Vietnamese exporters can hope to increase their sales to the Japanese market after the signing of the Viet Nam-Japan Economic Partnership Agreement in Tokyo last Thursday.

The agreement is expected to go into effect early next year, after the two countries complete ratification procedures.

Tran Quoc Khanh, head of the Multi-lateral Trade Policy Department of the Ministry of Industry and Trade, said the biggest benefit for Viet Nam would be increased access for Vietnamese farm products.

Under the agreement, Japan will eliminate its tariff for 86 per cent of the export value per agricultural product. Khanh said this was the greatest tariff reduction Japan has offered to an ASEAN country.

Of the 30 Vietnamese farm products exported to Japan that earn the highest revenue, 23 will enjoy no tariffs for a maximum of 10 years.

Goods including shrimp, crab, durian, litchee and honey will also have more preferential treatment compared with these same items exported to Japan from other ASEAN countries.

However, according to Khanh, for Vietnamese businesses to take advantage of the favourable trade terms, they must improve their corporate governance, competitive capacity and product quality.

The two sides also discussed co-operation programmes to improve Viet Nam’s capacity in the field of food safety.

Busy week for southern FDI

Last week was a busy one for foreign direct investment (FDI) activities in the southern key economic region.

On December 24, Japan’s Toshiba Corporation announced that it would meet growing global demand for high efficiency motors by establishing a new manufacturing and sales base in Dong Nai Province.

Toshiba Industrial Products Asia Co will begin building a factory in April on 8ha of the Amata Industrial Park.

The $77 million project, which is expected to begin operations in September 2010, will manufacture high-efficiency industrial motors.

When the new facility reaches full capacity in 2015, it will be able to manufacture up to 1.2 million high-efficiency industrial motors a year, including key components.

As the new company ramps up its business, its initial product line will include parts for export to North America. It will subsequently export goods to China, Southeast Asia and Japan in an attempt to achieve a $201 million sales target by the Fiscal Year 2015.

Earlier this week, work began in HCM City on a major information technology project called the Viet Nam-Japan Tri Thuc Park (VIJA Brain Park).

The park, which is being built by the Japanese corporation VIJA PowerSource, will cover 10.3ha in Thu Thiem new urban area in District 2.

It is expected to cost $610 million and be completed by 2011.

The park will accommodate some 100 software companies, provide office buildings and houses for rent, training for highly skilled workers, and production and processing of software and chips.

Another major high-tech park will be developed in Binh Duong Province, which, last Tuesday, awarded an investment certificate to the Mapletree Viet Nam Urban Business Co. Mapletree; an affiliate of Singapore’s property developer Mapletree Investment.

Construction of the park will start in mid-2009, and is expected to cost $400 million. The park is expected to commence business in 2010.

The 75ha project will be positioned as a world-class modern business park catering to high-tech software, research and development, and value-added manufacturing industries.

Mapletree has also won an investment certificate for a second warehouse project worth $110 million that covers 68ha in Binh Duong’s Viet Nam- Singapore Industrial Park 2.

All of these projects have contributed to the country’s $64 billion in FDI this year – around three times 2007’s figure.

Banks drop rates

Commercial banks have cut interest rates for deposits and loans after the State Bank of Viet Nam reduced the country’s prime interest rate to 8.5 per cent.

Phuong Dong (Oriental) Joint Stock Commercial Bank reduced its deposit rate by between 0.26 per cent and 2.02 per cent annually.

Asia Commercial Bank (ACB) made its second cut in seven days, reducing its rate last Thursday to 8.1 per cent, as the highest level for three-month-term deposits.

The State Bank’s 8.5 per cent prime rate means lenders are not allowed to charge more than 12.75 per cent interest.

Agribank reduced its rate for short-term borrowings by 1.2 per cent to 10.8 per cent; the yearly rate for long-term loans is 12.72 per cent.

Agribank has also made trillions of dong available to producers and traders in the farming sector.

The Viet Nam Bank for Foreign Trade, or Vietcombank, has reduced its preferential lending rate to 8.5 per cent, down about 1.5 per cent, while its normal rate is set at 11 per cent annually.

"We expect to make bank credit easier to access for small and medium enterprises and makers of exports and other enterprises hampered in production," said Vietcombank chairman Nguyen Hoa Binh.

The ACB has made US$50 million available to provide six-month hard-currency loans to exporters at 6.5-7.5 per cent rates.

"The objective is to provide cheaper credit to exporters so that they can make their capital more effective, reduce [their] input cost and enhance their competitiveness," said ACB deputy general director Nguyen Thanh Toai.

However, banks are also experiencing some difficulties.

Businesses which obtained loans at interest rates of more than 20 per cent in the middle of this year are trying to pay their debts prior to expiry in order to apply for new loans at the much softer rates.

Bankers also complain that the ceiling on lending rates deters unsecured consumer loans because of high risk. They suggest that the central bank allow them to negotiate the interest rate with debtors at a level above the 12.75 per cent cap. — VNS

Source: http://vietnamnews.vnagency.com.vn