Concern mounts as fake goods flood struggling market

The production and distribution of fake goods is becoming increasingly dire, affecting people's health and the country's economy, a conference heard in HCM City last week.

Delegates told the conference on fighting knockoffs and fake goods to protect businesses and consumers that such products are widely available everywhere – from rural areas to markets and even supermarkets in big cities.

According to the Market Watch Department, more than 13,100 cases of counterfeit goods and other infringements of intellectual property rights were uncovered last year.

Market watch teams found 3,115 cases in the first quarter of the year, and collected fines of VND13.5 billion (US$636,790).

Fake goods are both manufactured domestically and smuggled into the country, mainly foodstuffs, garments, household appliances, and consumer goods, delegates said.

In HCM City, the department inspected a warehouse belonging to an import-export company containing over 50,000 items and found 21,000 of them had been produced in China but had Vietnamese labels.

Fertilisers are among the most faked products, badly affecting agricultural production.

Recently a market watch team caught the Viet-Phap Science, Technology and Investment Corporation in Ha Noi's Thanh Tri District producing around 60 tonnes of fake fertilisers made mainly using limestone powder.

Duong Hung Do, general director of the Southern Construction and Mineral Exploitation Joint Stock Company, said his company sells the Dia Long brand of fertilisers, which is popular with farmers, but recently discovered many fake Dia Long fertilisers in the market.

Huynh Van Hoang, editor-in-chief of Thuong hieu Viet magazine, which organised the conference, said unscrupulous elements take advantage of the fact that consumers are reluctant to claim compensation when they buy fake goods.

Do agreed, saying that when his company knew farmers' crops had been damaged by fake fertilisers it urged them to seek compensation, but they kept finding reasons not to do it.

Manufacturers too hesitated to inform authorities when their goods were fake because they were afraid of losing consumers, delegates said.

Le Xuan Dai of the Market Watch Department said official agencies, consumers, manufacturers, and the entire community need to co-operate in the fight against fake products.

Business associations, enterprises, and the media should also co-operate to improve consumers' knowledge about their rights and responsibilities, he said.

Manufacturers should register new products for intellectual property rights to prevent knockoffs, he added.

Participants called on businesses to improve their public communication to help people identify fake and substandard goods.

The conference was organised in association with the Viet Nam Union of Science and Technology Associations.

Insurance firms eye lower dividends

Many insurers have planned to slash dividend payments, following the usual round of insurance company shareholder meetings.

A manager from the Military Insurance Corporation told the Dau tu chung khoan (Securities Investment) newspaper said his company failed to meet its profit target in 2012.

It bought a 19 per cent stake in a real estate firm and had to make provisions for diminution in value of investments worth VND10.4 billion (US$490,500).

If there had been no provision, the insurer's last year profit would have been VND42.3 billion ($1.9 million) – or 60.5 per cent of the plan – rather than the actual VND31.9 billion ($1.5 million).

In addition, profit from insurance business in 2012 accounted for only 1.9 per cent of 2011, he said.

Last year, most insurance companies made the payment as pledged. Only a few paid out at lower rates, such as SHB-Vinacomin 6 per cent compared to the target of 10 per cent, and Military Insurance 5 per cent instead of 12-15 per cent.

Agribank Insurance, despite its efforts to pay dividends at 10 per cent in 2012 as promised, this year will pay 8-10 per cent.

While shareholders required the company to set the minimum dividend at 10 per cent, chairman Nguyen Van Minh said 8-10 per cent was the best he could do.

The company was facing difficulties handling insurance claims for the Vinalines Queen ship which sank last year.

PVI Holding (PVI) decided to reduce dividends from 15 per cent to 9 per cent; Pjico planned at least 10 per cent compared to 13 per cent last year.

Meanwhile, SHB-Vinacomin might not pay this year's dividend, as it expected a profit of only VND916 million ($43,200).

Insurers such as PVI said profits from investment activities had declined, leading to lower dividend rates.

Only insurers Bao Viet (BVH) and VinaRe will not reduce dividend rates for this year. Bao Viet planned to retain its 15 per cent while VinaRe pledged 20 per cent compared to 18 per cent in 2012, the highest level among domestic insurance companies.

Aquaculture sector faces tighter controls

Officials in the agricultural sector are hoping to strengthen the management of aquaculture projects to raise productivity and improve quality.

According to Deputy Head of the Directorate of Fisheries Nguyen Huy Dien, the Ministry of Agriculture and Rural Development (MARD) released a memo on July 5, on strengthening and standardising aquaculture breeding.

It details the necessary requirements for individuals and organisations to engage in aquaculture breeding, such as licensing, labelling, more inspections and restrictions on introducing new breeds of fish and crustations.

According to reports released by the Fisheries Directorate, from this June, the country has around 1,425 projects that breed tiger prawns and 103 for white legged shrimps.

However, many of these use poor quality breeding stock and antiquated methods of production on top the inadequate water. In addition, many are small-scale producers, say industry insiders.

For example, in 2012, the northern provinces had 43 ponds for breeding fresh water fish but they only meet about 30-35 per cent of the regional demand, with the rest imported from the southern provinces or China and Thailand.

According to the Aquaculture Department at MARD, inspecting the quality of aquaculture breeding has not been rigorous enough and many breeders do not confine their operations to the breeding season.

Quarantine inspections have also been poor, allowing substandard fish to enter the market, according to departmental officials.

Tran Cao Muu, a representative from the Viet Nam Fisheries Association, said that some localities still allow breeding to go ahead unchecked and fish that have bypassed the quarantine process are transported to other areas for breeding.

According to Bui Duc Quy, head of the ministry's Aquaculture Department, industry insiders hope that Circular 26 will benefit both aquaculture farmers and breeding companies.

The recent memo also provides a legal basis for both fish farmers and breeders. If carried out effectively, Quy said they would benefit by having a stronger breeding stock, which reduces the risk of disease.

According to Dien from the Fisheries Directorate, his office is looking at putting together a national programme to select only quality breeding shrimps and step up inspections at every level.

The directorate will also reassess studies carried out by aquacultural research institutes, particularly in planning to increase the efficiency of research labs.

The Vietnamese fisheries industry earned US$6.2 billion in exports in 2012.

Japan forum targets new trade

Over 100 business players and top economic experts converged at the seventh Viet Nam-Japan Economic Dialogue in Tokyo on Thursday to seek business opportunities.

Co-hosted by the Vietnamese Embassy in Japan and Japan's International Friendship Exchange Council, the event was part of activities to celebrate the 40th anniversary of Viet Nam-Japan diplomatic ties.

Addressing the event, Vietnamese Ambassador to Japan Doan Xuan Hung declared that with steady effort, Viet Nam would become an attractive investment destination, especially for Japanese companies.

He said that through official development assistance (ODA) and direct investment, the Japanese government and people had actively contributed to Viet Nam's development.

However, the Ambassador noted that bilateral economic links had yet to meet each side's potential. He also admitted that snags remained in Viet Nam's investment environment, such as cumbersome administrative procedures.

Etsuro Honda, special advisor to the Japanese Cabinet, stressed that economic policies named "Abenomics", advocated by Japanese Prime Minister Shinzo Abe, were behind the closer ties between the two nations.

He cited nursing care for the elderly as a potential co-operation field as Japan had a burgeoning demand for medical and nursing staff.

He said Viet Nam was an investment "hotspot", adding that Japanese investors would enjoy gains from pouring money into Viet Nam, a country that boasted political and macro-economic stability.

Director of the Viet Nam Institute of Economics Tran Dinh Thien said Viet Nam's investment environment has improved considerably over the past years.

He also introduced Viet Nam's economic development strategy, which was recently adopted by Prime Minister Nguyen Tan Dung.

The scheme highlighted priority fields that needed Japanese investment, such as electronics, car manufacturing, shipbuilding, energy, agro-forestry-fishery and environment.

Delta delivers mass longan tree treatment

More than 19,00ha of longan trees in the Cuu Long (Mekong) Delta infected with witch's broom have been treated and sprayed, according to the Southern Plant Protection Centre.

Tree branches affected by the disease were cut off and the rest of the plant was sprayed, the centre said.

About 24,216ha of the total 32,600ha of longan trees that have been planted had been affected by witch's broom, which affects woody plants. The disease gets its names from the dense mass of shoots that grow from a single point.

The treated longan areas are in Can Tho as well as in the provinces of Tien Giang, Dong Thap, Soc Trang, Tra Vinh, Vinh Long and Hau Giang. They account for 81 per cent of the Delta's infected areas.

Ho Quoc Chien, director of the Southern Plant Protection Centre, said the outbreaks of witch's broom occurred between September 2011 and March 2012.

The total cost for treating the disease has reached VND178 billion (US$8.4 million). Of that figure, VND122 billion was from the central Government budget and the remaining from local budgets.

In Viet Nam, the disease was caused by the nhen long nhung (Eriophyes dimocarpi), a tiny insect.

The Ministry of Agriculture and Rural Development has given farmers with orchards of more than 70 per cent of diseased longan trees VND7 million per hectare to treat the trees. Farmers with 30-70 per cent of longan trees affected were given VND5 million per hectare.

Can Tho and the six provinces with diseased longan trees have also organised 1,100 courses about disease treatment for more than 51,000 farmers. — VNS

As of March, the Ministry of Agriculture and Rural Development has stopped providing financial support as the disease has been largely controlled.

However, Chien said the disease was reappearing in some areas. The provinces as well as Can Tho said they would continue to provide training courses for farmers.

Crop selection key to farm profits

Farmers in the Tay Nguyen (Central Highlands) region are replacing their cacao, rubber and cashew orchards with other trees that offer higher profits despite warnings from authorities of an oversupply.

Three to five years ago, farmers in Dak Lak and Dak Nong provinces began planting cacao when it was selling at high prices, but they have now switched to corn, cassava, and coffee plants that have risen in price.

The cacoa area of Dak Lak Province's Ea Kar District has fallen from 1,200ha to 450ha.

The profits from coffee trees are two times higher than that of cacoa in this area, according to the Institute of Society, Economy and Environment.

Short-term cash crops like cassava and corn also require less advanced farming techniques, the institute said.

With so much farmers switching to other plants, the number of coffee and pepper fields has increased dramatically.

Dak Nong now has 115,000ha of coffee, nearly double the area that is officially zoned for coffee.

The province's pepper fields have already increased to nearly 8,500ha, even though the province's plan calls for only 8,000ha by 2015.

Local authorities said that with such overplanting farmers would ultimately suffer financial losses when the price of some of these crops drops on the market.

In addition, farmers in Dak Nong Province have cut down hundreds of hectares of rubber as the cultivated rubber varieties were not suited to the soil or had bad yields.

Do Ngoc Duyen, director of the Dak Nong Department of Agriculture and Rural Development, said his department had warned farmers many times that they should not plant large quantities of rubber trees, especially in unsuitable areas which are more than 700 metres above sea level.

However, farmers have ignored the warning, and as a result, many of these areas have produced trees with a low yield. Because of that, farmers have then decided to cut them down.

Dak Nong has more than 29,500ha of rubber, with 5,000ha planted before 2005, mostly in Cu Jut, Dak R'lap, Dak Song and Krong No districts. Only 40 per cent of the 5,000ha have had good yields.

The area of cashew cultivation in Dak Lak has also fallen significantly in recent years, from 41,000ha in 2008 to 28,000ha now.

In Dak Lak's Ea Sup District, which has ideal conditions for growing cashew trees, the area has shrunk from 13,000ha a few years ago to 4,000ha.

Nguyen Ngoc Phu, head of the Ea Sup Agriculture and Rural Development Bureau, said that farmers had been warned to not cut down their cashew trees, but they continued to do so.

"Unstable prices and unfavourable weather conditions are the major reasons that cashew farmers have switched to other cash crops," he said.

The district's cashew area is expected to be less than 3,000ha by the end of the year, he said.

Japan’s Nojima invests in local electronic goods retailer

Japan’s Nojima Corporation has paid over 64 billion VND (3 million USD) for a 10 percent stake in Tran Anh Digital World JSC, an electronic goods retailer.

In addition to financially support Tran Anh to expand its market share, Nojima will also send experts to work with the Vietnamese partner to build long-term business strategies and improve customer services.

Through the contract, Nojima becomes the first electric goods retailer in Japan to set up ties with a Vietnamese retailer.-

Large banks focus on corporate bonds

The total value of corporate bonds sold during the first six months of this year has reached 15 trillion VND (707.5 million USD), equivalent to 88 percent of last year’s total, according to a report from the Bank for Investment and Development of Vietnam (BIDV).

Property developer VIDP Group issued 7.6 trillion VND (358.4 million USD) in corporate bonds, mineral giant Vinacomin raised 2.5 trillion VND (117.9 million USD) and Ho Chi Minh City Infrastructure Investment (CII) issued 1 trillion VND (47.1 million USD) worth of bonds.

The BIDV report recorded small scale issuance of under 100 billion VND (4.7 million USD) from other companies. “Most of the bonds belonged to real estate firms,” the report said.

Corporate bonds were favoured by commercial banks. BIDV and Techcombank bought 500 billion VND (23.8 million USD) and 3 trillion VND (141.5 million USD) worth of bonds in VIDP Group, while all the bonds issued by CII, totalling 1 trillion VND (47.6 million USD) were sold to Vietcombank (VCB).

‘Attractive yields have brought banks with large cash reserves to corporate bonds,” the report said. “Despite the gloomy economic situation that made it more difficult for bond issuance, large corporations are still alluring to investors.”

The supply of corporate bonds is expected to continue to rise as companies take advantage of low interest rates to raise capital. “Along with increasing supply, demand will be large, especially for bonds from reputable businesses,” the report said.

Bond yields for three- to five-year terms range from 13-15 percent.

Meanwhile, Government bonds were less attractive, according to Viet Dragon Securities Co. Government bonds during the first six months yielded about 6-9 percent. Declining yields discouraged investors, especially banks.

In June and the beginning of this month, foreign investors sold Government bonds with a net value of 7.2 trillion VND (339.6 million USD).-

Rice market recovers

The local rice market has seen signs of recovery as enterprises have signed more export contracts this month.

Le Truong Son, director of Dong Thap Province-based Docimexco Company, said that the rice market has turned active thanks to plenty of orders from African and Chinese importers. At present, the summer-autumn harvest is almost finished in the Mekong Delta and enterprises have sped up export contract signing to prevent stockpiles from building up.

However, Son said enterprises should be cautious against losses as some enterprises have accepted low export prices for various reasons.

Tran Thanh Van, deputy director of Gentraco Joint Stock Company, attributed the rising rice prices to the fact that enterprises have strongly boosted rice purchases to meet the stockpile target of one million tons by late this month.

Van however said that rice export prices have improved over a couple of weeks but the uptrend is still unclear.

The price of the 5% broken rice ranges from US$390 to US$410 a ton. Meanwhile, Thai rice price is US$470 a ton, or US$70-80 higher than Vietnam’s 5% broken rice. The gap was US$100 per ton in the first quarter of this year.

Regarding the news that Thailand’s government has organized auctions to sell 500,000 tons of milled rice and 400,000 tons of unmilled rice for private exporters, local firms said that the information has yet to impact Vietnam’s rice export prices.

In fact, the volume of Thai rice launched onto the global market via this channel is still small. Customers have not flocked to buy Thai rice and they still signed contracts with Vietnamese firms.

According to rice market website Oryza, the Philippines will import 350,000 tons of rice this year as committed to the World Trade Organization (WTO).

Early this year, the nation imported 187,000 tons from Vietnam under the government-to-government contract. Many local exporters expect that the nation will import the remaining 163,000 tons from Vietnam.

The Vietnam Food Association (VFA) said that Vietnam had exported over 3.5 million tons of rice worth US$1.53 billion, FOB Vietnam port, as of July 11.

Number of foreign workers seen falling at IPs, EZs

The number of foreign employees at export-processing zones (EZs) and industrial parks (IPs) in HCMC as managers or specialists are falling sharply, according to an official of the HCMC export processing and industrial zones authority (Hepza).

The number of foreign-invested projects licensed in the city’s IPs and EZs has been on the rise but foreign workers at these facilities have declined considerably, said Nguyen Tan Dinh, deputy director of Hepza.

As of the end of last year, there had been some 2,000 foreigners working at these zones, dipping 5% year-on-year, Dinh said. Meanwhile, according to Hepza, foreign workers at these facilities continued to plummet by 6.3% year-on-year to a total of only about 1,900 by June this year.

From January to June, Hepza issued only 140 new work permits for foreigners, a contraction of 6.6%, while renewing 121 licenses, an increase of 4.3%, and re-issuing six licenses, a reduction of 40%.

The total number of foreign employees with work permits is around 1,700 out of 1,800 in need of such licensing. The majority of new recruitments are to replace other foreign workers whose labor contracts have expired.

Dinh ascribed the falling foreign workforce to the fact that difficulties faced by enterprises have forced them to reduce foreign employment commanding much higher pay than local peers. Besides, he said, it is also because employers will have to pay many expenses involving housing and travel among others when recruiting foreign employees.

The fall of foreign workers in the city also shows that local workers somehow have mastered skills to fill in their positions, Dinh remarked.

As of last month, roughly 1,200 investment projects had remained valid with total pledges of US$7.45 billion in IPs and EZs citywide, creating jobs for around 268,000 workers, dropping 2.09% against this year’s first quarter, Hepza reports.

There were 495 foreign direct investment projects with total commitments of about US$4.48 billion and 762 local schemes totaling some US$2.97 billion, according to the authority.

76% of new firms are service providers

About 11,900 new enterprises were established in HCMC in this year’s six months, with service providers accounting for up to 76.4%, the city’s Statistics Office reports.

Among the new firms, 477 are private entities, about 1,290 joint stock companies and roughly 10,100 limited liability companies. Total registered capital of these companies was about VND55.2 trillion. Compared to the same period in 2012, the number of new firms rose by 353 or 3.1% while their total capital fell by 25.5%.

Companies in the manufacturing-construction sectors account for 23.2% of the total number of new startups. The registered capital of a manufacturing entity averages out at VND3.8 billion, only equivalent to 36.8% of that of a company in the construction sector but 95% of that of a service provider.

Regarding the high proportion of service companies among the new market players, a trade expert noticed many entrepreneurs are inclined to choose the service industry to resume business after a long time struggling with difficulties and bankruptcy, as investment for the service business is generally lower than in other sectors.

Multiple companies that are exhausted and bankrupt due to tough business conditions over the past time just have little accumulated capital left, and this is why they have shifted to the service industry, the expert explained.

About 8,300 entities halted operation in January-May, representing 59.3% of the total number of new firms in the same period, the statistics office reported.

Mercedes pledges long-term investment with state-of-the-art painting facility

While some local automotive manufacturers are scaling down their operations under pressure from a decreasing tax for imported cars from now to 2018, Mercedes Benz is still increasing investment in Vietnam by opening its first electro-dipping coating facility worldwide in HCMC on Wednesday.

This technically most advanced and ecologically friendly electro-dipping coating facility is worth an investment of nearly US$10 million. Vietnam is Mercedes-Benz’s pilot country for this type of plant, said Michael Behrens, CEO and general director of Mercedes-Benz Vietnam.

He said that this foreign direct investment underlines the company’s clear belief in the automotive market in Vietnam.

Located inside the Mercedes-Benz Vietnam factory in the city’s Go Vap District, the facility was built on an area of 5,000 square meters.

The two main parts of the electro-dipping coating facility are the surface pre-treatment and the actual electro-dipping coating. With top-of-the-line so called Zircobond technology using zirconium transitional elements usually seen only in spacecraft production, the line ensures that car bodies are heat-proof and corrosion-resistant. The key advantage of the facility is its extreme environmental friendliness.

The facility eliminates heavy and extremely hazardous metals such as nickel, zinc or manganese, decreases clean water usage by 40%, electrical energy by 40% and wastewater by 30% compared to traditional phosphate coating technology.

To finalize the whole process, each chassis traverses 16 small steps, including nine steps of phase 1 and seven steps of phase 2, in total for 10 times dipped into the tanks. The whole cycle takes 120 minutes.

According to the company, the electro-dipping coating facility of Mercedes-Benz Vietnam can paint many types of chassis and structural components. This facility will be used for the locally manufactured body frames of GLK, C-Class and E-Class. After installing the plant in Vietnam, the parent firm Daimler will further spread this technology to other countries.

Top executives of the company were present on this occasion. Peter Alexander Trettin, president & CEO of Daimler Central/Eastern Europe Africa & Asia in Stuttgart, Germany said: “We not only introduce the safest and most luxurious vehicles to Vietnam’s customers, but the most advanced ecologically friendly German technology to this country as well. Vietnam is one of our production plants worldwide. We highly appreciate this market and commit to a long-term investment.”

He said this facility is also a significant investment by Mercedes-Benz. “Therefore, this facility is also a symbol for our long term commitment to this market. We strongly believe in the further development of the economy in Vietnam, as well as the growing automotive market here as well as in the South East Asian region.”

Under pressure from a decreasing tax for imported cars from now to 2018, some manufacturers are moving their investment to other countries in the region. “We stay,” stated Michael Behrens, saying: “As opposed to other luxury brands who only import, we are a true corporate citizen of Vietnam, bringing ecological, technical benefits to our host country. No other manufacturer uses this type of ecologically friendly painting facility in Vietnam. We are pioneer once again.”

Mercedes-Benz is the only luxury manufacturer to partially assemble vehicles in Vietnam. It has been certified and proven as a top quality factory within the Daimler family. It is a responsible brand in the luxury segment and among the top tax-payers in HCMC.

Expressway project seeks 2nd investor

Roadshows will be held for the expressway project connecting Dong Nai Province’s Dau Giay with Binh Thuan Province’s Phan Thiet in some Asian countries to seek a second investor capable of accelerating the implementation progress.

The project is carried out under the public-private partnership (PPP) model with Bitexco Group as first investor and contributing 60% of the project’s investment capital.

Dau Giay-Phan Thiet expressway worth around US$757 million will have four lanes and a total length of some 100 kilometers. The expressway connects HCMC-Long Thanh-Dau Giay expressway in My Thanh Commune in Dong Nai Province with National Highway 1A in Binh Thuan Province.

Scheduled for completion in 2019, the expressway will help shorten travel time from HCMC to neighboring industrial development areas as well as tourist sites in the central coastal region.

According to Bitexco, the Ministry of Transport and the World Bank will hold roadshows for the project in India on Monday, in South Korea on Wednesday and in Singapore on July 26. Besides, the project will be introduced in Hanoi in mid-September.

Local makers decry stainless steel import tariff cuts

The import tariff reductions to 0% for some types of stainless steel have led six local steel manufacturers to request a uniform tariff of 10% to help them survive.

The six stainless steel companies have sent a joint petition to the Ministry of Finance and its two units, the General Department of Customs and the General Department of Taxation.

Dong Bang Stainless Steel Company, Trung Thu Company, Long An Stainless Steel Company, Thien Quang Group, Ha Anh Stainless Steel Company and Hoa Binh Inox Company have said they import unprocessed stainless steel as feedstock for local production.

In June 2012, the General Department of Customs introduced new import tariffs on four types of stainless steel bars and rods, with the tax on one of them unchanged at 10% and that on the other three exempted.

“That move has thrown us into a difficult position. In their customs files, stainless steel importers may say all their imports belong to the tariff-free category to profiteer,” said Nguyen The Hung at Long An Stainless Steel Company.

“This has dealt a blow to local manufacturers and will cause a huge tariff revenue loss,” he told the Daily.

Nguyen Thi Cao Lien, head of the export and import department at Thien Quang Group, said imported stainless steel would sell for a minimum VND41.5 million per ton if a 10% tariff was imposed.

However, due to tax evasion or dodging practices, importers can launch their products at a much lower price, say, VND37.5 million per ton, forcing local producers to lower their prices to VND40 million a ton, which is below cost, to stay competitive, she said.

According to the petitioners’ estimates, the Government might lose over VND30 billion in monthly tariff revenues if stainless steel importers falsified their customs documents to evade the import tariff.

“We are having great difficulty maintaining our production and employment,” said Hung.

Hung said his company this year had laid off nearly 300 of its 1,500 staff.

The six petitioning companies employ some 10,000 workers.

Hung said: “We urge the Ministry of Finance to adjust up the stainless steel import tariff to 10% to create a level playing field for local manufacturers.”

A source from the General Department of Customs said the agency had received the joint petition, but it would need time to consider it before making a decision.

Rubber exports bring zero profit

The current price of Vietnamese natural rubber exported to China hovers around VND43 million a ton, almost the same as production cost.

Vietnamese enterprises spend VND42 million making a ton of rubber at the moment, so they would earn almost nothing if they export rubber at a lower price, according to an executive of the Vietnam Rubber Group (VRG).

That export price is VND20 million lower than VRG forecast at a meeting earlier this year on 2012 business review and 2013 projections.

Rubber prices have been in the downward spiral since the start of the year. The selling price offered by VRG averaged out at VND59.7 million a ton in the first six months of the year, shrinking VND11 million year-on-year.

The group achieved total sales of VND5.44 trillion in the period, 64.5% of the figure recorded in the same period last year.

Despite the natural rubber price falls, VRG said it would continue to expand rubber farming areas in the country’s north and the neighboring nations of Laos and Cambodia as earlier planned. The firm ascribed its determination to the fact that developing this industrial tree is part of its long-term strategy.

January-June rubber exports totaled 383,000 tons worth US$976 million, dipping 5% in volume and 19.2% in value over the year-ago period, the Ministry of Agriculture and Rural Development reports. China remained the biggest importer of Vietnamese rubber, accounting for 46% of the country’s total rubber export value, followed by Malaysia with nearly 19%.

Public investment disbursements surge

The State Treasury’s disbursements for routine expenditures and capital construction in the first half rose to an all-time high in many years, a move which is aimed at accelerating public spending to shore up slowing gross domestic product growth.

Regular expenses financed by the State budget totaled an estimated VND319.1 trillion from January to June, 47.3% of the year’s plan, heard a conference of the State Treasury on Tuesday. It was higher than in previous years.

Notably, the pace of disbursement for capital construction, which had been a bottleneck over the years, improved considerably. By late last month, the State Treasury got the capital construction funding plans that amount to VND246.1 trillion, with roughly VND100.2 trillion already disbursed in the year to end-June, 41% of the financing plan for the year.

In the first half of 2012, the total disbursements for capital construction were VND77.4 trillion.

The amount disbursed for capital construction carried forward to 2013 from last year by the State Treasury were estimated at a combined VND42 trillion in the first half.

The provinces with strong capital disbursements and good controls on routine expenditures are Thanh Hoa, Danang, Dong Nai, Phu Tho, Gia Lai, Bac Giang, Hau Giang, Ninh Binh, Nam Dinh, Soc Trang, Quang Binh, Thai Nguyen, Phu Tho and Binh Duong.

The State Treasury said it would actively work with provincial authorities and project owners to boost disbursements for capital construction and recover the advanced money to achieve the highest disbursement rate in capital construction in the final months of the year.

Kon Tum province invests in Ngoc Linh ginseng

Ngoc Linh ginseng, a precious medicinal species indigenous to the mountain of the same name in the Central Highlands province of Kon Tum, has been conserved and developed to become a key commercial product.

Ngoc Linh ginseng (Panax articulatuc) was discovered on the mountain in 1973. Research has found it to be among the four most precious ginseng species in the world, which contain substances beneficial to human health and thus high in economic value.

According to a research project conducted by the Health Ministry in 1978, Ngoc Linh ginseng rhizome contains 26 saponins (chemical compounds) that have previously been identified in other species and 24 completely new ones. In comparison, Korean ginseng contains only about 25 saponins. A high amount of the compound in ginseng is generally seen to be an indicator of better quality. As such, Ngoc Linh ginseng is now more expensive than its Korean counterpart.

However, the species has been over-exploited since its discovery and is in danger of extinction.

The Ngoc Linh ginseng conservation centre under the Kon Tum-based Dak To Forestry Co. Ltd. in 2004 launched a project to preserve and develop the plant with the participation of the local community.

Director of the centre Nguyen Thanh Chung said that at present, the project has 10 hectares planted with pure seedlings in an effort to expand ginseng cultivation.

The best time for planting is June and July, the rainy season, which will gives the air high humidity levels and help reduce irrigation, Chung explained.

Ngoc Linh ginseng is a perennial plant that takes dozens of years to grow and develop. Its quality and productivity depend on seeds, climate, soil, fertilisation and growth period, he added.

Kon Tum province has long considered ginseng as one of the nine key products and tried to create a trademark for it.

In a plan to develop Ngoc Linh ginseng in the 2012-2015 period, the provincial Department of Agriculture and Rural Development has concentrated cultivation in Tu Mo Rong and Dak Glei districts. It is striving to have 500 hectares by 2015, of which 100 hectares can be harvested.

The plan also includes a vision to 2025, when it is hoped there will be 7,000 hectares planted with the ginseng. Up to 500 hectares would be harvested every year, producing 250 tonnes of ginseng which will be used to make medicines sold in domestic and foreign markets.

New port up for tender despite sluggish demand

Despite the abundant port capacity in Cai Mep - Thi Vai port complex which is pushing some rival port operators close to bankruptcy, the government has decided to put a new terminal up for lease this year.

The Ministry of Transport last week approved a plan for leasing two berths of the Japan official development assistance (ODA)-funded Cai Mep-Thi Vai international container terminal in Ba Ria-Vung Tau province. The selection of port operator will be put up for tender.

The Cai Mep container berth which can accommodate vessels up to 100,000 dead weight tonnage would be leased out for a minimum fee of $219.5 million, while the Thi Vai berth which can accommodate vessels up to 50,000 dead weight tonnage would cost at least $130.5 million.

“This is the first time a state-invested infrastructure project has been put up for a 30-year lease,” said Le Tuan Anh, head of international cooperation at the Vietnam Marine Administration.

“This is a solution to help the state to more quickly recoup its investment capital. Operators that offer the highest price and have the best business plans will win the tender,” said Nguyen Nhat, director of the administration.

The container terminal was inaugurated in January and is scheduled to start commercial operations in the second half of this year after contractors finish the final installation of equipment. The $625 million terminal is among the largest terminals in the Cai Mep-Thi Vai port complex in the southern province of Ba Ria-Vung Tau.

Despite the optimism over the new terminal, Cai Mep-Thi Vai’s other ports are in a perilous state as they have suffered losses since last year because of cargo shortages, despite government plans to make the complex the main gateway for maritime trade in the south of Vietnam.

The situation is so bad that the SP-SSA International Container Terminal, a port joint venture between the US’ SSA Marine, Vietnam National Shipping Lines (Vinalines) and Saigon port, planned to temporarily close its 38-hectare terminal at the same complex.

Experts urge consistency in petroleum pricing policies

The recent increase in petroleum prices has caused surprise and worry among consumers who were not expecting it based on signals from relevant agencies.

On the evening of July 17 the ministries of Finance and Industry and Trade allowed petroleum traders to increase fuel prices by nearly VND500 per litre. The decision brought prices for 92 octane gasoline to VND24,570 (USD1.21) per litre, diesel to VND22,310 (USD1.06) per litre and kerosene to VND22,020 (USD1.04) per litre.

This is the fourth petroleum price hike since the beginning of the year and the third consecutive price increase over the past month.

Associate Professor, Dr. Ngo Tri Long, said the frequency of recent petrol price hikes is quite unusual. They have driven the price of petrol up by VND2,691 per litre.  

“During this slump in business and slow market demand, these price hikes are considerable. I wonder why the Ministry of Finance doesn’t use a tax tool at this moment to support petrol firms and ease the burden on consumers,” Long commented.

Economist Le Dang Doanh said, “It’s understandable that domestic petrol prices are increased in accordance with the rise in prices on the world market. However, statements made by relevant authorities only seem to confuse the public."

The decision to increase petroleum prices starting at 8pm on July 17 was made only eight hours after these authorities announced that they were considering cutting import taxes, would continue to use the petrol price stabilisation fund and hold off on making any decision on price hikes.

Several experts have commented that the authorities have been inconsistent in their statements and actions. .

“The current petrol price regulation mechanism seems to be transparent, but the authorities don't monitor the actual situation of petrol firms. Rather they often make decisions based solely on complaints of losses by these firms," he said.

Doanh attributed the situation to the fact that relevant authorities do not want to announce any price increases in advance for fear of speculation.

“In order to improve public confidence, it’s necessary to improve coordination between relevant authorities and avoid inconsistencies between their statements and their decisions in the future,” Doanh noted.

Ta Van Thang, of the Finance Ministry's National Institute for Finance and Economics, said the current inadequacies in the petroleum market are a result of monopoly in petrol trading and a lack of transparency in the market.

Among 17 petrol wholesalers, Vietnam National Petroleum Group (Petrolimex) holds the largest market share. This has forced the remaining companies to follow suit in terms of pricing, leaving consumers with little choice as there is little difference in cost between products.

Nguyen Tien Thoa, General Secretary of Vietnam Price Appraisal Association, said the current pricing mechanism, based on the average price in the world market for a month, is inadequate. He proposed changing the timeline to ten days to better keep up with changes in the market.

25,000 businesses go bust in first half

An estimated 24,931 Vietnamese enterprises ceased operations in the first six months of this year, the vast majority of them private firms, according to the General Department of Taxation.

Of the total, 24,460 were private companies, leaving only 269 foreign-invested and 202 state-owned firms.

During the same period 40,523 new enterprises were given licenses in Vietnam, including 39,732 private companies, 542 foreign-invested firms and 249 state-owned companies.

By late June this year, Vietnam had 457,343 registered companies, up 39,700 compared to the same period of 2012.

The ministry has also implemented solutions to support businesses and deal with bad debt under the government’s Resolution No.02. The ministry has extended payment schedules for several kinds of tax by three to six months for companies which meet requirements.

The ministry offered a VAT payment time extension to 105,037 companies with a total VND4.428 trillion (USD209.5 million), including 101,858 private firms. Meanwhile, 45,037 enterprises were given extensions on corporate income totaling a combined VND952 billion (USD45.3 million).

The extension is forecast to reduce state budget revenues by VND17.613 trillion (USD838.7 million) and the figure is expected to climb to VND17.58 trillion in 2014.

Sturgeon farming still underdeveloped in Vietnam

Cold-water fish farming in Vietnam, such as sturgeon-breeding, is still underdeveloped and has not taken full advantage of the climate, water resources and geographical location the country provides--with this young fish farming industry now facing a serious threat from illicit sturgeon coming in from China.

Cold-water fish farming, in particular sturgeon farming began to develop in the last five years. Starting from Lam Dong and Lao Cai Provinces, sturgeons are being bred with production reaching 700 tons in 2012, of which Lam Dong Province accounting for 50 percent.

However of late, sturgeons illegally brought in from China are seriously affecting the local sturgeon farming industry. According to data, around 2-3 tons of fresh sturgeons are illegally brought in from China into Ho Chi Minh City by air every day and sold at a very low price.

According to Tran Van Hao, Chairman of Lam Dong Province Coldwater Fish Farming Association, local sturgeons are bred in near natural conditions and harvested after 12-14 months when they reach a weight of around two kilograms. Meanwhile, Chinese sturgeons, with the help of growth stimulants, can be harvested after 4-6 months; hence, Chinese sturgeons are much cheaper than Vietnamese ones.

Cheap sturgeons from China have paralyzed the distribution network of local sturgeons and are seriously affecting local sturgeon breeders. Ngo Thi Kim Phung, Director of Vietnam Da Lat Sturgeon Company, revealed that Vietnamese sturgeons have to be sold at VND150,000 per kilogram at the farm to ensure profits for breeders whereas illicit Chinese sturgeons are sold to traders at VND50,000-60,000 per kilo and to retailers at VND120,000 per kilo.

Besides, some companies recently imported Chinese sturgeons into fish farms in the northern provinces to disguise as local-bred sturgeon before selling them in the market.

Tran Van Hao said that in order to protect and develop sustainably the sturgeon farming industry in Vietnam, beside preventing and controlling illicit Chinese sturgeons, many solutions about fries, fish foods, breeding process, and distribution, should be carried out.

Currently, some local companies are able to produce fries but the quality is not good enough. Local firms can also produce fish foods but need to buy technology and ingredients from foreign countries. Noticeably, there has been no close connection between distributors and producers.

Hao also said that local sturgeon breeders must learn to beat competition from Chinese sturgeon by improving quality and safety and offering consumers reasonable prices--once Chinese sturgeon is legally imported into Vietnam.

Foreign-made goods overwhelm local markets

At most grocery stores, supermarkets, and trade centers in Ho Chi Minh City, foreign-made products outnumber domestic-made goods and remain more popular as supermarkets and trade centers continue to import them, even  though these can be produced locally.

At M. Supermarket on 3 Thang 2 Street in District 10, many household goods, such as ladles, kettles, and electric mugs, have been imported from China, South Korea, and Japan. Even mops, towels, cradles, and makeup remover cotton pads are from foreign countries although in reality, local producers are capable of producing these same items.

Not only household goods, but foodstuffs also out price domestically made commodities. For instance, Thailand tamarind is priced around VND90,000 per kilo, and Thailand wafers are priced VND21,000 per three pieces, at M. supermarket.

Similarly, L. Supermarket on Le Dai Hanh Street in District 11 is also flooded with foreign-made toys and fresh food products. Local products merely account for a modest number. As for instant noodles, shelves are full of instant noodles imported from South Korea and Thailand. Of course, the price of instant noodles from South Korea is fairly higher, from VND20,000 to VND40,000 per pack, while price of other kinds of instant noodles is around VND10,000 per pack.

Bookstores cum mini-supermarkets, including M.K and T.N also display many kinds of pens, glasses imported from China and Thailand from VND200,000 to VND300,000 per item, depending on product and brand name.

Electronics supermarkets, such as N.K, P.K, and P.V, sell cases for mobile phones and laptop cooling pads from VND200,000 to VND2 million per item. Noticeably, all these products have Chinese and Taiwanese origin markings.

There are just a few supermarkets where Vietnamese products account for 80-90 percent of the total amount of goods. But supermarkets where foreign goods are sold are easy to find and it is out of question if these foreign products cannot be replaced by local-made ones.

In fact, many foreign products can be totally replaced by local products. It is said that xenophile of consumers and poor competitiveness of local producers have created favorable conditions for foreign products to crush the domestic market.

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