Market rallies as VAMC moves ahead

The market was buoyed by general confidence and the information that the national asset management corporation (VAMC) would be officially operational in July with shares showing robust growth on both stock exchanges last week.

The benchmark VN-Index on the HCM City Stock Exchange gained a cumulative 2.6 per cent during the week, finishing Friday at 500.24 points, while the HNX-Index on the Ha Noi Stock Exchange climbed 3.6 per cent to a close on 62.61 points on Friday.

Selling pressure increased towards the end of the week as many investors sought quick profits but strong market confidence helped absorb those shares.

The trading volume on the southern bourse increased over 60 per cent over the previous week, averaging 69.3 million shares worth nearly VND1.16 trillion (US$55.2 million) per session.

On the northern market, the volume of trades jumped 82.5 per cent compared with the previous week, totalling 49 million shares worth almost VND409 billion ($19.5 million) per day.

Increased liquidity along with both indices surpassing their short-term technical barriers was consolidating investor confidence that cash flows were returning to the market. However, many analysts warned that the current rally would not be as strong as expected.

According to Nguyen Tuan, head of the FLC Securities Co's analysis department, the market rises last week were supported by the information of the VAMC establishment in July but, because all the terms related to its operation had already been discussed and reflected in previous uptrends, this information would not affect the market as strongly as might otherwise have been expected.

"The market shows signals of short-term profit taking but not in a massive way. The foundation of the current rally is quite good so the price rises will not likely stop in the near future, but accompanied with several declining sessions," Tuan said.

Nguyen The Minh, an analysis of Viet Capital Securities Co, said: "The market tends to rise in a narrow band. The VN-Index could reach its next short-term support level of 520 points and the HNX-Index 65 points. However, the market may experience a few corrections to test demand at new support levels."

Minh said exchange-traded funds would restructure their porfolios in July and the increases or decreases in the number of shares in their investment baskets would affect the market.

Foreign sectors continued to conclude last week as net buyers on the two markets but their buys fell sharply compared with previous weeks. According to many analysts, foreign investors also increased their sales to realise cash profits as they were net sellers in the last two sessions.

They were responsible for a net buy of just VND8.3 billion ($395,000) worth of shares on the HCM City market, focusing on blue chips like steelmaker Hoa Phat Group (HPG), PetroVietnam Drilling and Well Services (PVD) and Southern Rubber Industry (CSM).

They also picked a net buy of VND20.7 billion ($986,000) worth of shares on the Ha Noi Market, favouring speculative stocks like NET Detergent (NET), PetroVietnam Drilling Mud (PVC) and Sai Gon-Ha Noi Bank (SHB).

Yen devaluation troubles exporters

 The Japanese yen has dropped by nearly 20 per cent over the Vietnamese dong in the last six months, leaving exporters worried about further losses if the currency continues to be devalued.

Cao Van Sang, general director of Sai Gon Plastics JSC, who exports plastic parts used in airport trolleys, said his company had agreed to reduce payments on contracts by 0.02 per cent, with the condition that payments be made in US dollar.

Previously, Japanese customers had wanted his company to receive payments for contracts in either yen or dong, he said.

Six months ago, the exchange rate fell from VND246.05 to VND205.34 on May 21, a fall of VND40.71 per yen.

The yen's devaluation has also affected Vietnamese exporters of farm produce.

Nguyen Pham Thanh, general director of Highland Dragon Co, which is based in Song Than IP No 1 in southern Binh Duong Province, said that local companies that manufacture canned tuna for the Japanese market had been hit by the yen's devaluation.

"The price of imported goods in general, and tuna products in particular, rose sharply in the past several months. This caused Japanese importers to re-consider signed import contracts," Thanh was quoted by Tuoi Tre (Youth) newspaper as saying.

Nguyen Van Kich, general director of the Hau Giang-based seafood joint-stock company Cafatex, said that Japanese buyers of Cafatex's shrimp were facing difficulties because selling prices had risen because of the yen devaluation.

"The price of imported shrimp from Viet Nam to Japan rose by more than 20 per cent. And, on top of that, the devaluation of the yen caused shrimp prices to rise by 40 per cent in the Japanese market," said Kich.

To avoid risks if the yen becomes stronger against other currencies, Japanese importers and distributors have changed their mode of purchasing from long-term contracts for large volumes of shrimp to smaller volumes after selling their stockpiles.

Nguyen Trung Dung, commercial counsellor at the Vietnamese Embassy in Japan, said he was worried about the growth in export turnover of Vietnamese goods in Japan this year.

According to the Trade Affairs Department in the Vietnamese Embassy in Japan, Vietnamese exports to Japan amounted to $3.6 billion in the first four months of 2013.

Major increases in Viet Nam's exports to Japan include a 15 per cent jump in wood products to $234 million.

Footwear exports rose to $121 million from $103 million in the first four months of 2012. Garment exports to Japan reached $697 million in the same period.

The department also reported a slump of $268 million in crude oil, $15 million in coal sales, and a 4.8 per cent drop in seafood exports from Viet Nam to Japan in the first four months of this year.

Rice buy mapped out

The Ministry of Agriculture and Rural Development (MARD) plans to buy 1 million tonnes of rice for reserve beginning June 15 over a two-month period.

The aim is to stabilise paddy/rice prices and to prevent a sharp drop in prices at harvest, which could lead to losses for farmers in the next summer-autumn crop.

According to MARD's figures, the southern region is expected to harvest more than 9.3 million tonnes of paddy, or more than 4.65 million tonnes of rice, in the coming summer-autumn crop that ends in late August.

Of that amount, at least 3.1 million tonnes of rice will be for sale, and the rest kept in reserve for national security and for future export.

From June until the end of the year, the country will keep 5.6 million tonnes of rice in reserve, including 3.75 million tonnes of summer-autumn and autumn-winter crops for export, according to Nguyen Ngoc Thua, head of MARD's Production Department for Agriculture-Forestry-Seafood Processing-Salt.

Thua announced the figures at a meeting held by the ministry in the Cuu Long (Mekong) Delta on Thursday.

A representative of the Ca Mau Department of Agriculture and Rural Development said the planned reserve purchase period, from June 15 to August 15, is not suitable for Bac Lieu and Ca Mau provinces, as the summer-autumn crop falls in mid-September.

Truong Thanh Phong, chairman of the Viet Nam Food Association, said that many provinces in the Cuu Long (Mekong) Delta would prefer to have reserve purchases based on global market demand and supply.

"The world market right now has a large volume of rice in surplus, which has forced Viet Nam to adjust rice production and reduce rice cultivation areas, and increase areas devoted to other crops," he said. "Viet Nam imports large volumes of maize and soybeans every year."

If the world market becomes more favourable for Vietnamese rice in June and July, the volume of rice for reserve purchase should be lower, said Phong.

A lack of proper facilities also hinders food companies from making plans to buy rice for reserve, he added.

To help farmers sell all the paddy harvested in the summer-autumn crop, delegates at the meeting asked MARD to increase the amount to 1.5 million tonnes and extend the time for purchasing since harvest times vary in different localities.

City plans restructuring

The volume of growth in HCM City's high-tech manufacturing sector, which has been a major exporter for the city, is expected to rise further under a master plan that will restructure the city's economy.

Under the plan, high-tech products and services would account for 40 per cent of the city's GDP by 2015.

With major markets in the US, Japan, the EU and ASEAN, the city's export turnover for high-tech products is predicted to rise nearly sixfold by 2015, compared with the $499 million of hi-tech exports in 2010.

Sai Gon Hi-Tech Park said it would target total exports of $10 billion by 2015.

Also, by that time, products made in high-tech parks would have 25 per cent of locally-made parts, and 40 per cent by 2020.

Since 2011, the city has been promoting its high-tech sector, particularly its support industry. More locally made parts can help meet the demand of major manufacturers like Intel and Nidec, it said.

The city has also scaled up projects to make more electronic and IT products at Sai Gon Hi-Tech Park, Quang Trung Software Park and other industrial parks in Tan Binh and District 7.

According to the city's Department of Industry and Trade, the IT sector had 63 per cent growth last year, with total turnover of VND86 trillion (US$4.1 billion), including VND78 billion in hardware and VND8 trillion in software.

The Sai Gon Hi-Tech Park's export turnover rose from $1 billion in 2011 to $2.1 billion last year, while Quang Trung Software Park attained local revenue of VND1.03 trillion ($49 million) and export turnover of $50.7 million.

