Packaging industry faces competition

Plastic packaging manufacturers have been forced to make adjustments in anticipation of more competition in the overseas markets.

In the first six months of the year, the plastics industry exported US$825 million, up by 21 per cent compared over the same period last year.

Independent market observers said this was a positive sign because the export value of many industries, such as garments and footwear, in the country had grown slowly in the period, averaging only 10 per cent growth rate.

However, many CEOs of plastics-production enterprises, particularly plastic-bag manufacturers, said they had foreseen problems that could affect their export activities.

According to the Viet Nam Plastics Association, Japan, the EU and the US are the biggest importers of Vietnamese plastic products, at rate of 27 per cent, 25 per cent and 12 per cent, respectively.

Plastic packaging accounts for 66 per cent of the total plastic industry's export value.

However, consumption has decreased in these overseas markets because of prolonged economic recession, affecting the Vietnamese industry.

Tran Viet Anh, general director of the Nam Thai Son Import and Export Company that specialises in plastic-bag exports, said 60 per cent of the company's total products were exported to the EU market.

However, since May the number of orders from that market had begun to drop, Son said.

The company had to cut production prices to ensure this year's export value of US$22 million, equivalent to last year's figure, are maintained.

Nguyen Van Khue, general director of the RKW – Lotus Joint Stock Company, said that Viet Nam's exports of plastic bags to the EU had some advantages because this market had placed anti-dumping duties on plastic bags from Thailand and China, with rates of between 7.9 and 14.3 per cent, and between 8.4 and 28.8 per cent, respectively.

The duties on Thai and Chinese plastic bags caused prices to jump 10 per cent higher than similar Vietnamese products, according to Khue.

However, the EU's anti-dumping policy on Thai and Chinese plastic bags is expected to be lifted in September, so the Vietnamese product's price advantage will be lost.

Japan is a big importer of Vietnamese plastic bags, but the country is a choosy market and has rejected large volumes of Vietnamese plastic products, according to Anh.

Pham Trung Cang, chairman of the Dai Tan Hung Plastic Joint-Stock Company, warned of unhealthy competition occurring among domestic plastic bag manufacturers which have cut prices.

Anh said that those companies' profits were too low to allow them to reinvest in their business.

Livestock, aquaculture to get support to overcome difficulties

The Prime Minister has asked State commercial banks to reduce interest rates on loans for farmers in the livestock and aquaculture sector while also giving them more time to pay back debts.

Banks have been called on to give struggling farmers in the sector up to 24 months to repay their debts in a bid to help businesses overcome a difficult period.

The banks are also asked to continue offering loans with an interest rate of 11 per cent, the lowest market interest rate at present, to help farmers invest in the raising, slaughtering and processing of cattle, poultry and tra fish.

The moves are part of the Government's measures to help farmers and agricultural enterprises to cope with difficulties such as outbreaks of disease, falling prices, lower demand and capital shortages.

According to the Ministry of Agriculture and Rural Development, in the first half of this year, livestock prices continued to drop and hit the lowest point for the last two years.

Pork prices have fallen by 20 per cent from VND53,000-54,000 (US$2.5) in January to VND42,000-43,000 ($2) in June, resulting in losses of at least VND6,000 -8,000 ($0.28- 0.38) per kilo for farmers.

Falling demand from major tra fish importers such as the US and EU has also hit domestic producers, with the Prime Minister asking relevant ministries and associations to seek new markets for these products.

Garment sector needs to seek new markets

Seeking new markets was key to boosting consumption of local garment products, said policy-makers and experts at a seminar to discuss ways of boosting the sector.

The seminar on solutions to access resources and expand the garment business globally was co-hosted by the Viet Nam Textile and Apparel Association (VITAS) and Vietinbank with Dun&Bradstreert (D&B) yesterday in Ha Noi.

At the seminar, leading experts in the field of garments and textiles and trade and exports shared experiences and outlined the potential and limits of the local garment and textile industry and solutions to find new customers.

They also looked at ways to attract potential customers in traditional markets and handling current difficulties for exporters.

Slow domestic consumption has been attributed to the global economic crisis.

Over the last seven months, Viet Nam's garment and textile exports reached $9.3 billion, maintaining annual growth rate of 7-8 per cent. This was viewed as modest compared to the country's growth of 22 per cent.

Dang Phuong Dung, deputy chairwoman and general secretary of Vitas, said the major exporters were the US, the EU, Japan and South Korea. Exports to South Korea alone had grown following the signing of the bilateral Free Trade Agreement (FTA) with some of the ASEAN nations, including Viet Nam, to further promote the country's trade volume with the bloc.

Looking back at 2011, inflation was low and exports orders remained high, but in 2012, the US has faced ongoing public debt and unemployment that has affected consumers.

The US and the EU market have seen low growth, and the eurozone crisis has also had a significant effect on garment exporters.

The first solution to accelerate consumption of garment products was to seek new markets. Apart from traditional markets, domestic exporters needed to expand their markets.

In addition, trade promotions needed to be enhanced to establish new partners, said Dung.

Also speaking at the seminar, Nguyen Thi Khanh Phuong of Vietinbank said her bank would help its customers access capital through export support programmes from different countries.

Vietinbank would also help garment exporters to balance their forex demand between members of the garment and textile sector to minimise the reliance on foreign currencies while ensuring payment ability and avoiding exchange rate risks.

Increasing imports compound struggling steel industry woes

The steel industry's problems like high inventories and declining production are being exacerbated by the large volumes of various kinds of steel that are being imported despite the domestic capability to manufacture them.

A report from the General Department of Customs said in the first half of the year nearly 1.1 million tonnes of steel worth US$996 million were exported while 5.7 million tonnes valued at $4.2 billion were imported.

"Import and export are normal for an industry," Nguyen Tien Nghi, deputy chairman of Viet Nam Steel Association (VSA), said.

"The country needs many kinds of steel [but] the industry cannot produce all of them because of the lack of advanced technologies and capital."

But he was alarmed by the fact that many kinds of steel that could be produced in the country were being imported.

For instance, domestic manufacturers could fully meet the demand for construction steel, but 103,000 tonnes were imported in the first half of this year, he said.

"Companies imported construction steel under another label to enjoy low import tax. This illegal import severely affects the steel industry."

The VSA, which fears this will continue for a long time, has asked the Government to carefully manage investment in the steel industry.

"The Government should limit issuing investment licences for steel projects to prevent inventories from piling up," Nghi said.

It should put up quality and other non-tariff barriers against steel from ASEAN member countries, he said.

Steel that can be produced domestically must not be allowed to be imported, he said.

Customs should carefully examine the origin and quality of imported steel, he said, adding trade promotion programmes should be organised to widen the market for Vietnamese steel.

Industrial park seals $25m credit deal

Viet Nam-Singapore Industrial Park Joint Venture Company Ltd (VSIP) will receive up to US$25 million from Standard Chartered Bank (Viet Nam) following a credit facility agreement signed between the two sides yesterday in the southern province of Binh Duong.

The facility will enable the company to develop infrastructure for expansion of its VSIP Binh Duong Integrated Township and Industrial Park project (VSIP Binh Duong).

VSIP Binh Duong has to date attracted 415 domestic and foreign-invested projects and of the total, over 300 worth a combined of $3.8 billion have created more than 100,000 local jobs.

"It had been a difficult couple of years in Viet Nam, with the weak economies in the US and Europe exacerbating our internal macroeconomic concerns," said VSIP General Director Nguyen Phu Thinh.

"This facility agreement, however, represented our continued confidence to go on with our development plans as scheduled and facilitate our tenants' operations," he said.

Viet Nam was a key growth market for the bank and this financing agreement with VSIP was a strong proof of our commitment to Viet Nam, said Standard Chartered Bank (Viet Nam) CEO Louis Taylor.

The first VSIP was established in 1996 in Binh Duong's Thuan An District. In 2006, the park was expanded to the neighbouring Ben Cat and Tan Uyen districts where the New Binh Duong Township was being developed.

In 2007, a third park was started in the northern province of Bac Ninh, while a fourth was later established later in the port city of Hai Phong. The fifth park was built earlier this year in the central province of Quang Ngai.

In all, the four integrated townships and industrial parks cover around 6,000ha.

Companies return to operations after halt

About 940 enterprises who suspended operations in the first half of the year restarted business last month, said Viet Nam General Department of Taxation.

The high number was seen as a positive signal for the market following the closure of nearly 22,000 businesses in the first six months of the year.

By last month this trend had subsided and the number of businesses that suspended operations had come down to 20,741. Nearly 47,000 new enterprises were also registered, including 5,000 State-run businesses.

The department added that the recovery was led by non-State firms.

According to the department's second-quarter report, pre-tax profits for all enterprises in Viet Nam in the second quarter were 2.5 per cent higher than in the first quarter, while profits for State-run companies were up 5.8 per cent.

The Department of Statistics said as of last year there had been 451,103 registered businesses, though only 375,732 were operating, with the rest suspending operations or shutting down. For most companies the biggest problems have been the inability to obtain credit at reasonable rates and high stockpiles.

Finance confab opens next month in capital

The 2012 Viet Nam Finance Conference and Exhibition, with the theme Enhancing Fiscal Sustainability: Mid-term Spending and Modern Technology Solutions, will kick off in Ha Noi on September 20, organisers said at a press conference held here yesterday.

The ninth Viet Nam Finance Conference, previously named Viet Nam ICT in Finance, will be co-organised by the Ministry of Finance and the International Data Group (IDG Viet Nam).

The two-day event will include two conferences in which leaders, State agencies and experts will discuss constructing policies relating to the State budget and public finance as well as IT applications to improve fiscal sustainability, said Dang Duc Mai, director of the ministry's Informatics and Statistics Department.

Mai added that the conferences will have specific presentations on tax and e-customs services for e-finance.

Along with the conferences, the exhibition will showcase and introduce an overall IT system development strategy in the finance sector. Local enterprises and IT providers will have rooms to display their products and IT application solutions.

Sand, gravel needed for projects in duty-free areas

The Ministry of Construction will likely ask the Government to permit sand and gravel exports into duty-free areas in order to construct, repair and maintain the areas' infrastructure.

The current prohibition on exporting these materials into the areas has negatively impacted infrastructure construction there.

Ministry issues import quotas for certain goods

The Ministry of Industry and Trade (MoIT) officially issued Circular 22/2012/TT-BCT announcing the import quotas for salt, sugar and eggs in the period from August 6 to December 31, 2012.

Herein, the import quota for salt is 102,000 tonnes; 70,000 tonnes for crude and refined sugar; and 40,000 tonnes for eggs.

The quotas will be distributed to companies that directly use these materials for production.

State budget expenditure surged in July

Spending from the State budget in the first seven months of the year increased 15 per cent while its input decreased 2.8 per cent compared with the same period last year, the Ministry of Finance has announced.

Total expense in seven months was VND498.16 trillion ($24 billion). Expenditure in July alone was estimated at VND81.26 trillion ($3.9 billion.).

Input for the State budget last month stood at VND49.26 trillion (US$2.35 billion), about VND1.96 trillion ($93 million) more than the previous month.

However, total input in the first seven months of the year reached VND393.5 trillion ($18.7 billion), falling 2.8 per cent in comparison with last year. Of the falling amount, 1.4 per cent fell from domestic collection and the rest was caused by the fall in import-export.

The expenses, as the ministry reports, were to meet demand for socio-economic development, to cover national defence, security, salary reform, and social welfare, and to recover natural disasters.

In a bid to ease difficulties for businesses, the taxation agency extended value added tax (VAT) payment for April, May and June worth VND10 trillion ($480 million) to more than 200,000 enterprises. The deferred payment of enterprises' income tax stood at VND347 billion ($16.7million).

This year tax exemptions for fishing households and salt producers totaled more than VND10 billion ($480,000).

Ministry wants to lift income-tax threshold

The Ministry of Finance has asked the Government to increase the personal income tax threshold to VND9 million (US$429), 2.25 times higher than the current level.

Deductions from each dependent of a taxpayer would also double from VND1.6 million ($76) to VND3.2 million ($152). This means an individual who has one dependent and earns a monthly salary of less than VND12.6 million ($581) would enjoy tax exemption.

These are part of the ministry's amendments to the Law on Personal Income Tax which was approved by the National Assembly on October 21, 2007, and came into force in 2009 with seven tax brackets, the highest set at 35 per cent for taxable income of over VND80 million ($3,800).

In March, the ministry introduced a draft amendment to the law as the low threshold had caused taxpayers difficulties in coping with inflation and increasing prices over the last three years.

The highest tax rate would also be reduced to 30 per cent for taxable income of over VND52 million ($2,500) .

However, concerns remain because previous amendments were only scheduled to take effect as of 2014, and may by then be outdated.

The ministry expects the amended law to be approved by the National Assembly later this year and to take effect next July. The Government has also asked the National Assembly Standing Committee to adjust family deductions in case of market price fluctuations of more than 20 per cent.

According to the ministry, last year there were 3.8 million personal income taxpayers in Viet Nam, contributing 5.5 per cent to the State revenue.

If the proposed family deduction is applied, 70 per cent of taxpayers will be tax exempt.

Lawyer Vu Xuan Tien, chairman of Value of Finance ond Management Consulting Company, said that it was reasonable to increase the tax threshold because it could help reduce the number of taxpayers and tax collection costs.

However, he was unsure if the threshold would become outdated like the existing level.

Former deputy head of the Taxation General Administration Nguyen Thi Cuc said that the range between the lowest tax bracket and the highest remained narrow, and much less than in neighbouring countries.