Strawberry, artichoke cultivated area decreased in Da Lat

Recently, the cultivated area under strawberry and artichoke, both famous specialties of Da Lat City, has been decreased due to unstable price factors and spread of plant disease.

Ho Ngoc Dinh, chairman of the Farmer’s Association of Ward 12 in Thai Phien village in Da Lat City said that the village now has only 40 hectares under artichoke cultivation, a decrease by 10 hectares since last year.

From 1997 to 1999, artichoke cultivation was spread across more than 100 hectares and sold at a high price of VND120,000 per kilogram.

Even though it remains a favorite food item, price of artichoke has continued to fall since 2007, with the fresh flower selling at VND10,000-VND15,000 a kilogram and the dried for about VND70,000 per kilo.

Farmers have turned to flower cultivation to supply to the local and export markets to reap higher profits, using greenhouse technology.

Strawberries too are not being seen much in Ha Dong and on Phu Dong Thien Vuong, Mai Anh Dao and Nguyen Tu Luc Streets, because of constant threat of disease.

Strawberry area is currently about five hectares only, instead of 30 hectares in 2004-2006.

Disease has been attacking strawberry crops for several years. Symptoms of the disease include withered leaves, reddening of branches and shriveled fruits.

According to the Vietnam Agriculture Science Institute, the disease affecting strawberry crops is caused by a fungus in the rainy season, which inhibits the plant from drawing on nutrients and water.

The institute has asked farmers to keep their gardens clean and use some chemical pesticides.

TPP talks tough for Vietnam over yarn-forward issue

Several Trans-Pacific Partnership (TPP) nations support the yarn-forward principle set by the U.S., while others, including Vietnam, disagree.

Prior to the beginning of the 13th TPP round of negotiations last Monday, one of the two relevant parties must make concessions on the issue of the origin of textiles and garments exported to the U.S. so that TPP negotiations can continue to proceed.

This round of talks is taking place in San Diego, California and will conclude tomorrow. According to the Office of the United States Trade Representative (USTR), the topic of textiles was discussed last Friday.

Before the round began, two senior trade officials of the U.S. came to Vietnam and Malaysia last month to promote TPP negotiations in the field of textile and garment, says World Trade Online, the website of Inside U.S. Trade, which provides exclusive information about the policy-making process of the U.S.

Particularly, Gail Strickler, assistant U.S. trade representative for textiles, discussed with her counterparts in Vietnam and Malaysia over market access, rules of origin and relevant issues on textiles to accelerate TPP negotiations.

Accompanying her was Doug Bell, assistant U.S. trade representative for trade policy and economics. Bell is the coordinator for TPP negotiations on agro-products, industrial goods and textiles.

Data from the early warning website of the Vietnam Competition Authority shows that of the eight countries joining TPP negotiations with the U.S., Vietnam, Peru and Malaysia are the three biggest garment exporters to the U.S, with respective turnover of US$3.78 billion, US$680.6 million and US$318 million in 2011.

Vietnam is currently the second biggest garment exporter to the U.S. after China.

Inside U.S. Trade quoted a private source as saying that TPP negotiations have come to the point where one of the two parties, the U.S. and Vietnam, has to make concessions to let TPP negotiations move on. Still, the website did not provide further details.

The website this May also quoted a private source as saying Vietnamese officials had told U.S. representatives for textiles that Vietnam might consider the yarn-forward principle suggested by the U.S.

However, Vietnam will only do so if the principle is to be applied five years later. This means that during the first five years after TPP comes into force, Vietnam will enjoy preferential tariffs when exporting clothing products made of fabrics imported from non-TPP member countries.

Back then, the U.S. also made a flexible move when saying that the country could make a short and temporary list of fabrics that TPP nations can import from other countries to produce clothes but still enjoy a zero tax rate when exporting to the U.S.

A representative of the Vietnam Textile and Apparel Association said he had not heard of such information. At present, the officials in charge of TPP negotiations at the Department for Multilateral Trade Policy under the Ministry of Industry and Trade are attending the 13th round of negotiations in San Diego.

VinaCapital launches rental service for Azura

Homebuyers in VinaCapital’s Azura apartment building project in Danang City can rent their homes through a service just launched by the company.

The developer said any customers who have purchased Azura apartments can sign long-term leases in case they do not intend to stay at their new homes immediately.

If apartment owners agree to rent with a term of not less than one year and not to stay at the apartment during the lease, they will enjoy an annual return of 8%. This is the gross margin that customers can earn after excluding expenses for management, brokerage and advertising.

The move is aimed at creating incomes for apartment owners who do not use their properties immediately, said David Brenac, project manager of Azura.

