BUSINESS NEWS IN BRIEF 4/12

Created 04 December 2018
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Wood exports expected to hit $8.85 billion this year,Businesses remain vague about non-tariff barriers,Ha Giang’s Shan Tuyet tea receives geographical indication certificate,Agriculture restructures toward modernization and sustainability

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Over 83,000 firms suspend operations in 11 months

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So far this year, some 121,000 companies have been established, while more than 83,000 have suspended their operations, according to the Business Registration Agency under the Ministry of Planning and Investment.

Data indicate that the January-November period recorded the establishment of 121,248 companies, with registered capital of some VND1,234 trillion (US$53 billion), marking respective increases of 4.5% and 9.1% from a year earlier.

Each company registered an average of VND10.2 billion (roughly US$430,000) in capital, 4.1% higher than the year-ago period.

Meanwhile, operational companies registered an additional VND2,198 trillion to fund their expansion plans, raising the total newly pledged capital to more than VND3,426 trillion (US$147 billion) during the period.

In addition, the number of companies resuming business rose by some 31% year-on-year to roughly 31,800, bringing the total number of newly registered enterprises and those resuming operations in the 11-month period to more than 153,000.

The new firms registered to employ 1.1 million people, down 4.5% compared with the same period last year.

Some 42,600 companies entered the wholesale, retail and automobile and motorbike repair sectors, accounting for 35.1% of the country’s total, while the construction, processing and manufacturing sectors as well as consulting, design and advertising services have also drawn numerous enterprises.

On the other hand, the period also witnessed a 49.3% rise in the number of enterprises suspending their operations, reaching more than 83,100. Over 14,800 companies have already completed procedures for dissolution, marking a year-on-year rise of 37.4%.

Most of the ineffective firms operated in the wholesale, retail and automobile and motorbike repair sectors; construction; and the processing and manufacturing industries.

Vingroup to roll out Vsmart smartphones in mid-December

Vietnamese conglomerate Vingroup is set to launch its four Vsmart-branded smartphone models at a function scheduled for December 14 at the HCMC-based Landmark 81 building. The smartphones mark the group’s fresh foray into the smart electronics sector.

The smartphones were made at the Vinsmart smartphone manufacturing plant, located in the Vinfast automobile manufacturing complex in Dinh Vu-Cat Hai Industrial Park in Haiphong City.

The plant is expected to manufacture some five million products annually during the first phase, with designs meeting international standards IPC-A-610 set for electronic manufacturing plants.

Vingroup founded Vinsmart Company and announced its venture into electronic products nearly six months ago.

Vinsmart’s electronic devices, including the upcoming Vsmart smartphones, leverage European advanced technology. Besides this, most of the manufacturing phases, ranging from product design, research, and development to production, are managed by BQ, a leading Spanish technology firm and Vinsmart’s new business partner.

With ownership of up to 51% in BG Company, Vinsmart can make full use of BG’s experts in product research and development.

Further, Vinsmart aims to establish collaborations with the world’s leading technology companies, such as Qualcomm and Google, under its cooperation agreement with BG to stay updated on the latest technology trends in the smartphone industry.

Sharp rise in tuna exports to Israel

Vietnam enjoyed a year-on-year surge of 88 percent in tuna exports to Israel in October with 2.7 million USD, according to the Vietnam Association of Seafood Producers and Exporters.

With a strong growth of 52 percent in the first 10 months of this year, Israel continued to be a promising market for Vietnamese canned tuna amidst a slowdown in traditional markets, commented the association.

According to the association, Vietnam’s export revenue of tuna in October rose 16 percent over the same period last year to 67 million USD, pushing the total figure in the January-October period to nearly 541 million USD, up 11 percent compared to the same time in 2017.

Kien Giang province to build more industrial clusters

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The Mekong Delta province of Kien Giang plans to improve infrastructure at six industrial clusters by 2020 and 14 by 2025 to improve the production value of its industries.

By 2020, more than 2 trillion VND (86 million USD) is expected to be spent on infrastructure, and more than 17,620 new jobs would be created.

The clusters’ production value is expected to be between 52 million USD and 105 million USD per year, focusing on agriculture, forestry, fishery, supporting industries, construction materials and foodstuff. By 2025, the eight remaining clusters would be developed. 

