State strained by unnecessary works: ministry

1,154 unnecessary projects have been carried out this year, costing the state over VND3.3 trillion (US$158.65 million), the Ministry of Planning and Investment said at a recent regular cabinet meeting.

Of these, 183 projects were executed by central government agencies with a total funding of VND337 billion, and local governments spent VND1.736 trillion to carry out another 638 projects.

The ministry said there were an additional 333 new projects that have been started and cost the state budget a total VND344 billion.

The ministry thus suggested suspending certain public works that are being carried out by central government agencies to recover VND337.6 billion for the budget.

As for local projects using the state budget funding, the ministry suggested local governments should reconsider them.

For projects funded by government bonds, the ministry recommended the government should recover all of the funding that were disbursed as of January 31, 2011 but are yet to be allocated to any project.

So far this year, the government has been able to save VND81.5 trillion by suspending certain public works nationwide.

Smuggled goods still rampant in HCMC

Despite officials’ efforts, smuggled goods are still flooding supermarkets and trade centers throughout Ho Chi Minh City.

The HCMC Market Management Bureau said smuggled products of all kinds with large quantities could be easily found on the market and the trading of smuggled goods such as garment, fabric, mobile phones, electronics, footwear and beverage was also on the rise.

In July alone, the market management authority seized a large number of smuggled goods, including 4 tons of herbal medicine, 300kg of monosodium glutamate, 165,000 towels and thousands of used computers and laptops.

A raid into Tan A Warehouse in District 6 in July also found thousands of household goods including electricity fuses, light switches, dishware and incense burners of Chinese origin that had been illegally brought into Vietnam.

The officials also seized more than 3,000 smuggled children’s toys without safety guarantee stamps in the first seven months of this year.

According to the market management bureau, fake and smuggled products aren’t just sold in suburban areas and provinces but can even be found downtown HCMC supermarkets and trade centers such as Maximark Cong Hoa Supermarket, Lucky Plaza and Saigon Square trade centers.

Dang Van Duc, head of the bureau, said the smugglers constantly changed their unloading locations to avoid detection.

“In case they’re caught, they’re ready to leave behind their products whose values are often small,” Duc said.

Vu Hong Nam, head of the HCMC Economic Crime Investigation Police Department, admitted that the current legal framework is not adequate, consistent or strict enough to curb the smuggled products flowing into Vietnam.

Nam said there were cases when the authority had to stop investigating because of some legal technicalities.

Tightened credit wrecks toll on construction sector

In Ho Chi Minh City, construction material manufacturers and retailers are suffering from low sale as a result of a credit-starved real estate market.

Bui Hoang Trieu, Director of Minh Khoa Construction Company, said the troubling economy and the government’s policy that restricts credit to the real estate sector was affecting the building material industry.

The owner of a building material store in District 10 said so far her sale had slumped by 30 percent in four consecutive months compared to the same period last year.

She said she had never seen such prolonged recession like this year and hadn’t been able to sell the products stockpiled since April.

M.V.T, a cement distributor, said he had managed to sell only 1 ton of cement a day, down by 50 percent compared to the same period last year.

For their parts, construction material manufacturers said the frozen real estate market had also affecting their businesses badly.

Vietnam Cement Industry Corporation, or Vicem, said cement consumption recorded in July dropped 10 percent month-on-month to 320,000 tons.

As of the end of July, Vicem achieved only 50 percent of its annual target with 9.6 million of tons of cement consumed. Its stockpile also reached a record high of 1.62 million tons.

Meanwhile, the Vietnam Steel Association said the steel sector also incurred a large stockpile of 930,000 tons in July, up by 28 percent compared to the same period last year.

Dinh Quang Huy, Chairman of the Vietnam Building Ceramic Association (VIBCA), also said there are now 30 million square meters of tile bricks stockpiled at all VIBCA’s member companies.

Tran Van Huynh, Chairman of the Vietnam Association for Building Materials, said a Ha Nam-based company also keeping 12,000 cube meters of lightweight concrete in its warehouse even though its annual production is only 100,000 cube meters.

EVN remains in debt to PetroVietnam, Vinacomin

Vietnam Electricity Group, the country’s monopoly power supplier, has yet to repay its VND10 trillion (US$487.8 million) debt to two other state-run enterprises despite repeated urging by the creditors since April.

At a meeting held by the Ministry of Industry and Trade in Hanoi yesterday, the Vietnam National Oil and Gas Group (PetroVietnam) and the Vietnam National Coal and Mineral Industries Group (Vinacomin) sought the ministry’s intervention in the affair.

Nguyen Van Bien, Vinacomin’s deputy CEO, said his company would face difficulty in operating its power generators if EVN did not pay up.

“EVN owes Cam Pha thermal power plant VND1 trillion and the plant needs the money for its operation,” he said.

Vu Quang Nam, PetroVietnam’s deputy CEO, said EVN owed large sums to two of its subsidiaries, PetroVietnam Oil Corporation and PetroVietnam Gas.

In July PetroVietnam asked the government to persuade EVN to repay its debts, saying the amount included VND7.7 trillion in electricity bills owed to PetroVietnam’s thermal power plants and VND422 billion in interest.

PetroVietnam said EVN also owed VND895 billion to its Ca Mau 1 and 2 thermal power plants from whom it bought power from 2007 and 2009.

Vinacomin and PetroVietnam said they had been demanding repayment at almost every meeting held by the Ministry of Industry and Trade, but EVN’s refrain was that it lacked funds and it did not mention any plans to clear the debts.

This time too EVN had remained silent about repayment plans, they said.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said the two companies should sympathize with EVN. Earlier this year the government had ordered banks to lend EVN VND10 trillion but it still could not mobilize this loan, he said.

He urged EVN to work with banks to soon get the loan.

EVN also needs money to buy oil for power generation since the Nam Con Son gas pipelines that feed its thermal power plants in the southern region, which are responsible for around a fourth of the national power output, will be closed for maintenance from September 15 to 25.

“EVN needs to quickly get the loans for buying oil and clear part of its debts to PetroVietnam and Vinacomin,” he said.

Japan firm to build $25 mln feed plant in Long An

Japan’s Kyodo Sojitz Feed Co Ltd has got the license from Long An Province to set up a US$25-million animal feed manufacturing plant in Ben Luc District.

Phan Thanh Phi, head of the provincial economic zone management, said the project was likely to go on stream in April 2013, producing 200,000 tons annually.


So far this year 30 foreign investors, mostly Japanese, have leased plants and production facilities in industrial zones around the province, he added.

Kyodo Sojitz is a joint venture between major trading company Sojitz Corporation and feed producer Kyodo Shiryo Co Ltd.

Banks expand activities abroad

A number of Vietnam’s banks are expanding their activities by opening their branches abroad.

The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) will become the country’s first bank to make a presence in Europe with the opening of its branch in Frankfurt, Germany, scheduled for Sept. 6.

Chairman of the Board of Directors of Vietinbank Pham Huy Hung said the bank chose Germany to expand its activities as the country is Europe’s leading economic centre and a big trade partner of Vietnam where there is a large number of overseas Vietnamese.

Hung revealed the bank’s long-term plan to upgrade its branch in Frankfurt into a subsidiary bank and open more branches in the Czech Republic, Poland, the UK, France and other European Union countries.

Meanwhile, other banks have chosen Cambodia and Laos to open their branches, including the Vietnam Bank for Agriculture and Rural Development (Agribank), the Bank for Investment and Development of Vietnam (BIDV) and the Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank).

BIDV bought the local Prosperity Investment Bank Plc (PIB) and named the restructured bank Bank for Investment and Development of Cambodia PLc (BIDC). After opening its branch in Phnom Penh late July, 2010, BIDC opened another branch in Siem Reap province.

In May, 2011, the Sai Gon-Hanoi Joint Stock Commercial Bank (SHB) received the State Bank of Vietnam (SBV)’s permission to open its branch in Cambodia.

Apart from the presence of BIDV and Sacombank in Laos, the Military Bank (MB) has decided to invest 12 million USD to open its branch in Laos.

BIDV and Sacombank leaders have revealed their plans to open their branches in Myanmar, a potential market for economic and trade cooperation with Vietnam.

Trade fair brings contracts to local businesses

Vietnamese and foreign businesses signed five contracts with 21 million USD and 55 billion VND on September 5, in the framework of the International Trade Fair 2011 of the central region and Central Highlands of Tay Nguyen.

The largest contract, worth 20 million USD on buying, processing and exporting ocean tuna was inked between the Ba Hai Co., Ltd of Phu Yen province with the Ocean Trading Co., Ltd of Japan.

