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IN THIS ISSUE

Highlights Despite FMCG sales growth, retailers remain cautious

11

Economy Enterprises

Ha Tinh is focused on attracting Japanese investors

2 Toyota Vietnam debuts junior football clinic and camp

9

Paper enterprises need a plan for upcoming trade deals

3 Vietnam based Kinh Do to form palm oil JV with Indo-Trans Logistics & Malaysia‟s Felda Global Ventures

9

Efforts to boost supporting industries 4

Vietnam becomes world‟s fourth largest garment exporter

4

Banking & Finance Market & Prices

Bank guarantees for property meant to safeguard buyers

5

Stable interest rates as planning 6

Investment Legal Updates

Northern investors migrating south 7 FDI enterprises are officially allowable to export scraps and import components for the purpose of warranty

10

First made-in Vietnam 24-bit chip launched for medical applications

8 New provisions on quality control and maintenance of construction works

10

Adding 07 permissive food additives 10

VIETNAM

BUSINESS

REVIEW

Vol 23

June 24th 2015

Vietnamese beaches win foreign tourist’s hearts

SEIKO IDEAS CORPORATION www.seiko-ideas.com

ECONOMY

Page | 2

More than half of Vietnamese dissatisfied with their salary

Up to 54 percent of employees in

Vietnam are not satisfied with their

current salary, according to a new

survey from the recruitment firm

VietnamWorks. Most of employers

in the country have not been able to

assess salary benchmark data to

determine the best pay for their

current employees and candidates,

said the survey of 204 employers in

June.

Up to 55 percent of questioned

companies said they prefer to base

their salary level on the pre-set

salary budget, and 62 percent find it

wise to determine salary through

direct negotiation. According to

another VietnamWorks survey of

6,000 employees in 2014, 36

percent of respondents said their

monthly salary were under VND6

million (US$285), and 32 percent

from VND6-9 million.

Gaku Echizenya, CEO of

VietnamWorks, said: “87 percent of

companies that VietnamWorks

surveyed haven‟t made use of

professional tools to evaluate salary

levels...Therefore, these companies‟

salary levels may not be competitive

enough to attract quality

candidates.”

[Vietnamworks]

Ha Tinh is focused on attracting Japanese investors.

At the meeting in Hanoi between

Ha Tinh‟s Provincial Party

Secretary Vo Kim Cu and 30

Japanese enterprises, Ha Tinh

province committed to create all

the best conditions would be given

to Japanese investors in various

sectors like infrastructure, logistics,

ports, urban development,

healthcare, education, agriculture,

supporting industries, and oil

refinery in the province. The

meeting was attended by major

Japanese enterprises like JFE

Shoji, Mitsubishi, Sojitz, Vijachip,

Jicem, Tamada, Takagi, J-Power,

Sumitomo Mitsui Banking

Corporation, TK Chemical, and

NNA.

Also according to content at the

meeting, Ha Tinh province will

speed-up site clearances and will

halve the time for processing all

administrative procedures for

investors or build a large industrial

park for Japanese investors in the

time to come, also establish an

office, known as Japan Desk, in

charge of supporting Japanese

doing business and living in

Vietnam and all foreign investor

will be treated the same as local

enterprises and Ha Tinh citizens.

Actually, foreign investors have

been investing over $17 billion in

Ha Tinh such as Taiwan‟ s

Formosa Group ( Formosa‟s steel

and port complex in the top list).

The complex, which will be able to

produce 7.5 million tones of steel

in the first phase, will become

operational by 2017, before

entering the second phase with the

total investment capital of $16

billion to produce 22 million tonnes

of steel per year. And Japan‟s

Mitsubishi planned to invest over

$2.4 billion in building the second

1,200 megawatt thermal power

plant in the 7,000MW Vung Ang

power centre. Meanwhile, South

Korea‟s Samsung proposed to

invest $5 billion in building the third

and fourth plants in the power

centre.

Currently, there are many

Japanese enterprises who were

operating in Vietnam wanted to

open more factories in the country.

