Exports hit record-high $94.8b
 
Viet Nam had export turnover of US$94.8 billion as of December 25, a record-high and an increase of 35 per cent over last year, according to Viet Nam Customs.

Meanwhile, import value reached $105.2 billion, leaving the trade gap standing at nearly 11 per cent, the lowest figure since 2002.

Total import-export value reached a record-high of $200 billion.

In the last 10 years, the country has seen blazing growth in import and export activities.

Export turnover grew after Viet Nam became an official member of the World Trade Organisation (WTO) in January 2007.

Although the country has been hurt by the global economic crisis this year, total import-export value remained high, standing at $100 billion by July 14, and rising in the following months.

In 2007, total import-export value reached $100 billion, compared to $31.2 billion in 2001.

According to Viet Nam Customs, 49 imported and exported products had a value of more than $1 billion each.

Five of those exported staples had a total of more than $6 billion in turnover. They were in the textiles and garments, crude oil, telephones and spare parts, footwear and aquatic-product sectors.

Five of the imported products were valued at $6 billion. The products were machinery; computers, electronics and spare parts; petrol; materials for the textile and garment industry and footwear industry; and iron and  
steel for construction.

Electrical supply to increase by 11%
 
The total amount of electricity produced and imported next year is scheduled to exceed 120.7 billion kWh, a 10.89 per cent increase over this year, according to a new plan for power supply and electricity system  
operation.

The plan, which has been approved by the Ministry of Industry and Trade (MoIT), sets a target of 58.1 billion kWh of electricity in the dry season and 62.6 billion kWh in the wet season.

The hydro-power plants were expected to generate more than 45 billion kWh in total, including 18.3 billion kWh in the dry season and 26.6 billion kWh in the wet.

Electricity produced by thermo-power plants would be 24.7 billion kWh, with 13.7 billion kWh in the dry and 11 billion kWh in the wet.

The electricity imported from China by the Electricity of Viet Nam would be an estimated 4.65 billion kWh.

The ministry has asked EVN to build up and implement the weekly and monthly plan on electricity supply.

EVN was required to co-operate with the Ministry of Agriculture and Rural Development, the National Hydro-Meteorological Service, the Viet Nam Oil and Gas Corporation and the Viet Nam Coal, Mineral Industries  
Holding Corporation to ensure effective use of water sources for power supply and agricultural production, as well as the supply of coal, oil and gas for electricity generation.

Export of forest products fetches US$4.1 bln

Vietnam earned US$4.1 billion from exporting forest products and wooden furniture in 2011, representing a year-on-year increase of 14.7 percent.

Traditional importers of the Vietnamese products include the US, China, Japan, the Republic of Korea, and the UK, according to the General Department of Forestry.

In 2011, the country’s timber output reached 5.5 million cu.m, of which 5.1 million cu.m were logged from artificial forests.

Vietnam also imported around US$1.3 billion worth of timber and forest product materials, mainly from China, Malaysia and the US.

Credit card payment encouraged

The banking system will develop credit card payment services with the aim of reducing the quantity of cash in circulation to 11 percent by 2015.

It will also strive to increase the number of bank account holders to 35-40 percent of the population.

The targets were set in a Prime Minister-approved project to accelerate non-cash payment services.

To meet the targets, the banking system will diversify card payment services, with a primary focus on developing pay points. It aims to install 250,000 card payment machines to increase the number of transactions to  
200 million a year by 2015.

It will continue to pay State workers through bank accounts and encourage them to use credit cards in transactions.  

Vinamilk turnover hits US$1 billion

For the first time the Vietnam Dairy Products Joint Stock Company (VINAMILK) has reached its US$1 billion turnover mark this year.

The figure was obtained one year ahead of schedule to celebrate the 35th anniversary of the company in 2012.

Also, in 2011, Vinamilk products were exported to 15 countries around the world for US$130 million-a record figure so far.

The company has signed a contract worth US$10 million to export milk to Thailand.

With more than 170,000 retail points set up across the country, Vinamilk’s powdered milk now holds a 30 percent market share, twice that of 2009.

In 2012, the company strives for annual growth of 30 percent, and it is continuing to diversify its product lines to meet increasing consumer demand.

Under its long-term development strategy, Vinamilk aims to become one of the 50 largest dairy businesses in the world, with turnover of US$3 billion in 2017.

Malaysia’s largest housing group pours investment into Vietnam

WCT (S) Pte Ltd, under WCT Berhad, one of Malaysia’s largest construction and property development groups, on December 27 was licensed to carry out a housing and commercial complex project in HCM City.

Accordingly, WCT (S) Pte Ltd and Southern Land Corp JSC will establish a joint venture called WCT-DPN Co Ltd with initial charter capital of US$25.15 million.

The company will develop a middle-and high-class apartment and real estate project for leasing or selling.

The project is built on an area of 46,577sq.m in the southern new urban area of HCM City.

Clear pathway needed to power exports

Industry experts are mulling ways to boost Vietnam’s exports in 2012.

Deputy Minister of Industry and Trade Nguyen Thanh Bien said a tough world economy in 2012 would challenge Vietnam’s trade promotion, while dampening export performance of Vietnamese firms.

“The price of exported rice soared one month ago due to scarce supply. However, competition from rice exporting countries like India has tumbled the world price, hurting Vietnam’s rice exports,” said Bien.

According to Vietnamese trade counselor in Japan Vu Van Trung, the image of made-in-Vietnam goods in Japanese market was stained due to a group of small firms having poor knowledge about the Japanese market.

“These firms will struggle to survive in 2012,” said Trung.

In respect to next year’s exports, Trung confirmed Japan would have tremendous demand for import in 2012 to resume production and rebuild areas which were hardly hit by disastrous earthquake and tsunami in early  
2011.

Japan is loosening protectionism towards imported agricultural products and shifting into importing products from other countries rather than China on the back of worsening Chinese products’ comparative advantages  
due to rising labour cost and quality problems in this country.

“Vietnamese export firms need to make the most of the Vietnam-Japan economic partnership agreement, effective from October 2009, which saw 84.6 per cent of Vietnamese exports to Japan become tax free during 10 years since the enforcement, paving the way for the country’s exports to carve a niche in the Japanese market,” Trung added.

Vietnam trade office in the US’s minister-counselor Dao Tran Nhan gave a warning that imported products into the US market must abide by strict regulations under the Food Safety Modernisation Act (FSMA) with concrete requirements on product origin tracing and record filling of processors and manufacturers.

Vietnamese trade counselor in South Korea Le An Hai said South Korean firms wanted to import Vietnamese seafood and consumer goods. “The Vietnam trade office in South Korea is ramping up efforts for made-in-Vietnam instant noodles and rice papers to make inroads in this market,” said Hai.

Parallel to advantageous products like agricultural and seafood items and raw materials, in the coming period Vietnamese firms must jump into the global supply chain of products like electronic, auto and motorbike components and precise engineering items to bolster export value, according to the industry and trade departments in southern Dong Nai and Binh Duong provinces.

Dutch builder plans six shopping malls

Netherlands-based mall developer ECC International Real Estate Hanoi announced plans to invest $400-500 million over the next five years to develop five to six malls in Vietnam and Thailand.

Its first resort-style mall, to cost 2.9 billion baht ($96 million), is scheduled to open in the Thai city of Chiang Mai next December.

Tjeert Kwant, president and chief executive officer of the company, said ECC will announce its first project in Vietnam, a mall in Ho Chi Minh ity, in the next three months.

"Vietnam is recognised as a different kind of market from Thailand, and our first shopping mall in Ho Chi Minh City will have a ‘downtown mall' concept with a small footprint and maximum utilisation of retail space," Kwant told the Thai English language newspaper The Nation.

The company decided to shift its investment focus from Europe to Southeast Asia around six years ago since the continent's shopping-mall market was reaching saturation.

"We are entrepreneurial, and we have started our business in Thailand with a good feeling. We feel the potential is 100 per cent both in Thailand and Vietnam," Kwant said.

Consumer trend shifting to Vietnamese made products  

Recent consumer trends in supermarkets and trade centers in Hanoi and Ho Chi Minh City have shifted to purchasing more domestic made goods, as a recent survey conducted by the Nielsen Company in HCMC discovered.
 
This was disclosed at a conference to review two years of the “Be Vietnamese Buy Vietnamese” campaign, started by the Ministry of Finance, on Wednesday.

According to the survey by the Nielsen Company, 90 percent of people in HCMC and 83 percent in Hanoi deliberated more towards purchasing Vietnamese made goods.

Although Vietnamese made goods are increasing their presence at supermarkets and trade centers, they still are inferior in many ways as compared to other commercial goods in markets.

People have also tightened consumption this year, though turnover of garments, footwear and paper has remained at a steady growth rate of 12 percent. Garment businesses in particular have shown an impressive growth in the domestic market, up 30-50 percent over last year.

Vu Kim Hanh, director of the Business Studies and Assistance Center said that though Vietnamese made goods are gaining popularity in big stores and supermarkets in cities, they still have to make their presence felt in traditional and rural markets.

Authorities need to pay more attention to expanding the market for domestic made products.
 
Property owners fret about buyers’ wait-and-see attitude

Homebuyers still wait for further drops in prices on the condo market, which is one of the main reasons behind the current stagnant trade, investors said at a seminar on housing quality and prices held last week by the HCMC Real Estate Association (Horea).

After HCMC had seen a shockwave rippling through the market with discount products of Petroland Mark in District 2 and An Tien in Nha Be District, many people believed that prices of condo projects will continue falling to the real value.

Le Chi Hieu, chairman of Thu Duc Housing Development Corporation (Thuduc House), asserted that a price downtrend is unavoidable in the context of the real estate market bubble burst. Many investors under the huge pressure of loan repayment are forced to offload their apartments at discounted prices, meaning they have managed to sell products at any cost to service bank loans.

“The move has made individual investors and buyers hope for better discounts,” said Hieu.

In fact, secondary investors do not invest in the apartment segment owing to the slim margin of profits while those in need of housing find it hard to afford homes.

At the seminar, many realty trading businesses showed anger at the idea that the realty prices should be revised down further as industry players were still enjoying lofty profits at the present prices.

Horea chairman Le Hoang Chau pointed out that such a wrong thinking has caused bad outcomes for both enterprises and the whole property sector.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Co., estimated that realty companies would incur losses when launching a massive volume of discount homes onto the market. Like other businesses, he believed enterprises have failed to cover costs with lower prices and their profits have been eroded as a consequence.

Germany – a potential market for Vietnamese exports

Germany is Vietnam’s sixth largest export markets after the US, Japan, China, Australia and Singapore, and it is the gateway to the huge, lucrative European market.

The European Union member country is the world’s second largest importer, mostly purchasing machinery, chemicals, tobaccos, food, beverage, metals and oil products.

Experts attending a workshop in Ho Chi Minh City on December 27 shared the view that Germany is a potential market for Vietnam’s key exports such as garments, leather shoes and seafood.

Do Thang Hai, head of the Trade Promotion Department under the Ministry of Industry and Trade, said Germany has become one of Vietnam’s major trading partners in Europe since 2007.

Germany has supported Vietnam’s call for an immediate end to the EU’s anti-dumping duties levied on Vietnamese shoes imported to the EU market. It has also shown interest in early negotiations of a Vietnam-EU free trade agreement (FTA).

These are positive signs opening up opportunities for Vietnamese businesses to increase exports to Germany, said Hai.

Vietnam exports 18 commodities to Germany, including footwear, garments, coffee, furniture, seafood, rucksacks, handbags, wallets, fine art articles, farm produce and hand-made embroideries. Most of industrial products are made under contracts while farm products are semi-processed.

However, Vietnam’s export earnings to Germany are too modest compared to those of China, Thailand and India.

Product quality and design will be a decisive factor in penetrating this demanding market, said Hai, adding that businesses should carefully explore the German consumer tastes, customs regulations and tax levels before shipping their products.

Thomas Hundt, the Germany Trade & Invest chief representative in Vietnam, pointed to the fact that to enter this market, businesses must meet both EU and German standards, and German regulations are stricter than the other. Top criteria are product quality, food safety and social responsibility.

He also suggested that Vietnamese businesses thoroughly explore their German partners before signing economic contracts. In addition, he said they should have long-term business strategies and have an adequate supply of commodities to meet large orders.

The Ministry of Industry and Trade reported that two-way trade between Vietnam and Germany in 2010 hit US$4.115 billion, of which US$2.37 billion was generated from Vietnamese exports. By the end of the third quarter of 2011, the two-way trade figure amounted to US$3.99 billion.

Online newspaper recognises Top 500 firms

The Viet Nam Report Joint-Stock Company, in collaboration with VietnamNet newspaper, will hold a ceremony on January 13 to announce the Top 500 largest Vietnamese Enterprises in 2011 (VNR500) in HCM City.

This is the fifth consecutive year that the VNR500 has been held to recognise and honour the companies' achievements.

At the meeting, a forum with the theme "Harvard Exchange: Strategic Vision – Vietnamese Businesses with Global Challenges" will discuss solutions for local businesses to integrate with the world economy.

The VNR 500 forum will be attended by leaders of big companies, domestic and foreign professors, economists and researchers. A delegation of professors from Harvard University in the US and American entrepreneurs will also participate.

On this occasion, Media Tenor International, the sole partner of Viet Nam Report, will also announce the Global Reputation Awards – Asia 2011, which is the most prestigious in the international media.

The Viet Nam Top 500 Largest Enterprises by the Revenue Ranking Board, which follows the Fortune 500 model, is based on international standard research results from the Viet Nam Report Joint-Stock Company, with consultation from Vietnamese and international experts, particularly Professor John Quelch, vice president of Harvard Business School.

Independent audit of credit institutions

The State Bank of Viet Nam issued Circular No 39/2011/TT-NHNN on December 15, regulating independent audits of credit institutions and foreign bank branches. Under the circular, credit institutions and foreign bank branches must select at least one independent auditing organisation to audit its financial statements and internal control systems annually. The independent audit must also ensure compliance with provisions of current law on protection, management, security of assets and the timely disclosure of financial and management information. The Circular takes effect on January 1.

Domestic franchises no longer need to register

The Government issued Decree No 120/2011/ND-CP on December 16, amending administrative procedures in a number of decrees issued pursuant to the 2005 Commercial Law. The decree eliminates the requirement that domestic franchises (or domestic franchises operating franchises in a foreign country) must register, requiring them instead to simply file a report with Department of Industry and Trade. The decree further stipulates that provincial People's Committees shall be responsible for State management of domestic franchising within provincial territory and that provincial departments of Industry and Trade must make periodical reports on franchise activities in the province to the Ministry of Industry and Trade. The Decree takes effect on February 1, 2012.

Bag export poised to surge next year

The export turnover of Vietnamese bag products would surge strongly by 40-50% next year thanks to the processing orders transferred from China, said Chairman Nguyen Duc Thuan of Vietnam Leather and Footwear Association (Lefaso).

Thuan recently indicated the big opportunity for local bag producers, saying the world’s famous bag brands used to focus their production in China, but they realized a must to reduce the dependence on China by 50%. These brands are shifting sub-contract production to Vietnam, India and Indonesia.

Thai Binh Group, or TBS Group, whose chairman is Thuan, used to manufacture shoes only, but in the middle of this year opened a bag production factory in Binh Duong. As soon as the factory was opened, the firm signed a contract worth US$10 million with the U.S. luxury bag maker Coach to produce products under this brand.

Earlier, another enterprise specializing in footwear processing for export to Europe said it was planning to join hands with a European partner to process bags. The reason given was that bag processing is easier than shoes processing.

Thuan underscored there are still plenty of opportunities for the local bag manufacturing industry, but the point is whether Vietnamese businesses are qualified and capable of seizing those opportunities. Producing bags for big brands required many factors, such as good governance, capital, machinery and factories.

According to Lefaso, the total export turnover of the leather and footwear industry this year would amount to US$7.5 billion. In particular, the footwear export turnover was expected to reach US$6.2 billion, or a rise of 25% against 2010, while the export turnover of bag products would be some US$1.3 billion.

Foreign invested enterprises accounted for over 50% of the total export turnover of the local leather and footwear industry, and over 70% of bag export. Currently, the majority of foreign companies operating in the Vietnam’s bag industry are South Korean ones.

Regarding the export markets of local bag products, Lefaso predicted the U.S. would record a faster growth than other markets as many U.S. customers were preparing for the era of the Trans-Pacific Partnership (TPP), when the import tax rates of Vietnamese bags to the U.S. would be lower than those made in China. TPP is still under negotiation now.

As for export orders in 2012, whilst some shoes exporters are still waiting for their partners’ confirmation, the order amount is stable with bag producers, especially exporters of fashion bags.

Plan to reduce cash payments by 2015

Cash payments will make up less than 11 per cent of all transactions in Viet Nam by the end of 2015, according to a Government plan approved by Prime Minister Nguyen Tan Dung earlier this week.

"The rate of cash payments in Viet Nam is still very high," Vietnamese finance and banking expert Can Van Luc said.

Cash payments constitute a global average of only 5-7 per cent of transactions and the rate is even lower for the neighbouring economy of China, with 3-4 per cent.

The 2011-2015 plan, drafted by the State Bank of Viet Nam, also aims to double the number of people with bank accounts to 40 per cent of the population in the next four years.

Card payment services will be the focus of the reform and the country expects to have some 250,000 points of sale (POS) which accept card payments by 2015.

Continuing the expansion of wage payments to bank accounts in State-owned enterprises and organisations, the Government will also encourage non-cash payments to pay for utility bills.

Expert Luc said the Government plan was feasible, and that the time to implement such changes was right.

"Viet Nam now has good economic and social conditions to achieve the non-cash payment goals," he said.

According to Luc, the fast development of the commercial banking system, non-cash payment support services and new payment technology was key to the plan.

"After such a difficult time, commercial banks have now given priority to retail banking and services, which will help develop a non-cash payment society," said Luc.

However, the cash culture of Vietnamese people will be the biggest challenge for the plan, the expert said, adding that the uneven distribution of banking services across the country will be another disadvantage.

"While cities have a lot of banks and ATMs, these services can hardly be found in the countryside," said Luc.

Low cash management fees also encouraged people to use cash, he added.