The ask price of the one bed room apartment stays at VND1.6 billion and VND3.5 billion for a three bed room one, according to Savills Vietnam, the sale agent of the project.

The Azura luxury apartment high-rise is being completed as part of the World Trade Center Danang.

Banks lose trust in businesses

A goal of disbursing VND30 trillion in loans for enterprises set by the HCMC government and the State Bank of Vietnam’s HCMC branch was not achieved last month as only two thirds of the amount was lent out.

Statistics of the central bank’s city branch show that of the VND20 trillion, the disbursement for agriculture, export, small- and medium-sized enterprises (SMEs) and supporting industries was VND3.8 trillion, VND2.3 trillion, VND11.7 trillion and VND2.2 trillion respectively.

These figures are quite modest compared to the huge capital demand of the city. However, they are still much higher than the disbursed amounts for these four sectors in May.

Nguyen Van Dung, deputy director of the central bank branch in the city, said the reason for last month’s low credit growth was that banks and enterprises were losing mutual confidence as both had their own problems with enterprises suffering from high interest rates and banks facing mounting bad debt. Some banks think the financial capacities of SMEs are weak, so they have restricted lending to such firms.

Therefore, the branch has proposed the central bank set specific criteria for what financial capacities are deemed weak or strong and instruct banks about how to settle old and new debts of enterprises.

According to Nguyen Truong Nhan, deputy director of the HCMC Investment and Trade Promotion Center (ITPC), the HCMC government last month instructed business associations to make a list of enterprises in need of capital, and the central bank branch in HCMC will then ask banks to lend to those in need.

However, few enterprises have put their names down to borrow loans, so Nhan said enterprises could contact IPTC, the Department of Industry and Trade, the HCMC Business Association or the HCMC Credit Guarantee Fund for registration.

Several enterprises looked passive at the meeting. They said banks did not clearly explain whey their loan applications were rejected and that many businesses still had to pay high interest rates, up to 18-19%, for their current loans.

In response to requests of enterprises, Tran Buu Long, deputy director of the credit guarantee fund, said the fund would consider guaranteeing loans for some SMEs having sound business plans.

Luong Ngoc Quy, deputy general director of Dong A Bank, said the bank was coordinating with the Young Business Association to provide VND1 trillion in loans for association member companies with a preferential interest rate.

Meanwhile, Bank for Investment and Development of Vietnam (BIDV) said it would also try to meet the funding demand of enterprises with an interest rate of less than 13.5% per year.

Life harder for exporters

Amid current tough economic conditions, Vietnam’s export sector will encounter more difficulties than other sectors due to the pressure from price hikes on input materials and an export price squeeze.

Economic expert Pham Chi Lan told a seminar on the competitiveness of exporters held in Danang City last week that to remove difficulties for enterprises, there needs to be an interest rate reduction in sync with the inflation decline to help enterprises get access to loans.

In addition, the Government should reschedule, cut or exempt taxes, disburse State investment capital, attract and disburse foreign investment and official development assistance (ODA) capital, remove investment barriers, reform administrative procedures, facilitate business operations and settle bad debt for enterprises.

“Enterprises are facing difficulties in the face of domestic and foreign demand declines. In particular, it is not easy to buy input materials due to high prices and to take out bank loans,” Lan said.

At the seminar, the Vietnam Chamber of Commerce and Industry (VCCI) introduced the VND10 trillion credit package offered by Military Bank for exporting firms.

Nguyen Cuong, director of VCCI’s Danang branch, said Military Bank has also signed a cooperation agreement with VCCI to deploy this credit support program for enterprises nationwide.

Vietravel posts 31% revenue growth

HCMC-based travel firm Vietravel in the year’s first half saw its revenue growing 31% compared to a year ago.

Alongside price cuts, the tour operator has launched a promotional program with prizes totaling VND8 billion during the summer.

As for the domestic travel segment, Vietravel registered a 20% year-on-year growth rate while it recorded a growth rate of 25% in outbound tourism.

There was a pick up in domestic tours taking in destinations in the country’s central and northern regions, Phu Quoc Island and the Mekong Delta as the company offered 40-45% discounts under the stimulus program.

Tours to Cambodia, Thailand Singapore and Malaysia grew significantly given attractive prices. Meanwhile, high-income travelers still chose destinations such as the U.S., Japan, South Korea, Dubai and Egypt.

Vietravel now arranges five tours to the U.S and Dubai monthly, 2-3 tours higher than last year. The number of tourists taking these tours is high, at over 30 per trip.

For this summer, the tour operator unveils promotions on 50 out of 300 tours. As of May 16, it served nearly 73,000 tourists.