Perhaps, it‟s time for Ha Tinh

province to become a good

destination with its advantages

such as large power plants and

Son Duong deep-water seaport..

[R&C Dept.]

SURVEY

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ECONOMY

Page | 3

Sales of consumer packaged goods rebound in Vietnam

After seeing a sharp downturn in

2014, sales of fast moving

consumer goods (FMCG) such as

food and personal care products

have recovered, growing 3.4

percent in volume and 4 percent in

value in the first quarter.

Beverage is the key category

driving the growth recovery, but

other categories such as food and

home care also have shown signs

of recovery in the quarter, said a

new report released by Nielsen.

The report also found that more

than 80 percent of FMCG sales in

Vietnam still come from the

traditional trade channel which

includes around 1.3 million FMCG

stores across the country.

The sheer number of traditional

stores makes Vietnam one of the

most complex markets for FMCG

manufacturers to build distribution

and manage logistics, said the

report.

Local instant noodle producer Hao

Hao, Vinamilk and Coca-Cola are

the top three most supported

brands by retailers.

[Nielsen]

Paper enterprises need a plan for upcoming trade deals

Statistics from the General

Department of Customs showed

that in the first five months of the

year, the country's total turnover of

paper and paper products was

US$49 million, while its import

turnover reached $174.5 million, or

3.5 times higher than that of its

exports. Another report from the

Viet Nam Paper and Pulp

Association revealed that last year,

Viet Nam imported more than 1.5

million tonnes of paper and paper

products, its exports were only

133,000 tonnes. This shows that

the local paper industry is heavily

dependent on imported materials.

Local paper enterprises have no

the right development orientation

such as Hai Tien Paper Company

used to export paper products to

Malaysia and Singapore some

times while they have focused on

the local market now as the

products do not meet the

standards required by the

importing countries.

But now, under the pressure of

Free Trade Agreements (FTAs),

domestic paper businesses have

been urged to improve their

products' quality and

competitiveness if they do not want

to lose the current market shares.

However, many paper enterprises

are afraid that there‟re many

difficulties for them.

Vietnamese paper businesses are

small and have inefficient

production lines, thus their product

quality is not as good as that of

other countries. Moreover, the

most important thing for the paper

industry would be the

establishment of the ASEAN

Economic Community by the end

of this year. The import tax on

paper and paper products among

the Community would be zero by

2018. This could create fierce

competition for the local paper

industry as half of the paper in Viet

Nam was imported from the

ASEAN. The tariff cut would create

opportunities but would also

challenge domestic businesses.

However, local firms have not

clearly understood the

opportunities and challenges

presented by FTAs as they have

only focused on the domestic

market so far.

For this reason, the businesses will

need support from the Government

in terms of capital, infrastructure

and equipment. [ R&C Dept.]

SURVEY

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ECONOMY

Page | 4

Vietnam becomes world’s fourth largest garment exporter

Vietnam is now the fourth largest textile exporter in the world

with 12.18 billion USD earned from these products in the first

six months of this year, according to the Vietnam National

Textile and Garment Group (Vinatex).

The figure represented a 10.26 percent increase from the

same period last year.

The US, the Republic of Korea (RoK) and the European

Union were the biggest importers of Vietnamese products,

posting growth rates of 11.01 percent, 8.33 percent, and 8.2

percent, respectively, against the same period last year. The

results are a positive sign which will enable Vietnam‟s

garment industry to achieve its set target of 27-27.5 billion

USD in export value this year. With favourable movements in

the global economy and the recent signing of free trade

agreements (FTA) between Vietnam and the Eurasian

Economic Union (EAEU), and the RoK, 2015 is forecast to

be a bright year for Vietnam‟s garment industry.

Mentioning opportunities brought about by the Vietnam-

EAEU FTA, Truong said Vietnam is likely to earn over 1

billion USD from shipping textiles to the market if the country

takes full advantage of benefits from the agreement. The

sector will need to make additional efforts to seek new

markets and opportunities, and establish partnerships with

major groups to be able to sign high-value orders in the

remaining month of this year, Truong said.

