BUSINESS NEWS IN BRIEF 28/7

Farm produce, agricultural machinery fairs open in HCM City

Three international fairs – Farm & Food Tech 2018, Vietnam Farm and Food Expo 2018 and Agritech Vietnam 2018 – are taking place in Ho Chi Minh City. 

The three-day expos which will run till July 28 feature 200 booths from local and foreign exhibitors.

Many of the exhibitors are from countries and territories that have advanced agricultural technology, including the Republic of Korea, Japan, Malaysia and China.

The exhibitions introduce a wide range of post-harvest preservation and treatment technology, machinery and equipment for food-safety testing and tracing product origin; food processing and printing and food packaging machinery and equipment; agricultural products; biotechnology; and gardening tools, among others.

Speaking at the opening ceremony, Nguyen Phuong Dong, Deputy Director of the city’s Department of Industry and Trade, said the three fairs offer businesses a chance to introduce their latest agricultural technologies and learn about advanced technologies and equipment, as well as help producers and traders exchange information and explore business opportunities.

The events also help promote the use of technology in agricultural production and processing with the aim of improving productivity, quality and export value of the country’s agricultural products, according to Dong.

The expos are organised by the department in collaboration with the HCM City Union of Business Associations.

Seminar helps Mekong Delta firms grasp chances from CPTPP

A seminar was held in Can Tho city on July 25 to help enterprises in the Mekong Delta seize opportunities from the Comprehensive Partnership and Trans-Pacific Partnership (CPTPP) trade agreement and take advantage of the vast Chinese market.

Attending the event, hosted by the Vietnam Chamber of Industry and Commerce’s branch in Can Tho (VCCI Can Tho), were leaders from VCCI Can Tho, economic experts, and representatives of the city Departments of Planning and Investment, and Industry and Trade, as well as associations of enterprises and enterprises from provinces and cities in the region.

The delegates discussed the CPTPP’s impacts on some key industries in the Mekong Delta as well as advantages and challenges of Vietnamese products exported to Chinese market.

Phung Thi Lan Phuong, head of the FTA Division of the WTO and Integration Centre of the VCCI, said the CPTPP was viewed as a better option for Vietnam and its 10 other member countries, following the US withdrawal from the former Trans Pacific Partnership (TPP).

She said the CPTPP would enable Vietnam to sign three new free trade agreements (FTA) with Canada, Mexico, Peru and seven upgraded FTAs with other members.

The CPTPP brings benefits from reduced tariffs, which could increase Vietnam’s GDP by 1.1 percent annually. Though this number is less than one-sixth of the same benefits the former TPP had promised, the CPTPP may help boost the country’s institutional economic reform, she said.

She also said, however, it would be a challenge for the Vietnamese business community to take full advantage of the CPTPP. 

The task of implementing the deal is of great importance for domestic enterprises.

Economic growth dynamics in Vietnam Nam are still lacking because of low labour productivity and over-dependence on the world economy and the foreign-invested sector, according to Phuong.

The country must improve productivity and administration, and demonstrate an overall commitment to the free trade conditions of the agreement, she said. 

On March 8, 2018, Vietnam and 10 other economies signed the CPTPP. If six countries approve it by the end of 2018, the CPTPP will come into effect in 2019.

CPTPP, also known as TPP-11, is an open free trade agreement (FTA) whereby countries can join after the agreement enters into force if they accept its standards and member countries agree.

The 11 signatories to the CPTPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Also at the event, results of a survey conducted by VCCI Can Tho were released, showing that most enterprises in the Mekong Delta are optimistic about their business prospects in the second half of the year.

Nguyen Phuong Lam, Deputy Director of VCCI Can Tho, said according to the survey of 62 companies in the Mekong Delta conducted by the VCCI, more than 83 percent of businesses said they had stable business production in the first half of the year. 

Of the figure, 41.9 percent of the enterprises said business results had been better during this time; 45.2 percent said they had stayed the same; and 12.9 percent said it had been worse than the same period last year.

More than 90 percent of businesses said that business results would be better in the second half of the year, while 9.7 percent said it would be worse.

According to the survey, 80 percent of the enterprises plan to keep their current production scale, while 20 percent will expand production in the second half.

In the second half of the year, 30 percent of businesses said they would increase their sales by around 25 percent or less (mainly seafood, rice and garment makers), while 14 percent said they would increase sales by more than 25 percent.

Ten percent of businesses said their profits would remain unchanged; 34 percent said their profits would increase; and 14 percent said their profits would decrease, according to the survey.