Vinacomin sells 17% of VND3 trillion bonds

The Vietnam National Coal and Mineral Industries Group (Vinacomin) has sold only 17% of the VND3 trillion worth of bonds launched on the local market due to a lower coupon than expected.

Nguyen Van Bien, deputy general director of Vinacomin, said by the end of the bond purchase registration in June 29, four investors had registered to buy a combined amount of VND500 billion with a coupon of 14.5% for the first year.

Vinacomin last year had a plan to issue 3,000 bonds worth VND1 billion each with terms of 5-7 years in 2012. Vinacomin bonds are sold under the form of book entry, with floating coupons paid annually.

Bien said the Vietnam dong bond sale in 2012 aimed to raise funds for the projects to be executed in 2012-2015. It is also part of the coal-mineral industry development plan approved by the Government.

In 2010, Vinacomin’s plan to issue US$500 million worth of bonds in the international market was canceled as a weak response from the market after several road shows.

ANZ Vietnam and Vietnam Bank for Industry and Trade (Vietinbank) are consultants and bond sale agents for Vinacomin. “Using bonds as one of the middle- and long-term capital mobilization channels is a right move of the group,” said Tareq Muhmood, general director of ANZ Vietnam, in a statement issued last week.

However, financial market analysts predicted the Vietnam dong bond market would not prosper from now to the year’s end. In the stock market, foreign investors have reduced net buying and switched to net selling since the second quarter under the impact of the euro zone debt crisis and the Vinalines graft scandal.

Notably, according to Bao Viet Securities Co. (BVSC), Vingroup last week wrapped up its second bond issuance. The international convertible bonds worth a total of US$115 million have a coupon of 5% per year.

The unsecured five-year bonds are listed on the Singapore Stock Exchange and the bond coupon is paid biannually.

The conversion price of the bonds is VND88,000 each. The bonds offered this time will combine with the previously issued ones to form a unique lot worth as much as US$300 million.

VEC on the road to recovery

A specific mechanism is crucial to ensuring the efficiency of leading state-own highway developer Vietnam Expressway Corporation.

Vietnam Expressway Corporation (VEC) just submitted its operational model and finance restructuring draft plan to the Ministry of Transport (MoT), the third submission after garnering useful inputs from the ministries of Planning and Investment and Finance.

As of June 2012, VEC completed capital assignments for five major highway projects 540 kilometres long worth VND106 trillion ($5 billion). However, capital assignment success has made VEC Vietnam’s biggest public debtor as these projects’ investment capital is mostly sourced from commercial loans when VEC’s chartered capital is merely VND1 trillion ($47.6 million).

VEC’s deputy general director Luong Quoc Viet said since highway projects featured low financial efficiency and long capital recouping process and VEC’s operational model was still being trialed in light of current state regulations on public debt management VEC would incur several following critical faults.

First, VEC’s current debt/chartered capital rate is 106 against 3 regulated ceiling level as stated in Decree 09/2009/ND-CP presenting regulations on state companies’ financial management and management of state investment capital at enterprises.

Second, as its chartered capital is tiny against an investment project’s capital scope VEC fails to satisfy the requirement requiring a project developer to have at least 30 per cent of owner capital in an investment project, regulated in the Law on Public Debt Management, Clause 34.

As 90 per cent of its investment capital is loans, VEC’s capital structure is then highly susceptible to risks, particularly exchange and interest rate volatility.

To empower its operations, VEC is proposing a policy framework with specific mechanisms such as those on bond issuances and foreign loans subleasing for implementation of its highway projects.

Accordingly, VEC proposed the government to shift VND46,586 billion ($2.2 billion) of debts derived from site clearance and construction of above-mentioned five highway projects into government debt and credit into VEC owner capital. This will help VEC come on par with the requirement requiring the developer to have at least 30 per cent of owner capital in an investment project.

In case the proposal is not green-lighted or only partly satisfied, VEC asked the government enact a specific regime allowing VEC to be immune from enforcement of state regulation on debt/chartered capital rate paving the way for VEC to raise capital and that on its business efficiency appraisal.

“The trial model state enterprises handling highway projects as in VEC case would drop due to default factor if we are still obliged to follow such set stringent state regulations,” said VEC’s general director Mai Tuan Anh.

Feed producers’ big appetites

Many foreign animal feed producers are increasing investment in Vietnam to meet the industry’s rich potential.

Japfa Comfeed Vietnam, an affiliate of Japfa - one of Indonesia’s leading groups in producing and trading animal feed and breeding animals, started work on its fifth animal feed factory in Vietnam, with the 7.6 hectare plant in northern Hoa Binh province coming with a VND600 billion ($28.8 million) price tag.

“With huge development potential of the animal feed industry and a favourable investment environment, we decided to build the Hoa Binh animal feed plant with an aim to meeting the market’s increasing demand,” said the company’s general director Sanjeev Kumar.

Japfa Comfeed Vietnam targeted to reach its animal feed output of one million tonnes by 2015 and two million tonnes by 2020, he added. In March Cargill Vietnam, an affiliate of the US-based Cargill Group, inaugurated its ninth animal feed plant in the country. The new $18 million facility, covering 4ha in northern Ha Nam province, turns out 240,000 tonnes per year.

Also in the same month, Cargill Vietnam opened its shrimp feed plant in the Mekong Delta’s Tien Giang province, taking over the plant from Japan’s Higashimaru in late 2011. Cargill CEO Greg Page said: “We see a very bright future in Vietnam as we prosper together with local farmers and producers in the livestock and aqua industry, as well as our valued dealers and suppliers.”

Chanh Truong, chief representative of Cargill Vietnam, said the company was studying to build additional animal feed plants to reach total output of 1.5 million tonnes per year by 2015.

Last year, China’s CP Vietnam Corporation announced it would build six additional animal feed plants in Vietnam before 2014. Another Chinese company – New Hope - also said it would construct six plants in Vietnam.

Vietnam Animal Feed Association chairman Le Ba Lich said Vietnam was home to more than 20 foreign-invested animal feed companies which accounted for up to 70 per cent of the market share, and nearly 180 Vietnamese businesses. He said local companies’ market share was expected to fall amid foreign firms’ expansion plans.

Hot pepper growers in Tien Giang rake it in  

Many farmers in the Mekong Delta Province of Tien Giang earn up to VND500 million (USD23,800) per hectare of hot pepper.

This crop, traders have been coming to the growers to buy hot pepper at prices of more than VND40,000 (USD1.9) per kilogramme.

Huynh Thi Mai, from Cho Gao District, who is harvesting 5,000 square metres of of pepper said sometimes will traders even pay VND42,000 per kilogramme, prices vary, but the lowest they go is VND40,000.

She added that locals grows two crops annually, mostly hot red ones, which which are easily grown and have a high yield. The first crop lasts from April to July and the second is often finished before Tet.

Le Van Thoi, an exporter of peppers from Cho Gao District said that currently, the export demand for peppers to other Asian countries, such as India, South Korea, Thailand, Singapore and China has seen a sharp increase. He said that he sometimes pays prices as high as VND50,000 (USD2.38) per kilogramme, and that many traders have to visit growers for purchase.

Nguyen Van Thinh, Deputy Head of the district Department of Agriculture and Rural Development, said the locality has around 650ha of hot pepper, including 350ha in Binh Ninh Commune.

HCM City rejects mini apartment project  

The People’s Committee of HCM City has officially turned down a project to build an apartment block offering homes measuring just 20 square metres.

The project in District 1 was submitted to the committee by Dat Lanh Real Estate Company.

The city turned down the proposal on the basis that it would lead to too high a concentration of people and put greater pressure on traffic and social infastructure.

Earlier, the company proposed that the Ministry of Construction revise regulations on the construction of small apartments to match people’s demand.

Director Nguyen Van Duc said up to 300,000 apartments had been offered in Hanoi and HCM City since 2004, excluding future supply. Most of them measured over 70 square metres each. However, these apartments failed to meet the demand of many people due to high prices.

He proposed that the State should focus on building small apartments of below 40 square metres each such as type of 20-30 square metres for one person, 30-50 square metres for two and 50-70 square metres three. He also suggested that enterprises who had built 70-square apartments should be allowed to subdivide the flats into two or three parts.

However the Minister of Construction Trinh Dinh Dung earlier supported the construction of mini-apartments, saying that “The ministry plans to include this into a draft resolution to submit it to the Government for consideration. It is also aimed to implement the national housing strategy.”

Cement inventory level safe
 
The cement industry sector had around 2.8 million tonnes of cement in their inventory which was a safe level, said Deputy Minister of Construction Nguyen Tran Nam.

The deputy minister reported this information on Chinhphu.vn website after some claimed there was a serious imbalance between supply and demand in cement production due to insufficient planning by the cement industry.

The official said that stockpiled cement was not a common problem of most cement producers. The cement industry now had 62 production lines of reverted furnaces for cement production with a combined capacity of 57.6 million tonnes a year. Last year, cement demand was just 54-55 million tonnes, but this figure is forecast to increase to 75-76 million by 2015 and to 113-115 million by 2020. They should not make long-term plans based on short-term difficulties, Nam said.

Total consumption of cement for the first half of this year was estimated to be 28 million tonnes.

He also noted that transport projects, particularly in rural areas, using uncalcined raw materials such as uncalcined gypsum for portland cement production show great potential for the industry.

