Vietnam attracts US$15 bil of FDI in nine months

Vietnam attracted more than US$15 billion of foreign direct investment (FDI) in the first nine months of this year, a surge of 36.1 percent year-on-year, according to the latest report by the Ministry of Planning and Investment (MPI).

Of the figure, US$9.294 billion was poured into 872 newly-licenced projects, a yearly increase of 34.9 percent, while the rest US$5.71 billion was added to 340 running projects, up 37.9 percent.

An estimated US$8.62 billion was disbursed, up 6.4 percent compared to the figure of the same period in 2012.

The processing and manufacturing industry led all sectors in attracting FDI with 400 new projects and nearly US$13 billion in both total new and additional capital, accounting for 86.4 percent of the total amount.

Real estate followed with US$588.11 million, while the science and technology sector came next with US$380.59 million.

Japan topped the list of 48 countries and territories investing Vietnam, with US$4.736 billion, accounting for 31.6 percent of the total registered FDI, followed by Singapore with US$3.95 billion and the Republic of Korea, US$2.636 billion.

Fifty provinces and cities nationwide welcomed foreign investors in the reviewed period. The northern central province of Thanh Hoa attracted the largest amount of FDI capital with US$2.92 billion, followed by the northern midland province of Thai Nguyen and the northern port city of Hai Phong with US$2.158 billion and US$1.94 billion, respectively.

The Foreign Investment Agency under the MPI announced that exports of the FDI sector (including sales of crude oil) in the nine-month period are estimated to exceed US$63 billion, a 22 percent rise year-on-year and accounting for 66 percent of the country’s total export earnings.

Vietbuild 2013 opens in Can Tho

More than 200 local and foreign businesses have their products showcased at 450 stalls at the international exhibition Vietbuild 2013 which opened in Can Tho city on October 2.

Le Thi Kim Thu, director of the Can Tho International Exhibition Fair Centre said that the exhibition brings into focus local and global trademarks in the fields of construction, real estate and interior and exterior decoration.

During the five-day event, seminars will be held to introduce the latest technologies and products which are friendly to the environment and investment opportunities in the fields of real estate, tourism and trade, as well as new policies on housing construction.

There will be an awards ceremony for producers of high quality products in the housing estate sector.

Vietbuild 2013 was co-organised by the Ministry of Construction and Can Tho city.

US$450 million poured into mining exploration in Laos

The Vietnam National Chemical Corporation (Vinachem) is set to break ground on a US$450 million rock salt exploitation and processing project in the central Lao province of Khammouan.

Designed with an initial annual capacity of 320,000 tonnes and expected to reach an eventual 1 million tonnes, the project will slash Kali fertilizer imports, limit the burden on both nations’ foreign currency reserves, and create jobs for thousands of Lao workers.

The Lao Ministry of Energy and Mines says 64 Lao and foreign investors have signed government mining and exploitation plant construction contracts.

Four more foreign firms are expected to invest in Laos’ mining industry over the 2013–2015 period.

Since 1998, Laos has licensed 171 foreign-invested mining projects with capitalization totaling US$5.5 billion. These projects have brought hundreds of millions of US dollars to Laos, the majority of which was earned via the two Sepon and Phoukham mines.  

Manufacturing sector grows in September

The Hong Kong and Shanghai Banking Corporation (HSBC) has reported Vietnam’s September Purchasing Managers’ Index (PMI) rose above the 50.0 neutral reading to 51.5.

The PMI is a composite indicator offering a snapshot of the manufacturing industry’s operating conditions. September’s 51.5 improves on August’s 49.4 and is the best reading since April 2011.

HSBC said record rises in new business and employment drove the PMI’s surge.

 New business growth was solid, reflecting more positive underlying demand from domestic and foreign clients. Improved product quality and competitive pricing—demonstrated by six successive months of output charge declines—also helped to support sales growth.

New export business rose at a series record pace. For the first time in four months, new export sales increased.

This encouraged the Vietnamese manufacturing sector’s observed payroll expansions as companies sought to keep on top of their workloads.

Work backlogs continued to abate during September, their eighteenth consecutive month of doing so. But the rate at which work outstanding reduced was the slowest seen since April.

Stocks of finished goods rose slightly. Manufacturers were able to add to stocks, reduce backlogs, and manage more new orders while maintaining generally stable output.

September’s input cost inflation stayed steady. Despite easing from August’s high, average cost rises were still marked, and competitive pressures continued to squeeze profit margins.

Demand for inputs was also higher in September. Purchasing activity increased for the first time since April in line with rising new orders and positive demand projections.

HSBC Asia Economist Trinh Nguyen said the PMI reading exceeding 50.0 reflects stronger global demand for Vietnamese goods and the stabilisation of domestic conditions.

“We expect output to pick up in the second half of 2013 thanks to predicted recoveries in the Eurozone, China, the US, and Japan,” she said. “Internal demand is still lacklustre. While prices rose in the third quarter, we believe inflationary pressures will remain contained.”

Biotechnology prioritised in science, tech development

The programme "Research on Development and Application of Biotechnology" (Ministry of Science and Technology) and the Institute of Biotechnology (Vietnam Academy of Science and Technology) on September 27 co-organised the National Workshop on Biotechnology.

It offered biologists nationwide a chance to share their research, and allowed managers and researchers to review the achievements in biotechnology over the past five years.

Addressing the event, Minister of Science and Technology Nguyen Quan said biotechnology has practically contributed to improving the quality of scientific and technological advances in agriculture, health care and the environment.

Much research in biotechnology is highly relevant and can be widely disseminated in life, he added.

According to the minister, biotechnology is developing quickly in the right direction in Vietnam, but faces many difficulties and challenges ahead.

Vietnam’s population of nearly 90 million, with over 70 percent in the agricultural sector, diverse ecosystems and hard-working people will help Vietnam develop biotechnology, he said.

Minister Quan said he hopes the workshop will contribute significant and practical scientific research to national development.

BIDV awarded best domestic forex services provider

The Bank for Investment and Development of Vietnam has been named as the Best Domestic Provider of Foreign Exchange Services in Vietnam by Asiamoney magazine.

This is the fourth time the BIDV has received the Asiamoney’s prestigious award, which was voted by financial institutions. The bank won the prize in three straight years, from 2008.

The Asian leading regional financial publication also awarded the Best for Foreign Exchange Products and Services in Vietnam, voted by businesses, the Best for Foreign Exchange Options in Vietnam, by businesses, and the Best for Foreign Exchange Research and Market Coverage in Vietnam, by businesses, to the BIDV.

The bank was also named in 2012 as the Best Overall Domestic Cash Management Services and Best Overall Cross-border Cash Management Services by the magazine.

Also in 2012, the world’s leading financial magazine, Euromoney, has named the Bank as the Best Domestic Trade Finance Provider in Vietnam.

Central Highlands coffee sector targets sustainable development

Developing the coffee industry in a sustainable manner is a mutual concern of the government, ministries, sectors, businesses and coffee growers in the Central Highlands provinces.

With an annual average output of over 1.5 million tonnes, developing coffee has been underscored as key to Vietnam’s agricultural growth, said Director of the Central Highlands Agriculture and Forestry Science Institute Le Ngoc Bau.

He highlighted the advantageous climate and fertile soil as well as the unique and creative farming techniques used in the area as the reasons that local producers can still sell their products despite the unstable coffee prices in the market.

The director, however, warned that an increasing number of local coffee growers persist in harvesting green beans, which may result in their products being of lower quality.

Added to this, erratic weather and security issues also responsible for the unstable coffee quality, Bau said.

He suggested Vietnamese businesses in the field come up with solutions to enhance the quality of their products mainly via improving the harvesting process.

Local authorities must also intensify security during the harvest to ease workers’ worries of their coffee beans being stolen, Bau said.

Furthermore, the State should encourage farmers and enterprises to focus on deep processing, as one kilogram of soluble coffee has far greater value than the same amount of raw processing coffee.

Scientists have also been tasked with conducting more research on technological scientific solutions to increase replanting efficiency, which will spur the sustainable growth of local coffee.

Shareholders approve DaiABank-HDBank merger

Shareholders of DaiABank during the extraordinary shareholders meeting on Wednesday approved the plan to merge with HDBank at the share swap ratio of 1:1.

Shareholders of DaiABank approve merger with HDBank at the extraordinary shareholder meetingon Wednesday - Photo: Courtesy of DaiABank

Based in southern Dong Nai Province, DaiABank has chartered capital of VND3.1 trillion and nearly 70 transaction units in the country. Bad debts of the bank are reported in trade, steel, construction and real estate sectors.

Meanwhile, HDBank has capital of VND5 trillion and 106 transaction points nationwide.

The consolidated bank will keep the brand of HDBank and have a chartered capital of VND8.1 trillion. Given the merger deal, all employees of DaiABank will be retained.

The new bank will have total assets of over VND70 trillion and 210 transaction points to serve 420,000 individual and institutional customers. The bank will have around 3,600 employees.

HDBank expects to organize an extraordinary shareholding meeting on Saturday to approve the merge plan. Recently, HDBank has acquired 100% equity of Société Générale Viet Finance (SGVF) while it has also owned stake in low-cost carrier VietJet Air.

SeABank wins international bank awards

SeABank has been crowned Best Customer Service Bank Vietnam 2013 in an awards ceremony by the UK’s prestigious online financial forum Global Banking & Finance Review (GBAF).

The bank’s chairwoman Nguyen Thi Nga was also named Most Innovative Banking Chairperson Vietnam 2013.

The awards are a testament of SeABank’s constant and painstaking efforts to provide a comprehensive suite of financial solutions to better serve customers.

According to a GBAF spokesperson, Nga was singled out for her contribution to the bank’s 19-year development from a small bank in the northern port city of Haiphong, to one of the leading commercial joint stock banks in Vietnam in terms of chartered capital, total asset value, operation network and brand identity.

A great night for SeABank was capped when deputy general director Nguyen Tuan Cuong received both the ASEAN Chief Information Officer and Chief Security Officer awards for 2013.

According to the International Data Group Vietnam (IDG Vietnam), Cuong was selected by a panel including IDG Vietnam and government agencies on information technology (IT) in the ASEAN region, for his prominent contributions to promote the usage of IT applications in socioeconomic development.

With 17 years of experience as CIO at SeABank, Cuong is now in charge of a pipeline of projects intended to bolster the bank’s competitiveness.

Thanks to sound management and effective support from foreign strategic partner Societe Generale, as well as local partners MobiFone and PV Gas, SeABank has witnessed market developments in products and services diversification focusing on retail banking.

Its intensive investment into information technology infrastructure is proving a key factor in perfecting customer service quality. SeABank is developing cloud computing with modern applications to improve customer experience.

In April 2013, the bank was also at the heart of an award ceremony when it won Best Cloud Based Project 2013 for its outstanding improvements in information technology application and cloud computing by The Asian Banker – a leading financial forum in Asia.

Green goods generate green demand

While more and more Vietnamese customers are buying green products, few actually understand their contribution to the environment.

Nguyen Ngoc Thuyen decided to spend several thousand dollars on light-emitting diode (LED) bulbs for his new four-storey house.

“They are ten times the price of standard bulbs, but they are durable and I can buy them in many different colours,” said Thuyen, an architect living in Hanoi.

Pham Ngoc Minh, head of an electrical appliances store on Hanoi’s Phung Hung street, said his sales of LED lights to customers like Thuyen had risen considerably.

“LED products are both durable and fashionable, and though they are expensive, there is high demand,”Minh said.

Thuyen and Minh, while appreciating some of the lights’ qualities, did not realise that they are also helping Vietnam reduce greenhouse gas emissions.

“I buy them because they look good and are reliable,” Thuyen explained.

Are consumers thinking green?

Ralf Matthaes, the regional managing director of TNS Indochina – a world leader in market research, global market information, and business analysis, said the average Vietnamese consumer had little knowledge of environmental issues, let alone green products.

“Most consumers think of environmental issues in the sphere of motorbike and car emissions and garbage and toxins in rivers and waterways. However, they have little knowledge of things like depletion of the ozone layer and deforestation,” he explained.

“This is not a surprise, given that most Vietnamese focus on basic needs like filling their stomachs and consumer fads like buying the latest mobile phone. Green products are not high on their wish list, and though the younger generation is much more aware, this is only on a superficial level” he added.

A representative from Osram Vietnam, which makes the LED lights Thuyen used in his home, said that many Vietnamese consumers regularly used environmentally friendly products, but were unaware they were helping to save the environment.

Nguyen Duc Anh, a salesman at the HC electronics superstore on Hanoi’s Pham Van Dong street, said that his customers usually focused on the quality and prices of products, rather than any environmental bonus.

“We have sold many energy-saving refrigerators, irons, and TVs, but the local demand comes from a reputation for quality, design and reasonable prices, not from the companies green outlook,” Anh said.

“Consumers are not even aware of HCFC, which is largely responsible for ozone depletion and used in the manufacture of refrigerators and air-conditioners,” he continued.

HCFC is the generic and chemical acronym for DuPont’s Freon and is used as a refrigerant, propellant, and solvent in numerous retail and industrial products.

According to Nguyen Dinh Thanh, a senior branding expert from locally-owned company Le Bros, Vietnam should look to developed nations’ green mentality, where consumers are the driving force behind companies innovating energy saving products and less pollutive manufacturing processes.

“If Vietnamese consumers go green, it will be a tremendous step toward reducing pollution and mitigating the impact of climate change, Thanh said. “Supermarkets such as Hanoi-based Tutraco still give nylon bags to customers and that damages the environment.”

According to TNS, environmental pollution tops the list of concerns in its 2010 survey of Vietnamese consumers about the environment. 63 per cent of respondents believed pollution would worsen in the following 12 months.

The survey also reflected that over 90 per cent of consumers were concerned with Vietnam's pollution problem, particularly in Ho Chi Minh City where over 60 per cent opined that pollution had worsened over the previous three years.

Perhaps reflecting this concern was head of Big C supermarket chain’s public relations and corporate affairs division Duong Thi Quynh Trang’s opinion that consumer awareness and interest in environmentally friendly products was beginning to grow.

“Demand for biodegradable bags is increasing, and Big C is aware of and is meeting that demand,” she said.

The bags, which have been recognised by the Ministry of Natural Resources and Environment's Vietnam Environment Administration, decompose within five years after being discarded.

German-backed Metro supermarket joined the club when they decided to use biodegradable plastic bags and cardboard boxes to wrap meat and vegetables.

“They [disposable bags and boxes] are convenient and are eco-friendly,” said Nguyen Thu Ha, a housewife from Hanoi. “They don’t discolour and can be kept in the refrigerator for long periods without harming the food.”

Khuat Quang Hung, head of Metro’s general affairs and corporate communications, said customers’ demand for these bags and boxes was so great that Metro sold them in large volumes to other businesses.

“There is an increasing demand for environmentally friendly products,” Hung added.

A greener tomorrow According to Thanh, millions of customers are benefiting from and seeking green brand trends.

He added that all around the world, companies are developing and distributing greener products built by environmentally friendly technology.

In particular, electronics producers such as Osram, Samsung and Haier, as well as auto manufacturers like Toyota, Ford, Mercedes, and Honda are introducing their own environmentally friendly products. A major goal of both industries is to reduce energy consumption during production and reduce emissions and pollution resulting from their products while maintaining the quality and durability their customers expect.

“Toyota and Panasonic even have museums in Japan showcasing environmentally friendly technologies and products which are open free of charge to the public,” said Thanh.

He also said that enterprises needed to continue churning out newer and better green products, as this was now a major factor in competition. Furthermore, companies all over the world were having to adapt to policies limiting emissions.

Keisuke Seto, assistant manager of Toyota’s global communications department, said the company was researching green solutions at its Vietnam factory.

“Going green means you aim at a sustainable future for your business and customers,” Seto explained. “Toyota is innovating new hybrid cars that we think will be very popular in Vietnam.”

Many companies that work in foodstuff and industrial products are also showing a greener outlook.

Swedish-backed Tetra Pak, the world leader in processing and packaging solutions for food and beverages, is supplying eco-friendly milk cartons to all Vietnamese milk manufacturers including TH TrueMilk, Vinamilk, and Dutch Lady.

“These cartons can be recycled to make other products such as ornamental trees and office stationery,” said Vu Thu Hang, a public relations representative from TH TrueMilk.

Citibank’s big achievements see rewards

Citibank has been named Best Foreign Commercial Bank in Vietnam by a prestigious Hong Kong-based financial publication.

The award was presented last week by FinanceAsia, a Hong Kong-based publication reporting on Asia’s financial and capital markets, as part of their Country Awards for Achievement 2013.

According to FinanceAsia, Citibank has consolidated its position via a number of landmark transactions for local clients, both corporate and state, including Vietnam Airlines, Vinacomin, PetroVietnam and the National Power Transmission system.

In addition to arranging financing, the US bank has also innovated the use of swaps to help companies achieve better pricing and liquidity on trade financing and other deals.

Although liquidity swaps are routinely traded offshore, Citibank has worked with the regulators and stock exchange to bring these tools onshore, with the underlying asset denominated in dong. The bank assumes the foreign exchange risk to provide dollar-denominated financing and allows companies to generate liquidity on the back of their local shares – thereby creating cheaper financing than may be available traditionally.

“I am exceptionally pleased that Citibank Vietnam has been named Best Foreign Commercial Bank in Vietnam by FinanceAsia in its Country Awards for Achievement 2013. Coming after winning Asset Magazine’s Best Bank in Vietnam award early this year, this confirms Citibank Vietnam’s industry-leading position in the country, innovative spirit, unparalleled products and relentless commitment to serving our clients,” said Brett Krause, Citibank Vietnam country officer.

Experts shine light on bank rate controversy

Banks’ lending rates are unlikely to fall and the government needs to keep a tight hold on the ceiling deposit interest rate say Vietnamese economic experts.

Last week several banks rolled out lending packages at highly competitive rates to woo borrowers.

Accordingly, lending rates for production businesses are holding at around 6-7 per cent. Ocean Bank even offered personal loans at 5.91 per cent.

Member of the National Financial and Advisory Policy Council Le Xuan Nghia applauded banks for their actions.

“Banks lending at rates equal to or below the current deposit interest cap of 7 per cent was due to them having access to low cost capital from international organisations as well as government and business deposits. This does not mean, however, that the government’s grip on the lending rate will be loosened,” Nghia explained.

The lending rate remains considerably relaxed compared to 2012, but as of late August more than 25 per cent of loans still marked over 13 per cent.

According to senior economist Nguyen Minh Phong, this year’s inflation may hit 7.5 per cent, surpassing the government’s target of around 7 per cent. This will make it difficult for bank’s to further scale down their interest rates.

Given this conflict between deposit and lending rates, some experts are arguing that it is time for the State Bank of Vietnam (SBV) to relent on the mobilising cap.

Between 2012 and now, the SBV revised its deposit rate cap several times. In early June 2012 the central bank had no rate ceiling for 12-month term and over deposits.

A year later, it went even further to remove the cap on deposits with a six-month and over term.

According to the SBV’s Monetary Policy Department, after the SBV removed the cap for six-month deposits, the market has remained fairly stable. The competition between banks for market share has been healthy.

Even as banks reduced their deposit rates, this did not stop customers from putting their money in banks.

By mid-September, VND deposits jumped 13.78 per cent against the end of 2012.

These factors suggest the time may be right to dissolve the deposit rate ceiling.

Some experts, though, argue that removing the cap would hurt the liquidity of small banks.

They said also that removing the cap is risky at a time of surging inflation and as problems with underperforming banks had yet to be tackled.

Rice for export insufficient

Although rice export runs into difficulties and the Vietnam Food Association has lowered this year’s target to 7.2 million from 7.5 million tons, it is paradoxical but likely that Vietnam will not have enough rice for delivery.

According to a local well-informed source, the current rice inventory of member enterprises of the Vietnam Food Association (VFA) is lower than the export volume under contracts enterprises have signed.

The rice export volume of signed contracts recorded as of September 19 reached 6.399 million, inclusive of 450,000 tons carried over from last year, while the rice volume that has not been delivered after September 19 is 1.54 million tons.

However, the total rice inventory of enterprises under VFA is only 1.44 million tons, meaning a shortfall of 100,000 tons.

Besides, if enterprises sign more export contracts from now towards the year-end, the volume they need to buy in the domestic market will be higher.

Moreover, at least 900,000 more tons of rice is needed if rice traders are to realize the year’s newly-revised export target of 7.2 million tons.

In addition, if rice traders store rice late this year for new contracts with the delivery time early next year under normal practices, the amount in need will be much greater than 900,000 tons, the source explained

The source said that recent information about the local rice market and rice export on newspapers was like smokescreen which was unfavorable for farmers and traders with rice in stock. Therefore, farmers and traders need to remain calm and should not sell rice when the price is low as the rice demand of enterprises will be heavy in the coming time.

Early this month when VFA reported that the Thai government was selling the 100% B rice, equivalent to Vietnam’s 5% broken rice, at only US$380 per ton, the local rice price dropped to VND4,000-4,100 per kilogram of IR 50404 rice from VND4,600-4,700.

However, the website on the rice market Oryza.com stated that the selling price of Thailand’s 100% B rice at that time was US$420-430 per ton and remains stable until now.

S’pore court upholds Vietnam arbitrator’s ruling

The Supreme Court of Singapore has upheld rulings by Vietnam International Arbitration Center (VIAC), forcing Singapore’s Wilson International Trading Co. Ltd. to compensate nearly US$2.2 million and VND500 million for Vietnam’s Loi Loi Import-Export Co. Ltd.

Lawyer Le Thanh Kinh, director of the Le Nguyen Law Office, who protects the interests of Loi Loi, told the Daily on Wednesday that the decision of the Supreme Court of Singapore is now being enforced.

“Wilson suggested paying the compensation by installments but Loi Loi has rejected the proposal,” Kinh said.

The dispute on the economic contract between Loi Loi and Wilson erupted five years ago when the two companies in August 29, 2008 signed a contract on fertilizer trading worth about US$3 million, with Loi Loi selling 5,000 tons of packed Prilled urea products at US$605 a ton. Both sides on September 1, 2008 signed another fertilizer trading agreement with a total value of around US$3 million, with one ton of Prilled urea priced at US$610.

Under the two agreements, Loi Loi was responsible to transport the products while Wilson was in charge of appointing the shipper to receive the shipment at Haiphong Port. The transport deadline for the first agreement was on September 25, 2008 while that for the second one was on September 30 in the same year.

Loi Loi had fulfilled its obligations but Wilson had failed to appoint the shipper for the shipment as stated in the contracts. The two sides then managed to deal with the problem but failed to gain a mutual agreement accordingly.

Because of this, Loi Loi on September 17, 2009 filed a lawsuit against Wilson at VIAC as provided for in the contracts.

VIAC on September 11, 2012 released a judgment forcing Wilson to pay Loi Loi a fine of US$60,500 for breaking the first contract and compensation of about US$1 million and roughly VND34 million for involved damages.

For violations of the second contract, Wilson was also forced to pay a fine of US$61,000 for breaking the deal and compensation for involved losses worth about US$1 million. The total sum that Wilson had to pay also include arbitration fees of some VND464 million.

The ruling by VIAC clarifies that the amounts must be paid by Wilson within 30 days since the issuance date of the verdict. However, Wilson did not conform to the ruling and did not pay any to Loi Loi, prompting the local company to lodge a petition to the Singaporean authority on April, 2013 to compel the latter to obey the order.

Experts: CIOs must be business strategists

Changing technologies and a tough business situation have placed a great burden on the shoulders of chief information officers (CIOs), making them not only technology leaders but also strategists for enterprises, experts said here on Wednesday.

Speaking at the ASEAN CIO/CSO Summit and Awards organized by the International Data Group (IDG) in HCMC on Wednesday, Maynilad Water Services Inc.’s senior vice president Francisco Castillo said that the roles of CIOs have changed, staying very close to business strategies of enterprises and organizations.

CIOs not only provide consulting for enterprises in investment and technology application but also act as business strategists, he said.

CIOs must be knowledgeable of business. They must act as brokers between users and services they want to offer, Castillo said.

Sundara Rajan Ramesh, director of Malaysia’s CIMB Group, said that once a CIO decides to change or intervene in information technology (IT) infrastructure of an enterprise, he must prove that the decision will fetch positive effects.

“CIOs must solve the problem of combining business and technology,” he said.

Experts at the summit said that the next technology trend will focus on cloud computing, mobile, social media and big data. Therefore, enterprises should consider using these technologies to better IT investment and business models.

IDG and relevant ministries also granted awards to 20 outstanding CIOs and chief security officers (CSOs) in Vietnam and other ASEAN countries on Wednesday. They were selected from 450 nominees from Vietnam, Singapore, Thailand, Malaysia, Indonesia and Philippines.

Demand for wood processing machines runs high

The demand of replacing and upgrading woodworking machinery and equipment is on the rise as the industry is growing well, said representatives of wood processing and exporting enterprises.

Speaking to the Daily at the Vietnam International Woodworking Industry Fair 2013 opened on Wednesday, Huynh Quang Thanh, chairman of the Binh Duong Furniture Association, said that most wood processing enterprises in Binh Duong Province were not worried about lacking orders.

That is to say local furniture makers have the demand to acquire new technologies for their production expansion, according to Thanh.

Furthermore, most of the wood processing enterprises have operated for a long time, and thus their technology is somehow outdated and the demand of new equipment is high, Thanh observed.

According to a report of the Ministry of Agriculture and Rural Development, the export value of wood and wood products in the January-August period was over US$3.34 billion, up 12% year-on-year.

Except for a drop seen in shipments to Germany (-14.4%) and France (-2.2%), the January-July export rose strongly in most of the major markets, with the U.S. at 7.2%, China 14.7%, Japan 20.3% and South Korea 48.2%.

Meanwhile, Nguyen An Diem, chairman of the Binh Dinh Timber and Forest Products Association, said that enterprises in Binh Dinh Province mainly used equipment of medium quality imported from Taiwan, China or produced locally as their production scales were not as big as those in southern provinces.

However, according to Diem, some enterprises have started to import equipment from Europe and Japan to meet the stricter quality requirements of customers.

Vietnam has around 2,500 enterprises active in the wood processing industry and their demand of upgrading machines and equipment is huge, Diem said.

The tenth Vietnam International Woodworking Industry Fair is taking place until Saturday at Saigon Exhibition and Convention Center in HCMC’s District 7. The fair has the participation of over 260 enterprises from 19 countries and territories with over 500 booths.

The fair is organized by Vietnam National Trade Fair and Advertising Company (Vinexad), Chan Chao International Co. and some partners and associations.

Binh Duong expects to sustain trade surplus

The southern province of Binh Duong saw a 2.2 billion USD trade surplus in the first nine months of this year, up 15.6 percent against the same period last year, and the figure is expected to rise further in the time to come.

According to Vo Van Cu, Director of the provincial Department of Industry and Trade, recent harsh years have pushed forward businesses’ production restructuring, leading to increasing export value and an inevitable export surplus.

Local businesses have taken steps towards more stable and sustainable development thanks to a steady exchange rate and inflation, reduced interest rates and falling costs of imported materials, the department said.

The recovery of major importers such as the US, EU, Japan, Australia, Brazil, Argentina and the Middle East along with the positive impacts of the Trans-Pacific Partnership Agreement (TPP) negotiations have raised their export orders by 10-15 percent compared with last year’s corresponding period.

However, the decisive factor behind the surplus is the businesses’ efforts to reduce expenditure, said Phan Van Xo, President of the Binh Duong Association for Exporters.

Semiconductor industry to watch for big rewards

Experts believe that it’s now the right time for Vietnam to join the global IC production chain, a golden opportunity to approach to high technologies. Insights from the Vietnam Net online newspaper.

Don Tran, Managing Director of Global Equipment Services GES, said the demand for electronic products in Vietnam has been increasing rapidly thanks to the increasingly high percentage of people using Internet and their improved income. Meanwhile, enterprises tend to more utilise the information technology and high technologies in their production and business.

All these could be the favorable conditions for Vietnam to develop a semiconductor IC factory it has been striving for a long time.

According to the official, the heavy investment in the semiconducting industry would help reduce the imports, increase the values of domestically made electronics and ease the reliance on imports.

"I believe that the establishment of an IC factory in Ho Chi Minh City is a right move, because all the necessary factors have got ready, from the labour force, technique, transport and good development policies," he said.

Bettina Weiss, Vice President of SEMI, also thinks that it’s now the right time for Vietnam to join the IC production market. Nowadays, every person owns more than one digital device, which means the demand for IC has been increasing rapidly, he added

Asia- Pacific has emerged as a world’s leading source of IC supply. China’s Taiwan, for example, now holds 13-16 percent of the market share, China 9 percent.

To Thi Thu Huong, Deputy Director of the Information Technology Department under the Ministry of Information and Communications, also said the government has highlighted the IC production as one of the priority industries.

Analysts have predicted that the Vietnamese IC market is worth 2 billion USD a year.

As such, the matter for discussion now is what way Vietnam should follow to develop the semiconductor industry.

According to Huong, there would be many different phases of development. The first would be the time for setting up the infrastructure, designing IC production factories, and building up the workforce, while the next would be the period for development which needs the state’s support to help create the market for domestic products.

In order to do that, it’s necessary to build up the list of the strategic products Vietnam should focus on.

Vietnam now still cannot make the products which require high technologies, the 90 nm – 45 nm chips. Therefore, it would be better to focus on the products which fit its capability in the immediate time.

Pham Ba Tuan from the CNS IC factory project, which is expected to be implemented in the time to come, thinks that the 180 nm technology proves to be most suitable to the Vietnamese current financial capability. If it chooses the 90 nm, the price it has to pay would be triple. Meanwhile, the 180 nm is believed to exist in the next 20 years.

He went on to say that an IC factory would not be enough for the semiconductor industry development. In the future, Vietnam would need to set up research and development (R&D) centres, or the design centres which would test if the products fit the market or not before they are put into mass production.

Ca Pass tunnel project sped up

Transport Minister Dinh La Thang has urged relevant authorities to speed up the construction of the Ca Pass Tunnel in the central provinces of Phu Yen and Khanh Hoa.

The project aims to replace Ca Mountain Pass and Co Ma Mountain Pass, parts of National Highway 1A that run through Dai Lanh Mountain and have dangerous bends prone to avalanches and landslides, with two tunnels.

Originally scheduled for completion in 2016, along with other parts of National Highway 1 that are also being repaired, the VND15.6 trillion (US$742.8 million) project is currently one year behind.

The construction was supposed to be carried out under the Build-Operate-Transfer (BOT) and Build-Transfer (BT) models. Deo Ca Investment Join Stocks Company was to mobilise capital to finance the project and see a return on its investment later, while the two provinces' authorities and transport ministries were in charge of providing surface for the construction.

But the investor failed to do the necessary preliminary work, said Tran Xuan Sanh, head of the ministry's Department for Management of Traffic Work Construction and Quality.

"The investor has not yet finished assessments and strategies for the construction process," he said.

The ministry is also concerned about the investor's financial capacity as its shareholders have committed barely VND1.078 trillion ($51.3 million).

Dinh Van Chuong, head of the Project Management Department of Deo Ca Investment Joint Stocks Company, blamed the delay on slow land clearance. He told Nguoi Lao dong (The Labourer) newspaper that the investor had nearly completed the resettlement area for households in Phu Yen Province who had to make way for the construction.

"The province committed to handing over space for the construction next month, but that is the rainy season, so we have to postpone it until next February," he said.

However, Nguyen Tai, chairman of Dong Hoa District People's Committee in Phu Yen Province, said that land clearance went as scheduled. He claimed the real reason for the delay was the investor's initial design, which was problematic because the road would have run through a high voltage electrical pole.

Slow disbursement of compensation also delayed nine affected households from moving, Tai said. While compensation amounts were determined last year, the investors did not pay until this year. Other affected households complained about unfinished power and water infrastructure in resettlement areas.

Minister Thang asked local authorities and the investor to co-operate with other experienced project management units to review both project design and staffing.

Export profits expected for ‘functional foods'

Viet Nam's vitamin and minerals-enhanced food sector plans to make large export earnings by 2030 while meeting 75 per cent of the domestic market.

The target was announced by Nguyen Xuan Hoang, vice chairman of the Viet Nam Association of Functional Foods (VAFF) at a conference on the so-called "functional foods".

Hoang said the country imported 40 per cent of its needs although it had potential for production. However, an investigation by the Ministry of Health showed that 60 per cent of 60 imported samples were substandard.

The Association of Functional Foods' chairman, Tran Dang, said Viet Nam had started to develop key medicine cultivation areas, but they were still on a small scale.

The areas were under the control of the Ha Noi Institute for Medicine Research, the centre for medicinal plants research, HCM City Medicine Centre and the centre for science and technology transfer and development.

Dang said the functional foods market had developed rapidly. The country had 1,500 production and trading firms last year while in 2000 there were only 13.

In 2000, the market had 63 functional food items while the number was more than 5,500 last year.

He added that the sector should have suitable development strategies to reduce imports and become a strong exporter.

Dang said the industry had shortcomings. This included the fact that half of all advertisements were violations of existing laws - and most sold in Viet Nam had not been carefully tested.

The market has been linked with multi-level marketing by distributors who were only interested in profits and who over stated the characteristics of their products.

Do Ngoc Thach, vice general secretary of the association, said the sector should have a legal framework to apply good manufacturing practice (GMP), good agriculture practice (GAP) and good hygiene practice.

ANZ pleads for refinance stability

In a report issued late last week, ANZ Bank called for the State Bank of Viet Nam to keep its benchmark refinancing rate on hold at 7 per cent through 2014, despite a persistent weakness in domestic demand.

The central bank lowered the rate from 9 per cent to 8 per cent in March, and to 7 per cent in May, to assist struggling businesses and support market growth.

Although interest rates have been cut by a cumulative 800 basis points since 2012, over a quarter of loans are still priced at over 13 per cent per year, according to ANZ.

The Government expects lending to continue to pick up in the fourth quarter to fulfill the 12-per-cent annual target for credit growth, after overall credit increased 6.45 per cent in the first eight months, compared to 5.3 per cent recorded in July.

The bank also said it was cautious of Viet Nam's foreign debt obligations.

A recent joint report by the Ministry of Planning and Investment and the United Nations Development Programme estimated the ratio of Government-issued to Government-guaranteed bonds of two-five year tenors stood at 88.7 per cent. It also mentioned that both foreign and public debt have rapidly increased over the last decade.

"Despite the lack of of timely data, we will continue to monitor developments in Viet Nam's debt management and its effect on economic growth," ANZ said.

The bank said data dump for September, including muted retail sales and a foreign trade deficit, revealed that the trend of sluggish activity amid easing inflation pressure had continued.

Foreign direct investment (FDI) continued to lend support to the sluggish economy, however, with investment values increasing 34 per cent this year to August for a total of about US$7.4 billion.

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