VN textile, garment industry to join TPP

Participation in the Trans-Pacific Partnership Agreement (TPP) would create favourable conditions to boost Viet Nam's textile and garment sector as the third key industry of the country.

Deputy general secretary of the Viet Nam Textile and Apparel Association (VITAS) Nguyen Van Tuan said at a workshop on the TPP and impacts on Viet Nam's textile and garment enterprise.

He warned that it's also a challenge for Vietnamese textile and garment businesses when the industry still faces a big deficiency in materials including cotton and cloth as well as technology.

"The industry uses 820,000 tonnes materials every year, which include 420,000 tonnes of cotton and 400,000 tonnes of fiber. However, we had to import 415,000 tonnes of cotton, 99 per cent of the total demand of the industry's production last year," Tuan said.

"A figure last year showed the garment industry used 6.8 billion metres of cloth, of which 88 per cent was imported.

Domestic cloth production only supplied 0.8 billion metres," he said.

Tuan pointed out that 70 per cent of the total exports were still made from Cut-Make-and-Trim (CMT) contracts.

"It's a weak point and disadvantage for Vietnamese businesses with TPP participation. However, local enterprises should make a big change to strengthen the competitiveness," he suggested.

Last year, 4,000 enterprises earned a combined revenue of US$20 billion, of which $17.2 billion came from exports, contributing 15 per cent to the country's Gross Domestic Product (GDP).

He also recommended that local enterprises invest in the cotton, spinning and weaving industries, shifting production modality from CMT to free-on-board (FOB) practice, as well as expanding cooperation with foreign partners.

Nguyen Duc Tri, general director of Hoa Tho textile and garment joint stock corporation, said a deficiency in raw material, design and technology has been a big problem for his enterprise.

"Although earning $100 million per year in exports, the company's production is still dependent on imported material. A small change in the price of material would lead to poor competition against rivals in the export market," Tri said at the seminar sideline.

"Participating TPP would be a big chance for us to restructure our production and make investment in advanced technology."

Vice chairman of VITAS Nguyen Dinh Truong emphasized that TPP would help sustain the country's industry as one of the top-five exporters in the world.

"The industry has developed with an annual growth of 20 per cent over past two decades. From 200 textile companies with an export value of $1 billion in 1990, the industry has expanded to over 4,000 enterprises with 5.1 million spindles," he said, adding that it employs 2.5 million workers.

He stressed that VITAS conducted a big survey to evaluate the capacity of businesses before mapping out a master plan for the sustainable development of the industry.

VITAS' deputy general secretary Nguyen Van Tuan said the government should call for more direct investment from foreign textile manufacturers, while creating favourable conditions for the production of raw materials and core products.

"We have to identify key areas in fiber-weaving-dying to promote the value chain from thread, weaving and dying to sewing. Skilled labour force training centres will also play a key role for better competition of the industry," Tuan said.

"Among 250 industrial parks nationwide, only Nam Dinh, Hung Yen and Binh Thuan provinces reserve areas for developing the fiber-weaving-dying industry," he said.

"Our garments and textiles could not have big power if we do not produce materials ourselves," he concluded.

Banks ignore deposit interest cap in desperate liquidity bid

Banks are flouting the deposit rate cap to improve liquidity though, paradoxically, many are barely lending, according to analysts.

The State Bank of Viet Nam has capped the interest rates on dong deposits at 7 per cent and on dollars at 1.25 per cent.

But many banks, mostly small, are offering rates well above that.

Le Hung Anh of HCM City's Tan Binh District said two months ago he deposited VND1 billion (US47,393) in a bank for one month and was offered 8 per cent interest.

In September the bank raised the rate to 8.5 per cent, he said.

Duong Thi Ngoc of Phu Nhuan District said three months ago she was offered 10 per cent on her VND800 million deposit for a month. The rate was cut to 9 per cent and then 8 per cent but was recently raised again to 8.5 per cent, she said.

An executive at a bank in District 3 admitted the bank is ready to pay over 8 per cent for dong deposits and 2 per cent for dollar deposits.

Deposits of more than six months are paid even higher rates. However, there are no rate caps for them.

Thinh Vuong Commercial Joint Stock Bank, for instance, offers 8.3 per cent for six-month deposits, while the Sai Gon Commercial Joint Stock Bank offers 8.8-8.92 per cent.

Analysts are puzzled by what they say is a paradox, pointing out that according to SBV data deposits were up 9.5 per cent by late August though loans outstanding had only risen 5.4 per cent.

