BOT investors hastily return projects to gov’t

Many BOT (Build – Operate – Transfer) investors have transferred their infrastructure projects back to the Ho Chi Minh City government after operating them for a short time, far sooner than originally planned, due to poor effectiveness.

In a BOT contract, a private company builds an infrastructure project, operates it, and eventually transfers the ownership of the project to the government.

But many investors have practically skipped the operate stage and quickly jumped to the last stage -- transfer, since they have simply failed to recoup their investment from operating the projects.

One of these is the Phu My Construction Investment Corporation (PMC), which has recently demanded to return the Phu My Bridge, which connects Ho Chi Minh City’s District 2 and 7, to the municipal government, instead of operating it for 26 years as earlier contracted.

Inaugurated in September 2009, the 2.4-km Phu My Bridge, which spans the Saigon River, was expected to attract a huge traffic flow of transporters from the Mekong Delta to the central and northern parts of Vietnam, and help ease congestion in the inner city.

However, over the last two years, few container trucks and other heavy-weighted vehicles, the investor’s main source of toll collection, have passed through the bridge that cost PMC a huge investment of VND3.4 trillion (US$163.3 million).

The poor toll collection for recouping investment has driven PMC to ask for help from the city’s government, while the contract has more than 20 years remaining.

In response, the HCMC People’s Committee said in February that they agreed to receive the bridge, a final conclusion following a series of meetings held to discuss a solution to assist the investors that began when the bridge was opened to traffic.

But Phu My Bridge is not the first BOT project to die prematurely.

In 2007, the Construction and Natural Gas JSC, or IDICO – CONAC, returned the project of upgrading Provincial Route No 15, which is now Huynh Tan Phat Street in District 7, to the municipal government.

The move was made for a similar reason to the case of PMC, with IDICO failing to regain investments from low toll collection.

The investor has recently received VND230.2 billion from the municipal Department of Finance, as reimbursement for its investment.

Similarly, in 2006 the city’s Department of Transport had to repurchase the BOT project of building the 285-m Ong Thin Bridge in Binh Chanh District from CIENCO 5 at VND31.2 billion.

The investor gave up on the project since they were only allowed to collect traffic fees worth no more than 65 percent of the rate stipulated by the finance ministry.

More and more BOT investors have given back projects to the public sector due to the slow progress of recouping their huge investments, said economic expert Le Dang Doanh.

Since most of the investors intend to reclaim money by setting up toll booths, their recoupment plans will be ruined if there is little traffic passing through the bridges or roads, he said.

Similarly, Doctor Nguyen Xuan Thanh, director of the Fulbright economic teaching program, said it is risky for investors to take up BOT contracts.

The actual traffic flow through the projects does not meet the investors’ expectations, so they have to get rid of them, said Thanh.

“[The investors] should have to share the risks with the government, but as allowed by the contract, they have the rights to evade responsibility,” he said.

“Hence, the government is now clearing debts for such projects.”

Stocks continue to rally after yield rumours

National stocks retained their growing streak during this morning's session following yesterday's rumours that interest rates would be reduced.

"Although there hasn't been any official announcement, the rumours will still help boost trading," Bao Viet Securities Co analyst Nguyen Xuan Binh wrote in yesterday's note.

On the HCM City Stock Exchange, the VN-Index added 0.9 per cent to 449.04 points, while the VN30 rose nearly 1.2 per cent to 513.30 points.

The value of trades jumped 37.9 per cent compared to yesterday morning's level, hitting VND732.1 billion (US$34.8 million) on a volume of 52.8 million shares.

Real estate stocks performed well, especially with three of the 30 leading stocks by capitalisation and liquidity reaching their ceiling prices, including Hoang Anh Gia Lai (HAG), Ocean Group (OGC) and Vung Tau-based Development Investment Construction Corp (DIG). Among the top 30 shares, only Petrovietnam Drilling Services Co (PVD) retreated.

Ocean Group was the most active code on the southern exchange with some 3.6 million shares changing hands.

On the Ha Noi Stock Exchange, the HNX-Index also edged up by 0.9 per cent to 75.51 points.

Trading saw an increase of 30.8 per cent in value to VND546.7 billion ($26 million) and 35.2 per cent in volume to 56.8 million shares.

The heaviest trades were placed on VNDirect Securities Co (VND) with nearly 6.8 million shares exchanged. It marched 5.9 per cent higher to VND12,500 per share.

2012 Vietnamese Expo opens in Hanoi

The 22nd Vietnamese International Exhibition, Vietnam Expo 2012, opened its doors in Hanoi on April 4, with numerous kinds of products on display.

With the theme “Vietnam – Cooperation for Development”, the expo comprises of more than 600 stands occupied by 450 domestic and overseas businesses from 20 countries and territories across the world.

Speaking at the opening ceremony, Deputy Minister of Industry and Trade Nguyen Thanh Bien praised the participation of so many overseas businesses.

He said he hopes that the annual event will provide Vietnamese businesses with more opportunities to promote their goods, seek out trading partners, and expand their businesses and exports into the global marketplace.

Bien added that the expo will also help Vietnamese businesses integrate into the international economic community.

The Belarusian Deputy Minister of Trade Edvard Matulis said that the expo is an excellent opportunity for overseas exhibitors to develop new markets and promote their products in Vietnam and to other countries in the region.

He said Belarusian enterprises have faith in the potential of Vietnam ’s market as well as the country developing strongly in the near future.

Matulis added that Belarus will hold negotiations with the Vietnamese authorities to set up a trading centre in Hanoi as soon as possible to promote trade ties between the two countries in the near future.

According to a Hanoi representative from the Korean Trade, Investment & Promotion Agency (KOTRA), the presence of businesses from the Republic of Korea (RoK) at the 2012 Vietnam Expo indicates not only the strong trade ties between Vietnam and the RoK but also that RoK businesses are expecting to find more Vietnamese partners.

Export revenues rise by 23.6 percent in Q1

Vietnam earned $24.5 billion  from exports in the first quarter of this year despite the adverse impacts of the global market, recording a year-on-year increase of 23.6 percent.

Export earnings in the foreign-invested sector made a year-on-year increase of 48.8 percent.

By the end of the first quarter, textiles and garments earned an export turnover of $3.2 billion, followed by seven commodities with export revenues of one or more billion USD each; seafood, coffee, crude oil, footwear, electronic products, mobile phones, machinery and general equipment.

Meanwhile, the import turnover for the first quarter of the year stood at $251 million, the lowest figure for a number of years.

At a regular teleconference between Hanoi and Ho Chi Minh City, Deputy Minister of Industry and Trade Nguyen Nam Hai said that Vietnamese businesses are facing difficulties accessing loans and with the rising costs of imported raw materials while the export price of commodities have fallen this year.

To help businesses, Deputy Minister Hai said that the ministry proposed lengthening the time scale for them to pay tax and implementing an export credit insurance scheme on a trial basis, besides helping businesses look at trade barriers on certain imported goods.

To fulfill the export targets set for this year, Hai said the ministry would instruct businesses to save energy, reduce unnecessary expenditure, upgrade their technologies, increase the quality of management and restructure their business operations.

Financial shares lead market rebound on both exchanges

Shares pared earlier losses yesterday, adding value on both of the nation's stock exchanges.

On the HCM City Stock Exchange, the VN-Index advanced by 1.17 per cent to close at 444.93 points, while the VN30, tracking the exchange's 30 leading stocks by capitalisation and volume, also rose by 1.4 per cent to 507.35 points.

The value of trades jumped by 39.4 per cent over the previous day to a total of VND909.6 billion (US$43.3 million). Volume reached 61.6 million shares.

"Two crucial stock groups – banking and real estate stocks – showed stable movements but were not as impressive as the securities group," noted Kim Eng Securities Co analysts.

