FIEs ready to join “National Branding” fest

All foreign enterprises in Vietnam are being invited to take part in the country’s “National Branding Programme” in 2013 to highlight made-in-Vietnam products.

“The government will include foreign invested enterprises (FIEs) in its National Branding Programme from 2013,” Deputy Minister of Industry and Trade Tran Tuan Anh told VIR at last week’s media briefing on results of the “National Branding Programme 2012”. The programme highlights domestic enterprises with national-recognised branded products.

FIEs are “an important factor” of the Vietnamese economy, Anh explained. “FIEs’ joining this programme will help further promote made-in-Vietnam products’ brand names and FIEs’ prestige,” he said.

Anh said the Ministry of Industry and Trade (MoIT) would later promulgate detailed instructions on how FIEs could join this programme.

This programme, having deployed since 2003 every two years, is the government’s first effort aimed at promoting the country’s image via products’ brand names. So far, only domestic enterprises have been allowed to participate.

This programme is symbolised by an eye-catching image of stylised cranes with spreading wings in shape of a flower, representing the country’s increasing development. This image is embraced by the words “Vietnam Value” to reflect the values of quality, renovation, creativity and pioneering.

The “National Branding Programme 2012” extolled the economic contributions of 54 large domestic enterprises operating in various sectors like steel, automobile, garment and footwear, telecommunications, ceramics, precious metal, pharmacy, financing and banking.

Featured enterprises included steel-maker Hoa Phat, automobile maker Truong Hai, garment producers Viettien, An Phuoc and May 10, pharmacy producers OPC and Traphaco, coffee maker Trung Nguyen and Vinacafe Bien Hoa, and the banks BIDV, Vietcombank and VietinBank.

Business profiles of all these enterprises have been strictly appraised under national standards with the help of international auditing firm KPMG.

“The more difficult the economy becomes, the more efforts we must promote Vietnam’s national brand names globally. This will help enterprises seek partners and then boost the economic growth,” Anh said.

Manufacturing stagnates in December

Vietnam’s manufacturing impetus has yet to show major signs of bouncing back.

At 49.3 in December, down from 50.5 in November, the seasonally adjusted HSBC Vietnam Manufacturing Purchasing Managers’ Index (PMI) posted below the neutral 50.0 mark for the eighth time in the past nine months.

The latest deterioration in operating conditions reflects reduced new order inflows, disinvestment of inventory holdings and stagnating production volumes.

The average PMI reading in 2012’s fourth quarter was 49.5, up from 46.9 in the third quarter and the highest outcome since 2011’s third quarter.

After rising moderately in November 2012, the level of manufacturing output was broadly unchanged during last month. Companies indicated that where volumes had been eaten into, this had been through the depletion of work backlogs.

Market conditions remained subdued overall, reflected by reductions in domestic and new export orders. The level of new export business contracted for the eighth month running and to a greater extent than flagged in November.

The muted performance of the manufacturing sector has not yet filtered through to the labour market, as highlighted by job creation being recorded at manufacturers for the third successive month in December 2012.

Although the increased rate of payroll numbers was again only mild, it was nonetheless still one of the fastest since the survey began in April, 2011. Higher employment – alongside efforts to sustain production volumes – was also a prime factor underlying the substantial drop in backlogs of work.

Input buying volumes were unchanged compared to November, as lower demand discouraged companies from raw material purchasing. Meanwhile, a preference for reduced inventory holdings led to lower levels of pre- and post-production stocks.

The average input prices declined for the first time in five months in December, although the rate of reduction was only slight. Lower purchasing costs were mainly attributed to weak demand for raw materials, especially in the domestic market.

December saw average output prices decline for the eighth consecutive month, with the decreased rate broadly in line with the average for this period. Lower factory gate prices were attributed to weak demand and strong competition.

HSBC Asia economist Trinh Nguyen said: “The economy is stabilising, as indicated by the output level. However, the economic recovery process is still in its fragile state as external demand remains weak and consumer confidence is subdued. A third expansion of employment shows the resilience of the economy. Still, while things will likely improve marginally next year, significant changes to consumption behaviour are not expected unless meaningful reforms take place”.

ODA funds boost infrastructure plan

Vietnam has successfully disbursed about $3.9 billion in official development assistance in 2012, the Ministry of Planning and Investment reported.

