Manufacturers cut lead times, inventories

 

Many domestic companies are choosing lean manufacturing or just-in-time (JIT) production as one of several methods to survive in more difficult economic times.

Lean manufacturing is a production practice that considers the expenditure of resources for any goal other than the creation of value for the customer to be wasteful and thus, a target for elimination.

Just-in-time production is a "pull" system of production, whereby actual orders signal when a product should be manufactured.

To realise lean production, many enterprises are seeking ways to reduce the volume of products in stock and the reserve of production materials which, they believe, will help them quickly achieve capital turnover and effectively use capital resources.

Minh Tien Bag Sewing Company (Miti) in HCM City's Binh Chanh District is one of the pioneers using lean production methods and achieving initial success.

Miti director Nguyen Tri Kien predicted that the market's purchasing power would drop because prices of all kinds of goods including production materials would rise.

To effectively use capital sources, the company had reduced the stock of both completed products and raw materials by at least 50 per cent by buying raw materials on time, producing in line with the design process, and delivering on schedule, Kien said.

In addition, the company had also expanded its distribution network via a system of supermarkets and bookshops to increase its sales points from 25 to 75 points.

To reduce investment costs, Miti was seeking partners involved in production of accessories needed for production of bags and suitcases, he said.

The director of a company specialising in processing of animal feed revealed that his company each month used 1,000 tonnes of cassava for processing activities.

In the past, it often stocked raw materials for at least six months, but the stock now has fallen significantly, which allows for only one or two months of production.

High interest rates, unpredicted forex rates and sky-high prices of raw materials needed for production of animal feed were the main reasons that many producers were keeping small volumes of raw materials, he said.

Thanks to limited stocks, storage fees had also decreased significantly, he added.

With the JIT method, the Southern Rubber Industry Joint Stock Company (Casumina) also reduces its stocks of completed products and raw materials, thereby minimising its production costs and quickly achieving capital turnover, according to deputy general director Le Van Tri.

"We stock enough raw materials to implement orders that prove to have a high payment ability. Thanks to this, we can receive the money right after delivering," Tri said.

Tri, however, said that when keeping a limited volume of raw materials in stock, companies might meet high risks from fluctuating raw material prices on the market.

To avoid this possibility, companies should negotiate with their partners to sign short-term orders at current prices, he said.

Trinh Tri Cuong, general director of Dai Dong Tien Plastic Corporation, also said that his company's production plan now was based on the market's monthly demand.

First ‘green fuel' refinery kicks off in Quang Nam

 

The Dong Xanh (Green Field) Joint-stock Company inaugurated a biological fuel ethanol refinery in the central province of Quang Nam last Saturday, making it the first ‘green fuel' producer in Viet Nam.

The Dai Loc Ethanol Refinery, built at a cost of more than VND600 billion (US$28.8 million), has an annual capacity of 100,000 tonnes of ethanol or 125 million litres. It will make ethanol from cassava grown by farmers in the region.

The factory has carried out test-runs since September last year, rolling out 12,000 tonnes of ethanol so far for both domestic use and export.

Once running at full blast, it will employ more than 300 work-hands and provide well-paid incomes for about 20,000 local cassava growers.

Leftovers from cassava used to produce ethanol will be recycled into biological fertilisers to be sold to local farmers at prices lower than the market average.

As a result, Quang Nam and its neighbouring city of Da Nang now has six petrol stations where E5 petrol (which has 5 per cent ethanol) is available, out of a national total of 40 petrol stations selling this clean energy.

The refinery has planned to provide ‘green fuel' for some 200 retail points nationwide by the end of this year.

The Prime Minister's biofuel development programme, ratified in November 2007, targets ethanol production nationwide of over 250,000 tonnes per year by 2015 and 1.5 million tonnes per year by 2025.

The nation is also seeking foreign investment in at least 20 projects to increase biofuels production, as well as official development assistance funds to promote development of the alternative fuels sector.

Ha Noi to set up IT exchange

According to the Ha Noi Department of Information and Communications, a trading floor will be established in Ha Noi to boost trade promotion.

The city will post business summary reports on the trading floor in English and Vietnamese and support enterprises in trade promotion in the northern region at no cost.

It will also offer training courses in information technology.

Major property projects in south

Song Da-Thang Long Joint Stock Company has given details about major property projects planned for the southern region, two of which were the Nha Trang-based Dragon Pia resort and the U-Garden apartment complex in HCM City.

U-Garden, which has a total investment of VND550 billion (US$21.2 million), will open in two years.

The Dragon Pia project will occupy a 50,000sq.m area. Song Da-Thang Long JSC has invested VND1.4 trillion ($66.7 million) in the project.

Over 16,000 new firms created in Q1

According to the Ministry of Planning and Investment, 16,500 enterprises applied for business registration in Q1. They had a combined capital of VND91.6 trillion (US$4.36 billion).

The number of firms applying to register in Q1 was up 89.7 per cent on last year. Their combined asset value was up 84.1 per cent.

In March alone, there were 6,800 new enterprises, with a registered capital of VND36.1 trillion ($1.72 billion), applying for registration.

South Korea joins tourist promotion

Viet Nam and South Korea had a lot of potential to co-operate in promoting tourism, said the head of South Korea's General Tourism Department, Charm Lee, in a ceremony late last week to launch a Tourism and Culture Office at the South Korean Embassy in Ha Noi.

Lee said the office would help boost Korean tourism in Viet Nam and strengthen the tourism and cultural exchanges between the Vietnamese and Korean peoples.

"The department is expected to play an active role in promoting Korean tourism in Viet Nam based on the interest of the Vietnamese people in Korea and in promoting tourism with neighbouring countries," said the director of the new office, Lim Hyung Taek.

Lim told Viet Nam News that South Korea had been Viet Nam's second leading tourism market, with Korean tourist arrivals rising from 53,000 in 2003 to 5 million last year.

Cooking gas dealers speculating

As petroleum prices rise, cooking gas retailers have begun to speculate, leading to shortages. However, Do Trung Thanh of Sai Gon Petro said there was still enough gas on the market to meet demand.

The world gas price is predicted to reach US$920 per canister this month.

Maritime Bank receives award

Viet Nam Maritime Commercial Joint Stock Bank (Maritime Bank) was presented with the Global Payments and Cash Management Award 2010 last week.

The bank has won the award for the last three consecutive years.

Mandarin Garden apartments open

Hoa Phat Group last week inaugurated its new Mandarin Garden apartment block in Ha Noi.

Occupying an area of 25,886sq.m, the complex consists of four towers of 25 to 29 floors with 1,008 apartments.

Work on the project began in 2009. It is expected to be completed in 2013.

Tham Then mine receives licence

Vinavico Underground Works Construction Co has been granted a licence to exploit marble by open-cast mining in Tham Then in Yen Bai Province's Tan Lap Commune.

The 24-ha site contains an estimated 23.4 million cubic metres of marble, which will be exploited over a 30-year period.

Paper industry faces forex woes

 

Paper prices went up in the first quarter of this year due to the depreciation of the dong against the dollar, industry insiders said.

Paper now costs VND23.1 million (US$1,100) per tonne, a rise of VND2.2 million ($104.76) compared to the end of last year, as opposed to newsprint which costs VND14.5 million ($690.48) per tonne, compared to $38.1 at the end of last year.

Meanwhile, the cost of printing and writing paper imported from Indonesia and Malaysia remains at about $1,024-1,047.6 per tonne.

"Firms have raised prices by 5-7 per cent," said Vu Ngoc Bao, general secretary of Viet Nam Pulp and Paper Association.

He blamed higher costs and the depreciation of the dong to the dollar for the rises.

"Recently, coal and petroleum prices have sharply increased, impeding the production and consumption of paper in the market," Bao said.

Adding to firms' woes, the cost of borrowing had also gone up.

Meanwhile, they were still having to import up to 45 per cent of their materials, Bao said.

The Viet Nam Paper Corporation said consumption in the US, Europe and Japanese had declined.

