Better Work Vietnam expands to northern region

The Better Work Vietnam programme in the apparel industry was launched in Hanoi on March 19, expanding its scope to the north and footwear sector of Vietnam.

Jointly organised by the International Labour Organisation (ILO), the International Finance Corporation (IFC) and the Ministry of Labour, Invalids and Social Affairs, the programme aims to enhance the operation efficiency and competitiveness of export enterprises.

As part of the Better Work Global programme, it plays an important role in connecting the interests of the private sector and the observation of Vietnam ’s law and basic international labour standards through training services and assessments.

After proving its efficiency in the south, in the 2014-2019 period, the programme will expand to Hanoi and surrounding localities by giving support to businesses in both apparel and footwear industries.

Addressing the launching ceremony, Deputy Minister Pham Minh Huan said he expects the programme will help improve working conditions and create better and more stable jobs for Vietnamese labourers.

He praised the independence, professional operation and prestige of the programme as well as its partners.

Meanwhile, Gyorgy Sziraczki, Director of ILO in Vietnam , said the programme can assist Vietnam in maintaining and promoting its role as one of the hottest destinations for garment and textile customers.

Vietnam can make itself different in the international market based on not only low-cost labour but also on improved working conditions and productivity, he said.

Since its launch in 2009, the Better Work Vietnam programme has reached nearly 300,000 workers in more than 200 factories in the south, equivalent to one-fourth of the total apparel manufacturers in the country.

More than 50 international firms have also registered to join the programme.

New Japanese-funded plant built in Vinh Phuc

The construction of a bike and automobile spare parts manufacturing plant was kick-started in the northern province of Vinh Phuc on March 19.

The 5-million-USD project, the second of its kind funded by Japanese investors, is being built at Ba Thien 2 industrial park in Binh Xuyen district with a modern and environmentally friendly assembly line.

It is expected to be put into operation in August and generate jobs for hundreds of workers.

According to Director of the Vietnam-based Suzukaku Co.,Ltd Suzuki Kakunori, his company will be responsible for constructing new plants in Vietnam and help the country enhance its competiveness against those facilities built in Japan and the US, contributing to the company’s development.

Vice Chairman of the provincial People’s Committee Ha Hoa Binh said his locality will create the optimal conditions for Suzukaku to promptly deal with difficulties during the process of carrying out the project.

He expressed his hope that the company will harness all its resources to ensure the progress and quality of the plant.

Japan is running 21 investment projects in Vinh Phuc province which is appealing for more money into expanding and promoting the bike, automobile and support industry.-

Vietnam focuses on saving, effective energy use

Vietnam has invested in tapping alternative energy sources and developing nuclear electricity to reduce the nation’s dependence on fossil fuels to ensure energy security and sustainable development, a top official has confirmed.

Deputy Minister of Industry and Trade Cao Quoc Hung highlighted the policy at a Vietnam-Norway workshop on hydro-power and electricity market reform in Hanoi on March 19.

According to Hung, the country is also using its energy more effectively and has embraced the application of low-carbon emission technology.

However, he admitted that challenges exist relating to the management and operation of hydro-power plants. Particularly, terraced plants built on rivers are struggling to meet their targets for power generation, irrigation for agricultural production, flood regulation while ensuring environmental safety.

In addition, the ministry also needs to learn from foreign experience in developing a competitive national electricity market by 2020, he added.

Monica Maeland, Norwegian Minister of Trade and Industry, said Norway is able to share its experience in the field.

Per Christer Lund, an electricity industry consultant based in Singapore, said that the electricity market needs more participants and more balance to be truly effective, because Vietnam already has a competitive power generation market and links to the retail sale marketplace.

He suggested Vietnam connect with other regional countries to address the issue because hydro-electricity is still a major power generation source.

According to the Ministry of Industry and Trade, Vietnam’s energy consumption was 57 million tonnes of equivalent oil in 2013 and is forecast to increase by seven percent a year during the 2010-20 period and five percent for the decade after.

In its electricity development planning for 2011-2020 with a vision to 2030, Vietnam continues to prioritise the development of hydro-power, bringing total hydro-electricity production to 21,300MW in 2020 from the current level of 14,000MW.

Binh Duong holds customs dialogue with Japanese firms

A total of 100 Japanese firms operating in the southern province of Binh Duong were told about issues regarding tax policies and export-import procedures at a dialogue on March 19.

At the event, Binh Duong customs officials clarified the procedure of the Japan-funded Vietnam Automated Cargo and Port Consolidated System and the Vietnam Customs Information System (VNACCS/VCIS).

Most of the Japanese businesspeople raised concerns regarding the use of on-site export invoices and the inspection of import quality.

Regarding on-the-spot export-import inspections, Nguyen Hong Hanh, deputy head of the Binh Duong provincial customs department, said businesses have to submit invoice copies only to the customs office when necessary.

They are permitted to bring special goods such as vaccines, medicines, health equipment, cattle feed and fertilisers to their headquarters for quality checking under the supervision of customs officials, he said.

