Banks finally begin to trim interest rates

Four weeks after the deposit interest rate ceiling was cut to 13 per cent from 14 per cent, it was cut by another percentage point last Wednesday to 12 per cent.

Just like last time, banks have started to announce cuts in lending rates too. The Bank for Investment and Development cut then by 1.5-2.5 per cent to 14.5 per cent for short-term loans and 13 – 14 per cent for priority sectors like agriculture and exports.

The HSBC reduced mortgage rates by a percentage point, with the floor rate falling to 17 per cent.

Eximbank Viet Nam has earmarked VND6 trillion (US$290 million) for priority customers such as exporters, manufacturers, small- and medium-sized enterprises, household businesses, and low-income earners to buy houses at an interest rate of 16.5 per cent.

Techcombank will lend VND4 trillion ($192.3 million) to such customers at 15 per cent.

However, rates generally remain high since the cheaper loans are limited either by the amounts allocated or categories of customers.

Sacombank for example earmarked VND1 trillion for loans of up to 12 months for the farming, fishing and forestry sectors at a mere 12 per cent in the first month of the term, then the rates could go up to 19.5 per cent.

A local newspaper quoted Tran Quoc Manh, vice chairman of the HCM City Handicraft and Wood Industry Association, as saying that the one percentage point cut was of little benefit in the context that tens of thousands of enterprises were going bankrupt because of the high interest rates.

There are mutters that banks are the only beneficiaries of the interest rate regime. But it is a fact that a number of banks still illegally offer deposit interest rates of more than the regulated 12 per cent, which pushes up their cost.

There are suggestions that the State Bank of Viet Nam should also cap lending interest rates to ensure that not only banks but also customers benefit.

On their part, banks face a major risk of bad debts since too many businesses are floundering while they have large volumes of products in stock.

US new technical barrier hinders local honey exports

Many Central Highlands-based companies exporting honey to the US have, over the last few months, been affected by the latter’s recent decision to apply a new limit on the carbenzamin content in honey products shipped to the country.

According to many exporters, carbenzamin is a chemical contained in the pesticide used to protect rubber and cashew trees, which provide a large source of honey for the local bee-raising sector, against moulds.

The new limit on the chemical is in fact a technical barrier, which has adversely affected the honey harvest of farmers, they said.

The US currently accounts for nearly 90 percent of their total honey export turnovers.

Only around 1,000 tons of honey has been shipped to the US so far this year, while the figures in previous years were between 4,000 and 5,000 tons, a sales representative of the Dak Lak-based Dakhoney JSC said.

Local exporters have built up an unsold inventory of more than 2,000 tons.

VN is world’s biggest woodchip exporter in 2011

Vietnam has become the world's largest woodchip exporter with 5.4 million tons exported in 2011, up 5 million tons compared to the humble start in 2001, according to Vietnam Pulp and Paper Association (VPPA).

According to experts in the industry, the expansion of Chinese pulp capacity is the main cause for the increasing number of hardwood plantations and processing facilities for woodchips in Vietnam.

However, woodchip export is not the main target of Vietnam since it is a form of exporting raw materials, having a lower export added values. The better options are exporting ingredients to produce pulp and paper.

$3.7 billion spent on animal feed imports

Le Ba Lich, chairman of Vietnam Animal Feed Association, said the country imported 8.9 million tons of animal feed with a value of approximately $ 3.7 billion in 2011.

The imported volume accounted for over 62 percent of total volumes of raw materials used to produce 14.3 million tons of animal feed for local market in the past year.

In addition to the imports of 4.8 million tons of protein-rich raw materials, Vietnam also had to import 3.8 million tons of energy-rich materials that could be produced locally including 870,000 tons of corn, 570,000 tons of bran, and 2.3 million tons of wheat.

Lich said the industry had to import too much raw materials since local land planning have yet zoned off land areas for the farming of such materials.

FPT to be Apple’s official distributor in Vietnam

The Corporation for Financing and Promoting Technology, better known was FPT, is completing final procedures to become the official distributor of the American Apple Inc in Vietnam.

As expected, the latter will recognize the former as the first tier distributor - Apple's premium reseller, newswire Vnexpress quoted Truong Dinh Anh, FPT general director, as saying at a recent shareholders’ meeting.

After being recognized by Apple, FPT will open two first official Apple stores in the downtown of Ho Chi Minh City in the second quarter of this year.

The first one will be located at the trade center of Vincom and the second will be at an independent building on Le Loi Street.

The representative of FPT has also committed to Apple to open about 10 such stores from now to the year-end.

"As the official distributor of Apple products, we hope we can officially distribute the iPhone in Vietnam," said Anh.

The FPT general director also said that this is a turning point for the distribution operations of this company. According to Vietnamese network operators, there are currently about 800,000 activated iPhone in Vietnam.

Viettel helps connect Cambodia

Military-run telecom giant Viettel said it has provided a data transmission line connecting the Trans-Eurasia Information Network (TEIN3), the pan Asian Research and Education Network and the Institute of Technology of Cambodia (ITC).

The network, to which Cambodia is the latest connection, brought the number of Asian countries benefiting from the high speed network to 17, the telecom provider said.

The new link initially connects the ITC in Phnom Penh as well as potentially connecting Cambodia 's 35,000 researchers with scientists around the world.

The move will improve the quality and quantity of research conducted in Cambodia 's higher education institutes and research centres, Viettel said.

The development of Cambodia 's national research and education network (CamREN) will be boosted by its link to TEIN3, as it works to strengthen national and international research collaboration.

To achieve the connection, CamREN worked closely with VinaREN, the national research and education network organisation of neighbouring Vietnam . VinaREN helps arrange a dedicated link from its network in Hanoi to ITC and provides access to its existing TEIN3 connection.

The successful connection to TEIN3 was driven by the Network Startup Resource Centre (NSRC) based at the University of Oregon, which worked with CamREN technicians to provide the equipment and technical assistance at the ITC campus to complete the connection.

Report on Vietnam’s economic reform announced

A survey, “Changing Attitudes toward Market and State 2011” (CAMS 2011) was reported at a workshop in Hanoi on April 13.

Jointly conducted by the Vietnam Chamber of Commerce and Industry (VCCI), the World Bank (WB) and the Irish Embassy in Vietnam , the survey recorded important indexes to help Vietnamese policymakers, research and consultancy agencies to develop suitable economic and administrative reforms in Vietnam in future.

The majority of Vietnamese people surveyed highly valued the market economic model in the country and advocated the reform process that Vietnam is implementing, said Chairman of VCCI Vu Tien Loc.

Up to 87 percent of interviewees said that the market economic model brings more advantages than any other economic models. Meanwhile, only 7 percent said they prefer the State economic model in Vietnam .

This rate showed that most people from all walks support the change of the country’s economic system to a market economy model.

The survey, however, found out that outsiders did not appreciate the marketability of Vietnam ’s economy at present.

In addition, the survey also emphasised the transparency of Vietnam ’s economy.

According to Dau Anh Tuan, Deputy Head of Legal Department of VCCI, Vietnam overcame the challenges of the global crisis but has fallen into downturn and slow growth. This shows that Vietnam has not taken advantage of opportunities to reform its economy as expected.

Vietnam refinery needs $2 bln investment to up capacity: report

Vietnam's only oil refinery, Dung Quat, needs more than US$2 billion of investment to expand its processing capacity by nearly a third to 192,000 barrels per day (bpd), or 9.5 million tonnes per year, a local newspaper reported on Friday.

The expansion would also require a new crude processing unit for grades from the Middle East or Venezuela, the Dau Tu newspaper said, citing a report from Japanese adviser JGC Corp.

The report put $2.2-billion Dung Quat's current capacity at 149,000 bpd, already above initial output of 130,500 bpd. Dung Quat refines mainly light sweet Bach Ho crude.

JGC Corp has been hired to provide a feasibility study on the refinery's expansion as Vietnam aims to increase its output of domestically refined oil products to cut reliance on imports. Dung Quat now meets a third of domestic demand.

Last month, Dung Quat's operator said the refiner was seeking to sell a 49 percent stake to foreign investors to raise funds and boost its capacity by more than half.

Oil refinery eyes $2 billion upgrade, production boost

It would cost the Binh Son Refining and Petrochemical Co Ltd US$2 billion to expand production at the Dung Quat Oil Refinery by 43,000 oil barrels per day, according to a feasibility study conducted by Japanese consultant JGC.

Under the study, the refinery could raise its capacity to 192,000 oil barrels per day, equivalent to 9.5 million tonnes of crude oil per year, instead of the current 149,000-barrel production scale.

The company also plans to invest in an input crude oil processing workshop to diversify input oil sources such as oil imported from the Middle East and Venezuela.

PM urges timely construction of transportation projects in Ha Noi

Prime Minister Nguyen Tan Dung has urged that construction on the second terminal at the Noi Bai International Airport, the Nhat Tan-Noi Bai expressway and the Nhat Tan Bridge complete by 2015.

At an urban planning working session with members of the capital People's Committee on Saturday, Dung said special attention should be given to the 11.7km road connecting the city's Nhat Tan area with the airport, as it would give visitors their first impression of Ha Noi.

People's Committee Chairman Nguyen The Thao said the city had completed planning for five satellite towns.

He called on the Government to allow specific mechanisms to attract investment to the Nhat Tan-Noi Bai axis.

Dung said the axis would be a highlight of the region, stressing that construction on the Nhat Tan-Noi Bai road would go together with that on the Nhat Tan Bridge and the new Noi Bai airport terminal.

The PM requested the city to attract investors alongside effectively managing its zoning and development activities.

Market economy best for nation, says poll

The majority of Vietnamese people prefer a market economy to an alternative economic system, according a survey released yesterday in Ha Noi.

The poll was conducted from August to October last year by the Viet Nam Chamber of Commerce and Industry and the World Bank.

The changing attitudes to the market and the State survey received responses from more than 1,000 respondents with 39 per cent coming from the State sector and 41 per cent from the corporate sector, poll organisers said.

Only 7 per cent of respondents preferred a State-led economy, while 6 per cent regarded the economic model as unimportant, the survey found.

"However, there is some confusion about whether Viet Nam has really become a market economy or still remains a State-led economy," said Dau Anh Tuan, from the survey's research team.

He said only 25 per cent of respondents agreed that Viet Nam was a full market economy, while 22 per cent thought Viet Nam remained basically a State-led economy.

"Viet Nam needs more time to convince more people fully that we are now a market economy," Tuan said.

The survey also found that a significant number of people were dissatisfied with the speed of economic transition over the last five years. It found that 28 per cent viewed the reform process as slow or extremely slow, while 26 thought the process neither fast nor slow.

Viet Nam joined the WTO six years ago and it has signed up to a number of multilateral economic agreements. Under these accords, the country was requested and expected to reform aggressively and quickly towards a more market-oriented economy.

However, since its joining, the world was plunged into an economic crisis, which saw food and energy prices soar. Viet Nam fell into recession as a result, the survey found.

Surprisingly, the survey found that 68 per cent of respondents thought the State should intervene in the market to stabilise the price of essential goods, such as electricity, petroleum, the exchange rate, the gold price and the cost of land, while just 28 per cent thought the market should determine prices.

Senior economist Pham Chi Lan attributed the surprising finding to the monopoly and dominance of State-owned enterprises when it came to essential goods and services.

Lan said that although State intervention to stabilise prices sounded attractive, in the long term it would be counterproductive.

The survey also found that more than half of respondents felt existing price-stabilisation programmes, implemented in a number of provinces, had been ineffective, while just 36 per cent thought they had been worthwhile.

Price-stabilisation schemes employed by the Government over the last few years have involved providing interest-free or low-interest loans to companies so that they can offer essential items at lower-than-market prices.

Lan is not convinced that State intervention is the best policy.

"Is State intervention an effective and sustainable solution to price volatility? The jury is out on this one," Lan said.

Developer breaks ground on new resort project

The Con Bap Ecological Tourism Co Ltd has broken ground on the Con Bap Ecological Tourism Resort in Hoi An City's Cam Nam Commune.

Occupying an area of over 24ha, the VND980 billion (US$46.67 million) resort will include recreation area and five-star and three-star hotels along with a culture preservation centre, entertainment centre, commerce and services centre, ASEAN culture and meal centre and a corn field.

The project is expected to welcome visitors in the third quarter of 2015.-

International trade fair opens doors in capital

VietPo 2012's international exhibition and trade fair on commodities, handicrafts, agricultural products and processed food kicked off on Thursday in the capital.

"VietPo 2012 will provide firms with good opportunities to introduce new products, share business experience as well as promote business co-operation between enterprises," said Pham Van Sinh, one of the event's organisers.

VietPo 2012, jointly hosted by the Viet Nam Co-operative Alliance (VCA) and the Ha Noi Business Association (HBA), had the attendance of nearly 500 stalls.

Noticeably, a quarter of the stalls are run by enterprises from Asian countries such as Korea, China, Singapore, Thailand, Malaysia, Palestine and Cambodia. The remaining stalls will belong to local enterprises.

"We hope the fair can help us introduce our services and products in fashion, handicrafts and tourism," said a representative of Victoria Investment Trade and Tourism company. "This is a good opportunity for us to strengthen our partnership co-operation."

Additionally, the fair will showcase wooden furniture, electronics, information technology, packing and printing equipment, agricultural machinery and textiles and garments.

Conferences and seminars on trade promotion will also be held, as will training in import and export.

The expo, which is part of the National Trade Promotion Programme, ends on Sunday.

Sai Gon Tex promotes VN products

Nearly 300 businesses from 18 countries and territories are showcasing their products and services at the 22nd international fair on "Garments and Textiles Equipment and Accessories" (Sai Gon Tex 2012) which opened in HCM City on Wednesday.

The four-day fair has been organised by the State-owned Viet Nam National Textiles and Garments Group (Vinatex), in association with the VCCI Exhibition Service Company and the Hong Kong Exhibition JSC.

Sai Gon Tex 2012 is seen as a great opportunity for garment and textiles businesses both in Viet Nam and overseas to exchange information, seek out new sources of materials and expand their operations.

Japan group builds materials plant

LIXIL Corporation, a global leader in housing equipment and building materials, was licensed earlier this week by the southern province of Dong Nai to build a US$410 million plant.

Based at the Long Duc Industrial Zone, the factory aims to produce construction materials, office and housing equipment, and interior decoration items. The plant will be constructed this autumn.

LIXIL Corp's productivity is expected to rise by 10 per cent because the plant expects to export its products to Japan and other Asia-Pacific countries.-VNS

Chinamac Fair 2012 set to hit City

The 12th Chinese Machinery Fair in Viet Nam (Chinamac Fair 2012) will be held at HCM City's Sai Gon Exhibition and Convention Centre between July 25 and 28.

Organised by the Guangdong Great Future Exhibition Co Ltd, Chinamac Fair 2012 expects the participation of more than 250 domestic and foreign enterprises with 400 stalls.

The fair will showcase industrial products including engineering machines and equipment, construction equipment, hydraulic equipment, plastic equipment and machines as well as electric and pneumatic equipment.-

Yarn plant to be built in the north

Northern Quang Ninh Province on Wednesday granted an investment certificate to Hong Kong Texhong to build a yarn plant at the Hai Yen Industrial Zone in Mong Cai City.

The plant, worth US$300 million, will cover an area of nearly 400,000sq.m to include six workshops with a total annual capacity of 140,000 tonnes.

The project will be divided into three phases with the first stage running from now to March 2013, the second to October 2015 and the third to October 2017.

Design capacity for the first and second stages will be 92,750 tonnes of yarn per year, to reach 46,375 tonnes by the third stage.-

MobiFone offers news service

MobiFone will offer a newspaper-reading service via MMS (Multimedia Messaging Service) to its mobile subscribers.

Such a service will cover general news, sports, entertainment and economic news.

To use this service, subscribers will need internet connections, support and the ability to receive MMS messages.

S-Fone to shift to 3G technology

The Ministry of Information and Communications has allowed Saigon Postel (STP) to shift from CDMA to 3G technology.

The ministry also required STP to ensure the rights and interests of subscribers and implement measures to make sure their telecom network works well.-

Vinaphone sets subscriber target

Ho Duc Thang, deputy director of Vinaphone, said it targets 1 million 3G subscribers in 2012.

Vinaphone reported that it currently had more than 30 million cell phone subscribers, with the number of 3G subscribers having increased rapidly. This year, Vinaphone would further develop applications for 3G services, Thang said.-

Viettel offers more cell phone numbers

Viettel will provide its users with 1.3 million new mobile phone numbers starting with 096. Accordingly, the company has become the only provider owning multi-number networks in the local telecoms market.-

Province to host e-commerce fair

A second e-commerce fair will be conducted in the central coastal province of Khanh Hoa from June 8 to 10, titled ‘Technology Products and E-commerce'.

It is expected to include 40 pavilions, organised to raise awareness on e-commerce and generate an environment for business and consumer exchange. Businesses participating in the fair must have websites to provide information to consumers or provide e-services.-

MIC set to hold frequency auction

The Ministry of Information and Communications will submit a plan to the Prime Minister to select frequencies to be auctioned.

Accordingly, 4G licences will be sold off instead of joining in competition with 3G.

In March this year, the PM stipulated the auction and right transfer of radio frequencies to be effective by May 2012. Accordingly, telecoms companies in need of radio frequencies will have to join the auction instead of being granted free rights as before.-

Construction of Saigon 2 Bridge starts

Traffic jams at Ho Chi Minh City’s northeastern gateway are to ease with the Saigon 2 Bridge hitting top gear in 2014.

At the ground-breaking ceremony of the $72 million project bridge this week, developer Ho Chi Minh Infrastructure Investment’s director Le Vu Hoang pledged to put in extra hours to get the bridge ready to address the city’s traffic chaos.

Le Hoang Quan, Ho Chi Minh City People’s Committee chairman, said: “The bridge is one of the most important projects in the city. It will not only reduce traffic pressure on the current Saigon bridge, which is daily travelled by 40,000 vehicles, but also improve traffic from the city centre to the outskirts, including districts 2, 9 and Thu Duc.”

The Saigon 2 Bridge will be located at three kilometres from the current Saigon Bridge to the lower of the Saigon River, at 913 metres in length and 23.5m in width with four lanes. Currently, Ho Chi Minh Infrastructure Investment has not received land in District 2 and Binh Thanh district for the project’s construction, so the bridgehead in District 2 would be first developed.

After being completed, Saigon 2 Bridge will be connected to Dien Bien Phu street by a 350m road and also link with Hanoi Highway. The roads below the bridge will be adjusted to become suitable to the current Saigon bridge and the Ben Thanh-Suoi Tien railway viaduct.

At that time, Saigon 2 Bridge will be used for vehicles travelling from the city’s centre to Thu Duc district and the current Saigon Bridge will be used for vehicles from Thu Duc district to the city’s heart.
The project is conducted under the build-transfer model.

Vietnam attends trade fair in France

Can Tho City has three special products, including rice, seafood and tourism exhibited at the 2012 Nice international fair in the southern region of France for the first time.

The Vietnamese stall, covering an area of 40 square metres with two big-sized photos of Cai Rang floating market and Ha Long Bay, has attracted a lot of French and other international visitors who are interested in Nice-Can Tho tours.     

Over 1,000 businesses have taken part in the nine-day fair, showcasing a wide range of products, including famous hot dogs, cheese, and wine from France, Italy, Austria and Israel.

Tourism development in north-central region

The potential and orientations for tourism in the north-central region were discussed at a seminar in Hue City on April 15, aiming to promote tourism in the region and in the country as a whole.

Twenty-six reports presented at the seminar highlighted the tourism potential of this region, which has significant tangible and intangible cultural heritage as well as, revolutionary historical sites, natural landscape, divers eco-systems, islands and international borders to facilitate the exchange of goods.

However, the Vietnam National Administration of Tourism (VNAT) says the region's tourism products and services are not attractive enough to encourage visitors to extend their stays. The number of tourists using support services is low compared to other regions, accounting for only 25-30 percent for the whole country.

In the future, the tourism sector in north-central provinces should focus on increasing the quality of its services, developing trademarks for high-quality products, and improving material and technical facilities, in addition to promoting regional tourism in foreign countries through enhancing the connections between localities.

The National Tourism Year 2012 hosted by the central province of Thua Thien Hue aims to develop closer links between localities to create favourable conditions for the north-central region to boost its tourism development on par with its potential and strengths.

Vietnamese trade fair attracts Cambodian consumers

An agriculture and trade fair at the Khanh Binh border gate in the Mekong Delta province of An Giang has drawn 35,000 visitors, including a large number of Cambodian consumers.
 
As many as 120 stalls were put up by 85 businesses showcasing different kinds of agricultural machinery, food, household appliances and clothes.

The total sale revenue at the closing of the event on April 15 was estimated at nearly VND2 billion, double last year’s figure.

Danang expands IT park in central region

The authorities of Danang City on Thursday decided to expand the concentrated information technology (IT) park located in Hoa Vang District to 440 hectares as requested by the American investor, Rocky Lai & Associates Inc.

Vu Quang Hung, deputy director of the city’s Department of Construction, said at the meeting on Thursday that at first the park was planned to cover 131 hectares. However, under the latest decision of the city’s leaders, the project will be expanded by 209 hectares to the south, he said.

The city will also develop another IT park covering 50 hectares next to the huge concentrated park.

Rocky Saint Let Lai, president of Rocky Lai & Associates Inc., last year signed a cooperation agreement with Danang City’s chairman Van Huu Chien.

Under the agreement, Rocky Lai & Associates Inc. will lease the planned site for 50 years to develop facilities for the IT park in Hoa Vang District. Meanwhile, Danang City pledged to grant the land-use certificates to Rocky Lai as well as other enterprises investing in the park and offer investment incentives.

Rocky Lai & Associates Inc. at the time pledged to complete infrastructure for the first 60 hectares at the end of next year and the rest of 71 hectares in 2015.

Also at the meeting on Thursday, Danang City decided to downscale a golf course project invested by South Korea’s Daewoo in Da Phuoc international urban area from 18 holes to nine holes so that the land will be used for the second branch of the Danang Software Technology Center.
 
Vung Tau warns of maritime insecurity

Vung Tau Port Authority has issued a serious warning against maritime insecurity in the Ba Ria-Vung Tau waters, citing a couple of recent costly collisions.

An investigation by the port authority shows human error was the main cause of those accidents and that the ships involved did not comply with the International Regulations for Preventing Collisions at Sea 1972 (COLREG 72). Pilots failed to stick to speed limits or get on and off ships in a correct way, according to the investigation.

Le Van Chien, director of Vung Tau Port Authority, told the Daily that careless piloting had been identified as one of the causes of a recent accident that sank a container vessel in Ganh Rai Bay, Vung Tau. Pilots should be held responsible and punished in line with the Maritime Law if they cause ship collisions, he proposed.

Ganh Rai Bay is a vital gateway to ports in Ba Ria-Vung Tau, HCMC, Dong Nai, Binh Duong, Tien River and Cambodia. When an accident happens, the port authority will have no choice but to stop traffic around disaster zones, leaving a negative impact on sea transport and trading activities in the Southern Key Economic Zone.

Nguyen Van Kha, general director of Vietnam Salvage Corporation (VISAL), ascribed the recent vessel collisions in the south to the carelessness of captains and pilots. Having joined the rescue of the sunken Green Viship, Hoang Dat 36, Duc Tri and Truong Hai Star vessels, VISAL concluded that the captains of these ships were not as knowledgeable about the sea route in this area as expected.

Regarding the latest case involving Truong Hai Star, 21 containers had been towed ashore on Thursday morning, said Chien of Vung Tau Port Authority. Four containers have been unsealed and the autos inside are undamaged.

For fear of oil spill from the wrecked ship, rescuers on Thursday formed another floating ring at the wreckage scene. Related authorities are collecting evidence, interrogating crewmembers and decoding the black box of the Thai-flagged Krairatch Dignity ship to see what led to the collision.
 
Signed rice export deals reach 3.6 million tons

Companies in the country have in the year to date contracted to export 3.6 million tons of rice, up 600,000 tons compared to end-March, according to the Vietnam Food Association (VFA).

Vietnam’s key rice importers include China, the Philippines, Indonesia and Malaysia. In particular, China is emerging as a major market for this staple food since the volume of rice export contracts to China has been rising in recent times, said VFA.

The country in the first quarter exported more than one million tons of rice, down over 40% in both volume and value year-on-year. However, rice exports are getting back on track as the number of export contracts is picking up.

At present, rice traders in the Mekong Delta buy low-grade rice IR50404 at VND4,100-4,400 and VND4,900-5,300 a kilo for fresh and dried grain respectively. The price of commercial grain IR50404 ranges between VND6,700 and 6,900 a kilo.

VFA said some 89 member enterprises have bought more than 700,000 tons as part of a plan to stock up on one million tons of rice in this year’s winter-spring crop to prop up prices.

Supply chain development still choppy

Developing supply chains will provide a much-needed impetus for supporting industries to grow but there is a scant number of businesses involved in the supply chain development process in the country.

Speaking at a seminar held in HCMC on Thursday with sponsorship of the EU-Vietnam Mutrap III, Truong Thi Chi Binh, director of the Supporting Industry Enterprise Development Center (SIDEC) of the Institute for Industry Policy and Strategy (IPSI), said just 300 local manufacturers are joining supply chains.

The actual number might be bigger, Binh said, adding these producers only supply spare parts and accessories, instead of taking part in supply chains. There are only 50 firms able to supply auto makers while the respective figures in Thailand and Malaysia are 2,500 and 400 in 2010, according to the Vietnam Automobile Manufacturers Association (VAMA).

Most suppliers of manufacturers in the country are foreign-invested or Vietnam-foreign joint-venture firms. Among the parts suppliers of Honda Vietnam, local enterprises number 19 compared to the 59 owned by foreign investors, Binh said.

The apparel and textile sector, a high export earner, has a total of 3,700 businesses with 70% of them producing garments, 17% making textiles, 6% manufacturing yarn and 4% dyeing fabrics.

Up to 99% of cotton needs and 70% of artificial fiber demands are imported. The country, meanwhile, exports 65% of locally-produced yarn and imports 5.2 billion meters out of the total need of six billion meters of cloth to make clothing products.

Many companies in supporting industries have found no way to enter existing supply chains for large firms specializing in assembly and production. For instance, a Danang-based rubber company is known as a good brand for tires but it has yet to sell products to domestic auto makers.

It is hard for local suppliers to approach major firms like Toyota. They have long-established business ties with their suppliers from Thailand and Japan, so there is no reason for them to shift to local suppliers, Binh explained.

The same problem has also happened to local leather and footwear industries, with a majority of materials imported from other nations, said Nguyen Thi Tong, vice chairwoman of the Vietnam Leather and Footwear Association (LEFASO).

Binh emphasized the role of the Government in promoting local supporting industries. Investing into supporting industries requires modern machinery and skilled labor but faces risks, so Binh the Government should give a helping hand to resolving this matter.