The deputy minister, however, pointed the finger at badly-performing cement factories, including the Ha Long, Dong Banh,Quang Son and Tam Diep cement plants.

The Dong Banh cement plant had been operating at a loss because its shareholders had not contributed enough charter capital, leading to a capital shortage. Despite good production methods, the Ha Long cement plant still faced capital shortage due to the higher investment costs, as a result of the long investment time, according to the official.

Since the end of 1980, Viet Nam has suffered from a lack of cement. Annually, the country had to import between 3-4.5 million tonnes of cement. Since the end of 2010, cement supply has begun to meet the real demand of domestic consumption and export. With such issues, cement production was fully accurate between 2005-10.

With advanced technology, cement production has risen and stopped the shortage of cement. Over the last 15 years, the cement sector has brought into play its role in the Government price stabilisation programme. Over the last 15 years, cement prices have risen with an average increase of over 1 per cent annually despite of many difficulties in input such as coal, electricity and high banking interest rates.

To deal with the challenges facing the building industry, the Ministry of Construction has encouraged cement producers to enhance investment management and continuously raise the localisation ratio of technology in cement production as well as promote domestic consumption and exports. The Ministry has also warned cement producers to carefully consider their investment and control their money flow to avoid existing weakness of ailing cement producers.

PetroVietnam profits up 10%

Viet Nam National Oil and Gas Group (PetroVietnam) earned an pre-tax profit of VND30.1 trillion (US$1.43 billion) in the first half of this year, an increase of 10 per cent against last year, Le Minh Hong, the group's deputy general director, reported yesterday in Ha Noi.

Hong said revenues during the period reached VND203 trillion ($9.67 billion), up 20 per cent year-on-year, while its contribution to the State budget also rose 16.6 per cent to VND81.2 trillion ($3.87 billion).

"The group has basically completed its major targets set for this year and achieved high growth rates over the same period of last year," Hong said, attributing this result to higher prices of crude oil, which increased from $115 per barrel in 2011 to $123 per barrel this year, and the 15-per-cent rise in revenue from oil and gas services.

During January-June, oil sales reached $7.45 billion, up 23 per cent against last year, while oil and gas service revenues totalled VND109 trillion ($5.19 billion).

The group's total investment value in the first six months of this year reached VND40 trillion ($1.9 billion).

By the end of this year, PetroVietnam estimates to earn a total pre-tax profit of VND61.4 trillion ($2.92 billion) and contribute VND160 trillion ($7.62 billion) to the State budget.

Currently, PetroVietnam invests over VND5 trillion ($238 million) in its non-core businesses (finance, insurance, banking and securities) and it plans to gradually withdraw from those sectors by 2015.

However, according to PetroVietnam's chairman Phung Dinh Thuc, the group's investments in finance (PetroVietnam Finance Corporation) and insurance (PetroVietnam Insurance Corporation) are necessary for its operations and the group is proposing to retain its holdings from 18-20 per cent in these companies.

Also in response to concerns over low consumption of new products including ethanol and synthetic fibres, Thuc said domestic demand was low and most of ethanol products had to be exported.

"PetroVietnam has three plants producing ethanol with the total capacity of up to 300.000 litres per year, but only 9,000 litres were sold in the domestic market," Thuc said, adding if more were consumed here, Viet Nam could save more US dollars from importing fuels.

PetroVietnam announced the first oil at the Te Giac Trang (White Rhinoceros) field was produced last Friday, 37 days earlier than the plan of the project management unit and 11 and a half months ahead of the Ministry of Industry and Trade's development plan.

Te Giac Trang oil field is located in offshore Viet Nam, in the northern part of Block 16-1 in the Cuu Long Basin, 100 km southeast of Vung Tau City, and under contract and management of Hoang Long Joint Operating Co (HLJOC). This area has five wells with an average flow of 10,000-15,000 barrels per day.

The H4 superstructure oil rig in the field has a total investment capital of US$44 million and is expected to produce 2,000 tonnes of oil. HLJOC operates Te Giac Trang oil field on behalf of partners Soco International, PetroVietnam and PTT Exploration and Production.

Oil production from this oil fields is expected to help ensure Viet Nam's energy security.

Firms lose turf in open market

Businesses were losing market share to foreign firms in the move to an open market system under the World Trade Organisation, industry leaders said.

They called for more assistance from the State so local associations and industries could develop in preparation for even more fierce competition to come as Viet Nam opened up all sectors.

Many of the firms were struggling to survive.

Sai Gon Garment Co 3's general director Pham Xuan Hong, who is also vice chairman of Viet Nam Textile and Apparel Association (Vitas), said one answer was to minimise reliance on imported raw materials which was causing the high retail price of locally made products.

Manufacturers needed to develop local raw material sources to cut costs, he said. For example, the garment sector imported 90 per cent of its cotton and 70 per cent of its fibre.

Hong said Vitas had encouraged its affiliated companies to seek partners in the domestic market and well-known companies to expand their markets.

Initiative and effort from business were necessary, however, and support from the State was needed to assist local businesses to reclaim their home turf, he said.

But while the sale of imported fake and poor-quality goods was rampant at markets and shops, domestic businesses would continue to face difficulties.

Association of Viet Nam Retailers' vice chairman Nguyen Ngoc Hoa said businesses were suffering from unequal competition.

Foreign retailers had advantages of finance, infrastructure and experience, and they could afford to suffer losses for several years to gain a foothold in Viet Nam. Vietnamese businesses needed to enhance their professionalism, train staff and employ talented people, he said.

Another example was the local freight market, around 70 per cent of which is dominated by foreign businesses.

The industry was previously protected by the State but after the country was admitted to the WTO, foreign freight and cargo companies arrived and now number at least 30.

Of the more than 800 Vietnamese freight and cargo companies, most are small, with charter capital of below VND1.5 billion (US$71,400) and poorly skilled staff.

SGN Logistics Co's director general Ta Thi My Linh said freight fees in Viet Nam now accounted for 20-25 per cent of GDP, higher than many countries in the region and the world. This reduced the competitiveness of local companies.

In the next two years, the country would completely open its doors in the freight sector which would place the domestic logistic industry under an even greater threat of losing ground to foreign players.

Economist Ngyen Minh Phong said competition with foreign businesses was unfair due to high local interest rates and insufficient support policies, making the Vietnamese businesses poor at generating added value and increasing income for employees.

Phong said that when the market economy fully developed, domestic businesses would have better conditions but they would have to prepare strategies and plan methodically.

Viet Nam Marketing and Management Institute director Nguyen Trung Thang said that once Viet Nam opened all sectors in its commitment to the WTO, the competition would become even more fierce. Therefore, the State should focus on assisting associations and industries to develop.

Quality to help hold farm product prices

The Ministry of Agriculture and Rural Development (MARD) has proposed solutions to deal with price reductions for farming products recently.

Prices of farming products in recent months declined by 30 per cent for rice and tra fish, 60 per cent for lobster, and 50 per cent for pork, in comparison with the same period last year, said the ministry.

Trang Quang Thanh, director of the Dak Lak Agriculture and Rural Development Department, said many farming products in the province had fallen in price, including coffee, rubber and rice, and the price of cassava had dropped by 50 per cent to VND1,000 per kilo against the same period last year.

Nguyen Van Chien, head of the Co Dong Livestock Co-operative in Ha Noi, said all households and members of the co-operative had suffered huge losses from livestock breeding.

Because prices of pork and chicken on the local market fell sharply to VND42,000-43,000 per kilo for pork and VND21,000-22,000 per kilo of chicken, they had lost VND10,000 per kilo of pork and VND8,000 per kilo of chicken, Chien said.

Nguyen Huu Rong, director of the Thai Binh Agriculture and Rural Development Department, said Thailand and India had bumper rice crops and boosted rice exports, so export prices fell leading to fall in the price of domestic rice.

All Vietnamese farming products for export rely on global prices, but they have fallen due to an increase in production, said Minister of Agriculture and Rural Development Cao Duc Phat, adding that the situation of high output on the domestic market while low prices on the world market had pushed the trading prices of farming products on the domestic market down.

Additionally, domestic enterprises had difficulties in purchasing, consumption and stock, so they could not keep farming products in stock to wait for an increase in prices on the world market, he said.

To solve the situation, the ministry would focus on adjusting the structure of production for farming products and improve the quality of those products to meet market demands, he said.

Tran Bich Nga, deputy director of the National Agro Forestry Fisheries Quality Assurance Department, said farmers and enterprises should promote the implementation of Good Agricultural Practices in farming production to improve the quality of farming products and increase consumption.

The ministry would work with relevant ministries and other countries to solve technical barriers related with export activities for agricultural, forestry and fisheries products, aiming to increase farming exports, Phat said.

It had also proposed credit solutions for enterprises to purchase farming products that would help farmers not have to sell farming products at low prices, he said.

Small firms pressed to become efficient

The southern province of Dong Nai has implemented many programmes this year to help small- and medium-sized enterprises (SMEs) access capital and become more efficient and competitive.

The Dong Nai Planning and Investment Department has organised three training courses in business management for leaders of SMEs. The courses attracted 117 participants.

For its part, the Dong Nai Science and Technology Department has helped SMEs become more competent, apply advanced quality management systems and register to claim intellectual property rights.

The provincial Fund for Investment and Development had provided loans worth VND37.2 billion (US$1.8 million) to SMEs in the province by the end of last month.

In addition, vocational training establishments have trained and supplied more than 2,600 workers to SMEs active in many sectors, including garment and textiles, wood processing, building materials, mechanical engineering and electronics.

Meanwhile, the provincial Employment Service Centre organised six job fairs, attracting more than 7,000 job seekers.

The Dong Nai Industrial Promotion Centre has helped SMEs in the province take part in trade fairs elsewhere in the country and supported them in upgrading production chains.

City encourages banks to loosen credit

A major conference will be held soon in which banks will describe their lending conditions, including preferential measures, to enterprises that need access to bank loans, according to HCM City People's Committee vice chairwoman, Nguyen Thi Hong.

Hong made the announcement last Saturday at a People's Committee meeting to discuss Government Resolution No13, which deals with helping businesses overcome difficulties.

In recent months, the committee has been working with the State Bank of Viet Nam's (SBV) branch in HCM City, districts, associations and industry sectors to set up meetings between banks and enterprises.

As a result, within one month, about 4,200 enterprises involved in four priority sectors received bank loans worth a total of VND21 trillion (US$1.08 billion) at the interest rate of 13 per cent.

Hong, however, said this figure was modest compared with the real demand from businesses.

The Saturday conference also heard a report on city-based bank operations in the first six months of the year.

Nguyen Ngoc Thang, deputy director of the SBV branch in the city, said the local banking sector's bad debts continued to rise over the last six months, accounting for 6.3 per cent of total outstanding loans.

Profits of commercial banks also fell sharply, with some of their branches even incurring losses.

Thang said that some local banks had not implemented the central bank's interest-rate policies designed to help enterprises overcome difficulties.

These credit institutions have been intentionally delaying the adjustment of the interest rate of old loans.

Meanwhile, the number of loans injected into the city's four priority sectors was still low, with the lending interest rate still not cut significantly, according to Thang.

Some banks have shown signs of violating the central bank's interest-rate cap by offering higher deposit interest rates to attract or keep customers.

Pham Xuan Hoe, deputy director of the SBV's Department of Monetary Policies, said commercial banks should cut the lending interest rate of old credit contracts.

The banks' credit activities would be able to develop sustainably after companies overcome their difficulties, Thang said.

Hong of the People's Committee said that difficulties in the business community were spreading to the banks.

She said the central bank's branch should have close control over the local banks' implementation of the central bank's regulations, particularly those relating to debt restructuring.

She urged local banks to share the burden and adjust their lending interest rates for companies that need loans.

Bank officials said the central bank should create clear guidelines on policies as well as regulations to ensure that they are implemented uniformly among all banks.

However, SBV Deputy Governor Tran Minh Tuan said the central bank had already issued documents that guided commercial banks in their adjustment of interest rates. However, the latter had not carried out these guidelines seriously, he added.

Consequently, both deposit and lending interest rates were still high, thus preventing enterprises from accessing bank loans, according to Tuan.

He asked the city's People's Committee and the SBV branch in HCM City to work with local districts to create opportunities for enterprises to access bank loans.

He said that each bank could be responsible for loans to a selected group of enterprises.

City supermarkets lure wary customers

Supermarkets, shopping malls, and even traditional markets in HCM City have launched a slew of promotions to stimulate consumption, but to little effect.

"I am really surprised when I go shopping," Pham Thu Trang of District 7 said.

"Most fashion stores in malls such as Crescent and Parkson in District 7 and Vincom in District 1 offer discounts."

Food and foodstuffs at supermarkets have seen prices cut by up to 50 per cent.

Traders said promotions have doubled this year, but fail to attract customers as hoped.

Phan Bich Thuy, a shop owner in District 3, said usually demand is high from June to August, but not this year.

Despite doubling her promotions and cutting down on production, her inventory is higher than normal, she said.

Nguyen My Hanh, owner of a fashion shop on Nguyen Dinh Chieu Street, said despite cutting prices by up to 80 per cent, business is not good.

The items she sells cost only VND50,000-100,000 (US$2.5-5), but she sells only four in a typical morning, she lamented.

An employee of a famous supermarket in Tan Phu District said current promotions are more attractive than ever, but most customers only buy essential things like food and foodstuff.

Electronics supermarkets also have many sales programmes.

A store in District 1 has cut the prices of 90 per cent of all products, but only manages to sell television sets, a salesperson said.

Many are reconciled to losing on these programmes.

Van Duc Muoi, director of food company Vissan Limited Company, told Tuoi Tre (Youth) newspaper, said his company loses on some fresh foods. It has offered discounts twice this year but been unable to boost sales significantly.

Rubber company sees decline in profit

Dong Phu Rubber Co (DPR) earned VND457.3 billion (US$21.8 million) in the first six months of this year, just 67.9 per cent of the level achieved in the same period last year. Profits declined 45.4 per cent during the period to VND160 billion ($7.6 million).

The company estimated sales volume at around 6,400 tonnes, slightly higher than last year, but inventories mounted to 2,500 tonnes, more than two times higher. Rubber prices averaged VND70.7 million ($3,400) per tonne, just 73 per cent of last year's average price in the corresponding period.

Combined profits of investment funds fall

Twenty-eight out of 47 investment funds have released 2011 financial reports, of which 17 posted total gains of VND136 billion ($6.5 million)), while 11 others lost around VND50 billion ($2.4 million). Vietinbank Capital saw the largest profit of VND41.8 billion ($2 million), while Manulife AM was the most unprofitable fund, losing VND9 billion ($429,000).-

State-owned water company sets up affiliate

The Ha Noi Clean Water Trading Co has equitised its subsidiary, the Ha Noi Purified Water Co, converting it into a joint stock company. The company has a charter capital of VND8.47 billion ($403,300), of which the State-owned parent company will hold 73 per cent. Fewer than one per cent of shares will be sold to staff, while the remaining 26.5 per cent will be sold to investors.

Ha Noi Purified Water Enterprise, established in 2007, produces purified water under the trademark of Cawa (Capital Water).

Government-backed bonds unable to find buyers

The VND2 trillion (US$95.2 million) tranche of three- and five-year Government-guaranteed bonds issued by the Social Policy Bank last Friday has failed to find any buyers, the Ha Noi Stock Exchange announced. Meanwhile, only around VND500 billion ($23.8 million) worth of VND5 trillion ($238.1 million) in Government bonds issued one day earlier has been sold.

Experts meet to discuss bank sector's bad debts
 
Leading economists yesterday discussed ways of dealing with the banking sector's high bad-debt ratio of 10 per cent caused mainly by the collapse of 26,000 businesses in the first half of this year.

At an on-line dialogue yesterday between economists and readers of the Viet Nam Economic Times, Nguyen Xuan Thanh, director of the Public Policy Programme at the Fulbright School in HCM City, said Government restructuring plans had outlined different solutions to handle the debt.

He said he believed there were two key solutions – to rely on market moves or seek State financial support.

The first solution was to merge ailing banks or let strongly financed banks purchase bad debts in accordance with market mechanisms and securitisation (securitisation is the financial practice of pooling various types of contractual debt).

The second, which he considered essential, was for the State to play a key role and use public finance to handle bad debt. He said if this did not happen, the debt could become greater.

Thanh said he hoped consensus could be reached on handling the bad debt.

Deputy director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh said one of the proposals was a plan to establish a company under the management of the State Bank of Viet Nam to trade bad debt worth VND100 trillion (US$4.8 billion). However, questions remain on how to organise the programme.

On the same subject, Nguyen Xuan Thanh said the establishment of the company required a clear target and finance source for its operation.

The company will set a target to purchase and recover bad debts within a short period of time instead of rescheduling them.

He said the company should only buy debts that had not yet fallen into insolvency. After bad debts were purchased, this would allow credit institutions to operate normally again.

The Government should classify all bad debts and ask enterprises that have bad debts to come up with the solutions, said senior economic Le Dang Doanh, adding that enterprises should be prepared to accept bankruptcy.

However, banks are also enterprises so bankruptcy at banks should be considered carefully because bank is an important financial institution and has functions in mobilising capital and providing loans for eligible projects and enterprises, Doanh said.

Weak banks should merge or be acquired by stronger banks, he said. The State Bank of Viet Nam already permits a process of bank mergers and acquisitions.

CIEM deputy director Vo Tri Thanh attributed bad debts to loose macro-economic management and rampant public investment.

He also blamed businesses for their unprofessional know-how. As a result, many were at a loss to know how to overcome difficulties facing them, especially during a time of global economic turmoil.

Truong Dinh Tuyen, former trade minister and member of the National Consulting Council of Financial and Monetary Policy, said Viet Nam's economy now had positive growth signals, including a reduction in Consumer Price Index, an increase in Gross Domestic Product, stabilisation in exchange rates and increases in foreign currency reserves.

But in fact, the economy and enterprises have still had so many difficulties, he said. The banks must find measures to solve bad debts and enterprises' difficulties in accessing capital with low interest rates though the rates already been reduced.

The domestic economy had recovery in the second quarter but for a long term, it was not sustainable growth, said Tuyen.