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Vietnam’s trade turnover was estimated at more than US$22.6 percent in March (up 57.1 percent), including US$11.57 billion in import value (up 59.9 percent) compared to the February figures.
The General Department of Vietnam Customs said total exports earned US$11.03 billion (up 54.3 percent).
In the last two weeks of March alone, the trade deficit reached US$460 million, accounting for 8.7 percent of export earnings in this period.
As a result, Vietnam’s total trade turnover in the first quarter hit US$29.76 billion, showing a year-on-year increase of 19.8 percent.
Imports in the first three months were valued at US$29.49 billion (up 17.7 percent) compared the same period last year.
The direct foreign investment (FDI) sector boasted US$16.06 billion, or 54.5 percent of the country’s total import value, representing a year-on-year increase of 24.7 percent.
Gia Lai hosts agriculture exhibition
Farm produce and services for agricultural production are on display at an exhibition that opened in the Central Highlands of Gia Lai on April 19.
The week-long event, the largest ever of its kind in Gia Lai, has drawn 25 250 units from Central Highlands provinces, showcasing their agricultural achievements, products and services for agriculture, production and craft villages as well as essential goods for farmers at 350 stalls.
On display are machines, equipments and means of transport serving agriculture and rural development, fertilisers and pesticides, garments, textiles, leathers, pharmaceutical products, and wood and rattan items.
The event has offered an opportunity to farmers and consumers to meet with scientists and businessmen while accessing advanced technologies.
Within the framework of the event, there will be workshops on technical solutions in farming and agricultural trade promotion and charitable activities.
Bulk carrier handed over to Italy
The Pha Rung Shipbuilding Industry Corporation handed over a 34,000 DWT bulk carrier to Italian Premuda Group at a ceremony in the northern port city of Hai Phong on April 19.
The Four Emerald vessel, which is 180m in length and 30m in breadth, has a cargo capacity of 45,500 cubic metres and a maximum speed of 14 nautical miles per hour.
This is the third of its kind built and delivered to foreign partners by the Pha Rung Corporation.
Though facing various difficulties, the corporation has still affirmed its determination to join hands in realising the restructuring of the shipbuilding industry for its sustainable development.
Korea-Vietnam Business Forum 2013 opens
Hundreds of business representatives from Vietnam and the Republic of Korea (RoK) discussed the possibility of establishing stronger partnerships at a joint forum in Seoul on April 19.
In his address, Korea Chamber of Commerce and Industry (KCCI) Vice-Chairman Lee Dong-geun said the forum created a valuable opportunity for the two business circles to exchange experiences, negotiate deals, and strengthen mutual understanding.
He quoted statistics saying RoK businesses have achieved the highest profit margin of all foreign companies operating in Vietnam over the years.
The Saigon-Hanoi Commercial Joint Stock Bank, in coordination with Vietnam Chamber of Commerce and Industry (VCCI), opened the 2013 Korea-Vietnam Business Forum in Seoul, the Republic of Korea (RoK) on April 19.
For his part, Vietnamese Ambassador to the RoK Tran Trong Toan highlighted Vietnam’s great national development achievements, including recording an annual economic growth rate of 7.26 percent over 2001–2010, eliminating poverty, and completing a number of the United Nations Millennium Development Goals 10 years ahead of schedule.
The forum offers Korean businesses the chance to focus on the potentially lucrative Vietnamese market and update their knowledge of Vietnam’s development demands with a view to 2020, he noted.
Delegates examined reports on Vietnam-RoK trade relations, Vietnam’s foreign direct investment policies, and the country’s investment possibilities.
HAGL Group constructs 4-star hotel in Laos
The Vietnamese Hoang Anh Gia Lai Group (HAGL) broke ground for the construction of the four-star HAGL-Vientiane Hotel in Laos on April 19.
The 12 storey building will consist of 169 first class, 14 VIP and two VIP deluxe rooms, a conference centre, a meeting hall and a restaurant, as well as recreational and sports areas.
The US$16.5 million hotel will be built by the Lao Chicharuen Company and is scheduled to be finished within 15 months.
This is the second hotel in Laos invested by the HAGL Group, which has been involved with many other projects in the country.
Trade Minister attends APEC Meeting in Indonesia
Minister of Industry and Trade Vu Huy Hoang will represent Vietnam at an APEC Ministers Responsible for Trade (MRT) Meeting to be held in Indonesia on April 20-21.
Delegates will discuss support for multilateral trade and APEC priorities in 2013 – the two main issues host Indonesia has suggested in its programme of action for the APEC Leaders’ Summit.
At a recent press briefing, Indonesian Trade Minister Gita Virjiawan underlined the need to establish an open and free trade and investment area in Asia and the Pacific by 2020.
To this end, APEC should focus not only on removing regulations and reducing trade barriers, but also on maintaining and enhancing investment to ride out the global economic recession.
Vietnamese Deputy Minister of Industry and Trade Tran Quoc Khanh met his Chilean counterpart Alvaro Jana in Indonesia on April 19, discussing trade cooperation between the two countries and international issues of mutual concern, including the Trans-Pacific Partnership Agreement (TPP).
At the second public forum on competitive services held in Indonesia the same day, delegates introduced initiatives highlighting the emerging role of services in trade and investment, developing the services sector for infrastructure and connectivity, and identifying business priorities in building competitiveness for regional economic integration.
Vietnamese ambassador to Indonesia Nguyen Xuan Thuy attended the forum.
An Giang hosts 2013 border trade fair
An exhibition and fair on border trade opened in the Mekong Delta province of An Giang on April 18, creating opportunities for cooperation and development in trade, tourism and investment.
This is the first time the border town of Tan Chau has organised such a large scale event, aiming to promote the development potential of the Vinh Xuong international border gate economic zone and recognise local socioeconomic achievements.
The fair creates opportunities for businesses to deepen their knowledge of untapped markets, boost trade promotion, and introduce their latest high-quality products to consumers along the Vietnam-Cambodia border.
The fair features 200 stalls representing 74 businesses from An Giang, the southwestern and southeastern regions, Ho Chi Minh City, and Cambodia.
They showcase various commodities including agricultural products, seafood, footwear, garments, machinery, electronics, timber products, interior decor, building materials, arts and handicrafts, and tourism services.
The fair also offers gardening consultancy, fruit cultivation advice, sell-off programmes, and fact-finding trips to tourist attractions in An Giang and Cambodia.
It will run through to April 23.
Two-way trade between Vietnam and India reached US$1.3 billion in the first quarter of the year, up 40.2 percent on the same period last year.
Of the figure, exports to India accounted for US$533 million, up 59.3 percent, while imports contributed US$774 million, up 29.5 percent.
Nguyen Son Ha, Vietnam’s trade counselor to India, quoted statistics saying Vietnam’s trade deficit with India fell by 8.3 percent correspondingly.
Exports to India saw high growth over the period, including communications equipment (up 174 percent); computers, electronics and components (up 104.4 percent), coffee (up 118.3 percent), chemical products (up 42 percent), fibre (up 84 percent) and timber products (up 82 percent).
Conversely, some categories of export products declined, such as machinery and equipment (down 32 percent); natural rubber (down 23 percent); and pepper (down 18.6 percent).
India mainly imports Vietnamese agro-forestry products, such as coffee, pepper, cinnamon, fennel, tea and cashew nuts, which are processed and sold on to other countries. Each year, the country imports more than 500,000 tonnes of spices worth over US$1.7 billion.
Meanwhile, Vietnam chiefly imports materials for production, such as corn, cotton, pharmaceuticals, steel, chemicals, fertilisers and accessories for the garment and footwear industries. Most imported products are used for processing, production and everyday consumption.
The prices of Indian products are relatively competitive compared to those from other markets, such as the US or Europe, largely due to the shorter distance and lower labour costs.
Challenges for Vietnamese exports
Although Vietnam’s export turnover in the first quarter of this year increased by 19.7 percent to US$29.69 billion compared to the same period last year, there remain certain challenges to overcome in the immediate future.
The problem was the food processing, fuel and mineral industries continued growing, but the export market for such products was shrinking.
Deputy Minister of Industry and Trade Tran Tuan Anh said businesses need to identify priority areas and devise appropriate development strategies. At the moment, Vietnam is facing anti-dumping lawsuits, mostly related to shrimp and tra and basa fish exports.
In the first two months of this year, Vietnam earned more than US$1.89 billion in export revenue from China (up 19.4 percent). Its exports to the ASEAN market also increased by 29.1 percent to US$2.87 billion and those to Japan by 0.8 percent to US$1.88 billion.
In the meantime, the country exported US$4.17 billion worth of goods to the European market (up 28.2 percent) and US$3.68 billion to the American market (up 21.9 percent).
However, Vietnam’s exports are still hindered by trade protectionism as many governments have issued new exchange rate policies, raised technical barriers, and lodged anti-dumping lawsuits with the aim of protecting the interests of domestic businesses not to mention tough competition on the international market.
On home turf, Vietnamese businesses still find it hard to access capital for production when their products remain in store at a high level of inventory.
As a case in point, Truong Dinh Hoe, General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said the seafood sector is struggling to maintain production.
Deputy minister Anh asked businesses to closely monitor the market trend in the world and focus on promoting links between exporters and importers.
Mai Thi AnhTuyet, director of the An Giang provincial Department of Industry and Trade, said that it is urgent to help domestic busineses secure a firm foothold in the international market.
Diep Thanh Kiet, Vice President of the Vietnam Leather and Footwear Association (Lefaso), said that most of them are far behind FDI-enterprises in terms of both production output and export value. Therefore, relevant ministries and agencies need to support weak businesses in ironing out snags as quickly as possible.
Instalment plans take advantage of Vietnamese consumers
The credit industry has been a relatively recent introduction to the country, and some financing companies have been taking advantage of consumers' lack of knowledge.
Many firms have been offering instalment deals with quick delivery of goods and services, but with a price tag attached. For example, reporters have found that Prudential Finance has been providing loans for people on a salary of VND12 million (USD572.5) per month at a monthly interest rate of 2.2%. Compounded annually such interest rates can become much higher than customers expected.
"I bought a motorbike for VND37.5 million (USD1,789) and at the end of my nine month contract had to pay VND44.72 million (USD2,133)," said one consumer.
A colleague of his was also sucked into a similar scheme. But she said she had to cancel the contract to buy a motorbike at a monthly interest rate of 4.82% after she learned that she still owed VND19.3 million, even though she made a down payment of VND18 million, plus another VND 10.44 million over seven months.
Many other consumers have found themselves paying larger interest rates than they initially thought, lured in by seemingly low monthly rates.
The Gioi Di Dong electronics store chain has been cooperating with ACS Financial to provide instalment plans that require the customer to pay anywhere from 20% to 70% of the product price and then monthly interest rates which may seem low but add up to upwards of 26% per year. Many such loans specifically target students and low-income individuals.
Within the fine print of many of these short-term loans there are clauses that require the customer to make monthly payments instead of paying off their debts all at once, which could incur them a fine of 2% to 4%. This has left a number of individuals in a no-win situation, faced with fines for paying for their purchases or paying much higher prices over the long-term.
Up-market housing remains empty
Several luxury real estate projects in Hanoi are finding it hard to sell their housing, and they’re forecast to remain unsold for next decade despite discounts of up to 50%.
Many people have deposited billions in luxury houses but are hesitant to settle their remaining payment upon the investor’s request or are trying to sell the house amid a market slump.
Nguyen Tuan Hung, a real estate broker, currently owns two house blocks worth dozens of billions of VND at Bac An Khanh urban area in Hanoi’s outlying district of Hoai Duc. He is struggling to sell the houses.
The villas are now something like Hung’s “debt” as the deadline to pay off for the investor is getting close.
After a period of price gouging, the prices of houses in several projects have sharply fallen, making it no longer an attractive investment channel. Several brokers who failed to sell their houses before the market fall are compelled to sit on their investments.
Villas at projects like An Hung new urban area in Ha Dong District have been completed but many buyers have yet to settle payment to take over their houses. This situation has put the project’s investor into major debt.
The same situation is recorded at a project along National Highway 32 as buyers are hesitant to pay from 10-20% of the remaining prices, equivalent to billions of VND.
Investors are struggling to settle debts by contractors along with dealing with arising expenses for maintenance of the empty houses.
Several experts estimated that housing blocks in outlying districts like Tien Son in Bac Ninh and some in Soc Son and Me Linh Districts may remain empty for the next five to ten years despite discounts of up to 50%.
Statistics from 13 investors showed that Hanoi now has 5,875 houses for sale. Many projects in Me Linh and Hoai Duc Districts had no clients in the first quarter of this year.
CBRE Vietnam said that among 9,000 houses completed in the last three years at several urban areas, 60% remain empty.
Do Thi Thu Hang from Savills Vietnam said demand for houses has sharply fallen as people await lower prices.
“Hanoi will have more houses with a combined area of 10,200 hectares of land from 76 projects in 14 districts. The municipal authorities are mulling over halting licensing commercial housing from now onto the end of 2014,” she added.
Commodity trading floors not popular in Vietnam
In just a short time of operations, commodity trading floors in Vietnam have been facing continued difficulties with trading volume becoming less and less, with any solution still not in sight.
Earlier, departments and organizations inside and outside the country and the Ministry of Industry and Trade had eagerly taken part in developing commodity trading floors in Vietnam. As a result, the country had many trading floors established, such as Buon Ma Thuot Coffee Exchange Center, Vietnam Commodity Exchange and Sontin Commodity Exchange.
However, despite transparent transactions, steady prices, and qualified commodities, most trading floors failed to attract attention. For instance, after opening with much fun fare, Can Gio Farm Produce Trading Floor shut down quietly after a few tens of trading sessions because traders in Vietnam were unused to this trading method.
Binh Phuoc Cashew Trading Floor also experienced the same situation and had to stop operations after a few trial trading sessions as cashew companies totally depended on imported cashew and had not had cashew reserves, so they could not consign commodity at the exchange floor for matching transactions.
As for Buon Ma Thuot Coffee Exchange Center, one of the few surviving trading floors in the country, its business performance was drastically poor. From the crops of 2009-2010 to now, the amount of coffee consigned at the trading center for immediate delivery merely exceeded 1,000 tons. And as for forward transactions, brokers and buyers dealt and matched by themselves so the results were pretty low.
Earlier, when discussing developing of trading floors, firms always proposed to the Government to present measures to increase liquidity as low liquidity draws neither buyers nor sellers. In order to improve liquidity, the market must have had market makers and companies with financial liquidity coordinating on trading floors.
Accordingly, commodity trading floors will be able to operate in public-private partnership schemes, or by going public to increase financial resources and improve the development process. Moreover, the Government should have a suitable policy for trading floors to solicit local and foreign companies, and members of large trading floors in the world so as to increase liquidity.
Dubai boosts tourism ties with city
Dubai will introduce its tourism image in HCMC for the first time in September, with enterprises from the UAE also visiting to try and understand the city’s outbound tourist market.
Nguyen Bao Anh, deputy head of the HCMC Tourism Promotion Division, said that leaders of Dubai Department of Tourism and Commerce Marketing have said they will attend the International Travel Expo HCMC in September.
On this occasion, Emirates and Etihad Airways will arrange for UAE’s travel enterprises to come to HCMC to visit the expo.
“This is a good signal as Dubai and UAE as a whole is a potential market of HCMC’s tourists. Next month, HCMC will join the tourism fair Arabian Travel Market in Dubai to promote the city’s tourism,” Anh told the Daily on Tuesday after a working trip to Dubai with HCMC’s representatives last week.
According to Anh, now that Emirates operates daily direct flights to HCMC, Etihad Airways also plans to offer a service from Dubai to HCMC with three flights per week with the first set to be launched in October.
Credit support offered to investors in SHTP
Enterprises with projects for chip production, precision engineering and automation in the Saigon Hi-Tech Park (SHTP) will receive credit support, said the park authority.
SHTP will join hands with the Hochiminh City Finance and Investment State-owned Company (HFIC), Bank for Investment and Development of Vietnam (BIDV) and Bank for Foreign Trade of Vietnam (Vietcombank) to give loans to such projects.
