BUSINESS IN BRIEF 14/11

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Vietnamese goods promoted in France



A week-long promotion of Vietnamese goods has been launched at Hyper Casino Italie in Paris on November 9.

It aims to strengthen cooperation between Vietnamese suppliers and the supermarket chain under Groupe Casino and other supermarkets in Europe.

Visitors to the supermarket are introduced to Vietnam’s key products including rice, shrimp, lotus tea, cuttle-fish, basa fish, egg noodle, girdle cake, Sai Gon beer, fruit and vegetables.

Vietnamese Ambassador to France Duong Chi Dung said the event provides a good opportunity for Vietnamese businesses to meet French retailers and consumers.

Dang Hoang Hai, Head of the Department for European Market under the Ministry of Industry and Trade (MoIT) said the promotion will bring benefits for both countries.

Vietnamese businesses, for their part, will learn how to penetrate the European market while Groupe Casino will gain access to different kinds of high quality goods at reasonable prices from Vietnamese suppliers.

PM approves results of the road project

Deputy Prime Minister Hoang Trung Hai has approved the results of negotiations with a foreign partner, the content of a loan agreement and other documents related to a road building project in northern mountainous provinces.

The Deputy PM has authorized the Governor of the State Bank of Vietnam to sign the loan agreement with a representative from the Asian Development Bank (ADB).

Six provinces such as Cao Bang, Bac Kan, Ha Giang, Tuyen Quang, Yen Bai and Lao Cai will benefit from the project which is divided into two phases.

In phase I (from 2012-2017), a number of roads with a total length of 300 kilometers will be upgraded at an estimated cost of US$109 million, of which US$80 million is sourced from the ADB loan.

Indian companies seek distributors in Vietnam

Representatives from 30 leading Indian enterprises attended a Vietnam-India trade seminar in Ho Chi Minh City on November 9 to strengthen investment and trade relations between the two countries.

The Indian delegation, which includes enterprises operating in finance, mechanical engineering, energy, machinery, wood decoration, cosmetics, functional food, agriculture and education, expected to seek cooperative opportunities with Vietnamese retailers, wholesalers, importers and exporters.

A representative of Sylvester Company, Mark S. Fernandes said his company is looking for Vietnamese seafood providers to export 100-200 tonnes per month to and businesses involved in transport and seaport development projects.

Deputy Secretary General of the Vietnam Chamber of Commerce and Industry Vo Tan Thanh said Vietnam and India have seen remarkable developments in trade and investment.

India has become one of the Vietnam’s leading export markets, importing key staples such as coal, black pepper, electronic components, rubber and footwear. The two countries are making efforts to reduce Vietnam’s trade deficit and increase two-way trade value.

In the past ten months of 2011, Vietnam-India bilateral trade value reached nearly uS$3 billion, a year-on-year increase of 40 percent.

Luxembourg businesses explore southern hub potential

Representatives of businesses in Ho Chi Minh City met with their counterparts from the Grand Duchy of Luxembourg on November 9 in the city, where a municipal official called for investment from the western European country.

The meeting was held by the municipal Business Association to prepare for Luxembourg Grand Duke Henri’s working visit to the city. Participants included Luxembourg’s Minister for the Economy and Foreign Trade Jeannot Krecke.

Lu Thanh Phong, Vice Director of the municipal Department of Planning and Investment, said investors may be given incentives in corporate income tax ranging from 10-20 percent, and be exempt from this tax in the next nine years.

Phong added that investors are also exempted from import taxes on machinery used to create immovable assets and on construction materials which have not been produced domestically and are used to create immovable assets.

On this occasion, the Luxembourg businesses shared their experience in applying for business visas in foreign countries and experience in exporting to Luxembourg and European countries.

The representatives also expressed their wish to invest in the fields of electronics, mechanics, pharmacy, metro and elevated railway.

Seminar promotes Vietnamese rice’s trademark

Measures to promote trade, add value to domestic rice, support businesses and farmers and improve the competitiveness of farm products were discussed at a seminar in Soc Trang province on November 9.

The seminar, jointly held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Soc Trang provincial People’s Committee, was part of the 2011 Vietnam Rice Festival.

The event helped affirm the status of Vietnamese rice, define its position in the world market and work out its import-export strategy until 2015.

Participants also provided solutions to improve the value chain and build a trademark for the Vietnamese rice.

The seminar provided an excellent opportunity for agricultural experts and regional businesses to meet and share experience with administrative agencies.

Foreign language skills essential for effective money borrowing

Leading speakers from the Asia Pacific Loan Market Association (APLMA) shared their expertise on practical legal issues concerning international loans and forms of guarantee for them at a workshop held in Ho Chi Minh City on November 9.

Representatives from more than 200 banks and businesses attended the event organized by the Vietnam Chamber of Commerce and Industry.

APLMA experts focused their presentations on APLMA standard contracts and documents, practical legal issues related to the structure of syndicated loans, and other popular loan forms as well as guarantee modes.

Lawyer Abdul Jabbar from Rajah & Tann law firm described poor foreign language skills as the major barrier to borrowing loans from overseas.

Exports to RoK sharply increase

Vietnam’s exports to the Republic of Korea (RoK) recorded an impressive year-on-year growth of over 60 percent in the fast ten months to reach US$3.86 billion.

Experts attributed the sharp increase to the RoK’s commitments in the ASEAN-RoK Free Trade Agreement (AKFTA).

Commodities with high export growths included garment, footwear, woodwork, confectionary, seafood and coffee.

The Vietnam General Department of Customs said garment exports to the RoK hit US$700 million by the end of October, representing a record year-on-year increase of 140 percent.

The figure is expected to be US$800 million for the whole year, making the RoK the fourth largest importer of Vietnamese garment products, after the US, the EU and Japan.

Seafood is also one of Vietnam’s strengths in the RoK market with an export turnover of US$345 million, up over 38 percent. The RoK is now the largest mollusk importer of Vietnam.

Vietnam sees a bigger opportunity for fruit and vegetable exports to the RoK. In the ten-month period, it earned US$15.5 million from exporting to this market banana, pineapple, dragon fruit, sweet mango, durian and canned and dried fruits, doubling the figure of the same period last year.

Hanoi craft show attracts businesses, artisans

Thousands of handicraft products are on display at over 400 pavilions at the Hanoi Craft Show 2011 that opened in the capital city on November 8.

The event drew the participation of businesses and artisans from 19 cities and provinces nationwide.

During the five-day event, there will be also seminars on new trends of design and potential for exporting handicraft products, especially to the Northern European countries.

The Hanoi People’s Committee presented 34 certificates of outstanding rural industrial products to artisans at the opening ceremony.

Metfone wins world communication award 2011

Metfone, a Cambodia-based affiliate of the Vietnamese military-run telecom group Viettel, won the “Best operator in a developing market” award at the World Communication Awards 2011 ceremony held in London on November 7.

The award aims to honour operators who possess innovative and unique solutions and overcome difficulties of a developing market to bring values to the society, community, customers and their own businesses.

Officially launched in 2009, Metfone is now the largest telecom service provider in Cambodia, accounting for 48 percent of the market share with over 7 million subscribers.

SOS for struggling firms

Government tax incentives will help firms and individuals weather the economic storm.

On November 4, 2011 the government enacted Decree 101/2011/ND-CP presenting diverse tax incentives to help firms and individuals keep their heads above water.

Decree 101’s prominent feature was it rendered 30 per cent corporate income tax (CIT) cuts payable in 2011 to small- and medium-sized enterprises (SMEs), excluding taxable incomes gained from lottery, property, finance, securities, banking and insurance services trading, as well as those derived from the production and trading of products and services subject to excise tax payments.

The tax exemptions would not be applied to first-class and special class businesses belonging to economic groups and corporations, and parent company subsidiaries in which parent companies are not SMES in size and hold over 50 per cent of subsidiaries’ equity capital.

Decree 101 also slashes 30 per cent of CIT in 2011 for labour intensive firms operating in agro-forestry-seafood processing, textile and garment, footwear, electronic component production, and socio-economic infrastructure construction.

The value added tax and personal income tax payment (PIT) will be halved from July 1 to December 31, 2011 for households and individuals providing accommodation to workers and students, and those working in baby sitting and catering services provision to workers.

To be eligible for tax reductions, households and individuals must undertake to keep the rent, baby-sitting and food prices stable at the same level as those in December 2010.

Besides, Decree 101 offers PIT exemptions from August 1 to December 31, 2011 towards dividends gained from securities or stock purchases, except for dividends from joint stock banks, investment funds and credit organizations, 50 per cent PIT cuts also during the period for individual securities transfers.

PIT exemptions are available for individuals having incomes from wages, pay and business activities subject to level 1 PIT partial progressive tariff payment regulated in the PIT Law.

The decree, to be effective from December 20, 2011, is expected to help firms and individuals survive in the current tough business climate.

Indian companies seek distributors in Vietnam

Representatives from 30 leading Indian enterprises attended a Vietnam-India trade seminar in Ho Chi Minh City on November 9 to strengthen investment and trade relations between the two countries.

