Plans in place to ensure price stability
 
The industry and trade sector plans to attempt market regulation in stabilising domestic prices by the end of 2011.

The statement was made by an official from the Ministry of Industry and Trade during an online meeting yesterday.

Deputy Minister of Industry and Trade Le Duong Quang said that, in order to achieve results, a price fever leading up to Tet had to be avoided at all costs.

He added that the domestic commodities market would experience complicated fluctuations by the end of the year, affected by factors such as inflation.

To reach an annual CPI jump of 18 per cent, balancing supply and demand would be a tough job, necessitating cooperation in following market developments, he explained.

Market watch would help regulate the supply and demand of goods and stabilise markets to ensure effective production.

Relevant offices are set to promote market controls to ensure the supply of essential goods including petrol, fertiliser, steel, printing paper, cement, rice and pharmaceutical products alongside domestic trade promotion programmes and co-operation with the Viet Nam Union of Co-operatives in consuming industrial and farming goods.

Commercial speculation, trade fraud, price increases, food quality and hygiene as well as the safety of domestic goods are also to be strictly dealt with.

While the ministry expects the total retail sales value of goods and services to increase by 22 per cent to VND1.88 trillion (US$90.4 billion) year-on-year, growth will not be sustainable due to inflation, Quang said.

During the first nine months of the year the total retail sales value rose by 22.8 per cent to VND1,393 trillion ($67 billion) due to the effects of weather, animal disease and dependence on import goods, said Nguyen Tien Vy, head of the ministry's Planning Department.

An unstable supply of food and vegetables made market prices, as well as the CPI, increase.

In 2011, the Ha Noi Industry and Trade Department planned to loan VND475 billion to 17 enterprises in order that each could have temporary stock, including 10 essential goods items, for price stabilisation purposes.

Meanwhile, the HCM City Industry and Trade Department also planned to provide VND437.22 billion to 37 enterprises in order to do the same.

So far, Ha Noi has 561 spots selling stabilised-price goods while HCM City has 3,773 alongside 200 convenience shops.

Diesel, kerosene prices cut, petrol unchanged

At 11am today retail prices of diesel and kerosene were cut by VND400 and VND300 a liter respectively while petrol prices remained unchanged, according to the Ministry of Finance.

Diesel now costs VND20,400 and kerosene, VND20,200.

Gasoline remains at VND20,800 following a price cut on August 26.

The ministry has also left the surcharge of VND300 a liter -- this goes to the fuel price stabilization fund – and import tariffs on petrol, diesel, and kerosene untouched.

The ministry’s Price Management Agency said the cut followed global oil price developments.

Ministries run trial credit insurance programme
 
A national trial credit insurance programme aiming to cover nearly 3 per cent of export turnover by credit insurance by the end 2013, has been launched by the Finance, Industry and Trade ministries, the State Bank of Viet Nam (SBV) and the Government Office.

Deputy Minister of Finance Tran Xuan Ha said seven insurers had been selected to carry out the pilot programme including Bao Viet, Bao Minh, PetroVietnam Insurance (PVI), Bao Viet Tokio Marine, QBE, Chartis and the United Insurance Company of Viet Nam.

Under the programme, which will be implemented during 2011-13, about 23 commodities groups will receive export credit guarantees, minimising risks for exporters while ensuring financial security and enhancing exports, he said.

Subject to the programme are enterprises exporting certain commodities including seafood, rice, coffee, fruit and vegetables, textiles and footwear.

Commercial and political risks associated with these commodities will be guaranteed and a premium will be calculated based on risk, damages and management fees.

Many insurers have expressed concern about the programme's feasibility as exporters had not recognised the importance of credit insurance in export operations and insurers would face adaptability issues regarding technology and human resources.

Before the programme was launched, Bao Viet, PVI, Bao Minh, Chartis and QBE had conducted small-scale credit insurance activities with mixed results.

Until April this year, QBE had attracted only two credit insurance contracts worth VND4 billion (US$192,300) and Bao Minh had struck only six deals worth VND3 billion.

Director of the Institute for Business Development under the Viet Nam Chamber of Commerce and Industry Pham Thi Thu Hang said Vietnamese exporters should use credit insurance to boost export operations and mitigate risks involved in contracts with foreign partners.

Hang said there were many risks inherent to export activities such as timely delivery and political stability and Vietnamese exporters had not taken adequate precautions to avoid such risks. As a result, domestic exporters were unable to fully tap into the potential offered by the export business.

