HCM City monitors prices of essential goods

 

The progress of the price stabilisation programmes for drugs and baby formula milk topped the agenda at a working session of the HCM City People's Committee on Tuesday.

 

Deputy chairwoman Nguyen Thi Hong said pharmaceutical firms had to expand their drug delivery system to remote areas.

 

The Department of Health should popularise the model followed by People's Hospital 115 of only prescribing medicines from the price-stabilisation programme.

 

The department has signed agreements to bring 45 medicines under the programme and 325 pharmacies, including 99 belonging to hospitals and 115 private ones.

 

The programme began in April and in May four drug firms that have signed up saw turnover rise.

 

Many pharmacies that were reluctant to join now wanted to do so, a department official said.

 

The department plans to intensify the distribution and sales of medicine in the list, and lobby doctors to prescribe only drugs participating in the programme.

 

The Viet Nam Dairy Products Joint Stock Company (Vinamilk) and Nutifood, two leading manufacturers of dairy products and baby formula who have signed up, sell products at prices lower than market prices at 244 outlets in the city.

 

In May Vinamilk sold 18.39 tonnes of dairy products for VND6.11 billion (US$296,500).

 

Nutifood does not have figures yet.

 

In addition to its 179 existing outlets, Nutifood is working on a plan to open 100 more at supermarkets and 20 at hospitals.

 

Hong said both companies needed to be more active in expanding their network, especially in remote areas, and strive to increase turnover from price-stabilised products by 10-12 per cent.

 

The department should co-ordinate with companies to indicate the nutritional values of products to enable consumers to choose, she said.

 

It would help the consumers feel secure about using the products, she added.

 

Ho Chi Minh City workers fall prey to loan sharks

 

Workers in Ho Chi Minh City are forced to borrow from loan sharks at usurious rates of interest that sometimes reach 30 percent a month.

 

The failure to pay in time means a penal interest and beatings by gangs working for the moneylenders.

 

Your correspondent went disguised as a worker and asked a woman lender living near the Vinh Loc Industrial Park in Hoc Mon District for a loan for paying rent.

 

She was reluctant, saying she only lent to regular borrowers.

 

But when I told her that I knew an associate of hers, she checked before asking me with a smile how much I wanted. The interest rate would be 10 percent a month.

 

“There is no paperwork. All I need is your signature. Since you come recommended by my associate, I’ve got all the information about you already.”

 

She handed over VND1 million (US$50) and asked me to sign in a notebook filled with other signatures.

 

There are four other loan sharks lurking around Vinh Loc Industrial Park, who charge 10 to 12 percent a month.

 

There are four or five such illegal lenders in the area near Tan Binh Industrial Park in Tan Phu District.

 

“The loan sharks know that workers badly need money and have no other choice,” Thu Hong, a worker at the Tan Binh Industrial Park, said to explain the exorbitant interest rates that could climb to 30 percent a month.

 

Hung, a loan broker near Binh Duong Industrial Park in Binh Duong, told Tuoi Tre that workers can borrow up to VND20 million ($1,000) at 15 percent a month from lenders.

 

The area has many loan sharks but workers need Hung’s recommendation to borrow from them.

 

Some operate even inside industrial parks.

 

Nguyen Thi Hoa, who works for Nam Yang sewing company at the Song May Industrial Park in Dong Nai, said some workers in her company had become moneylenders.

Workers can hardly pay off

 

In June 2010 D.Y.N, a worker at the Binh Duong-based VSIP Industrial Park, borrowed VND5.5 million ($275) from a lender at 10.5 percent. After twice paying the monthly interest of VND600,000, N. could no longer afford it.

 

With the lender putting pressure on her to pay, she had to hide from him.

 

But in April this year the lender caught up with her and demanded VND14 million ($700), including a fine, failing which he threatened to cut off her ear.

 

Fortunately for her, the police arrested the lender.

 

A man working at the Tan Tao Industrial Park in Tan Phu was assaulted by a gang hired by the lender for failing to repay a VND1 million loan he had taken from a loan shark. The gang also threatened to cut off his limbs if he did not clear the debt soon.

 

Duc Truong, a worker at the Vinh Loc Industrial Park, said workers had no choice but to borrow from the loan sharks, especially when their company paid their salary late.

 

“Once a worker borrows from a lender, they have to borrow from others to pay the [first] lender in time. And they are stuck in a cycle.”

 

Ties with Cambodian engineer corp praised

 

Lieut Gen Nguyen Trung Thu, deputy chief of General Staff of the Viet Nam People's Army, yesterday met with visiting General Quan Siem, commander of the Engineering Corps of the Cambodian Royal Army, in Ha Noi.

 

At the meeting, Lieut Gen Thu praised the fruitful co-operation between the engineering corps of both countries in exchanging professional skills in bomb and mine clearance, building defence establishments, and using specialised equipment in training and coping with natural disasters.

 

Cambodia called on Viet Nam to assist it in setting up an army engineer school and technical training centre for Cambodian Royal Army engineers.

 

Importers decry restriction policy

 

Many importers of fast-consuming goods like cosmetics, liquor, mobile phones and cars under nine seats are blasting the new import restriction policy which took effect last Wednesday and left them no time to prepare.

 

According to the Decision No. 197/TB-BCT of the Ministry of Industry and Trade issued on May 6, shipment arrivals of imports of the three non-essential items, mobile phones, cosmetics and liquors, will only be allowed at ports in HCMC, Danang, Hai Phong.

 

In addition, importers will be required to provide authorization documents from producers which must be legalized by Vietnamese embassies overseas.

 

Tran Quoc Hung, managing director of Nhan Viet Company, an authorized importer and distributor of a French-based cosmetics brand, told Saigon Times Daily via phone that this requirement means that he has to wait a few more weeks to get permission for every new product line.

 

The sudden announcement could see him lose substantial business during the most profitable time of the year, the year-end season.

 

“Import plans for the year-end season, starting in October, must be completed four to five months before the cargo is shipped and they can’t be changed. The decision came out suddenly and made us unable to submit required papers on time, hence customs clearance will be prolonged and cause us to miss a lot of business opportunities,” he said.

 

Dinh Anh Huan, general director of mobile phone retail chain, The gioi di dong, said the new regulation will have a heavy impact on his business because of the prolonged import procedures and heavy costs.

 

“A large majority of our products are from China and usually are transported by air. The shipment will take a few days longer than it used to,” Huan said.

 

In addition, the requirement for certification by the Vietnamese embassy at the country where the cargo is embarked will also take more time and have high costs for importers.

 

“The whole procedure will take at least a month and the cost for it will account for 2 percent of the sales price,” he said.

 

According to economist Le Dang Doanh, this measure is being brought in by the Government in an effort to fight against the rising trade deficit that has climbed to US$6.6 billion in the first five months of this year.

 

“I think the Government should use economic tools like special consumption tax that will increase the price that consumers have to pay for the item and make them think more carefully before deciding to splash out on lavish goods, instead of using administrative measures,” he said.

 

According to Doanh, administrative measures are likely to cause a negative impact on importers and the investment environment, and escalate bureaucracy.

 

Many automobile importers were also hit in the government’s move to restrict imports and narrow the trade deficit.

 

Last month, 70 importers of automobiles signed a petition requesting the government to reconsider the newly published circular 20 that will come into force on June 26.

 

Under this circular, importers have to supplement more procedures on trading vehicles under nine seats, including a letter of attorney from producers, contracts legalized by Vietnamese diplomatic offices overseas as well as maintenance facility certificates granted by the Ministry of Transport.

 

The petition said the new rule would force numerous companies and showrooms to shut down their businesses as they are unable to fulfill the requirements.

 

“The whole market will be taken over by car joint-ventures, the ones that have authorization documents”, it said.

 

Nevertheless, the ministry insisted on the necessity to require car importers to disclose the legal origins of their products because consumers need to be protected.

 

Nguyen Thanh Bien, deputy minister of Industry and Trade, affirmed that the new regulations aimed at controlling imports and exports in order to protect consumers without violating WTO commitments, according to local newspapers.

 

According to him, around 1,700 companies have been importing cars of less than nine seats, with a total of 30,000 units per year, and this is too much for such a small market like Vietnam and that the number of importers needs to be slashed.

 

Matthias Duhn, Executive Director of European Chamber of Commerce in Vietnam (Eurocham) said he was concerned with Notice 197 regarding the imports of wine, spirits, cosmetics and mobile phones, and of Decision 1380 that lists goods that are not encouraged for imports.

 

“These measures cover a significant part of EU exports to Vietnam, including products whose tariffs are bound under WTO,” he said.

 

Bilateral relationship with Italy still has potential

 

The bilateral relationship between Viet Nam and Italy had experienced significant growth in recent years, but untapped potential remained, said Deputy Minister of Planning and Investment Dang Huy Dong during a conference yesterday.

 

Dong described the event as a good chance for policymakers to draw up effective policies and move towards creating favourable conditions for the two nations' small- and medium-sized enterprises to foster co-ordination.

 

In his speech at the event, Italian Ambassador to Viet Nam Lorenzo Angeloni said Italy was facilitating the establishment of joint ventures between businesses from the two countries.

 

However, in order to attract more Italian investment, Viet Nam needed to create a good investment climate, he said.

 

During the event, Stefano Giovanelli, director of Italian regional agency for trade promotion Toscana Promozione explained the Tuscany region's policies and experiences in developing its footwear, wood and renewable energy sectors.

 

He added that a business delegation, led by the region's Governor, would travel to Viet Nam in November to seek co-operation with Vietnamese firms.

 

Last year, Toscana Promozione inked a co-operation agreement with the Ministry of Industry and Trade's Trade Promotion Agency.

 

Under the agreement, the two sides agreed to strengthen and support the development of trade and investment.

 

The two sides would share information regarding markets and trade, and economic policies affecting trade relations between the two business communities.

 

Chinese animal feed producer to buy Viet Nam livestock firm

 

CP Pokphand, a Chinese animal feed producer, will buy a 70.8-per-cent stake in CP Viet Nam Livestock Co, one of the leading livestock and seafood companies in Viet Nam.

 

CP Pokphand will acquire the interest from Bangkok-based Charoen Pokphand Group Co Ltd for about US$609 million – a figure equal to over 12 times CP Viet Nam Livestock Co's 2010 net profit. The deal is expected to be completed before the end of the year.

 

"The deal, as one of the largest corporate acquisitions in Viet Nam, represents a unique opportunity for CP Pokphand to acquire a controlling stake in a market leader and expand into one of the fastest growing feed and farming markets in Southeast Asia," the company said in a press release.

 

CP Viet Nam, established in 1993, has expanded its entire food production value chain, from the manufacturing and distribution of animal feed to breeding and farming of livestock and seafood, and processing and production of meat and food products.

 

The company currently holds a 20-per-cent market share in both the commercial feed and industrial farming markets. It earned over VND20 trillion ($1 billion) last year and posted a net profit of VND964.6 billion ($50.3 million).

 

Vietnam fruits find many markets ripe for plucking

 

Vietnam’s fruit exports topped $US205.6 million in the first quarter, a 32.2 percent rise from the same period last year, according to the customs.

 

With their variety and improving technologies, Vietnamese fruits are becoming popular in many new markets, sending exports soaring.

 

The Vietnam Fruit Association said the country sold fruits to more than 50 countries.

Dam Van Hung, head of Huong Mien Tay, a fruit exporting firm based in Ben Tre Province, said his company used to export only to China but faced many difficulties there.

 

“My products sometimes failed to pass customs clearance since they [Chinese partners] had many unreasonable requirements,” he said, lamenting he was often forced to lower prices.

 

Hung’s firm then contacted fruit importers in other countries and took part in international fruit fairs in an effort to find new markets. It eventually began to export to Germany, Spain, Norway, the Netherlands, and Canada.

 

Phan Quoc Nam, director of Tien Giang-based fruit exporter Long Uyen Co Ltd, chose another way to boost exports: by shipping frozen fruits to avoid the high hygiene and other requirements for fresh fruit in the EU and US markets.

 

Long Uyen now exports frozen fruit to South Korea, Singapore, Sweden, the Netherlands and Norway.

 

Recently, many fresh-fruit exporters have managed to surmount technological and other barriers to enter large markets like the US, Japan, Korea, Australia, and New Zealand.

 

In the first five months 750 tons of thanh long (blue dragon fruit) were exported to the US, or 90 percent of total exports to that country last year, the Plant Protection Department said.

 

Vietnam exports 40 tons of this fruit to Japan and 20 tons to Korea every month.

 

In April fresh rambutan received the green light for entering the US.

 

Infrastructure company faces loss

 

HCM City Infrastructure Investment Co (CII) is likely to incur a loss in the second quarter due to difficulties in the business environment, said the company's financial director and chief accountant, Le Quoc Binh.

 

CII's costs had increased significantly on the back of tightened monetary and credit policies, as well as the interest rates being charged by banks, Binh said.

 

CII shares yesterday plunged to their floor price of VND25,600 (US$1.24) per share.

 

Option to foreign ownership cap

 

The Viet Nam Association of Financial Investors (VAFI) has proposed a mechanism allowing foreign investors to purchase non-voting shares in companies subject to foreign ownership limitations.

 

In a proposal to the Ministry of Finance and the State Securities Commission, VAFI said that many of the top 100 listed companies in which foreigners trade had reached or were nearing their foreign ownership limits. VAFI pointed to the experience of Thailand, where foreigners can buy non-voting shares in a company subject to foreign ownership restrictions, such as banks. The Thai Stock Exchange and securities depository centre register and classify the transactions.

 

Bao Minh Securities to list shares

 

Bao Minh Securities Co, a subsidiary of Bao Minh Insurance (BMI), will list 30 million shares on the HCM City Stock Exchange. The HCM City-based brokerage house, with a charter capital of VND300 billion (US$14.6 million), posted a net profit of more than VND17 billion ($825,200) last year, down 10 per cent compared to the previous year.

 

Two companies to buy back shares

 

Hoa Binh Construction and Real Estate Corp (HBC) and An Pha Petroleum (APS) have announced the repurchase of shares as treasury stock.

 

The two companies will repurchase an amount of around 1 million shares, using undistributed profits from 2010.

 

HCB will complete its repurchase within three months from the start of June, while APS kicked off its repurchase from June 2.

 

Bank deadline for credit growth holds

 

The governor of the State Bank of Viet Nam (SBV), Nguyen Van Giau, has reiterated that commercial banks must lower their rate of credit growth in non-production to 22 per cent by the end of this month.

 

In an interview on Viet Nam Television on Tuesday night, Giau said 20 joint stock commercial banks currently had credit growth in non-production of more than 22 per cent.

 

He added that some banks'non-production credit growth in real estate, securities and consumption was far beyond 22 per cent.

 

Two banks had credit growth of 50 per cent and 52 per cent, he said, adding that the SBV would take action against any bank that did not abide by its instruction.

 

The SBV in March ordered credit organisations, foreign bank branches in Viet Nam and SBV branches to lower credit growth.

 

Furthermore, Giau told credit institutions to outline specific plans to ensure the year's credit growth rate of less than 20 per cent. Of this, credit growth in non-production must be kept at less than 22 per cent and 16 per cent by the end of this month and the end of December this year, respectively.

 

Banks have been given enough time to adjust credit growth in non-production as the SBV instruction was issued at the beginning of March, he said.

 

The central bank would require banks violating its instructions to double their current reserve ratios along with severe restrictions on their operations, according to the SBV.

 

Nguyen Thi Mùui, member of the National Advisory Council for Monetary Policies, believes that the target of restraining credit growth to at less than 20 per cent for the year would be successful based on the existing pace of credit growth and SBV measures.

 

There will be many challenges however as banks witnessed optimistic credit growths during the first quarter of the year.

 

In order to reduce risk, banks should review bad debts and lending policies in order to provide effective loans, Mùui said.

 

According to the SBV, as of May 23, total outstanding bank loans increased by 6.2 per cent in comparison with the same period last year. Of this, loans surged by 2.59 per cent and 18.9 per cent in terms of Vietnamese dong and foreign currencies, respectively.

 

EU aid not to be affected by crisis

 

The European Union has assured it will not reduce its official development assistance to Vietnam despite its current economic difficulties.

 

Sean Doyle, head of the Delegation of the EU in Vietnam, said in the next three to four weeks ODA disbursement could reach 40 million euro ($60 million). The EU is awaiting reports on the general economic situation from the International Monetary Fund (IMF).

 

The bloc is the major provider of non-refundable aid to Vietnam with a total of $972.3 million earmarked for 2011, or 11.1 percent of total overseas donor commitments to the country.

 

Of this, 42 percent, or $406.4 million, will be non-refundable aid.

 

The EU is working with the World Bank and IMF to make policy recommendations to the Vietnamese government at the mid-term meeting of the Consultative Group to be held Thursday in the central province of Ha Tinh.

 

The EU said it had enough resources to tackle the public debt crisis in several member countries, and therefore there was no concern about its aid to other countries.

 

The Ministry of Planning and Investment said Vietnam’s ODA disbursement in the first five months is estimated at $1.26 billion, or just over half the targeted amount, with loans accounting for $1.19 billion and non-refundable aid for $70 million.

 

The commitments for during the period were worth more than $1.66 billion, including $1.63 billion in loans and $27 million in grants.

 

Marine economy underperforms

 

The development of the domestic marine economy has not reached its full potential, says head of the Viet Nam Administration of Seas and Islands Nguyen Van Cu at a forum to discuss advertising and developing sea-based products, currently held in the south central province of Khanh Hoa.

 

Cu said that infrastructure in ocean and coastal regions as well as islands remained poor.

 

Ports were small and equipment was out of date, he added.

 

Cu said that the Vietnamese ocean economy was lagging behind both developed and regional nations.

 

According to reports released at the forum, the volume of cargo per personnel moved through Vietnamese ports was only 0.14 per cent of Singapore's capacity, 14 per cent of Malaysia's and 20 per cent of Thailand's.

 

Regarding tourism, the forum heard that although there was a lot of potential, the sea tourism industry still lacked specific products.

 

Pham Trung Luong, an official from the Viet Nam National Administration of Tourism, said that domestic sea tourism industry had failed to attract foreign visitors.

 

Many ocean tourism resources had not been effectively exploited, Luong added.

 

During the forum, participants discussed ways to develop the ocean economy.

 

They all agreed that initially, there was a strong need for investment in infrastructure.

 

A plan to utilise and protect ocean resources from now until 2020 and towards 2030 was also needed. This would help to effectively exploit ocean resources in the long term, they said.

 

Experts at the forum said that the country must comprehensively develop its ports in line with the national transportation system.

 

Ports must become the logistical centres of their region, said director of the Cam Ranh Port Company Ltd Pham Huu Tan.

 

The Vietnamese ocean economy earns more than US$10 billion per year while the global figure recently hit $1.3 trillion. Japan leads the way with $468 billion per year.

 

Banks join capital financing programme

 

More banks are injecting preferred capital into domestic enterprises through trade finance and credit finance, which are seen buoys to save thirsty-capital enterprises from capital tension this year.

 

The Asian Development Bank (ADB) in conjunction with nine Vietnamese commercial banks carried out a Trade Finance Programme (TFP) in order to boost the international trade activities. The programme is designed to benefit exporters and importers in Viet Nam.

 

Trade finance refers to international transactions. In this financing arrangement, the bank or the importer's institution provides payment for goods imported on behalf of the importer.

 

The TFP's director, Steven Beck, said that the programme has been developing rapidly, supporting up to US$2.8 billion in trade activities in 2010 in Asia. Viet Nam was one of the members using the largest capital of the TFP and definitely the usage will be enhanced within this year.

 

Vietnamese traders expect their trade finance requirement to increase in the next six months, according to this year's HSBC Trade Confidence Index released in the middle of last month. Fifty-two per cent of respondents will use trade finance from banks, while over 34 percent will rely on their own capital to do business. Only 15 per cent of future trade financing obligations are expected to be made through buyers' support and payment terms from suppliers.

 

HSBC, Citibank and DBS late last month signed a deal arranging a total of $457 million for Vietnam Airlines to purchase eight Airbus A321-231S.

 

Earlier, HSBC arranged $904 million under Export Credit Agency (ECA) sourced from Sinosure institution, Hermes to finance the Vung Ang No1 thermo power plant of PetroVietnam.

 

Citibank Viet Nam arranged $200 million of credit for electricity transmission projects of National Power Transmission (NPT) Corp.

 

OceanBank, a domestically active bank in launching credit contracts late last month, signed a credit agreement of $7 million with Vietnam Airlines for purchasing engines of Airbus A321 aircrafts.

 

OceanBank earlier co-operated with HSBC to arrange a seven year credit line of VND400 billion ($19.51 million) for Phu Quy wind power plant in the central province of Binh Thuan.

 

Steel industry protests tax plan

 

The Vietnam Steel Association has urged the government not to impose the 3 percent tax on steel exports proposed by the Ministry of Finance.

 

The tax was mooted last month after the MoF said the steel industry was taking advantage of cheap electricity from Electricity of Vietnam Corp – it pays only VND1,242 per kWh instead of the normal VND1,777.

 

However, the VSA said steel embryo (huh?), which is produced mainly for domestic supply, consumed the highest amount of electricity at 600 kWh per ton while other products made for export, such as construction steel and pipes, required only 100 to 120 kWh.

 

The exports must remain tax-free to also reduce the large trade deficit, it added.

 

Last year Vietnam’s steel exports were worth only US$1.05 billion compared to $6.15 billion worth imports.