Vietcombank cuts lending interest rates

Vietnam Commercial Joint Stock Bank for Foreign Trade, better known as Vietcombank (VCB), has officially announced lowering the lending interest rate.

The interest rate easing policy has been approved by the bank's board director board, Nguyen Thu Ha, Vietcombank's deputy general director, told Thanh Nien newspaper.

Particularly, the lending interest rate in dong has been reduced by 2 percent per year, commercial loans and short term services at 17 percent per year, short term loans to serve production at 16.5 percent per year, and short term loans for exports at 16 percent per year.

VCB's consumption lending interest rate has been also been winded down, of which short term loans will cost 18 percent per year, medium and long term loans at 18.5-19 percent per year and the lending interest rate for securities and real estate sectors at 20 percent per year.

However, the reduction of lending interest rates will initially be applied for short term only and mainly for prioritized borrowers such as agricultural e, exports and small and medium sized enterprises (SMEs).

With this incentive, at some branches of VCB, the lowest lending interest rate for export is at 16 percent and the highest level for non-production loans is at 20 percent per year.

With the this latest move act, VCB is the second largest state-run bank lowering to lower lending interest rates this year, after the Bank for Investment and Development of Vietnam (BIDV) pioneered the move.

Previously, BIDV marked the pioneer in lowering lending interest rate.

Since September 2011 so far, BIDV the bank has continuously made five reductions of the lending interest rate. Currently, BIDV's lowest lending interest rate for prioritized borrowers is 14.5 percent per year and the highest level is about 17-17.5 percent per year.

STB dampens indices in HCM City, shares rebound in Ha Noi

Index heavyweight Sacombank (STB) continued to hit the floor price this morning, dragging down the stock market.

With 6.22 million shares exchanged – the largest volume today – at the price of VND18,100 (US$0.86) each, STB bottomed out for the forth successive session pulling down both the VN-Index and VN30 Index on the HCM Stock Exchange.

In HCM City, the VN-Index slid another 0.23 per cent to finish today's session at 396.51 points, while the VN30 Index closed at 443.54 points, down 0.57 per cent from Wednesday.

Advancers outnumbered decliners by 108-83, however.

Blue chips were mixed. While Tan Tao Investment and Industry (ITA) and software producer FPT Corp (FPT) increased by over 1 per cent, insurer Bao Viet (BVH) declined 1.9 per cent, property developer Hoang Anh Gia Lai (HAG) and PetroVietnam Finance (PVF) closed down by more than 1 per cent.

Market value dropped 17 per cent over yesterday, reaching more than VND658 billion ($31.3 million) on a volume of 34.8 million shares.

On the Ha Noi Stock Exchange, the HNX-Index regained 0.61 per cent from yesterday's losses, concluding this morning at 60.58 points.

Trading value decreased by 10 per cent to VND265.3 billion ($12.6 million) as 32.3 million shares were traded today.

Gainers edged losers by 118-95. Kim Long Securities (KLS) with nearly 3.8 million shares changing hands, became the most active stock today, closing up 4.5 per cent to VND9,200.

Credit policies depress market
 
Shares plunged yesterday on both of the nation's stock exchanges following news late Tuesday that the central bank would not issue more favourable credit policies for the securities market.

In a press conference on Tuesday afternoon, State Bank of Viet Nam deputy governor Nguyen Dong Tien said loans to investors in the real estate and securities markets would continue to be listed in the bank's non-productive classification and would not receive priority for lending from banks.

"Monetary policy in 2012 will continue to focus on economic stability and prioritise lending to the production sector," Tien said.

This information struck like "thunderbolt" to investors who had rushed to buy shares in recent sessions in the hopes that the central bank would ease credit for the securities market.

On the HCM City Stock Exchange yesterday, the VN-Index closed down 0.71 per cent to 397.41 points. Both the volume and value of trades improved by about 25 per cent over Tuesday's session, totalling 45.7 million shares, worth VND791.5 billion (US$37.7 million).

Decliners outnumbered advancers by 131-85.

