Vietcombank sells VND1 trillion in non-performing loans in 2014

The Bank for Foreign Trade of Vietnam (Vietcombank) aims to control its non-performing loan (NPL) rate at 2.73% and sell VND1 trillion in NPLs to the Vietnam Asset Management Company (VAMC).

Nguyen Hoa Binh, Chairman of the Board of Directors of Vietcombank, revealed the information at the bank’s annual shareholders congress in Hanoi on April 23.

Vietcombank will also continue divesting from other banks at the request of the State Bank of Vietnam, said Binh.

“We will retain our stock at efficient banks such as Military Bank (MB) and Eximbank, and divest from others to make our investment more efficient,” he said.

Binh also assured shareholders that the process of mergers and acquisitions (M&A) will definitely take place at Vietcombank, but did not disclose when it will happen.

The bank is increasing its charter capital to prepare for the M&A process if time permits, he said.

At the convention, shareholders agreed to raise the bank’s charter capital by an additional VND3.476 trillion this year to VND26.65 trillion.

This year, Vietcombank plans to expand its total asset value by 11% to VND520.583 trillion, its credit balance by 13% to 309.975 trillion, and its pre-tax profit and provisions by 13.35% to VND10.500 trillion.

The bank intends to open 16 more branches in Vietnam and other branches in Myanmar and Laos in 2014.

US$4.5 bil quarterly trade surplus with US

Vietnam's trade surplus with the US in the first three months of the year widened to US$4.5 billion, according to the latest statistics from the Vietnam Customs office.

The total import-export volume between Vietnam and the US in the reviewed period climbed to US$7.76 billion, up 24.9% against the same period last year.

The country's US exports jumped up 25.6% to US$6.15 billion, while imports from the US market also rose 22.4% to US$1.61 billion.

The US remains Vietnam’s second largest trade partner, just after China. In 2013, Vietnam’s trade surplus with the US hit a record high of US$18.6 billion.

The garment and textile sector led in exports to the US market for the quarter, with sales of US$2.16 million, up 14.55% compared to the same period last year, comprising 35.2% of the total exports.

Footwear ranked second in exports to the market with sales of US$674.1 million (up 23.63%), followed by wood and wooden products at US$484.61 million (up 22.8%).

In the first quarter of the year, almost all of Vietnamese exports to the US posted strong growth. Notably, telephones and components saw a six fold increase against the comparable period last year.

ASEAN Women Entrepreneurs’ Network makes its debut

The launch of the ASEAN Women Entrepreneurs’ Network was held in Hanoi on April 22.

The establishment of the network makes a practical contribution to the development of small and medium-sized enterprises (SMEs) within the ASEAN Economic Community (AEC).

In the context of regional integration and the establishment of AEC by 2015, the ASEAN Women Entrepreneurs’ Network will help promote trade and economic ties within the bloc and with non-ASEAN nations to strengthen gender equality, women empowerment as well as building a peaceful, stable and prosperous ASEAN region.

Being President of the ASEAN Women Entrepreneurs’ Network, the Vietnamese Women Entrepreneurs Council (VWEC) is expected to fulfil its tasks and put forth initiatives to develop and improve the network’s status.

Delegates asked the AEC and the ASEAN Entrepreneurs Community and development partners to strengthen cooperation and connectivity with the ASEAN Women Entrepreneurs’ Network in order to encourage equal opportunities, generate jobs, and promote prosperity within the ASEAN community.

They expressed their wish that the ASEAN Committee on Women (ACW) will continue to support activities of ASEAN Women Entrepreneurs’ Network in order to bring a better quality life for women in particular and ASEAN people in general.

Seminar discusses ways to curb counterfeit goods

Hanoi hosted a seminar on April 22 to highlight the role of businesses and market management agencies in the fight against fake goods and the violation of intellectual property rights.

Bui Huy Son, EU-MUTRAP (Multilateral Trade Policy Assistance) Project Director said it is a very complicated issue which requires maximum effort from relevant agencies and active participation of the whole society.

The seminar aims to seek solutions to improve the efficiency of co-ordination among businesses and executive agencies and raise businesses’ awareness of protecting goods and intellectual property as well as increasing efficiency in the fight against bogus and substandard goods and violation of intellectual property rights in the future.

Do Thanh Lam, deputy director of the Market Management Department emphasised that over the years, the cause has achieved promising results, helping promote production, attract investment, protect consumers’ interests and create a healthy business environment.

However, the real situation has affected consumers’ health and property and had a negative impact on the country’s socio-economic development.

