BUSINESS IN BRIEF 7/3 Strong inflow of FDI forecast to continue The strong flow of foreign direct Investment (FDI) into The forecast was made by leading economists and business professionals during an online discussion recently held by the newspaper Bizlive. Vietnam Association of Foreign Invested Enterprises (VAFIE) President Nguyen Mai said that global economic recovery is on the mend and successful businesses are scurrying to find lucrative investments. Universally they consider Korea Trade-Investment Promotion Agency (KOTRA) Deputy Director Park Chang Eun, said that multilateral groups focus on the nation’s ability to assimilate modern technologies. They also consider the nation’s political stability and commitment to offer preferential policies on the origin of products as strong-points, he added. During the talk, Nguyen Noi, deputy head of the Ministry of Planning and Investment’s Foreign Investment Department said that drastic measures to improve business environment will be undertaken. Most notably are the simplification of customs formalities and streamlined procedures to establish businesses, he added. According to statistics, many multinational groups from the Experts forecasts that, the enforcement of the Land Law after July 1 will allow foreigners and overseas Vietnamese to purchase homes in UK Premier’s special envoy discusses projects in Vietnam Lord David Puttnam, who is the British Premier’s special envoy, met HCMC Vice Chairwoman Nguyen Thi Hong last Thursday to discuss major projects that British could participate in, especially the financial center project in Thu Thiem New Urban Area in District 2. Hong and the British dignitary discussed the cooperation between the Investment and Construction Authority for Thu Thiem New Urban Area (Thu Thiem ICA) and the The two sides will sign a memorandum of understanding on this cooperation project, and Thu Thiem ICA will send a mission to the UK to work with the partner and call for British companies to invest in Thu Thiem. At the meeting last Thursday, Lord David Puttnam also suggested the HCMC is currently home to 95 projects invested by British companies with total investment capital of over US$500 million. Last year saw two-way trade between the two countries reaching US$4.27 billion, rising by nearly 20% year on year. SBV delays debt classification deadline The State Bank of Viet Nam (SBV) finally agreed to give commercial banks at least six additional months before implementing the new standards of loans classification. This is the third postponement that the banks were eagerly awaiting. The new deadline for loans classification is extended to early 2015, instead of ending sharply on June 1, 2014. Loans classification is one of the important contents of Circular 02/2013/TT-NHNN of January 21, 2013, which also regulates a wide array of loans and risk-related issues, such as the levels and methods of risk provisioning and the use of provisions to handle risks by credit institutions and branches of foreign banks. Except for such significant amendments to the loans classification, Circular 02 will be still put into practice on June 1, 2014, which was intended to help banks in coping with problems, as the central bank explained. Circular 02 was initially expected to come into effect on June 1, 2013. But, after deliberation amid growing enquiries from commercial banks, who were concerned about a surge in bad debts, a collapse of major businesses, and a financial domino crisis after implementing the regulation, the Circular was postponed by a year to June 1, 2014. "I think the central bank has taken into consideration the good and the bad aspects related to the commercial banks implementing the loans classification as scheduled. If the good outweigh the bad at this time, then we go for it," stated Nguyen Thanh Toai, the deputy general director of Asia Commercial Bank (ACB). Some banks, which are struggling to bring their bad debt ratio to below 3 per cent, noted that the new regulation on loans classification will turn a series of positive loans into negative or alert status. If it happens, credit businesses will be consequently frozen. State Bank Governor Nguyen Van Binh recently announced that SBV was determined to apply international standards to the regulation of the banking system as soon as possible, rather than prescribing temporary solutions. However, he also stressed that his strategy was to catch the mouse without breaking any vases. Apart from loans classification, the amended Circular 02 also incorporated some new rules on the issuance of special bonds by the Viet Nam Asset Management Company (VAMC) and on the debts that violate covenants. VAMC, a 100 per cent state-owned company managed by SBV, is allowed to spare 20 per cent for risk provision fund. The company has purchased VND39 trillion (US$1.8 billion) worth of bad debts from commercial banks, of which VND200 billion ($9.4 million) has been recovered. The wholly-state owned company plans to buy an additional VND10 trillion ($473 million) in the first quarter of this year, however, there will be pressure to sell the bought debts in 2014. Regarding the plans on debt refinancing through the special bonds issued by VAMC, Head of the central bank's Monetary Policy Department Nguyen Thi Hong yesterday remarked that the plans are yet to be implemented. The strong purchase of VAMC has helped the Vietnamese banks to get their bad debts off books and polish their balance sheets. As per the standards set by the central bank, the bad debt ratio of the system increased from 4.08 per cent in 2012 to 4.73 per cent in October, 2013, and the ratio reduced to 3.63 per cent last December. If the bad debt rescheduled under the Decision No780/QD-NHNN dated April 23, 2012, is included then US$1.3 billion investment in energy Construction will begin on March 9th on the Vinh Tan 4 thermal power plant, in the central province of Binh Thuan, at an estimated cost of VND36,000 billion (approximately US$1.3 billion), reported the Electricity of Vietnam (EVN). The 1,200 MW plant is expected to generate 7.2 billion kWh annually to ease the shortage of electricity in southern According to the schedule, the first turbine of the power plant will be connected to the national electricity grid in 2017, and the second in 2018. Already this year EVN has connected several big thermal power plants to the national grid, including Vinh Tan 2 (622 MW) and Hai Phong 2 (300 MW). It also started construction on a 600 MW thermal power plant in the Doosan Vina –first nuclear products supplier in SEA Doosan Heavy Industries Vietnam Co., Ltd has been certified by the American Society of Mechanical Engineers (ASME) as the first supplier of nuclear products in ASME is a Non-Profit Organization which establishes the standards and technical specifications for thermal and nuclear power plants. ASME certifies that the quality assurance (QA) program and the implementation of the program by the surveyed company meet all ASME requirements for products that will be used in the thermal or nuclear power industry. ASME inspectors from the Doosan Vina was awarded six new ASME Nuclear certificates, (NPT, NA, NS, Site NPT, Site NA, “This international certification by ASME is testimony to the skill of our employees and “This means Vietnamese technicians now have the skill and expertise necessary to manufacture and supply the equipment to Doosan Vina is a high tech industrial complex in the Dung Quat Economic Zone of central Soc Trang to host Mekong Delta Economic Forum The eighth annual Mekong Delta Economic Cooperation Forum (MDEC) will be held in Soc Trang province in November 2014. This was announced at a March 6 meeting between the Steering Committee for Southwestern region and Soc Trang provincial People’s Committee on preparations for the event. This year’s annual forum, will coincide with the Oc Om Boc festival of the Khmer ethnic group and focus on agricultural restructuring and developing new rural areas in the Mekong Delta region. Local authorities and relevant agencies have been urged to make thorough preparations and call for more investors and donors to sponsor the coming event. Nearly 100 Japanese businesses congregated on Tuesday at a forum in The event was jointly organized by the Vietnamese Ministry of Agriculture and Rural Development and the Vietnamese Embassy in According to Commercial Counsellor to Japan Nguyen Trung Dung, cooperation in agro-fisheries has significantly contributed to the economic development in the two countries. Apart from the traditional realms, such as the manufacturing industry and trade, the Japanese firms can be potential investors in Deputy General Secretary of the Viet Nam Association of Seafood Exporters and Producers To Thi Tuong Lan, emphasized that even though Between 1993 and 2011, In addition to fisheries, Vietnamese fruits, such as mango, durian, grapefruit, and dragon fruit, are also seeking ways to enter the Japanese market, where the market requirements are particularly stringent. Nguyen Thanh Binh, the director of Vegetexco, noted that last year, At the forum, a representative of Yasaka, a Japanese firm operating in Exports to The cumulative Vietnam-Japan import-export turnover jumped 15.1% against the same period last year and stands at US$4.02 billion according to Vietnam Customs. Of the figure, In 2013, the Vietnam-Japan import-export turnover hit US$24.3 billion, up 2.4% from last year’s period including US$13.65 billion from In 2013, total two-way trade turnover ranked fourth among all Seminar discusses impacts of Vietnam-EU trade deal The EU-Vietnam free trade agreement (EVFTA) should be considered alongside other agreements to evaluate the opportunities and challenges it brings