Meat prices fall as epidemics fade, imports rise

Food prices have begun to fall after hitting record highs in June and July as supply has begun to increase.

Pig traders said supply has increased following a sharp fall in consumption last month when many people temporarily turned vegetarian.

Besides pig farms have recovered from the blue-ear pig disease outbreaks of last year.
Since farms in the northern region too have recovered from the disease, they no longer source pigs from the south.

In June the northern region had suffered a severe shortage since farms there were more severely affected by the epidemic than those in the south.

But since meat prices were much higher in the north, many southern traders dispatched large quantities of meat there, sending food prices in the southern region skyrocketing.

Food companies also attributed the current slump in pig and poultry prices to the steep rise in import of frozen meats.

While the average import in the first half of the year was only 4,000 tons a month, they said, in July and August it had shot up to 14,000 tons and 12,000 tons of frozen meats.

Trung, who runs a pig farm with 1,200 animals in the southern province of Dong Nai, said prices of pigs on the hoof dropped from VND56,000 (US$2.8) a kilogram to VND50,000 this week.

“Last week I decided not to sell my pigs until prices go up,” he said.

“But it turns out that I cannot sell them even at these falling prices.”

Pork prices also dropped by up to VND4,000 a kilogram.

Poultry prices slumped to below cost prices, selling for around VND31,000 a kilogram, while farmers said their costs came to VND36,000.

The falling prices are enabling food companies to prolong their promotions and enjoy better sales.

Van Duc Muoi, CEO of VISSAN Co Ltd, said the company’s price reduction could last for 10 more days, adding that pork sales had risen by 15 percent in the first half of this month.

ADB: policy tightening will lower inflation

ADB Headquarters, Metro ManilaThe Asian Development Bank (ADB) on Sept. 14, recommended that Vietnam continue to maintain its tightened policy in order to lower inflation.

In its Asian Development Outlook 2011 Update (ADO Update), the ADB said Resolution 11, a comprehensive policy package, has made good initial progress by helping the exchange rate to stabilize, allowing foreign reserves to be replenished, and lowering monthly inflation outcomes during June - August.

It was too early, however, for Vietnam to ease macroeconomic policies, as year-on-year headline inflation remained above 20 percent, the report said, adding premature easing could undermine macroeconomic stabilization efforts, erode business and consumer confidence in the dong, and renew downward pressure on foreign reserves.

The report forecast a slightly lower Vietnam growth outcome, from 6.1 percent to 5.8 percent for 2011, increasing to 6.5 percent in 2012. Inflation was projected to ease gradually to 18.7 percent, revised up primarily because of higher food prices, before moderating to 11.0 percent next year.

ADO Update commended efforts taken by the Government but observed that the market was receiving mixed signals on both monetary and fiscal policies that was undermining the effectiveness of the macroeconomic stabilization package.

"Investors and residents are likely to have more confidence in economic management if policies and policymaking are given greater clarity, consistency, and transparency," said Tomoyuki Kimura, ADB Country Director for Vietnam.

The ADB report said deteriorating bank credit quality remained a risk.

Macroeconomic tightening, after a period of rapid growth in credit, will have placed stresses on borrowers and banks. The Government needed to take concrete actions to safeguard the financial sector.

"Restoring macroeconomic stability is the immediate priority, but addressing root causes of high inflation requires greater efforts on structural reforms. These reforms include reducing bottlenecks in production and transportation, safeguarding the finance sector, increasing the efficiency of public investment, and imposing market discipline on large state-owned enterprises," said Kimura.

Vietnamese, German businesses boost cooperation

A seminar was held in Berlin on September 12 to help Vietnamese and German businesses to seek investment cooperation opportunities and partners.

The seminar, entitled “Vietnam Focus,” attracted 150 Vietnamese and German businesspeople from Berlin, Potsdam and the surrounding cities.

Speaking at the event, Vietnamese Ambassador to Germany Do Hoa Binh said the seminar was a marvelous opportunity for Germany businesses to understand more about potential investment opportunities in Vietnam.

He said that Vietnam always attaches importance to developing cooperation with Germany.

With its confidence in Germany’s capital sources, technology and high-quality education, Vietnam is actively cooperating with the European country to implement several projects, such as the Vietnam-Germany University and a project to build the second metro rail route in Ho Chi Minh City, he said.

Vietnam’s ongoing industrialization and modernization process has opened up new investment opportunities for German businesses, especially in infrastructure construction, hi-tech, renewable energy, health and environment, he said.

Participants at the event focused on discussing investment attraction policies and the business environment in Vietnam, as well as challenges and barriers to doing business in the Southeast Asian nation.

One of the activities during Asia-Pacific Week in Germany, the seminar was jointly held by the Vietnamese Embassy in Germany, the Berlin and Potsdam Chambers of Commerce and Industry, and the Germany-Vietnam Friendship Association.

4 foreign banks' branches to raise chartered capital

The State Bank of Vietnam (SBV) has given the green light to 4 foreign banks' branches in Ho Chi Minh City to scale up their chartered capitals.

They were the branches of Woori Bank, First Commercial Bank, Industrial Bank of Korea and JPMorgan Chase, N.A.

Woori Bank's branch is allowed to hike its chartered capital by 3.5 times from $15 million to $67 million.

First Commercial Bank's branch will hike its chartered capital from $15 million to $40 million, increasing over two-fold.

Industrial Bank of Korea's branch will increase its chartered capital from $15 million to $115 million, up 7-times.

JPMorgan Chase, N.A's branch will raise its chartered capital from $27 million to $77 million, an over 2-fold increase.

The central bank's governor asked these banks to carry out the chartered capital increase plan and commit to comply with SBV's Directive No.01 dated March 1, 2011 on controlling the credit growth till the end of this year at below 20 percent and the M2 growth at 15-16 percent together with suitable interest rates and forex rate.

Previously, Korea Exchange Bank's Hanoi branch was also approved to increase chartered capital from $15 million to $67 million, an over 3-fold increase.

HAGL boss ranked among most powerful in SE Asia

Doan Nguyen Duc, chairman and founder of Hoang Anh Gia Lai Group and a football club, is ranked 29th out of the 30 most influential executives and officials in Southeast Asia, according to Wall Street Journal.

In the “Southeast Asia Power List” issued Tuesday, the Wall Street Journal describes the 48-year-old Duc as one of the main players in Vietnam’s fast-growing economy.

Duc is heavily involved in rubber, furniture and hydropower. He also owns one of the country’s top football teams, the list said.

He was ranked the richest stock investor of Vietnam in 2008 and 2009, and the second richest last year. His total stock asset as of early this month is estimated at VND8 trillion (over US$390 million), while total assets of Hoang Anh Gia Lai group is more than VND23 trillion as of the second quarter this year.

Duc is also the first businessman to have a private jet in Vietnam since the end of war in 1975.

Upon receiving the news, Duc told newswire VnExpress that he was surprised and “did not believe that he is one of ASEAN’s top executives.”

“I have never made any contact with Wall Street Journal nor been informed of the poll,” he was quoted by VnExpress as saying.

Billionaires from Indonesia, Malaysia, Singapore and Thailand take most of the remaining places in the list while Aburizal Bakrie, chairman of the Indonesia’s largest coal producer Bumi Resources Group, takes the first position.

VND290 billion for roads to Tuyen Lam Lake

The Central Highlands province of Lam Dong will spend VND290 billion opening two roads connecting Tuyen Lam Lake to Dalat City and to National Highway 20, aiming to attract investments and tourists into this tourist site.

Truong Van Thu, vice chairman of the province, said investments in infrastructure projects would help accelerate tourism investments in Tuyen Lam Lake that is currently two years behind the schedule, partly caused by the stagnant economy and credit tightening.

Tuyen Lam tourist area is now having 38 ongoing tourism projects, but only four of which have put some services into use and 30% of these projects have been 40-50% completed.

The province had withdrawn investment licenses of some long-delayed projects, including some big ones covering an area of up to 30 or 50 hectares, and would transfer the land to new potential investors, Thu said.

“In addition to investing in infrastructure projects, we will also tighten control over tourism project progress. Some 80% of current projects are committed to be completed in 2015.”

According to a decision on the planning of Tuyen Lam tourist area until 2010 and a vision towards 2020, this 2,800-hectare area will consist of many components such as a villa resort covering 150 hectares, a 550-hectare luxury resort, a 346-hectare complex of entertainment and meeting spaces, a 1,100-hectare eco-tourism resort and many other works.
 
Cashew industry to experience three idle months

A large number of cashew export processors will be idle in the next three months due to a lack of raw cashew material, said the chairman of the Vietnam Cashew Association (Vinacas).

Nguyen Thai Hoc told a review meeting of the association to discuss measures to step up processing and exporting in the rest of the year in HCMC on Monday that the last batches of material will be delivered to processor this month and next while Vietnam’s new cashew crop can only be harvested early next year. Therefore, the cashew industry will have no material for processing for at least three months, said the Vinacas chairman.

According to statistics from Vinacas, Vietnam has over 200 cashew enterprises capable of processing around 800,000 tons a year compared to just 600,000 tons of material available this year, meaning many processors lacked material during pre-harvest months.

Vinacas standing vice chairman Nguyen Duc Thanh said that Vietnam planned to import 300,000 tons of cashews in 2011, a fall of 150,000 tons compared to the plan set at the beginning of the year.

Thanh, however, judged that it is an encouraging sign as the supply goes down because the price of cashew nuts will go up. Vietnam exported some 108,000 tons of cashew nuts worth US$858 million in the year to date, down 13% in quantity but up 25% in value against year on year.

Speaking with the Daily on the sidelines of the meeting, an exporter said that the price of cashew nuts for export averages out at US$10 a kilo at present but is expected to climb to US$12 a kilo thanks to the increasing consumption demand.

“As the demand for cashew nuts will be on the rise thanks to Christmas, New Year and lunar New Year holidays while the world’s cashew nut stocks have dwindled, those enterprises who can stock the products until then can make big bucks,” he added.

Due to the shortage of material, this year is predicted to see some 150,000 tons of exported cashew nuts, a year-on-year decrease of 48,000 tons. Therefore, banks should reschedule enterprises’ debt payments so that exporters can retain their products to wait for better prices, which is expected to bolster the export value to US$1.3-1.4 billion, up US$200-300 million against last year.

“Vinacas has sent a written document to the central bank and the Ministry of Agriculture to ask for debt repayment extension so that enterprises do not have to sell cashew nuts at a price lower than US$10 a kilo at the time,” Hoc said.

Lao newspaper highlights Vietnam’s investment

Since 1989, Vietnam’s investments in Laos have contributed to the remarkable growth of the Lao economy.

From 1993 to August 2011, Vietnam invested in more than 420 projects worth US$3.570 million in total of which Laos made up 6.6 percent. Vietnam’s investments are focused on banking, telecommunications, insurance, mineral exploration and reforestation.

Vientiane took the lead in attracting Vietnam’s projects with nearly US$1,900 million, followed by Xekong (US$350 million) and Champasak (US$248 million). From October to September 2011, Vietnam has had 50 investment project capitalized at US$246 million.

Vietnam plans to further support Laos in promoting training and education, generating jobs and reducing poverty.

HCM City woos Japanese trade investors

An official from the Investment and Trade Promotion Centre (ITPC) of Ho Chi Minh City has called on Japanese enterprises to pour their investment into the city, especially into trade and services.

Nguyen Anh Ngoc, ITPC Deputy Head, was speaking to about 150 delegates at a seminar co-organised by HCM City People’s Committee and the ASEAN-Japan Centre, in Tokyo on September 14.

Vietnam’s largest economic hub, HCM City is dubbed as a city of investment opportunities, Ngoc said, briefing Japanese investors on the city’s strengths and investment incentives.

Ngoc expressed hope that Japan will regain its position as the third-largest investor in the city, once it recovers from the devastating March 11 earthquake and tsunami.

Le Huu Quang Huy, Investment Counsellor of the Vietnamese Embassy in Japan, highlighted HCM City’s economic, geographic and market scale advantages, saying such advantages have helped the city take the lead nationwide in attracting foreign direct investment.

During the seminar, representatives from relevant HCM City agencies addressed concerns raised by Japanese companies regarding the city’s investment incentives.

During its stay in Japan, the Vietnamese delegation took part in the Vietnamese Festival, to promote HCM City’s image and attract more Japanese tourists to the city.

Son La prefers older markets

Residents in the north-western province of Son La do not just go to markets to shop. For them, markets are places for socialising, and through that process, maintaining their cultural traditions.

About 80 percent of the province is covered with mountains. Currently, about half of its 204 villages and wards have local markets, but only three meet standards outlined in the national programme to establish new rural areas.

Since 2005, the province has invested more than VND100 billion (US$4.7 million) in building, expanding and renovating markets, with priorities being given to rural markets and those in highland and mountainous areas.

Despite these efforts, many of the existing markets have not been properly managed, while local residents still have to rely on temporary and makeshift markets for daily demand.

Mua Thi My, a H'mong resident from the mountain village of Hang Dong who was visiting Ta Xua market, said the market was only open once a week, but it was always a special treat for locals. These highland markets provided alternative options for the residents in the area, otherwise they had to travel further to lowland markets in the district, she said.

Across the area of the Hoa Binh hydroelectric power plant, 14 markets are held occasionally, with most of the produce coming from Hoa Binh Province. They are usually set up in temporary outdoor locations.

In 2000, Son La City People's Committee invested VND1 billion ($47,600) to build Chieng An market. Covering an area of 8,200 square metres, the market is as yet unoccupied.

According to local ward authorities, the area was previously used for farming. Giang Lac market, located on Hoang Quoc Viet Street in the city of Son La, was built three years ago, but is also unoccupied.

Meanwhile, at least 100 localities in Son La Province do not have markets. In addition, most rural markets do not meet basic standards, such as adequate lighting and waste-water treatment systems, fire safety standards, or environmental regulations.

The province is making efforts to designate areas and develop the rural market network alongside the process to establish new rural areas, in addition to encouraging private sectors to invest in these markets. By 2015, the province aims to have at least one rural market within the radius of 4.5 kilometres or 5,000 residents.

In the period 2011-15, Son La Province will start the construction of 96 markets, revamping 15 others, with a total budget of VND120 billion ($5.7 million).

Vu Xuan Quyet, head of the trade management under the Son La Department of Industry and Trade, said building a rural trading network was critical in the process of establishing new rural areas. But it's not necessary to have one market for each village, he said.

All localities had to prioritise on resources, define locations and establish guidelines for building new rural markets that closely follow other standards outlined in the process to build new rural areas, he added.

Da Nang chosen for low-carbon city project

APEC energy and transport ministers have selected Vietnam’s Da Nang city, together with Thailand’s Koh Samui and Peru’s San Borja, for a green model city project.

The project is aimed at reducing CO2 emissions from public transportation and households business by using environmental technologies. It also aims to promote the use of solar, wind and other renewable energies more effectively by introducing smart-grid technology.

As scheduled, the APEC ministers will finalise the decision in October. Last year, APEC designated Tianjin, China, as its first low-carbon model city project.

Deputy PM praises World Bank support

The Vietnamese Government has praised the advice and support it has received from the World Bank to date, especially in terms of hunger elimination and poverty reduction.

Deputy Prime Minister Vu Van Ninh made the statement while receiving World Bank Viet Nam Country Director Victoria Kwakwa in Ha Noi yesterday.

Ninh thanked the World Bank for its co-operation and assistance, which has contributed to helping the country overcome difficulties caused by the world economic situation.

While the Government achieved various positive results, the country has still to overcome many challenges in the coming time, he said.

Short-term targets have been focused on curbing inflation, stabilising the macro-economy and stabilising social affairs.

Ninh expressed his wish that the WB would continue supporting Viet Nam in fields such as providing policy consultations to enhance macro-economic stabilisation, technical assistance in public debt management, particularly in terms of WB loans, and creating investment sources for developing essential infrastructure.

Kwakwa highlighted the co-operation between the Vietnamese Government and the WB in facilitating joint activities.

She affirmed that while Viet Nam had made excellent progress, the country still faced many medium and long-term obstacles.

The WB committed itself to continue helping Viet Nam in realising its targets and supplying assistance for purposes of economic and financial reform.

German businesses keen on investment environment in Vietnam

A seminar entitled “Focus Vietnam” has been held in Berlin to give German and Vietnamese businesses a chance to seek partners for business and investment cooperation.

The event was attended by 150 business people from German groups involved in different areas, including those operating in Vietnam and coming from Germany’s major cities such as Berlin, Potsdam, Frankfurt and Rostock.

In his speech at the seminar, Vietnamese ambassador to Germany, Do Hoa Binh, highlighted the seminar as an excellent opportunity for German businesses to gain a better understanding of the potential of the investment environment in Vietnam.

Vietnam and Germany have maintained a strong and healthy traditional relationship and Vietnam always attaches great importance to increasing cooperation with the European country.

Binh said that Vietnam is actively cooperating with Germany to carry out many projects and to exploit the areas of Germany’s strength, such as infrastructure development, high-technology, renewal energy and the environment.

During the seminar, many German entrepreneurs raised questions about the investment environment in Vietnam, incentives for foreign investors, business experiences and challenges in the country.

The event was part of the Asia Pacific Week in Berlin, organised by the Vietnamese Embassy in Germany, in collaboration with the Chamber of Commerce and Industry of Berlin and the Chamber of Commerce and Industry of Potsdam.

Ministry urges EVN not to raise rates more than once per quarter
 
Electricity of Viet Nam (EVN) should not be allowed to increase electricity rates more than once per quarter due to the negative impacts on the economy, said Minister of Finance Vuong Dinh Hue.

Hue has sent a document to Minister of Industry and Trade Vu Huy Hoang responding to Hoang's proposals on taxes, fees and prices for a number of commodities, including electricity.

In the document, Hue agreed in principle that electricity rates needed to increase to reflect actual costs, but the rate and timing of increases needed to depend on the economic situation. In the current economic situation, he said, EVN needed to co-ordinate with the ministries to establish a general plan for increasing electricity rates based on input costs, such as coal prices.

The plan should consider specific economic impacts on major industries from increase in electrical rates, Hue said.

EVN most recently sought Government approval to raise rates on September 8. The utility giant said it had suffered losses of VND2 trillion (US$96 million) this year, and cumulative losses over the last several years were preventing EVN from investing in new capacity – a situation that would lead to expected power shortages during 2013-15, said EVN deputy director Duong Quang Thanh.

It would need to invest another VND525 trillion ($25 billion) by 2015 to meet demand, but current estimates are that it would only be able to raise about half that amount, Thanh said.

Hue said EVN should report on the situation to relevant authorities, including the State Bank of Viet Nam, which could arrange special financing mechanisms.

Vietnam attends Siberia Economic Forum

The seventh Baikal Economic Forum was held in Irkutsk, Siberia, Russia on September 14, with a focus on the economic development of the Far East, Siberia and Russia.

Vietnamese ambassador to Russia Pham Xuan Son and representatives from the Vietnamese embassy in Russia attended the forum, with the aim of strengthening exchanges to promote Vietnam’s image and to implement diplomatic activities to aid the country’s economic development. Attendees also discussed forestry economy and the use of natural resources of forests as well as other topics in roundtable meetings.

Addressing the forum, the Vietnamese ambassador to Russia, said that Vietnam holds a strong, traditional relationship with Russia and is an active member of ASEAN. This is a positive factor to promote Russian-ASEAN cooperation in general, as well as in Russia and Vietnam in particular, for prosperity and peace both regionally and globally.

Rise in bad bank debt exposes economy

Bad debts in Viet Nam's commercial banking system rose to over 3 per cent of total outstanding loans on July 31, up from just over 2 per cent last year, the State Bank of Viet Nam announced in a report released yesterday.

However, the rate remains acceptable and under control, the central bank said, adding that bad debts could rise to as high as 5 per cent of total outstanding loans in a worst-case scenario.

Credit growth, or total outstanding loans, increased by 8.85 per cent in the first eight months of the year, the central bank said, well below its target of 15-18 per cent for the entire year.

Loans to businesses in manufacturing and other production sectors rose by nearly 14.8 per cent during the period, while loans in non-production sectors such as securities investment or real estate development declined by nearly 17 per cent from the same period in 2010.

Borrowers in the production sector enjoying long relationships with particular lenders were enjoying interest rates of 17-19 per cent per year, while rates for other sectors as high as 24 per cent per year, adding pressures to default.

"Mounting bad debt will be seen in the last quarter of this year because companies are exhausted from paying high interest costs," said a member of the National Consulting Council for Monetary Policy who asked to remain anonymous.

In a workshop with the World Bank in June, the council's vice chairman, Le Xuan Nghia, said that bad debts were a major concern because a large part of banks' capital had been lent to inefficient State-run enterprises.

An increasing rate of loan defaults could pose risks for the economy as a whole in the coming months, Nghia warned.

PV