Most of the companies said they had experienced some difficulties because of fluctuating prices of materials, as they are dependent on imported raw materials. Meanwhile, fishery enterprises said they faced difficulties in consumption.

In the first half of the year, the region’s export turnover reached 8.2 billion USD, a year-on-year increase of 1.45 billion USD. The figure is expected to hit 17 billion USD by the end of the year.

Vietnamese start-up Homedy.com raises funds from three investors

Vietnamese real estate start-up Homedy.com successfully secured its second round of funding from three foreign investors. — Photo vneconomy.vn

Vietnamese real estate start-up Homedy.com has announced it has successfully raised funds from three foreign investors, including Genesia Ventures, Access Ventures and Mynavi Corporation.

The total amount of funding has not been disclosed. This was the firm’s second round of funding.

With new capital, Homedy will focus on two areas: Big Data and mobile apps.

Big Data will be used to analyse user data to help consumers make smart decisions, while the app will provide an enhanced search experience for users. Homedy.com will also continue to develop technology, recruit new people, and expand its market.

Founded in 2015 by Nguyễn Bá Đức and Vũ Minh Hiếu, the three-year-old startup is a property portal in Việt Nam with over one million users. Homedy recently launched an interior design project called My Homedy, which aims to help people design their own home.

The owners have experience in digital marketing and communication. They used to operate online music website nghenhac.info which was sold to Japanese Irep Co in 2014.

Currently available only in Hà Nội, Homedy.com said they would expand to Đà Nẵng and Nha Trang by the end of this year. It would also expand to other Southeast Asian countries such as Indonesia and the Philippines in the next one to two years.

Genesis Ventures is a venture capital fund that supports tech startups in Japan and Southeast Asia. Founded by Soichi Tajima, former CEO of CyberAgent Ventures, Genesis Ventures has supported more than 40 companies in Japan, Indonesia, Việt Nam, Singapore and the US.

Access Ventures has focused on helping startups in Việt Nam, Indonesia and South Korea. The firm is led by Charles Rim and John Chang. Rim is head of mergers and acquisitions for Yahoo and Google in Asia. Chang is the co-chair of APAC for Barclays and also the CEO of Deutsche Securities Korea.

Mynavi is one of the leading Japanese companies providing human resource services and business-to-consumer (B2C) information channels. 

UOB retains 2018 GDP growth forecast for Vietnam at 6.8%

The Vietnamese central bank is expected to keep refinancing rate on hold until at least the end of this year, a UOB economist wrote.

Singapore-headquartered United Overseas Bank (UOB) has kept its 2018 growth projection for Vietnam unchanged at 6.8% despite a robust rate of economic expansion in the first half of this year.

The move is due to the “high base effects which will exert a statistical dampener on growth, particularly in 2H18,” the bank said in a recent report.

UOB economist Manop Udomkerdmongkol pointed out that high transport and energy infrastructure investments remain key growth drivers. Industrial production will be boosted by continued opening of new multinational enterprises in labor-intensive, export-oriented manufacturing and processing industries.

Vietnam’s economy grew 6.8% in 2Q18 and 7.1% in 1H18, bringing the six-month growth to 7.08%, the fastest pace since 2011, according to official data. The growth in 1H18 was mainly driven by industry, construction and services, particularly wholesale and retail, transport, banking and finance, education and healthcare.

Exports and tourism will benefit from a broad-based global recovery. Private consumption should be supported by rising household income and an expansion in private credit.

Nevertheless, the economy will still be facing economic risks, especially an increase in global protectionism. If the trade tensions between Vietnam’s two largest trading partners – the US and China – were to worsen, it would lead to negative spillover effects on Vietnam’s growth prospects, the economist noted.

Looking ahead, in terms of monetary policy, the State Bank of Vietnam (SBV) is expected to keep refinancing rate on hold until at least the end of this year, the economist wrote.

At the current benchmark rate, the monetary policy stance remains conducive to the continuation of economic expansion. The strong growth eases pressure on the government and the SBV to add more stimuli so as to achieve annual growth target of 6.7% under the 2018 socio-economic development plan.

As a consequence, another policy rate cut may not be on the cards at the central bank even as other Asian central banks have started to pursue monetary policy normalization by raising policy rates gradually.

Wínk Hotels secures prime location in Da Nang for third Vietnam project

Indochina Kajima Development Limited (ICC-Kajima), the developer of the Wínk Hotels brand, has acquired a second site in Da Nang city for the construction of its third hotel worth US$40 million under the brand name of Wínk in Vietnam.

Wínk Hotels, the visionary hotel concept created by Indochina Vanguard Hotels (ICC-Vanguard) announced the third location in Da Nang’s business and entertainment district. 

The property will offer a new style of entertainment, innovative food and beverage concepts, minimalist-style guestrooms and a well-equipped coworking space.

Situated on Tran Hung Dao Street running along the Han River, and sandwiched between two of Da Nang’s iconic bridges – the Han River Bridge and the Dragon Bridge, the hotel complex will offer spectacular unobstructed views of the Da Nang skyline and Hai Van Mountains on one side and the Son Tra peninsula, Cham Islands and East Sea on the other.

Compared to Wínk’s first two projects at 75 Nguyen Binh Khiem, Ho Chi Minh City, and 178 Tran Phu, Da Nang, ICC-Kajima has much bigger ambitions for the Tran Hung Dao site.

The site’s prime location, on the bank of the Han River and in the city’s central business and entertainment district, speaks to the great potential of the development, according to Tuan Bui, General Director of ICC-Kajima.

With a total project value of US$40 million, the development will be a mixed-use complex consisting of a Wínk Hotel, Wínk Suites, the brand’s serviced apartments, and a podium devoted to food, beverage and entertainment. The building will have a 25 floor, 60-meter façade that runs across Tran Hung Dao Street, along the Han River. It will house 252 Wínk Hotel rooms and 70 Wínk Suites.

Vietnam has been witnessing strong growth of international hotels brands and foreign hospitality management companies in recent years. According to Savills Hotels, a particularly large increase has been observed in 2018 with recent announcements of Mandarin Oriental and Movenpick in Ho Chi Minh City, Best Western Premier in Quang Binh and Long Hai.

Compared to a few years ago, the number of projects that can appeal to international operators is much greater due to better quality, more international design concern, improved trust on foreign management companies and increased need for creating competitive advantages, according to Mauro Gasparotti, Director of Savills Hotels Asia Pacific.

“We observed a large increase of interest from operators in the country in the past three years, following the expansion of the hospitality market,” said Mauro Gasparotti.

“Vietnamese developers are still new to hospitality products, but with a large amount of supply coming, there will be a fast learning for some of them and more quality asset are expected to be underway,” he added.

Viettel Global suffers loss of nearly US$4.7 million in Q1

 High corporate tax rate led to Viettel Global`s continuing loss.

Viettel Global, the international investment arm of the military-run Viettel Group, posted a after-tax loss of VND107 billion (US$4.66 million) in the first quarter this year, after the deduction of both current and deferred corporate taxes, according to the company’s quarterly financial statement. 

As of March 31, Viettel Global’s pre-tax profit stood at VND13.9 billion (US$605,345), a significant improvement from the loss of VND139 billion (US$6.05 million) that the company suffered at the same period last year.

Corporate tax totaling VND121 billion (US$5.26 million) caused the company to post a loss of VND107 billion (US$4.66 million) in the period. 

During this six-month period, the company’s revenue reached VND3.94 trillion (US$171.5 million), slightly down 2.2% year-on-year, while the company’s gross profit increased by 42% to VND904 billion (US$39.3 million). 

At present, Viettel Global is subject to corporate tax rate of 20%, while the rate varies among its subsidiaries, in particular Viettel Cameroon with a tax rate reaching 33%.

In the January – March period, income from financial activities jumped by four times against the same period of last year to VND550 billion (US$23.9 million), mainly thanks to change in interest rates. With a similar reason, financial expenses saw a sharp increase, up 2.3 times to VND581 billion (US$25.3 million).

Meanwhile, sales expenses stayed around the same year-on-year at VND369 billion (US$16 million) and administrative expenses increased by 36% to VND584 billion (US$25.4 million). 

Recently, Viettel Global has fixed the list of shareholders as a basis to register its shares with the Vietnam Securities Depository (VSD), with the view of listing shares on the Unlisted Public Company Market (UPCoM), according to the Bao Viet Securities Company (BVSC). The registered amount is 2.24 billion shares, corresponding to charter capital of VND22.43 trillion (US$972.3 million).  

Viettel Global’s total assets by the end of the first quarter reached VND51.6 trillion (US$2.24 billion), down 0.54% compared to the beginning of the year, of which the majority are receivables (both short- and long-term) at VND19.1 trillion (US$831.8 million) and fixed assets of VND14.5 trillion (US$631.4 million). 

Its equity in the first quarter was reported at VND18.3 trillion (US$797 million) and accumulated loss of nearly VND3.6 trillion (US$156.7 million), while payables slightly decreased by 0.5% to VND33.3 trillion (US$1.45 billion). 

