BUSINESS IN BRIEF 1/1 – VietNam Breaking News

Criteria for recognition of high-tech agriculture zones

The Prime Minister has signed a decision on criteria and procedures for recognition of high-tech agriculture zones.

The recognised zones are centralised production areas in which high technologies are applied to produce one or several agricultural goods which ensure high yield, quality and added values and be friendly to the environment, according to the Vietnam Government Portal.

Production and consumption activities are part of the value chain in which enterprises and co-operatives are indispensible.

Applied technologies must be advanced, biological, environmentally-friendly ones that help elevate added values to agricultural products.

The technologies must also be applied in industrial scale to improve farming effectiveness, raise products’ values and elevate the productivity.

The hi-tech agricultural zones must have suitable natural conditions and technical infrastructure to facilitate production.

The Municipal and provincial People’s Committees of centrally-governed cities and provinces are authorised to decide the recognition of hi-tech agricultural zones.

Economy may expand 6.7-6.8 percent in 2016

Vietnam’s economy may grow 6.7-6.8 percent next year, according to the National Financial Supervisory Commission (NFSC).

The total social investment is expected to account for 31 percent of the GDP thanks to the world’s higher economic growth, domestic sustainable macro-economy and opportunities from completing the Trans-Pacific Partnership (TPP) negotiations, the Vietnam Government Portal quoted the commission as saying.

In addition, measures to restructure the banking system and deal with bad debt will help strengthen the financial system and increase the credit supply for private sector.

Exports will achieve higher growth rate compared to 2015 thanks to number of free trade agreements taking effect in 2016, expanding markets for such key commodities as garment, footwear, agricultural-forestry-aquatic products.

The laws and measures designed to further improve the business environment will help promote the capacity of the economy.

The NFSC forecasts inflation rate may be around 2-3 percent in 2016 and the trade deficit may increase to 4 billion USD in comparison with 3.2 billion USD in 2015.

Deputy PM directs 2016 tasks for financial sector

Deputy Prime Minister Vu Van Ninh has asked the Finance Ministry to execute policies favourable for businesses, thereby improving national economic competitiveness, in light of plummeting oil prices.

The ministry forecast that the economy will grow by 6.7 percent, inflation below 5 percent, and exports up 10 percent in 2016.

With the upcoming birth of the ASEAN Economic Community and the signing of free trade agreements, Vietnam is forecast to meet both advantages and challenges, including uncertain weather conditions, epidemic outbreaks, and risks in the global financial market.

The government has submitted to the National Assembly a report on State budget balance for 2016, including a revenue of more than 1,000 trillion VND (45.4 billion USD), 54.5 trillion VND (2.4 billion USD) of which is sourced from crude oil.

The estimated spending is over 1.270 trillion VND (57.7 billion USD), said Deputy Finance Minister Vu Thi Mai, adding that as of December 28, the State revenue was approximately 957 trillion VND (43.5 billion USD), or 105 percent of the estimate.

However, she also raised concern over smuggling and trade fraud, transfer pricing, wasteful allocation of funding, and slow progress of divestment and equitisation.

The Deputy PM, for his part, said a 7-8 percent increase in budget revenue collection is enough to offset deficit due to crude oil price slump.

He urged the ministry to overhaul financial mechanism in its units, regulate prices in market mechanism and continue financial reform.

Finance Minister Dinh Tien Dung, who was present at the event, directed a number of tasks for 2016, including speeding up restructuring of State-owned enterprises, improving the efficiency of using State budget, contributing to stablising the macro-economy, among others.

Vietnam Railways records success in equitisation

The State-owned Vietnam Railways (VNR) has seen certain success in its equitisation process as 23 out of its 24 subsidiaries have completed initial public offerings (IPOs) to date, said VNR Deputy General Director Doan Duy Hoach.

The only one left, Bac Giang Railways Information and Signals Company, plans its IPO on December 31, completing the corporation’s equitisation plan in 2015.

However, Hoach admitted that the IPOs failed to attract strategic investors with a majority of share buyers being employees of these companies.

Since the beginning of 2015, VNR has requested its members to work closely with consulting firms to map out and implement all equitisation activities in accordance with existing laws, he noted.

All equitised companies will start operation on January 1, 2016 as scheduled, he added.

Hai Phong Port aims for 35 million tonnes of goods

The Hai Phong Port Joint Stock Company said it aims to handle 35 million tonnes of goods in 2016, an 8.7-percent growth from 2015.

The company, which runs a group of ports in the northern city of Hai Phong, also targets 656.4 billion VND (29 million USD) in pre-tax profit, up 8.1 percent from 2015.

In its plan for 2016, the company will focus on storage building at the Dinh Vu port and IT infrastructure for Tan Vu port. It will also speed up paper work for expanding the Hai Phong port towards Lach Huyen area.

In 2015, the company handled 31.8 million tonnes, completing the yearly goal three days ahead of schedule and earned total profit of 607 billion VND (27 million USD), up 15.7 percent.

Hai Phong Port is one of the two largest ports in Vietnam.

Fruit, veggie exports hit record in 2015

Vietnam grossed 2.2 billion USD from selling fruits and vegetable abroad, a record yearly increase of 47 percent, according to the General Statistics Office.

Many fruits such as longan, litchi, and mango have gained access to selective markets like the US , the European Union, and Japan thanks to meeting Vietnam Agriculture Practice (VietGAP) standards with high quality.

Vietnam is home to over 100 fruits and vegetable processing factories, which are able to produce 300,000 tonnes of products on an annual basis.

The country exports various kinds of fruits and vegetable to 40 countries and territories, including major ones like China, Japan, the Republic of Korea, the US, Malaysia and Thailand.

In 2014, more than 1.6 million tonnes of fruits and vegetables were exported, including 997,000 tonnes of dragon fruit, nearly 300,000 tonnes of watermelon, over 100,000 tonnes of longan, 70,000 tonnes of litchi, and 600 tonnes of rambutan.

China is Vietnam ’s largest importer of fruits and vegetable with more than 435 million USD, comprising of 29 percent of the total exports, according to the Vietnam Fruit and Vegetable Association (Vinafruit).

Japan and the Republic of Korea were followed with 49.8 million USD and 47.59 million USD respectively, making up 4.1 percent and 3.9 percent of Vietnam’s total exports.

VNA picks up top ten economic events for 2015

The Vietnam News Agency (VNA) has rounded out the country’s top 10 economic events for 2015 as follows:

1. Highest GDP growth in eight years: The national economy grew 6.68 percent , the highest level in the past eight years and higher than the target of 6.2 percent set by the National Assembly. Inflation remained low at 0.63 percent, while social welfare was ensured. However, there were several shortcomings such as macroeconomic instability, low competitiveness, increased public debts and slow pace of state-owned enterprise equitisation.

2. Vibrant international economic integration: Vietnam concluded negotiations of free trade agreements (FTAs) with the Eurasian Economic Union, the European Union, the Republic of Korea, and members of the Trans-Pacific Partnership (TPP) agreement, bringing the number of FTAs it has joined to 14. The formation of the ASEAN Economic Community, scheduled for December 31, 2015, is expected to create more opportunities for Vietnam to deeply integrate into the regional and global economies.

3. Budget collection exceeds estimates: Despite drop in global oil prices and sharp decline in several tariff lines by integration commitments, budget collection exceeded estimates by 5 percent to approximate 957 trillion VND (about 41.6 billion USD), by December 28.

4. State Bank of Vietnam takes over commercial banks at 0 VND: For the first time in the banking sector’s history, the State Bank of Vietnam bought all shares of the Vietnam Bank of Construction (VNBC), Ocean Bank, and Global Petro Bank (GPBank) at zero VND per share. This was considered a drastic step in restructuring the system of credit organisations.

5. Withdrawal of State capital from 10 big enterprises: The Prime Minister urged the State Capital Investment Corporation (SCIC) to report plans on the withdrawal of State capital from ten enterprises. This was part of a State-owned enterprise restructuring roadmap with the aim of diversifying investment capital sources and helping businesses improve management model.

6. Breakthroughs in transport infrastructure: The completion of expansion and upgrade of numerous major transport projects in 2015, including National Highway Road 1, Ho Chi Minh City-Long Thanh-Dau Giay Highway, Ho Chi Minh Road’s section through the Central Highlands, and Hanoi-Hai Phong and Noi Bai-Lao Cai Highways, created breakthroughs in the country’s infrastructure development. Those facilities have helped improve transport capacity and promoted trade activities, facilitating economic development in regions, and helping the country’s infrastructure keep up with the integration trend.

7. Eight key corruption and economic cases brought to trial: The Central Steering Committee for Corruption Prevention and Combat during its 8th meeting decided to put into trial eight serious corruption and economic cases.

They were violations at Phuong Nam Food Processing Company in Soc Trang province, the Vietnam Bank for Agriculture and Rural Development (Agribank)’s Branch 7 in HCM City, the Railway Projects Management Unit (RPMU), the Dong Phuong Company under the Vietnam National Textiles and Garment Group and the Agribank’s Branch 6 in HCM City, Agribank’s Financial Leasing Company II (ALC II), Hai Phong Maritime Technology Co., Ltd and Dai Phat Maritime Transport Co., Ltd, Lifepro Viet Nam JVC and Agribank’s South Branch in Hanoi, and the Dong Thap Oil and Gas Trading Company.

8. Use of banned substances in livestock: The use of banned substances in livestock has increased this year, affecting the consumers’ confidence. The agricultural sector has launched investigations and inspections of banned substances in the country to deal with the problem.

9. Room for foreign investors expanded: On June 26, the Government issued Decree No. 60/2015/ND-CP allowing foreign investors to have unlimited ownership in public enterprises that not operate in the conditional business lines. Besides, foreign investors are allowed to invest without a limit in the Government and corporate bonds. This was considered a breakthrough in attracting foreign capital into Vietnam’s stock market.

10. Agro-fishery consumption market faces difficulties: Exports of the agro-fishery-forestry sector reached only 30.13 billion USD, down 1.4 percent from a year ago due to dual difficulties of weather and market. Key export products, including rice, coffee, and rubber, posted an decrease of 2.9 to 28.1 percent.

Stiff competition looms as more FTAs become effective

Fierce competition looms large on the domestic market when more and more free trade agreements (FTAs) come into effect, Deputy Prime Minister Hoang Trung Hai warned at a meeting between the Government and ministries and local authorities on December 29.

More imported products, particularly from ASEAN member states, will soon enter the domestic market, he said, urging the Ministry of Industry and Trade and the Ministry of Finance to help local businesses enhance their competitive edge while improving their own management capacity so as to well handle any arising issues.

“Imported goods will flood the market, and trade disputes are expected to increase, so we would not be able to protect domestic businesses if timely solutions are not adopted and the management mechanism improved,” the deputy PM stressed.

He noted that while domestic enterprises are able to meet domestic demand and even export, their products still face tough competition from imports, citing steels and fertilizers as examples.

He urged ministries for more effective measures to safeguard local industries.

Echoing Hai’s view, Deputy PM Pham Binh Minh voiced his concern over low levels of public awareness of the ASEAN Economic Community (AEC) and its impacts.

Many Vietnamese exporters have kept their focus on EU, Japan and US markets, leaving regional ones untapped, and a majority of businesses do not actively seek information on AEC, Minh noted.

Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong proposed that ministries should disseminate information on AEC, Trans-Pacific Partnership (TPP) and FTAs more widely and design more support for local enterprises while research technical barriers and anti-dumping and subsidy measures to assist young industries.

Hai Phong Port aims for 35 million tonnes of goods

The Hai Phong Port Joint Stock Company said it aims to handle 35 million tonnes of goods in 2016, an 8.7-percent growth from 2015.

The company, which runs a group of ports in the northern city of Hai Phong, also targets 656.4 billion VND (29 million USD) in pre-tax profit, up 8.1 percent from 2015.

In 2015, the company handled 31.8 million tonnes, completing the yearly goal three days ahead of schedule and earned total profit of 607 billion VND (27 million USD), up 15.7 percent.

Hai Phong Port is one of the two largest ports in Vietnam.

Ban Chat, Huoi Quang hydropower plants begin generating electricity

The Electricity of Vietnam (EVN) held a ceremony in Muong Kim commune, Than Uyen district, the northern mountainous province of Lai Chau on December 31 to inaugurate the Ban Chat Hydropower Plant and the first turbine of the Huoi Quang Hydropower Plant.

The Ban Chat plant has a capacity of 220 MW while the Huoi Quang plant includes two turbines with a combined capacity of 529 MW.

The two are built on Nam Mu River in Than Uyen district, Lai Chau province and Muong La district, neighbouring Son La province.

The Huoi Quang plant, the third largest underground power plant in Vietnam, is constructed and supervised completely by Vietnamese engineers.

Upon completion, the two plants will supply a total of 3 billion kWh to northwestern and northern provinces.

Speaking at the ceremony, Deputy Prime Minister Hoang Trung Hai praised relevant units for their efforts to complete the Ban Chat project on schedule.

He also asked them to ensure the safe operation of the Ban Chat plant and the scheduled completion of the Huoi Quang plant as well as the stable life of displaced locals.

State budget income exceeds 2015 target

State budget revenue surpassed the yearly target by five per cent to hit VND957 trillion (US$42.5 billion) as of December 28, despite economic difficulties.

The information was released by Deputy Minister of Finance Vu Thi Mai during a conference in Ha Noi yesterday.

Despite this achievement, Mai admitted the finance sector was still facing many difficulties. The fight against smuggling and trade fraud was struggling, while progress on equitising state-own enterprises and divestment remained slow compared to the requirements set out, Mai said.

According to the Ministry of Finance, State budget revenues in 2016 were expected to reach VND1,014.5 trillion ($45.08 billion), of which budget collections from crude oil products would top VND54.5 trillion ($2.4 billion), with an output of 14.02 million tonnes.

Total budget spending is forecast to be VND1,273 trillion ($56.57 billion). Budget overspending is expected to reach an estimated VND254 trillion ($11.28 billion), equal to 4.95 per cent of GDP.

Attending the event, Deputy Prime Minister Vu Van Ninh asked the finance ministry to implement tight fiscal policies in order to support production and business, continue stabilising the macro economy, control inflation and enhance the competitiveness of the country’s economy.

Ninh said the ministry should review the expenditure of the State budget, adding that spending was increasing too rapidly and many localities were wasting their budgets.

According to the ministry, the nation’s public debt was estimated at 61.3 per cent of GDP by the year end, within the Government’s limit of 65 per cent.

Ninh said that public debt was growing because of the rising demand for development and investment. Considering the current structure of public debt, Ninh said domestic debts with short-term, high interest rates were adding pressure to public debt.

Ninh order the ministry to keep a close tab on State budget spending, market prices and public debts, while fine-tuning policies on taxation, customs, budgets, corporate financial management, the securities market and accounting-auditing services in line with economic restructuring.

Minister of Finance Dinh Tien Dung said the finance sector would continue to supervise lending and loan repayments, particularly new loans, to ensure the debt ratio stayed within the permitted level. At the same time, it would tightly monitor the use of capital from these sources.

Dung also suggested raising the ratio of long-term and low-interest loans to help restructure public debt.

Malaysian company agrees to build Tra Vinh power plant

The Ministry of Industry and Trade (MoIT) and Malaysian Teknik Janakuasa Group met on Tuesday in Ha Noi to sign a contract to build the Duyen Hai 2 thermal power plant.

The plant will be built in southern Tra Vinh Province.

Dang Huy Cuong, Director General of MoIT’s General Department of Energy, said the plant has a total investment capital of more than US$2 billion, including 80 per cent received from loans. The plant will use imported coal for power generation and have two turbines, with a total capacity of 1,200 MW.

The plant is expected to become operational before 2020. It will be one of four thermal power plants in Duyen Hai Power Centre. The remaining plants, built by the Electricity of Viet Nam Group (EVN) at a cost of $6 billion, include Duyen Hai, Duyen Hai 3, and the Duyen Hai 3 extension.

The power centre will contribute an additional 30 billion kWh annually to the national power grid when it come into operation. The centre is expected to play an important role in ensuring the energy security for the southern region in the 2015-20 period and beyond.

Cuong said his department is committed to closely co-operating with the investor in arranging for capital and in building the project.

The two sides also signed land leasing and electricity purchase contracts, while Minister Vu Huy Hoang has awarded Government guarantees to the group.

Hoang said the project has played an important role in the country’s Power Master Plan 7, as well as providing a power supply for the Cuu Long Delta region, as well as long-term energy security.

He added that this is the second Malaysian build-operate-transfer (BOT) project in Viet Nam. It is also the first project signed between ASEAN and Viet Nam in the energy sector. It could be considered a landmark for the establishment of the ASEAN Economic Community, which becomes operational at the end of this year.

The project was given a licence in September and construction is scheduled to begin in the second quarter of 2016.

This is the second largest foreign invested project licensed in 2015, in terms of investment capital, after the $3 billion project financed by Samsung Display Viet Nam in the northern Province of Bac Ninh.

Mergers, acquisitions increase in textiles, garments market

Mergers and acquisitions in Viet Nam’s textile and garment industry have increased, in a bid to take advantage of free trade agreements, especially the Trans Pacific Partnership (TPP), experts said.

According to the HCM City Association of Garment – Textile – Embroidery – Knitting (AGTEK), there was a wave of mergers and acquisitions in local garment and textile sectors as local enterprises found they could not fulfill requested orders due to their limitations in capital.

Pham Xuan Hong, deputy chairman of the Viet Nam Textile and Apparel Association (Vitas), said medium- and large-sized enterprises have maintained stable production and business, but small-sized firms have faced many difficulties in their business. Therefore, recently, many small textile and garment companies have sold their workshops and machines and entered other sectors.

In addition, some local enterprises have sold part of their factories to foreign investors, he said, including Chinese investors who have developed a system of processing and production for export products in Viet Nam to take advantage of the TPP deal.

Nguyen Van Hoan, former head of Ha Noi Industrial, Textile, Garment and Fashion College, said foreign investors had difficulties in expanding their production in Viet Nam because some provinces and cities have limited foreign investment in the garment and textile sectors due to concerns about environmental pollution. This has prompted foreign investors to purchase local textile and garment companies that already have production lines and employees.

Further, the Ministry of Planning and Investment said management offices carefully weighed requests before issuing investment licences for large textile and garment projects, since textile, fiber production and dyeing projects often cause environmental problems, reported vnexpress.net. So, some investors have bought factories from local partners.

In 2015, Viet Nam has issued investment licences for 30 textile and garment projects while foreign investment in industry was expected to continue increasing in the near future.

In 2016, part of the US$300 million provided by the Indian government would include investments in projects to manufacture textile and garment materials in Viet Nam, as part of the cooperation between the governments of Viet Nam and India.

Domestic businesses lack integrity

Just 29 per cent of enterprises practice integrity and transparency in their business, announced the latest survey of Viet Nam Chamber of Commerce and Industry (VCCI) on Tuesday.

VCCI carried out the survey with the participation of 180 enterprises in major cities of Ha Noi, Da Nang and HCM City under the “Enhancing Integrity Implementation Initiative in Business – Project 12” in the period of 2015 to 2019.

Florian Beranek, Lead Expert of Social Responsibility at the United Nations Industrial Development Organisation (UNIDO), said for businesses, corruption was not only known as bribery receiving or giving but also includes lacking transparency in recruitment, no information provided to employees or other acts.

Common corruption phenomena are internal fraud within a company, from share-out and bribery between the parent company and its subsidiaries, between management tiers using common properties for personal purposes to the appointment of trusted persons in important positions in that company.

VCCI’s survey said that about 93 per cent of enterprises understood the concept of integrity and transparency in business which was known as doing business according to law with no bribes and no violations.

Over 55 per cent of enterprises believe that business integrity must be attached to ethical and legal principles and standards and make barriers against bribery and corruption. 29 per cent of enterprises which implemented good practices said they carry out good internal control spending management and make transparent reporting mechanisms with the tax customs authorities.

VCCI’s survey also found that though enterprises understood the term of integrity, state agency was one of the factors hindering their performance of integrity. The enterprises in the leather and footwear, food processing and banking industries often experience difficulties and harassment dealing with the state agencies even when they try to apply the integrity in their business.

Nguyen Quang Vinh, VCCI’s deputy secretary said without appreciating and applying integrity and transparency, it was difficult for Viet Nam to build a national brand for companies and a good business environment.

Economist Pham Chi Lan said it was not easy for enterprises to practice integrity because much of the bribery and fraud come from the management apparatus. According to a recent report by the World Bank, when Vietnamese enterprises earn one dong from a business contract, they must sometimes spend almost another dong in bribes to get the contract. They must pay about 40.8 per cent of profits for official taxes and fees.

Lan said very few Vietnamese enterprises practiced integrity, which caused low participation of local enterprises in the production chains in the region and in the world.

Data showed that 36 per cent of Vietnamese firms are engaged in production networks while in Malaysia and Thailand in is 60 per cent. About 21 per cent of Viet Nam enterprises engage in global value chains while it’s 30 per cent in Thailand and 46 per cent in Malaysia. The lower level of involvement has resulted in less technology and knowledge transfer as well as less productivity improvement of the local enterprises.

Viet Ha to launch public offering in January

Beverage company Viet Ha Corporation plans to launch its initial public offering (IPO) at the Ha Noi Stock Exchange on January 26, 2016.

More than 18.7 million shares will be sold in the IPO, at an initial price of VND10,000 (44 US cents) per share.

Viet Ha Corporation, an enterprise with 100 per cent charter capital from the state budget, has its headquarters at 254, Minh Khai Street, Ha Noi. Its main products are beverages and purified water.

After its equitisation, the company is expected to have a charter capital of VND768 billion ($7.8 million).

The State will hold 51 per cent of the company’s shares, while the staff will have 0.34 per cent.

Some 24.33 per cent of the shares will be for strategic investors and the remainder 24.33 per cent, equivalent to 18.7 million shares, will be auctioned publicly.

As of the end of the third quarter this year, the company’s total assets were worth VND668 billion ($29.6 million), while its equity was VND598 billion ($26.1 million). It reported a total revenue of VND214 billion ($9.5 million) and after-tax profit of VND4.3 billion ($191,000).

Vietnam Airlines makes impressive performance in 2015

Minister of Transport Dinh La Thang praised Vietnam Airlines for its prominent outcomes in 2015 at a conference in Hanoi on December 30, affirming that the firm’s good performance significantly contributes to the transport sector’s achievements in the year.

Reports presented at the conference showed that the national flag carrier conducted over 127,500 safe flights in 2015, representing a year-on-year increase of 3.5%.

It transported more than 17.4 million passengers during the year, earning VND69.3 trillion (US$3.08 billion) in revenue and VND1.4 trillion (US$62.2 million) in pre-tax profit, 129% higher than the set target.

Even though it faced numerous challenges due to fluctuating foreign exchange rates and poor domestic airport infrastructure, the firm fulfilled its key objectives and created breakthroughs in reforming its fleet and improving service quality.

The airline made progress in restructuring and equitisisation. After becoming a joint stock company from April 1, 2015, Vietnam Airlines worked hard to seek strategic investors. It has so far basically completed negotiations for share purchase contracts with strategic investors.

From 2012-2015, it divested all its shares in 13 fields, up three ones compared to the restructuring plan. The divested amount reached VND819 billion (US$36.4 million), two times higher than the investment value.

In 2016, the carrier set to transport 19.2 million passengers, up 10.6% against 2015. It is expected to post a revenue of VND77.8 trillion (US$3.4 million) and a pre-tax profit of over VND2.3 trillion (US$102.2 million).

On the occasion, Vietnam Airlines officially announced the establishment of the Vietnam Airport Ground Service ( VIAGS ) Co., Ltd, which is merged by its Noi Bai, Danang and Tan Son Nhat International Airport Ground Service Enterprises .

The formation of VIAGS is one of the key policies in the corporation’s restructuring plan approved by the Prime Minister towards improving its competitiveness and business efficiency, thus contributing to the country’s socio-economic development.

The same day, the Signing Ceremony of the Tripartite Coordination Instrument between Vietnam Airlines, Vietnam Air Traffic Management Corporation (VATM) and the Airports Corporation of Vietnam (ACV) was held.

HCM City’s budget collection exceeds target

Ho Chi Minh City collected nearly VND280 trillion (US$12.6 billion) to the local budget in 2015, surpassing the yearly estimate by 5.04% and posting an annual increase of 10.7%.

Director of the municipal Department of Finance Phan Thi Thang raised the figures at a conference in the city on December 30.

Excluding crude oil, the local budget collection in 2015 reached over VND253 trillion (US$11.4 billion), including nearly VND160 billion (US$7.2 million) from domestic sources (up 21.16%) and over VND94 trillion (US$4.23 billion) from imports-exports (up 6.55%).

Chairman of the municipal People’s Committee Nguyen Thanh Phong revealed that the city aims to collect over VND298 trillion (US$13.4 billion) to the local budget in 2016, up 12% against the 2015 estimate.

To realise the target, he asked the taxation sector to strengthen management measures to ensure sufficient and prompt collection in accordance to law while actively addressing setbacks in the field.

Meanwhile, the finance department along with tax, customs and treasury agencies should focus on administrative reform and personnel capacity improvements to increase transparency and win trust from locals and businesses, he suggested.

Phong requested the district-level People’s Committees to play a key role in directing the budget management as well as make the best use of revenue sources from transactions relating to land and housing.

He recommended businesses to improve production and management capacity, increase access to markets and develop Vietnamese brands.

The Department of Finance unveiled that as of December 30, 2015, the local budget spending totaled at VND55.5 trillion (US$2.5 billion), exceeding the yearly estimate by 1.64%, of which nearly VND28 trillion (US$1.26 billion) was spent on construction projects for various fields such as transport, inundation prevention, education-training, and healthcare.

On the occasion, the municipal People’s Committee presented certificates of merits to 10 businesses and 24 districts for significant contributions to the State budget collection across the city in 2015.

Vietnam adds flesh to regulatory bones to court more investment

Vietnam has issued detailed regulations for foreign investors in 17 business sectors in a drive to improve the investment climate of a fast-growing country blighted by bureaucracy, but now seeing record inflows of foreign capital.

The new list of sectors specifies foreign investment ratios, the scope of investments and compliance with international trade rules and could help reassure businesses hesitant about setting up in the country due to its notorious paperwork, ambiguity and web of regulations and restrictions.

Despite expediting protracted reforms this year, including the opening of dozens of off-limit sectors and easing foreign ownership caps on equities, many potential investors have been waiting for Vietnam to put flesh on the bones of much of its new legislation.

The list includes real estate and providing services in tourism, entertainment, computing, research and development, information, leasing, transportation, construction, healthcare and trading, the Foreign Investment Department said on its website (dautunuocngoai.gov).

Vietnam has seen a record rush of disbursed foreign investment this year, worth an estimated $14.5 billion, up 17.4 percent from the previous year, though pledges have eased slightly to $15.58 billion.

The bulk of that was into a swelling manufacturing sector dominated by textiles, footwear and electronics production for brands such as Samsung, Canon, Nike, Mango and Lacoste, helped by the prospect of tax-free exports under the Trans-Pacific Partnership (TPP) and other trade pacts.

Now clearer are 100 sub-class areas involving providing services, production and trading open or closed to foreign investors. The list did not, however, mention some areas attractive to foreign firms, such as insurance and textiles.

Fields closed to foreigners include lotteries, radio and television broadcasts, operations of flights and key airports and national power transmission and regulation.

Foreign ownership ceilings in other businesses could vary from 49% in ship navigation to 65% in providing telecoms service without network infrastructure, or 70% in leasing vessels and providing healthcare.

A report to the government published this week by the National Financial Supervisory Commission predicted more investment in 2016, including into equities and via mergers and acquisitions. It gave no specific dollar estimates.

The government’s think tank projected economic growth to quicken to 6.7-6.8% in 2016, from 6.68% this year.

Nguyen Mai, president of Vietnam’s Association of Foreign Invested Enterprises, anticipated further FDI increases, aided by the clarification of rules.

“The list will help improve the quality of foreign direct investment,” he added.

Standard Chartered firms up Vietnam’s integration to boost growth

London-based Standard Chartered Bank sees Vietnam’s strong efforts to embrace regional and global economic integration as a boost to its business in the country, where it is fully committed to investing in the nation’s growth through a robust and sound long-term strategy.

“Vietnam has showed signs of economic recovery and a transformation towards higher value economic activities. It is also becoming highly integrated into the world economy with its impressive export record and focus on various free trade agreements,” said Standard Chartered Vietnam CEO Nirukt Sapru. “Vietnam is strongly deepening bilateral ties with many countries. Lots of major global companies have already incorporated Vietnam into their supply chains, and many more are exploring the opportunity.”

As Vietnam becomes a strong international trading nation, Standard Chartered continues to be a partner in helping businesses internationalize their customers and supply chains. The emerging markets bank plays a strong role in telling the compelling Vietnam story to international investors. Its role as the sole ratings advisor to the Vietnamese Government and many governmental delegations it has supported across the world continues to help drive inward investments into Vietnam.

The bank continues to participate in Vietnam’s development process, working with the government, regulators, investors, businesses and people to further strengthen the Vietnamese economy, help Vietnam benefit from global and regional trade, grow the banking sector and provide more people and enterprises with access to financial services.

Nirukt Sapru said Standard Chartered will continue to support large and small businesses and retail clients in Vietnam. The bank’s desire to be a catalyst for socio-economic development sits at the heart of the bank’s business strategy and is reflected in its brand promise, to be Here for good.

From London, having recognized the bank’s excellent performance and its focus on innovation and strategic advancement, Global Banking and Finance Review has named Standard Chartered the Best Foreign Bank in Vietnam in 2014 and 2015.

“Winning the award for two consecutive years is a testimony to the strength of our business, our staff’s efforts and most importantly, the trust that our clients and customers have in us,” said Sapru. “We are humbled that the services we provide to our clients and customers are rewarded with the recognition by the financial press and award bodies. This recognition will inspire us to an even greater level of services and commitment to all our clients and stakeholders.”

Also from London, International Finance Magazine has underscored the bank’s brand promise by naming it Best Corporate Social Responsible Bank in Vietnam 2015. Standard Chartered has spent more than US$1.5 million for its various community programs in the country during the last two years. The bank carries out a robust global employee volunteering scheme which offers every employee a three-day paid leave. In 2015, the Vietnam staff volunteered nearly 1,000 days.

The bank’s biggest program, Seeing is Believing, which tackles preventable blindness, was launched in Vietnam in 2004 and has benefited thousands of children. It is currently at phase five with US$1 million spent to bring eye care services to more rural and remote areas. For 2016-2018, the bank will invest US$2 million to support people in the northern region and the Mekong Delta.

In addition, the bank’s global program “Goal” was launched in Vietnam last year to provide financial education, life skills and employability training to 8,000 adolescent girls. The US$220,000 and three-year project aspires to empower the young girls to play a more active role in their communities.

Late in 2015, Standard Chartered Vietnam was awarded titles “Best Bond Deal,” “Best Corporate Bond,” “Best Bond House” and “Deal of the Year” by The Asset magazine. The awards recognize the bank’s leading role in providing strategic and robust advisory services to both the government and clients.

The first award recognizes the bank’s prominent role in helping the Vietnamese Government in its issuance of the 10-year dollar-denominated global bonds last year. The bank served as a joint lead arranger in this issue. This transaction marked Vietnam’s first return to international capital markets since 2010 and achieved multiple highlights including being the lowest coupon bond ever issued by Vietnam, its debut liability management exercise, and one of the largest order books ever amassed for a single-tranche Asian sovereign issuance.

The second is for the bank’s having acted as Issuing Agent for a major Vietnamese consumer goods company’s first 10-year bond issuance worth approximately US$100 million. “The Deal of the Year” title recognizes the bank’s role as the financial advisor for the US$370 million sale of a Vietnamese company’s snacks and confectionery business to an American multinational conglomerate. This was the largest transaction in Vietnam’s F&B sector last year.

Buy-to-let sector reaps rich dividends

The buy-to-let trend has been sweeping across major cities in Vietnam, offering high yields and a stable investment strategy for buyers.

In the southern province of Dong Nai, near Ho Chi Minh City, an investor declining to be named has bought a dozen villas in the Dai Phuoc project. The villas will be available for leasing at weekends and during festive periods.

A source at Dai Phuoc Lotus Villas said that the advantageous location of these ecological villas had caught interest from customers who hoped to re-lease them as resort residencies for visitors from Ho Chi Minh City.

According to Kenneth Atkinson, executive chairman of Grant Thornton Vietnam, the buy-to-let industry in Vietnam has become a lucrative investment channel.

Atkinson has purchased several apartments in Vietnam, one as a buy-to-live property and two as buy-to-let. “After a time of using those apartments for lease, I realised that rental yields in some areas such as districts 1, 2 and Binh Thanh, are currently quite attractive,” he told VIR.

According to CBRE Vietnam’s latest research, buy-to-let potential is now a factor with ever-increasing importance.

Dung Duong, director and National Business Line leader of CBRE Vietnam, said that the buy-to-let industry had become more and more popular thanks to its high profit generation.

Dung also noted that the relaxation of foreign housing ownership regulations, combined with promotional sales programmes offered by developers, was already reaping results just three months after implementation.

“We are seeing a lot of interest from Singaporean, the Republic of Korea, Japanese, and Malaysian buyers who live and work in Vietnam, most of whom are buy-to-let investors,” she said.

For some high-end condominium projects in districts 2 and 7 in Ho Chi Minh City, gross rental yields are estimated by CBRE to stand at 6 to 8 per cent, while net yields are roughly 4.5 to 6.5 per cent.

“Compared to net yields of 2-3 per cent in Singapore, or 3-4 per cent in Bangkok, this rate is very attractive,” Dung said.

With a large pool of tenants readily available in these districts, especially near international schools, investors tend to fill up their vacant apartments quickly.

Previously, investors predominately focused on re-selling their properties to gain a small profit on their purchases. However, the buy-to-let trend now offers investors the stability and benefits of a long-term investment.

Furthermore, the current economic situation means that other investments, such as gold and securities, are no longer the most efficient channels for investors.

In Ho Chi Minh City, properties at a variety of projects in districts 2 and 7 are being snapped up by leasers.

Meanwhile, foreigner immigration has led to a surge in projects that boast an infrastructure system containing features such as healthcare centres, spas, schools, trading centres, and leisure facilities.

In Hanoi, the most desirable areas for foreign leasers are still around West Lake and in the central business districts (CBD), while domestic leasers tend to focus on non-CBD, such as Hadong and Tu Liem.

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