731-Laxmi Institute Of Management Sarigam

A

GLOBAL/COUNTRY STUDY AND REPORT

ON

“BUSINESS OPPORTUNITIES AND CHALLENGES FOR INDIAN ENTREPRENEURS IN VIETNAM”

Submitted to

GUJARAT TECHNOLOGICAL UNIVERSITY

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

Submitted by

Students of S. Y. M. B. A.

Batch : 2011-2013

MBA SEMESTER III/IV

LAXMI INSTITUTE OF MANAGEMENT, SARIGAM

MBA PROGRAMME

Affiliated to Gujarat Technological University Ahmedabad

May 2013

Students’ Declaration

We below mentioned students of SY MBA hereby declare that the report for Global/Country Study report project entitled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is a result of our own work and our indebtedness to other work publication, references, if any, have been duly acknowledged.

Place: Sarigam

Date:

Sr. No Enrollment No Name Signature

1 117310592002 Mistry Bhoomi Ratilal 2 117310592010 Tailor Ankur Jayantilal

3 117310592015 Poonia Saroj Amarsingh

Faculty Guide: Dr. Keyur M. Nayak

Institute’s Certificate

“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Dr. Keyur M. Nayak, Associate Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature

1 117310592016 Kudle Firoz Jabbar

2 117310592019 Parekh Rakeshbhai Parsottambhai 3 117310592034 Patil Hemantkumar Rameshbhai 4 117310592037 Champaneri Jaimishkumar Dilipbhai

5 117310592038 Falguniben Ishwarlal Rohit 6 117310592033 Koli Sachinkumar Ashokbhai

Faculty Guide: Mr. Bhautik Shah


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Mr. Bhautik Shah, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature 1 117310592040 Khan Mohammad Hasan Shaboobali 2 117310592030 Parmar Gaurav Jitendra

3 117310592027 Koli Rohan H.

4 117310592041 Patel Ankitbhai Sumanbhai

5 107310592052 Patel Chintankumar Kantilal 6 107310592005 Poliyath Vineeth Viswanathan 7 117310592028 Namita Bharatbhai Panchal

8 117310592044 Mishra Priya Premshankar

Faculty Guide: Mr. Pranav Raythatha


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Mr. Pranav Raythatha, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature 1 117310592022 Rana Manishaben Babubhai 2 117310592006 Parmar Hemakumari Vikramsinh

3 117310592020 Kansara Palkeshkumar Nileshbhai

4 117310592021 Prajapati Smith Thakorbhai

5 117310592029 Vishwakarma Jignesh Jaishankar 6 117310592032 Thakar Nilay Mukesh

Faculty Guide: Mr. Shyamsunder Singh


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Mr. Shyamsunder Singh, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature 1 117310592011 Patel Ankur Kiritkumar 2 117310592017 Patel Vaibhavbhai Nareshbhai

3 117310592001 Devdhekar Hiren Vijay

4 117310592023 Boga Akib Ashrafbhai

5 117310592035 Contractor Nikita Narottam 6 117310592036 Rohit Poonamben Mohanbhai

Faculty Guide: Ms. Kavita Ahuja


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Ms. Kavita Ahuja, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature 1 117310592003 Tiwari Rahul Harishankar 2 117310592009 Thomas Amit Babu

3 117310592018 Solanki Vanrajsinh Nileshsinh

4 117310592004 Tandel Priyanka Mohanbhai

5 117310592013 Chaniyara Jyoti Pareshbhai 6 117310592045 Valand Sandeepkumar Kirankumar

Faculty Guide: Ms. Poonam Yadav


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Ms. Poonam Yadav, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr.No. Enrolment No. Names of the students Signature

1 117310592014 Jadav Harshal Manojkumar 2 117310592031 Desai Prachi Subhash

3 117310592039 Shaikh Sakib Faruk 4 117310592043 Parmar Yogeshbhai Valjibhai

5 117310592046 Tiwari Madhu Dwarikanath

6 117310592025 Champaneri Krishna Bharatbhai

Faculty Guide: Ms. Reshma Bhat


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Ms. Reshma Bhat, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS



Place: Sarigam

Date:

Sr. No. Enrolment No. Names of the students Signature 1 117310592007 Shah Arpit Nitesh 2 117310592008 Desai Bhavin Rajesh

3 117310592042 Lad Jaydeep Sureshbhai

4 117310592012 Daruwalla Pehzad Keki

5 117310592005 Savant Manali Sangrambhai 6 117310592026 Patel Swetaben Sureshbhai

Faculty Guide: Mr.Hiral Tailor


“Certified that this Global/ Country Study and report titled “Business opportunities and challenges for Indian Entrepreneurs in Vietnam” is the bonafide work of students of Second year MBA who carried out the research under the supervision of Mr. Hiral Tailor, Assistant Professor. I also certify further, that to the best of my knowledge the work reported herein does not part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate.

Director LIMS

PREFACE

As the part of curriculum of Gujarat Technological university, the students of second year of MBA have to undergo a training pogramme in which they have to select nay organization or company or industry or sector of foreign country and study the details of that country and find out the existing business and future business potential of that industry/company/ sector with India.

To fulfill the curriculum requirement the class was divided into eight group and the topics were assigned to them. At the end the work of each group was compiled and a report was prepared under the guidance of faculty members. The country chosen by the students was Vietnam.

The first group has undergone the intensive study about the major industries existing in Vietnam and also group has covered the business opportunities and challenges for Indian chemical and oil sector in Vietnam. The second group has evaluated the major trading partner of Vietnam and focused on the business opportunities and challenged for Indian Paper sector.

The third group has revised about the Political Environment of Vietnam and the group has thrown light on the Business opportunities and challenges for Indian IT sector in Vietnam. The fourth group has learned about the Economic Environment and also had determined the business opportunities and challenges for Indian Pharma Sector in Vietnam.

The fifth group has assessed the Social environment of Vietnam and the group also has evaluated the business opportunities and challenges for Indian food and agro sector in Vietnam. The sixth group has studied the about technological environment and also focused on the business opportunities and challenges for India education sector in Vietnam.

The seventh group has done a study on environmental analysis of Vietnam and also evaluated the business opportunities and challenges for Indian Textile sector in Vietnam. The eight group has studied about the legal environment and also evaluated the business opportunities for Indian Power and energy sector in Vietnam.

ACKNOWLEGEMENT

We would like to express our sincere gratitude and appreciation to the GTU for giving us an opportunity to undergo The Global project which was beneficial and valuable to develop within us the interpersonal and intrapersonal academics skills.

We would like to thank the campus director of Laxmi Vidyapeeth, Sarigam Mr. George Thomas and the director of Laxmi Institute of Management Dr. Rupak Chakravarty for their constant motivation throughout the project.

We are extremely thankful and grateful to all the faculty members : Dr. Keyur M. Nayak, Mr. Bhautik Shah, Mr. Pranav Raythatha, Mr. Shyamsunder Singh, Ms. Kavita Ahuja, Ms.Poonam P. Yadav, Ms. Reshma Bhat and Mr. Hiral Tailor for their constant guidance, supervision, wise idea and encouragement throughout the study. They truly helped the progression and smoothness of the project.

We also like to express our thank and gratefulness to all our colleagues for their enormous efforts at all levels as we all have worked as a team to completed the project successfully and on time.

INDEX

Chapter No. Chapter Name Page Nos.

Student’s Declaration

Preface

Acknowledgement

1. Introduction to Vietnam 1.

Country Overview 2.

2012 Rank for Ease of Doing Business 7.

Profile 9.

Economy 11.

Overview of Major Industries in Vietnam 30.

Prohibiting the Import and Export by Vietnam 40.

Favourable Environment for Investor 42.

India-Vietnam Two way trade Relation 46.

2. PESTEL Analysis 50.

Political Analysis 50.

Economic Analysis 55.

Social Analysis 60.

Technological Analysis 71.

Environmental Analysis 79.

Legal Analysis 90.

3. Paper Sector In Vietnam 98.

Wood Pulp and Paper Industry 99.

Today’s Logistic Situation in Vietnam 102.

Main Pulp Manufacturers of Vietnam 108.

Paper Industry 111.

Vietnam Pulp and Paper Industries 114.

Plan of Development 121.

4. Chemical and Oil Sector of Vietnam 123.

Vietnam Oil Production and Consumption 126.

Major Opportunities in Oil Sector of Vietnam 127.

Key Challenges in Oil Sector 130.

5. Information Technology Sector in Vietnam 132.

Recent Development in IT and ITES 133.

IT based services : Global Outlook 136.

Country Competitiveness in the Global Market of IT

based Services

137.

Vietnam IT, ITES and ICT Industries 145.

Vietnam’s Challenges 152.

6. Pharmaceutical Sector In Vietnam 154.

Reason for Investing in Vietnam Pharma Sector 156.

Challenges in Investing in Vietnam 158.

Opportunities for India in Investing in Vietnam 159.

India - Vietnam Trade 162.

Major Buyers and Inco terms used by Pharma

Companies in Vietnam

163.

7. Food and Agro Sector in Vietnam 168.

Development of Agriculture and food sector at Vietnam 168.

Issues and Challenges of Indian agricultural sector 172.

Issues and challenges of Vietnam agriculture and food

sector

174.

Opportunities and strengths of Indian food sector 176.

SWOT analysis of the Indian food industry 176.

Export of Indian food and agriculture sector 177.

Import of Indian Food sector 179.

Benefits for Vietnam to do business with Gujarat 186.

Benefits for Gujarat to do business with Vietnam 191.

8. Education Sector in Vietnam 193.

Strengths of Education Sector 194.

Vietnamese Education System 195.

National Policies on Literacy 202.

National Target Programs of Vietnam education upto 208.

2020

Shortcomings in the system 213.

Vietnam’s Educational Reforms 214.

India’s Action Plan 226.

Opportunities in Vietnam Education 228.

Challenges for Indian Education Sector 229.

Recommendations 232.

9. Textile Sector in Vietnam 233.

Introduction 233.

Advantages with textile Industry in Vietnam 241.

Strengths of the Vietnam Textile and Garment Industry 242.

Exports and Imports information 250.

Issues and Challenges of Textile sector 251.

Issues and Challenges of Gujarat textile industries 254.

Opportunities to export and import from Vietnam 255.

Indian textiles domestic growth 264.

10. Power and Energy Sector in Vietnam 269.

What is renewable energy 269.

Wind Energy 271.

Vietnam’s position in power sector 273.

Government support and incentives 274.

Hydro Power 276.

Indian government support and incentives on small

hydropower

285.

Biomass Energy 288.

Solar Energy 290.

Solar Thermal Energy 297.

Geothermal Energy 313.

11. Tax Benefit 322.

General Tax Incentives for Industries 329.

Vietnam basic principle of Taxation 331.

Export Promotion Capital Goods (EPCG) 334.

EPCG scheme of India 340.

Conditions and Obligations under EPCG scheme 342.

Vietnam – The role of CSR 358.

CSR activities in Vietnam 354.

12. Conclusion 359.

Bibliography

Annexure

CHAPTER 1

INTRODUCTION TO VIETNAM

Map of world

COUNTRY OVERVIEW:

GEOGRAPHIC CHARACTERISTICS:

The location of Vietnam is on south east side of Asia, having the border of Gulf of

Tonkin on east and border of south China sea on south eastern side, and Gulf of Thailand

on south west side. China lies to the north of Vietnam, Lao and Cambodia lies to the west

of Vietnam.

Map

As Vietnam is the easternmost country in the Southeast Asia, Countries like China, Laos,

Cambodia has some portion of their border in sharing with Vietnam.

TOTAL AREA AND TERRAIN Vietnam covers a territory of 331,210 sq km (205,804 sq mi), with 21,140 sq km (13,135

sq mi)of water and 310,070 sq

km (192,668 sq mi) of land, of

which approximately 133,330

sq km(82,847 sq mi) is forest.

Extending 1,650 km (1,025 mi)

north to south, the country is

only 50 km(31 mi) across at its

narrowest point. For

comparison, it is slightly larger

than New Mexico, and similar

in size to Ohio, Kentucky, and

Tennessee combined.

Vietnam’s terrain varies from

mountainous to coastal delta,

with low, flat delta in the south

and north. The Central

highlandsare hilly to

mountainous in the far north

and northwest.

CLIMATE Vietnam’s climate varies from south to north. It is tropical, and more equable in the

south; monsoonal in the north with a hot, rainy season (May to September) and a warm,

dry season (October to March); the centre is most subject to typhoons. Vietnam has a

minimum temperature of approximately 23.7 ºC (74.6 ºF), and maximum temperature of

approximately 32.3 ºC (90.14 ºF). In Vietnam, the rains are highly unpredictable with an

annual mean rainfall of 1931 millimeters (76.02 inches).

NATURAL RESOURCES Minerals and materials Vietnam has substantial and varied energy, metal and mineral resources, including

phosphates, coal, manganese, rare earth elements, bauxite, chromate, offshore oil and gas

deposits, timber, and hydropower. The country’s reserves of bauxite, estimated at 8bn

tons, are the third‐largest in the world and are largely untouched. There is also an

estimated 520 million tons of iron ore.

Oil and natural gas Proven oil reserves total approximately 3.4bn barrels, along with natural gas (185bn cu

meters reserves) and coal in the Red River Delta (3.8bn tons, mainly anthracite).

Vietnam’s energy resources are a major source of export earnings and support domestic

industries.

Arable land Vietnam’s arable land is scare‐just 0.08 hectares (0.19 acres) per person‐but it is highly

productive, so that Vietnam is routinely the world’s second or third largest exporter of

rice.

Water resource The two major rivers of the country are the Red river and the Mekong river in the north

and south respectively. The notable smaller rivers in Vietnam are Ka Long O River and

Huong river (Perfume River) respectively. Whether large or small, Vietnam’s rivers are a

natural resource of the country. The total renewable water is approximately 891.20 (cu

km). (Vietnam Rivers)

REGIONS/STATES/PROVINCES Vietnam's eight regions shown on the map above are: the Northwestern Region (Tay

Bac), the Northeastern Region (Dong Bac), Greater Ha Noi/Red River Delta (Ha Noi

Kinh‐Dong Bang Song Hong), North Central Coast (Bac Trung Bo), South Central Coast

(Nam Trung Bo), Central Highlands (Tay Nguyen), Southeastern (Dong Nam Bo), and

the Southwestern region in the Mekong River Delta (Tay Nam Bo‐Dong Bang Song Cuu

Long).

MAJOR CITIES Capital: Hanoi (pop. 6.472 million)

Other cities: Ho Chi Minh City (formerly Saigon; pop. 7.163 million)

Haiphong (pop. 1.841 million)

Danang (pop. 890,500)

Can Tho (pop. 1.189 million).

INFRASTRUCTURE Main ports of entry

· Airports In 2010, Vietnam had 44 airports. Tan son Nhat Internation Airport with (IATA code :

SGN) in the city of Ho Chi Minh, Hanoi ‐ Noi Bai International Airport (IATA code:

HAN), and Da Nang ‐ Da Nang International Airport (IATA code: DAD) are the main

airports. Other international airports in Vietnam, are Can Tho ‐ Tra Noc International

Airport (IATA code: VCA), Da Lat ‐ Lien Khuong International Airport (IATA code:

DLI), Hai Phong ‐ Cat Bi International Airport (IATA code: HPH), Hue ‐ Phu Bai

International Airport (IATA code: HUI), and Nha Trang ‐ Cam Ranh International

Airport (IATA code: CXR). The flagship state‐owned national airline, Vietnam Airlines

(VA), has been modernizing and expanding rapidly.

· Seaports Vietnam has more than 80 sea ports. The main seaports are Haiphong and Quang Ninh in

the north, Danang and Qui Nhon in the centre, Ho Chi Minh City in the south‐east and

Can Tho in the Mekong Delta. Tariffs at Saigon Port (Ho Chi Minh City) are competitive

compared with other ports in the region, such as Hong Kong and Singapore, ports that are

able to process larger ships. Vietnamese ports handled 38 million tons of freight in 2007.

(Vietnam Data)

· Land‐entry ports

From China – Mong Cai, Quang Ninh province (China side ‐Dong Xing, Quang Xi

province), Huu Nghi Quan, Lang Son province (China side ‐You Yi Quan, Quang Xin

province), and Lao Cai, Lao Cai province (China side – He Kou, Yun Nan province).

From Laos – Nam Can, Nghe An province, Highway 07 (Laos side – Nam Khanh, Xieng

Khoang province), Cau Treo, Ha Tinh province, Highway 08 (Laos side – Nam Phao,

Bolikhamxai province), and Lao Bao, Quang Tri province, Highway 09 (Laos side – Lao

Bao). From Cambodia – Moc Bai in Tay Ninh province (Cambodia side – Bavet), Chau

Doc in Chau Doc town, (Cambodia side – Kaam Samnor ); this is the Mekong river

crossing.(Vietnam Ports of Entry)

Transportation between cities Vietnam has 2347 km (1458 mi) of railway, 222,179 km (138,055 mi) of roadway, and

17,702 km (10,999 mi) of waterway. The network of national roads has been improving;

84% are now paved, up from 61% in 1997. Rural roads vary widely in quality, but 76%

of the population lives within 2 km (1.24 mi) of an all‐weather road, a high proportion

relative to other developing countries. Two‐thirds of all vehicular trips in Hanoi and Ho

Chi Minh City are made by motorcycle. There are over 20 million motorcycles on the

roads in Vietnam, equivalent to one for every household. The demand for cars is still

modest, but has more than tripled since 2001. Vietnamese roads are fairly dangerous,

with an average of 33 fatalities per day, equivalent to almost 12,000 annually. (The

World Factbook)

2012 RANK FOR EASE OF DOING BUSINESS

Country/region 2012 rank

singapore 1

Hong kong 2

New zealand 3

japan 20

mexico 53

vietnam 98

china 91

regional average (s.asia) 117

russsian federation 120

brazil 126

indonesia 129

india 132

phillippines 136

afghanistan 160

zimbabwe 171

chad 183

PROFILE:

Socialist Republic of Vietnam

Cộng hòa Xã hội chủ nghĩa Việt Nam

Flag Emblem

Motto: Độc lập – Tự do – Hạnh phúc "Independence – Freedom – Happiness"

Location of Vietnam (green)

in ASEAN (dark grey) — [Legend]

Capital Hanoi 21°2′N 105°51′E

Largest city Ho Chi Minh City

Official languages Vietnamese

Official scripts Vietnamese alphabet

Demonym Vietnamese

Government Unitary Socialist Single-party state

- President Trương Tấn Sang

- Prime Minister Nguyễn Tấn Dũng

- Chairman of National Assembly Nguyễn Sinh Hùng

- Chief Justice Trương Hòa Bình

- General Secretary Nguyễn Phú Trọng

Legislature National Assembly

Formation

- Independence from China 938

- Independence from France 2 September 1945

- Reunification 2 July 1976

- Current constitution 15 April 1992

Area

- Total 331,210 km2 128,565 sq mi

- Water (%) 6.4

Population

- 2012 estimate 90,388,000

- Density 265/km2 683/sq mi

GDP (PPP) 2012 estimate

- Total $320.450 billion

- Per capita $3,545

GDP (nominal) 2012 estimate

- Total $137.681 billion

- Per capita $1,523

Gini (2008) 38

HDI (2011) 0.593

Currency đồng (VND)

Time zone ICT (Indochina Time)UTC+7 (UTC+7)

- Summer (DST) No DST (UTC+7)

Drives on the Right

Calling code 84

ISO 3166 code VN

Internet TLD .vn

Economy

GDP

Growth trends Vietnam’s gross domestic product (GDP) is $92.6 billion (2009); $70 billion (through

third quarter 2010). At over 8.7%, GDP growth in 2007 was the highest since the Asian

Financial Crisis of the late 1990s. Increases in exports and petroleum price hikes were

mainly responsible for this robust performance. In 2006 the economy grew at 8.2%;

however growth decreased to 6.2% in 2008. Then the global economic slowdown

lowered the GDP growth rate to 5% in 2009 however Data monitor estimates indicate

that GDP growth is expected to recover to 5.9% in 2010.

VIETNAM GDP ANNUAL GROWTH RATE:

The Gross Domestic Product (GDP) in Vietnam expanded 5.44 percent in the fourth

quarter of 2012 over the same quarter of the previous year. Historically, from 2000 until

2012, Vietnam GDP Annual Growth Rate averaged 6.6 Percent reaching an all time high

of 8.5 Percent in December of 2007 and a record low of 3.1 Percent in March of 2009. In

Vietnam, industry and construction constitute the biggest sector of the economy (41

percent of total GDP). Yet, in the past six years the growth in services outpaced

significantly all other sectors, and today services account for 37 percent of GDP. Finally,

agriculture, forestry and fishing represent 22 percent of total output. This page includes a

chart with historical data for Vietnam GDP Annual Growth Rate.

VIETNAM BALANCE OF TRADE: Vietnam recorded a trade deficit of 94 USD Million in February of 2013. Historically,

from 1990 until 2013, Vietnam Balance of Trade averaged -493.25 USD Million reaching

an all time high of 1102 USD Million in July of 2011 and a record low of -3888 USD

Million in December of 1996. Vietnam exports mainly crude oil, textiles, seafood, rice,

electronics and computers and rubber. It's main exports partners are: United States, Japan,

China, Australia and Singapore. Vietnam imports machinery tools and spare parts,

petroleum, steel, fabrics and plastics. Vietnam's main imports partners are China, Japan,

South Korea, Taiwan, Thailand and Singapore. This page includes a chart with historical

data for Vietnam Balance of Trade.

VIETNAM CONSUMER PRICE INDEX: Consumer Price Index (CPI) in Vietnam increased to 150.64 Index Points in February of

2013 from 148.67 Index Points in January of 2013. Historically, from 1995 until 2013,

Vietnam Consumer Price Index (CPI) averaged 74.06 Index Points reaching an all time

high of 150.64 Index Points in February of 2013 and a record low of 41.66 Index Points

in January of 1995. In Vietnam, the Consumer Price Index or CPI measures changes in

the prices paid by consumers for a basket of goods and services. This page includes a

chart with historical data for Vietnam Consumer Price Index (CPI).

VIETNAM GDP: The Gross Domestic Product (GDP) in Vietnam was worth 123.96 billion US dollars in

2011. The GDP value of Vietnam represents 0.20 percent of the world economy. GDP in

Vietnam is reported by the World Bank. Historically, from 1985 until 2011, Vietnam

GDP averaged 39.8 USD Billion reaching an all time high of 124.0 USD Billion in

December of 2011 and a record low of 6.3 USD Billion in December of 1989. The total

national income and national output of economy of any given country is measured in

terms of Gross Domestic Product abbreviated as GDP. The sum total of expenditures for

finished goods and services which is produced within the same country in a given period

of time is also termed as gross domestic product (GDP).

VIETNAM GDP GROWTH RATE: The Gross Domestic Product (GDP) in Vietnam expanded 5.44 percent in the fourth

quarter of 2012 over the previous quarter. Historically, from 2000 until 2012, Vietnam

GDP Growth Rate averaged 6.32 Percent reaching an all time high of 8.46 Percent in

December of 2007 and a record low of 3.14 Percent in March of 2009.Vietnam is a

developing economy in the Southeast Asia. In recent years, Vietnam aroused as one of

the leading exporter of agricultural products and a place of attraction for the foreign

investors. Vietnam's key products are: rice, cashew nuts, black pepper, coffee, tea, fishery

products and rubber. The development in industries like Manufacturing, information

technology and other high-tech industries are the one of the major reasons of fast growth

of Vietnam. Vietnam is also one of the largest oil producers in the region. This page

includes a chart with historical data for Vietnam GDP Growth Rate.

VIETNAM GDP PER CAPITA: The Gross Domestic Product per capita in Vietnam was last recorded at 757.40 US

dollars in 2011. The GDP per Capita in Vietnam is equivalent to 6 percent of the world's

average. GDP per capita in Vietnam is reported by the World Bank. Historically, from

1984 until 2011, Vietnam GDP per capita averaged 394.7 USD reaching an all time high

of 757.4 USD in December of 2011 and a record low of 198.5 USD in December of

1984. The GDP per capita is obtained by dividing the country’s gross domestic product,

adjusted by inflation, by the total population. This page includes a chart with historical

data for Vietnam GDP per capita.

VIETNAM GDP PER CAPITA PPP: The Gross Domestic Product per capita in Vietnam was last recorded at 3434.97 US

dollars in 2011, when adjusted by purchasing power parity (PPP). The GDP per Capita,

in Vietnam, when adjusted by Purchasing Power Parity is equivalent to 16percent of the

world's average.GDP per capita PPP in Vietnam is reported by the World Bank.

Historically, from 1985 until 2011, Vietnam GDP per capita PPP averaged 1495.6 USD

reaching an all time high of 3435.0 USD in December of 2011 and a record low of 494.7

USD in December of 1985. The GDP per capita PPP is obtained by dividing the

country’s gross domestic product, adjusted by purchasing power parity, by the total

population. This page includes a chart with historical data for Vietnam GDP per capita

PPP.

VIETNAM POPULATION: The total population in Vietnam was last recorded at 87.8 million people in 2011 from

34.7 million in 1960, changing 153 percent during the last 50 years. Population in

Vietnam is reported by the World Bank. Historically, from 1960 until 2011, Vietnam

Population averaged 60.6 Million reaching an all time high of 87.8 Million in December

of 2011 and a record low of 34.7 Million in December of 1960. The population of

Vietnam represents 1.27 percent of the world´s total population which arguably means

that one person in every 79 people on the planet is a resident of Vietnam. This page

includes a chart with historical data for Vietnam Population.

VIETNAM UNEMPLOYEED PERSONS: Unemployed Persons in Vietnam decreased to 1 Million Persons in December of 2011

from 1.30 Million Persons in December of 2010. Historically, from 1998 until 2011,

Vietnam Unemployed Persons averaged 1.3 Million Persons reaching an all time high of

2.3 Million Persons in December of 2006 and a record low of 0.8 Million Persons in

December of 2005. In Vietnam, unemployed persons are individuals who are without a

job and actively seeking to work. This page includes a chart with historical data for

Vietnam Unemployed Persons.

VIETNAM UNEMPLOYEED RATE: Unemployment Rate in Vietnam increased to 2.06 percent in the third quarter of 2012

from 1.87 percent in the second quarter of 2012. Historically, from 1998 until 2012,

Vietnam Unemployment Rate averaged 2.56 Percent reaching an all time high of 4.50

Percent in December of 1998 and a record low of 1.87 Percent in June of 2012. In

Vietnam, the unemployment rate measures the number of people actively looking for a

job as a percentage of the labor force. This page includes a chart with historical data for

Vietnam Unemployment Rate.

VIETNAM EMPLOYEED PERSONS: Employed Persons in Vietnam increased to 50.40 Million Persons in December of 2011

from 49 Million Persons in December of 2010. Historically, from 1982 until 2011,

Vietnam Employed Persons averaged 35.4 Million Persons reaching an all time high of

50.4 Million Persons in December of 2011 and a record low of 23.5 Million Persons in

December of 1982. In Vietnam, employed persons are individuals with a minimum

required age who work during a certain time for a business. This page includes a chart

with historical data for Vietnam Employed Persons.

VIETNAM INFLATION RATE: The inflation rate in Vietnam was recorded at 7.02 percent in February of 2013.

Historically, from 1996 until 2013,Vietnam Inflation Rate averaged 7.37 Percent

reaching an all time high of 28.24 Percent in August of 2008 and a record low of -2.60

Percent in July of 2000. In Vietnam, the inflation rate measures a broad rise or fall in

prices that consumers pay for a standard basket of goods. This page includes a chart with

historical data for Vietnam Inflation Rate.

VIETNAM EXPORTS Exports in Vietnam decreased to 7150 USD Million in February of 2013 from 11472

USD Million in January of 2013. Historically, from 1990 until 2013,Vietnam Exports

averaged 3599.56 USD Million reaching an all time high of 11472 USD Million in

January of 2013 and a record low of 700 USD Million in February of 1998.Vietnam

exports mainly crude oil, textiles, seafood, rice, electronics and computers and rubber. Its

main exports partners are: United States, Japan, China, Australia and Singapore. This

page includes a chart with historical data for Vietnam Exports.

VIETNAM IMPORTS Imports in Vietnam decreased to 7240 USD Million in February of 2013 from 10695

USD Million in January of 2013. Historically, from 1990 until 2013, Vietnam Imports

averaged 3983.58 USD Million reaching an all time high of 11144 USD Million in

December of 1996 and a record low of 740 USD Million in February of 1999. Vietnam

imports machinery tools and spare parts, petroleum, steel, fabrics and plastics. Vietnam's

main imports partners are China, Japan, South Korea, Taiwan, Thailand and Singapore.

This page includes a chart with historical data for Vietnam Imports.

INDUSTRY SECTOR: GDP of Vietnam comprises 3 sectors: (see Figure 1).

· Agricultural products are paddy rice, coffee, rubber, cotton, tea, pepper,

soybeans, cashews, cane sugar, peanuts, bananas, poultry, fish, and seafood.

· Industrial principal sectors are mining, quarrying, manufacturing, electricity,

gas, water supply, cement, phosphate, chemical fertilizer, glass, tires, oil,

paper and steel.

· Services principal sectors are tourism, wholesale and retail insurance, repair of

vehicles and personal goods, hotel and restaurant, transport and storage, and

telecommunications.

MAJOR IMPORTS AND EXPORTS Imports

Vietnam imports mainly machinery and equipment, petroleum products, fertilizer, steel

products, raw cotton, grain, cement and motorcycles. A breakdown of import partners is:

China (23.08%), Singapore (14.54%), Japan (11.69%), South Korea (10.98%) and

Thailand (7.55%). From 2008 to 2009, imports have decreased 4 billion from 89 billion

to 85 billion.

Exports Vietnam export products are: crude oil, marine products, rice, coffee, rubber, tea,

garments and shoes. A breakdown of export partners is: the U.S. (22.97%) (According to

nation master, Vietnam ranked #1 in the export of cashews to the U.S.), Japan (15.27%),

China (8.81%), Singapore (5.11%) and Malaysia (3.91%). From 2008 to 2009, exports

have decreased 2 billion from 69 billion to 67 billion.

POLITICAL

POLITICAL SYSTEM(S) AND INSTITUTIONS Vietnam is a communist state. The executive agencies such as president’s office and

prime minister’s office which were created by the constitution in 1992 also holds

important powers apart from the communist party of Vietnam (CPV) in the government.

The Communist Party remains the dominant political force and sole political party. Other

important forces, the government, the army and the bureaucracy, are subordinate to the

CPV. The party secretariat issues directives to party members and plays an important role

in directing government policy. The party is entrenched in state institutions and mass

organizations that are grouped under the Vietnam Fatherland Front, which exists to

mobilize support for the party’s goals and to ensure the Communist Party of Vietnam’s

subordination to the party line.

RECENT POLITICAL DEVELOPMENTS On January 18, 2011, the 11th National Congress of the Communist Party of Vietnam

elected

175 official members and 25 alternate members to CPV Central Committee (CPVCC) for

the 11th tenure. Of particular interest are planned changes in the method of choosing top

leaders of the party with efforts that are aimed at increasing the accountability of top

officials, an issue of growing concern following some high‐profile corruption cases.

Reformist elements in the party are also pushing for enhanced influence for the country’s

burgeoning private sector by allowing business owners to join the party.

MILITARY CAPABILITY Vietnam maintains an active military force. In addition to a mainly conscript army of

412,000 (two years of military service is, in principle, required of all men), there is a

navy of 13,000, an air and air defense force of 30,000, a border defense corps of 40,000,

and reserves of approximately 5 million in the urban People’s Self‐defense Force and the

rural People’s Militia. Government expenditure on the armed forces is believed to

amount to approximately2.5% of GDP, although the actual numbers are a state secret.

Vietnam’s armed forces personnel numbers 484,400 which is ranked 9th/149 countries,

while army personnel numbers 412,000 which is ranked 7th/149 countries.

LEGAL

CONSTITUTION The adaption of existing constitution of Vietnam started on 15 April 1992, which

reaffirms the centre role of the Communist Party of Vietnam (CPV) in area of politics

and society, and outlining government reorganization and increased economic freedom.

§ Court hierarchy of Vietnam has three tiers:

1. Supreme court

2. Provincial courts

3. District courts

§ Legal system is based on communist legal theory & French civil law.

§ The most important law include:

– The Civil code(2005)

– The labor code(1994,as amended in 2002)

– The commercial law(2005)

– The law on enterprises(2005)

– The law on investment(2005)

– The law on credit institution(1997 as amended in 2004)

– The land law(2004)

– The law on business income tax(2004)

– The law on accounting(2004)

DEMOGRAPHIC CHARATERISTICS

Size and Growth According to the CIA world fact book, as of 2011 Vietnam’s population was recorded at

90.55 million persons, which ranked 14/237 countries in the world. The Vietnamese

population is growing at 1.2% annually. By 2015, the population is projected to reach

93.68 million persons. The implementation of Vietnam’s two‐child policy introduced in

the 1960s was eliminated in 2003, although the one‐party state's rulers encouraged

couples to have small families so they could adequately care for them. Facing a new baby

boom, communist Vietnam is planning to reintroduce the policy to prohibit couples from

having more than two children.

Ethnic groups and societal make‐up Vietnam is a multi‐nationality country with 54 ethnic groups. The majority ethnic

group, which is Vietnamese (Kinh), comprises approximately 73.594 million, or

85.7% of the Vietnamese population. Other significant ethnic groups are: Tay

(1.89%), Thai (1.8%), Muong (1.47%), Khmer (1.46%), Chinese (0.95%), Nung

(1.12%), and Hmong (1.24%).

Age distribution According to 2010 estimates, approximately 26.1% (male 12,069,408/female 11,033,738)

of the Vietnamese population was between the ages of 0 and 14 years ; 68.3% (male

30,149,986/female 30,392,043)of the population was between 15 and 64 years; and

citizens over the age of 65 constituted only 5.6% (male 1,892,505/female 3,039,078) of

the population. According to CIA World Factbook estimates, Vietnam had a median age

of 27.4 years in 2010, which means that 50 percent of the population was younger than

27.4 years old. The infant mortality rate in the country is approximately 21.57 deaths per

1000 live births.

OVERVIEW OF MAJOR INDUSTRIES IN VIETNAM:

Vietnam has started to carry out reforms since 1986, focusing on market economic

management. The reforms are based on three pillars: 1) restructuring to build a multi-

sector economy; 2) financial, monetary and administration reforms and 3) the

development of external economic relations. Vietnam has created an ever more

competitive and dynamic economic environment. The multi-sector economy has been

encouraged to develop, thus mobilizing effectively all social resources for economic

growth. External economic relations have been expanded and the flow of foreign direct

investment increased. Export of goods and labor, tourism industry and remittances from

overseas Vietnamese have been strongly promoted to generate increasing foreign

earnings for Vietnam. Along with improvement of the business environment, market

economy institutions have also been established.

GDP of Vietnam comprises majorly of 3 sectors:

· Primary Sector: Agriculture is considered to be the primary sector of economic

structure of Vietnam. Agricultural products are paddy rice, coffee, rubber, cotton,

tea, pepper, soya beans, cashews, cane sugar, peanuts, bananas poultry, fish, and

seafood. Among the list of countries which exports rice, Vietnam is considered to

be one of the largest.

· Secondary Sector: Under this sector various industrial products like finding ores

from mountains and earth, manufacturing of various products like cement for

construction, phosphate and its compounds, wide range of chemical fertilizers,

different types of glasses, wide range of tyres for different types of vehicles, Oil

for various applications like cutting, machining, vehicles etc., different types of

paper and various products from steel, manufacturing of machineries.

· Tertiary Sector: Service sector is considered to be the tertiary sector of economic

structure. Services includes development of tourism industry, insurance

companies, vehicle maintenance and repair, availability of personal goods, hotels

& cafeterias for fooding and hotels for accommodation, availability of types of

transport facilities and storage facilities, and development of telecommunication

industry. This sector contributes to 36-38% of GDP of Vietnam.

Domestic / Principle economic sectors

Business Sector % of GDP % change from previous year

Value in USD bill

1. Agriculture, Forestry and Fishery

20.66 -5.10 18.41

2. Industry – construction

40.24 +1.85 35.26

3. Service 39.10 +3.63 34.84

Total 100.00 +1.00 89.11

AGRICULTURE- FORESTRY-FISHERIES: Vietnam is an agriculture country with 70% of the population living in rural areas.

Although the sector contributes slightly more than 20% only to the GDP, but plays an

important role in the country’s exportation. The amount of agricultural products exported

such as seafood, cashew nut, coffee, rice, rubber and wooden products accounts for more

than 25% of the total exports of Vietnam, excluding crude oil. Vietnam is the world’s

largest exporter of black pepper and second largest rice and coffee exporter. The sector

has contributed to the maintenance of socio-economic stability, hunger eradication and

poverty alleviation.

The products that are exported as agricultural products from Vietnam includes Rice,

Unroasted Coffee Beans, Seafood, Pepper, Nuts and its Preparations.

Industries: The industrial sector comprises of around 40% of the total GDP of Vietnam. Textile and

Apparels are important pillars of manufacturing sector and also for country’s export.

Moreover the other industries in Vietnam include Shoes and Leather Products, Furniture

and Wooden Products, Electronics and Computer Accessories, Construction Industry,

Steel, Oil & Gas, Kitchen Appliances, Television & Other electronic Equipments,

Diamond Industry.

The major countries where the exports of industrial goods are done are U.S.A., European

Union, Thailand, Japan, Thailand and Japan is the major markets of the industry.

Services: Tourism: Vietnam has emerged as a popular new destination for tourists in recent years.

The combinations of unique landscapes and rich culture, from high mountains to

extensive coastline, from modern cities to hundred-year-old handicraft villages become

known to both domestic and overseas tourists. Vietnam attracts its foreign visitors mainly

from China, South Korea, and Japan. There is around growth rate of around 25% per year

of visitors in Vietnam.

While Vietnam’s reputation as one of the safest places for travel, the country still facing

many challenges, including a poor and disjointed market image, relative high

transportation costs and limited infrastructure. However, Vietnam has seen steady

investment in hotel and resorts in the past few years. Several premier resorts are

expanding their facilities to meeting the growing demand for luxury accommodations in

new tourist destinations. The central and all local governments are encouraging

investments from domestic and foreign firms. This will lead to opportunities such as

management consulting for development of tourism master plan and strategies, investing,

developing and upgrading tourism infrastructure facilities. Never the less, In Vietnam,

along with agriculture, forestry and fishery households (farm households) sector, non-

farm individual business households (units) contribute an important part of Vietnam’s

economy. Non- farm individual business sector is a specialty of Vietnam’s economy;

they have been in operation for a long time, significantly contributed to economic

development, generated millions of jobs, reduced poverty. There are about 72% numbers

of business non-registered units and 50% of value added in non-farm individual business

sector.

The graph below shows the contributions of various industries to FDI :

3%

16%

31%

5%7%6%1%

3%6%

5%

2%2%

5% 7%

2% FDI BY SECTOR

oil & gas

Construction

Heavy industries

Food industry

office, apt, const

The areas where major industries concentrate are as follows :

• New material, high-tech products, bio-technology, information technology and

mechanical manufacturing

• Agricultural, forestry and aquaculture

• Labor intensive industries

• Development of infrastructure facilities and important industrial large-scale projects

• Education, training, health, sports, culture

• Development of traditional crafts and industries

OUTLINE OF SOME MAJOR INDUSTRIES OF VIETNAM:

SOFTWARE INDUSTRY: The Vietnamese software industry is new, with about

200 enterprises operating in the market. The domestic

market is also new with low demand. The product

structure is simple and monotonous. On the export

side, Vietnam’s access to international market is

limited; only a few companies export to a limited number of countries. Total export value

is of 5% of the industry's total revenue. The industry’s competitiveness is weak and the

production scale is small. Despite these points, the industry has a good potential in terms

of human resources, low labor costs and government support.

MAJOR INDUSTRIES

Software industry

Steel industry

Textile industry

Leather & Footwear

Software industry

Current trade Sector

Electronic industry

Emerging trade sectors

STEEL INDUSTRY: The steel industry has an important role in Vietnam’s industrialization. Since 1986, it has

been performing well in terms of capacity and

product diversification. However, the industry

also faces some drawbacks: the monotonous and

simple product structure (only low and medium

quality long products); the low capacity of billet

production; out-of-date technology; and

inconsistency between targets and capacity.

Competitiveness is weak with respect to

production cost, human resources and

infrastructure. The regional and international

integration process has posed many challenges

for the steel industry, and the survival of

enterprises operating in Vietnam is being threatened.

TEXTILE AND GARMENT INDUSTRY: The Textile and garment industry plays important roles in Vietnam. However, Vietnam is

competitive only in the exports of a narrow

range of garments and contributes to very

limited stages of production and distribution.

The main mode of garment production for

export is CMT. This is suitable for

Vietnamese garment manufacturers as it

provides small risk and stable margins. Some

factories export in the FOB mode, but even

this is the simplest FOB (type I), not more

advanced FOB (types II and III). The

Vietnamese textile markets are very primitive

and cannot handle inter-firm business risks.

The Vietnamese government has approved a “speed up” strategy for 2000-2010 aiming at

(i) building a backward linkage through investment in the upstream sector (textiles); and

(ii) early realization of garment export under “type III FOB.”

LEATHER AND FOOTWEAR INDUSTRY: The leather and footwear industry has contributed to Vietnam’s economic growth. This

industry contributes to be one of the major export

of the country. The industry has a good prospect of

future development, including the US market

under the newly ratified US BTA. It has also

benefited from the policy of private sector

development as well as low cost and high quality

labor. However, Vietnam has to overcome a few obstacles: keen competition from other

countries (especially China), high dependence on imported raw materials, etc.

ELECTRONICS INDUSTRY: The electronics industry has grown strongly since 1990, in terms of both production

capacity and number of enterprises. To date, there

are approximately 200 enterprises, of which state

enterprises account for a half. Most enterprises are

small-scale assemblers. Enterprises in the south

account for 75% of total electronics output.

Foreign-invested enterprises dominate, while state

enterprises and domestic private enterprises

account for a small proportion of output. In terms

of technology, it remains a labor-intensive

industry in which complete knock down (CKD)

assembly accounts for 80% of total. Simple labor

in Vietnam’s largest input. While the government desires to promote the industry, the

strategy is formed at national or ministerial level with very general directions. The

government has revised its policy orientation from import substitution to export

promotion.

Despite the advantages of cheap labor and the government’s promotion, Vietnam’s

electronics industry faces many challenges: (1) market imbalance; (2) inherent

disadvantages of a late starter; (3) unskilled labor with little discipline; (4) poor

infrastructure; (5) weak macroeconomic management; and (6) the weakness of state

electronics enterprises.

CURRENT TRADE SECTORS: The biggest export sector for Vietnam is Crude Oil which is expected to be weak over the

next five years, with a modest decline projected. Then comes Footwear, which is

expected to see reasonable growth of around 3.2%, with the US and Germany the key

markets. Furniture is the third largest export sector and is expected to see strong growth

of around 6.3%, led by the US where growth is expected to top 7%. Coffee is another fast

growing sector with exports expected to rise by more than 6%. Import wise Non-Crude

Oil is the biggest sector and is expected to continue to grow robustly at close to 4.5%,

with Singapore, Korea and China the three biggest suppliers. Second largest is Hot

Rolled Iron and Steel, with growth of 8.7% expected, where China, Korea and Japan are

the major partners. Telecom Equipment and Knit Fabric are the next two biggest import

sectors with growth expected to be around 12.9% and 9% respectively.

EMERGING TRADE SECTORS: Audio-Visual parts and equipment are also expected to see strong export growth of

16.6% and 14.4% respectively, again reflecting strong global growth. Telecom equipment

sees buoyant growth in both exports and imports of 15.9% and 12.9% respectively.

Printing also shows up as seeing strong trade growth, with exports to rise 13.3% and

imports 11.6%. The other sector expected to see double digit export growth is Electric

Motors and Generators. Import wise Cotton and Aircraft are expected to see growth of

around 12.6%, with Cars around 11.6%. Electronic Circuits, Computers, Spirits and

Plastics are all expected to see double digit growth.

2012-26, VIETNAM AND WORLD COMPARED

· Vietnam trade growth from 2012 to 2026 is forecast to be 187%.

· Vietnamese companies forecast to increase trade activity by 7.3% annually over

this period.

· Short term confidence remains high for Vietnamese traders, with Trade

Confidence Index scores of 115.

· Audio-Visual and Telecom Equipment the fastest growing trade sectors.

Switzerland, India and Brazil lead exports.

Total value of country trade to rise 187% by 2026 Vietnam is expected to see rapid trade growth over the next fifteen years. Total trade is

expected to rise by around 187% to 2026, close to double the increase in global trade.

Growth is expected to be 8.2% over the next five years and then at a similar pace to 2021

before slowing like its Asian peers in 2022-26 to around 5.3%.

PROHIBITING THE IMPORT & EXPORT BY VIETNAM

Vietnam is prohibiting the import of the following goods:

· Arms and ammunition, explosives (except for industrial explosives as separately

stipulated by the Prime Minister in the Document No 1535/CP-KTTH dated 28

December 1998), military equipment.

· Drugs which are harmful for health

· Toxic chemicals that are hazardous to atmosphere and health.

· Cultural products which are Depraved and reactionary, children toys which affects the

dignity, social order and safety of people. Firecracker of all kinds (except for signal

fires used for marine safety and other needs specified in the documents No 1383/CP-

KTTH dated 23 November 1999 by the Prime Minister)

· Cigarettes, cigar and other tobacco products

· Second-hand consumer goods, including:

− Clothing, foot wares, garments

− Electric goods

− Electric refrigeration products

− Electric appliances

− Interior decoration

· Household equipments made from china, ceramics, porcelain, glass, metal, plastic,

rubber, resin and other materials.

· Right steering-wheel vehicles (including those disassembled and converted into left

steering wheel before being imported into Vietnam), except for some self-propelled

and special purpose right steering-wheel motor vehicles operating in short distance

including: crane lorries, channel and gutter diggers, road cleaning lories, dumpers,

road-building lorries, airport passenger carriers, cargo-lifting vehicles.

· Second-hand materials and vehicles

· Articles and materials of asbestos of the amphibole group.

· Professional machines and softwares used within the Government secret.

The prohibition of import of those commodities aims to protect national security, social

order and safety, traditional culture, fine customs, health of human beings and animals

and environment.

Vietnam is prohibiting the exports of the following goods:

· Arms and ammunition, explosives (except for industrial explosives), military

equipment.

· Antique

· Narcotic (drug) of all kinds

· Toxic chemicals

· Log and chipped wood coming from domestic natural forests, fire wood, charcoal

made from wood or fire wood coming from domestic natural forests

· Wild animals, scarce and precious natural animals and plants.

· Professional machines and software used within the Government secret.

· Goods prohibited from export under the list of goods subject to professional control

of the Ministry of Agriculture and Rural Development, Ministry of Fishery, Ministry

of Culture and Information under Decision No 46/2001/QD-TTg dated 4 April 2001

on controlling export and import in the 2001-2005 period.

For wood coming from domestic natural forests, the prohibition of export aims to

reserve the natural forest and the environment.

The prohibition of export of toxic chemicals aims to reserve the human and

animal health. The prohibition of antique, things of museums and historical and cultural

places, statues of Buddha and worshipping objects made of all materials coming from

worshipping places of all religions (pagodas, temples, churches...) aims to protect

national cultural heritages and national religious heritages.

The prohibition of export of books, films, movies, video films, recorded objects or other

visual audio data (CD, VCD, DVD, cassettes...) and other cultural publications aims to

protect social safety and order.

FAVOURABLE ENVIRONMENT FOR INVESTOR:

Why to invest in Viet Nam?

Nowadays, along with multifaceted co-operation among countries as well as the

international integration, economic sector of Vietnam are more and more developing.

And many investors around the world have come to Vietnam to invest for economic.

There are a lot of reforms in policy, legal, as well as many stock market are set up in

Vietnam that bring GDP growth of Vietnam rapidly during 10 years. Vietnam also joins

WTO as well as a lot of other economic organizations in regions as well as international

with the view to developing Vietnam’s economy and raising its position in the

international arena. All investors are domestic as well as foreign investors want to take

part in investment activities, they need to look for all information about

• Socio-political stability

• Continuous economic growth

• Abundant human resources

– High level of literacy, IT-savvy

– Labourious, hard-working

– New generation of corporate leaders

• Low cost of materials and inputs

– Electricity, water, telecoms, air freight

• Trade regime becomes more open and transparent following WTO entrance

• Favorable FDI policies

– Simplification of investment procedures

– Compliance with international practices

• Convenient for outsource and processing industries

– Located at the heart of Southeast Asia

– Easily reachable by air, sea or land

– Enjoy preferential tariffs by FTAs

WTO concessions on goods

To create a favorable environment for the development of a multi-sector

market economy as well as more open and stable investment environment, Viet Nam is

making efforts to improve its legal system. During recent years, many laws and

regulations have been enacted to establish the legal framework for the open-door policy,

to comply with the integration requirements of international agreements, and especially to

prepare for Vietnam’s WTO membership

• Bound rates for 10,600 tariff lines reduced from 17.4% to 13.4% phased over 5-7

years since 2007.

• Largest reduction applied to garment & textile, aquatic products, wood & paper,

manufacturing, electrical and electronic machinery & equipment.

Join Free Agreements by sector for IT, garment & textile, medical equipment, airplane

equipment, chemical, construction machine.

Effects of WTO on investment

• TRIMS: Investors shall NOT be forced to undertake any of the following

requirements:

– Localization

– Export or import ratio

– Giving preferences to purchase domestic goods and services

– Achieving a certain ratio in R&D

– Selling goods and services at a certain location

• Duties reduction promotes trade in goods and services between Vietnam and

regional countries

Trade Complementarily between India and Vietnam;

In this study, we have not estimated the extent of trade creation and trade diversion that

may occur owing to formation of India-Vietnam tariff free regime. We match total

exports (or imports) of India with corresponding total imports (exports) of Vietnam, for

different commodity groups. This may give an idea of: (i) export potential of supplying

country, (ii) export competitiveness of supplying country, and (iii) import demand of

importing country. This concept is sometimes called complementarily in trade.5 It will

help us to examine the potential of trade expansion in member countries, i.e. India and

Vietnam.

Two-way trade between Vietnam and India has so far this year reached 1.845 billion

USD, a year-on-year rise of 0.45 percent, according to the Export-Import Department

under the Ministry of Industry and trade.

Vietnam earned 755 million USD from exports to India, up 22.6 percent, while importing

goods worth 1.09 billion USD from the country, down 11 percent compared to the same

period last year.

Apart from traditional commodities like farm produces and handicrafts, the export of

value-added products such as steel and steel products, rubber, coal, computer hardware,

machinery, means of transport and chemicals has seen increases. Of these, machinery

grew 70.3 percent, computers, electronic products and spare parts, 91.2 percent; rubber,

358.9 percent; and cashew nuts, 97.6 percent.

According to the Vietnam Trade Office in India, with a population of 1.2 billion, most of

them are middle- and low-income earners; India is a promising market to Vietnam due to

similar consumption demands. In fact, Vietnamese goods are not so popular to Indian

customers. Vietnam has yet to find out main exports to India while trade ties between the

two countries still fail to match their potentials.

Experts from the Export-Import Department said that India has a large import demand for

Vietnam’s tea, coffee; cashew nut and pepper for re-export.

Furthermore, the country expects to import 62,000 tonnes of natural rubber in 2012 for

the production of car tyres for domestic consumption and export.

However, to make full use of the ASEAN-India Free Trade Agreement, Vietnamese

businesses should intensify market study to seek partners, according to experts.

They should also study carefully customs procedures as well as other information about

the market

INDIA VIETNAM TWO WAY TRADE RELATION:

Bilateral trade touched US$ 2.48 billion during Jan – Dec 2008, up from US$ 1.54 billion

during Jan – Dec 2007. For the corresponding period of 2007, the growth of Exported

was registered to 54.35% as the total exports of goods and services from to India to

Vietnam accounted to US$ 2.09 billion. Exports from Vietnam to India were US$ 389

million, an increase of 116.47% over the corresponding period in 2007.

During the first quarter of 2009, as a result of global economic recession, exports from

India to Vietnam were US$406.44 million, a decrease of 43.60% over the corresponding

period in 2007. Exports from Vietnam to India increased by 45.53% to reach US$69.55

million.

(million US dollar)

(Figures in US$ millions)

2002 2003 2004 2005 2006 2007 2008

Import 324.6 456.95 593.53 598.79 880.28 1356.93 2094.4

Export 52.03 32.27 77.24 97.76 137.84 179.7 388.99

Total trade 376.63 489.22 670.77 696.55 1018.12 1536.63 2483.39

Trade imbalance 272.57 424.68 516.29 501.03 742.44 1177.23 1705.41

Major export commodities from India to Vietnam

(Amount in million USD)

Sr.

No.

Commodities Jan – Dec

2006

Jan – Dec

2007

% Increase

1. Feed ingredients 245.08 450.44 83.79

2. Pharmaceuticals 61.17 85.80 40.26

3. Machinery and

Equipment

48.48 91.17 88.06

4. Ordinary metals 71.38 75.78 6.16

5. Plastic materials 65.21 73.28 12.38

6. Steels of all kinds 44.36 60.76 36.97

7. Medicinal Ingredients 30.87 40.66 31.71

8. Leather and textile

materials

27.81 41.20 48.15

9. Cotton of all kinds 37.32 39.69 6.35

10. Pesticides and

materials

25.68 34.80 35.51

11. Tobacco accessories 11.13 26.74 140.25

12. Chemicals 15.46 27.84 80.08

13. Chemical allied 28.48 22.45 -21.17

products

14. Fibres of all kinds 9.90 14.04 41.82

15. Fabrics of all kinds 8.24 10.49 27.31

16. Other products 285.92 564.84 97.55

Exports from Vietnam to India during 2007:

Vietnam’s exports to India during 2007 registered an increase of 21% over the

corresponding period in 2006


2006 (Jan - Dec) 2007 (Jan – Dec) % Increase

137.84 179.70 30.37%

Major export commodities from Vietnam to India


Sr. No. Commodities Jan – Dec 2006 Jan – Dec 2007 % Increase

1. Coal 20.25 20.73 2.37

2. Pepper 10.98 13.61 23.95

3. Rubber 6.91 9.2 33.14

4. Computer and electronic

goods

6.86 10.75 56.71

5. Cinnamon 7.08 9.03 27.54

6. Garment and textiles 7.96 3.82 -52.01

7. Footwear of all kinds 4.33 3.81 -12.01

8. Coffee 7.74 2.62 -66.15

9. Vegetable 2.89 2.16 -25.26

10. Other products 52.96 96.94 83.04

Investment relations

As of December 2008, India has 30 investment projects in Vietnam with total registered

capital of US$185.47 million. Indian companies are investing in oil and gas exploitation,

mineral exploitation and processing, sugar manufacturing, agro-chemicals, IT, and

agricultural processing. TATA Group of India inked a memorandum with Vietnam Steel

General Corporation to research for the building of Ha Tinh Conjugate Steel Company

and exploit Thach Khe iron mine with an output capacity of 4.5 million tons per year. It

is expected to invest more than USD 4.5 billion in the next few years. With this

investment, India has become top 10 investors in Vietnam. From Vietnamese side, a

Vietnamese company, FPT, has made an investment of US$150,000 in an Indian

technology development and investment project.

Development Assistance of India to Vietnam

Vietnam is one of the largest recipients of Indian aids through Lines of Credit extended

by Department of Economic Affairs (DEA), Ministry of Finance of the Government of

India. Since 1976, India has extended 14 Lines of Credit totaling Rs.3,610 million to

Vietnam. In the 1980s, Vietnam received relatively large amounts of assistance though

these programmes were reduced during the 1990s. India announced another credit line of

US$27 million to Vietnam an agreement for which was signed in August 2004 between

Exim Bank of India and Ministry of Finance of Vietnam. Most recent credit line of US$

45 million is being implemented for Nam Chien Hydropower projects in Vietnam.

India has announced an aid of Rs. 100 million to Vietnam for setting up of an Advanced

Resource Centre in IT in Hanoi. Another grant of Rs. 122.07 million has also been given

to Vietnam for assisting human resource development in the field of IT in six educational

institutions in Vietnam. Implementation of both these projects is going on.

CHAPTER 2

PESTEL ANALYSIS

POLITICAL ANALYSIS

Political History of Vietnam

In the early 19th century, Western capitalist countries entered the period of imperialism

and colonialism. Through missionaries and trade, the French gradually dominated

Vietnam. For the first time in history, Vietnam had to cope with the invasion of a

Western industrial country. In that context, some Vietnamese intellectuals were aware of

the need to carry out reforms, bringing the country out of stagnation and save national

independence. Many reform plans were proposed, yet rejected by the Nguyen Dynasty.

Subsequently, the country was driven into backwardness and deadlock and became a

semi-feudal colony for nearly 100 years from 1858 to 1945.

The founding of the Communist Party of Vietnam on 3 February 1930 was an important

milestone in the Vietnamese history. In August 1945, under the leadership of the

Communist Party headed by President Ho Chi Minh, the Vietnamese people successfully

launched an uprising to seize power and the Democratic Republic of Vietnam came into

being on 2 September 1945.

The newly founded Vietnam had to go through another 30-year-long struggle for national

liberation and reunification. Vietnam become independent after Geneva Resolution

passed in 1954 from French colonialist. According to the Accord, the country was

temporarily separated along the 17th Parallel North into two territories, North Vietnam

and the South Vietnam, which were expected to be reunified two years later with a

general election. South Vietnam was ruled by a pro-French and then pro-USA

government in Saigon. Though Saigon regime attempted to prevent reunification, it failed

to subdue peace and national reunification campaigns. As a result, the National

Liberation Front for South Vietnam was founded on December 20 1964.

Between 1954 and 1975, Vietnam had to stand up for national liberation and unification.

To support the South Vietnam regime, the US sent military aid and over half a million

soldiers to Vietnam, and started bombing North Vietnam in 1964. The Vietnamese people

faced greatest sacrifice and dedication to fulfill their leader Ho Chi Minh’s aspiration

about independence and freedom are the most precious than all. In 1973, the Paris Accord

was signed for restoration of peace in Vietnam and withdrawal of the US troops. The war

came to an end in spring 1975 as the patriotic armed forces launched an offensive against

the Saigon regime, liberated southern Vietnam and reunified the country. Since then, the

unified Vietnam has ushered into a new era of peace, unification and national

construction. Democratic Republic of Vietnam was renamed Socialist Republic of

Vietnam on April 25th, 1976. Ho Chi Minh, who also served as the country's President,

was appointed Vietnam's first prime minister in 1946 by the National Assembly, after

having served months as Acting Chairman of the Provisional Government and foreign

minister in the aftermath of the 1945 August Revolution. In 1977, Vietnam get the

membership of UN general assembly.

Vietnam Politics, Governance System and policies:

Government Overview: The Vietnamese Communist Party (VCP) has a monopoly on

government power. A three-person collective leadership consists of the VCP general

secretary, the prime minister, and the president. President is the chief of state, while

Prime Minister is head of government. General Secretary heads up not only the VCP but

also the 15-member Politburo. A decision by any member of the triumvirate is vetted by

the other two. As a result, policy announcements tend to be bland and equivocal. The

mechanism for transfers of power suffers from a lack of transparency.

Vietnam: Political and Administrative structure:

Government type: Socialist republic

Independence: 2 September 1945 (from France)

Constitution: 15 April 1992

Legal system: Based on Marxist ideology and communist legal theory and also adoption

from French civil laws and legal system.

Administrative structure: Divisions of 58 provinces and 3 municipalities

Governance Mechanism:

1. Legal Structure: Article 4 of the Constitution stipulates the leading role of the

Communist Party of Vietnam (CPV). The CPV's executive is the 150-member Central

Committee, elected by the Congress of all party members, which meets every five years.

(1.1) Legislative Branch: In Vietnam, to frame laws and policies for the country, The

National Assembly, established by the Socialist of Vietnam Constitution of 1992, is the

main organ of state and the only body in Vietnam with constitutional and legislative

power for peoples welfare. The National Assembly shall decide the fundamental

domestic and foreign policies, the socio-economic tasks, the country's national - defense

and security issues, the essential principles governing the organization and activity of the

State machinery, the social relations and the activities of the citizen.

(1.2) Executive Branch: The Government is the executive organ of the National

Assembly, the highest organ of state administration of the Socialist Republic of Vietnam.

This executive branch is responsible to carry out overall management of the

administrative work for the fulfillment of the political, economic, cultural, social, and

national - defense, security and external duties of the country. The Government shall be

composed of the Prime Minister, the Deputy Prime Ministers, the Cabinet Ministers, and

other members. With the exception of the Prime Minister, its members are not necessarily

members of the National Assembly. The President of the State of Vietnam and the Prime

Minister are elected by the National Assembly as per the constitutional law 1992.

(1.3) Judiciary Branch: Supreme People's Court (chief justice is elected for a five-year

term by the National Assembly on the recommendation of the president). The Supreme

People's Court, the local People's Courts, the Military Tribunals and the other tribunals

established by law are the judicial organs of the Socialist Republic of Vietnam.

(1.4) Local Government: On a formal level Vietnam’s local administration system is

divided geographically into three levels:

• Provinces (about 60 units including three municipalities)

• Districts (about 600 units)

• Communes (about 10,400 units).

Electoral System: Vietnam has universal suffrage at age 18. Elections for the National

Assembly are scheduled every five years.

Politics/Political Parties: Vietnam is a one-party state. The Vietnamese Communist

Party (VCP) has a monopoly on power.

Vietnam’s Capital: Hanoi

The current Prime Minister Mr. Nguyen Tan Dung has served since 2005, and he is

serving his last term.

The President of Vietnam represents the Socialist Republic of Vietnam internally and

externally as the head of state, maintains the regular and coordinated operation and

stability of the national government system and safeguards the independence and

territorial integrity of the country. The President appoints prime ministers, vice

presidents, ministers and other officials with the consent of the National Assembly. The

person who is commander-in-chief of Vietnam People’s Armed Forces, is also the head

of the state as well as the chairman of the council for Defense and Security. The tenure of

head of state is of five years only and he can serve for two tenure only.

The current President, MR. Truong Tan Sang, is the Politburo's highest-ranking

member.

The Chairman of senate-National Assembly is the head of political constituency. Mr.

Nguyen Sinh Hung is the current chairman of the National Assembly of Vietnam.

Overview of Political scenario in Vietnam: So far as political mechanism and

governance in Vietnam is concern, the country has not sound track record even today as

far as public freedom, suppression of freedom of expression and peaceful assembly,

political reforms and act, expose co officials corruption, call for democratic alternatives

to one party rule, free speech, journalism and civil rights are concerned due to socialist

government model. In Vietnam, police frequently torture suspects to elicit confessions for

national interest and, in several cases, have responded to public protests over evictions,

confiscation of land, and police brutality with excessive use of force. Anti-China protests

in Hanoi and Ho Chi Minh City in 2011 were dispersed and protesters were intimidated,

harassed, and in some cases detained for several days.

Vietnam is one of the fastest growing developing countries in south Asian region Key

Issues in Vietnam politics which directly affecting its economy:

1. Macroeconomic policies are tight to protect state run industries which are highly

required to ease for economy reforms.

2. SOE-State owned enterprise reforms are required to reduce risk to financial sector

risk and public finances and to improve overall growth prospective in the

economy.

3. Vietnam requires maintaining an exchange system free of political interference

and restrictions on the making of payments and easing the current international

transactions.

4. Another thing is to do TAX REFORMs for efficient functioning of economical

activity by Vietnam government to increase overall growth.

Conclusion: Throughout the formation and development of Vietnam, patriotism, self-

reliance, tradition of unity and the willpower to fight for the righteous cause of the nation

are the most important features and the moral standards of the Vietnamese. The tradition

of industriousness, creativeness and patience originates from the life full of hardship of

the Vietnamese people. The need to stand united to cope with difficulties and challenges

has created close bonds between the people and the nature and among the people, which

can be observed in the family as well as the community no matter at home, village or

nationwide level. Throughout history, the Vietnamese people are also characterized by

traditions of mutual assistance, ethic-based lifestyle, benevolence, hardship sharing in

needy times, high consensus, quick adaptation and integration, flexible behavior,

eagerness to learn, respect for righteousness, and tolerance. These are the powerful and

endless endogenous strengths for the Vietnamese people to embark on the cause of

national construction towards the goals of strong country, prosperous people, and just,

democratic and advanced society.

ECONOMIC ANALYSIS

In the past years Vietnam has become one of the fastest growing economies in Asia and

has weathered the crisis quite well with the signs of recovery observed in 2009. In 1986

Vietnam's Communist Party adopted "economic renovation" (Doi Moi) policy, which laid

the foundation for a market-based system to replace the planned economy model.

Vietnam and its accession into WTO, establishment of securities market along with

equalitisation of state owned sector has created huge opportunities ever for foreign

investors to exposure their business in Vietnam market. Furthermore, the positive

prospect for economic growth, dynamic, young and low cost labour force and increasing

role of private sector will also contribute to the flood of foreign capital and flourish

presence of foreign enterprises in Vietnam.

Economy Growth of Vietnam

Vietnam economy is one of the highest growths in the South-East Asia, second after

China globally in Period of 1991-2007 and at present its prospect remains positive

despite the persisting difficulties.

Vietnam’s real GDP achieved average growth rate of 7.34% in period of 2005-2009

before it declined to 5.3% in 2009 due to the global financial crisis which started in 2008.

Vietnam’s long-term economic growth prospects remain positive. According to

economists, growth will accelerate to a rate of 6.6% - 7.2% in the period 2012-14. Rises

in consumption, investment and exports have led to economic growth. We have taken

various economic indicators for this analysis which include the GDP, inflation rate,

industrial production index, interest rate in Vietnam, Balance of trade and terms of trade

in Vietnam.

The gradual rapprochement with the US and the Western World has yielded economic

benefits for Vietnam with the per capita income rising to US$ 300 from $200 over the

past five years.

Tourism has always been a major attraction for Vietnam. Total in 2010, this number

reached 5,049,855 arrivals, increasing 34.8% over the same period in 2009.

Fact Files of Vietnam Economy Vietnam’s economy is socialist-oriented. Its economic structure can be classified into

the following sectors.

(i) Primary Sector – comprising agriculture, aquaculture, fishery and forestry;

(ii) Secondary Sector – comprising auxiliary industries and construction; and

(iii) Tertiary Sector – comprising the services sector: banking, insurance,

telecommunications, transportation, tourism and others.

Health expenditures

7.2% of GDP (2011)

Population growth rate: 1.054% (2012 est.)

Birth rate: 16.83 births/1,000 population (2012 est.)

Death rate: 5.95 deaths/1,000 population (July 2012

est.)

Age structure Percent Male Female

0-14 years 25.2% 11,945,354 10,868,610

15-64 years 69.3% 31,301,879 31,419,306

65 years and over 5.5% 1,921,652 3,092,589

Source: CIA World Fact book as of July 26, 2012

- Vietnam's managed currency, the dong, continues to face downward pressure due to

a persistent trade imbalance.

- Since 2008, the government devalued it in excess of 20% through a series of small

devaluations.

- Foreign donors pledged nearly $8 billion in new development assistance for 2011.

- The economic policies of government have resulted in a growth along with high

inflation rate, which went as high as 23% in August 2011 and averaged 18% for the

year.

- In February 2011, Vietnam shifted its focus away from economic growth to

stabilizing its economy and tightened fiscal and monetary policies.

- In early 2012 Vietnam unveiled a broad "three pillar" economic reform program,

proposing the restructuring of public investment, state-owned enterprises and the

banking sector.

- Vietnam's economy continues to face challenges from low foreign exchange reserves,

an undercapitalized banking sector, and high borrowing costs.

- The state-owned enterprise Vinashin, a leading shipbuilder is on the verge of

bankruptcy and subsequent default, which led to a ratings downgrade of Vietnam’s

sovereign debt.

SWOT Analysis of Vietnam’s Economy

Strengths · Vietnam has been one of the fastest-growing economies in Asia in recent years,

with GDP growth averaging 7.6% annually between 2000 and 2009.

· The economic boom has lifted many Vietnamese out of poverty, with the official

poverty rate in the country falling from 58% in 1993 to 20% in 2004.

Weaknesses

· Vietnam still suffers from substantial trade, current account and fiscal deficits,

leaving the economy vulnerable as the global economy continues to suffer. There

are certain expenses which largely focus on ‘off-the books’ spending.

· The import costs are high due to weak dong currency along with tight control on

foreign exchange reserves. This also reduces incentives to enhance the quality of

exports.

· The heavily-managed and weak dong currency reduces incentives to improve

quality of exports, and also serves to keep import costs high, thus contributing to

inflationary pressures.

Opportunities

· WTO membership has given Vietnam access to both foreign markets and capital,

while making Vietnamese enterprises stronger through increased competition.

· The government stand is quite clear and they are moving forward with market

reforms, including privatization of state-owned enterprise and liberalizing the

banking sector irrespective of the current macroeconomic condition.

· Urbanization will continue to be a long-term growth driver. The UN forecasts the

urban population to rise from 29% of the population to more than 50% by the

early 2040s.

Threats · Inflation and deficit concerns have caused some investors to re-assess their

hitherto upbeat view of Vietnam. If the government focuses too much on

stimulating growth and fails to root out inflationary pressure, it risks prolonging

macroeconomic instability, which could lead to a potential crisis.

· Reforms could be on hold if prolonged macroeconomic instability continued as

they struggle to stabilize the economy.

SOCIAL ANALYSIS

The social landscape covers the demographics, health, culture, household and population

scenario in Vietnam. The social welfare policies run by the government along with the

Vietnam’s performance in terms of healthcare, income distribution and education are also

provided. The following are the areas covered in social aspect –

1) Education.

2) Health

3) Vietnam culture, household and life style.

4) The Issue of Immigration and Labor Export.

5) Vietnam population and

6) Road Safety.

EDUCATION –

The national education system of Vietnam consists of recognized education and complete

education and includes the following levels in education:

· Pre-primary education including nursery and kindergartens;

· General education including primary education, secondary education, and higher

secondary education;

· Professional education including professional courses education and vocational

training;

· Higher education including

· College, undergraduate, master degree and doctoral degrees.

Schools in the national educational system are organized in the following forms:

· Public schools

· Founder schools

· Private schools

Statistical Data:

DATA OF NUMBER OF SCHOOLS IN VIETNAM FOR THE PERIOD FROM

1999 TO 2011

DATA OF NUMBER OF STUDENTS IN SCHOOLS IN VIETNAM FOR THE

PERIOD FROM 1999 TO 2011

DATA OF NUMBER OF TEACHERS IN SCHOOLS IN VIETNAM FOR THE

PERIOD FROM 1999 TO 2011

Highlights on Vietnam Education

Since the late 90s, as recommended to UNESCO’s Education for All (EFA), Vietnam has

achieved commendable progress in improving access to basic education with a net

primary enrolment rate of 95% for the year 2002 and 97.5% for 2007. However, there are

still problems facing the education system. The Ministry of Education and Training, other

government agencies and educational institutions are motivated to address and solutions

to the problems.

Quantity

The numbers of schools, students and teachers have considerably increased over the last

10 years, which shows the hopeful result of governmental pains to provide more basic

general education to the Vietnamese. The results also show the Vietnamese people’s

increased focus to their children’s schooling. The living standards are generally low,

almost all Vietnamese families try their best to manage for their children to attend the

school, with the hope of better future for their children.

Quality

Quality is one of the factors which need to be taken seriously, as it is affected by many

factors including a lack of passive teaching, poor infrastructure, and weak education

management system. However, Vietnam has been working in this field by focussing on

improvement of quality and has succeeded also. With the support of the Vietnamese

people, the government will continue to work towards the country’s stated goal that

“Education is the top national policy”

Teaching method

The teacher is the speaker and the student is the listener, teachers in Vietnam apply this

old and outdated teaching method. This method is not interesting for the learners and they

become habitual of a passive teaching. In order to make positive changes in traditional

teaching method, Vietnam must enforce revolutionary pedagogy in universities where

proper training should be given to teachers and ensure that they apply these more active

practices to their pupils once they enter the classroom. On the other hand, teachers are

also under high pressure to strictly follow the curriculum of the government by the

Ministry of Education and Training, which are outdated.

Shortage of teachers

Vietnam has a massive shortage in teaching staff - in quantity and quality. Many teachers

are overloaded and they do not match with the requirements of teachers. Teachers often

do not have time to do any research work, skill improvement or enhance their knowledge

to improve their teaching skills.

Inadequate school infrastructure

Most schools in Vietnam do not have qualified labs, libraries, and playgrounds for pupils.

With the cooperation of various industry sectors and the investment from society as a

whole, the school infrastructure has been upgraded day by day, but it is still not enough to

significantly change enrolment and the learners’ needs, especially in the remote,

mountainous, and isolated areas of the country.

TEACHING MATERIAL

Teaching materials are changing slowly and are still a long way from practical use. It is

said that the Government is currently considering a “70 thousand billion Dong project” to

be used for renewing teaching materials.

Education management

Education management is a weak point in Vietnam’s overall education system. The

current management system does not work effectively even though it is changed on

regular basis. Many improvement projects have been invested, but have not brought

about significant results.

Examination

Examination is really a pain for the learners. In the future, when teaching and learning

quality has been improved, graduation examination required for higher secondary school

students and university entrance examinations should be removed as they are illogical

and expensive.

HEALTH

Vietnam has achieved moderate levels in basic health indicators that are comparatively

better than other developing or underdeveloped nations even with similar or even higher

per capita incomes. Much of this accomplishment has been the result of extensive

practices of promoting social harmony and a fairly identical distribution of wealth and

income.

Ø With respect to health and nutrition, Viet Nam has evidenced clear improvements

in life expectancy, maternal and child mortality, and the prevalence of severe

underweight children. Between 1992 and 2007, life expectancy increased from

65.2 to 74.3 years

Ø During the same period, under-one infant mortality has declined from 31 per

1,000 live births to 15.5, while under-five mortality has declined from 42 to 25.

Ø Malnutrition among children has declined from an estimated 44.9 percent in 1994

to 19.9 percent in 2008. Viet Nam has been appreciated for achieving better

results in health indicators in comparison to other countries.

Ø Some communicable diseases such as polio, newborn tetanus and leprosy have

been successfully eradicated. Malaria and dengue are no longer among the leading

causes of morbidity and/or mortality as they were in mid-1990s.

Ø As of 2011, more than a quarter (29%) of Vietnamese adults had been diagnosed

with high blood pressure, and a higher percentage (37%) had been diagnosed with

high cholesterol than adults countywide and adults from all other major

racial/ethnic groups as of 2009.

Ø The health impacts of chronic and infectious disease on Vietnamese residents, as

well as economic impacts on Vietnamese families, may be exacerbated by lack of

healthcare coverage.

Ø In 2011, more than 1 in 4 Vietnamese adults (26%) in Santa Clara County lacked

healthcare coverage, a higher proportion than for adults in the county as a whole

in 2009.

Even if Vietnamese residents have healthcare coverage, community leaders

indicated that navigating the healthcare system was a major roadblock to

accessing quality care. Automated telephone systems in English make it difficult

to reach someone who speaks Vietnamese and receptionists often do not speak

Vietnamese. Also, leaders suspected that Vietnamese community members may

not be aware of free or low-cost health care available in their area. Moreover,

there was concern that there may be limited access to, and utilization of, quality

health care in Vietnamese, particularly for specialty care.

CULTURE, HOUSEHOLD AND LIFESTYLE –

The basic structure of Vietnam society is the structure in which village communities are

the foundations. To integrate in a modern society with new, outstanding development that

appears for the first time in Vietnam’s history, structure of Vietnam’s traditional culture

will be faced with many radical changes. Among them, the stagnation and

conservativeness of traditional agricultural community will be broken. Social structure

associated with village community will be changed.

Those changes appear in many aspects, not only in familiar economic, political and social

aspects but also in culture and lifestyle with their lively and diversified manifestations.

These are some common manifestations:

1. Change in each person and it connect to change in family.

2. Change in structure of age group in cycle of a human life.

3. Change in neighbour relations.

4. Change in consuming culture.

The causes of such changes are:

1. Impact of market economy.

2. Impact of industrial civilization

3. Impact of globalization.

4. Traditional social structure was changed to a modern and diversified society.

Diversified and individualized tendencies are not only specific characteristics of Vietnam

but also common phenomena in all countries which are industrializing and modernizing.

In general, this eventful process is occurring quickly and changing continuously. It is not

only in appearance but in role, position in society. Such diversified manifestations make

the boundary between social groups less clear as in traditional society. In social sciences,

they call it as surprising leap of mobile society and it creates much difficulty for

indentifying individual.

Since they are parts of social structure, such changes will be the mirror reflecting macro

social changes. Their plentiful and diversified characteristics contributed to the

identification of social changed of each country in recent time. In the situation of

renewal, life-style diversification is necessary and it would be considered as rule in any

society. The problem is defining the level and evaluating political-social results, because

this process has positive factors besides its negative ones.

THE ISSUES OF IMMIGRATION AND LABOR EXPORT –

IMMIGRATION

According to the Report on Completed Census Results in 2011, during 5 years from

2004-2009, the number of migrants increased by more than 2.2 million people compared to the

period 1994-1999, especially, the increase in the number of migrants rose with the migration

distance. While intra-district migration only increased by 275,000 people, inter-district migration

within the same province increased by 571,000 people. Inter-regional migration increased by

more than 1 million people. The report also points out that there are many reasons for people to

migrate, but the main reason is to seek employment.

LABOR EXPORT

In the field of labour export, 88,000 employees were sent to work in foreign countries in

2011.

The major markets are Taiwan, Korea, Japan and Malaysia. This number is less than

what is expected, due to economic recession of the world, and especially, the crisis of

Lybia.

The numbers of Vietnamese workers to be employed out of the country is likely to drop

in the current years as overseas demand is falling. In 2012, some 80,000 Vietnamese

labourers worked in foreign countries.

South Korea is employing more than sixty thousand Vietnamese was the largest market

for them.

In the case of South Korea, more than 15,000 Vietnamese workers had escaped before the

conclusion of their contracts, forcing the country to suspend the plans to receive more

workers from Vietnam. To date, around 12,000 Vietnamese remain on waiting-lists

looking forward to work in South Korea.

Japan received just 5,500-6,000 workers from Vietnam last year, as despite the high

demand for labour, Vietnamese employees were thought to lack the skills required for the

nature of the job. In 2012, Taiwan employed about 25,000 workers and this figure is

expected to be same in 2013.

Dang Huy Hong, general director of the International Manpower Supply and Trade

Company Ltd (SONA) said that the salaries of Vietnamese labourers in Libya had now

come to pre-conflict levels where the people are satisfied to some extent.

Besides traditional markets, other some markets such as Angola, the Republic of Sip and

Chinese Macau are also keen on employing Vietnamese workers because of easy

availability and low cost.

POPULATION –

Vietnam's population reached 88.78 million as of the end of 2012, an increase of 1.06

percent over last year, with more female than male, reported the Vietnam General

Statistics Office.

Of the total, women comprised 44.86 million, up 1.04 percent, and men with 43.92

million, up 1.09 percent year-on-year; urban population was 28.81 million, up 3.3

percent, while rural population was 59.97 million, up 0.02 percent.

Total birth rate reached 2.05 babies per woman in 2012, higher than previous year's 1.99

babies per woman level. Sex ratio of newborns was 112.3 male per 100 female, higher

than the level of 111.9 male per 100 female in 2011.

Employed labourers aged 15 and above in 2012 were 51.69 million, up 2.7 percent over

2011, of whom 10.4 percent work for the state- run sector, 86.3 percent for the non-state

sector, and 3.3 percent for the foreign direct investment sector.

Of the working age group, those working in agro-forestry- fishery sector decreased from

48.4 percent in 2011 to 47.5 percent in 2012; in industry and construction down from

21.3 percent to 21.1 percent.

Meanwhile, those working in the service sector increased from 30.3 percent to 31.4

percent. Unemployment rate of labourers in the working age group in 2012 was 4.99

percent.

ROAD SAFETY:

Vietnam’s 2002–2012 National Policy on Accident and Injury Prevention notes that

injuries related to road accidents are not just a transport sector issue, but part of a wider

national injury crisis.

Transport safety, especially road safety, therefore has become a high priority for the

government. Coordination arrangements have been put in place with the establishment of

the National Traffic Safety Committee (NTSC), demonstrating the government’s

commitment to improving cross-sector dialogue between the transport, health, and

education sectors.

The government also prepared the National Program for Traffic Safety (NPTS) and the

Vietnam Road Sector project.

The NPTS covers the period 2001–2005 and has set the objective of reducing the annual

growth rate of traffic accidents from 8 percent to 4 percent by 2005.

It calls for the following policy and physical interventions:

1. Education and publicity campaigns for traffic safety improvement;

2. Application of road safety audits on newly improved, upgraded or built roads;

3. Definition and treatment of black spots;

4. Development of a traffic accident reporting and analysis database;

5. Re planning the system of training and licensing of drivers;

6. Forming and building up of first-aid stations for traffic accidents; and

7. Mechanizing and modernizing the system for registering motorized vehicles.

TECHNOLOGICAL ANALYSIS

Vietnam is country where the high technology production is very slow. The government

of Vietnam has announced the in July 2010 regulating investment and co-operation with

foreign partners in the field of science and technology. Vietnamese government has taken

many numbers of initiatives for e-governance in the country. Vietnam still faces

challenges in terms of computers, which are less than 40% of region and small cities.

Vietnam is now becoming a rapidly developing country in terms of technology. In the

year 2011, the strategic plan took place. The main concern of the plan is economic and

social development for the period 2011-2020, in which the technology and infrastructural

development is considered as main aim. With this plan, the country has build many

express highways and will let the local transport network be eventfully upgraded to fulfill

the requirement of rural industrialization and modernization, and link the rural area with

the other national system

The main focus of the above plan is to identify the scientific and technological gap till

2020. To give a start to this project, the Vietnamese Government has given top priority

for enriching the competence of scientists and related managers while encouraging the

organization of training courses partnered with foreign competent partners.

As per this project, the Government will focus on the renovation of technology and

scientific area to focus the competitive edge of local products and assisting business to

buy the patents in some prioritized area such as biotechnology, information technology,

new material technology- nano technology, manufacturing technology and automation.

Analysis of Vietnam Technology

Summary

Vietnam’s telecoms sector is growing quite fast, and the Internet has become very

popular in the country. The number of Internet users doubled during 2005–06. In

addition, at the start of the new millennium the country decided to embark upon the

creation of Millennium Science Institutes (MSIs). However, the country was granted no

patents in 2006 and just one in

2007. The Central Committee of the Communist Party of Vietnam recognizes the

importance of biotechnology, and has initiated steps to foster its development in the

country. Japan is funding Vietnamese power projects based on renewable resources so

that it can receive required Certified Emission Reduction credits.

Evolution

Mobile telephony continues to grow at some speed despite severe price constraints.

Vietnam is mirroring China and India on a smaller scale, with Western-educated

Vietnamese citizens returning to the country to add foreign management and technical

experience to the low-cost workforce. Vietnam is one of the fastest growing markets for

technology of any sort –

and telecoms in particular – as large infrastructure projects continue to attract investment

and consumers. The Internet is becoming very popular in the country, and the number of

users jumped from 5.9 million in 2005 to 14.7 million in 2006, a rate of around 150%.

Structure and policies

The Ministry of Science and Technology is responsible for technological and scientific

initiatives in the country. Vietnam embarked upon the development of a series of MSIs

starting from 2000. These institutes will have the following characteristics:

They will be efficient, small in size, and usually located within existing institutions.

Their principal activity will be scientific research, and their principal product will be

educated individuals. Each institute will have a small permanent scientific staff of very

high quality, a flow-through of junior scientists, and numerous visiting scientists.

Institutes will be autonomous with regards to local institutional structures. At the same

time, they will have links to other institutions, the private sector, the government, and one

another.

Each institute will mark a organizer of major scientific importance, with entrepreneurial

traits and persona, who is able to both work at the frontiers of research and to serve local

needs. Institutes should be flexible in concept and design, and adapted to local conditions.

Intellectual property

There is practically no innovation in Vietnam. The country was granted no patents by the

US Patent and Trademark Office in 2006, and just one in 2007.

Performance

Telecom

Vietnam has witnessed rapid growth rates in terms of both mobile and fixed line users.

Mobile penetration per 100 individuals increased from 44.4 in 2007 to 72.1 in 2008, and

then to 94.7 in 2009, which indicates that the country witnessed strong growth over the

period. The country recorded impressive mobile penetration growth rates of 51% and

62% in 2007 and 2008 respectively, and mobile subscription growth rates stood at 61.6%

in 2006 and 32.6% in 2007. The number of fixed line subscribers grew at a rate of 16.7%

in 2006 and 13.8% in 2007.

Internet

Since 2008, the number of internet users has increased from 21 million to around 25

millions till 2010. Vietnam has observed good growth rate of around 19% in 2009, which

was previously recorded very less during 2005 and 2006

Technological Landscape

Figure

Biotechnology

Vietnamese Prime Minister Nguyen Tan Dung approved an investment of VND1.7tn

($87.2m) for the national program on IT application in state agencies by 2015.

The aim of the program is IT infrastructure for the enhancement of e-governance, the

growth of IT application in the state, and the condition of information and public

services.

The country also plans to build a database center to link central and local information

systems, and to build national database centers focused on people, natural resources and

the environment, finance and economics, industry, and trade in order to boost e-

governance in the public sector. It intends to introduce video-conferencing between

government, ministerial, and local representatives, and expects state agencies to open up

their websites and offer online public services.

In December 2008, the deputy prime minister affirmed that the state is ready to invest

$20.8m to solve pressing issues in agriculture relating to seeds, new breeds, and post-

harvest technology. A new technology research center will be built in Hanoi, with a

projected investment of $350m sourced from Japan’s Official Development Assistance

program. The center will aim to effectively implement the country’s space technology

research and application strategy by 2020. It will be located at the Hoa Lac Hi-Tech Park,

which is expected to include a satellite manufacturing plant, an integrating and testing

center, a magnetic field testing area, a satellite control center, and an observatory model.

Work on the new center is expected to begin in 2010 and to be completed by 2017.

KEY SCIENCE AND TECHNOLGOY TASKS

1. Social sciences and humanities

Carrying out basic researches in social sciences and humanities and management science.

Studying to make clear new issues of development models and the way towards the

socialism. Developing synchronized regulations of the socialist-oriented market

economy in our country. Forecasting development trends in the region and the world for

socio-economic development strategies, ensuring security and defense in the international

integration context. The industrialization and modernization process of the country is

done for the social development and the enhancement for the scientific foundation.

2. Natural sciences

Focusing on basic researches in some fields at which Vietnam is strong such as

mathematics, physics, chemistry, mechanics, life science, terrestrial science. Especially

paying proper attention to applied-oriented basic researches for supporting selection,

acquisition, adaptation and improvement of advanced technologies imported from foreign

countries, and then creating Vietnam’s technologies.

3. Technology sciences

a) Information – Communication technology

Studying and improving the level of using information-communication technologies to be

equal with regional and international levels in fields of posts, telecommunications,

banking, finance, tourism, trade, energy, transportation, defense, security.

b) Biology technology

Using widely biology technology in agricultural production, aquaculture, medicine-

pharmacy and environment protection. Carry out researches to develop product

technology for the establishment of biology industry.

Focusing on researching, mastering and using in practice some high technologies in fields

of gene decoding, production of new-generation vaccines, original cell technology.

c) Advanced material technology

Focusing on researches to use advanced material technologies to produce steel, special

alloys, polymer and composite materials, electronics and photon materials.

Researching nano material technology and mastering medicine–biology technology,

material manufacturing technology.

d) Automation, mechanics and machinery technology

Using integrated technologies, developing techniques of intelligent and parallel robots.

Studying technologies of designing and manufacturing mechanic-electronic controlling

systems; developing techniques of imitation, making virtual samples, number controlling

technology in mechanics, knitting, tailoring and shoe-making ect..

Initially implementing some new research directions as micro mechanic-electronic and

nano mechanic-electronic systems.

đ) Technology in the energy field

Studying to use new types of energy and recycled energy, technology of using safely and

effectively energy. Researching technology solutions to safely and effectively exploit

traditional types of energy.

Developing technologies of manufacturing energy mechanic-energy equipment as

complex of hydro-electricity equipment, electro-conductivity systems, high-pressure

electricity equipment.

Studying to use radiation energy and S&T issues for the construction, management and

safe operation of nuclear electricity factors.

e) Preserving and processing technology of agricultural products and foods

Researching and using preliminary processing technologies on small and medium scale,

post-harvest preserving technology and advanced processing technology in order to

increase the quality, added values and strengths of agricultural products and foods,

especially some products which have advantages and potentials for exports as rice,

marine products, coffee, tea, cashew, rubber, meat products, milk, vegetables, flower,

fruits, fruit juice, vegetable oil.

g) Cosmology technology

Researching to acquire remote sensing technology and global positioning technology for

information and communications demands, surveys and management of natural

resources; monitoring the environment; preventing natural disasters; planning on land use

and territory; raising and catching marine products; positioning means of transportation;

and serving the national defense, security and international integration.

Building capacities of designing and manufacturing some land receiving and

broadcasting stations, air flying equipment as the basis for the establishment of

cosmology technology industry and the development of information and communication

technology.

ENVIRONMENTAL ANALYSIS

Introduction

This chapter analyses the challenges Viet Nam will face over the coming decade in

managing the environment. Begins with examining Vietnamese experience in designing

and implementing environmental protection and management policies. then examines

future potential pressures on the environment and the impact of endogenous forces, in

particular population growth, economy and the adoption of technical changes, on the

rural environment also examines the major exogenous sources of risk to rural

environment over the coming decade. Finally, considers the agenda for future actions,

and possible role of donors in supporting Government intervention.

Viet Nam is blessed by the nature, with a great ecological and hydrological diversity. The

Country is made up of equatorial lowlands, high, temperate plateaus and cooler

mountainous Areas. It lies in the inter-tropical zone and local conditions vary from frosty

winters in the far northern hills to the year-round subequatorial warmth of the Mekong

Delta. Geographically, it stretches over 1600km (1000mi) along the eastern coast of the

Indochinese Peninsula; and has two main cultivated areas, that are the Red River Delta

(15,000 sq km/5400 sq mi) in the north and the Mekong Delta (60,000 sq km/23,400 sq

mi) in the south. Vietnam also has diverse wildlife, with rare and precious fauna such as

elephants, rhinoceros, tiger, leopard, black bear, snub-nosed monkey, crocodile and

turtle. Forest area accounts for 2% of total forests in East Asia and Pacific. Fish catch is

among the 10 highest countries in the world, with 1,451,800 tons per year. However, as

the report of the World Bank on the environment in Viet Nam, ―Rapid economic growth

in Vietnam over the last ten years, and its associated industrialization, urbanization, as

well as increased exploitation of natural resources, has created significant pressures for

the environment. For example, the diverse wildlife is in precipitous decline because of

the destruction of habitats, illegal hunting and pollution. In fact, Viet Nam Rhino was

officially extinct in 2011.

One of the most obvious examples for illustrating the environmental pollution is the

Phenomenon of getting narrowed of the lakes in Hanoi. The total area of lakes has

decreased sharply during the urbanization, while a lot of them have disappeared. It is

estimated that 80% of the lakesides have got polluted, 71% of lakes have suffered from

pollution, 26% of the lakes still do not have embankments, while 8% of lakes have partial

embankments. Environmentalists have called on to take urgent actions to protect the

remaining lakes, or they would also disappear one day.

Vietnam is among the countries that can be seriously affected by climate change. And the

fact shows that the increasing deterioration of environmental conditions is emerging as a

barrier to growth and development in recent years. In fact, according to the General

Statistics Office, domestic natural disasters occurred in 2011 has made 257 people dead

and missing, 267 wounded; nearly 1.2 thousand houses collapsed and swept away; 391.8

thousand houses were submerged or damaged; more than 760 km of dykes, and the 680

km road motorized traffic bursts, landslides; 867 power poles broken or poured; nearly

54,000 hectares of rice and vegetables has been lost; more than 330,000 hectares of rice

crops were flooded or damaged. Total value of damage caused by natural disasters in

2011 was estimated at over 10 trillion VND. Thus, this is really a big challenge of the

country; and it needs a national and urgent action to prevent an ecological and

hydrological catastrophe.

Past Policies and Management Achievements

Environmental Protection-Institutional and Policy Development Integrating

Environmental Considerations into Socioeconomic Planning

Under the Law on Environmental Protection every project has to prepare an

environmental impact assessment (EIA) to analyze and forecast environmental impact

during the period of project implementation, to be submitted to competent authorities for

approval.

Pollution Management for Industries and Urban areas

Due to the fast growth in industrialization as well as urbanization which is the reason for

rapid growth in development socio-economic culture, this has lead to attract the

government’s attention for environmental pollution.

Natural Resource Management Reforestation

Important achievements in reforestation have been made. To protect natural forests, in

early 1997, the Prime Minister issued a Decree banning all exploitative activities of

natural forests.

Land Management

Part of the Doi Moi renovation process is a fundamental change in land policy. Under this

policy, cooperative land was allocated to cooperative members free of charge and with

equality among the members for all types of land.

Water Resources Management

Key responsibility to provide water facility to farmers and to maintain the rice production

sustainability, the irrigation system receives the largest investment in the agricultural

sector budget.

Future Pressures

Population Growth

Viet Nam is the third most populous country in Southeast Asia and 14th in the world

(Central Population and Housing Census Steering Committee 2009). The population

annual growth rate is approximately 1.2 percent during the period of 1999-2009.

Population growth rate differs between urban and rural areas.

Agricultural and Rural Development

Following the implementation of reforms, agriculture and the rural sector have developed

steadily with the annual average rate of 4 percent. The first problem is the uncontrolled

pollution from agricultural production activities. Overuse and misuse of agricultural

chemicals (i.e. pesticides, herbicides and insecticides) stands as the most significant

danger to the rural environmental, health of farmers and agricultural products consumers.

Industrialization Industry zones are increasing day by day over last decade.

In 2008, the number of industrial zones reached 223. There are severe problems with the

current management of these industrial zones.

Current and Future Challenges

Natural Resources Issues-Degradation of Water Resources

Population growth, intensive agricultural production, industrialization and urbanization

combined with the under-pricing of both drinking and irrigation water have increased

water demand as well as waste discharged to water. This leads to decrease in stock of

available water quantity.

Land Use Inefficiency and Soil Degradation

Due to the rapid population growth, arable land resources per capita have become

increasingly scarce. Over the 1996-2008, the average usable land area per capita had

reduced by around 2000 m2 from 4979 to 2935 m2 which is equal to about half of the

world level in the year of 2007 at 4653 m² (World Resource Institute Website 2010).

Biodiversity Loss

Another environmental issue relates to biodiversity loss. Some species are in danger of

extinction, including tigers, single-horned rhinoceros, grey bulls, golden deer, musk-deer,

and white-neck cranes. Biodiversity loss also applies to the aquatic and marine

environment. Both the quantity and quality of the fish stock has declined. The fish stock

is estimated to have decreased by a quarter from 1990 to 2003.

Mineral Resources – Overexploitation and Pollution

Mineral resources have been exploited on a large scale, rapidly depleting reserves. The

most important mine is crude oil. Analysts expected production of crude oil will be more

than 400,000 barrel per day in the future years (Energy Information Administration

2007). Mining is also a great source of pollution. Technology used in mineral

exploitation is often backward and enterprises are not equipped with proper waste

treatment systems.

Urban Pollution, Waste Disposal and Sanitation

Urban pollution, water disposal and sanitation issues are discussed in the chapter on

urban management.

Barriers to Addressing the Environmental Challenges

Awareness-Policymakers

The awareness of policymakers about environmental issues is still limited, especially

when it comes to the consideration of trade-offs between economic development and 192

environmental protection.

Public Awareness

The limited awareness of environmental protection needs also extends to the community.

Industry , an important stakeholder in environmental protection, is far from being

convinced of the importance of investing in environmental protection.

Institutions and Policies-Overlapping and Ineffective Regulations

Specifically, the overlaps and ineffectiveness of regulations can be classified into the

following categories (Institute of Science for Environmental Management 2009).

Regulations related to organizational structure;

§ Regulations related to pollution control and waste management;

§ Regulations related to assessment and evaluation of environmental impact;

§ Regulations related to water resource;

§ Regulations related to inspection and handling violations of the environmental

law;

§ Regulations related to financial mechanisms.

Weak Enforcement of Regulations

Some believe that the most important policy issue in many areas is not the lack of laws

and regulations but weak law and regulation enforcement. This belief also applies in

environmental areas.

Lack of strength in Collaboration among Stakeholders at All Levels

§ Line Ministry organization

Poor use of land and planning in infrastructure

The existing plan for original natural resources or ecology management should work

jointly.

Underdeveloped Framework for an Environmental Services Market

At the moment, there is no proper market for environmental services. If all natural

resources are underpriced, then they are likely to be used wastefully.

Insufficient Human Capacity

There are only about 1900 environmental staff members nationwide. That means there

are only 22 environmental officers per one million people. It is estimated that to fulfil

increasingly demanding environmental tasks, this number should be double (Nguyen

2009).

§ Inadequate and Improperly Managed Budget

Since 2006, an annual budget for environmental protection activities nationwide has

increased to one percent of the annual state budget. However, this is not meeting the need

(ICEM 2007) and a significantly higher state contribution is required.

Suggested Solutions

Institutional Improvement

The environmental policy and regulation development process needs to be improved.

Adequate research needs to be carried out before issuing policy and regulations. More

specifically, the development of policy and regulations need to be evidence-based,

including as assessment of the needs of society. Mechanisms to facilitate the participation

of stakeholders in environmental decision-making need to be developed. Public debates

on environmental issues need to be facilitated so that different viewpoints and arguments

have a chance to be heard. The public media’s duty to disseminate information without

bias needs to be highlighted. Public disclosure, which involves publicizing information

on business environmental performance, needs to be promoted.

Market-Based Instruments

More market based instruments need to be developed and applied to address problems of

public goods and open access problems of environmental goods and services.

Awareness Raising

Awareness of environment and climate change issues needs to be raised both for the

public and for policymakers

Increased International Cooperation

Increased international cooperation could bring about multiple benefits. it will help

transfer of knowledge and technology needed to address environmental and climate

change issues.

Possible Environmental Projects for Partner Consideration

Tasks which have been identified as needing partner support include:

§ Reviewing and completing environmental standards

§ Introducing environmental taxes and tradable permits

§ Developing payment for environmental services

§ Upgrading the current MONRE to a Ministry of Environment

§ Public private partnership in providing environmental services

§ Building wastewater and solid treatment facilities for densely populated areas

§ Improving drinking water supply and sanitation

§ Enhancing environmental enforcement capacity

§ Facilitating business to meet environmental requirements for exporting commodity

§ Improving land use planning

§ Land use inventory and database

§ Enhancing hydropower planning and sustainable water resources usage

§ Introducing water pricing and tradable permits

Climate Change Adaptation and Mitigation

Climate change is a major problem that effect and impacts at global, regional and

local level too.

Problems are emerging in both physical and socio-economic forms. Although progress

has been made, there are large uncertainties and pitfalls in effectively examining the level

of vulnerability and how future adaptation and mitigation can be shaped.

Current Climate Change Observations in Viet Nam

International studies, such as the Fourth Assessment Report of the Intergovernmental

Panel on Climate Change released in 2007 (IPCC, 2007), the World Bank‖s study on the

impacts of sea level rise (SLR) on developing countries (World Bank, 2007), the National

Target Programme to Respond to Climate Change (MONRE, 2008) and the Climate

Change Scenarios for Viet Nam (MONRE, 2009), all have indicated that Viet Nam is

„particularly vulnerable to the adverse effects of climate change‖ as defined in the UN

Framework Convention on Climate Change (UNFCCC).

Climate Change Scenarios for Viet Nam and Potential Impacts

During 2009, IMHEN applied global climate change scenarios to the Vietnamese

situation to develop climate change scenarios for Viet Nam. Temperatures in winter

could increase faster than those in summer for all climate zones. Rainfall during dry

seasons may decrease in most climate zones while the South of Viet Nam may experience

a more extreme decrease.

Vulnerability to Climate change

Social Vulnerability

A key aspect of the lives of the rural poor in Viet Nam is vulnerability to natural disasters

and therefore to climate change impacts. Floods, drought, and crop failure are more

frequent in poor areas than in those inhabited by the rich.

Challenges and Opportunities to Climate Change Adaptation and Mitigation

Since the Human Development Report 2007-08 (UNDP, 2008) and the Fourth

Assessment Report of the IPPC (2007) were released, both of which indicated the

urgency of climate change impacts affecting Viet Nam, there has been great attention

given to climate change in the national and international media. A number of awareness

raising and capacity building programmes have been conducted at national and local

levels, not only by the Government but also by non-governmental and international

organisations.

Awareness and Knowledge Base

Public awareness is currently concentrated on the effects of climate change on natural

disasters.

Mitigation

There are opportunities for Viet Nam to start preparing now for a low-carbon, developed

economy by using modern technologies and making investments that save costs and are

socially and economically attractive, while at the same time mitigating GHG emissions.

Energy Demand and Shortage

Though Viet Nam has nearly all kinds of energy resources, its capability of exploiting,

processing and using energy is limited. An imbalance between supply and demand for

energy will appear in 2010-2020 and Viet Nam will gradually turn from exporting to

importing energy (Dung et al., 2003 and Dung, 2008).

Disaster Risk Management and Reduction

Climate change will result in more frequent and intensive disasters with severe

consequences for local food security and livelihoods of agriculture-dependent

populations in vulnerable areas.

National Policies and Institutional Capacities -The National Target Programme to

Respond to Climate Change Mitigation

Viet Nam contributes negligibly to global emissions and has low energy intensities,

although inefficiency in energy use means that it has higher emissions than it should,

given its GDP level.

Climate Proofing and Adaptation

Climate proofing of existing and future infrastructure investment in the light of emerging

climate change impacts in vulnerable areas, such as the Mekong Delta, requires effective

partnerships to build institutional capacity.

Capacity Building

Within various institutions programmes are needed to improve awareness and of climate

change, with focus on relevant technical knowledge. Capacity building in many sectors,

provinces and line ministries is needed.

International Climate Change Policy Integration and Cooperation

To address the problem, Viet Nam must take the initiative in developing, organising, and

implementing climate change strategies, policies, and legislation with close cooperation

with international community.

The Role of United Nations’ Agencies and Like-Minded Donor Group United

Nations’ Agencies

On climate change, UNDP has been the most active of the UN agencies in Viet Nam,

with several activities to support the Government, notably the formulation of the NTP-

RCC, the application of „global climate models‖ to Viet Nam, NTP-RCC

implementation, the Second National Communication to UNFCCC, and information

management and awareness raising.

Like-Minded Donor Group

LMDG, as an ad-hoc group, is drawn together by a common commitment to promoting

pro-poor growth. The group aims to improve the quality of aid in Viet Nam through the

harmonization of aid management practices, participation in joint activities, promoting

the use of Government systems, and introducing new aid instruments that lower

transaction costs and improve effectiveness.

Efforts to prevent or reduce climate change impacts in Viet Nam face many challenges,

including:

§ Viet Nam is a developing country, so national resources for responding and

adapting to climate change are still limited;

§ Reducing GHGs is a challenge for Vietnamese enterprises, especially small and

medium enterprises, because they do not have sufficient capacity to apply new

technology and adopt energy efficiency methods or clean energy;

§ Climate change affects the poor in rural areas more than others, and they are also

those with the least resources to cope;

§ Management at the local level has not paid appropriate attention to climate

change, including responding to it and adapting to its consequences;

Urban Management

In 1990, there were 500 towns. Rice fields and villages have been converted to residential

areas. The urban population increases steadily.

The 1999 Census found that in the five years preceding the census date, about 1.6 million

persons moved from rural to urban areas.

Social Consequences of Rapid Urbanization

As per law citizen can live wherever they want. However in practice this is not the case

as many benefits, subsidies and access to services are still linked to the registration

system.

Implications of the Growth of Large Cities

In many ways, Vietnamese cities have been well served given the country’s income level.

For example, the standard of garbage collection and street cleaning has been quite

remarkable, and supply of domestic water and power satisfactory. However, the growth

in the sheer size of HCMC and Ha Noi poses great challenges.

Solid Waste

Increased population, income levels and industrialization are increasing solid waste

generation.

Air Pollution

The faster the process of industrialization and urbanisation, the more serious is the

problem of air pollution. Dust is the most serious air pollutant in Viet Nam.

Urban Management Issues

Rapid growth in the large cities has placed great pressure on the urban environment. The

recent study by Harvard University concluded the investment in infrastructure is HCMC

was falling behind the levels needed to match the needs generated by the rapid growth of

the city

Industrial and Construction Pollution

In 1995, there were just 12 industrial zones. In 2008, the number of industrial zones

reached 223 (MPI 2009). Old industries, which were built before 1975, pose particular

problems, as they have old production technologies. While many newly built factories

have waste treatment systems, many of the systems are not operating, or are in operation

only when environmental officers come to the factories for inspection. Consequently, a

large amount of untreated industrial waste is discharged into the environment every day.

LEGAL ANALYSIS

All powers of state are centralized in the National Assembly, and the Government performs all

executive functions, supported by local level authorities under the National Assembly. People’s

Courts is the highest authority of judicial arm and responsible for resolving disputes and hearing

appeals from matters tried in the lower courts.

Hierarchy of laws

Instruments Issuing Body

· The Constitution

· Laws (including Codes) · National Assembly

· Resolutions

· Ordinances & resolutions · Standing Committee of the National

Assembly

· Decrees, regulations& resolutions · The Government

· Decisions & directives · The Prime Minister

· Circulars · Ministries

· Decisions · Ministers

Key legislative and policy developments for Vietnam as an investment destination

Years Amendments

29 Dec 1989 The first law of foreign investment passed by the national assembly.

15 Apr 1992 For the first time, The constitution recognizes the importance for the

development of market economy, the concept of private property and the right of

individuals to conduct business activities. The authority expressly recognizes

foreign-owned capital as a rightful sector of the economy & encourages foreign

investment and provides guarantees to foreign investors that assets will not be

expropriated.

12 Nov 1996 A new law on foreign investment was passed with significant improvements on

the 1987 instrument: for example allowing new forms of investment which also

includes build-operate-transfer contracts. The revised law also allows the

investors to assign their interests in a foreign owned enterprise to other parties.

9 June 2000 The amended law on foreign investment recognises the rights of foreign

investors to merge their investment company with another, to acquire companies

and branches, and their rights to transfer the form of investment.

13 July 2000 The United States of America and Vietnam has signed a bilateral agreement.

14 June 2005 The National Assembly passed a civil code of commencement law which

brought reform in Vietnamese contract law, including new provisions governing

the use of land, intellectual property rights, technology transfer, commercial

contracts and trading rights.

29 Nov 2005 The National Assembly pass law on investment and law on enterprises &these

laws passed by the authority are cornerstone laws which establish a common

regime and unified ‘company’ law for domestic as well as foreign investment in

Vietnam.

11 Jan 2007 Vietnam accedes as the 150th member of the world trade organization (WTO)

Types of corporate enterprises

Since 2006, for both domestic and foreign-invested enterprises, there are three main private

company forms:

• A single member limited liability company (SLLC);

• A multiple-member limited liability company (MLLC); and

• A shareholding company (SC), also referred to as a joint stock company.

SLLC MLLC SC Investors and their intentions

· The sole investor may be an organization or an individual

· Cannot be listed

· Two or more investors (or members) who may be organizations or individuals.

· The number of investors must not exceed 50

· Cannot be listed

· Three or more investors(no upper limit who may be organizations or individuals

· May be a ‘public company ‘(more than 100 shareholders or has made a ‘public offer’ via mass media) and therefore and other requirements

· Can be listed Capital or form of equity investment

· ‘charter capital which is the capital that the investor contributes that the investor contributes or undertakes in certain period of time

· Cannot issue shares · Cannot reduce charter capital

· ‘Charter capital’, which is the capital that the member contributes or undertakes to contribute in a certain period of time.

· Failure to contribute in full and on time gives rise to a debt owned by the relevant investor to the MLLC

· Cannot issue shares.

· Charter capital is divided into equal portions called shares

· Must have ordinary shares and may have preference shares, including voting preference shares, dividend preference shares, redeemable preference shares and other types stipulated in the charter.

· May issue all types of securities to raise funds and may issue bonds, including convertible bonds.

Transfer of assignment of capital · When an investor transfers

only part of the character capital, the SLLC must register for conversion into an MLLC

· Investors wishing to transfer all or part of their capital contribution must first offer to sell such shares of capital contribution to all other investors proportionally

· Shares may be freely transferred (except for certain limitations on founding shareholders for the first three years)

· Voting preferences shares may not be transferred.

Management structures in the main private company forms

SLLC MLLC SC

Members council

· Where the investors appoint

more than one authorized

representatives, they form the

member council ( the MC).

The investor appoint one

authorized representative as

chairman of the MC

· The MC is the highest

authority in the SLLC.

Chairman of the SLLC

· Where the investor must

appoint one or more

individuals as it authorized

representatives

General director

· The MC or the chairman of

the SLLC appoint a general

director (the GD) to manage

the day-to-day business

operations. This position is

similar to that of a CEO. The

GD must not be a related

person of a member of the Mc

or the chairman of the SLLC ,

nor of a person authorized

representative or the chairman

of the SLLC.

Inspectors

· The investors must appoint

one to three inspectors who

Member council

· The MC comprises all the

investors (or their

authorized representative in

the case of investors who

are enterprises)

· The MC is the highest

authority in an MLLC. MC

has to make decision on the

specified matters.

· Voting thresholds are set at

65% for basic matters and

75% for certain specified

matters. Some enterprises

are permitted to lower these

thresholds to a simple

majority, but this depends

on several factors, including

the home country of any

foreign investors.

Chairman of the MC

· The chairman of the MC is

appointed by the MC

General director

· The GD manages the day-

to-day business of the

MLLC and is responsible to

the MC

· The GD is appointed by the

General meeting of

shareholders

· All the shareholders have

the right to vote in the

general meeting of

shareholders (the GMS).

· The GMS is the highest

authority. The law

specifies certain matters

requiring GMS approval.

Voting thresholds are set

at 65% for basic matters

and 75% for certain

specified matters. Some

enterprises are permitted

to lower these thresholds

to a simple majority, but

this depends on several

factors, including the

home country of any

foreign investors.

Board of management

· The board of management

(the BOM), akin to a

board of directors, has

three to 11 people

appointed (via cumulative

voting ) by the GMS

· Investors holding

specified percentages

have the right to nominate

oversee the actions of the MC

or chairperson of the

company and the GD and

report to the investor

· Where the investor is an

individual, the SLLC has a

chairman and a GD. The

investor can be the chairman

and GD.

MC

Inspection committee

· An MLLC with more than

11 members must have an

inspection committee

· The inspection committee

has the responsibility,

power and conditions

stipulated in the charter

candidates for the BOM

· Decisions are passed by

simple majority

· The BOM supervises the

GD

Chairman of the BOM

· Appointed by either the

GMS or the BOM, the

chairman has a casting

vote and may by the GD

· General director

· The GD, akin to a CEO, is

appointed by the BOM

and is responsible for the

day –to-day management

of the SC

· The GD cannot

concurrently be the GD of

other Vietnamese

companies

Inspection committee

· If an SC has more than 11

investors ,or more than

50% of the shares are held

by investors who are

enterprises, it must have

an inspection committee

· The inspection committee

supervises the BOM and

the GD

Land

Developers may be allocated land or may lease it from the state. In either of the case, if it is used

for residential housing and transferred to an eligible buyer, the buyer receives the right to use land

for a ‘stable and long term’. A common structure in land development investments is for the

Vietnamese party to contribute their land use rights as capital into the investment joint venture.

To do this, the Vietnamese partner must have been allocated the land use rights and have paid all

land use fees.

Contract

As a general rule, parties to Vietnamese contracts are free to agree on the specific contents of

their contracts.

Securities and the Stock Market

All public companies must register their securities with the Vietnam Securities Depository. Listed

securities are traded on one of Vietnam’s two stock exchanges and there is also an unlisted public

companies market. Foreign investors wishing to invest in Vietnam’s stock markets will need a

trading code and either a securities company, an authorized transaction representative or a local

fund manager through whom they will trade.

Banking and Finance

Vietnamese credit institutions and banking operations are overseen and regulated by the State

Bank of Vietnam.

Tax

Corporate income tax Personal income tax Values added tax

· Standard rate is 25%

· Higher rates (between 32%

and 50%) apply to

enterprise operating in

petroleum, gas and other

natural resources sector.

· Preferential rates of 10%

and 20% apply to

enterprises in certain sector

such as education, training

and health care and to

newly established entities

in certain economic zones

and areas with difficult

socio-economic conditions.

These preferential rates

may apply for a limited

period, eg 10 years, after

which the standard rate

applies. Tax holidays and

rate reductions are also

available in specified cases.

· PIT rates on salaries are

progressive, with higher

rates (in 5% increments

applying to portions of an

individual’s monthly

income. The lowest rate

,5% applies to the first 5

million Vietnamese dong

earned each month. The

highest rate ,35%, applies

to any earnings per month

of more than 80million

Vietnamese dong.

· Particular rates apply to

other income: eg 5% on

capital investments, 25%

for real property transfers

(capital gains) and 20% for

share transfers.

· Standard rate is 10% which

applies to all applies to all

applicable goods to all

services for which an

alternative rate is not

provided

· Rates of 5% and 0% can

also apply, depending on

the nature of the

transaction : eg the 5% rate

applies to goods and

services in agriculture and

goods used for education.

Intellectual Property

Intellectual property protections in Vietnamese law are bolstered by Vietnam’s accession to

various international treaties dealing with intellectual property.

Employment Law & Dispute Resolution

Vietnam’s population is estimated at approximately 88 million and is expected to grow with an

annual growth rate of 1.3%. Around 60% of the population are under 25 years of age. The

strength of trained or skilled workers (with elementary qualifications or higher) is approximately

15 % of the population. The Labour Code issued in July 1994 (as amended in 2002, 2006 and

2007) creates a legal framework that sets out, amongst other things, the rights and obligations of

employers and employees with respect to working hours, labour agreements, payment of social

insurance, overtime, strikes, and termination of employment contracts. In addition, there are

specific implementing decrees and circulars guiding the provisions of the Labour Code.

The new Law on Commercial Arbitration will usher in a new chapter for arbitration in Vietnam;

in particular, for international commercial arbitration. For foreign investors, a choice may

sometimes be made as to whether to resolve disputes in the Vietnamese courts or by arbitration

CHAPTER 3

REPORT OF PAPER SECTOR IN VIETNAM

Vietnam’s paper industry showcases superb opportunities. Vietnamese paper

consumption per capita was 8 kg/person/year in 2000, rising to 13 kg/person/year in 2004

and 22 kg/person/year in 2009 and it has continuously increased every year. With

Vietnamese factories only supplying 35% of domestic demand, the remaining has to be

imported.

Vietnam now has 500 paper and pulp industries with a total production capacity of 2.075

million tons of paper and 437,600 tons of pulp per year. However, the volume is equal to

only 21% of designed capacity of mills. In the past there were only state enterprises

operating. Nowadays, many private enterprises are competing with state enterprises, that

latter of which are in the process of transfer to private industry.

Vietnam‘s paper industry’s capacity is only able to (i) produce at about 21% the capacity

it was designed for, and (ii) satisfy only 35% of the demand. That means much of the

decent paper has to be imported. Total quantity of imported paper was 1.03 million tons

for 2009.

There are several mills having capacity of over 1,000 tons/month. Most mills’ technology

lags 10-20 years behind other countries’. However, Bai Bang and Tan Mai are two of

several plants having installed modern processing technology. Most of the local paper

mills produce bond paper. The required raw material, pulp, is becoming more and more

scarce. Demand forever exceeds the supply.

The Vietnam Paper Association reports that the paper industry in Vietnam still focuses

mainly on bond (printing and writing paper). The capacity to produce packaging paper is

very limited, and the industry needs to import much of it.

There has recently been several big investment projects in the paper industry such as the

SCG Paper Group (USD 220 million), Lee and Man Paper (USD 480 million), Sojitz and

Oji Paper (USD 1.2 billion). These projects are going far in helping meet domestic

demand.

Vietnam's paper industry expects to meet 70% of the domestic consumption demand by

2020, the Dang Cong San Vietnam newspaper reported, citing the source from Ministry

of Industry and Trade.

According to the newspaper report, Vietnam currently ranks second largest in the world

in terms of exporting timber shavings for the paper industry. Last year the country

exported 3 million tons of timber shavings.

Wood pulp and paper industry Situation

As compared to other industries in Vietnam considering in terms of international

competitiveness, the pulp and paper industry is relatively underdeveloped, it is not able to

fulfill growing national demand. There are very large number of state owned units

compared to private organizations for pulp and paper and as a result of these there is

underdevelopment in this sector. All except a few are of moderate size, with rather old

equipments and high relative costs. From over 25 pulp mills, only five have a production

capacity exceeding 10000 T/year; and from over 50 paper mills, only 20 have a

production capacity exceeding 10 000 T/year (Table 1).

There is an association of industrial plan with the plan of reforestation which aimed of

reaching 0.615 million tons per year for pulp and paper production in year of 2005 and

further will reach to 1.05million tons per year by the year of 2010. The reason for this

growth is due to the object of providing at least 80-90% of the national consumption.

Notable problems have been faced so far in the plantation programs as compared to

industrial development plans in their implementation in Vietnam. The progress report of

the pulp and paper productions has reached to ceiling since 2000, with difficulties in

reaching two thirds of the results which were expected by the industrial plan in 2005. In

the meantime, there is continuous increase in demand.

There are large numbers of average small capacity of pulp mills and out of these many

are very far from reaching the theoretical capacity and so the pulp production has not

been able to follow the increase of demand. There is suffering faced by all the mills from

supply difficulties, thus have to import significant amounts of pulp from other countries.

The accounts of imported pulp results on an average of 45% of the total input in paper

mills of Vietnam, and which contributes to 60 - 65% of their production costs.

Competition faced by pulp mills with chips and board industry for the supplies: Vietnam pulp mills are facing very harsh competition for the same resource with board

mills and chip mills for the supply of raw materials along with the transport cost

problems. But they all are benefited in terms of difference in cost structures of each of

them. The development has been visualized in furniture, flooring and other wood

working industries, since the economic reform due to the availability of cheap but skilled

labor force. Based on increasingly big amounts of imported timber, and re-exported

manufactured products, the Vietnamese sector has become one of the new place of

opportunity for the world furniture industry. The dynamics of board and panels industry

in Vietnam, have direct linkages with the furniture and indoor - outdoor wood industry is

being benefited from this trend, and as a result of that there has been growth in the

national consumption up to more 8 lacs m3/year. Far above that level, the production has

rocketed up to 1.6 million m3/year and more in 2000, the difference being essentially

powered by the exports towards Japan.

Today’s Logistic Situation in Vietnam: The road network is not yet well developed in Vietnam. As a result of the wood which is

harvested has to be mostly transported by means of bullock cart. The investment capacity

of the individuals working in the sector is another reason for this mode of transportation.

The wood to plantation exit is taken from the depot with the help of small & medium

sized tractors or lorries to carry the wood. Later on, big lorries are used to transport the

wood to the mills or processing plants. The sequence of transportation prevailing apart

from being worst is also most expensive. The transportation costs are much higher than

the costs prevailing in other countries. In these sequence of transportation, lot of

unloading and loading as well waiting time is involved at each stage, therefore again the

system is not economical and efficient.

Pulpwood transport cost is shown in below table:

Increasing demand

Those involved in the promotion of the pulp and paper industry maintain that demand for

paper products is increasing, and must be met. Paper consumption per capita and

"development" go hand in hand in this context, as if by increasing paper consumption a

rise in living standards will automatically occur. The United Nations Food and

Agriculture Organization (FAO) for example, states: "That paper is a commodity vital to

the growth and development of every country, its communications and packaging, is

beyond dispute" (FAO 1986: 3). The "paperless office" is viewed as a "threat" by the

captains of the pulp and paper industry (e.g. Erickson 1996: 160), and demand is seen as

something that "has to be stimulated" (Clark 1994 cited in Kerski 1995: 144).

Table : Pulp, paper and board consumption (selected countries) 1992-93

Country consumption (kg) per capita

Country consumption (kg) per capita

USA 333 Australia 167

Finland 266 South Korea

134

Hong Kong 233 Malaysia 82

Japan 230 Portugal 75

Singapore 230 Thailand 34

Netherlands 227 Brazil 27

Taiwan 225 Chile 27

Canada 220 China 20

Germany 200 Indonesia 13

Sweden 195 North Korea

3

UK 192 Vietnam 1

New Zealand

184 Laos <1

The expansion of supply

To meet this perceived demand for paper products, there is an flourishing trade in the

commodities involved in the manufacture of paper, as well as in paper products

themselves. Raw materials, initially in the form of logs, then wood chips and increasingly

dry pulp form an expanding part of world trade.

Changes in manufacturing technology

At least until the early 1950s, the ample supplies of long-fibred pulp in temperate regions

led to reluctance on the part of the pulp and paper industry to utilize short-fibred

hardwood pulp. However, forecasts of a future shortage of long-fibred pulpwood

encouraged research into pulps from Birch, Beech and Eucalypts, which were found to be

very suitable for certain grades of paper production. The development of technology for

utilizing short-fibred pulps from tropical hardwoods followed, and by the mid 1970s

mixed tropical hardwoods could be utilized for pulp production on a commercial scale.

Demand for hardwood pulp meanwhile has increased with the use of computers and

photocopiers in offices, which require paper products such as fine writing paper,

computer and copy paper which are manufactured from hardwoods.

World Bank

The World Bank's policy on forestry investments has evolved since the late 1970s.

Before then the Bank viewed forests simply as sources of capital to support growth in

other sectors of the economy, and lending to the forestry sector was therefore entirely on

industrial utilization and investment in new plantations of fast-growing, usually exotic

species with ready markets (World Bank 1994: 33). In 1978 the Bank produced a

Forestry Sector Policy Paper, and since then, Bank rhetoric at least, has focused on the

role of forestry in relieving rural poverty. This Policy was updated in 1991 with an

increased focus on the "adequate planting of new trees and the management of existing

tree resources to meet the rapidly growing demand for the products and services that

forests and trees can provide for the rural poor in developing countries" (World Bank

1991: 10). However, although the share of lending for industrial forestry projects has

decreased to 20 per cent of total forestry lending, the actual amount lent has increased by

12 per cent to an average of over US$100 million per year, with around US$240 million

more currently in the pipeline (World Bank 1994: 13). Since the 1991 Policy the Bank

has funded no commercial logging in primary moist tropical forests, which reveals an

even larger shift towards industrial plantation projects funded by the Bank.

The Operations Evaluation Department of the World Bank produced another forestry

report in 1991 reviewing the Bank's forestry portfolio. The report stated that although

economic rates of return for the twenty forestry projects, for which data was available,

were almost all over 10 per cent, "the overall forestry portfolio had been unsatisfactory in

terms of its social impact, institutional development, and sustainability" (World Bank

1991: 34).

The Bank's attitude to demand for rural wood products is quite clear: "The achievement

of a more sustainable balance between supply and demand requires actions to reduce the

demand for fuel wood and other local wood uses and to increase supply by encouraging

the planting and husbandry of trees" (World Bank 1991: 14). Demand for fuel wood is to

be reduced through the use of more efficient household wood stoves, the use of kerosene

or other alternative fuels, more efficient marketing systems, and investment subsidies for

alternatives to wood burning (World Bank 1991: 49). On the other hand, "There will be

continuous increase in demand for industrial wood in both developed as well as

developing countries" (World Bank 1991: 30). There is no hint that demands for

industrial wood products such as paper should be reduced. According to the Bank, that

demand must be met at all costs.

It is estimated that paper consumption and production has increased from 13% in 2010 to

16% in 2011 and further it is going on increasing.

Capacity of Pulp industry is mentioned in below table:

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 CAPACITY 2.44 4,20,000 54.76 6,50,000 -1.54 6,40,000

Bleached hardwood

kraft pulp -BHKP

0.00 1,20,000 108.33 2,50,000 0.00 2,50,000

Unbleached hardwood

kraft pulp -UHKP

7.69 1,40,000 0.00 1,40,000 -7.14 1,30,000

Chemical Thermo-

Mechanical Pulp – CMTP

0.00 40,000 250.00 1,40,000 0.00 1,40,000

Semi-Chemical Pulp

0.00 1,20,000 0.00 1,20,000 0.00 1,20,000

In Early august of 2011, a state-of-the-art bleached hard wood kraft pulp (BHKP) line

with ECF bleaching process and delignification as pre-bleaching stage of An Hoa Paper

Joint-stock company successfully started up in Tuyen Quang province in the north of

Vietnam. The line with main equipment from Metso Paper and has capacity of 1,30,000

tones/ year. It is the biggest chemical pulp line in Vietnam up to now. A Hoa is also in

plan to build the second pulp line in the stage II with the same capacity.

A new pulp line is started in Long province in the south of Vietnam. It is in a Greenfield

mill of Phuong Nam Pulp Mill, which belongs to Vietnam Paper Corporation. It is an

advanced TMP line from andritz with capacity 1,00,000 tones / year. The line will use

local kraft as raw material.

With this new capacity, the pulp output is increased to 55% compared to 2010. Capacity

of the unbleached hard wood kraft pulp (UHKP) in Vietnam is going on decreasing

because of the environmental issue.

Now Vietnam is in excess of wood fiber, so we have to export wood chips, exporting

woodchips for a long time has brought effect on the economy in terms of reforestation,

helping the forest cover rate grow up across our country.

According to department of forests, at the moment, the plantation area (production forest)

is 1,503,426 ha, the newly planted forest is 208,869 ha and the bare land is 2,481,668 ha.

It is said that we still have a large area for reforestation.

In 2010, Vietnam has exported about 4 million tons wood chips, mainly to china and

Japan. With such outstanding point, pulp industry in Vietnam becomes more attractive to

the investors inside and outside in the coming years.

Vietnam will become the pulp exporter, instead of woodchips one. Whenever all the large

pulp projects are implemented, it is sure that Vietnam will not export woodchips

anymore.

Main Pulp Manufactures of Vietnam:

Manufacture Capacity (tones) Grade 1. An Hoi Paper JSC. 130,000 BHKP – Acacia, Ucalyptus

2. Phuong Nam Pulp Mill (Vinapaco)

100,000 Advanced TMP - kenaf

Vietnam Paper Corporation (Vinapaco)

75,000 BHKP - Acacia

3. Tan Mai group JSC. 40,000 BCTMP

4. Ha Giang Pulp Mill 20,000 UHKP - Acacia

5. Hai Duong Pulp Mill 15,000 BHKP - Acacia

6. Kinh Mon Pulp Mill 15,000 BHKP - Acacia

7. Quang Binh Pulp Co. 15,000 BHKP - Acacia

8. Lam Son Paper JSC. 15,000 UHKP - Acacia

9. Muc Son Paper JSC. 15,000 UHKP - Acacia

10. Song Lam Paper JSC. 15,000 UHKP - Acacia

Technical level of pulp production

After An Hoa’s pulp line is on stream in 2011, 85% BHKP produced can be made by

complete modern lines. The rest, 15% BHKP is from the small producers, with low

capacity and poor quality.

All UHKP is made by backward equipments with low productivity and no chemical

recovery system. 100% of semi-chemical pulp used for making joss paper is produced

with simple technology, causing serious environmental pollution.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 TOTAL PULP PRODUCTION

11.13 345,875 7.96 373,400 29.69 484,250

Bleached hardwood kraft

pulp -BHKP

0.00 1,20,000 20.83 145,000 51.72 220,000

Unbleached hardwood kraft

pulp -UHKP

10.56 134,000 -14.18 115,000 4.35 120,000

Chemical Thermo-

Mechanical Pulp – CTMP

15.29 24,465 63.09 39,900 51.00 60,250

Semi-Chemical Pulp

38.06 67,410 9.03 73,500 14.29 84,000

In comparison with 2010, pulp production in 2011 will increase 8% in total. It will be

contributed by increasing of the BHKP production. The production UHKP will decrease

caused by shutdown of the line polluted environment.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 TOTAL PULP

CONSUMPTION 13.59 466,924 10.91 517,850 15.64 598,858

BHKP 16.94 235,049 16.76 274,450 19.37 327,608 UHKP 7.69 140,000 -7.14 130,000 -2.31 127,000 CTMP -21.64 24,465 63.09 39,900 51.00 60,250

Semi-Chemical Pulp

38.06 67,410 9.03 73,500 14.29 84,000

The total pulp consumption will reach 517,850 tons in 2011, increased by 10.91%

compared to 2010.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 TOTAL PULP

IMPORT 6.69 106,477 35.66 144,450 -20.66 114,608

- Bleached kraft Pulp

24.05 100,477 28.84 129,450 -16.87 107,608

- Unbleached Kraft pulp

-31.82 6,000 150.00 15,000 -53.300 7,000

In 2011, the total pulp import will be 144,450 tons (mostly BHKP), increased 36% in

comparison with 2009 as the price of BHKP decreased in the region.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Local

Collection 10.66 734,212 20.35 883.626 11.72 987,156

Import 24.33 269,743 14.78 309,622 49.62 463,266 Total

Recovery paper

consumption

13.51 1,003,955 18.85 1,193,248 21.55 1,450,422

Local recovered Paper collection:

Local recovered paper collection in 2011 will be 883,626 tons in total. The collection will

be increased by 20% in comparison with year 2010. Recovery rate will reach 34%, 2%

more than 2010.

Consumption:

In 2011, recovered paper consumption will increase from year 2010 (18.85%).

Recovered Paper Import:

Recovered paper import will be reached 309,622 tons, increased only 14.78% from 2010

as price of imported paper is high. As a result, they promote to use locally recovered

paper.

Old corrugated Containerboard (OCC) accounted for 72% of total imports, while mixed

waste and old newspaper (ONP) accounted for 16% and 12% respectively. United States,

Japan and Singapore were major exporters to Vietnam.

Recovered Paper collection activities can be enhanced strongly, thanks to the collecting

networks of some major companies (An Binh Joint Stock Company, Sai Gon Paper

Corporation). Such major networks expected to help the collection activity become more

professional.

In 2011, total capacity of paper and paperboard is 2.12 million tons grew by 14.90% from

year 2010. It includes some paper machines which are brought in to operation in Phu Tho

(newsprint), Bac Ninh Provinces (Packaging Paper), Ba Ria – Vung Tau (Tissue Paper).

Total capacity of newsprint, tissue and containerboards increases 100%, 3.4% and 4%

respectively.

PAPER INDUSTRY

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Capacity 14.9 2,008,00

0 5.6 2,120,00

0 14.9 2,435,00

0 Newsprint 24.05 45,000 100.0 90,000 166.7 240,000 Printing &

Writing 5.7 370,000 370,000 12.2 415,000

Packaging Paper

17.7 1,298,000

4.0 1,350,000

7.4 1,450,000

Tissue 45.0 145,000 3.4 150,000 13.3 170,000 Joss Paper 150,000 6.7 160,000 160,000

It is estimated that paper production in 2011 will grow up by 16.5% with the total

production of 1,513,000 tons compared to 2010.

Newsprint production in 2011 will increase 63.09% due to the new machine put into

production in the first quarter of the year and will reach total 38,000 tons.

Packaging paper production will continue to grow up to nearly 1 million tons, increased

11.36% in comparison with 2010. However, the utilization rate of capacity is low, only at

74%, as some companies reduce production.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Production 14.54 1,298,00

0 16.50 1,513,00

0 18.84 1,798,00

0 Newsprint 13.49 23,300 63.09 38,000 18.42 45,000 Printing &

Writing 0.38 263,500 27.13 335,000 16.42 390,000

Container Board 19.57 880,000 11.36 980,000 20.41 1,180,000

Tissue -0. 88

67,700 32.94 90,000 14.44 103,000

Joss Paper 38.06 64,200 9.03 70,000 14.29 80,000

Printing and writing paper production in 2011 will be increased by 27.13% compares

with 2010. This may be seen as the great effort of printing/writing paper manufacturers,

while both printing/writing paper consumption and imports seeing the high growth.

Paper consumption in 2011 will be increased 13.27% from 2010. The growth rate is

higher than the growth rate of paper consumption in 2010 compared to 2009. This may be

the general trend in the coming years.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Consumption 3.75 2,294,412 13.27 2,598,900 11.72 2,903,400

Newsprint -52.76 45,200 27.88 57,800 21.11 70,000 Printing &

Writing -3.45 444,000 15.99 515,000 13.59 585,000

Container Board 11.50 1,551,912 11.48 1,730,000 14.18 1,975,300 Tissue -27.31 43,300 75.75 76,100 9.20 83,100

Joss Paper 2.68 210,000 4.76 220,000 -13.64 190,000 Other 3.75 2,294,412 13.27 2,598,900 11.72 2,903,400

Newsprint consumption appears to be the grade with the high growth rate, by 27.88%

compared to 2009, because of political events at the early months of year such as 11th

national congress of the communist party of Vietnam and Vietnamese parliamentary

Election.

Printing and writing paper will have high growth rate too. In comparison with 201,

consumption of printing and writing paper will increase by 16%. It is caused by the

political event as in the case with newsprint paper.

Packaging paper used in industry sector will rise up at modest level, only by 11%, the

smallest percentage for many years ever due to the packaging export industry faces many

difficulties.

After decreasing by 27% in tissue consumption in 2010 compared to 2009, consumption

of the tissue paper will turn up to normal rail. The consumption will expect to grow 76%

in comparison with 2010 and will be reached 76,100 tons. However, tissue paper

consumption per capita in Vietnam is very low, at about 0.87% kg/year.

The economic situation in Vietnam may change a little in 2012, so the paper consumption

could be increased by 12% in comparison with 2011.

IMPORT – EXPORT OF PAPER

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Import -2.96 1,107,412 7.45 1,189,900 3.40 1,230,400

Newsprint -70.86 21,900 -9.59 19,800 26.26 25,000 Printing &

Writing 0.55 203,500 -1.72 200,000 10.00 220,000

Container Board 2.45 671,912 11.62 750,000 6.04 795,300 Tissue -96.94 100 0.00 100 0.00 100 Other 2.68 210,000 4.76 220,000 -13.64 190,000

In 2011, we could expect to see gradually decreases for newsprint and printing & writing

paper because of replacing by local products.

Containerboard paper import could increased with modest rate compared to 2010, only

12%.

Unit: ton `10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Export 75.91 111,700 -6.89 104,000 20.19 125,000

Printing & Writing

360.00 23,000 -13.04 20,000 25.00 25,000

Tissue 104.17 24,500 -42.86 14,000 42.86 20,000 Joss Paper 38.06 64,200 9.03 70,000 14.29 80,000

There is nothing much to speak about paper export, due to joss paper, the low quality of

paper, using much of natural resources, causing serious environmental pollution, with

cheap price is still the main grade for exporting. Printing and writing paper is exported as

notebooks to American market. Some foreign companies moved their notebook

production to Vietnam in order to avoid being envied the anti-dumping tax that they

impose on some countries.

Vietnam need more time to export paper in true meaning. However, tissue in jumbo roll

with high quality produced in Vietnam is being exported increasingly to other markets.

`10/`09(%) 2010 `11/`10(%) 2011 `12/`11 2012 Apparent

Consumption Per Capita (kg/y)

2.57 26.44 11.98 29.61 10.45 32.70

Population (million)

86.78 87.77 88.78

In short term, we could witness average annual growth rate of 13-15% in the paper

demand and capacity.

Paper import will decline gradually as being replaced by local products from new

investments.

About 750,000 tons of new pulp and paper capacity is planned or under construction in

Vietnam. Though there is lack of research in field of increase in poverty due to

plantations, new industrial tree plantations are developed to feed the industry which is

being supported by the government of Vietnam and international aid agencies.

At present, there is a reconstruction activity in the industry, mostly by replacing old

equipments with the new better ones, which have much higher capacity.

Investment trend in pulp and paper industry is aiming to paper machines with the

capacity of above 50,000 tons / year.

VIETNAM'S PULP AND PAPER INDUSTRY

There are three large state owned pulp and paper mills in the Vietnam, Bai Bang (approx

55,000 tons per year) in Vinh Phu province in the north of Vietnam, Dong Nai (approx

20,000 tons per year) and Tan Mai (approx 48,000 tons per year) both in Dong Nai

province in the south. Today, Vietnam's pulp and paper mills produce a total of about

360,000 tons of paper and board a year.

The supply of raw materials is becoming an increasing headache for the Vietnamese pulp

and paper industry, a situation which is made worse by the export of wood chips to Japan

and Taiwan. Mills have been forced to close for several months in recent years due to

shortage of materials.

Many Vietnamese pulp and paper mills operate at well under capacity resulting in many

mills running at a loss. Production costs of Vietnamese paper are almost higher than

European or US costs, and cheap paper has been dumped on the Vietnamese market from

Eastern Europe and Russia.

The following section looks at some of the pulp and paper and wood chip mills in the

country.

· BAI BANG PULP AND PAPER MILL

When SIDA launched the Bai Bang pulp and paper mill project in 1974, World Wood, a

timber trade magazine, reported the estimated cost as US$170 million (World Wood

1974: 3). Bai Bang turned out to be Sweden's longest running and most expensive aid

project ever. In total, Sida contributed about US$1 billion to the 55,000 tons a year pulp

and paper mill – making it possibly the most expensive pulp and paper mill in the world

per ton of paper produced. The mill sources its raw materials from a total area of 1.2

million hectares. Large areas of natural forests have been cleared to supply the mill,

sometimes to be replaced with plantations. Despite the massive input of Swedish money

and expertise, the mill only reached its designed output in 1995, fifteen years after first

paper machine started operation.

The mill still relies on pulp imports to run at capacity. The price of paper produced at Bai

Bang is up 10 to 20 per cent above the international price of paper.

· VIET TRI PAPER MILL

Viet Tri is 25,000 tons a year paper mill producing kraftliner and coated wrapping paper

in Phu Tho province, in the north of Vietnam. The mill imports its raw material.

· TAN MAI PAPER COMPANY

Tan Mai Paper Company in Dong Nai province, is a state-owned business belonging to

Vinapimex. The mill's paper capacity has expanded from 10,000 tons a year in 1990, to

48,000 tons a year in 2000. Newsprint production accounts for 50 to 60 per cent of the

company's capacity. Equipment suppliers to the mill include ABB, Thermo Black

Clawson, Allimand, Valmet, Ahlstrom and Sund Defibrator.

· DONG NAI PAPER MATERIAL COMPANY

Dong Nai Paper Material Company is a subsidiary of Vinapimex. The Director of the

company is Ninh Due Yen. The company has plantations in Dong Nai, Binh Phuoc, Dac

Lac, Kontum and Binh Thuan provinces, supplying raw material to its 14,000 tons a year

pulp and paper mill in Dong Nai province.

· KONTUM PULP AND PAPER MILL

In August 2001, the government approved a Vinapimex feasibility study on a project to

establish plantations to supply a new paper mill in Kontum province in the Central

Highlands. The government agreed to fund seven per cent of the US$240 million project.

The remainder is to come from international official development assistance.

The plantations are to be managed by the Dong Nai Paper Material Co. To supply raw

material to the mill, Vinapimex is planting trees and aims to establish an area of 125,000

hectares of fast-growing tree plantations. In addition, according to the feasibility study,

Vinapimex plans to use 38,000 hectares of natural forest to supply the mill.

· MANG YANG PULP AND PAPER COMPANY

The Mang Yang Pulp and Paper Company is managed by the Gia Lai Province People's

Committee. The company was established in 1991. In 1992, the company received

funding from SIDA to establish a 500 hectare eucalyptus "model pulpwood plantation".

Consultants from the Vietnam-Sweden Forestry Cooperation Programme provided advice

on forestry economic analysis, climate and soil analysis and marketing. The Mang Yang

company plans to sell its wood to the Quy Nhon woodchip mill, which is about 150

kilometres away. The pulp mill in Kontum provides another market for Mang Yang's

wood.

· MUC SON PAPER ENTERPRISE

The Muc Son Paper Enterprise, in Thanh Hoa province, produces plain or dyed

packaging paper. Vinapimex plans to build a 50,000 tons a year packaging paper mill at

Thanh Hoa.

· BINH DUONG

In the province of Binh Duong in the south of Vietnam, the New Toyo company of

Singapore had started a tissue paper million with capacity of 20000 tons per year in 1998.

· HAIPHONG PAPER COMPANY (HAPACO)

Hapaco was one of the first five companies listed on Vietnam's stock market. Based in

the northern port city of Haiphong, the company produces tissue paper for the domestic

market and exports fake bank notes, which are used in religious ceremonies, to Taiwan.

· CAU DUONG

At the end of 2001, Vinapimex was reported to be gearing up to start tests on a new

10,000 tons a year tissue mill at its Cau Duong mill, nine kilometres from Hanoi. The

unit was supplied by Daewoo of Korea. Cau Duong is primarily a plywood mill

producing 5,000 square metres a year.

· LE HOA PAPER COMPANY

Established in 1995, the Le Hao Paper Company produces paper for students, note books,

photocopy paper and a range of large sized paper formats. The company uses reels of

plain paper bought from local suppliers as raw material.

· NDK PAPER PULP MANUFACTURING

NDK was established in May 2001, to produce pulp, paper and act as a consultant to the

paper industry. The company's head office is in Ho Chi Minh City

· SAIGON PAPER COMPANY

The Saigon Paper Company has a capacity of 10,000 tons a year. The company was

established in 1997 and specialises in carton and sanitary paper.

· QUY NHON PLANTATION FOREST COMPANY

The Quy Nhon Plantation Forest Company, in Binh Dinh province, is a US$14 million,

Japanese-owned project aimed at planting 13,000 hectares of acacia and eucalyptus trees.

The plantation is to supply a 50,000 tons a year wood chip mill for export to Japan.

· NISSHO IWAI

In 2001, in conjunction with the Vietnam Forestry Corporation, Nissho Iwai completed a

140,000 tons a year particle board factory at Vung Ang Port in Ha Tinh province. To

supply the factory, 40,000 hectares of plantations have been established in Nghe An, Ha

Tinh and Quang Binh provinces. Another 10,000 hectares has been planted at the Bac To

plantation in Quang Ngai province.

· OJI PAPER

Oji Paper, Japan's second largest paper manufacturer, started to establish trial plantations

at two forest enterprises in Song Be province in the south of Vietnam in 1991. The aim

was to establish species and provenance trials leading to a US$5.7 million industrial

plantation covering 13,000 hectares to supply wood chips for export.

· ITOCHU CORPORATION

Itochu Corporation (formerly C. Itoh & Co.) is one of Japan's largest general trading

companies. According to reports in 1993, the company acquired 5,000 hectares of state

owned land in Vung Tau province in southeast Vietnam, with the aim of establishing a

wood chip supply to Japan. Itochu set up a joint venture with Southern Forest Resource, a

Hong Kong speciality trader, which was to carry out the planting and wood chipping

operations. Acacia was planned to be planted at a rate of 1,000 hectares per year, and the

first harvest was to be in 1997. Chips are to be processed in Vietnam and sold by Itochu

Corporation to Chuetsu Pulp Industry Co. Ltd. a medium sized Japanese paper

manufacturer which is part of the Oji Paper group.

· VIJACHIP

Vijachip is a woodchip mill in Danang. There is a joint venture of a Japanese company

with a Vietnamese state company for this mill. The wood chips are exported to Japan.

· BA RIA-VUNG TAU PROVINCE

Two wood chip mills operate in Ba Ria-Vung Tau province: the Vinh Hung company (a

company with Taiwanese involvement) and the VICO company (Vietnam-South Korean

Paper Joint Venture). Both wood chip mills produce for export, mainly to Japan.

· KIEN TAI

The Kien Tai project is a joint venture between the Taiwanese consortium Central

Trading and Development (CT&D) and the Vietnamese provincial authority of Kien

Giang province, to establish 60,000 hectares of fast growing Eucalyptus trees for export

as wood chips to Taiwan. The joint venture was established in June 1991, and was one of

the first joint ventures to start establishing plantations in Vietnam.

The pulp mill projects will mean more industrial tree plantations, more biodiversity loss,

more dried up streams, lowered water tables and less land for agriculture and rural

communities.

Recently, William Sunderlin and Huynh Thu Ba, researchers at the Centre for

International Forestry Research, asked themselves two research questions about Vietnam:

how forests help alleviate poverty; and whether the plans for large scale tree planting are

consistent with the government’s goal of eliminating poverty. They concluded that their

questions could not be answered, because “there has not yet been any primary empirical

research directed specifically at answering these questions”.

Yet, even without this research, the development of industrial tree plantations to feed the

pulp industry is heavily subsidised by the Vietnamese government as well as by bilateral

and multilateral aid agencies. While the benefits of these subsidies go to the pulp and

paper industry and to exporting industries, the impacts are felt by rural people.

There was announcement done by the Ministry of Agriculture and Rural Development

(MARD) for the implementation of “concentrated afforestation” on 258,000 hectares of

land which is located in the Central Highlands of Vietnam on August, 2006. In February

2007, the MARD announced plans to establish 2.4 million hectares of plantations over

the next five years in the northern mountainous region. According to the Vice Minister

for Agriculture and Rural Development, Hua Duc Nhi, the plantations are intended to

provide raw material for the pulp industry, which will produce 700,000 tonnes of pulp a

year in the northern region of Vietnam, once the plantations are established.

The German government is supporting a project to establish plantations in five northern

provinces in Vietnam. For the project of “Concentrated afforestation” in central highlands

of Vietnam, there has been approval for the loan of US$ 45 million done by the Asian

Development Bank. The World Bank is funding a Forest Sector Development Project in

four central coastal provinces. The project aims to establish 66,000 hectares of

plantations.

The 5MHRP started in 1998, and aimed to plant one million hectares of industrial tree

plantations to feed the pulp and paper industry. “In Vietnam, they make plans which are

inappropriate and then they cancel them,”a World Bank forestry specialist explained to

Keith Barney, a Canadian academic, in 2003. The Bank’s expert described the 5MHRP as

“not realistic”. Two years later, Hua Duc Nhi, MARD vice Minister for Agriculture and

Rural Development acknowledged that tree planting was “way behind schedule”.

Government surveys found that the quality of plantations was poor and the supply of

wood was small. The target has now been reduced to three million hectares.

In January 2007, Education Nature Vietnam reported that, “Government audits have

revealed that between 1998 and 2005, a total of 35 billion VND (US$2.25 million) was

misappropriated from a forestation fund nationwide and put to private use by provincial

authorities.”

Plan of development targets and objectives: The paper industry has two objectives:

· To establish a paper industry, in Vietnam, having advanced technology, establishing

centralized paper and pulp production areas with a substantial capacity to satisfy

domestic consumption and export needs. By 2020, 70% of domestic demand is to be

met, while increasing exports of paper articles that will be competitive in regional and

world markets.

· To establish centralized paper raw material areas to provide sufficient raw materials

for producing 1,800,000 tons of pulp by 2020, making possible the building of

concentrated and large paper processors.

· In particular, the aims that the industry targets to 2020 are: Increase forest coverage to

907,000 hectares, providing sufficient raw materials for producing 1,800,000 tons of

pulp and 3,600,000 tons of paper.

· The ministry is seeking opinion on the draft master plan on developing the country's

paper industry till 2020 and vision to 2025, the newspaper said. The draft will

continue boosting the development of paper sector and increase Vietnam’s

competitive strength in the region and international markets.

Vietnam’s paper industry is booming. In 1995, paper production stood at 220,000 tonnes.

In 2007, the Vietnam Paper Association aims to produce more than one million tonnes of

paper. Demand far exceeds supply and in 2006, Vietnam imported 709,000 tonnes of

paper products. A large proportion of paper produced is for packaging – a result of

Vietnam’s expanding export economy.

Vietnam’s pulp and paper sector needs US$6 billion of investment by 2020. Out of these,

some of the investment has already begun and also there is planning of about 750,000

tons of new capacity is done and is under construction stage.

Vietnam’s Paper Industry Expects to Meet 70% of Domestic Demand by 2020

Jan. 3, 2012 - Vietnam's paper industry expects to meet 70% of the domestic

consumption demand by 2020, the Dang Cong San Vietnam newspaper reported, citing

the source from Ministry of Industry and Trade.

Vietnam now has 500 paper mills with a total production capacity of 2.075 million tons

of paper and 437,600 tons of pulp per year. However, the volume is equal to only 21% of

designed capacity of mills.

According to the newspaper report, Vietnam currently ranks second largest in the world

in terms of exporting timber shavings for the paper industry. Last year the country

exported 3 million tons of timber shavings.

The ministry is seeking opinion on the draft master plan on developing the country's

paper industry till 2020 and vision to 2025, the newspaper said. The draft will continue

boosting the development of paper sector and increase Vietnam’s competitive strength in

the region and international market.

CHAPTER 4

CHEMICAL AND OIL SECTOR OF VIETNAM

Vietnam Oil & Gas Industry

· The oil and gas industry, a key industry in the Vietnamese economy,

contributes highly to the GDP, and makes up 18-20% of exports and is the

source of 28-30% of state budget funding.

· Vietnam ranks third in Southeast Asia after Malaysia and Indonesia and

thirty-first in the world for crude oil and gas production.

· Vietnam’s oil output per capita ranks 7 out of 15 biggest oil and gas output

countries, putting it higher in that regard than China.

· PetroVietnam - the country’s national petroleum corporation, had extracted

more than 250 million tons of crude oil and 50 billion cubic meters of gas.

· Vietnam’s oil and gas industry is one of the prime industries for foreign

investment thanks to its promising potential

Vietnam Oil Production and Consumption

· Vietnam's oil production increased steadily until 2004, when it peaked above

400,000 barrels per day (bbl/d). Since 2004, oil production has slowly

declined

· The Consumption has overtaken the total production in 2011, however

according to the latest details Vietnam managed to find some small fields and

that would be capable enough to reach outthe consumption till 2015.

· Vietnam is currently a net exporter of crude oil but remains a net importer of

oil products due to the unavailability of good refineries.

· Before the Dung Quat refinery came online in 2009, Vietnam exported nearly

all of its crude oil.

· Vietnam's encouraging FDI in the sector to get the latest technology in order

to find new fields, setting up refineries and implementing the pipelines etc.

· Power and energy sector as well as industries in Vietnam directly receive

processed natural gas after its production.

· The production raised considerably since 2007 as a result of Vietnam's

aggressive policy to attract investment and issue exploration contracts.

Major Opportunités in Oil Sector of Vietnam

¨ Equipment and Services supply

¤ Oil & gas exploration with Seismic surveying

¤ Facilities for production, engineering & construction

¤ Various technologies for Drilling and production process

¤ Managing of Oil Spill

¨ Availability of Refineries

¤ Providing proper training and education for all aspects of various industry

¨ Knowledge about health, safety, environment and waste management.

¨ Facilities for Direct Investment

¤ A number of undiscovered blocks in Song Hong Basin, Phu Khanh Basin,

Onshore Mekong Delta, Nam Con Son Basin, Phu Quoc Basin, Malay-

Tho Chu-Phu Quoc Basin is a great opportunity for exploration.

¤ PetroVietnam is calling for investment in Gas Pipeline ($1.3 bn), Gas

Processing Plant ($700 million).

¤ PetroVietnam is calling for investment in Refinery and Petrochemical

projects such as Dung Quat Refinery (Expansion) Plant ($400 million),

Long Son Refinery ($7-8 bn), Ca Mau Fertiliser Plant ($900.2 million)

• Untapped investment opportunities

• Vietnam does not manufacture specialty chemicals such as for dying, bleaching

and printing.

• Last year, Vietnam’s imports of chemical products from India increased by 27%

year-on-year to US $75 million. This trend clearly indicates that there are lot of

opportunities for chemical companies of India.

• (VOV)- an exhibition was held in HCM city on January 23 to showcase India’s

chemical products and promote trade exchange between the two nations. This

shows that Vietnam is interested in doing trade of chemical products with India.

• According to Satish W. Wagh chairman of CHEMEXCIL (Chemicals,

Pharmaceuticals and Cosmetics Export Promotion Council) the two day event was

held to boost India’s chemical exports through the consolidation of trade relations,

promotion of partnerships and the expansion of the market in Vietnam.

• Trade turnover between Vietnam and India reached around US $4 billion last

year, ranking India among Vietnam’s top ten trade partners.

• India is currently having substantial investments in Vietnamese oil and gas, steel,

mineral exploration, agriculture and food processing industries, with a total

registered capital of around US$250 million.

• India is now the second largest provider of chemical products to Vietnam, with

imports reaching US$213.2 million in the first 11 months of 2012.

• It is expected that the growth will continue, as ten categories of chemical

products have been pegged to create more favourable trading conditions between

the two countries as part of Vietnam’s 2020 chemical industry development plan.

• Vietnam is the easternmost country on the Indochina Peninsula in Southeast Asia.

• As Vietnam's economy depends greatly on agriculture, and with a just emerging

chemical industry, the country is required to import massive agrochemical and

other chemical products.

• The Vietnamese chemical industry is still in its infancy stage, where it only

produces a limited variety of basic chemicals. Chemicals for industrial use do not

meet domestic demand and are only sufficient for pesticide production and

several basic goods.

• Furthermore, pure and special chemicals are not produced in the country.

• In the agrochemical aspect, every year about 70% of urea demand is imported,

while ammonium phosphate is 100% imported.

• The technology used in Vietnam for production of chemicals much outdated.

• Its chemical products have lower competitive capability compared to regional

countries and in the same time have lower awareness to chemical risks. This leads

to loss of natural resources and the country faces severe environmental pollution

issues. For e.g. CETP

• At present, the Vietnamese agricultural chemical market occupies approximately

0.5% of the international market.

• One of the biggest opportunity is Vietnam International Chemical Exhibition

• It is to be held on 04 - 07 December 2013

Ho Chi Minh City International Exhibition & Convention Center Ho Chi Minh

City, Vietnam

• Highlights

The main highlights of Vietnam International Chemical Exhibition are as follows:

+ Symposium.

+ Business and Networking Sessions.

Key Challenges in Oil Sector

¨ Territorial Disputes with China.

¤ India is playing with fire by agreeing to explore for oil with Vietnam in

the disputed South China Sea. --- China Energy News

¤ ONGC has already withdrawn from the one block in South China sea due

to China’s objection.

¨ Huge Investment

¤ Even after investing heavily there is no guarantee of return: ONGC

invested approx USD 68 million only to know that there is no presence of

OIL, finally they decided to handover the block to PetroVietnam.

¨ Lack of technical guideline

¨ Overlap of activities

¨ Lack of coordination and cooperation

¨ Information exchange

¨ The legal provisions are not enough strict. Chemical inspection: have not been

given due attention

¨ Awareness of the business on the chemical safety remains low

¨ Coping skills of workers is not good

¨ Equipment and manpower to response for chemical accident: not good.

¨ Chemical breakdown of the chemical industry of Vietnam occurred more

• Regulation on RA in chemicals: not available.

• Study on RA: Until now, there are some case study on RA in the few chemical

factory.

Example: Application of risk assessment methods in Fertilizer; Assessment of

chemical risk and hazardous waste management and some initial results of research on

methods of assessment chemical risk for human health.

• In 2011 & 2012: Japan support some training course on RA & RM for Vietnam

Chemical Agency

• Legal solution

• Technical solution

• Measures for education training

• Investment in facilities for basic research areas of chemical risk assessment.

• It is quite difficult to control raw materials quality and supply for better

controlling product quality

• Low competitive

• Low efficiency

CHAPTER 5

INFORMATION TECHNOLOGY SECTOR IN VIETNAM

New business opportunities in Vietnam for Indian entrepreneurs and IT

professionals in IT, ITES and ICT sector

Our View: For business in IT and particularly in ITES services, if every country wants to

be an attractive IT & ITES destination, it require an English speaking skills as a natural

benefiting from English language abilities to garner business.

Indian IT sector overview:

The IT Sector of India has gained a global brand reputation as a knowledge economy due

to its IT and ITES companies. The IT, ITES industry has two major components:

Software solutions Services and business process outsourcing (BPO). The growth in the

service sector in India has been led by the IT–ITES sector, contributing substantially to

increase in GDP, employment, and exports. The sector has increased its contribution to

India's GDP from 1.2% in FY1998 to 7.5% in FY2012. According to NASSCOM, the

IT–BPO sector in India aggregated revenues of US$100 billion in FY2012, where export

and domestic revenue stood at US$69.1 billion and US$31.7 billion respectively, growing

by over 9%. The major cities that account for about nearly 90% of this sectors exports are

Bangalore, Hyderabad, Chennai, Delhi, Mumbai. Bangalore is considered to be the

Silicon Valley of India because it is the leading IT exporter. Export dominate the IT–

ITES industry, and constitute about 77% of the total industry revenue. Though the IT–

ITES sector is export driven, the domestic market is also significant with a robust

revenue growth. The industry’s share of total Indian exports (merchandise plus services)

increased from less than 4% in FY1998 to about 25% in FY2012. According to Gartner,

the "Top Five Indian IT Services Providers" are Tata Consultancy Services, Infosys,

Cognizant, Wipro and HCL Technologies.

This sector has also led to massive employment generation. The industry continues to be

a net employment generator - expected to add 230,000 jobs in FY2012, thus providing

direct employment to about 2.8 million, and indirectly employing 8.9 million people.

Generally dominant player in the global outsourcing sector. However, the sector

continues to face challenges of competitiveness in the globalized world, particularly from

countries like China and Philippines.

India's growing business in the Information Technology Age enabled it to form close ties

with both the United States of America and the countries of European Union. However,

the recent global financial recession and IT Sector’s slow recovery has sharply affected

the Indian IT companies as well as global companies. As a result recruitment and hiring

of new IT talents has decreased sharply, and thus employees from that sectors are looking

at different works and sectors like the financial services, telecommunications services,

and manufacturing industries, which have been seen phenomenal growth over the last

few years due to rising corporate activities and global expansion. The Pillars of India's IT

Services industries were born in Mumbai in 1967 with the first establishment of Tata

Group in partnership with Burroughs of America. The first IT and software export zone

SEEPZ was set up in Mumbai way established in 1973, the first step of the modern day

IT SEZ and park.

Recent Development IT and ITES:

Information technology (IT) is amongst the fastest growing sectors in the country. Its

contribution to GDP rose from 1.2 per cent in 1999-2000 to 5.2 per cent in 2006-07 and

to an estimated 5.5 per cent in 2007-08. Growth of Indian IT industry has been driven by

the IT software and services (IT services) and IT enabled services (ITES). The software

and services (IT services) industry of India has been moving up the value chain, giving

India a formidable brand equity in the global markets. The Indian software and services

exports including ITES-BPO are estimated at US$ 40.3 billion (Rs. 163,000 crore) in

2007-08 as compared to US$ 31.4 billion (Rs. 141,000 crore) in 2006-07, showing an

increase of 28.3 per cent in dollar terms and 15.6 per cent in rupee terms.

In India, Business Process Outsourcing (BPO) sector has emerged as a key driver of

growth for the Indian software and ITES services industry. As per the report, It has

become the biggest employment generator amongst young college graduates in India. In

BPO Sector alone, the total number of IT and ITES-BPO professionals employed has

grown from 284,000 in 1999-2000 to over 1.63 million in 2006-07 in India. Apart from

this, the IT and ITES industry helps to create millions of job opportunities for young

professional an IT graduates through direct and induced employment in telecom, power,

construction, facility management, IT, transportation, catering and other services in India.

Indian IT and ITES Companies are expanding their service offerings with different skills,

enabling customers to strongly penetrate their offshore engagements and shifting from

low-end business processes to higher ones with more specifications and Value addition in

process. They are also enhancing their global service delivery capabilities through a

combination of greenfield initiatives, cross-border mergers and acquisitions, as well as

partnerships and alliances with local players. This has helped them execute end-to-end

delivery of new services.

IT and ITES sector contribute significant share in overall growth of economy and

valuable share in Indian export which in turn impact the economic situation of the

technologically inclined services sector in India—for 40% of the country's GDP and 30%

of export earnings as of 2006 in GDP share, while employing only 25% of its workforce.

The share of IT (mainly software) in total exports increased from 1% until 2001 to 18%

in 2001. IT enabled services account for business services such as back office operations,

remote maintenance, accounting, public call centers, medical transcription, insurance

claims, and other bulk processing are phenomenally expanding. Indian companies such as

HCL, TCS, Wipro and Infosys may yet become household names around the world.

Today in global perspective, Bangalore is known as the Silicon Valley for IT Software

and research hub of India and contributes 33% of overall Indian IT Exports. All most all

companies dealing in IT sector having direct or indirect presence in Bangalore and India's

second and third largest software companies like Infosys and Wipro, HCL are head-

quartered in Bangalore, as are many of the global SEI-CMM Level 5 Companies.

CMM: Capability Maturity Model Integration

SEI: Carnegie Mellon created the Software Engineering Institute (SEI).

Full form: SEI-CMM is for evaluating the software capability of contractors as part of

awarding contracts.

Big Four IT Services company in India :

Firm Revenues Employees Fiscal Year Headquarters

TCS $10.17 billion 254,076 2012 Mumbai

Wipro $7.30 billion 140,569 2012 Bangalore

Infosys $7.00 billion 153,761 2012 Bangalore

HCL

Technologies

$4.3 billion 85,335 2012 Noida

The Global Opportunity in IT-Based Services: Increasing Country

Competitiveness

The Global Opportunity in IT-Based Services

Assessing and Enhancing Country Competitiveness

Introduction

Advances in information technology (IT) and global connectivity, combined with waves

of economic liberalization, have given impetus to a new dimension of globalization:

cross-border trade in services. The services sector has been growing steadily and already

accounts for 70 percent of employment and 73 percent of gross domestic product (GDP)

in developed countries and for 35 percent of employment and 51 percent of GDP in

developing countries (UNCTAD 2008). As infrastructure and skills improve in

developing countries, cross-border trade in services is expected to continue to expand.

This report aims to help policy makers take advantage of the opportunities presented by

increased cross-border trade in IT services and IT-enabled services (ITES).

IT-Based Services: Global Outlook

Large Markets and Growing Opportunities

IT services typically include IT applications and engineering services, while ITES

involve a wide range of services delivered over electronic networks (Table 1). These are

two broad segments, however, and the sophistication of the services in each varies

considerably.

There are basically three categories of IT and IT-enabled services

1) Application Services:

A) Application Development and Maintenance (Integration, Testing and

Maintenance,

B) System Integration (Analysis, Design, Development, Integration and Testing and

Package Information)

C) IT Infrastructure Services (Help Desk, Desktop Support, Data centre Service,

Mainframe Support, Network Operations)

D) Consulting (IT Consulting, Network Consulting)

2) Engineering Services

(A) Manufacturing Engineering: (I) Upstream Product Engineering- concept Design,

Simulation and Design Engineering (II) Downstream Engineering-Computer

Aided Design and manufacture, Embedded Software and design and Localization

(III) Plant and Process Engineering

(B) Software Product Development:-Product development, Gaming, Localization,

Variant/Porting, Maintenance support

3) Business Process Services

(A) Horizontal Processes (I) Customer Interaction and Support-Call Centers (II)

Human Resource Management (III) Finance and Administration (IV) Supply

Chain (Procurement Logistics Management)

(B) Vertical Process (I) Banking (II) Insurance (III) Travel (IV) Telecommunication

(V) Pharmaceuticals (VI) Manufacturing (VII) Others

(C) Knowledge Process Outsourcing (I) Business and Financial Research (II)

Analysis (III) animation (IV) Data analytics (V) Legal Process and patent

research

Country Competitiveness in the Global Market of IT-Based Services

Assessing Potential Competitiveness

Governments that wish to take advantage of global opportunities in IT services and ITES

can benefit from a structured assessment of the strengths and weaknesses of their

location. In recent years, a number of consulting firms have developed benchmarking

frameworks, locational indices, and rating criteria for determining the e-readiness and

attractiveness of different locations for IT services and ITES industries.

Location Selection Criteria for IT and ITES

(1) As per AT Kearney’s Global Services Location Index (I) People Skills and

availability-Remote Service sector, Experience, quality Ratings, Labour Force

Availability, Education and language, Attrition risk etc., Financial attractiveness-

Compensation cost, Infrastructure cost etc., Tax and regulatory cost (II) Business

Environment-Country Environment, Infrastructure, Cultural exposure, Security of

intellectual property

(2) As per Gartner’s 10 criteria: (I) e-infrastructure-telecommunication, power,

transport (II) Labour Pool-Quality, quantity, Scalability, work condition (III)

Education system-Quality, New grads in IT (IV) Cost-Labour, Real estate,

Infrastructure, telecom, (V) Political and economic environment-stability of govt.,

corruption, geo-political risk, financial stability (VI) Language (VII) Govt.Support-

promotional, Institutional, Education (VIII) Cultural Compatibility-Cultural

attributes, adaptability, proximity, ease of travel (IX) Global and Legal Maturity

(X) Data and intellectual property security and privacy

(3) Hewitt’s International Benchmarking modal: (I) Infrastructure- Real estate,

Telecom, Power (II) Connectivity (III) Talent-Availability, Quality, Cost. (IV)

General Demographics (V) Environment-Macro, Business and Geological

Environment (VI) Cluster (VII) Incumbent IT/ITES Industry

(4) Mckinsy’s Location Readiness Index:- (I) Quality of Infrastructure- telecom, real

estate, transport, power(II) Talent-availability, suitability, trainability, Willingness,

quality (III)Cost-Labour cost, Infrastructure cost, Corporate tax (IV) Market

Maturity-IT/ITES Market share in GDP, Presence of Industry Association, IT

employees as a percentage of total service sector employment (V) Risk Profile-

Regulatory risk, Country risk, Data risk (VI) Other Incentives (VII) Environment-

Govt. Support, Business Living Environment, Accessibility, Living environment.

Economic Impacts of Developing IT and ITES Industries

India is the global leader in the provision of both IT services and ITES (Figure 3). Two

developed countries—Canada and Ireland—have also done particularly well in the

industry, as have a few developing countries, notably China, Mexico, and the Philippines.

The last decade has seen information and communication technologies (ICT)

dramatically transforming the world, enabling innovation and productivity increases,

connecting people and communities, and improving standards of living and opportunities

across the globe. While changing the way individuals live, interact, and work, ICT has

also proven to be a key precondition for enhanced competitiveness and economic and

societal modernization, as well as an important instrument for bridging economic and

social divides and reducing poverty.

The speed of IT and internet pace due to technological advance is accelerating and ICT is

increasingly becoming a ubiquitous and intrinsic part of people’s behaviors for one or the

other reason and transactions as with social networks as well as of business practices and

government activities and service provision.

India

The best-known IT services and ITES success story is India. In 2007–08,4 total exports

of IT services and ITES from India stood at $40.4 billion ($23.1 billion in IT application

services, $6.4 billion in engineering and research and development (R&D) services, and

$10.9 billion in other ITES). The IT services and ITES industries contributed one-quarter

of the country‘s total exports and nearly half of service exports in 2007.5 In addition to

the exports, some $11.6 billion of software services were also produced for domestic

consumption. In sum, IT services and ITES represent 5.5 percent of India‘s GDP and

grew at a remarkable rate of 33.7 percent in 2007 (NASSCOM 2008a). Going forward,

India‘s IT services and ITES exports are forecasted to reach $60 billion by 2010, when

the sector is expected to represent almost 7 percent of GDP (NASSCOM-McKinsey

2005).

For IT and ITES competitiveness, English Speaking is must its growth.

ICT’s Growing impact on poverty reduction

1. Direct Income generation: Production of ICT goods and services.

2. Through diversified and more secure employment opportunities.

Advantage ICT: Some innovative applications that can make a tangible difference and

improve living standards of the urban and rural poor, with a particular focus on the role

of enterprises.

Two ways in which ICT in enterprises can benefit the poor are considered:

The first by using ICT in enterprises of direct relevance to farmers, fishermen, and other

micro enterprises in low-income countries;

The second occurs when the poor are directly involved in the sector and are employed

producing ICT goods and services.

The IT and networked readiness framework that measure the environment for ICT,

together with the main stakeholders’ readiness and usage, with a total of nine pillars as

follows:

1. Environment subindex

• Market environment

• Political and regulatory environment

• Infrastructure environment

2. Readiness subindex

• Individual readiness

• Business readiness

• Government readiness

3. Usage subindex

• Individual usage

• Business usage

• Government usage

Vietnam: - in South East Asia, Vietnam is not the largest economy But the Fastest

growing economy.

ü Average GDP growth of 7% during the last 20 years

ü Hardware is dominant but Software and digital content are developing fast

ü Annual growth rate is 20-25% during 2005-2010 for IT and ICT Industries.

The Vietnamese software industry is one of the industries that growth at highest rates in

the nation. Contrast to India, software revenue skewed to domestic market (about 70%).

Moreover, almost all Vietnamese companies have focused on programming skill of

producing software; other skills such as system analysis and marketing are forgotten.

Most of Vietnamese software companies are small scale, with the total employees of only

10-50 people (about 80%).

There are only a few companies that carry out more complex projects such as conversing

foreign software programs or producing software packages. The software activities

carried out by most companies in Vietnam are gathered up in simple managerial solutions

for Industries Development of small specific applications for existing system,

Formulating Vietnamese alphabet in documental compiling, Network designing (LAN,

WAN) for enterprises, Web page design and other services related to small networks.

Ø Software activities in Vietnam are concentrated mainly in major cities like Hanoi, Ho

Chi Minh City and Danang. Most of Vietnamese software companies are young

(established 1995 and afterwards)

Ø The rivalry situation in the software market is considerable. Based on industries and

fields that software products serve, the software market is divided into several

segments. In some areas of business process of IT enable, the competition is high

(like accounting, financing, banking process, government administration etc.,). This

rivalry situation resulted from many reasons, one of which is the low demand

conditions for the industry.

Vietnam: An emerging Market for IT and IT Enabled due to government’s strong

commitment to develop IT and ICT, WTO admission leads to significant legal

environment improvement-Software Piracy reduced at a considerable level, Strong FDI

boost IT investment demand, increasing need for local businesses sector for IT solutions

to improve business services process and operation efficiency.

Vietnam’s Position: Macroeconomic Competitiveness

1. Social Infrastructure and Political Institutions: (A) Basic health and education-

Goods provision of basic services (B) Political Institutions-High levels of

political stability, Increasing decentralization of economic policy

responsibilities, little effective policy dialogue, corruption remains a significant

challenges (C) Rule of Law-good quality of laws but poor implementation of

laws.

2. Macro Economic Policies: (A) Fiscal Policies-Governments budget and debt at

acceptable levels but still reliant on foreign aid (B) Monetary Policy-High level

of inflation

Vietnam IT, ITES and ICT Industries:

IT Industry revenue (million USD)

Year-2008-09

1. Total Revenue from IT Industry 5,220 million USD.

2. Hardware Industry revenue 4,100 million USD.

3. Software Industry revenue 680 million USD.

4. Digital Content Industry Revenue 440 million USD.

Year-2009-10



3. Software Industry revenue 850 million USD.


Year-2010-11



3. Software Industry revenue 1,064 million USD.


● In Vietnam, Hardware Industry is dominant but Software and digital content

Industry are developing fast

● Annual growth rate is 20-25% during 2005-2010 for IT Industry.

Vietnam : IT Industry Revenue :

Total number of employees in IT Sector (Persons)

Year-2008

Hardware Industry-1, 10,000

Software Industry-57,000

Digital Content Industry-33,000

Year-2009




Year-2010




Average Revenue per employee in IT Sector (USD/Employee (person)/Year)

Year-2008

Hardware Industry-37,200



Year-2009




Year-2010




Average Wage of IT Sector (USD/Person/Year)

Year-2008




Year-2009




Year-2010




Vietnam IT industry: ICT and Hardware Industry:

● Vietnam : ICT among top 10 exports of Vietnam

⇒ComputerHardwareandICTProductExport $3.5B USD to 35 countries

⇒ Ranked #7 in 2009

⇒ Over 127,000 workers

● Vietnam : For ICT and Computer, Hardware FDI Compagnies are the Key Player

⇒ Samsung, Canon, Nidec, Compal, Fujitsu, Foxconn…

Vietnam – Software Industry

● Growth 25% annually in the last 10 years

● In 2010, Software Industries revenue reached to $1B USD

● 1000+ software companies employing total 70,000 people

Influenced by the economic crisis, the growth rate in 2008 and 2009 dropped

substantially; but in 10 years, Vietnam Software Technology revenue increased nearly 19

times, with an average increase of nearly 35% per year

Ø Over 200 companies, with average size of 150-200 employees, engaged in software

outsourcing services..

Ø There were two businesses that achieved CMMI level 5 certification, and dozens of

companies have CMM-4, CMM or ISO-9001-3.

Ø There are some companies with more than 1000 employees, such as FPT software,

FPT Information Systems, TMA, PSV, etc.

Ø Prime Minister issued Decision, "Regulation on Management & Development

Program of the software industry and the development program of the digital content

industry in Vietnam" in order to remove obstacles and promote the implementation of

development programs and software industry.

Vietnam: A new destination for Software Outsourcing

v Vietnam is in Top Ten of A.T. Kearney’s Global Services Location Index 2011 &

2009.

v Ho Chi Minh City on KPMG 'locations to watch' for next outsourcing boom.

(KPMG Advisory , 2009)

v “Ho Chi Minh City the 5th of Top 50 Emerging Outsourcing Cities”

“Hanoi the 10th of Top 50 Emerging Outsourcing Cities”

(Global Services-Tholons, 2009)

List of IT companies from across the globe who already outsourced to Vietnam:

1. IBM

2. Intel

3. Microsoft

4. NTT

5. Alcatel-Lucent

6. Nortel

7. ORACLE

8. FUJITSU

9. Hitachi

10. Toshiba

11. FOXCONN

12. CSS

13. FLEXTRONICS

14. RENESAS

15. TCS

16. NIIT

17. APTECH

18. Juniper

19. Electronics Arts

Vietnam software outsourcing – Why attractive?

ü Large talent pool

• 40,000+ ICT graduates a year

• Hundreds of ICT universities and colleges

ü Quality

• Meet stringent quality requirements from world leading companies

• Adoption of international quality standards: ISO, CMMi…

ü Low Attrition

• Less than 10%

ü Strong government support for the software industry

• Tax, training & education, software/high tech parks etc.

Vietnam – Digital Content Industry

Ø Annual growth rate 40% since 2005

Ø Over 500 companies employing 51,000 people

Ø In 2010, Digital content industry revenue reached 934M USD

Ø In 2010, Digital content services on mobile network revenue reached 571M USD

Ø Internet with 26 millions users

Ø 3G network with 7 millions users

Why Vietnam? – A New High Tech Center

Ø An attractive investment destination

o Vietnam – the top destination for investment beyond BRIC (UKTI, 2010)

o FDI: $40+B invested in the last 10 years

Ø Young and well-educated population

o 60% of 89M population under 30

o Literacy rate more than 90%

o 220,000+ university/college graduates a year

Ø Emerging as a high technology center

o Investment by IBM, Intel, Samsung, Renesas, Foxcon , Fujitsu, Canon…

to develop/manufacture high tech products

o R&D outsourcing from IBM, Microsoft, HP, CSC, EA, Alcatel-Lucent,

NTT, Avaya, Nortel, Toshiba, NEC, Amdocs, Andrew

Ø Why Vietnam? – Opportunities

Ø Your partner in South East Asia

o Distribution

o Localization

o Testing

o Technical support

o Professional services

Ø Domestic market

o Fast growing ICT market

Ø ICT outsourcing

o Tap into the Vietnam large pool of young talents

Ø increase your competitiveness

Vietnam's Challenges

Ø Vietnam's IT industry is hardware-focused, largely due to widespread software

piracy, and the lack of effective intellectual property protection in the country. The

Business Software Alliance put Vietnam's software piracy rate last year at 90 percent.

Ø According to experts, Vietnamese companies gain greater awareness of the need for

security. The market needs to be educated on the importance of security and

availability. The sense of technical discipline is not as good as it should be.

Ø Human resources and management skills still remains a big problems. Human

resource training in the country is weak, both in quantity and quality, and far below

what is required by western standards. Human resource development should be

established to help IT workers master new technology and conduct research and

development activities.

Ø The need to improve companies' access to capital. Vietnam unlike much of SE Asia

has good access to venture capital but capitalization of many IT companies in

Vietnam is limited.

Ø Firms also needs to spend more time on specializing in specific areas of software

development, and it has been suggested that they increase advertising budgets in

order to build relationships with larger companies.

Ø Vietnam needs other institutions to support the market, including insurance, security,

co-author and technology consultancy firms.

Ø Corruption and bureaucracy in investment and basic capital construction could also

be considered as a serious challenge to the technology market.

CHAPTER 6

PHARMACEUTICAL SECTOR IN VIETNAM

Introduction

Vietnam’s pharmaceutical market has shown a tremendous potential with a increasing

market growth. Despite this strong growth, the market size is still relatively small when

compared to other ASEAN countries, largely due to the low per capita spend on

pharmaceuticals each year (only around US$17 per person). Vietnam’s population of

over 88 million should have a larger pharmaceutical market size, however has uniquely

young demographics as a result of the Vietnam War.

Nutritionals continued to see strong growth in current value terms, driven primarily by

vitamins and dietary supplements as well as slimming products. Although growth was

still some way short of the pre-millennial rates posted by nutritionals, particularly in

vitamins and dietary supplements, it was still ahead of projections thanks to increasing

consumer product awareness, improving living standards and rising health consciousness

among the local population.

There is still great potential in Vietnam and industry players will need to try and continue

raising consumer awareness not only of the existence of these products, but also of the

benefits that they offer. Tapping into the global health and wellness trend, where relevant,

will also be a good way of promoting many of the products available in the nutritionals

market. All areas of herbal/traditional products recorded increasing sales in the last two

years, with herbal digestive remedies and herbal child-specific dietary supplements doing

particularly well.

In 2007, the Vietnamese pharmaceutical market represented around 1bn USD,

according to market’s consensus. High growth rate over the years, great potential, quite

complex and obscure are its main characteristics. In fact with an average growth rate

observed over the past few years of more than 15%, pharmaceutical industry is destined

to a good evolution potential. Compared to the Indonesian market, which is twice the

value but half the volume, Vietnamese market is as young, healthy and difficult, as the

people. It records good fundamentals, relies mainly on volumes and low prices.

Indeed the Vietnamese population just starts to consider healthcare expenses. The

country counts 86 million inhabitants, as for July 2008 estimates which grows by 1%

per year, with almost 90% under 65 years-old, more than 70% rural, and yearly

healthcare expenses account only for 13.4$per person, compared to around 35$ in

Thailand, 32$ in Indonesia and 19$ in the Philippines. The country is growing faster

than its Asian neighbors.

However the healthcare offer is restricted. Some international hospitals, 978 hospitals

run by the Ministry of Health, the population has the choice between high-standards,

international, very expensive hospitals or local, low-value, overcrowded ones. Most of

the rich Vietnamese prefer to go abroad and spend between 500,000 and 1 million USD

for treatment in Singapore, Hong Kong, Thailand, Europe or the US. For those who

have low revenue, their choice goes to State-hospitals and if they can avoid it they will

go to the pharmacy to get the medicine needed. Indeed Vietnamese prefer to buy drugs

directly from the pharmacist, according to advices or commercials, than to go see the

doctor.

The healthcare industry is at its beginning, in the expansion phase. The offer is

growing, the demand is skyrocketing. Recently a healthcare park has been

licensed in HCMC, for an investment of 400 millions USD, including 5 hospitals

with a capacity of 1,750 beds, research centre, residential living, etc. This project

developed in joint-venture with 70% for Singapore’s Shangri-La Healthcare

Investment Pte, is the first one of this scope and introduce high-end healthcare

treatment in Vietnam in order to satisfy the newly rich population.

Reason for Investing in Vietnam Pharma Sector

• Young market with a high potential growth (around 15% per year for the next 5 years) thanks to drugs consumption on the rise.

• Very difficult to operate for foreigners but st i l l dominated by international products.

• Strategic industry for the government in terms of development, who is promoting domestic production.

• A very fragmented market with a multitude of local companies which produce all the same products (generics and food supplements)

• The current economic situation burdens Vietnamese companies with heavier obstacles.

Product Sold in Vietnam

The only companies with a budget for marketing expenses and money to

advertise nationally are foreign pharmaceutical companies. As a result products

from international firms are chosen by Vietnamese consumers, firstly because

of the brand recognition and also because in people’s mind western product

means quality. Following are the top products in Vietnam. Foreign products

are the top selling in number of box but also in revenue. Efferalgan for

instance, products of the American pharmaceutical company BMS, 2nd product

the most sold in Vietnam, was intensively advertise for several years.

Top Pharmaceutical Product sold in Vietnam is as follow :

Top 10 product sold in Vietnam ( in terms of Revenue)

Rank Product Company Application Revenue 2007 (K USD)

1 AUGMENTIN GLAXOSMITHLINE ANTIBIOTIC 10,107

2 ZINNAT GLAXOSMITHLINE ANTIBIOTIC 6,883

3 PANADOL GLAXOSMITHLINE PAIN-RELIEVER 5,947

4 VASTRAEL LABORATORIES SERVIER

CARDIOLOGY 5,747

5 EFFERALGAN BRISTOL-MYERS SQUIBB

PAIN-RELIEVER 5,596

6 DIAMICRON LABORATORIES SERVIER

ANTI-DIABETIC 4,818

7 PLAVIX SANOFI-AVENTIS BLOOD SOLUTION

4,587

8 SMECTA IPSEN ANTI-INFECTION 4,101

9 VENTOLIN GLAXOSMITHLINE RESPIRATORY SYSTEM

3,747

10 DIANEAL LOW CALCIUM

BAXTER OBNCOLOGY

HOSPITAL SOLUTION

3,720

Sources: IMS

Challenges in Investing in Vietnam

Challenges in Vietnam’s healthcare sector include:

· Most Vietnamese seek initial and rudimentary medical treatment at public

hospitals clogging an already overcrowded system

· High child mortality and other national health issues – HIV/Aids, Hepatitis B & C

infections, liver cirrhosis, lung disease and asthma are all on the rise

· High incidence of deaths related to road accidents

· Overcrowded facilities (particularly in paediatric wards)

· Outdated medical equipment

· Low salaries for healthcare professionals

· Insufficient government subsidy

The Vietnamese Government provides funding to the country’s healthcare system,

however funding is comparatively low by ASEAN standards, with per capita spending on

health in Vietnam below that of other ASEAN countries such as Malaysia, Indonesia and

the Philippines.

Overcrowding in Vietnamese hospitals is a significant issue with it not being uncommon

in some poorer state-run hospitals for two or three patients to share one bed. Most of the

best health workers are concentrated in the larger hospitals in Ho Chi Minh City and

Hanoi. Healthcare units in these large urban areas are better equipped and have more

modern equipment to provide health treatment that health centers in other provinces do

not have. Given this disparity, Vietnamese from rural provinces will often seek treatment

in these larger urban hospitals, compounding the problem of overcrowding.

Vietnam’s pharmacies are severely unregulated and underdeveloped. There is an under

supply of pharmacists in Vietnam and an oversupply of ill-regulated pharmacies,

meaning patients are often given sub-standard over-the-counter (OTC) health advice.

Almost all drugs are available without prescription and counterfeit drugs are not

uncommon in some pharmacies. Given most antibiotics are available without

prescription; a worrying trend is the increasing antibiotic resistance many Vietnamese are

developing (recent tests show 70 per cent of the bacteria carried by urban Vietnamese are

resistant to penicillin).

Most Vietnamese have health insurance which is compulsorily contributed to by a small

levy from both the employee and employer and the health insurance market is dominated

by a state-owned company, Bao Viet Insurance Corporation. Given the lack of

competition in health insurance, the scheme is viewed as inadequate and ineffective in

terms of meeting the health needs of a modern Vietnamese society and most health and

hospital expenses still have to be met out of pocket.

However, healthcare consumption is expected to increase as Vietnam gradually

implements a universal healthcare system. Currently, 34 million Vietnamese are enrolled

in a compulsory government health insurance plan. The government plans to expand the

system so that it covers 100 per cent of the population by 2014.

Opportunities for India in Investing in Vietnam

Vietnam’s underdeveloped health sector and Vietnam’s demand for expertise as well as

its favorable demographics and high growth rates, provide significant opportunities in

various health sub-sectors for Australian exporters in health expertise, goods and

services.

Medical device

Vietnam’s medical device market is estimated to be growing at a rate of about 10.3 per

cent annually. This high growth makes the country an excellent prospect for long-term

business. Compared with Japan and China, Vietnam’s regulatory system is less

cumbersome to manufacturers in terms of the documents required, costs, and time

frames. However, expertise is still required to navigate it successfully.

There are four main classes of medical device purchasers. The largest is government-

funded hospitals, which counts for 70 per cent of the market. Foreign-owned hospitals

and clinics are also a significant destination; however, these entities usually purchase

supplies from their sponsoring country. Local private hospitals will exhibit the strongest

growth, while research and educational institutions will also account for some demand.

Most government hospitals purchase medical devices though bidding, which is organized

on a provincial or national level by the MOH, (government hospitals can directly buy

medical devices by themselves if the amount is not exceed the limit of US$5,700) while

private hospitals or clinics directly purchase those from local distributors. Foreign

companies are not allowed to submit a tender – it can only be done via a local partner

who will liaise with the organizer to submit the required documentation.

Competitive environment

The Vietnamese Government has a commitment to rapidly develop the health sector and

improve the standard of its healthcare facilities. The government health system has

already forged foreign partnerships with countries such as US, Belgium and Indonesia for

assistance in improving health infrastructure, training and for research exchange and

transfer.

There are a growing number of international hospitals and clinics in the major urban

centers such as the Franco-Vietnam Hospital in Ho Chi Minh City. Demand for better

healthcare services from an increasingly wealthier Vietnamese population is driving this

foreign health investment.

Despite the increasing presence of international standard hospitals in Vietnam’s large

urban cities, each year over 30,000 Vietnamese travels abroad to destinations such as

China, Thailand and Singapore for superior medical treatment demonstrating that current

health supply is not meeting demand.

Tariffs, regulations and customs

Depending on the actual product, the import tariff could vary from 5-15 per cent

(pharmaceuticals); 25 to 40 per cent (supplements) and 0-5 per cent for medical device.

The VAT imposed from 5-10 per cent as normal rate.

There is currently no legislation relating to vitamins or dietary supplements in Vietnam.

These products must therefore follow the regulations covering pharmaceuticals in the

country. The MOH only allows imported pharmaceuticals to be put on the domestic

market after registration. It takes around eight months for registering a

pharmaceutical/supplement product.

Required documentary for pharmaceutical/supplement product:

· Free sales certificate

· GMP

· Authorized letter

· Certificate of analysis

· Samples

As regulated by MOH, it takes 15 working days of receiving legal dossier but in fact, an

import license for medical device takes from six months or longer for registration

depending on particular product. The dossier required for an import license is:

· Original catalogue

· Instruction manual and technical guide, including specifications (originals and

Vietnamese translations)

· Manufacturer’s quality certificate: either ISO 13485 or ISO 9001 certification or

FDA/CE approval of the device manufacturing site

· Free Sale Certificate from country of origin

· Quality declaration letter

The MOH sets out stipulations for the packaging and labelling of medical products.

These state that all drugs in Vietnam have to show clear instructions on their name and

use, side-effects, dosage, storage conditions and expiration date. These must be printed in

Vietnamese on the insert inside the package. The company license number, product batch

number, import agent and expiration date must be printed on the outside or primary

packaging.

The monitoring of packaging and labeling is carried out by the Drug Administration

Department of Vietnam (DAV), which is also responsible for granting and removing

licenses for all medicines in Vietnam. The Ministry of Finance is responsible for price

control of medical products.

The Ministry of Culture and Information looks after the monitoring of medical product

advertising. For the majority of OTC products advertising to consumers is only allowed

through media such as advertisements in magazines and newspapers or leaflets.

India- Vietnam Trade

Mumbai, Oct 13 (IANS) Inviting Indian business and technical expertise in various

sectors, Vietnamese President Truong Tan Sang Thursday said the demand for material

and machinery is high in his country and that there is a huge potential for Indian

businesses in Southeast Asia's fastest growing economy.

'Beginning 2010, Vietnam has implemented a 10-year-long modernization policy which

has thrown open the need for products and services worth hundreds of millions of dollars.

India with a long-standing expertise in almost every one of those field, can take

advantage of the same,' Truong said.

'Bilateral trade with Vietnam stands at close to $4 billion, ten times more than what it was

in 2000. Vietnam's exports to India crossed $1 billion in 2010-11, a jump of 92 percent

over the previous year and India's exports to Vietnam also increased to $2.6 billion,' he

said.

Forbes also said that he expected bilateral trade between the two countries to cross $7

billion by 2015.

'Vietnam and India have a time honored tradition of friendship. The two nations trust

each other. And though India is one of the top 10 business partners of Vietnam, bilateral

business is much below potential. The need is thus for strategic partnership and economic

relations will receive the highest attention from us,' Nguyen said.

Major Buyers and Inco terms used by Pharma Company in Vietnam

Pharma Companies in Vietnam

There are today in Vietnam, 170 drug manufacturers. Except some foreign

companies, which own their factories, like Sanofi-Aventis, and some joint-venture

between local and international, most of these 170 companies are Vietnamese

manufacturers, that is to say around 150. This high number can be explained by

the complexity and the potential of the industry. Indeed, when distribution was

not developed, each region, province, town, ministry created its own

pharmaceutical factory. Today more and more companies cover the nationwide

market and most of the small businesses have difficulties to face the

increasing operating costs. Mergers, acquisitions and bankrupts will happen in

the next 3 years.

With a value of around 1bn USD in 2007, according to the market consensus, the

Vietnamese pharmaceutical market is dominated by foreign companies. In fact

international corporations are in a dominant position regarding the local

consumption while Vietnamese manufacturers control the production. And the

government wants to keep the production locally.

The 10 first companies in term of total revenue are big international

pharmaceutical corporations; the first one would be the French Sanofi-Aventis

with total revenue for 2007 of 52 millions USD, followed by the American GSK

with 48 millions USD. The first Vietnamese companies in the ranking are DHG

Pharma, listed at the 7th position. Domesco is 15th, Mekophar is 24th, Imexpharm

is 26th, OPC is 49th and Pharimexco 170th.

The Vietnamese pharmaceutical market is quite particular because of the

characteristics of the players. Indeed, some very big global pharmaceutical

companies, leaders on most of the other markets, are not in Vietnam. For example

Pfizer, giant global corporation, has a restricted activity in Vietnam and is ranked

on the 6 th Posit ion, whereas Laboratories Servicers, a more moderate French

player, is number 3. The possible reason lays in the fact that the Vietnamese

industry was difficult and didn’t have a sufficient potential for these big companies,

which just re-enter the market and start a new local development. The membership

of the country in the WTO is a major factor is this change of strategy.

Top 20 Pharma Companies in Vietnam in terms of revenue

Rank Company Name Revenue 2007 (K USD)

1 SANOFI-AVENTIS COR 52,164

2 GSK GROUP 48,654

3 SERVER GROUP 22,206

4 BMS GROUP 21,028

5 NOVARTIS GROUP 20,537

6 PFIZER GROUP 19,972

7 HG PHARM 19,178

8 UNITED PHARMA 18,510

9 SOLVAY GROUP 15,848

10 ASTRAZENECA GROUP 15,793

11 BOEH INGEL GROUP 14,491

12 J&J GROUP 13,447

13 MERCK SERONO GROUP 12,840

14 IPSEN GROUP 12,723

15 DOMESCO 11,539

16 BAYER SCHERING GROUP 11,382

17 ORGANON GROUP 11,237

18 GEDEON RICHTER 10,996

19 STADA 9,865

20 ROCHE GROUP 8,996

Distribution Channel for Pharma Company in Vietnam

Inco terms used by Pharma Companies in Vietnam are as follow :

EX W – Ex Works (Place of delivery):

The seller makes the goods available at its premises. Here the maximum obligation is on

the part of the buyer and minimum on the part of the seller. It is often used when making

a quotation for the goods without any cost attached. It means that the seller has the

possession of the goods at his premises (which may include works, factory, warehouse

etc) on agreed date.

FCA – Free Carrier (named place of delivery)

Here the seller hands the goods which are cleared for export to the disposal of the first

carrier (buyer name) at the named place. The seller pays for carriage to the named point

of delivery, and risk passes when the goods are handed over to the first carrier.

CPT - Carriage Paid To (named place of destination)

The charges for carriage is paid by the seller. Risk transfers to buyer upon handing goods

over to the first carrier.

CIP – Carriage and Insurance Paid to (named place of destination)

The containerized transport/multimodal is equivalent of CIF. Here the seller only pay for

the carriage and insurance to the named destination and the risk is passed to the buyer

when it is handed over the first carrier.

DAT – Delivered at Terminal (named terminal at port or place of destination)

Seller pays for carriage to the terminal, except for costs related to import clearance, and

assumes all risks up to the point that the goods are unloaded at the terminal.

DAP – Delivered at Place (named place of destination)

Seller pays for carriage to the named place, except for costs related to import clearance,

and assumes all risks prior to the point that the goods are ready for unloading by the

buyer.

DDP – Delivered Duty Paid (named place of destination)

Here the seller is responsible for paying all the costs in bringing the goods to the

destination including all the import duties and taxes and also for delivering the goods to

the named place in the country of the buyer.This term places the maximum obligations on

the seller and minimum obligations on the buyer.

CHAPTER 7

FOOD AND AGRO SECTOR OF VIETNAM

DEVELOPMENT OF AGRICUTURE AND FOOD SECTOR AT VIETNAM

The changes over the last ten years (1991 to 2000) in food consumption (strongly

influenced by demographic and economic parameters), crop production and food supply

channels Finally, particular emphasis is placed on the information flows and coordination

mechanisms between private players in the food sector, who are at the very heart of

adjustments between supply and demand.

The weight of the domestic market Despite the exports boom between 1990 and 1997, Vietnamese agriculture is still mainly

oriented towards the domestic market, which absorbs 90% of production. In value, the

domestic food market represents twice that of agricultural exports, i.e. 5 billion dollars in

1998 (and more than 7 billion dollars in 2002 by extrapolation). In terms of products,

regions, production structures, quality and price characteristics, there are differences

between the domestic market and exports, but there also exist overlaps: some channels

are oriented towards both the domestic market and exports (rice, aquatic products), while

others are mainly aimed at exports (coffee, rubber), and others still are marginally

exported (fruit and vegetables, meat). Whereas for aquatic products the nature of the

companies and the quality demands differ for the two types of outlet, they are similar for

rice and pork. Finally, the domestic market can be led to weigh on the trade balance if

food imports – limited to less than 10% of food consumption in 2001 – develop with new

trade agreements. Moreover, fertiliser imports, which presently weigh more in value than

the imports of agricultural products, develop rapidly.

The growth of the domestic market

The domestic food market has experienced considerable growth: it increased in value by

46% between 1993 and 1998. From 1991 to 2000, the increase was particularly strong for

meat (7% per year), vegetables (6% per year) and imported food products such as wheat

(8% per year) and oils (6% per year). The growth of the Vietnamese market is linked to

the following three main factors: demographic growth, urbanization and the increase in

incomes (with a link between these last two phenomena). With a population of 76.3

million inhabitants according to the 1999 census and almost 80 million in 2002, Vietnam

is the most densely populated country in the region after Singapore. Annual demographic

growth is estimated at 1.7% per year. The rate of urbanization - 25% in 2002 – is

relatively low compared to the average for South- East Asia (36%), but it will rise, with a

demographic growth rate in the cities estimated at 3.8% per year for the period 1998-

2020 compared to 0.1% in rural areas (Cour, 2001).

A satisfactory response of production in quantity..... Local crop production has shown its capacity to meet increasing local demand. This

response has, for the most part, been supported by the political context (allocation of land

to peasants, withdrawal from commercialization by the state). During the past ten years,

pork production has increased by 5.8% per year, corn by 11.2% and vegetables by 7% per

year. Rice production has increased by an average of 5.6% per year, 80% of which is

attributed to the increase in crop intensity and yields, and 20% to the increase in area; this

trend may continue as there is still a potential for growth of these two parameters in many

regions. However, rice production provides poor incomes for producers who, for about a

decade, have combined the process of intensification of rice-farming with diversification,

although the process of diversification is slow: rice still occupies more than 60% of

farmed lands (this figure was 70% in 1991).

…yet unsatisfactory in regularity and quality However, this quantitative appraisal masks problems of coordination between supply and

demand. On the one hand, production does not always succeed in supplying the market in

regular fashion all throughout the year. Thus, the supply of temperate vegetables and corn

experiences shortages for five months in the year, leading to costly imports from China.

On the other hand, production does not totally satisfy demand in terms of quality.

Low level of interaction of agriculture with the other economic sectors At present in Vietnam, it is in the agricultural and food processing sectors that the rural

population finds employment, rather than in non-agricultural jobs whose contribution to

rural incomes has stagnated at less than 20% since 1990. This is due in particular to

certain areas being physically cut off thus damaging the profitability of rural companies,

as well as to problems of economic access to outlets. In the Red River delta, labour is

under-employed in rural areas at a level of more than 20% of working time, but it cannot

be redeployed in the industrial sector which is capital intensive and labour non-intensive.

Agriculture is less and less productive compared with the other sectors. The ratio between

non-agricultural and agricultural productivity increased from 4.4 in 1986 to 7.3 in 1998

(Cour, 2001). The food processing sector is still little developed: it represented 6% of the

GDP in 1996, much less than primary production. However, research conducted in other

countries shows that industrialization, highlighted as a priority by the Vietnamese

government, relies on the increase in agricultural productivity, notably through the

development of agri-business, like in Taiwan.

Imperfect market mechanisms The process of economic reform has improved access to the market for both producers

and consumers, in rural and urban areas alike, causing a reduction in the rate of self-

consumption.

The ratio of the non-agricultural population to the agricultural population rose from 0.39

in 1986 to 0.47 in 1998 and should reach 0.96 in 2020 (i.e., a farmer must feed

him/herself plus one non farmer). Market system organization depends greatly on the

type of product and the location of the production zones in relation to the destination

market. In the case of perishable goods, such as leafy vegetables, they mainly come from

peri-urban zones (less than 50 km from the cities) and the markets or shop retailers are

supplied directly by producers or collectors (who are also often producers) bringing small

quantities (a few hundred kilos per day) using two-wheeled transport.

In the case of other products (onions, fruit, meat, etc.), there is an additional link in the

person of the wholesaler who buys from the collectors. Food marketing in Vietnam is

characterized as disorganized by many authors, but it nevertheless satisfies the supply

function at very low costs (15% commercial margin for rice, 20% for pork, 45-50% for

vegetables). These levels can be linked to the low opportunity cost of labor, which is

unskilled and highly available, the short market chains, competitive trade and the

minimal character of services added to the products. Moreover, the organization of the

marketing channels into networks satisfies the dispersed characteristics of production and

the transport, constraints (limited access to motor-driven vehicles and refrigeration).

However, the marketing channels are still not capable of translating demands for quality

into income-generating opportunities for producers, even when the latter have the

technical capacity to do so: this would require multiplying the producer associations

capable of indicating and communicating improved quality procedures, establishing

internal and external quality controls together with the public authorities and defining,

together with the traders, differentiated price strategies according to quality.

Agricultural production must adapt to the evolution of distribution structures, which is

tending towards higher levels of concentration. In both Hanoi and Ho Chi Minh City, the

municipalities have planned a network of wholesale markets, with a view to eliminating

informal markets and travelling vendors. Furthermore, large volume distribution is

developing. At present, there are only 3 hypermarkets in Vietnam, located in Ho Chi

Minh City. This is compared to 78 hypermarkets in Thailand.

ISSUES AND CHALLENGES OF INDIAN AGRICULTURAL

SECTOR

The major problems confronting Indian agriculture are those of population pressure,

small holdings, depleted soils, lack of modern technology and poor facilities for storage.

(a) Population Pressure:

India has a huge population of over one billion and it is increasing at a very fast rate.

According to 2001 census figures the overall density of population is 324 persons per

sq. km. This is likely to increase further in future. This has created great demand for

land. Every bit of land has been brought under the plough. Even the hill slopes have

been cut into terraces for cultivation.

(b) Small and Fragmented Land Holdings:

The pressure of increasing population and the practice of dividing land equally among

the heirs has caused excessive sub divisions of farm holdings. Consequently, the

holdings are small and fragmented. The small size of holdings makes farming activity

uneconomical and leads to social tension, violence and discontentment.

(c) Inadequate Irrigation Facilities:

By and large the irrigation facilities available in India are far from adequate. So for

half of the total area under food crops has been brought under irrigation and the

remaining half is left to the mercy of monsoon rains which are erratic in time and

space.

(d) Depleted Soils:

Indian soils have been used for growing crops for thousands of years which have

resulted in the depletion of soil fertility. With deforestation the sources of maintaining

natural fertility of soil has been drying out. Lack of material resources and ignorance

of scientific knowledge have further depleted the soils of the natural fertility. Earlier

only animal waste was enough to maintain soil fertility.

(e) Storage of food grains:

Storage of food grains is a big problem. Nearly 10 per cent of our harvest goes waste

every year in the absence of proper storage facilities. This colossal wastage can be

avoided by developing scientific ware-housing facilities. The government has taken

several steps to provide storage facilities.

(f) Farm Implements:

Although some mechanization of farming has taken place in some parts of the country,

most of the farmers are poor and do not have enough resources to purchase modern

farm implements and tools. This hampers the development of agriculture.

(g) The average size of land holdings is small

The average size of land holdings is less than 20,000 m² and subject to fragmentation

due to land ceiling acts and, in some cases, family disputes.

(h) Poor socio-economic condition of farmers

Illiteracy, the root cause of farmers’ poor socioeconomic condition, should be tackled

vigorously. Lack of technical knowledge and awareness are also responsible for low

productivity, adding to the problem of poverty among farmers. Other causes are the

slow progress in implementing land reforms, inadequate or inefficient finance and

marketing services for farm produce and inconsistent government policy. Agricultural

subsidies and taxes often change without notice for short-term political ends.

(i) Use of technology is inadequate

In India, farming practices are too haphazard and non-scientific and need some

forethought before implementing any new technology. The screening of technology is

important since all innovations are not relevant or attractive to all areas. It is important

to screen them according to the geographical area and the local context of agriculture

and let the local Kisan Vigyan Kendras (KVKs) promote it. Appropriate technologies

need to be adopted.

(j) Dependence of agriculture on weather

Agriculture in India and many other developing countries depends on the monsoon

because irrigation facilities are not fully developed. If the monsoon fails or it rains

heavily or untimely, it ruins agricultural production. Agriculture is also a gamble with

temperature. Too high a temperature negatively affects the productivity of a crop. The

present insurance system in India does not cater much for any loss of crop due to

unfavourable and unavoidable climatic conditions or pest epidemics. Small farmers

who have taken loans to raise crops fall into heavy debt in such situations and if this

continues, the poor farmer may starve and sometimes even commits suicide as

reported in Maharashtra and Andhra Pradesh.

Issues and challenges of Vietnam agriculture and food sector

Vietnam has enjoyed strong growth in its economy, has an increasing demand for

imported foods and is a major tourist destination. In addition, its own food manufacturing

sector is growing and becoming a significant user of imported food ingredients.

There are more affluent consumers with disposable income and a cultural predisposition

to spend it on food in the large urban centers of Ho Chi Minh City, Hanoi, Danang, Hai

Phong and Can Tho. Such expenditure is made either by dining out or by purchasing

from supermarkets and other retail outlets.

In November 2006, Vietnam became a member of the World Trade Organisation (WTO),

which required the country to reduce its trade and investment barriers including, tariffs,

subsidies, non-tariff barriers (NTB’s), investment restrictions and improve recognition of

intellectual property rights (IPR). This has established a very strong framework for

countries to trade with Vietnam.

The Vietnamese food retail sector continues to grow rapidly. Local companies such as

Saigon Co-op, Citimart and Maximart have pioneered modern retail, however the

entrance of Metro and Casino have introduced retail expertise that is dramatically

modernizing food retailing. Close neighbor, Thailand, experienced a similar awakening

in 1997 when, during the South East Asian financial crisis, large European retailers such

as Casino, Royal Ahold, Tesco and Carrefour entered the market and rapidly expanded

the modern retail sector.

However, like any emerging market, one of the key challenges is managing the supply

chain, understanding the import requirements and ensuring the product can be delivered

to the customer and/or consumer. Much of this risk can be avoided by the appointment of

a reputable importer/agent who becomes a partner in the transactions that take place.

Opportunities and Strengths of Indian Food Sector

· It is the seventh largest country, with extensive administrative structure and

independent judiciary, a sound financial and infrastructural network and above all a

stable and thriving democracy.

· Due to its diverse agro-climate conditions, it has a wide ranging and large raw

material base suitable to food processing industry.

· It is one of the biggest emerging market, with over 1 billion population and a 250

million strong middle class.

· Rapid urbanization, increased literacy and rising per capita income, have all cause

rapid growth and changes in demand pattern, leading to tremendous new opportunities

for exploiting the large latent market. An average Indian spends about 50 percent of

household expenditure on food items.

· Demand for processed/convenience food is constantly on rise.

· Cheap labour workforce which is available in India can be efficiently utilized to

achieve low cost production.

· Liberalized overall policy regime, with specific incentives for high priority food

processing sector, provides a very conducive for investment and export in the sector.

· Very good investment opportunities exist in many areas of food processing industries,

the important ones being: food & vegetable processing, meat, fish & poultry

processing, packaged, convenience food and drinks, milk products etc

SWOT Analysis of the Indian food industry

Strengths

· India’s abundance of natural agricultural resources makes the market attractive to

investors from all food sub-sectors.

· India’s mass grocery retail sector is developing, and there is scope for considerable

expansion across all formats and across all regions of the country.

Weaknesses

· The processed food industry is less developed as a result of logistical and distribution

problems

· Agriculture remains inefficient and is vulnerable to climatic changes.

· Despite rapid economic growth, India remains a very poor country.

· India’s infrastructure is notoriously inadequate. A 500km road journey can take as

much as 24 hours owing to poor road conditions, congestion and tolls.

Opportunities

· The government is actively seeking investment in the food processing and

agribusiness industries.

· Rising disposable incomes and increasing urbanization mean higher-value processed

foods are likely to experience strong growth rates

· The immense size of India’s population and landmass ensure that market maturity is a

distant prospect.

Threats

· Logistical problems, underdeveloped service networks and poor infrastructure hinder

development in fresh food industries, such as dairy.

EXPORT OF INDIAN FOOD AND AGRICULTURE SECTOR

The Indian food processing industry is primarily export oriented. India’s geographical

situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan,

Singapore, Thailand, Malaysia and Korea. One such example indicating India’s location

advantage is the value of trade in agriculture and processed food between India and Gulf

region.

Products that have growing demand in the export market are pickles, chutneys, fruit pulp,

canned fruits and vegetables, concentrated pulps and juices, dehydrated vegetables and

frozen fruits and vegetables along with processed animal-based products. India's exports

of agricultural and processed food products in 2009-10, has grown by 38 per cent, which,

in absolute value terms, is US$ 6.59 billion, against US$ 4.79 billion in 2011-12.

India's exports of Processed Food was Rs.34864.36 Crores in 2011-12, which including

the share of products like Mango Pulp (Rs.620.83 Crores), Dried and Preserved

Vegetable (Rs.700.19 Crores), Other Processed Fruit and Vegetable (Rs. 2117.86

Crores), Pulses (Rs. 1067.93 Crores), Groundnuts (Rs. 5246.45 Crores), Guargum (Rs.

16523.87 Crores), Jaggery & Confectionary (Rs. 3459.40 Crores), Cocoa Products (Rs.

175.98 Crores), Cereal Preparations (Rs. 1870.04 Crores), Alcoholic and Non-Alcoholic

Beverages (Rs. 1469.54 Crores) and Miscellaneous Preparations (Rs. 1291.03 Crores).

The Indian food processing industry is primarily export orient. India's geographical

situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan,

Singapore, Thailand, Malaysia and Korea. One such example indicating India's location

advantage is the value of trade in agriculture and processed food between India and Gulf

region.

Retail, one of the largest sectors in the global economy (USD 7 Trillion), is going

through a transition phase in India. One of the prime factors for non-competitiveness of

the food processing industry is because of the cost and quality of marketing channels.

Globally more than 72% of food sales occur through super stores. India presents a huge

opportunity and is all set for a big retail revolution. India is the least saturated of global

markets with a small organized retail and also the least competitive of all global markets.

IMPORT OF INDIAN FOOD SECTOR

What kind of food India has been importing most during 2010?

Let’s have a look at the top food import categories in India…

Number 1: With over one billion dollars of imports are “Sugars and sugar

confectionery”. The major supplying countries are Brazil, Thailand, Guatemala and

Spain.

Food India: Roadside vegetable market Bangalore

Number 2: In 2010 India imported over 800 million US$ dried vegetables. Even if India

is one of the biggest fruit and vegetable producer in the world, India imported dried

vegetables from Canada, USA and Australia (this were mostly food items like dried peas

& lentils … most probably for the preparation of the Dhal, one of India’s favorite dishes).

Number 3: With almost 700 million US$ fruits, especially nuts, apples and dates where

imported from USA,Ivory Coast, Benin and Afghanistan. (USA exports many apples to

India, Ivory Coast & Benin cashew nuts and Afghanistan dates).

On fourth position in the “What food India imports” list is: Coffee, tea and spices

mostly from neighbouring Asian countries like Sri Lanka, Indonesia, Nepal and China.

Number 5: Some 180 million US$ of dairy products, eggs and honey came into India

mostly from Australia and New Zealand.

On 6th and 7th position are cereals (90 millions $) and preserved fruit, vegetables and

fruit juices (80 million $).

IMPORT AND EXPORT INFORMATION RELATED TO VIETNAM IN CONTEXT WITH INDIA

Vietnam increases cashew exports to India. Vietnam ships more than 160,000 tons of

cashew nuts abroad annually, and has become the largest cashew nut exporter to the US.

In the first eight months of 2012, India imported 3,245 tons of cashew nuts at an average

price of Rs. 163.38 per kg. A large portion of that volume was supplied by Vietnam.

India’s cashew nut demand is increasing, both for household consumption and food

processing.

Vietnam is a promising source of broken cashew nuts; local exporters are therefore keen

to capitalize on the Indian market.

Cashew Export Promotion Council of India estimates India needs at least 700,000 tons of

imported cashew nuts for its food processing industry.

What are the incentives available to exporter of foods product in India?

Fiscal policy and taxation:

· Rupee is now fully convertible on current account and convertibility on capital

account with unified exchange rate mechanism is foreseen in coming years.

· Repatriation of profits is freely permitted in many industries except for some, where

there is an additional requirement of balancing the dividend payments through export

earnings.

· Liberal corporate tax policy is applicable for export and domestic earnings, income tax

rebate allowed (100% of profits for five years and 25% of profits for the next five

years) for setting up of new agro-processing industries to process and package fruits &

vegetables.

· Fruits & vegetables, and dairy machineries are completely exempt from central excise

duty. Central excise duty on preparation of meat, poultry and fish, pectin, pats and

yeast is also completely exempt.

· Quantity restrictions on all food products have been removed. Peak rate of customs

duty has been reduced from 30% to 25% (excluding agricultural and dairy products)

and duty structure on designated items has been rationalized.

· Customs duty on refrigerated goods transport vehicles has been reduced form 20% to

10%.

Export promotion:

· Food-processing industry is one of the thrust areas identified for exports. Free Trade

Zones (FTZ) and Export Processing Zones (EPZ) have been set up with all

infrastructures. Also, setting up of 100% Export Oriented Units (EOU) is encouraged

in other areas. They may import free of duty all types of goods, including capital

foods.

· Capital goods, including spares up to 20% of the CIF value of the capital goods may

be imported at a concessional rate of customs duty subject to certain export obligations

under the EPCG scheme. Export linked duty free imports are also allowed.

· 50% of the production of EPZ/FTZ and 100% EOU units is saleable in domestic tariff

area.

· All profits from export sales are completely free from corporate taxes. Profits from

such exports are also exempt from MAT.

· Agri export zones and food parks

· Setting up of 60 agri zones for end-to-end development for export of specific product

from geographically contiguous areas.

· 53 food parks approved to enable small and medium food and beverage units to set up

and to use capital intensive common facilities such as cold storage, warehouse, quality

control labs, effluent treatment plant, etc.

Government initiatives in the Indian food industry

Following are some of the government initiatives in the Indian food industry:

· The Indian government will be setting up 10 Mega Food Parks (MFPs) with an

investment of US $514 million

· The food processing industries are prioritized highly in terms of getting credit and

lending money in the bank, because they grow fast and thus indicate a stable business.

· The fruit and vegetable processing companies do not have to pay any taxes on these

products to the Indian government, thus making the business easier to acesss.

· The excise duty tax on ready-to-eat packaged foods and instant food mixes has been

brought down to 8% from 16% making this industry highly attractive and competitive.

OPPORTUNITIES TO INDIA TO TRADE WITH VIETNAM

ASSOCHAM has been taking several initiatives to strengthen India’s International

economic relations particularly with the ASEAN region. The trade between India and the

ASEAN countries following the Free Trade Agreement (FTA) for trade in goods reached

US$ 50 billion in 2011. It is expected to reach the target of US$ 70 billion by 2012-13.

Vietnam is India's very important trading partner amongst the ASEAN countries. The

bilateral trade in 2011-12 amounted to US$ 5.4 billion, of which India's export to

Vietnam was worth US$ 3.7 billion. Indian Companies had invested about US $ 201.4

million in 41 projects in Vietnam.

Vietnam offers trade opportunities for Indian companies in the sector like Agriculture

products & Food Processing, Pharmaceuticals, Energy, Chemicals, Mining, Sugar,

Power, Machinery & Equipments, Infrastructure, Auto parts and lubricants, furnishing-

handicrafts & articles, fashion goods, electronic & telecommunication and service

industries.

Accordingly, with a view to providing excellent opportunity to Indian companies,

ASSOCHAM with the support of Ministry of Commerce and Industry, Govt of India is

organizing “India Pavilion at 23rd Vietnam International Trade Fair on April 10-13, 2013

at Vietnam Exhibition & Fair Center, 148 Giang Vo Road, Hanoi.

In view of your company’s keen interest on the subject, we invite your organization to

participate in the EXPO and explore the business opportunities in the ASEAN region.

The registration will be on the first-come-first-serve basis as per details are enclosed for

your kind reference

Vietnam, India to foster investment

Vietnam and India should foster bilateral investment cooperation to match their real

economic potential.

This is the observation of a new online report by the Foreign Investment Agency (FIA),

Ministry of Planning and Investment

According to the report, by the end of January, India had 68 valid projects with total

investment of 251.35 million USD in Vietnam, ranking the 30 th among 98 foreign

investors in Vietnam .

Most Indian investment is in the form of wholly foreign-invested projects. There are 33

projects in the manufacturing and processing industry worth a total 134.9 million USD,

accounting for 53.7 percent of total investment. Another three mining projects with 86

million USD make up 34.3 percent of total investment.

Vietnam has three investment projects in India with total investment of 23.6 million

USD. Among them, Rohto Mentholatum Co. Ltd. invests 22.8 million USD in a business

venture importing pharmaceutical and food products from other countries to sell in India .

According to FIA Director General Do Nhat Hoang, activities should be held to attract

more Indian investment in high-tech industries, software, and electric and electronic

industries. Vietnam also encourages Indian investment in energy (coal, wind and nuclear)

production.

Vietnam-India economic and investment cooperation is expected to increase after the

ASEAN-India Free Trade Agreement is finalised.-VNA

Benefits prevails by both countries to trade with each other in terms of Export and Imports

At a recent seminar on trade and investment opportunities between Vietnam and India in

Ho Chi Minh city, India offered zero percent tax on 60 Vietnamese import goods from

December 31, 2013.

Workers making shoes at an Export Company

Accordingly, India will apply zero percent tax on 60 commodities imported from

Vietnam after December 31 next year. The number of goods under zero percent tax will

increase to 70 by 2016.

In turn, Vietnam will also offer zero percent tax on 60 commodities imported from India

by 2018.

The two countries will reduce import tariff on commodities which are their main

strengths like tea, coffee, pepper, seafood and garments from 2019.

At present, several commodities from India like animal feed and chemicals are enjoying

low tariff rates of 0-9 percent in Vietnam.

According to the Vietnam Chamber of Commerce and Industry, two-way trade between

the two countries has grown to reach US$3.9 billion in 2011, a four time increase

compared to last five years. The two-way trade is now expected to reach $7 billion by

2015.

India is one of the 10 biggest export markets for Vietnam. However Vietnamese

commodities account for only 0.3 percent of total import turnover of India. Although

India has applied tax reductions with ASEAN – India free trade agreement, their tariff

rate is still at 30%.

The ASEAN – India trade presently is about $80 billion.

BENEFITS FOR VIETNAM TO DO BUSINESS WITH GUJARAT

Strategic Location

1. Gujarat, a state in western India has, since time immemorial, been renowned for

its entrepreneurial spirit.

2. It is this inherent trait that has made Gujarat spearhead the Indian march for

global economic superpower status.

3. With many natural and man-made plus points, Gujarat has earned the sobriquet of

being the "Growth Engine of India".

4. Attractive geographical setting

5. Strategically located on the west coast of India

6. Gateway to the rich land-locked northern and central hinterland

7. Access to all major port-based countries, such as UK, Australia, China, Japan,

Korea and Gulf countries, etc..

Strong Economic Credentials

The economic growth indicators of Gujarat have been impressive with an achievement of

an average annual growth rate of 10.4 % in the last five years, a figure that is higher than

that of the "Asian Tigers". Gujarat contributes to 16% of the industrial production of the

country and has also mobilized the highest share (12.7%) of the investments through

lEMs in the country.

1. Accelerated yet Stable Reforms Process

a. Present leadership is the original reformers

b. Broad consensus on importance of reforms

c. Reform momentum immune to changing leadership

2. Robust Economic Fundamentals

a. Strong forex reserves

b. Controlled inflation (WPI)

3. Escalating Consumerism

a. Increasing aspirations

b. Rising income

4. Focus on Infrastructure Development

a. Large investments with higher effectiveness: attracting further global

b. Local transport

c. Air-connectivity (domestic and international)

Business Friendly Regulatory Environment

· Simplification of Procedures

· Gujarat Investor Portal

· Investor Support Software

· Information Bank

· Investment Monitoring System

· Industrial Zoning

· Creation of Land Bank

· Doing Business in Gujarat

Highly Skilled and Multilingual Workforce

Some of the India's premier institutes are located in Gujarat

· Indian Institute of Management (IIM) for Management

· Indian Institute of Technology (IIT) and DAIICT for Technology

· NIFT and NID for Fashion & Design

· Nirma and Gujarat Knowledge Society (GKS) for Knowledge

· MICA for Communication

· CEPT for Architecture

· IRMA for Rural Management

· NIPER for Pharmaceutical

· Pandit Deendayal Petroleum University for Petroleum

Technical and Skilled Workforce

· Need based short-term courses in existing institutions

· Establishment of extension centers at Industrial Estates/SEZ/Industrial

park/Clusters

· Anchor institutes in identified areas

· 54 Engineering and 106 Diploma Engineering colleges offer over 17000 & 25000

respectively

· 441 vocational training institutes (Industrial Training institutes (ITI's)) offering

87981 seats every year for semi-skilled manpower

· Over 7 lakh students graduate every year

Strong and Sophisticated Financial Services Sector

India's financial system has kept pace with the growing needs of its corporate and retail

borrowers. Interest rates are market-determined and have shown a downward trend over

the last few years.

The components of the Indian banking system are:

· Scheduled commercial banks

· Urban and state co-operative banks

· Regional rural banks

Vibrant Culture and Excellent Lifestyle

Gujarat earns the reputation of finer things in life as culture reflects the finer details of

moral and traditional values and lifestyle is the very existence of Gujaratis.

Gujarat is a place with high spirits, vibrant culture and joyous festivals. Prosperity is

synonymous with partnership. Quality of life and standards of living are high while costs

are low.

Gujarat is also popular for the lifestyle and cuisines that go with the celebrations.

Traditions almost remain unchanged and you get acquainted with the modern living as

Gujarat develops on a faster growth to modernity, influenced by outside culture.

Unmatched traditions in the world, it speaks of ‘Home is where the heart is’. Though,

with changing times the state has prospered and is on the path of development, its people

are strongly bound by their ancient culture and the value system.

Gujarat is influenced with enculturation; a culture shared with members of the society

and passed on from one generation to the next. Enculturation has unified people with

common sense experience and influence that lead to knowledge and appreciation of

cultural traditions and lifestyles. The aspect of joining hands to greet or bow down comes

through age influences as offering reverence. Social systems of learning, religious

practices and forms of artistic expressions have led way to more balanced lifestyles in

Gujarat. People of Gujarat are found to be sharing cultural traits and patterns with other

regions and also extend beyond national boundaries towards International culture.

Ancient crafts exist in Gujarat blend with unique traditional intricate work and finer

details with artistic and aesthetic appeal. The handicrafts products of skilled

craftsmanship are popular all over the world. It mirrors vibrant culture of the State.

Gujarat boasts of a rich culture and heritage. Opportunities for recreation abound. From

cool, club swimming pools and sprawling Multiplex cinemas to a walk in the beauty of

Gujarat's natural settings in municipal parks, there is something to get you on your feet.

In Gujarat, Lifestyles sustain. Gujarat is ‘heaven on earth’. Ask anyone in the world and

Gujarat is the most cherished place to visit in India. Gujarat is the Land of the Legends –

where individuals have peace of mind, are spiritual and live in harmony. The people are

enterprising oriented, cooperative,and supportive. They possess warm and friendly nature

with qualities of humanity, Gujaratis are found to be most generous and loyal. It is said,

Attitude and all is that ‘Makes a Big Difference.

BENEFITS FOR GUJARAT TO DO BUSINESS WITH VIETNAM

1. A Record Foreign Direct Investment (FDI) - FDI estimated to reach USD$13

billion this year. The WTO membership has brought in a higher number of

foreign investors and Vietnam now ranks 6th in the world in terms of the most

attractive FDI destination by the United Nations.

2. A Record Foreign Indirect Investment (FII) - FII estimated to reach USD$5.5

billion this year as foreign equity funds are pumping money into Vietnam

securities market.

3. An Increase in Exports - a 20% increase in export reaching USD$39 billion

YTD and estimated to reach USD$48 billion for 2007.

4. Access to Cheaper Loans - Vietnam now has access to loans from the World

Bank's International Bank for Reconstruction and Development, which is one of

the cheapest loans out there.

5. Equal Treatment for Vietnam Products - Vietnam's products now enjoy equal

treatment in member country markets, which leads to the increase in price of

export products as well as the increase quality.

6. Increased in Consumer Spending - Consumer spending has increased due to the

wider selections of products brought in by foreign companies.

7. A HOT Real Estate Market - The real estate sector has seen rapid development

and investment from foreign investors. However this has caused real estate prices

to skyrocket and the government will need to act to avoid a crash landing.

8. The MOST Attractive Manufacturing Destination - Vietnam now ranks as the

number one manufacturing destination (beating out China) by the Price water

house Coopers EM20 Index.

CHAPTER 8

EDUCATION SECTOR OF VIETNAM

QUOTES FOR EDUCATION:

· An education isn’t how much you have committed to memory or even how much you

know. Its being able to differentiate between what you know and what you don’t”

Anatole France (1844-1924)

· “A school should not be a preparation for life. A school should be life”

Elbert Hubbard

Profile of Indian education:

• 50% children enrolling in private schools in urban areas.

• 2,12,7000 secondary schools in March 2012

• One of the largest system in the world.

• Major segments of core and non-core businesses.

• Schools and higher education for the core group.

• Non-core business, pre-schools, vocational training and coaching classes.

• Vocational segment US$ 2.6 billion market.

• Grow rate US$ 3.6 billion by 2012.

• Growing by 25 %.

Strength of education sector:

According to the 2011 census,

• Total literacy rate in India is 74.04 %

• The female literacy rate is 65.46 %

• Male literacy rate is 82.14 %

• The country has :

- 40 central universities,

- 6 science and research institute,

- 45 technical institutes,

- 13 management institutes,

- 4 information technology institute,

- 3 planning and architecture institutes,

- 4 training institutions,

Benefits provided by Government

· The Government allows 100 per cent FDI in the education sector.

· Hike of about 18 % in the budgetary allocation for 2012-13. plan

· Outlay of Rs 61,427 crore (US$ 10.92 billion) .

· Rs 15,458 crore (US$ 2.74 billion earmarked for higher education

· School education has received Rs 45,969 crore (US$ 8.17 billion).

· Rs 3,124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA)

representing an increase of 29 per cent.

· Rs 1000 crore allocated for National Skill Development Fund in 2012-13.

· Increase budget allocation to for Sarva Shiksha Abhiyan

Increase in allocation skill development programmers.

“India is a land of opportunity that places premium on enterprise and creativity… I invite

you, the overseas Indian, to make use of the investment and business opportunities that

India now offers. This is the time for all of us to become strategic partners in India’s

progress.”

Dr. Manmohan Singh, Hon’ble Prime Minister of India

VIETNAMESE EDUCATION SYSTEM:

• Vietnam is an S-shaped country, stretching from 8002’ to 23023’ north of the

equator. Its surface area is approximately 331 thousand square kilometers. The

population is over 83 million persons 1, and includes 54 ethnic groups with the

Vietnamese majority group accounting for 90%. Vietnamese is the common

language for the ethnic group community.

• With regard to administration, Vietnam is divided into 64 centrally managed

provinces and cities; 659 districts, towns and provincially managed cities; and

10,732 communes, quarters and towns.

In the education sector, Vietnam has obtained impressive results compared with those

countries with similar economic development: over 90% of the working-age population is

literate; more than 98% of children of primary school age attend schools; and the

enrollment rates for boys and girls are more or less similar.

Chart: POST GRADUATE EDUCATION

Ø The main educational goal in Vietnam is improving people’s general knowledge,

target quality human resources and nurturing and fostering talent.

Ø With one of the highest GDP growth rates in Asia, Vietnam is currently trying to

overhaul its education sys, with a view to prepare students for the increasing role

of English as the language of business, and the importance of internationalizing

the education sys to maintain the rapid economic growth of the last two decades.

School grades

The school year is divided into two semesters. The first semester begins in late August

and ends some time before Tết, while the second one begins right after the first one and

lasts until June.

TABLE : SCHOOL GRADES

Level/Grade Typical age

Preschool

Pre-school playgroup 3-4

Kindergarten 4-6

Primary school

First grade 6-7

Second grade 7-8

Third grade 8-9

Fourth grade 9-10

Fifth grade 10-11

Secondary school

Sixth grade 11–12

Seventh grade 12-13

Eighth grade 13–14

Ninth grade 14-15

High school

Tenth grade 15–16

Eleventh grade 16–17

Twelfth grade 17–18

Post-secondary education

Tertiary education (College or University)

Ages vary (usually four years,

referred to as Freshman,

Sophomore, Junior and

Senior years)

· Pre-primary education

· Primary education

· Intermediate education

· Secondary education

All subjects are compulsory for students.

· Literature/Reading

· Mathematics (consisting of separate subjects Algebra (year 10 only), Calculus

(year 11 and 12 only) and Geometry (both year 10, 11 and 12))

· Physics

· Chemistry

· Biology

· History

· Geography

· Civics (generally consists of economics, philosophy, politics, law and ethics)

· Foreign language (mostly English; Chinese, French and Russian are taught at

some specialized schools)

· Technology (consists of Agriculture/Horticulture, Mechanics, Electronics,

Design, etc.)

· Information Technology (Recently introduced, yet to be implemented in poorer

regions. Students study basic programming in languages such as Visual FoxPro,

Visual Basic and Pascal)

· Physical Education

Advanced classes consists of either:

· Environmental Science

· Social Research

At the start of secondary school, students can enroll in Specialist Classes if they pass the

class entrance exam, which usually consists of a Mathematics exam, a Literature exam,

and an exam of the subject that the student wants to specialize in. Other courses include

university-level courses.

· Higher education

There are 4 group of fixed subjects namely :

· Group A: Mathematics, Physics, Chemistry

· Group B: Mathematics, Biology, Chemistry

· Group C: Literature, History, Geography

· Group D: Literature, Foreign Language, Mathematics

Besides these, there are also groups H, M, N, R, T and V.

Candidates have a total of four attempts at passing the examination.

Vietnam universities also offer Master’s and Doctorate for 2 years and 4 years

respectively.

In addition to universities, there are community colleges, art and technology institutes,

professional secondary schools, and vocational schools which offer degrees or

certificates, after courses lasting from a few months to two years.

· Private universities

Now at present 23 private universities exist in Vietnam, 11% of total. These universities

have 119,464 students which is 11% of the total. The government has plan of increasing

the private universities share of the sector to 30% by the year 2013.Lots of new and

foreign universities is increasing year by year.

PROFILE OF VIETNAM EDUCATION SYSTEM

Vietnamese education system

· Early Childhood Care and Education (ECCE), including crèches and

kindergartens.

· Vocational education with 3 levels: elementary, intermediate and college level.

· Higher education: college, undergraduate, master and doctorate levels.

Current situation of Vietnam education

A. Development in educational scopes, quality and networks.

B. Attention to Management of educational quality has paid more.

C. Social equity in education has been improved.

D. Increase in learning opportunities for girls.

E. exempted/reduced tution fees and provided scholarships for poor.

F. In 2007, 53% of the total no. Students fees exampted/reduced.

G. In 2007 about 25% of all social expenditure for learning came from people

contributions.

TABLE : VIETNAM POSITION

NATIONAL POLICIES ON LITERACY

• The national education policy considers manpower as a decisive factor in socio-

economic growth. The investment for man's education is the investment for

development.

• Carry out simultaneously the aspects of Education for All.

• Pre-school Education (PSE).

• Universalization of Primary Education (UPE).

• Universalization of Lower Secondary Education.

• Eradication of illiteracy and

• Continuing Education for Development.

• Ensure that the EFA (Education for All) aspects serve socio-economic

development.

Countries Education and human

capital index

English

proficiency index

High-tech

proficiency index

Singapore 6.81 8.33 7.83

China 5.73 3.62 4.37

Malaysia 5.59 4.00 5.50

Philippines 4.53 5.40 5.00

Thailand 4.04 2.82 3.27

Vietnam 3.79 2.62 2.50

Indonesia 3.44 3.00 2.50

• Create a convenient learning environment provide access to written materials and

mass media for all, and gradually build a learning society.

The Current Vietnamese Education System – Issues, Policies, Experience

System Structure - School Network

Since 1945, adult education in form of non- formal education (initially anti- illiteracy

classes, subsequently “complementary” education and currently continuing education)

has existed in the Vietnamese education system. However, at the end of 20th century,

some educational policy-makers and researchers saw continuing education as only a

delivery mode and not a part of the education system structure. The Education Law 1998

shows some conceptual hesitance in relation to non-formal education, by stating, “Non-

formal education units consist of continuing education centres...” However, in the

Education Law 2005, this regulation was modified: “The national education system

consists of formal education and continuing education”. Therefore, it should now be

understood that continuing education is not just a delivery mode but also a part of the

overall system.

In terms of different sub-sectors and training qualifications, the Vietnamese education

system comprises of:

- Early Childhood Care and Education (ECCE), including crèches and kindergartens;

- General education, including three levels: primary, lower secondary and upper

secondary;

- Vocational education with 3 levels: elementary, intermediate and college level;

- Higher education: college, undergraduate, master and doctorate levels.

In terms of curricula/programs, there are some structured on the basis of

educational levels and training qualifications as stated above; there are also those not

direct equivalent to an educational level or training qualifications (such as continuing

education programs or

professional training, in-service training, updating knowledge/skills, etc.).

Educational institutions include: schools, colleges, universities, institutes and educational

centers. Vietnam is also making efforts through the media to offer distance learning and

education.

Some of the brief discussion are as follows.:

A. Development in educational scopes, quality and networks.

B. Attention to Management of educational quality has paid more.

C. Social equity in education has been improved.

D. Increase in learning opportunities for girls.

E. exempted/reduced tution fees and provided scholarships for poor.

F. In 2007, 53% of the total no. Students fees exampted/reduced.

G. In 2007 about 25% of all social expenditure for learning came from people

contributions.

Various program for upliftment of education system in Vietnam Education System :

National target program for Vietnam Education upto 2020 will include following

projects:

1) Implement universalization of 5 years old preschool, maintain illetracy

eradication and primary education universalization, improve achievements of

secondary education universalization and suppot to develop continuing education.

2) Renovate curricula, textbooks and teaching materials,

3) Renovate learning-teaching assessment and develop an accreditation system of

educational quality.

4) Train, upgrade teaching staff and educational managers.

5) Mobilize overseas Vietnamese intellectuals to participate in teaching, doing

researches and to pass technological transfer in Vietnam.

6) Educate and train talent pupils/students.

Action Research on Mother Tongue-Based Bilingual Education Creating Learning

Opportunities for Ethnic Minority Children.

1. Viet Nam is an ethnically diverse society made up of 54 different ethnic groups,

many of which have their own distinct language and live in remote and

economically disadvantaged parts of the country. The ethnic minority population

totals approximately 11 million; 13 percent of the total population of 85.8 million.

This has created a “language barrier” for many ethnic minority children who have

a limited understanding and proficiency in Vietnamese or in some cases do not

understand the language at all. Because few teachers can communicate in local

ethnic minority languages, many ethnic minority children struggle to understand

their teachers and consequently cannot participate confidently in active learning.

This is one of the reasons why the net primary school completion rate1 among

ethnic minority children (61 percent) is significantly lower than the corresponding

rate for Kinh (86 percent).

2. In order for Viet Nam to achieve the Millennium Development Goal on Universal

Primary Education, as well as the goals set forth in the 1991 Law on

Universalisation of Primary Education (UPE), and in order to maintain UPE

under the 2005 Education Law, the Government has launched a number of

initiatives to provide special support to disadvantaged children. One of the

initiatives already proving effective after just one year of implementation is the

Action Research3 on Mother Tongue-based Bilingual Education (MTBBE) being

carried out by the Ministry of Education and Training (MOET) in collaboration

with UNICEF Viet Nam.

MTBBE Action Research aims to achieve the following results:

· A detailed study design, including methodologies and assessments of ethnic minority

children’s learning performance;

· Policymakers, education managers at all levels, principals, teachers, students and

community members understand and support mother tongue-based bilingual

education;

· Teaching, learning, reference and advocacy materials in ethnic minority languages

developed;

· A professional development programme for teachers implemented with intensive in

service support and pre-service orientation; education managers, teachers, teaching

assistants, and student

· Teachers in the Action Research programme sites understand and know how to apply

mother tongue-based bilingual education methodologies in school management and

classroom teaching;

· Models of mother tongue-based bilingual education in selected preschools and

primary schools successfully implemented and children’s learning achievements

measured; and

· An applicable and sustainable policy for ethnic minority languages and mother

tongue-based bilingual education adopted.

Steps taken by Vietnam to improve the education for ethnic minority

children

Viet Nam: bilingual education helps ethnic minority children enjoy school

By Nguyen Thi Thanh Huong

Ksor Hiep plays the T'rung at the beginning of class. Photo: UNICEF Viet

Nam\2012\Nguyen Thi Thanh Huong

· Gia Lai Province, January 2013 -- Third grader Ksor Hiep plays the T’rung, a

traditional music instrument made of bamboo tubes, at the beginning of class. It

has been a class tradition that the student on duty play a song on the T’rung every

morning while the others prepare for class. “We find it exciting to start a new day

with our traditional music. We can all play the T’rung and we enjoy it very

much,” says eight-year-old Hiep.

· For Hiep and his friends in Ly Tu Trong primary school in Gia Lai province in the

Central Highlands of Viet Nam, school is a fun place where they can learn and

play in their mother tongue: Jrai.

Bilingual education for ethnic minority children

H'Truc enjoys learning in her mother tongue. Photo: UNICEF Viet Nam\2012\Nguyen

Thi Thanh Huong

· In La Der, a poor commune where Hiep lives, almost all the inhabitants are Jrai,

one of 53 ethnic minority groups in Viet Nam. Traditional values are embraced by

the people in the community and they communicate with each other in Jrai. As a

result, the majority of the ethnic minority children in general, and Jrai children in

particular, underperform at school. While the primary completion rate for the

Kinh majority is 86 per cent, the rate for ethnic minority children is only 61

percent.

· The project aims to help children to overcome the language barrier and be able to

enjoy school and hence improve their learning achievement. With support from

UNICEF, the project has developed a roadmap for children to gradually transit

from their mother tongue to Vietnamese so that from grade 5 onwards, students

have developed bilingualism to a level where they are confident enough to learn

in Vietnamese.

· The project had shown the positive initial impact on the academic performance of

students after three years of implementation.

· Children who participate in bilingual classes perform much better on language

and mathematics tests than children in non-bilingual classes.

Ø “I love learning in Jrai as it is my own language,” says H’Truc, a third grader.

According to H’Truc's father, she is doing much better than her two elder siblings,

who are learning in non-bilingual classes.

The way forward…..

· More than 500 children are participating in these bilingual education classes in

Viet Nam. The project will continue to be refined and strengthened, based on the

lessons learnt from the current experience, so that other provinces and

organizations can replicate the approach. The project is also expected to

contribute to the advocacy for policy change and the development of a quality

mother tongue-based bilingual education programme in Viet Nam.

· “We aim to ensure quality, inclusive and equitable education for all children.

Being born into an ethnic minority group should no longer be a disadvantage and

we need to work hard to make sure that every child has the same opportunity,”

says Mitsue Uemura.

National target programs of Vietnam education upto 2020 will include

following projects :

1) Implement universalization of 5 years old preschool, maintanin illiteracy

eradication and primary education universalization, improve achievements of

secondary education universalization and support to develop continuing

education.

2) Renovate curricula, textbooks and teaching materials.

3) Renovate learning-teaching assessment and develop an accreditation system of

educational quality.

4) Train, upgrade teaching staff and educational managers.

5) Mobilize overseas Vietnamese intellectuals to participate in teaching, doing

researches and to pass technological transfer in Vietnam.

6) Educate and train talent pupils/students.

Ø NATIONAL POLICIES ON LITERACY :

• The national education policy considers manpower as a decisive factor in socio-

economic growth. The investment for man's education is the investment for

development.

• Carry out simultaneously the aspects of Education for All.

• Pre-school Education (PSE).

• Universalization of Primary Education (UPE).

• Universalization of Lower Secondary Education .

• Eradication of illiteracy and

• Continuing Education for Development.

• Ensure that the EFA (Education for All) aspects serve socio-economic

development.

• Create a convenient learning environment provide access to written materials and

mass media for all, and gradually build a learning society.

CHART : THE VIETNAM EDUCATION SYSTEM

CHART : NATIONAL SYSTEM OF EDUCATION QUALITY ASSESSMENT

ALIGNMENT WITH EDUCATION SYSTEM:

· Newly developed national standards and an updated curriculum clearly define the

national goals in education .

· The results of assessments are used to interpret the quality of curriculum. Vietnam

is also serious to link the results of assessments with policy and teaching (new

policy on full day schooling).

Educational Strengths, Weaknesses, and Gaps

Ø Vietnam’s government recognizes education to be a universal human right and is

congnizant of education’s centrality to a human development paradigm and to the

future of Vietnam itself. Vietnam’s leads have consistently emphasized that education

is perhaps the “NATIONAL PRIORITY”. In particular, the government has

demonstrated its commitment to expanding the availability of education and training

opportunities.

Ø Many of Vietnam’s achievements in education have been justifiably lauded. By 2009,

literacy approached 94% nationally and 97% in urban areas. Enrolment data suggest

dramatic improvements in the availability of formal education at all levels of

schooling, including and doubling and trebling of lower and upper secondary

enrolment over the past two decades, and a thirteen fold increase in post secondary

enrolment. Remarkably, enrolments among boys and girls are now roughly equal

across primary and secondary education, with girls enrolment in upper secondary

education exceeding that of boys in some regions.

Ø It is doubtless that improvements in the availability of education have contributed to

Vietnam’s economic growth. But the most commonly cited statistical indicators of

education in Vietnam especially enrolment figures can present a misleading picture.

Powerful incentives for education managers to report “goodness” has resulted in

something that Vietnamese refer to as “Achievement Syndrome”, which has resulted

in a systematic neglect of the quality and relevance of education. The fact that higher

proportion of Vietnamese are attending school is certainly a good thing. But this tells

little about the quality, or its adequacy to Vietnam’s current and prospective

developmental needs. Available research suggests education and training in Vietnam

has system wide problems and unacceptable unevenness in the quality and relevance

of education and instruction.

Ø Public spending on education : Between 1990 and 2006, recurrent budgetary spending

on education increased from 1 to 3.5 percent GDP (MOF 2006). Between 2001 and

2006 the government’s annual budget for education trebled. Currently education

stands as the largest single expenditure item in the regular budget. By 2008, education

accounted for roughly 23% of the state budget and the government has indicated its

intention to maintain this level for the foreseeable future. The government has sought

to bring total public spending on education to 6.9% of GDP by 2010, as compared to

roughly 1.8% in 1994.

Ø In 2007 education budget, primary education accounted for some 28%, lower and

upper secondary for a combined 36% ( 24% and 11% respectively), followed by

tertiary education (16%), vocational and professional secondary education (4% each),

continuing education (2%), with the remainder going to “other” categories. Vietnam’s

government has stated its intent to raise public expenditure on education to 5.5% of

GDP by 2020.

Ø As in most developing countries, a large proportion (over 80%) of recurrent public

spending on education goes to teachers wages. Recent years have seen several round

of wage increases, reflected in a more than four fold increase in recurrent

expenditures. Salaries and wages vary considerably across regions and different parts

of the education system. The very slow growth in teachers pay over the 1990s gad

created hardships for teachers and contributed to the institutionalization of such

practices as illegal fees, the private provision of after hours “extra study” classes by

nominally “public” teachers, and various forms of academic corruption. Future

policies on teachers pay have wide ranging implications for the costs and quality of

education in Vietnam and may or may not mitigate the current trends toward the

commercialization of education.

SHORTCOMINGS IN THE SYSTEM

Ø Vietnam’s current approach to reform of its higher education system is extremely

ambitious. Nation may be at risk of attempting to do too much too quickly.

Ø By 2020, for example, Vietnam expects its higher education sys to be advanced

by modern standards and highly competitive internationally.

Ø This optimistic vision faces many challenges. The economy’s rapid growth masks

a reliance on unskilled labor and the exploitation of natural resources, while

decision-making in many areas of public life continues to be hamstrung by over-

regulation and centralized control. A great many goals and objectives have been

set for reform of the higher education system during the next decade. Realizing

these aspirations will require some difficult shifts in the management culture, as

well as a great deal more public investment.

Ø The massification of Vietnam's higher education sector in the last two decades has

led to quality problems that do not match the demands of society and of the

nation's development.

Ø "Vietnam is now suffering from an excess of low quality universities and lack of

high quality ones”

Ø Newer universities and non-public institutions are become less attractive to

students.

Ø In the education sector, Vietnam has obtained impressive results compared with

those countries with similar economic development: over 90% of the working-age

population is literate; more than 98% of children of primary school age attend

schools; and the enrollment rates for boys and girls are more or less similar.

WB endeavors to clearly present challenges to Vietnam to achieve the Education for All

(EFA) goals by 2015 and enhance educational development with a view to meeting the

requirements of industrialization and modernization in the context of globalization, and

development of information and communication technology.

VIETNAM’S EDUCATIONAL REFORMS,

· The most important task in the third education reform which, faced a serious

shortage of resources.

· Some solutions are required in the reform of general education, vocation

completed in 1996.

· The reformed curriculum comprised of elements that are more modern and

therefore created pre-conditions for the improvement of education quality.

School enrolment, primary (% gross)

Gross enrolment ratio : Primary. GER can exceed 100% due to the inclusion of over-aged

and under-aged students because of early or late school entrance and grade repetition.

Chart : School Enrolment Ratio

Ø Gross intake rate in grade 1, female (% of relevant age group)

Ø Gross intake ratio : The ratio can exceed 100% due to over-aged and under-aged

children entering primary school for the first time.

Chart : Gross intake ratio

Adjusted savings: education expenditure > % of GNI 2.81 % of

GNI

Children out of school, primary 1,006,627

Children out of school, primary, female 368,487

Children out of school, primary, male 113,301

Duration of compulsory education 5 years

Duration of education > Primary level 5

Duration of education > Secondary level 7

Education enrolment by level > Primary level 8,841,004

Education enrolment by level > Secondary level 9,265,801

Education enrolment by level > Tertiary level 797,086

Education enrolment by level, percentage girls >

Primary level 47.49%


Secondary level 47.42%


Tertiary level 42.79%

Education enrolment ratio, net, primary level 88%

Education enrolment ratio, net, primary level > Men 98%

Education enrolment ratio, net, primary level > Women 92%

Education, percentage of pupils starting grade 1

reaching grade 5 86.8%


reaching grade 5 > Men 87.2%


reaching grade 5 > Women 86.5%

Education, primary completion rate 94

Education, primary completion rate > Men 104

Education, primary completion rate > Women 98

Enrolment ratio > Secondary level 62.5%

Female enrolment share > Primary level 47.7%

Female enrolment share > Secondary level 47.1%

Geographical aptitude results 78.019

Girls to boys ratio, primary level enrolment 0.94

Girls to boys ratio, secondary level enrolment 0.97

Girls to boys ratio, tertiary level enrolment 0.71

Grade 1 intake rate 78.1

Gross intake rate in grade 1, female > % of relevant age

group 95.33 %

Gross intake rate in grade 1, male > % of relevant age

group 100.75 %

Gross intake rate in grade 1, total > % of relevant age

group 88.25 %

Illiteracy rates by sex, aged 15+ 7%

Illiteracy rates by sex, aged 15+ > Men 5.3%

Illiteracy rates by sex, aged 15+ > Women 8.5%

Illiterate population by sex, aged 15+ 3,922,800

Illiterate population by sex, aged 15+ > Men 1,486,000

Illiterate population by sex, aged 15+ > Women 2,423,100

International Mathematical Olympiad > Results for the

2006 IMO > Points 131

Literacy rate, adult female > % of females ages 15 and

above 86.92 %

Literacy rate, adult male > % of males ages 15 and

above 93.92 %

Literacy rate, adult total > % of people ages 15 and

above 90.28 %

Literacy rate, youth female > % of females ages 15-24 93.59 %

Literacy rate, youth male > % of males ages 15-24 94.18 %

Literacy rate, youth total > % of people ages 15-24 93.88 %

Literacy rates, aged 15-24 93.9%

Literacy rates, aged 15-24 > Men 94.2%

Literacy rates, aged 15-24 > Women 93.6%

Net intake rate in grade 1 > % of official school-age

population 81.92 %

Persistence to grade 5, female > % of cohort 86.47 %

Persistence to grade 5, male > % of cohort 87.16 %

Persistence to grade 5, total > % of cohort 86.83 %

Primary completion rate, female > % of relevant age

group 97.61 %

Primary completion rate, male > % of relevant age

group 103.86 %

Primary completion rate, total > % of relevant age

group 93.52 %

Primary education, duration > years 5 years

Primary education, pupils 7,773,484

Primary education, pupils > % female 47.48 %

female

Primary education, teachers 360,624

Primary education, teachers > % female 78.03 %

female

Private school enrolment > Primary level 0.3

Private school enrolment > Secondary level 11.3

Progression to secondary school > % 94.6 %

Progression to secondary school, female > % 94.42 %

Progression to secondary school, male > % 94.76 %

Public spending on education, total > % of GDP 1.8 %

Public spending on education, total > % of government

expenditure 9.73 %

Public spending per student > Primary level 7.5

Public spending per student > Tertiary level 149.5

Pupil-teacher ratio, primary 21.56

Pupils-teacher ratio > primary level 28

Pupils-teacher ratio > secondary level 28.2

Ratio of female to male enrollments in tertiary education 70.79

Ratio of female to male primary enrollment 93.62

Ratio of female to male secondary enrollment 97.47

Ratio of girls to boys in primary and secondary

education > % 93.51 %

Ratio of young literate females to males > % ages 15-24 99.37 %

Repetition rate, primary > % of total enrollment 1.01 %

Repetition rate, primary, female > % of total enrollment 1.92 %

Repetition rate, primary, male > % of total enrollment 2.83 %

Repitition rate > Primary level 2.9

School enrollment, preprimary > % gross 59.67 %

gross

School enrollment, preprimary, female > % gross 56.95 %

gross

School enrollment, preprimary, male > % gross 62.28 %

gross

School enrollment, primary > % gross 94.51 %

gross

School enrollment, primary > % net 87.72 % net

School enrollment, primary, female > % gross 91.34 %

gross

School enrollment, primary, female > % net 91.46 % net

School enrollment, primary, male > % gross 97.57 %

gross

School enrollment, primary, male > % net 97.06 % net

School enrollment, primary, private > % of total

primary 0.37 %

School enrollment, secondary > % gross 75.79 %

gross

School enrollment, secondary > % net 69.32 % net

School enrollment, secondary, female > % gross 74.8 % gross

School enrollment, secondary, female > % net 67.96 % net

School enrollment, secondary, male > % gross 76.74 %

gross

School enrollment, secondary, male > % net 70.63 % net

School enrollment, secondary, private > % of total 9.81 %

secondary

School enrollment, tertiary > % gross 15.97 %

gross

School enrollment, tertiary, female > % gross 13.21 %

gross

School enrolment, tertiary, male > % gross 18.67 %

gross

School life expectancy > Male 10.8 years

School life expectancy > Primary to tertiary 10 years

School life expectancy > Primary to tertiary > Female 10 years

School life expectancy > Primary to tertiary > Male 11 years

School life expectancy > Total 10.4 years

Schools connected to the Internet > % 20 %

Scientific and technical journal articles 216

Secondary education, general pupils 9,472,815

Secondary education, pupils 9,939,319

Secondary education, pupils > % female 48.57 %

female

Secondary education, teachers 415,579

Secondary education, teachers > % female 63.83 %

female

Secondary education, vocational pupils 466,504

Spending on teaching materials 6

Tertiary enrollment 9.7%

Trained teachers in primary education > % of total

teachers 93.37 %

Trained teachers in primary education, female > % of

female teachers 87.01 %

Trained teachers in primary education, male > % of

male teachers 87.01 %

Women to men parity index, as ratio of literacy rates,

aged 15-24 0.99

Establishment of World Class Institution

· Vocational institutions include professional secondary schools under the management

of the Ministry of Education and Training; and vocational training schools and centers

under the management of the Ministry of Labor, War Invalids and Social Affairs

(MOLISA) in Vietnam.

· According to the Education Law, the vocational training system under the

responsibility of

· MOLISA will move to provide training at all three levels -- elementary, intermediate

and college.

STEPS TOWARDS ESTABLISHMENT OF INSTITUTIONS

• India has opportunity to establish the practical technical training system which

will be able to meet the demands of socio-economic development;

• Proper attention can be paid on vocational training of skilled workers, technicians

and professional staff for short term period.

• Gujarat & India has opportunity to develop Higher education institutions in

Vietnam which can include:

a) Junior colleges;

b) Colleges and universities, including those with different university members

and others or providing only faculties, academies;

c) Universities and research institutes to provide master and doctorate training if

they are qualified by having a sufficient pool of professors and associate

professors, physical facilities, equipment and experience in taking on the

responsibilities of conducting state- level scientific research.

• Introducing higher education in fulfilling the needs for industrialization,

modernization and international economic integration in Vietnam on Indian

model.

• Courses should raise their knowledge levels & professionalism, improve the

quality of their life, self-employment and job creation opportunities, and make

better contributions to society.

• A comprehensive plan for Continuing education comprises of the following in the

Institutions:

a) Anti- illiteracy and post- literacy programs;

b) Tailor-made programs for updating knowledge and skills, and technology

transfer;

c) Programs for in-service training, retraining and upgrading professional

qualifications;

d) Educational degree granting programs in the national education system.

Our established institution should target the following:

a) To improve anti- illiteracy achievements and the literacy rate among the

population aged 15-35;

b) To expand learning opportunities for adults and workers, helping them access

and benefit from training programs to improve their knowledge, working

abilities and quality of life;

c) To establish continuing education units in all locations nationally.

• Vietnamese educational policy-makers and managers believe that the education

system that Vietnam must be an open education system which is expects easily

accessible by everyone.

• An education system which nurtures and promotes the creativity of young people,

with educational institutions -primarily universities- as cradles of science and

technology innovation;

• An education system closely linked with science and technology progress,

especially information technology and telecommunication, in order to

continuously renovate but preserve stability.

• An education system which promotes competition among various educational

institutions to improve the quality, and to gradually raise, through cooperation and

competition with foreign educational institutions, Vietnam’s regional and

international status.

Table : Literacy rates of the population aged 15 and older by sex and urban-

rural residence,1989~2009

1989 1999 2009

Overall 87.3 90.3 93.5

Male 92.7 94.0 95.8

Female 82.7 86.9 91.4

Urban 93.8 94.8 97.0

Rural 85.4 88.7 92.0

CHART : AGE GROUP

INDIA’S ACTION PLAN:

A number of Vietnamese universities have taken advantage of international funding

sources to establish hi-tech and science centers so as to improve the quality of training

and research, India should find the scopes, challenges and rewards related to those

projects.

India should identify its own centers which have put their international standard emphasis

on science and technology in priority areas such as bio-technology, new material

sciences, information technology, automation, business management, vocational and

professional courses training, distance and online education, etc. like IITs, IIMs, IIS,

NIFD, NIIT, Technical Universities, NCERT, CBSE, UGC, State boards, private colleges

and Deemed Universities, despite different sizes, these centers have been provided with

modern and up-to-date equipment.

India should use the platform of organization where Vietnam’s active participation in the

activities led by regional and international organizations such as UNESCO, UNICEF,

UNDP, AIF, AUF, ASEAN+1,2,3, Gang and Mekong Rivers Cooperation, and

SEAMEO is part of a major effort to achieve regional and international integration in

education sector.

A WORLD CLASS INSTITUTION PLAN

o An educational system that promotes an appreciation of science and technology

and a respect for rationality and the values of research;

o A system of universities and research centers;

o Independent academies of sciences, engineering, and medicine;

o Ministry or equivalent executive-branch structure for guiding decision making on

matters of S&T policy;

o Professional and other associations that serve the practitioners of various

disciplines;

o Public funding mechanisms for promoting public-goods and fundamental

research;

o Private-sector entities that are active in the promotion of new science and

technology;

o Private funding mechanisms, such as foundations;

o Libraries, museums, and other cultural institutions that have archival

responsibilities, as well as educational functions;

o Appropriate committees in the legislative branches of government for addressing

S&T issues;

o Specialized journals and public media outlets that engage these issues at various

levels.

o Leadership by a person widely recognized by peers and who possesses effective

management skills;

o Mechanisms for ensuring quality, including international assessments and

dissemination of research results in internationally recognized publications;

o Merit-based hiring and promotion policies;

o Peer review of activities, both internal and external, as a systemic element;

o Collaboration with international institutions;

o A focused research agenda that includes interdisciplinary themes;

o Activities that cover not only research but also applications and technology

transfer;

o Nurturing of new generations of S&T talent.

OPPORTUNITIES IN VIETNAM EDUCATION

· Government agreement to construct four international standard universities.

· Cost of US$400 million loans from the World Bank and the Asian Development Bank.

· Presently Vietnam educational infrastructure is not sufficient.

· Looking for foreign partners to develop new university systems and train students.

· Vietnam is inviting qualified educators & universities.

Opportunity for improvising higher quality of education

• low levels of parental support.

• lack of school access.

• least enrollments and high drop outs.

• lack of investment and encouragement from the public sector.

• commercialization of education and ignoring the standards by the private sector.

• ambitious government policies and mismatching budgets.

• overseas education and brain drain.

• advanced curriculum and least educational infrastructure.

• Over 100,000 Vietnamese Studied Overseas in 2012.

• While Vietnam produces high numbers of students every year, it does not have

many high qualification students.

• The demand for skills has been increasing significantly in Vietnam.

• Vietnam does not have quality Higher Education Institutes.

• Low R&D capacity and inequitable distribution of higher education

opportunities, suggest that the higher education sys does not yet have the tools it

needs to adapt to the growing and changing needs of an increasingly dynamic

economy.

• This provides a strong requirement for further expansion and improvement of

higher education in the country.

• To get there, Vietnam will need to create supporting governance and financing

frameworks, with a revised role for the public and private sector.

• Education sector is one of the fastest growing sector in Vietnam with Govt

spending almost 20% of GDP.

• Opportunity for Indian Universities to collaborate with existing Universities of

Vietnam.

• Top Indian Universities like IITs/IIMs can establish Branch in Vietnam.

• Start Faculty and Student exchange program.

• Scope in primary/secondary education is non existent as education is being

provided by Govt. free of cost.

• The Royal Melbourne Institute of Technology (RMIT) an Australian-

based university operating in Vietnam, with two campuses located in Ho Chi

Minh City and in Hanoi.

• Established in 2001, RMIT delivers internationally recognized degrees. Starting

with around 30 students, RMIT Vietnam now boasts a strength of approximately

6,000.

• When Australian can open why not Indian ?

CHALLENGES FOR INDIAN EDUCATION SECTOR

• Our own education sys is far from satisfactory and suffers from:

· Lack of infrastructure

· Lack of qualified faculties

· No Government specialization

· Our syllabus at University level is mainly book oriented with hardly any

skill based training. Not acceptable at International level.

• Vietnam being a communist country rules and regulations are very strict.

• Strict Government control on education sector and very close monitoring on

assessment procedure.

• Permission from our own Government to Open University / college in foreign

country.

INFERENCES

• Opportunities exist for top Indian Institutes to enter in the education sector of

Vietnam.

• Other Indian Universities / Colleges (Both Public / Private sector) should

collaborate with Vietnam Universities by signing MOUs.

• Indian Universities / Colleges should lay emphasis on Faculty / Student Exchange

programs.

• These program should involve short capsule courses and main focus should be on

cultural exchange.

CHALLENGES FOR VIETNAM EDUCATION

Challenges for Vietnam education development in the 21st century

The biggest challenge faced by Vietnamese education in early 1980s was that the State

was not able to provide financial resources while it dismantled the importance of the

collective economy. Consequently, education like other social sectors education and

higher education- Our educational system, Gujarat and India can come into picture.

1) The rapid growth of science and technology.

2) Social gaps in the country are increasing.

3) Needs of economic development in the future require human resources not only in

quantity but also in high quality.

4) Training human resources.

5) Development of Teaching Staff and Educational Managers.

6) Investment into Education - Mobilization of all Resources for Educational

Development.

7) Language barriers.

8) Cooperation and International Integration in Education.

9) Educational Management - Decentralization, and Increased Autonomy and

Accountability.

10) Issue regarding migration.

11) Contradictions between increased scale and training quality .

12) Contradictions between training scale, network and economic development.

13) The level of administration and lecturers in universities.

14) The construction of high-quality and high-fee schools.

15) issues regarding education system.

16) Vocational training.

17) Low level of education

Recommendations

Ø National and local governments in developing nations should strengthen higher

education with public funds (supplemented with private funds if available) to

offer greater opportunities for tertiary education and S&T training to young

people in modalities ranging from ‘community colleges’ (as they are called in the

United States) to top-class research-based universities.

Ø National and local governments in developing nations should develop a strong

partnership with universities and industry to plan the development of capabilities

in science and technology.

Ø Universities should have increased autonomy while seeking to systematically

strengthen their ties with regional and international institutions and networks;

such links can significantly increase the effectiveness of the universities’ S&T

efforts.

Ø Research universities should make strong commitments to excellence and the

promotion of the values of science in their activities, incorporating unbiased merit

review into all of their decisions on people, programs, and resources; they should

also have greater interaction with society at large.

CHAPTER 9

TEXTILE SECTOR IN VIETNAM

Overview

The textile industry touches the lives of all people in one or the other ways. Apparel,

Home textiles, Technical textiles, Industrial textiles, Medical textiles, Safety textiles,

Smart or Intelligent textiles etc, there are variations for all - Consumers, Traders,

Manufacturers, Technologists, Engineers, Fashion designers and others.

The industry originated in UK with traditional approach but now the global textile and

apparel industry has evolved as distinct consumption and production hubs. Production,

which was previously located in developed economies such as the USA and the EU has,

over the years, shifted to India, China, Bangladesh etc. Because the cost advantage

offered by developing economies.

Meanwhile, developed economies have emerged as major consuming hubs as developing

Economies are still in the nascent stages in terms of consumption.

Introduction

The apparel and textile industry occupies a unique and important place in India. One of

the earliest industries to come into existence in the country, the sector accounts for 14%

of the total Industrial production, conduces to about 30% of the total exports and is the

second largest employment creator after agriculture.

The apparel and textile industry caters to one of the most basic requirements of people

and holds importance; maintaining the prolonged growth for improved quality of life.

The sector has a unique position as a self-reliant industry, from the production of raw

materials to the delivery of end products, with considerable value-addition at every stage

of processing. Over the years, the sector has proved to be a major contributor to the

nations' economy.

Its immense potential for generation of employment opportunities in the industrial,

agricultural, organized and decentralized Introduction to textile industry sectors & rural

and urban areas, especially for women and the disadvantage is not worthy.

History and development of textile industry

History

The history of apparel and textiles in India dates back to the use of mordant dyes and

printing blocks around 3000 BC. The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard of block printed and resist-

dyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are

the proof of large scale Indian export. During the 13th century, Indian silk was used as

barter for spices from the western countries. Towards the end of the 17th century, the

British East India Company had begun exports of Indian silks and several other cotton

fabrics to other economies. These included the famous fine Muslin cloth of Bengal,

Orissa and Bihar. Painted and printed cottons or chintz was widely practiced between

India, Java, China and the Philippines, long before the arrival of the Europeans.

Developments

Ø Along with the increasing export figures in the Indian Apparel sector in the country,

Bangladesh is planning to set up two Special Economic Zones (SEZ) for attracting

Indian companies, and duty free trade between the two countries. The two SEZs are

intended to come up on 100-acre plots of land in Kishoreganj and Chattak, in

Bangladesh.

Ø Italian luxury major Canali has entered into a 51:49 Joint Venture with Genesis

Luxury Fashion, which currently has distribution rights of Canali-branded products in

India. The company will now sell Canali branded products in India exclusively.

The diversity of fibers found in the country, intricate weaving on its state-of-art manual

looms and its organic dyes has attracted buyers from all across the world for centuries.

Before the introduction of mechanized ways of spinning in the early 19th century, all

Indian silks and cottons were hand spun and hand woven, a highly popular fabric, called

the khadi. Independent India saw the development and building up of textile strength,

diversification of its product range, and its emergence, once again as important player in

the world industry.

Today, the Indian apparel and textile industry employs around 35.0 million people (and is

the 2nd largest employer), yields 1/5th of the total export earnings and contributes 4 % to

the GDP thereby making it the largest industrial sector of the economy. The sector aims

to grow its revenue to US$ 85bn, its export figures to US$ 50bn and employment to 12

million by the year 2010 (Texmin 2005).

The Indian textiles industry that already has an overwhelming presence in the economic

life of the country has been given a further boost with the scrapping of quotas in global

trade of textiles and clothing. In the post quota period, the size of industry has expanded

from US$ 37 billion in 2004-05 to US$ 49 billion in 2006-07. During this period, while

the domestic market has grown from US$ 23 billion to US$ 30 billion, exports have

increased from around US$ 14 billion to US$ 19 billion.

As a matter of fact, the apparel and textile is the largest foreign exchange earning sector

in the country. Being a direct employment provider to over 35 million people and with

continuing growth momentum, the role of this sector in Indian economy is bound to

increase.

The Technical textiles classified into following categories

ž Agrotech : Agro Textile are used in gardening, landscaping, agriculture, forestry,

animal husbandry etc.

ž Buildtech: Construction textile used in the construction of buildings, sport arenas

and halls.

ž Clothtech: Functional textile used in clothing and footwear

ž Geotech: Geo Textile used by the civil engineering industries like roads, bridges,

tunnels and dams to provide support and stability below the ground level.

ž Indutech: Industrial Textile used for purposes such as filtration, cleaning,

mechanical engineering, sealing, sound insulating, etc.

ž Medtech: Medical Textile used in health and hygiene applications for the medical

markets.

ž Mobiltech: Transport Textiles used in the construction, equipment and furnishing

of passengers and goods transportation (land, sea, air), civil and military.

ž Hometech: Home Textile used in the manufacture of furniture, floor coverings

and carpets.

ž Oekotech: Eco Textile used in environmental protection, waste disposal and

recycling.

ž Packtech: Packing Textiles used for carriage, storage and protection of industrial,

agricultural and other goods.

ž Sporttech: Sports textile used for sport and leisure products .

Fig : Segment wise the ratio of Global textile production

The Industry layout

· Vietnam’s textile industry has increased significantly since normalizing

relationships with the United States in the 1990’s.

Vietnam was granted most favored nation status (MFN) in December 2001, which led to

a dramatic reduction in import tariffs in the US market.

ž Vietnam’s induction to the World Trade Organization (WTO) in 2007 and the

Vietnamese government’s strong support of the textile and garment sector, have

provided strong incentives to attract foreign investors.

ž Vietnam is one of the top 10 garment exporters in the world and the garment and

textile industry is the country’s second largest in terms of foreign exchange

earnings.

ž The United States which is Vietnam’s largest single export market for garments

and textiles, accounting for approximately 54 per cent of Vietnam’s garment

exports.

The Industry layout

ž Approximately 1,100 companies, including some 200 foreign-invested

companies, are based in and around Ho Chi Minh City.

ž Out of 2,000 companies, 1,280 are garment enterprises, 120 are spinning

companies, 340 are textile ventures, and the remaining 260 are commerce and

service businesses.

ž However, whilst the sector may be large and significant in many ways, the ‘value

added’ of the garment industry is low as most raw materials such as fibres, yarns,

fabrics and garment accessories are imported.

ž Buyers from a number of the world’s leading textile and apparel companies have

sourced apparel from Vietnam including Express, Hucke, Itochu, JC Penney,

Jupitar, Kmart, Kowa, Lee Cooper, Li & Fung, Mast Industries, Nichimen, Nissho

Iwai, Otto, Sara Lee, Seidensticker, Sumitomo, Tomen, Tommy Hilfiger,

Victoria’s Secret, and Wal-Mart.

ž However, the proportion of domestic inputs in final products is still low.

ž Most exports by the biggest Vietnamese exporters (Vinatex, Viettien, Thanh

Cong, 10 Garment and Nha Be) are CMT (Cut-Made-Trim) products, with

insignificant contribution by Vietnamese-branded products.

ž What is CMT

CMT (Cut-Made-Trim) refers to a production practice whereby the buyers, buying agents

and buying offices provide Vietnamese firms with all inputs for design, materials and

transportation arrangements, while Vietnamese garment manufacturers only cut, make

and trim.

CMT is the simplest production practice for export and only requires manufacturing

capacity and a little designing capacity in making counter-samples.

ž However, most Vietnamese garment manufacturers (93.6 per cent) are still

involved in the CMT or other low value-added operating models where fabric

suppliers are appointed by multinational retailers or foreign customers, as they

want to ensure the use of the right fabric, consistent quality and timely delivery

Purpose of CMT

ž In Garment exports the CMT is a key element of the export strategies of many

emerging economies, including Vietnam. In all cases garment exports started with

CMT types of business (a model of work often driven by a lack of available

working capital) and a plan to move away from CMT to various levels of Freight

On Board (FOB) manufacturing within a five-year period.

FOB 3 Model

ž There are only a few companies working at FOB levels which are successfully

exporting to developed markets. In general, they are either foreign or foreign-

invested companies.

ž Successful FOB companies also tend to be larger organisations or micro-

companies driven by owner-designers. In the highest value adding operating

model (called FOB 3), companies produce garments based on their own designs

and are responsible for all input elements. This model requires skills and

experience that are not normally prevalent in Vietnamese garment companies.

ž Some major exceptions which are successful in ‘designing’ and production for the

domestic market, including Saigon 2, Nhat Tan and Hanosimex.

Advantages with Textile Industry in Vietnam

ž Labour cost advantage

The wage levels in Vietnam are about one third of those in China’s coastal region. In a

2008 Booz Allen Hamilton survey said that 88 percent of companies originally chose

China for its lower labour costs. Of the companies surveyed, 55 percent believe China is

losing its competitive edge to countries such as Vietnam. The survey also indicated that

63 percent named Vietnam as their top low cost sourcing alternative to China.

ž Low cost location

Ig Hortsmann, a professor of business economics at the University of Toronto’s Rotman

School of Management notes that Nike originally off shored manufacturing to Japan.

When labour cost increased in South Korea and Taiwan, it was moved to China and later

also to Vietnam.

ž The Vietnam traditional touch

Elisabeth Rolskov, founder of ER-Couture in Vietnam, notes that manufacturing

advantages in Vietnam go beyond labour cost and the country has some competitive

advantages compared to China. “Vietnam has very good embroidery skills and needle

work. “A lot of designers and manufacturers need embroidery skills and Vietnam has

kept in touch with its traditional roots.”

She adds that the Vietnam is currently a great location for smaller manufacturers as the

market is more flexible. “China is more volume focused”,

Intra-ASEAN Integration

Trade between Vietnam and its ASEAN neighbors exploded between 2002 and 2009,

growing tenfold for some of their most popular items. Its top export markets are

Thailand, the Philippines, and Malaysia, and its top products are synthetic filament yarn,

synthetic staple fiber yarn, and cotton yarn.

Vietnamese exports to ASEAN countries of synthetic filament yarn rose from $3.6

million in 2002 to $48.7 million in 2009. In the same period, synthetic staple fiber yarn

exports rose from $6.2 million to $36.3 million, and cotton yarn rose from $311,000 to

$33.3 million.

Vietnam’s synthetic staple fiber imports from ASEAN had increased 300-fold over that

seven-year period. Synthetic filament yarn imports almost doubled in the same period,

from $53 million to $90 million.

Cotton imports, uncared and uncombed, increased almost 15-fold, from $2.3 million to

$31.2 million, with most of this sourced through Singapore.

Strengths of the Vietnam textile and garment industry

Strength

ž Its main attribute is an abundant, skillful, quick-learning labor force available at a

relatively competitive cost. In addition, many of its enterprises are well-organized

and can make quality, complicated styles. Vietnamese salaries are lower than

those in China, giving the country a distinct cost advantage

ž Supportive government policies, including incentives to attract foreign direct

investment.

ž The industry also has a good relationship with major importers and retailers,

especially in the US.

ž A generally supportive government policy, allowing, for example, duty-free

imports of raw materials on the condition that they are re-exported as clothing

products within 90-120 days

ž Vietnam Textile and Garment Association (VITAS) notes the strategy for

Vietnam Textile and Garment Industry development for 2015-2020 is:

ž Production growth from 12-14% a year,

ž Export growth at 15% a year,

ž Providing employment to 2.75 million people in 2015 and 3.0 million people in

2020, and

ž Export revenue attaining US $18 billion dollars in 2015 and US $25 billion

dollars in 2020.

Opportunities

ž Development of ‘non-traditional’ markets for Vietnamese clothing products.

ž Greater product differentiation and specialization may boost margins – for

example in functional work-wear, home furnishings, and other niche markets.

ž The 16th round of TPP negotiations concluded last week in Singapore. A core

issue of negotiation is the ‘yarn forward’ principle, put forward by the US. The

principle, if approved, would require Vietnam to make its garments from raw

materials made in Vietnam or the TPP countries in order to enjoy zero preferential

tariffs on its garment exports to the US.

ž The “yarn-forward principle” has prompted investors to inject their money in the

textile industry. Textile factories to be set up in the near future would supply

Vietnamese garment producers, who would export their products to the US and

enjoy the zero export tariff.

Challenges

§ While Vietnam’s garment technology is not far from international standard, 30

per cent of textile equipment is 20 years behind,

§ The garment companies in Vietnam rely heavily on imports, reducing the

flexibility and competitiveness of Vietnam’s garment industry. .

§ Lacking to generate economies of scale.

§ Infrastructural bottlenecks .

§ Unfavourable labour laws.

§ Now the increasing costs of labour as a result of repeated increases in the

minimum wage in line with continuing GDP growth

§ Local industry

Table : Recent Data on Vietnam Garments and Textiles

Category Textiles and Garments

Total Workers 2 million

Vietnam Export Total (2008)

% of World Market (2007)

$9.082 billion total with 10-15% of that textiles 1.43%

Five Most popular exports

(2008)

Polo shirts/T-shirts

Pants

Jackets

Shirts

Coats

Value and Market Share

$2.1 billion 23.1%

$1.5 billion 16.4%

$1.2 billion 13.1%

$500 million 5.5%

$475 million 5.2%

Average Wage $0.30-0.60 per operator hour

Source : Vinatex and South East Asia Textile Business review 2009 (1st Edition)

Table : Vietnam’s most Popular apparel exports to world (US$)

Product Value in 2001

Value in 2002

Value in 2003

Value in 2004

Value in 2005

Value in 2006

Value in 2007

Value in 2008

Women’s suits, jackets, dresses, skirts & shorts

84,116 243,611 411,277 634,455 832,195 939,007 1,355,028 1,445,550

Jerseys, pullovers, cardigans,

40,168 186,679 306,180 347,399 354,821 475,873 826,105 1,439,493

knitted or crocheted

Men’s suits, jackets, trousers & shorts

371,093 506,082 639,497 694,306 770,983 1,003,270 1,175,781 959,181

Men’s overcoats, capes, wind-jackets

196,146 191,041 148,502 252,572 210,395 317,253 336,968 537,676

Women’s overcoats, capes, wind-jackets

214,568 186,531 146,193 244,072 249,249 221,764 317,028 528,150

Women’s suits, dresses, skirts, shorts, knit/crochet

16,591 93,643 280,573 297,064 333,312 323,846 445,412 479,030

T-shirts, singlets and other vests, knitted or crocheted

80,262 160,136 204,802 252,859 232,187 341,487 579,764 449,145

Men’s shirts

162,008 225,323 249,852 330,585 324,261 358,604 373,897 418,442

Track suits, ski suits and swimwear; other garments

274,319 153,837 77,965 59,996 86,447 99,523 100,690 366,071

Men’s shirts, knitted or crocheted

5,677 20,143 81,032 116,113 147,416 155,213 203,893 333,351

Source : UN Comtrade statistics

Table : Vietnam Imports from ASEAN countries 2001-2008 (US$’000)

Exporters 2001 2002 2003 2004 2005 2006 2007 2008

Sythetic Staple fibres, not carded

‘World 2,608 6,776 6,919 167,040 188,945 176,334 205,794 221,536

ASEAN 298 206 242 26,971 44,716 50,376 93,110 94,746

‘Thailand 191 - 99 22,078 37,369 40,397 76,555 72,981

‘Malaysia 53 - - 4,025 4,376 4,207 5,727 10,957

‘Indonesia 54 36 143 629 2,378 5,511 9,723 10,464

‘Singapore - 170 - 184 593 261 1,105 344

‘Phillipines - - - 55 - - - -

Synthetic Filam yarn, not put up

ASEAN 52,963 67,514 63,590 59,271 66,710 75,130 93,368 89,900

‘Indonesia 13,231 13,377 17,327 15,873 19,900 19,687 25,201 30,784

‘Malaysia 31,419 43,768 36,934 29,635 31,107 39,349 43,763 30,159

‘Thailand 6,766 7,804 7,599 12,796 14,673 15,252 22,474 26,716

‘Singapore 1,532 2,562 1,627 904 992 832 1,881 2,193

Vietnamese Textile and Garment Exports, 1981-2010

From negative balances, net exports became positive since 2004 (Table 1). In the

first 6 months of 2011, the prices of imported fabrics increased a lot more than the prices

of finished apparels. Out of US$6.16 billion of export value, US$4 billion worth of

imported fabrics (65 per cent) were used in these garment exports. According to Lê Tiến

Trường (the Vice President of Vinatex), the value-added that remained in Vietnam is just

$2.16 billion (about 35 per cent).

Most Vietnamese producers subcontract for corporate buyers in the global supply

chain, using imported inputs (cotton, fiber, fabrics and other materials) and machinery.

Overall, the domestic content ratio has remained low, though imported cotton, fabrics and

other materials fell in 2008-09. Further research is needed to examine whether this import

reduction was replaced by domestic production of cotton and fabrics.

Cut, make and pack (CMP) contracts still dominated in 2011, in which most

value-added is derived from low wage assembly of imported materials. This is not as

desirable as the Freight on Board (FOB) contracts in which they can source/buy, and thus

benefit from the inputs (primarily fabrics).

Vietnamese producers cannot source inputs under CMP contracts; this fact

undermines the usefulness of market-based arguments. Interviews with leaders in Vinatex

and associations for management such as the Vietnam Textile and Apparel Association

(VITAS), and the Ho Chi Minh City Textile/Garment/Embroidery Association (AGTEK)

confirmed that low value-added garment assembly for export still dominated exports

from Vietnam. Interviews show that over 70 per cent of inputs are provided by the tier-2

suppliers or brand holders.13 Thus, beyond price, it is very difficult for the Vietnamese

producers to break into this well-established relation between the brands and their

suppliers.

Imports and Exports, VGTI, 2000-2009 (US$ million)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Cotton 90.4 115.4 111.6 105.4 190.2 167.21 219.0 268 468 395

Fiber 237.3 228.4 272.6 317.5 338.8 339.59 544.6 744 788 896

Fabrics 761.3 880.2 1,523 1,805 1,927 2,399 2,984 3,980 4,454 4,212

Auxiliary materials* 1,194.7 1,397.9

1,513.4

1,825.9

1,724.3

1774.2

1,952.0

2,152

2,376

1,932

Import** 2,283.7 2,622 3,421 4,054 4,180 4,680 5,700 7,144 8,086 7,435

Export

1,891.9

-391.8

1,975.4

-646.5

2,732.0

-688.7

3,609.1

-445.1

4,385.6

+205.6

4,838.4

+158.4

5,834.0

+134.4

7,794

+650

9,121

+996

9,066

+1631

Nevertheless, there is hope for raising domestic content, especially in knitted

products which may not require expensive dyeing. Producers use 20-30 per cent of inputs

from domestic sources in knitting compared to only 5-10 per cent in the fabrics used in

garment manufacturing for export. Domestic producers can also use some Vietnamese-

made accessories, such as thread and carton packaging products. Most cotton yarn is

imported – 40-50 per cent from the US and the rest comes from India, Brazil, Pakistan,

and West Africa.

The staff we interviewed from 16 textile and garment SMEs in 2011 confirmed

the subcontracting role of Vietnamese producers and the dependence on imported inputs

delivered by brand holders and suppliers. Only 5 factories (about 30 per cent) stated

explicitly that they source 30-100 per cent of their inputs domestically, while the rest are

completely dependent on imported inputs. The general trend is that the factories that can

source their own raw materials tend to service domestic and Eastern European markets,

while those importing fabrics tend to export to other foreign markets.

Many managers complained about being dependent on imported inputs. One

interviewee expressed: “The Corporation has many subsidiaries, so most of the raw

materials come from these small subsidiaries”. Another owner of a family-owned factory

said: “Buyers supply raw materials. We only buy thread, (packing) cartons, and bags

from factories in HCMC.” An owner of a medium-sized garment factory said matter-of-

factly: “Because of doing subcontracting work so all raw materials are provided by

overseas buyers”. Another factory owner making backpacks for Korea said:

Since we are at the last stage, buyer is the one who buys the raw materials. We

have no role in this. Mostly are outside sources – 80 per cent are fabrics coming from

China, only 20 per cent from domestic sources: zippers, zip locks.

Being dependent on imported raw materials has subjected the VTGI to

vulnerabilities in global markets. First, the devalued Vietnamese currency (đồng) has

undermined Vietnam’s ability to import materials such as raw cotton, fabrics and

machinery. An owner of a medium-sized knitting factory who must import 80 per cent of

the cotton yarn and fiber from foreign sources to produce knitted fabrics for both markets

(50 per cent domestic and 50 per cent foreign) complained:

The loss in value of VND is a big problem. We need foreign currency to import

raw materials … we need to have investment policy in raw materials – too much

dependence on imports will limit our competitiveness. Moreover, exchange rate and raw

material prices vary too much. Therefore we can’t sign long-term contracts with foreign

buyers.

Vietnamese fiber producers engaged in long term fixed price contracts, who also

use raw cotton as input at fixed prices, are unable to raise the price of fiber, thus taking a

loss. Finally, fluctuations in the supply of raw cotton are a major cause of losses. For

instance, the reduction in Chinese cotton output (due to a bad harvest) gave rise to other

countries protecting their cotton (thus not exporting), which seriously affected knitting

firms due to soaring prices. Consistent quality for raw materials is required in most cases,

but especially for exports to Japan, United States and Europe. A small owner, producing

shirts for export to Europe, said:

We need to buy clean raw materials with trustworthy brands, not fly-by-night

products. Low quality finished garments will hurt our company’s reputation (Interview

with VV Garment owner, September 2011).

A young owner of an embroidery factory in one of the most famous traditional

embroidery villages in the North lamented:

The (corporate) buyers decide where to get raw materials. For example, upscale

products require upscale raw materials which are imported from outside such as high

quality Italian linen, and high quality French thread, which has consistent coloring over

time.

From the key stakeholders’ perspective, the consequences of “static” comparative

advantage do not bode well for the long-term interest of Vietnamese producers and

workers. Without proactive initiatives to create linkages, they will remain as low value-

added subcontractors.

Exports and imports information related to Vietnam?

What drives export success in East Asia?

Success in international markets as indicated by unsubsidized exports or production for

the local market without protection is the single most useful measure of an industry's (and

firm's) international competitiveness. What therefore determines export success? This

section briefly discusses this issue to provide a framework for the analysis which follows.

The discussion is with particular reference to East Asian industrialization, although of

course the lessons are generalizable.

The first and most important factor is trends in the real effective exchange rate (REER),

as compared to a country's competitors. The REER is defined as the ratio of the price of

tradables goods to that of non-tradable. Because international data on these are not easily

obtainable, a crude proxy is the nominal effective exchange rate (i.e., the weighted

average of all of a country's bilateral exchange rates, with weights being the

countries'/currencies' shares in its total trade), adjusted for relative inflation rates. The

International Monetary Fund collects such data on a global basis, although it is not

commonly published.

The REER thus has two components - a set of nominal exchange rates (in which the

dollar and yen (and presumably shortly the Euro) typically dominate), It is

important to note that the Vietnamese dong has been appreciating in REER terms since

the beginning of 1997, essentially because, although the dong has been declining against

the dollar, it has been strengthening against the currencies of many of its major trading

partners. The dong's appreciation is an especially serious challenge given the sharp

devaluation of most East Asian currencies since mid-1997. Although these devaluations

have not yet translated into a significant increase in export growth for these countries,

owing to financial difficulties and other supply disruptions, exports (particularly of

manufacturers) are known to be exchange rate elastic, and so a strong export supply

response is only a matter of time. These exchange rate movements must surely be one of

the major challenges facing the Vietnamese authorities.

Issues and challenges of textile sector

The purpose of this section is to highlight some of the major challenges which the

industry is currently facing, and to argue the case that reform is required to sustain the

recent growth momentum. Eight issues are addressed here. No doubt the list could be

extended, but these issues do seem to be among the most important. It needs to be

emphasized that most of these issues are economy-wide in nature, and generally do not

relate just to the textile and garment industry.

(a) The China Factor

The clear impression obtained during interviews with both government officials and at

the enterprise level is that China's textile and garment industry poses the major

competitive challenge for Vietnamese firms. It is apparent from the trade statistics

presented above that China is the dominant East Asian textile and garment exporter. Its

exports dwarf those of Vietnam on an absolute basis, and even in per capita terms they

are larger. Smuggling of Chinese textile products in to Vietnam is reportedly widespread,

and has been the subject of several (unsuccessful campaigns to eradicate it - see Luong,

forthcoming), while in direct competition in third country markets Vietnamese forms are

said to be uncompetitive.

(b) US Market and MFN Status

Vietnam has suffered through its inability to secure effective access to this market.

This is especially the case given the significant Vietnamese community residing in that

country who, in a more favorable environment, could make a major contribution to the

development of strong trade links between the two countries. It is impossible to overstate

the importance of securing US market access on an MFN basis, a point which is of course

clearly understood by the Vietnamese authorities. Not only is the US market the largest in

the world, but it is a relatively open one, and it caters to a large range of qualities, thus

enabling exporters to develop market niches (both geographic and quality-based) which

suit their circumstances. Obtaining MFN status is clearly a complicated negotiating

process, and in an era of intrusive, hard-nosed US commercial-diplomatic policy it will

involve the Vietnamese authorities making economic and political concessions which

may appear unreasonable. However, the benefits will almost certainly outweigh the costs,

and thus there is a strong case for assigning the highest priority to this objective.

(c) The MFA and Export Quotas

As argued earlier, textiles and garments are the mostly intensely regulated of any Major

internationally traded manufacture. The imposition of export quotas is obviously

commercially unreasonable and harmful, and Vietnam has been disadvantaged as a very

late quota entrant. But it is a fact of life in the international market place, it is not without

its advantages once quota access is secured, and there is a prospect that the regulatory

environment (ie, the MFA) will be gradually dismantled in the coming decade. Moreover,

it always needs to be emphasized that, even in the presence of quotas, the fundamental

determinant of export performance is domestic efficiency. That is, securing a quota does

not guarantee access - price and quality requirements also have to be met. In addition,

there is always scope for export growth even in a quota-constrained environment: firms

can shift to non-quota items (although the number of such items is now much reduced),

they can move to higher value items (since quotas are generally quantity-defined), and

they can seek out non-quota (non-MFA) markets. Thus countries can achieve solid export

growth even in the presence of seemingly very restrictive quotas, as Indonesia and

Thailand did before exchange rate movements in the early 1990s eroded their

competitiveness in labour-intensive manufactures (see Hill and Suphat, 1992). It is

therefore important not to overstate the disadvantages of export quota restrictions. With

the major exception of the US, Vietnam has done reasonably well out of quota growth in

recent years, especially to the EU, albeit from a low starting point. Negotiating continued

quota expansion must always be a high priority for the government.

Private firms may apply for export quotas, but the application procedures are

reportedly extremely tedious and protracted, and generally result in - at best - only very

small quotas. The resale of export quotas is officially illegal, but it is widely known in the

industry to occur. The usual practice is for a state enterprise to in effect 'subcontract' the

production of quota items to a private firm, even though the output will still be officially

recorded as having originated from the state firm. It is impossible to quantify the

significance of this practice.

It is not possible to obtain an accurate picture of how quickly export quotas

are allocated. Some enterprises report that quotas may arrive quite late in the quota year,

thus resulting in under-utilization of quotas. But aggregate information on this

phenomenon is not available.

(d) Strengthening International Connections

Vietnam has made a remarkable transition from a centrally planned economy whose

economic relations were almost wholly with the Comecon block of nations and in the

direction of a mixed market economy increasingly integrated into the world economy.

This issue is of prime importance in the textile and, especially, garment industry. As

emphasized in this report, garments are a consumer oriented industry employing

standard, 'mature' technology. Significant capital investment is not required; what is

highly important is knowledge of international marketing channels, attention to quality

control, management of stocks, and a capacity to deliver reliable supply.

(e) Linkages: How Important?

Development planners have long employed 'linkage analysis', in the form of input output

tables, to measure the extent to which various activities are connected through their

purchase of inputs (i.e., upstream linkages) or sale of outputs (i.e., downstream linkages).

Textiles and garments are an illustration of the presence of such linkages: cotton and

petrochemicals are the major inputs into natural and synthetic yarns respectively, which

are in turn the major inputs into the weaving process, which supplies cloth to the garment

industry. Other linkages in this chain are machinery and parts manufacturers, together

with smaller items such as buttons, labels and padding in the case of garments

manufactures.

Issues and challenges of Gujarat textile industries?

Cotton textile industry is obsessed with many problems. Two main factors which have

wrecked die industry are Government's textile policy and the growth of the power loom

sector.

The result was that many cotton mills became inefficient and uneconomic-one-dirt of the

cotton mills became sick and was closed down. By 1992 as many as 130 cotton mills

were closed down. Following are some of the problems faced by the industry.

(a) The country is short of cotton, particularly long- staple cotton which is imported from

Pakistan, Kenya, Uganda, Sudan, Egypt, Tanzania, U.S.A. and Peru. It is pity that

despite largest area under cotton (26 per cent of the world acreage) the country

accounts for only 9 percent of the world output of cotton. Fluctuating prices and

uncertainties in the availability of raw material cause low production and sickness to

the mills.

(b) Obsolete machinery-In India most of the cotton textile mills are working with old

and obsolete machinery. According to one estimate in India over 60 per cent of the

spindles are more than 25 years old.

(c) Power shortage-Textile mills are facing acute shortage of power. Supplies of coal are

difficult to obtain and frequent cuts in electricity and load shedding affect the industry

badly. This leads to loss of man hours, low production and loss in the mills.

(d) Low productivity of labour-Low productivity is another major problem of cotton

textile industry. On an average an Indian factory worker only handles 380 spindles and

2 looms as compared to 1,500-2,000 spindles and 30 looms in Japan. If the

productivity of an American worker is taken as 100, the corresponding figure for U.K.

is 51 and for India only 13. Also industrial relations are not very good in the country.

Strikes, layoffs, retrenchments are the common features of many cotton mills in the

country.

(e) Competition in foreign market-The Indian cotton textile goods are facing stiff

competition in foreign markets from Taiwan, South Korea and Japan whose goods are

cheaper and better in quality. It is really paradoxical that in a country where wages are

low and cotton is internally available, production costs should be so high.

While certain traditional buyers of Indian textile goods like Myanmar, Indonesia, Sri

Lanka, Ethiopia, Aden etc. are facing severe balance of trade problem some European

countries like France, Germany, U.K. and Austria etc. have imposed quota limitations

over the Indian textile imports. Acute world recession has badly affected the export

prospects.

Opportunities to export and import from Vietnam.

Strategies for Indian Exports

Quota free market means competition amongst firms and not nations. Quotas have frozen

the growth in market share. They encouraged the high cost domestic industry in many

textile-importing countries by freezing the market share. Even the high cost exporting

countries (Hong Kong, South Korea, Taiwan) continued to have high market share taking

advantage of quotas. Quotas also assured fixed market opportunities in early years to

Indian garment industry and textile industry despite low productivity, poor time delivery

and quality. Number of incentives was provided in India including Duty drawback and

cash compensatory support. Garment quotas are distributed by AEPC based on

government policy from time to time regarding past performance, etc and quotas were

traded in gray market for long time.

This is in sharp contrast to world-class manufacturing and supply chain tried by some

units in Europe and USA in online transmission of high sale garment designs in

departmental stores and replenishing the sold stocks quickly through a very low delivery

cycle.

Whereas Indian domestic market shall hot up by entry of both retailing chains in India

(FDI has been now permitted up to 51% in single brand stores) and Outsourcing centers

for International chains like Wal-Mart, the Indian exporters will get on one hand newer

opportunities to enter restrained markets, while on other hand they will face stiff

competition from countries like Turkey, Brazil, Mexico, Korea, China, Tunisia, Romania,

Bangladesh and Pakistan.

Quotas by restricting market supply have also kept the export prices artificially

high. There is bound to be a price war in post quota regime. Already it has started

happening with Indian exporters (at least for price elastic goods). Developed countries

have relocated facilities offshore or have shifted to high value products. Developing

countries that were free from MFA restraints will loose out due to fall in prices.

The Indian textile and clothing Industry except for cotton yarn sector should test waters

within domestic markets to establish their global competitiveness and consumer

acceptance.

Developed countries and many other countries are trying to extend quotas up to end of

2007 as evident from Istanbul declaration in March 2004.USA is developing a DNA

marker system to trace the fabric origin. The technology can identify the US produced

cotton yarn and check illegal textile imports.

Instead of criticizing, countries like India should hold high vision as regards standards of

health, safety and child labor to conform to international standards and to avoid non-tariff

barriers. Technology Up gradation Fund (TUF) has to be better utilized and textile

technology training infrastructure has to be improved in country.

Figures have been estimated based on US & EU imports for 2010

Value % Value % Value % Value % Value %

28.3 13.3% 49.3 15.9% 78 22.0% 132.8 27.5% 216 35.9%

91.6 43.2% 110.7 35.7% 101 28.3% 148.3 30.7% 166 27.6%

4.7 2.2% 8.5 2.7% 10.2 2.9% 16.1 3.3% 24 4.0%

4.8 2.3% 8.7 2.8% 10.2 2.9% 18.9 3.9% 22 3.7%

7.6 3.6% 14 4.5% 19.6 5.5% 17.4 3.6% 17 2.8%

75 35.4% 118.9 38.4% 137 38.5% 149.5 31.0% 157 26.1%

212 100.0% 310 100.0% 355 100.0% 483 100.0% 602100.0%

1990 1995 2000 2005 2010

Value % Value % Value % Value % Value %

107 50.6% 131 42.4% 129 36.3% 195 40.3% 237 39.4%

33.7 15.9% 51.8 16.7% 82.1 23.1% 103 21.2% 105 17.4%

12.8 6.0% 24.7 8.0% 24.7 7.0% 28.4 5.9% 34 5.6%

5.3 2.5% 11.9 3.8% 16 4.5% 17.7 3.7% 20 3.3%

4.7 2.2% 5.9 1.9% 7.8 2.2% 10.3 2.1% 12 2.0%

- - 1.4 0.5% 3.9 1.1% 10.5 2.2% 11 1.8%

48.2 22.7% 82.9 26.7% 91.6 25.8% 119 24.6% 183 30.4%

212 100.0% 310 100.0% 355 100.0% 483 100.0% 602 100.0%

World cotton production is about 24870 million tones and world consumption is about

24460 million tones.

World all fibre per capita consumption in 2011 is estimated at 11 kg. of which cotton is

about 3.5 kg representing about 32% of the total consumption Per capita consumption of

North America is about 31 kg., West Europe is about 22 kg., China is at 17 kg. and India

is about 7.5 kg.

87 129 216 35.9%

67 99 166 27.6%

13 11 24 4.0%

9 13 22 3.7%

12 5 17 2.8%

63 94 157 26.0%

251 351 602 100.0%

Textiles Clothing Total Amount Total %

73 164 237 39.4%

23 82 105 17.5%

7 27 34 5.7%

18 3 21 3.3%

4 8 12 2.1%

126 67 193 32.0%

251 351 602 100.0%

The growth in per capita consumption of cotton fibre is more or less stagnant. With

growth in world population and increase in consumption of textiles in the emerging

economies, the polyester fibre is likely to be the most consuming fibre importance of

Textile Industry to Indian economy.

Ø Second largest producer of textiles and garments after China

Ø Second largest producer of cotton in the world

Ø Second largest employer in India after agriculture–Direct Employment

to35mn.people

Ø Constitutes about 12% of India’sexports

Ø Contributes about14%toIndustrial production

Ø Contributes about 4% to GDP

Ø Investment made in Textile sectors in launch of TUF schemeis Rs.208000 crores

till June 2010.

Indian Textile Industry Size – 2010

Particulars Domestic Export Total

Apparel 36.00 11.00 47.00

Home Textiles 4.00 3.00 7.00

Textiles 12.00 11.00 23.00

Total 52.00 25.00 77.00

Importance of Indian textile industries to Indian economy:--

Second largest producer of textiles and garments after China

Ø Second largest producer of cotton in the world

Ø Second largest employer in India after agriculture – Direct Employment to 35mn

people

Ø Constitutes about 12% of India’s exports

Ø Contributes about 14% to Industrial production

Ø Contributes about 4%to GDP

Ø Investment made in Textile sector since launch of TUF scheme is Rs.208000

crore still June 2010

Impact of current global economic

The Indian textile industry is largely ma l and fragmented and organized players

constitutes only 5% of the industry

Ø The smaller players(SME’s)have been badly impacted in the current scenario on

account of the following

Ø Sudden drop in prices of cotton ,for example Shankar6 variety of cotton came

down from about Rs.57,000 per candy to Rs.33,000 per candy

Ø Sudden depreciation of Indian Rupee vs. US$ from about Rs.44.62 levels in

April2011 to Rs.53.62 levels in December 2011,thereby representing af all of

20.17%

Ø Slowdown in India’s major export market viz. USA & Europe, resulting into

consolidation of sourcing; there by affecting the smaller players in terms of loss

of business

Ø In Coimbatore/ Tirupur and other southern belt, the power supply from the

gridiserratic and most of the time te unitsha vetorunon DG sets; resulting in power

cost of Rs.8–Rs.9 per unit; making them unviable

Ø Higher interest cost regime; there by smaller units ready impacted by the other

factors are not able to sustain such increase

Indian Textiles-Major Domestic Growth Drivers

Ø Increasing retail penetration–Textiles and clothing retail comprise 40% of

organized retailing in India. Share of organized retailing to increase from about5%

currently to about 24% by FY2020

Ø Higher disposable income–The per capita income of the masses has been increasing

regularly and is estimated at USD1200p.aleading to consumption of Textiles

increasing at11%CAGR.

Ø Higher level of working women Propensity to spend in the case of working women

is higher by around 1.3 times as compared to a housewife. It is estimated that the

population of working women has increased to around 32% in FY2010 from 26% in

FY2001.

Ø Increase in nuclear families – average household size has decreased to about 5.0 in

FY 2010 from 5.36 in 2001. As a result, per household consumption is increasing.

Ø Favorable demographic profile – the percentage of earning population (15 -60

years) in the total population is rising. This group is about 60% of the total

population.

Various government schemes for textiles

Ø Technology Fund Up gradation Scheme (TUFS).

Ø Group Works hed Scheme (GWS).

Ø Group Insurance Scheme for development of Power loom sector.

Ø Integrated Scheme for Power loom Cluster Development.

Ø Marketing Development Programme for Power loom Sector etc.

Indian Textiles-Major Domestic Growth Drivers…

Ø Higher growth in urban population - The urban population is growing gradually. The

favorable demography coupled with rising urban population and income levels will

act as a key growth factor for the Indian textile and apparel Industry.

Ø Increased usage of credit cards

Ø Sustainable real GDP growth outlook of around 8% p.a., increasing industrial output,

rising disposable income, vibrant construction activity etc., to drive demand for

home textiles.

Ø Hotel room demand is expected to grow at10 % p.a. for next 5 years necessitating

addition of room capacity – driving demand for home textiles.

Ø Healthcare delivery market to grow at 13% p.a. over next few years, creating demand

for more hospitals – to boost demand for home textiles and work wear.

Ø Rising disposable income in the hands of rural consumers due to rising agriculture

income and increased employment generation to drive the demand of basic textile

products.

Therefore India’s Domestic Market Will Grow Substantially…

Indian Textiles-Domestic Growth

Indian Textiles-Export Growth Drivers

Textile manufacturing continues to shift to low cost Asian countries

Ø Increasing cost of labor, scarcity of raw material and other key resources like

power, rising domestic demand is restricting China’s ability to further increase its

share in the world trade there by making it as fourth largest importer of textiles.

Ø Buyers need to diversify sourcing risk.

Ø Availability of raw materials, especially cotton, integrated operations and design

skills in India.

Ø Favorable demographics, rising income and population levels, and rising retail

penetration in other developing countries (other Asian countries, Latin America

etc.).

Strong Economic Fundamentals

Politically stable

Ø Fast paced infrastructure development

Ø High growing economy –average 8%

Ø Skilled and qualified manpower

Ø Increasing technology adoption

Integrated Textile Set Up

Availability Of Raw Material

India is amongst the largest producer of fibres …

One of the largest producer of raw cotton

One of the largest producer of cotton yarn

One of the largest producer of cellulosic fibre/ yarn

One of the largest producer of silk

One of the largest producer of synthetic fibre / yarn

One of the largest producer of jute

India’s Exports and Imports vis-à-

Most of the competing countries are importing textiles and exporting clothing. India is

the least importer of textiles implying self sufficiency in textiles

Expected Future Trend in Indian Textiles

Ø Traditionally Indian Textile Industry is mainly cotton textiles due to cotton

surplus situation of India and governments attempt to promote cotton textiles to

protect farmers and accordingly the government levied heavy duty on polyester.

Ø The governmental so supported small and medium players in segments such as

weaving, garments and knits for creating job opportunities which was very much

beneficial and was reason for growth of small and fragmented units

Ø Government has liberalized the textiles sector and has taken several measure like

TUFs, to promote large and integrated textile units

Ø The future growth in textiles would be driven by organized players and their share

is expected to increase from the present 5-6% to about 15-20% by 2020.

Ø Similarly, the government has of tended their stand on polyester and duties in

polyester have been brought down to 12%.

Ø In the last two years, cotton prices have increased considerably from about

Rs.17,000 per candy to about Rs.35,000 per candy. As a result typical cotton yarn

of 40s count (Rs.215/kg) is more than twice of typical polyester yarn of 80 denier

texturized yarn (Rs.100/kg).

Ø Opportunity to export to Vietnam and import from Vietnam.

Vietnam’s garment and textile sector has seen positive signs in the fourth quarter of the

year with many big names having acquired sufficient orders for the period and even for

the first quarter of 2013.

Le Trung Hai, Deputy Director General of the Vietnam Textiles Group (Vinatex), said

the sector will spare no effort in achieving an export target of US$17-17.5 billion in 2012

and $20 billion in 2013.

By the end of September, Vinatex topped the sector with an export value of $12.6 billion,

a 7.4 percent year-on-year increase.

According to Hai, the garment sector had a really difficult time in the second quarter, but

the situation improved in the third and fourth quarters thanks to higher growth in the

market.

In particular, Vietnam’s hosting of the 2012 annual global conference of the Textile

Manufacturers Association from November 4-6 will be a good chance for local

businesses to update themselves on market information and expand ties with leading

manufacturers in the world, he added.

According to economic experts, the trade agreement partners across Asia and the Pacific

will change the global textile trade. America is considered the largest textile consumer in

the world with orders of approximately $100 billion a year, of approximately $500 billion

a year of global textile consumption. That will open up huge opportunities for Vietnam's

garment sector as Vietnam is one of the nine current members of the TPP.

The fact that textile export growth rate reached 25-30 percent in recent years has created

a new step for Vietnam's garment and textile sector.

Besides, surplus value also increased, accounting for 40 percent of the total export value

of textile and apparel industry which has become one of the country's key export sectors.

Garment export value in the first nine months of 2012 reached $12.6 billion, up 7.4

percent from the same period in 2011.

In particular, exports to the U.S. market reached $5.6 billion, up 8 percent; to the EU it

was $1.81 billion; to Japan $1.45 billion, up 18.7 percent; to South Korea $748 million,

an increase of 18.5 percent compared to the same period in 2011.

Despite the world economic downturn, orders from Japan, South Korea are still high

thanks to incentives from the bilateral and multilateral trade agreements between

Vietnam, ASEAN, Japan and South Korea.

Currently, South Korea has become the 4th important export market for Vietnamese

garments.

Conclusion

Ø India has unique position in global textile industry due to strong manufacturing

base and is now emerging as a strong consumption base as well.

Ø Domestic consumption would be major driving force for textiles backed by strong

economic growth prospect and growing per capita income.

Ø India’s in here strengths like textile infrastructure along with high service

capabilities makes it a preferred sourcing destination.

Ø The traditional players like China are getting stagnated and other major player

Europe is on decline other competing nation.

Ø The organized sector is all poised to play major role in making India a leading

textile hub.

Ø Indian Textile Industry is all set to witness almost 3times growth in the next

decade from USD 78 bn. To USD 220 bn.

Indeed this decade promises to be the best ever decade for Indian Textile Industry and

therefore may be regarded as the golden decade.

CHAPTER 10

POWER AND ENERGY SECTOR IN VIETNAM

What is renewable energy?

In contrast to the fossils fuels, renewable energy, as the name suggests exists

perpetually and in abundant quality in the environment. Renewable energy is ready to be

harnessed, inexhaustible, and more importantly, it is a clean alternative to fossils fuels.

The team “renewable energy” has no official or commonly accepted definition. The

definition for the renewable energy given by the working party of the international

energy agency is “Renewable energy is that energy which is derived from natural

processes which can be constantly replenished.”

Scenario of Renewable energy in India:

It is a sector that is still underdeveloped. Ministry of Non –conventional by set in early

80’s & India was the only country in the world to do so. However its success has been

very spotty. In recent years India has been lagging behind other nations in the use of

renewable energy (RE). India's cumulative Grid interactive or Grid Tied Renewable

Energy Capacity (excluding Large Hydro) has reached 26.9GW, of Which 68.9% comes

from Wind, while Solar PV contributed nearly 4.59% of the Renewable Energy Installed

Capacity in India of total generation capacity of India. All the matters regarding to

renewable energy in India comes under the purview of Ministry of New and Renewable

Energy.

Renewable energy in Vietnam:

It is expected that Viet Nam's energy needs will more than triple by 2020 as a result of

dynamic economic growth. At present, 64% of electricity in Viet Nam is generated using

fossil fuels. It can be assumed that the CO2 emissions from the generation of electricity

will quadruple.

It is against this backdrop that the Vietnamese Government adopted a national Power

Development Plan in 2011. This aims to step up the promotion of renewable energy

sources in the future. Nevertheless, weak support structures and the absence of an

incentive system continue to hamper the expansion of renewable energy.

Following the successful outcome of a project promoting wind power, GIZ is supporting

the further development of renewable energy in Vietnam as part of a new project within

the framework of the BMU International Climate Initiative.

Objective

Adaptation of energy-policy conditions speeds up the expansion of renewable energy.

Approach

The main focus of the project is developing grid-connected renewable energy systems. In

this regard, the project provides assistance to the Ministry of Industry and Trade as it

draws up regulations on feeding into the grid electricity derived from waste and waste

water (bioenergy) from agriculture, industry and municipalities. This should stimulate

interest in the construction of biogas and biomass plants for electricity generation

purposes from investors, project developers and governmental and non-governmental

bodies. An improved planning and authorization procedure for proposed new plants will

boost planning certainty and contribute to the development of renewable energy in line

with market conditions.

The project also promotes the training of specialists at central and local level. Moreover,

an information system for renewable energy aims to advance the development of

additional projects and mitigate the risks involved in the financing and technical

implementation of investment measures. Lastly, the project assists local and national

authorities with the development of guidelines and standards as well as with planning and

approval for renewable energy projects. Exchanges and consultation missions at regional

and international level serve to consolidate knowledge and create a platform for

international dialogue.

WIND ENERGY:

India is the 3rd largest annual wind power market in the world, and provides great

business opportunities for both domestic and foreign investors. The Indian wind power

sector experienced record annual growth in 2011 with the addition of more than 3 GW of

new installations. Diverse incentives supported by a long-term policy and regulatory

framework at the central and state levels have played a crucial role in achieving this goal.

Wind power is now increasingly accepted as a major complementary energy source for

securing a sustainable and clean energy future for India. Since the 1980s the Government

has taken various initiatives for developing the country’s vast indigenous renewable

energy resources. This includes the National Action Plan on Climate Change (NAPCC),

and the current 12th five-year plan, which set long-term targets, that help in evolving a

better investment environment for the wind sector. But this effort would have been in

vain, without the positive and proactive role of the Ministry of New and Renewable

Energy and the electricity sector regulators. Their role in the development of wind power

in India is undeniable and important. We look forward to working closely with all

relevant stakeholders and supporting the Government towards achieving the goals set

under the NAPCC and the 12th five-year plan. Our top priority is to support the

development of a comprehensive renewable energy law and stable regulatory

environment for wind power in India.

India's Largest Wind power production facilities (10MW and greater)

Power Plant Producer Location State Total

Capacity (MWe)

Vankusawade Wind Park Suzlon Energy Ltd Satara distict Maharashtra 259

Cap comorin Aban Loyd Chiles Offshore

Ltd. kanyakumari Tamil Nadu 33

Kayathar Subhash Subhash Ltd. Kayathar Tamil Nadu 30


Capacity (MWe)

ramakkalmedu Subhash Ltd. Ramakkalmedu kerela 25

Muppandal wind Muppandal wind farm Muppandal Tamil Nadu 22

Gudimangalam Gudimangalam Wind Farm Gudimangalam Tamil Nadu 21

Puthlur RCI Wescare (India) Ltd. Puthlur Andhra Pradesh

20

Lamda Danida Danida India Ltd. Lamba Gujarat 15

Chennai Mohan Mohan Breweries & Distilleries Ltd.

Chennai Tamil Nadu 15

Jamgudrani MP MP Windfarms Ltd. dewas Madya Pradesh 14

Jogmatti BSES BSES Ltd. Chitradurga district Karnataka 14

Perungudi Newam Newam Power Company Ltd. perungudi Tamil Nadu 12

Kethanur Wind Farm

Kethanur Wind Farm kethanur Tamil Nadu 11

Hyderabad APSRTC

Andhra Pradesh State Road Transport Cooperation

Hyderabad Andhra Pradesh

10

Muppandal Madras Madras Cements Ltd. muppandal Tamil Nadu 10

Shah gajendragarh MMTCL Gadag Karnataka 15


Capacity (MWe)

Shah gajendragarh Sanjay D. Ghodawat Gadag Karnataka 10.8

Acciona Tuppadahalli

Tuppadahalli Energy India Private Limited

Chitradurga District Karnataka 56.1

Poolavadi chettinad Chettinad Cement Corp. Ltd. Poolavadi Tamil Nadu 10

Shalivahana Wind Shalivahana Green Energy.

Ltd. Tirupur Tamil Nadu

20.4

Vietnam’s position in power sector:

· According to the national plan, the electricity demand in Vietnam is forecasted to

increase by up to 14.2 pct. annually for the period 2011-2015 and 11.4 pct. for the

period 2016-2020.

· The total primary consumption would be 5.6 % by 2020 & 9.4 % by 2030, is the

vision set for renewable energy by National Energy Development Strategy (2011-

2020). The government has planned to increase the wind power to 1,000 MW (0.7

pct. of electricity production) by 2020 and by 2030 to 6,200 MW (2.4 pct.). A

new feed-in tariff for wind power has been regarded as an improvement to the

renewable energy market.

· By June 2011, only a 30 MW Wind Farm has been put into operation. By end of

2012, there will be four more wind farms that will be put into operation and 50

other projects are in the pipeline. The total estimated investment needed for wind

power by 2025 is 1,125 million US dollars.

· Vietnam is located in the monsoon wind zone with two main wind directions, i.e.

the cold east-north monsoon wind from Siberia and China during winter and the

hot south-west monsoons from equator during summer. With more than 3,000 km

of coastline and plenty islands, the total potential of wind energy in Vietnam is

estimated to be as high as 713,000 MW – 510,000 MW on land and 203,000 MW

on islands. In comparison this is 200 times more than the largest hydropower

plant, Son La, in Southeast Asia produces.

GOVERNMENT SUPPORT AND INCENTIVES:

Legislation prior to the Electricity Act, 2003 (EA 2003) had no specific

provisions that would promote renewable or nonconventional sources of energy. Despite

this shortcoming, the Ministry for New and Renewable Energy has worked towards

supporting the sector by way of policy guidelines since 1994-1995, with mixed results.

However, the EA 2003 changed the legal and regulatory framework for the renewable

energy sector in India. The EA 2003 mandates policy formulation to promote renewable

sources of energy by the federal government, the State governments and the respective

agencies within their jurisdictions. The SERCs determine the tariff for all renewable

energy projects across the States, and the state-owned power Distribution Companies

(DISCOMs) ensure grid connectivity to the renewable energy project sites, which

generally are situated in remote locations away from major load centers. Some States

have come out with technology specific RPSs, which they continue to split between

‘Solar’ and ‘Non-Solar’ categories. Also a January 2011 amendment to the National

Tariff Policy mandated SERC’s to specify a solar-specific RPS at state level. By June

2012, as mandated under Electricity Act20, 26 SERCs had fixed quotas (in terms of % of

electricity being handled by the power utility) to procure power from renewable energy

sources. The mandate, which is called a Renewable Purchase Specification (RPS), varies

from 0.5% to 10% in various states over 2012-13 [See Annex 3 on page 34 for more

details].

Vietnam’s government’s support in wind energy sector:

Under current legislation, investors are entitled to maximum incentives for every

aspect related to solar or wind energy projects, such as land or water surface lease terms

and fees, corporate income tax, value-added tax, import and export duties, land site

clearance, and depreciation of fixed assets, among others. In addition, solar and wind

power projects are considered clean investments under the country's clean development

mechanism (see Decision 130). Accordingly, investors are subsidized by the state

through the Environmental Protection Fund of Vietnam for the difference between the

real input costs and the sales price of power as agreed to in the contract to provide power

generated by solar or wind energy.

FUTURE OUTLOOK:

The Ministry of New and Renewable Energy (MNRE) has announced a revised

estimation of the potential wind resource in India from 49,130 MW assessed at 50m Hub

heights to 102,788 MW assessed at 80m Hub height. The wind resource at higher Hub

heights that are now prevailing is possibly even more.

Future prospects for Vietnam in wind energy sector:

Vietnam has by far the Best wind conditions in South East Asia as per the data published

by World Bank. According to the report, 39% of the land area of Vietnam Has fair

(annual Ø >6 m/s per annum) to excellent (Ø 9 m/s per annum) wind conditions. Two

Major reasons are given for the cause for these extraordinary wind conditions, typically

for the southern and southeastern coast of Vietnam. One Of these is the monsoon wind,

blowing over and around the mountains of the peninsula, merging with the offshore

winds to become even stronger. The Second reason is related to the strong solar radiation

heating up the 3.450km Long coastline creating a low--‐pressure district, causing strong

land--‐sea breezes. The Southern part of Vietnam, With wind conditions reaching far into

the inland planes and linkages to major urban infrastructure and demand centers, like Ho

Chi Minh City, Show “exceptional promise” for the development of Wind Energy.

HYDRO POWER:

A fast growing power sector is crucial to sustain India’s economic growth. India

has an assessed hydropower potential to the tune of 84,000 MW at 60% load factor; out

of this only about 20% has been developed so far. In the past various factors such as the

dearth of adequately investigated projects, environmental concerns, resettlement and

rehabilitation issues, land acquisition problems, regulatory issues, long clearance and

approval procedures, power evacuation problems, the dearth of good contractors, and in

some cases, inter-state issues and law and order problems have contributed to the slow

pace of hydropower development. There have been large time and cost overruns in case

of some projects due to geological surprises, resettlement and rehabilitation issues, etc.

However, considering the large potential and the intrinsic characteristics of hydropower

in promoting the country’s energy security and flexibility in system operation, the

Government is keen to accelerate hydropower development.

Current position of hydro power in Gujarat:

Gujarat State Electricity Corporation Limited was incorporated in August 1993

with the objectives to mobilize resources from the market for adding to the generating

capacity of Gujarat and improving the quality and cost of existing generation.

GSECL is involved in a wide spectrum of activities to improve the electricity

infrastructure and generation of power in Gujarat and has the status of Independent

Power Producer (IPP) with approval to undertake new power projects. The Company

commenced it’s commercial operation in the year 1998.

As a part of the reform process, the Government of Gujarat has unbundled the

various functions of GEB and GSECL was given responsibility of electricity generation.

GSECL was notified as State Generating Power Plant by Government of Gujarat

on 29 May 2004 with the purpose of improving efficiency in the state’s electricity

generation activities.

GSECL is serving Sardar Sarovar Narmada Nigam Limited Hydro-electric project by

O&M contract.

· NARMADA - The lifeline of Gujarat Project at a Glance:

ü Estimated Cost - Rs. 392.4 billion (8 billion USD)

ü Main Dam - 1,210 m long, 163 m high from the deepest foundation level

o World's Second Largest Concrete Gravity Dam (by volume) after Grand

Coulee

o World's Third Highest Spillway discharging capacity - 87,000 m3/second

ü Designed Live Storage Capacity of the Reservoir 5860 MCM (4.75 million acre

feet)

ü Hydropower - 1,450 MW installed capacity (1 billion kWh every year)

ü Irrigation - 1.905 million Ha (1.8 million Ha. in Gujarat benefitting 1 million

farmers)

ü Drinking Water - 9633 villages and 131 towns (29 million people)

ü Canal Network - Approximately 75,000 km length within Gujarat

ü Main Canal - 458.318 km long, capacity 1,133 m3/second, 633 structures

ü No. of Employees – 4673

Current position of hydro power in Vietnam:

The estimated hydropower potential of the lower Mekong Basin (i.e.

excluding China) is 30,000 MW, while that of the upper Mekong Basin is 28,930 MW. In

the lower Mekong, more than 3,235 MW has been met through facilities built largely

over the past ten years, while an additional 3,209 MW are currently under construction.

An additional 134 projects are planned for the lower Mekong, which will effectively

exhaust the river’s hydropower generating capacity. The single most significant impact –

both now and in the future – on the use of water and its management in the Mekong

Region is hydropower.

With development proceeding in the region’s countries, power demands are

expected to rise 7% per year over the next 20 years, yielding a substantial – and

potentially lucrative - energy market. Hydropower is a clear and favoured energy option

for the Mekong’s riparian countries, as reflected in the narratives utilised to support these

interventions. Laos is being portrayed as the ‘battery of Southeast Asia’. In China,

hydropower is heralded as the best possible (‘clean green’) alternative to their coal-fired

power stations, and will open the way to the development of the west. In Thailand, they

emphasise the ‘greening of isan “the drought-prone northeast, to legitimise the

development of a spectacular ‘water grid’ that will channel water from Laos, under the

Mekong mainstream, and over-emphasising projected energy demands in the country In

Cambodia, hydropower is central to solving the country’s energy supply problems.

GOVERNMENT POLICIES IN HYDRO POWER SECTOR:

With the aim to accelerate the development of Hydropower, the Ministry of Power

(MoP), Government of India (GoI) introduced the National Policy on Hydropower

Development in 1998. The policy document has identified and responded to the major

issues and barriers. The objectives of the National Policy document on Hydro Power

Development, 1998 are (as stated in the document):

· To ensure targeted capacity addition during 9th Plan (and the subsequent plans)

· With Central, State and Private hydropower projects contributing 3455 MW, 5810

and 550 MW respectively, the GoI aims to reach the total capacity of 9815 MW

during the ninth plan. (The XIth Plan aims capacity addition of 18781 MW in the

hydropower sector)

· Exploitation of vast Hydro Electric potential at faster pace

· The government would take steps like execution of all CEA cleared projects,

update and clear pending DPRs, survey new green field sites and resolve inter-

state disputes.

· Promotion of small and mini hydro projects

· Small and mini hydro projects are especially viable for remote and hilly areas

where extension of grid system is comparatively uneconomical

· Strengthening the role of PSUs and SEBs in taking up new hydro projects

· The government aims at enlarging Public sector’s involvement in mega hydro

projects and multi-purpose projects involving inter-state issues, projects for

peaking power and those with rehabilitation and resettlement issues.

· Increasing private investments for development of hydropower in India

· The public sector would be supported by greater private investment through IPPs

and joint ventures. Private sector participation is considered vital for large scale

development of hydropower.

India has immense economically exploitable hydropower potential of over 84,000

MW at 60% load factor (148700 MW installed capacity), with Brahmaputra, Indus and

Ganges basins contributing about 80% of it. In addition to this, small, mini and micro

hydropower schemes (with capacity less than 3 MW) have been assessed to have 6781.81

MW of installed capacity. Of this vast potential, India has utilised only about 15% so far,

7% under various stages of development. The remaining 78% remains un-harnessed due

to many issues and barriers to the large scale development of Hydropower in the

subcontinent.

Various studies have established the ideal Hydro: Thermal power mix for India at

to be at 60:40. The present mix of 75:45 is creating much problem in the Indian power

system with country facing energy shortage of 9.3% and peaking shortage of 12.8%. The

total requirement ending XI plan is set to be 206000 MW. The current installed thermal

and hydropower capacity stands at 66% and 26% of the total power generated with 83272

and 32726 MW respectively. Remaining 8% of 10091 MW is achieved from other forms

including wind and nuclear. The current captive generation amounts to 14636 MW.

India’s power system is divided into five major region namely, the Northern

region, Western region, Southern region, Eastern region and North-Eastern region, with

each region facing separate issues. While the Eastern and North-Eastern regions are

power abundant, the Northern and Western regions have greater power demands. The

hydropower potential is largest in NE region with 98% of it still untapped. Northern,

Eastern, Western and Southern regions have 79%, 77%, 23% and 33% untapped

hydropower potential respectively.

Region No. of stations No. of units Capacity in MW

Northern 78 234 11070.30

Western 45 117 6588.80

Southern 92 286 11004.35

Eastern 26 82 2424.10

North eastern 15 42 1094.70

Total 256 761 32182.25

Renovation, Modernization & Up-rating

In order to augment the hydro generation and improve the availability of existing

hydro power projects, Government of India has put emphasis on Renovation,

Modernization & Up-rating (RM&U) of various existing Hydro Electric (H.E.) power

projects in the country. RM&U of the existing/old hydro electric power projects is

considered the best option, as this is cost effective and quicker to achieve than setting up

of green field power projects. The cost per MW of a new H.E. power project works out to

about INR 4 to 5 Crores whereas the cost per MW of capacity addition through up-rating

and life extension of old H.E. power project works out to about 20%. Further, the RM&U

of a hydro project can be completed in 1 to 3 years depending upon scope of works as

compared to gestation period of 5 to 6 years for new hydro projects.

Under the hydro RM&U program, 33 hydro electric projects (13 up to the VIIIth

Plan & 20 in the IXth Plan) with an installed capacity of 6174.10 MW have been

completed by the end of the IXth Plan. During the Xth Plan (2002-07), 47 H.E. power

projects with an installed capacity of 7449.20 MW are programmed for completion of

RM&U works. For the XIth Plan (2007-12) a total of 59 hydro electric power projects

having an installed capacity of 10325.40 MW are programmed for completion of RM&U

works to accrue a benefit of 5461.18 MW.

Generation

Type

2010 Installed

Capacity

(MW)

Proportion of

Total Installed

Capacity

2025 Installed

Capacity

(MW)

Proportion of

Total Installed

Capacity

Hydropower 9412 36% 20,306 23%

Government policies of Gujarat in hydro power sector:

Gujarat's power sector was in a shambles in 2001, when Narendra Modi became

chief minister. A decade later it is in the that have carried forefront of states out sweeping

power reforms, as a result of which it now has surplus power. This case study details the

key steps the government took to bring about the change, which was carried out in a

manner fair to all stakeholders.

When Narendra modi took over as chief minister of Gujarat in October 2001, he

found the state's power situation grim. The Gujarat State Electricity Board, or GSEB, had

posted a loss of Rs 2,246 crore for 2000/01, on revenues of Rs 6,280 crore. Interest costs

alone were Rs 1,227 crore. Transmission and distribution, or T&D, losses were a

substantial 35.27 per cent, and load shedding was frequent. GSEB had no funds to add

generation capacity on its own, nor was it able to persuade the private sector to invest.

Reforming the GSEB, thus, became one of Modi's top priorities. "He feared that a

bankrupt power utility could derail his vision for the state," says Saurabh Patel, Gujarat's

Industries and Power Minister, then as now. "He knew electricity is crucial for growth."

Small hydropower projects in India:

Small Hydropower projects upto 25 MW capacities can be developed in consultation with

Ministry of New and Renewable Energy. The estimated potential for power generation in

the country from such plants is over 15,000 MW. Most of the potential is in Himalayan

States as river-based projects and in other States on irrigation canals. The SHP

programme is now essentially private investment driven. Projects are normally

economically viable and private sector is showing lot of interest in investing in SHP

projects. The viability of these projects improves with increase in the project capacity.

The Ministry’s aim is that at least 50% of the potential in the country is harnessed in the

next 10 years.

Hydro Power Project Classification

Hydro power projects are generally categorized in two segments i.e. small and large

hydro. In India, hydro projects up to 25 MW station capacities have been categorized as

Small Hydro Power (SHP) projects. While Ministry of Power, Government of India is

responsible for large hydro projects, the mandate for the subject small hydro power (up to

25 MW) is given to Ministry of New and Renewable Energy. Small hydro power projects

are further classified as

Class Station Capacity in kW

Micro Hydro Up to 100

Mini Hydro 101 to 2000

Small Hydro 2001 to 25000

Small Hydro Power Programme

Small Hydro Power (SHP) Programme is one of the thrust areas of power generation

from renewable in the Ministry of New and Renewable Energy. It has been recognized

that small hydropower projects can play a critical role in improving the overall energy

scenario of the country and in particular for remote and inaccessible areas. The Ministry

is encouraging development of small hydro projects both in the public as well as private

sector. Equal attention is being paid to grid-interactive and decentralized projects.

Aim: The Ministry’s aim is that the SHP installed capacity should be about 7000 MW

by the end of 12th Plan. The focus of the SHP programme is to lower the cost of

equipment, increase its reliability and set up projects in areas which give the maximum

advantage in terms of capacity utilisation.

Potential: An estimated potential of about 15,000 MW of small hydro power projects

exists in India. Ministry of New and Renewable Energy has created a database of

potential sites of small hydro and 5,415 potential sites with an aggregate capacity of

14,305.47 MW for projects up to 25 MW capacity have been identified.

Small hydropower projects in Gujarat:

Sardar Sarovar Narmada Nigam Ltd, a wholly owned Government of Gujarat

undertaking (the “SSNNL”) is engaged in the construction, operation and maintenance of

Sardar Sarovar Multipurpose project including the dam Hydro Power and its canal

network and as part of this endeavor, the SSNNL has decided to undertake development,

operation and maintenance of the small hydro power projects on the various canal falls

through Public Private Partnership (PPP) On Design, Build, Finance, Operate and

Transfer (“DBFOT”) Basis (the “Project”), and has decided to carry out the bidding

process for selection of a private entity as the bidder to whom the Project may be

awarded.

Narmada Main Canal starts at the head regulators from the Sardar Sarovar Dam.

Kutch branch canal further emanates from Narmada Main Canal in Banaskantha district

of Gujarat at chainage 385.814 km and having length of 360 km. The following falls on

the Kutch Branch Canal (KBC) at the specified chainages have been identified by

SSNNL for the Sardar Sarovar Narmada Nigam Ltd, a wholly owned Government of

Gujarat undertaking (the “SSNNL”) is engaged in the construction, operation and

maintenance of Sardar Sarovar Multipurpose project including the dam Hydro Power and

its canal network and as part of this endeavor, the SSNNL has decided to undertake

development, operation and maintenance of the small hydro power projects on the

various canal falls through Public Private Partnership (PPP) On Design, Build, Finance,

Operate and Transfer (“DBFOT”) Basis (the “Project”), and has decided to carry out the

bidding process for selection of a private entity as the bidder to whom the Project may be

awarded. A brief description of the project may be seen in the Information Memorandum

of the Project at the SSNNL’s website www.ssnnl.com or www.sardarsarovardam.org

Narmada Main Canal starts at the development of small hydro projects for the generation

of electrical power through Public Private Partnership (PPP) mode and on Design, Build,

Finance, Operate and Transfer (“DBFOT”) Basis. All the generated energy from the

project shall be purchased by SSNNL at the rates of the successful offers accepted by

SSNNL.

Small hydropower projects in Vietnam:

A “Programme of Activities” (PoA) is an umbrella under which several similar

CDM-Project Activities (CPA) can be undertaken.

The proposed PoA is a voluntary and coordinated action managed by Vietnam

PoA Carbon Management Joint Stock Company, which will coordinate small

hydropower plants owned by public/private entities across Vietnam to encourage

renewable energy electricity generation in the country.

The “Sustainable Small Hydropower Programme of Activities (PoA) in Vietnam”,

will consist of CPAs that each represent one or more small-scale hydropower plants

(capped to 30 MW as per Decision of Ministry of Industry - No 3454/QĐ-BCN dated 18

October 2005) built in Vietnam

To reach this goal Vietnam PoA Carbon Management Joint Stock Company will

provide the following services:

· Raise awareness among local stakeholders of climate change and hydropower. To

ensure maximum stakeholder involvement CPAs will be developed according to

the Gold Standard requirements and will include significant public education and

consultation components

· Raise awareness among Indonesian hydropower developers of opportunities for

generating CDM revenues. To this end the coordinating entity will conduct

capacity building sessions across the country that explain the CDM and support

entrepreneurs in integrating CDM into their hydropower projects in order to

improve the financial viability of such projects.

· Provide standardized and streamlined access to CDM services for the hydropower

projects in Indonesia, including the smallest ones that otherwise would not be able

to generate into CDM revenues. To this end Vietnam PoA Carbon Management

Joint Stock Company will coordinate the inclusion of the CPA in the PoA;

conduct the registration of the CPA as a Gold Standard activity (if applicable);

provide monitoring and verification services to all CPAs; and support the

effective commercialization of CERs. Over time additional services will be added

to support the effective development of the hydropower sector across Vietnam.

Indian government support and incentives on small hydropower:

Overview:

The electricity generated from Small Hydro Power (SHP) projects is cost-effective. Such

projects are simple to operate, have a relatively short gestation period, and are

environment friendly. In addition, SHP projects can be located in remote areas for

generating power. The global estimated potential of SHP is about 180,000 MW.

Potential

India has an estimated potential of 15,000 MW of small hydro power projects (up to 25

MW) is estimated at 15,000 MW, whereas the country has so far set up SHP projects with

a cumulative installed capacity of 1,976 MW only, which indicates the substantial

possibilities for future growth.

The Government envisages a capacity addition of 1,400 MW during the 11th Five-Year

Plan period (2007-2012). Apart from this, projects aggregating to a 394 MW capacity are

under implementation.

Business opportunities by scale of investments

Scale of Investment Type of Opportunity

Low Consulting for the Hydel energy sector

Training people for the hydro energy industry

Setting up micro-hydro energy plants

Medium Setting up / implementing small and medium scale hydro energy

plants

Setting up manufacturing plants for components and accessories

for the hydel energy Setting up R&D facilities for research into

hydro energy

High Large-scale manufacturing of components and parts for the

hydel energy industry

Gujarat government support and incentives on small hydropower:

The Sardar Sarovar Project is one of the largest water resources project of India

covering four major states - Maharashtra, Madhya Pradesh, Gujarat and Rajasthan.

Dam's spillway discharging capacity (30.7 lakhs cusecs) would be third highest in the

world.

With 1133 cumecs (40000 cusecs) capacity at the head regulator, and 532 km.

length, the Narmada Main Canal would be the largest irrigation canal in the world.

The dam will be the third highest concrete dam (163 meters) in India, the first two

being Bhakra (226 metres) in Himachal Pradesh and Lakhwar (192 meters) in Uttar

Pradesh. In terms of the volume of concrete involved for gravity dams, this dam will be

ranking as the second largest in the world with an aggregate volume of 6.82 million

cu.m. The first is Grand Coule Dam in USA with a total volume of 8.0 million cu.m.

This dam with its spillway discharging capacity of 85,000 cumecs (30 lakh cusec), will

be the third in the world, Gazenba (1.13 lac cumecs) in China and Tucurri (1.0 lac

cumecs) in Brazil being the first two.

The Reservoir:

The reservoir would occupy an area of 37,000 ha. and would have a linear stretch of 214

kilometer of water and an average width of 1.77 kilometer. The Full Reservoir Level

(FRL) of the Sardar Sarovar Dam is fixed at RL 138.68 metres (455 feet). The

Maximum Water Level is 140.21 metres (460 feet.) while minimum draw down level is

110.64 metres (363 feet.). The normal tail water level is 25.91 metres (85 feet.).

Vietnam government support and incentives on small hydropower:

In order to meet this hearty demand for electricity, new power projects will be

required in 2010 that are 2.3 times, and in 2015 that are 3.7 times, the 2005 power supply.

However, because EVN efforts to develop the new power projects alone cannot keep up

with this demand and because EVN’s fund-raising capacity is limited, the Vietnamese

Government has adopted a strategy to overcome this situation by encouraging private-

sector participation in power projects.

Against this background, such large IPP thermal power projects as the Phu My2-2

(720MW) and Phu My3 (720MW) were developed by foreign consortiums, but apart

from these the entry of foreign investment has effectively been stopped. In contrast,

Vietnamese-backed private sector companies from other industries have flocked to the

power sector due to the bubble euphoria amidst Vietnam’s high economic growth.

Consequently, the electricity supply is not keeping up with the growing electricity

demand, requiring the implementation of planned blackouts nationwide on a daily basis.

Thus expectations are held for the BLT (Build-Lease-Transfer) system, a new IPP

business scheme aimed at cancelled small-medium sized hydropower projects that would

make participation by foreign investors easier, to resolve the electricity shortage, even to

some degree. The BLT system aims to even out the fluctuations in income from

electricity sales due to the hydrological risk (risk of fluctuations in river discharge)

inherent to hydropower generation by providing incoming from leasing fees. For foreign

investors, this is a very attractive business model.

BIOMASS ENERGY

Biomass Energy in India

· India produces about 450-500 million tonnes of biomass per year. 32% of all the

primary energy use in the country at present is provided through biomass.

· EAI estimates that the potential in the short term for power from biomass in India

varies from about 18,000 MW, when the scope of biomass is as traditionally

defined, to a high of about 50,000 MW if one were to expand the scope of

definition of biomass.

· At present biodiesel is not sold on the Indian fuel market, as per the government

plans, 20% of the country’s diesel requirements will be met using biodiesel by

2020.

· Plants like Jatropha curcas, Neem, Mahua and other wild plants are identified as

the potential sources for biodiesel production in India.

· There are about 63 million ha waste land in the country, out of which about 40

million ha area can be developed by undertaking plantations of Jatropha. India

uses several incentive schemes to induce villagers to rehabilitate waste lands

through the cultivation of Jatropha.

· The Indian government is targeting a Jatropha plantation area of 11.2 million ha

by 2012.

Biomass energy in Vietnam:

In the last decade, fast industrialization and the economy’s progress of Vietnam

lead to its rapidly growing energy consumption. Total primary energy consumption of

Vietnam increased from 32,236KTOE in 2000 to 53,364KTOE in 2008, reaching more

than 8% per year. During this period of 200-2008, gas demand was rising at the highest

rate of 20.5%/year (IoE, 2010). However, the energy sector of Vietnam foresees an

imbalance in near future with increasing dependence on fossil fuels. The share of fossil

fuels in the total primary energy consumption is forecasted to increase from 42% in 2002

to 69% in 2030,while renewable energy source shares reduced from 58% to 22% over the

same period (Bal, 2011).While Vietnam is today still a net energy exporter, the national

energy development plan indicates that it is expected by 2015, that Vietnam turns to a net

energy importer with import increase steadily each year. Expected primary energy

imports will account for 36% of total primary energy consumption in 2020and it will

increase to 57% in 2030.

Biomass energy in Gujarat:

In an attempt to meet the increasing energy needs in Gujarat, especially in rural

areas, the government is likely to soon come up with a biomass energy policy. Gujarat

will be the third state to have such a policy after Tamil Nadu and Andhra Pradesh.

The Gujarat Energy Development Agency (GEDA) – a government body set up to

promote renewable and non-conventional energy resources in the state – has prepared a

draft policy and submitted it to the government for approval.

Minister of State for Energy Saurabh Patel told The Indian Express on Monday

that the government was considering the draft policy. But, since the two-day Assembly

session has been summoned, the government would make an announcement on the new

policy only in the House.

"There is tremendous potential in Gujarat for power generation through biomass,

with several private companies from Gujarat as well as other States evincing keen interest

in setting up biomass-based electricity generation projects in our state. In fact, some of

them have even inked Memoranda of Understanding (MoU) with the government for this,

proposing to produce about 400 MW," the minister said.

Sources in the GEDA say though the government will not offer any cash subsidy

or other incentives to private entrepreneurs for setting up the plants in the state, the draft

policy has been worked out in such a way that they will be encouraged to establish their

projects in this otherwise untapped sector.

"Initially, we have set the target of producing about 1,000 MW of electricity through this

renewable source in Gujarat. The government will encourage private companies to set up

small biomass power units of the capacity ranging between 10 MW and 50 MW," said a

source, adding that the GEDA would act as both the facilitator and regulator.

GOVERNMENT POLICIES ON BIOMASS ENERGY:

The Ministry of New and Renewable Energy (MNRE) provides Central Financial

Assistance (CFA) in the form of capital subsidy and financial incentives to the biomass

energy projects in India. CFA is allotted to the projects on the basis of installed capacity,

energy generation mode and its application etc.

Vietnam’s government policies on biomass energy:

The decision to introduce separate bands of support under the Renewable Obligation

(RO) for each type of project is intended to encourage the installation of solar projects at

large factory and warehouse buildings, DECC said. It comes as part of the Government's

response to two supplementary consultations published alongside its review of

Renewable Obligation Certificate (ROC) bandings earlier this year.

The Government also announced details of a new subsidy for dedicated biomass plants,

which it said could encourage investment worth up to £600 million and create around

1,000 construction jobs, alongside details of other changes to biomass incentives.

However, this subsidy will be capped once 400MW of generating plant is built.

SOLAR ENERGY IN INDIA & VIETNAM

· Need for Solar Energy in Vietnam

Vietnam’s foremost expert on solar energy has outlined the need for acceleration in the

development of domestic solar power technologies and projects in order to capitalize on

the vast generation and economic opportunities.

Dr Trinh Quang Dung, Former Director of Solar lab, Vietnam Academy of Science and

Technology will present his case at the upcoming Power Industry Vietnam conference,

5th and 6th December in Ho chi Minh City.

“Vietnam has high potential for solar energy” says Dr Dung in an introduction to his

keynote address, “Nevertheless in the past 20 years; the solar industry has developed very

slowly.”

Solar energy is abundant in Vietnam, with average solar radiation at 5kWh/m2 per day

throughout the country. However, this has yet to be utilized to any great extent and

dependence on fossil fuels is in fact increasing nationally. Against the global trend, the

share generation capacity from renewable sources is falling and is currently at around

2%.

“Vietnam has to build PV industry by itself to cover a local market of 85 million people.

The PV industry will be a substantial factor to guarantee the energy security of the

country and could bring high profits to the Vietnamese economy in the future. Beside

this, over 3000 islands of Vietnam are lacking energy and solar PV energy is most

suitable for them.”

Dr Dung presents his Proposal on Strategic Development of Solar Power and Mega Solar

Power Program at Power Industry Vietnam 2012, the conference and exhibition

exclusively for those active in national power generation, supported by the Ministry of

Industry and trade Vietnam and the Vietnamese Energy Association. Power Industry

Vietnam is set to be the country’s most senior power generation forum, 5-6 December,

Sheraton Saigon Hotel & Towers in Ho Chi Minh City.

· Energy Security

Energy security is essentially encapsulated in the following 3 elements .

1. Availability

2. Accessibility

3. Affordability

According to Prime Minister Manmohan Singh,

“The quest for energy security is second only in [India’s] scheme of things to food

security.´ the quest for energy security had “become an important element of Indian

diplomacy and shaping India’s relations with a range of countries across the globe.”

Like China, India is a growing giant facing the critical challenge of meeting a rapidly

increasing demand for energy.

Kyoto Protocol

Kyoto Protocol is an international agreement which was adopted in 1997 in Kyoto and

became famous in Japan as Kyoto Protocol. It is a global response to rising GREEN

HOUSE GAS (GHG) emission that causes climate change. The Protocol binds countries

to limit or reduce their emission. It is the most far reaching environmental agreement ever

adopted. The agreement signed between the participating countries shows the willingness

of the community to acknowledge and take necessary measures against the climate

change.

Under the protocol, each industrialized country set a biding GHG emission target to

reduce emission below 1990 levels by 2012. This target different for each country. Kyoto

officially become legally binding on 16th Feb. 2005.

· Economic Viability

India’s growing economy is facing a severe electricity deficit that runs between 10% and

13% of daily needs. As the nation is increasingly eyeing solar in its energy mix, Nishtha

Arora engages solar expert Dr Tobias Engelmeier on the way ahead for India. He is

owner of a renewable energy and resource management company based in New Delhi.

Solar power has one big disadvantage: it is costly compared to other sources. But the key

advantage is that it can be installed off-grid, of any size it does not matter. We cannot do

that with a coal-based plant.

India has not built up a centralized power infrastructure, a big grid involving mega power

plants. The problem for the population is they do not have access to power. For the

government, it will be more expensive to provide them with a grid than to provide them

with a decentralized energy solution.

It is quite likely businesses that are suffering from power cuts, and villages that are cut

off from the grid will look at solar power for a solution. The question is who pays for that

extra cost. There are ways of mitigating that.

The government could subsidized it directly; it depends on the customer group. So if you

look at village electrification, you have 90% capital subsidies for that. The commercial,

industrial markets would be able to pay for themselves.

Electricity is extremely expensive and you pay upwards of 15 rupees per kWh. You can

have solar power at 11 to 12 rupees. In that context, it is much cheaper, even if you look

at the cost of solar installation, which is falling rapidly. The problem is in the liquidity. If

you buy diesel power, there is a small fixed cost, which is the generator, and the high

variable (and recurring) cost, which is the fuel. With solar power, you have to pay for the

system upfront but people don’t have that much cash in their pockets. So you have to

look at some sort of financing models.

· Solar Energy Market in India

Among the various renewable energy resources, solar energy potential is the highest in

the country. Clear sunny weather is experienced for 250 to 300 days a year in most of the

parts of India. The annual radiation varies from 1600 to 2200 kWh/m2, which is

comparable with radiation received in the tropical and sub-tropical regions. The

equivalent energy potential is about 6,000 million GWh of energy per year.

National solar mission has achieved the installed capacity By July 2012 the installed grid

connected photovoltaic’s had increased to 1040.67 MW, and India expects to install an

additional 10,000 MW by 2017, and a total of 20,000 MW by 2022. The mission

National Solar mission under the brand name “Solar India” set an ambitious target of

adding 20 GW of Grid connected and 2 GW of Off-grid capacity by 2022 in three phases.

In rural areas, demand for solar products has been rapidly rising for the recent years, and

is expected to grow substantially during forecast period (2011-2013).

Tax savings & incentives are offered by many states for promoting solar based

applications. In order to boost the solar industry a transparent & progressive regulatory is

formed by states of Gujarat and Rajasthan.

· Solar Energy Market in Vietnam

Vietnam is considered a nation with high solar potential, especially in the central and

southern parts of the country. Solar energy intensity on the average is 5 kWh/m2. The

intensity is lower in the North at about 4kWh/m2 due to the annual winter-spring cloudy

and drizzle sky. The average sunshine at 150kcal/m2 in Vietnam is between 2,000-5,000

hours.

Solar energy in Vietnam is available all year round, is rather stable and distributed widely

over different eco-geographical areas. Solar energy, especially in the southern and central

regions can be used on average 300 days per year.

In Vietnam, solar energy applications have been increasingly developed since the 1990’s

(Trinh Quang Dung, 2010). The development of PV power in Vietnam in the last 10

years from 1998 to 2008. The applications include solar electricity for homes and service

centers, solar water heating systems, solar PV power, solar drying and lighting. The

Hybrid Technology of RE source, namely the Manicub, has been also introduced in solar

boats, solar ambulances and solar villas (Trinh Quang Dung, 2010). Among various uses,

solar water heating technology is considered the most commercially viable, effective and

popular.

Although the solar energy resource in Vietnam has been recognized with huge potential,

there has been not much attention on its development yet. Most projects throughout the

country are at small scale and focused on harvesting heat solar energy. Huge up-front

investment cost is the key reasons hindering solar development in Vietnam.

The major organizations active in implementing solar energy systems are the Solar

Laboratory of Vietnam Science Institute (Solar lab) based in Ho Chi Minh City, the

Institute of Energy in Hanoi and the Renewable Energy Centre of the Hanoi University of

Technology.

Policies Related to solar Energy Sector in India

POLICY FRAMEWORK IN INDIA:

POLICIES IN FORCE:

1. Jawaharlal Nehru National Solar Mission (JNNSM): First phase with 200 MW of

allocations. Getting ready for second phase.

· In phase one, 30 projects each of 5 MW, were allocated by the process of

competitive bidding (Bids closed for min: INR 10.76/ kWh, max: 12.50/ kWh).

· Process for second phase allocation would start in near future.

· Roof top PV & Small Solar Generation Programme (RPSSGP) (Grid connected 1

– 2 MW projects) : Tariffs state wise in range of INR 18.54/ kWh to INR 15.32/

kWh and about 80 MW is allocated.

· Roof top off-grid and decentralized solar application:

o Size of systems considered: 100 to 250 kWp

o Funding Pattern: Min 20% promoter's equity, MNRE capital subsidy

(30%), Soft loans at 5% rate of interest.

o Benchmark prices considered for Plant with Battery backup – INR

300/Wp, without battery back-up – INR 190/ Wp.

o Scale of Capital subsidy: without Battery backup – INR 90/ WP, INR 57/

WP.

o Capital & Interest subsidy available for Individual ( 1 – 5 kWp) & Non –

commercial entities (100 – 250 kWp), Capital or Interest subsidy for

Industrial / Commercial entities (100 – 250 kWp)

Solar Power Policy of Gujarat

Aim: To promote power generation of green and clean power in the state using solar energy.

Key initiatives:

· To put in place appropriate investment climate, that could leverage the clean

development mechanism (CDM).

· Productive use of wastelands, thereby bringing in a socio-economic

transformation.

· Promote R&D and facilitation of technology transfer.

· Establish core technical competence in professionals of the state to initiate and

sustain the use and effective management of new applications.

Incentives and concessions:

· Solar Power generators (SPGs) installed and commissioned up to March 31, 2014

shall be eligible for incentives.

· Electricity generated from the SPGs and used for self consumption or sale to third

party or licensees Shall be exempted from payment of electricity duty.

· Exemption from demand cut to the extent of 50 per cent of the installed capacity

of SPGs, assigned for use purpose.

· The sale of Electricity to the distribution licensees in the state will be at levelised

fixed-tariff per unit which will be generated from a solar power project.

Solar Photovoltaic System

Photo Voltaics (PV) is the method of generation of electrical power by converting solar

radiation into direct current electricity with the help of semiconductors exhibiting

photovoltaic effect. Photovoltaic power generation employs solar panels composed of a

number of solar cells containing a photovoltaic material.

By the end of 2011, a total of 67.4 GW had been installed, sufficient to generate 85

TWh/year. And by end of 2012, the 100 GW installed capacity milestone was achieved.

Solar photovoltaics is now, after hydro and wind power, the third most important

renewable energy source in terms of globally installed capacity. More than 100 countries

use solar PV. PV may be installed through ground-mounted (and sometimes integrated

with farming and grazing) or built into the roof or walls of a building (either building-

integrated photovoltaics or simply rooftop).

SOLAR THERMAL

SOLAR THERMAL TECHNOLOGY:

· SOLAR THERMAL ENERGY IN INDIA :-

Solar thermal applications have long known to be associated with residential water

heating purposes but what is not known is its potential to cater to the various industrial

process heat requirements. The technology for harvesting the maximum heat energy out

of the sun’s incident radiation has developed considerably and offers tremendous

opportunities for industries to make a shift from furnace oil and electricity driven process

applications to solar thermal applications. The abundant solar radiation available in many

regions of India makes solar thermal an attractive proposition for industries that require

medium temperature heating requirements.

Efficient and environmentally benign process that utilized parabolic collectors and

Fresnel solar concentrators are offering the highest thermal energy output per square km.

The simplicity of operations coupled with good safety, ensures minimum maintenance

requirements. What makes these solar thermal concentrators even more attractive is the

fact that they could be retrofitted to the conventional boilers and heaters available in

industries.

Industries and potential applications for which solar thermal could be used, is

summarized below

Industry Applications

Textile Industry Bleaching, drying, heat treatment, mercerizing etc.

Plastic / Polymer Industry Extrusion, drying, effluent treatment etc.

Automobile Industry Cleaning, paint drying, degreasing etc.

Chemical Industry

Heat treatment, drying, extraction, galvanizing,

effluent treatment, boiling, distillation etc.

Pharmaceutical Industry Drying, process heating and cooling, sterilization etc.

Paper and Pulp Industry Bleaching, drying, kraft pulping, etc.

Service sectors such as Hotels Washing, laundry, cooking, building air cooling etc.

Food Processing Industry

Concentration, dehydration, drying, pasteurization,

sterilization etc.

SOLAR THERMAL ENERGY IN VIETNAM:

This power point presentation - given by Dr Ing Christoph Menke (University of Applied

Sciences, Trier) – outlines the technology options and market potential for solar thermal

systems in South-East Asia. After an overview of global solar thermal technology, it

outlines the potential for solar water heating in Thailand, the temperature ranges for

different food industrial processes, and gives an overview of the subsidy programmes

implemented between 2008 and 2011.

These subsidies had several positive effects:

• Higher market volume

• Reduction in sale price of large scale solar system from 21,500 baht/m2 to 16,000

baht/m2.

• Increased Market Size

• More important role for industrial sector.

The presentation also outlines lessons that can be taken from the programmes in Thailand

and Vietnam. For a solar thermal sector to flourish there needs to be competitive fuel

prices, a long-term investment support programme, and capacity building of technicians.

CLASSIFICATION OF SOLAR WATER HEATING SYSTEM:-

Solar thermal technologies hold significant promise for India with high solar insulation of

4 – 6.5 kWh/ sq.m /day for an average of 280 sunny days. Water heating through solar

water heating system is a commercially viable and technologically mature product which

has existed in the country for many years. Yet, against a technical potential of 45 million

sq. km. of collector area only a little over 2.5 million sq. km of collector area has been

installed. This works out to a little more than 2 sq.m./1000 people as against countries

like Israel and Cyprus, which have over 500 sq.m./1000 people.

In order to transform the solar water heating market in India, the Ministry of New and

Renewable Energy (MNRE) has joined hands with UNDP/UNEP/GEF Global Solar

Water Heating Market Transformation Strengthening Initiative. Under this project, India

aims to achieve 10 million sq meter additional collector area by 2012. In absence of any

intervention, the market was projected to add 3 million sq meters during this period.

International Copper Promotion Council (India) is partner to this project in India

· SOLAR WATER HEATING SYSTEM IN VIETNAM:

Nowadays due to improved income and living standards, demand for hot water by

Vietnamese households has been increased. It is estimated that there are currently two

million electricity-run water heating equipment at average capacity of 2.5 kW/equipment

or 5,000 MW for the two million equipment) is in use in Vietnamese households.

Increased installation and use of water heating equipment in households, hotels and

restaurants, which accounts for about 30% of electricity demand during rush hour, has

been one of the major causes of shortage of electricity supply and consequently power cut

especially during rush hour.

Total electricity consumed for 2 million water heaters is approximately 730. 106 kWh per

annum and the CO2 emission averages 0.6kg/kWh. As a result, use of solar energy-

powered water heaters is a good alternative to save energy and reduce CO2 emission in

hot water supply.

Vietnam has great potential for solar energy due to its geographical and climate

conditions. Despite this, use of solar energy especially for hot water heating purpose has

been insignificant. There are many obstacles to using solar energy among which are the

lack of economically viable models, lack of documented evaluation, advocacy activities

and lack of community involvement.

However, the Government of Vietnam has recently appreciated the importance of

renewable energy sources and solar energy in particular. The National Energy

Development Strategy issued in December 2007 targeted 3% and 5% of contribution of

renewable energy by 2010 and 2020, respectively. As a result, the Government has taken

action to encourage people to save electricity and use other energy sources including

solar energy as alternatives to electricity. Nevertheless, there are barriers to promoting

solar water heaters in urban Vietnam, including: limited community awareness,

technological issues (improper installation or poor positioning leading to inefficient solar

energy absorption, compatibility with existing water heating system), lack of policy

support, cost of purchase and installation).

The project proposes to address those issues through:

· Advocacy for use of solar water heater as an alternative to solar energy via

advocacy materials, newspapers and television and women’s unions’ activities.

· Developing and refining sample installation protocol (for urban areas) to ensure

the most solar energy absorption)

· Developing technological solution to connect the solar water heater to the existing

electricity-powered heater

· Reducing installation cost

APPLICATION OF SOLAR WATER HEATING SYSTEM:-

1) Domestic: Flats, Bungalows and Apartments.

2) Commercial: Hotels, Hospitals, Hostels and Dormitories.

3) Industrial: Process Industries, Preheating boiler feed water. In domestic sector, hot

water is used for bathing, washing of clothes & utensils etc. The requirement may,

however, vary with the season of the year & number of family members. Our experience

says that on an average 30 to 35 litres of water at 50 to 55º C. is consumed by an

individual. Thus for a family of 4 members, 125 LPD Solar Water Heating System is

quite sufficient.

In commercial & industrial sectors, where large quantity of water is required at fairly

high temperature, ''Jain Solar Water Heating Systems'' are designed to meet the above

requirement. Depending on the distribution pattern of hot water, the system could be

either modular or a big capacity single tank system.

· Water heating system in high rise residential buildings:

Solar water heating systems are being installed on multi-storey buildings with a large no

of apartments. There are different ways of installing these solar water heating systems.

The system shown has been installed on top of the terrace of a 20 storied high rise

building of Reserve Bank of India in Lower Parel, Mumbai with a capacity of 10000

litres /day of hot water. The system has supply and return piping to ensure hot water

availability round the clock.

· Water heating system in apartment blocks

A number of systems of smaller capacity were installed on the terrace of the multi-storey

building with large number of apartments. Each system in installed to meet the capacity

requirement of apartments connected to a common pipe shaft. System shown in the

picture has been installed on Vikas Palms in Thane. Total capacity of all systems put

together is 16200 Litters per day for 54 Apartments. Water heating systems in Hotels

Solar water heating system is an effective solution for hot water requirement in hotels. A

number of hotels has already installed solar hot water systems in their hotels and saved

electricity considerably.

· Water heating system in hostels

the following example of J P Siddhartha Hotel, payback was realized within 2 years of

time.

Solar water heater can be a solution to the hostels for hot water requirement. Following

is an example of Infosys hostel in Mysore which was developed by M/S Shobha

Developers with a capacity of 1,77,000 liters per day.

· Water heating system in hostels

Solar heating systems can be used efficiently for swimming pool heating as well.

Following is an example of a swimming pool heating in the Golf-Club of Chandigarh

which has a capacity of 6 lacs litters. The project cost was Rs.30 Lacs with par day

electricity savings of 1550 units. Even if the swimming pool heating is operated for 6

months a year, the pay back would be realized in 2.5 years.

· Water heating system in textile mills

Solar water heating system is a solution for low and medium pressure process heating and

boiler pre heating in industrial applications. Textile is one such industry which requires

hot water for dyeing purposes. Following is an example of a 25 Kcal per day system in

Chelsea Jeans mill in Haryana which helped the company to save 271 liters of diesel per

day. Considering an average price of Rs.30 per liter of diesel, the payback to the

company would come in approximately 3 years of time.

SOLAR WATER PUMPING IN INDIA:-

The Suntechnics Solar Water Pumping system is the perfect compact solution for

pumping water from the borewell, open well, lake, river or stream to the ground level.

The pumped water can be used right away or stored in remote locations.

The solar PV modules in this system generate DC electricity which is fed into a pump

through a controller. The solar modules are mounted on a manually-operated tracking

structure on the ground using hardware. This solar water pumping system offers very

high reliability, minimum maintenance and a long service life.

· Features

v Can be used with a surface or submersible pump

v Durable and rugged construction

v Environmental friendly

v DC Submersible pump - Total lift up to 300ft (92mtrs)

v DC Surface pump - Total lift up to 70ft (21mtrs)

Applications

v Village/Drinking water supply

v Residential/Industrial well pumping

v Irrigation pumps

Solar water pumping in Vietnam:

For stand-alone (no utility interconnection) water pumping systems there have been

papers published comparing diesel powered water pumping systems to solar-PV water

pumping systems (1, 2). There are also papers on modeling and field testing of solar

pumps in different locations in the world (3,4, 5).

However, there are very few papers on the following topics with regards to stand-alone

water pumping:

1. Choosing between a wind or solar powered system.

2. Advantages and disadvantages of PV module types.

3. Controller characteristics (efficiency, reliability, price) for different systems.

4. Choosing the best pump based on daily water volume requirements and pumping

depth.

This paper will focus on the list of items above to help the reader in the selection of the

best stand-alone water pumping system. Fig 1 shows a typical solar-PV water pumping

system containing a PV array, disconnect switches, controller, submersible motor with

pump, and storage tank.

8 Incentives and rebates for solar thermal in India:-

· Federal Solar Tax Credit

Tax credit can be availed upto 30% of the cost of your Solar Electric System and

installation on your federal tax bill.

· Incentive types can be specifically for residential, schools, business, or industrial;

or inclusive of all of them. Solar incentives are mainly for grid tied systems and

are sometimes available for off grid systems.

· Loans

(May be available for Off-grid and/or Grid-tied Systems.) State or local

governments may offer low or zero interest loans for renewable energy projects.

Terms are typically 10 years or less. If you are going to purchase or remodel a

home that you are going to add a solar system to you may also want to see

the Energy Star website for information on Energy Improvement Mortgages (EIMs).

· Utility Rate Discounts & Rebates

(Available for Grid Tied Systems.) Some utilities and state or local programs may

offer temporarily reduced rates on utility bills, or one time rebates on the

installation of solar systems and purchases of energy efficient appliances and/or

HVAC systems.

· RAJKOT: Determined to convert the city's energy source to solar energy, the

Rajkot Municipal Corporation (RMC) has declared various incentives to

promote solar energy harvesting and creating awareness about the renewable

energy. The city had earlier been selected to be developed as a solar city' by

ministry of new and renewable energy, government of India.

· According to officer on special duty, RMC, Alpna Mitra, the RMC is replacing

the existing electric streetlights with solar streetlights. These LED-based solar

streetlights save energy consumption. About 200 streetlights will be replaced. We

are determined to make the city a solar city by various programmes. Efforts are on

to create a model city in solar harvesting and renewable energy sector.

· Indian Govt offers 80% incentive to push solar power

Incentives and rebates for solar thermal in Vietnam:-

BK-IDSE (Bach Khoa Investment and Development of Solar Energy) was established the

specialist in renewable energy in 2006. Our directors, Mr Nguyen Huu Hung, Mrs.

Duong Thanh Luong and Mr. Nguyen Duong Tuan, formerly worked at RECTERE

(Research Center of Thermal Equipment and Renewable Energy) of Polytechnic

University of HoChiMinh City of Vietnam. Since 1990, we have installed about 900

small wind turbines and over 500 Solar water heating systems in Vietnam. Vietnam has a

very good Wind and Solar resource and we are looking for the cooperation from around

the world to wake up this huge potential.

· Business type: R&D, Manufacturer

· Product types: Solar Energy Products: PV, Solar Water Heater Wind Energy

Products: Small Wind turbines for battery charging (from 200 W up to 3. 2kW)

Consultancy service for Wind and Solar Energy Performing Wind resource

assessment. Visit us at: or send us an Email at -idse. com.

· Service types: Consultant

· Address: 11 TTN 17 Street, Tan Thoi Nhat Ward, District 12, Ho Chi Minh,

Vietnam

· Telephone: +84--8--62558091, +84-982-839-879

· Web Site: http://www.bk-idse.com

· E-mail: Send Email to Bach-khoa Investment and Development Of Solar Energy

DEVI - Renewable :-

With the aim of contributing to research, education, training and commercialization of

renewable energy products in Vietnam , DEVI was founded in 2011 and it is one of the

youngest institutions involved in renewable energy markets in Vietnam,.

· Business type: retail sales, distributor

· Product types: solar roofing systems, hybrid power systems, wind power plants,

wind energy systems (small), photovoltaic module components, solar thermal

energy, Biomass Gasification.

· Service types: consulting, design, installation, construction, education and

training services, research services

· Address: 276 Bach Mai, Hanoi, HN Vietnam 084

· Telephone: +84-436862761

· FAX: +84-436862761

· Web Site: http://devi-renewable.com

· E-mail: Send Email to DEVI - Renewable

Swot analysis of Indian solar industry

Strength:

· It Is Easy to Outsource.

· Solar energy does not create and pollution.

· System will operate with negligible maintains.

· Electricity generation from grid connection & fuel transport is costly & difficult,

as compared to it, solar energy is economically feasible.

· initial capital cost of installing a solar power plant has been invested, maintenance

costs are low compared to existing electricity generation technologies

Weakness:

· During nights or due to bad weather conditions solar energy and electricity are not

available, due to which storage or complementary power system is required for

applications. Whereas wind energy give us a solution to cater this problem.

· Solar panel consumes lot of space over the roof.

· The main weakness of our business is that we are a start-up business and that we

have to face already established retailers.

· We are selling the product that consumer are not well aware.

· it requires heavy advertising and promotional activities

Opportunity:

· The 89 pet watts of sunlight energy reaches the earth’s surface which is very large

compared to the 15 terawatts of average energy utilized by human beings.

· The rising utility prices give us a good opportunity to set ourselves in the market.

Threats:

· Solar cells produce DC power which must be converted to AC power by using a

grid tie inverter when used in distribution grids. This may incurs an energy loss of

4-12%.

· High Price of Installation will cause

Pest-analysis

Political

- Incentives of the government for investments in solar energy (around 5%)

- Tax benefits from Spanish government, like a buyback price

- EU legislation in general

Economic

- Interest rates

- Inflation

- Unemployment (relatively high in Spain)

- Price of construction materials

Social

- Image of solar energy is strongly positive

- Can create a lot of high-valued jobs

Technological

- Strongly growing technology with a high potential in general

- Government support for Research and Development

Environmental

- The weather, climate and climate change affecting the solar energy

- Impact on landscape

Porter’s five forces

Rivalry

- Solar energy seems to have a little rivalry because it’s a current strongly growing

industry

- Excellent current profits will let industry leaders to expand in future

Threat of substitutes

- The initial investment in this alternative power sources is expensive, but when buyers

start to acknowledge the shortage in the current source of power, many buyers will

start to consider these substitutes

- The current CO2 emissions created by using fossil fuels is a high cost to the earth

Buyer and supplier power

- A high variety of energy sources leaves consumers with the ability to choose

- There is no high competition in the solar energy market

- Increase in production materials during the crisis

- Moving from a seller’s market to a buyer’s market

Barriers to entry

- A shortage of information about solar technologies and little consumer awareness

- Limited education for and insufficient numbers of trained and experienced personnel

Factors Driving the Growth of Solar Energy in India

The factors propelling the current and future growth in the solar energy segment are

segregated into demand side growth drivers and supply side growth drivers. Exhibit 4

summarizes the major growth drivers and challenges faced by this industry.

Demand Side Growth Factors

India suffers persistent energy shortage with average demand-supply gap revolving

around 12% of total power supply. This, coupled with rising energy needs, is a major

factor driving the growth of this segment. The Power Ministry forecasts electricity

consumption to increase to around 1900 kWh by 2032 from the current 660 kWh. Policy

measures such as JNNSM, aimed at encouraging investment in the solar energy sector,

shall help develop a market for solar energy in India, thereby driving down costs.

Increasing public awareness about issues such as energy scarcity and environmental

preservation shall also fuel the demand for eco-friendly power, hinting at growth

opportunities for solar power.

Supply Side Growth Factors

The current power generation in India is heavily dependent on non-renewable natural

resources such as coal and diesel, whose fast depletion has forced the government and the

power generation companies to look into RE sources, especially solar power. The

favourable environment created by government through subsidy schemes and policies is

encouraging power generation companies to invest in this sector and thus promoting

growth. The other major factors driving the growth from the supply side are huge demand

for electricity in rural areas lacking grid connectivity, and abundant availability of

sunrays in India throughout the year.

Challenges Faced by Solar Energy Sector in India

Following steps are required for active growth of the Indian solar energy industry. These

measures will not only boost the growth of solar energy sector, but also reduce the usage

of non-renewable sources of energy and carbon footprint.

Faster and Efficient Implementation of Renewable Energy Certificates (RECs)

RECs are interstate tradable certificates issued for every unit of renewable energy

produced. Mechanisms such as these are essential to achieve NAPCC’s goal of increasing

the mandatory RE usage for states from 5% today to approximately 15% in the next 10

years. Instead of producing RE by their own, states can purchase RECs from each other

to increase their RE content in total energy. This mechanism will enable low RE potential

states to purchase RECs from high potential states, enabling them to meet NAPCC’s

increased demands. Moreover, these purchases will incentivize high RE potential states

to produce more RE than required currently, enabling overall increase in RE production.

Carbon Trading as a Source of Revenue

Solar power generation emits lesser amount of CO2 compared to conventional sources of

energy such as coal. Trading this reduction in the emissions trading market can be

another source of income for the Solar Energy manufacturers. We estimate that on an

average – considering the current rate of emissions trading – savings of anywhere

between Rs 0.9-1.5 can be achieved per unit of electricity produced. This will partially

help in offsetting the high cost of solar production.

Large-scale on-grid applications are more feasible in areas where there is plenty of

barren land and high rate of irradiance such as Gujarat and Rajasthan

Selective Implementation of On-Grid Application

From today’s technology standpoint, solar power generation works at 15-20% efficiency.

Under this scenario, large-scale on-grid applications are more feasible in areas where

there is plenty of barren land and high rate of irradiance such as Gujarat and Rajasthan. It

is very important to concentrate the efforts in these areas to realize solar potential there

before moving onto other parts where the irradiance is low or there is scarcity of barren

land. The RE produced in these regions can be transferred to other states through RECs,

enabling uniform distribution.

Development of Off-Grid Application

More than 80, 000 villages in India suffer major electricity supply shortages throughout

the year, which provides tremendous opportunity for off-grid solar applications

deployment. Some of the possible applications are lighting and electrification systems,

solar powered cellular towers, irrigation pumps and street lighting.

Opportunities in the Vietnam Solar Energy Market

Solar and wind energy are clean, renewable sources that are becoming increasingly

popular in many countries, especially in developing economies such as Vietnam.

Realizing the importance, advantages, and benefits of such sustainable sources of energy,

and facing an increasing demand for electricity supply for further economic development

(with consistent annual electricity consumption increases of 10-15 percent), Vietnam

decided recently to give greater scrutiny to studying, surveying, encouraging, and

supporting investors, both foreign and domestic, investing in renewable energy projects.

Development of new and renewable energy was included in Vietnam's national energy

development strategy through 2020, with a vision towards 2050, as promulgated in

Decision 1855. This strategy sets specific targets to increase the proportion of new and

renewable energy sources to 3 percent of total commercial primary power by 2010, 5

percent by 2020, and 11 percent by 2050. To reach these targets, Decision 1855 also

guides the direction and orientation for development together with policies, incentives,

and governmental support to attract investors.

Advantages for Investors

Under current legislation, investors are entitled to maximum incentives for every aspect

related to solar or wind energy projects, such as land or water surface lease terms and

fees, corporate income tax, value-added tax, import and export duties, land site clearance,

and depreciation of fixed assets, among others. In addition, solar and wind power projects

are considered clean investments under the country's clean development mechanism.

Accordingly, investors are subsidized by the state through the Environmental Protection

Fund of Vietnam for the difference between the real input costs and the sales price of

power as agreed to in the contract to provide power generated by solar or wind energy.

GEOTHERMAL ENERGY

Geothermal energy is defined as heat from the Earth. It is a clean, renewable resource

that provides energy in the U.S. and around the world in a variety of applications and

resources. Although areas with telltale signs like hot springs are more obvious and are

often the first places geothermal resources are used, the heat of the earth is available

everywhere, and we are learning to use it in a broader diversity of circumstances. It is

considered a renewable resource because the heat emanating from the interior of the

Earth is essentially limitless. The heat continuously flowing from the Earth’s interior,

which travels primarily by conduction, is estimated to be equivalent to 42 million

megawatts (MW) of power, and is expected to remain so for billions of years to come,

ensuring an inexhaustible supply of energy.

How does a conventional geothermal reservoir work?

A geothermal system requires heat, permeability, and water. The heat from the Earth's

core continuously flows outward. Sometimes the heat, as magma, reaches the surface as

lava, but it usually remains below the Earth's crust, heating nearby rock and water —

sometimes to levels as hot as 700°F. When water is heated by the earth’s heat, hot water

or steam can be trapped in permeable and porous rocks under a layer of impermeable

rock and a geothermal reservoir can Form.

Up to 20% of the UK's electricity needs could be met by tidal power in around ten

separate sites around our coastline. Unfortunately harnessing this energy and converting

it into electricity is not a simple task (and it is therefore expensive at present), however

as oil, gas, and coal prices increase, and governments' understanding of the importance of

alternative green energy increases, tidal power will become more attractive.

The large-scale renewable energy industry can now get down to business and begin the

rollout of around 8,000MW of wind farms and solar farms over the next eight years after

the Climate Change Authority delivered its final decision on the much contested

Renewable Energy Target.

As expected, the CCA resisted the overtures of the majority incumbent energy utilities

and generators and retained the fixed target of 41,000GWh of renewable energy by 2020

– even if this might deliver more than the generic “20 per cent” target. But while the

utility-scale market will be pleased with the conclusions, those in the commercial-scale

solar sector, in particular, could see growth in their market delayed once again.

Many generators and utilities, and conservative state governments had argued that the

fixed target of 41,000GWh, in the face of falling overall demand, represented an

unnecessary burden on consumers. They also complained that their own balance sheets

could be shot by the increased competition from green energy.

Reliability

The smart grid will make use of technologies that improve fault detection and allow self-

healing of the network without the intervention of technicians. This will ensure more

reliable supply of electricity, and reduced vulnerability to natural disasters or attack.

Flexibility in network topology

Next-generation transmission and distribution infrastructure will be better able to handle

possible bidirection energy flows, allowing for distributed generation such as from

photovoltaic panels on building roofs, but also the use of fuel cells, charging to/from the

batteries of electric cars, wind turbines, pumped hydroelectric power, and other sources.

Efficiency

Numerous contributions to overall improvement of the efficiency of energy infrastructure

is anticipated from the deployment of smart grid technology, in particular

including demand-side management, for example turning off air conditioners during

short-term spikes in electricity price. The overall effect is less redundancy in transmission

and distribution lines, and greater utilisation of generators, leading to lower power prices.

Peak curtailment/leveling and time of use pricing

Many smart devices are installed in home & business when energu demand is high & is

used to track the consumption of electricity & when it was consumed. These devices are

used during the high cost peak usage periods for reducing the demand in energy. It also

gives utility companies the ability to reduce consumption by communicating to devices

directly in order to prevent system overloads. Examples would be a utility reducing the

usage of a group of electric vehicle charging stations or shifting temperature set points of

air conditioners in a city. This could mean making trade-offs such as cycling on/off air

conditioners or running dishes at 9 pm instead of 5 pm. The direct economic benefit of

using energy at off-peak times will become more energy efficient as seen by businesses

and consumers, for which the theory says that there will inclusion of energy cost of

operation into their consumer device and building construction decisions. See time of the

day metering and demand response

Sustainability

The improved flexibility of the smart grid permits greater penetration of highly variable

renewable energy sources such as solar power and wind power, even without the addition

of energy storage Current network infrastructure is not built to allow for many distributed

feed-in points, and typically even if some feed-in is allowed at the local (distribution)

level, the transmission-level infrastructure cannot accommodate it. Rapid fluctuations in

distributed generation, such as due to cloudy or gusty weather, present significant

challenges to power engineers who need to ensure stable power levels through varying

the output of the more controllable generators such as gas turbines and hydroelectric

generators. Smart grid technology is a necessary condition for very large amounts of

renewable electricity on the grid for this reason.

Market-enabling

The smart grid allows for systematic communication between suppliers (their energy

price) and consumers (their willingness-to-pay), and permits both the suppliers and the

consumers to be more flexible and sophisticated in their operational strategies. Only the

critical loads will need to pay the peak energy prices, and consumers will be able to be

more strategic in when they use energy. Generators with greater flexibility will be able to

sell energy strategically for maximum profit, whereas inflexible generators such as base-

load steam turbines and wind turbines will receive a varying tariff based on the level of

demand and the status of the other generators currently operating. The overall effect is a

signal that awards energy efficiency, and energy consumption that is sensitive to the

time-varying limitations of the supply. At the domestic level, appliances with a degree of

energy storage or thermal mass (such as refrigerators, heat banks, and heat pumps) will

be well placed to 'play' the market and seek to minimise energy cost by adapting demand

to the lower-cost energy support periods. This is an extension of the dual-tariff energy

pricing mentioned above.

Smart Grid

Smart grid is a generic label for the application of computer intelligence and networking

abilities to a dumb electricity distribution system. Smart grid initiatives seek to improve

operations, maintenance and planning by making sure that each component of the electric

grid can both 'talk' and 'listen'. Another major component of smart grid technology is

automation.

· The National Target Program in Response to Climate Change, including

incentives for emissions reduction and low carbon economic development, 2008.

· The Law on Energy Saving and Efficiency was adopted in the National Assembly

on 17 June 2010. This law provides many incentives for energy efficiency and

· conservation as well as cleaner production measures .

· The new environmental tax measures, Ministry of Finance, promoting energy

efficiency and renewable energy indirectly by putting taxes on oil, gas and coal

and specific pollutants.

· The Action Plan in response to climate change of the Ministry of Industry and

Trade (MoIT),September 2010.

Future Development

· The Vietnamese government is focused on increasing access to electricity in the

country, with a current target of 90% of the population as part of its commitment

to reducing rural poverty.

· Extension of the national grid has been focused on connecting densely populated

urban areas, whereas in rural areas the government has been focused on the use of

local hydroelectric power.

· EVN plans to develop a national electricity grid by connecting together several

regional grids. The country's distribution infrastructure has benefited from recent

improvements including a $56 million north–south power line transmitting power

from Vietnam's largest generator,

· The Hoa Binh hydropower plant in the north, to large population centres in the

south. This World Bank-funded project has also had the affect of alleviating

electricity shortages in Ho Chi Minh City.

· Vietnam is now assessing the construction of a 500 kV, 188-mile power line from

Pleiku to Danang City. EVN have also announced plans to upgrade transmission

lines surrounding Hanoi

· The Vietnamese government estimates that 9,300 miles of new high voltage

transmission lines and 173,600 miles of new medium and low voltage

transmission lines will be necessary to accommodate demand by 2010.

· The high cost of grid extension and the country’s geographical complexity will

preclude the inclusion of some 1,100 remote or mountainous communities. These

communities have 750,000 households and about three million people, though

some already have access to commercial electricity through local small grids and

local power production from sources like small hydro plants

Competitors Analysis

Company Sales (Rs millions)

Current price

Change (%) P/E Ratio

Market Cap (Rs. Millions

52-Week high/low

Siemens 129199 515.4 2.51 213.62 178742.66 799/467

ABB 75649.9 501.75 0.73 76.82 105551.56 830/469

Crompton Greaves 64853.8 91.4 0.88 12.24 58119.13 142/87

ALSTOM T&D India 41291.89 155.3 0.06 48.54 37108.95 230/138

Alstom India 18671.3 314.95 -1.11 11.26 21411.95 433/297

Schneider Electric 13491.92 73.25 -2.14 0 17896.94 105/70

Techno Electric (Mer 6811.08 275.8 0 15.61 15745.75 277/268

BGR Energy Systems 34470.5 185.15 -1.33 7.65 13541.12 339/176

TD Power Systems 6252.12 237 -1.66 19.25 8010.26 341/206

Apar Inds 34545.38 117.2 -2.05 4.2 4602.99 185/105

Honda Siel Power 5048.27 441 -1.76 17.77 4553.22 707/380

M AND B Switchgears 339.4 20 -0.25 35.67 4010 27/5

Otis Elevator Co (I) 8990.99 318 0 3.7 3988.38 0/0

Voltamp Transformers 5698.05 372.05 -2.01 13.23 3841.47 547/333

Bharat Bijlee 7177.79 442.05 -0.87 42.86 2520.31 684/402

Elpro International 314.5 305 0 15.39 1406.56 427/210

Transformers & Rect 5121.51 105.3 2.93 27.89 1322.09 180/74

EMCO 8095.27 19.6 -2.97 25.6 1315.76 37/17

Easun Reyrolle 2767.08 60 0.08 60.26 1247.38 83/48

Kirloskar Electric 8717.4 23.3 1.97 11.32 1154.41 33/17

Jyoti 5067.39 59.9 0 0 1026.03 80/46

Modison Metals 1626.01 0 0 10.59 958.9 51/29

Star Delta Transform 667.61 317.8 2.52 26.53 930.06 539/205

ECE Inds 1905.06 105.1 -4.02 154.66 845.99 139/97

Indosolar 919.75 2.43 -2.02 0 831.16 6/2

Indo Tech Transform. 1146.86 74.6 -3.49 0 820.93 185/68

Surana Ventures 726.69 0 0 39.05 811.91 38/15

Salzer Electronics 2228.78 55 0 6.54 565.61 66/42

Best & Crompton Eng. 562.8 4.17 0 0 541.43 10/4

Birla Power Solution 4126.93 0.21 0 15.03 448.39 1/0

Eon Electronic 566.08 26 0 0 417.49 54/20

Lakshmi Elect.Contl. 1639.82 155 0 7.52 380.99 248/137

Goldstone Infratech 597.85 0 0 24.05 335.55 18/9

Advance Metering 0 19.5 0 0 313.12 25/14

WS Industies 2251.04 12.79 0 0 270.38 30-Sep

IMP Powers 2822.43 25.15 0 5.03 204.63 60/22

Thakral Services 391.53 16.6 0 17.71 194.8 42/10

Tarapur Transformers 315.43 0 0 46.29 179.6 41473

Shilchar Tech 829.42 42.45 0 17.83 161.88 62/35

Websol Energy System 1432.52 7.12 0 0 156.45 19/6

Kaycee Inds. 251.63 2865 0 22.33 153.19 4250/2701

Stone India 986.53 17 4.29 0 123.82 41/14

Alfa Transformers 192.43 20.45 0 0 109.61 30/15

Accurate Transformer 2490.19 35.1 0 4.53 104.31 55/27

JSL Inds. 591.69 92 0 3.57 102.71 143/82

Marsons 1155.26 3.79 0 7.2 94.75 11/3

Bilpower 3561.21 0 0 0 84.43 32/3

Remi Elektrotechnik 656.83 16.6 0 2.66 80.76 17/17

EPIC Energy 315.04 9.3 0 17.53 62.42 16/8

Starlite Components 306.93 4.14 0 0 34.9 5/2

Comparison of Competitors in Power & Energy Sector

Company Sales Rs million

Current Price

Change (%)

P/E Ratio Market Cap. (Rs. million)

52-Week High/Low

NTPC 620522.3 155.8 0.65 11.78 1276397.89 175/136

Power Grid Corpn. 100353.3 111.1 1.32 12.21 507649.38 124/100

NHPC 56546.9 21.25 0 10.18 261390.78 29/15

Tata Power 84958.4 95.45 0.58 23.92 225204.57 113/86

Reliance Power 661.2 71.2 0.21 41.3 199304.24 111/59

Adani Power 39489 49.45 1.23 0 116911.34 70/37

Neyveli Lignite 48378.7 68.75 -0.29 7.98 115678.08 91/64

Reliance Infra 178156.3 370.35 1.08 4.68 96359.54 579/315

SJVN 19275 19.8 -0.5 8.12 82318.87 23/18

JP Power Ventures 16155.6 26.3 -0.38 17.44 77563.28 47/24

Torrent Power 79178.2 143 0.42 9.02 67276.64 206/137

CESC 46805.4 290.05 -0.24 5.78 36325.12 346/248

Suzlon Energy 68712.1 14.31 2.51 0 29198.91 27/13

Indiabulls Power 11.5 8.79 1.03 0 22991.75 16/9

KSK Energy Ventures 675.24 49.5 3.13 26.6 17886.26 74/41

PTC India 76502.75 59.8 -0.83 14.93 17849.3 81/49

GVK Power & Infra 276 9.73 3.62 0 14828.79 16/9

Nava Bharat Ventures 9689.19 167.65 1.02 5.76 14817.3 216/147

Guj. Inds. Power 13002.34 72 0.63 5.76 10822.02 83/56

BF Utilities 355.25 272 1.45 108.48 10098.69 490/181

Orient Green Power 78.15 14.71 0.07 0 8350.75 16/9

Techno Electric &Eng 7322.01 130 0.46 9.47 7387.6 228/121

Urja Global 1054.61 39.7 0 186.62 2013.61 61/17

Entegra 0.08 4.5 0 0 1427.19 41378

Energy Development 602.6 0 0 0 495 39/14

SE Power 16.79 12.1 0 289.95 491.38 36/10

Veer Energy & Infra 721.87 6.01 -3.53 5.74 443.16 19/3

Indowind Energy 290.31 3.45 1.77 8.76 304.22 7/3

Suryachakra Power 1838.42 1.15 3.6 0 166.09 3/1

Karma Energy Ltd 253.56 12.99 0 6.96 150.29 19/9

NEPC 1.79 2.2 5.77 0 144.07 3/2

Amalgaated Elecy. Co 0.05 66.15 0 0 91.83 77/66

SRHHL Ind (Amalgamat 0.18 4.98 0 39.63 62.23 7/4

Sun Source 13.96 2.99 0 0 43.03 6/2

Ravindra Energy 328.85 12.67 0 0 8.29 13/12

Torrent Power SEC 9502.66 553.05 0 0 NA 0/0

Torrent Power AEC 12016.97 259.65 0 0 NA 0/0

CHAPTER 11

TAX BENEFIT

TAXATION in INDIA

Three tier federal structure is being developed in India, which consist of Union

government, the state government and local bodies of urban/ rural area. The power to

levy taxes and duties is distributed among the three tiers of Governments, in accordance

with the provisions of the Indian Constitution.

The main taxes/duties that the Union Government are as follows

· Income Tax (except tax on agricultural income, which the State Governments can

levy)

· Customs duties

· Central Excise and Sales Tax and Service Tax.

State Governments are

· Sales Tax (tax on intra-State sale of goods),

· Stamp Duty (duty on transfer of property),

· State Excise (duty on manufacture of alcohol),

· Land Revenue (levy on land used for agricultural/non-agricultural purposes),

· Duty on Entertainment and Tax on Professions & Callings.

The Local Bodies are empowered to levy tax on

· Properties (buildings, etc.),

· Octroi (tax on entry of goods for use/consumption within areas of the Local

Bodies),

· Tax on Markets and Tax/User Charges for utilities like water supply, drainage,

etc.

India has went through the radical in line with economic policy and commitments of

WTO of the country.

Some of the changes are:

· Reduction in customs and excise duties

· Lowering corporate Tax

· Widening of the tax base and toning up the tax administration

Direct Taxes

A tax is said to be direct tax when impact and Incidence of a tax are on one and same

person, i.e., when a person on whom tax is levied is the same who finally bears the!

burden of tax. For Instance, income tax is a direct tax because impact and incidence falls

on the same person.

Indirect taxes:

Indirect taxes are those taxes which are paid in the first instance by one person and then

are shifted on to some other persons. The impact is one person but the incidence is on the

other.

If impact of tax falls on one persons and incidence on another, the tax is called indirect.

For example, tax on saleable articles is usually an indirect tax because it can be shifted on

to the consumers.

1. Personal Income Tax

Individual income slabs are 0%, 10%, 20%, 30% for annual incomes up to Rs 50,000,

50,000 - 60,000, 60,000 - 1,50,000 and above 1,50,000 respectively.

2. Corporate Income Tax

For domestic companies, this is levied @ 35% plus surcharge of 5%, where as for a

foreign company (including branch/project offices), it is @ 40% plus surcharge of 5%.

An Indian registered company, which is a subsidiary of a foreign company, is also

considered an Indian company for this purpose.

In the host countries in which these MNCs operate, they end up paying taxes; this can

lead to the MNCs being favored by the government. The MNCs use this government

leverage to receive subsidies and tax benefits; they can also evade taxes by increasing the

price of imports and decreasing the price of exports of the products they manufacture.

Though they increase the employment and revenue in the host countries, their unfair

influence with government can stifle other local businesses.

Multinationals are business entities that operate in more than one country. Multinationals

are also known as multinational corporations, transnational corporations and

multinational enterprises. Typically, multinationals will have headquarters in one country

and operational facilities in other countries. Multinational benefits both to the home

country and the host countries.

The state should levy taxes on individuals according to the benefit conferred on them.

The more benefits a person derives from the activities of the state, the more he should

pay to the government. This principle has been subjected to severe criticism on the

following grounds:

Firstly, if the state maintains a certain connection between the benefits conferred and the

benefits derived. It will be against the basic principle of the tax. A tax, as we know, is

compulsory contribution made to the public authorities to meet the expenses of the

government and the provisions of general benefit. There is no direct quid pro quo in the

case of a tax.

Secondly, most of the expenditure incurred by the slate is for the general benefit of its

citizens, it is not possible to estimate the benefit enjoyed by a particular individual every

year.

Thirdly, if we apply this principle in practice, then the poor will have to pay the heaviest

taxes, because they benefit more from the services of the state. If we get more from the

poor by way of taxes, it is against the principle of justice?

The most popular and commonly accepted principle of equity or justice in taxation is that

citizens of a country should pay taxes to the government in accordance with their ability

to pay. It appears very reasonable and just that taxes should be levied on the basis of the

taxable capacity of an individual. For instance, if the taxable capacity of a person A is

greater than the person B, the former should be asked to pay more taxes than the latter.

It seems that if the taxes are levied on this principle as stated above, then justice can be

achieved. The fact is that when we put this theory in practice, our difficulties actually

begin. The trouble arises with the definition of ability to pay. The economists are not

unanimous as to what should be the exact measure of a person's ability or faculty to pay.

The main viewpoints advanced in this connection are as follows:

(a) Ownership of Property: Some economists are of the opinion that ownership of the

property is a very good basis of measuring one's ability to pay. This idea is out

rightly rejected on the ground that if a person’s earns a large income but does not

spend on buying any property, he will then escape taxation. On the other hand,

another person earning income buys property; he will be subjected to taxation. Is this

not absurd and unjustifiable that a person, earning large income is exempted from

taxes and another person with small income is taxed?

(b) Tax on the Basis of Expenditure: It is also asserted by some economists that the

ability or faculty to pay tax should be judged by the expenditure which a person

incurs. The greater the expenditure, the higher should be the tax and vice versa. The

viewpoint is unsound and unfair in every respect. A person having a large family to

support has to spend more than a person having a small family .If we make

expenditure. As the test of one's ability to pay, the former person who is already

burdened with many dependents will have to' pay more taxes than the latter who has

a small family. So this is unjustifiable.

(c) Income as the Basics: Most of the economists are of the opinion that income should

be the basis of measuring a man's ability to pay. It appears very just and fair that if

the income of a person is greater than that of another, the former should be asked to

pay more towards the support of the government than the latter. That is why in the

modern tax system of the countries of the world, income has been accepted as the

best test for measuring the ability to pay a person.

Withholding Tax for NRIs and Foreign Companies:

Withholding Tax Rates for payments made to Non-Residents are determined by the

Finance Act passed by the Parliament for various years. The current rates are:

Rates given below are in general and in respect of the countries with which India does not

have a Double Taxation Avoidance Agreement (DTAA).

1. Interest - 20% of Gross Amount

2. Dividends - 10%

3. Royalties - 20%

4. Technical Services - 20%

5. Any other Services - Individuals - 30% of net income

6. Companies/Corporate - 40% of net income

Double Taxation Relief:

DTTA has being entered by the India along 65 countries consisting of countries like

U.S.A., U.K., Japan, France, Germany, etc. These agreements provides for relief from the

double taxation in respect of incomes by providing exemption and also by providing

credits for taxes paid in one of the countries. These treaties are based on the general

principles laid down in the model draft of the Organization for Economic Cooperation

and Development (OECD) with suitable modifications as agreed to by the other

contracting countries.

The rates are determined by agreement and are indicated for various countries as under The % rates determined are given below as below:

Country Dividends

%

Interest

%

Royalties

%

Australia 15 15 15

Austria 20 20 30

Bangladesh 15 10 10

Belarus 15 10 15

Belgium 15 15 20

Brazil 15 15 15

Bulgaria 15 15 20

Canada 25 15 15

China 10 10 10

Cyprus 15 10 15

Czechoslovakia 20 15 30

Czech Republic 10 10 10

Denmark 20 15 20

Egypt 20 20 30

Finland 15 10 20

France 10 15 10/20

Germany 10 10 10

Greece 20 20 30

Hungary 15 15 30

Indonesia 15 10 15

Israel 10 10 10

Italy 20 15 20

Japan 15 15 20

Jordan 10 10 20

Kazakhstan 10 10 10

Kenya 15 15 20

Korea 20 15 15

Kyrgyzstan 10 10 15

Libya 20 20 30

Malaysia 20 20 30

Malta 15 10 15

Mauritius 15 20 15

Mongolia 15 15 15

Morocco 10 10 10

Namibia 10 10 10

Nepal 15 15 15

Netherlands 10 10 10

New Zealand 15 10 10

Norway 15 15 30

Oman 12.5 10 15

Philippines 20 15 15

Poland 15 15 22.5

Portugal 15 10 10

Qatar 10 10 10

Romania 20 15 22.5

Russian Federation 10 10 10

Singapore 15 15 15

South Africa 10 10 10

Spain 15 15 20

Sri Lanka 15 10 10

Sweden 10 10 10

Switzerland 15 15 20

Syria 0 7.5 10

Tanzania 15 12.5 20

Thailand 20 20 15

Trinidad and Tobago 10 10 10

Turkey 15 15 15

Turkmenistan 10 10 10

United Arab Emirates 15 12.5 10

United Kingdom 15 15 15

United States 20 15 15

Uzbekistan 15 15 15

Vietnam 10 10 10

Zambia 15 10 10

Non treaty countries 0 20 20

General Tax Incentives for Industries:

100% deduction of profits and gains for ten years is available in respect of the following:

· The organization which have the business of developing, maintaining and

operating infrastructure facilities viz., roads, highways, bridges, airports, ports,

rail systems, industrial towns, inland waterways, water supply projects, water

treatment systems, irrigation projects, sanitation and sewage projects, solid waste

management systems

· Undertakings engaged in generation or generation and distribution, transmission

or distribution of power, which commence these activities before 31.3.2006.

· Any company engaged in scientific and industrial research and development

activities, approved by the prescribed authority, before 31.3.2003.

· The companies which are under operation, maintenance of Industrial park or

special economic zone before 31.3.2006.

· The enterprise which involves in development or industrial park or SEZ before

31.3.2006

· Notified Industrial Undertakings set up in the North Eastern region including

seven north-eastern states and the state of Sikkim.

· Undertakings developing and building housing projects approved by the local

authority before 31.3.2001and which are completed before 31.3.2003.

· 100% deduction for seven years for undertakings producing or refining mineral

oil.

100% deduction from income for first five years and 30% (for persons other than

companies: 25%) in subsequent five years is available in respect of the following:

· Company which starts providing telecommunication services whether basic or

cellular including radio paging, domestic satellite service, network or trunking,

broad band network and internet services before 31.3.2003.

· Industrial undertakings located in certain specified industrially backward states

and districts.

· Undertakings which begin to operate cold chain facilities for agricultural produce

before 31.3.2003.

· Undertakings engaged in the business of handling, storage, transportation of food

grains.

· 50% deduction for a period of five years is available to undertakings engaged in

the business of building, owning and operating multiplex theatres or convention

centres constructed before 31.3.2005.

· Tax exemption of 100% on export profits for ten years upto F.Y. 2009-10, for

new industries located in EHTPs and STPs and 100% Export Oriented Units. For

units set up in Special Economic Zones (SEZs), 100% deduction of export income

for first five years followed by 50% for next two years, even beyond 2009-10.

· Tax exemption of 100% of Export profits for ten years for new industries located

in Integrated Infrastructure Development Centres or Industrial Growth Centres of

the North Eastern Region.

· 50% of export profit from the gross total income is being deducted.

· Deduction from the gross total income of 50% of foreign exchange earnings by

hotels and tour operators50% deduction of export income due to export of

computer software or film software, television software, music software, from the

gross total income.

Vietnam basic principal of taxation

· Scope of taxation:

Individual who have Vietnam nationality including those who are sent abroad or

woks or study overseas and have taxable income.

· Tax year :

Vietnam tax year is calendar year i.e. 1 January to 31 December assessment of

PIT(personal income tax) on income from business and income from salaries or

wages is on a calendar year basis. For non employment income , e.g.in come from

capital investment , capital assignment , transfer of property , individual required

to declare and pay personal income tax.

· Method of calculating tax

VND (Vietnam dong) is considered for personal income tax for income in foreign

currencies, the calculation of personal income tax after converting into VND, is

computed by average exchange rate on the interbank foreign currency market at

the time of the transaction takes place.

· Residence status.

– Personal income tax legislation distinguishes between tax residents and

non-residents.

– Residents are those individuals residing in Vietnam foe 183 days of more

in calendar year.

– Individuals not meeting the condition for being tax residents are

considered as tax non-residents in Vietnam.

– Individuals who have a lease with term of more than 90 days but stay less

then 183 days in tax year in Vietnam will be treated as a Vietnam tax non-

resident.

Understanding Vietnam tax system

à Taxation of employment income :

Income from employment is fully subject to tax , where income is paid or where

contract of employment is signed. Employment income includes salary , wages

and other remuneration e.g. allowances ,bonuses and non cash benefits.

à Non taxable income.

Allowances for dangerous working environment, attraction allowances for new

economic zones and regional allowances for people working in remote areas.

Allowances as stipulated in law on social insurance and lab our code e.g.

Subsidies for sudden difficult situation, labour accidents, occupation diseases .

à Double taxation relief.

An individual who is a tax resident of another country may qualify for relief for

or exemption from Vietnam personal income tax agreement concluded between

that country and Vietnam.

à foreign tax credit.

A tax resident of Vietnam who receives income from offshore employment can

claim a credit for the tax paid on such income in the foreign country against his

Vietnam tax liability. The total foreign tax credit shall not exceed the Vietnam tax

liability payable on such income.

à Personal Deduction and Family Deduction.

· What to do when you arrive in Vietnam ?

à Tax code registration.

Individuals who have taxable income are required to obtain a tax code. Submit the

tax registration file to their employer who will submit this to local tax office.

Those who have other items of taxable income are requied to submit their tax

registration file to the district office of the locality where they reside.

à Registration of dependants.

à Tax Declaration and Payments.

Tax rate for employment income and business income

05

101520253035

Tax rate

tax rate

EXPORT PROMOTION CAPITAL GOODS (EPCG)

EPCG scheme is for import of capital goods for pre production, production and post

production (including CKD/ SKD) thereof as well as computer software system) is

allowed at 5% customs duty subject to an export obligation equivalent to 8 times of

duty reduced on capital goods imported under EPCG scheme to be fulfilled over a

period of 8 years is considered from the date of issue of authorization.

The capital goods shall include spares, (including refurbished/ reconditioned spares)

jigs, fixtures, dies and moulds. EPCG Authorization may also be issued for import

of components of such capital goods required for assembly or manufacturer of

capital goods by the authorization holder.

Second hand capital goods without any restriction on age may also be imported

under the EPCG scheme.

Spares (including refurbished/ reconditioned spares), tools, spare refractories,

catalyst & consumable for the existing plant and machinery imported/to be imported

under the Scheme shall also be allowed subject to an export obligation equivalent to

8 times of duty saved to be fulfilled over a period of 8 years reckoned from the date

of issuance of Authorization.

The scheme will be available for exporters of engineering & electronic products,

basic chemicals & pharmaceuticals, apparels & textiles, plastics, handicrafts,

chemicals & allied products, leather & leather products, paper & paperboard and

articles thereof, ceramic products, refractories, glass & glassware, rubber & articles

thereof, plywood and allied products, marine products, sports goods and toys.

Import by Agro Units

In the case of agro units, import of capital goods at 5% Customs duty shall be

allowed subject to a fulfillment of an export obligation equivalent to 6 times the duty

saved (on capital goods imported under the Scheme) over a period of 12 years from

the date of issue of Authorization.

Import by SSI Units

However for SSI units, import of capital goods at 5% Customs duty shall be allowed

subject to a fulfillment of an export obligation equivalent to 6 times the duty saved

(on capital goods imported under the Scheme) over a period of 8 years from the date

of issue of Authorization provided the landed CIF value of such imported Capital

Goods under the Scheme does not exceed Rs. Twenty Five Lakhs and the total

investment in plant and machinery after such imports does not exceed the SSI limit.

However, in respect of EPCG Authorizations with a duty saved value of Rs. 100

crore or mote, the same export obligation shall be required to be fulfilled over a

period of 12 years.

Other Provisions

In case CVD is paid in cash on imports under EPCG, the incidence of CVD would

not be taken for computation of net duty saved provided the same is not CENVAT.

The capital goods shall include spares, (including refurbished/ reconditioned spares)

jigs, fixtures, dies and moulds. EPCG Authorization may also be issued for import

of components of such capital goods required for assembly or manufacturer of

capital goods by the Authorization holder.

Second hand capital goods without any restriction on age may also be imported

under the EPCG scheme.

However, import of motor cars, sports utility vehicles/all purpose vehicles shall be

allowed only to hotels, travel agents, tour operators or tour transport operators and

companies owning/operating golf resorts whose total foreign exchange earning from

the hotel, travel & tourism and golf tourism sectors in the current and preceding

three Regional years is Rs 1.5 crores or more. The ‘duty saved’ amount on all EPCG

Authorizations issued in a Regional year for import of motor cars, sports utility

vehicles/all purpose vehicles shall not exceed 50% of the average foreign exchange

earnings from the hotel, travel & tourism and golf tourism sectors in the preceding

three Regional years. However, the parts of motor cars, sports utility vehicles/ all

purpose vehicles such as chassis etc. cannot be imported under the EPCG Scheme.

Import of Restricted items of imports mentioned under ITC(HS) shall only be

allowed to be imported under the Scheme after approval from the Import Licensing

Committee.

Spares (including refurbished/ reconditioned spares), tools, spare refractories,

catalyst & consumable for the existing plant and machinery may also be imported

under the EPCG Scheme subject to an export obligation equivalent to 8 times of

duty saved to be fulfilled over a period of 8 years reckoned from the date of issuance

of Authorization.

EPCG for Projects

An EPCG authorization can also be issued for import of capital goods for supply to

projects notified by the Central Board of Excise and Customs under Sr. No. 441 of

Customs Exemption Notification No 21/2002 dated 01.03.2002 wherein the basic

customs duty on imports is 10% with a CVD of 16%.

The export obligation for such EPCG Authorizations would be eight times the duty

saved. The duty saved would be the difference between the effective duty under the

aforesaid Customs Notification and the concessional duty under the EPCG Scheme.

EPCG for Retail Sector

To create modern infrastructure in the retail sector, concessional duty benefits under

EPCG scheme shall be extended for import of capital goods required by retailers

having minimum area of 1000 sq meters. The retailer shall fulfil the export

obligation i.e. 8 times the duty saved in 8 years.

Eligibility

EPCG scheme covers manufacturer exporters with or without supporting

manufacturer(s)/ vendor(s), merchant exporters tied to supporting manufacturer(s) and

search providers.

Export Promotion Capital Goods (EPCG) Scheme also covers a service provider who is

designated / certified as a Common Service Provider (CSP) by the DGFT, Department of

Commerce or State Industrial Infrastructural Corporation in a Town of Export Excellence

subject to provisions of Foreign Trade Policy/Handbook of Procedures with the following

conditions:

1. EPCG licence to be given to the CSP should have a clear endorsement giving the

details of the users and the quantum of Export Obligation (EO) which each user

would fulfill;

2. Such exports will not count towards fulfillment of other specific export obligations ;

and

3. Each one of the users of the CSP apart from the CSP should furnish 100% Bank

Guarantee (BG) equivalent to their portion of duty foregone apportioned in terms of

quantum of EO to be discharged by them and the B.G. will be enforced in the event

of the obligation not being fulfilled.

Technological up-gradation of existing EPCG machinery

EPCG Authorization holders can opt for Technological Up-gradation of existing capital

good imported under EPCG Authorization. Conditions governing Technological Up-

gradation of existing capital goods are as under:

· Minimum time period for applying for Technological Up-gradation of existing capital

goods imported under EPCG is 5 years from Authorization issue date.

· Minimum exports made under old capital goods must be 40% of total export

obligation imposed on first EPCG Authorization.

· Export obligation would be re-fixed such that total export obligation mandated for

both capital goods would be sum total of 6 times of duty saved on both the capital

goods, to be fulfilled in 8 years from new authorization issue-date.

· Facility for technological up-gradation shall be available only once and the minimum

imports to be made shall be at least 1 0% of the existing investment in plant and

machinery by applicant.

· Capital Goods to be imported must be new and technologically superior to earlier CG.

An advantageous scheme for procurement of Capital Goods through import as well as

domestically

· The EPCG scheme allows import /domestic sourcing of capital goods (including

CKD/SKD thereof as well as computer software systems and spares, jigs, fixtures,

dies and moulds) at 0% (for certain sectors) & at 3.09% Customs duty for all sectors

as against the normal total of 23.895%, thus providing a duty saved value of more

than 20% of the import value. This is subject to an Export Obligation (EO) equivalent

to 6/8 times of duty saved, to be fulfilled over a period of 6/8 years reckoned from the

date of issuance of license. For large projects, SSI etc. there are more relaxed norms

of EO. The scheme covers manufacturer exporters with or without supporting

manufacturer(s) / vendor(s), merchant exporters tied to supporting manufacturer(s)

and service providers.

· Actual user conditions: Import of capital goods are subject to Actual User condition

till the export obligation is completed.

Domestic Sourcing:

A person holding an EPCG license may source the capital goods from a domestic

manufacturer instead of importing them. The domestic manufacturer supplying capital

goods to EPCG license holders shall be eligible for refund of Excise Duty paid by him. In

addition the indigenous supplier can import his own raw material duty free and other

benefits which can be discussed

For Manufacturers:

The scheme is quite beneficial to Manufacturer exporters as they can import their CG at a

substantial discount. Especially for those manufacturers whose final product is not

excisable (Agriculture sector) or is exempt from excise duty (like those in Uttaranchal)

since they cannot take the CENVAT credit of the CVD paid on imports and Excise Duty

paid in Domestic markets.

Merchant Exporters tied with the supporting manufacturers can also utilize the scheme

for concessional duty import of Capital Goods to be installed at the supporting

manufacturers.

For Projects:

EPCG can be taken for the full projects where exports of goods or services can be

envisaged by the use of the project or alternative products. This can be taken for Captive

Power units also. EPCG can be taken along with Project Import scheme in case of new

Projects.

For Service Provider:

Various service providers / exporters can take EPCG route to reduce their Capital Cost.

Service Providers like Port Developers, Hotels, Hospitals, Tour Operators, Taxi

Operators, Construction Companies, Logistics companies can utilize the scheme to

import/procure from domestic market, their capital goods at a substantially reduced costs.

The EO can be fulfilled by Forex Earnings through providing services, like that of

Foreign Guests staying in the hotel, medical tourism etc.

For Others:

Certain other sectors like Retail Sector in the country, Port Projects etc. can also utilize

EPCG scheme to their advantage.

In case of domestic procurement we can assist in getting necessary invalidations from the

authority, and the refund of Excise Duty.

However, in respect of EPCG licenses with a duty saved of Rs.100 crore or more, the

same export obligation shall be required to be fulfilled over a period of 12 years.

In case CVD is paid in cash on imports under EPCG, the incidence of CVD would not be

taken for computation of net duty saved provided the same is not Cenvated .

The capital goods shall include spares (including refurbished/ reconditioned spares) ,

tools, jigs, fixtures, dies and moulds. EPCG license may also be issued for import of

components of such capital goods required for assembly or manufacturer of capital goods

by the license holder.

Second hand capital goods without any restriction on age may also be imported under the

EPCG scheme.

Spares (including refurbished/ reconditioned spares), tools, refractories, catalyst and

consumable for the existing and new plant and machinery may also be imported under the

EPCG scheme.

However, import of motor cars, sports utility vehicles/ all purpose vehicles shall be

allowed only to hotels, travel agents, tour operators or tour transport operators whose

total foreign exchange earning in current and preceding three licensing years is Rs 1.5

crores. However, the parts of motor cars, sports utility vehicles/ all purpose vehicles such

as chassis etc cannot be imported under the EPCG Scheme.

EPCG SCHEME OF INDIA

a. The scheme shall now allow import of capital goods for pre-production and post-

production facilities also.

b. The Export Obligation under the scheme shall now be linked to the duty saved and

shall be 8 times the duty saved.

c. To facilitate up gradation of existing plant and machinery, import of spares shall also

be allowed under the scheme.

d. To promote higher value addition in exports, the existing condition of imposing an

additional Export Obligation of 50% for products in the higher product chain to be

done away with.

e. Greater flexibility for fulfillment of export obligation under the scheme by allowing

export of any other product manufactured by the exporter. This shall take care of the

dynamics of international market.

f. Capital goods up to 10 years old shall also be allowed under the scheme.

g. To facilitate diversification into the software sector, existing manufacturer exporters

will be allowed to fulfill export obligation arising out of import of capital goods under

the scheme for setting up of software units through export of manufactured goods of

the same company.

h. Royalty payments received from abroad and testing charges received in free foreign

exchange to be counted for discharge of export obligation under EPCG scheme.

In case of agro units, and units in cottage or tiny sector, import of capital goods at 3%

Customs duty shall be allowed subject to fulfillment of export obligation equivalent to 6

times of duty saved on capital goods imported, in 12 years from Authorization issue date.

For SSI units, import of capital goods at 3% Customs duty shall be allowed, subject to

fulfillment of export obligation equivalent to 6 times of duty saved on capital goods, in 8

years from Authorization issue-date, provided the landed if value of such imported

capital goods. Under the scheme does not exceed Rs.50 lakhs and total investment in

plant and machinery after such imports does not exceed SSI limit. However, in respect of

EPCG Authorizations with a duty saved amount of Rs. 100 crores or more, export

obligation shall be fulfilled in 12 years. In case CVD is paid in cash on imports under

EPCG, incidence of CVD would not be taken for computation of net duty saved,

provided the same is not cenvated.

Capital goods shall include spares (including refurbished / reconditioned spares), tools,

jigs, fixtures, dies and moulds.

CONDITIONS AND OBLIGATIONS UNDER EPCG SCHEME

The following are the conditions and obligations;

I. Export of goods manufacturers or producers should fulfil the export obligation

under the scheme.

II. The exports shall be direct exports in the name of the importer. However, the

importer may export through a third party provided the name of the

importer/license holder is also indicated in the Shipping Bill.

III. Export proceeds shall be realized in freely convertible Currency.

IV. Exports shall be physical exports. Deemed exports shall also be taken into

consideration for fulfillment of export obligation but the license shall not be

entitled to claim any benefit of Deemed Exports.

V. The export obligation shall be in addition to any other export obligation

undertaken by the importer and shall be over and above the average level of

exports of the same product achieved by him in the preceding three licensing

years. If the exporter achieves an export of 75 per cent of the annual value of the

production of the relevant export product, the export obligation under this scheme

shall be subsumed under that export provided, however, that the aggravate value

of such exports during the specified period shall not be less than the aggregate

value of the export obligation fixed.

VI. Where the manufacturer exporter has obtained licenses for the manufacture of the

same export product both under this scheme and the Duty Exemption Scheme the

physical exports made under the Duty exemption Scheme shall also be counted

towards the discharge of th4e export obligation under this scheme.

VII. In the case of export of computer software, the export obligation shall be

determined in accordance with policy but the conditions that exports hall be over

and above the average level of exports in the preceding three licensing years shall

not apply.

Indian Exports and Imports

Bilateral trade touched US$ 2.48 billion during Jan – Dec 2008, up from US$ 1.54 billion during

Jan – Dec 2007. US$ 2.09 billion were the export from India to Vietnam, which showed a

growth of 54.35 per cent over the corresponding period in 2007. Exports from Vietnam to India

were US$ 389 million, an increase of 116.47% over the corresponding period in 2007.

During the first quarter of 2009, as a result of global economic recession, exports from India to

Vietnam were US$406.44 million, a decrease of 43.60% over the corresponding period in 2007.

Exports from Vietnam to India increased by 45.53% to reach US$69.55 million.

(Figures in US$ millions)

2002 2003 2004 2005 2006 2007 2008

Import 324.6 456.95 593.53 598.79 880.28 1356.93 2094.4

Export 52.03 32.27 77.24 97.76 137.84 179.7 388.99

Total trade 376.63 489.22 670.77 696.55 1018.12 1536.63 2483.39

Trade imbalance

272.57 424.68 516.29 501.03 742.44 1177.23 1705.41

Major export commodities from India to Vietnam


Sr. No. Commodities Jan – Dec

2006 Jan – Dec 2007 % Increase

1. Feed ingredients 245.08 450.44 83.79

2. Pharmaceuticals 61.17 85.80 40.26

3. Machinery and Equipment 48.48 91.17 88.06

4. Ordinary metals 71.38 75.78 6.16

5. Plastic materials 65.21 73.28 12.38

6. Steels of all kinds 44.36 60.76 36.97

7. Medicinal Ingredients 30.87 40.66 31.71

8. Leather and textile materials

27.81 41.20 48.15

9. Cotton of all kinds 37.32 39.69 6.35

10. Pesticides and materials 25.68 34.80 35.51

11. Tobacco accessories 11.13 26.74 140.25

12. Chemicals 15.46 27.84 80.08

13. Chemical allied products 28.48 22.45 -21.17

14. Fibres of all kinds 9.90 14.04 41.82

15. Fabrics of all kinds 8.24 10.49 27.31

16. Other products 285.92 564.84 97.55

Exports from Vietnam to India during 2007:

Vietnam’s exports to India during 2007 registered an increase of 21% over the corresponding

period in 2006.


2006 (Jan - Dec) 2007 (Jan – Dec) % Increase

137.84 179.70 30.37%

Major export commodities from Vietnam to India


Sr. No. Commodities Jan – Dec 2006

Jan – Dec 2007

% Increase

1. Coal 20.25 20.73 2.37

2. Pepper 10.98 13.61 23.95

3. Rubber 6.91 9.2 33.14

4. Computer and electronic goods

6.86 10.75 56.71

5. Cinnamon 7.08 9.03 27.54

6. Garment and textiles 7.96 3.82 -52.01

7. Footwear of all kinds 4.33 3.81 -12.01

8. Coffee 7.74 2.62 -66.15

9. Vegetable 2.89 2.16 -25.26

10. Other products 52.96 96.94 83.04

Investment relations

As of December 2008, India has 30 investment projects in Vietnam with total registered

capital of US$ 185.47 million. Indian companies are investing in oil and gas exploitation,

mineral exploitation and processing, sugar manufacturing, agro-chemicals, IT and

agricultural processing. TATA Group of India inked a memorandum with Vietnam Steel

General Corporation to research for the building of Ha Tinh Conjugate Steel Company

and exploit Thach Khe iron mine with an output capacity of 4.5 million tons per year. It

is expected to invest more than USD 4.5 billion in the next few years. With this

investment, India has become top 10 investors in Vietnam. From Vietnamese side, a

Vietnamese company, FPT, has made an investment of US$150,000 in an Indian

technology development and investment project.

Development Assistance of India to Vietnam

Vietnam is one of the largest recipients of Indian aids through Lines of Credit extended

by Department of Economic Affairs (DEA), Ministry of Finance of the Government of

India. Since 1976, India has extended 14 Lines of Credit totaling Rs.3,610 million to

Vietnam. In the 1980s, Vietnam received relatively large amounts of assistance though

these programmes were reduced during the 1990s. India announced another credit line of

US$27 million to Vietnam an agreement for which was signed in August 2004 between

Exim Bank of India and Ministry of Finance of Vietnam. Most recent credit line of US$

45 million is being implemented for Nam Chien.

Hydropower projects in Vietnam

India has announced an aid of Rs. 100 million to Vietnam for setting up of an Advanced

Resource Centre in IT in Hanoi. Another grant of Rs. 122.07 million has also been given

to Vietnam for assisting human resource development in the field of IT in six educational

institutions in Vietnam. Implementation of both these projects is going on.

Vietnam - The role of CSR

Companies see CSR as a way of enhancing their image. Initially, CSR was primarily

confined to foreign companies and organizations involved in international development

cooperation. Particularly in the manufacture of shoes and clothing intended for export,

which is subject to international standards, companies located in Vietnam have long been

judged by the standards of the ethics commission. CSR activities by companies such as

Deutsche Bank, van Lack and Metro have attracted public attention.

There is growing interest in certification and standards such as Global Gap, FSC (Forest

Stewardship Council) and 4C (Common Code for the Coffee Community).

Accordingly, labor and social standards and anticorruption efforts are increasingly a topic

of discussion in forums for stakeholders. The Vietnam Business Link Initiative and the

Business Office for Sustainable Development, which are part of the Vietnam Chamber of

Commerce and Industry and focus on promoting CSR, have been in existence since

2000.

The Vietnamese government has created a strategy called Vietnam Agenda 21, which

deals with aspects of CSR including, in particular, sustainable development.

However, the country has no explicit CSR policy, since the necessary legal foundation is

lacking.

It would be wise for the government to make greater efforts to establish a policy

framework, in order to achieve better coordination of public entities and more

involvement of SMEs in discussions of CSR.

Vital role played by International organization in raising awareness and implementation of CSR:

§ Particularly in raising awareness of the importance of CSR - e.g. by organizing

multi-stakeholder forums on CSR topics (the Swedish embassy on the topic of

corruption) or roundtables (German development cooperation organizations on

the topic of international standards).

§ This has increased pressure on the government and companies and helped trigger

dialogue among the relevant parties.

§ The national Global Compact Network is currently being established (October

2008).

§ The Vietnam Business Forum, organized each year by the World Bank (IFC), is

paying more attention to CSR and including it as a permanent item on the agenda.

§ Promotion of international standards, whether in agricultural production (e.g.

Global Gap by GTZ, Fair Trade by Swiss development cooperation organizations

and the Asian Development Bank/UK Department for International Development

“Making markets work for the poor”) or in industrial production (e.g.

international labor standards by ILO).

§ Producers as well as official agencies have become much more aware of the need

for certification and international standards.

§ Chambers of Commerce Abroad (AHK)/Business associations – Readers,

evening programs, discussion forums, fundraising activities to raise awareness

CSR understanding

In 1986, a socialist economic policy gave way to a policy of greater economic openness

(“Doi Moi”) aimed at transforming Vietnam from a planned economy to a “socialist

market economy.”

State-owned companies have been privatized, and in theory the state has withdrawn from

certain areas, although it continues to try to control some aspects of private industry (for

example the formation of associations and other interest groups).

The party and government agencies want to maintain a socialist orientation, e.g.

promoting the interests of disadvantaged groups (ethnic minorities, the disabled, residents

of underdeveloped areas, etc.), redistributing wealth, providing support for rural areas

and their links to industry (although there is some doubt as to the long-term effectiveness

of these programs).

The Vietnamese traditionally have a well-developed sense of responsibility for their

families.

Source: German Embassy, Hanoi

Expectations towards companies

To reduce poverty, create jobs and promote the development of backward regions and

group, this are the expectation of socialist system.

Most of the public expects companies to operate profitably and manufacture products that

benefit society. However, the media, NGOs and consumers have other expectations with

respect to companies’ social responsibilities.

With respect to German companies in particular, the following holds true:

§ Vietnam has traditionally had close ties to Germany: some 100,000 Vietnamese

people live in Germany, and there are approximately the same numbers of

German-speaking Vietnamese in Vietnam.

§ Germany is a model in a number of areas. The government is striving to follow

the German example of a socially and ecologically sound market economy and

demanding that companies accept their proper responsibilities. German

companies and/or associations could play a role in this context.

§ There is also interest in introducing the German model of a dual vocational

training system. Demand is high from the Vietnamese side, since a lack of skilled

workers is a problem for the country’s economic development; this also affects

German investors.

§ There are high expectations with regard to activities to promote education and

fight poverty. There is less interest in German corporate involvement in cultural

affairs, peace efforts and environmental protection.

Source: German Embassy, Hanoi

Basic conditions

Government regulations – Laws that are relevant to CSR

The legal framework for CSR activities in Vietnam includes labor, environmental and

company-related laws. International conventions have been the most important factor

leading to CSR-relevant legislation.

The most important labor laws are the following:

§ Labor Code (1994, amended in 2002)

§ Law on Trade Unions (1990)

§ Law on Environmental Protection (1991, amended in 2005)

§ Law on Social Insurance (2006)

Vietnam has ratified most of the ILO core labor standards, most recently those dealing

with forced labor.

The Ministry of Labor, War Invalids and Social Affairs (MOLISA) is very active in

monitoring adherence to minimum standards. It also encourages countries to go beyond

what is required by law and offer better working conditions. The ministry is drawing up

codes of conduct for various sectors, including the leather and textile industries, which

are the country’s most important exporters.

Since 2004, the Vietnamese government has also passed a number of laws dealing with

companies, including

§ Enterprise Law

§ Law on Foreign Investment

§ Law on Securities

§ Law on Procurement

§ Law on Cooperatives

§ Model Charter for Listed Companies

The following laws address environmental issues:

§ Law on Special Consumption Tax (2004)

§ Law on Environmental Protection (2006)

§ Law on Water Resources (1998)

§ Electricity Law (2005)

The Grassroots Democratic Ordinance (2007) addresses the participation of stakeholders

at the local level, particularly with respect to socioeconomic development, environmental

protection and infrastructure planning.

Industry initiatives – CSR tools of the business community

Voluntary frameworks also play an important role, particularly in trade relations between

Vietnam and the United States. The textile trade agreement concluded in 2003 should be

mentioned in this context; it requires the Vietnamese government to work toward the

implementation of the social accountability standard (SA 8000).

With its GTZ-AVE Vietnam Business Links Initiative project, the German retail trade is

setting guidelines for supplier production methods with respect to both working

conditions and environmental standards. A supplier monitoring system has being

developed as a part of public and private partnership, yet it has not been implemented by

Vietnam government.

Other GTZ PPPs seek to make value chains more competitive, for example in Pangasius

catfish fishing.

In 2006, the British Department for International Development lent its support to the

introduction of the National Program on Labor Protection, Occupational Health and

Occupational Safety. The project was sponsored on the Vietnamese side by the Vietnam

General Confederation of Labor, the Vietnam Chamber of Commerce and Industry and

the Vietnam Cooperative Alliance. Its goal is to uphold ILO standard 155 (occupational

safety and health).

The Swiss government helped to establish the Vietnam Cleaner Production Center. Other

partnerships, for example with UNIDO, focus on training and supporting small- and

medium-sized enterprises, promoting environmentally friendly production, achieving

sustainable economic development and encouraging micro-entrepreneurs.

CSR in Vietnam

If I thought Cambodia was a surprise, Vietnam was a revelation. I was in Saigon for five

days and this hustling bustling city reminded me very much of Mumbai. The

environmental problems are evident; accelerated by massive development and growth of

the country. To put in perspective, Vietnam may be the fastest growing of emerging

economies by 2025, with a potential growth rate of almost 10% per annum in real dollar

terms that could push it up to around 70% of the size of the UK economy by 2050

according to Price water house Coopers.

Vietnam is an economy that is largely SME based and it is export-oriented which makes

it a CSR hothouse. The potential for CSR is huge in this country and much like it is in

India; it is largely untapped. Vietnam's economy mainly centers around agricultural and

forest products apart from mining and manufacturing. The perceptions of CSR however,

are archaic and many companies believe that it is an added expense rather than a cost-

saving measure.

Many MNCs are investing in improving the profile of CSR in Vietnam. Environmental

controls although present are not strictly adhered to which makes CSR all the more

important. However, as an export based economy CSR can also act a means of quality

control which is on the increase in all emerging economies. In order to compete

effectively, Vietnamese businesses are beginning to understand the importance of CSR.

The Global Compact Network Vietnam (GCNV) recently held a meeting in Hanoi to talk

about embedding the ideas of CSR into businesses. They have proposed a three step stage

in order to increase the profile of CSR which at the first level talks about implementing

the basics of CSR. At the second level, companies will have to include the UN Global

Compact framework to use CSR as a business strategy. At the final level, companies

should show their commitment towards CSR and how to improve its profile within the

organization.

Although many companies are slowly becoming more aware, the shift is gradual and will

take some more time before CSR becomes main stream in Vietnamese business.

CSR Activities in Vietnam

The concept of Corporate Social Responsibility was first introduced widely in Vietnam in

recent years through various activities of international NGOs and multinational

companies. It is now one of the hottest topics in business, especially following a few

environmental damages caused by factories in 2010. As the public shows increasing

interest in social responsibility of business and also reacts strongly against those that fail

to do so, both foreign and local companies start paying more attention to CSR.

Nevertheless, CSR is still a very new concept and pioneers in this area are facing

numerous challenges in executing CSR programs in Vietnam.

According to a CSR Survey conducted by SRI Vietnam, 90% of interviewees

misunderstand the idea of CSR and related issues. In fact, Vietnamese consumers’

perception toward CSR as well as other ethical behaviors remains virtually unknown

even though they have been suffering serious consequences caused by corporations

during the past few years. 40% of interviewees consider CSR as a social obligation of

businesses, which mainly consists of community works and events. While the level of

awareness about CSR of Vietnamese is still low, the suspicion of the media continues to

add up to the difficulty in dealing with general public. Lack of in-depth knowledge and

professional research about CSR in Vietnam has led to incomplete information provided,

which then turns into inaccurate news and articles that can influence consumers and

governmental departments. CSR programs are often cited as PR (Public Relations)

activities – another new communication concept in Vietnam that is frequently

misinterpreted as negative as well. As a result, the main challenge is to raise the level of

awareness of CSR among consumers, increase their appreciation of CSR and associate it

in their choice of products to buy and to relate CSR with social concerns.

On the business side, lack of resources and commitment for CSR is the major cause for

the current situation. Many local companies resist changing and still maintaining their

conventional thinking system, in which business performance is measured by simple and

more visible metrics. They are more driven by short term incentives to make money,

therefore using CSR as a branding tool is in fact more sensible to them.. In Vietnam, the

number of people with professional training in CSR is very limited while the subject of

CSR is not yet taught or even mentioned in most universities’ bachelor programs. On top

of that, the attitude of businesses remains as an internal barrier to practice CSR at the

moment. Many businesses in Vietnam believe that “CSR is only for big, multinational

corporations”, or even “CSR is a luxury of the developed world, which is not relevant in

a developing country”. Therefore, it is important to change their attitude from “CSR as a

cost” to “CSR as an investment” in order to see more active CSR initiatives among local

business community in the near future.

Nevertheless, the CSR picture in Vietnam is very promising. The government and

enterprises are the two main players in the promotion of CSR in Vietnam, whereas the

enterprises determine the success of CSR and the government promulgates policies,

supervises the enforcement of regulations and provides information on CSR issues. Two

main drivers for their rising interest in numerous issues of CSR are public awareness and

pressure from importers. Recent scandals of factories committed to serious pollution in

Thi Vai River, in particular Vedan company and various cases of health safety problems

such as tainted milk distribution, toxic ingredients in consumer goods and pesticide

remained in vegetables have been raising a greater concern on corporate social

responsibility among consumers. As a result, CSR efforts related to daily life and health

care would make more sense to Vietnamese consumers, regardless of their age, economic

and educational background. Along with these environmental and health issues,

Vietnamese export companies have been also encountering certification and standard

problems when their foreign investors and buyers require them to take business practices

based on respect for people, communities and environment. For instance, the U.S.-

Vietnam textiles agreement included an obligation for the Vietnamese authorities to

encourage exporting companies to implement CSR codes in return for access to the U.S.

market.

CSR Award 2009 Vietnam – Source: Vietnam Business Forum

Environment was a common theme for a lot of CSR projects in 2010. The most famous

campaign is Toyota’s Go Green, an educational program on television that provides basic

knowledge about various environmental issues, together with Go Green student club and

many public events. Additionally, Panasonic also came up with “Eco Ideas” campaign

and Canon with its eco-bags exchange activities. Many other big corporations in Vietnam

have also played a vital role in incorporating the core value of CSR into their projects.

Examples are Honda with “I love Vietnam” campaign, in which they use television to

educate the public about road safety and transportation; sanitation education program for

children living in mountainous areas by Unilever and an IT training program Topic64 by

Microsoft, Qualcomm and HP.

Green Living Festival organized by Toyota Vietnam –

Looking at Japanese companies like Panasonic, Honda and Toyota and the general

perception of Vietnamese about CSR, we can see that education is probably the most

reasonable approach for CSR activities at the moment. Common ground in culture and

experience in education are the key advantages of Japanese organizations, which allow

them to focus on both students and local businesses. While the main channels to approach

Vietnamese companies are through conferences and occasional corporate training, it is

much easier to reach students. Educating Vietnamese students during their university

days could help change their mindset early and hence benefit Vietnamese businesses at

the core value. Japanese organizations should consider both formal education through

incorporating CSR courses in business subjects and informal education such as student

clubs, training programs and communication campaigns aimed at student communities.

Each channel can add value in its own way.

In a country like Vietnam where CSR is a brand new concept even to people working in

business, Japanese organizations should slowly approach the issue by first raising

awareness through education.

CHAPTER 12

CONCLUSIONS

COUNTRY PROFILE :

The location of Vietnam is on south east side of Asia, having the border of Gulf of

Tonkin on east and border of south China sea on south eastern side, and Gulf of Thailand

on south west side. China lies to the north of Vietnam, Lao and Cambodia lies to the west

of Vietnam.

Vietnam’s climate varies from south to north. It is tropical, and more equable in the

south; monsoonal in the north with a hot, rainy season (May to September) and a warm,

dry season (October to March).

Vietnam has substantial and varied energy, metal and mineral resources, including

phosphates, coal, manganese, rare earth elements, bauxite, chromate, offshore oil and gas

deposits, timber, and hydropower.

The two major rivers of the country are the Red river and the Mekong river in the north

and south respectively. The notable smaller rivers in Vietnam are Ka Long O River and

Huong river (Perfume River) respectively. Whether large or small, Vietnam’s rivers are a

natural resource of the country.

Some of the Details of the country are as follows:

Official Name : Socialist Republic of Vietnam

Motto : "Independence – Freedom – Happiness"

Capital City : Hanoi

Official Language : Vietnamese

Currency : đồng (VND)

Time Zone : ICT (Indochina Time) UTC+7 (UTC+7)

PESTEL ANALYSIS

POLITICAL ANALYSIS

The Vietnamese Communist Party (VCP) has a monopoly on power. A three-person

collective leadership consists of the VCP general secretary, the prime minister, and the

president. A decision by any member of 15 member’s politburo, the triumvirate is vetted

by the other two. As a result, policy announcements tend to be bland and equivocal.

Vietnam is a one-party state. The Vietnamese Communist Party (VCP) has a monopoly

on power.

Vietnam has had a series of constitutions, introduced in 1946, 1959, 1980, and 1992. As

of late 2004, the Vietnamese constitution is regarded as the 1992 document, as amended

in 2001 to continue the reform of the state apparatus, to allow more leeway to the private

sector, and to promote progress in the areas of education, science, and technology. The

constitution recognizes the National Assembly as “the highest organ of state power.” The

Vietnamese government has ministers in the following areas: agriculture and rural

development; construction; culture and information; education and training; finance;

foreign affairs; industry; interior; justice; labor, war invalids, and social affairs; marine

products; national defense; planning and investment; public health; science, technology

and environment; trade; and transport and communications.

Undergirded by tight macroeconomic policies by Vietnam government, inflation is

receding rapidly, activity is slowing, and the current account deficit has declined sharply.

The informal interbank exchange rate has moved within the band around the official rate

and investors, both domestic and foreign, are shifting into dong assets, allowing the State

Bank of Vietnam (SBV) to increase foreign exchange reserves.

The current Prime Minister Nguyen Tan Dung directs the work of government members,

and may propose deputy prime ministers to the National Assembly. The President of the

Socialist Republic of Vietnam, known as Chairman of the Council of State from 1981 to

1992, is the head of state of the Socialist Republic of Vietnam. Since Vietnam is a one-

party state, with the Communist Party of Vietnam being the sole party allowed by the

constitution, all the presidents of the Democratic Republic and the Socialist Republic

have been members of the party while holding office. The current president is Truong

Tan Sang, since 25 July 2011. He is ranked first in the Politburo hierarchy.

ECONOMIC ANALYSIS

Vietnam’s economy is socialist-oriented. Its economic structure can be classified into the

following sectors.

(iv) Primary Sector – comprising agriculture, aquaculture, fishery and forestry;

(v) Secondary Sector – comprising auxiliary industries and construction; and

(vi) Tertiary Sector – comprising the services sector: banking, insurance,

telecommunications, transportation, tourism and others.

Health expenditures

7.2% of GDP (2011)

Population growth rate: 1.054% (2012 est.)

Birth rate: 16.83 births/1,000 population (2012 est.)

Death rate: 5.95 deaths/1,000 population (July 2012

est.)

SOCIAL ANALYSIS

The basic structure of Vietnam society is the structure in which village communities are

the foundations. To integrate in a modern society with new, outstanding development that

appears for the first time in Vietnam’s history, structure of Vietnam’s traditional culture

will be faced with many radical changes. Among them, the stagnation and

conservativeness of traditional agricultural community will be broken. Social structure

associated with village community will be changed.

Those changes appear in many aspects, not only in familiar economic, political and social

aspects but also in culture and lifestyle with their lively and diversified manifestations.

These are some common manifestations:

5. Change in each person and it connect to change in family.

6. Change in structure of age group in cycle of a human life.

7. Change in neighbour relations.

8. Change in consuming culture.

Diversified and individualized tendencies are not only specific characteristics of Vietnam

but also common phenomena in all countries which are industrializing and modernizing.

Vietnam has achieved commendable progress in improving access to basic education

with a net primary enrolment rate of 95% for the year 2002 and 97.5% for 2007.

However, there are still problems facing the education system.

TECHNOLOGICAL ANALYSIS

Vietnam is country where the high technology production is very slow. Vietnam still

faces challenges in terms of computers, which are less than 40% of region and small

cities. Vietnamese government has taken many numbers of initiatives for e-governance in

the country. Vietnam is now becoming a rapidly developing country in terms of

technology.

Vietnam’s telecoms sector is growing quite fast, and the Internet has become very

popular in the country. The number of Internet users doubled during 2005–06. In

addition, at the start of the new millennium the country decided to embark upon the

creation of Millennium Science Institutes (MSIs). However, the country was granted no

patents in 2006 and just one in 2007. The Central Committee of the Communist Party of

Vietnam recognizes the importance of biotechnology, and has initiated steps to foster its

development in the country. Japan is funding Vietnamese power projects based on

renewable resources so that it can receive required Certified Emission Reduction credits.

ENVIRONMENTAL ANALYSIS

Vietnam is among the countries that can be seriously affected by climate change. And the

fact shows that the increasing deterioration of environmental conditions is emerging as a

barrier to growth and development in recent years.

Due to the fast growth in industrialization as well as urbanization which is the reason for

rapid growth in development socio-economic culture, this has lead to attract the

government’s attention for environmental pollution.

Important achievements in reforestation have been made. Population growth, intensive

agricultural production, industrialization and urbanization combined with the under-

pricing of both drinking and irrigation water has increased water demand as well as waste

discharged to water. This leads to decrease in stock of available water quantity.

Due to the rapid population growth, arable land resources per capita have become

increasingly scarce. Another environmental issue relates to biodiversity loss. Some

species are in danger of extinction, including tigers, single-horned rhinoceros, grey bulls,

golden deer, musk-deer, and white-neck cranes. Biodiversity loss also applies to the

aquatic and marine environment. Both the quantity and quality of the fish stock has

declined.

Mineral resources have been exploited on a large scale, rapidly depleting reserves. The

most important mine is crude oil.

LEGAL ANALYSIS

All powers of state are centralized in the National Assembly, and the Government

performs all executive functions, supported by local level authorities under the National

Assembly. People’s Courts is the highest authority of judicial arm and responsible for

resolving disputes and hearing appeals from matters tried in the lower courts.

Hierarchy of laws

Instruments Issuing Body

· The Constitution

· Laws (including Codes) · National Assembly

· Resolutions

· Ordinances & resolutions · Standing Committee of the National

Assembly

· Decrees, regulations& resolutions · The Government

· Decisions & directives · The Prime Minister

· Circulars · Ministries

· Decisions · Ministers

Developers may be allocated land or may lease it from the state. In either of the case, if it

is used for residential housing and transferred to an eligible buyer, the buyer receives the

right to use land for a ‘stable and long term’. As a general rule, parties to Vietnamese

contracts are free to agree on the specific contents of their contracts.

All public companies must register their securities with the Vietnam Securities

Depository. Vietnamese credit institutions and banking operations are overseen and

regulated by the State Bank of Vietnam.

Standard Rate of Corporate Income Tax is 25%. Personal Income Tax rates on salaries

are progressive, with higher rates (in 5% increments applying to portions of an

individual’s monthly income. The lowest rate, 5% applies to the first 5 million

Vietnamese dong earned each month. The highest rate, 35% applies to any earnings per

month of more than 80 million Vietnamese dong. Standard rate Value Added Tax is

10% which applies to all applies to all applicable goods to all services for which an

alternative rate is not provided.

The Labour Code issued in July 1994 (as amended in 2002, 2006 and 2007) creates a

legal framework that sets out, amongst other things, the rights and obligations of

employers and employees with respect to working hours, labour agreements, payment of

social insurance, overtime, strikes, and termination of employment contracts. In addition,

there are specific implementing decrees and circulars guiding the provisions of the

Labour Code.

MAJOR TRADING PARTNERS OF VIETNAM

Since the early 2000s, Vietnam has applied sequenced trade liberalization, a two-track

approach opening some sectors of the economy to international markets while protecting

others. In July 2006, Vietnam updated its intellectual property legislation to comply with

TRIPS, and it became a member of the WTO on 11 January 2007. Vietnam is now one of

Asia's most open economies: two-way trade was valued at around 160% of GDP, more

than twice the contemporary ratio for China and over four times the ratio for India.

Vietnam's chief trading partners include China, Japan, Australia, the ASEAN countries,

the United States and Western Europe. Vietnam's total international trade, including both

exports and imports, was valued at approximately $200 billion.

· Vietnam trade growth from 2012 to 2026 is forecast to be 187%

· Vietnamese companies forecast to increase trade activity by 7.3% annually over

this period

· Short term confidence remains high for Vietnamese traders, with Trade

Confidence Index scores of 115

· Audio-Visual and Telecom Equipment the fastest growing trade sectors.

Switzerland, India and Brazil lead exports

Current trade corridors :

Vietnam’s major export partners are the main trading nations of the world, the US, Japan,

China and Germany. Export growth to all of them is expected to remain strong. The US is

the largest by some distance, with exports led by Furniture, Clothing and Footwear, and

growth is expected to remain strong at 6.6% overall. Japan is also expected to see growth

of around 6%, with exports of Wire and Cable the top sector by volume. Export growth to

China is expected to be particularly strong at over 10%, reflecting the growth in intra-

regional trade. Coal is the top export here. German exports are led by Footwear and

Coffee and again growth is expected to be strong at over 7%. Only Australia of the top

export partners is expected to be weak, care of declining Crude Oil exports. The main

import partners come from the region, led by China with growth of 10.4%. The top

sectors are Non-Crude Petroleum, Hot Rolled Iron and Steel and Telecom Equipment.

Korea, Singapore and Japan come next with growth of 8.8%, 5.7% and 7.6%

respectively. Non-Crude Petroleum and Hot Rolled Iron and Steel again dominate.

Emerging trade corridors

The fastest growth in exports is expected to come from Switzerland at some 17%.

Thereafter emerging market countries dominate with exports to India and Brazil seeing

more than 14% growth, while Turkey, Hong Kong and Korea are all expected to grow

more than 11%. Exports to Russia and the UAE are also expected to grow strongly at

around 10.9%.

Import growth is led by Norway at 15.2%, followed by Brazil again at 11.5%,

which stands out as the key new trade corridor. Imports from US and UAE are both

expected to grow by around10.9%. There are a group of countries all expected to see

around 10% growth in imports over the next five years, notable among them are

Switzerland, China, Turkey and India, who show up as fast growing export partners.

Trade amongst the major trading partners for Vietnam is expected to remain

strong, with the exception of Australia where falling exports of Crude Petroleum are

expected to weigh. The US is by far the largest export destination for Vietnam, roughly

twice as big as Japan, which the next largest, yet the report still sees strong growth of

exports to the US of 6.6% over the next five years. China is also a key trade corridor for

Vietnam, with strong export growth of 10.2% forecast out to 2016, and import growth of

10.4% over the same period.

The fastest growing export market is expected to be Switzerland with growth of

some 17%, followed by India and Brazil at 14.5% and 14% respectively. Exports to

Turkey, Hong Kong and Korea are all expected to grow more than 11% over the next five

years. Norway is expected to lead import growth at over 15%. Brazil also shows up with

import growth of 11.5%, as do Turkey and India both above 10%.

Imports

Vietnam imports mainly machinery and equipment, petroleum products, fertilizer, steel

products, raw cotton, grain, cement and motorcycles. A breakdown of import partners is:

China (23.08%), Singapore (14.54%), Japan (11.69%), South Korea (10.98%) and

Thailand (7.55%). From 2008 to 2009, imports have decreased 4 billion from 89 billion

to 85 billion.

Exports

Vietnam export products are: crude oil, marine products, rice, coffee, rubber, tea,

garments and shoes. A breakdown of export partners is: the U.S. (22.97%) (according to

nation master, Vietnam ranked #1 in the export of cashews to the U.S.), Japan (15.27%),

China (8.81%), Singapore (5.11%) and Malaysia (3.91%).

Total Value of Country Trade to rise 187% by 2026

Vietnam is expected to see rapid growth over the next fifteen years. Total trade is

expected to rise by around 187% to 2026, close to double the increase in global trade.

Growth is expected to be 8.2% over the next five years and then at a similar pace to 2021

before slowing like its Asian Peers in 2022-26 to around 5.3%.

Audio-Visual and Telecom Equipment are fastest growing exports

Audio-Visual parts and equipment are also projected to be strong at 16.6% and

14.4%. Telecom equipment is expected to see buoyant export and import growth at

15.9% and 12.9% respectively. Iron and Steel tops import growth at 13.5% with cotton

and Aircraft also expected to be strong at better than 12.5%.

PAPER SECTOR

Strengths :

· Vietnam currently ranks second largest in the world in terms of exporting timber

shavings for the paper industry.

· Tissue in jumbo roll with high quality produced in Vietnam is being exported

increasingly to other markets.

· United States, Japan and Singapore are major exporters to Vietnam.

· Vietnamese paper consumption per capita was 8 kg/person/year in 2000, rising to

13 kg/person/year in 2004 and 22 kg/person/year in 2009 and it has continuously

increased every year.

Weakness :

· The capacity to produce packaging paper is very limited, and the industry needs to

import much of it.

· The road network is not yet well developed in Vietnam.

· Old corrugated Containerboard (OCC) accounted for 72% of total imports, while

mixed waste and old newspaper (ONP) accounted for 16% and 12% respectively.

· Production costs of Vietnamese paper are almost higher than European or US

costs, and cheap paper has been dumped on the Vietnamese market from Eastern

Europe and Russia.

· There are several mills having capacity of over 1,000 tons/month but most mills’

technology lags 10-20 years behind other countries’.

· There is nothing much to speak about paper export, due to joss paper, the low

quality of paper, using much of natural resources, causing serious environmental

pollution.

Opportunities :

· Vietnam‘s paper industry’s capacity is only able to (i) produce at about 21% the

capacity it was designed for, and (ii) satisfy only 35% of the domestic demand,

remaining has to be imported.

· The required raw material, pulp, is becoming more and more scarce.

· Demand forever exceeds the supply.

· As compared to other industries in Vietnam considering in terms of international

competitiveness, the pulp and paper industry is relatively underdeveloped.

· Vietnam’s pulp and paper sector needs US$6 billion of investment by 2020.

· There is continuous rise in demand for paper and paper products. Per capita

consumption of paper increases every year.

· Paper is a commodity vital to the growth and development of every country, its

communications and packaging, is beyond dispute".

Challenges :

· Vietnam's paper industry expects to meet 70% of the domestic consumption demand

by 2020.

· The sequence of transportation prevailing apart from being worst is also most

expensive, also lot of unloading and loading as well waiting time is involved at each

stage, therefore again the system is not economical and efficient.

· The transportation costs are much higher than the costs prevailing in other countries.

· Printing and writing paper is exported as notebooks to American market. Some foreign

companies moved their notebook production to Vietnam in order to avoid being

envied the anti-dumping tax that they impose on some countries.

· Paper import will decline gradually as being replaced by local products from new

investments.

· The "paperless office" is viewed as a "threat" by the captains of the pulp and paper

industry and demand is seen as something that "has to be stimulated".

CHEMICAL AND OIL SECTOR

Strengths :

· Vietnam ranks third in Southeast Asia after Malaysia and Indonesia and thirty-first in

the world for crude oil and gas production.

· The oil and gas industry, a key industry in the Vietnamese economy, contributes

highly to the GDP.

· Vietnam’s oil output per capita ranks 7 out of 15 biggest oil and gas output countries,

putting it higher in that regard than China.

Weakness :

· The technology used in Vietnam for production of chemicals much outdated.

· Since 2004, oil production has slowly declined.

· Vietnam is currently a net exporter of crude oil but remains a net importer of oil

products due to the unavailability of good refineries.

Opportunities :

· Vietnam’s oil and gas industry is one of the prime industries for foreign investment

thanks to its promising potential.

· Vietnam is currently a net exporter of crude oil but remains a net importer of oil

products due to the unavailability of good refineries.

· Equipment and Services supply such as :

o Oil & gas exploration with Seismic surveying

o Facilities for production, engineering & construction

o Various technologies for Drilling and production process

o Managing of Oil Spill

· Availability of Refineries

· Providing proper training and education for all aspects of various industry

· Knowledge about health, safety, environment and waste management.

· Facilities for Direct Investment

o A number of undiscovered blocks in Song Hong Basin, Phu Khanh Basin,

Onshore Mekong Delta, Nam Con Son Basin, Phu Quoc Basin, Malay-Tho Chu-

Phu Quoc Basin is a great opportunity for exploration.

o PetroVietnam is calling for investment in Gas Pipeline ($1.3 bn), Gas

Processing Plant ($700 million).

o PetroVietnam is calling for investment in Refinery and Petrochemical projects

such as Dung Quat Refinery (Expansion) Plant ($400 million), Long Son

Refinery ($7-8 bn), Ca Mau Fertiliser Plant ($900.2 million)

· Vietnam does not manufacture specialty chemicals such as for dying, bleaching and

printing.

· India is currently having substantial investments in Vietnamese oil and gas, steel,

mineral exploration, agriculture and food processing industries, with a total registered

capital of around US$250 million, ranking India among Vietnam’s top 10 trade

partners.

Challenges :

· The oil and gas industry, a key industry in the Vietnamese economy, contributes

highly to the GDP, and makes up 18-20% of exports and is the source of 28-30% of

state budget funding.

· Territorial Disputes with China.

o India is playing with fire by agreeing to explore for oil with Vietnam in the

disputed South China Sea.

o ONGC has already withdrawn from the one block in South China sea due to

China’s objection.

· Huge Investment

o Even after investing heavily there is no guarantee of return: ONGC invested

approx USD 68 million only to know that there is no presence of OIL, finally

they decided to handover the block to PetroVietnam.

· Lack of technical guideline.

· Overlap of activities.

· Lack of coordination and cooperation.

· Information exchange

· The legal provisions are not enough strict. Chemical inspection: have not been given

due attention.

· Awareness of the business on the chemical safety remains low.

· Coping skills of workers is not good.

· Equipment and manpower to response for chemical accident: not good.

· Chemical breakdown of the chemical industry of Vietnam occurred more.

INFORMATION TECHNOLOGY SECTOR

Strengths :

· The Vietnamese software industry is one of the industries that growth at highest rates

in the nation. Contrast to India, software revenue skewed to domestic market (about

70%).

· In 10 years, Vietnam Software Technology revenue increased nearly 19 times, with an

average increase of nearly 35% per year

· Vietnam unlike much of SE Asia has good access to venture capital.

Weakness :

· Most of Vietnamese software companies are small scale, with the total employees of

only 10-50 people (about 80%).

· Human resource training in the country is weak, both in quantity and quality, and far

below what is required by western standards.

· The capitalization of many IT companies in Vietnam is limited.

Opportunities :

· The IT Sector of India has gained a global brand reputation as a knowledge economy

due to its IT and ITES companies.

· This sector has also led to massive employment generation.

· Almost all Vietnamese companies have focused on programming skill of producing

software; other skills such as system analysis and marketing are forgotten.

· There are only a few companies that carry out more complex projects such as

conversing foreign software programs or producing software packages.

· An attractive investment destination.

· Young and well-educated population.

· Emerging as a high technology centre.

Challenges :

· The recent global financial recession and IT Sector’s slow recovery has sharply

affected the Indian IT companies as well as global companies. As a result recruitment

and hiring of new IT talents has decreased sharply

· Almost all Vietnamese companies have focused on programming skill of producing

software

· Vietnam: An emerging Market for IT and IT Enabled due to government’s strong

commitment to develop IT and ICT, WTO admission leads to significant legal

environment improvement-Software Piracy reduced at a considerable level, Strong

FDI boost IT investment demand, increasing need for local businesses sector for IT

solutions to improve business services process and operation efficiency.

· Vietnam's IT industry is hardware-focused, largely due to widespread software

piracy, and the lack of effective intellectual property protection in the country. The

Business Software Alliance put Vietnam's software piracy rate last year at 90 percent.

· According to experts, Vietnamese companies gain greater awareness of the need for

security. The market needs to be educated on the importance of security and

availability. The sense of technical discipline is not as good as it should be.

· Human resources and management skills still remains a big problem. Human

resource development should be established to help IT workers master new technology

and conduct research and development activities.

· Firms also need to spend more time on specializing in specific areas of software

development, and it has been suggested that they increase advertising budgets in order

to build relationships with larger companies.

· Vietnam needs other institutions to support the market, including insurance, security,

co-author and technology consultancy firms.

· Corruption and bureaucracy in investment and basic capital construction could also

be considered as a serious challenge to the technology market.

PHARMACEUTICAL SECTOR

Strengths :

· Vietnam’s pharmaceutical market has shown a tremendous potential with a increasing

market growth.

· Vietnam’s population of over 88 million should have a larger pharmaceutical market

size, however has uniquely young demographics as a result of the Vietnam War.

· High growth rate over the years, great potential, quite complex and obscure are main

characteristics of the Vietnamese Pharmaceutical Market.

Weakness :

· Vietnamese prefer to buy drugs directly from the pharmacist, according to advices or

commercials, than to go see the doctor.

· Very difficult to operate for foreigners but st i l l dominated by

international products.

· A very fragmented market with a multitude of local companies which produce

all the same products (generics and food supplements).

· Very Low investments per capita spend on pharmaceuticals each year (only around

US$17 per person).

· Vietnam’s pharmacies are severely unregulated and underdeveloped.

Opportunities :

· Those who have low revenue, their choice goes to State-hospitals and if they can

avoid it they will go to the pharmacy to get the medicine needed.

· Young market with a high potential growth (around 15% per year for the next 5

years) thanks to drugs consumption on the rise.

· Strategic industry for the government in terms of development, who is promoting

domestic production.

· The current economic situation burdens Vietnamese companies with heavier

obstacles.

· Vietnam’s pharmacies are severely unregulated and underdeveloped

· Healthcare consumption is expected to increase as Vietnam gradually implements a

universal healthcare system.

· There is still great potential in Vietnam and industry players will need to try and

continue raising consumer awareness not only of the existence of these products, but

also of the benefits that they offer.

Challenges :

· Most Vietnamese seek initial and rudimentary medical treatment at public hospitals

clogging an already overcrowded system.

· High child mortality and other national health issues – HIV/Aids, Hepatitis B & C

infections, liver cirrhosis, lung disease and asthma are all on the rise.

· High incidence of deaths related to road accidents.

· Overcrowded facilities (particularly in paediatric wards) .

· Outdated medical equipment.

· Low salaries for healthcare professionals.

· Insufficient government subsidy.

FOOD AND AGRO SECTOR

Strengths :

· Vietnam has an increasing demand for imported foods and is a major tourist

destination.

· It is the seventh largest country, with extensive administrative structure and

independent judiciary, a sound financial and infrastructural network and above all a

stable and thriving democracy.

· Due to its diverse agro-climate conditions, it has a wide ranging and large raw

material base suitable to food processing industry.

· It is one of the biggest emerging market, with over 1 billion population and a 250

million strong middle class.

· An average Indian spends about 50 percent of household expenditure on food items.

Weakness :

· Storage of food grains is a big problem. Nearly 10 per cent of our harvest goes waste

every year in the absence of proper storage facilities.

· Illiteracy, the root cause of farmers’ poor socioeconomic condition, should be tackled

vigorously. Lack of technical knowledge and awareness are also responsible for low

productivity, adding to the problem of poverty among farmers.

· Logistical problems, underdeveloped service networks and poor infrastructure hinder

development in fresh food industries, such as dairy.

· Vietnamese agriculture is still mainly oriented towards the domestic market, which

absorbs 90% of production.

Opportunities :

· Production does not always succeed in supplying the market in regular fashion all

throughout the year. Thus, the supply of temperate vegetables and corn experiences

shortages for five months in the year, leading to costly imports.

· Production does not totally satisfy demand in terms of quality.

· Its own food manufacturing sector is growing and becoming a significant user of

imported food ingredients.

· Rapid urbanization, increased literacy and rising per capita income, have all cause

rapid growth and changes in demand pattern, leading to tremendous new opportunities

for exploiting the large latent market. Demand for processed/convenience food is

constantly on rise.

· Cheap labour workforce which is available in India can be efficiently utilized to

achieve low cost production.

· Liberalized overall policy regime, with specific incentives for high priority food

processing sector, provides a very conducive for investment and export in the sector.

· Very good investment opportunities exist in many areas of food processing industries,

the important ones being: food & vegetable processing, meat, fish & poultry

processing, packaged, convenience food and drinks, milk products etc

· The government is actively seeking investment in the food processing and

agribusiness industries.

· Rising disposable incomes and increasing urbanization mean higher-value processed

foods are likely to experience strong growth rates

· The immense size of India’s population and landmass ensure that market maturity is a

distant prospect.

Challenges :

· Local crop production has shown its capacity to meet increasing local demand.

· The pressure of increasing population and the practice of dividing land equally among

the heirs has caused excessive sub divisions of farm holdings.

· By and large the irrigation facilities available in India are far from adequate.

· Indian soils have been used for growing crops for thousands of years which have

resulted in the depletion of soil fertility. With deforestation the sources of maintaining

natural fertility of soil has been drying out.

· Most of the Indian farmers are poor and do not have enough resources to purchase

modern farm implements and tools.

· The average size of land holdings is less than 20,000 m² and subject to fragmentation

due to land ceiling acts and, in some cases, family disputes.

· In India, farming practices are too haphazard and non-scientific and need some

forethought before implementing any new technology.

· Agriculture in India and many other developing countries depends on the monsoon

because irrigation facilities are not fully developed. If the monsoon fails or it rains

heavily or untimely, it ruins agricultural production.

EDUCATION SECTOR

Strengths :

· Proper attention is paid on vocational training of skilled workers, technicians and

professional staff for short term period.

· Cost of US$400 million loans from the World Bank and the Asian Development Bank.

· Government agreement to construct four international standard universities.

· Educational degree granting programs in the national education system is carried out.

· Tailor-made programs for updating knowledge and skills, and technology transfer is

adopted.

Weakness :

· Presently Vietnam educational infrastructure is not sufficient.

· The massification of Vietnam's higher education sector in the last two decades has led

to quality problems that do not match the demands of society and of the nation's

development.

· Newer universities and non-public institutions are become less attractive to students.

· Strict Government control on education sector and very close monitoring on

assessment procedure.

Opportunities :

· India has opportunity to establish the practical technical training system which will be

able to meet the demands of socio-economic development;

· Introducing higher education in fulfilling the needs for industrialization,

modernization and international economic integration in Vietnam on Indian model.

· Courses can be raised for increase in their knowledge levels & professionalism,

improve the quality of their life, self-employment and job creation opportunities, and

make better contributions to society.

· A comprehensive plan for Continuing education comprises of the following in the

Institutions can be implemented:

o Anti- illiteracy and post- literacy programs;

o Programs for in-service training, retraining and upgrading professional

qualifications;

· Looking for foreign partners to develop new university systems and train students.

· Vietnam is inviting qualified educators & universities.

Challenges

· In the education sector, Vietnam has obtained impressive results compared with

those countries with similar economic development.

· Vietnam’s current approach to reform of its higher education system is extremely

ambitious. Nation may be at risk of attempting to do too much too quickly.

· By 2020, for example, Vietnam expects its higher education sys to be advanced

by modern standards and highly competitive internationally.

· A great many goals and objectives have been set for reform of the higher

education system during the next decade by Vietnamese Government

· "Vietnam is now suffering from an excess of low quality universities and lack of

high quality ones”

· Our own education sys is far from satisfactory and suffers from lack of

infrastructure, lack of qualified faculties, No Government Specialization, Our

syllabus at University level is mainly book oriented with hardly any skill based

training. Not acceptable at International level.

· Vietnam being a communist country rules and regulations are very strict.

· Permission from our own Government to Open University / college in foreign

country.

TEXTILE SECTOR

Strengths :

· Vietnamese government’s strong support of the textile and garment sector, have

provided strong incentives to attract foreign investors.

· Vietnam has very good embroidery skills and needle work. “A lot of designers and

manufacturers need embroidery skills and Vietnam has kept in touch with its

traditional roots.

· Development of ‘non-traditional’ markets for Vietnamese clothing products.

· Vietnam’s textile industry has increased significantly since normalizing relationships

with the United States.

· Vietnam is one of the top 10 garment exporters in the world and the garment and

textile industry is the country’s second largest in terms of foreign exchange earnings.

Weakness :

· The wage levels in Vietnam are about one third of those in China’s coastal region.

· The increasing costs of labour as a result of repeated increases in the minimum wage

in line with continuing GDP growth.

· China's textile and garment industry poses the major competitive challenge.

· While Vietnam’s garment technology is not far from international standard, 30 per

cent of textile equipment is 20 years behind.

· The garment companies in Vietnam rely heavily on imports, reducing the flexibility

and competitiveness of Vietnam’s garment industry.

Opportunities :

· The apparel and textile is the largest foreign exchange earning sector in India.

· The location availability for investment in Vietnam is also of low cost.

· Greater product differentiation and specialization may boost margins – for

example in functional work-wear, home furnishings, and other niche markets.

· The 16th round of TPP negotiations concluded last week in Singapore. A core

issue of negotiation is the ‘yarn forward’ principle, put forward by the US. The

principle, if approved, would require Vietnam to make its garments from raw

materials made in Vietnam or the TPP countries in order to enjoy zero preferential

tariffs on its garment exports to the US.

· The “yarn-forward principle” has prompted investors to inject their money in the

textile industry. Textile factories to be set up in the near future would supply

Vietnamese garment producers, who would export their products to the US and

enjoy the zero export tariff.

· The textile infrastructure in India is very strong and have high service capabilities.

Challenges :

· The United States which is Vietnam’s largest single export market for garments

and textiles, accounting for approximately 54 per cent of Vietnam’s garment

exports.

· Lacking to generate economies of scale.

· Infrastructural bottlenecks.

· Unfavourable labour laws.

· Local industry

· Intensive growth of Power loom sector in India.

· In India most of the cotton textile mills are working with old and obsolete

machinery.

· Textile mills in India are facing acute shortage of power.

· The Indian cotton textile goods are facing stiff competition in foreign markets

from Taiwan, South Korea and Japan whose goods are cheaper and better in

quality.

POWER AND ENERGY SECTOR

Strength:

· It Is Easy to Outsource.

· Renewable source of energy does not create and pollution.

· Renewable source of energy system will operate with negligible maintains.

· Electricity generation from grid connection & fuel transport is costly & difficult,

as compared to it, solar energy is economically feasible.

· Initial capital cost of installing a solar power plant has been invested, maintenance

costs are low compared to existing electricity generation technologies

Weakness:

· During nights or due to bad weather conditions solar energy and electricity are not

available, due to which storage or complementary power system is required for

applications. Solar panel consumes lot of space over the roof.

· The main weakness of our business is that we are a start-up business and that we

have to face already established retailers.

· Many of the products for energy and power are sold that consumer are not well

aware.

· Power and Energy products requires heavy advertising and promotional activities.

Opportunities :

· Under current legislation of Vietnam, investors are entitled to maximum

incentives for every aspect related to solar or wind energy projects, such as land

or water surface lease terms and fees, corporate income tax, value-added tax,

import and export duties, land site clearance, and depreciation of fixed assets,

among others.

· Among the various renewable energy resources, solar energy potential is the

highest in India and Vietnam

· The 89 pet watts of sunlight energy reaches the earth’s surface which is very large

compared to the 15 terawatts of average energy utilized by human beings.

· The rising utility prices give us a good opportunity to set ourselves in the market.

· It is expected that Viet Nam's energy needs will more than triple by 2020 as a

result of dynamic economic growth.

· India is the 3rd largest annual wind power market in the world, and provides great

business opportunities for both domestic and foreign investors.

· Vietnam is located in the monsoon wind zone with two main wind directions, i.e.

the cold east-north monsoon wind from Siberia and China during winter and the

hot south-west monsoons from equator during summer.

Challenges :

· India’s growing economy is facing a severe electricity deficit that runs between

10% and 13% of daily needs.

· Solar cells produce DC power which must be converted to AC power by using a

grid tie inverter when used in distribution grids. This may incurs an energy loss of

4-12%.

· High Price of Installation will cause.

· The government of Vietnam has planned to increase the wind power generation to

1,000 MW (0.7 pct. of electricity production) by 2020 and by 2030 to 6,200 MW

(2.4 pct.).

· The Government also announced details of a new subsidy for dedicated biomass

plants, which it said could encourage investment worth up to £600 million and

create around 1,000 construction jobs, alongside details of other changes to

biomass incentives.

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Laxmi Institute of Management, Sarigam [LIMS - 731] An educational Seminar cum Sector Analysis:

Business Opportunities & Challenges of Paper Sector in Vietnam for Indian Entrepreneurs

5th April 2013 [Friday] Introduction:

According to C. J. Walker “I had to make my own living and my own opportunity! But

I made it! Don’t sit down and wait for the opportunities to come. Get up and make them!”.

Keeping in mind the above note, Laxmi Institute of Management, Sarigam [LIMS]

organized one day Educational Seminar cum Sector Analysis on Business

Opportunities and Challenges of Paper Sector in Vietnam for Indian

Entrepreneurs; concept derived from the Global Country Project for Indian

Entrepreneurs to grab the opportunities to expand their business globally and to survive

the competition in international market on 5th April 2013 at Laxmi Vidyapeeth Campus,

Sarigam.

Inauguration:

The function started with welcoming of guest to the venue in traditional manner

with Diya and Tilak by the students. The event started with the prayer by group of

students. Then followed by lighting of lamp by all the dignitaries. After the lighting of

lamp the event was followed by the welcome dance by the group of students of Laxmi

International School. The welcome speech was given by Ms. Bhoomi Mistry and Ms.

Namita Panchal of 4th Semester M.B.A., then followed by felicitation of our esteemed

guests with bouquet as follows:

· Hon. George Thomas Sir, Campus Director, Laxmi Vidyapeeth

· Mr. Tushar Shah, Director, Damanganga Group, Vapi

· Dr. Diptesh Kundu, Principal of Senior Secondary Section, Laxmi

International School

· Col. Sanjeev Upadhyay, Director Campus Colleges, Laxmi Vidyapeeth

Thereafter, our guest and keynote speaker Mr. Tushar Shah, Director,

Damanganga Group shared his knowledge about paper sector in India. He gave the

information about the current scenario of paper industries India and Vapi, Gujarat. Vapi

town is an largest industrial hub in India with many SME’s and some Large industries.

He pointed about the demand and supply of paper and its products in India. Moreover, he

also emphasized that the Vapi town itself satisfies almost 1/3rd of the total demand of

paper and its products in India. He claimed about basic necessities of any paper industry

which are majorly Huge Capital as Paper industries are capital intensive industries, large

amount of water and Very high amount of thermal energy.

Then the Final year M.B.A. student Mr. Jaimish Champaneri on behalf of the

whole group of students as listed below made a presentation on their research and

learning on various topics sublimed the main theme of seminar on Business

Opportunities and Challenges of Paper Sector in Vietnam for Indian

Entrepreneurs. The presentation outlined the various details about the paper sector in

Vietnam which covered topics like Background of India and Vietnam Relation,

Development of Bilateral ties between India and Vietnam, Demand and Supply

conditions of raw material for manufacturing of pulp & paper products including the

conditions of finish paper and paper products, current scenario of paper sector in

Vietnam, the situation logistics in Vietnam today, Plan of development and objectives of

Vietnamese government for paper sector in Vietnam, future of paper sector in Vietnam.

The Final year M.B.A. students who were involved in research for paper sector

are Jaimish Champaneri, Hemant Patil, Rakesh Patel, Firoz Kudle, Falguni Rohit, and

Sachin Koli.

After the presentation of research by students, Mr. Tushar Shah enlightened the

students in his concluding speech about the differences and requirements of resources to

make the paper from wood pulp and recycling of paper. The effects on environment due

to the use of hazardous chemicals and cutting of trees in order to manufacture virgin

paper that is paper made from wood pulp, the requirement of large quantity of water and

thermal energy. He outlined the benefits of paper manufacturing from recycling of paper.

Moreover he gave the review to the students that what extra research is needed for the

paper sector and the other topics regarding paper sector should be studied.

The seminar ended with the vote of thanks by the hosts of the event Ms. Bhoomi

Mistry and Ms. Namita Panchal to all the dignitaries, faculty members and students.

THANK YOU

IT Sector; Entrepreneurial opportunities in Vietnam for Indian Entrepreneurs.

Brief Summary report:

Respected All Faculties and Guide,

On behalf of the group for global project under the guide of Asst.Professor Mr. Pranav

Raythatha, We, Namita B. Panchal, Rohankumar Koli, Gaurav Parmar, Mohammad

Hasan Khan, Ankit Patel and Priya Mishra of MBA 4th Semester, Laxmi Institute of

Management, Sarigam have put an effort to presentation on IT Sector under the heading

entrepreneurial opportunities in Vietnam for Indian entrepreneurs by looking various

strategic context for this project. For this we cordially organized one joint seminar for the

above subject on 5th of April, 2013 at multipurpose hall in our campus between 8.30 to

11.30 o’clock.

Resource Persons and Guest Speaker: Mr. Prashant Lotlikar-ATOS INDIA Pvt. Ltd.

Mumbai.

Date of Seminar: 5th April 2013

Time: 8.30 AM to 11.30 AM

Venue: Multipurpose Hall, Laxmi Vidhyapeeth

Venue: Multi Purpose Hall

Executive Summary of the Seminar

The information technology report presents the technology requirements and find out the

profitable business opportunities available in South Asian country Vietnam who is

already an exporter of IT and ICT Hardware particularly in manufacturing of Microchip

for processor is concern. For Indian IT Sector, already India’s largest IT software

company TCS, NIIT and APTECH are there in IT segment and support activities.

The key objective of this seminar was to find out business opportunities in IT sector at

Vietnam which is a neighboring country with having friendly business relations (Vietnam

granted MFN status to India) as well as to serve academic purpose for MBA program to

conduct a business seminar with related industry experts for the particular project on

global business opportunities and challenges in selected country with student

participation and corporate exposure as well.

During session of our keynote speaker’s address, we found three key areas of

considerations for the above subject matter.

(1) Service Delivery - Given the environment prevail in IT sector, firm should

focuses on costs for the use of IT modal in business as well as to provide updated

complete services. The technology approach must strive to maximize value by

cost control and efficiency enhancement in process. (For Indian entrepreneurs)

(2) Data Conversion - Although the full delivery of services relies upon access to

electronic records, it will be necessary to convert all information to make

significant productivity improvements. The extent of required data conversion is

an essential element in the definition of detailed requirements for business process

reengineering. An opportunity to go strategically and explore business there (For

Vietnam)

(3) Business Prerequisites - There are many business issues and policies to be

resolved before full IT business and services are possible. It will be necessary for

rapid progress to be made with these prerequisites for the deployment of

technology to proceed on schedule. An immediate example is the access and use

of IT, Software and ICT in business, education, governance and cultural dealings.

The challenge for Indian businessman is to counter pirated version of software,

technological equipments and intense competition from china as well as their

domestic companies also. Some concerns are less education, low population and

income and economy is largely based agriculture and manufacturing sectors

although one of the fastest growing economy.( Agriculture: 53.9%, industry:

20.3%, services: 25.8% (2009)

Guests and Dignitaries in seminar

2. We found following areas for business opportunities in our seminar for IT Sector.

(1) Technology Requirements from the Business Process Redesign

(2) Target Environment: Target technology environment

(3) Education related, company related B 2 B approach, B 2 G approach for software

development, B 2 C approach via Network design, financial sector particularly

banking related IT application and IT training interface.

(4) SWOT analysis of Vietnam for IT, ICT and ITES business possibility for Indian

entrepreneurs.

(Resource Person: Mr Prashant Lotlikar addressing)

Conclusion:

One serious limitation is that we the students as well as our college guide have not visited

this country Vietnam to collect primary data. Throughout the formation and development

of this presentation on business opportunities seminar for above subject, we gathered all

these relevant information by taking utmost care to the extent zero disparities from

various websites and sources like world bank report, online journals, reports and

periodicals to find out best information to prepare our report and presentation which can

helps one to frame up policy about its business decisions as well to aware the new

challenges in IT, ICT and ITES in the global context. For further reference, kindly refer

PPT and Report made by us.

Key Note:

We sincerely grateful to the guest of honor and keynote speaker Mr.Prashant Lotlikar-

ATOS INDIA Pvt. Ltd. Mumbai for his valuable notes on subject specific, our Asst

Director Dr.Keyur Nayak for his inspiration and support. We all are also thankful to

Principal Dr.Diptesh Kundu, his Staff and students for their presence and support. We

are also thankful to College Director Colonel Mr.Sanjeev Upadhyay for his presence

and passionate support. And also thank you so much to our college guide Asst.Professor

Mr.Pranav Raythatha for his constant guidance and knowledge sharing. Last but not

least we all are very much thankful to our Campus Director Mr. George Thomas for

his ease, thoughtfulness and ability to acknowledge by his presence.

We all are thankful for this kind support from our college. Our aim is learning and it will

remain forever.

Thank you GTU

Thank you for your interest.

Yours truly,

Participants:

1. Namita B Panchal

2. Priya Mishra

3. Priyanka Tandel

4. Rohan Koli

5. Gaurav Parmar

6. Mohammad Hasan Khan and

Asst.Professor Mr. Pranav Raythatha

Laxmi Institute of Management, Sarigam [LIMS - 731]

An educational Seminar cum Sector Analysis:

Opportunities & Challenges of Education in Vietnam

25th February 2013 [Monday]

Introduction:

According to Anatole France (1844-1924) “An education isn’t how much you have committed to memory or even how much you know. It’s being able to differentiate between what you know and what you don’t” keeping in mind the above note Laxmi Institute of Management, Sarigam [LIMS] has organized one day educational seminar cum Sector Analysis on Opportunities and Challenges of Education in Vietnam; concept derived from the Global Country Project on 25th February 2013 at Laxmi Vidyapeeth Campus, Sarigam.

Inauguration:

The function started with a group prayer by the MBA semester IV students at 9:25 a.m. followed by the welcome key address by Dr. Keyur Nayak , Head of MBA department, to all the guest speakers and students from MBA, MCA and final year BBA divisions. The event continued by offering welcome bouquet to Dr. Diptesh Kundu, Principal of Senior Secondary Section, Mr Sangiv Upadhyay, College Campus Director of Laxmi Vidyapeeth and Mr Carol Toth, Principal of Laxmi Global School [LGS].

The guest speakers on the dais post event welcoming with flower bouquet

Thereafter, selected group of final year MBA students listed below made a presentation on their research and learning on various topics sublimed the main theme of the seminar, Opportunities & Challenges of Education in Vietnam. The presenters in detail explained about Profile of Vietnam education, Current situation, comparative study of Vietnam with other Asian Pacific countries, Challenges for Vietnam education development in the 21st century and concluded it with the view of the future ahead of Vietnam education system which shows mobilization of overseas Vietnamese intellectuals to participate in teaching, doing researches and to pass technological transfer in Vietnam.

Topics Presenters

Introduction on Opportunities & Challenges of Education in Vietnam and Indian Education Profile & Benefits

Mr Ankur Tailor

Vietnamese Education Profile & System

Current Situation and Future of Vietnam

Ms Saroj Poonia

Opportunities for Vietnam Education Sector

Ms Bhoomi Mistry & Mr Vanrajsingh Solanki

Challenges for Vietnam Education Sector Ms Priyanka Tandel & Mr Nilay Thakar

Conclusion Mr Nilay Thakar

GROUP PRESENTERS FROM MBA DEPARTMENT MENTORED BY PROFESSOR POONAM YADAV

Audience is engrossed listening the MBA student participants

The seminar functioned ahead with deepen and broad topic presentation by Mr Sangiv Upadhyay, College Campus Director of Laxmi Vidyapeeth. He spoke about the historical, geographical, cultural heritage of Vietnam. He threw light on the factors influencing its educational system and compare and contrast it with Indian education governance. He also explained that Education in Vietnam is divided into five levels: preschool, primary school, secondary school, high school and higher education and the main educational goal in Vietnam is improving people’s general knowledge, training quality human resources and nurturing and fostering talent. His discussion also included the shortcoming in system; Vietnam is now suffering from an excess of low quality universities and lack of high quality ones and newer universities and non-public institutions are become less attractive to students. He further spoke regarding his experience on the challenges faced by the Indian education system and opportunities, challenges and inferences of Indian educational system and so on.

Mr Sajiv Upadhyay explaining the pointers

The event was then followed with an elaborative presentation by Dr. Diptesh Kundu, Principal of Senior Secondary Section who with his strong communication and presentation skills discussed about future prospectus of doing business in Vietnam, domestic versus international market, serve and supply where the demand falls, how to staff the need of educational skill based in Vietnam , talent acquisition, strategy stressing upon how it helps in brand building. He also discussed about consumerism and standardization as the key to success in global market. He also explained the meaning of Globalization throughout different centuries. His discussion also included Multinational Corporate which gave a new definition for the 21st century.

Dr Diptesh Kundu elaborating and sharing his ideas

Mr Carol Toth, Principal of Laxmi Global School [LGS] discussed on optimization of available international educational future perspective especially in Vietnam and also brought in our understanding of the current situation of education policies and need to impart quality education in South Asian Countries. His focus point was quality faculty pool which can deliver quality education and present a platform for the researcher.

Mr Carol Toth – Principal Of Laxmi Global School Affiliated To Cambridge Board Presenting His Views On Opportunities And Challenges In The Education Sector Of

Vietnam

Dr. Keyur Nayak , Head of MBA department completed the valedictory function with a vote of thanks to the Dignitaries, faculty members and students from various departments. The event ended with light refreshments.

Thank you

LAXMI INSTITUTE OF MANAGEMENT, SARIGAM (731)

An International Seminar on Sector Analysis of Textile

Business Opportunities and Challenges of Textile Sector in Vietnam

Held on 5th April 2013

Introduction

Laxmi institute of management sarigam(LIMS) organised one day international seminar on Textile sector analysis and Business opportunities and challenges of textile sector in Vietnam, the concept derived from the global country project on 5th April 2013 at Laxmi Vidyapeeth, campus, sarigam.

Inauguration

The function started with the group prayer and group dance by the Laxmi International School(LIS) students followed by the welcome key address by Dr. Keyur Nayak, Head Of MBA department, to guest speaker Dr.Alpesh Leua- Associate Professor, Navsari Agriculture University, Navsari and students from MBA IV semester. The event continued by the lightning of lamp and offering bouquet to Dr.Alpesh Leua , - Mr. Goerge Thomas- Campus Director- Laxmi Vidyapeeth, Sarigam, Col. Sanjeev Upadhyay- Campus Director Colleges.

Group Prayer by LIS students

Group Dance by LIS students

Lightning of Lamp by speakers

Audience

Thereafter, final year MBA students listed below made a presentation on their research and learning on various topics on business opportunities and challenges of textile sector in Vietnam. The student presenter covered following topics in their presentation.

1] Back ground of Indian and Gujarat Textile Industries

2] Journey of development of Indian and Gujarat Textile Industry

3] SWOT analysis of Indian and Gujarat Textile sector

4] Benefits and information related to Import and Export of Indian and Gujarat textile sector

5] Issues and challenges of Indian and Gujarat textile sector

6] Major growth drivers and major players in Indian textile sector

7] Expected future trend in Indian Textile sector

Whole presentation covered by Ms. Krishna Chapaneri and Mr. Sakib Shaikh( Students MBA IV Semester).

Dr. Alpesh Leuva

The seminar continued with the deepen and broad topic presentation by guest speaker Dr. Alpesh Leua- Associate Professor, Navsari Agriculture University, Navsari. He gave overview of Textile sector, global apparel of retail market, segment wise ratio of global textile production, Vietnam and Indian economy, textile sector and industry layout in Vietnam, advantatages and different treaties signed by Vietnamese for textile sector. Also he concluded with the topic that there are still some of the lacuna/weakness in the textile industries i.e., lack of processing, lack of high quality human resources, unable to provide complete packages, limited fashion capabilities are the major challenges for the industry.

Dr. Keyur Nayak

At last, Dr. Keyur Nayak –HOD-MBA department completed the valedictory function with a vote of thanks to the dignitaries, faculty members and students.

LAXMI INSTITUTE OF MANAGEMENT, SARIGAM (731)

An International Seminar on Sector Analysis of Textile

Business Opportunities and Challenges of Agriculture Sector in Vietnam


“When it is understood that one loses joy and happiness in the attempt to possess them,

the essence of natural farming will be realized. The ultimate goal of farming is not the

growing of crops, but the cultivation and perfection of human beings.”

One day international seminar was conducted on “GLOBAL BUSINESS

CHALLENGES AND OPPORTUNITIES” on 5th of April, by Laxmi Institute of

Management to enlighten the students with the current market scenario of different

sectors of business and to provide them practical knowledge of working pattern of these

sectors.

The programme started as per the schedule at 9.00 pm with a prayer and welcome dance

by the students of Laxmi International School. The dignitaries were welcomed by

bouquet and they were requested for lightning of lamps.

Then as per the programme schedule presentation on agriculture sector was started at conference hall and the guests were called to deliver the speech.

Distinguish Guests in Agriculture sectors were -

Prof Dr. Ruchira Shukla, Associate Professor Navsari Agriculture University

Ms. Hemali Joshi , Renowned Researcher, Mumbai University

Distinguised audiences were the farmers of nearby area and the students of Laxmi Institute of Management.

After the welcome address by Dr. Keyur Nayak, Head of MBA department, the first speaker Dr. Ruchira Shukla was requested to enlighten the audience with her presentation.

She started her presentation with a line “Everything else can wait but not Agriculture”

and thus focussed on the importance of agriculture in India. She enlightens that India has

huge supply advantage due to diverse Agro Climatic conditions and wide ranging raw

material base. She has presented many facts and figures from different dimensions

showing that the agriculture and food is the largest consumption category in India.

She also threw light on how the wastage of food and fruits across the supply chain is

leading to lower level processing and low value addition. She highlighted many steps

taken by the Government in improving the food trade and creating a conducive

atmosphere for international trade. She has discussed about various opportunities and

challenges India is facing in Agriculture and food Sector.

She has also covered the various issues related to agriculture sector in context with

Vietnam. What are the strengths and weaknesses of both the countries and what steps

should be taken to overcome the weaknesses. She has optimistically focussed on various

opportunities to go in trade with Vietnam and also shown a bright picture where the bi

lateral trade between India and Vietnam is going to be a successful venture for the future.

At the end, forum was left open for the questions of the audiences. Few of the farmers

have queries which were solved by the respected speaker.

The next speaker was invited to throw light on how biotechnology can be used to

improve the quality of the products. She has started her lecture with the meaning and

definition of biotechnology and how it is applied to the animals and plants to get

desirable results. She has thrown light on the various methods which can be used to

enhance the quality of various products like mango, chickoo, rice, wheat etc.

She has also given few websites to the farmers who are interested to use the technology

and receive the training of the methods. She also told how the farmers can get better

prices for their products by using the techniques of biotechnology and also she has given

some references to get entry into international markets.

At the end one old age farmer has asked few very interesting questions related to

biotechnology. He questioned to respected speaker about the time lag between the

research and the applicability of that research in the real world.

Then Dr. Keyur Nayak has also thrown light on the export procedure and documentation

in short which was of great utility to the farmers. The list of leading exporters with their

postal address and contact number was handed over to the farmers. It was a interactive

and informative session which ended with the smiling and satisfied faces of the students

and the farmers, thus our motive was achieved.

THANK YOU

Laxmi Institute of Management, Sarigam [LIMS - 731]

A Chemical Seminar cum Sector Analysis:

Opportunities & Challenges of Vietnam in Vietnam


Introduction:

Laxmi Institute of Management, Sarigam [LIMS] has organized one day seminar cum Sector Analysis on Opportunities and Challenges of Chemical in Vietnam; concept derived from the Global Country Project on 05th April 2013 at Laxmi Vidyapeeth Campus, Sarigam.

Inauguration:

The function started with the group prayer and group dance by the Laxmi International School (LIS) students followed by the welcome key address by Dr. Keyur Nayak, Head Of MBA department, to guest speaker Mr. Siddharth Thakkar- Associate Consultant, Atos Origin Ltd, Mumbai and students from MBA IV semester. The event continued by the lightning of lamp and offering bouquet to Mr. Siddharth Thakkar, - Mr. Goerge Thomas- Campus Director- Laxmi Vidyapeeth, Sarigam, Col. Sanjeev Upadhyay- Campus Director Colleges.

Group Prayer by LIS students

Group Dance by LIS students

Lightning of Lamp by speakers

Audience is engrossed listening the MBA student participants

Thereafter, selected group of final year MBA students made a presentation on their research and learning on various topics sublimed the main theme of the seminar, Opportunities & Challenges of Chemical and oil sector in Vietnam. The presenters in detail explained about Profile of Vietnam chemical sector and oil sector, Current situation, comparative study of Vietnam with other Asian Pacific countries, Challenges for Vietnam chemical development in the 21st century and concluded it with the view of the future ahead of Vietnam chemical sector.

Mr. Sharad Thakkar sharing his view to MBA students

The group presenters have an interaction with Mr. Sharad Thakkar, President, Vapi Industrial Association. It was a knowledge sharing session with him, and he shared the different chemical opportunities and challenges of Vapi in Vietnam.

Mr. Siddharth Thakkar sharing his views

The seminar functioned ahead with deepen and broad topic presentation by Mr. Siddharth Thakkar, Project Leader, Atos India Pvt. Ltd. He focus on Vietnam as the new destination for global business as in oil and chemical sector. Initially he discussed about the Vietnamese economy, and also added that the oil and chemical sector contribute highly to the GDP. Then he threw light on the oil and gas consumption in Vietnam. He stated that Vietnam ranks third in Southeast Asia after Malaysia and Indonesia and thirty-first in the world for crude oil and gas production. He also discussed case analysis of Nauru as country.

At the end, the main challenges and opportunities in chemical and oil industry were discussed. The main opportunities mentioned by him were as follows :

¤ Industrial Chemical haven’t produced as per the demand.

¤ Chemicals for pesticide production are mainly imported.

¤ Medicine and Chemical for house hold imported nearly 100%.

¤ Production, of detergents and cosmetics products.

¤ Manufacturing of paint and rubber products.

¤ Insect Killers & Repellents products.

¤ Chemicals for industrial use do not meet domestic demand.

¤ In the agrochemical aspect, every year about 70% of urea demand is imported, while ammonium phosphate is 100% imported.

Also the challenges were

¤ Outdated production technology.

¤ Low awareness of chemical risk factor.

¤ Lack of facilities for chemical risk prevention.

¤ No plan to dispose the hazardous waste.

¤ Lack of quality and trained human resource.

Dr. Keyur Nayak , Head of MBA department completed the valedictory function with a vote of thanks to the Dignitaries, faculty members and students from various departments. The event ended with light refreshments.

Thank you

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