Manufacturing sector moves closer to stabilization: HSBC
Vietnam’s manufacturing sector showed signs of near stabilization even though its output and new orders continued to fall in August, according to HSBC.
The August survey says, there was a survey record increase in employment as manufacturers were in the positive for activity.
Profitability remained under pressure, however, as output charges were little changed, but input prices rose at the sharpest pace since March. Rising transportation costs were widely reported.
The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) recorded 49.4 in August. That was an improvement on July’s 48.5 and the best reading since April but, by remaining below the 50.0 no-change mark, signaled a marginal deterioration of manufacturing operating conditions.
New orders received by Vietnam’s manufacturers continued to fall in August, extending the current run of contraction to four months. Market activity remained slow, according to panellists, and customer demand soft. That said, there were reportedly pockets of growth, the net result being only a marginal overall contraction in new work.
Latest data showed that new export orders also continued to decline. The marginal fall was the third in successive months. Export market conditions were reported to have remained tough, but were showing signs of stabilisation.
Manufacturing production volumes fell for a fourth month in succession during August. The decline was linked to a fall in new orders. In line with the trend for sales, the degree to which output fell was modest.
Manufacturers were again able to make inroads into their work outstanding during the latest survey period. Backlogs of unfinished orders fell for the seventeenth successive month, and again at a marked pace.
Falling backlogs in part reflected a depletion of inventories. Warehouse stocks fell marginally for the first time in three months. Additional capacity also helped companies to keep on top of workloads. Employment rose in August for the first time since April, with the rate of growth solid and the sharpest in the survey history. Recruitment reflected positive forecasts for production and orders.
Profits came under further pressure, reflective of two factors.
Firstly, output charges were little changed. Competitive pressures, efforts to stimulate sales and client requests for reduced prices all weighed on average tariffs.
Secondly, input prices rose at a marked and accelerated pace. Inflation was the sharpest since March. Higher transportation costs and a rise in the price of oil and associated derivatives were reported as key inflation drivers.
Commenting on the Vietnam Manufacturing PMI™ survey, Trinh Nguyen, Asia Economist at HSBC said that “Vietnam manufacturing activity continues to be hammered by weak external demand and sluggish domestic conditions, although the pace of contraction is significantly reduced. Global demand is expected to pick up towards year-end thanks to a recovery from the US, the Eurozone, Japan, and China. This should help the manufacturing sector. However, with input prices rising and domestic conditions still weak, we think the recovery process in Vietnam continues to be bumpy.”
Seminar features UK’s experience in PPP model
The UK’s experience in the public-private partnership (PPP) model, a scheme to better access private credit in addition to limited State budget was featured at a seminar in Ho Chi Minh City on September 3.
Addressing the event, Nguyen Thi Hong, Vice Chairwoman of the municipal People’s Committee, said the model should expand into other fields to lure investment and acquire technology.
Claire Phillips, an expert from the UK Public-Private Partnership Agency, said the model aims to meet demand for the overhaul and modernization of public services by making costs more transparent.
According to her, PPP is an important tool for procuring public services but it needs appropriate research and application in concrete fields to bring expected results.
At the event, representatives from the UK Export Credit Agency provided information about financial support for Vietnam’s PPP projects.
PPP is a model in which public projects enjoy private investment. Some industrialized nations even adopt the policy of transferring public services to the private sector.
The model is popular in transport, infrastructure, education and waste treatment, benefiting 100 countries and territories worldwide.
Osaka businesses explore cooperation with Vietnam
Osaka Industrial Development Agency Chief Kyoko Hirose has affirmed her province’s small and medium-sized enterprises regard cooperation with Vietnam as indispensable.
During a September 3 working session with Ha Nam’s Provincial People’s Committee, Kyoko Hirose who is leading a business delegation seeking investment opportunities in Vietnam, noted that Osaka, as the economic centre of Kansai, is home to major conglomerates such as Sharp, Sanyo, Kintesu, and Matsushita.
After visiting some Japanese businesses in Ha Nam’s Dong Van 1 and Dong Van 2 industrial zones, Kyoko revealed her Hirose MFG Company has planned a Ha Nam-based outlet in addition to the one currently operating in Ho Chi Minh City.
Kyoko said Ha Nam offers foreign investors independent incentives on top of those already extended to Japanese investors. These include entertainment facilities and retirement homes tailored to Japanese workers. The province ten commitments to its investors are outlined as sufficient electricity, human resources, and clean land supplies, simple administrative procedures, and the absence of strikes.
The province intends to build an exclusively Japanese industrial zone.
Kyoko highly praised provincial leaders’ management for facilitating the effective operations of its 40 Japanese investors.
The Provincial People’s Committee announced it will soon welcome more Japanese business delegations from Kansai and Kobe interested in investing locally.
HCMC hosts five international exhibitions
Five international exhibitions are taking place at Ho Chi Minh City’s Tan Binh Exhibition and Fair Centre over September 3–6.
The centre will host the International Plastic and Rubber Industry Exhibition (Vietnam Plas 2013), Vietnam International Packing and Printing Industry Exhibition (Vietnam Pack 2013), Vietnam International Print & Label Industry Exhibition (Vietnam Print and Label 2013), Vietnam International Food Processing & Pharmaceutical Industry Exhibition (Vietnam Foodtech and Pharmatech), and Linkage Industry Vietnam—Machine Tool and Automation Exhibition (Linkage Metalworking Vietnam 2013).
With a total of 460 booths, the exhibitions feature more than 260 foreign and domestic enterprises from 15 countries and territories including Vietnam, the Republic of Korea, India, Italy, Japan, Russia, China, Singapore, Taiwan, and Indonesia.
Displays range across plastic pressure machines, glass blowing machines, automatic PET bottle blowing machines, paint drying machines, milling machines, printers, and packaging production machines.
Vinaxad Deputy Director General Pham Quynh Giang said the events are excellent opportunities for local plastic producers to forge international relationships, learn about emerging technologies, and improve the competitiveness of domestic products.
The exhibitions were organised by the Vietnam National Trade Fair and Advertising Company (Vinaxad), the Chan Chao International Enterprise Group, the Yorkers Trade and Marketing Service Company, Paper Communication Exhibition Services, Vietnam Plastics Association (VPA), and Vietnam Rubber Association (VRA).Eight-month export revenue approaches US$85 billion
The Ministry of Industry and Trade (MoIT) has estimated Vietnam’s eight-month export earnings at US$84.82 billion, representing an annual increase of 14.7 percent.
The MoIT said export revenue hit US$11.5 billion and imports were valued at US$11.8 billion in August alone, rising 5.2 percent from July.
Import turnover for the year thus far totals US$85.4 billion, 14.9 percent higher than the same period in 2012.
Vietnam’s trade deficit reached US$577 million, equal to 0.7 percent of the country’s total export turnover.
At the MoIT’s online conference on September 3, many participants attributed the rising import surplus to a sharp decline in values of key export items, including seafood and other agricultural products.
Vietnam Food Association Deputy Chairman Pham Van Bay said current global rice market fluctuations have dramatically impacted Vietnamese rice’s export price. Abundant Indian and Thai rice supplies force prices down.
The MoIT stressed the need to minimise inventory levels and stabilise market prices. Other priorities include facilitating the support industry’s development, ratcheting up administrative reform, and expanding export customer bases, especially if the yearly US$127–128 billion export value target is to be achieved.
Aquatic exports up 1.3% in 8 months
The export value of aquatic products are estimated at US$591 million for August, bringing the total turnover in the first eight months of this year to US$4 billion, a year-on-year increase of 1.3%.
According to statistics by the Ministry of Agriculture and Rural Development, the US remains Vietnam’s largest seafood importer, accounting for 20.9% of the total turnover. It bought US$712.31 million worth of products in the January-July period, up 6.1% from the same period last year.
Exports to China, Thailand and Canada also enjoyed remarkable increases in value of 52.7%, 9.6% and 6.8%, respectively, over the same period of 2012.
However, decline was seen in exports to the Republic of Korea (19.1%), Spain (11.5%) and Japan (1%).
Vietnam spent US$415 million on importing aquatic products in the first eight months, down 7.2% year-on-year.
India and China’s Taiwan are the two largest suppliers of aquatic products to Vietnam, accounting for 14.2% and 11.4% of its total import turnover, respectively.
Ministry slashes coal tax in bid to clear stockpiles
The Ministry of Finance has cut the coal export tax from 13 per cent to 10 per cent in a move to help coal producers reduce their high stockpiles. Under Circular 124/2013/TT-BTC, the tax cut takes effect this week..
The move was made following a proposal from the country's largest coal producer, Vinacomin. The group asked the Government to revoke a July hike in export tariffs, saying this had had a disastrous impact on its business.
According to the group, since the Government raised coal-export tax from 10 per cent to 13 per cent in July, its coal export volume has dropped to only 120,000 tonnes a month, only a tenth of the previous amount.
The group said the rise in tariffs meant that export prices had to increase significantly. Taxes and fees now make up 30 per cent of the production cost of export coal, and 20 per cent of coal sold to domestic customers.
To avoid loss, Vinacomin had to raise coal export price, making its products less competitive in the wake of low world demands.
The Industry and Trade Ministry also reported that coal exports in July fell by 91 per cent in volume and 80 per cent in value compared to June. Coal exports in the first seven months of this year reached 7.8 million tonnes, grossing US$561.4 million.
Due to the low demand, the group estimates it had stockpiled about 7.9 million tonnes of coal at the end of August.
The group claims that it can only export a maximum of one million tonnes of coal in H2, down six million tonnes against the first half. It further claims that this will cause a loss of thousands of billions of dong to the State budget.
Vinacomin said it expected to sell about 2.9 million tonnes of coal this month while producing 3.2 million tonnes.
Manufacturing sector shows greater stability
The Purchasing Managers' Index survey for August released yesterday by HSBC Vietnam signalled a near stabilisation in the country's manufacturing sector.
"Although output and new orders continued to fall, they did so at marginal rates," the report said.
"There was a survey record increase in employment as manufacturers signalled positive expectations for activity."
Profitability remained under pressure, however, as output charges were little changed but prices rose at the sharpest pace since March. Rising transportation costs were widely reported.
The headline seasonally adjusted PMI recorded 49.4 in August, an improvement on July's 48.5 and the best reading since April but, by remaining below the 50.0 no-change mark, signalled a marginal deterioration in operating conditions.
New orders received by Viet Nam's manufacturers continued to fall in August, extending the current run of contraction to four months.
Market activity remained slow, according to respondents, and customer demand, soft. But there were reportedly pockets of growth, meaning new work only contracted marginally.
New export orders also continued to decline, falling marginally for a third successive month. Export market conditions remained tough but showed signs of stabilising.
Manufacturing volumes fell for a fourth straight month in August as new orders declined. But, in line with the sales trend, the degree to wich output fell was modest.
Manufacturers were again able to make inroads into their backlog during the latest survey period, causing it to fall for the 17th successive month and again at a marked pace.
This also reflected a depletion of inventories. Warehouse stocks fell marginally for the first time in three months. Additional capacity also helped companies to keep on top of workloads.
Employment rose for the first time since April, with the rate of growth the sharpest in the survey history, reflecting the positive forecasts for production and orders.
Profits came under further pressure, reflective of two factors: Prices changed little due to competitive pressures, efforts to stimulate sales, and client requests for reduced prices but costs rose at a marked and accelerated pace.
Inflation was driven also by a rise in the price of oil and associated derivatives.
Commenting on the survey, Trinh Nguyen, Asia Economist at HSBC, said: "Viet Nam manufacturing activity continues to be hammered by weak external demand and sluggish domestic conditions, though the pace of contraction is significantly reduced.
"Global demand is expected to pick up towards year-end thanks to a recovery in the US, the Eurozone, Japan, and China. This should help the manufacturing sector. However, with input prices rising and domestic conditions still weak, we think the recovery process in Viet Nam continues to be bumpy."
The HSBC Vietnam Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to 400 manufacturing companies.
Da Nang pulls plug on slow projects
The central city of Da Nang has decided to revoke two development projects which have been plagued by persistent delays.
A total of US$180 million was to be invested in total for the projects – a public park and an underground car park – in the city's downtown area.
The developer Vien Dong Land Corporation was granted construction permission in 2008, but no progress has been made since a ground-breaking ceremony took place five years ago.
The city instructed the Department of Natural Resources and Environment to withdraw the two projects to make room for other investors and developments.
"The city will halt more delayed projects following final decisions at a meeting of the city's Party Committee and the People's Council," said department director Nguyen Dieu.
"We'll release a full list of delayed projects that will be revoked this month."
According to an unofficial survey, the city has 30 slow-moving projects.
The city has attracted 259 FDI projects worth $3.62 billion in total.
Meanwhile, last month 210 domestic businesses registered total investment capital of VND388 billion or $18.5 million.
Promotions increase City holiday sales
Several supermarkets in HCM City reported a surge in sales during the National Day holidays thanks to promotion programmes and the start of the city's "Sales Promotion Month."
Big C, which offered discounts of 50 per cent on 1,500 products and will continue to offer 49 per cent on 4,000 others almost through next month, said the rise in sales was as it had expected.
Duong Thi Quynh Trang, the French supermarket's director of Public Relations and Foreign Affairs, said sales of items with big discounts, such as essential goods, fresh and processed food, household utensils, garments, and cosmetics increased sharply.
Since it expected higher sales, it increased stocks as well as the number of cashiers, security officers, and free delivery and other services.
Co.opmart, the country's biggest supermarket chain, reported a more than 50 per cent jump in sales during the holiday. It is offering discounts of up to 50 per cent on more than 2,000 products and this will continue virtually through September.
Vo Hoang Anh, marketing director of Saigon Co.op, said fresh food sales saw the sharpest increase — by 70-80 per cent — over normal days.
Other supermarkets like Maximark and Citimart also reported a jump in sales during the holiday.
Nguyen Thi Phuong Thao, director of Maximark Cong Hoa, said revenues were up 20-30 per cent, adding customers preferred discounted items.
A fair at the Phu Tho Indoor Stadium in District 11 that kicks off HCM City's annual sales promotion month in September is also attracting many customers with its discounts and freebies.
The fair, which closes today, has more than 400 stalls selling textile and garments, foodstuff, household appliances, consumer goods, and others.
Saigon Co.op has begun a nation-wide promotion programme to popularise Vietnamese goods called Dong Hanh Cung Hang Viet 2013 (Go together with Vietnamese goods).
The highlight will be about 150 mobile sales at discounts and with freebies by the supermarket chain's vehicles in many provinces in all parts of the country such as Vinh Long, Ca Mau, Binh Duong, Ba Ria-Vung Tau, Da Nang, Quang Tri, Ha Noi, and Hai Phong.
The goods that are offered at discounts – of 5-50 per cent — include high-quality essential goods, food, garments, and utensils made domestically.
Development firm posts losses
The Kinh Bac City Development Company (KBC) has recently announced its audited financial statement for the first six months of this year, revealing losses of VND70.75 billion (US$3.3 million), a surge of VND9 billion ($424,500) compared to the initial report.
The biggest change after the audit was the deferred corporate income tax in the first six months.
The company had reported its deferred tax at VND43.3 billion ($2 million), while the audit shows that the figure was just VND29.3 billion ($1.38 million).
Possible new market for fruits economically fruitful
Four types of Vietnamese fruits may be licensed for exporting to the US in the near future, one official said.
The Minister of Agriculture and Rural Development, Cao Duc Phat, made the statement after a meeting with the US Secretary of Agriculture. Phat and several other government officials accompanied State President Truong Tan Sang to the recent visit to the US.
This would be a good sign for the Vietnamese vegetable agriculture industry, as few fruits and vegetables are currently allowed into the US from Vietnam.
One of the changes would include the opening of a new market for longan, welcome news to farmers.
Currently, most of longan in Hung Yen is sold in the local market, but recently some have been illegally exported to China.
Concerning the developing plans between the US and Vietnam, Trinh Van Thinh, Charman of Hong Nam Longan Cooperative, said, “This is great news for us. We just hope to make sure that our business is stable.”
However, Hoang Trung, from the MARD’s Department of Plant Protection Department, said that the issue is more complicated. In order to get a license, Vietnamese fruit exporters must meet several strict requirements such as listing diseases and epidemics, the chemicals used and methods of harvesting and packaging processes.
He hoped that, apart from longan in Hung Yen Province, longan from the Mekong Delta region would also be eligible for exports to the US.
Many hope that the agreement could allow Vietnam to realise their goal for fruit export revenues, USD1 billion per year.
More state-owned enterprises find salary payment violations
HCM City authorities have found eight more wholly state-owned public-service companies in the city who are violating employee's salary payment regulations.
On August 31, Huynh Thanh Khiet, Deputy Director of the municipal Department of Labour, Invalids and Social Affairs said, the cases of these eight firms came to light after the case in which leaders of four state-owned public-service firms in HCM City received a salary of VND2.6 billion per year (USD123,809).
He added that to legalise big salary payments for the employees, these companies use a trick by signing seasonal contracts of less than three months with employees who meet all conditions to sign long-term contracts.
The eight companies use their employee salary fund for bonuses for directors, deputy directors and chief accountants. Due to violations in signing contracts and salary calculations, many workers at these companies are not offered anything in terms of social and health insurance.
Regarding salaries given to the employees, Le Ngoc Thuy Trang, Head of Corporate Finance Board under the HCM City Department of Finance, said this is a blatant violation of the Labour Code.
According to Mrs. Trang, the enterprises’ salary fund includes the fund of the management board and workers. Under regulations, salary for managers is based on their positions, and they have no right to use the employees'’ salary fund.
The recent inspection showed that the leaders of four state-owed public service companies in HCM City have been accused of embezzlement of employees' salaries.
At City Urban Drainage Company, Public Lighting Company, Saigon Traffic Construction Company and the Green Park Company, the average wage was VND22.2 million per month (USD1,000) while the figure at other state companies was only VND7.3 million. The case has caused public outrage.
While managers and regular employees collected average salaries, day-labourers and temporary employees were making much less.
Economist Pham Chi Lan said she does not understand how state management agencies can let this violation happen. This will affect people’s trust, particularly in the context of the current economic downturn.
The employees have been overpaid for a long time, but this was out of the control of management agencies, including those involved in taxation. It creates public doubt about the co-operation between the companies and authorities.
She added that lots of garment and textile companies achieved good business results, but the salaries of their managers account for just one third of the salaries of the managers of the four suspect firms.
Meanwhile, the Minister and Chairman of the Government Office,Vu Duc Dam, said the prime-minister’s salary is nearly VND15 million (USD714.2) per month and the level for leaders of economic groups is no more than VND36 million. Bonuses for them are not allowed to exceed VND10 million (USD476.2).
Lawyer Tran Cong Ly Tao, Deputy Head of HCM City Lawyers Association said the above-mentioned salaries for the employees show signa of criminal violation.
Rice price falls after stockpiling program over
Ever since the Government rice stockpiling program ended, the price of paddy in the Mekong Delta provinces has fallen by VND 200-500 per kilogram compared to the beginning of August.
In Can Tho City and neighboring provinces, traders bought fresh low-grade paddy IR 50404 at VND 4,000-4,200 per kilo. The price of fresh long-grain paddy varieties, such as OM 6976, OM 2517, and OM5451, also dropped from VND 4,800-5,000 per kilo to VND 4,500-4,700 per kilo.
According to experts, domestic paddy price dropped due to a decrease in rice export price. In addition, as firms no longer received preferential interest rates from banks, they could not continue to buy local rice at high prices any more.
After a brief surge, rice export price has gone down in the past two weeks. Currently, 5-percent-broken rice was sold at US$ 385-395 per ton, down from US$ 405-415 per ton at the beginning of August. 25-percent-broken rice also declined by US$ 15 per ton to US$ 350-360 per ton.
Vietnam Food Association recently sent a letter to Prime Minister Nguyen Tan Dung and relevant ministries, asking for purchase of 300,000 tons of late summer-autumn and autumn-winter crops for stockpiling from September 15 to October 16 and preferential interest rates for firms participating in purchase for two months, starting from September 15.
BIDV borrows US$140 million from foreign banks
Bank for Investment and Development of Vietnam (BIDV) has signed a contract with seven foreign banks to borrow a syndicated loan worth US$140 million.
This is among largest sums of its kind ever lent to a Vietnamese commercial bank over the past years.
According to BIDV’s press release, the seven lenders are Cathay United Bank, China Construction Bank, Indovina Bank, Far East National Bank, Shanghai Commercial and Savings Bank, Vinasiam Bank and Hua Nan Commercial Bank. However, the bank did not tell about term, interest rates and conditions of the loan.
“The US$140-million syndicated loan will help BIDV supplement foreign currency capital source,” said Quach Hung Hiep, deputy general director of BIDV.
As of the end of June, BIDV ranked third in the country in terms of total assets with over VND521 trillion after Agribank and Vietinbank. Its credit growth rate was nearly 11%, bad debt ratio 2.57% and after-tax profit over VND2 trillion.
HDBank acquires financial firm SGVF
HDBank has obtained approval in principle from the central bank to acquire 100% equity of Société Générale Viet Finance (SGVF), one of the largest foreign-owned consumer finance companies in Vietnam.
SGVF will become a subsidiary of HDBank. The transaction, the first one of its kind, will pave the way for other institutions in Vietnam to make acquisitions to form financial and banking groups and actively partake in the reduction of the number of financial institutions in the restructuring plans for banks in Vietnam.
However, HDBank did not disclose the value of the transaction.
SGVF, 100% owned by Société Générale, is a consumer finance company that was licensed by the central bank in 2007. Currently, SGVF has around 1,100 employees with a network stretching to 42 provinces across Vietnam.
SGVF has provided consumer finance services to more than 125,000 individual customers through 300 partners and over 800 service introduction points located at motorcycle and electronic vendors throughout the country.
HDBank plans to retain the whole system, business partners, customers and employees of the finance company.
Le Thanh Trung, deputy CEO of HDBank, said in a statement that this merger and acquisition (M&A) transaction is in line with international trends and within the restructuring plans advocated by the Government and the central bank.
HDBank will continue the pursuit of the ambitious development of SGVF in the consumer finance market and will maintain a similar human resources structure post acquisition, Trung added.
Vinamilk raises milk cows in Thanh Hoa
Vietnam Dairy Products Joint Stock Co. (Vinamilk) plans to establish Thong Nhat Thanh Hoa Cow Milk Co., a subsidiary specializing in raising milk cows in Thanh Hoa Province, in the fourth quarter.
The new offshoot will be set up in cooperation with Thong Nhat Co. based in Thanh Hoa Province. The subsidiary will have charter capital of VND600 billion, with VND570 billion contributed by Vinamilk.
The new company will develop a farm of 2,600 hectares and have 26,000 cows.
According to a representative of Vinamilk, the farm will be developed in many phases under the model of farms in Australia and New Zealand and completed after five years.
Vinamilk now has five milk cow farms whose scales are 2,000-3,000 cows each, and the number of cows of the five farms is over 8,000. The firm plans to increase its herd to some 25,500 in 2015 and 28,000 in 2016.
To achieve such targets, Vinamilk has set aside over VND1.5 trillion to invest in four new farms in Tay Ninh, Ha Tinh and Thanh Hoa provinces.
In related news, HCMC has plans to increase the capacity of milk cows raised in the city from 5,000 kilograms per head a year to 8,000 kilograms by using farming techniques from Israel.
The city on Tuesday opened the Dairy Demonstration and Experimental Farm in the outlying district of Binh Chanh. The project aims to help farmers reduce farming costs and increase the milk productivity.
According to the HCMC Department of Agriculture and Rural Development, the current average capacity is 5,000 kilograms.
Under the project, the experimental farm will provide training courses as well as transfer farming technology of Israel to milk cow farmers.
Covering over ten hectares and consisting of different sections, the experimental farm has been developed at a cost of over VND70 billion, with the city’s budget accounting for over VND59 billion and the rest sourced from Israel’s non-refundable ODA.
Currently, Vietnam has around 170,000 milk cows, with HCMC alone accounting for nearly a half, at 83,000 cows, followed by Nghe An Province with around 30,000 head of cattle.
Self-defense measure taken for domestic oil
The Ministry of Industry and Trade last week signed a decision to adopt a self-defense measure for refined soy and palm oil taking effect from September 7, slapping an additional 5% on top of the current import tariff for the edible oil.
Under the decision, in addition to import tariffs, refined soy and palm oil imported to Vietnam will have to bear an additional tax rate of 5% from May 7, 2013 to May 6, 2014. In the three following years, the surcharge will drop gradually to 4%, 3% and 2%.
This is the first time Vietnamese enterprises have succeeded in asking for self-defense measures for domestic products when foreign products of the same categories are imported into Vietnam at low prices. In 2009-2010, local enterprises failed to have self-defense taxes for float glass.
Last November, Vietnam Vegetable Oils Industry Corporation (Vocarimex) made a petition to the Vietnam Competition Authority and the Ministry of Industry and Trade to adopt self-defense measures. The ministry initiated the investigation and sent questions to relevant sides one month later.
On April 22, the ministry decided to take a self-defense measure after a period of investigating relevant issues.
Vocarimex as the petitioner received supports from four domestic oil producers, which are Tuong An, Tan Binh, Cai Lan and Golden Hope-Nha Be.
These five companies account for 100% of the domestic vegetable oil production while prevailing regulations allow for initiating such a measure if petitioners hold a combined 50% of domestic production, according to the Ministry of Industry and Trade.
According to the ministry, the increasing volume of imported vegetable oil left an impact on the domestic production, causing material injury to local players. The market share of domestic producers dropped from 52% to 27% in the 2009-2012 period while the market share of imported oil increased from 48% to 73%.
The market share decline resulted in a fall in production. The domestic production dropped by 32% last year while the import volume rose by up to 45.83%. Besides, revenues and profits of domestic producers contracted sharply by 38% and 31% respectively compared to those of 2011.
“The decline in domestic production was seen clearly last year and tends to continue in the coming time. If so, domestic producers cannot avoid losing market share,” said the ministry’s report.
HCMC hosts more dialogues with FIEs
Ho Chi Minh City’s officials need to meet with foreign investors more often to better support their business, said a city leader.
City vice chairman Le Manh Ha admitted this to foreign investors during last Friday’s dialogue co-chaired by him and Do Nhat Hoang, director of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency. The dialogue was attended by companies from Europe, Japan, Korea, and the US.
Ha elaborated by saying that more direct communication would needed for officials and administrators to understand the problems companies faced and then solved them.