Each project can borrow a sum worth 70% of its investment cost, not exceeding VND100 billion, with a term of seven years. The lending rate equals the average deposit rate for the 12-month term of BIDV, Agribank, Vietcombank and Vietinbank in the city, said Le Bich Loan, deputy head of SHTP authority, at a conference on investment promotion for hi-tech supporting industries held in HCMC on Tuesday.
SHTP and the HCMC Department of Industry and Trade will appraise each project. Then, they will report to the municipal government, seeking lending rate support for the projects in hi-tech supporting industries from the investment stimulus fund of the city.
SHTP has set aside 14 hectares for hi-tech supporting industries, divided into three sections, with space of 500-2,000 square meters for each workshop.
In addition to credit support, owners of hi-tech supporting industries projects will enjoy a zero corporate income tax in the first four years, 5% in the next nine years, 10% in the following two years and the common rate for the rest of their life.
Furthermore, SHTP will cover 10-30% of the cost for training in technology, foreign languages, soft skills and labor safety for these projects.
Loan said the 14-hectare area for hi-tech supporting industries had attracted only Hai Nam Company with a US$10-million circuit board project for supply to Intel Vietnam.
Currently, 56 certificates for investment in SHTP remain valid, with total capital of US$2.2 billion, including US$1.8 billion of foreign investment. These projects have created jobs for 17,000 workers and contribute VND100 billion to the State budget every year.
Amway to spend US$20 million on new plant
The U.S.-based direct-selling company Amway has announced to invest an additional US$20 million to develop its second plant in Vietnam this year.
Speaking at the fifth anniversary celebration of Amway Vietnam on Tuesday, President Doug Devos said that the new plant would cover over 54,000 square meters at Vietnam-Singapore Industrial Park II in Binh Duong Province.
The plant is expected to be kicked off late this year and put into operation in 2015 with three production lines, producing nutrition supplement products under the Nutrilite brand in the first phase.
The production capacity of the new plant which is estimated to reach US$200 million worth of products per year will be seven times higher than that of the first one located at Amata Industrial Park in Dong Nai Province.
According to Doug Devos, the demand of using health, beauty and home care products of Amway has grown substantially since Amway started business in Vietnam in 2008. Besides, Amway has a long-term investment strategy in Vietnam due to the market’s huge growth potential.
“This has inspired us to build a second factory to meet higher local needs and scale up the business in the future,” said Doug Devos.
After only five years, Vietnam ranks 12th among over 100 countries and territories that Amway has been present in. With the new plant, Amway expects Vietnam to be included in the top ten markets in 2016.
Amway currently holds around 30% of the multi-level marketing segment in Vietnam.
Amway has sets up a widespread distribution network with 300,000 distributors, branches, distribution centers and sale points in big cities and provinces nationwide. Besides, Amway has also opened two stores and two training centers in Hanoi and HCMC.
On this occasion, Amway announced two community projects under the One by One Campaign for Children to grant scholarships for poor students with outstanding academic records and provide free surgeries for children with cleft lip and cleft palate with a total contribution amount of VND6 billion.
Textile exports sharply rise in new markets
A sharp rise in Vietnam’s textile exports to foreign markets that are not traditional importers was recorded in the first quarter by the General Department of Customs.
According to a report released on Tuesday, apparel exports brought home US$3.7 billion in the first three months, surging 18.3% year-on-year, with shipments bound for numerous new markets picking up markedly.
For instance, export value of Vietnamese garment items shipped to ASEAN members reached US$111.4 million in the first quarter, soaring 44.4% year-on-year.
Among these nations, Cambodia was the biggest buyer of Vietnamese textile products in January-March with an export value of US$45.7 million, a staggering 103% rise over the same period last year. Similarly, garment shipments to Myanmar doubled year-on-year.
Vietnamese textile exports to other markets also posted strong growth, with Nigeria contributing a 12-fold rise, Norway 134.6%, New Zealand 120% and Australia 37%.
In recent years, diversifying markets for textile-garment items is considered one of the effective ways for members in the local industry to cope with poor demand from the traditional markets including the U.S. and the EU.
The result in the first quarter shows a positive sign for the local apparel industry in the context that multiple textile enterprises at home had struggled with maintaining export growth last year.
Dong Nai Garment JSC, or Donagamex, recorded a decline of 7% in its export revenue in 2012. Besides the major markets of Japan, the U.S. and the EU, the firm will expand its presence to Russian, Canadian and Australian markets gradually.
The economic slump in the EU and the U.S. has led to a considerable fall in the markets’ textile orders in 2012 while material and fuel costs shot up 15% against 2011.
Thanh Cong Trading Investment Textile Co. is one among apparel exporters facing the tough times last year. The company incurred a loss of VND20.16 billion last year while the firm obtained net profits of VND198.4 billion and VND112.9 billion in 2010 and 2011 respectively.
In a document submitted to the Hochiminh Stock Exchange a week ago, Thanh Cong said its revenue from garment exports to the U.S. fell 35%.
Saigontourist raises insurance cover for tourists
Saigontourist Travel Service Company and AIG Vietnam on Wednesday signed a global travel insurance contract for the 2013-2014 period, with the maximum insurance coverage of VND2.1 billion for an outbound tourist.
Under the deal, customers can enjoy benefits like compensations for flight delays and especially the 24-hour worldwide travel assistance.
In addition to travel inconvenience benefits, the insurance includes other benefits in case of terrorism, natural disasters and diseases.
“Tourists tend to travel farther and go to many new places. Therefore, we have to provide more insurance benefits and services for customers. While the maximum insurance coverage was US$10,000 (around VND200 million) per tourist per case in 2006, it has now increased to VND2.1 billion, or US$100,000,” said Tran Anh Tai, director of Saigontourist Travel Service Company.
Regarding travel insurance for domestic tourists, Saigontourist has worked with Bao Minh Insurance to increase the maximum compensation from VND60 million to VND100 million per tourist per case. The new contract has been effective from this month.
In related news, Saigontourist will open a branch in the Mekong Delta province of Tien Giang at 83 Le Loi Street, My Tho City. This is the fourth branch to be put into operation this year and also the fourth branch of Saigontourist in the Mekong Delta after the ones in Can Tho City, An Giang and Long An provinces.
Saigontourist offers whopping discounts for Halong Bay
Saigontourist Travel Service Company in coordination with Vietnam Airlines and Bhaya Cruises has offered two promotional tours staying overnight on Bhaya ships in Halong Bay with discounts of over VND4 million.
The three day-tour departing on Fridays enjoys a VND4.2 million discount and is priced at VND6.15 million. Meanwhile, the four day-tour departing on Thursdays costs just VND7.2 million compared to the previous price of VND11.2 million.
In addition to famous sites in Halong Bay, the tours will take tourists to Vung Vieng fishing village in Bai Tu Long Bay, a new destination lying next to Halong Bay. According to Saigontourist, customers will fly in the morning and return in the afternoon.
Besides, tourists will stay one night on the four-star ships of Bhaya and another night at a three-star or four-star hotel in Hanoi and Halong.
Bhaya Cruises has four Bhaya Classic ships, with each having 20 luxury rooms for 40 tourists. The ships offer sightseeing and entertaining services on fixed routes in Halong Bay.
Doosan Vina wins new contract from Saudi Arabia
Doosan Heavy Industries Vietnam (Doosan Vina) on Tuesday signed a contract to design and build four 4,400 ton multistage flash desalination evaporators, which will be part of a mega multibillion dollar power and water project near the Saudi Arabian city of Yanbu.
These huge evaporators will be built in Vietnam and the four “plug-and-play” units as large as a football pitch each will produce enough water to meet the needs of some 1.2 million people. They will be shipped intact from the company’s factory in Dung Quat Economic Zone in 2014, the company said in a statement.
The overall project in Al Madinah Province, Saudi Arabia is the largest of its kind ever undertaken and Doosan was selected because of its cutting-edge desalination technology and vast experience in the field. The four desalination units in this project will be among the world’s largest ever engineered in both size and production capacity, the company said.
Each unit will desalinate enough seawater to produce 20 million gallons a day, or some 91 million liters of fresh water to meet the daily needs of millions in Saudi Arabia.
Earlier this year Doosan Vina completed and shipped three similar evaporation plants to the Ras Al Khair desalination project in Eastern Saudi Arabia.
Medical insurance debts mount to VND2.3 tril. in Q1
Local medical insurance premiums had posted a rise of over 30% year-on-year as of the end of last month but unpaid amounts still stayed high, says a report of the Vietnam Social Insurance at a review conference in Hanoi on Wednesday.
Pham Luong Son, head of the Medical Insurance Policy Implementation Committee under the agency, told the conference that nearly 59 million persons had medical insurance coverage, or 94.5% of the plan as assigned by the Government.
Medical insurance premiums reached more than VND9 trillion in the first quarter, representing 24.4% of the plan and soaring 33.5% over the same period last year. The rise is rather high but medical insurance debts also amounted to around VND2.3 trillion in the period, with some VND1.2 trillion owed by the State budget.
Many small and private firms often ignore insurance liabilities or do not pay enough insurance premiums for workers, Son noted. He cited several reasons behind the lamentable situation, including financial difficulties faced by many entities due to the economic downturn.
Medical insurance premiums totaled VND39.2 trillion last year. The sum spent on health examination and treatment in the same year was roughly VND33.3 trillion, surging 31% against 2011.
However, Son said, there were still 11 localities that posted overspendings in medical insurance, mainly southern cities and provinces.
Vietnam to join TPP when ready
Vietnam will only sign an agreement for the Trans-Pacific Partnership currently under negotiation when the country has made all necessary preparations in order to lessen negative impact on its economy and businesses, Minister of Planning and Investment Bui Quang Vinh said.
“Vietnam will lose more than what it gains if it signs the TPP agreement when it has not well readied conditions for participation. This is my concern in the role of a head of the ministry responsible for general economic issues,” Vinh said at the Vietnam-Singapore Business Forum opening in HCMC on Wednesday.
However, Vinh emphasized that Vietnam had actively entered negotiation rounds for the TPP so as to have an appropriate roadmap for its participation. The TPP is expected to take effect by 2015.
Vinh said the Government’s view was to do its utmost to settle all relevant issues, including those within Vietnam for becoming a member of the TPP, which will certainly enable the country to expand trade and investment linkages with the world. But, Vietnam will have to grapple with much negative impact as a result of opening its market.
Vinh cited Vietnam’s admission to the World Trade Organization as a good lesson for the country to learn. He said after more than five years of joining this global trade club, the country had gained a lot but also had to cope with many problems.
“When local companies have not met conditions for global integration, they lose much of their market shares,” Vinh said, referring to tax reductions and market opening as Vietnam’s commitment to the WTO.
“TPP will be the same if Vietnam does not ready it well,” Vinh said.
Current number of m/c exceeds 2020 target
The number of registered motorcycles nationwide has amounted to over 37 million units, already outstripping the target of 36 million motorcycles for 2020 as show in a master traffic plan approved by the Government in February.
Statistics of the Ministry of Transport shows 28,535 new cars were registered in the first quarter, raising the total number of cars nationwide to over 2.03 million, while there were 691,599 new motorcycles added in the quarter, taking the total to 37.023 million units.
In March alone, the number of new cars dropped by half on-year to 5,943 vehicles, while that of new motorcycles increased to nearly 199,000 units compared to 187,466 new motorcycles in the year-earlier period.
HCMC saw a high rise in number of new cars and motorcycles in the first quarter with 4,238 cars and 82,870 motorcycles respectively. The city currently has over six million cars and motorcycles, not to mention around one million vehicles of migrant workers.
According to the traffic development plan until 2020 and a vision towards 2030, Vietnam will have 36 million motorcycles and 3.2-3.5 million cars by the end of this decade.
The plan also mentions administrative measures to control the number of motorcycles in rural areas and regions without public transport means.
Power likely to mark up in line with coal
Another power price hike is in sight since Vietnam National Coal and Mineral Industries Group (Vinacomin) has proposed increasing the prices of coal sold to power generators.
Coal-fired thermoelectric plants are now running at full capacity to deal with hydropower shortage due to drought. However, Vinacomin wants to raise coal prices to make up for high production costs, said Nguyen Van Bien, deputy general director of Vinacomin, adding that the prices of coal sold to power plants in 2012 was just 63% of the production costs.
On September 15, coal prices were raised by 28-42%. From then to the end of 2012, Vietnam Electricity Group (EVN) paid an additional VND890 billion for coal.
Representative of a thermoelectric plant running on coal supplied by Vinacomin told the Daily that coal prices made up 50-70% of power production costs. Therefore, if coal prices picked up, power prices would certainly follow suit to avoid losses.
Ha Quang Gioi, deputy general director of Haiphong Thermal Power Joint Stock Company, said the two generators of Haiphong 1 Thermal Power Plant were now operating at full capacity of 600 MW. Meanwhile, Haiphong 2 Thermal Power Plant with the same capacity will start operation late this year with coal provided by Vinacomin.
Haiphong 1 Thermal Power Plant every day generates 14 million kWh of electricity and consumes around 5,600 tons of coal. As coal prices account for over 50% of power production costs, power price hike would be a must if coal prices went up, he said.
Similarly, Do Huu Tai, deputy general director of Quang Ninh Thermal Power Joint Stock Company, said all the three generators of Quang Ninh Thermal Power Plant, with a capacity of 300 MW each, were running at full capacity. Every day, the plant buys over 3,000 tons of coal from Vinacomin.
Power production costs are made up by two components, fixed costs (equipment repair and depreciation) and variable costs (fuel input). When input costs fluctuate, production costs will change accordingly and power prices must be raised.
Duong Thuy Duc, deputy general director of Ninh Binh Thermal Power Joint Stock Company, stated: “When coal prices change, power prices must also change because coal prices make up nearly 70% of power production costs.”
In a talk with the Daily in January, Pham Le Thanh, general director of EVN, said the prices of coal sold to the power sector would increase in 2013. Therefore, EVN this year will have to spend an additional VND6 trillion for the coal price spike.
As such, with rising costs and an accumulated loss of some VND34 trillion incurred by EVN in the past years, power prices will inevitably rise further this year.
Finding more room to grow in logistics
Rapid economic growth and robust exports offer attractive opportunities for Singaporean logistics firms and logistics infrastructure developers in Vietnam.
Heavyweight Singaporean logistics firms like Neptune Orient Lines, Keppel Logistics, YCH Group, CWT Globelink and logistics infrastructure developers like Mapletree, PSA and Ascendas have already discovered opportunities in Vietnam.
Although there are challenges such as poor transportation infrastructure, these companies all view Vietnam as an attractive investment destination, given its sweet demographics, strong foreign direct investment with international corporations choosing Vietnam as an alternative production base to China and export growth that accelerated 18.3 year-on-year in 2012.
“Vietnam is an important market and represents a significant part of our regional activities and we remain optimistic about opportunities in the country,” said a Neptune Orient Lines spokesman.
Not surprisingly, logistics is among six sectors of cooperation that the Vietnam and Singapore governments want to focus on, according to the Connectivity Framework Agreement signed between the countries in 2005. This also facilitates the business expansion of Singaporean firms in Vietnam’s logistics sector.
As a result, Neptune Orient Lines is planning to expand warehouse footprint in Vietnam from 70,000 to 100,000 square metres by focusing on inbound logistics, especially in retail and raw material and providing distribution centres close to the cities and industrial parks.
So far, Neptune Orient Lines is a leading provider of container transportation and logistics services in Vietnam.
Through its two core business segments – APL and APL Logistics – the firm provides local and multinational clients with premium container transportation and supply chain management solutions across a range of business sectors.
APL, a container liner business, handles 300,000 20-foot equivalent units annually in Vietnam. This ranks Neptune Orient Lines among the top three shipping lines in Vietnam. Meanwhile, APL Logistics handles 2.4 million cubic metres of cargo every year, with compound annual growth of 14 per cent over the last five years.
“We have a good network, including services linking Vietnam to the world and a strong customer following,” said the Neptune spokesman.
CWT Globelink Vietnam, a subsidiary of Singapore’s CWT Globelink, has also expanded its presence in Vietnam rapidly. The firm started operations in March, 2006 and has evolved over the years to become a leading non-vessel operating common carrier operator and well known less-than-container load consolidation player in Vietnam.
Mapletree has also rapidly expanded its business in Vietnam. This company established its presence in Vietnam in 2005. Now Mapletree has three logistics parks in the country, namely Mapletree Logistics Centre and Mapletree Binh Duong Logistics Park in southern Binh Duong province and Mapletree Bac Ninh Logistics Park in northern Bac Ninh province.
In a recent interview with VIR, a Mapletree representative said the firm continued to look out for good investment and development projects in Vietnam to fuel its expansion in the future.
Singapore firms eye healthy market
Known for expertise in medical treatment and hospital management, Singapore healthcare companies are expanding business in Vietnam where they see growing demand for private medical services.
Hoa Lam-Shangri-La Healthcare Limited Liability Company, a Singapore-Vietnam joint venture, in the second quarter of this year will open a City International Hospital in Ho Chi Minh City. This is the first hospital in its $400 million International Hi-Tech Healthcare Park, and is managed by a Singapore-based leading private healthcare group in Asia, Parkway Pantai.
As the largest international private hospital in Ho Chi Minh City, City International Hospital aims to raise the healthcare bar in Vietnam by offering international standard healthcare services.
The hospital will be an attractive alternative for Vietnamese patients who travel abroad to seek high quality medical treatments.
City International Hospital will also contribute to elevating the country’s healthcare talent pool through public-private hospital partnerships in continuous medical education sharing and training.
“Currently, there is unmet demand for private healthcare services in Vietnam. Coupled with its large population whose income levels and expectations of healthcare have risen over the years, there are tremendous opportunities to expand the scope and depth of healthcare services in the country,” said Tan Seang Teak, chief executive officer of City International Hospital.
With a population of 88 million, the healthcare system in Vietnam, both public and private, has lagged behind the growing demand of healthcare. Many wealthier Vietnamese are willing to pay more for better patient cares abroad, and most of them eye Singapore as a good place for medial services.
The Ministry of Health estimated that each year Vietnamese spent about $2 billion on healthcare services abroad, due to the lack of high-quality hospitals in the country. This brings profitable opportunities for Singapore’s medical firms to expand foothold in Vietnam
Like Parkway, Thomson Medical Centre Limited signed a hospital management agreement with Hanh Phuc International Women and Children Hospital Joint Stock Company to manage Hanh Phuc Hospital in southern Binh Duong province.
Fortis Healthcare International Pte, a Singapore-incorporated firm, last year acquired a 65 per cent stake in Vietnam’s Hoan My Hospital. And International SOS Pte Ltd also invested in three centres in Vietnam.
For Parkway Pantai, City International Hospital is its first venture into Vietnam where the firm eyes as a strategic and significant market.
“We are keen to strengthen our presence beyond Ho Chi Minh City with the right opportunity or strategic partner, leveraging Parkway Pantai’s over 30 years of hospital management expertise in the region,” said Tan Seang Teak.
In the zone for top Singapore-backed industrial parks
By investing in industrial parks, Singaporean firms are playing an important role in luring foreign direct investments (FDI) to Vietnam.
In 1996, Singapore’s Sembcorp Development Ltd teamed up with Vietnam’s Becamex Corporation to establish a joint venture Vietnam Singapore Industrial Park (VSIP) to build its first industrial park in Vietnam, VSIP Binh Duong.
The park, covering an area of 500 hectares in southern Binh Duong province, shortly became a famous destination for hundreds of international companies to set up investments in Vietnam. Ten years later, VSIP launched the second project in Binh Duong province, VSIP Binh Duong II, which covers more than 1,000ha in Binh Duong new city.
Nowadays, VSIP is the most famous brand in Vietnam in term of industrial and urban property with four operating integrated township and industrial parks nationwide, including VSIP Binh Duong I, VSIP Binh Duong II, VSIP Bac Ninh and VSIP Haiphong. Mid-this year, the developer is going to break ground of a new integrated township and industrial park project in central Quang Ngai province, marking its first step into the central region of Vietnam.
The investment in VSIP in Vietnam has significantly contributed to luring foreign direct investments to Vietnam. Some 240 foreign investors from 22 countries around the world have chosen to base their long-term investment projects in VSIP Binh Duong I so far, while VSIP Binh Duong II attracted 133 customers. VSIP Bac Ninh also attracted famous multinational companies like Nokia and Pepsico and VSIP Haiphong attracted famous brands such as Fuji Xero, Nipro Pharma and Kyocera Mita.
The reputation of VSIP makes many provinces including Thanh Hoa, Quang Ninh and Can Tho desire to attract its investment because they understand that VSIP can help attract more investments to the provinces.
Singapore-based Ascendas, a provider of business space solutions in Asia, is also expanding its presence in industrial park business in Vietnam. Ascendas entered Vietnam market in 1996 through investment into VSIP. Last year, the firm completed infrastructure for phases 1 and 2 of its own industrial park, named Ascendas-Protrade Singapore Tech Park (APSTP). The park, covering 500ha in Binh Duong province about 40 kilometres from Ho Chi Minh City, is being marketed to multinational firms to set up manufacturing facilities in Vietnam.
Han Ann Foong, country head of Ascendas Pte Ltd in Vietnam, said APSTP would focus on developing industry clusters for the electronics, pharmaceutical, and food and beverage sectors, and general industries. “We are receiving increasing enquiries and visitations, especially from Japanese companies,” said Han.
Despite the current economic challenges in Vietnam, Han said Ascendas remained optimistic about the prospect in this market, and had already planned and could commence infrastructure works for phases 3 and 4 once there was a need.
“Vietnam can be well poised to benefit from the China+1 or +2 strategy of multinational firms relocating from China to South East Asia. We have observed a continuous trend of multinational firms relocating out of China to reduce costs, especially the Japanese companies,” said Han.
VSIP is also optimistic about potential growth in Vietnam, as the developer is seeking location for developing a hi-tech park in Vietnam which will be a destination for research and development facilities, information and telecommunication technology centres and biotechnologies centres. “We learnt experience from the first project and changed our strategy. From an industrial park developer, we expanded investment in urban projects and hi-tech parks,” said the senior officer at VSIP.
The source said the new VSIP investments aimed to support its core industrial park business. “As many manufacturers build factories in our industrial parks, this leads to a growing demand of office space, residential projects and land for research and development,” he said.
Through investment in VSIP, Ascendas also touts its experience in developing a successful industrial park in Vietnam. It has invested substantially to address issues encountered in other IPs such as lack of essential amenities for workers and pollution control.
Consumer goods sector lures investors
Many Singaporean enterprises are eager to carve a large slice from Vietnam’s growing pie of agricultural, foodstuffs and consumer goods sectors.
As the largest exporter of farm produce in Vietnam, Singapore-backed Olam Vietnam exemplifies how Singaporean firms are coveting more aspects of the Vietnamese market.
Olam Vietnam director Le Tran Anh Dung said: “With a long-term vision in Vietnam, Olam will continue opening more coffee processing projects in northern provinces of Son La and Dien Bien, and central Quang Tri province which are rich in coffee materials.”
The company already has seven facilities processing export-oriented farm produce in six locations in Gia Lai, Dak Lak, Lam Dong, Dong Nai and Long An provinces and Ho Chi Minh City.
“We are excited about our future prospects here as the country has a huge potential in agriculture. We have just augmented investment capital of a coffee processing project in Long An’s Nhut Chanh Industrial Park from over $45 million to over $80 million in late 2012. This project has been operating well,” Dung said.
This plant, the biggest of the type in Vietnam, was put into operation in April, 2010 and currently has annual capacity of over 8,000 tonnes of instant coffee. At present, Olam Vietnam is recruiting more employees to expand a workforce that already numbers 1,000.
According to the Singapore Businesses Group in Vietnam, many other Singaporean firms wanted to strengthen their positions in Vietnam’s agricultural, consumer goods and foodstuff market. These firms include milk product maker F&N, drink maker Gold Roast and Super Coffeemix, tissue producer New Toyo, furniture maker Serrano Vietnam, foodstuff producer Hock Hin Foodstuffs and foodstuff additive maker ApecChem.
“There are a number of notable Singaporean brands that have become prominent in the Vietnamese market, with the beverage sector, food products, and bakery chains. There is even a greater number of multi-national companies successfully operating where Singapore acts as a supplier to Vietnam,” the group’s president Norman Lim told VIR.
Singaporean enterprises have long been established in Vietnam, with Singaporean investment in Vietnam totalling $24.9 billion, according to the Singaporean embassy in Hanoi.
As many Singaporean enterprises search for the next high-growth market, Lim said, Vietnam was proving to be an exciting destination for retail because of the country’s rapidly growing young population. Currently, the consumer market made up 65 per cent of the population at 50 million people. It was estimated that within the next ten years, 16 million new consumers would come of age in Vietnam.
Additionally, Lim said, the middle class had doubled over the last five years, with rising disposable incomes leading to increased consumption. “This has led to a growing demand for goods and services, particularly for better quality and premium products. There have been a consumer shift from unbranded to branded goods, an increased demand for packaged/convenience goods, as well as a trend towards healthier products.”
“Topping Bloomberg’s recent list of the 25 Best Frontier Markets, Vietnam is still considered a largely untapped market with great growth potential for Singaporean enterprises,” he added.
According to the Vietnam Food and Drink report for 2013’s first quarter of Business Monitor International, the world-famous market analyst based in London, Singapore-invested mass grocery retail operator NTUC Fairprice and Vietnam’s Saigon Co.op were looking to establish a chain of hypermarkets in Vietnam through their local joint venture.
“NTUC Fairprice also has concrete plans to expand in Vietnam. Given the union’s local expertise and NTUC’s experience in operating hypermarket stores, this is clearly a formidable-looking partnership, and their expansionary activities are likely to place considerable upward pressure on our hypermarket growth forecast for Vietnam.”
Vietnam’s Trade Office in Singapore reported that scores of Singapore firms were exploring investment and business opportunities via projects with investment capital of $5 million to $50 million each in Vietnam. Sectors of interest include the foodstuff and farm produce processing industries, rice millers and exporters, rice noodles and processed rice products, coffee plantations and processors, feedmills, slaughter house, prawn and tra fish processing, and cocoa plantation and processing.
However, Lim said the presence of Singaporean consumer goods and foodstuff enterprises “is still rather limited in Vietnam, as Singapore’s commercial presence tends to focus more on other sectors, such as property, logistics and financial services.”
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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