Binh Duong has attracted more than 17,400 projects, of which 2,250 are foreign direct investment (FDI) ones worth a total of nearly 20 billion USD.

With 204 projects valued at over 4.3 billion USD, Japan has become the largest investor in the locality.-

ADB warns of risks for Asian bond markets

The Asian Development Bank (ADB) said emerging East Asia’s local currency bond markets have weathered the recent market volatility well but risks to the markets are ticking up and countries need to be prepared.

The Manila-based financial institution gave out the warning in its latest Asia Bond Monitor released on March 20.

"Good economic data so far this year, attractive yields, and a recovery in some currencies mean Asia is still the best place to invest, but the threat of contagion is certainly higher than it was,” Head of ADB’s Office of Regional Economic Integration Iwan J. Azis said in a press release.

To avoid being caught up in a general emerging market backlash from a crisis in one or two economies, Asia’s governments should implement structural reforms to strengthen the resilience of their economies and promote productivity growth, the report said.

Contagion risk is highest for countries with large current account deficits and low foreign exchange reserves, while borrowers with high levels of foreign currency debt are most vulnerable if currencies depreciate.

According to ADB, local currency bonds in emerging East Asia largely held steady in the fourth quarter of 2013 as turmoil dogged other emerging markets, although yields on most government bonds rose in January, most notably in Indonesia and the Philippines. As the US reduces its purchases of US Treasury bonds in coming months, global market uncertainty is likely to continue.

That said, foreign bond holdings of the region’s local currency government bonds held steady in the final three months of 2013 given the region’s solid economic outlook and the attractive yield pickup versus other markets. Indonesia had the highest foreign ownership at the end of 2013 with offshore investors holding 32.5% of outstanding government bonds, followed by Malaysia at 29.4%.

ADB defines emerging East Asia as China, Hong Kong, Indonesia, Republic of Korea, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam.

The region’s bond markets continued to expand in size. By the end of the year, the region had 7.4 trillion USD in outstanding bonds, 2.4% more than at the end of September 2013 and 11.7% more than at the end of 2012.

ADB said Vietnam’s market expanded the fastest on a quarterly basis – up 14.8% - while Indonesia posted the highest annual growth rate at 20.1%.

While governments have tended to issue local rather than foreign-currency bonds in recent years, many companies, such as real estate firms in China, have been taking advantage of strong demand to issue US dollar-denominated bonds.

In 2013, the region sold a record 141.5 billion USD of bonds denominated in US dollars, yen, and euros, of which 128.4 billion USD were issued by the region’s companies. Depreciation in home currencies would mean higher debt servicing costs at a time when the domestic economy is also likely to be weaker. Gross local currency bond issuance by corporates last year was 765.6 billion USD.

Emerging East Asia’s sales of sukuk, or Islamic bonds, remained strong at 91.7 billion USD last year, led by Malaysia and Indonesia. A special section in the monitor notes that sukuk have great potential as a source of financing for infrastructure projects but that governments need to put in place a suitable regulatory framework to encourage borrowers to use them more often.

Forum offers information security update

Chief security officers, chief information officers, and information technology professionals are attending the Security World 2014 Conference & Exhibition in Ha Noi to discuss and share information security initiatives.

Speaking at the opening ceremony on Tuesday, Nguyen Tat Loi, the director of IT Department from the General Department of Technology & Logistics under the Ministry of Public Security, stated that the annual event will offer updates to governmental agencies, businesses, and organisations on the latest technology trends and practical solutions.

According to the Trend Micro report, during the second and third quarter of last year, Viet Nam ranked first in the list of countries affected by online banking frauds. Security risks loom large over mobile device users, as the number of malicious and high-risk apps targeting the Android platform reached the one-million mark in September 2013. Viet Nam ranked third in the list of top countries impacted by malicious Android app volumes.

A recent report by IDC in January 2014 forecast that information technology spending in the Vietnamese market will see a growth rate of 15.5 per cent, and the total market revenue is expected to reach US$13.05 billion in 2014.

Anthony Lim, a member of the Application Security Advisory Board for ISC, the largest non-profit membership body of certified information and software security professionals worldwide, remarked that the internet is useful and entertaining, but it was also a dangerous place with no laws.

He emphasised that free public Wifi could pose a danger to the users and suggested employees not to casually click on links and stay abreast with the latest changes in the social media.

"Please make sure that no one uses 1234 or abcd as passwords. When you log onto any site, please check if it is a valid one," Lim pointed out.

Currently, people access data from different devices, such as computers and smartphones. Lim added that enterprises should build a security culture by ensuring that the staff members do not create multiple copies of confidential documents.

He stressed that computer security was not only about technology, but also encompassed human and policy components.

Concurring with Lim's idea, Ngo Viet Khoi, the country manager of Trend Micro Vietnam & Cambodia cited the example of users clicking on a link showing the position of the missing Malaysian Airlines MH370.

"When the users click on share, they will download malware. It is about social engineering, like Lim referred before," Khoi stated.

According to Khoi, hackers now focus on carrying out advanced persistent attacks that intend to penetrate targeted firms and organisations using several methods, such as emails with malicious programme attachments or exploiting vulnerable users in order to steal information or hijack computers communicating with external parties.

"Many firms feel safe with anti-virus software installed on their devices, but they are wrong. In the past, everyone used Windows Explorer to surf websites and compose documents on Microsoft Office. However, currently, there are several choices and risk management cannot be fully achieved," he asserted.

Security World has been held in Viet Nam for the past eight consecutive years since 2007. The event is co-organised by the General Department of Logistics & Technology under the Ministry of Public Security, Viet Nam Computer Emergency Response Team under the Ministry of Information and Communications, and International Data Group (IDG) under the endorsement of Ministry of Public Security.

Vietnam, Germany discuss science-technology cooperation

More than 100 Vietnamese and German scientists gathered at a conference in Hanoi on March 19 to look at ways to enhance bilateral cooperation in science and technology through a number of joint research projects.

Participants discussed water and environment issues, and their international cooperation programme to protect climate and environment by sustainable technology and services.

Key projects such as textile dyeing wastewater treatment, online urban traffic monitoring systems, and strategies for industrial sewage management were also put on the table.

The conference heard that the sewage discharged from the textile industry amounts to 25-30 million cubic meters annually, yet only 20 percent of which is treated.

Experts from the project had met with over 70 Vietnamese companies operating in the fields of dyeing, food, medicine, hospital, and hotel to introduce the latest technologies in treating industrial waste.

Andreas Suthof from the Department of International Relations and European Studies under the Asian Management Institute called for creative solutions and close collaboration between governmental offices and organisations to effectively carry out the joint projects between Vietnam and Germany.-

Bong Mieu Gold plant likely to reopen next month

After typhoons and flooding caused major landslides and destroyed roads to the site of Bong Mieu Gold Mining Company (BMGMC), one of two joint ventures of Besra Vietnam, the company suspended operations for repairs.

The company partnered with the 6666 Industrial Minerals Group Joint Stock Company to fix the roads from from the plant to the Nui Kem mine. The repairs have since been completed and are in use.

However, the mine remains flooded and work is underway to reopen it.

“Dewatering is now being implemented and is expected to be completed within 4-6 weeks. Immediately after dewatering is completed, Bong Mieu gold plant will resume operations,” said the company’s statement.

To ensure safety during the temporary closure, the company has cooperated with local authorities and partners to prevent illegal gold mining in the area. Specifically, regulations to ensure safety in Tam Lanh commune were signed between parties including the Phu Ninh Police Department, the Tam Lanh People’s Committee, BMGMC and the 6666 company.

JICA funds four key infrastructure projects

The Japanese Government has agreed to provide JPY86.4 billion (US$851.5 million) in official development assistance to help Vietnam implement four infrastructure projects.

A contract to this effect was signed in Tokyo yesterday between the Japan International Co-operation Agency (JICA) and representatives from the Vietnamese Government.

The four projects are the Da Nang–Quang Ngai Highway project, to which JPY30 billion has been allocated, the Ho Chi Minh City–Dau Giay Highway project (JPY18.4 billion), the Lach Huyen Port construction project (JPY21 billion) and the Tan Vu–Lach Huyen Road project (JPY16.9 billion).

The Da Nang–Quang Ngai Highway, part of the North–South Highway project, is one of the Central Region’s arterial routes, connecting Vietnam with the East–West Economic Corridor. The highway is scheduled to open in July 2017.

The expansion of the Ho Chi Minh City–Dau Giay Highway, another portion of the North–South Highway, is expected to improve traffic efficiency in the south by connecting industrial zones to the region’s airports and seaports. The project will be completed in July 2016.

Lach Huyen Port, located in the eastern part of Hai Phong, is to be a deep-water port capable of receiving vessels with high tonnage ratings. The port is expected to be put into operation in December 2017.

The Tan Vu–Lach Huyen Road will connect developing areas in eastern Hai Phong with the Dinh Vu industrial zone and the Hanoi–Hai Phong Highway when it opens to traffic in early 2017.

Fish processors anxious about tariff review stateside

Tra fish export processors are looking at the ninth Period of Administrative Review (POR9) of anti-dumping tariffs stateside because these will have a profound impact on their revenues.

The U.S. Department of Commerce (DOC) will announce POR9 within the last five days this March, said lawyers working on the pangasius anti-dumping case.

Nguyen Van Ky, CEO of An Giang Fisheries Import Export Joint Stock Company (Agifish), said many exporters of tra fish are more concerned about POR9 than the U.S. Department of Agriculture’s Farm Bill passed this year because the bill will not officially take effect until next year.

In the preliminary POR9 issued last September, the anti-dumping tariffs imposed on frozen tra fillets exported to the U.S. nearly doubled those in the previous review. Particularly, the tax imposed on products of Hung Vuong Corporation (HVC) and Vinh Hoan Corporation (VHC) was US$2.15 and US$0.42 a kilo, while other exporters had tax sums of US$0.99 a kilo.

In their 2013 reports released this March, many listed firms exporting tra fish to the U.S. market still saw the anti-dumping tax amounts as payables.

VHC, one of the Vietnam’s two biggest exporters of tra fish, was subject to US$0.19 per kilo under the POR8 announced by DOC. However, this listed firm’s profit will likely be hugely affected this year if higher tariffs are imposed after POR9.

A number of exporters have spent much money hiring attorneys to protect them against the troublesome tariffs. It took HVC nearly VND43 million on a lawsuit in 2013 while the company did not spend any in the previous year. Also, VHC in 2012 had spent VND5.1 billion on legal services.

Statistics of the Vietnam Association of Seafood Exporters and Producers (VASEP) show that Vietnam’s tra fish exports were valued at US$1.8 billion last year compared with US$1.74 billion in 2012. The U.S. and EU markets accounted for more than half of the country’s total exports.

Power demand surges in south

While Vietnam Electricity Group (EVN) has been running most power plants at full capacity, power demand in the southern region keeps soaring given hot weather with consumption on Monday hitting the highest level since early this year.

Pham Minh Luong, managing director of the Southern Load Dispatch Center, told the Daily on March 18 that total power consumption in the south reached 210 million kWh on Monday, or one million kWh higher than early last week.

Power demand is expected to rise further in the coming days. Currently, EVN has to run O Mon and Ca Mau diesel-fueled power plants due to a gas supply shortfall prompted by a leakage of the gas pipeline PM3 last Saturday, he said.

Backup power supply in the region remains low at the moment. Therefore, demand-supply imbalance may occur in some occasions this year, according to EVN Southern Power Corporation.

In a statement released on Monday, EVN said it is spending an extra sum of around VND70 billion each day running diesel-fired power plants as the leakage has disrupted gas supply for Ca Mau power plants since late last week.

Pham Quoc Bao, deputy general director of HCMC Power Corporation, told the Daily that power consumption in the city alone hit 57.8 million kWh on Monday, the highest since early this year, with maximum generation output of nearly 3,000 MW.

Though the city has yet to see a power shortage, demand is expected to increase in the future as residents are increasingly using air-cons and other cooling devices due to hot weather. Output is expected to reach the maximum level of 3,400 MW a day, higher than in the dry season last year, at 3,050 MW, Bao said.

EVN Southern Power Corporation said only two generators of Vinh Tan 2 coal-run thermal plant will be put into operation this year with a capacity of 1,200 MW, so there will be tension in power supply in the region. Demand is estimated to reach its peak between March and June with consumption rising by around 15%.

Meanwhile, electricity grids in neighboring provinces such as Binh Duong, Ba Ria-Vung Tau, Dong Nai and Long An provinces are running at full capacity. Construction of some 220 kV stations such as Nhon Trach, Phu My 2, Vung Tau, My Xuan, Tay Ninh, Ham Tan and Duc Hoa have also fallen behind schedule.

However, unlike the dry season in 2013, some cement and steel enterprises have yet to report power shortages for production so far.

SOE leaders forced to speed up equitization

Chairmen and CEOs of 29 State-owned enterprises (SOEs) in HCMC will be disciplined or even dismissed if they fail to let their entities go public by end-2015.

Leaders of these 29 SOEs on March 13 signed pledges to get their equitization plans moving on schedule; otherwise, they will face disciplinary measures. Leaders of HCMC’s government and departments witnessed the signing.

Doan Tuong Thuy, chairman of Specialist & Labor Export Service Co. Ltd. (Suleco), said he would accept any disciplinary measures if he failed to have Suleco equitized before December this year.

Tran Thi Thanh Nhan, chairwoman of Cho Lon Investment and Import-Export Co. Ltd., or Cholimex, said Cholimex leaders would be certainly held responsible if the enterprise did not go public before December next year.

Cholimex pledged to launch an initial public offering in September 2015 and finish equitization at the end of next year.

However, Cholimex general director Dao Xuan Duc told the Daily that a huge volume of shares would be launched onto the market as 432 enterprises would go public in the 2014-2015 period.

Meanwhile, buying power on the stock market is limited. Many large enterprises will go public during the period, fueling competition among issuing businesses to attract investors, Duc said.

HCMC vice chairman Le Manh Ha said the city did not attain the equitization target for nine SOEs last year due to delays in property handover or signing of contracts with consultants. Some enterprises were found to infringe regulations on labor, wage and leadership reshuffle.

The city has set a target of equitizing 31 SOEs in 2014-2015. However, two enterprises are seeking approval to implement their equitization plans later than 2015 while the remaining 29 will have to get equitization done prior to December 2015.

The entities to go public include popular brands such as Saigon Jewelry Holding Company (SJC), Saigon Cultural Products Co., Saigon 5 Garment Co., HCMC Housing Development and Trading Co., Benthanh Tourist Co., Gia Dinh Garment & Textile Company, and Saigon Hi-Tech Park Development Company.

Fruit exports off to good start

Vietnam exported US$136 million worth of fruits in the first two months of the year, or up 22% year-on-year, paving the way for the country to realize the 2014 target at US$1.2 billion, said the fruit association.

Nguyen Van Ky, general secretary of the Vietnam Fruit and Vegetables Association (Vinafruit), said that main export items are fresh fruits such as dragon fruit, grapefruit, and mango as well as some canned and frozen fruits.

Local fruits have found wide path to some choosy markets including the U.S., Japan and Korea, he said.

Home-grown fruits have been mostly shipped to Asian markets. In the year to date, China has been taking the lead in importing fruits from Vietnam, followed by Japan, the U.S., Thailand and Malaysia.

In late 2013, Vietnam and Taiwan finalized procedures for Vietnam’s dragon fruit to enter Taiwan. Within the first quarter of this year, this kind of fruit would be also sold to New Zealand.

The U.S. is also a highly potential market for Vietnam’s fruits. Beside longan and litchi approaching the U.S. market, Vietnam has been discussing exports of mango and star-apples to this market too.

Vinafruit predicts that vegetable and fruit exports can reach U.S$1.2 billion this year owing to the reopening of the EU market.

In 2013, Vietnam’s vegetable and fruit exports brought in US$1.04 billion, or US$200 million higher than the target set by the Ministry of Industry and Trade early that year.

Sugar firms boost exports to avoid local market glut

Local sugar producers are boosting exports to China in a move to avoid harsh competition with smuggled sugar from Thailand that is sold at lower prices in the domestic market, and also as a way to reduce the increasing inventory.

The Vietnam Sugar and Sugar Cane Association (VSSA) said that sugar prices of local companies are now around VND12,500 per kilo while early this month sugar smuggled from Thailand in the Mekong Delta was sold at VND11,500-11,600 per kilo.

The price of sugar shipped to China, meanwhile, is standing at VND13,100 per kilo.

Last year, around 400,000 tons of Thai sugar was brought illegally into Vietnam and VSSA predicted that this year, the figure is likely to be higher as Thailand is expected to reach a record sugar output with 11.3 million tons this year while its sugar prices are now on a downtrend.

According to VSSA, the amount of sugar smuggled from Thailand into Vietnam varies from time to time depending on how effectively the anti-smuggling force of Vietnam works.

This year, China is predicted to lack sugar for its domestic use and is expected to import 2.1 million tons.

Another reason for the local sugar firms to boost exports to China is the increasing sugar inventory at home.

By end-February, the sugar inventory in Vietnam had climbed to more than 514,000 tons, up around 100,000 tons over the same time last year.

Recently, VSSA has asked the Ministry of Industry and Trade to allow domestic firms to export around 300,000-400,000 tons of sugar to China this year after the Ministry had earlier set an export quota of 200,000 tons while pending data from the Ministry of Agriculture and Rural Development on sugar supply and demand at home.

Last month, the Ministry of Industry and Trade also officially set the quotas for imported sugar for this year at 77,200 tons compared to 73,500 tons of last year. The import is made under Vietnam’s commitments with the World Trade Organization.

The 77,200 tons of sugar, including both refined sugar and crude sugar, will be processed into refined sugar before being sold in the domestic market.

Fertiliser market to face stiff competition

The local fertiliser market will face intense competition this year due to oversupply and cheap fertilisers being imported from China, according to the Ministry of Agriculture and Rural Development.

The nation needs 11 million tonnes of fertiliser this year, 700,000 tonnes higher than last year, stated the ministry as reported by the VnEconomy newspaper.

Meanwhile, the local fertiliser demand is expected to reach 2.2 million tonnes of urea fertiliser, 900,000 tonnes of SA fertiliser, 960,000 tonnes of kali fertiliser, 900,000 tonnes of DAP fertiliser, and 4 million tonnes of NPK fertiliser. The domestic market's demand for phosphate fertiliser is expected to reach1.8 million tonnes.

The nation has 500 enterprises producing a total output of 8 million tonnes of fertiliser, thereby meeting 80 per cent of the domestic demand.

Supply of some major fertiliser products, such as urea, NPK, and phosphate, has met the domestic demand. Meanwhile, the urea fertiliser output has often increased against the local demand.

The national urea output is expected to exceed the local demand by 400,000 tonnes.

Oversupply of fertilisers has led to an average reduction of 17-20 per cent in the local selling price since the end of 2013 and even 30 per cent for some kinds of fertiliser, claimed the ministry.

Additionally, the domestic fertiliser market is also facing stiff competition due to cheap Chinese fertiliser imports, it noted. In February, Viet Nam imported 286,000 tonnes of fertiliser, worth US$98 million, including 9,000 tonnes of urea fertiliser and 147,000 tonnes of SA fertiliser.

Chinese fertiliser volume accounted for 31 per cent of the total fertiliser import value in February, the ministry added.