Herb Cochran, executive director of AmCham Vietnam in the city, said foreign invested had a strong hold on the city’s exports with 66 per cent of the total and the growth of 21.7 per cent against last year.
AmCham will continue to cooperate with Vietnamese business and industry associations to help Vietnamese firms become “qualified suppliers” in US supply chains.
“And we recommend that the people’s committee and relevant departments, as well as business and industry associations, provide support for this effort as well. This will help develop supporting industries in Vietnam, and will also help the firms export through US supply chains to the US and global markets,” Cochran said.
EuroCham vice chairwoman Nicola Connolly said, “Vietnam is standing at a crossroad where every decision will impact the economic well-being of the country in the mid- to long-term. Making the right decisions is absolutely key, especially as ASEAN starts taking more shape.”
She warned that European countries may be looking to other Asean markets while mentioning returned skepticism of Vietnam’s overall economic outlook. She said in the last quarter only 48 per cent of respondents to EuroCham expected a deterioration of Vietnam’s macroeconomic environment. This quarter, respondents’ appreciation of the macroeconomic environment has taken a turn for the worse, with 60 per cent now expecting the macroeconomic environment to further deteriorate.
“This brings us back to the same high level that we experienced last year,” she said.
Meanwhile, Japanese Businesses Association Ho Chi Minh City (JBAH) chairman Kimio Yamaguchi said Japanese investments would increase continuously to Vietnam and other regional countries. Therefore, it is necessary for Vietnam to provide a more comfortable and more preferable business environment and conditions in order to lure more Japanese investment to the country.
“But we have to say that the current business environment in Vietnam has not reached the level we expect,” he explained. “Therefore, Vietnam needs to improve logistics, transportation, customs and taxation, labour issues, and so on.”
Eight-month rice export fetches over 2 billion USD
Vietnam exported 4.58 million tonnes of rice for more than 2 billion USD in the first eight months of 2013, the Vietnam Food Association (VFA) reported on September 3.
The figure included over 521,000 tonnes shipped in August, which brought home 229.7 million USD.
According to the VFA, the price of dry unhusked rice in the Mekong Delta provinces ranges from 5,100-5,400 VND per kilo.
VFA forecast that rice export this year can reach 7.5-7.6 million tonnes.
Last year, the country shipped a record 7.72 million tonnes of rice, earning 3.45 billion USD.-
VietinBank and JFC strengthen ties
Vietinbank, Japan Finance Corporation (JFC) and the Japan External Trade Organization just inked at a deal at a customer conference for Japanese small and medium-sized enterprises (SME) in Hanoi.
The agreement stipulates that the JFC will promote Vietinbank expansive services to Japanese SMEs and issue Stand-by Letters of Credit to guarantee their Vietinbank loans.
The services to be promoted include accounts and deposits, cash management, internet banking, and foreign exchange. Most importantly, Vietinbank will provide flexible financing solutions to meet clients’ capital needs quickly and efficiently.
The lending terms on this financing will range from one to five years and will be calculated in Vietnamese dong to avoid risks resulting from the floating interest rate policy. The rate will also be open to periodic revisions to help diversify firms’ financial resources.
According to Vietinbank deputy general director Pham Huy Thong, the bank has formed a specialised section (the Japanese Desk) to build and maintain high-quality relationships with Japanese partners and to support Japanese customers in accessing Vietinbank’s diverse capital sources.
“Japanese SMEs can access a full suite of highly effective and practical services at Vietinbank which would help them keep up with their capital expansion plans and scale-up operational efficiency, and thereby forge stronger relations between Vietnam and Japan,” Thong said.
“I expect that Vietinbank’s advantages will make it a top choice for Japanese firms doing business in Vietnam,” said JFC executive director Takamichi Harada.
Health market looks robust
The growing demand for healthcare services in Vietnam not only offers big opportunities for healthcare services providers, but also makes the country a profitable market for medical equipment manufacturers.
Seven Japanese medical equipment manufacturers comprising Konica Minotal, Toshiba, Fujifilm, Olympus, Hitachi, Mitsubishi Electric and Nihon Kohden have presented their most advanced equipment in Hanoi, with an eye on expanding their sales in Vietnam.
“Vietnam is the fastest-growing economy in Southeast Asia, and the demand for healthcare here is growing rapidly too,” said Nobuyuki Hatakeyama, deputy manager of International Sales Division, Toshiba Medical Systems Corporation, adding that the strong growth would lead to greater demand for advanced medical equipment.
He noted Vietnam had great potential for Toshiba to expand its medical equipment sales. “We are providing products and services to Vietnam from Toshiba Medical Systems Asia in Singapore, and two of our cutting-edge Aquilion One systems have already been installed and are in use. Using the latest technologies, we will continue to contribute to Vietnam’s medical sector by developing high-quality products that meet local needs,” he said.
In the latest financial report, Toshiba’s medical sector revenues in Vietnam reached $60 million.
With a population of nearly 90 million and increasing average incomes per capita, Vietnam’s private and public healthcare services are lagging behind growing demand. Espicom Business Intelligence, a UK-based company providing business intelligence on medical devices, pharmaceuticals and healthcare across global markets, estimates 92 per cent of Vietnam’s medical device market was supplied by imports this year, and the sector was growing rapidly. Japan, USA, Singapore and China were the leading suppliers, accounting for 50 per cent of the imports in 2012, the publication noted.
“There is a big gap between central and provincial hospitals in Vietnam now. Central hospitals are far better-equipped than provincial hospitals. When the Vietnamese government upgrades the public hospital system and when private investors build more new hospitals, there will be major opportunities to provide equipment,” said Hironobu Kawano, general manager of Asia-Pacific Sales Marketing Department, Olympus.
Olympus established a representative office in Vietnam in 1997 to begin local services based on sales and post-sales customer care. In 2005 Olympus Medical Systems Vietnam Company, a subsidiary company of Olympus group, was established with Hanoi as headquarters and a branch office in Ho Chi Minh City.
“Our business in Vietnam is very good,” said Kawano. “Since 2009, average revenue growth has reached 30 per cent.”
Fujifilm is also expecting to expand business in Vietnam. Takaaki Ueda, general manager of Endoscopy Systems Division of Fujifilm Corporation, said Fujifilm planned to bring advanced products such as ultrasound systems and double balloon enteroscopy which are routinely performed in Japan, however are not common in Vietnam because there are higher needs for specific educational programme.
“Our next challenge in Asia regarding endoscopy sales is to increase the number of physicians capable of using endoscopes in order to increase the demand for endoscopy systems and achieve a higher sales growth ratio,” said Ueda, adding that the firm would open a training centre in collaboration with Japan’s Nagoya University and Hue University for the training of around 20-30 physicians per year in Vietnam.
Japanese ODA charges Vietnam power development
Japanese official development assistance (ODA) loans play a vital role in ensuring Vietnam’s power projects continue moving forward and power supply keeps up with demand.
Japan has been a consistent supporter of Vietnam’s power supply projects in the areas of supply, transmission, and distribution.
The state –run Electricity of Vietnam (EVN) currently has conducted 12 power projects in progress funded by over $5 billion in ODA loans from Japan, of which seven are completed. The remainder are in active progress.
Since 1995, the total Japanese ODA toward power projects totaled $11 billion, of which $5.34 billion came from the Japan International Cooperation Agency. The Asian Development Bank has distributed capital totaling $2.37 billion, said an EVN report.
EVN reported that during 2011-2012, ODA loans totaled around $4 billion with EVN receiving $3.5 billion. This has been particularly handy in 2012, as the company found it difficult to source capital from banks.
Power projects funded by the Japanese government made up nearly 18 per cent of EVN’s power supply and 10 per cent of the national power system.
Notably, in 2011 Vietnam and Japan signed a cooperation agreement on the Ninh Thuan 2 nuclear power plant. Accordingly, Japan will support Vietnam in preparing for and implementing a nuclear energy programme, as well as training human resources for the plant and developing nuclear power regulations.
The Ninh Thuan 2 nuclear power plant would have a capacity of 2,000 MW with two turbines and will be built in the province of the same name. It would be Vietnam’s first nuclear power plant and follows Vietnam’s power development strategy and was approved by the 12th National Assembly. The $12 billion project is slated to start in 2014, with the first phase to begin commercial operations by 2020.
EVN said that it was aiming to get Japanese ODA support of around $1.5 billion between 2013-2015 for developing the Duyen Hai 3 power plant, transmission projects, human resources, and infrastructure necessary for nuclear power.
EVN asserted that as a leader in high-tech innovation, Japanese investment would be bolstered by technology exchange.
Under Vietnam’s Power Development Plan towards 2020, it is envisioned that the total power capacity of Vietnam will be increased to 75,000 MW by 2020 and 146,800 MW by 2030.
With electricity consumption rising by 12 per cent a year, current projects would not keep up with demand. The dry season is particularly difficult, with Vietnam relying heavily on hydro-power, which makes up 40 per cent of the country’s total production.
From now to 2015, EVN needs at least $25.3 billion to for its power generation and transmission projects.