The export value of Vinatex, which has the largest

production scale in the textile and garment industry in the

country, hit 1.7 billion USD in the two first quarters of this

year, up 10.7 percent over the Jan-June period last year.

The group plans to invest 9.4 trillion VND (441.3 million

USD) by 2017 in 59 textile, dye, garment and infrastructure

projects.

[VNA]

Efforts to Boost Supporting Industries

The Japan External Trade Organization (JETRO), the Ho

Chi Minh City Investment and Trade Promotion Centre

(ITPC) and Reed Tradex Vietnam Company recently signed

a cooperation agreement to organise the “Business

Alliance for Supporting Industry” Show 2015 in Ho Chi

Minh City.

The show is set to take place from October 8 to 10 in Ho Chi

Minh City within the framework of Metalex Vietnam 2015 - the

Vietnam International Exhibition on Machine Tools and

Metalworking Solutions for Production Upgrade. The Business

Alliance for Supporting Industry Show 2015 aims to encourage

parts produces to directly contact with Japanese buyers, and

figure out future demands to build production strategies and

systems to obtain best business results.

Vietnam is emerging as an attractive destination for foreign

investors and this has resulted in higher demand for industrial

parts. This requires industrial companies to understand factors

that affect the development of supporting industries. Hirotaka

Yasuzumi, Besides, this year JETRO will organise many

events to deepen Japan - Vietnam business ties and the

Business Alliance for Supporting Industry will be a highlight of

the event chain. Accordingly, JETRO will set up an exhibition

area and trade connection meeting. The exhibition will

contribute positively to the development of supporting

industries of Vietnam and Ho Chi Minh City will build a

foundation to become a typical production base in ASEAN in

the future.

Incorporated with the “Business Alliance for Supporting

Industry” Show 2015 is Metalex Vietnam 2015, a component of

ASEAN‟s largest metalworking exhibition. With seven

international sections for China, Japan, Germany, South Korea,

Singapore, Taiwan and Thailand, Metalex Vietnam 2015 will

gather world-wide advanced technologies and solutions. The

event also includes a conference to highlight Vietnamese

engineers‟ capabilities.

[Le Phuong]

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BANKING & FINANCE

Page | 5

Bank guarantees for property meant to safeguard buyers

A regulation ordering bank

guarantees to become mandatory

for property purchases, which was

to be completed in the future, has

caused mixed concerns among

property developers and buyers.

Following Article 56 of the Law on

Real Estate Business, to take

effect on July 1, property

developers, before selling or

leasing unfinished or future

property, must obtain guarantees

from eligible commercial banks as

assurances of their financial

obligations to buyers. Accordingly,

in case property developers fail to

hand over apartments to buyers

following commitments, banks

would be responsible for returning

the buyers' money, in line with

signed contracts. The regulation

was expected to protect the rights

of home buyers, as well as

contributing towards cleaning up

the realty market.

For this season, this would

eliminate risks for home buyers, as

their money would be guaranteed

by banks, which would strengthen

overall buyers' confidence. Further,

the regulation would stimulate

home purchases and improve

liquidity in the real estate market.

Financial disputes arising when

property developers failed to

complete their obligations were

also expected to be reduced.

Moreover, bank guarantees

reflected that the project met

certain standards and

development potentials. Therefore,

home buyers could feel secure

when spending money on

guaranteed projects.

However, there were concerns that

the regulation would increase

property prices and cause

disadvantages to small developers.

Guarantee fees might be a factor

to be calculated in property prices,

which would push up selling prices.

Thus, it would be unreasonable to

apply the regulation to all property

developers, as guarantees for

projects of prestige developers

were, in fact, not necessary.

Instead, buyers should be allowed

to request a guarantee if they

found it necessary.

While the regulation was expected

to eliminate incompetent property

developers and enhance market

transparency, this regulation might

burden small developers who

could need to purchase less

favorable guarantee fees, in

comparison to large firms, or might

face difficulties in negotiating with

banks for guarantees. Further,

some voiced concerns that this

would undermine their

competitiveness and even force

them to leave the market. However,

no guarantee fees have been

disclosed, as the fees should be

competitive, several banks said.

Detailed instructions

While several developers were

taking pioneering steps in signing

agreements with commercial

banks to guarantee their property

projects, others remained

confused with the regulation,

claiming detailed instructions about

guarantee procedures were

urgently needed. To date, no

decree or circular outlining the

implementation of the regulation

have been issued.

[R&C Dept., following Vietnamnews]

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BANKING & FINANCE

Page | 6

Stable interest rates as planning

Interest rates in the second half of

this year will remain stable as

inflation has been predicted at 3-

3.5 per cent this year. The interest

rates of the whole banking system

had remained stable and kept

decreasing against the rates last

December, although some banks

had recently raised their deposit

interest rates, causing concerns

about a possible rise in lending

rates in the coming months.

Medium- and long-term [more than

six months] deposit rates have

relatively been stable, though

some large-sized banks had

recently lifted their short-term

[ under six months] deposit rates,

adding that the raise was

unpopular.

The hike to the reason that large-

sized banks had previously cut

their short-term rates significantly

and offered rates lower than that of

other banks thanks to their

abundant liquidity. Therefore, their

hike now made their rates only

equal to that of other banks and

not higher than the average rates

of the whole banking system.

However, the central bank would

continue executing various policies

to keep the rates stable as

targeted earlier this year. The

central bank will closely watch the

market to take timely and suitable

measures through open market

operations, as well as support

liquidity for credit institutions to

meet the target.

According to SBV's report, deposit

interest rates in the first half of the

year reduced by 0.2-0.5 per cent

against that of December last year,

mainly for terms of more than six

months, thereby bringing the

medium- and long-term lending

interest rates down by 0.2-0.3 per

cent to roughly 9-11 per cent per

year. By mid-June, credit rose 5.78

per cent against that of December

last year and up 18.98 per cent

year-on-year, the highest since

2012. Of this, the total outstanding

loans to agricultural and rural

areas surged 7.71 per cent, while

the increasing rates for the exports

of small and medium firms,

supporting industries, and high-

tech firms were 3.9 per cent, 1.88

per cent, and 24.02 per cent,

respectively.

As concerns were raised that high

credit rates to the real estate

sector during the past months

might cause a „bubble' in the

property market as earlier, it‟s said

that the rise was not a jump. The

credit to the real estate sector by

the end of May rose 10.89 per cent

and accounted for 8.3 per cent of

the total outstanding loans,

compared with 7.96 per cent of the

same period last year. The credit

hike for the real estate sector

during the past few months was

positive as loans were mainly

channeled to the construction and

completion of works, which

contributed to reducing the

stockpile of the building materials

sector.

However, the central bank would

continue monitoring the credit flow

to the real estate sector and take

timely measures to control any

possible risk. Besides, the central

bank also affirmed that in the

second half of this year, it would

continue creating policies to

maintain the devaluation of the

Vietnamese dong against the US

dollar by no more than 2 per cent

for the whole year as targeted.

[R&C Dept., following VNS]

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INVESTMENT

Page | 7

Northern investors migrating south

There has been a rising trend of

Hanoians buying properties in

central and southern provinces.

A range of project developers have

begun launching their projects to

the Hanoi market in response to an

increasing demand from the capital

city for properties in the central

and southern regions of the

country. Such developers include

Phu My Hung, VinaCapital,

CapitaLand, Kepple Land and

many others. During the recent

launch of The Point project to the

Hanoian market, a representative

from VinaLiving (of VinaCapital)

said that Hanoian buyers

dominated its projects, with around

70 per cent of total buyers coming

from the capital. Properties in the

south and central provinces are

attractive to Hanoians, as they can

buy-to-lease the properties, or

purchase them as investment

opportunities.

NovaLand recently introduced a

number of apartments located in

Ho Chi Minh City to the real estate

market in Hanoi. Among those,

about 300 units from The Sun

Avenue were introduced to the

northern buyers. NovaLand has

built many large scale projects

such as the Sunrise City, The

Prince Residences, Tropic Garden

and Lexington Residence. Many of

those were highly sought after by

buyers from the northern region.

NovaLand recently is looking for

buyers who want to find a property

and sublease it for a profit. The

profit levels of buy-to-let in Ho Chi

Minh City are now relatively high–

up to 8 per cent per year.

Besides, STDA property

transaction centre, the distributor

of The Sun Avenue aimed to

attract northern buyers who are

living in Ho Chi Minh City. In

district 7, around 40 per cent of

purchases were made by northern

buyers. In order to

be attractive to

northern buyers,

properties must be

proven to return

high profits.

According to our

estimation, the

profit level of high-end apartment

projects in the Ho Chi Minh City

centre could be up from 7 to 8 per

cent, compared to levels in Hanoi

of only 3 to 4 per cent.

In addition, other factors that

attract northern buyers to

properties in Ho Chi Minh City are

the high population density and a

higher amount of foreigners.

Meanwhile, properties in the

central tourist hotspot city of Nha

Trang are also popular among

buyers from Hanoi and Ho Chi

Minh City. According to Savills

Vietnam, up to the second quarter

of this year, Nha Trang has more

than 2,800 units from 10 projects.

Almost all of those projects are

located in the beachfront area,

especially in Tran Phu street, with

the average price ranging from

VND23million to 60 million ($1,095

to $2,857) per square metre. The

most desired units are typically

one and two bedrooms, and they

significantly easier to lease.

Savills also reported that the

majority of these buyers came

from Hanoi and Ho Chi Minh City

with the desire to secure a

property as a second home or a

buy-to-lease investment.

[VIR]

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INVESTMENT

Page | 8

First made-in Vietnam 24-bit chip launched for medical applications

The Integrated Circuit Design

Research and Education Centre

(ICDREC) under the Vietnam

National University, Ho Chi Minh

City launched its ADC 24-bit chip,

the first of its kind in the country to

be used in electronic measurement

devices.

The chip is a product under the

project „Researching and

designing prototype image

compression chip using JPEG2000

standard and ADC versatile chip

for medical applications‟ under the

State-level scientific and

technological development

programme.

The 24-bit ADC chip converts

analog signals into digital signals

(Analog-to-Digital Converter) with

high accuracy. The product is

highly competitive and similar to

those on the world market with

superior technical features such as

24-bit and 18-bit effective

resolution (ENOB), over-sampling

rate - OSR 512, 8- input channels

and operating voltage at 3.3 V.

The ADC chip is designed with

level 2 delta-sigma architecture

and CIFB structure.

According to the ICDREC, with the

ability to detect very small

fluctuation with high accuracy, the

24-bit ADC chip is used in

electronic measurement devices

including galvanometer and

seismographs, and in the health

sector in electrocardiogram (ECG)

and medical signal processing.

Prior to the ADC-24bit chip,

ICDREC also successfully

manufactured the country‟s first

SG8V1 chip and commercialized

the product in 2014. The SG8V1

chip is currently used in the

manufacturing of air conditioners,

sphygmomanometers, electronic

galvanometers, and vehicle

monitoring devices.

Also according to recent news,

The Vietnam National University

Integrated Circuit Design Research

and Education Center (ICDREC)

has signed a cooperation contract

with Japanese CM

Engineering. Under the contract,

ICDREC will make wireless sensor

chips for designing power source

units in microprocessors for radio

multi-band, multi-system

transceivers. CDREC will have the

task of making the wireless sensor

chip designed to power supply

parts in microprocessor radio

transceivers and multi-band, multi-

systems. CME is the firm that

specializes in providing the

designs of the examination and

certification services as well as

providing highly competitive IPs to

customers for the development of

wireless processor SoC. SoC or

SOC is an integrated circuit (IC)

that integrates all components of a

computer or other electronic

system into a single chip.

In order to become the partner of

CME, ICDREC has to prove it can

satisfy the high requirements set

by the Japanese firm. Japanese

firms are well known as being very

choosy in selecting partners.

ICDREC spent two years learning

the center‟s capability in meeting

the requirements in infrastructure

items, chip‟s quality and the labor

force before making final decisions.

The cooperation contract is a new

step taken in IC industry

development cooperation between

Vietnam and Japan and

cooperation in analog IC design.

An expert noted that success in

the cooperation deal will create

prerequisites to further promote

the production of high-quality ICs

to serve society‟s needs, and

create a solid foundation for the

production of good engineers for

Vietnam‟s IC industry.

[R&C Dept., following Internetnews]

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ENTERPRISES

Page | 9

Vietnam based Kinh Do to form palm oil JV with Indo-Trans Logistics & Malaysia’s Felda Global Ventures

Vietnam-based food firm Kinh Do along with Indo-Trans

Logistics Corporation (ITL) and Malaysia‟sFelda Global

Ventures (FGV) signed a memorandum of understanding to

establish a joint venture that will produce bottled palm oil for the

Vietnamese market.

Kinh Do will contribute 45 per cent to the joint venture‟s capital,

while ITL and the Malaysian investor will collectively own 55 per

cent. The JV is expected to be launched within the next six

months.

With its experience of operating in the palm oil refining

industry, the world‟s largest producer of crude palm oil, FGV will

assist the JV by guaranteeing high quality products, Kinh Do

said in a statement.

Meanwhile, ITL will provide integrated solutions for local

logistics, maritime and aviation transport management. Based on

combining the strengths of three corporations, the joint venture

company will become a strong, successful bottled oil firm in the

market. The JV will not build a new plant during its inception.

Instead, it will capitalize on current available infrastructure to

implement production with raw materials imported from Malaysia

by FGV and ITL.

Kinh Do, headquartered in the southern Ho Chi Minh City,

entered the cooking oil business last year after acquiring some

24 per cent of the Vietnam Vegetable Oil Industry

Corporation (Vocarimex) during its initial public offer in July. It

has plans to consolidate its presence in Vocarimex by

investing another VND530 billion ($24.5 million) in the newly

equitised state firm, increasing the holding to 51 per cent.

Beyond the oil segment, Kinh Do has also formed a $30 million

instant food JV with Taiwan-investedSaigon Ve Wong Co Ltd,

where it owns 49 per cent stake.

Latest financial data show that the Vietnamese firm earned more

than VND1 trillion in revenue for the first quarter, an increase of

28 per cent year-on-year. Profit before tax remained stable at

VND47 billion. [Following Dealstreetasia]

Toyota Vietnam debuts junior football clinic and camp

The program, supported by the Ministry of Education and

Training (MOET), will take place in four cities – Hanoi, Danang,

Can Tho and HCMC – from July 5 to August 31.

Yoshihisa Maruta, president of TMV, said, “The Toyota Junior

Football Clinic & Camp continues our commitment to nurture

young football talents in Vietnam at the grassroots level. We

believe that this program will contribute to the physical and

mental development of the children and encourage their love to

football.”

The program will not only teach fundamental skills and

techniques of football playing for children, but also teach them

the fair-play spirit and teamwork that can support them in life.

The program has invited Nguyen Hong Son, a professional

coach in Vietnam, to be in charge of specialty, coaching,

evaluating and selecting. As one of the most outstanding

football players in the national team of Vietnam and The Cong

club from 1995 to 2001, he has a lot of experience in and

passion for football development.

Toyota Junior Football Clinic & Camp 2015 includes three main

activities including the selection round in Hanoi, Danang,

HCMC and Can Tho from July 5 to 26 this year, in which the

top 30 will be chosen. Camping & Training will take place from

August 8 to 14 in HCMC for the 30 selected players and a

friendly match in Japan with junior teams of the Japan

Professional Football League by the end of August.

Toyota Junior Football Clinic & Camp 2015 is under the Toyota

Mekong Football Project, which was initiated by Toyota Motor

Asia Pacific (TMAP) in 2014 among the Mekong countries. The

Toyota Mekong Project consists of Toyota Mekong Club

Championship and Toyota Mekong Football Challenge.

In 2014, TMV, in cooperation with TMAP and VPF, organized

the Toyota Mekong Club Championship in Binh Duong

Province, with the four best football clubs in the Mekong

countries – Laos, Cambodia, Myanmar and Vietnam taking part.

Becamex Binh Duong of Vietnam won the event.

TMV is the main sponsor of Toyota V-league 2015, the biggest

football tournament in Vietnam. [Talkvienam]

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LEGAL UPDATES

Page | 10

FDI enterprises are officially allowable to export scraps and import components for the purpose of warranty

Official letter No. 3765/BCT-XNK dated April 17, 2015 of the Ministry of Industry and Trade regarding the export of scraps, wastes;

import of supplies, components for the purpose of product warranty of foreign direct investment enterprises (FDI enterprises)

The document is to reply to official letter No. 2139/TCHQ-GSQL dated March 16, 2015 of the General Department of Vietnam Customs

proposing that FDI enterprises to be allowable to export scraps, waste abroad and import components, supplies serving the warranty

Accordingly, basically, the Ministry of Industry and Trade agrees with the two proposals of the General Department of Vietnam Customs.

However, there are some notable points as follows:

- With respect to enterprises directly manufacturing, they are allowed to export scraps, waste without the requirement of supplement to the

investment certificate because scraps, waste obtained from the production process of products (which are specified in the investment

certificate) are belonged to the enterprises‟ ownership and the enterprises have the right to decide them through export

- With respect to enterprises investing in treatment systems of scraps, waste or enterprises trading the export of scraps, waste, they shall carry

out in accordance contents stated in the their investment certificates or business licenses

Regarding the import of components, supplies for the purpose of warranty, FDI enterprises are not required to supplement name, categories of

components, supplies, HS codes to the investment certificates or business licenses. However, if FDI enterprises import goods for trading, they

are only allowable to import components, supplies serving the warranty appropriate to goods items stated in the investment certificates or

business licenses, goods sale and purchase documents and customs declaration.

New provisions on quality control and maintenance of construction works

Decree No. 46/2015/ND-CP dated May 12, 2015 of the Government on quality

control and maintenance of construction works

This Decree provides the guidance on Construction Law No. 50/2014/QH13 in terms of

the construction work quality control in the inspection, design and construction

activities and in terms of maintenance of construction works and resolution of

construction work incidents arising during the construction. One of the new points of

this Circular is to supplement the provision on the minimum warranty deposit towards

works using state capital (Clause 7 Article 35)

Accordingly, contractors constructing works using state capital must deposit for works

warranty at least 3% of contract value (applicable to special grade and grade I works)

and at least 5% of contract value, applicable to other works

Construction works using other capital may be referred to such minimum rates for the

application. In addition, this Decree also supplements the provision that grade III works

must not prepare the specific maintenance processes for each works (Clause 3 Article

38)

This Decree takes effect from July 01st, 2015 and replaces the Decree

No. 114/2010/ND-CP dated December 06, 2010 and Decree No. 15/2013/ND-CP

dated

February 06, 2013. Enclosed with this Decree the Appendixes:

- Appendix I. Classification of construction works

- Appendix II. List of works/work items that exert impacts on community safety (must be

inspected the acceptance tasks by competent agencies).

Adding 07 permissive food additives

Circular No. 08/2015/TT-BYT dated May 11,

2015 of the Ministry of Health on providing

amendments to a number of articles of the

Circular No. 27/2012/TT-BYT dated November

30, 2012 by the Minister of Health providing

guidance on the management of food

additives

This Circular is to amend, supplement to Annex

1 and Annex 2 of Circular No. 27/2012/TT-

BYT as follows:

- To add 07 food additives to the List of

permissive food additives promulgated with

Annex 1

- To amend the maximum limits of food

additives promulgated with Annex 2

Accordingly, 07 food additives to be added

include: Vegetable carbon, Red cabbage colour

(colouring), Succinic acid, Potassium hydrogen

sulfate (acidity regulator), Alanin, DL-, Glycine,

Glycyrrhzin (flavor enhancer, sweetener). This

Circular takes effect from July 01st, 2015.

[Ms Phuong Thao]

SEIKO IDEAS CORPORATION www.seiko-ideas.com

HIGHLIGHTS

Page | 11

Despite FMCG sales growth, retailers remain cautious

Fast Moving Consumer Goods

(FMCG) sales have shown signs

of recovery in the first quarter of

2015, but retailers remain

cautious about the future,

according to the latest report

released by international research

agency Nielsen.

The first quarter witnessed a 3.4 per

cent volume growth in the six key

cities of Hanoi, Ho Chi Minh City,

Haiphong, Cantho, Nha Trang and

Danang, following a sharp downturn

in 2014. Beverage is the key factor

behind growth recovery, but other

categories such as food and home

care are also picking up. The report

also found that more than 80 per

cent of FMCG sales in Vietnam still

comes from traditional trade

channels which include around

1.3,million FMCG stores across the

country. The sheer number of

traditional stores makes Vietnam

one of the most complex markets for

FMCG manufacturers to build

distribution chains and manage

logistics.

Furthermore, only 30 per cent of

these traditional stores contribute to

the top 80 per cent of sales.

Therefore, to win in this traditional-

trade dominated market,

manufacturers must identify the right

stores to target, which is not an easy

feat in such a large, dynamic and

ever-changing retail market. In

addition to the complexity and a

large number of traditional stores,

the power to make or break a brand

or product lies with traditional retail

store owners. The report shows that

only 70 per cent of traditional retail

stores comply with manufacturers‟

request to stock their products,

highlighting the importance of

winning over a retailer.

Among the brands most supported

by Vietnamese retailers, Hao Hao,

Vinamilk and Coca-Cola stand at the

top, with more than half of store

owners indicating willingness to

stock their products more and

recommend them to shoppers.

Despite the growth of FMCG, the

Retailer Confidence Index reached

the score of only 71, which shows

significant levels of hesitation. The

main reason is that retailers are

mainly concerned about what

directly impacted their businesses,

such as extra stock, margin and

customer services support.

Therefore, it is critical for

manufacturers to completely

understand these concerns, identify

the right stores to target and ensure

that retailers comply and stock their

products in-store throughout the year.

This requires a combination of

different strategies based on retailer

and shopper understanding in order

to build a picture of success for sales

and to execute in the market.

With such a complex retail market, it

is essential for manufacturers to

identify the right stores to target their

priority investment. Only when this

stage is completed can

manufacturers focus on launching a

logical attack plan for market

penetration, sales force deployment,

direct vs. in-direct store strategy and

stock availability. A picture of

success is normally comprised of a

combination of pricing, assortment,

trade activity and in-store

communication. However, the big

challenge for manufacturers is to find

a way to ensure that these

component parts are executed in

store and complied by retailers.

[VIR]

SEIKO IDEAS CORPORATION www.seiko-ideas.com

CONTACT

Page | 12

SEIKO IDEAS CORPORATION

Our services Training (Languages & Soft skills)

Investment Consulting

Market Research - Business Matching

Translation - Interpretation

Address Floor 5th - A Chau Building

No.24 Linh Lang str., Ba Dinh dist., Hanoi, VN

Telephone +84-4-6275-5246 ; +84-4-6273-6989

Fax +84-4-6273-6988

Website www.seiko-ideas.com

Person in charge Le Thu Trang (Ms.)

Mobile +84-97-8363-289

Email trang.le@seiko-ideas.com

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