FINANCE. finance & business news. Reference exchange rate up 9 VND

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1 finance & business news 4 July Reference exchange rate up 9 VND 1 Banks eagerly seek to purchase retail segment 2 Foreign capital keeps flowing into bonds 3 Cashing in: Vietnamese bank buys out Australian partner in Saigon 4 Sacombank targets $44.5 million profit 4 Macro economy remains stable in six months 5 Government regular meeting discusses socio-economic situation in H1 5 There are wide doors for further economic growth, says PM 7 Gauging room for further growth: starting from state-owned enterprises 8 Keeping inflation below 4pct is achievable: deputy PM 9 New policies take effect from July 10 Find ways to step up EU exports, VN firms urged 11 Vietnam's exports forecast to hit 195 billion USD in Export value of forest products expected to exceed 7.5 billion USD 12 Ben Tre aims to fetch 400 million USD from exports 13 Seafood processing fuels export in Tien Giang 13 Quang Ninh's export earnings increase by 6.7pct in first half 13 Vietnam spends heavily on fertiliser, pesticide imports from China 14 China remains Vietnam's top rice importer 14 Mekong Delta region enjoys 3.5 billion USD trade surplus in six months 14 Vietnam, Russia look to $10 billion bilateral trade 15 US to partially terminate anti-subsidy investigations in Vietnam's steel nails 16 Australian ban on VN prawns ends this week 16 More than 32pct of businesses still have financial difficulties 17 PM requests stronger administrative reform 18 HCM City to expand veggie traceability programme 18 HCM City to make origin of poultry meat and egg traceable 19 Quality key for modern trade 19 Agriculture sector urged focus on main targets 20 International lenders vital to rise up SMEs 21 Investors keen on renewable projects 23 Convenience store boom fuels concern over market saturation 23 Restaurant chains: fine line between winning and losing 24 Foreign firms eye cosmetics market 25 Reference exchange rate up 9 VND Intellasia No. 21, lane 173/63/17, Ngoc Ha Ward, Ba Dinh Dist, Hanoi All Rights Reserved JLL: Vietnam remains a bright spot for hotel investors and operators 26 Deputy PM encourages autos carrying Vietnamese brand name 27 Rentals at IPs in south heading upwards 28 Human resources training needs improvement 29 VN to cooperate with Saudi Arabia in renewable energy projects 30 Hue to invest $52 million in agricultural restructuring 31 Investors to pour $1.77b into Kien Giang 31 Vietnamese firms 'indifferent' to technology transfer from Korea 32 Dak Lak becomes more attractive to investors 33 BIZ NEWS Business Briefs July 04, Markets advance further on banks, brokerages 34 Positive Q2 reports to drive up VN stocks 34 Brokerages: Market unpredictable this week 35 Efforts needed to upgrade stock market 36 Vietnamese giants race to loosen foreign ownership 36 Masan Consumer to issue 5 million ESOP shares 38 Tracodi adds new line of business, expands board of directors 38 HAGL expects 1.6 per cent revenue drop in Vinamilk tops most valuable firms list 39 11,400 market frauds discovered 40 Vietnam borrows $100 million from Korea to build 22 bridges 41 Foreigners allowed to apply for visas online 41 Industrial land rent continues to 'escalate' 42 Prime minister gets report on faulty fishing boats 42 Over 6 trillion VND to upgrade airport infrastructure 43 Chinese firm builds waste treatment plant in Can Tho 43 EVN gets more price decision-making power 44 HTP, PVGasD clinch power plant deal 44 Thanh Thanh Cong to develop 20 solar power projects 45 $2.3 billion Nam Dinh power plant making headway 46 Firm allowed to conduct survey for $200mn solar power plant construction in Vietnam 47 HCM City supports Siam Cement in making green building materials 47 Vietnam Airlines opens new 24/7 customer service centre 48 Volkswagen Vietnam expands dealership network 48 B2S stationery store launched in Vietnam 48 High-quality product fair held in Quy Nhon 49 04/JUL/2017 INTELLASIA VNA The State Bank of Vietnam (SBV) adjusted the daily reference VND/USD exchange rate on July 4 up 9 VND from the day ago to 22,440 VND. With the current trading band of +/- 3 percent, the ceiling rate applied to commercial banks during the day is 23,113 VND and the floor rate 21,768 VND per USD. The rates listed at commercial banks in the opening hour saw slight fluctuations. Vietcombank cut both rates by 5 VND to 22,695 VND (buying) and 22,765 VND (selling), per USD. Tel: Fax: Office@intellasia.com Websites:

2 BIDV listed its buying and selling rates at 22,700 VND and 22,770 VND per USD, unchanged from the day ago. The buying rate at Techcombank was adjusted down by 20 VND to 22,660 VND and the selling rate was reduced by 5 VND to 22,775 VND. Banks eagerly seek to purchase retail segment 04/JUL/2017 INTELLASIA BAO DAU TU Vietnam International Commercial Joint Stock Bank (VIB) has just completed the acquisition of a foreign bank branch in HCM City. The identity of this branch is expected to be officially announced by the bank this afternoon. Earlier, there was information that VIB was one of five banks that wanted to acquire the retail segment of the Australia and New Zealand Banking Group Limited (ANZ). The bank's leaders refused to comment about this deal but affirmed that VIB still continued its plan to purchase another bank's retail segment in Although the specific identity of the bank whose retail segment would be acquired was not disclosed, Han Ngoc Vu, CEO of VIB said the criteria for selecting the object to acquire were good asset quality and transparency. Thus, along with the appearance in large number of banks and foreign bank branches in Vietnam over the last period, some banks had to withdraw from the retail segment. Most recently, ANZ Vietnam successfully transferred the retail segment to Shinhan Vietnam. However, in terms of trend, foreign bank branches are still very interested in Vietnam market. Reportedly, two foreign banks are looking to acquire the retail segment of another bank. Of which, the remaining banks are also aggressively implementing the strategy to promote retail segment. Currently, nine 100 percent foreign owned banks have been granted with licenses to operate