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BUSINESS IN BRIEF 27/7   2010-07-27 - VietNamNet/VNA

Vietnam, Uzbekistan increase trade links


The fourth session of the Vietnam-Uzbekistan Inter-Governmental Committee for Economic, Trade and Scientific-Technological Cooperation convened in Hanoi on July 27.


The Vietnamese delegation was led by Deputy Minister of Industry and Trade Le Danh Vinh, Chairman of Vietnam’s sub-committee, while the Uzbekistani delegation was headed by the First Deputy Minister of Foreign Economic Relations N. Nazhimov, Head of the Uzbekistani sub-committee.


Both parties reviewed the progress of agreements reached during the previous session and discussed bilateral cooperation in a number of areas.


They signed the minutes of the fourth session under which Uzbekistan pledges to supply a long-term and stable provision of commodities including cotton, fertilisers and liquefied gas for Vietnam while Vietnam will provide agro-forestry products and seafood to Uzbekistan .


The two sides will step up cooperation in trade and investment by holding seminars to help businesses from both countries understand each other’s legal frameworks, incentive policies and projects that are calling for investment.


They will focus on cooperation in industry, agriculture, health, education and training, finance and banking and construction.


The fifth session of the committee will be held in Tashken, Uzbekistan in 2011.


UK newspaper: VN lures in more foreign investors


UK newspaper, the Financial Times, on July 26 ran an article saying that Vietnam ’s attractive investment environment, especially its cheap labour costs and political stability, are persuading foreign companies to choose it as the best destination in the region for their investments.


According to the article, when Mitsubishi Heavy Industries (MHI) Aerospace was planning to build a factory to assemble wing flaps for the Boeing Aircraft Corporation, it looked around Southeast Asia before setting on what is rapidly becoming the region’s destination of choice: Vietnam .


Hirotaka Masuda, head of the MHI Vietnam, said that MHI Aerospace is taking the same path as more and more companies are choosing, driven by the country’s cheap labour and relative political stability.


A survey of Japanese companies with overseas operations by the Japanese Bank for International Cooperation found that Vietnam beats China and India as having the lowest labour costs.


The Kobe Steel Group has also recently announced a 100 billion JPY (1.1 billion USD) investment in a steel mill and the cosmetics company Shiseido has opened a large factory to supply its distribution network in Southeast Asia and China .


Sapporo , a Japanese beer producer, plans to open a brewery in Vietnam in 2012 while Daiwa Securities has launched a 40 billion JPY investment trust that will allocate two-fifths of its assets to Vietnam .


The total foreign direct investment into Vietnam hit 9.8 billion USD last year, down from 11.5 billion USD in 2008 but still significantly better than many experts had predicted during the height of the global economic crisis.


The relatively stable level of foreign investment, along with the economic momentum Vietnam had built up gong into the crisis helped the economy continue growing at 5.3 percent in 2009.


VN remains attractive destination for Japan investors


Many Japanese investors have recently said that they will choose Vietnam as a destination for their investments within the next 1-3 years, although there remains some concerns over the quality of the workforce and the country’s infrastructure.


The Investment Review, a local newspaper, cited a recent survey conducted this July by the Japanese financial group Shokochukin, saying that Vietnam is the second choice in Asia for Japanese investors. Twenty-one percent of 700 Japanese small and medium sized enterprises surveyed voted for Vietnam while 30 percent opted for China .


For Japanese businesses, the country’s socio-politic stability, abundant and cost effective labour force, tax incentives and the potential for economic development give Vietnam a very competitive edge.


These factors, said the paper, help investors feel secure when they decide to inject capital into this market and expand their businesses.


According to the 2010 Vietnam Business Climate Report, 58 percent of Japanese enterprises currently doing business in Vietnam said they would increase their investment, 40 percent would maintain their operations while 1.4 percent would scale down and only 0.7 percent plan to withdraw from the country.


At a meeting with representatives of the Ministry of Planning and Investment in early July, the Executive Director of the Investment and Tourism Division of Aichi province in Japan, Masanori Ito, said that many companies in his province had drawn up plans to invest in Vietnam .


Aichi, one of the largest economic and industrial centres in central Japan, has more than 70 investors operating in Vietnam, including Toyota, Honda, Suzuki and Yamaha.


However, some Japanese investors are concerned about electricity cuts and the quality of the workforce in Vietnam .


To become more attractive as an investment haven, the Japanese External Trade Organisation (JETRO) said that Vietnam needs to ensure stable and reliable electricity supplies, improve its workforce and re-adjust cost-related factors such as property taxes, transport costs and electricity, water and communications fees.


The Foreign Investment Agency (FIA) said that by the first half of this year, Japan ranked third among 39 countries and territories having invested in Vietnam with a total registered capital of 1.22 billion USD, accounting for 14.5 percent of all foreign direct investment in the country.


Avertising industry sets up promotion agency


A group of major digital advertising firms has opened a franchise of the US-based Interactive Advertising Bureau to promote digital advertising industry through training, stimulating co-operation and other means.


As the second of its kind in Asia, after Singapore , it is registered as a non-profit company and has so far signed up 15 publishers and advertisers as members. The figure is expected to rise to 40 this year.


Bryan Pelz, IAB Vietnam co-founder and adviser to online game firm VNG, said though digital advertising enjoyed a very high growth rate of over 70 percent last year, it represented only 2 percent of total advertising spending.


"We target to raise the rate to 10-15 percent in three to four years, equal to China ’s level," he said, but adding the goal could be achieved only if advertising firms fully understood the importance of online advertising and to combine digital technology and traditional advertising.


IAB was set up in the US in 1996 and has helped promote the advertising industry in several countries.


For the first time, digital advertising outranked television in terms of revenue in the UK last year, according to auditing and market research firm PricewaterhouseCoopers.


Total advertising spending in Vietnam last year was worth around 700 million USD.


Jetstar Pacific expands its fleet


Jetstar Pacific Airlines will bring an additional Airbus A320 into service by the end of October, raising the total number of planes in their fleet to seven in order to meet higher demand next year.


The airline plans to expand its team to 15 planes by 2014. In the first half of this year, Jetstar Pacific Airlines carried out 9,063 flights and transported 1 million passengers on its domestic routines. Up to 90 percent of the company’s passengers benefited from cheap-flight prices.


WTO nominates panel members for Vietnam’s lawsuit


The World Trade Organisation (WTO)’s Director General Pascal Lamy on July 26 appointed three members to the panel that reviews the US’s anti-dumping measures imposed on frozen shrimp imported from Vietnam.


The panel members include Mohammad Saeed, Legal Affairs Officer of the Permanent Delegation of Pakistan to WTO; Deborah Milstein, an official of the Israeli Ministry of Industry, Trade and Labour; and Iain Sandford, Director of the Australian International Trade Group. Mohammad Saeed was assigned as chairman of the panel.


Lamy made the decision after Vietnam and the US failed to reach consensus on the panel’s members following 60 days of discussion.


Vietnam requested Lamy to nominate the panel’s members. The WTO chief had met with representatives of the two countries for consultations before he issued the decision.


The panel’s members will work independently and will not receive instructions from any governments. They will examine evidence and is expected to send a final report on the lawsuit to the concerned parties after six months.


On February 1, 2010, Vietnam lodged a proposal to WTO for consultations with the US on its imposition of anti-dumping measures against Vietnamese frozen shrimp exports.


This is the first time Vietnam has launched a trade lawsuit since it joined the WTO in January 2007.

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