Petrol and oil sales increase by 25 per cent in four months

 

Total domestic petrol and oil sales hit around 6 million cu.m during the first four months of 2011, a year-on-year increase of 25 per cent.

 

Petrol volume accounted for 24 per cent of total sales, equivalent to 2.1 million cu.m and up 24 per cent compared to the same period last year. Around 3.17 cu.m of diesel was consumed, a year-on-year increase of 29 per cent.

 

It is estimated that around 7.7 million cu.m of petrol and oil would be sold during the first five months of 2011, a surge of 23 per cent compared to the same period last year.

 

The import volume petrol and oil is predicted to reach nearly 5.1 million cu.m, an increase of 16 per cent.

 

During the first five months of 2011, the total petrol sales of the Dung Quat Refinery are predicted to reach nearly 2.7 million cu.m. Sales are expected to fall when the refinery undergoes essential maintenance from mid July to mid September, experts said.

 

Singapore franchises scout VN

 

Singapore franchising companies are looking to enter Viet Nam and will organise a conference in HCM City this month to meet with potential partners.

 

Viet Nam's rapid economic growth and its young and dynamic consumers are the main reasons Singaporean franchisers are eyeing the market, Hsien Naidu, the director of Singapore's Astreem Corporation Pte Ltd, the organiser and a partner of the Singapore Franchising&Licensing Association, said in a press release.

 

Present at the Top Franchise Asia 2011-Viet Nam Edition on May 26 will be Singaporean franchises in the food, beverage, and lifestyle sectors like Country Chicken, Don's Pie, Empire State, Popeyes, Snackz It!, Auito Saver, Kooshi, Mondo and Pazzion, KinderGolf, and FMDS.

 

It would be a great opportunity for franchisers and franchises to come together and make a contribution to the development of Viet Nam's franchise market, Naidu said.

 

It would also provide business owners with knowledge of franchising, opportunities to expand their business locally and across borders, and meet established Singaporean brands that are ready to enter the Vietnamese market, she said.

 

Viet Nam has a population of more than 87 million of whom a majority are young, a segment that is highly receptive to modern offerings, she added.

 

Pepper exports push past India on top rung

 

Viet Nam is now the world's largest pepper exporter.

 

While India formerly held the crown, the country had a modest harvest this year, which allowed Viet Nam to export more pepper, reported the Viet Nam Trade Office in India.

 

In April, Viet Nam exported 16,000 tonnes of pepper, valued at US$80 million. In the first four months of the year, 42,000 tonnes of pepper worth $208 million were exported.

 

The Ministry of Agriculture and Rural Development (MARD) said farmers were encouraged to harvest more pepper this year because of the high demand on the international market.

 

MARD said the price of pepper has continued to soar since 2007 and experienced a massive surge last July.

 

During the latter half of 2010, the price of pepper increased by 45-60 per cent when compared to prices from the first half of the year, the ministry said.

 

The ministry says that the price is likely to increase until the end of May.

 

Beginning in June, the price will likely hinge on export volume from big pepper suppliers in Indonesia and Brazil.

 

The Ministry of Industry and Trade expects the country to export 120,000 tonnes of pepper this year, worth $470 million.

 

Experts said this target was reachable because the International Pepper Centre forecasts that Viet Nam's total pepper yield this year would increase by 5.3 per cent this year to 100,000 tonnes.

 

Furthermore, the devaluation of the dong will help exporters reach their target.

 

Although the country will export a large amount of pepper for a good price this year, Vietnamese experts claim there is still room for improvement.

 

Despite of the fact that Viet Nam has been one of the world's biggest pepper producers and exporters, the country often sells its pepper at prices that are lower than those from India, Brazil Indonesia.

 

The Viet Nam Pepper Association says that Vietnamese pepper is exported through many middlemen.

 

Moreover, the country exports raw pepper, while other countries export high-quality processed pepper.

 

To further develop the sector, experts say that the industry needs to focus on branding its product and improving the quality of its pepper.

 

South-east earmarks hi-tech growth

 

The south-eastern region, the country's economic hub, is focusing on development and use of technology as an aid to economic growth, officials have said.

 

Ho Ngoc Luat, chair of the Ministry of Science and Technology's Local Science and Technology Committee, said governments in the region were investing intensively in infrastructure for scientific development and drafting long-term strategies for research organisations.

 

However, they faced difficulties in terms of human-resource availability, particularly businesses in research.

 

Scientific research products of some companies had not yet been recognised, which was a prerequisite to set up a sci-tech business, he said, adding that lack of capital was also hindering the solid development of sci-tech firms.

 

Permanent Deputy Minister of Science and Technology Nguyen Quan said the region has applied and provided scores of new technologies and focused on building brand names and securing intellectual property.

 

It would assign priority to developing high technology and those critical to development like information technology, bio-technology, new materials, and engineering and automation.

 

The region hopes to increase the ratio of hi-tech application in industry to 30 per cent by 2015 and 40 per cent by 2020 and bolster the technology market to ensure technology-related trading grows at 15 per cent annually.

 

Figures from the ministry's Local Science and Technology Committee show that the region has so far appraised and clinched more than 30 technology transfer deals with local companies, many of which have proved effective in improving the productivity and quality of goods produced.

 

Quan said relevant sectors and agencies should further increase sales of technology and invest more in science and technology.

 

The region, comprising eight provinces – Binh Duong, Binh Phuoc, Tay Ninh, Dong Nai, Ba Ria-Vung Tau, Lam Dong, and Binh Thuan – and HCM City, contributes more than two-thirds to the national budget, and leads the country in terms of exports, foreign investments, and other economic solutions.

 

Vietnam’s seafood export turnover soars 28 pct

 

Vietnam’s seafood export turnover soars 28 pct  Vietnam’s seafood industry continued to make an outstanding growth in the first four months of the year, with the export turnover jumping nearly 28 percent to US$1.6 billion.  

 

The Ministry of Agriculture and Rural Development (MARD) expected that the Pacific white shrimp and prawn will remain Vietnam’s strategic exports in the upcoming years, with an average turnover estimated to reach $2 billion per year.

 

Among other seafood export are tra fish (pangasius), which ranked second behind prawn with a turnover of nearly $1.5 billion.

 

Surveys from the Food and Agriculture Organisation show Vietnam is one of the world’s 20 seafood exporters

 

John Nielsen, Danish Ambassador to Vietnam, said Denmark can provide seafood processing firms of the Southeast Asian partner with modern equipments and techniques as the European country is popular with its environmentally friendly model of fish farms.

 

The MARD expected that the seafood export turnover this year will increase 10 percent year-on-year to $5.5 billion.

 

The Vietnam Association of Seafood Exporters and Producers said the goal will be able to achieve as the seafood industry has many advantages this year, including strong dollar and the rising consumption of aquatic foods around the world.

 

Despite the competition worldwide getting fiercer, experts predicted Vietnam’s seafood exporters can overtake their foreign competitors thanks to the country’s stable material supply.

 

The MARD also submitted Prime Minister Nguyen Tan Dung’s approval to create a new fund to promote and support Vietnamese tra fish exports.

 

Under the plan, tra fish exporters will contribute 1-2 US cents on every kilogram of fish they sell to the fund, which will also receive local and international donations. The fund will be used to promote the fish in the US and EU markets and develop strategies to protect Vietnamese exporters against false safety allegations and unfair trade barriers.

 

Vietnam is the supplier of more than 95 percent of tra fish on the global market with an annual output of 1.5 million tons, the Vietnam Economic Times reported last week, citing the national seafood association.

 

The World Wildlife Fund last year blacklisted Vietnam’s tra fish in a consumer guide published in several EU countries. Although the organization later removed the fish from its “red list”, consumption of Vietnamese tra fish in Europe has been negatively affected.

 

Meanwhile, the US Department of Commerce has recently cut anti-dumping taxes on tra fish imported from some Vietnamese companies to zero percent, compared to a previously proposed tax rate of 130 percent.

 

Despite the recent achievements, experts warn the seafood industry still has to deal with many problems.

 

“Vietnam’s prawn entered 82 countries around the world, with 80 percent of the export turnover coming from 10 key markets including the US, Japan and Korea. However, local export prices are often lower than other countries’ as Vietnamese exporters fail to meet the time of delivery,” said a director of a HCMC-based seafood producer.

 

“Some of them even receive purchase orders without checking whether their production capacity can meet up the orders or not.”

 

Rice exports earn US$1.3 billion

 

Since the beginning of this year, Vietnam has exported 2.75 million tonnes of rice, earning US$1.3 billion, according to the Vietnam Food Association.

 

The price of rice in the Mekong Delta hovers around VND5,850-VND6,000/kgwhile five-percent broken rice is traded at VND9,450-VND9,500/kg.

 

Meanwhile, the Vietnam Association of Seafood Exporters and Producers (VASEP) said the Association will increase the export price of tra fish in the third quarter of this year as the export market looks very promising this summer.

 

It predicted that the price of tra fish would will reach US$4.5/kg in the US and US$3.6/kg in Europe.

 

U.S.-Vietnam trade grows strongly in Q1

 

Bilateral trade in goods between the United States and Vietnam continued its strong growth momentum in the first quarter of this year, as it expanded by around 19.6% year-on-year to surpass US$4.74 billion.

 

Foreign trade updates of the U.S. Census Bureau showed the U.S. imported US$3.69 billion worth of goods from Vietnam and exported more than US$1 billion worth in the first quarter, up nearly 18% and 26.3% from the same period last year.

 

Fashion and textiles led the list of U.S. imports from Vietnam in the January-March period, registering over US$1.47 billion and a 14% rise year-on-year. Footwear and furniture had respective increases of more than 32% to around US$457 million and 3% to almost US$396 million.

 

The U.S. exports to Vietnam in the first quarter included fiber and cloth, machinery and equipment for the engineering and power sectors. These exports grew substantially from double to triple-digit growth rates compared to the same period last year.

 

Last year saw Vietnam-U.S. trade almost hit US$19 billion, up more than 20% on the previous year. U.S. Under Secretary of Commerce for International Trade, Francisco Sanchez said in HCMC earlier this year that two-way trade between the two countries would hopefully double in the next five years.

 

Businesses need longer vision, says U.S. consultant

 

Vietnamese corporations need to have a strategic orientation in business with a long-time horizon and focus on their core business to develop and compete instead of myopic and diversified sectors, said a strategist from the U.S.

 

Professor John H. Behzad told a seminar in HCMC on Thursday that most local companies have the short-term business orientation as they only do business with the sectors that bring quick profits.

 

As a consultant for many local companies, Behzad said many local firms now do business following the copycat economy.

 

“That means local firms have copied successful models or business fields to get profits quickly while they are not knowledgeable in the fields. It is not good,” he said at the seminar as one of three exclusive lectures he is giving at the Moon Garden Restaurant from Wednesday until today.

 

He advised local firms to maintain sharp managerial visibility in their strategy, asking “how far you can see into the future?

 

”The three-day seminars focused on challenges and advantages for Vietnamese groups in globalization; modern structures of large businesses; and how to establish and introduce some successful management systems.

 

Heat goes on US investor to deliver

 

‘While we are completing site clearance at remaining site, investors should implement their commitments at the cleared site’.

 

An American investor is under pressure to deliver central Binh Dinh province’s biggest tourism project.

 

The provincial authority this month asked ITC Condor Development to complete all administrative procedures to start construction of its $250 million Vinh Hoi resort in the Nhon Hoi Economic Zone in 2012.

 

“The project construction has been delayed for four years, we want the investor to implement its commitment,” said Man Ngoc Ly, head of the Nhon Hoi Economic Zone Management Authority.

 

Vinh Hoi resort, granted an investment certificate in 2007, is supposed to have three resorts, an 18-hole  golf course, a convention centre, luxurious villas and an entertainment centre.

 

The investor signed contracts with hotel management firms Ritz-Carlton, JW Marriott and Outrigger for managing three resorts in the project.

 

Ly said slow site clearance was to blame, not the investor’s financial ability. But now, half of the project’s site has been cleared. The provincial authority already handed over 135 hectares out of 235ha  to investors. “While we are completing site clearance at remaining site, investors should implement their commitments at the cleared site,” he said.

 

Ly added the resort, once operational, would bolster the provincial tourism sector and make the province more attractive to foreign and domestic tourists.

 

Binh Dinh, home of Quy Nhon port, is considered a gateway to the sea via the highlands region, southern Laos, northeastern Cambodia and Thailand. Some of domestic companies like ITC Condor Development are building luxurious resorts in Nhon Hoi zone to tap into the province’s tourism potential.

 

My Tai Company registered to develop Rainbow Resort and An Phu Thinh Company registered to build the $100 million Quy Nhon Four Seasons Bay Resort in the zone.

 

More than 50 investors have registered business plans in the zone. The investors include Taiwan’s Foxconn, the world’s largest electronics manufacturing contractor, Taiwan’s Formosa Group, China’s Abestech, Singapore’s Boustead and Germany’s Bitburger. Thailand’s Rayong Purifier Public Company and STFE Company are preparing to build an oil refinery and a thermoelectricity plant in the zone, respectively.

 

As of the end of April, 33 investment projects have been licensed in Nhon Hoi zone worth about $1 billion.

 

US oil firm considers asset sell-off

 

American oil giant ConocoPhillips plans to sell its oil and natural gas assets off Vietnam’s coast.

 

“ConocoPhillips will be marketing all of its assets in Vietnam. This includes two upstream assets in the Cuu Long Basin and an equity share of the Nam Con Son pipeline,” John McLemore, a company spokesman told VIR last week.

 

“Our experience in Vietnam has been positive, our business has been successful and our relationships have been good,” McLemore said without further details.

 

Representatives from the Ho Chi Minh City-based headquarters of ConocoPhillips Cuulong Limited, an affiliate of ConocoPhillips, declined to comment when contacted by VIR.

 

Foreign news services last week quoted McLemore as saying the company was marketing its assets in Vietnam as part of the divestiture programme. ConocoPhillips’ Vietnam assets was valued at about $1.5 billion, foreign media quoted Paul Sankey, a Deutsche Bank AG analyst, as saying in an April 27 note to clients.

 

ConocoPhillips has a 23.3 percent share in a cluster of five fields in Block 15-1 in the Cuu Long Basin. It holds a 36 percent stake of the Rang Dong field in Block 15-2 in the same basin.

 

The company also is offering its 16.3 percent stake in the Nam Con Son gas pipeline which connects the Nam Con Son Basin with southern Vietnam.

 

In a previous interview with VIR, ConocoPhillips (UK) Cuulong Company president Kathy A.McGill said that the company had made significant investments in Vietnam since the opening of the company office in 1996 spending more than $1.3 billion to date.

 

On giving its approval for 2011 capital programmes in February this year, ConocoPhillips said that about $6 billion would be invested in exploration and production in Europe, the Asia-Pacific and Africa.

 

Within the Asia-Pacific region, funds will be used for further development of the coalbed methane-to-liquefied natural gas (LNG) project associated with the Australia Pacific LNG joint venture, as well as for the development of new fields offshore Malaysia, Indonesia and offshore Vietnam.

 

PetroVietnam gives gas to oil plans

 

PetroVietnam, investor of the $6.2 billion Nghi Son refinery in Thanh Hoa province, expects to sign a key construction contract in 2011’s second quarter.

 

Negotiations for the Engineering, Procurement and Construction (EPC) contract were underway between PetroVietnam and a consortium led by Japanese JGC Corporation, Japanese Chiyoda Corporation, French Technip SA, Korean SK Engineering and GS Engineering.

 

Under its plan to put the refinery into operation in 2014, PetroVietnam planned to sign this contract by the end of last year. However two sides still hope to receive more favourable conditions from the Vietnamese government.

 

When signed, this will be the largest EPC contract in Vietnam’s oil and gas sector, because with the estimated investment capital of $6.2 billion, the investors decided to issue only one EPC package contract.

 

Nghi Son will be the second oil refinery in Vietnam and the first involving foreign partners. It is expected to be put into operation in 2014. PetroVietnam holds a  25.1 per cent stake in the project, Kuwait Petroleum International with 35.1 per cent, Japan’s Idemitsu Kosan with 35.1 per cent and Mitsui Chemicals with 4.7 per cent.

 

When finished, the project will have a designed capacity of 10 million tonnes of crude oil a year, or 200,000 barrels a day, 1.5 times higher than the capacity of the operational Dung Quat, Vietnam’s first oil refinery.

 

Japan’s JGC Corporation in October, 2010 was chosen for being a consultant for the expansion of the Dung Quat refinery in central Quang Ngai province, from the current 6.5 million tonnes to 10 million tonnes.

 

JGC previously involved in a joint venture with French Technip and Spain Tecnicas Reunidas to build Dung Quat refinery where JGC was responsible for Residual Fluid Catalytic Converter, LPG Treater and Naptha Treater areas.

 

Samsung smiles at new tax incentives

 

The government has green-lighted a special tax incentive policy for Samsung’s northern Bac Ninh province base.

 

A Samsung Electronics Vietnam source told VIR that Prime Minister Nguyen Tan Dung had approved a  Ministry of Planning and Investment (MPI) proposal to grant tax incentives to Samsung.

 

“The incentives will be applied immediately after we receive an adjusted investment certificate from the Bac Ninh Industrial Zones Authority,” the source said.

 

The MPI proposal was submitted after advice was sought from the ministries of Industry and Trade, Finance, and Science and Technology.

 

Accordingly, Samsung Electronics Vietnam will now enjoy a corporate income tax at 10 per cent for all products manufactured at its $670 million factory in Bac Ninh. The corporate income tax rate normally applied in Vietnam is  25 per cent.

 

The firm will also receive an income tax exemption in its first four years of operation and pay half this 10 per cent rate in the following nine years while enjoying tax exemption for imported components during the first five years of operation.

 

For its investment expansion from $670 million to $1.5 billion, the Korean company will enjoy the same incentives applied to new investment projects. The current tax regulations do not give tax incentives to expanded investments.

 

The company’s $670 million mobile phone factory was licenced in 2008. Last year, the firm announced it planned to increase investment to $1.5 billion by 2015 to develop a massive complex manufacturing mobile phones, laptops and other electronic products.

 

Not all of Samsung’s products made at the manufacturing complex in Bac Ninh province are covered by the list of hi-tech products that mean tax incentives for investors, according to the Ministry of Science and Technology.

 

But the MPI said Samsung’s project was important because it created jobs, boosted the development of the supporting industry and made a notable contribution to the state budget.

 

Bac Ninh People’s Committee estimated the firm would contribute $150 million each year to the provincial and state budgets, 450 times higher than the combined tax contribution of other foreign invested enterprises in the province this year.

 

Samsung Electronics Vietnam announced it had recruited nearly 9,000 workers to date and attracted more than 30 suppliers to the country with total commitment capital at around $250 million.

 

Vietnam investment abroad leaps in January-April

 

Vietnamese enterprises vigorously bolstered their overseas investment this year, with the total registered outbound capital of US$1.8 billion in the January-April period, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).

 

FIA said the country licensed nine new overseas investment projects in April, bringing the country’s total overseas investment in the first four months to about US$1.8 billion compared to US$3 billion for the whole year of 2010. The total sum represents an aggressive approach among enterprises towards outbound investment at a time authorities are checking the efficiency of overseas investment projects as well as the transfer of capital abroad for investment.

 

The agency said that large-scale overseas investment projects were mainly for energy, rubber growing and telecommunications.

 

Most notably, the Electricity of Vietnam International Joint Stock Co. (EVNI) was licensed to invest US$800 million in the Ha Se San 2 hydroelectric power project, and Chua Se-Kamong Thom Joint Stock Co. committed US$31.7 million to grow 4,000 hectares of rubber, both in Cambodia.

 

Earlier, the Ministry of Planning and Investment set this year’s outbound investment target at between US$1.5 billion and US$2 billion.

 

Vietnamese enterprises last year were licensed to invest about US$3 billion in 25 countries and territories, according to statistics from FIA. By the end of February, local companies had invested in 575 projects in 55 countries and territories with total registered capital of US$23.7 billion.

 

The mining sector accounts for the lion’s share in total outbound investment, at US$4.3 billion in 88 projects, followed by the agriculture-forestry sector with US$1.87 billion in total pledged capital.

 

Local companies have also expanded their business beyond neighboring countries like Laos, Cambodia and Myanmar to farther destinations like Japan, France, Germany, the U.S., Britain and African countries.

 

According to the agency, the rate of return on overseas investments has been very poor, although the investment volume has risen steadily over the last few years, raising concerns about the efficiency of overseas investment.

 

To better check the efficiency of overseas investment projects, the agency has recently required Vietnamese investors with projects abroad to submit reports on their business performances. The move aims to check the efficiency of overseas investment projects as well as the transfer of capital abroad for investment by State groups and enterprises.

 

Experts said that it was necessary to monitor overseas investment to regulate the capital outflow as most of the investment capital was from State-owned enterprises.Experts said the Government encouraged local companies to invest overseas during 2007-2008, when the economy had ample capital sources. Now that the country is facing macro-economic difficulties, it’s necessary to assess the feasibility of overseas investment projects, they said, citing the economy’s high trade deficit, unstable balance of payments, and falling foreign reserves. 

 

Spiking input costs put firms on back foot

 

Production firms are anxious about rising input costs, especially potential power price rises.

 

Sadakim deputy general director Vu Van Hien in southern Dong Nai province’s Bien Hoa 1 Industrial Zone was worried about possible power price hikes as under Decision 24/2011/QD-TTg dated April 15, 2011 the power price will be set under market rules starting from June 1, 2011.

 

“Power cost currently makes up 10-15 per cent of the mechanical sector’s total production costs. Business can hardly draw up workable product pricing schemes if a concrete power price hike plan is not in place,” Hien said.

 

Handbag maker Minh Tien Company Limited director Nguyen Tri Kien is in the same position since power cost accounts for around 10-12 per cent of the garment sector’s production costs.

 

Kien said the company would have to lift product prices if the power becomes dearer.

 

“Our firm is checking production processes to innovate big energy ones. This would eat up huge investments but it will make us more competitive when the power price is set following market rules,” Kien said.

 

In fact, less-than-modern equipment and technology is the core reason creating headaches to enterprises whenever the water and electricity costs are revised.

 

“Most Vietnamese firms use the technology several generations behind the world’s average level,” said deputy minister of Industry and Trade Tran Tuan Anh.

 

Only 2 per cent of Vietnamese companies reportedly use cutting-edge technology while the rate is 31 per cent in Thailand, 51 per cent in Malaysia and 73 per cent in Singapore.

 

Besides, many local firms used only 0.2-0.3 per cent of their total revenue to inject in technology innovations, Anh said.

 

Big investment was required for technology and equipment innovations, Hien said.

 

He had ascribed current high bank lending rates and difficulties in sourcing replacement spare parts to renovate machinery systems the core reason for which businesses were late in making them more competitive through technology innovation.