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BUSINESS IN BRIEF 17/8

 Viettel joint venture wins award in Mozambique; Exports to France surpasses US$1 billion; 7-month trade deficit runs at US$277 million; IFC supports Vietnam’s economic growth

Viettel joint venture wins award in Mozambique

Movitel- a joint venture between Vietnam’s Viettel Group and Mozambique’s SPI and Invespar Company has won the leading business in competitive capacity award.

After 10 rounds of appraisal it got 9 marks, double the level of famous rivals, such as Vodacom and TM which have secured a firm foothold in Mozambique.

Frost and Sullivan experts said Movitel focuses on large number of low income people through its social programs, such as offering free Internet assess at school, and supporting rural people in using its services.

Over the past year, Movitel has won 80% of new subscribers in Mozambique and generated more than 20,000 jobs for local people. Millions of teachers and students now have access to the Internet thanks to its free Internet progam for 4,200 schools across the country.

Mozambique is listed one of the top three countries in telecommunications in the Lower Sahara. Two others are South Africa and Nigeria.

The country is now ready to implement management tools such as e-Government and apply information and communication technology into health care and education for socio-economic development.

Movitel CEO Safura da Conceicao said the award acknowledged Movitel’s contribution to telecommunications development in Mozambique and Africa.

In 2012, Movitel was also awarded by Africacom for its best solutions to improve telecommunications in rural Africa.

Exports to France surpasses US$1 billion

Vietnam’s exports to France hit more than US$1 billion in the first half of this year, up 6.3% on the same period last year.

According to the Trade and Industry Information Centre (TIIC) under the Ministry of Industry and Trade (MoIT), products exported to France are diverse, such as footwear, garment, utensils, agriculture, forestry and seafood products, electrical equipment, electronics and rubber.

Telephones and its components topped the list of export commodities with more than US$383 million in revenue (up 25.1%), followed by computers, electrical products and components with US$112.7 million (up 156.9%) and footwear with US$109.8 million (down 15.3%).

Some other items also achieved high export growth, such as garment, pepper, confectionary and cereals.

Vietnam is currently negotiating Free Trade Agreement with the EU in an effort to reduce import taxes for some of its products.

7-month trade deficit runs at US$277 million

Despite recent considerable export growth, the national economy slipped into a trade deficit of US$277 million in the first seven months of this year, according to Vietnam Customs.

The figure is still far below the General Statistics Office’s (GSO) US$733 million estimate.

Vietnam Customs reported that the country’s total 7-month import-export value reached US$146.91 billion, a year on year increase of 15.2%.

Export earnings rose 15.2% to 73.32 billion, and imports also grew by 15.2% to US$73.55 billion.

In July alone, Vietnam achieved an export surplus of US$379 million, or US$179 million more than the GSO’s earlier estimate.

In seven months, mobile handsets and spare parts topped the list of export items, earning US$11.5 billion, followed by garments (US$9.7 billion), computers, electronics and spare parts (US$5.78 billion), crude oil (US$4.27 billion), and seafood (US$3.41 billion).

Foreign direct investment (FDI) businesses raked in US$44.3 billion from exports, increasing 27.2% year on year and accounting for 60.4% of the country’s total export value.   

IFC supports Vietnam’s economic growth

A leading official from the International Finance Corporation (IFC) of the World Bank Group has affirmed that the IFC has confidence in Vietnam’s long-term economic prospects and commits to supporting its growth during difficult times.

IFC Vice President for Asia Pacific Karin Finkeiston made the remark at an annual press conference held in Hanoi on August 15 to announce the outcomes of the IFC’s operations during the 2013 fiscal year (July 2012-June 2013).

“Looking forwards, we will focus our efforts on helping accelerate necessary structural reforms, particularly in the banking sector, in order to see Vietnam return to more robust economic growth,” Finkeiston stressed.

The IFC has invested around US$805 million in Vietnam during the fiscal year to help expand lending to small and medium-sized businesses, generate jobs, and spur growth as the country’s economy slowed and companies found it difficult to get financing, IFC Regional Director Simon Andrews reported.

Vietnam’s economy is experiencing its longest spell of slow growth since the onset of economic reforms in the late 1980s, growing a mere 5% in the second quarter from the same period last year. Many enterprises have cited high borrowing costs as a key factor behind closures and bankruptcies.

In response, the IFC’s Global Trade Finance Programme has helped Vietnamese banks improve access to finance by increasing lending for local exporters and importers, thus facilitating cross-border trade that is vital to private sector growth.

During the 2013 fiscal year, which ended on June 30, the IFC’s trade finance programme enabled participating banks to issue 155 guarantees worth US$800 million, making Vietnam one of the institution’s top markets in trade finance.

The IFC’s total investments in East Asia Pacific reached a record US$3.4 billion in 83 projects for the whole period, up around 15% on an annual basis. Vietnam ranked second after China in terms of IFC investment volume in the region.

Andrews also revealed that his corporation will help banks improve their management ability, recover bad debts, and achieve international standards in risk management and corporate governance.

The moves will help banks run more efficiently so that the private sector, particularly small and medium-sized enterprises, is able to get financing at a lower cost, Andrews added.

Local firms aim for trademark popularisation

Business players from home and abroad converged at the 2013 Shape the World conference in Ho Chi Minh City on August 15 to consider how to promote Vietnamese trademarks to the world.

Co-hosted by the Vietnam Chamber of Commerce and Industry, Singapore’s Consulus Group and Nhip cau doanh nghiep (Bridge for business) magazine under the Ministry of Industry and Trade, this year’s event was themed “What is Vietnam’s brand of leadership?”.

Participants talked about steps to address their difficulties, ranging from workforce management, business models and trading risk control to promotion of Vietnamese trademarks in global markets.

According to statistics, over 95% of domestic firms are unaware that branding can result in a strong competitive advantage in the business arena. More than 70% of local companies do not have staff specialising in brand strategy or public relations, and 50% have yet to hire relevant professional services.

Consulus Chief Executive Officer Lawrence Chong said in order to achieve the goal, there should be stronger coordination among businesses, management agencies and industry insiders.

He also recommended firms pay attention to customer psychology and demand in target markets, product quality and selling prices, brand recognition, public relations and business consultancy services in localities.

Competitive businesses rewarded with preferential treatment

Six highly competitive economic industries will be graced with the government’s undivided attention, a Ministry of Industry and Trade (MoIT) seminar was told in Hanoi on August 15.

Participants recommended rewarding business efficiency with tax cuts, official development assistance, and other preferential loans.

The industries expected to benefit from the 2013–2020 plan include agriculture and aquaculture, processing and manufacturing, construction, logistics and forwarding, hospitality services, and information and communications.

HCM City’s Deputy Director of the Department of Industry and Trade Le Van Khoa said impressive export growth should earn the wood and food processing sectors some kind of policy recognition. Timber exports raked in nearly US$5 billion last year, helping Vietnam become Asia’s second largest wood exporter and ranking it sixth in the world.

MoIT Planning Department Deputy Head Hoang Thinh Lam said prioritised businesses can expect to enjoy lower corporate tax rates (15%) until 2020 in an effort to lengthen their already competitive strides.

Lam also revealed the MoIT is drafting a trade and export promotion programme and plans on building a number of bonded warehouses and goods distribution centres abroad some time in the near future.

Belgium – Vietnam’s key consumer in EU

Vietnam’s exports to Belgium have sharply increased in recent years, hitting a record high of US$1.44 billion in 2012.

According to the Ministry of Industry and Trade’s Trade and Industry Information Centre (TIIC), shipments to Belgium totaled US$637.94 million in the first half of this year, up 9.5% on the same period last year.

Vietnam primarily exports seafood, footwear, garments, leather products, ceramics, gemstones, plastics and rubber products.

Footwear led the country’s export commodities with US$250 million in revenue (accounting for 39.2% of total export value), followed by garments (US$75.7 million or 11% of the total) and coffee (9.3% of the total).

The TIIC said Belgium, as a regional distribution centre, is a useful European Union market entry point for Vietnamese goods.

Belgian Ambassador to Vietnam Bruno Angelet recently worked with Deputy Minister of Industry and Trade Tran Tuan Anh on building a distribution and auction centre for Vietnamese seafood products at Belgium’s Zeebrugge Port.

Angelet said the initiative is a joint proposal from the Vietnam Association of Seafood Exporters and Processors (VASEP) and the Belgian Embassy. The centre would guarantee a reliable supply of exported tra (Pangasius) fish to EU markets.

If plans are realised, Vietnamese tra fish export businesses can expect reductions in transport expenses and opportunities to cut out costly intermediaries when supplying major supermarket chains and retailers.

The EU is currently one of Vietnam’s three largest seafood importers, behind the US and Japan.

Australia’s cattle exports to Vietnam hit record high

One of Australia's largest exporters says Australia is now exporting more cattle than ever to Vietnam.

The Australian Live Export Council estimates 20,000 head of cattle have been exported to the country so far this year.

Darwin Port Manager for South East Asia Livestock Services, Sid Parker, says Vietnam is a crucial market because it takes heavier cattle, up to 400 to 500 kilo.

"Vietnam takes quite a number of bulls, they are taking cows, bulls and heavy steers. There will be a lot of heavy cattle left here if Vietnam had not opened up a bit", said Darwin.

The Australian Livestock Exporters Council says Queensland cattle producers have been on the front foot with the trade.

CEO Alison Penfold says Queensland's contribution to Australia's overall exports has increased over the past year.

Last year, 2.8 percent of all cattle exported out of Australia came from Queensland. This March, 9.4 per cent of all cattle exported also came from Queensland."

Wood processing sector still lacking in support industry

Even with its annual export revenue surpassing US$4.5 billion, the wood processing sector still suffers from support industry deficiencies.

Every year around US$700 million is spent on importing miscellaneous parts including wood glue, paint, padlocks, screws, and hinges.

Vietnam Timber and Forest Product Association (Vietfores) Vice Chairman Nguyen Ton Quyen said the imported parts make up 30­–40 percent of the production cost for each product on sale.

In the first half of this year, the wood processing sector surpassed the agriculture, forestry and aquaculture sector by fetching US$2.46 billion in export earnings, up 12.5 percent on 2012.

However, the industry had to import US$689 million worth of materials and US$360 million miscellaneous parts.

Nguyen Manh Dung, Head of the Ministry of Agriculture and Rural Development’s (MARD) Wood Processing Department, said integrating Vietnam’s wood processing into the global value chain will require a much more effort in support industry.

The glue used in producing plywood is the most important determinant of its quality and international competitiveness.

On average, one cubic metre of plywood uses 100kg of urea-formaldehyde glue.

A cubic metre of particle board needs 90–100kg of glue, 8–10kg of silica gel, and 2kg of ammonium chloride, while the same amount of medium-density fibreboard (MDF) requires 80–100kg of glue, 10kg of paraffin, and 1.7–2kg of ammonium chloride.

From 2016–2020, the MARD plans to turn out 100,000 cubic metres of particle board, 1.5 million cubic metres of plywood, and 500,000 cubic metres of other man-made wood products.

Achieving such targets it annually needs at least 250,000 tonnes of glue, 5,000 tonnes of ammonium chloride, and tens of thousands of tonnes of silica gel.

Each square metre of wood surface requires 250gr of paint and other finishing chemicals,  and there is an urgent need for hundreds of thousands of tonnes each year.

In fact, only 10 percent of the total volume of such materials can be domestically produced, but the remainder has to be imported at an annual cost of US$400 million.

Almost no Vietnamese factories specialise in manufacturing spare parts for wood processing industry.

The limited quantity of padlocks and handles manufactured domestically are of substandard quality.

Compensatory Chinese imports are unacceptable for use in luxury or export timber products.

Vietnam has no clear-cut policy to develop support industry for wood processing sector and the Prime Minister’s support industry development decision is still on paper.

In the forestry sector’s 2016–2020 strategy there is no mention of support industry for wood and timber processing.

The Department of Processing and Trade for Agro-Forestry-Fisheries and Salt has only outlined orientations for developing such an industry in future.

The focus will be on encouraging domestically manufacturing wood glue for man-made board and furniture construction by 2020.

The chemical industry will be asked to produce non-toxic paints and metallic finishes to reduce the reliance on imported materials and improve the quality of wood products for export.

Vietnam will cooperate with Japan and the Republic of Korea in researching and improving the sustainable growth of the wood processing sector.

Access to loans gives farmers a lift

The total amount of credit available to the agricultural sector has increased by 2.1 times to VND622 trillion (US$29.6 billion), three years after a Government decree to improve the flow of credit to farmers came into effect.

This figure accounts for 18-19 per cent of the total credit available to every sector, said the Director of the State Bank of Viet Nam's Credit Department, Nguyen Viet Manh, during an online meeting that focused on the demand for credit from agriculture and rural areas yesterday.

The Decree became effective in July 2010, and has had several positive impacts on farmers, particularly in helping them to get better access to credit, he said.

The credit programme has helped to increase the amount of loans available to farmers from VND10 million ($476) to VND50 million ($2,380), from VND50 million ($2,380) to VND200 million ($9,500) for farm owners and from VND100 million ($4,760) to VND500 million ($23,800) for co-operatives without any guaranteed assets.

However, many involved say that the credit policy needs to be complemented to meet demands from farmers as well as ensuring it is efficient.

The Vice Chairman of the Viet Nam Farmers' Union, Lai Xuan Mon,said credit for farmers through the Union reached VND13 trillion ($619 million), while there are 14 million farming households nationwide. This means that only 4 per cent of households could access credit.

The Deputy Director General of the Bank for Agriculture and Rural Development (Agribank) Nguyen Tien Dong, said that apart from providing loans for farmers via intermediary groups such as the Farmers' Union, the Viet Nam Women's Union or the Viet Nam War Veterans Association, the bank's credit department also sent representatives to every commune and village, offering credit to farmers directly.

Credit for farmers via intermediary groups accounted for 17 per cent, he said.

When explaining why credit institutions preferred offering loans to businesses rather than farmers when they visited rural areas, Dong stressed that farmers were the most vulnerable borrowers because of the impacts of natural disasters, diseases and their limited management capacity.

Concerning the limited operations of local agricultural businesses due to their shortage of capital, Deputy Minister of Agriculture and Rural Development Vu Van Tam said that not only farmers but businesses as well, needed credit support.

However, apart from State assistance, businesses should take advantage of trade opportunities and study the market to introduce appropriate production and trade strategies, he said.

Most businesses operating in agriculture in Viet Nam still fail to work closely with the farmers to boost production, he added.

When asked about the debts run up by agricultural businesses, Tam said that the Government had instructed all banks to review the debts of big businesses and restructure them following their own individual plans.

He pointed to the need to introduce measures to tackle the difficulties in the consumption of farm products and develop the market for agricultural businesses.

"The next credit policies should have different credit programmes for each key agricultural product such as "tra" fish, rice and coffee," he said.

Tam also proposed a credit policy for fishermen, which he said was an important sector that also contributed to protecting national sovereignty, but is facing very high risk.

Manh stated that the banking system would continue to relax the tax laws and will allow for delays and reduced payments for bad debts from now until the end of the year.

The State Bank of Viet Nam was working with several Government agencies to draw up new agricultural credit programmes that fall in line with the production processes used by farmers, he said.

Coal group proposes export tax reduction

The Viet Nam National Coal and Mineral Industries Group (Vinacomin) has proposed lowering coal export taxes to 10 per cent in a bid to lift coal consumption by the end of the year.

At a meeting with Deputy Prime Minister Hoang Trung Hai in northeastern Quang Ninh Province yesterday, Vinacomin leaders pushed the case for reducing the current rate from 13 per cent to 10 per cent to combat declining coal sales.

Vinacomin's coal exports showed significant declines last month, falling to 100,000 tonnes following the increase in export tax to 13 per cent in mid July.

The group added that keeping the current rate would likely result in the company failing to meet its end of year consumption target of 39 million tonnes.

Vinacomin reported coal production in the first seven months of this year estimated at 25.7 million tonnes. By contrast, coal sale was estimated at 23.7 million tonnes, roughly 60 per cent of this year's target.

The group's leaders urged the deputy PM to fast track project licenses, extend invitations for upcoming projects, as well as purchase and manage the implementation of the group's affiliates' projects. The leaders also pushed for the government to favour housing projects for workers.

The Deputy PM emphasised the important role the coal industry played in national energy security and praised co-operation between Quang Ninh Province and Vinacomin in addressing the environment impacts of coal exploitation.

Calling for ongoing efforts in environmental sustainability, Hai also advised Vinacomin to continue efforts in effective coal consumption, including greater investment in new technology.

The deputy PM particularly affirmed the importance of workplace safety and the importance of safeguarding jobs and income.

Pepper exports up in seven months

Viet Nam's pepper exports for the first seven months of this year rose over the same period last year, but pepper supplies are forecast to fall in the remaining months, according to the Viet Nam Pepper Association (VPA).

Pepper exports achieved a year-on-year increase of 22.8 per cent in volume to 94,000 tonnes and 17.7 per cent in value to US$618 million during the first seven months of 2013, the association said.

Pepper was one of few farming products to see a surge in export value during the past months, partly thanks to pepper prices of VND135,000 ($6.4) per kilo, VND18,000-20,000 ($0.85-0.95) higher than the prices earlier this year.

However, by the end this year, supply of pepper was expected to fall and this year's total pepper exports are forecast to be lower than last year, according to the association.

VPA chairman Do Ha Nam said the country's pepper output was forecast to reach 95,000 tonnes this year, 15 per cent lower than 2012, despite the total area under pepper cultivation expanding to 60,000ha from 57,500ha in 2012.

The decrease in output was blamed on a long rainy period in June 2012, which resulted in fewer pepper trees flowering.

The country's average annual pepper output is 100,000 tonnes, accounting for 50 per cent of pepper traded on the global market, he said.

Viet Nam's pepper output reached 125,000 tonnes in 2011 and 115,000 tonnes in 2012.

Nam said export prices for Vietnamese pepper reached an average of $8,800 per tonne for white pepper and $6,090 per tonne for black pepper.

These prices were expected to increase this year due to falling supply in Viet Nam, India, Malaysia and Indonesia.

The export price of Vietnamese pepper was expected to surge as foreign traders take more notice of Vietnamese pepper.

Therefore, Vietnamese traders should be carefully in signing export contracts so that they can benefit from expected price rises later this year.

Vehicle sales drop slightly, up on last year

Viet Nam's auto sales were estimated to have eased by 3 per cent month-on-month to 9,360 units in July, Viet Nam Automobile Manufacturers' Association (VAMA) reported yesterday.

However, it noted that this figure was still up 26 per cent against July last year. This is the fourth consecutive month the total sales have been higher than the same period last year.

Of the sum, 3,959 cars were sold apart from 5,401 trucks and commercial vehicles. Car sales were up 2 per cent against June, while trucks were down by 7 per cent.

The sales of locally assembled cars in July rose by 3 per cent month-on-month to 7,676 units, but the increase could not compensate for the sharp 24 per cent drop in Completely Built Unit (CBU) sales to 1,684 units. The decrease was in marked contrast to the previous four months' upward trend.

VAMA members sold 8,209 vehicles in July, almost the same as June's figure and up 23 per cent year-on-year, said association chairman Jesus Metelo Arias.

Notably, while multi-purpose vehicles and passenger cars posted higher sales than both previous months and their 2012 equivalent, commercial vehicle sales fell 24 per cent and 10 per cent compared to June and same period last year respectively.

VAMA said that two agents, Vinacomin-Vinacoal and Vinaxuki, reported zero sales in July.

Impressive sales surges were recorded by Toyota (2,995 units), GM (460 units), Ford (685 units), and Honda (510 units).

The July figure has extended auto sales to 59,197 vehicles from the January to July period, an increase of 18 per cent from a year ago. Of these, car sales were up 25 per cent and sales of trucks and commercial vehicles were up 13 per cent.

With the current trend of recovery, together with the implementation of registration fee reductions in major cities, auto sales this year could be as high as 110,000 to 112,000 units, VAMA said in the report, having revised its earlier forecast of 100,000 units.

IFC invests $805m in VN this year

The International Finance Corporation (IFC) provided up to US$805 million in trade finance to Viet Nam's banking sector in the previous financial year, according to an announcement made yesterday.

The agency, which is a member of the World Bank, supplied the funds in the previous fiscal year ending June 2013, in an effort to boost lending to small and medium enterprises, create jobs and lift economic growth.

"Viet Nam's economy is experiencing its longest slow growth period since the economic reforms in the late 1980s, growing just 5 percent in the second quarter," said Karin Finkelston, IFC vice president Asia Pacific.

As high borrowing costs became a key factor in company closures and bankruptcies, the IFC's Global Trade Finance Program helped Vietnamese banks increase lending to domestic businesses and facilitate cross-border trade that was vital to private sector growth.

During the 2013 fiscal year, the IFC's trade finance programme enabled participating banks to issue 155 guarantees to support more than $800 million in trade finance, making Viet Nam one of IFC's top markets in this field.

"After operating in Viet Nam for more than 15 years, we have confidence in the country's long-term economic prospects and have remained fully committed to supporting its growth during difficult periods," said Finkelston.

"Looking forward, we will focus our efforts on helping accelerate necessary structural reforms in the state-owned enterprises and in the banking sector, in order to see Viet Nam's economy maintain its competitiveness and return to more robust economic growth."

The IFC pledged to help banks manage and recover non-performing loans as well as meet international standards on risk management and corporate governance.

In an effort to promote low-carbon growth, the IFC has ramped up efforts to improve energy efficiency in Viet Nam's industrial sector.

Backed by financial and advisory support from the IFC, two Vietnamese lenders – Techcombank and VietinBank – have raised energy-efficiency portfolios to more than $60 million during the last three years.

The IFC is also partnering with the Ministry of Construction to revise the Building Energy Efficiency Code that aims to reduce building energy consumption by up to 15 per cent per square meter, in new buildings.

The IFC's total investments in the East Asia Pacific reached a record of $3.4 billion across 83 projects in the 2013 fiscal year, an increase of 15 per cent from the previous fiscal year.

Hopes rise for huge oil plant

A group from Thailand and Viet Nam's central Binh Dinh Province are together conducting a feasibility study for a US$30 billion petrochemical refinery project in the province.

The two entities were given the nod by the Vietnamese Government in May after preparing a pre-feasibility report.

Representatives from Thailand's oil and gas PTT Group and local authorities yesterday visited the site designated for the planned complex in the province's Nhon Hoi Economic Zone.

Sukrit Surabotsopon, senior executive vice-president of the petrochemicals and refining business unit at PTT said the area was a perfect location.

At a press briefing in the province, Surabotsopon said factors attracting the PTT Group to the locality were the great support from local authorities and 2,000-ha land that has already been cleared and "embedded with fine infrastructure".

The Petroleum Authority of Thailand yesterday announced three international companies as consultants for the project.

The McKinsey Company was selected as a strategic project manager, Foster Wheeler would carry out engineering consultation and the preliminary stages of the project, and IHS Inc would support import and export from now to May next year.

PTT Group has plans for a complex that would compete with companies from Singapore and South Korea for five years. The group had wanted to build in Thailand, but decided on Binh Dinh Province to avoid export taxes in Thailand.

"We are aiming at exporting our products to countries in the ASEAN economic community, including Viet Nam, thus the complex based here would be more economically profitable," said Surabotsopon.

The Thai group will contribute about 40 per cent of the total expected investment of US$30 billion.

During the feasibility study process for final approval by the Government next year, the PTT Group intends to lure international investors from various sectors to the project.

Meanwhile, Binh Dinh People's Committee said it would find qualified domestic investors to work with the group in different sections of the project.

The scale of the complex, which will refine oil and produce petrochemical products such as olefins and aromatics, will be decided by PTT Group after the feasibility study is done.

"We might complete this world-class complex in one go or separate it into two stages," Surabotsopon said.

With proposed capacity of about 32 million tonnes of crude oil a year, the complex is expected to be able to supply all demands for oil and petrochemical products in Viet Nam and also export to the global market.

Le Huu Loc, chairman of the provincial People's Committee, said the refinery complex would be a key impetus to the province's development.

"It is clear that it will lift up the province's economy and create jobs for thousands," he said.

The refinery complex will be the biggest one in the economic zone, where, so far, Quy Nhon Port is the only business operating at full capacity. The project will help the development and expansion of the port as well.

Loc pledged to implement strict environmental assessments before submitting the complex proposal to the Government, ensuring the least impacts to nature at locality.

Low raw materials hit fisheries sector

Ensuring reliable sources of raw produce has become a major headache for many of the country's fisheries processors.

Nguyen Thi Tinh, chairwoman of the Phu Quoc Fish Sauce Association, said Phu Quoc fish sauce was missing out on its great potential to gain market share overseas due to a shortage of anchovies.

The domestically well-known brand of fish sauce has been granted Protected Designation of Origin (PDO) status in the EU and passed all of the union's food safety regulations.

But the famous sauce, the first-ever Vietnamese product to be granted PDO status in the EU, is now failing to exploit this status, said Tinh.

During the past two years, fish sauce producers in southern Kien Giang Province's Phu Quoc Island have reduced production due to difficulties in securing anchovies at reasonable prices.

On average, the island's fish sauce sector uses 40,000-50,000 tonnes of fish every year to produce fish sauce, Tinh said. But so far this year, fish sauce processors have only managed to secure 30 per cent of the annual volume for processing, while fish sauce sales have reduced by 60 per cent against 2012.

Tinh said part of the problem was that fishermen were selling less of their anchovy catches to fish sauce producers as they were making more money selling directly to traders.

Anchovies were sold to traders at prices of VND18,000-20,000 (US$0.85-0.95) per kilo, 2.5-3 times higher than prices for sales directly to fish sauce processors.

Due to a lack of raw materials, 60 per cent of the fish sauce producers on Phu Quoc Island must stop processing fish sauce and now only 80 fish sauce factories are continuing to do business, she said.

Nguyen Huu Dung, deputy chairman of the Viet Nam Seafood Exporters and Producers (VASEP), said seafood processors often faced a lack of raw materials and 90 per cent of processors in the sector needed to import material every year to ensure production.

This year, the fisheries industry was expected to increase imports of raw material by 20 per cent against last year, Dung said. The import value of seafood products for export processing was estimated to reach as high as $1 billion this year.

Experts said the lack of raw materials was a persistent problem for processors as the sector didnot have an effective general plan on developing cultivation of raw materials while co-operation between enterprises and regions was also ineffective.

Some provinces had general development plans, however these plans were not implemented effectively, he said.

This had resulted in an imbalance between the great number of seafood processors and limited areas for aquaculture cultivation.

To solve the problem, experts said enterprises should invest into cultivation and strive to secure the support of farmers in developing these areas. They should also work more closely with farmers to ensure raw materials for processing.

Da Nang attracts $26.5m in FDI

The central city licensed 19 foreign-invested projects, with a total investment of US$26.5 million, while nine established projects raised their total investment capital to $62.8 million last month.

Officials announced on Tuesday that the city has drawn in 259 FDI projects worth $3.62 billion, of which 164 projects are now in operation, costing $1.64 billion.

Also last month, 210 domestic businesses registered their total investment capital of VND388 billion or $18.5 million.

The city exported goods and services worth $156.3 million in July, an 11.1 per cent surge in comparison with the same period last year.

The ports of Tien Sa and Lien Chieu shipped 2.8 million tonnes of cargo last month.

Bike recall for faulty fuel lines

Owners of Yamaha Nozza scooters have been urged to bring their vehicles to Yamaha dealers following concerns over a fault that leads to petrol leaks.

In May, Yamaha Viet Nam recalled 83,000 Nozza scooters nationwide due to possible petrol leaks from pipes connecting the fuel tank to the engine.

However, the department has found that as many as 26,600 Nozza scooters have not yet been taken to Yamaha dealers for repairs.

The Japanese motorbike manufacturer said it would fix and replace all the pipes and their holding systems, which were not correctly assembled and positioned during manufacture.

Nozza owners can bring their bikes to Yamaha dealers for the repairs and replacement work, which would take about 30 minutes and be free of charge, the company said.

They said that frequently used motorbikes were more likely to suffer leaks.

The recall applies to models produced between August 20, 2011 and March 30, 2013, said Yamaha Viet Nam.

South Korea backs waste research

The Korean International Cooperation Agency (KOICA) and the Hanoi University of Technology (HUT) have signed a project on strengthening the research capacity in waste recycling technology.

The South Korean government will provide US$1.5 million in non-refundable aid in the 2013-15 period to build a recycling technology development centre complete with research and analytical equipment.

In addition, the agency will also transfer waste recycling technology to Viet Nam .

Viet Nam has set the target to recycle 85 percent of solid waste under the national environmental protection strategy by 2020.

Budget revenue surges in July

State budget revenues in July rose by a staggering 41.9% against June to VND73 trillion, or an additional VND21.55 trillion over the preceding month, said the Ministry of Finance in a statement last week.

The ministry noted that budget incomes in July showed a marked turnaround compared to the first six months of the year, when revenues always fell far short of targets.

The ministry did not give a breakdown of revenue sources, nor gave explanations for the steep increase.

In a previous report, the ministry said revenues for the State budget in the first half was much lower than the target. Up to 42 provinces and cities collected revenues at less than 50% their annual targets, including major economic centers like HCMC, Hanoi, Danang, Dong Nai, and Binh Duong provinces, while only 21 cities and provinces realized half of the targets.

With the upsurge in budget revenues in July, the accumulated incomes for the State coffer in the January-July period totaled over VND429 trillion, equal to 52.6% of the year’s estimate and rising 6.3% year-on-year, according to the ministry.

Of the total figure in the seven-month period, domestic revenues amounted to VND281.7 trillion, rising 8.2% on-year, while income from crude oil reached VND64.33 trillion, and foreign trade revenue contributed VND119.7 trillion.

As of end-July, Government bonds had contributed VND127.33 trillion, or 65.3% of the annual target, according to the ministry.

In a recent TV program, Minister of Finance Dinh Tien Dung stressed budget collections this year would prove difficult as the Government had introduced programs to exempt, reduce or reschedule taxes for enterprises, which would lead to a shortfall of VND7 trillion for the State budget this year and VND36 trillion in 2014.

PRUBF1 rises to one-year high

Although Prudential Balanced Fund (PRUBF1) managed by East Spring Investments will officially close on October 4 as scheduled, the price of the fund unit increased to VND10,500 last Friday, the highest in the past year.

According to a report of PRUBF1 in July, the fund had net assets of VND539.5 billion as of the end of July, including VND526.4 billion in cash. Its net asset value (NAV) per unit was VND10,791 by late July, higher than the par value.

PRUBF1 closed last Friday’s session at VND10,500, which was still lower than its NAV by July 31.

This is why the price of the fund unit has increased steadily with high trading volume in recent times. Over the past year, PRUBF1 has reached the highest price of VND10,400 versus the lowest level of VND6,000. However, the fund unit stood at VND10,500 in the last two sessions last week.

According to a report the fund has sent its investors, asset liquidation will last from April 1 to October 4. If liquidity on the market falls short and odd fund certificates accrue during liquidation, the process will extend to April 6, 2014.

In case that asset liquidation is done on October 4, the fund will settle financial obligations to the State, operation and dissolution fees from October 7-15. Payment for investors will be on October 7-8.

Orders in settlement have been regulated in charters of PRUBF1 with payments for fund dissolution fees coming first, followed by accounts payable to fund management firm and custodian bank, financial obligations to the State, and other amounts following the laws and investors.

The Hochiminh Stock Exchange (HOSE) last week announced that 50 million PRUBF1 fund units will be delisted from the exchange on September 4 as its operation time will end October 4.

Phan Thi Anh Minh, head of marketing and government relations of East Spring Investments Fund Management Company, told the Daily that the company was processing to launch a new open-ended mutual fund investing in diversified financial products.

Financial companies deteriorate

The key financial indicators provided by the State Bank of Vietnam (SBV) reveal that the situation at financial and finance leasing companies is deteriorating.

The return on assets (ROA) and the return on equity (ROE) of financial and finance leasing companies as of June 30 had fallen by 0.19 and 4.22 respectively against the end of last year, according to data on SBV’s website based on June account balance reports and the first-quarter financial statements of credit institutions.

However, other indicators unveil the health of this group of lenders is worsening and this is the group faced with ‘the worst situation’.

Equity capital of financial and finance leasing companies by the end of June had sharply dropped 7.76%, or some VND9.93 billion, versus a decline of 3.3% as of May 31.

Total assets of these credit institutions had dwindled 0.75%, equivalent to VND153.7 billion.

Capital adequacy ratio (CAR) at the end of June was 8.41%, down from 8.76% at May 31 when the ratio was minus 1.23% (losing over VND152.9 billion against the end of 2012).

The ratio of credits to deposits between banks and individuals or organizations was 164.33%, a further increase from 161.93% in the preceding month.

Meanwhile, banks also saw their CAR shrinking. CAR of the whole system at the end of June stood at 13.65%, down significantly from 14.25% at May 31.

CAR of state-owned banks was 11.1% and of joint stock banks was 12.8%.

ROA and ROE of the system at the end of June remained unchanged from May 31, standing at 0.23% and 2.52% respectively.

Equity capital of State-owned banks rose nearly VND153.14 billion, or 11.56%, while that of private lenders went down 3.68%, equivalent to VND176.4 billion.

The ratio of credits to deposits also dipped from 87.44% in May to 87.3%.

Total assets of the credit system reached VND5,293,557 billion, an increase of 4.09% compared to the end of 2012.

Total equity of the system picked up 2.89% from 2012.

Speaking about bank restructuring, SBV Deputy Governor Dao Minh Tu in an interview on the website of the central bank said foreign investment in the banking sector of Vietnam had produced very positive results.

“We have 13 joint stock banks with participation of foreign investors and generally they’re very efficient,” said Tu. “The central bank is studying and will propose the Government adjust a number of limits in a bid to enable foreign investors to contribute capital to or acquire stakes in local institutions, firstly in the weak banks.”

Eight of the nine weak banks have received approval for their restructuring schemes. Restructuring is taking place at all banks, including those not subject to restructuring, with mergers and acquisitions one of the forms.

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

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