Hanoi sees trade deficit, HCMC sees surplus in first nine months

The capital experienced a huge trade deficit of US$11.23 billion in the first nine months of the year, the city's Statistics Office announced yesterday.

Hà Nội's export revenue was nearly US$7.16 billion, while its imports were worth $18.39 billion.

In September alone, the city's exports reached just $875.2 million in comparison with its imports worth $2.03 billion, according to the office.

Imports were topped by fertilizer, which rose 48.5 per cent in comparison with August. The second biggest import was fuel, up 47.5 per cent on the previous month.

Meanwhile, several exports contributed significantly to the capital's export turnover. They were coffee, up 24 per cent on August, and art works, up 21 per cent.

In contrast, HCM City saw a trade surplus of $1.28 billion in the first nine months of 2011. Exports were worth $20.3 billion, while imports reached $19 billion, according to HCM City's Statistics Office.

Wave of international trade fairs to begin in HCMC

A series of international exhibitions, including VietnamPlas and Linkage 2011, are scheduled to begin September 21.

While VietnamPlas comprises plastics and rubber, packaging and print, food technology and printing and labelling sectors, the Likage exhibit features industrial automation, electricity engineering and energy industry products.

Around 230 exhibitors from 13 markets including mainland China , Hong Kong , India , Israel and Japan will showcase their products and services until Sept. 24.

The VietnamWood and Furniture exhibition, organised once every two years, will follow, to take place between October 12-15.

Around 250 companies from 19 countries and territories, including the Republic of Korea , Germany , Taiwan , Thailand and the US , will be present. The event will introduce the latest technologies of the industry including wood processing and coating materials and services, among others.

Pham Quynh Giang, director of the HCM City branch of exhibition and advertising firm Vinexad, said US companies considered Vietnam the second largest market, after China , for their hardwood lumber.

Sixteen companies from the Hardwood States Export Group and the US hardwood industry are showcasing their products at the exhibition.

Germany and Taiwan also have their own pavilions.

More than 230 companies have registered their participation at the Vietnam Int'l Textile and Garments Industry Exhibition, which will be the final one to run from October 19 to 22.

Coming from India , Turkey , Italy , France , the Netherlands and other countries, they will also join a seminar on the latest technologies as well as trends of the industry, apart from their product showcasing.

All the events will be at the Sai Gon Exhibition and Convention Centre in Phu My Hung New Urban Area, and organised by Vinexad in co-ordination with the Taipei-based Chan Chao Int'l Co and several other partners.

Meanwhile, an another expo on medical equipment and pharmaceutical will open its door in the city the same day.

The four-day Pharmed and Healthcare Vietnam 2011 will see around 350 local and foreign firms attend.

Customs upgrade to cost $126m

Prime Minister Nguyen Tan Dung has approved an amount of VND2.6 trillion (US$126 million) for the customs sector to improve its fleets from 2011-20.

The move aims to better facilitate the prevention and control of cross-border smuggling and make the patrol, inspection, and pursuit of violators more efficiently.

These goals would help ensure the country's economic security as well as its sovereignty.

Accordingly, customs will have new fleets of patrolling boats: speed-boats with modern technical features enabling more missions and co-operation with other authorities, including police.

Domestically-made boats are preferable. Moreover, existing equipment will be maintained and upgraded.

The fund is from the State's budget, liquidation of old equipment and other legal sources.

Plastics industry to expand by 30% this year
 
The country's plastics industry is expected to achieve an export turnover of US$1.3 billion this year, an increase of 30 per cent on last year.

The Ministry of Industry and Trade's Industry and Trade Information Centre (VITIC) said this was possible because in the first eight months of the year, the industry had already earned more than $840.7 million from exports, 28 per cent higher than for the same period last year.

Of the total, plastic packing, including bags and products used for transport, ranked first, amounting to 36 per cent. The items were exported mainly to Japan, German, England, the US and Cambodia.

Household plastic products accounted for another 20 per cent with big markets in Indonesia, the US, Germany, Cambodia and Japan.

VITIC said exports were expected to sharply increase in the last few months of the year.

The centre also forecast that Japan could become the biggest potential importer as its yearly demand for plastic products would reach $8 billion.