To reduce counterfeit goods and violation of intellectual property rights, Lam said that the Market Management Department has called for closer cooperation among businesses and producers to facilitate their involvement in the investigation process.

HCM City’s CPI continues downward trend in April

The consumer price index (CPI) of Ho Chi Minh City in April fell by 0.04 percent against the previous month, according to the municipal statistics office.

Prices of five out of 11 baskets of commodities and services were down, with the biggest drop (1.24 percent) seen in baskets of housing, electricity, water and fuel.

Other commodities also experiencing the same trend were garments-textiles, headwear and footwear (down 0.04 percent); post-telecom services (0.4 percent); cultural and entertainment services (0.2 percent), and other goods and services (0.14 percent).

Meanwhile, price hikes were recorded in four baskets, namely foodstuffs and dining-out services (up 0.22 percent); beverages and tobacco (0.1 percent); household utensils (0.25 percent); and travelling and postal services (0.29 percent).

The costs of medicines-medical and educational services remained unchanged in April.

In April, the southern hub’s CPI rose 4.49 percent compared to the same period last year.

The practice of austerity by consumers is considered as one of the main reasons for the CPI drop.

VBSP raises 300 billion VND from bond sales

The Vietnam Bank for Social Policies (VBSP) raised VND300 billion (US$14.2 million) through government guaranteed bonds auctioned in Hanoi on April 22.

The bonds, of five and three-year maturity, were sold through the Hanoi Exchange Market.

The VBSP sold out VND100 billion three-year bonds at the yield of 6.8 percent annually, down 0.1 percent from the previous auction on April 4.

The bank also mobilised VND200 billion five-year bonds with annual interest rate of 7.6 percent, down 0.09 percent compared with the auction of April 14.

VBSP has so far this year mobilised VND3,651 billion (US$182 million) through the sales of Government backed bonds.

Japanese firms seek investment opportunities in Hau Giang

A Japanese business delegation on April 22 toured the southern province of Hau Giang with the intention of exploiting the investment market.

Provincial People’s Committee Chairman Tran Cong Chanh briefed the delegation on natural conditions, climate, advantages and the sectors that are calling for investment.

“Hau Giang wants Japanese businesses to run their investment projects in the province focusing on five areas—production of high-quality animals and plants for material areas, cooperation in plant protection services, investment in laboratories analyzing the genetic code of the virus,  purchase of mechanical equipment serving material areas and  investment in processing plants.” Chanh said.

Chairman of the Japan-Mekong Business Cooperation Committee Kohel Watanabe praised the significant achievements the province has made over the past time especially in agriculture.

Hau Giang has been successful in building highly competitive trademarks of farm produce in the market. It is building a biggest ever hi-tech industrial park in the Mekong River Delta with a total investment of more than VND 5.000 billion and a fruit processing facility.

Apart from learning about agriculture, Japanese enterprises expressed their interest in seeking investment opportunities for other fields like finance, monetary, technology and the environment.

The same day, the delegation also visited the cluster of Song Hau industrial parks and Minh Phu seafood processing company Ltd.

Import-export trade volume rises 14%

The cumulative import-export trade volume of Vietnam rose to over US$77.97 billion for the first quarter of 2014, up 14% from last year’s same period, according to Vietnam Customs statistics.

The nation’s trade deficit for the quarter was US$613 million, bringing the overall trade surplus down from over US$1 billion to US$572 million.

By mid-April, total exports climbed to over US$39.27 billion, 16.1% higher than  the same period last year.

The foreign –invested sector garnered an export volume of nearly US$24.31 billion, up 20.5%, accounting for nearly 61.9% of total export value.

Meanwhile some import items that saw a decrease in the first half of March included computers, electronics and components (down US$112 million), telephones and components (US$49 million), timber products (US$31 million), and plastics (US$31 million).

Several items experienced an increase such as petroleum (up US$168 million), machines, equipment and other components (US$134 million), and crude oil (US$80 million).

HCMC, Guangzhou boost cooperation

Vice Chairman of the Ho Chi Minh City People’s Committee Le Manh Ha hosted a reception on April 24 for Vice Governor of China’s Guangzhou province Ouyang Weimin, who is leading a business delegation on a visit to the city.

Ha said his city is keen to strengthen cooperation with Guangzhou forward. He highlighted the similartities that the two sides share and suggested both work harder for closer ties, especially in economics and tourism.

Ho Chi Minh City is willing to create all possible favourable conditions for Guangzhou businesses to come and explore investment opportunities, Ha promised.

Ouyang Weimin said he is being accompanied by nearly 300 businesses, who will attend a meeting in the financial sector in the city.

The guests are scheduled to meet with the Ho Chi Minh City Stock Exchange to discuss cooperation potential.

Vietnam promotes investment in Tokyo

The Ministry of Finance (MoF) will host an investment promotion conference on Vietnam’s securities market in Tokyo, Japan, on April 25.

The conference is expected to focus on equitisation of State-owned enterprises (SOEs) and economic restructuring guidelines of Vietnam’s securities market.

The event provides an opportune occasion for Vietnam to encourage more Japanese investment in its securities market which directly translates into increased economic growth in the economy.

It also creates an opportunity to fully explain legislative policy changes aimed at enticing foreign investors to the Vietnamese stock exchange, and to capitalise on economic restructuring and SOEs equitisation.

At the event, MoF Minister Dinh Tien Dung will deliver a message to affirm Vietnam’s strong commitment to improve its investment environment for Japanese investors.

On the sidelines of the conference, Minister Dung is scheduled to meet with Japanese parliamentarians and work with Japan International Cooperation Agency (JICA) officials to discuss measures to boost bilateral cooperation and encourage solicit development assistance (ODA) for Vietnam.

He will also visit the Tokyo Stock Exchange and meet with the Director General of Sumitomo Mitsui Bank with the aim of attracting more Japanese investment into Vietnam.

Rice exports to Africa slump in Q1

Vietnam‘s rice exports to Africa faced numerous difficulties in the first quarter of this year due to competitive prices from Thailand and India.

Statistics show Thailand exported more than 1 million tonnes of rice to Africa in Q1 offering competitive prices of US$5-10 per tonne less than the Vietnamese rice. India and Pakistan continued to reap the advantages of transport costs, US$30-40 per tonne cheaper than Vietnam.

According to the Vietnam Food Association (VFA), Vietnam’s rice export earnings from Africa dropped by nearly 63%, accounting for  just 7% of the country’s total global exports.

Cumbersome payment procedures are one of the two key factors that affect Vietnam’s rice exports to Africa. Due to limited financial capacity, African importers often prefer CIF contracts with deferred payment over 30 to 90 days and they refuse to open L/C due to high fees. In addition, both sides lack information about each other.

To avoid risks, Vietnamese businesses select international intermediaries to ship rice to Africa that drives up rice prices and reduces the competitiveness of the product.

The United Nations Food and Agriculture Organization (FAO) report that rice consumption in Africa reached 24-24.5 million tonnes per year between 2011-2013 and the average consumption per capita was 22.1 kilo per year.

To maintain this potential market, the Ministry of Industry and Trade (MoIT) has dispatched delegations to African countries for trade promotions and held meetings between  banks of both sides.

Vietnam has exported rice to 35 out of 55 African countries, with 2013’s total turnover fetching US$775.02 million, up 2% over the previous year.

Denmark seeks cooperation opportunities in Danang

Danish ambassador to Vietnam John Nielsen on April 24 paid a working visit to the central city of Danang to share green growth experiences and inquire into investment opportunities for sustainable economic development and reduced environmental impact.

The Danish diplomat had a talk with students from the University of Technology and the University of Economics on the use of clean and renewal energies, visited Danang Industrial Park and introduced Danang municipal People's Committee about the possibility of future cooperation between Denmark and Danang.

Over the past 30 years, Denmark's GDP soared by 80 % while there was no increase in power consumption. Denmark once experienced what is happening now in Vietnam, including Da Nang when the economic development faced negative environmental impacts and growing demand for electricity, water and fossil fuel.

Thanks to the Government’s breakthrough policy and determination, Denmark has become the world leading country in sustainable green growth. Denmark wants to share experience and opportunities for successful cooperation in sustainable development with Danang, John Nielsen said.

He said Danang has a good investment environment, facilitating Danish investment in information and technology, clean technology and waste treatment.

Japan helps Vietnam improve e-clearance system

VNACCS/VCIS- a modern e-clearance system, dedicated to electronic processing of air/sea cargo to enable faster and more efficient customs clearance was officially handed over to Vietnam Customs on April 25.

Vietnam Customs successfully preliminarily tested the system, part of a Japanese ODA project with total funding of JPY2.661 billion, on November 15, 2013.

Subsequently, they began installation of the system in Hai Phong and Hanoi as of April 1, 2014, and after successful transactional testing, accepted final delivery on April 24.

Regarding the system’s benefits, Sakurai Hiroki, chief consultant of Technical Cooperation Project said that the development of the system is based on Japanese technological models named Nippon Automated Cargo Clearance System (NACCS) and Customs Intelligence System (CIS). They have been modified to adapt to Vietnam’s real conditions.

However, Sakurai Hiroki said there has been congestion for the e-clearance system in Hai Phong, adding that the fact that customs staff is unfamiliar to the use of the system.

Sakurai Hiroki said that users can find it difficult to get used to the system at first but when becoming familiar with the system, they will realize that it is very convenient, efficient and practical.

He added that the system has run smoothly in the process of operation in Japan. With its fast processing speed and high reliability, NACCS is seen as an important part in boosting Japan’s economic development.

In just a second right after customs documents come, the system can respond immediately and provide 24- hour service running 365 days in a year.

Since Vietnam joined the World Trade Organization (WTO) in 2007, foreign direct investment (FDI) in the country has increased rapidly. Declaration documents have risen markedly from 1.16 million in 2002 to 4.16 million in 2010, placing a heavy burden on customs officers.

The Vietnam Automated Cargo Clearance System (VNACCS) aims to improve the business environment as it helps reduce administrative costs and the time of handling custom clearance formalities. In addition, it will contribute to stimulating Vietnam’s economic growth and strengthening connectivity between Vietnam and the global economies through ASEAN’s one-stop-shop mechanism.

When the VNACCS/VCIS is officially put into operation in the future, Japan is intent on assisting the Vietnam Customs with risk control in customs check and work with other agencies on creating a legal framework for a national one- stop-shop mechanism.

The support plan will last until April 2015. From now to period ending, Japan will continue supporting the Vietnam Customs in operating the system until when customs officers can master it.

The technical transfer will be conducted rapidly to help Vietnam operate and optimize the system in the coming time, Sakurai Hiroki noted.

Hanoi hosts Asian agriculture conference

The third General Assembly of the Asian Food and Agriculture Cooperation Initiative (AFACI) met in Hanoi on April 23, attracting representatives from AFACI member countries and international organizations.

Vietnamese Minister of Agriculture and Rural Development Cao Duc Phat said the meeting focused discussion on policies and strategies to deal with common issues in the region.

The event provided an opportunity for member countries to exchange experience, promote business cooperation and find measures to improve the productivity and efficiency of food production in Vietnam and Asia as a whole, Phat added.

Vietnam’s agriculture still faces a number of challenges, especially in the context of rapid population growth, shrinking farmland, and frequent natural disasters. To raise competitiveness, Vietnam has no choice, but to restructure the agricultural sector, of which science and technology plays a key role.

Nguyen Van Bo, Director of the Vietnam Academy of Agricultural Sciences, said Vietnam was selected to host the meeting as it has a wealth of experience in agricultural production.

According to the senior expert, Vietnam is willing to share its experience with other countries, and apply scientific and technological advances to agricultural production.

Participants also discussed issues related to climate change adaptation, food hygiene and safety, food security, as well as food security.

The AFACI was established in 2009 on an initiative of the Republic of Korea and it currently has 13 member nations. The network aims to share agricultural knowledge and advanced technology application, and research advanced technologies to boost agricultural production and protect the environment.

Lai Chau hosts int’l trade fair

An international trade fair got underway in Lai Chau province on April 24, attracting more than 200 companies from around the globe, showcasing their wares in roughly 350 pavilions.

The week-long event is part of a national trade programme and is held to coincide with the observance of the 60th anniversary of the Dien Bien Phu Victory.

Celebratory activities include the presentation of Labour Order, first class, and a ceremony to announce the Government’s decision on the establishment of Lai Chau city.

A wide variety of products are on display at the fair, including everything from local farm produce, consumer goods, to modern machinery and equipment of leading world name manufacturers.

The event is considered an opportune occasion for Lai Chau to tout its socio-economic achievements and investment opportunities to both local and foreign businesses

It is also expected to create stronger links between northwestern provinces and China’s Yunnan province.

Lai Chau provincial People’s Committee Vice Chairman Nguyen Chuong, who is Head of the fair’s organization board, said the trade fair helps advertise agricultural products and specialties of ethnic groups in the province.

Lai Chau is speeding up integration process and calling for investors to join efforts in boosting its development process.

Businesses praise mechanical exhibition in Hanoi

Many trade deals were signed at the 3rd International Precision Engineering, Machine Tools and Metalworking Exhibition (MTA Hanoi 2014) that concluded in the capital city recently.

The event drew 4,000 visitors and witnessed the signing of numerous deals between local firms and foreign trade partners.

As many as 143 foreign businesses from 19 countries took part in the exhibition to introduce State-of-art technologies and modernized manufacturing solutions such as cutting, moulding and tooling systems, metrology machines and hand tools, among many others.

Director General of Mazak Vietnam, Edward Yuen, said more and more investors are keen on the northern region of Vietnam, driving up the production sector.

Yuen revealed that his firm received many orders from visitors to the MTA HANOI 2014.

Executive Director of Thailand’s Hexagon Metrology, Taveesak Srisuntisuk, said that his company sold Coordinate Measuring Machine (CMM) to Ogino Company of Vietnam on the first day of the exhibition.

Director of Singapore’s TRUMPF, Takahito Otsu described Vietnam’s northern region as a lucrative market for his company as industrial sectors have been enjoying remarkable growth.

The MTA HANOI 2014 showcased high-quality machines that are useful for those businesses who want to increase their capacity and productivity, said Shirao Shunji, Director of Nissei Electric Hanoi.

April inflation rises modestly

Inflationary pressures in 2014 have remained low, reflecting both weak domestic demand and subdued commodity prices, according to economists at the Hong Kong and Shanghai Banking Corporation (HSBC).

HSBC reports that the inflation rate in April rose a modest 4.45% year on year, picking up slightly from last month’s rate, and forecasts that prices are expected to stay relatively steady throughout the remainder of the year.

Even with social costs set to increase in August and September, HSBC economists still forecast inflation for 2014 to be at a 10 year low.

Vietnam had the lowest month on month increase in inflation in more than a decade in April, said HSBC, adding that for the past 13 years, the average month on month increase of prices for the first four months of the year was 1.0%.

With price pressures contained, the State Bank of Vietnam (SBV) has room to keep the OMO short-term interest rate on hold at 5.0% until the end of 2014, HSBC reports.

As a result of lower interest rates, credit growth accelerated in April to 1.35% from the end of March (according to statements from the SBV). The central bank also lowered the lending rates on loans acquired by the Vietnam Asset Management Company (VAMC) as well as encouraged commercial banks to reduce lending rates.

HSBC forecast that prices will increase modestly over the next two months as domestic conditions gradually pick up. However, price pressures are expected to be lower on average this year as consumer confidence remains modest and global prices stay lackluster.

Pacific Alliance offers tremendous opportunities

The Pacific Alliance (PA), consisting of Chile, Colombia, Peru and Mexico, held a seminar in Hanoi on April 24, shedding light on abundant opportunities for cooperation in Latin America.

Cu Chi Loi, Director of the Institute of American Studies, described Latin America as a dynamic region with plenty of investment opportunities. The PA currently ranks 8th among the world’s largest economies, with its export value ranked 7th globally, he noted.

Chilean ambassador to Vietnam Fernando Urrutia in turn emphasized that the PA creates an open economy that gives priority to eliminating trade barriers and advancing global integration.

At present, some PA members, along with Vietnam, are actively participating in the Trans-Pacific Partnership (TPP) negotiations, he added.

For his part, Mexican ambassador Gilberto Limon Enriquez said the PA is considered a highly effective organisation, promoting trade liberalization and global integration setting the stage for stronger links between Latin America and the Asia-Pacific region.

It has laid a solid foundation for cooperation among its member countries in various fields, such as environment, climate change, science-technology, and social development, he added.

Other issues raised for discussion also covered opportunities, challenges, and commitments of the PA, as well as its influence on countries in the Western Pacific region, including Vietnam, China, and Japan.

Established in 2012, the PA aims to fully develop into an integrated economic unit of the Latin American region, with a closer connection with Asia-Pacific countries.

The PA has drawn due attention of many countries around the world, and currently has 30 observers, including the US, Canada, Australia, Japan, China, the Republic of Korea, the UK, and France.

New manufacturing facility opens in Dong Nai

Aureole Fine Chemical Products Inc. (AFCP), a wholly owned subsidiary of Japan’s Mitani Sangyo Group, inaugurated its first manufacturing plant in Long Thanh Industrial Park, in Dong Nai on April 24.

The facility was constructed on an area of 30 hectares with a total investment of US$10 million.

According to representatives from AFCP, the company will begin operating in early May, producing various types of chemicals along with differing powders used in the food processing and cosmetics industries.

The new facility is generating hundreds of skilled and unskilled jobs.

Vice Chairwoman of Dong Nai province’s People’s Committee, Phan Thi My Thanh said that there are 31 industrial parks operating in the locality that have attracted over 1,400 foreign investment projects capitalised at nearly US$25 billion.

Japan now ranks fourth among 40 nations and territories investing in Dong Nai with 173 projects worth over US$2.9 billion.

Thai Retail Fair opens in Hanoi

The annual Thai Retail Fair kicked off in Hanoi on April 24 with over 100 leading Thai businesses showcasing their products in more than 120 stalls.

At the fair, taking place from April 24 – May 27, businesses are displaying their wares including food, beverages, fruits, household utensils, electrical appliances, garments and textiles, cosmetics, decorative articles, souvenirs, auto parts, vehicle and bicycle components.

The event provides companies a great opportunity to develop new business relationships and become more informed about the Vietnamese retail market,” said Pham Thi Hong Thanh, a senior official of the Ministry of Industry and Trade at the opening ceremony.

She said over the past seven years, the Thai retail fair in Hanoi has received a great amount of attention of local consumers, and Thai businesses have gradually found a firm foothold on the Vietnamese market.

The total import-export turnover between Vietnam and Thailand reached US$9.4 billion in 2013, up 10% compared to the same period last year. Both sides aim to raise the figure to US$15 billion by 2020.

Vietnam is now the second largest ASEAN trade partner and the ninth largest global trade partner of Thailand.

The future of Vietnam’s retail industry

Five years after opening its retail market in line with the World Trade Organisation (WTO) commitments, Vietnamese businesses are meeting with difficulties, struggling to survive in the face of fierce competition from foreign rivals.

With huge financial advantages, the more experienced world renowned retailers such as Metro Cash& Carry, Bourbon (Big C) and Parkson have opened stores in Vietnam gaining the confidence of consumers and are beginning to dominate the market, edging out the local competition.

Meanwhile, other European giants like Walmart and Carrefour are standing in line, eying the lucrative potential in the Vietnamese marketplace.

Supermarket products are now popular with Vietnamese consumers (Photo:VTV)

Over the past five years, trade centres, supermarkets, and convenience stores have mushroomed in Vietnam. The number of convenience stores now makes up 20% of the retail market and the figure is expected to increase twofold in 2014.

However, Vietnam’s retail market is beginning to reveal its weaknesses, especially the lack of supply chain linkages among retailers and definite lack of oversight in managing the growth of the industry, leading to spontaneous development and unhealthy competition.

Only a few Vietnamese retailers such as Co-op mart and Vinatext mart have fully developed market strategies with well thought out and highly integrated supply chains capitalising on local producers and suppliers to ensure sufficient supplies for consumers.

An appalling lack of professionalism in the retail culture is bottlenecking the fledgling retail industry from developing to its fullest potential.

With these drawbacks, many people are sceptical about the future prospect of Vietnam’s retail industry. Undoubtedly the industry has plenty of opportunity to develop given its potential and support from the State, but it needs a new thinking from market managers and stakeholders.

Experts advise Vietnam not to develop the number of convenient stores too fast, explaining Vietnamese consumers are familiar with shopping at traditional markets rather than supermarkets and it is difficult to change this age-old habit overnight.

They suggest Vietnam heavily invest in training to generate a contingent of qualified retail staff meeting international standard.

Vietnamese businesses will lose out to foreign rivals on the home turf if they do not team up to address their weaknesses, especially when foreign retailers are permitted to establish wholly foreign invested businesses in Vietnam as of January 2015.

Dong Nai: Coffee export volume increases twofold

The southern province of Dong Nai has exported 100,000 tonnes of coffee in the first four months of the year, a two-fold increase compared to the same period last year, according to the provincial statistics office.

Dong Nai’s largest coffee consumers are the US, Germany and some other European countries.

The Tin Nghia Corporation is the largest coffee exporter in the province, shipping abroad 55,000 tonnes in the reviewed period alone.

Quach Van Duc, chairman of the corporation, said the price of export coffee remains stable at about US$2,100 per tonne, while the domestic price of coffee beans hovers around VND41,000-43,000 per kilo.

Duc said the Standard Chartered Bank has recently signed a sponsorship deal worth US$22 million with the corporation, enabling it to export coffee to European and Asian markets. It plans to raise its total coffee output for export from 100,000 tonnes to 140,000 tonnes in this 2013-2014 crop season.

Stronger support needed for SMEs

Vietnam should provide more support for small and medium-sized enterprises (SMEs) to help them improve capacity and competitiveness, said Alain Chevalier, a chief advisor for a SME assistance programme.

At a recent seminar on Vietnam-France trade and investment promotion held by the Ministry of Industry and Trade (MoIT), Alain Chevalier praised the fine adjustment made by the Vietnamese government in the scale of state-owned enterprises (SoEs).

Further assistance to SMEs and a reduction in the number and scale of SoEs have demonstrated Vietnam’s sound policies, he added.

Alain noted that Vietnamese people are very intelligent and creative, with many initiatives for developing the household economy. If they receive the right support, they can develop SMEs effectively, he noted.

With enormous potential for developing service and manufacturing sectors, SMEs can team up with large groups to engage in the support industry. They are also enjoying favourable conditions to penetrate fields such as information technology, tourism and finance, Alain said.

However, he pointed out some hurdles facing SMEs, including limited access to financial sources thus putting them in a difficult position to pay taxes, apply advanced technology and sharpen competitive edge.

Alain’s view was shared by Hoang Gia Media Group General Director Hoang Hai Au, who said local businesses, especially SMEs, are suffering numerous challenges due to weak liquidity, low purchasing power and large inventories.

It’s difficult for Vietnamese businesses to compete against foreign rivals and stand firm on home turf as they have to pay high interest rates of bank loans. In addition, local firms are struggling to protect their trademarks in the face of invasion by foreign companies, Au elaborated.

He said that in many countries, including the US, SMEs are considered a great source for job generation and GDP contribution, while giant groups create reputation and represent a country on the global market.

Vietnam’s Enterprise Law (revised) is expected to help SMEs iron out teething problems and operate more efficiently, he added.

Alain suggested Vietnam learn experience from developed countries in assisting SMEs in their fledgling period. The government should assist SMEs who are in need of technical assistance, zoning plans and development strategy.

In Switzerland, SMEs are regarded as the backbone of economic growth, and the government is willing to help them with investment capital and technology, he said, citing Nestle as an example.

As an one-member firm previously, Nestle was then expanded, and soon became a globally renowned brand name. Thanks to its flexibility, creativeness and self-recovery ability, Nestle has generated huge job opportunities and overcome difficulties and challenges caused by the world’s economic downturn, Alain noted.

He hailed SMEs’ crucial role in boosting Vietnam’s economic growth, apart from valuable inflow of foreign direct investment (FDI).

Regarding business consultation, Hoang Hai Au emphasised the need to provide stronger support for SME and introduced a programme called CEO SME 2014 that aims to help local businesses improve management and administration capacity.

Local businesses increase access to global supply chain

Measures to help Vietnamese businesses penetrate the global supply chain were raised for discussion at an April 22 seminar in Ho Chi Minh City.

The event was co-organised by the US-ASEAN Business Council (USABC), the US Agency for International Development (USAID), and the Vietnam Chamber of Commerce and Industry (VCCI).

Nguyen Phuong Dong, HCM City Department for Industry and Trade, Deputy Director highlighted a number of shortcomings that prevent local firms from taking part in the global supply chain.

Most Vietnamese businesses still find it difficult to enter the world market due to their weak competitiveness, poor knowledge about labour management and distribution, and lack of long-term plans and competition strategy, he said.

Dong revealed approximately  300 domestic enterprises are capable of joining the chain but they only provide replacement parts not involving in the production of key products.

 They are currently investing in material area development, upgrading facilities, and applying modern technology, as well as seeking trade partners, especially those from foreign countries.

However, he said, most of them are small and medium sized businesses with limited investment capital, making it difficult to participate in the global supply chain.

Speakers from the USABC also provided information on import trends in several huge markets - Japan, China and the US and pointed out advantages and challenges for Vietnamese exporters.

They also shared experience in helping Vietnamese businesses increase operational efficiency and utilize their advantages to expand export markets and engage in the chain.

More than ten outstanding businesses were selected to become involved in the mentoring program with other firms from ASEAN and the US, with a view to building a strong community of small-and-medium-sized enterprises.

Giant fast food restaurant chains keen on firm footholds in Vietnam

Vietnam’s fast-food franchise market is growing robust with the entrance of an array of foreign players, the Vietnam Investment Review (VIR) reported.

McDonald’s has just opened its first restaurant in Vietnam which is capable of accommodating 350 people in-house as well as its to-go services.

In the first month of operation, the restaurant served more than 400,000 customers and sold 61,980 Big Macs, the company’s flagship burger.

According to Nguyen Bao Hoang, founder of food and travel services firm Good Day Hospitality – the Vietnamese franchise holder of McDonald’s in Vietnam, the customer numbers have surpassed expectations and they plan to open second restaurant in Ho Chi Minh City in very near future.

Hoang has ambitious plans to spread the chain across Vietnam in a similar fashion to Singapore which has 100 McDonald’s restaurants, and the Philippines with 400.

Coffee giant Starbucks has also advanced into Vietnam under an agreement with Coffee Concepts Vietnam, a branch of Hong Kong’s Maxim Group.

The first outlet was launched in early February 2013.

Since, it has expanded to four stores and has scaled up efforts for their upcoming launch in Hanoi, likely in the second quarter.

In late October 2013, BBQ Vietnam’s BBQ Chicken restaurant chain, part of Korea’s Genesis BBQ, reopened its property on Trang Tien street under a new name BBQ Premium Café.

BBQ Vietnam was one of the first fast food chains to enter the country, since 2006 it has opened 16 restaurants in Hanoi (11 under franchise agreements).

BBQ reportedly has an aggressive expansion plan that aims to unseat rival McDonalds in terms of number of restaurants by 2020. The plan foresees this requiring a total 50,000 outlets.

According to BBQ Vietnam director Sim Hwang Jin, the company is working on a plan to expand its outlet system in satellite cities in the north and south as its restaurants are actually more successful in small cities rather than the major ones.

Positioning in smaller localities would also help BBQ solve the outlet space problem that often plagues franchises in big cities.

“Global brands are competing for the top spots in big cities. Not every franchise can afford this strategy,” Sim told the VIR.

KFC is one of leading players in Vietnam at this point with 17 years in the market and more than 180 outlets in 18 provinces and municipalities.

But KFC might be facing mounting pressure from the wave of new brands in recent years, that also include Burger King, Domino’s Pizza, Popeye’s and Dunkin’ Donuts, brought to Vietnam by Imex Pan Pacific Group (IPP Group) owner Jonathan Hanh Nguyen.

Last year these chains contributed 8.04 percent to IPP’s total revenue.

The Republic of Korea’s Lotteria dropped anchor in Vietnam only a year after KFC, the brand now features over 187 Vietnam outlets.

“After a long presence in Vietnam, we finally won consumer confidence, which is a solid foundation for us to overcome this difficult time,” CEO Cho Young Jin was quoted as saying.

Da Nang develops souvenir business

Souvenir business in the central city of Da Nang has strongly developed in recent years. The business has created jobs for local people and helped lure more tourists to the city, Da Nang Today reported.

The Quang Huy Handicrafts Production Company in Cam Le District is a typical example. Apart from expanding its space and creating more job opportunities for local people, the company now produces various tourism products.

Amongst them, the hand-made wooden items depicting the Dragon Bridge are the most popular. In addition, the company has also received many orders for other wooden products such as fruit dishes, flower baskets, and sailing ships inside bottles.

Another example is the Truc Xanh (Small Green Bamboo) Company in Ngu Hanh Son d istrict, which specialises in making handicrafts from quartz. In addition to a wide range of stone jewellery and statues, Truc Xanh has created many landscape paintings made from quartz such as the beauty of the Son Tra Peninsula, the Marble Mountains, and the cherry bell flowers of the Ba Na Hills Resort.

The company has also provided many products imbued with Vietnamese cultural identity, including rice mortars.

The company’s Director Nguyen Thi Thanh Huyen, said that her company’s products have helped to advertise the city's image and promote her company’s own brand name to international markets.

She added that her company’s products are often sold at fairs and at the Museum of Cham Sculpture. Most notably, her company often receives orders from the city’s agencies and departments to present to their foreign partners.

Thanh Thien Fine Art Sculptures, Pho Hoi and Dai Duong (Ocean) Gifts companies have also become actively involved in creating new tourism souvenirs, and improving the quality of their existing ones.

Their products, which are mainly made from bamboo, wood and stones, re-create some of the unique images of the city, such as the Marble Mountains, the Han River Swing Bridge and the Dragon Bridge.

Da Nang plans to develop tourism into one of the key sectors that makes up a large proportion in its economic structure. The city has set a target of welcoming 3.6 million visitors, including 820,000 foreigners, earning more than 8.8 trillion VND (420 million USD) in 2014. It also aims for an average annual tourism revenue growth of 15-16 percent between now and 2020.

Last year, the city welcomed over 3.1 million travellers, including 743,000 foreign visitors, generating some 7.8 trillion VND (371 million USD), an increase of 29.8 percent from 2012.

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