Shares slide on sluggish trading
 
Prolonged lacklustre trading ate away investor confidence pushing, shares down yesterday on both national stock exchanges.

According to Giang Trung Kien, director of FPT Securities Co's analysis division, the domestic economy still faced many difficulties such as restructuring the banking system, declining demand, low GDP growth, and particularly negative second-quarter business results announced by many listed companies.

"This shows the recovery of the business environment, the backbone of the economy, is still very slow, and therefore the possibility of a market uptrend is unlikely at this time," Kien said.

On the HCM City Stock Exchange, the benchmark VN-Index fell back in the afternoon session to close off 0.13 per cent at 414.48 points.

Market value declined 10 per cent from the previous day, totalling VND417 billion (US$20 million), while the volume of trades was also down 5 per cent to 25.4 million shares.

Blue-chips were mixed. Amongst the top 30 shares by market capitalisation and liquidity, 12 advanced, 10 declined and eight closed unchanged, driving the VN30 Index down 0.06 per cent to 491.98 points.

Only three shares saw trading in excess of 1 million shares yesterday, including Tan Tao Investment Industry Corp (ITA), financial conglomerate Ocean Group (OGC) and telecom equipment producer SACOM Development and Investment (SAM).

SAM rose 1.25 per cent while OGC shed 0.8 per cent and ITA closed flat.

Sacombank Securities Co (SBS) continued to shock the market by hitting its ceiling price for the seven consecutive session, despite the fact trading of the company's shares is only permitted in the last 15 minutes of every session.

SBS was put under tight control by the State Securities Commission from July 23 because the company's losses exceeded its total equity capital at the end of March. SBS closed at VND4,200 ($0.20) yesterday.

Meanwhile, the HNX-Index on the Ha Noi Stock Exchange also slid 0.37 per cent to finish yesterday at 69.194 points on a sluggish value of VND235.4 billion ($11.2 million).

Large-cap shares led the downturn, with the HNX30 losing 0.36 per cent to close at 130.92 points. VNDirect Securities (VND) was still the most active code on the Ha Noi market with nearly 2.6 million shares traded, closing unchanged at VND10,800 ($0.51).

Daelim gets giant refinery moving

South Korea’s Daelim Industrial Company is in the final steps of conducting a feasibility study to build a $3 billion mega oil refinery and petrochemical project in central Vietnam.

Daelim will develop the project, in central Khanh Hoa province’s Van Phong Economic Zone, through a joint venture with Vietnam’s state-run Petrolimex. Nguyen Trong Hoa, director of Van Phong Economic Zone Management Authority, told VIR that Daelim would complete the feasibility study before the end of this quarter.

“We are informed that Daelim is going to finish the study. This will set a milestone for Daelim and Petrolimex to further develop the project,” said Hoa.

The South Van Phong oil refinery and petrochemical plant is among Vietnam’s largest oil refinery and petrochemical projects and Petrolimex last year announced the refinery would have the total capacity up 10 million tonnes of crude oil per year, similar to the capacity of Nghi Son project jointly developed by PetroVietnam with Japanese and Kuwait partners. The first phase of the South Van Phong oil refinery will have capacity of four million tonnes of crude oil per year.

The two firms last year signed a memorandum of understanding in Hanoi for jointly investing into this project. In the first stage, Daelim would provide engineering-procurement-construction services to develop the refinery.

Daelim is one of the leading Korean firms operating in engineering, construction and petrochemical sectors and has an overseas network in 11 countries including Saudi Arabia, Kuwait, Iran, India, China and the United States. Daelim has already had a footprint in Vietnam with a motorbike manufacturing plant.

In July 2011, at the time of its initial public offering, Petrolimex announced the South Van Phong oil refinery and petrochemical plant would go on-stream by the end of 2013 to produce a range of products like LPG, high-octane unleaded gasoline, kerosene, diesel, polypropylene and benzene.

But Hoa said the joint venture could miss this deadline as it had not yet finished necessary investment procedures. “However, the involvement of Daelim will ensure the development of this project as Petrolimex is facing difficulties in mobilising funds for this project,” he said.

Petrolimex is now the biggest fuel supplier in Vietnam, accounting for a 55 per cent share of the market. The company’s leading position comes thanks to its nationwide distribution network of 2,100 retail outlets.

In a bid to ensure energy security, Vietnam is now developing several oil refinery and petrochemical projects. The first, Dung Quat refinery is operating in central Quang Ngai province. Four others are under construction or in preparation stages in Thanh Hoa, Phu Yen, Ba Ria-Vung Tau provinces and Can Tho city.

Nation’s first subway to gather ahead of steam

The southern economic hub is ready to start work on the country’s first metro line this month.

Work is set to break ground on Metro Line 1 on August 28, with the $2.2 billion subway route scheduled for competition in 2017 and starting operational in 2018.

Ho Chi Minh City People’s Committee chairman Le Hoang Quan last week called for a speeding up of site clearance for the construction of the 19.7-kilometre route between Ben Thanh downtown and Suoi Tien in District 9. The city’s Management Authority for Urban Railways (MAUR), was required to make sure all preparation work was finished before the groundbreaking ceremony.

Funding for the mammoth project comes from official development assistance (ODA) loans from the Japan Bank for International Cooperation, which account for 88 per cent of project costs, and Vietnam’s counterpart funds.

The Ben Thanh-Suoi Tien metro route will run through districts 1, 2, 9, Binh Thanh, Thu Duc in the city and part of Di An district in neighbouring Binh Duong province. Less than 3km of the subway line will run underground with three stations and the remaining sections will be constructed above the ground with 11 stations.

The most importance of the three project packages is for the elevated sections and Long Binh Depot in District 9, developed by a consortium between Japan’s Sumitomo Corporation and Vietnam’s Civil Engineering Construction Corp No. 6 (Cienco 6).

The other packages are for construction of the underground section between Ben Thanh Market and Ba Son Shipyard and for mechanical-electrical devices and maintenance.

The metro route is designed to transport 162,000 passengers a day in the initial period, 635,000 passengers by 2030 and 800,000 by 2040. The metro stations will open 20 hours a day with trains departing at six minute intervals.

The line is one of the six urban railway routes to be built in Ho Chi Minh City under MAUR management. The second city needs $39 billion for traffic infrastructure development until 2020 and the city’s subway routes would cost about $10 billion.

Construction of Metro Line No.2 for the length of 20km between Ben Thanh and An Suong will begin by the year’s end. It is also set for completion in 2017 and will cost $1.37 billion. Ho Chi Minh City is looking for capital sources for lines No.3 and No.4, but the MAUR has yet to announce the required investment costs.

Suspected carcinogenic milk not on sale in Vietnam

Imported milk products from China’s Shaya Limited Company that may be carcinogenic are not on sale in Vietnam.

The confirmation was made by the Vietnam Food Administration after it was warned that five packets of milk products from the Shaya Limited Company had been found to contain levels of Aflatoxin M1 beyond the permitted level following recent inspections by the National Food Quality Supervision and Inspection Centre of China.

Aflatoxin M1, a strain of fungi found in cereal and soybean, has been classified by the World Health Organisation as a Group 1 carcinogen.

Vietnam plans to double arabica output by 2020

Vietnam, already the world's biggest producer of robusta coffee, plans to expand its planting area for arabica in a bid to more than double output of the superior-quality bean to 96,000 tonnes by 2020, though industry officials said production could be even higher.

The Southeast Asian nation, the world's No.2 coffee producer after Brazil, will expand its northern and central arabica area to 40,000 hectares (99,000 acres) over the next eight years, an Agriculture Ministry official said.

Estimates on Vietnam's current arabica area range from 32,000 to 38,000 hectares, though it has no central agency able to give exact crop data.

"We aim to keep the area stable at (40,000 hectares) until 2030," Pham Van Thanh, a manager in the ministry's crops department, told Reuters on the sidelines of an industry conference.

Arabica coffee requires wet processing to ensure the higher quality of its beans, something many domestic processors have yet to embrace due to limited funding and unstable domestic supplies, some officials said.

The government said in a plan seen by Reuters that output of arabica would rise to 96,000 tonnes by 2020, accounting for 9 per cent of the country's total coffee output that year. It did not say how much would be invested in the expansion.

But Thai Hoa Vietnam Group, Vietnam's top exporter of arabica, said the country was more likely to be producing 120,000-150,000 tonnes of the variety by 2020.

Vietnam's arabica output in the next 2012/2013 crop year will rise 12 per cent from the current season to between 55,000 and 57,000 tonnes, or 917,000-950,000 bags, Thai Hoa Vietnam Chairman Nguyen Van An said earlier this month.

The country could replace robusta with arabica in some areas with a suitable climate, Vietnam Coffee and Cocoa Association Chairman Luong Van Tu told the conference.

The more aromatic arabica, normally sold for around double the price of robusta, can be grown in cool climates in areas some 1,000 metres above sea level.

Robusta beans account for 97 per cent of Vietnam's coffee production. The country is estimated to produce 22.25 million bags in the upcoming 2012/2013 crop year, based on a Reuters poll of 29 analysts and traders on Wednesday.

That would be down from 24-25 million 60-kg bags in traders' estimates for the 2011/2012 crop due to end in September.

Vietnam's coffee exports between October 2011 and this month could have risen 25.2 per cent from a year ago to 1.44 million tonnes, or 24 million bags, government data showed on Thursday.

Vietnamese consumer confidence remains strong

According to a Nielsen survey, 46 percent of Vietnamese respondents believed that their job prospects are good or excellent, a slight drop of 7 percent compared to the first quarter of 2012 and 11 percent against 2011.

Business confidence grows after economic recovery in Q2
More than 50 percent of consumers said that their personal finances for the next 12 months should be good or excellent, higher than the 49 percent in the first quarter of 2012, and 66 percent considered saving spare cash as their top priority.

The Vietnamese prefer spending their money on holidays (32 percent), new technology (29 percent) and clothes (28 percent) to upgrading their technological equipment (27 percent) and out-of-home entertainment (28 percent).

The survey also showed that 86 percent of consumers have changed their shopping habits to save on household expenses, mainly gas and electricity (70 percent), replacing major household items (53 percent) and mobile phones (51 percent).

UK businesses keen to invest in Vietnam

Many UK businesses are interested in investing in Vietnamese banking, finance, and insurance, says Lord Mayor of London David Wootton.

At a working session in London on July 27 with Minister of Culture, Sports and Tourism Hoang Tuan Anh, Mayor Wootton said UK enterprises are also paying attention to other fields in their strengths such as sports, tourism, infrastructure development, hospitals and harbour construction.

He said he plans to visit Vietnam and some other Asian countries when the London 2012 Paralympics closes in September. He also wished Vietnamese athletes success in the ongoing Summer Olympic Games.

Minister Anh, who is in London to attend the opening ceremony of the London 2012 Olympics Games, presented Vietnam’s great potential and called for UK investment in sports, tourism and infrastructure development.

He also said he hopes that the strategic partnership between the two countries will be promoted in the future.

Footwear sector gaining ground

Despite the impact of global economic downturn, the footwear sector has grown strongly over the past five years with the export volumes of shoes rising 163 percent and bags 205 percent.

The Vietnam Leather and Footwear Association (Lefaso) reports that of the sector’s total exports by the end of 2011, 47.5 percent went to the EU market, 28.2 percent to the US, 3.2 percent to Japan and 21.1 percent to other markets.

The sector is expected to become one of the nation’s key exporters.

Experts say Vietnam’s signing several free trade agreements, such as the FTA and Trans-Pacific Partnership (TPP) will open up more opportunities for the footwear sector. Currently, Vietnam is placed behind Indonesia, Bangladesh, and India in the list of key footwear producers.

The high quality of Vietnamese footwear is proven through well-known international trademarks such as Nike, Reebok, Adidas, Bata and Fila.

In recent years, the local footwear industry has successfully concerned the domestic market with its annual sales reaching 60-65 million pairs of shoes to meet half of the local consumer demand. It has a plan to gain more ground as some brand names, such as Timberland, Nike, Adidas and Nine West, have opened retail shops in Vietnam.

For the benefit of long-term development, An Lac, Thai Vinh, Thuong Dinh, and several other companies are investing in production and transport facilities with a focus on improving distribution and post-sales services.

All businesses in the footwear sector are committed to using more domestic materials in production and creating new designs to catch the eye of consumers.

The sector has estimated its annual growth rate at 9.4 percent in the 2011-2015 period, 8.8 percent in the 2016-2020 period and 8.2 percent in the 2021-2025 period, but the use of domestic materials in production will rise to 60-65 percent and the total value of exports will reach US$11 billion by 2017.

To meet the set target, businesses are required to invest as much as VND28,340 billion in the next five years, of which 44 percent will come from domestic sources and 56 percent from overseas.

The sector will develop an additional 3,000 production lines in rural areas and build fashion research centres in big cities. It will complete a profile of domestic and international shoe sizes, improve the skills of designers and build a footwear database. Key products will include sports and canvas shoes.

Lefaso President Nguyen Duc Thuan, says international groups such as Nike and Adidas have proposed establishing human resource training centres to increase labour productivity on a par with other countries in the region.

Frankly speaking, the sector is not yet highly competitive. Labour cost in Vietnam is the same as in Indonesia and India, 40-50 percent higher than in Bangladesh but 25-30 percent lower than in China. Labour productivity in Vietnam is also 20-30 percent lower than in China.

Agribank sets target for mobilizing deposits
 
As of next month, bankers and employees working for the Vietnam Bank for Agriculture and Rural Development, commonly known as Agribank, will have to exert effort to mobilize deposits to meet the bank’s target, under a newly-issued regulation.

Agribank has stipulated in a recent document that employees should mobilize deposits from themselves or their friends to meet the required norms, which differ from position to position.

Once the regulation takes effect, any members of the board, and general or deputy directors that manage to attract deposits worth more than VND700 million (US$33,600) a month will be considered as “excellently fulfilling duty.”

Deposits valued from VND500 – 700 million will bring the bankers the status “accomplishing duty,” while their mission will be dubbed as unaccomplished if they can only mobilize less than VND500 million worth of savings.

The respective targets for directors and deputy directors of transaction offices and level-one branches are above VND600 million, VND400 – 600 million, and under VND400 million.

The range for employees of other positions in Hanoi, Ho Chi Minh City, Da Nang, Hai Phong, and Can Tho is between VND200 and 400 million.

The lowest target, applied to bankers of other localities, is VND150 – 300 million a month.

The bank also stated clearly that the targets are intended to provide the basis for it to allocate payments and annual bonuses for the employees.

 Bac Lieu’s wind-power project gets on fast track

The upscale wind-power project in the Mekong Delta province of Bac Lieu is getting fast-tracked so as to start supplying power to the national grid in early September, said the investor Cong Ly Construction-Trading-Tourism Co.

To Hoai Dan, general director of the company, told the Daily on Thursday that the fifth turbine is being installed on the sea, and all the ten turbines fore the first stage with a combined output of 16MW will have been completely installed by August 15.

Cong Ly will soon start second-phase development with 52 more turbines to raise the total output of the project to 99.2MW. The total investment for the project amounts to some VND5.2 trillion, or around US$255 million.

Dan said the second phase is scheduled for completion and power generation will start next June.

Currently, the company is also accelerating the construction of auxiliary works such as a 110-kilovolt cable line stretching 18km and a 110kV transformer station to facilitate the power transmission.

The wind power towers and turbines, each weighing 210 tons with a height of 90 meters, have been erected by the U.S. firm General Electric (GE) with an output of 1.6 megawatts each.

This is the first wind power project to be implemented along the nation’s coastline. Thanks to the US$200-million loan funded by the U.S. Export-Import Bank (Ex-Im Bank), Cong Ly is deploying the project along a 62-kilometer stretch of the coastline of Bac Lieu Province.

Bac Lieu Province leaders said this wind-power plant is the first upscale project of its kind in the Mekong Delta, and its success will pave the way for the development of more wind-power projects in the locality.

The provincial government is seeking approval from central authorities to expand Bac Lieu Wind-Power Plant into the wind-power center of the whole Mekong Delta, according to the website www.chinhphu.vn.

If the approval is forthcoming, the investor will install some 300 more turbines along the coastline with an estimated investment of US$1 billion

In late March, Cong Ly Construction-Trading-Tourism Co. also asked for approval from the HCMC government to carry out a 200-megawatt wind power project in the city’s outlying coastal district of Can Gio with total investment capital of VND10 trillion. If the project gets the nod from the city government, Cong Ly will have 125 turbines installed along a 20-kilometer section on Can Thanh beach by GE within three to four years.

 Positive signs for farm product exports

The country obtained US$15.9 billion from the exportation of agro-fishery-forestry products from January-July, up 12.4% year-on-year, thanks to the large contribution of an estimated US$8.9 billion from agro items, according to the latest figures by the Ministry of Agriculture and Rural Development.

Most agro-fishery-forestry products witnessed steady growth in exports, except for rice and rubber. In particular, coffee exports hit 1.2 million tons and generated US$2.5 billion, up 31.6% in volume and 25.4% in value. The two largest consumers of Vietnamese coffee are Germany and the U.S.

In particular, there has been a robust increase in coffee exports to Indonesia with a nine-fold year-on-year increase. Meanwhile, the country recorded a 40% cut in the export volume of coffee beans in other markets like Belgium.

As for tea, the nation experienced excellent export performance in the major markets. Pakistan remains Vietnam’s biggest tea importer and makes up 19.2% of total tea exports.

Some 73,000 tons of tea have been shipped abroad in the past seven months, bringing the country total export value of US$108 million, up 5.9% in volume and 4.2% in value from 2011.

Cashew and pepper registered the highest export growth rate with 120,000 tons of cashew (worth US$828 million) sold overseas, representing a 36.5% surge in volume and a 19.2% jump against last year. Vietnam thus retains its position as the world’s No.1 cashew exporter.

The country saw export value of pepper rising 20% as it exported 80,000 tons of pepper worth US$546 million.

Given a downtrend in traditional export markets, the rice price is on the decline, with the quotation falling 6.6% to US$458 a ton. The country exported an estimated 4.6 million tons of rice worth US$2.1 billion.

The export value of seafood items is projected at US$3.4 billion this year so far, a 6.5% pick-up from the same period last year. The U.S. is still the main importer, followed by Japan and South Korea.

However, the National Agro-Forestry-Fisheries Quality Assurance Department has warned of difficulties facing Vietnam’s seafood industry, especially stringent technical barriers recently imposed by Japan.

Japan has emerged as a potential market for Vietnamese seafood. However, the importer has applied a set of technical barriers to seafood products imported from Vietnam such as minimal risk levels for several substances such as trifluralin, enrofloxacin and enthoxyquin.

The country expects to earn US$26.5 billion from agro-fishery-forestry products in 2012.

National strategy aims for public debt reduction

Vietnam strives to cut public debt to less than 65 percent of its gross domestic product by 2020 and 60 percent by 2030.

Under a recently-approved national strategy, by 2020, the Government's debt is not to exceed 55 percent of the GDP and borrowing from foreign countries will not be higher than 50 percent of the GDP. By 2030, the correlative figures should be 50 percent and 45 percent.

To meet these goals, borrowing to cover State budget overspending needs to fall to below 4.5 percent of the GDP by 2015, 4 percent by 2020, and 3 percent after 2020.

Prime Minister Nguyen Tan Dung said the strategy is to balance the State budget and investments for socio-economic development in specific periods, to assure efficiency in mobilizing and using loans and to maintain the country's financial security.

The nation can issue a maximum of US$10.82 billion worth of State bonds by 2015, and US$24.04 billion in 2016-20, to raise funds for developing health care, education and traffic and irrigation works.

It can borrow around US$26.44 billion at maximum by 2020 to build infrastructure for the industrialization and modernization process.

By 2020, the value of foreign loans is to fall to below half Government's debt while the value of official development assistance capital should account for about 60 percent of its total loans from overseas.

Dung urged the country to minimize risks involving currencies, exchange rates and capital liquidity, and boost the development of the State bond market. The average term of State bonds should be extended to 4-6 years by 2015 and 6-8 years by 2020, he said.

The Government leader asked for debt payment responsibilities to be fully performed, noting that there shouldn't be overdue debts to avoid affecting the country's international commitments.

He specified that the Government's debt must not exceed 25 percent of total State budget revenue each year while foreign borrowing should be lower than 25 percent of total export value. Foreign exchange reserves also need to be double that of short-term foreign loans annually.

Dung stressed the need to speed up the development of the domestic capital market and actively take part in the international capital market, in addition to strengthening risk supervision for national borrowing, especially State corporation debt.

VN garment hangers face 188% dumping duty in US

Vietnamese-made garment hangers exported to the US may be subject to an anti-dumping tariff of as high as 188 percent, according to the preliminary conclusion from the US Department of Commerce (DOC).

The duty levied on Vietnamese steel wire garment hangers ranges between 135.81 – 187.51 percent, while the figures for similar products from Taiwan are only between 69.98 and 125.43 percent, according to the Competition Management Agency under the Vietnamese Ministry of Industry and Trade.

“The DOC will announce the final ruling this December,” the agency said.

It added that TJ Group and three Vietnamese exporters will be subject to a 135.81 percent tax, while Hamico and the remaining manufacturers will suffer the top duty, 187.51 percent.

The lawsuit against Vietnamese garment hangers started last December when the US-based VORYS law office, which represents US manufacturers, filed dossiers to call on the DOC, and the US International Trade Commission, to conduct anti-dumping and anti-subsidy inspections into steel wire garment hangers imported from Vietnam.

The US manufacturers charged the Vietnamese hangers coded HS 7326.20.0020 and 7323.99.9080 imported to the US with having dumping margins ranging between 82.87 percent and 159.20 percent.

They also demanded federal investigations into products imported from Taiwan for alleged dumping margins of 57.01 to 166.19 percent.

Figures from the US authorities show that China, Vietnam, and Mexico are the top three exporters of the hanger coded HS 7326.20.0020 to the US.

According to the Vietnam Chamber of Commerce and Industry, in 2010 the US also conducted an inspection on tax evasion in steel wire garment hangers imported from Vietnam.

This is not the first time Vietnamese exports have been challenged by anti-dumping and anti-subsidy lawsuits in the US.

On November 15, 2011 four American manufacturers asked the US Department of Commerce to conduct anti-dumping inspections on steel pipes imported from Vietnam, India, Oman and the United Arab Emirates.

In May 2010, the US imposed anti-subsidy taxes of 5.28 to 52.56 percent, and anti-dumping tariffs of 52.3 to 76.11 percent on PE bags imported from Vietnam.

This has raised concerns among industry insiders on many possible trade lawsuits local exporters may face in the future.

Quang Ngai wants to attract Japan’s investment

The central province of Quang Ngai is in need of assistance to boost industrial and urban development, improve the quality of human resources and sustainably manage poverty reduction, said Chairman of the Quang Ngai Provincial People’s Committee Cao Khoa.
 
Khoa made the statement at a working session with a Japanese parliamentarian’s delegation, led by Kanda Norio, advisor to the Japan’s Ministries of Finance and Privatization of Postal Services, in Quang Ngai province on July 30.

He said he hopes Japanese investors will explore and invest in agriculture, industry, health care, education and the development of the Dung Quat Oil Refinery and Ly Son island district.

For his part, Norio spoke highly of Quang Ngai’s tourism and technical resource potential.

He said he will assist with the construction of the Long Mon primary school in Minh Long district as soon as possible.

During their visit to Quang Ngai province from July 27-31, the delegation made a fact-finding tour of Minh Long mountainous district and Ly Son island district.

Carrying gold out of the country may be banned

Vietnamese and foreign individuals may be banned from taking gold bullion out of the country when they leave. The ban may also extend to raw gold, such as nuggets and gold dust.

A draft circular from the State Bank of Vietnam (SBV) states that it is collecting feedback on the matter from relevant agencies.

Under the new rule, Vietnamese and international travellers wearing gold jewellery weighing more than 300g will also have to declare it with customs and pay taxes.

However, people who go abroad for legal permanent residency will be allowed to carry one kilogram of gold if they possess a permit issued by SBV branches in the provinces and cities where they reside.

The draft rule states that requests for permits will take 15 days to process.

Vu Ngoc Lan, deputy director of the SBV's Legislation Department, said the circular aimes to strengthen the management of gold bullion and raw gold to keep the market stable.

"Strict management will create the right conditions for the processing of gold and trading, and ensure the rights of residents and gold enterprises," she said.

In the existing circular issued in 2001, she said the SBV does not ban individuals from carrying gold bullion when leaving the country. It only askes them to declare it with customs and apply for permits from the SBV.

However, Nguyen Hoang Lan, director of the Thanh Cong Wrapping Private Company, said 15 days is too long to wait for a permit.

"To help residents follow the regulations, the State should simplify procedures and shorten the time for issuing permits," he said.

Industrial index up 4.8 percent in seven months

The nation's Index of Industrial Production (IIP) increased 4.8 percent over the same period last year, the General Statistics Office reported.

This is the lowest growth of the industrial sector over the last three years but the highest since the beginning of this year, following a year-on-year increase of 6.1 percent in July alone.

GSO specialists said industrial production has shown signs of recovery after a prolonged downturn and this proved the Government's financial measures – including interest rate cuts and a VND29 trillion (US$1.4 billion) support package – to stimulate production had taken effect.

The manufacturing and processing area, which represents up to 70 percent of all industrial production values, posted the highest consumption index growth at 5.9 percent in seven months, while it was only around 3.5 percent in April and May, and 0.2 percent in the first two months.

Consumption of engine-vehicles rose significantly at 70.3 percent, followed by garments at 41.7 percent and electronic products at 40.5 percent.

Several areas saw significant declines, however, such as electric cables and wires at 59.8 percent, fertilizers at 34 percent and footwear at 12.6 percent.

On July 1, the inventory index grew 20.2 percent, remaining a worrying level according to GSO specialists, although this index had fallen significantly compared to a peak of 34.9 percent in March.

Areas witnessed high inventory increases, including iron and steel at 48.7 percent, cement at 34.4 percent, and animal feed and seafood at 32.1 percent.

Vietnam’s rice exports reach $2.1 billion

Vietnam’s rice exports reached approximately 4.6 million tonnes, worth US$2.1 billion, in the first seven months of this year, according to the Vietnam Food Association (VFA).

VFA Chairman Truong Thanh Phong said that despite difficulties, Vietnam is likely to achieve its yearly target of exporting 7 million tons of rice if the country focuses on tapping its strength and firmly retains its existing markets.

Additionally, the country should boost its export of high-quality products, Phong said, adding that currently, China is importing 100 percent of its high-quality and fragrant rice.

The VFA recommended that Vietnam should export about 20 to 25 percent of its rice of lower-quality as this product fails to compete with low-priced rice from India and Myanmar.

Raising pigs is a risky business, farmers say

The gloomy prospect of slumping pork prices and skyrocketing feed prices has cast shadows over almost all of the players in the pig raising industry, from individual pig farmers to animal husbandry tycoons.

No matter how small or large their farming scales are, all industry insiders say raising pig is similar to gambling: they sink a huge sum of money into, and only the god of luck knows whether they can recoup the investment.

Le Van Me, director of Phu Son Co in the southern province of Dong Nai, says pig raisers are all alone in the struggle to maintain the business.

“Prices just go up and down, while epidemics constantly lurk around – it’s like farmers will have to gamble forever,” says Me.

The Vietnamese animal husbandry industry lacks an adequate guideline for development, and there are three main culprits for its gloomy status, according to experts.

Breeder pigs, feeds, and veterinary issues -- the three backbones of the industry -- have proved problematic in the country, experts said.

Associate Professor and Doctor Le Van Kinh from the Vietnam Agricultural Technologies Institute, says Vietnamese breeder pigs are of poor quality, which increases cost price for raising pigs.

“And consequently, farmers will suffer losses when pork prices slump,” adds Kinh.

Meanwhile, figures from the Vietnam Husbandry Association show that the country has to import as much as 80 percent of raw materials for animal feed manufacturing, which costs a massive US$3 billion a year.

Again, the heavy reliance on imported materials results in higher expenses for pig raisers.

“In other countries, feeds only account for 50 to 55 percent of the cost price, while the figure is 75 percent in Vietnam,” says Chung Kim, a pig raising tycoon in the southern Binh Duong Province.

Regarding disease management, Nguyen Dien Tuong, director of the Dong Nai Agricultural Livestock Product JSC (Dolico), says the government has been deploying a wrong approach to controlling epidemics.

“Several diseases break out in Dong Nai every year, but the government only begins to fight back the epidemics after they have already broken out,” says Tuong.

“While prevention is better than cure, the government just follows a reverse procedure.”

And yet local pig farmers are also under other threats: being invaded by imported meats, and international companies.

Foreign-invested players such as CP of Thailand, Japfa of Indonesia, and Emivest from Malaysia have almost taken control of the domestic chicken and egg markets, and are now eyeing the pig raising sector.

The sows raised by the aforementioned companies now account for 10 percent of the country’s herd, and the figure has been sharply rising.

“The foreign businesses are focusing investment in the south and the area will soon suffer a pork surplus, as has been the case with chickens,” warns Kim.

Meanwhile, Tuong of Dolico says the lack of a technical barrier for imported meats is forcing domestic pork businesses closer to the brink of bankruptcy.

“Some countries said they are willing to import our meats, as long as we can pass their technical barriers like our farm has not caught any foot-and-mouth diseases over the last 10 years,” says Tuong.

“Why are there no such standards for imported meats in Vietnam?”

Minister introduces Vietnam’s potential in London

Minister of Culture, Sports and Tourism Hoang Tuan Anh on July 27 worked with the leaders of the City of London to introduce Vietnam’s potential for cooperation, especially in the field of culture, sports and tourism.

The working session took place during Anh’s visit to the UK from July 26-29 to attend the opening ceremony of the London Olympic Games 2012.

The minister called on UK investors to boost investment in Vietnam, thus furthering the strategic partnership signed between the two countries in September 2010.

He also wished the UK success in organising the Games.

The Lord Mayor of the City of London, David Wootton, said that many UK businesses want to invest in Vietnam, especially in banking, finance, insurance, sports, tourism and infrastructure development.

He said he plans to visit some Asian countries, including Vietnam, right after the London Paralympics 2012 wraps up in September this year.

On the same day, Minister Anh visited Vietnamese athletes who will compete at the Games.

Striving and waiting for market recovery

The fact that banks are lowering lending rates brings about positive changes in the property market, offering investors a hope that buyers will gradually come back to the market in the coming time.
A half year of striving

Saw Kim Suan, general director of Setia Lai Thieu One Member Company Limited, said the first half of this year was the most difficult time since the Malaysia-invested firm joined the local realty market six years ago. The company saw its sales slowing down in line with the market trend due to the economic woes.

Although the central bank has loosened the monetary policy and lending rates are falling, the property trade volume in the market did not improve in the first six months. CB Richard Ellis Vietnam (CBRE) reports apartment prices continue the downtrend and buyers mainly eye the mid-end segment.

There are currently some 94,000 apartments on sale, and half of them have been completed. Medium-cost apartments make up 40% of the total supply.

Le Thanh Vinh, deputy general director of Sai Gon Thuong Tin Real Estate Joint Stock Company (Sacomreal), said unfavorable conditions had forced many investors to suspend their projects or offer discounts.

Though project owners are racing to launch increasingly attractive promotion programs, homebuyers feel no rush to make their decisions.

However, property prices could hardly drop any further because they have matched the actual values while the project costs, such as site clearance expense and lending rates, remain high.

At present, most project owners are applying flexible payment methods to lure customers.  Buyers only need to make down payments equal to 30% of the apartment values and the remainder can be paid in installments in 2-3 years with no interest.

Market observers underscore lending rate cut is not a decisive factor in wooing those with no demand to purchase houses, but it only assists those actually in need of housing. This explains why the trade volume has not increased significantly over the past time.

Given the reductions of deposit and lending rates, several project owners continue to offer their apartments and land plots with attractive sale promotions, including Sacomreal with its Arista Villas project. The project covering over nine hectares in HCMC’s Thu Duc District is designed with garden houses, villas, school, club and green park.

Meanwhile, Nam Long Investment Corporation will launch some 14,000 Ehome condos into the market in the next five years, aiming at young families. Specifically, the Ehome 3 Saigon West project in Binh Tan District will be put up for sale at VND615 million per unit.

The property developer is also carrying out the Nam Long-Saigon North Residence project in Thuan An District, Binh Duong Province. The project is designed with 4,000 Ehome condos and 218 terraced garden houses, covering 75-90 square meters each.

The first 20 garden houses are now on sale at VND867 million per unit.

Also in Binh Duong, Setia Lai Thieu is offering the project named EcoXuan with prices of VND2 billion per street house and VND4 billion a villa.

In Dong Nai, Kim Oanh Real Estate Joint Stock Company and Tin Khai Company, a subsidiary of Tin Nghia Group, have put up for sale the Lavender City project in Vinh Cuu District. The project consists of 544 townhouses and 71 villas priced from VND185 million per plot.

In addition, Phuc Khang Investment and Construction Corporation and Thang Long Real Estate Corporation have launched the joint project called Sunflower City in Dong Nai’s Nhon Trach District. Meanwhile, Dong Nai Rubber Real Estate One Member LLC is offering 80 commercial street houses and garden villas of the Green Town project in Trang Bom Town at VND3.9-6.8 million per square meter.

Vinh of Sacomreal expected the property market would witness better signs and investors would return to the market if banks slashed their lending rates further to stimulate cash flow.

According to a research of CBRE, it would take six more months for the realty market to regain the growth momentum.

Deposit rate cap poised for another cut

Governor Nguyen Van Binh of the State Bank of Vietnam signaled the ceiling deposit rate could be reduced by another percentage point this year if inflation continued to stay low.

However, he stated the deposit rate cap could only be lowered to 8%, explaining that if it was slashed further, Vietnam dong would become less attractive and people would switch to other investment channels like gold and foreign currencies. This would leave a great impact on exchange rates and the gold market, so interest rates will not drop sharply in the rest of the year, said Binh at the bank-business connection conference held in HCMC last Saturday.

He stressed if interest rates were cut drastically, the cash flow would run into speculative and inefficient sectors, then inflation might flare up again, and all efforts to remedy the issues in Vietnam from last year would come to nothing.

Representatives of many businesses and associations proposed the interest rates for new loans should be brought down to 10%. In addition, quite a few enterprises had mortgaged their assets for the old loans, so they could not take out new ones

Binh said lending rates had gone down considerably against last year and businesses should wait for some more time.

Particularly, in September, 2011, the deposit rate ceiling was pulled down to 14%, and now it stays at 9%. Meanwhile, lending rates have fallen from 17-19% last year to around 13% at present.

The governor said the central bank had worked with the Ministry of Construction on disbursing funds for incomplete property projects. Still, property firms must lower their prices to deal with unsold products.

He highlighted the call for banks to reduce interest rates for old loans to less than 15% is not an administrative decision. As such, there will be no punitive sanctions.

“Since credit contracts are economic contracts, administrative decision cannot change them. However, commercial banks should consider this as a political task for the sake of enterprises and the economy,” said Binh.

Representatives of several banks present at the conference such as DongA Bank, Eximbank, Vietcombank and BIDV said they had cut interest rates for old loans to below 15% two weeks earlier. Moreover, the rates for new loans have reduced much, staying at around 14% now.

Most banks have offered preferential packages with lending rates of only 10%, but only financially-sound businesses can access such loans.

Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, informed the majority of lenders in the city had adjusted the interest rates for new loan to less than 15% per year. The outstanding loans with interest rates of below 15% currently account for nearly 70% of the total outstanding loans in the city.

The outstanding loans for the four priority groups have amounted over VND26.6 trillion. Credits grew 0.35% in June, much more than the previous month.

Incentra launches sample condo in Moscow

Incentra Investment Co. Ltd. last Saturday launched the sample apartment of the Hanoi-Moscow Culture-Trade Center Complex and Hotel in Moscow on the occasion of President Truong Tan Sang’s visit to the country and his leg at the construction site.

The sample apartment lies on the fifth floor of the US$200-million project developed under the agreement between authorities of Hanoi and Moscow.

Incentra chairman Nguyen Canh Son reported to President Sang that the hotel-apartment section of the project has been developed to the 21st floor. Meanwhile, the commercial center is being implemented on the first floor.

As scheduled, homebuyers will receive their apartments in May 2013 and the entire building will be inaugurated in September of the same year, on the occasion of the festival “Vietnamese cultural days in Moscow”.

At the meeting, Nguyen The Thao, chairman of Hanoi City, and Vinogradov Valeri Iurievich, chairman of Northeastern Moscow, praised the efforts to develop the project on schedule, meeting the standards set by the project owner.

The two senior officials pledged to join hands to timely put the project into operation. This is a foundation for developing the relations between the two capital cities in not only culture and trade, but also investment and high technology.

President Sang expressed his joy at the project’s scale, progress, professionalism and discipline and its great meaning to the Vietnamese people in Moscow as well as Vietnamese businesses exporting goods to Russia. The President emphasized the State and the Government will always assist the investor in executing and finalizing the project on schedule to offer stable accommodations and jobs to the Vietnamese community in Russia.