Office rents among world highest

Office rent rates in Vietnam's biggest cities, HCM City and Hanoi, are among the highest in over 100 markets worldwide, according to an annual report released by British real estate services firm Knight Frank last week.

HCM City is the 19th and Hanoi the 21st most expensive market with prime rents at US$38 and $36.5 per square metre per month respectively, the report said.

The rates are more expensive than established markets like Manhattan (New York, US), Frankfurt (Germany), Shanghai (China), Brussels (Belgium) and Rome (Italy).

However, availability has increased in Vietnam, with both the cities seeing large amounts of new Grade A office supply during 2010. This has caused vacancy rates to rise and put pressure on Grade A rents. Meanwhile, demand remains strong in the Grade B and C office sectors, according to the report.

Elsewhere, rental growth has been led by the world's major financial centres, with office rents rising in cities such as London, New York, Hong Kong and Singapore, said the report.

In contrast, rents continue to come under downward pressure in a smaller group of markets, including Los Angeles, Madrid, Seoul and Dubai, where the economic outlook remains uncertain or availability of space is high.

Commercial crops give new life to ‘infertile land'

Farms that combine forestry, agricultural cultivation and animal husbandry have enabled residents in the mountainous districts of Phu Yen Province to survive and thrive on impoverished land.

The Phu Yen Department of Agriculture and Rural Development said these farms have emerged as a trend over the last decade.

The central province now has 2,682 such farms attracting a total investment of VND374 billion (US$18 million) and the farms have an average income of VND102 million ($4.9 million) a year, a significant earning for the poor province, the department said.

The farms are concentrated in the districts of Song Cau, Dong Xuan, Son Hoa, Song Hinh, and Phu Hoa, where residents are growing commercial crops like sugarcane, cassava and acacia, as well as grass for feeding cattle.

The Nhan Dan Newspaper quoted Nguyen Dinh Hoan, chairman of the An Nghiep Commune Farmers' Association, as saying the farms have extracted high economic value out of 300ha of low-fertility land in the commune.

Vo Luan of Ea Bar Commune, who engages in livestock farming apart from growing rubber, coffee and cassava on his farm, said he expected billions of dong in profit this year. "Each ha of cassava fetches VND15 million, while coffee yields around VND100 million per ha," Luan said.

He has 20ha and 11ha under coffee and cassava cultivation at the same time.

Another farm owner, Nguyen Ngoc My of Ea Ly Commune, who grows sugarcane apart from rearing cattle on 25ha, earns more than VND1.5 billion ($73,000) in profit every year.

According to Ban Nguyen Ngan, chairman of Ea Ly Farmers' Association, the commune has 10 farms covering 2,747ha that grow sugarcane, rubber, coffee and cassava. The farms have lifted up the commune's economy.

Farm owners said they wanted local authorities to support expansion of the model to other families and localities in the province.

Expansion of good agricultural practices urged

Application of Good Agricultural Practices (GAP) in agricultural production to promote quality and safety is expected to help Vietnamese farm produce gain wider acceptance in both domestic and international markets, experts said at a conference in HCM City last Saturday.

GAP is a collection of principles that apply to on-farm production and post-production processes, ensuring the health of both producers and consumers, reducing environmental pollution, and resulting in the production of safe and healthy food as well as products with easily traceable origins.

Speaking at the Safe Food Chain conference, Dr Vo Mai, deputy chairwoman of the Viet Nam Gardening Association, said with increased incomes, people tend to choose safer, healthier products.

GAP standards will help customers feel secure when buying Vietnamese farm produce, especially fruit and vegetables.

The Food and Agricultural Organisation has forecast that demand for fruit and vegetables in the world market will increase annually by 3.6 per cent while such output increases by just 2.8 per cent per year.

In the domestic market, consumption of fruit and vegetables has increased by 10 per cent a year.

These offer a huge opportunity for agricultural countries like Viet Nam to boost exports of fruit and vegetables, Mai said.

But high requirements on food safety and plant quarantine set by import countries pose major challenges for Vietnamese farm produce to penetrate the markets, she said.

Application of GAP in production in the country was still modest, Pham Hoang Nam of the Agricultural Study and Assistance Center said, adding that only 47ha under vegetable plantation in HCM City had received VietGap certification.

