Business confidence index continues falling

 

Vietnam’s business confidence index (BCI) in the first quarter of 2011 continued dropping 17 points to 109 points compared to last year’s fourth quarter, showing businesses’ anxiety and caution amid the current domestic economic developments.

The survey, conducted on 333 enterprises from 11 key sectors and industries in Vietnam, showed that the USD/VND exchange rate adjustment and price hikes of input materials, including coal, electricity and petrol, as well as forecasts on inflation and growth greatly influenced on decisions to expand operations and confidence of businesses, especially small- and medium-sized ones.

Nearly 72 per cent of interviewed enterprises said their business and production operations were affected by the foreign exchange rate adjustment in the first three months of the year. Meanwhile, 46 per cent affirmed that they will raise prices of their products and services due to increasing input material prices.

Regarding the economic situation in Vietnam , only 25.83 per cent of the participants said the economy has improved while 45.95 per cent said the economy was worse, and 28.23 per cent saw no change at all.

With businesses confidence falling for six consecutive months, close to 45 per cent of businesses affirmed they had no intention to expand operations in 2011.

However, more than 54 per cent of the surveyed expressed their belief in a better economy in the next 12 months.

BCI is a quarterly survey conducted by the Vietnam World Vest Base Financial Intelligence Services (WVB FISL) and PetroVietnam Finance Investment and Consultancy Company (PVFC Invest).

Cheap loans to help steady Ha Noi prices

 

The Ha Noi People's Committee plans to provide interest-free loans worth VND475 billion (US$21.7 million) to domestic companies involved in a price stabilisation programme.

The ten price-stabilised commodities include rice, sugar, cooking oil, red meat, poultry, frozen seafood, fruit and vegetables, eggs, processed foods and student notebooks.

Last year, the committee offered businesses a loan of VND400 billion ($18.3 million) at no interest rate if they took part in the programme, said director of the municipal Department of Industry and Trade Luu Tien Long.

The programme saw the ten essential commodities sold at 397 outlets in the city last year.

In addition to the loans, businesses also used more capital from their own budgets in an attempt to better stabilise prices, Long said. However, the city's consumer price index (CPI) last year was still high, at 9.56 per cent.

Weak distribution systems and insufficient supervision resulted in distorted market prices that continue to worry consumers, he said.

Thus, the top priority this year would be given to setting measures to control prices and double the number of sale stabilisation outlets with a focus on markets, trade centres, rural areas and industrial parks.

Raising public awareness on the issue among consumers and businesses was also necessary, Long said.

Speaking during a conference held late last week, municipal People's Committee chairman Nguyen The Thao said price control activities needed to go to the root of the problem and a requirement to list sale prices must be mandatory and this, he stressed, would prevent businesses from easily selling goods at inflated prices.

Meanwhile, HCM City would also provide interest-free loans worth VND660 billion ($33 million) to companies selected to take part in the city ‘s programme to stabilise prices for essential goods throughout the year.

The city has encouraged more eligible companies, including those operating outside the city, to participate in the programme, which would focus on three groups: food and foodstuff, domestically made medicine and school supplies.

The food and foodstuff group would cover nine essential goods, including rice, sugar, cooking oil, red meat, poultry, eggs, fruit and vegetables, processed food and seafood.

The prices of commodities under the programme would be sold at 10 per cent lower than normal market prices.

Competition for international credit cards heats up

Several banks are competing to issue more international credit cards after a new government decision lowered the volume of foreign currency permitted to be taken out of the country without declaration.

The State Bank of Vietnam lowered from $7,000 to $5,000 the amount of foreign currency that could be taken out of the country without declaration by an individual or in baggage, under a request from Prime Minister Nguyen Tan Dung.

The central bank's move has the effect of encouraging people to use international payment cards.

To take the advantage of this opportunity, many banks are promoting the use of payment cards and issuing many kinds of credit cards to satisfy their cardholders, according to independent market watchdogs.

The Hong Kong – Shanghai Banking Corporation (HSBC) also has a plan to attract customers to sign up for credit cards.

The bank is implementing a Home&Away privilege programme which offers all HSBC credit cardholders privileges at over 19,000 outlets in more than 160 countries and territories.

In addition, the Bank for Foreign Trade of Vietnam (Vietcombank) is carrying out a big promotion under which the holders of Vietcombank American Express cards will benefit, depending on their credit-card turnover.

At the Dong A Commercial Joint Stock Bank, those who go abroad can pay a security deposit in dong to have short-term credit cards.

The terms of this kind of card is three months maximum, and cardholders can have a maximum credit limit of VND140 million (nearly $6,700).

Vietnam's payment card market is relatively small but it is one of the most dynamic markets in the world, analysts said in the "Vietnam Plastic Card Market Forecast to 2013" report.

The report says that the Vietnamese payment card market will grow about 18.5 per cent between now and 2014.

The local payment card market, which includes both credit cards and debit cards, has been rapidly growing in the past few years, fuelled by rise in the young population, technological development, emerging trends in e-commerce and government policies on limiting the use of cash.

The total number of cards issued in Vietnam has nearly doubled during the 2008-10 period.

Garment and textile exports to hit $13b this year: Vitas

Viet Nam should be able to export US$13 billion of garments and textiles this year, according to the Viet Nam Textile and Apparel Association (Vitas).

Vitas said the goal was achievable given that established partners had recently agreed to a price increase of between 15 and 20 per cent.

In the first quarter of this year, the industry earned $2.8 billion from exports, a year-on-year increase of 28 per cent.

According to Vitas, the price of many imported raw materials had surged.

For example, the price of cotton imported from the US had increased by 74.1 per cent in comparison with the same period last year, while the cost of labour, transportation and power had also gone up.

To solve the problem, the association has worked with provinces to construct industrial zones in which they can plant cotton and produce other raw materials.

As part of a garment and textile development plan in 2010-15, the industry will meet about 45 per cent of the domestic fibre demand in 2011, and this figure will increase to 70 per cent in 2012.

In 2015, the localisation rate is expected to be 70-80 per cent.

Ensuring bamboo, rattan exports keep growing

 

As a supply hub for bamboo and rattan, Viet Nam is regarded as one of the most important sourcing centres for basketware in the world, according a new report from the US nonprofit organisation Kearny Alliance.

The report, Viet Nam Sourcing Report: Basketware, contains information that helps connect local suppliers in developing economies with buyers worldwide.

Viet Nam's basketware industry benefits from an abundant supply of indigenous raw materials obtained from many forests and plantations across the country.

"Viet Nam's handicraft industry enjoys several competitive advantages, among which are craftsmanship and the abundance of rattan, bamboo and water hyacinth used for woven baskets," according to Vu Ngoc Khiem, programme manager of the Kearny Alliance's Developing Country Export Assistance Programme in Asia.

The basketware industry manufactured products that were known for their durability and aesthetic craftsmanship, Khiem said.

Viet Nam is the world's sixth largest supplier of raw bamboo and devotes 1.4 million ha, or approximately 4 per cent of total land area, to cultivation of the plant, according to the Ministry of Agriculture and Rural Development.

This leads to an annual yield of 2.1 to 3.5 million tonnes of raw bamboo, depending on the species.

Viet Nam also has 380,000 ha of forest and plantations devoted to rattan, of which 20,000-50,000 tonnes are produced annually.

The abundance of raw materials helped local suppliers procure components easily and inexpensively, and helped prevent product price fluctuations by keeping usage of imported materials at a minimum, the report said.

Viet Nam has about 2,000 craft villages mainly composed of home-based artisans who specialise in the production of handicrafts like baskets.

The country also has 720 trade villages that have organised as companies capable of carrying out the entire manufacturing process.

However, rattan and bamboo are being overexploited in the country, leading to deforestation and a decline of many species of rattan.

The Government was planning to issue conservation policies regulating the exploitation of rattan and bamboo to mitigate adverse effects and to ensure sufficient supply of raw materials over the long-term, the report said.

According to a survey conducted by Kearny for the report, local exporters of basketware are upbeat about their competitiveness, projecting 10 per cent export growth this year, which they attribute to the abundant domestic supply of raw materials.

In addition, 60 per cent of featured producers would keep export prices unchanged over the next six months, while 80 per cent of the interviewed suppliers planned to increase prices to within only 5 per cent, the report said.

"Easy access to natural rattan and bamboo from the suppliers' local plantations enables them to lessen their dependence on imported components, thus stabilising their export prices," Khiem said.

Sixty-five per cent of the surveyed local exporters plan to target the EU market.

Export prices range from about $0.1 for a simple bamboo basket up to $10 for such intricate woven designs.

Featured products are made of one type or a combination of materials including water-hyacinth, sea-grass, pandan leaf, banana leaf, bamboo, rattan or synthetic rattan and plastic.

The report offers in-depth profiles of 36 verified export suppliers, supplier market analysis, price forecasts and more than 130 top-selling products, ranging from storage and laundry baskets to dishes and serving trays, in addition to full descriptions, prices and packaging details.

Industry fair pushes clean production to small firms

A rattan industry trade fair which opened in HCM City on Sunday is promoting the concept that cleaner production helps small and medium-sized companies operate in a sustainable manner and access the international market.

The Asia Pacific Lifestyle Trade Fair has attracted around 700 companies, but only a few dozen apply Clean Production (CP).

While rattan products are very popular in Indo-China and beneficial to people's livelihood, waste created during the production process, and pollution are threatening the industry.

The World Wide Fund for Nature (WWF) 's "Sustainable Rattan Programme in Cambodia, Laos and Viet Nam" project, funded by the EU, Swedish home-products retailer IKEA, and the German development finance institution (DEG), was begun in 2009 to engage communities, the private sector, and governments in securing sustainable rattan supply chains.

Around 300 SMEs are familiarising themselves with CP, with at least 120 of them able to apply their own tailored solutions.

"As a cleaner production body, we are, in collaboration the WWF Rattan Programme, putting our time and effort into encouraging rattan companies to engage in CP," Le Xuan Thinh, head of company consultancy at the Viet Nam Cleaner Production Centre (VNCPC), said.

Seven Vietnamese companies are committed to applying CP.

VNCPC has developed eight new CP techniques that will be tested by rattan processors before introducing to companies.

"A company in Nui Thanh District, central Quang Nam Province, may save 30 per cent to 50 per cent of chemical costs and 40 per cent of liquid, gas, and fuel costs, Thinh added.

In addition to CP, the project also promotes sustainable forest management through FSC (Forest Stewardship Council) certification.

According to legislation passed recently in Europe and the US – FLEGT and Lacey Act – only FSC-certified timber items can enter the two markets – two major importers of rattan products.

Rattan does not belong to the timber forest class but rattan products too may soon see strict import policies.

HCM City furniture group signs design deal with Italians

The Handicraft and Wood Industry Association (HAWA) and Italian furniture industry association Centro Speri-mentale del Mobile (CSM) last week signed a memorandum of understanding for co-operation in research, marketing, training, and furniture design and wood-processing technology.

Under the agreement signed in Florence by a visiting HAWA delegation, CSM will help HAWA enter into tie-ups with relevant institutions in Italy, including training organisations and woodworking-machinery and tool-manufacturers associations.

It will also help HAWA's members with marketing to boost exports to Italy.

HAWA, in turn, will assist CSM with establishing contacts with its members, make factory visits, and generally work with the furniture sector in Viet Nam.

The HAWA delegation comprising executives from 11 firms was in Italy from April 11 to 18 to study the wood processing industry.

The visitors called at the international furniture fair in Milan, wood processing factories in Tuscany region, and elsewhere.

Viet Nam's export of wooden furniture to Italy has risen from nearly US$27 million in 2009 to $32.2 million last year, according to the Ministry of Industry and Trade.

It was worth $15.5 million in the first quarter of this year, a 17.4 per cent increase year on year.

HEEAP to raise training funding for future engineers

Partners and members of the Higher Education Engineering Alliance Program (HEEAP) will convene a meeting in HCMC this week to decide more funding and measures to make this program move faster and develop next generation of Vietnamese engineers.

The meeting was disclosed by Jeffrey S. Goss, director of Vietnam HEEAP and assistant dean of Global Outreach and Extended Education for Arizona State University’s Ira A. Fulton Schools of Engineering.

“Our initial resource partners Intel Corporation and the U.S. Agency for International Development (USAID) provided us US$2.5 million to start the project last summer. We will be announcing a large increase in the funding for the program,” Goss told the Daily last Friday, after Siemens announced US$71 million in-kind software grant to the program.

The in-kind software grant will help universities develop the next generation of Vietnamese engineers in order to quench the thirst of companies for high-skilled employees in Vietnam.

The software comprising comprehensive digital product development and digital manufacturing solutions will benefit the Hanoi University of Technology, Danang University of Technology, Can Tho University, HCMC University of Technology and the HCMC University of Technical Education.

Erdal Elver, president and chief executive officer of Siemens Vietnam, said Siemens supported the universities in their education program as part of its corporate social responsibility committed to Vietnam. He expected the program would bring practical benefits to the universities and assist students with their career development.

The software was provided by Siemens PLM Software of the Siemens Industry Automation Division and a major provider of product lifecycle management (PLM) software and services.

Goss of the Arizona State University said students in Vietnam would be given access to state-of-the-art tools that provide the knowledge and experience helpful for them to be successful in a highly competitive marketplace. “Advanced technology like the PLM software is critical to preparing our students for the challenges of a global economy.”

Rajiv Ghatikar of Siemens PLM Software said that the experience gained in the use of the PLM software widely-applied by leading multinational manufacturing companies worldwide would better prepare students for Monday’s highly-competitive manufacturing jobs requiring full knowledge of modern technologies.

Also on Friday, Siemens signed license agreements with the five university partners of the HEEAP. This program was developed in collaboration with the Vietnamese Government, the USAID, the Ira A. Fulton Schools of Engineering, Intel Corporation and Siemens to help the top technology universities in Vietnam advance their electrical and mechanical engineering curricula.

The HEEAP focuses on developing and advancing interdisciplinary and applied engineering and vocational curricula through instructional innovation and university level transformation needed to succeed in the emerging Vietnamese high-tech sector.

Goss of the Arizona State University said the alliance would have new partners that bring in more cash to help train engineers in more faculties as well as physical labs for students to gain applied engineering experiences.

 

PM ticks electricity price flexibility

Prime Minister Nguyen Tan Dung has approved a decision to allow electricity prices to be adjusted under market mechanisms from June 1.

Decision 24/2011/QD-TTg allows electricity prices to be adjusted when there is a change in fuel prices or foreign exchange rates. The electricity price cannot be adjusted more than once in three months.

When costs decline, causing the power price to fall more than 5 per cent, EVN can reduce the price accordingly.

If EVN wants to increase the price by 5 per cent, it has to present a proposal to the Industry and Trade Ministry for approval within five days. If there is no response, EVN can increase the price automatically.

If the price needs to be increased by more than 5 per cent, EVN has to send report to two ministries of Industry and Trade and Finance who will then recommend appropriate adjustment to the Government for approval. If there is no response within 15 working days, EVN can raise the price 5 per cent.

If necessary, the State can use the stabilisation fund to minimise impacts on the macro economy and social welfare.

Wood association signs MOU with Italians

Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) signed a memorandum of understanding with the Italian association of wood manufacturers Centro Sperimentale del Mobile (CSM) to boost cooperation in research, marketing, training, design and wood processing technology.

Under the deal, CSM supports HAWA in developing relationships with relevant institutions in Italy, including training organizations, and woodworking machinery and tools manufacturers’ association.

On the other side, HAWA supports CSM in establishing contacts with HAWA members, including in arrangement of factory visits and business talks.

Nguyen Van Vy, office manager of HAWA, told the Daily that the cooperation agreement could expand to supporting B2B meetings between Vietnamese and Italian companies in collaboration with the Italian chamber of commerce. It also includes exchanging publication and information on the wood processing industry on new designs, raw materials, marketing and research activities.

In addition, HAWA also signed a cooperation deal with Martini Venturi Italia, an Italian consulting firm, to support the activities between Vietnamese and Italian wood manufacturers. According to Vy, a delegation of Italian wood processors will visit Vietnam in the near future, under the deal.

The cooperation is part of a week-long Italian visit by the HAWA delegation which ends on Monday. Other activities include visiting an international furniture fair in Milan, visiting the wood processing facilities as well as working with Tuscany furniture association.

According to the Vietnam Ministry of Industry and Trade, exports of wood products from Vietnam to Italy though small had jumped from US$27 million in 2009 to over US$32 million in 2010. In the first quarter, wood product exports from Vietnam to Italy were estimated at US$15.5 million, up 17% compared to the same period last year.

 

Finance, tax data a must for loans

 

Small and medium businesses should pay more attention to financial and tax reports when applying for loans, HCM City Credit Guarantee Fund deputy head Tran Buu Long said last Saturday.

He was speaking at a discussion in the city, organised by the fund, the Saigon Entrepreneurs Club and the Orient Commercial Joint Stock Bank (OCB).

Long advised enter-prises to improve their capacity to complete financial and tax reports prior to applying for loans.

The reports must be transparent, Long said, not only for the bank and the guarantor but also for future investors in the company.

Companies should also pay taxes on time because overdue tax payments had a negative impact on loan applications.

"Our fund will not issue a credit guarantee to an enterprise with overdue tax bills or tax fines," Long said.

Maintaining a healthy credit record to keep off the Credit Information Centre blacklist would also assist a loan application, he said.

Also, enterprises should have at least 10 per cent of the capital for the investment project or business plan for which financial assistance was being sought.

This showed the management's comm-itment to their plans, he said.

Dien Quang Techno- logy Joint Stock Company director Nhu Tin said. many small businesses outsourced their accounting, which was frowned on by banks,

He advised firms to employ their own accounting staff.

OCB deputy general director Tran Hoai Phuong stressed the need for persuasive business plans as well as debt payment plans.

"Banks and credit guarantee organisations need such information," Phuong said.

Being a member of an organisation like the Sai Gon Entrepreneurs Club would also be an advantage, he said.

National Monetary and Financial Policy Advisory Council member Dr Tran Hoang Ngan said bank credit specialists could advise firms on the most experienced consultant.

The three organisers of the meeting agreed to co-operate to help enterprises gain access to the banks' capital.

City targets thrift in fuel and water use

 

Transport and water supply agencies in HCM City have to prepare proposals that effect savings of 10 per cent in fuel consumption and reduce wastage in water supply by 2 per cent compared with last year, the municipal administration has directed.

A report posted on the government website says Le Hoang Quan, chairman of the HCM City People's Committee, has also ordered the Department of Transport to come up with ways to encourage city residents to use public means of transportation at least one day per week.

Initial targets for the campaign will be civil servants, Party members, and students, the report said.

The proposal on encouraging widespread use of public transportation should also include promotion of walking and cycling.

The department should also work with districts in the city's outskirts to establish motorbike parking lots that commuters can use before boarding buses to the city centre, the report said.

All government agencies in the city should set up a plan aimed at saving energy in using their vehicles, it said.

The report said Quan has asked the Sai Gon Water Supply Corporation to encourage water-saving habits among city residents. For itself, the corporation should find ways to reduce leakage of water, targeting at reducing wastage in water use by 2 per cent over last year.

Other government agencies have been asked to effect a 10 per cent decrease in water expenses over last year.

Quan emphasised that the proposals have to be effective and convincing for residents to adopt energy and water saving practices.

IPs save a big sum thanks to power saving

Tan Tao and Tan Binh Two industrial parks in HCMC have saved some 95,700 kilowatt-hours of power or equivalent to over VND100 millions after over seven months applying measures for saving power and water consumption, heard a seminar in HCMC on Friday.

Duong Lan Huong, an official of the HCMC Energy Conservation Center, told the seminar on saving power for industrial production organized that these two IPs parks were the pioneers applying solutions for cutting down the power and water consumption since last September. The measures were consulted by the center.

Huong said by changing the old lighting systems in and around the parks, the measures could help these industrial parks saving millions of Vietnam dong each year. The saved energy was also equivalent to the reduction of some 41 tons of carbon dioxide discharged into the environment.

At the seminar, the center said the measures could be widely applied at many other industrial parks in the city and other localities.

There were hundreds of representatives of developers of many industrial parks in HCMC, Binh Duong, Ba Ria-Vung Tau, Dong Nai, Long An and other southern provinces joining the seminar.

Macau firms come seeking investment opportunities

A delegation of 25 Macau companies and investment funds last Saturday visited HCMC to learn the investment environment in Vietnam and to sound out opportunities, especially in the property and hospitality industry.

This is the first time these Macau firms come to gauge the potential investment in Vietnam through a business matching held at the Continental Hotel in downtown HCMC. The event was organized by Sao Khue Investment and Trade Promotion Organization, the Macau Trade and Investment Promotion Institute (IPIM) and the Industry and Commerce Association of Macau.

Besides working with the Chamber of Commerce and Industry of Vietnam in HCMC and the HCMC Department of Culture, Sport and Tourism, the delegation met some 40 local companies such as CT Group, Tan Tao Group, Tuan Chau Group, Cotecland, GIICO and Nam Long Group for future cooperation.

The organizer said some 20 property projects were introduced to Macau companies during their five-day visit to HCMC.

For example, GIICO International Investment Corporation brought to the business matching event some tourism property projects underway across the country, including the Venus Cat Ba – Halong International Resort Complex.

Ha Manh Dung, chief executive officer of the corporation, told the Daily that he hoped that Macau partners would be interested in the company’s projects including a casino development in its Venus Cat Ba project.

Joseph Lo, managing vice president of the Industry and Commerce Association of Macau, said the first visit was just a starting point for future business for Macau investors to get a general idea of the investment environment, policies and potentials in Vietnam.

He said after the trip a report would be made to introduce potential investments in Vietnam to Macau companies in the coming time.

During the Vietnam visit, the Macau delegation also had a working session with C.T Group to sound out opportunities for cooperation.

The meeting was the first step to pave the way for future cooperation between Macau enterprises and C.T Group, a property developer and distributor of high-end fashion and cosmetic brands.

Jackson Chang, chairman of Macao Trade and Investment Promotion Institute, appraised potentials for cooperation with C.T Group.

The HCMC-based C.T Group, established in 1992, has 36 members active in real estate, financial investment, high-end retail, cuisine, entertainment, education, healthcare, construction, natural resources, tourism, and import-export among others.