Hope for Vietnam’s steady growth in 2013

In 2012, Vietnam’s GDP growth rate was 5.03 percent, an impressive figure compared to the economic decline in many countries. The Vietnamese people are hoping for further economic growth in 2013.

Vietnam is facing a tough challenge in economic development: maintaining GDP growth at a reasonable level, controlling inflation, stabilizing macro-economy and ensuring social welfare. In his New Year address, Prime Minister Nguyen Tan Dung outlined 6 tasks including holding inflation to below 8 percent and achieving economic growth of 5.5 percent.

This difficult goal will require flexible policies, particularly a flexible monetary policy. Doctor Nguyen Quang Thai, Vice President and Secretary General of the Vietnam Economic Association, said “We reduced inflation to 6.8 percent in 2012 and are now reducing it more, while coordinating inflation and economic growth to stimulate the economy. The combination between monetary and fiscal issues requires tight supervision and management by the State”.

Vietnam will focus on improving regulations and policy reaction capabilities, and creating trust in the market, a factor that will create a more favorable business environment and a more competitive economy.  This factor will make economic restructuring and shifting the growth model successful. The economic restructuring will be carried out more aggressively by restructuring credit organizations and settling bad debts to free capital flow. In addition, removing business obstacles and supporting markets will continue in 2013.

Doctor Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management said, “We are paying more attention to demands and generating purchasing power for the market. A series of new measures are needed to accelerate to a certain level public investment, which will affect state-owned enterprises, especially small and medium-sized enterprises.”

Vietnam will seek to ensure social welfare and reduce poverty by assisting areas inhabited by ethnic minority groups, and near-poverty groups. Vietnam gives priority to socio-economic development projects in poor areas. Doctor Ngo Tri Long, former Director of the Institute for Price and Market Studies, suggests measures to address this issue, “Besides the state budget, all resources need to be fully tapped to improve social welfare. This is clearly stated in the government’s address. I propose that we implement plans strictly and this process should be closely inspected.”

The tumultuous year 2012 has passed and Vietnam managed to improve its macro-economy and social welfare, rein in inflation and earn high export revenues. These results are a foundation for better performance in 2013. As Prime Minister Nguyen Tan Dung puts it “In difficulty, our achievements mean our potentials, advantages, new models and good measures should be upheld to successfully fulfill tasks for 2013.”

The path to growth continues to be rough. The Vietnamese people must strive to maintain their momentum toward a better future.

FDI pours into northern localities

Foreign direct investment (FDI) capital in northern provinces and cities has increased considerably in recent times, hitting nearly half of the country’s 2012 total.

The Foreign Investment Agency (FIA) reports that six northern localities (Hanoi, Haiphong, Bac Ninh, Bac Giang, Quang Ninh, and Hung Yen) were among the country’s top ten FDI attractors last year.

These six localities alone received a total of US$5.036 billion in FDI committed by foreign businesses, according to the agency under the Ministry of Planning and Investment.

Other provinces including Ninh Binh, Vinh Phuc, Hai Duong, Ha Nam, Hoa Binh, Yen Bai, Thanh Hoa, Nam Dinh, Nghe An, Ha Tinh, Phu Tho, Thai Nguyen, Cao Bang, Lao Cai, Lang Son, Thai Binh and Tuyen Quang welcomed US$1 billion in registered and added FDI.

Taken together, their FDI reached US$6 billion, only under half of Vietnam’s US$13 billion total.

Vinh Phuc was the most successful locality in calling for FDI in the northern region. Among its foreign-invested projects, those in the agricultural sector were valued at US$49 million.  

Ninh Binh province is also lobbying for foreign investment in agriculture. Dinh Quoc Tri, Vice Chairman of the provincial People’s Committee, said priority is given to advanced agricultural technology development, research and development, high-yield varieties, and post-harvest processing.

Haiphong is rolling out the red carpet for wholly-owned foreign investment or joint venture projects in the fields of cultivation technology application, seafood processing for export, and caged fish farming.

