BUSINESS IN BRIEF 11/7
SBV plans flexible monetary policy for H2
The State Bank of Vietnam's Governor Nguyen Van Binh is planning a more flexible monetary policy in the second half of this year to achieve credit growth of 12 to 14% by year-end.
At a conference held by the central bank on July 9, Binh announced this year's first half credit growth of 3.52%, which was largely due to a 12.03% growth in foreign credit and 2.17% growth in dong credit.
The low credit growth, which has stirred concerns in recent weeks, was blamed on weak capital absorption capacity of the economy, unsolved budget debts and the process of handling collaterals along with the loan underwriting mechanism for enterprises.
In H2, the central bank will focus on managing bad debts, raising total demand and facilitating market recovery.
Policy makers said that credit demand in the second half was always twice than that of the first half. They expressed optimistic provisionary views over the entire year's target of 12 to 14% credit growth.
Earlier, a report by the Monetary Policy Department showed that roughly 87 to 90% of capital sources in banks flew into Government bonds and State Treasury bills.
The central bank on July 9 said that the bond and bill purchases would help credit institutions raise liquidity provision. However, they warned that the holding may probably cause some difficulty if banks were not active in balancing tenures.
In terms of credit structures in H1, credit increased 10% for exports, 5.8% for auxiliary industries and 13% for hi-tech applied production firms. Meanwhile, small and medium sized enterprises showed a 2% increase in credit.
As of May 2014, loans allocated for agriculture and rural areas were up 2.56% against the end of 2013.
Dong liquidity was secured. Loan-to-deposit ratio (LTD) in the dong came down to 87.4% from 92.5% in December last. [The LTD ratio accesses a bank's liquidity. If the ratio is too high, it means that banks might not have enough liquidity to cover any unforeseen fund requirements and if the ratio is too low, banks may not be earning as much as they could be.]
By the end of June, the foreign exchange reserves were US$35 billion. The central bank said the dollarisation in the economy was dwindling.
The ratio of dollar deposit-to-total money supply was 11.4%, slightly down from 12.4% by the end of last year.
New technologies showcased at MTA Vietnam 2014
As many as 310 enterprises from 20 countries and territories are showcasing their newest technologies at MTA Vietnam 2014, an exhibition of precision engineering, machine tools and metalworking taking place between July 8 and 11 at the Saigon Exhibition and Convention Center (SECC) in HCMC’s District 7.
Foreign exhibitors account for more than 80% of the total number, displaying their best-selling and latest technologies and products at the event co-organized by Singapore Exhibition Services Pte Ltd and VCCI Exhibition Service Co., Ltd.
Carina Albrecht, business development and marketing manager of TRUMPF that has joined the annual exhibition for the past five years, said the event has facilitated the company in approaching the fast-growing manufacturing industry in Vietnam with scores of business deals having been made.
Lee Wai Yip, general manager of Hurco for Southeast Asia, said its operation in Vietnam has enjoyed strong growth. The participation of Hurco in the annual MTA Vietnam over the past time has allowed it to enter the country’s vibrant manufacturing industry more deeply.
Vietnam has also made a good improvement in productivity, thus raising the demand for high-quality machines and equipment, Lee added.
Tee Boon Teong, deputy country head of Singapore Exhibition Services Company, said Vietnam has attracted more foreign-invested projects as it aimed to become a competitive production base in the region. To improve competitiveness and productivity, enterprises should invest more in modern technology.
In addition to the exhibition, there will be seminars on related manufacturing issues, trends and development of Vietnam’s manufacturing sector.
Hanoi attracts US$560 mln in FDI in H1
The capital attracted US$560 million in foreign direct investment (FDI) in the first half of the year, representing a 14% year-on-year increase.
The Vice Chairman of the municipal People's Committee, Vu Hong Khanh, told a conference held in Hanoi on July 9 that FDI disbursement in the period also rose by 6.5% to US$405 million over the same period last year.
"Production and businesses of FDI enterprises in Hanoi have not been remarkably affected by escalating tension in the East Sea," Khanh said.
He said total investment in the city between January and June was estimated at VND871.1 trillion (US$41.4 billion), increasing 10.2% against the corresponding period last year.
The city's budget spent VND7.7 trillion (US$366.7 million) on development investment, meeting 44% of the whole year's target.
He added that Hanoi has been focusing on implementing ODA projects with disbursement of VND1.43 trillion (US$68.1 million).
The city has been rushed to complete 22 key projects by 2015.
It has done its planning on improving the business environment as well as increasing its provincial competitiveness index (PCI). It held meetings with around 70 businesses in the capital to quickly solve their difficulties while continuing to apply policies on preferential lending rates.
Statistics from the committee showed that by the end of May, the city had 6,150 businesses registered for operations with total capital of VND33.2 trillion (US$1.58billion), reducing 1.5% in comparison with the same period last year.
More than 5,300 firms stopped their operations, representing a 4.7% year-on-year increase, of which 848 are implementing insolvency procedures.
He said the city would continue to resolve its difficulties in agriculture, rural areas, export products and support industry. It has supported small and medium sized enterprises with low lending rates of between 7-8%, he added.
ASEAN on verge of borderless economy
The ASEAN Economic Community to be established next year is expected to enable free movement of goods, capital, and skilled labour, a seminar heard in HCM City on July 9.
Le Trieu Dung, deputy general director of the Ministry of Industry and Trade's Multilateral Trade Policy Department, said trade between Vietnam and ASEAN member countries has expanded rapidly in recent years to top US$40.1 billion last year.
The establishment of the AEC will bring more choices of goods and services to Vietnamese consumers and enable Vietnamese companies to increase exports to ASEAN countries because their goods will have zero duty, he said.
It will facilitate mobility of skilled labour within the bloc via mutual recognition arrangements (MRAs), enabling skilled, experienced professionals to work and ultimately be certified in a destination country, he said.
Jae Hee Chang, a specialist on employers' activities at the Bangkok-based International Labour Organisation (ILO), said MRAs aim to promote mobility of skilled professionals, attract regional talents to meet staffing shortages, boost regional competitiveness, and improve the quality of services throughout ASEAN.
Under ASEAN MRAs, eight categories of professionals – in medicine, dentistry, nursing, accounting, surveying, engineering, architecture, and tourism — will be able to move freely within the region, she said.
She said an ILO survey of regional employers on skills and competitiveness, which polled 240 firms in 10 countries, found that "most enterprises are optimistic that greater labour mobility, lower trade barriers, and free investment flows will boost their competitiveness, but few understand the AEC fully and many are not ready to capitalise on the opportunities."
It showed that skill gaps are a major concern across the region since companies find it hard to recruit personnel with the skills they need, she said.
For Vietnam, the importance of upgrading the skills of the workforce is very important, she said.
It is vital for Vietnam and other ASEAN members to find a common language that everybody can use, especially for education and also at the workplace, because without a common language or harmonisation of thinking, it is very difficult to exchange people and ensure labour mobility, she warned.
The language and culture barriers are very important to address, she added.
There is a need for more engagement by companies with the MRAs and in particular the ASEAN Qualifications Reference Framework, she said, adding that they should be more active in having dialogues with the Government and education organisations to reform training curriculums.
Ngo Dinh Duc, general director of HR company Le & Associates, said skilled workers will have more choices in the future, but they must equip themselves with good English speaking skills and improve their productivity and attitude towards work.
To retain talent, employers need to build a good image for their company, offer a good working environment and salaries, bonuses, and welfare policies, and invest more in human resources development strategies, he said.
The level of labour integration in ASEAN remained low, Le Trieu Dung said, adding that the AEC will have a great impact on the labour market in ASEAN, especially Vietnam.
23 countries, territories to attend Pharmex 2014
Nearly 600 businesses from 23 countries and territories have registered to attend the 9th international medical exhibition at the Saigon Exhibition and Convention Centre in HCM City from September 24-26.
This is an umbrella exhibition encompassing five related medical industries.
Pharmex is dedicated to pharmaceuticals and related equipment and technology; Medex to medical equipment and devices; Analytex to laboratory products and equipment; Beautycare to cosmetic, massage, and spa products; and Hospex to high quality medical services.
The event aims to update attendees with knowledge of the latest innovations, developments and equipment in the medical sector and exchange experiences and thoughts on the best approaches to achieve sustainability.
Last year’s event attracted 416 businesses from 21 countries and territories, displaying their products and services in 550 stands.
Thailand markets products in Vietnam
Nearly 200 Thai businesses are showcasing their high-quality products at an exhibition in HCM City from July 9-12 to promote Thai brands to Vietnamese consumers.
On display at over 260 stands are foods, beverages, health care and beauty products, gifts & decorations, toys for kids, furniture, stationery, plastics, and household electrical appliances, as well as educational, tourism and restaurant products and services.
The exhibition is expected to help Thai manufacturers, trading companies and distributors penetrate deeper into the Vietnamese market and cater to local consumers’ diverse tastes.
Over the past 13 years, the annual event has proved successful, seeing an increase in the number of contracts signed between the two countries’ business circles.
At present, Vietnam is Thailand’s ninth largest trade partner in the world and 4th in ASEAN.
Bilateral trade ties have developed steadily in recent years. Vietnam exports fuel, chemicals, automobile spare parts, motorbikes and computers to Thailand, while importing consumer goods, household appliances, footwear and garments from its neighbor.US to levy anti-dumping duty on pipes
The Viet Nam Competition Authority reported on July 7 that the US will levy anti-dumping duty on welded stainless pressure pipes imported from Viet Nam, Malaysia and Thailand this year.
This follows a vote to that effect by the US International Trade Commission (USITC).
The department said that the USITC made its decision while affirming that the import of welded stainless pressure pipes from the three countries has been causing significant losses to local firms which produce the same product.
Basing on the USITC's voting result, the US Department of Commerce (DoC) is likely to impose anti-dumping duty on imported welded stainless pressure pipes from July 13, 2014.
Last month, the DoC submitted the conclusions of its investigation, under which Vietnamese manufacturers and exporters would have to pay an anti-dumping duty of 16.25 per cent. Earlier, on December 31, 2013, DoC had made a preliminary decision of imposing duty ranging from 17.72 per cent to 53.91 per cent on Vietnamese enterprises.
Meanwhile, DoC has set dumping margins, ranging from 22.07 per cent to 167.11 per cent on Malaysian imports, and from 23.89 per cent to 24.01 per cent on Thai products.
According to the Viet Nam Competition Authority, the US imported $10.3 million worth of welded stainless steel pressure pipes from Viet Nam, pipes worth $11.9 million from Malaysia and pipes worth $16.9 million from Thailand.
The case involving welded stainless steel pressure pipes is the fourth anti-dumping and countervailing duty lawsuit the US has filed against Vietnamese products since 2011.
The other three lawsuits involved oil tubular goods, carbon-welded steel pipes and steel wire garment hangers.
Vietnamese wood exports to grow rapidly
Viet Nam's export market for wood products will enter a golden period, according to Vice Chairman of the Handicraft and Wood Industry Association of HCM City (HAWA) Huynh Van Hanh.
The forecast of the country's expansion of its global market share is based on the fact that the prices of European products have remained high, while Chinese products are being charged a high anti-dumping tax.
In September last year, the United States imposed high anti-dumping tax rates of 56-122 per cent on Chinese wood products, reducing the competitiveness of Chinese products.
Speaking at a meeting to announce the overall development plans for Viet Nam's industrial sector on Monday, Hanh said the current environment, which has seen strong growth in the import markets of Japan and the United States as well as that of the EU, marked a good opportunity for Viet Nam's wood exporters to boost their global exports.
According to the Viet Nam Timber and Forest Products Association (Vietfores), the export of wood products to the United States, Japan and the EU this year will produce growth rates of 10 per cent, 15 per cent and 18 per cent, respectively.
Hanh noted that some timber such as melaleuca, rubber timber and cultivated timber had become Viet Nam's trademark, and many importers use this legally acquired timber.
He claimed that rising timber exports had not impacted the country's forests, but he encouraged forest cultivation, adding that forest coverage was expected to rise from approximately 43.5 per cent this year to 45 per cent next year.
Industry and Trade Minister Vu Huy Hoang said Viet Nam's export of wood products currently met regulations intended to reduce timber imports and increase the cultivation of timber.
International organisations had also praised Viet Nam's wood processing industry as it continued to grow while still meeting strict regulations to protect watersheds and prime forest areas, Hoang explained.
Wood and timber product exports are among Viet Nam's top 10 export industries. The industry is expected to earn an export turnover of US$6.3 billion this year, up 10 per cent compared to 2013, according to Vietfores.
Mobile retailer plans listing on HCM City stock exchange
The shares of Dau Tu The Gioi Di Dong Jsc, (Mobile World Investment Corporation or MWI Corp) will be officially traded on the HCM City Stock Exchange from July 14.
This was announced by the southern bourse on Monday.
MWI Corp will be listed as MWG and its shares will be priced at VND68,000 or US$3.2 per share, with a vibration amplitude of 20 per cent.
With 62.72 million shares listed, the market capitalisation of MWI Corp will initially be VND4.264 trillion ($200.18 million).
Currently, MWI Corp has four major stakeholders, each having holdings of more than 10 per cent: two founders with holdings of 17 per cent and 18.7 per cent; CDH Electric Bee Limited with 18.8 per cent; and Mekong Capital with 14.3 per cent.
MWI Corp expects to reach a turnover of more than VND13 trillion or $619 million this year, an increase of 37.1 per cent over last year with the after-tax profit being VND435 billion or $20.7 million, up 68.3 per cent.
Last year, MWI Corp earned VND9.498 trillion or $452.2 million in turnover and VND258 billion or $12.2 million in net profit.
The company was founded in March 2004 and has been involved in trading and repairing of mobile phones, digital devices and e-commerce.
The Gioi Di Dong (Mobile World), which runs the store chain known as thegioididong.com , has a 25 per cent share of Viet Nam's mobile phone market. The company plans to increase its market share to reach 35 to 40 per cent in 18 to 24 months.
Another MWI Corp member, The Gioi Dien Tu (Electronics World), runs dienmay.com.
Cut brokerage fees to lower prices, urge experts
Purchasing power in the second half of the year could improve, if authorities manage to lower consumer prices by reducing fees for brokerage services and supporting capital for production.
According to the General Statistics Office (GSO), the total retail sales of goods and services in the first half of this year was estimated at US$68.5 billion, up 10.7 per cent over the same period last year.
However, excluding inflation, the growth was only 5.7 per cent, just equivalent of the rate in the five-month period, and lower than the four-month period's 6 per cent, that was showing signs of levelling off.
"A large chunk of consumers are tightening their belts. This will make it more difficult for producers to develop or expand the market," said market observer Nguyen Minh Phong.
Vu Vinh Phu, Chairman of Ha Noi Supermarkets Association, said that purchasing power would be at a standstill, and even if there was an improvement, it would be very modest.
"If the situation persists, it will probably cause stagnation in production, circulation and consumption," Phu said.
In an attempt to bolster purchasing power, Phu suggested that authorities create more jobs, reorganise delivery systems to lower brokerage service fees, counter goods smuggling and fraud and penalise those found indulging in market manipulations.
Any move to eradicate brokerage service systems must be focused, so as to reduce prices of consumer goods, Phong said.
"This, it is hoped will encourage people to spend more and manufacturers to do their jobs," he added.
Van Duc Muoi, Chairman of HCM City Food and Foodstuff Association, said that capital resource was another key problem that enterprises expected to get help with.
Experts have urged the central bank to cut the dong interest rate further, in order to ease the capital cost burden on businesses, especially small- and medium-sized enterprises.
Annual interest rates charged on privileged loans hover around 7 to 8 per cent. For the manufacturing sector, the rates are 9 to 10 per cent for short term loans and 10.5 to 12 per cent for mid and long terms loans per year. For dollar loans, popular lending rates are 3 to 7 per cent annually.
In a related move, economists have encouraged enterprises to make the most of the Government's support, such as designed lending packages for the agricultural sector, to revive businesses and boost purchasing power.
In the first six months, retail sales, which contributed three-fourth to the total value rose by 12.2 per cent – the lowest level among four components that included hotels and restaurants, retail sales, consumption and tourism services. Tourism services posted the highest increasing rate of 20.5 per cent.
Rising petrol and power prices and health-care services in HCM City added to the slowdown in spending.
Other indicators announced previously also showed that industrial production was also in difficulty with high inventories (nearly 80 per cent) in the first six months, coupled with a rising number of companies being dissolved or being forced to halt operations (up 16.3 per cent over the same period last year).
Dong Thap greenlights fish value chain project
The Cuu Long (Mekong) Delta Province of Dong Thap has approved a pilot programme to develop linkages between buyers and producers of pink tilapia fish.
The project aims to ensure a stable outlet for the fish as well as harmonising profits for all stakeholders involved in the value chain.
It would help farmers avoid a "price drop on a bumper harvest", according to provincial authorities.
Phan Kim Sa, deputy director of the provincial Department of Industry and Trade, said a close linkage between farmers and enterprises would gradually eliminate intermediaries involved in the trading of the fish.
Under the project, farmers will breed the fish following contracts with enterprises. Enterprises will then supply farmers with output materials and build a brand for the fish.
Through the project, the province wants to re-organise production of co-operatives so that they are able to sign contracts with enterprises, he said.
This year, the pilot model will be implemented in Binh Thanh Commune in Cao Lanh District, with the participation of 21 farmers under the Binh Thanh Pink Tilapia Production and Consumption Co-operative and Hoang Long Seafood Processing Co Ltd.
This would be vertical linkage chain producing pink tilapia brood stock, mature fish, processing the fish and consumption.
Banks will increase the loan limit at preferential interest rates for co-operatives participating in the programme, while training courses will be organised to provide farmers with advanced farming techniques.
Vo Tuan Kiet, director of Binh Thanh Pink Tilapia Production and Consumption Co-operative, said co-operative members were pleased that the programme would help them find outlets to sell their fish.
Rice and tra fish are two key products of the agricultural province.
The province for many consecutive years has led the country in output and export revenue of fresh water fish, with revenue from tra fish exports accounting for more than half.
US drug giant arrives in HCM City
Eli Lilly and Company, one of the world's leading pharmaceutical companies, opened an office in HCM City on Monday.
Jannie Oosthuizen, the company's vice president and director of Asian Operations, said the company invested almost US$5.3 billion in research and development last year.
Salt production surges on high prices
The country's salt production has reached 870,000 tonnes in the first half of the year, an increase of 9.3 per cent year-on-year, according to the Ministry of Agriculture and Rural Development.
Of the quantity, more than 237,800 tonnes were produced on large-scale fields and the rest by individual farmers on a small scale.
For the first six months of the year, the volume of salt harvested from large-scale fields increased by 23 per cent over the same period last year.
As of June 20, the country's quantity of salt in stock is about 346,800 tonnes.
For the first half of the year, Viet Nam imported about US$6 million of salt, down 5.5 per cent year-on-year, according to the ministry.