in Vietnam, including Woori Bank, Public Bank Berhard, ANZ, Standard Chartered, Shinhan Bank, Hong Leong, CIMB and HSBC. Recently, United Overseas Bank has been approved to become a wholly foreign owned bank in Vietnam. That is not to mention, the country has more than 51 branches and 51 representative offices of foreign banks operating. With more than 93 million people, and sharply increasing consumption, Vietnam is considered as the potential land for the retail segment of banks. This is the reason why over time, banks have strategically planned to boost the retail segment. Among foreign banks, HSBC and Standard Chartered are the two banks that have the strongest expansion in Vietnam. Standard Charter's leaders said they planned to increase personnel for the retail segment in the country. HSBC is also having deeper understanding about the domestic market and is gaining the strongest growth momentum especially in the retail segment. Currently, HSBC leads foreign banks in terms of profits. Meanwhile, having just completed the acquisition of ANZ's retail segment, Shinhan Bank does not hide its ambition to occupy the retail market share in Vietnam. Last year, this bank's profit reached more than one trillion dong, well ahead of many domestic banks. Along with Shinhan Bank, another South Korean bankera "rockie"i.e. Woori is also planning to carry out a series of retail products in Vietnam in In the group of domestic banks, retail is also considered as a core strategy that brings about revenue in the near future as the room to develop the wholesale segment is shrinking. Even, large banks that previously specialised in wholesale such as BIDV, VietinBank, Vietcombank, etc. are also shifting strongly to retail. Apart from VIB, many domestic banks are also finding banks having strength in retail to acquire. It can be seen that retail is currently the target of both domestic and foreign banks in the market but this is also a quite drastic "battle". An example from ANZ shows that this bank used to be very ambitious with the retail strategy in Vietnam due to expectation on increased people's income. However, the too intense competition of domestic banks such as Vietcombank, BIDV, VietinBank, VPBank, Techcombank, etc. caused ANZ's market share not to be as high as expected. Finally, it had to transfer the retail segment to Shinhan Bank (South Korea). Foreign capital keeps flowing into bonds 04/JUL/2017 INTELLASIA DTCK Foreign capital is still flowing strongly into the government bond market despite fore- Intellasia 4 July / 49

3 cast about the future interest rate raises of the US Federal Reserve (Fed), which causes the US dollar to increase, and Vietnam's lack of incentives for foreign capital in this market. As per the National Financial Supervisory Commission (NFSC), in May, foreign investors net sold $15 million worth of Vietnamese government bonds but cumulatively, in January-May, they still net bought about 11 trillion dong bonds. In June, the net purchase trend of government bonds of foreign investors became clearer. Transactions in the bond market during June updated by Vietnam Prosperity Bank Securities Company (VPBS) showed that on the secondary market, the total transaction value reached trillion dong, up 34.8 percent from the previous week. The liquidity in the bond market was positive thanks to the contribution of foreigners. As per Saigon Securities Incorporation (SSI), the transaction value of foreigners last week reached four trillion dong, doubling the previous week. This corporation net purchased 983 billion dong in the week, raising the total net purchase value from the beginning of this year to 14.9 trillion dong. Explaining the positive foreign capital inflows into government bond market, leader of a foreign invested fund management company said that Vietnam's GDP growth rate in the first months of this year has not fulfilled the expectation to ensure the full-year growth of 6.7 percent but it is still positive compared to many neighbouring economies. It is worth mentioning that interest rates, exchange rate and inflation are controlled stably. In the context of such positive economic conditions, the Vietnamese government bond yields are significantly higher than the market, thereby attracting foreign capital to this investment channel as an attractive opportunity to gain profits. *Will this positive trend be maintained in the second half of the year? As per SSI analysts, the worry of dong devaluation against US dollar is not significant to foreign investors when investing in the bond market. Therefore, it is more likely that foreign capital flow will continue flowing into the bond channel from now till the end of the year. The US dollar value has risen slightly after Fed decided to raise interest rates in mid- June but decreased again late last week. In the domestic market, a worth noticing development in the past week was that the State Bank increased the buying price of US dollar by 50 dong to 22,725 dong/us dollar on June 19. This was the third time in the year the State Bank adjusted up the buying price of US dollar, after increasing 100 dong in April and 275 dong in January. This move was considered to be in line with the low inflation context and the continuous declining trend of the US dollar/dong exchange rate right from the beginning of the year, creating favourable condition for the State Bank to increase the foreign exchange reserve without putting pressure on exchange rate while pumping liquidity to the system without having to use open market tools. With the macro-economic context to continue moving in positive direction, investment director and portfolio management director of a large bank said the US dollar/dong exchange rate will be stable from now till the end of the year, except for sudden external influencing factors. That is a short-term view, while in the long term, a deputy general director of a large bank said the government bond market should have attracted more foreign capital than the results achieved in the first six months of this year if Vietnam had a good strategy. Reportedly, the Ministry of Finance is working on a scheme to attract foreign capital flow to the bond market. Investors expect that once incentive mechanisms, especially the fees and taxes, are applied, they will attract foreign capital flows into the bond market in the near future. Intellasia 4 July / 49

4 Cashing in: Vietnamese bank buys out Australian partner in Saigon 04/JUL/2017 INTELLASIA VNEXPRESS VIB's deal with the Commonwealth Bank of Australia is the first of its kind in the country. The Vietnam International Commercial Joint Stock Bank (VIB) and Commonwealth Bank of Australia (CBA) signed a deal on Monday for VIB to take over the HCM City branch of CBA. Without revealing any information regarding the value of the deal, VIB said that the transfer will be completed in the next few months. CBA currently holds a 20 percent stake in VIB, so the deal is expected to benefit customers of both banks. Han Ngoc Vu, CEO of VIB, said the system and staff at the CBA-HCM City branch would remain the same to allay concerns of its 22,000 customers in the city. With 160 branches in 27 cities and provinces across Vietnam, the deal should allow more people outside HCM City to access CBA's services, such as opening accounts to study in Australia and transferring money between the two countries, he said. According to the State Bank of Vietnam, this is the first time a local lender has taken over a branch belonging to a foreign bank. The Australian bank entered Vietnam in 1994 with a representative office, before opening the HCM City branch in According to data posted on its website, VIB has become one of the leading commercial joint stock banks in Vietnam, with total assets of more than VND100 trillion ($4.4 billion). The bank's charter capital stands at VND5.64 billion, while its shareholders' equity is worth nearly VND9 trillion. Sacombank targets $44.5 million profit 04/JUL/2017 INTELLASIA THE SAIGON TIMES Leaders of Saigon Thuong Tin Commercial Bank, or Sacombank, have shown a determination to obtain VND1 trillion, or $44.5 million, in pre-tax profit this year. "The board of directors and the management board will try to bring this year's pre-tax profit to VND1 trillion," Sacombank chair Duong Cong Minh told the press on the sidelines of the bank's annual general meeting last Friday. The goal drew attention from shareholders, investors and enterprises as Sacombank shareholders earlier approved a pre-tax profit target of only VND585 billion. Around 1,000 shareholders attended the meeting where many expressed dissatisfaction with Sacombank's failure to give a cash dividend in the past two years. Chair Minh, meanwhile, promised that Sacombank leaders will strive to finish a restructuring scheme in five years instead of 10 years as approved by the central bank. The board of directors held a meeting to discuss personnel issues on Saturday. According to a source close to the situation, Nguyen Duc Thach Diem, deputy general director of Sacombank with 17 years of experience in the banking sector, is expected to take up the post of general director. Speaking to the Daily, some newly-elected members of the board assessed Diem's credentials for debt handling, one of Sacombank's top priorities now and next year. Minh, who is chair of Him Lam Corporation, was elected to Sacombank's board as expected by some shareholders at the meeting. They hoped the new chair with previous experience in real estate trading will be able to speed up the settlement of mortgaged assets and bad debts. A large proportion of assets used as collateral for loans at Sacombank have inadequate documents. If these assets are liquidated as per a bad-debt settlement resolution which was recently approved by the National Assembly and will take effect in mid-august, Sacombank will be able to speed up the debt recovery process, said a board member. According to Sacombank's consolidated financial report in 2016, the lender was holding VND37.3 trillion in special bonds issued by the Vietnam Asset Management Company (VAMC), over VND13.7 trillion worth of bad debts classified in group 3 Intellasia 4 July / 49

5 Macro economy remains stable in six months (substandard debt) to group 5 (potentially irrecoverable debt) and VND25.3 trillion worth of interest and fees that had to be recovered. The figures resulted in a high level of unprofitable assets of Sacombank compared to other credit institutions. Industry insiders said the restructuring of Sacombank requires a flexible mechanism from administrating agencies, including refinancing credits at suitable rates from the central bank via VAMC's special bonds, not just rescheduling and extending debt risk provisioning deadlines. In 2017, Sacombank looks to have VND384.6 trillion in total assets, up 16 percent from last year, VND356.1 trillion in deposits, up 17 percent and VND277 trillion in total outstanding loans, up 19%. The bank plans to basically settle percent of bad debts and properties sold to VAMC within three years. million-profit.html 04/JUL/2017 INTELLASIA VNA Vietnam's macro economy remained stable in the first six months of 2017 while inflation was curbed so as to reach the national steering committee on price management's yearly target of 4 percent. Notably, economic growth in the first half of this year reached 5.73 percent whilst the figure in the first half of 2016 stood at 5.65 percent, the national financial and monetary policy advisory council reported at a meeting in Hanoi on July 1. Gross domestic product (GDP) growth in the second quarter of 2017 was estimated at 6.17 percent, a surge compared to that of the first quarter 5.15 percent. Since the beginning of this year, the State Bank of Vietnam has deployed measures to manage interest rates and exchange rates to stabilise the monetary market. Total means of payment rose by 5.69 percent and credit growth was recorded at 7.98 percent, while interest rates remained stable. The council's members also forecast global economic risks, including a shift to trade protection and declining export growth to the US and EU, which will affect the domestic economy. The council called on the government to seek solution to accelerate disbursement of foreign direct investment, which is slower than in previous years. It also proposed reconsidering the calculation of average inflation and the adjustment of electricity prices to boost investment in the power industry. Members urged the government to direct ministries and sectors to continue studying mechanisms to mobilise gold and US dollars kept by individuals for production and business, while looking to reduce deposit and lending interest rates. Deputy prime minister Vuong Dinh Hue, also chair of the council, said the government, along with ministries and sectors, will continue monitoring macro-economic developments and push ahead with investment restructuring, capital divestment and equitisation of State-run businesses. At the same time, the government will reform the operational mechanism of public administrative units and promulgate documents to carry out the National Assembly's Resolution on handling bad debts, boost administrative reforms, develop logistics, facilitate trade and prevent trade fraud. Government regular meeting discusses socio-economic situation in H1 04/JUL/2017 INTELLASIA VNA Vietnam saw good socio-economic development indexes in the first six months of 2017, prime minister Nguyen Xuan Phuc affirmed at the government regular meeting on July 3. The online meeting, which included top leaders of the 63 provinces and cities and the Steering Committees of the Northwestern, Central Highlands, and Southwestern regions reviewed the socio-economic, defence, security and diplomatic situations of the country in the first half of this year and was expected to put forward measures to fulfil 2017 tasks assigned by the Party Central Committee and National Assembly, Phuc stated. According to him, from January-June, the economy progressed well compared with Intellasia 4 July / 49

6 the same period last year. Specifically, the macro economy was stable, while inflation was kept low. Economic growth recovered quickly, from 5.15 percent in the first quarter to 6.17 percent in the second quarter. Vietnam ranked sixth among the 12 leading countries globally in terms of tourism growth. The number of foreign tourists to the country increased by 30 percent in the period. The country's trade reached nearly $200 billion, with export turnover up 19 percent. Budget collection rose rapidly, and measures were taken to ensure collection, especially in major cities and in key economic zones. In addition, foreign direct investment surged in the first half with total newly-registered and additional capital of $19 billion, up 54.8 percent. Of the total, $7.7 billion was disbursed. There were more than 61,000 newly-established businesses with total capital of nearly VND600 trillion (US$26.4 billion). The PM went on to say that health insurance has to date covered 83 percent of the population. Political and social order and safety was ensured, while diplomatic work also produced positive results with several trade and investment deals worth billions of USD signed, he added. However, the PM underlined the need to point out difficulties hindering growth. He cited bottlenecks in the consumption of livestock, poultry and agricultural products, along with the low growth of industry and construction and sluggishness in the mining industry, especially the oil and gas sector. Besides, there are a number of businesses waiting to be dissolved or suffering prolonged losses, he said, stressing high costs, particularly in transportation and logistics. The leader also commented on slow investment disbursement which fulfilled just 30 percent of the target set by the PM and nearly 26 percent set by the National Assembly for the first half of this year. A noteworthy problem is the slow equitisation of State-owned enterprises (SOEs) and capital divestment, he said, explaining that only 20 SOEs were equitised and SOE equitisation plans for 51 others were put forth during the period, with VND11.6 trillion (US$510.4 million) out of VND60 trillion (US$2.64 billion) divested. The PM listed a range of other issues of public concern relating to food hygiene, social insurance, school violence, child assault and environmental pollution. Against this background, he emphasized tasks for the last six months of the year. To complete the yearly growth target of 6.7 percent, it is a must to keep the pace at 7.42 percent in the second half, he said, noting that it is not an easy task with the rainy season coming. However, he said, the target is within reach in the context of the recovery of sectors and other favourable domestic and international conditions. According to international organisations, Vietnam's economy has turned from a status of stability to activeness, as shown by its innovation index jumping 12 places in June, the leader added. He urged greater efforts and stronger reforms, particularly in production and business management agencies and localities, focusing on key economic zones and major cities and provinces. In that spirit, the PM asked Cabinet members and localities propose solutions to ensure growth in each economic sector. Efforts should be made in decentralisation with more authority given to localities, along with administrative reform, environmental protection, traffic safety and fire fighting, he said. Intellasia 4 July / 49

7 There are wide doors for further economic growth, says PM 04/JUL/2017 INTELLASIA VGP To achieve a 6.7 percent growth pace for 2017, it is necessary to attain a pace of 7.42 percent in the rest of the year. The high goal is within reach but needs greater endeavors, drastic actions, and strong reforms, asserted PM Nguyen Xuan Phuc. The PM made the point on July 3 in Hanoi while chairing a government's regular meeting for June with local leaders of 63 provinces and cities to discus on socio-economic performance in H1 and solutions in the rest of the year. Domestic economy in "good health" PM Phuc assessed that the economy operated properly in the first six months. Specifically, the macro-economy was stable. Inflation rate was kept at low level, rising only 0.2%. Growth pace rebounded quickly with 5.15 percent in Q1 and 6.17 percent in Q2. These were a spectacular growth despite international and regional difficulties. GDP expanded 5.73 percent in the first six months of which agricultural and service sectors grew rapidly. The number of international guests surged 30%. Vietnam was one of 12 leading countries in terms of tourism development. Credit growth was 8%, the highest rate over the last six years. Stock reached record high in nine years since March Export reached nearly 19%, higher than the same period last year. In the January-June period, trade turnover reached about $ 200 billion. Budget collection surged sharply. The amount of FDI reached over $ 19 billion, up 54.8 percent in value. FDI disbursement valued $ 7.7 billion, up 6.5 percent against the same period last year. Over 61,000 enterprises were founded with a total value of VND 600 trillion. However, PM Phuc also pointed out weaknesses and challenges. Purchasing of agricultural products coped with difficulties. Growth rates of the industry and construction sectors were lower than the same period last year, including mining (down 8.2%) and petroleum (11.6%). Despite business and production development, enterprises still encountered difficulties, including high production costs. The disbursement progress of public projects remained slow, meeting only 30 percent of the year target. The equitisation of SOEs was slow in which 20 enterprises were equitised and plans on equitisation of 21 others were built. Only VND 11.6 billion of capital withdrawal was implemented instead of VND 60 trillion of preset plan. Other social pressing issues have yet been resolved namely food hygiene, large-scale food poisoning cases, medical check-up inefficiency, social insurance debts, school violence, children harassment, and environmental pollution. According to PM Phuc, tasks and missions in the rest of the year are extremely heavy. It is necessary to attain a 7.42 percent GDP growth pace in H2 in an effort to achieve the set 6.7 percent rate in "The goal is high but feasible as key economic fields are rebounding amidst domestic and international advantages," said PM Phuc. "There are wide doors for growth", he added. However, "we must spare no effort; take drastic actions; make stronger reforms, especially in ministries, key economic regions, big cities." Strong voices to localities PM Phuc recommended government members and local leaders to focus on specific solutions for the government, sectors, and localities. He called on delegates to propose measures to surmount difficulties and obstacles especially in agricultural production and consumption; disbursement of public investment projects, SOEs equtisation, and administrative reform. PM Phuc stressed the need to give local leaders stronger power instead of applying procedures from central level and attach more importance to social issues. "In the first half, the government issued a large number of mechanisms, solutions, synchronous policies. However, the implementation remained slowly among a proportion of public officials and staff," PM Phuc stressed. Intellasia 4 July / 49

8 Gauging room for further growth: starting from stateowned enterprises 04/JUL/2017 INTELLASIA VIR Whether there will be substantial or little room for growth, which might either reach its critical point already or potentially open new developmental paths, depends on the action plan to carry out the three Resolutions of the Fifth Plenum of the 12th Party Central Committee. Meanwhile, the state sector continues to be considered as a key driver of the market economy by economic experts. If numbers could speak... "We are sitting on a mountain of money and are still worrying about not having enough for investment. I have a firm basis for this claim," said Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), who clearly wants to address the important point of the economy at this time, as he drastically urges greater efforts to find the solutions requested by the government to boost economic growth. However, the pile of money included in Cung's calculations does not only come from the population as frequently mentioned in a lot of research. "What I meant was the public sector, especially state-owned enterprises (SOEs). The sector is holding resources as well as untapped potential that reforms could unlock to generate growth," Cung said at a seminar organised by CIEM on the organisation and execution of effective and absolute SOE restructuring. Specifically, looking at the list of SOEs scheduled to be reorganised in the period (promulgated under Decision No.58/2016/QD-TTg), it can be seen that if all goes according to schedule and in strict accordance with the principle of minimising the proportion of state capital retained in enterprises, the book value of the state capital collected might hit over VND296 trillion ($13 billion) (see table). Furthermore, revenues from the divestment of state capital in public listed companies and those named in the listing plan are being estimated by experts to reach 15 per cent of the GDP between now and "While equitisation still faces a little hesitance due to concerns about underpricing in share sell-offs or delays in asset valuation, the divestment of state capital in public listed companies can proceed immediately and will certainly follow market prices. It inevitably requires the adoption of a few technical procedures and selling to maximise the value without affecting the market. Nevertheless, experts are fully capable of handle this," Cung said. However, before financial stock experts are able to do something, about 813 unlisted but equitised enterprises will have to move onto the trading floor. 738 of these enterprises have not registered for trading, 45 are under-qualified, and 30 are qualified but not listed. Excuses are unacceptable Properly using and allocating "the pile of money" above, whether in a speedy or steady manner, to generate growth for the economy or not, entirely relies on the government. "The matter here is to identify who is in charge and what actions should be taken," said Le Xuan Ba, an economic expert who has recently put these issues on the table and discussed the implications of the resolutions promulgated by the Politburo. Besides, he did not hide his concerns about the gap between these resolutions and their enforcement. More to the point, these concerns are not groundless. Assessing the picture of SOE restructuring during the period, although the number of equitised enterprises completed 93 per cent of the plan, the quality of SOE restructuring has been considered as inadequately low, since it failed to meet a couple of desirable targets. Regarding the ownership structure in equitised enterprises, state capital accounted for 81 per cent, new external investors contributed 9.5 per cent, and strategic investors held 7.3 per cent of the shares. After the plan to restructure SOEs from 2011 to 2015 was finalised, as many as 20 per cent of state-run economic groups and corporations accumulated major losses. Moreover, they were exposed to several risks which eventually led to financial insecurity. In 2015, 25 economic groups and corporations had to bear a debt ratio of more than three times the owner's equity. Meanwhile, very few state-owned enterprises were al- Intellasia 4 July / 49

9 lowed to file for bankruptcy or operate under the scheme of bankruptcy. Throughout the period, only eight bankruptcy cases were approved. Concerning the implementation of the 2016 equitisation plan, only three enterprises were included in the new list, while the rest were carried over from the previous period. "There is a serious problem with the discipline of administrative enforcement. All the decisions have clearly stated the responsibilities and duties of relevant parties, but no one was indicted for being incompetent or inefficient when they failed to complete the missions," Cung strongly emphasized. In addition, transferring SOEs from ministries and government bodies to State Capital Investment Corporation (SCIC), which was launched in 2006, has not been completed. Sharing similar concerns over the implementation issues, Pham Duc Trung, head of the Department of Enterprise Reform and Development at CIEM, the lead author of the study on SOE restructuring from 2016 to 2020, believes it is necessary to carry out a number of reforms with top-down imposition. "The government, as the owner, needs to be the one who makes rational decisions and imposes enforcement discipline. It is also crucial to perform structural shifts via administrative documents, such as the transfer of SOEs to SCIC, but the impacts appear to be very strong when separating state management from SOE management," Trung said. This means that the government must change first to actively impose discipline in order to widen the path for the market to operate in line with economic laws. The most important point that experts came up with visibly highlights the solutions needed to realise these accounts, which are supposed to be the most feasible measures up to date. These extremely innovative views on the market economy and the role of the government, as well as the position of SOEs and the private sector in the economy were expressed in the three resolutions of the Fifth Plenum of the 12th Party Central Committee. Particularly, as regards the SOE reform process, the prime minister has just approved the Scheme on SOE Restructuring, with a focus on state-run economic groups and corporations over the period. This is the reason why economic experts say that there will be no justification for any delays during the course of SOE restructuring. Keeping inflation below 4pct is achievable: deputy PM 04/JUL/2017 INTELLASIA VNS The target of keeping the country's inflation below 4 per cent in 2017 is quite feasible, said deputy prime minister Vuong Dinh Hue at a meeting late last week. Speaking at the meeting held to better carry out price management in the second half of the year, Hue said that while managing the consumer price index (CPI), relevant ministries and agencies must keep track of and support the country's economic growth target, and avoid triggering high inflation in the future. To meet the goal, Hue said the ministries and agencies must keep abreast of demand and supply, and avoid imposing administrative procedures so that gradually, the price of essential public services can be modified based on the market price roadmap. Hue instructed the State Bank of Vietnam to devise monetary policies accordingly, and be flexible. These policies must complement fiscal policies to ensure inflation stays under check, he said. The lending interest rate policy must be mapped out based on market development so as to support economic growth, he said. The deputy PM has asked the Ministry of Industry and Trade (MoIT) to work in conjunction with the Ministry of Finance (MoF) to manage petroleum prices according to the market mechanism, under State management based on Decree 83/2014/ND-CP, with reasonable use of the petroleum pricing stabilisation fund. The MoIT must also manage electricity price as per the PM's instructions, Hue said. It Intellasia 4 July / 49

10 must encourage investment in power production, at the same time considering the impact of input costs on production, consumption and people's lives. Hue also instructed the Ministry of Transport and MoF to monitor the collection of toll at build-operate-transfer (BOT) projects and ports. At the meeting, Hue appreciated the efforts made by all ministries and agencies in managing prices efficiently in the first half of this year. Nguyen Anh Tuan, director of the MoF's Pricing Management Department, said that the price of essential commodities declined gradually in H1, which will make price management easier in the second half of this year. According to the General Statistical Office, Vietnam's CPI in June went down 0.17 per cent against the previous month, helped by the sharp fall in poultry and pig prices. Previously, in May, the country reported the lowest CPI ever seen in May over the past decade, which declined 0.53 per cent against April. Still, the index in the first half of this year posted a 2.54-per cent year-on-year increase and a 0.2-per cent rise compared to December Average CPI of the six-month period rose 4.15 per cent against the same period of Key drivers of the hike included higher hospital and tuition fees, and higher prices of some necessary items such as petroleum and oil products, said the office. The finance ministry has forecast that there remains some pressure on pricing in the second half of 2017, owing to salary hikes from July 1 and possibly unfavourable weather conditions. New policies take effect from July 04/JUL/2017 INTELLASIA SGGP Many policies concerning maritime, taxation, investment, insurance and Pangasius fish farming have taken effect from July. Ocean liners must fly Vietnam's flag The Maritime Law 2015 approved by the National Assembly at the end of the same year and effective from July 1, 2017 stipulates that seagoing vessels from Vietnam and other countries must fly the flag of Vietnam while operating at the country's seaports. Foreign military ships and submarines arriving at Vietnamese territorial waters to reach seaports must float and put out the flag of Vietnam at the position equal to ships' national flags. New percentage of insurance agencies July 1 effective Circular 50 of the Ministry of Finance detailing Insurance Business Law 2000, revised in 2010, stipulates that maximum percentage bases on the premium collected from each insurance contract. The highest rate for some popular insurance services such as property insurance and damage insurance is 5 percent. The rate on package insurance is the total percentage of each insurance service in the package. Maximum percentage on group life insurance contracts accounts for 50 percent of the rate on single premium life of the same kind. Stored export import goods The government's Decree 169, effective from July 1, permits transporters to auction stored export import goods which recipients do not come to receive or refuse to receive. The transporters must do relevant customs procedures before auction. Debt trading conditions The Ministry of Finance's Decree 69 on debt trading conditions, taking effect from July 3, requires debt trading companies to have internal management regulations on debt trading organisation and operation. The regulations must be issued by authorised level at enterprises. Chartered capital or investment capital on the accounting balance sheet must be equal to or higher than minimum capital stipulated at the decree. Enterprise managers must have bachelor's degree or higher in economics, business management, law or the expertise of their enterprises. Pangasius fish farming Intellasia 4 July / 49

11 Find ways to step up EU exports, VN firms urged According to the government's Decree 55 on Pangasius fish farming, processing and export effective from July 1, first time farming registration documents comprise an application for farming pond code granting and a copy of pond position outline. Reregistration documents include an application for re-granting of pond code, the origin of the first time granted code certificate and a copy of pond position outline. Pond code certificates granted under Decree 36/2014 will still be valid. 04/JUL/2017 INTELLASIA VNS Vietnamese firms should step up efforts to boost exports to the EU despite facing several difficulties, a senior official said on Monday. Dang Hoang Hai, head of the European Market Department under the Ministry of Industry and Trade, was speaking to the Vietnam News Agency on the even of prime minister Nguyen Xuan Phuc's visit to Germany and Holland and participation to G20 Meeting (July 5-7). He said EU was a large and potential market with 28 member countries and a total population of 500 million people. For several years, Vietnam has enjoyed a trade surplus with the EU market, he noted. In 2016, Vietnam exported goods worth $34 billion to the EU, 12 times the value in 2000, and paid $11 billion for imports from the bloc. Hai noted that Vietnam can enjoy benefits from the generalised System of Preferences (GSP) for the period. Many countries exporting to the EU do not have enjoy this preference. When the Vietnam-EU Free Trade Agreement (EVFTA) comes into effect, Vietnam would have experienced 20 years of participating in the process of regional and international economic integration. Vietnamese enterprises have actively competed with rivals from other countries, he said. Furthermore, a characteristic of the Vietnam-EU import-export structure is that it is mutually complementary and less confrontational than direct competition, Hai said. Commitments under the EVFTA on opening each other's markets will be an important impetus for boosting Vietnam-EU trade relations, as also an opportunity to further expand exports, especially of key items like textiles, footwear, agro-forestry and wooden products. Meanwhile, Hai said, it must not be forgotten that the EU is a market with strict quality and safety standards that not many local firms can meet. Vietnam's legal system and policies lack uniformity and stability, so local enterprises are at a disadvantage when it comes to international disputes and lawsuits. Hai said Vietnamese enterprises are also not fully conversant about product origins, and with related rules in the FTA being very strict, the firms will not be able to comply with them. Therefore, businesses need to actively adjust their supply chain and input materials to adhere to the rules of origin and enjoy preferential tax regimes under the EVFTA. These activities will also help them avoid investigations and other trade defense measures. Local enterprises should actively reform and improve their ability in all fields, and enhance product quality to face future challenges, Hai said. To boost exports to the EU, the Ministry of Industry and Trade has directed its trade offices in the EU member countries and relevant agencies to monitor market developments and identify solutions. Hai also said that the ministry plans to encourage local enterprises directly joining the international distribution network. - Vietnam's exports forecast to hit 195 billion USD in /JUL/2017 INTELLASIA VNA Vietnam's export turnover is likely to hit 195 billion USD this year, up percent compared with 2016 and 6-7 percent higher than the target set by the prime minister, Intellasia 4 July / 49

12 according to the Ministry of Industry and Trade (MoIT)'s Export-Import Department. The department said the country's export revenue in the first six months of this year stood at billion USD, representing a year-on-year rise of 18.9 percent. The accumulated export-import turnover in the first half was close to billion USD, a year-on-year increase of 21.5 percent. In June alone, total export-import value reached 35.8 billion USD, down 1.6 percent against the previous month. Of the number, exports made up 17.8 billion USD, down 0.7 percent and imports were 18 billion USD, down 2.5 percent. The statistics show Vietnam ran a trade deficit of 200 million USD in June and nearly 2.7 billion USD during January-June, equivalent to 1.4 percent of the total export revenue. The country's major exports included computers, and electronic products and components while its imports were machines, equipment, tools, fabrics, phones, plastic, garment-textile and footwear materials, petroleum. Experts held that the picture for export will be brighter in the near future based on rosy forecast for the export of agro-fishery and industrial products like garment-textiles, footwear and timber products. Specifically, deputy prime minister Trinh Dinh Dung has signed a decision on the issuance of the rice export market development strategy, which is expected to contribute to raising the country's rice export value. MoIT minister Tran Tuan Anh underlined the need to keep a close watch on major import markets like the US and China, while putting forth methods to raise competitiveness of Vietnamese products in big markets. billion-usd-in-2017/ vnp Export value of forest products expected to exceed 7.5 billion USD Ben Tre aims to fetch 400 million USD from exports 04/JUL/2017 INTELLASIA VNA The forestry sector aims for at least 7.5 billion USD in export turnover and a 6.6 percent increase in production value in 2017, said deputy minister of Agriculture and Rural Development Ha Cong Tuan. Addressing a conference held by the Vietnam Administration of Forestry on July 3, Tuan said that in the first six months of 2017, the sector basically fulfilled its assigned tasks and targets, which is expected to help increase the forest coverage to percent this year. However, the sector still faced several shortcomings. Despite decreasing deforestation, over 1,000 hectares were lost while the alternative afforestation progressed slowly, he noted. He asked relevant agencies to exert efforts to deal with difficulties in forest production, and drastically carry out the target programme on sustainable forestry development in and complete a draft law on forest protection and development. The official also stressed the need to have specific measures to plant alternative forests. During January-June, the forest production value grew 5.29 percent. The export turnover of woodwork and forest products reached 3.77 billion USD, up 12.7 percent yearon-year. Vietnamese wood products have to date been shipped to over 100 countries and territories. In the period, 40,612 hectares of alternative forests were planted, equivalent to 60 percent of the total area that needs to be covered. billion-usd/ vnp 04/JUL/2017 INTELLASIA VNA The Mekong Delta province of Ben Tre aims to generate 400 million USD from exports in the second half of 2017, according to the provincial Department of Industry and Trade. To reach the goal, the locality plans to accelerate product promotion, stabilise tradi- Intellasia 4 July / 49

13 tional markets and seek new trade partners, while creating a system of quality and technique regulations for exporters, producers and businesses. The local department expects to see an increase in export quantity and earnings of several coconut products, garments and textiles as well as handbags in the rest of the year. In the first six months, local export turnover exceeded 347 million USD, up 3.56 percent year-on-year and making up percent of its yearly goal. Of the sum, more than 240 million USD came from foreign-invested enterprises, while the remaining value was added by local firms, representing percent and percent of overall export turnover, respectively. Some major export commodities of the locality, including dry shred coconut and coconut milk, experienced an increase in quantity with shipment of 10,266 tonnes, up 3.97 percent and 28,000 million litres, up percent, respectively. Meanwhile, from January to June, the local garment and textile industry raked in 57 million USD, up 13.9 percent against last year. million-usd-from-exports/ vnp Seafood processing fuels export in Tien Giang Quang Ninh's export earnings increase by 6.7pct in first half 04/JUL/2017 INTELLASIA VNA Agricultural exports in the Mekong Delta province of Tien Giang hit 1.14 billion USD in the first half of 2017, up 25.4 percent year-on-year. According to Ngo Van Tuan, director of the provincial Department of Industry and Trade, shipments of processed seafood, particularly Tra fish, drove the export growth. The 6-month export value of local fishery commodities, of which 90 percent were Tra fish products, increased 5.3 percent from last year to million USD. Tien Giang Tra fish has to date been exported to 50 markets across the globe. Rice exports were also a highlight, growing 50 percent during the period compared to last year, with more than 115,000 tonnes of rice shipped overseas, reeling in 55.7 million USD. Tuan said the outcomes are a good start for Tien Giang to realise its export goal of 2.35 billion USD for The target represents a year-on-year climb of 11.4 percent. The outcomes also reflects efforts from local authorities and business communities, he noted, adding that the province is working to overcome trade barriers by overhauling local production assembly lines to ensure food safety and goods origins. 04/JUL/2017 INTELLASIA VNA The northern province of Quang Ninh earned 749 million USD from exports in the first half of 2017, 45.3 percent of its yearly goal. According to the provincial Department of Planning and Investment, turnover was up 6.7 percent from a year ago. Notably, shipping 970,000 tonnes of coal raked in million USD, a year-on-year increase of 32 percent. Other export goods that witnessed an increase included textiles, up 27.2 percent; wolfram, 27.3 percent, cement, 7.2 percent; candle, 9.7 percent and vegetable oil, 5.7 percent. Imports from local businesses during the period were valued at million USD, up 4.89 percent compared to the same period last year and representing 30.5 percent of the yearly plan. The locality also earned 939 million USD, growing by 2.86 percent against the previous year, from temporary import and re-export activities. Intellasia 4 July / 49