WB Vice President visits Vietnam

Vietnam represents an important development success story and our goal is to continue to find ways to support Vietnam in meeting its development challenges.

The statement was made by World Bank (WB) Vice President for Concessional Finance & Global Partnerships, Axel van Trotsenburg, during his visit to Vietnam from June 17-19.

Trotsenburg, who is responsible for the International Development Association (IDA), the WB’s fund for the poorest countries, met with Deputy Prime Minister Hoang Trung Hai, Deputy Minister of Planning and Investment Cao Viet Sinh, Minister of Finance Vuong Dinh Hue, and Governor of State Bank of Vietnam Nguyen Van Binh, to discuss ways to further strengthen the Vietnam-World Bank partnership.

IDA places a special focus on the critical  development themes of climate change, gender, crises of food and natural disasters, and conflict-affected and fragile states.

Vietnam has successfully reduced its poverty rate from 58 percent in 1993 to 14.5 percent in 2008, and real income has grown by 7.3 percent per year over the last 10 years. The country has registered striking gains in education as well as in providing electricity for city and rural residents.

IDA has contributed to this success through finance for economic reforms, agriculture, infrastructure, health programs, and schools, among other things. The organization has provided Vietnam with US$13.2 billion in interest-free credits, grants, and guarantees.

Vietnam's effective use of IDA financing to produce strong development results has contributed to successful replenishment of IDA's pool of funds available for the period of July 2011 - June 2014.

Mr Trotsenburg discussed the future strategy for IDA overall, specifically for Vietnam. He noted that as Vietnam continues to move forward along its development path, IDA is seeking new ways to remain a committed development partner to the country.

Shares fall on oil price rumours
 
Stocks reversed a two-session rally to fall during yesterday's trades despite rumours that petrol prices could decline again.

As the global energy market dwindled overnight, domestic petrol dealers said that retail prices could fall further.

"Investor pessimism overshadowed the market as cash flows were too weak," FPT Securities Co's analysts wrote on the company's website yesterday. "Poor trading ate away the confidence in the uptrend driven by the Government's plan to support the economy."

On the HCM City Stock Exchange, the decline gathered pace in the afternoon session, driving the VN-Index down over 1 per cent to close at 431.08 points.

Blue chips retreated. Up to 24 of the 30 largest shares by market value and liquidity sank while only four codes climbed, depressing the VN30 Index down 0.81 per cent to 506.67 points.

Only Khang Dien House (KDH) could sustain its morning rise, settling at the ceiling price of VND16,500 (US$0.79) per share by the end of the session.

Total value of trades tripled that of the morning's session, reaching over VND1.15 trillion ($54.8 million) on a volume of 68.6 million shares. However, negotiated trades accounted for almost a half, led by the Military Bank (MBB) whose shares saw trade worth VND213 billion ($10.1 million), accounting for 15 million MBB shares.

On the Ha Noi Stock Exchange, the HNX-Index also sank by more than 1 per cent, concluding yesterday's session at just 74.08 points.

Market volume and value continued to be modest with only 35.6 million shares, worth nearly VND372 billion ($17.7 million), changing hands.

PetroVietnam Construction (PVX), with over 3.5 million shares traded, was again the most active stock nationwide, losing 3.7 per cent to a close of VND10,300 ($0.49) a share.

Low inflation and reduced interest rates no longer weighed heavily on the market. Investors were paying more attention to credit growth, said Dao Hong Duong, analyst of PetroVietnam Securities Inc.

"Debt reduction influences the market and entices investors," Duong said.

"The market's ups and downs also depend on the world market and moves by foreign investors," he added, noting that if foreigners continued to dump shares, the market would likely see another downturn.

Foreign investors turned out to be net buyers yesterday on both stock exchanges, picking up a combined net buy of over VND25 billion ($1.2 million) worth of shares.

CPI down 0.17pct in June

The consumer price index (CPI) in June dropped by 0.17 percent against the previous month and increased by 6.32 percent over last year’s same month, according to the Hanoi Statistics Department.
 
Three groups of products went down in price such as housing, electricity, water and construction materials (1.86 percent), transport (1.73 percent) and food and drink services (0.05 percent).

In the first half of this year, the CPI grew by 0.42 percent per month on average and the price index by 11.38 percent.

Also in June, domestic gold prices fell by 2.69 percent but the US dollar exchange rate rose up 0.25 percent against May.

$11.5-mln floating dock left rusted in Cam Ranh

A floating dock worth an enormous US$11.5 million has been sitting dormant in Cam Ranh Bay in the coastal province of Khanh Hoa since 2008, as it has failed to receive approval to be imported to the country.

“We have yet to be able to green-light the import of the Venture Dock 2 floating dock since its owner has failed to complete necessary procedures as required,” said Nguyen Thanh Son, an official from the province’s Customs Agency.

The ill-fated equipment, which is now rusted and severely deteriorated, and has several broken down parts, was purchased from Singapore fours year ago by Ho Chi Minh City-based Long Son Co.

The 166.5-m Venture Dock 2, capable of loading 12,000 tons, arrived in Cam Ranh Bay on August 9, 2008, according to the provincial customs’ file. The floating dock was built in Indonesia in 1999, but was registered as Mongolian nationality despite its Singaporean owner.

“Our file doesn’t show who is the Vietnamese owner of the equipment,” said Son.

“After seeing the floating dock sitting in Cam Ranh Bay for years while no one had ever showed up to complete import procedures, we have had to exert effort to search for that owner.

“It was not until late last April that we found Tran Thi Hien, director of Long Son Co, to work with.”

Hien said Long Son Co bought the equipment at $11.5 million, under a temporary import and re-export plan.

“We intended to sell it to a foreign partner, but the deal was canceled due to the economic crisis,” she said.

However, according to a document released on April 28, 2011 by the Ba Ngoi Port Customs in Cam Ranh City, the floating dock is under the management of Viet Hai Shipping and Real Properties Corporation (VSP), based in HCMC.

VSP is the successor of the Vinashin Petroleum Investment and Transport JSC, or Shinpetrol, which was established in 2002. The debt-stricken Vinashin held a 40 percent stake of the company, which bought the floating dock for ship repairs.

A chief official from Cam Ranh Shipyard Co Ltd, another subsidiary of Vinashin, said VSP had planned to cooperate with his company to put the Venture Dock 2 floating dock into operation at Cam Ranh shipyard plant in 2010.

“But the People’s Committee of Khanh Hoa Province turned down the plan out of concern for environmental pollution,” he said.

Vietnam’s superfluous cement plants

At a time when many cement makers are taking losses and have had to call for help from the government, many localities are still building more cement manufacturing plants.

Cement plants have spread their existence to almost 100 percent of cities and provinces in Vietnam, with some localities, such as Ninh Binh, Ha Nam, Hai Duong, and Quang Ninh provinces, containing two-five plants each.

Of these, Bong Lang hamlet of Ha Nam province seems the most noteworthy, with as many as three cement making projects operating in the small village in Thanh Nghi Commune, Thanh Liem District.

The three plants in Bong Lang hamlet include the 2.3-million-ton Xuan Thanh cement plant of Xuan Thanh Group, the 450,000-ton plant Thanh Liem, and the 350,000-ton Hoang Long plant. All three are located within 1km of each other.

Nguyen Van Thu, a local from Thanh Nghi Commune, said the construction of the Xuan Thanh plant has reclaimed 600,000 sqm of land in the locality.

While the commune is now renowned for its record three cement production plants, Thanh said this is not something to be proud of.

“We never expected to achieve such a record – three cement plants built in one hamlet,” he said sadly.

Although the plants will generate jobs for locals, Thanh said he has other things to worry about.

“I don’t know how modern their technologies are, but we villagers are concerned over pollution, especially if they are using old equipment,” he shared.

Meanwhile Bui Thi Nga, another villager, said she has no idea “why the officials planned to put three cement plants in such a densely populated hamlet like Bong Lang.”

“The plants occasionally darken the sky with their exhaust emission,” she said, pointing to a chimney at the Hoang Long plant.

While new cement plants have regularly been constructed and put into use, the market for the product they create has gone in the opposite direction over the last two years.

“I used to sell some 3,000 – 4,000 tons of cement a day two years ago, but now 500 tons a day is the best I can manage,” said T, a cement distributor.

He sold only 780 tons of cement in May, a 60 percent year-on-year decline, he said.

“Consumption this month is expected to continue to drop by 30 percent compared to May,” he said.

T said the poor consumption is caused by delayed construction work and the frozen real estate market.

“And the surplus supply as many new cement plants have been built has just exacerbated the issue,” he added.

A marketing executive of a cement maker said the company’s plant has been operating at only 60 percent of its capacity over the last few months.

Meanwhile, the Vietnam Cement Association (VNCA) said in a recent meeting that most cement makers have been suffering from losses and high unsold inventory since the beginning of this year.

“Some are on the brink of bankruptcy, and there is no positive sign for the market in the other half of this year,” stated VNCA Chairman Nguyen Van Thien.

According to their design capacity, all cement production plants in Vietnam are estimated to produce a total of 77 million tons of cements this year, while total consumption stands at only 50 million tons.

Even when the plants operate at 60 – 70 percent capacity, the surplus will be as high as 6 – 8 million tons.

Even so, 52 new plants have been planned for construction between now and 2030. The new comers will send total production to 139.34 million tons a year, while the surplus will stand at some 20 million tons, as consumption is expected to rise to only 113 million tons in 2030.

Meanwhile, many outsiders of the cement sector, such as Song Da Group, coal and mineral giant Vinacomin, and oil and gas producer PetroVietnam have also invested in cement plants.

Tran Van Huynh, chairman of the Vietnam Construction Material Association, said most of the plants are using low-quality technologies from China, which severely pollute surrounding environments.

“The plants also yield poor effectiveness as they consume a lot of materials, and face high risks with the rising coal and power costs,” he said.

Domestic tours offered at 30 percent off

Local airlines, together with the Ho Chi Minh City Tourism Association (HTA) and local tourism sectors, will cooperate with travel agencies to make it cheaper to travel inbound this summer holiday.

A representative from the Vietnam Airlines Southern Regional Office said the airline will increase the number of discounted seats by up to 40 percent on a domestic flight from Ho Chi Minh City to Hanoi, Da Nang, Phu Quoc and Hai Phong in July and August to meet the demands of local travel agencies. Also starting in August, travel agencies will need to register for Vietnam Airlines flights 20 days in advance, instead of the previously required month.

Budget airline VietJet Air also teamed up with the Ho Chi Minh City Tourism Association (HTA) to offer a discount of up to 49 percent for travel agencies until the end of this year. This domestic travel stimulus initiative will introduce exclusive low-cost holiday packages to help lure travelers to the country’s most celebrated destinations like Ho Chi Minh City, Hanoi and Da Nang.

Nguyen Thi Khanh, vice chairwoman at HTA, said hotels and restaurants based in twelve provinces in the Mekong Delta had agreed to discount 30 percent of the service charge to boost inbound traveling.

Authorities in Nghe An and Binh Thuan provinces and Da Nang City also encouraged tourism-related business to bring down prices and cooperate with HTA members to join the promotional program.

Up to now, 19 travel agencies have registered for more than 11,000 cheap plane tickets in an effort to bring down the prices of domestic tours by 30 percent, according to HTA.

Biggest Vietnamese listed firms: more cash, bigger debt

There are 12 public companies holding over VND1 trillion in cash, but most of them are also big debtors.

As of the end of Q1/2012, the 12 listed companies have nearly VND54 trillion ($2.58 billion) in cash, including cash, cash equivalents and bank deposits with terms of less than 1 year.

Besides the cash flow generated from business operations, the business also raised a large amount of capital through the issuance of shares and debt papers.

There are two companies that hold more than VND10 trillion in cash, Masan Group (MSN) and PV Gas (GAS), with respective cash values of VND14.635 trillion and VND10.77 trillion.

According to MSN statements of cash flows, in Q1/2012, Masan Group had received VND6 trillion from issuing short-and long-term debt papers.

MSN has VND1.755 trillion in cash, VND11.712 trillion in cash equivalents, and VND1.168 trillion cash deposited for over 3 months at local banks.

The amount of deposit will likely be injected in the Nui Phao project through MSM subsidiary Masan Resources and the implementation of future merger and acquisitions (M&A) deals.

GAS’s amount of cash comes primarily from profits and its long-term loan in 2011.

In addition to GAS, a member of the Vietnam National Oil and Gas Group (PetroVietnam), there are three other members of PetroVietnam on the 12-member list, PetroVietnam Technical Service (PVS), PetroVietnam Construction (PVX) and Phu My Fertilizer Co (DPM).

The two construction giants, PVX and Vinaconex (VCG), have entered the list after offering shares to raise capital late last year.

R.E.E Electric Appliances Joint Stock Co (REE) earned VND500 billion from divestments in Sacombank in 2011. Confectionery maker Kinh Do (KDC) earned VND660 billion the issuance of a more than 10 percent stake to Ezaki Glico.

The 12 listed enterprises with cash holdings totaling VND54 trillion have borrowed more than VND80 trillion ($3.82 billion).

MSN and GAS, the two companies with the most abundant cash, have debts equivalent to their available cash.

However, about 60 percent of MSN loans, mainly of the long-term variety, can be converted into shares.

Vinaconex and HAGL also owe more than VND12 trillion each.

Those two firms also have the largest difference between cash and debt, all above VND10 trillion.

The two businesses’ short-term debt, including long-term debts due to be paid, is quite large, at VND7 trillion and VND2.7 trillion respectively.

In Q1, HAGL borrowed VND1.95 trillion and paid principal loans worth some VND1.38 trillion.

HAGL’s cash supply was reduced by more than VND1.2 trillion compared with that in the beginning of 2012 due to the payment of nearly VND1.6 trillion for the procurement and construction of fixed assets.

On the other side, DPM is in the most comfortable situation, with VND9 billion in outstanding loans and VND5.6 trillion in cash available.

In addition, Vinamilk (VNM), REE, and KDC also have more cash than debt. VNM’s debt is around VND400 billion, but its cash is worth some 8 times more than that.

Agencies respond over toxic Chinese milk, apples

Two local administrative agencies have responded to public concerns over apples from China which have been found to be wrapped in poisonous bags, and Chinese-imported formula milk allegedly contaminated with mercury.

The Ministry of Agriculture and Rural Development yesterday assigned the Plant Protection Agency to handle the case of Chinese apples, saying the agency can send inspectors to China to create an official report on the issue.

Minister Cao Duc Phat also called for strengthened checks on imported batches of apples from China.

Earlier the Chinese media revealed that farmers in Yantai, Shangdong Province have wrapped their Fuji apples in plastic bags containing drug powders until maturity so that the fruits grow better skins.

The toxic chemicals are reportedly thiram and melarsoprol, which are prohibited from use in China, local media outlets said.

Nguyen Xuan Hong, head of the Vietnamese Plant Protection Agency, said Chinese authorities have recalled 2.7 million plastic fruit-wrapping bags, and forced the bag manufacturers to shut down operation.

The Plant Protection Agency has ordered two centers in Hanoi and Ho Chi Minh City to take samples of Chinese apples to test their toxicity.

China is the world’s largest supplier of Fuji apples, accounting for 40 percent of global supply.

Meanwhile, head of the Vietnam Food Administration Tran Quan Trung confirmed with Tuoi Tre yesterday that his agency has not granted quality certificates for any Chinese Yili baby formula since 2009.

Chinese authorities last week found that Yili baby milk contains high levels of mercury.

The dairy maker confirmed that it had started recalling batches of baby formula following the authorities’ detection in the country’s latest food safety scandal.

In 2008 Chinese milk also caused a food safety scare as some dairy products were illegally injected with the industrial chemical melamine to give the appearance of higher protein content, AFP reported.

At that time the Vietnam Food Administration also asked relevant agencies to recall and destroy the contaminated Yili milk products.

VNPT to end dial-up Internet service in VN

The Vietnam Post and Telecommunications Group (VNPT) will put an end to dial-up Internet service on July 15, 2012 due to the dwindling number of subscriptions.

VNPT has obtained approval from the Ministry of Information and Communications after sending a report proposing to stop providing the indirect Internet services including VNN 1260, VNN 1269 and VNN 1268.

An indirect internet connection is a service connected via the public telephone network by dialing PSTN, once very common in Vietnam when the Internet was first introduced here more than 10 years ago.

However, with the popularization of broadband Internet services, many local Internet service providers, such as FPT Telecom, Viettel, and NetNam, stopped offering this service about four years ago.

Only VNPT continued the service, mainly for the benefit of society, especially for those in remote areas, but the cost to maintain the network has risen against falling revenue.

With the permission of the Ministry of Information and Communications, indirect Internet will complete its historic mission in Vietnam starting mid-July.

VNPT said that the group will continue to provide Internet services to customers through two networks: high-speed Internet cable, or FiberVNN; and broadband Internet, or MegaVNN.

Redirecting catfish exports to US needs considerations
 
Vietnamese catfish exporters have been warned redirecting their produces to the US market is an unwise move as it may trigger new waves of anti-dumping lawsuits raised by local farmers, according to a recent conference.

The demand for seafood imports in the EU market has been decreasing dramatically, since people have to cut down their spending amid the prolonged economic turbulence.

Therefore, Vietnamese exporters, who cannot boost sales in the EU market, have started to turn to the US market as an alternative choice, according to Thoi Bao Kinh Te Sai Gon newspaper.

‘The shift may do harm than good,” Nguyen Thi Hong Minh, former deputy minister of Agriculture and Rural Development (MARD), who had returned from a fact finding trip to Mekong Delta, told the conference.

“Regional seafood companies have told me that they are considering exporting to the US market to offset the decreases in the exports to the EU,” Minh said at the conference held by the Vietnam Association of Seafood Exporters and Producers (VASEP).

Vietnamese seafood companies now tend to choose the US market since they heard that exporters would enjoy lower tax rates when entering the US.

The lowered tax rates for enticing local exporters were decided by the US Department of Commerce (DOC) after the seventh administration review (POR7) in March 2012.

The massive exports to the US may trigger new waves of anti-dumping lawsuits raised by the American farmers’ associations,” Minh said.

“Relevant agencies need to monitor this movement as it may pose a new threat for more anti-dumping lawsuit against Vietnamese catfish in the US,” Minh added.

Nguyen Thanh Bien, deputy minister of Industry and Trade, said no intervention will possibly result in more risks for the next anti-dumping review for catfish exports.

VASEP has predicted a bad picture for local seafood sector in 2012.

An article published on VASEP’s official website said the 11 percent growth rate in the first four months of 2012 and 0.9 percent growth rate in April are the lowest growth rates in the last three years, which can truly reflect the real difficulties of the industry.

Capital and material shortages, plus the increasing input costs and the narrowed export markets, all are the big challenges seafood companies are facing.

The exports of shrimp and catfish, the two main seafood export items, have begun decreasing since April.

Especially, shrimp exports dropped by 6.5 percent to $163.2 million, and black tiger shrimp exports dropped by nearly 22 percent owing to spreading epidemics and the low demand for high-grade products.

Catfish exports also brought $143.6 million only, a decrease of 0.9 percent in comparison with the same period of the last year.

Analysts have warned that catfish exports would decrease further, if enterprises and farmers still cannot access bank loans.

The seafood exports to the EU decreased by 12 percent in the first four months of the year, of which shrimp and catfish exports were down by 30 percent and 14 percent respectively.

According to VASEP, the export turnover of catfish to EU, mainly in Spain, the Netherlands, Germany and Italy, was over $169 million in the year’s first five months, down 14 percent from the same period last year.

Meanwhile, the export turnover to the US in the period reached $127.6 million, up 44 percent year on year.

Seafood processors will fall short of 40 percent of catfish materials starting from the third quarter this year, said VASEP.

VASEP vice chair Duong Ngoc Minh said multiple farmers and catfish trading firms are now indebted to banks, letting alone the existing debt chains, of which processing plants owes money to farmers who owes money to feed suppliers.

Therefore, the chance for new investments in catfish cultivation in a seeable future is becoming unrealizable.

Between 20-30 percent of catfish processing and exporting companies are on verge of bankruptcy this year due to a serious shortage of capital and materials.

According to the VASEP, the Vietnam Development Bank (VDB) has advocated the association’s proposal of offering urgent financial support to catfish companies.

There were only 473 companies involved in seafood exports during the first five months of this year, down significantly from 800 companies in the same period last year, according to VASEP.

Some US lawmakers, including Senator John McCain, have spoken out against the US Department of Agriculture (USDA) for adding its proposal on additional catfish inspection program for imported catfish into the US Farm Bill.

US Food Safety quoted McCain as saying that if the proposal is passed, Vietnam, which is the largest catfish exporters in the world, will sue the US to the World Trade Organization because the US has erected unjustified trade barriers.

In 2010, the US imported $ 185 million of catfish from Vietnam.

Transport fees freezing local automobile market: VAMA

Transport fee used to limit personal vehicles have frozen the local automobile market, said Vietnam Automobile Manufacturers’ Association (VAMA) in a recent document sent to Hanoi authorities.

“Vietnam’s automotive industry has faced the most dramatic decline in sales ever with total sales dropping 40 percent year on year in the first five months of 2012,” said VAMA.

According to VAMA, auto sales plummeted due to the increases in registration fees for passenger cars in Hanoi and Ho Chi Minh City from 12 percent to 20 percent and from 10 percent to 15 percent respectively.

In addition, a number of new fees expected to be imposed soon, especially fees used to limit personal vehicles in the biggest cities in Vietnam, including Hanoi and HCMC, has helped lower the temperature of the currently-freezing market.

Domestic companies and auto traders told the Saigon Times Daily that buyers are hesitant as a high fee will likely be imposed to limit the use of private vehicles. If the government fails to make clear their plans for the fee, the local auto market will be frozen or continue to slump.

As a result, VAMA has proposed Hanoi and HCMC governments consider reducing registration fees for passenger cars to 10 percent.

Around 6,870 automobile units were sold in Vietnam last month, a 2 percent month-on-month fall, said VAMA.

Among them, as many as 5,710 units were assembled in Vietnam, while more than 1,000 completely built units (CBUs) were imported from overseas.

In the first five months of 2012, some 29,812 automobiles were sold, a 40 percent year-on-year drop, of which, commercial vehicle sales hit 14,692 units, down 30 percent against the same period last year.

Only Vietnamese auto maker Truong Hai and Toyota sold more than 1,000 units in May, with 1,898 units and 1,602 units respectively.

However, Truong Hai, who leads the market in terms of sales volume in recent times, also saw a 29 percent year-on-year decline in May.

The sales of local automakers kept declining despite the offering of a series of promotional and customer care programs.

Besides price cuts, automakers also gave more supports to customers, including free registration fees, car accessories and insurance fees.

They also launched new products to draw the attention of customers.

But all the aforementioned efforts seem to have been in vain.

Last month, Mercedes-Benz Vietnam sold 142 cars, a 63 percent year-on-year drop, though having launched a huge discount program slashing the price of some luxury cars by over VND1 billion each.

Other automakers under VAMA also reported disappointing sales data in May despite their efforts in launching as many big sales as they could.

According to a report of VAMA, GM Vietnam sold just 311 cars, a 42 percent year-on-year fall, while Ford Vietnam suffered a 50 percent year-on-year decline with only 224 cars sold.

Ford Vietnam has just announced a discount program with biggest discount amounting to VND100 million for all its locally assembled vehicles.

The respective figures at Honda Vietnam, Isuzu Vietnam and VinaStar (Mitsubishi) were around 100, 112 and 103 units.

Cocoa growers target global market

Viet Nam hopes to become a major supplier of cocoa beans in the world market, with production of 50,000 tonnes of fermented beans by 2020.

It plans to have 50,000ha under cocoa cultivation, of which 42,000ha would yield the fruit.

The cocoa sector in Viet Nam is showing signs of rapid growth, according to Phan Huy Thong, director of the National Agriculture Extension Centre, who spoke at a forum on sustainable cocoa development in Binh Phuoc Province last week.

Total cultivated land is now about 20,100ha, yielding 5,100 tonnes last year. There were only 2,000ha of land planted with cocoa trees in 2005.

Cultivation exists mainly in 10 provinces, including Ben Tre, Tien Giang, Dak Nong, Dak Lak, Binh Phuoc and Ba Ria-Vung Tau, mostly grown under the shade of other crops, including coconut palms and cashew trees.

Phan Van Don, deputy director of Binh Phuoc Province's Department of Agriculture and Rural Development, said cocoa could be an attractive crop to smallholder farmers, both in intercropping and monoculture systems.

Cocoa has the advantage of lower labour costs to coffee and rubber, less water requirements compared to coffee.

Intercropping with cashew gardens in the province has been successful as well.

Nguyen Khac Thuoc, a farmer in Bu Dang District of Binh Phuoc Province, said that intercropping with his 5ha under cashew cultivation had helped him raise his income substantially.

Nguyen Van Hoa, deputy head of the Cultivation Department, said there was an increasing demand for the high-nutritive valued bean in the global and domestic markets. Cocoa supply globally was much lower than demand.

Viet Nam has to import more than 10,000 tonnes of cocoa powder for local production annually.

Cocoa was not expected to face strong price fluctuations as other farm produce, Hoa said.

The price of cocoa as well as other farm produce in the domestic market has fallen this year due to a drop in price in the world market, but compared to other agricultural products like rubber and cashew, cocoa prices have not fallen much.

Despite the potential of the sector, many delegates at the forum agreed that the sector had not yet reached its potential due to poor farming practices, limited technological transfer, poor planting materials and outbreaks of pests and diseases.

In addition, the planting was scattered and small-scale, causing difficulties to production and consumption, Hoa said.

Since cocoa is still a relatively new tree in Viet Nam, little research has been conducted on the plant in the country.

With less experience in planting cocoa compared to other trees, farmers are still hesitating about planting the tree, according to Thong.

He said that, to meet the planning target, the Ministry of Agriculture and Rural Development should review zoning plans for cocoa cultivation in the country.

Each locality should identify the amount of cocoa cultivation and then draw up appropriate plans.

He said that scientists and agricultural research institutes should focus more on research to create new high-quality seedlings, better cultivation techniques, and measures to prevent and control pests and diseases.

The Government is encouraging co-operation between concerned agencies and the private sector to develop the cocoa industry.

Delegates suggested that the Government establish standards for cocoa quality, and develop more agricultural extension programmes to provide farmers with skills and techniques in growing, harvesting and processing cocoa.

They also recommended that modern technologies should be used for processing cocoa beans to achieve higher quality.

Hoa said Viet Nam would increase the value of the bean by meeting standards for certificates granted for high quality cocoa production.

Organised by the Central Agriculture Extension Centre, the forum attracted policymakers, scientists and agriculture experts as well as more than 300 farmers from 10 provinces.

Pig farmers in crisis

Constant pig price drops over the last six months have placed a heavy burden on the shoulders of farmers in the Mekong Delta.

“I have been a pig trader for more than five years, but never experienced such a tough time,” said Phan Van Thiet, a pig trader in Cai Lay District, Tien Giang Province.

Live pig prices in Tien Giang, Long An and Dong Thap provinces are fluctuating around VND3.1-3.6 million per quintal (100 kilos). Particularly, high-quality pigs are being bought at VND3.5-3.6 million per quintal, while those of lower-quality are priced at VND3.1-3.2 million, a loss off VND500,000-700,000 a quintal against last month.

Given the current prices, all farming households incur losses and have to abandon their farms for fear of further price drops. Meanwhile, with every quintal of live pig bought, intermediary traders have to cover a loss of VND600,000 to VND1.3 million.

Nguyen Thanh Son, deputy head of the Husbandry Department under the Ministry of Agriculture and Rural Development, told the Daily that price volatility discourages pig farmers from making new investments, sending the livestock farming industry into crisis.

According to the department, there is likely to be a meat undersupply for the domestic market later this year. Therefore, local husbandry authorities must adopt measures right away to overcome this situation.

A representative of Than Cuu Nghia husbandry business in Chau Thanh District, Tien Giang said that if the uncertainties of the livestock farming industry were not eliminated, the chance of supply-demand imbalance in the future would be high.

Low prices, capital shortage and high input costs are the major problems currently facing the livestock farming industry, according to many animal husbandry firms and farming households.

* Prices of pork and poultry products joining the price stabilization program of HCMC are lowered by VND1,000-5,000 per kilo starting on Friday given the abundant supply while buying remains weak.

Nguyen Quoc Chien, head of the market price unit at the finance department, said the decrease in rates had been adjusted to reduce losses of enterprises and offer farmers conditions to keep farming. Pork prices after cuts are 3.5-5.6% lower than the market prices while poultry prices are 12-19% lower, said the municipal finance department.

The fact that pork, chicken and duck prices are plunging while animal feed prices remain unchanged results in huge losses, sparking worry about meat shortages in the next few months as farmers abandon their farms.

Therefore, the finance department asked price stabilizers to pay attention to generating supply sources to prevent undersupply and price fever.

On the contrary, eggs have marked up sharply against early May. Pham Thi Huan, director of Ba Huan Co., said chicken eggs are now priced at an average VND25,000 per dozen and duck eggs at VND28,000-32,000 a dozen, rising 10%.

Meanwhile, price-stabilized chicken and duck eggs are sold at significantly lower prices, VND22,500 and VND29,500 per dozen respectively.

Truong Chi Thien, director of Vinh Thanh Dat Co., stated that egg prices picked up because they had already hit rock bottom in early May. Egg prices have constantly increased over the last two weeks and will likely continue in the near future, said Thien.

Egg exports to Hong Kong are recorded by the management agencies, but the volume is modest. “Supply is abundant now,” Huan noted.

Property trading floor tests new sale strategy

Eden Real will invite homebuyers to townhouses that are available for sale without having to giving information about them at the trading floor as has been done before.

Under the new sale strategy, a townhouse on Nguyen Canh Chan Street in HCMC’s District 1 will be put up for sale at a price of nearly VND2 billion on Saturday.

The strategy came out as sellers want to urgently sell their hones while there is high demand for townhouse purchases via real estate brokers. Through one-day trading, both sides can make their decisions quickly and buyers can directly inspect the houses that they are going to buy.

It is expected that 50 clients will inspect this house and make a deposit in the trading day.  This will be one of major activities that Eden plans to pursue in the coming time.

Vietnam plans five trade promotion offices in China

The Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade plans to establish five trade promotion offices in China this year in an effort to boost export sales and expand trade promotions there, said Do Thang Hai, general director of Vietrade.

Vietnam has set up a trade commission in China and this commission has a branch in each of Kunming, Nanning and Guangzhou. The Agricultural Trade Promotion Agency under the Ministry of Agriculture and Rural Development will lead a mission to take part in a food and beverages fair organized in a northern Chinese province.

China is an attractive market for Vietnamese agro-products suppliers as the number of participants registering to join the fair is higher than expected. “Despite being warned of risks, a populous market like China is still appealing to agricultural businesses,” said Hai.

China is now Vietnam’s biggest rice exporter. Thus, the Vietnam Food Association (VFA) plans to launch a long-term trade promotion campaign there.

Apart from the HCMC-based export promotion center for high-grade rice, VFA looks set to open several branches of the center in major Chinese cities and provinces, said Huynh Minh Hue, general secretary of VFA.

The association in the year to date has made two business trips to China for trade promotion with the participation of local agricultural businesses.

Two-way trade between Vietnam and China has snowballed in recent years. The country earned US$5 billion from exports to China in January-May while spending US$10.5 billion on imports from China, according the General Department of Customs.

Inter-bank rate skyrockets

Several banks majority held by the State chased up the inter-bank interest rate by around one percentage points on Thursday, pushing the overnight rate on the market to some 5%-6% a year compared to a mere 1% a fortnight ago.

Banks lent to one another at 5%-6% for overnight and one-week terms, 6% to 6.5% for terms of two to three weeks, and up to 7.5% for one-month terms, said analysts of the Bank for Investment and Development of Vietnam (BIDV).

BIDV experts said the inter-bank market had become more bustling since early this week, and the rate has now approached the deposit rates at commercial banks. Most transactions centered on short-term loans of less than one month.

Sources from Vietcombank attributed the inter-bank rate rise to a rate cut for short-term deposits that resulted in short-term money being drained out of banks. Furthermore, banks now prefer holding the U.S. dollar instead of selling the greenback to the central bank as seen in previous weeks, they said.

“We’ve learned that some banks use Vietnam dong from the inter-bank market to purchase the U.S. dollar from the central bank, which has driven the inter-bank interest rate to increase by 0.5-1.5 percentage points,” said a Vietcombank analyst.

On Wednesday, the State Bank of Vietnam injected a net VND118 billion via open market operations and an additional VND185 billion on Thursday.

On the forex market, the dollar fluctuated, easing to VND20,950 in the morning but rising to VND20,964 in the afternoon, with banks purchasing US$250 million and selling US$230 million. The formal forex rate stayed unchanged at VND20,828 to the dollar.

A source said most banks had low forex reserves and therefore the dollar shortage will be hardly resolved via the inter-bank market. However, the central bank said last week it would keep Vietnam dong stable, not to depreciate by more than 3% against the U.S. dollar this year.

Transporters blast new Binh Trieu Bridge toll station

The ongoing construction of a new toll station by the HCMC Infrastructure Investment JSC (CII) at the Thu Duc District end of Binh Trieu 1 Bridge has attracted criticism from transporters as it will cause traffic congestion there when in service.

According to CII’s announcement sent to the city’s Department of Transport, work on the new toll station started last Friday and it will be put into operation on a trial basis on July 22.

CII investment vice director Duong Quang Chau said collecting fees at Binh Trieu 1 and 2 bridges is to refund the investment capital for the Binh Trieu road and bridge project under the build-operate-transfer (BOT) contract between the city government and his company.

Meanwhile, local transporters expressed their outcries over the construction of the new toll station.

It is unfeasible to set up a new toll station at Binh Trieu 1 Bridge as the area is the oft-congested gateway to the city, said Thai Van Chung, general secretary of the HCMC Cargo Transport Association.

“Moreover, as per Circular 90 of the Ministry of Finance, the project owner needs to meet four conditions including finishing construction, repair and upgrade of road and bridge projects and seeking quality certification from relevant authorities before collecting fees. CII has just upgraded the bridge but has yet to accomplish the road’s construction, so it has not the right to collect tolls,” Chung clarified.

As the Binh Trieu road and bridge project is not complete, it is irrational to force transporters to pay fees without providing them appropriate traffic infrastructure, said Dang Duc Tiep, director of Dang Tien Transport Co.

Tiep said there now exists a toll station for Binh Trieu 2 bridge.

Despite CII’s suggestion that such a station would help regulate traffic during rush hours, Tiep cast doubt on this idea.

Realizing the possibility of traffic congestion given the new toll station, the transport department only allowed CII to install and test run the facility for one month. The department also said CII would have to immediately remove the station if it caused traffic congestion.

Bac Lieu attracts investment into key projects

Bac Lieu is calling on domestic and foreign businesses to invest in key projects, especially in agricultural infrastructure.

The province has planned to develop its rural transport, irrigation, electricity and communication systems to serve local production and people’s daily life.

It will upgrade Ganh Hao port at a total cost of VND600 billion and build high-tech agricultural production zones valued at VND1,362 billion.

Nguyen Quoc Nam, Vice Director of the provincial Trade, Investment and Tourism Promotion Centre, said the province has offered a number of incentives for investors, such as financial preferences, land rental and corporate income tax, reduction and/or exemptions and employee training support. It has timely dealt with their difficulties to create the best environment for investors.

Despite difficulties, Bac Lieu province has achieved a relatively high economic growth rate of 11.87 percent in the first half of this year.

Its industrial production value increased by 11.8 percent to nearly VND1,600 billion.

The province harvested 346,100 tonnes of rice, up 13.38 percent and 130,000 tonnes of aquatic products, up 18.6 percent.

Rate cut does not mean easy money for firms

The State Bank of Vietnam (SBV) early last week cut the ceiling deposit rate for the fourth time in four months as the over regulated market start to mellow.    

However, big lending rate cuts are unlikely due to the bank’s high borrowing costs from old deposits and bad debt risks.

The central bank on June 11 reduced the ceiling deposit rate for one-12-month terms from 11 to 9 percent, the refinancing rate from 12 to 11 percent, the interbank electronic payment overnight rate from 13 to 12 percent and the discount rate from 10 to 9 percent.

The magnitude of policy rate cuts, to trigger credit expansion in negative territory throughout the first five months of 2012, was higher than what many economists had expected. However, bankers said quickly bringing down lending rates, as domestic enterprises desired, was difficult.

Pham Thien Long, deputy director of HDBank, said with the 9 percent interest rate, banks could lend out at 11 – 12 percent for profits.

However, it would take banks up to three months to cut the lending rate.

“Moreover, banks that have liquidity difficulties last year had to borrow on the interbank market at 20 – 25 percent, and they still have to suffer from such high capital costs until now. That is a barrier for banks to reduce the lending rate”, he noted.

Agribank chairman Nguyen Ngoc Bao said deposits came with high mobilization costs. At Agribank, the capital mobilized at 14 percent for more than one year accounted only 15 percent of the bank’s total deposits, causing banks to balance between deposits and lending.

Le Quang Trung, deputy general director of VIB, said 90 percent of banks’ deposits were less than three months and together with other costs such as operation costs and required reserves, banks could reduce lending rates to 12 – 13.5 percent while still making profits.

“However, banks’ credit growth remains modest due to their ineffective operations and bad debts of many enterprises which make banks not dare to lend out. The lending rate reflects the rate of return from a loan. If a loan is risky, the interest rate for it must be higher”, said Trung.

SBV Governor Nguyen Van Binh two weeks ago announced that the banking system’s non-performing loans had surged to 10 percent of outstanding loans.

Trinh Nguyen, an analyst from HSBC, said that after the SBV's move to reduce deposit cap by 2 percent, lending rates remained high at around 15 – 17 percent, making it difficult for firms to access loans.

“The lending interest rates are still so high as they reflect the risks that banks have to take to extend loans to corporations now. Firms with higher risks incur higher borrowing costs”, Trinh told VIR.

Long of HDBank said banks could not enhance lending because many enterprises had ineffective business results, lacked collaterals and had too high inventory levels. “Banks can accept inventories are collaterals but it is very difficult for us to evaluate them and we do not know when we can sell such inventories”, said Long.

A survey by the Vietnam Chamber of Commerce and Industry (VCCI) shows that until the end of April, in most enterprises still suffered lending costs at 18 percent.

Top construction exhibition to open soon

The International Exhibition of Construction Technology (Vietconstech 2012) will take place in Hanoi from June 27-29, the Ministry of Construction announced at a press conference in Hanoi on June 19.

The event is expected to attract 80 leading businesses operating in civil and industrial construction and transport projects, as well as representatives from many foreign firms from Japan, France, Germany, and Australia.

The exhibition will focus on introducing effective technological achievements in the fields of civil, transport, irrigation, hydropower, thermal power, nuclear power, mineral exploration and exploitation.

This is a good opportunity for both local and international businesses to introduce their achievements in designing, construction, quality control and manufacturing of equipment, materials, and technological software.

In the framework of Vietconstech 2012, there will be two seminars on new construction technologies in Vietnam and advanced technical solutions to improve investment efficiency in construction. These seminars offer chances for organizations and enterprises to discuss issues related to new technologies, technical solutions, application of scientific advances to improve construction quality, safety, and cost saving.