"Although Vietnamese producers have made great efforts to reduce production costs, the slow application of new technology and modern equipment has weakened their competitiveness," Bao said.

Inflation hits retail prices

Selling prices of houses and apartments should be adjusted in line with fluctuations in the nation's consumer price index (CPI), according to Bui Tien Hung, deputy general director of Viet Hung Urban Development and Investment Joint Stock Company.

Bui Tien Hung said his company wanted to apply a fluctuating price that could see buyers have to shell out more money if the CPI rises dramatically. That meant prices determined at the time of registration with sellers, could fall or rise after contracts are signed.

Hung said his company was still considering the best way to apply the pricing process.

"Selling prices for apartments would be determined at the time of registration with sellers and there subsequent payments would be adjusted in accordance with fluctuation in the CPI," said Hung.

"In addition, our company will use a certain threshold to protect the interests for customers. This threshold will be agreed by the seller and buyer."

Hung said the proposal aimed to provide more security for sellers.

Senior land adviser Dang Hung Vo said using CPI to calculate housing prices was a good idea. "In the context of rising prices, this approach could avoid the devaluation of the Viet Nam dong," he said.

"Today, prices rise and fall and this is reflected in the CPI. In this way, property would also fluctuate against a collective ratio."

Using US dollar or gold as a payment calculation or reference price for property is problematic, said Vo. Recently, some businesses were found to be violating the Ordinance on Foreign Exchange. High value products such as real estate, if paid in Vietnamese dong, leave investors open to huge losses in the context of high inflation.

"Each real estate construction project lasts between 3 to 4 years or even longer, if prices rise by between 15 to 17 per cent, investors will suffer great losses," Vo said.

Dang Van Quang, director of Navigat consulting firm, said selling or buying houses was risky.

"To limit risk, investors must be linked to an index or certain things that can be quantified," he said. "Even though housing sales are referenced, adjusted in line with the US dollar, gold or CPI, they are estimates only."

Vincom to build centres

The property developer Vincom was expected to develop 10 trading centres nationwide during the next five years, said the company's chairman Le Khac Hiep.

Thanks to a large youthful population and rapid urbanisation, the retail market was developing strongly, said Hiep, adding that in 2010, Viet Nam ranked fourth out of the 30 most attractive countries for retailers, with consumption rising to 30 per cent a year.

However, there were not enough commercial and entertainment centres to meet rising demand, which had encouraged Vincom's recent move, Hiep said.

"The 10 trading centres will cover a total of 1 million square metres nationwide, especially in the big cities of Ha Noi and HCM City," he said.

Vincom will divide the projects into two groups, with projects that have a total area under 100,000 square metres named Vincom Centres while those with areas larger than 100,000sq.m will be named Vincom Mega Malls. As a result, the Vincom City Towers Ha Noi have been renamed as Vincom Centre Ha Noi.

Hiep said the new Long Bien Vincom Centre would open this December and feature a shopping complex and entertainment zones.

Nation urged to draft housing strategy

 

Viet Nam needs to draft a national plan on residential housing until 2020 with a vision to 2030, heard a meeting held in Ha Noi last Friday.

The meeting, chaired by deputy Prime Minister Hoang Trung Hai and the steering committee of housing and real estate policies, aims to collect information and ideas on how to draft the plan.

Under the plan, issues related to policies of planning for housing, land, finance, credit, and application of new technologies and building materials will be included.

According to research on population and housing, the number of houses in the country has increased during the last decade.

The number of households, most of whom own a house, surged from 16,661,366 to 22,198,922 over the last decade.

Total area of houses and apartments has soared by 706 million square metres, bringing the total area of housing in the country to 1,415 million square metres.

At present, only 0.05 per cent of households do not own a house or apartment.

The average area of housing per person has increased from 9.7 sq.m per person to 16.7 sq.m per person.

The number of apartments with area of at least 60 sq.m has surged by 51 per cent.

However, the development and management of the housing market has faced difficulties, especially inconsistent policies.

Many regulations about the housing market are not feasible, failing to control the imbalance of housing supply and demand.