During a meeting with a National Assembly delegation in April, the Department of Industry and Trade said exports of high-tech products from HCM City, such as computers, electronics and components, in 2012 reached $2.46 billion.

This was triple the previous year's figure and accounted for 11.4 per cent of last year's total exports in HCM City.

In the first four months of this year, the city's exports of hi-tech products rose to $654.8 million, an increase of 53.8 per cent compared with the same period last year.

Exports of electronics and components from HCM City are expected to reach $3.2 billion this year.

Major importers of HCM City's goods include Japan, Singapore, mainland China, Hong Kong and the US.

Resource shortages cause public concern

Meeting future energy needs is an important issue facing seven out of 10 people in Viet Nam, according to a rencent survey conducted by Shell Viet Nam.

Other issues of concern were employment and cost of living, the survey showed.

By 2030, it is estimated that the world will need 40 – 50 per cent more energy, water and food to keep up with rising demand, according to the United Nations and Shell scenarios. This could place significant stress on these vital resources.

Many Vietnamese are increasingly aware of these issues and the role they can play in addressing it.

For eight out of 10 Vietnamese surveyed, water, food and energy shortages, as well as higher energy prices, were seen as having the greatest impact on Viet Nam in the future.

"Growing concerns about the world's vital energy, water and food resources, and the impact of climate change, have driven many Vietnamese to think about the future of energy more seriously," said Nguyen Anh Tuyet, Shell Viet Nam country chair.

"To meet growing needs, the world will have to mobilise all forms of energy over the coming decades," Tuyet said.

"But the challenge of ensuring sufficient supplies of energy, water and food is magnified by the linkages between them. These challenges will need to be addressed intelligently and in unison."

The "Future Energy Survey" showed that Vietnamese most favoured a mix of sources to help meet future energy demand.

Most preferred solar energy (72 per cent) as the country's energy source, followed by hydro energy (58 per cent) and wind power (47 per cent).

Using bio-fuels was also viewed as being better for the environment and a means to reduce carbon dioxide emissions, which was considered very important to a majority of the Vietnamese community.

The survey also revealed that nearly two-thirds of Vietnamese believe the general public has a role to play in creating a better energy future.

Many Vietnamese are already taking individual steps, such as using less energy (78 per cent) and using energy-saving products (74 per cent).

However, they view collaboration as the key to building future energy solutions, with government playing the most significant role.

Firms plan to hire more people in the coming year

Enterprises nation-wide plan to enlarge their staff this year by up to 68 per cent over 2012, according to a report by recruitment website vietnamworks.com.

The website's first online employment report for 2013 is based on an annual survey of its customers.

In comparing 2013's first quarter to that of 2012, the company reported stability in the total number of job postings that it received.

"While this stability in total jobs may sound a little unexciting, we regard it as a great base for the rest of the year," said Carlton Pringle, Chief Executive Officer of VietnamWorks.

"2012 kicked off in a period of high inflation and general growth, and high wage inflation had more people moving jobs and so on, so our Q1 numbers reflected that 2013 commenced with the hangover of late-2012, and general economic malaise, so to return an almost identical quarter YOY is quite a solid foundation for a strong 2013.

"Further – and most encouragingly – we saw our best week in history at the end of February 2013, followed by a strong month in March with YOY 9 per cent growth in terms of job postings."

Other important findings show Ha Noi as the best city in the country to find a job at present, ahead of HCM City and Da Nang, according to a ratio that measures the number of listings to the working age population of the three major cities.

The best industries for young job seekers remain IT, notably software development in Da Nang, where job growth in this industry has tripled; electronics (up 28 per cent); consulting (up 32 per cent); textile and foot-wear (up 38 per cent); pharmaceuticals and bio-tech (up 66 per cent); and retail and wholesale (up 105 per cent). These industries have proved themselves recession-proof with all of them recording listing growth.

Various administrative/clerical sectors, marketing, and architecture/interior design have not fared as well, with declines of 38, 31 and 23 per cent, respectively.

Tax cuts boost small-car sales

Car manufacturers in Viet Nam are rolling out small cars at reasonable prices in an effort to speed up the market.

The trend follows a draft plan to develop the Viet Nam automobile industry by 2020 with a vision to 2030 by cutting consumption tax and ownership registration fees by 50 per cent for vehicles with cylinder capacity of less than two litres.

According to the Viet Nam Economic Forum, automobile makers have said if the draft plan is approved long-term, they will strongly invest in manufacturing.

General Motors Viet Nam is one of the manufacturers who stand to benefit. It recently introduced the new, automatic, one-litre Chevrolet Spark for VND377 million (US$18,000). Huyndai Thanh Cong is offering Elantra models from VND699 million to VND756 million (from $33,300 to $36,000).

Honda Viet Nam in HCM City has displayed its City model, but has yet to announce the price. In July, Vinaxuki will offer small-size VG models targeting customers in urban areas. They will sell from VND220 million to VND350 million.

The director of Hyundai Thanh Cong, Le Ngoc Duc, said policies for the industry were so changeable that his company did not dare to maintain investment in manufacture.

Duc said if the Government's coming policies were preferential and stable for domestic manufacture, his company would boost assembling in Viet Nam and attract and encourage foreign part producers to join in the country's industry.

Director of General Motors Viet Nam Gaurav Gupta said the recent cut in ownership registration fee from 20 per cent to 10-15 per cent of a car's value had improved the market further and raised makers' turnover.

"We are waiting for a renovation in Viet Nam's automobile industry policies. If the Government shows preference for domestic manufacture, we will surely push up investment to increase the local-made rate, as well as roll out various new models with reasonable prices," he said.

According to the director of Vinaxuki, Bui Ngoc Huyen, if the special consumption tax rate and ownership registration fee were cut for small cars, buyers would save from US$5,000 to $7,000 for each unit they purchase.

"This would bring prices down. It's really good news, not only for those who dream of possessing cars, but also to automobile makers, who hope to boost sales," said Huyen. "We wish the new policies are issued as soon as possible."

"Competitiveness remains hottest for roles in administration and accounting and import/export roles, where we typically see the highest numbers of applications per job and the most job seekers specifying those industries as desired employers," said Pringle.

Businesses want more guidance from tax office

Nearly 70 per cent of business leaders in Viet Nam believe that taxes in the nation are geared towards stimulating economic growth.

This is revealed in a quarterly report released last Friday by consultant Grant Thornton International in a survey of 3,000 businesses in 44 countries, which was conducted in January and February.

The report added that two-thirds of world businesses would like more tax guidance from tax authorities on what was acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders.

Seventy five per cent of eurozone businesses were keen for more guidance compared to just 54 per cent in North America. Similarly 85 per cent of businesses in Latin America and ASEAN nations were more likely to look for advice compared with their peers in Asia and the Pacific (67 per cent).

Francesca Lagerberg, global tax leader at Grant Thornton, said: "Reducing liabilities across borders can offer significant tax savings, so it is interesting to see how open business leaders are to improving guidance and global co-operation.

Business leaders are also critical of what the tax regimes in their economies are set up to achieve. Just 31 per cent globally said their local tax laws and policies were geared to stimulate economic growth.

Senior executives in Southern Europe (11 per cent) and Latin America (23 per cent) were particularly scathing.

However, in Viet Nam, business leaders were much more positive, with 66 per cent believing that taxes were geared towards stimulating economic growth.

Moreover, 49 per cent of business leaders believed their current tax regime did not bring enough economic participants into the tax base, although there was a large divergence of opinion between G7 businesses (63 per cent) and their BRIC peers (17 per cent).

A further, 41 per cent of businesses do not believe their tax regimes are sufficiently redistributive, led by those in North America (54 per cent).

These figures are in contrast to Viet Nam, which clearly believes that the tax regime does bring enough economic participants into the tax base. Only 6 per cent feel the base should be wider.

Lagerberg, added: "Tax is a cost to businesses in its simplest form so it is perhaps unsurprising to see few associate it with economic growth. Moreover, many mature economies around the world are undergoing severe fiscal retrenchment and business leaders are seeing taxes rise even as growth remains flat.

Industrial production rallies

The industrial production index (IIP) increased 6.7 per cent year-on-year in May, placing total growth for the first five months at 5.2 per cent.

This represented an improvement over the first quarter, but still dragged behind last year's growth, according to the General Statistics Office.

Still, the office's economic specialist Vu Quang Ha said that the move showed industrial production was rallying after its recent slump.

Manufacturing and processing, which accounted for over 70 per cent of all industrial production, expanded 5.5 per cent in the first five months. But last year, they grew 6.3 per cent.

Some products in these areas saw significant growth, such as casted metals (up 15.3 per cent), leather (up 14.7 per cent), paper and paper products (up 12.7 per cent) and beverages (up 11.8 per cent).

But several major products did not grow and some even declined. Textile fabric rose only 5.5 per cent, crude oil increased a scant 3.3 per cent and raw iron and steel were down 7 per cent.

The consumption index increased 5.7 per cent year-on-year as of May, while the inventory index, though gradually declining, remained high at 12.3 per cent.

The inventory index went up significantly for many major products, such as computers and electronics and optical goods (up 46.8 per cent), electric devices (up 26.3 per cent) and furniture (up 32.2 per cent).

According to statistics office experts, the index was not showing signs of easing, with inventories of produced goods at 74 per cent in April and nearly 77 per cent in the first four months. The secure level is regarded as 65 per cent.

Lacoste studies business conditions in Quang Nam

A delegation from the French Lacoste group has made a fact finding tour of the Phuoc Ky Nam Joint Stock Company in the central province of Quang Nam as part of a plan to seek investment opportunities here, according to the Quang Nam Newspaper Online.

During their trip last week, Global President of Lacoste Footwear Andy Simister and his entourage also held a working session with local administration officials.

Quang Nam officials briefed the guests on the local labour supply, land policy and investment procedures as well as preferential treatment for investors.

The delegation made positive assessments about the investment conditions of Quang Nam province as well as its target partner’s capacity.

Earlier the French group also sent delegations to the province to study the possibility of opening a processing facility.

Vietnam, Italy promote business links

Vietnamese and Italian timber businesses launched a connectivity programme in HCM City on May 27 to increase trade exchanges.

The programme, initiated by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), the Chamber of Commerce of Italy’s Pordenone province, and the Italian Chamber of Commerce, aims to create a forum for the two countries’ timber businesses to exchange information, transfer technology and establish partnerships.

HAWA President Nguyen Chien Thang said the wood processing industry in Vietnam has made significant progress in recent years, with its exports rising 17.9% in 2012 to US$4.67 billion. In the first four months of this year alone, the industry exported products valued at around US$1.57 billion.

To meet the increasing demand of the export market, HAWA is making great efforts to seek potential partners through trade and investment promotion programs. The Vietnam-Italy business links program is one of the activities to help HAWA meet its goal.

Italian Ambassador to Vietnam Lorenzo Angeloni said Vietnam is keen on learning about economic achievements and advanced technologies around the world. Its small-and-medium-sized enterprises have established cooperative ties with their foreign partners through trade and investment promotion forums.

Promotion agencies should create the best possible conditions for businesses to expand their relationships and penetrate international markets, Lorenzo said.

The Italian businesses joining the program seek to gain a better understanding about Vietnam’s potential and to meet directly with their Vietnamese partners.

During their stay in Vietnam until May 30, the Italian businesses will make a fact-finding tour of a number of companies and factories in Ho Chi Minh City and other southern provinces.

Seminar highlights consumer rights

The Vietnam Standard and Consumer Association organised a seminar in Hanoi on May 27 to discuss domestic enterprises’ social responsibility to protect consumer rights.

Representatives from the Ministry of Industry and Trade, the Vietnam Standard and Consumer Association and businesses agreed that the first and foremost responsibility of enterprises is to ensure the quality of goods.

The association was asked to improve its role in connecting enterprises and consumers.

Last year, it successfully addressed 83 percent of the 961 complaints, which mainly focused on restaurant services, e-commerce and property sectors, cosmetic and pharmaceutical products.

Representatives suggested enterprises boost their connections with retailers and associations across the country to protect both their own and consumers’ rights.

E-commerce sales to reach US$1.3 bn by 2015

Vietnam’s e-commerce market is expected to earn US$1.3 billion in revenue by 2015, announced the Vietnam E-commerce and Information Technology Agency (VECITA).

Total earnings of local e-commerce deals in 2012 were estimated at US$700 million, while 47 e-commerce exchange centres registered with VECITA generated US$354 million in sales.

Meanwhile, the proportion of non-cash payment was reduced to 11.8 percent in 2012.

In specific, bank card payment accounted for only 0.2 percent of the total value of non-cash payment during the same period. As of June 2012, there were 47.2 million bank cards released locally.

Major Cambodia complex backed by VN investment

The largest complex of sugarcane, ethanol and thermal power plants in Cambodia was inaugurated in Kratie Province's Sombour District on Sunday.

The main investment has come from Kamdhenu Ventures Cambodia Limited (KVCL), a joint undertaking between Viet Nam with 51 per cent of equity capital and an unspecified foreign partner.

According to the KVCL, the US$90.7 million plant is one of the biggest foreign investment project in Cambodia. They are investing $25.3 million, with the rest coming from the Viet Nam Bank for Investment and Development and its branch in Cambodia (BIDC).

Located in northeastern Cambodia near the Mekong River, the plant spanning 7.635ha – including 50ha for factories – was built with Japanese and Indian technologies in late 2010.

The factories can produce 3,500 tonnes of sugarcane and 30,000 litres of ethanol per day. The thermal power factory will produce 20MW per day.

According to the investor, as well as providing economic benefits, the plant will significantly contribute to social security, employment opportunities and income for local people. More than 500 plant labourers and thousands of workers in the community will benefit, making annual an revenue of about $23 million, contributing to the economic development of Cambodia.

On the same day, Vietnamese Five Stars Group signed a co-operation contract to provide fertiliser to grow the sugar cane in the plant.

Addressing the ceremony, Cambodia's Deputy Prime Minister Yim Chay Ly emphasised that the opening of the complex was an outcome of the initiative between the Prime Ministers of Cambodia and Viet Nam.

Agriculture export earnings take tumble

Viet Nam earned over US$10.7 billion from agro-forestry and fishery exports in the first five months of this year, down 4.6 per cent compared with the same period last year, the Ministry of Agriculture and Rural Development (MARD) has reported.

The decrease was due to difficulties in both markets and prices, which affected major agricultural and fishery products, according to MARD.

Meanwhile, the country's agricultural import turnover rose 4.9 per cent against last year, pulling the trade surplus of the industry down to $3.7 billion.

In the Jan-May period, the country shipped abroad 2.86 million tonnes of rice, bringing home $1.26 billion, representing decreases of 3 per cent in volume and 8 per cent in value year-on-year.

China remains Viet Nam's largest rice customer, consuming 38.7 per cent of Viet Nam's total export, followed by Malaysia 6.1 per cent, Singapore 5.6 per cent, Hong Kong 4.2 per cent and Indonesia 4.1 per cent.

Coffee businesses delivered 697,000 tonnes to foreign importers, down over 23 per cent year-on-year, for an earning of $1.49 billion, a drop of nearly 22 per cent. Germany and the US were the two biggest markets, making up 13.5 per cent and 11.8 per cent, respectively, of Viet Nam's total export value.

Tea export also saw a 5.6 per cent decrease in volume, with 48,000 tonnes shipped abroad, but enjoyed a 1.3 per cent rise in value to $73 million thanks to higher price.

Among agricultural products, cashew and pepper recorded the most impressive growth in both volume and value.

Viet Nam exported a total of 85,000 tonnes of cashew nuts for $535 million, up 9.7 per cent in volume and 0.8 per cent in value. The US, China and the Netherlands were key markets of Vietnamese cashew.

The five-month pepper export volume rose 13.9 per cent to 68,000 tonnes, earning $446 million, up 9.6 per cent.

At the same time, the country earned $2 billion from exporting wood and wooden products, a surge of 10.4 per cent. Except for Germany, rises were seen in other major markets such as the US, China, Japan and the Republic of Korea.

In the contrary, seafood export saw a 5.6 per cent decrease in the first five months of 2013, with $2.2 billion. The US, Japan and the Republic of Korea, which are Viet Nam's leading seafood consumers, saw a considerable decline in their imports, with a corresponding year-on-year decreases of 1.1 per cent, 4.9 per cent and 20.2 per cent.

In face of the situation, MARD has directed businesses to further improve their product quality, while expanding to new markets to further step up exports of key agro-forestry and fishery products.

Lending jumps 2.3 per cent

Total lending of the whole banking system on May 22 increased about 2.3 per cent over the end of last year, the State Bank announced yesterday. Dong loans were up 4.6 per cent while foreign currency lending declined 8.1 per cent.

There was a high possibility that general credit growth would reach 2.5-3 per cent at the end of this month, which would be a good sign after lending declined 1.7 per cent in the first four months, the central bank said.

Mobilising interest rates for the dong at many credit institutions now hover around 5-7.5 per cent for terms of less than 12 months and 8-10 per cent for terms of 12 months or more.

Enterprises that could prove their financial situation was healthy and their production and business plans were effective could manage bank loans with an interest rate of 7-8 per cent, according to the bank.

Disposable capital in dong of lending institutions met compulsory reserve requirements.

Woodworkers strive for joint ventures with Italian firms

Viet Nam will open offices in Italy to promote investment in many industries including woodworking as part of a programme to develop its small- and medium-sized enterprises.

The plan, developed by the Handicraft and Wood Industry Association of HCM City, has been funded by the Italian Government.

It is now being executed by the United Nations Industrial Development Organisation and Viet Nam's Enterprise Development Agency.

It is aimed at improving the competitiveness of Vietnamese firms through extensive technical assistance programmes to address their main weaknesses like design capacity, marketing, and innovation.

It also seeks to promote partnerships between Vietnamese and Italian firms and business groups, heard a conference titled "Industrial Cluster Enterprises Partnership" to promote the partnerships in HCM City yesterday.

Nguyen Chien Thang, Hawa chairman, said Vietnamese firms had the opportunity to acquire technology and managerial expertise from their Italian counterparts through seminars and training courses organised in the project's first phase.

"The second phase will strengthen technical support to enable more Vietnamese companies to benefit from Italian expertise in several areas," he said.

Italy is famous for high-end wooden products and globally ranks second in terms of export of wooden products after China, he said.

But, like in Viet Nam, most Italian firms in the woodworking sector are small- and medium-sized, and their strengths are design, quality, marketing, and know-how, he said.

Linking up with Vietnamese SMEs, whose strengths are low costs, easy access to Asian markets, Italian firms would enable the two sides to become very competitive in the global market, he said.

But such co-operation remains rare, he said, hoping it would improve and they would establish joint ventures to produce wooden products in Viet Nam.

Attending the conference was a delegation of Italian business executives from the woodworking industry that visited HCM City to meet with their counterparts from more than 25 local companies to exchange information and seek business opportunities.

Michele D'Ercole, chairman of the Italian Chamber of Commerce in Viet Nam, said "During the business event, we could see there are a lot of opportunities for investment co-operation between Vietnamese and Italian companies."

Lorenzo Angeloni, Italy's ambassador to Viet Nam, said by investing in Viet Nam, Italian companies can reach other markets in the region that have huge demand for wooden products.

Thang said Viet Nam can increase wooden products exports to tens of billions of dollars — from US$4.6 billion last year — if the Government and enterprises sit together to come up with a development road map.

Exports in the first five months of the year were worth $2 billion, a year-on-year increase of 10.4 per cent, according to the General Statistics Office.

Thang said demand for wooden furniture in the US is increasing since its housing market has begun to show signs of recovery.

Japan, traditionally a major importer from Viet Nam, is making a shift away from China and importing more from Viet Nam.

Business booming as start-ups soar

The number of enterprises established in the first five months of this year increased 4.8 per cent to reach 31,009, according to the Department of Business Registration Management.

Bui Anh Tuan, the department's Deputy Director, said that for the first time, this number was up from the previous year. In the three-month and four-month periods, the numbers were 14 per cent and 1.2 per cent lower than 2012.

Southern Tra Vinh, Dong Thap and Binh Dinh provinces saw the most newly-founded enterprises in the five-month period, with rates of 188 per cent, 90.9 per cent and 78.5 per cent respectively.

Sectors which experienced high increasing rates saw fewer enterprises founded, such as financial, banking and insurance (down 6.8 per cent), construction (down 7.1 per cent) and real estate business (down 14.3 per cent).

Fewer enterprises were dissolved in May, with only 570, a reduction of 27.1 per cent over last month. About 3,020 enterprises halted operations, 15.4 per cent and 13.5 per cent lower than last month and last year.

These figures show that while the business climate is improving, difficulties continue for enterprises.

Tuan pointed out that the number of enterprises that temporarily halted construction in the five-month period still experienced a 13 per cent increase. However, this was still good news, as it indicated a steady decline from the 26.1 per cent increase of the three-month period and 16.9 per cent increase of the four-month period.

Coal export tax will be raised to 13 per cent

The Ministry of Finance late last week issued Circular 71/2013/TT-BTC amending the export tax on coal (Code 27.01 and Code 27.04) in the export tax list.

Under the circular, export tax on fossil coal, briquette, ovoid coal and solid material made from fossil coal, coke coal and half-coke coal refined from fossil coal, lignite or peat will be raised to 13 per cent from the current rate of 10 per cent.

The new export tax rate will be applied as of July 7 this year.

Hanoi sees tax collection drop due to stagnant property market

Data from Tax Office in Hanoi shows that the City’s tax collection reached VND49.79 trillion in the first five months of this year, accounting for only 33.2 percent of the target, and 85.5 percent of that in the same period last year.

Domestic incomings, excluding from crude oil and land use tax, touched VND42.38 trillion, accounting for 31.8 percent of the target, and 80.3 percent of that in the same period last year.

As for incomings from the real estate market, the tax collectors have just collected around VND1.87 trillion of land use tax, accounting for 15.7 percent of the target and 61 percent of that in 2012.

As for incomings from land lease, collection is VND495 billion, up 31.35 percent year-on-year, but merely 45 percent of the target.

Tax collectors forecast that with such stagnation in the property market, real estate companies will have no revenue to pay tax, which will seriously affect the national budget of the City.

Small scale livestock breeding under threat

According to a survey by the Department of Agriculture and Rural Development in the southern province of Dong Nai, foreign direct investment (FDI) companies tend to suffer fewer losses than domestic farms and households when prices of pork and chicken fall.

Better breeding chicken and livestock methodologies and advanced technology has helped FDI companies lower their cost price.

When pork price falls to as low as VND38,000 a kilogram, FDI businesses still profit while breeding farms lose VND2,200 a kilogram and households around VND5,000 a kilogram.

A kilogram of white industrial chicken fetches only VND14,000, causing a loss of VND8,000 to FDI companies, but for breeding farms it is upto VND17,000.

Officials from the Department of Agriculture and Rural Development in Binh Dinh Province said that blue ear disease and bird flu occur annually, resulting in both price fall and reduction in scale of breeding each successive year.

The number of small scale farms is still high, providing 65-70 percent of total output. Since 2003, diseases have mainly occurred in small scale farms run by households while large scale farms have been able to protect their chicken and livestock with advanced methods.

Nguyen Xuan Duong, deputy head of the Livestock Department under the Ministry of Agriculture and Rural Development, said that pig and chicken breeding has dropped by 2-2.5 percent over the same period last year and by 3-4 percent for buffaloes and cows.

Nguyen Van Bac, deputy head of the National Agriculture Extension Center in HCMC, said that domestic breeders are slow in accessing advanced technologies, thus their cost price is always high.

Dr. Bac has proposed to group households in cooperatives that authorized organs will organize training courses to provide them with breeding knowledge and measures to prevent diseases. They will also help breeders apply advanced technologies to reduce cost price.

Vietnam’s pork output accounts for 42.2 percent to rank first and duck output 22.4 percent to rank second in Southeast Asia.

16 more state-owned enterprises re-organised

In the first five months of 2013, 16 more state-own enterprises (SOEs) have been re-organised under a project to re-arrange and renovate SOEs for the 2011-2015 period.

This was announced at a meeting held by the Steering Committee on Corporate Renovation and Development in Hanoi on May 27.

Among the 16 SOEs, 10 businesses were equitised, 5 others were merged and one new business was established.

Last year, 22 SOEs were rearranged under the project.

By April 2013, the Prime Minister has approved 99 out of 101 projects on SOEs rearrangement and renovation submitted by ministries and branches, localities and businesses, the committee said in a report presented at the meeting.

By May 20, the Prime Minister has also adopted 17 out of 21 reform projects submitted by State-owned groups and corporations, including Vietnam National Textile Garment Group, Vietnam National Oil and Gas Group, Vietnam Electricity Group, Vietnam Rubber Group, and Vietnam Airlines Corporation, among others.

Addressing the gathering, Deputy Prime Minister Vu Van Ninh, who is the head of the committee, noted that the building of mechanisms and policies on re-organising SOES is lagging behind schedule.

He also urged those SOES that already have their re-arrangement plans approved by the Prime Minister, to speed up the work.

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