The Indian delegation, which includes enterprises operating in finance, mechanical engineering, energy, machinery, wood decoration, cosmetics, functional food, agriculture and education, expected to seek raw material and construction material providers as well as cooperative opportunities with Vietnamese retailers, wholesalers, importers and exporters.

Representative of Sylvester Company, Mark S. Fernandes said his company is looking for seafood providers to export 100-200 tonnes per month to India, alongside cooperating with Vietnamese businesses in transportation, investment and seaport development.

Deputy secretary general of the Vietnam Chamber of Commerce and Industry Vo Tan Thanh said Vietnam and India had seen recent developments in trade and investment.

India has become one of the Vietnam’s leading export markets, importing key staples such as coal, black pepper, electronic components, rubber and footwear. The two countries are making efforts to reduce Vietnam’s trade deficit and increase two-way trade value.

In the first ten months of 2011, Vietnam-India two-way trade value reached nearly $3 billion, a year-on-year increase of 40 per cent.

TransAsia Airways operates new direct route Hanoi - Kaohsiung

For the increasing traffic between Vietnam and Taiwan, the Taiwanese TransAsia Airways officially operates Hanoi – Kaohsiung route from November 10, 2011.

With two lights per week on Monday and Thursday by Airbus A320, the new flights can bring 12 business seats and 138 economy seats which depart Kaohsiung at 5.20pm and arrive Hanoi at 7pm and depart Hanoi at 8.20pm and arrive Kaohsiung at 11.30pm.

The new direct route of TransAsia Airways is not only planned to carry passengers directly from Hanoi to Kaohsiung for the increasing for demand for commercial, investment, tourism and labour exchange purposes, but also a further step in Vietnam – Taiwan relationship.

Kaohsiung is the second biggest city in Taiwan after Taipei. The crowded commercial economy center of the south with population of 1.51 millions is one of the most attractive destinations in Taiwan, a beautiful city with big commercial gateway.

At the present, there are more than 30,000 Taiwanese living and working in Vietnam. The number of Vietnamese community living in Taiwan is more than 200.000 including commercial community, students, and a majority of labour workers and Vietnam brides marrying Taiwanese.

TransAsia, established in 1951, is one of the first non-government owned airlines in Taiwan. At present, TransAsia Airways is operating eight domestic routes in Taiwan, 10 routes to different cities of China and 10 international routes to other countries in the area (Korea, Macao, Vietnam and Southeast Asia).

In Vietnam the airline’s ticket sales office is now open in Hanoi at 4th floor, Dao Duy Anh Tower, 9 Dao Duy Anh, Hanoi. Tel: (04) 3577 2888; Email: ge.han@transviet.com.

Automakers compete in small-car segment

Automakers in the country are competing harshly with each other on the small-car market as this segment is contributing a large portion to their sales volumes given the rising trend in compact vehicle consumption in big cities.

Ford Vietnam, for instance, has sold nearly 1,300 units of the global small car line Fiesta debuting this May on the local market as of now. The compact model’s contribution raised the company’s total number of vehicles sold in the January-September period to 6,060 units, or a rise of 39% year-on-year.

Laurent Charpentier, managing director of Ford Vietnam, said the Fiesta model has quickly become the firm’s leading car line thanks to its fuel efficiency and smart technologies.

Meanwhile, Toyota Vietnam has launched into the market the Yaris car line imported from neighboring Thailand since March. Although still exploring the market, the company has sold 784 Yaris cars as of October-end.

Still, the firm’s compact car model Vios recorded the strongest consumption. Over 4,640 units of this line were sold in ten months.

However, the leading model on the small car market should be Kia Morning assembled and distributed by Truong Hai Auto Joint Stock Co, better known as Thaco. According to the statistics of the Vietnam Automobile Manufacturers Association (VAMA), some 5,530 Kia Morning cars were consumed in the first ten months of the year, which explained why Thaco in some previous months surpassed Toyota Vietnam to become the leading auto firm on the local market.

Obviously, the small car lines are being consumed stronger in the Vietnamese market. The compact fuel-efficient vehicles are suitable in crowded urban areas.

To catch up with this trend, other auto firms have invested to bring small car models to Vietnam.

Vina-Mazda as the official distributor of Mazda Japan after a short period importing cars to explore the market has opened the first assembly factory in Vietnam at the Chu Lai Open Economic Zone in Quang Nam Province.

Notably, Vina-Mazda chose the compact car line Mazda 2 as the first model to be assembled in the factory, planning to turn out 500 units from now to the year’s end and 2,000 units in 2012.