"As the country integrates into the global economy, Vietnamese exporters may fail unless they use credit insurance tools for their foreign trade activities," Hang said.

Representative for the VCCI's International Arbitration Centre Vo Nhat Thang said only 20-30 per cent of domestic businesses were aware of credit insurance.

Thang said Viet Nam's export turnover reached over $70 billion last year but only 15-16 per cent was Cost Insurance and Freight (CIF), meaning the shipper or trader had to pay costs of transport to the ship, insurance of cargo and freight costs to the destination port, adding that local enterprises could claim larger profits from foreign trade activities if CIF increased to 30-40 per cent the total export revenue.

Director of the Ministry of Finance's Insurance Supervisory Authority Trinh Thanh Hoan said in order to help insurers and exporters begin implementing the programme, the State would support part of insurers' costs and 20 per cent of the premium for exporters.

Deputy Minister Ha said credit insurance for exports was totally new in Viet Nam and required input from authorities, insurers and exporters.

Ha said this month a draft of regulations on credit insurance guarantees for exporters would be considered by the Ministry of Finance, in addition to a plan to train insurers and exporters.

Dong Nai set to hit growth target
 
Dong Nai is on track to achieve this year's economic growth target of 15-16 per cent.

The southern province has achieved 75 per cent of the full year's targeted growth in the first three quarters, with its nine key industries all growing as fast or faster than in the same period last year, according to authorities who briefed its Party Committee at a review meeting last week.

Some like garment, footwear, agricultural and food production, and wood production, had grown by 15 per cent or more.

Exports had risen by 30 per cent year-on-year, and foreign investment in Dong Nai, which has more than 30 industrial parks, the largest number in the country, had reached more than 73 per cent of the year's goal.

So far this year 1,500 businesses had been established and 470 others had registered to increase their investment.

"The growth in the first nine months indicates Dong Nai will fulfil the year's target with three months to go," People's Committee chairman Dinh Quoc Thai told the meeting.

But inflation was up in September, surging 2.87 per cent month-on-month, taking the year-to-date figure to 17.7 per cent.

Deputy head of the Dong Nai Statistics Office, Tran Quoc Tuan, said the 61 per cent increase in tuition had been a major reason.

The meeting also discussed the economic growth target for next year ranging from 12 to 14 per cent. Most participants agreed that 12-13 per cent growth would be most feasible since foreign investment had declined by half this year.

The target would be finalised at a meeting at the end of the year.

The meeting also discussed measures to fulfil next year's goals, which include improving planning management, and the outlook for socio-economic development.

Province joins hands with Japanese firms
 
A joint venture between a Vietnamese company and five Japanese partners in the central province of Phu Yen is expected to facilitate development of the local tuna fishing industry and a brand name for Phu Yen ocean tuna.

The US$2 million firm will be established by the province-based Vinh Sam Company Ptc and five Japanese companies, with the latter contributing $1.2 million, a fish freezing vessel that can preserve fish at minus 60 degrees Celsius, and a 30-tonne transport boat.

The Japanese firms will transfer technology to Vietnamese companies for tuna processing.

Importantly, they will help local companies develop a brand name for the tuna products.

The joint venture will also buy an expected 2,000-3,000 tonnes of tuna each year at $12-20 per kilogramme, depending on quality.

Le Van Truc, vice chairman of the Phu Yen People's Committee, said his agency was working with the ministries of Planning and Investment and Agriculture and Rural Development to ensure this JV could start operations by year-end.

Ocean tuna is one of the Phu Yen's most important products.

Since Phu Yen is the leading locality in Viet Nam in ocean tuna fishing, processing, and exports, it is essential for local enterprises to build a brand name for the tuna, according to the Viet Nam Association of Seafood Exporters and Producers.

Phu Yen had paid much attention to promoting tuna products, and it needed to take part in international forums and exhibitions to promote them globally, it said.

Under the National Brand Name Program 2011, the Ministry of Industry and Trade plans to support Phu Yen in developing a tuna brand name, according to the ministry's Trade Promotion Agency.

So far this year, the tuna catch landings of the province reached more than 5.61 million tonnes, an year on year increase of 13.8 per cent.

However, with offshore fishing costs accounting for up to 70 per cent of revenues, most of the fishing boats specialising in ocean tuna barely break even.

One of the main reasons is that Phu Yen companies' tuna-processing technologies are poor and lower quality.

As a result, only 30 per cent of the province's catch is good enough for export to European, American, and Northeast Asian markets where prices are highest.

Firms urged to cut back on imported materials

The Ministry of Trade and Industry is calling on local firms to reduce their dependence of imports of machinery parts, vehicles and raw materials such as sugar, salt, steel and conrete, which account for nearly 83 per cent of Viet Nam's total imports in terms of value.

The ministry said that 150 of the products or raw materials that were imported could now be sourced domestically – as opposed to 95 as of May 2010.

The ministry issued decree number QD2840/QD-BCT a few years ago that named products and raw materials that could be bought locally. Most of those products include machinery used in the power industry, equipment used in production lines for rubber and fertiliser, lorries under 10 tonnes, coaches with fewer than 50 seats, fertiliser, combine harvesters, motorbikes; and raw materials such as sugar, salt, steel and cement.

However, Le Duong Quang, the deputy trade minister, said the Government should introduce protectionist measures to make local producers of machines and machinery parts more competitive domestically. He also said local producers were only capable of making simple machines, or assemble more complex items made abroad.

Nguyen Van Thu, the president of the Viet Nam Association of Machinery Industry, said EPC bidding (a contracting arrangement within the construction industry under which the contractor will design the installation, procure the necessary materials and construct it, either through own labour or by subcontracting part of the work) did not favour local firms. As a result, he said domestic manufacturers of power plants could only meet 35 per cent to 40 per cent of domestic projects in terms of value.

Tran Anh Thai, deputy director of Applied Technical System Ltd, said local enterprises were usually less competitive than foreign firms.

He also said regulations should be implemented to favour local companies.

Quang said the MoIT would submit to the Government a proposal to encourage local firms to bid for State-funded projects. He also said he would be looking into bidding regulations.

Firms seek supply chain lift
 
Viet Nam needs to make great improvements to infrastructure, support industries, and tax and land-lease incentives to grasp its opportunity to become the world's workshop, experts have said.

Rising labour costs, an appreciating currency, and tightening labour regulations continued to put pressure on manufacturers in China.

As a result, Southeast Asian countries such as Viet Nam were the places where manufacturers were considering moving their production, participants heard last Friday at a press conference in connection with the upcoming Viet Nam Supply Chain Congress this month.

Viet Nam was attractive with its young labour force and labour costs that were 35-45 per cent cheaper than even in second and third tier China cities and 20-35 per cent cheaper in than Thailand.

Industrial construction costs in HCM City were 35-40 per cent cheaper than Beijing and Shanghai.

Viet Nam had attracted several investors in the technology sector including Intel, First Solar, Nokia, Samsung, and Wintek.

It was also drawing strong interest from auto and motorcycle producers, with major companies likes Yamaha, Piaggio and Honda in expansion mode.

While foreign investment pledges had fallen sharply this year, investment that had been committed in industrial parks in the first half went up 15 per cent year-on-year to $3.32 billion.

They included $250 million by Kyocera Mita, $280 million by Nokia in plant its largest in Southeast Asia, $300 million by First Solar, and Samsung's increase to $1.5 billion from $630 million.

A strong supply industry for each industrial sector, national-level industrial development strategies, and improvements to infrastructure and legal framework would facilitate foreign investment.

Dr Eckart Dutz, general director of Cartridge World, said for major companies in the US, supply chain costs made up 80-90 per cent of total costs.

"While reducing cost by 5 per cent raises profit by 45 per cent, increasing sales by 5 per cent only raises net income by 5 per cent," he said about the effect of supply chain performance on business performance.

Crackdown targets disclosure violations

The HCM Stock Exchange has tightened its enforcement of disclosure requirements in a renewed bid to make the securities market more transparent.

The exchange for the first time has indicated that it might cancel the listings of companies that violate the disclosure regulations, and it recenty sought authority to impose stricter punishments on multiple violators.

Additional terms for cancelling listings would be incorporated into a decree being drafted to provide guidlines for enforcement of the amended Law on Securities, said State Securities Commission vice chairwoman Vu Thi Kim Lien.

Listings would be cancelled if businesses frequently violated the duty to disclose, forged documents, or purposefully provided false information, Lien said.

The commission's new aggression was viewed as an outcome of the recent case of Vien Dong Pharmaceutical Co (DVD), which concealed the information that it was forced into involuntary bankruptcy, causing heavy losses to stockholders who were caught holding largely worthless shares.

Recently, Descon Construction Co (DCC) was suspended from trading after it violated the disclosure requirement, failing to publish its 2010 financial report and delaying its first- and second-quarter filings.

Five other companies have previously received warnings from the commission over violations of discolusure and reporting requirements. These included Cuu Long Pharmaceutical Co (DCL), real estate developer Van Phat Hung Co (VPH), Hoang Quan Consulting-Trading-Service Real Estate Co (HQC), Ben Tre Forest and Seafood Products Import-Export Co (FBT) and bedding company Mirae Co (KMR).

While disclosure violations are found in other developed markets, the problem in Viet Nam was the lack of a sufficient framework with strict enough measures to deal with systematic violations, particularly the late submission of financial reports, independent analyst Ho Quoc Tuan told the newspaper Dau tu Chung khoan (Securities Investment).

Tuan said that provisions related to information disclosure should be updated with more detailed and stronger penalties, including suspension of trading and fundraising, and even listing cancellation, along with fines.

Listed enterprises should also be encouraged to use conference calls as a tool for informing public investors, Tuan said.

"This allows shareholders to have a direct dialogue with the company and gain a better understanding of the company's situation," he said.

Rice research starts to pay off

Viet Nam is one of the most important rice exporters in the world, second only to Thailand in recent years. Rice contributes significantly to the national income and is a staple food for all Vietnamese.

As is the case with all Asians, Vietnamese people typically eat rice everyday – usually at every meal. Rice is such an integral part of life that its consumption is often taken for granted – not just as a staple food but as a driver of national food security, regional political stability, economic growth, and its potential to elevate whole communities out of poverty.

But, when rice prices rise, people start to pay attention, because higher rice prices directly affect individuals and their families. Higher rice prices reduce people's capacity to purchase other essential foods and they have less money to invest in health care, housing, and other basics. Alternatively, when rice prices are affordable people have much greater potential to meet their basic needs and then invest in other areas such as micro-business and education – drivers of economic growth.

Without Viet Nam's contribution to global trade, regional political stability and food security would be threatened. Compared with that of other commodities, the international market for rice is "thin" – meaning most rice is produced and consumed domestically, leaving little for international trade.

So, aside from playing an important national role in feeding its own people, Viet Nam is a critical global player in international rice trade. Changes in international trade dynamics, such as the Thai government's recent decision to implement a rice mortgage programme to pay higher prices to Thai farmers for their rice, can affect trade globally, international prices, and thus the affordability of rice for consumers everywhere.

In 1985, Viet Nam achieved self-sufficiency in rice and then went on to continue to increase its production due to supportive Government policies, and its adoption of better crop management strategies and new high-yielding rice varieties.

In September, the Australian Centre for International Agricultural Research (ACIAR) released a report looking at the impact and value of rice breeding work of the International Rice Research Institute (IRRI) between 1985 and 2009 in three key rice-growing countries: Indonesia, the Philippines, and Viet Nam. The report mentioned that over this time and directly due to IRRI's contributions, rice yields in Viet Nam increased by 9.8 per cent in southern Viet Nam in the Mekong Delta, which produces more than 50 per cent of Viet Nam's rice.

The annual value of IRRI's rice breeding benefits across all three countries studied by ACIAR is US$1.46 billion – a staggering amount considering that IRRI's annual revenue across this time was around US$40 million. Around 42 per cent of these benefits – or around $610 million every year – flowed directly to Viet Nam.

Of course, Viet Nam has made additional investment in its own institutes, scientists, and extension officers to build their expertise and capacity to add value to IRRI's breeding work. Viet Nam's Ministry of Agriculture and Rural Development (MARD), various universities, and other agencies help test IRRI's rice and adapt it to local conditions and needs. Then they do the hard work of getting the seed of these new varieties into the hands of farmers for planting and production.

In addition, the ACIAR study notes that their evaluation of IRRI's impact in Viet Nam accounts only for IRRI's rice breeding work and that, if the other areas of activities had been included, the impact and value of benefits would have been much more.

For example, with our Vietnamese partners, IRRI helped MARD develop the Three Reductions, Three Gains (Ba Giam, Ba Tang) programme that motivated rice farmers in the Cuu Long (Mekong) Delta to modify three resource management practices – seed, fertiliser, and insecticide use. This programme has won multiple awards and has contributed to rice yield increases in southern Viet Nam. We are also looking forward to a plant hopper workshop that will be held in Ha Noi in December that will support efforts to provide innovative and ecologically sustainable ways to reduce pest outbreaks of brown plant hoppers that have been damaging rice crops and have re-emerged in recent years in Viet Nam.

The ACIAR report has evaluated the dollar value of our rice breeding contribution to Viet Nam and demonstrated the value of investing in rice research and development. We look forward to future collaboration with Viet Nam to support the development of the rice sector there.

VN to modernise livestock industry
 
Viet Nam would modernise its livestock breeding sector by shifting from household-based breeding to industrial farms, an official said at a meeting with the international press in HCM City earlier this week.

Modernisation will raise productivity, efficiency and competitive capacity, according to Hoang Kim Giao, director general of the Livestock Production Department under the Ministry of Agriculture and Rural Development.

The meeting is part of a programme to promote Viet Nam's livestock and aquaculture industry and an international exhibition on livestock, dairy, meat-processing and aquaculture (ILDEX Viet Nam 2012) to be held in HCM City next March.

Giao said under the Viet Nam Livestock Development Strategy until 2020, the pig population would increase from 27.37 million in 2010 to 35 million by 2020.

By 2020, poultry and milk cow herds were expected to increase to 410,000 and 500,000, respectively, he said.

The livestock industry targets production of 6.7 million tonnes of meat, 14.5 billion eggs, and 1 million tonnes of milk.

This translates into 56 kilos of meat, 140 eggs and more than 10 kilos of milk per capita.

The livestock industry in the coming years would focus on quality development, not just quantity, he said.

Under the plan, the nation's livestock industry also targeted an increase in exports from 2015 onward, he said.

It also planned to increase industrial livestock feed production to 16.3 million tones by 2015 and 19.2 million tones by 2020, up from 10.5 million in 2010.

To achieve these targets, the sector has encouraged investment in building industrial farms, slaughterhouses and meat processing factories with advanced technology to improve disease-control capacity, ensure hygiene and food safety and protect the environment.

Preferential policies will be offered to encourage individuals and corporations to develop livestock production and shift to industrial farming, including financial support from the State to build infrastructure and longer land-lease terms and lower fees.

Famed durian needs brand protection

Widespread forging of trademarks for durians grown in Khanh Son District in the central province of Khanh Hoa has become a common occurrence as local authorities have been slow to label the product.

Famed for their unique taste, durians planted in mountainous Khanh Son District were granted a trademark certificate by the Ministry of Science and Technology's Office of Intellectual Property in April this year.

Local farmers have specialised in growing two kinds of the fruit, the Moonthoong and Chin Hoa varieties, most of which are harvested on 200 hectares of the province's land.

The fruit has helped reduce poverty for thousands of ethnic Raglai minority households who have an average income of VND30-40 million (US$1,460-1,950) per year.

Director of the Maximark Khanh Hoa Plaza Doan Thi Tho told the Lao dong (Labour) newspaper that durians from Khanh Son District could be sold quickly on the market, but forgery of the trademark was an everyday occurrence.

At present, many customers in south-central provinces, especially in Nha Trang City, are provided with durians from all over the country, thinking they were from Khanh Son.

Khanh Son durians are harvested between July and September every year but traders have been selling the fruit since March without stating their true origins and falsely applying the Khanh Son durian trademark.

Deputy chairman of the Khanh Son District People's Committee Dinh Ngoc Binh admitted that although being legally protected, the durians had not been labelled.

He said local authorities had not been prepared to help farmers protect their products' trademarks and adopt measures to deal with violations.

Next year, the district would design and print the Khanh Son durian trademark and provide it directly to farmers, Binh added.

The district's Department of Agriculture and Rural Development would give technological training to 3,600 households in the district in an effort to enlarge the durian-growing areas to 1,000ha, he said.

RoK boosts local trade, investment with Vietnam

Ho Chi Minh City and Busan city of the Republic of Korea (RoK) have agreed to cooperate in information exchange and technical development as well as in boosting investment and trade.

The agreement to this effect was signed on October 4 during a visit by a Busan delegation which includes representatives from 31 businesses operating in footwear, mechanical engineering, steel production and high technology.

The cooperation between HCM City and Busan will help foster the regional investment and trade ties between Vietnam and the RoK, and create favourable conditions for the two sides’ businesses to connect, said Oh Kyung Tae, Chairman of the Busan-based Sasang Trade Development Committee, one of the 16 largest trade organisations in the RoK.

So far this year, two-way trade between Vietnam and the RoK has reached US$10.2 billion. The figure is expected to increase to $16 billion this year and $20 billion in 2015.

At present, RoK investors are operating in almost all sectors in Vietnam, ranging from infrastructure, telecommunications, heavy industry and real estate to auto production, shipbuilding and hotels and restaurants.

US Gap enters VN market

Gap, the American fashion iconic retail brand, has entered the Vietnamese market with the launch of a ceremony at Vincom Center in HCMC’s District 1.

The event has also introduced Gap’s first store and its newest Fall 2011 collection for every target segment includes adult, baby and kid, to Vietnamese people.

The style offers modern interpretations of versatile, cool and sexy, but very American. Clean, classic clothing and accessory help customers express their individual sense of style, Gap said in its press release.

Gap’s brands in Vietnam include Gap for adults and the youth, Gap kids for children and babyGap for baby. In Gap store, the customers can enjoy international standard shopping environment, from the design to the professional manner of Gap’s staff.

Both the international and national media, influential bloggers and business partners were impressed by the venue set up, the Fall seasonal color and the dedicate fashion show with the participation of famous models. The music performance by Ho Ngoc Ha also heated up the environment during this event.

“We are non-stop dedicate our effort to bring the international quality of fashion but affordable price to Vietnamese people who love fashion,” said Vivienne, brand manager of Gap in Vietnam.

"Compare to other countries, Gap in Vietnam will never left behind in terms of updating the newest collection. We believe that Gap will become familiar with every member of family and people from Vietnam," he added.

Gap was brought to Vietnam by Chau My Fashion and Comestic Ltd., which belongs to the Imex Pan Pacific Group Incorporation (IPP Inc.).

The next stores of Gap will be operated at Crescent Mall on November and Diamond Plaza on December.

Central bank considers setting up gold fund

The State Bank of Vietnam is considering setting up a gold fund with Saigon Jewelry Co. (SJC), the country’s largest gold trader, and commercial banks, to tame the soaring domestic gold prices.

Accordingly, when domestic gold price rises unexpectedly, the central bank will narrow the gap between local and global prices by increasing supply to SJC’s gold stock and the banks’ gold deposit.

The banks will also be allowed to open gold trading accounts on international floors to balance their stocks.

When domestic price drops, SJC and the banks will buy gold.

Experts said the gold fund mobilized from SJC and commercial banks should be about 20 tons, or 530,000 taels.

They said to carry out this plan, the central bank must allow banks to sell part of their gold deposits and to open gold trading accounts on international floors, of which it banned last July.

Some insiders also questioned how big the gap between domestic and global prices should be to be considered big enough to require the central bank’s intervention.

The central bank said a gap of VND400,000 a tael would be reasonable as it shows signs of speculation.

A banking expert said the fund of 20 tons of gold would be worth around $1.2 billion, a sum no speculators could ever afford to manipulate the market.

Border economic zones fail to attract investors

The 30 or so border gate economic zones built around the country at a cost of VND4 trillion (US$200 million) are proving to be failures.

For instance, the Moc Bai border gate economic zone in the southern province of Tay Ninh, which hoped to see the construction of an industrial zone, trade centers, and tourism areas, is almost deserted.

There are only a border gate market and some duty-free supermarkets remain there after most other booths shut down due to poor sales.

Similarly, the 202-hectare Thuong Phuoc border gate economic zone in the Mekong Delta province of Dong Thap looks abandoned, with many unfinished construction sites and some that have not even been cleared yet.

The large border gate market there, built in 2004, has almost no traders.

“Most of the this economic zone is now used for raising cattle,” a local resident said.

Thousands of hectares of land earmarked for industrial zones and trade centers in other border gate economic zones in An Giang, Kien Giang, and Kon Tum Provinces remain barren.

Duong Thanh Van, head of investment at Moc Bai, said Moc Bai 46 projects worth $219.2 million had been licensed, but only 16 actually become operational, most of them duty-free supermarkets.

After a decade of operation its tax-free area had failed to attract industrial investors or wholesalers exporting Vietnamese products to Cambodia, he admitted.

In fact, Moc Bai only seems to sell imported luxury goods in its 30 odd duty-free stores, including expensive wines, cosmetics, electronics, and confectionary products from France, Korea, China, and the US.

The businesses chose to sell imported goods to enjoy the exemption of value-added, import, and luxury taxes, which enabled them to sell at low prices and increase sales, Van said.

“Locally made products are only exempt from the 10 percent value-added tax,” he explained.
Similarly in An Giang, the tax-free policy has attracted 74 investors to the commercial sector, while the industrial zone has failed to attract investors.

“Consumption in the border area as well as in Cambodia is too low while the local workforce is not skilled enough,” a plastic processor said to explain why his company had not set up a plant in the An Giang economic zone.

The Kon Tum-based Bo Y border gate economic zone had not only failed to attract new investors but was also likely to lose existing ones, Nguyen Trong Hao, head of its management board, admitted.

PV