about, thus aiding the renovation of Experts at a March 5 seminar in However, they are concerned about non-tax measures imposed by the EU, and suggested Vietnam gather more consultations before making decisions regarding these EU regulations while enhancing its capacity to fulfill new requirements. EU procedures should be publicised among businesses interested in the ongoing negotiations in a bid to accelerate export and raise competitiveness, they said. Pham Thi Lan Huong, an expert of the European Trade Policy and Investment Support Project (EU-MUTRAP), proposed Apart from tax advantage, it is necessary for Le Trieu Dung, deputy head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, said most of agreements Claudio Dordi, technical assistance team leader of EU-MUTRAP , said the EU is placing more importance on such issues as origin of products, intellectual property rights, competitiveness policies, the recognition of product quality and the settlement of disputes in trade agreements it sign with other partners. The bloc also emphasizes the importance of sustainability and environment factors in such agreements, he said. Truong Dinh Tuyen, former minister of trade and now an expert from EU-MUTRAP, said the EVFTA is a comprehensive and high-quality agreement meeting the standards set by the World Trade Organisation (WTO). Along with goods, services and technical barriers, A report released by EU-MUTRAP reveals that the EVFTA is expected to promote investment and technological renovation, thus increasing productivity while expanding the service sector. Garments and textiles, footwear and food processing sectors will benefit most from the pact, the report said, adding that however, whether exports will increase or not depends on the level of improvement in production capacity. The 28-member EU market has a gross domestic product (GDP) of about US$18 trillion, making up 22% of the global figure. The bloc’s total outbound investment accounts for nearly 40 percent of the global FDI while it receives 20 percent of foreign investment. The EU is also Vietnam-Spain trade records impressive growth Preliminary statistics released by Spanish Customs showed that the figure represents a year-on-year increase of 6.48%. Its exports were largely mobile phones and their accessories, garments, footwear, spare parts, coffee, and mechanical equipment, while imports were organic chemicals, seafood, tanned leather, plastics, dyes and pharmaceuticals. Two-way trade hit 1 billion EUR for the first time in 2008 and US$2 billion in 2012. In recent years Vietnam attends the world’s largest tourism fair in Berlin Thirty Vietnamese travel operators attended the 48th International Tourism Bourse (ITB) – the world’s largest annual event of its kind which opened in The five-day event attracted tens of thousands of travel agencies and tourism companies from 189 countries worldwide, to exhibit and promote their traditional tourism packages and products. The fair has focused on organising forums to develop tourism and attract tourists from websites. According to the organising board, European travel companies accounted for nearly 75% of the fair participants while those from This year’s fair is expected to attract approximately 170,000 officials, entrepreneurs and visitors. Vietnamese products highlighted at Foodex 2014 Vietnamese businesses attended an international food and beverage exhibition (Foodex Japan 2014), held in Makuhari Messe from March 4-7. The four-day event provides an excellent opportunity for potential Japanese partners to learn more about Ministry of Agriculture and Rural Development (MARD) Promotion Trade Centre said 14 Vietnamese enterprises will display a wide range of Vietnamese specialties including agricultural and seafood products, fruits and vegetables, processed cashew nut, processed rice food, and specialty Phu Quoc fish sauce. Vietnamese businesses hope to establish relations with Japanese importers, expand the Asian market, develop new export items, sign valuable export contracts and promote Foreign visitors, mostly representatives from Japanese businesses visited Vietnamese ambassador to Japan Doan Xuan Hung affirmed that Vietnam-Japan relations have thrived over the years. Despite Hung said that Notably, Vietnamese products with Japanese standards will be exported to a third nation, not in the Japanese market, he said. He added that if the Japanese market has a demand for importing This year’s fair is expected to attract more than 70,000 visitors and businesses from more than 82 nations and territories worldwide. Businesses miss Tra fish export opportunity While the import of Tra fish into the The Vietnam Association of Seafood Exporters and Producers (VASEP) said a number of processing plants in the Mekong Delta region have cut back on production, by as much as half, due to material shortages. Only proactive