State leasing firm could sink in debts

An investment of nearly US$300 million to buy 77 ships for lease has left state-owned Agribank Leasing Company No 2, or ALC2, with a debt of $273 million from lessees.

Ten of its vessels are detained in foreign ports while some others remain docked for a long time.

One of them is Bien Nam, which ALC2 leased to Bien Nam Maritime Co for VND75.3 billion ($3.6 million). During a recent trip, the ship was detained in Indonesia’s Padang Port since the lessee had not paid docking fees.

Bien Nam Co owes ALC2 more than VND73 billion ($3.6 million) plus an interest of VND28 billion.

Seahome Sapphire, leased to Gia Hai Maritime Transporting Co for VND90 billion, is being detained in the Maldives for a similar reason.

The company owes ALC2 nearly VND110 billion.

Gia Hai Co charters another ALC2 ship, Seahome Shine, which is being held in Malaysia.

Gia Hai Co has little chance of clearing its debts to ALC2, which is also likely to lose the three vessels since they will be put on sale under maritime law.

Last year Trai Thien Co Ltd leased Trai thien 08, Trai Thien 68, Trai Thien 86, and Dong Thap 18 from ALC2 for tens of billions of dong.

But all four remain berthed for nearly a year in HCMC since Trai Thien has gone bankrupt.
Nguyen Tan Son, captain of Dong Thap 18, which is in bad shape with its whole deck covered in rust, said the ship had only made eight trips since last year.

The ship cost $3.4 million to build.

As for Trai Thien 68, captain Vu Thanh Van said its last trip was on May 21 and it had since been docked first in Can Tho and then in HCMC.

“The ship has, in fact, made only two trips to Malaysia and two domestic trips since being leased,” he said.

Trai Thien 08 and Trai Thien 86 are in no better condition with their sides rusting and machinery broken down.

Hoang Ngoc Tien, ALC2’s CEO, told Tuoi Tre that his customers had asked ALC2 for financial assistance to clear the debts, settle disputes, and bring the ships back.

ALC2 had sought State Bank of Vietnam permission for this but was rebuffed since its proposal to cover customers’ expenses “had no legal basis.”

“Therefore, even though we are willing to pay, we still cannot recover the ships,” he lamented.

The ships would be sold by the foreign maritime authorities, he said.

“We have given up.”

In 2007 ALC2 leased Nam A to Nam A Co and the ship was detained in Pakistan since the Vietnamese firm was sued by a US-based company for not paying for fuel.

The latter asked for $100,000 to release the ship and ALC2 had to put up $87,800.
“But we have yet to be repaid by Nam A Co,” Tien said.

ALC2 spent another VND10 billion to get Phuc Hai 5, which it leased to Hai Phong-based Phuc Hai Co last May, from Indonesia.

“The severely dilapidated ship is now docked in Hai Phong and our company has to pay a large sum as docking fees every day.

“And there seems no chance for us to get Phuc Hai Co to pay up.”

Vietnam, Russia boost trade, investment

A Vietnam-Russia business forum was held in Hanoi on Thursday to help the two countries’ businesses seek investment cooperation opportunities.

The forum drew the participation of representatives from more than 40 Russian businesses operating in biotechnology, pharmaceuticals, energy, machinery, oil and gas, metallurgy, mining and transport.

Speaking at the forum, Nikolay Kapustkin, Deputy Chief Representative of the Russia Trade Office in Vietnam, said that two-way trade between Vietnam and Russia reached US$2.45 billion in 2010, quadrupling the figure of ten years ago.

The two countries see great opportunities to boost bilateral trade and investment cooperation as they aim for $3 billion in two-way trade by 2012, he noted.

At present, Russia is home to nearly 20 Vietnamese projects with a total investment of $1.7 billion, he added.

According to Pham Thi Thu Hang, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI), despite continuous increases over the past years, two-way trade between Vietnam and Russia still fails to match the two countries’ potential and demand.

During the forum, a cooperative agreement between VCCI and Moscow Business Association was signed.