Meanwhile, GM Vietnam, the new name of Vietnam Daewoo Motor Co. from September, saw a good consumption of the small car model Spark with nearly 2,880 units sold as of last month. After the rename, GM Vietnam also released the Mini Spark model.

Hyundai Thanh Cong, distributor of Hyundai Korea, also has joined the competition with Hyundai i10.

Inter-bank rates cool down

Interest rates on the inter-bank market have shown signs of cooling down as a few banks have reported borrowing money from the market with lending rates lower than last month.

According to the central bank, last Friday witnessed the overnight rate dropping to the lowest level of 13.8% per annum and the 12 month term rate of 15.99% annually as the highest. This level was down by 4.41 percentage points compared to 24 hours earlier.

The overnight loans accounted for a considerable VND12.150 trillion of a total of over VND27 trillion. Meanwhile, the 12-month term set at steeper rates has a much more modest volume, recorded at only VND338 billion last Friday.

Trinh Van Tuan, general director of Oriental Commercial Bank (OCB), said that interest rates in the inter-bank market had sharply declined, hovering around 16%-22% yearly subject to lending terms and borrowers’ health status. Large banks can approach low-cost loans, while small banks have to accept higher lending rates and hand in valuable papers to bigger lenders as mortgage.

However, local credit institutions have no difficulty applying for recapitalizations from the central bank, noted a banker.

For instance, the central bank permits banks to supplement credit documents after receiving recapitalizations and this becomes a life buoy for a few banks facing liquidity risks, added the banker.

Via open market operations, a large volume of money was pumped into the market by the central bank in the first week of this month, reaching around VND32.4 trillion. Thanks to this huge amount, liquidity problems at small banks have been partially eased.

Ocean Bank targets maritime customers

Ocean Commercial Bank on Tuesday inaugurated a branch in Nha Trang City to better services for corporate customers in the fields of maritime, shipbuilding, petroleum and precision engineering in the central coastal Province of Khanh Hoa.

This is the 18th branch of the bank in Vietnam, providing a wide range of banking services like credit, currency, foreign exchange and payment.

On the inauguration day, the lender signed several deals with Vinalines Nha Trang Maritime Company and Cam Ranh Shipyard. The bank is set sign a cooperation agreement with PTSC Shipyard at the inauguration of its Dong Nai branch this Friday.

The lender also expects to open two more branches in Thai Binh and Binh Dinh provinces within this month, bringing the total number of its banking units to over 100 nationwide.

Ocean Bank as of the end of the third quarter obtained VND582 billion in profits and it projected to gain VND800 billion this year.

Many veterinary drug producers on verge of dissolution

Many enterprises working in the veterinary drug industry would be forced to dissolve their business in case their products failed to meet the Good Manufacturing Practice (GMP) standards.

Local veterinary drug producers were unable to construct GMP factories due to many reasons. Phan Minh Nghi, director of Minh Ngan Veterinary Medicine Trading Co. Ltd., said the firm could not switch its production to GMP standards as requested by the Ministry of Agriculture and Rural Development.

“Though having plans for a GMP factory construction, we lack capital to complete the project due to the economic downturn,” said Nghi.

Expenditure for building a GMP drug plant is very high, with up to VND50 billion required for a production line. Also, enterprises cannot afford the high lending rate at above 20%, said the director of a HCMC-based veterinary drug company.

According to the Ministry of Agriculture and Rural Development, there are currently some 150 veterinary medicine producers. It is estimated that there will be only 15 GMP veterinary drug plants that remain operational by December 31, 2011.

Regarding the timeline to implement GMP standards, producers of drug injection, solution and powder must apply the standards by the end of 2010. If they failed to do so within the time limit, their products would be allowed for distribution until December 31, 2011, as for injection and solution, and December 31, 2012, as for powder drugs.

As for production lines of injection mixed with powder and other drugs, the applicable deadline is the end of 2012. Exceeding this time limit, these products will be distributed until December 31, 2014.

Central bank refutes rumors of discontinuing financial firms

The banks supervising agency of the State Bank of Vietnam on Tuesday denied recent rumors of abandoning financial companies in the country.

The agency made it clear via Tuesday’s announcement that it aims to reduce gradually ownership of State-run corporations and groups in the companies.

The State Bank has so far allowed the establishment of 18 financial companies, including six foreign-invested firms, and eight companies with their shareholders being State-run corporations and groups that hold a stake of more than 25%.

The Vietnamese Government has already asked State-run corporations and groups to cut their investments into fields out of their major business areas, especially to reduce their ownership in finance, banking and insurance.

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