Farmers, who have had a good harvest this year because of favourable weather, are now entering the peak salt season.
Farmer Pham Canh Nhan, who owns 3,300sq.m of salt fields in Tuy Phuoc District in Binh Dinh Province, said he had harvested more than 50 tonnes of salt and earned VND60 million (US$2,800).
Traders are paying VND1,300 ($0.06) a kilo for "clean" salt harvested in fields lined with canvas sheets that protect it from soil contamination.
"With this price, salt farmers can make a profit of VND600-700 a kilo," Nhan said.
The price of salt harvested in fields without canvas sheets is VND1,000 a kilo.
With higher prices, many farmers in Phu My, Phu Mat and Tuy Phuoc districts have resumed producing salt in fields that had been left vacant in previous years.
Nguyen Xuan Nam, an official with the Binh Dinh Sub-department of Rural Development, said demand for salt to process has increased compared to previous years.
In the first half of the year, the two salt processors in Binh Dinh have bought a total of 3,6000 tonnes of salt to produce refined and iodised salt, he said.
"To increase value, farmers should invest in producing clean salt by using canvas sheets on salt fields," he said.
Binh Dinh has produced a total of 15,321 tonnes of salt in the first half of the year, up 20 per cent against the same period last year, according to the province's Department of Agriculture and Rural Development.
The ministry has encouraged farmers to use advanced production techniques, including the use of canvas sheets on salt fields to produce a cleaner salt.
Many salt-producing provinces have taught farmers advanced techniques, and have invested in infrastructure for salt production and transport.
Nguyen Thanh Cong, chairman of the Ninh Thuy Salt Cooperative, which uses canvas sheets to produce salt in Ninh Hoa Town in the central province of Khanh Hoa, said salt yields had increased two times compared to traditional methods that do not use any kind of lining atop the soil.
Salt harvested on canvas sheets is whiter, he said.
Many farmers are aware that using canvas sheets would produce higher quality of salt and yield more profits, but they do not have enough money to invest in this method.
Each hectare of salt produced on canvas sheets costs VND200 million ($9,500).
Dollar credit growth safe: SBV
There is no need to worry about credit growth in foreign currencies in the first half of this year as the ratio of dollar loans versus mobilisation is within its safe threshold.
Head of the central bank's money policy department Nguyen Thi Hong said this to the local press on Sunday.
The Ministry of Planning and Investment's statistics showed that credit in foreign currencies grew by 10.51 per cent, while the growth of dong loans was only 0.68 per cent as of June 20.
Hong listed three factors that are supposed to ensure the liquidity of foreign currencies, in a response to an earlier report of the National Financial Supervisory Council which said that credit in foreign currencies was bearing certain pressure.
First, the dollar loans in May increased by 9.35 per cent against the end of 2013, but increased by 1.34 per cent only, year over year.
Second, taking into account all deposits and savings from domestic accounts and other capital sources, the ratio of dollar spending is only between 50 per cent and 60 per cent.
Third, most of the dollar borrowers are companies which have shown proof of having dollar resources to repay the loan. Otherwise, dollar loans are only granted to companies in priority sectors such as exports, agriculture, hi-tech applied agribusiness and auxiliary industry.
"While the overall credit growth is low, the central bank flexibly allows commercial banks to expand credit in foreign currencies," Hong said.
The State Bank of Viet Nam (SBV) reported that the overall credit growth in the first six months was 2.3 per cent. The banking system now has six more months to achieve 12 per cent credit growth by the end of the year.
Hong said that credit in foreign currencies significantly contributed to the overall credit growth. In May 2014, Hong said if dollar loans had not increased by 9.35 per cent, the entire credit would not have reached 1.51 per cent.
The State Bank of Viet Nam's reports showed that the borrowing costs of dollar loans were 3 to 4 percentage points lower than that of dong loans. This has been blamed for the steady increase of dollar loans.
The annual interest rates charged over privileged loans hover around 7 to 8 per cent. For manufacturing sectors, the rates are 9 to 10 per cent for short-term loans and 10.5 to 12 per cent for mid- and long–term loans per year. For dollar loans, the popular lending rates are between 3 to 7 per cent annually.
Although she affirmed that the recent rise of foreign credit is in line with the State Bank's direction, Hong said that the bolstering by dollar loans was a short-term policy.
The central bank would go ahead with measures for de-dollarisation of Viet Nam's economy. In the coming weeks, SBV will closely supervise credit growth, especially dong loans, to made proper adjustment.
Economists have urged the central bank to cut the dong interest rate further, in order to ease the capital cost burden on businesses. The central bank said it would take time to consider the issue thoroughly for the sake of the dong position in the long run.
Last week, Pham Xuan Hoe, deputy head of the central bank's Monetary Policy Department, said that the total capital supply increased by 6 per cent as of 25 June. Roughly 87 to 90 per cent of the capital resources in banks went to Government bonds and State Treasury bills, though they should go towards supporting economic recovery instead.
Shrimp, prawn demand lifts seafood exports
The export value of seafood in the first half of this year grew strongly due to a sharp increase in shrimps and prawns.
The Ministry of Agriculture and Rural Development said the value of seafood exports rose 24.2 per cent to US$3.45 billion, of which 48 to 49 per cent came from shrimps and prawns.
The Viet Nam Association of Seafood Exporters and Producers said shrimps and prawns were strongly sought by the United States, the European Union, Japan, South Korea and China.
Earlier this year, disease in many shrimps and prawn supplies from other countries led to a boom in the domestic market, which was unaffected.
Tran Van Pham, general director of Soc Trang Seafood Joint Stock Company, the second largest shrimp exporter in Viet Nam, said shrimp exporters were kept busy processing product.
At the end of June, in the Cuu Long (Mekong) Delta provinces, shrimp and prawn prices rose by VND20,000 per kilo to between VND120,000-125,000kg for white-leg shrimp and from VND255,000 to 260,000kg for prawn. In mid-June, prices rose from VND275,000 to 280,000 per kilo for prawn.
Pham said that high prices for shrimp and prawn had forced some importers to delay buying Vietnamese product.
The total export value of seafood this year is expected to reach $6.9 billion, which includes $3.5 billion from shrimp and prawn exports, similar to that of 2013.
Trade with Singapore rises 23% in 2014
Two-way trade between Viet Nam and Singapore experienced a year-on-year increase of 23 per cent to over US$6.52 billion over the past five months, according to the Singapore Department of Statistics.
During the reviewed period, Viet Nam exported over $1.22 billion worth of goods to Singapore, up 24 per cent over the same period last year.
Among the key Vietnamese exports to the market were telephones and their components, boilers, machinery and spare parts. Coffee and tea, as well as glass products, construction glass, and oil and gas comprised the rest of the exports.
Meanwhile, Viet Nam's imports to this island country reached approximately $5.3 billion, a yearly rise of 22 per cent.
VN construction material exports to Africa rising
Viet Nam generated over US$127.4 million from exporting construction materials to Africa last year, up 25 per cent year-on-year, according to the General Department of Customs statistics.
Africa was regarded as a lucrative market for Vietnamese construction material due to its insufficient infrastructure and the weak production capabilities of construction material producers in the bloc, even as the demand for these products had been increasing significantly, the Ministry of Industry and Trade's Department of Africa, West and South Asia Market said.
The department forecasts that Viet Nam's construction material exports would continue to rise in the future, making it one of Viet Nam's key export items
Sugar firm to open Singapore subsidiary
The Ninh Hoa Sugar Joint Stock Company (NHS) will establish an affiliate firm in Singapore's High Street Centre, with the investment capital coming from its own equity.
According to a management board decision issued last Friday, the subsidiary will be named the NHSS Private Limited Company and will have a charter capital of VND14.7 billion, or US$700,000.
It is expected to sell about 6,000 tonnes of sugar and 10,000 tonnes of byproducts per year, within an operational term of 50 years.
Ninh Hoa is based in the central Nha Trang City and has over VND915 billion, or $43.57 million, in equity.
Steel consumption up in first half
Vietnam’s total steel consumption recorded a slight increase in the first half of this year, according to the Ministry of Industry and Trade.
Statistics from the ministry show that in the reviewed period, the consumption of rolled steel reached 1.72 million tonnes, a year-on-year rise of 25.4 percent, while 1.74 million tonnes of steel sheets and bars were sold, up 7.4 percent.
Raw steel consumption saw a decrease of 2.9 percent to nearly 1.4 million tonnes.
Before June 1 when a circular on steel quality management was still valid, businesses in Vietnam imported a large amount of alloyed steel, with the import of this product in May recording an impressive surge of 110 percent against April.
In the first five months of this year, Vietnam imported 1.74 million tonnes of alloyed steel, a year-on-year rise of 76.7 percent, and 4.32 million tonnes of steel products, up 13.6 percent from the same period last year.
The ministry has forecast a slight decrease in steel production and consumption due to the same trend in construction demand.
HCM City increases trade ties with foreign partners
Businesses in Ho Chi Minh City have been offered a chance to study the investment and settlement policies and opportunities in the US, especially in Vermont.
At a July 8 seminar co-hosted by the Vietnamese Consulate General in San Francisco and Vermont , and the Vietnam Chamber of Commerce and Industry’s Ho Chi Minh City branch, experts introduced investment programmes and projects that meet Vietnamese businesses’ demands.
Vietnamese investors also met legal consultants to learn about investment environment and cooperation opportunities in the US .
Over the past time, the US ’s trade and investment activities have positively contributed to HCM City ’s economic development. By the end of the second quarter of 2014, the country had had 285 projects worth nearly 525 million USD, ranking 12 th among foreign investors in the city.
In the first half of this year, many US multinational companies sought investment opportunities in Vietnam and HCM City in particular, mainly in the fields of information technology and education.
The same day, a Vietnam-Thailand business forum took place in the city with the aim of promoting bilateral cooperation in potential areas such as foodstuff, beverages, healthcare services, tourism, restaurant and hotel services.
Six-month credit growth reaches 3.52 percent
Vietnam’s credit growth in the first half of this year surged only 3.52 percent compared to last December, the State Bank of Vietnam reported on July 8.
The central bank added that the high increase of foreign currency credit contributed remarkably to the result.
Statistics by the SBV in the reviewed period show that the credit system is witnessing positive signs as it is turning towards priority sectors.
By the end of June, credit for exports had risen 10 percent year-on-year, while those for support industries, high technology application businesses and smalls and medium-sized enterprises stayed at 5.8, 13 and 2 percent, respectively.
The central bank explained that the credit increase remained slow due to the low loan demand of local businesses in the first months of the year, the weak capital absorption of the economy, state budget insolvency and the ineligibility of several enterprises to access loans.
In the context of the low credit growth, SBV’s credit policy has been applied flexibly. The bank has allowed a number of credit institutions to give foreign currency loans to the Government’s priority fields.
San-Earth factory operational in central province
A factory manufacturing earth resistance reducing material (San Earth) was commissioned in Binh Son district of central Quang Ngai province on July 8.
This is the first of its kind in Vietnam and one of the three in the world run by Japan’s Sankosha Corporation to serve telecoms, electricity and navigation industries.
The project is designed with a capacity of producing 500 tonnes of San Earth material each year to cater for both local and foreign demands.
Vice Secretary of the Quang Ngai Party Committee Tran Van Minh said he hopes in the coming time Sankosha Vietnam company will apply advanced technology and standards on occupational hygiene and safety for high-quality products.-
IT firms get nod to use outsourced services
Vietnamese information technology firms get the nod from Prime Minister Nguyen Tan Dung to use outsourced services, the English language news website VietNamNet Bridge reported.
IT firms will provide software products and technology systems under the mode of service packages to customers for use.
The systems will run on the suppliers’ platforms. Customers can order the services they want and pay for service packages, while the service providers will take the responsibilities for all the stages of the service deployment, from operation to maintenance.
According to Do Cao Bao, Chair of FPT Information System Company (FIS), there are four basic benefits institutions and individuals can enjoy when using outsourced services.
They can cut down expenses, save time, improve productivity and reduce labour costs.
Regarding the investment rate, the companies only have to pay small sums of money for what they receive for years, instead of having to spend big money at once to build up information systems of their own.
Customers will also be able to save time because they do not have to follow the complicated administrative procedures. If they use IT firms’ services, they will not have to worry about procedures because this will be undertaken by the IT firms.
Using IT services instead of developing information systems of one’s own is believed to be an economical solution for everyone. They do not need to maintain a large workforce to run IT works.
Nguyen Xuan Hoang, CEO of Misa, said IT services are especially suitable for small and medium enterprises and state agencies, which can easily access high-level management systems, and do not have to spend too much money on servers and systems.
However, analysts commented that it is too early to say the Government decision on allowing state agencies to use outsourced IT services would help develop the market.
In fact, Vietnamese institutions and individuals have been aware of the benefits of IT services. However, they are hesitant to go ahead.
Bao of FIS said that this is understandable. The “hesitancy” is the thing regularly seen in developing countries, where the management level remains lower than in developed economies.
However, Bao said, this does not mean that the opportunity to develop the IT outsourced service market has not come. Vietnam is believed to have all the necessary conditions to do this right now.
IT has been developing more rapidly than the average development of the other sectors of the national economy. Some experts believe that Vietnam’s readiness index is even higher than that of other countries with similar GDP growth rates.
Beer market shows bubbly prospects
Japanese beer-maker Sapporo plans to more than double its production capacity in Vietnam, said Hirofumi Kishi, general director of Sapporo Vietnam Ltd.
The firm intends to ramp up its production line from an output of 40 million litres to 100 million per year.
Kishi also reported that Sapporo plans to further develop its distribution network in Ho Chi Minh City and the rest of the southern region before expanding to Hanoi, but did not disclose the total amount of the investment. He added that Sapporo will target the high-end segment and projects 200 per cent sales growth in 2014.
Vietnam is among the top 25 countries in the world in terms of beer consumption, with more than 3 billion litres in 2013. Kishi noted that this is likely to grow by at least 10 per cent in 2014.
Many brewers in Vietnam are expanding production to take advantage of its fast growing market. Sabeco, which currently holds a 44 per cent domestic market share, recently broke ground on a new factory to expand its output to 2 billion litres a year. Habeco also plans to expand its operations this year.
Foreign beer producers are following suit. Anheuser-Busch InBev announced its plans to build a brewery in the southern province of Binh Duong that will make its Budweiser brand. A number of other foreign brewers, including China’s Tsingtao, the Netherlands’ Heineken and Singapore’s Tiger, are increasing their exports to Vietnam.
Vietnam's bad debt rate exceeds 4%
The bad debt rate of Vietnamese banks had surpassed 4% of total outstanding loans by the end of April this year.
In January this year, the bad debt rate of the Vietnamese banking system was 3.74%, which increased to 3.86% in February, 3.93% in March and 4.03% by the end of April this year.
Despite the government’s efforts, the bad debt rate of the Vietnamese banking system has continued rising over the past year, particularly after Vietnam Asset Management Company (VAMC) was put into operation. By June 15, VAMC had bought around VND47 trillion (USD2.23 billion) in bad debt from credit institutions.
According to Moody's, bad debt in the Vietnamese banking system accounts for at least 15% of total debt, a far cry from the State Bank of Vietnam's estimate.
However, the SBV contests Moody’s rating, saying that the "positive signs" along with the efforts of local banks have helped to ease the problem. According to the SBV, by the end of 2012, the rate of bad debt rate in the Vietnamese banking system increased to 4.73% as of October 2013, and reduced to 3.63% by late December. The state bank said that these numbers were calculated through standard accounting practices and continues to stand by them.
Company contributes to Vietnam's fishing fleet
A private company in HCM City is planning to invest some VND1.5 trillion (USD71.4 million) into buy 95 fishing ships with equipment to be used on the East Sea.
The Duc Khai Company also plans to buy rescue ships and two helicopters for emergency cases. Their representatives will fly to South Korea this week to negotiate and make the purchases of the first 12 fishing ships. Pham Ngoc Lam, chairman of Duc Khai Company said this is purely an investment, it is not a PR tactic nor has it political purposes, as some rumours have said.
According to Lam, he travelled abroad to inspect the ships directly. 45 ships will be bought from South Korean partners. They expect to receive all of the ships in August. Duc Khai Company will also buy more ships from Japan, the US and Australia.
Each ship costs from VND6 billion to VND10 billion. Afterwards, Duc Khai Company will spend VND2-4 billion more on each ship to equip it for fishing. These ships are already 10 years old, but representatives from Duc Khai Company said they still have 30 to 40 more years of use left. They can run at 22 nautical miles per hour with modern navigation equipment.
Instead of taking 50% of profits from their expeditions, the company will only take 34%, with 65% going to the crew, and 1% deposited into a fund for fishermen.
PM approves to create HCM City Region by 2030
Prime Minister Nguyen Tan Dung signed off last week on a decision to create the Ho Chi Minh City Region by 2030 with a vision to 2050.
The master plan will connect the country's largest city with key economic regions in the South Central Coast and in the context of climate change and rising sea levels.
The planning area includes Ho Chi Minh City and the regional provinces of Binh Duong, Binh Phuoc, Tay Ninh, Long An, Ba Ria -Vung Tau and Tien Giang, a total area of 30, 404 sq km that had a population of just over 18 million in 2013.
The plan will also develop rural areas that suit traditional culture and production conditions and establish hi-tech agriculture zones, urban agriculture zones and specialized agriculture zones.
In order to preserve natural landscapes and ecological features, the plan suggests the establishment of national - and international - level tourism centres.-
Vinamilk and Masan dominate leadership positions in Katar Worldpanel latest rankings
The latest study of the most chosen FMCG brands by Kantar Worldpanel shows that some leading Vietnamese food and beverage companies are far ahead in Vietnamese consumers’ preferences.
This leadership of local Vietnamese brands in the foods category is reflected in the fact that eight out of top 10 food brands in Vietnam are from local manufacturers.
Two companies- Vinamilk and Masan- dominate the leadership positions in the rankings.
Vinamilk holds the top position in the urban market while Masan holds the top position in the rural market.
Masan has three brands in the top ten ranking for the rural market, including the number 1 position for its fish sauce brand Nam Ngu, as well as rankings for instant noodle brand Kokomi and seasonings brand Tam Thai Tu.
In the urban market, Vinamilk has three brands in the top ten, while Masan has the number 2 position for its fish sauce brands Chin-su and Nam Ngu.
“In Vietnam, global brands perform strongly and lead the ranking of health, beauty and home care sectors in both urban and rural Vietnam. Yet, when it comes to food, local brands have more advantages,” said David Anjoubault, general manager, Kantar Worldpanel Vietnam.
“Indeed, local consumers feel enormous pride towards local brands and their heritage, particularly in food, and local brands can also be more flexible and responsive to local consumer needs. This liking for local means global manufacturers must react to cultural differences and spend time understanding local consumers’ needs and wants to win shoppers’ hearts,” he added.
Kantar Worldpanel is part of the WPP group, which is the world’s leading advertising group, and is considered a global leader in consumer knowledge and insights.