Garment sector looks to boost world export standing

The garment and textile industry this year should invest further in hi-value competitively priced products to maintain its position in the world's top five exporters, with a view to making it into the top three, Deputy Prime Minister Hoang Trung Hai told a conference on Monday.

Hai urged the industry to focus on technological innovation, while sourcing the best raw materials and improving the quality of its human resources – including its management.

An adequate support industry was also necessary to ensure the sector's sustainable development, he said.

The sector has set an ambitious target of US$12.7-$13 billion in export earnings this year, according to the Viet Nam National Textile and Garment Group (Vinatex).

It is also aiming to source between 55 and 60 per cent of its raw materials locally to cut import costs this year.

To achieve these goals, the sector planned to focus on finding new export markets, Vu Duc Giang, Vinatex chairman, said.

To reduce reliance on imported raw materials, Giang said Vinatex was trying to encourage farmers to grow more cotton.

However, he said it would be difficult to develop a cotton growing industry that met the requirement of the garment and textile industry because of poor soil quality. He said that farmers should alternate growing cotton with other crops to boost profits.

Vinatex is preparing to establish a raw-materials manufacturing joint stock company with its member firms to work with provinces to earmark farmland for cotton growing. It will be looking for farms of 50ha to 100ha.

Despite a number of difficulties, the garment sector still generated $11.2 billion from exports last year, up 23 per cent year-on-year. The localisation ratio rose from 46-49 per cent.

Tariff rules stir auto industry optimism

Car sales last year fell 6 per cent against the previous year to 112,224 units due to the ongoing effects of the economic crisis, according to the Viet Nam Automobile Manufacturers' Association.

The data includes sales of both domestically produced and imported vehicles. According to the General Statistics Office, Viet Nam imported 53,100 completely built units (CBUs), valued at US$960 million last year, down 34.1 per cent year-on-year and 22.4 per cent by value.

The association reported that sales of multi-purpose vehicles declined up to 13 per cent and the decreasing figures for commercial vehicles and four-seaters stood at 4 per cent and 3 per cent, respectively.

Toyota topped sales with a total of 31,135 cars sold last year, up 3 per cent over the previous year. Although ranking second with 26,047 cars sold last year, Truong Hai had the highest growth at 20 per cent. Vinamotor also reported total sales of 12,274 units.

In December, a total of 12,485 cars were sold, a 17 per cent year-on-year decline, the association said. It was the sixth consecutive month the industry suffered a drop in sales.

In that month, Toyota still topped the sales list with 3,603 units sold, however, the figure was still down 14 per cent against the same period of 2009. Truong Hai and Vinamotor followed with 2,720 units (down 4 per cent) and 1,176 units (down 13 per cent), respectively.

Industry insiders admitted that last year was more difficult than 2009 for the domestic auto market because of lingering effects of the global economic crisis. However, they expected this year to see improvements thanks to a new regulation to shave tariffs on vehicles imported from ASEAN countries, effective January 1.

Under the new tariff, vehicles with fewer than nine seats and an engine capacity of 1.8-2.5 litres would see import taxes lowered by 1 per cent to 82 per cent, while rates for vehicles with larger engines would drop by 6 per cent to 77 per cent.

Nguyen Van Long, a salesman at an Au Co Street showroom, estimated that vehicles with a cylinder size of less than 2.0 litres would enjoy a reduction of roughly 0.8 per cent against the current price. The reductions for vehicles with cylinders of 2.0–3.0 litres would be 0.9 per cent. For cars with cylinders of 3.0 litres or more, the savings would be roughly 4.4 per cent.

"A Yaris would enjoy a reduction of roughly $126.6, while the figure for a Camry would be $345.6. Buyers of makers like Venza, Lexus and Accura, whose cylinders are more than 3.0 litres, would likely see reductions of roughly $1,019, $2,270 and $3,000 per unit," Long said.

Aluminium project to begin production

An aluminium-bauxite project in the Tay Nguyen (Central Highlands) province of Lam Dong should turn out its first batch of aluminium product in the second quarter of this year, according to the Viet Nam National Coal and Mineral Industries Group.

By the end of 2010, VND99.5 trillion had been invested in the project, accounting for 85 per cent of its total investment. A bauxite factory will also be put into operation in April this year.

Of this, Tan Rai Aluminium Bauxite Project has completed almost 90 per cent of work while Nhan Co Alumin Project is conducting a geological survey for the implementation of the remaining part.

HGCI opens office in Laos capital

The Ha Noi Gold Consultancy and Investment Joint-stock Co (HGCI) officially opened a representative office in Vientiane, Laos, last Sunday.

HGCI, a subsidiary of the Ha Noi Golden Investment (HGI), operates in gold, property trading and stock investment with an initial charter capital of $689,000, and plans to raise its investment capital to $5 million by the end of 2011.

HGCI aims to provide effective investment consultancy and updated financial information services for local clients, according to Nguyen Doan Thang, general director of HGCI.

$42 million-invested beer facility opens

The Ha Noi - Vung Tau Brewery Company's new brewery in Ba Ria – Vung Tau Province began production yesterday.

The US$42 million, eight-hectare plant in the My Xuan A Industrial Zone has an annual capacity of 50 million litres of Hanoi and Carlsberg beers in the first phase.

The company is a joint venture between the Denmark-based Carlsberg, Viet Nam's State-owned Hanoi Beer and Beverage Corporation (Habeco), and the Viet Nam Ceramics and Glass Corporation which holds a minor stake.

Import of essential goods to continue

Viet Nam will continue to import meat, salt, sugar, animal feed and steel products for this year, the Ministry of Industry and Trade has predicted.

This year, total domestic demand for all meat products would increase 6.5-7 per cent to 2.9 million tonnes, the ministry said. There would be a resultant shortfall of 90,000-100,000 tonnes of meat which would need to be imported.

The ministry also estimated Viet Nam would import 182,000 tonnes of salt this year because domestic demand was expected to reach 1.35 million tonnes while local production would be just over 1 million tonnes.

The country would also import 250,000 tonnes of sugar this year, lower than 2010's 300,000 tonnes, the ministry said.

Domestic demand would reach 1.3-1.4 million tonnes while domestic supply would be roughly 1 million tonnes.

Animal feed was another of the essential goods that would need to be imported in 2011 because domestic supply would total only 15.2 million tonnes of the estimated total demand of 20.6 million tonnes.

Total imports would reach 7.7 million tonnes this year against 6 million last year.

Meanwhile, steel imports were predicted to reach 1 million tonnes this year as the domestic demand was estimated at 6.5 million tonnes while local production was expected to reach just 5.8 million tonnes.

Air France launches new business-class cabin 

Air France has put to service a new-version Boeing 777-300ER equipped with one more business-class cabin and new in-flight products, including an entertainment system for its non-stop flights between Paris and HCMC.

The latest version of the Boeing 777-300ER was configured with 42 Business seats, 24 Premium Voyageur seats and 317 Voyageur seats. The new Premium Voyageur is positioned between the business and economy classes.

In addition to the in-flight entertainment system developed exclusively for Air France, the European carrier said there were new bar areas in each cabin of the Boeing 777-300ER that flies between the two cities thrice a week.

“With the deployment of this new aircraft offering a further improved in-flight product, Air France aims to bolster its position in Vietnam,” Thierry Beragnes, country manager Vietnam at Air France KLM, said in a statement.

“This is a further step forward in our development strategy, following the code-share agreement signed with Vietnam Airlines last July and the launch of non-stop services in November,” he added.

In the winter schedule, Air France has five weekly non-stop flights between HCMC and Paris, with three flights operated by the Boeing 777-300ER and two flights by Vietnam Airlines. The Boeing aircraft arrives at Tan Son Nhat International Airport at 4:55 p.m. on Tuesdays, Thursdays and Saturdays.

Air France also offers its customers non-stop flights operated by Vietnam Airlines between Hanoi and Paris-Charles de Gaulle Airport in Paris five times weekly under the terms of a code-share agreement signed by the two sides.

The five flights depart Hanoi at 11:55 p.m. and arrive in Paris at 7 a.m. the next days on Tuesdays, Wednesdays, Fridays, Saturdays and Sundays. The Vietnam Airlines plane leaves Paris at 1:10 p.m. and lands on Noi Bai International Airport at 6:20 a.m. the next days on Mondays, Wednesdays, Thursdays, Saturdays and Sundays.

Labor strikes increase before Tet

Labor strikes have become widespread in HCMC as laborers expect Tet bonuses and minimum wage hikes, said Truong Lam Danh, vice chairman of the HCMC Labor Federation.

During the past two weeks, local workers have held five strikes over salary and bonus disputes. More strikes are expected as many enterprises haven’t raised wages and paid bonuses, citing difficulties.

Workers of SuperSoft Vietnam Co. Ltd. in Tan Tao Industrial Park stopped work on January 5. The employer had not raised minimum wages and allowances for workers as they should have under new regulations of the Ministry of Labor, War Invalids and Social Affairs. The company had also told the workers they would not pay the Tet bonuses until after the traditional Lunar New Year holiday (Tet).

The strike ended the following day after the enterprise agreed to raise wages and advance Tet bonuses for workers at VND1 million each, said Phan Phuoc Quang of the HCMC Export Processing and Industrial Zone Authority (HEPZA).

The Labor Union in Cu Chi recently requested local government to look into minimum wage increases at businesses to prevent disputes before Tet. Only a fifth of the enterprises in the district have increased minimum wages for employees, while the new wage rates were applied from the beginning of this year, Danh said.

The HCMC Labor Federation has asked businesses to give Tet bonuses to employees as this will help prevent labor strikes before Tet.

Footwear industry needs leg-up

Vietnam's leather and footwear sector is currently not likely to meet proposed growth targets from now until 2020 and beyond due to capital shortages.

According to the Ministry of Industry and Trade-approved development planning, Vietnam’s leather and footwear sector was expected to reap $9.1 billion in export value in 2015 and $14.5 billion in 2020, with corresponding localisation rate of 60-65 per cent by 2015 and 75-80 per cent by 2020, respectively.

Deputy chairman of the Vietnam Leather and Footwear Association (Lefaso) Diep Thanh Kiet said the sector would require enormous investments of VND59.570 trillion ($2.97 billion) up to 2020 – 43 per cent of which would be locally sourced.

“This means the sector will need over VND2.5 trillion ($125 million) worth in investments each year within the next decade, a too high level compared to its current capital raising capacity,” Kiet said.

In respect to human resources Kiet said local footwear sector needed around 650,000 direct workers and a large amount of indirect workers operating in diverse fields of material supply and services to achieve current export value. Thereby to triple the export value (from $4.5 billion in 2010 to $14.5 billion in 2020) the sector would need human resources at least double current manpower size, provided that the production output hiked 20 per cent and the sector’s added value up 30 per cent during the period.

Seeking sufficient labourers by that time would be an arduous task given current widespread labour scarcity by footwear enterprises.

Besides, investments in the sector’s production expansion did not go proportional with investments in materials and accessories production and businesses in the sector were consequently heavily reliant on imported materials.

This was evinced through the fact that a decade ago, the sector had a plan to build two footwear industrial clusters and two materials and accessories centres when establishing its development plan for 2000-2010. These two projects, however, remained on the drawing board till the present.

The footwear sector has also witnessed fierce competition from similar made-in-China items in the world marketplace as China reportedly has many advantages in price and material terms.

In this situation, Kiet proposed to heighten Lefaso’s role in overseeing the leather and footwear sector’s whole development plan implementation process and start work on the sector’s investment projects as of early 2011 to better confront challenges and make use of opportunities in the coming period.

HVN slow to drive price change

The Vietnam Standard and Consumers Association (VSCA) recently criticised that Honda Vietnam (HVN) had done nothing to protect Vietnamese consumers. The criticism came as prices of HVN’s automatic gear motorbikes had rocketed over the past three months.

“We feel dissatisfied with HVN’s responses to us. While HVN says its local distributors are its authorised ones, it lets them freely augment motorbike prices without taking any action to curb such rocketing prices, which are harming consumers,” said an association representative, who declined to be named.

HVN’s proposed average price is around VND50 million ($2,564) for a newly launched PCX motorbike in Vietnamese market and VDN31 million ($1,589) for Honda Lead motorbike. However, the market price is VND65-70 million ($3,333-$3,589) for a PCX motorbike and VND38.5 million ($1,974) for a Honda Lead. Honda’s motorbikes currently occupy 50 per cent of Vietnam’s motorbike market.

“HVN said it raised its productivity and output to meet the increasing demand, but domestic consumers still cannot benefit from this move,” the VSCA representative told VIR.

HVN said in a letter sent to the association that HVN always asked its distributors to sell the products at “suitable prices”.

“But HVN has no legal right to force its distributors to sell the products at the prices proposed by HVN. If HVN does that, it would violate Vietnam’s Competition Law and the international common practice,” the letter read.

“Relations between HVN and its distributors is that of independent businesses, which are equal before the law.”

“After HVN sells its products to any distributor, such products will become that distributor’s assets, not HVN’s. Thus, HVN has no right to determine the prices,” said HVN sales manager Tetsuya Kawahara.

But, the VSCA representative said: “How can HVN act that way? It must show its responsibilities to customers. Honda product sellers cannot twist consumers around their little fingers.”

He also said Honda motorbike sellers were “violating” Clause 13’s Article 2 and 5 of the Competition Law, under which an enterprise, with its monopoly of goods in the market is banned from imposing irrational prices of services and goods on its customers.

An enterprise is considered having monopoly if it either has a market share of 30 per cent upward or is able to limit other enterprises’ competitiveness remarkably. In this case, Honda’s motorbikes currently occupy 50 per cent of Vietnam’s motorbike market.

“Personally, I think that the government has no strict punishments for such sellers,” the VSCA representative admitted.

According to HVN, it is trying to expand its production output in Vietnam, from 1.5 million motorbikes now to two million per year after July, 2011.

“HVN’s increased production is expected to help reduce product prices,” Kawahara said.

PV