On the same day, a seminar aimed at boosting trade and investment exchanges between Vietnam and Russia was held in Ho Chi Minh City , coinciding with a visit by a business delegation from Russia ’s Tomsk region.

The delegation includes representatives from 18 companies operating in information technology, software production, medical equipment, pharmaceutical, chemical and garment sectors.

The Russian businesses expressed a wish to establish long-term business cooperation with Ho Chi Minh City and Vietnam .

Also on October 20, VCCI hosted a discussion with a delegation from Japan ’s Kochi prefecture Chamber of Commerce.

Floods force catfish plants to close down

Around 70 percent of all catfish processing plants in the Mekong Delta have been forced to shut down because of a severe raw material shortage caused by the ongoing floods.

In Dong Thap and An Giang provinces, which account for 60 percent of the total production of catfish in the delta, floods have prevented farmers from feeding the fish, while their ponds have also been contaminated, Saigon Tiep Thi newspaper reported.

Duong Ngoc Minh, Deputy Chairman of the Vietnam Association of Seafood Exporters and Processors, said catfish prices rose by VND5,000 a kg to VND27,500 (US$1.3) a kg since early this month, but there isn’t enough supply.

Meanwhile, increased raw material prices have driven many businesses to losses.

He said most businesses had contracted to sell the fish fillet at below $3 a kg, while the current figure is over $3.2 a kg.

Processors with low capacity have to close down for now while bigger ones have had cut production by 50 percent, he said.

“The shortage will not ease up until next June,” he said.

Power monopoly wants to hike prices, again

Vietnam's power supply has exceeded demand given soaring consumer prices and gross domestic product growth under pressure due to anti-inflation measures in recent months. After increasing prices by 15 percent in March, the Electricity of Vietnam Group (EVN) is seeking approval to increase power prices again as of next month.

Dao Van Hung, Chairman of the EVN Board of Directors, told Tuoi Tre that EVN had submitted its price adjustment proposal and the actual rate was still being considered by higher authorities.

Hung denied prices would be increased by another 13 percent as rumored.

Nguyen Binh Niem, member of the EVN Board of Directors, also denied the rumor and said such an increase would be unreasonable.

Meanwhile, a source told Tuoi Tre that EVN had submitted its plan to increase power prices by over 10 percent and that an increase of 11 percent was likely to be approved. If so, the new average power price will be VND1,360 (US$0.06) per kWh, up by 26 percent compared to the price last year and 9 percent compared to the current rate.

EVN had cited steep losses as the reason for these increases. EVN still owes PetroVietnam Gas and Vietnam National Coal and Mineral Industries Group more than VND10 trillion.

Niem said last year EVN also incurred a loss of VND8 trillion since it had to purchased oil-fired power at prices between VND3,000 and VND5,000 a kWh while it could only sell power at VND1,242 a kWh.

“EVN also suffered from another loss of dozens of billions of dong due to the forex rate adjustment and bank loans,” he said.

An EVN official said the price increase in March should have been 62 percent to enable EVN to cover all of its expenses.

But since the figure was only 15 percent, EVN has become financially unbalanced, he said.
Nguyen Duc Thang, head of the General Statistics Office’s Price Agency, said if power prices went up next month, the consumer price index would be affected.

He said prices of other items would also rise along with power prices increased, adding that it would be difficult to keep inflation this year at 18 percent.

Vo Van Duc Bay, deputy director of Cho Lon Plastic Co., said power cost for his production would be increased by VND39 million a month if power prices rose by 11 percent.

“This is not a small expense for businesses in this economic turbulence,” he said.

Southern hub’s inflation slows down

Ho Chi Minh City’s consumer price index (CPI) in October showed a slight increase of 0.18 percent over last month, according to the municipal Statistics Office.

The increase was lower than the CPI rise of 0.45 percent for October 2010, the office said.

This contributed to a rise of 14.69 percent from the beginning of this year and 18.55 percent for the same period of last year.

In the last two months, there has been a big price hike in the education sector (up 2.16 percent) because school fees rose between 0.42 percent and 7.13 percent depending on the grade.

This was followed by medicine and health services (up 1.11 percent); household appliances (up 1.1 percent) and catering services (up 0.06 percent).

But prices for houses, electricity, tap water, fuel and building materials went down by 0.8 percent, transport by 0.27 percent, post and telecom services by 0.4 percent, and other goods and services by 0.3 percent.

To help curb inflation, HCM City’s authorities require enterprises to supply 15,700 tonnes of rice for city markets during the coming Tet (Lunar New Year) festival.

Obstacles for developing pig farms in economic integration

Vietnam’s accession to the World Trade Organization (WTO) has promoted tough competition in the domestic meat market.

Swine production remains the key economic activity in both smallholders and big farms in Vietnam. Pig breeding farms in the Red River delta contribute about 20 percent to total meat production and have a big impact on markets thanks to the large production scale.

According to a recent survey jointly conducted by researchers Nguyen Thi Duong Nga and Pham Van Hung from the Hanoi University of Agriculture, pig farms in the Red River delta are often vulnerable to external conditions, the most significant being disease outbreaks and market fluctuations. Both of these contribute to higher cost and lower market prices for pork, resulting in weak competitiveness of domestic pig producers.

In 2012 the pork tariff will be reduced by 50 percent, so pig producers are likely to face tough competition from cheap imported meat. To sharpen competitiveness of pig farms, disease prevention and control should be emphasized, while ensuring sustainable supply of piglets by building breeding stations in selected areas, according to a survey presented at a recent international conference held in Hanoi on agriculture and food security in Asia.

Joined ASEAN in 1995 Vietnam has to follow a schedule for lowering regional tariffs through the common effective preferential tariff (CEPT), where Vietnam committed to reducing its tariff to 50 percent next year. The country’s commitment will impact pig producers who depend greatly on Vietnam’s competitive edge in pig production.

According to researchers, the Government plays an important role in facilitating and protecting pig producers through increasing management of imported meat, building alliances among farmers and relevant actors, and granting more incentives through macro policies.

During the 2001-2006 period, the total number of pig farms increased about 14 times, reaching 7,475 farms in 2006. Pig stocks of the country reached 27.6 million in 2009 and ranked fourth in the world after China, the US, and Brazil, according to recent statistics by the United Nations Food Association (FAO).

Currently, pork represents 73 percent of total meat consumption of Vietnamese diets, and the domestic demand continues to rise due to population growth and increasing consumer income. Therefore, the pig breeding sector is crucial for rural livelihoods as well as food markets in the country.

Since 2000, pig production on a larger scale has been encouraged and given due attention by the government. However, there remain snags in both production sales and marketing since further adjustment in tariffs for imported pork in 2012 will put pig farmers in fierce competition.

On average, in 2010 total farm income was estimated at VND231 million, of which pig production accounts for about 70 percent.

Three problems faced by pig farmers have been identified, including epidemics, market fluctuations, and land and credit constraints. About three-quarters of pig farm owners report that pig disease, mainly foot and mouth and diarrhea, have caused an average loss of 10 – 40 percent of pig farmers’ total revenues.

Farmers view market price fluctuations as one of the highest risks. Pig prices have fluctuated due to supply and demand conditions – which are both influenced by disease outbreaks and input prices. While pig prices do not show a strong increasing pattern, the cost of animal feed steadily rose by about 40 percent from 2008-2010.

Farmers also find it difficult to expand breeding area to ensure biological safety. Small housing areas means farmers can’t separate sick pigs from healthy ones during disease outbreaks.

Credit is also a persistent problem for many farmers, especially after disease outbreaks. To borrow from banks, land use-right certificate or valuables assets are required for deposit; furthermore, high interest rates lead to high costs, discouraging farmers to invest more in pig production.

To promote the sustainable development of pig farms, the link between producers, corporations, scientists and government should be strengthened so that farmers can be benefit from advanced technologies, preferential policies, and the most current market information.

A boost to Quang Binh – Nakhon Phnom

A visiting delegation from Thailand’s Nakhon Phnom province has worked with the central Quang Binh province’s People’s Committee on the possibility of boosting cooperation and investment between the two localities.

At the working session on October 19, both sides agreed to further promote cooperation in agriculture, tourism and trade.

Mayor of the Nakhon Phanom province proposed through a joint working party, accelerating bilateral cooperation. He announced that Friendship Bridge No 3 which connects Nakhon Phanom province in Thailand to Khammouane province in Laos and Quang Binh province in Vietnam will be inaugurated and open to traffic in November this year.

Quang Binh authorities presented a list of 27 priority projects on infrastructure construction, trade, tourism, industry, agriculture, health, culture and education that need investment capital.

Nakhon Phanom is Thailand’s gateway to three countries in Indochina. In the next five years, the province will focus on developing cross-border trade, tourism, agriculture and industry as well as training human resources and turning itself into a green, clean and beautiful centre.

Vietnam boosts cooperation with Finnish localities

The Vietnamese Government always supports its localities in their efforts to boost cooperation with cities and provinces of Finland for the benefit of traditional friendship and cooperation between the two countries.

Deputy Prime Minister Hoang Trung Hai made the remark while receiving a visiting delegation of mayors of Finnish cities and provinces in Hanoi on October 20.

Deputy PM Hai expressed his hope that Finnish regions would find Vietnamese partners to cooperate, especially in labour.

He also said he hoped that Finnish localities would increase the number of scholarships for Vietnamese students and create more favourable conditions for them to study in Finland.

The head of the delegation, Peltola Asko Antero, who is Mayor of South Ostrobothnia and President of the Council of Mayors of Finland, spoke highly of the Vietnamese Government’s efforts in economic development management in the face of global economic downturn.

He said that the delegation’s members, as mayors of Finnish localities, would create favourable conditions and encourage their enterprises to invest in Vietnam.

He informed the host that during the visit, which started on October 16, the delegation had worked with some ministries and agencies and visited Hanoi, Hai Phong and Quang Ninh to seek cooperative opportunities in trade, investment, education and training, and labour.

Clothing trade needs better service centres
 
Viet Nam's textile and garment businesses should develop their service centres, especially the industry's small- and medium-sized enterprises (SMEs), participants were informed at a workshop held in Ha Noi yesterday.

This workshop on Capacity Building for Service Centres to Develop SME Cluster was part of a 3 million-euro (US$4.28 million) development project funded by the Italian government and implemented by the United Nations Industrial Development Organisation (UNIDO) and the Enterprise Development Agency (EDA) under the Vietnamese Ministry of Planning and Investment.

The main objective of this project is to contribute to the sustainable development of Vietnamese SMEs: increasing their competitiveness, upgrading the quality of their products, and improving their access to international markets. A key approach for improving SME competitiveness was the establishment of industry clusters, strengthening connections between businesses in order to create an environment that facilitates innovation and sustainable development.

In a speech delivered at the event, Italian Ambassador to Viet Nam Lorenzo Angeloni said his government had paid attention to SME cluster development within UNIDO and believed SMEs had played an important role in the economy.

He said Viet Nam should attempt to build trademarks by studying the examples of foreign countries, adding that Italy would be a good partner for a middle-income country like Viet Nam.

EDA's deputy director cum national project director Nguyen Trong Hieu said the project had been implemented for nearly three years in Viet Nam, aiming to increase competitiveness and restructuring businesses.

"A service centre in the north would help textile and garment businesses meet export requirements," he said.

Patrick Gilabert, UNIDO representative in Viet Nam, agreed, adding that the centres would also meet the requirements of domestic firms for design, export promotion, and marketing information.

Enrico Ottolini, senior project advisor of International T&G Advisor, said service centres would provide testing, training, technology consultation and opportunities for applied research. They would focus on building competence and teaching the skills needed for sector development.

"The establishment of the centre is a result of public-private consensus between local and national stakeholders. The centre will have private soul but a public vision," he said.

He added that Viet Nam had strongly supported the decision to upgrade the Textile Research Institute (TRI) as one kind of centre that would offer a wide array of services, ranging from product design to export promotion to waste management and pollution control.

Statistics from Viet Nam T&G Industry showed that the country has employed nearly 2 million people, with direct labourers numbering around 1.1 million. It has about 4,000 enterprises with the State as a major shareholder, accounting for 77.5 per cent of the companies.

Export turnover this year was estimated to reach an average of $1 billion per month.

It also forecast that textile and garment production would move from East European countries to Asian ones in the next three to four years.

"It would be a good time for Indian, Bangladeshi, Pakistani, Vietnamese and Cambodian clothing manufacturers to expand production," he said.

He expected that the value of the testing market in Viet Nam would soon reach $20 million per year and have a market growth rate of 10 per cent per year.

"Lab equipment produced by Viet Nam's organisations were thought to be modern and accurate enough to provide reliable tests. Vietnamese technicians are able to perform their jobs effectively," he added.

Director of HCM City's Concetti Consultancy Centre Han Manh Tien said the centre must be able to interact with local companies and associations, providing customised consultations for the development of new projects.

Trade with Russians may hit $3b next year as doors keep opening
 
Bilateral relations between Viet Nam and Russia have developed significantly over the past few years, Viet Nam Chamber of Commerce and Industry (VCCI) General Secretary Pham Thi Thu Hang said at a business conference in the capital yesterday.

Two-way trade rose from US$300-400 million in the 1990s to $2.4 billion in 2010. Turnover was expected to reach $3 billion in 2012 and $10 billion in 2020, she said.

However, there was still room for developing the relatively modest two-way trade further, she said, adding that last year, Vietnamese exports to Russia accounted for merely 0.3 per cent of the country's total import turnover.

Hang said that she hoped yesterday's event, with the participation from over 100 businesses, would open a new page for bilateral co-operation based on commerce and investment.

Vietnamese enterprises have been paying increasing attention to the Russian market, said Pham Vu Hai, director of the Investment Promotion Centre-North Viet Nam under the Ministry of Planning and Investment.

Currently, Russia was Viet Nam's second largest outbound investment market after Laos. To date, Vietnamese companies have invested $1.67 billion in 18 projects in Russia. These projects mostly involved oil and gas, banking and trade.

Meanwhile, Russian companies have pumped $910 million into Viet Nam, helping the country rank 23rd among those investing in the Southeast Asian nation.

During the event, Russian enterprises expressed their hopes for accelerating co-operation with Vietnamese partners in biological technologies, oil and gas, mining, pharmaceuticals, machinery, energy and electronics.

Yesterday also witnessed a co-operation agreement inked between the Viet Nam Chamber of Commerce and Industry and the Moscow Entrepreneurs Association.

Under the agreement, the two sides would join hands in strengthening and expanding economic and commercial ties between Russian and Vietnamese companies.

They would also co-ordinate in organising business conferences as well as trade fairs and exhibitions in order to help firms better update each other with market information and business opportunities.

A delegation of 15 leading businesses from Russia also met with local businesspeople in HCM City yesterday to examine mutual investment opportunities.

They met with local businesspeople at a seminar organised by the VCCI's branch in HCM City in collaboration with the Russian Chamber of Commerce and Industry based in the country's Tomsk region.

Andrey Trubitsin, vice governor of the Tomsk region, which is one of four technology development economic areas in Russia, said Vietnamese businesses would be entitled to preferential taxes, including a 0 per cent transport tax for 10 years, 0 per cent property tax for 10 years, 0 per cent for imported customs and 0 per cent land tax for five years. The other tech-development areas include St. Petersburg, Moscow (Zelenograd administrative district), and the Dubna area around Moscow.

The visiting Russian businesses operate in various sectors, including information technology, health equipment, medicine, electricity cables, hi-tech, investment funds, oil and gas, software and biotechnology.

The Tomsk region has some of Russia's top universities and talented professionals, with the highest percentage of tertiary-level graduates. Many IT and scientific research companies are located there as well.

The region is one of Russia's top five in producing oil and gas, ranking first in fresh and mineral water supply and second in lignum fossil supply.

Work begins on hydro power dam in Ha Giang Province

Work began yesterday on building a dam across the Song Bac River for a hydropower plant in northern Ha Giang Province's Quang Binh District.

This marks an important step in the provision of electricity for the north-western region and the easing of the national power shortage.

The plant, financed by the Song Bac Hydroelectric Co, will consist of two turbines with a combined capacity of 42MW that will be able to generate more than 166 million kWh a year.

It is expected to become operational in two years' time, a year ahead of schedule.

The Japanese Sumitomo Mitsui Bank provided a loan of US$50 million for the project, about 80 per cent of the total investment needed.

Speaking at the launching ceremony, general director of the company, Do Van Binh, said the loan had been provided at low interest rates.

"Several hydroelectric projects have had difficulties getting loans due to the world economic downturn," Binh said.

He said the company used its own capital to do primary work and the bank had disbursed $30 million of the total.

Work on clearing the land for the VND1.29 trillion (US$64 million) project started in September last year. The first turbine is expected to be in operation by next October and the second by the end of 2012.

The plant, part of the Electricity Master Plan, was the first private project in Viet Nam funded by the Export and Investment Insurance Overseas Untied Loan Insurance Programme (NEXI-OULI).

Statistics from the Ministry of Industry and Trade show that Viet Nam has plans for about 890 small and medium-scale hydropower projects.

However, to date, only 100 projects have started generating power.

Delta firms look for HCM City partners

Effective co-operation between HCM City and the Mekong Delta can help the latter emerge as one of the most dynamic regions in the country, experts said yesterday.

Delegates attending the Mekong Delta Business Forum said closer ties between HCM City and the region would create more investment opportunities, expand consumption and improve human resources.

The Mekong Delta with its 14 localities (13 provinces and C?n Th City) and a population of 17 million is home to 44,000 enterprises. Some of these have become huge corporations, but most are small-scale enterprises with low competitiveness. The delta, therefore, was waiting for further investment and support from HCM City and other areas so that its resources could be exploited effectively, speakers said.

Nguyen Phong Quang, deputy head of the Southwest Steering Committee, said that HCM City and southwestern provinces needed to further promote co-operation to boost socio-economic development in the region.

The city had an important position in the socio-economic development of the country in general and the Mekong Delta in particular. It had the scientific and technological know-how, high quality human resources, experienced officials in business and large-scale enterprises that had the potential to invest in other provinces, Quang said.

At the same time, the Mekong Delta was also in great need for investment capital that could efficiently exploit its growth potentials, he added.

HCM City was also a large consumer market and gateway that could connect localities with other countries in the region and the world, Quang noted.

Pham Thanh Tuoi, chairman of the Ca Mau Province People's Committee, said that HCM City, with more than 190,000 enterprises, accounting for nearly one-third of the national total, could help the Mekong Delta by promoting increased enterprise-to-enteprise contacts.

For its part, HCM City had always looked to co-operate with Mekong Delta provinces, said Thai Van Re, head of the city's Department of Planning and Investment.

Over the past decades, the city had established bilateral co-operation with 13 provinces and city, he said.

"Multifaceted bilateral and multilateral co-operation with Mekong Delta provinces is something we have to establish now because it would generate huge benefits for participating localities," Re said.

From 2000 to June 2011, HCM City businesses had invested in 782 projects worth about VND198.68 trillion (US$9.5 billion) in the Mekong Delta. The areas of investment included agriculture, industry, trade, tourism, science, technology, health, education, information and culture, and transportation and environmental protection, Re said.

He called on local and foreign enterprises to continue investing and exploiting the strength and potential of the Mekong Delta region. In return, the delta should have preferential policies in place to attract outside investors, he said.

Quang said one of the difficulties in promoting increased co-operation between HCM City and the Mekong Delta provinces was that follow-up action after the signing of agreements was sluggish. Moreover, there was no set up that brought together the region under one umbrella in establishing co-operative ties with HCM City, he said.

At the same time, several transportation projects implemented in the delta recently had created favourable conditions for HCM City enterprises to expand their investments in the Mekong Delta he said.

The HCM City – Trung Luong Highway has been completed and put into use, shortening the time taken to transport goods and passengers from the city to southwestern provinces.

The opening of the Rach Mieu, My Thuan and Can Tho bridges has also facilitated the movement of goods and people between HCM City and the Delta.

When the HCM City-Can Tho Highway and the Vam Cong and Cao Lanh bridges open to traffic, it would further shorten travel time between the two localities and facilitate greater commerce, speakers said at the forum.

One area of co-operation that should receive more attention was human resources training, speakers said, noting that the delta had amble labour supply but not enough skilled labour.

Prestigious vocational training centers in the city should be encouraged to open more branches in the Mekong Delta provinces to serve the local population, the forum heard.

HCM City hosts retail market seminar

Vietnam remains one of the important corporate retail markets and can compete against other countries in the region during the next three years, according to a seminar in Ho Chi Minh City .

The Oct. 19 seminar on the current situation and future directions of Vietnam ’s retail sector in 2015 said that the development of the country’s retail system was being facilitated by the expansion of joint ventures between domestic and foreign businesses.

However, a recent survey revealed that the market share of Vietnam ’s corporate retail system remained smaller than that of other countries in the Asia-Pacific region and was not yet developed as strongly as Japanese, Indian and Indonesian markets.

The seminar also pointed out many challenges faced by the country’s retail market in maintaining stable growth in the remaining months of the year and in 2012.

Experts said promotions and discounts were effective measures for retailers to attract customers and increase their turnover.

Representatives from the Metro Cash and Carry chain emphasised the need for businesses to overcome challenges in the management of food hygiene safety and food supply as well as put forward solutions to assist farmers’ production activities.

At present, Vietnam has almost 1,000 supermarkets.

Footwear sector out of step

The local footwear industry faces missing its master plan targets due to capital distress.

In late 2010, the Ministry of Industry and Trade (MoIT) gave the go-ahead to Vietnam’s footwear industry master planning to 2020 with a vision towards 2025 which envisages around VND60 trillion ($2.9 billion) in total investment capital ($1.37 billion for 2011-2015 and $1.5 billion for 2016-2020). Around 43 per cent of the capital will be sourced locally and the remainder to be offset by foreign loans.

This giant sum will be injected into building tanning factories, material centres and specialised industrial parks. However, escalating inflation, extensive public investment cuts and declining foreign investment make sourcing this sum almost impossible.

The plan to raise capital for materialising master planning targets had flown into turbulence against the backdrop of a worsening global economy, said Lefaso deputy general secretary Nguyen Thi Tong.

Reality shows though the sector’s production was significantly boosted in the past years, its capacity relative to material production is nearly the same as this requires enormous investment which is beyond the scope of most local firms.

Meanwhile, foreign-invested firms are just interested in footgear production with lower investment and quicker yields.

Local materials could only meet around 40 per cent of the demand with a limited range of products such as shoe soles, fabrics, adhesives and some accessories whereas various kinds of shoe uppers were almost imported from Taiwan, South Korea or China.

Lefaso’s chairman Nguyen Huu Thuan assumed the sector’s development in the next five years would be heavily reliant on local tanning industry growth. However, the sector was yet to build a tannery.

Since materials represent 68-75 per cent of the sector’s total production cost, it holds a decisive role to the sector’s development.

Thuan said the footwear sector and businesses must come up with concrete investment projects and programmes in the coming period focusing on setting up central industrial clusters to lift competitiveness.

PV