Major infrastructure investment priorities discussed

Hanoi hosted a Ministry of Planning and Investment (MPI) and World Bank (WB) seminar on June 27 discussing Vietnam’s major infrastructure priorities and methods for selecting projects deserving investment.

Addressing the seminar, Deputy Planning and Investment Minister Nguyen Van Trung affirmed Vietnam’s huge investment demands shows no signs of slowing between now and 2020.

The WB is one of Vietnam’s most important bilateral partners. Vietnam wishes to learn from the organization’s infrastructure experiences and receive its support, particularly in urban development.

Cledan Mandri Perrott, the WB’s Lead Financial Officer in Singapore, said projects should be selected according to the government’s socio-economic plan.

Vietnam’s socio-economic development plan for the 2011–2015 period enumerates 11 priorities - restructuring the economy, developing the economic and industrial sectors, ensuring culture and social equity, environmental protection, addressing natural disasters and climate change, sustainable urban zoning, and efficiently using resources in modern infrastructure construction.

Delegates also shared their experiences in assessing and evaluating infrastructure projects as well as classifying investment.

Cell phone export to UAE reaches US$1.36 billion

Vietnam’s cell phone export turnover to the United Arab Emirates (UAE) were worth US$1.36 billion in the first five months this year, according to the General Department of Customs.

With this, UAE became the largest import market of Vietnam’s cell phones, accounting for more than 17.7 percent of the country’s total cell phone export turnover (more than US$8 billion in the first five months).

Cell phones accounted for nearly 87 percent of Vietnam’s total export earning to this market in the first five months, which reached nearly US$1.6 billion.

Together with cell phones, other commodities with large export turnover to UAE were computer and components at US$53.5 million, pepper at US$29.4 million, and garments and textiles at nearly US$22.9 million.

Vietnam-China Border Trade Fair to open in November

The 13th Vietnam-China Border Trade Fair, themed “Cooperation-Friendship and Integration – Development,” will take place in the city of Lao Cai, in the northern border province of the same name, from November 13-18.

As part of the national trade promotion programme for 2013, the fair is expected to accommodate 650-700 stands run by 500 enterprises from both countries.

The fair is organised annually, alternating between Lao Cai province and China’s Yunnan province, with the goal of promoting trade cooperation between the neighbours.

On display at this year’s event will be a wide range of commodities such as agro-forestry, seafood products, machinery, electronic and electrical devices, handicrafts, fine art products, pottery and wooden furniture.

Several tours in the economic corridor, which links Vietnam’s northern localities of Lao Cai, Hanoi , Hai Phong and Quang Ninh with Yunnan ’s Kunming city, will be also promoted at the fair.

According to Le Tien Dung, Director of Lao Cai province’s Trade, Investment and Tourism Promotion Centre, his province and Yunnan will continue promoting the fair in the run up to November in order to lure even more businesses to set up stalls at the event.

Garments and textiles to enjoy zero percent tariffs

Vietnamese garment and textile businesses are expecting Trans-Pacific Partnership (TPP) signatories to offer their products.

Preferential zero percent tariffs when entering foreign markets. This stage of the international integration process creates a huge opportunity for the Vietnamese garment and textile industry.

In order to receive these preferential import tariffs, garment and textile manufacturers must make use of materials originating in TPP member nations. Businesses are therefore striving to accelerate their rates of localization in the hopes of avoiding squandering such a valuable advantage.

The Government has approved a development strategy for the garment and textile sector until 2020, with a focus one establishing a supply chain that efficiently links businesses.

Major infrastructure investment priorities discussed

Hanoi hosted a Ministry of Planning and Investment (MPI) and World Bank (WB) seminar on June 27 discussing Vietnam’s major infrastructure priorities and methods for selecting projects deserving investment.

Addressing the seminar, Deputy Planning and Investment Minister Nguyen Van Trung affirmed Vietnam’s huge investment demands shows no signs of slowing between now and 2020.

The WB is one of Vietnam’s most important bilateral partners. Vietnam wishes to learn from the organization’s infrastructure experiences and receive its support, particularly in urban development.

Cledan Mandri Perrott, the WB’s Lead Financial Officer in Singapore, said projects should be selected according to the government’s socio-economic plan.

Vietnam’s socio-economic development plan for the 2011–2015 period enumerates 11 priorities - restructuring the economy, developing the economic and industrial sectors, ensuring culture and social equity, environmental protection, addressing natural disasters and climate change, sustainable urban zoning, and efficiently using resources in modern infrastructure construction.

Delegates also shared their experiences in assessing and evaluating infrastructure projects as well as classifying investment.

Vietnam-Singapore trade shows drastic upturn

Bilateral trade turnover and investment cooperation between Vietnam and Singapore sharply increased during the first half of this year.

Vietnam earned US$962.7 million from exports to Singapore in the first five months of 2013, more than 23 percent than the same period last year.

Singapore’s exports to Vietnam were valued at US$4.23 billion, with over US$1.8 billion of the total credited to goods originating from or manufactured in Singapore itself.

With newly licensed and added capital to US$3.41 billion in the first six months of the year, Singapore ranks 2nd among the 45 countries and territories with licensed investment projects in Vietnam.

As of the first quarter of 2013, Vietnam has invested over US$1 billion in 46 Singapore-based projects.

Export earnings from garments for kids increase

Vietnam raked in US$279.3 million from the export of kid clothing in the first five months of this year, up 19.7% over the same period of 2012.

The value is predicted to reach US$351.3 million in June, or a year-on-year increase of 20.2%.

Key export markets, including the European Union, the US, Japan and the Republic of Korea, saw impressive growth.

The US alone accounted for 68.9% of Vietnam’s kid clothing exports in the first four months, and the growth is expected to be maintained in the coming months thanks to positive signs of economic recovery in the market.

The market share of Vietnamese garments for kids was also increased in Russia, Hong Kong, Angola, Pakistan, Israel, Peru, Jordan, and Lebanon.

However, the price of export garments saw a decline of 13.5% compared to a year earlier to US$2.61/item.

Vietnam boosts trade ties with Egypt, Israel, Sudan

A Vietnamese trade delegation led by Deputy Minister of Industry and Trade Le Duong Quang is on a fact-finding tour of three African countries.

At a working session with the Egyptian Ministry of Foreign Trade and Industry (MFTI) on June 26, the two sides discussed opportunities for cooperation in industry, agriculture, fisheries, tourism and pharmacy business.

Quang said despite Egyptian political disorder in 2012, two-way trade turnover hit around US$300 million, up 12% from a year earlier, with Vietnam’s exports to Egypt rising 16% to US$297.1 million.

He insisted that the two sides actively prepare for the 5th meeting between the two inter-governmental joint committees and the 50th anniversary of Vietnam-Egypt diplomatic ties.

Quang affirmed that the Vietnamese Embassy and Chamber of Commerce in Egypt will be a bridge to the promotion of trade exchange between the two countries.

The host expressed hope that Vietnam would cooperate with Egypt in processing products for exports as many processing zones are located in a favourable geographic position.

Earlier, from June 22-25 the Vietnamese delegation visited Israel. It worked with the Ministry of Economy and Trade and the Ministry of Environmental Protection and attended a business conference.

After visiting Egypt, the delegation will fly to Sudan for meetings with government officials and business leaders to learn about the local market trend and trade policy.

Godaco Seafood targets $4.8m profit in 2013

Shareholders of the Godaco (Go Dang) Seafood Co (AGD) have approved the company's business plan for this year, targeting a revenue of VND1 trillion (US$47.6 million) and a net profit of VND100 billion ($4.8 million), up 18 per cent and 3.4 per cent respectively, over last year's targets.

In order to achieve this, the company will install a second fish meal production line in Go Dang Ben Tre, costing VND30 billion ($1.4 million) and purchase an extra 30ha of land for the production of raw materials, reportedly for VND60 billion ($2.9 million).

Construction company warned over auditing

The HCM City exchange decided to place Development Investment Construction Co (DIG) under a warning from yesterday following the opinion of auditors concerning the company's 2012 consolidated financial statement.

This decision was to protect proper investors interests, the exchange said.

According to auditors, DIG did not make provision for the overdue receivables worth VND130.55 billion (US$6.2 million) that were recorded by its real estate business, pushing up the company's profit by the same amount.

SOE cutbacks expected as State tightens belt

The Ministry of Planning and Investment has released draft regulations reducing State funding in State-owned enterprises (SOEs).

Under the proposal, Government interest in State-backed pharmaceuticals, chemicals, finance, credit, vaccines, street lighting, drainage and sanitation enterprises would be cut from 65-75 per cent to 50-65 per cent.

Involvement in tobacco production and airport management would be slashed from 100 per cent to 75 per cent. The airport management reduction aims to attract more private investment.

The State's stake in petrol wholesalers would be reduced to 75 per cent while stakes in the coffee and rubber processing industries would be cut to 50-65 per cent.

The draft regulations are open for public comment.

Loan interest supports sought for major export sectors

The HCMC Department of Industry and Trade has asked the municipal government to provide 100% loan interest support for all non-polluting projects in key industries with an annual export turnover of over US$1 billion each.

The department made such a proposal last Thursday when reporting to the municipal government on planning, investment and development in the four key industries, namely mechanical engineering, chemical, electronics - information technology (IT), and food and foodstuff processing, along with supporting industries in the city.

The department also sought 50% loan interest support for the projects in the industries whose exports reach US$500 million per year.

The entities to enjoy loan interest supports under this proposal differ from those currently receiving supports from the city’s budget in accordance with Decision 33/2011/QD-UBND issued by the HCMC government in May, 2011, regarding the implementation of the projects under the city’s stimulus program.

Since 2009, as many as 59 projects with total capital of VND4 trillion in major and supporting industries have been granted 100% and 50% loan interest supports from the municipal budget, said the trade department.

Among them, there are 19 mechanical manufacturing projects, seven electronics and IT projects, eight chemical projects, four food processing projects, 19 electrical engineering projects and two environmental remediation projects.

However, the policies for industrial profile shift and the incentives for investment and business development are not attractive enough to encourage enterprises to spend on technological innovation and production restructuring to improve their performances, the department remarked.

HCMC had a poor industrial start with approximately 85% of the city-based firms small and medium, making them easily affected by inflation and rising input prices. In addition, their production technology is average or low, and their innovation is low.

As a result, the growths in the key industries in the city are slowing down. The value-added content of industrial production is increasing, but still low, while the percentage of processing remains high although it is falling.

Meanwhile, supporting industries are underdeveloped and not highly competitive. The city’s industrial production still depends heavily on imported materials.

After meetings with businesses and trade associations, the trade department suggested the municipal government send a petition to the Government and relevant agencies, seeking permission for enterprises to pay loan interest sums quarterly rather than monthly. Besides, there should be regulations facilitating business access to low-interest loans for their technological innovation and business expansion.

Moreover, businesses proposed the city should have more preferential policies, offering supports in transport charges and customs clearance, to make it favorable for local firms to bring their products to Laos, Cambodia and Myanmar.

The four key industries account for 57.3% of the city’s industrial profile, with mechanical manufacturing representing 17.1%, chemical 20%, electronics – IT 3.6% and food processing 16.5%.

Qatar firm explores urban development opportunities

Leaders of Construction Development Company (CDC) under Qatar-based United Development Company (UDC) visited HCMC over the weekend to sound out opportunities to join urban development and traffic infrastructure projects in the city.

Khalil P. Sholy, managing director of CDC and founder of UDC, met HCMC Chairman Le Hoang Quan on Sunday along with key executives of the company.

UDC is active in wide range of sectors in many nations worldwide, focusing on construction, urban development, oil and gas, and telecommunications.

HCMC is developing several new urban area and transport infrastructure projects, and CDC is looking for opportunities to invest in these two areas, said Sholy.

“We have heard much about HCMC and we think now is the right time for us to invest here,” he told the city’s leader, adding that CDC had set up a representative office in Hanoi.

He said CDC had experience in developing large buildings and large-scale urban projects. He hoped the municipal authorities would give advice on which projects in the two above areas CDC could invest in.

HCMC is carrying out several large urban projects, like Thu Thiem New Urban Area in District 2 with a planned area of 790 hectares, Hiep Phuoc Port Urban Area with 500 hectares for logistics development, and Northwest Urban Area covering 4,000 hectares. The plans for such projects have been completed and CDC can invest in them, Chairman Quan suggested.

Regarding urban traffic infrastructure development, Quan informed HCMC would develop six metro lines, with lines 1, 2 and 5 to be financed by ODA. The remaining lines are still awaiting investors.

Infrastructure development requires huge capital and high technology, he said. By 2025-2030, HCMC will need some US$60 billion for traffic infrastructure development, but the Government can only address 15% of this capital demand.

Therefore, the city has to borrow ODA funds, issue bonds, and encourage investment under the PPP format.

Sholy said his company would study the projects that the HCMC leader recommended.

SOFRI studies new dragon fruit varieties

The Southern Fruit Research Institute (SOFRI) is joining hands with the New Zealand Institute for Plant & Food Research (PFR) to carry out a project aimed at creating new dragon fruit varieties.

The project will be implemented from 2013 to 2018, with Vietnam to spend 582,000 New Zealand dollars, or around VND9.4 billion, said Luong Ngoc Trung Lap, head of the market research department under SOFRI. However, he did not reveal how much the New Zealand side would spend on this project.

“This collaborative project is expected to produce a dragon fruit variety with red skin and light pink flesh, one with yellow skin and flesh, one with red skin and pink flesh, etc. to meet the diverse demand of the market, increase the value of products and boost income for farmers,” he said.

In Tien Giang and Long An, the two largest dragon fruit growing localities in the Mekong Delta, there is currently some 3,100-3,300 hectares under dragon fruit cultivation. The variety with red skin and white flesh is the most common one.

According to SOFRI, Vietnamese fruit exports totaled US$360 million in 2012, with dragon fruit contributing US$181 million. In the first quarter of 2013, dragon fruit exports fetched US$46.5 million, up 18% year-on-year.

While joining hands in creating new varieties, the New Zealand side will also assist Vietnam in farming techniques and post-harvest preservation to boost exports in the coming period, especially to the choosy markets like South America, Europe, Australia, South Korea and Japan, said Lap.

Outlet the biggest problem for agriculture

Although Vietnam’s agriculture has encountered many unfavorable conditions like extreme weather conditions, prevalent diseases and increasing input costs, the biggest problem is outlet, officials said on Monday.

Nguyen Thi Hong, head of the Planning Department under the Ministry of Agriculture and Rural Development, said at the review meeting in Hanoi that the demand and prices of agricultural products on the global market have embraced the downward spiral since mid-2012 while the supply, especially rice, tends to rise. This has left a direct impact on the overall agricultural export.

According to the agriculture’s report on the year’s first half, most of major exporting products like rice, coffee, rubber, tea and cassava see a decline in both price and export volume.

Coffee is a product which has the sharpest drops of 24.2% in volume and 22.4% in value. Meanwhile, the respective drops of cassava are 19.4% and 15%, rubber 5% and 20%, rice 7% and 10%.

Therefore, agriculture’s export turnover in the first six months is estimated at US$13.53 billion, down 1.7% year-on-year.

Minister of Agriculture and Rural Development Cao Duc Phat said that the low consumption and prices were major obstacles to agricultural production and reduce incomes of farmers.

“We have not ensured a match between production and consumption,” Phat said, explaining that while the volumes of products are equivalent to or higher than in previous years, there is a strong decline in demand, especially the local livestock demand and the global demands of seafood products and rice.

Moreover, although Vietnam has become a big agricultural exporter, quality and food hygiene issues still cause concerns, hindering Vietnam’s products in penetrating the global market. The proportion of farm products returned or included in the list of products needing close inspections in foreign countries is high.

Economic conditions in the year’s second half are forecast to remain unfavorable with slow recovery and instability. As a result, it is unlikely that the farm produce consumption and purchasing power will be improved.

With such conditions, the agriculture ministry will propose to adjust and reduce by some 200,000 hectares of autumn-winter rice in Mekong Delta and northern provinces and plant other crops instead.

The replacement of new crops also needs careful market researches to prepare production plans which can deliver economic efficiency. Besides, the ministry will propose policies to support farmers in dealing with drought and salinity intrusion, building embankments and pumping stations to reduce damages and production costs for farmers.

Bank safety ratios improve slightly

Latest data announced by the State Bank of Vietnam showed that some safety ratios of the banking system improved slightly in the first four months.

As of the end of April, the banking system had total assets of nearly VND5,200,000 billion, a 1.93% increase. Its equity was nearly VND419 trillion, down 1.64% compared to the previous month while its total charter capital inched up 0.39%.

The network’s capital adequacy ratio (CAR) stood at 13.41%, a slight improvement compared to 13.37% at the end of the previous month. State-owned commercial banks, including VietinBank and Vietcombank, had a CAR of 10.15% while that of commercial joint stock banks was 13.83%.

The loan-to-deposit ratio (LDR) of the network was 87.87%, up from 86.22% at the end of March.

However, both return on equity (ROE) and return on assets (ROA) ratios declined sharply to 2.52% and 0.23% from 3.97% and 0.48% a month earlier respectively.

For total assets and equity capital, joint venture and foreign banks saw stronger improvements with total assets growing 9.68% to VND609 trillion while State-run and joint stock banks increased 0.84% and 1.04% respectively.

Joint venture and foreign banks saw equity capital rising 2.73% to VND95 trillion while those of State-run commercial banks and commercial joint stock banks declined 1.03% and 4.33% respectively.

Budget home buyers in Binh Duong offered soft loans

Customers buying low-cost houses of Becamex IDC Corporation will be able to get access to loans of the Government’s low-cost home loan program.

Bank for Investment and Development of Vietnam (BIDV)’s Binh Duong Branch last Saturday signed a cooperation agreement with Becamex IDC to assist civil servants and low-income earners who buy budget homes of the latter.

BIDV will apply a rate of 6% this year and a loan term of up to 15 years. In the following years until June 1, 2023, the interest rate will be 50% of the average rate of other banks but not exceed 6% per year.

Besides, BIDV has pledged to handle loan applications in a maximum of four days upon the receipt of full dossiers from home buyers.

Becamex IDC’s budget housing scheme which is developed at 37 places consists of 64,700 apartments. Each apartment equipped with utilities has an area of 30 square meters and is priced at VND100 million.

The firm has developed projects of this kind in Thu Dau Mot City, Thuan An and Di An towns, Ben Cat and Tan Uyen districts with total floor space amounting to 2.72 million square meters.

Becamex IDC earned over VND18.09 trillion and over VND2.88 trillion in revenues and profits last year.

Riverside plastic embankment falls behind schedule

Construction of some 34 sections of embankment along the Saigon River in HCMC has fallen behind schedule as the quality of the uPVC plastic pickets used for the works made by Saigon Industry Corporation (CNS) are not yet certified.

The city’s Department of Construction in a report to the local government last week said the progress is slow because CNS has yet to announce the quality criteria of uPVC plastic pickets it makes at home.

CNS, meanwhile, said it would only be able to release the information in September.

The municipal authorities in September, 2012 allowed CNS to deploy 34 uPVC plastic embankment projects with a total cost of more than VND600 billion. As per the plan, CNS will advance capital to make the plastic pickets to carry out the construction items to deal with landslides and flooding along the Saigon River with a total length of some 60 kilometers. The city’s State budget will reimburse CNS later.

Nguyen Van Tho, general director of CNS, said his firm has sent the samples of uPVC plastic pickets to the Quality Assurance and Testing Center 3, or Quatest 3, for quality verification. CNS will make an announcement on the plastic picket quality right after Quatest 3’s approval, he told the Daily last Friday.

Besides, the construction department noted, although CNS is entrusted as the general contractor of engineering, procurement and construction (EPC) for the 34 schemes, the company has not been licensed to provide designing and construction services.  This means that CNS isn’t qualified for the EPC general contractor role for the schemes, so the enterprise needs to set up a join venture with other companies to do the job.

CNS commissioned the uPVCplastic picket plant in HCMC’s outlying district of Cu Chi in June, 2012 at a cost of some VND300 billion with a designed capacity of 550 kilos of products an hour. The plant’s products have also been piloted at a number of riverside embankments in districts 9 and 12.

There are around 1,600 kilometers of dykes and embankments citywide, with 400 kilometers of dykes along the rivers and large canals. Many dyke sections not properly reinforced are prone to landslides due to high tide, causing flooding for several riverside residential areas.

Export of agro-forestry and aquacultural products decreases

Export turnover of agro-forestry and aquacultural products is expected to reach 13.5 billion USD in the first half of this year, down 1.7 percent from the same period last year, said the Ministry of Agriculture and Rural Development (MARD).

The decrease is attributed to the year-long downward trend in global demands and prices of agriculture products.

Major agricultural products raked in an estimated 7.59 billion USD, down 10.5 percent, while forestry products brought home 2.31 billion USD, up 12.4 percent; and earnings from aquacultural products stayed at the same level as last year at 2.88 billion USD.

Most export staples such as rice, coffee, rubber, tea and cassava saw decreases in both price and volume. Coffee suffered the highest reductions, dropping 24.2 percent in volume to 795,000 tonnes and earning only 1.71 billion USD, 22.4 percent less than the figure of the same period last year.

Export of cassava also witnessed a deep decrease during the first six months of the year, bringing home 693 million USD, down 14.5 percent.

Only cashew and pepper showed increases in both export amount and price. Cashew exporters earned 723 million USD by exporting 115,000 tonnes of cashew, an increase of 5.7 percent in turnover and 15.9 percent in amount.

The US, China and Netherland remain Vietnam’s biggest cashew importers.

Pepper export went up 22 percent in volume and 16.8 percent in turnover, in comparison with the same period last year.

From now to the end of the year, the MARD urged relevant agencies were urged to keep track of the domestic and global demand and supply; give priority to expanding export markets, enhancing trade promotion activities; while coordinating with businesses and associations to propose policies to boost export and tap potential markets.-

Vietnam-Customs Union FTA negotiations progressing

Negotiations on a free trade agreement (FTA) between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan were productive as the second round of discussions that took place over six days ended on June 25 in Moscow, Russia.

The two parties reached consensus on points relating to goods, services, investment and movement of natural persons, rules of origin and customs cooperation.

The outcome was drawn after comprehensive discussions between the two sides, who were led respectively by Vietnam’s Minister of Industry and Trade (MoIT) Vu Huy Hoang and Eurasian Economic Commission Trade Minister Andrey Slepnev.

The heads of the negotiation teams discussing technical points were Dang Hoang Hai from MoIT and Andrey Tochin from the Eurasian Economic Commission, and they coordinated 10 working groups discussing the content of the FTA.

The eventual agreement will encompass goods trade, service trade, investment, customs cooperation, sanitary and phytosanitary measures (SPS), technical barriers to trade and legal and institutional issues.

At the plenary session, Hoang and Slepnev reaffirmed their intention to conduct negotiations in line with the regulations set out by the World Trade Organisation, while taking into account sensitive areas and differences in the development level of each side.

The two sides agreed to increase their consultations at both internal and bilateral level, paving the way for the third negotiation scheduled to take place from September 9 to 13 in the Republic of Belarus.

Domestic insiders envision the FTA between Vietnam and the Customs Union will open up prospects for a large free trade area and tighten the traditional and strategic relations between the four countries.-

Banks look to foreign funds

Many Vietnamese banks are seeking support from foreign partners, including Japanese investors, in a bid to boost their capital.

According to the Dau Tu (Investment) newspaper, Sai Gon Thuong Tin Commercial Joint Stock bank (Sacombank) planned to sell 20 percent of its stakes to a foreign partner this year in order to increase charter capital.

According to its Chairman Pham Huu Phu, Japanese investors were among those being highly considered.

At a shareholders’ meeting of the Housing Development Bank (HD Bank) in April, the bank announced its plan to call for capital from strategic foreign partners.

It later cooperated with businesses from Japan and the UK and hired a consultancy company to seek more suitable partners.

Many Japanese investors have already poured money in buying stakes in Vietnamese banks.

At the end of 2012, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) signed an agreement to sell a 20 percent stake, worth 822 million USD of its business to Japanese Bank Tokyo-Mitsubishi UFJ.

This marked the biggest M&A deal in the country’s financial industry. Recently Vietinbank increased room for foreign investors to 30 percent.

Previously Vietnam Export Import Bank (Eximbank) sold 20 percent of its stock to the Japanese Sumitomo Mitsui Banking Corporation.-

Local steel sector’s back to the wall

The local steel sector has run into a brick wall with alarming inventory levels and foreign investors’ clean pair of heels.

The supply of construction steel in the first half of 2013 has outrun demand after two new businesses, Thai Trung Steel based in northern Thai Nguyen province with designed capacity of 500,000 tonnes per year and Danang’s Central Steel with 250,000 tonnes per year designed capacity, began launching products into the market.

A Ministry of Industry and Trade report in May showed that steel production growth had surpassed industrial sector average growth (5.2 per cent). Accordingly, rolled steel production hiked 14 per cent and that of steel bars rose 7.4 per cent. The sector’s consumption, however, fell 1.2 per cent.

“Building material production has grappled with hardships on the back of the property sector’s high inventory,” said chairman Pham Chi Cuong at Vietnam Steel Association (VSA).

Unsold construction steel will be 300,000 tonnes against an acceptable level 230,000-250,000 tonnes.

The VSA also put average consumption of its member units at 400,000 tonnes per month, down 10 per cent against peak level 450,000 tonnes per month.

Paradoxically, as consumption falls, rolled steel production capacity was on the rise.

The VSA surveys show that scores of steel businesses were ‘clinically’ dead.

To attract customers, steel firms have launched constant price discounts, making selling prices to fall below the production cost. However, price discounts keep continuing, particularly in northern area.

Big firms are also bleeding.

For instance, Pomina Steel (POM) reported 2012’s after-tax profits of more than VND5 billion ($238,000) against VND405 billion ($19.3 million) in 2011.

Mounting competition among businesses in the steel sector, however, does not mean there is no more room for growth opportunities in the sector, according to industry experts.

Accordingly, current per capita steel consumption in Vietnam is a mere 120kg, a half of the level seen in other ASEAN countries. To turn Vietnam into an industrialised nation current steel production needs to double or triple to come on par with actual demands for housing and infrastructure construction.

Industry experts warned that foreign investment projects in the steel sector, particularly big ones, would undermine performance of local businesses and exaggerate current supply-demand imbalance unless there were suitable strategic plans to attract foreign investors in the sector.

A big southern steel firm representative said: “We [the Vietnamese company] were told to totally export products if setting a manufacturing plant in Myanmar. Foreign investors also find it extremely hard to invest in steel production in the Philippines. In China’s case, albeit this country turns out billions of tonnes of steel per year, foreign investors’ contribution in a steel joint venture must not exceed 30 per cent of the joint venture’s total capital. Vietnam should count on these experiences when charming foreign investment in the steel sector.”

Siemens and Vinamotor roll out first hybrid bus

Siemens and Vinamotor yesterday launched the first prototype of the hybrid-drive bus with Siemens ELFA drive technology.

The bus is the result of nine months of close collaboration between Siemens and Vinamotor and represents a milestone for green bus system development in Vietnam.

According to Siemens Vietnam, the Siemens ELFA hybrid-drive technology helped city buses to reduce fuel consumption by up to 50 per cent significantly saving costs. The operation of these buses will also mitigate the impact on the environment through lower exhaust emission and provide maximum comfort for passengers. Furthermore, riders and drivers travelling behind the bus can enjoy clean air when the diesel engine of the bus stops.

Do Nga Viet, chairman of Vinamotor, said the state-owned firm would cooperate with Siemens to manufacture buses to replace all old buses in Hanoi.

New Ford Vietnam’s managing director appointed

Ford Motor Company has announced the appointment of Jesus Metelo ‘Met’ Arias as managing director of Ford Vietnam, effective July 1.

He will continue to report directly to Matt Bradley, president of Ford ASEAN.

Arias, who is currently serving as director, Customer Service Division, Ford ASEAN, based in Bangkok, Thailand, will replace Laurent Charpentier, who has been appointed operations director, Ford of France.

In his new role, Arias will be responsible for leading the successful and ongoing product-led transformation of Ford’s business in Vietnam. This is being driven by the continued introduction of class-leading One Ford vehicles, as well as the expansion of the company’s dealer network and customer service experience.

“We’re proud to have Met take on this new leadership role and are confident in his ability to lead a strong focus on serving our customers in Vietnam, while continuing to drive the success of our business in Vietnam," said Bradley.

Arias joined Ford Philippines in 1998 as dealer operations manager. He holds a Bachelor’s degree in Mechanical Engineering from De La Salle University.

Charpentier has served as managing director of Ford Vietnam since 2011, during which time he has successfully led Ford's continued expansion in the market. This has been driven by the company’s on-going product-led transformation – including the launch of the all-new Ford Fiesta, all-new Ford Ranger and all-new Ford Focus – as well as the on-going expansion of Ford’s nationwide dealer network.

He has also been active in Vietnam’s auto industry and business community, serving as chairman of the Vietnam Automobile Manufacturers Association (VAMA), and governor of the American Chamber of Commerce of Vietnam.

Businesses closed down in Hoa Binh

The northern province of Hoa Binh's Department of Planning and Investment has withdrawn the licences of 178 enterprises for failing to report on their operations for three consecutive years.

The head of the department's business registration, Pham Dinh Huong, said these enterprises had breached the Law on Enterprises.

Most were involved in construction, mining, trade and tourism, including 55 in Hoa Binh City and 50 in Luong Son District.

The enterprises will have to complete dissolution procedures and return official stamps to local authorities within six months.

PVS estimates over $27m in profits in first six months

PetroVietnam Technical Services Corp (PVS) estimates its profits for the first-half of this year at VND570 billion (US$27.1 million) while its revenue could reach VND10.2 trillion ($485.7 million) by the end of June.

According to the company, it is becoming increasingly confident of completing its business plan for this year, of which total revenues will reach VND26.5 trillion ($1.26 billion) and before-tax profits, VND1 trillion ($47.6 million).

This year, PVS will focus its investment on core businesses such as shipping services, ports and specialised equipment for the oil and gas industry.

Plastics industry breaks export mould

Increasing global demand for plastic products had provided opportunities for domestic manufacturers to expand their markets, according to the Industry and Trade Information Centre.

Statistics showed that by June 15, the export turnover of the plastics industry had reached US$771.7 million and was forecast to increase the in coming months.

Japan was the largest importer of Vietnamese plastic products, with turnover of $163.3 million in the first five months of the year, followed by the US ($76.6 million), Cambodia ($60.1 million) and Germany ($44.1 million).

Viet Nam exported a diversified range of products, from plastic bags to household commodities and industrial plastics. Vietnamese-made plastic bags are now present in nearly 60 markets around the world.

This was a great opportunity for domestic plastics producers to boost exports to difficult markets as many were shifting from importing products from China, according to Thoi Bao Kinh Te Viet Nam (Viet Nam Economics Time).

It was important to improve product quality and enhance competitiveness to grasp this chance, experts said.

The plastics industry plans to produce high-quality and environmentally-friendly products with diverse range of types and models together with increasing the proportion of technical plastics and plastic products for construction.

According to the Viet Nam Plastics Association, the plastics industry was expected to grow at a rate of 11-13.5 per cent this year to reach $2.2 billion in export turnover.

Last year's export turnover hit $1.98 billion, representing a 42 per cent increase over 2011.

Statistics Office reveals 2013 business figures

A total of 6,192 Ha Noi businesses have shut down so far this year, 20 per cent less than the same period last year.

The municipal Statistics Office said that of these, 222 closed operations completely (up 27 per cent), 1,266 filed documents for closure (up 27 per cent), 2,804 changed their businesses address (down 2 per cent) and 1,900 temporarily shut down (down 49 per cent).

However, about 7,000 new businesses worth VND52.3 trillion (US$2.5 billion) were set up, down 9.5 per cent in quantity but up 13.2 per cent in capital against the first half of last year.

Phones head list of exports to Turkey

Viet Nam's exports to Turkey hit US$11.6 million in May, up 79 per cent from a year earlier.

According to the Viet Nam General Department of Customs, phones and components topped the list of consumer items, earning a monthly record of $40.2 million, 4.5 times higher than the previous month and 7.6 times higher than the same month last year.

The total earnings from phones and components exported to Turkey in the first five months of this year were lower than those from coarse textile fibres.

The difference has narrowed from $155 million in 2011 to $140 million in 2012 and $14.7 million in the first five months of this year.

SBV asks banks to extend rice reserve loans

The State Bank of Viet Nam (SBV) has sent a document to commercial banks asking them to extend loans to food companies to enable them to buy paddy/rice reserves.

The central bank asked the banks to follow the production and performance of rice export companies.

If exporters faced difficulties, the banks should carefully consider restructuring loans.

The SBV also asked the banks to supervise the companies' capital utilisation to prevent them from taking advantage of the programme to delay payments.

Under a Government programme, the banks have provided the companies interest-free credit to buy 1 million tonnes of rice from the winter-spring crop.

The Government is fully subsidising the interest on the loans for three months.

Support from the banks has kept rice prices stable in 2012-13, and the Government's policy to buy rice reserves has also supported the price and helped farmers.

The Ministry of Agriculture and Rural Development said it would establish a team to carry out check-ups and supervision on the rice/paddy reserves.

The ministry will co-operate with the Finance and Industry and Trade ministries, SBV, the Viet Nam Food Association and provincial committees to check the quantity of rice reserves.

The team will also look at preferential loans and disbursement of commercial banks.

Rolls-Royce teams up with Regal

Regal Motor Cars Corporation yesterday reached a deal with the Rolls-Royce Motor Cars to be its official dealer partner in Ha Noi.

Viet Nam holds great potential for the brand as the country's economy has grown in recent years and created many successful entrepreneurs.

The assessment was stated by Herfried Hasenoehrl, Rolls-Royce Motor Cars General Manager for Emerging Markets-Asia.

Following the Regal Motor Cars deal, Rolls-Royce is now represented in 22 cities across the Asia-Pacific region outside of China.

Tay Ninh cuts hubs and industrial parks

Southern Tay Ninh Province has decided to axe four industrial areas and reduce the land coverage of three industrial parks.

The province hoped to save up to 638 hectares, to be sued for planting and residential areas, through the initiative.

As many as 200 projects operate across the province's seven industrial zones and nine industrial complexes, which cover 5,000ha in total. The projects help create 100,000 local jobs.

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