Many large projects will be implemented this year to transmit electricity from coal-fired power plants in the Mekong Delta to the national grid, including a 500 kV line between My Tho and Duc Hoa, and another between Song Hau and Duc Hoa.

According to a document signed on March 14 by Doan Tan Phong, director of the southern power projects management unit at the National Power Transmission Corporation, the two projects have total investment capital of VND3,900 billion (US$171.6 million) and are scheduled for completion in 2018.

The 500 kV My Tho - Duc Hoa line will connect Duyen Hai coal-fired power complex in Tra Vinh Province with the national grid while the 500 kV Song Hau - Duc Hoa line will link Song Hau 1 and 2 power plants and the national grid.

Together with other 500 kV lines such as Duc Hoa - Phu Lam, Duc Hoa - Cau Bong and Duc Hoa - Chon Thanh, the two new lines will transmit electricity from the power plants in the Mekong Delta to load centers in HCMC and nearby provinces.

In addition, My Tho - Duc Hoa and Song Hau - Duc Hoa lines will help create 500 kV interconnections between areas in the system to ensure safe and stable operations, improve power supply reliability and reduce power losses.

The My Tho - Duc Hoa line has a total length of 54.93 km, starting from Chau Thanh District, Tien Giang Province and ending in Duc Hoa District, Long An Province.

The Song Hau - Duc Hoa line has a total length of 133.6 km, starting from Song Hau power center in Hau Giang Province and ending in Duc Hoa District, Long An Province.

According to Power Generation Corporation 1 (EVN Genco1) under Vietnam Electricity Group (EVN), the Duyen Hai power center has three coal-fueled plants: Duyen Hai 1 (1,200 MW), Duyen Hai 2 (1,200 MW) and Duyen Hai 3 (600 MW).

According to information on the website of PetroVietnam Construction Joint Stock Corporation under Vietnam National Oil and Gas Group, the Song Hau thermo-power center covers ​​360 hectares in Phu Huu A industrial zone in Chau Thanh District, Hau Giang Province with a total designed capacity of 5,200 MW.

In addition to My Tho - Duc Hoa and Song Hau - Duc Hoa power lines, two other projects will be carried out this year and next, including the 500 kV Duc Hoa transformer substation which is scheduled to start construction this year and be complete in the second quarter of 2018, and the 500 kV Duc Hoa - Chon Thanh transmission line which is scheduled to get off the ground in 2018 and be ready in 2019.

Crown Danang to double production capacity

Crown Beverage Cans Danang Ltd, a subsidiary of U.S. firm Crown Holding Inc., is installing a new production line at its can factory in Danang City to double its capacity to meet increasing customer demand.

When the new line is in place, the 3.6-hectare factory of the company at Lien Chieu Industrial Park will be able to turn out around 1.6 billion cans a year. The company raised its investment to US$70 million from US$45 million, said general director Phan Van Dung.

The new production line is scheduled for commissioning in August and commercial production a month later. Technology and equipment for the line are imported from Germany, the Netherlands, England, and the U.S.

Crown Beverage Cans Danang Ltd is a sole or major supplier of two-piece aluminum cans to two Heineken Vietnam Brewery plants in Danang and Quang Nam, Saigon-Quang Ngai Beer JSC under Saigon Beer, Alcohol and Beverage Corp,  Dung Quat Beer factory, two factories of Masan Brewery in Phu Yen and Hau Giang, PepsiCo Dien Ban factory of Suntory PepsiCo Vietnam Beverage, a Danang City plant of Coca-Cola Beverages Vietnam Ltd, and other beer and beverage companies in the central region.

Dung said the current production line is running at full capacity but it cannot meet the growing demand. This is why Crown Danang has decided to set up a new production line to better serve clients.

The plant went into production in October 2013. After only three years, it has doubled its production capacity, which is regarded as a success, he said.

The facility now has less than 100 staffs and will increase to 150 staffs, thanks to a high level of automation. Last year, it generated revenue of VND1.3 trillion and paid over VND109 billion in taxes.

Crown Danang is an environmentally friendly manufacturer since it has greatly reduced its energy consumption over the past few years, with gas, electricity and water consumption down by 10% per year. 

The can factory has a modern wastewater treatment system, so its wastewater meets level B (qualified for discharge into the sea according to Vietnam’s latest standards).

Saigon Danang Investment Corporation, the investor of Lien Chieu Industrial Park and expanded Hoa Khanh Industrial Zone, said the Crown Danang beverage can plant is one of the two largest foreign direct investment (FDI) projects at the corporation's industrial parks. The success of Crown Danang is expected to help lure more foreign investors to these industrial parks and Danang as a whole.     

Publishing industry reports 2016 revenue of VND2 trillion

The publishing industry has grown significantly, with revenue amounting to more than VND2 trillion (about US$88 million) in 2016, said the Vietnam Publishing Association.

Total revenue of the industry in 2016 edged up 2.7% compared to 2015 to VND2,201 billion and after-tax profit jumped 48.5% over 2015 to VND149 billion.

Results of a survey by the southern office of the Vietnam Press Association showed that in 2016, 75% of publishers posted print volume growth, 71.4% reported revenue growth, and 46.4% obtained book sales growth.

The high-growth publishers include Young Publishing House with revenue of VND13.3 billion, Su That National Political Publishing House (VND18.5 billion), Kim Dong Publishing House (VND28 billion) and Vietnam Education Publishing House (VND67.8 billion).

However, some publishing houses racked up losses, such as Sports Publishing House with VND205 million and Maritime Publishing House with VND130 million.

The Vietnam Publishing Association said that last year several enterprises expanded their distribution networks and their operations locally. Phuong Nam Cultural Joint Stock Company opened 13 new bookstores last year, followed by FAHASA with 11 fresh bookstores.

According to Phuong Nam Retail Co Ltd, 2016 was a good year for the book market. The publishing market will continue attaining more growth in years to come, helped by the rising interest of young readers.

At Phuong Nam bookstores, books for young audiences account for nearly 60% of book sales and 40% of best-sellers are for young readers. History books have grown attractive to readers, including young ones.

According to FAHASA, children's books hold great growth potential. Last year, publishers reported high sales growth in books for children, which accounted for 25% of book sales, the highest proportion.

In particular, sales of political and law books grew more than 70%.

PM wants budget revenue growth of 14-16%

Prime Minister Nguyen Xuan Phuc has said in a fresh directive that government agencies at local and central levels will have to work hard to achieve a 14-16% rise in budget revenue from trade and manufacturing activities this year.

An effective implementation of the tax laws and budget revenue tasks for 2017 will help attain the target, the directive says, adding there is no room for policy proposals that might cause budget collections to fall.

Import and export duty collections should be increased 5-7% compared to last year, according to Directive 14/CT-TTg on implementation of financial and State budget tasks for 2017.

State agencies should work closely with tax and customs authorities to spur budget collections, crack down on lost revenue, smuggling, trade fraud and tax evasion, and slash tax arrears.

The Ministry of Finance is tasked with directing tax and customs agencies to strictly fulfill the budget collection targets, and enhance tax and post-clearance inspections.

The price lists which the customs uses for duty calculation should be strictly controlled, especially those of high-value items such as automobiles, cosmetics and goods in transit.

Resources should also be focused on collecting tax debt, with quotas allocated to each tax or customs office. Those corporate taxpayers having delayed tax payments should be periodically publicized.

By the end of this year, tax arrears should account for less than 5% of the year’s budget revenues.

The directive calls for strict controls on budget spending and better use of State money. No additional appropriation proposals will be accepted, except for special cases.

Overspending will not be tolerated. Expenses for conferences, seminars, ceremonies, festivities, ground-breaking, commencement or inauguration events, overseas study and surveys, public cars and expensive equipment should be restricted.

Ministries, agencies and local authorities should mull cutting their appropriation estimates for the items which will not be done by June 30, 2017, except for those already decided by the Prime Minister.

The directive encourages cities and provinces to think of ways to generate revenue to fund wage reform in 2017, including a 10% cut in other regular expenditures than wage and a 50% rise in local budget revenue.
  
Draft agriculture promotion decree below expectations

The Ministry of Planning and Investment has not thought out of the box in the process of drafting a new agriculture and rural development promotion decree as this draft is not much different from the 2013 decree that has failed to create a breakthrough for agriculture and rural development.

The draft decree which amends and supplements Government Decree 210/2013/ND-CP issued on December 19, 2013 to promote investment in agriculture and rural development was brought up for discussion at a meeting in Hanoi on Wednesday, which was attended by Deputy Prime Minister Vuong Dinh Hue.

The MPI said at the meeting that the draft focuses on issues such as adding more enterprises and projects to enjoy State incentives; promoting research and development; revising the supporting mechanism for enterprises to expand markets, do the branding, and develop competitive products; boosting administrative reform; and setting up a mechanism for State support funds.

However, Deputy PM Hue said a mere 1% of the nation’s enterprises are involved in agriculture with their capital accounting for a slight 3% of total investments in business and production operations nationwide even though agriculture holds great growth potential and the huge rural market remains largely untapped.

The main reason behind this situation is land, he said. “We have a sense of hesitation when it comes to implementing the land accumulation policy to facilitate the formation of a land transfer market. Thus, businesses have not been able amass enough land for large-scale production.”

The ad hoc nature of land policy change at local level also puts long-term business plans of agri-businesses at stake, he said, while poor agricultural insurance policies discourage banks from lending to farming projects.

Hue noted no enterprises would be willing to run the risk of investing in agriculture if there is no State policy support for them to sell their products.

Attendees at the meeting were of the opinion that Decree 210/2013/ND-CP had failed to bolster private sector investment in agriculture and rural development. Since this decree came out, only 64 projects have been carried out in 23 cities and provinces, said Deputy Minister of Agriculture and Rural Development Ha Cong Tuan.

Worse still, the decree allows for financial aid for enterprises and projects committed to agriculture and rural development. But, Tuan said, this source of funding has gradually declined.

“In 2015, VND168 billion was allocated. In 2016, the figure dropped to VND78 billion. And in 2017, only VND32 billion can be arranged through the pledged amount is VND380 billion,” said Tuan.

But money is not the answer for everything, Deputy PM Hue said, because “Many enterprises said they do not need financial support from the State. A legal corridor and a solid mechanism are more important to attract investors into agriculture and rural development and grow businesses in this sector.”

Explaining the draft decree, Deputy Minister of Planning and Investment Dao Quang Thu said this draft decree cannot be the answer as the above issues involve multiple laws such as the Land Law, the Investment Law and the Enterprise Law.

These laws should be modified or supplemented first, he said, adding a Government decree cannot deal with a big issue like land accumulation, which can be solved when the Land Law is amended.

Vietjet shareholders okay foreign ownership cap hike

Vietjet Aviation Joint Stock Company has secured approval from shareholders for its key targets and plans, including increasing the foreign ownership cap to 49%.

At the firm’s general meeting in HCMC on April 20, shareholders gave the go-ahead to the board of directors to work with government agencies over the foreign ownership cap increase plan, which will enable the airline to mobilize more foreign capital. 

The Government’s Decree 92/2016/ND-CP provides a number of conditions for foreign involvement in civil aviation services. A single foreign investor can own no more than 30% of a Vietnamese airline’s chartered capital while a controlling stake must be held by a Vietnamese individual or institution.

In case there is more than one foreign investor, the combined foreign stake must be capped at 49%, according to the decree, which took effect on July 1, 2016.

Shareholders approved Vietjet’s revenue and profit targets at the meeting. Vietjet looks to gross revenue of more than VND42 trillion (around US$1.84 billion) and after-tax profit of over VND3.39 trillion in 2017. It plans to pay a 10% dividend in cash on May 10 this year.

The carrier’s revenue and profit last year were VND27.5 trillion and VND2.5 trillion respectively, up 38.6% and 113.2% compared to 2015.   

Last year, Vietjet took delivery of 12 more planes, expanding its fleet to 41 aircraft (30 Airbus A320s and 11 Airbus A321s). The carrier transported more than 14 million passengers, up a staggering 50.9% from 2015.

Vietjet is expected to have 51 aircraft and transport around 17 million passengers on 98,124 flights this year.

Vietjet listed 300 million shares on the Hochiminh Stock Exchange in February and the VJC shares have since been sought after by foreign investors.

In January, Vietnam Airlines became one of the biggest firms by market capitalization on UPCoM after it listed more than 1.2 billion shares on the market for unlisted public companies.

APEC Food Security Week to take place in Can Tho

The Ministry of Agriculture and Rural Development has decided to organize the Food Security Week in the Mekong Delta city of Can Tho as part of the 2017 Asia-Pacific Economic Cooperation (APEC) forum in Vietnam.

The event is aimed at promoting growth and cooperation to deal with challenges and highlight a priority of APEC 2017 to spur food security and sustainable agriculture in response to climate change, according to Tran Kim Long, head of the ministry’s International Cooperation Department in a working session with Can Tho on April 20.

He said a series of events are scheduled during the Food Security Week in Can Tho. Their main purposes are to promote sustainable agriculture and fishery development by applying advanced science and technology in production management and sustainable use of natural resources; control food waste in the supply chain; and encourage the application of science and technology in production and management.

Besides, these events will foster public-private partnership, create a favorable environment for sustainable infrastructure development, and strengthen cooperation in improving food safety and hygiene.

Four working groups on food security and climate change, technical cooperation in agriculture, biotechnology and agriculture, and aquaculture will arrange these events expected to happen from August 18 to 20.

He added policy-related meetings on relevant issues will occur on August 21-22. Then the aforesaid groups will meet to share experience on August 24. Finally, a high-level conference is set to take place on August 25.

In addition to a startup forum, a field trip will be organized to introduce major farm produce in Can Tho and the Mekong Delta as a whole, such as rice, seafood and fruit.

Vietnam will host the 2017 Asia-Pacific Economic Cooperation forum with the participation of 21 Pacific Rim member economies. Related events are scheduled to take place from February to November in 10 major cities and provinces across the country.

Aviva acquires VietinBank shareholding in JV

Aviva plc announced on April 21 it had acquired VietinBank’s entire 50 per cent holding in the VietinBank Aviva Life Insurance Limited (Aviva Vietnam) life insurance joint venture and had signed a new distribution agreement with VietinBank to sell life and health insurance products through the bank’s network of over 1,100 branches and transaction offices; the second-largest in Vietnam.
Aviva Vietnam is now a wholly-owned subsidiary of Aviva, with a key focus on growing the business across all key distribution channels. The move also simplifies Aviva’s operating structure in the region. The transaction is now subject to customary closing conditions, including regulatory approvals.
Aviva Vietnam was founded in 2011 and has since built a strong presence in the market, becoming a Top 10 life insurer by premium value. Vietnam is an attractive insurance market, with double digit life premium growth over the last three years and has one of the world’s lowest life insurance penetration levels, at less than 1 per cent of GDP (Source: Swiss Re, The Vietnamese Insurance Market, January 2017). The insurance sector is expected to benefit from the country’s projected GDP growth of more than 6 per cent annually over the next three years (Source: World Bank, Global Economic Prospects, January 2017).
“With Aviva’s insurance and digital expertise and a strong partnership with a leading bank, we are optimistic about our growth prospects in Vietnam,” said Mr. Chris Wei, Executive Chairman of Aviva Asia and Global Chairman of Aviva Digital. “We have developed a deep and successful relationship with VietinBank and will continue to build on our strong foundations.”
Mr. Randy Lianggara, Regional CEO for China, Indonesia and Vietnam, said: “We are thankful to VietinBank for the excellent support they have offered us and the high-quality partnership we have built together. We will continue to meet the changing needs of Vietnamese people by introducing relevant products that are targeted to their unique life stages. We will also expand our distribution and digital capabilities and enhance the service quality we provide to our customers.”

Local meat defeated by cheap imported meat

Local meat price will drop more in next months because of cheaper imported meat, said deputy head of the Department of Livestock Production Nguyen Xuan Duong.

In the sidelines of the seminar “Food safety and measures to replace antibiotic in animal feeds” held in Hanoi on April 21, Mr. Duong predicted a drop in domestic pig price in next months though it is so low at present.

Pork price was under VND30,000 (US$1.3) per kilogram in the end of 2016. One of the reasons for the fall of meat price is rampant cheap imported meat in the local market, said Mr. Duong.

In spite of abundant supply of Vietnamese pork and chicken for demand, meat from abroad countries is imported rampantly.

In 2016, Vietnam imported 39,400 tons of meat with average price of VND35, 900 per kilogram, and other parts of the animal fetched VND21,000 a kilogram while price of local meat fluctuated at VND40,000.

Currently, most of Vietnamese meat is exported to China with small quantity in illegal way and suckling pigs are exported to Russia, Taiwan and Hong Kong (China).

It is forecast that in May and June, the meat price will lower because consumers will prefer to have aquatic products and water fowl as the weather is so hot.

Figures from the General Department of Vietnam Customs showed that the country imported nearly 7,800 tons of meat in the first quarter, spending US$9.4 million, an increase of 16 percent in quantity and 21.2 percent in value compared to the same period last year. Average price of a kilogram of imported at the time was VND27,000.

Real estate transactions reduces, prices increase in first quarter

The real estate market saw transaction reduction in both Hanoi and HCMC during the first quarter this year and price increase of 7-10 percent over the same period last year, reported Vietnam Real Estate Association yesterday.

Compared to previous months, the prices were up 1.5-3 percent, the association said.
 
Meantime, transactions reduced over the end of last year and the same period last year to 18,338.
 
In the HCMC market, the transaction volume reached 9,808 apartments measured 742,700 square meters. The most traded type is middle apartments while high grade ones saw slow liquidity.
 
Hanoi recorded 3,624 apartments, equivalent 321,300 square meters, were sold.
 
There was no new low cost and social housing project in the first quarter.

FDI firms leading loss-making rate for years

Foreign direct investment (FDI) companies have taken the lead in loss-making ratio in Vietnam for many years, reported the Vietnam Chamber of Commerce and Industry on Friday.

In 2008-2009, the ratio of loose making FDI companies was 51.2 percent and 49.8 percent respectively but they still broadened investment in Vietnam.
 
Secretary general of the chamber Pham Thi Thu Hang said that the ratio topped 40 percent in the phase of 2007-2015 showing transfer pricing had not been tackled.
 
Despite reporting much loss, FDI companies were always in the lead of return on asset (ROA) ratio.
 
FDI companies just reduced losses after the Government applied some measures to control transfer pricing through inspections in 2010 and 2011, when the rate dropped to 44.2 percent and 45 percent.
 
In the phase of 2012-2015, it rebounded in line with the common trend of the economy’s difficulties.
 
In 2015 alone, FDI firms ranked second in the loss making ratio after state own enterprises.

Haiphong investment seminar enchants Singaporean enterprises

An ASEAN market seminar “Capturing business opportunities in Vietnam’s third largest city: Haiphong” took place in Singapore on April 20, attracting more than 80 participants, mostly Singaporean businesses coming from diverse industries.

The seminar was held by the Singapore Business Federation in tandem with the Vietnamese Ministry of Planning and Investment’s Vietnam Investment Promotion Centre, Deep C/Dinh Vu Industrial Zone, which is based in Vietnam’s northern port city Haiphong, consultancy firm Deloitte, and Vietcombank, a leading bank in Vietnam. 

The seminar featured a presentation by Tran Thi Hue, a representative from the Vietnam Investment Promotion Centre (IPC), providing an insight into Vietnam’s economic situation and the potentials and business opportunities the country has to offer to investors.

Vietnam’s membership in a variety of international organisations, such as the World Trade Organization (WTO), the ASEAN, and the Vietnam-EU Free Trade Agreement (FTA), has made and will make trade between Vietnam and its key consumer markets more efficient.

The trade and business links between Singapore and Vietnam have grown significantly over the years, with Singapore becoming Vietnam’s second largest investor after Korea as of the end of 2016, Hue said.

Active economic integration together with strategic location, improved infrastructure, and business environment reforms have enabled Vietnam to establish itself as a topmost destination for foreign direct investment.

As the Vietnamese government’s investment promotion centre, IPC has committed to provide strong support to Singaporean investors during their survey process as well as in doing business in Vietnam.

Frank Wouters, general director of Dinh Vu Industrial Zone JSC, the central focus of the seminar, highlighted the efforts of the Vietnamese government and Haiphong city authorities to improve the existing and developing new key transportation infrastructure units, including a deep seaport, an international airport, and a road network heading north to China, south to other coastal provinces, and to Hanoi.

The combination of the deep seaport-expressway-airport-industrial zone cluster helps unlock the potential of a market brimming with opportunities and a skilled labour pool of 20 million northern Vietnamese people.

Haiphong’s excellent connection to key transport infrastructure affirms its premium location for investment. Looking at its geographical situation, the city is located at the very heart of the northern transportation hub: it lies adjacent to the deepest port in north Vietnam, which is accessible by fully-loaded 100,000DWT vessels, and is conveniently close to Cat Bi International Airport that offers both international and domestic connections. In addition, the city is only an hour drive by truck from Hanoi.

Located at the centre of these key infrastructure units, the Deep C cluster provides huge benefits to investors, leveraging its golden location, state-of-the art power and water utilities, and a wide range of associated services.

Participants at the seminar also gained a deeper insight into the practical banking and financing considerations for foreign businesses in Vietnam from the detailed presentations by Vietcombank and Deloitte.

The seminar has provided Singaporean businesses with a deeper understanding of the strengths and potentials of Vietnam in general and Haiphong city in particular, laying the groundwork for this prominent destination to come up more often in Singaporean investment strategies in the future.

Đông Á Plastic to raise capital to $22.2m
     
Dong A Plastic Joint Stock Company in 2017 will increase its chartered capital to VND500 billion (US$22.2 million) from the current VND419 billion.

Increasing chartered capital is part of Dong A Plastic’s 2017 plan, which was approved by its shareholders at the annual shareholder meeting on Friday.

At the meeting, the company’s shareholders also approved Dong A Plastic paying five per cent dividend in shares for its 2016 performance.

Under the plan, each shareholder will receive one bonus share for every 20 shares owned by the shareholder. The dividend payment is expected to be made in the second or third quarter of 2017.

In 2017, Dong A Plastic has targeted VND1.71 trillion in revenue, a yearly increase of 22 per cent from 2016, and VND72 billion in post-tax profit, a rise of 35 per cent year-on-year.

In 2016, the company earned VND1.4 trillion in revenue, 11 per cent higher than 2015, and post-tax profit of VND52 billion, an increase of 31 per cent.

The company’s shares are listed on the HCM Stock Exchange under code DAG. Shares ended Friday’s session up 0.4 per cent. 

State raises $281.78 million in latest bond auction
     
The State Treasury raised VND6.34 trillion (US$281.78 million) by auctioning Government bonds (G-bonds) at the Ha Noi Stock Exchange (HNX) on Thursday.

In the latest auction, the State Treasury targeted VND6 trillion, including VND1.5 trillion in five-year bonds, VND1.5 trillion in 10-year bonds, VND1 trillion in 20-year bonds and another VND2 trillion in 30-year bonds.

The bidding for the five-year bonds fetched VND500 billion at an annual yield rate of 5.12 per cent and the bidding for the 10-year bonds earned VND1.95 trillion at an annual yield rate of 5.99 per cent.

The HNX raised VND1.3 trillion at an annual yield rate of 7.2 per cent from the bidding for 20-year bonds and VND2.59 trillion at an annual yield rate of 7.68 per cent from the bidding for 30-year bonds.

Since the beginning of the year, the State Treasury has raised a total VND74.6 trillion from G-bond auctions. 

Viglacera to auction 120 million shares next month
     
Viet Nam’s largest producer of construction ceramics and tiles Viglacera Corporation will auction 120 million shares on May 25.

The starting price for the shares is VND12,300 per share. Viglacera expects to receive VND1.5 trillion from the auction.

The income from the share auction will be spent on different business projects, including construction to expand the Yen Phong Industrial Zone.

Viglacera has total 307 million outstanding shares, equal to VND3.07 trillion in chartered capital. More than one-fifth of Viglacera’s shares are listed on the Ha Noi Stock Exchange under code VGC.

In 2017, Viglacera will issue shares based on the employee stock ownership plan at a rate of five per cent.

Viglacera expects to reduce State ownership in the company to 54 per cent by the end of 2017 and 51 per cent in 2019. 

Vietnam ups 30 places in globalisation index ranking

Vietnam ups 30 places in the latest KOF index of globalisation ranking released by the Swiss Federal Institute of Technology in Zurich, Switzerland on April 20.

Based on 23 variables, the KOF Index of globalisation measures the economic, political and social dimensions of globalisation of 187 countries and territories with data available from 1970 to 2014.

The Netherlands tops the list, followed by Ireland and Belgium. Switzerland is in fifth place.

The world’s major economies are more inward – looking and tend to occupy lower ranks on the index list. The US, the world’s largest economy, ranks 27th, while China is 71st, Japan 39th, and Germany 16th.

Solomon Islands remains the least globalised country in the world.

Vietnam aims to earn global reputation for rice quality

Rice has long been one of Vietnam’s most competitive agricultural products in the global market. But reform is urgently needed for sustainable rice production as the international integration process is posing numerous challenges to the sector.

Vietnam considers rice a strategic and irreplaceable component of its farm production. The Government has included rice production in 2 of 3 major national economic programs and invested heavily in irrigation, seedlings, and intensive and extensive farming development. 

At a recent conference on sustainable rice production in the Mekong Delta, Prime Minister Nguyen Xuan Phuc said “We will not only try to maintain our position as one of the world’s top rice exporters but also ensure that our rice has the best possible added values in the next one or two decades by meeting universal standards of nutrition and health. We must create breakthroughs in both policy and growth model to reform the rice sector.”

Vietnamese rice is now available in 150 countries with major markets including China, the Philippines, Malaysia, and Ivory Coast. 

Tran Tuan Anh, Minister of Industry and Trade emphasized that “It’s time to concentrate on building a brand for Vietnamese rice in world markets. It’s essential to improve the quality of rice and strengthen coordination between farmers, processors, exporters, and logistics networks to form a production chain”.

Vietnam aims to build sustainable rice production zones and earn a global reputation for Vietnamese rice in terms of quality and food safety by 2030.  

Vietnam in gradual shift to exporting more roast and ground coffee

The TNI King Coffee Factory that recently opened in Vietnam's southern province of Binh Duong is the latest player to join the race to ship more finished coffee products from the world's second-biggest producer.

With an investment of US$15 million, the factory aims to produce 9,000 tons of roast and ground coffee and nearly 20,000 tons of instant coffee annually for export, according to Le Hoang Diep Thao, director of TNI Corporation and the co-founder of Trung Nguyen Coffee. She has also helped build five plants for Trung Nguyen, one of Vietnam's biggest coffee makers.

TNI Corporation, which has recently gained a foothold in China's online market for instant coffee and plans to start distribution through a supermarket chain there, did not give the size of its annual green bean demand for the new factory. 

But to reach the targeted annual output, the Binh Duong-based facility will need at least 13,000 tons of green beans for roast and ground coffee and another 50,000 tons for the instant variety, according to a Vietnamese coffee expert at a European firm based in Ho Chi Minh City.

TNI's factory will have to compete with 200 plants already in operation or which which will be going into operation this year and the next, before the government puts a stop to new coffee processing plants in 2020 to ensure quality.

In December 2016, India's Tata Coffee said it will set up a freeze dried coffee plant in Vietnam to expand its market. In mid-January 2017, Tin Nghia Coffee Co began construction of a US$28 million instant coffee plant in the southern province of Dong Nai, which is slated to open in early 2018.

Demand for raw materials from the new plants will eat into exportable green bean stocks in Vietnam, the world's largest exporter of semi-processed robusta beans, which has seen a smaller harvest this season due to adverse weather.

"Demand is rising about 10% a year, and with a higher ratio of bad-quality beans from the last harvest due to bad weather, Vietnam may face shortages in the third quarter," said the expert, who declined to be identified by name, referring to the three-month period starting this July.

Top exporter Intimex expects the supply crunch to emerge in May or June, citing Vietnam's fast export pace in the first months of 2017.

Vietnam's 2016/2017 output has dropped 8% to an estimated 26.7 million bags (1.6 million tons) due to high temperatures and dry conditions brought by El Nino, the US Department of Agriculture (USDA) said in its December 2016 report. One bag contains 60 kilograms of beans.

Green coffee bean shipments are forecast to drop 13% from the previous 2015/2016 season to 23.5 million bags due to smaller output and more beans being used for domestic consumption or processed for export, the USDA said in its latest report.

As such, green beans accounted for 90% of Vietnam's total export volume, while roast and ground beans and instant coffee - or finished products - made up the rest. Vietnam's crop year lasts from October through September. 

The forecasts mark a slow change to the country's coffee export structure. Five years ago, finished products made up only 2% of Vietnam's coffee shipments, the government said.

Exports of roast and ground beans in the current 2016/2017 season are projected at 550,000 bags, unchanged from 2015/2016, but above the 457,000 bags shipped in the 2014/2015 season, based on the USDA report. The forecast volume represents 2% of Vietnam's total projected shipments.

The USDA also forecasts instant coffee exports to remain steady at 2 million bags, which shows a surge of 56% from the 2014/2015 season, while it said domestic consumption of roast and ground coffee would rise nearly 10% from the previous season to 2.5 million bags.

Consumption of green beans in Vietnam is estimated at 2.87 million bags, up 9% from a year earlier, the USDA said.

Vietnam does not publish breakdowns for its coffee exports.

The Vietnamese government has plans to raise the output of roast, ground coffee and instant coffee to 25% of total output by 2020, while the output of instant coffee alone will increase to 5.83 million bags by 2030 from the 255,000 tons targeted for 2020.

Japan teaches Vietnamese how to grow high quality rice

Rice has been a staple food of Vietnam for more than a millennium but today the local country farmers and rice processors only produce strains that tend to be of very low to middling quality.

Currently, the government has designated one-half of the total land available for agriculture production, or 3.8 million hectares, for rice cultivation. About two-thirds of the rice produced is used domestically with the remaining one-third exported to foreign markets.

Due to the failure of Vietnamese rice to meet with strict quality control standards most of the rice is exported to China, a country which there are no food safety standards to speak of.

The quality of Vietnamese rice isn’t problematic just because it contains too many pesticides, it relates as much to the failure of local farmers to grow high-quality varieties such as jasmine rice.

Top supermarkets in countries like America or Japan quite simply will not put Vietnamese rice on their shelves because consumers in those markets demand high quality rice.

The primary problem that the rice segment in Vietnam suffers from is fragmentation and small-scale production, said Dr Nguyen Anh Phong, a researcher at the Centre for Agriculture Policy.

This leads to poor selection of varieties to plant to begin with and then is further compounded lack of knowledge of good agricultural practices leading to improper storing and milling that in turn causes degradation and excessive post-harvest losses.

And unlike modern day industrialized countries where mechanical dryers are used, Vietnamese farmers typically let the sun do the work, which monumentally contributes to post-harvest losses.

Phong added that most Vietnamese farmers are not good businesspersons and lack even a cursory understanding of contract law let alone foreign commerce and international taxation issues.

Most notably, they suffer from a total lack of understanding of other cultures and consumers buying habits and preferences.

However, the rice segment in Vietnam is evolving as more Japanese rice growers are entering and transitioning to larger farms with higher levels of technical expertise in growing higher quality rice with more sophisticated management skills.

Smaller antiquated Vietnamese farms are falling by the wayside, Phong underscored.

In addition, the Ministry of Agriculture and Rural Development is currently in discussions to shift low-productivity rice areas populated by small local Vietnamese rice farms to raising fish and seafood, he noted.

The major global destinations of intact-grain Jasmine rice are the following countries: China, Singapore, Malaysia, the US, Singapore, Hong Kong, Côte d’Ivoire and Japan.

The five largest rice importers in the world are China at 4.7 million metric tons annually, Nigeria at 2 million metric tons, Philippines at1.8 million metric tons, Iran at 1.6 million metric tons and Indonesia at 1.6 million metric tons per annum.

Parboiled and other common non-fragrant white rice are being exported to Middle Eastern and African countries primarily by Thailand and India. On the other hand, the Basmati rice trade is currently dominated by Pakistan and India, with their shipments’ destinations primarily being to Middle Eastern countries.

Ten years ago, Thailand was recognized as the dominant force in the Jasmine rice market but, in the most recent of years, Cambodia and Vietnam have both made important headways into the market, causing Thailand’s share in the Jasmine market to drop to less than 50%.

Currently, with the help of Japan, Vietnamese have claimed 40% of the global market share for Jasmine rice, making it the biggest competitor globally for Thai ‘Hommali’ Jasmine rice.

HCM City boosts international cooperation in expanding Binh Dien market

Ho Chi Minh City welcomes experience and technology from international partners for the expansion and management of Binh Dien wholesale market, which is expected to become a trade centre and tourist destination.

Tran Vinh Tuyen, Vice Chairman of the Ho Chi Minh City People’s Committee, made the remark at a meeting in the southern city on April 20, calling for collaboration with his guest Bertrand Ambroise, director for international cooperation at Semmaris, which administers the Paris-based Rungis International Market, the world’s largest wholesale food market.

Ambroise stated with the experience from running Rungis, Semmaris is willing to consult and transfer technologies on market building and operation to the Sai Gon Trading Group (SATRA) to oversee Binh Dien market.

With a view to helping Binh Dien turn into a big wholesale market, Semmaris intends to focus assistance on warehouse management, waste treatment and freezer technology.  

Ambroise said his organisation also wants to increase trade transactions between the two markets and help Vietnamese agricultural products access EU markets.

The success of the Binh Dien expansion project depends largely on support from local authorities and close work between the public and private sectors, he added.

Commending his guest’s proposal, Tuyen suggested Semmaris and SATRA engage in research collaboration for a joint project to ensure hygiene and product quality at the expanded Binh Dien market.

The sides should boost transactions, contributing to bilateral trade between Vietnam and France, the official noted.

With 492 projects worth 3.4 billion USD, France is ninth among foreign investors in Ho Chi Minh City.-

Caltex launches new lubricant for heavy trucks
     
Chevron Corporation’s petroleum brand Caltex has launched a new lubricant for heavy trucks.

The company said Caltex Delo 400 MGX SAE 15W-40 is specially designed for Vietnamese market requirements and operates efficiently in both high- and low-sulphur diesel fuel environment.

“The oil and gas industry in Viet Nam produces a mix of low- and high-sulphur diesel fuel,” said Lennard Kwek, Asia Pacific marketing manager of Chevron Lubricants.

It can be used in all major heavy industries such as commercial transportation, construction, and mining, agriculture and power generation.

The newly product is available in 5l, 18l and 200l drums and gallon.

Chevron Vietnam Company Ltd is a subsidiary of Chevron Corporation, specialised in producing and selling engine lubricants, marine lubricants, industrial lubricants and other products. The company’s products are distributed by 60 distributors and 20,000 retailers nation-wide. 

SMEs solicit support for brand building
     
With their limitations in terms of capital, management, technologies and brand building, Vietnamese small and medium-sized enterprises need support to stay afloat amid the country’s global integration, according to the Viet Nam Retailers Association.

Speaking at a seminar titled “Brand Story” in HCM City on April 20, Dinh Thi My Loan, chairwoman of the VRA, said SMEs account for a majority of businesses in Viet Nam and struggle on many fronts like resources, research and development and others.

They are not very efficient at production or trading due to high costs and a lack of market research and ties with retailers and distributors.

Brand building is very important for companies, especially SMEs, she said, adding that some Vietnamese SMEs are still struggling to build their brands.

Nguyen Xuan Ton, owner of Long Trieu Coffee Establishment in Lam Dong Province shared his experience in developing his coffee brand, saying: “I started to think of developing a brand for my coffee in 2004.

“But at that time I did not know how to build brands or give a name for my products. Finally, I named my products after the names of my two children – Long and Trieu.”

In the beginning he promoted his products through traditional channels, and they sold very well.

Taking them to modern retail channels became a problem because they did not meet retailers’ requirements with regard to quality, packaging, and others, he said.

Do Manh Hung, director of Hung Thai Tea Co., Ltd in Thai Nguyen Province, said his company too found it hard to sell to supermarkets for similar reasons.

Nguyen Th? Cac Thuy, director of Tay Cat Co., Ltd of Dong Thap Province, which sells sweets, said despite having good products SMEs like hers find it hard to sell to supermarkets since their brands are not well-known.

It was at this time that Ton, Hung and Thuy took part in the “Accompany Vietnamese Brands” programme launched by Big C Vietnam last November to help SMEs enter the modern distribution channel.

SMEs that qualify are provided training in retail markets, quality management and product development; support to map out development plans; branding; and resource management, Le Thanh Trung, director of Big C’s SMEs support and development division, said.

They can also get preferential credit from Big C’s bank partners and support in distribution and logistics, and promote their products on the retailer’s communications channels, he said.

In four months since it began the programme has enabled 19 SMEs to make big strides in brand identification, packaging and distribution, and their products are available on Big C’s shelves, he said.

Ton said his company now sells 10-11 tonnes of coffee a month, including through modern channels, much higher than before.

Philippe Broianigo, CEO of Central Group Vietnam and Big C Vietnam, said through the programme, his company wants to make sure it addresses the issues faced by SMEs, usually with respect to cash, research and development, and in production.

“Definitively we are not going to finish this programme in a short time. It is important for Viet Nam, important for [customers] but also important for us because we also want to sell good quality products, we also want to satisfy our customers as a retailer.”

Loan said SMEs need support from distributors, authorities and business groups for building brands so that they can survive in the highly competitive market. 

Air France offers Vietnamese customers long-haul travel cabins
     
Air France has announced that customers flying between HCM City and Paris-Charles de Gaulle can enjoy its latest long-haul travel cabins.

Its three weekly flights, operated using Boeing B777-200 aircraft, will have 28 seats in the business cabin, 24 fully redesigned seats in the premium economy cabin and 260 seats in the economy cabin.

Delphine Buglio, country manager for Air France KLM Vietnam, said: “We are delighted to give our regular and new customers in Vi?t Nam the opportunity to travel this summer in the comfortable new Air France cabins, including the latest full-flat business class seat which is designed to offer our passengers optimum comfort, space and privacy.”

The new cabins will be offered between HCM City and Paris during the peak summer period from May 30 to September 3.

In the business cabin, the seat adapts to the shape of each individual, from a seating position to a real two-metre bed.

Each passenger also has a 16-inch (41 cm) HD touch screen.

Air France is the only European carrier with direct flights from HCM City and Ha Noi and Paris-Charles de Gaulle, and celebrated 87 years of flights between Vietnam and France last month.

It has six flights a week between Hanoi and Paris operated by code-share partner Vietnam Airlines.

Workshop in Italy introduces Vietnam’s investment potential

Vietnam’s investment potential was highlighted at a workshop jointly organised in Rome by the Vietnamese Embassy in Italy and the Italian Progress Time Magazine.

Vietnamese Ambassador to Italy Cao Chinh Thien and Trade Counsellor Bui Vuong Anh briefed participants about political and socio-economic situation as well as investment incentives in Vietnam.

Thien underlined opportunities for Italian firms to invest in and export to Vietnam, particularly in infrastructure development, mechanics, agriculture, agricultural processing, chemicals, construction materials, tourism, technology transfer in environmental protection, and wastewater and solid wastes treatment.

The Governments of Vietnam and Italy have identified economic cooperation as a key pillar in the bilateral strategic partnership, afactor to drive forward and realise the fruitful political relations between the two nations, Thien said.

Vietnam will continuously create favourable legal conditions for Italian investors to do business in the country, Thien affirmed.

The European Union (EU) and Vietnam have finalised negotiations and will soon sign the EU-Vietnam Free Trade Agreement (FTA), Thien said, adding that the FTA will be a tool to promote trade relations between Vietnam and EU members, including Italy.

The Ambassador pledged to continue serving as a bridge connecting and supporting Italian firms in investment in Vietnam and partnering with Vietnamese enterprises.

During the event, representatives from Italian firms also shared their experience in investing in Vietnam, underlining the country’s potential and its role as a gate for Italian firms to enter ASEAN and Asian markets.

Several videos featuring Vietnam’s tourism potential, culture and people were screened during the event.

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