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Vietnam To Eliminate At Least 50 Percent Of Business Conditions By 2019

Vietnam To Eliminate At Least 50 Percent Of Business Conditions By 2019

VIETNAM: Vietnam’s Prime Minister, Nguyen Xuan Phuc, has requested for ministries and government agencies to remove and simplify at least 50 percent of business and investment conditions by 2019.

This follows the government’s resolution No. 19 which is aimed at improving Vietnam’s business environment and enhancing national competitiveness. To add to this, the Vietnamese government has also recently issued resolution No.139 which acts to approve the action plan on reducing financial expenses for enterprises, meaning that enterprises can now save up to a minimum of 10 percent of financial costs when investing in Vietnam.

According to the Minister Nguyen’s new directive, ministries and ministry-level agencies are required to report to the Prime Minister on a quarterly basis on the remaining number of business conditions and goods subject to specialised control. Clear justifications are also required in the event that there are changes to the number of  business conditions and goods required for specialised inspection. Additionally, proposals on removing business conditions must also be substantial in order to produce new conditions that would be viable for businesses.

Based on Minister Nguyen’s vision, the lessening of business conditions will function as a key for economic growth and efficiency and the successful execution of this vision mandates strong collaboration from government leaders and ministers.  Minister Nguyen has also strictly prohibited government agencies and ministries from establishing new business conditions or abusing specialised inspections.

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Taiwanese Companies Shift Production To Taoyuan As Trade War Heats Up

Taiwanese Companies Shift Production To Taoyuan As Trade War Heats Up

TAIPEI, TAIWAN: According to Bloomberg, Taiwanese technology companies are shifting production to Taoyuan from China due to an intensification of the trade war. This indicates a reversal of previous trends whereby manufacturing plants were shifted to China from Taiwan.

As 15 of the 20 largest exporters from China to the U.S. in 2016 were run by Taiwan companies, these companies are highly susceptible to trade war induced tariffs and are working to avoid current and potential future tariffs on technology based products that are made in China. At the same time, the region’s proximity to Taiwan’s largest international airport, the Taiwan Taoyuan International Airport, as well as existing facilities in the surrounding region, have made this an attractive region for manufacturing operations.

Similarly, as per Bloomberg’s report, companies that have shifted to Taoyuan from China include iPhone assembler, Pegatron Corp, laptop maker, Compal Electronics Inc. and Apple Supplier, Inventec. In addition, Barry Lam, Chairman of Quanta Computer Inc. has also released a statement regarding the company’s shift to Taoyuan and in this case, Quanta will not only be shifting its supply chain of high end products back to Taiwan, the company is also looking to shift its focus to the development of new products such as smart medical care, smart manufacturing, and smart household items along with the establishment of a new AI research center.

Angela Hsieh, an economist from Barclays has also commented that, “There are still a lot of uncertainties surrounding a trade war, so companies tend to first add capacities in their existing facilities in Taiwan instead of spending a lot to build new plants.” A view that is echoed by Elton Yang, chief financial officer of Quanta, when he stated that, “The fastest way is to add capacity in existing facilities. Looking for new land and building new facilities elsewhere will be too slow.”

According to findings from Sinyi, a Taiwanese real estate company, from January to September this year, Taoyuan has sold more industrial land and factories than any other city in Taiwan. Michael Wang, a manager at Sinyi has also told Bloomberg that this is because more land is available in Taoyuan and it is easier to acquire land there than in Hsinchu. The land in Taoyuan also has the added bonus of being cheaper than Taipei and the local government is collaborating with real estate companies to facilitate the acquisition of land by manufacturing plants.

Meanwhile, in an interview with the Wall Street Journal, American President Trump has stated that if a deal cannot be brokered with Chinese President Xi Jinping at the G20 summit in Buenos Aires, he will be looking to enforce tariffs on the remaining lot of $267 billion worth of Chinese products imported into the U.S.

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European Union-Singapore Free Trade Agreement Spurs Vietnamese Economic Growth

European Union-Singapore Free Trade Agreement Spurs Vietnamese Economic Growth

BRUSSELS, BELGIUM: HSBC Vietnam has reported that the recently established European Union-Singapore Free Trade Agreement (EUSFTA) is the first free trade agreement (FTA) that was conducted between the EU and an ASEAN country and it signifies a significant moment for the economies of Singapore and the EU as well as Vietnam, which is currently in negotiations with Europe on a similar FTA.

The EUSFTA, which would remove all tariffs and decrease non-tariff barriers between Singapore and Europe, will allow for manufactured goods to have ASEAN cumulation. This means that selected inputs, especially those from Vietnam, that are sourced by Singaporean businesses from ASEAN member states will also come under Singapore’s zero tariff regime with Europe.

Winfield Wong, Head of Wholesale Banking at HSBC Vietnam has commented that with the EUSFTA in place, Singapore and the ASEAN region including Vietnam will be impacted in areas like electronics and pharmaceuticals. Additionally, a large proportion of Singapore products have components that are produced in other ASEAN countries, with ASEAN ranking in as the largest exporter to Singapore – just in 2017 alone, Singapore had imported US$71.06 billion worth of goods from ASEAN. In particular, common Vietnamese exports to Singapore includes computers, electronic products, machinery and equipment and parts.

Currently, Singapore is the third largest trade partner to Vietnam in ASEAN and the country’s tenth biggest trade partner globally. Singapore is also Vietnam’s third largest foreign investor and the country’s highest spending ASEAN investor, with a total investment value of US$43 billion invested in over 2,000 Vietnamese projects in areas such as manufacturing, energy, logistics and services.

Moving forward, the EUSFTA will serve as a template for future EU-ASEAN FTAs especially as the EU continues negotiations towards an FTA with Vietnam, Indonesia, Thailand and Malaysia. As of July 2018, the EU and Vietnam have already agreed on the final text for the EU-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement. This adds on to Vietnam’s current status as the EU’s second biggest trading partner in  ASEAN after Singapore. Similarly, as ASEAN grows in its role as the supply chain hub for European companies, the region is expected to benefit from the FTAs that have been established.

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Manufacturing And Processing To Be Driving Force For Vietnam’s 2018 Trade Surplus

Manufacturing And Processing To Be Driving Force For Vietnam’s 2018 Trade Surplus

In accordance to Vietnam’s Cong Thuong newspaper, the country’s export revenues in 2018 is projected to reach a value of US$237 – 239 billion with an expected 10 – 12 percent year on year increment, while FDI investments reached US$127.84 billion, increasing by 14.6 percent. This is mainly attributed to the growth in the manufacturing and processing industry which constitutes a majority of the country’s exports, with smartphones comprising the largest export pool.

In March, Vietnam’s export turnover reached a high of over US$21 billion while in August, export turnover peaked at US$23.48 billion. Of which, US$5 billion were from smart phone exports over those two months.

The local government is also looking to reduce import tariffs to 0 percent due to free trade agreement commitments and this has increased the competitiveness of Vietnamese products, especially when coupled with the improvements in the local business environment. Also, while the US-China trade war has yet to be resolved, the Ministry of Industry And Trade will be monitoring it to reduce its impacts on Vietnam’s trade activities.

On the whole, Vietnam witnessed a trade surplus of US$5.39 billion in the January – September period, of which the FDI sector contributed for a trade surplus of US$23.65 billion, and domestic enterprises constituted a trade deficit of US$18.26 billion.

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