Viettel currently is the only Vietnamese companies having revenue of over US$1 billion in overseas markets. It has some 43 million clients in foreign markets as of the end of 2017, up 15% year-on-year.

The telco is operating in 11 countries, including Vietnam, Cambodia, Laos, Timor East, Peru, Mozambique, Cameroon, Burundi, Tanzania, Myanmar and Haiti.

In 2018, Viettel targeted a positive profit in overseas investments with a growth rate of 32% compared to 2017, while expanding its customer base in foreign markets to 50 million. 

MoH looks at PPP model for healthcare investors

In light of the latest moves by the Ministry of Health, the door for domestic and foreign private investors to join public-private partnership projects in Vietnam’s lucrative healthcare sector will open in the next few months.

The Ministry of Health (MoH) is working on a circular to guide the development of public-private partnership (PPP) projects following the issuance of Decree No.63/2018/ND-CP governing investment in the PPP format, which came into effect on June 19, 2018.

“Private investment in the healthcare industry remains modest. It’s necessary to have a favourable business environment to promote the development of the private sector, thus creating a foundation for the PPP model in the future,” said an MoH senior official.

“We are also working on the amendment of Decree No.85/2012/ND-CP on the operation and financial mechanism of publicly run medical units towards promoting more private investment,” the official added.

These are considered strong signals by MoH, showing the positive change in its investment attraction strategy with more focus on the private sector. At present, Vietnam’s healthcare system is mostly publicly invested, while the privately run segment makes up only 5 per cent.

The signal was reinforced when Minister of Health Nguyen Thi Kim Tien made a call for private investment, including through the PPP format, at an online conference held in early July, naming upgrading communal clinics to increase their examination and basic treatment quality and thus easing the overload of central hospitals as a priority area.

The call comes as communal clinics have been invested in by the state for years, but their infrastructure fails to meet the growing demand.

For years, PPP has attracted interest from foreign investors in different sectors, including the healthcare industry, which boasts about 800 foreign firms.

The Vietnam Business Forum (VBF) Healthcare Working Group has encouraged the Vietnamese government to create a clear sector development roadmap led by a senior inter-ministerial taskforce. This roadmap should include an effective plan for various PPP projects, especially in enhancing the development of private clinics and hospitals, to take full advantage of support from the private sector.

“International healthcare companies, with international best practices and technical know-how, can help make a difference and create value and growth in Vietnam through PPP projects in research, innovative solutions, manufacturing, and technology transfers,” said Ngo Van Huy, representative of the VBF Healthcare Working Group.

According to the European Chamber of Commerce in Vietnam’s Pharma Group, members of which include Merck KGAA, Pfizer, Hoffman-La Roche Ltd., and Sanofi-Aventis Vietnam, the local pharmaceutical industry will be able to increase its capabilities through partnerships with multinational corporations, expand their product portfolio to contain more valued-added medicines, and use technological know-how to produce export-quality medicines.

Along with these moves and some never-before-seen highlights in Decree 63 related to investment capital, investment incentives (import duty, corporate income tax, land use levy/rental, loans), guarantees, and dispute settlement, domestic and foreign firms can expect more opportunities to join PPP projects in the industry.

Vietnam’s pharmaceutical market has emerged as increasingly appealing to foreign investors, given the growing demand for high-quality and accessible healthcare services. In addition, the enforcement of several free trade agreements (FTAs), including the EU-Vietnam FTA, should further open the market.

The market is on track to grow quite strongly in the near future. In 2017, the revenue of the market was estimated at $5.2 billion, up about 10 per cent on-year, and it is expected to continue seeing double-digit growth rates over the next five years, according to London-based Business Monitor International.

Handover delay of Mandarin Garden 2 to cut Hoa Phat’s profit by VND200 billion

Ho Chi Minh City Securities Corporation (HSC) estimates that the after-tax profit for 2018 of Hoa Phat Group will reduce by VND200 billion ($8.8 million) due to the handover delay in the Mandarin Garden 2 project in Hanoi.

HSC has just released its assessment report on Hoa Phat Group (code: HPG). The report details HSC’s estimate of HPG’s net revenue in the first half at VND27.14 trillion ($1.2 billion), up 30 per cent on-year, and after-tax profit at VND4.473 trillion ($197 million), up 28.7 per cent.

HSC also outlined several short-term challenges of HPG. Specifically, the consumption volume of construction steel reduced to 148,822 tonnes in the first half of this year, down 11.4 per cent on-year and 34.92 per cent in comparison with previous months.

This decrease is a result of the heavy rains typical of June. Moreover, steel distribution agents need time for consumption after a peak in consumption volume in May. They may also be waiting for steel prices to increase before making purchases for reserves.

The average selling price has declined by 2.2 per cent since mid-June after increasing for 12 consecutive months from VND10.5 million ($463) to VND13.6 million ($600) per tonne. The price of construction steel is currently VND13.3 million ($586) in line with a global price decrease.

According to HSC, Mandarin Garden 2 project of Hoa Phat Group is currently being assessed for the suitability of its fire prevention and fire fighting system, the result of which could affect both the project’s delivery plan of its apartments and the group’s profitability.

Thereby, HSC forecasts a VND200 billion ($8.8 million) reduction in HPG’s after-tax profit for Mandarin Garden 2, and of VND94 billion ($4.14 million) for the decrease of steel volume.

Earlier, the Hanoi Police Department of Fire Fighting and Prevention issued a penalty of VND40 million ($1,760) for administrative violations by the developer of Mandarin Garden 2. Hoa Phat Group put the building into operation without a fire certificate.

The agency detected numerous violations of the fire code at the complex of 26-storey and 30-storey towers. For example, the construction of the commercial service area from the first to the sixth floor was not complete, and the fire detection and fighting systems were not operational.

In addition, the glass walls and fire doors in the elevator’s basement buffer room did not guarantee fire resistance in line with the approved design documents. There are also numerous violations related to the exits and fire safety system.

Vietnam’s property market unlikely to see crisis in the next two years

Experts at the seminar “Crisis Cycle and Investment Opportunity in the Property Market” held by Thanh Nien newspaper in Ho Chi Minh City on July 18 agreed that a property crisis in unlikely during the next two years.

According to Phan Truong Son, head of the Housing and Property Development Division under the Ho Chi Minh City Construction Department, a property crisis in unlikely during the next two years since the supply of houses in the first half of this year was lower than that of the same period last year.

Around 9,700 units of all grades were launched to the market in the first half of the year, compared to 16,400 units in the same period last year.

“The number of apartments for sale has been quite stable while the fever seen in land plots in some outskirt areas of the city has been due to the development of infrastructure such as first metro route, Long Thanh – Dau Giay Expressway, Long Thanh Airport, Cat Lai Bridge and many other ring roads that have been constructed around the city,” Son said.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that this fever in land plots resulting in a price hike occurred in two segments from the end of 2016 until May this year, particularly in the three proposed special economic zones. However recently this fever in land plot sales has settled.

According to Chau, a crisis real estate situation occurs under certain conditions such as sudden development of the economy, loosening policies from the government on credit management, a big gap between supply and demand and an increase of speculators.

“These factors have so far not occured in Vietnam so it’s unlikely there will be a crisis situation in the near future until at least 2019,” Chau said.

In reality, during the last four decades Vietnam’s economy has experienced a crisis roughly every ten years.

Promoting high quality tourism services exports

According to the General Statistics Office, the export revenue from Vietnam’s tourism services was estimated at US$5.2 billion for the first six months of 2018, up 18.9% over the same period last year.

The figure was also higher than the growth rate of total service exports (16.4%) and higher than the increase of total merchandise exports (16.0%) in the first half of 2018. Tourism exports only increased by 9.4%, so the tourism sector witnessed a trade surplus increase of 31.6% over the same period last year in the context of Vietnam’s continuous trade deficit in services while its exports of goods is unstable.

In the first six months of 2018, the number of visitors to Vietnam increased 27.2% over the same period last year, with increases recorded in arrivals through all channels and from all continents. However, it should be noted that despite the strong increase in international visitors, the growth rate of tourism revenue is always lower than that of tourist arrivals. The average spending of each international visitor to Vietnam is only US$92.2 per day, lower than the average rate of US$96 per person a day in the world. 

In 2017, the average daily expenditure of each international visitor to Vietnam was US$15.1 for travel and US$14.5 on purchasing goods. The average number of days each visitor spent in Vietnam in 2017 was 7.2 days, shorter than the 8.7 days in 2005; 9.5 days in 2006; or 9.1 days in 2009. It can be seen that the average spending and length of stay of overseas tourists is on a downward trend and tourism efficiency is not high.

The export of tourism services depends largely on the number of international visitors and the number of days they stay, the development of infrastructure, the variety and attractiveness of tourism products, among other factors. It is straightforward to admit that Vietnamese tourism still has many shortcomings and weaknesses, such as the lack of seriousness in planning leading tourist destinations, causing disorder and disrupting the natural beauty and environment of many coastal areas and national tourism areas. In addition, the lack of tourist accommodation and special tourism products as well as human resources serving the sector is one of the limitations facing the country’s tourism sector. In general, Vietnam still focused on increasing the number of tourists without paying much attention to attracting high-spending customers as well as interdisciplinary solutions and policies to increase the spending of visitors.

Promoting the export of high-quality tourism services is an important orientation in the development of Vietnam’s tourism, contributing to the development of a spillover effect and the role of tourism as a key economic sector, and to improve the international service balance. Sectorial and local authorities and enterprises should raise their awareness of the situation and strengthen close coordination while focusing on investments in technical infrastructure complexes in a synchronous manner and the diversification of high quality and closed-end tourism products, as well as developing attractive and unique tourist products, such as community-based tourism, eco-tourism and traditional villages.

At the same time, it is necessary to highlight the importance of the development of high-quality tourism human resources; resolutely eliminate acts of coercion and deception in tourism sites and develop a system of convenient transportation services between domestic and international destinations. In order to promote the export of high-quality tourism services, it is essential to drastically implement projects to restructure tourism, considering it a core measure to maintain sustainable growth for the economy. In addition, travel businesses should also focus on improving the quality of their services and competitiveness to attract more tourists.

Shark catfish farming catching on     

Shark catfish farming has grown rapidly in An Giang Province due to the authorities’ efforts to introduce sophisticated farming techniques and new technologies.

The fish is farmed on around 741 hectares of ponds, 11.2 per cent higher than a year ago, with output in the first half of this year being 16.4 per cent higher at 167,000 tonnes.

With demand for shark catfish being large, prices have ruled consistently high at VND29,000-31,000 (US$1.26 – 1.34) per kilogramme, fetching farmers an income of VND9,000 per kilogramme.

According to the provincial Department of Industry and Trade, 58,920 tonnes of the fish have been exported this year for $139.5 million, a 22.3 per cent rise.

The exports went to 72 countries.

Demand for juvenile catfish for farming has also increased, and over 1.2 billion juvenile fish were bred for the purpose this year, 7.5 per cent higher than last year.

The provincial Department of Agriculture and Rural Development has been helping farmers learn proper farming methods and testing water quality at farms to ensure they are optimal for raising the fish.

It is also working with farmers and businesses to plan breeding and harvesting activities.

An Giang plans to increase the area of shark catfish farms to 1,000ha by 2025 and exports to $380 million. 

Tay Ninh links farmers, businesses     

Links between farmers and enterprises are weak in the southern province of Tay Ninh, making it difficult to add value to local farm produce, according to its Department of Agriculture and Rural Development.

The department organised a workshop on Tuesday to discuss ways to bring farmers and businesses together to create value chains for vegetables and fruits.

It said farmers are often forced to harvest their vegetables early and sell to buyers at the farm because they are in need of cash for the new crop season.

These vegetables are then consumed at local markets or sold to HCM City and nearby provinces, with only a small quantity exported.

The processing and preservation of vegetables and fruits are mostly done manually using outdated methods. The province does not have a wholesale market for agricultural produce where classification and distribution can be done.

Links between farmers and enterprises are loose since much of the farming is small and scattered.

Vo Thanh Nhon, chairman of the Green Vina Tay Ninh co-operative, said since its establishment last year the co-operative has been functioning efficiently and has attracted 20 members.

But funds remain a problem since banks do not lend large sums for agricultural projects, he said.

He said the province should explore ways to strengthen farmers’ links with food companies and sellers of fertilisers and seedlings so that they could buy high-quality seeds and fertilisers and sell their produce to the companies, avoiding dependence on traders, who usually pay low prices to farmers.

Dinh Hung Dung, deputy general director of Lavifood, a fruit processor and exporter, said his company would buy from local farmers when once its plant in the province begins operation in September. It can process up to 500 tonnes of fruits a day.

He said small holders can grow pineapple and red-flesh dragon fruit since the new plant would need supply from 600ha and 500ha respectively of the fruits.

He said his company could offer farmers a guarantee of buying 100 per cent of their fruit output at reasonable prices.

Farmers with larger land holdings and co-operatives could grow mango, green-skinned pomelo and soursop to ensure steady incomes for a long term.

He said the company would collaborate with fertiliser and seedlings companies to help farmers buy them at reasonable prices and with banks to help farmers borrow.

