US dollar lending back in fashion

Dollar lending has sharply risen  in recent months in the face of high dong lending rates and a stable exchange rate.
 
For example, Ut Xi Seafood Processing Joint Stock Company’s deputy general director Nguyen Tuan Anh said the firm sourced dollar loans from state-owned Agribank with a 4 per cent, per year interest rate. “If we had dong lending, the negotiable interest rates might be 20-22 per cent per year,” Anh said.

High dong lending rates made scores of firms to turn to using dollars.

Banks have also been eager to meet demand as dong loan demand drops.

Ho Chi Minh City State Bank branch statistics show that city-based banks took VND819 trillion ($3.95 billion) in deposits by late June 2011, up 1.58 per cent against late 2010. Lending amount also hiked considerably 6.67 per cent in the first six months against late 2010. Particularly, dong lending surged 2.14 per cent and dollar lending soared 18.7 per cent.

The State Bank reportedly bought in $4 billion this year to consolidate national foreign currency reserves.

A top executive of a Ho Chi Minh City-based commercial joint stock bank said dollar lending still showed no sign of sliding.

“Since the [dong-dollar] exchange rate is forecast to remain stable until late 2011 and the dong lending rate yet to be eased, importers still prefer to using dollar loans for payment purposes,” he said.

In this context, head of Ho Chi Minh City University of Banking’s Business Management Faculty Dr. Le Tham Duong assumed the on-going practice would pressurise the dollar supply by the year’s end when many dollar-denominated credit contracts came due.

“When sourcing dollar loans, firms need to adopt precautionary measures to soften exchange rate risk, especially by the year’s end when trade deficit often escalates though the current exchange rate is relatively stable,” Duong said.

Current dong lending rates to some areas:

Production and trading activities: 20-22 per cent per year

Non-productive sectors: 23-25 per cent per year

Dollar lending:

Short-term loans: 6-7.5 per cent per year

Medium and long-term loans: 7.5-8 per cent per year.

Agriculture boost to ensure food security

Prime Minister Nguyen Tan Dung called on the Ministry of Agriculture and Rural Development to promote large scale agricultural production to ensure food security and boost exports, at a Government meeting held yesterday.

Relevant authorities were urged to implement measures aimed at increasing the amount of breeding stock, stabilise food prices and prevent disease in meeting demands.

July witnessed an up to 70 per cent sudden surge compared to the same period last year in pork prices, driven by high demand, partly contributing to a 3.2 per cent increase in the foodstuff price index.

"The soaring price of foodstuff, particularly pork, has brought farmers high profits yet at the same time added a remarkable burden on people, especially those who rely on a fixed monthly salary," said Minister of Agriculture and Rural Development Cao Duc Phat.

"The ministry has called on local authorities to help increase supplies in an effort to stabilise the foodstuff market."

At the meeting, PM Dung asked the State Bank to keep a tight grip on the banking system and real estate credit, gradually reducing interest rates alongside a decrease in the consumer price.

Foreign visitors to HCMC rise 10 per cent

Ho Chi Minh City welcomed over 1.85 million foreign visitors in the first seven months of this year, representing a year-on-year rise of 10 per cent despite impacts of the global economic downturn.

This success was attributable to an action plan on waterway tourism development, the popularity of the second stage of “Ho Chi Minh City – 100 interesting things” programme, and the promotion of standardised tourism programme with music shows, undertaken by the municipal tourism sector.

The sector has paid attention to bettering the quality of its human resources along with increasing bilateral cooperation with foreign counterparts and participation in activities of the Tourism Promotion Organisation for Asian-Pacific Cities.

It has worked with Vietnam Airlines and Vietnam Tourism Association to popularise Vietnam’s tourism in potential markets of the Republic of Korea, Japan, the US, Russia, Spain, India and ASEAN.

Since the beginning of this year, the country’s tourism sector had earned more than VND10.6 trillion in revenues, up 29.6 per cent.

Petroleum fund comes under scrutiny

The State Audit of Vietnam (SAV) is looking into the use of the petroleum price stabilisation fund from July 22 to the end of August.

The audit will focus on nine petroleum wholesalers, including the state-owned Vietnam National Petroleum Corp (Petrolimex) and PetroVietnam Oil Corp (PV Oil).

The Ministry of Industry and Trade, along with the Ministry of Finance will also come under scrutiny for their responsibility in overseeing the fund.

The inspection, which focuses on period between 2009 and 2010, aims to find the details about how the fund was operated and used, as well as uncover any possible misuses.

The audit, it is hoped, will clear away doubts about Petrolimex's transparency, following the recent release of its financial reports for the period from 2008 to 2010. After having claimed large losses for years, the state-owned petroleum trading firm released financial reports that showed profits.

Still, an anonymous SAV official said that the inquiry would not focus on these discrepancies in Petrolimex's bookkeeping, but on the overall efficiency and use of the fund.

From October 22, 2010 through to February 24 this year, the country has used VND6.369 trillion ($307.7 million) from the petroleum price stabilisation fund to help stabilise the domestic petroleum market because of fluctuations in world prices.

Saline water leaks put crops at risk

Saline water, leaking into paddy fields from adjacent sand pipes, has put 200ha of rice and other crops in Cai Gia hamlet at risk of destruction, according to Hung Hoi Commune chairman Huynh Van Quang.

The sand pipes were laid in service of the 66ha Hoang Phat housing project, operated by the Hoang Phat Construction Investment Company.

Although local residents and authorities had voiced their concerns, little to no heed had been paid.

Pepper farming helps improve island's income

Farmers in the island district of Phu Quoc in southern Kien Giang Province have returned to pepper farming as the price rises and local authorities offer timely support.

Head of the district's Economic Department Nguyen Minh Truc said that the district now had about 300ha of land devoted to pepper cultivation, each averaging about 3 tonnes per year.

More than 700 local households grew pepper, earning a yearly profit of VND36-48 million (US$1,700-2,330) per ha.

Pepper had been grown in the district for decades with varying success at market, Truc said. He added that the district used to have 800ha of pepper growing in the mid-1990s but then the area was cut down due to falling pepper prices.

Since 2009, prices have gone up again, inspiring farmers to come back and develop their farms. Now, a kilo of black pepper costs VND90,000-110,000 ($4.4-5.3 ) and ripe pepper goes for VND150,000-160,000 ($7.3-7.7 ).

By 2015, the district hopes to expand cultivation to 500ha and raise yearly production to 1,200-1,500 tonnes.

This year, Truc's office carried out a programme to help local pepper growers apply Global Good Agricultural Practice.

"Global GAP helps improve the productivity and quality of pepper and reduce its production cost," he said.

The district's pepper is famous for its strong taste thanks to favourable weather and soil conditions as well as superior breeding and cultivation techniques.

"Under the Global GAP, pepper is grown through a clean, safe process without using chemical fertilisers, which means better quality and success at market," Truc said.

"Some companies even offer prices that are 20-30 per cent higher than market prices in cases they drop down."

This success proved the co-operation between growers and producers was a factor in making growers interested in pepper farming, Truc said. However, he said that the farmers in his district still faced difficulties, including water shortages in the dry season and high labour costs.

At present, an automatic drip system was being tested in three pepper gardens, which should save water, labour and petrol to run pumping machines, Truc said.

Lam Tan Thanh, a farmer in Duong Dong Town, said that he used little chemical fertiliser and that some households even used fish remains [left after the process of making fish sauce].

High quality pepper is usually sold to tourists at VND180,00-200,000 ($8.7-9.7) per kilo. Pepper gardens have also become tourist attractions in the island district.

Early this month, the National Office of Intellectual Property of Viet Nam, under the Ministry of Science and Technology, granted a trademark certificate for Phu Quoc pepper.

Vice chairman of the provincial People's Committee Tran Thanh Nam said that the recognition for the local pepper could help promote its production and its value for tourism.

Phu Quoc, 62 nautical miles away from Rach Gia City, is the largest island in Viet Nam, comprising the island proper and 21 other islets. It is a popular tourist destination and famous for fish sauce in addition to its pepper.

Delta rice farmers reap big benefits
 
Aggregation of land and the formation of co-operatives is providing economies of scale in Mekong Delta paddies, resulting in greater efficiency and improved production.

Viet Nam is among the top three rice exporters in the world, and the country's "rice basket", the Mekong Delta, accounts for as much as 90 per cent of its export turnover.

However, it is also a fact that rice cultivation in the delta, which produces more than half of the country's rice output, is largely based on fragmented, small paddy fields.

The fragmentation has long been identified as a factor that hampers application of advanced technologies on the one hand, and on the other, perpetuates production inefficiencies.

These shortcomings have been addressed effectively in recent years by pilot projects that have brought many small farmers together in order to reorganise production and achieve economies of scale, project managers say.

In An Giang Province's Vinh Binh Commune, located on the banks of the two main tributaries of Mekong River, farmers have been organised into cultivating rice on big fields in a pilot project implemented by the An Giang Plant Protection Company (AGPP), a major rice processor and exporter.

The project, which began last October on an area of 1,200ha, aims to ensure sufficient supply for the company's rice mill, said Le Minh Phuong, deputy director of the factory.

The project brought together more than 650 farmers to form an area focused on cultivating rice for export, he said.

"Even though rice production can yield profits of more than 30 per cent, most farmers still lead difficult lives because their fields are too small and they are exposed to losses caused by bad weather and pests" said Nguyen Tien Dung, assistant to AGPPgeneral director.

He said that AGPP was carrying out the project at the request of the Ministry of Agriculture and Rural Development in order to help farmers reduce losses, get more value for their rice and learn advanced way of production.

This would also help develop a brand value for Vietnamese rice in the world market, he said.

"Rice farmers need loans, technical assistance, machines, post-harvest facilities and stable outlets for their produce," he said.

"So we need to organise specialised rice growing areas without changing ownership," he said.

Under the contract that AGPP has signed with the farmers participating in the project, the company would provide the latter with certified seed varieties, pesticides and fertilisers on credit until 30 days after the harvest.

AGPP would also dispatch its team of more than 400 ‘Farmers' Friends' (FF), agricultural experts who would work with farmers directly in the fields to make sure that their production techniques conform to standards, transfer technology, and sort out problems if any.

"We will take care of the whole harvesting and transporting processes for farmers, and they can still choose to sell their rice to us or not," Dung said, adding that the factory posted prices every day according to market developments.

If the farmers chose to sell their harvest to the factory, it will subtract all the expenses it had covered during the production process, he said.

"In case they want to wait for good prices, they can store their rice in our facility free for up to 30 days," he added.

"In this way, farmers are linked directly with the company in a close circle from the start to the end of production, eliminating middlemen who take away much of the profit from farmers," he said.

Although farmers can freely sell their yield to outside traders, they rarely do so, he noted.

"The factory's prices are always close to market prices," said Vo Thanh Phuong, who grows rice on two hectares. In fact, he has never seen factory prices fall below market prices, Phuong said.

"If we choose to sell to outside collectors, we have to pay off all the debt to the factory within three days," he said.

Other farmers participating in the project also said they have much to gain compared to farming on their own.

"My favourite part is the transfer of technology," said Nguyen Van Can, who owns a rice field of 3ha. "I used to keep up with new technologies via TV or radio channels, but I could understand very little.

"Now we've got rice of better quality thanks to the certified seeds we're given," he said, adding that seeds that the farmers prepared by themselves were not of uniform quality.

Another advantage of using the new model of cultivation is that the farmers can save a lot on chemicals that they previously used in large quantities.

"We used pesticides even when there were no pests as a precautionary measure and we usually used more than the amount needed just to get a feeling of security. But now we are told to use chemicals only when needed," Can said.

Farmers are required to strictly adhere to the "One Must, Five Reductions" formula. They must use certified seeds, and reduce the use of water, fertilisers, chemicals, seeds and post-harvest losses.

They also learn to keep logs of daily expenses so that they can calculate accurately how much profit they earn at the end of a crop.

Nguyen Anh Tu, 28, who graduated from An Giang University and now works as an FF, said his routine includes discussing with farmers what to do at the beginning and what experiences they have drawn at the end of a few days.

"On an average, we visit farmers once to three times a week," he said, adding that each FF is in charge of around 50ha.

The biggest difficulty that FFs face, Tu said, is that there are some farmers who prefer to rely on the knowledge and experience passed on by their forefathers.

"They say that we're too young to tell them what to do, because they've grown rice for decades," he said.

Phuong, deputy director of AGPP's rice mill, said that the company plans to expand the project from the current 1,600ha to 5,000ha next year.

The factory's designed capacity can take in the output of 15,000ha of paddy fields a year, he said.

In fact, the big field model in An Giang Province's Vinh Binh Commune coincides with what agro scientists have advocated for years.

It's also not one of its kind in the Mekong Delta. Many similar projects have already been operational elsewhere in the delta.

In Soc Trang, Hoa Loi Co-operative, which is composed of local rice farmers, is working with Can Tho-based Thot Not General Commerce Company, or Gentraco, to develop aromatic rice according to Global GAP (Good Agricultural Practice).

Gentraco also got engaged in cooperation with Hoa Tien Co-operative in Kien Giang Province's Go Quao District to create a close circle of rice production.

"Widespread application of contract farming between groups of farmers and agro-businesses should be encouraged," remarked Dr Nguyen Phu Son from Mekong Delta Development Research Institute in a workshop on rice production in the middle of last month in Can Tho City.

"We need to create motivation for farmers so that they continue to grow rice," he said, adding that farmers' profit is not at all on a par with their labour.

So the rice value chain that links together all players in the rice production process, like the big field model in Vinh Binh Commune, is what the Delta really needs at the moment.

Son also suggested developing high-quality varieties of rice to meet growing demands of high-income people who wants more value for their diets.

HCM City, Delta show opportunities to investors  

Investor when thinking of putting money into Vietnam’s Mekong Delta should give top priorities to fisheries, then agriculture and forestry, Agriculture Deputy Minister Luong Le Phuong told an investment promotion conference in Ho Chi Minh City Tuesday.

Agriculture Deputy Minister Luong Le Phuong talks to media about the Mekong Delta sectors calling for investment at the investment promotion conference (Photo: Tuong Thuy)

The provinces are Ca Mau, An Giang, , Long An, Ben Tre, Dong Thap, Soc Trang, Bac Lieu, Hau Giang, Tra Vinh, Can Tho City, Kien Giang, Tien Giang, and Vinh Long.

The investment promotion conference, which saw more than 500 delegates, is part of the Mekong Delta Economic Cooperation-Ca Mau 2011 Forum.

Deputy Minister Phuong said among fisheries, agriculture and forestry, the first one is the fastest profit-making area.

The sector includes catching fish and aquaculture, as well as processing aqua-products for export, he added.  

The delta has seen its total aquaculture acreage increase from 233,500 hectares in 2000 to 746,000 hectares last year, with output soaring from 444,000 tons in 2001 to 1.94 million tons in 2011, said Mr. Phuong.

According to him, Vietnam houses more than 500 aqua-product processing factories. Of them, 330 have been put into the European Union-accepted list, and more than 70% of the EU-accepted factories are located in the Mekong Delta.

Vietnam’s Prime Minister Nguyen Tan Dung established in March 2010 the Mekong Delta Economic Cooperation, or MDEC, to further support the whole region’s development. MDEC-Ca Mau 2011 is part of MDEC.

The delta region contributes over half of the country’s rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the MDEC Secretariat.

In introduction, the secretariat says Ho Chi Minh City and the Mekong Delta hold lots of advantages for agriculture (agriculture, fisheries and forestry) and marine economy. The two regions are endowed with a convenient network of transportation that includes roads, air routes and waterways.

HCMC and the 13 provinces cover nearly 4.3 million square km, making up 13% of Vietnam’s area.

The delta has about 2.63 million hectares of farmland, including 1.9 million ha fore rice, almost 576,000 ha for fruits and over 746,000 ha for aquaculture, according to the secretariat.

During the full-day conference in HCMC, investment promotion officials from all the 13 delta provinces displayed their economic potentials and advantages at a sideline show.

The delta has a total of 151 industrial parks. Can Tho City and the provinces of Long An and Kien Giang have attracted more investment capital from HCMC than others, the secretariat says.

Long An, which borders HCMC, has attracted from the city 420 projects worth more than VND60 trillion (US$2.9 billion) since 2000.

Kien Giang has received 103 projects worth VND88 trillion ($4.2 billion) over the past five years.

Can Tho City, the Delta’s hub, reports it has attracted 61 investment projects worth VND23 trillion (US$1.1 billion) over the past 10 years. Most projects are in tourism, infrastructure development and retailing.

The investment promotion conference called for capital into such fields as high-tech agriculture; processing and preservation of post-harvest agricultural products; trade; infrastructure; agricultural services; development of material zones; and other agricultural activities.

Speaking at a meeting held Monday to review economic development cooperation between HCMC and the Delta, city chairman Le Hoang Quan said the metropolitan government has actively promoted the Delta’s business opportunities to foreign and local investors.

He said the city has worked with several sectors, including infrastructure development, environmental protection, healthcare, hydropower development and others.

After the investment conference, a workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.

October will also see a conference on promoting the delta’s development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.

In addition, the province will host the Leaders Conference on MDEC-Ca Mau 2011 in the same month.
 
Agricultural exports up 33%
 
Viet Nam earned US$13.9 billion from agricultural exports during the first seven months of this year, a year-on-year increase of 33.4 per cent.

According to the director of the Ministry of Agriculture and Rural Development's Information and Statistics Centre, Nguyen Viet Chien, agricultural products such as rice, pepper and rubber made up $8.1 billion of total exports, an increase of 44.6 per cent in comparison with the same period last year.

Chien added that the increase had occurred mainly due to price hikes experienced by agricultural products.

In seven months, rice exports hit $2.3 billion on 4.7 million tonnes sent abroad, and increase of 9.7 per cent in volume and 10.8 per cent in value.

Indonesia remained Viet Nam's largest rice importer, followed by the Philippines to which exports declined by 50 per cent.

To compensate for the Philippino downturn, local companies have been exploring new markets in Senegal and Bangladesh.

Total pepper exports hit 85,000 tonnes, valued at $465 million, a surge of 70.9 per cent on a largely unchanged volume.

Pepper exports to the US increased by 17.4 per cent in volume, doubling in value.

Forestry products reached $2.2 billion, a year-on-year increase of 13 per cent, while fisheries products hit $3.1 billion, increasing by 24.8 per cent.

According to the centre, the total import value of agro-forestry and fisheries products and materials reached $9 billion in the first seven months, an increase of 20.4 per cent over same period last year.

Automobile imports decrease sharply in July

The import of complete built unit (CBU) automobiles into Vietnam decreased sharply to 4,000 CBU automobiles in July (worth US$75 million) from last month 7,000 units (worth US$122 million).

The General Statistics Office put the sharp decline down to strict implementation of Circular 20/2011 issued by the Ministry of Industry and Trade in June.

However, in the past seven months of the year, the import of CBU automobiles showed a slight increase of 38,000 CBU (worth US$707 million).

Republic of Korea, Vietnam cooperate in ‘public-private partnership’

An interagency delegation from Vietnam made a study tour of the Republic of Korea from July 24-27 to discuss and exchange experience in public-private partnership (PPP) between the two countries.

The delegation worked with the host Finance Ministry and proposed signing an agreement on the principles of bilateral cooperation in ‘public-private partnership’.

During their stay in the RoK, the delegation in coordination with the Korea Development Institute held two seminars for 150 Korean businesses in the fields of construction and designing with the aim of introducing PPP opportunities in Vietnam’s infrastructure.

The Republic of Korea has been highly experienced and successful in infrastructure investment in the form of PPP.

Taiwan business granted investment certificate

The Yamani Dynasty Company Limited of Taiwan ( China ) has been licensed to build a leather-based product factory in Nam Dinh province.

The Nam Dinh Provincial People’s Committee on July 26 hosted a ceremony to hand over an investment certificate to the company.

Accordingly, the company will invest 14 billion USD in a factory specialising in making leather bags, wallets and belts in the Nam Hong industrial cluster in Nam Truc district of the northern province of Nam Dinh.

Once fully completed by July, 2012, the plant will be capable of manufacturing more than 900,000 bags, wallets and belts and 50 other leather-based products per year.

Forum highlights VN businesses in Cambodia

More than 100 Vietnamese businessmen operating in Cambodia gathered at a forum in the Cambodian capital city of Phnom Penh on July 27.

The event was jointly held by the Vietnam Ministry of Industry and Trade (MoIT) and the Vietnamese Embassy in Cambodia .

While addressing the forum, MoIT Deputy Minister Le Danh Vinh said Vietnam and Cambodia have entered into many important legal documents such as the Trade Agreement, the Agreement on Trade and Exchange of Goods and Services in Border Areas and the Agreement on Goods in Transit, creating a legal framework for trading activities between the two countries.

As a result, over the past decade, two-way trade revenues increased more than ten times, from 184 million USD in 2001 to 1.8 billion USD in 2010, Vinh said, noting that in the first half of this year alone, the figure stood at over 1.3 billion USD, up 56.7 percent.

In 2011, Vietnamese companies invested into 89 projects in Cambodia with a total registered capital of some 2 billion USD.

Such achievements were attributable to active contributions by the Vietnamese community in Cambodia , including entrepreneurs, Vinh said, considering this a significant factor to boost the friendship between the two countries.

Vietnam has issued many polices to create favourable conditions for Overseas Vietnamese, including those in Cambodia , he said.

Nguyen Van Dinh, Chairman of the Vietnamese Business Association in Cambodia , said Vietnamese businesses in Cambodia , most of them small and medium-sized, are operating well.

Participating enterprises used the occasion to express their wish to access information relating to investment and tax policies as well as customs procedures of Vietnam.

Industrial output drops

The country's Index of Industrial Production (IIP) slowed during the first seven months of this year, only surging by around 8.8 per cent, according to a General Statistics Office (GSO) report.

Production lowered due to the modest 1.7 per cent growth rate experienced by the mining industry while the power, manufacturing gas and water sectors experienced growth rates of between 11.9 and 10 per cent only.

Despite a slow IIP index, some industrial products remained to record significant growth rates including 18.2 per cent in fibre and cloth, 14.3 per cent in steel and 14.2 per cent in automobile production.
 
Industrial growth slows to just 8.8%
 
The country's Index of Industrial Production (IIP) slowed during the first seven months of this year to 8.8 per cent, according to a General Statistics Office (GSO) report.

Production lowered due to the modest 1.7 per cent growth rate experienced by the mining industry while the manufacturing and power-gas- water sectors experienced growth rates of between 11.9 and 10 per cent.

Unsatisfactory performance was additionally attributed to the slow consumption power experienced in the textiles, beverage, footwear, cement, fruit and vegetable processing industries, according to the GSO.

Meanwhile, the stockpile index of petroleum rose by 92.4 per cent against the same period last year while the indices of furniture and beverages surged by 84.4 per cent and 73.5 per cent, respectively.

However, some industrial sectors did manage to record significant growth rates over the January-July period including 18.2 per cent in fibre and cloth, 14.3 per cent in steel and 14.2 per cent in automobile production.

Earlier, Minister of Industry and Trade Vu Huy Hoang said that local industries, already feeling the pinch, were set to experience more hardships during the next several months.

An increase in global commodity prices on the back of rising oil prices was expected to have a serious impact on local manufacturing and production sectors, Hoang said.

He continued by saying that, in order to maintain growth rates, industrial producers needed to strengthen measures aimed at controlling inflation, using only domestically produced machinery and materials in order to minimise negative impacts resulting from dependence on imports.

HCMC invests VND199 trillion in Mekong Delta

Entrepreneurs in HCMC have invested in 782 projects in 13 provinces in the Mekong Delta with total pledged capital of VND199 trillion since 2000, HCMC chairman Le Hoang Quan said on Monday.

Chairman Quan told a review meeting held here on Monday that much of the invested capital had been poured into industrial zone development and foodstuff and seafood processing facilities. He said that in the coming time, HCMC would keep investing in the delta, and that transportation and infrastructure remained the top priorities for investment.

According to the HCMC Department of Planning and Investment, Kien Giang and Long An provinces took the lion’s share of HCMC investments, with 103 and 420 projects worth VND88.4 trillion and VND60 trillion respectively. Meanwhile, Ben Tre Province has attracted only eight projects worth VND365 billion.

HCMC-based companies have set up numerous infrastructure facilities in the Mekong Delta, including commercial centers, supermarkets, food and foodstuff and seafood processing plants, residential complexes, and tourist amusement parks among others.

However, as site clearance and project investment preparation were quite costly and traffic system was underdeveloped, the Mekong Delta is not so attractive to HCMC investors as Binh Duong, Dong Nai, Ba Ria-Vung Tau, or Tay Ninh Province.

Nguyen Hoang Minh, deputy director of the city’s Department of Planning and Investment, said the high site clearance cost had cut into the delta’s competitiveness. The site clearance expense there averages out at VND8 billion per hectare of industrial land in Long An Province and VND5 billion in Can Tho City.

According to Minh, the workforce in the Delta is abundant but low in quality and knowledge. Laborers there mostly work as unskilled workers in the fields of garment, footwear, and aquaculture processing while advanced industries are thirsty of labor.

At present, the Mekong Delta has 151 industrial zones including 26 ones approved by the Government, mainly in Long An Province and Can Tho City. These industrial zones have attracted a little over US$1 billion of foreign direct investment and VND15.8 trillion of local investment.
 
Footwear firms hindered by lack of materials

Many footwear firms designing products for the local market are facing severe difficulties caused by a lack of materials, especially leather, in the industry.

In a seminar last week in HCMC, 12 local companies showcased original shoe designs in a bid to encourage firms in the industry to create their own footwear products rather than just focus on contract manufacturing only.

The designs were made under the assistance of the project ‘IN_TRADE: Innovation and Trademark as a tool to successfully compete in the global market’ under MUTRAP III. The project was implemented from 2009 to 2011, sponsored by the European Commission, the Leather and Footwear Association (LEFASO), with partners from Italy and Belgium.

After joining the project, some local companies have tried to produce their own designs for the domestic market. However, they admit they have struggled to make their designs come to life due to material shortages.

Designer Do Trinh Hoai Nam from Hanoi-based Hoai Nam Fashion Co., Ltd. said in the seminar that the company started to design and make shoes. But the lack of materials makes their job impossible at times.

“Our company is small, so it’s hard to find leather for our shoe designs,” he said.

Huynh Thoai Long, vice director general of Vien Thinh Company, told the Daily at the international leather and shoes exhibition in HCMC on July 21-23 that his company has been producing shoes for the local market for more than two years. The shortage of materials, notably leather for shoe production, is one of the biggest challenges for the company, he said.

“We tried to look for leather in Vietnam, but we finally imported all leather from Taiwan. Their products are cheaper than local ones, but with the same quality. Or, they are better, with the same price,” said Long.

The problem is that the company is small, so it’s not easy to find materials when buying in small volume, he added.

According to Nguyen Thi Tong, deputy chairwoman and general secretary of the Vietnam Leather and Footwear Association (LEFASO), most material for Vietnam’s shoe production is imported from China. Material trading within the industry is now not good. Soles and some other materials are available in Vietnam, but trading is mainly between partners, not in the free market, she added.

Pham Hong Viet, director of Hanoi rubber joint stock company (Harco), said that many footwear firms in northern Vietnam were struggling.

“Harco provides soles and materials but due to shoe companies being located so far apart it’s hard to approach shoe producers. There is no planning for footwear material supply,” Viet said.

According to Lefaso, there are now more than 450 businesses producing shoes, excluding small facilities and household shoemaking enterprises.

Around 70% are contract manufacturers who earn about 15% from the production process. They import most of the materials, with designs and technical management being performed by their buying partners.
 
Hai Duong leads country in FDI attraction

The northern province of Hai Duong for the first time took the lead in foreign direct investment (FDI) attraction in the year to date after a huge FDI project was licensed this month.

The Ministry of Planning and Investment has just awarded an investment certificate to Malaysia’s Jaks Resource Bhd to develop a US$2.26 billion coal-fired power plant in the province.

With this project, Hai Duong has in the January-July period attracted nearly US$2.5 billion of pledged capital, followed by HCMC with more than US$1.63 billion, Ba Ria-Vung Tau with US$510 million and Hanoi with US$500 million.

A total of 49 new foreign-invested projects have been licensed in July with combined pledged capital of US$3.23 billion. The new additions have brought the total amount of foreign direct investment registered in the country so far this year to US$9.05 billion, down 24% year on year, according to the ministry’s Foreign Investment Agency.

The agency also reported that disbursement of FDI rebounded in July, reaching approximately US$1 billion. Total FDI disbursement hit US$6.3 billion for the first seven months, marking a 1.6% decrease over the same period of last year.

Vietnam has set a target of achieving US$20 billion in fresh FDI commitment this year, up from the US$18.6 billion last year. FDI disbursements are targeted to rise to US$11.5 billion this year from last year’s US$11 billion.

July’s trade deficit at US$200 million

Gold exports have helped Vietnam keep trade deficit in July at US$200 million, up just US$40 million in comparison with last month.

According to the General Statistics office, Vietnam’s exports in July are estimated at US$8.4 billion while imports are US$8.6 billion, down US$60 million and US$20 million respectively from June, leaving a trade deficit at US$200 million.

Export of precious stones and jewelry, mostly gold, this month is estimated at US$800 million, helping the trade deficit in July ease from May, seeing June-July exports at US$2 billion, up 31% year-on-year. Gold exports in 2009 were US$2.73 billion and more than US$2.8 billion in 2010.

Last month, gold exports generated as much as US$806 million owing to the widened margin between local and global prices, increasing 133% month-on-month. The upsurge in gold exports helped narrow the trade deficit to a mere US$160 million in June compared to levels close to US$1 billion in previous months.

Nevertheless, there have been eight export items that have decreased in value since June.

June-July exports are estimated at more than US$51.46 billion, up 33.5% year-on-year while imports reached US$58.1 billion, up 26% from the same period last year, leaving the trade deficit this year at US$6.64 billion, down 8.5% from last year and accounting for 12.9% of total export turnover.

Crude oil exports this year have reached US$4.1 billion, up 40% year-on-year, while gasoline exports have amounted to US$1.1 billion, up 68% year-on-year.

Key agricultural exports have also increased from the same period last year, thanks to price rises on the global market. This year Vietnam has exported 920,000 tons of coffee, earning more than US$2 billion, up 18% in volume and 83% in value over last year. The nation exported more than 4.7 million tons of rice, earning US$2.3 billion, up 9% in volume and 10.5% in value. Rubber exports are also estimated at US$1.6 billion, up 77% year-on-year.
 
MBS leases out Intan building

Knight Frank, a property consultancy and services firm, has announced that it has successfully leased out the entire Intan building in HCMC’s Phu Nhuan District to Melior Business School (MBS).

MBS will relocate from their current premises in the city’s District 3 and take occupation of the whole building at 97 Nguyen Van Troi Street. The building has total floor space of 3,236 square meters and the total leased value is up to US$3.5 million.

Paul Sorensen, principal of MBS, said in a statement, “Over the last three years, MBS has doubled its required space, and we are looking forward to this site being our main campus to provide our students with a spacious learning environment with state-of-the-art technology and learning resources.”

The building is invested by Haliem Company that has instructed Knight Frank to exclusively market its Intan Building.
 
HCM City prepares wind power production

The HCMC Department of Industry and Trade is assessing the potential of wind power in Can Gio District in preparation for constructing wind power plants in the outlying district.

The city will spend an initial budget of VND1.2 billion installing 70-meter-high pillars for measuring the wind velocity and other data needed for the project of building wind farms in the future, said an official of the department.

In an earlier scheme for developing renewable energy in HCMC between now and 2020, it was stated that the city had favorable conditions for the development of wind and solar power.

Particularly, Thanh An Ward in Can Gio District with 1,100 families in total is still not yet connected to the national grid. However, this coastal locale has very huge potential for wind power development.

Initial estimates show Ly Nhon Ward, Thanh An Ward and Can Thanh town in Can Gio District have the potential for generating 3.5 million kilowatt hours of wind power a year.

Local knowledge pays dividends

PetroVietnam Southern Gas (PGS) and Hoa Phat Group (HPG) have posted strong profits thanks to their core businesses.

However, PetroVietnam Drilling and Well Services (PVD) has taken a tumble.

PGS announced this morning its net profit for the first six months of 2011 sharply rose by 374.3 per cent year-on-year to VND142.15 billion ($6.9 million). Q2’s profit stood at VND103.79 billion ($5 million), up 630 per cent against last year’s corresponding period.

PGS’s strong profits mainly come from its core business, while financial activities’ revenue declined. Its total revenue stood at VND1.46 trillion ($70.5 million), up 73 per cent.

Earnings per share of the parent company reached VND4,155.

Beside PGS, the leading steel firm Hoa Phat Group (HPG) posted a robust business performance.

The parent company’s net profit within Q2 was up 33.36 per cent to VND455.74 billion ($22 million), helped by net revenue rising to VND4.57 trillion ($220.8 million).

Its gross profit from core business of the group also strongly advanced 47.14 per cent to VND805.2 billion ($19.57 million), mainly contributing to its good results. Financial revenue made up an insignificant part. The group’s after-tax profit is of VND1.03 trillion ($49.8 million).

HPG’s earning per share for the first half year thus stands at VND3,090.

In contrast with those two firms, PVD’s financial business significantly rose. This sector produces the oil and gas services firm VND176.75 billion ($8.5 million) in revenue, up 234 per cent against last year’s corresponding period.

Its core business’ gross profit shed some 18 per cent despite a rise of 11.5 per cent in gross revenue, due to high capital costs.

The parent company said its Q2 profit reached VND271.21 billion ($13.1 million), down 8 per cent year-on-year. That for the first half year added 6.13 per cent to VND460.64 billion ($22.25 million).

Three-year Labour Market Project concludes

The three year long, EU-funded Labour Market Project (LMP) in Vietnam was concluded at a final workshop on 26 July 2011, having exceeded expectations.

The LMP was implemented by the Ministry of Labour, Invalids and Social Affairs (MoLISA), with the International Labour Organisation (ILO) the executing agency.

The Labour Market Project operated in Viet Nam from 2008 to 2011 with two purposes: 1) Upgrade human resource development (HRD) planning through a facilitation of analysis and dissemination of data relating to labour market needs and evolution in key provinces and at a central level through the design, development and application of a labour market information system (LMIS); and 2) Strengthen the quality and relevance of technical vocational training in order to satisfy public and private sector demand for skilled workers, technicians and skilled technicians.

There is a strong evidence for confidence that many of the projects achievements will be sustainable. In particular, the Labour Market Information Center (LMIC) and its outputs are now well established, and the unit appears to be going from strength to strength on the basis of its own capacity, which the project itself played such an instrumental role in helping to put in place.

For the Technical and Vocational Education and Training (TVET) component, key initiatives in relation to skill standards development, as well as the KAB (Know About Business) and CBTREE (Community-Based Training for Economic Empowerment) programmes, will not only prove sustainable but have huge multiplier effects.

There is no question about stakeholders identifying the project as their own, and considering themselves as equal partners with the EU and the ILO. This evidence is a positive indicator for the important principle of ownership.

“After three years of implementation, the Labour Market Project achieved its objectives and has contributed not only to development of the labour market information system in Vietnam but also to the development of labour market.” Vice Minister of Labour, Invalids and Social Affairs Nguyen Thanh Hoa said.

“The project will not be an end as its achievements will continue to be replicated”.

"This project came at the right time as both components addressed high priority issues to Vietnam's development" - shared Johann Farnhammer, First Secretary, head of Economic Development and Governance at the Delegation of the European Union to Vietnam.

Rie Vejs-Kjeldgaard, director of ILO Country Office for Vietnam stated: "The project managed to accomplish much within a relatively short time. The pioneering role of the Labour Market Information Center has not only given Vietnam a valuable labour market information system, but has also played a catalytic role in stimulating positive chain reactions of new initiatives being supported by government".

At the workshop, the medals in recognition of the contributions to the cause of labour, invalids and social affairs in Vietnam were presented to Rie Vejs-Kjeldgaard, director of ILO Country Office for Vietnam; Johann Farnhammer, First Secretary, head of Economic Development and Governance and Vu Thi Tuan Anh, programme officer at the Delegation of the European Union to Vietnam.

City sees 10% rise in foreign visitors

HCM City welcomed over 1.85 million foreign visitors in the first seven months of this year, a year-on-year increase of 10 per cent.

It helped the city's tourism sector earn more than VND10.6 trillion (US$505 million), up 29.6 per cent.

The city has developed plans on waterway tourism, advertised the city's tourism potential and improved tourism services. It plans to increase co-operation with domestic tourism organisations and foreign counterparts.

Wood processing plant to be built for $1.4m

The People's Committee of Binh Dinh Province has approved the construction of a VND30 billion (US$1.4 million) wood processing and paper materials factory in Bong Son Town of Hoai Nhon District, north of Binh Dinh Province.

It is expected to start operation at the end of this year and to reach a projected capacity of 30,300 bone dry metric tonnes per year.

The factory is built by the Hoai Nhon Commercial Manufacturing and Construction JSC.

Rice processing plant planned for Delta

Construction of a VND77 billion ($3.7 million) rice processing complex has started in Thoai Son District of Mekong Delta province of An Giang.

The 2.6-ha plant, to be built by the An Giang Joint Stock Import-Export Company, comprises a warehouse system to accommodate 28,000 to 30,000 tonnes of paddy rice and a drying system to process 600 tonnes of paddy rice a day.

The project is expected to be complete in five months and start operation early next year.

Experts urge use of ISO standards

Experts from both Vietnamese and Japanese certification bodies met and discussed the need for enterprises to obtain certificates of conformity and ISO management systems in order to expand their businesses, at a conference held in the capital yesterday.

The international seminar, entitled "Business Expansion by Conformity Assessment", was co-organised by Viet Nam's Quality Assurance and Testing Center No 1 (Quatest 1) and the Japan Quality Assurance Organisation (JQA).

Quatest 1 Deputy Director Dang Tuan Hung encouraged companies to apply technologies and management systems to production processes in order to improve quality and enhance competitiveness on the back of increasing global economic integration.

Hung said that obtaining certificates of conformity would help consumers make better decisions in buying products, assist manufacturers in determining the success of their goods and help State management bodies better inspect product quality.

Viet Nam has more than 6,000 national standards (TCVN), designed to ensure product safety, and four certification bodies, including Quatest 1, 2, 3 and Quacert (the Viet Nam Certification Centre), providing certification services.

Noriaki Kobayashi, senior executive, board director and COO of JQA, stressed the importance of obtaining certificates of conformity and applying ISO management systems to help companies gain customer trust, raise revenues and expand businesses.

According to Kobayashi, many Japanese companies, mostly focused on manufacturing, are currently investing in Viet Nam, with accumulative investment capital reaching US$5.2 billion, far exceeding closest rival Singapore's $4 billion.

"Over half of production is aimed at exporting, mostly to Japan, necessitating compliance with Japanese standards," he said.

Kobayashi revealed a plan of establishing an independent mechanism of conformity assessing products manufactured in Viet Nam for export to Japan.

"With such a mechanism present in Viet Nam, local products could be directly distributed to Japan, benefiting both Japanese enterprises and Vietnamese exporters."

Additionally, experts have introduced calibration and verification of measuring instruments as well as JIS (Japanese Industrial Standards) mark certification to businesses.

Vietnamese exporters, particularly of steel and machinery, have been encouraged to apply JIS, but due to the high cost of this process, it will only be applied to high profit products.

JQA, the largest certification body in Japan since establishment in 1957, provides certification services to manufactures of electric home appliances, consumer electronics and transportation equipment.

New circulars regulate construction contracts  

The Ministry of Construction issued Circular 09/20111/TT-BXD on June 28, establishing templates for construction contracts using 30 per cent or more of State capital, including funds from the State budget, official development assistance (ODA), State development credit, credit capital guaranteed by the State, and investments by State-owned enterprises.

The construction contract templates attached to Circular 09 guide the relationship between investor and contractor and between general contractor and subcontractor, and they include equipment installation contracts. The accompanying regulations on contract prices and payments vary depending on the type of contract, and a single contract may include various types of services and be subject to different regulations.

Regulations on contractual provisions, work volume, hiring consultants, advance payments, performance security, warranty, payment time limits, installment payments, suspension and termination of the contract, and other provisions are expressly subjected to Government Decree No 48/2010/ND-CP of May 2010. The new circular takes effect on August 15.

On the same day, the ministry also issued Circular 08/2010/TT-BXD, establishing a contract template for consultancy in construction works using 30 per cent or more State capital, including surveys, financial and investment consultancy, consultancy on preparation of technological reports or feasibility studies for construction works, and design consultancy.

Circular No 08 includes a construction consultancy contract template which can be modified by investor and contractor based on the specific consulting work to be offered for tender.

The circular also requires contracts to specify work volume, requirements of quality and quantity, payment provisions, contract performance security (if any), settlement, term, and termination. This circular also takes effect on August 15.

Seminar discusses joint growth model with Laos

An international scientific workshop themed "Socio-economic development in Viet Nam and Laos in the period of 2001-2010" was held in the Lao capital city of Vientiane on Monday.

The workshop bought together scientists, state management bodies and leaders of economic groups from both countries.

They focused upon breakthrough stages and a macroeconomic growth model; economic restructuring and development of key economic sectors in Laos; foreign direct investment (FDI) attraction and international economic integration; human resource development and ensuring social security.

Participants said that in recent years, Laos had achieved extensive growth by tapping into its advantages and natural conditions such as land, forests, minerals and hydraulic power, thus achieving a high growth rate for consecutive years and increasing per capita income.

They also suggested a new growth model for the Lao economy for the 2010–20 period and the following years which combines both extensive and intensive growth.