Ho Chi Minh City strives for 9.5 pct GDP growth

Ho Chi Minh City has set the targets of a 9.5 percent growth rate in gross domestic product (GDP) and annual GDP per capita at 4,000 USD for 2013.

The southern economic hub will also strive to increase export turnover by 13.5 percent, mobilise 248.5 trillion VND in social development investment, and keep the yearly consumer price index (CPI) at below the nation’s figure.

The targets are set in a resolution adopted by the municipal People’s Council’s 7th session early this month.

During the year, the city will make every effort to create jobs for 265,000 people, reduce unemployment rate by 4.8 percent and poor households to 2.32 percent, as well as supply clean water for 89 percent of urban households.

At the session, Chairman of the municipal People’s Committee Le Hoang Quan said the city administration will continue its efforts to improve the investment and business environment to boost production and trade, strengthen urban planning and management towards sustainable development, together with effectively implement social welfare policies to raise people’s living standards.-

Wood exports forecast to reach US$5.5 billion in 2013

Wood and wood product exports are expected to reach US$5.5 billion in 2013, growing at a rate of 10% -15%, the Ministry of Agriculture and Rural Development has predicted.

Wood product exports have surpassed US$1 billion each year since 2004. The commodity is one of few agroforestry and fishery products that have maintained a stable growth since the start of the year.

According to statistics from the General Department of Customs, exports of wood and wood products fetched more than US$2 billion in the first five months of 2013, an increase of 12% over the same period last year. In May alone, the sector brought in US$450.4 million for a year-on-year increase of 8.9%.

Most of the major import markets for Vietnamese wood and wood products recorded positive growth.

The US market continues to top the list, buying up US$710 million worth of Vietnamese wood products during the first five months of 2013, up 6.1% compared to the same period in 2012. May exports to the US shot up by 19.4%, netting US$172.7 million.

Exports to China and Japan in the same five months increased significantly by 10.3% and 18.7%, with revenues of US$300 million and US$305.86 million, respectively.

Other major markets such as the Republic of Korea, the UK, and Canada also recorded impressive growth in imports of wood and wood products from Vietnam since the same period last year.

However, many local businesses and producers have encountered difficulties in the form of rising input costs and lack of raw materials. Domestic timber supply meets only 30% of market demand.

Customer requirements regarding the legal origin of Vietnamese products compel local manufacturers to perform careful quality control and to acquire international certificates permitting the export of goods to certain markets.

Wastewater from seafood firms pollutes fish farms

Wastewater discharged by 15 seafood processing companies in Son Tra district have caused heavy losses to more than 70 seafood farmers.

A dozen hectares of oyster and fish farms with an estimated crops amounting to 150 tonnes were almost wiped out due to poor quality water over the past two weeks.

The farms, situated in Man Quang Bay, are expected to lose at least VND20 billion (US$900,000).

Although a wastewater treatment station for Tho Quang precinct seafood processing zone treats 3,000 cubic metres per day, the quality of the treated water is not high.

Farmers said the pollution continued day and night.

Nguyen Binh, 47, said he had to bury his fish crop in recent days. "I lost VND250 million ($12,000) in just 10 days," he said.

"I have farmed grouper and red snapper for 10 years in the area, but it's the worst loss I've seen. I normally make a net profit of between VND60 million and VND70 million each year."

He added fish died due to lack of oxygen in the treated water.

Le Duc Bui, 67, from Nai Hien Dong Ward, said he had lost VND60 million ($2,900) in the past two days. "Wastewater from seafood business stinks the bay," he said.

More than 700 people in the coastal district live on oyster and fish farming.

Dragon Capital funds fall in June on ETF redemptions

All funds under direct management of Dragon Capital saw their values decline in June as redemptions by exchange-traded funds (ETFs) reversed most the gains of the previous month, Dragon Capital reported.

Viet Nam Enterprise Investments Limited (VEIL) and Viet Nam Growth Fund Limited (VGF) suffered the steepest monthly decline of 8.2 per cent each, higher than a 7.3 per cent drop of the benchmark VN-Index in June.

According to Dragon Capital, the poor performance of the two funds was mainly driven by slumps of blue chips such as Masan Group (MSN), which plunged 20.3 per cent during the month on concerns over selling pressure from the issuance of 17.5 million ESOP (Employee Stock Ownership Plan) shares.

Stocks that previously benefited from ETF purchases also suffered most from the ETF rebalancing and redemptions. They included Hoa Phat Group (HPG), down 14.6 per cent; Phu My Fertiliser (DPM), 13.4 per cent; Hoang Anh Gia Lai Group (HAG), 11.9 per cent; and REE Corp (REE), 9.8 per cent.

Foreign flows stayed negative in June, caused by emerging market fund outflows following global market declines. In Viet Nam, foreign flows changed from a net inflow of US$61 million in May to a net outflow of $84 million in June, of which ETF redemptions reached the monthly highest point of $69.6 million.

The bullish sentiment that followed the official introduction of the Viet Nam Asset Management Co (VAMC) in late May subsided as investors started to realise that the VAMC will take time to gain traction and may not have any real positive impact on the economy in the short term, the report said.

"This together with the continued foreign outflows prompted local investors to start taking profits after a 10 per cent market rally in May and take a ‘wait and see' stance," it said, noting average daily liquidity declined from $73 million in May to $57 million in June.

Dragon Capital's three other funds also declined.

Viet Nam Property Fund Limited (VPF) decreased 1.3 per cent while Viet Nam Debt Fund SPC (VDeF), including VDeF-A and VDeF-B, dropped 1.5 per cent and 1.2 per cent, respectively, seeing their worst month since 2010.

Since the beginning of the year, VDeF-A rose 8.3 per cent and VDeF-B climbed 9.3 per cent.

A wave of foreign selling was again attributed to the fund's poor performance, but as foreigners held less than 5 per cent of outstanding Vietnamese Government bonds, the rash of selling did not have much of an impact.

Shoes, leather products showcased

About 160 domestic and international manufacturers and suppliers are taking part at the International Shoes and Leather Exhibition in HCM City from July 11-13.

Companies from 16 countries and territories, including Argentina, mainland China, Germany, India, Japan, Spain, Thailand, Turkey and the US, are showcasing machinery, materials, chemicals, cloth, shoes and leather products.

The exhibition is an opportunity for businesses to access new technologies, promote their brand names and meet international partners.

Numerous activities will be organised as part of the programme, such as an award ceremony for the 2013 International Footwear Design Contest, and workshops on opportunities and challenges that Viet Nam's industry faces as the country joins the Trans-Pacific Partnership (TPP) and the Viet Nam-EU Free Trade Agreement.

Viet Nam considers fizzy drinks tax

The Viet Nam Beer, Alcohol and Beverage Association (VBA) recently proposed that the State administration impose a special consumption tax of 10 per cent on carbonated beverages.

In a proposal sent to the National Assembly, Viet Nam's legislature, and the Ministry of Industry and Trade and the Ministry of Finance, VBA called the proposed tax "rational," adding that it is "applied by many countries," Tuoi Tre (Youth) newspaper reported on Tuesday.

Carbonated beverages contain a level of acidity that is 100,000 times higher than normal water, which can lead to obesity, according to several studies.

The reaction between the drinks' saturated carbon dioxide (CO2) and acid in the body creates pressure on the stomach and intestines; and is especially harmful to those who suffer from ulcers.

Kangaroo Company jumps ahead

Viet Nam's Kangaroo corporation has received a US$45 million investment from South Korean partners following a strategic co-operative agreement.

According to the commitment, Kangaroo will use the investment to focus on equipping a modern production chain. The products will meet international standards, including ISO (International Organisation for Standardisation) and EC marking for products in the European Economic Area.

Kangaroo, which appeared in Viet Nam 10 years ago, produces water treatment equipment and home furnishings.

The cooperation with South Korean companies is part of a plan to become the top corporation in its field in Southeast Asia by 2016.

MoC considers building more small apartments for single people

The Ministry of Construction said development of apartments sized under 30 sq.metre per unit was under consideration.

Deputy Minister of Construction Nguyen Tran Nam said the move aimed to meet the housing demand of singletons and low-income earners.

The current standard area for low-income apartments ranges from 30 sq.metre to 70 sq. metre.

Nam said small apartments should not be considered slums, but added they must meet minimum living conditions for residents, as well as fire safety requirements.

Ha Noi to stop licensing new commercial housing in city centre

Ha Noi will halt the licensing of new commercial housing projects in the centre in three years' time, according to the city's proposed Housing Development Programme for the 2012-20 period.

People's Committee statistics showed real estate inventories in the city remained high with 5,789 apartments (totalling 566,000 sq.m).

The committee's deputy chairman Nguyen Van Suu said the city was speeding up inventory reduction by allowing properties to be converted into social housing or structurally adjusted.

Thanh Hoa Province warns slow projects to speed-up work

Many real estate projects in Thanh Hoa Province were making unacceptably slow progress, according to the provincial People's Committee.

Main offenders included a tourism project of the T&T Group in Tinh Gia District's Tan Dan Commune, Bitexco's complex project in Thanh Hoa City's Dong Huong Commune, Viettel Group's hotel project in Sam Son Town, Phu Thai Thanh Hoa Company's trade centre and many other projects.

The committee asked the Department of Natural Resources and Environment to consider the revocation plans for these projects in accordance with established regulations unless the projects began implementation before September 20.-

Market shows slight improvement

The property market in Viet Nam showed some positive signs in the second quarter of this year, though difficulties remained, according to quarterly reports from real estate companies.

According to Savills Viet Nam, office space in the west of Ha Noi was renting reasonably despite significant supply. Cau Giay District remained the main supplier of office space, with 282,000sq m, accounting for 23 per cent of the market.

Total stock in the city was about 1.2 million square metres from 146 buildings, up 10 per cent over the first quarter and 22 per cent over last year.

Office renting greatly increased in the quarter to nearly 41,000sq.m, with the leased area of Grade A buildings in the west area continuing on a sharp upward take-up trend to reach 9,600sq m.

With regards to hotels, the average number of occupied rooms in the second quarter was 4,200, a year-on year increase of 9 per cent.

Seven projects supplying 1,300 hotel rooms were expected to enter the market this year and Tu Liem District would provide the largest supply, with 70 per cent of future projects set to be five-star hotels.

The serviced apartment sector rose again in the second quarter, meaning the total number of leased units has now increased for five consecutive quarters, reaching 2,600 and up 1.6 per cent year on year.

For apartment sales, the number of projects selling raw-construction units had increased because developers wanted to reduce the total price per unit to attract end users, according to Savills.

The soft liquidity of the villa market remained in the second quarter, with the average price of this market having dropped 2 per cent, the lowest decrease in approximately one year. However, significant challenges were facing villas in the coming months as there was still a lack of proper infrastructure development accompanying this kind of property.

A report from Cushman&Wakefied showed that rental prices for grade-A office space in Ha Noi remained stable for the second quarter, but grade-B offices saw a 2 per cent drop quarter-on-quarter.

Jonathan Tizzard, associate director of Cushman&Wakefield, said that high vacancy rates and a large increase in new stock in the short-term indicated that pressure on rental levels would increase.

The serviced apartment sector retained high occupancy rates and even witnessed an increase in rents during the second quarter. However, the oversupply of apartments in the city would influence the serviced-apartment market as more of this stock was converted. There are about 10,000 new apartment units in Ha Noi and low absorption rates continue.

HCM City's office market recorded a slight drop in rental rates in the second quarter. Grade A absorption was especially low this quarter, and with the prospect of new space coming on line in the short and medium term, it looked to remain a tenant's market.

The real estate market had been in decline in Viet Nam for some time now, the report said. Speculators had left the market for the most part, with end-users the targeted clients across sectors.

According to a report by CB Richard Ellis Viet Nam (CBRE), the retail space drew attention of foreign investors.

Notably, Warburg Pincus, a global private equity firm, said at the end of May that it would buy around 20 per cent of the retail unit of Vingroup for US$200 million.

The Ministry of Industry and Trade's Circular 08/2013/TT-BTM about the Economic Needs Test would also create more confidence in foreign investors when entering the Viet Nam retail market.

Vingroup took the lead in Ha Noi retail market with two huge projects, the Vincom Mega Mall Royal City and Vincom Mega Mall Times City with total area of 437,000sq m. The former was planned to be opened this month, becoming the country's biggest trade centre, while the latter went up for rent in June.

However, 17 projects would enter the retail market by the year end with a total area of nearly 500,000sq m, creating huge pressure on the market while many existing trade centres were in difficulty and halting operations for restructuring or conversion to other uses, according to Savills.

The CBRE's report also revealed the continued trend of price declines in property market till the year end, saying that home-buyers remained cautious and still expected further price falls.

Regarding the Government's stimulus package, Do Thu Hang, head of Research and Consultancy at Savills Ha Noi, said only a very limited number of developers and buyers had been able to take advantage of the package of VND30 trillion ($1.43 billion) since the application process was extremely difficult.

Savills Viet Nam deputy managing director Troy Griffiths noted positively that Asia as a whole was showing potential economic growth of about 5 per cent this year, although he conceded that Viet Nam still had inferior business environment governance compared to its neighbours.

"If this governance is not improved, investments will go somewhere else like Indonesia or the Philippines," he warned.

Fee cut drives up car imports

Viet Nam imported 16,000 completely built cars, or units (CBU), worth US$308 million in the first half of this year, up 17.8 per cent in volume and 7.5 per cent in value year-on-year.

The General Statistics Office (GSO) said the strong rebound shows that the import value of CBU cars has been rising since earlier this year, fuelled by hopes of a cut in new car registration fees.

Each month for the first four months of this year saw nearly 3,000 CBU cars being imported, with their value increasing sharply from $48 million in March to $50 million in April and $66 million in May.

However, their import value dropped to $55 million in June.

Meanwhile, from earlier this month, the Ha Noi People's Council started to cut the registration fees on new cars with fewer than 10 seats to 12 per cent.

Registration fees for second-hand cars with fewer than 10 seats will remain at 2 per cent.

The current level of 15 per cent was introduced at the beginning of April, down from the previous fee of 20 per cent.

This move aims to increase car sales in the city, helping car assemblers to recover from a loss of revenue caused by falling sales.

Motorbike users will pay a road-use fee of VND100,000 each year to the country's road maintenance fund.

Responding to these changes, HCM City is now considering lowering its fee to 10 per cent.

The Viet Nam Automobile Manufacturer's Association (VAMA) reported that sales of locally assembled cars in May rose by 11 per cent over April and 42 per cent over the same month last year, totalling more than 9,700 units.

The association, which is comprised of 18 leading domestic car assemblers, raised its estimate of total car sales this year from 100,000 to 108,000.

Foreign firms plan pulp factory

India's JK Paper and Japan's Sojitz Corporation will join hands to develop a pulp factory, expected to cost US$180 million, in the central province of Quang Ngai.

The news was made known by deputy head of the Dung Quat Economic Zone Management Board Le Van Dung, who was quoted by baodautu.vn as saying:

"The province is fulfilling final administrative procedures to grant an investment certificate to the joint-venture in the third quarter of this year."

The pulp factory, to be located in the Dung Quat Economic Zone, would provide about 200,000 tonnes of pulp annually, he said.

Sojitz in co-operation with Japan's Oji Paper Corporation had proposed to build a $1 billion pulp producing factory with an annual capacity of 600,000 tonnes in the province in 2007. However, the investors gave up on this huge project due to issues related to supply of raw materials.

The soon-to-be licensed project is expected to help the nation reduce its reliance on imported pulp, as current pulp production in the country was far below demand.

The country's paper pulp imports over the first half of this year were 691,000 tonnes with a total value of $640 million, representing a 114 per cent year-on-year rise over the same period last year.

The Viet Nam Paper and Pulp Association's statistics revealed that domestic pulp production reached 484,300 tonnes in 2012, an increase of 30 per cent over 2011. However, the association's general secretary Vu Ngoc Bao said this only met half of the demand.

Viet Nam lacks pulp and has to import it for $900-$1,000 a tonne, despite the fact that the country is ranking first in the world for exporting woodchips (used in pulp production) during the last two years.

Banks issue low interest loans

Banks have begun to lend to people on low incomes and Government workers from the VND30 trillion ($1.43 billion) stimulus package to buy homes.

According to the Government's website, five people working for Government agencies in HCM City got loans at 6 per cent interest from BIDV to buy apartments at Khang Gia – Tan Huong JSC's housing project in Tan Phu District.

They borrowed for 10 years to buy apartments measuring 60-69sq.m and priced at VND14.8 million per square metre.

Banks in central Da Nang City have lent to 27 low-income residents for buying apartments at Nesthome 1 built by Phu My Investment Construction Co.

Nesthome 1 is Phu My's first low-cost housing project in the country.

In Ha Noi, Vietinbank and Viglacera have tied up for loans for buyers of apartments in Viglacera developments like the Dang Xa New Urban Areas No 1 and No 2 in Gia Lam District, and OCT Tenement No 2 in Tu Liem District.

Vietinbank has so far lent to eight home-buyers.

An Dong Tenement built by PG and Bac Son by Hai Phong Investment Development and Construction JSC are the two projects in northern Hai Phong City to be supported by the package. Banks have approved two out of 10 applications to buy homes at Bac Son.

According to the Ministry of Construction, 30 investors are included on the list it has forwarded to the State Bank of Viet Nam (SBV) and other commercial banks, as being eligible for the loan. Only three are State-owned enterprises.

Several projects that asked to be converted into social housing are also being evaluated, said the ministry, adding that the list of those eligible would be submitted to the SBV and commercial banks within two weeks.

The ministry said that it would work with SBV to identify difficulties with procedures to speed up the granting of loans from the support package.

1,300 taels of gold left unsold at auction

For the first time in the State Bank's last six gold auctions, 1,300 taels were left unsold yesterday. The bank offered 26,000 taels (one tonne) of gold with 16 credit institutions in attendance.

The bank set a reserve price of VND37.35 million (US$1,778) per tael, up to VND350,000 ($16.60) higher than the local market price. One institution left without bidding; the other 15 bought 24,700 taels at between VND37.4-37.5 million ($1,781-1,785) a tael.

The gold price kept falling from early morning yesterday, down by VND50,000($2.20) a tael compared with the same time of the previous day. Saigon Jewelry Company gold was listed at 37-37.42 million ($1,761-1,781).

After hitting $1,300 per ounce (1,566.5 a tael) last night, the price fell to $1,276.5 per ounce ($1,538.2 a tael) on the global Kitco.com trading floor, making the gold price in Viet Nam $214.5 per tael higher than the official global price.

Since March 28, the Central Bank has held 43 gold auctions, selling nearly 1.168 million taels (about 45 tonnes).

Experts forecast subdued economic progress

Viet Nam's economy will remain subdued for the rest of 2013 as bad debts and huge stockpiles of goods continue to hold the country back, predicted participants at a seminar on Thursday.

Vo Tri Thanh – Deputy Director of the Central Institute for Economic Management (CIEM) predicted that Viet Nam's economy would grow by between 5.2 to 5.5 per cent, at least until 2015, but stressed that it would be difficult to reach next year's national growth target of 6 per cent.

He said that collecting revenue for the State budget was also facing difficulties this year due to the Government's tax exemptions and the large number of businesses that have gone bankrupt, cut back or even halted production, while bad debts held by the banking sector remained the biggest problem.

Some said that the country's exports and industrial output have given several positive signals, but Thanh said industrial production remained poor and unstable, pointing out that the Purchasing Managers Index (PMI) for the production sector has dropped rapidly.

The country's exports in the second quarter of this year only rose by 16 per cent, which is lower than the 20 per cent recorded in the first quarter.

According to other commentators, the restructuring of the economy and banking sector along with measures to encourage social investment and favourable tax policies are likely to increase supply and put pressure on the consumer price index (CPI).

The country's economy is still being affected by the global economic downturn, while bad debt and outstanding debts in the construction industry have yet to be resolved.

Many said that the interest rate on loans is no longer a major concern, but businesses still find it difficult to access loans from commercial banks due to stricter administrative procedures.

Nguyen Ngoc Tuyen, director of the Institute of Finance and Economics, stated that stockpiled products in the remainder of this year may see a high increase and this could prove damaging to the country's economic growth.

The majority of economic analysts attending the seminar said that inflationary pressures on economic growth remain high, but have lessened.

Many international organisations have lowered their forecast of Viet Nam's inflation rate to between 6-7 per cent this year against previous predictions of between 7-9 per cent

Do Thi Ngoc – Deputy Director of the Price Statistics Department at the General Statistics Office said that inflation was no longer a major concern this year, as it has only risen by 2.4 per cent in the first six months of the year.

Ha Nam strives to attract FDI

The northern province of Ha Nam was targeting to attract 15-20 new foreign-invested projects with a total registered capital of US$120 million by the year-end, according to the provincial Department of Planning and Investment.

In the first half of this year, the province welcomed 11 foreign-invested projects, capitalised at $78.4 million. During the period, the foreign-invested sector posted $293 million in revenue, up 37 per cent year-on year, and created 15,600 jobs.

The latest additions bring the total number of licensed foreign-invested projects in the province to 77 with capital totalling $670 million. Of the sum, $512 million or 76.5 per cent of the total registered capital has been implemented.

The department deputy director Bui Hong Thanh attributed the good performance to increased efforts by local authorities to attract foreign investors including a range of investment promotions.

Thanh said the number of licensed projects rose significantly over the years from five projects worth $7.5 million from 2001-05 to 39 capitalised at $267.8 million between 2006-10.

It was the operations of foreign investors that helped us to advertise the investment climate, Thanh said, adding that the province was striving to attract more investors from Japan and South Korea.

In order to do so, the province has established an investment promotion office in Hiroshima, Japan.

Besides participating in overseas trade promotion activities, provincial authorities had also held talks with foreign investors to listen to their problems, and then they made the necessary policy adjustments to facilitate their operations in the province, Thanh said.

"The province will continue to adopt more incentives to attract foreign-invested enterprises and secure long-term investment," said chairman of the provincial People's Committee Mai Tien Dung.

He was speaking at a recent working session with representatives from over 70 foreign-invested enterprises from nine countries and territories based in the locality.

Dung said the province would concentrate on perfecting infrastructure in industrial zones, training qualified workers and reforming administrative procedures.

During the event, Daiken Murakami, director general of Showa Denko Co and chairman of the Japanese Business Association in Viet Nam, appreciated the incentives the province was offering to foreign investors and Japanese firms in particular.

He pledged to work with local authorities in an effort to draw more Japanese businesses to the province.

Japanese investors find ASEAN attractive

Members of the Association of Southeast Asian Nations (ASEAN) have succeeded in luring Japanese businesses over the last two years by improving their investment environments.

The statement was made by Motonobu Sato, chairman of the Federation of Japanese Chambers of Commerce and Industry in ASEAN.

Speaking at the 6th dialogue between the Secretary General of ASEAN and the federation in Ha Noi yesterday, Motonobu said the federation's membership had risen from 4,500 companies to nearly 5,700 since 2010.

It showed Japanese companies' strong commitment to investing in ASEAN, he said, adding that their business engagements are primarily in the automotive and auto-parts, electronic and electrical appliances, chemicals, consumer products and financial services sectors.

After the European Union, Japan is the principal investor in ASEAN in terms of net inflow of foreign direct investment (FDI). The latest statistics indicated that in 2011, Japan invested over US$15 billion in ASEAN, making up 17 per cent of total FDI in the block.

Japanese manufactures in ASEAN have steadily been increasing their local procurement ratios either in their host country or from other ASEAN nations.

According to a survey of Japanese Affiliate Firms in Asia and Oceania last year by Japan External Trade Organisation (Jetro), 50 per cent of raw materials and parts procurement that ASEAN-based Japanese manufacturers used came from ASEAN countries.

Finished and semi-finished products were exported to markets including Japan, ASEAN countries, mainland China and Europe.

At this dialogue, Japanese businesses made suggestions to the ASEAN Secretariat for 2014, including the early elimination of non-tariff barriers/measures which were recognised as bottlenecks for improving business competitiveness, as well as the introduction of the "ASEAN Business Travel Card" scheme.

They also asked for a co-ordinated tax and social security system to avoid double taxation and duplicated social security payments, plus steady negotiations on the Regional Comprehensive Economic Partnership aimed at developing a more business-friendly framework.

At the talk, ASEAN General Secretary Le Luong Minh said despite being hit by the global economic slowdown, Japan was still the second biggest trade partner and FDI contributor to ASEAN.

He said by responding to Japanese companies' requests at previous dialogues, ASEAN had made progress in simplifying customs procedures

Minh said the dialogue was a good mechanism for assessing implementation of comprehensive measures to realise the ASEAN Economic Community goal in 2015.

The Federation of Japanese Chambers of Commerce and Industry in ASEAN was formed in 2008 to facilitate mutual co-ordination and contribute to regional economic development, while improving business environments for Japanese enterprises through dialogue with the ASEAN Secretariat.

Domestic brands walk tall in VN market

Made-in-Viet Nam footwear is the first choice for a majority of Vietnamese customers, according to the Viet Nam Leather and Footwear Association (LAFASO).

The association says the finding comes from a recent survey that studied consumer behaviour patterns in five major cities and provinces – Ha Noi, HCM City, Hai Phong, Thanh Hoa and Binh Duong.

The survey was an attempt to help enterprises keep abreast of market demand and develop strategies for product design, pricing and distribution.

The survey showed that almost two-thirds, or over 70 per cent, of the respondents would purchase local shoes and sandals as their first choice.

The association said the survey also highlighted the growth potential of the domestic footwear market.

It found that about 65.9 per cent of the respondents spend less than an average of VND200,000 (approximately US$10) per month on footwear.

Twenty per cent of the respondents said they were ready to spend VND500,000 (US$24) and the remaining said they would pay even higher sums on their footwear per month on average.

Industry insiders said these figures indicate great growth potential since consumers appear willing to spend significant sums on their footwear, and this expense would only increase when incomes go up in the future.

Three well-known Vietnamese shoe brands most favoured by respondents are Biti's, Thuong Dinh and Vinagiay, the survey found.

Nguyen Thi Thanh Xuan, deputy general secretary of LEFASO, said the survey results would help domestic producers understand Vietnamese consumers better and develop suitable production and marketing strategies.

Local firms can also adjust their product designs to better meet consumer preferences, she said.

The survey showed, for instance, Vietnamese consumers bought their footwear at retail shops (40.8 per cent), footwear centres (28.3 per cent) and enterprises'own stores (18 per cent). Consumers make their choices based on reasonable prices, quality assurance and convenience, Xuan said.

The survey findings indicate that despite their limitations in production capacity, design and distribution, domestic footwear makers have opportunities to expand their market share in the coming years, she said.

Deputy general director of the Binh Tien Consumer Goods Company Limited (Biti's), Nguyen Duy Thanh, said footwear is a fashion product, so it is very important to keep creating new products and designs, especially considering the fierce competition from Chinese imports.

Each month, Biti's needs to introduce at least 50 new shoe designs if the company is to survive, Thanh said.

In addition to improving product quality and designs, Biti's has also increased investment in developing distribution networks and after-sales services, he said.

The company's factory has an annual production capacity of 20 million pairs, 55 per cent of which are sold in the domestic market via 60 major direct distribution centres and 3,500 agents.

As a result, the company has been able to increase its turnover by between 20 and 30 per cent every year, Thanh said.

Xuan said fashionable design was the Vietnamese footwear industry's weakest point.

This could be seen in the fact that 59 per cent of those preferring to buy foreign shoes said their choice was influenced by their design, she said.

To further expand their market share, domestic shoemakers should pay more attention to improving product designs and come up with effective sales strategies, Xuan said.

Ha Noi looks to improve business competitiveness

Ha Noi must improve its investment, production and business environment to boost its provincial competitiveness index (PCI), said Ha Noi People's Committee Vice Chairman Nguyen Van Suu.

Suu made the remark at a recent seminar on the city's dismal PCI ranking, which was 51st out of 63 provinces and cities last year, 15 places lower than its performance in 2011.

The rankings were established in a survey by the Viet Nam Chamber of Commerce and Industry.

Among nine categories in the PCI, Ha Noi was in the top group in terms of labour training but it was bottom of the list in issues such as land access and stability of land use.

The capital's Party committee and People's Committee were forced into gathering all relevant departments and agencies to figure out the reasons behind the disappointing performance and propose ways to enhance the PCI.

Suu asked the municipal units to further push administrative reforms with a focus on administrative procedures and the implementation of a one-stop mechanism, to remove difficulties for businesses.

Tran Huy Sang, director of the Municipal Department of Home Affairs, said improving its PCI ranking would help boost Ha Noi's socio-economic development.

The Ha Noi People's Committee had previously issued a plan to boost PCI rankings in the period 2011-2015.

However, despite its poor PCI showing, Ha Noi had recorded a 7.7 per cent economic growth rate in the first six months of the year, a relatively high figure in the context of economic hardship nationwide.

The PCI programme has been a US Agency for International Development's Viet Nam Competitiveness Initiative since 2005. All 63 provinces and cities have used the PCI to devise their own economic policies and development strategies.

Phu Quoc to join national power network by 2015

Phu Quoc Island will be connected with the national electricity grid by an undersea cable system by 2015.

The island constantly faces a severe shortage of electricity since numerous tourism projects are in progress, forcing it to rely on diesel generators and often causing outages in many parts.

This has hindered tourism development on the island, according to Huynh Quang Hung, deputy chairman of the Phu Quoc District People's Committee, and the island is in need of a stable power supply system, especially after the opening of the Phu Quoc International Airport last December.

In 2007 the Ministry of Industry and Trade commissioned Electricity of Viet Nam to lay a 110KV cable across the sea to Phu Quoc island from Ha Tien in Kien Giang Province.

The Government has instructed speedy disbursement of funds for the work, according to the ministry.

Construction of the 55.8km, 31 MVA cable is expected to cost VND2.4 trillion (US$114 million) is start early next year.

Prysmian Powerlink SRL, the Italian contractor for the project, is currently fabricating the cable.

Prysmian said it would be the longest of its kind in Southeast Asia.

Hung said once laid the cable would ensure stable power supply to the island, promote its economic development, and reduce the use of diesel generators and, thus, environmental pollution.

H1 cashew exports increase in volume and value

Viet Nam hopes to ship 95,000 tonnes of cashew in the second half of the year, bringing the year's total to 210,000 tonnes, an increase of five per cent over last year, according to the Viet Nam Cashew Association (Vinacas).

Speaking at a conference held in HCM City last Saturday to review the industry's first-half performance, Dang Hoang Giang, Vinacas general secretary, said some 115,000 tonnes of cashew worth US$716 million was exported in the first half of the year.

This was a year-on-year increase of 30.3 per cent in volume and 18.8 per cent in value, he said.

However, the average export price for the period was $6,185 per tonne, down 9.46 per cent against the same period last year, he said.

The US remained the biggest importer of Vietnamese cashew, followed by China, EU and Australia.

Giang said cashew businesses have encountered many difficulties in the first half of the year, including shrinking output and a shortage of working capital.

Cashew output last year was just 264,810 tonnes, compared to 301,730 tonnes in the preceding year. The output for this year would be even lower, he said.

For the second half of the year, there are both positive and negative signs for the cashew industry, he added.

Regarding the negative aspects, Giang said the world economy had been recovering very slowly from the prolonged slump.

In addition, "India recently raised its import duties on cashew nut, causing difficulties for Vietnamese exporters."

But the appreciation of the US dollar against the Vietnamese dong and the stimulation packages launched by big markets like the US, Japan and the EU to increase local consumption were positive factors, he said.

Vinacas forecasts that demand for cashew in the world market will increase from now to the end of the year, given that many festivities take place during this period.

To meet its export target, Viet Nam would need to import about 180,000 tonnes of raw cashew in the remaining months of the year for processing, Giang said.

Domestic processing companies imported 220,000 tonnes of raw cashew in the first half of the year, up nearly 88.9 per cent from the same period last year, mostly from Cambodia, Ivory Coast, Ghana, Nigeria, Guinea Bissau and Indonesia.

Nguyen Van Chieu, Vinacas deputy chairman, said Viet Nam can currently process more than 800,000 tonnes of cashews a year, but local supply accounts for less than half this capacity.

As a result, the country had to import a large volume of raw cashew from other countries, he said.

However, representatives of enterprises have complained about the poor quality of imported raw cashew, especially from Africa, saying they were mixed with contaminants including cashew skins, rotten branches and cashew sprouts, Vinacas chairman Nguyen Duc Thanh told the conference.

The country must have regulations to control the quality of imported raw material, Thanh said.

The association had agreed to establish a council to provide consultancy services on raw cashew imports, he added.

Chieu said the council would work to reduce and prevent risks involved in raw material imports.

The results of a two-year review on the use of machinery in processing cashew were also presented at the meeting.

The report says that overall, higher economic efficiency has been achieved through reduction in costs and time, as well as improved product quality.

Cashew enterprises should focus on improving their production technology even further in order to ensure their sustainable development, the report says.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR