VN production capacity well above average

 

The UN Economic and Social Commission for Asia and the Pacific (ESCAP) has recognised Viet Nam's successful expansion of production capacity as going beyond global average levels.

 

ESCAP said at an annual meeting in Bangkok, Thailand, from May 19-25 that Viet Nam was one of the four most successful regional countries in terms of diversifying export-oriented products and expanding market share for a number of products during the past two decades.

 

It also lauded recent measures taken by the Vietnamese Government in ensuring social welfare, which was of great concern at the meeting in the post-crisis period.

 

Representatives from 62 ESCAP members shared a view that although developing economies in the region had managed to maintain an average growth rate of 8.8 per cent in 2010 – and an expected 7.3 per cent this year – they were still facing numerous challenges such as high inflation and stagnant production.

 

Consequently, social welfare had become an issue of great concern for the region, not only to ensure a reasonable life for people, especially the poor, but also to boost the labour force in the interest of socio-economic development, the meeting was told.

The meeting passed a number of initiatives on ESCAP priorities, ranging from stronger assistance for less developed economies, to the harmony of the environment and development, energy, and closer co-ordination of action between ESCAP and other international and regional organisations.

 

In this regard, head Vietnamese delegate Le Hoai Trung, who is Deputy Foreign Minister, called on ESCAP to strengthen co-operation with the Mekong River Commission and other regional organisations, after reiterating the national policy for further reforms in all fields and stronger global integration.

 

Preferential customs procedures on trial

 

Local and foreign exporters and importers could benefit from preferential customs procedures in a pilot project revealed by the Ministry of Finance yesterday in Ha Noi.

The pilot project falls under Ministry Regulation 63/2011/TT-BTC to apply preferential customs procedures for enterprises which meet certain conditions.

 

A representative from the Viet Nam General Department of Customs (VGDC) said that preferences would be given in three exporter and importer categories: domestic aquaculture/agriculture and crude oil products, high-tech, and all other sectors.

 

According to the VGDC, enterprises would be exempted from detailed inspections of customs documents and goods unless there was evidence of a violation. Preferential enterprises would also be exempt from post-entry audits. They would be able to complete e-customs procedures 24 hours per day, seven days per week, pay customs tax and fees once each month through banks and enjoy other preferences.

 

Director of the After Clearance Inspection Department Pham Thanh Binh said the regulation would be an important step in the Viet Nam customs reform process in preparation for integration of the sector into regional and international customs.

 

"The regulation targets groups of domestic aqua-agriculture and crude oil product exporters and importers with an aim to boost trade and economic development," stressed Binh.

 

Preferred enterprises must be on the list of lowest risk companies and satisfy various conditions, such as having turnover of at least $100 million per year for domestic aquaculture/agriculture and crude oil products and at least US$500 million per year for all other sectors. Turnover for high-tech companies would be decided on a case by case basis.

 

According to VGDC, the regulation targets a group of 250 big exporters and importers that have a turnover of between $100-500 million among the more than 40,000 enterprises in Viet Nam.

 

"We hope to have as many preferential enterprises as possible. However, the criteria is very specific and detailed," said Binh.

 

"We expect to have around 50 enterprises on the preferential list by the end of 2011," he said.

 

A representative for Intel Products Viet Nam, Nguyen Thanh Tam said that Intel would be willing to apply to the list of preferential enterprises.

 

"The regulation, especially the exemption from post-entry audits, is an open-point in customs procedures that helps exporters and importers save time in the customs clearance process and boost trade and production," said Tam.

 

The regulation will be piloted for a two year period.

 

The customs department yesterday started a campaign to disseminate the content of the regulation to enterprises nation-wide.

 

Ministry targets economic corridor

 

The Ministry of Foreign Affairs will become the key agency to deal with development obstacles associated with the East-West Economic Corridor project between Viet Nam, Laos, Thailand and Myanmar.

 

Speaking at a meeting on Wednesday with central province authorities, Nguyen Xuan Phuc, the minister and director of the Government Office, said the Foreign Affairs Ministry would be in charge of activities to improve cooperation between provinces and localities in Laos and Thailand.

 

The EWEC project, initiated at the eighth Greater Mekong Sub-region ministerial summit in the Philippines in 1998, aims to develop a traffic system for transport of cargo and passengers in the region.

 

The EWEC's section in Viet Nam goes through Quang Tri and Thua Thien Hue provinces and ends at Tien Sa Port in Da Nang.

 

A 1,450km road as well as seaports and tourist and energy facilities have been built.

 

However, the provinces have reported a number of problems related to the differences between countries.

 

These include vehicles with the driving wheel on the right side, differences in working hours between the countries, different road fees, and an incomplete support road system.

 

During the meeting, the provinces asked the Government to create better cooperation between provinces and localities in neighbouring countries in order to improve development.

 

Minister Phuc said that related ministries and central agencies should assist the provinces in dealing with the problems.

 

In addition, the Government Office plans to submit reports to the prime minister on the major issues related to the EWEC project.

 

Ho Xuan Son, deputy minister of foreign affairs, recommended establishing a joint committee of the four countries' governments to discuss the major issues related to the corridor.

 

Coordinated policies for customs, fee rates, services and tourism along the corridor would be the keys to success, he said.

 

The Transport Ministry pledged to carry out work to adjust traffic signs and road repair along the corridor.

 

To increase usage, Nguyen Ngoc Dong, deputy minister of transport, suggested a reduction in fee rates on road and bridges along the corridor.

 

Inflation lifts agricultural export value

 

Increasing prices on the world market have pushed agricultural, fish and forestry export values up to over US$10 billion during the first five months of 2011, a surge of 41.5 per cent, according to the Ministry of Agriculture and Rural Development (MARD).

The ministry said that the agricultural export revenue made up $6.1 billion of the total export value, 1.5 times higher compared to the same period last year.

 

The export value of seadood reached $2.1 billion, a year-on-year increase of 27.3 per cent while exporting forest products earned the sector $1.6 billion, an increase of 19 per cent.

 

The ministry confirmed a trade surplus of $4 billion gained during the first five months of the year, the export of most products earning profits thanks to increasing prices.

 

According to MARD, the price of coffee increased 1.6 times, pushing its export value up 230 per cent while the price of pepper increased by 67.9 per cent.

 

High prices also helped double the export turnover of rubber, its export volume only increasing by 26.3 per cent.

 

Rice was the only product to experience a downturn in export value, decreasing by 5.9 per cent during May to only $1.7 billion, a decline of 13.3 per cent compared to the same period last year.

 

During the first five months of 2011, Indonesia, followed by Cuba, Malaysia and Hong Kong, was the largest importer of Vietnamese rice, importing 25.5 per cent in rice volume.

 

MARD reported that the import of raw materials, fertiliser and other agricultural products increased by 9.9 per cent compared to the same period last year, reaching $6 billion.

 

Steel competition heats up

 

Five new steel plants would go live by the end of this year, according to the Viet Nam Steel Association (VSA).

 

The new plants would have a combined annual production capacity of up to 1.7 million tonnes of construction steel and around 250,000 tonnes of pig iron, said the steel industry's peak body.

 

The opening of the new plants in Vung Tau, Binh Duong province in the south and centralDa Nang City would also remove the reliance on imports, according to the association.

 

This was critical as Viet Nam still imported more than 30 per cent of the total domestic demand for pig iron, said VSA deputy chairman Nguyen Tien Nghi.

 

"When the new plants are opened, competition will definitely heat up," said Nghi.

 

"However, they will help strengthen the industry," he added.

 

He also predicted the industry this year could meet at least 70 per cent of the domestic demand for pig iron.

 

"The figure last year was less than 70 per cent," Nghi said.

 

Explaining why Viet Nam needed to import steel ingot, the VSA representative said the total capacity of steel manufacturers had not met demand.

 

Moreover the country did not have a scrap iron source to produce steel ingot.

 

"Scrap iron is key when producing steel ingot. Meanwhile, Viet Nam is not an industrial country so that we have to import about 70 per cent of our scrap iron requirements to produce pig iron," Nghi said.

 

Nghi told Viet Nam News that the country's total steel sales this year could increase by up to 10 per cent.

 

"Last year, the country consumed 6.3 million tonnes of steel," he said.

 

Rush to produce energy-saving bulbs

 

Several local and foreign lighting equipment manufacturers are rushing to use the latest technologies for production to take advantage of Viet Nam's push for energy conservation.

 

Viet Nam-owned Dien Quang Lamp Joint-Stock Company, which has been highly successful in manufacturing energy-saving lights, especially the compact fluorescent light bulbs, is planning to produce light-emitting diode (LED) lamps for optimal power savings.

 

Pham Minh Thang, Dien Quang company's vice chairman and deputy general director, said they had reduced production on energy-inefficent lights, and now held a 65 per cent market share in the country.

 

The company plans to manufacture LED lamps in the market this year, thanks to technical supervision from the United Nations Development Programme's energy- efficient lighting project.

 

This year the company will introduce a collection of lamps using LED technology and the products will be sold to restricted consumers, such as luxurious hotels and apartments, due to the high cost.

 

Thang said that emitting diode lamps would be widely used in Europe by 2014. Several companies in Viet Nam have studied and begun producing and selling the light in the market.

 

"It will soon be commercialised in Viet Nam now," he said.

 

The company's output of power-saving products climbed from 30,000 products in 2006 to 10 million compact lights last year.

 

The US-backed Schreder Viet Nam, which produces light reflectors in the country, plans to expand their business in Viet Nam. Currently, the company produces 43,000 products every year.

 

Nguyen Khanh Binh, general director of the company, said the amount of product would increase when other factories were built in Viet Nam, adding the company also produced LED lights for public lighting.

 

FawooKidi Technology, the joint venture between locally-owned Kim Dinh Company and South Korean Fawoo Technology, began manufacturing LED lamps early last year.

 

Le Trong Dinh, chairman of the joint venture, said the company manufactured more than 8,000 lamps using light-emitting diode technology a day.

 

FawooKidi on Thursday replaced 39 public lights with LED lights on HCM City's Thanh Thai Street, which became the first street in Viet Nam lighted with LED technology.

 

Dinh said besides the LED lamps on District 10's Thanh Thai Street, 10 more lamps will be installed soon on another street, with the hopes of saving power for public lighting.

 

Recently, locally owned Rang Dong Light Source and Vacuum Flask JSC began producing lamps and decorative lights applying LED technology.

 

According to experts, using LED lights help consumers save up to between 30 to 90 per cent electricity if compared with other types of lamps.

 

The lifespan of this kind of light is 20 times longer than others. However, due to the high price, the light is most often used for advertising, high-ranking construction projects or public lighting.

 

Since the nation's energy conservation campaign on lighting began five years ago, government offices, companies and households have saved 4.5 billion kWh of electricity by using energy-efficient lighting.

 

However, according to Vu Minh Mao, head of the Viet Nam Lighting Association, every year the country can save at least 6.3 billion kWh in electricity from the lighting system.

 

Between 2006 and 2007, Electricity of Viet Nam provided 1 million compact lamps to households in 3,000 communes in the country's rural areas.

 

The amount of lights provided to the families increased to 5 million during the 2008 – 10 period.

 

Experts eye role of independent audits

 

The independent auditing sector celebrated 20 years of operation in Viet Nam yesterday with a meeting that looked back on the achievements that were made during that time.

 

"Viet Nam is making huge strides as a market economy, and by recognising independent auditing as a profession, is making giant steps forward," said Rob Thomson, CPA Australia's executive general director.

 

"The most significant effort Vietnamese authorities in this segment have made is building an international auditing standard system," he said.

 

"The work you have been doing with Viet Nam's independent auditing sector over the past 20 years has enabled the nation to actively participate in the international accounting standards and become an official member of IFAC (International Federation of Accountants), AFA (Incorporated Financial Accountant) and CAPA (Confederation of Asian and Pacific Accountants)," Thomson said to congratulate the Vietnamese authorities.

 

He also praised the Law on Independent Auditing which will take effect next January.

 

The sector also experienced unexpected growth in during the period. The development scheme between 2001 and 2010 aimed at the creation of 100 auditing firms but "It actually reached 162 by December 2010 and now there are 165 companies", said Tran Van Ta, President of the Viet Nam Association of Certified Public Accountants (VACPA).

 

The Ministry of Finance targeted to increase this number to 350 within 10 years.

 

Ta revealed that auditing services had been improved with more consulting services being offered apart from normal financial auditing statement. "The revenue structure of services has transformed with the reduction in the proportion of auditing revenue and the increase in advisory revenue."

 

Auditing revenue last year was estimated at VND2.7 trillion (US$128.6 million), up 25.2 per cent compared to 2009.

 

Fund invests in bird's nest products

 

VinaCapital Viet Nam Opportunity Fund Limited (VOF) yesterday announced the acquisition of 20 equity stakes in the Yen Viet Joint Stock Company, a domestic bird's nest products developer.

 

The acquisition cost US$7 million, which VinaCapital will use to assist the company in strengthening its distribution channels, production capability and product development.

 

The fund will also help the company improve corporate governance and prepare for a listing on a Vietnamese or international stock exchange.

 

Andy Ho, Managing Director of VOF's Investment Manager, said that the partnership with Yen Viet earmarked it as a dominant player in the private equity investment market in Viet Nam.

 

"The consumer goods sector is particularly attractive given its growth prospects, and Yen Viet is a perfect example of Viet Nam's potential for high-margin, high-growth consumer products," he said.

 

The edible nests of swiftlets are considered a delicacy in many parts of East and Southeast Asia. The largest market is China, particularly Hong Kong, where bird's nests are used as part of traditional medical remedies. The nests are farmed or collected from caves without harm to the birds.

 

Yen Viet, which targets affluent clients with high disposable incomes, has increased the value of its brand by creating a popular bottled bird's nest drink.

 

VinaCapital Viet Nam Opportunity Fund Limited is one of three close-ended funds of asset management company VinaCapital.

 

Nation's printing industry at the crossroads

 

Despite achieving considerable growth, the HCM City printing industry faces numerous challenges that threaten to derail future growth, according to the Printing Association of HCM City.

 

The going was good for the industry from 1993 to 2008 when it grew at an average of 10-15 per cent a year.

 

However, in 2009 the growth rate fell to 5 per cent due to the global recession.

 

The association said the escalation in the cost of inputs, especially printing paper, in the last few years had increased printing costs, hitting demand. Besides, the growth of information technology and the digital media had come at the cost of the printing industry, it said, adding that the number of printed books, newspapers and magazines reduced by 20-30 per cent in the last two years.

 

The printing of reference books and dictionaries is down by half.

 

Along with industrial development, demand for printing on packaging and labels has increased, becoming a driving force for the industry.

 

But local companies face fierce competition from foreign companies, especially those from Thailand, mainland China, Malaysia, Taiwan, the US and Australia, who already have a massive market share, particularly in packaging and labelling.

 

With their better technologies, they enjoy an advantage over local competitors.

 

In recent years the HCM City printing industry had been spending US$5 million-$7 million annually on buying new technologies. However, it was mostly focused on publishing, leaving other sectors with outdated technologies, the association said.

 

To overcome difficulties, the association had suggested a series of measures like developing healthy competition, avoiding overlap in investment, and focusing investment in special printing sectors.

 

HCM City has 260 printing presses equipped with industrial presses and more than 2,000 smaller establishments.

 

The industry annually prints 540 billion pages on average, earning more than VND18 trillion ($870.4 million).

 

It accounts for 60-65 per cent of the country's total printing output.

 

Irrigation fee exemptions boost total cultivation area

 

Although most agricultural experts agreed on maintaining Government Decision 115, which exempted farmers from irrigation fees, some have raised concerns regarding its possible disadvantages.

 

The decision has helped increase cultivation areas, said the deputy director of the Water Resource Department Vu Van Thang at a conference held earlier this week.

 

Proper irrigational construction has ensured stable water supplies for cultivation.

 

Tran Quoc Hung, director of the Linh Cam Water Resources Co Ltd in central Ha Tinh Province, said that, thanks to the Government's waiver of irrigation fees, cultivation areas have increased from 16,800ha in 2007 to 19,000ha last year and it was expected to reach 20,000ha by the end of this year throughout the province.

 

Deputy Chairman of the Thai Binh Province People's Committee Pham Van Ca suggested the policy be maintained as it had helped the province develop efficient water resource systems at communes, decreasing electricity fees by one - third due to local farmers not needing to pump water all the way to their fields.

 

However, in Nam Dinh Province and the Central Highlands, irrigation construction covered large areas, requiring high management fees that the State budget, as well as income from local irrigation construction enterprises, was unable to cover.

 

Good governance helps attract investment: expert

 

Good corporate governance is a good way to improve a company’s performance and to attract more investment from overseas investors, but this issue has not been adequately attended to in Vietnam, said an expert at a seminar held in HCMC on Thursday.

 

Vietnamese companies with good governance would be better positioned to attract external financing and increase profitability, said David Gerald, President and CEO of the Singapore Securities Investors Association, at the seminar “Corporate Governance – The Way to Create Company Value.”

 

Gerald explained that investors are willing to pay more for the shares of well-governed companies, and are taking the initiative to evaluate the presence or absence of corporate governance safeguards, as well as corporate cultures, at the companies in which they invest.

 

“A study shows that best-governed companies have returns on investment and equity better than those of poorly-governed companies,” he told the seminar organized by Kim Eng Vietnam Security Stock Company and the HCMC Stock Exchange.

 

According to Gerald, in Asian countries, companies are mostly formed by the family where corporate governance is lacking for they just care about the profit of their own.

 

“But when they move out into the market, they have to improve their governance to meet the global and local standards,” he said.

 

He explained that good corporate governance provides a climate conductive to the orderly development of the capital markets and meet the increasing expectation of investors.

 

Gerald highlighted Singapore as the number one in corporate governance because it attracted more overseas investment than the second one, Hong Kong, for “investors know that they will be accountable.”

 

In 2010, the International Finance Corporation launched a Corporate Governance Scorecard for Vietnam, reviewing the corporate governance practices by exploring compliance with laws and regulations of the best 100 largest companies listed on the Hanoi and HCMC stock exchanges. The result showed that 80 of them were found below average.

 

Vietnam’s Visa card market booming 

 

Lorijon Bacchi, director of Indochina region of payment card network Visa, said the Vietnam market has had the strongest growth of all Visa markets.

 

Vietnam is new in the online payment market but she said on Thursday that it has vast potential due to huge growth in terms of international payment card numbers, total number of transactions and total revenue of transactions by cards.

 

By late last year, Visa had 1.5 million cardholders in Vietnam, an increase of 22%, the strongest Visa growth in the region. The total revenue of transactions of Visa in Vietnam in the first quarter was US$176 million, an increase of nearly 60% year-on-year.

 

Bacchi said she appreciated the potential of Vietnam’s card market given its current strong development of e-commerce.

 

“Vietnam has the biggest number of people using mobile phones among countries I have ever come across,” she said and added that 31% of the Vietnamese population use Internet, while the country ranked 17th among the countries joining online social networks. Online trade revenue of Vietnamese firms last year rose by 50% from the previous year.   

 

She said that e-commerce was a good foundation to develop online payments so that in the future institutions would help to strengthen the online system in Vietnam by making it convenient for banks to join the operation and widen their card acceptance point network, and offer training for bank staff.

 

The company has cooperated with 30 local and foreign banks in Vietnam. All card products and money transfer operations are provided by banks while all payment transactions are done by Visa’s system. Last year, global payment revenue via Visa cards was around US$3.3 trillion.