Rising beer consumption sparks competition

Domestic beer consumption has risen by an average of 20 per cent per year since 2003, reaching 2.7 billion litres last year, says the Ministry of Industry and Trade.

The 2004 development plan for the brewery industry projected beer consumption at 10 million litres per year in the Mekong Delta province of Bac Lieu, but by 2010, the provincial consumption had jumped to 40 million litres, with Soc Trang Province drinking 50 million litres and Can Tho City 70 million litres, noted the head of the ministry's light industry department Phan Chi Dung.

To meet rising demand, Viet Nam Beer Joint Venture, which produces and bottles in Viet Nam such popular beer brands as Heineken, Foster and Tiger, has proposed to increase its production capacity by 100 million litres to 400 million per year, the ministry has said, noting that major domestic brewers Habeco and Sabeco have also stepped up production.

Beer imports weres also on the rise, with imports of popular brands like Heineken, Lucky, Corona, Budweiser and Bavaria reaching 40 million litres last year.

The increased number of products on the domestic market would give consumers more choice but also create intense competition between domestic and foreign brewers, Dung said.

The war for market share would be based on three factors: good products, good distribution and effective marketing, said Sabeco Trading Ltd Co director Van Thanh Liem.

Delays on plastic-bag controls

The implementation of a tax on plastic bags which began this year has kick-started the production of biodegradable and eco-friendly bags, but to date there are still no official regulations for these environmental friendly products.

Ho Chi Minh City-based Van Cuong Phat Company president Pham The Hao said that his company sold 300,000 unwoven bags in the last three months of 2010, triple the amount sold in previous six months. His products have become a popular choice for many companies, shops or even conferences, Hao said.

Van Cuong Phat claims that its unwoven bags are made from 100 per cent polypropylene spun bonded fabric using the hot seal technique which makes the bag ‘almost' 100 per cent disposable.

"These qualities have been approved by Sustainable Growth Solutions (SGS), a Hong Kong-based company," he said.

Many companies are making eco-friendly bags or other products, but their green credentials are self-professed, rather than relying on a domestic set of green criteria.

Thai Quynh Hoa, head of Daily Life Product Office under the Ministry of Sciences and Technology's Quality Control Department said there had yet to be standard quality criteria set for such products issued by the government.

An owner of an unwoven bag making company in Ho Chi Minh City said: "We visited many government offices but none of them could provide us with a standard regulation on these products. They asked us to create our own measure and make our products based on that. It's just not persuasive to our customers."

Professor Nguyen Dinh Tuan, rector of Ho Chi Minh City College of Natural Resources and Environment said that in theory, products that are made of cellulose were easier to dispose when buried than plastic products. But how effective these unwoven bags are to the environment still remained unclear, he said.

ADB loans $210m for rural development

The Government of Viet Nam signed loan agreements worth US$210 million with the Asian Development Bank (ADB) yesterday to support rural area development.

Specifically, the funds will support infrastructure improvements, transportation and communicable disease controls in rural areas.

Governor of the State Bank of Viet Nam Nguyen Van Giau represented the Government while ADB Country Director for Viet Nam Ayumi Konishi attended the signing ceremony on the bank's behalf.

According to ADB, isolation due to a lack of infrastructure has limited rural resident access to social services in mountainous communities. The situation hinders the Government's efforts to alleviate poverty and increases the gaps between urban and rural areas.

The first loan of $108 million, for the Sustainable Rural Infrastructure Development in Northern Mountain Provinces Project, will focus on upgrading small – to medium-scale irrigation and drainage systems for about 12,400ha of farmland, 600 kilometres of rural roads and markets in 15 of the poorest northern mountain provinces.

A second $75 million loan will improve 340 kilometres of roads stretching through Viet Nam, Laos and Thailand under the Second Northern Greater Mekong Sub-region (GMS) Transport Network Improvement Project.

The third $27 million loan from the Asian Development Fund will expand surveillance response systems to help control dengue outbreaks and prevent the spread of communicable and tropical diseases.

Foreign investment in agriculture yet to take root

Vietnamese agricultural sector’s poor performance in wooing foreign investment has proven a headache for management agencies.

The past decade witnessed a sharp decline in foreign direct investment (FDI) i n the country's agricultural sector with the figure dropping from 8 per cent of Vietnam’s total FDI in 2001 to merely 1 per cent in 2010.

Ministry of Agriculture and Rural Development's (MARD) International Cooperation Department’s Integration and Investment Division head Tran Van Cong said the shortfall came from three factors.