Small-scale production and a lack of cooperation among farmers, co-operatives and businesses prevented application of GAP in production, he said.

In addition, outlets for GAP products were not stable, discouraging farmers from following GAP standards, Mai said.

Applying GAP standards for agricultural production would help reduce production costs, raise quality and increase the competitiveness of Vietnamese goods in both domestic and foreign markets, Dr Mai Thanh Phung of the National Agriculture Extension Center, said.

But farmers themselves could not implement the entire process of production following GAP standards, he said. They need support from government, scientists and enterprises.

Local agricultural extension centers, for instance, should organise training courses to raise awareness among farmers about application of GAP in production as well as instruct them in production techniques that are in line with GAP standards, especially writing notes in a handbook, he said.

Mai said the local government should support farmers with capital so they can improve their post-harvest technology to reduce post-harvest losses. Currently the country loses between 30 and 40 per cent of its harvest due to inefficiencies in its post-harvest handling of food crops.

Mai and Phung agreed that close links between enterprises and farmers, in which enterprises ensure outlets for all products produced following GAPGAP standards in their production. standards, would help farmers feel secure to apply

Close links between enterprises and farmers could also help reduce intermediate costs to make products more competitive and raise farmers' earnings, Mai said.

Mai also called on localities and farmers to make re-zoning plans for their fields to facilitate application of GAP standards in production.

The conference was organised by the Viet Nam Farms and Agricultural Enterprises Association. At the event, the association was awarded the Campaign Medal from the Ministry of Agriculture and Rural Development for its contribution to the development of Vietnamese agriculture, farmers and rural areas.

Local industrial machine set to run out of steam in Q2

Expensive fuel, materials and high interest rates will slow Vietnam’s industrial production during the second quarter of this year.

Ministry of Industry and Trade (MoIT) Minister Vu Huy Hoang said global commodities prices would climb as a result of rising oil prices, which would have serious impacts on the local manufacturing and production sectors.

“Difficulties have already been felt by local industries since last month and things will become harder during the next several months,” Hoang said.

MoIT statistics show that some key industries reported lower production output and domestic sales in April against March, particularly regarding steel, air-conditioners, urea fertiliser, garments, vegetable oil and chemical products.

Steel makers produced 478,000 tonnes in April, 1.2 per cent lower than March.

According to the State-run Vnsteel, Vietnam’s biggest steel manufacturer, the public investment down-swing under the government’s Resolution 11 dated February 24 to control inflation and stabilise the macroeconomy had hit local steel sales.

Steel makers have reported 211,400 tonnes of long-rolled steel in stock currently, up 36.5 per cent from last year’s corresponding period. Unsold flat-rolled steel reached 26,600 tonnes, 2.2 times higher than last year.

“High interest rates have also seriously affected steel production during the last month,” said Vnsteel’s deputy general director Le Phu Hung.

State-run Vinatex Group, the country’s biggest garment and textile producer and exporter, experienced a 7.4 per cent monthly output fall to 7.5 million units in April.

“We have experienced low production because of expensive imported raw materials and increased electricity prices, and particularly high export costs,” said Vinatex’s general director Tran Quang Nghi.

The cost for a container of exported products in April has almost tripled from one year earlier, which Nghi said “has created a very great pressure on export-led manufacturing enterprises in Vietnam, including those in the garment and textile industry”.

According to the MoIT, electricity prices would possibly be raised further in June as a result of higher global oil prices.

“Local production activities will face a much harder period in the next few months due to high oil and input material prices,” Hoang said.

Diesel price hike hits fishing in Ca Mau

Many fishermen in the southernmost province of Ca Mau have stopped going out to sea after diesel prices were hiked by a whopping 40 percent this month.

Since the beginning of May Song Doc fishing port in Tran Van Thoi Commune, one of the biggest in the Mekong Delta region, usually bustling and noisy, has been quiet.

Many boats remain beached.

Ho Thuy Mai, owner of Quoc Nam fish trading center, said she can buy only six tons of fish a day compared to the normal 10 tons.

She buys small fish to sell to fish powder and sausage manufacturing plants.

A manager at Song Doc port said the total catch arriving at the port has fallen from 100 tons a day before the diesel price hike to just 70 tons now, and this is likely to fall further.

Chien, who runs an icehouse, said his plant only sold 300 slabs a day last week compared to 2000-3000 normally.

But Truong Quoc Binh, chairman of the Camau Association of Seafood Producers and Exporters, said the price of fish cannot be based on diesel prices.

Banks to wait on central bank for ATM installation

The State Bank of Vietnam has prohibited installation of new ATMs until it resolves the contentious issue of cash-withdrawal fees, Nguyen Thu Ha, chairman of the Vietnam Banking Association’s Card Society, said.

Many banks including Vietcombank have been planning to set up ATMs, and they have now have to wait for the central bank’s go-ahead.

Until the ban was imposed, a bank just had to register with local authorities at the place it wants to set up an ATM.

The Card Society has forwarded a petition to the SBV from major banks asking to lift the ban, saying the central bank should view an ATM as just a value-added service for customer and not as another branch.

Earlier this year it had proposed an increase in the fee for customers using other banks’ ATMs from VND3,300 to VND5,500 saying security systems that have been installed after several burglaries recently are expensive.

But the government shot down the suggestion.

There were 11,700 ATMs nationwide by the end of last year, 20 percent more than in 2009, with Agribank, Vietinbank, DongA bank, Vietcombank, BIDV, and Techcombank accounting for more than 70 percent of them.

Clients can deposit gold to Eximbank for free

Instead of storing gold at your house, you can entrust the task to Ho Chi Minh City-based Eximbank, which does it free of charge.

This happens as many commercial banks have lowered interest rates on gold deposits to nearly zero.

Eximbank said clients can send gold bullions to the bank from May 6, but they will not receive any interest.

The minimum amount of gold to be deposited is one tenth of a tael.

It is the first commercial bank in Vietnam that offers the service for free, Lao Dong newspaper reported.

In a separate move, the bank has encouraged gold depositors to switch to dong savings, offering to pay 0.15 percent higher than market price for the gold. That compares to an extra 0.35-0.4 percent at Viet A Bank, reported Thanh Nien.

The State Bank of Vietnam at the end of April had ordered commercial banks to stop lending gold and restrict deposits of the metal starting May 1.

It said the move is aimed to reduce the use of gold as currency.

Following the order, many commercial banks have lowered their interest rates on gold deposits to as low as 0.01 percent a year. Dong deposits, on the other hand, can fetch interest rates of up to 14 percent per year.

Analysts have said as the habit of keeping savings in gold is still strong around the country.

They will even accept to pay banks to look after their bullion holdings, some analysts said.

The price of gold has risen nearly 38 percent in Vietnam over the past year.

Essential goods prices stable for now

Several factors may help restrain prices of essential goods this month, a report released by the Price Management Department under the Ministry of Finance says.

Local supplies of essential commodities for production and consumption were considered one of the most important factors contributing to the nation's effort to curb inflation.

Along with a bunch of promotion campaigns with price reductions during Victory Day and International Labour Day holidays, the prices of many essential commodities such as rice, sugar, cement, steel and fertiliser, were likely to drop in May, the report said.

Government Resolution 11 on curbing inflation, issued in February, has impacted on the domestic market, shown by a recent appreciation of the Vietnamese dong against the US dollar.

The department also forecast that rice prices would not increase this month in both global and domestic markets thanks to adequate supplies from Viet Nam and Thailand and high reserves in China and India.

In addition, several huge importers including the Philippines, Indonesia and Bangladesh, had fulfilled their import requirements.

The sugar price was predicted to decline in the domestic market thanks to an output of 1.146 million tonnes of sugar produced, an increase of 200,000 tonnes in comparison with the previous harvest.

Fruit and vegetable prices would remain stable or decline slightly, the report said.

After a dramatic surge in prices in April, cement and steel prices were forecast to remain stable or decline slightly in May, compared with previous months, due to a reduction in demand.

Prices of finished steel products would decline thanks to a levelling off of steel dust prices in the global market and a lower demand in the domestic market caused by the cancellation of construction projects under Government Resolution 11, the department said.

However, soaring prices of input materials would continue to affect other essential commodities in the domestic market. Of this, pharmaceutical product prices would increase due to a 4-7 per cent surge in import costs.

Fresh meat and fish prices would stay high as rising input prices and livestock diseases put the domestic supply under pressure.

Gasoline and fuel prices would soar in the domestic market along with the global market.

The report also said an electricity price adjustment taking effect from the first of June and a pay increase for civil servants from the beginning of this month would contribute to an increase in the consumer price index this month.

In addition, the high demand for consumption and tourism services because of long holidays would contribute to a dramatic increase in prices of transportation, eating out and entertainment.

Businesses thrive despite high bank lending rates

Despite being hit by high bank loan interest rates and increasing input costs, many Vietnamese companies have managed to survive, with some achieving good growth.

Amid financial difficulty, Vikybomi Corporation, which specialises in producing wheat flour, for instance, had earmarked a rather large amount of money to participate in trade fairs in the UK and South Korea, the Nguoi Lao Dong (The Labourer) reports.

The company's expectation finally paid off when it signed export contracts with an UK buyer. Last month, eight tonnes of Mikko powder mix were exported to the UK.

By taking part in trade fairs to bring Vietnamese products to rural and remote areas, its products became popular.

While many businesses had to suspend their projects due to capital shortage, Sai Gon Paper Corporation has decided to invest in the My Xuan II plant, which will help triple the corporation's productivity.

Recently, Sai Gon Paper Corp has also signed a strategic co-operation and investment agreement with Japanese paper manufacturer Daio Paper Corp and the Development Bank of Japan's Bridgehead fund. They have acquired a 34 per cent stake in Sai Gon Paper Corp.

The agreement was considered the most deep strategic investment transaction in the country's paper industry.

Besides providing financial assistance, Japanese counterparts have also provided technology and training to help Sai Gon Paper Corp raise its market share in the domestic market and increase exports to Japan.

The company has exported the first three containers of tissue paper to Japan; around 10 more containers will be exported to the market this month.

From June, the company expects to export between 15 and 20 containers of tissue paper to Japan.

In addition, it also plans to boost exports to Cambodia, Canada and the US.

Similarly, Ha My Joint Stock Company has invested more than VND100 billion (US$4.8 million) in a cashew processing plant in southern Binh Phuoc Province with advanced technology.

The processing plant operates following HACCP international standards - a science-based management system to ensure the safety of food, which will help improve competitiveness of Vietnamese cashew products in the world market.

Biggest rice warehouse in Delta region opens

The Northern Food Corporation yesterday opened the 70,000-tonne rice warehouse in Lai Vung District of Cuu Long (Mekong) Delta province of Dong Thap.

The warehouse, the biggest in the delta, is equipped with five rice processing lines with a capacity of around 1,200 tonnes a day, and two compressors to compress rice husks of 300 tonnes a day.

After a three-month trial, the warehouse has processed 50,000 tonnes of rice for reserve, adding up the corporation's reserve in the delta to 200,000 tonnes. It produced 3,000 tonnes of compressed rice husks as well. The warehouse has recruited 400 staff and workers in the province.

GreenFeed builds animal feed plant in Dong Nai

GreenFeed Viet Nam has finished construction on its animal feed plant situated in the Song May Industrial Zone in Trang Bom, southern Dong Nai Province.

The US$4 million plant has a first phase production capacity of 120,000 tonnes per year. GreenFeed has provided additional interest-free loans of VND700 million (US$33,500) to 600 poor farming households in the Tuy Phuoc and Hoai An Districts of Quy Nhon City in order to help families breed pigs, poultry, cows, fish, scale up their incomes and keep their children at school. Loans will be refunded after two years.

Binh Thuan issues 15 investment licences

Central Binh Thuan Province granted licences to 15 investment projects in the first quarter of 2011, bringing the total number of provincial projects up to 1,142 with total registered investment capital of VND87.3 trillion (US$4.1 billion).

The local authority has also issued business registration licences to 58 new companies and updated business registration procedures for 324 companies already operating in the province.

Cement corporation breaks ground on real estate project

The Viet Nam Cement Corporation has started construction on the Vicem centre in the new urban area of Cau Giay District.

The VND2 trillion (US$95.7 million) centre will consist of offices and a trade centre.

The 31-storey building will cover an area of 8,476 square metres. Construction is expected to complete by June, 2014.

Demand for steel drops 30% compared to last year

Demand for construction steel has declined by 30 per cent compared to the same period last year despite the peak construction season, according to the Viet Nam Steel Association.

The decline is attributed to the global decrease in raw materials as well as low demand in the domestic market. Construction steel prices started dropping by VND400,000 (US$19.32) per tonne in April.