RoK shares experiences in public procurement bidding

Bidding and e-bidding cooperation between Vietnam and the Republic of Korea (RoK) will create favourable conditions for businesses from both countries in public procurement activities.

Le Van Tang, Director of the Bidding Management Department under the Ministry of Planning and Investment (MPI), made the statement at a seminar on Vietnam-public procurement bidding in Hanoi on March 27.

The seminar organized by the MPI and the Korean Public Procurement Service provided a good chance for bidders from the two countries to seek cooperative opportunities, especially in public procurement bidding.

Participants from the two countries exchanged experiences in public procurement bidding for ministries, departments, localities and businesses, discussed legal documents when joining the bidding market and introduced public procurement bidding and e-bidding systems.

During the seminar, Vietnam and the RoK signed a memorandum of understanding on cooperation in public procurement bidding and e-bidding.

Uncertainty makes stocks decline

Stocks extended this morning's losses to the afternoon session as investors again felt uncertain on the economic look.

The Ministry of Planning and Investment on Wednesday reported a sharp rise in companies filing for bankruptcy in the first quarter. In HCM City, 526 enterprises completed procedures for dissolution at the HCM City Department of Planning and Investment, up 23.8 per cent year-on-year, while over 5,000 others filed paperwork with the City Tax Department to shut down operations.

The Ha Noi counterpart has yet to complete its calculations but confirmed the number of dissolved companies continued to rise in March. In the first two months of this year, the number of firms filling for bankruptcy in Ha Noi rose by 4.3 times over the same period last year.

In addition, reports of slowing industrial production and exports raised concerns over the possibility of stagnation.

On the HCM City Stock Exchange, the benchmark VN-Index was down 1.5 per cent to close yesterday's session at 439.63 points. Trading value dropped 25 per cent from the previous session, totalling nearly VND1.05 trillion (US$50 million), while volume of trades declined 10 per cent to 74.5 million shares.

Blue chips tumbled with 21 of the 30 leading shares by market value and liquidity closing down, including 4 which dropped to their floor prices, while only three rallied, driving the VN30 Index down 1.2 per cent to 498.48 points.

Losers overwhelmed gainers by 198-63 overall.

Financial shares remained the most active in HCM City, with Sacombank Securities (SBS) and Eximbank (EIB) each seeing over 3.3 million shares changing hands. But while SBS slid 4.6 per cent to end at VND6,300 ($0.30), EIB edged up 0.6 per cent to finish at VND17,200 ($0.82).

On the Ha Noi Stock Exchange, the HNX-Index fell a more substantial 3.08 per cent to 73.20 points.

Value of trades declined slightly over Wednesday but still stood high at VND941.2 billion ($44.8 million) with 93.6 million shares changing hands.

Decliners nearly quadrupled over advancers, with Habubank (HBB), the most heavily-traded code nationwide on a volume of 14.7 million shares, settling down 4.3 per cent at VND6,700.

VN targets green growth
 
Viet Nam is currently in the process of developing a "green" gross domestic product (GDP) index which is expected to be ready for use in 2014.

With support from the UK's Foreign Commonwealth Office, Viet Nam's Central Institute for Economic Management (CIEM) and the General Statistics Office are conducting research to develop a methodological framework for a national Green GDP Index.

According to Nguyen Manh Hai from CIEM, the traditional GDP which is currently applied in Viet Nam does not account for the costs of pollution and natural resource exhaustion.

The Green GDP will include the depletion of natural resources and costs of pollution in its calculations.

Deputy director of CIEM Vu Xuan Nguyet Hong said that the economic development of Viet Nam in the past two decades had heavily relied on natural resource extraction with high energy use and rapid growth of polluting industries.

"The current GDP is no longer an adequate indicator of economic growth," she said, adding that a Green GDP was indispensable for sustainable development policies.

Research has revealed that the Green GDP index is often lower than the traditional index.

"The real number might be worse," Hong said, adding that the Green Index would provide a more comprehensive and accurate view of the economy.

Hong also stressed that it would be a very hard road ahead for the Green Index to be made available in 2014 because environmental accounting was still new to policy-makers and statistical practitioners in Viet Nam.

The country should first focus on building natural resources and pollution accounts, which were the most important, said Hai.

The natural resource account would provide information on the availability and reserves of the nation's natural resources, while the pollution account would estimate the real costs of pollution. "The most urgent work now is to prepare data for accounting," he added.

In 2006, China issued the world's first Green GDP, accounting for the year 2004.

Under Prime Minister Decision No 42, the Green GDP would be included in the national system of socio-economic indices by 2014.

Farmers can't afford ‘good practices'

Farmers in the Cuu Long (Mekong) Delta are jettisoning Good Agricultural Practices since they are not getting adequate returns on the large investments they have to make to obtain GAP certification.

For VietGAP, for instance, they have to meet some 70 criteria and pay around VND20 million (US$950) per hectare of orchard per year.

In case of GlobalGAP, there are more than 300 standards and it costs at least $3,100, according to Vo Tong Xuan, a professor from Long An-based Tan Tao University.

The certificates serve to assure consumers about the quality and food safety at each stage of cultivation, animal husbandry, or aquaculture.

But most farmers did not enjoy the premium for their products they should have.

For instance, more than 90 per cent of GAP-certified dragon fruits in central Binh Thuan Province were exported through illegal channels to markets like China, Malaysia, Hongkong, and Thailand, the provincial Dragon Fruit Development Research Centre admitted.

As a result, they fetched just normal prices, it said.

Only small quantities were exported to Europe, Japan, and the US, markets that are willing to pay extra for high quality, the Binh Thuan Department of Rural Development and Environment (DoNRE) said.

Another fruit, star apples, met with the same fate. The Lo Ren Vinh Kim Star-Apple Co-operative in Tien Giang Province, one of the first to get GlobalGAP certification — in 2008 - sold only 20-30 per cent of its members' products at high prices, and the rest at normal rates.

The co-operative's members have decided not to renew their GAP certification, which is valid for one year.

A large number of farmers in the delta had signed up to apply the practices since 2007.

Tien Giang, the first province to embrace the concept, had nearly 300ha of orchards with GlobalGAP/VietGAP certificate by the end of last year.

Ben Tre Province had more than 150ha of orchards belonging to 300 households.

Binh Thuan has expanded its dragon fruit-growing area from 3,000ha in 2009 to 5,000ha, with more than 6,600 farmers participating.

In the beginning, to encourage farmers to adopt the international standards, many companies involved in exports persuaded them to obtain the GAP certification and even subsidised it.

Local governments, including those of Tien Giang, Long An, and Vinh Long, provided the companies soft loans to encourage the production of high-quality fruits.

But the companies as well as authorities failed to help the farmers build brands for their products or find lucrative outlets for them.

Economists said it is necessary to have someone who can guide the farmers and help them find markets.

Each locality needs to have a business with the capacity to financially support and promote the exports of high-quality fruits to demanding markets.

Xuan also bemoaned the lack of co-operation among enterprises, between enterprises and farmers and buyers and suppliers.

"At the end of the day, the farmers are the ones to lose."

The Binh Thuan Department of Natural Resources and Environment said there was no co-operation among companies and they had been always in competition with each other in trading dragon fruit.

This lack of co-operation between companies and farmers also ended up costing at least one company dearly. Hoang Hau Dragon Fruit Company Limited lost millions of dollars since it bought dragon fruit from unknown sources and its European partners refused to buy since the fruits failed to meet quality standards.

Farmers are one by one abandoning GAP practices and going back to their traditional way of farming also due to the high cost of getting the certification.

Agricultural exports to reach $6b
 
Agricultural exports are forecast to reach nearly US$5.9 billion in the first quarter of this year. This figure is on par with the same period last year, according to Minister of Agriculture and Rural Development Cao Duc Phat.

The minister said the export values of major traditional Vietnamese agro items posted $3.2 billion, a decline of 14 per cent. Fishery products stood at $1.2 billion, up 9 per cent, and forestry products reached nearly $922 million, a year-on-year increase of 6 per cent.

Demand for rice greatly declined in the first quarter, despite the decreasing competitive pressure from major rice exporter Thailand due to a policy that ensures Vietnamese farmers a high purchase price. However, Viet Nam must compete against other rice exporters like India, Myanmar and Pakistan that sell at a lower price.

The total rice exports in the first quarter reached 1.3 million tonnes, a turnover of $681 million, down 32 per cent in quantity and 29.5 per cent in value over the same period last year.

Indonesia remains the largest rice importer, accounting for one-third of the volume and value of Vietnamese exports. The remarkable growth in rice exports since early this year include Hong Kong, mainland China and Taiwan. Vietnamese fragrant rice has gradually taken consumers confidence of these importers with a growth rate between two and four times over the same period last year.

Viet Nam's rubber exports are also in a dismal situation due to the global decline in rubber prices. Additionally, the major consumption market of Vietnamese rubber is China, which now has a large inventory. As a result, rubber massively increased in volume by 40 per cent, but export value declined nearly 10 per cent over the same period last year.

The Eurozone debt crisis may be one reason that coffee consumption decreased in the EU market. Domestic coffee exporters have therefore enhanced their exports to new markets with remarkable growth recorded in Indonesia (9 times), Algeria and Mexico (4 times). The total coffee exports reached 504,000 tonnes worth $1 billion, down nearly 12 per cent in quantity and 14.3 per cent in value.

Though the largest importer, tea exports to Pakistan have also seen a decline of two-thirds over the same period last year. The total tea export in the first three months reached 29,000 tonnes with a turnover of $41 million.

Cashew exports saw high growth, with the country exporting 31,000 tonnes at $222 million with 6.6 per cent increase in volume and 8.5 per cent in turnover.

Despite the difficulties encountered in the EU market, seafood exports have seen a substantial growth compared to other farm products. Besides the decline of the EU, including a drop of 22 per cent in Germany over the same period last year, Vietnamese fishery products have sold well in Japan, South Korea and Mexico. However, MARD has warned exporters of the biggest concerns relating to food safety and hygiene.

RK Engineering Plant inaugurated

RK Engineering, a wholly foreign invested company from Japan yesterday inaugurated a high-pressure resistance tank, tank top, heatproof material and equipment plant in Dinh Vu Industrial Zone in the northern city of Hai Phong.

Speaking at the inauguration ceremony, the company's general director Yuzuru Tsuchiya said they were aiming to provide high quality products to the Asian market at competitive prices.

The US$14 million project would process 300 to 480 billion tonnes of products annually to serve the petrochemical and food industries.

Most of their finished products would be exported to Japan and other Asian countries.

Construction of the plant started last July, and it should be ready to go into operation next month as scheduled.

Industrial production slows to 4.1% in Q1

Index of industrial production (IIP) in the first quarter of this year surged only 4.1 per cent over the same period last year, the slowest level for the past five years, the General Statistics Office (GSO) reported yesterday.

In last year's economic downturn, the index still increased by 9.3 per cent during the same period.

Vu Quang Ha, GSO expert, attributed the pessimistic result to the low 3.2 per cent surge in the processing-manufacturing and mining industries, which account for more than 75 per cent and 17 per cent of the country's total industrial production value, respectively. Growth among the industries during the same period last year was 12.4 per cent. Among the processing-manufacturing industry, the IIP for fertiliser, cement, engine vehicles, iron and steel decreased between 9 per cent and 19 per cent over the same period last year.

Ha said the industries faced consumption difficulties, both in domestic and export markets, causing production to shrink as a result of high inventory. The industrial sector consumption index surged only 0.5 per cent as of March 1 resulting in an inventory index of 34.9 per cent against 19.8 per cent during the same period last year.

However, production and distribution of the power, gas and water industries surged 13.7 per cent compared with 9 per cent in last year's corresponding period.

The Ministry of Planning and Investment said industrial production during the first months of the year faced many challenges due to accelerating input costs, high interest rates, low consumption and high inventory.

Small and medium-sized enterprises and those in the processing and manufacturing industry were the most vulnerable, it said. Due to the economic difficulties, the ministry reported that more than 2,200 firms dissolved and another 9,700 firms registered to cease operations or did not pay tax in the first three months, a 6 per cent surge over the same period last year.

The ministry recommended the Government to intensively focus on boosting industrial production as it was a key factor to help the country maintain a GDP growth of 5-5.6 per cent this year. The industrial sector last year contributed roughly a third of the country's GDP value.

Meanwhile, experts called on the Government to cut lending rates to help ease difficulties for businesses as part of measures to accelerate the economy.

Province suggests incentives for new auto assembly plant

Quang Nam Province has called for special incentives for the Chu Lai-Truong Hai Automobile Engine Manufacturing Plant which is expected to be established in Chu Lai Open Economic Zone.

The US$206 million plant is planned to receive technology transfer from the South Korea-based Hyundai Group.

Huynh Khanh Toan, vice chairman of the Quang Nam People's Committee, told Dau Tu (Vietnam Investment Review) newspaper that the Government was considering incentives in taxation, land lease and loans for the project.

Under the province's proposal, the plant is set to enjoy a series of incentives among preferential policies from the Key Mechanical Programme.

Specifically, the province suggested that the project should be allowed to borrow State investment loans from the Viet Nam Development Bank by up to 85 per cent of its total investment capital during a 12-year period.

In case the investors borrow loans from foreign countries, the Government should guarantee the loans for the plant, the proposal said.

In terms of import tax policies, the province proposed a zero import tax rate applied for imported materials, accessories or semi-products that domestic manufacturers were unable to produce. The province also proposed the State Bank of Viet Nam make foreign currencies available to help projects import equipment and machines easily.

It suggested a 10 per cent corporate income tax rate should be applied for the plant's life and it should be exempt from corporate income tax during the first four years of profit and half the suggested corporate income tax thereafter for nine years.

It was proposed the project should receive support for trade promotion expenses in foreign countries for at least five years.

A peppercorn rental of $1 for 10ha of land with upgraded infrastructure is proposed to apply during the life of the project estimated at 70 years.

If approved, the plant would become the first ever project receiving first priorities.

Last year, Quang Nam proposed a plan to establish a national auto manufacturing hub in Chu Lai Open Economic Zone with a total investment capital of $500 million. However, several incentives for the project were rejected by the Ministry of Finance (MoF).

In November last year, the MoF rejected a proposal from Quang Nam Province to offer special incentives to Hyundai Motor Co in the zone.

Thai firms ink deal to boost investment in border zone
 
Enterprises from Viet Nam's central Ha Tinh Province and Thailand's north-eastern Nakhom Phanom Province on Monday signed seven agreements to invest in Ha Tinh's Cau Treo Economic Zone.

The signing took place at an investment promotion seminar in Nakhom Phanom, where provincial chairmen committed to co-operating in education, traffic, trade, services and tourism development.

Traffic connections would soon be established to facilitate trade between the two provinces, they said.

At the event, Commercial Counsellor Nguyen Thanh Hung introduced Viet Nam's investment policies and described some of the advantages to investing in the country.

Hung said economic and trade relations between the two countries had strongly developed over the last few years. Bilateral trade totalled US$9.3 billion last year, and Thailand invested in 264 projects in Viet Nam with a total capital of $6.7 billion, ranking 11th among all countries and territories with investments in Viet Nam.

Tourism co-operation was undergoing continuous development, with a significant number of visitors travelling to the countries' twinned provinces which had generated a considerable number of jobs in these areas, he said.

Vietnamese Ambassador to Thailand Ngo Duc Thang said he expected more Thai enterprises and investors to soon make decisions to boost investment in Ha Tinh.

Cau Treo Economic Zone is located in the border area of Viet Nam and Laos on the East-West Economic Corridor. It is one of nine international border gate economic zones which the Government has prioritised for development in master plans until 2020.

Major sectors in which the Ha Tinh People's Committee called for investment into the zone during the 2011-15 period include industrial park infrastructure, urban and tourism complexes, consumer goods production, processing, installation, recycling, trade, services, hotels and restaurants.

Khanh Hoa Province lures Japanese enterprises

Japan's second largest tuna processing corporation Sojitz Corp has said there was potential for tuna cultivation in the central province of Khanh Hoa, according to a survey conducted by Sojitz and the Viet Nam Association of Seafood Exporters and Producers (VASEP).

Sojitz was considering investing in Khanh Hoa and hoped to co-operate with Vietnamese enterprises on the project, VASEP said.

Pomina Group gears up advanced steel mill

The Pomina Group put into operation the Pomina 3 Steel Mill, worth VND2.4 trillion (US$114.3 million), in the mid of this month at the Phu My Industrial Zone in the southern province of Ba Ria-Vung Tau.

It has a capacity of 1 million tonnes per year. The plant is equipped with advanced European technology to produce high quality steel billets.

Pharmaceutical plant opens in Binh Duong

The Hasan-Dermapharm Co Ltd, a joint venture between the Vietnamese Hasan Pharma Co Ltd and the German Dermapharm AG Corporation, inaugurated a pharmaceutical production plant worth VND150 billion (US$7.1 million) at the Dong An Industrial Zone, Thuan An Town, in the southern province of Binh Duong last Saturday.

It was the second plant to be opened by the joint venture in Viet Nam. The company specialises in production of the antibiotic Betalactam and the bactericidal antibiotic Cephalexin, with capacities of 250 million and 100 million tablets per year, respectively.

The joint venture was set up in 2008 and focuses on the research and development of prescription drugs with European quality standards.

Thua Thien-Hue revokes resort investment

The People's Committee of the central province of Thua Thien-Hue has revoked the investment certificate for the Thuan An Resort due to delays in investment and construction.

The project was licensed in August 2008 with a total investment capital of VND288 billion (US$13.7 million), covering an area of 8.7ha in Thuan An Town, Phu Vang District. Construction was expected to be completed in December 2011, but so far the investor has only advanced VND75 million ($3,571) in compensation to local residents.

Quang Tri builds new latex processing facility

A new latex processing plant with targeted annual output of 5,000 tonnes was kicked off yesterday in the central Quang Tri Province.

The VND50 billion (US$2.3 million) factory, overseen by the Quang Tri Trading Company, will cover 10ha in Cam Lo District.

Accordingly, production will probably commence in August after about 800ha of rubber trees are harvested over a total area of 4,000ha in the district.

The plant aims to diversify Vietnamese rubber products and meet export demand as well as reduce poverty by creating jobs for thousands of local rubber tappers and workers.

The facility targets earnings of VND300 billion ($14 million) per year.

Fines set for consumer rights violations

The Government issued Decree No 19/2012/ND-CP on March 16, providing for sanctions for administrative violations in the area of consumer rights violations. For each administrative violation, the violating organisations and individuals shall be given a warning or fined up to VND70 million (US$3,349). Based on the nature and seriousness of violation, the violaters shall face additional sanctions such as loss of licence or professional practising certification or confiscation of property. Violations of warranties on goodsshall be fined from VND5 million ($238) to VND70 million ($3,349), according to the value of such goods. The decree, which takes effect on May 1, also sets sanctions for false advertising and offering shoddy goods or goods or services that harm or risk of harm to life, health or property of the consumer.

Fishermen's radios exempt from licensing requirements

The Ministry of Information and Communications issued Circular No 03/2012/TT-BTTTT on March 20 providing a list of radio engineering devices exempted from licence for use of radio engineering frequencies. The circular exempts three groups of radio engineering devices: (i) devices with short range, limited capacity; (ii) devices placed on fishing vessels with a frequency band of 26.96 MHz to 27.41 MHz; and (iii) devices for receiving only. The radio engineering devices exempted from licence shall not be allowed to jam devices officially licensed to use the same frequencies. The circular takes effect on May 10, revoking Circular No 36/2009/TT-BTTTT of December 2012 and Decision No 09/2006/QD-BBCVT of April 2006.

Banks face tighter foreign currency position rules

The State Bank of Viet Nam issued Circular No 07/2012/TT-NHNN on March 20, regulating the foreign currency position of credit institutions. Under the new rules, banks will not be allowed to exceed a foreign currency position of 20 per cent of their capital instead of the previous 30 per cent. The total foreign currency position of branches of foreign banks with registered capital of US$25 million or less shall not exceed $5 million. The circular also provides a method for calculating foreign currency positions. It takes effect on May 2, replacing Decision No 1081/2002/QD-NHNN of October 2002 and Decision No 1168/2003/QD-NHNN of October 2003.

Taxing issue leaves customs in a spin

Tax arrears collection work between customs bodies and auto firms has hit a road block.

Auto firms to pay big sums in tax arrears include Honda Vietnam, Toyota Vietnam, Ford Vietnam, GM Daewoo Vidamco and Vinamotor.

General Department of Customs deputy chief Hoang Viet Cuong said the tax arrears issue was basically settled after the Ministry of Finance (MoF) enacted Document 13113/BTC-CST presenting preferential import tariffs on auto parts of October 3, 2011.

Shortly after the MoF’s guiding decree was in place, customs bodies and relevant firms embraced work to quickly address unsettled problems. However, much work remains to be done.

In light of Document 13113/BTC-CST auto firms’ tax arrears review will be divided into two periods - from April 15, 2006 (the date MoF’s Circular 19/2006/TT-BTC guiding auto components and parts classification came into force) to December 31, 2010 and 2011.

An auto firm representative told VIR customs bodies and firms had just finalised tax calculations for file records in 2011, while huge file records for 2006 to 2010 had yet to be touched.

“Customs bodies require firms to submit entire import declaration records from 2006 to 2010 for making comparisons. There would be a huge pile of relevant files since at some firms such papers number 100,000 copies per year,” said the representative.

Under current MoF regulations to enjoy parts tax rates, total value of imported components not satisfying regulated breakdown level must not exceed 10 per cent of total component value for assembling or manufacturing whole car units of all car types in a specific year.

Auto firms, failing to meet MoF’s regulations, will incur the tax rates equal to those levied on completely-built car units (CBUs) which all exceeded 72 per cent of the car value in 2011.

In respect to the component set breakdown level as a basis for setting tax, the Ministry of Science and Technology just made public Circular 05/2012/TT-BKHCN effective from April 30, 2012 prescribing methods to define cars’ localisation rates to amend Decision 05/2005/QD-BKHCN on breakdown levels of automobile parts. Accordingly, breakdown levels of imported auto parts relevant to body and frames will be divided into six major groups. Auto frames over 3.7m long are allowed for electrostatic painting before it is imported into Vietnam.

Wood processors, handicraft firms in tough spot

Although fortunate enough not to declare bankruptcy, a great number of local wood processors and handicraft manufacturers have had to bargain away their machinery or borrow loans at exorbitant monthly interest rates just to be able to maintain production.

“We have been operating perfunctorily since early March as there is no capital left,” said Nguyen Van Nguyen, chairman of the Binh Minh bamboo curtain cooperative based in Ho Chi Minh City’s Phu Nhuan District.

Nguyen said most banks have refused to offer loans to the cooperative because he has no assets for collateral.

“While we used to seek financial assistance from the cooperative alliance’s fund, we are now rejected for the same reason,” lamented Nguyen.

The chairman thus had to borrow from friends and relatives, with interest rates at times as high as 10 percent a month to maintain production, as production, material, and labor costs have all more than doubled.

“There are plenty of orders, but how could we accept them when we have no capital?” he said sadly.

“Should the tense situation fail to ease up in the next few months, the cooperative will certainly have to dissolve.”

Similarly, the active, busy production atmosphere at the Binh Duong-based Hung Thai wooden clog manufacturer has faded into the past, thanks to the lack of export orders.

At the 2,000-square-meter facility there are now only 50 laborers working, one-fourth the size of the former workforce.

“Traditionally, we have a lot of orders to export to Japan and the EU from now to the end of the second quarter,” said the company director Thai Van Anh Hung.

“But we have so far received no orders from the partners, while the completed contracts have also fallen by a half compared to last year.”

The owner of a wood processing company in Binh Duong Province was recently ‘pleased’ to announce that he had managed to sell all of the company’s plants and machinery at a price that was 50 percent lower than the purchase rate, making for a loss of tens of billions of dong.

“In 2008, when the company was founded, orders from the EU were placed on a regular basis, but after all input and output expenses, and bank interests were counted, we had few or even no profits left,” he said.

However, the following year witnessed a sharp fall in signed contracts, forcing the company to lay off a third of its workforce, he added.

“Moreover expenses, including raw material, space rental, labor wages, and interest, have constantly skyrocketed, and we have completely failed to afford these new costs.”

Dang Quoc Hung, deputy head of the Handicraft and Wood Industry Association of HCMC (HAWA), said that to deal with the hurdles, businesses have opted to either sell their machines, or struggle to find alternative sources of capital to remain operational.

“They have to continue operations, even when this will bring losses,” said Hung.

“If businesses come to hibernation, they still have to spend a great sum to cover the expenses of warehouses, machine depreciation, labor wages, and bank interest.”

Hung himself runs a company that processes coconut products for exports, which is sharing the same fate of the handicraft sector.

“The company now only operates four to five days a week,” said Hung.

A large number of wood processing businesses are in “clinically dead condition,” he said, citing unofficial figures.

As part of the domino effect, laborers working for the wood processors and handicraft manufacturers, have also fallen into a tough spot.

One such laborer is Nguyen Van Thien, who works for a handicraft facility in District 12. Thien has not gone to work for more than a month, since there is nothing to do there, he said.

His wage has dropped to only VND2 million a month, from VND6 million a year ago.

“Around 100 of my coworkers have left the company for another job, since our employer has run out of capital, and has delayed our wages since the end of last year,” said Thien.

Similarly, Luong Thi Minh, an employee of the TP wood processing plant in District 12, said most of the company’s laborers have returned to their hometown, or switched to selling fish at the markets.

“I have also had to find another job since the company owes me several months of payments,” stated Minh, adding that her house rental has recently surged by VND200,000 a month, and so have other expenses.

“How can I make ends meet without a job and salary?”

2-year low CPI rise in Q1/2012 raises public doubt

Vietnam’s consumer price index (CPI) in the first quarter of this year saw the lowest quarterly CPI rise in the last 2 years with the recent 0.16 percent rise in March.

Vietnamplus.vn, a news website of the Vietnam News Agency, on Saturday reported that the slight CPI rise in March “took everyone by surprise since both state agencies and local experts had forecast the index to rise 0.4-0.5 percent in March.”

“Some independent economists have forecast a 0.8-1 percent CPI rise.”

“As a result, when the CPI was announced to edge up 0.16 percent, many experts say the General Statistics of Vietnam (GSO) could have been under some pressure to release ‘nice’ figures to calm down the public as well as pave the way for the state utility group to hike electricity price,” Vietnamplus reported.

“The input costs for electricity production have risen significantly compared to those in the last price hike on December 20, 2011.”

Previously, the country's CPI in March is expected to increase slightly following a sharp fall in both Hanoi and Ho Chi Minh City, recording a 0.19 percent and 0.12 percent rise over February.

“The CPI was believed to go up, driven by a dramatic rise in the prices of petrol and gas in early March,” the English portal of Voice of Vietnam reported.

Economist Ngo Tri Long told Thoi Bao Kinh Te Sai Gon newspaper that he was surprised at the CPI announcements by local authorities as the domestic market management department of the Ministry of Industry and Trade had earlier forecast the March CPI to hover around 0.4-0.5 percent.

Long expresses some reservation about the figures released by local authorities, saying any fuel price spike always resulted in a sharp increase of the CPI in previous years. As reported by Thoi Bao Kinh Te Sai Gon, fuel retail prices were hiked by 10 percent when CPI data were collected.

Local media last year questioned the accuracy of a CPI report by a province in September. The province later adjusted down the figure from over 1 percent to roughly 0.9 percent.

Given the current tough economic conditions, experts suspected a number of provinces might have deliberately given out fine CPI figures to appease the public, according Thoi Bao Kinh Te Sai Gon.

Tran Thi Hang, Deputy Director of GSO, said the March CPI deceleration “is not ‘strange’ because the prices of food and catering services, accounting for 40 percent of the CPI calculation, dropped 0.83 percent this month.”

The food prices in the market have dropped 1.21 percent compared with February, due to the impact of rice export stagnancy, she said.

As the general yield of the Winter-Spring crop in the Mekong Delta is high, a surplus supply has helped to bring down the rice price.

Local retail rice prices in the market have decreased VND500-1,000 a kg.

The prices of other kinds of food have also decreased 1.25 percent due to falling demand, coupled with plentiful yields. Specifically, fresh food prices decreased 2.43 percent, with pork, beef, and chicken prices decreased by 2.79 percent, 0.65 percent, and 1.82 percent respectively.

Vegetable prices decreased 2.99 percent thanks to favorable weather and plentiful supply.

The fuel price adjustment only contributes to the overall CPI increase of about 0.08 percent in March, Hang said.

The fuel price group does not make up a great proportion of the CPI calculation, and as GSO stopped collecting data for the CPI calculation on March 15, the increased fuel prices are not fully reflected in the CPI.

Specifically, the transportation group has the third biggest price increase of 1.08 percent due to the impact of fuel price hike.

Additionally, the housing and construction materials group had the strongest rise of 2.31 percent, but only contributing 0.23 percent to the overall national CPI rise.

An expert told Thoi Bao Kinh Te Sai Gon newspaper the slower growth of this month's CPI is somehow reasonable.

The group of transport services and that of housing, electricity, water, fuels and building materials only account for 8.87 percent and 10.1 percent respectively of the basket of items used to calculate the CPI, he said.

The food and catering services group making up nearly 40 percent has tumbled this month, he explained.

In early March, the Hong Kong-Shanghai Banking Corp (HSBC) said in a report on macro economy and Vietnam's prospects for March that the recent 10 percent petroleum price increase could hardly affect CPI.

The bank predicted the hike would have only slight implication on the overall CPI. Moreover, import tax for several fuel items such as gas, diesel oil and petroleum has eased.

Additionally, food prices that account for 40pct of commodities' basket to calculate CPI has experienced a sharp decline over the recent time, which could make up for fuel price escalation.

Tuoi Tre on Friday reported that the impact of fuel price adjustment began to seep into consumer prices. After the first price adjustment in March, the market is now waiting for a new wave of price increases.

Price increases in the context of declining purchasing power present a number of firms and retailers the risk of mounting unsold stocks.

The items affected by the price increases are mainly essential commodities such as MSG, seasoning salt, and soy sauce.

After receiving a new batch of Maggi seasoning salt, the owner Phuong Dung in Hoang Hoa Tham market in HCMC’s Tan Binh District was shocked to see a VND30,000 increase for a box of 10 packages.

“This increases the retail price of seasoning salt at the market to VND54,000 a package, " she said, adding that in such a context, shoppers wills surely walk away when seeing the new price.

In most markets, many distributors have simultaneously launched new rates for small shop/kiosk owners.

Kim Oanh in Hoang Hoa Tham market, said the wholesalers of goods, such as soy sauce Tam Thai Tu, Chinsu, MSG, and seasoning salt, have demanded around VND2,000 more for each commodity, stating that it is due to hiked fuel prices.

“Such continuous price increases make it hard for me to find a customer to sell my goods,” Oanh said.

Mai Lan, owner of a grocery in Pham Van Hai market in Tan Binh District, said since the beginning of 2012, the distributors had repeatedly increased the price, VND1,000-2,000 each time.

“Seasoning salt has risen from VND7,000-8,000 a packet to VND15,000, and we continued to see our goods stockpiling,” she said.

Besides the food items, some consumer items, such as raincoats, electronics, and cosmetics in HCMC markets began snapping to price hikes.

The owner of Anh Thu kiosk in Pham Van Hai market said rain coats have inched up VND5,000-10,000 each.

"Previously, you can get a good one for VND20,000, but now even a VND30,000 one cannot match the quality of the previous VND20,000 one.”

Marketing staff of cosmetics firm Kao said the prices of some cleanser products would rise 2-3 percent when delivered to the market, primarily to compensate for transport costs.

After the price increases in early March, many supermarkets continue to receive notice of price increase from a number of suppliers, with some goods like processed food, cosmetics, and soft drinks expected to increase by 5-7 percent.

The sales department of the Co-op Mart supermarket chain said it has prepared new price tags for at least 30 products from suppliers, many of them are seasonal items such as beverage, processed food, and household plastic.

Many supermarkets said they were considering whether to maintain the free service delivery for bills worth more than VND200,000 as the petrol prices have increased significantly.

VN assured of Dutch support in exporting to EU

The Netherlands, with its economic, trade and export advantages can provide support for Vietnamese goods to enter the EU market, Dutch General Consul in Ho Chi Minh City Jos Schellaar told a seminar on boosting Vietnamese exports to European markets held in HCMC recently.

Jos Schellaar described the Netherlands as a gateway to the EU market, helping to connect ports and industrial parks with the inland.

The Netherlands market also accounts for 57 percent of distribution centers in the EU and a large market share in warehousing and the chemical industry, he said.

Meanwhile Italian Trade Commissioner to Vietnam Bruna Santarelli said the Italian trade commission had offered free services to help Vietnamese enterprises expand investment and business in Italy, the 7th largest exporter and the 8th largest importer globally.

Vietnam-EU two-way trade value has increased from US$4.1 billion in 2000 to $24.29 billion at present, with Vietnam’s export to EU reaching $16.5 billion.

But in order to increase Vietnamese goods’ competitiveness and boost exports to this market, experts say enterprises should try harder to meet the increasing demand for product quality as well as implement more effective market approach strategies.

Between the 2011-2013 period, Vietnam benefits from the EU’s generalized system of preferences (GSP) with a tariff reduction of 3.5 percent, which is applied to 25 percent of the country’s total exports to EU.

According to Tran Ngoc Quan, Deputy Head of the European Market, the Ministry of Industry and Trade, Vietnamese enterprises should seek professional help in order to make full use of existing trade commitments and agreements, as well as in protecting their interests in the EU market.

Vietnam may remove deposit rate ceiling by July: report

Vietnam's central bank may remove a ceiling on deposit rates in June or July if liquidity in the system continue to improve and inflation slows, a state-run newspaper reported on Tuesday, quoted the governor.

The State Bank of Vietnam also aims to cut the rate ceiling by an average 1 percentage point each quarter of sooner if the situation improves, Governor Nguyen Van Binh told a government meeting on Sunday, according to the report.

Earlier this month the central bank cut key rates on dong loans and deposits, by 1 percentage point, for the first time in nearly three years and its governor was then quoted as saying commercial lending rates could now fall, helping businesses.

The central bank currently caps interest rates on dong deposits for one year or more at 13 percent, short-term deposits at 5 percent and dollar deposits at 2 percent.

Vietnam Q1 economic growth slows to 3-year low

Vietnam's economic growth in the first quarter of 2012 slowed to a three-year low, according to government data.Vietnam's economic growth in the first quarter of 2012 slowed to a three-year low as domestic demand weakened and as local industries grappled with high inventories.

First-quarter growth slowed to 4 percent from a year ago, the lowest rate since January-March 2009, according to government data. The southeast Asian economy grew 6.1 percent in the last quarter of 2011.

"The economy continues to grow, but at a pace slower than the same period in previous years," the government said in a statement issued late on Sunday, citing Planning and Investment Ministry data.

Even though inflation is slowing, Vietnam's economic growth has been hurt partly by stockpiles of products in the industrial sector, Deputy Minister of Planning and Investment Cao Viet Sinh told Reuters last week.

"We do not expect the GDP growth rate to reach a high level in the first quarter," Sinh said. "The reason was industrial production has been facing difficulties due to high inventory," adding that prices have been stabilising since the end of 2011.

Industrial production in the first quarter slowed to 4.1 percent from a year ago, from 9.3 percent in the same period in 2011, according to a report from the Planning and Investment Ministry delivered at a government meeting on Sunday.

In 2011 the industrial sector contributed about a third to Vietnam's gross domestic product value.

People have cut spending, Sinh said. "We need to keep watching the risks of high prices in the coming months as we expect price fluctuations to continue," he added.

High interest rates may have deterred investment, hindering economic growth, analysts said.

"Vietnam's low economic growth in the first quarter was a result of the fact that many domestic companies did not access loans to boost their production due to high interest rates," said Giang Trung Kien, head of research at FPT Securities in Hanoi.

Experts have called on the government to cut lending rates to help ease difficulties for businesses as part of measures to accelerate the economy, the statement said.

Vietnam's central bank asked lenders last Thursday to bring down lending rates following cuts in major interest rates as the government aims to ease the burden on businesses.

On Sunday Prime Minister Nguyen Tan Dung and government officials met to consult with more than 30 Vietnamese scientists and economists on macro economic policies, especially those in finance, monetary sectors, the government's statement said.

"Keeping inflation at a single digit and maintaining the economic growth of around 6 percent in 2012 requires a great effort," the statement cited economists as telling Dung and other government officials at the meeting.

Inflation in March slowed to an annual rate of 14.15 percent, from 16.44 percent in February, and the consumer price index for this month also rose just 0.16 percent from February, the lowest in 20 months, government statistics show.

Exports in the first three months of 2012 rose 23.6 percent to US$24.5 billion while imports rose 6.9 percent to $24.77 billion.