The first was associated with investment projects’ restructuring when all projects involved with cattle feed production and agricultural-forestry product processing in agriculture were transferred to the industrial sector.

Second, sharp rise in the number of FDI projects in infrastructure and property fields against finite growth of investment projects in agriculture has magnified differences in FDI capital structure.

Third, investment in agriculture was considered risky with lengthy capital return and heavy reliance on climatic conditions.

Objectively, lack of expertise in compiling strategies to woo investors in agriculture, lateness in presenting prioritised investment projects, loosened cooperation between state management agencies and localities in luring investment and resolving FDI projects’ problems were allegedly major causes making foreign investors turn their back to the sector.

A Korea Trade-Investment Promotion Agency (Kotra) representative said Vietnam’s agriculture was less charming in the eyes of foreign investors chiefly due to lack of information, then the problems associated with infrastructure and administrative procedures.

Besides, the incentives to help lure investors into agricultural development failed to create breakthroughs. Though the Vietnamese government enacted the Decree 61/2010/ND-CP encouraging businesses to invest in agriculture and rural areas in 2010, only 1.63 per cent of Vietnamese firms have set their foot in this sector.

“How could we attract foreigners to invest in Vietnamese agriculture when even local firms hesitated to do so and rich rural people inject money into urban area investment ventures,” said head of the Institute of Policy and Strategy for Agricultural and Rural Development Dr. Dang Kim Son.

Son also proposed to offer more incentives towards FDI projects in the agricultural sector.

A MARD senior official said priority would be given to wooing FDI projects using less natural resources, involving the processing industry, seeds production, agricultural machinery manufacture, and technology intensive projects. Besides, MARD said it was considering the application of public-private partnership (PPP) model to help the agricultural sector lure more investors.

Reality shows that current FDI projects in the agricultural sector are mostly small in size, averaging $20-30 million per project and most investors come from Asia such as Thailand, South Korea, Japan or Singapore.

Ministry of Agriculture and Rural Develolpment's statistics show that the agricultural sector attracted 32 projects worth around $490 million in 2010. These projects chiefly involve livestock breeding, cultivation, forest conservation, water conservation and climate changes.

Price of export rice increased

The Viet Nam Food Association (VFA) on Tuesday announced price increases for export rice, the fourth adjustment in prices in 2011.

Under the VFA decision, the export price for 5 per cent broken rice will increase by US$20 per tonne to $520, while 25 per cent broken rice will be sold for $490 per tonne, an increase of $10.

The change prices aimed to help Vietnamese rice prices catch up with changes in the global rice market, VFA announced.

Meanwhile, farmers in the Mekong province of An Giang's Tinh Bien and Tri Ton districts said they were currently harvesting a bumper winter-spring crop.

Tran Phuoc Nghi, a farmer in Tinh Bien District's An Nong Commune, said local farmers were selling paddy directly from the fields for VND5,300 to VND6,400 (0.30) per kilogramme.

Nghi said he earned some VND20 million ($952) from his 1.5 ha paddy field this winter-spring crop.

An Giang Department of Agriculture and Rural Development said the province had harvested 45 per cent of the total 223,000ha planted with winter-spring crop, with average yield of 6.5 to 7.2 tonnes of paddy per hectare.

The winter-spring crop harvest would end in early April, the department said.

According to VFA figures, Viet Nam has exported some 780,000 tonnes of rice for $384.3 million in earnings so far this year.

Rice prices in the Mekong Delta were on the rise after VFA told its members two weeks ago to buy 1 million tonnes of rice to hold in reserve.

New auditor standards apply from April

The Vietnamese Government has issued a new regulations for auditor standards which will take effect from April 20.

The new decree requires auditors to hold a bachelors degree or higher from universities specialising in economics, finance, banking, accounting or auditing.

Those who have at least five-years of experience in the finance sector, or who have practised auditing for a minimum of four years at auditing companies will be eligible to register for auditor examinations.

High-tech toymaker lands US contract

Tosy Robotics Joint Stock Co, a high-tech Vietnamese toy producer, signed a US$3.5 million contract to export one million of its AFO flying objects at the American International Toy Fair last Thursday.

The company showcased three toys at the fair: the AFO flying object, TOOP humming-top and TOSY fire ring.

Tosy Robotics is the first Vietnamese producer to export toys to the US market.

Rules aim to promote infrastructure investment

The Ministry of Planning and Investment estimates that between now and 2020, Viet Nam will need some US$150-160 billion for infrastructure development, while the State budget and official development assistance (ODA) will only be able to provide half of this amount.

To seek other funding sources for infrastructure development, the Prime Minister issued Decision No 71/2010/QD-TT in November on the pilot application of the public-private partnership (PPP) model, which took effect on January 15. The regulation is intended to apply to pilot projects for three to five years until it is replaced by a more comprehensive decree governing PPP investments.

The regulation sets forth conditions and procedures applicable to infrastructure development projects or the provision of public services on a trial basis using the PPP model.

The concept was first introduced in Viet Nam in the 1996 Law on Foreign Investment in the form of build-operate-transfer (BOT), build-transfer-operate (BTO) or build-transfer (BT) contracts, and was further refined with the promulgation of the 2005 Law on Investment and Government Decree No 108/2009/ND-CP on BOT, BTO and BT investments.

However, the ability of these forms to attract PPP investment fell short of expectations. According to MPI statistics, since 1996, there have been only 90 PPP projects nationwide with a total registered capital of $7.1 billion. Among them, only two major foreign projects, namely the Phu My 2 and Phu My 3 gas-fired power plants, commenced operations under a BOT regime.

The new regulation, with comprehensive and open provisions, is expected to create a breakthrough in luring private investment in infrastructure development. The regulation expands sectors available for PPP investment, including some which used to be exclusively reserved for State enterprises, such as roads, bridges and tunnels; ferry landings; rail infrastructure; urban traffic systems; airports, seaports and river ports; water supply and waste treatment systems; and hospitals.

Under the PPP model, an authorized State body and an investor jointly implement a project on a contractual basis. The authorized State body can be any ministry, ministerial-level agency, Government-attached agency or provincial-level People's Committee as decided by the Prime Minister while its contractual partner can be an individual or institutional investor at home or overseas.

Partners to a PPP project may use equity capital, domestic or foreign commercial loans or funds raised from other sources, provided that the financing does not give rise to public debt. Of the total capital contributed by the private investor to the project, its equity capital must account for at least 30 per cent while the remaining 70 per cent can be raised from other sources without Government guarantee.

The regulation removes the current 49-per-cent cap on State capital invested in these projects and replaces it with a new concept of State portion which is limited at 30 per cent unless otherwise decided by the Prime Minister. The State portion can be in the form of capital or investment incentives, or tax policies.

The regulation specifies project preparation steps from investor selection through project implementation. Compared to current regulations, conditions and criteria for selection of PPP projects and project investors are clearer and more transparent, helping screen out inappropriate proposals while reducing risks to investors in the initial period.

Under the regulation, a project proposal, regardless of whether it is originated by an authorized State body or a private investor, will be first assessed by the MPI and, if qualified, incorporated into a project portfolio to be approved by the Prime Minister. This project portfolio will then be announced in the Tendering Bulletin and the MPI website.

Based on the approved project portfolio, the authorized State body will hold a tender process to select a consultant to formulate a feasibility study and execute a consultancy contract with the selected contractor within 30 business days after the tender results are approved. The State portion, investment security mechanisms and other matters will be decided upon by the Prime Minister during this phase based on the proposal of the authorized State body and the MPI evaluation report.

After the feasibility study is approved, the authorized State body will issue bid dossiers and hold an open domestic or international bid process to select the project investor. Competitive tender is always required under the regulation, alhough exceptions for direct appointment of contractors are available under Decree No 108.

The regulation also states that a project contract must be finalised and initialed within 30 business days after the project investor is selected for submission, together with other relevant documents, to the MPI for the grant of an investment certificate. The time limit for the MPI to conduct evaluation and grant an investment certificate is 45 business days from receipt of a valid application.

As the regulation does not allow operating enterprises to manage and implement PPP projects, after receiving the investment certificate, project partners will jointly establish a new enterprise, called the project enterprise, to implement the project.

The regulation also devotes a separate chapter to investment incentives. These make project enterprises entitled to corporate income tax incentives and exemptions from land use fees for the entire duration of operation. Goods imported for project implementation will enjoy incentives under the Law on Import and Export Duties. Project enterprises will also be permitted to pledge or mortgage assets and land use rights on the condition that such pledge or mortgage does not affect the project's objectives, schedule or operation. In the process of building and operating the project works, the investor and the project enterprise may acquire foreign currency from licensed banks to pay for current and capital transactions, or machinery and equipment purchased or leased from foreign parties, or transfer profits abroad.

A project enterprise may also have priority access to public utilities, services and facilities needed to complete the project. The Government may appoint an agency to guarantee the supply of raw materials or products necessary for the performance of the contractual obligations of the project investor.