In addition, the administrative procedures for housing are still complicated and cumbersome.

The draft plan will be submitted to the Government for approval within this month.

Curtain drops on giant coal price increases

Vinacomin started raising coal prices for products delivered to domestic cement, paper and fertiliser producers from 20 to 40 per cent, the group announced yesterday.

The price hike, effective from April 1, came after the Ministry of Finance approved Vinacomin’s price hike proposal due increased production costs.

Vinacomin, the country’s largest coal miner, said in a statement that it would face a financial trouble if did not raise coal prices.

The new price will be also applied to steel and construction material manufacturers in the country, according to the group.

“The price hike this year will be higher than previous years because of high production costs increase. The 20-40 per cent price hike to cement, paper and fertiliser producers can only fulfill the gap of the group’s production cost increase in 2010 and 2011,” said Vinacomin.

In March, Vinacomin hiked coal prices by 5 per cent to Electricity of Vietnam’s coal-fired power plants.

This year, the group aims to sell 44 million tonnes of coal including 27.5 million tonnes to the domestic market.

Vertex Standard expands the market in Vietnam

Vertex Standard, a leading Japanese maker of two-way radios and communications solutions, April 6, announced its expansion plans for Vietnam, with a solution portfolio designed for a wide range of commercial, government and industrial customers.

The introduction of Vertex Standard in Vietnam is part of its growth plans to gain a stronger presence in the Asia Pacific region and world wide.

Vertex Standard’s portfolio is focused on advanced technology and value-added solutions with customisation options for customers from public safety, healthcare, manufacturing, transportation, hospitality, healthcare and construction sectors, marine and security. The category of radios offered to them includes: commercial radios, marine radios, airband radios, amateur radio, and aaccessories and peripherals.

The company has introduced models VX-231, VX-351/VX 354, VX2100/VX 2200,VX4100/VX4200 and VX 1700which are now retailing at all leading channel outlets in Hanoi, Ho Chi Minh City and other key provinces such as Can Tho, Dong Nai, Danang and Haiphong.

The channel capacity of the radios ranges from 16 channels to 512 channels, with a number of features including individual or group paging ability with built-in DTMF ANI (Dual Tone Multi-Frequency Automatic Number Identification) for selective paging requirements, supported by high-speed scanning capability with various scanning options and a high-powered audio feature that is ideal for noisy environments.

“The expansion of Vertex Standard in the region and in Vietnam is an important part of our business strategy and the launch of the new series VX450/VX4500 is an important part of this expansion plan,” said Stephen Ritchie, director of distribution, Asia Pacific for Vertex Standard.

“We see Vietnam as an important country for us as a lot of opportunities and potential here with high GDP growth in hospitality and manufacturing,” added Ritchie.

Banks try to pay dividends to appease shareholders

Many banks, struggling with lower-than-expected earnings in 2010, have been trying to pay dividends to calm down anxious investors, especially small ones.

With the stock market remaining volatile, bank stocks are trading at around the face value, so using shares to pay dividends will be certainly unwelcome by investors. Therefore, most banks have chosen to pay cash dividends for 2010.

Take Saigon Thuong Tin Commercial Bank (Sacombank) for example. The HCMC-based joint-stock bank in previous years often paid dividends by issuing extra shares for shareholders to increase its chartered capital.

However, at its general meeting this year last weekend, Sacombank proposed a plan for paying the 2010 dividend of 15% in cash. The bank still proceeds with a plan to increase its chartered capital this year by issuing shares for existing shareholders at a rate of 15%.

Dang Van Thanh, chairman of Sacombank, told the meeting that the dividend payment plan would offer individual investors two options: taking a cash dividend or buying new rights. This dividend payment method was quickly passed by shareholders.

Meanwhile, DongA Commercial Bank achieved just 78% of the 2010 profit plan, it has managed to pay a 14% cash dividend to shareholders, equivalent to the savings deposit rate, and has also pledged a dividend of at least 15% for coming years.

Despite its 2010 pre-tax profit reaching a mere 64% of the original plan, Saigon Commercial Bank (SCB) has decided on a cash dividend of 6% for shareholders.

There have been two small banks making a difference, though. They have designed their dividend payment plans in favor of small shareholders.

At its recent general meeting, Long An Province-based Trust Bank suggested two methods of dividend payment. The first one is to pay a 3% cash dividend and a 7.5% share dividend for those holding shares worth VND100 million or less, or a 5.5% share dividend for those owning higher than VND100 million worth shares. The second is to give all shareholders, small and large, a 3% cash dividend and a share dividend of 5.5%.

Investors finally decided to choose the first method for the benefit of small shareholders. In 2010, Trust Bank obtained VND302 billion in pre-tax profit, four times over the previous year, but its chartered capital doubled to VND3 trillion last year.

While investors usually criticized the low dividend payment policy of Nam A Commercial Bank in previous years, such as 0.47% in 2008 and 3.5% in 2009, they seem to have taken things easier at the 2010 general meeting of the bank. The shareholders who have share equity above VND10 billion will get a 6.05% dividend and the others will receive a dividend of 10.5%. This dividend is still lower than the deposit rate, but it has appeased investors, especially small ones.

Vietnam Expo 2011 opens

The 21st Vietnam International Trade Fair (Vietnam Expo 2011) opened at the Vietnam Exhibition and Fair Centre in Hanoi on April 6.

With the theme “Vietnam-Integration and Development”, the Vietnam Expo focused on agricultural products, processed food, timber products, indoor and outdoor furniture, handicrafts, the fashion industry, electricity and electronics industry, information technology, machinery and equipment, construction and construction materials, printing, packages and services.

The fair attracted businesses from 20 countries and territories, including the US, China, Japan, Russia, India, Cuba, the Czech Republic, Slovakia, the Republic of Korea, Taiwan, Hong Kong (China), Indonesia, Laos, Cambodia, Malaysia, Nigeria, Thailand, Pakistan, and United Arab Emirates (UEA).

In particular, 70 Indian businesses attended the fair with the aim of seeking partners and establishing investment and trade relations with Vietnamese businesses.

To help businesses make the most of the fair, the Trade Promotion Department under the Ministry of Industry and Trade organised import-export linking activities at Vietnam’s “export promotion” stand.

During the fair, a wide range of activities will take place to strengthen friendship and cooperation between domestic and foreign businesses, such as seminars and talks on trade promotion, signing ceremonies for key contracts, a ceremony to present medals and certificates of merit, and tours of industrial zones and markets.

Hanoi supports online tax declaration for businesses

The Hanoi Department of Taxation assisted 5,330 businesses in the capital city to lodge their taxes online on April 6. 

To do so, businesses needed to create tax profiles using an application software provided free of charge by the Department, acquire digital signatures issued by the Ministry of Information and Communications and have a permanent email address.

The online tax declaration will help businesses to reduce time and money as they can do it round the clock.

This year, the Department plans to provide the service for another 10,000 businesses.

Tra fish export prices on the rise

The Vietnam Association of Seafood Exporters and Producers (VASEP) has decided to increase the price of tra fish exports to Europe and the US by US$0.2 per kg.

The rise in prices is mainly due to the lack of input material.

Tra fish export revenues hit a record high of nearly US$1.4 billion in2010, a lucrative contribution to the seafood sector.

In the past ten years, tra fish imports to Europe accounted for 19 percent of this market’s total volume.

UK magazine: Vietnam to grow 7.2 percent from 2011-2015

Vietnam’s real GDP growth is expected to average 7.2 percent a year in the 2011-15 period underpinned by strong growth in consumption, investment and exports, forecast the Economist Intelligence Unit (EIU) of the UK’s Economist magazine.

In its latest report, EIU also said that consumer price inflation will accelerate to a rate of 14.3 percent in 2011 compared with its previous forecast of 12.3 percent. The inflation will go down to an average of 7.8 percent a year in the 2012-2015 period.

The increasing inflation in 2011 reflected part of the reality that domestic prices are easily changed because of the moves of the international commodities market.