The Indian invested KCP Vietnam Industries Co., Ltd of Indian reached a 40 billion VND contract with Binh Dien Fertilizer Joint Stock Company and Tan Hoa Binh Co-operative entered into contract to export handicraft products worth 1 million USD with Kamaya. Inc of Frence.

Besides, 15 other domestic businesses also concluded contracts on pharmaceutical products, and fertilizer trading with Vietnam-based ThaiNakor Patana company of Thailand and Hoang Long Vina Production and Trading Co., Ltd.

Ministry cuts seafood exports forecast on uncertainties

The Ministry of Agriculture and Rural Development has just lowered its forecast on Vietnam's seafood export turnover in 2011 to $6 billion, down $100 million from the previous forecast, due to raw material shortage and shrinking foreign demand, newswire NHDmoney reported.


Although the demand for seafood products of EU, the US, Russia, China and Southeast Asia markets remained high, the demand for fisheries products of Japan, the country's biggest seafood buyer, saw a serious decline, according to the ministry's updated forecast on some agricultural product markets in August 2011.

Vietnam's total seafood exploitation output in August 2011 was estimated to reach 254,000 tons, bringing the total figure in January-August to 1.73 million tons, up only nearly 1 percent from the same period last year, of which fish output reached 1.619 million tons.

Meanwhile, the aquaculture production output in August was estimated to reach 282,000 tons, bringing the total figure in the first 8 months of this year to 1.845 million tons, rising 5.3 percent year on year, of which fish output reached over 700,000 tons.

Vietnam's export turnover for seafood products in the first eight months of this year reached $3.7 billion, rising 24.4 percent year on year.

The export turnover increased sharply in large foreign markets, such as the US, China and Italia, with 42.7 percent, 57.3 percent and 45.1 percent year on year rise respectively.

Cement sector in crisis as supply exceeds demand

The four cement projects that recently call for government aids in settling foreign debts is only the tip of the iceberg as many other cement businesses are in crisis due to their out-dated Chinese equipment and technology.

According to Saigon Times newspaper, the cement sector has made a mistake in deploying cheap and out-of-date Chinese technology and equipment in production.

Within 8 years during the last 90s, many provinces around the country imported more than 50 vertical shaft cement kilns for their production. But early as 2004, most of the plants employing such kilns were ordered to shut down by the government due to their out-dated, polluting and fuel-consuming technology and low economic effectiveness.

Not long after this shaft kiln lesson, the domestic cement sector jumped into another mistake.

During the past six years, Vietnam has imported a large number of rotary cement kilns from China that are said to consume more fuels and materials than its European counterparts.

A cement expert said up to 70 percent of the rotary cement kilns around Vietnam is using outdated Chinese equipment and technology, which China itself has no longer used since 2010.

Many cement makers said in 2004 and 2005, when the domestic cement supply was not enough to meet demand, cement manufacturers rushed to import Chinese technologies since these were dirt cheap and always available for sales, while European or Japanese ones, which could be more effective, were only sold by order placement.

This increased the nation total cement production by three times, while the demand only doubled, which resulted in the crisis for the cement sector.

The director of a cement manufacturer said many cement makers have sold their products at prices lower than production cost to compete in the context of supply surpassing demand.

“This is a risky move and many firms have indeed failed to repay their debts,” he said.

The asynchronous development between the cement sector and infrastructure is another cause for turbulence of this industry.

With most of the cement plants based in the northern region and the road infrastructure underdeveloped, the cement manufacturers have to spend a great deal on transportation costs.

The fee for transporting a ton of cement or clinker from the northern provinces of Ha Nam, Ninh Binh and Thanh Hoa southwards could be up to VND800,000 (US$40), accounting for up to 45 percent of the retail prices, a cement maker said.

Farmers worry as fertilizer prices shoot up

 With world fertilizer prices rising and supply falling in Vietnam, prices have recently soared, worrying farmers who are preparing to sow the autumn-winter crop.

Duong Van Thanh, a farmer in the Mekong Delta province of Tra Vinh, was shocked last week to learn about fertilizer prices. Urea was up 30 percent to VND12,000 per kilogram, diammonium phosphate and potassium prices had risen by 47 percent and 14 percent, he said.

“[But] rice prices have dropped by VND1,000 per kilogram since July,” he lamented.

Some distributors in the delta sell urea at VND12,500. Fertilizer companies said the urea wholesale price was VND11,400, up almost 10 percent since mid-August and 84 percent year-on-year.

Last year urea had cost only VND6,200.

The Vietnam Fertilizer Association said the recent rise in world prices had sent domestic prices skyrocketing.

However, many fertilizer importers and companies attributed the price rise to a supply shortage.

Distributors in delta provinces confirmed that supply had fallen from both domestic manufacturers and importers.

Vu Duy Hai, CEO of the Ho Chi Minh City-based Vinacam Company, said demand had been rising since August and supply was not enough to meet it.

Fertilizer imports were lower this year and domestic availability was also down due to exports.

“The companies used to stockpile large quantities of fertilizers in past years but their stocks are now almost empty,” he said.

Most U.S. firms plan to expand business in SE Asia: Amcham

Eighty-five percent of U.S. companies in Southeast Asia plan to expand their business as the region will become more important in the next two years, the American Chamber of Commerce (AmCham) in Singapore said on Monday.

"ASEAN continues to grow in importance for businesses in the region," AmCham Singapore said in a statement, citing a poll of 327 senior executives from U.S. companies in Cambodia, Indonesia, Malaysia, Singapore, the Philippines, Thailand and Vietnam between May 18 and June 8.

ASEAN refers to the Association of Southeast Asian Nations and also includes Brunei, Myanmar and Laos.

Seventy-three percent of respondents said ASEAN's importance to their companies will increase over the next two years, up from 70 percent in a survey last year, while not a single company said it intended to shrink its regional operations.

Regionally, Indonesia was the most popular destination for U.S. companies, with 72 percent of respondents reporting their company was planning to expand there.

"Indonesia's strengths lie in its low-cost business environment. Respondents enjoy low-cost labor as well as low housing and office lease costs," AmCham Singapore said.

"However, there are also major concerns with corruption, laws and regulations, and infrastructure."

Vietnam to export 6 mil tonnes of rice in 2012-2015

Vietnam will export six million tonnes of rice every year in the 2012-2015 period.

This was affirmed by the Vietnam Food Association during its seventh congress on the 2012-2015 period in Can Tho City on September 6.

The association said Vietnam will implement five measures to ensure the efficiency of rice exports including improving the quality of rice and seeds, establishing high quality material zones, building trademarks, and diversifying rice products to meet market demands.

These measures aim to strengthen the country’s competitive edge, maintain and consolidate traditional markets and meet the requirements of new markets to increase its market share. It is also important to link production to consumption, ensure stable prices for rice, and deal with dumping.

Over the past eight months, Vietnam exported 5.3 million tonnes of rice worth US$2.525 billion, up 11.4 percent in quantity and 23.8 percent in value against the same period last year. The country is expected to export a total of 7 million tonnes of rice in 2011.  

Vietnam Airlines offers discount on UK route

The national flag carrier Vietnam Airlines on September 5 announced its promotion programme to mark the opening of the Vietnam-UK direct air route in December.

Under the promotion programme, return tickets are sold at the price of VND12,500,000 (roughly US$599), including taxes and other charges.

The discount price is applied to tickets sold from September 15 to October 15 for flights departing from December 8 to December 31.

The national flag carrier said it will operate four flights per week from Hanoi and Ho Chi Minh City to Gatwick airport in London as from December 8 using Boeing 777 aircraft. With the two new routes, London will become Vietnam Airlines’ fourth gateway to Europe.

Vietnam attends forestry meeting in China

A delegation from the Vietnamese Ministry of Agricultural and Rural Development led by Minister Cao Duc Phat attended the 1st Asia Pacific Economic Cooperation (APEC) forum’s Meeting of Ministers Responsible for Forestry, in Beijing, China, on September 6.

The meeting, themed “Enhanced regional cooperation for green growth and sustainable forestry development”, was initiated at the 18th APEC High Level Meeting in Japan last year.

Speaking at the meeting, Chinese President Hu Jintao said the event opened a new channel for strengthening cooperation between economies in the region, fostering exchange of economic development methods, dealing with climate change, promoting green growth and stepping up the pace of development in each country’s forestry sector.

He suggested that the regional economies should focus on the three major areas of enhancing forestry development, promoting the functions and effects of forests and strengthening cooperation in the region in the future.

The same day, Minister Phat and the delegation hosted a bilateral meeting with Director of State Forestry Administration of China Jia Zhibang on cooperation between China and Vietnam in forestry development.

HCM City to host Vietbuild 2011

The International Exhibition of Construction, Building Materials, Housing and Interior Décor (Vietbuild) will take place from September 14-18 at Phu Tho Sports Competition House in Ho Chi Minh City.

A press conference was held in the City on September 6 to announce the event, which will attract the participation of 800 companies specializing in construction, construction materials, real estate and interior decoration from 11 countries and territories around the globe including the US, France, Germany, Japan, the Republic of Korea, Singapore, Malaysia and Thailand.

The event will offer an opportunity for Vietnamese businesses in the fields of real estate and construction to seek partners and introduce new services and products in the context of integration and development.

Nguyen Dinh Hung, General Director of the Vietbuild Company, said that the event will hopefully help businesses find a way out of the current difficult economic situation.

It will also help businesses seek opportunities for cooperation, create sources of capital to develop the real estate market, and generally promote business, he said.

Agricultural imports rise 23 percent

Vietnam saw a year-on-year increase of 22.6 percent to US$10.4 billion in the first eight months of this year in imports of material for production and processing and finished products for the farming, forestry and seafood industries.

According to the Ministry of Agriculture and Rural Development, the increase was due to a large surge in the import prices for materials and finished products used by these sectors.

Fertilizer saw the highest increase in import volume and value during the period, the ministry said. Volume surged by 31.1 percent to 2.6 million tonnes and 64 percent in value to US$1 billion.

Rubber products followed, with the country boosting imports by 40 percent in volume to 248,000 tonnes and by 56.7 percent in value to US$613 million against the same period last year. The average import price during the eight months jumped by 41.3 percent in comparison with the same period last year.

The ministry said pesticide imports had a year-on-year surge of 22 percent in value to US$412 million.

Import value for wood and wood products increased by 16.4 percent to US$835 million percent while the figure, for animal feed was US$1.6 billion, equivalent to 5.8 percent increase.

Le Ba Lich, chairman of the Vietnam Animal Feed Association, said the animal feed industry must import a huge volume of material every year for processing at an average value of US$3 billion.

Therefore, the price of animal feed was always higher here than in other countries, making it difficult for Vietnam's livestock industry to compete with similar products made in other countries, Lich said.

Pham Tat Thang, an economic expert at the Ministry of Industry and Trade's Institute for Trade Studies, said material and product imports for the farming sector would continue in the near future because most key products in the farming sector, such as fertilizer, had to be imported.

Initially, the farming, forestry and seafood sectors should apply modern measures and technologies to produce high value-added export products to reduce the trade deficit, Thang said.

But for the long term, the farming, forestry and seafood sectors should prioritize the expansion of material production for the domestic processing sector and finished products for local consumption, he said.

Exports still face challenges

An online meeting was held by the Ministry of Industry and Trade (MoIT) in Hanoi and Ho Chi Minh City on September 5.

According to the MoIT, the total export value of garments and textiles over the past eight months is estimated to be nearly US$9 billion and it is likely to reach US$13 billion by the end of 2011.

However, small and medium-sized businesses in the industry still lack capital for expanding production as well as land for growing cotton and sufficient human resources.

Tran Quang Nghi, General Director of the Vietnam National Textile and Garment Group (Vinatex), said that the group has been affected by inflation and the lack of capital.  Therefore, it has proposed that the MoIT continue essential investment channels in order to reach the targets set for 2015.

The MoIT forecasts that exports will increase about 25 percent this year, compared to 2010 however, they are also predicted to hit snags as the world economy remains unstable and some businesses have become involved in trade disputes.

MoIT Minister Vu Huy Hoang said, in order to boost exports, relevant organisations should provide businesses with more information about markets and new regulations, and actively tackle problems that can hinder trade cooperation.

Trade associations should become more active in fighting against unreasonable trade barriers for Vietnamese goods. The Vietnam Leather and Footwear Association (Lefaso), and the Vietnam Association of Seafood Exporters and Producers (VASEP) have done a good job so far but associations need to work together more closely to deal with new obstacles that have arisen recently in some countries, he added.

Over the past eight months, Vietnam imported more than US$8 billion in goods, accounting for 10.21 percent of the total import-export turnover. The import surplus in the period only increased by 13 percent, lower than the Government’s set target. The import surplus is gradually decreasing and products were imported primarily from China, ASEAN, the Republic of Korea and Taiwan.

PV