Ben Tre to curb exports of coconut material and raw products

The Mekong Delta province of Ben Tre was urged to cut down its exports of coconut material and raw processed products to prevent damage to the province, as heard at a workshop held on April 8 during the ongoing fourth coconut festival in the province.

Ho Vinh Sang, President of the Ben Tre Coconut Association, said that the locality exports about 100 million coconuts each year, making up one-fifth of the provincial coconut production.

He clarified provincial damage caused by large amount of coconut exports is seen in losing additional coconut values, reducing jobs and tapering off contribution to the provincial economic growth.

Furthermore, Vietnamese enterprises have encountered an unequally competitive environment as numerous Chinese taxes have been levied on Vietnamese coconut exports to the country, while Chinese traders are exempt from tax when purchasing raw coconut materials in Vietnam.

According to a study conducted by Dr Tran Tien Khai and his co-workers from Ho Chi Minh City University of Economics, large-scale coconut cultivation and processed coconut products will bring higher revenue than the export of material coconuts and semi processed commodities.

Khai said that exports of processed products including desiccated coconut, coconut shell charcoal and coconut jelly, could rake in 575 USD per 1,000 coconuts, well above the amount received from selling raw coconuts, compared to only 487 USD earned from 1,000 fresh coconuts.

Ben Tre is the country’s largest coconut cultivation with 63,000 hectares generating 500 million coconuts each year.

Fresh vegetable production plant to be built in Ha Nam

Japanese Showa Denko Group will build a pilot plant producing clean vegetables using LED light technology at the total cost of 1 million USD in the northern province of Ha Nam, said the Group’s General Director Daiken Murakami.

He announced the decision at a working session with Ha Nam province People’s Committee on April 8, highlighting that the Group’s first clean vegetable production built outside Japan will be constructed in Dong Van II industrial park, becoming operational by the end of this year.

He also briefed provincial leaders on the new technology, stressing its necessity for current agricultural production as outdoor cultivation methods are experiencing negative impacts from climate change.

LEDs can create optimal light waves to induce plant growth while eliminating waste and cost for the growers, he added.

Daiken Murakami said his firm has built 21 plants applying the technology in Japan and plans to scale up its model if the pilot plant in Ha Nam is prosperous.

Secretary of the provincial Party Committee Mai Tien Dung underscored that the Group’s investment is in line with the province’s industrial-oriented strategy to develop local agriculture.

He said that the province is focused on investing in transport infrastructure, the electricity grid and irrigation system while facilitating procedures for the Group to carry out the project in the locality.

Earlier, An Phu Hung Company has partnered with Japan’s HBC International to successfully implement a Japanese technology organic vegetable-planting model in Ha Nam province.

Seminar on Vietnam’s economic integration held in Argentina

A seminar on Vietnam’s international economic integration was held in the Argentinean capital of Buenos Aires on April 8 with participating representatives from Argentinean diplomatic agencies and businesses.

Speaking at the event, Gabriel Volpi from Argentina’s Ministry of Foreign Affairs and Worship, emphasised the importance of promoting trade with Vietnam as one of the emerging dynamic economies in the world.

Trade between Vietnam and Argentina reached a record figure of 1.92 billion USD last year, up 20.6 percent from 2013, he noted.

Volpi also said Vietnam remains a priority market for Argentinean exports, adding that the Latin American country should diversify its export products to Vietnam.

Meanwhile, a representative from the Vietnamese Embassy in Buenos Aires stressed the advantages in government policy to attract foreign investors.

In 2014 Vietnam’s exports to Argentina reached 214 million USD, up 5 percent, while its imports were 1.7 billion USD, an increase of 22.6 percent compared to 2013.

Event participants showed interest in promoting tourism between Vietnam and Argentina.

In 2014, about 10,000 Argentineans visited the Southeast Asian nation. So far this year, Vietnam has already welcomed 5,000 Argentineans.

On the occasion, a video was screened featuring the people and famous landscapes of Vietnam as well as the achievements of the reform process in recent years.

Deputy PM urges strengthened cashew industry

Deputy Prime Minister Hoang Trung Hai has urged the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade to design requirements and standards to connect production and export in the cashew sector.

During his tour of the southern province of Binh Phuoc to visit a number of effective cashew-growing farms in Bu Gia Map district on April 8, the Deputy PM underscored the need to tap the cashew potential in the locality, one of the country’s key cashew-planting areas.

Hai asked the agricultural research institute to conduct in-depth studies on the new cashew grafting method of local farmers applied in the locality, saying it is necessary to improve the process and introduce cashew growers in other localities to the style.

Binh Phuoc boasts a total cashew planting area of 178 hectares with an annual output of over 200,000 tonnes. Local famers paying heed to selecting varieties and applying advanced technologies in cultivation are generating high yields of about 3 tonnes per hectares.

