Light bulb maker to invest in Venezuela

 

The Dien Quang Electric Bulb Joint-stock Company has signed a deal to build a compact light bulb factory with an annual capacity of 74 million units in Venezuela.

 

Under the contract, signed with PDVSA Industrial, Dien Quang will be responsible for the whole investment and completely transfer its technology in light bulb production to the Venezuela partner by 2017.

 

In 2009, Dien Quang won over rivals from China, Belarus, the Republic of Korea and Taiwan to gain a contract to export 10 million light bulbs to this South American market.

 

The company is one of the first Vietnamese businesses to receive certificates for its products that meet European Comformity (CE) marking standards, European Restrictions of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment and the UL Standard for Safety of the US . They are conditions for light bulbs to take a foothold in Europe and the US .

 

Light bulbs of the Dien Quang trademark are now available in the Republic of Korea, India, Bangladesh, Brazil, Cuba, Jordan and Mexico, in addition to the traditional markets of Myanmar and Egypt.

 

Big players are flourishing

 

While most all local enterprises are struggling to mobilise capital given the difficult economic situation, a few lucky punters are considering the best way to benefit from their plentiful cash.

 

The conglomerate Hoang Anh Gia Lai (HAG), which had VND3.6 trillion ($173.9 million) in cash at last year’s finish, said it was willing to spending money on its big projects. Among them, its big-scale rubber planting plan was its first priority.

 

“How to spend in this difficult economic situation is a matter which needs much careful consideration,” said HAG’s chairman Doan Nguyen Duc.

 

Early this year, HAG had mobilised an additional $90 million via international bond issuance and is planning to mobilise $110 million more in order to finance its next projects.

 

Meanwhile, aquatic producer Hung Vuong Corp., which has VND190 billion ($9.18 million) in cash, is spending to acquire its weak peers.

 

Lately last month the company registered to purchase 2.8 million shares or 18.7 per cent stake of the near-bankrupt peer Faquimex (FBT) from State Capital Investment Corp. (SCIC), which will cost it some VND30 billion ($1.5 million).

 

Some sources familiar with the matter even indicated that HVG would bid for all the 4.92 million FBT shares held by SCIC and bought some more from the market, aiming at taking the control in FBT and merge the acquired company with itself afterwards. They said it would also spend more than VND1 trillion ($48.3 million) to raise FBT up after the acquiring finished.

 

Besides, HVG is also bidding 1.15 million shares of Agifish Co. (AGF), which exports tra fish into Russia. Observers said that the HVG would likely spend all its current cash in the two share purchases.

 

Dong Phu Rubber (DPR) is also among few “rich companies” at this moment with some VND600 billion ($28.98 million) in cash at Q1’s end. The rubber producer plans to strongly expand its scale, namely planting 2,540 hectares of rubber additionally and establishing a new rubber company covering 10,000ha.

 

In fact, Vietnamese enterprises are largely spending their cash in banks as home deposit interest rate is extremely high of more than 17 per cent. However, that way of spending is unstable as the rates could fall down unexpectedly and much impact enterprise’ plans, said chairman for Hung Vuong Corp. (HVG) Duong Ngoc Minh.

 

Sparking petrochemical project momentum

 

Long Son petrochemical complex recently asked the government for incentives to get the project rolling.

 

Accordingly, it sought approval for 30 year materials, additives and chemicals import duty exemption, 5 per cent import duty imposition on its key items such as PE, PP and VCM once operational and 30-year excise tax exemption for raw production materials.

Under current regulations, the complex benefits from five year materials and accessories import duty exemption since starting production. The proposed 30-year import duty exemption may face the risk of impinging on the World Trade Organization (WTO) regulations, according to industry experts.

 

They said that imposing 5 per cent import duty on the complex’s key products would not be easy since they are input materials for many production sectors.

 

Construction of the complex project kicked-off in September 2008.

 

The project is said to be the biggest independent petrochemical complex in the country with total investment of $3.77 billion with capacity of over three million tonnes of products per year. It covers 400 hectares in PetroVietnam Long Son Industrial Park, next to Long Son oil refinery in southern Ba Ria Vung Tau province.

 

Investors of the project are PetroVietnam, Vinachem, Vina SCG Chemicals and the Thai Plastic and Chemicals Company (TPC).

 

The complex is scheduled to start operations in late 2012 and will act as the only supplier of HDPE and LDPE in Vietnam. Construction of the first phase is scheduled for late 2013 and an expansion of the complex is planned for 2016.

 

Once fully operation, the complex will produce 1.45 million tonnes of polyethylene (PE) and polypropylene (PP), meeting 65 per cent of domestic demands for PE and PP by 2017, contributing to stabilising input materials for petrochemical industry, plus 730,000 tonnes of chemical materials for production of polyvinyl clorua (PVC) and 840,000 tonnes of other key chemical materials for the oil refinery and petrochemical industry.

 

The complex plays an important role in strong and stable development of Vietnam’s petrochemical and plastic industries, helping reducing reliance on imports of polyolefin products, save foreign currencies, curb inflation and stabilising prices in Vietnam.

Construction of the project is expected to create jobs for some 10,000 workers and in the operational period, about 1,500 workers will be needed.

 

Nut exporters chew on cash crunch

 

Cashew exporters were facing a shortage of capital and struggling to import enough raw materials to meet the industry's annual export target of US$1.4–1.5 billion, said industry insiders.

 

Vice chairman of the Viet Nam Cashew Association (Vinacas) Nguyen Duc Thanh said exporters needed roughly $400 million to import 400,000 tonnes of raw cashew.

 

However exporters were facing major difficulties because of world price hikes and high interest rates.

 

"The industry is confronting some unusual developments this year including a drying up of credit, high interest rates, and tough requirements for getting bank loans," said Thanh.

 

A tonne of raw cashew currently set businesses back $1,400, up 60-70 per cent against last year, said Thanh, adding it was hard for cashew exporters to access bank loans because of interest rates that hovered around 21-25 per cent per year.

 

Deputy Director of the Department of Agriculture, Forestry and Fishery Products Processing and Salt Industry Doan Xuan Hoa also admitted the cashew industry was facing tough times.

 

He called on Vinacas to monitor raw cashew and export prices and oversee the quality of cashew nuts, but added that there was a need to control export prices since incorrect forecasts could lead to needless stockpiling of cashew.

 

This would result in heavy losses, Hoa said.

 

Vinacas recently asked the Ministry of Finance to cut the cashew import tax from the current 5 per cent to zero, saying that tax adjustment was needed to solve difficulties faced by domestic businesses.

 

Every year, the cashew businesses need about 700,000 tonnes of raw cashew for processing and export. However, domestic output meets less than half of this demand. Domestic cashew exporters therefore import raw cashew – mainly from Africa, Indonesia and Cambodia.

 

To minimise this dependence on imports, Vinacas has developed a plan to establish a 200,000ha cultivation area dedicated for cashews in southern Binh Phuoc Province. If approved by the Ministry of Agriculture and Rural Development, this will lift the country's total cashew cultivation area to roughly 500,000ha.

 

FDI disbursements fall in May

 

Disbursement of foreign direct investment reached US$4.52 billion during the first five months of this year, a modest yearly increase of 0.4 per cent, the Ministry of Planning and Investment said.

 

However, disbursement had a tendency to decrease month-by-month since Tet (Lunar New Year holiday), from $1.4 billion in March to $1 billion in April and only $900 million this month, the ministry's Foreign Investment Agency said.

 

This month also witnessed the lowest level of new FDI with only $322 million coming from 51 new foreign-invested projects.

 

During this month, 13 existing projects were allowed to increase their capital by a total of $343 million, representing a year-on-year increase of 50 per cent in capital but a slump of 53 per cent in the number of projects.

 

The latest addition has brought the total of FDI registered during January-May to $4.7 billion, down 76.5 per cent against the same period last year, the agency said.

 

Illegal petrol speculation leads to shortage

 

Stiffer penalties should be imposed on filling stations to prevent speculation at petrol retailers around the country, according to industry experts.

 

Vuong Thai Dung, deputy general director of the Viet Nam National Petroleum Corporation (Petrolimex), said Government regulations required that petrol retailers be supervised by their wholesalers to create a more transparent petrol manufacturing chain.

 

Many petrol stations suspended sales waiting for anticipated higher prices, a practice that is against the law, Dung told Dau Tu newspaper.

 

Petrolimex has more than 6,000 gas stations. When there was a shortage of petrol in March, the company's retail stations did not have enough fuel for customers.

 

The trading volume at the stations was even higher than normal because the stations of other petrol wholesalers had stopped selling their products, a Petrolimex representative explained.

 

"We could not determine which stations (that had stopped selling) were linked to particular wholesalers. That responsibility belongs to authorities," Dung said, adding that it was not very difficult to discover the fuel shortage at a petrol station and then trace the responsibility of the wholesaler.

 

The country has around 14,000 petrol stations, enough to satisfy consumption demand for the country.

 

Early this month, many petrol stations in the Mekong Delta and southeastern region either closed or sold petrol only periodically.

 

The situation has become more serious as it has expanded to other regions, according to Industry and Trade newspaper.

 

The speculation has created a serious shortfall of fuel for daily use and production in some rural areas.

 

Farmers in An Giang Province's Phu Tan District had to leave their combine harvesters and pumps idle or buy fuel at higher prices at VND25,000 to 30,000 a litre from stations.

 

This also occurred in Tien Giang, Tra Vinh, Binh Phuoc and other provinces, even though market watch officers imposed penalties on the speculators. The situation has improved in northern provinces.

 

The Ministry of Industry and Trade's Market Control Department has announced that it will impose a heavy penalty on gas stations speculating in fuel.

 

The department has set up a hotline to receive complaints from customers.

 

Market watchdog calls for new indices

 

A senior official has called for the introduction of new indices capable of better reflecting movements on the country's stock markets.

 

"Existing indexes haven't succeeded in showing exactly what is happening on stock markets" said Nguyen Son, head of Market Development Department of the State Securities Commission (SSC).

 

Speaking to reporters, Son suggested instead Viet Nam develop new index systems based on the top 30 or top 50 large-cap companies, or divided into business sectors.

 

As evidence of this need, the official cited stock market sessions where 80 per cent of stocks listed on the VN-Index and HNX-Index fell but both markets rose on the back of blue chip performance.

 

Son went on to explain that current indices were calculated on the basis of outstanding stocks, rather than free float volume.

 

This method was accurate for international markets where the amount of free float shares was the outstanding volume, said the official.

 

But Son said that many listed companies in Viet Nam were transferred from State-owned enterprises and stakes held by the State could not be traded freely on the markets.

 

Son then gave Vietcombank as an example. Listed in 2009, Vietcombank now sees 163.2 million shares traded on the HCM City Stock Exchange while the real outstanding volume is over 1.7 billion shares.

 

The remaining 1.6 billion shares are currently held by the State.

 

Son said, however, that Vietcombank's upcoming listing of these 1.6 billion shares on the HCM City Stock Exchange would not help. Rather, it would increase the outstanding volume while retaining the free float. This in turn would affect the calculation on VN-Index, then distort it.

 

"This is why index calculations have to be revised."

 

Earlier, the SSC urged both the HCM City and Ha Noi stock exchanges to research possible new indices development and to revise the calculation of existing indices.

 

"This revision is essential, but it doesn't mean discarding current indices because these provide an important reference point," Son concluded.

 

Price ceilings for meat to be raised

 

The price ceilings for cattle and poultry meat listed in Ho Chi Minh City’s price-stablization program will be raised as of Thursday, the municipal Department of Finance has said.

 

The finance department said this was aimed to reduce the gap of 23 to 24 percent between controlled prices and market prices.

 

Particularly, prices of pig legs and half fat and half lean pork will be increased by VND9,000 (US$0.45) per kilogram to VND84,000($4.2) and VND89,000($4.45) per kilogram, respectively.

 

Poultry will also be priced up by 9.7 to 14.3 percent.

 

The price of home chicken for instance will be raised from VND57,000 ($2.85) to VND63,000 ($3.15) per kilogram and industrial chicken by VND4,000 to VND45,000 ($2.25) per kilogram.

 

Duck meat’s price will also be increased from VND57,500 ($2.875) to VND64,000 ($3.2) per kilogram.

 

The department said these prices are still 10 percent lower than market prices.

 

Nippon Sheet Glass to increase capacity of Vietnam’s plant

 

Japanese Nippon Sheet Glass Co will install two new production lines worth $320 million in Vietnam as early as 2013 to keep pace with global demand, according to Japanese newswire Nikkei.

 

The new lines, one for glass for solar cells and the other for ultrathin glass, will increase the capacity of the Vietnam’s plant to meet the rising demand for touch panel and solar cell production in growing markets of solar energy and smartphones.

 

But Nippon Sheet Glass did not reveal the production capacity of the new lines, which will be built at its My Xuan facility near the southern economic hub Ho Chi Minh City.

 

The two new lines are expected to create about 400 local jobs.

 

The new line for solar cell glass in Vietnam will be its 6th integrated production operation.

 

Nippon Sheet Glass is thought to hold about 70 percent of the market for the product used in thin-film cells which require little silicon. What makes the company's glass different is that it is manufactured and coated with a conductive film in a single process.

 

The line for touch panel glass will be its 2nd after the 1st one in Maizuru, Kyoto.

 

Nippon Sheet Glass has seen a sharp increase in the use of its ultrathin glass for touch panels in the past 1-2 years.

 

Government opts to invite investors for projects

 

The Prime Minister has allowed Kien Giang Province’s People’s Committee to invite investments for two projects in Phu Quoc Island initially intended to be funded by government bonds.

 

These projects, now designated as Build-Transfer, are construction of a 16-km road to connect Dong Duong Airport with Phu Quoc Resort Beach and construction of Nguyen Trung Truc Bridge.

 

Nation's printing industry at the crossroads

 

Despite achieving considerable growth, the HCM City printing industry faces numerous challenges that threaten to derail future growth, according to the Printing Association of HCM City.

 

The going was good for the industry from 1993 to 2008 when it grew at an average of 10-15 per cent a year.

 

However, in 2009 the growth rate fell to 5 per cent due to the global recession.

 

The association said the escalation in the cost of inputs, especially printing paper, in the last few years had increased printing costs, hitting demand. Besides, the growth of information technology and the digital media had come at the cost of the printing industry, it said, adding that the number of printed books, newspapers and magazines reduced by 20-30 per cent in the last two years.

 

The printing of reference books and dictionaries is down by half.

 

Along with industrial development, demand for printing on packaging and labels has increased, becoming a driving force for the industry.

 

But local companies face fierce competition from foreign companies, especially those from Thailand, mainland China, Malaysia, Taiwan, the US and Australia, who already have a massive market share, particularly in packaging and labelling.

 

With their better technologies, they enjoy an advantage over local competitors.

 

In recent years the HCM City printing industry had been spending US$5 million-$7 million annually on buying new technologies. However, it was mostly focused on publishing, leaving other sectors with outdated technologies, the association said.

 

To overcome difficulties, the association had suggested a series of measures like developing healthy competition, avoiding overlap in investment, and focusing investment in special printing sectors.

 

HCM City has 260 printing presses equipped with industrial presses and more than 2,000 smaller establishments.

 

The industry annually prints 540 billion pages on average, earning more than VND18 trillion ($870.4 million).

 

It accounts for 60-65 per cent of the country's total printing output.

 

Forestry, fisheries exports top $10 billion

 

The nation’s agro-forestry and fisheries export revenues exceeded $10 billion in the first five months of the year, a year-on-year rise of 41.5 per cent, the Ministry of Agriculture and Rural Development (MARD) said.

 

The five-month agricultural products export turnover recorded a year-on-year surge of 150 per cent, followed by seafood products, 27.3 per cent and forest products, 19.1 per cent.

 

In the review period, the country exported more than 3 million tonnes of rice for almost $1.5 billion, year-on-year rises of 20.6 per cent in volume and 23.6 per cent in value. Indonesia, Cuba and Malaysia remained Vietnam’s major rice importers.

 

MARD said it was likely to fulfil the target of exporting 7.4 million tonnes of rice this year as it has noticed soars of 58.6 per cent in volume and 90 per cent in value of rice imported by the Hong Kong (China) market.

 

The five-month coffee exports exceeded last year’s turnover, with almost $1.8 billion. The coffee sector is predicted to break the 2008 record of $2.2 billion in the next two months.

 

Although the nation exported only 230,000 tonnes of rubber in the first five months, it recorded a double increase in revenue, to $1 billion, thanks to the world’s rubber export prices reaching $4,383 per tonne.

 

Despite a drop in volume, the five-month pepper and cashew nuts export value fetched $393 million and $293 million, respectively.

 

Meanwhile, seafood exports fetched almost $2.1 billion in the first five months of the year, a year-on-year rise of 27.3 per cent, with Japan, the US, the Republic of Korea (RoK) and the European Union (EU) being Vietnam’s key importers.

 

Also in the first five months of the year, Vietnam imported almost $6 billion worth of raw materials for agro-forestry and fisheries production.

 

City draws over US$1.52 billion in FDI

 

Foreign direct investment (FDI) approvals in HCMC in the January-May period rose a staggering 67.5% against the same period last year, largely owing to a mammoth project by a U.S. investor.

 

The city’s Department of Planning and Investment said on Tuesday that the city attracted more than US$1.33 billion in fresh foreign capital registered in 123 new projects, up 61.5% year-on-year. Besides, in the first five months of this year, 42 existing FDI projects have registered to increase capital by US$193 million.

 

This result is largely attributed to the project of the U.S.-invested company First Solar Vietnam Manufacturing Co. Ltd. to develop a thin-film solar power panel factory worth US$1 billion in Cu Chi District.

 

The initial investment in the first phase of the project, which got off ground in March, was around US$300 million, and the facility will come on stream in the second half of next year.

 

Much of the new FDI is committed to the city’s industrial parks and export processing zones.

 

The HCMC Export Processing and Industrial Zones Authority (Hepza) said that total FDI into these zones so far this year, including additional funds injected into operational projects, has amounted to US$1.183 billion, up nearly US$1.1 billion year-on-year.

 

Meanwhile, the management authority for the city’s southern area development licensed seven projects with investment capital of over US$131 million.

 

Authorities of Thu Thiem Urbanized Area, Saigon Hi-Tech Park (SHTP) and HCMC North-West Metropolitan Area have yet to grant a license this year.

 

The city to date has some 3,990 valid FDI projects with total registered capital of more than US$31 billion.

 

Labor-strained cashew industry to apply automation

 

Many cashew-processing enterprises will likely apply automation this year and next as the move will help them slash their work force by 70% and reduce production cost, heard a workshop in Dong Nai Province on Tuesday.

 

Nguyen Thai Hoc, chairman of the Vietnam Cashew Association, told the workshop on automation and technology transfer for the cashew industry on Tuesday that automation would help processors overcome the labor shortage on the one hand and improve their competitiveness on the other hand.

 

The workshop was held by the association to introduce new machines and technologies for cashew processing. Highlighted at the workshop was the project KC-07 sponsored by the agriculture ministry to manufacture fully-automatic cashew nut skinning machines.

Nguyen Van Thoa, head of Binh Phuoc Province’s Cashew Association, said the province as the country’s key cashew growing area is facing a critical shortage of workers. Most enterprises in the province are in dire need of manual labor as they are still using obsolete machinery and technology, Thoa said.

 

The cashew processing industry currently requires some 200,000 workers, but at many enterprises, the manpower meets just 30% to 50% of their labor demands, according to the Vietnam Cashew Association.

 

Dang Huu Tam, director of cashew processor Phuong Thanh Tam in Binh Phuoc Province, said his company wanted to recruit 300 workers, but was able to hire only 100. Therefore, “if the automation project endorsed by the agriculture ministry is translated into reality, the problem of labor shortage will be addressed soon,” Tam said.

 

The Vietnam Cashew Association said at the workshop that it expected to supply the machine for all its members between now and the end of 2012. By then, the processing cost for each kilo of cashew nut will be slashed to some VND1,000 from the current VND3,000.

 

City wants forex counters at slot machine clubs

 

Operators of slot machine clubs should either have a foreign exchange counter for players to change their money into the local currency, or be allowed to import new gaming machines that can accept local banknotes, said a HCMC tourism official.

 

Truong Vinh Tho, head of the Hotel Division under the HCMC Department of Culture, Sports and Tourism, told the Daily that the department had asked higher authorities to create such conditions for those gaming clubs for foreigners. He said the Vietnam National Administration of Tourism should work with relevant agencies to assist slot machine clubs to improve services for foreigners.

 

The slot machines in the city only accept the U.S. dollar while many foreigners with other currencies have difficulty changing their money at the clubs, Tho said.

 

According to him, the clubs are located at luxury hotels but foreigners cannot change their money to the U.S. dollar because the rule just allows such hotels to change foreign currencies into Vietnam dong only.

 

“That’s why many clubs want to import slot machines accepting Vietnam dong, or to install foreign exchange counters there,” he said.

 

So far, 14 companies in HCMC have been licensed to provide this conditional service for foreigners. However, the Government has revoked three licenses as these clubs have admitted Vietnamese people.

 

The city’s tourism department has sent the request after an inspection trip to all of the slot machine clubs in HCMC following a request to check the operation of the facilities from VNAT.

 

VNAT wants to learn about the performance of the service providers to improve regulations about the service. Under the regulations issued in 2003, the service providers can install slot machines for use by foreigners only.

 

The Government does not encourage entrepreneurs to run the conditional service in the country, so this service is mainly limited to luxury four- and five-star hotels in HCMC and Hanoi, and three-star hotels in other provinces and cities.

 

City agrees to pay higher treatment fee for Vietstar

 

The HCMC government has agreed to pay Vietstar Company US$12 for treating each ton of waste instead of US$5 as stated in an earlier contract between the city government and the company for the household waste treatment.

 

Dao Anh Kiet, director of the city’s Department of Natural Resources and Environment, said the fee increase was due to the higher operating costs of Vietstar waste treatment plant in the outlying district of Cu Chi.

 

The higher treatment cost has caused big difficulties for the investor of the facility, particularly the higher cost for power and fuels.

 

Kiet said in a document that was sent to the city government recently that if the fee was kept at only US$5 per ton, the facility’s operation could be severely affected.

 

Vietstar waste treatment complex, which was invested at US$53 million, started operation in December 2009 with an initial capacity of only 600 tons a day. The waste treatment complex will double its treatment capacity to 1,200 tons in the coming months.

 

Kiet said the treatment fee of US$12 for Vietstar Company was still lower than the fee applicable to other operational waste facilities such as Da Phuoc Solid Waste Treatment Complex developed by Vietnam Waste Solutions and Phuoc Hiep by the HCMC Urban Environment Company.          

 

The city now pays Vietnam Waste Solutions US$17.9 for treating each ton of waste and some US$12.5 for the HCMC Urban Environment Company.

 

At the moment, the city discharges some 7,000 tons of waste a day. With a waste increase of 8% annually, the total amount of waste discharged in the city will likely surge to 16,400 tons a day by 2020.         

 

For treating all the discharging waste in the coming years, the city is calling for investments for developing more waste treatment facilities. By now, the city has already approved around 11 projects for treating solid waste until 2015.

 

Danang calls for investment in tourism complex

 

Danang Land Exploitation and Management Co. on Tuesday invited investors to put their money into Van Village resort and entertainment complex in Lien Chieu District, which is expected to cover over 1,500 hectares with the total investment of US$5 billion.

The area includes 600 hectares of chargeable land, 500 hectares of water surface and 465 hectares of free land. Potential investors are required to build a hotel and resort with 1,000 rooms, condos, villas for lease or sale, a commercial center, theatre, international convention center, golf course and gambling zone for foreigners. The enterprise will field investment applications until June 7.

 

Local government is preparing to relocate 134 families of the Van village to Hoa Hiep residential area in early December to facilitate the project.

 

The U.S.’s Oaktree Group planned to invest US$4.5-5 billion in a tourism project in the city but halted the plan due to the recent global financial crisis.