Mai Anh Nhin, Vice Chairman of the Kien Giang People’s Committee, said the province would industrialise its agriculture and focus more on processing industries. The province is working on improving its investment climate and policies.

Investors of infrastructure in the industrial clusters would receive governmental assistance in soft bank loans, land funds and workforce training, as well as administrative procedures and construction permits.

Kien Giang, one of the Mekong Delta’s key economic regions, is seeing an increasing number of investors in Rach Gia, Ha Tien and Phu Quoc.

Japanese capital continues pouring into textile and garment

Japanese firms are scaling up investment into Vietnam’s textile and garment sector to take advantage of the huge market potential and Vietnam’s new-generation free trade agreements.

Several months ago, leading Japanese general trading company Itochu bought an additional 10% stake in Vietnam’s state-owned textile and garment conglomerate Vinatex, bringing its ownership to approximately 15%.

The deal took place at a time when only two out of 11 members had approved the landmark Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

After the deal was struck, Itochu became Vinatex’s second-largest shareholder behind the Ministry of Industry and Trade which, on behalf of the state, currently manages a 53% stake.

Now the number of CPTPP signatories has reached seven, with Vietnam being the most recent country to have approved the deal.

Itochu’s move suggests that the group has accurately forecasted the CPTPP development journey and the textile and clothing sector’s remarkable advantages to avail themselves of the opportunities from the deal in the years to come.

The Japanese group’s apparel exports from Vietnam are worth about VND12.84 trillion (US$558 million) per annum, with about half of this produced by Vinatex.

The company aims to boost processing volume and scale up its export value to US$878 million by 2021.

With around 30 plants in operation, Sakai Amiori, another firm coming from Japan’s Fukui prefecture, has opened an export apparel production plant based in Phu Ha Industrial Zone (IZ) in the northern province of Phu Tho.

The plant finished construction in April 2017 and now sees stable production and exports.

Another Japanese firm, Matsuoka Corporation, first set foot in Vietnam in 2014 and quickly expanded production to raise capacity by 6-7-fold through the Matsuoka Phu Tho plant, which mainly produces apparel items carrying the Uniqlo brand to be exported back to Japan.

As a partner to leading global apparel brands like Uniqlo, Tore, and Korabu, Matsuoka Corporation generates an annual revenue touching US$530 million, taking the lead in Japan and the 11th worldwide.

The company operates an expansive network of 17 plants across Asia and has chosen Vietnam for capital injection and production expansion in recent years to take advantage of the opportunities anticipated to be brought by new-generation free trade agreements (FTAs) such as the EVFTA and the CPTPP.

After its first plant coming online in 2016, the second plant began production in last August, with an annual capacity of about two million products.

The company has further invested in an apparel plant complex with an investment value surpassing US$16 million and annual production capacity of seven million products.

By the end of this year, the complex is expected to create jobs for more than 2,500 local labourers.

The influx of foreign direct investment continuing to flow into export-oriented sectors like textiles and clothing has the dual benefits of helping to boost the sector’s capacity and turning Vietnam into a global manufacturing base.

A look into the textile and clothing sector’s export-import performance from 2010 until present shows that the sector has posted a constantly-growing trade surplus, going from a mere US$2.9 billion to US$12.7 billion last year, along with a 13.8% jump against 2016.

According to Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, in the first 11 months of this year, the sector’s export value came to $30 billion and trade surplus surpassed US$13 billion.

Global gender equality certificate improves competitiveness of businesses

The competitiveness of businesses not only comes from maximising benefits and protecting the environment, but also from diversified gender roles and gender equality.

According to McKinsey Global Institute, if women would take part in the global economy on an equal footing with men, the GDP of the globe would increase by US$28 trillion by 2025.

It is necessary to raise awareness and change people’s mindset. Particularly in Vietnam, commitments on gender equality are strong, but result in little to no specific action, especially at companies.

In the World Economic Forum’s (WEF) Global Gender Gap Index 2018, Vietnam ranked as Asia’s sixth most gender equal country.

Meanwhile, according to audit company Deloitte Global, Vietnam ranks first in Asia in terms of female leadership in businesses with 17.6% of board members, higher than the world average (15%), while Japan and the Republic of Korea are at the bottom of the list with the ratio of 3.5 and 4.1%, respectively.

However, in fact, there is scant awareness of gender equality in businesses. Specifically, according to UN Women 2016, the salary of female employees is 20% lower than of male employees in the same role, and this gap is increasing. For around 83% of management positions, recruiters prioritise male applicants.

According to a 2017 report of the General Statistics Office, women are paid VND887 for each VND1,000 paid for men.

There are even shortcomings related to gender equality in the regulatory system. "The Vietnamese Labour Code aims to protect female employees, so there are many jobs (such as hard physical labour) which only men can do or in which lines the retirement age for women is lower. Therefore, the law should be amended towards the equality of genders," said Ha Thu Thanh, chair of Vietnam Business Coalition for Women's Empowerment (VBCWE) cum chair of Deloitte Vietnam.

Thanh stated that gender equality should start at the business community, especially the private sector to create equal opportunities for both genders. At Deloitte Vietnam, women are not restricted by the retirement age. "In Vietnam, the increasing retirement age is an issue. The more time the elderly spend for work, the more barriers younger employees face," added Thanh.

Positive effects of gender equality on businesses cannot be denied. However, most businesses do not pay enough attention to ensure equality. Vu Tien Loc, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said: "Although business expenses would increase, they would improve the brand’s image and win over customers. Moreover, the market is trending towards more refined products, which suit the skillsets of women as well as create sustainable value for businesses."

Global gender equality certification

Economics Dividends for Gender Equality (EDGE) certification creates added-value and raises the reputation of products, as well as improves the competitiveness of businesses.

In Vietnam, VBCWE is the representative organisation granting EDGE certification to businesses.

"The EDGE certification expresses gender equality among businesses. This has been applied in numerous countries, contributing to the implementation of the United Nations' sustainable development goals (SDGs)," Ha Thu Thanh said.

The certification will add value for footwear and seafood companies exporting products to Europe and Americas.

"In addition to the ISO certification, European and American people are interested in products that have a positive impact on society like EDGE-certified items and the certification proving that no worker under tha age of 15 took part in the manufacturing of the product. Accordingly, customers in this region have good awareness on issues related to the environment, women, children, and disabled people. In addition to competition on quality, the perceived value also affects customers’ decisions. The products exported to developed countries and carrying the EDGE certification will enjoy better reputation and competitiveness," emphasised Thanh.

In Vietnam, as many as three firms (EVN Ho Chi Minh City, Maritime Bank, and SASCO) have received this certification, while two others (Deloitte Vietnam and Garco 10) are waiting for approval.

Other researches outlined that firms promoting gender equality will increase competitiveness by 15%, especially in technology companies. If there are women involved in businesses' leadership, corporate governance will be more transparent and crises will be easier to overcome by sustainable development.

"In Malaysia, listed companies are stipulated to have at least one woman on their management board. This is also encouraged in several other countries, while we are promoting gender diversity among board members," added Thanh. She also revealed that there are only three firms with female members on the management board among the blue-chip VN30 Index. This is a solid start for developing gender equality in businesses.

Bac Lieu boasts potential for wind power development

The Mekong Delta Region has many advantages to develop wind power, which result in economic benefits and a reduction of environmental pollution.

The initial success of the wind power project in Bac Lieu province with an output exceeding initial forecasts has demonstrated that the region still has much potential for development.

The Bac Lieu wind power project, the first of its kind in Vietnam, was launched in September 2010 on an area of 1,300 hectares. Its turbines are installed on the sea surface spreading from Nha Mat ward to the coastline of Soc Trang province.

Completed 5 years later with a total of 62 wind turbines, the wind farm has a capacity of up to 100MW. Each month these turbines generate more than 16,000 MW of clean electricity to be connected to the national grid. According to investors, the figure will increase because wind power along the coast of Bac Lieu province is always predictably higher than first estimates.

Ho Minh Chanh, Deputy Director of the Bac Lieu wind power project, said wind speeds of up to 6 to 7 meters per second were initially expected but it is consistently in excess of 8 meters per second.

Dr Le Anh Tuan, an expert on climate change, said the Bac Lieu wind power plant has proven the abundant potential of wind power in the coastal areas, which hasn’t yet been properly exploited.

