Oil driller offers single bright spot

Shares continued to lose ground yesterday on the nation's stock exchanges. On the HCM City bourse, the VN-Index declined by another 0.5 per cent to close at 425.28 points.

The value of trades fell by half from Wednesday's level to VND767 billion (US$36.5 million), as demand continued to shrivel and volume fell to 46.9 million shares.

Decliners outnumbered advancers by 140-73.

Of the 30 leading shares tracked by the VN30 Index, only seven advanced, including food processor Masan Group (MSN), financial conglomerate Ocean Group (OGC), Phu Nhuan Jewelry (PNJ) and PetroVietnam Drilling Services Co (PVD). The VN30 Index retreated 0.8 per cent to 500.24 points.

In a recent report, Kim Eng Securities Co analyst Nguyen Thi Ngan Tuyen said PVD was a "new investment opportunity" and recommended buys with a target price of VND50,500 ($2.40) based on the expectation that the stock's price-to-earnings ratio would reach 10.

"An obvious advantage of the company is that PetroVietnam is a major shareholder, holding over 50 per cent stake," she said. This would help the company easily obtain drilling contracts in a field otherwise dominated by foreign competitors.

The company also halted its plan to issue $200 million worth of international bonds due to a debt-to-equity ration of 1.16 and has decided instead to issue 40 million additional shares.

On the Ha Noi Stock Exchange, the HNX-Index shed 0.7 per cent to end the day 74.24 points. Decliners overwhelmed advancers by 180-77. The value of trades dropped slightly to VND373 billion ($17.7 million), while volume totalled nearly 36 million shares.

Interest cap prompts rate war
 
Following the sharp cut in the deposit interest rate ceiling to 9 per cent, a fierce battle has broke out between banks to retain deposits, with many illegally offering higher rates.

The State Bank of Viet Nam reduced the cap from 11 per cent with effect from June 11 in an attempt to bring down loan interest rates and spur economic growth, which is forecast to plummet to levels not seen in more than a decade.

But independent analysts said the central bank's move has become a hurdle to banks'efforts to retain existing depositors and attract new ones.

Since the rate was cut, many people have been withdrawing their money from banks and investing in other asset classes like property and foreign currency, they said.

Small banks are facing particular difficulty. Consequently, many lenders have been breaching the rate cap.

Some small banks are offering 11 to 12 per cent for deposits of VND1 billion (US$47,000) or more.

Others are offering gifts and cash incentives.

For example, some banks ostensibly offer 9 per cent as regulated, but pay the difference between that rate and higher rates up front.

Some banks also offer attractive interest rates on non-term deposits. Sai Gon Commercial Joint Stock Bank, for instance, offers 3 per cent per annum while the normal rate is less than 2 per cent.

A few months ago, when the savings interest rate was capped at 11 per cent, many banks had offered 14 and 15 per cent. Some were even punished severely by the central bank.

Dr Cao Sy Kiem, a member of the National Advisory Council for Financial and Monetary Policies, stressed the need for cracking down on this illegal practice.

The central bank's drastic cut in interest rates would greatly benefit businesses and the economy by providing access to cheap funds and spurring growth, he added.

Analysts pointed out that banks' willingness to top the central bank's cap proved that their liquidity, particularly in the case of small ones, remains volatile.

This means the interest rate is only likely to stabilise after nine weak banks identified by the central bank are restructured.

Diesel-electric buses to be emission free

Viet Nam will soon get new diesel-electric hybrid buses following the signing of an agreement in Ha Noi yesterday between Siemens Viet Nam and the Viet Nam Motors Industry Corporation or Vinamotor.

"Siemens's state-of-the-art and environment friendly technology will help improve the quality of our buses as well as help us manufacture buses that are safe, environmentally friendly, energy efficient and clean," Vinamotor chairman Do Nga Viet said at the signing ceremony.

A prototype of the new bus will be built this year with Siemens supplying all the necessary components and technical support and Vinamotor building the body and certain parts.

It is expected to enable city public buses to reduce fuel consumption by up to 50 per cent, significantly saving costs.

It will also reduce the impact on the environment through lower exhaust emission.

The technology, called ELFA, is a diesel-electric hybrid concept that combines mobile power supply modules such as diesel generator sets and energy-storage devices. These allow the energy produced during braking to be stored.

In conventional city buses, braking energy is converted into heat and lost.

ELFA technology allows this to be converted into electrical energy and fed into energy storage devices like high-performance capacitors and batteries. The stored energy is reused during start and acceleration.

Depending on the storage capacity of the system the bus can also be driven purely electrically, meaning without emissions, especially in inner city areas.

Seminar to be held in HCM City for managers, salespeople

Dan Seidman, named among the top 12 sales coaches in the US by the Selling Power magazine, will hold a one-day seminar tomorrow in HCM City, talking about the best way to influence buyers and advance sales, especially in crisis situations.

Seidman, author of The Secret Language of Influence and the bestseller, Sales Autopsy, will share experiences that he and others have had in facing sales challenges around the world. He will speak on how to speak to resistant buyers, close more deals with influential words, what information different types of buyers like to hear, and how to avoid language patterns that undermine influence.

Mekong Delta gets the nod to expand rice warehouse capacity

The Ministry of Agriculture and Rural Development has given the green light for a plan by the Southern Food Corporation No 2 (Vinafood 2) to build 40 new warehouses that can store nearly 856,000 tonnes of paddy.

A 2010 ministry decision mandated that by the end of 2013 the agricultural sector should have a warehousing system around the Cuu Long (Mekong) Delta that can store 4 million tonnes of paddy.

Vinafood 2 has already built new warehouses with a capacity of 711,000 tonnes, accounting for 75 per cent of the target it was assigned. The Northern Food Corporation has added 210,000 tonnes of capacity, or nearly 80 per cent of its target.

Hue developer to invest $76m in massive residential complex

Apec Land Hue Joint-stock Company signed a deal late last week with the Thua Thien – Hue Province new urban development management board to develop a residential complex in Hue's An Van Duong New Urban Area.

Apec Land will invest VND1.59 trillion (nearly US$76 million) to build villas, semiattached houses, apartment blocks, and business-service centres in the 34.7ha Thuy Van Property Complex.

Construction will start in the fourth quarter of this year and take eight years.

Vietnamese brands being bought by foreign companies

Many well-known Vietnamese brands have been bought by foreign companies recently, said a representative of ‘Friday Business Forum Club’ at a seminar, in which 500 businesses took part.

Brands take years to build and much effort and money goes into creating a brand name, but to lose it takes a short time. As the brand becomes well-known and famous, other companies eye it as a prospective investment.

In the same way, Vietnam is slowly losing its many famous brands to foreign prospectors.

Highland Coffee bought 100 per cent stocks of ‘Pho 24’ brand and then later sold off 50 per cent to Jollibee- Philippines largest fast food chain.

Lotte, a Korean brand, bought 38 per cent of stocks of Bien Hoa Confectionery Joint Stock Company (Bibica) and is currently managing the entire technology and development strategy of Bibica.

Many foreign companies are eyeing Vietnamese brands in the beverage and beer industry.

Many foreign companies have swallowed Vietnamese companies by collecting stocks during the period that Vietnamese stock market went down in 2009-2011.

According to statistics, more than 50,000 Vietnamese businesses have stopped operations and nearly 7,000 of these have declared bankruptcy.

To keep Vietnamese brands from being overtaken, many participants at the seminar suggested that Vietnamese businesses need to build effective business strategies and focus on developing strong brand names.

In addition, they need to conduct surveys of people’s opinions on their products and carry out extensive market research.

Vietnamese companies should pay more attention to quality standards of products; advanced technology and competitiveness in the market, said Pham Tri Hung from VNR Research Division.

Currently, most Vietnamese companies create their brand name in a simple, basic way by putting stickers on their products and selling them in the market. Such Vietnamese products lack credibility and fail to grip the consumer market.

Transport systems targeted for upgrade

Improving transport infrastructure and information technology by 2020 was critical to the nation's modernisation target, the Government said yesterday in its programme to implement Party Central Committee's Resolution 13 on infrastructure building.

Expanding National Highway 1A between Ha Noi and Can Tho to four lanes by 2016, and upgrading the Ho Chi Minh road through Central Highlands provinces are also included in the programme.

Other priorities would be the modernisation of the national north-south railway and continued research into the possibility of high-speed railways.

Airports also to be improved

The efforts would also be put into upgrading five airports: Noi Bai, Tan Son Nhat, Da Nang, Can Tho and Cam Ranh, and attracting investment to the construction of Long Thanh International Airport.

All projects would be co-ordinated to ease traffic congestion in major urban areas, especially in Ha Noi and HCM City.

As for information infrastructure, the nation would improve information technology in education, electronic textbooks and online training and push the development of the software industry and a national information technology hub.

The programme would be the basis for ministries, central agencies and provincial authorities to get the tasks completed.

Law suggests contracts for non-registered services valid

Article 9.1 of the Law on Enterprises requires enterprises to operate in their line of business as registered with licensing authorities and recorded on the enterprise's business registration certificate. Many enterprises register to operate within a large scope but only undertake a small portion of their registered line of business, while others undertake operations entirely outside the scope of the licences. Whether this violates the law is an issue that has not been uniformly decided, even among Vietnamese courts.

If an enterprise operating in conditional lines of business enters into a contract to provide a service not within the licensed scope of its operations, such a contract would be considered invalid under Article 11.6 of the Law on Enterprises.

If the enterprise operates in non-conditional lines of business, however, the provision of other services are not expressly regarded as a violation of the law. Despite this, a number of courts declared such contracts invalid as a breach of Article 9.1. This is an erroneous interpretation, however, since Article 9.1 is not a prohibition. It is instead designed to enable enterprises to take advantage of business opportunities despite an incomplete business registration process.

Contracts by enterprises operating in non-conditional lines of business to provide service beyond the scope of the business registration certificate should be recognised because they comply with the civil law in form and content. However, for engaging in unregistered business activities, the enterprise should be subject to administrative sanctions.

Machine tools take centre stage

The 10th edition of MTA Viet Nam will take place July 3-6 at the Sai Gon Exhibition and Convention Centre in which big brands will pledge their support to Viet Nam's premium trade event for its manufacturing industry.

MTA Viet Nam 2012 will incorporate Metrology Vietnam 2012, ToolTecVietnam 2012, SubConVietnam2012, AutomationVietnam2012, WeldTechVietnam2012.

The exhibition is organised by Singapore Exhibition Services Pte Ltd (SES) and local organiser VCCI Exhibition Service Co Ltd (VCCI).

MTA Viet Nam has proven to be Vietnamese manufacturers' choice procurement ground for equipment, technology and services.

MTA Viet Nam was organised for the first time in 2005, and at least 80 per cent of participating businesses are foreign firms.

The event will showcase the latest technologies, products and solutions in precision engineering, machine tools and metalworking available in the global marketplace.

The event last year saw more than 9,900 people attending the show to keep themselves updated on the latest machine tools from around the world.

Aside from the returning big brands, MTA Viet Nam will also see strong support from international trade bodies and government agencies at group pavilions from Germany, Japan, Singapore, Taiwan, Korea, Thailand and the UK.

According to the organisers, the event returns at a timely moment as Viet Nam's economy shows signs of stability.

The lowering of the inflation rate due to the implementation of the monetary policies by the State Bank of Viet Nam has helped stabilise the Vietnamese currency and raised the confidence of international and domestic investors.

The increase in investors' confidence, coupled with government policies to help encourage the development of the Vietnamese manufacturing industry, puts Viet Nam in the ideal position for their manufacturers to seek business opportunities and explore new partnerships.

Bui Thi Thuc Anh, director of VCCI Exhibition Service Co Ltd, said that with an increase of 30 per cent of visitors each year, MTA Viet Nam 2012 would provide the perfect platform for international and local industry professionals to network with key leaders, gather knowledge and establish new business opportunities.

Lack of connecting roads prevents ports from operating

Two ports worth more than VND700 billion (US$33.6 million) in Ho Chi Minh City are still not able to become operational, despite the fact that construction has been completed, since there are no roads to connect them to the traffic system.

The ports include the VND367-billion Phu Huu in District 9, and the VND398-billion Phu Dinh in District 8, both of which have so far received no ships due to the lack of connecting roads, Nguyen Hong Anh, CEO of the Saigon Transportation Mechanical Corporation (SAMCO), the operator of the ports, told a delegation from the Economic and Budget Committee of the municipal People’s Council yesterday.

According to Nguyen Ngoc Thao, deputy CEO of Ben Nghe port, the investor of Phu Huu port, the Ha Tien cement plant, located next to the port, has recently invested in a road to connect them and Nguyen Duy Trinh Street.

The 1.7-km road will cost VND300 billion, and is expected to open to traffic at the end of this year.

However, even once the road is completed, it will still be difficult for container trucks to enter the port, as Nguyen Duy Trinh Street is too narrow, and passes through a residential area.

The city’s authorities are still unable to afford investment for an 800m road to link Nguyen Duy Trinh Street and the Hanoi Highway.

Meanwhile, Phu Dinh port was put into operation in September 2011, but has since failed to dock any vessels, since Ho Hoc Lam and An Duong Vuong leading to it are too narrow, and are constantly flooded by flood tides and rain, which prevents trucks from arriving at the port.

Bac Kan develops its tourism plans up to 2030

The People’s Committee of the northern mountainous province of Bac Kan on June 12 signed a contract with the Japanese company Nikken Sekkei Civil Engineering to develop a plan for tourism at the Ba Be National Park until 2030.

According to the Deputy Chairman of the provincial People’s Committee Trieu Duc Lan, the province will create the best possible conditions for the contractor to complete the project.

Ba Be National Park is included in the Ramsar Convention on the list of wetlands that are of international importance, and is the most famous and popular tourism destination in Bac Kan.

The bio-diversity in the 10,000 ha park is also impressive as it is home to 1,268 species of flora and fauna. The site earlier was recognised as an ASEAN Heritage Park in 2004.

Vietnam halts export of five vegetables to EU market

Hoang Trung, deputy head of the Plant Protection Department, on Monday said that since May the department had temporarily stopped export of five kinds of vegetables to the EU market, until proper quality standards are met.

Speaking at a seminar hosted in Ho Chi Minh City, he said that this move will prevent export of other variety of vegetables and fruits from being affected.

The five vegetables taken off the list are basil, sweet pepper, celery, bitter gourd and coriander. The EU market has on many occasions issued warnings against the quality standards of these vegetables.

Their export will once again resume only after authorities can control their quality standards at source of supply.

In 2010, EU sent 29 warnings on the quality standards of vegetables originating from Vietnam, and in 2011 EU issued as many as 366 warnings.

EU has further warned that if another five more cases of poor quality vegetables are detected they will stop importing all vegetables and fruit from Vietnam.

The Ministry of Agriculture and Rural Development is consulting businesses on regulations of food safety and quarantine of vegetables and fruits, in an effort to instill quality control at supply source itself.

Franchising - promising business model in Vietnam

A seminar was held in Ho Chi Minh City on June 12 to discuss the opportunities and challenges to franchising in Vietnam.
    
The event was held jointly by the Ministry of Industry and Trade (MoIT), the United States Agency for International Development (USAID) and the Support for Trade Acceleration (STAR) Plus project.

Participants said that Vietnam has many favourable conditions for franchising development because of its large population, wide variety of income sources and high consumer purchasing power.

It also possesses huge potential for developing the retail sector, and is considered a promising market for franchise investors, they noted.

Frank Joseph, a representative from the US embassy in Vietnam, said that franchising offers significant benefits for both businesses and the national economy including increased revenues, trademark building, job creation, human resources training, and more choices for consumers.

Many US businesses are keen on cooperating with Vietnamese businesses in education and training, and marketing services through franchising, he said.

Sean T. Ngo from Vietnam Franchises Ltd. said franchising is growing fast in the global market. However, strong cooperation among all the partners involved in the franchises is essential.

HSC takes over CLSC’s customers

HCMC Securities Corporation (HSC) on Monday announced that it would take over customers of Cho Lon Securities Company (CLSC) given a cooperation agreement signed earlier.

According to a statement released on Monday, CLSC has stopped providing stock brokerage service after restructuring. It has picked HSC as partner to take over trading accounts and continue giving supporting and consultancy services for its customers.

Under the agreement signed by the two brokers on Sunday, all customers of CLSC will open accounts at HSC to continue transactions.

HSC said that cooperation with CLSC went in line with the restructuring trend on the stock market. HSC also pledged to give CLSC customers and its own clients equal services and treatment.

However, a source of the State Securities Commission (SSC) told the Daily that nearly two-thirds of securities firms in Vietnam are ‘clinical dead’, which means they can neither maintain operation nor go bankrupt.

The current bankruptcy regulations fail to consider bankruptcy causes of securities enterprises and compensation for investors. Besides, it is hard to evaluate losses a broker has caused to its clients as stock prices vary continuously.

Kim Eng Vietnam Securities Company earlier took over customers from Dong Duong Securities Company.

Vietnamese people search for new investment channels  

The low yields of traditional investment channels, such as gold, real estate and deposit accounts, have left Vietnamese people looking for a place to keep their money.

The drop in bank interest rates has posed a big problem for Nguyen Dinh Hoan, of Hanoi. He and his wife, both retired, live on the interest of their pension. They also lease their old apartment for VND4 million (USD190) per month.

Hoan said last year he earned VND33 million (USD1,500) per month, when interest rates were around 20%. This year he had to switch to smaller banks to receive an additional 3%. Since interest rates have been lowered to 9% his income has fallen to VND18 million (USD858) per month.

"I don't invest in securities. I don't dare to risk my money in real estate market. I intended to invest in gold if the price drops to around VND40 million (USD1,900) per ounce but it keeps rising," Hoan said.

In the past, when bank interest rates are reduced people would move their money to gold or foreign currency. But these investments have not been yielding much return. Also, the slump in the real estate market has been keeping potential investors at bay.

Minh Phuong, also of Hanoi, planned to use VND800 million (USD38,167) to buy 750 grams gold. "I scrapped the plan because the domestic gold price is VND2 million (USD95) higher than the world price. I also heard that the Government plans implement policies to tighten control over gold trading, which will depress prices. Foreign currencies do not give much return, so i just keep the money in the bank," she said.

The securities market has not been faring much better. The volatility that has driven many investors into bankruptcy has been warding off new ones.

As a result, many prefer the safer option of long-term deposit accounts.

Though the banks can negotiate interest rates with clients for accounts with terms of over 12 months, most banks keep their rates close to 9% and the ceiling at 11%. Still, this appears to many to be the most attractive option.

The head of VP Bank said that last week many people changed to long-term deposit accounts because they are more stable than other investments. Meanwhile a representative of Techcombank said that over the last six months individual depositors have been turning their backs on USD.

Nguyen Duc Huong, Deputy Head of Lien Viet Post Bank, said VND can earn the most profit with the new interest rate, inflation is expected to be 8-9% and the interest rate for USD to be only 2%.

The deputy governor of Sate Bank of Vietnam confirmed that since the interest rate and foreign currencies are expected to be kept stable, VND accounts are the surest way to make a return.

Industrial parks abandoned with no infrastructure

Attracting even a single investor is now beyond the reach of certain industrial parks in the Mekong Delta province of Tien Giang, as their infrastructure projects have remained in the blueprints for years.

The large land plots inside the industrial parks (IP) are thus left abandoned, while farmers, who had to relocate to give their lands to the construction, have nowhere to start work on their agricultural production.

After receiving the go-ahead in late 2008, the 285-hectare Soai Rap Industrial Park in Go Cong Dong District has so far received only one investor -- the Petrovietnam Steel Pipe JSC. Most of the IP area is now covered with weeds.

Located not far from Soia Rap IP is the Binh Dong IP, spanning 220 hectares in Go Cong Town. The project was approved three years ago, but no construction work has ever been started.

Nguyen Anh Tuan, chairman of the town’s people’s committee, said the infrastructure contractor Khang Thong Co has planned to build a 10-hectare residential area for locals who had to relocate, but site clearance has yet to be done.

“Some businesses have visited the IP to look for investment chances, but once they learn of the difficult transport route from here to Ho Chi Minh City, they all leave,” said Tuan.

“Goods must be transported to My Tho City, and take on National Highway 1A or the Trung Luong Expressway to HCMC, which is a long and costly route.”

Nguyen Van Khang, chairman of the provincial people’s committee, said he is constantly worried as the two IPs show no positive signs despite the province’s effort to boost investment.

However, investors simply leave immediately when they learn that there are no decent roads leading to the sites, and no bridges to facilitate transport to Ho Chi Minh City, he said.

As the land inside the IP are zoned for industrial production, locals cannot plant their agricultural crops there, he added.

“Another considerable waste is a VND1-trillion water plant in Chau Thanh District, which was built to supply clean water to the IPs,” he lamented.

The only way to facilitate transport between the IPs and HCMC is the My Loi Bridge, which connects Go Cong Town of Tien Giang and Can Duoc of Long An province, a neighboring province of HCMC.

But work was started on the road leading to the bridge and then stopped, according to Nguyen Thi Minh Thuy, deputy director of the Tien Giang Department of Transport.

“Hence, the Binh Dong IP project may be delayed for several more years,” she said.

Meanwhile, the 8-km road leading to the Soai Rap IP will need VND775 billion worth of investment, but insiders said they have no idea when the project will be implemented.

“Investors said that inadequate traffic is the main reason they are hesitant in opening their pockets,” said Pham Minh Duc, head of the Economy – Infrastructure Office of Go Cong Dong District.

“By the time the My Loi Bridge is completed, these investors may have already found somewhere else to spend their money.”

Vietnam to propose oil, gas development with Japan

Vietnam's state oil and gas group Petrovietnam plans to invite Japanese firms to join it in the joint development of about 20 oil and gas blocks in the South China Sea, the Nikkei business daily said on Wednesday.

Petrovietnam will hold a briefing session for Japanese firms in early July, the unsourced report said. Japanese firms will also be given a chance to invest in infrastructure projects, including oil refineries and coal-fired power plants, totalling US$24.8 billion, it said.

State-owned Petrovietnam held a similar briefing in Tokyo in June 2010, inviting Japanese investments in 28 Vietnamese projects in downstream oil, power plants, finance and real estate, totalling $23.8 billion.

An official with the Japan External Trade Organisation (JETRO), which helped organise the 2010 briefing, said no new briefing had been planned as yet.

A number of Japanese firms have been involved in energy projects in Vietnam, including JX Holdings and Idemitsu Kosan Co in the upstream sector.

Japan's JX Nippon Oil and Energy, a unit of JX Holdings, has been also considering teaming up with Petrovietnam for the expansion plan of Vietnam's Dung Quat oil refinery.

Vietnam requires state firms to disclose earnings

Vietnam's government said state-owned enterprises are now required to disclose their financial statements, as the country seeks to raise the competitiveness of the public sector and boost investor confidence.

State-owned companies will have to report their quarterly and annual financial reports, investment returns and level of state ownership on their websites, or face fines, Deputy Prime Minister Vu Van Ninh said in a directive obtained by Reuters on Wednesday.

Information disclosure by businesses in the defence and security sectors is subject to the prime minister's discretion, Ninh said in approving a government project for improving corporate governance in line with market economy rules.

The directive was signed on Monday with immediate effect.

Many state-owned enterprises (SOEs), which take out most of the bank loans in Vietnam, have been losing money, while government reform to diversify state ownership via privatisation has been slow, upsetting investors.

Donors, foreign investors and government officials agreed that Vietnam needed to focus on speeding up the restructuring of the banking sector, SOEs and public investment as Vietnam's economy has stabilised, they said at a meeting early this month.

"Banking sector and SOE reforms were noted as those needing the utmost attention," the World Bank said in a statement on June 5 at the close of the Consultative Group meeting, where attendants discussed the roadmaps for reforms in the two areas.

The debt of SOEs was near US$20 billion as of September 2011, or 16.9 percent of the country's total loans at the time, Finance Ministry data showed.

Bad debt has risen to 10 percent from 6 percent of the total loans in Vietnam's banking sector, central bank governor Nguyen Van Binh was quoted as telling the National Assembly last week, without giving any timeframe.

In late November, Binh has said bad debt at the end of 2011 would be 3.6 to 3.8 percent of loans, up from 2.14 percent at the start of last year.

Vietnam's economic growth slowed to an annual pace of 4 percent in the first quarter of this year, the lowest in three years.

"The slowing of the economy has forced the Vietnamese to evaluate the effectiveness and efficiency of their investment, for both the public and private sectors," HSBC said in a report on Monday.

"SOEs continue to pose a drag on the economy, making up more than 60 percent of total investment but lagging behind in performance," the report said.

Coupled with high interest rates, banks having tightened lending in the past year to avoid bad debt, which has slowed the country's lending. On Monday the central bank cut its key interest rates for the fourth time this year to help spur economic growth.

Lack of connecting roads prevents ports from operating

Two ports worth more than VND700 billion (US$33.6 million) in Ho Chi Minh City are still not able to become operational, despite the fact that construction has been completed, since there are no roads to connect them to the traffic system.

The ports include the VND367-billion Phu Huu in District 9, and the VND398-billion Phu Dinh in District 8, both of which have so far received no ships due to the lack of connecting roads, Nguyen Hong Anh, CEO of the Saigon Transportation Mechanical Corporation (SAMCO), the operator of the ports, told a delegation from the Economic and Budget Committee of the municipal People’s Council yesterday.

According to Nguyen Ngoc Thao, deputy CEO of Ben Nghe port, the investor of Phu Huu port, the Ha Tien cement plant, located next to the port, has recently invested in a road to connect them and Nguyen Duy Trinh Street.

The 1.7-km road will cost VND300 billion, and is expected to open to traffic at the end of this year.

However, even once the road is completed, it will still be difficult for container trucks to enter the port, as Nguyen Duy Trinh Street is too narrow, and passes through a residential area.

The city’s authorities are still unable to afford investment for an 800m road to link Nguyen Duy Trinh Street and the Hanoi Highway.

Meanwhile, Phu Dinh port was put into operation in September 2011, but has since failed to dock any vessels, since Ho Hoc Lam and An Duong Vuong leading to it are too narrow, and are constantly flooded by flood tides and rain, which prevents trucks from arriving at the port.

Input shrimp cost exceeds export price

Shrimp exporters have run into trouble as the sale price is even lower the input cost while they are facing the possibility of losing the Japanese market over banned residues.

Countries such as Thailand, Indonesia and Ecuador are enjoying bumper shrimp harvests. Meanwhile, the shrimp material shortage and high input costs in Vietnam are driving local enterprises into a corner.

Tran Van Linh, general director of Thuan Phuoc Seafood and Trading Corporation in Danang City, said his firm was offering a sale price lower than production cost but had not been able to find buyers.

“We will have to carefully consider the price when customers ask for price quotations. We earn almost no profit. However, if we agree to sell at their suggested price, they would switch to other sellers on a cheaper price,” Linh said at the conference held by the Vietnam Association of Seafood Exporters and Producers (Vasep) on Tuesday.

Local firms are now in need of money. Worse still, the input cost is high due to massive deaths of shrimp caused by diseases, according to Linh.

Ho Quoc Luc, head of the Shrimp Committee at Vasep, said shrimp export shipments denied and returned by importers are on the rise, especially those from Japan. Vietnam is facing risk of losing the Japanese market, Vietnam’s biggest shrimp market, he warned.

After the frequency of tests for trifluralin and enrofloxacin in shrimp imports from Vietnam to 100%, Japan is continuing to test the ethoxyquin with a frequency of 30%.

Vasep said the value of returned shipments amounted to US$30 million.

Total shrimp export had in the year to May 15 reached US$686 million, up 5.8% from the same period last year. In this period, the EU market imported 26.7% less shrimp from Vietnam, Canada 12% and Singapore 1% while growth was obtained in other markets.

Chu Lai, Dung Quat classified as first-rate economic zones

Chu Lai in Quang Nam and Dung Quat in Quang Ngai are the country’s first-rate coastal economic zones under a scheme conducted by the Ministry of Planning and Investment (MPI) to classify such zones to prioritize investments.

The two zones take the top spot in the list of 15 such zones nationwide with a score of 1,000 points each out of the maximum of 1,100 points.

Vu Dai Thang, head of the Economic and Industrial Zones Management Department under the ministry, said the MPI has set five criteria to evaluate coastal economic zones.

Coastal economic zones will be highly regarded if they have a seaport to transport goods (250 points), are in close proximity to the airport (200 points), have driving-force projects (150 points), attract strong investment flow (150 points), and occupy strategic locations for regional economic development (250 points).

Following the two above-mentioned economic zones are Dinh Vu-Cat Hai in Haiphong City with 880 points, Nghi Son in Thanh Hoa Province and Vung Ang in Ha Tinh Province with 825 points each, and Phu Quoc Island offshore Kien Giang Province with 805 points.

Taking the medium positions are Chan May-Lang Co in Thua Thien-Hue Province and Van Phong in Khanh Hoa Province with 775 points each, Van Don in Quang Ninh Province 675 points, and Nhon Hoi in Binh Dinh Province 665 points.

Lower on the ladder are Dong Nam Nghe An in Nghe An Province and Nam Can in Ca Mau Province with 590 points, Hon La in Quang Binh and Nam Phu Yen in Phu Yen with 540 points, and Dinh An in Tra Vinh Province with 500 points.

With these results, economic zones with high scores will enjoy more incentives in receiving State investment from next year. The beneficiaries will be Chu Lai, Dung Quat, Dinh Vu-Cat Hai, Nghi Son, Vung Ang, and Phu Quoc.

Thang said that the selection of good coastal economic zones was just a solution to allocate existing resources suitably.

The ministry is collecting opinions of relevant agencies and experts to develop policies for the zones.

Since Chu Lai, the first coastal economic zone, was established in 2003, there have been 15 economic zones, with two in the Red River Delta, ten in the central coastal region and three in the southern region.

The total land and water surface of the 15 coastal economic zones is 662,250 hectares. Under the overall planning, there will be around 54,300 hectares used for manufacturing, tourism and services, 12,100 hectares for non-tariff areas, 71,100 hectares for agricultural, forestry and fisheries land, 36,800 hectares for residential land, 25,000 hectares for public and administrative works and 318,800 hectares of water surface and mountains.

The coastal economic zones had mobilized total capital of nearly VND250 trillion as of the end of last year. Chu Lai, Dung Quat and Nghi Son economic zones have virtually finished their infrastructure facilities.

Besides, the economic zones have so far attracted US$31 billion from both foreign direct investment (FDI) and local investment with a total leasing area of over 20,000 hectares. However, there are not enough conditions to evaluate the business efficiency of these zones, according to the ministry.

Gas companies fleece their customers   

Experts have proposed tightening State management of retail gas prices because domestic prices do not reflect the fall in international prices.

Although contract fees for gas imports have gone down by USD100-120 per tonne, most import companies have switched to spot delivery contracts because the Dung Quat refinery is undergoing maintenance. This has driven up prices by USD60-80 per tonne.

As world fuel prices continue to fall, domestic price should have seen a reduction of VND40,000 (USD1.9) per 12 kilo tank, but gas companies have only reduced their prices by VND30,000 (USD1.4) in order to maximise profits.

Listed gas prices in Vietnam range from VND340,000-350,000 (USD16.1-16.6) per 12 kilo tank.

Gas companies have been making large profits, as their reduction in prices reflect only 50% of the reduction in world prices.

Ms. Liem, of Hanoi, said she bought a 12 kilo tank at Petrolimex on June 4 for VND360,000 (USD17.1) even though the listed price was VND340,000 (USD16.1). She was told by an employee that the extra cost was for business expenses, including transport, employee salaries, etc.

Another Petrolimex outlet in Cau Giay District listed a different price of VND350,000 (USD16.6) for 12 kilos tanks.

Managers at major gas companies refused to make any comment.

One unnamed official said, “The prices we give to our dealers is not public information, and is flexible, depending on the situation."

Do Trung Thanh, of Saigon Petro’s Sales Department, said that the processes and time needed to adjust petroleum and gas prices was not the same.

The price of petrol is managed by the Government, while gas prices are regulated by market management agencies.

“Common interest among gas companies makes stabilising gas prices a difficult task. When PVN’s Dinh Co Company was put into operation several years ago, gas companies held a meeting. The result of that meeting was Dinh Co raising their prices so the other companies could compete," Thanh said.

Nguyen Xuan Chien, Deputy Director of the Domestic Market Department, under the Ministry of Industry and Trade, shared that the ministry would co-operate with the Ministry of Finance to require gas companies to lower their retail price.

“Gas prices should be based on the market and comply with Government policies. The Ministry of Finance has the right to apply measures to stabilise gas prices if necessary”, Chien suggested.

Water plant violates laws, causing huge losses   

Inspectors in Tien Giang Province have initially concluded that the Dong Tam Water B.O.O Corporation has violated three laws and caused losses of at least VND165 billion (USD7.92 million).

The provincial authorities announced the results of the inspection of the Corporation’s operations yesterday, and Nguyen Van Chien, spokesman of the committee, said the former chairman of the provincial People’s Committee, Tran Thanh Trung, and a research team led by deputy director of the Finance Department, Tran Van Hung, should be blamed for the wrongdoings and the loss caused by the project.

In 2007, Prime Minister Nguyen Tan Dung directed the chairman of the provincial People’s Committee to develop a project to upgrade the province’s water supply to 170,000 cubic metres per day for the Go Cong area, inspectors said.

The authorities, however, did not follow the directive, instead setting up another project in the form of Build-Own-Operate (BOO) to establish the Dong Tam Water B.O.O Corporation, which was planned to supply only 90,000 cubic metres per day.

This BOO project cost more than VND1 trillion (USD48 million), while the original upgrade would have cost only VND890 million.

The Corporation later built just 44 km of water pipelines, while if upgrades had been carried out, the length of the pipes would have been 130 km.

More seriously, the BOO form is not provided for in the Investment Law, but the authorities still developed the project without asking for permission from the Government, inspectors said.

After the Corporation’s water plant was put into operation in July 2010, the authorities fixed the water price at VND8,000 (USD0.38) per cubic metre, which is expected to increase to VND16,000 according to a 20-year roadmap, causing strong objections from the public. Meanwhile, the regulated water price for households in the province is only VND4,500 per cubic metre.

As a result, the province’s budget had to provide VND350 billion (USD16.8 million) every year to offset for the difference between the regulated price and the randomly fixed price.

In addition, the inspectors also initially discovered that the total cost of the project as shown in the Corporation’s books was VND165 billion (USD7.91 million) higher than the actual cost.

Meanwhile, the Corporation not only violated the Investment Law but also the Construction Law and the Bidding Law, inspectors said.

Provincial spokesman Chien said the authorities would report to the Prime Minister about the inspection’s results.

The authorities will also negotiate with the Corporation to acquire all of the stakes of the investors from Ho Chi Minh City at the Corporation, as a way to supply water to locals at reasonable prices, he said.