Stocks fall on mixed economic data

Stocks sank on both national trading boards last week, with economic news failing to boost investor confidence – a downward trend that was expected to extend into this week.

The Ministry of Finance's decision to lower petrol prices by another VND700 to VND21,200 per litre had little impact on the market. Meanwhile, consumer prices in the major cities of Ha Noi and HCM City in June were reported to have receded slightly from the prior month, with a deflationary trend now raising concerns of a looming recession.

"It seems investors are waiting for a clearer indication of economic trends, such as credit growth figures, second-quarter growth, and second quarter earnings," FPT Securities Co analyst Le Thi Bich Hang wrote in a report.

The economy has not shown many positive changes despite a series of Government support policies, Hang said. GDP growth in the first three months was disappointing, about 70 per cent of businesses reported losses during the period, and credit growth continued weak through May, she added.

Bad debt levels in the nation's banking system worsened, climbing from just over 3 per cent at the end of last year to 4.14 per cent and a total of VND108 trillion ($5.14 billion) on April 30. Bad debt ratios have been rising at an alarming rate of 8.6 per cent per month, reflecting rapidly growing levels of defaults on commercial loans.

On the HCM City Stock Exchange last week, the VN-Index lost 1.93 per cent over the course of last week, closing on Friday at 427.17 points. Poor trading during the week dragged the volume of trades down 20 per cent from the previous week's level to a daily average of about 51.5 million shares and a value averaging just VND822 billion ($39 million) per session.

Banking, seafood and chemicals shares were the only showing overall gains during the week. All other sectors dropped, including information technogly shares, which fell by an average of 5.4 per cent on average; mining firms, which lost 3.6 per cent; and securities companies, which declined by over 3 per cent.

The VN30 Index, which tracks the HCM City bourse's 30 leading shares by market capitalisation and liquidity, also sank by 1.49 per cent to stand at Friday's closing bell at 500.34 points.

The Bank for Investment and Development of Viet Nam (BIDV), the nation's third largest bank, made an initial public offering last December of shares representing 3 per cent of equity and had planned for its shares to debut on the HCM City exchange tomorrow. However, BIDV announced last week that it would delay listing its shares to the end of next quarter due to gloomy market conditions, saying that listing at the present time might negatively affect share values and harm shareholder interests.

On the Ha Noi Stock Exchange last week, the HNX-Index also gave up 2.2 per cent of its value to close the week at 73.31 points. The daily value of trades during the week averaged about VND366 billion ($17.4 million), down 28.6 per cent from the previous week.

Foreign investors were net buyers last week on both exchanges. They picked up shares worth a combined net of over VND132 billion ($6.3 million), of which VND116 billion ($5.5 million) were disbursed in HCM City and VND16 billion ($762,000) in Ha Noi.

Sluggish trades pull shares down

Shares failed to retain earlier gains this morning, extending last Friday's losses.

On the HCM City Stock Exchange, the VN-Index closed the morning session at 424.64 points, a 0.6 per cent off with 186 losers out of 262 listed stocks.

Market value reached 48.7 per cent of last Friday's entire session, totalling VND368.2 billion (US$17.5 million) on a volume of 25.6 million shares.

The VN30, tracking the southern bourse's leading stocks in capitalisation and liquidity, retreated 0.44 per cent to 498.16 points.

Of these 30 shares, only food processor Masan Group (MSN) and property and entertainment services developer Vincom (VIC) advanced 2 and 1.9 per cent, respectively. Meanwhile, others tumbled or ended unchanged in price.

Trading was even lower in Ha Noi, with value and volume of trades reaching only VND214.2 billion ($10 million) and 20.9 million shares.

The HNX-Index on the Ha Noi Stock Exchange lost over 1.4 per cent to 72.26 points. Decliners outnumbered advancers by 170-38.

PetroVietnam Construction Co (PVX) was the most active code nationwide with nearly 2.2 million shares changing hands.

June CPI at -0.26 pct, 1st drop in 38 months
 
Vietnam’s consumer price index (CPI) posted minus 0.26 percent growth in June 2012, the first drop in 38 consecutive months, said the General Statistics Office of Vietnam (GSO).

With the new CPI data, Vietnam’s CPI still rose 2.52 percent from December 2011, and 6.9 percent year on year.

Of the 11 groups of commodities and services used for the CPI calculation, five saw prices drop against the previous month, including food-foodstuff-catering services (-0.23 percent), housing- construction material (-1.21 percent), transport (-1.64 percent), posts and telecoms (-0.02 percent), and culture-entertainment- tourism (-0.27 percent).

The remaining saw prices inch up over May, ranging from 0.1 percent to 0.62 percent.

Since the five aforementioned groups with a negative growth rate in prices have a weight of about 65.4 percent in the GSO's price basket, which has been expanded to cover 573 items, up from 495 previously, they dragged the whole index down.

The CPI growth rate in Vietnam’s eight economic regions all turned negative, ranging from 0.04 percent to 0.53 percent. Of which, the strongest fall was in the northern central region, while the slightest fall was in the Central Highlands.

Excluded from the CPI calculation, the gold price index in June decreased 2.03 percent over the previous month, down 7.51 percent compared to December 2011, but up 9.12 percent over the same period last year.

The US dollar price index increased 0.2 percent over the previous month, down 0.8 percent from December 2011 but up by 1.18 percent over the same period in 2011.3

Previously, the CPI in Ho Chi Minh City and Hanoi, Vietnam’s two biggest cities, saw the first negative growth rates in two years and ten years in June 2012, respectively, according to the municipal statistics offices.

HCMC’s CPI declined by 0.43 percent against May, the first month-on-month fall after 21 months of constant increases, while Hanoi’s CPI fell by 0.17 percent month on month in June 2012, the first negative month-on-month CPI figure in the last 10 years.

Quach Manh Hao, deputy director of Thang Long Securities, told Vneconomy that though he is not sure if the CPI next month will be negative or not, it will be very low and the inflation index will continue to decline.

“I think the index will continue to decline mainly due to the fact that the prices last year were at a high level,” he said.

The lowest CPI rise is expected to fall in September or October this year before increasing slightly by the year-end due to policy cycles.

“I think the year-end inflation rate will be about 6-7 percent.”

The World Bank has cut its forecast of Vietnam's 2012 inflation to 9.5 percent from a previous estimate of 10.5 percent.

The Vietnam Center for Economic and Policy Research (VEPR), under the Hanoi National University, earlier this month affirmed in a report about the economic prospects in 2012 that the inflation rate would be “abnormally low” this year.

In the most pessimistic scenario drawn up by the center’s economists, the inflation rate would stand at just 6.2 percent by the end of the year.

In May 2011, VEPR predicted the CPI rate would be at 15.5 percent, in the most optimistic scenario, and over 18 percent in the most pessimistic one. Vietnam’s CPI then peaked at 18.23 percent in August 2011.

The WB then forecast a 9.5 percent CPI growth rate for Vietnam in 2011.

Vietnam to sell shares in Dung Quat refinery operator

State oil and gas Petrovietnam group will sell shares in its subsidiary, Binh Son Refining and Petrochemical Co which is the operator of the country's only oil refinery, to the public within this year, the government said.

The operator of the $2.2-billion Dung Quat refinery will have less state ownership along with 92 other state-owned enterprises this year, the Finance Ministry said in a statement issued late on Friday, but gave no values or any specific dates.

It uses the term 'equitisation' instead of privatisation to describe the process of reducing state ownership via initial public offerings, in which the state retains a majority of shares.

The ministry did not say how much of the stake in Binh Son would be offered to the public. An IPO in Vietnam is separate from a listing, which can come several years after the shares have been sold to the public.

The refinery operator is the only firm run by Petrovietnam to go public this year, according to a Finance Ministry list seen by Reuters.

Binh Son Refining and Petrochemical Co, established in 2008, is located in the central province of Quang Ngai, where the 130,500-barrel-per-day refinery was built by French oil services group Technip and has been operational since May 2010.

The company has also been seeking to sell a 49 percent stake in the refinery, now fully owned by Petrovietnam, to foreign investors to raise funds and boost its capacity by 54 percent to 10 million tonnes.

Many state-owned enterprises, which take out most of the bank loans in Vietnam, have been losing money, while government reform to diversify state ownership via privatisation has been slow, upsetting investors.

Last week the government required state-owned enterprises to disclose their financial statements, as the country seeks to raise the competitiveness of the public sector and boost investor confidence.

Hanoi sees FDI drop by half in first 6 months

An additional 150 foreign direct investment (FDI) projects with a total capital of US$450 million got underway in Hanoi in the first half of this year, according to the municipal Statistics Department.

This represents a 7.4 percent reduction in the number of projects and a 49.5 percent decrease in registered capital compared to the same period last year.

Cong Xuan Mui, Head of the municipal Statistics Department said the FDI has been mainly invested in the services sector, which requires less capital and land, while manufacturing received a significantly smaller sum.

To add to manufacturers woes, the acreage of industrial zones available for new investors is now limited and newly established industrial zones are struggling with compensation claims and land clearance issues.

FDI drops 60% in Ho Chi Minh City

Industrial parks and export-processing zones in Ho Chi Minh City have attracted US$202.29 million worth of both direct and indirect investments in the first six months of this year, down by 38 percent year-on-year, according to the HCMC Export and Processing Zone Authorities (HEPZA).

The attraction, however, is only 40.46 percent of the targeted figure for 2012.

Foreign direct investment (FDI) accounts for $75.84 million of the total mobilized capital, representing a 59.45 percent year on year drop.

According to HEPZA, 90 projects in the city’s industrial parks and export-processing zones have had to suspend operation, reduce production or liquidate in the first six months of the year due to capital shortage, declined orders, or poor consumption.

Of these, four FDI projects ceased operation, while four others had to dissolve. 16 others had to cut down on production.

In related news, Hanoi attracted $450 million worth of additional FDI from 150 projects in the first half of this year, according to the municipal General Department of Statistics.

This represents a 7.4 percent reduction in the number of projects and a 49.5 percent decrease in registered capital compared to the same period last year, according to a Vietnam News report.

Cong Xuan Mui, head of the municipal Statistics Department was quoted by VNA as saying that the FDI has been mainly invested in the services sector, which requires less capital and land, while manufacturing received a significantly smaller sum.