businesses with good inventory models in place can keep production at full steam, the VASEP said. VASEP Vice Chairman Duong Ngoc Minh said tra fish material costs currently stand at a reasonable VND24,000 per kilogram but there is no available material for processing businesses and the shortage is forecast to last through the remainder of the year. Another contributing factor is that farmers let cultivation slide by 60% compared to last year. Production of Tra fish in March was 60,000 tonnes, much lower than the 150,000 tonnes recorded in March 2013. In addition, the recent prolonged cold weather has affected the reproductive ability of Tra fish, resulting in a sharp reduction of fry. Vietnam attends int’l furniture fair in Malaysia The event, sponsored by United Business Media in Malaysia, has attracted more than 500 enterprises from 13 countries and territories including the US, China, the UK, the Republic of Korea (RoK), India, Spain, Singapore, Indonesia, Iran, Hong Kong, Taiwan, and Vietnam. Covering 80,000 square meters, the fair showcases a wide range of the latest products including furniture for offices, living rooms, bedrooms, kitchens, children's rooms, and furniture accessories. At the To date, the company’s products have been exported to markets in the Vuong Dinh Sac, director of the company, said he hopes through the event, his company will have the opportunity to expand its market to Southeast Asian countries, particularly Addressing the event, Mohd Ridzal Sheriff, Deputy Secretary General of Trade under the Ministry of International Trade and Industry of Malaysia, stressed the fair aims to provide a strategic platform for worldwide furniture suppliers, customers, restaurants, hoteliers, architects and interior decorators to establish more business networks. MIFF Chairman Tan Chin Huat expressed his hope that through the event, the Malaysian furniture industry will see an at least 5% increase in its sales this year. In 2013, Top 10 export commodities to West Asia Mobile phone handsets topped the list of 10 leading Vietnamese exports to the United Arab Emirates (UAE) in 2013, earning US$3.42 billion, according to the Ministry of Industry and Trade. The ministry quoted the United Nations Commodity Trade Statistics Database (COMTRADE) statistics, as saying the UAE’s telephone import turnover hit a record high of US$6.8 billion in 2012, accounting for 22% of its total import value, and Vietnamese phones were getting the lion’s share in this market. The top 10 key exports to West Asia are mobile phone handsets and components, fibers, computers - electronics and spare part, machinery and equipment, seafood, milk and dairy products, textiles, footwear, clothing, and pepper. Phones, computers, electronics and spare parts are mainly exported to the UAE, Textile exports continue to rise The garment and textile industry in the first two months of this year gained a year-on-year increase of 30.1 per cent in export value to reach US$3.2 billion. According to the Ministry of Industry and Trade, the industry had a surge of 44.9 per cent in export value in February to reach $1.3 billion. The ministry said the textile and garment industry firms have started large projects to expand their production and receive new business opportunities this year, Chinhphu.vn reported. So far, many enterprises have signed export contracts to be completed by the third quarter of this year, the ministry said. Nguyen Thi Thanh Huyen, general director of the Garment 10 Corporation, said the company had signed many export contracts since early this year. It had increased investments to install more production lines to make high-quality products in its factories in the Thai Binh, Thanh Hoa and Quang Binh provinces, the Vietnamplus online newspaper reported. The company had also renewed the organisation of production to increase capacity, she said. Nguyen Ngoc Lan, deputy general director of Nha Be Garment Corporation, said his corporation had, like other Vinatex members, got enough orders to manufacture products the whole year. So he expects Nha Be to have better export results this year compared with last year. Nha Be has invested several times in developing its production capacity to become an original design manufacturer. An original design manufacturer (ODM) is a company which designs and manufactures a product which is specified and eventually branded by another firm for sale. Now many foreign customers want partners which can provide ODM services to help them save money and time, he said. Viet Nam Textile and Garment Group (Vinatex) general director Tran Quang Nghi said the export products of Vinatex had reduced the use of import materials and increased products with design. So it had not only increased the export value but also increased the added value of the products. Nghi said Vinatex had achieved its targets in the market and increased investment and efficiency with its restructuring of production and business to improve its competitiveness in the domestic and foreign markets. The improvement of the quality of production and business is a key task of Vinatex this year, according to the general director. The group expects to gain a year-on-year increase of 12 per cent in export value this year. Vinatex will promote its investments in developing materials and sub-materials this year, including solid-dyed cloth and yarn-dyed cloth, to increase the localisation rate of its products. That is one of key conditions to get more export opportunities under the Trans Pacific Partnership (TPP) Agreement, he said. The group expects the member companies to get more export orders this year due to the bright forecast for the world textile and garment market and the increase in export opportunities from TPP. Ho Thi Kim Thoa has highly appreciated Vinatex's success in equitisation and restructuring processes in the previous years and has also asked the group to focus further on the domestic market and to promote cooperation among Vinatex members this year to create a cooperative and competitive business environment. In 2013, Vinatex had reported a gain of 11.2 per cent over 2012's figure to reach $2.91 billion in 2013. Ca Mau exports soar in first two months The southernmost The revenue was mainly contributed by exports of aquatic products, at $173.53 million, followed by nitrates with $10.55 million and farm produce at $1.38 million. According to the provincial Department of Industry and Trade, aquatic products are still among the key exports shipped to the province's main importers, such as the Thus, it is vital to tighten the control of the quality of input materials for aquatic exports, the department said. Further, the province is taking action to raise its export turnover to $1.1 billion this year. Gold loan rate tumbles as banks urge dong transfers Gold loans at commercial banks in Given no harsh deadlines, the State Bank of A senior official at Eximbank said that terms of gold loan contracts were quite long and clients often did not want to end contracts before their maturity. Sharing similar views, representatives of Southern Bank said it is difficult to transfer gold loans to dong loans. But the picture seems to improve when gold prices fall. At lower gold prices, clients would benefit from the lower values of gold loans. For instance, Phu Nhuan Jewellery Joint Stock Company (PNJ) closed gold loans worth VND567 billion (US$26.87 million) at Asia Commercial Bank and Sacombank. Besides pushing to wipe the slate clean, banks also cut purchases of gold due to potential risks of movements of gold. Statistics from the central bank's In 2013, the State Bank of The sales reduced local gold prices to VND34.6-34.7 million (US$1,641-1,646) per tael at the end of 2013, down VND12 million ($569.28) per tael, or 24 per cent against the year-end in 2012. Each tael equals 1.2 troy ounces. Rice exports hit nearly 150 million USD in February The VFA also reported that the average price rose by 29.89 USD per tonne, with the FOB (free on board) price standing at 445.03 USD per tonne. The result pushed the country’s total rice export volume in the first two months of this year to 637, 756 tonnes, worth 274.62 million USD, it said. However, the figures represented a drop of 13.53 percent in volume and 14.2 USD per tonne in price, added the association. The VFA also forecast that March’s export volume will reach 500,000-550,000 tonnes. As much as 49 percent of Meanwhile, the domestic rice price was stable but rather high in February and is likely to decrease in the coming time after all rice destined for the Experts said in the first quarter of this year However, cross-border trading to According to the Department for Cultivation under the Ministry of Agriculture and Rural Development, in the 2013-2014 winter-spring crop, the rice bowl of Mekong Delta region has a total rice field area of 1.6 million hectares with an estimated output of nearly 11 million tonnes, with 4.27 million tonnes ready for export. -VNA In March and April, the region is likely to harvest about 7.5 million tonnes of rice, the department said. According to the VFA, price stabilisation measures should be applied to avoid a plunge in the domestic rice price, as the global value is forecast to drop sharply when Saigon Hi-Tech Park (SHTP) in Ho Chi Minh City is a major highlight in terms of investment attraction, with 60 existing projects and total investment capital of about 2.22 billion USD, according to Vietnam Economic News newspaper. Moreover, since it was established in October 2002, its export revenues have amounted to almost 6.476 billion USD, added the newspaper. The Ministry of Science and Technology said that ground clearing works at SHTP had almost been completed and that 778.9ha of land had been withdrawn for construction of the park accounting for 97.3 percent of all 801ha. Last year 21 domestic and 39 foreign investors visited the park to seek investment and cooperative opportunities in micro-electronics, information technology, telecommunications, precision engineering, biotechnology, and others. The SHTP Authority issued investment certificates to six new projects with total capital of 125.9 million USD in 2013, representing a 50 percent increase on capital over 2012 despite the decline in the number of new investors. Production revenues reached about 2.296 billion USD, including nearly 2.282 billion USD from exports, a 25.9 percent increase, and almost 1.87 billion USD, a 4.3 percent increase from last year. Since 2002 production revenues have amounted to almost 6.533 billion USD, including nearly 6.476 billion USD in exports and 5.794 billion USD in imports, and creating 17,619 jobs. Currently 57 businesses and research centers are operational in the SHTP. Apart from world-class high-tech groups and companies such as Intel, Jabil, Nidec, Datalogics and Microchip, the SHTP has received many domestic leading science and technology companies such as FPT, Hutech, CMC and HPT. Many businesses and research centers in the park have achieved notable success in science and technology research such as Nanogen, which made public its new drug which treats liver cancer in an effective, short and cheap manner. The invention received an exclusive patent in the US and is now under the process of franchise negotiations with multinational companies. The US-Vietnam Photonics Company Limited (UVP) has invented FRED chips and shipped its first batch, which was also Vietnam’s first semiconducting products, to Hong Kong-China in September 2013. SHTP Authority Head Le Hoai Quoc said that the authority would continue investment promotion activities this year. Potential investors would come from the US, Japan and the Republic of Korea, who accounted for a vast majority of business visitors to the SHTP last year. In addition, the SHTP Authority would continue creating a favorable environment, regarding infrastructure and a good legal corridor, for research & development (R&D) and venture investment, while at the same time improving the quality of human resources. Employees who hold university and post-graduate degrees accounted for only more than 10 percent of the total workforce in the SHTP in 2010. However, the percentage soared to 30 percent in 2013 providing an outstanding advantage for the park. Following its development directions until 2020, the SHTP is expected to become a major hi-tech center in Ho Chi Minh City and Vietnam providing science and technology invention opportunities. In doing so, the park would help Ho Chi Minh City keep up with other big cities in Southeast Asia.- Rail sector looks to get back on track Transport Minister Dinh La Thang has urged the State-owned Vietnam Railways Corporation (VNR) to drastically renovate its operations in order to stay competitive with other forms of public transport. At a recent conference launching tasks for the corporation, Minister Thang pointed out the fact that the railway construction is lagging behind schedule, while advanced technology has not been applied in selling tickets and patrolling railroads. The firm reported that in 2013, the volume of its passengers was equal to that of 2012. The number of short-distance travellers rose 15 – 20 percent, but the figure of long-distance ones fell. Pham Van Son, Deputy General Director of VNR’s affiliate Saigon Railway Passenger Transport Company, said to improve performance, his firm will undertake more market research, enlarge the ticket selling network, adjust ticket prices to reflect the market change and raise the service quality. Tran Ngoc Thanh, head of the VNR’s board of executives, said they will speed up technology application in 2014. Notably, cutting edge technology will be employed to sell ticket online from August. The sector aims at increases of 3 percent in passenger and goods volumes and 5 percent in revenue this year.- Vietnam – Spain trade records impressive growth Vietnam - Spain trade in goods surmounted a record amount of 2.16 billion EUR last year, with rises in exports from both sides. Preliminary statistics released by Spanish Customs showed that the figure represents a year-on-year increase of 6.48 percent. Vietnam shipped goods valued at over 1.9 billion EUR to the southern European nation, up 4.9 percent, while importing more than 245 million EUR, a rise of 20.3 percent. Its exports were largely mobile phones and their accessories, garments, footwear, spare parts, coffee, and mechanical equipment, while imports were organic chemicals, seafood, tanned leather, plastics, dyes and pharmaceuticals. Two-way trade hit 1 billion EUR for the first time in 2008 and 2 