The official development assistance (ODA) disbursement included $3.65 billion of loans and $250 million of non-refund aids. “It is a positive result, especially amid economic difficulties, and at a time when Vietnam has become a middle-income nation for which ODA tends to reduce,” MPI Minister Bui Quang Vinh said.

Last week, Japanese Ambassador to Vietnam Yasuaki Tanizaki told VIR that Japan, which was Vietnam’s biggest bilateral ODA donor, had been providing Vietnam with $2.6 billion over this fiscal year, from April 2012 to March 2013. Of that amount, $1.4 billion was disbursed for the period’s first six months, focusing largely on infrastructure projects in Vietnam. In the previous fiscal year, Japan provided $2.7 billion in ODA loans.

“We will continue to assist Vietnam’s economic development, especially to help it realise the goal of becoming a modern industrialised country by 2020. In other words, we would like to support Vietnam for it to better adapt to the market economy system and enhance its competitiveness sustainably,” Tanizaki said.

At the 2012 annual Consultative Group (CG) meeting of donors for Vietnam in Hanoi on December 10, 2012, development partners pledged $6.485 billion in ODA for Vietnam’s development agenda in 2013.

“The new $6.485 billion ODA has manifested the international donors’ great confidence in Vietnam’s ODA usage. It is a very big sum and reflects their very kind heart to the country,” Vinh said.

The minister said the support was even more significant, especially amid the growing European public debt and the world’s troubled economic situation.

This $6.485 billion would be mainly used for Vietnam’s infrastructure, poverty reduction, climate change and social security projects. It came from 30 development partners, including 25 countries and five big international organisations.

Vinh said 2013 was forecast to be another difficult year not only for Vietnam, but also for all donors. “We understand that donors also find it difficult in giving their financial assistance to Vietnam, while their budget is being tightened. Still, Vietnam would like to continue being supported by the international community, because their assistance is an important capital source for the country’s poverty reduction and development investment.”

Since 1993, total ODA committed to Vietnam has exceeded $76.5 billion. For instance, the figures were $7.386 billion in 2012, $7.9 billion in 2011 and over $8 billion in 2010, and $24.8 billion in between 2003 and 2009.
ODA disbursement reached $2.94 billion in 2010 and $3.65 billion in 2011.

FIEs lead on export growth

After riding out the economic storm to brighten Vietnam’s export performance in 2012, foreign invested enterprises are expecting more export jackpots for the new year.

Under the glow of hundreds of electric bulbs, 1,500 workers at Korean-backed garment maker KJ Vina in Binh Duong province are working to meet the company’s export orders for early 2013.

In 2012, KJ Vina’s revenue totaled $4.8 million, besting its 2011 revenue amid the country’s economic slowdown. “This figure reflects our great efforts in keeping export markets of the US and Europe. It is also a win amid increasing economic difficulties,” said a company representative.

“Many other foreign garment makers in Binh Duong also had a good 2012 for exports,” said the source.

Some other South Korean-backed garment firms which reportedly had big monthly export turnover in 2012 include Hansae Vietnam ($22 million) in Ho Chi Minh City, and Eins Vina ($17 million) and Poong In Vina ($13 million) in Binh Duong.

The General Statistics Office (GSO) last week reported that Vietnam-based foreign invested enterprises’ (FIEs) garment and textile export turnover in 2012 grew 60 per cent on-year and held 70 per cent of Vietnam’s total garment and textile export turnover of $17 billion in 2012.

According to the GSO, while the local export sector faced a challenging 2012, FIEs enjoyed big export windfalls, especially for Vietnam’s staple exports, making a great contribution to the economy’s growth.

Specifically, many industrial products have seen a strong export turnover in 2012, such as TVs, computers and laptops ($7.9 billion, up 69.1 per cent against 2011), telephones and mobile phones ($12.6 billion, up 97.7 per cent), and machinery and equipment ($5.5 billion, up 26.9 per cent) and garment and textile ($11.9 billion, up 7.1 per cent). Most of these products are made by foreign firms, the GSO said.

Typically, the GSO cited South Korea’s electronic product maker Samsung as expecting to fetch an export turnover of $12 billion in 2012. Vietnam’s total mobile phone export turnover in 2012 was $12.6 billion, up 97.7 per cent against 2011.

Meanwhile, the US-backed chipset maker Intel was reported by Ho Chi Minh City’s Department of Information and Communications to reap export turnover of $1.4 billion in 2012.

