“Your partner in Indochina”

Executive Consulting & Support for Production, Marketing, Sales We handle your business activities

German engineer in Vietnam, Cambodia, Laos, Myanmar since 2005, guarantees with his team of

management, engineering, business development, location, product, production, marketing, sales and M&A experts for turn-key processing to

German quality standards

Mobile: 0084 - (0) 938433385 web: www.produktionsservice-vietnam.com e-mail: office@produktionsservice-vietnam.com

“VIETNAM BUSINESS NEWS” The Economic Mirror Indochina’s

Januar 2015

Economy, International Cooperation, Business, Investment, Markets & Prices

We report about the latest prime business news from various fields, as well as the economic environment in particular for western business people. We publish the informations, news and reports of the leading news sources which could appear of special interest for our clients.

INDEX: Subjects after Country marked: V = Vietnam. C = Cambodia. M = Myanmar. L = Laos. O = Other Country's.

Topic of the Month O - Why 2015 investing in Vietnam? Economy Opportunities Future

Economy & Business V - German SME Market Entry in Vietnam Asia V - Economic highlights in 2014 V - Simplified Enterprise and Investment law to enter the Vietnamese Market O - The European SME Mittelstand should prepare himself. The TPP agreement will make the global trading world completely upside down V - Vietnam's production costs are the world's most stable and with the lowest O - German firms pep up health market M - Myanmar approaches second stage of 20 year plan for industrialisation V - 10th ProPak Vietnam: Good Opportunity for Processing and Packaging Industries

Int'l Cooperation L - Switzerland opens fund for cultural expression O - Belgium supports knowledge-based development

Investment V - Procurement Import Export of merchandise of all kinds V - US investment fund to inject US$300 mil into Vietnam V - Hanoi's most famous state-owned hotel has new investors M - Myanmar on Deutsche Bank’s list of frontier markets to watch V - Samsung investment in Vietnam to top $20bn in 2017: ministry

M - Foreign Investors Hiding Behind Burmese Citizens ‘Face a Crackdown’ V - Foreign investors pour $138.5b into Vietnam’s manufacturing, processing industries V - Big investors keen on retail market in Vietnam V - Malaysia - one of top investor in Vietnam V - Garment & Textile: Risk of Losing Home Ground

Finance & Banking O - Vietnam Indochina Asean: Unbeatable prices by R&D Production Export O - Dollar gains on euro after strong US data V - Foreign banks make high profits in Vietnam O - Trade-weighted euro may see shock 2015 upswing V - Credit Suisse named Best Foreign Investment Bank in Vietnam

Markets & Prices O - Purchase Production Trading Import-Export Servicing in Vietnam Indochina Asean V - Car imports to Vietnam increase considerably O - The German SMEs interested in Vietnam only the fast trading buck. Other Europeans prefer win with long-term value creation V - Vietnamese automobile industry to compete with other countries V - PM allows changes to industrial parks V - Vietnamese auto companies join alliance V - Thai billionaire opens second mall in Vietnam V - Starbucks, McDonald’s arrival just a storm through the village V - Vietnam retail market to fully open for foreign firms V - New wave of retailer expansion expected to materialize in 2015 V - Local-made drug to account for 80 % in market: Ministry V - High technology helps to improve the quality of agriculture V - Retail Market Moves towards Modernisation

Export-Import O - Procurement import export. Distribution by Representative Office or Trade Agency V - Vietnam's exports to Russia seen declining V - Capital city trade deficit tops $13 billion in 2014 V - Vietnam sees trade surplus for third year V - VN enjoys trade surplus of US$1.31 billion from Italy V - Garment exports may set new record V - Coffee exports touch over $3 billion in turnover V - Vietnam's 2014 exports seen up at a record $150 billion: PM

Particular Reports O - The difference between Americans and Asians O - AEC (ASEAN Economic Community) 2015: Will it happen? O - Thailand not ready for Asean Economic Community

Fairs & Exhibitions O - VIETNAM - CAMBODIA - LAOS – MYANMAR. All Fairs with organizer contact data. REPORTS: V - Note: February 18 - 22 is New Year in Vietnam Caution for business deadlines in Vietnam: Because from february 18 to 22 is new year in Vietnam. At the same annual leave for workers. Therefore from february 15th to 23rd everything, except tourist hotels, is closed.

Topic of the Month O - Why 2015 investing in Vietnam? Economy Opportunities Future By Dipl.-Ing. Alex Narr, CEO Productionservice-Vietnam, 23.12.2014 The past is Europe. The present is America. The future is Asean. This slogan recently announced a German lawyer on his ASEAN law firm website. He is not the only one that sees it like this. If one objectively view the facts his perspective could be true. Because the GDP average of the EU countries in total achieve according to Eurostat from dec. 17th 2014 only very meager 0,1 - 0,2%. Even Germany’s GDP creates only 1,0% instead the hoped for 1,8%.

If one viewed Europe from outside one recognize that many politicians are more concerned with their self-representation as with their mission from the voters. Also overestimate themselves. Forcing even high-spirited economic sanctions against Russia. Even though Germany alone depends on 30% of Russia's energy delivery. And Germany’s economy supply them for 36.1 billion $ worth of goods. In return need Russian goods from for 40.41 billion $. The Committee on

Eastern European Economic Relations said already that the crisis endanger up to 25,000 jobs in Germany. Were a broad recession to befall Russia, German growth could sink by 0.5 percent, according to a Deutsche Bank study. Vladimir Putin already answered to this EU-sanction games: He create a new economic zone with China. Of course without West-Europe.

With all the political wrangling the EU, especially Germany, overlooked that other countries, areas in the world, moved meanwhile constantly forward. Give with GDPs between 5,9 to 8,5% economic full throttle, overtaking Europe more and more. Coupling the EU business train simply off.

In plain English; if Europe's Euro locomotive Germany loses even more steam it could come economically true - that the past is Europe.

And the present is America. Because since 2009 the Obama administration formed with great skill and enforcement the TPP Agreement (Trans Pacific Partnership). The future production, trade and consumption world. Start 2015. “The economic milestone”.

And that the economic future happens in Asean (not be confused with whole Asia / China), particular in the TPP countries, underline the following circumstances:

>Vietnam's manufacturing sector attracts Chinese investors. They have shown growing interest in Vietnam's manufacturing sector because of the country's low labour costs and its proximity to China. And so it sees the former low-low-cost world champion China!

>Deutsche Bank Juliana Lee senior economist for Asia frontier markets says; in particular Vietnam, Cambodia, Myanmar are worthy of attention by investors, delivering better performance, subject to only marginally higher risk. >Why investing in Vietnam? Vietnam is one of the few countries that is involved in every major trade pact currently in existence, or presently being negotiated, in the region (ex. ASEAN, RCEP, TPP, and APEC), along with Singapore, Malaysia and Brunei. If all the trade deals are enacted Vietnam is in the enviable position of being a low-cost manufacturer with free trade access to some of the world’s largest economies. These agreements are advantageous for investors because they take down barriers to trade between countries by removing protections for local industries. >Vietnam is on track to become the largest supplier in ASEAN. The American Chamber of Commerce (AmCham) predicts that Vietnam will become the largest ASEAN supplier to the United States by the end of 2014.

>Vietnam a key sourcing destination for foreign investors. The Regional Comprehensive Economic Partnership (RCEP) would cover the Asia/Oceania portion of the Pacific coast. If enacted, this free trade agreement would provide Vietnam with tariff free access to China, India, Australia, Japan, and South Korea. Any manufacturer setting up in Vietnam with an eye towards exporting into other Asian countries should be tempted by the reach of the RCEP. In addition the Trans-Pacific Partnership (TPP) will be the golobal most potential Free Trade Agreement, ratified 2015. The TPP focuses more on the wealthy Western Hemisphere with the largest consumption.The major players on that side of the Pacific Ocean are the United States and Canada.

>EU-Vietnam FTA. If this trade agreements come to fruition then Vietnam would have free trade agreements in place with the world’s three largest economies, as well as five more economies within the top fifteen in GDP. With it Vietnam has positioned itself as a key hub for future global commerce.

Parallel the Vietnamese government is continuing its efforts to make the country more inviting for foreign businesses. Vietnam simplified its Investment Law procedures to target higher quality investments. Examples include new high-tech parks, the growing coffee industry, as well as textiles. The government also realizes that current infrastructure needs are not adequate for the level of foreign investment it is trying to achieve, thus it is spending to improve roads, rail links and airports.

Unlike other countries in the region, Vietnam has a stable government and political system. Don’t need to worry about religious destabilizing influences that may put their investments at peril. The cost of location and production are since 2010 nearly unchanged which is worldwide rather unique.

>Why the German SMEs prefer the fast trading buck? The latest list of Vietnam's top 20 Foreign Investors makes it clear the German SMEs interested the fast trading buck. (see section Markets & Prices).The list also shows German SMEs plays with investment not matter. Are not even listed. Can not participate at the ASEAN value explosion. The interest of German SMEs is very weak, almost zero as the data of the GBA (German Business Association) show. Germany has besides the multinational joint stock companies and some SMEs long time on site with around 170 members more or less no increase in German SMEs as new entrants. >Instead sets Holland, UK, France, Switzerland, Luxembourg and Russia to safe levels by means of investment in Vietnam. Win with long-term value creation. Participate at Vietnam's upcoming values explosion. We notice now also increasing interest in market entry in Vietnam come from Italian, Dutch, Belgian, Czech and Slovak SMEs. Any company would be wise to consider investing into Vietnam as either a first step into Asia, or as a means of diversifying their Asian holdings. There is significant growth potential in the country, both for exporting as well as domestically. Domestic consumption is predicted to increase at a rate of 20 percent per year – with a population of over 90 million and Southeast Asia’s fastest growing middle class, Vietnam clearly represents an important market for foreign goods. And if the proposed free trade agreements are ratified, then global free tariff access will only make Vietnam more attractive. In this context are European, especially German companies well advised if they put in considering the situation a foothold in the future from VIETNAM. The usefulness: Significant reduction of procurement, production and distribution costs. Partially reduction/exclusion of tax, customs and VAT usable. Operate in a market with more than 610 million consumers. In addition Asean's worldwide business is handled in US-Dollar. Not depending on the creeping devaluation of the Euro. Which gets exacerbated with increased TPP World Trade Traffic. Productionservice-Vietnam handles in Vietnam and Indochina all business activities practice-compliant and reliable. No problems with authorities, site selection, staff recruitment and training. Our controlling also has the costs and potential returns in grip. We can offer interim manager too. Interested investors / companies can email us their plans and we will give an free first time estimate of the requirements, possibilities and project costs http://www.produktionsservice-vietnam.com/Englisch/leistungen.php Source: Eurostat. A. Salzman. Vietnam Business News – the Economic Mirror Indochinas.

Economy & Business PSV ad: V - German SME Market Entry in Vietnam Asia By 2015 Asia will be the world's largest free trade zone. Whoever wants to join the fields of opportunities are: > Procurment, Import, Export, Marketing, Sales of merchandise of all kinds > Production. As a in-house production or contract manufacturing > Production relocation. Outsourcing of labor-intensive manufacturing > Investment projects by company purchase. Joint-Venture

> Or new begin. We possess viable business concepts Productionservice-Vietnam handles in Vietnam and Indochina all business activities practice-compliant and reliable. No problems with authorities, site selection, staff recruitment and training. Our controlling also has the costs and potential returns in grip. We can offer interim manager too. If you are interested email us your plans and we will give you an estimate of time, possibilities and project cost. www.produktionsservice-vietnam.com V - Economic highlights in 2014 VGP – 24/12/2014

The national economy has witnessed positive changes in 2014 with the following five remarkable signals.

Improving economic indicators All macro-economic indicators improved against the previous year with the gross domestic product (GDP) expanding around 5.6-5.8%. Over the past 11 months, the industrial production index increased 7.5% compared to 5.6% of the same period last year. The index gradually went up from 5.3% in Q1 to 6.9% and 7.8% Q2 and Q3 respectively.

Foreign visitors, a year-on-year increase of 5.4%. Noticeably, the number of tourists from Russia and China rose respectively 25.2% and 5.1%.

It is estimated that more than 68,000 enterprises were established with the total registered and additional capital of VND936 trillion and 14,208 enterprises resumed operations, up 11.8%.

The nation lured 1,427 fresh FDI projects with the total registered capital of nearly US$14 billion, up 21.4% while 515 other projects expanded investment worth more than US$3.92 billion. FDI disbursement volume in the first 11 months was estimated to at US$11.2 billion, up 6.2% against the same period last year.

Stable financial market The securities market remains a magnet for foreign investment. Interest rates kept on spiraling while credit growth came up to expectations.The bad debts and weak financial organizations were gradually controlled and handled. Recovering real estate market The real estate market was getting warmer, particularly in social and low-cost housing segments. Successful transactions saw a twofold and one-third increases in Ha Noi and Ho Chi Minh City respectively over the past 11 months. The inventory rate dropped by around 13-15% compared to the end of 2013. Low inflation rate According to the General Statistic Office, the average consumer price index (CPI) between January and November stood at 4.3%, the lowest figure over the past 10 years. The CPI decrease was partly attributed to the reduction of petroleum prices and public investment as well as effective control of the prices of essential commodities.

Improving business environment In 2014, the Government took drastic measures to slash tax and interest rates, streamline administrative procedures, improve public services and equitize State-owned enterprises. Besides, the country continued its deeper international integration, especially the conclusion of negotiations on free trade agreements with the Republic of Korea and the Customs Union of Russia, Belarus and Kazakhstan. V- Simplified Enterprise and Investment law to enter the Vietnamese Market By Dipl.-Ing. Alex Narr, CEO Productionservice-Vietnam, December 19th, 2014 At the last international trade fairs the organizers from the SECC in Ho Chi Minh City made a survey of visitors from Europe and US. One of the basic question was; what is the intention at the show and how they assess the commercial and manufacturing base Vietnam?

Main responses were:

The cost of my service subsidiary in China has tripled since 2008 emphasizes an manufacturer of packaging machines from Italy. I move this branch now to South Vietnam. Several of my customer also move their production from China to Vietnam. South Vietnam is the new center of the Asean manufacturing world. With it also concentrate my market developing office for Asia from Singapore to Ho Chi Minh City. A further significant location cost reduction.

Or: Mainly because of the TPP agreement that excludes us Europeans from the global duty-free trade I attended branch trade fairs in Kuala Lumpur and now Saigon. Checked the necessary requirements and what is feasible for the start of a new branch in a TPP country. As I saw investment and running costs are in Vietnam even lower then in Malaysia. Vietnam offer me exceptional duty free trade advantages, as well as a significant cost reduction.

Here the brand new much improved investment and enterprise law to start business in Vietnam:

The amended Enterprise Law will take effect on 01 July 2015 with 10 chapter and 213 articles while the amended Investment Law has 07 chapter with 76 articles.

The amendment of those 02 important laws is expected to create more favorable conditions for the enterprises to enter the market, to protect the rights and interests of the investors, shareholders and business members, and meanwhile to improve the management of foreign investment. Pending for detailed review of those amended laws, we would like to note some highlighted amendments reported from internet source:

Amended Enterprise law i. Right to freely conduct business: The enterprises will really have the right to freely conduct

business and allowed to do what are not prohibited by laws. ii. Seal of enterprise: The enterprise will be free to choose the use of seal. In case that the

enterprise uses the seal, its’ form and content shall be decided by the enterprise but it is required to register with the licensing authority.

iii. New definition of state owned enterprise: The state owned enterprise is defined as a wholly state-owned enterprise. This is a different concept when the current EL consider an enterprise with more than 50% state capital is the state owned enterprise

Amended Investment law i. New scope of governing: The amended IL solely governs direct investment and leaves

indirect investment to the Law on Securities (2006) and its guiding regulations. The amended IL directly covers offshore investment (i.e. - investment by Vietnamese entities in foreign countries) which was previously regulated by a separate Government’s decree

ii. New definition of foreign investor: Foreign investor is now any foreign individual or organization established in accordance with the foreign law. This new definition is expected to make clear the concept of the foreign investor.

iii. Decrease of the prohibited and conditional business lines: The amended IL promulgates only 06 prohibited and 272 conditional business lines. This is a dramatic decrease in comparison with the current IL.

From 01 July 2015, the foreigners with a valid visa, as well as foreign companies and international organizations operating in Vietnam will be allowed to purchase and own houses and apartments. Those amendments on Housing Law are expected to boost the real estate market frozen during last few years in this country.

Under the amended Housing Law, the foreigners subject to purchase and own houses and apartments in Vietnam are as follows:

i. Foreign individuals and organizations that invest in building houses under projects in Vietnam according to regulations of this law and other relevant legislation.

ii. Foreign-invested enterprises, branches and representative offices of foreign businesses, foreign investment funds, and branches of foreign banks operating in Vietnam.

iii. Foreign nationals allowed to enter Vietnam with a valid visa. However, the only allow those above subjects to purchase, purchase on hire-purchase agreements, or own more than 30 percent of the flats in any apartment building or 250 villas/ townhouses in a project.

Meanwhile, the housing ownership certificate will be valid for a term of 50 years but this term can be renewed subject to the regulation of the Government.

In view of these changes, heavily supported by the new TPP Free Trade Agreement, European SMEs should take advantage of the offered massive monetary benefits. Start own business branch in Vietnam. Source: Vietnam Government (VGP). SECC Fair Management Saigon. Vietnam Business News – the Economic Mirror Indochinas. O - The European SME Mittelstand should prepare himself. The TPP agreement will make the global trading world completely upside down By Dipl.-Ing. Alex Narr, CEO Productionservice Vietnam, 17.12.2014 Obama's administration fiddle about intensively since 2010 on the new global trade order called TPP (Trans-Pacific Partnership Agreement). Of course all for the benefit of America. Also the involved countries get something of it. Especially the strategically important. And with minerals like Oil. Or a profitable agriculture with cattle & coffee. And with lots of cheap workforce to produce low-low cost consumer items mainly for US utilities. All to the detriment of US rivals China and Russia. And the intractable Europe gets equal a lesson with it. The 12 TPP countries Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA, Vietnam with over 610 million consumer create the new world economic zone that account for 40 per cent of GDP and one-third of global trade! All without China, Russia. And unfortunately Europe. Nothing will change the world trade with this altered geography more than the TPP Agreement. US biggest modern times weapon - exceptionally economic. Many businessmen have the upcoming TPP trade power still not properly understood. Don’t really know yet what comes along with it hand in hand. The TPP countries have all kind of economic advantages and assets, from nature or wealth. The emerging countries in Asean and South America: Best climate. Exceptionally low raw material. Very low location and production costs. Therefore are the new magnet for the big investors. And the wealthy countries Australia, Canada, USA, Japan need to buy their production output. All goods can be moved within the member countries duty free back and forth. The Asean and South American non TPP countries will future especially strongly feel the power and pressure of their TPP neighbours. Also this low-cost production volume will be exported to Europe. Despite EU customs duties, they will be still able to offer at great prices. Along with it the overpriced European items will get in trouble and sales decrease.The goods on stocks piling up. Shrinking profit margins. This is accompanied by rising unemployment. The EU with all the divergence

burden will be even more debited. This fundamental change will make it even more difficult for the Euro to recouvere. At the old heights of the Euro is no longer to think The low-low cost TPP countries in Asean http://www.produktionsservice-vietnam.com/Englisch/country-ranking.php and Southamerica where the cost, compared to central Europe, only one third of them cost, will be the new winners. And here counts only the US dollar. European corporate groups and large corporations that operate worldwide have long ago multiple legs in Asean and South America. Therefore farsighted European SME should set now also a foothold after ASEAN (not be confused with whole Asia/China) or South America into one of the TPP countries. Because the economic turmoil in Europe will increase further. No spin from the European politicians can help here. The "nor" island of prosperity Europe has simply overslept TPP. The price will be high. Very high. Anyway, the “economic leader” of the next at least quarter century is the TPP! Whoever wants to be there needs a foothold in ASEAN or South America. Start is already 2015. Time is pressing. Productionservice-Vietnam handles in Vietnam and Indochina all business activities practice-compliant and reliable. No problems with authorities, site selection, staff recruitment and training. Our controlling also has the costs and potential returns in grip. We can offer interim manager too. Interested investors / companies can email us their plans and we will give an free first time estimate of the requirements, possibilities and project costs http://www.produktionsservice-vietnam.com/Englisch/leistungen.php V - Vietnam's production costs are the world's most stable and with the lowest Dipl.-Ing. Alex Narr, Productionservice-Vietnam, 6.12.2014 The cost of production are since 2010 unchanged in Vietnam which is worldwide rather unique. In Bangladesh and Cambodia rents and wages are indeed lower, but by annual wage increases. In Cambodia, but especially Bangladesh's infrastructure lags partially far behind. Vietnam has instead acceptable balance with it. In addition in whole Asia, Asean and Indochina only Vietnam, Malaysia, Singapore and Brunei are from 2015 TPP member countries. In future a unbeatable location advantage for duty-free movement of all goods within the 12 member countries. They achieve together 40 % of GDP and 33 % of global trade! For comparison: Europe 14%. Production costs in Vietnam, depending on location amenities & features a month from: - Wages/month: Seamstress $ 120. Skilled worker $ 150. Technician $ 300 - Rent: Produktion- / warehouse space from $ 1.80 sqm - Construction costs production area / factory building standard from $ 120 / sqm. Investors with export production, depending industry and location, can achieve degressive exemption from income tax up to 15 years. As well as 100% VAT and duty exemption for all production goods. Real Estate prices are since 2010, depend oversupply and the associated disaster, still in the basement. Meanwhile the government could with specially created financing packages for lower income families achieve considerable improvements. Among others, they rebuild 4- and 6-room luxury apartments in Hanoi and Ho Chi Minh into 2- and 3-bedroom apartments, affordable for the small and medium budget families. What were characterized suddenly sellable. Purchase price from 430 $ / sqm and 760 $ / sqm. Above $ 900 is still unsaleable.

O - German firms pep up health market

Vietnet, 10/12/2014

German firms are hungry for a bigger slice of Vietnam’s lucrative pharmaceutical and healthcare industry cake.

Fabrice Leguet, head of Siemens Healthcare in Vietnam, told VIR that Siemens “is proud to be the number one supplier of diagnostics solutions in the Vietnamese market, combining the strengths of both in vitro and imaging diagnostics.” “We aim to supply Vietnamese healthcare providers with the most innovative medical technologies to properly diagnose and treat patients,” he said. “For some patients, availability of the equipment is a question of life or death. For investors, it’s a question of getting the most out of their investment. We invest heavily in people and technical training and we are expanding our global state-of-the-art service processes in Vietnam,” he added.

Since 1993, Siemens has provided the most innovative technologies in imaging and laboratory diagnostics to numerous hospitals and clinics throughout the country.

German leading healthcare product maker B. Braun Melsungen AG has planned to raise its compound investment capital in Vietnam to $270 million over the next seven to nine years with most of the investment made within the next two to three years. After more than two decades in Vietnam, B.Braun has two medical plants in Hanoi. The firm is investing an additional $50 million in the second stage of its plant in Thanh Oai district this year, raising the total investment for this plant to $94 million. When the second stage of its third plant, also in Thanh Oai, comes into operation by 2016, total investment in the two plants in Thanh Oai will increase to $191 million. B.Braun has subsidiaries in 60 countries including China, India and Japan. Vietnam is the firm’s second biggest manufacturing base in Asia, following Malaysia. According to the German Business Association in Vietnam, other firms like Boehringer Ingelheim International, Draeger Medical Vietnam, Rudolf J.H Lietz, Fresenius Kabi, Bayer Schering Pharma, and Merck are also operating successfully in Vietnam.

Established in 2010, Merck Vietnam is engaged in the importation, marketing, distribution and trade of laboratory and specialty chemicals, which provide the Vietnamese market with high quality chemical products for the pharmaceutical, chemical, food processing, cosmetics, and painting industries, as well as for use in environmental monitoring. “We aim to establish trustworthy relationships with our customers and partners, to excel in product and service efficiency, through constant improvement and innovation,” said the company’s managing director Frederic Fack.

Vietnam’s healthcare industry has rapidly developed and this trend looks set to continue. Increasing numbers of hospitals and clinics are being equipped with modern technology and the demand for high quality patient care services is on the rise. “The Vietnamese government also supports the industry’s development with no import tariffs on medical equipment,” Leguet of Siemens said.

According to London-based Business Monitor International Company’s (BMI) Pharmaceuticals and Healthcare Report for the fourth quarter, the attractiveness of Vietnam’s pharmaceutical and healthcare market is steadily increasing. While structural challenges remain - such as the country’s ageing population, as well as poor quality healthcare infrastructure and personnel. Growth in expenditure is supported by a significant disease burden, the new insurance law, introduction of new products, more corporate investments and better regulations.

M - Myanmar approaches second stage of 20 year plan for industrialisation Written by Win Ko Ko Lat, 10/12/2014

The second stage of Myanmar’s long-term economic plan to become an industrialised nation will soon be presented to parliament, the Deputy Minister of National Planning and Economic Development, Daw Lei Lei Thein told Mizzima on December 8.

Myanmar’s current long term strategic plan, is constructed of four - five year plans that began in 2010-11 and will run until 2030-31.

The first five-year plan is already underway and being undertaken as a public-centred plan, she said, with a focus on public works projects. Now the amended second five year will be proposed as a parliamentary bill.

“The second five-year plan will develop Myanmar’s small and medium enterprise industries, the third five-year plan to improve larger businesses and improve the special economic zones and the fourth will build the country as an industrialised nation,” she added.

Daw Lei Lei Thein said that she is unable to forecast the overall budget for this long-term plan but it will be funded through a mixture of government funding and foreign loans and assistance.

Dr Zaw Oo, economic adviser to the President, said the long-term plan has been drawn up in conformity with the existing short-term plans, adding that it is important that Myanmar grow out of its Least Developed Countries status after 2020 and place itself on par with the more developed countries in the region.

Dr Maung Maung Soe, a retired professor from the Yangon Institute of Economics told Mizzima that economic planners need to focus on developing secondary exports.

Many of Myanmar’s current exports are of raw, unprocessed products, rather than products that have been processed, packed or in some other way improved to give them a value-added or more competitive edge, said Dr Maung Maung Soe.

“Now, the government holds to a misconception - how can we measure an industrialised nation?” he said. “The nation should to add value [to its produce] first. For example, the farmer may use a tractor in farming his field but this is not a value added process.”

V - 10th ProPak Vietnam: Good Opportunity for Processing and Packaging Industries Le Phuong, November 28, 2014

According to experts, despite huge potential for robust development in the future, packaging and processing industries in Vietnam are confronting numerous difficulties in the period transiting from an emerging market to a developed market. Difficulties range from technological upgrading to personnel development for operating these technologies. To seek solutions to this issue, the International Processing, Filling and Packaging Technology Exhibition and Conference for Vietnam (ProPak Vietnam 2015) promises to be a valuable forum for domestic and foreign businesses to showcase their latest products and technologies as well as expand partnerships. ProPak Vietnam 2015, scheduled to take place from March 31 to April 2, 2015 at the Saigon Exhibition and Convention Centre (SECC), Ho Chi Minh City, is a leading trade event for

food, water and medicine industries. The event is co-organised by VCCI Exhibition Service Co., Ltd and Singapore Exhibition Services Company. For the development of packaging and processing industries ProPak Vietnam 2015 is a timely event for the emerging and developing packaging industry in Vietnam. The future looks positive for Vietnam’s food, drink and pharmaceutical packaging industries due to the competitive production costs, abundant natural resources and the improvement of export packaging quality standard in Vietnam. According to the American Chamber of Commerce in Vietnam (AmCham), the packaging industry in Vietnam grew 15 - 20 percent year on year. In addition, international brands have recognised the potential in Vietnam. Instead of importing packaging as in previous years, in recent years, many local and international companies have been ordering from Vietnamese packaging suppliers. This has led to the sustainable development of the Vietnamese packaging industry. In 2014, statistics has showed that 80 percent of bottle packages in Vietnam is produced locally. A trustworthy platform Propak Vietnam 2014 successfully brought together 320 companies from 23 countries and territories, including 6 international country group pavilions, to showcase their latest products and solutions to Vietnam. The event attracted 7,587 trade visitors from 24 countries with over 47 percent trade visitors from senior-level management. Over 65 percent of visitors surveyed at the exhibition stated that they are looking to buy new machines and services and will be increasing their levels of investment over the next 12 months. ProPak Vietnam 2014 ended positively for both the exhibitors and the visitors, with many promising to return in 2015 for a bigger and better edition. Leong Hoe Yin, Business Development Manager of Singapore-based Multivac Pte Ltd, an exhibitor of ProPak Vietnam 2014, said that joining this successful event has enabled her to meet her targeted domestic and international customers. Ms Stephanie God, Executive of International Relation at Association of Small and Medium Enterprises (ASME) in Singapore, said Propak 2014 was a meeting point for all buyers and traders from the industry. Singapore companies have greatly benefited from their participation. She said her company will come back again next year. At ProPak Vietnam 2015, ASME (Singapore), TAITRA (Taiwan), VDMA (Germany), KPMA (South Korea) and DTIP/SMI (Thailand) look set to return with their respective country pavilions in the next event, with potential new groups from JPMA (Japan) and UCIMA (Italy). Mr. BT Tee, Deputy Chief of Vietnam Representative Office of Singapore Exhibition Services Company, said, “The food processing industry in Vietnam will continue grow for the years to come. There are, however, challenges to overcome, in particular in ensuring consistent quality and safety for products for both local consumption and the export market, and in improving processing productivity for better production yields through investing in new technologies and practices. With these goals in mind, the Organising Board will strive to improve the range of products and technologies featured at Propak Vietnam 2015. We hope to also develop new seminars which address the pertinent issues in food safety, process technology and food engineering with help from our local and international partners.”

Int'l Cooperation

L - Switzerland opens fund for cultural expression

Vientiane Times 22.12.2014

The government of Switzerland in partnership with Sisanchai Co., Ltd has launched the Lao Culture Challenge Fund (LCCF) phase 2, which opened last week. The LCCF will provide funding opportunities and training for organisations, business or civil society to promote cultural expressions in Laos under the theme, “From Lao, for Laos”. The application deadline is February 15, 2015.

“The Lao Culture Challenge Fund is a re-occurring fund that is open to organisations, businesses or groups related to the creation, production and dissemination of cultural goods that enable large populations to take part in cultural life in Laos,” said Ruth Huber, Development Consular, Embassy of Switzerland.

Swiss Agency for Development and Cooperation (SDC) Communication Officer, Mr Touravanh Hook said in the press conference last week that, with this year's theme, From Lao, for Laos, meant the Swiss agency supported Lao culture for Lao people, and traditionally it has been Switzerland's policy that 1 percent of the overall aid budget must be spent on the promotion of culture. This policy applied to the SDC programme budget in Laos, currently at US$18.5 million annually for 2015-5017.

Mr Touravanh said that many countries b rought their culture to Laos, but Switzerland wanted to promote Laos' rich culture for the Lao people to enjoy. Many Lao people had creative ideas but they didn't have the funds to support their activities, and Switzerland wanted to give the opportunity to Lao people to develop their own culture . The LCCF will support civil organisations promoting cultural activities through two main approaches, financial grants and training. This fund encourages culture expression and strengthens cultural identity, at local and national level, and it enable citizens to increase their role in society. Support for culture also develops social cohesion within civil society, and it contributes to the richness and diversity of an already vibrant local life in the country.

Application writing workshops will be provided in Luang Prabang and Pakse for interested organisations that seek advice and guidance on the requirements. Sisanchai will facilitate these events next month. Through the first launch of the LCCF, Switzerland could support 10 different organisations to develop their cultural activities and to strengthen their institutional capacities. The second phase of the LCCF is planned for one year 2015-2016 with a total budget of US$185,000 with about 1.5 billion kip available and accessible to all provinces. Sisanchai takes on the role of an information hub, guide for the application and proposal process, and monitor of activities.

O - Belgium supports knowledge-based development VGP, 16/12/2014 Belgium has pledged to provide more than €6 million of non-refundable ODA to support Viet Nam in enhancing the quality of human resources.

The agreement to this effect was signed by Deputy Minister of Education and Training Bui Van Ga and Belgian Ambassador to Viet Nam in Ha Noi last week.

The move aims to contribute to the sustainable development and growth of Viet Nam by facilitating Viet Nam to become a knowledge-based industrialized country by 2020 by strengthening the innovative and management skills and capabilities of Vietnamese individuals and targeted institutions.

The Ministry of Education and Training will be responsible for the implementation and management of the project during four and a half years

Investment PSV ad: V - Procurement Import Export of merchandise of all kinds For over 2000 years there have been trade agencies. In the Middle East a long time ago they were called Caravanserai. By the Middle Ages they were in business in Europe at the coaching inns, where the horses were changed. After world war one the new phrase Import / Export came up. And more recently the advertising people have applied the new term Event Marketing. But it’s really still the old proven, reliable Trade Agency. Nowadays Trade Agencies have become, especially with the new FTA and TPP Free Trade-Agreements, of new worldwide importance. Because all kind of manufacturer and trader need the experienced Trade Agency to handle their business on site. www.produktionsservice-vietnam.com execute business in Vietnam Asean.

V - US investment fund to inject US$300 mil into Vietnam VOV - 12/23/2014

The IWCC Co, Ltd and Premier United Investment Fund from the US signed a strategic partnership contract in Ho Chi Minh City on December 22 to inject investment capital into Vietnamese businesses in the coming time.

The move is seen as a step forward strengthening bilateral cooperation and opening up opportunities for foreign investors who want to invest in Vietnam.

Under the signed contract, IWCC will provide financial solutions and trade promotion strategies for local businesses while Premier Untied Fund will perform its role as an investor and provider of capital, corporate administration solutions.

Accordingly, Premier Fund has agreed to invest US$300 million in pharmaceuticals, infrastructure-construction and garments and textiles. The company’s investment capital amount will be adjusted over the next three and five years.

At present, IWCC has representative offices in the US, the Republic of Korea (RoK) and is a strategic partner for three foreign investment funds in Vietnam with advantageous fields- hi-tech, energy, environment, health and real estate.

By 2017, IWCC plans to open more representative offices in nations which are investing heavily in Vietnam including Japan, Taiwan (China) and Russia.

V - Hanoi's most famous state-owned hotel has new investors

VietNamNet Bridge – 17.12.2014

Thang Loi Hotel, the most beautiful and famous hotel in Hanoi, has new investors, including the BRG Group, a private corporation with golf, real estate and finance and banking businesses.

Its owner, Nguyen Thi Nga, the chair of the Southeast Asia Bank (SEAbank), is a famous entrepreneur who has successfully acquired large businesses and hotels in Hanoi.

According to anonymous sources, BRG Group has acquired a 30% stake after Thang Loi Hotel was privatized a few months ago. The State holds 20% of shares of the hotel and the rest was sold to the hotel’s staff and outside shareholders. BRG’s officials have held some key positions at the hotel.

However, Mr. Nguyen Kim Ha, director of the Thang Loi Tourism Hotel Co., Ltd told an online newspaper "This is just restructuring for more efficient investment, not for form of privatization. The Executive Board of the company does not change."

Thang Loi Hotel is located on Yen Phu Road, Tay Ho District. The hotel has a total area of about 4.5 hectares. It opened in mid-1975 and was the present of the people of Cuba to Vietnam.

The hotel has changed management several times. From 1975 to 1986, it was under the Government’s management. In the 1986 to 1995 period it was transferred to the Hanoi Tourism Company. Since 1995, the hotel has been an independent business.

In 2013, it was rumored that this Group acquired the Hanoi Hilton Opera Hotel. However, stakeholders have not issued any comments. BRG Group also declined to give official information about its capital contribution to Thang Loi Hotel.

VNE/VNN

M - Myanmar on Deutsche Bank’s list of frontier markets to watch By Mizzima 16.12.2014 Deutsche Bank sees investment potential in frontier markets, such as Myanmar. Groundnut oil factory in Shwe Pyi Thar Industrial Zone in Yangon on December 26, 2013. Photo: Hein Htet/Mizzima

Myanmar is one of several frontier markets that have the potential to deliver a relatively better performance for investors than emerging markets, according to a new Deutsche Bank report.

Writing for Barron’s Asia, Ms Juliana Lee, a senior economist for Deutsche Bank, says Asia’s frontier markets of Myanmar, Bangladesh, Cambodia, Laos, Mongolia, Pakistan, Sri Lanka and Vietnam are worthy of attention by investors, delivering relatively better performance, subject to only marginally higher risk.

According to her report dated December 15, the countries have seen strong growth and impressive gains in income in recent years. Indeed, latest projections made by the International Monetary Fund suggest considerable upside going forward for most of these economies. If the present trend continues, Deutsche Bank thinks that by the end of this decade a majority of these countries could well be represented in Emerging Market bond and equity indices, with a few of them with investment or close-to-investment grade sovereign ratings. One of the countries

profiled is Myanmar, a newly-opened economy which is enjoying low-hanging fruits of first generation reforms.

The report says Myanmar’s potential is substantial but so too are risks to the outlook. Surging capital flows are supporting much needed infrastructure investment, but there is a clear need for further improvement in its institutional capacity to manage those flows. Among the various forthcoming markers of the economy’s integration to the global economy are attaining socio-political stability, improving governance, and strengthening fiscal, financial, and regulatory institutions. As the report says, “the transformation of Asia’s frontier economies including Myanmar has been recent but striking. While much more progress is needed before investors can find an array of investment opportunities in these countries, some are already fairly investor and business friendly, and others have begun to realize their rich potential.”

With per capita income steadily moving up from the bottom of the global income spectrum, Mongolia, Vietnam, and Sri Lanka are already in the same income bracket as EM economies like India (US$1,600) and Indonesia (US$3,400), with Bangladesh, Cambodia, Lao, Myanmar, and Pakistan fairly closely behind, the report says.

The bank report points to the sizeable populations in several of these countries, large enough to offer a growing number of middle income consumers now and in the coming years. Most of the economies, bar that of Pakistan, have been growing at an average of around 5 percent over the last decade. IMF’s broadly optimistic outlook on Myanmar, Cambodia, Laos, Mongolia and Sri Lanka, Vietnam expects growth to hover around 7 percent going forward.

V - Samsung investment in Vietnam to top $20bn in 2017: ministry

TUOI TRE NEWS, 12/16/2014

Samsung is eyeing several new investments in Vietnam which could help increase its total registered capital in the country to US$20 billion by 2017, among which is the possibility of taking part in the implementation of the multibillion-dollar Long Thanh International Airport project.

The Korean electronics titan is likely to seek investment in several components of the $18.7 billion airport, once it is approved by the National Assembly, the Ministry of Planning and Investment said in a report to the government. The document recaps the cooperation with Samsung, which has so far invested almost $13 billion in the Southeast Asian country. The corporation is expected to prepare prefeasibility reports in the first quarter of 2015 and announce its investment decision by the end of that year, according to the Vietnamese ministry.

The fields Samsung wants to invest in include terminal constructions, airport operation services, and duty-free trades. The South Korean firm also plans to build a 300-hectare shipyard in the coastal city of Cam Ranh in the south-central province of Khanh Hoa, according to the investment ministry. The facility is expected to cost $2.6-2.8 billion.

The Vietnamese Ministry of Transport is trying to sell the plan to build Long Thanh airport, to be located in the eponymous district of the southern province of Dong Nai, around 32km east of Ho Chi Minh City. The total capital required to build the new airport, designed to be able to handle 100 million passengers a year by its last phase, is estimated at $18.7 billion for all three phases,

according to a report by the ministry. The first phase ending by 2025 will require an estimated $7.8 billion, while the respective capital needed for the next two phases, completed by 2030 and after that, is $3.8 billion and over $7 billion. The new airport is hoped to ease pressure on Tan Son Nhat International Airport in Ho Chi Minh City, which the transport ministry said will become overloaded somewhere between 2016 and 2017.

Samsung is running a number of multibillion-dollar projects across Vietnam. In 2014 alone, the company pumped an additional $5.4 billion into the Southeast Asian country through its $3 billion second production complex in the northern province of Thai Nguyen, the $1 billion screen-making plant in the northern province of Bac Ninh, and the $1.4 billion consumer electronics factory in Ho Chi Minh City. The company also signed a memorandum of understanding last month to develop a $2.5 billion thermal power plant in the north-central province of Ha Tinh.

Samsung’s existing projects in Vietnam include the $2.5 billion manufacture complex in Bac Ninh, the $2 billion complex in Thai Nguyen, and the $36.5 million screen-making factory in Ho Chi Minh City. The investment ministry projected that Samsung’s total investment in Vietnam will rise to $20 billion by 2017.

M - Foreign Investors Hiding Behind Burmese Citizens ‘Face a Crackdown’

The Irrawaddy, 15.12.2014

Foreign investors who seek to bypass laws by registering businesses under the names of Burmese citizens are facing a “crackdown” by the Myanmar Investment Commission, a report said.

The problem is most pronounced in Burma’s rapidly growing garment industry, commission secretary Aung Naing Oo said.

“As far as we know about 50% of companies [in the garment industry] were foreign investments registered under the names of [Burma] citizens,” he was quoted by the Myanmar Times as saying.

Foreign firms are not permitted from entering business in several industries and are subject to restrictions in other areas, such as land ownership.

Aung Naing Oo said there had been a two-year leniency window for foreign investors to comply with the law but now the commission is “going to take action…in the future there will not be any forgiveness for them.”

�

V - Foreign investors pour $138.5b into Vietnam’s manufacturing, processing industries

SHD, 11.12.2014

Foreign investors have poured 138.5 billion US dollars into Vietnam’s manufacturing and processing industries as of November 2014, accounting for 56 percent of the country’s total registered foreign direct investment (FDI), according to the Ministry of Planning and Investment (MPI).

The average investment per project in manufacturing/processing reached 14.7 million dollars, higher than the average investment of 14.2 million dollars per project in other sectors, the ministry reported on its portal on Wednesday.

Out of 101 foreign countries and regions investing in Vietnam, there are 80 having FDI projects in manufacturing and processing industries. Japan took the lead with 1,282 projects worth 30.58 billion dollars, accounting for 22.1 percent of the total registered capital in these industries, followed by South Korea, China’s Taiwan, Singapore, British Virgin Islands and others.

FDI projects in these industries have been implemented in 61 out of 63 cities and provinces across Vietnam, concentrating in the southern key economic localities including Dong Nai, Binh Duong, HCM City and Ba Ria-Vung Tau.

Eighty percent of the FDI registered capital in the manufacturing/processing industries have been operated in the wholly-foreign invested form, while 19 percent as joint ventures and the rest 1 percent as share-holding or cooperative contract forms.

In the first 11 months of 2014, the country attracted 13.4 billion dollars from new FDI projects and 3.9 billion dollars from the expanded projects. Of the total investment, 13.15 billion dollars poured into the manufacturing and processing industries, accounting for 76 percent of the country’s total FDI attraction during the reviewed period, reported MPI.

V - Big investors keen on retail market in Vietnam The Hanoitimes - 09 Dec 2014 Many giant international retail groups such as Auchan, Robinson and Walmart are likely to set up more convenience stores, supermarkets and big commercial centres in Vietnam when the country completely opens its retail market next year, said the Vietnam Business Forum Magazine (VBF). Vietnam's retail market is changing extensively, becoming more modern and integrated. In the first ten months of 2014, total retail sales nationwide reached nearly 2,400,480 billion VND, up 11.1 percent compared to the same period of 2013. Total retail sales of goods and services for 2014 are projected to reach 2,970 trillion VND, up 11.3 percent compared to 2013.

According to the Vietnam Retailers Association, as of 2013, Vietnam had about 724 supermarkets, 132 commercial centres, a few hundred convenience stores, nearly 9,000 markets of various kinds and about 1 million family stores. By 2020, the country is expected to have about 1,200-1,300 supermarkets, 180 trade centres and 157 shopping centres. Currently, this type of distribution is claiming about 25 percent of the Vietnam distribution market. According to Nguyen Tien Vuong, Deputy General Director of Hanoi Trade Corporation (Hapro), in recent years, businesses have started to conduct more drastic measures to renovate, construct and expand trade infrastructure systems in the city as well as some northern provinces . So far, Hapro has had 2 HAPRO Shopping Centres, 3 Market Centres, 40 supermarkets and HaproMart convenient stores, 44 Haprofood shops selling guaranteed products and other specialised store systems. According to the Vietnam Retailers Association, although foreign investors in the retail sector account for only 3.4 percent of the businesses involved in this sector, they have gained the strongest growth rate, reaching over 21 percent. The competition between domestic and foreign enterprises has been getting fierce, but it does not mean that domestic firms are losing their “home ground” or falling into a passive situation. V - Malaysia - one of top investor in Vietnam The Hanoitimes - 08 Dec 2014 Malaysia is a leading country investing in Vietnam with foreign direct investment (FDI) of US$10.74 billion in 478 projects measured on a cumulative basis as of November, according to the Foreign Investment Agency. The average size of a Malaysian project calculates out to US$22.5 million, which is US$8.2 million higher than the US$14.3 million average for all FDI projects in the country. Malaysian businesses have invested in 18 out of 21 economic sectors and in 33 out of 63 provinces in Vietnam. They are most heavily invested in the real estate sector with FDI of US$5.53 billion in 14 projects.

HCM City leads in the attraction of FDI with 175 projects, followed by Hanoi with 83 and Dong Nai with 33. A US$3.5 billion Berjaya international university project, a US$1.16 billion Yen So Park project and a US$930 million financial centre in HCM city are among the largest projects completed to date.

V - Garment & Textile: Risk of Losing Home Ground Si Son, December 02, 2014 Although the garment - textile industry has made a significant growth in recent years to prepare for the expected Trans-Pacific Partnership (TPP) Agreement, input production remains an unresolved issue when the vast majority of businesses are dependent on imported inputs. The unbalanced development is driving this industry to the risk of losing the home market to foreign direct investment (FDI) companies.

Le Duong Quang, Deputy Minister of Industry and Trade, said the garment - textile industry is calling for investors, especially foreigners, to invest and develop input sources in Vietnam to seize opportunities from the TPP. Importing 6 billion metres of fabric annually In 2014, the Vietnamese garment and textile industry is expected to fetch US$25 billion from exports, up 19 percent year on year. Key export markets are the US, the EU, Japan and South Korea with 49 percent, 15 percent, 12 percent and 9 percent of the share, respectively. However, seeking and importing inputs is facing tremendous difficulties due to fierce competition from export apparel outsourcing countries. Besides, taking advantage of input scarcity, many suppliers are deliberately delaying their deliveries to raise selling prices. This move has helped them successfully raise input prices by 10 - 15 percent but it negatively impacted the progress of fulfilling export orders of Vietnamese companies. According to statistics, Vietnam needs about 6.8 billion metres of fabric each year but the domestic source can meet just 800 million metres and 6 billion metres are offset by imports. Besides, domestic fabric is more expensive than imports and this drives many companies to foreign sources. Hoang Ve Dung, Deputy General Director of the Vietnam National Textile and Garment Group (Vinatex), said that Vietnam's garment - textile industry meets only 2 percent of cotton demand and an eighth of cloth demand. Although the country produces 140,000 tonnes of yarn a year, its low quality also sends manufacturers to foreign suppliers. This is the conundrum for the garment - textile industry, especially when Vietnam is preparing for the signing of TPP Agreement. Once entering TPP, companies will enjoy tax preferences given the proof of origins of yarn and fabric. It turns out to be clear that garment and textile companies must also manufacture inputs, not only do outsourcing. To reduce dependence on foreign input supplies, Vietnam must develop supporting industries. However, although the policy to this effect has been introduced for over 10 years, it remains on

paper. This is considered a bottleneck that holds up the development of Vietnamese garment and textile industry. Textile and tanning are the two fundamental fields of the garment - textile industry but modern technology and much investment capital inhibit local companies from jumping into them. Better late than never While domestic companies are struggling with input supply sources, many FDI enterprises with a preponderance of capital and technology are carrying out big input production projects to catch TPP tax incentives after it is signed and enacted. On November 15, 2011, Texhong Group (China) started construction on Texhong Hai Ha Industrial Park in Quang Nam province. Costing VND4,520 billion to build, the 600-ha project in Mong Cai Border Gate Economic Zone comprises factories (nearly 300 ha), operating centres (nearly 25 ha), technical infrastructure (17ha), trees and lakes (109.51 ha), roads and reserve land (93.71 ha). A modern complete garment - textile chain will be put into operation in 3-5 years in Texhong Hai Ha Industrial Park. Mr. Hong Tian Zhu, President of Texhong Group, said: "The advent of Texhong Hai Ha Industrial Park is the move to lead the trend and create an important breakthrough for its Texhong globalisation strategy to build up the strongest competition on the global market.” In spite of seeing an opportunity, it remains a challenge for Vietnamese companies to catch it to boost exports. Until the signing and enforcement of FTAs and TPP Agreement, there is still time for domestic companies to scale up their capabilities, invest in material production and complete supply chains. Changing from offshore outsourcing with heavy reliance on foreign inputs to self-reliant freight on board (FOD) and ODM (original design manufacturer) methods to meet buyers’ demands and create higher added values is a certain and prioritised way for Vietnamese garment and textile industry to go.

Finance & Banking PSV ad: O - Vietnam Indochina Asean: Unbeatable prices by R&D Production Export Executive consultant Dipl.-Ing. Alex Narr and his team identify suitable projects for the client. Review due diligence. Support decision-making with possible transaction base. Everything for the successful long term investment process. German and Vietnamese lawyers on-site guarantee for the contracts. Areas: Cosmetic. Hospital-hardware. Health. Bio-Oils and Care Products. Lubricants.Textile / Garment / Weaving. Beverages. Automotive Parts. Machinery and Equipment.Tourism. Agriculture. Real Estate. We execute business in Vietnam Asean: www.produktionsservice-vietnam.com

O - Dollar gains on euro after strong US data

AFP, 29/12/2014

The dollar edged higher against the euro on Friday (Dec 26), rising further on the heels of a strong US economic growth report earlier this week.

NEW YORK: The dollar edged higher against the euro on Friday (Dec 26), rising further on the heels of a strong US economic growth report earlier this week.

The greenback also advanced modestly against the Swiss franc and the British pound, while retreating a bit against the yen on a quiet day in which many currency traders were absent following Thursday's Christmas holiday.

The US currency has climbed steadily against the single currency since May on expectations that the US Federal Reserve will move more quickly to raise interest rates than other major central banks. Those expectations grew after the Commerce Department reported on Tuesday that US gross domestic product jumped 5.0 per cent in the third quarter, far better than previously estimated.

"There's a difference in outlook for monetary policy in the US and Europe with the US tightening and Europe becoming more accommodative," said Saxo Banque analyst Andrea Tueni. "The economic data are much more solid in the US than in Europe."

V - Foreign banks make high profits in Vietnam VietNamNet Bridge – 29/12/2014

Despite many barriers, foreign banks have been prospering in Vietnam, dominating many service market segments.

On April 4, 2014, a transaction to transfer 22 million VIC shares worth $70 million was successfully made. This is the biggest-ever deal made by a Vietnamese private company and the biggest transaction in the secondary stock market in 2014. Credit Suisse and Morgan Stanley acted as the consultants in the deal. In late 2013, Credit Suisse, acting as the global coordinator, together with Deutsche Bank and ING, arranged the Vingroup’s deal of issuing international bonds, which successfully raised funds of $200 million. Since 2001, Credit Suisse has reportedly helped raise over $6 billion worth of funds for the government of Vietnam, Vietnamese and foreign invested enterprises in Vietnam.

The institution’s clients include well-known names such as Hoang Anh Gia Lai Group (property, hydropower, farm produce), Ocean Group (banking), Vinacomin (coal miner), PetroVietnam (oil and gas), EVN (electricity), SSI (securities) and LienViet Post Bank. Credit Suisse, for the third consecutive year, has been recognized as the best international investment bank in Vietnam in 2014.

In early 2014, the HSBC, Standard Chartered Bank and Deutsche Bank came forward and arranged the Vietnamese government’s $1 billion bond issuance in the international market. In early December 2014, Standard Chartered and Societe Generale Corporate and Investment backed Masan Consumer’s deal of issuing VND2.1 trillion worth of 10-year bonds with a guarantee from CGIF, an arm of the Asian Development Bank (ADB).

A series of international bond issue campaigns by Vincomin, Vingroup, BIDV and HAG in recent years were also arranged by big international investment banks which have operations in Vietnam.

Analysts noted that Vietnamese banks do not have the opportunities to get involved in such big deals.

Going their own way All the foreign banks in Vietnam have clear business strategies. They can be classified into some groups, including groups of investment banks, retail banks, banks that fund commercial activities, and banks specializing in providing loans and services to foreign invested enterprises in Vietnam.

The investment banks include familiar names such as Standard Chartered Bank, Credit Suisse, Deutsche Bank, Morgan Stanley, HSBC, ING and CitiGroup.

Other banks focus on retail banking, which is believed to be a potential market segment. They include ANZ, HSBC and CitiBank. Meanwhile, Korea Exchange Bank, Industrial Bank of Korea, Woori, Taipei Fubon, Malayan Banking Berhard, Bank of China, ICBC, China Construction Bank, and Mizuho have been funneling capital to fund commercial activities by foreign invested enterprises.

In late 2013, Industrial Bank of Korea opened a second branch in Vietnam, while CIMB Group Holdings BHD is awaiting an operation license from the central bank.

O - Trade-weighted euro may see shock 2015 upswing Reuters 2014-12-28 2

Increase would push fears of deflation While investors are betting the euro will fall against the dollar next year, hopes that the European economy will therefore get a boost could be premature: It may not depreciate at all against currencies of other major trading partners. As speculation grows that the European Central Bank (ECB) will ease monetary policy more aggressively, some economists predict the euro could even slide to parity with the US dollar by the end of 2015 from around $1.22 now. However, the dollar is no longer the most important element in the ECB's trade-weighted euro index, its favored gauge of the euro's strength. That position is now held by the yuan and against the Chinese currency - along with others such as sterling, the Swiss franc and Japanese yen - the euro's prospects are far from clear. The euro has already lost around 3 percent against the US dollar since early October when the ECB said it would buy rebundled packets of debt, as it tries to fight off the threat of deflation in the eurozone. Expectations are strong that the ECB will move on to quantitative easing in 2015 by buying government bonds. This would involve printing money in the hope of pushing inflation that is close to zero toward its target of just under 2 percent, a policy that should weaken the euro. The ECB reckons that a 10 percent fall in the euro's effective exchange rate would deliver 40 to 50 basis points of much-needed inflation to the eurozone. However, the euro has actually gained around one third of 1 percent on a trade-weighted basis since October. China is now the eurozone's biggest trading partner, and the common currency has held steady against the yuan over the past month while it has fallen 1.5 percent against the dollar. Any euro rise against the yuan would effectively import disinflation from China, hurting the ECB in its campaign to avoid the kind of deflation that has hit the Japanese economy so badly in the past decade. The US economy is expected to grow strongly in 2015, prompting the Federal Reserve to start raising interest rates and thereby boosting the dollar, but the outlook for China and its currency is far less clear. "The potential for the yuan to become more volatile next year is certainly there," said Paul Lambert, head of currency at Insight Investment. "There are certainly scenarios in which the yuan

would weaken." Saxo Bank's Chief Economist Steen Jakobsen reckons the yuan will fall at least 5 percent against the dollar next year. V - Credit Suisse named Best Foreign Investment Bank in Vietnam The Hanoitimes - 10 Dec 2014 Credit Suisse has been named Best Foreign Investment Bank in Vietnam in The Asset magazine’s Triple A Country Awards for 2014.

This is the third consecutive year Credit Suisse has received the Best Foreign Investment Bank in Vietnam accolade from The Asset, a leading industry business publication in Asia Pacific. This marks a continuation of the excellent track record the bank has in Vietnam and across Southeast Asia. Le Hoai Anh, Vietnam Country Head, said: “As a bank that has demonstrated a consistent commitment to Vietnam, we are delighted that this has been recognised. Today’s announcement reflects the excellent reputation we have maintained in Vietnam as a leading bank in this promising market.”

Credit Suisse was the first investment bank to start covering Vietnam in 2001 and it has the most comprehensive Vietnam coverage team among its international peers. Since the start of its coverage, the bank has raised over US$6 billion of capital for the Vietnamese Government, domestic and foreign enterprises with Vietnamese assets.

In the period under review, Credit Suisse executed a broad range of market defining transactions that solidified its leadership position including an international bond offering, a share placement, an international syndicated loan, a loan restructuring and an equity swap.

Credit Suisse was sole global co-ordinator on the US$200 million senior notes offering for Vingroup in October 2013, which was the first ever benchmark US dollar denominated bond offering for a Vietnamese corporate and successfully re-opened the offshore US dollar bond market for Vietnamese issuers. The bank also handled a leadership role in the US$150 million international syndicated loan for Vingroup, the first ever real estate company in Vietnam to have successfully tapped the international syndicated loan market. Other deals included the US$630 million restructuring of an international syndicated loan for Vinashin, and a US$70 million treasury shares placement.

Credit Suisse is a leading player in Southeast Asia as the region forms a critical part of the bank’s Asia-Pacific business strategy. Apart from The Asset, in July, the bank has also won Best Investment Bank in Vietnam for the sixth time in Euromoney’s Awards for Excellence and no less than seven times in the last decade as Best Foreign Investment Bank in Vietnam in FinanceAsia’s Country Awards Achievements.

Markets & Prices PSV ad: O – Purchase Production Trading Import-Export Servicing in Vietnam Indochina Asean Irrespective if you are a Producer, Trader or Servicer - the easiest, quickest and most cost effective solution for testing, start-up, entry -or even getting out again without major commitments- is an external Rep-Office, Trade-Agency, or seasoned Scout Team. We Acquire. Organize. Produce. Market. From A to Z - we do the lot. www.produktionsservice-vietnam.com V - Car imports to Vietnam increase considerably The Hanoitimes - 29 Dec 2014 The total import turnover of Completely Built-Up (CBU) automobiles in Vietnam this year reached US$1.446 billion, which nearly matched the record level of US$1.5 billion.

The General Statistics Office estimated last month that the total import turnover of automobiles in the first 11 months of the year would be US$1.292 billion with 60,000 units. However, the latest figure disclosed by the General Department of Customs reflected different data from estimates. The most recent figures showed that the country reached 61,595 units, with a turnover value of US$1.345 billion.

Moreover, the amount attained this year would reach a record level of imported automobiles, as estimated figures were double those of last year, in terms of both quantity and value.

Further, the latest numbers announced by the Vietnam Automobile Manufacturers Association revealed that the assembled and CUB imported units into Vietnam in the first seven months of the year rose by 24% and 62%, respectively, compared with the same period last year.

O - The German SMEs interested in Vietnam only the fast trading buck. Other Europeans prefer win with long-term value creation Dipl.-Ing. Alex Narr, Productionservice-Vietnam, 29.12.2014

The latest list of Vietnam's top 20 Foreign Investors makes it clear. The German SMEs interested more the fast trading buck. The other European SMEs prefer already win with long-term value creation Germany is among the EU Member States, the main trading partner of Vietnam. 2013, bilateral trade amounted to around € 7.5 billion. Vietnamese exports to Germany are especially electronics (35.1%), textiles and clothing (12.9%) and food (15.2%). German exports to Vietnam are machinery (17.1%), chemical products (11.6%), motor vehicles and motor vehicle parts (2.9%), and measurement and control technology (4.4%).

Top 20 Foreign Investors in Vietnam (Investment licenses issued to 20 June 2013)

Total registered capital of US$218.8 billion

Foreign investors invested in Vietnam a total capital of US$218.8 billion as the licenses issued to 20 June 2013 show.

But as the top 20 investment ranking also shows German SMEs plays by investment not matter. Are not even listed. What the German SMEs interested is the fast buck - only trading with Vietnam. Instead set Holland, UK, France, Switzerland and Luxembourg to safe levels with investment in Vietnam. Win with long-term value creation. Which variant will be the better decision in the long term? In addition Asean's worldwide business is handled in US-Dollar. Not depending on the ups and downs of the Euro. What are more likely exacerbated by the increasing TPP World Trade Traffic. In view of these changes, heavily supported by the new TPP Free Trade Agreement, European SMEs should take advantage of the offered massive monetary benefits. Start own business branch in Vietnam or Indochina. It's rarely too early. But quickly too late. Dipl.-Ing. Alex Narr, Productionservice-Vietnam Source: Press Release German Ministry of Economy, Trade and Energy. VGP Hanoi

V - Vietnamese automobile industry to compete with other countries The Hanoitimes - 22 Dec 2014 The Vietnamese Government has implemented a protectionism policy on its domestic automobile industry with a national strategy to build a sector able to compete with other regional nations'. The ASEAN Trade in Goods Agreement (ATIGA) is a free trade and investment agreement that has provided investors with a unique set of guarantees designed to stimulate foreign direct investment and the movement of factories within the Asian region. It has increased ASEAN’s competitive edge as a production base in the world market primarily through the elimination, within ASEAN, of tariffs and non-tariff barriers.

The primary mechanism for achieving such goals has been the Common Effective Preferential Tariff scheme, which established a phased schedule starting in 1992 with the goal to increase the region’s competitive advantage as a production base geared for the world market. Now with the final phase of the tariffs phase-out set for January 1, 2015 many are having buyer’s remorse amid last minute concerns that foreign ASEAN goods and services may flood the domestic market, leading to a glut and threaten the economic stability of the domestic retail market. However, Vietnam senior government officials have moved to quell the anxiety as it is not a justifiable concern. In fact, the reduction of tariffs under the ASEAN Free Trade Agreement (FTA) have been taking place since 1999, they point out, which has resulted in tremendous benefits for economic growth in Vietnam. In the 2012-2014 period, Vietnam cut 7,000 tax lines to zero % and 2,000 tax lines to 5%.

V - PM allows changes to industrial parks

VNS | 26/12/2014

Primer Minister Nguyen Tan Dung has permitted amendments to the development master plan for industrial parks in 31 provinces and cities.

Primer Minister Nguyen Tan Dung has permitted amendments to the development master plan for industrial parks in 31 provinces and cities. - Photo misa

He has approved the scrapping of five and reducing the size of six others that are set to come up in the five provinces of Ha Nam, Vinh Phuc, Tay Ninh, Ben Tre, and Tien Giang. Another 16, which have been built already in Hoa Binh, Quang Ninh, Hai Phong, Vinh Phuc, Ha Nam, Da Nang, Gia Lai, An Giang, and Can Tho, will also see their sizes reduced.

Four parks in Hoa Binh, Vinh Phuc, and Dong Thap will be enlarged.

The PM wants all provincial people's committees to make efforts to speed up investment in industrial parks and the 10 provinces with the least investment in industrial parks to report to him and the Ministry of Planning and Investment every six months.

The ministry together with other relevant ministries and agencies now has to quickly submit the master plan for industrial parks for the period up to 2020 for the country's remaining provinces, and supervise and assist localities in attracting investment.

The PM also ordered provinces to resolve all difficulties faced by investors, reduce the size of parks with low efficiency, and review regulations related to detailed master plans, environment, land use in parks, compensation for land, and resettlement of people whose lands are acquired. He wanted every industrial park to have wastewater treatment systems at the earliest.

V - Vietnamese auto companies join alliance

VietNamNet Bridge – 19.12.2014

Five wholly owned Vietnamese automobile companies have united in an “alliance”, joining forces to improve the local automobile industry to meet the challenges of the AFTA (ASEAN Free Trade Agreement) period.

The companies are Vietnam Engine and Agricultural Machinery Corporation (VEAM), Vietnam Motors Industry Corporation JSC (Vinamotor), Saigon Transportation Mechanical Corporation (SAMCO), Truong Hai Automobile, Vinaxuki (Xuan Kien Automobile), Z179 Factory and MDC, a center for mechanical engineering development.

They are Vietnam’s key auto production and assembling enterprises, and all are members of the Vietnam Association of Mechanical Industry (VAMI). The members have set up an Automobile Committee under VAMI which will be in charge of supporting member corporations with the aim of developing the automobile and supporting industries. Dao Phan Long, deputy chair of VAMI, said

the companies would focus on developing trucks, passenger vehicles, specialized vehicles and sedans. Long said about 50 percent of car parts could be made domestically.

Bui Ngoc Huyen, general director of Vinaxuki, said Vietnamese manufacturers want to prove that Vietnamese can also make automobiles. “The other enterprises may use bodywork made by Vinaxuki, while Vinaxuki will buy car parts made by other enterprises,” said Huyen, describing the cooperation model.

However, while showing a strong determination to develop the automobile industry instead of relying on foreign automobile manufacturers, the Vietnamese manufacturers said success would depend heavily on state policies. Huyen said Vietnamese enterprises are weak in capital, technology and branding, and need support from the state.

Analysts have been cautious about making statements about the establishment of the automobile committee under VAMI and the “Vietnamese automobile dream”. However, they warn that the biggest challenge the “big five” would meet is convincing government agencies about the feasibility of their plan. Huyen admitted that his dream of making Vietnamese automobiles remains half-finished. “Our VG model still cannot be marketed because of high taxes and fees which make it competitive with imports,” Huyen said.

Vinaxuki has asked the government to exempt 50 percent of luxury tax for manufacturers who make sedans with a localization ratio of 50 percent. The proposal was supported by the Ministry of Industry and Trade, but rejected by the Ministry of Finance.

The two ministries have recently disagreed about many policies related to the automobile industry. The biggest problem, as Kien said, is that state management agencies still do not have confidence in Vietnamese enterprises, and therefore, do not support enterprises’ plans.

Vietnam, as member of AFTA, will apply a zero tariff policy to all automobiles imported from ASEAN countries by 2018.

Vietnam reportedly spent $1.1 billion on auto imports during the first 10 months of the year, nearly doubling 2013's figure and registering the highest level over the last five years.

V - Thai billionaire opens second mall in Vietnam

VietNamNet Bridge – 17.12.2014

Robins Department Store Pcl of the Central Group, owned by the family of Mr. Tos Chirathivat, Thailand's richest man, opened the Robins shopping center in HCM City last Friday, following its first center in Hanoi in early March this year.

Mr. Philippe Broianigo, CEO of Central Vietnam, said the second center has an investment capital of $4 million, covering 10,000 m2, with four floors, providing 10,000 categories of goods

supplied by 200 suppliers. This center sells many worldwide luxury brands, including large volumes of Thai goods.

In Thailand, the Central Group is famous for its shopping center chain named Robinsons. In Vietnam, this retailer has shortened the name to Robins. Robins is not the first retail project in Vietnam of Central Group. Previously, the stores Supersports, Crocs and New Balance opened in Vietnam through the distribution system of Central Group’s subsidiaries and franchise partners. According to the Central Group, the opening of two shopping centers in Vietnam is part of a plan approved last year to expand to other markets in Southeast Asia, with a budget of about $460 million to set up shopping malls in Indonesia, Vietnam and Malaysia.

This move reflects an aggressive wave of Thai investors in Vietnam.

Previously, Berli Jucker (BJC), owned by Thailand's third richest man - Mr. Charoen Sirivadhanabhak – spent $32 million in 2012 to purchase 65% stake in Thai An, a retailer in the North. Shortly thereafter, BJC acquired the convenience store chain Family Mart and renamed it into B'mart. This year BJC paid nearly $880 million to acquire the entire chain Metro Cash & Carry Vietnam.

The second richest man in Thailand – Mr. Dhani Chearavanont, chairman of Charoen Pokhphand Group (CP Group) - has been in Vietnam since 1990 and currently holds 7% of the industrial pork market, 16% of industrial egg market and about 22% of the industrial chicken market.

CP All – the operator of the 7-Eleven brand in Thailand – in late 2013 said it would open its first store in HCM City. The 7-Eleven system in Thailand has over 3,000 stores, ranking fourth in the world.

V - Starbucks, McDonald’s arrival just a storm through the village

Business Times Dec 16th, 2014

Subway, McDonald’s, Starbucks, KFC, Burger King, Pizza Hut, Dunkin Donuts, Domino’s Pizza, Dairy Queen and Papa John’s are 10 well-known fast food brands around the globe, with thousands of stores and revenue reaching a few billion to tens of billions USD in 2013. Of these, only Papa John’s is absent from Vietnam.

Vietnamese consumers, especially young people in urban areas, have been exposed to brands such as KFC, Lotteria, Pizza Hut, and BBQ for almost 20 years and have formed a new

consumption style: young, dynamic and friendly. They have never been as “crazy” as they were when McDonald’s and Starbucks in Vietnam in the past two years. With the arrival of McDonald’s and Starbucks, the youth became crazy expressing their “high-class style”, their ‘wealth” in opposition to the average income of most of the population. Meanwhile, people at Starbucks and McDonald’s in HCM City share their joy each passing moment, with many more comments appearing on their Facebook pages showing the expectation to have more stores in Vietnam.

A population of 90 million with 65 percent under 35 years of age, rising incomes, increasingly busy lifestyles – these are the factors supporting the strong growth of the fast food industry in Vietnam. More importantly, the restaurants entered Vietnam with the belief of bringing a new style for young consumers. With global thinking and local action strategy, fast food brands have succeeded somewhat in the Vietnam market. To select the time to lay the first bricks in Vietnam, they took a lot of time to research the market, to find appropriate partners and to observe consumer tastes. An expert on marketing and brands, Vo Van Quang, said: “McDonald’s entering Vietnam at this moment shows their artfulness.”

“This is a nascent and growing market, and we think the opportunity is ripe for McDonald’s penetration into Vietnam. We have never thought of being a latecomer in any market. We are looking for opportunities to build the brand, to meet consumer tastes in regions,” Mr. Don Thompson, McDonald’s CEO, told American media when the first McDonald’s store opened in HCM City last year. McDonald’s currently has three stores in Saigon and has no plans to go to Hanoi. However, McDonald’s hamburgers are not more favored than Starbucks coffee by Vietnamese youth. After sweeping HCM City market, early this year the storm of Starbucks flew over Hanoi, a picky market.

Within three months, Starbucks opened four stores in Hanoi, with an area of 150 to 350 m2. Three of them are located around Hoan Kiem Lake and one in Cau Giay District. Starbucks currently has a total of 12 stores in Vietnam and it aims to reach 100 stores in the next five years. Jff Hansberry, Chair of Starbucks Asia – Pacific, said Hanoi is the market that Starbucks is determined to win. However, a quick interview with 100 young people born in 1990 or later in Hanoi and HCM City by reporters of Dau Tu Newspaper revealed unexpected results. Different from Starbucks and McDonald’s expectations, 90% of respondents said they did not like fast food, like cooking at home, and they would visit these fast food stores once only.

In particular, the story of 24-year-old female Tran Phuong Linh is positive and negative for Starbucks. At the age of 15, Linh went to New Zealand to study. After the course, she tried to work at financial institutions overseas and then Linh decided to return to Vietnam. In over 10 years living abroad, Linh was a loyal customer of Starbucks but things changed when she is returned to Vietnam. Linh said farewell to her Starbucks to return to the traditional coffee of Vietnam. When Starbucks opened four stores in Hanoi, Linh visited all of them but she was disappointed with the coffee taste there. “They said they are seeking ways to offer the drink that adapts to Vietnamese consumers but these things do not suit the taste of Vietnamese. If Starbucks keeps the flavor and quality in the overseas market, it may be able to retain loyal customers who are former overseas students, foreign tourists and foreigners working in Vietnam,” Linh said. For the prices, in New Zealand, Europe, and Australia, the price of Starbucks is a little higher than other drinks, so the consumers can still accept them. But in Vietnam, that price is too expensive relative to the income of Vietnamese people. The average price for a Starbucks coffee is more than VND100,000 (nearly $5), while it is only VND20,000 ($1) for a fragrant traditional black and milky coffee cup.

“I like strong coffee, it makes me more creative in life and work. If I live abroad, I will remain loyal to Starbucks, but in Vietnam, why should I have to pay three times higher for a Starbuck glass while its quality is not as good as the local one,” Linh said. Linh said that Starbucks may still exist in Vietnam because of its famous brand, but to have loyal consumers, it will be very difficult. Most consumers go to Starbucks for the nice view rather than to enjoy good coffee. “Young Vietnamese can be obsessed with something new, but after a very short time, everything will get saturated and dissipated, to be replaced by a new movement,” she added.

Bui Cong Khanh (Hanoi) who is studying in the US, in his most recent vacation in Saigon, went to a McDonald’s store in HCM City but he ate only a single piece of the hamburger and threw it away. “I was satisfied with the quality of McDonald’s hamburger in many countries but the quality seems to be different in Vietnam. This is the first and also the last time I will stop at a McDonald’s store in Vietnam,” said Cong Khanh. After the initial sweep, the consumption trend of Vietnamese seems to be back to normal. But like many other food and beverages brands in Vietnam, Starbucks expects to boost sales in the last three months. “This time, the people of Vietnam and foreigners usually spend more during the Christmas and New Year holidays. This is an

opportunity for us to earn higher revenue to compensate for the previously gloomy months” said a Starbucks representative.

According to Dau Tu, Starbucks stores based at the New World Hotel in HCM City and the Indochina Plaza Hanoi building are the two locations with high revenue. The rents in Hanoi are higher than in HCM City, but sales are not as high as Saigon’s because the spending style in Hanoi is more frugal.

Meanwhile, McDonald’s is also very cautious in its expansion plan in Vietnam. Mr. Don Thompson admitted that it is a challenge for McDonald’s to multiply its stories in Vietnam and to be sure that it can expand its quality of service, food and hygiene.

However, Nguyen Bao Hoang, CEO of Good Day Hospitality, which holds the franchise rights of McDonald’s in Vietnam, expects that in the next 10 years, the company will open at least 100 McDonald’s stores in Vietnam, similar to the number in many other Southeast Asian countries (Singapore has over 100 stores, the Philippines has 400, although these countries have a smaller population than Vietnam). However, McDonald’s has no plans to open stores in Hanoi in the next two years.

V - Vietnam retail market to fully open for foreign firms Business Times, Dec 16th, 2014

The 2015 scheduled establishment of ASEAN Economic Community (AEC) together with the implementation of World Trade Organization (WTO) commitments and other bilateral and multilateral free trade agreements will completely help Vietnam’s retail market to go out the restriction, putting local businesses in a face to face competition to foreign giants.

After eight years of a WTO member, Vietnam has attracted most of the world and region’s leading retailers such as Metro Cash & Carry (Germany), Big C (France), Parkson (Malaysia), Circle (the US), Lotte (South Korea), Aoen (Japan) and FairPrice (Singapore).

Two Thai giants Berli Jucker and Central Group have recently implemented their projects in Vietnam.

Singaporean Shop & Go has been in Vietnam since mid 2005 and become the largest convenient store chain with 110 stores, followed by the US’s Circle K with over 70 outlets in Ho Chi Minh City.

B’Mart of Thailand has launched 96 outlets in Vietnam after buying the Japanese FamilyMart chain, the number is expected to hit 300 by 2018. Big C has recently opened more than 10 C-Express stores nationwide.

Inadequate statistics show that HCMC has about 700 convenient stores–66 of these are operating in chains, and 37 commercial centers, 168 supermarkets, about 723 convenient stores and 240 traditional markets. According to a survey, the 10 million population city should have 100 commercial centers, 1,000 supermarkets, 10,000 convenient stores to diversify the distribution system and better serving the shopping demand of residents. Vietnam is a potential retail market. Retail revenue growth averaged 21.2 percent for the last five years and earned US$124 billion in 2013. While the number of domestic retailers is rather limited, namely Saigon Co.op with 72 supermarkets, 86 Co.op Food stores, 200 Co.op stores, one Co.opXtraPlus and one commercial center Sence City.

Besides, Dong Hung Company has 26 Citimart supermarkets, An Phong Company has six Maximark trade centers and Saigon Trading Group has two supermarkets and 42 Satra Food stores. Nhat Nam Company is with Fivimart supermarket chain and Hanoi Trade Corporation with some supermarkets and Hapro stores.

Chairwoman of the Vietnam Retailers Association Dinh Thi My Loan said that about 10 percent foreign retailers have been present in Vietnam, running 40 percent of the country’s supermarkets. They are forecast to continue increasing in the country.

According to WTO commitments, foreign direct investment (FDI) companies have been permitted to join Vietnam’s distribution system since 2009 in 110 out of 155 service sub-sectors as per WTO’s classification, including commission agent, wholesaling, retailing, multi level marketing, and franchising. They have not been permitted to distribute cigarette, newspaper and book, magazine, videos, precious stones and metal, medicine, dynamite, petrol, crude oil, sugar and rice in Vietnam.

On March 29, the Government has loosened the Economic Needs Test (ENT) which foreign firms have to pass to establish their second and subsequent outlets, providing them with an ENT exemption for retail stores of less than 500 square meters to sell some items in the banned list such as rice, sugar, cigarette and book and newspaper.

Vietnam has also pledged not to limit the origin of products in foreign retail outlets in the country, giving foreign retailers full power to decide what kinds of goods with Vietnamese or foreign origins that they can sell in Vietnam.

V - New wave of retailer expansion expected to materialize in 2015

Tuoi tre news, 12/16/2014

Key emerging markets in Southeast Asia, along with other markets in the Asia Pacific region, will benefit from a new wave of retailer expansion which is expected to be realized next year, according to a recent report by US-based CBRE Group Inc.

Big cities in the region, like Hanoi and Ho Chi Minh City in Vietnam, will be a strong area of focus due to the growing appetite for consumer goods and the relaxation of foreign investment regulations next year, according to “The New Age of the Asia Pacific Retail Market” report.

Major cities in Indonesia, Malaysia and the Philippines will be in the same boat with the construction of new high-quality shopping centers, which are providing more options for retailer expansion in these markets, said Jonathan Hsu, director at CBRE Research in the Asia Pacific region.

International retailers tend to expand to secondary cities in the region after establishing their presence in capital or first-tier cities, said Hsu. In recent years, the Asia Pacific retail market has boomed on the back of strong economic growth, rapid urbanization and the emergence of a large and prosperous middle class population, said the report by the Los Angeles-headquartered firm. As a result, Asia Pacific is now experiencing an upsurge of new retail construction to meet demand as international retailers flock to the region. The report reveals that Asia’s middle class is set to triple in size, from 525 million in 2009 to over 1.7 billion by 2020. It is forecasted that by 2020, China, India and Indonesia will all be in the top ten global markets for retail consumption demand. In order to take advantage of this expanding middle class, international retailers—predominantly fast fashion brands—are continuing to enter and expand in Asia Pacific at a rapid rate.

Regional trend Overall retailer demand in Asia Pacific is set to remain subdued heading into 2015 but activity and demand levels will diverge across different markets. Despite concerns over the slowdown in economic growth and retail sales, especially in China, there continues to be an increase in the number of new retailer entrants across the region. Hong Kong, Beijing and Shanghai have seen the strongest flow of new market entrants looking to capitalize on the China growth story. Tokyo saw the strongest activity in 2013 and momentum has continued in 2014, particularly from luxury brands, which has underpinned strong rental growth this year.

In Southeast Asia, Singapore has been the main hotspot, whilst both Taipei and Seoul are among the most active markets globally for new retailer entrants. “Japan and Australia are expected to remain upbeat, whilst activity in India should pick up on the back of relaxation of foreign direct investment in single and multi-brand retail,” said Jonathan Hsu.

“China, Hong Kong and Singapore will stay relatively quiet due to softening domestic consumption, in addition to Chinese shoppers’ weaker appetite for luxury goods.” In terms of retailer types, CBRE expects mass-market brands to look towards highly populated markets—primarily China and India—for expansion in 2015.

Retailers in the luxury sector will opt to focus on the mature markets of Japan, Singapore and Hong Kong, with China less of a priority due to the ongoing anti-corruption campaign.

Bridge brands will concentrate on slightly more mature markets, including Japan and South Korea.

One man’s meat is another man’s poison

There are challenges ahead for retailers, including rising operational costs, the rapid growth of e-commerce, and a more sophisticated and demanding consumer base, contributing to a more competitive market.

“Retailers will have to implement higher standards of due diligence, competitor benchmarking and strategic planning as the retailing environment turns increasingly competitive,” said Sebastian Skiff, executive director of CBRE’s Retail Services.

"Retailers are also putting a general focus on portfolio reviews and consolidation, although they’re continuing to display a strong interest for well-established properties and locations in markets with a proven track record,” he said.

“The increased level of competition will be especially visible in the shopping center environment, where landlords will have to utilize a range of strategies in order to ensure they stay relevant and continue to attract shoppers and tenants,” he added.

V - Local-made drug to account for 80 % in market: Ministry

SGGP/VNN – 10/12/2014

Local-made medicines will account for 80 percent of home market, said a leader of the Drug Administration of Vietnam under the Ministry of Health at a meeting on pharmaceutical in Hanoi on last Saturday.

Head of the Drug Administration of Vietnam Truong Quoc Cuong said that the pharmaceutical sector had seen an impressive progress to ensure a full supply for increased treatment and prevention demand.

Currently, the country has 133 GMP standard medicine manufacturers and there are around 177 GSP-certified distributors and around 40,000 nationwide, he said.Turnover of Vietnamese –made drugs achieved over US$1.35 billion in 2013 and it is estimated that each person spends US$31.18 annually on drugs, he added.

However, Mr. Cuong said that the sector was facing several challenges and difficulties such as the low capacity to meet domestic demand, high dependence on imported drugs and materials. In addition, though the local producers have produced over 12,000 various medicines, they are just simple kinds such as vitamins, tonic (multivitamin with minerals), painkillers, febrifuge and anti-inflammatory drug and the country has to import the narcotic, cardiovascular. In a plan on developing the domestic pharmaceutical sector to 2020 the ministry will focus on production of 20 materials as well as increase of market share of home-made high quality drugs to replace foreign medicine, Mr. Cuong said.

The domestic pharmaceutical sector targets 80 percent of the home market, said Mr. Cuong. The sector will also focus on making generic drugs to ensure the quality at appropriate cost to replace foreign counterparts gradually. Apart from this, the ministry will set up five distribution centers in the northern mountainous districts, central northern provinces, central southern provinces, highlands provinces, and the Mekong Delta in a bid to reduce distribution cost as well as drug prices.

The ministry will also set up a scientific council on medicine bidding and an index of standard medicine prices.

V - High technology helps to improve the quality of agriculture The Hanoitimes - 04 Dec 2014 The future of Vietnam agriculture lies in an alliance with Japan, Israel and New Zealand in support of a modernized sector with improved product quality in conformity with the highest of international standards, says Dr. Tran Dinh Thien, Director of Vietnam Institute of Economics.

The bilateral trade turnover in 2014 between Vietnam and New Zealand has expanded significantly by 23% compared to 2013 to NZD2 billion. Both nations have agreed to work cohesively to bring the figure to US$1 billion in 2015.

In turn, New Zealand’s key exports to Vietnam have historically been milk and wood products while Vietnam’s major exports to New Zealand have included beverages, coffee and food, says Mike Petersen, a New Zealand Special Agricultural Trade Envoy (SATE).

Both nations have been able to cooperate effectively as their trade needs are not competitive but rather are complimentary. New Zealand has invested on average US$10 million each year supporting Vietnam’s agricultural sector with a focus on projects aiming to develop a value chain that benefits farmers and enhances capacity for small and medium-sized enterprises (SMEs).

A project on planting a new variety of dragon fruits in Tien Giang and a food safety and hygiene project in Binh Dinh province have been the most high profile New Zealand projects to date. However, these projects are incipient of New Zealand’s desire to become highly competitive through innovation.

New Zealand’s approach has been aimed at reforming agricultural production systems, improving the product quality and taking full advantage of limited agricultural land to make greater profits on a per ha basis. The country wants to share these experiences with Vietnam to develop an agricultural chain with higher added value, which is mutually beneficial for both nations Petersen says underscoring that sharing experiences is highly beneficial to both sides.

Several nations with advanced agriculture have often supported Vietnam in poverty reduction projects over the year, which has contributed significantly to improving the quality of farm produce. However, obstacles still remain as the quality of farm produce and food safety has not been ensured.

Recently several batches of agricultural exports have been returned by foreign markets. Vietnam has hopes that through cooperation with New Zealand, both nations will share experiences to raise farmers’ awareness of agricultural production.

In its future orientations, Vietnam’s agricultural sector need to concentrate its efforts to develop trade alliances with Japan, Israel and New Zealand. The move will offer the best opportunity to improve the quality of Vietnam’s farm produce in compliance with the international standards.

V - Retail Market Moves towards Modernisation Huong Ly, December 03, 2014

In 2015, when Vietnam opens its retail market completely, a large number of retail groups such as Auchan, Robinson and Walmart are likely to penetrate the market, which could create an explosion of modern retail channels such as convenience stores, supermarkets and big commercial centres. Modernisation and expansion Vietnam's retail market is changing extensively, becoming more modern and integrated, and as a result its requirements are also getting increasingly higher and more diverse. In the first ten months of 2014, total retail sales nationwide reached nearly VND2,400,480 billion, up 11.1

percent compared to the same period in 2013, slightly lower than the 12.6 percent increase of last year. The main reason is weak purchasing power. Excluding the factor of increased price, the total retail sales of the first ten months had an increase of 6.4 percent. Total retail sales of goods and services for 2014 are projected to reach VND2,970 trillion, up 11.3 percent compared to 2013. According to the Vietnam Retailers Association, as of 2013, Vietnam had about 724 supermarkets, 132 commercial centres, a few hundred convenience stores, nearly 9,000 markets of various kinds and about 1 million family stores. By 2020, the country is expected to have about 1,200-1,300 supermarkets, 180 trade centres and 157 shopping centres. Currently, this type of distribution is claiming about 25 percent of the Vietnam distribution market. Mr Nguyen Tien Vuong, Deputy General Director of Hanoi Trade Corporation (Hapro) said that in recent years, businesses have started to conduct more drastic measures to plan, renovate, construct and expand trade infrastructure systems in the city as well as some northern provinces. So far, Hapro’s trade infrastructure has developed and consisted of 2 HAPRO Shopping Centres, 3 Market Centres, 40 supermarkets and HaproMart convenient stores, 44 Haprofood shops selling guaranteed products and other specialised store systems. According to Ms Le Viet Nga, Deputy Director of the Department of the Domestic Market ( Ministry of Industry and Trade), domestic enterprises recently continually expanded distribution channels in order to get closer to consumers across the country. A notable example was Vinatex with the chain retail supermarkets Vinatexmart. Before, stores and dealers of textile enterprises were often only present in big cities, but now consumers can easily find retail garment stores in all provinces and cities across the country. Besides Vinatexmart, the member units of the group such as Viet Tien, Garment 10, Duc Giang, Hanosimex and Phong Phu also actively opened stores and dealers to introduce products into all provinces and cities in the country. As of 2013, there had been 4,125 stores (a 4 percent increase compared to 2012). In 2014, this figure is expected to reach 4,286 stores. Sharing experiences doing business in Hanoi market, Ms Dang Thuy Ha, Customer Director of Nielsen Vietnam in the northern region, said the retail sector was ushering in a new era. Shopping trends in the digital era tended to steer toward e-commerce with modern technology. Vietnamese retailers should focus on category management and services such as loyal customer cards to catch up with the development trend of regional modern sales channels. Vietnamese retailers maintain the initiative According to the Vietnam Retailers Association, although foreign investors in the retail sector account for only 3.4 percent of the businesses involved in this sector, they have the strongest growth rate, reaching over 21 percent. The competition between domestic and foreign enterprises has been getting fierce, but it does not mean that domestic firms are losing their “home ground” or falling into a passive situation. Chairperson of the Vietnam Retailers Association, Ms Dinh Thi My Loan, said that foreign firms getting into Vietnam's retail market are often widely advertised, so people think that they have a strong presence. In fact, however, modern retail channels account for about 25 percent only and almost all foreign retailers are investing into these channels alone. Some local strong retailers indicated by Ms Dinh Thi My Loan include Pico, Nguyen Kim, Tran Anh. Reputable networks of local businesses such as Fivimart, Intimex and Coopmart also have more advantages than foreign competitors which are the initiative in goods, especially domestic brand names. Mr David Alan Treadgold, Member of the Advisory Council of Oxford Institute of Retail Management, pointed out that the only visible weakness when comparing internal and external enterprises was the ability of applying e-commerce and marketing techniques. Mr Treadgold suggested that Vietnamese businesses should prepare themselves fully in terms of technology, human resources and management to cut costs and improve competitiveness.

Export-Import

PSV ad: O – Procurement import export. Distribution by Representative Office or Trade Agency Vietnam Indochina Asean - a huge market full of opportunities with unrivaled price-performance. > Productionservice-Vietnam acquire, organize, produce, market > Take over the complete handling > Is always reliable. Flexible but incorruptible and nimble > Work without "ifs and buts" and only for the client > We discuss the details - and off you go We execute business in Vietnam Asean. Ensure best exploration, preparation, implementation, execution. Everything on German quality standards www.produktionsservice-vietnam.com

V - Vietnam's exports to Russia seen declining

Viet Nam News, 29-12-2014

The plunge of the ruble is becoming a challenge to Vietnamese exporters dealing with the Russian market. Key export products of Vietnam to the Russian market, including seafood, telephones and their spare parts, rice and coffee, are at risk of declining in export turnover. The plunge of the ruble against the dollar and euro will raise the price of Vietnamese products imported to the Russian market. The Russians will likely reduce imports from foreign countries to decrease their spending. Trade counsellor to Russia Pham Quang Niem said that the slide of the ruble would limit the imports of the country. A representative of the An Dinh Technology Investment and Development Co Ltd told Dau Tu (Vietnam Investment Review) that its Russian partner had stopped signing new contracts for 2015. Next year will be a tough year for Vietnamese exporters to the Russian market. The company, located in My Hao District in the northern province of Hung Yen, had an average agricultural export turnover to the Russian market of nearly US$1 million per year. This accounts for 20 per cent of the company's total export turnover. Statistics from the General Department of Customs showed that the rice export of Vietnam to Russia in the first 11 months of 2014 fell by 74 per cent compared with that recorded in the same period last year. Than Duc Viet, management director of Garment 10, remarked that Russians will have to pay more for products when the ruble weakens. Therefore, customers will have to adjust their spending and may choose to buy lower-quality products. These are factors that Vietnamese exporters should take into consideration. Apart from worrying about the decline in export turnover, enterprises are also anxious about the increasing risks associated with payment. Russian partners may have difficulty buying dollars to pay for import contracts from Vietnam, which could result in slow payments, shared Dinh Hong Ky, chairman of the Secoin joint-stock company management board. However, a number of enterprises expressed optimism that the market will still need to import products with lower prices. This would create opportunities for Vietnamese products with reasonable prices since Russian customers are expected to limit their purchases of high-quality products as the ruble weakens. The Russian market will still be a potential consumption market for Vietnamese exporters,

especially for seafood and garments and textiles, said the Viet Nam Enterprises Association in Russia.

V - Capital city trade deficit tops $13 billion in 2014 Source VNS, 29/12/2014

The capital recorded a trade deficit of approximately US$13.8 billion in 2014, according to the municipal Statistics Office.

Workers produce clothes for export at Viet Huy company in Ha Noi's Thuong Tin District.

The capital city generated $11 billion from exports in 2014, up 11.7 per cent year on year. - VNA/VNS Photo Tran Viet

Ha Noi generated $11.07 billion from exports, up 11.7 per cent year-on-year, while import value rose 4.3 per cent to $24.45 billion. In September alone, the city exported $1.02 billion worth of goods, increasing 5.8 per cent month-on-month. It spent $2.32 billion to import goods, a rise of 13.7 per cent that resulted in a trade deficit of $1.3 billion.

The capital's key export staples this year were computer spare parts and peripherals with turnover of $1.6 billion, up 56.6 per cent; garments and textiles with $1.58 billion, up 20.7 per cent and agricultural products with $1.13 billion, up 17 per cent. Other items recording encouraging export value included petroleum ($815 million), electronics ($443 million), glass products ($331 million), coffee ($288 million), footwear ($249 million) and handicrafts ($192 million).

The city's major export outlets included the US, Japan and China, which together received 38.4 per cent of exports. The city mainly imported petroleum with $5.45 billion, steel and iron with $1.18 billion, plastic with $772 billion, fertiliser with $342 million and chemicals with $333 million.

The Ministry of Industry and Trade's Import-Export Department revealed that Ha Noi had the country's biggest trade deficit in 2013 with $13.5 billion, five times higher than southern Ba Ria-Vung Tau Province with $2.9 billion.

Last year, the capital city posted export turnover of $9.9 billion and imported $23.4 billion worth of goods.

V - Vietnam sees trade surplus for third year

Viet Nam News, 29-12-2014

Vietnam recorded a trade surplus of roughly US$2 billion in 2014, the General Statistics Office (GSO) reported last Saturday. This is the third consecutive year that the country saw a surplus, after recording surpluses of

$280 million in 2012 and more than $860 million in 2013. This year, overall export revenues hit $150.42 billion, up 13.6 per cent over last year, while total import values reached $148.58 billion, a year-on-year increase of 12.1 per cent. According to the GSO, foreign direct investment (FDI) enterprises contributed to the majority of revenues of Vietnam's key export products. They accounted for 99.6 per cent of $24.83 billion in telephone and component exports, 59.4 per cent of $20.77 billion in garment and textile exports, and 77 per cent of $10.22 billion in footwear exports. They also represented 89.7 per cent of machinery and equipment exports, which totaled $7.26 billion, and 98.8 per cent of computer and electronic exports, which amounted to $11.66 billion. In 2014, the structure of exports saw significant changes that benefited the country's goods. The exports of light industrial goods increased 15.9 per cent to nearly $60 billion, farming and forestry products rose by 11.4 per cent to 17.80 billion, while aquatic products were up 17.6 per cent to nearly $8 billion. Materials for production made up 91.2 per cent of total import values, reaching $135 billion, or a year-on-year increase of 12.5 per cent. Of these, the values of machinery and equipment were $55.60 billion (up 10.1 per cent), petroleum products were $7.62 billion (up 9.3 per cent), and chemical substances were $3.22 billion (up 14.6 per cent). Further, material imports served production for exports by the FDI sector more than that of domestic enterprises. These imports amounted to $84.57 billion for foreign companies, compared with $63.49 billion for local firms. The GSO noted that Viet Nam witnessed an increasing deficit in trade with China, while China remained the largest exporter to Viet Nam this year. The deficit for 2014 was $28.90 billion, a rise of 21.8 per cent from the figure recorded in 2013. Vietnam's imports from China reached $43.70 billion, up 18.2 per cent year-on-year, while its exports to this market were only $14.8 billion, although crude oil exports increased 76.9 per cent and textile fibre exports rose 40.3 per cent there. The GSO noted that as the contents of domestically made materials and components in export goods remained low, the three-year high trade surplus of $2 billion resulted in insignificant benefits to the Vietnamese economy.

V - VN enjoys trade surplus of US$1.31 billion from Italy VGP | 16/12/2014

Viet Nam’s export turnover to Italy reached US$2.5 billion over the past 11 months of the year, witnessing a year-on-year increase of 18.2%. The nation enjoyed a trade surplus of US$1.31 billion in the reviewed period.

The exports of phones and accessories led others with US$913.4 million, up 8.86% and making up 40% of the total export value. It was followed by footwear with US$237.85 million, accounting for 10.4% and coffee with US$210.67 million, up 50.74% in volume and up 48.38% in value.

Italy has become the 18th largest exporter and 15th largest importer of Viet Nam. The European nation also ranked third among the largest trade partners of Viet Nam in the EU.

Viet Nam’s export growth rate to Italy maintained at around 19% per year in the phase from 2005-2011.

Remarkably, when the Free Trade Agreement negotiations between Viet Nam and the EU are completed, Viet Nam’s export and import turnovers with EU nations will increase 30-40% and 20-25%, respectively.

V -Garment exports may set new record VGP | 13/12/2014 Viet Nam gained US$19 billion from exporting garments over the past 11 months of the year, according to the Viet Nam Textile and Apparel Association (VITAS).

The nation’s garment exports maintained strong growth in large markets such as the US, the EU, Japan and the Republic of Korea.

Garment exports in 2014 may reach US$24.5 billion, up 19% compared to last year and this is the highest growth rate over the recent three years, revealed VITAS General Secretary Dang Phuong Dung. Earlier, the Ministry of Industry and Trade approved a plan to raise the garment export turnover to US$24 billion by 2015.

The rapid growth of the garment sector can be attributed to a new wave of foreign investors coming to Viet Nam thanks to the country’s on-going engagement in a number of talks processes on free trade agreements, including the Trans-Pacific Partnership (TPP) and Viet Nam-EU FTA.

Vietnamese garment producers are now diversifying imported input materials to ensure their production.

V - Coffee exports touch over $3 billion in turnover VGP | 07/12/2014

Viet Nam shipped 1.6 million tons of coffee in the 2013-2014 crop, according to the Viet Nam Coffee and Cocoa Association (Vicofa).

The country pocketed US$ 3.3 billion in export revenue, up 17.2% in volume and 12.5% in value.

However, the 2014-15 coffee crop was projected to decline by 20% due to drought and a large proportion of old trees with low yields.

Viet Nam expects to export 1.4 million tonnes of coffee during 2014-2015, down 200,000 tonnes from the previous crop. The industry has set itself a target of increasing the output of instant and

roasted coffee to account for 25% of the total by 2020. Coffee consumption in the domestic market remains modest, at around 10% of the annual output.

During the 2014-2015 crop, Vicofa will assist coffee farmers in re-cultivation and call for more business involvement in coffee processing

V - Vietnam's 2014 exports seen up at a record $150 billion: PM

Reuters, December 05, 2014

Vietnam's exports this year are expected to hit a record $150 billion, up 13 percent from 2013, Prime Minister Nguyen Tan Dung said on Friday, beating a previous government projection. The value, above the $148 billion previously estimated by the trade ministry, could keep Vietnam on track to register a trade surplus of $1.5 billion in 2014, its third consecutive annual surplus, Dung told an international conference.

Particular Reports O - The difference between Americans and Asians Dipl.-Ing. Alex Narr, CEO Productionservice Vietnam, 29.12.2014 The psychologist Richard E. Nisbett and Yuri Miyamoto of the University of Michigan made their first cross-cultural studies on the perception of style between Americans and Asians. Here there was a profound difference between the majority of analytical thinking and actions of the Americans. They can give a protruding object immediately their attention. Their perception of analytical style sharply divided between important and unimportant and filters out a large part of information. While Asians had the tendency to search the context for further information. Their holistic perception of style would like more to register the environment, less filtering. What has nothing to do with attention deficit syndrome. It's just another way of seeing the world and this other kind. The researchers found this also in European cultures.

O - AEC (ASEAN Economic Community) 2015: Will it happen?

By Dipl.-Ing. Alex Narr. Productionservice-Vietnam, 19.12.2014

Is the AEC formation really right on track? Many people don’t expect it to occur by 2020. This skepticism is not too hard to understand due to financial short comings es partwise up to fanatically religious morals, corruption, poor governance and the inability of some governments to build up interdepartmental internationally coordination. As well as just 50 percent of the master

plan on ASEAN connectivity has been put into action. Leading economists even fear the AEC could become only a regional league.

In contrast, the Obama administration has tinkered together the TPP Agreement in 5 years and pushed through. 2015 we go.

Of all Asian and Asean countries are only Vietnam, Malaysia, Singapore and Brunei TPP members. Can act in future duty-free from Japan to US and from Australia to Canada – instead regionally delimited as the AEC. What the other AEC countries as non TPP members significantly disadvantaged. Not only seen so from the perspective of foreign investors. Who is in future not a TPP member plays at least the next quarter of a century in the global economy at best only a third fiddle!

Subsequent Report of Benny Hutabarat, Jakarta, explains best what is AEC all about:

The 2015 ASEAN Business Outlook Survey issued by the US Chamber of Commerce reveals prevalent anxiety that a good chunk of the ASEAN Economic Community (AEC) isn’t going to be ready by the 2015 deadline. Most respondents were a bit cynical about the AEC’s inauguration even happening by 2020. That’s because this isn’t the first time the AEC has faced a potential delay. The original AEC commencement had been pushed back in 2012 from Jan. 1, 2015 to Dec. 31, 2015. Although Surin Pitsuwan, then ASEAN secretary-general, had firmly said there would be no further delays and that all 10 countries were going to participate, strong and not so strong AEC proponents worried about the possibility that the AEC would not be ready by the close of 2015. The AEC was born out of the ASEAN Vision 2020 adopted on the 30th anniversary of ASEAN in 1997.

The goal is to produce one market and production base by 2020 with a free movement of services, goods, capital, investments and skilled labor. When ASEAN leaders met in 2003, they signed the Declaration of ASEAN Concord II and agreed to establish the AEC by 2020. However, in 2007, the Cebu Declaration sped up this establishment to the year 2015. This is when ASEAN revealed its AEC Blueprint, which, two years later, became the Roadmap for an ASEAN Community to help with the AEC’s enactment. The AEC Scorecard was developed to track the progress being made, based upon the EU Internal Market Scorecard. Since its inception, there were two published scorecards — 2010 and 2012. The 2012 AEC Scorecard reveals four key objectives, one market and production base; a viable fiscal region; reasonable economic growth and incorporation into worldwide economy (187 of 277 measures have been already put into place by the end of 2011). Thus the AEC formation is right on track, which begs the question why so many people don’t expect it to occur by 2020. The skepticism isn’t too hard to understand. It took nearly 50 years for Europeans to put together the European Community during the European integration process.

The ASEAN way of not interfering with domestic political affairs may cause the non-recognition of joint economic interest.

Some critics have noted that several AEC implementation deadlines have passed and several key initiatives have yet to begin. For instance, due to financial shortcomings, corruption, poor governance and the inability for governments to manage interdepartmental and international coordination — just 50 percent of the Master Plan on ASEAN Connectivity has been put into action. The largest concern, however, is ASEAN’s lack of structure to pull the AEC along. Think of the AEC as if it were a train. That makes the ASEAN Secretariat the locomotive. But even the ASEAN Secretariat does not have enough intellectual and financial resources to act like it should.

Even more shocking is that the resources it does possess have changed in 15 years despite the area’s quadrupled gross domestic product (GDP). The total budget for the ASEAN Secretariat for 2013 was US$16 million — a small amount for an ever-growing institution with more activities and mandates. The European Commission — for its administration — had a budget of around $4.3 billion in 2012. Many times that amount was spent by European governments to start off their area projects. And the ASEAN Secretariat is less than fully staffed. In 2012, there were just 300 people in the ASEAN Secretariat; the European Commission employees nearly 34,000 people. The budget constraints at ASEAN headquarters reveal that an entry-level professional makes around $3,000 every month, and this is still after recent significant improvements were made to remuneration packages. It’s no wonder the ASEAN Secretariat is struggling to find highly qualified and experienced staff for its department. It’s possible the AEC could be attained if ASEAN members can come together for the greater good — such as the benefits that come from the envisaged economies of one Southeast Asian market. Still, delays in bringing the AEC to fruition are a reflection of one of the more overwhelming challenges that face ASEAN: member states’ unwillingness to view themselves as being one market. For instance, Indonesia has yet to ratify the ASEAN Multilateral Agreement for the Full Liberalization of Air Freight Services. Its reasoning for not doing so is to keep regional competitors from encroaching on its domestic aviation industry — specifically Malaysia, Singapore and Thailand. With Indonesia not participating, the one aviation market is in name only, with no actual “open sky” above the ASEAN territory. There are numerous other examples. Many times, narrow national interests do better than a larger-scale regional interest with short-term benefits outweighing the long-term ones. The ASEAN way of not interfering with domestic political affairs may cause the non-recognition of joint economic interest. Should there be no sanction mechanism or powerful regional institutions for both non-cooperation and noncompliance, member states will only respond to peer pressure to carry out community obligations. The final issue is the slow progress and hurdles being encountered to get the AEC going, all because there is a basic awareness deficit of both AEC and ASEAN throughout the region. According to a 2013 ASEAN Secretariat survey, three of every four ASEAN citizens have no real understanding about the grouping. There is little doubt that the European experience is something the ASEAN can learn from — helping to promote public awareness regarding the EU. For directly impacted EU citizens of any EU legislation to understand the assessments made in Brussels, there must be 24 official translations. Thus, national authorities must make them aware of these laws before they can be implemented. Regardless of their language; EU citizens need to know what their leaders are up to. For ASEAN, English is the working language, but it is difficult for the average citizen to understand the regional agenda, especially if it’s only offered in English. Nonetheless, the earlier Indonesian government recklessly announced a new policy, which excluded the teaching of English language for primary school students. It’s also a known fact it is going to take time and money to copy the EU approach, and involving both complicated historical and regional differences. However, increasing the number of people who are ASEAN-aware using more effective ways of communication is helpful to the AEC establishment. On top of that, better public understanding about the AEC would entice people to use what is set to become a lone market that includes 600 million people and a $2.3 trillion GDP.

For the AEC to be launched on time, it needs the backing of a powerful ASEAN Secretariat and all 10 member states to forgo their narrow-minded fixations on shared affluence and wealth.

O - Thailand not ready for Asean Economic Community

The Nation, Erich Parpart, 12-12-2014

Thai Finance Minister Sommai Phasee and key private-sector voices have warned that the Kingdom has a long way to go before it is ready for the full implementation of the Asean Economic Community at the end of 2015. He said this was especially the case for regulations that were acting as a barrier against the free movement of goods, labour, services and investment. "The officials at the Finance Ministry have written it down on my speech here that they are ready for the AEC. I said you are not ready," Sommai said yesterday. Speaking at a seminar on "Is Thailand Ready for the AEC?", Sommai said many regulations still had to be introduced before the AEC's full launch. He said he had worked at the ministry for three months and in that time there had been "eight or nine" regulation changes but many more "still need to be upgraded, amended and covered if we are to be ready for the AEC". Sommai said the country had to amend regulations that acted as barriers against the idea of a single Asean market and production base. He said having a single Asean window to facilitate logistics and investment meant Thailand needed to improve its transport infrastructure to increase regional connectivity and fully embrace the digital economy to connect government agencies. Another important issue was inducing regional confidence in the country. "The government and the prime minister have to create confidence in terms of the country's political situation and our stance in the region," he said. "Do we know what our position in the AEC is or where we are now in the political situation?" "The government has to provide this clarity to maintain confidence at a regional and international level." Sommai said the Finance Ministry would next week propose to the Cabinet the setting up of a 25-billion baht (US$762,498,000) venture-capital fund to be spent on joint investment projects with small and medium-sized enterprises. Yu Jienyoenyongpong, chairman of the Land Transportation Federation of Thailand, said only large companies in Thailand had readied themselves for the AEC because they had the capital and know-how to do so. But he said 90 per cent of the country's businesses were SMEs and they were not ready because they did not have the capital or knowledge. He said the readiness of SMEs for the AEC would determine the country's readiness, including their competitiveness against regional rivals, and he was glad the minister had acknowledged the true picture. Yu said other countries in the region were ahead of the Kingdom in terms of regulation that facilitated investment while Thailand had rules that made it harder for SMEs to operate across borders. The government's Nong Khai-Map Ta Phut dual-track railway project would be ineffectual because it would not connect with the high-speed railways that Malaysia and Singapore were developing. He said the project's East-West Corridor route would lessen the benefit to Thailand as it would not pass major landmarks or manufacturing centres.

Sanan Augubolkul, chairman of Srithai Superware, said Thailand had to think about its energy consumption before the full implementation of the AEC because its reserves of natural gas were due to run out in seven years. Sanan said the nation had to invest in energy now before becoming more dependent on neighbours for energy while amendments to regulations and tax incentives were needed to facilitate foreign investors.

Fairs & Exhibitions VIETNAM - CAMBODIA - LAOS – MYANMAR. All Fairs with organizer contact data From our March Newsletter on we list again all trade fairs 2015 in VIETNAM, CAMBODIA, LAOS, MYANMAR, again with organizer data

*****************