Most blue chips lost value, pushing the VN30 Index down 0.92 per cent to close yesterday at 446.08 points. Sacombank (STB) and PetroVietnam Finance (PVF) bottomed out, while Vietinbank (CTG), insurer Bao Viet Holdings (BVH), and Phu My Fertilisers (DPM) all closed off substantially.

Eximbank (EIB) was the most active share with over 1.9 million changing hands. EIB ended the session down 0.6 per cent to VND15,400 per share.

Among shares included in the VN30, only a few posted gains, including Kinh Bac City Development (KBC) up 3.1 per cent, Ocean Group (OGC) up 1.1 per cent and Vinamilk (VNM) up 0.6 per cent.

On the Ha Noi Stock Exchange yesterday, the HNX-Index also slid 2.16 per cent to close at 60.21 points, with losers outnumbering gainers by 143-87. Value increased slightly to VND309.8 billion ($14.8 million) with nearly 36 million shares changing hands.

Ha Noi Housing Bank (HBB) was the most-active share on a volume of over 4 million, but it dropped to its floor price of VND4,500.

Nguyen Duc Hai, head of the bond department of Manulife Asset Management, said it would be difficult for the market to thrive as liquidity continued to be one of the biggest problems for banks.

Hai noted that the market had already risen by over 20 per cent in recent weeks and that many blue chips had posted gains of 30-35 per cent. "In order to continue rising at this pace," he said, "the market needs to be more motivated. So far I havn't seen those dynamics."

Foreign investors concluded yesterday as net buyers on both exchanges, picking up another VND68.5 billion ($3.3 million) worth of shares.

HSBC Vietnam opens representative office in Hai Phong

Hong Kong-Shanghai Banking Corporation (HSBC) Vietnam Ltd (HSBC Vietnam) opened its representative office in the northern port city of Haiphong on February 16.

Sumit Dutta, CEO of HSBC Vietnam, said Haiphong is one of the most dynamic places in term of both investment and industrial production in Vietnam. He expressed his wish to support local businesses in promoting their operations and using HSBC Vietnam’s products and services.

Haiphong now has 316 foreign-invested projects with a total capitalization of more than US$4.89 billion. The city plans to build an industrial zone covering an area of 1,000 hectares for Japanese investors and a new seaport to receive larger container ships.

HSBC Vietnam’s representative office in Haiphong will keep contact with customers, carry out market research, promote new investment projects, and monitor the implementation of contracts and agreements between HSBC Vietnam and local businesses and organizations.

No toxic Red Bull found in Vietnam

No Red Bull products circulating in Vietnam have been found containing toxic substances, confirmed the Vietnam Food Administration (VFA) yesterday, following reports that the product has been taken off shelves in China on fears of containing banned additives.

The VFA had ordered the National Institute for Testing Food Safety and Hygiene, and the Ho Chi Minh City Institute of Hygiene and Public Health to collect and test samples of the energy drink, and found no contaminated products, the food safety authority wrote in its latest announcement.

Last week, Chinese media reports stated that some of the beverage's ingredients are not registered with the State Food and Drug Administration (SFDA) and are not approved for vitamin functional beverages, according to Xinhua news agency.

An overdose of the substance could cause headaches, stress, anxiety, tinnitus and addiction, Xinhua quoted Dr Zhang Jing from the First Hospital, affiliated with Harbin University of Medical Science, as saying.

Following the news over the banned additives, supermarkets in many Chinese cities have taken Red Bull products off their shelves.

Meanwhile in Vietnam, Red Bull is still on sale in supermarkets around HCMC.

The sales departments of most supermarkets said they will depend on further announcements from VFA to decide whether to take the drink off shelves.

For its part, Red Bull Vietnam Co Ltd has confirmed all of its beverage products are safe for consumers.

Red Bull products circulating in Vietnam have been domestically manufactured since 2000, said the company CEO Chanachai Earsakul.

“All additives used in the products have been registered with VFA, and met required health standards as per Vietnamese law.”

Lending rates poised to fall soon: bankers

Most bankers have agreed that lending rates will fall further this year, having somehow been eased by one percentage point compared to the month before the Lunar New Year (Tet).
The lending rates now vary among banks depending on their scales.

The lowest rates are offered by state-owned commercial banks, at around 17 percent a year.

Meanwhile, large joint stock commercial banks offer rates of 18-21 percent per year while smaller ones charge a yearly interest rate of 19-23 percent.

ANZ Vietnam has also launched a $160 million (VND3.376 trillion) credit line aimed at supporting SMEs involved in agriculture and textile and garment or seafood industries.

The rate applied by the bank for these clients is one to two percentage points lower than the market average.

An executive of Vietnam International Bank (VIB) has told the Saigon Times Daily newspaper that at his branch the lowest lending rate is about 18 percent yearly and the highest is 21 percent.

These levels had dipped over 1 percent against the pre-Tet period as his bank now focuses on healthy corporate clients to avoid credit risks, he added.

The banker supposed that borrowing costs from the second quarter will continue cooling down.

It is because the money volume injected by the central bank over the past few months has gone up sharply and deposits from the public have bounced back after Tet, he explained.

"Lending rates can be pulled down if the central bank is determined to carry out the road map to merge weak banks with one another and if all lenders agree to revise down the rates," he added.

The National Financial Supervisory Commission's vice chair Le Xuan Nghia told the Saigon Times Daily that the lending rate would fall substantially this year.

Improving liquidity at small credit institutions is the basis to revise down lending rates soon, he said.

But aaccording to a commercial joint stock bank's leader in Hanoi, the signs of recently cooling down interest rates in the interbank market recently was not due to the banks' liquidity has having been improved but because large banks did not lend to small banks for the fear of risks.

The bank leader added during that in the past time, especially in the post-Tet period, the market saw phenomenon of deposit interest rate caps breach again.

"Owing to weak liquidity, so they have to raise capital exceeding the allowable deposit interest rate ceiling of 14 percent per year, thus the lending interest rate still remains at 18-22 percent per year" the leader explained.

Last week, the Prime Minister asked the central bank to create a roadmap for the interest rate cut scheme to submit to the government within the first quarter of this year.

The State Bank of Vietnam (SBV) has posted a net-withdrawal of VND112 trillion ($5.38 billion) in the last two weeks via open market operations (OMOs).

The SBV injected VND13.64 trillion at the lending rate of 14 percent with 7-day and 14-day terms, while it withdrew about VND69 trillion, including VND65 trillion for the pre-Tet period and about VND4 trillion for the first week of the post-Tet, via OMOs last week.

As of February 8, the overnight interbank interest rate was at 13.83 percent, while the interbank rate for 6-month term was at 15.16 percent.
 
Coastal city lacks facilities to woo investors

Ba Ria-Vung Tau Province has yet to develop infrastructure and policy to facilitate future Japanese investments in the province’s supporting industries, an official said.

According to director Tran Thi Huong of Ba Ria-Vung Tau’s industry and trade department admitted the province had difficulties in building preferential policies and developing infrastructure to welcome Japanese investors.

Since late 2011, the province has welcomed several business missions from Japan, Huong said. It is expected that 2 more Japanese missions including some 50 enterprises will come to study the investment environment in mechanics and electronics this February.

The province hoped to complete infrastructure development by the end of 2012 to satisfy investors’ needs.

“Most Japanese businesses come and seek ready-built workshops to promptly start production, meaning the province must have available premises to lease out to them, but now infrastructure is not ready due to the confusion about how to properly develop infrastructure to meet their requirements,” said Huong.

Also, Ba Ria-Vung Tau has not created preferential policies to attract investors. Tax exemption and reduction have not been clarified, she said.

“Within this week, the department will submit to the provincial government a draft scheme on establishing an intensive engineering industrial zone for Japanese investors. Location and expenditures for this industrial zone are under consideration,” Huong said.

Most Japanese businesses that show interest in the province are small and medium-sized, with some of them employing less than 50 laborers.

But these businesses apply advanced machinery and production technology to create high value-added products, components and machine parts.

Vietnam’s retail market attractiveness drops: report

Ho Chi Minh City has decided to start its two-month Impressive Vietnam Grand Sale 2010 campaign in November since its own month-long promotional program was kicked off early this monthVietnam’s retail market has been ranked at No.23 in the latest A.T Kearney's market retail ranking, continuing its downward trend since it topped A.T Kearney's market retail ranking in 2008, according to Dau Tu Chung Khoan newspaper.

Currently, major barriers include costly space rental, about $94 per square meter in central business areas and $48 per square meter in suburbs, together with unfavorable infrastructure and underdeveloped distribution systems.

However, young population along with rapid urbanization and increased personal income would attract plenty of domestic and foreign retailers, said A.T. Kearney Consultancy Group’s report.

According to the General Statistical Office of Vietnam, there are around 4.3 million people in the age range of 15-65 years old.

The number of households of annual average income of above $5,000 is also on the rise, which makes Vietnam an attractive destination, said the report.

Colliers' recent survey that was conducted in Hanoi indicated female of between 17-45 years old accounted for 70% of consumers. Major products that are popular among this group include shoes, perfume, clothing and entertainment.

What is noteworthy is customers of between 26-35 years old with stable jobs and high income tend to shop at commercial centers.

In the meantime, customers of above 46 years old appear to afford costly luxurious items.

In recent years, retail market supply has continuously hiked thanks to the potential domestic market.

Yet, given the gloomy local and global economic weather, consumers tend to tighten their belts.

Retailers would now be keen on improve their current business rather than expand further making competition even tougher.

Despite macro uncertainties such as high inflation and lower consumer spending, foreign retailers still want to enter the Vietnamese retail market.

E-Mart, South Korea’s top discount store chain, last July made inroads in the local market in a joint venture with Binh Duong-based U&I Group to set up a supermarket chain with a total investment of US$1 billion.

Meanwhile, AEON Co Ltd (Japan) retail group and its Jusco supermarket chain plans to enter the Vietnamese market by 2013. It plans to make Vietnam its fourth largest foreign market after China, Thailand and Malaysia.

Japanese convenience store operator Ministop, a member of AEON Group, last year also signed a strategic cooperation agreement with G7 Service and Trading Joint Stock Company (G7Mart), a member of Vietnam’s Trung Nguyen Group, to open hundreds of stores in Vietnam.

Time ticks on $50m site

Re-design issues continue to hold back construction of  VinaCapital’s $50 million Times Square mixed-use project in Hanoi.

But, the developer said work would get underway shortly. The project – a joint venture between VinaCapital, with 65 per cent, and Thang Long GTC – involves the building of a Grade A office tower with a proposed 20,000 square metres and a 300-room, five-star hotel with high-end retail units.

However, after ground was broken for the project in May 2008, the 4-hectare project in Pham Hung street ground to a halt. David Blackhall, deputy managing director of VinaCapital Real Estate, told VIR the last 12 months had seen significant changes in the real estate market and this had required the joint venture company to modify some of the development parameters. This was done to ensure the end product would meet the needs of tenants and investment partners.

“The Times Square project is proposing to secure large commercial end-users this year with the view to commence construction at the same time,” Blackhall said.

Another source from VinaProjects, an affiliate of VinaCapital which is now managing Times Square Hanoi, told VIR that in July 2009 the Ministry of Construction distributed Circular 29/2009/TT-BXD on the adjustment of some articles on the “Regulation on architecture and construction management in areas around the National Convention Centre in My Dinh area” issued in 2007.

Circular 29/2009/TT-BXD further detailed the scale, height limitations and functions of a number of projects in the area, including Times Square Hanoi. This meant the investor had to change the design, as well as re-submit an application for a construction licence from the Hanoi Construction Department.

The VinaProjects source predicted the project could be re-started at the end of this year, when all necessary procedures are finished. “Discussions are underway with potential operators and co-investors for the retail, office, hotel and serviced apartment parcels,” the developer said.

In its strategy to the next six months from October 2011, VinaCapital aimed to obtain concept design approval, seek a buyer for the serviced apartments and the hotel land as well as an operator and investor for the retail parcel.

It also planned to commence basic pre-construction site works within the above period.

According to the VinaCapital report, the current net asset value of this stood at $34 million with the target internal rate of return on investment being 29 per cent.

Vietnam to focus on quality, effective FDI projects  

Even though Vietnam has opened its trade policy and improved on its investment environment, particularly in attracting more Foreign Direct Investment, some believe that the country has still to do much towards attracting more FDI inflow as well as maximise its benefits.

It cannot be denied that FDI is important for achieving targets in socio-economic growth. During 1999-2000, FDI accounted for 30 per cent of the total investment capital, 16 per cent during 2001-2005 and 28 per cent during 2006-2011.

The FDI contribution to the GDP was 14.5 per cent in 2005 and 20 per cent in 2010, when it added US$3.1 billion to the state budget. The FDI sector also contributed to about 40 per cent towards industrial output.

FDI has shaped many new business sectors in Vietnam like electronics, informatics, oil refineries and petrochemicals by using innovative modern technologies. It has also helped build a human resource of tens of thousands of managers, engineers and highly-skilled workers.

The sector has contributed to the growth of such urban areas like Phu My Hung, Nam Thang Long and many five-star luxury hotels in the city, besides contributing to the fundamental changes in modes of production, distribution and consumption, and the lifestyles of so many Vietnamese people, bringing them closer to world standards.

However, many FDI have also had investment licence revoked, after they were found to be taking advantage of local preferential policies and not implementing projects in time.

Slow FDI disbursement can be attributed to several reasons such as the global economic crisis, slow site clearance or cumbersome administrative procedures.

Nonetheless, by the end of 2011, FDI projects created more than 2.3 million direct jobs and millions of indirect jobs.

FDI has been playing an important role and having a large impact on the growth of Vietnam’s economy in many aspects.

It is an important additional source of funding for investments and development, helps raise industrial production capacity and boosts technology transfer.

FDI also contribute significantly to the state budget, raise import-export value and sets macro balances; improves public administrative reforms and brings about transparency in the country’s investment environment, helping Vietnam to have a greater integration in the global economy.

When Vietnam first opened its door to FDI, it cared more about capital than in quality and socio-economic efficiency. Thus, many small-scale projects worth less than $1 million each were licensed. Due to the limited number of FDI projects at that time, allocation of land for projects was easy.

Nowadays, as the economy has made a significant headway, the assessment towards FDI should change. Quality and efficiency should be the most important measures for judgment, based on which FDI must meet expectations.

The Foreign Investment Department has proposed guidelines for FDI policies including quality and efficiency of FDI projects that need to be assessed so as to suit the socio-economic development strategy of the nation, locality and industry.

A representative of the department said that it is vital that FDI in the new period prioritise hi-tech industries and modern services which use innovative technologies.

According to Dr. Nguyen Mai, former Deputy Chairman of the State Committee for Cooperation and Investment, in order to attract more FDI capital, government needs to improve the legal framework related to FDI and reform state environment management systems both at the central and local levels.

More and more FDI continue to be pour into the country and Vietnam needs the capital to ensure its own economic growth. FDI are valuable assets for Vietnam and it must be smarter in receiving international funds effectively and develop its growth sustainably.

Phu Yen Province breaks ground for Tuy Hoa Civil Airport  

The Southern Airports Corporation along with the People’s Committee of Phu Yen Province held a breaking ground ceremony for the new Tuy Hoa Civil Airport project.

Dinh La Thang, Minister of Transport, and Dao Tan Loc, secretary of the provincial Party Committee attended the ceremony and called for the project to start immediately.

All sections of the airport project will be carried out simultaneously, such as the passenger terminal, parking hangers for three A320 and A321 aircraft, a drainage system, a lighting system and other related features of an airport, at a total investment of VND353 billion.

The passenger terminal will cover 3,800 square metres, and will be built to meet 4C grade standards set by the International Civil Aviation Organisation.

Tuy Hoa Civil Airport has been designed to serve 555,000 passengers per year, and cope with 300 passengers per hour at peak time.

By 2022 the airport will increase its capacity to welcome 850,000 passengers per year.

Winter-spring rice crop planted out
 
Farmers in the south have completed planting the winter-spring rice crop while the task is continuing in other regions, the Ministry of Agriculture and Rural Development reported.

In the Cuu Long (Mekong) Delta, they have totally planted 1.56 million hectares.

Further east, planting has been completed on 122,000ha, and the crop is reportedly very healthy.

The last flood season in Cuu Long Delta saw historic high flooding, depositing more silt in paddy fields and destroying rice pests, enabling a healthy crop now, according to MARD.

The southern region also has favourable weather and plenty of water for irrigation, according to MARD's Plant Cultivation Department.

Nguyen Tri Ngoc, head of the department, said his department is monitoring the crop in coastal south-central and Tay Nguyen regions, and would also keep watch over the drought and salt water intrusion likely to occur at the end of the crop.

It would work with the agriculture departments in the two regions to draft plans to prevent diseases and cope with the water shortage and salt water intrusion, he said.

In other places, the planting is being completed rapidly. In the coastal south-central region and Tay Nguyen (Central Highlands), 244,000ha have been planted, or 98 per cent of the targeted area.

In the north-central region, farmers have planted 170,000ha, or 50 per cent of the planned area.

The work is continuing, mostly in Thanh Hoa, Nghe An, and Ha Tinh.

The severe cold spells recently have affected the crop in the region, even destroying it in some areas. In Ha Tinh, for instance, 11,700ha have been affected.

Farmers in the north have planted more than 800,000ha and are expected to finish by March 5.

Local authorities have advised farmers to cover the newly cultivated fields with plastic to protect the plants from cold.

On Thursday the northern region completed releasing water from reservoirs for a second time for this paddy crop, according to the Irrigation Department.

Phu Tho Province saw 100 per cent of its lands irrigated, while in Ha Nam, Hung Yen, Hai Duong, Thai Binh, and Nam Dinh the number is 90 per cent.

Meanwhile, Minister of Agriculture and Rural Development Cao Duc Phat said the ministry would continue to research and create new rice varieties until 2016.

It is now in the middle of eight projects to create pure and hybrid strains at a cost of VND30 billion (US$1.43 million), he said.

The projects aim to create strains that yield 15-20 per cent more than existing varieties, they are of high quality and highly resistant to diseases, unfavourable farming conditions, and suitable for planting in various ecological zones, he said.

For the Cuu Long Delta, the country's rice granary, the ministry will focus on creating new strains for exports, he said.

They would yield more than 6.5 tonnes per hectare and have a grain length of more than 7mm and amylose content – one of the main criteria for grain quality - of around 20 per cent, meeting export standards, he said.

Breeders of brackish shrimp urged to improve controls

The Minister of Agriculture and Rural Development (MARD) has asked authorities in the Cuu Long (Mekong) Delta to improve management of brackish-shrimp breeding in an aim to restore quality.

Speaking at a conference on Wednesday, Minister Cao Duc Phat asked agencies to continue to maintain tight control over breeding, processing and harvesting as well as exports.

He said that provinces should also pay more attention to the overuse of chemicals. Breeders use chemicals to prevent shrimp disease.

He said that managers and agencies must closely oversee aquatic-feed production facilities and deal with violations promptly.

Local authorities should review and develop specialised farming areas with an aim for sustainable development.

Last year, there were 656,425 ha devoted to breeding brackish shrimp, with an output of 495,657 tonnes, an increase of 5.48 per cent in output compared to 2010.

Of that amount, Cuu Long (Mekong) Delta provinces had 602,416 ha, accounting for 91.8 per cent of the country, according to MARD.

Last year was also a difficult year for Vietnamese shrimp exporters as some markets complained about surplus antibiotic amounts, especially in Japan.

India, Viet Nam to tackle weevil problem

India and Viet Nam will jointly tackle the problem of weevil contamination of animal feed imported from India after more consignments are found to contain the destructive beetle in the last few months.

This was agreed at a meeting between officials and industry representatives from the two sides held in HCM City on Thursday.

Nguyen Van Nga, head of Zone 2 Plant Quarantine Inspection Department, said since the middle of December two consignments of 7,645 tonnes of feed imported from India through HCM City ports had to be returned because they contained the beetle, an invasive and dangerous species for Viet Nam.

Earlier last year around 23,000 tonnes had failed to meet quarantine requirements and also had to be returned, he said.

Following repeated non-compliance by the India side, the Ministry of Agriculture and Rural Development wrote last December to the Indian Minister of Agriculture and Food Processing Industries, warning that Viet Nam could apply more stringent measures like import bans on some agricultural products from that country until the weevil risk was addressed.

Nga said that under Vietnamese regulations, if a consignment was found to contain live weevils, it had to be re-exported. In case of other insects and dead weevils, it had to be fumigated before entry into the country, he said.

Dr JPSingh, deputy director of the National Plant Quarantine Station, said India had revised its National Standard for Phytosanitary Measures with relation to methyl bromide fumigation.

It had taken tough action, including suspension of nine fumigation agencies for fumigation failure, he said.

Sarvesh Rai, director of the Plant Protection Department under the Indian Ministry of Agriculture, who led the Indian delegation, arrived in Viet Nam last Sunday to discuss the problem.

On Wednesday his department signed an agreement with the Vietnamese side for co-operation in inspecting consignments, issuing plant quarantine certificates, and others.

The visiting delegation inspected maize consignments from India that have been detained in Hai Phong and HCM City's Cat Lai ports because of the presence of insects and documentation issues.

The Indian side promised to fulfil all of Viet Nam's requirements.

Abhay Thakur, the Indian consul in HCM City, said Vietnamese firms should work with the consulate general or business groupings like the Solvent Extractors' Association of India to find reliable business partners who would fully comply with Vietnamese regulations.

Import of animal feed from India reached US$529 million last year, an increase of 28 per cent over 2010, he said.

The figure was expected to be lower this year due to the problems, he added.

Mekong Delta farmers attract tourists with ecotourism

While many tourism hotspots around Vietnam are ripping off foreign tourists and turning them away, a handful of farmers in the Mekong Delta are winning the backpackers’ trust with their gardens designed as an original and interesting ecotourism area.

Only a few of the hundreds of tourists, both foreign and domestic ones, visiting the Ba Duc ancient house at Dong Hoa Hiep Commune, Cai Be District of Tien Giang Province every day know that 12 years ago the house could not hold a visitor’s interest for more than fifteen minutes.

Prior to 2000, Phan Van Duc and his six family members entered into an agreement with the Cai Be travel agency to receive VND2,000 for every tourist the tour organizer brought to his ancient house for an excursion.

The ancient-house tour was so boring that few tourists returned to his house for the second time, he said.

“I know I could do better on my own, if tourists were to participate in more activities when visiting my house, rather than just going on a mere sightseeing trip.”

In 2000, Duc had his 2.5-hectare orchard transformed into an ecology garden. At the garden center, he dug a pond and raised fish for tourists interested on fishing. To meet the tourists’ lodging needs, he built many rooms around, fully equipped with modern facilities.

On top of that, his wife, besides cooking meals for the tourists, began to teach them how to cook local specialties.

At present, Duc welcomes around 100 tourists every day, most of whom are foreign backpackers.

Entrance admission costs VND5,000 each, and fee for a homestay night is US$22 a person, Duc said, adding the money from doing tourism had enabled him to recoup his investment, and begin to reap profits.

Duc said he collected feedback from visitors to better his services.

“Some foreign tourists have returned three to four times because they are interested in my family’s form of tourism,” he proudly said.

Similarly, Le Hoang Vinh of Binh Hoa Phuoc isle, Long Ho District of Vinh Long Province, renovated his 2.2-hectare fish pond into an ecotourism place in 2004.

Vinh succeeded in buying and raising some African ostriches, making the ostrich-riding services an original feature on his farm.

He also brought exotic birds and animals to the farm to pique the tourists’ interest.

“If your garden is just like all other gardens and does not have anything special, visitors will feel bored and leave soon,” Vinh, now CEO of Vinh Sang Co Ltd, concluded.

From the initial investment of VND20 billion ($960,000), Vinh is now firmly on the highway to success, with some 300 tourists visiting his Vinh Sang tourism area a day.

Vinh said he was considering joining hands with 20 neighboring farmers to expand his tourism model.

“We will link with other households on the isle to create a community tourism area, which will benefit all of the residents on the isle,” Vinh shared.

Meanwhile, Huynh Thanh Bach, a farmer in Long My Commune, Long Ho District of Vinh Long Province, chose to make his 4-hectare ecotourism garden stand out from the rest by operating a floating restaurant boat worth more than $1.5 billion.

“We need something new, strange, and unique to attract tourists,” Bach said.

Vung Tau seaports receive few vessels despite huge investments

Despite a number of modern container seaports with investments worth several billions of US dollars established in its waters, the Cai Mep – Thi Vai area in Ba Ria – Vung Tau Province has docked a modest number of container vessels.

This grim reality runs counter to the investors’ high expectations of developing Ba Ria – Vung Tau into an urban port with high container-loading capacity.

Ports have been built in large quantities, but the infrastructure serving their operations remains undeveloped, experts said.

According to the Vietnam Port Association (VPA), the total container-handling capacity of the ports in Ba Ria – Vung Tau is as much as 8 million twenty-foot equivalent unit (TEU), while the real demand is no more than 5 million TEU.

In spite of the surplus capacity, the province is set to welcome several new ports in 2012, and 2013, VPA said.

According to the provincial Department of Transport, Ba Ria – Vung Tau is now home to 53 seaports, 23 of which are already operational, while those remaining will soon reach completion.

The department also said the total registered investment in the seaport system in the province by the end of last year was more than US$7 billion, while disbursement was worth $2 billion.

Few vessels come to the ports

In contrast to the high density of deep-water seaports in the area, and the busy atmosphere at the construction sites of the new ports, a gloomy air can be found at the ports most of the time.

On the road leading to the two major deep-water ports, Tan Cang – Cai Mep and CMIT, there are hardly any container trucks loading cargo in and out the ports. There are no vessels loading or unloading goods at the ports’ cranes, either.

While the container ports in Ho Chi Minh City are always packed with cargo ships and piles of containers, those in Cai Mep – Thi Vai only have several containers scattered around.

The container loading machines in the ports have also constantly been left unused, with ships coming to the ports for loading only two or three days a week, a man working for a deep-water port in Cai Mep – Thi Vai said.

The director of a container seaport said the fact that ports do not have many containers to handle not only reduced the ports’ attractiveness to shipping companies, but also forced them to cut fees to appeal to vessels, which would understandably result in losses.

Industry insiders said another reason for the unattractiveness of the ports is that the traffic system and logistics services supporting the ports have been underdeveloped.

National route No 51, the main road connecting the Cai Mep – Thi Vai area with the main traffic system, has deteriorated, with its surface full of cracks and potholes.

Meanwhile, route no 956 connecting national route 51 and other major seaports has yet to be completed. Even worse, the project to build roads linking the ports is still no more than a blueprint.

“This is because we have failed to finish the site clearance and compensation tasks due to a capital shortage,” Luong Anh Tuan, deputy director of the provincial Department of Transport, explained.

Since the road traffic infrastructure is incomplete, ship owners now have to use barges to transport their containers to the ports, according to VPA.

“This means of transportation is ineffective as it increases the transporting fee for the container owners,” said VPA general secretary Ho Kim Lan.

“Ba Ria – Vung Tau has only completed construction on the seaports, but totally neglected the completion of road traffic and logistics services.”

Vietnam to offer VAT refund for foreign tourists

The Vietnamese Government has agreed on VAT refund for foreign tourists.

Foreign tourists to Vietnam who depart via Noi Bai and Tan Son Nhat international airports in Hanoi and HCM City will get a VAT refund on the goods purchased in Vietnam.

All receipts worth at least VND2 million or more in total, if they receive from the same shop on the same day, will be refunded.

The pilot scheme will run from July 1, 2012 to June 30, 2014.

Salted ginger exported to Japan and US

Thanh Lan, a Vietnamese company in the Central Highlands, has exported thousands of tonnes of salted ginger to Japan and the US over the years.

Since the beginning of this year, the company has shipped ten containers of the product weighing over 200 tonnes to these two markets.

Currently, the firm has already signed a contract to export more than 400 tonnes to the Japanese market. It has invested an additional VND1 billion to build a ginger processing factory to meet the increasing demand and generate jobs for local ethnic minority people.