Viettel provides network service in East Timor

Telemor, a brand of the telecom group Viettel, now provides network service to remote East Timor villages and hamlets after a year of building infrastructure.

A total of 320 2G and 3G base transceiver stations and 1,600km of fibre optic cable now link up 96 per cent of the local population. Telemor has developed an equipment distribution system with 2,500 outlets. The company has 400,000 customers, leading the country's telecom market. It expects to generate US$17 million in revenue and $4 million in net profit this year.

Thailand steps up VN tra fish imports

Thailand has become Viet Nam's leading tra fish export market in the ASEAN as of end-July 2014, according to the Viet Nam Association of Seafood Entrepreneurs (VASEP).

The association cited figures from the Viet Nam General Department of Customs showing that tra fish export turnover reached US$27.98 million, representing a 40-per cent increase over that of the same period last year.

Viet Nam's tra fish exports to Thailand posted positive growth from the beginning of this year in spite of political unrest in the ASEAN country in the first months of 2014.

VASEP also cited figures from the International Trade Centre showing Thailand imported 10,070 tonnes of tra fish and frozen fish fillets in the first seven months of this year, with a majority or 99.8 per cent of the imports coming from Viet Nam.

Thailand imported tra fish from Viet Nam for domestic consumption, VASEP officials said. As of the end of last year, Thailand's importation of Vietnamese tra fish ranked only second among ASEAN countries.

According to VASEP, Thailand is a potential market and a gateway for Viet Nam to expand tra fish exports to other ASEAN markets with an estimated total population of more than 600 million people.

As of mid-August 2014, Vietnamese tra fish exports to ASEAN countries was estimated to reach $87.5 million, representing a 13.3-per cent increase over that of the same period last year.

While tra fish exports to ASEAN, the third largest importer after the Europe Union (EU) and the United States (US), posted growth, exports to the EU dropped by 7.3 per cent over that of the same period last year to $220 million.

The EU was currently the country's biggest tra fish importer, accounting for 21 per cent of total tra fish export turnover.

FPT Trading becomes sole Symantec distributor

American technology company Symantec Corporation announced this week that FPT Trading would be its sole distributor in Viet Nam.

Under the agreement, FPT Trading, a subsidiary of Vietnamese software giant FPT, will be solely responsible for distributing Symantec products in Viet Nam.

"This is an important turning point in the relationship between FPT Trading and Symantec after 10 years of successful co-operation. We believe that our experience and Symantec's leading technology will bring success for both companies to deliver data protection solutions for businesses efficiently," said Tran Quoc Hoai, FPT Trading general director.

"With the support of FPT Trading, we are confident that we can make a stronger impression on the Viet Nam market and bring more benefits to partners and customers," said Hadiyanto Wibawa, Symantec's channel manager for the Southeast Asia region.

Seagate sees rising demand for SSHDs

Storage solutions provider Seagate Technology said it has shipped its 10-millionth solid-state hybrid hard drive (SSHD) as a result of rising demand for this product in the last two years.

According to the United States-based company, SSHDs typically deliver three to four times the performance of traditional hard drives in typical PC workloads, a key factor driving demand among PC vendors and buyers.

Explosive data growth from mobile applications, cloud infrastructures, social media and

business applications, as well as a wide variety of consumer markets, are fuelling the demand for systems integrating SSHDs.

New rolling door technology debuts in Ha Noi

Austdoor Group has introduced its latest Austmatic Rolling Code (ARC) technology that prevents theft by generating a variety of authentication codes at fixed intervals to open electric rolling doors.

The debut of the new technology in the capital city on Monday made the company the first rolling door producer to use this kind of technology in Viet Nam.

ARC technology makes use of a built-in clock and factory-encoded random key, and is capable of generating billions of unrepeated codes. Each code is generated when a user presses the remote control to operate the door. After this, the code is automatically deleted and replaced by another random code.

Price of gasoline cut for fifth time since August

The Viet Nam National Petroleum Group (Petrolimex) slashed the selling price of gasoline yesterday.

The price of diesel was cut to VND21,500 per litre and that of kerosene was reduced to VND21,670. Mazut now costs VND18,100 per kilogramme.

The price of RON 92 gasoline will remain VND12 lower than the base price per litre, according to the Ministry of Finance.

This is the fifth time that retail prices have been cut since August. The latest price cut was on September 9.

VN to export rice to Philippines

The National Food Authority (NFA) of the Philippines approved the import of 200,000 tonnes of rice from Viet Nam via a government-to-government (G2G) deal.

Viet Nam and Thailand vied to supply 500,000 tonnes of 25-percent broken rice to the Philippines.

Thai suppliers offered the best price for 300,000 tonnes, so the NFA Auction Board announced it would buy the amount from Thailand and invited Viet Nam to supply the remaining 200,000 tonnes at the same price.

The rice is scheduled to be delivered between October 15 and December 15.

Can Tho eyes Russian market

The Mekong Delta city of Can Tho will promote exports of agricultural products and seafood to Russian market in a bid to improve living standards for its farmers.

At present, Can Tho's agricultural and aquatic products amount to only 1.6 per cent of Viet Nam's total exports to Russia.

At Wednesday's meeting on commodity exports, vice-chairman of the municipal People's Committee, Truong Quang Hoai Nam, asked the municipal Department of Industry and Trade to conduct market surveys with the city's Trade and Investment Promotion Centre.

The surveys will seek information on taxes and quality requirements for goods eyeing the Russian market.

He suggested that businesses should diversify export products and promote their goods on Russian websites.

Director of the Department of Industry and Trade, Nguyen Minh Toai, said Can Tho's main exports to Russia included rice, tra fish fillet, molluscs; and frozen, dried and salted fish.

In the first nine months of this year, Viet Nam shipped 485,000 tonnes of rice and 75,000 tonnes of seafood to Russia, representing a year-on-year decrease of 12.6 per cent and 38 per cent, respectively.

PAN to raise funds via share sale

Retailer Pan Pacific (PAN) expects to raise VND752.5 billion (US$35.3 million) from strategic shareholders to finance investment projects and the acquisition of other companies in the sector.

Exactly 25 million shares will be issued for a maximum of 100 investors at VND30,000 per share. PAN concluded trading yesterday at VND46,000, representing a 1.1-per cent slide.

CEO Group to list 34m shares

Property and education services developer CEO Group will list 34.31 million shares at the Ha Noi Stock Exchange on September 29.

In the first six months of this year, the company earned a revenue of VND101 billion (4.7 million), representing a 125-per cent increase compared with that of the same period last year, and its profits reached VND20.8 billion, representing a 140-per cent increase compared with that of the same period last year.

Construction firm plans divestitures

PetroVietnam Construction (PVX) is totally divesting from 13 companies, mainly in the construction and real estate business.

Offloading of shares will be done through order matching on the stock market until the end of next year. The transaction prices will be market prices at the time of the sale but will not be lower than the price during PVX's initial investment. The company ended yesterday's session higher by five per cent at VND6,300.

Business community supports the Government to build independent economy

The Vietnam Chamber of Commerce and Industry (VCCI) and business associations signed a joint statement on an action programme for Vietnam’s business community at the Vietnam Business Forum 2014 held in Hanoi on September 19.

The aim of the joint statement is to connect Vietnamese businesses, coordinate with the Government and international businesses, and build an independent and competitive economy.

Chairman of VCCI Vu Tien Loc said the programme focuses on four main groups of actions, namely joining hands with governmental agencies to reform institutions, to create a favourable and transparent business environment and to restructure the economy; designing and implementing programmes to enhance enterprises’ competitive capacity; boosting connectivity and building a strong network of business associations; and nurturing a business culture that is deeply imbued with national identity.

Speaking at the event, Vice President Nguyen Thi Doan spoke highly of VCCI’s effective cooperation with governmental agencies to foster constructive dialogues between the business community and governmental agencies as well as local authorities. The VCCI also plays an important role in encouraging the business community to make feedback and recommendations to the Government on policies and laws, aiming to improving the business and investment environment.

According to the VCCI, the country now has more than 300 business associations, with one third of them operating on a national scale.

Corporations urged to improve social responsibility

Corporate social responsibility (CSR) is an international norm and an important factor for inclusive and sustainable industrial development (ISID) in Vietnam, Patrick Gilabert, representative of the United Nations Industrial Development Organization (UNIDO), said at the Forum for CSR on consumer confidence on September 19.

Sharing this point of view, Chairwoman of the Association of Vietnam Retailers (AVR) Dinh Thi My Loan stated that Vietnamese businesses face substantial challenges in terms of competitiveness with international retailers such as Lotte, E-Mart (RoK), AEON, Takashimaya (Japan), and Aucham (France), thus requiring them to innovate their business strategies, in which consumer confidence plays a key role.

According to Florian Beranek, Chief Technical Advisor of the UNIDO-Vietnam Chamber of Commerce and Industry (VCCI) CSR project, multilateral dialogues are effective tools that help businesses understand the demands, challenges and opportunities of CSR. Improving a business’ social activities would boost its competitiveness and provide opportunities for production units, as well as reduce the negative impacts on the environment and resources and establish a positive relationship with relevant stakeholders, he said.

Currently, UNIDO is working to help Vietnamese corporations improve their CSR on consumer confidence via standardisation. This includes the implementation of joint projects with the Ministry of Industry and Trade and the social enterprise SECO on enhancing measurement capabilities, ensuring food safety and developing a system to trace food to its origins. The UN agency has also coordinated with the Ministry of Health and WHO to encourage pharmaceutical production in Vietnam.

During the forum, an official from the Vietnam Environment Administration (VEA) revealed that a draft national action plan for sustainable production and consumption 2020 is on the pipeline, in line with the UN’s next 10-year programme, along with plans to implement the green growth strategy and environmental protection strategy.

Hai Phong city boosts marine-based economy

The northern city of Hai Phong has strongly fostered its marine-based economy, the Vietnam Economic News reported on September 19.

Head of Hai Phong Port Authority Bui Van Minh said in the first seven months of 2014, Hai Phong seaport had received 10,430 domestic and foreign ships, a 12 percent year on year increase and the volume of goods via the seaport had reached 37.2 million, up 17 percent over the same period last year.

Hai Phong is a centrally-governed coastal city about 102 km from Hanoi . The entire mainland area of the city is surrounded by the sea and rivers with five main river mouths flowing to the sea on a 125km coastal length including Thai Binh, Van Uc (southern Do Son), Lach Tray, Bach Dang and Lach Huyen (northern Do Son) river mouths.

After more than 100 years of establishment and development, Hai Phong seaport has an important role in the domestic and foreign trade activities. The seaport system has always played a key role in the city’s economy through shipping services, storage and a large number of other support services.

To promote the development of the seaport system, the city has created favourable mechanisms for Dinh Vu seaport area. The city has planned to move businesses along the Cam River to Dinh Vu. Hundreds of billions of dong have been invested in Dinh Vu, helping to transform this fallow land into the busiest seaport in the northern region. It is estimated that more than 60 million tonnes of goods will be handled via Hai Phong seaport this year.

According to marine-based economy experts, the limitation of the Hai Phong seaport system has revealed in its scattered investment. The data of Hai Phong Port Authority showed that the city has 42 wharves with quay length of over 10km. The average loading and unloading capacity of the whole seaport system is only 50-60 percent of advanced seaports in the Southeast Asia region.

The experts also said that to make the most of the advantages offered by maritime trade, Hai Phong needs to develop a sustainable and efficient marine-based economy; invest in marine science; set up mechanism of cross-sectoral coordination in sea management; and boost multilateral cooperation on marine-based economic development.

Suspension of sugar-cane mills threatens farmers

Thousands of farmers in the Mekong Delta have been worried about their livelihoods since the Ministry of Natural Resources and Environment proposed to halt the operation of two sugar-cane mills.

Two sugar-cane mills in Ca Mau and Tra Vinh provinces have been repeatedly ordered to deal with pollution problems caused by those facilities since 2003, but those problem have remained unsolved. In 2013, there was a resolution on industrial pollution which demanded the two mills, Tra  

Vinh Sugar Plant and Thoi Binh Sugar Plant, to take effective measures to deal with their pollution by the end of June, 2014.

An inspection carried out by the Ministry of Natural Resources and Environment revealed that the factories had ignored the warnings. The ministry then fined each factory VND230 million (USD10,950) and proposed a nine-month suspension. In August, Ca Mau and Tra Vinh provincial authorities expressed agreement with ministry's determination to strictly deal with environment pollution.

However, the authorities asked the ministry to wait until the two factories finish sugar production for this year's crop before enforcing the suspension, which would be delayed until May 2015 for Tra Vinh Plant and until July 2015 for Thoi Binh Plant.

According to provincial authorities, suspending the plants' operations at this particular time would adversely affect the lives of over 3,000 farmers, who have grown 8,000 hectares of sugar-cane. In addition, the provinces would have to bear a huge burden as a result of increased unemployment.

In this season, the price of sugar-cane is too low to profit the farmers. Luu Nghiep Anh, a farmer in Tra Vinh, said, "If the plant stopped working, the prices would plummet. Traders would reduce what they are willing to pay because of the increased transport fees needed to take the sugar cane to sugar mills farther away."

Nguyen Thanh Long, chairman of the Vietnam Sugarcane and Sugar Association, said, "We can only ask other plants in the Mekong Delta to adjust their schedules in order to help the farmers in Ca Mau and Tra Vinh in case the two factories there are shut down." However, few factories are enthusiastic about the idea because the profit would low and it would be inconvenient for them to change their schedules.

Anti-dumping measures encouraged

As the country integrates into the global economy, anti-dumping tariffs will be one of the most effective tools for domestic enterprises to protect their market share, experts said at a conference on Thursday in Ha Noi.

The conference followed the Ministry of Industry and Trade's decision to impose tariffs on steel imports from mainland China, Taiwan, Indonesia and Malaysia. The move aimed to protect domestic industries from foreign competitors and create an equal playing field for businesses in accordance with international practices, said Nguyen Thi Thu Trang, director of the World Trade Centre at the Viet Nam Chamber of Commerce and Industry (VCCI), which co-organised the conference with the Viet Nam Competition Authority (VCA).

Anti-dumping tariffs are a legal measure allowed by the WTO to deal with dumped imports. In other countries, enterprises use them as a business strategy when they face unfair competition from foreign firms, explained Trang.

Nguyen Van Sua, vice chairman of the Viet Nam Steel Association (VSA), said at the conference that many Vietnamese exports, primarily steel, were the target of anti-dumping tariffs. Thus, the recent move was a sign that Vietnamese firms had started to use the measure proactively to protect the domestic industry from the fierce competitiveness of foreign companies.

The tariff imposition also created confidence among domestic enterprises and encouraged them to follow suit, Sua added.

In the ten years since the Standing Committee of Viet Nam National Assembly's ordination on anti-dumping against imports to Viet Nam took effect, Viet Nam has dealt with about 100 commercial lawsuits from foreign enterprises as a respondent, including 50 anti-dumping lawsuits. However, this is the first time Viet Nam has been the prosecutor.

This revealed that many domestic enterprises remained unconcerned with the measures. Relevant enterprises were not well-prepared and faced difficulties such as a lack of human resources and language barriers, according to Pham Chau Giang from the VCA.

"When we informed relevant agencies and enterprises to register to access documents, many did not do. They only asked about the documents when the tariff imposition was decided, but it was too late," she said.

Dam Quang Hung, deputy director of the Son Ha International Joint Stock Company, expressed worry that the tariff imposition could cause disadvantages for steel-importing firms and buyers, as many domestic steel producers had started to increase prices.

In response, Dau Anh Tuan, head of the VCCI legislation board, said the tariff would benefit the economy and consumers in the long term. Foreign enterprises might have low prices now, but they could increase them later after wiping out domestic producers.

Withdrawal of Japanese investor stalls steel project

Japan's JPE Group recently decided not to create a partnership with a Taiwanese company for a major steel project in Quang Ngai Province, bringing the project to a standstill.

JPE came to the decision after two years of assessing the Quang Lien steel project, which is designed to have an annual capacity of five million tonnes.

This is considered a bad news, not only for this particular project, but also for the province's prospects of attracting further foreign investment.

Eight years after the USD4.5-billion project was initiated, only offices and the factory fences have been built.

Pham Chi Cuong, former chairman of the Vietnam Steel Association, said the investor of the project is a Taiwanese company called Tycoons.

“In 2006, Tycoons pledged to invest USD1 billion in the project, quite a significant investment for Quang Ngai. One year later, it set up a joint venture with E-United Group. Tycoons divested to only a 10% stake and soon completely pulled out,” Cuong said.

A short time later, the investor pledged to increase its investment to USD3 billion, but several years after work began, there is not much to show for it. Surprisingly, the investors again raised their pledged investment to USD4.5 billion, but with the same results.

“These regular increases in pledged investment are just moves to avoid pressure from the authorities amid in light of stagnant construction. Relevant authorities have had doubts about the investor’s financial capacity since 2010,” Cuong noted.

When JPE showed interest in the project, it was expected that construction may be resumed. However, JPE's withdrawal means uncertain future for the project.

In 2012, Quang Ngai provincial authorities threatened to revoke the company's investment license unless the situation improved but it's hard to understand why it had not already been cancelled.

“In response to prompts by authorities, in early 2012, E-United proposed to raise the project’s capacity to seven million tonnes per year. The proposal was turned down because it was so unrealistic,” he said.

Vo Tien Dung, deputy chief of Dung Quat Economic Zone’s Management Board, said E-United plans to meet with provincial authorities on September 19 in order to discuss plans for implementation.

If the investor wants to continue the project, they will have to work out a detailed plan for construction, which they would be required to strictly comply with, under threat of their license being revoked. If the project is cancelled, they investor would be refunded their investment, estimated at between USD40 million and USD50 million so far, Dung added.

Experts raise concerns over Hanoi’s massive supermarket plan

Hanoi municipal authorities plan to build around 1,000 markets and trade centres of different kinds, but this has raised concerns among experts.

At a recent conference, Hanoi's authorities announced a plan to build a network of wholesale and retail markets in the capital city by 2020 with a vision toward 2030.

According to the Hanoi People’s Committee, the city will build 23 large supermarkets; 42 trade centres and 595 markets.

However, economists have voiced concerns over issues such as the land fund, capital and infrastructure systems as well whether there is enough demand to support such a plan.

Dr. Dang Dinh Dao, former head of the Institute of Economic Research and Development, under National Economics University, said that raising the number of supermarkets from 100 now to 1,000 in the next five years is too ambitious considering the city's current limited infrastructure condition.

“For instance, supermarkets will have impact on traffic, road upkeep and parking lot constructions. Besides, it is important to have logistics plan distribution,” Dao added.

Dao noted that it would be very difficult to arrange a large land fund for building so many markets in the inner-city areas of Hanoi.

Dr. Dao Ngoc Nghiem, deputy chairman of Hanoi Urban Planning and Development Association, said that other infrastructure, such as schools, hospitals and public works should be prioritised for land allotments.

According to Vu Vinh Phu, chairman of the Hanoi Supermarket Association, 87% of people in Hanoi buy goods from more traditional temporary markets. Phu suggested that the planned number of markets to be cut by two thirds, adding that they should focus on improving product quality and service, instead of just expanding the scale of operations.

Dr. Dao Ngoc Nghiem suggested that traditional markets be restored to become cleaner, particularly in terms of food safety.

Phan Thiet Civilian Airport to be built in BOT model

Prime Minister, Nguyen Tan Dung has approved a plan to build Phan Thiet Civilian Airport in the southern province of Binh Thuan in a Build-Operate-Transfer (BOT) model.

PM Dung asked the Binh Thuan Provincial People’s Committee, the State agency in charge of the project, to work with the Rang Dong Corporation and relevant agencies to develop the project’s feasibility study report.

The Committee was also required to co-ordinate with Ministries of Planning and Investment, Transportation and Defence and relevant agencies to evaluate and approve the report, while selecting investors for the project in accordance with legal regulations and conducting the project appropriately.

In accordance with the Aviation Transportation Development Plan to 2020 and towards 2030, which was approved by PM Dung, the Ministry of Transportation planned to develop the airport into a joint civilian/military airport in Thien Nghiep commune, Phan Thiet city.

PetroVietnam revenue hits $23b

Viet Nam National Oil and Gas Group (PetroVietnam) achieved 74 per cent of its annual target by earning VND492 trillion (US$23.4 billion) in revenues in the first eight months of 2014.

The company also reported on its website that in August alone, its total production output reached 2.16 million tonnes of oil equivalent (TOE), bringing the total in the first eight months of the year to 18.25 million TOE, or 71 per cent of its target for the year.

The company said petroleum production in August was estimated to be 3.46 million tonnes, or 75 per cent of its target for the year.

Of these, PetroVietnam's Phu My Condensate Processing Plant contributed 240,000 tonnes, and its Dung Quat Oil Refinery contributed 3.21 million tones.

PetroVietnam reported that its electricity production in August reached 0.99 billion kWh, bringing the total to 10.54 billion kWh in the first eight months of the year.

Nitrogenous fertiliser production was reported to reach 149,100 tonnes in August alone, bringing the total volume to more than one million tonnes in the first eight months of the year. Of this figure, Phu My Fertiliser Plant produced 573,700 tonneser Plant generated 503,800 tonnes.

The group's fiber production was also reported to reach 7,390 tonnes, bringing the total volume to 22,000 tonnes. By end-August, PetroVietnam also conducted trial drilling on 21 oil wells.

Sasco shares sold out at IPO

Tan Son Nhat Airport Services Company (Sasco), a subsidiary of Airports Corporation of Vietnam, sold out nearly 31.1 million shares at its initial public offering (IPO) in HCMC on September 18.

Some 12 investors bought the shares at the average winning price of around VND19,330 each. The firm raised over VND601 billion from the auction.

Sasco has total chartered capital of over VND1.3 trillion. It put up 31.1 million shares (23.65%) for the public auction at the Hochiminh Stock Exchange (HOSE) on September 18 at the starting price of VND10,000 each.

According to Sasco’s equitization plan approved by the Ministry of Transport, the State owns 67.06 million shares, equivalent to 51% of the company’s chartered capital. The company will sell over 2.3 million (1.75%) shares to its employees and 31 million shares (23.6%) to strategic investors.

The company sells duty-free goods, handicrafts, gold, silver, precious stones and books, and provides catering and tourist transport services.

Sasco, Noi Bai Airport Services Company (Nasco) and Danang Airport Services Company (Masco) are the three big service providers at airports in Vietnam.

Local rice trader seeks huge compensation from shipping line

An Giang Province-based rice trader Hung Lam Joint Stock Company has sued South Korea’s Hanjin Shipping Co., Ltd. and demanded compensation of US$1.3 million, accusing an employee of the shipping line of stealing its rice.

Both parties are now in the process of out-of-court settlement of the dispute, but the local rice trader said it would press the lawsuit ahead in case the conciliatory settlement fails to yield satisfactory results.

As stated in its lawsuit, the local firm accused that an employee of Hanjin had colluded with a rice buyer in Ghana to steal 80 containers of its rice.

Hung Lam said that an employee of Hanjin in Ghana and the rice buyer - Yuletech Company - also in Ghana had counterfeited documents to steal 80 containers, but the theft was busted by Ghanaian police when only 11 containers had been taken. But the shipping line denied its responsibility.

At the reconciliation meeting on Tuesday, both sides retained their viewpoints as at the first meeting of settlement.

According to Hoang Lam, director of Hung Lam Company, his company will invite a lawyer to protect its interests. The economic court in HCMC will organize a final conciliation meeting for both sides this November.

At the first mediation on August 27, Hanjin said it was not wrong and Hung Lam needed to sue HCMC-based Cat Truong Giang Co., Ltd, the company Hung Lam hired to transport 80 containers of rice, equivalent to 2,000 tons, from HCMC to Tema port.

After signing the transport contract, Cat Truong Giang hired Hanjin to transport the rice volume.

In accordance with international trade practices, Hung Lam opened a letter of credit at Standard Chartered (SCB) and Yuletech had to make payments at SCB in order to receive 80 containers of rice. Nevertheless, Yuletech did not pay money to SCB but colluded with a Hanjin employee to take rice from Hung Lam.

The case was detected in March 2013 after 11 containers had been stolen and the remaining 69 containers were sealed and kept at Ghana’s port.

After that, with the intervention from the Ministry of Industry and Trade, Ghana allowed Hung Lam to sell the remaining rice to recover capital. However, Hung Lam had to pay storage fees and taxes worth nearly US$700,000 in total.

Meanwhile, under the purchase contract, the buyer had to cover such expenses and Hung Lam was exempted from such duties when goods arrived in Tema port.

According to Hoang Lam, due to the huge costs incurred, Hung Lam has petitioned the economic court in HCMC to ask for US$1.3 million in compensation.

Nguyen Hung Linh, chairman of the Vietnam Food Association, said Hung Lam has not informed the association of the case and thus it has yet to offer supports.

“I think both sides need an economic arbitrator for conciliation first before taking it to the court,” he added.

Rice prices fall despite new G2G rice export contract

Rice prices in the Mekong Delta have abruptly fallen although Vietnam just won a government-to-government contract earlier this week to supply 200,000 tons of 25% broken rice to the Philippines.

Lam Anh Tuan, director of Thinh Phat Company, a member of the Vietnam Food Association (VFA), attributed the falling domestic rice price to Thailand undercutting Vietnam’s rice on the world rice market by lowering its export prices. Meanwhile, local exporters still quote a fairly high export price and could not find buyers.

Nguyen Dinh Bich, an expert in the rice industry in Vietnam, told the Daily that the shrinking domestic prices are inevitable because Thailand is stepping up its rice sales to cut down in its alleged low-quality inventory. Besides, rice farming in India has also significantly improved following droughts.

Between now and the end of this year, Thailand will still be the key player in determining the world’s rice prices while India is also emerging again as a major rice exporter, Bich noted. The expert predicts the local rice market will not experience a price plunge despite the downward trend in prices.

Duong Van Men, a rice trader in Dong Thap Province, said local exporters are buying material rice at VND7,250-7,400 a kilo, dropping VND100-150 a kilo compared to the level before Vietnam grabbed the deal.

It was earlier believed that Vietnam could have won a large volume out of the 500,000 tons of rice demanded by the Philippines. As such, local exporters hastily bought rice and kept the domestic rice prices stable, Men added.

“However, local exporters in fact can fulfill the contract to provide 200,000 tons of rice to the Philippines by themselves. As a result, they have slowed down rice purchase from farmers, thus reducing the domestic rice prices,” Men said.

Price of IR 50404 paddy also fell to VND4,800-4,900 from the previous level of VND5,000.

According to the VFA, the association’s members shipped abroad nearly 4.4 million tons of rice with the free-on-board value of nearly US$1.9 billion this year to September 11.

Statistics of the Department of Crop Production under the Ministry of Agriculture and Rural Development showed the productivity and paddy output were 5.5-5.6 tons per hectare and 8.3 million tons respectively as of September 11.

SBV wants stricter rules on consumer credits

The State Bank of Vietnam is fielding suggestions for a draft circular under which commercial banks must set up a separate finance company to provide consumer credits to customers.

According to the draft regulating consumer lending activities in the country, a finance company can provide consumer credits to individual clients via installment loans, loans on overdraft and issuance of shopping cards.

Finance firms are banned from giving real estate loans due to high risks. According to the board tasked with drafting the circular, finance companies still have many limitations such as low charter capital, poor capability in finance governance and risk control.

Notably, the draft regulates that commercial banks wanting to provide consumer credits to individual clients must set up finance companies. By referring to international standards and the reality of consumer lending activities in Vietnam, the rule aims to reduce risks for banks when extending unsecured consumer loans, the drafting board explained.

In the country, there is no clear line between consumer lending by commercial banks and finance firms. Banks give consumer credits to ineligible individuals to buy vehicles and home appliances in a similar model as finance companies do.

Meanwhile, international practices require that bank customers must earn high incomes and good credit records while finance firms aim at customers from all walks of life, in which many are middle or low-income earners, have no credit records or rack up low credit ratings. Those customers often find it difficult to access bank services.

To secure professionalism and reduce risks in extending consumer loans, some banks have lately rushed to set up finance companies. For instance, HDBank has acquired 100% equity of Société Générale Viet Finance Company and VPBank has acquired Vietnam National Coal - Mineral Finance Company to focus on the consumer loan market.

In addition, some international groups also have plans to set up finance firms in Vietnam to provide consumer credits.

The draft also includes rules on advertising and information provision before credit contract are signed to protect consumers.

Consumer lending is one of key products of local banks. Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that consumer and securities credits now account for around 8% of the city’s total outstanding loans, or around VND80 trillion. Of this, securities loans are insignificant.

The consumer loan segment reported a bad debt ratio of around 2% as of the end of August, lower than the ratio of 4.5% of the entire banking system.

The city’s credit grew 5% as of end-August against late 2013. Local banks are expected to report credit growth rate of 9-10% at the end of this year, Minh said.

New circular on foreign loan borrowers

The central bank has released a circular requiring enterprises taking out medium- and long-term loans from overseas lenders to register at the administering agency if the loans are not guaranteed by the Government.

According to Circular 25/2014/TT-NHNN, enterprises must register such loans, extended short-term loans with the total tenor of over one year, short-term loans that are not extended but the outstanding credit remains after one year from the first date of capital withdrawal except that borrowers can settle the loans within 10 days from the time of one year since the first capital withdrawal date.

Besides, corporate borrowers will have to report to the central bank any revisions to their registration documents as clarified in the circular, which will take effect from November 1.

If enterprises adjust capital withdrawal and debt payment plans within 10 days from those registered at the central bank earlier, they have to inform the new plans to banks and do not need to make registration at the central bank.  

The central bank’s foreign exchange management department will verify applications and revisions for registration of foreign loans from US$10 million (or other foreign currencies with equivalent value) and foreign credit in Vietnam dong.

The central bank’s branches in localities will control applications and revisions for registration of foreign loans of US$10 million or lower.

In addition, corporate borrowers must obtain approval of the central bank’s governor for any foreign loans in dong.

Southern Power, Siemens ink $15m contract

Electricity of Viet Nam subsidiary Southern Power Corporation (EVNSPC) and the Siemens Consortium signed a US$15 million contract on Friday to install an electricity management system by September 2016.

"The system will help our company improve the efficiency and reliability of the distribution network in 21 provinces and cities in the southern region of the nation, thus contributing to regional economic development," said EVNSPC president Nguyen Thanh Duy. "The unmanned substations will help us save costs by using labour more efficiently."

Siemens Vietnam president Pham Thai Lai said the project would pave the way for four similar projects that will be implemented in the near future.

The Siemens Consortium includes Siemens AG, Power Automation (a joint venture between Siemens and Power Singapore) and Siemens Limited Viet Nam. The contract was awarded in connection with the World Bank-funded Distribution Efficiency Project.

Seafood firm to build factory in Russia

The Hung Vuong Joint Stock Company plans to build a US$30-million seafood processing plant in Russia, beginning early next year, reported Dien dan Doanh nghiep (The Business Forum) online.

Company General Director Duong Ngoc Minh announced the plan after attending a seafood trade fair in Russia last week.

The scheme to build the plant is based on an agreement for co-operation on industrial zones, signed between HCM City and Russia's capital, Moscow. The agreement aims to create jobs for Vietnamese labourers in Russia, Minh added.

He pointed out that enhancing the quality of Vietnamese packaged seafood exports and utilising the diversified seafood material in Russian waters will help the plant to meet the Russian consumer demand.

The company is based in the Mekong Delta province of Tien Giang.

SSTI to manufacture integrated circuits

Saigon Semiconductor Technology Inc (SSTI) is the first local company to make 100 per cent investment in an integrated circuit manufacturing and production factory at the Saigon Hi-tech Park.

The US$257.5-million factory which covers an area of two hectares, will also have a research and development centre and an experimental research centre for developing multi-purpose products such as light-emitting diodes and solar cells.

The products of the factory are expected to replace imported goods, and connect with companies engaged in the provision and delivery of materials for setting up a compound semiconductor industry in Viet Nam.

Meanwhile, the Saigon Industry Corporation - One Member Limited plans to invest approximately VND6.6 trillion ($314.2 million) in constructing an integrated circuit production factory at the hi-tech park. However, it has not been granted an investment certificate so far.

In mid-2012, HCM City's People's Committee launched a programme to develop an integrated circuit industry in the city in the period of 2013-20. By 2017, the industry is expected to gain revenue of $100 million to $150 million, train about 2,000 engineers and technicians and incubate about 30 enterprises.

Wood sector confronts hard situation

Although Viet Nam ranks second worldwide in wood exports, local consumers say they lack access to Vietnamese-made furniture that is both stylish and reasonably priced, Tin tuc (News) newspaper reported late last week.

A customer from HCM City's District 3, for example, said that many products sold in stores from China, Korea and Malaysia were affordable.

"Foreign wood products are diversified, have eye-catching designs, and are updated to follow global trends, but local products are uncompetitively priced, and the styles are all the same," the woman said.

Viet Nam has 4,000 businesses operating in the wood product sector, of which 95 per cent are privately owned. Enterprises fully invested in the domestic market are usually of a small or very small scale, typically located in individual households or craft-village households.

Larger enterprises, which have better technology and more capital, focus on exports and the requirements of international buyers such as US and Japan.

Viet Nam has more than 1,000 wood-processing craft villages nationwide, but due to a lack of a distribution system, the locally-made products, especially those in craft villages, have not been favoured by consumers.

Phan Chi Dung, head of the Ministry of Industry and Trade's Light Industrial Department, said multinationals and foreign-invested enterprises had grabbed 80 per cent of market share of wood and furniture products.

Many of the local companies are not competitive because of the lack of capital and small-scale production. Moreover, it is difficult for them to quickly adapt to changing consumer tastes.

In addition, the production of raw materials is heavily dependent on foreign imports, leading to higher selling prices. And promotional activities and designs are still limited.

Nguyen Huu Toan, director of Toan Thien An Interior Ltd Co, said businesses should have professional design teams and distribution channels, and recognisable trademarks.

"Exploiting the domestic market has many advantages, such as stable demand and stable production plans. Companies can adjust samples and designs according to market demand," he added.

At the seminar "Viet Nam Economy 2014 and business prospects in the furniture sector" held recently in HCM City, many participants said the local wood market had great potential in a country of 90 million people.

According to Nguyen Quoc Khanh, chairman of the HCM City Handicraft and Wood Industry Association, a Vietnamese household spends about VND6 million (US$285.7) for furniture products per year.

With a growing economic recovery, domestic consumption this year is expected to reach more than $2 billion and will increase in coming years.

According to economists, the State needs to issue support policies for local businesses soon, such as preferential tax policies to encourage investment and preferential credit policies. It also should create wood-processing industrial clusters, they said.

Creating linkages between local and foreign businesses would help them learn from more experienced manufacturers.