The US-backed turbine maker General Electric Vietnam reported that it had fully realised its target of fetching an export turnover of $166 million in 2012. During 2010-2012, this company has earned a total of $278 million from exports.

In another case, at Japanese-invested industrial equipment maker Saigon Precision in Ho Chi Minh City, 2,000 workers have been focusing on fulfilling the company’s export orders for 2013 since November 2012, following an injection of $25 million investment capital.

Vietnam’s agro-forestry export turnover reached a record $17.7 billion in 2012, up 18 per cent on-year. Many FIEs also contributed a big share.

Ajay Bhagat, managing director of Indian-invested Hanoi-based plywood producer Vietductch International Joint Stock Company, said his company had been operating in Vietnam for two years, and 2012 was “an excellent export year” for his firm, with total export turnover of $6 million.

“We have fulfilled our export orders for 2012 for months. Vietnam boasts big raw materials and preferential incentives for exporting high-quality wood products. Meanwhile, the world’s demand for this product is increasing strongly,” Bhagat said.

Syed Nishat Hussain, general director of Indian-invested tea maker $6 million Phu Ben Tea Company Ltd in Phu Tho province, said 2012 was a “golden year” for his company’s export performance. “We are quite satisfied with our tea exports as we exported 2,000 containers of tea overseas in 2012,” Hussain said. “It is difficult to say about our total revenue now as we have to make calculations. But we have earned some profit.”

Since 1993 when Vietnam had a trade surplus of $40 million, the country in 2012 for the first time enjoyed a trade surplus, at $284 million. FIEs had a trade surplus of nearly $12 billion including crude oil exports—and $3.6 billion excluding oil. Meanwhile, the local economic sector suffered from a trade deficit of $11.7 billion.

“Vietnam’s trade picture in 2012 is quite different from many other previous years and from the trade picture of many developing countries home to low export growth, especially amid economic woes nationwide and globally,” said the GSO’s head Do Thuc.

Vietnam’s total export turnover in 2012 reached $114.6 billion, up 18.3 per cent on-year. FIEs occupied 17.7 of this 18.3 per cent.

While the local economic sector’s total export turnover was $42.3 billion, up only 1.3 per cent on-year, the figure for the foreign economic sector was $63.9 billion (excluding crude oil exports), up 33.5 per cent on-year.

The GSO’s National Account Department head Ha Quang Tuyen said the export growth had held 27.23 per cent of Vietnam’s total economic growth rate of 5.03 per cent for 2012. “Thus it is clear that foreign exporters have contributed greatly to the country’s economic growth,” Tuyen said.

The KJ Vina representative said the garment and textile export market in 2013 was expected to be brighter than 2012. “We expect a $5 million in revenue for 2013. [The figure for 2012 was $4.8 million]. However, this target means we will have to make bigger efforts.”

Meanwhile, Bhagat of Vietductch International said his company was expected to rake in a plywood export turnover of $12 million for 2013, when his factory will have expanded capacity. This figure would double the $6 million in 2012.

Phu Ben Tea Company also expected a strong year 2013. “We have already had so many export orders for 2013 and currently we have 3,000 hectares of tea and want to expand more to boost exports and revenue,” Hussain said. “Vietnam’s investment is very good.”

Hussain said his company aimed to export 233,000 containers of tea in 2013. “Vietnam is an ideal market for tea production and exports. It is likely that we will expand our investments here.”

General Electric said it expected an export turnover of $166 million for 2013, the same as in 2012, due to economic difficulties causing a reduction in consumption of its products.

Le Thi Minh Thuy, head of the GSO’s Service and Commerce Statistics Department, said the FIEs’ contributions to Vietnam’s export turnover increased from over 45 per cent several years ago to about 56 per cent now.

“FIEs have big capital, technology and output markets, while these factors are always coveted by local cash-strapped enterprises,” Thuy said.

Thuy said FIEs’ exports would continue strongly growing in 2013 due to their export plans and orders already made, with stable export markets. For instance, the turnover for the whole garment and textile export sector was forecast to be $18.5 – 19 billion and about $13 billion for exporting mobile phones.

Quang Ngai seeks new FDI for heavy industry complex

Aiming to become a nation’s hub of  heavy industrial manufacturing, central Quang Ngai province has just introduced a list of large-scale projects in heavy industries calling for foreign direct investment capital.

Those projects, which will be offered to foreign investors from now to 2020, include a 1.2 billion- megawatt gas-fired power plant, a 300-hectare industrial park serving for heavy manufacturing industries, a tire-manufacturing factory having an annual capacity of two million units, an integrated steel factory that could produce 10 million tonnes of steel per year, an oil refinery and petrochemical complex with an annual refining capacity of 10 million tonnes, an industrial equipment manufacturing factory and a fibre and textile factory.

In addition, the province also calls for investments in a shipyard project, a deep-water seaport, a rubber manufacturing factory and an automotive component manufacturing factory. Most of projects in the list are planned inside the province’s Dung Quat Economic Zone (EZ).

The introduction of the wishlist is part of the province’s efforts to attract more foreign direct investment (FDI) to boost its socio-economic development.

“The wishlist is planned carefully. We want to offer foreign investors specific options,” said Le Van Dung, deputy director of Dung Quat Economic Zone Management Authority.

“Quang Ngai is turning into an industrial manufacturing hub in the central region in particular and in Vietnam in general,” he said, explaining why most of the projects are in heavy industries.

Home to Dung Quat EZ and Dung Quat oil refinery, the first one of Vietnam, Quang Ngai in the recent years has emerged as a good destination for investments. According to Quang Ngai Provincial People’s Committee, foreign and domestic investors registered to invest in 274 projects in the province during 2006-2011, with the total investment capital of around $5 billion.

Most of those projects are in industrial manufacturing sector. South Korea’s Doosan Heavy Industries in 2007 built a $300 million industrial manufacturing complex in Dung Quat EZ. In the future, the group plans to further expand investments in Quang Ngai by building a nuclear power reactors manufacturing facility.

VSIP, the leading industrial park and township developer in Vietnam, in 2011 decided to build a 1,226 hectare integrated township and industrial park in Quang Ngai after studying five central provinces.

The development comprises an industrial park located within the Dung Quat EZ, where the government-supported special economic zone incentives are made available to manufacturers. In addition, the developer will build a commercial and residential township near Quang Ngai downtown.

VSIP believes Quang Ngai is ideal for labour-intensive, fast-moving consumer goods and food and beverage manufacturing, serving both the northern and southern regions in addition to its central market that stretch from Thua Thien-Hue to Phu Yen provinces.

Another big foreign investor is Singapore’s Sembcorp Industries, which is studying to build a $2 billion thermal power plant in Dung Quat EZ. The project was approved in principle in April 2012 by the provincial people’s committee. And JFE Steel, the world’s sixth largest steel maker, in early 2012 announced the plan to acquire stakes in E-United Group’s $4.5 billion steel project in Vietnam.

The Japanese corporation signed a memorandum of understanding with E-United Group, a Taiwanese corporate group engaged in steel production, medical services, education and real estate, to study the feasibility of building and operating an integrated steelworks in Vietnam at which JFE Steel would be the major shareholder.

Local makers wring for life

While foreign giants Unilever and Proctor & Gamble dominate Vietnam’s laundry care market, local players have found ways to keep themselves afloat.

According to Euromonitor International, the world leader in strategy research for consumer markets, Unilever Vietnam currently leads laundry care in the country with 59 per cent value share. Its leading brands are Omo, Comfort, Surf and Viso.

“Since its participation in Vietnam, Unilever has had a very strong understanding of Vietnamese consumer needs and behaviour as a result of its huge investment in research and development activities. Furthermore, Unilever was also very active and creative in its marketing activities,” said Euromonitor International in its website.

Some 23.1 per cent of Vietnam’s laundry care market share is now held by US’ Procter & Gamble.
Meanwhile, the remaining market share of the product is controlled by local brand names like Vi Dan, Viso, Lix, Daso and My Hao, and some imported brand names like France’s Econet, Malaysia’s Lucako and Thailand’s Pao.

Vietnam has a population of nearly 90 million people, with per capita income of $1,540 per year. Despite economic woes, the local laundry care market has been growing recently at 10 per cent per year.

Euromonitor forecast that in the 2012-2016 period, this market’s size would grow from VND7.5 trillion ($360.5 million) to over VND8.6 trillion ($413.4 million). During the 2006 -2011 period, this size swelled from VND3.8 trillion ($182.7 million) to nearly VND7.3 trillion ($351 million).

However, according the Ministry of Industry and Trade’s VietnamCompetition Authority, only few out of 30 local laundry care makers have been able to keep themselves afloat in the market due to pressure from foreign rivals.

But, some local firms have found ways to compete. For example, Lix Detergent Joint Stock Company has since 2000 been a processor for Unilever, with an annual capacity of thousands of tonnes of products. However, Lix has always found ways to expand their production size. It bought in 2005 a Hanoi-based factory of Unilever and gradually amplified its own products with its own brand names. Besides, Lix has also boosted its exports, which currently occupy 44 per cent of its total revenue. This strategy has helped Lix fetch an average annual revenue growth rate of 25 per cent.

My Hao Chemical Cosmetic Joint Stock Company had found its own way without becoming Unilever’s processor. My Hao said it had turned down Unilever’s proposal to buy the My Hao brand name, at a price of several million US dollars in 1995, $10 million in 1998 and $30 million in 2010.

“If we sold the My Hao brand name to Unilever, it was likely that we would have many orders from partners with attractive prices. However, when the market went down, we would lose our market,” said My Hao’s director Luong Van Vinh.

My Hao has annually since 2008 invested $1 million into expanding and improving production and distribution chains and building its own brand names. At present, its products occupy five per cent of Vietnam’s laundry care market and also exporting its products to Taiwan, Laos, the Philippines and North Korea.

According to Euromonitor, in 2011, laundry care experienced increasing demand from consumers in line with increasing living standards and rising consumer awareness toward hygiene in the country. International manufacturers continued to boost their sales by introducing new products and new marketing campaigns to stimulate growth, while local manufacturers continued to upgrade their packaging to improve their brand image to attract consumers’ attention.

Delays persist on Nghi Son refinery plan

A  key contract of the $8 billion Nghi Son oil refinery remains delayed despite Prime Minister Nguyen Tan Dung confirming Vietnamese government’s guarantee to push forward the project plans.

State-run PetroVietnam chairman Phung Dinh Thuc last week said that the engineering procurement and construction (EPC) contract of Nghi Son project would be delayed until January 2013.

“This is a very big scale project and negotiations are very hard in the context of the current financial crisis, whereas all partners are very careful on any decision,” Thuc said.

Apart from having the huge investment capital of more than $8 billion, central Thanh Hoa province-based Nghi Son project is the first new refinery in Vietnam with foreign investors’ participation. Dung Quat refinery in central Quang Ngai province, the first of its kind in Vietnam, is currently in operation and is 100 per cent owned by PetroVietnam.

The EPC signing would also represent a milestone as Vietnam’s largest ever EPC contract for the oil and gas sector.

One year earlier, according to PetroVietnam, the total value of the EPC contract to build Nghi Son refinery would reach more than $5 billion.

International contractors involved in this EPC contract are also the ones that have involved in building Dung Quat, including Technip from France and Japan’s JGC.

In October 2012, the overseas press reported that Idemitsu Kosan, the third largest oil refinery company in Japan and also a partner in Nghi Son refinery in Vietnam, had announced it would postpone investing in this project, due to the restructuring of its investment funding process.

PetroVietnam confirmed that the decision to adjust funding plans of the Japanese partner would slow down the project a little bit, but did not affect its overall progress.

Under plans first unveiled in 2008, Nghi Son refinery is a joint venture between PetroVietnam with a 25.1 per cent stake, Kuwait Petroleum International with 35.1 per cent, Japan’s Idemitsu Kosan with 35.1 per cent and Mitsui Chemicals with 4.7 per cent.

The project will have an annual capacity of 10 million tonnes of crude oil, or 200,000 barrels per day, 1.5 times greater than Dung Quat’s current capacity.

PetroVietnam’s eye catching results

Leading state energy group PetroVietnam has wrapped up 2012 with a bang.

It had turned heads by outperforming most business targets, except the target relevant to petroleum production, in 2012, according to the group’s deputy general director Le Minh Hong.

Particularly, the group was ahead of schedule by three months in fulfilling oil and gas exploration targets, whereas it finished oil extraction goal 19 days earlier and gas exploitation 12 days prior to schedule.

PetroVietnam also did a good job in respect to power and fertiliser production which were 26 and 20 days earlier than scheduled, respectively.

Notably, PetroVietnam achieved its full-year revenue target one month earlier and tax contribution two months before schedule with a year-on-year growth compared to in 2011.

Its executives had attributed its achievements to higher crude oil prices in the world marketplace at 1.7 per cent more or $117.6 against $115.6 per barrel and contributions from its major businesses parallel to its core oil and gas exploration and extraction functions. For instance, petroleum services companies reported revenue 13 per cent more than in 2011 which made up over 30 per cent of its total revenue.

In 2012, PetroVietnam explored 48 million tonnes of oil and gas equivalent, tantamount to 137 per cent of the projection, inked five new contracts (one abroad), made two new oil and gas field discoveries Kinh Ngu Trang (White Whale) and Tho Trang (White Rabbit), and tapped four local an three overseas oil and gas fields.

To ramp up investment efficiency and accelerate pace of major projects, last year PetroVietnam decided on delaying and extending progress targets of 24 investment projects valued more than VND11 trillion ($532 million) to inject capital into its major projects.

Generally, the group finalised 87 per cent of its investment plant equal to VND90.7 trillion ($4.3 billion) and completed 96 per cent of disbursement plan tantamount to VND89.5 trillion ($4.26 billion). PetroVietnam wrapped up investment and put into use 53 projects in 2012.

Significantly in 2012, the petroleum sector’s member units handed a wide range of measures to reduce costs and practice thrift. Consequently, the group saved VND5.104 trillion ($243 million) in 2012 against a VND3.715 trillion ($177 million) projection, reaching 137 per cent of the plan.

Responding to the government’s state-owned enterprises restructuring commitment to bolster business efficiency, PetroVietnam inked the group’s shake up plan for 2012-2015 which was submitted to the Ministry of Industry and Trade for appraisal and reported to the government for approval.

To tackle hardships in 2013, PetroVietnam’s management is set to be consistent with handling breakthrough solution packages relevant to management, science-technology and human resources development and scale up support to member units to address production and business woes in a timely manner with a view to outperforming all set plans.

Electronic customs procedures deployed nationwide

Viet Nam began to launch electronic customs procedures nationwide since January 1, 2013 as stipulated in the Government’s Decree 87/2012/ND-CP on detailed implementation of some of articles of the Customs Law.

The move was made after seven years the country first introduced a pilot program on e-customs procedures in a bid to further facilitate businesses’ export and import activities.

Deputy Head of the General Department of Customs’ Reform Board Tran Quoc Dinh said the promulgation of the above Decree marked a turning point in the modernization process of the customs sector.

Under the Decree, individuals and organizations can make customs declarations 24 hours a day and seven days a week.

Digital signatures will also be used in e-customs procedures.

As of November this year, the total number of e-custom declaration papers reached 3.2 million sets, accounting for 87.2% of the customs declaration papers and 87% of the total export-import value.

Earlier, e-customs procedures had been implemented in 21 out of 34 customs departments in cities and provinces across the country. Out of 134,000 enterprises with import/export licenses, 55,000 have registered to use e-customs and made 3.47 million declarations./.

Energy efficiency labeling compulsory since 2013

Since January 1, 2013, producers and importers are obliged to attach energy-saving labels in household and industrial equipments.

Professionally implementing energy efficiency program, Hanosimex has save approximately 5 -7 billion dong a year -
The move is part of an effort to realize the Law on Energy Efficiency and Conservation.

Industrial devices include transformers and electronic motors. While household equipments consist of lights, electrical ballasts, air conditioners, refrigerators, washing machines, electric cookers, fans and televisions.

Energy efficiency labels is an effective tool for State management and an approach for producers and importers to penetrate the market. They will also help customers to smartly select energy-saving products.

National shrimp exports fall into muddy waters
 
Shrimp exports could top US$2.4 billion in 2013 if the problems of last year like diseases and raw-material shortage are overcome, the Viet Nam Association of Seafood Exporters and Producers has said.

Truong Dinh Hoe, VASEP general secretary, said shrimp exports were worth around $2.25 billion last year, a year-on-year decrease of 6.3 per cent.

It was the first time the sector had failed to meet the export target which had been set at $2.4 billion, he said.

The industry had faced many challenges in both the local and foreign markets, he said.

A slowdown in demand in traditional markets had caused a sharp fall in shipments to the EU, the US, Asean, and Canada, he explained.

Besides, Japan, the largest market for Viet Nam's shrimp, had reduced the maximum permissible limit of Ethoxyquin residues to 0.01ppm, severely hitting Vietnamese firms' exports, he said.