To Hoai Dan, the General Director of Bac Lieu Power Project, said to turn the Mekong Delta Region into a wind power center, the government, ministries, and functional agencies should redouble their efforts in this arena and develop more preferential policies.   

“It’s necessary to issue more incentives focusing on interest reduction and the extension of project life cycle in order to attract more investors. We need to combine economic development with environment protection,” said Dan.

With a coastline of 700 km, wind energy is expected to become a significant advantage of the region. In addition to Bac Lieu province, 10 other wind power projects in Ca Mau, Tra Vinh, and Soc Trang provinces with hundreds of wind turbines have been granted investment certificates.

Experts on climate change said Vietnam has great potential for renewable energy including small hydro-power, wind, biomass, solar, and garbage. Vietnam, a country of more than 3,200 km of coastline, likely has a potential wind power area of 2,700 km2. But currently the development of wind power hasn’t been on par with its potential.

Climate change expert Ky Quang Vinh said “A recent survey shows that Vietnam’s long coastline can generate about 500,000MW. This is an excellent prospect for the development of Vietnam’s wind power.”

According to wind energy experts, wind power is one of solutions needed for the development of renewable, clean energy in Vietnam. Vietnam has forecast that, that electricity generation using renewable energies will account for 6.5% of the power structure by 2020, of which wind power capacity will reach 800 MW by that year and 6,000 MW by 2030.

Professor Nguyen The Mich said to date the total capacity of wind power plants has averaged only 200 MW, which falls short in the context of future goals.

Agriculture restructures toward modernization and sustainability

The Party resolution on agriculture, farmers and rural areas launched in 2008 aims to develop modern and sustainable agriculture and competent farmers in building new rural areas.

In the last decade, Vietnam’s agriculture has helped stabilize the macro-economy, control inflation, generate jobs, reduce poverty, and raise Vietnam’s status internationally.

Vietnam’s food security has been ensured, with aquaculture production increasing 26% and animal husbandry increasing 27%.

The country’s agricultural export has gained a bigger foothold in the international market with staple products like rice, rubber, coffee, cashew nuts, shrimp, and tropical fruit.

The agricultural sector’s GDP increased nearly 2.7%. Over 3,000 communes met the criteria of new-style rural areas.

Technology has become more widespread in agriculture, with 7.2 million rural workers attending vocational training.

Breakthroughs in agricultural restructuring

The Resolution aimed to raise public awareness and achieve social consensus on the need to restructure the agricultural sector. Now agricultural production must promote local advantages to meet market demand and adapt to climate change.

Overseas markets for Vietnamese products have been expanded, with more products now qualified for export. Vietnamese farm produce is sold in 180 countries and territories.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said “We should enhance agriculture restructuring by reviewing each sector and focusing on Vietnam’s staple products for which there is worldwide demand. Technology should be applied to all processes to leverage the 4th Industrial Revolution.

The rural economy should be improved to make production more efficient and reduce rural workers by one third.”

Developing a modern, competitive agricultural sector

Vietnam will continue to strengthen agricultural restructuring, promote local advantages, increase productivity, improve quality, focus more on the domestic market, and enhance competitiveness.

Deputy Prime Minister Trinh Dinh Dung said, “Vietnam intends to develop a modern agriculture to compete in international markets. We need to increase added values and grow sustainably. Businesses and cooperatives are the driving force for agricultural development.”

In the next two years Vietnam hopes to boost agriculture revenues by 3 percent annually, agricultural labor productivity by 3.5%, and the incomes of rural residents to 2 to 3 times what they earned in 2015. Other targets include: 50% of communes meet the new rural criteria, 15,000 cooperatives are operating smoothly, and forest coverage reaches 42%.

Ha Giang’s Shan Tuyet tea receives geographical indication certificate

The northern province of Ha Giang held a ceremony on December 1 to announce the geographical indication for Shan Tuyet tea.

The geographical indication for Shan Tuyet tea covers tea produced in 44 communes of five districts and one city in Ha Giang province, which is the third largest tea-growing area in Vietnam.

Ha Giang Vice Chairman, Nguyen Minh Tien, stated that the geographical indication certificate is the result of years of selecting and reviving the gene pool of ancient Shan Tuyet trees.

The province currently has 20,000 hectares of tea, of which 18,000 hectares are productive, with an annual output of 67,500 tonnes. Ha Giang province has determined tea as one of the key crops in its agricultural development strategy.

Notably Ha Giang possesses many old Shan Tuyet tea forests, mainly growing at altitudes of 600-1,000 metres above sea level in Vi Xuyen, Hoang Su Phi, Xin Man and Quang Binh districts.

Shan Tuyet tea trees grow in the natural environment, completely free from pesticides and growth stimulants, therefore they are used to produce organic tea products.

In the future, the province will publish documents on the management and use of the geographical indication and promulgate the technical process concerning the production of Shan Tuyet tea in order to maintain the geographical indication and protect local growers and consumers.

Businesses remain vague about non-tariff barriers

Vietnamese businesses are incapable of grasping basic information on issues related to non-tariff barriers in trade transactions and facing a number of challenges caused by barriers to international trade such as non-tariff barriers to trade (NTBs) set by foreign markets.

Vietnam has boosted its deeper international integration through the signing of a number of bilateral and multilateral free trade agreements (FTAs). However, most of its small and medium-sized enterprises (SMEs) still fail to grasp issues related to non-tariff barriers in trade transactions, said Hoang Minh Chien, deputy head of Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade (MoIT).

He emphasized the importance of enhancing the capacity for businesses to overcome NTBs as a lack of knowledge on these issues has resulted in losses in both production and export activities.

Alain Chevalier, Senior Technical Advisor of International Trade Center (ITC) said non-tariff measures (NTMs) in Vietnam have not followed the regulations that are common in the rest of the world, while the country has become involved in bilateral and multilateral FTAs as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Chevalier cited statistics from the Central Institute of Economic Management (CIEM) as saying that Vietnam currently has 379 non-tariff measures (NTMs), mostly those pertaining to animal-plant quarantine and other technical barriers that exist in trade (TBTs).

He pointed out that both SMEs and other relevant agencies are not fully aware of NTMs, noting that they should be fully provided with information and training courses in order to deal with NTMs set by foreign markets.

Vietrade has recently coordinated with ITC to to provide technical assistance that supports Vietnamese export businesses in reducing trade costs and ensuring transparency of information to tackle non-tariff- related issues that may occur in foreign markets.

According to Chien,Vietnam’s trade competitive capacity project will focus on surveying service providers and commodity production businesses thus enabling Vietnamese enterprises to identify trade regulations and other formalities in export activities.

Vianney Lesaffre, Market Analyst at ITC, said with regard to the joint project with Vietrade that ITC has made various attempts to reduce trade costs such as helping management agencies to build national mechanisms that deal with trade barriers related to NTMs. In particular, the project focuses on capacity building of Vietnamese SMEs to grasp information on regulations and other non-tariff procedures across a broad range of import markets.

Under the project, a series of surveys have been conducted on various Vietnamese businesses across groups and industries, thus providing consultation to reduce trade costs related to NTMs. It also provides a trade barrier warning mechanism through which both the Government and businesses are able to cope with trade barriers in a more timely manner, Mr Vianney Lesaffre noted.

Nguyen Thi Xuan Thuy, head of the Industry Department at the Ministry of Industry and Trade, advised businesses to get information on NTMs in import-export activities and learn about NTMs applied in import markets, in the face of ever-changing trade policies in order to devise proper orientations for more effective business operations towards the protection of both businesses and domestic consumers, she added.

Enterprise Rent-A-Car enters Vietnamese market

Enterprise Rent-A-Car and MP Executives have officially introduced car rental services in Vietnam on November 29.   

Enterprise Rent-A-Car is a US company with USD22bn in annual revenues. The car rental services in Viet Nam and Asia are licensed to MP Executives-a subsidiary of MP Group. Their targeted customers are multinational companies working in Vietnam.

MP Executives also started a similar service previously with 80 percent of the customers are companies. Individual customers must hire a driver.

Enterprise Rent-A-Car and MP Executive are considering to allow individual customers to drive the cars on their own and launch a car-renting mobile app and website with listed prices for each type of car.

Dang Minh Phuong, MP Logistics, said Vietnam was an important market. There are four major car-renting firms in the world including Enterprise Rent-A-Car, Hertz Global Holdings, Avis Budget Group, and Dollar Thrifty Automotive Group. Enterprise Rent-A-Car has the highest annual revenue.

The firms own all of the cars. In the coming time, Enterprise Rent-A-Car will also let customer rent second-hand vehicles.

Cuong Dang, director of Enterprise Rent-A-Car Vietnam, said HCM City was their first market and the service would be opened in Hanoi and Danang in 2019's first quarter.

He said, "There's no data yet but the market is still very fragmented. Still, foreign investments in Vietnam are increasing strongly. This is a huge chance for Enterprise Rent-A-Car. Moreover, young people have different demands for cars than previous generations. Rental car will help solve many problems such as parking space and maintenance fees."

Enterprise Rent-A-Car has about 300 different cars with many high-end brands such as Toyota Fortuner and Ford Transit. The renting fees for them will be at least VND900,000 (USD38).

Wood exports expected to hit $8.85 billion this year

Vietnam’s export of wood and wood-based products is projected to reach 8.85 billion USD this year, up over 1 billion USD from the 2017 record of 7.7 billion USD. 

Timber and wood products earned the country over 7.22 billion USD between January and October, increasing 15.6 percent against the same period last year.

Also between January and October, Vietnam spent nearly 1.9 billion USD importing wood and woodwork products, translating into a trade surplus of over 5.35 billion USD, an annual increase of nearly 1 billion USD.

Trade surplus of timber goods was ranked second among key Vietnamese agricultural exports during the period, only behind that of aquatic products, which recorded over 5.8 billion USD. 

Businesses busy as Tet draws nearer

During this time of the year, food businesses in Ho Chi Minh City are busy organising for the Tet holiday. So far, food goods have been prepared with a total value of over 790 million USD, with food health and safety set at the top priority. 

For Tan Quang Minh Manufacture and Trade Limited Company, the customer demands for goods to serve Tet has increased by 10 percent for the 2019 holiday year-on-year. Besides further investment in product design, the enterprise has also focused on more natural ingredients in order to meet the growing trend for less processed foods.

According to the Food and Food Stuff Association of Ho Chi Minh City, the total goods value of the city is estimated at over 790 million USD, an increase from 23-36 percent year-on-year. In particular, the city has always been ready to provide sufficient goods to stabilise market prices.

In the context of fierce competition with imported goods, Vietnamese enterprises should invest more in the quality and design of products in order to meet the increasing demand of customers, while also promoting the “Vietnam prioritises Vietnamese goods” campaign.

Time for all-out change to power development plan

The Vietnam Electricity Group (EVN) last week sent out shocking news: the country will likely face a power shortage next year, and power consumption can be curbed, as several thermo-power plants in the north are facing a shortage of coal while hydropower reservoirs in central Vietnam are seeing dwindling water flows. The warning poses uncertainties for the country’s power security.

EVN later backpedaled its previous notice, saying power supply can be secured but prices may be hiked as diesel-fueled generators will be mobilized – the situation has revealed a worrying fact that the sector remains heavily reliant on traditional power generation sources.

In fact, the current master plan on power development has doubled down on thermo-power and hydropower facilities as the dominant electricity sources. Under the master plan approved by the Prime Minister in July 2011, coal-fired plants should account for 48% of the total power output estimated at 75,000MW by 2020, while gas-fueled plants some 16.5% and hydropower plants 23.1%. Meanwhile, renewable energy sources should account for a mere 5.6%.

As the growth of power consumption slowed in the following years, and as nuclear power projects faltered, the adjusted master plan approved by the Government in late 2016 set the total national output at 60,000MW by 2020. Still, in the revised master plan, renewable power sources still made up a minimal percentage by 2020, which should rise slightly to 2.1% for wind power and 3.3% for solar power by 2030.

Such minor changes and developments do not seem to match the changing socioeconomic landscape. Thermoelectric and hydropower developments have stoked concerns, especially in terms of pollution and environmental protection given the adverse impacts of climate change, let alone the rising cost of such power sources versus the falling cost of renewable energy.

In fact, when the Government issued a decision in April 2017 raising the purchasing price for solar power to 9.35 U.S. cents per kilowatt hour, numerous private investors have queued up, seeking licenses for such plants. 

Dau Tu, citing data from a recent conference, says that since the new price frame, hundreds of investors have come knocking. At least 332 solar-power projects have been submitted with total output of 26,000MWp compared to the country’s total output of 46,000MW currently. However, only 121 projects with combined output of 7,234MWp available before 2020 have got the nod, while the remaining 211 projects with total output of over 13,000 are still in the queuing line.

The key reason behind the stagnation for renewable energy projects is the lack of facilities, primarily the power grid, to accommodate new sources of power. Development of such facilities proves difficult as the current master plan does not allow for building transmission lines to and from localities with high potentials for wind and solar power sources.

Given the uncertainties from traditional power generation sources, given the global trend to shift to renewable energy, and given the inverse movements of cost-effectiveness of the two, it is high time for the country to strongly brace for the latter. To do so, the master plan on power development needs to be redone in its entirety to realize this goal.

Public investment capital disbursement in HCMC remains low

When discussing public investment, officials often deny the availability of funds, yet funds allocated for spending in 2018 have been disbursed by around a half only at municipal departments and agencies, stated HCMC Party Committee Secretary Nguyen Thien Nhan at a meeting of the HCMC Party Committee on November 29.

Nhan pointed out multiple bottlenecks existing in the city, of which the traffic jams and flooding issues were highlighted.

The city's top leader stressed that these ongoing problems were not totally due to the shortage of funds, adding that many departments and agencies had yet to use up their public investment capital for this year.

Nhan pointed to two units, the municipal Department of Transport and the HCMC Steering Center of the Urban Flood Control Program, to demonstrate the slow pace of disbursement.

In particular, the Department of Transport was allocated VND4.5 trillion to invest in 454 public investment projects. As of October, the disbursement was recorded at a mere 58% of the total, or VND2.6 trillion.

Regarding the anti-flood center, some VND1.13 trillion was allocated for investment in 106 projects, but the center had only disbursed 53% of the total during the year to late October.

Statistics show that the rate of disbursement for tackling the two urgent problems had reached less than 60%.

Besides this, other units that recorded a slow pace of disbursement were the Department of Natural Resources and Environment at 30%, the HCMC Department of Architecture and Planning at 22% and the Department of Industry and Trade at a mere 1.1%.

However, the disbursement rate at districts is much higher. Some six districts have disbursed 80% of their budget, another four have disbursed 70%-80% and the remainder were under 70%.

Nhan proposed the leaders of departments, agencies and districts review their public investment projects and budget spending over the past three years and take steps to avoid the same problem in the next two years.

Further, Nhan noted that National Assembly Resolution 54 on a pilot program for a special mechanism in the city had yet to benefit the city in 2018. The mechanism may raise the budget for the city’s re-investment plan, but an assessment of the scheme’s execution will only be made one year later. As such, generally, the city’s collection sources this year remain unchanged.

Meanwhile, capital mobilization under the build-transfer format failed to be completed as the Government had called for the suspension of this mechanism. Also, selling public assets came to a halt due to changes in regulations.

Despite the given challenges, HCMC still maintained high overall investments, totaling 35% of its GDP, and is expected to achieve economic growth of 8.3% this year.

Fake products overwhelm ecommerce platforms

Low quality and smuggled products flooding ecommerce platforms have recently stoked concerns among consumers as inadequate information on online sellers hinders buyers from making complaints, Nguoi Lao Dong newspaper reported.

The Ministry of Industry and Trade forecast that the scale of ecommerce in the country would amount to US$10 billion by 2020. Ecommerce platforms, however, have loosened quality management in terms of checking the origins of products and enforcing the criteria of sale registration.

Despite the convenience and preferential prices on ecommerce platforms, online retail vendors displaying vague information have discouraged shoppers.

It is easily seen on ecommerce platforms that products with famous brands such as Nike, Adidas and Gucci sell for a low price, which seems unreasonable. In addition, Chanel perfume products, which are priced below VND200,000, are rampantly sold on certain platforms, creating difficulties in differentiating genuine goods from counterfeit products.

Le Thi Ha, head of the ministry’s Department of Ecommerce and Digital Economy, stated that controlling the quality of products on ecommerce platforms was complicated.

Ha noted that online retail sellers had exploited many tips to dodge regulations, stating that they advertise well-known Nike products with the spelling N-I-K-E, in lieu of the word Nike, to escape the attention of the management agency, which would remove any fake products.

It is known that registering to sell products on ecommerce platforms is quite simple with no need for travelling or preparing paperwork. Sellers are only required to provide email addresses, phone numbers and the names of their stores. In particular, information on the addresses of stores is unclear and is not confirmed by the ecommerce platforms.

Given the easy registration, vendors on ecommerce platforms are not asked to present a business license. As such, anyone can join online retail channels, leading to fake and low-quality goods overwhelming ecommerce platforms.

A lawyer cited Clause 3 in Article 36 of Decree 52 of the Government on ecommerce operations as stipulating that traders, organizations and individuals that sell goods on ecommerce platforms have to provide their name, address of headquarters and permanent address when registering their operations. Further, Decree 52 also regulates the provision of a number of a business registration certificate and its date and place of issuance.

The lawyer asserted that some ecommerce platforms had failed to meet regulations as they do not ask sellers to present their business registration certificates.

Ha remarked that sellers were responsible for enforcing regulations issued on ecommerce platforms in accordance with Decree 52.

Besides this, she noted that owners of ecommerce platforms should bear the responsibility for confirming information provided by vendors.

On receiving complaints about low-quality goods or falsified transactions, the ministry’s Department of Ecommerce and Digital Economy will directly handle the problems or ask the platforms to remove the inappropriate information and take steps to protect customers’ benefits.

Nguyen Anh Duong, head of the Macroeconomic Policy Department at the Central Institute for Economic Management, proposed adding regulations on banned activities in ecommerce operations and on entities operating in the ecommerce space, as well as their rights and duties.

In addition, it is necessary to impose penalties for administrative violations in ecommerce operations.

Enterprises look to empty landfills in circular economy

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Many multinational corporations and firms with operations in Vietnam are focusing on recycling waste to empty landfills around the country, which will help improve the environment, heard attendees at a conference titled, “Zero Landfill in Circular Economy,” held on November 30 in HCMC by INSEE Ecocycle Vietnam.

A representative of the European Chamber of Commerce in Vietnam (EuroCham) said inefficient landfills pollute the soil, water and air and affect the economy and tourism, particularly in coastal areas.

Vietnam’s economy is currently witnessing significant growth, but its environment index is low. Thus, the country is facing a thorny problem in terms of efficiently recycling waste.

Commenting on local environmental issues, the EuroCham representative noted that Vietnam has many regulations protecting the environment, but enforcement of these regulations is not effective. They only ease environmental pollution by seeking to replace fuel-powered vehicles with electric vehicles over the next five years to reduce the volume of gas emissions polluting the air.

In addition, the target of cleaning up the environment will be difficult to realize if local coal producers continue to be backed by the Government in maintaining their operations, the representative added.

Offering a corporation’s perspective, Jean Pierre Dawance, technical director at Nestle Vietnam, stated that Nestle had achieved its target of producing zero waste for landfills thanks to its waste recycling initiative. For instance, part of its food waste is turned into animal feed through a recycling process, while packages and other waste are recycled for use as construction tiles or fertilizers.

Meanwhile, Nestle will treat nonrecyclable waste appropriately in collaboration with other firms, he said.

Dawance noted that minimizing the use of input materials will result in the reduction of waste. In particular, Nestle recycles its coffee bean bags, which are used to carry coffee beans being transported from the Central Highlands to its processing plants.

Addressing the conference, Bruno Fux, director of INSEE Ecocycle Vietnam, remarked that waste incineration was definitely not a sustainable solution. He took Switzerland as an example, pointing out that the country had spent some US$1 billion treating a 10-year-old landfill. Thus, Vietnam can learn from the experience of other countries to adopt more appropriate solutions for waste treatment.

Apart from featuring successful case studies on emptying the landfills, shared by the corporate participants, the conference also honored enterprises that have contributed to the local economy’s sustainable growth.

INSEE Ecocycle Vietnam for the first time presented Green Business Awards to 17 corporations and businesses that had pledged to achieve the target of emptying landfills.

 

Source: VNS - Bridge

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