Vo Van Chau, former general director of the Phuong Dong Commercial Joint Stock Bank, told Nguoi Lao Dong newspaper that some banks lacked assets to use as collateral to borrow on the inter-bank market or through open-market operations (OMO).

As a result, they are forced to get deposits by paying more, he said.

Others said some banks had accepted gold deposits until last year and lent out the gold. They have been unable to get repayment and so need money to buy gold to repay their depositors, they said.

Heads of some banks said that many lenders are afraid of a possible liquidity crunch at the end of the year and so are mobilising deposits now.

Analysts said the practice is not new but difficult to control because banks produce proper documents when asked by inspectors.

A deputy director of the SBV's branch in HCM City admitted that uncovering banks' interest-rate violations has proved to be very difficult.

 Viet Nam key to SE Asia expansion: Thai cement giant

Siam Cement Group (SCG) from Thailand considers Viet Nam a key market in its strategy to expand investment in the Southeast Asian region.

SCG President and CEO Kan Trakulhoon said that Viet Nam has always been an important market in the group's business strategy in the ASEAN region since the group entered the country in 1992.

"We will continue our investment in this potential market, focusing on cement, building materials, paper and chemicals," he stressed.

SCG currently has 19 affiliates in Viet Nam which have total assets worth US$615 million. The group posted VND6.7 trillion ($320 million) in sales revenue in the Vietnamese market in 2012, an 11 per cent surge from a year earlier.

In the first half of this year, the figure saw a year-on-year rise of 43 per cent to hit VND4.9 trillion ($230 million).

Last December, the Thai group paid $5.12 trillion ($240 million) for 85 per cent of Prime Group, a leading building material producer in Viet Nam, a strategic step to consolidate its competitiveness in ASEAN.

Kan Trakulhoon noted significant changes in Viet Nam's investment and business environment.

"Viet Nam is an emerging economy with a large and dynamic population and a good business environment. Remarkably, we have seen its efforts in building an ASEAN Economic Community. In this context, Viet Nam has many favourable factors for our upcoming plans," he added.

SCG is also seeking other opportunities here. Last year, the group and Thai Plastics and Chemicals Public Company Limited (TPC) entered into a joint venture with QPI Viet Nam (a subsidiary of Qatar Petroleum International), the Viet Nam National Oil and Gas Group (PetroVietnam) and Viet Nam National Chemicals Group (VinaChem) to invest in a petroleum project in the country.

SCG and TPC own 28 and 18 per cent of the project respectively. The remaining belongs to Vietnamese businesses. It is scheduled to become operational in the next few years.

Besides Viet Nam, the Thai group is also eyeing other markets in the Southeast Asian region.

Vinh Long prepares to host Mekong forum

The 2013 Mekong Delta Economic Co-operation Forum (MDEC Vinh Long 2013) is scheduled to be held in southern Vinh Long Province from November 21 to 24.

The announcement came at a press conference in Ha Noi late last week by the Steering Board for the Southwest Region (SBSR), the Steering Committee for the MDEC Vinh Long 2013 and the Vinh Long provincial People's Committee.

Under the theme ‘Mekong Delta towards the Green Economy', MDEC Vinh Long 2013 comprises a series of events, including the 2013 Conference on Investment Promotion and Social Welfare for the Mekong Delta region and the 2013 Mekong Delta Business Forum.

Addressing the press conference, Deputy Prime Minister Vu Van Ninh, who is also SBSR Chairman, stressed the strategic position and role of the Mekong Delta, as well as the need to strengthen links in the region and apply scientific and technical advances to production.

"Investment, trade and tourism must be promoted based on each locality's strengths and the common interests of the whole region," he said.

He also urged relevant ministries and agencies to suggest suitable mechanisms and policies to help the Mekong Delta region take full advantage of its potential and strengths.

The Mekong Delta Economic Co-operation Forum is an annual event where participants propose initiatives and policy suggestions to enhance co-operation among provinces in the region, as well as the connections between the region and other localities nationwide, central ministries and agencies, and international organizations; and to boost the region's socio-economic development.

The suggestions will be submitted to the Prime Minister for consideration.

EVN tackles gas pipeline halt

Electricity of Viet Nam (EVN) is lifting efforts to minimise a potential power shortage this month due to a 9-day halt in gas supply at the Nam Con Son Gas Pipeline Company.

The director of the Ministry of Industry and Trade's Electricity Regulatory Authority of Viet Nam (ERAV), Dang Huy Cuong, said that if necessary, EVN would mobilise more expensive sources including oil and diesel fuel to meet energy demand.

