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Export of electronics products is forecast to grow rapidly in the coming time given the massive foreign direct investment (FDI) flow into this sector.
Vietnam has been luring funds from the giants in hi-tech, electronics and research & development (R&D), which is a bright spot in the FDI attraction picture, said the property consultancy firm CBRE Vietnam.
CBRE has assisted Panasonic in setting up the project Eco-Solution Factory in Binh Duong with total investment of some US$38 million. Following the success of its component factory in the northern region, the Japanese electronics corporation has decided to move to the south and the new factory is scheduled to start operations in late 2014.
CBRE has also helped LG Electronics select a suitable location for a factory and deal with the issues of labor and tax incentives. The South Korean corporation intends to spend US$300 million building a factory in Haiphong, where labor cost is still low and the fight for employees is not so harsh as in Bac Ninh and Bac Giang.
Early this year, Fuji Xerox of Japan began work on a US$119-million factory specializing in production of printers and photocopiers at the urban and industrial complex VSIP Haiphong. It is expected that the factory will be inaugurated in August and start operations in November.
During its first phase, the factory will have a capacity of two million products per year, creating jobs for around 500 workers. This will be the first production facility of Fuji Xerox in Vietnam.
These new projects together with the operational ones will contribute to the tremendous growth in electronics export in the coming time and prove electronics the major export item of Vietnam, said experts.
Heavy investment in electronics in recent years has helped this sector win the first place in terms of exports from textile-garment in 2012 and the first quarter of this year.
Foreign-invested enterprises significantly contributed to export of cell phones, electronics products, computers and components last year, with over US$20.52 billion.
Samsung Electronics Vietnam alone exported US$12.7 billion worth of cell phones, twice as much as the figure of US$6 billion in 2011. Intel of the U.S., Canon, Nidec and Fujitsu of Japan and Foxconn of Taiwan also made great contributions, according to the General Statistics Office.
Samsung has recently started work on a new production facility in Thai Nguyen with total investment of US$2 billion, which may be raised to US$3.2 billion in the future.
Winter Corporation of Taiwan, a producer of touch screens for iPad and iPhone, last year poured an additional US$870 million into its factory at Quang Chau Industrial Park in Bac Giang, taking its total investment in Vietnam to US$1.12 billion.
With the investment increase of Samsung and Wintek, along with the factory of Nokia under construction in Bac Ninh and the mobile phone plant of Kyocera in Hung Yen, robust electronics export growth is in sight.
Petrol price cut by 500 VND per litre
Petrol retailers cut their price by 500 VND per litre to 24,050 VND on April 9 after a request from the Ministry of Finance.
The ministry cited lower prices of petrol and oil products in the global market and the fact that domestic retail prices were higher than the reference prices as the reason for the decrease.
Prices of diesel and kerosene were also lowered, going down 450 VND per litre to 21,450 VND and 21,600 VND respectively.
Although import taxes on petrol and oil products remained much lower than regulated levels, the ministry decided not to raise them in order to support local production and consumption.
Petrol prices hit a record high of 24,580 VND per litre last month after a hike of 1,430 VND per litre.
Poultry prices remain stable despite H7N9 bird flu
Prices of poultry in northern provinces have still ranged between VND32,000 and VND33,000 a kilo and show no signs of falling despite the information on H7N9 bird flu spreading in the neighboring country of China.
Prices of local fowls are not affected by the Chinese bird flu information as local poultry farming is carried out in a closed process, thus helping control diseases, said Nguyen Xuan Duong, acting head of the Livestock Husbandry Department under the agriculture ministry.
In recent times, certain volumes of Chinese substandard chickens have been smuggled into the nation and then sold to restaurants.
However, in the south, Nguyen Tri Cong, chairman of the Dong Nai Livestock Association, expresses his concerns about the Chinese flu, saying the information might negatively influence local husbandry farmers.
Cong noticed increases or deductions of local poultry and pig prices over the past few years have mainly resulted from poor consumer confidence in food safety and hygiene. Therefore, he said, the information on dead pigs being drifted along rivers in China and H7N9 flu epidemic attacking the nation will certainly cause bad impacts on local husbandry products’ prices.
25,700 gold taels sold in second auction
The second gold auction held by the State Bank of Vietnam (SBV) on Thursday attracted 22 bidders, with 25,700 taels of gold out of the total 26,000 taels sold to 20 bid winners.
Most of the bidders joining the session on Thursday were banks. They had no reason to complain this time as the floor price was lower than the market price, unlike the previous auction.
SBV did not give the ceiling price, but the floor price was set at VND43.23 million per tael, equal to the purchase price quoted by Saigon Jewelry Holdings Co. (SJC) on Thursday morning.
At the end of the morning, the floor price was VND20,000 per tael lower than the market price and some VND400,000 per tael lower than the reference price for deposits on Wednesday. The highest bid winning price was VND43.37 million a tael and the lowest equaled the floor price.
Representative of a bank joining the bidding session said most of the units present made bids because of the low price. Bidders were willing to bid at higher prices than the floor price because this price was not much lower than the market price.
Gold price fell sharply in the evening session in the New York market this Wednesday and went down further on Thursday morning, reaching the lowest level in nine months.
At the close of the evening session in New York this Wednesday, gold price lost US$23.75 per ounce, dipping to US$1,553 an ounce. Price of the precious metal in the Asian market plunged deeper on Thursday morning and at 11:20 a.m., stood at US$1,544 an ounce.
Meanwhile, at the end of on Thursday morning, SJC quoted gold at VND43.25 million per tael for buying and VND43.45 million a tael for selling, down VND160,000 against the preceding day and VND50,000 higher than the opening price. The market was quiet as investors and citizens wanted to know the result of the gold auction before making transactions.
A senior source from SBV said the central bank had considered the average purchase price of local enterprises last week and price fluctuations in the international market to set an appropriate price for the auction.
The floor price could not be lowered to the global level since Vietnam has not imported gold for long. In addition, if the price was any lower, it might fuel speculation, said the source.
SBV will conduct more gold auctions until the demand of enterprises declines. It will also import gold to replenish the national reserve after taking careful consideration to prevent gold import from affecting the exchange rate.
