplus in the first 7 months of this year reached US$1.26 billion thanks to a good export performance, the General Statistics Office reported.

The result was due to an improvement in export value which reached $83.5 billion in the first 7 months, up 14.1 per cent compared to the same period of last year.

There were a number of high-valued export staples including marine products with an increase of 25.5 per cent to $4.23 billion, textile and garment industry with a rise of 19.4 per cent to $11.48 billion and phones and accessories manufacturing that showed a growth of 13.9 per cent to $13.15 billion.

Crude oil export value also made up $4.61 billion, up by 5.8 per cent in volume and by 8.3 per cent in turnover.

The GSO stated that the export turnover could reach a higher value if there was no reduction of export value in agricultural products. These included rice exports with 3.86 million tonnes worth $1.75 billion, down 8 per cent in volume and 4.7 per cent in value.

A decrease in rubber exports also contributed to the situation with 454,000 tonnes worth $832 million, down 9.5 per cent in volume and 32 per cent in value.

In the first seven months, the country’s import value was $82.24 billion, up 11.4 per cent year-on-year.

The GSO said that the country spent most for imports of raw materials for production such as cotton which increased by 35 per cent to 458,000 tonnes and 36.3 per cent in value to $919 million.

The value of imported machines and spare parts increased by 24.4 per cent to $12.65 billion, and fabric import value reached to $5.5 billion, an increase of 16.7 per cent.

The GSO said that China remained Viet Nam’s largest import market with a total turnover of $23.4 billion, an increase of 15.3 per cent compared to the same period last year. The figures brought the trade deficit with China to $14.8 billion, up 14.4 per cent over the same period of 2013.

Most of the imported products from China were textile raw materials, machines and equipment for energy industry, light industry, consuming products and electronic products.

Viet Nam also spent significant values for importing goods from ASEAN and South Korea markets with import turnover of $13.4 billion and $12.3 billion, up 8.4 per cent and 6.3 per cent, respectively.

Import value from Japan, EU and the US were low range between $3.7 billion and $6.9 billion.

Solutions proposed to develop support industries

Support industries are the backbone of the country’s industry, according to Truong Thanh Hoai, deputy director of the Heavy Industry Department of the Ministry of Industry and Trade.

Further, support industries play a key role in raising the competitiveness of industrial products and are a decisive factor in the development and enhancement of the nation’s competitiveness. Without having support industries, it would be impossible to operate manufacturing industries, Hoai said during a workshop to discuss solutions to develop support industries in Viet Nam, held by HCM City Economics University and the Economic Commission of the Party Central Committee in HCM City yesterday.

Regarding developing solutions for support industries in Viet Nam, Professor Vo Thanh Thu said developing support industries must focus on key industries in Viet Nam, including those attracting large foreign investments, such as garments and textiles, engineering and electronic assembly. These industries have a large demand for support industries, as well as provide a need to modernise technologies and train highly-qualified workers to produce standardised products.

Thu emphasized that investment in technology required large amounts of capital. To assist enterprises, the Ministry of Finance and the State Bank of Viet Nam should work out policies to create favourable conditions for enterprises to have access to long-term loans with preferential interest rates. A representative of the HCM City Department of Industry and Trade told those at the seminar that support industries in Viet Nam were mainly catering to export processing technologies, while manufacturing industries largely relied on imported raw materials and components.

In addition, the country has not yet developed specialized industrial complexes, resulting in underdeveloped support industries.

The HCM City Department of Industry and Trade has proposed a series of measures to develop support industries by offering incentives to attract FDI businesses. It is stated that FDI businesses are an important driving force to promote domestic support industries.

The department has also suggested that the Government consider a master plan for support industries and offer credit loan policies for businesses to develop support industries and human resources in support industries.

Hoai said the Ministry of Industry and Trade is now developing a decree on the development of support industries, and is expected to submit to the Government in the fourth quarter of this year.

Hoai added that the decree would focus on measures to support technology, production management and customer services to avoid shortcomings in local support industry companies.

Furthermore, the decree would supplement incentives on corporate income taxes and construction regulations on the building of support industry complexes to attract global multinational corporations to provide parts and materials to invest in Viet Nam.

Subsidence blamed on residents

Construction conducted by nearby residents has caused the pavement along the O Cho Dua-Hoang Cau road, the most expensive route in Viet Nam that opened early this year, to subside, said Nguyen Sy Bao, the director of the management board on key urban development projects in Ha Noi.

Speaking at the press conference on Tuesday, Bao said the pavement subsided after a short period of construction after residents demolished their old houses. Residents then gathered concrete stakes and drove excavators and trucks over the new pavement.

Bao confirmed that samples of bricks used on the pavement had been tested to meet quality standards.

The loose management and co-operation between the project’s investor, inspection consultancy unit and local authority had enabled the damage, he said.

The investor had asked the construction unit to quickly re-build 165 square metres of the damaged pavement, repair the covers of manholes and reduce the height of the pavement to help drivers go up and down more easily.

The pavement had since been fixed, he said, adding that a cost of more than VND70 million (US$3,301) was incurred by the project’s contractor.

Bao said the management board would re-examine the incident to establish the fault of those involved, including four units participating in constructing, designing, consulting on and supervising the project.

In June, Ha Noi Party Secretary Pham Quang Nghi had requested a re-examination of the construction of the pavement on the O Cho Dua-Hoang Cau route following inspections.

He said that each phase of the project would reveal the responsibilities of those responsible for the poor-quality pavement.

The O Cho Dua-Hoang Cau road route was part of the city’s Belt Road No1 project costing VND642 billion ($30.5 million), including $25 million for site clearance.

However, the real amount for site clearance had been raised to VND743 billion ($35.3 million), making it the most expensive road in the country.

Although the city has opened the road for traffic, the installation of lighting systems, separators, painted lines, pipelines and trees is yet to be finalised.

VN exports face tough challenges

Low value adds, poor quality of exports and heavy dependence on raw material imports along with poor processing facilities and transportation were affecting the country’s export quality and efficiency.

Nguyen Thi Thu Hang, senior technical consultant at Export Potential Assessment (EPA), told a conference in Ha Noi yesterday that limited understanding about foreign markets and international trade issues and inadequate market information, poor supply chain and sector linkages as well as outdated production and processing technologies for export products were also problems plaguing the country’s exports.

EPA is the first major activity of the four-year “Decentralised Trade Support Services for Strengthening the International Competitiveness of Vietnamese Small and Medium-sized Enterprises” programme, being implemented nationally by the Trade Promotion Agency.

In order to deal with these issues, Hang emphasised on the importance of promoting the implementation of the State’s preferential policies in support industries to solve input material shortages.

Besides, to enhance linkages in supply chains to reduce cost, improving product quality and competitiveness of exports, diversifying export markets and accelerating trade promotion were also necessary, she said.

She added that improving the capacity of domestic enterprises in negotiating, contracting and getting international transactions reduced should be also included.

On his speech at the event, Deputy Minister of Industry and Trade Do Thang Hai said Viet Nam was attempting to increase exports of high-value goods while reducing shipments of raw materials abroad.

The country was also fostering its negotiations of Free Trade Agreements with foreign countries to expand export outlets, he said.

In the future, it was necessary to identify and assess products and services which had an export potential and then focus on accelerating exports of these goods, he noted.

According to a report which was also released at yesterday’s conference, the items with high export potentials in the short to medium terms were coffee, rubber and cassava along with pepper, garments and leather shoes. Seafood such as tuna and shrimp were also on the list. Electronics, textiles and garment, and wooden goods apart from bamboo and rattan products, were also items with high export potential. Tourism and labour were items on the list.

SBV approves new Construction Bank head

The State Bank of Viet Nam (SBV) has approved a new chairwoman and general director of the Viet Nam Construction Bank (VNCB).

The decision follows the arrest and temporary detention of the bank’s three former senior officials on July 29.

The new chaiworman is Vu Bach Yen, who has been a member of VNCB’s executive board since February 2012 and is a major shareholder. Meanwhile, the bank’s Deputy General Director Dam Minh Duc, who was in charge of the bank’s operations in Ha Noi, is the new general director.