To add to manufacturers woes, the acreage of industrial zones available for new investors is now limited and newly established industrial zones are struggling with compensation claims and land clearance issues, VNA reported.

Airlines discount tickets for summer holiday
 
Local budget airline Vietjet Air and flag carrier Singapore Airlines have rolled out promotions with interesting discount fares for flights between Vietnamese cities and overseas this summer holiday.

With the tension at EURO 2012 reaching fever pitch, VietJetAir is launching a special promotion only available for a three-hour period every night next week with 5,000 tickets for just VND299,000 ($14) up for grabs.

The sale lasts from 9pm till midnight from 25 June to 1 July 2012 on routes Ho Chi Minh City – Hanoi, Ho Chi Minh City – Da Nang, Hanoi – Da Nang (for travels between 15 August and 15 November 2012); and the soon-to-be launched Ho Chi Minh City – Hai Phong route (for travels between 1 October and 15 November 2012).

Celebrating its 20th anniversary in Vietnam, Singapore Airlines is also offering amazing fares from Ho Chi Minh City, Hanoi and Da Nang to 20 destinations including Melbourne, Delhi, Maldives, Istanbul or Paris.

The promotion lasts for 20 hours from 4am to 12am on 28 June 2012 and is valid for round-trip travel between July 5 2012 and March 31 2012.

Shipbuilder likely lose $30 mln from client’s hesitation

A German partner has refused to receive a vessel worth more than US$30 million it contracted Hyundai – Vinashin Shipbuilding Co (HVS) to build, HVS deputy CEO Cao Tuan Dung said Friday.

“The ship was completed last year but the partner has refused to take it under an excuse of economic turbulence,” said Dung.

The official said HVS has not signed any new contract since September 2011 despite its capacity of building 17 vessels a year with a total loading capacity of 1 million tons.

“Orders started to decline in 2010,” he said.

“This year we will hand over 17 ships to foreign partners, and only a few [vessels] next year thanks to some contracts inked two or three years ago.

“If the situation does not get better, we may have to lay off a large number of workers.”

In related news, the Phu Yen Shipbuilding Co, a subsidiary of loss-making Vinashin, yesterday held an auction to sell 510 tons of steel at the facility.

“The metal was bought to build a 4,000 ton vessel and two ships with capacity of 4,100 tons for Binh Dinh Shipbuilding Co,” the company’s director Vo Tan said.

“However, when the first ship, made under a VND70 billion ($3.36 million) contract, was 80 percent completed, the Binh Dinh Co just did not bother to get the ship and ignored us, so we had to stop building due to money shortage.

“The unfinished 4,000-ton ship has been left unattended to since 2008, and become severely deteriorated,” he said.

Work starts on Vietnam’s first car engine plant
 
Automaker Truong Hai Auto JSC (Thaco) yesterday broke ground on a vehicle engine manufacturing plant, the first of its kind in Vietnam, in the central province of Quang Nam’s Chu Lai Open Economic Zone.

A technology transfer project from Korea, the Truong Hai – Chu Lai plant is expected to become operational in 2013. Its first construction stage is expected to conclude in early 2014.

The plant will produce four-liter engines with Euro II and Euro III emission standards intended for trucks with loading capacity from 2 to 4.5 tons, and 17- and 40-seat buses.

“These products bear very important significance to the local mechanical sector, and will lay the ground for the development of the auto-making and supporting industries in the central part of Vietnam,” said Deputy Minister Hoang Trung Hai at the groundbreaking ceremony.

Meanwhile, the Vietnamese automobile market is on the decline, according to Ngo Van Tru, deputy head of the Heavy Industry Agency under the Ministry of Industry and Trade.

“Consumption in the first four months of this year saw a sharp fall, and the full-year figure is expected to be only 81,000 cars, equal to 2007,” he said at a conference held yesterday to discuss ways to ease difficulties for the auto market.

Tru said the slumped sales caused a VND6 trillion (US$288 million) worth of revenue loss to the state budget.

“We should seek ways to increase consumption to develop the automobile market,” he said.

While the Ministry of Industry and Trade is seeking ways to boost the auto-making industry, other ministries and agencies tend to limit its development.

The Ministry of Transport, for instance, has increased the registration fee for cars to 20 percent on the price of a vehicle, and mulled imposing another charge called ‘fee to restrict personal vehicles.’

“The current registration fees are too high, and when the government does not officially say whether the ‘restriction fee’ will be approved or not, the market will continue to collapse,” warned Tru.

Cambodia, Vietnam promote investment

The third Vietnam-Cambodia investment cooperation conference was held in the southern province of Kien Giang on June 24 co-chaired by Prime Minister Nguyen Tan Dung and his Cambodian counterpart, Hun Sen.

The conference was part of activities in the Vietnam-Cambodia Friendship Year 2012 and celebrations of the 45th anniversary of the two countries’ diplomatic ties.

Addressing the event, PM Dung expressed his pleasure at the positive development in Vietnam-Cambodia cooperation, especially in economics, trade, investment and tourism.

The Vietnamese Government has taken measures to facilitate business operations in the country, he said, adding that Vietnam wants the Cambodian Government and ministries to create further conditions for Vietnamese firms investing and operating in Cambodia.

He suggested both sides continue maintaining regular dialogue mechanisms in order to timely ease difficulties and obstacles for their businesses and increase investment and business activities, alongside accelerating investment promotion to help firms seek partners and expand business.

The Vietnamese Government, ministries, agencies and localities welcome and create favourable conditions for Cambodian companies to invest and do business in the country as well as facilitating Vietnamese firms’ investment in Cambodia, PM Dung affirmed.

For his part, Cambodian Prime Minister Hun Sen stressed the significance of the conference, saying he hopes it will contribute more to seeking new opportunities in increasing and expanding economic-trade cooperation between the two countries.

He introduced Cambodia’s economic policies, including those on foreign investment attraction, and affirmed that the Cambodian Government will unceasingly build better investment climate.

Cambodia welcomes foreign investors, including those from Vietnam, for long-term cooperation, he said.

At the conference, leaders of ministries and agencies discussed with representatives of businesses latest policies and incentives to attract and manage foreign investment.

The two government leaders witnessed the signing of a protocol to amend and supplement the 2001 Agreement on Investment Encouragement and Protection between Vietnam and Cambodia, creating a new legal basis for stepping up cooperation and investment between the two countries in the coming time.

According to statistics released by the Ministry of Planning and Investment, Vietnam is operating 112 projects capitalized at over US$2.36 billion in Cambodia.

Two-way trade increased sharply from US$1.2 billion in 2007 to US$2.8 billion in 2011. Both countries are endeavouring to raise their trade value to US$5 billion in the next five years.

Green economy poses challenges to Vietnam

Like many other developing countries, Vietnam faces tough economical challenges, but one that keeps policymakers awake at night is how to create jobs in a green economy.

However, a recent report released by the World Bank’s (WB) Hanoi office stresses that a green economy does not necessarily slow down economic growth. The secret to success, the report explains, is changing infrastructure to a greener model as the economy matures.

As Marianne Fay, Chief Economist of the Sustainable Development Network of the WB, explained, the growth of a green economy will result in the loss of numerous traditional jobs, which could be deemed as devastating by local communities, especially the poor. Yet, the move towards greener methods and technologies will create new pockets of jobs and professions.

Fay cited the growth of the renewable energy market in Germany as a successful model, which produced more than 400,000 new jobs throughout the country.

Bakhodir Burkhanov, an official of the United Nations Development Programme (UNDP) Vietnam, recently remarked that a handful of Vietnamese businesses in the steel, cement, and tourism industries are already adapting traditional processes towards greener methods.

He noted that these business initiatives should be nourished and expanded through suitable planning.

Pham Hoang Mai, an official from the Ministry of Planning and Investment, developed Burkhanov’s point further, claiming that the government should formulate policies to encourage the involvement of the private sector in Vietnam’s green strategy.

The shortage of capital and the resistance to a shift in job structure, however, are impeding the implementation of the country’s green growth, Mai added. He predicted that Vietnam’s green growth strategy will be unique to the country, and one that mirrors the current roadmap for economic development.

Victoria Kwakwa, WB Country Director for Vietnam, echoed Mai, saying that the Southeast Asian country should define different priorities for different points in time that complement its more concrete policies.

Fisheries exhibition attracts local, foreign businesses

The Vietnam Fisheries International Exhibition (Vietfish) will be held at the Saigon Exhibition and Convention Centre (SECC) in Ho Chi Minh City from June 26-28.

The event, organized by the Vietnam Association of Seafood Exporters and Producers (VASEP), has drawn the participation of 175 businesses to showcase machinery, equipment and services on 330 stands.

One third of the stands represent enterprises from Thailand, the Republic of Korea, Japan, France, India, Norway and the US.

The event has also attracted booths from foreign organizations such as the Bangladesh Fisheries Society, Thaifex 2012-World of Food Asia, the Shanghai Exhibition (China) and the Global Aquaculture Alliance.

Businesses will have the opportunity to introduce their products at the exhibition, seek partners, and expand their markets. They will also be able to gain useful, updated information at seminars on the new regulations for exporting goods to the US.

PVEP to explore for oil in Peru

The PetroVietnam Exploration and Production Corporation (PVEP) expanded its presence in South America by acquiring over 50 percent of a project to explore oil in Peru, from London-based Perenco SA.

PVEP and Perenco SA signed the deal for 52.6 percent of Block 67 in London on June 21.

Speaking at the signing, Jean Michel Jacoulot, Perenco CEO, said he hopes the joint operation will be the first of many between the two companies.

Congratulating new partners PVEP, he praised the company's previous operations as well as its specialists, technicians and workers.

"We found a good partnership can be established," he said.

Jacoulot also said he hopes that the first oil will flow from Block 67 by the middle of next year.

PVEP Chairman and CEO Do Van Khanh said the expansion of PVEP operations in South America plays an important role in its strategy to reach out overseas markets.

The output of oil from this project will help ensure national energy security, he added. Currently, PVEP, one of PetroVietnam's key companies, has 44 domestic projects in operation and 19 overseas in 15 countries around the world.

Indonesia wants Vietnam to invest in seafood processing

Indonesia is seeking Vietnamese investment, especially in the fishing and seafood processing sectors in which it has great potential.

At the Vietnam–Indonesia Business Meeting held in HCM City on June 22 by the Indonesian Consulate General, Indonesian and Vietnamese delegates said Indonesia's waters had huge fish stocks.

The country, made up of more than13,000 islands and with a large demand for fishing and other vessels, was also looking for investment from Vietnamese firms in ports, shipping, and shipbuilding.

Besides, the mining and oil exploration industries also offered much promise.

The meeting was chaired by Indonesian Ambassador Mayerfas, who took charge just a few months ago and was visiting HCM City for the first time.

Bambang Tarsanto, the Indonesian Consul General in HCM City, said: "The basis of good co-operation between two countries is the need to complement one another, therefore we need to widen our businesses sectors to improve the prosperity of our people."

Mohamach Abdoula, an Indonesian businessman with interests in fisheries and agriculture, said his country wants Vietnamese investment but large fishing enterprises have so far ignored Indonesia.

Only some small Vietnamese fishing firms wants to invest, he added.

Tarsanto said Vietnam and Indonesia have targeted trade of US$5 billion before 2015.

The Indonesian diplomats said ties have been moving to a higher level after the two nations signed a declaration for a framework of friendly and comprehensive partnership in 2003.

With a large and affluent population and abundant natural resources, Indonesia is a promising market as well as investment destination for Vietnam, Tarsanto said.

Indonesia, which achieved 6.3 percent economic growth last year, has a GDP of around US$1 trillion and per capita income of US$3,400.

Over 90 State enterprises to go public in 2012

As many as 93 State businesses will be equitized  in 2012, announced the Ministry of Finance.  

The Binh Son Oil Refinery – Petrochemical Company (BSR) under the Vietnam Oil and Gas Group, and the Vietnam National Textile and Garment Group (Vinatext) are among the top companies listed for restructuring.

The Vinaconex Investment and Mineral Trading One Member Company and Lai Chau Mineral Company, both members of the State Capital Investment Corporation (SCIC), are on the list to be equitized, as well as two branches of Vietnam National Shipping Lines (Vinalines) in Hai Phong and Nha Trang and its Khuyen Luong Port Limited Liability member company.

The Vietnam Paper Corporation (VINAPACO), Vietnam Cement Industry Corporation (Vicem), Vietnam Glass and Ceramics for Construction Corporation (Viglacera) and the Vietnam Machinery Erection Corporation (Lilama) are also scheduled to be equitized this year.

Steady growth in Vietnam-Mexico trade

Vietnamese exports to Mexico reached US$78.55 million in April, Vietnam’s Embassy in Mexico reported on June 21.

According to the Embassy’s Commercial Office, exports to Mexico, the second largest economy in Latin America, only recorded an eight percent increase over last year’s same period.

However, the figures still indicate a steady increase in two-way trade, thanks to Mexico focusing more and more on Asia and diversifying its market policies and Vietnamese businesses becoming more dynamic.

Commercial Counsellor Hoang Anh Dung said that in the first four months of this year, Vietnam earned US$370.7 million from exports to the North American market, a rise of nearly 30 percent thanks to an increase in the volume of garments, footwear, coffee and aquatic exports.

The Southeast Asian nation also imported over US$26 million worth of commodities from Mexico during this period, a year-on-year rise of 62 percent.

Remarkably, the import value increased more than twofold in April, from US$3.9 million to US$8.3 million, due to a high demand for electronic equipment and cattle fodder.

VND61 trillion needed to develop the nation’s fisheries

Vietnam’s fishery sector requires VND60,857 billion to implement its development strategy to 2020, claimed participants in a seminar in Hanoi on June 22.

Of this figure, VND30,000 billion will be allocated to aquaculture breeding activities;VND24,257 billion to seafood processing which will see the introduction of modern technologies; and VND6,600 billion to seafood exploitation to develop off-shore fishing.

Deputy Minister of Agriculture and Rural Development, Vu Van Tam, emphasised that the fishery sector should focus on developing a national brand and becoming more competitive in the global market.

It is also essential to establish large fishing centres and key breeding areas, he added.

According to the sector’s zoning plan by 2020, total product output will reach 2.4 million tonnes, projecting an annual growth rate of 16-17 percent. The sector is expected to earn an export revenue of US$11 billion in 2020.

To achieve this target, Nguyen Thanh Tung, Director of Vietnam's Institute of Fisheries Economics and Planning (VIFEP), stressed the need to apply advanced technologies in aquaculture breeding and post-harvest conservation. Local seafood producers and exporters should increase added values for their products, expand distribution networks and strengthen links with importers while ensuring food hygiene and safety and protecting the environment, he added.

Hanoi’s GDP up 7.6pct in six months

The capital city has obtained a GDP value of nearly VND41 trillion in the first half of this year, a rise of 7.6 percent from a year ago, according to the Municipal Statistics Office.

The service sector saw the highest growth of 8.5 percent to generate VND18 trillion and contribute 3.8 percent to the common growth.

Despite the 8.1 percent growth, the industrial and construction sector posted the highest value of more than VND20.3 trillion and contributed 4 percent to the common growth.

Meanwhile, the agro-forestry and fishery sector fell 2.9 percent to VND2.3 trillion, causing the capital’s GDP to dip 0.2 percent.

Cong Xuan Mui, head of the Municipal Statistics Office, attributes the fall to the recent harsh weather conditions, especially the prolonged cold winter and a high level of humidity that affected agricultural crops.

In addition, he says, the agricultural sector was confronted with difficulties, including the shrinking cultivation acreage, high prices of cattle feed, and complex developments of crop diseases.

However, 7.6 percent is an ‘encouraging’ GDP rate, given domestic stagnant business production and global economic slowdown, says Mui.

Vietnam attends APEC meeting on food security in Malaysia

After two decades of renewal process implementation, from a country facing a serious shortage of food, Vietnam has become the world’s second largest rice exporter.

The statement was made by Pham Quang Huy, an expert from the Ministry of Agriculture and Rural Development at an Asia-Pacific Economic Cooperation (APEC) seminar on food security in Malaysia from June 18-21.

During the four-day seminar, participants discussed a series of issues related to techniques to raise food production efficiency and productivity, increase income for farmers, promote agricultural production, and increase food reserves. They also proposed measures to improve transport and distribution networks, improve capacity for agricultural production and encourage the private sector to take part in investment projects, particularly post harvest and transport ones.

Huy presented a report on Vietnam’s food security situation and practical measures in this field.

Despite its significant achievements in the past two decades, Vietnam is yet to cope with some challenges, such as great losses caused by natural disasters, climate change and poor storage systems, Huy said.

So the Vietnamese Government has worked out some solutions aimed at integrating national food security into the national socio-economic development strategy, developing agriculture comprehensively and effectively and building high efficient and competitive production zones as well as purchase and reserve systems in localities to help people access high quality food and encourage all economic sectors to invest in ensuring national food security.

Wood industry looks to new markets

While outbound woodwork sales to European markets are on the wane given falling demand, a couple of new markets have emerged, providing a much-needed lifeline for local wood products exporters.

There has been a sharp decline in outdoor furniture exports to the EU, said Nguyen Ton Quyen, vice chairman of the Vietnam Timber and Forest Products Association (Vifores). The gloomy outlook for the euro zone has compelled consumers to cut down on their spending on these products.

However, many customers from Russia and India are eyeing Vietnamese wooden items and placing orders for sample products, said Quyen.

Moreover, if negotiations on the Trans-Pacific Partnership (TPP) agreement succeed, more Latin American countries such as Chile and Peru will come to Vietnam to inspect the local wood processing industry, according to Quyen.

The EU economic downturn definitely has a deep impact on Vietnamese furniture exports, said Huynh Quang Thanh, general director of Hiep Long Co., Ltd based in Binh Duong Province. However, the firm has found new clients which are not traditional markets of Vietnam’s wood processing sector.

The country obtained US$360 million in timber and woodwork exports in May, bringing  total exports in the five-month period to nearly US$1.8 billion, up 20.5% year-on-year, according to the Ministry of Agriculture and Rural Development. Furniture exports to the U.S. and Japan grew by 31% and 30% respectively while the EU recorded a decline.

Economic growth still a concern

The Government has set an economic growth target of 6-6.5% for 2013, the same as this year, despite the economy experiencing a downturn.

Directive 19/CT-TTg, recently signed by Prime Minister Nguyen Tan Dung, requests ministers and local agencies, along with State groups and corporations, to map out plans for socio-economic development next year.

In the directive, the Prime Minister highlights that the main focus of next year is carrying out the policies on monetary, credit, taxation, land and administrative reform to remove the difficulties in production and business, as well as boost growth.

However, the directive states that macro-economic stability remains a priority next year. The document specifies flexible and prudent monetary policy is aimed to stabilize the macro-economy, support production and business, restore growth, curb inflation and keep the currency value stable.

In addition, the Prime Minister calls for policy consistency in the market-driven price management of power, coal, fuel and public services, meeting the targets of inflation restraint and macro-economic stabilization.

GDP growth was only 4% in the first quarter and is estimated to reach 4.5% in the second quarter. In a report sent to the National Assembly (NA), the Ministry of Planning and Investment said the economic growth target of 6-6.5% this year is very hard to achieve due to the difficulties at home and abroad. The ministry forecast this year’s growth may only reach 5.5-6%.

However, Minister of Planning and Investment Bui Quang Vinh committed to strive for growth of at least 6% in 2012.

He said: “If failing to achieve 6% growth, our economy will leave dire consequences on jobs, multiple businesses would go bust, the economy could not develop, and social security issues could not be resolved. Therefore, the minimum growth must be 6%.”

Meanwhile, many NA deputies said the Government had tightened the monetary policy so much that the economy fell into a downturn, and CPI dipped to 3% in the year’s first half, lower than the goal of below two-digit level passed by the NA late last year.

Deputy Nguyen Ba Thuyen of Lam Dong Province complained: “We have cut down on too many (public investment projects) under the spirit of Resolution 11, which obviously has lead to economic impoverishment.”

The minister of finance and the governor of the central bank pledged to gradually loosen the fiscal policy and the monetary policy to support the economy and businesses. However, NA deputies expressed a concern that this will pose a risk of returning high inflation in 2013.

Minister Vinh said the economic growth target in the 2011-2015 period had been lowered to 6.5-7% at the 11th Party Congress, instead of the 7-7.5% given earlier.

“That is a brave and straightforward look into the reality which has been approved by the NA,” he told a recent NA meeting.

Special services attract customers amid economic difficulties
 
While hundreds of businesses go bankrupt or face financial hardship some of the more unique parts of the service industry have been faring quite well.

Services such as plucking grey hairs, taking care of domestic animals and leasing virtual offices have seen no shortage of customers.

Le Trung Tin, Director of an event organising company in Ba Dinh District, Hanoi, said his firm has targeted wealthy families for weddings, funerals, birthdays and other ceremonies during the economic downturn. The company charges between VND3-5 million (USD142.8-238) to plan parties and also offers event consulting services.

'Virtual offices' have also become a trend among businesses.

Le Cam Ha, of My Dinh new urban area, Tu Liem District, shared, “Virtual offices are relatively new in Vietnam, mainly serving start-up businesses that are able to do most of their work online. Many foreign companies also use this service to open new branches. Virtual offices are managed by IT and leased at VND1-2 million (USD47.6-95.2) per month. The service often includes receptionists, fax system and other conveniences.

These offices also provide support services, such as business registration certificates, tax declaration support and free web design.”

A number of hairdressers have started to offer hair plucking services to get rid of grey hair. For many this has become their main business.

Vu Hai Minh, owner of hairdresser on Van Cao Street, Ba Dinh District, said that she had to hire extra staff to provide the service to the middle-aged customers. Although the prices are not high, the number of customers has made it profitable. Minh hopes to focus on hair plucking to make up for the decline in demand for other services.

Pet care has also been taking off, particularly in the summer as families go on holiday. Prices depend on the the animal's weight; VND90,000 (USD4.28) for an animal weighing 1-10kg, VND130-150,000 (USD6.17.1) for 10-15kg and VND180,0000-200,000 (USD8.57-9.52) any animal over 15kg. Higher fees can be charged for extra care, such as better quality food, daily walks, playgrounds and even air-conditioned rooms.

The companies also provide beauty care for the animals such as nail clipping and feather dyeing.

Senior management forced to take rock-bottom wages    

Company executives are biting the bullet and sharing in their staff’s cash woes due to the difficulties their companies are facing. Some members of the management board are accepting monthly salaries of VND3-5 million (USD143-238.4) which are commonly given to unskilled workers.

The recent Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO) annual shareholder meeting agreed that the company’s chairman would be paid based on the company’s performance. Other members of the board would be paid VND3 million (USD143) per month.

IDICO operates in construction, interior and exterior decoration, real estate trading.

Electronics Communication Technology Investment Development Company’s annual general meeting approved salary levels for top management of 2% of the company’s post-tax profits. The head of the inspection board will be paid VND5 million (USD238.4) per month, while other members in this board would receive VND3 million (USD143.5) per month each.

Nam Kim Steel Company shareholders set wages for the chairman of board at VND120 million (USD5,722) per year, vice chairman of the board VND84 million (USD4,005) per year, and remainder of the board VND60 million (USD2,861) per year each.

Head of the Nam Kim’s inspection board is paid VND10 million (USD476.8) per year, members of this board get paid of VND5 million (USD238.4) each.

Although domestic economy has had signs of rebounding, many companies continue to suffer serious losses or were left unprofitable in the first quarter of the year.

In Binh Duong Trade and Development Company’s business report, taxed profits in this first quarter were claimed to have reached VND976 million (USD46,542), marking a decrease of VND18.7 billion (USD891.750) compared to the same period last year.

Chairwoman Bui Thi Lan, in her report given to the Ho Chi Minh City Stock Exchange, attributed this to the economic downturn, and due to the fact that the business often performed better in the third and fourth quarters of the year.

Mirae Company’s post-tax profits reached VND259 million (USD12,350), marking a 50% decline compared to the same period last year.

A Mirae Company official attributed this to a continuous rise in the cost of input materials combined with price cuts in the company’s product line.

Stricter rules for low-income housing
   
Low-income houses will be occupied if the buyers or renters do not move in within three months.

The Hanoi People's Committee has recently revised regulations on sales, leasing and use of low-income housing in urban areas.

Purchasers will be required to submit a commitment to occupy their homes along with photos of family members before signing a contract with low income house project developers.

Potential buyers or lessees must receive their salary from the State budget and be registered as a temporary or permanent resident in a district in the city of Hanoi.

The tighter regulations are aimed to deal with the increasing number of fraud cases in the low-income housing market.

During an online forum, the Minister of Construction, Trinh Dinh Dung, said, despite the slump in the real estate market, prices remain out of the reach of many people. The Government is making plans to assist low-income households. The Government will also use public funds to construct apartment complexes and take steps create conditions to encourage investors to build affordable housing.

1mln ton rice stockpile eyed to help farmers

The Ministry of Agriculture and Rural Development will seek government approval to create a stockpile of 1 million tons of rice in the summer-autumn crop to help farmers stabilize prices.

“We should find outlets for the summer-autumn rice as soon as possible to protect farmers’ lives at this time of troubled rice exports,” Nguyen Tri Ngoc, head of the ministry’s Cultivation Agency, said at a meeting his institution held yesterday.

Agricultural agencies convened to discuss ways to assist farmers, as rice prices have reached a 23-month low in Mekong Delta provinces such as Hau Giang, Tien Giang, and Dong Thap.

Areas of paddy fields in these localities have been greatly expanded, but prices have slumped since no traders have come to buy the produce, farmers said.

“Rice processing plants only buy in small quantities and pay low prices, so we traders are not keen on buying from farmers to supply them,” said Nguyen Thanh Hang, a rice trader in Tien Giang’s Cai Be District.

Le Van Doi, deputy head of Hau Giang’s Department of Agriculture and Rural Development, said the total area of summer-autumn paddy fields in the province is some 70,000 hectares. The fields have reached harvest time, but there are few traders.

This has sent prices plunging to only VND3,400 a kg for fresh rice, and around VND4,000 for dried rice, the lowest rates since August 2010, he said.

According to the Cultivation Agency, after the harvest season in July and August, total rice production will be as much as 7 million tons of rice.

“Prices are falling not only because of the huge supply but also thanks to the fluctuating export market,” the agency stated.

Doctor Nguyen An Tiem, an official from the Sub-National Institute of Agricultural Planning and Projection, said stockpiling rice is the only way to help farmers, given the current situation.

Ngoc said the Cultivation Agency will report to the agriculture ministry for the latter to call on the government to stockpile 1 million tons of rice in three months.

Pham Van Bay, deputy head of the Vietnam Food Association (VFA), said Vietnam has exported more than 2.95 million tons of rice this year as of June 20, earning some US$1.34 billion.

“But it’s a 20.13 percent decline in volume, and 23.35 percent drop in value compared to the same period last year,” said Bay.

He added that most rice processing businesses have also been suffering from unsold inventory since the winter-spring crop, which made it more difficult to consume rice these days.

“Rice yielded from the summer-autumn crop is mostly low-quality (25 percent broken rice), but the export market for this commodity is increasingly narrowed as Vietnam cannot compete with low-cost rice from India and Myanmar,” he said.

“We have almost failed to sign any contracts to export 25 percent broken rice to the African market.”

Fuel prices slashed again following world trend

The retail prices of gasoline and other petroleum products have been cut for another time, by VND300-700 a liter, following the latest trend of the commodity on the world market.

The price cut decision, made by the Ministry of Finance, took effect at 4:00 pm on Thursday.

Accordingly, A92 and A95 gasoline prices saw the sharpest cut of VND700 a liter to VND21,200 a liter and VND21,700 a liter respectively.

The respective prices of diesel oil and kerosene were cut by VND400 a liter and VND350 a liter to VND21,200 a liter and VND20,050 a liter.

Fuel oil saw the slightest cut of VND300 a liter to VND17,950 a liter.

The price adjustment took place in the context that the world oil prices continued to fall.

According to Petrolimex, biggest Vietnamese fuel importer/trader, the Ron 92 gasoline price in Singapore market, the supplier for over 40 percent of local demand, on Wednesday was $99.1 a barrel, down more than $20 a barrel month on month.

The price of kerosene, 0.05 S and 0.25 S diesel oil and in Singapore market also plummeted to $110.98 a barrel, $112.62 a barrel; and $111.69 a barrel.

Local petroleum wholesalers on Wednesday also admitted that they are enjoy a profit rate of VND700-2,100 per liter of petroleum product sold.

Thus, in almost 2 months, the retail prices of gasoline have been adjusted down 4 times with a total reduction of VND 2,600 a liter.

Previously, the price of gasoline increased 2 times in March and April with a total increase of VND 3,000 a liter.

World crude oil prices tanked on Thursday (local time) after US announced an increase in its oil stockpiles and the US Federal Reserve mentioned no new round of economic stimulus in a near future.

New York’s main contract, light sweet crude for delivery in July, tumbled $2.23 to close at $81.80 a barrel, and Brent North Sea crude for August In London trade settled at $92.38, down $3.07 day on day.

The Fed has wrapped up a two-day policy meeting announcing it would extend its bond-swap program, known as “Operation Twist,” until the end of the year instead of ending at the end of June.

Some market participants have hoped that the Fed would unleash a new round of bond purchases, or quantitative easing (QE). The previous two QEs had stimulated worldwide investment in dollar-backed commodities.

Previously, crude oil prices slid with traders taking profits from gains won in New York overnight on hopes of fresh stimulus measures from the Fed, according to AFP.

New York's main contract, light sweet crude for delivery in July, dropped $1.03 to $83.00 a barrel.

Brent North Sea crude for August shed 68 cents to $US95.08 in London afternoon deals.

The losses came after a rally on Tuesday fuelled by talk of Fed action, an anticipated new round of QE, to boost the flagging US economy, also the world's biggest oil-consuming nation, Jason Hughes, head of premium client management for IG Markets Singapore, told AFP.