Financial conglomerate Ocean Group (OGC) and PetroVietnam Finance (PVF), as well as Saigon Securities Inc (SSI) and real estate developers Hoang Anh Gia Lai (HAG) and Becamex (IJC) all rose to their ceiling prices, gaining 5 per cent during yesterday afternoon's trading.

Telecommunications equipment provider Sacom (SAM) yesterday reported a profit last year of only VND8 billion (US$380,900), as it posted huge losses in its copper cable business.

During its shareholders meeting yesterday in HCM City, Sacom's management board asked its shareholders to dissolve its Sai Gon Cable Co (CSG) unit, in which Sacom continues to hold a 31.5-per-cent interest.

Last year, Sai Gon Cable eked out a profit of VND10.2 billion ($485,700), mainly from interest revenue, but its core business operations were a loser. "If Sai Gon Cable is dissolved, we will get cash back, which will be higher than current CSG stock price," said Sacom director Do Van Trac.

Eximbank (EIB) was the most-active share in HCM City yesterday, with roughly 3.9 million changing hands.

On the Ha Noi Stock Exchange, the HNX-Index concluded at 74.82 points, a 2.1 per cent increase compared to Wednesday's session. Market value increased only 17.7 per cent to VND783.3 billion ($37.3 million) as trading volume reached 80.8 million shares.

Habubank (HBB), after new talk that it was a takeover target, added 1.4 per cent and became the most-active stock nationwide with around 9.5 million shares traded.

Vietnam, EU to negotiate for free trade agreement

Vietnam and the European Union have completed necessary procedures to begin the first rounds of negotiation for a new bilateral free trade agreement, the EU delegation said in Hanoi yesterday.

European Commissioner for Trade Karel De Gucht, and Vietnamese Minister of Industry and Trade Vu Huy Hoang are set to discuss issues regarding the removal of import and trade service tariffs, the non-tariff barriers to trade, and other trade rules related to intellectual properties and competition.

Vietnam is the third country in ASEAN, besides Singapore and Malaysia, to negotiate the FTA with EU.

It is also EU’s fifth largest trade partner out of ASEAN countries, and the 35th worldwide. Meanwhile, the EU is Vietnam’s third largest trade partner, followed by China and the US, according to newswire VnExpress.

Last year saw two-way trade between EU and Vietnam reached EUR18 billion, with export turnovers from Vietnam worth EUR13 billion.

Export staples include footwear, textile and garment, coffee, seafood, and leather.

The two have initialed the EU – Vietnam Partnership and Cooperation Agreement to increase the bilateral ties.

Ho Chi Minh City seeks solutions for beleaguered firms

The Ho Chi Minh City government will focus all of its effort in seeking solutions to ease the hurdles challenging municipal enterprises, said city chairman Le Hoang Quan at a meeting yesterday.

“What matters now is helping businesses maintain production and ensure jobs for laborers,” he said at the meeting to review the city’s eco-social development in the first quarter.

As of mid-March, 4,998 new businesses have been established in 2012, up by 31 percent year on year, a report from the municipal People’s Committee showed.

However, the newly registered capital was only VND23 trillion, a 7 percent decline.

“This means new firms are set up with a lower investment scale,” the report stated.

In the meantime, 931 other businesses have also blocked their tax codes to dissolve, 526 of which have completed the dissolution procedures, according to the municipal Department of Planning and Investment.

That figure rose by 24 percent against the same period last year, the department said, adding that most of the dissolved businesses, or those suspending operations, are in the trading, construction, transporting, and tourism sectors.

“With the ratio of dissolved company to newly-established firm around 10 percent, the statistics recorded this year are still at the normal rate,” commented Thai Van Re, head of the department.

Meanwhile, Nguyen Van Lai, head of the municipal Department of Industry and Trade, said medium- and small-sized enterprises are facing a myriad of difficulties, with a rising unsold inventory index.

The municipal government partially attributed the sluggish operations of the businesses to economic turbulence and the long holidays of the Lunar New Year.

“However, the major culprits are the rising input costs, following the soaring global fuel prices, and the exorbitant interest lending rates,” the city said.

“These factors have affected the products’ cost prices, reduced buying power, and increased unsold inventories.”

Consequently, the city saw the index of industrial products in Q1 rise by only 2.7 percent, while the figure recorded in the same period last year was as high as 6.9 percent.

Speaking at the meeting, Nguyen Thi Hong, deputy chairman of the municipal people’s committee, demanded that the Department of Industry and Trade submit a report about the capital supplied to the development of businesses.

“What are the highest and lowest interest rates businesses have to pay, and how many borrowers actually accessed bank loans last quarter?” she asked.

“Only with such detailed data in hand can we evaluate the situation precisely, and have the basis to work with the State Bank of Vietnam and other relevant agencies to provide capital support to businesses,” said Hong.

Meanwhile, Nguyen Hoang Minh, deputy head of the HCMC branch of the central bank, confirmed that the city enjoyed credit growth of 0.43 percent in the first three months, while the country’s figure is -2 percent.

“This is thanks to the huge effort from banks to support capital for the economic sectors,” he said.

However, Minh failed to provide a particular answer as chairman Quan asked, “Exactly how many businesses have successfully borrowed loans?”

Loans inaccessible for firms to upgrade technologies

While a large number of local businesses have been operating with very poor or even outdated technologies, upgrading them is beyond their reach, with the banks refusing to offer loans.

Undeveloped technologies have resulted in low productivity, high cost prices, unstable quality, and low competitiveness for the businesses’ products, economic website Saigon Times Online reported.

Huynh Van Hai, director of the Bao Long Food Technology Production Co, has repeatedly failed to borrow the VND2 billion (US$96,000) needed for his plan to upgrade the company’s technology.

The company can afford VND8 billion of the VND10-billion plan, and it expects to cover the remaining from the special loan at interest rate of only 7 percent a year, as offered by Ho Chi Minh City’s master plan to enhance production technologies of firms operating around the city, the director said.

However, over the last year, Hai has yet to receive any response from the Fund for Scientific and Technological Development of HCMC on his files asking for a loan.

“Though it may take five or ten more years, I’m determined to access this source of capital,” he said.

Also the chairman of the Business Association of Hoc Mon District, Hai said other firms in the area also facing capital shortages for their technology upgrading plans.

“They are all rejected by banks.”

Not as patient as Hai is Nguyen Van Nam, deputy CEO of Dai Phat Group, who said his company had to borrow loans at exorbitant rates to implement their upgrading plan.

“The paperwork for the preferential loan is too complicated,” said Nam.

“We now have to clear bank interest worth VND6 billion annually for the huge loan of VND30 billion.”

According to a recent survey by the United Nations Development Program, which polled 100 businesses in Hanoi and HCMC, only 3 percent of the firms’ total revenues are earmarked for enhancing machinery and technology.

Meanwhile, most of the plans for loans are turned down by banks and credit funds for several reasons which businesses said have been used for years” “the companies do not know how to develop a plan,” “the plan has low economic effectiveness,” or “ineffective plan to repay debts.”

“The assessment experts of the banks are not industry insiders, so they cannot evaluate our plans accurately,” the businesses accused.

This is also the reason why many medium- and small-sized enterprises cannot access bank loans, though their plans are well developed.

“I have even asked a friend of mine, who is the director of a credit fund, to review the plan before sending it to the bank, but nothing has changed,” said Hai of Bao Long Co.

ADB project helps promote border trade activities

Vietnam should set up a border trade loan guarantee fund to provide preferential guarantee and training for commercial banks regarding small and micro business loans.

This was one of the 13 recommendations made by experts of the Enhancing Border Trade Services and Rules for Small and Medium-sized Enterprises (SMEs) project (ADB RETA 7380) at a seminar jointly held by the Asian Development Bank (ADB) and the Ministry of Industry and Trade in Hanoi on April 4.

According to ADB experts, to create favorable conditions for SMEs to operate in the Vietnam-China border area, Vietnamese agencies should design a cross-border trade programme which allows commercial banks and micro-credit institutions to expand business lending at micro and small-scales.

Besides, border trade information centres (BTICs) should be developed in Lang Son province and other important border areas to provide necessary information on financial products and business services to improve border trade enterprises’ operation.

Addressing the event, Head of the Mountainous Trade Department Hoang Minh Tuan noted that Vietnam-China border trade value has recently posted an annual growth rate of 26 percent, from US$4.2 billion in 2006 to US$10.4 billion in 2011.

However, the potential for expanding Vietnam-China border trade activities has not been fully tapped due to the lack of specific measures and policies, he said.

Additionally, border trade activities are limited as enterprises, especially the SMEs, have not received much support to conduct market research and trade promotion programmes and train human resources.

The ADB RETA 7380 project is expected to help strengthen trade border activities between Vietnam and China, contributing to boosting production, and poverty reduction in Vietnam-China border mountainous regions.

Vietnam dollar bonds best in Asia

Vietnam’s dollar bonds are leading gains in Asia this year, according to HSBC Holdings Plc.

The notes handed investors a 10 percent return, HSBC Holdings Plc indexes show, as consumer price increases slowed to a 12-month low and the trade deficit narrowed.

India’s bonds advanced 7.1 percent and China’s 4.9 percent, the next best performances among the region’s 11 biggest economies excluding Japan.

Vietnam’s bonds are also in demand this year as higher-yielding securities will probably be least affected by rising treasury yields as the US economy improves, said Sergey Dergachev, a senior portfolio manager in Frankfurt at Union Investment.

Aberdeen Asset Management Plc (ADN) and Union Investment Group, which oversee the equivalent of US$526 billion in assets, say they boosted holdings of Vietnam’s global debt in the past year.

“Vietnam is a good hedge for me against a possible rise in US Treasury rates,” Sergey Dergachev said. “Vietnam historically, and also as a high-yield credit, is less susceptible to movements of US Treasury yields than Philippine and Indonesian debt.”

Vietnam’s 6.75 percent dollar bonds due January 2020 yield 326 basis points, or 3.26 percentage points, more than similar-maturity US Treasuries, while the yield premiums for the Philippines’ 6.5 percent debt due January 2020 and Indonesia’s  5.875 percent notes due March 2020 are at 146 basis points and 170 basis points, respectively, according to data compiled by Bloomberg.

Vietnam’s trade gap narrowed as slower lending growth curbed demand for imports. The trade deficit was US$150 million in March, down from $279 million in February, preliminary figures from the statistics office showed on March 28.

Slower inflation limited domestic demand for foreign currency, easing pressure for its currency (VND) to devalue and giving the central bank room to bolster its foreign-exchange reserves.

Behind the low economic growth

Vietnam achieved a GDP growth rate of just 4 percent in the first quarter of this year, and the low pace will have far-reaching implications for the economy unless the government takes immediate action, economic experts have warned.

The Ministry of Planning and Investment (MoPI) reported that the national economy grew at around 4 percent in the first quarter of 2012.

The low GDP figure is in line with expectations from economists given recent unfavourable developments of the national economy, especially difficulties in construction and industrial production.

However, economic experts have raised concern about the country’s GDP growth for the whole year.

“It is not going to be easy to achieve a 6 percent rate as set for this year if we look at the recent increase in business closures and a decline in the import of machinery and materials,” said Le Dang Doanh, a senior economist.

A report by the Ministry of Planning and Investment (MoPI) shows that in the past three months, the agro-forestry and fishery sector achieved a growth rate of 2.8 percent, the construction and industrial sector just 2.9 percent, and the services sector 5.3 percent.

The stagnant production of the construction-industrial sector, which contributes the largest proportion of revenue to the economy, is casting a shadow on the economy.

It is reported that in the past three months more than 2,200 businesses have filed for bankruptcy and approximately 9,700 others have registered for halting operations or tax payment.

“This excludes a large number of businesses running out of steam. If the status quo continues, they will not be able to fuel the economy,” said Tran Xuan Gia, former MoPI Minister.

Gia also expressed his concern that without new measures in place Vietnam is unlikely to achieve its targeted GDP growth this year.

“GDP normally grows slowly in the first quarter and increases gradually in the following quarters. An important open question is how it bounces back on fledgling support factors,” he analysed.   

He said the 12-percent credit growth in 2011 is one of the biggest factors that will impact this year’s GDP growth.

His analysis is not groundless. The Vietnamese economy greatly relies on investment which has not been efficient in recent years. Meanwhile, credit growth, the backbone of the economy, reached a record low over the decade last year. It even fell 2.51 percent in the past two months, an abnormal sign for the economy.

“It is said that many businesses cannot access bank loans. I think that is not correct. What will they do with their loans in the current circumstance of the economy?” Gia questioned.

Other factors that affect growth, according to Gia, are the shrinking domestic and overseas markets that eventually generate a large amount of commodities in stock, high production costs, and a low competitive edge for Vietnamese products.

Citing the economic circumstances in 1998-1999 and 2008-2009, Gia said the year with the highest inflation rate is not the year with the lowest GDP growth, but the following year.

“The scenario will probably be repeated this year,” he forecast, adding that action should be taken to stop the economy slowing further.

Many other economic experts also expressed their concern about the country’s low economic growth, saying production is grinding to a halt and purchasing power remains low, although worries about high inflation are partly eased.

“Measures are needed to stimulate public consumption, boost production, and support businesses,” said Prof Nguyen Mai, former vice chairman of the State Committee on Cooperation and Investment.

The senior expert suggested that the government quickly survey businesses to inquire into the real situation so as to introduce financial and credit policies suitable to specific economic sectors.

Echoing Mai’s view, Gia said it is necessary to stimulate consumption targeting key sectors to support the sale of products without driving up inflation.   

“Priority will be given to sectors that have high inventory; for example investment stimulation is needed in construction. However, whatever we do should not affect the ongoing public investment restructuring plan,” Gia stressed.

Economic experts reminded the Prime Minister during a March 25 consultation that immediate solutions should go along with long-term ones to avoid unwanted implications for the economy in the coming periods.

Firms encouraged to attend Turkey trade fair

The Vietnam Exporters Association (VEXA) has called on local businesses to participate in the Turkey World Trade Bridge (TWTB) exhibition held in Istanbul from June 3-10.

The week-long event aims to promote trade and investment ties between Turkey and other countries. It is expected to attract the participation of 1,500 foreign visitors and 1,500 Turkish exhibitors with products showcased at more than 200 booths.

The TWTB will focus on certain industries like construction, furniture, construction materials and apparel.

The fair is organized by Turkish Confederation of Businessmen and Industrialists (TUSKON) in collaboration with the Turkish Ministry of Economy and Turkish Exporters’ Assembly.

Boosting exports to French market

Vietnam should seize opportunities to increase its exports to France, as the European country is expected to have a high demand for essential consumer goods and household utensils in 2012 and beyond, say experts.

In the face of economic slowdown, French consumers tend to accept imports at reasonable prices, opening the doors for Vietnam’s key exports, such as garments, sports shoes, rice, coffee, pepper and seafood to penetrate this demanding market.

According to the Ministry of Industry and Trade, although France’s economy has encountered difficulties, the exchange of goods between Vietnam and France has seen remarkable growth. In 2010, two-way trade turnover reached more than EUR2.15 billion, up 19 percent compared to 2009. Of the total, Vietnam’s exports to France fetched around EUR1.35 billion, up over 11 percent.

In 2011, the total exchange value of goods between the two countries was EUR2.2 billion, up 2 percent while Vietnam’s exports to the country reached EUR1.6 billion, up 18.5 percent.

Economists warn that although Vietnam’s key exports see favourable conditions in the French market, some seafood products are under strict supervision by French and EU organizations in charge of food hygiene and safety, consumer protection, and the environment.

They advise seafood businesses to strictly follow regulations on food hygiene and safety and be careful about payment conditions in export contracts to avoid losses.

Apart from essential goods, there is also great demand for high quality consumer goods for high-income earners and tourists in France, who have great purchasing power and can bring remarkable profit to Vietnam’s export businesses.

Foreign businesses seek opportunities at Vietnam Expo 2012

More than 450 domestic and foreign businesses from 20 countries and territories are showcasing their products at the Vietnam International Trade Fair (Vietnam Expo 2012) in Hanoi.

Entitled “Vietnam – Cooperation for Development”, the expo, which runs until April 7, provides a good chance for businesses to introduce their products, seek partners and expand markets, not only in Vietnam but also in other countries.

At the opening ceremony on April 4, Deputy Minister of Industry and Trade Nguyen Thanh Bien spoke highly of the participation of foreign businesses and said that the event helps domestic businesses to expand and access foreign markets to promote exports in the future.

Belarusian Deputy Minister of Trade Edvard Matulis affirmed that Vietnam Expo is among the fairs which attract attention from businesses in his country. This is the sixth time Belarusian businesses have joined the fair.

This shows that Belarusian businesses have confidence in Vietnam’s potential and its strong growth in the future, especially in the fields of truck and automobile manufacturing, and scientific-technological research, Edvard said.

He revealed that the Belarusian side will hold talks with Vietnamese authorities to set up a commercial centre in Hanoi to boost bilateral ties in the future.

A representative from the Korea Trade Investment Promotion Agency (KOTRA) said the increasing number of Korean businesses taking part in the event demonstrates close economic cooperative ties between the two countries.

Chinese farm machinery dominates
 
More than 60 per cent of agricultural machinery in use in the Vietnamese domestic market is from China, largely due to the lack of Government financial support to local manufacturers, according to the Viet Nam Engine and Agricultural Machinery Corporation (VEAM).

The corporation estimated that there are about 550,000 agricultural machines currently in use nation-wide, mainly for rice harvesting and which are mostly made-in-China, while some are from Japan or South Korea.

Pham Van Liem, deputy director of the Institute for Strategy and Industrial Policy under the Ministry of Industry and Trade (MoIT), said that the local agricultural machinery market cannot develop because the machine's quality is not high and the production standard is still weak.

Foreign machine import is not controlled and leads to unfair competition. Meanwhile, domestic enterprises have to bear all the taxes, especially import taxes levied on components which account for 70 per cent of their assembled machines.

But according to VEAM's deputy general director Bui Quoc Viet, Chinese products are more competitive because they are cheaper while local manufacturers face difficulties with capital, technology and planning.

Pham Hong Thang, from a company which supplies farm machinery in southern Can Tho City's Thot Not District, told the Nong Thon Ngay nay (Countryside Today) newspaper that his company is among seven enterprises approved to get financial support to produce farm machines according to the Government's decision No.63 issued in 2010. However; up to now, there have been no Government loans as local banks have not received any instruction from the State Bank.

In Cuu Long (Mekong) Delta, farmers need about 70,000 diesel engines at a motor capacity of 6-10hp for shrimp farming each year. Domestic production capacity reached 24,000 machines, but may not sell out because people prefer foreign machines from Japan, the former Soviet Union, South Korea, and China. The reason is that domestic machinery is priced 15 to 30 per cent higher than imported machines but less effective.

According to the 2015 plan of the Ministry of Industry and Trade, agricultural machinery industry will establish a nationwide network of manufacturing, assembling and industrial support. The focus will be on fundamental processes like casting, forging billet, thremal treatment, quality inspection, and appropriate investment for clean industry. The industry strives to win the majority of the domestic market for mid-sized diesel engines and small gasoline engines, and thus meet the requirements of agricultural production. After 2015, Viet Nam plans to produce high-level products such as oil pumps, high pressure hoses and multi-fuel engines.
 
Chu Van Thien, deputy director of the Agriculture Electromechanical and Post-harvest Technology Institute, said that 90 per cent of the combine-harvest machines on the market are from foreign countries.
Agricultural drying machines only meet about 30 per cent of demand and are technologically substandard, according to Thien.

"The Institute also manufactured a collection of combine tracker machines which can collect, process, pack, and carry straw packing. The machines are proven to be effective, yet producing this machine costs money, so local businesses are afraid of investing in the product," Thien said.

A weakness of industrial support makes Viet Nam-made agriculture machines uncompetitive in the home market, according to the Cuu Long (Mekong) Delta Rice Institute.

Liem suggested that the Government give financial support to help farmers develop agriculture and have more preferential policies to produce farm machines.

Firm ‘misused $508m in State-owned funds'

Government inspectors have discovered a series of violations regarding the improper use and management of State-owned capital and assets at Song Da Holdings.

A recent inspection revealed a total of roughly VND10.67 trillion (US$508 million) went unaccounted, the Tuoi Tre (Youth) Newspaper reported.

Inspectors have petitioned the Prime Minister to direct appropriate measures to deal with the missing money.

According to the Tuoi Tre, the inspectors asked the Prime Minister to require Song Da Holdings to devise measures to handle the combined financial infringement of VND9.97 trillion ($474.7 million) at its holding firm, its member corporations and affiliates.

Song Da group is the conglomerate of six corporations including Song Da Corp, Viet Nam Machine Assembly Corp (Lilama), Construction and Infrastructure Development Corp (Licogi), Construction Investment and Development Joint stock Corp, Song Hong Joint stock Corp, and Construction Mechanics Corp (Coma). In addition, the holding has about 85 affiliates, subsidiaries and funds.

The inspection report indicates that after the merging of these six corporations, the Ministry of Construction did not assess the stake of State-owned capital but gave the group management board this task, thus causing an inaccurate assessment of the group's charter capital.

Under the petition, the Ministry of Industry and Trade will deal with the over VND668 billion (US$31.81 million) for fuel that Lilama illegally received from the Electricity of Viet Nam based on the bidding contract of the expanded Uong Bi power project.  
The inspectors also required the group to pay VND8 billion from asset depreciation of the Deo Ngang Tunnel. The Construction Investment and Development Joint stock Corp will also have to pay back VND23 billion of illegal incentives.

Of the total sum, the group and its members were alleged to spend up to VND2.33 trillion investing in non-core businesses. Their core businesses include construction, power, mechanics and cement.

"The capital and asset management has loosened, causing losses in tax payment to the State budget," the newspaper reports.

The group and its members investted a combined capital of VND195 billion ($9. illon) into the Viet Nam Investment Fund. Yet with low effectiveness and high risk, they are on the verge of losing this money.

In addition, Song Da Corp did not build the My Dinh-Me Tri new urban area as approved by the Ha Noi People's Committee. It signed a deal to subcontract Sudico and Bitexco jointly implementing the project without a permit from relevant authorities.

Song Da Corp also did not carry out the Nam An Khanh new urban area project but instead shifted the building to Sudico without consulting the relevant authorities.

The inspectors also petitioned the Prime Minister to assign the Ministry of Public Security to direct an investigation of corruption in the to continue clarifying missing capital and loose asset mismanagement at the Song Da Holdings.

Viet Nam News could not reach the Song Da Holdings for comments yesterday.

Ben Tre hosts high-quality goods fair for first time

More than 150 businesses are displaying their products at the Vietnamese high-quality products fair that opened yesterday in Ben Tre Province.

The 400 booths at the fair will exhibit garments and textiles, footwear, handicrafts, food, and household and electrical goods.

Held alongside the Coconut Festival, the event is seen as an important bridge between local businesses and customers, enabling the latter to buy quality goods at reasonable prices and the businesses to expand their distribution system.

The six-day fair, held in the Cuu Long (Mekong) Delta province for the first time, is organised by the Business Association of High-Quality Vietnamese Goods, Sai Gon Tiep Thi newspaper, and the Ben Tre Department of Industry and Trade.