According to the Ministry of Public Security’s Investigation Police Agency, the three former officials were arrested on Tuesday for allegedly violating Viet Nam’s Penal Code’s Article 165.

The Article deals with deliberate acts against the State’s regulations on economic management, leading to serious consequences.

The arrested persons are Pham Cong Danh, 49, former chairman of VNCB; Phan Thanh Mai, 43, former member of VNCB’s executive board and general director; and Mai Huu Khuong, 31, former member of VNCB’s executive board, in charge of finance.

On Monday, a day before they were arrested, SBV announced that the three officials had been dismissed from VNCB’s service to ensure normal operations of the bank.

VNCB was established from the Trust Bank in May 2013. The Trust Bank was in operation for 23 years with a charter capital of VND3 trillion (US$142.85 million).

It’s reported that Mai, Danh and Khuong were elected members of VNCB’s executive board in February 2013. Then Mai was appointed as the bank’s general director.

Danh was also Thien Thanh Group Ltd Company’s chairman of the board of directors.

Thien Thanh Group Ltd Co is a subsidiary of the Thien Thanh Group, based in HCM City. Its businesses include construction materials, auto services, real estate, finance and hotels.

Meanwhile, Khuong was also chairman of the executive board of the Dai Viet Stock Company, while Mai was a member.

The case is being investigated further.

Pan Pacific stitches up tender for largest stake in Vinaseed

Pan Pacific Corporation (PAN) announced it has become Viet Nam National Seed Corporation’s (NSC) biggest shareholder after completing the tender offer for its shares.

According to its filing on the HCM City Stock Exchange yesterday, Pan Pacific has bought 4.63 million shares of Vinaseed, lower than the total 6.23 million shares it registered while buying.

PAN’s total holdings in the seed firm increased from 2.47 million shares to nearly 8.14 million shares, equivalent to 53.2 per cent of the firm’s stakes that makes NSC a PAN subsidiary.

The company could spend over VND352 billion (US$17 million) to own NSC shares as in March, PAN offered to buy their shares at a price of VND76,100 (US$3.61) per share from May 30 to July 15.

Sellers included Sai Gon Securities Inc (SSI) who sold out all its holdings of over 2.42 million shares in July.

NSC shares fell 0.7 per cent to close yesterday’s session at VND74,500 ($3.53) a share while PAN shares tumbled 3.1 per cent to end at VND47,500 ($2.25) each.

The acquisition of Vinaseed has shown PAN’s investment strategy to expand business in the agricultural sector in which Vinaseed is a leading company in the field of plant varieties.

NSC is a stable performer with profits rising steadily from 2009 to 2013. It estimates a profit of VND59 billion ($3 million) in the first half of this year, equivalent to 51 per cent of its yearly profit target and a rise of 9 per cent against the same period last year.

Apart from Vinaseed, Pan Pacific owns 62.4 per cent stake in Ben Tre Forestry and Aquaproduct Import and Export Co (ABT), and 23 per cent in Long An Food Processing Export Co (LAF).

PAN is operating in administrative and support services with 10 business lines, including agricultural and seafood production, home care services and industrial solid and liquids apart from gas waste treatment services and high-rise building and apartment management services.

Pan Pacific incurred losses of more than VND2 billion ($95,000) last year and is under warning status by the HCM Stock Exchange. Its first-half net profit is projected at VND22.5 billion ($1 million), six times the same period last year.

VSA sees slight increase in steel sales in July

The Viet Nam Steel Association (VSA) has reported that steel consumption in July was 380,000 tonnes, an increase of 1 per cent against last month.

In July, steel plants churned out only 400,000 tonnes, which was lower than the designed output due to low demand.

The Vice President of VSA, Nguyen Van Sua said that steel consumption could decrease in August due to the rainy season.

VSA forecast that the steel industry will increase business by 10 per cent this year.

Footwear exports fetch more than $1.1b

The southern province of Dong Nai has earned more than US$1.1 billion from footwear exports in the first seven months of this year, up 12.8 per cent year-on-year.

According to Director of the provincial Department of Industry and Trade Le Van Danh, in July alone, the export of this product brought $167 million to the province, up 16.4 per cent over the previous month and 5.1 per cent compared to a year earlier.

He said that growth was seen in almost all markets, led by the Republic of Korea with $323 million and the US with $309 million. They were followed by Belgium with $98 million, China with $50 million and the UK with $75 million, he said.

Local businesses attributed the growth to the Generalised System of Preferences (GSP) that the European Union has granted to Viet Nam, coupled with the economic recovery in many markets, including the EU and the United States.

Unsold sugar inventory reaches nearly 460,000 tonnes

The unsold volume of sugar at factories was estimated at 457,890 tonnes as of July 15, 32,160 tonnes higher than a year earlier, an official of the Ministry of Agriculture and Rural Development (MARD) said.

However, this will not be a serious problem if the current effective control of smuggling can be maintained, according to Doan Xuan Hoa, deputy head of MARD’s Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production.

At the same time, he pointed to the fact that most sugar makers have not formed partners with distributors, thus their sales depend much on the market. As a result, they are under great pressure when supply overcomes demand on the domestic market. To add to the problem, sugar export is also facing many difficulties.

Hoa urged the Vietnam Sugarcane and Sugar Association and businesses to devise production and sales plans for 2015 so as to ensure supply and demand balance in the domestic market.

The department forecasts the sugar output from now to the end of 2014 at 300,000 tonnes, while imports this year are expected to reach 77,300 tonnes, bringing total supply to 835,190 tonnes.

Meanwhile, sugar consumption is predicted to be at the same level as last year, resulting in unsold inventory of around 251,240 tonnes by the end of the year.

Personnel appointed for Steering Committee for Price Regulation

Deputy Prime Minister Vu Van Ninh who is head of the Steering Committee for Price Regulation, has appointed Finance Minister Dinh Tien Dung as deputy head of the committee.

Nine members of the committee were also named under Decision 52/QD-BCDDHG freshly signed by the Deputy PM. They are officials from the Ministries of Finance, Industry and Trade, Planning and Investment, Public Health, Education and Training, Transport, and Agriculture and Rural Development, as well as the Government Office and the State Bank of Vietnam.

The Steering Committee for Price Regulation was set up in May this year with Deputy PM Ninh as its head under the Prime Minister’s Decision 690/QD-TTG. It is responsible for studying and helping the Government leader consider and approve major policies and orientations for price management in a certain period, as well as specific measures to stabilise prices for essential goods and services.

The committee will also assist the PM in directing local and municipal ministries and agencies to manage prices, serving the targets and requirements of the Government on curbing inflation and stabilising macro economy.

In addition, it will hold seminars and conferences for experts to share experience in and out of the country to improve the operational efficiency of the committee.

Philippine firms encouraged to invest in Vietnam

Vietnamese Ambassador to the Philippines Truong Trieu Duong has called on Philippine businesses to expand their investment in Vietnam.

Speaking at the 22nd Metro Manila Business Conference recently held in Manila, the Ambassador briefed participants on Vietnam’s economic integration policies as well as the country’s advantages.

Philippine firms said they highly value Vietnam’s investment environment and took this opportunity to thoroughly enquire about business opportunities in country.

Hosted by the Philippine Chamber of Commerce and Industry, the conference aimed to gear up for regional integration as an ASEAN economic community will be formed by 2015.

Many barriers to business remain, says expert

Many policy drafting agencies tend to resort to the “prohibition” term for the business scopes that are hard to control and this has set up many barriers to the country’s business environment, said the director of the Central Institute for Economic Management.

Speaking at a seminar held in Hanoi Thursday to introduce the revised Enterprise Law, Nguyen Dinh Cung described the legal documents about allowable and conditional business areas as a maze. “We assume these documents would be a cubic meter if they are put together,” Cung said.

Cung said regulations for the prohibited business areas regarding dangerous games for children and their character development, social security and order, sexual products and scrap imports which can pollute the environment among others are unclear as there are a lack of detailed criteria and definitions.

Such regulations, according to Cung, can be interpreted differently by different market monitors depending on their worldviews, and this puts producers and traders at risk.

“Individuals at State management agencies can take advantage of different interpretations for their private gains,” he warned.

The regulation banning enterprises trading pollution-causing scrap imports, according to Cung, is also unreasonable. He wondered whether enterprises are allowed to trade domestic scraps or not.

Cung noted the Enterprise Law is ruled by 20 industry-specific laws and regulations, and ministries and sectors make full use of these laws to protect their interests.

However, chairman of the Vietnam Tea Association Nguyen Huu Tai disagreed with Cung.

Tai said food producers should strictly follow the regulations on safety and hygiene of the Ministry of Health rather than the Enterprise Law. He furthered a person owns a big piece of land in a downtown area of a city but he is not allowed to raise pigs on his land as he should observe the Land Law.

Dau Anh Tuan, head of legislation at the Vietnam Chamber of Commerce and Industry, said in support of Cung that the Enterprise Law would be invalid if industry-specific laws and regulations set too many business conditions.

Tuan said the inclusion of business lines with special requirements in the Enterprise Law or in decrees needs careful consideration as it cannot be kept updated with the reality.

Two contractors banned from road projects

Two consulting contractors responsible for supervising a project to construct a road connecting Vi Thanh Town in Hau Giang Province with Can Tho City in the Mekong Delta have been prohibited from joining any traffic projects for 18 months for not fulfilling their duties properly.

The Ministry of Transport in a decision issued on July 24 banned Consulting and Construction Ltd., Co. 747 and Design Consultant Enterprise, an arm of Investment Construction Joint Stock Company No.10 under the Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO).

The two consultants are found by the ministry to have violated regulations in supervising the project’s quality and progress and failed to perform their contracts duly.

Apart from these two contractors, over then other units relating to the construction of the road have also had their works reviewed to guarantee the project’s quality.

Previously, the transport ministry made a snap inspection into the project, invested by the Hau Giang Province’s Department of Transport, and identified many violations by contractors.

Gov’t orders customs procedures simplification

Prime Minister Nguyen Tan Dung has told the Ministry of Finance and its General Department of Customs to remove unnecessary customs procedures to help enterprises at a time of economic hardship.

In Notice 289/TB-VPCP, the Prime Minister requests that import and export goods clearance time should be cut by 50% from the current level by the end of 2014. Paperwork should also be streamlined.

In 2015, Vietnam should reach the same standards of the countries in the ASEAN-6 bloc of Indonesia, Thailand, Singapore, the Philippines, Malaysia and Brunei with the average time of completing export and import procedures and customs paperwork reduced to 171 hours a year.

The Government orders the General Department of Customs to further speed up application of information technology and deployment of the ASEAN one-door mechanism and the One-door Customs Mechanism.

The Ministry of Finance will have to cooperate with relevant units to secure consistency in management of export and import goods, people and means of transport traveling into and out of the country.

Relevant agencies are required to review the policies issued in recent times to help the Government work out decrees guiding implementation of the amended Law on Customs. The National Assembly has recently passed the law to ensure administrative reform goals and requirements will be met.

Notably, the Government requests stricter management of customs staff, especially at grassroots levels, to prevent wrongdoing in the process of customs clearance. Officials who violate rules must be eliminated.

Meanwhile, the Ministry of Finance and the General Department of Customs will draw up a project allowing the non-State sector to join equipment procurement and infrastructure investment contracts in the customs sector. The contracts aim to improve supervision and goods checks by the customs.

The Government will continue investing in scanners to check goods and enhancing supervision at border gates.

The General Department of Customs should encourage private firms to join customs service and agent sectors. The department will initiate a pilot scheme to apply a consistent management model at border gates by arranging courses for officials.

Initially, the model will be piloted by the customs departments in Haiphong City and HCMC. The ministry will report the project to the Government before November 1.

According to the Doing Business 2014 report by the World Bank (WB), Vietnam now ranks 65th among 189 economies in terms of customs procedures.

It normally takes enterprises in Vietnam 21 days to finish export papers, compared to only 11 days in the member countries of OECD (Organization for Economic Co-operation and Development).

In addition, it costs firms in Vietnam US$610 to ship a container, compared to US$450 in Malaysia and US$856 in East Asia-Pacific.

Liquidity risk still high at EVN

The power purchase deals between Vietnam Electricity Group (EVN) and its subsidiaries lack transparency with huge losses offset internally, which are among reasons for high liquidity risk at the group, said State Audit of Vietnam.

According to the auditing result for 2012, five power corporations of EVN owed the parent firm as much as VND9.88 trillion worth of electricity and the amount the parent company owed power plants also amounted to VND6.06 trillion.

The debt amounts collectible and payable between the parent company and its subsidiaries were quite high but EVN did not perform good bookkeeping to monitor and analyze such debts. Besides, debt payments made by power purchasing companies to power plants were often late.

According to State Audit of Vietnam, power purchases between the parent company and subsidiaries and affiliates were not objective as the internal power price in 2012 took into account the losses incurred in 2011. By lowering the internal price, the parent company offset losses for five subsidiaries with a total of nearly VND1.72 trillion.

Besides, the parent company underwrote the losses of VND865 billion incurred in 2011 for its two wholly-owned thermal power companies, with VND722 billion for Uong Bi thermal power plant and VND143 billion for Can Tho Thermal Power Company, said Nguyen Hong Long from State Audit.

EVN also owed other groups like Vietnam National Oil and Gas Group and Vietnam National Coal and Mineral Industries Holding Corporation a combined VND16.07 trillion as of 2013, most of it overdue. However, EVN had pledged to pay VND2.65 trillion by December 31, 2013 and the rest would be paid within seven years, with VND1 trillion to be paid each year.

According to Long, EVN earned a profit of around VND8.82 trillion in 2012 and the return on equity ratio was 7.52%, though the group earmarked over VND10 trillion to cover exchange rate changes and other amounts to provide for losses of previous years.

EVN borrowed much to invest in power generation and transmission systems, with loans totaling VND25.04 trillion as of 2013, including short-term loans of VND6.1 trillion.

With business results improving gradually, EVN’s long-term loan payment capacity in the next five years, according to State Audit, is ensured thanks to the amortization of assets as well as its supplementary assets being revalued.

Philips introduces smartphones in Vietnam

Dutch electronics giant Philips has launched its latest smartphone models and announced a new distributor in Vietnam.

Smartcom Co. has been picked by Sangfei Mobility Singapore, a company that holds the right to trade Philips smartphones on global markets, as the authorized distributor of Philips handsets in Vietnam. Smartcom has been selected as it has much experience in distributing major brands, including Sony, HTC, Blackberry and Gionee.

With the debut last week, Vietnam was chosen by Philips as the first market in Southeast Asia for its four new smartphone models of S308, S388, W6110 and i908. These cellphones are retailed for VND1.29 million to VND6.99 million (around US$60-329).

Philips has also introduced its feature phone X2566 to the Vietnamese market.

Long-lasting battery technology is among the highlights of Philips phones.

Philips had its cellphones distributed by Thanh Cong Mobile in Vietnam in 2009.

Supporting industries lack effective policies

Vietnam’s supporting industries have made slow progress in the past decade due to a lack of effective policies to support their development, according to the Japan External Trade Organization (JETRO).

Yasuzumi Hirotaka, managing director of JETRO in HCMC, told a function on establishing the Japan-Vietnam supporting industries forum last week that policy-making agencies had not fully understood the needs of enterprises.

The lack of effective policies to spur Vietnam’s automobile industry is a case in point. This is one of the brakes on development of supporting industries in this market, Hirotaka said.

Therefore, the HCMC Export Processing Zones and Industrial Parks Authority (HEPZA) and JETRO in HCMC signed a memorandum of understanding to boost supporting industries in this city, including the establishment of the Japan-Vietnam supporting industries forum. This forum is expected to bring the requests of both Vietnamese and Japanese firms to policy makers and help them get a better understanding of businesses.

According to Hirotaka, the forum will also assist in human resource development for supporting industries as if there are not qualified people making technological transfers happen, it is difficult for local businesses to grow and benefit from technological advances despite strong foreign investment inflows.

As Japanese firms have not found good local enterprises in supporting industries, JETRO and HEPZA will make a list of businesses at exporting processing zones and industrial parks in HCMC that can meet the demand of Japanese firms.

There were 311 Vietnamese enterprises active in supporting industries as of last year. Many foreign enterprises operate in supporting industries Vietnam but their products are mainly for export.

There are many final products made in Vietnam but their localization rates are low. A 2013 survey of JETRO showed that the average rate of products by Japanese enterprises in Vietnam were 32.2% last year compared to 27.9% in 2012.

Citibank launches new credit card

Citibank Vietnam has launched the international credit card Citi Rewards, targeting office workers and young consumers in the country.

Raul Parades, Citibank Vietnam’s consumer business manager, said Citi Rewards is the first product to enable customers to accumulate far more bonus points than other credit cards. The points can be redeemed for gifts, including music players, cell-phones and entertainment services.

In addition, card holders can enjoy privileges at Citibank partner restaurants, hotels and shopping centers.

The group has introduced Citi Rewards in several markets in Asia-Pacific such as Hong Kong, the Philippines, Indonesia, Thailand, Taiwan, India, Malaysia, China and Australia.

Citibank joined the local retail banking market in 2009. Earlier, it launched other credit cards onto the market such as Citibank PremierMiles World MasterCard, Citibank Visa Platinum Cask Back and Ready Credit.

HCM City’s credit growth better than expected

The amount of total outstanding loans in HCMC is estimated at VND984 trillion in the first seven months of this year, a rise of 3.35% compared to end-2013, heard a meeting on the city’s socio-economic situation yesterday.

The central bank’s HCMC branch earlier estimated the city’s credit growth rate by end-June at 1.32%, but the rate actually increased to 2.84%.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s HCMC branch, told the Daily that the accelerating credit growth rates in June and July were attributed to the city’s bank-business capital connection program.

Up to date, there have been 701 companies, two cooperatives and 25 family-run businesses approved by banks for loans totaling VND15.7 trillion.

The total amount from the program is expected to reach VND28-30 trillion at the end of this year compared to the earlier estimate of around VND20 trillion, Minh said.

As many as 34 companies will also borrow an additional sum of nearly VND1.9 trillion from banks on August 8 with the annual interest rates of 7.5% for short-term tenors and 9.5-10.5% per annum for medium and long-term tenors.

Businesses in fact have accelerated borrowing money from banks to support their operations. However, certain obstacles concerning bad debts and stockpiled goods are reasons behind the low credit growth rate.

The ratio of bad debts stood at 4.84% as of end-May, up 0.15 percentage point against the end of last year.

The city’s export turnover hit US$16.4 billion, a year-on-year rise of 3.5%, in the first seven months of this year, director Thai Van Re of the city’s Department of Planning and Investment told the meeting.

Certain exported products enjoyed good results including pepper, up 85.8% year on year, followed by vegetables and fruit with a 48.5% increase, machines and equipment up 37%, aquatic products up 14.8%, coffee up 14.6%, rice up 11%, apparel up 8.6% and footwear 7.4%.

Meanwhile, the city’s import revenue stood at US$14.14 billion in the first seven months of this year, an 8% year-on-year fall.

Notably, goods from China that account for 22% of the total import revenue inched down 1.9% in value. However, imports from Singapore surged by 45.8% in value, followed by goods from the U.S. up 28.3%, Taiwan 18.5%, South Korea 11.7%, Thailand 4.8% and Japan 4.1%.

The city used to buy a wide variety of products from China, ranging from machines and equipment, electronics, metal to materials for agriculture.

However, China’s illegal placement of an oil rig in Vietnam’s waters in early May has influenced the export-import activities between the two countries, but it is also deemed as an opportunity for the city to lessen economic dependence on China.

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

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