Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! Business in brief 01 March 2013

The Industrial Production Index (IPI) saw a year-on-year increase of 6.8 percent in the first two months of 2013, according to the General Statistics Office (GSO). Of which, the index of the mining industry increased 1.8 percent over the same period last year, that of the processing and manufacturing, 7.9 percent, electricity production and distribution, 11.7 percent, and water supply and sewage treatment, 9.9 percent. Meanwhile, the production of several industries saw notable increases includes battery production (107.1 percent), electrical equipment (51.3 percent), machine spare parts (45.9 percent), fertilizer and nitrogen compound (43.3 percent), footwear (35.9 percent), and telecom equipment (26.4 percent).

Two-way trade between Vietnam and Myanmar hit US$227 million in 2012, a year-on-year increase of 35.9 percent, according to the General Department of Customs. Vietnam enjoyed a trade surplus of more than US$8 million with Myanmar for the first time over the past decade, the department says. It always ran an annual trade deficit with this market between 2003 and 2012, with the figure increasing threefold in 2005 and 2006. In 2012 Myanmar ranked 55^th among 230 foreign exporters to Vietnam, shipping US$117.8 million worth of commodities, up 42.9 percent compared to 2011. Within ASEAN, Vietnamese exports to Myanmar are just a bit higher than those to Brunei and account for just 0.7 percent of its total exports to all ASEAN member countries.

Vietnamese businesses face numerous challenges in Eastern Europe in the face of its weak purchasing power and fierce international competition. They include runaway inflation, high unemployment rates, low GDP growth and devaluation of the euro that has resulted in low income sources. At the 6^th Vietnam Business Forum in Europe held recently in Prague, participants agreed that Vietnamese traders have not yet paid adequate attention to developing retail business and dealing with unhealthy competition and dumping activities in provinces and small towns where Chinese traders are holding sway.

Vietnamese Permanent Mission to the United Nations in Geneva on February 27 asked for the establishment of a panel at an official meeting of the Dispute Settlement Body, aimed at resolving the shrimp case DS/429, in which the US side is the respondent. Countries which registered to be third parties at the meeting include the European Union, China, Japan, Norway and Thailand. The US Department of Commerce (DOC) is considering the imposition of anti-subsidy duties on certain frozen warm-water shrimp from Vietnam and six other countries after the US International Trade Commission (ITC) concluded that the US domestic shrimp production industry was suffering damage due to subsidized shrimp products imported from the seven countries including Vietnam. Vietnam officially requested consultations with the US concerning a number of anti-dumping measures on certain frozen warm-water shrimp from Vietnam with three key contents including zeroing, country-wide rate and sampling. The panel in the case made a verdict supporting two of the three contents.

On February 28 Vietnam Airlines announced that they are upgrading the fleet of aircrafts on the Ho Chi Minh City (Vietnam)-Yangon (Myanmar) airway to meet increasing travel and economic exchanges demand between the two cities. As per the plan, from March 31, Vietnam Airlines will hire Airbus A321 on the high traffic corridor, replacing Fokker 70s. The Airbus 321 is a more modern aircraft, providing services for business class customers. The change also enables a 75 percent increase in the number of Vietnam Airlines seats available between these cities. To mark the occasion, the national carrier will offer discounts on seats by up to 27 percent, starting from US$220 (around VND4,62 million) for a two-way economy class ticket. The sale will apply to tickets sold from now until March 30, 2013, as well as journeys departing from April 1 to September 30, 2013.

Inflation has risen by nearly 2.6 percent in the year to date, according to the National Financial Supervisory Commission (NFSC). But inflation in February was up just 1.32 percent on the previous month – the lowest February increase since 2010. The NFSC attributed the modest increase to weak demand and monetary factors that contributed to inflationary pressures. Vietnam’s efforts to control inflation in 2013 mainly depend on its price management policy. The inflation rate stood at around 8 percent between May and August 2012, increasing to 10 percent by the end of the year. The NFSC was optimistic about the 2013 goal to reduce inflation to 6.8 percent given the January and February consumer price index (CPI) was estimated at 7.04 percent and 7.02 percent, respectively.

Ba Ria-Vung Tau Province plans to set aside nearly VND20 billion for this year’s investment promotion activities with three main programs - preparing promotion documents, organizing theme meetings and holding investment promotion conferences. These programs are part of a plan to innovate the province’s investment promotion activities to attract quality projects and those involving sustainable development and environmental protection. The province expects to attract many investments from Japan this year. According to the provincial Department of Planning and Investment, the province looks to attract US$500 million from around 20 foreign invested projects and some VND12.5 trillion from local investors this year. Projects that Ba Ria-Vung Tau wants to call for investments are those in the sectors of logistics, tourism, transport infrastructure, human resource training, healthcare, value added services, technology, environmental protection, agriculture and supporting industries.

Vietnam manufacturing sector fell back into contraction in February after a marginal growth in the previous month, a survey by Markit Economics revealed Friday. The HSBC manufacturing purchasing managers’ index fell to 48.3 in February from 50.1 in January. Readings above 50 indicates expansion of the sector, while readings below 50 suggests contraction. Markit said that the rate of contraction was the sharpest since August last year. Both production and new orders both declined during the month, reflecting weak client demand. Incoming new export business fell for the tenth successive month, but the rate of reduction eased to a six-month low, Markit said. The manufacturing sector reported job losses for the first time in five months as the subdued performance filtered through to the labor market. Purchasing costs increased for the second successive month. Subsequently, manufacturers adjusted their selling prices higher, causing factory gate prices to rise for the first time in ten months.

Eni has signed an agreement with Vietnam’s state-run PetroVietnam to jointly assess the country’s potential reserves of unconventional oil and gas, the Italian major said Thursday. The Rome-based company said the deal for joint study into Vietnam’s unconventional reserves was signed by the chief executives of both companies in Hanoi. The work will be carried out by a team made up of officials from both companies which will benefit from Eni’s "substantial wealth of knowledge and proprietary expertise" in the sector, Eni said. "With this agreement, Eni takes another step forward in its strategy of strengthening its presence in Asia, a region with very high growth potential that presents great opportunities in terms of upstream and the market," Eni said in a statement. Last month, Eni and PetroVietnam signed a separate memorandum of understanding to jointly pursue potential joint upstream opportunities in Vietnam and elsewhere.

Viettel signed a co-operation agreement with An Khanh New City Development Joint Venture Company Limited (An Khanh JVC) on Wednesday to become a partner in developing infrastructure and supplying telecommunications services for the first phase of the Splendora project. Accordingly, the two sides will jointly invest and build infrastructure, as well as operating telecommunications services and information technology for the Splendora project, which is backed by An Khanh JVC. Services offered include internet, telephone wiring, cable TV, IP next TV, mobile phone, intercity and inter-country data transmission services, video conferencing and many others.

HSBC Vietnam has announced the launch of a new wealth management product that will safeguard customers’ savings while maximizing potential benefits. In doing so, HSBC has become the first bank in Vietnam to introduce Structured Deposits of this kind. Essentially, Structured Deposits are part investments that provide customers with the opportunity to earn a higher return than those offered by conventional fixed deposits, normally depending on movement on the foreign currency exchange rate. For now, HSBC Vietnam will introduce only basic Structured Deposit products to Vietnamese customers.

The first fair of the year under the program to bring Vietnamese goods to rural areas will be held in Ca Mau Province’s Nam Can District from March 1-3. Around 40 companies will take part in the fair, displaying food, confectionery, textiles, household utensils, cosmetics, stationery and other products. The fair will also facilitate the donation of gifts to poor people and needy students, training in sales skills for small traders in traditional markets and provide agricultural extension services to farmers. Organizers of the fair, the Business Study and Assistance Centre and the Nam Can District People’s Committee, will also join hands with participating enterprises to conduct a local market survey. Organizers said results of the survey will help enterprises better understand the district’s distribution system to take full advantage of the local market potential.

The US-based Amway Corporation will build its new plant in My Phuoc Industrial Zone in Vietnam’s southern Binh Phuoc province this year. The new plant will be Amway’s second in Vietnam after its first 12 million USD factory, built at Amata Industrial Zone, southern Dong Nai province, in 2007, according to the Amway Vietnam Co. Ltd. The US company’s business in the Southeast Asian country grew by 35 percent per year over the past years. Founded in 1959, Amway has grown into a multinational corporation which earned a global revenue of 11.3 billion USD in 2012.