25th anniversary of peaceful US-VN relations

Vietnam considered the US an important partner and was willing to bolster bilateral ties in all fields, especially in economic co-operation, trade, investment, science-technology, and education and training, Deputy Prime Minister Vuong Dinh Hue said.

The Deputy PM made the statement while attending a meeting organised by the American Chamber of Commerce in Việt Nam in Hà Nội on January 18 to celebrate 25 years of the normalisation of Việt Nam-US trade relations, and the 25th founding anniversary of Amcham in Việt Nam.

At the meeting, he said the normalisation and development of Việt Nam-US relations had resulted in great interest for the people of the two nations, contributing to regional and international peace, stability, co-operation and growth.

In the past 25 years, two-way trade surged from US$450 million in 1994 to more than $60 billion in 2018. The US had been Việt Nam’s largest export market for several consecutive years.

Investment from the US had greatly contributed to Việt Nam’s development. The activities of GE, Microsoft, IBM, Nike and ExxonMobil, along with other US corporations, had helped Việt Nam earn and sustain a foothold in the global value chain, Huệ noted.

Speaking highly of Amcham’s achievements over the last 25 years, he voiced his hope that Amcham would continue to serve as a bridge connecting the two nations, thereby deepening and bringing the Việt Nam-US comprehensive partnership to a new height.

US Chargé d’Affaires ad interim to Việt Nam Caryn McClelland said the end of the embargo “closed one door on our bilateral relationship and opened another … we could trade, build people-to-people ties, and cooperate in areas such as education, science, and technology.”

She credited Senators McCain and Kerry and long-term American business people in Việt Nam who helped turn “opportunity into prosperity” as key figures driving the remarkable progress.

She also made a special point to thank “our friends and partners within the Vietnamese Government made President Clinton’s decision in 1994 more palatable to the American public with their unwavering dedication to helping us with our most sombre and sacred task – recovering the remains of our service members who never returned from the war.”

With the United States now Việt Nam’s largest export market and with Việt Nam one of America’s fastest growing markets, McClelland expressed optimism that the two countries would enjoy 25 more years of economic co-operation and growth.

Chairwoman of the 2019 Amcham Hanoi Board of Governors Natasha Ansell said the normalization of Việt Nam-US relations had opened opportunities for US enterprises and investors to develop in Việt Nam.

On the occasion, she revealed that a new programme titled Amcham Academy for High Potential Talent would be launched to commemorate the 25th anniversary of the organisation.

The programme was expected to offer chances to learn and connect with young Vietnamese leaders as part of Amcham’s commitment to creating sustainable socio-economic values for Việt Nam, Ansell said. — VNS


25th anniversary of peaceful US-VN relations

Decree opens up pharma competition

Late last week the Ministry of Health (MoH) officially introduced Decree No.155/2018/ND-CP, amending a number of regulations on the business conditions that pharmaceutical and cosmetics companies faced under the controversial Decree No.54/2017/ND-CP.

“Decree 155 has many positive changes towards cutting procedures, thus creating favourable conditions for businesses in tenders, drug imports, and others,” said Truong Quoc Cuong, Deputy Minister of Health.

One of the important features of the move is the cut in the number of procedures in pharmaceutical imports which had attracted concern among international pharmaceutical companies. In terms of licensing the import of drugs without a circulation registration paper, the new decree requires label models and drug descriptions in the country of manufacturing or country of export, except for cases with a certificate of pharmaceutical product (CPP).

This requirement is simpler than those set out by the previous decree which asks for label models and descriptions of drugs being actively marketed in the countries producing the CPP, except for cases with the CPP.

Furthermore, importers are exempted from the Good Manufacturing Practice (GMP) certificate under Decree 155 if manufacturing facilities have been recognised to have met the GMP or the CPP. In contrast, the old decree asks importers to have the GMP certificate of all manufacturing facilities if the proposed imported drugs were produced by from many units.

In regard to clinical records of proposed imported drugs, under the new legislation, importers are exempted from clinical records for the pharmaceuticals that were once licensed to import through the same import mode as regulated in the decree. The exemption is allowed as long as no changes were made in relation to information about indications, dosage, and instruction for use. This is in contrast to Decree 54 where importers had to submit clinical records for proposed drugs as regulated by the MoH.

According to a representative from the MoH’s Drug Administration of Vietnam, the new decree also eases the criteria to consider the volume of imported drugs.

Article 5 of the decree states that the number of imported pharmaceuticals is based entirely on the demands of the importers. While the grounds for the import volume ruled in Article 91 is dependent on the scale and development of fatal diseases, dangerous, and emerging epidemics.

Another positive change in is drug registration working towards reducing the time to appraise the manufacturing facilities in terms of review, recognition, and appraisal of dossiers. In particular, the time for dossier appraisal will be cut to 40 days, rather than the 60 days stated by Decree 54 and to 20 days for dossier recognition from 30 days as regulated by Decree 54.

The implementation process of the legislation will be extended to January 1, 2021 for manufacturing facilities and materials for drug production, while the process will be extended to June 30 this year for drug trading units.

Drug registration and drug imports to Vietnam have been among the top concerns for international pharmaceutical firms from the EU and ASEAN for years. Many have complained that regulations in Decree 54 have caused difficulties for their operations and put up barriers to improving patient access.

With the new decree, many of these concerns have been addressed, thus creating more favourable conditions for businesses to practice imports.

In spite of the improvements, industry insiders have raised concerns about the possibilities of pharmaceuticals imports to Vietnam increasing. It is thought that foreign companies could take advantage of the loose rules to cash in on the country’s growing demands amid an increase in diseases, especially non-communicable diseases (NCDs). According to global healthcare company Norvatis, NCDs account for over 70 per cent of the total incidences of diseases and health-related deaths in Vietnam.

In the meantime, domestic and international drug makers are expanding local production to reap the incentives from the country’s plan to prioritise domestically-produced pharmaceuticals.

With a possible increase in the volume of drug imports and a growing volume of ­locally-made pharmaceuticals, new competition in the local market will begin to take shape.


Decree opens up pharma competition

Private sector a key driver for 2019

On January 1, Prime Minister Nguyen Xuan Phuc issued resolutions No.01 and No.02 on the main duties and solutions to carry out the socioeconomic development plan, improve the investment and trading environment, and strengthen competitiveness ­among enterprises.

One of the key points of the resolutions is the government’s commitment to creating a more level playing field for all ­businesses in the economy to perform, following international practices, via a series of sturdy solutions.

The government is targeting one million businesses by 2020, the majority of which would be private, with startups also developing strongly.

“Continuously developing the private sector in accordance with the resolution of the fifth meeting of the 12th Party Central Committee on developing the private sector into one of the important propellants of the socialist-oriented market-based economy, we will continue providing the private sector with the most favourable conditions, loans, credit, land, human resources, and market information,” PM Phuc stated.

“Alongside this, solutions must be taken to ­further connect the private ­sector with foreign-invested ­enterprises (FIEs) and ­state-owned enterprises (SOEs) in developing supporting industries and hi-tech applications,” he added.

He assigned ministries and localities to devise measures to support the private sector, which is seen as one of the four key drivers of the economy, according to ­Vinanomics, an economic policy framework book launched in December by the World Bank and the Ministry of Planning and Investment (MPI).

“We should promote the dynamic role of the private ­sector. This is one of the ­important tools to create ­competition and flexibility for the economy in the changeable context of the international economy and technology,” PM Phuc told the Vietnam Reform and Development Forum, where Vinanomics was launched.

A national pride

Over the past few years, the private ­sector has been strongly developing and ­contributing remarkably to ­national socioeconomic ­development. For example on December 30, Van Don International ­Airport in the north-eastern province of Quang Ninh was officially launched by ­privately-owned Sun Group. The first commercial flight also landed there, marking an ­important milestone for the Vietnamese aviation industry. It is the first private airport in Vietnam to be built in only two years with the total ­investment of VND7.7 trillion ($334.8 million).

Previously in September 2018, car manufacturer VinFast, an arm of Vingroup, introduced its two car concepts at the Paris Motor Show, one of the biggest vehicle events in the world. This not only flabbergasted the Vietnamese people but also ­attracted the international media. The company plans to begin manufacturing in March 2019, only six months after the debut of the concept version.

Sun Group and Vingroup are typical of Vietnam’s private groups moving ­forward.

Talking about the big ­contributions of the private ­sector, PM Phuc added, “We are proud to have strongly developing private groups with huge works and projects which can create breakthroughs in the future. Many businesses have ­overcome difficulties, make the impossible possible, and joining the global value chain.”

“Many startups have been performing well, with their novel ideas closely pertaining to Industry 4.0, and they have been financed by domestic and international investment funds. This could lay a firm groundwork for the economy to attract and apply high and digital technologies,” he said.

According to fresh statistics by the MPI, last year the private sector created 43.22 per cent of the GDP, and held 43.3 per cent of the economy’s development capital, up 18.5 per cent on-year. The private sector also employs 85 per cent of Vietnam’s labour force.

Meanwhile, a booklet titled “Vietnam private sector – Productivity and prosperity,” recently released by the Australian government and the Mekong Business Initiative, stated, “The private sector has been a key contributor to Vietnam’s economic growth, job creation, and poverty reduction. It has also helped improve people’s living conditions, while ensuring inclusive and sustainable growth in Vietnam. Excluding household businesses, domestic and foreign private enterprises create about 557,000 new jobs on average per year.”


Besides big private companies like Vingroup or Sun Group, nearly all of Vietnam’s more than 600,000 operational businesses are small- and medium-sized enterprises (SMEs), and household businesses.

They are now bogged down in difficulties, especially in terms of capital, one of the most necessary conditions for businesses to improve competitiveness. This comes especially when new-generation free trade agreements (FTAs), such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EU-Vietnam FTA take effect this year.

Working in the field of electrical equipment and ­automatic systems, domestically-invested ELAS Company in Hanoi has always had high demand for bank loans. ­However, the current lending rate is prohibitively high for the company. “We are borrowing bank loans at an annual rate of 7.5-9.5 per cent, which is very high compared to the average of 0.5-3 per cent in other countries,” ELAS director Vu Van Tu told VIR.

In comparison, the highest lending rate in China is nearly 5 per cent, while in European countries, the US, and Japan, the rate is between zero and 2 per cent.

“Although the government and the central bank have established pro-business credit funds, the majority of SMEs still find it hard to access loans from the funds,” Tu said.

In another case, privately-owned Minh Tam Trading Co., Ltd., specialising in agricultural product exports in Hanoi, is struggling to stay afloat.

“We almost have no property to use as bank collateral, and we have no title deed for the land of our factory, so it cannot be used to mortgage,” said company director Nguyen Van Huong.

According to a recent report of the Vietnam Chamber of Commerce and Industry (VCCI), about 30 per cent of SMEs borrow 3 per cent of the total loans in the economy. The Doing Business 2018 report by the World Bank showed that ­Vietnam’s credit access rate in 2018 ranked 29th out of 190 surveyed economies.

In addition to capital shortages, many SMEs are currently hit by woes in tax issues, which is among many other obstacles facing them.

“Currently, corporate ­income tax (CIT) in Vietnam is 20 per cent but respective rates in Singapore, Thailand, and ­Indonesia are 17, 15, and 12.5 per cent. Thus, the Vietnamese CIT is undermining the competitiveness of ­Vietnamese businesses,” said To Hoai Nam, vice chairman of the Vietnam Association of Small- and Medium- Sized Enterprises.

PM Phuc cited a VCCI survey stating that the rate of businesses giving unofficial payment to customs agencies was 56.4 per cent in 2016 and 53 per cent in 2017, which is quite high. “If businesses have to pay VND1 million ($34.47) as bribery for the customs clearance of a container of goods, they would lose hundreds of millions of US dollars a year. This unofficial payment will kill businesses,” he said.

One of the other biggest obstacles of the private sector, especially under the impact of Industry 4.0, is the lack of skilled ­employees. With only 40 per cent of Vietnamese ­labourers being trained, this is a disadvantage for Vietnam’s enterprises in general and the private sector in particular.

“The current labour force of Vietnam can satisfy the demand of Industry 2.5 or 3.0, not 4.0,” Mac Van Tien, senior specialist from the National Institute for Vocational Training, told VIR.

Thus it is hoped that with new policies in favour of the private sector in 2019, it can more ­easily develop and play a ­bigger role in the wider ­economy.


Private sector a key driver for 2019

Volkswagen AG and Ford Motor Company launch global alliance

Volkswagen CEO Herbert Diess and Ford CEO Jim Hackett confirmed that the companies intend to develop commercial vans and medium-sized pickups for global markets beginning as early as 2022. The alliance will drive significant scale and efficiencies and enable both companies to share investments in vehicle architectures that deliver distinct capabilities and technologies.

The companies estimate the commercial van and pickup cooperation will yield improved annual pre-tax operating results, starting in 2023. In addition, Volkswagen and Ford have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore opportunities. Both companies also said they were open to considering additional vehicle programs in the future. The teams will continue working through details in the coming months.

“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” Hackett said. “It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility.”

Diess added: “Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to even better serve millions of customers around the world. At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.”

The alliance, which does not entail cross-ownership between the two companies, will be governed by a joint committee. This committee will be led by Hackett and Diess and will include senior executives from both companies.

volkswagen ag and ford motor company launch global alliance
Logo of the two brands

Commercial van and pickup collaboration

Ford and Volkswagen both have strong commercial van and pickup businesses around the globe, with popular nameplates such as the Ford Transit family and Ranger as well as the Volkswagen Transporter, Caddy and Amarok.

The companies’ collective light commercial vehicle volumes from 2018 totaled approximately 1.2 million units globally, which could represent the industry’s highest-volume collaboration as production scales.

Demand for both medium pickups and commercial vans is expected to grow globally in the next five years. The alliance will enable the companies to share development costs, leverage their respective manufacturing capacity, boost the capability and competitiveness of their vehicles and deliver cost efficiencies, while maintaining distinct brand characteristics.

Through the alliance, Ford will engineer and build medium-sized pickups for both companies, which are expected to go to market as early as 2022. For both parties, Ford intends to engineer and build larger commercial vans for European customers, and Volkswagen intends to develop and build a city van.


Volkswagen AG and Ford Motor Company launch global alliance

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