Ethoxyquin is a substance used in the preservation of fishmeal (a main ingredient in animal feed), and most countries in the world apply a maximum residue limit of 77-150 ppm.

Le Hang, deputy director of Vasep's Centre for Training and Trade Promotion, told a conference held in HCM City last week: "The early mortality syndrome (EMS) disease damaged many shrimp farms areas, causing a severe raw material shortage."

The disease and high input costs had pushed up production costs, making Vietnamese shrimp products less competitive than that of Indonesia, India, and Ecuador, she said.

Processors had to import raw shrimp costing an estimated $170 million from countries like Thailand, Indonesia, conference participants said.

Hang added: "Raw material imports will surely increase if diseases are not controlled."

Tran Thien Hai, VASEP chairman, and many other delegates agreed that the country has to find ways to ensure stable supply raw shrimp, failing which exports would plunge.

Tran Van Linh, general director of Thuan Phuoc Seafoods and Trading Corporation based in Da Nang, urged the shrimp industry to "restructure production and establish shrimp breeding industrial zones with public investment to create a sustainable raw material source".

Other delegates said high prices of shrimp feed was also a reason for higher production costs.

Domestic firms only produce fish feed, leaving the shrimp feed market to foreign firms. The latter is nearly three times more expensive than fish feed.

Food & beverage, IT look safe bets for this year

Experts recommend that securities investors put their money on the food and beverage sector and IT this year and continue to be cautious when investing in financial and property shares.

Food and beverage (F&B) has historically been favoured by investors as a safe haven during uncertain times. According to market insiders, F&B stocks usually start low, as is typical for defensive stocks, but they often rise strongly when the market declines.

Such developments were evident in 2012, when F&B stocks fell at the beginning of the year after the market surged but rebounded in the latter half as the market declined. At the end of last year, this group posted an average gain of 45 per cent.

According to analysts of Viet Capital Securities Co, raw material prices will remain stable this year thanks to the stable exchange rate, and revenue growth is forecast to be 15 per cent for dairy products and 3 per cent for confectionery products.

There are 15 F&B companies currently listed on the stock market with a total market capitalisation of VND84 trillion (US$4 billion).

Meanwhile, information technology (IT) shares did not perform well last year. Software services maintained growth above 15 per cent, but the hardware business suffered a hard year due to declining demand.

However, the IT industry will see bright developments this year if the Government's spending on this sector - which contributes 30 per cent to the industry's total revenue - continues to be high.

Analysts say the planned re-launch of the Government's IT infrastructure project will be a key factor promoting industry growth this year, predicting the IT sector will likely grow by 10-15 per cent or even up to 30 per cent if conditions are favourable.

The stock market now has 21 listed IT companies with a combined market capitalisation of VND12 trillion ($574.2 million), of which FPT Corp (FPT) is the biggest player with a capitalisation of VND9 trillion ($430.6 million).

On the other end of the spectrum, analysts have more cautious views about shares of banks and securities and real estate companies.

According to Bao Viet Capital Securities Co analysts, it is very difficult to know the severity of bad debts in banks while current prices of bank shares do not take into account the bank's bad debts.

The real estate sector is also facing many challenges due to low demand as well as difficulty in accessing capital. Investors have been increasingly talking in recent days about the Government's rescue package for the sector, but although hopes tied to the rescue efforts helped lift the stock market in the last trading sessions of 2012, the policy's effectiveness remains unproven.

Korean insurer takes new name for local market

Insurance firm Korean Life Viet Nam officially changed its name to Hanwha Life Viet Nam yesterday to identify with its parent company in a bid to strengthen its brand.

Established in Viet Nam in 2009 with a charter capital of US$60 million, the company serves more than 23,000 customers via 9,000 agents.

Last year, it made VND168 billion ($8.2 million) in premium turnover, 12 per cent higher than the annual target.

Central economic zone attracts 32 projects

The Chan May- Lang Co economic zone (EZ) in the central province of Thua Thien- Hue has attracted 32 investment projects.

These, totally worth over VND35 trillion (US$1.67 billion), include 10 foreign direct investment projects valued at VND21 trillion ($1 billion).

Among them, 12 projects have been put in operation.

Besides offering preferential policies, Thua Thien- Hue has also injected more than VND1,7 trillion ($81 million) into transport, electricity and water supplies, communications and other social infrastructure to give the EZ a facelift.

