Difficulties may bring successes to investors

Many Vietnamese enterprises with low competitiveness in capital and technologies have invested in choosy and emerging markets abroad with high hopes of success.

In early 2010, the military telecom group Viettel announced that it had bought 60 percent of stake of Haiti telecom company, Natcom and jointly with other foreign investors won the bid for a US$29 million contract to provide mobile phone services in Mozambique.

Viettel expected that the two projects will help promote the image of the group and of Vietnamese businesses in the African market.

Viettel has also obtained success with Metfone in Cambodia and Unitel in Laos.

Meanwhile, the National flag carrier, Vietnam Airlines entered a joint venture with the Cambodian Royal Government to establish Cambodia Angkor Air with an investment capital of US$51 million.

The national oil and gas group PetroVietnam is pouring into 25 projects US$2.35 billion in oil and gas exploration, exploitation and development in Russia, Venezuela and countries in Latin America and North Africa.

According to the Ministry of Planning and Investment, since 1998 Vietnamese enterprises have had 558 investment projects abroad with a combined registered capital of over US$7.56 billion, scattered through “strange” and “difficult” markets.

However, small scale investment brought little benefits. The benefits and capital recovery capacity of many projects have been low, averaging just 0.46 percent in the 1989-2010 period.

Viettel, a leading telecom firm in Vietnam, only announced its benefits in 2010, four years after first investing in Laos and Cambodia.

Phan Huu Thang, former Director of the Foreign Investment Agency under the Ministry of Planning and Investment said that all investment projects needed time, especially those in oil and gas, hydro-power, telecom and forestry plantations. In addition, benefits depend on investment scale, project duration and the local investment environment.

Thang expressed optimism that together with the development of businesses, overseas investment from Vietnam would certainly be more eventful and effective in the future.

Gas smuggling rampant, authorities turn blind eye

Gasoline and oil from southwestern provinces like An Giang, Dong Thap, Kien Giang and Long An in the Mekong Delta region are now overtly smuggled over the border to neighboring Cambodia where smugglers can earn VND2,000 (US$0.1) per liter.

Boats after boats loaded with gasoline and oil tanks race through waterways in An Giang Province’s An Phu District to Cambodia to grasp easy money thanks to a higher price there.

Gas stations around the district’s Khanh Binh checkpoint are always jammed with tanks that will be transported by boats over the Chraythom checkpoint at night.

Customs authorities here admit that it is almost impossible to stop the smuggling activities which take place at night only.

But the hot spot in the province for gasoline trafficking is Tinh Bien District.

It is not difficult to spot traffickers hoarding gasoline from barges on the Vinh Te canal day and night and people carrying gasoline tanks alongside its banks.

Motor-driven boats are always ready to take all those through the Tu Meo channel over to Takeo Province’s Kirivong District in Cambodia.

Tuoi Tre finds out that such smugglers travel like an army parade on the canal right before the eyes of local customs officers who turn a blind eye.

In Dong Thap Province, the situation appears the same. On the So Thuong River, boasts busily drop by to get gasoline from barges packed with full barrels for transport to Piemcho and Niec Lueong Districts in Cambodia’s Prey Veng Province.

Meanwhile, gas stations around the border in Kien Giang Province’s Giang Thanh District often close as early as 16:00 to save petrol for their smuggling clients.

Gasoline smuggling is also rife in Long An Province’s Vinh Hung District where bikes carrying 5-6 petrol tanks – which contain 30 liters each – ride like crazy through Khanh Dien A Commune up to Cambodia’s border.

In Tan Hung District of the same province, smugglers use ropes to drag gasoline barrels across the border along a 15km-long channel.

They now earn over VND300,000 ($15.38) for each of the smuggling trips.

Local authorities confirm they are aware of the smuggling but the traffickers are wise enough to avoid capture.

Dak Lak exports coffee to 60 countries and territories

Coffee from the Central Highland province of Dak Lak has been exported to 60 countries and territories across the world, according to the local trade promotion, investment and tourism centre.

Apart from traditional markets such as the US, Japan, Switzerland, Germany, Dak Lak’s coffee exports have spread to other markets in North Africa, the Middle East, and Asia.

The province currently has over 180,000 hectares of coffee and the annual output is over 400,000 tonnes, comprising nearly 50 percent of the country’s coffee production. The locality also produces the most Robusta coffee in the world.

In recent years, businesses, organisations and farmers have applied positive measures such as meeting UTZ standards, using IPM and ICM management, and establishing modern production lines, thereby increasing the quality of coffee products from Dak Lak province.

Coffee exports bring in US$600 million of foreign currency every year to Dak Lak, making up 40 percent of Vietnam’s total coffee export turnover.

Vietnam’s pharmaceutical market to top regional growth by 2013: report

Vietnam’s pharmaceutical market is forecasted to top Asia-Pacific region’s growth at a Compound Annual Growth Rate of 19 percent in 2011 - 2013, said a recent survey conducted by an India-based market research and information analysis company.

Vietnam is one of the fastest growing economies in Southeast Asia since growing economy, liberalized trade, and technological advancements are providing opportunities to every sector in the country, said RNCOS’ "Asia Pacific Pharma Sector Analysis" report.

Due to these factors, the pharmaceutical market is also emerging as a fast growing sector.

Besides, the expenditure made by the country on the medicines surged up by a double digit growth rate in 2009, which has fuelled the growth of the market.

In addition to this, the report also identifies various factors responsible for the growth of the industry.

The main factor among several factors discussed in the report is the entry of various pharmaceutical giants in the country. Due to huge growth potential of the pharmaceutical market of the country, Vietnam has attracted 39 foreign direct investment (FDI) projects in the pharmaceutical industry, of which 22 specialize in the production of medicine.

The report has included several countries of the region based on the developments occurring in each country in regard with pharmaceutical industry, including China, India, Japan, South Korea, Vietnam, Indonesia, Malaysia, Thailand, the Philippines, Australia, and New Zealand.

For each country, it has provided detail statistical data of the pharmaceutical industry, its segmentation, and regulatory environment prevailing in the industry.

"Asia Pacific Pharma Sector Analysis" also provides information of the key competitors in each country included in the report along with their business information and areas of expertise.

It provides segment level analysis of the industry along with emerging trends that may shape up with the betterment of economic conditions.

The research will help consultants, industry analysts, and vendors to get in-depth knowledge of the current, past, and future performance of the industry.

The report provides an extensive research on the recent trends of the Asia-Pacific pharmaceutical industry along with impartial analysis considering the impact of financial crisis on its performance.

$259 mln to develop machinery industry

The machinery industry needs investments of US$259 million in the next 15 years for its development, according to the Ministry of Industry and Trade.

Under a plan approved recently for the industry until 2015, it said the money will be sourced from the government, foreign direct investment, and elsewhere.

The industry is expected to achieve an annual turnover of around VND3.1 trillion (US$150 billion) by 2015 and VND8.5 trillion by 2025.

The plan focuses on investment in advanced technologies and environmentally-friendly materials.

Some of the key products the sector will focus on include equipment for the construction and transport sectors and for farming and health care.

The plan also envisages construction of plants for manufacturing machines in industrial parks around the country.

Tien Giang short of 30,000 workers after Tet

The southern province of Tien Giang will face a shortage of about 30,000 workers for nearly-opened companies and factories.

Labour recruitment faces many difficulties because businesses want to employ skilled workers but the training at the provincial vocational schools and centres does not meet this demand.

In 2011, Tien Giang will focus on promoting high quality of worker training and connecting businesses and training units.

Tien Giang now has five industrial zones and clusters which attract over 15,000 workers.

More than 50,000 heads of cattle died of severe cold weather

As of 4pm on February 2, a total of 50,000 heads of cattle have died because of the recent long cold spell in some northern provinces, according to the Veterinary Department of the Ministry of Agriculture and Rural Development (MARD).

Son La province suffered the greatest loss of over 9,300 heads of cattle, followed by Lang Son (7,500) and Cao Bang (6,800).

Apart from the buffalos and cows died of the severe cold weather, horses, pigs, goats and giraffes were also lost.

The Veterinary Department appointed delegations to cities and provinces coordinate local animal health departments to fight against the dangers of hunger and cold for cattle during the Lunar New Year (Tet) festival.

February inflation forecast to be at least 1.8 pct

The consumer price index is likely to rise by 1.8-2 percent in February, the Ministry of Finance has forecast, edging up from the 1.74-percent figure for the previous month.

The cost of eating out, transport, beverages, tobacco, and entertainment will see the sharpest rise.

The inflation is attributed to a 20 percent increase in demand for goods and services during the Lunar New Year, which fell on February 3 this year, and a decrease in the supply of some foods due to the cold spell and drought in the north.

The rise in prices of fuel and some other materials like steel and sugar, and the payment of bonuses for the New Year also put pressure on prices.

If the February inflation rate meets the forecast, the government will face a big challenge in keeping the rate below its targeted 7 percent for the year.

Wood industry urged to target local market

A wood export revenue target for 2011 of around US$4 billion is quite achievable, however, exporters are being advised to focus more on growing domestic demand in order to avoid the risk of rising input prices.

The Handicraft and Wood Industry Association of HCM City (HAWA) statistics showed that Viet Nam ranked fourth among Southeast Asia's wood exporters, but just 20 per cent of the wood products consumed in the country are produced by Vietnamese enterprises, the remaining 80 per cent wood products in the country are imported from mainland China, Hong Kong, Thailand and Taiwan.

"While export market is being successfully exploited, the domestic market has been left wide open," Nguyen Chien Thang, HAWA's chairman said.

HAWA stated that domestic consumer demand is estimated to increase by an average 15 per cent per annum. Demand for wood products for high-end apartments in HCM City and Ha Noi totals hundreds of millions of dollars every year.

"Vietnamese enterprises should be more familiar with domestic consumer tastes. If there was a focus on high to average income segments, they could definitely dominate the domestic market, instead of wrestling over foreign markets," Thang said.

Ngo Thi Hong Thu, deputy director of wood processor Truong Thanh Co suggested that Vietnamese wood processors should shift 30-50 per cent of the products they export onto the domestic market to minimise risks in the global market as well as to diversify consumer wood goods.

Advice to concentrate more on the domestic market is based on the increased challenges posed to maintain market share in the US, Europe and Japan as price and tariffs begin to take their toll.

The Viet Nam Timber and Forest Product Association's (Vifores) Secretary General Nguyen Ton Quyen said that the biggest headache for produces now was rising input costs.

To have wood to process for exports, Viet Nam has to pay an average of $1 billion for 3 million cubic metres of raw material every year. In 2010 alone, expenditure for raw materials stood at $900 million. Domestic raw material supplies meet just 20 per cent of the demand.

The price of rubber wood rose 50 per cent to 60 per cent compared to last year, while prices of paints and other materials have also increased 20 per cent from last year.

Increased input costs are likely to push up the prices of completed products, which will lower the competitiveness of made-in-Viet Nam wood products on global market.

A survey recently conducted by HAWA shows that despite rising costs, some processors will accept lower selling prices to win orders from foreign importers.

Thu admitted that despite the company having received orders equivalent to an estimated 70 per cent of output for the whole year, the biggest challenge now was cost.

"Rising and fast changing input costs have caused many difficulties for the business," she said.

"Higher material costs could have been resolved by increased stockpiling of inputs, but it is impossible now given high interest rates and rapid changes in consumer tastes," she added.

Some companies had accepted low profit margins or break-even prices to maintain customers and preserve jobs, the association said.

The US and European countries had recently imposed Lacey and Flegt Acts to tighten criteria against wood imports.

Francesco Russo, chief technical advisor of a United Nations Industrial Development Organisation (UNIDO) project on small and medium sized enterprises cluster development said that to deal with the new legislation, Vietnamese wood processors needed firm connections and more efficient production, otherwise they would not be able to control input material quality and prices.

"So, to some extent, domestic enterprises should think of targeting the domestic market," Dang Quoc Hung, HAWA's vice chairman said.

Stock market to take a positive turn in 2011

Vietnam’s stock market in 2011 will change course to a more positive direction thanks to new policies on securities and currency, the return of foreign investment capital flow and the recovery of the global economy after economic crises, forecast analysts.

Phan Quoc Huynh, Deputy General Director of the Wall Street Securities Company, said that 2011 is the first year the Resolution of the 11th Party Congress will be implemented and the Government would provide strong support in its macro policies.

He added that the foreign exchange market is seeing more positive signs with a stable price for gold and the US dollar after a long series of rises due to impacts from the world gold market.

Additionally, the foreign indirect investment (FII) is forecast to flow strongly into the stock market this year due to cheaper shares compared with other countries in the region. Last year, about US$1 billion in FII was poured into Vietnamese stock market.

Vu Bang, chairman of the State Securities Commission said that 2011 is the first year the stock market development strategy to 2020 will be carried out.

Along with the amended Securities Law that will take effect on July 1, 2011, the commission will ensure the necessary conditions for a derivatives market to be set up, activate new regulations on issuance, reorganise the information system, risk and business management procedures to ensure a fair playing field for all its members, he also said.

Pham Thai Binh, Director of the Analysis Board of PetroVietnam Securities Incorporated, said that “by the end of 2011, the VN-Index is likely to increase by about 10 percent over last year.”

At the last trading session of 2010, the VN-Index had reached 484.66 points, a decrease of over 10.11 points or 2.08 percent against 2009.

The fluctuation of commodity prices in the world, shortcomings in macroeconomic policies and sudden changes in gold and foreign currency prices are considered the main causes for a gloomy stock market in 2010.

However, the stock market in 2010 still saw some bright points with the volume of capital through the market reaching VND110 trillion, three times more than 2009 and the total amount of shares bought by foreign investors was worth more than VND16 trillion, less than the record of VND23 trillion set in 2007.