Bad supply chains soil agriculture sector

Weak supply chains and unreliable products have prevented the agriculture sector from growing in recent years, said Deputy Minister of Agriculture and Rural Development (MARD) Nguyen Thi Xuan Thu at a forum in Ha Noi on Thursday.

"Agriculture creates employment for about 70 per cent of Viet Nam's workforce, contributing to the country's efforts to eliminate hunger and poverty," Thu said. "However, in recent years, growth and productivity have slowed."

At the forum, held by MARD, the Asian Development Bank (ADB) and the French Development Agency, domestic and international experts recommended policies to help Viet Nam promote the participation of localities, organisations and enterprises in both regional and global supply chains.

Nguyen Do Anh Tuan, director of MARD's Centre for Agriculture Policy Consultancy, said that Viet Nam should build specialised zones for plants and livestock, expand production forests and increase the value of forestry products.

Tuan also urged more investment in the fishery sector and irrigation system.

"We need to control the quality and hygiene of food, ensure food security, join bilateral agreements and ensure that trade laws and regulations are in accordance with those of the World Trade Organisation as well as international standards," he said.

Giovanni Capannelli, ADB's Special Adviser to the Dean, said that Viet Nam was predicted to gain the highest growth rate by 2030 among the CLMV group (Cambodia, Laos, Myanmar and Viet Nam).

Consequently, he pointed out, agriculture policy needed to focus on boosting productivity, enhancing supply chain management and increasing investment for research and development, agriculture promotion and rural infrastructure.

Capannelli also said it was necessary to improve the financial policy for agricultural enterprises, enhance the competitiveness of the breeding industry and improve food safety standards.

He added that the four countries would produce 12 reports about national policies and other technical manuals to enhance agricultural productivity this year.

U Tin Htut Oo, Chairman of the National Economic and Social Advisory Council of Myanmar, said that when it came to policy making, CLMV countries were stuck in the mindset of the 1968 Green Revolution, which focused simply on boosting productivity.

The region needed to adopt a new approach to agricultural development that would ensure food security, environmental sustainability and economic development opportunities, he said.

Imported pesticides saturate VN market

Concerns are growing about the ineffective management of plant protection chemicals in the domestic market.

According to the Plant Protection Department under the Ministry of Agriculture and Rural Development (MARD), there are currently around 1,100 types of plant protection chemicals on the market, but 90 per cent of raw materials were imported.

Official statistics show that in the first eight months of this year, $454 million worth of raw materials for plant protection chemicals were imported, and more than half came from China.

Tran Thi Thang, a farmer from Chuong My District in Ha Noi, said her family had a 5,000sq m vegetable farm, but struggled to find an outlet that sold reliable plant protection chemicals.

Thang said she had spent about VND1 million on various types of plant protection chemicals, but was unsure about which ones were reliable.

"We can only listen to what the shopkeepers tell us, but they often try to sell us substandard products to make a quick profit," she said.

Nguyen Xuan Hong, head of the Plant Protection Department, said there were 97 small-scale outlets for self-processed plant protection chemicals, but government agencies were unable to control their activities.

Agriculture Minister Cao Duc Phat said the management of plant protection chemicals was a top priority, but regulations regarding the chemicals were established 10 years ago, and were outdated.

These regulations are going to be replaced by the Law on Plant Protection and Quarantine, which should provide a tighter legal framework.

According to experts, the ineffective management of plant protection chemicals was because there were too many vendors and farmers lacked information.

Experts are calling for better co-ordination among agencies to build distribution channels and information sources for farmers, where they can find out more about the various types of plant protection chemicals available and report companies that sell inferior products.

Sweden brings winds of change to VN

Local and foreign stakeholders in the energy sector discussed the potential for renewable energy and energy efficiency projects in the Mekong Delta province of An Giang at a workshop held on Thursday in HCM City.

Twenty-one projects, including 10 capacity-building projects on energy efficiency and renewable energy, were presented at the workshop for investment opportunities.

The workshop was one of the final activities of the Partner Driven Cooperation Programme on energy efficiency and renewable energy between An Giang Province and the Swedish Energy Agency.

It has been implemented since 2012, said Maria Selin, counsellor and deputy head of mission for the Swedish Embassy.

As Sweden is phasing out its bilateral development assistance to Viet Nam, it is essential to strengthen partnerships between Sweden and Viet Nam, she said.

With the Partner Driven Cooperation (PDC) model, sustainable partnerships can be maintained over time even without Sweden's aid financing.

Environment and climate change are the priority areas for strategy cooperation between the two countries, she added.

The PDC programme, with a total budget of US$1.15 million, aims to develop capacity in both the public and private sectors in order to increase the number of energy efficiency and renewable energy applications in An Giang Province.

A training programme for initial project development and financial engineering is the main focus of the PDC programme, which is funded by the Swedish Energy Agency, the Swedish International Development Cooperation Agency (SIDA) and provincial government.

Business plans for several projects were developed under the financial engineering training programme, including a small-scale gasification of rice-husk project and three projects for the production of pellets from biomass residues.

It also supports project development with a focus on capacity-building and utilisation of climate change through the carbon market, as well as a clean-development mechanism by raising awareness and providing assistance in addressing barriers to project development.

The Centre of Excellence on Renewable Energy and Energy Efficiency, which was established under the programme, plays an important role as an operational counterpart between the project partners.

In the past two years, the two sides have jointly developed three projects, including the PDC Programme on Energy Efficiency and Renewable Energy, said Vuong Binh Thanh, chairman of An Giang Province's People's Committee

Other projects are the An Giang-Pitea Sustainable Community Development and the An Giang-Vaxjo Building Capacity on Energy Development Programme, Thanh said.

An Giang Province produces 4 million tonnes of rice and 320,000 tonnes of fish per year, he said.

The province exports 600,000 tonnes of rice per year and 140,000 tonnes of seafood per year.

Nguyen Duc Cuong of the Institute of Energy said that Viet Nam had great potential for biomass and biogas production.

More than 118 million tonnes of biomass was being produced every year, mainly from husks and straw, bagasse and sugarcane leaves, corn residues, natural and planted forest, barren lands, deforested hills and planted trees, Cuong said.

A total of 4.8 billion cubic metres of biogas could also be recovered every year from husbandry activities, he said.

SHB helps fund new projects

Sai Gon Ha Noi Bank (SHB) will offer loans of nearly VND1.2 trillion (US$56.8 million) for the construction of a hydro-power plant in Central Highland Dak Nong Province and a bridge in southern Dong Nai Province.

Accordingly, the HCM City branch of the bank would lend VND584 billion ($27.7million ) to Dak Nong VRG Joint Stocks Company – investor of Dak Sin 1 Hydro-power Plant located in the province's Dak R'lap District. The loan accounts for about 70 per cent of the total investment needed for the plant's construction.

The dual turbine hydro-power plant is expected to yield about 105.61 million KWh yearly, meeting power demand in the province as well as reduce power loss during power transmission.

The bank also committed to lend VND600 billion ($29 million) for the construction of a new Dong Nai Bridge and its two approaches.

The bank's deputy general director Dang To Loan said that one of the bank's priorities this year was to finance key infrastructure projects in a move to boost its credit growth while fulfilling its social responsibility to the country's development.

Hai Phong attracts new FDI projects

The northern port city of Hai Phong licensed five foreign-invested projects worth nearly US$1.59 billion in the third quarter of this year.

According to the latest report of the Hai Phong Economic Zone Management Board, of the new foreign-invested projects, the most significant was the $1.5 billion one invested by LG Electronics from the Republic of Korea.

The four other foreign-invested projects were King Plastic Pte Ltd and Dongbu Singapore Pte Ltd (both from Singapore), IML Technology (Indonesia) and Knauf International (Germany).

The management board also granted investment certificates to three domestic projects with a total registered capital of over VND290 billion ($13.8 million).

In addition, the city authority agreed to add $25.1 million to the investment capital of seven ongoing foreign-invested projects.

In the first nine months of this year, the Dinh Vu-Cat Hai Economic Zone in the city attracted 13 foreign-invested projects valued at $1.776 billion and 11 local-invested ones, worth VND1.765 trillion ($84 million).

By the end of September this year, the city's economic and industrial parks had 138 valid foreign-invested projects with a total registered capital of $5.368 billion and 70 domestic ones worth more than VND 36 trillion ($1.7 billion).

Viet Nam boosts trade with UK

Viet Nam exported over US$2.47 billion worth of goods to the UK in the first eight months of 2013, up 34 per cent year-on-year.

In August alone, exports to the market hit $384.3 million, according to statistics from the General Department of Customs.

During the reviewed period, telephones and components experienced the highest turnover of $871.3 million, accounting for 30 per cent of Viet Nam's total export turnover to the UK.

They were followed by footwear at $358.5 million, marking a yearly rise of 8 per cent, and textiles and garments at $307.8 million, up 3 per cent.

UK launches HCMC business chamber

The UK Government has announced the launch of a business chamber in HCM City and introduction of a priority visa service for business, investor, and work applicants.

The business chamber is meant to make official the existing British Business Group Viet Nam and offer more support for British businesses in Viet Nam, Douglas Barnes, the UK consulate in the city, said.

Viet Nam is one of 20 countries with whom Britain wants to intensify trade and investment, he said.

Despite ranking seventh in terms of value, transport means and components posted the strongest growth of 160 per cent.

Other items that recorded encouraging turnover growth including wood and wooden products, coffee, computers, electronics, seafood and pottery.

Viet Nam earned a total of $3.9 billion from exports to the UK in 2012, up 44.3 per cent from 2011.

Nguyen Thi Hong Thuy from the UK and Northern Ireland Trade Office at the Vietnamese Embassy said that poor language skills and a lack of knowledge about trade, laws, culture and international business customs were the major obstacles for Vietnamese exporters.

In order to expand trade relations sustainably, she urged Vietnamese businesses to focus on improving awareness in these areas, while intensifying trade promotion activities.

Experts have branded the UK a demanding market as its consumers were conscious of health and environmental issues.

They added that Vietnamese businesses would make higher profits if they could meet the UK's strict standards.

HCM City property market sees revival

The HCM City property market is showing signs of stirring, especially the residential and office segments, according to CBRE Viet Nam.

In a report released on Thursday, it said around 1,700 units were launched in the apartment-for-sale sector during the third quarter, a 45.8 per cent rise quarter-on-quarter and 11.6 per cent up from the period last year.

The affordable segment accounted for 72.4 per cent of the supply, and the high-end segment for 21.1 per cent.

The rise in the number of new launches, the sharp increase in the number of projects being advertised, and the amount of advertisement reflect developers' reviving confidence in the market, Ngoc Le, CBRE's senior manager for research and consulting, said.

The new price range for the high-end segment is getting closer to buyers' expectations after falling to US$1,300-1,600 per square metre after incentives.

Marc Townsend, managing director of CBRE, said both the affordable and high-end segments were witnessing sales because of "encouragingly longer payment terms."

Developers who had been cautious about extending payment terms have been offering flexible payments in the third quarter, allowing the last payment of 50-70 per cent of the cost within one or two years after handover.

Districts 2 and 7 have been bright spots in the apartment market due to the fact that pricing has become more affordable and infrastructure is set to significantly improve with the opening of Sai Gon Bridge 2 next month.

"Sales were triggered again, projects are handing over actual units, people, especially wealthy Vietnamese and expatriates, are moving in, giving the areas more energy," Townsend said.

"These two districts are always at the top of the inquiry list and in the top five of the most sought-after rental markets."

The report said the two districts would continue to attract high-income people, while Binh Tan and Thu Duc will be the choice of middle – and low-income people.

In the office space market, vacancy levels in grade A and B buildings fell by 3.5 per cent and 0.3 per cent quarter-on-quarter since there was limited new supply and continued demand from companies centralising operations and consolidating occupational requirements.

Net absorption in the A and B segments was 27,720sq.m, 31.1 per cent up quarter-on-quarter and almost three times the rate a year earlier.

The segments also saw rentals climb respectively 3 per cent and 3.2 per cent quarter-on-quarter to $32.47 and $18.73 per square metre per month.

"There are identifiable sub-sectors within the market and it appears that the top seven or eight properties in District 1 are now detaching themselves from the rest of the market," Townsend said.

They are already raising rents while those in the next tier, A – or B+, are acting in a more stable manner.

The retail sector saw tenants moving out and rentals softening in the third quarter.

With no new supply coming into the market for two consecutive quarters, the negative absorption was 4,133sq.m, reflecting tenants' dissatisfaction with rentals at major shopping centres and the number of visitors they are able to generate.

While malls in the central business district (CBD) maintained their high rentals and waited for the best contracts, non-CBD retail rent was adjusted downwards to attract retailers.

"Retailers do not actually shut down their business, they simply relocate, moving out of the overpriced CBD retail centres to high-street shop houses in the centre or on the periphery, which offer more affordable rates and attract larger footfalls," Ngoc said.

But the report named several malls – Diamond Plaza, Parkson Saigontourist, Bitxco Financial Tower, and Parkson Hung Vuong – that have succeeded in keeping both their rentals and tenants.

Besides, in the context of consumers reducing spending amid worries about recession, unemployment, and high prices, food and beverage and convenience stores that supply basic needs remain active.

In response to this, Zen Plaza has announced conversion of retail space on its first three floors into a food court by early November, Townsend said.

The report said any pick-up in the retail market would have to wait for an economic recovery.

The serviced apartment segment has been increasingly fragile, with both rents and occupancy falling.

Grade A rentals saw a fall of 4.4 per cent quarter-on-quarter while occupancy decreased by 5.1 percentage points.

"This steep rise in the serviced-apartment vacancy rate amid largely softened rents is the result of fierce competition from buy-to-let landlords," Ngoc said.

Exports of rice to decrease sharply

Viet Nam's rice export will reach 1.8 million tonnes in the fourth quarter this year, 128,000 tonnes lower than planned due to an export decrease in September.

This year, the country's rice export is planned to stand at 7 million tonnes, according to the Viet Nam Food Association (VFA).

Viet Nam's main importer is still China but the market is becoming increasingly competitive with fierce rivalry coming from Pakistan, Myanmar, African nations and familiar competitors - Thailand and India.

According to the VFA, the world rice export market faced difficulties as supply outstripped demand, while rivals from Thailand implemented generous price subsidies for farmers and India's export volume rallied.

Thailand also benefited from the decreasing cost and rising global demand of both white rice and parboiled rice, which it specialises in growing.

In the fourth quarter, it is estimated that the rice demand of African countries will range between 3-3.5 million tonnes while Indonesia will import 500,000-700,000 tonnes, making both attractive markets for Vietnamese exporters.

By September 30, Vietnamese rice export volume had reached 5.2 millions tonnes at an average price of about US$429 per tonne. However the rice volume decreased $13.79 per tonne over the same period last year.

South Korea urges stricter produce controls

The 2007 ASEAN-Korea Free Trade Agreement has significantly increased trade between Viet Nam and South Korea, according to the Ministry of Industry and Trade.

Le An Hai, deputy director general of the ministry's Asia-Pacific Market Department, said two-way trade went up from US$6.58 billion in 2007 to $21.1 billion last year.

It is expected to top $27 billion this year, he said at a conference organised yesterday by the HCM City WTO Centre.

The two sides have pledged to boost exports of Vietnamese farm produce to reduce Viet Nam's trade deficit.

South Korea is now Viet Nam's fourth largest trading partner behind the US, EU, and China, he disclosed.

The FTA may have helped Viet Nam boost exports of textile and garment, seafood, wood products, and processed foods to S. Korea, but exports of fruits and vegetables have not risen much, he said.

As an agricultural country, Viet Nam can supply all kinds of fresh and processed farm produce, he said.

Hong Won Sik, general director of Lotte Viet Nam Shopping Co Ltd, said Korea imports a lot of farm produce, but to penetrate the market, products must meet strict requirements set by the Government.

Kim Tae Ho, non-food director of Lotte Viet Nam Shopping Co Ltd, said however the Korean Government has monthly limits on farm imports.

Ho said Vietnamese firms should carefully study when they can export their products to South Korea and ensure they meet delivery deadlines since Korea has four distinct seasons.

They must also study the Korean Government's stringent conditions for imports, especially of fresh fruits, he said.

Despite low prices, the inconsistencies in size, colour, and taste of Vietnamese fruits have worked against their export to South Korea, he said.

Their packaging too cannot match those from countries like China and Thailand, he noted.

Their screening and hygiene standards must be improved if they are to be exported in larger quantities to South Korea, he advised.

Hai urged local firms to invest in production technologies to improve the quality and competitiveness of their produce.

Garment and textile, seafood, processed foods, household utensils, farm produce, and electronic and machinery parts are among products that can be exported to South Korea, he said.

He urged companies to carefully study demand, consumption habits, trade barriers and distribution systems in South Korea before entering the market.

Min Kim, director of Dole Viet Nam, highlighted the need to identify the right products to be exported to South Korea.

Hai said the two countries are negotiating a bilateral FTA, which, when it takes effect, would hopefully boost Vietnamese farm exports.

Mobile phones press towards top of export list for first time

Mobile phones and spare parts are likely to top the list of Vietnamese export items for the first time this year, with their annual export earnings expected to hit US$20 billion.

Viet Nam raked in $13.07 billion from exporting these products in the first nine months of this year and the $20 billion target is within reach, according to experts.

The export value of mobile phones and spare parts increased 21.45 times from 2009 to 2012, or 177.8 per cent each year on average.

In 2009, these products ranked ninth among the country's top 10 export items behind garments, footwear, crude oil, seafood, electronics, computers and spare parts, wood and wood products, rice and rubber.

One year later, they climbed to the fourth place. They placed second behind garments in 2011 and 2012, but jumped to the top in the first nine months of 2013.

Notably, foreign-invested businesses accounted for 99.2 per cent of exports.

The high export growth was attributed to new phone handset manufacturing projects in northern Bac Ninh Province, which made Bac Ninh the country's second-largest hard currency earner this year after HCM City. The two areas earned $15.5 billion and $20 billion respectively.

The European Union was the largest importer of Vietnamese mobile phones and spare parts, consuming $5.4 billion in the past nine months, a year-on-year increase of 71 per cent.

‘New approach' needed

With trade becoming a major contribution to economic growth, Viet Nam's future export growth must be based on enhancing competitiveness and capturing greater value addition, experts have urged.

At a workshop held yesterday in HCM City, representatives of the World Bank and the Viet Nam National Committee for International Economic Cooperation discussed recommendations in their new report, "Trade Facilitation, Value Creation and Competitiveness: Policy Implications for Viet Nam's Economic Growth".

They said Viet Nam had posted a strong trade performance in a difficult external environment, with exports rising 34 per cent in 2011, 18 per cent in 2012 and nearly 20 per cent in the first quarter of 2013.

However, Viet Nam has been less successful in diversifying its exports basket and in moving to global supply chains, they said.

"Viet Nam's ability to escape the middle-income trap is also predicated upon its ability to create a more competitive and efficient economy," the report says.

In his foreword to the report, Deputy Prime Minister Vu Van Ninh noted that the advantages of trade liberalisation were reaching their limits.

"It is time to have a new approach to improve trade competitiveness and export growth," he said.

World Bank economist Pham Minh Duc told the conference that the key for export growth was enhancing competitiveness.

Thus, the country must improve trade-related infrastructure, border management and manufacturing supply chains.

According to Duc, trade-related infrastructure in Viet Nam is weak, including poor transport and services, high transport costs, weak access to ports and inadequate inland container depots.

In addition, there is weak awareness of logistics and an inadequate framework for public-private partnerships (PPP) and logistics operators.

Also, warehousing, trucking services and freight forwarders lag behind global standards.

"Investment in annual transport infrastructure was 3.1 per cent (an average from 2009-11) of gross domestic product, far below the average for countries at the same level of development," the report says.

Speaking to Viet Nam News, Duc said: "Viet Nam should have a comprehensive legal framework so that PPP can be widely applied in the country."

"Exports are predicted to increase threefold over the next 10 years. So, we need support from the private sector as well as from the Government budget," he added.

As for border management, the World Bank report says slow, inconsistent procedures are a problem.

Complex business processes and weak coordination among key stakeholders, including customs, ministries and border troops, are other constraints.

Another weak area is supply-chain usage. Viet Nam has a weak capacity for sourcing materials and is dependent on intermediaries for sourcing supplies and receiving market signals. It also lacks working capital, the report notes.

To improve trade, the report recommends the establishment of a National Committee for Trade Facilitation to develop a national action plan for trade competitiveness enhancement and improved infrastructure and transport services.

Simplifying regulatory procedures to reduce time and costs and improving the reliability of cross-border trade are other recommendations.

In addition, it is imperative to restructure the manufacturing supply chains to capture value and to participate proactively in global value chains. The restructuring of agriculture supply chains is needed as well.

According to the report, success will require considerable and sustained effort by all stakeholders, with the Government playing the role of a facilitator and coordinator.

Political commitment will be needed from the top leadership, given that the recommendations will affect country competitiveness and directors of social and economic development at large, the report concludes.

Taiwan firms explore VN distribution opportunities

Executives from 46 Taiwanese companies are in HCM City looking for distributors and franchisees to sell their products in the country.

At an exchange organised yesterday by the Taiwan Trade Centre (Taitra), they showcased products like cosmetics, home appliances, machinery, automobile parts, many of them technologically advanced.

Food, foodstuff, cosmetics, and other companies looking for franchise partners were introduced to Vietnamese companies, the first time Taiwanese franchise opportunities have come up here, a Taitra official said.

She added that a similar exchange had been organised a few months ago, and it was extremely successful.

Many Vietnamese companies saw the benefit in co-operating with Taiwanese companies and approached Taitra looking for more opportunities, she said.

Trade ties between Viet Nam and Taiwan are on the upswing, more than 6 per cent year-on-year in the first eight months of this year to US$7.5 billion.

Viet Nam's exports were worth nearly $1.7 billion, a 14 per cent jump, while its imports rose 4 per cent.

Viet Nam has a trade deficit of $4.1 billion with Taiwan, but the figure is gradually reducing.

Agricultural product imports surge

The import value of agricultural products in the first nine months of this year saw a year-on-year surge of 10 per cent to US$13.6 billion, said the Ministry of Agriculture and Rural Development.

Importers of cashew, fertiliser products and animal food have had a particularly successful year so far.

Raw cashew imports recorded a year-on-year surge of 78.1 per cent in volume to 495,000 tonnes and 67 per cent in value to $466 million, including 37,000 tonnes in September, earning $66 million.

During the first nine months of this year, the imports of animal food products experienced year-on-year growth of 39 per cent in value to $2.42 billion from Argentina, India and the US.

The increase in animal food imports was due to rising demand on the local market, where the domestic production of those products is still confronted with many limitations, the ministry said.

In the first nine months of this year, Viet Nam imported 1.33 million tonnes of corn worth $431 million, an increase of 2.7 per cent in volume and 8.7 per cent in value against the same period last year.

However, imports of some farming products saw reductions, including wheat, seafood and soybeans. The import volume fell 45 per cent for wheat, 3.1 per cent for seafood and 0.7 per cent for soybeans year-on-year.

Gold auction sells 14,800 taels

The State Bank of Viet Nam (SBV) held its 63rd auction yesterday, releasing a further 14,800 taels onto the market.

The latest auction saw more than US$26 million raised from the gold bullion sale.

Credit institutions bought the 14,800 taels at a cost of VND37.40-37.42 million ($1,774-1,775) per tael.

The Saigon Jewellery Company (SJC) posted prices marginally above and below the auction prices at VND37.32-37.54 million ($1,770-1,780) on its website the same afternoon.

SBV has sold over 1.6 million taels since the first auction in March 28 this year, as a mechanism to regulate the local price of the commodity which continues to remain high.

Local retail prices remained $200 per tael higher than the rates posted by the internet trading floor kitco.com.

The central bank said an agency comprised of members from various government departments and offices had been established to ensure there was proper oversight for the sale of the gold.

Dong Thap strives for $599 million in exports

The Cuu Long (Mekong) Delta province of Dong Thap is striving to increase the export of its industrial and commercial goods to US$599 million this year, according to the provincial Department of Industry and Trade.

Despite facing many difficulties such as decreasing demand and increasing inventories, the province's exports up to the end of the third quarter exceeded $438 million, equivalent to 89 per cent of the same period last year.

In the past nine months, Dong Thap's industrial output value reached VND11 trillion, an increase of 7.5 per cent over the same period last year.

Eight-month trade with France hit impressive $2b

Two-way trade between Viet Nam and France has reached an estimated US$2 billion over the past eight months, according to statistics from Viet Nam Customs.

Viet Nam has exported over $1.27 billion worth of goods to France, marking a modest increase over the same period last year, with key export items including electronics, footwear, telephones and spare parts.

Over the period, the country's imports from the market have decreased 27 per cent year-on-year to $0.68 billion. Among the major imports are pharmaceuticals, transport vehicles, machines, accessories and steel.

France is one of Viet Nam's largest trade partners, and the fourth biggest European supplier of goods. The French market is also Viet Nam's sixth biggest importer of goods in Europe.

International Furniture and Handicraft Fair begins

More than 100 businesses are showcasing their products at the HCM City International Furniture and Handicraft Fair 2013, which opened its door yesterday in the city.

Deputy Industry and Trade Minister Tran Tuan Anh described the four-day fair as important to the development of Viet Nam's wood and handicraft enterprises.

The fair will offer businesses valuable promotional space and the chance to explore potential markets while consolidating relationships with domestic customers, he said.

Provinces, cities lined up for property trading floors

Provinces and cities could be granted permission to establish property trading floors at state administrative offices, according to a draft of the amended real estate trading law made by the Ministry of Construction.

Under the draft, the office would provide services related with property transactions and the collection of fees. The Government would introduce specific regulations on the procedures of establishing and operating such floors.

The ministry said the draft also stipulates that no property trading floors can receive investment. The floors play an intermediary role for facilitating transactions and receive fees from these deals.

Government approves Kinh Do Tower construction

Deputy PM Hoang Trung Hai has approved a proposal from the Ha Noi People's Committee and Le Truc Garment Joint Stock Company to build the Kinh Do Tower at the Le Truc Garment JSC in Ba Dinh District, Ha Noi.

According to the investor, Kinh Do Trading, Construction and Investment JS Company, Kinh Do Tower will be a complex containing a trading centre, offices for lease and luxury apartments. It will have 17 floors above ground and four below.

Second property trading session opens this month

A second property trading session will open in Ha Noi from October 18-20 to sell 1,500 property products at luxury, popular and low-income levels.

The session expects to attract many property investors, banks and 2,000 potential customers, said Nguyen Anh Tu, head of the Viet Nam Real Estate Association's office.

Luxury hotel chain to make VN debut in capital city

Viet Nam's first JW Marriott hotel is set to open in Ha Noi this year, with the aim of becoming a regional MICE (Meetings, Incentives, Conferences and Exhibitions) hub as a catalyst for promoting the country's tourism sector.

The 450-room nine-storey JW Marriott Hotel Ha Noi will be located next to the National Convention Center in the city's Tu Liem District, about 7.5km west of central Ha Noi.

The hotel will have 2,150 square metres of space, including a 1,000 square-metre grand ballroom, a 450 square-metre ballroom and five meeting rooms.

The Ha Noi property will be Marriott's third in Viet Nam. A 271-room JW Marriott Resort is scheduled to open in central Da Nang City in 2013.

Thai investors seek opportunities in VN

Financial group Maybank Kim Eng welcomed 35 Thai investors at the start of this week who are looking for investment opportunities in Viet Nam, said Kim Thien Quang, director of the company's customer department.

The Thai investors rated the Vietnamese stock market's cost to earnings ratio at 12, relatively lower than the Thailand market.

The investors visited corporations such as Vinamilk (VNM), PetroVietnam Fertiliser and Chemicals Corporation (DPM) and PetroVietnam Drilling and Well Services (PVD).

Maybank Kim Eng Viet Nam expects to invite more investors from the Southeast Asian region to survey the country's investment opportunities.

In addition, 46 foreign investors were granted transaction codes in September by the Viet Nam Securities Depository.

Vinacomin sets dong issuance record

The Viet Nam National Coal and Mineral Industries Corporation recently announced it had successfully sold VND5 trillion (US$235.8 million) worth of five-year bonds with a floating interest rate.

The issuance attracted many investors, including commercial banks, financial firms, insurers and securities companies.

The corporation's deputy general director, Nguyen Van Bien, said the issuance had helped his company raise a large amount of capital at a low cost in a short period of time. This is the largest issuance in dong ever made by a state-owned enterprise.

Credit growth falls behind target

Continuing economic difficulties are weighing on national efforts to achieve desired credit growth, say experts.

An unnamed general director of a joint stock bank told Dau tu chung khoan (Securities Investment) that the general lending situation wasn't satisfactory although loan costs had significantly declined.

This year, deposit interest rates have decreased 2-3 percentage points, and lending rates have been down 3-5 percentage points, according to the State Bank of Viet Nam.

Interest rates for existing loans also eased, with the ratio of loans subject to rates of over 13 per cent having dropped by roughly 67 per cent.

Recent central bank reports revealed that overall credit growth fell from 6.45 per cent at the end of August to 5.83 per cent on September 18.

The director said the decline was because the quantity of new loans couldn't compensate for matured ones.

Many small- and medium-sized firms refused to sign new credit contracts, although bank credit staff visited them to offer an interest rate of only 8 per cent per year.

Company leaders said they couldn't sell goods and just tried to maintain modest operations.

Few banks dared to risk financing firms which accepted high interests. "There's a distance between increasing bank caution and decreasing business qualifications involved in lending conditions. Loan demand is not so strong as people expect, but I suppose that such credit growth is already good in the current economic situation," the director said.

"The fourth quarter is the beginning of a production and business season, but the actual enterprise situation shows that fewer firms qualify for accessing new loans," the deputy general director of the Vietnam International Bank, Le Quang Trung, said at a seminar in Ha Noi last week.

He said that credit growth, despite improvement in the last two quarters, was currently low compared to the 12-per-cent annual target.

Economist Tran Du Lich told the recent Autumn Economic Forum in central Hue City that credit growth was still trapped in a vicious circle, which was involved in the ups and downs of market demand, business inventory, production and bad debt – all were feeling the impacts of continuing global headwinds and domestic difficulties.

Vu Nhu Thang, director of the Ministry of Finance's Institute of Strategy and Policy on Finance, warned that there was a potential risk of macro-economic instability as the State budget was seeing deficits caused by economic stagnancy, business losses and a frozen property market.

"Looking at these conditions, any lower credit growth this month than last month won't be something amazing," banking expert Nguyen Tri Hieu told Dau tu chung khoan. "The annual target for credit growth of 12 per cent may be unreachable."

In a report newly submitted to the Government, the Ministry of Planning and Investment said national economic reform programmes had initially seen satisfactory results, but the restructuring of fragile banks was not solid as bad debt resolution had just begun and the cross-ownership in banks remained difficult to control.

State Bank Governor Nguyen Van Binh said re-organising credit institutions still needed caution to avoid creating even more difficulties for them.

Mini supermarkets, convenience stores on the rise

With an impressive growth rate in less space and smaller capital requirement, convenience stores and mini-supermarkets are finding favor with investors.

Explaining reason for switching from shopping in a big supermarket to a mini supermarket near her house, Bui Thu Thao in District 1 said she can easily control spending in a smaller store where she is not inundated by promotional programs and piles of commodities to choose from.

Like Thao, a number of consumers are choosing to shop in mini supermarkets or convenience stores now.

This shows a change in shopping patterns in urban Vietnamese, who are buying more goods but at stable prices while also saving on the time factor.

According to a recent survey by Kantar Worldpanel, mini supermarkets and convenience stores have seen growth rate of 74 percent higher while for big supermarkets growth has been at around 6 percent.

Two years ago, around 10 percent households in urban districts chose convenience stores once a year. This year at least one household out of five chooses a convenience store once a year.

Kantar Worldpanel predicts soon every household will go to mini supermarkets or convenience stores once a year.

Local and international retailers do not want to miss this chance. Many big supermarkets have switched to convenience stores. For instance, Saigon Co-op set up Co-op Food, Citimart launched B&B convenience store, Satra has Satra Food convenience chains,  Big C with New Cho and Express, and many different names such as Circle K, shop & go, Ministop, Family Mart.

Investors just spend VND2.5 billion( US$118,749) on an area of 50-200 square meters while they need hundreds of billions and an area of tens of thousands of square meters to set up a big supermarket.

Moreover, the payback period in mini supermarkets and convenience stores is quite fast.

At present, 2-3 mini supermarkets or convenience stores are mushrooming in residential blocks every month.

This trend will not stop in the future as retailers plan to grow more chains. For instance, Saigon Co-op targets to have 150 stores by 2015. Similarly,  Satra plans to develop 20 to 50 stores as soon as possible.

Foreign investors make no secret of their desire to dominate the retail market. Japanese retailer Family Mart has made a comeback in Vietnam’s retail market with a Ho Chi Minh City-based store. As per its plan, Family Mart will set up an additional 20 convenience stores by year end.

When it comes to Family Mart, people remember bidding farewell to the Japanese retailer and local distribution and retail firm Phu Thai Group JSC.

Phu Thai Group has developed a new retail brand B’smart. Thai Beri Jucker Plc (BJC) has jumped into the Vietnamese retail market by buying equities of Phu Thai. According to plan, 20 B’smart convenience shops would be opened in Ho Chi Minh City by end of 2013 to increase the total number of shops to more than 60.

Yet a coin has two sides. Challenges of setting up a convenience store or mini supermarket is that leasing price will increase year by year, investors will face difficulties in maintaining operations in a fixed place.

Furthermore, when the economy improves, people will prefer to go to big supermarkets where piles of commodities are displayed with various promotional programs.

Authorities to apply stricter laws in the petrol market

A newly-issued decree by the government concerning the trading of petrol has suggested stricter punishments for those who store and trade in low-quality products.

Resolution 97, which concerns administration fines for violations in the fuel business, will take effect from October 10.

Firms that store and trade sub-standard products will be fined an amount as high as 1.5 times the cost of the products. If the firms try to mix strange substances into the fuel to lower the quality or create low-quality products in any way, the fine will be 1.5-2.5 times the cost of the products.

Firms will be fined  VND50 million (USD2,400) if they try to use improper measurement tools to earn profits. In addition, violators that are petroleum companies or export-import companies may have their business licences revoked for one to six months. Violators that are dealers and service companies will have their licences revoked for one to three months.

Nguyen Dac Loc, head of the Hanoi Department of Market Management said, Resolution 97 has filled in some of the loopholes from the previous Resolution 104. "Due to unclear regulations, we only checked on the octane and sulfur indexes. But now we'll have to check more carefully for any strange substances." Loc said.

According to Loc, the dealers can hardly make a profit in this industry so they try to mix in other substances to increase the volume of petrol. "They spent the money to build the stations, hired staff to do the management work, yet the commission fees are not nearly enough to offset these expenses. These agents have made a lot of complaints." he said.

A new resolution about copyright protection will also take effect on October 15, raising the maximum fines to VND250 million for violators who are individuals and VND500 million for an organisation.

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