Good dairy farming practices to be applied

Dairy company FrieslandCampina Viet Nam, formerly Dutch Lady, has attracted 2,800 farms over the past two years to its programme named "Good Dairy Farming Practices" (GDFP).

Under the project, farmers have been trained in advanced breeding techniques and animal healthcare, ensuring good quality for their milk.

It is expected that a total of 3,100 farms will be evaluated as GDFP this month.

Starbucks to finally arrive in Viet Nam

Starbucks, the world's biggest coffee-shop company, said it would set up its first outlet in Viet Nam early next month as it continued to expand in Asia.

The store is set to open in HCM City in partnership with Hong Kong's Maxim Group.

Viet Nam is the second-largest coffee producer in the world behind Brazil and has a substantial history with coffee.

Starbucks operates more than 3,300 stores across 12 countries in the Asia-Pacific region.

Doosan Viet Nam posts $165 million profit

Doosan Heavy Industries Viet Nam has earned a net revenue of US$165 million for 2012, the company told Viet Nam News. The company also contributed $750,000 to Quang Ngai's provincial budget and created regular jobs for 2,500 workers.

They have also reported that they produced and shipped a total of 34,000 tonnes of boiler units manufactured in Viet Nam to thermal power plants and desalination projects in 10 countries worldwide.

Quang Ninh issues call for FDI
 
The northeastern province of Quang Ninh, widely known for its wonderful Ha Long Bay, is calling for foreign investment in seven projects worth a combined capital of about US$500 million, according to the local authorities.

The largest projects include an expansion of the Hai H seaport, expected to cost $150 million, and a rare earth production facility worth $35.5 million. Other projects would be involved in such sectors as infrastructure development and trade.

Despite global economic difficulties over the past year, Quang Ninh managed to attract $412 million in new foreign direct investment (FDI), 15 times higher than in the previous year. Total FDI in the province to date has exceeded $4.1 billion.

The US was currently the province's leading source of FDI, accounting for $2.4 billion, or 59 per cent of the total. It was followed by mainland China and Hong Kong The province's largest foreign-invested project is a $300 million fibre production facility being developed by Hong Kong's Texhong Group in the Hai Yn Industrial Zone.

The province has set a goal of attracting total investment of VND804 trillion ($39.2 billion), with half of the sum expected to come from foreign investors.

"We will continue to improve our investment climate, perfect our investment policies, and pay further attention to domestic and overseas investment promotion in an attempt to attract more capital," said provincial Party Committee secretary Pham Minh Chinh.

The province has also aimed to increase the quality of investments and lessen environmental impacts by striving to raise the technological content of each project to 40-50 per cent of the value, switching the focus from heavy industry to hi-tech support industries, reducing the export of unprocessed raw materials, and taking full advantage of its tourism potential.

Long-term loans prove elusive
 
Businesses are finding it difficult to access long-term credit with commercial banks currently preferring to offer only short-term loans, says one corporate executive.

The executive, who asked to remain anonymous, said that his company would like to borrow at terms of one or two years in order to anticipate financing and make long-term business plans.

However, he said, banks were only offering short-term loans of one to three months with preferential interest rates.

Vietnam International Bank (VIB), one of the first banks to publish its lending interest rates on its website, only lists rates for loans of one to three months, he noted.

Viet Nam Association of Small and Medium-sized Enterprises chairman Cao Sy Kim said that companies depended upon bank financing now that other channels for raising capital, for example, the securities market, remain stagnant.

Kim said that banks would prefer not to offer long-term financing since the loans were risky in the context of an ongoing production and business slowdown and an unpredictable economy.

To encourage banks to make long-term loans, the Government needed to demonstrate its ability to keep inflation under control for a sustained period of time, helping banks attract long-term deposits, he said.

Contrary to banking practice elsewhere in the world, Kim said that long-term lending rates needed to be higher than those for short-term loans and that rates were already too high for many struggling companies to be able to afford.

According to statistics from the State Bank of Viet Nam, lending interest rates at the end of last month were 10-13 per cent for short-term loans to exporters and borrowers in the agricultural sector, while interest rates on longer-term loans remained at 14.6-17.5 per cent.

Kim said that, without a change, the banking system could see increasing liquidity problems while companies failed to access financing for long-term planning and operations.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR