BUSINESS IN BRIEF 28/2
Vietnam attends AEM Retreat in Singapore
Minister of Industry and Trade Vu Huy Hoang is attending an ASEAN Economic Ministers Retreat (AEM) in Singapore to examine preparations for the establishment of the ASEAN Economic Community next year.
The meeting, due to begin on February 27, sees the participation of economic ministers from 10 ASEAN member states and ASEAN General Secretary Le Luong Minh.
Senior officials of ASEAN met on February 26 to prepare for the ministers’ retreat. They reviewed the implementation of free trade agreements (FTAs) between ASEAN and China, Japan, the Republic of Korea, India, Australia, and New Zealand (ASEAN+1 FTAs).
They also discussed the regional comprehensive economic partnership (RCEP) agreement between 10 ASEAN member states and China, Japan, the Republic of Korea, India, Australia and New Zealand.
They gave opinions on an FTA between ASEAN and Hong Kong due to be signed in 2015.
Industrial production on recovery path
The index of industrial production (IIP) saw a 5.4% growth in the first two months of this year, according to the General Statistics Office (GSO).
GSO economists said the domestic industrial production has been recovering amid many challenges still being faced by the global and local economies.
The IIP growth showed that businesses have invested strongly in production to keep pace with the economic recovery.
The processing and manufacturing industry, especially, has seen a growth rate of 7.8% in the first two months, compared with the 5% growth in the same period last year.
Many industries also saw high growth in the reviewed period, such as garment up 21.1%, leather 19.2%, electronics and computers 10.4%, television production 38.3% and rolled steel 22%.
However, some key industrial products saw low or reduced growth, including crude oil down 1.4%, electricity equipment 1% and motorbike production 11.2%.
Seminar discusses ASEAN Shrimp Standards
ASEAN shrimp producers are desperate for a common set of standards for shrimp aquaculture, as are global customers, Vice Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Huu Dung has said.
Dung was speaking at a seminar held in the Mekong Delta city of Can Tho on February 26 by VASEP, the Vietnam Fisheries Society and the ASEAN-US Maximising Agricultural Revenue through Knowledge, Enterprise Development and Trade (ASEAN-US MARKET) project, funded by the US Agency for International Development.
He said ASEAN nations are supplying 80 % of the global shrimp output, and they have to follow various standards set by importing countries.
Therefore they have collectively agreed to build a common set of standards for shrimp, which will be in line with popular international requirements, he added.
The ASEAN Shrimp Standards are expected to be enforced by 2015, when the ASEAN Economic Community is formed.
At the seminar, Corey Peet, an expert from the ASEAN-US MARKET project, presented the goals, scope and the development of a draft for the ASEAN Shrimp Standards, along with support for farmers to follow the requirements.
Cashew nut exports to hit US$1.8 billion this year
Vietnam’s cashew nut output is likely to increase by 10-15% and its export earnings to hit US$1.8 billion this year.
The Vietnam Cashew Nuts Association (Vinacas) unveiled its ambitious plan at a conference in HCM City on February 26.
Vinacas said its businesses strive to purchase 100% of domestic materials (equal to 350,000 tonnes of raw cashew nuts) and import an additional 650,000 tonnes from West Africa, East Africa and Southeast Asia to meet the processing demand.
Around 180,000 tonnes of processed cashew nuts will be exported this year for US$1.8 billion, and the export of by-products could raise the value to US$2.2 billion.
Vinacas President Nguyen Duc Thanh warned agricultural products exports will face some technical trade barriers from major importers, such as the Food Safety Modernisation Act of the US Food & Drug Administration (FDA).
He suggested businesses should purchase all domestic materials from now to the end of April and consider imported volume carefully.
Thanh predicted the raw cashew nut market will become more stable and trade fraud will be reduced.
To help the sector develop sustainably, Vinacas proposed the State restructure processing units and encourage businesses to process by-products to meet market needs.
In February, 9,000 tonnes of cashew nuts were exported to the value of US$57 million, bringing the total exported volume in the first two months to 28,000 tonnes worth US$169 million, down 0.1% in volume and up 2.4% in value against the same period last year.
Three major importers were the US (accounting for 26.17% of total value), China (20%) and the Netherlands (9.84%).
Key cultivation localities, like Binh Phuoc and Dong Nai provinces, have begun growing new crops. The purchasing price currently hovers around VND26,000-26,500 per kg.
FDI drops sharply in two months
Vietnam attracted US$1.539 billion in foreign direct investment (FDI) between January 1 and February 20, down 62.5% from the same period last year.
The General Statistics Office of Vietnam (GSO) reported 122 new projects were licensed in the reviewed period with a total registered capitalization of US$830.9 million, down 33% in project numbers and 19.3% in value.
