Vietnam, Japan cooperate for high-yield cassava

Vietnamese and Japanese scientists have agreed to study genetically modified cassava to produce a high-yield variety, helping reduce soil erosion or depletion in cassava-growing areas.

A document to this effect was signed in the Japanese city of Yokohama on May 22 between representatives of the Japan Institute of Physical and Chemical Research and the Vietnam Institute of Agricultural Genetics.

Addressing the signing ceremony, Deputy Prime Minister Nguyen Thien Nhan said that he hopes the project will be a success to pave the way for future agricultural cooperation between the countries.

In the coming time, a joint laboratory will be set up in Vietnam to facilitate both countries’ scientists to strengthen cooperation in research.-

First int’l sea-tourism fair attracts foreign businesses

Eighty foreign businesses will attend the first international thematic fair on sea and island tourism in Vietnam, slated for early June in the central coastal province of Khanh Hoa.

The Nha Trang-Vietnam International Sea and Island Tourism Fair 2013, part of the 2013 Nha Trang Sea Festival, will have 160 booths introducing marine tourism products and services of local tour operators as well as travel agencies from Russia, Western Europe, Australia, New Zealand, Northeastern Asia, ASEAN and Middle East.

Besides promoting Vietnam’s sea and island tourism, the organising board also hopes to attract foreign investors in building tourism infrastructure.

Located 440km from Ho Chi Minh City, the city of Nha Trang has been long well-known for its attractive beaches on nearly 10km of white-sand coastline, where the clear water is warm throughout the year.

Nha Trang Bay has been selected to be one of the most beautiful bays in the world.-

Heat goes on builders

A tough, new anti-fire law is to put the heat on property developers.

The draft law’s Article 23 states that high buildings, underground and natural minerals exploitation projects, and steel-framed and iron sheet-roofed houses must have solutions to prevent fire, smoke congestion and toxic gas.

Importantly, all projects must be equipped with fire-detecting automatic systems. Besides stipulating stiff anti-fire regulations for nuclear power projects, investors must “use anti-fire construction and decoration materials for super-high buildings.”

Moreover, the draft law also orders in its Article 25 that at markets and commercial centres, power systems for different purposes must be put separately. Notably, the markets and centres must have emergency exits. All anti-fire automatic solutions must be installed.

Worryingly, few markets and commercial centres now have emergency exits, while anti-fire equipment was of poor quality, said Nguyen Kim Khoa, chairman of the National Assembly’s National Security and Defence Committee.

He said these new regulations were either not carved or remained unclear in the existing Law on Fire Prevention issued in 2010, which also failed to clarify the responsibilities of heads of agencies, organisations and households in fire prevention. However, in this new law, property owners may face criminal prosecution from losses about human and assets due to fire.

Deputy Minister of Public Security Pham Quy Ngo said these new regulations were “a good solution to curb the increasing number of blazes.”

During 2002-2011, Vietnam was home to nearly 20,000 big blazes in factories, schools, hospitals and houses, killing 712 people, injuring more than 1,900 people and causing financial losses of $201.3 million.

Such fires stemmed from cooking, power, chemicals, gas and fuel.

“Enterprises’ investments in anti-fire measures remain limited and they are not serious about implementing anti-fire regulations. Notably, many foreign-invested enterprises in Vietnam have backward technologies and production chains. Consequently fire and blasts can happen at any time,” Ngo said.

For instance, a big fire on May 18 burnt locally-owned shoe-maker Duy Hung Company and Taiwan’s shoe sole maker Shangone Vietnam in southern Binh Duong province’s Song Than Industrial Park, while three days before, a fire damaged Taiwanese footwear-maker Pou Yuen Vietnam, supplier of global brands like Adidas, Nike, Reebook and Puma.

In April, some blazes also hit five factories based in the park. However, Khoa said the draft law needed to clarify the criteria about high buildings and super-high buildings. Also, anti-fire regulations must also be imposed on metros, electric fly-overs and tunnels.

Eastside Story: a new Hanoi grows across the Red River

The arrival of Japan’s leading retail developer, Aeon, with a $200 million retail centre in Long Bien district will be a fresh example of the emergence of eastern Hanoi across  the Red River.

Aeon will start construction of its first project in Hanoi within the next few months to meet the increasing consumer demand of the area.

Aeon is a prominent player among many developers eyeing the potential of Hanoi’s emerging east side. Several other residential and retail developers like Vincom have developed projects, broken ground or laid out plans for the development of the area.

Fast development of new infrastructures together with the increasing number of residential and multi complex projects in the eastern Hanoi have attracted more people to move from high density central of Hanoi to the less crowded area with many modern commercial amenities.

Although Long Bien is a short drive to Hanoi’s central business district, for a long time it had not been on real estate developers’ radar screen. But now dozens of big scale residential projects are in development.

Hoang Hanh My, a resident in Viet Hung new urban complex, told VIR that she had moved to this area for more than two years, from the old style living quarters of inner Hanoi. “I like the environment and low density of population most. These issues I could not have in my old living quarterd in Trung Tu commune of Hanoi’s Dong Da district,” My said.

Moreover, she said the four current bridges over the Red River provided convenient and quick access to the city centre. In the future, she said, the planned Tu Lien and Long Bien 2 bridges would help improve access to the area as well.

The area and facilities, My said, were developing quickly and living standards continued to improve.

Real estate development in Long Bien has moved forward quickly in recent months with the openings of Savico Megamall and Vincom Centre, as well as other prime mixed-use developments such as the under-construction Mipec project next to Long Bien bridge.

Richard Leech, CBRE Vietnam executive director, said he believed that the infrastructure had developed well. Leech said the occupancy rate in Savico Megamall now was at a high level of around 95 per cent. Rents differ from floor to floor but he believed that shops were available at $25 per square metre per month.

In the first five months of the year, Leech said, the demand for the Big C hypermarket, food and beverage and entertainment in Savico Megamall has been strong. However the specialty stores have faired less well as consumers have tightened their belts.

Savico MegaMall and Vincom Centre Long Bien have ample parking facilities, which can satisfy families who visit the area from the inner Hanoi. In addition, tenant spaces are larger and cheaper per square meter, so customers can visit a greater variety of tenants on larger spaces.

However, economic woes are also impacting to the number of customers coming to Savico Megamall. Tran Thi Nga, a salesgirl of Ninomaxx shop in Savico Megamall, told VIR that her shop was only crowded at weekends and normally had very few customers as Vietnam’s economic woes had seen consumers tighten their belts.

Another salesgirl at Madison underwear shop with scores of leading domestic and foreign brands such as Vietnam’s Vera, Misaki, Wow and American’s Jokey, Jbuss or France’s Ell said that from the beginning of this year, though domestic brands reduced their price by 50 per cent and foreign brands by 30 per cent, the number of products sold was not many and shoppers were mostly women.

At Junger Germany, a kitchenware shop, sales clerk Nguyen Van Nam shared that his shop had not received many customers. “I hope that the situation will be better in the last six months of the year, when consumption can increase to meet the demand of people in traditional holidays and the festive seasons,” Nam said.

In order to lure more customers to Savico Megamall, Leech said the best way was continuously improving the overall tenant mix. “On top of that, a marketing campaign that attracts shoppers on a regular basis will also help lure tenants. Customers are looking for a good variety of shops in a convenient location. Savico Megamall should increase its food and beverage and entertainment offer to take advantage of the footfall already being generated by Big C,” Leech said.

As the urban infrastructure expands east of Hanoi, big developers are engaged in big projects such as Vincom Village, BVIS International School, Berjaya’s Hanoi Garden City, (Vihajico) Ecopark, and Viet Hung new urban area developed by Housing Urban Development Corporation.

Door set to open for more foreign property buying

The Ministry of Construction plans to open the doors far wider for foreigners to buy property in Vietnam.

Trinh Dinh Dung, Minister of Construction, admitted the current tight restrictions on foreign housing ownership had badly impacted on the local real estate market.

In a ground-breaking move, Dung said the Ministry of Construction would propose foreigners be eligible to buy villas or private houses, not only high-end apartments as currently, in its plan to revise the Housing Law and the Real Estate Business Law.

Moreover, Dung said foreign enterprises would be permitted to buy and own office buildings.

Dung revealed the above information during a meeting last week in Hanoi to review the implementation of the Housing Law, the Real Estate Business Law and the National Assembly’s Resolution 19 on permitting foreigners to buy houses in Vietnam.

According to the Ministry of Construction, the revised ownership rules could be put into implementation in 2015 when the revised laws could be approved.

“We are now at the planning step and the revised laws will seek public opinions before being submitted to the National Assembly in 2014,” Dung said.

According to Resolution 19 dated June 3, 2008, five types of organisations and foreign individuals are eligible to buy and own homes in Vietnam.

However, the reality is that with the complicated procedures and the tight regulations, a very small number of foreigners and overseas Vietnamese (Viet Kieu) were reported to have bought homes in Vietnam. Many have authorised their Vietnamese spouses or relatives to own the property.

A most revealing statistic provided by the General Department of Land Management shows that after four years from the date the government started permitting overseas Vietnamese and foreigners to own their houses in Vietnam, less than 500 cases were reported throughout the country.

Meanwhile, it is estimated that more than 80,000 foreigners and overseas Vietnamese are living and working in Vietnam.

Experts said that in the context that a large amount of accommodation still unsold, encouraging foreigners to buy houses could be a good channel to absorb these unsold units.

Mekong Delta pins hope on bumper rice crop

The Mekong Delta’s total rice output is expected to reach 9.3 million tonnes in the 2013 summer-autumn crop, said the Ministry of Agriculture and Rural Development (MARD) at a conference in Can Tho city on May 23.

The region also targets more than 4.6 million tonnes of husked rice, including 3.1 million tonnes for trade, it said.

According to the ministry, the country’s rice bowl has more than 1.8 hectares for the ongoing summer-autumn rice crop, representing a decrease of over 6,400 hectares. By May 8, more than 1.1 million hectares have been filled, accounting for over 62 percent of the plan.

In an effort to stabilise rice price and ensure minimum profits for farmers, the MARD has mapped out a plan on 2013 summer-autumn crop rice reserves to be submitted to the Prime Minister.

Under the plan, the ministry proposed purchasing 1 million tonnes of rice for reserves, or 30 percent of total output reaped in the 2013 summer-autumn crop, within two months, beginning from June 15.

According to the Vietnam Food Association, by May 16, Vietnam shipped abroad 2.4 million tonnes of rice, up 11.5 percent in volume and 4.85 percent in value.

The country signed contracts to export 4.42 million tonnes of rice, of which nearly 2.4 million tonnes have been handed over to customers.

Meanwhile, the rice volume for domestic consumption is expected to hit 8 million tonnes in 2013, excluding an inventory of 787,000 tonnes from the previous year.

The MARD said that Vietnamese rice will continue facing difficulties in 2013 as import demands of several Asian countries are forecast to sharply fall and increasing competitions among exporters, with newly emerging rivals such as India and Myanmar.

Making audit reports add up for firms

Tran Hang Thu, KPMG Vietnam’s Audit partner takes an expert look at how understanding the mechanics of audited statements will give firms a clearer view of the business landscape.

As companies are due to submit their audited financial statements, which will subject to scrutinizing during Annual General Shareholder Meetings, it has become increasingly important for stakeholders to navigate and understand the key elements of the audit reports attached to the financial statements - an area that is not familiar to everyone.

The public tends to recognise any issues mentioned in audit report as “points being highlighted by the auditor” regardless of where or how the issue is mentioned. It has been observed in quite a number of listed companies’ financial statements published so far this year that there is an increasing appearance of “Emphasis of Matter” paragraph right after the audit opinion section. Many users often wonder what auditor wants to communicate within this Emphasis of Matter (EOM) paragraph and how the issues mentioned add to the overall picture of the related financial statements’ truth and fairness?

The meaning of an EOM in audit report is different from a qualification – an audit report with an EOM is still considered a “clean audit report” assuming that there is no other issue subject to auditor’s qualification. On another word, the auditor has been able to obtain sufficient audit evidence regarding the recognition, presentation and disclosure in the financial statements of the matter being highlighted in the EOM but the auditor would like bring such matter to the financial statements readers’ attention due to its importance to the user’s understanding of the financial statements while the financial statements are considered to give a true and fair view. However, auditors and financial statements reader should be cautious about the use of EOM paragraphs. In fact a widespread use of EOM paragraphs diminishes the effectiveness of auditor’s communication of such matters. Additionally, incorporating too much information in an EOM may imply that the audited entity’s management has not included enough information in the related financial statements.

In general, an EOM paragraph is used mainly in the case that a significant uncertainty exists having a material effect on the financial position and performance of the audited entity. A common example of significant uncertainty is relating to the ability of the entity to continue as a going concern which may be subject to the occurrence or non-occurrence of future events. When adequate disclosure about the uncertainty is provided in the financial statements, the auditor would ordinarily include an EOM paragraph to highlight the uncertainty that may cast significant doubt on the entity’s ability to continue as a going concern. However, the important point is that the auditor has not opined that the going concern is not appropriate. The auditor has still agreed that the going concern is still appropriate and the financial statements are true and fair.

If the entity does not provide adequate disclosure about the uncertainty in the financial statements, an emphasis of matter paragraph would be inappropriate since the financial statements as a whole are not true and fair. Instead, the audit opinion would have to be qualified. In case the auditor is unable to obtain sufficient audit evidence about the ability to continue as a going concern or does not agreethat going concern assumption is appropriate, the auditor would express a disclaimer of opinion or adverse opinion.

Significant uncertainty may also exist in relation to results of outstanding lawsuit filed against the entity. In this case the lawsuit is on-going and has not been concluded at the year-end while based on information available at the year-end date it is not possible for entity’s management to assess the potential outcomes of the case. Similar to the uncertainty over going concern, if the uncertainty over the lawsuit is explained sufficiently in the note to financial statements; the auditor would include an EOM to refer to such explanation as opposed to the case where there is not sufficient explanation regarding the lawsuit in the financial statements, a qualified opinion is likely to be needed, assuming the potential contingent effects is material to the financial statements.

Uncertainties however must associate with a future event and therefore issues for which there are indications or conditions confirming their existence at the balance sheet date should not be mentioned in an EOM. Cases such as additional provision for income tax which should have been accrued based on the prevailing tax regulations but in fact not being made as management arguing that it is subject to official tax notice or allowance for bad debts not being provided for as management is working toward revising the original payment terms are clearly not matters of uncertainty for which a qualification is appropriate not an EOM. Similarly issues that associate with wrong accounting treatments should never be reported within an EOM.

The need to distinguish an EOM and a qualification is key to understand audit reports. Audit reports, as the final products of the audits and their quality, play a fundamental role in bringing transparency to the capital market. In order for a financial statements user to make informed decision he needs to learn how to extract the right information when reading audit reports. Understanding of situations where EOM paragraphs may be used also helps user to evaluate the quality of the audit report to a certain extent.

The views expressed by the author here do not necessarily represent the views and opinions of KPMG Vietnam.

Processing and manufacturing attract 90 percent of total FDI

Vietnam has attracted $ 8,51 billion of foreign direct investment (FDI) since the beginning of the year, up by 8.9 percent year on year, according to a report released on May 24th by the Foreign Investment Department under the Ministry of Investment and Planning.

As many as 398 new foreign investment projects have been licensed and 160 ongoing foreign investment projects have been approved to raise their investment capital.

Noticeably, processing and manufacturing industries have lured $ 7.6 billion, making up 89.2 percent of the total registered capital of the FDI projects.

Meanwhile, Thai Nguyen province, attracting more than $ 2 billion of FDI, has topped the list of localities across the country in terms of luring FDI. It was followed by Binh Dinh, Binh Duong, Dong Nai and Vinh Phuc.

Major FDI projects that have been licensed or approved to add capital since the beginning of the year included Nghi Son oil refinery in Thanh Hoa, Samsung Electronics Vietnam project in Thai Nguyen, Bus Industrial Center project in Binh Duong and Prime Group project in Vinh Phuc

Ads on cell phones rising

With the increasing number of Internet users via cell phones, many enterprises have spent much on developing advertising services on such devices which are considered a good advertising channel.

On the occasion of launching the Google Display Network in Vietnam recently, Google has introduced the Vietnamese version of AdSense, an online software that helps website owners manage advertisements on their websites, with interfaces for both websites and cell phones.

According to James McClure, head of Google’s Emerging Markets for Southeast and South Asia, one among every two Internet users is using mobile Internet, and this tendency is on the rise.

Realizing the importance of mobile devices, Google has developed strategies as well as introduced many products and services for such devices. However, Google has yet to have an office in Vietnam, which is an opportunity for local investor.

For instance, Goldsun Media Focus has poured heavy investments in advertising infrastructure and services for cell phones to build a network called SoSmart, and has had around 600 million visitors every month.

The figure accounts for 65% of the number of visitors accessing the Internet by cell phones in Vietnam, which is equivalent to around 14 million Internet users. According to Goldsun Media Focus, advertisements on cell phones can have a large coverage of customers and also benefit from interactive features of this kind of device.

According to market researcher Nielsen, the cell-phone penetration rate in Vietnam is as high as 145%, with smartphone users accounting for around 30% of all devices.

Besides, among the rest of cell phones users, half of them want to acquire smartphones.

Another market research shows that 40% of cell phone users both watch television and use their cell phones or tablet computers, 56% use cell phones to search for information about products they have seen on television, 25% use cell phones to find information from posters and 35% use cell phones to search for information they saw on newspapers.

Enterprises have noticed a change in behavior of consumers and thus are finding ways to get access to those customers.

Several brands like Coca Cola Vietnam, VietJetAir, VP Bank and Sanyo have used the advertising system of SoSmart.

However, mobile advertising is currently used as a supplementary channel for traditional advertising channels.

Eximbank prioritizes risk management

Risk management in the banking system must be the top priority given increasing difficulties of the economy and higher bad debt danger, said Le Hung Dung, chairman of Vietnam Export Import Commercial Bank, or Eximbank.

Sticking to the motto “Prevention is better than cure”, Eximbank has strictly followed risk management rules over the past time to secure safe development of its entire system. The bank has launched a credit center into operation to improve credit quality of branches and credit policies.

Therefore, Eximbank has bettered control over credit quality, Dung told the Daily on the occasion of the Third Class Labor Medal Receiving Ceremony on Wednesday. Dung, who also serves as Chairman of the Board of Members of Saigon Jewelry Company, won the title for his contributions to the society since 2008.

The bank’s management activities have also received supports from its foreign strategic partner Sumitomo Mitsui Banking Corporation (SMBC). Its risk management system has met international standards, which are stricter than those regulated in the country.

This year, Dung said Eximbank still aims to boost credit growth rate but it will focus on risk management by controlling credit quality and drastically handling overdue debts and bad debts.

Eximbank posted up a modest credit growth of only 0.04% in 2012 and 0.03% in the first quarter of this year. Its bad debt ratio stayed low at around 1.33%, which was almost unchanged compared to late 2012.

Eximbank has been granted with the Best Managed Bank in Vietnam 2013 Award by The Asian Banker. Giving this award to Eximbank, the magazine has recognized the lender’s sustainable development in the recent three years.

Truong Van Phuoc, general director of Eximbank, has also received The Asian Banker Leadership Achievement Awards 2013 title.

Eximbank is among commercial banks that boast biggest total assets in Vietnam. The bank has obtained strong growths in three years with asset value jumping from VND65.4 trillion at the end of 2010 to nearly VND157 trillion as of the end of April.

Despite challenges in the banking network, the bank targets to gain VND3.2 trillion in pre-tax profit in 2013, a 12.2% year-on-year increase, and pay dividend for shareholders at 12%. This dividend rate is much higher than the average of the banking sector.

Eximbank’s general director Truong Van Phuoc said that the high target will encourage the bank to put more effort in business operations, focusing on retail banking and loans for export and import enterprises this year.

The Asian Banker is one of prestigious magazines in the Asia-Pacific and globally. It is founded in Singapore and has many representative offices in different countries.

Its quarterly publications have attracted many readers who are businesspeople in the region and worldwide. Every year, the magazine organizes selections of outstanding names in the banking industry in areas of finance trade, currency management and payment among others.

BIDV to offer VND10 trillion preferential home loans

Bank for Investment and Development of Vietnam (BIDV) will be able to offer preferential home loans worth VND10 trillion as part of the Government’s VND30-trillion program.

BIDV said in a statement on Thursday that it had registered this credit volume.

Since a circular of the Ministry of Construction and another of the central bank relating the program had come out, BIDV has quickly mobilized resources to make loans under the program.

In the first 2-3 years, the lender will give 60% of the soft loans to corporate clients and 40% to individual homebuyers. The ratio will be changed to 30:70 in the fourth year.

Owners of low-cost housing projects or commercial-turned-budget home projects will be granted loans worth 20% of the total investment cost with a five-year term and an interest rate of 6% per annum.

As for individuals wanting to buy budget condos or commercial homes of less than 70 square meters priced below VND15 million per square meter, BIDV will provide loans for State employees, low-income people, and retired and self-employed people. The maximum loan term for individual borrowers is 15 years and the interest rate is 6% per year for 2013.

The interest rate for the following years will be announced by the central bank in December each year. Basically, it will equal 50% of the average lending rate on the market but not exceed 6%.

The above lending rate will apply for ten years at most. After that, BIDV will set a rate equivalent to the interest rate for a 12-month deposit plus two percentage points.

The bank has issued guidelines about the preferential lending program to all of its branches and transaction offices nationwide.

BIDV will give priority to the half-done projects that can be finalized in 2013-2015, and those having finished investment procedures or having sold over 50% of their apartments.

The lender said it would try to disburse loans for corporate clients in less than 20 working days and those for individual borrowers in less than four days.

BIDV has pledged to lend to three low-cost housing projects with a total of 1,068 apartments. They include a project developed by Vinaconex Xuan Mai, a project located at the eastern end of Bach Dang Street in Danang and one in Hue run by Vicoland.

These projects are scheduled for completion in 2013-2014. BIDV has promised to provide them with VND231 billion loans, of which VND101 billion has been disbursed.

BIDV will try to deploy its preferential home loan program right in this quarter. The bank expects to disburse over VND2.7 trillion this year.

Satra rep office in Myanmar to open soon

The representative office of Vietnam’s Saigon Trading Group (Satra) in Myanmar will officially start operation on June 6, later than scheduled.

The office at 70 Phone Gyi Road, Landmadaw Township in Yangon City will represent both Satra and the HCMC government. It will display the major products of Satra, collect information about the Myanmar market, do the marketing, suggest and implement measures to strengthen relations between Satra and Myanmar customers, and join negotiations with partners.

In addition, the office will promote trade, investment and tourism on behalf of the HCMC government.

The representative office will help HCMC firms organize and attend fairs, exhibitions and workshops, conduct market surveys and hold talks with partners from Myanmar. It will call for investment in the city-based projects, explore the capacity and demand of Myanmar investors, and help them with investment procedures in Vietnam.

Moreover, the office will introduce the history, culture and tourism of HCMC to Myanmar. It is assigned to study the demand and taste of Myanmar tourists and provide the tourism authorities with research results.

Satra said it would set up a branch in Myanmar if needed.

Those in need of assistance can contact Dao Ngoc Tam, chief of the representative office of Satra in Myanmar, at 70 Phone Gyi Road, Landmadaw Township, Yangon City or 275B Pham Ngu Lao Street, District 1, HCMC. He can be reached at 0903-825-107 or via anh9tam@gmail.com.

Ownership certificates sought for improper homes

Owners of houses not complying with approved designs might still get home ownership certificates if the proposal made by the HCMC Department of Natural Resources and Environment was accepted.

In HCMC, there are still nearly 130,000 properties ineligible for certificates for various reasons like complicated land origins, illegal trade, disputes and violations committed by project owners, said the environment department.

To finish granting land use right certificates and home ownership certificates by the end of this year in accordance with Directive 1474 of the Prime Minister, the department has submitted some suggestions to the HCMC government.

Owners of houses not meeting their designs yet still consistent with the overall planning of the 1/2,000 scale should be granted home ownership certificates. As for houses smaller than designed, which do not affect the urban landscape, district governments should also consider issuing home ownership certificates to their owners, the department suggested.

Earlier, the HCMC government has reported to the central authorities on some measures to accelerate the certificate granting process.

For example, some properties developed after October 15, 1993 and before the planning was published are inconsistent with the planning. Owners of such properties should be granted certificates if the State had not set a specific time for implementing the planning yet, said the municipal government.

Those buying condos at property projects should be given home ownership certificates after completing payments regardless of the violations committed by the project owners during the construction process, said the environment department.

VFA, Mekong Delta at odds over rice storage volume

The summer-autumn rice crop will enter its peak harvest season in less than a week, but the Vietnam Food Association (VFA) and the Mekong Delta provinces have not reached an agreement on the rice volume to be bought for temporary storage.

VFA suggests stockpiling 500,000 tons, versus one million tons in the winter-spring crop. Meanwhile, provincial authorities want a higher volume.

Nguyen Van Ngung, deputy director of the Soc Trang Department of Industry and Trade, said the rice storage amount should be increased to 1.5 million tons.

A representative of the government of Vinh Long Province cited a report of VFA as saying that enterprises were still holding two million tons of rice in their warehouses, plus 3.5 million tons to be produced in the summer-autumn crop. However, they have just signed sale contracts for around two million tons, meaning some 3.5 million tons has not found buyers.

“Therefore, I propose raising the temporary storage target to 1.5 million tons in this summer-autumn crop,” he said at a conference on rice stockpiling in the Mekong Delta held in Can Tho City on Thursday.

However, VFA Chairman Nguyen Thanh Phong said a larger amount would spell trouble for rice exporters, especially in the context of mounting rice inventory in India and Thailand.

Not only the rice storage volume, but the agency in charge of the stockpiling program has also remained undecided.

The Ministry of Agriculture and Rural Development has drafted regulations on rice stockpiling in the Mekong Delta, suggesting that either VFA or the Mekong Delta’s local governments should be in charge of the program. The final decision will be made by the Government.

Either way, VFA should coordinate with local governments to provide information about the stockpiling process and the production situation. VFA must disclose the points of purchase and the purchase prices to local governments and farmers, said Deputy Minister of Agriculture and Rural Development Vu Van Tam.

The rice storage for the summer-autumn crop is scheduled to take place from June 15 to August 15. Enterprises participating in the program will enjoy a zero lending rate for three months, but many rice exporters want the interest-free period to be extended to four months.

High duties push up fuel retail prices

The average price of finished fuel products imported by wholesalers is now much lower than this time last year, but fuel retail prices are more exorbitant because of high import tariffs.

Over 70,700 tons of petrol worth more than US$67 million was imported in the first half of May. On average, the price of each ton of imported petrol was US$950, according to the General Department of Customs.

As of mid-May, petrol imports totaled nearly 880,000 tons, worth more than US$929 million. The five-month average import price was around US$1,056 per ton.

The average price year-on-year was much higher. Last year, the average petrol import price in the first half of May was US$1,113 per ton and the five-month price was US$1,126 a ton.

As for diesel oil, imports in the first half of May amounted to more than 131,000 tons, worth around US$112 million. By the middle of May, nearly 1.1 million tons of diesel oil had been imported, costing over US$1 billion.

The average prices in these two periods were US$853 and US$924 per ton respectively, versus US$980 and US$1,007 last year.

Yet, fuel retail prices moved in an opposite direction. Currently, each liter of A92 petrol sells for VND23,330 and diesel oil VND21,250.

This time last year, the two items were priced at VND23,300 and VND21,200 per liter respectively.

On May 23, 2012, the governing body issued a decision on reducing petrol retail price by VND600 and diesel oil VND400. As such, RON92 petrol and diesel oil prices dropped to a respective VND22,700 and VND21,200.

The main reason for this difference is import tariffs. The current import tax on petrol is 19%, while diesel oil is charged at 14%.

This time last year, import duties on gasoline and diesel oil were only 2% and 1% respectively, and then increased to 4% and 3% on May 23, 2012 in accordance with the above-mentioned decision.

With 19% import duty, each liter of petrol is bearing VND3,000 of tax. Plus excise tax, value added tax and environmental protection tax, one liter of gasoline is now subject to nearly VND8,000, said the Vietnam Petroleum Association (Vinpa).

Similarly, import tariff is occupying VND2,125 of the price of each diesel oil liter. Overall, taxes are making up nearly VND5,000 of diesel oil retail price.

This year, import tariffs on fuel have constantly been hiked, especially since April. On May 8, the Ministry of Finance decided to raise petrol import duty from 16% to 19% and diesel oil 12% to 14% when the global prices fell.

According to the statistics of the General Department of Customs, fuel imports in the first half of May as well as since January 1 are lower than the same period last year.

The total import volume of gasoline, diesel oil, kerosene, fuel oil and aviation fuel since the beginning of the year is more than 2.7 million tons, worth over US$2.5 billion, versus 3.3 million tons and US$3.4 billion year-on-year.

Travelport renews contract with Galileo Vietnam

Travelport, a major provider of transaction processing solutions and data for the global travel industry, has renewed a multi-year service contract with Galileo Vietnam to help the latter continue providing the products and solutions for aviation, hospitality and tourism sectors.

Pham Van Hien, chairman of Galileo Vietnam, and Patrick Andres, Travelport’s vice president and regional managing director, Asia Pacific, clinched the renewed contract in HCMC on Tuesday evening at the witness of representatives of airlines and travel agencies.

The agreement came after 10 years of successful partnership between the two sides. The new signing consolidated Galileo Vietnam as a major distribution center for Travelport’s Galileo technology and services in this market.

Hien said over the past decade, more than 500 agencies had used Galileo’s global distribution system (GDS) services for their daily business in Vietnam, Laos and Cambodia, and millions of air-ticket, hotel and car rental bookings had been processed successfully by the Galileo system.

Andres commented that the commitment of Galileo Vietnam to delivery of Travelport’s products and services to the local travel agent community made the company “a key partner in the region and a representative of the Travelport group.”

Hien said Galileo Vietnam provided solutions to customers in aviation, hospitality and tourism sectors. He noted by using the Galileo GDS, many of the airlines had been able to reduce their distribution costs by up to 80%.

“We look forward to continuing our work with Travelport, and continuing to provide cutting-edge solutions to travel agencies,” Hien said. He added that Galileo Vietnam was excited about the future of the hospitality and tourism industry in the region.

Andres said the travel industry in Vietnam was expected to post stronger growth in the coming years as a result of increased disposable income and improvement of living standards in this country.

Galileo Vietnam has opened four offices across Vietnam, Laos and Cambodia since its establishment more than 10 years ago.

Government asked to clarify standards for assessing public debt

While the government said Vietnam’s public debts are still at manageable levels, a National Assembly deputy proposed the the assessment standards are clarified.

The NA held a working session on May 22 to review the results of socioeconomic development and state budget in 2012, as well as the implementation of development plans in the first months of this year.

The country’s public debts drew much of the attention of NA deputies during the meeting.

NA Deputy, Truong Thi Anh, from HCM City, said the statement that the country’s public debt rate was at a safe level was unilaterally asserted by the government without any verification from the NA.

“The government should clarify the criteria it uses to assess the safety of public debts and submit it to the NA for approval,” Anh proposed.

Deputy Tran Du Lich said even though it is necessary to control public debt, the NA should take into account the implications of reconsidering the rate of state budget deficit spending, so as to loosen fiscal policies and boost demand.

“The government’s plan to issue VND45 trillion (USD2.14 billion) in bonds for some industries is significant, but first priority should be given to the settlement of debts owed by public investment projects to enterprises, projects already underway and those that are nearly complete,” Lich recommended.

Although a government report released at the NA’s opening session on May 20 said that the country’s public debts are still at acceptable levels, it did not mention a specific figure.

However, a recent report from the Ministry of Finance showed that by the end of 2011 Vietnam’s public debts accounted for 56.7% of the country’s GDP.

Several experts said such this level is high compared to those recommended for developing countries, usually between 30%-40% of GDP.

Concerning current economic situation, deputy Pham Huy Hung from Hanoi said the recent economic developments reveal possible risks while the country’s economy may expand by only 5.03% this year compared to the 6% target by the NA for the year.

Hung, also a staff member of a bank, said that interest rates are not really the major barrier for enterprises in accessing capital. Modest lending is a result of weak demand in the economy, large inventories as well as business difficulties such as weak financial portfolios.

“Well-performing enterprises tend not to expand very much and borrow less. Meanwhile, those that want to borrow generally lack feasible business models. Proper solutions should be worked out to shore up demand, boost sales and increase confidence among banks,” he emphasised.

Deputy Bui Thi An from Hanoi attributed inefficient investment to the lack of calm decisions on macroeconomic regulation and the lack of cooperation among ministries and branches.

She added that more attention should be paid to identifying problems in the economy so as to work out suitable solutions.

Rules tightened to block FDI firms from direct purchases from farmers

The Vietnamese government will issue a new circular to prevent FDI companies from buying agricultural products directly from farmers.

Circular 8 issued by the Ministry of Industry and Trade will take effect from June 7 stated that FDI companies in Vietnam can only buy agricultural products from licensed Vietnamese traders unless international treaties, to which Vietnam is a party, stated otherwise.

According to the minister of Agriculture and Rural Development, FDI companies have taken over 70% of the animal feed industry.

In the Central Highlands, 12 FDI companies have exported 50-60% of total coffee production. The Louis Dreyfus Commodities' export volume alone accounted for over 40% of coffee export output in Gia Lai Province in 2012. The FDI companies also bought and exported 36.6% of the black pepper output last year.

Pham Quang Dieu, chief economist of the Agricultural Market Analysis and Forecast Company said many FDI companies only buy the product and did not invest in the agricultural resources despite their investment permit's requirement.

Meanwhile he said domestic companies, who have supported the farmers during the production process, lost due to FDI companies paying the farmers higher prices.

Dang Kim Son, head of Institute of Policy and Strategy for Agriculture and Rural Development said about 30 FDI companies are collaborating with the Ministry of Agriculture and Rural Development to support the farmers achieve better production output. If this circular went into effect, it could discourage firms from investing into the raw materials.

Philippe Bacac, CEO of Metro Cash and Carry in Vietnam said they are carrying out an aqua hygiene product project. The farmers would be given support including materials and skills training to meet EU standards. Bacac said they would not make any profits if they followed Circular 8.

A number of experts said the relations between domestic firms and farmers were still very vague and there was a lack mutual benefit in their relationships. Farmers earned too little so domestic firms should tighten their collaboration.

"We should learn from Indonesia. Their regulations stated that FDI companies are only allowed to buy from their own invested farmers and raw materials. Their permits will be revoked if they don’t make any investment within three years period," and expert said.

FDI companies have been able to dominate the market because of their superior supplies of capital and human resources. The authorities should find a reasonable way to encourage farmers, local firms and FDI companies to all benefit.

Vietnam to promote energy efficiency and green buildings 

Vietnam will attempt to take measures to accelerate energy efficiency so as to save 15% in energy use per square metre of new buildings in the next years.

As part of this effort, the Ministry of Construction (MoC) has recently signed a cooperation agreement with the International Finance Corporation (IFC) to promote energy efficiency in buildings and reduce greenhouse gas emissions.

As a result, the IFC will provide Vietnam with technical assistance to help the ministry develop procedures and the capacity to implement the Building Energy Efficiency Code between 2013 and 2017.

The code took effect in 2005 but has not been widely implemented due to a lack of specific guidance and enforcement. Last year IFC signed a memorandum of understanding with the Vietnamese government to support it in revising the code, which is expected to be released later this year.“

This agreement is expected to contribute to the implementation of the National Target Programme on Climate Change Adaptation, the National Target Programme on Energy Efficiency, and the National Green Growth Strategy,” said Phan Thi My Linh, Deputy Minister of Construction.

Wendy Werner, IFC’s investment climate advisory services manager for East Asia and the Pacific, said "Tthe building sector was among the biggest energy users in Vietnam, accounting for about 36% of national energy consumption. Energy efficiency will help developers reduce operating costs and contribute toward a low-carbon economic growth path.”

A World Bank report shows that Vietnam’s electricity consumption increased fourfold between 1998 and 2008, contributing considerably to carbon emissions, which increased at an estimated 12% per year.

“Promoting energy efficiency in the building sector will help the country achieve its target of reducing greenhouse gas emissions from 8-10% from 2011 levels by the year 2020,” Werner added.

Nguyen Cong Thinh, from the MoC’s Department of Science, Technology and Environment, said that Vietnam’s construction industry could reduce energy consumption by between 20% and 30% annually if measures to improve energy efficiency are effectively taken.

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