Experts urge new growth models

Infrastructure for urban and industrial zones and universities need to be planned in a more co-ordinated manner at regional levels, says the former director of the Institute for World Economics and Politics, Vo Dai Luoc.

At a workshop on restructuring public investment held in Hanoi on May 3, Luoc emphasized the need for more public investment in areas which offer economic advantages and strong potential to generate returns.

For example, the Hanoi-Hai Phong and HCM City-Vung Tau economic corridors lack good highway and express rail connections as 80 percent of the country’s total industrial transport depends on them, he said.

So, the Government needs to build its laws on public spending up to international standards and norms, including those concerning tendering, construction, State budget, land use rights and anti-corruption, he added.

Vietnam Institute of Economics director Tran Dinh Thien agreed, that economic restructuring means restructuring of sectors, regions and institutions for the benefit of resource distribution.

Vietnam has huge potential for developing but its economic growth remains imbalanced because of inflation, Thien said.

“There must be a new growth model based on the pillars of high technology, skilled labour and international associations to ensure Vietnamese businesses effectively participate in the global value chain.”

Currently, Vietnam has more than 100 banks, hundreds of financial and stock companies, 100 seaports, 18 economic zones, 30 border economic zones, 280 industrial zones and 650 industrial clusters, as well as 233 universities and colleges, and its GDP is estimated at US$130 billion, Thien said.  

By any standard, the distribution of resources suggests enormous amounts of duplication and waste, he added.

Vu Tuan Anh from the Vietnam Institute of Economics urged a reduction in taxes to create a favourable environment for businesses to overcome the economic downturn, expand production and improve competitiveness.

Supermarket sales soar 27 percent

While sales at traditional markets in HCM City have plunged in the last 10 years, supermarkets have been growing at 19-27 percent a year in that period.

Market research companies say consumers prefer shopping at supermarkets to traditional markets these days.

The change in the shopping habits has strongly influenced the nature of goods sold at supermarkets, with the focus switching to food.

Bui Hanh Thu, deputy general director of Sai Gon Co.op, said fresh food sales are growing by 40-50 percent a year and account for 18 percent of Sai Gon Co.op Mart's total revenues.

The supermarket sells more than 1,000 fresh food items, she said, adding that it is mulling over an increase in the supply of semi-processed and cooked foods to meet demand.

Nguyen Nguyen Phuong, head of the HCM City Department of Industry and Trade's trading management division, said supermarkets have three advantages over traditional markets.

Firstly, products' quality and quantity are always ensured because their origin, production and expiration dates, and price are all clearly stated.

Secondly, they offer more choice for customers.

Thirdly, all supermarkets have links with producers to ensure after-sale services like delivery, installation and periodic maintenance.

Many shoppers said that they shifted to supermarkets because their products were not only hygienic but also often cheaper than at traditional markets.

To ensure a stable supply of goods at competitive prices, most supermarkets tie up with agricultural cooperatives and farmers by investing capital, providing production techniques, and after-harvest technologies and ensuring an outlet for their produce.

Producers, distributors, and consumers all benefit from this.

As a pioneer of this method, Metro Cash&Carry has trained more than 20,000 farmers and fishermen in safe and sustainable agricultural production over the last 10 years.

It worked with local authorities and agriculture and rural development departments to start training courses for fish farmers.

Thu of Sai Gon Co.op said more than half of fresh food products at Co.op Mart are the result of cooperation with cooperatives and farmers.

Sai Gon Co.op provided capital and production techniques to the cooperatives and farmers, enabling them to ensure a stable supply of goods at stable prices.

It has also helped farmers add value to produce, thus improving their incomes.
Supermarkets are now focused on developing supply chains for products and on controlling quality, hygiene, and food safety.

As of last year HCM City had 140 supermarkets, 25 shopping malls, and more than 500 convenience stores.

Their combined revenues accounted for 35 percent of the city's total retail sales compared to 15 percent in 2007.

Finland’s flagship carrier opens rep. office in Vietnam

Finland’s flagship carrier Finnair on May 3 opened its representative offices in Hanoi and Ho Chi Minh City.

Finnair flies to 60 destinations in Europe and 11 in Asia.

The airline operates a fleet of more than 70 aircraft, making it one of the most modern air service providers in Europe.

Retteri Kostemaa, sales manager of Finnair in the Singapore and Southeast Asian region, said the presence of the flag carrier in the Vietnamese market is a milestone in expanding its network among Asian countries.

Finnair hopes to penetrate the Vietnamese market successfully, he noted.

Vietnam, Laos strive for US$1 bln trade turnover

Lao Minister of Industry and Commerce Nam Viyaketh held talks with his Vietnamese counterpart Vu Huy Hoang in Hanoi on May 3 to promote trade cooperation between the two countries.    

The two ministers agreed to speed up the 2008-2015 Vietnam-Laos trade development plan, aiming to bring bilateral trade turnover to US$1 billion by 2015.

Accordingly, both will create favourable conditions for Vietnamese and Lao businesses to meet, exchange and sign contracts, organize trade promotion activities within the framework of the East-West Economic Corridor, design showrooms of Vietnamese and Lao products, and build border markets by 2020.

In 2011, two-way trade turnover between Vietnam and Laos hit over US$730 million, up 50 percent compared to 2010.

In the first quarter this year, bilateral trade reached more than US$230 million, up 57 percent against the same period last year.

The Lao Minister began a four-day visit to Vietnam on May 3.

Vietnam-Norway trade turnover increases

Two-way trade turnover between Vietnam and Norway reached US$128.5 million in the first three months of 2012, with Vietnam enjoying a trade surplus of US$35.2 million, up 17.6 percent against a year earlier.

According to the Statistics Norway, in the first quarter of the year, Vietnam’s exports to Norway reached US$81.9 million, up 26.3 percent. Footwear topped the list with US$23.6 million (up 0.1 percent), followed by garment and textiles US$12.3 million (up 12.8 percent), interior decoration US$7.6 million (up 6.2 percent), seafood US$4.2 million (up 18.5 percent), handicraft US$1.6 million (down 1 percent) and cashew nuts US$1.9 million (down 69 percent).

In the reviewed period, Vietnam’s imports from Norway increased by 33.7 percent to US$46.7 million compared to last year’s level.

30 pct of nutritional supplement ads are false

Thirty percent of advertisements for nutritional supplements are aired without permission or contain information other than what has been approved by authorities, according to Nguyen Thanh Phong, deputy head of the Vietnam Food Administration (VFA), under the Ministry of Health.

Since entering Vietnam ten years ago, food supplements have enjoyed high growth on a yearly basis, with advertisements allegedly greatly contributing to this success, VFA said.

There are currently 3,700 different types of nutritional supplements circulating the market, 50 percent of which are domestically produced.

While the nutritional supplements only provide nutrients and vitamins to consumers, their manufacturers tend to over-advertise, especially via leaflets, word of mouth, and multilayer marketing, that the products can cure certain diseases, medicine experts said.

“Many manufacturers talk about their products as if they are a panacea,” said Phong.

“We have revoked their licenses, publicized their misconduct via the media, and levy penalties which they defy because of the huge profits.”

Meanwhile Doctor Luong Chi Thanh, from the Ministry of Health, said products that can cure diseases are considered medicines, but have been mistaken by consumers as nutritional supplements and used as food.

“Should consumers inappropriately take these medicines, they may suffer severe side effects,” he warned.

“Following a healthy and nutritious diet is the best way to stay healthy, and consumers are advised to beware of nutritional supplements featured in ads that boast about their qualities,” said Pham Hung Cung, deputy chairman and general secretary of the Vietnam Nutritional Supplement Association.

For his part, Doctor Ta Van Binh, former director of the Central Hospital of Endocrinology, said nutritional supplements are under loose management in Vietnam.

“Authorities should tighten their control on the product ads to prevent consumers from being fooled by misleading information,” he urged.

T, a Chinese nutritional supplement manufacturer which runs a plant in Vietnam, has recently announced that it will unveil a new product called ‘nutritious rice’ on the local market.

The products are red and green rice-like pills which the company says can provide a decent amount of nutrients such as vitamins E and B1, as well as iron and zinc, to consumers once they are cooked together with their daily rice.

The supplements are made by grinding the real rice into powder, after which they are mixed with the nutrients, and finally restored into the shape of rice.

“The green rice is intended for children, while the red is for adults,” the company’s chairman said.

However, commenting on the product, a nutrition expert said that even mixing one nutrient, such as iron, into food is a complicated process.

“Simultaneously packing a number of nutrients, from iron and zinc to vitamins, into a few rice grains is incredible,” he stated.

Agro-forestry, fishery exports hit $8b in Q1
 
Agro-forestry and fishery exports decreased slightly by 0.1 per cent to US$8 billion in the first four months of this year when compared to the same period last year, according to the Ministry of Agriculture and Rural Development.

In April alone, export turnover had reached $2.1 billion, the ministry said.

The director of the ministry's Statistics and Information Centre, Nguyen Viet Chien, said the slight decline was a result of the economic slowdown, especially in the European Union, a major trading partner for Vietnamese companies.

During the first four months of the year, export revenue for agricultural products was at $4.6 billion, a year-on-year decrease of 6.6 per cent. Meanwhile, fisheries have brought the country $1.9 billion in revenue, up by 16.4 per cent, and forestry products have earned $1.5 billion, up by 23.8 per cent in comparison with the same period last year.

Viet Nam exported about 2 million tonnes of rice , worth $989 million in the first four months.

Indonesia, mainland China and Malaysia remain as Viet Nam's largest rice buyers, with rice exports to mainland China and Malaysia seeing strong increases in volumes.

Other markets seeing promising growth for Vietnamese exports are Hong Kong and Taiwan.

The country also exported 258,000 tonnes of rubber, with revenue of $754 million. The figure also represents a 30.4 per cent rise in volume and a 12.9 per cent fall in value.

Chien said that as China was the biggest importer of Vietnamese rubber, when the country stopped buying rubber earlier this year, rubber prices dropped sharply.

During the first four months, the average price was about $3,000 per tonne, down by 33.4 per cent over the same period last year.

However, Chien said rubber imports would pick up again as demand on the world market was forecast to rise in the coming time.

Coffee shares saw the same situation with export volumes declining by 5.6 per cent to 660,000 tonnes. Value was also down by 6.5 per cent to $1.4 billion.

"The eurozone crisis has strongly affected Vietnamese coffee exports so that the price will continue to fall in the coming time," Chien predicted.

Meanwhile, seafood and forestry exports are overcoming challenges to reach a growth rate of 16.4 per cent and 23.8 per cent respectively in the first four months.

Seafood exports to major markets, including the US, Japan and South Korea, have continued maintaining high growth rates.

These markets are also the destination of wood and wood-based products. In four months, Viet Nam earned $69 million from these exports, an increase of 6.6 per cent over the same period last year.

To boost agro-forestry and aquaculture products, the Ministry of Agriculture and Rural Development urged companies to widen their business promotion programmes in order to find new markets.

Also, the ministry will focus on developing three key products including aquaculture, livestock breeding and forestry. Accordingly, the ministry will find out and develop high-value tree plantations.

System overload makes power cuts inevitable
 
The national power supply will meet demand during this year's dry season, the Electricity Regulatory Authority of Viet Nam confirmed at a press conference held by the Ministry of Industry and Trade on Wednesday.

However, power cuts would occur in some parts of the country on peak days due to the overloading of the transmission system.

According to Electricity of Viet Nam (EVN), electricity consumption increased significantly along with the summer heat over the last seven days.

For example, Ha Noi's power consumption rose 15 per cent when the temperature reached 39 degrees Celsius.

About seven other large-scale hot spells have been forecast to hit northern Viet Nam by the end of July.

According to EVN's deputy director Duong Quang Thanh, power supply would benefit from the Son La hydro-electric plant's fifth turbine with a capacity of 400 MW, connected to the national grid last Sunday, and the 500kv Son La-Hiep Hoa power line, which became operational at the end of March.

Meanwhile, leakage from the dam at Tranh River Hydro-electric Plant 2 in central Quang Nam Province has been reduced by 98 per cent, after 70 litres per second were reported to be flowing out last month, according to deputy director of the Department of Energy Nguyen Khac Tho.

No cracks have yet been found on the dam's surface. "The dam remains safe," he said.

ENV has asked the dam's investors to work with the Hydrochina Huadong Engineering Corporation to proceed with effective repairs.

All repair works are expected to be finished by the end of July.

The dam went into operation in January of 2011 and has been leaking since February this year.

Also at the conference, the director of the Domestic Market Department Vo Van Quyen said that the ministries of Industry and Trade and Science and Technology were considering stopping the use of petrol A83.

Petrol A83 is a poor-quality fuel with an octane index lower than the current regulated standard.

Quyen added that the adjustment in petrol price should be based on its average import cost in 30 days.

Southern provinces enjoy bumper rice harvest

Provinces in the southern region have now basically finished harvesting the winter-spring 2012 rice crop with a total volume recorded until April 15 of around 11.5 million tons, up one million year-on-year.

According to a recent report of the Ministry of Agriculture and Rural Development, the southern region had harvested 1.7 million hectares of rice as of the middle of last year, or 86.5% of the total sown area. The Mekong Delta harvested 10.5 million tons in an area of 1.5 million hectares.

Besides, the average productivity of the region was 6.67 tons per hectare, which was 0.2 ton higher than the previous crop. The output was even much higher in the Mekong Delta, the country’s biggest rice granary, with 7.35-7.4 tons per hectare.

While some areas are harvesting the winter-spring crop, other localities have started sowing the summer-autumn crop.

Property firms more cautious in business plans

The decline in business results and persistent tough conditions have made property firms become cautious of this year’s business targets by narrowing down their operations to survive instead of expanding like before.

According to annual reports of property enterprises, most firms failed to meet their profit targets last year, and the business targets for this year have declined, including reducing the number of projects to wait for better times.

Sai Gon Thuong Tin Real Estate Joint Stock Co. (Sacomreal) has presented to its shareholders a business plan for the year which focuses more on consolidating the firm rather than focusing on development targets.

Sacomreal’s business results declined strongly last year, with a pre-tax profit of around VND103 billion, equivalent to some 34.5% of the target. The decline partly resulted from the credit tightening policy which made the capital sources restricted, and thus the firm has to extend the implementation progress or stop executing some projects.

This firm also saw a profit drop in the first quarter with only some VND4 billion, down 23% from the same period last year.

Similarly, Dat Xanh Real Estate Service and Construction Corp. (Dat Xanh) last year only obtained half of its revenue target and earned nearly VND34 billion in after-tax profits, falling by half from the previous year and accounting for 42% of the year’s profit target.

Explaining for the profit decline, Dat Xanh said it resulted from many reasons, including the credit tightening. Many projects have fallen behind schedule due to a lack of capital while customers are also in difficulty, and thus the investor has had to reduce the selling price as well as offer incentives to spur the demand.

Quoc Cuong Gia Lai Joint Stock Co. also set the targets of completing its current projects, including the 6B apartment project located on Nguyen Tri Phuong Street in Binh Chanh District, rather than launching new projects.

Consisting of two 30-floor block, this project has had the basic construction and six floors finished. However, the execution of the project has temporarily been stopped due to capital shortage.

Therefore, the developer has proposed to sell this project at a reduced price to the city so that it can be added to the resettlement housing fund.

Besides, Quoc Cuong Gia Lai has been negotiating to sell 50% of the Saigon Plaza project on Le Thanh Ton Street in District 1 to reduce the capital pressure.

The decline in business results has made many other enterprises such as Van Phat Hung, Hoang Quan and Dat Xanh decide not to pay dividends for shareholders, for the reason of using capital for business operations and investments in the coming time.

FDI disbursement still stable

Though foreign direct investment (FDI) capital flow into Vietnam kept declining in the first four months of the year, FDI disbursements remained stable.

US$1.09 billion was disbursed by foreign-invested businesses in April, taking the total in January-April to US$3.61 billion, equivalent to the same period last month, according to the Foreign Investment Agency of the Ministry of Planning and Investment.

Compared to the newly-registered capital of US$4.2 billion in the period, a year-on-year drop of 32%, FDI disbursements in the year to end-April had stayed at a stable level despite the bleak economic picture.

If this level is maintained, the target for US$10-11 billion disbursements set by the Ministry of Planning and Investment will be attainable, said experts. The ministry set the same target for FDI attraction this year.

The FDI disbursement target for this year is similar to what was achieved in 2010 and 2011. Given the result of the first four months, FDI project implementation has been kept stable over the past two years.

The country is paying more attention to FDI disbursements than FDI commitments this year, so only projects that are deemed as feasible can seek approval.

Despite a smaller number of projects, the property sector attracted the most pledged FDI capital in January-April, at US$1.57 billion, with the Japan-invested Tokyu Binh Duong project alone accounting for US$1.2 billion.

The Tokyu project turned Binh Duong into the province in the country having the most registered FDI capital, at US$1.4 billion, followed by Haiphong, Quang Ninh and Ninh Binh.

Japan has emerged as Vietnam’s biggest foreign investor, with US$2.36 billion committed, 76% of the total registered foreign capital, in the year to date.

The Ministry of Planning and Investment expects the country to lure US$15-16 billion in FDI this year, nearly the same as last year.

Public officials’ performance announced

The provincial governance and public administration performance index (PAPI), the largest-ever survey of its kind in the country, was announced in Hanoi on May 3.

The PAPI survey, with the participation of 13,640 people, looks at six different dimensions of provincial governance and public administration. This includes participation at local level; transparency; vertical accountability; the control of corruption in the public sector; public administrative procedures; and public service delivery.

According to the PAPI results, central Quang Binh province, southern Ba Ria Vung Tau and Long An provinces are assessed by their citizens as three of Vietnam’s top-performing provinces in terms of governance and public administration. Southern Long An province is the only one that is systematically ranked at the top of all six governance dimensions measured in the survey. At the other end of the scale, Dien Bien (northern), Ninh Thuan (central) and Quang Ngai (central) provinces scored relatively low.

Addressing the announcement ceremony, UN resident coordinator in Vietnam Pratibha Mehta said the PAPI research will provide useful reference material for policymakers, social and mass organisations and scientific researchers.

Meanwhile, Dang Ngoc Dinh, a key member of the PAPI team and Director of the Centre for Community Support and Development Studies, said that on land issues, the PAPI survey finds that most citizens at the local level are unaware of land use plans.

Obtaining land use rights certificates remains a problematic public administrative service that systematically scores lowest among the four types of administrative procedures measured in both the 2010 and 2011 PAPI surveys, he added.

The PAPI survey was first conducted in 2009 in three cities and provinces and then expanded to 30 cities and provinces in 2010 and nationwide in 2011 by the United Nations Development Programme (UNDP), the Centre for Community Support and Development Studies, Vietnam Fatherland Front and the National Assembly’s Ombudsman Committee.

Import-export slowdown hit logistics

Import-export order slump has led to a drop in contract volume of local logistics firms.

Pham Quang Thang, country sales manager of FedEx Express, said textile-garment and leather-shoe are the top two sectors that contribute the most to the revenue gained from air freight of FedEx Vietnam.

He said his company’s orders are falling, in which orders from textile firms have declined by 30-40%. FedEx is specialized in delivering samples processed in Vietnam at orders of foreign companies.

The sales manager stated his company still records revenue growth, but the growth rate is slowing down significantly.

This is the general situation of express delivery service. The industry now has a growth of 10-20%, versus 30-40% four or five years ago.

There are currently four major express service providers in Vietnam, namely DHL, TNT, UPS and FedEx, said Thang.

Bui Anh Duc, sales executive of the HCMC-based Bee Logistics Co., said his company’s order volume has dropped 30-40% year-on-year. Not only the contracts to serve export, but those to serve import have also dipped in volume, he stressed.

Customers are experiencing tough times caused by the economic woes, while facing financial problems at the same time, thus they have reduced production and export, Duc explained.

In addition to order slump, logistics companies are anxious as several shipping lines have announced to raise charges soon.

Duc said shipping fees have marked up sharply against last year. For example, shipping fees to Europe have surged 100%, the U.S. risen 50%, and China shot up 300%.

Shipping cost makes up a large portion of door-to-door logistics service prices. Therefore, shipping charge hike will certainly affect service prices of logistics businesses.

Some enterprises said the competition in the logistics industry is very harsh, especially the battle among domestic companies. As such, quite a few enterprises will be willing to share their profits with customers to ensure competitiveness.

The financial statements of the listed logistics companies showed that many companies recorded declines in profits.

Particularly, the profit from sales and service supply of South Logistics Joint Stock Company (Sotrans) in the first quarter was over VND26 billion, compared to VND28 billion in the same period last year. Meanwhile, Gemadept reported a profit of VND18 billion in the first quarter, a sharp drop against VND33 billion in the year-ago period.

HCMC to exploit more river tourism

The establishment of an Artists Village in District 2 of Ho Chi Minh City a year ago marked the beginning of river tourism in the city. Now river tours will become more attractive than ever before, what with more investments being approved by local authorities.

Thanks to its complex river system and an international biosphere preservation area, the Can Gio mangrove swamp, HCMC does have an advantage for developing river tourism as well as eco-tourism.
Nguyen Thi Hong, vice chairwoman of the People’s Committee of HCMC, on a survey trip of Rung Sac Base in Can Gio mangrove swamp (Photo: SGGP)

Easier said than done, since the establishment of the Artists Village did not bring back much profit at first, and initially discouraged both local government officials as well as crafts people.

However, after a recent survey of tourism in the Can Gio mangrove swamp area, Nguyen Thi Hong, vice chairwoman of the People’s Committee of HCMC, said that ever since excursion trips into the swamp began this year, there has been a positive feedback from foreign tourists.

Pham Xuan Anh, director of Viet Tourist Company, and first to introduce cruise tours on Can Gio River, said that in the first five months of this year his company experimented with two river tours along Thi Vai River in Region No.2, in which tourists rowed a kayak deep into the mangrove swamp,   visited some salt fields, and climb the Giong Chua mountain.

Tourists were also offered a guided boat tour, which at first was not as popular because tour guides lack biology knowledge of mangrove swamps and its ecosystem. What’s more, boat drivers did not have a good choice of stopovers, so tourists could not have a satisfying overview of the landscape.

All these negative points have been gradually remedied, making both the above tours an excellent selection for tourists. In fact, these tours have been welcomed by more than 1,000 foreign tourists, most of who are from Germany and the US.

Director Anh commented that Can Gio District needs more funds to invest in luxury structures, better human resources, and better service for high-income and demanding tourists. In addition, more souvenir and handicraft shops should be opened to satisfy foreign tourists.

The Phi Long Shipyard Joint Stock Company in Tam Thon Hiep Commune has developed a project to construct a 50-hectare complex for a Swift bird-breeding centre and a Swift museum. Moreover, with a substantial fleet of 400 seater and 200 seater boats, the company plans to build more docks for transporting tourists from the southern city of Vung Tau to Can Gio District.

According to Le Van Sinh, director of the Management Committee of Can Gio Mangrove Swamp, due to certain regulations related to protected forests, the exploitation of water ways for tourism purposes is somewhat restricted.

Therefore, the first thing that concerned agencies should do is to prepare a building plan for docks, floating restaurants, service structures for such activities like boat-rowing and water-skiing in the area near Can Gio mangrove swamp.

They should also file a report to the Prime Minister for approval of use of about 2-3 per cent of the swamp for tourism purposes and for construction inside the swamp, since the exact area of the protected forest is only 6,134 hectares out of a total 33,000 hectares.

During the period 2012 to 2015, the city will concentrate on planning and developing a dock area in Can Gio District for both tourism as well as transport needs. Local authorities are also encouraging private businesses to invest in tourism similar to the model of a Swift bird-breeding centre mentioned above.

By the end of May 2012, the Department of Culture, Information and Tourism in HCMC must finish a report on all possible future routes in river tourism so that the city can address any problems that may arise.