Japanese investment and technology introduced

Hanoi hosted Japanese Investment and Technological exhibition (Techno Japan 2013) in conjunction with the third exhibition of safety security on December 16.

The events was scheduled as part of activities to mark 40th anniversary of the two countries’ diplomatic ties and aim to implement the international integration project on science and technology until 2020.

Techno Japan 2013, the first of its kind in Vietnam, has met the Japanese businesses’ demand for new investments and the transition of production sites from other nations to Vietnam, as well as providing the opportunity for Japanese and Vietnamese companies to exchange and sign contracts.

Minister of Science and Technology, Nguyen Quan, emphasized how the event has served as a bridge for both Vietnamese and Japanese businesses to exchange scientific and technological knowledge and skills to promote cooperation and investment, technological transfer and seek new partners.

 Vietnamese enterprises will have the opportunity to access Japan’s latest advances in such fields as security technology, automation technology, bio-technology, food processing, information technology and construction technology.

Various seminars will be held throughout the event, to provide Vietnamese businesses with solutions and new policies on foreign investment and technological transfer.

The two events have attracted nearly 100 business representatives from Japan, the UK, Bulgaria, Slovakia and the US.

Vietnam to export 6.5-7 mln tonnes of rice next year

Vietnam’s rice exports next year will reach 6.5-7 million tonnes, equivalent to its export value in 2013 due to many difficulties in sales, forecasts the Vietnam Food Association (VFA).

According to the VFA, the export situation in 2014 will continue to be difficult because of excess supply and competition.

Although a decline in demand, Southeast Asia will remain Vietnam’s traditional market. China is the largest importer of Vietnam.

The VFA forecast that the quantity of rice exported in 2013 fall by 1.12 million tonnes compared to last year, equivalent to 14.5 percent. By November 30, rice exports reached 6.143 million tonnes.

Vietnam enjoys US$1.8 billion trade surplus from Japan

According to the latest statistics from the Vietnam General Department of Customs (VGDC) Japan has rapidly become Vietnam’s key market, accounting for 10% of Vietnam’s total export turnover.

During the last 11 months two-way trade turnover between Vietnam and Japan was estimated at US$22.94 billion, up 1.7% against the same period last year.

Vietnam’s Japanese exports were valued at US$12.37 billion, a year-on-year increase of 3.5%, while the country imported Japanese goods worth US$10.57 billion, down 0.3% from the previous year.

Vietnam has enjoyed trade surplus from Japan for several consecutive years, with its export surplus reaching US$0.4 billion in 2011, US$1.5 billion in 2012, and US$1.8 billion so far this year (up 33%).

By November 2013, Japan ranked fourth among Vietnam’s largest trade partners. Major exports to the Japanese market included garment and textiles, crude oil, transport vehicles, machines, seafood, timber products, plastics, computers, and electronics and spare parts.

The VGDC identified that Vietnam’s main imports are machinery, computers, electronics, steels, and raw materials for garment and footwear industries, with an estimated value of US$7.62 billion, accounting for 73% of its total import figures from Japan.

The two countries have posted an annual trade growth of around 17% since 2005, with bilateral trade turnover increasing from US$8.5 billion in 2005 to US$16.8 billion five years later.

Shrimp exports likely to hit US$3 bln for first time

Vietnam’s shrimp exports reached nearly US$2.5 billion in the 10-month period and may top US$3 billion by the end of December.

General Secretary of the Vietnam Association of Seafood Exporters and Producers Truong Dinh Hoe told Vietnam Agriculture newspaper that if the forecast is realised, shrimp will equal rice in export value and outpace coffee and rubber.

The figure attained in this year’s first ten months alone broke the US$2.4 billion shrimp export record set in 2011, he added.

Hoe attributed the fact to price increases due to a sharp fall in global shrimp output caused by the early mortality syndrome in many countries like Thailand, China and Malaysia.

Among the products, white-legged shrimp has seen high growth in production and value. As of the end of October, its shipment value accounted for 49% of all shrimp exports, while black tiger shrimp was 44%.

Vietnam’s aquatic exports in November are estimated at US$650 million, bringing the 11-month figure to US$6.1 billion and matching the total for the whole of 2012.

German housing finance model adopted in VN

The Ministry of Construction recently put into place a housing finance model from Germany to assist in helping the nation successfully achieve its national housing strategy.

The housing finance model used in Germany was put in use nearly one hundred years ago and later spread to many countries.

In Germany, parents open a saving account for their children and put a certain sum of money into the accounts each month. After fifteen to twenty years, when their children had grown, they would have a sum of money – possibly equal to one-third to one-half of the value of a house, and with a loan from a bank the next generation could afford to purchase a house.

Deputy Minister Nguyen Tran Nam was quoted by VOV as saying that the model operated efficiently in many countries, such as China, South Korea and Germany, which helped create a long-term and stable capital source for housing development, while encouraging savings.

However, careful research about any barriers effecting this housing finance model in Viet Nam were needed to determine how it would be adopted.

For instance, fluctuations in interest rates were a barrier to using a similar savings model in Viet Nam.

In Germany, savers would be provided with long-term loans for house purchases by banks at the stable interest rate of about 3 per cent.

In Viet Nam, the interest rate would certainly be higher, experts said, pointing out that the Government's support package was currently available at the rate of 6 per cent.

Also, only 1.56 per cent of the VND30 trillion (US$1.42 billion) package had been distributed.

Pham Sy Liem, deputy president of the Viet Nam Federation of Civil Engineering Associations, told the newspaper that inflation was also a concern, because the real value of the savings could be lower after twenty years due to inflation.

Also, the real estate market continued to change in ways that are not predictable, he added.

Liem also pointed out that the savings model had not helped to deal with housing demands of low income earners, because some of them still struggled to make a living and did not have money to set aside for a monthly savings account.

However, Nam said this model aimed to prevent the reliance of people on the Government's support and encourage them to save, especially low-income earners.

Property market strikes positive year-end note

As the year draws to a close, the local property market is looking bright and busy as it realigns its offers for investors and gets ready for some stellar growth over the season.

Investors who have always viewed the purchase of property as a profitable, long -term investment channel, are now faced with a wide range of choices opening up before them, said Vu Cuong Quyet, General Director of the Dat Xanh Real Estate and Service JSC.

Quyet added that remittances from overseas would pour into the country at this time of the year and this would help stimulate local investments, especially investments in the property market.

The price of property projects has dropped drastically to price levels that buyers will inevitably find irresistible. Since property developers are running against time to sell their projects and to expedite sales, they are presenting several promotional programmes, such as offering lower price points, long-term payment schedules and simpler buying conditions.

These incentives will attract buyers, despite the current frozen property market.

Quyet said that the macro economy had also drastically improved and the financial market had seen many good movements, as bank interest rates fell sharply and loan conditions became simpler.

Viet Nam's economic development is looking more promising and positive over next year. Therefore, it is the right time and a good opportunity for people to invest, especially those who have a real need for housing.

Agreeing with this point of view, Chris Brown, general director of Cushman&Wakefield, predicted that if inflation was kept stable, 2014 would be a ‘prospect' year for Viet Nam's real estate market and market confidence would recover soon, too.

This was reported in the Business Forum on-line newspaper.

According to Dr Le Xuan Nghia, an analyst, 2014 would be a year of recovery for the real estate market. The property market could see a rapid increase in liquidity, starting from the Q3 and growing stronger in Q4.

However, because of the huge debts involved in real estate projects, this market could either recover firmly next year, or become slower for the high-end market segments.

Unlike the quiet atmosphere and grim outlook of the previous month, the local housing market is now boisterous again due to the many offers from property developers.

Housing loans remain hard to get

Distribution of the Government's VND30 trillion (US$1.4 billion) package for low-cost housing has only seen 1.56 per cent of the total VND470.8 billion distributed, six months after the programme began.

State Bank of Viet Nam (SBV) figures indicated that by the end of November, five designated banks, including Vietinbank, Vietcombank, BIDV, Agribank and MHB, disbursed the housing loan to more than 1,200 applicants.

Further, Vietinbank is committed to providing loans to 314 customers.

Vietcombank is to provide loans to 360 customers, with a total of VND134.5 billion being disbursed.

The central bank said three banks, including BIDV, Vietcombank and Agribank, signed credit contracts with 10 businesses, with total capital of VND1.11 trillion. However, the banks disbursed this sum of money to only five companies, with total loans only reaching VND176 billion.

The Ministry of Construction had earlier say that the loans would be disbursed within three years.

Under the loan package, buyers of low-income housing, Government workers, and military personnel, can borrow money at just six per cent interest for the first three years when buying a house or apartment with an area less than 70 sq.m, and costing no more than VND15 million per sq.m. The maximum loan will be for 10 years for personal use, and 5 years for businesses.

However, applicants should not own housing or have a house with less than 8 sq.m per household per person to be eligible to receive this loan.

Talking about the slow disbursement, the banks were quoted by Dantri online newspaper as saying the main reason they are needed was the lack of social housing supplies.

In addition, they said the regulations stipulated that social housing projects would not be transferred within 10 years of the signing date. The apartments would only be transferred to the Government, investors or other eligible people.

Banks, therefore, required investors to sign a three-party contract among banks, businesses and people, in which investors were asked to purchase the apartment if a buyer could not make payments on his loan.

Nguyen Viet Manh, head of SBV's Credit Department, said the contract would make loans safe if buyers did not have assets.

Viet Nam has 167 social housing projects, of which 34 apartment blocks with 19,000 units are now in use. The remaining units are under construction.

Experts said the slow disbursement was caused by regulations asking home buyers to prove their ability to pay their debts.

However, Dang Hung Vo, former deputy minister of Natural Resources and Environment, told the newspaper that this requirement would make home buyers hesitate to borrow loans.

Nam Dinh to build 2,400MW thermal power plant

The northern province of Nam Dinh will facilitate the construction of a 2,400MW thermal power plant in Hai Hau district beginning in 2014, a local senior official has said.

According to Chairman of the Nam Dinh People’s Committee Nguyen Van Tuan, the 4.5 billion USD project, which is 95 percent funded by the Republic of Korea’s Taekwang Vina Company and 5 percent by Vietnamese partners, will cover an area of 251ha in Hai Ninh and Hai Chau communes.

The plant will be built in two phases. Two turbines with a total capacity of 1,200 MW will be built in 2016-17, while the two others, with the same capacity, will be built in 2020-21.

The plant will operate under a BOT (build-operate-transfer) form for 25 years, with an estimated revenue expected to reach 25 billion USD.

Pham Quoc Khanh, Deputy Head of the Nam Dinh’s Department of Planning and Investment, Taekwang Vina is arranging financing, contracts for the plant, especially BOT contracts, as well as approving the feasibility report.

The province commits to helping clearance at the plant site, he added.

Chairman Tuan called the plant one of the key tasks in the province’s socio- economic development plan in 2014.-

Apparel exports to the US likely hit 8.5 billion USD

Vietnam’s garment and textile industry is able to earn 8.5 billion USD from selling its products to the US by the year-end, up 10.4 percent from 2012.

According to the US Chamber of Commerce (AmCham) in Vietnam, the sector is likely to post a gradual growth in its apparel exports to the market due to a moderate increase in labour costs estimate for next year.

The Southeast Asian nation is expected to enjoy the strongest growth among the largest clothing exporters to the US, namely China, India, Indonesia, Mexico and Bangladesh.

Currently, Vietnam ’s textile-garment exports account for 36 percent of its total export turnover to the US .

The sector might bring home 16.4 billion USD from shipping its products to the US by 2025.

Quy Nhon port receives 6.5 million tonnes of goods in 2013

Quy Nhon port broke its record for receiving the 6 millionth tonne of goods on December 12.

For the first time in its 38 years of operation, Quy Nhon port in the central province of Binh Dinh has served over 6 million tonnes of goods per year.

The volume of goods handled at Quy Nhon port is estimated at 6.5 million tonnes this year, 15 percent and 8.3 percent increases from 2012 and its set target, respectively.

It is expected to earn 477 billion VND (22.7 million USD) in revenue and 28 billion VND (1.3 million USD) in profit in 2013, representing respective rises of 14 percent and 35 percent from a year earlier.

These figures are forecast to be 8.4 percent and 3.7 percent higher than the port’s revenue and profit targets this year.-

Quang Ninh hosts int’l tourism, trade fair

The 2013 Vietnam-China International Tourism and Trade Fair is underway in Mong Cai city of the northern province of Quang Ninh, seeing the participation of 230 businesses.

The 400-pavilion fair features a wide range of products from agro-forestry and aquatic produce, handicraft items, ceramics, woodworks to machines and electronic equipment.

The event creates a golden opportunity for business players to seek partners and increase cooperation in trade, tourism and investment between the two countries, said Vice Chairman of the provincial People’s Committee Nguyen Van Thanh.

A string of activities will take place during the annual fair, including a forum on Vietnam-China border trade promotion and economic development, a music festival and sports event.

Jointly organised by the Mong Cai municipal People’s Committee and the China’s Dongxing People’s Government, the event will run through to December 18.-

BOT contract signed for Vinh Tan 1 thermoelectric plant

The Ministry of Industry and Trade , China ’s Southern Group, China Power International Holding Ltd and Vietnam Coal and Mineral Industries Group inked a Build-Operate-Transfer (BOT) contract in Hanoi on December 12.

The Vinh Tan 1 project with total investment capital of over 2 billion USD will be built in the central province of Binh Thuan .

The plant will be constructed under the BOT model and include two generators with a total capacity of 1,200 MW.

It is set to put into service its first generator in the second quarter of 2019 and fully operate in the last quarter of the same year.

The power plant will be transferred to Vietnam after 25 years since its completion.

Vinh Tan 1, together with Vinh Tan 2 and Vinh Tan 3 power plants, will form a thermal power centre under the national electricity development plan.

The construction of Vinh Tan 2 started in 2010 while a construction contract for Vinh Tan 3 was signed last October.

Vietnamese enterprises to receive a better financial climate: experts

Vietnam's gross domestic product (GDP) growth rate is forecast to reach 5.67 percent next year, while its consumer price index (CPI) will be 7 percent. Experts predicted the financial climate next year would bring in winds of change.

According to the National Centre for Socio-Economic Information and Forecast under the Ministry of Planning and Investment, the economy will see a lighter index of recovery, while inflation will be restrained at single digit figures in the next two years.

Mai Thi Thu, the centre's director, addressed a conference in Hanoi on December 12 on Vietnam's economic outlook in 2014. She spoke about the effects of the Government's policies promulgated this year to stabilise the macro-economy, which would lead to positive effects on the economy.

Corporate income taxes are poised to be lowered, from 25 to 22 per cent in parallel with reducing lending interest rates at 10-13 percent next year. This would facilitate businesses in expanding production.

"The biggest opportunity for Vietnamese enterprises lies in the country's stable macro-economy and gradual recovery of the world market," Thu said.

She said that the relatively low CPI, increasing exports and improved foreign reserves would be necessary conditions for recovery of companies. The forecast also indicated that FDI inflows would increase next year, thus bringing opportunities to domestic firms, she added.

In the same vein, Doan Hong Quang, economic specialist from the World Bank in Vietnam, said that the country's economy would depend on the world's recovery.

The participants, however, pointed out the potential risks for the economy next year as it faced barriers of low demand, bad debts, low investment effectiveness and a slow restructuring process.

The centre's figures revealed that the total investment this year indicates a slow growth. By the end of the third quarter this year, the country's total investment rose only 6.1 percent year-on-year.

In addition, capital scale was also narrowed as gross fixed investment as the percentage of GDP last year was less than 30 percent, while the percentage was 40 percent in the years before 2008.

Nguyen Huy Hoang, from the centre, said that the decreasing capital scale and low effectiveness in using capital would reduce the economy's competitiveness, thus bringing in a possible instability, when considered on a long term landscape.

Hoang said the trend of market expansion and participation in free trade agreements would also bring competition in international markets, lower production costs and selling prices for domestic businesses.

The Government should have policies to support enterprises in the days ahead, he said, adding that the policies could focus on improving investment environments, simplifying administrative procedures and improving the infrastructure.

Specifically, there should be policies to untie the inventory of VND100 trillion (4.7 billion USD) in the real estate sector. The Government would also need to promote the domestic market while preventing the inflow of smuggled and counterfeit goods.

"If the policies are effectively implemented next year, it will be a preparation for a step into a high quality, sustainable period," he said.-

Tay Ninh reaps benefits from large-scale field model

In 2008, Tay Ninh became the first province to try out the “four-players collaboration” model (also known as the large-scale field model) and has so far achieved encouraging results. Since then, the large- scale field model has quickly become an attractive model, bringing farmers huge economic benefits, according to Vietnam Business Forum.

With 150,000 hectare of rice cultivation area,Tay Ninh province is the largest rice producing area in Southeast Vietnam. Before applying the large-scale field model, rice production in the province encountered various problems in rice growing seasons, rice varieties, and application of advanced technique in cultivation. To enhance production and compete with Mekong Delta provinces, the Ministry of Agriculture and Rural Development has directed Tay Ninh to adopt the model of four-players collaboration on rice crops, with support from the Cultivation Department, the Department of Plant Protection, the Institute for Agricultural Science for Southern Vietnam and especially from many pharmaceutical and fertiliser companies.

The model was first implemented in 2008 on an area of 36 ha (500 ha planned) with the participation of 21 farmers. The model continued to be implemented and replicated, and in 2013 it was introduced in six major districts of Tay Ninh and reached 5,400 ha/year (summer/autumn season alone reached 2,377 ha/crop).

Going through 13 seasons during six years of implementation, the model has been enlarged in scale and also its name has been changed from time to time to suit the reality, as well as the proposed objectives.

Thanks to the application of technology advances in breeding and cultivation, provincial rice yield has been increasing. In 2012, Tay Ninh yielded about 5 tonnes/ha on average, rice production reached 776,118 tonnes, realising the requirements of food production serving domestic demand and moving toward exportation.

Tay Ninh is currently producing three harvests a year, including winter/spring season with planting area from 42,000 to 45,000 ha, average yield of 5,070 kg/ha, rice production of 219,267 tonnes; summer/fall season with area from 51,000 to 52,000 ha, average yield of 4,650 kg/ha, rice production of 241,575 tonnes; and the main season with area from 56,000 to 57,500 ha, average yield 4,580 kg/ha, rice production 262,880 tonnes.

The training, consultancy and technical support for farmers currently are top concerns of the provincial agricultural sector. Participating farmers hold five meetings every season, of which three are training in cultivation, technology application, pest control and other general solution. Each week, technicians and farmers visit fields to help farmers identify pests on site, then consult and give technical support to help farmer solving problems encountered in production, thereby enhancing field-managing skills of farmers.

By now, the Big Field model has produced positive results in Tay Ninh. Farmers have changed the old farming practices, applying advanced technology in accordance with the cultivation of the model, saving production costs, improving productivity and rice quality, raising interest for farmers, contributing to food security towards a sustainable agriculture.

“Tay Ninh has adopted the Big Field model since 2008 and, the province has now created many productive rice fields. The Cultivation Department highly appraised these achievements. We considered Tay Ninh the pioneer in providing the foundation to develop the Big Field in the Southeast as well as other provinces," said Mr Pham Van Du, Deputy Director of the Cultivation Department, the Ministry of Agriculture and Rural Development.

Even though the province has achieved numerous encouraging results, the actual development of the Big Field in Tay Ninh remains difficult and challenging, including obstacles such as: unsteady output for farmers, dependent on traders, low prices; lack of specialised technical staff to guide people in participating in the large-scale field.

To overcome these limitations, in the future, Tay Ninh province decided to focus on strengthening the areas already implementing the large-scale field instead of extending the model to new communes and districts. At the same time, Tay Ninh will gradually transfer successfully implemented areas operating efficiently to district-level management, the Provincial Department of Agriculture and Rural Development will act as operator; for 2014 this plan will be first conducted in Duong Minh Chau district.

Besides the rice crop, Tay Ninh province is also beginning to adopt the “ four- players collaboration ” model to other crops such as sugar cane, cassava and tobacco; expecting to make other spectacular breakthroughs, creating a comprehensive new look for the province's agriculture sector.-

Ministry looks to promoting production and stabilising prices

To ensure enough goods for the upcoming Lunar New Year (Tet) holiday, the Ministry of Industry and Trade directed all sectors to increase production in order to balance supply and demand and focus on stabilising prices, reports Vietnam Economic News.

Due to increased demand for the Tet holiday, it represents an opportunity for companies to boost production and consumption. According to the Ministry of Industry and Trade’s statistics, the industrial production index in November was estimated to increase by 5.7 percent compared to the same period last year.

In the first 11 months of this year, the industrial production index was estimated to increase by 5.6 percent compared to the same period last year. In particular, the industrial production index in the manufacturing and processing industries, electricity production and distribution and water supply and wastewater treatment increased by 7.1, 8.6 and 9.2 percent respectively.

Domestic consumer sales also witnessed a strong growth in November. The sale of televisions, footwear and leather and beer increased by 88.3, 12.7 and 15 percent compared to the same period last year.

Hanoi Beer, Alcohol and Beverage Corporation (Habeco) General Director Nguyen Hong Linh said that in the remaining month of this year, especially in the run-up to the Tet holiday, the consumption rate of beer and wine would increase. Therefore, to provide enough products to the market, the company’s production line has operated at maximum capacity.

Manufacturing and processing industries’ consumption index in October also increased by 11 percent compared to the same period last year. In the first 10 months of this year, its index increased by 10.4 percent compared to the same period last year. In particular, consumption index of beer, tobacco, civil electronic products increased by 11.2, 7.8 and 13.4 percent respectively.

According to the Ministry of Industry and Trade’s assessment, the supply of goods (including essential commodities) is plentiful.

In addition to boosting production, price stabilization programs have really become a tool to effectively regulate prices, contributing to controlling and limiting speculation in the last month of the year.

The Ministry of Industry and Trade’s Domestic Market Department Head Vo Van Quyen said that 32 provinces and cities throughout the country had implemented price stabilization programs with total value of about 1 trillion VND. In particular, companies have actively implemented price stabilisation programs from their financial resources or preferential loans from commercial banks.

Vo Van Quyen said that the utilisation of preferential loans from commercial banks had been seen as the newest point of price stabilization programs in recent years. To support companies, the State issued policies to link manufacturers, distributors and commercial banks, contributing to creating a continuous distribution chain to stabilize the market. These policies have received a positive response from commercial banks and have been applied in Hanoi, Ho Chi Minh City and Can Tho province.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa said that previously instability had occurred during and after the Tet holiday. Therefore, in addition to price stabilization programs, the Ministry of Industry and Trade needed to promote market management. In addition, the ministry should direct companies to boost production in order to provide enough goods to the market.

Vietnam-China cross-border trade, tourism promoted

The burgeoning development of cross-border tourism-trade activities between Vietnam and China has helped drive economic growth, create social changes and provide jobs for local people.

The view was shared by Duong Van Co, Chairman of the People’s Committee of Mong Cai city, the northern border province of Quang Ninh at a workshop jointly held by Mong Cai and its Chinese neighbouring city of Dongxing on December 13.

Co also said cross-border tourism and trade activities have also improved the spiritual life of ethnic people residing along the boundary, thus consolidating security, defence and social order and safety in the border area.

The operations, however, require the betterment of managerial work, he added.

Both Vietnamese and Chinese participants agreed that both cities own favourable conditions to promote their cross-border tourism and trade, adding that Mong Cai and Dongxing border gates have become important entrepôts for goods, investment capital and travellers between Vietnam and China .

Trade and tourism cooperation will benefit vastly from the two Governments’ joint statement on enhancing Vietnam – China comprehensive strategic cooperative partnership and a Memorandum of Understanding on the construction of cross-border economic cooperation zones.

Reports at the workshop outlined a number of measures and development orientations for the sectors.

The two sides will build a cooperation mechanism for trans-national tourism promotion and consider the construction of a joint tourism area. Participants stressed that both sides need to simplify relating procedures to encourage this model.

Meanwhile, they urged Mong Cai and Dongxing to ensure smooth transportation routes for goods and services, reduce transport fees to further competitiveness, and intensify anti-smuggling measures.

Dongxing is the only land and sea border gate between Vietnam and China . It is also the most favourable gateway for China ’s southern and southwestern regions to trade with Vietnam and other ASEAN nations.

Major cities take lead in economic integration

HCMC, Hanoi and Binh Duong Province are the three localities taking the lead in integrating into the global economy, according to this year’s report on province-level global economic integration capability.

The report conducted by the National Committee for International Economic Cooperation was released on Wednesday. It measures how local economies integrate into the global economy via an economic integration index.

According to the findings, the top positions belong to HCMC, Hanoi, Binh Duong, Ba Ria-Vung Tau and Danang. Meanwhile, localities near the bottom of the list are Soc Trang, Hau Giang, Bac Lieu, Tuyen Quang and Binh Phuoc.

According to Trinh Minh Anh, head of the Post-WTO Entry Program Steering Committee, this is the second time the index has been announced and the first time the index has covered all the nation’s 63 provinces and cities.

Main indicators used in the report are institutions, infrastructure, culture, geographical features, people, trade, investment and tourism.

Deputy Minister of Industry and Trade Nguyen Cam Tu said the report’s major aim was not to rank but to identify impacts of integration on growth and social welfares for the people and business development for enterprises.

The report evaluates the strategic vision and integration capability of each locality so that timely adjustments and recommendations are made to attract resources for sustainable development.

According to former Deputy Prime Minister Vu Khoan, the evaluation of integration capability of each province and city is new. However, the point is to help localities know what they should do to improve.

Capital construction debts tumble

Debts owed by the State to developers of capital construction projects had declined sharply as of the middle of this year, according to a report the Government has sent to the National Assembly.

Minister of Planning and Investment Bui Quang Vinh in the report said that capital construction debts from the State budget and government bonds was over VND43.3 trillion by mid-2013, a strong decline compared to VND91 trillion by the end of 2012.

Of which, debts due to the State budget was VND32.8 trillion for over 14,600 projects, and from government bonds VND10.4 trillion for 964 projects.

Giving no specific explanation for the sharp decline, Vinh said that ministries, agencies and local authorities arranged over VND15.5 trillion to settle debts for over 2,600 projects in 2012.

Local authorities accounted for nearly 94% of total debts of capital construction projects while central ministries and agencies made up the remaining ratio. Capital construction largely covers infrastructure and other key public facilities.

Ninh Binh Province was the biggest debtor with over VND3.9 trillion, followed by Ha Giang, Danang, Thai Binh, Daklak and Hanoi City. The Ministry of Transport had a debt of around VND1.2 trillion, the highest among central ministries.

Capital construction debts are the serious problem as local authorities have asked enterprises to advance capital for public projects. Many enterprises have got into big troubles given the debts.

The Government has asked local authorities to complete debt payments before 2015.

Ernst & Young upbeats about Vietnam’s economic prospects

Real GDP growth rates for Viet Nam were projected at 5.2% in 2014 and over 6% in 2015-17, according to Ernst & Young (EY).

The multinational professional services firm recently published a report on rapid-growth markets forecast.

The report said that subdued export markets and persistent high real interest rates have kept the country's 2013 GDP growth close to last year’s 5%.

But a sustained pickup in prospect from 2014, as the past year’s strong inward investment rise starts to boost exports to faster recovering markets. Despite an inflation rebound in the second half of the year, policy interest rate cuts are set to resume in 2014.

This should precipitate a deeper fall in private sector borrowing costs as the banks continue to return to health.

Although the trade deficit will widen again from 2013, a generally balanced current account and rising FDI should ensure that the Vietnamese dong will depreciate only in line with inflation. This will widen the scope for monetary easing and continued loan growth.

Better trade access, rising remittances and receding energy constraints will also support medium-term growth and contain inflation. But linkages between the foreign-invested sector and smaller private firms are weak, and state-owned firms are set to maintain preferential credit access.

This could prolong inefficiency and overexpansion. Rising exports and FDI, and the fast-expanding domestic market will underpin growth in excess of 6% in 2015 and 7% in 2016-16.

Vietnam pilots public-private partnerships in agriculture

The Ministry of Agriculture is piloting a public-private partnership (PPP) model in agriculture with the participation of 15 trans-national groups, one official said.

Le Quoc Doanh, Deputy Minister of Agriculture and Rural Development made this statement at a seminar called “Applying science and technology in agricultural production for Vietnam’s food safety, quality and sustainability”, which was held on the morning of November 29 in Hanoi.

According to Doanh, in order to realise the country’s plan for agricultural restructuring, which was approved by the prime minister in June, it requires the utilisation of resources from a number of industries and economic sectors.

Currently, state funding for agriculture remains modest while official development assistance (ODA) resources are on the decrease in recent years and resources from private sector and individuals are also low.

“In these circumstances, PPP can play an important role as it helps utilise resources from science and technology as well as the management experience of multi-national groups and corporations,” Doanh emphasised.

He said that the Ministry of Agriculture and Rural Development (MARD) is piloting a PPP model in agriculture in order to foster agricultural development by increasing added values and sustainable practices.

The model has attracted the participation of 15 trans-national groups so far, including Metro Cash & Carry, Unilever, Nestle, Dupon, Croplife, Syngenta, and Fresh Studio.

They are working to find a way to cooperate and foster the sustainable development of five industries: tea, coffee, vegetables, fisheries and commodities. They are calling for the participation of more foreign and domestic companies to realise these efforts.

Dupon is working with MARD on ways to find effective ways to apply science and technology to agriculture, animal husbandry, aquaculture as well as enhancing food nutrition and safety in the country. Meanwhile, several other foreign companies have been working to build up professional and sustainable supply chains in the country.

Vietnam targets to attain an agricultural growth rate of from 17-18% by 2015, with the sector’s expected export revenues climbing to USD30 billion per year.

By 2020, the sector’s export venues are forecast to reach USD40 billion, in which agriculture will contribute USD22 billion and, for fisheries, USD11 billion.

Vietnam’s diary industry faces challenges

Vietnam’s diary industry boasts great potential for development thanks to increasing demand while the country still imports up to 70% of milk products.

As food and drink are a big part of Vietnamese culture, large-scale milk consumption in the country is somewhat of a new development compared to western countries. The country's growth rate in this sector has been roughly 20% annually in recent years.

The number of dairy cows in the country increased from 11.000 in 1990, to 167.000 in 2012. Domestic milk production reached 381,000 tonnes last year.

There were only a few small-sized milk companies in the country before 1990, but the number of enterprises that take part in the market has reached 25, producing around 12,000 tonnes of milk per year, along with hundreds of importers and distributors.

Milk consumption has quintupled to 15 litres per person per year, compared to 1995.

Many experts have stated that Vietnam’s diary industry has been on par with the world market in terms of application of milk processing technology but it is in desperate need of other resources.

“The lack of fresh milk has been the biggest challenge to Vietnam’s diary industry, as domestic fresh milk production meets only 30% of demand,” said Vu Van Tam, Deputy Minister of Agriculture and Rural Development at the Vietnam Diary Dialogue – Towards Sustainable Development.

The quality of domestically made milk products has also been a lingering concern because of the nature of the small farms and lack of modern and environmentally friendly husbandry techniques.

Vietnam is on the list of 20 biggest milk importers in the world, importing average 1.2 million tonnes of milk per year, mainly processed and condensed milk and ice cream. As much as 70% of the liquid milk products in the country is made made from imported powered milk.

In order to improve the situation and foster sustainable development, the country targets to stimulate domestic milk production by raising more cows and intensifying the application of advanced technology to increase milk productivity.

“Vietnam has set a target to raise the number of cows from current 170,000 to 500,000 by 2020 in order to produce one billion litres of milk. Even if the target is realised, supply would only meet 40% of the demand, as consumption will continue to rise,” said Nguyen Xuan Duong, Deputy Director of the ministry’s Animal Husbandry Department.

However, fulfilling the target remains a challenge, as its current milk yield of 4,600 kilos per cow per year just accounts for over a half of the world average.

Su Thanh Phong, from Hanoi University of Agriculture, said the country should encourage breeding large herds of cows, as current size of an average of three to five cows per household and the targeted size of ten to fifteen cows per household in the time to come may not ensure sustainable production.

Meanwhile, an official from Fresh Studio, a Dutch agricultural consultancy firm, said that to realise the target of producing one billion litres of milk by 2020, Vietnam needs to produce an additional 60 million litres of milk per year. To this end it requires the collaboration of all stakeholders.

The official also emphasised the necessity of ensuring food safety and hygiene in milk production and quality.

Mexican firms turn to Vietnamese market

A host of business executives met a workshop in Mexico on December 6 to seek opportunities in emerging global economies, including Vietnam.

In his opening remarks, Manuel Sandoval, ProMexico Executive Director in charge of export projects, said he hopes that Mexican firms will be able to seek new pathways for their businesses in Vietnam.

Deputy Director of the Vietnamese Ministry of Industry and Trade’s Department of the American Market, Nguyen Hong Duong, informed delegates that Vietnam-Mexico trade has topped 1.2 billion USD in recent years.

Last year, Vietnam produced 44 million tonnes of rice – a key hard-currency earner, generating over 3.7 billion USD from exports. The country is now the second biggest rice exporter in the global rankings.

Mexican Rice Council (CMA) General Director Ricardo Mendoza Mondragon said Mexico has to import 90 percent of rice for domestic consumption, 75 percent of which is unhusked rice bought from the US.

He expressed hope to import rice from Vietnam or then produce the grains in the country if possible.

Duong answered questions regarding rice cultivation, harvest and preservation in Vietnam, including technological advances and insect control.

The Vietnamese delegation led by Duong also held working sessions with representatives of ProMexico and the National Service of Health, Food Safety and Quality Senasica. They visited several cultural and historic sites in Mexico ’s capital city.-

Concerns dampen domestic production recovery

Experts expect Vietnam to achieve 2013 GDP growth between 5.3–5.4% while keeping annual inflation to 6.2–6.3% but warn domestic production needs more time to make a complete recovery.

ASEAN Statistics recently lauded Vietnam’s measures against inflation, acknowledging that although it remains among the region’s highest, the Government is obviously intent on reining it in.

The Vietnam General Statistics Office reported the consumer price index (CPI) rose 0.34% in November, pushing the 11-month CPI increase to 5.5%. Industrial production is gradually recovering, with its index improving 5.7% in November and 5.6% in the 11-month period.

Many businesses have to cut production costs to sustain growth (Photo:Petrotimes)

A recent World Bank report presented 2013 as Vietnam’s third consecutive year of steady macroeconomic advances. The bank said the government’s 2011–2012 measures helped Vietnam reduce inflation, readjust its fiscal balance, and preserve currency market stability.

At a September 2013 meeting with Prime Minister Nguyen Tan Dung in Washington DC, International Monetary Fund Managing Director Christine Lagarde praised Vietnam’s macroeconomic stability and urged the country to continue the economic restructuring ambitions designed to better its current 5% GDP growth rate.

A government report revealed 11-month export earnings increased 15% to nearly US$120 billion; imports rose 15.9% to US$120 billion; registered foreign direct investment (FDI) exceeded US$20 billion, a 14% leap; and disbursed FDI grew 6% to US$10.55 billion.

Vietnam attracted US$4.6 billion in official development assistance (ODA) capital during the reviewed period, a year-on-year rise of 14.1%. Disbursed ODA also improved 13.5% to US$4.04 billion.

The number of newly registered businesses reflected these positive trends with another 9.3% rise and more than 12,600 businesses emerged from stagnation to resume operations.

Domestic and foreign experts warn Vietnamese economic growth is not as secure as it appears and faces significant threats. Expert Nguyen Dinh Anh believes the limits of the current growth model, based on public investments, low labour cost, and natural resources exploitation, will strangle any potential for national economic breakthroughs if it is extended into 2014.

ASEAN Statistics highlight the Vietnamese prices of essential services and commodities are almost all higher than regional averages, particularly in medicine and medical services, entertainment, and tourism. It recommends striving for a firmer handle on inflation and better economic performance to achieve sustainable growth.

The FDI sector is still the country’s major economic contributor, leaving the domestic and private sectors dwindling in its wake. During the past 11 months, the FDI sector recorded an export surplus of US$12.2 billion compared to the US$12.3 billion trade deficit burdening the domestic business sector.

FDI is also a major driver of industrial production. The processing and manufacturing industries attracted US$16.1 billion in FDI during the 11 months, 77% of Vietnam’s total registered FDI capital.

The government insists business restructuring is a crucial step towards reviving the domestic economy. Dr Nguyen Minh Phong says successfully facilitating private business operations could propel national economic development.

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