Much of this involves industrial plastics for installing electricity systems following the disastrous earthquake and tsunami.

This year, it is expected that in the first nine months of the year, export turnover to Japan will be only $211 million, but this is 18 per cent higher than for the same period last year.

Japan is now the largest importer of Vietnamese plastic products, followed by the US.

Vietnamese businesses have been striving to deeply penetrate the Japanese market.

According to the Viet Nam Trade Office in the UK, demands for plastic household appliances, outdoor furniture and ornamental plants has been large.

Vietnamese plastic pipeline products have been selling well in the European Union. Export turnover is expected to reach $272 million in the period.

In South-east Asia countries, where production requirements were not as strict as in other regions, export turnover is predicted to hit $239 million in the first three quarters of the year, an increase of 40 per cent over the same period last year.

The VITIC said Vietnamese products often did not meet design requirements, making it difficult for them to penetrate highly technical markets.

In addition, Viet Nam's recycled plastic industry had not been developed. Foreign enterprises often had the advantages of capital, technology, experience and market share.

While plastic products have seen high growth rate, there has been a general lack of competitiveness as the industry had to import up to 80 per cent of input as well as equipment for production.

An information shortage among export businesses often led them to sell products at prices lower than necessary.

The centre said domestic enterprises should focus on specific items to ensure healthy competitiveness.

They should also concentrate on establishing the recycled plastic industry and in producing high value-added products used in construction and health sectors.

Trade with France below potential
 
Economic co-operation between Viet Nam and France has failed to reach its potential even though France is now one of Viet Nam's leading trading partners in the EU, a business conference heard in Paris late last week.

Vietnamese Ambassador to France Duong Chi Dung suggested that the two countries should make greater efforts to enhance bilateral co-operation with a focus on promoting co-ordination between localities and identifying prioritised sectors.

During the event, the participants also discussed measures to minimise the negative impacts of the global economic crisis on their economies.

Bilateral trade has seen an average annual growth of 13 per cent per year of the past decade, increasing from US$978 million in 2000 to $2.75 billion last year, said Deputy Minister of Industry and Trade Nguyen Nam Hai. The figure was forecast to reach $3.3 billion by the end of this year, an increase of 20 per cent over 2010, he said.

Major French groups operating in the petroleum industry have also established their presence in Viet Nam and have made a significant contributions to the country's industrial growth, Hai said.

French companies have also paid increasing attention to Viet Nam's electricity sector, he said, noting that Viet Nam had a need for the financial and management expertise of French companies as well as their quality equipment and services.

Profit taking seen extending this week

Securities enterprises have predicted profit taking pressure to pick up in some sessions this week as many investors have shown signs of locking in profits after a long rising streak last week.

Fiachra Mac Cana, managing director of HCMC Securities Corp., after last Friday’s session said the correction he had been expecting for some days has finally arrived with a massive selloff during the day. Offers soared later on, suggesting that selling pressure may extend into the early part of this week.

Foreign participation levels increased significantly and they were even heavier net sellers on apparent position adjusting. Closing the day, the VN-Index tumbled most in four months to end the week at 457.11, falling 0.6% from the week earlier.

“Investors do have a lot of profits to take and after a thirteen-day consecutive run-up which ended only a few days ago it’s not surprising they cracked especially just before the weekend,” he said.

“However, in the end it took a rising crescendo of foreign technical selling over the past few days which peaked on Monday with foreigners accounting for 42% of all selling. This spooked domestic investors who chose to run for the exits for the time being.

“In our opinion, this technical selling is a short-term phenomenon and a pullback to lower levels may actually release new buying interest next week.”

APEC Securities Co., meanwhile, said the correction was necessary before the market enter a more sustainable rally but was not enough for the VN-Index to regain previous highs.

Although monetary policy has been loosened, local and international economies still face many unforeseen difficulties. Therefore, the local market might fail to manage another long-term rising streak in the coming time.

“Short and medium-term rising tendency has yet to end but the market is now at a very low position. We think that the market might move sideways with low or average liquidity as monetary policy might be tightened again in 2012 given high inflation,” the broker said.

“We suggest selecting stocks having good fundamentals, stable and transparent business results to prevent sudden bad news like losses, disputes, bankruptcy or interrupted operations. Investors should rely on technical analysis to buy stocks in an appropriate and timely manner,” APEC added.

The Hanoi market also saw a mild decrease with three falling and two rising sessions last week. The HNX-Index lost 1.9 points, or 2.47%, from a week earlier to 74.88. The market’s liquidity remained high with an average daily volume of around 68 million shares worth VND788.8 billion. The market is predicted to continue dropping this week.
 
Throughput at Vietnam ports declines

Ports have seen a decline in cargo throughput due to falling consumer demand in importing countries and overcapacity at the Cai Mep-Thi Vai deepwater port complex, according to the Vietnam Seaports Association.

The secretary general of the association, Ho Kim Lan, said on the sidelines of an annual conference of the association last Friday that cargo throughput at the ports had dipped as consumption in many importing markets had slackened.

Many producers of textiles, garments, leather footwear and woodwork – which are among the country’s top export earners – have faced difficulties in production given economic contraction at home and abroad.

“Numerous ports which are operating below capacity have seen slowing growth in cargo throughput,” he said. “The fees collected from cargo storage and loading services are also down as the ports are competing with one another.”

Saigon Newport still managed to maintain good operations as its throughput in the first half represented some 48% of all of 2010 but Saigon port, Ben Nghe port, and the vegetable port reported their throughput accounted for 42%, 36%, and 32% of the whole 2010 respectively.
 
IT necessary for small businesses, say experts

Small- and medium-sized enterprises should realise that investment in IT is the only way to improve business efficiency in the context of the global economic crisis, experts warned at a seminar last week.

According to the Viet Nam Chamber of Commerce and Industry (VCCI), there are around 520,000 firms in Viet Nam.

Le Van Loi, head of the VCCI's Information Technology Institute, said: "Ninety five per cent of them are SMEs and they face great challenges like rising expenditures, high inflation and interest rates. IT applications is the answer for them to survive."

There had been a significant change in the use of IT in Viet Nam following the development of the telecom infrastructure, the rapid growth of the banking industry, and tax and customs procedure going electronic.

"SMEs should invest in IT as an important and long-term infrastructure for sustainable development."

One study by the Mekong Project Development Facility (MPDF), which assists SMEs in Viet Nam, Laos and Cambodia, has found that Vietnamese SMEs can save 42 – 76 per cent of management costs if they have appropriate IT systems.

To achieve the maximum possible efficiency, Phi Anh Tuan, vice chairman of the HCM City Computers Association and a consultant, urged SMEs to define their management goals and IT needs and hire consultants for finding solutions.

SMEs should forecast the hardware needs that could arise once they grew, he said. Elsewhere, Intel Viet Nam and the VCCI began their two-month-long "Smart Business" programme last Thursday under which they offer support packages for businesses at discounted prices.

For businesses with up to nine workers, the package consists of computers, internet access and secure software.

For those with 10-50 workers, Intel has added an accounting programme and servers; human resource software has been added for larger businesses.

"Many SMEs have leveraged IT use to compete with bigger rivals," Nguyen Thu Phong, vice chairman of the city's Young Business Association, said.

"And the advantage should be enlarged."

VietnamPlas, Linkage shows to open this week

More than 230 professional exhibitors from 13 countries and territories will attend VietnamPlas 2011, an international plastics, packaging, printing and food-tech industry exhibition, in HCMC this week, and Linkage Vietnam 2011, a machine tool and automation exhibition.

The 11th Vietnam International Plastics, Packaging, Printing and Food-tech Industry Exhibition and Linkage Vietnam Machine Tool and Automation Exhibition 2011 will take place at the Saigon Exhibition and Convention Center in HCMC’s District 7 from September 21-24.

The participating companies come from Vietnam, China, India, Hong Kong, Japan, Israel, Korea, Malaysia, Singapore, Thailand, Taiwan, the UK, and UAE, organizers told a press conference last week.

The organizers of the two events under one roof are Vietnam’s Vinexad, Chan Chao International Co., Ltd., Yorkers Trade & Marketing Service Co., Ltd., Paper Communication Exhibition Service, Vietnam Plastics Association (VPA), Vietnam Rubber Association (VRA) and Vietnam Printing Association (Vinaprint).

Linkage Vietnam focuses on industrial automation, metalworking, electricity engineering and energy industry. All 10,000 square meters of exhibiting area has been taken and the scale of the event is 25% bigger than previous events, according to the organizers.   

With the advantage of displaying inter-related products/machinery in one show ground, VietnamPlas 2011 offers an opportunity for international companies/organizations to establish new or further intensify existing business relations with Vietnam local industries, and vice versa.

On show will be advanced, high-tech machinery and equipment such as plastic injection molding machines, plastic woven bag machines, turn-key equipment of mold and die manufacturing plant, and other equipment related to packaging, printing, and food processing.
 
Nova Scotia Bank buys into VietinBank

Vietnam Bank for Industry and Trade, or VietinBank, will sign a strategic partnership with Nova Scotia Bank early next year, Pham Huy Hung, VietinBank’s chairman, told investors in HCMC last week.

Negotiations on a 15% stake offering for Nova Scotia, one of North America’s premier financial institutions, have produced initial results, Hung said, adding another 5% would be offered in 2014.

VietinBank, according to the ownership structure, is 80% owned by the Government, 10% by IFC, an arm of the World Bank Group, and IFC Capitalization Fund, and the rest by others.

This year VietinBank expects to pay 20% cash dividend to shareholders.

In end-June, bad debt at VietinBank had made up 1.1 % of total outstanding loans, Hung said. Vietnam Shipbuilding Industry Group (Vinashin) alone owes over VND900 billion but this debt has not turned bad.

By end-August, VietinBank’s total assets had amounted to VND425 trillion and the figure is expected to rise to VND450 trillion by the end of this year.

Next month, the bank plans to increase its chartered capital to VND20 trillion from the current VND16.8 trillion. And the number will continue to grow to VND26-27 trillion in the last two months of 2011.
 
Firms back investment in renewable energy

Vietnamese enterprises support the Government’s move to invest in renewable and alternative energy and they accept high energy costs in the short-term to lessen the nation’s dependence on mineral oil and its aim to have a long-term stable price.

The findings were announced by audit company Grant Thornton in the latest international business report after conducting a survey in May in which enterprises were asked two questions on how they will support the Government in investing in renewable energy and finding an alternative source of energy; and if they would accept short-term energy cost increases for more stable prices in the long term.

For the first question, 50% of a total of 154 Vietnamese companies backed the Government, which is higher than the average rate of 44% of global enterprises.

Those participating countries from the Association of Southeast Asian Nations (ASEAN) such as Malaysia, Thailand, Singapore and the Philippines as well as other countries in the Asia-Pacific region also shared the same viewpoint with respective rates of 61% and 52%.

Similarly, for the second question, 68 out of 100 Vietnamese firms accepted high energy costs for a more stable price level, which accounted for a rate of 68% and put Vietnam second after the Philippines with 82%.

Meanwhile, 60% of enterprises in North America and 53% in the G7 group of developed nations said yes to both questions compared to just 35% in the group of emerging countries such as Brazil, Russia, India and China (BRIC).

“At this time, when the global recovery still remains faint, it is encouraging that enterprises support investment in renewable energy projects. The findings were considered as a reminder to governments and international organizations that the economic dependence on mineral oil should be taken into consideration,” said Ken Atkinson, Chief Executive Officer of Grant Thornton Vietnam.

The international business reports are Grant Thornton’s regular surveys with the aim of revealing the global enterprises’ stance and wishes for the business environment.

The renewable energy source survey was participated by 2,697 enterprises operating in the fields of production, retail, service and construction and belonging to 39 economies in Asia-Pacific, North America, Latin America and European Union.
 
Ammonium Nitrate plant for Thai Binh

The People's Committee of northern Thai Binh Province has granted an investment licence to an ammonium nitrate plant to be built in the provincial Thai Tho Industrial Zone.

The plant, with total investment capital of US$280 million, will supply 200,000 tonnes of products each year. It is being built by the Mining Chemistry Industry Corporation of Vinacomin Group.

The project is scheduled to begin in November and become operational by early 2014.

Residential, tourism complex to go ahead

The People's Committee of southern Kien Giang Province has requested the Swiss Trustee Suisse Group and Vinaconex R&D Joint Stock Company to start construction of the Asian Pearl complex on the southern island of Phu Quoc off Kien Giang Province.

The US$2 billion project, which received permission to build last year, includes a financial centre, a residential quarter and a tourism complex.

It will not include a golf course and casino as previously proposed by investors, according to local authorities.

Bank offers low interest loans

The Ocean Commercial Joint Stock Bank will apply a preferential lending programme with a low interest rate of 16 per cent to enterprises in agricultural production and export.

The lowest lending interest rate to other fields will be 17 per cent.

The bank will also continue to give small- and medium-sized enterprises preferential lending with interest rates decreasing from 1 to 3 per cent a year.

Construction giant to offer bonds

Construction company Song Da (SJS) will issue VND700 billion (US$33.8 million) worth of corporate bonds this month. The bonds will have a three-year maturity and floating yield. SJS earned VND97.8 billion ($4.7 million) and posted a profit of VND24.9 billion ($1.2 million) in the first six months of this year.

Vinacafe to pay cash dividend

Vinacafe Bien Hoa (VCF) will pay an 8-per-cent cash dividend, with September 28 set as the ex-date for shareholders to participate. VCF will also hold a shareholders meeting on October 27 to elect new members of the board, following a Masan Consumer announcement earlier this month that it had acquired a controlling interest in the coffee processor.

Vinamico to sell shares to strategic investors

Vinamico Mining Co (CTM) has cancelled a planned issue of convertible bonds and will instead sell shares to strategic partners who would prefer to hold shares than bonds, the company said. Two million shares will be sold at VND10,000 each to four or five strategic partners in the fourth quarter this year.

Brokerage delays plan to list shares

Tan Viet Securities Co will postpone its plan to list shares, according to general director Nguyen Van Dung, who said that the stock market doldrums had affected the company's revenue. "We don't expect to make a significant profit this year," he said. However, Tan Viet continues to plan to increase its charter capital next year from VND350 billion (US$17 million) to VND500 billion ($24 million).

Alarm bells ringing over inferior coffee seedlings

Poor management has led to the production of substandard coffee seedlings at nurseries that have sprung up in Hoa Thang Commune in the Central Highland City of Buon Ma Thuot.

The commune has recently become a major supplier of seedlings for Central Highland provinces.

As the rainy season approached, seedling production mushroomed in the commune.

For years, the Central Highland Institute for Agricultural and Forestry Science and Technology (former known as Ea Kmat Coffee Institute) was the main seedling supplier and its products, with the brand name Ea Kmat, were well-known for high quality.

But, Do Trong Vinh, director of Ea Kmat Company for Consulting and Investment in Agro - Forestry Development, which is under the institute, said the company was now able to meet only half of the demand for seedlings, leaving the door open for beginners.

This year, the company cultivated two tonnes coffee seeds, enough seedlings to plant out 2,000ha of coffee.

However, Vinh said, the demand for coffee seedlings had grown sharply because there were large areas where old and stunted coffee trees had to be replaced.

There were also freshly deforested areas that had to be planted out.

However, a recent inspection by the municipal authority found that all 15 establishments inspected were unqualified to supply seedlings.

Nguyen Van Bang, head of the city's Economic Department, who led inspection groups, said the establishments did not have qualified staff, including technicians, to produce healthy viable plants.

Bang said that most of the 300 establishments in the commune were new and had difficulty supplying seedlings up to standard.

Nguyen Minh Tang, deputy chief inspector of the city's Agriculture and Rural Development Department, said that planting out inferior seedlings could cause long-term losses for farmers.

He said farmers spent an average of VND100 million (US$4,850) on each hectare of coffee for the first three years until the first harvest. However, it took at least five years to identify whether the seedlings were performing well.

Moreover, he said, many farmers could not ask for compensation as they paid cash for the seedlings - often without no invoices to prove the purchase.

Tang said that the department had urged authorities to tighten the granting of licences to seedling growers. He advised farmers to buy seedlings only from reliable producers.

Financial management programme launched

The treasury and budget management information system (Tabmis), a programme designed to promote public financial reform, kicked off at State offices, including the Ha Noi Department of Finance, the State Treasury offices and Governmental financial agencies in the capital city yesterday.

The programme allows instant updates of daily financial transactions, helps share the information and data needed to ensure synchronism among State agencies, helps form financial statements and reduces payment information overlapping in 45 other provinces and cities as well as some central agencies.

Pham Sy Danh, Deputy Minister of Finance, said that the use of Tabmis would bring positive changes to the reform of financial management mechanisms, especially in the management of State budget, funds, loans and debts.

Poor land management causes State losses
 
Capacity limitations among State agencies involved in land management had led to significant State budget losses as well as land use inefficiencies, according to the State Audit of Viet Nam (SAV).

An annual land management audit report issued by SAV revealed that VND1.255 trillion (US$59.7 million) was added to State coffers from land use fees in 2009 – the highest in the last four years, representing 3 per cent of the year's total revenue.

The sum was halved in 2010.

According to deputy director of SAV's Department of General Affairs Tran Khanh Hoa, loose land management among State agencies was to blame. He said violations had occurred in land price assessments for taxation as well as the granting of exceptions and reductions in land use fees.

Wasteful use of land was also reported, with some localities using land improperly or allowing it to go fallow, said Vu Nhat Anh from the National Assembly Office's Department of Economy and Budget.

In addition, the lack of transparency in the transfer of land use rights as well as in compensation for land clearance also contributed to State budget losses, he said.

Do Manh Hien from the General Department of Land Administration emphasised that the slow progress in implementing projects hindered economic development and reduced tax revenue.

Experts agreed that tax and fee policies were no longer appropriate to ensure efficient land management and use, as it caused land speculation and increased land prices.

Former deputy minister of Natural Resources and Environment Dang Hung Vo said there was a huge difference in the land prices set by the State and the market prices.

Regulations were needed to balance the prices, he said.

In addition, State revenue from land use fees was at risk of falling as land was gradually used up, Vo said. Doan Xuan Tien, Deputy State Auditor, said auditing played a significant role in promoting efficiency of land management and use.

However, capacity building among State agencies in managing land use was a decisive factor, he said.

Revenue from land is estimated to reach VND60 trillion ($2.85 million) in 2011, about 11 per cent higher than last year.

Viet Nam has more than 33 million hectares of land with nearly 9.4 million hectares of agricultural land and 11.6 million hectares of forest land.

Hanoi eyes mould industry
 
Mould manufacturing needs to overcome several hurdles in order to become one of Ha Noi's key industries, according to the Department of Industry and Trade.

The department's survey of production methods found that foreign moulds were still preferred by enterprises due to their superior quality and lower cost. Businesses reported that domestic moulds were neither sufficiently durable nor sophisticated.

Vietnamese companies produced moulds mainly to serve in their own manufacturing process but rarely sold them on the market.

According to deputy director of the Department of Industry Management Luu Minh Duc, the industry currently lacks high-level skills, techniques and human resources, and investment in equipment for mould production is costly.

Duc said that human resources played an especially decisive role in the development of mould production, which depended mainly on experience, knowledge and creativity.

A lack of co-operation between mould producers is another cause of concern, according to Bui Ngoc Huyen, director of Xuan Kien Automobile Company.

Activities, such as fairs and exhibitions, were needed to advertise domestic moulds and promote co-operation, which would help raise capacity and sophistication, he added.

He also urged that financial incentives be put in place, including a tax on imported steel, the material used for moulds.

"Promoting the sector's development is crucial," Duc emphasised. He reasoned that moulds could be highly valuable when used to produce high-quality goods.

There are 30 enterprises producing moulds in Ha Noi, about half of which receive foreign investment, mainly from Japan, China and Taiwan.

Meanwhile, the demand for moulds has been increasing as thousands of Ha Noi enterprises use moulds in production.

According to the Ministry of Industry and Trade, the sector employs about 1,500 people and has a turnover of VND500 billion (US$23.8 million) per year.

Ngo Van Tru, deputy director of the ministry's Department of Heavy Industry, said moulds were included in the list of industrial products to receive incentives from the Government.

Under the master socio – economic plan for Ha Noi to 2020 with vision to 2030, ratified by the Prime Minister in July, mould production would become an important industry of the capital.

PV