Vietnam will not face a rice deficit: official  

Vietnam will not face a rice deficit, even though floods in the Mekong Delta have almost completely destroyed the harvest there, said Nguyen Tri Ngoc, head of the Cultivation Department on October 4.
 
According to the Central Steering Committee for Flood and Storm Prevention, floods have devastated nearly 5,000 hectares of rice crops in An Giang, Dong Thap and Long An Provinces.

Nevertheless, the target of one million tons is still achievable, said Ngoc. He said that the Mekong Delta has harvested 155,000 hectares of autumn-winter rice crop, accounting for over 25 percent of the total seeded area.

According to estimates, the total area for autumn-winter rice crops has increased by 100,000 hectares from the previous crop season. In addition, Ngoc said that the Ministry of Agriculture and Rural Development had earlier forecast a scenario of huge flooding in the Mekong Delta and proposed to the Ministry of Finance to assist communities with funds to reinforce the dyke system and dredge canals, to prevent severe damage from floods.

However, the Finance Ministry deliberated before deciding to provide VND10 billion (US$476,000). Now when the flooding has already caused havoc, the ministry has agreed to another VND170 billion. The move comes too late, Ngoc said.

In related news, Nguyen Long Hoai, head of the Irrigation Department in Ca Mau Province said that some sections of the sea dyke have been badly damaged from landslides, threatening thousands of households in U Minh, Dam Doi and Ngoc Hien districts.

He also said that sea waves swept away about one kilometer of land in Ca Mau Province each year.

Vietravel wins Asia’s best travel agent award  

Vietnam’s Vietravel tourist company will be presented the title of Best Travel Agent for Asia at an award ceremony in Bangkok, Thailand on Oct. 6.

Initiated by TTG Asia magazine since 1989, the annual programme aims to vote the best travel agents and suppliers throughout Asia.

This year, the organising board will grant 51 travel suppliers awards, 16 travel agent awards, four outstanding achievement awards and eight Travel Hall of Fame awards which honour companies winning TTG Asia prizes for at least 10 times

State Bank pushes lower lending rates
 
The State Bank of Viet Nam (SBV) has requested that commercial banks and credit institutions slash lending interest rates for the production sector to between 17 per cent and 19 per cent per year, as promised by Nguyen Van Binh, SBV Governor.

At the first meeting between the central bank and the 12 major commercial banks (G12) – which account for 85 per cent of market shares – in Ha Noi on Tuesday, Governor Binh said the SBV would publish loan information to help domestic producers access credit more easily.

The meeting also discussed issues such as falling deposits in Vietnamese dong, which affects a bank's' liquidity.

To help increase bank liquidity, especially among small institutions, the SBV plans to access Open Market Operations to re-finance credit institutions, Binh said.

The SBV is also planning to announce its 2012 credit growth plan at the beginning of next month.

The central bank has asked commercial banks to review and tighten their lending in foreign currencies, while applying higher borrowing requirements for companies with revenue exclusively in Vietnamese dong.

Deposits and foreign currency lending should be reduced, the SBV said.

Last week, the SBV regulated that non-term deposit interest rates offered by commercial banks and other credit institutions would be capped at 6 per cent per year, from October 1.

The cap on deposit interest rates for term deposits of one month or more will remain unchanged at 14 per cent at banks and 14.5 per cent at credit unions.

In the past few months, a number of commercial banks have flouted the rule by offering higher interest or bonus interest to entice depositors. Some banks have also given depositors overnight interest of 14 per cent. These practices introduce a high element of risk into the nation's banking system, the SBV said.

Small banks have to increase their non-term rates to lure customers from larger banks.

After the circular became effective, banks slashed their non-term deposit interest rates to under 6 per cent per year.

Sai Gon Commercial Bank (SCB) announced on Monday a non-term deposit interest rate of 4.2 per cent per year.

Western Bank posted a rate at 6 per cent for one – to six-day-terms, while ABBank listed rates of 3 per cent and 6 per cent for non-term and one, two, three-week terms.

Customers en masse withdrew deposits after small banks reduced their non-term rates.

At the meeting, the SBV also said it was mulling a draft to sanction banks which offered higher deposit interest rates or bonuses to entice customers.

Accordingly, credit institutions that were found to have violated the regulation would also be temporarily stopped from opening more branches and transaction offices and establishing subsidiaries for six months.

New player enters re-insurance
 
The reinsurance market, which has so far been dominated by a single company, the Vietnam Re-insurance Corp-oration, has seen the entry of a second player.

The new entrant, PVI Re, a member company of PVI (PetroVietnam Insurance Holdings), has a charter capital of VND460 billion (US$22 million).

Insurance industry insiders said however that PVI, which provides insurance to oil and gas projects as well as those in energy and marine operations, and others, had been running a reinsurance operation for the last 15 years.

It had a modest charter capital, but since it was wholly owned by PVI Holdings, they said it was not quite easy for PVI Re to increase its capital.

PVI Holdings chairman Nguyen Anh Tuan said the company hoped to increase the share of reinsurance premiums retained in the local market by reducing the amount going to companies outside the country.

Major insurance companies in Viet Nam like Bao Viet and Bao Minh have their own re-insurance operations, but share up to 70 per cent with foreign reinsurers to hedge their risks.

In the first half, according to statistics from the Vietnam Insurance Association, this 70 per cent amounted to some VND2.6 trillion ($125 million). This rate was 66 per cent last year and 64 per cent in 2009.

The remaining 30 per cent, or VND1.1 trillion (over $50 million) remained in the domestic market.

Analysts blamed this dependence on foreign companies on the limited financial and professional capacity in the country's insurance industry.

Trinh Thanh Hoan, head of the Ministry of Finance's Insurance Management and Supervision Agency, said in its reinsurance development plan, the ministry expected to see three re-insurance companies operating by 2015.

Bao Viet, who has the second largest reinsurance turnover behind VinaRe, has no plans to set up a full-fledged reinsurance company.

Highway One tunnel projects open for bids

The construction contract for the Phu Gia and Phuoc Tuong tunnels on Highway 1 will be opened for bidding, marking the first time a build-operate-transfer (BOT) project will have been offered for tender in a transport project.

The project's total cost has been estimated at nearly VND1.2 trillion (nearly US$57.6 million), with about VND810 billion ($39.3 million) earmarked for the tunnel construction.

The Ministry of Transport has said that it would put the project out to tender to choose the best contractor to build the tunnels, the second and third in the central province of Thua Thien-Hue following Hai Van Tunnel.

Through the transparency of bidding, the best contractor would be chosen to effectively complete the project at the most reasonable cost, said Minister of Transport Dinh La Thang.

At least two partnerships have registered to bid for the contract. One of the joint ventures is the alliance of Mien Trung Corporation (Cosevco), Civil Engineering Construction Corporation No 8 (Cienco8), and Phu Thinh Construction Investment Joint Stock Co. The other consists of HCM City Infrastructure Investment Joint Stock Company (CII) and Civil Engineering Construction Joint Stock Co No 591.

The two tunnels, at 500m and 400m long, respectively, would burrow beneath the Phu Gia and Phuoc Tuong passes for a total length of 8.4km. The tunnels would be designed to safely accommodate two lanes of vehicles and help ease the busy traffic over the passes, which see traffic of around 21,000 vehicles daily, as well as frequent traffic jams and accidents due to the curvy roadway.

The project was approved in July and work was expected to begin early next year, with completion slated for 2015.

Only one fifth of afforestation projects completed in Dak Lak

The Central Highland province of Dak Lak has allowed 41 local enterprises to afforest 35,800ha since 2005, but until now only 6,800ha of trees have been planted, said Nguyen Van Xuan, deputy director of the provincial Department of Agriculture and Rural Development.

In Ea Sup District, 14 enterprises are registered to plant 8,337ha of forest but no afforestation projects have been implemented.

The situation is the same in other districts including Buon Don, Krong Nang, Ea Kar and Ea H'Leo, Xuan said.

Xuan added that since private companies were registered to protect forests, safety in the province's forest land had become disorganised, especially Ea Sup District, which has became a target for deforestation.

In the first seven months of the year, more than 200 cases of deforestation have been discovered in the district with more than 1,820ha of forest land destroyed.

Reasons for the afforestation projects' low rate of progress have centred around inappropriate selection of companies by local authorities.

"Some enterprises have proven to lack the capacity and responsibility to manage their assigned forest areas," Xuan said.

The Hoang Nguyen Enterprise was hired to afforest 438ha of land, but have only planted 40ha of rubber trees and the remaining area have been used to build petrol stations and automobile garages.

Xuan added that co-operation between authorities at different levels was not good enough.

So far, the department has withdrawn 28 afforestation projects from 28 enterprises after it became evident that they were not able to properly implement the projects.

Provincial authorities have stopped authorising new afforestation projects and have been forced to check and correct on-going projects, Xuan said.

At present, about 60,000ha of forest in the province had no afforestation plans, but the Department of Agriculture and Rural Development would pursue a new strategy to assign the land to proper companies by 2015, he added.

Experts urge change to fuel price rule

Insiders of the fuel sector are calling for a change in Decree No 84 which they say are preventing domestic petrol wholesalers from earning profits.

Under the Ministry of Finance’s Circular No 84 which took effect in December 2009, wholesalers’ prime cost for petrol is made up of the average price paid for petrol imported from Singapore within 30 days, taxes, marketing, distribution costs and a “rationed profit” of VND300 a liter.

With this calculation, the current prime cost of gasoline is higher than the retail price by VND900 a liter. But as the prime cost already includes the “rationed profit” of VND300 a liter, the real loss of distributors on every liter of gasoline is VND600.

Experts said domestic fuel distributors shouldn’t operate with losses considering the price of crude oil has being falling sharply recently.

On October 5, Brent crude oil slumped to only $99.79 a barrel, the lowest price since last February, making the gasoline price in Singapore, which is Vietnam’s main supplier, fall to $113.85 a barrel.

Should the prime cost calculation be applied with this imported price instead of the average number of the last 30 consecutive days, local wholesalers’ prime cost of gasoline is only VND20,140 a liter, lower than the current retail price by VND660 a liter.

If the average imported gasoline price within the last 10 days is used for calculation, wholesalers still earn a profit of some VND800 a liter as the prime cost will be VND20,000.

Experts thus blamed Decree No 84 for handicapping domestic fuel price adjustment.

An expert said since the world fuel price often fluctuated in a period of seven to ten days, Vietnam would likely miss the chance to adjust fuel retail prices if they had to wait 30 days to get the average imported price.

In fact, consumers have twice missed the chance to enjoy a price cut in June and August because of this shortcoming.

An executive of a fuel analyzing company suggested that prime cost should be calculated based on the average imported price in seven days to enable wholesalers to adjust prices in time with the global fluctuation.

Other experts also said the average time of ten days would be more reasonable.

They also urged the Ministry of Finance to remove the “rationed profit” from the prime cost to increase the transparence when it comes to a comparison between the retail price and prime cost.

China’s Brazil footwear trouble hits Vietnam

Vietnamese footwear exports to Brazil will come under the scanner as the South American country begins an investigation into whether China is bypassing anti-dumping tariffs by exporting through Indonesia and Vietnam.

“Chinese footwear manufacturers send their products through Vietnam and Indonesia and label them as made there to bypass the tariff,” the Associated Press quoted the Brazilian Ministry of Development, Industry and Foreign Trade as saying in a statement released Wednesday.

Brazil has slapped anti-dumping tariffs on Chinese footwear products since 2009.

According to the Vietnamese Ministry of Industry and Trade’s Competition Management Agency, footwear exported to Brazil between July 2010 and June 2011 with codes between 6402 and 6405 will come under investigation.

An official from the agency told Saigon Times Online that Vietnam would be considered as evading tariffs if any of its footwear products had more than 60 percent material of Chinese origin.

But he said Vietnamese exporters could prove they did not have anything to do with the Chinese footwear manufacturers’ evasion of tax.

Vietnamese footwear exports to Brazil currently attract an 18 percent anti-dumping tax. If they are found to be of Chinese origin, this rate will be added to the anti-dumping tariff imposed on Chinese footwear.

The agency said the tariff could be as high as 250 percent.

Vietnam’s footwear exports to Brazil topped US$118.9 million in the year to August, a 50 percent rise year-on-year.

VN eyes wood, rattan product exports to Japan

The Japanese Government will help the central province of Quang Binh build a suspension bridge in Son Trach commune, Bo Trach district.

The project is funded with 105,000 USD in non-refundable aid by the Japanese government, which signed a contract on Oct. 6 in Hanoi .

Under the contract, the assistance will be used to construct a suspension bridge to connect the two hamlets of Tram and Me in Son Trach commune, which are separated by the Son River .

The bridge is expected to bring safety and convenience to the local people while the separation affects their life.

Speaking at the signing ceremony, the Japanese Ambassador to Vietnam Yasuaki Tanizaki expressed hope that the project will contribute to improving mobility in Son Trach commune, as well as promoting the friendship and mutual understanding between the two countries’ people.

Trillions of Vietnam dong poured into seafood processing

The Ministry of Agriculture and Rural Development has approved a national master plan for developing the seafood industry from now until 2020.

Under the plan, the processed seafood output is expected to hit about 2.1 million tonnes per year by 2020 with an annual growth rate of 3.5 percent and export earnings of US$10 billion.

To achieve this target, the ministry said the industry will need about VND2.55 trillion in the next ten years from all economic sectors, both domestic and foreign loans and government bonds.

The master plan for developing seafood emphasizes the need to implement a number of projects to upgrade or build industrial-scale factories for processing seafood, buy storage and preservation facilities for ships, and set up a research centre.

Another focus of investment will be on training labourers, promoting trade, and developing domestic markets and technologies.

The plan introduces several measures to boost domestic consumption of seafood and export. It also gives priority to projects on ensuring food safety and hygiene.

Algerian Oil and Gas Company’s leader awarded

A ceremony was held at the Vietnamese embassy in Algeria on October 6 to confer a Friendship Order on Deputy General Director of Algeria’s state-owned oil and gas company SONATRACH, Sahnoun Said in recognition of his active contribution for the development of Vietnam’s oil and gas sector.

Addressing the ceremony, Vietnamese ambassador Do Trong Cuong highlighted great contributions made by the management board of SONATRACH to the PetroVietnam Exploration and Production Corporation (PVEP) and its partners.

The ambassador said that the award will help strengthen the friendship and cooperation between PVEP and SONATRACH as well as between the two countries.

In 2002, PVEP signed a contract to explore the Bir Seba oil field which is 550km away from the capital city of Algiers.

Workshop discusses investment in Southeast Asia

A workshop on private investment in Southeast Asia took place in Ho Chi Minh City on October 6, attracting almost 200 domestic and foreign fund managers and Vietnamese businesses.

The event was co-hosted by the Vietnam Chamber of Commerce and Industry (VCCI), the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment and Thunderbird Global Private Equity Centre (TPEC) of the US.

During the two-day workshop, participants will focus their discussion on economic potential and private investment issues in the Southeast Asian region. They will also introduce the legal framework for investing, investment appraisal, and fund management.

Speaking at the event, Dang Xuan Quang, Deputy Director of FIA, affirmed Vietnam will further improve its investment environment and quality of human resources and actively develop technical facilities in order to attract private investment funds in the future.

Vietnam needs rice export strategy

The Ministry of Agriculture and Rural Development (MARD) has drawn up a food security strategy to ensure a balance between production and consumption.

However, economists say that Vietnam should have a macro policy based on the prospect of rice exports in the world.

The Ministry of Industry and Trade (MoIT) has proposed a number of projects to improve market research and competitiveness.

Vietnam is expected to export about seven tonnes of rice this year. By September 2011, the country already shipped 6.8 tonnes of rice to foreign markets, up 13.17 percent over the same period last year, according to the Vietnam Food Association (VFA).

Meanwhile, the government of Thailand on October 7 announced a new price for the purchase of rice from Thai farmers, about US$498/tonne, 47 percent higher than the current figure. This move has created an opportunity for Vietnam to become the world’s leading rice exporter.

Binh Phuoc and Laos’ Attapeu province enhance cooperation

Deputy Governor of Laos’ Attapeu province Khenthong Sysouvong has expressed hope that Binh Phuoc province will assist Attapeu in socio-economic development, infrastructure investment and improving people’s living conditions.

Khenthong made the statement at a working session with Binh Phuoc provincial leaders on October 6.

The deputy governor took the occasion to thank Binh Phuoc authorities and people for their assistance to Attapeu in human resource training and technical assistance in agriculture.

Vice Chairman of the Binh Phuoc provincial People’s Committee Bui Van Thach affirmed that the Attapeu delegation’s visit is a symbol of solidarity and friendship between the two provinces.

Binh Phuoc always maintains and enhances its economic cooperation with Laos’ provinces in agricultural production, said Thach.

Earlier, the delegation visited the My Le ecotourism site and explored the business operation of My Le Ltd. Co. in Long Hung commune, Bu Gia Map district.

Vietnam Tourism Awards granted to top companies

The Vietnam Tourism Association and the Vietnam National Administration of Tourism will grant the 2010 Vietnam Tourism Awards to excellent businesses in the field on October 17.

The ceremony, to be held at the Hanoi Opera House, will honour 50 leading tourism companies, including Vietnam’s top 10 five-star hotels, domestic travel firms, and international travel companies.

The event is expected to provide an opportunity for businesses in the service and tourism industries to meet and exchange experience.

Initially, the awards only targeted travel companies and hotels, but they have now expanded to other tourism-related services such as shopping establishments and tourist transport companies. The awards are designed to constantly boost the quality and diversification of tourism services as well as the professionalism of companies.

The awards also seek to honour businesses that have made great contributions to the Vietnamese tourism industry.

This is the 12th year the awards will be presented.

Handicraft products penetrate Japanese market

A seminar was held in Ho Chi Minh City on October 6 to discuss measures to boost the export of hand-made Vietnamese products to Japan.

The event was co-organized by the HCM City Department for Industry and Trade, the Trade Promotion Department under the Ministry of Industry and Trade, and the ASEAN-Japan Promotion Centre on Trade, Investment and Tourism (AJC).

Participants emphasized the need to increase added value of Vietnamese timber and rattan products for the Japanese market.

AJC’s recent statistics showed that timber and interior products account for a large proportion of Vietnamese exports to Japan. However, Vietnamese businesses have not yet fully tapped their export potential to Japan – a market which imports timber products worth US$1.5 billion a year.

According to the Vietnam-Japan Economic Partnership Agreement (VJEPA), about 92 percent of the products are exempt from tax when they are imported into each other’s markets during the 2010-2020 period.

Japan has also committed to granting incentives for Vietnamese businesses who export seafood and agro-forestry products to Japan.

Workshop discusses investment in SE Asia

A workshop on private investment in Southeast Asia took place on Oct. 6 in Ho Chi Minh City , with almost 200 domestic and foreign fund managers and Vietnamese businesses taking part.

The event was co-hosted by the Vietnam Chamber of Commerce and Industry (VCCI), the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment and Thunderbird Global Private Equity Centre (TPEC) of the US .

During the two-day workshop, participants will focus their discussion on economic potential and private investment issues in the Southeast Asian region. They will also introduce the legal framework for investing, strategies of investment appraisal and fund management.

Speaking at the event, Dang Xuan Quang, Deputy Director of FIA, affirmed Vietnam will further improve its investment environment and quality of human resources and actively develop technical infrastructure in order to attract private investment funds in the future.

Vietnam will also complete regulations and transparent policies soon to create a legal framework to conform to international requirements, aiming at creating favourable conditions for foreign investors, Quang said.

According to Supawat Likittanawong, Director of Lakeshore Capital Inc, Vietnam is an emerging market with great potential to attract private investment in the future.

Vietnam eyes wood, rattan product exports to Japan

A seminar to promote the export of wooden and rattan products to the Japanese market took place in Ho Chi Minh City on Oct. 6.

The event was jointly organised by the municipal Department of Industry and Trade, the Trade Promotion Department under the Ministry of Industry and Trade and the ASEAN-Japan Centre for Trade, Investment and Tourism Promotion (AJC).

According to AJC statistics, indoor wooden products account for the largest component of wooden furniture and imports to Japan each year and were worth nearly $1.5 billion. Of this, imports from Vietnam are mainly wooden furniture for bedroom, kitchen and office.

Takayoshi Nagashima, a representative from Japan’s AIK company, said that Japanese consumers prefer products with unique characteristics and high added value to improve the quality of their lives.

According to the Vietnam-Japan Economic Partnership Agreement, almost 92 per cent of commodities flowing between Japan and Vietnam will be exempted from tax from 2010 to 2012. In addition to agricultural, forestry and aquatic products which be provided with high incentives from Japan, industrial products will also enjoy a tax reduction.

Looking for local tools to get the job done

Industry insiders are looking for ways to increase the use of locally-made equipment in key projects.

According to Applied Technical Systems Company Limited’s deputy director Tran Anh Thai, developers of power projects under state groups Electricity of Vietnam, PetroVietnam and Vinacomin should give concrete demands to contractors to use locally-made products in a list enacted by the Ministry of Industry and Trade (MoIT).

“Developers often consider the right to choose equipment belonging to contractors while government’s policies are to regulate contractors. Therefore, local firms could hardly gain the right to supply equipment to projects though they can manufacture quality items to  meet project standards,” said Thai.

Vietnam Association of Machinery Industry’s (VAMI) chairman Nguyen Van Thu said developers’ bidding packages were often beyond the production and supply capacity of local contractors.

“When VAMI asked developers to separate bidding packages for equipment supply to create more chance to local firms, most developers were unwilling to do so saying that this would push up costs,” said Thu.

The practice was reflected in a MoIT report which read that project developers mainly sourced foreign loans due to limited state capital sources.  Financial requirements on loan provisions demand gathering bidding packages into bigger ones. This made negotiations with winning contractors on using locally-made materials and equipment for projects rather difficult as contractors often took project quality, progress or economic aspect as core reasons for their refusal.

Materials and goods provision to projects would continue falling on foreign contractors’ hands unless the Law on Bidding was revised, according to Equipment and Spare Parts Corporation’s general director Vu Viet Kha.

Reality shows that local manufacturing enterprises have embarked on hydraulic equipment manufacture for power projects for around seven years and the equipment quality was appreciated.

Kha, however, commented with total investment capital of local manufacturing enterprises of less than $1 billion, even lower than a manufacturing plant’s total capitalisation in foreign countries like South Korea, it would be an one-sided competition for local firms to win contracts from foreign players.

Besides, Kha said a mechanical manufacturing project would need long-term loans from three to five years, while lending policies were volatile making developers continuously revise projects to make profit rates match interest rates to ensure project efficiency.

“Current 20 per cent lending rates are beyond the scope of local mechanical manufacturing firms as no incentives are available to mechanical manufacturing or complete equipment manufacture,” Kha said.

SBV says to ensure local currency liquidity for all banks

The central bank has affirmed that it will ensure Vietnam dong liquidity of the banking system, especially when numerous commercial banks have cut lending rates for manufacturing industries to 17%-19% from 18%-22%.

In a meeting with 12 large commercial banks held on Tuesday in Hanoi, the State Bank of Vietnam (SBV) said local lenders had performed well in controlling the lending balance for non-productive industries.

It also revealed that it was urgently working with related agencies to remove some social security objectives out of the list of non-productive industries enjoying preferential interest rates.

According to SBV, the amount of mobilization and loans in the first 20 days of last month decreased but has improved since September 23, showing a real sound development of credit institutions.

There is a high possibility that the demand for dong borrowing will keep rising this month when the recapitalizations come to maturity, which might lead to an upsurge in lending interest rates. Therefore, the central bank is set to secure liquidity of the banking system, especially small banks, by continuing to pump money into the open market.

SBV said in a statement on Wednesday that it would harshly supervise liquidity in the market, and be proactive to detect credit institutions facing liquidity risks to carry out appropriate timely solutions.

As for the U.S. dollar, SBV also hinted at strictly controlling loans in tune with mobilization performance in local and international markets.

On gold, SBV pledged to deploy effective measures to narrow the differential between local and world prices as much as possible, to prevent gold speculation and negative impacts on the foreign exchange rate.

PV