Cashew farmers switch to rubber

Many farmers in the southeastern province of Binh Phuoc, the country's largest cashew cultivation area, have switched to growing rubber trees as the price of cashews has fallen by 50 per cent.

Farmer Ma Van Quang of Dong Phuoc District's Thuan Loi Commune, said he did not have enough money to continue to cultivate cashews this year, especially after a poor harvest.

The price of cashew nuts has dropped to VND26,000-27,000 (around US$1.28) a kg compared to VND37,000-40,000 ($1.76-1.9) a kg last year.

"My neigbours have also cut down their cashew orchards," Quang said.

Tran Ngoc Tuan, whose orchard is near Quang's, cut down four ha of his six-ha cashew orchard.

"The income from cashews is now even lower than that from cassava," said Tuan, who had grown the trees for more than 10 years.

Farmers with orchards that have productive trees are also switching to other crops.

Nguyen Thi Quynh Giao, a trader who buys cashew-tree wood in Bu Gia Map District, said she had never seen so much cutting of wood.

"If this cutting continues, this area will have no cashew orchards in the next few years," she said.

Traders buy cashew wood for VND15-20 million ($714-952) a ha, and then they sell it for firewood.

Tran Ngoc Kinh, head of the province's Sub-department of Plant Protection, blamed the situation on the lack of close cooperation among farmers and cashew processors.

"Binh Phuoc has the country's largest cashew cultivation area, but there is no processor cooperating with farmers to develop cashew cutivation areas," he said.

Processors typically wait until the harvest season to buy cashew nuts, he said, adding that many processors do not buy domestic nuts for production but import them from Africa.

Recently, the province's Department of Agriculture and Rural Development encouraged farmers to grow cacao trees in their cashew orchards, which is expected to bring higher incomes to farmers.

The area under cashew cultivation in Binh Phuoc fell from 180,000 ha in 2005 to 167,000 ha in 2009, and to 148,000 last year, according to the Binh Phuoc Province Cashew Association.

Stocks rebound on both bourses

Stocks rallied yesterday on both of the nation's stock exchanges, with the VN-Index adding 0.9 per cent to the previous day's close in HCM City and the HNX-Index finishing the day up 0.4 per cent in Ha Noi.

On the HCM City Stock Exchange, the VN30, tracking the city's 30 leading stocks in terms of market capitalisation and liquidity, also edged up 0.5 per cent to 513.38 points. However, the rally in blue chip shares slowed towards afternoon trading. Insurer Bao Viet Holdings (BVH), after hitting its ceiling price earlier in the day, retreated before closing up on the day by about 2.5 per cent.

Telecommunications equipment provider Sacom (SAM) became the most-active share nationwide with around 3.9 million changing hands.

The value of trades in HCM City reached VND787.3 billion (US$37.4 million) overall, up 9 per cent, on a volume of 49 million shares.

"Lower volumes are now a major concern for the fragile market," said Kim Eng Securities Co analysts, who advised investors to maintain a strategy of keeping low ratios of stocks in investment portfolios.

Viet Nam Investment Securities Co analysts predicted that economic stability and expectations of futher interest rate reductions would prevent the stock market from plunging.

On the Ha Noi Stock Exchange yesterday, the HNX-Index closed at 75.62 points. The value of trades increased slightly over Tuesday's session to VND345.8 billion ($16.4 million) on a volume of 32.4 million shares.

After nearly three months of extended trading hours, the market has became more vibrant and market liquidity has improved significantly, said the head of the Sate Securities Commission's market development division, Nguyen Son, noting that the pilot period would end this week.

The commission would make an overall evaluation of the pilot period for submission to the Ministry of Finance, which would make a final decision on whether to officially apply the longer trading period.

On the Government bond market, bonds in four terms worth a combined value of VND3.75 trillion ($178.5 million) were sold, accounting for 37.5 per cent of the total tender. The yield for two-year bonds was only 8.9 per cent.

Firms issue more shares to raise capital

Many large companies are seeking capital through issuing additional shares in an effort to overcome difficulties in accessing bank loans or to finance dividend payouts.

Food processor Masan Group (MSN), one of the top 10 companies by market capitalisation and liquidity on the HCM City Stock Exchange, approved a private issue early this week of up to 310 million shares at a price of no less than the par value of VND10,000 per share.

Those shares, expected to be issued in the latter half of this year or in the first quarter of next year, will be targeted to domestic and foreign strategic investors who are capable of contributing to the company's operations.

Of 310 million shares, 110 million shares will be issued to raise cash for operations and to complete merger and acquisation deals, while money raised from the remaining 200 million shares will be used to settle debts.

By the end of the first quarter of this year, MSN had posted earnings of VND1.5 trillion ($73 million), up 16 per cent over the same period last year, but its profits were down 1.5 per cent to just VND559 billion ($26.6 million) due to higher costs.

MSN shares are currently being traded at around VND100,000 per share.

Another of the top 10 largest shares on the HCM City exchange, property developer Hoang Anh Gia Lai Co (HAG) will also list over 70 million shares on June 4, worth an estimated VND700 billion ($33.3 million). The funds raised will be used to cover dividends on 2010 profits.

HAG reported its first-quarter revenue increased 21 per cent year-on-year to VND870 billion ($41.4 million), but due to the rising costs of sales and debt servicing, its net profit declined 83 per cent to just VND77 billion ($3.7 million).

HAG closed yesterday unchanged at VND27,300 per share.

Another major real estate developer, Tan Tao Investment Industry Co (ITA), has also decided to list nearly 102.6 million shares worth over VND1 trillion ($48.8 million) on June 5. The funds raised would also be used to finance its 2010 dividend payout.

ITA shares declined by 1.3 per cent yesterday to end the session at VND7,600 per share.

Stocks reverse previous gains

Shares declined this morning after posting gains yesterday. On the HCM City Stock Exchange, the VN-Index tumbled 0.7 per cent, finishing morning trading at 432.15 points. Losers outnumbered gainers by 192-38.

The VN30, formed by the southern bourse's 30 best stocks, closed at 510.44 points, a 0.6 per cent off.

Only construction firm Sudico (SJS) and food processor Hung Vuong among these 30 stocks managed to add points. Meanwhile, largest shares lost significant value, such as Vietinbank (CTG), property developers Hoang Anh Gia Lai (HAG) and Vingroup (VIC), and PetroVietnam Gas (GAS) - which is not included in the VN30 but has become the second largest listed stock.

Market value in HCM City reached VND425.5 billion (US$20.2 million), or 54 per cent of yesterday's entire session, on a volume of 26.4 million shares.

On the Ha Noi Stock Exchange, trading value this morning only accounted for around 66 per cent of yesterday's whole level, totalling VND229 billion ($10.9 million). The volume of trades fetched nearly 24.2 million shares.

The market is due to open again at 1 pm.

CTS fined $476,000

Vietinbank Securities Co (CTS) was fined by the State Securities Commission for using its trade support agents in an order-receiving capacity.

The value of the penalty was VND10 million (US$476,190).

Study considers express trains in Delta

A feasibility study has been completed for building rail tracks from HCM City to My Tho and Can Tho in the Cuu Long (Mekong) Delta that will allow the operation of superfast trains that travel at an average of 200km per hour.

According to the Transport Engineering Design Joint-Stock Incorporated South (TEDI South), which will design the railroad together with a South Korean consulting firm, it will take passengers a mere half an hour to travel from the southern hub to My Tho in neighbouring Tien Giang Province and an hour to Can Tho.

Once TEDI South completes detailed plans next year, the Ministry of Transport will seek investment for the 160-km, US$9.6 billion project.

At the HCM City end, the route will start at either Thu Thiem in District 2 or Hoa Hung railway station in District 3. It will end in Cai Rang District in Can Tho.

As the tracks will go underground while entering cities, they will be elevated elsewhere to ensure they do not obstruct canals and other waterways.

The railroad will cover 258.2 ha of land, including 42.8 ha in HCM City, 129 ha in Tien Giang Province, 39 ha in Vinh Long and 41.5 ha in Can Tho.

Compesation for site clearance amounts to $1.25 billion, according to the figures from Chungsuk Company, the Korean consulting firm.

Large bridges spanning the Tien and Hau rivers will be built.

The Viet Nam Railway Bureau has reached agreement with Long An and Tien Giang Provinces for the project.

They will allocate land to reduce site compensation.

The Railway Bureau will also work with authorities in Vinh Long Province and Can Tho next month to draw up the plans.

A Sai Gon-My Tho railway built by the French in the early 20th century exists but TEDI South said new tracks would be laid.

Gov't bonds fail to sell

Only 20 per cent out of a total VND1 trillion (US$47.6 million) in Government bonds succeeded in finding buyers this week.

Three-year bonds worth VND200 billion ($9.5 million) were sold with an annual yield of 10 per cent. However, bid rates for five-year bonds ranged between 10.45-12.5 per cent, higher than issuing yield, resulting in no sales.

The bonds were issued by the Viet Nam Bank for Social Policies. Since the beginning of this year, the bank has raised a total of VND11.83 trillion ($563.3 million) worth of Government bonds.

Bank has new subsidiary

Military Insurance Corp has become a Military Bank subsidiary after the latter got permission from the Ministry of Finance to increase its ownership in the insurer from 18 to 49.8 per cent.

The insurance company, with capital of VND400 billion (US$19 million), currently lists its shares on the unlisted public company market.-

BIDV plans to go public

The Bank for Investment and Development of Viet Nam (BIDV) will list shares on the HCM City Stock Exchange next month, says its chairman, Tran Bac Ha. The bank registered to be a public enterprise from May 14 at the State Securities Commission.

From now until it becomes a listed bank, BIDV will have to comply with information disclosure regulations applicable to unlisted firms.-

Firm delists on City bourse

Viky Plastic Co (VKP) will delist 8 million shares worth VND80 billion (US$3.8 million) on the HCM City Stock exchange on June 25. The last trading day will be June 22.

Viky attributed the move to its loss of between VND35.7-58.6 billion ($1.7-2.7 million) over three successive years.-

Salt stockpiles reach 136,000 tonnes in May

Farmers and salt companies said they had more than 136,000 tonnes of salt in stock by the middle of this month, or equivalent to 58 per cent of last year's corresponding period, according to the Ministry of Agriculture and Rural Development.

The Cuu Long (Mekong) Delta accounted for the largest quantity of salt produced, with about 110,000 tonnes, followed by the central region with 17,880 tonnes and the northern region with 11,690 tonnes.

Currently, salt is sold from VND700 (US$0.03) to VND2,000 ($0.09) per kilo nation-wide.-

Japan firm opens $17m factory in Dong Nai

Hisamitsu Viet Nam Pharmaceutical Co Ltd, a 100 per cent subsidiary of the Japanese Hisamitsu Pharmaceutical Co Inc, opened its new factory in Dong Nai Province's Bien Hoa Industrial Park No 2 yesterday.

With an investment of US$16.84 million, the factory is expected to increase production of Salonpas pain-relief patches to meet rising demand in the local market and to export to other Asian countries.

With this new factory, total investment of Hisamitsu in its manufacturing facilities in Viet Nam is nearly $25.5 million, up from $5 million when the company first entered the country in 1995.-

Vice President attends opening of Vietinbank's Berlin branch

Vice President Nguyen Thi Doan yesterday attended the opening ceremony of the second branch of the Joint Stock Commercial Bank for Industry and Trade of Viet Nam (Vietinbank) in Berlin.

She said the pioneering bank, in expanding into the German market in particular and Europe in general, has created to a turning point in the expansion strategy of Vietnamese banks.

It marked the development of the local finance and banking sector during the country's international integration process.

Doan also chaired a forum on accessing credit and business opportunities in Germany, co-hosted by the Viet Nam Chamber of Commerce and Industry and Vietinbank.

She said this was an opportunity for businesses from both countries to explore investment prospects and further boost their trade relations.

As part of her three-day working tour, which concludes today, she also visited the Vietnamese Embassy and the Vietnamese overseas community of some 100,000 and said they played a key role in consolidating ties between the two countries.

HCMC ekes out ways to rescue businesses

The first four months of 2012 have been extremely difficult for Vietnam’s economy in general and Ho Chi Minh City in particular.

It is estimated that nearly 8,300 enterprises have shut shop in the first four months of the year. Amongst them, the numbers of retail businesses going bankrupt were the highest, amounting to more than 5,000. Many businesses operated with 90 per cent capital coming from bank credits so that they could not afford to pay the interest rates.
 
These businesses failed to pay the interest rates or clear dues and declared bankruptcy, with the economic recession being the main cause of their plight.

One real estate businessman in Thu Duc District told reporters that he had to suspend operations because of high bank interest rates, which were as high as 20-22 per cent per year.

He could not sell any apartments and now is gradually eating from his capital.

Economic difficulties also affected the commercial banks, as income from services declined sharply compared to last year.

The profit rates of many Vietnamese commercial banks mostly depends on lending activities, which suffered a negative credit growth rate of 0.66 per cent in the first four months of this year.

Negative credit growth is posing a huge challenge to Vietnam’s current credit-driven growth model.

In the current market conditions, the continued pressure of the central bank on deposit rate ceilings can be seen as the main cause in helping commercial banks to maintain marginal profit rates.

Most banks have seen revenues decline as many customers tend to restrict the use of commercial bank services in order to cut their input costs.

The city’s Department of Finance estimated that if the banks seize assets to reimburse debts, the total number of businesses going bankrupt would be far higher. The reason was that the value of real estate was going down and even if the banks confiscated land or houses of debtors, it would be no use as the entire capital amount could not be retrieved!

Almost 90 per cent businesses in Vietnam are either small or medium-sized. These SMEs suffer the most in an economic recession.

In terms of revenue and business performance, SMEs cannot compete with other big enterprises, due to financial shortage, high land rentals, difficulty in accessing loans from banks, etc.

Tran Thuy L., director of a plastic company, said that in the first four months in 2012, production reduced constantly, consumer power   decreased, and the numbers of goods in store accumulated day by day!

Nguyen Trong Hanh , vice director of the Tax Department in HCMC, revealed that in the first four months of 2012, more than 8,000 businesses informed the Tax authorities of preparations for ceasing operations and declaring bankruptcy.

If the individual households are also taken into account, the numbers reach more than 38,000, he added. During recent meetings with customers, he realised their spirits were low. “They told me they could not see the light at the end of a tunnel”, said Hanh.

Similarly, the Vietnam Association of Processing and Exporting Sea Products unveiled a survey in the first quarter of 2012, in which 30 per cent businesses faced threat of suspending operations.

Statistics from Customs Offices showed that the number of export businesses decreased from 800 to 500 in the first quarter of 2012. Figures from Statistics Offices also show that goods stockpiles have increased by 32 per cent over the same period last year.

Experts raised the question as to how businesses can overcome difficulties in 2012.

The Government has allowed businesses to make their VAT declarations at the end of the second quarter of the year and not pay immediately.

The Gov’t has also reduced land rental payments and waived this year's license tax for fishery and salt-making households. The move is aimed at helping struggling firms and households overcome financial difficulties.

Recently the Ministry of Finance unveiled an assistance package worth VND29 trillion ($1.39 billion) to support local firms to overcome their financial difficulties.

However, experts believe that businesses can withstand the difficult times. One solution is that the banks apply a cap on lending rates for four prioritised sectors at 15 per cent per annum; including agriculture, exports, small and medium enterprises (SMEs); and support industries and step up efforts to boost slow growth.

Another solution for coping with financial pressure is for several trading companies to settle problems by resolving wages, unemployment benefits, insurance for employees, by paying in kind and not cash, such as products or devices in supermarkets.

Nguyen Thi Hong, vice chairwoman of the People’s Committee of HCMC, recommended the Government step up clearing of bad debts. At present the amount of bad debts in commercial banks has reached nearly VND37 trillion.

In any case, due to financial shortage, the trading companies have to re-organise and find ways to enhance competition.

“The grass root solution is that policies concerning factors such as access to bank loans, stockpiling, and profits should be changed to macro-economic management level to support businesses”, Ms. Hong said.

More houses threatened by landslide along Hau River

Further stretches of the Hau River bank continued to slip on Sunday, putting more houses in danger of being swallowed by the river in Binh Khanh Ward of Long Xuyen City in the Mekong Delta province of An Giang.
Local residents clear debris of a collapsed house after the landslide along the Hau River bank in An Giang Province on May 26

The landslide has now stretched over nearly 30 metres into the mainland. At the edge of the landslide on one end lies a noodle processing unit while at the other end exists a warehouse, both of which stand to drop into the river at any time.

Vo Duy Cuong, chairman of the People’s Committee in Binh Khanh Ward, said that the heavy rainfall on Sunday has made the area more susceptible to further landslide. A 40m long crack has also been found in the area.

Authorities in An Giang Province have warned about dangerous conditions along a 180m stretch of the river bank.

Total numbers of households affected by the landslide have increased to 27, of which 15 have been evacuated and the remaining are ready to relocate if the landslide worsens.

Tran Anh Thu, deputy director of the provincial Department of Natural Resources and Environment, said that relevant sides should first control the eddies. In the long term, the province will need to develop a project to control the river’s flow.

The project will help to uncover vulnerable spots for landslides and prevent them from occurring so frequently. However, it is a very costly project which needs assistance from the central Government.

Building material industry remains in slump

The Government issued Resolution 13 in mid-May this year to resurrect companies that had become sluggish in recent years, particularly the building material companies affected by an ailing real estate market, but its efficacy is still under question.

Data issued by the General Statistics Office shows that in the first four months of this year, consumption index of iron and steel dropped by 2.2 per cent; cement manufacturing declined by 9.5 per cent; and power cable and electric wire manufacturing decreased by 18.3 per cent.

Meanwhile, inventory index of these products rose sharply. For instance, inventory of cement surged 44.2 per cent; furniture increased 16.7 per cent; and steel and iron rose 1.1 per cent.

This situation caused by a muted real estate market and prolonged policies to reduce public investments seems to worsen as May ends.

Tran Van Huynh, chairman of Vietnam Association for Building Materials, said that building material firms were facing dire agony. The numbers of companies which had to contract or call a halt to manufacturing were increasing. Besides, these companies are about to enter the most difficult period in a year-the rainy season-- when building materials rarely have a market.

Amidst this tense situation, the government promulgated a solution package, the so-called Resolution 13, to help resolve imminent problems and revive the market, as well as reduce input expenses for enterprises.

Under Resolution 13, firms received reduction or extension on value-added tax, corporate income tax, and land rentals.

According to experts, a faster public investment disbursement will help firms resolve their high inventory of steel and cement. Although building material companies are not the main subject under Resolution 13, it is expected that building material markets with other support programmes by banks will benefit from these government measures.

However, building material companies remain pessimistic about their future. Excluding tardiness of the policy, even when heat returns to real estate market, other related industries will not recover concurrently.

All building material companies have almost run out of working capital because products are unsalable or buyers do not have money to pay. Companies appropriate capital of each other so they cannot reclaim money to turn over manufacturing while input expenses like power and fuel are increasing ceaselessly.

A cement company in the central province said that it still suffered redundancy though it was running at 70 per cent of its capacity.

Do Duc Oanh, general secretary of Vietnam Cement Association, said that high inventory was the current biggest issue in the cement industry. This year, cement industry is expected to consume around 46-47 million tonnes of cement and export 7 million tonnes which means that more than 10 million tonnes of cement lies redundant.

Currently, nearly 100 cement companies are in a miserable situation. For instance, Cam Pha Cement Joint Stock Company suffered accumulated losses of nearly VND1.26 trillion; Ha Long Cement Company VND982 billion; and Dong Banh Cement Company VND149 billion. Meanwhile, some other cement companies, including Thanh Liem Cement Company and Ang Son Cement Company have stopped working.

Steel industry also experienced a slump in consumption and high inventory. The Vietnam Steel Association forecast that the industry will have to face difficulties for at least six more months, or even until the end of this year.

Mr. Tran Van Huynh considered that the new government policy will only produce a few minor effects. Firms can barely access lending capital although banks have loosened credits. Moreover, as most firms are ailing, these measures do not seem to revive the building material market immediately. As the rainy season approaches, building material companies are switching to retail marketing, however, this will not help them recover manufacturing woes.

Going with the grain

Poverty forced Duong Xuan Qua to drop out of school after completing his ninth grade and turn to farming, but it could not dim his passion and aptitude for tinkering with machinery.

Several years later, he moved to HCM City and began working for a Taiwanese company, where he learnt welding and designing steel staircases, doors and other things.

After learning as much as he could from the job, he returned to his hometown in the Cuu Long (Mekong) Delta province of An Giang, still liking to tinker with things and still wanting to make his fortune.

The year was 2002. He was 45 years old.

He not only worked as a welder back home, but also did several other things to earn his livelihood. He made a simple oven to bake bread, incubators to hatch eggs as also a machine to help make rice wine. In doing all this, he kept reading technological magazines and getting ideas about making improvements to existing equipment.

Then, one day, he struck upon the idea of making a paddy drier that was more efficient than the ones in use in the Cuu Long (Mekong) Delta, the region known as the nation's rice granary.

When he finally managed to make one and it worked successfully, it was the happiest moment of his life.

"It was an indescribable emotion. If someone had given me five taels of gold then, I would not have been happier," he said.

Qua said that his paddy dryer was better than others used in the Cuu Long (Mekong) Delta thanks to the innovation of a fan system placed outside the kiln.

Other traditional paddy dryers also have the fan but they do not perform strongly enough to deliver the heat to all parts of the kiln.

Furthermore, the fan installed by Qua consumed less power.

"I accidentally saw a propeller used in a boat that could travel at 80km an hour. I decided to make the propellers with ten wings. That's why the fan in my drying system operates much better, giving stronger wind to the kiln than the others which use traditional propellers," Qua said.

"The modified fan can help cut 30 to 50 per cent of electricity used during the drying time. With traditional paddy dryer, the expense for one tonne of dried paddy is estimated at VND100,000, but that is reduced to VND60,000 by using my dryer," Qua said.

He said he was trying to further improve the system to reduce the drying cost for a tonne of paddy to VND40,000.

"The newly invented fan and the well-designed kiln means farmers do not have to work to spread out the rice as it dries. When using traditional paddy dryers, farmers often take all paddy out to put the top layer at the bottom of the kiln and the bottom layer at the top, to ensure the rice dries evenly.

"This is not necessary anymore," Qua said.

He said his dryer did not only give very good drying result but also delivered good quality rice.

In 2007, Qua established an enterprise for producing the paddy-drying machine with capacity of 10 to 30 tonnes.

Now, his enterprise employs more than 20 workers, excluding five teams that are in charge for assembling and offering maintenance services to customers in the Cuu Long (Mekong) Delta, the Southeastern and Central Highland regions.

With non-stop innovation of his products, more and more farmers want to buy the dryer. Although Qua's product was introduced to the market less than two years ago, buyers have come from all over the country after hearng about it. Last year, Qua exported 30 dryers to Cambodia.

Since 2005, he has sold more than 1,300 paddy dryers of all sizes for farmers in 18 provinces and cities.

Qua said that he has also successfully made a conveyor belt that transports paddy from boat to the dryer, with the aim of reducing labour costs for farmers.

During harvest time in rainy season, farmers cannot dry their paddy under the sunlight. And it's very difficult for them to transport the paddy to the locations of dryers.

Qua has even made floating paddy dryers that can be rowed along rivers and canals to the houses or paddy fields of farmers. The floating dryer can dry between 10 to 15 tonnes of paddy each time.

Early this year, Qua signed a "big contract" with the Co Do and Song Hau companies for installing more than 80 dryers.

Another major innovation that Qua is working on now is to use solar energy for the dryer. He is doing this under a research project funded by the Danish government, which has recognised Qua's earlier work by choosing him for the latest initiative.

Qua's dryers are bought by individual farmers as well as cooperatives and entrepreneurs. He provides good installation and after sales maintenance services to keep clients satisfied.

Every time his products are sold, he sends staff to help assemble the system. He does this for customers everywhere including the Central Highlands and Cambodia.

Nguyen Van Anh, a farmer in Tan Trieu District in Mekong Delta Dong Thap Province, who has bought three drying systems from Qua to offer the service to local farmers, said he was happy with the systems' performance. The contract was worth about VND1 billion.

His customers were very happy with the drying result, Anh said, adding that his factory was always crowded with clients during the harvest season while other plants in the area languished.

Anh, however, claimed that he himself has deployed some "tricks" to make the machine work even better, but declined to reveal what they were.

Before 2002, life was very difficult for Qua. He owed VND30 million to the bank and was struggling to make ends meet. However, with the very first contract for his paddy dryer, he paid of all his debt.

Qua refused to talk about his family's current income from the paddy drier business, but said his economic conditon was much better than in the past.

The 55-year-old man, known popularly as Nam Nha, king of paddy driers, has four children, three sons and a daughter. All of them are married. Two of his sons now help him operate the business.

Huynh Hiep Thanh, an agricultural official in An Giang, said the province has been praised as the locality having the highest number of paddy dryers in the country, with more than 2,300 systems that meet 80 per cent of local demand.

Qua's initiative and his Nam Nha Enterprise have made great contributions to the province's achievements in rice cultivation and processing, Thanh added.

Fresh FDI approvals continue falling

New foreign direct investment (FDI) approvals in the country has totaled US$5.33 billion in the year to date, down 31.8% year-on-year, according to the Ministry of Planning and Investment.

The country has attracted 283 new FDI projects with total registered capital of US$4.12 billion, equivalent to 74.7% of the figure recorded in the same period last year. Some 82 existing FDI projects have added US$1.2 billion to their capital.

The manufacturing sector has taken the lead in FDI attraction with total investment capital of more than US$3.3 billion, followed by the realty sector with US$1.57 billion pledged.

Despite the shrinking new approvals, FDI disbursements have remained stable. In particular, January-May saw US$4.5 billion FDI disbursed, almost the same as in the same period last year.

Japan has so far become the country’s biggest investor with 104 projects worth US$3.7 billion, followed by British Virgin Islands, Hong Kong and South Korea.

Binh Duong Province is now the country’s most attractive destination for foreign investors. In the year to date, it has lured 33 new projects with combined capital of US$1.6 billion.

Binh Duong is followed by Hai Phong, Dong Nai, HCMC and Quang Ninh.

Logistics firms get moving

Local logistics firms are mulling ramping up operational efficiency before the market totally opens to foreign investors from 2014.

Vietnam is home to 800-900 logistic firms, most small with limited capital sources and just holding a 30 per cent market share.

One of logistic firms’ biggest concerns is Vietnam totally opening its logistic market to foreign players from January 1, 2014 as per World Trade Organization commitments, meaning foreign firms will be liable to open wholly foreign-owned logistic firm in Vietnam.

In this context, many local firms are planning mergers and acquisitions (M&A) to sharpen their competitiveness.

Gemadept Logistics Joint Stock Company is one firm looking for a strong restructuring plan in the next three years.

Albeit active in ports services, shipping, real estate and rubber growing this year Gemadept is set to boost incomes from ports services and shipping.

Especially from second quarter of 2013 its Nam Hai-Dinh Vu port will enter into service to serve northern market to catch up with rebounding demands for goods transport, for instance to China. The port’s ground and wharf area is to triple that of its existing Nam Hai port in Haiphong city.

“Parallel to completing Nam Hai-Dinh Vu port, we are carrying out M&A with other logistic firms having good infrastructure,” said Gemadept general director Do Van Minh.

Eyeing an annual average growth of 30 per cent, Minh Phuong Trade Services Company is a weighty competitor in local logistic field.

“In the long haul, we may consider M&A as a way to enhance our position,” said Minh Phuong’s chairwoman Dang Thi Minh Phuong when being queried about the company’s strategy to stay firm in the market after 2014

Big investments were also required to grow professionalism in logistic services, according to Phuong. Accordingly, Minh Phuong Company had pumped millions of US dollars into procuring 100 container truck trailers, dozens of vans and 12,000sq.m wide holding yard. These are the company’s advantages in sourcing partners.

“Local logistic firms with good infrastructure like Minh Phuong will be the targets of foreign-invested firms often with minor investments into infrastructure,” said MUTRAP III’s senior expert Jan Tomczyk.

Tomczyk assumed M&A perspectives in the logistic field would be promising since logistic field eyes a high annual growth of 20-25 per cent thanks to steadily rising retail and import export sector value.

Put-through cargo volumes at Vietnamese ports are expected to hike from 280 million tonnes per year to 500-600 million tonnes per year from now to 2015, reaching 900-1,100 million tonnes by 2020 and from 1,600 to 2,100 million tonnes by 2030. In this context, local logistic firms can only meet one-fourth of the demand.

Vietnam Shipowners Association chairman Tran Duc Minh said local firms needed to weigh up creating synergies to help them compete equally with foreign players when the market is totally opened from 2014.

Low labor quality hinders investments in Mekong

Low quality and poor discipline of human resources in the Mekong Delta are the biggest concerns of foreign investors.

This view was shared by local businesses and foreign investors at a seminar on investment promotion for Can Tho City and the Mekong Delta co-organized by the Vietnam Chamber of Commerce and Industry (VCCI), the 2030 Business Club under the Saigon Times Club and Can Tho Promotion last Friday in HCMC.

Ha Xuan Anh, chairman of Son Viet Garment Corporation, known for the fashion brand Relax, said the Mekong Delta, with around 18 million people, 22% of the national population, is considered a large market for the garments industry and many others.

Consumers here, Anh noted, have disposable incomes and many of them are willing to spend up to 90% of their incomes.

However, the biggest headache Anh will face when he plans to open a factory in this area is labor. Although the region has an abundant workforce, the educational level of locals is generally low, he said.

What worries him more is the lack of labor skills and of discipline, so it is hard to ensure production efficiency.

Sharing Anh’s view, Dao Ngoc Hoang Giang, general director of Sao Mai Office Equipment JSC, said it is difficult to find workers with medium and high skills levels in the delta. Therefore, expanding production and business operations is a hard nut to crack.

Speaking at the seminar, foreign investors bemoaned the issue of recruitment in the delta, saying it is the biggest concern at present. Oliver Meeker at Vietnam Investment Group said his organization could not employ local people for a project in Ca Mau, and had to turn to HCMC instead, leading to higher labor costs and inconveniences.

Similarly, Nguyen Thi Diep, director of the Can Tho branch of Germany’s GHP Far East, said it took more than six months for GHP to recruit a person for the post of branch head, since locals have no experience in working for foreign companies and have little or no knowledge of foreign languages.

Diep also complained about the discipline of laborers in this region. “Employees often quit halfway. When asking them for reasons, they said they left for rice farming for a couple of days and would return soon,” Diep noted.

Another problem that businesses and investors raised at the seminar is poor infrastructure, which they deemed the biggest obstacle for investment attraction in the Mekong Delta.  Although road infrastructure from HCMC to the Mekong Delta has been much improved, transport infrastructure remains weak, thus the region is less appealing to foreign investors.

Enterprises underlined the need to promote projects to develop transport infrastructure and soft infrastructure such as power supply and internet services.

According to investors, some provinces in the delta are promoting the development of fish and rice farming, and expanding other sectors, but infrastructure preparations for these industries are not enough.

Citing the Can Tho branch of GHP Far East as an example, Diep said her branch is operating very well and in need of expansion because the markets in Can Tho and other provinces are potentially large.  However, the major problems are that internet connection in Can Tho is not stable and power outages occur frequently, making it difficult for an information technology company like hers.

Diep said her branch needs internet connections with other GHP branches worldwide. Therefore, she called for an improvement of internet access and electricity supply.

From 1988 to 2011, the delta lured 565 foreign-invested projects worth a combined US$9.5 billion, less than 5% of the national total.

Last year, this region attracted 96 FDI projects capitalized at US$402 million, less than a quarter of the figure in 2010 and representing a mere 3.5% of the total foreign direct investment approvals in Vietnam in 2010.

Gold bar trading allowed for six more months

Gold traders will be able to trade gold bars for another six months after the newly-issued Circular 16 of the State Bank of Vietnam takes effect from July 10, the Government said on its website (chinhphu.vn).

The circular was issued last Friday to guide the implementation Government Decree 24/2012/ND-CP on gold bar trading restrictions. Under the circular, traders will have six months to switch business.

During this period, all gold bar trading will take place as normal, and enterprises and credit institutions have to complete the required procedures to get gold bar trading licenses from the central bank.

After this conversion time, organizations and individuals are only allowed to conduct gold bar trading with enterprises and institutions licensed by the central bank to buy and sell gold bars. Enterprises will also be banned from producing gold bars as stated in Article 21 of the decree.

According to the circular, gold bars of SJC or of other producers previously licensed by the central bank and under the legal ownership of organizations and individuals will be traded on the market normally.

After the six-month period, gold owners will only be able to buy and sell the yellow metal through accredited enterprises and credit institutions.

The conversion period for gold jewelry production and trading is 12 months.

Vietnam’s top 10 architecture, property firms recognized

BCI Asia, a construction media group in Australia, picked 10 most active architecture firms and property developers in Vietnam for the annual BCI Asia Top 10 Awards held in HCMC last Friday.

The eighth award recognized developers and architecture firms building and designing the greatest volume of buildings in Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

In the architecture category, The BCI Asia Top 10 Awards 2012 went to companies such as Aedas Vietnam, DA Urban Architecture, DP Consulting, dwp design worldwide partnership, HTT Architect & Associates, and RSP Architects Planners & Engineers (Vietnam).

In the developers category, CapitaLand (Vietnam), Duc Khai, Keppel Land Vietnam, Sai Gon Thuong Tin Real Estate JSC (Sacomreal) and VinaCapital are among the awarded companies.

The portfolios of these elite architecture firms include US$6.8 billion worth of properties scheduled to start construction in Vietnam this year while the portfolios of these top developers contain US$3.3 billion.

The awards are bestowed to firms that will shape the built environment of tomorrow, enabling the market to better understand the important roles these firms play and their impact, both socially and on the environment.

Matthias Krups, chairman of BCI Asia, said innovation for designs and long-term solutions for sustainability were seen in examples of projects by this year’s Top 10 Award winners.

He said the fact that buildings are responsible for as much as one third of global greenhouse gas emissions and 40% of global energy used. Sustainable development is starting to be recognized stronger by the market players around the world. This trend is witnessed in Asia as well.