BUSINESS IN BRIEF 18/1
Bao Viet Fund launches e-transaction services for open-ended fund
The Bao Viet Fund launched an electronic transaction system for its equity dynamic open-ended fund (BVFED) yesterday on the website www.bvfed.com.vn.
It is the first open-ended fund in Viet Nam that has launched e-transaction services to help investors do secured trading online.
The fund's investors can also track the net asset value (NAV) reports on the website.
BVFED is an open-ended fund set up by the Bao Viet Fund Management Company Ltd in 2013, with a capital of VND71.3 billion (US$3.34 million).
Sai Gon Securities Inc. to issue bonds worth VND500 billion
The Sai Gon Security Incorporation's (SSI) managerial board has decided to issue bonds worth VND500 billion (US$23.5million).
Between January and February, SSI will issue a maximum of 1,000 two-year bonds with par value of VND500 million ($23,500) each.
The interest, to be paid once a year, will be 8.2 per cent in the first year. In the second year, it will be the average of interests of one-year deposits of four banks – Vietcombank, Vietinbank, BIDV and Agribank – plus 2.2 per cent per year.
Named SSIBOND012015, the bonds will be unsecured and inconvertible. They will be sold at face value.
SSI is willing to buy back the bonds every six months, but will not pay the tax on such transactions. The price of the bond resold to SSI will be its face value plus accumulated interest.
Quang Ngai to switch on $60m solar power station this year
The central province of Quang Ngai is developing a 30-Megawatt solar power station in Mo Duc District, which will start operating by the end of the year, the provincial Department of Industry and Trade announced yesterday.
The department said the station, which got construction approval five years ago, will be built with a US$60 million investment from a joint-stock company.
The department said the project will commence this year so it can connect to the national grid. It will be an example of green growth in the province.
In 2005, a solar power project was developed in An Binh Islet of Ly Son Island District, 30km off the coast of Quang Ngai Province. But the district started using power from the national grid at the end of 2014.
Tien Giang prepares to welcome 1.5m visitors
The Mekong Delta province of Tien Giang hopes to get 1.5 million tourists in 2015, representing an annual increase of 6.5 per cent.
Authorities there are making efforts to improve tourism services, diversify tourism products and speed up implementation of key projects, particularly the eco-tourism areas of Dong Thap Muoi, Thoi Son islet, and Tan Thanh-Hang Duong beach resort.
They plan to offer incentives for trade villages and vocational training to help people in rural areas increase their income from tourism and enable sustainable development of the industry.
The province will also strengthen ties with provinces and cities in Viet Nam and abroad to boost tourism.
It plans to co-operate with the Japan International Cooperation Agency to organise the second ancient village festival at Dong Hoa Diep (Cai Be District) this year.
Rice exports lag behind expectations
Vietnam exported 6,316 million ton of rice worth US$2,789 billion last year. The export volume lags behind the intended number of 7 million tons and becomes the lowest for the last four years, reported the Vietnam Food Association.
The rice export last year reduced 300,000 tons in volume and US$100 million in value over 2013.
Meantime Thailand exported 9.49 million tons equivalent to US$4.69 billion in the first 11 months of 2014, an increase of 60 percent in volume and 18 percent in value over the same period in the previous year.
Rice prices remain low in the Mekong Delta ranging from VND6,700-7,000 a kilogram.
Japanese firms look to sow 1,000-ha super sorghum crop in Vietnam’s Central Highlands
Two Japanese companies are seeking permission from a province in Vietnam’s Central Highlands to make use of the poor soil there to grow a drought-resistant grain.
NTS Partners Co. Ltd. and SOL Holdings have asked to be granted a total area of 1,000 hectares of plain land on eroded hills or in poor forests in Dak Nong to sow super sorghum seeds in the initial phase, they said during a recent meeting with the provincial administration.
The meeting saw the Japanese firms report results of their trial cultivation of the grain in several Central Highlands provinces.
Sorghum is an important crop worldwide, used for food, fodder, the production of alcoholic beverages, and biofuels.
The gramineous super sorghum is “known for a high crop yield with cane containing a very high content of sugar,” according to SOL Holdings.
After a year of working on test crops, it was concluded that the weather and soil in the Central Highlands in general, and Dak Nong in particular, suit the cultivation of super sorghum, the Japanese firms told local authorities.
The two thus want to start the first 1,000ha crop in Dak Nong, and will expand the farm if it yields positive results, they added.
SOL Holdings decided to commence the trial cultivation in March 2014.
The trial took place in fields covering an area of approximately 30 hectares in total, spread across numerous locations in the north, center, Central Highlands and south of Vietnam, which had been carefully selected for their geographical and climatic conditions, it said in a press release.
The trial cultivation was implemented under agreements the Japanese firm reached in late 2013 with the Vietnamese Ministry of Agriculture and Rural Development, local dairy firm TH Milk, and domestic sugar producer Lam Son Sugar.
SOL Holdings had told the Vietnamese partners that “there is significant potential to increase [sorghum] yields” in the Southeast Asian country.
“Vietnam currently produces an annual yield of 60 tons per hectare of sugar cane, and 70 tons per hectare of sorghum, an indigenous crop that is primarily made into livestock feed,” the company said.
“In contrast, the trial cultivation in Indonesia has produced an annual yield of 430 tons per hectare of super sorghum.”
The Japanese company underlined the success of super sorghum cultivation in Indonesia and the benefits of the grain as both a crop and an energy source at a conference for major national companies from the sugar, dairy and ethanol industries hosted by the agriculture ministry in early 2014.
After the event, the ministry and a number of the attending companies “agreed that super sorghum cultivation should be inaugurated in Vietnam as well,” SOL Holdings said.
SBV survey optimistic about outstanding loans in 2015
About 84% to 97% of credit institutions operating in Vietnam are optimistic that the total of outstanding loans will continue to increase in the first quarter of 2015 with loans in Vietnamese dong rising faster than that of foreign currencies.
They expect that the total outstanding loans of all credit institutions will grow 3.5% in the first quarter of 2015 and 14.57% by the end of this year.
The figures were announced by the State Bank of Vietnam’s Monetary Statistics and Forecasting Department in its recent survey on the business trend of credit institutions and branches of foreign banks in Vietnam in the first quarter of 2015.
Almost all credit institutions have assessed that the business environment and business performance improved significantly in 2014, and they expect more positive results in 2015.
Approximately 89% of credit institutions said that their liquidity improved in 2014, which will be maintained in 2015.
They also expect higher deposits in the first quarter of 2015 and throughout the year with an average increase of 4.5% in the first quarter and 14.35% by the end of the year.
Along with the optimistic business prospects, most credit institutions forecast that the rate of non-performing loans will stabilise or decrease in the fourth quarter of 2015. They believe that the non-performing loan ratio in 2015 will be less than 3% of the total outstanding loans.
According to results of the survey, interest rates are expected to remain stable or decline slightly in 2015, but deposits made to the banking system will continue to rise as it is still considered a safe and effective investment channel.
Long Xuyen needs real estate investors
The government of An Giang Province is looking for investors for urban and housing development projects in Long Xuyen City to fuel development of the city.
Tran Anh Thu, chairman of the city, said the city would invest more in transport infrastructure and urban areas to accommodate more citizens and that investors are encouraged to take part in these projects.
The city will construct more industrial parks to attract laborers to Long Xuyen City to double its population. The city’s current population city is around 280,000 people while a first-grade city needs to have more than 500,000 people.
Potential investors are being sought for real estate projects with investments of VND500-700 billion each, including a 56-hectare urban area, five to seven housing projects located along the main roads leading to HCMC and neighboring localities.
“We pledge to support investors with site clearance land, simple administrative procedures and preferential land rents,” Thu said.
The city has allocated more than 51 hectares of cleared land for the first urban area project called Smart City An Giang developed by the National Housing Organization (N.H.O) and Thien But Co. Ltd.
According to Jeong Cheol, project director of the organization, the West Hau River Urban Area - Smart City An Giang on the west bank of the Hau River will have low-cost houses, apartments and villas.
The project will be implemented from 2014 to 2017 with a total investment of VND990 billion.
Vinafood 2 acts to secure rice for export
Vietnam Southern Food Corporation (Vinafood 2) plans to buy paddy (unhusked rice) directly from farmers to process sufficient rice for export, instead of purchasing rice only as before.
Huynh The Nang, general director of the corporation, told the Daily that the move is part of a strategy to develop its large-scale paddy field model. “This is our new strategy,” he said.
Nang said the large-scale paddy field project will not only comply with the Government’s policy but also help the corporation’s members to secure enough rice stocks for export.
Vinafood 2 is deploying the project in the winter-spring crop 2014-2015. The corporation targets its large-scale paddy fields would make up 20% of the total area under rice production in the Mekong Delta by 2020.
By 2020, about 30% of four million hectares under rice farming in the Mekong Delta will be large-scale paddy fields developed by Vinafood 2 and An Giang Plant Protection Company (AGPPS).
Nang said seven banks have pledged to finance the project of Vinafood 2, and four of them have inked lending contracts with the corporation.
The corporation will continue exporting normal 5%, 15% and 25% broken rice to traditional markets and will expand markets for quality rice, including the fragrant type.
“We expect to sell quality rice at US$550-600 per ton to avoid direct competition with Hom Mali rice of Thailand or Basmati of India,” Nang said.
Ministry sticks to ice-to-fish ratio rule
The Ministry of Agriculture and Rural Development has not bowed to pressure from fish processors, saying the regulations on the ratios of ice and moisture content in tra (Pangasius) fish fillets for export are necessary to improve Vietnam’s tra fish quality and value.
The ministry insisted on keeping the rules despite objections by enterprises and associations, including the Vietnam Association of Seafood Exporters and Producers (VASEP), to the Government’s Decree 36/2014/ND-CP on farming, processing and exporting tra fish.
The decree, which was originally set to take effect in June 2014 but delayed to early this year and then until the end of the year, regulates an ice-to-fish ratio of 10% and moisture content of 83% in tra fish fillets.
Such regulations will help sustain the development of the domestic tra fish sector, Deputy Minister of Agriculture and Rural Development Vu Van Tam said in Document 293/BNN-QLCL issued on Tuesday to respond to the previous proposals of several Mekong Delta provinces to remove the regulations to support tra fish exporters.
According to enterprises in the region, the ice-to-fish ratio rule could make life tough for them because their customers do not require such a ratio in the tra fish fillets they order.
The ministry said in defense that the ice content in tra fish fillets is to minimize the water loss, which can reduce the quality of the product when it is stored. The 10% ratio is necessary for firms to process high-quality products for export and helps prevent trade fraud.
The ministry said local tra fish exporters mostly sell their products to importers rather than retailers. Therefore, the new regulations will affect both exporters and importers and this is the reason why they have opposed the regulations.
Exporters proposed the ministry allow them provide clear information about their product quality instead of applying the regulations on moisture content and ice-to-fish ratio. But the ministry turned down the proposal, saying the loose management of tra fish quality in the past had marred the sector’s reputation.
VASEP warned that the regulations could push up tra fish prices and cause many exporters to stop their operations due to the loss of customers.
Large-scale paddy fields reap high yields
The Ministry of Agriculture and Rural Development said in a recent report that the output of paddy grown under the large-scale field model is 15-20% or 8.6-11 quintals (800-1,100 kilos) per hectare higher than normal fields.
Le Thanh Tung, deputy head of southern office of the Cultivation Department under the ministry, said the country’s paddy output averaged 57.7 quintals per hectare last year while the volume of paddy (unhusked rice) of the large-scale fields was 66.3-68.7 quintals per hectare.
In addition to higher productivity, the ministry wants to use the new model to produce high quality varieties to cash in on rising demand for premium rice products on global markets and to develop special farming regions for quality rice production.
According to the cultivation department, the Mekong Delta region is expected to have five regions for rice production under the large-scale field model for domestic consumption and export.
The Mekong Delta had had the largest rice production area, 200,000 hectares, under the large-scale field model in the country as of last year, with 69,000 hectares in Tra Vinh Province, 33,000 hectares in Tien Giang Province, 26,000 hectares in Can Tho City and 22,000 hectares in Soc Trang Province.
Last year, the northern region had around 27,500 hectares of paddy under the model while there was nearly 16,820 hectares in the southeastern and Central Highlands regions.
However, enterprises have pledged to buy paddy volume equivalent to only one-third of the total produced under the farming model.
“Contracts between enterprises and farmers always have terms regarding the quality of paddy, moisture content and contract duration. But in reality such contracts are often breached by one party, forcing farmers to sell their paddy to merchants,” Tung said.
Tung said the large-scale rice field model has brought positive results though it still needs to be improved.
Husbandry households face tougher future
Husbandry households now contribute 40-50% of Vietnam’s livestock output but they are almost left alone to cope with the mounting challenges brought by the country’s deeper economic integration into the region and world.
Husbandry households are among the most vulnerable when the ASEAN Economic Community (AEC) is established this year, said Tong Xuan Chinh, deputy head of the Animal Husbandry Department under the Ministry of Agriculture and Rural Development.
Chinh told the Daily that as households run small-scale breeding farms, their production cost is high. They have limited access to capital sources.
Among total costs, households have to spend more on animal feed whose prices are high as local producers have to import material.
Statistics of the General Department of Customs indicated that the country spent nearly US$3 billion importing animal feed and material in the January-November period last year, up over 5.8% year-on-year.
To minimize adverse impact of the country’s deeper integration, farmers should manage to raise product quality and join forces to reduce prices and enhance competitiveness, said Chinh.
The Government needs to give incentives to family-run husbandry businesses, including loan interest subsidy and training on breeding, Chinh told the Daily on the sidelines of a function held in HCMC on Tuesday to introduce the international trade fair on husbandry and seafood VIV ASIA 2015.
VIV ASIA will take place in Thailand’s city of Bangkok from March 11 to 13. Organized by VNU Exhibitions Europe, the event includes seminars on pig breeding, meat and milk processing and eggs, among others.
Hanoi aims to ensure stable Tet prices
Hanoi businesses have stocked up and developed trade promotions to stabilise the market and boost consumption during the Tet holiday, a Hanoi Industry and Trade Department official said.
At a meeting of the industry and trade sector of Hanoi on January 13, Tran Phuong Lan, Deputy Director of the department, said most enterprises in the capital city have actively planned to increase their goods inventory by 10 to 15 percent or 16 trillion VND (774.2 million USD) for the Tet holiday, the Thoi bao Kinh te Vietnam (Vietnam Economic Times) newspaper revealed.
The supply will meet up to 70 percent of the city's demand, and will include 4,000 tonnes of rice, 900 tonnes of pork, 450 tonnes of poultry, along with 200 tonnes of seafood, 1.5 million litres of cooking oil and 1,500 tonnes of vegetables.
Supermarkets, such as Big C, Metro, Citimart, Le's market, Coop mart and Fivimart, have also raised their inventory by 10 to 15 percent against other months for the Tet holiday in February.
Around 70 percent of the goods for Tet will be sourced from local producers, Lan stated.
The department has asked business enterprises to sell their goods at around 600 shops specialising in selling price-stabilised goods. It has also directed 1,600 agencies and shops in the industrial and export processing zones, schools and companies in the city to refrain from raising prices.
Lan said the department has been actively consulted by the city authorities for stabilising the market and has also issued a general directive to serve the people in the city during the upcoming Tet holiday.
The department has formulated specific plans for the production of essential goods, such as confectionery, alcohol, beer and beverages for enterprises in the city, she noted.
Authorities crackdown on tobacco smuggling
Controlling the trading and transportation of smuggled tobacco products in the local tobacco market has to be given top priority, according to the Ministry of Industry and Trade (MOIT).
Nguyen Trong Tin, Deputy Director of the ministry’s Market Management Department, said at an online meeting on market management this week that the trading and transportation of smuggled tobacco products in the country is a complicated process.
He added that such practices are common mainly in the border provinces located in southern and central Vietnam, including Quang Tri, Long An, An Giang, as well as Dong Thap, Kien Giang and Tay Ninh.
It is from these provinces that smuggled tobacco products are transported to markets in Ho Chi Minh City and other large cities nationwide, he pointed out.
The hotbed for tobacco product smuggling is in the border areas of the Long An Province, while Hanoi and HCM City are the largest markets for trading smuggled tobacco products, Tin noted.
The smuggling of tobacco has grown due to the availability of cheaper tobacco at 3,500 VND to 12,000 VND per pack, compared with the more expensive local tobacco products.
This is because the smuggled tobacco products' cost does not take into account the special consumption tax of 65 percent and a value-added tax of 10 percent borne by local tobacco products.
Therefore, the Government had issued a directive in September 2014 to fight the growing incidence of such smuggling.
Since the directive was issued, the department has seized 873,399 packs of tobacco; accounting for 43.67 percent of the total packs seized in all of 2014 and collected 10.2 billion VND (481,100 USD) from fines imposed in smuggling cases.
Minister Vu Huy Hoang said the fight against the illegal trading and transportation of smuggled tobacco this year is expected to encounter further challenges, due to which the department is promoting certain activities to fight against the smuggling of tobacco products.
The department also needs to forge closer ties with relevant offices, such as border military, taxation, sea police and customs at the central to provincial/city level to fight tobacco smuggling activities this year, Hoang said.
The smuggling of tobacco will increase further and has to be jointly dealt by the market and society, he suggested.
Tin said market forces in cities and provinces that trade in large volumes of smuggled tobacco products, including Hanoi, HCM City, Da Nang, along with Can Tho and Hai Phong, will monitor enterprises, business households, tobacco shops and services for the sale of any smuggled tobacco products.
Vu Van Cuong, Chairman of the Vietnam Tobacco Association, said the smuggling of tobacco is highly profitable as Vietnam has implemented strict regulations for made-in-Vietnam tobacco production, which has indirectly created conditions that are conducive to the growth of smuggling activities.
The smuggled tobacco volume accounts for 30 percent of the local tobacco market and resulted in a 20 percent reduction in the consumption of domestic tobacco products, Cuong pointed out.
According to a government circular dated December 7, 2012, persons found transporting 1,500 packs of smuggled tobacco are liable for criminal prosecution, he said. Therefore, smugglers only transport fewer than 1,500 packs to avoid criminal prosecution.
As a result, the association has proposed that the State should decrease the number of packs of illegally imported tobacco as the basis for criminal prosecution from 1,500 to 500, he said.
Meanwhile, Peter Henriques, Director of British American Tobacco, appreciated the directive issued by the government to discourage tobacco smuggling.
He expects State offices to actively fight against tobacco smuggling in order to curb smuggling and help control tax evasion and budget losses.
Local company invests over 17.5 trillion VND in mineral processing
Nui Phao Mining and Mineral Processing Co., Ltd (Nui Phao Mining) has poured over 17.5 trillion VND (833 million USD) into a mining and mineral processing project which has been implemented in Dai Tu district, the northern province of Thai Nguyen since 2010.
Of the amount, 15 trillion VND (714 million USD) was spent on mining infrastructure and the remaining was used for site clearance and resettlement support.
After two years of official operation, Nui Phao Mining has become one of the leading miners in the country which generates trillions of VND in revenue and provides jobs for more than 1,000 workers, said the company’s Deputy General Director Vu Hong.
It was one of the 40 companies in Vietnam honoured as the most outstanding enterprises in the Asia-Pacific region, he added.
In addition to production activities, Nui Phao Mining has also paid attention to supporting residents affected by its projects with a total assistance of 2.5 billion VND (119,000 USD) in 2014.
According to Hong, this year, the company will focus on producing and exporting its four main products of tungsten, bronze, bismuth and fluorite while bettering resettlement and job creation for relocated people, and developing a high-quality workforce.
Credit organisations upbeat about business performance
Most credit organisations and branches of foreign banks in Vietnam have shown their optimism about business prospects in 2015, according to a survey conducted by the Statistics and Forecast Department under the State Bank of Vietnam.
The survey indicated that the liquidity of the banking system is improved, bad debts are controlled as well as mobilising and lending activities are on the rise.
Credit organisations expect capital sources mobilised from the economy to continue increasing in the first quarter and the whole year as well.
They said customers’ demands for using banking products and services will experience a remarkable recovery as a result of a sharp rise in 2014.
About 84-97 percent of surveyed institutions forecast a 3.5 percent growth in credit balance in the first quarter of 2015 and the figure is expected to reach 14.57 percent for the whole year.
In addition, the organisations are looking to the bright future of their bad debt rate, which is thought to be stable at 3 percent of total credit balance.
Cocoa growth fails expectations
Agricultural officials, farmers and business executives discussed the state of the cocoa industry and measures needed to further expansion at a seminar held in HCM City on January 15.
Dinh Hai Lam, cocoa development manager at Mars Incorporated, said the development of the cocoa industry had not reached expectations, and that its expansion had occurred mostly due to the support of non-government organisations (NGOs) and projects involved in eliminating hunger and reducing poverty.
In these projects, disadvantaged households are provided cocoa seedlings as well as technical assistance to plant trees. However, the households are often vulnerable to price fluctuations.
The country's cocoa cultivation area increased from 500ha in 2003 to 25,700ha in 2012. But in 2013, when the price for cocoa beans dropped, farmers chopped down trees, sharply reducing the cultivation area, he said.
Low productivity due to the planting of trees on less fertile soil and applying improper farming techniques had contributed to the slow progress of the industry.
A lack of linkages between businesses and farmers in cocoa production was also to blame, according to delegates attending the meeting.
In addition, the Government has not devised a specific policy for cocoa industry development, they said.
As an export commodity with high economic value, cocoa needs the participation of businesses and investors in production via the establishment of large-scale farming and closer linkages with farmers in the production chain.
In which, businesses will play a leading role in technology transfer, and provide input and ensure outlets for small households in the production chain.
Nguyen Vinh Thanh, Director of the cocoa sector at Cargill Vietnam, said most cocoa seedlings did not meet required standards, and more efforts were needed to develop better seedlings.
Phan Huy Thong, head of the Vietnamese Cocoa Committee, said demand for cocoa had been increasing in the world market, while supply from main cocoa-growing countries in western Africa and Indonesia had fallen due to aging trees, offering great potential for Vietnam's cocoa industry.
Cocoa cultivation, however, faces competition in the country with other high-intensive agricultural trees like coffee, pepper and fruit trees, he said.
Pham Hong Duc Phuoc of Nong Lam University said to encourage farmers to plant cocoa, cocoa productivity must reach two tonnes per hectare.
Technology transfer to local farmers is crucial in helping them understand and follow cultivation steps. Many cocoa gardens enjoy very high productivity thanks to proper techniques, he said.
As cocoa requires different farming techniques from other trees, farmers need to fully understand these cultivation measures, said Nguyen Duc Tin, a farmer in Ben Tre province. Phan Van Khong, Director of Ben Tre Province's Agricultural Extension Centre, said when planting cocoa trees on one hectare of coconut, farmers can double their income to around 100 million VND (4,690 USD) per hectare, at current prices.
With 70,000ha under coconut, the province wants to intercrop cocoa in coconut gardens to raise the value of each unit of land, he said.
With a bright future for the industry, farmers must make long-term investments to avoid the repeated growing and then chopping down of trees, delegates said.
Many farmers at the event suggested that the Government develop a policy to support famers with capital so they can invest in farms.
Cocoa bean prices have been stable at 65,000-70,000 VND per kilogramme in the domestic market, encouraging farmers to invest in intensive farming to raise productivity.
The country has about 17,000 ha under cocoa cultivation, mostly in the Mekong Delta, the Central Highlands and southeastern regions. Up to 90 percent of cocoa is intercropped with other trees.
Mekong irrigation project moves forward
Can Tho City and Hau Giang and Kien Giang provinces will invest VND990 billion (US$47 million) to start the second phase of the O Mon-Xa No irrigation project this year and complete it by the end of 2017, Dao Anh Dung, Vice Chairman of Can Tho City People's Committee, said on Wednesday.
The project aims to improve irrigation, prevent floods for a 45,430ha area, improve the quality of 38,800ha of agricultural land and increase rice production from two to three crops each year. However, lack of investment has stalled the project since 2013.
The project involves building new drains and dredging three first-degree canals and 92 second-degree canals with a total length of 83km and 288km, according to project designer Hydraulic Engineering Consultants Corporation Number II.
However, construction has not started because local residents and infrastructure for telecommunications and electricity have not been removed from the area, according to district officials.
Chairman of Can Tho's O Mon District People's Committee Nguyen Vu Phuong said that 97 per cent of households in the district had handed over their land for the construction of the irrigation system. The district authority was working to encourage the remaining households to hand over their land within the next 15 days.
Chairman of Phong Dien District People's Committee Nguyen Hoang Ba said that all households in the district had handed over their land. However, telecommunications and electricity infrastructure had not been removed. He insisted that responsible organisations remove that infrastructure so that construction could start.
The VND536 billion ($25.5 million) first phase of the irrigation project was carried out from 2005 to 2012. It involved building 115km of dyke roads, 121km of 15 second-degree canals and 72 first- and second-degree drains.
The first phase also helped Hau Giang province supply cleaner water for local residents. By the end of 2012, seven local communes and towns, including Tra Long town, Phuong Binh and Vi Thanh commune, built six water plants with an investment of VND21 billion ($1 million) to provide 8,200 cubic metres of clean water each night, an increase of 26 per cent compared to the time before 2012.
Experts forecast garment, textile export target accessible this year
Negotiations of Trans-Pacific Partnership (TPP) and other free trade agreements (FTA) have been done and they are going to be signed this year, which experts say are an opportunity for the garment and textile industry to maintain its export growth momentum last year and obtain a turnover target of US$28-28.5 billion this year.
Last year the garment and textile export turnover reached nearly US$24.5 billion, an increase of 16 percent over 2013. Garment items brought US$21 billion up 17 percent while fibre products yielded US$3 billion.
The export turnover grew 12.5 percent to U.S. market, 17 percent to the EU and remained unchanged at 9 percent to Japan.
Vietnam has been the second largest exporter of garment and textile products to the U.S. for the last several years. The annual export turnover from Vietnam to U.S. market has grown 12-13 percent in recent years while the North American nation’s import value has grown only 3 percent.
These achievements were partly due to influences from free trade agreements.
Experts believed that these agreements will make the garment and textile industry’s export target accessible this year because they are directly related to the main export markets of Vietnam, for instance TPP with the U.S. and Japan and FTAs with the EU, South Korea, and the Customs Union of Russia, Belarus and Kazakhstan.
When the Vietnam-EU FTA is signed, the tariff rate will fall from 12 percent to 0 percent. Similarly, the TPP agreement will abolish U.S. tariff rates of 17-18 percent.
Despite of the above advantages, experts have said that Vietnam would face difficulties in getting the export turnover target as the material source of garment and textile industry is largely dependent on import.
Ms. Raffaella Carabelli, chairwoman of the Association of Italian Textile Machinery Manufacturers, said that besides diversifying the export markets businesses should reduce the reliance on import material sources for successful integration.
Sharing the same view deputy chairman of the Vietnam Association of Garment and Textile Le Tien Truong said that localization rate increase is one of factors helping businesses improve their competitiveness and products’ added value.
From now until the agreements are signed and take effect, businesses should invest in material production, link fibre production with cloth production and garment making to improve the supply chain, he added.
They should quickly change from processing with high material import ratio into all-in production to meet customers’ demand and increase the added value of their products, he said.
HCM City enterprises expand business market in Mekong Delta
Ho Chi Minh City businessmen invested around 15 projects to open super markets, trade centers and convenience stores in Mekong Delta’s provinces and cities in 2014.
The investment not only helped city’s enterprises to develop their good distribution systems but also sell their products in Mekong Delta’s provinces.
Moreover, the projects were expected to contribute to job creation in the delta and became a link between the region with Ho Chi Minh City market.
In addition to expand trade market, Mekong Delta’s provinces also created best favorable conditions to support enterprises in good source investment, exploitation and development.
Long An border gate zone approved as Mekong Delta’s economic hub
The Prime Minister has approved a broad plan for developing the Long An border gate economic zone to 2030, with the hopes of making it one of the Mekong Delta region’s industrial, commercial and service hubs.
The zone, located in the Mekong Delta province of Long An and bordering the Cambodian province of Svay Rieng, will extend across 13,080 hectares of land and include an international border gate, Binh Hiep, and a secondary border gate, Long Khot.
According to Decision No 07/2010/QD-TTg, established on January 25, 2010, the zone will cover seven communes and one town.
By 2020, the zone is intended to have a population of 58,000 people, with 30,200 living in urban areas (52%). This is expected to increase to 105,000 in total and 70,000 living in urban areas by 2030.
The zone will have 425 hectares set aside for industrial parks, 146 hectares for small-scale industrial parks, and another 54 hectares for mini industrial areas.
Telecom, television get more complaints
The Vietnam Competition Authority said that there were more complaints about telecommunications and television services than other fields complained about by consumers last year.
Last year, the authority under the Ministry of Industry and Trade handled more than 1,000 complaints, 4.6 times higher than the number of the previous year.
Of the total, services under the management of the Ministry of Information and Communications accounted for 57.5% and complaints about telecom-television services took 50% of this proportion and Internet 7.42%.
The authority explained there were more complaints about telecom-television services than other fields because the sector had grown fast and many complicated cases had emerged. There existed disputes worth tens of billions of dong in this sector last year.
Following telecom-television were the property sector, accounting for 8.13% of the total complaints, consumer goods with 7.36%, electronics with 6.17%, transportation with 6.12%, beauty and healthcare services with 4.54%, and finance-banking-insurance sector with 3.6%.
The authority has recently launched a free call service at 1800 6838 to receive complaints from consumers with an aim to better protect consumers’ legitimate interests. Consumers can also lodge complaints to the authority via www.bvntd.vca.gov.vn or by mail.
Ministry told to adjust tariffs on E5 bio-fuel imports
The Government has told the Ministry of Finance to review and adjust tariffs on E5 bio-fuel imports to support domestic production of this product as its import duty now stands at as low as 5% compared to 35% on RON92 gasoline imports.
The finance ministry has been assigned to recalculate fuel import tariffs in a view that the retail price of E5 petrol should be lower than that of RON92 gasoline to encourage consumption of the bio-fuel, a mixture of 95% RON92 petrol and 5% ethanol, in the country.
Deputy Prime Minister Hoang Trung Hai has urged the ministries of industry-trade and finance to work out plans to adjust import tariffs and appropriate measures to create the price difference between E5 and RON92 gasoline products.
As the duty on E5 petrol imports is too low at the present, locally-produced E5 petrol cannot compete with imports. Therefore, the finance ministry should monitor E5 petrol imports, increase tariffs and collect an environmental protection fee to narrow the difference between the prices of E5 petrol and RON92 gasoline.
The ministries should report specific solutions to the Government before January 15.
Earlier, a number of local fuel enterprises proposed revising up import tariffs on E5 petrol imports, and Binh Son Refining and Petrochemical Company (BRS) is one of them.
The company calculated with the import duties of 5% on E5 and 35% on A92 gasoline, the price of the bio-fuel produced in Vietnam is much higher than the imported product, and this makes it difficult for local enterprises to sell the bio-fuel on the domestic market.
Vietnam National Petroleum Group (Petrolimex) is another big producer and supplier of E5 bio-fuel in the country.
Private firms contribute more to HCMC's economy
The contribution of local State-owned enterprises (SOEs) to HCMC’s gross domestic product (GDP) has shrunk while the share of private firms, especially foreign-invested enterprises, has edged higher over the years, according to the city’s Department of Planning and Investment.
The department reported at a meeting with the leaders of HCMC on Wednesday that the State economic sector accounted for 17% of the city’s GDP last year and the proportion is forecast to fall to 16.8% of GDP this year, well below the 26.6% recorded in the 2006-2010 period.
Meanwhile, the private economic sector has contributed more the city’s GDP, from 50.6% in the 2006-2010 period to 58% last year and possibly 58.2% this year. Last year, foreign-invested firms’ contribution was 25%, according to the report on economic restructuring in 2011-2015.
The city government has restructured 15 State-owned corporations and holding companies by dissolving and selling loss-making enterprises and letting those unable to resume operations go bust. In addition, the city will pull State capital out of joint stock companies and urge local State-owned enterprises to boost divestments from non-core operations.
In the 2014-2015 period, 14 SOEs plan to divest a total of more than VND4.73 trillion (US$220.8 million) from non-core business operations, according to a recent report of the city government on the restructuring of public investment, state-owned enterprises and the banking system in the city.
The city will speed up State capital divestments from non-core businesses this year and next, particularly in the banking, securities, insurance and real estate sectors and investment funds.
The HCMC Export Processing and Industrial Zones Authority (Hepza) said foreign-invested firms have continued increasing investments and faring well in 2011-2015. The sector is responsible for US$2.7 billion out of US$4 billion investment pledges for projects in industrial parks and export processing zones in the city.
Services have taken a bigger percentage of the city’s GDP in the 2011-2015 period and the share of manufacturing and construction sectors has been in decline. The service sector accounted for 53.6% of the city GDP in 2010 and is expected to make up 59.9% this year.
Contributions of the manufacturing and construction sectors are projected to drop to around 39% in 2015 from 45.4% in 2010, while the proportion of the agriculture sector has been only 1% in the past years.
Experts warn of frangible state of economy
Economic and financial experts have pointed out a score of macro-economic challenges and warned that the local economy is now in a frangible state though it has shown signs of recovery.
Tran Dinh Thien, head of the Vietnam Institute of Economics, said economic restructuring since 2011 has brought about limited results and the economy is now in the most vulnerable state in 30 years.
Speaking at a seminar in HCMC on January 8 on economic development risks, Thien said higher gross domestic product (GDP) growth does not reflect the actual nature of Vietnam’s economy as recovery means the economy’s health is just a bit better but all woes have not been resolved.
Optimistic statements may create illusions about the actual state of the economy, Thien warned.
Thien described the transition of Vietnam’s economy to a new growth model as a molting snake. “It is fragile and very weak,” Thien said.
“In the current situation, new policies should be issued with great caution and it is important to forecast and identify risks rather than make rosy statements about the economy.”
Thien stressed that having experienced a host of troubles in the past seven years Vietnam’s economy is now at its weakest state in 30 years. “At this point of time, it would be too risky to make ambitious global integration commitments as the economy could be at stake,” he said.
According to Thien, exports hit a record high of US$150 billion last year with a trade surplus of nearly US$2 billion but trade deficit with China was still on the rise. Vietnam enjoys a trade surplus with the world but grapples with an increasing trade deficit with China.
Vo Dai Luoc from the Vietnam Asia-Pacific Economic Center said economic restructuring in Vietnam is still obstructed by many barriers like the old way of thinking, slow institutional reform and amendments to legal documents, the strong influence of interest groups on policymaking, and ineffective allocation of resources.
The private economic sector always serves as the backbone and main growth driver of modern market economies. Therefore, according to Luoc, to strengthen the driving force for Vietnam’s economy, it is necessary to foster development of private enterprises.
Regarding Vietnam’s growth model and economic structure, banking-financial expert Nguyen Dai Lai questioned whether outsourcing, use of cheap labor to attract foreign manufacturers of export goods, slow transfer of modern technologies and insufficient investment in domestic market development are the problems of Vietnam’s economy. He noted outsourcing would make Vietnam dependent more on the global economy.
Lai said Vietnam needs to make full use of its comparative advantages as well as avoid becoming a supplier of low-cost natural resources and cheap labor for the world.
MoIT rolls out plans to boost rice exports
Amid fierce competition, low demand and overproduction, the Ministry of Industry and Trade (MoIT) recently announced that it will intensify measures in 2015 to expand the nation’s rice exports.
Specifically the MoIT has set its sights on the African, West Asian and South Asian markets citing them as high demand markets where it can be price competitive with the other major players in the industry.
Currently the primary suppliers of rice to Africa are Thailand, India, Pakistan, Vietnam and the US. Thailand tops the list, accounting for 50% of market share, and the MoIT believes there arehighly favourable prospects to make substantive headway into the market in 2015.
For West Asia, Iran and Iraq are two largest rice importers that collectively purchase in excess of 1.2 million tonnes of rice annually, making it a highly lucrative target market for Vietnam with ample opportunity to pick up market share in the coming year.
In South Asia, Bangladesh is the dominant rice importer and the MoIT believes it can capitalise in the market on the back of a memorandum of understanding (MoU) between the two governments that went into effect in early 2014.
The US Department of Agriculture has also forecast that rice exports will surge in South Asia for 2015 so the MoIT is confident this market is a solid target for exports. Other markets the MoIT have under its microscope with plans to negotiate deals are the Ivory Coast, Congo, Kenya, Angola, Mozambique and Madagascar.
In order to augment rice exports to these markets, the MoIT aims to strengthen marketing and promotion efforts and improve coordination with other governmental agencies involved in agro-forestry-fisheries exports.
The MoIT will also establish bonded warehouses in key markets such as Cameroon, Angola, and Mozambique to facilitate Vietnamese exporters and improve market accessibility the MoIT concluded.
Handicraft export orders rise
In 2014, the export value of Vietnamese handicrafts jumped 8% on-year to US$1.6 billion, accounting for one-fifth of world market share. However, Vietnam’s handicraft exports have just targeted the low-end markets and have not matched their full potential.
This was recently announced by the Department of Processing and Trade for Agro-Forestry-Fisheries Products under the Ministry of Agriculture and Rural Development (MARD).
The MARD had approved a plan to export handicraft products for the period 2010-2015, which set an export target of US$1.6 billion however, the sector fulfilled the target a year ahead of schedule, the Ministry reported.
Last year, Vietnam’s bamboo and rattan exports grossed US$530 million while the turnover for ceramic, weaving, wood sculpture and household products was US$480 million, US$270 million, and US$130 million, respectively.
Other ancillary products in the handicraft industry fetched an export turnover of some US$190 million.
The US, Europe and Japan have historically been the traditional markets for Vietnam’s handicrafts, making up a huge proportion of the sector’s total exports. However, handicraft exporters have shifted their focus to new markets within BRICS including Brazil, Russia, India, China and South Africa.
Vietnam Handicraft Exporters Association (Vietcraft) General Secretary Le Ba Ngoc said last year, an inflow of handicraft orders from Japan and China dramatically improved the market in Vietnam. The move was primarily attributable to policy changes in China that increased minimum wage for workers and in turn led to higher production costs.
Moreover, Chinese manufacturers started setting minimum order requirements making it more costly for consumers to purchase Chinese products. In addition to Vietnam’s price competitiveness the huge number of orders has also been attributed to increased trust consumers place in the quality of Vietnam’s handicrafts.
However, Vietnam’s handicraft exports are still far from matching potential, according to Vietcraft. At present, the world market consumes handicraft products estimated at US$100 billion each year while Vietnam has just 1.5% of market share.
Vietnam’s export volume of just US$1.6 billion has been much too low compared against the increasing number of craft villages of 2,790 and hundreds of labourers.
Vietcraft Vice President Do Van Khoi said due to lack of investment in production technologies and product design, several craft villages and businesses have opted to make low-cost products instead of higher added value items.
At present, some 90% of Vietnam’s handicraft products are made based on technical details as ordered by customers and used their brands for export. Therefore, compared to other regional nations such as Thailand, Indonesia and the Philippines, Vietnamese handicrafts lack a competitive edge.
Ba Ngoc warned that to promote advantages and increase export turnover, Vietnamese enterprises should focus on mid-end markets in line with their production capacity, material source and working skills and put off targeting higher end markets until later years. Especially, they should also apply for trademark protection.
The MARD has also devised concrete solutions to accelerate the development of craft villages and boost exports. At the same time, the ministry should take measures to build sustainable material zones with a priority given to specialised cultivation areas.
In addition, the Ministry urged enterprises to develop traditional handicrafts with lower investment capital , high job creation and focus on training human resources to speed up the export of highly added value and creative handicrafts and seek highly lucrative markets.