Nguyen Duy An, deputy director of the department, said the province aims to have 50 per cent of its farm produce bought under contracts and 60 per cent of the produce grown to Vietnamese and global good agriculture practice standards by 2020.

It also plans to create by 2020 a 20,000ha clean vegetable zone and a 15,000ha specialised fruit zone, and double the latter’s size by 2030.

Japan engineering firms eye VN     

Japanese companies are investing heavily in the mechanical engineering industry in Viet Nam.

Koji Takimoto, head of the Japan External Trade Organisation (JETRO) in HCM City, said due to Viet Nam’s economic stability, many Japanese firms are moving their production to this country from China.

As a result, Japanese investment in Viet Nam has been growing steadily.

Last year the East Asian country topped the list of investing countries with a total of US$9.11 billion, or more than a quarter of all FDI that came to Viet Nam.

On average, money from Japan flows into around 500 projects in Viet Nam every year, most of it being for expansion.

These investments, especially in projects in the mechanical engineering sector, were used to buy machinery and equipment, Takimoto said.

Nakano Precision Company Limited was one such. Nguyen Cong Ly, its deputy director, said the company has been in Viet Nam for four years.

Following the construction of a factory at the Tan Binh Industrial Park (in HCM City’s Tan Binh District) last year Nakano had parts manufactured by local companies before assembling and exporting them to its parent company in Japan.

“We will further invest in machinery and equipment because there are signs of growth in the precision engineering, machine tools and metalworking industries,” Ly said.

Earlier this year Sanko Metal Viet Nam announced a $2 million investment in its factory at the Nhon Trach IP No 3 in Dong Nai Province.

Japanese firms are also collaborating with local companies to transfer technology and machinery and equipment to speed up local production of their products, a JETRO spokesman said.

At the 2017 International Precision Engineering, Machine Tools and Metalworking (MTA) Viet Nam, 12 Japanese firms signed business deals with local counterparts.

JETRO expects more such contracts to be signed at the upcoming 2018 MTA exhibition.

A recent survey by JETRO found that for Japanese companies in Viet Nam the rate of use of local products last year was 33.2 per cent compared with 57.1 per cent in Thailand and 68 per cent in China.

It said it would like the rate in Viet Nam to rise in the near future.

This rate has an effect on Japanese companies’ effectiveness, Takimoto said.

This is why many of them in supporting industries seek partners in Viet Nam for the transfer of technology, machinery and equipment, he said.

This trend would only strengthen in the coming years, according to the survey.

Lilama to withdraw all capital from Sông Vàng Hydropower     

The Viet Nam Construction and Machinery Installation Corp (Lilama) has decided to withdraw all capital from Song Vang Hydropower JSC (SVH).

Under the plan, Lilama will withdraw 7.9 million shares by order matching and settlement on the Unlisted Public Company Market (UPCoM) trading floor. The divestment plan is expected to be conducted in the last six months of 2018.

Da Nang-based SVH was established in 2004 by three shareholders of Lilama, PetroVietnam Power Corporation (PV Power) and Civil Engineering Construction Joint Stock Company No 586.

In the first quarter of 2018, SVH’s revenue reached VND19.2 billion (US$842,000) and after-tax profit was more than VND7.57 billion, down 8.5 per cent and 13.3 compared with the same period last year, respectively.

SVH attributed the fall in revenue and profit in Q1 this year to the decrease in the water volume flowing into the company’s lake, due to unfavourable weather in the central region. 

Smaller, below the radar Vietnam firms go hi-tech as needed

Small companies see Industry 4.0 not as an image booster, but as a tool to meet customers’ specific requirements.

Nguyen Luu Dung is a familiar face in Vietnam’s mechanics world.

He is the director of Vinamachines, a machinery and tools distributor. But he prefers being called a technical advisor. “In my company, everyone is just a machinery salesperson.”

Dung must be in the thick of things as Vietnamese leaders and experts repeatedly talk about the challenges and opportunities that the Fourth Industrial Revolution, Industry 4.0, presents to Vietnam, but he keeps a low profile.

“I have just delivered two machines costing VND20 billion (US$878,000) and VND50 billion (US$2.2 million) to an elevator maker to use in their stainless steel sheets manufacturing. With these machines, their manufacturing time has been cut down from eight hours to one hour.”

The machines have also helped his customer boost productivity from 300 to 600-800 elevators per month, he said.

Cutting edge technology in the machine and tools industry is already available and local firms like Dung’s customer are adopting them as they strive to remain innovative and keep pace with new technological developments.

But unlike big companies with solid financial resources and strong innovation capacity who advertise their huge investments in new technology and automation, smaller companies are rather quiet about this aspect of their growth.

For a real estate developer or a bank allocating dozens of billion dong is not a problem, but for mechanic manufacturers, it is a big decision that requires careful consideration, an economist told VnExpress.

Apart from capital, manpower is also a major obstacle for firms in integrating advanced technology into their production line. Skilled workers able to operate advanced automated machines are relatively scarce in Vietnam, he said.

At a recent workshop on digital transition, Vu Kim Hanh, president of the Business Association of High-Quality Vietnamese Goods, also mentioned manpower as one of the three main concerns of Vietnamese enterprises when thinking about digitalizing their operations, the other two being capital and data security.

“They worry about not being able to find capable employees. They also worry about not being able to prevent employees going away with their data. Even if firms can find qualified employees, they will soon lose them to other companies,” she said.

But Tran Viet Huan, APAC Digital Advisor of Microsoft Vietnam, said firms should not be worried too much about cost and manpower when applying digitalization, as technological solutions are now available on cloud platforms that are cost-saving and easy to use.

He said they can rely on these services in the beginning when implementing new technology without spending big bucks on hiring experts.

Last month, the Saigon Hi-Tech Park (SHTP) in HCM City set up the Viet Nam-Japan Training and Technology Transfer Center with the aim of solving the human resources problem for firms in adopting Industry 4.0 technology.

SHTP manager Le Hoai Quoc said the center was established to meet the demand of manufacturers for high quality workers who are equipped with Industry 4.0 knowledge and skills.

It is also expected to become a leading training center in the fields of robotics and automation in Southeast Asia over the next decade, he added.

HCM City develops key industrial products for higher competitiveness

Ho Chi Minh City will focus on developing key industrial products to raise its competitiveness.

The municipal Department of Industry and Trade met with more than 30 experts at a meeting in the city on July 25 to discuss ways to develop the city’s main industrial products.

HCM City is assessed as a dynamic city but its industries develop slowly, with no key products. The proportion of the four main industries is only 10 percent of its total Gross Regional Domestic Product (GRDP).

Speaking at the meeting, the department’s Deputy Director Nguyen Phuong Dong said the city’s economic growth rate had risen greatly in recent years, but its development capacity had encountered shortcomings.

He said that competitiveness was not high, infrastructure degraded, and land rentals remained rather high compared to other localities.

Added value to products also remains low, and key products have not been clearly identified, according to Dong.

Ly Thi Kim Chi, Chairwoman of the HCM City Food and Foodstuff Association, said in the city only some of the 15 major industrial products selected before 2015 were still available in the market, while others had disappeared due to competitive pressure.

The city resumed its programme on selecting major industrial products, but selection criteria should be reviewed to fit the current situation, she said.

There were many products of high added value, with a large market share in domestic market and exports, but they did not meet the programme’s selection criteria, she added.

Nguyen Van Hung, Chairman of the 28 Corporation, said the city should have a long-term vision to serve as a basis for identification of key products.

As for the garment and textile sector, it is unlikely to remain in HCM City due to the factors of labour, wages, infrastructure and logistics, among others.

Though garment and textile products would not be the city’s key products in the long term, there should be a centre for designing and logistic services, he said.

According to participants, big branded products in the city are gradually losing market advantage, with some producers shifting to produce goods in other localities.

Since it was now becoming more difficult to identify key products, the city needed to have a multi-dimensional approach to the problem, they said.

If the criteria for selecting key products are based on size and market growth, the product will have a high risk because there is high potential for market fluctuation.

Tran Quoc Toan, General Director of the Saigon Transportation Mechanical Corporation (SAMCO), said the city’s key products should focus on downstream products combined with an industry development forecast.

These products must be associated with the city, and at the same time, the city must develop a policy to create market space and opportunities for the key products to develop.

For example, the city is encouraging the production of clean-fuel vehicles, but with this policy, the city must also create ways for organisations and individuals to use the vehicles.

Nguyen Thi Canh of the University of Economics and Law in HCM City said that it was not necessary to have only high-tech industries or industries with high added value as the main ones, but selection criteria should vary depending on the industry.

Attendees at the meeting also said the city’s key products must be Vietnamese-made products. In addition, the key products must be involved in the city’s activities to promote investment and brand development.

The programme on developing the city’s key industrial products should focus on priority sectors for development, especially the manufacturing sector with high added value, participants said.

The city should have mechanisms to support sectors with high development potential, while support should be done in an indirect way such as developing human resources and new production technology and data systems for the sectors, among others, they said.