Since 2003, a number of local families in Bu Gia Map district have used a new grafting method with elevated economic value.

With the aim to make the local cashew industry stronger and more sustainable, Binh Phuoc set up a steering committee.

Local authorities also mapped out and ratified policies to support cashew growers to improve their cultivation models while arranging training courses for local residents and facilitating access to capital to promote the sector’s development.

Credit incentives needed for farm export in Mekong Delta

Experts and representatives of businesses in the Mekong Delta province of Ben Tre gathered at a workshop on April 7 to call for credit incentives for local agricultural export.

General Director of Ben Tre Export and Import Joint Stock Company (Betrimex) Tran Van Duc highlighted the need for specific credit packages targeting agricultural production, processing and export.

Representatives from the Luong Quoi coconut processing company suggested the Government make amendments to financial policies on developing agricultural and rural areas, with the State Bank of Vietnam (SBV) lowering the annual USD lending interest rate ceiling.

Meanwhile, Dr Le Tham Duong from the University of Banking emphasised the role of farming households in the development of the region, suggesting that credit incentives should be devised to increase their agricultural production.

SBV Deputy Governor Nguyen Kim Anh valued the potential of agricultural production and lauded efforts made by local households towards that end.

The SBV pledged to continue its support for local businesses and residents to enhance the value of local products and ensure sustainable and rapid development in the region, Anh added.

In 2014, the national agricultural export value exceeded 30 billion USD including major Mekong Delta products, according to Anh.

High taxes hinder growth of auto industry

Vietnam's car and part manufacturers say the newly-approved automobile development strategy won't succeed unless the government offers more tax and credit incentives to local car producers which are struggling amid fierce competition from imported products.

According to the strategy approved by Prime Minister Nguyen Tan Dung in July, local automobile firms will produce 227,500 cars by 2020, 237,900 by 2025 and 1.5 million by 2035.

Though the strategy is considered conservative given that Vietnam’s 2035 target is smaller than Thailand's current output, few believe Vietnam will achieve it.

Shortcomings in tax policy remain a big obstacle to market development, car and part manufacturers said at a recent meeting organized by the Ministry of Industry and Trade on the nation's automotive strategy.

Bui Ngoc Huyen, director of auto maker Vinaxuki, said the high taxes imposed on domestically-made cars make them too expensive for locals to afford. In Vietnam, cars are subject to numerous taxes and fees, including import tax, value-added tax, special consumption tax and registration fees.

Up to 50 percent of residents in rural areas, and 90 percent in Hanoi and Ho Chi Minh City want to own automobiles, but few can afford them, he said. Automobile prices in Vietnam are 1.5-2 times higher than in other Southeast Asian countries like Thailand and Indonesia.

“Without tax incentives to encourage local production and consumption, Vietnam will fail to realize the strategy,” Huyen said.

Tran Ba Duong, chairman of the Truong Hai Auto Corporation, said Vietnam needs to cut the special consumption tax imposed on locally made cars. Under current regulations, cars are subject to a special consumption tax rate of 15-60%. Imported cars are taxed based on their Cost, Insurance Freight (CIF) price, while domestic vehicles are taxed based on their retail price.

“If the tax isn't cut, local producers will hesitate to expand investment, as they remain more expensive than imports,” he said.

Prices of locally-produced cars will be 20% higher than vehicles imported from Assocition of Southeast Asian Nations (ASEAN) countries when Vietnam eliminates import tariffs to meet its ASEAN Free Trade Agreement (AFTA) commitments in 2018, according to the Vietnam Automobile Manufacturers’ Association (VAMA).

Difficulties in credit access and a shortage of qualified laborers have also hindered the industry’s development, said Huyen. Car makers can only access 1-3 year loans, while the industry requires long-term investment.

Without careful preparation, insiders say, Vietnam will find itself in the same situation the Philippines did a few years ago, when producers began importing cars to meet rising demand, leading to a serious trade deficit.

The local auto market remains small compared to other countries in Southeast Asia, the institute said, adding that in 2012 it was half the size of the Philippines’ market, one-fifth of Malaysia’s, and one-24th of Thailand’s.

Local producers churn out some 100,000 cars every year, meeting 60-70% of local demand, it said.

Under the strategy, Vietnam aims to increase the percentage of locally-produced parts used in domestic automobiles to 30-40 percent by 2020. The rate currently hovers around 10 percent on average.

Only a few manufacturers have exceeded 30 percent, despite the fact that these companies committed to a scheme that sought to gradually produce cars that were 100 percent locally-made.

Truong Hai's Duong said the government should create policies to encourage auto makers to help local small-and medium-sized enterprises manufacture parts.