In 2013 Quang Ninh plans to woo foreign businesses to invest US$500 million in seven projects. Two are already under way – the Hai Ha seaport upgrade (US$150 million) and a rare earth refining plant (US$35.5 million).

Contractors will work o other major FDI projects this year, including the Ha Long-Mong Cai expressway, Bac Luan II bridge, Van Don international air terminal, and Big C trade plaza.

The province is seeking FDI for its projects using environmentally friendly technology, especially from Japan, in Viet Hung and Dong Mai industrial parks.

Deloitte upbeat about Vietnam’s competitiveness

Vietnam will be one of the 10 most competitive nations in the world in the next five years, according to a study by Deloitte Touche Tohmatsu Limited and the US Council on Competitiveness.

US-based Deloitte Touche Tohmatsu Limited which specialises in audit, consulting, financial advisory, risk management and tax, and the US Council on Competitiveness jointly conducted a study gathering data from more than 550 CEOs and senior manufacturing leaders in 2012.

In their 2013 Global Manufacturing Competitiveness Index, the study says in the next five years emerging economies will surge to occupy the top three spots, with China retaining top position, and India and Brazil moving up to claim second and third rankings,  respectively.

Vietnam is forecast to move into the top 10 as the tenth most competitive nation behind Singapore and ahead of Indonesia, Malaysia and Thailand. It currently ranks 18th behind Singapore, Thailand, Malaysia and Indonesia.

According to the report, developed economies such as the US, Japan and Germany will have to enter into fierce competitions with emerging economies like China, Brazil and India to retain their competitive levels.

In five years, China is predicted to top the list of competitive nations, followed by India that will replace Germany, while Brazil will replace the US’s position.

In the next decade, 10 Asian economies will be among the 15 most competitive nations in the world.  

Pepper production - something of a paradox

While most of agricultural products went down in price last year, pepper exports continued paying off well with net turnover increasing by nearly 10 percent and market prices rising by roughly 16 percent. However, the pepper sector is facing a steady decline in output.

According to the Ministry of Agriculture and Rural Development (MARD), Vietnam exported 118,000 tonnes of pepper and earned US$802 million, down 4.3 percent in volume but up 9.6 percent in value with the average export price in 2012 rising 15.8 percent to US$6,792 per tonne against the previous year. Of the total volume, the US accounted for 14.7 percent, Germany (10.1 percent) and United Arab Emirates (8.48 percent).

As the world’s largest supplier, Vietnam accounts for more than 50 percent of pepper transactions with more than 80 nations and territories, most notably with Singapore (up 105.68 percent), Kuwait (up 78.67 percent), Canada (up 76.9 percent), Australia (up 71.5 percent) and Italy (up 67.17 percent).

The Vietnam Pepper Association (VPA) said over the past six years, the pepper price has kept increasing from VND30,000 per kilo in 2009 to VND130,000 per kilo in 2012.

VPA President Do Ha Nam said the pepper cultivation covers only 2.5 percent of the total 2 million hectares reserved for the growing of five industrial plants in the country, but it accounts for over 8 percent of their total export earnings. Its economic value hovers around US$6,800 per hectare per year, 4 times higher than rubber, 8 times higher than cashew nuts, 2.6 times higher than coffee and 6 times higher than tea. Each hectare of pepper can make a profit of around VND200-250 million per year.

Vietnam harvested 125,000 tonnes of pepper in 2011and only 115,000 tonnes in 2012, showing a paradoxical result of larger cultivation acreage but lower output.

The MARD’s Cultivation Department said the pepper growing acreage increased from 7,000 hectares in 1995 to 50,000 ha in 2010, then from 55,400ha in 2011 to 57,500ha in 2012. The main reason was that farmers wanted to make a quick profit despite warnings about the spread of diseases from the growing of pepper with unclear origin.

A recent survey by the Cultivation Department shows that the average pepper yield dropped to just 2.4 tonnes per hectare in 2012 compared to 3-3.5 tonnes per hectare two years earlier. Dong Nai province, for instance, has expanded its pepper growing acreage to 1,000 hectares, but it has seen a decline in yield from 2 tonnes per hectare in 2011 to just 1.4 tonnes per hectare in 2012. In Ba Ria Vung Tau province, the average pepper yield is down by 0.14 tonne per hectare. Only in Binh Phuoc province, it is up from 2.85 tonnes to 3.07 tonnes per hectare.

According to the International Pepper Community (IPC), the global pepper output in 2013 will drop to 319,000 tonnes from 327,000 tonnes last year and Vietnam will reap only 100,000 tonnes compared to last year’s figure of 115,000 tonnes. To help the pepper sector maintain its sustainable growth and raise its export earnings to over US$1 billion in the coming years, the MARD should map out a long-term strategy for pepper production, establish an institute for research and technical upgrade, and invest in infrastructure facilities for pepper growers and other farmers in the target areas mentioned above.

Binh Duong exports surge in January

Enterprises in southern Binh Duong province have generated US$1.3 billion from exports in the first month of 2013, marking a 70 percent rise year-on-year.

According to the Binh Duong Association for Exporters, turnover of key export items such as wood products, textiles, footwear and electronics increased by 15 to 30 percent during the month.

Association chairman Pham Van Xo said: “This not only a positive beginning but also provides impetus for the rest of the year.”

“This year, Binh Duong will strive for annual export growth of between 20 to 25 percent,” Xo said.

In another bright sign Xo said all members of his association had already inked export contracts for the whole year with foreign counterparts, with garment and leather footwear sectors winning the largest deals.

The provincial enterprises this year will focus on exporting quality affordable products.

Experts forecast the province’s exports would remain stable this year as the EU and US economic are on tract for recovery and partner in these markets are targeting the cheap goods markets where Vietnam has considerable strength.

Last year, Binh Duong posted an export turnover of US$12.13 billion, representing a year-on-year increase of 16 percent as a result of concerted efforts from provincial authorities and enterprises in fostering trade promotion and expanding export outlets, according to the provincial official website.

It is now home to 1,725 exporters, shipping products to 143 countries and territories including the US, EU, Japan, the Republic of Korea and China.

Electricity output reaches above 10.12 billion kWh in January

Electricity of Vietnam (EVN) has announced it produced and purchased an estimated 10.12 billion kWh in the first month of this year.Production reached over 3.88 billion kWh, accounting for 38.4 per cent.

EVN has continued to monitor power projects including the Ban Chat and Lai Chau hydroelectricity plants and the Ninh Thuan Nuclear Power Project.

The organisation forecast that demand for electricity this year may surpass 2012 as the industrial production sector begins a likely recovery.

The national grid was capable of supplying the economy and domestic market providing there were no sudden changes in hydrology and problems at big plants, said EVN's Deputy General Director Dinh Quang Tri.

To ensure the plan to produce and buy more than 130.5 billion kWh of electricity, (an 11 per cent increase on 2012), Tri said, EVN has added over 2,300 MW of capacity to all sources since December last year.

The group had also put a number of transmission and distribution grids into its system to ensure regular supply for southern areas, he said.

Last year, EVN produced 54.4 billion kWh, which was nearly 3.6 billion kWh more than planned. It was reported to have reduced losses from 2011 by VND3.5 trillion (US$167 million).

By the end of 2012, the group had provided electricity to more than 19.8 million households, representing a 1.08 million increase on the previous year and covering 97.5 per cent of the country's population.

Foreign tourists flock to central region by air and sea
 
The central city will host around 11,000 foreign tourists during the first week of Tet holidays, which falls in early February, the vice director of the city’s culture, sport and tourism department Tran Quang Thanh said.

The department is set to host the first 180 visitors on a direct flight from Kuala Lumpur to Da Nang on February 10.

As scheduled, over 5,100 travellers will visit the city, Hoi An, My Son and Hue city on direct air routes from Singapore, Kuala Lumpur, Incheon, and 41 chartered flights in February alone.

Meanwhile, the SuperStar Aquarius will dock at Tien Sa Port on February 12 with 1,400 passengers from the US, Canada, Australia and China.

The city also plans to host 6,500 tourists visiting the city and central region heritage sites during Tet holidays.

Tet tours offer foreigners festive experience in Mekong Delta

Many foreigners are set to enjoy Tet tours launched by leading travel firm Saigontourist this year.

The firm’s Mekong Delta tours start from the 23rd to the 29th of the last lunar month (February 3-9). The tours will enable visitors to experience the pre-Tet atmosphere in My Tho City, visit the local flower market as well as the Vinh Trang Pagoda. They will also be taken to local homes where they can join Tet preparations, like making banh tet (sticky rice cake with green beans and pork fat stuffing), traditional confections and other dishes.

First private airline launches international flight

Private airline VietJetAir on Sunday launched its first international flight which connects Ho Chi Minh City and Bangkok of Thailand, marking the first private airline to be allowed to fly aboard.

Passengers flew with Airbus A320 bringing Vietnam’s tourism symbol and all them were offered lucky envelops with new bills inside.

Passengers also enjoyed New Year celebration carried out by stewardesses and beauties in Thailand traditional costumes with famous dance Gangnam Style of Korean Artist Psy.

The Ho Chi Minh City-Bangkok fight departing from the International Airport Tan Son Nhat  at 11: 45 AM arrives at Bangkok’s Suvarnabhumi Airport at 13:15 PM and the return flight departs at 14:30 PM everyday, said an airline representative.

The flight route is the first international and the tenth flight route of the airline.

VietJetAir is the Vietnam's second airline lauching flights to Bangkok after the national Vietnam Airlines.

Vietnam has now six airlines including leading flag Vietnam Airlines and five private and joint-stock flying operators among that Indochina temporary closed because of loss and debt.

VietJetAir was set up in 2007 and launched the first flight on December 25th 2011. It currently operates over 300 flights every week.

Power of simplicity and resolute action

Mai Kieu Lien, chairwoman cum director general of Vietnam Diary Products Joint Stock Company (Vinamilk), attributes her strength to simplicity in words and resolution in action.

While several businesses are making great fuss of the hardships in the present economic crisis, Lien led Vinamilk to enter the list of largest businesses in the Asia-Pacific region with turnover of US$1 billion.

Lien says that she had anticipated the crisis and prepared measures to cope with bad times. Businesses must build a long term plan to take new initiatives in any circumstance. Every year the plan should be revised and reviewed to adapt to prevailing market conditions.

In 2012, she made an impressive decision to import material for the entire year. In order to choose the time to do that, the company’s leader needed good forecast ability, experience of the market and production and trade strategies. This indispensable factor is called resolution.

That was only one of several decisions of nerves that she made in her leadership position over the last tens of years. For instance, she invited a boss of a multinational group to undertake marketing for Vinamilk because their own marketing activities were weak at that time.

To reach the current position, Vinamilk has faced strong competition from foreign milk which has been preferred over domestic products. As a result, Lien never accepts producing items that other companies have yielded much success in, but encourages new products.

She said that all products born at the company have raked in good profits. The company introduced yoghurt and ice cream for the first time in 1993, when people lined up to purchase them. They reclaimed their investment within three months.

Vinamilk inaugurated Dielac-- the first powder milk plant in Vietnam in 1987. In the beginning, their staff had to travel everywhere but still failed to sell their product because consumers just believed in foreign milk.

At present, powder milk of the company occupies 30 percent of the domestic market share and now Lien is targeting 50 percent.

Vinamilk is currently exporting its products to 23 countries in the world with turnover from Dielac powder milk alone reaching millions of US dollars a year.

Lien always demands unceasing creativity in her company in order to produce new products for the market.

At present, she pays great attention to training confidential and talented staff and managers for the company. She said that the company does not depend on any individual.

After working hours, Lien returns home to her husband and children and does housework which she said she finds relaxing. She goes swimming and practices yoga in her free time.

Minister talks measures to solve financial issues

Finance Minister Vuong Dinh Hue has affirmed that the concerted combination of fiscal and monetary policies will help remove difficulties for businesses and accelerate corporate restructuring and the implementation of the 2013 budget goals.
 
In his New Year interview granted to the Vietnam News Agency, the minister said that over the past time, in addition to tax measures, his ministry has put forth other financial solutions, including promoting the effective implementation of public investment activities and the use of official development assistance (ODA), increasing foreign direct investment (FDI) attraction, developing the domestic bond market, restructuring the stock market, and closely managing prices.

The ministry will continue to keep a close watch on the situation and make timely assessments on the effectiveness of the above-mentioned measures in order to propose appropriate solutions to the Government, he said.

According to Hue, a project was built by the ministry on the restructuring of State-owned enterprises (SOEs) with a focus on State economic groups and corporations in the 2011-2015 period, which was approved by the Prime Minister last July.

Although the acceleration of SOE reforms is facing severe challenges in the context of the country’s deep international economic integration, the restructuring will create conditions for SOEs to improve their competitiveness and increase GDP growth, directly serving the tasks of economic restructuring and growth model changing.

Regarding the mobilisation and allocation of resources, the minister said that the allocation of resources for economic development and ensuring social security, for savings and consumption, for key economic regions and difficult mountainous and ethnic minority people-inhabited areas remains a difficult problem that requires flexible adjustments in each period.

To improve the efficiency of public investment and ensure social welfare, Hue emphasised the need to continue restructuring State budget spending in the direction of gradually reducing development investment and increasing spending for human development.

“We also need to strengthen the mobilisation of investment resources from local economic sectors and foreign investors,” he noted.

On the financial sector’s major orientations in 2013, the minister stressed the continued restructuring of the State budget; the strict and effective management of national financial resources; and the guarantee of financial security, actively contributing to strengthening macro economic stability, preventing high inflation and ensuring social welfare, defence, security and foreign relations in the new situation.

In order to fulfill the set targets, the financial sector must take synchronous measures and keep consistent macroeconomic policies, combining fiscal and monetary policies with priority given to increasing the efficiency of tax collection management measures, and strictly managing State budget spending, he said.

Minister Hue said he believes that the economy will continue to see positive developments with gradually recovered growth and more stable and sustainable macro balances, especially when the economic restructuring and growth model renovation will be carried out synchronously in the coming time.

Tet specialties sent abroad to Vietnamese overseas

Like every year, many businessmen and companies are busy sending local Tet specialties abroad to the Vietnamese communities in foreign countries.

Chung cake is among Vietnamese Tet specialties for exports

Returning Vietnam two months ahead of the Tet holiday, now Nguyen Van Huyen from Hai Duong Province is speeding up the preparation for a return journey to the Czech Republic.

Three members of his family have prepared luggage of up to 60-70 kilos, most of which is traditional Vietnamese foods.

Huyen said, "In countries with large Vietnamese populations such as the Czech Republic and Germany foods like sticky rice, morning glory and bamboo shoots are much sought after and often traded around Tet."

In Russia, anywhere with Vietnamese inhibitants has markets of Vietnamese goods to serve the demand on Tet. Vietnamese overseas in Russia often have a full traditional Tet with chung cake, pork, salted onion as well as parallel sentences.

Most Vietnamese families in Russia set up an altar to to make worship to their ancestors.

In order to serve increasing demand for Vietnamese Tet specialities, several companies have begun exporting these goods.

Previously major exports included lemon leaves and banana leaves. However, recently several types of Vietnamese traditional special cakes have been exported as well, including banh hoi, a traditional cake made of rice powder; banh it, a type of cake made from sticky rice powder, green peas, lean meat, mushroom, dry shrimp and onion.

One HCM City based company exports five to six containers of such goods every month to the Europe, the US and Australia in the months close to Tet.

Another company, famous for exporting processed fruits, said they have packaged more than ten tonnes for export during the Tet season.

Supermarkets become popular for Tet

Even when people flock to make the last-minutes purchases for Tet, small traders said they could not compete with supermarkets.

Traders at Hiep Thanh or Thoi An markets in HCM City said their customers are mostly workers, but by this time, most of the workers have left for their hometowns, taking away much of their business.

Traders are also hesitent to store many goods for Tet due to the economically difficult times and a lack many fresh commodities.

Traders in Tan Phu Trung Market complained that more people preferred to go the the supermarket this year.

Oanh, a local in Tan Phu Trung Commune said, "The prices for meat and fish go up in markets as Tet nears. The more customers they have, the higher their prices are. That's why I decided to buy goods in supermarkets."

The traders said their best selling goods are livestock such as chicken, fish or some commodities that supermarkets do not offer like flowers.

"I often buy fruits for Tet but this year, even the fruits in Hiep Thanh and Thoi An markets are not so good so I went to a supermarket." Duong Thuy Dat, a local in Hiep Thanh Ward said.

HCM City shifts to high-end exports

Ho Chi Minh City, a major economic hub of Vietnam, will strives to increase the export of processed industrial products of high added value as part of its exports restructuring programme for 2011-2015 period.

By 2015, earnings from industrial items alone are set to make up 54.4 per cent of the city’s total export turnover.

At the same time, major foreign currency earners such as garment-textile and footwear must maintain a stable growth, while export of raw materials and unprocessed should be reduced.

In order to further back the goal, the city has also placed focus on the development of supporting services like logistics, consultation and technical assistance.

Ho Chi Minh City has set the target of raking in over $34 billion from exports in 2013, a year-on-year increase of 13.5 per cent.

As the export markets are predicted to have difficulties, the Municipal Department of Industry and Trade has warned local exporters to get their coping measures ready.

The businesses are advised to diversify products, strengthen their presence in the traditional markets of Europe, the US and Asia, while seeking new potential outlets in Africa, the Middle East, South America and Oceania as well as taking part in the global value chain, especially in the process of design and distribution.

In 2012, the city exported to 228 countries and territories, marking an increase of four new markets compared with 2011.

In addition, the city aims to rein in import turnover in luxurious consumer goods but increase the purchase of machineries, equipment and technology from developed countries this year.

Vietnamese rice returns to Japan

The An Giang Import-Export Company (Angimex) and An Giang Plant Protection Company (AGPPS) have recommenced rice shipments to Japan, five years after the country halted the import of Vietnamese rice.

It is attributable to the companies’ collaboration with farmers to set up rice farms using stringently-controlled techniques to produce high-quality rice. Japanese experts also examine every step, from sowing, harvesting, husking, transporting and packaging.

Rice samples were sent to Thailand and Japan to be tested. The results met all 593 of the Japanese Ministry of Agriculture, Forestry and Fisheries’ criteria.

Tran Quoc Thanh, AGPPS Food Deputy Director, said his company is negotiating with Japan’s Marubeni Group and partners for additional contracts. In the coming time, it will multiply the model of clean and high-quality rice production in the Mekong Delta with the goal of expanding its market share in Hong Kong, Taiwan, New Zealand, Singapore and the EU.

Huynh Van Thon, AGPPS General Director, said once accepted in the Japanese market, Vietnamese rice will grow in popularity, improving its penetration into other markets across the world.

Angimex General Director Nguyen Van Tien said his company was the first to win a contract since Japan began repurchasing Vietnamese rice in early 2012.

The company plans to expand its rice growing area to 15,000 – 20,000 hectares to produce high-quality fragrant rice, increasing the value of its brand. Its rice has recently gained entrance into the Republic of Korea, another choosy market, added Tien.

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