billion USD in 2012. In recent years Vietnam has consistently enjoyed high trade surplus. Mekong Delta aims for 1.3 million tonnes of tra fish output Localities in the Mekong Delta region plan to produce up to 1.3 million tonnes of tra fish this year, aiming for 650,000-680,000 tonnes in export volume and 1.75 billion USD in value. According to the Vietnam Tra Fish Association, in order to reach the target, the region will expand its farming area to 5,500-6,000 hectares, focused in the major aquaculture provinces of Dong Thap, An Giang, Ben Tre, and Can Tho city. Meanwhile, the localities have upgraded tra fish breeding production facilities to raise their breeding capacity to 2.5-3 billion fry per year. They will also sign contracts with processors to ensure stable markets for tra fish, the association said. Local producers will also broaden the domestic market, while increasing the application of advanced technologies used in production, enhancing the quality of tra fish and diversifying processed products, it added. In addition, local governments will help farmers and enterprises update the situation of global and domestic markets and strengthen the market forecast in order for them to make proper adjustments. Environmentally-friendly farming models will also be encouraged, the association added, proposing that the government issue national technical standards in the field as soon as possible, creating a basis for the management of tra fish quality and allowing farmers to apply international standards in tra fish farming. Increased FDI fuels industrial property market in Vietnam Increased foreign investment has fuelled the industrial property market in Vietnam, reported the English language newspaper Vietnam Investment Review. According to Tran Duy Dong, Deputy Director of Economic Zone Management Department under the Ministry of Planning and Investment (MPI), improved FDI attraction has pushed the industrial property market forward. “Investment in industrial zones last year revealed positive trends. Giants such as Samsung and LG have had their investments echoed, with satellite projects following in their wake,” Dong said in a seminar on investment promotion to industrial zones (IZs) in Vietnam late last year. The MPI’s Foreign Investment Agency reported that the total newly committed foreign direct investment (FDI) to Vietnam reached 21.6 billion USD in 2013, up 54.5 percent year-on-year. Around 80 percent of this figure was focused on the manufacturing sector, driving demand for industrial locations. Samsung Electronics invested in a 2 billion USD factory in Yen Binh IZ in the northern province of Thai Nguyen and is currently expanding its 1 billion USD factory in Yen Phong IZ in the neighbouring Bac Ninh province. Meanwhile, LG Electronics also invested in a 1.5 billion USD electronics factory in Trang Due IZ in the northern port city of Haiphong. “When a foreign investor builds a factory in Vietnam, it’s best for them is to build it in an IZ. We’re upbeat about the development of IZs in the year to come, as FDI projects predicted to come into the country are on the rise,” said Nguyen Thanh Phuong, General Director of South Dinh Vu IZ in Hai Phong. CBRE Vietnam forecasted that the IZ real estate market would remain busy because Vietnam had emerged as an attractive destination for foreign investors. With good infrastructure, good logistics networks and proximity to China and international ports and airports, Hanoi and Hai Phong will remain attractive IZ destinations. “With LG’s recent announcement, it is anticipated that a shortage of ready built factories in Hai Phong will occur,” CBRE Market Review cited. The last quarter of 2013 saw more US investors seeking investment opportunities in Vietnam as the anticipated Trans-Pacific Partnership trade agreement is slated for signing this year. Vietnam is currently home to 185 IZs and export processing zones (EPZs), with 104 others in the pipeline. In the south, Dong Nai has received more enquiries for both land and ready built factories due to existing and fourth coming infrastructure improvements such as the Long Thanh - Dau Giay highway. In the north, new investors have tended to move either to Hai Duong or Hung Yen provinces, to take advantage of cheap labour or to IZs in Hai Phong where tax incentives are available. “With the incoming factory from LG Electronics, land leasing and factory leasing prices in this and the surrounding area may increase in 2014,” CBRE predicted. Several regulations intended to improve the investment climate took effect from January 2014, and FDI figures are likely to remain positive, with a focus on business process outsourcing, IT and fast moving consumer goods sectors.- Trade unions call for company cooperation Trade union experts from Vietnam and other Asia-Pacific countries gathered in Ho Chi Minh City on March 4 to share experience between unions and businesses. The seminar was jointly held by the Vietnam General Confederation of Labour (VGCL), the Japanese Federation of Textile, Garment, Chemical, Food, Trade and Service Workers’ Union , and the Asia-Pacific Labour Network. Speaking at the event, Vo Van Nhat, a representative from the VGCL, highlighted Vietnam’s view of building a harmonised, stable, advanced and mutually trusting relationship between trade unions and companies. At present, many free trade agreements stipulate improved workers’ rights and the role of trade unions have grown in influence, he said. Participants said a fair balance between the interests of employees and employers is a decisive factor for the success of any business. When the relationship is built on fairness, both sides’ interests are guaranteed. To enhance this partnership, trade unions should perform its role of encouraging workers to actively contribute to the company’s development while protecting their legitimate rights and interests, they said. According to Vice Chairman of the Japanese federation Shoichi Hachino, Vietnam, in its international integration with the market and participation in international and regional organisations, it has promoted its economic development, especially in trade. More and more trans-national companies have invested in Vietnam, creating severe competition among businesses, he said, adding that to overcome this challenge, companies need to have sustainable and independent strategies and strong bonds with unions, he said. The Vietnam General Confederation of Labour has set a target of having trade unions in all domestic businesses and 65 percent of foreign invested ones.- Vietnam plan B for risk wary Japanese investors Due to rising labour costs and the growing political crisis in Thailand, more Japanese companies are pursuing a Thailand plus one strategy, which could benefit Vietnam’s attraction of foreign direct investment. Yasuzumi Hirotaka, chief representative of Japan External Trade Organisation’s (JETRO) office in Ho Chi Minh City, said increasing numbers of Japanese companies in Thailand had adopted the strategy to avert the risk of concentrating their production in one country. The strategy means Japanese companies will shift part of production from Thailand to other Southeast Asian nations to take the advantage of political stability and lower labour costs. “This is a chance for Vietnam to lure investment from Thailand,” said Hirotaka. “When seeking investment from Thailand, Vietnam should not only attract investment from Thai companies, but also from Japanese companies in Thailand,” he added. In recent years, Thailand has been the most attractive place in Southeast Asia for Japanese companies. Japan’s multinational companies like Nissan, Toyota and Honda expanded investment in Thailand when they used the strategy of China plus one to avert risks of growing tension between China and Japan and rising wage costs in China. But now, the new strategy reflects rising wage costs in Thailand. According to a recent JETRO survey of Japanese companies in 20 countries in Asia Pacific regions late last year, the average annual wage of a worker in the manufacturing sector in Thailand was 2.3 times higher than in Vietnam. And now, Japanese investors are becoming increasingly concerned over the current political crisis in this country, which began last October. Kyoichi Tanada, president of Toyota Motor Corp in Thailand was quoted by Bloomberg as saying that long-term investors may consider countries including Indonesia and Vietnam because of the unrest. Last month, Toyota, the largest automobile manufacturer in Thailand, revealed it could reconsider investing up to $609 million in Thailand, and could even cut production, if political unrest dragged on. Statistics from JETRO also showed that Japan’s direct investment inflows into Thailand declined in 2013, but the investment flows to Vietnam increased. Hirotaka suggested Vietnam should hold more investment promotion activities in Thailand to attract Japanese companies. “We could form a supply chain between Thailand and Vietnam,” he noted. JETRO has already started encouraging Japanese companies in Thailand to expand investment projects in Vietnam as part of their Thailand plus one strategy. This organisation published three articles in InfoBiz Thailand, a Japanese magazine for Japanese companies in Thailand, to promote investment expansion in Vietnam. Atsusuke Kawada, chief representative of JETRO’s Hanoi Representative Office, said last year the organisation held a trip for some 50 Japanese companies to explore investment opportunities in the north of the country. He added JETRO would continue to organise Vietnam tours for Japanese investors this year. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR |
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