Forty-one existing projects were authorised to increase additional capital by US$708.8 million.
On the contrary, disbursed FDI rose 6.7% to approximately US$1.12 billion, the GSO said.
The processing and manufacturing industry topped the list of economic sectors, attracting US$1.178 billion, or 76.5% of the total.
Eighteen provinces and cities licensed new FDI projects, with the southern province of Binh Duong luring US$197.1 million or 23.7% of the total newly-registered capital.
It was followed by Ho Chi Minh City (US$125.8 million and 15.1%), Bac Giang (US$108.1 million and 13%) and Thai Nguyen (US$73.3 million and 8.8%).
The Republic of Korea came first among 25 countries and territories investing in Vietnam so far this year.
Vietship 2014 attracts global names
An international shipbuilding exhibition was opened in Hanoi on February 26, attracting leading global shipbuilders from Japan, the Republic of Korea, China, the Netherlands, Norway and Singapore.
The International Exhibition on Shipbuilding, Marine Technology & Transportation (Vietship), the seventh of its kind, has showcased the latest products and technology in the shipbuilding industry on more than 200 stands, with half of them coming from foreign brands.
Vietnamese Minister of Transport Dinh La Thang said at the opening ceremony the exhibition creates an international playground and expands direct information channels for maritime and shipbuilding market development, contributing to realizing the country’s sea-borne economic strategy.
Thang said the biannual event gives participants the chance to seek new investment opportunities, particularly in Vietnam.
The exhibition, which runs until February 28, includes a seminar to chart the course for Vietnam’s shipbuilding industry in the post-economic crisis period.
Rubber industry invests heavily in Cambodia
Vietnamese businesses have invested hundreds of millions of US dollars in rubber plantations in Cambodia to exploit latex and process rubber timber for export.
Tay Ninh Rubber Company (TRC) recently received an investment licence from the Vietnam Ministry of Planning and Investment to set up Siem Reap-Tay Ninh Rubber Development Company to undertake rubber plantation projects in Cambodia.
TRC will spend approximately US$64.8 million planting rubber on 6,157ha out of 7,600ha in Cambodia over 70 years. It is expected to harvest and export rubber from 2019 to 2040.
In addition, Vietnam Rubber Group (VRG) members now have 20 projects in Cambodia with a combined investment capitalisation of nearly VND10.5 trillion. Of which, Tan Bien-Kampong Thom and Hoang Anh Yang K companies are planning to build a rubber latex processing factory which is expected to be put into operation in the second quarter of this year.
Phuoc Hoa Rubber Company has been licenced to plant rubber trees on more than 9,000ha in Kampong Thom province totaling US$55 million. After five-years of operation, the company has grown nearly 7,600ha and will finish the project at the end of 2014.
The company is expected to exploit latex out of the first 500ha of rubber planted in 2009.
Hanoi’s exports on upward trend
Hanoi has earned almost US$1.7 billion from exports in the first two months of 2014, up 14.5% from the same period last year.
In February, the capital is estimated to see an export turnover of US$801 million, representing 92.4% of last month’s figure and a 33.9% surge year-on-year.
Most commodity groups have enjoyed growth in their exports, except for agricultural products (down 13.8%), and computer components and peripheral devices (down 29.9%).
Manufacturing for export in Hanoi is reportedly accelerating as many businesses have won shipment contracts and regained production tempo after the long Lunar New Year holiday.
Japan invests US$3.1 billion in Dong Nai
Japanese enterprises have so far had 167 investment projects in Dong Nai province with a total registered capitalization of US$3.1 billion.
They mostly invest in electronic equipment, computer and machinery manufacturing, water supply and transport infrastructure construction.
Currently, Japan ranks fourth among 40 foreign investors in the province.
Dong Nai is one of the four Vietnamese localities that have attracted a large volume of foreign investment. The province has 1,365 foreign investment projects valued at US$23.6 billion.
Outstanding Vietnamese businesses honoured
An awards ceremony to recognise 476 companies for their commitment to produce high-quality Vietnamese products was held in Ho Chi Minh City on February 25.
The companies were selected by the Business Association of High-Quality Vietnamese Goods for their innovative and creative improvements to product quality which serves to improve the image of Vietnamese products, opening up international markets.
The association plays an important role in assisting its members win over consumer trust by organizing trade fairs, boosting trade promotion abroad, and developing traditional craft villages.
In the upcoming year, the Association aims to focus its efforts on implementing practical measures to assist the Vietnamese business community secure a firm foothold in international markets such as Indonesia, China, and Myanmar.
Speaking at the event, Association Chairwoman Vu Kim Hanh elaborated on the need to stimulate creativeness and innovation in supply chains, particularly singling out businesses involved in raw material production for both the domestic and foreign marketplace.
“Apart from building up a close link among local businesses, it is essential to encourage them to penetrate overseas markets”, she added.
On the occasion, Minister of Science and Technology Nguyen Quan presented certificates of merits to 17 businesses recording innovative accomplishment.
In other developments, a trade fair will be held in the southern province of An Giang from March 3-9, introducing high-quality Vietnamese products at 400 stalls from 180 firms.
3.72 trillion VND of Government bonds mobilised
The State Treasury successfully mobilised 3.72 trillion VND (174.8 million USD) worth of Government bonds through a bid organised by the Hanoi Stock Exchange (HNX) on February 26.
As much as 650 billion VND was mobilised from two-year bonds with an annual interest rate of 6.15 percent.
The rest included 1.54 trillion VND in three-year bonds with an annual interest rate of 6.75 percent, 530 billion VND in five-year bonds with an annual interest rate of 7.67 percent, and 1 trillion VND in 10-year bonds with its annual interest rate of 8.88 percent
The State Treasury has mobilised over 35.26 trillion VND worth of Government bonds via four tenders held since the beginning of this year.
More micro-credit access for lower income earners
Experts from Vietnam, Laos, the Philippines, Georgia, Tajikistan, Sri Lanka and the Netherlands have shared their expertise to help vulnerable people to have access to microfinance at a recent conference in Hanoi, according to local newspaper.
The microfinance sector in Vietnam is still developing at a healthy pace. Not only is the sector still growing, but the microfinance institutions of Vietnam are increasingly looking for better ways to reach marginalised and poor communities.
According to Sebastian Dinjens, director of INFI, an exchange network or microfinance professional across the Asia, the sector is looking for ways to reach more clients that may be difficult to access.
“But to be able to do that, they need to professionalise more on Social Performance Management, and design their products to fit specifically with the needs of marginalised people,” the Vietnam Investment Review quoted Dinjens as saying at the conference “Balance in microfinance - seeking harmony between social and financial performance”.
The February 24-25 conference aims to equip the development projects and microfinance institutions with Social Performance Management and seeking for the balance in their microfinance practice.
The Social Performance Management standards respond to an industry concern that institutions have lost focus on their clients.
Most institutions claim to improve client welfare, but for the last two decades many institutions have focused more on financial sustainability than on the needs of clients. Many of these institutions are driven by financial outcomes because they only manage financial performance.
Institutions with a social purpose must also manage their social performance. By defining and promoting strong SPM, these Standards contribute to refocusing institutions on the client.
Therefore, the introduction and applying of SPM is a solution for these issues.
INFI is an exchange network for microfinance professionals across Asia. The initiative was started by international organisation MCNV that has been working in development in Vietnam for 45 years.
There is a lot of experience in Vietnam and across Asia on how to reach marginalized groups more effectively. The key is to get that expertise from all over the world and use it to enrich the Vietnamese microfinance sector.
Many of the organisations in Vietnam are working with people with a low level of education, sometimes even not entirely literate.
These groups often live in rural areas where agriculture is the main market. Increasing trade with other countries is creating many opportunities, but these people lack the capital to produce on a scale that can serve the market.
Dinjens explains that what he often sees is that these people are very able to manage their finances on a small scale.
“They spend, produce and save money just like anybody, and often can create a regular income to help them survive. But what they are able to save is often not enough to invest in their own business. This is where microfinance services can help. By giving these people a loan for their business, they can invest to grow their business without too much risk. But it requires microfinance organisations to be knowledgeable about the needs of their clients, and willing to invest in the small businesses of rural Vietnamese,” he said.
VietJet Air launches HCM City-Da Lat flights
Vietnamese budget carrier VietJet Air officially launched service between Ho Chi Minh City and the Central Highlands resort town of Da Lat (Lam Dong province) on February 26, its 22nd route so far.
The HCM City-Da Lat route operates seven weekly round flights with a total of 2,520 seats.
On the occasion, the airline will put on sale 30,000 discount tickets on all its routes at just 22,000 VND (1 USD) during three days from March 5.
The promotional programme will apply for flights from March 22 to May 20 with the exception of national holidays.
The Vietnamese low-cost airline, which started to fly in late 2011 , recently has finalised an order with Airbus Group to purchase and lease 100 aircraft with a total contract value of 9.1 billion USD.
According to Nguyen Thanh Hung, Vice Chairman of VietJetAir, the airline transported more than 4.3 million passengers last year, accounting for about 26 percent of domestic market share. After more than two years of operation, the airline now has a fleet of 11 leased A320s. Besides domestic destinations, the carrier also flies to Bangkok , Seoul and China ’s Kunming .
The carrier plans to open a direct route from Vietnam to Singapore this year and other routes to North East Asia in the time to come.
Bank assets rise 13% on State bank growth
Commercial bank asset values totalled over VND5,700 trillion, or US$271.43 billion, at the end of last year, up 13 per cent over the previous year.
This was reported by VnExpress online which cited State Bank of Viet Nam sources.
State-owned banks led all credit institutions, with total assets amounting to VND2,500 trillion, or $119.05 billion, which is about VND100 trillion, or $4.76 billion, higher than that of joint stock banks.
The State-run sector also showed a greater lending ratio, as with every deposit of 100 dong, it could lend 95 dong. The ratio for the joint stock area was 100/75.
Bank equities grew 6.54 per cent in 2013 to reach a combined VND195 trillion, or $9.29 billion, at the end of the year, despite challenges related to credit growth, profitability, bad debts and declining capital throughout the year.
The health of financial companies worsened, with equities slumping 75 per cent and asset values plummeting 57 per cent in 2013.
Dragon Capital to merge portfolios
Dragon Capital, the Vietnamese investment manager, announced yesterday that it would merge two shareholding classes in its Vietnam Debt Fund (VDeF).
Following a meeting of the shareholders in Hong Kong on January 27, it was agreed that all of the assets of the A Class Segregated Portfolio will be transferred to the B Class Portfolio.
The objective of the merger is to create a larger aggregate portfolio, increasing trading and risk management efficiency. The combined portfolios will have a NAV (net asset value) of US$38.5m.
Launched in November 2007, VDeF is open-ended and its strategy centres on active management seeking high sustainable returns in Viet Nam's debt markets.
While the A class portfolio's mission has been to invest in government debt, the B class portfolio has a broader mandate including corporate debt.
The fund is registered in the Cayman Islands and listed on the Main Securities Market of the Irish Stock Exchange in Dublin.
The VDeF fund has performed strongly over the past three years with the B Class Portfolio providing USD annual returns of 10.36 per cent and the A Class Portfolio returning 9.25 per cent.
Consequently, the fund's two share classes were ranked first and second in Camradata's recent Emerging Market Corporate Debt report.
"The larger size of the combined portfolios will allow for greater flexibility in our investment strategy, make risk management easier and reduce the expense ratio, which is a heavy burden for small sized funds," said Dan Svensson, portfolio manager of the Vietnam Debt Fund.
Dominic Scriven, CEO and co-founder of Dragon Capital, said: "This merger of the two portfolios makes good strategic sense for Dragon Capital and enables us to build on the success that the VDeF has already achieved since 2008. VDeF and its local affiliate VFB have consistently delivered market leading performance. We are optimistic that this merger will allow us to continue delivering strong returns from Vietnam's debt markets."
Founded in 1994, the Dragon Capital group is an investment company with two decades of investing experience in Viet Nam. Dragon Capital and its affiliates manage in the region of US$1.1bn in assets across public equities, private capital, clean development, fixed income and property. Shareholders comprise international agencies such as the World Bank Group, Proparco and the company's own founders, management and employees.
World gold prices marginally increase local prices
Local gold prices increased by 0.2 per cent yesterday to touch VND36.55 million per tael (US$1,732), driven by a strong surge in world gold prices on Monday.
The price fell afterward to as low as VND36.46 million ($1,727) per tael for an SJC gold bar in the late afternoon trading session. Last Monday, local gold prices reached a new high of VND36.80 million ($1,744), the highest since last November.
After it reached the record price of $1,338.6 per ounce on Monday, gold fell marginally to $1,332.8 yesterday but remained steady at an almost four-month high due to China's growth. One tael is equivalent to 1.2 ounces.
Last year, the State Bank of Viet Nam managed gold prices by auctioning material gold. The central bank announced that it will continue to sell gold this year to further stabilise the domestic market and address imbalances between supply and demand. However, so far this year, the central bank hasn't auctioned any gold.
Market observers argue that gold auctions are a reasonable tool to manage the local gold market if needed, but they do not think it should be used in the long term.
"When the central bank holds gold auctions, it also needs a strong source of foreign currencies, particularly of the US dollar, to import gold bars, which consequently influences the balance of payments and foreign reserves," a banking-finance expert said.
He recommended that the central bank allow local gold prices to move in tandem with world gold prices to prevent speculation or smuggling, which did occur in the market.
Economist Vu Dinh Anh remarked that the central bank and the Ministry of Finance should collaborate to efficiently tax the precious metal.
The US dollar traded at VND21,085-VND21,125 against the Vietnamese currency, yesterday.
Manufacturing solutions showcased in Ha Noi
A leading international precision engineering, mechanised tools and metalworking exhibition and conference – MTA Ha Noi 2014 – is planned to be held in the city's International Centre for Exhibition (ICE) from April 1-3.
This is the third time the event has been organised, designed to serve the thriving industries of northern Viet Nam and its surrounding regions.
During the three working days, the exhibitors will showcase manufacturing solutions such as cutting, moulding and tooling systems, metrology machines and hand tools, among many others. It will also feature three group pavilions from the Czech Republic, Singapore and Taiwan.
"After two editions, MTA Ha Noi has established itself as the go-to event for companies located in the vicinity, to source the latest manufacturing technologies," said William Lim, Project Director for MTA Ha Noi 2014 from the show's organiser, Singapore Exhibition Services.
2013 trade with UK up 19.5 per cent
Bilateral trade between Viet Nam and the UK reached US$4.27 billion in 2013, a 19.5 per cent year-on-year increase, Viet Nam's Department of Customs' statistics showed.
Of the total, Vietnamese exports hit $3.69 billion, up 22 per cent, while its imports were $573.27 million, up 6 per cent.
Among Viet Nam's key exports to the UK, mobile phone handsets and components topped the list with $1.24 billion, followed by footwear at $543 million; garments, $471 million; computers and components, $400 million; wood and timber products, $217 million; and seafood, $143 million.
Exports increase likely due to GSP
Market shares of Viet Nam's major exports to the European Union (EU) are expected to surge as exporters will enjoy preferential treatment under the bloc's Generalised System of Preferences (GSP).
Tran Ngoc Quan, deputy director of the European Market Department under the Ministry of Industry and Trade, stated this at a conference on "The EU's New GSP Regulation – New Opportunities for Exports to the EU", held in Ha Noi yesterday.
From 2014 onward, more Vietnamese products, including footwear, may gain further benefits under the new GSP regulations, Quan noted.
The EU published its amended GSP regulations in October 2012, and they came into effect at the beginning of this year. The regulations are aimed at facilitating market access for goods originating from developing countries, including Viet Nam.
Viet Nam will remain among the list of countries eligible to enjoy preferential treatment under the EU's GSP, with a number of favourable tariffs.
Quan estimated that the export market share of coffee, tea and spices will increase from the current 12 per cent to 22 per cent because of the new GSP. Exports of seafood will increase from 9.9 per cent to 19 per cent, while the exports of shoes will rise to 34 per cent.
GSP rules will improve Viet Nam's access to the EU market, speed industrialisation, create jobs and increase incomes, as well as contribute to economic growth, said Ministry of Foreign Affairs official Nguyen Ngoc Son.
"However, besides the advantages, the new GSP regulations may give rise to a number of challenges. Businesses need to have a long-term vision and strategy for sustainable development, quality improvement and compliance with the EU's requirements and standards on issues, such as labeling and non-toxic products," he added.
The ambassador and head of the EU delegation to Viet Nam, Franz Jessen, added that the strong growth of exports from Viet Nam to the EU was partly due to the benefits that Viet Nam's products are entitled to under the GSP.
He stated that since early this year some export products, including footwear, have benefited from more favourable tariffs under the new GSP.
He said it was therefore crucial for Viet Nam's government and exporters to understand and exploit the opportunities offered under the EU's new GSP.
Claudio Dordi, the EU-MUTRAP team leader, agreed. He noted that the favourable tariffs offered to Viet Nam will create competitive advantages for Vietnamese garments and textiles enterprises.
However, he remarked that the advantages under the new GSP will not be sustainable, as the GSP will not be in force forever.
Truong Dinh Tuyen, former minister of Industry and Trade, noted that the GSP will not pressure businesses to restructure and change their growth models, thus not providing a balance to exports.
Tuyen added that imports will also be higher, in parallel with exports, due to competitive pressure on labour productivity, quality and prices.
He remarked that the country should accelerate its economic restructuring process, while taking advantage of the GSP to improve competitiveness.
"This will be the basic road to improve and sustain export capacity," he added.
A representative from the Garment 10 Company said one of its difficulties in taking advantage of GSP was the origin of input materials. For Free on Board (FOB) contracts, importers often stipulated the material to be used themselves, most of which had to be imported from China. This was the reason why the company had not been able to avail themselves of preferential treatment under the GSP for FOB shipments.
He noted that it would be better if Viet Nam could take advantage of investment flows to directly produce materials in the country.
Quang Nam launches new IZ infrastructure
The People's Committee of the central province of Quang Nam has decided to begin construction on the infrastructure of the Tam Thang Industrial Zone (IZ) in the provincial Tam Ky City.
The zone's infrastructure development is expected to cost VND360 billion (US$17.15 million). This sum will come from the State budget and the zone investor, Chu Lai IZ Infrastructure Development Co, according to the committee's vice chairman Huynh Khanh Toan.New markets awaiting Vietnam's exports
With high demand, low barriers, and medium high product quality requirements, Africa and Latin America are considered emerging markets for Vietnamese goods. An insight by the Ministry of Industry and Trade's online Vietnam Economic News.
Export is one of the bright spots of economic activities last year with total revenue of 132.2 billion USD, up 15.4 percent compared with 2012, a ccording to the Ministry of Industry and Trade.
Exports to new and small markets such as Africa and Latin America experienced apparent growth rates in the context that Vietnamese exports to the traditional markets faced difficulties. Africa was the market with the highest export growth rate of 28 percent, reaching 2 billion USD, while Latin America hit a growth rate of 23.1 percent, reaching 28 billion USD. To continue with better results in the time to come, increased proportion of Vietnamese exports to these markets will be aimed at.
Speaking about export orientation for 2014, Minister of Industry and Trade Vu Huy Hoang insisted that Vietnamese exporters should gradually increase the proportion of Vietnam’s exports to African markets and Latin America along with traditional markets.
Thanks to their high quality and reasonable prices, Vietnam's exports have gradually won lots of customers in African and Latin American countries. They have also taken advantages from free trade agreements (FTAs) signed and implemented between Vietnam and these countries. For example, the Vietnam - Chile FTA that officially took effect from early 2014 promises to increase two-way trade revenue and help Vietnamese goods penetrate deeper into the Latin American market.
According to Vietnamese Commercial Counselor in Chile Tran Dinh Van, since 2010, export revenue of Vietnam to Chile consistently achieved over 20 percent growth rates annually, and last year it reached about 250 million USD. The Vietnam - Chile FTA takes effect and will create the premise for raising the proportion of Vietnamese exports to this market. In addition, it can also help increase the volume of Vietnamese exports to other Latin American countries as Chile, Mexico, Peru, and Colombia already established the Pacific Alliance, the largest regional trade organisation that makes up to 50 percent of Vietnam’s total import and export value to Latin America.
Rice is a major export to African countries. A series of memos on rice trade promotion have been signed between Vietnam, Guinea-Bissau and Comoros in order to facilitate direct exporters to these markets. In particular, the Vietnam - Guinea-Bissau memorandum of collaborative trade and industry signed in early 2014 will act as a bridge for Vietnamese goods to enter Guinea-Bissau and other West African countries as well.
However, exports to Africa and Latin America also have encountered difficulties in terms of geography, payment through intermediaries, market information, and stiff competition by countries with geographical proximity such as India and Pakistan.
According to Van, Latin America is a new and far market for Vietnam, so trade promotion activities in this market must be prepared carefully, especially cost calculation and trade promotion places as Latin America is divided into South America, Central America, and the Caribbean. Vietnam's exports found it more advantageous in South American markets such as Brazil, Argentina and Peru. Exporters to ship commodities to Central American and Caribbean countries should select those in adjacency to save time and cost.
Memos have been signed between Vietnam and some African countries and are now facilitating direct payment.
“The Ministry of Industry and Trade will this year reduce market risks when exporting through intermediaries by organising more businesstrips for better building direct trade cooperation," head of the ministry’s Africa, Western and South Asia Markets Department’s Africa market Division Hoang Duc Nhuan said, adding that the ministry is focusing on a specific export scheme to remove barriers and promote rice export to this potential market.
Hancorp’s shares to go under hammer
The Hanoi Construction Corporation (Hancorp) on February 25 announced a plan to sell shares to the public via an auction for the first time, in a bid to fulfil its equitisation process.
Hancorp, one of the country’s leading firms in construction, is scheduled to sell more than 49.74 million shares, equivalent to 26.18 percent of its projected charter capital, at a starting price of 10,200 VND (approximately 0.48 USD) each.
The move aims to adjust the firm’s executive management structure and administration methods while increasing its access to the capital market, in order to raise its financial and operational capacity.
Hancorp has recorded achievements in property trading and investment focusing on residential areas, housing development and shopping malls, with each project worth between 50 billion VND (2.35 million USD) and 1.5 trillion VND (70.5 million USD).
The business specialises in constructing industrial works, with more than 70 projects in the spheres of traffic, heavy industry, electricity and irrigation.
Vietnam-Finland innovation partnership to continue
The Prime Minister has approved the second phase of the Vietnam-Finland Innovation Partnership Programme, which will be carried out during the 2014-18 period by the Ministry of Science and Technology, according to the Vietnam Government Portal.
The 11-million EUR project sees the Finish Government providing 9.9 million EUR in non-refundable aid and the Vietnamese side paying the remainder 1.1 million EUR in corresponding capital.
The project aims to turn the national innovative system into a momentum for the fulfillment of socio-economic development goals in Vietnam and convert the country into an industrialised and modernised one in 2020.
Earlier, the first phase of the programme was conducted between 2009 and 2013 with a total investment of 7 million EUR.
The programme supported over 60 projects on institutional development, innovative building, pro-initiatives, innovation projects of businesses and cooperation between the two countries.
Agribank facilitates remittance payments
The Vietnam Bank for Agriculture and Rural Development (Agribank) on February 25 signed a cooperation agreement with the Republic of Korea (RoK)’s NongHuyp Bank, in order to help Vietnamese guest workers transfer money back home.
Under the agreement, NongHuyp Bank will provide money transfer services in a safe, fast and convenient manner for the Vietnamese labourers, and encourage them to send money back through Agribank.
The two banks will team up to introduce and instruct Vietnamese workers in the RoK to open and maintain a separate bank account at NongHuyp Bank until they clear their loans from Agribank.
According to Dao Cong Hai, Deputy Director of the Ministry of Labour, Invalids and Social Affairs’ Overseas Labour Management Department, Vietnam has around 500,000 guest workers. Of which, 75,000 working in the RoK send home an annual average sum of 650-700 million USD.
Both Agribank and NongHuyp Bank operate in agriculture and rural fields and play a key role in promoting the growth of the two economies.
Dak Nong moves to develop coffee farming
The Central Highlands province of Dak Nong will invest more than 40 billion VND (1.88 million USD) in carrying out measures to help farmers develop their coffee planting in 2014-2015.
Accordingly, the area of commercial coffee trees will be expanded to 110,000 hectares from the current 98,000 hectares, while average productivity will increase from 2.3 tonnes to 2.6 tonnes of coffee beans per hectare, translating into an additional 1.2 trillion VND (56.4 million USD) in value each crop.
The province prioritises transferring advanced technologies in coffee processing to farmers and businesses, as well as building the irrigation system, storehouses and drying grounds to serve production and processing.
It also encourages farmers to grow avocado and jackfruit trees to protect coffee trees from wind and earn more money.
Dak Nong province now has about 116,000 hectares of coffee trees with a total yield of 225,000 tonnes per year.
However, as a number of local farmers plant coffee trees in unsuitable areas and don’t apply correct technologies in cultivation, productivity and economic efficiency remain poor.
Largest export commodities recorded
Up to 21 commodities earned over US$ 100 million from export in the first month and are expected to join the US$ 1 billion export club in 2014.
According to updated data of the Viet Nam Customs, the declining import revenue left Viet Nam to run the highest ever trade surplus of US$ 1.41 billion in January.
The domestic sector got a trade surplus of around US$ 31 billion.
In the first month, total trade turnover touched US$ 21.48 billion, down 3% against the same period last year. Export turnover valued US$ 11.46 billion. Import volume was worth US$ 10.02 billion.
Out of the 21 commodities, ten gained rising export turnovers especially garment and textile, suitcases, aquatic products, furniture, telephones, and cameras.
Meanwhile, 26 markets traded a total US$ 10.223 billion in turnover with over US$ 100 million each. These markets held 89.2% of the total market share.
Viet Nam’s key export markets included the US, Japan, China and the Republic of Korea.
Retailers ask for more policy support to tap potential
Domestic retailers have called for policy support to help them exploit their potential better, especially as they have to face fierce competition from foreign counterparts.
Statistics from the Ministry of Industry and Trade (MoIT) showed that the domestic retail sector contributed 14 percent to the country's GDP growth rate and had a scale equivalent to the export turnover of 2012.
By the end of last June, Vietnam had around 560,000 businesses operating in the domestic retail sector. Of these, direct retailers with foreign investment achieved the highest growth rate of 29 percent in the period 2011-13, though they accounted for just 3.46 percent. Domestic retailers saw 4.4 percent growth rate despite accounting for a high 9.8 percent.
Deputy Minister Ho Thi Kim Thoa was quoted by Thoi Bao Kinh Doanh (Business Times) as saying that the domestic retail sector had encouraged development and provided more opportunities to the customers in choosing products.
However, Thoa said the strong growth of foreign retailers has exposed the challenges faced by domestic ones, as their market share had increased from 1.2 percent in 1996 to 3.5 percent last year.
She said the Vietnamese retail model has been one of main reasons for its slow development. Its traditional markets, which provide 40 percent of the total goods value, have not established a systematic and stable model suited to each market.
Vo Van Quyen, head of the ministry's Domestic Market Department, said the domestic retail system had many intermediates. He added that the sector lacked policy support, besides having shortcomings such as small capital scale and lack of high quality human resources.
He said this was the reason that the sector was not strong enough to compete with the foreign competitors.
Agreeing with these ideas, Dinh Thi My Loan, Chairwoman of the Vietnam Retailers Association (VRA), told Vietnam News that the country should have strong policies and regulations which would not go against the commitments of the World Trade Organisation and the Free Trade Agreement and would support associations and enterprises in human training, market researches and buying trends.
"The State agencies should focus on building 20 leading domestic retailers which have increasing added value," Loan said.
She added that support for land and the links between production and customers should also be given to promote the domestic retail sector.-
Mekong Delta aims for 6 mln tonnes of sugarcane
The Mekong Delta region will strive to output 6 million tonnes of sugarcane in 2014, a year-on-year increase of 300,000 tonnes.
It will maintain the current 60,000 hectares of sugarcane fields until 2020, according to an Agriculture and Rural Development Ministry plan.
To achieve the target, the regional provinces have encouraged local farmers to use high-yield sugarcane varieties and mechanise the farming process.
In addition, they will continue to build and upgrade irrigation facilities and reorganise sugarcane farming from small to large-scale production, as well as utilise modern science and technology to reduce costs.
As many as 27,000 hectares of sugarcane have been grown mostly in Long An, Ben Tre and Tra Vinh provinces so far this year.
10 trillion VND of Government bonds mobilised
The State Treasury successfully mobilised 10 trillion VND (470 million USD) worth of Government bonds through a bid organised by the Hanoi Stock Exchange (HNX) on February 20.
Three trillion VND (141 million USD) was mobilised from two-year bonds with an annual interest rate of 6.15 percent.
The remaining money raised included 4 trillion VND (188 million) in three-year bonds with an annual interest rate of 6.7 percent, and 3 trillion VND in five-year bonds with an annual interest rate of 7.67 percent.
The State Treasury has mobilised over 31.54 trillion VND (1.48 billion USD) worth of Government bonds via four tenders held since the beginning of this year.-
Mekong Delta expands large-scale rice field area
The Mekong Delta region has expanded its large-scale rice fields to over 100,000 ha in the 2013-2014 Winter-Spring crop, 34,000 ha more than the same period last year, according to the Steering Committee for the South-western Region.
Large-scale rice fields usually range from 300 to 1,000ha, facilitating mechanisation of farming work.
Rice cultivation in such fields has also met Vietnam Good Agricultural Practice (VietGAP) and Global Good Agricultural Practice (GlobalGAP) standards.
Accordingly, the region has used high quality rice seeds that have strong resistance against disease and unfavourable weather, and applied advanced technologies in farming in order to improve yields and meet export standards.
Director of Can Tho city’s Department of Agriculture and Rural Development Pham Van Quynh said several contracts encompassing seed, fertiliser, pesticide , machine and equipment supply were signed between businesses and rice farmers in the locality.
Enterprises have also pledged to buy rice at appropriate prices from farmers.
Mekong Delta farmers have harvested Winter-Spring rice crops on 20,000ha so far. According to the Vietnam Food Association, the price of fresh rice in the region fluctuates between 5,000 and 5,600 VND/kg, while high-quality dried rice fetches 5,700-5,800 VND/kg.
The Ministry of Finance said that the large-scale field model makes 1-4 million VND/ha more profit than the old system.-
Advanced wood production line built in Quang Tri
Work on a 1.4 trillion VND (66.6 million USD) wood production line started on February 20 at the Quan Ngang Industrial Zone, Gio Linh district in the central province of Quang Tri.
The line, MDF VRG Quang Tri wood factory’s second, will have a designed annual capacity of 120,000 cu.m. of medium-density fibreboard (MDF) and use the most advanced technology in wood processing.
Scheduled to be completed in the second quarter of 2015, the line will triple the MDF VRG Quang Tri wood joint stock company (GEWOODCO)’s growth rate, earning 1.3 trillion VND in revenue per year and generating more than 2,000 jobs for local workers.
Speaking at the ground-breaking ceremony, Deputy Prime Minister Nguyen Xuan Phuc highly valued the efforts of the province, the Vietnam Rubber Group and GEWOODCO in building the factory, helping a large number of local farmers earn a living from growing trees to supply wood to the company.