Local enterprises could establish joint-ventures with foreign automobile component producers, or buy technology from them to develop supporting industries, Duong said.

If Vietnam cannot develop its own supporting industries, it will continue to benefit only from providing labor and factory space, he said.

A representative of part manufacturer 19-8 said the government should issue specific regulations that force auto makers to purchase spare parts from local firms. Without the regulations, local small and medium-sized enterprises won't be able to compete on the market.

Deputy Minister of Industry and Trade Le Duong Quang said car and part manufacturers should by all means cooperate, but Vietnam can't force auto-makers to buy components from local small and medium-sized enterprises.

The cooperation should be implemented on a voluntary basis, he said.

To lure customers, each part manufacturer should focus on producing a limited number of high-quality components, he said.

Duong agreed that it would be impossible to produce and sell an entirely made-in-Vietnam car, given that neighboring countries like Thailand and Indonesia have already developed their auto industries so well.

But, local businesses still have opportunities to provide components for famous producers targeting the ASEAN market, he said.

Vietnam is currently home to 18 foreign and 38 local car makers with a total annual output of some 460,000 vehicles, according to Nguyen Manh Quan, director of the Ministry of Industry and Trade’s heavy industry department.

However, their firms mainly focus on assembly, welding, painting and cleaning, he said.

Although the government planned to produce 50-90% of car engine parts by 2010, the industry failed to reach that goal.

Quan said about 210 businesses participate in supporting industries, but they are small and medium-sized firms which mainly produce a handful of simple components.

PVI Sun Life aims to lead Vietnam’s life insurance market

PVI Sun Life has officially launched three new insurance products designed specifically for the Vietnamese market.

The new policies, named Bao An Gia, Bao An Sinh and Bao An Nhan serve parents that want to create a fund for their children’s education, middle-aged couples planning retirements, and the breadwinner of the family, respectively.

“The launch of the three products is in PVI Sun Life’s plan to improve quality and diversify its product portfolio as well as clientele in 2015,” said CEO Michael Stewart Elliott.

“Vietnam’s life insurance market has much potential for growth,” he added. “Our new products are going to stand out among the many life insurance products available right now due to their being designed to suit the specific needs of Vietnamese.”

PVI Sun Life was officially established in 2013 as the joint venture between Vietnam’s PVI Holdings and Canadian Sun Life Financial. Besides the three newly launched products, PVI Sun Life has seven main products and many side products as well as the PVI Sun Life pension product, which is currently very popular in Vietnam.

PVI Sun Life ranks seven out of the 17 life insurers in Vietnam in terms of market share and first in voluntary pension with its PVI Sun Life pension product, which holds a 90 per cent market share. Since its launch in April last year, PVI Sun Life has been serving 10,000 employees in more than 20 firms all over the country.

In 2014, PVI Sun Life records a 117 per cent on year increase in the number of new policies to 4,830.

In Vietnam, the company has over 3,000 agents working in 63 cities and provinces, and 23 offices in the north, central and south regions. It aims to become the leading life insurer in Vietnam in the next five years.

Certificates of origin to be issued by exporters

Export firms have been urged to actively study the mechanism for self-issuing the certificate of origin (C/O) for goods under free trade agreements (FTAs) to boost exports.

The Ministry of Industry and Trade said that upcoming FTAs, such as the Trans-Pacific Partnership and Vietnam–EU FTA, would allow exporters to have the right to issue self-certification of origin. The ministry is the only body currently that can authorise C/Os.

Self-certification of origin would help save time, reduce costs and promote trade and investment, the Vietnam Chamber of Commerce and Industry (VCCI) said.

However, Tran Thi Thu Huong, director of VCCI's Centre for Trade Paper Attesting, said many firms were not fully aware of the mechanism for issuing self-certificates of origin, which would result in rampant confusion during the implementation of the procedure.

An expert from the US Agency for International Development said Vietnamese firms, especially those in the garment and textile industry, would face with a lot of difficulties in determining the rules of origins and origin verification procedures.

For example, the origins of garment and textile products were very complicated and different origins would result in different tax rates being imposed.

According to the General Department of Customs, firms might be accused of trade fraud as many could take advantage of the self-certification of origin procedure to enjoy preferential tax rates for goods which did not meet origin rules.

Au Anh Tuan from the General Department of Customs, said fraud in certification of origins could hurt exports, adding that import countries could suspend the imports of products if their origin was revealed to be fraudulent.

The Ministry of Industry and Trade said self-certification of origin was a challenge, but if export firms were eligible for self-certification of origin, this would help firms enhance competitiveness, grasp opportunities from FTAs and boost exports.

The ministry would also decide on the list of enterprises allowed to self-issue certificates of origin.

Experts also urged firms to actively study the mechanism for self-certification of origin and prepare to become eligible for self-certification of origin in order to grasp opportunities stemming from upcoming FTAs.

Domestic medicine producers struggle to lift market share

Great effort is required by the domestic pharmaceutical companies to expand their share in the medicine market, which is currently largely dominated by imported drugs.

The Ministry of Health's Department of Pharmaceutical Management said that even though there were more varieties of locally-manufactured medicines in the market than imported medicines, the consumption of the former was lower.

Data showed that Vietnam has more than 130 companies, which meet good manufacturing practices (GMP) and produce about 12,000 kinds of drugs, while there are just around 11,000 categories of imported medicines.

The annual average spending on medicine by Vietnamese reached US$31.18 per person, but a large percentage of that was for imported medicines, which are priced higher.

The consumption value of domestic medicines made up for 48% of the total value.

Last year, Vietnam imported more than US$2 billion pharmaceutical products from 30 countries, reflecting an 8.3% growth over the year before, the Vietnam Industry and Trade Information Centre under the Ministry of Industry and Trade said.

In addition, domestic pharmaceutical production was hugely dependent on imported materials, which accounted for up to 90%. Technology was also a huge problem for most domestic medicine producers.

The national strategy of developing the pharmaceutical industry was targeted at the industry producing 20% of raw materials for domestic production and 80% of the total medicine consumption value by 2020.

According to the Director of the Department of Pharmaceutical Management, Truong Quoc Cuong, the pharmaceutical industry should invest in producing generic drugs of a high quality, which could replace imported drugs in treatment.

Cuong said the potential of traditional medicines should be brought into full play, adding that priority should be given to developing raw material plantation areas.

Vietnam, EU push for FTA signing

Vietnam and the European Union (EU) have maximized efforts to accelerate the signing of the EU-Vietnam Free Trade Agreement (EVFTA) by mid-2015.

The Chairman of the European Parliament’s International Trade Committee, Bernd Lange made the statement at an April 8 press conference in Hanoi following the EU-Vietnam FTA negotiations.

Lange said the two sides have agreed on several major issues and voiced clear commitments and a road map that Vietnam had put forward during the negotiations.

If the agreement is concluded, the footwear and textile sector will certainly benefit Vietnam. The agriculture sector will also boost Vietnamese exports. On the EU side, machinery, scooters, and cars will be the major export products. Investment still remains the key issue, and will benefit both Vietnam and the EU. Climate change issues will soon be resolved after the agreement, he said.

He also expressed his hope that Vietnam and the EU will soon finalize the FTA negotiations thus stabilizing the ties between Vietnam and EU member countries.

Japan to construct high-tech indoor farm in Ha Nam

Japanese group Showa Denko’s general director Daiken Murakami recently unveiled the company’s plan to construct an advanced LED indoor farm that will produce clean vegetables in Ha Nam province.

Murakami made the announcement at a working session with the provincial People’s Committee on April 8 at which he explained the details of the proposed ‘plant factory’ and introduced the technique of using LED lights for growing vegetables indoors.

The US$1 million plant will be erected at the Dong Van II industrial zone in Duy Tien district and is expected to be in full operation by the end of the year.

The technique purportedly helps increase the productivity of vegetables by 2.5 times, compared to those grown outdoors in natural light.

In addition, the method helps reduce the amount of post-harvest spoilage by an average of 40% from conventional farming and it is good for the environment as it reduces the carbon footprint.

Murakami said that Showa Denko has put up dozens of such factories and plans to replicate the model in Vietnam.

Secretary of the Provincial Party Committee Mai Tien Dung affirmed that the province will invest the necessary funds in transport and infrastructure to facilitate the group in carrying out the project.

Tra fish exports to China surge

China has emerged as a major importer of Vietnamese tra fish and other aquaculture products lagging behind the US, Middle East and EU – and its market share has been forecast to hit 10% in 2015.

Vietnam Tra Fish Association Vice Chairman Vo Hung Dung made the revelation at a press briefing on April 7 at which he announced that in the two months leading up to March of this year, China’s market share had expanded to more than 8%.

China is a large lucrative market for the Vietnamese aquaculture industry due to its close proximity, which results in ready access by land or sea, reduced transport costs and less spoilage.

However, he cautioned that Vietnamese fish farmers will find it difficult to break into this volatile market as prices fluctuate wildly and customs procedures at the border gates are unpredictable.

It is going to take a coordinated effort by the association, its members and other interested parties to successfully break into the market and develop the high quality Made-in-Vietnam brand, Dung concluded.

Bright spots for Vietnamese rice in emerging markets

Although overall rice exports during the two months leading up to March dropped compared to last year’s corresponding period, analysts at the Ministry of Industry and Trade have reported some bright spots in the figures.

Most notably, the bright spots were in rice exports to emerging markets in Africa, West Asia and South Asia, which accounted for 27% of the total agro-forestry-fisheries exports for the period and experienced significant on-year growth.

In the January-February period total agricultural exports for rice, pepper, tea, and cashew nuts to these markets combined jumped 14.2% compared to last year’s same two-month period to US$215.4 million.

Another bright spot was the two markets of Ghana and Ivory Coast, which have resumed the import of Vietnamese rice with exports reaching US$30.1 million and US$22.3 million respectively.

Notably, the rice, pepper, cashew and tea exports to these markets are likely to grow strongly in the coming time, analysts at the ministry said.

Canon opens 4th Image Square in Vietnam

Canon Marketing Vietnam has opened an Image Square store in Da Nang central city, the fourth of its kind in Vietnam, to meet the demand for professional imaging products and technology solutions of local residents.

Image Square is a chain of branded retail stores aiming to bring a range of authentic and high quality Canon products to Vietnamese consumers such as IXUS, Powershot, and Legria.

Addressing the inauguration ceremony, President and CEO of Canon’s South Asia and South East Asia Operations, Kensaku Konishi said the Image Square store aims to introduce the world’s leading image technologies to customers and build a professional space for photographers to share their passion.

The Image Square store in Da Nang has smart photo printers which allows customers to create their own photo cards and album in different sizes.

Image Square Da Nang will be the first store to launch new Canon products in the market namely 5DS and 5DSR.

The first three Image Square stores were located in Hanoi and HCM City.

FHV Nam 2015 offers access to int'l brands

The eighth edition of Food&Hotel Vietnam (FHV) to be held on April 21-23 will offer industry professionals from Vietnam and the surrounding regions a platform to source from market leaders of the international food and hospitality industry.

The event will include 353 exhibitors from 31 countries and regions, with four first-time pavilions from Poland, Korea Dairy Industries Association, Meat & Livestock Australia and Spain.

They will showcase the latest products such as canned fruits and vegetables, cheese, cured meat products, sausage, fresh meat, fresh fruit, olives, wine, and liquors without alcohol.

In addition to the new entrants, returning group pavilions from Australia, Germany, the Republic of Korea, Malaysia, Singapore, Taiwan and the US will make up the total of 13 international group pavilions.

Food&HotelViet Nam 2015 is organised by Singapore Exhibition Services in collaboration with local organiser VCCI Exhibition Services Co. Ltd. at the Sai Gon Exhibition and Convention Centre.

New shopping mall to open in city next weekend

Vietsin Commercial Complex Development Joint Stock Company (VCCD) on April 8 announced it will inaugurate its SC VivoCity shopping mall in HCMC’s District 7 next weekend.

The shopping mall at 1058 Nguyen Van Linh Street is developed and operated by VCCD, a joint venture between Saigon Co.op, the owner of the Co.opmart store chain, and Singapore’s Mapletree Investments Pte. Ltd., which specializes in property investment and management.

The five-storey SC Vivo City, costing US$100 million, has total floor space of 41,000 square meters. The facility has areas for shopping and commercial facilities, food courts and entertainment services of 150 local and foreign retail brands.

The mall will be home to Co.opXtra Tan Phong supermarket on an area of 8,000 square meters, CGV cinemas, California Fitness & Yoga Center, Nu Cuoi Vui bowling and entertainment center, indoor playground for children of Apple, Wall Street English school, Phuong Nam bookstore, and fashion stores of Topshop, Topman, Ninomax, Ziar, beside cosmetics and home appliances.

Each floor has a food court that features brands such as Starbucks, Phuc Long, McDonald’s, Kichi Kichi and Gogi House.

Another highlight of the shopping mall is the outdoor playground for children under 12. The free-entrance area allows children to play in tunnels and water fountains.

VCCD also offers free shuttle bus service for visitors to the shopping center.

The company’s general director Goh Wee Keng said occupancy at SC VivoCity has reached 80%, with foreign brands making up 20% of the leased area.

He added that Vietnamese products account for 75-80% of the goods at Co.opXtra Tan Phong supermarket and the rest are imported products.

Experts: Sell value-added tra fish products

Experts have urged local seafood enterprises to turn out more value-added tra fish products for local sale and export to boost revenues and ensure sustainable development apart from semi-processed fillets.   

Nguyen Viet Thang, chairman of the Vietnam Pangasius Association (VPA), told a conference on seafood industry and processing technologies in Can Tho City yesterday that enterprises just produce semi-processed and frozen tra fish fillets although the demand for these products on home and foreign markets has dropped. More customers favor value-added products.

VPA is willing to support enterprises to invest in advanced technologies to turn out processed products, said Thang.

Vo Hung Dung, general secretary of VPA and director of the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho, said there are over 300 shops selling Japanese foods in Vietnam with a majority of items made from imported ingredients, while not many local firms have tapped into this market segment.

Dung learned from his recent trips to China and the United States that Vietnamese tra fish are favored by many American and Chinese consumers. He added that China held a contest for competitors to cook 60 different dishes from Vietnam’s tra fish at a food festival last month.

Dung said an organizer of the festival told him that tra fish can be processed into 600 favorite dishes for Chinese diners.

The northern neighbor spent nearly US$19.2 million importing frozen tra fish products from Vietnam in the first two months of this year, up 58% year-on-year. With ample supply, Vietnamese tra fish can enter different market segments, Dung said.

According to the German supplier of convenient food technology Nienstedt, Vietnam mostly ships frozen tra fillets to Europe. Vietnam posted seafood exports of US$7.8 billion last year, with tra fish contributing 22% of the total.

If local producers apply advanced technologies, exports of the fish could increase significantly.

Dao Anh Dung, vice chairman of Can Tho City, told the Daily that the city had 50 tra fish processors and will assist them in improving processing technology.

Besides technology, a lack of investment, fish varieties, farming processes and packaging are among the weaknesses of the local seafood sector.

Vietnam fetched more than US$1.76 billion from tra fish exports to the European Union, the U.S. and 149 other markets last year, up a mere 0.4% year-on-year.

In the first two months of this year, Vietnam exported less than US$225 million worth of tra fish, down 18.2% compared to the same period last year. The major markets in the period were the U.S. (21.7%), the EU (17.8%), Mexico (9.8%), ASEAN (8.7%), China (8.5%) and Colombia (5.6%).

Banks urged to focus more on agriculture

Banks should prioritize lending to agriculture in the Mekong Delta to help local enterprises perform better, improve productivity and boost exports, experts said at a seminar on Tuesday.

Nguyen Kim Anh, deputy governor of the central bank, said bank loans for the Mekong Delta have edged up in recent years, especially for farm produce exporters.

Anh made the point at a seminar on the importance of credits for the Mekong Delta’s farm produce exports in Ben Tre Province. The event was part of the fifth Ben Tre Coconut Festival from April 7 to 13.

According to a report of the central bank, total outstanding loans for the region have increased steadily, from VND271.5 trillion (US$12.5 billion) in 2012 to VND302.7 trillion in 2013 and VND353.8 trillion by the end of February.

Total outstanding loans for agriculture and rural development were VND163 trillion at the end of February, up VND10 trillion versus end-2014 and accounting for 46% of the region’s total. Credits for rice and seafood exports neared VND59.6 trillion, making up 37%.

Despite the improvement, some at the seminar said banks should focus more on value and production chains and enterprises applying advanced technologies instead of financing all as now.

Tran Dinh Thien, director of the Vietnam Institute of Economics, said Vietnam is deepening its international integration as the country will sign more free trade agreements (FTAs) such as the Trans-Pacific Partnership (TPP), the Vietnam-European Union (EU) FTA, the Vietnam-Korea FTA, and will join the ASEAN Economic Community.

Therefore, to enjoy tax reductions and exemptions in the trade pacts, local farm produce exporters must improve product quality and take part in production chains.

Vo Tri Thanh, vice president of the Central Institute for Economic Management (CIEM), said investors earlier shunned the agriculture sector due to poor profitability and low growth. However, with large-scale farming and value chains in place, enterprises in this sector now can earn more profit.

Many domestic and international enterprises have invested in agriculture, focusing on value chains and application of high technologies, Thanh said.

So far, local banks have pledged loans of over VND7.3 trillion for at least 40 enterprises in line with the Government’s Resolution 14/NQ-CP on a pilot loan program for agricultural development.

Tokyu, Becamex join hands to develop bus service

Japan’s group Tokyu is working with Becamex IDC Corp. over a major project to develop Japan-style shuttle bus service not only in the southern province of Binh Duong but also in neighboring provinces.

Tokyu president Koshimura Toshiaki talked about the project on Monday, according to Vietnam News Agency.

The project would be developed based on the 22-kilometer bus route linking Thu Dau Mot City and Binh Duong New City launched in December last year by Becamex Tokyu Bus Co. Ltd.

The subsidiary of Becamex Tokyu Co. Ltd., a joint venture between Binh Duong Province-based Becamex IDC Corp. and Japan’s Tokyu Group, is working toward the expansion of the environmentally friendly service to Binh Duong’s neighboring provinces.

Relevant parties are considering the possibility of expanding the Japan-style bus service to Suoi Tien Park in HCMC as part of the project worth some VND3.5 trillion. The bus route from Binh Duong New City to Suoi Tien is 30.8 kilometers.

Toshiaki said Tokyu is operating public transportation systems serving 2.9 million passengers a year in Japan in addition to its operations in real estate, urban development, retail, hotel and resort, information technology sectors.

Toshiaki said Tokyu has sufficient funding for projects in Binh Duong.

Tran Van Nam, chairman of Binh Duong Province, hailed the Kaze Shuttle bus service as it helps improve the quality of public transportation and public awareness of the future of modern transportation.

Nam said projects invested by Tokyu and other Japanese investors have contributed to urban development of Binh Duong. The provincial government pledged favorable conditions for Japanese investors to invest and do business in the province.

Japanese enterprises have invested in 225 projects with combined registered capital of around US$5 billion in the province.

Tokyu is currently involved in a US$1.2 billion-plus urban area development project comprising of homes, offices and entertainment facilities in Binh Duong New City.

Ministry says hard to raise capital from G-bonds

Deputy Minister of Finance Vu Thi Mai said it was difficult to mobilize capital from Government bonds sales to fund the State budget deficit in the first quarter of this year.

As of the end of March, Vietnam raised more than VND55.99 trillion from sales of G-bonds, meeting 22.4% of this year’s target and equivalent to only 62.7% of the sum mobilized in the same period last year.

“The 22.4% is pretty low compared to the target,” Mai told a media briefing in Hanoi Tuesday.

There were many reasons for the lower-than-targeted proceeds of G-bonds and one of them was that the ministry had to implement the National Assembly’s resolution which requires it to sell G-bonds with tenors of five years or longer.

Previously, the ministry could mobilize capital via sales of different short- and long-term G-bonds. However, Thu said the ministry has pledged to stick to the NA’s resolution.

At the end of last month, the ministry signed 13 borrowing agreements worth around US$1.73 billion. Budget deficit in the first quarter of this year was VND37.3 trillion, equivalent to 16.5% of the year’s estimate.

State budget collections in January-March reached VND226 trillion, or 24.8% of the year’s target and up 10.3% year-on-year. Meanwhile, budget spending amounted to VND263.3 trillion in the period, equivalent to 23% of the year’s estimate and rising by 12.3% against the same period last year.

State budget collections from crude oil exports stood at VND16.63 trillion in the three months, or 17.9% of the year’s target and dropping 35.9% year-on-year. The average oil price in the period was US$58 per barrel, down US$42 against the expected price.

Wooden chopping boards go abroad

The chopping board craft village in Lai Thieu Ward, Thuan An Town in Binh Duong Province has existed for more than half a century, making it to the list of craft villages that still stands firm despite changes brought by market forces.

Thanks to the application of new machinery and technology, chopping board makers in the village can now free themselves from hard work such as sawing, shaving and carving. This also helps improve the quality and design of the product, so it can now enter some foreign markets such as Europe, Japan and Thailand.

In the domestic market, Lai Thieu chopping boards cost around VND25,000 (US$1.15) per unit with a diameter of 20 centimeters and VND30,000-35,000 with a diameter of 25-30 centimeters. However, prices on foreign markets are decided by weight.

Lai Thieu chopping board craft village is home to around 40 establishments with 8-10 workers each.

Competition seen intensifying in steel sector

The Ministry of Industry and Trade has warned that local steel manufacturers should get ready for tougher competition with cheap steel imports in the years to come.

Vietnam will have to lower import tariffs on steel products imported from more markets as committed to bilateral and multilateral trade agreements (FTA), according to a report of the ministry’s Industrial and Commercial Information Department.

Vietnam is expected to sign FTAs with South Korea and the Eurasian Economic Union comprising Belarus, Kazakhstan and Russia. South Korea and Russia have strong steel manufacturers.

Last month, Korea’s Ministry of Trade, Industry and Energy said the northeast Asian country hoped the FTA with Vietnam would be officially signed in the first half of this year and come in force by the end of the year, raising hopes for two-day trade to triple to US$70 billion by 2020.

Once the trade pact comes into force, Vietnam will further open its market to Korea’s industrial products including iron and steel items and liberalize 89.75% of tariff lines for Korea’s imports, while that country’s proportion for Vietnam will be 95.43%.

At the meeting in Hanoi on Monday, Prime Minister Nguyen Tan Dung and his Russian counterpart Dmitry Medvedev agreed on stepping up the formal signing of the FTA between Vietnam and the Eurasian Economic Union within the first half of this year.

The Ministry of Finance has issued Circular 161/2011/TT-BTC clarifying that import tariffs of certain steel, ore and alloy products have been reduced to 0% from this year in accordance with Vietnam’s commitments to the ASEAN Trade in Goods Agreement (ATIGA).

The department said sharp import tax cuts in 2015-2018 will result in both opportunities and challenges for local enterprises.

The Vietnam Steel Association (VSA) calculated steel imports last year stood at 11 million tons, surging 105% over the previous year. The volume consisted of 4.78 million tons of alloy steel products for construction subject to very low import tax rates.

Such cheap steel imports were VND1-2 million a ton lower than domestically-made steel, forcing local mills to slash their output and a number of factories to stop operations.

In addition to more steel imports, major steel makers including POSCO SS and Hung Nghiep Formosa Ha Tinh will pile pressure on local steel supply in the coming time.  

The Ministry of Industry and Trade put steel sales on the local market in the first two months of this year at over 300,000 tons, tumbling 30.3% year-on-year. If exports were included, the consumption of construction steel in the period rose by 7.38% to 645,204 tons.

According to the report, steel sales are forecast to increase in the second quarter when there are more construction activities in the dry season, but the domestic oversupply and rising imports would rein in steel price rises.

The VSA estimated domestic steel consumption would be as low as six million tons this year while the combined production capacity of operational steel mills is 11 million tons.

The report suggested the Government create opportunities for private enterprises to participate in tenders for steel supply to the projects funded by the State budget if it wants the local steel sector to develop sustainably. Besides, the licensing of new steel projects should be suspended.

The Ministry of Industry and Trade needs to limit cheap steel products and review import tariffs on steel imports to help prevent unhealthy competition between importers and local manufacturers.

Firms prefer low-interest foreign loans

Although the interest rates for bank loans in Vietnam’s dong currency have edged down remarkably since 2014, enterprises in HCMC have still opted for foreign-currency loans overseas to enjoy even lower rates.

According to updated statistics of the central bank’s HCMC branch, 750 firms based in the city had taken out medium- and long-term loans abroad by the end of last year with a total value of US$6.25 billion. Of the figure, foreign direct investment (FDI) enterprises accounted for 66%.

The total outstanding volume was US$3.65 billion at the end of 2014, up 9.7% from a year earlier, including nearly US$3.5 billion in cash and the remainder in goods.

Explaining the figures, Nguyen Hoang Minh, deputy director of the branch, said that FDI enterprises borrowed from their parent firms overseas. Meanwhile, most domestic companies borrowed from partners via deferred payments for machine purchases or investments, from individuals overseas or got government guarantees for loans.

Such loans are much cheaper than in the country with interest rates at around 1% per annum, Minh said.

However, few companies could approach foreign banks as there are no consulting or brokerage firms for the service currently. Normally, only large and renowned enterprises can easily borrow abroad.

Earlier, a leader of the central bank told the Daily that the central bank always follows foreign currency borrowing by local enterprises. The agency will have solutions to keep foreign loans within safe levels and the limit approved by the Government.

In recent times, this source of funding has helped enterprises supplement medium- and long-term capital to facilitate investment, expansion and development, the official said.

Besides, enterprises have the right to borrow overseas. They can choose either domestic or overseas credit.

However, from a macroeconomic perspective, the more local firms take out foreign loans, the heavier the foreign debt burden of the nation will be. Therefore, the central bank will cooperate with the Ministry of Finance and other ministries to set a limit on overseas commercial loans.

This aims to keep overseas debts at safe levels following the Law on Public Debt Management and international practices, the official said.

A financial expert said that the central bank should not obstruct overseas borrowing as this is a source of cheap capital for enterprises.

However, the agency should issue rules to control short-term loans as they might affect the foreign currency market.

Vietnam-Eurasia Economi Union FTA expected to be signed

The free trade agreement (FTA) between the Eurasia Economic Union and Vietnam is expected to go into effect within this year, according to Minister Tatyana Valovaya of the Eurasia Economic Union( EEU).

During a working visit with the French Businessmen Association on April 7 in Paris, Valovaya said the EEU (including Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia) hopes to sign the FTA with Vietnam in the first half of this year and implement it immediately thereafter.

At a meeting with businessmen on April 7 in Ho Chi Minh City, Russian Prime Minister Dmitry Medvedev highlighted the benefits for Vietnam in the draft FTA, saying the negotiations are close to a conclusion with almost all issues addressed.

Deputy Minister on the Development of the Far East Maxim Shereikin told reporters from the Russian Ria Novosti News Agency on April 8 that businessmen from Vietnam as well as other Southeast Asian nations are expected to be big investors in the Far East region of Russia.

He highlighted the potential in the Far East for wood processing, the light industry and gas liquefaction as huge opportunities for Vietnamese and Thai investors.

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