Proposal to reduce meat imports 

The Animal Husbandry Department of the Ministry of Agriculture and Rural Development has proposed that meat imports must be reduced to encourage local livestock farmers to expand production. 

According to Hoang Kim Giao, head of the department, prices of livestock have increased from 30-50%, but prices of pork in the country are still lower than in neighbouring countries like China and Thailand.

In addition, demand for pork between now and August is normally low, hence supplies are static and pork prices will slump. This price decline would hurt the livestock farming industry.

Giao also said that the proposed import cut would help stabilize local meat prices and ensure secure income for farmers.

Earlier, the Ministry of Industry and Trade had proposed to import an additional 100,000 tons of meat to stabilize the market meat prices.

BIDC opens branch in Hanoi 

The Bank for Investment and Development of Cambodia (BIDC) has opened its first branch in Hanoi with a capital of US$15 million.

Established in September 2009, with 100% capital from Vietnam, BIDC is the economic and trade bridge between Vietnamese and Cambodian businesses. BIDV will help boost financial trade between Vietnam and Cambodia.

BIDV has its head office in Phnom Penh, Cambodia and four branches in Phnom Penh, Siem Riep, Ho Chi Minh City and Hanoi.

BIDV ranks as the top five banks of Cambodia and expects to raise a capital of $1 billion in the coming years.

Singapore brands eye franchise in Vietnam 

Various Singapore franchisors in the food, beverage, lifestyle and education sectors are this month sounding out business opportunities in Vietnam, where the consumer market is expanding and the population has reached 86 million people.

The “Top Franchise Asia 2011 – Vietnam Edition” matching platform was held Thursday in Ho Chi Minh City as a conference towards this end.

Participating franchisors included Kooshi and Animaland in lifestyle; F&B brands such as Empire State, Creative Eateries, Don’s Pie; FMDS, Q-dees, Soul Kids, and Kinder Golf in education; Auto Saver for the retail section.

The event was a joint effort between the VietCham Expo Company and Singapore’s Astreem Corporation, supported by the Vietnam Chamber of Commerce and Industry and the Franchising and Licensing Association of Singapore, better known as FLA Singapore.

Astreem is a consulting company and a strategic partner with the association.

Astreem founder Hsien Naidu said many Singapore companies were now interested in Vietnam as a market for franchise expansion. “The rapid economic development and dynamic consumers are the main reasons for Singapore firms to seek franchise deals in the country.”

“We hope that via this platform, many aspiring entrepreneurs will find their suitable franchise business opportunities,” she added.

Vietnam has recently been ranked 8th in the Asia Pacific region in terms of food and beverage business environment by Business Monitor International, Astreem reports.

The Singapore firm says it hopes the matching platform will facilitate the interest and participation of Vietnam’s brands in the upcoming FLAsia 2011 showcase, which will be held in Singapore near the end of this year.

Market analysts say more Vietnamese businesses are accepting franchises as an appropriate way of securing their investments when trying to establish a niche in the local market and indirectly penetrating foreign markets in a quicker and easier fashion, if they are not financially strong enough to launch overseas promotions themselves.

Vietnam currently sees dozens of franchise brands such as KFC, CBRE, Dilmah, Lotteria, Pizza hut, Gloria Jean’s Coffee, Coffee Bean, Germany’s Metro, Malaysia’s Parkson, and Vietnamese brands like Trung Nguyen Coffee, Pho 24, Kinh Do Bakery, and AQ Silk.

Vietnam's rapid growth has shaken macroeconomic stability: report 

VietNamNet Bridge - The Vietnamese government deserves praise for taking decisive action to mitigate the negative impacts of the global economic crisis, but the success has been achieved at a price, a new European Union report says.

“Pursuing a pro-growth agenda into late 2010 despite signs of overheating has had a significant negative impact on inflation, forex reserves, the exchange rate, and above all, investor confidence,” according to the Green Book 2011, a publication by the EU Commercial Counsellors and the EU Delegation to Vietnam.

The report said Vietnam’s economic growth has arrived at a “critical stage” where the government should decide clearly to implement pro-business policies in order to boost investor confidence.

Vietnam’s inflation is expected to rise 19.78 percent this month compared with May last year, the General Statistics Office said. The government launched a series of measures late February in an attempt to restore macroeconomic stability and control inflation, and economists say the policies have begun to show their effect.

The Green Book is an annual report on Vietnam’s economic performance in general and EU-Vietnam trade relations in particular.

This year’s report said Vietnam enjoyed a trade surplus of nearly 4.9 billion euros with the EU in 2010. Labor intensive products continued to dominate Vietnamese exports to the EU while the key commodities exported from the EU to Vietnam remained high-tech products.

The top export product from Vietnam to the EU last year was footwear, valued at 1.75 billion euros. It was followed by textiles and garments, coffee, seafood and furniture.

VinaCapital invests in bird’s nest firm 

VinaCapital, through a fund, on Thursday inked a deal to buy a 20 percent stake in Yen Viet Joint Stock Company, a domestic bird’s nest products seller.

Under the agreement, VinaCapital Vietnam Opportunity Fund (VOF) will pay US$7.5 million for the acquisition. Yen Viet will spend $7 million upgrading its factory in the central province of Ninh Thuan and use the remaining capital to promote its brand.

For its part, VinaCapital will assist the company in strengthening its distribution channels, production capability and product development.

In addition, the fund will help Yen Viet improve corporate governance and examine the possibility of a listing on a Vietnamese or international stock exchange.

Andy Ho, Managing Director of VOF’s Investment Manager, said the fund’s investment in Yen Viet is a testament to the fact that VinaCapital continues to be a dominant player in the private equity space in Vietnam.

“The consumer goods sector is particularly attractive given its growth prospects, and Yen Viet is a perfect example of Vietnam’s potential in high-margin, high-growth consumer products,” he said.

In 2010, Yen Viet posted revenues of VND270 billion ($13 million) while the total sales of the bird’s nest sector in the country was around VND1 trillion per year, said Vo Thai Lam, CEO of the company.

Lam also said his company would consider launching a chain serving fast food made from bird’s nest in the future.

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 nest is used as part of traditional medical remedies.

Vietnam to raise iron ore export duty in July: government 

The Vietnamese government said it will raise the export duty on iron ore to 40 percent in early July from 30 percent now to ensure raw material for its domestic steel industry.

The government in a statement said that the new rate will come into effect on July 2 following a Finance Ministry circular. It added that "The export of iron ore in recent years has led many domestic steel manufacturing enterprises to face shortages of the raw material and forced them to import.”

The Vietnam Steel Association and several domestic steel producers had sought a government ban on the export of processed iron ore.

Much of Vietnam's exports of raw minerals such as iron ore go to China. Vietnam had to spend $6.16 billion last year to import steel and steel products, a rise of 15 percent from 2009, the government’s statistics show.

Between January and May this year, the cost of importing the products rose an estimated 15.6 percent from a year earlier to US$2.6 billion.

Current deposit interest rates maintained

The State Bank of Vietnam (SBV) has not yet made any adjustments to either deposit interest rates or lending rates in Vietnam Dong (VND), said SBV Governor Nguyen Van Giau.

Mr Giau said that the SBV has worked with eight commercial banks, and all of them have proved good liquidity. According to the law, commercial banks are allowed to impose negotiated interest rates. However, the SBV has the right to intervene in banks’ interest rates when the local market faces problems and it is authorized to make decisions on ceiling deposit interest rates, he stated.

The SBV Governor elaborated that the domestic gold and USD markets have shown positive signs in recent times, thanks to a decline in demand, as well as a reduction in overspending and public investment.

The current price of gold in Vietnam is still below the global price, which is having a positive impact on the local gold and foreign currency markets, he added.

Vietnam, Cambodia cooperate in rubber planting

Vietnam is currently implementing rubber growing projects in Cambodia, aiming to plant 100,000 hectares of rubber trees in five Cambodian provinces by 2012.

The projects are part of a trade promotion plan approved by the Prime Ministers of both countries at the Vietnam-Cambodia business conference in April 2011.

A seminar was held in Phnom Penh on May 27 to offer tax reductions and exemptions for businesses involved in rubber growing projects in Cambodia.

Cambodian officials highlighted the significance and benefits of these projects, saying that the projects helped upgrade infrastructure, provide clean water, build houses for workers and pagodas for religious followers, thereby improving local people’s incomes.

Developing East-West economic corridor

Nguyen Xuan Phuc, Politburo member, Minister, and Head of the Government Office chaired a meeting in Hanoi on May 25 to iron out snags in the development of the East-West economic corridor.

The project on East-West economic corridor cooperation was approved at the eighth Ministerial Conference on Subregional Economic Cooperation (GMS) in 1998. A lot of work has been done to help reduce cumbersome administrative formalities, improve the business environment and promote investment and economic cooperation.

However, there are still some snags in the organisation of the East-West economic corridor. Participants proposed setting up an inter-governmental committee to speed up infrastructure construction.

2011 Vietnam Business Forum opens

The 2011 Vietnam Business Forum was held in Hanoi on May 27 by the Ministry of Planning and Investment (MPI) in co-ordination with the World Bank (WB).

The forum was within the framework of Consultative Group (CG) mid-term meeting for Vietnam in 2011, which is scheduled to take place in the central province of Ha Tinh on June 8-9.

Participants at the event discussed issues related to the macroeconomy, investment environment, banking sector, capital market, infrastructure, human resources development, and administrative reform.

Representative of the European Chamber of Commerce in Vietnam (EuroCham) praised the Vietnamese government’s efforts to curb inflation and maintain high economic growth. Vietnam will successfully increase its competitiveness and achieve sustainable economic growth in the long-term by protecting rights, promoting intellectual property rights, ensuring a stable supply of energy, improving the quality of labour sources, simplifying administrative procedures, and combating corruption, according to the representative.

Delegates at the forum also focused on attracting investment, controlling inflation, stabilising the foreign exchange market and increasing foreign currency reserves.

They said that from now to 2020 Vietnam needs about US$160 billion to develop infrastructure, including roads, railways, seaports, telecommunication networks and power plants.

Ministry refutes reports of pork import licence issue

Media reports that licences had been issued to import pork to Viet Nam have been refuted by Deputy Minister of Industry and Trade Nguyen Thanh Bien.

Bien said at a meeting this week that no such licences had been issued and he asked the media to make a correction.

Previous media stories reported that the ministry had issued licences to import 100,000 tonnes of pork.

However, Ministry of Agriculture and Rural Development figures showed that pork consumption was roughly equal to national production, meaning there was no need for imports.

"Recently, a partial shortage of pork was reported because animal diseases were not controlled properly, resulting in transport restrictions and a number of households discontinued pig farming activities," said head of the ministry's Animal Husbandry Department Hoang Kim Giao.

Although pork was plentiful in localities, it could not be transported to other localities, he said.

However, Giao said proper controls were in place to curb disease and farmers had resumed pig breeding.

During the lull, some farmers took the opportunity to re-structure their farming practices and shifted to bigger, more efficient farming models, he said.

For example, it took about 6-7 months for households to raise and sell their pigs prior to the lull but larger-scale farming reduced the time to about five months, so productivity improved, he said.

Total pork output was 960,000 tonnes in the first four months of the year, equivalent to 225,000 to 260,000 tonnes per month.

The demand for pork during that time was between 247,000 and 248,000 tonnes per month.

The ministry said national livestock production was still growing compared to the same period last year despite the cold weather and diseases experienced in the early months.

It expected supply would continue to satisfy demand till the end of the year.

This year, the country's total demand for meat is 4.2 million tonnes including 3.3 million tonnes of pork. Supply is estimated to be about 4.2-4.3 million tonnes. Viet Nam exports about 13,000-15,000 tonnes of pork annually to neighbouring countries.

Pepper becomes hot commodity in Gia Lai

Hundreds of pepper farmers in the Central Highlands province of Gia Lai feel they have won the lottery.

With just one crop they have turned into dong billionaires, thanks to a sharp increase in world pepper prices.

In the last crop, pepper prices rose higher than at any point in the previous 15 years, reaching VND120,000 (US$ 6) per kilo of black pepper and VND200,000 (US$9) per kilo for white pepper, about VND20,000 per kilo higher than that in early April.

In Chu Prong District alone, nearly one hundred families in the communes of Ia Pia, Ia Ver and Ia Ga harvested between 10 and 30 tonnes each, turning all of them into dong billionaires.

Nguyen Van Tap, a farmer in Ia Pia Commune, said his family harvested about 20 tonnes from two-thirds of their pepper garden.

"After paying all the expenses for fertiliser, fuel, and labour, we earned VND2.5 billion (US$119,000)," Tap said.

According to the Viet Nam Pepper Association (VPA), Viet Nam now has about 15,000ha under pepper, 70 per cent of which is located in Gia Lai, Dak Lak, Dak Nong and Lam Dong. Each ha yields an average of 2.5 tonnes per crop.

The Gia Lai Agriculture and Rural Development Department also said that the province now had over 6,000ha under pepper cultivation, the majority of which were in the two districts of Chu Se and Chu Puh.

A VPA representative explained the record increase in pepper prices, saying Indian pepper output had fallen sharply this year, so major processors in the world had turned to buying the spice from Viet Nam.

The pepper fever is now spreading across many districts in Gia Lai Province, prompting many farming households to chop their coffee plants, according to a report by the Sai Gon Giai Phong (Liberated Sai Gon) Newspaper.

Ngo Van Tu, a farmer in Chu Prong District's Bau Can Commune, said his family had spent more than 20 years planting coffee trees, but now they had to shift to pepper to make more profit.

"This crop, we harvested nearly five tonnes of coffee beans and sold them at VND 40 million per tonne. After paying all expenses, we ended up with very modest gains," Tu said.

However, the cultivation of pepper is not as smooth and easy as it looks, experts say.

Hoang Phuoc Binh, vice president of the Chu Se pepper association, said the job was also fraught with risk.

For a ha of pepper creepers, farmers have to build about 2,200 cement pillars which cost VND150,000 each. On average, the cost of cultivating one ha of pepper is VND700 million ($33,000), exclusive of land rentals, Binh said.

In Gia Lai Province, many farming households have used bank loans for growing pepper, but it was not always the case that the spice fetched very good prices, he said.

Apart from the interest rates that added to cultivation costs, pepper, like other crops, was also exposed to natural calamities and diseases, he added.

This can be seen in the fact that many pepper farmers were close to bankruptcy because of piled up debts, Binh said.

Petrol stations punished for cheating customers

Over 40 per cent of inspected petrol and oil trading companies in the Central Highlands province of Gia Lai were found to be involved in illegal activities.

Inspections were carried out at 29 local petrol firms by the provincial Market Watch Department from April 5 to May 20.

Some firms were found to have used an array of methods to defraud their customers including altering the technical standards of petrol measuring devices, using out-of-date measuring devices and not listing petrol prices as regulated, according to the head of the department, Nguyen Van Tan.

"Inspections at a petrol station in Hung Phu, Krong Pa District, found that the firm has been using software to alter the display of fuel quantities, enabling it to sell lesser quantities of gas than that displayed on pump screens while pocketing around 5.5 per cent of the amount of gas sold to customers," he said.

The provincial People's Committee decided to fine the business VND38 million (US$1,900) and confiscated its two altered petrol pumps.

Under current regulations, petrol and oil firms in violation of the law will be fined between VND10-40 million ($500-2,000).

Apart from fines, firms would have their pumps confiscated or required to cease operating dependent on the level of infringement, Tan said, adding that the department planned to continue its inspections during coming months.

Despite regular inspections, violations were still common. Tan said that stricter punishments were needed in order to warn firms off violating the law.

State Bank denies rumour of new interest rate cap

The Governor of the State Bank of Viet Nam, Nguyen Van Giau, on Thursday affirmed that, to date, the central bank had no policies on adjusting interest rates or putting caps on lending rates.

Many banks were recently reported to be in breach of deposit cap rates set at 14 per cent, forcing enterprises to borrow capital with interest rates of up to 23-25 per cent. The disorder in the banking system led to rumours that the State Bank (SBV) planned to cap lending rates at 18-19 per cent while raising deposit rate caps to over 14 per cent.

"Although a few have mentioned this issue, I affirm that it's not a central bank policy. The central bank has not issued any adjustments concerning lending rates or dong deposit interest rates," Giau told reporters.

Giau added that controlling lending rates looked good on paper, but brought risks that the SBV could not afford, particularly on the back of credit demands already exceeding supply.

He mentioned that an application of lending rate caps could lead to the bribery of bank staff. "Corruption can make staff ease credit requirements and consequently, not only placing the bank at risk, but also the entire system."

Adjusting interest rates should be consistent with macroeconomic signals, the Governor said.

He revealed that the SBV had considered adjusting interest rates when global prices fluctuated last month, but now that prices and inflation were declining as well as the national economic condition improving, "why should we lift the caps on deposit rates?"

By May 23, capital mobilisation throughout the entire banking system rose 1.48 per cent compared to the end of 2010, of which foreign currency mobilisation increased 18.84 per cent while dong mobilisation decreased 2.75 per cent.

The decline of mobilisation in local currency was mainly attributable to the capital withdrawal of economic organisations worth VND156.7 trillion (US$7.6 billion). Giau said that this was healthy as enterprises drawing money from banks to invest in production could reduce production costs and improve liquidity in the economy, as well as decrease the coefficient of currency expansion.

Dong deposits from civil groups surged 11.84 per cent while deposits in US dollar rose 8.63 per cent.

Total outstanding credit rose 6.2 per cent compared to the end of last year. Loans in dong increased 2.59 per cent while credits in foreign currency rose 18.9 per cent. The net increase of credit volume during the first five months of 2011 reached VND135.8 trillion ($6.59 billion), equivalent to 33 per cent of the total planned credit for the year.

Credit growth in the manufacturing sector, in terms of agricultural, rural areas and export in particular, reached 22.2 per cent. Loans to the non-manufacturing sector declined by 1.92 per cent from 18.87 per cent at the end of last year.

Giau said loans to the non-production sector accounted for 16.95 per cent of total credit and from now until the end of this year, lending to this sector could be reduced to 16 per cent according to Government targets.

By May 23, Western Bank and Vietbank, having credit growths of over 20 per cent, would be investigated by the central bank, Giau confirmed.

He added that banks violating deposit caps would be fined, saying, "if any breaches were detected, branch managers would be disciplined, or branch operations suspended".

Vietnam Airlines takes out loan for backup engines

Ocean Bank will lend Vietnam Airlines up to US$7 million in order to buy backup engines for Airbus A321 aircraft, pursuant to a loan contract inked yesterday between the two sides in Ha Noi.

Buying backup engines for Airbus A321, as well as all other kinds of aircraft in general, would help ensure sustainable production and business activities, said Vietnam Airlines General Director Pham Ngoc Minh.

Ocean Bank General Director Nguyen Minh Thu said that the contract, the first of its kind between Vietnam Airlines and Ocean Bank, would open up opportunities for further co-operation between the two sides in future.

The V2533-A5 engines will be provided by the famous engine manufacturer International Aero Engine AG (IAE) and will be delivered next week.

Vietnam Airlines, the national carrier, is offering flights to over 40 domestic and international destinations.

Earlier this week, the carrier inked an agreement with a consortium of three banks including Citi, DBS and HSBC in order to receive loans for the purchase of up to eight Airbus A321-231S aircraft.

The company had signed additional contracts with French aviation firm Airbus in 2007 and in 2009 in order to purchase 26 Airbus A321-231 for delivery during the 2011-14 period. The purchases are part of company plans to expand their fleet to 115 and 170 aircrafts by 2015 and 2020, respectively.