Ministry to curb luxury imports

 

The Ministry of Industry and Trade will step up efforts to control the trade deficity by more tightly restricting the import of luxury or unnecessary goods.

 

"We will take bolder measures, including administrative measures, to restrict the import of luxury goods, especially cars, mobile phone, cosmetics and wine, in order to keep the trade deficit at less than 16 per cent of total export value," said Minister of Industry and Trade Vu Huy Hoang.

 

Ministry statistics show that the nation's import value last month hit US$8.7 billion, leaving the trade deficit at $1.4 billion, its highest monthly level this year. The trade deficit in the first four months of this year reached $4.9 billion, equal to 18.8 per cent of total exports during the period.

 

In the first four months, the import of goods subject to control such as fruits and vegetables, confectionery, steel, precious metals, and auto and motorbike parts surged 23.2 per cent to $1.66 billion. Meanwhile, the import of goods subject to import restriction, such automobiles and mobile phones, also surged sharply to more than $1.5 billion, with auto imports alone rising 71.4 per cent to 21,000 units, worth a total of $400 million.

 

Imports from China in the first four months surged 24.8 per cent to nearly $4 billion, while imports from ASEAN markets rose by 41.2 per cent to $2.6 billion.

 

Phan Van Chinh, director of the ministry's import and export department, said easier access to the US dollar in the wake of the devaluation of the dong might have led to an increase in imports of consumer goods, so it was necessary to more closely control the imports.

 

Hoang said that his ministry would co-ordinate with the Ministry of Finance and the General Department of Customs to scrutinise existing import taxes on goods subject to import restriction and raise some duties as appropriate.

 

He also ordered State-owned groups and firms under the ministry's auspices to use Vietnamese-made materials, parts and equipment for their production and projects.

 

Diseases hit Delta’s tiger shrimp farming hard

 

Diseases have destroyed around 13,000 hectares of tiger shrimp farming area in the Mekong Delta, which is 50% of tiger shrimp farming area in the region.

 

Nguyen Van Khoi, deputy director of Soc Trang Province’s Department of Agriculture and Rural Development, said shrimp diseases have appeared since March but causes as yet remain unknown.

 

The Research Institute of Aquaculture No. 2 (RIA 2) earlier concluded that local tiger shrimps mainly caught liver problems while white spot syndrome is not critical. Another test by the Animal Health Center Zone VII later showed that shrimps were free from Taura, white spot and yellow head diseases.

 

The province has lost over VND1 trillion due to the diseases. However, Soc Trang doesn’t receive support from the Ministry of Agriculture and Rural Development as no disease has been detected, Khoi said.

 

In Ca Mau Province, 11 out of 20 hectares of a newly-farmed tiger shrimp area has caught the white spot disease.

 

As the danger of a disease outbreak approaches, Ben Tre Province’s agricultural department has told farmers not to begin new farming now to prevent losses. The department also advises farmers to buy shrimp breeds from certified farms in the province, not from neighboring localities.

 

Khoi said unusual weather conditions might be the cause of recent shrimp diseases. “We have yet to see signs of transition between the dry and the rainy season although it occurs between April and May every year. So, in my opinion, shrimp diseases still remain now,” Khoi said.

 

RIA 2 is scheduled to meet with related departments on Thursday to announce causes of the diseases and give advice to farmers. The diseases cannot be controlled in the short-term, Khoi said.

 

Ministry calls for investment in power plant projects

 

The Ministry of Industry and Trade has called for investors to join electricity plant projects to ensure sufficient power supply for the nation in the 2015-2020 period.

 

Investors can join the bidding for construction of power plant projects under BOT (build, operate, transfer) and PPP (public-private partnership) forms, Pham Hung, deputy head of the Energy Department, said at a discussion of the Asian Development Bank’s (ADB) 44th Annual Meeting in Hanoi on Tuesday.

 

Addressing the meeting, Deputy Prime Minister Hoang Trung Hai said electricity shortage has become critical in Vietnam, although power plant investment accounts for over 10% of the overall investment in the economy.

 

The ministry expects the power source growth rate of Vietnam at 14-16% between 2011 and 2015 and 11.3-11.6% during the 2016-2020 period. To meet the targets, Vietnam needs to build power plants with the combined output of 50,000MW from now to 2020.

 

The Government has provided supporting polices for Electricity of Vietnam (EVN) to enhance its role as the only electricity provider and incentives for investors to construct independent power plants in the country.

 

The ministry is preparing bidding invitation procedures to carry out 11 power plant projects under BOT form, of which eight projects already have investors and the ministry will look for investors for the other three, Hung said.

 

Those include Mong Duong 2 coal-fired thermal power plant, which is expected to start work in July and begin electricity generation in 2014. Meanwhile, the Ministry of Planning and Investment is evaluating Hai Duong coal-fired thermal power plant project to decide whether to grant an investment license for investors.

 

Besides that, the ministry is seeking international investors for Nghi Son 2 project in Thanh Hoa Province. Bidding invitation procedures for O Mon 2 project in Can Tho City and Vung Ang 2 project in Ha Tinh Province are expected to be released in 2012.

 

The ministry is also making a list of power plants to be developed under PPP form, including coal-fired Song Hau 1 thermal power plant in Hau Giang Province, Quang Tri project and Quynh Lap project in Nghe An Province.

 

“The PPP method creates an opportunity for investors to join power plant projects in Vietnam,” Hung said.

 

Vietnam, over the past four months, has suffered a 10% power shortage, or over one billion kilowatt hours. The figure was much lower than the expected figure of three billion kilowatts due to power price hikes in March and the Government’s energy-saving campaign.

 

FDI Should Be On The Right Track

 

Vietnam expects foreign direct investment to flow to manufacturing sectors, and generate added value and technological value for the economy. However, in recent years, this capital source has seemed to target short-term investment and raw material exploitation.

 

Dr. Tran Dinh Thien, director of the Vietnam Institute of Economics, recently cautioned that the hospitality industry and real estate investment have topped the priority list of foreign-invested enterprises at a rate of 40.9% and 35.4% respectively. “This is an emreging transition after Vietnam joined the World Trade Organization, which indicates a prevailing trend of short-term investment and speculative venture, with little emphasis on technology and employment,” Thien said at a seminar on new economic development strategies held by the Ministry of Planning and Investment earlier this month in Hanoi.

 

According to Dr. Thien and his associates’ study, on average, the capital of a foreign direct investment (FDI) project in the hospitality sector is some US$160 million, in real estate US$150 million, and mining US$79 million. Meanwhile, manufacturing and processing industries have attracted modest investment capital, averaging only US$10 million/project. The average investment capital in education, science and technology projects is way lower.

This trend should not be ignored, Thien warned. In 2008, of the realized FDI capital of US$11.5 billion, only US$8 billion was from abroad, and the rest was contributed by Vietnam through land use right and other sources. Meanwhile, Vietnam has pinned high hope on the FDI flow into manufacturing industries in order to create added value for the economy.

 

What Thien has found out coincides with a different research by the Vietnam Chamber of Commerce and Industry (VCCI) on Provincial Competitiveness Index (PCI) released last month. Although there are no official statistics regarding the number of foreign-invested businesses investing in real estate, profits of projects to exploit raw minerals are very high. The rest have small scale, acting as sub-contractors for multinationals. Thus, many foreign-invested enterprises in Vietnam are struggling at the bottom of the value chain. “On average, only 5% foreign investors nationwide invests in advanced technology production and information and communication technology; 5% takes part in scientific and technical services; and 3.5% in insurance or finance, which all require high-caliber workforce,” states the PCI report.

 

“Foreign-invested businesses’ trend toward raw material exploitation should be scrutinized and analyzed carefully,” Thien stressed. He cited some other research results for assessment, such as fixed assets, which are the most crucial factor for production capacity of high competitiveness, and long-term investment capital. Some 5,000 foreign-invested enterprises have total long-term investment of only VND390 trillion, or VND79 billion/enterprise. Although higher than that of private businesses, this figure is lower than that of state-owned enterprises. Moreover, capital increase has been so far made mainly in real estate and mining projects, whilst that for manufacturing and agriculture remains unchanged.

 

On the other hand, foreign-invested enterprises usually moan about low quality of the local work force. In reality, they tend to recruit this category of employees so that they can pay low salaries. Among nearly 2 million employees currently working directly and indirectly in the FDI sector, only 40% are trained at vocational schools, and the rest are manual workers. Being mostly assemblers or sub-contractors, few of these companies have run long-term training programs or conducted technological transfer.

 

VCCI says at present, 66% of foreign-invested enterprises intend to expand operations in Vietnam over the next two years. Nonetheless, given the above analyses, it may be necessary to tighten the licensing of new FDI projects in certain fields.

 

Travel expo set to widen scope of promotion

 

The International Travel Expo 2011 in HCMC scheduled for September this year will expand its scope of promotion to four countries instead of three Indochina nations as in previous events, and will possibly include China’s Yunnan province as well, a local tourism official said.

 

The expo has the new theme called “Four countries one destination” is aimed at promoting the four countries of Vietnam, Laos, Cambodia and Myanmar as a single tourism destination, said Nguyen Bao Anh, deputy head of the Tourism Promotion Division under the city’s Department of Culture, Sports and Tourism.

 

Anh told the Daily on Tuesday that under the new theme, the travel expo would focus on promoting the world heritage sites, the common tourism potential of the four countries, health tourism and youth tourism, as well as beaches and islands.

 

He said that along with the new theme, the organizing committee is inviting Yunnan province of China to join this year’s event, aim to turn the expo into the tourism event of the Mekong sub-region.

 

At the event in 2007, the tourism ministers of Vietnam, Laos and Cambodia signed a joint declaration on tourism cooperation to make the three countries a common destination for international tourists. Since that year, the annual travel expo has the theme of “Three Countries, One Destination”.

 

Last year, Vietnam invited Myanmar to join the event, and then the four countries’ tourism leaders have agreed to join hands in contents such as sharing information and experiences in tourism planning, product development and tourism investment promotion. The four countries also agreed to work together to take part in international tourism events among others.

 

This year’s travel expo will take place from September 14 to 17 at the Saigon Exhibition & Convention Center in District 7. The event will feature a tourism exhibition, buyers and sellers meetings, and conferences.

 

Anh said the number of exhibitors will be up around 20% compared to 175 exhibitors in last year’s event.

 

To date, exhibitors have booked around 70% of the total exhibition space of nearly 2,000 square meters.

 

“It’s quite good compared to the same period of last year. We will close the registration in early August,” he said.

 

He said 100 foreign buyers have registered to join the event. The organizer expects to have more than 180 buyers this year.

 

The annual travel expo was held for the first time in 2005. The Ministry of Culture, Sports and Tourism has recognized it as the national tourism event of Vietnam.

 

Travel firms want higher interest from deposits

 

The HCMC Tourism Association has issued a document asking relevant agencies to allow international tour operators to enjoy higher interest rates for their compulsory deposits at banks instead of the low rate for call deposits.

 

The association has sent the document to the Vietnam National Administration of Tourism, the State Bank of Vietnam, and relevant agencies to ask for the favor as a way to help travel firms cope with more difficulties due to the economic downturn.

 

Each international travel firm has to place a deposit of VND250 million at banks as per the requirement of the Tourism Law and is given an interest rate for call deposits only, while the commercial interest rate is much higher. The travel firm has to send the bank’s confirmation to the Vietnam National Administration of Tourism (VNAT) before they can obtain a license to provide services for international tourists.

 

The deposits are to be used to compensate for visitors in case of contract infringements. According to VNAT, travel firms across the country have deposited a total of VND200 billion at banks.

 

Earlier, VNAT has suggested transferring all deposits from international travel firms to a commercial bank for higher interest sums, which should be used to finance marketing campaigns.

 

This is the second time the association has stood for the interests of its members. Last month, the association issued a petition asking agencies to soften operation conditions for entrepreneurs in the industry and offer them more tax incentives.

 

It has asked for a 50% reduction of value added tax (VAT) and a 30% reduction of corporate income tax. Enterprises also want to delay the tax payment by two quarters.

 

Foreign rice traders need to be financially capable

 

Foreign enterprises joining the rice market in Vietnam will have to obtain financial capability certification from the relevant department from September 1, said Nguyen Thanh Bien, Deputy Minister of Industry and Trade.

 

Vietnam in principle has opened the rice market to foreign businesses given its commitments to the World Trade Organization. The Government has released Decree 109 to regulate rice trading in Vietnam, under which enterprises have to meet requirements for financial capability and warehouses.

 

Local departments of industry and trade will check the qualifications before granting business licenses, Bien said.

 

Local governments so far have yet to receive rice trading applications from foreign businesses. “Foreign enterprises mainly join the rice market indirectly, by buying shares of local companies, especially State-owned firms,” Bien added.

 

Soc Trang opens first subsidized food store

 

Soc Trang Food Co. on Sunday inaugurated a food store in Soc Trang City to offer consumers products at 10% lower than market prices.

 

The VND2.5-billion store, the first of its kind in the province, aims to help stabilize food prices on the market, said Lam Dinh Quoc, director of the company. It offers 600 to 700 products at low prices and will supply food and foodstuffs for residents if price fevers occur. 

 

This is part of the store chain of Vietnam Southern Food Corp. developed in accordance with the Government’s price stabilization program. The chain targets to stabilize market prices, not for profits.

 

Wood exports fetch US$1.1 billion

 

Vietnam’s wood exports generated US$1.1 billion in the first four months of the year, up 52% from same period last year, with the U.S. and European countries remaining key buyers.

 

Meanwhile, local wood processors so far have imported US$350 million worth of timber and other materials, up 18% over the same period last year, according to the agriculture ministry.

 

Nguyen Ton Quyen, secretary general of Vietnam Timber and Forest Product Association, said the high export revenue was owing to the economic recovery in key importing markets including the U.S. and Europe.

 

Quyen expected wood exports would increase sharply from June as production would be on high peak. Nevertheless, according to him, the rising input cost is posing challenges to furniture makers.

 

“Some wood manufacturers have signed enough contracts for delivery until September. However, the rising input cost and high inflation are posing so big challenges to their business and they have to seek ways to cut cost,” he said.

 

Detailed plan approved for major port in Nghe An

 

The Ministry of Transport has approved a detailed zoning plan for a major seaport that will be able to handle ships of 30,000 to 50,000 DWT in the central province of Nghe An.

 

According to the plan prepared by Port and Waterway Construction and Consulting Co., the Dong Hoi Port will require total capital of VND16.56 trillion by 2020 and cover 1,096 hectares.

 

When in place, the port will mainly meet the needs for import-export operations of power stations, steel mills and construction material plants in the Dong Hoi Industrial Park in the province and neighboring areas.

 

Total annual throughput at the port is estimated to range between about 3.0 and 3.5 million tons by 2015 when the port receives 30,000-DWT vessels and the range will rise to 5.8-7 million tons by 2020 when 50,000-DWT ships can dock there.

 

The port will be divided into four functional sections with one for power stations, one for steel plants, one for cement and other construction material factories, and one for other purposes.

 

The passage to the port will be 10 km long and 150 m wide.

 

The developer of the Dong Hoi Industrial Park and other investors are responsible for raising funds for the port project.

 

PM endorses location of Haiphong int’l airport

 

 Prime Minister Nguyen Tan Dung has just agreed to pick Tien Lang District in the northern port city of Haiphong as location of Haiphong international airport to replace the existing airport Cat Bi for international flights in the future.

 

The future international airport will cover 4,500 hectares encompassing Vinh Quang, Tien Hung, Dong Hung and Tay Hung communes, and serve as a satellite airport for Noi Bai International Airport in Hanoi.

 

The Prime Minister in his decision last week ordered the Minister of Transport to map out a zoning plan for the new airport. This project’s components include runways and taxiways, passenger and cargo terminals, a parking area for planes, a management building, an aviation industry area and other auxiliary facilities.

 

Though the final detail of investment capital and construction has yet to be announced, the new airport is expected to handle modern big aircraft and to receive up to 100 million passengers and five million tons of cargo a year by 2050.

 

The news portal of Haiphong City says developing a new international airport in Tien Lang District would help save VND1.4 trillion (over US$68 million) for site clearance and infrastructure development.

 

The new airport will be conveniently linked with cities in the Red River delta by road, railway and waterway, as it is a one-hour drive from Hanoi, 65 kilometers from Halong City, 45 kilometers from Thai Binh and 94 kilometers from Ninh Binh City.

 

As it takes many years to complete preparations for the new international airport in Haiphong, the Government already approved a master zoning plan for Cat Bi Airport until 2015 and with a vision until 2025. Northern Airports Corp., which manages the airport in Haiphong’s urban area, said this airport would be upgraded to receive two million passengers and 17.000 tons of cargo a year by 2015, and four million passengers and 82,000 tons of cargo annually by 2025.

 

The master plan worth over VND1.7 trillion (some US$82.6 million) envisages Cat Bi Airport will be able to receive big aircraft of different types, and will have a food processing area, a cargo terminal by 2015 and a parking area for 11 planes by 2025.

 

Currently, Vietnam Airlines and Jetstar Pacific operate their daily flights to Cat Bi Airport. Just last week, Vietnam Airlines resumed its service between Danang and Haiphong after nearly a decade of suspension, using the ATR 72 aircraft for five weekly flights on this route on Mondays, Wednesdays, Thursdays, Fridays and Sundays in the initial time.

 

In the first quarter of this year, Cat Bi Airport received 1,084 flights, up 65.2% year-on-year. The period saw the number of passengers going through this airport up 21.2% compared to the year before to 128,500 and cargo volume by 26.1% to 1,540 tons.

 

Jewelry firms face difficulties after gold loans ban

 

Since May 1, commercial banks cannot lend gold even for jewelry production under new regulation of the central bank that may put jewelry companies in jeopardy.

 

The boss of a large jewelry company said the firm usually accepted loans in gold from banks to produce jewelry - and capital from banks accounted for a considerable proportion of the company’s total capital.

 

He said the State Bank of Vietnam’s ban will hit jewelry companies hard.

 

The regulation has also been applied for contracts that have already been signed but not yet disbursed or partly disbursed.

 

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Co. (PNJ), told the Daily that the new regulation will have a huge impact on jewelry companies.

 

She said for gold jewelry, companies had to invest huge capital to produce the jewelry and then put the goods in stores to wait for customers to purchase. Therefore, borrowing gold with a low rate was a good choice for jewelry companies, she added.

 

However, given the new regulation, jewelry companies have to find other ways to do business as Cuc said PNJ had to rebalance its total capital and will have to find other capital sources.

 

The general director of a joint-stock bank in HCMC’s District 1 said that jewelry companies now had to borrow capital in Vietnam dong and then buy gold to produce jewelry.

 

However, the high lending rate in dong which is currently 20% per year would be beyond a lot of companies as well as the fact it is not so easy to borrow Vietnam dong, the source said.

 

As banks cannot give loans in gold, most lenders have cut their deposit rate in gold to lower than 1% per year. The State Bank of Vietnam will still allow banks to mobilize gold via issuing certificates of deposit from now to May 1 next year.

 

Nguyen Thi Kim Xuyen, deputy general director of DongA Commercial Bank, said that gold mobilized at a low rate still can help banks to ensure liquidity. The bank from Wednesday began decreasing gold deposit rates by between 0.2% and 0.4% per year and customers cannot withdraw early.

 

Banks also cannot convert capital in gold to Vietnam dong for lending so banks’ operational effectiveness will be impacted in the future, especially banks that were strong in gold-related operations.

 

Truong Van Phuoc, CEO of Eximbank, in the bank’s general meeting last month said the bank now managed 13 tons of gold from individual customers and other sources. Of which, seven tons have been lent while the remaining six was still in the bank’s stock, he added.

 

Meanwhile, Ly Xuan Hai, CEO of Asia Commercial Bank, said with the central bank’s ban on lending and trading gold an amount of gold would be in stock. Gold accounts for about 15%-20% of the bank’s total assets.

 

Dealers vow sufficient petrol supplies

 

Petrol and oil supply could well meet the domestic demand by June, according to domestic petrol and oil dealers.

 

Le Xuan Trinh, deputy general director of PV Oil, said that his company had so far supplied an average output of 270,000 tonnes of petrol per month without cutting supplies to its sales agents.

 

The Viet Nam National Petroleum Corporation (Petrolimex) confirmed that it would have enough petrol and oil products to service the domestic market by the end of the second quarter of this year.

 

Bui Ngoc Bao, Petrolimex chairman and general director, said that his corporation imported 3.7 million tonnes of petrol and oil during the first four months of this year, 60 per cent of the total minimum import quota for such types of products, in order to boost its stock.

 

"So far, Petrolimex has signed contracts for the import of 5 million additional tonnes of petrol and oil during the second quarter, enough to meet the domestic demand, in order to ensure a market growth rate of 17 per cent," said Bao.

 

Nguyen Van Nam, a representative from the Viet Nam Oil and Gas Group (PetroVietnam), said that the Dung Quat Oil Refinery Plant operated at full capacity in order to supply 2 million tonnes of petrol and oil for the domestic market during the first four months of this year.

 

Bao said that the trading of petrol and oil was experiencing difficulties at the moment due to the increase of petrol and oil prices around the world.

 

During the first four months, the world crude oil price increased 23 per cent while the world petrol and diesel oil prices rose 32 per cent and 45 per cent, respectively.

 

High prices had created pressure on domestic petrol and oil prices in the first four months during which the government urged dealers not to increase sales prices for petrol and oil products in the domestic market, Bao said.

 

Since the start of this year, domestic petrol and oil prices have increased two times by VND2,900 per litre to VND19,300 per litre on February 24 and by VND2,000 per litre to VND21,300 (US$1.02) per litre on March 29.

 

Bao said Viet Nam's current domestic petrol and oil prices were still lower than the prices in Laos and Cambodia which meant that the illegal smuggling of petrol and oil would continue. The state was responsible for putting a stop to this situation in order to ensure enough volume for local consumption.

 

There have been rumours that domestic sales price for petrol and oil is set to increase by VND2,700 a litre to VND24,000 a litre during coming days.

 

The Ministry of Finance confirmed that the rumours were not true while urging dealers to help maintain stability in current domestic petrol and oil prices. The current price is set at VND21,300 for petrol and VND21,000 for diesel oil.

 

Viet Nam coffee exports to top $2.6 billion this year

 

The Ministry of Agriculture and Rural Development recently increased its forecast regarding the coffee export value for 2011 after coffee prices kept rising.

 

According to the new forecast, coffee exports during 2011may well reach 1.2 million tonnes, worth more than US$2.6 billion.

 

Export value increased by around $1 billion during 2010 and rose by $600 million in comparison with the Ministry's forecast at the end of 2010.

 

Current predictions are based on Ministry reports revealing that the export value during the first four months year-on-year nearly doubled to $1.4 billion while volumes rose by only 45.4 per cent to 675 million tonnes. During this time, export value surged by between 1.5 and 8 times throughout markets, including the largest one in the US.

 

Experts attribute high value to increasing export prices. During recent years coffee prices have kept increasing by 200 per cent, according to experts.

 

In the first four months, the average price came in at around $2,200 to $2,300 per tonne, surging by 50 per cent over the same period in the previous month.

 

Experts predict that prices would continue to increase seeing as Brazil, the largest coffee producer in the world has not yet harvested its crop.

 

In addition, some farmers kept stocks of coffee in reserve while waiting for prices to increase.

 

"Coffee prices follow a cycle based on a five-year increase and five-year decrease. We are currently experiencing the upwards surge," said the Chairman of the Viet Nam Coffee and Cocoa Association, Doan Trieu Nhan.

 

Prices could remain at a stand still if manufacturers had enough material for production.

 

According to a forecast made by the International Coffee Organisation, the coffee yield of Viet Nam, in terms of crop during 2010-11, will come in at around 18.4 million bags, a 1.3 per cent increase compared to previous crops.

 

VietinBank, UniCredit sign cooperation agreement

 

The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) and UniCredit S.p.A of Italy signed a comprehensive cooperation agreement in Hanoi on May 5.

 

The agreement will offer opportunities for a tighter partnership, better exchange of information, experience sharing, and access to each other’s customer information. Such opportunities will allow both sides to expand their operations, enhance their financial strength, and undergo further development in the long term.

 

The signing of the agreement is regarded as essential and is expected to promote the VietinBank image as well as that of the Vietnam banking industry in international markets.

 

VietinBank and UniCredit have had correspondent relations with each other for many years. The two banks have cooperated in many areas such as trade financing, payment, remittance, treasury and foreign exchange services.

 

They signed a remittance agreement and a framework financing agreement in compliance with programmes of import and export credit agencies and granted each other credit lines, which are frequently used in a positive manner, especially in international trade transactions.

 

The signing ceremony took place on the sidelines of the 44 th ongoing ADB annual meeting in Hanoi from May 3-6.