Hanoi’s tiny ‘golden lot’ goes for VND47 billion

An investor of a trade center and office building project finally had a deal on Tuesday on the compensation price for a prime site at Hang Bai – Hai Ba Trung intersection in Hanoi City’s Hoan Kiem District, offering tenants a staggering VND47 billion (US$2.3 million) for an area of just 56 square meters.

Five households in the small building at the intersection handed over land and received compensation on Tuesday. They signed papers to accept the compensation and to hand over the land to T&T New Era JS Company as the project developer.

The deal thus averted a forced relocation plan due to be launched on Tuesday by Hoan Kiem District authorities.

Lam Quoc Hung, vice chairman of Hoan Kiem District’s People’s Committee, said: “We don’t have to apply any coercive measures against the tenants because they agreed to move.”

Tran Hong Son, vice chairman of T&T New Era JS Company, said the families in the area had just accepted the compensation plan on July 11.

The project in the golden land area had captured public attention since late 2010 when some households living here required a record compensation of VND1 billion per square meter. However, the investor and relevant agencies didn’t accept it, and negotiations had dragged on until this week.

Protective clothes facility starts operating

Toyotsu Vehitecs Vietnam Co., Ltd on Thursday commissioned a clothing factory in the southern province of Binh Duong to produce protective suits and uniforms for industrial manufacturing.

The company is a joint venture between two Japanese companies Toyotsu Vehitecs Company and Toyota Tsusho Corporation.

Kawase Toshihiko, director of Toyotsu Vehitecs Vietnam Co., Ltd, said that it had invested US$1.5 million in the facility in My Phuoc 3 Industrial Park, Ben Cat District.

The company will provide jobs for over 210 workers and will ship all of its output to the Japanese market, he said. The facility is able to turn out 360,000 units per year. The company will manufacture protective suits and uniforms for carmakers in Japan like Toyota, Mitsubishi, Daihatsu and Suzuki.

Becamex owns My Phuoc 3 which has attracted 141 projects with the total investment capital of US$933 million.
 
Thep Viet halves production output on poor sales

Thep Viet Steel Corporation, one of the largest steel producers in the country, has decided to halve its production capacity in the wake of slow consumption of construction steel.

Do Duy Thai, general director of Thep Viet Steel, told the Daily on Wednesday that the corporation had revised down its annual output to around 500,000 tons of construction steel compared to its earlier output of over 1.1 million tons.

Thep Viet also took 30% off its output of industrial steel products by now because of poor sales in recent months as well as difficulties in boosting exports.

“Earlier, the corporation had targeted to increase the ratio of export from 8% to 30% within this year, but exportation has still been very difficult. We exported less than 10% of our total output in the year’s first half,” Thai said.

“The production reduction is affecting thousands of workers though we are trying to provide more subsidies and allowances for them,” Thai said. Thep Viet is employing some 4,000 workers at the moment.

Thai, who is also vice chairman of the Vietnam Steel Association, said other steel producers had not been spared. The current workforce of the country’s steel industry is nearly 32,000 people.

According to Nguyen Tien Nghi, another vice chairman of the steel association, the industry as of the end of June had seen construction steel stockpiles amounting to over 400,000 tons.

Nghi told the Daily on Wednesday that the consumption of construction steel in July could fall further from a modest sale volume of 300,000 tons in June as many construction projects had been put on hold nationwide.

Phan Vu Hung, director of Saigon Thuong Tin Commodity Exchange (Sacom-STE) specializing in steel products, said prices of several kinds of industrial steel had now fallen by VND300,000-500,000 per ton.

“Though the prices are decreasing, but transactions on our exchange are still sluggish,” he said.

According to the director of the steel exchange floor, over 100,000 tons of industrial steel is still in stock at the exchange now due to the very slow consumption in recent months.

Sacom-STE, which started its operation since late 2009, has served as a trading floor for many steel producers and traders to change hands thousands of tons of construction and industrial steel products a day.

“We will likely see many steel trading enterprises to be out of business by the end of this year,” Hung predicted on Wednesday.

Earlier, Hung had also said the hardship in selling products had forced some large producers of industrial steel such as Huu Lien A Chau, Nguyen Minh, Viet Thanh and others to bargain away their stockpiled materials to avoid losses.

Meanwhile, several steel trading companies were also retreating to the ‘hibernation’ to overcome the freezing period of the steel market.

Mekong Garden builds eco-resort in Tien Giang

Mekong Garden Co. Ltd. has spent over VND100 billion, or US$5 million, to build the Mekong Riverside Resort in the Mekong Delta province of Tien Giang, which will open for business late this year.

The company, founded by Cai Be Tourism Company and an individual investor, is developing the 7-hectare resort near the Tien River, around one kilometer from Cai Be Floating Market, a popular attraction for tourists. A big area of the resort will become a garden with many kinds of fruit trees, while tourism facilities such as restaurants and 80 bungalows will be intertwined in the remaining areas, said Phan Xuan Anh, the individual investor and director of Mekong Garden.

“The first 40 bungalows will open for business this October to serve foreign travelers. Cruise passengers will become the main guests of restaurants and other tourism facilities there,” he told the Daily on Tuesday.

According to him, HCMC and Tien Giang are the two main attractions for international cruise passengers in the southern region but services for such visitors in the province are of very low quality.

“We want to improve the service quality for the guests via the new resort,” said Anh, who is also chairman of Viet Excursions catering to foreign cruise ships in the country.

Along with the Mekong Riverside Resort, the investor is joining hands with other investors to build the Pomelo Resort by the Huong River, opposite to Thua Thien-Hue Province’s famous attraction Thien Mu Pagoda.

“We will build a green resort with a big pomelo garden there. We have plans to spend VND100 billion on the project and the first part of the resort will open late this year,” Anh said.
 
Fund raising via stock markets proves difficult

The amount of capital that companies raised via the stock market in the year’s first half was trivial and barely increased from the year-earlier period due to the gloomy economic outlook.

Only eight companies sought to auction shares on the southern exchange in the January-June period, offering 145.9 million shares but selling only 32 million shares worth VND396 billion, according to the Hochiminh Stock Exchange.

The situation was similar compared to the first half last year when 11 companies offered 139 million shares via the southern bourse and sold only 22.1 million shares worth VND310 billion.

Investor appetite for risks seemed to be stronger on the Hanoi Stock Exchange.

In this year’s first half, there were five shares auctions on the northern bourse with 71.1 million shares on offer, and investors snapped up 43.6 million shares worth VND451 billion. However, the auction of Vietnam Steel Corporation alone accounted for the lion’s share, with up to 39.15 million shares finding buyers compared to 66 million shares on offer.

Among Asian stock indexes, the HNX-Index of the northern bourse fared the worst, falling as much as 34.9% in the first six months of this year, followed by the VN-Index of the southern bourse with a fall of 10.75%. Experts said the prospect for Vietnam’s stock market was still dim in the near term.

Viet Dragon Securities Co. in a report for July said investors would continue to unwind their positions to repay bank loans, thus exerting pressure on stock prices in the coming time.

According to a new draft circular of the central bank on the safety ratio of banks, credit institutions can lend a maximum of 3% of their equities for stock investment, said Viet Dragon Securities Co. Given the current total equity of banks at VND233.6 trillion, credits for stock investment should total only some VND7 trillion.

However, current regulations allow a bank to lend as much as 20% of its chartered capital to stock investors, meaning the banking industry could extend up to VND42 trillion in credits for stock investment. If the draft circular is approved, credits from banks for the stock market must be downsized by six times, and equal to just one-third of the real amount of loans for portfolio investment now.

Therefore, Viet Dragon Securities Co. predicts the stock market cannot strongly increase in the near future.

Monetary tools exhausted, says financial committee

Monetary policy has been exhausted and there is little room to exercise this year except fiscal measures to secure the country’s macro-economic stability, warned the National Financial Supervisory Committee.

In a report just submitted to the Government, the committee said monetary tightening in the first six months would seriously affect economic growth and to some extent inflation.

According to the State Bank of Vietnam’s latest statistics, money supply (M2) had increased 2.45%, and credit growth had reached 7.13% as of June 20, far below the year’s targets of 16% and 20%, respectively.

As cash flows have been choked off, numerous problems have emerged in the economy, according to the committee.

“Money supply is too low and money flows are slowing down. If the tendency continues, it would create an endless cycle of shortage of cash, higher interest rates, production stagnation, shortage of goods and higher inflation,” the committee said.

This means the economy would experience lower growth and higher inflation. The report estimates the annualized economic growth rate would be as low as 3.7-4% in each of the third and fourth quarters, if money supply continues its current pace.

According the central bank’s latest statistics, annual loan interest rates are 18.6% on average, an increase of 3.2 percentage points compared with end-2010.

However, Nguyen Van Phung, deputy director of the Taxation Policy Department of the Finance Ministry, said that in some cases the lending rate was as high as 25-26%, making loans even more expensive.

“Businesses face difficulties with such a high rate. No one dares to take out loans to expand production,” he said.

The committee, however, said it supported monetary tightening in line with the Government’s Resolution 11.

As the room for monetary policy maneuvering has reached its limit to help curbing inflation, the macro-economic stability now depends on fiscal policy, including measures to reduce public investment, cut administration spending and reduce the State Budget deficit.

However, the real amount being cut, according to the committee, is not as big as announced at VND80.5 trillion by the Ministry of Planning and Investment.

It said that VND4.75 trillion and VND1.71 trillion was cut from the State Budget spending for development investment and administrative management, respectively.

Vietnam’s economy in the first half of the year, according to the committee, was stuck in the most difficult situation unseen in recent years in terms of key factors including growth, industrial production, state budget collection, the banking system, foreign reserves, and domestic consumption demands.
 
Mekophar to de-list for restructuring business

Shareholders of the drug firm Mekophar, which is listed on the Hochiminh Stock Exchange under the code of MKP, on Monday approved the company’s plan to ‘de-list’ from bourse as a tactical measure to reorganize business.

The company is considered a foreign-invested enterprise as foreigners hold 4.7% of its shares, and therefore, it cannot obtain a license to engage in wholesale and retail business under prevalent laws. By delisting from bourse, Mekophar will seek to buy back the foreign stake to become a wholly local firm to expand its scopes of business.

Mekophar has recently sought to re-register business and supplement wholesales and retail distributions in its operations, but the move was rejected by the HCMC Department of Planning and Investment as regulations disallow a foreign-invested company to do wholesale and retail business in the pharmaceutical sector.

Mekophar has asked for help from the State Securities Commission and other agencies, all to no avail.

A representative from the stock watchdog told the Daily that this issue was out of its reach as such business scopes were governed by the Investment Law and circulars from relevant ministries.

“We have sent documents to the Ministry of Planning and Investment and the HCMC Department of Planning and Investment asking for reconsideration of the Mekophar case. However, as the issue relates to the law so they also cannot solve the deadlock,” the officer said.

After delisting from bourse, Mekophar will seek to buy back all shares held by foreigners so as to obtain a license for wholesale and retail distribution of medicines.

Other pharmaceutical companies listed on the stock market also have their shares held by foreign investors, but they have registered wholesale and retail distribution before listing so they do not have trouble like Mekophar.
 
Jabil to invest US$70 million more in SHTP facility

Jabil Circuit Incorporation, a U.S.-based electronics solutions company, plans to enlarge its existing facility in HCMC’s Saigon Hi-Tech Park (SHTP) with an additional investment of US$70 million.

Michael Matthes, senior vice president of Jabil’s Worldwide Operations, told city chairman Le Hoang Quan on Tuesday that his company would need support from the city to proceed with the factory’s second phase, which could get off the ground in September.

Matthes said Jabil wanted the city to extend a land rent payment. Quan said investors could choose to pay land rent once for the lifetime of a project or once a year, and that the city government would offer all possible incentives to support investors like Jabil to grow business.

Speaking to the Daily, SHTP vice president Le Bich Loan said Jabil would invest an extra US$70 million in the second phase. “A location at the SHTP has been prepared for Jabil to implement the second phase.”

The larger facility will produce equipments that can be used in fields such as IT, communication, electronics and health, said Loan.

According to an SHTP report, Jabil Vietnam plans to put the new facility into operation early next year with a yearly capacity of 1.6 million point-of-sale (PoS) machines and 5 million printed circuit boards (PCB).

“The total turnover will be able to reach US$480 million per year, with export accounting for US$441 million,” Loan added.

With registered capital of US$100 million, Jabil Vietnam Company Limited started operating its first phase in June 2007 with investment capital of US$30 million. Its export turnover so far has amounted to US$213.5 million while its import turnover US$182.7 million.

Ministries to hold property forum

Viet Nam Real Estate and Construction Investment Forum will be held in Ha Noi on August 26 by the Ministry of Planning and Investment (MPI) and the ministries of construction, transport, industry and trade.

The forum will gather 500 delegates from domestic and foreign companies and policy-making bodies to discuss challenges and sustainable solutions for construction and real estate in Viet Nam in the short and long term periods.

The Global Construction Experts Organisation Perspectives and the Oxford Centre for Economics predicted that by 2020 the construction industry of Viet Nam, along with Nigeria and Turkey, will achieve the highest growth rates next to the booming markets of India and China.

Archi acquires 76% of Sodito

Archi Invest Joint Stock Company, a subsidiary of the property developer Georgia-based Archi Group, signed a deal to buy a 76-per-cent stake of Song Da Lake Tourism Joint Stock Company (Sodito), making the domestic firm one of its affiliates in Viet Nam.

This is the second time this year Archi Invest bought stakes in resort and property development in the northern region. It bought stakes of Kim Boi Tourism Investment Joint Stock Company last quarter.

VC2 signs a $3.6 million contract

An affiliate of construction giant Vinaconex – Vinaconex 2 (VC2) will be responsible for building the foundation and base for the MD Complex Tower project, following the US$3.66 million deal with the Housing and Urban Development Investment Company.

The MD Complex Tower project, located in the new urban area My Dinh 1, Ha Noi, covers a total area of over 6,519sq.m. It will include two 29-storey blocks and three basements.

Delta welcomes 10 million tourists

The Mekong Delta welcomed nearly 10 million visitors including over 700,000 foreigners in the first half of the year, a year-on-year increase of 720,000 and 100,000, respectively, said the Cuu Long (Mekong) Delta Tourism Association.

The region has earned an estimated total tourism revenue of more than VND1.7 trillion (US$81 million), the highest level recorded.

First gold bullion to be produced

The first ever gold bullion batch has just been finished by the Dak Sa Gold Mining Plant of Phuoc Son Gold Company Limited, central Quang Nam Province.

Through this advance, the plant expects to use ore exploited from Dak Sa mine for gold production starting this September.

With over US$25 million worth of investment, the plant is designed to process 120 million tonnes of ore per year and forecasts a capacity of 350 million tonnes of ore per year.

VietABank launches online payments

VietABank, in association with OnePay Online Trade and Service Joint Stock Company officially launched online payment gateway starting yesterday.

Accordingly, customers can make payments for online shopping (Nguyen Kim and Mediamart supermarket, Grand Hotel and Linhperfume), online booking (AirMekong, Jetstar Pacific and Megastar movie ticket) and post-paid bill payment (mobile bills, internet and fixed-line telephone).

IT association awards medals

The HCM City Computers Association on Wednesday gave away its 13th annual Gold Medals and the Top 5 Information and Communication Technology Cup to 37 companies.

As many as 32 gold medals were awarded in seven categories based on turnover.

Thirty-two companies received trophies in ICT businesses, Vietnamese computers, hardware, integrated system services, internet, digital content, retail, software, software export and training based on turnover, brand names, and prestige. The list of gold medal winners saw most of last year's winners retaining their positions this year.

Demand pushes pork up 70%
 
An unsatisfied demand for some agriculture foodstuffs was the main reason for increased prices, said Minister of Agriculture and Rural Development Cao Duc Phat.

He told a meeting on Tuesday to discuss methods of stabil-ising food prices that domestic demand had reached a peak while supply was still low. Imports of many types of agricultural food had also fallen.

Prices of some agriculture foodstuff had increased by 40-60 per cent while inflation was only 13 per cent. Pork prices jumped the highest, surging by 70 per cent in April over the same period last year.

Explaining why pork prices had increased, deputy head of the Livestock Breeding Department Nguyen Xuan Duong said input prices, such as feed and vet bills, had climbed.

Meanwhile, he said, bank interest rates were high so that no farm dared to borrow to feed their pigs, leading to the short supply.

"The price of pork in Viet Nam is now equal to China and higher than many other countries such as Thailand and the United States," Duong said. "It is difficulty to reduce the price. We can only control and limit the increase."

Ministry officials at the meeting rejected the claim the Chinese traders were buying vegetables and meat in big volumes, causing a shortage on the domestic market.

"In the last six months, no buffalo or cows have been exported for foodstuff purposes," Department of Animal Health head Nguyen Van Dong said.

"The volume of pigs unofficially exported to China since the beginning of the year was more than 19,200. This export stopped from April because the price of pork in China was the same as in Viet Nam."

As for vegetables, participants at the meeting agreed that bad weather conditions had a strong impact on prices.

Head of the Cultivation Department Pham Dong Quang said that storms last month reduced the vegetable yield.

The volume of fruit and vegetables imported from China had year-on-year dropped by 10 per cent.

To solve the problem and stabilise prices, the ministry asked authorities to guide companies and implement price stabilisation programmes.

"Appropriate authorities have to co-operate with the Ministry of Industry and Trade as well as local authorities to boost activities in preventing smuggling," Phat said.

Phat said that with all efforts, the country could fully meet the demand for vegetables within 10-15 days.

"In special cases, the Cultivation Department may give farmers seeds," he said. "Livestock feeding must be strengthened to meet the demand."

Phat also ordered authorities to find out what difficulties farmers faced in getting loans.

Bottom falls out of tax collections

More than 1,000 foreign-invested enterprises in Vietnam reported fake losses to evade tax in three years from 2008 to 2010.

According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 foreign-invested enterprises (FIEs) as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2.23 trillion ($107 million).

As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years (2008, 2009 and 2010). The GDT's Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance across 2011.

The GDT said in the past six months, due to bad impacts from many factors including the earthquake and tsunami in Japan, business activities of enterprises, both state-owned, domestic private and foreign invested, in Vietnam had been affected resulting in a remarkable reduction in the state budget collection.

For example, in January, declared Value Added Tax (VAT) of enterprises in Vietnam was about VND13.8 trillion ($666 million). However, this figure lowered to VND9.2 trillion($444 million) in April and to VND8.6 trillion ($415 million) in June.

Similarly, declared Special Consumption Tax (SCT) was about VND4.3 trillion ($207 million) in January and dropped to VND3.5 trillion ($169 million) in May and VND2.8 trillion ($135 million) in June.

For Personal Income Tax (PIT) collection in January, declared tax was more than VND3.3 trillion ($159 million) and decreased to VND2.8 trillion ($135 million) in May and to VND2.4 trillion ($116 million) in June.

Some other collections from registration fees and land usage also sharply dropped.

Deposit rates fall, loan rates held
 
After the rise of annual interest rates to 18 and 19 per cent, commercial banks have finally lowered them to 14 per cent as required by the State Bank of Viet Nam. They, however, have seemed reluctant to cut the lending interest rate.

In the second week of July, some banks quoted deposit rates for the Vietnamese dong slightly lower than the ceiling rate of 14 per cent per year, after having kept the real rates at high levels for months.

The drops were implemented after the central bank cut the interest rate it charges for loans in the open market operation (OMO) by 100 basis points to 14 per cent on May 17.

In recent days, several commercial banks have officially announced their lower nominal deposit interest rates, with different terms having a 14 per cent rate or lower.

These banks include the Asia Commercial Bank (ACB), Export and Import Commercial Joint-Stock Bank (Eximbank), Dong A Joint Stock Commercial Bank (DongABank) and Sai Gon Joint Stock Commercial Bank (SCB).

At Eximbank, the highest rate for individual deposits is 13.85 per cent per year while the 12 per cent rate is applied to 15-month or longer deposits.

The SCB recently lowered the rates for deposits with 6- to 13-month terms to 13.5 per cent, while savings with terms of over 13 months have a 13 per cent rate per year.

The ACB's deposit interest rate was also cut to 13.88 per cent rate for those with one to nine- month terms. Meanwhile, the bank offers the rate of between 10.9 and 11.4 per cent per year for deposits with 24- to 36-month terms.

The above indicators showed that commercial banks'nominal deposit rates dropped between 0.1 and 0.5 per cent.

Independent market watchdogs said currently special customers or those having big deposits could negotiate a higher rate with banks, while most individual customers depositing small amounts of money must accept the lower rates as quoted.

The negotiated (real) rates at many banks fell slightly but were still over 18 per cent.

The downward trend of deposit interest rates proves that liquidity of the banking sector, particularly small ones, has improved.

Some banking industry insiders said that the decrease in deposit interest rates was an attempt of banks to regularly take back the rate to the central bank's 14 per cent cap.

They, however, also admitted that lending interest rates had shown no signs of decreasing.

The common rates of loans invested in agriculture and export areas now stands at 16.5 per cent and 20 per cent per year, while lending rates that banks are applying to other production and business activities are 18 and 21 per cent.

Loans to customers in non-production sectors are charged at higher rates, from 22 per cent to 25 per cent.

Explaining this, representatives of some banks said in the past they had paid only 8 per cent interest rate for deposits and offered 12 per cent loan interest rates.

The 4 per cent gap helped them make a profit.

With deposit interest rates of 18 and 19 per cent and loan interest rates of 20 per cent and 21 per cent, banks make smaller profits.

A deputy general director of a joint-stock commercial bank in HCM City said that lending interest rates would certainly drop but it would take some time, not immediately.

This was understandable as banks had offered high deposit rates, and credit demand remained strong.

According to SBV Governor Nguyen Van Giau, the high loan interest rate is because of a domino effect created from the central bank's application of tight and prudent monetary and fiscal policies to curb inflation.

The central bank, however, would closely watch the monetary market's changes in the coming time so as to timely use proper monetary policy tools to keep loan interest rates at reasonable levels, and also to lower interest rates when inflation drops, Giau said.

VNPT short-listed for international broadband award

Leading domestic information telecommunications service provider Vietnam Posts & Communications Group (VNPT) has been short-listed for the international Broadband Infovision Awards 2011 with its “VNPT Broadband Gardens” nomination.
 
VNPT is among three candidates selected to compete in the “Changing Lives” prize, one of 10 at the Broadband Infovision Awards 2011.

The organising board has announced 44 entrants for the final round of the awards set to take place in the French capital of Paris on September 27, 2011.

Broadband Infovision Award is the world’s leading broadband award annually held by the UK’s Informa Telecoms & Media Group.

VNPT is currently Vietnam’s leading information communication technology firm, accounting for 60per cent of the country mobile subscribers, 75 per cent of internet market share and 95 per cent of fixed telephone market share. It earned revenues of $5 billion in 2010.

VNPT has installed broadband Internet connection (ADSL) in 2,353 communal post offices nationwide. The group has also provided 1 million hours of free internet connection to pupils, students and citizens in remote rural areas.

Despite a dramatic rise in internet access, rural use still lags behind urban areas. While in urban provinces and cities, broadband services are very popular, in rural areas, which are home to up to 70 per cent the country’s population, the majority of people have never used advanced telecommunication services, including the internet.

FTA to boost textile firms

European Union delegation economic and politics advisor Juan Jose Almagro Herador said the Vietnam-EU free trade agreement (FTA), now under negotiation, would greatly benefit Vietnam's key export sectors such as footwear, garment-textile and seafood since with the FTA ratification, these exports would have their import duties into EU countries eased. For the textile-garment sector, the rate will be reduced from 12 to zero per cent.

"Local textile-garment firms also have an opportunity to import production machinery and equipment from EU countries at cheaper prices, inspiring the sector to gain a better status in EU market," said Herador.

A firm with 70 per cent of products going to EU market, Bac Giang Garment Joint Stock Company expected the FTA would help local firms boost export value to EU.

Alongside promoting export, the FTA would help Vietnam's textile and garment sector scaled up its competitive edge in the world marketplace, said the company's general director Nguyen Huu Phai.

Local firms, however, worry about conditions they must satisfy to qualify to EU tax incentives such as local material usage requirements.

Textile and garment products making a foray into the EU market are mostly made under export processing contracts with low added values and source materials from South Korea, China or Taiwan, said Dap Cau Garment Joint Stock Company's general director Nguyen Dang Luan.

The proportion of export products up to scratch would be low, if EU required export products to source local materials, said Luan.

Besides, to enter EU market, made-in-Vietnam export products must satisfy requirements of not a single EU country but all 27 EU members.

According to trade experts, trade barriers or strict quality requirements importers demand from exporters in global trade were inevitable. To qualify to those preferences and deepen international integration, local export sectors have no other option than forge ahead and confirm their status in the world market.

Until present, Vietnam had signed FTAs with South Korea and Japan. Statistics show that Vietnam's export value, including that of textile and garment items, to these markets sharply rose since the ratification of these FTAs. In 2010, Vietnam's textile and garment export to Japan rose more than 20 per cent against 2009 and made up around 10 per cent market share in Japan.

Gold exports bring trade deficit down but not for long

The nation's trade deficit declined sharply to 5 per cent of total export turnover in June, compared with 22.6 and 19.6 per cent in April and May respectively.

This has helped reduce the overall trade deficit for the first six months of this year to 15.7 per cent.

The sharp decline is attributed to the spurt in export of gold and gems last month, reaching $630 million, compared to $242 million in May.

However, the "significant gold export in June might not have had such a big impact on narrowing the trade deficit," Phan Van Chinh, head of the Ministry of Industry and Trade's Export – Import Department, told the Thoi bao Kinh Te Vietnam (Vietnam Economic Times) newspaper.

Chinh said that for the first six months of this year, gold exports reached $1 billion, accounting for 2.43 per cent of the total export turnover, while for the same period last year the figures were $1.5 billion and 4.65 per cent.

"The trade deficit of 15.7 per cent is the lowest figure for the last five years," he said, adding that this reflected the effectiveness of measures taken by the ministry to tighten imports.

The ministry's effort has been recognised by the government, which has said that the target set by the National Assembly has been met. The National Assembly had said that the trade deficit for the first six months of the year should not exceed 18 per cent.

But the government, in a first-half economic review, also noted that the trade deficit could increase in the future. It said foreign currency rates and price for imported goods had been fluctuating. All this might impact efforts to improve the balance of payments, control inflation, stabilise the market and boost production and commerce, it said.

Many senior officials also agreed that gold export was not sustainable and without it, the trade deficit was still over 18 per cent.

"Looking carefully at the list, we can see that import of several luxury commodities that should have been curtailed, like automobiles and motorbikes, have increased 70 per cent. Therefore, the trade deficit still needs more control," said Ha Van Hien, chairman of the National Assembly's Economy Commission.

He said that the foreign exchange rate was stable at present because of administrative management.

Vietnam and Japan evaluate projects’ results

Japan International Cooperation Agency (JICA) and Vietnam’s Ministry of Planning and Investment (MPI) jointly held the fourth joint evaluation feedback workshop, on July 14 in Hanoi to evaluate Japan’s supported projects to Vietnam.

According to JICA, this joint final workshop demonstrated the achievement of the one-year activity for the Joint Evaluation Programme 2010, which aims to harmonise the evaluation mechanisms and strengthen the institutional capacity of the MPI and agencies responsible for Monitoring and Evaluation through joint evaluations on JICA-funded projects in the transportation and power sector.

This year, a new implementation structure of joint evaluation was introduced based on the accumulation of the three-year experience to fully transfer evaluation ownership to the Vietnamese side: the Vietnamese evaluators (Consultant) and the Evaluation team members from the project related agency have conducted the primary evaluation and then Japanese evaluator has conducted the secondary evaluation on the primary one.

Through this process, the government officials and evaluators have gained more knowledge and experiences to conduct the evaluations by their own. In addition to this, the four years cooperation in joint evaluation programme between 2007 and 2010, which accomplished total eleven ex-post project evaluation and remarkable human resource development on evaluation both in government and private sector, was reviewed by the Japanese evaluator.

The primary evaluation results for the two evaluated projects, Tan Son Nhat International Airport Terminal Construction Project and Dai Ninh Hydropower Project, were presented by officers involved in the respective projects, who are members of the Evaluation Team.

Both projects were evaluated to be highly satisfactory, and the preliminary ratings given for the projects were “A”, which are the highest of the four rating scales in JICA evaluation system. The preliminary results of the secondary evaluations by the Japanese evaluators were also the same as the Vietnamese evaluation team.

The evaluation results of Tan Son Nhat International Airport Terminal Construction Project shows that the project fulfilled its objectives: to meet the increasing air transportation demand and to improve the convenience and efficiency of the airport users by constructing a new international passenger terminal building with associated facilities at Tan Son Nhat International Airport.

Meanwhile the evaluation results of Dai Ninh Hydropower Projectshowed the good achievement of the three expected outcomes, namely, meeting the increasing power demand, enhancement of irrigation agriculture in Binh Thuan Province, and improvement of living standard of project-affected indigenous people in Lam Dong Province, by construction of the 300MW Dai Ninh Hydropower Plant together with a number of small-scale development projects in forestry, agriculture, education, health and culture sectors under the Indigenous People Development Programme.

Since it started operation in 2008, Dai Ninh Hydropower Plant has generated average 1,183GWh every year. After Dai Ninh Plant, water is provided to the 30MW Bach Binh Hydropower Plant, constructed downstream Dai Ninh Plant, to generate additional 114GWh per year, and then utilized for agriculture in Bach Binh district, which added approx. 2,000 ha of irrigated land after the project.

In the course of four years’ cooperation by JICA, the government of Vietnam has developed the evaluation system, institutional capacity and human resources which lead the evaluation on the Vietnamese Public Investment Project including ODA projects by their own.

Vietnamese Investment Evaluation Association (VIEA) is expected to be launched soon. Now, with those changes, the new step toward evaluation in Vietnam can be made. The MPI and JICA are expecting that the evaluation will make difference on the further social and economic development in Vietnam.

Fuel price to operate under market rules

The domestic market price of petrol and gas is set to operate under market mechanisms from the fourth quarter of this year, according to Bui Ngoc Bao, chairman and CEO of the Viet Nam National Petroleum Corporation (Petrolimex).

As part of Resolution 11, the Prime Minister had confirmed that the price of coal, petrol and oil would develop under market mechanisms, Bao confirmed.

"Seeing that petrol and oil are sensitive goods, both related to energy security, the Government has not yet opened the fuel market completely, remaining in control of the market in necessary cases," he said.

Bao added that the management of retail prices for petrol and oil on the domestic market fell under Decree 84, which has allowed petrol dealers to start earning profits from trading activities.

Nguyen Cam Tu, deputy minister of Industry and Trade, said that the Goverment had led the development of petrol and oil prices via market mechanisms and direct management.

Such form of management was aimed at ensuring the interests of the State in stabilising tax collection, of the people buying fuel at reasonable prices and of traders accumulating capital for investment development, he said.

Therefore, as part of Decree 84, if world oil prices were to increase or decrease by 0-7 per cent, enterprises would be left to decide the retail price of petrol and oil on the domestic market. If world prices changed by 7-12 per cent and beyond, the Government would co-operate with enterprises in setting suitable petrol and oil prices.

In some special cases, the Goverment would have the right to adjust fuel prices in order to stabilise the economy, Tu said.

Last Friday, the Ministry of Finance decided not to raise import duties on petroleum products in the face of "complicated" fluctuations in the global market. The decision was expected to maintain the sales prices of petrol, diesel oil and kerosene.

During the last 30 days, although world oil prices fell, domestic prices remained unchanged, Tu said.

When world oil prices increased, the Government kept traders from raising local prices in order to compensate them for their losses from the State budget, he added. When world oil prices decreased, the Goverment increased import taxes in order to refund its budget, collecting money for the petrol price stabilisation fund.

According to Tu, if world oil prices continued declining, the Governemnt would consider permitting dealers to cut retail prices.

Regarding calculation measures for local prices, Bao said that Petrolimex had the most transparent calculation methods for petrol and oil retail prices on the domestic market.

Bao said that, every year, Petrolimex invited independent auditing firms to audit its parent corporation and subsidiaries, adding that the auditing of petrol and oil prices was easy.

Domestic retail prices have been transparently calculated using data based on world prices, import tax rates and the rate of collecting money for the price stabilisation fund in a market report on the Petrolimex website. The current price for petrol is VND21,300 (US$1.01) and VND21,000 for diesel oil.

Vincom strikes it rich

Vincom has successfully raised $40 million from the international market

Vincom, Vietnam’s largest listed real estate company by market value, has entered into a $40 million convertible bonds with an interest rate of 6 per cent per annum for 11 months and being able to be converted into shares.

Credit Suisse AG, Singapore Branch, is the arranger of the transaction.

It is the second time Vincom has successfully mobilised funds from the international market. Vincom intends to use the funds to supplement its working capital.

Earlier in 2009, Vincom issued and listed $100 million convertible bonds listed on the Singapore Stock Exchange with a five-year term. All these bonds were converted into VIC-coded shares at the conversion price of VND60,000 per share and redeemed by Vincom in June, 2011.

By the end of June 2011, Vincom’s charter capital was VND3.9 trillion ($190 million), its total stock market value $2.6 billion and its 2010 profit-after-tax VND2.4 trillion ($117 million).

Established in 2002, Vincom is the developer of a series of large-scale real estate projects in Hanoi and Ho Chi Minh City such as the Vincom Center in Ho Chi Minh City.

Future bright for cheap product brands

Experts forecast that in the next three years, one of every four products in a given supermarket would be a business's own brand product.

The prediction was made at a seminar entitled "The Movement of the Retail Market and Opportunities for Vietnamese Businesses" held in Ha Noi on Tuesday.

Businesses' own brand products are those ordered by distributors to provide a huge quantity for specific consumers. Their prices were usually lower than competitors by 10 to 50 per cent because of the amount distributors save from slashing marketing spending, the seminar was told.

Experts said that due to the recession and inflation, businesses' own brands would develop, expand and attract consumers with lower prices.

A new survey conducted by AC Nielsen shows that over 61 per cent of consumers worldwide have chosen businesses' own brands during the recession and 91 per cent will continue purchasing those products even when the economy recovers.

Participants in the seminar also analysed the future of the domestic retail market.

Le Linh, PepsiCo's director in the northern provinces, said that in order to serve customers better, retail businesses should build their own efficient supply chains and distribution networks.

But he added that PepsiCo had incorporated a direct model into its mostly indirect distribution system, saying that companies must tailor their models to their strategic development plans and specific characteristics, as there is no perfect model for all businesses at all times.

Mai Khue Anh, chief executive officer of Hapro Food, said her company decided to develop a supply chain of clean vegetable and foods by setting up many supermarkets in Ha Noi.

At the beginning, Hapro Food performed poorly due to the well-established habits of consumers, who were used to buying vegetables and other foods very early or late in the day from street vendors or traditional markets, Anh said.

By establishing its own growing company in Dong Anh District, Hapro Food has been able to provide clean vegetables for the market and sign long-term contracts with major suppliers, currently operating 30 retail shops in Ha Noi.

The seminar also discussed the retail market, which has proven to be the most lucrative sector in Viet Nam.

Though the nation's retail sector ranked 14 out of 30 on the list of the most attractive emerging retail markets in the world, the market still had the capacity to develop well, experts said.

Viet Nam owns the fastest-moving consumer goods market in Asia, as shown by the emergence of modern retail channels and the opening of new outlets and convenient retail shops nationwide.

In the past few years, the Government has supported Vietnamese products with the "Vietnamese use products made in Vietnam" campaign, which has sponsored a number of events and trade fairs and helped persuade consumers to buy domestic products.

At the seminar, Vu Kim Hanh, chairwoman of the High Quality Viet Nam Goods Association, predicted that the domestic retail market would benefit from urbanisation and mass media services, helping retailers promote themselves and gain easy access to consumers.

She also said that Viet Nam's economy had shown signs of recovery, and credited the promotional campaigns of large retailers with the improvement.

Despite the domination of traditional markets, domestic consumers have become familiar with supermarkets, wholesale and retail shops that offer better quality products for the same prices.

More price rises on the way
 
Viet Nam is set to continue experiencing price hikes in the latter half of the year due to both domestic and international socio-economic factors, according to economic experts.

It was suggested at a workshop in Ha Noi on Tuesday that the Government continue implementing measures such as monetary and financial tightening policies in combination with market controls as required by Resolution 11.

"Keeping the consumer price index (CPI) at 15 per cent in the second half of the year would mean increasing the current CPI by only 1.71 per cent as the domestic market has been affected by both inner and outer factors," Deputy Head of the Ministry of Industry anmd Trade's Domestic Market Department, Nguyen Loc An, said.

Figures from the General Statistics Office (GSO) have shown that during the first half of the year, the CPI rose by 16.03 per cent over the same period last year and more than 13 per cent in comparison with last December.

The GSO report confirmed that the price of some foods had more than doubled, the average price of pork in Ha Noi having risen from VND70,000 (US$3.4) to VND110,000 ($5.3) per kilo within the last 12 months.

According to An, although several factors had lead to rising prices, Resolution 11 has contributed, to some extent, to decelerating the speed of CPI increase.

"The prices of world market goods will continue to increase until the end of the year, offering little chance for full recovery with electricity prices expected to increase in order to make up for production costs," An said, adding that goods prices would rise during the coming flood and storm seasons.

He added that some positive factors could limit the increase of crude oil prices on the world market while increasing food supply and reducing interest.

"Positive factors coupled with the strict implementation of Resolution 11 could help bring the CPI down to 17 per cent this year," An said.

Director of the Finance Ministry's Pricing Department, Nguyen Tien Thoa, said that the prices of some goods would be continually adjusted under State management.

"It could be quite difficult to reduce inflation very quickly seeing as the current situation has been caused by the inherent economical shortcomings of several years," Thoa said, adding that the Government should draw up a roadmap for adjusting prices in order to avoid economical shock.

"In the long-term, the economy has to be restructured in such a way so as to ensure social security," he said.

Head of the Economics Department at the Ha Noi Institute for Social Development Studies, Nguyen Minh Phong, said that the factors causing an increase in prices included the decreased supply of goods, especially foods, the sudden increase in agricultural product demand by Chinese businesses and a weak distribution system

"Authorities urgently need to increase supply, reduce demand and strictly control distribution channels in order to ensure stability between purchase and sales prices," Phong said.

Vu Vinh Phu, chairman of the Ha Noi Supermarket Association, agreed that the Government should ensure competitive market mechanisms and proper distribution channels to deliver goods directly to consumers.

"The country's distribution system is inadequate. It pushes prices up while affording producers little profit and unreasonable prices to customers," he said.

According to Phu, smuggling, trade fraud and counterfeiting should be appropriately punished in order to better manage the market.

Deputy Director of the Finance Institute, Pham Van Dang, added that the Government should find effective solutions to curbing inflation during the next few years to ensure stable long-term development.

Bank lends $710m for three projects

The World Bank will lend US$710 million for Viet Nam to implement three projects on public investment reform, irrigation and urban water supply.

The State Bank of Viet Nam and the World Bank signed loan agreements and legal documents in Ha Noi yesterday relating to the second Public Investment Reform Programme (PIR2) Development Policy, the water resource management project serving the development of the Mekong Delta and the urban water supply and sewerage project.

World Bank country director in Viet Nam Victoria Kwakwa said the funding for the three projects aimed to strengthen the efficiency of public investment, provide clean water for residents in the project areas and improve their adaptability to climate change.

The Urban Water Supply and Sewage Project Phase 1 will use a World Bank loan of US$200 million to improve water supply systems in Quang Ninh, Ninh Binh, Quang Nam, Kien Giang, Lam Dong, Binh Duong and Binh Phuoc provinces.

The $350 million PIR 2 will focus on checking the environment for infrastructure investment projects using public capital sources, project supervision and assessment and public finance management.

The remaining $160 million would be granted to the water resource management project serving the rural development of the Mekong Delta. The project aims to raise the efficiency of water resources use in the region, increase agricultural productivity and improve clean water supply for rural households.

Viet Nam, Sri Lanka set up agricultural committee

The agriculture ministers of Viet Nam and Sri Lanka have decided to create a Joint Agricultural Co-ordinating Committee, which will meet every two years to propose, plan, and implement programmes.

During their meeting in Ha Noi yesterday, Vietnamese Minister of Agriculture and Rural Development Cao Duc Phat and his Sri Lankan counterpart Mahianda Yapa Abeyzawardana reviewed the implementation of a memorandum of understanding signed in November 2006 and discussed plans for the near future.

The two ministers agreed to improve co-operation in agricultural trade, development, and communication, specifically the exchange of scientific and technological information relating to black pepper, coffee, ramputan and mango.

Development in the south-west on track
 
The economic structure of south-western provinces had shifted positively and strongly, reported the region's Steering Committee yesterday at a conference to review a 10-year development plan.

Deputy director of the committee, Nguyen Phong Quang, said industry and construction had increased from 18 per cent in 2000 to 26 per cent of the region's Gross Domestic Product (GDP) in 2010.

Services had increased from 28 per cent to 35 per cent in the last 10 years while agriculture, forestry and aqua-culture had dropped from 53.5 per cent to 35 per cent.

The region's GDP growth had also shown a positive figure of 11.7 per cent per year, while export-import turnover was US$6.83 billion in 2010, 9.1 per cent of the total for the nation, according to Quang.

The development of the region had also been clearly reflected in people's average incomes, which had increased two-and-a-half times in the last 10 years, he said.

Deputy Minister of Planning and Investment Bui Quang Vinh said the most important achievement of the south-western region was to have agriculture, forestry and aqua-culture developed in a good balance and create specialising areas for specific product cultivation.

Vinh reported that in the last 10 years, production value of the sector had almost doubled from about VND56 rrillion to 101 trillion ($2.67 billion to $4.8 billion) while the rice yield increased from 16 million tonnes to 21.6 million tonnes.

He said the value of industry had increased 18.8 per cent per year and reached VND156 trillion ($7.4 billion) in 2010.

Social welfare was also emphasised by the authorities. In the last 10 years, more than 88,000 houses were built specifically for poor ethnic people and more than 10,000 jobs had been created.

Deputy Prime Minister Nguyen Sinh Hung, who chaired the conference, said the region had performed a great job by lowering the number of the poor by 13 per cent in 10 years and improved living standards for local people, including 1.4 million ethnic people.

However, Hung said many problems would need to be resolved in the next few years such as the lack of smooth connection between policy and planning; the connections between provinces in the region.

Infrastructure development had not yet met the requirement to protect the region from climate change or pollution.

During the meeting, the committee set a target to develop the region over the next 10 years, concentrating on building infrastructure.

The region hopes to achieve a GDP growth of 12-13 per cent. Agriculture, forestry and aquaculture will drop to 32 per cent in the total economic structure while industry and construction will reach 34 per cent and services will be at 36 per cent by 2020.

The committee also decided to put more focus on infrastructure construction such as transportation, irrigation infrastructure, and roads that connect major provinces.

Prioritised projects in the next years include thermal power centres in O Mon of Can Tho Province, Kien Luong of Kien Giang Province, Duyen Hai of Tra Vinh Province, Trung Luong-Can Tho Highway and Co Chien Bridge.

Phu Quoc Island will also be developed into an administration, economic and service centre of the region.

Education, health care, vocational training, and rural development are also among areas of focus in the 10 year plan.

Pork prices soar due to supply shortage

Pork price has surged this year due to a supply shortage caused mostly by epidemic diseases, rising feed prices and exorbitant interest rates, Hoang Kim Giao, head of the Animal Husbandry Department said in an interview with Tuoi Tre Thursday.

Giao said pork price in July has soared by 70 to 100 percent over the same period last year and is foreseen to continue to rise by the end of this year.

The pork market is seeing a severe supply shortage, in which many pig farmers have to reduce their production or even stop breeding due to three main causes, he said.

He attributed the first cause to the disease outbreak in late 2010 and early this year, which have reduced the total pig herd by 3.7 percent.

The total sow herd also dropped by 8.6 percent, hiking breeder prices, which he said is the second cause for the rising pork prices.

He said the hike in input costs, including feeds, breeders, and production maintenance have also pushed output prices higher.

Finally, the exorbitant lending rates have prevented small pig firms and farmers from accessing banks’ loans, while putting a harsh financial pressure on the major ones, he said.

“The traders have also contributed to sending pork prices to skyrocket,” he said. “The live pig fetches only VND60,000 (US$3) a kg, but traders boost pork price to VND100,000 ($5).”

Such difficulties plus the concerns over diseases and natural disasters have caused huge losses to many pig farmers.

He said 20 percent of farmers in the northern Ha Nam Province have given up pig breeding, while the ratio is only 10 percent in the central northern provinces of Nghe An, Thanh Hoa and Hung Yen.

Admitting that pork prices have no chance to decrease by this year end, Giao emphasized the necessity of keeping prices from surging further.

He said the most crucial step is to revitalize the pig farming industry to solve the supply shortage.

He also urged the Department of Animal Health to try its best to protect the pigs from diseases, and demanded special policies from the government to support pig farmers.

“The government should have a price stabilization policy for livestock farming industry and should order banks to charge reasonable lending rates for pig farmers,” he said.
 
US anti-dumping lawsuit may target VN furniture

Vietnamese bedroom furniture makers may face an anti-dumping lawsuit from the US, the Trade Remedies Council under the Vietnam Chamber of Commercial and Trade (VCCI) warned at a conference about anti-dumping on Thursday.

According to VCCI, furniture manufacturers from Malaysia, Indonesia and Brazil are also likely to face the same anti-dumping and anti-subsidy lawsuits from the US.
Last Tuesday (July 12), Vietnamese shrimp exporters won anti-dumping lawsuit against the US on frozen shrimps.

Pieter Jan Kuikper, former head of the Department of Foreign Affairs and International Trade of the Legal Service under the European Commission, attributed the victory to the reasonable arguments Vietnam has used in suing the US to WTO.

He, however, warned Vietnam against other possible anti-dumping lawsuits in the coming time.

Doctor Nguyen Thi Thu Trang, secretary of the Trade Remedies Council, advised Vietnamese manufacturers to focus on product quality rather than cheap price to avoid such lawsuits.

Quang Binh wants to build golf course near airport

After two golf courses have been approved to be built inside Ho Chi Minh City’s Tan Son Nhat Airport and Hanoi‘s Gia Lam Airports, another is planned to be constructed near the Dong Hoi Airport of the central Quang Binh Province.

The Quang Binh People’s Committee is seeking approval from the Ministry of Planning and Investment to add the golf course to the ministry’s Golf Course Development Plan of Vietnam towards 2020.

Earlier in 2007, the provincial People’s Committee has green-lighted the construction plan of the surroundings of Dong Hoi Airport, which included the project to build an 18-hole golf course in a 225-ha area spanning Quang Phu Commune of Dong Hoi City and Nhan Trach Commune of Bo Trach District.

Le Van Phuc, director of the provincial Department of Planning and Investment, said no lands for agricultural production would be reclaimed to give way to the golf course.

This project is still looking for investors.

9,200-tonne container ship handed over to German partner

Ben Kien Ship Yard Company in Hai Phong on July 15 organised a ceremony to hand over a 9,200-tonne container ship named HC MELINA to Germany’s Hanse Capital Group.

The ship, which measures 129.4m in length and 17m in width, can run at 14.7 nautical miles per hour.

Its equipment meets the latest international maritime regulations, ensuring the ship to operate in all ports over the world.

The container ship is labelled RSBK 02 and designed by the Netherlands’ INEC Company.