At the end of 2013, Viet Nam increased its import duty on urea fertiliser and DAP fertiliser products from zero to 3 per cent in order to limit the imports of those products, but China also cut its export duty to 2 per cent for its fertiliser products. As the Vietnamese tariff policy was not strong enough against the Chinese tariff policy, the Chinese fertiliser products exported to Viet Nam continued to increase. That situation has had a great impact on the local fertiliser market as well as local fertiliser traders.

According to the Viet Nam Fertiliser Association, the domestic fertiliser industry has experienced a growth in output, but lacks competitive ability. The industry still continues to use old production technology, while the world fertiliser industry uses many new technologies to reduce its production costs. For the long term, the local fertiliser factories will lose their market shares or even have to close if they do not adopt new production technologies.

The association asserted that the industry should restructure the local fertiliser market, and the traders should seek export markets. Meanwhile, the ministries and sectors should control the import of Chinese fertilisers at the border gates in order to stop trade fraud and the import of low-quality fertilisers. —

Local car-makers bemoan special consumption tax

The difference between the application of a special consumption tax on locally-assembled cars and imported cars is raising a debate between car-makers in Vietnam, the local authorities and car importers.

While local car-makers are up in arms over the proposed special consumption tax, car importers aren’t so concerned

Ho Manh Tuan, deputy general director of Honda Vietnam, said car-makers had just petitioned the Vietnam Automobile Manufacturers Association, the Ministry of Finance and the Ministry of Industry and Trade to change the application of a special consumer tax (SCT) on locally-assembled cars and imported cars.

Last month, car manufacturers in Vietnam also raised the concern at a meeting between the Vietnam Business Forum’s Automobile Working Group and relevant governmental bodies including the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Transport and the Ministry of Industry and Trade.

The concern was raised in a context where the Vietnamese government is revising its Special Consumer Tax Law for National Assembly approval within this year.

Currently, both locally-assembled cars and imported cars face an SCT rate ranging from 45 per to 60 per cent. But Tuan said the application of an identical SCT on locally-assembled and imported cars made local products less competitive.

According to local car-makers, the SCT on local cars integrates all the cost of production, insurance, freight, distribution investment, after-sales services and the car-maker’s profit margin. But the SCT on an imported car applies only to the imported price, excluding the distributor’s profit margin.

Gaurav Gupta, general director of GM Vietnam, who is also head of the Automotive Working Group of the Vietnam Business Forum – which is a biannual forum to bring together the business community to discuss matters of interest with the Vietnamese government - said the current application of the SCT was unfair to local car-makers as it widened the cost gap between local and imported cars.

Nguyen Anh Tuan, head of the Strategy Planning Division of Toyota Vietnam, estimated the price of a local car was 5 per cent higher than an imported alternative because of the different way the SCT was applied.

Although local car-makers have raised this concern for a long time, it seems likely their pleas remain ignored. In the latest draft of the revised Special Consumer Tax Law, the Ministry of Finance made no amendments to the issue. Local car producers are likely to continue to press their concerns in the run-up to the revised law being debated at the National Assembly.

If local car-makers are successful, the change could hurt car importers.

“The proposal [from local car-makers] is unexpected and would introduce an unfair advantage,” said Laurent Genet, general director of Automotive Asia Limited – the sole distributor of the Audi brand in Vietnam.

“Car importers support initiatives to make cars more affordable for Vietnamese customers. If this proposal was adopted we believe this would indicate that things are going in the opposite direction. We trust the Vietnamese authorities will continue with the fair application of the SCT,” said Genet.

He noted that Vietnam’s tax authorities were applying the SCT in a correct and fair way to both local and imported car players because the tax was imposed on the finished car value to the importer or distributor.

“That value includes all costs and profit margins – whether abroad or in Vietnam – required to deliver a finished car to the distributor for retail,” he said.

Gov't, trade unions to secure workers' rights

A new co-operation agenda agreed upon the Government and the Viet Nam General Confederation of Labour (VGCL) sets the protection of workers' rights and interests and improvment of their living conditions as key priorities for 2014, Prime Minister Nguyen Tan Dung said yesterday.

Speaking at a working session with confederation officials, Dung said the agreement should galvanise Party and State policies on improving the lives of workers through practical measures like providing housing and kindergarten facilities in industrial zones with large numbers of workers.

The Prime Minister praised the VGCL's close coordination with the Government on workers' rights, suggesting both sides could create secure and comfortable conditions for workers.

Dung also urged the two sides to work together to examine the implementation of recently-issued policies concerning workers. The PM also suggested that cooperation efforts could focus on publicising the State's laws and delivering campaigns to foster improved working conditions across the country.

During the session, Dung and ministry and sector representatives also acknowledged the VGCL's proposals on law enforcement.

The latest cooperation agenda follows successful joint efforts between the Government and the VGCL last year, which saw both sides collaborate on legal documents regarding workers' rights and benefits.

Numerous activities supporting poor workers and privileged policy beneficiaries were also launched by the confederation.

Foreign firms await ‘it’ factor

Clear incentives and better legal regulations would help Vietnam attract more foreign information technology firms.

While some major US IT firms such as IBM have embraced Vietnam, others remain sceptical that the market is sufficiently mature for their entry

Joseph Rhoden, director of US-based Redhat’s Global OEM Alliances, said his firm, one the leading providers of high-performance cloud software, virtualisation, storage and middleware technologies, had no business plans in Vietnam and instead Redhat was selling its products via IBM Vietnam.

“We need clear legal regulations on information technology (IT) development in markets like Vietnam before we can directly sell and produce our products there. We don’t want to take risks. Currently, we have offices in Singapore, India, China, Japan, South Korea, Australia and New Zealand,” Rhoden told VIR at Pulse 2014 – one of the world’s biggest premier cloud computing events hosted by IBM in late February in Las Vegas.

The event featured the participation of hundreds of leading IT companies, including IBM, Envision Enterprise Solutions, GenesisSolutions and Cohesive Information Solutions. Company reps told VIR that Vietnam could attract more foreign IT developers if it offered clear investment incentives and transparent legal regulations on IT development.

The Vietnamese government last November enacted Decree 154/2013/ND-CP on incentives for enterprises operating in concentrated IT parks. However, no guidance on how to implement the decree has yet been issued, making it difficult for local authorities to provide tax breaks.

Rajiv Daljeet, senior account executive of US’ GenesisSolutions, which offers enterprise asset management assessment solutions, said his company might ‘work in Vietnam’ depending on how the country’s legal framework developed.

“We need to understand what Vietnam needs to develop a sturdy IT industry. But what we need the most from a market like Vietnam is a free market without any subsidy from the state. A free market will enable equal competition,” he said.

Echoing this view, Matt Logsdon, executive vice president - sales and marketing of software producer US’ Cohesive Information Solutions, said the company had an office in Singapore which collected market information in other Southeast Asian markets.

“We’re exploring opportunities to invest in Vietnam as our products are yet to be sold there. However, we’d want the same preferences we enjoy in Singapore,” Logsdon said.

Ramana R, general manager sales of India’s Envision Enterprise Solutions Pvt Ltd offering asset accounting solutions, also said although Vietnam had great potential, “First and foremost we must conduct market surveys. There are big differences in culture, consumption and legal regulations on IT development between our country and Vietnam. Foreign investors would most importantly need transparency and good intellectual property right protection when they do business in any market.”

It seemed that IBM remained the most committed to investing in Vietnam.

“For 2014 and beyond, we have set a target of introducing additional new technologies to help local clients. Vietnam is one of the first countries that IBM has chosen for government, telco and banking solutions. We’re helping increase competitiveness and compliance with international industry standards,” said IBM Vietnam’s general director Tan Jee Toon.

IBM Vietnam has been working with Vietnam’s government and partners to support organisations, and banking, transportation and food industries as part of the IT giant’s ‘smarter planet’ projects to help businesses reduce investment and operational costs while protecting the environment.

Economic recovery remains fragile, experts say

Vietnam’s economy has seen signs of slight recovery but if structural weaknesses were not fixed in a timely manner, the path to full economic recovery would be blocked.

Speaking at a seminar on economic prospects and policy visions in 2014 in Hanoi on Thursday, Nguyen Duc Thanh, director of the Vietnam Center for Economic and Policy Research (VEPR), said the economy had recovered slightly since the fourth quarter of 2013.

Data showed industrial production bounced back in the first two months of this year while retail sales and services revenues have edged up. Consumer confidence has been strengthened and the stock market has advanced strongly with high liquidity.

If stimulus policies such as the VND30-trillion home loan program are maintained, capital will keep flowing into the stock market, he said.

However, Thanh said unemployment figures are not reliable though they increased steadily throughout 2013 and that the nation’s gross domestic product (GDP) growth figures are suspected of being exaggerated.

Le Quoc Phuong, deputy director of the Center for Industrial and Trade Information under the Ministry of Industry and Trade, said a trade surplus had mainly been contributed by the foreign direct investment (FDI) sector. Foreign reserves have inched up thanks to strong incoming remittances and interest rates have slid thanks to administrative decisions rather than market forces.

The real estate market is still sluggish despite the State’s intervention and bad debt remains a headache, Phuong commented.

Phuong predicted the economy would improve this year but only in short term.

Expert Luu Bich Ho said the economic restructuring process has lost steam. “Two years ago, we tried to gain big achievements for the 11th National Congress. Now, we are trying again for the next congress. But we have not solved internal problems to make changes for the long term,” he said.

The nation is still maintaining an old development model which relies heavily on state investments, so macroeconomic uncertainties may come back. Drastic measures should be taken to spur economic restructuring, Ho added.

Economic expert Pham Chi Lan said FDI capital is the only factor that can help boost economic growth. In addition, many domestic industrial sectors have been falling into the hands of foreign firms.

The number of enterprises going bust is rising. In February, over 4,800 firms stopped operations, raising the total to 13,800 in the first two months of this year, 60% higher than in 2013.

Confidence of active businesses is on the wane. This is really a worrying sign, Lan said.

Vietnam unlikely to stockpile rice this year: VFA

The Vietnam Food Association (VFA) will ask the Government not to stock rice this year as this practice will not work in buoying rice prices like in previous years due to Thailand unleashing its huge inventories, said the association chairman.

Truong Thanh Phong, who is attending a biotechnology conference organized by Singapore-based Croplife Asia, told the Daily on the event’s sidelines that Thailand’s rice stock is estimated at 15 million tons now and will increase to some 20 million tons this year.

Most rice importers in the world are now keeping an eye on Thailand’s move, and Vietnam’s rice stockpiling will not work, Phong said. That is to say local farmers cannot rely on the Government’s rice stockpiling scheme like in previous years, and prices will be driven by the market, he said.

Phong said that the rice stockpiling scheme had paid off in previous years, ensuring a profit margin for farmers. However, since 2012, this program has not proven effective.

Phong remarked that the global rice market will see a glut this year due to Thailand’s overwhelming supply.

“The Thai government ended its rice subsidy policy on February 28, and in order to have capital to pay farmers, Thailand will sell one million tons of rice from the government stock a month and about five million tons of rice from Thai farmers. This oversupply will pull the rice price down considerably,” he added.

Phong suggested that to help local rice farmers from losses, the Government should encourage rice traders to stock rice on their own and sell it upon good prices. In case of losses, the Government should compensate rice traders.

According to Phong, VFA has suggested that the Government approve the establishment of a supporting fund for rice traders and farmers. However, such a fund could only start operation next year at the earliest.

In a related development, the local rice trade has been stagnant lately, and rice prices have tumbled in recent days due to high productivity of the winter-spring rice crop being harvested.

In the Daily’s observations, most farmers in some provinces in the Mekong Delta region like Tien Giang, Long An and Dong Thap had enjoyed high profits thanks to the high price before March. However, the current situation is on the contrary, with the rice price dropping sharply.

Nguyen Van Tho, a rice trader at Ba Dac wholesale market in Tien Giang Province’s Cai Be District, said the domestic rice price has dropped almost on a daily basis.

“As far as I know, the average price of each 20-kilo bushel of unhusked rice has seen a drop of VND10,000 and the husked rice price has dropped by VND500-600 per kilo since early this month,” Tho said.

The price of fresh IR 50404 paddy in some areas in the Mekong Delta region fell to VND4,200-4,400 per kilogram on Thursday morning while a kilogram of fragrant rice OM 4900 was priced at VND4,500-4,600.

Animal feed production stands still

Animal feed production is expected to grind to a standstill this year as diseases have broken out while domestic meat consumption remains low.

Speaking at a conference of the rice industry in Hanoi City on Friday, Tran Ngoc Yen, director of Vietnam Market Analysis & Forecast Joint Stock Company, or AgroMonitor, said that industrial feed output increased only 1.2% to nearly 13.4 million tons in 2013. This was the lowest growth rate since 2011.

Of which, feed output for the fishery sector jumped nearly 20%, the strongest rise since 2008, while cattle and poultry feed output dropped 3%.

Explaining the figures, Yen said the seafood sector flourished in 2013 with export revenue hitting around US$6.7 billion, up 10% against 2012. In contrast, the local husbandry sector saw a decline with slumping pork prices, dragging down animal feed demand.

In 2014, the husbandry sector has yet to see signs of sustainable recovery as domestic consumption remains low. The strong rise in live cow imports has also threatened the industry.

Imports of Australian live cows sharply increased last year with import value surging by four times against 2012. Since June, 2013, the nation has imported around 3,000 to 4,000 live cows via Tan Cang-Cai Mep Port in Ba Ria-Vung Tau Province and 2,000 to 3,000 cows via Haiphong Port every month, Yen said.

Notably, the ratio of farming households using home-made feed has jumped strongly, especially in the South, due to falling material prices while feed prices have stayed unchanged. This has hurt market shares of animal feed producers.

According experts at the seminar, the husbandry and seafood sectors will face tough competition as the Trans-Pacific Partnership (TPP) is expected to be signed within this year. Therefore, feed production growth rate may grind to a standstill.

In fact, Vietnam has spent billions of U.S. dollars importing feed and raw materials for feed production in recent years. According to reports announced at the event, feed and material imports reached US$3 billion in 2013.

The Ministry of Industry and Trade estimates feed and material imports to rise by around 20% annually within the next two years.

Lee Swee Heng, general director of Wilmar Agro Vietnam Co. Ltd., told the Daily that the enterprise is using 100% domestic bran but has to import other materials such as corn, soybean and fish powder.

The nation consumes 12.5 million tons of feed each year but local material supply is modest. Therefore, related agencies should issue policies encouraging investment in feed production, reducing dependence on material imports, Lee said.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR