Under-reported listed company losses spook major investors

A number of listed companies have been forced to revise their financial disclosures once their financial statements were audited, resulting in many instances in lower earnings or profits from those previously announced.
The large number of such incidences this year has cast corporate governance of listed firms, and the Vietnamese stock market as a whole, in a negative light, say some experts.

Investors have been forced to accept the risks of a non-transparent disclosure environment to take fleeting profit opportunities, suggested the director for brokerage of Apec Securities Co, Doan Viet Hung.

"Businesses have tried to make their financial reports look brighter to manipulate share prices," said Hung. "The consequence is the divestment of major shareholders."

Some companies have seen their losses rise to double or even triple the levels reported in initial disclosures, including Meca Vneco Investment And Electricity Construction Co (VES) which revised its losses from VND1.14 billion (US$55,340) to VND4.9 billion ($237,860).

Two companies listed on the Ha Noi Stock Exchange – Underground Works Construction Co (CTN) and American Vietnamese Biotech Incorporation (AMV) – reported losses over double initial disclosures after issuing their audited financial statements.

In a few cases, estimated losses were revised downwards. Telecommunications device trader Viet-Han (VHG) trimmed its initially reported losses by about a third from VND10.8 billion ($524,300) to VND7.2 billion ($349,500).

The current downturn of the economy is affecting the operations of enterprises," said the head of Thang Long Securities Co's corporate finance division, Nguyen Trong Nghia. "So these companies have added other revenue sources to make up for the losses without acknowledging that those sources would not pass review by auditors."

In practice, auditors can propose changes in some entries, including writedowns of foreign currency loans and the valuation of investments in unlisted shares, consistent with accounting standards, so long as they are reasonably reflecting the financial status of enterprises.

However, the variation in profits and losses before and after audits has been sizeable on the Vietnamese stock market, and investors have been caught by surprise by ballooning profits from the liquidation or transfer of assets.

"Enterprises should not continue this practice, as the unaudited results, whether profitable or not, suggest a lack of transparency in corporate governance," Nghia said. "This will contribute to the increasing disappointment of investors in the declining stock market."

Building begins on rice processing plant

The An Giang Agricultural Product Protection JSC yesterday broke ground for a rice processing plant with an annual capacity of 100,000 tonnes in the Mekong delta province of An Giang.

The 8.2-ha Thoai Son processing plant in the district of the same name will also have a drying facility with a capacity of 500 tonnes of rice a day.

The company said the VND212 billion (US$10 million) processing plant would go on stream in early 2012.

The company is also set to start construction of a 200,000-tonne processing plant at a cost of over $10 million in Dong Thap Province ( the Mekong delta) today.

Tan Hong Rice Processing Plant in the district of the same name will be the largest of its kind in the delta when it becomes operational by the end of February next year.

To source paddy for the two processing facilities, the company has unveiled plans to sign contracts with local farmers to grow rice on more than 5,000 hectares, mainly of the jasmine 85 variety.

The contracts are likely to be signed by year-end before the planting of the 2011-12 winter-spring crop.

The company said it would break ground for another 200,000-tonne plant in Long An Province, also in the Mekong delta, in the third quarter of this year.

Electronics sales expected to improve at year-end

Electronics and home appliances retailers and importers in HCMC are holding out much hope of seeing better sales towards the year-end following a strong business decline induced by inflation concerns.

Electronic stores around the city, especially those on Hoang Van Thu Street in Tan Binh District and Nguyen Oanh Street in Go Vap District, have seen a steep slump in sales in recent months.

Nguyen Minh Thu, deputy director of Thien Hoa Electronics Co., said the company achieved a slower growth rate of only 5% in the first seven months of the year and got almost no profit as large amounts of money had been spent on promotions.

An import firm said it was in a difficult position as a large number of products imported had remained on the shelves since early this year, with sales down a staggering 70-80% from the same period last year.

Given huge stockpiles, local companies have reduced their import orders with foreign partners and paid fines for this action since retailers just purchase goods from distributors when they have real demand, according to the company.

Local retailers and importers are pinning hopes on the year-end shopping season.

Thu said he believed the market would be better as big discounts during the Big Sale month in September will help leverage sales. In this program, manufacturers and retailers offer lower prices of essential goods to boost consumer spending.

Experts believe many firms, particularly those without financial resources and appropriate business tactics, could disappear.
 
Ministry: Rice exports still under control

Deputy Minister of Industry and Trade Nguyen Thanh Bien on Wednesday affirmed rice production and export were still under control from now to the end of this year, rejecting rumors on sudden developments on import markets that led to rice price spikes in the Mekong Delta.

Speaking at a press conference call in Hanoi on Wednesday, Bien rejected claims that Vietnam Southern Food Corporation (Vinafood 2) had signed contracts to export a huge volume of rice to Indonesia and Malaysia.

According to figures of the ministry and the Ministry of Agriculture and Rural Development, the nation is expected to turn out 41.6 million tons of unhusked rice this year, up around 1.5 million tons against 2010. Local firms can export 14 million tons of unhusked rice, or around eight million tons of rice, after setting aside 27.5 million tons for the domestic market.

However, the ministry admitted unforeseen developments on the rice market this year. The Philippines, the largest rice importer of Vietnam, has decided to privatize import activities, impacting on government-to-government contracts. Meanwhile, Vietnam’s rival Thailand plans to release policies related to food prices such as unhusked rice price subsidies for its farmers.

Vietnam as of Tuesday had exported over 4.9 million tons of rice with the total FOB value of US$2.36 billion, rising 11% and 22% over the same period last year respectively. Export prices averaged out at US$473 per ton, a US$43 year-on-year increase, while local firms now have a stockpile of around 1.35 million tons.

Rice export volume dropped slightly, at 1%, in May and June but rose strongly by 12% in July due to huge supply in the country, rising rice prices and high demand of the world market. This has brought about high profits for local farmers but has led to food prices soaring in Vietnam.

As the Government gives flexible regulations for rice export contracts following market demands, state agencies cannot rebalance supply and demand to reduce local food prices despite the huge supply. Exporters should buy rice at high prices following high export rice to secure profits for farmers, Bien said.

Bien added for rice exporters it would be impossible to evade Decree 109, which will be effective from October 1 with requirements for warehouse and storage. Only 65 enterprises have won licenses for rice export so far with volumes registered months ago, there is no way for uncontrollable export in the current climate.

“We are still coping with speculation, price hikes and rumors in the rice export sector,” Bien added.
 
Capital contribution regulations full of loopholes

Lax regulations regarding chartered capital and equity capital in company establishment have created multiple legal loopholes for enterprises to take advantage of, defraud their partners and generate capital that is virtually non-existent.

Those are among the common practices indicated by lawyers at a seminar in HCMC on Wednesday on a draft review report on implementation of the Enterprise Law, the Investment Law and the Trade Law. The seminar was part of a project to review 16 economic laws in Vietnam carried out by the Government Office and the Vietnam Chamber of Commerce and Industry (VCCI).

Nguyen Duc Nghia, general director of Doc Lap Commercial Consultant Company, said Article 30 of the 2005 Enterprise Law required shareholders to contribute sufficient capital in a timely manner as pledged or else they become the company’s debtors.

In reality, founding shareholders and board members of many limited liability companies have failed to do so and this has resulted in them owning shares without contributing a single penny, he said, adding many swindlers had established companies to cheat others.

Lawyer Cao Ba Khoat, director of K & Partners Business Consultant Company and member of the law revision project, said chartered capital and equity capital should be clearly distinguished. Khoat said enterprises made use of the loophole in Article 4.6 of the Enterprise Law and Decree 102/2010, relying on equity capital pledges rather than real contributions to create a huge non-existent source of capital.

Hoang Van Son, director of VNC Lawyer Office, shared this view, saying unclear regulations on equity capital and contributed capital had led to large amounts of unreal capital. Son highlighted the risk of many contracts and transactions still being executed between virtually non-existent enterprises and legitimate businesses.

Lawyer Phan Thong Anh, director of Vietnam Partnership Law Company, said such regulations would render law enforcement agencies helpless when it came to settling disputes and complaints.

Therefore, amendments to the Enterprise Law have been proposed to make the regulations on capital contribution and related issues workable and guarantee businessmen’s legitimate interests.

Son of VNC suggested local departments of planning and investment would be in charge of business capital inspection and verification. Meanwhile, lawyer Khoat proposed capital be made within 90 days after the date of business registration certificates being issued by authorities.

Also at the seminar, many suggested doing away with the Investment Law because it overlaps other laws and legal documents. They agreed to keep the regulations that are not present in the Foreign Investment Law and the Enterprise Law and include them into the Enterprise Law.

A similar seminar occurred in Hanoi last week. Views and recommendations are being collected to complete a comprehensive report on those laws for submission to the Government, the National Assembly Committee and related ministries for revision.
 
Eximbank extends preferential export loans

The Vietnam Export Import Commercial Joint-Stock Bank (Eximbank) has announced to put on a preferential lending program for exporters.

Borrowers of export credit in Vietnam dong at Eximbank will pay an annual interest rate of 17%. The term of such a loan is three months.

Another option is Eximbank will roll out a local currency export credit program based on interest rates for foreign currency. The applicable interest rate for exporters is 7% a year and the loan term is six months.

Eximbank will set aside VND500 billion for each of the two programs.

Earlier, HCMC Housing Development Bank (HD Bank) kicked off a similar program known as “Preferential loans for supporting industries” with an annual interest rate 1-4 percentage points lower than normal rates for enterprises active in the fields of automobile assembly, telecom-electronic devices, household appliances, mechanical engineering, footwear and textile.

Asia Commercial Bank (ACB) has also launched a special credit program “Capital support, loan preference” for cash-strapped individual and household businesses. The program is applicable to disbursements from August 1 to December 31.

ACB clients will enjoy an interest rate of 1.2 percentage points less for short-term loans or those totaling VND500 million each, in HCMC and Hanoi, or VND300 million, in other parts of the country.

Better deal sought for deposit insurance
 
Higher coverage levels are needed to improve the domestic deposit insurance system as the Vietnamese banking system integrates more deeply into the global economy, according to a seminar held here on Tuesday by the National Assembly Committee on Economy and Budget.

The meeting was held to gather expert comments on proposed amendments to the Law on Deposit Insurance.

Dinh Sy Dung, deputy director of the Government Office's justice department, told the meeting that deposit insurance was viewed as high risk since it was expected to protect depositors from losses caused by a bank's insolvency by guaranteeing them against the loss of deposits.

Deposit insurance currently covers up to VND50 million (US$2,400) per eligible deposit per bank or credit institution in Viet Nam, but participants at the meeting argued that was too low to ensure confidence in the nation's banking system.

However, they acknowledged that premiums currently charged by Deposit Insurance of Viet Nam (DIV) to banks and credit institutions were no longer adequate.

DIV general director Bui Khac Son said that the fixed premium of 0.15 per cent was too low in the context of significantly growing deposits, threatening the solvency of DIV's current funding.

Through the end of last year, total premiums contributed by commercial banks and credit institutions had reached VND4.484 trillion ($215.6 million), growing at an average annual rate of 20 per cent, he said.

However, the proportion of available funding to the total amount of insured deposits has fallen significantly from 1.07 per cent in 2005 to 0.8 per cent last year, Son noted. Current funding was therefore only adequate to cover the bankruptcies of two mid-sized banks only, he said.

Several experts wondered about the criteria for setting premiums, with some suggesting that premiums should be set flexibly based on risk levels presented by the bank. Others said that the premiums might be according to the inflation rate and the total amount of deposits in commercial banks and credit institutions.

They also discussed whether deposit insurance should be mandatory. Nguyen Am Hieu from the Ministry of Justice said that, in all developed countries, deposit insurance was required for all credit institutions.

Deposit insurance operated worldwide under three models, Hieu noted, including purchase and assumption, payout and risk reduction methods.

The new Law on Deposit Insurance needed to be in line with international standards but take Vietnamese characteristics into account, several participants at the meeting said.

The role of the deposit insurance agency in supervising the financial market remained poor, many said, suggesting that the lack of legal framework had contributed to the sector's poor performance.

A number of experts suggested that the deposit insurance body be operated as a company with a board of directors, executive management, and an internal audit system.

Domestic market turns back to expensive construction materials  

Stockpiles at construction material retailers and producers in Ho Chi Minh City have been getting higher for five consecutive months as consumers were shunned by increasing prices.  

Nguyen Thi Xuan, owner of a construction material store in Thu Duc District, said sales at the store since April has only reached half of that in previous months.

During the first quarter this year and before, the store consumed around 100 tons of steel and 3,000 sacks of cement every month, but since April, only a few people came each day to buy a little amount of materials to fix their houses, Xuan said.

Tran Minh Huan, director of Hoang Minh Construction Company, Ltd. in District 12, said the company has only sold a quarter of steel and cement it imported for the past two months.

Huan said despite the slow trading, the company still has to pay the 2.2 percent of monthly bank interest and its debts are accumulating.

The same situation happened at major producers.

A source from Vietnam Cement Industry Corporation (VICEM) said that the group’s stockpile as of the end of June has reached 1.35 million tons.

Steel producers also reported nearly 600,000 tons left in stocks and most factories are now running only half of their capacity.

Representatives from VICEM and Vietnam Steel Association (VSA) said different factors have slowed down the business, including the policies about cutting public investment, the real estate market being frozen, and high inflation forcing people to limit their spending.

Both VSA and VICEM have turned to export markets to save their business.

Statistics from the groups showed that around 2.5 million tons of cement products and around 133,000 tons of steel worth US$7 billion have been exported during the first seven months this year.

But they said that the solution is just temporary as the markets do not generate as high value as domestic ones.

Although the business is lagging, the prices of major construction materials are still kept at high levels as producers blamed increasing costs.

The prices of steel and cement have been raised three times this year, by VND2.5-3 million (US$120-144) a ton and VND360,000 a ton, respectively.

That has driven the current retail prices of cement to VND1.2-1.45 million a ton and those of steel to VND15.5-15.8 million a ton.

Meanwhile, each cubic meter of sand has been charged for an extra VND10,000-20,000.

Some experts have suggested that the government adjust its monetary policies and help construction materials assess low-interest loans, in order to prevent the production from coming to a standstill.
 
City firms start stocking cheap goods for Tet

HCM City businesses have kicked off the annual Tet price-stabilisation programme by stocking goods worth VND3.4 billion ($166,000), a city official said.

Nguyen Thi Hong, deputy chairman of the municipal People's Committee, told a meeting with related departments that a similar programme started four months ago to keep day-to-day prices low, has worked, helping stabilise prices.

The stockpiling for the Lunar New Year – which falls in late January next year – represents an increase of 20 per cent compared to last year.

The goods include rice, cooking oil, and sugar, and the prices of the goods will be 10 per cent lower than comparable items on the market.

Hong instructed related departments to closely monitor market demand so that they could order market management teams to keep a close eye on prices everywhere in the city.

The city would also set up mobile sales outlets in industrial parks, export processing zones, and remote areas to bring the cheap goods to the doorsteps of workers and poor people.

According to the city Statistics Department, consumer prices rose 0.68 per cent this month, much lower than the 1.06 per cent in Ha Noi and 0.93 per cent for the country.

The programme has become an effective tool in controlling the city's prices and stabilising the local economy, Hong added.

Low sales put firms on brink

Honda motorbike dealers have been surprising customers by selling their most-popular model, the Air Blade, at about VND1 million below the list price. The situation is quite a turnaround from two months ago when customers often had to pay up to VND10 million above list to get their hands on one.

The dealers are blaming the sudden fall-off in demand for new motorbikes to the decline in consumer purchasing power over the past three months. The result has been a surge in motorbike inventories by as much as 40 per cent during the period, they said. And that figure is actually much lower than the figure for many other industries. According to the General Statistics Office (GSO), two-thirds of 136 tracked commodities saw accumulating inventories in the first eight months of the year. The stockpile index of the processing and manufacturing sector surged by nearly 17.8 per cent during the period, with the index for the wood products industry topping the list at 87.5 per cent, followed by beverages at 65.8, beer at 58.6 per cent, and footwear, animal feed, textiles and cement, all at around 40 per cent. Viet Nam Plastics Corporation deputy director Dao Duy Kha said that his firm had actively reduced total monthly imports of materials from 1,000 tonnes to 700-800 tonnes – even as stockpiled inventories rose by 20 per cent over the same period last year.

Viet Nam Association of Forestry and Wood Products general secretary Nguyen Ton Quyen said that demand for wood products had decreased sharply in the past quarter, following a price hike of 15-30 per cent which reflected the rising costs of raw materials.

Meanwhile, total retail sales of goods and services during the first seven months of the year increased by only 4.7 per cent nationwide to VND1,065.8 trillion (US$51.7 billion), according to the GSO.

Vu Manh Ha, an expert with the GSO's internal economics department, said that people had tightened their pursestrings due to high inflation and were only spending money on essentials such as food, rent, electricity, water and fuel – all of which have seen substantial price hikes.

High inflation had driven down industry sales by 30-50 per cent, Quyen said.

Stockpiles rose even more rapidly as producers breached contracts signed earlier this year when raw material costs were far lower rather than deliver goods at a substantial loss, said Pho Xinh Furniture Co director Duong Quoc Nam.

Many companies were now giving up workshop premises, scaling down production and laying off workers, according to the Viet Nam Chamber of Commerce and Industry, which reported that up to 3,000 enterprises had closed their doors in the first half of the year. The chamber's survey of the financial statements of 400 enterprises showed that most had posted losses during the period. Excessive inventories of goods, meanwhile, were devaluing the country's industrial output and boded ill for the economy, and if the situation continued, many more firms would have to cut production or even shut down, the chamber said.

The Viet Nam Association of Forestry and Wood Products has estimated that 30-35 per cent of 2,000 wood processing firms nationwide have had to suspend production.

Viet Nam Plastics Association vice chairman Ho Duc Lam said over 400 plastics companies – 20 per cent of the industry – would have to close their doors as they were no longer able to afford the 40-per-cent hikes in the costs of raw materials or oppressively high interest rates. Meanwhile, there was little opportunity for domestic industry to make up for lost sales by boosting exports. Truong Thanh Furniture Co director Vo Truong Thanh, who attended a wood products fair in Las Vegas this month, also said that the prices of Vietnamese products were higher than those from rivals in China, Thailand, Malaysia and Indonesia that were offered at the fair. While the Government has taken a number of measures to support enterprises, including tax breaks, businesses said the best way would be to help them access bank loans at reasonable interest rates and to spur consumption.

Chamber of Commerce and Industry general secretary Pham Thu Hang said that the Government should devise a suitable price strategy on input costs such as electricity, fuel and wages to avoid shocks to enterprises from escalating input costs.

Vietsovpetro discovers fresh oil at Meo Trang

The Russian-Vietnamese oil and gas joint venture, Vietsovpetro, has announced that it had discovered a new oil supply at its Meo Trang (White Cat) site on Tuesday.
The oil was discovered at a depth of 3,350m and measured to produce 250cu.m per day.

Vietsovpetro Deputy Director Tran Van Hoi, who is also in charge of geological surveys, said that the offshore White Cat site was located southwest of the Bach Ho (White Tiger) mine.

Based on its geological potential and exploratory drilling, the White Cat site might be a potentially great new source of oil.

Viet Nam Airline customers receive preferential policies

From September 1, 14 airlines operating under the SkyTeam alliance, including Vietnam Airlines, will launch preferential policies on baggage allowance aimed at members of frequent flyer elite and elite plus classes.

The new policy will help simplify travel by applying a standardised baggage allowance, regardless of differing frequent flyer and rating service participation.

Agricultural and handicraft fair to open in Ha Noi

The Trade Promotion Centre for Agriculture, run by the Ministry of Agriculture and Rural Development, will host an agricultural product and handicraft fair in the capital from September 9 to 14.

The event will exhibit food, jewellery, ceramics, mosaics, embroidery, rattan and bamboo from an array of regions and traditional villages in order to introduce the country's image to the world alongside promoting production capacity and potential export.

Aviation experts discuss Viet Nam's air transport

More than 150 air transport industry leaders met at the Viet Nam Future Aviation Industry and Role of Technologies Forum in Ha Noi on Tuesday to discuss national air traffic growth.

Viet Nam is estimated to become the world's third-fastest growing market for international passengers and freight, and the second-fastest for domestic passengers by 2014. Such growth offers great opportunities and challenges to both Viet Nam's airlines and airports.

Representatives from international organisations as well as aviation experts provided global insight into managing and developing more cost-efficient airlines and airports, at the same time delivering superior passenger services via world-class technology.

US retail company to open stores in Viet Nam

US retail company Gap Inc recently revealed plans to expand into Viet Nam as part of its global expansion efforts.

The San Francisco-based apparel retailer said that its first Gap store would open in October, while a Banana Republic story would make its debut in late 2012, in HCM City. With more locations planned for Ha Noi in 2012, all stores are set to sell Gap, GapKids, babyGap and Banana Republic apparel and accessories to men and women.

New model for growth urged

Viet Nam should change its economic growth model and restructure the economy to ensure future growth is sustainable, experts said at a seminar held yesterday in HCM City.

Organised by the HCM City-based Dream House Real Estate Group's International Business Knowledge Corporation in collaboration with Viet Nam Institute of Economics, the seminar attracted more than 200 officials from State management agencies, scientists, experts from universities, associations and economic organisations.

Nguyen Quang Thai, vice chairman of Viet Nam Economic Association, said: "Viet Nam should think about changing its growth model to ensure the sustainability of future growth."

He said the current high inflation and macroeconomic instability are due to the current growth model – characterised by maximum exploitation of natural resources.

But this model is no longer appropriate in current situation, he said, adding changes should be made to enable it to adapt to the changing environment.

"Restructuring of the economy must be undertaken systematically and receive the support of the whole country," he said.

The Government has to create a more equal policy environment in order to encourage development of the private sector, especially small and medium enterprises, he said.

Enterprises, for their part, should come up with a long-term vision and find effective ways to enter both domestic and overseas markets.

Meanwhile, consumers should effect savings in their daily expenditure.

Vo Tri Thanh, deputy head of Central Institute for Economic Management (CIEM) said Viet Nam's financial system has been rated "weak" in current times. He suggested the banking system also be restructured, the central bank be made independent and commercial joint stock banks overhauled.

He emphasized the need to restructure banks, especially those in weak financial health and have poor management capacity, "because they were exposed to numerous risks such as low liquidity and high bad debt ratios."

These factors may lead to macro-economic instability, he said.

Tran Dinh Thien, head of Viet Nam Institute of Economics said Viet Nam has faced many challenges like high inflation, volatile exchange rates, balance of payments, and financial and monetary market instability.

There were also other shortcomings such as poor infrastructure, electricity shortage and low quality manpower, he said.

He said inappropriate allocation of resources in different sectors in recent years has resulted in an unbalanced economy.

"The country needs to clarify the details of economic restructuring and focus on the quality of development.

"Viet Nam should adjust its strategy to attract foreign investment, give priority to manufacturing and support industries, and promote co-operation among domestic businesses," he said.

There's also a need to develop transportation and other infrastructure in economic zones and industrial parks as part of the restructuring efforts, he added

The aim was to create a fair, competitive environment for all economic sectors.

Bui Quang Tuan, deputy head of Viet Nam Institute of Economics said if the strategy is to focus on building and strengthening state-run groups, the restructuring effort would fail, and foreign investors would be discouraged.Foreign direct investment had been a major force in Viet Nam's economic development. The country should work out a suitable strategy to attract more and make full use of it, he said.

Conference to focus on restructuring

The 2011 Viet Nam Finance Conference and Exhibition themed "Restructure national finance: policy challenges, and linking and integrating tendency" would be kicked off in Ha Noi on September 28, organisers said on Wednesday.

The eighth Viet Nam Finance, previously named Viet Nam ICT in Finance, will be co-organised by the Ministry of Finance and the International Data Group (IDG Viet Nam).

The three-day event would include a conference in which leaders, State agencies and experts would discuss opportunities, challenges and lessons of post-crisis financial restructure and Viet Nam's vision and policies, as well as the strategic orientation in modernisation of State budget collection management, said Pham Doan Quan, deputy chief of the Finance Ministry Secretariat.

Along with the conference, the exhibition space will be reserved to showcase and introduce an overall IT system development strategy in the finance sector. Local enterprises and IT providers will have rooms to display their products and IT application solutions.

The event would be of particular significance to the Ministry of Finance, which was focusing on IT development and deployment to create effective cost-saving services in e-finance in its financial strategy for the 2011-20 period, Quan said.

IDG ASEAN general director Le Thanh Tam said that since 2004, Viet Nam ICT in Finance had proved to be an effective marketing channel in IT development for the finance sector.

Widespread IT application in finance had helped the sector to receive multi-dimensional feedback to meet the key demands of national industrialisation and modernisation, he said.

The seventh CIO Summit & Awards will also be jointly held on September 28 by IDG Viet Nam, the National Steering Committee on Information and Technology, Ministry of Information and Communications, the Ministry of Home Affairs and the Viet Nam Chamber of Commerce and Industry, to honour outstanding chief information officers in Viet Nam and other ASEAN nations.

Sugar makers seek investment

The Viet Nam Sugar and Sugarcane Association (VSSA) has proposed several measures to improve the sustainability and management of the domestic sugar industry.

In a meeting last Saturday, the VSSA asked Prime Minister Nguyen Tan Dung to allow sugar factories to access more bank loans so they can make payments to sugarcane farmers, who need to invest in more crops.

VSSA vice chairman Do Thanh Liem said that, because the sugar production industry operated from October to May, refineries needed large amounts of capital within a short time to pay sugarcane sellers and transporters. Most of that capital usually came from bank loans, he said.

But the Government has limited credit growth of commercial banks to only 20 per cent.

"The Prime Minister should issue a national sugar reserve policy prepared by the Ministry of Industry and Trade to ensure stable supplies of sugar for markets at home and abroad," he said.

The association also recommended a decree be issued to establish rules for the sustainable expansion of sugarcane harvesting for ethanol production.

The decree should also allow the sugar industry to sell energy to the Electricity of Viet Nam (EVN) at a price equal to the electricity rate charged by wind-power plants.

The association also asked the ministries of Industry and Trade and Agriculture and Rural Development to allow sugar imports from July to November to make up for sugar shortages in the domestic market.

The association called on the two ministries to issue national standards on raw sugarcane materials to ensure the quality of domestic sugar products, and to develop measures to fight sugar smuggling.

For the 2010-11 sugarcane crop, which began in September last year and finished in July, a combined farming area of 271,000 ha harvested around 15 million tonnes.

Average productivity was 60.5 tonnes per ha, 8.8 tonnes higher than the previous crop, according to the association's general secretary Nguyen Hai.

"Domestic sugar firms produced 1.15 million tonnes of sugar, a year-on-year increase of 260,460 tonnes while the average sugar reserve was 9.8 CCS (Commercial Cane Sugar), little higher than the previous crop's figure," Hai said.

"In general, production for the 2010-11 crop was better than the previous crop, thanks to farmers as well as sugar producers. Farmers also made more money thanks to the agriculture ministry's policy," he said.

Under the ministry's direction, sugar processing plants bought every tonne of sugarcane with 10 CCS at a price equal to the selling price of 60 or 70 kilos of refined sugar.

Hai, however, also said that the sugar industry had met difficulties when the industry and trade ministry allowed the import of 250,000 tonnes of sugar when localities nationwide entered the peak pressing season.

Consequently, sugar prices dropped fromVND20,000 in the early crop to VND16,000 per kilo in May.

Meanwhile, sugar refineries struggled to sell sugar, resulting in an inventory of sugar of 685,709 tonnes. These changes badly affected production and market stabilisation.

To ease the situation, the association asked the ministries to stop importing sugar and prevent illegal sugar imports.

It asked sugar refineries to protect the profits of both farmers and producers.

According to the Ministry of Agriculture and Rural Development, the country will have about 282,000 ha under sugarcane in the 2011-12 crop, an increase of 11,000 ha as compared with the 2010-11 crop.

In the new crop, domestic sugar production is expected to be 1.4 million tonnes plus 78,000 tonnes of imported sugar, under Viet Nam's World Trade Organisation commitments. This supply would be enough to satisfy domestic demand.

PetroVietnam signs a $451.3 million contract in Algeria

PetroVietnam Exploration Production Corporation (PVEP) and partners, Thailand's PTT Exploration and Production Pcl (PTTEP) and Japan Gasoline Corporation on Sunday signed a US$451.3 million contract with Algerian state energy firm Sonatrach.

The 31-month lasting oil building deal will be implemented at Bir Seba mine in southern Algeria.

Under the deal, PVEP and two partners will build a 20,000 barrel-per day-capacity oil treatment centre, a 1 million-cu.m-per day gas transportation plant, two oil pipelines, an electricity plant and a water separation plant.

Oil output is expected to reach 20,000 barrels a day in 2014 and 36,000-40,000 barrels in 2016.

Also under the deal, Sonatrach will receive 51 per cent of oil output and income of its joint-venture.

PetroVietnam contributes 40 per cent of the joint-venture's total capital.

Meanwhile, Vietsovpetro - the Russian-Vietnamese oil and gas joint venture, has announced on Saturday it successfully launched Moc Tinh drilling platform's sole with its weight 11,000 tonnes, and height of 136m.

It is the biggest-weight domestically-manufactured drilling platform sole in Viet Nam.

PV