Rice exports face challenges from foreigners in Cambodia

Vietnamese rice exporters will face tough competition from foreign countries looking to exploit advantages that Cambodia presents as a beneficiary of the the EBA (Everything But Arms) initiative, says an Econet report.

Under the EBA, Cambodia, as a least-developed-country, enjoys zero tariffs and no quotas for exporting its farm produce, especially rice, to the EU.

"However, Vietnamese companies have not been able to take full advantage of its proximity to a country that produced 2.1 million tonnes of rice in surplus in 2001, and lacks investment and manpower to expand rice cultivation," the report says.

The plan to build a modern rice mill near Phnom Penh announced by a Viet Nam-Cambodia joint venture nearly two years ago has made no progress.

Complicated formalities have been blamed for the delays in building a plant that aimed to process rice for export supplied by Cambodian farmers.

Cambodia-Viet Nam Foods Co (Cavifoods) – a joint venture between Viet Nam's Southern Food Corp (Vinafood II) and two Cambodian firms – International Development Co (IDCC) and Green Trade Co, was established in October 2009 with a registered capital of US$8 million.

Cavifoods has since focused on purchasing Cambodian rice for export.

In November 2011, Viet Nam's Thai Thinh Co signed with Takmoa Cambodia a $22.4 million contract to produce rice for export on 20,000 ha in Kompong Cham and Kompong Svay provinces.

Meanwhile, companies from other countries are preparing to enter the Cambodian rice market, presenting a stiff challenge to Vietnamese companies.

In March 2011, Toyota Tsusho, a subsidiary of the Toyota Motor Corp (Japan), joined hands with Thailand's Huay Chuan Rice Co Ltd to invest in Cambodia's rice growing industry.

The alliance, which includes Malaysian investors, has been in talks with Cambodia businessmen for a venture that would set up an export-oriented rice mill.

Takeo Province on the Vietnamese border has been chosen for building the rice mill.

Takeo, 150km east of Cambodia's deep-water seaport Sihanoukville, is expected to help realise the Cambodian Government's target of exporting 1 million tonnes of rice annually.

Thailand's Asia Golden Rice Co is also working with Japanese partners to invest in Cambodia's rice industry.

COFCO, the largest oil and food importer and exporter and a leading food manufacturer in China, is also seeking to invest in Cambodia's rice industry. A rice inspection and quarantine agreement was signed between China and Cambodia in October 2010, making it easier for Chinese investors to export rice from Cambodia.

Vu Thinh Cuong, commercial counsellor at the Viet Nam Embassy in Phnom Penh, said price of standard rice exported to the EU could be nearly $1,000 per tonne while the same rice would fetch only $400 to $500 per tonne in other markets.

In the first five months of 2011, Cambodia exported rice worth $29.4 million, a year-on-year increase of 215 per cent.

According to the US Department of Agriculture, rice production in Cambodia rose from 4.5 million tonnes in 2009 to 4.7 million tonnes in 2010 and is expected to reach 4.8 million tonnes this year.

Cambodia' Ministry of Agriculture said the kingdom produced 7.9 million of paddy in 2010, and had a surplus of 2.1 million tonnes of rice for export.

Cambodia reportedly shipped 900,000 tonnes of rice in 2010, almost double the 500,000 tonnes in 2008.

Chookiat Ophaswongse, managing director of Thailand's Huay Chuan Group, said Cambodia should have four million tonnes of paddy for export this year – 3.5 million tonnes to Viet Nam and the rest to Thailand.

Loose credit needed for property market

Over one quarter has passed since the State Bank of Vietnam (SBV) applied credit tightening on non-productive sectors such as real estate and securities, causing a severe shortage of funds on the property market.

Poor performance of the market is discouraging a number of businesses and is impacting the progress of many on-going projects, and thus there is a need for effective measures to remove obstacles hindering the industry.

At a meeting on Saturday held by the HCMC Real Estate Association (Horea), Le Hoang Chau, chairman of the association, mentioned difficulties which have put pressure on the market. For instance, a sharp rise in input costs and lending rates has driven many firms to the brink of bankruptcy, Chau noted.

According to Chau, the city in the first half of the year had only five projects of 1,800 units under construction, which is the lowest figure so far. Meanwhile, the outlook of the market in the second half is forecasted to remain tough for the industry.

Chau commented that relevant authorities should not group the real estate industry into a non-productive group, as the field also uses many workers and materials to build apartments as products.

Truong Thi Hoa, deputy chairwoman of the HCMC Commercial Arbitration Center, agreed with Chau. It is necessary to carefully weigh things up before listing the industry as a non-manufacturing field, she added.

It is better not to tighten credit for 70-80% of completed projects, and enterprises with a low bad debt ratio, she said.

The monetary tightening policy makes banks strict with non-productive industries, blamed for the current sluggish realty market. As a result, debtors have difficulty recovering funds to service bank loans.

A report of the HCMC authority quoted a SBV source as saying total outstanding loans in the city’s real estate sector declined to VND77,522 billion in late May from VND85,100 billion in January. However, bad debt involving the sector gradually increased to 4.06% in May from 2.47% in January.

Given less consumer spending, many investors have had to offer discount prices in the hope of recovering investment costs. Besides, dreariness and price reductions are believed to have resulted from monetary policy and dampened investor confidence.

In reality, the property market’s weak liquidity makes secondary investors reserved, while those in need of housing tend to wait for lower prices. Many secondary investors want to cut losses but could not do anything, even though the prices they offered were lower than what was offered by developers.

Several investors have delayed their sale plans while others have come up with many solutions to attract consumers, such as interest subsides, lucky draws, cash gifts or presents of gold and savings books for clients.

Le Chi Hieu, vice chairman of Horea, suggested policies should be flexible enough to adjust and support the market, instead of burdening the market.

High land costs have pushed housing prices up, he said, and the lending rates amounting to 24% per year for a three-year project could have been significantly down if such input costs were adjusted lower. Notably, most investors find it hard to survive with the land price payment regulation, Hieu commented.

Similarly, the HCMC government also admitted shortcomings that it has yet to regulate the market.

At present, housing trading accounts for 50-60% of the whole real estate transactions, showing the imbalance in the industry.

So far, there is no professional information center collecting data, forecasting and evaluating the property market. Consequently, recommending appropriate policies to manage and supervise the market as expected is not easy.

Also, the system of finance and credit or tax still has shortcomings and instability, which need to be improved.

Specialists agreed that the Government should soon issue specific regulations on non-banking financial institutions such as real estate investment trust and housing savings funds. It is expected that these regulations could help the industry minimize dependence on banks to mobilize capital.

According to Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee, authorities should have flexible monetary policy and ensure stable credit growth of the local realty market.

Real estate prices in Nha Trang rise on expansion plan

The stability in the Nha Trang property market is a thing of the past – prices are now skyrocketing after the city approved plans to expand the urban area.

In a city where property prices have never been prone to dizzy rises or collapses in the past, the price of land along the bay has gone through the roof since authorities announced plans to lengthen Tran Phu Street on either side, according to Tran Thanh Trung, director of a real-estate brokerage.

The prices of hilly land along the road have jumped five – or six-fold since earlier this year when the plan was announced.

Farmlands had appreciated by hundreds of times in the last two or three years since the administration decided they would be converted into residential land, Trung said.

Another broker, Duong Van Kenh in Duong De Hamlet, said: "In early 2010, the price of farmland in Duong De was just VND3 billion (nearly US$150,000) per ha but has now climbed to VND18 billion.

"Incomex Sai Gon, which owns a 9.6-ha plot in the most beautiful location there, is selling land at VND8 or 12 million per square metre."

Lam Hoang, chairman of the Nha Trang Real Estate Brokers Association, said the prices of land near An Vien luxury resort stood at VND21-22 million.

The price of land for luxury villas is around VND18 million while for townhouses, it is VND12 million.

Land remains the most popular of all property products which also include villas, apartments, and townhouses.

A study by Savills, a leading global real estate service provider, found that in recent months the Nha Trang real estate market had not seen great changes in the supply position.

The city has around 30 residential projects already licensed, with some already completed. But only the Vinh Hoa residential area is fully occupied.

Vinaconex has sold out all the land plots in its 36-ha Vinh Diem Trung urban area but many apartments there remain vacant.

Vinh Long to benefit from power projects

A total of VND47 billion ($2.2 million) had been invested in 77 power-grid development projects in southern Vinh Long province this year, according to the Vinh Long Electricity company.

Of these, 46 projects have already started with total investment of VND10.2 billion ($495,000) and 31 new ones will be started during the rest of the year using VND36.7 billion ($1.7 million) in investment capital.

The funds, from a World Bank loan for rural electrification, will provide power connections for 98.8 per cent of households in the province.

Garment makers seek Africa opportunities
 
Domestic textile and garment firms should target African countries as part of efforts to diversify their export markets, officials of the Ministry of Industry and Trade say.

The Viet Nam Investment Review newspaper yesterday cited the officials as saying local firms were likely to ignore the African market despite it being a lucrative one for garment and textile firms worldwide.

The Southern African Customs Union (SACU) was considered the region with the highest development potential in Africa, the ministry said.

SACU, the oldest customs union in the world, comprises Botswana, Lesotho, Namibia, South Africa and Swaziland.

Out of the five SACU members, South Africa had highest demand for garments, the ministry said, adding that last year it spent US$2.7 billion on importing garment and textile products.

More than half of these products were from China, according to South Africa's trade ministry, accounting for $1.47 billion. China was followed by India, Pakistan, Mauritius and Germany, it said.

Although it was one of the world's largest exporters of garment and textile products, Viet Nam's exports to African countries was very modest, the Ministry of Industry and Trade said.

Last year, Viet Nam's garment and textiles exports to South Africa was just $22.73 million, it said.

With advantages in labour costs, skills and productivity, Vietnamese garment and textile firms were quite capable of expanding their exports to Africa, experts said.

Viet Nam, as well as SACU nations, was member of the World Trade Organsisation, so trade between the two sides could be easily done based on market demand, they said.

With more than 10 years of experience in doing business in Africa, Thai Tuan Kieu, deputy general director of the Thai Tuan Group, said there was great demand in the continent for many kinds of goods.

However, to be successful in the African market, local firms must understand well their customs, culture and payment methods, he added.

Experts said that a policy of export market diversification was advisable for Vietnamese firms to avoid heavy reliance on traditional markets.

VN to implement new rubber export tax

The Ministry of Agriculture and Rural Development (MARD) has asked the Ministry of Finance (MoF) not to impose an export tax on rubber coded HS 4001 to encourage exports this year.

Bui Ba Bong, MARD's deputy minister said that under the nation's rubber development plan to 2015 with a vision to 2020 approved by the Prime Minister, incentives were needed in order to boost the domestic rubber industry, including a tax-free export policy for latex.

The request comes in response to a draft mulled by the MoF that intends to increase the export tax rate to 5 per cent for rubber.

According to MARD, only 18 per cent of the rubber produced was used domestically, while the majority was exported.

Thail products to go on display in VN

More than 130 Thai businesses will participate in the Thailand Products Exhibition taking place in Ha Noi from August 11-14, which will display high-quality perishable goods and commercial exports.

Thai Ambassador to Viet Nam Anunson Chinvano praised the strong development of Viet Nam's markets at a conference last Wednesday. He said the exhibition would help Thai businesses promote their products and investigate markets and opportunities in Viet Nam.

IZs and rural areas to help stabilise prices

The Ha Noi People's Committee has asked the Department of Industry and Trade and other relevant agencies to implement programmes to stabilise the prices of essential goods.

The city government has required businesses to establish price stabilisation plans aimed at selling reasonably-priced Vietnamese goods in rural areas and industrial zones.

Management boards of industrial and processing zones are responsible for finding locations for the programmes.

Viettel launches new BlackBerry services

The military-run telco Viettel has officially announced the launch of pre-paid services for BlackBerry users in Viet Nam.

The deluxe package provides users with fully functioning BB Mail with a subscription charge of VND100,000 per month, and BB Chat is also available for VND65,000 per month.

Two packages for post-paid subscribers provided by Viettel include BB Wed and BB Chat, targeting customers who do not want to use all the features of the BB Mail package. Subscription charge for the BB Web package is VND150,000 a month. — VNS

Consumer confidence declines in first half

A survey by MasterCard Worldwide in the Asia-Pacific region found that the Consumer Confidence Index (CCI) has dropped from 68 to 61 points in the first six months this year.

Vietnamese CCI has also fallen from 90.3 to 77.1 points, which is still high compared to other countries in the region.

Farm produce quality needs improvement

The Ministry of Industry and Trade has instructed the Cuu Long Delta provinces to focus on improving the quality of their major agricultural exports, including rice, fish and vegetables.

Total rice productivity is expected to increase by 3 per cent annually and reach 46 million tonnes.

Between 2016-2020, rice for export will gradually be reduced to 4-4.5 million tonnes with an export turnover of $3billion.

VN to grow genetically modified food

The Agricultural Genetics Institute said that next year it would begin growing genetically modified corn on a large scale throughout the country.

Genetically modified corn is more resistant to insects and grass pesticides with a yield 30-40 per cent higher than normal corn.

A trial cultivation of genetically modified corn in northern Vinh Phuc Province has so far shown no negative impacts on the environment or biological diversity.

Song Thuan adds new technology

Song Thuan Co Ltd in Song Thuan Industrial Park of southern Tien Giang Province has begun using an advanced automatic conveyor, dry and storage system valued at VND40 billion ($1.92 million).

Director of the company Cao Minh Vien said that, from the beginning of the year, his company exported more than 90,000 tonnes of rice or a 40 per cent year-on-year increase with an export turnover of more than VND800 billion ($39.2 million).

Bank buys BKAV's anti-virus software

The Sai Gon – Ha Noi Commercial Join Stock Bank (SHB) has signed an agreement with the Bach Khoa Anti-virus Centre (BKAV) to deploy the first phase of a project to modernise the bank's operation with BKAV's eOffice software.

eOffice is a software that can help enterprises manage and operate at top efficiency with a staff of up to 1,000 people. The software has been used by 400 enterprises around Viet Nam.

City brokerage profits sag

The HCM City Securities Corporation (HCM) has estimated that its annual after-tax profits will reach only VND177.5 billion (US$8.6 million) this year, a decline of 25 per cent on an initial target of VND237 billion ($11.5 million).

The company has attributed the decrease in profits to market value reaching only VND1.15 trillion ($55.8 million) per session during the first six months of the year, equivalent to just 38 per cent on an expected VND3 trillion per day.

In July, total market value on both exchanges came to VND600 billion ($29.1 million) per session.

Previously, HCM had reported first-half net profits of VND88 billion ($4.3 million), the highest figure among brokerage firms.

Vinamilk sales rise 21% in first half

Dairy producer Vinamilk (VNM) posted a net profit of over VND1.1 trillion (US$53.4 million) in the second quarter, lifting the figure for the first half of more than VND2.11 trillion ($102.4 million),a 21 per cent year-on-year increase.

Company sales increased by 36 per cent over the same period last year, reaching roughly VND10.17 trillion ($493.7 million) in the first six months. VNM's financial earnings rose by 61 per cent thanks to bank interests and rising bond prices.

Property sector shuffles the deck

Vincom recently handed over a 10 per cent stake (VND30 billion or $1.45 million) in a Viettronics Property Company Limited’s property project to Sinh Thai Investment and Development Joint Stock Company.

The project involves building a housing, office and trade centre complex over 13,000 square metres in Hanoi’s Dong Da street with estimated investment exceeding VND3.2 trillion ($154.5 million). After the transfer, Vicom’s stake in the project shed to 74 per cent from 84 per cent.

In late June 2011, Vincom finalised a transfer of 56 per cent in another housing, services, trade centre and office complex in Hanoi’s Thanh Xuan district to Sun Group.

The firm earlier pumped over VND128 billion into buying Sun Group’s shares distributed through additional issuances to own a greater stake in the project.

Archi Group, a famous name in tourism property, acquired 67 per cent of stake in Sudito and bought out Kim Boi Investment and Tourism Joint Stock Company.

In early 2011 telecom giant FPT reportedly sold a stake in a FPT building in Hanoi’s Lang Ha street to another firm.

In the southern market, local leading steel maker Hoa Sen Group approved in principle on selling Hoa Sen Phuoc Long and Hoa Sen Riverside apartment buildings in Ho Chi Minh City’s District 9, transferring land use rights in District 2 and selling 45 per cent stake in Hoa Sen-Gemadept international port project.

In second quarter of 2011, CapitaValue Homes under CapitaLand Group injected VND121 billion to acquire Quoc Cuong Saigon’s 65 per cent stake to have the right to use Quoc Cuong Saigon’s 9,000sqm area in Ho Chi Minh City’s Binh Chanh district to build 800 apartments.

The firm also got share in three other Vietnam-based property projects, including most property projects of Khang An Company in Ho Chi Minh City’s District 2.

The merger and acquisition trend had increased amid economic uncertainties, said former Minister of Natural Resources and Environment Dang Hung Vo.

“Mergers and acquisitions can benefit both sides and is a viable way-out for property developers not wishing to go bankruptcy,” said Vo.

Reality shows that deals often took place at property projects in their initial stage of development. These cases mostly involve transfer of controlling shares in the projects.

“Unveiled cases are just in formality while underground negotiations are bustling. Buyers often buy stakes in projects with capital-strapped developers as they assume the land value might bring them marginal future profits,” said Coldwell Banker Vietnam general director Edward Chi.

Zone’s manufacturing engine is revving

Central Quang Nam province’s Chu Lai Open Economic Zone is emerging  as a leading spot for locar car supporting industry.

In early August 2011 South Korea’s Hyundai Group and Vietnam’s Thaco inked a landmark cooperative deal for auto engine manufacturing.

With $165 million in the first phase, the Chu Lai OEZ joint venture project with 51 per  cent of the chartered capital contributed by Hyundai and the remainder offset by Thaco will churn out around 25,000 4L diesel engines for light trucks per year.

“The Hyundai Thaco auto joint venture is not only substantial for local car-making industry but it is also crucial to the supporting industry development,” said Minister of Industry and Trade (MoIT) Vu Huy Hoang.

Construction of the plant would start this month and the South Korean-based group expects the plant will come online in October 2012. The joint venture plant’s production capacity will be hiked gradually to reach 100,000 engines per year.

The plant’s output will gear towards local market and be partly exported to China and other Hyundai plants in different countries.

“Vietnam is a market with growing importance for Hyundai and is now part of our global production chain via the engine cooperative deal,” said Hyundai vice chairman Choi Han Young.

Since July 2010 the South Korean-based group has transferred technologies to Thaco for manufacturing Thaco-Hyundai branded commercial vehicles such as 2.5 to 25 tonne trucks, specialised vehicles, 25 to 47-seat passenger cars and bed-equipped passenger cars.

According to Chu Lai OEZ Authority deputy chairman Do Xuan Dien, South Korean’s Kia Group recently agreed to resume negotiations for an auto manufacture and assembly project with an annual capacity of 100,000 units. The plant will become online in 2015 and aim a localisation rate of 47 per cent right in the first year going into operation.

Reality shows that from 2003 up to now Thaco pumped VND8 trillion ($386.4 million) into Chu Lai OEZ to establish the Chu Lai-Truong Hai auto complex first phase which includes four auto manufacturing plants, five spare part plants, Tam Hiep port, bonded warehouses and a manpower vocational training facility over 234ha.

That was partly why central Quang Nam province and Chu Lai OEZ decided to build a general engineering and auto centre over 7,800ha at Chu Lai OEZ, of which the auto engineering part alone covers 2,800ha to woo domestic and foreign investors into auto engineering fields.

To appeal to investors, Quang Nam province proposed a number of investment incentives such as for 70-year term projects not collecting land rental over the project’s whole life, supporting part of the land acquisition and people’s resettlement costs, offering 10 per cent corporate income tax reduction in the first 30 years, applying export processing zone enterprise status when at least 70 per cent of the products being exported.

In respect to those proposals, a MoIT executive said in the past years the government offered special investment incentives to several potential projects to help lure in foreign investments.

Farm insurance piloted
 
The Bao Viet Corporation has agreed to operate the Government's pilot agricultural insurance programme on a not-for-profit basis, deputy general director Nguyen Quang Phi said at an online discussion yesterday.

The operation would be based on co-operation between State-owned enterprises and the Government, Phi said.

The discussion, held in Ha Noi, aimed to bring farmers nationwide a comprehensive view of agricultural insurance.

Twenty years ago, we failed to successfully run another programme on agricultural insurance, Phi said. Calamities and agricultural productions on a small scale were blamed for the failure at that time.

However, the State now provided 20-100 per cent insurance costs for whoever participated in the non-profit pilot programme, including poor agricultural households, individuals and organisations, following Government decision 315/QD-Ttg.

Drawing experiences from the earlier failure, the corporation had submitted to the Ministry of Finance a new method of insurance payments that gave priority to coverage of natural disasters instead of random risks, Phi said.

Deputy Minister of Agriculture and Rural Development Ho Xuan Hung said agricultural insurance was not operated in all countries, partly due to high risks as well as dispersed production.

Viet Nam's economy had faced difficulties with agriculture insurance, he said. Among them were lack of prioritised policies to encourage insurance enterprises.

Also, domestic farmers did not participate in agricultural insurance because they did not know what it was and how they could benefit.

Agricultural insurance was a new sector, not only for farmers but also for local authorities and insurance agencies.

In the short term, localities had been ordered to train their staff in agricultural insurance and then assign them to educate local farmers, said Tang Minh Loc, director of the Ministry ‘s Economy Co-operation Department.

The ministry planned to compile a detailed manual for both insurance agencies and farmers on how to operate the insurance, he said.

Representatives from the agriculture ministry also stressed that the rules of agriculture insurance would ensure the rights of the State, farmers and insurance agencies.

Cresting Mekong tributaries signal bumper rice crop
 
Flooding caused by rising water levels from the upper stream of the Tien and Hau rivers, two main tributaries of the Mekong River, has arrived one month early this year, contributing to a bumper harvest.

Farmers are now busy catching fish, shrimp and other aquatic species brought by the flooding.

An Giang Province's An Phu District and Dong Thap Province's Hong Ngu District, which contain the upper stream of the Hau and Tien rivers respectively, are the first areas that receive floods from Cambodia.

Harvested rice fields are now submerged deep in floodwaters.

Farmer Sau Dung of An Phu's Phu Hoi Commune said the water level in fields was more than one metre high.

"Every day, I earn hundreds of thousand of dong from selling fish caught from flooded fields," he told Tuoi Tre (Youth) newspaper.

Farmer Bay Chung of An Phu said: "If there are floods, there is fish, there is silt, and there will be a bumper rice crop."

In Hong Ngu District, every household is busy preparing equipment for fishing, including fish nets, bamboo fish traps and small boats.

Truong Minh Hien, chairman of the Thuong Thoi Hau B Commune People's Committee in Hong Ngu, said farmers in the commune typically catch a total 50 tonnes of various fish species each year during flooding season.

Hundreds of poor households in the commune are able to earn a better living during the flooding season.

Nguyen Van Man, head of the Hong Ngu Agriculture and Rural Development Office, said the peak level of floods would reach 4-4.5 metres this year, one metre higher than that of last year, according to weather experts.

If the peak level reaches more than four metres, floods will destroy pests in fields, bring silt into the fields, but would not harm the dykes, rural transport facilities or houses, Man said.

"The water flow in the river is mild and not strong as it was in previous years, when we had big floods," said Nguyen Huu Tuan, deputy chairman of the Phu Hoi Commune People's Committee in An Phu District.

"Every day the water level increases by 4-5 cm and there are no big changes. I, however, am concerned that floods could stop suddenly," he said.

Vo Thanh, director of the An Giang Province Centre for Hydro-Meteorological Forecasting, said the water level in the Hau River was 50-70 cm higher than the same period last year.

However, this level is average compared to previous years, Thanh said.

The impact of the recent storms, Hama and Nockten, which caused rains at the upper stream of the Mekong River, created the early floods downstream of the Mekong River, according to Thanh.

Nguyen Minh Giam, deputy director of the Southern Region Centre for Hydro-Meteorological Forecasting, said floods would reach peak level, 4.4-5 metres high, at the end of September or early October.

PV