According to the PetroVietnam Gas Corporation, Nam Con Son Pipeline Company suspended gas supply to thermal electricity plants Phu My 2 and Phu My 3 between September 7-16, for maintenance purposes.

It is estimated that around 358.6 million kWh could be generated with oil and diesel fuel, if needed.

EVN also plans to make use of hydro-power plants in the southern and central regions during the halt; additionally requesting hydro-power plants to store water reserves for the rest of this year.

By the end of September, water volume in reservoirs may be able to generate up to 9.707 trillion kWh, over 2.2 trillion kWh more than planned levels approved by the Ministry of Industry and Trade.

According to ERAV last month, average water volume at hydro-power plants' reservoirs across the country was relatively higher than that of previous years; with the exception of those in the central regions and Central Highland provinces.

In the last eight months, 25 power generation projects were built and a further 16 power transmission projects began construction, with investment for the projects being said to have exceeded VND56.8 trillion ($2.7 billion).

Last month, the first turbine - Hai Phong 2 Thermal Electricity Plant - was also connected to the national grid.

By this month, EVN will have achieved its plan for the year with six turbines commencing operations, including Nghi Son 1 Thermal Electricity Plan, Ban Chat Hydro power Plan, Quang Ninh 2 Thermal Electricity Plan and Hai Phong 2 Thermal Electricity Plan.  

VN firms eye speedy US free trade deal

Viet Nam has the chance to reach a free trade agreement with the US before other countries involved in the Trans Pacific Partnership (TPP) due to its competitiveness, according to the Ministry of Industry and Trade (MoIT).

In the short and medium terms, Viet Nam has advantages over other partnership countries, such as China, Indonesia and Thailand, in approaching the US market, said deputy head of MoIT's Multilateral Trade Nguyen Thi Hoang Thuy.

Viet Nam would join the TPP free-trade negotiations with an export tax rate of 10 per cent for its export products to the US, which will last for 10 years, according to the Ministry of Industry and Trade.

The impacts of the negotiations on local business and enterprises are far reaching as it exposes them to the world economy and they will gain competitive edge needed to compete on the world economic stage, Thuy said.

She added that TPP has already stimulated overseas investment into Viet Nam with some US investors already placing their bets on the economy before TPP has been finalised.

However, Thuy said, joining TPP would also create pressures to further open the market and increase competitiveness for local enterprises which need to react to the new trade initiative.

Meanwhile, she said local firms still have limitations with production, so TPP may bring disadvantages for them if they do not reform production methods and business models.

Thuy recommended businesses speed up their restructuring process to improve quality and value of goods and services and to raise efficiency for their own economic growth.

Viet Nam must continue reforming administrative procedures, opening the local market, promoting integration into international economy, improving investment and business environment and ensuring that the legal system and government policies are attracting foreign investment, Thuy said.

Negotiators from 12 member countries of the Trans-Pacific Partnership gathered in Brunei for the 19th round of TPP negotiations on August 22, with Japan participating as the newest member of the regional trade group since joining only one month earlier.

The nine-day round of talks focused on 10 issues, including intellectual property rights, state-owned business and tariffs with the goal that all TPP members try to complete the talks so that an agreement can be reached this year.

Besides the official meetings, ministers and ministerial-level officials also held bilateral sessions with partner countries to present their requests and offers related to trade tariffs.

The TPP member countries together create a market of 790 million people and account for about one-third of the global trade.

The member states currently include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam.

Gold price gap widens as SBV ends auctions

The disparity between domestic and global gold prices increased once more, after the State Bank of Viet Nam abruptly ended its weekly gold auctions, seeing the popular commodity settling at VND3.3 million (US$157) higher per tael than world gold prices.

This week, the State Bank of Viet Nam brought its auctions to a standstill after it sold 1,517,200 taels, out of the 1,622,000 taels on offer, between March and August this year.

"The key factor expanding the gap between local and global prices is the suspension of the gold auction," said a representative of the Viet Nam Gold Trading Association who asked to remain unnamed.

"The demand is so-so, but the gap would increase if no gold auction was held," he added.

The Sai Gon Jewelry Company (SJC) yesterday reported a drop of 0.26 per cent (VND100,000) against previous transactions, with the buy price per tael (1.2 ounces) settling at VND38,2 million, and the sell price at VND38,3 million.

Matching the trend, the global spot price for gold dropped a full 1 per cent yesterday to rest at US$1,365.05 an ounce. The overall gap between the two markets surged due to the price drops.

The bank's sales generated a profit of more than VND6 trillion ($272.72 million) largely due to the significant differential between the over-heated domestic gold price and the lower global price.

Fund-management profits ‘unsustainable'

Most fund management firms made profits not from their core business, but financial activities in the first half of the year.

However, some industry insiders are concerned about the trend. They say sustainable growth of fund management firms whose profits mainly come from financial activities are often extremely volatile as parent companies or related partners can withdraw their capital unexpectedly.

Among the 11 fund management firms that posted profits, only VFM and BIDV-Vietnam Partners reported a slight rise in profits from its core business of fund management and managing investment portfolios. The rest made profits mostly from deposits and financial-investment transactions.

Up to 98 per cent of Vietinbank Management Company's VND54 billion (US$2.56million) profit in H1 was from financial activities. Fees for fund management and investment portfolio management brought the company only VND760 million.

Besides Vietinbank, ACB, IPA and Ban Viet fund management firms also profited most from financial activities. Profits from deposits made up 90 per cent of ACB Fund Management Company's total profits. The figures for Ban Viet and IPA were also high at 88 and 82 per cent, respectively.

Industry insiders said that most of the firm's profits came from financial transactions related to its parent companies. ACB Fund Management Company's profit, for example, mainly came from its deposit in its parent company, ACB.

In the first half of the year, many fund management firms faced difficulties. Big firms also reported losses due to a sharp decline in turnover and profits from core business performance.

VinaWealth, which is managing the country's first open-ended fund, VFF, plans to set up two others, posted a loss of VND9.2 billion in H1.

Manulife Vietnam also made a loss of VND3.1 billion and the loss made by the Vietcombank Security Investment Fund Management Joint Venture Company was VND6.7 billion.

Although still posting profits in H1, pre-tax profits of Ban Viet Fund Management Company and SSI Fund Management Company declined half against the same period last year.

Corn imports a threat to domestic producers

A major increase of high-value corn imports to Viet Nam is threatening to seriously undercut domestic production, industry experts have warned.

Mai Van Chung, a purchasing director of the Japfa Cornfeed Viet Nam Ltd Company, said the firm has signed a contract to import 80,000 tonnes of corn for the production of animal feed by March 2014.

Japfa needs at least 16,000 tonnes every month and while it has always imported corn, it is doing so on an unprecedented scale at the present time to take advantage of the cheap price of corn on the South American market.

The cost of imports from nations such as Argentina and Brazil stood at around US$320 per tonne in June but the price has now dropped to $250, he said. Meanwhile, the price of local corn was $295 per tonne.

It is customary for local animal feed producers to purchase all the maize on the Vietnamese market before importing it from abroad when the local supply is exhausted, he said.

This year, though, the import price was cheaper than the local one so they imported the product before the local crop had ended, he added.

As well as being more affordable, foreign corn tends to be of superior quality and has a much lower humidity rate, preserving it for longer.

The increase of corn imports has forced the local corn price to fall, said Ha Quyet Nghi, deputy director of the Agriculture and Rural Development Department of northern Son La Province.

In early August, the local maize price was VND7.4 million per tonne. It has now dropped to VND6.2 million, Nghi revealed.

To reduce corn imports, the agricultural sector must apply biotechnology allowing maize production to increase output and better meet the local demand, argued Nguyen Tri Ngoc, former head of the Plantation Department under the Ministry of Agriculture and Rural Development.

Viet Nam does not have enough room to significantly expand maize plantations, so other means of boosting input must be implemented, he said.

The State should support the sector in building corn preservation and distributing systems to ensure a stable supply for the local market, he added.

Le Ba Lich, chairman of the Viet Nam Animal Feed Association, said the country has an annual maize output of 4.5 million tonnes and only 1.8 million tonnes goes to animal feed processors.

The processors currently must import 1-1.8 million tonnes of maize from India, the US, Brazil, Argentina and China to meet their demand.

In the first eight months this year, the nation imported 1.34 million tonnes of maize, 18.9 per cent higher than the same period of last year.

Survey reveals keys to retaining employees

Competitive salary and benefits are the essential factors to retain management level, but not the unique factor, a survey by a leading HR service provider has found.

According to Talentnet Corporation's survey on retention factors, which questioned 400 people at the management level, career development, compensation and organisation – related values, such as company vision, mission, direction, working environment, are the three factors influencing long-term employment.

Managers seek a clear career development road map as an objective for their ambition.

In addition, a good working environment with transparent communications where they can be involved in business strategy and direction is also important.

And last but not least, for managers, remuneration can be seen as a measurement for their achievement recognition.

Oganisations should consider all of these factors, including tangible and intangible elements, when employing managers.