With the gold price of VND43.23-43.37 million per tael on Thursday morning, the central bank if importing gold would make profits because the domestic price was still VND4.2 million per tael higher than the global price.
EC imposes anti-dumping duties on Vietnamese lighters
The European Commission (EC) has officially announced its anti-dumping duties applicable to disposable pocket gas-fueled lighters imported from Vietnam.
Under the EC’s latest decision, lighters made in China and then transported to Vietnam to evade anti-dumping duties will be subject to a tax rate of 0.065 (VND1.800) per unit. Products that were exported to the European market from June 27 to December 13, 2012 are also included in the EC’s anti-dumping list.
The EC had launched earlier investigations into Vietnamese and Chinese gas lighter producers and exporters. These investigations, and scrutinised customs data, revealed a sharp increase in gas lighters imported from Vietnam into the European market since 1997. In 2011 they comprised 84 percent of total European lighter imports.
During the reviewed period, Vietnam also significantly increased its gas lighter imports from China—from 3 percent in 1999 to 26 percent in 2010.
On June 26, 2012, the EC initiated an anti-circumvention probe into Chinese lighters attempting to evade anti-dumping duties via re-exports to Vietnam. The investigations lasted until April 26, 2013.
Of the 15 Vietnamese businesses included in the EC investigation’s inquiry list, only seven provided feedback. They were mostly based in HCM City, Nghe An, Binh Duong, and Tay Ninh.
Vietnam, France strengthen economic ties
Vietnam and France will work closely together to elevate their economic and trade ties to a new level.
The agreement was reached by Vietnamese Minister of Planning and Investment Bui Quang Vinh and French Minister of Foreign Trade Nicole Bricq who co-chaired an annual high-level economic dialogue in Hanoi on April 9.
The two sides spoke highly of the dialogue’s motivations, describing it as an important contributor to tightening economic ties with a view towards an official bilateral strategic partnership.
They noted that the trade and economic ties between Vietnam and France are yet to match their potential and both countries should take advantage of their fine political relations to strengthen the ties.
To this end, the ministers pledged to facilitate the two countries’ business operations by removing market access barriers detrimental to trade exchanges.
Minister Nicole Bricq gave in principle agreement to allocating additional development aid for helping Vietnam build urban railway routes in Hanoi.
She also decided on granting financial support to Vietnam’s healthcare sector. The first beneficiary will be the Mekong Delta’s Can Tho Hospital, scheduled to receive assistance for medical equipment purchases.
The ministers also discussed issues related to intellectual property, infrastructure project financial management, and private-public partnership (PPP) models.
They noted the successful organisation of a three-day forum between Vietnamese and French businesses in Ho Chi Minh City.
HCMC seeks Rhone-Alpes’ assistance
HCM City wants to learn from the French region’s experience in urban management and development.
Vice Mayor Le Manh Ha voiced the city’s desire at a reception for Louis Gagnaire, Vice President of the Rhone-Alpes region on April 9.
Like many other big cities in the world, HCM City is facing numerous challenges in its development process, and experience from the French region is useful, said Ha.
He noted with satisfaction the comprehensive cooperation between Vietnam and France in culture, education, economics and tourism, and said both sides can expand cooperation in other areas such as food processing, clean energy and IC manufacturing.
Gagnaire said the Rhone-Alpes region enjoys many advantages in energy production (nuclear, wind, hydroelectric, and solar), mechanical engineering, textiles, and plastics.
The Rhone-Alpes region is keen to increase investment cooperation with other global localities, including HCM City, he said, citing the recent opening of the region’s Economic Development Agency (ERAI) in the city as evidence.
He said that Rhone-Alpes and HCM City have cooperated in culture, science-technology, education-training, urban planning, and research and development.
He echoed Ha’s proposal, saying both sides need to boost cooperation in other areas such as food processing, IC technology, and energy conservation.
ADB forecasts 5.2pct GDP growth for Vietnam
The Asian Development Bank projects Vietnam’s economy will grow by 5.2 percent in 2013 and 5.6 percent in 2014 provided progress is made in banking reform and industrial production.
The forecast formed part of the bank’s 2013 Asian Development Outlook, released in Hanoi on April 9.
The country’s GDP growth slowed to 5 percent in 2012 due to the continuing impact of 2011’s tight fiscal and monetary policies.
GDP grew by 4.9 percent in the first quarter of 2013, marginally higher than the same period a year earlier, and the purchasing managers’ index rose slightly as orders increased.
In March 2012 the government approved a reform plan intended to strengthen the banking system through mergers, recapitalisation, the adoption of international prudential standards, and improvements in bank supervision. Some financially stressed banks were merged, but there was little progress in recapitalising banks or resolving non-performing loans.
Tomoyuki Kimura, ADB Country Director for Vietnam, said while subdued economic growth prompted the authorities to ease monetary policy in 2012, credit growth was constrained by the uncertainty surrounding the banking system’s health.
He pointed to how economic recovery depends on the acceleration of banking and State-owned enterprise (SOE) reforms, suggesting the government take a more strategically selective approach towards structural reforms and particularly to SOE restructuring.
Some initial success and progress can spur further reform momentum, he said.
The bank also forecast that Vietnam’s inflation is likely to be kept at 7.5 percent in 2013 before moving up to 8.2 percent in 2014. This view assumes reasonable weather for food production, a broadly stable VND exchange rate, and restrained policy stimulation.
The trade surplus is expected to climb to a record US$12.5 billion in 2013, while the current account surplus will likely increase again this year before easing in 2014 as imports accelerate in tandem with GDP growth.
Despite these concerns, the bank said Vietnam remains an attractive destination for foreign investment because of its large and growing working-age population and low labour costs. The general rising trend in FDI over the past decade supports this.
However, as ASEAN integration in 2015 approaches, the country faces increased regional competition for finite FDI. Its ability to remain competitive and drive economic growth back up to 7–8 percent will depend on successfully implementing structural reforms and improving the business environment more broadly.
Vietnam, Cambodia boost cooperation in agriculture and tourism
The first Tra Vinh trade and tourism exhibition and trade fair officially opened in Cambodia’s Battambang province on April 8.
This is part of activities to strengthen economic cooperation between Tra Vinh as well as other Mekong Delta provinces and Cambodia’s localities, especially in the field of agriculture and tourism.
Nguyen Van Phong, Vice President of the Tra Vinh provincial People’s Committee emphasized that despite geographical distance, Battambang and Tra Vinh provinces have many things in common and favourable conditions for sharing experiences and promoting economic cooperation.
In Tra Vinh, he said, some 30 percent of its population are of ethnic Khmer origin with Kinh and Khmer communities living in harmony. Both localities have untapped potential for cultural and tourism development.
Battambang leaders highlighted the significance of the trade fair as it aims to improve the efficiency of agricultural production and trade exchange across the common border.
Ry Uy, Vice mayor of Battambang said the province is willing to cooperate with Tra Vinh in applying new farming techniques and training human resources.
Vietnam should formulate proper policies and take the initiative to catch the wave of Japanese investment, said experts.
Professor Tran Van Tho from Japan’s Waseda University said Japanese entrepreneurs flocked to overseas markets every time the yen appreciated, pushing up production costs in their country.
The wave of Japanese investment swept over Asia in 1986 and 1987, but back then Vietnam had just opened its mindset. In 1993-1995, when the yen appreciated for the second time, Japanese firms invested heavily in Vietnam.
Unstable policies, cumbersome procedures and poor infrastructure in Vietnam discouraged many Japanese investors, making them switch to China, Tho told the Daily.
Now, Japanese entrepreneurs do not want to depend on China anymore and they are eyeing the neighboring countries, including Vietnam. Such an opportunity should not be missed and the Government should introduce appropriate policies to lure Japanese investors, said Tho at a workshop on the occasion of the 20th anniversary of Vietnam Asia-Pacific Economic Center (VAPEC) held in HCMC.
He suggested Vietnam should soon develop open and stable policies along with good infrastructure. Then, the nation’s leaders should directly call for investment into the key projects.
“After that, they cannot leave everything to their subordinates, but they themselves have to supervise such projects and give them instructions,” he stressed.
Takahisa Onose, director of Indochina Leader of Japan Business Services at Ernst & Young Vietnam, informed population, labor cost, legal transparency, tax, infrastructure and economic situation were among the concerns of Japanese investors.
Large population and cheap labor cost are the advantages of Vietnam, but tax and transparency pose big obstacles, he told the Daily in an interview via email.
He proposed the Government further improve the business environment to attract investors from Japan.
“Previously, we focused on investment in China, but we have realized that it is very risky to invest in only one nation. Therefore, taking into account the markets and the costs, we are shifting investment to Southeast Asia, particularly Vietnam and Indonesia,” he said.
Most of the large companies in Japan have already made investment in Vietnam. Now, small and medium enterprises are coming, and this trend will grow in the coming time, he said.
“Of course, Japanese do not come to Vietnam only. Therefore, what matters is the way of investment attraction. I believe the Government of Vietnam will be more active in investment attraction as this is the greatest chance ever,” he said.
Japan was the biggest investor in Vietnam last year with total fresh and additional capital of over US$5.1 billion, or nearly 40% of the total FDI approvals in Vietnam.
In the first quarter of 2013, Japan remained on top with newly pledged and additional capital totaling US$3.15 billion, accounting for 52.3% of total FDI inflow into Vietnam.
Vietnam export promises robust growth: HSBC
Vietnam’s export growth will remain strong this year and next, contributing greatly to the country’s gross domestic product and ensuring its current account surplus, according to a report composed by HSBC Research.
The bank’s economists expect by the end 2014, Vietnam’s export will contribute about 90% of the economic growth. The report says the continued rise of exports supported by remittance inflows will allow Vietnam to have a current account surplus in the next two years.
The bank expects Vietnam’s trade surplus this year would account for 2.7% of GDP, compared to 0.8% last year. Figures from the Ministry of Industry and Trade show Vietnam earned a trade surplus of US$780 million.
Export and import of Vietnam have been on the uptrend, showing that the trade surplus will not be so substantial, but Vietnam is unlikely to return to its high-trade-deficit days, as consumption is much more conservative than in recent years, says HSBC report.
The strong export growth is mainly driven by the foreign investment sector.
According to the Foreign Investment Agency, trade surplus of foreign-invested corporations in the first quarter this year was US$3.12 billion while the country’s trade surplus was US$481 million.
In the first quarter this year, registered foreign direct investment (FDI) capital amounted to US$2.9 billion while total new and additional FDI capital rose to US$6 billion, increasing 63% year-on-year.
“This means that while domestic demand is sluggish, the export sector, 63% of which is driven by foreign firms in 2012, will continue to expand and provide much-needed jobs and income,” said HSBC.
Both the improved new orders sub-index of HSBC’s survey on purchasing managers’ index (PMI) in Vietnam and the acceleration of imports show that exports should have a strong year, especially electronics and manufacturing, says the report.
Although the country’s economic growth in the first quarter 2013 was not too high, at 4.9% compared to 5.5% of the last quarter of 2012, HSBC report forecasts Vietnam’s GDP will grow 5.5% this year compared to 5% last year. The economic growth will be supported by a gradual improvement in domestic demand, an acceleration of foreign investment and steady remittances, says the report.
Low inflation rate in early months this year has been a good indicator, according to HSBC report. It forecasts the average consumer price index this year will increase 6.7%, compared to the 9.3% level last year.
Office workers moonlight during difficult times
Many office workers have opted to do part-time business activities as a way to earn extra money.
While salaries remain the same and daily living expenses continue to rise, tightening of belts has not been enough for many people. Some have turned to other ways of making a living.
Mrs. Hai Linh, of Tay Ho District, who works at a real estate company, said she invested along with relatives in raising pigs and fish. Not only did it add to her income, but it also provided clean and safe food, she added.
"I also collect orders from my colleagues,” Linh said, adding that she told some of her friends to mimic this business model. .
Mrs. Hien, attending the Institute for Nuclear Science and Technology, got cloth from a tailor. Since sewing has been a hobby of hers since she was young the activity came naturally to her. Hien's husband lost his job because of financial difficulties at his company, so Hien made up for the loss in income with her extra efforts.
"My sewing skills have become better with practice. Most of my customers are relatives or colleagues," she said.
Linh also said, "I specialise in providing meat and poultry to friends and colleagues. Pork pie and salted, shredded meat have been the best-sellers so far. We also sell to one another. It's beginning to look like a food production factory."
Hien also said that it was difficult to run a business after working hours in order to secure her job safety.
Government to forgive hard-to-collect tax arrears
The Ministry of Finance has proposed to cancel tax debts or fines prior to July 2007 for individuals and state-owned enterprises that are no longer be able to make their repayments.
To qualify households and individuals must prove that they are in financial trouble, have ceased operations and cannot repay their debts.
State-owned enterprises that have been dissolved, equitised or transferred ownership will be forgiven of tax when they were independent cost-accounting firm, have the decision to dissolve agreed by a provincial people's committee or from their managing ministries before July 1, 2013.
Amnestied taxes include excise tax, VAT, income tax, natural resource taxes and other kinds of administrative fees.
Fines for late payment and fines for administrative violations in the tax domain prior to July 2007 will also be forgiven.
The authority to cancel tax arrears for individuals or dissolved state-owned enterprises will be given to chairman of provincial people's committee or major cities.
The other cases must be reviewed by the minister of finance.
Pharmaceutical manufacturing neglected in Vietnam
Though Vietnam’s pharmaceutical market is considered a high-growth sector, still local firms have little hold of this market and foreign companies are not interested in setting up manufacturing facilities, creating a high dependency on imported drugs.
A report on the pharmaceutical market for 2013 by UK-based Business Monitor International shows that Vietnam’s pharmaceutical market saw revenue of US$1.1 billion in 2008 and $1.2 billion in 2009. This year, revenue is expected to rise to $1.7 billion, to reach an annual growth of 25 percent, making Vietnam a market with strong growth potential in the world, in both pharmaceutical products and health care services. This figure will possibly reach $5 billion in 2015.
However, local pharmaceutical manufacturers merely met 40 percent of demand while the rest 60 percent was totally dependant on imports. In 2008, the industry spent $923 million on imported medicines and by 2013 medicine imports are forecast to touch $1.4 billion.
According to the Ministry of Health, there are about 185 pharmaceutical companies across the country, of which, 100 produce new medicines, 80 produce oriental medicines, and five produce vaccines and biologic medicinal products. These companies were just able to produce normal specialty medicines while high-value medicines, such as anesthetic, specific antidotes, blood products, and anticancer drugs have all to be imported from foreign countries.
Under WTO agreement, since 2009, the industry has opened doors to foreign pharmaceutical companies to establish branches and manufactories in Vietnam. However, the development of local pharmaceutical industry has not come up to expectation with the number of companies investing in the pharmaceutical market only accounting for 30 percent while 70 percent of foreign companies licensed to operate in Vietnam importing medicines.
Foreign-invested projects in Vietnam also produce only normal medicinal products or formed joint-venture to provide logistics services for pharmaceutical industry instead of producing specific medicines. As a result, the country still has to spend billions of dollars to import medicines every year and barely has a chance to approach international pharmaceutical manufacturing technology.
Foreign companies said that competitiveness of Vietnam in pharmaceutical market remained weak compared to countries in the region, such as Indonesia, Philippines, and Singapore. Thus, they will not receive much benefit from building pharmaceutical factories in Vietnam.
For instance, when producing medicines, foreign companies pay most attention to local material source because ingredients account for nearly 60 percent of overheads, but in Vietnam, 90 percent of ingredients for pharmaceutical industry are imported with import tariffs much higher than other countries.
Therefore, although the British multinational pharmaceutical company, GlaxoSmithKline, wanted to become a wholly foreign-owned company in Vietnam, the company has just coordinated with local companies instead of manufacturing on its own.
Similarly, despite the appeal of Vietnam’s pharmaceutical market, Actatis was just expanded its distribution network and is seeking partners to coordinate in manufacturing at cheaper cost price.
Hence, until now, the pharmaceutical industry only has a foreign-invested project by United International Pharma (UIP), a subsidiary of Unilab, the largest pharmaceutical company in Philippines, which built a PIC/S-GMP factory in Binh Duong Province.
The hesitation of foreign companies has also caused difficulty for some local firms. Although about 55 percent of medicines produced by Imexpharm were distributed via hospital channels, the company has been facing challenges on price as it upgraded its production line and used high quality ingredients, so cost price went up higher.
As for the Imexpharm Penicillin project in Binh Duong Province, the factory has a capacity of 10 million bottles annually; however, as consumption was poorer than expected, it merely produces 3 million bottles per year.
Moreover, it is hard for the local pharmaceutical industry to develop when faced with preferred behavior towards foreign medicines by consumers.
According to a survey by the Department for Medical Examination & Treatment Administration, domestic medicines used in central hospitals only account for 12 percent; provincial and town hospitals were nearly 34 percent; and lower level hospitals were about 61 percent.
So, most pharmaceutical companies were not confident in producing high quality medicines, leaving imported medicines dominating the market. This may pave the way for counterfeit and faux medicines to infiltrate into the domestic market.
Five priority sectors to enjoy lower lending rate
The maximum interest rate on short-term Vietnamese dong loans has been lowered from 12 to 11pct per year in five priority sectors.
Dealing at a commercial bank in HCMC
Five sectors including agriculture, exports, support industries, small and medium-sized enterprises and hi-tech businesses will receive lower lending rate on short-term dong deposits.
This move aims to help priority sectors get easier access to bank loans to overcome current financial difficulties and boost the national economy. Lowered lending rates for these sectors will be 9-11pct per year and for other sectors 11-13pct by State-owned commercial banks and 12-15pct by joint stock commercial banks.
Remarkably, some enterprises of sectors that were healthy and transparent in financial dealings had effective production plans and already enjoyed lending rates from 9-10pct per year. Meanwhile, lending rates on US dollars remained unchanged at 5-7pct per annum for short term and 6-8.5pct per annum for long term.
In response to the Central Bank's move, the Ho Chi Minh City Housing Development Bank (HDBank) also began to offer a loan of VND1,500 billion ($72 million) with an annual interest rate of 11pct for SMEs who need additional working capital for production and export-import activities.
HCM City power consumption rises to cope with scorching weather
The present scorchingly hot weather has increased electricity consumption in Ho Chi Minh City in the last few days, informed the City Power Corporation.
Power consumption increased to 58.5 million kWh on April 2, the highest since the beginning of the year and far higher than the record 55.5 million kWh a day last year.
Muggy conditions are causing residents to use more electric fans and air conditioners.
Power consumption is expected to rise even more within the next few days and authorities are asking residents to conserve as much electricity as possible.
HCM City needs more hotel rooms to cope with rising visitor numbers
To accommodate 7 million foreign visitors and 24 million local tourists in 2020, HCM City will need 27,000 more hotel rooms, including 6,700 rooms of three- to five-star standards.
According to the Hotel Division under the Department of Culture, Sports and Tourism, the number of international arrivals in the city has risen by about 10 per cent annually, and the number of local visitors has had slightly lower growth. The average stay is 2.6 days for international visitors and 2.5 days for local travellers.
The development pace in the hotel sector in HCM City has slowed in recent years, and most of the hotel projects have been delayed because of capital shortage, with several five-star hotel projects falling behind schedule.
VN, Indonesia look at ways to exploit untapped potential
"Indonesia and Viet Nam share several conditions that can help enhance our economic relationship," said Indonesian Ambassador Mayerfas at a business conference organised yesterday.
He mentioned huge populations, increasing economic achievements, rising purchasing power parity, geographical closeness and membership in ASEAN as potentials for bilateral cooperation.
During the event, held by the Viet Nam Chamber of Commerce and Industry and Indonesian Embassy in Ha Noi, Indonesian business representatives heard about the host country's investment policy as well as specific tax regulations.
Viet Nam had become a new destination for Indonesian investors and several companies have been very active in exploring opportunities and completing deals with Vietnamese companies, the ambassador said.
He urged the Vietnamese business community to explore Indonesia's investment and business climate and learn about the opportunities the market held for foreign investors.
"While Indonesia is becoming more attractive to foreign investors, we sincerely look forward to Vietnamese entrepreneurs taking full advantage of what Indonesia has offered, both in terms of business and investment," he said.
Bilateral trade and investment between the two nations have developed significantly over the past years, said head of the chamber's International Relations Department Pham Quang Thinh, who added that the two business communities could bring the relationship to an even higher level.
Dang Xuan Quang, deputy head of the Ministry of Planning and Investment's Foreign Investment Agency, emphasised the importance of accelerating the two nations' ties with a focus on speeding up trade and investment promotion and ties between the two private sectors.
Last year, two-way trade turnover reached $4.6 billion, with Vietnamese rice, telephones and electronic components (as well as other exports) contributing over $2.35 billion.
Viet Nam imported more than $2.24 billion worth of goods from Indonesia, including paper, cooking oil and chemicals.
As of March, Indonesian investors had pumped $285 million into 34 projects in Viet Nam. In return, Vietnamese businesses had seven projects in Indonesia worth $107 million.
Industrial zones show recovery signs
Export processing and industrial zones in HCM City are showing signs of economic recovery with increased investment and higher production levels, according to the city's Export Processing and Industrial Zone Authority (Hepza).
In the first quarter of the year, local EPZs and IZs attracted a total investment of nearly US$145 million, a year-on-year increase of more than 21 per cent, said Ho Xuan Lam, head of Hepza's chief office.
Of the total, he said that $123 million was from foreign investors, an increase of 80 per cent compared to the same period last year. Domestic investors poured in nearly $22 million, a year-on-year decline of 57 per cent.
During this period, about 12 projects received investment certificates to set up in local zones. Five others have been permitted to add capital.
Two new projects had been put into operation, and another is waiting for a construction license.
"Production in the first quarter in these zones was more stable, with no bankruptcies or stopping of operations," Lam told Viet Nam News. "Some of the companies in food and foodstuff processing want to widen their investments."
He said that several sectors, such as the building materials industry, still faced challenges.
To help companies solve difficulties, Hepza promises to hold conferences in which companies located in Hepza will discuss their problems with local authorities and officials in the banking and tax sectors.
Hepza also plans to open trade promotion fairs in regional countries such as Laos and Cambodia to widen export markets.
Lam predicted that investments would improve until the end of next year. Many investors are thinking of setting up business in local zones and others are considering widening their investments.
Lam said that, at of the end of March, there were about 1,254 projects, worth a total of $7.3 billion, in local zones.
Of the total, foreign investors got involved in 495 projects with a total capital of nearly $4.4 billion. Domestic investors poured $2.9 billion into another 759 projects, he said.
Local authorities have reported that more than 1,000 projects were under operation, while 32 projects were under construction, 66 projects had yet to be carried out and more than 100 projects had been suspended or closed.
Last year, due to tough economic conditions, investment in local industrial zones and export processing zones fell substantially compared with previous years.
HCM City firms push local products
Over 100 businesses from HCM City are introducing made-in-Viet Nam products at the Viet Nam-Cambodia trade and service exhibition (HCM City Expo 2013) that opened in Phnom Penh on Wednesday.
The five-day event accommodates 200 booths, mostly focusing on food and foodstuff, household plastics, garments, footwear, handicrafts, cosmetics, office supplies, agricultural and constructional materials and decorations.
Opening the event, Cambodian Deputy Prime Minister Mensom Ol said the event contributed to boosting economic, trade and service cooperation between the two countries as well as their friendship.
She attributed the growing bilateral trade ties to Cambodia 's socio-economic development over the past years.
Viet Nam has invested in various areas in Cambodia, including agriculture, telecommunications, aviation, and banking, she said.
She expressed her hope that supported by the two governments, businesses will enhance their partnership for each country's economic development as well as stability, development and peace in the region.
Vice Chairman of the HCM City People's Committee Nguyen Thi Hong said the fair, including a seminar on trade promotion and a charitable programme, offers a good opportunity for the city businesses to explore the market and seek long-term partners.
Da Nang suffers cash flow crisis
The central city of Da Nang has yet to reclaim nearly VND4 trillion (US$190 million) land-tax debts from businesses and individuals.
The debt becomes more important when considering that the city's State budget revenue to date is VND 2.2 trillion ($105 million) – just 18.6 per cent of what was hoped for – in the first three months of the year.
"The low budget revenue has caused a delay in Da Nang's VND3.5 trillion ($167 million) bond issue for socio-economic development this year," said director of the city's finance department Le Thi Huong.
She said Da Nang had received VND300 billion ($14.3 million) from land taxes, only a sixth of the VND1,8 trillion ($86 million) planned for the first quarter.
At a meeting on Wednesday, city People Committee's chairman Van Huu Chien said the city had seen slow growth in economic development.
"Most industries, trades and businesses have seen a poor growth during the first three months of this year. Businesses have been struggling with sales and a lack of funds," he said.
He also said the real estate sector – a major revenue earner for the city, was stagnating.
Chien also said the city had also seen little increase in foreign invested projects.
Only seven new foreign-invested projects worth a total investment of $828,000 were approved in the first three months of the year.
The city also has seen three projects increasing investment capital worth $2.1 million in the first quarter.
Domestic rice exports continue to rise
Viet Nam targets exporting 2.2 million tonnes of rice in the second quarter of the year, which would raise the total export volume for the first six months to 3.65 million tonnes, according to the Viet Nam Food Association.
Speaking at a meeting in HCM City yesterday, Huynh Minh Hue, VFA general secretary, said that businesses had exported 1.45 million tonnes of rice for a free-on-board (FOB) value of US$641.3 million in the first quarter of the year.
This represented an increase of 35.12 per cent in volume and 22.76 per cent in value compared to the same period last year.
With an abundant supply in the world market, the average export price in the period was $44.5 per tonne lower than from the corresponding period last year, to around $442 per tonne, he said.
Countries in Asia and Africa were the main buyers of Vietnamese rice, accounting for nearly 66.3 per cent and 16.4 per cent of total export volume, respectively, he said.
During this period, exports of high-grade and fragrant rice accounted for nearly half of total exports, and average-grade rice 31.7 per cent, he said.
By the end of last month, enterprises had signed contracts to export 3.57 million tonnes of rice and had already shipped 1.45 million tonnes.
This means that another 2.12 million tonnes will be delivered beginning in April.
Hue as well as other meeting attendees said that world rice prices were not likely to increase in the coming months because supply was abundant.
Thailand and India, two of the world's largest exporters, have a large inventory, so they will seek ways to reduce their stocks, thus putting more pressure on rice prices.
However, Le Viet Hai, director of the Mekong-Can Tho Joint Stock Company, said there was no sense of urgency for Viet Nam to cut export prices further "since our price was already low, and our rice is fresh and has a consistent quality."
Truong Thanh Phong, VFA chairman, agreed, saying the association would adjust selling prices in a flexible manner.
Asian and African countries will continue to be the main import markets of Vietnamese rice, he added.
However, low-grade rice will have a difficult time entering African market since low-grade Vietnamese rice cannot compete with rice from India and Pakistan, Phong said.
He said "demand from traditional markets for Vietnamese rice is expected to improve in the second quarter."
In addition, Viet Nam has recently signed a memorandum of understanding with the Republic of Guinea to export 300,000 tonnes of rice annually to the African nation until the end of 2015, he said.
Phong said "I believed that the industry would meet its export target set for the second quarter."
He asked enterprises to keep a close eye on changes in the world rice market and outline appropriate export plans.
Enterprise representatives at the meeting asked the association to work with agencies to strengthen quality control of fragrant rice so that its reputation on the world market would be maintained.
As for the national programme to stockpile one million tonnes of rice, he said enterprises had completed purchases as scheduled. The programme has helped to both stabilise the price of rice and ensure a profit for farmers.
"From now until May, rice prices in the domestic market are not expected to fluctuate," Phong said.
Ethnic groups and Vietnamese family traditions celebrated at festival
This year's Culture Day of Vietnamese Ethnic Groups will feature cultural activities to celebrate Vietnamese Family Year 2013 and the solidarity of 54 ethnic groups of the country.
The three-day festival will focus around the theme of the Youth of 54 Ethnic Groups with the Inheritance and Development of Traditional Cultural Values of Vietnamese family, and will take place from April 19 at the Culture-Tourism Village of Vietnamese
Ethnic Groups (VINACULTO), Dong Mo Commune, 40km to the west of downtown Ha Noi.
The event also provides a chance for young people from different ethnic groups to learn how to preserve and develop their families' traditional cultural values, contributing to strengthening the unity of the nation's groups.
The VINACULTO in Dong Mo is considered as a communal house for people of all ethnic groups. The festival will enhance cultural exchanges between groups and promote the diversity of Vietnamese culture, said Lam Van Khang, vice chairman of the village's management board.
"The festival is an opportunity for the ethnic people to introduce their traditional culture personally," he said.
He added that people of eight ethnic groups from the northern provinces of Ha Giang, Son La, Bac Kan, Lang Son, Bac Giang and Hoa Binh will participate in the festival together with young representatives of the other groups.
A variety of activities, including a seminar on the role of young ethnic people with traditional cultural values, art performances, culture exchanges, traditional costume fashion show and folk games will be held.
During the three days of the festival, a northern mountainous region will hold a market where visitors can enjoy regional specialities, ethnic culture, folk games and cuisine in addition to folk songs and dances performed by local ethnic people.
The festival will be highlighted by an art performance featuring folk songs and dance praising solidarity and the diversity between groups. This performance will be broadcast live at 8pm, April 19 on VTV1, VTV4 and VTV5 channels.
Eight firms fined for Lam Dong forest damage
The government of the Central Highlands province of Lam Dong has imposed fines totaling more than VND15 billion on eight local companies producing and trading in agro-forestry products and exploiting minerals but failing to protect forest areas that they are allowed to hire.
According to Dispatch 1545/UBND-LN issued by the provincial government last Thursday, Lam Dong authorities already requested Tam Chau Co. Ltd to pay VND210 million, Di Duc Real Estate Co. Ltd VND74 million, Ngoc Mai Trang Co. Ltd VND12.5 billion, Toan Hung Investment Construction and Trading JSC VND535 million, Bao Lam Rubber JSC VND1.76 billion, Lam Dong Jewelry JSC VND4.5 million, Son Dien Co. Ltd VND89 million and Bay Chin Co. Ltd VND108 million. The companies are required to pay the penalties by May 30.
The local government requested the enterprises to pay the compensation fees to the State budget. At the same time, the corporate violators will have to take responsibility for planting, taking care of, managing and protecting forests in destroyed areas.
The province has directed the governments of districts Lac Duong, Duc Trong, Di Linh, Bao Lam and Da Teh to instruct relevant authorities to perform procedures to recover and submit to State budget the value of forestry products that were damaged due to the companies’ negligence.
Northwest region thirsty for funds
The Northwest is in dire need of investment for poverty reduction and socio-economic development, heard a dialogue held by the central bank and the Northwest Steering Committee on Tuesday. The dialogue is the prelude to a fully-fledged conference taking place today in Tuyen Quang Province to discuss development solutions for the region.
The Northwest is considered as the poorest region in Vietnam. It consists of Hoa Binh, Son La, Lai Chau, Dien Bien, Yen Bai, Lao Cai, Lang Son, Tuyen Quang, Phu Tho, Bac Kan, Cao Bang, Ha Giang and part of Nghe An and Thanh Hoa.
The percentage of poverty-stricken households is up to 70-80% in several communes in this region, far higher than the national average of 10%.
Vo Tri Thanh, vice president of the Central Institute for Economic Management (CIEM), said: “Over the last 10 years, we have repeatedly chanted the slogan ‘unlock potentials, eradicate poverty’. This shows how hard poverty reduction is in this region.”
Cat Quang Duong, deputy director of the Credit Department under the central bank, said the Northwest had raised a total fund of over VND76.2 trillion by the end of 2012, up 38% against end-2011.
However, such fund could only meet 69% of the demand for loans in the region. The total outstanding loans in the Northwest stood at VND110 trillion at the end of 2012, a rise of 16% over late 2011.
The Northwest is sparsely populated with 44 poverty-stricken districts among the total 62 districts recognized as poor nationwide. In addition, ethnic minority people in remote areas are still applying outdated cultivation techniques.
Therefore, banks are hesitant to grant loans for socio-economic development in this region, said Duong.
Representative of the central bank’s branch in Ha Giang said the province had introduced an interest rate subsidy program to help producers take out loans to buy machines, but they still could not borrow loans.
Nguyen Huu Thap, vice chairman of the business association of Tuyen Quang, stated: “Banks are still afraid of giving loans to small and medium-sized enterprises.” It is unfair since lenders are still offering funds for large State-run firms, he stressed.
He suggested banks cut lending rates further to share the burden with businesses.
In the last five years, banks provided the Northwest with over VND1.4 trillion for social security, or 28% of the total fund for 63 cities and provinces nationwide. The fund was mainly used for poverty reduction, study encouragement, road and school development, and healthcare and support for Agent Orange victims, says a report of the central bank.
Policymakers, economists and entrepreneurs today gather at the 2013 Conference for Investment Promotion and Social Security for the Northwest in Tuyen Quang Province to seek ways to remove difficulties for this region.
Over 1 million rural laborers get job training
Localities nationwide have supported vocational training for over 1 million rural laborers over the last three years.
The localities have responded to the Government’s project on vocational training for rural laborers which will last until 2020.
The National Steering Board for Vocational Training on April 2 convened a meeting to sum up its three- year operation under the chair of Deputy PM Nguyen Thien Nhan.
A report presented by the Board showed that 77.6% of the project goal was fulfilled.
The project disbursed VND 4.461 trillion, equal to 17.2% of the total expenditure in the 2010-2020 period.
Addressing the event, Deputy PM Nhan pointed out that a large number of localities have yet given adequate attention to vocational training in rural areas.
Local authorities were asked to make preliminary reports on project progress and submit them before May 15, when a conference to wrap up the project will be convened.
He proposed policy adjustments to vocational training registration, personnel, local responsibilities and assessment to make the project productive./.
Weak demand poses difficulty for rice exporters
Vietnamese rice exporters are facing difficulties in fulfilling their target of selling 8 million tonnes of rice abroad this year as demand is waning while supply is increasing, warned Truong Thanh Phong, President of the Vietnam Food Association (VFA).
Phong was speaking at a VFA meeting in Ho Chi Minh City on April 4 to review the association’s export status in the first quarter and the results of its plan to stockpile one million tonnes of rice earlier this year.
He said in the current condition, VFA’s management must be more careful than ever.
According to VFA, as of March 31, the country registered a total contracted amount of 3.576 million tonnes, up 12.42 percent over the same period last year. In Q1, 1.451 million tonnes of rice were shipped abroad at an average price of 442.06 USD per tonne.
VFA said the primary reason why such a large volume of rice was exported at a low price was because exporters had to sell their rice to China at a reduced rate due to declining demand from other traditional markets.
In the first quarter only, China - the largest consumer of Vietnamese rice, signed contracts to purchase over one million tonnes of rice. It has so far received 630,000 tonnes.
Meanwhile, falling demand was seen in Africa - Vietnam’s second largest market, with only 500,000 tonnes signed in the first quarter this year.
However, Phong said in the next two months exporters will no longer suffer from buying pressure and can focus on selling.
In the second quarter, the country’s total rice export volume is estimated to reach 2.2 million tonnes, while exporters are expected to win additional contracts from concentrated markets, said Phong.
He affirmed VFA’s determination to export 8 million tonnes of rice in 2013, and called on businesses to keep a close eye on market developments, both imports and exports, and especially in Thailand and China.
During VFA’s April 4 meeting, the association reported that they reached their one-million-tonne target of rice stockpiles on March 31.
Rice traders stressed the necessity of buying rice to stock and suggested that in the context of a big rice harvest, the association should implement its buying plan to stabilise the market price and ensure a good price for farmers.-
DongA Bank receives Bank of Mellon’s award
DongA Bank has been awarded by Bank of New York Mellon (BNY Mellon) an Excellence Award for 2012 for Straight Through Processing (STP), according to DongA Bank’s website.
The STP Award, granted every year by BNY Mellon, acknowledges outstanding performance with respect to payment processing.
Last year, STP between the two banks reached more than 95 percent of total payments.
Along with DongA Bank, the Vietnam Prosperity Commercial Bank (VPBank) also received the STP Award from the BNY Mellon last month.
The Bank of New York Mellon Corporation is an American multinational banking and financial services corporation formed on July 1, 2007 as result of the merger of The Bank of New York and Mellon Financial Corporation. It is the oldest banking corporation in the United States , tracing its origins to the establishment of the Bank of New York in 1784 by Alexander Hamilton.-
US$2.65 billion invested abroad in Q1
Vietnamese enterprises are increasingly investing overseas, especially in Laos, Cambodia, Myanmar and Russia, with their investment reaching US$2.65 billion in the first quarter.
Of the total, US$720.7 million came from 22 newly-licensed projects and the remainder was additional capital from existing projects, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI).
Notably, the Russia-Vietnam Oil and Gas Joint Venture (Rusvietpetro) decided to increase its investment in a Russia project by US$1.4 billion, and the Vietnam Chemical Corporation (Vinachem) added US$518.9 million to its salt mining project in Laos.
Most Vietnamese firms are keen on mineral exploration, information and communications, accommodation and restaurant services.
They registered to invest in 12 countries and territories in the first quarter of this year. By March 20, 2013, they poured investment in 742 projects with a total registered capitalisation of US$15.5 billion.
So far, Vietnamese businesses have invested in 59 countries and territories, with 227 projects worth over US$4.2 billion in Laos, and 129 projects worth US$2.7 billion in Cambodia.
About US$3.8 billion has been disbursed, including US$2.9 billion in the oil and gas industry, nearly US$500 million in rubber plantation, US$400 million in hydro-electric power plants, and US$249 million in the telecom sector.
Seafood exports to hit US$6.5 billion
Vietnam is expected to earn US$6.5 billion from seafood exports by the end of 2013, representing a year-on-year increase of 5 percent.
Nguyen Huu Dung, Deputy Head of the Vietnam Association of Seafood Exporters and Producers (VASEP), says that shrimp exports will fetch US$2.2 billion, equivalent to last year’ figure, while Tra fish exports are forecast to generate US$1.9 billion, up 5.5 percent over the previous year.
The export value of other seafood products is likely to rake in US$2.4 billion, up 10 percent compared to 2012.
Dung is optimistic about the recovery of major seafood importers in the second half of 2013, including the European Union (EU) and the US, from which Vietnam will see slight increases in export turnover to US$1.2 billion (up 5.3 percent) and US$1.3 billion (up 9 percent), respectively.
Shrimp exports to the Japanese market should also record positive results, he says highlighting the rising demand for seafood in other markets, such as China, the Republic of Korea, Australia, Southeast Asia, South America, Africa and the Middle East.
According to the VASEP official, the seafood export sector will have to face a number of challenges in 2013, such as technical barriers, strict food hygiene and safety standards, capital shortages, and rising costs of input materials.
He stresses the need to devise appropriate zoning plans for aquaculture breeding areas, increase seafood quality, reduce anti-biotic residue, apply modern technologies, protect the environment and create closer links along value chains.
Dung voices his concern about tough competition in the global market and other issues related to anti-dumping prices in the US. To corner the market, he says, local exporters should increase their competitiveness, set up reliable distribution networks and develop product trademarks.
Private entrepreneurs association debuts
Vietnam’s private entrepreneurs association was established at a congress in Hanoi on April 6.
The organisation aims to support businesses in improving operational efficiency, sharpening their competitive edge, and expanding overseas markets.
Top priority will be given to broadening partnerships to develop a contingent of entrepreneurs that have competent managerial skills, professional ethics, and corporate social responsibility.
In the context of international integration, businesses need to cooperate with each other to make use of their combined strength, enhance competitive capacity and address challenges, said Deputy Minister of Planning and Investment Dang Huy Dong.
He proposed that the association make recommendations concerning mechanisms and policies to create a favourable environment for all economic sectors to operate efficiently.
The congress elected Prof. Nguyen Trong Dieu, former Deputy Minister of Home Affairs, as President of the association for the 2013-2018 tenure.
Vietnam now has more than 400,000 private businesses that contribute significantly to the State budget every year.
However, private businesses have been struggling to weather the economic slowdown, and thousands suspended their operations in 2012.
Vietnam contributes to 2013 OECD forum
International delegates have praised Vietnam’s contributions to and effective cooperation with the Organisation for Economic Co-operation and Development (OECD).
During the OECD global forum in Paris on April 4-5, participants held dialogues with government officials from non-OECD member countries and representatives of the private sector and civil societies.
Featuring the theme “Creative Approaches to Poverty Reduction, Increased Social Connectivity and Advancement”, the forum highlighted Vietnam’s active membership in the OECD and proposed a new concept of social connectivity, which is considered an effective tool for evaluating poverty reduction efforts.
OECD Secretary General Angel Gurria described Vietnam as a pioneer among developing countries in promoting social connectivity and reducing the poverty rate.
Vietnamese representative Trinh Cong Khanh, head of the Ethnicity Policy Department under the Committee for Ethnic Minority Affairs (CEMA), affirmed that the Government of Vietnam has introduced many policies on socio-economic development and sustainable poverty reduction for ethnic minority groups.
However, he admitted, the country still has overlapping policies and insufficient human resources to implement them effectively.
Khanh emphasized that Vietnam attaches importance to promoting social connectivity and realizing the Millennium Development Goals (MDGs). Therefore, it was among the first countries selected by the OECD to implement a poverty reduction programme that takes into account the social connectivity factor.
The programme will focus on providing benefits to the most vulnerable people, narrowing the gap between rich and poor, and mobilizing the combined strength of the entire society.
Established in 2006, the OECD provides a venue for leaders and researchers from many countries to tackle poverty-related issues, narrow the development gap, and reduce unemployment.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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