For companies in hi-tech industry, for instance, training and development and flexible working hours are benefits highly valued by senior management.

Companies in the Fast Moving Consumer Goods industry consider opportunities to work in overseas offices, sponsorship for studying advancement, and recognition the most important.

According to the Mercer and Talentnet Remuneration Survey last year, compensation and benefit schemes for management are distinguished from other levels to create motivation and inspire managers to contribute to the business.

However, these practices differ in Vietnamese and foreign companies.

While there is a big remuneration gap between senior management and staff level at foreign companies, the gap is narrower in Vietnamese companies.

This shows that multinationals focus on motivating the management level, while Vietnamese companies need more time to do so.

According to the HR service provider, talent attraction, particularly senior management, is a challenging process for both foreign and Vietnamese companies, especially in such a limited talent pool.

Most companies have to nurture talent in-house or have internal promotions for key positions.

There is no standard model for businesses in attracting and retaining management level as it relies a lot on business status and the working model and operation of each company.

For instance, for long-term demand, some foreign companies have management trainee program to attract talented graduates. They provide them training as well as opportunities to work overseas to prepare them for future positions.

Challenging projects are also created to allow staff to act as project leaders so they can widen their knowledge, gain more experience, and upgrade both hard and soft skills.

Some companies create their own employer branding program to provide scholarships for the best students even when they are still in university.

If companies need to fill positions quickly, they work with consulting companies and freelancers who have specific knowledge.

Talentnet said that companies, however, should first understand their businesses clearly, reposition themselves to create specific requirements for such positions.

Many Vietnamese companies instead offer attractive remuneration schemes for top senior management but do not pay attention to their internal structure and policies.

As a result, if senior managers quit, other staff cannot adapt and there are losses in time, finance, trust and reputation.

The best way to attract and retain talent is to understand and clarify your company's business objectives and expectations, and then define the people strategy to satisfy those objectives. This will result in proper talent attraction and retention policies.

Ha Noi gets tough on landlord tax collections

The Department of Tax in Ha Noi will tighten its collection of landlord tax payments until the end of the year in an effort to crack down on tax evasion.

According to the municipal tax department, Ha Noi's rental market was experiencing rapid growth; particularly in the expat rental sector.

However, tax collection on rentals remained difficult, with reports of tax evasions occurring across the city.

Director of Tay Ho District's Tax Department Nguyen Huu Hung said that before 2009, a tax rate of 22.56 per cent was applied to rent.

From 2009, he further said, landlords were required to pay a value added tax (VAT) and personal income tax at progressive rates; prompting landlords to find ways to pay less tax on rental properties.

In an effort to reduce the number of tax evasions, the Ha Noi Tax Department will work with municipal police to inspect rental properties in each district with the temporary residence registry.

The tax department has said the lack of rental contracts between landlords and tenants will make the fight against tax evasion even more challenging.

Actual rental rates remain hard to verify due to payments made in cash without bills, the department said, adding that currently, there was no regulation on compulsory payments via the banking system.

Local exporters urged to make most of eager overseas markets

The Ministry of Industry and Trade has urged Vietnamese exporters to reap the gains of Free Trade Agreements (FTA) by tapping into foreign markets.

Speaking at a conference on FTAs in Ha Noi on Wednesday, Ministry of Industry and Trade representative, Hoang Van Phuong, emphasised the importance of Viet Nam's economic integration with global trade.

Phuong said only 33 per cent of Vietnamese goods exported to FTA countries enjoyed preferential tariffs from the agreement.

He said Viet Nam's average growth rate of exports to members of the ASEAN community; China, South Korea, Japan, Australia, New Zealand and India, was more than 20 per cent while that of exports to the world market was 15 per cent.

He added that businesses would be more able to meet export potential by meeting requirements for Certificates of Origin (CO).

Statistics from the ministry showed that export turnover using COs last year reached US$18 billion, accounting for 33.6 per cent of exports under Viet Nam's FTAs.

Deputy head of the ministry's Import-Export Department Tran Thanh Hai said a sharp decrease in tariffs would provide opportunities for Vietnamese businesses to boost exports.

Viet Nam's exports to FTA markets have seen high growth in recent years, with the country's exports to ASEAN rising 27 per cent in 2012.

In the same year, exports to Japan jumped 25 per cent, while trade with China and South Korea increased 17 and 18 per cent respectively.

Viet Nam has signed eight FTAs, including eight ASEAN nations and Chile.

Meanwhile, the country has been an active participant in negotiations for the Trans-Pacific Partnership (TPP), while conducting FTAs negotiation with the EU and South Korea.

In spite of these developments, Vietnamese businesses continue to struggle to take advantage of such agreements.

Hai said several enterprises have not paid attention to changing tariffs and were not investing or restructuring to meet C/O standards.

The ministry said they would continue to support multilateral trade under the WTO to access to trade markets.

HCM City raises quality standards of four key industries

Four key industries in Ho Chi Minh City have continued to raise quality of standards and contributed to the City’s price subsidized program, despite the ongoing economic crisis.

According to the Department of Industry and Trade, the mechanical engineering industry leaped by 13.4 percent in two successive years of 2011 and 2012 and showed an upward trend from 15.3 percent in 2005 to 17.1 percent in 2012.

The mechanical engineering industry accounts for 20-25 percent of industrial growth and is continuing to attract big projects deploying advanced technologies.

Similarly, the chemical industry increased by 8.8 percent in 2011 and 2012 and accounts for 39-45 percent of growth in the country.

New equipment and technologies have been deployed in production of washing-powder, cleaning chemicals, skin lotion and softeners, waterproof paint, dry batteries, heat-resistant paint, bicycles and car tires, which are manufactured not only for domestic markets but also for exports.

Nguyen Van Lai, Director of Department of Industry and Trade, said there have been improvements in electronics-IT industry and food processing. The IT industry accounts for 27 percent of growth in the country with an average growth of 4.6 percent a year in 2011 and 2012.

With good infrastructure, Quang Trung Software Park has attracted many large projects from international corporations like Intel and Nidec. In addition, the City has drawn projects to make solar-powered batteries to replace electric energy in response to energy saving policies.

Before, the food processing industry was outsourcing but it has been revamping steadily since 2006. Accordingly, Vietnamese brands like Vinamilk, Kinh Do, Pham Nguyen, Hanco, Saigon Beer, Vocarimex, Tuong An, Vissan, Ba Huan and Huynh GIa Huynh De have gradually taken control of the local market and exports.

Farmers abandoning rice cultivation due to Non-Profits

In an alarming situation, farmers in the central provinces are leaving paddy fields uncultivated as they have been suffering huge losses from previous crops.

Thousands of farmers in Quang Binh and Ha Tinh Provinces have abandoned their paddy fields.  Truong Loc Commune with 331.3 hectares under paddy accounts for 70.40 percent of rice cultivation, one of the biggest rice areas in Ha Tinh Province.

Hoang Manh Hung, the Tan Tien Village chief, said some paddy fields have been left uncultivated for such a long time that weeds have covered the land.

As days go by, more farmers want to give their rice farmland back to the government. At this rate, paddy fields will be totally abandoned in the next few years.

Hung added that farmers are not interested in doing farm work as they earn little to no profit. They prefer expat labor overseas or seek jobs in Ho Chi Minh City, southern provinces of Dong Nai, Binh Duong, or work in industrial parks for a higher income.

In Quang Binh Province, more than 750 hectares of farm land is lying deserted. Nguyen Viet Anh, Chairman of the People’s Committee in Quang Ninh District said 360 hectares of land is no longer under summer-autumn rice cultivation.

Pham Huu Thao, Deputy Head of the People’s Committee of Le Thuy District, said farmers cultivated the summer-autumn rice crop on 4,500 hectares in previous years but this is now reduced to 1,400 hectares, because farming is no longer profitable.

Thao said that at present farmers prefer growing recycled rice as they spend less and can harvest after 40 days. Each hectare harvests 26 quintal, earning more profits.

Phan Van Gon, Chairman of the People’s Committee of Bo Trach District in Quang Binh Province, said the government must intervene in rice prices to support farmers.

The Department of Agriculture and Rural Development in Ha Tinh Province sent a report to the Ministry that a total of 1,309 hectares of paddy fields are lying uncultivated.

The central provincial's authorities have sent their proposal to Government with wishing to get input-output price stabilization policy. If that they would be able to keep their mind on their work.

Ministry tightens control on multi-level marketing firms

The Ministry of Industry and Trade has cracked down on multi-level marketing firms and issued new regulations that will tighten control, though not altogether ban such operations.

The Ministry will now issue licenses to multi-level marketing firms for a maximum period of five years. All multi-level marketing firms must also have a minimum chartered capital of VND10 billion (US$470,000) and a deposit of VND5 billion ($235,000) at an authorized state agency.

To protect consumers, multi-level marketing firms must notify the local departments of trade and industry about the time and venue of their workshops, conferences, and sales training sessions, as most such firms take advantage of open events to expand their network.

The Ministry also requires multi-level marketing firms not to charge participants for basic training sessions, or charge only a reasonable amount to cover material costs and not compel them to purchase a certain amount of commodities.

Farmers begin harvesting autumn-winter rice

According to the Cultivation Department under the Ministry of Agriculture and Rural Development, farmers in the Mekong Delta provinces of Dong Thap, Kien Giang, Hau Giang, and Can Tho have begun harvesting of more than 20,000 hectares of early autumn-winter rice crop.

The price of fresh paddy bought at the field is now at VND4,000-4,100 per kilo; and long-grain paddy at VND4,500-4,600 per kilo.

According to Huynh Thanh Kieu, a farmer in Vinh Thanh District in Can Tho City, at the current price level farmers can only profit by VND10-15 million per hectare. This has raised concerns as rice price tends to decline and inventory is forecast to climb in the near future when farmers harvest more rice.

Up to now, farmers in the Mekong Delta provinces have grown rice over 560,000 hectares out of 790,000 hectares, and will finish growing the rest by mid-September.

Vietnam ranks 70th in global competitiveness

A recently released report on global competitiveness for 2013-2014 by the World Economic Forum shows Vietnam ranked 70th from among 148 countries surveyed, gaining five ranks compared to last year.

This result is mainly due to a slightly better macro-economic environment with inflation decreasing to one-digit in 2012. The country’s transport and energy infrastructure has also improved, and there is much more progress in the goods market, thanks to lower trade barriers and taxes.

Nonetheless, despite these improvements, the country’s economy remains fragile. For instance, the efficiency in the labor market went down five ranks; financial market development was at 93rd ranking; and technological slid to 102nd ranking.

Moreover, Vietnam needs to pay more attention to increasing levels of carbon dioxide being released into the environment with the rapid development of industries, leaving a bad impact on the environment with more air and water pollution.

Illicit tobacco trading causes state budget VND4-trillion loss

The illegal trading of tobacco has become more rampant, causing Vietnam’s state budget an annual loss of around VND4 trillion (USD190.47 million) in taxes.

This information was given by the Ministry of Industry and Trade’s Market Surveillance Agency.

It's the lure of big profits that makes this illegal activity very popular, the department said, adding that tobacco producers only earn a profit of  some 3% of their total production costs, but the rate can climb as high as 300% for those who import the tobacco illegally.

Do Thanh Lam, Deputy Head of the Market Surveillance Agency, said the illegal trading of tobacco has increased from the north to the Southwestern region with the most popular brands being Esse, 555 and Hero.

The agency said, on average  500 million packs of cigarettes are illicitly transported to Vietnam from Cambodia every year.  Illegal tobacco trading is an organised crime activity, which  includes gangs, who are ready to use weapons  against authorities.

Vu Van Cuong, Chairman of Member Council of the Vietnam National Tobacco Corporation, said control of tobacco consumption remains lax, fueling the illicit import of this product. Most retail tobacco shops sell Jet and Hero publicly.

According to the agency, in the first six months of this year, it revoked 553,000 tobacco packs, up 55% compared to the same period of last year. Recently, authorities seized 10,000 illegally-imported packs in Can Tho City.

The Vietnam Tobacco Association has proposed that the Ministry of Industry and Trade approve and implement soon a project to stop illicit tobacco business activities to protect local producers.

Vietnamese beverage, confectionery firms face fierce competition

Many local beverage and confectionery companies are losing ground to foreign competitors in domestic markets for 3 reasons: lack of capital, technology and expertise.

In recent years, as the economy has developed and the population has grown, demand for beverages and confectionery has risen in Vietnam. Therefore, the market has a potential business environment that has attracted the attention of many foreign investors.

Many long-standing multi-national groups have continued to invest in the market and widened their market share, at the expense of Vietnamese companies.

In order to increase their market shares in Vietnam, several foreign investors have opted to acquire stakes in local beverage and confectionery companies. By doing this, they have benefited from several incentive policies for tax rates and simple licensing procedures.

They have only to update the technology and apply their business strategies to ensure long-term development.

Carlsberg’s acquisition of a stake in Huda Beer is regarded as a first step for such a foreign giant to eventually control the entire beer market in central Vietnam.

In 1994, Hue Beer Company co-operated with Carlsberg to set up a joint venture with  equal ownership.

After over two decades of co-operation, Carlsberg wholly owned Huda Beer by late 2011, after buying the other half of the joint venture’s stake from Thua Thien Hue provincial government.

Carlsberg has also conducted several other deals in order to increase its stake in Vietnamese beverage companies.

It has increased its stake in a joint venture with Viet Ha Beer Company from initial 35% in 1993 to current 60%.

In 2007, Carlsberg bought a 30% stake in Ha Long Beer Company and the two sides set up a joint venture in Ba Ria – Vung Tau Province later that year. Recently, Carlsberg has been selected as Habeco’s strategic partner and allowed to buy a larger stake in the company.

Many other foreign beverage companies have also entered the Vietnamese market using this same partnership model.

Uni-President has acquired Tribico via joint venturing and stake buying.

British Diageo spent USD90 million on buying a 45% stake in Halico, Vietnam’s biggest alcohol producer while Masan has been provided with USD200 million by a US investment fund to acquire Phu Yen Beer and Beverage Company.

Japan’s Kirin Holdings has acquired Intefoods that owns Wonderfarm, a winter melon beverage in Vietnam.

Aneuser-Busch Inbev (AB Inbev) – the world’s biggest beer producer plans to enter the Vietnamese market next year which may well mean fierce competition in the market.

Even though the Vietnamese confectionery market is a potential investment environment, local firms find it hard to compete due to their lack of diversified products, enabling foreign firms to increase their market shares.

Lotte started business in Vietnam in the form of a joint venture with Bibica JSC. Now it has over a 39% stake in the company.

Lotte has taken advantage of Bibica’s infrastructure to further develop its own service chains, including Lotteria fast food and, Lottemart, hotel and stores.

After four years of co-operation with Lotte, Bibica has reported a decrease in its profits during the past two years. Bibica leaders have accused Lotte of price transferring of export products forcing Bibica to incur a loss of 18% in selling prices and make a loss on co-operation projects.

Glico, a leading Japanese confectionery firm has widened its market share and its investment in Vietnam via a partnership with Kinh Do Confectionery JSC.

Nabti, an Indonesian confectionery producer, also plans to build a plant in Vietnam while many other foreign investors are trying to increase their product distribution in this country.

Economists said this situation is an unstoppable development trend due to increasing demand in the local market.

Vietnam loosens radioactive monitoring on Japanese seafood imports

The Vietnamese Ministry of Agriculture and Rural Development (MARD) has decided to apply normal monitoring measures on seafood products imported from Japan.

The decision, which would take effect from September 1, was made based on positive radioactive monitoring results on Japanese food imports by the Department of Animal Health and Department of Plant Protection over the past two years.

MARD requested that Departments of Animal Health, Plant Protection, and National Agro-Forestry Fisheries Quality Assurance direct their subordinate agencies to remove strict monitoring measures on Japanese food imports.

The decision came after a recent proposal by the Vietnam Association of Seafood Exporters and Producers (VASEP) to remove radioactive monitoring measures on frozen seafood products imported from Japan in order to enhance competitiveness and lower costs for Vietnamese importers.

Monitoring results over the past time showed that after the radioactive leakage incident in Japan in March 2011 the Vietnamese and Japanese sides have both applied strict radioactive monitoring measures at ports and they have found no radioactive risks  present.

Previously, MARD requested that food imported from Japan’s four prefectures-- Fukushima, Gunma, Ibaraki, and Tochigi after March 11, 2011 must be kept at ports for radioactive supervision. As a result, any products that were found containing radioactive substances above the acceptable levels had to be returned to their home country.

State bank official: VND85 trillion in bad debts settled

Banks in Vietnam settled a total bad debt of VND85 trillion (USD4.04 billion) by themselves between early 2012 and the end of July this year, according an official from the State Bank of Vietnam (SBV).

Bad debt is not only an issue for banks but also affects enterprises as well as the whole economy.

SBV Deputy Governor Dang Thanh Binh said, local banks have been actively dealing with their bad debts. The settlement of debts, mounting up to VND85 trillion, is good news for the banking sector. The rate of bad debt in June of this year is down 4.68%, much lower than what was forecast.

Binh noted that bad debt is not only an issue for banks but also affects enterprises as well as the whole economy.

SBV has instructed to restructuring eight commercial joint stock banks with ineffective operations. Three among the four big state-owned banks namely Vietcombank, VietinBank and BIDV have also been urged to privatise.

The deputy governor added that from now to 2015, SBV will try to rearrange bad-performing banks through different measures such as mergers and acquisitions. Also, foreign financial institutions may  be allowed to invest in these banks.

Deputy Governor Dang Thanh Binh is also the Chairman of the Board of Members of newly-established Vietnam Asset Management Company (VAMC) which is expected to settle between VND40 trillion (USD1.42 billion) and VND70 trillion (USD3.33 billion) in bad debts this year.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR