Market build's on blue chip gains

The share market closed in the green this morning on both stock exchanges but no improvement was seen in trading volumes and values.

The benchmark VN-Index edged up 0.86 per cent to 391.48 points but the value of trades totalled just VND325 billion (US$15.5 million) on a volume of 24.5 million shares.

Most blue chips rose, tracked by an increase of almost 1 per cent in the VN30, which measures the performance of the top 30 shares on the southern bourse.

Property developer Hoang Anh Gia Lai (HAG) and PetroVietnam Finance (PVF) hit ceiling prices while others, such as dairy giant Vinamilk (VNM), real estate VinGroup (VIC), insurer Bao Viet Holdings (BVH), Vietinbank (CTG) and Phu My Fertiliser (DPM) gained from 1.2-2 per cent.

Shares of Tan Tao Investment Industry Corp (ITA) was the most active code with nearly 2.6 million shares traded, climbing 2.5 per cent to VND4,100 a share.

On the Ha Noi Stock Exchange, the HNX-Index also rose 0.57 per cent to close this morning's session at 54.66 points.

Only 17.2 million shares, worth VND115 billion ($5.5 million), were exchanged.

With over 3.5 million shares changing hands, PetroVietnam Construction (PVX) was the most heavily traded stock on the Ha Noi exchange. PVX shares soared to a ceiling price of VND4,300 a share.

Trade deficit may shrink to $1b
 
The nation's trade deficit this year is on track to shrink from last year's US$10 billion to just $1 billion due to a sharp decline in imports, said Deputy Minister of Industry and Trade Nguyen Nam Hai.

Hai anticipated that import value this year would total $114 billion, an increase of 6.8 per cent over last year, while export revenue was likely to surge 16.6 per cent to $113 billion.

The country's total export turnover reached $83.7 billion in the first nine months of the year, rising 18.9 per cent year-on-year, according to the General Statistics Office (GSO). Exports to countries in Asia grew at the fastest pace (27.2 per cent).

Meanwhile, the country's total import value during the period was $83.7 billion, rising only 6.6 per cent year-on-year. Imports from China accounted for the highest proportion of this figure (24.7 per cent), and imports of high-value items like gold and automobiles plummeted, allowing Viet Nam to enjoy a trade surplus of $34 million through the end of September.

Hai said that this year's low trade deficit would help improve the country's international balance of payments and foreign exchange market.

However, the figures also reflected a slowing of domestic production and demand. The country's industrial production value and retail sales value rose in the first nine months of the year but at a much slower pace than in previous years, the GSO said.

It also noted that the inventory index of the industrial sector remained unchanged in September compared with the prior month, standing at 20.4 per cent despite Government measures to support local producers.

Hai Phong's Cat Bi airport upgrade given thumbs up
 
The Prime Minister has approved a plan to upgrade Cat Bi International Airport in the northern port city of Hai Phong so it will be capable of receiving Boeing B747, Boeing B777 and Airbus A321 aircraft.

According to the VND5 trillion (US$240 million) plan which was officially announced yesterday, the international terminal will act as a standby for Noi Bai International Airport and also as a dual airfield for both civilian and military purposes.

By 2015, it will become a 4E level international airport under regulations from the International Civil Aviation Organisation (ICAO).

By that time, total volume of passengers will reach 2 million per year, along with 20,000 tonnes of cargo.

By 2025, annual passenger numbers are expected to hit 8 million, with 250,000 tonnes of cargo.

According to the plan, in the period up to 2015, a two-level passenger terminal with the capacity to serve from 4 to 5 million passengers per year will be built, and land for upgrading the capacity to serve from 7 to 8 million passengers per year will be prepared.

After the new terminal is put into operation, the old one will become a low-cost carrier or cargo terminal, or be used for other purposes.

A business and service zone is also planned covering an area of about 4,000 square metres, with room to expand to 12,000 square metres based on actual demand.

Currently, Cat Bi Airport services five HCM City-Hai Phong flights and one Da Nang-Hai Phong flight everyday.

Wood exports of $4.3b in sight
 
The wood industry is showing signs of branching out after the chairman of the Viet Nam Timber and Forestry Product Association said wood exports would reach US$4.3 billion for this year, up $400 million on 2011.

Ton Quyen said the target shouldn't prove to be difficult as the required earnings of roughly $300 million each month would be normal for the last quarter of the year.

Industry insiders also forecast that exports would increase towards the end of the year thanks to rising demand in the world market.

Quyen said although the world woodwork market has shrunk 30 per cent, the domestic wood industry hasn't been significantly affected, adding that the remaining 70 per cent remained a great opportunity for Vietnamese businesses to tap. Moreover, local wood producers and exporters are not dependent on bank credit so they have not faced the same financial challenges of producers and exporters in other industries.

According to the General Statistics Office, turnover for wood exports hit nearly $3.4 billion in the first nine months of this year, representing a year-on-year rise of 20.2 per cent. The US, China and Japan were major importers of Vietnamese wood products during the period.

The country has roughly 4,000 wood producers and exporters besides 30,000 households also doing work related to the industry.

The Government has so far encouraged the development of wood product export as it exempts import tax on wood materials. The country imports roughly $1 billion worth of wood materials yearly.

Chairman of the Handicraft and Wood Industry Association of HCM City (Hawa) Nguyen Chien Thang said Viet Nam, which ranks sixth in the world for woodwork exports, would likely see wood exports grow by $15-20 billion in revenue in the next 10 – 15 years.

However, experts also urged the industry to restructure, saying that the industry's growth contained potentially unsustainable factors that could seriously impact future expansion.

HCM City seeks way out of housing quagmire

HCM City authorities are looking for ways to revive the city's property market, as nearly 900 of 1,108 property projects have been left unfinished because of financial problems.

According to figures released by the city's Construction Department at a meeting last week, the property projects, which are located on a total of 4,097ha, comprise a total of 165,079 apartments in 23 districts.

Of these, 212 have been completed, 603 are under construction, 122 have not started and 14 have been suspended. Investment-license applications are being prepared for 157 projects.

City authorities said that only five per cent of the work had been done at the Waseco Plaza in Tan Binh District's Ward 2, although it was scheduled for completion next year.

In addition, construction has been suspended on an apartment-office building located on 3.1ha on National Highway No 50 at the Nguyen Van Linh Crossroads in Binh Chanh District's Binh Hung Commune.

After completing work on its foundation in February, the developer could not get a loan because interest rates were as high as 20 per cent at the time.

With an interest rate of over 18 per cent per annum, production costs of one apartment would rise from the expected VND10 million per sq.m to VND12 million per sq.m, said Tran Lenh Phu, general director of Company No 194, developer of the apartment/office building complex.

Speaking at a meeting last week to discuss solutions to the crisis, Nguyen Thanh Tai, former deputy chairman of HCM City, said the stagnant property market was caused by inappropriate business strategies on the part of developers and an imbalance between supply and demand.

In addition, many regulations affecting planning, policy and management are not a good fit for urban conditions.

Tai said that to develop all of these property projects, a huge capital source was needed. However, many enterprises are financially incapable and have to depend on bank loans and contributions from home buyers. As a result, they face difficulties when the market liquidity runs low.

Despite several cuts, apartment prices remain too high for low-income residents, and there are few low-cost houses on the market for low – and medium-income buyers. This is why many apartments remain unsold, although residents badly need accommodations.

According to a study conducted by Dragon Capital, Ha Noi and HCM City each have 35,000 unsold apartments. It would take seven years for the two cities to sell these apartments, the report said.

Based on an average price of VND2 billion for each apartment, the lost capital for all of these apartments amounts to VND140,000 billion.

Moreover, there are fewer home buyers in today's market, resulting in a loss of capital.

Le Hoang Chau, chairman of the HCM City Property Developers' Association, said construction delays meant developers were unable to hand over apartments and houses to buyers in due time, leading to complaints and disputes.

In such a critical situation, many developers have proposed that their apartments be divided into smaller accommodations to make them affordable to low-income buyers.

Apartment projects currently are being built following the 1:2:1 ratio, meaning 25 per cent of condo units are small-sized, 50 per cent are medium-sized and 25 per cent are large-sized. Many developers said this ratio regulation was not suitable for current market conditions.

Developers are asking for permission to increase the number of apartments in their projects. For example, the developer of an apartment project on Bai Say Street in HCM City's District 6 wants to increase its number of apartments from 144 to 192.

An investor of an apartment building on Nguyen Huu Tho Street in Nha Be District's Phuoc Kieng Commune in HCM City has proposed that his apartment sizes be reduced to 60-90sq.m each.

And the developer of an apartment/office building in Binh Chanh District's Binh Hung Commune has asked authorities to shift 3,700sq.m slated for office space to low – and medium-priced apartments to make them affordable to medium-income buyers.

However, Nguyen Thanh Toan, deputy director of the city's Department of Planning and Architecture, said Government agencies should not intervene in apartment sizes and and that companies should make the final decisions.

Investors in property projects also said they wanted loans at reasonable interest rates of 10 to 15 per cent per year, with other preferential conditions that businesses in other economic sectors are enjoying.

Steel exports

With steel exports reaching US$1.5 billion in the first nine months of the year, the Viet Nam Steel Association (VSA) hopes that this year's exports amount to $2 billion.

According to Dinh Huy Tam, VSA general secretary, this year's steel export turnover will be equal to that of last year. He said steel producers had found new markets, including Cambodia, Laos and Myanmar.

The steel inventory has dropped to 320,000 tonnes, down 14 per cent from the same period last year.

Tam also predicted that local steel demand would rise strongly near the year-end as the construction season had started and many projects were now awaiting the final touches for completion.

He said that steel consumption in September amounted to nearly 400,000 tonnes, compared with 350,000 tonnes in August.

Figures from the Ministry of Industry and Trade revealed that steel and other building-materials industries were facing difficulties and have had slow growth due to a decline in local demand. This year's inventory of construction materials is 40 per cent higher than the same period last year.

Viet Nam: top beer guzzler

Viet Nam has the highest consumption of beer in Southeast Asia, with a total of 2.6 billion litres of beer drunk in 2011.

At least 1.8 billion litres of beer were consumed by Thai drinkers and 1.63 billion litres by Filipinos last year, according to the global market research company Euromonitor International.

The three top beer-drinking nations were followed by Indonesia, 236.4 million litres; Malaysia, 171.4 million litres; Cambodia, 136.3 million litres; Laos, 134.3 million litres; and Singapore, 108.2 million litres.

Myanmar, who became an ASEAN member in 1997, had the lowest consumption rate with 30.4 million litres of beer last year.

The consumption of the six lowest beer-drinking nations of Myanmar, Singapore, Laos, Cambodia, Malaysia and Indonesia was just half of the volume of beer drunk by Filipinos over the period.

In 2010, the Euromonitor International predicted that beer consumption in the Vietnamese market would grow rapidly. Vietnamese people consumed 1.6 billion litres of beer in 2009, an increase of 56 per cent compared with 2004.

Earlier this year, Kirin Holdings Company Co, Japan's second largest brewer (just behind Asahi Breweries) reported that Viet Nam was among the top 25 beer-drinking nations in the world, with an increase of 15 per cent over last year, just behind Nigeria (17.2 per cent), India (17 per cent) and Brazil (16 per cent).

Few local drinkers, though, have taken pride in the new beer-drinking position of Viet Nam.

Nguyen Tuan Tai, a resident of Ward 25 in HCM City's Binh Thanh District, who shares beers with his friends every evening, said: "Such high level of beer consumption indicates a big waste of time, money and even health."

"As citizens of a poor country, we should take no pride in the No 1 position," said a third-year student at HCM City Economics University, who declined to be named. "For me, it's [kind of] a social evil and a shameful position."

The student said that beer drinkers should use part of the huge amount of money spent on beer to improve the living standards of the poor.

Intervention in VN gold market urged

The gap between global and domestic gold prices is expected to widen in the coming days if the central bank does not make timely interventions, market observers say.

Gold prices late last week soared to a stunning VND48.2 million per tael when the market opened. And just two hours later, it had increased by VND200,000 to VND48.4 million.

Based on the exchange rate between the dong and the US dollar listed at Vietcombank on October 5, the domestic gold price was VND3.2 million (US$152) per tael than the global rate per tael (a tael is 1.2 ounces).

Tran Thanh Hai, director of the Viet Nam Gold Business Company, said scarcity of the precious metal had forced domestic prices up.

"The principle governing gold trading enterprises including Sai Gon Jewellery Company (SJC) is to buy and then sell. Meanwhile, increasing market demand forces leading gold institutions to mobilise the metal from small gold traders, thus pushing domestic prices up," Hai told the Tuoi Tre newspaper.

The scarcity of gold has become more acute after the central bank's decision to stop gold mobilisation which will come into effect this November 25.

"A large volume of gold mobilised from the society was sold at a very low prices by banks particularly five banks that were in 2011 allowed to mobilise and sell gold bullions to stabilise the market and now, the banks will have to buy them again anyway before they have to stop their gold mobilisation. This has caused domestic gold prices to go up, " said Nguyen Thanh Long, chairman of the Gold Business Association.

Despite such strong pricing fluctuations, the central bank is yet to take any action to control the market.

Earlier, the central bank had twice allowed the recasting of damaged SJC gold bars and the transfer of non-SJC bars covering a total of 350,000 taels, equivalent to 13 tonnes. However, information relating to the number of non-SJC gold bars transferred has not yet been revealed.

In mid September, the central-bank gave the go-ahead for the SJC Company to convert 13 tonnes of gold bullion of other brand names into its national SJC brand.

The central bank giving the green-light to recasting non-SJC gold bullion came after petitions from banks and gold traders, as SJC has been chosen as the national brand and the central bank has a monopoly on bullion production.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam Branch in HCM City, said the SJC company already finished the recasting of damaged gold bars, but the recasting of non-SJC bullion would take more time since they had to be verified carefully first.

Importers to register gas prices

The Ministry of Finance has sent a letter to liquefied petroleum gas (LPG) importers nationwide asking them to register their sales prices before putting their products on the market.

The letter said gas importers must email price changes with e-signatures or fax notifications to the Ministry, and then call to confirm they have been received.

Importers are also required to explain reasons for price changes and inform their distribution networks.

The move follows a hike in cooking gas prices last week, which spiked by VND16,000 (0.77 US cent) to an average of VND434,000 (US$ 21) per 12kg canister.

The new price, a 4 per cent rise over last month, was attributed to high global prices which this month hit $995 per tonne, a $45 increase against the previous year.

According to the MoF, Viet Nam's imports of LPG accounted for between 30-40 per cent of the local market.

This has had a large influence on domestic gas prices as global prices fluctuate. The global crude oil price has also increased rapidly due to high demand for LPG in many countries as they seek to stockpile ahead of the winter.

Clamp on credit growth appropriate, say experts

The banking system should not focus on accelerating credit growth under the current conditions because domestic demand remained low, economic experts have said.

According to statistics from the State Bank of Viet Nam, as of September 20, the total outstanding loans of local credit institutions had grown by about 2.35 per cent over the end of last year.

The credit growth rate for the whole year was estimated to reach only 5 per cent, while the goal was set at 8-10 per cent.

"The figure is not alarming," said economic expert Vu Dinh Anh, adding that it demonstrated the demands of enterprises and was "appropriate" for the current economic situation.

Anh said that attention should be paid to the quality of cash flow and loan efficiency, rather than a specific amount of credit growth.

Deputy director of HSBC Bank Pham Hong Hai told Dau Tu (Investment) newspaper that lowering interest rates for short-term loans to 9-11 per cent had failed to attract customers because of the low demand for cash in the domestic market.

"The Government is providing tax deferrals to enterprises to boost domestic demand. However, it will take time to see the impacts of these fiscal policies," he said.

Hai said he did not expect strong credit growth in the coming months, adding that currently, enterprises were concentrating on clearing their inventories, not borrowing.

"Only when domestic demand increases will credit growth rise."

Economic expert Pham Do Chi said that the market mechanism should be allowed to regulate the banking system and establish a "real interest rate".

Chi pointed out that bad debt and interest rates remained the major concerns for the banking system, despite improvements seen in liquidity.

Banks urged to help firms
 
State-owned banks should act as co-ordinators and guide the credit and monetary market in ways that can help enterprises access loans and banks pump money into the economy, senior economists said at a conference in HCM City on Friday.

The conference was organised by the Viet Nam Chamber of Commerce and Industry (VCCI), Dien Dan Doanh Nghiep newspaper and HDBank.

It sought measures to unclog capital flows and ensure effective injection of capital into the economy. Experts said any measure taken needed the backing of Government policies as well as a supporting role played by State-owned banks.

They did not, however, elaborate on the specific ways in which they expected State-owned banks to support commercial banks.

The Vietnamese economy has recently seen signs of recovery with a significant decrease in inflation in the third quarter over the first and second quarters, and an increase in the Gross Domestic Product (GDP).

Economists said at the conference that inflation could be kept at between 7 and 8 per cent this year, while the GDP growth rate will be between 5.3 and 5.5 per cent.

The Government has issued several monetary and credit policies in an attempt to stabilise the macreconomy, promote sustainable growth and support domestic enterprises overcome difficulties.

These include Resolutions No.01 and 13, SBV's Circular 20/2012/TT-NHNN and several other directives from the central bank.

The Government's measures have worked, economists felt. The short-term business environment improved, as did the banking sector's liquidity, compared with 2011. Both lending and deposit rates were cut significantly.

Despite the positive changes, both banks and enterprises are still facing many difficulties, the conference heard.

"Although the lending interest rate has dropped, enterprises have still found it very difficult to access bank loans because of bad debts," said Tran Ngoc Liem, deputy director of the Viet Nam Chamber of Commerce and Industry (VCCI) in HCMC.

"Most of them do not have enough conditions, particularly assets to offer as collateral, as required by commercial banks. In addition, they face many other obstacles caused by the prolonged crisis," he said.

Consequently, over 35,000 enterprises have shut down so far this year, while those that are still operating have had to cut back on production because of a lack of capital.

As far as the banks are concerned,many of them have plentiful capital, but they cannot lend because enterprises do not meet their requirements, according to Liem. The result is that the banks' capital cannot be pumped into the economy.

"Credit institutions that have healthy operations, ensured liquidity, and actively implement the Government's policy of supporting enterprises should be supported by helping them settle bad debts, since this is the biggest problem of the two sides," he said.

He said the Government should set up a debt trading company or appoint the central bank to buy bad debts.

Dr. Tran Du Lich, member of the National Monetary Policy Advisory Council, also said that bad debts, and not interest rates, are the reason enterprises are unable to access bank loans.

He suggested that commercial banks seriously implement the central bank's policy of setting aside funds for bad-debt reserves and reduce risks. So far, they have been lax in doing so as they remained focused on maximising profits.

"To do this, they must cut profit, management costs, and salary," Lich said.

"The commercial banks should be allowed to suspend bad debts for enterprises with real potential while credit guarantee funds established by the government should further strengthen their roles in assisting enterprises borrow money from the banks," he said.

Lich stressed the need for policy initiatives from the Government to regain market confidence.

"Enterprises are facing many difficulties such as very high input costs, lack of working capital, high inventory and narrowed consumption market. At the same time, they do not have feasible projects, assets to offer as collateral and are facing big bad debts," said Le Thi Xuan of the Viet Nam Banking Association in HCM City.

She said the banking sector reflects the increasing imbalance between capital mobilisation and lending with growth rates of over 10 per cent and 1.4 per cent respectively.

Xuan said inventory was one of the biggest obstacles facing enterprises. She said once unsold stock was cleared, producers would continue borrowing money to reinvest and develop their business.

Xuan suggested reducing the import of commodities that can be produced by domestic firms, and called for the active launching of promotion programmes at home and aboard. She also said producers must be exempted from valued-added tax so that they can cut selling prices and increase sales.

Enterprises and banks should work together to reschedule debts based on the central bank's guidelines to enable the former get new loans for production activities.

She also agreed with Lich that the model of credit guarantee funds for small and medium-sized enterprises, which is now done by the central Government, should be expanded and established at different levels.

Pham Thien Long, deputy director of the HDBank, also said that it would require great efforts from both the banks and enterprises to ensure that capital can be injected effectively into the economy.

Among several necessary steps, the banks should actively create many preferential credit packages to support enterprises, particularly those that have potential are caught up in difficulties due to weak management skills, Long said.

For their part, enterprises should pay attention to making their financial information transparent and actively participate in the banks' preferential credit schemes and service packages to cut their capital costs, he said.

However, the success or failure of all the aforesaid measures would depend on the policy support provided by the Government and State-run banks, the experts reiterated.

Mekong Delta provinces increase high-quality rice exports

The Mekong Delta provinces have just exported 68,000 tonnes of high quality rice, bringing the total volume to 2.7 million tonnes, equal to more than half of the region’s rice exports since early this year.  

They have fetched US$2.3 billion, up 44 percent compared to the same period last year.

According to the Vietnam Food Association, the average price of rice hovered around US$443.3 per tonne in the past nine months, US$35.7 lower than last year’s figure.

Thanks to marketing efforts, the price of high quality rice exported to the EU, the North America, Asia and Africa was also between US$580-US$800 per tonne.

 Steel exports likely to fetch nearly US$2 billion

This year’s steel export turnover is expected to reach US$2 billion, according to the Vietnam Steel Association (VSA).
    
VSA forecast that the local demand for steel and iron will increase sharply from now until the end of the year as many construction projects are near completion.

One promising sign, it cited, is that steel consumption rose from 350,000 tonnes in August to nearly 400,000 tonnes in September.

As a result, total volume of steel in stock has so far dropped to about 320,000 tonnes, down 55,000 tonnes (14 percent) from a year earlier.

Seafood exports enjoy favourable conditions in Q4

Seafood export earnings are expected to hit around US$6.5 billion this year.
 
The Ministry of Agriculture and Rural Development estimates seafood exports reached US$500 million in September, bringing the total export value over the past nine months to US$4.5 billion, 3.5 percent more than the same period last year.

The US is the leading importer of Vietnamese seafood products, accounting for 19 percent of the total market share, followed by Japan (15.1 percent), and the Republic of Korea (7.9 percent).

The key tuna and crab exports were the only ones to rise, by 51.6 percent to US$414 million and by 13.2 percent to US$74.9 million respectively. Other seafood product exports declined, including shrimp - down 3.6 percent to US$1.5 billion - and tra fish - down 1.2 percent to US$1.2 billion.

The seafood sector is still recovering from a number of recent difficulties. Stock shortages and prolonged shrimp disease hit the sector particularly hard. Around 300 seafood processing factories were forced to close.

Tra fish and shrimp import volumes are expected to increase during the remainder of 2012 as the Christmas and New Year holidays are drawing near. The upcoming harvesting season means seafood material for processing will also be abundant.

Vietnam’s exports to Africa, Asia up

Vietnam's trade value with Africa-West-South Asia markets reached US$9.85 billion over the first eight months of this year.
    
To the figure, exports contributed US$5.73 billion, while US$4.12 billion came from imports representing 7 percent fall on last year, according to the General Department of Customs (GDC).

Vietnamese key export items enjoying significant growth during the period included rice, coffee, textiles and garments, seafood and mobile phones.

During the period, the country's exports to the Middle East bloc experienced the highest growth, soaring by 87 percent to hit US$2.82 billion due to significant increases in exports to the United Arab Emirates and Arabia.

The two markets imported US$1.29 billion and US$372 million worth of Vietnamese products, up159 percent and 132 percent, respectively, against the same period last year.

Exports to South Asia held steady, while exports to India, one of the most important markets in the region, rose by 13 percent year-on-year to US$1.05 billion.

Meanwhile, the African countries’ imports from Vietnam dropped by 49 percent, reaching only US$1.43 billion due to a slump in demand for Vietnamese precious stones and metals.  The Ministry of Industry and Trade (MoIT) estimated that the nation’s exports to those markets last month added an additional of US$1 billion.

Many of Vietnamese exports such as seafood, coffee, pepper, textiles and garments have been performing well in those markets, a trend reflected in the expanding export volume, reported MoIT.

The structure of the country’s exports to those markets has shifted to include more industrial and manufactured products, including mobile phones, computers and electronics. This development is considered an important precondition for Vietnam to maintain stable export growth in the markets for years to come.

Experts predict that Vietnam’s exports to Africa, West and South Asia will increase after the country approved the National Import, Export Strategy for the 2011-20 period late last year, to promote exports to Africa and strengthen trade ties with the Middle East by 2015.

Businesses find a way out of the mess

Despite Government support, many businesses and sectors are still striving to escape the general downturn independently.    

According to the Ministry of Finance (MoIT), more than 6,000 businesses have resumed their operations after Resolution No 13 on tax breaks and extensions for domestic businesses was adopted.

Hoa Phat Group General Director Tran Xuan Duong, working for one of Vietnam’s biggest steel producers, says that production snags have forced the group to seek stock outlets in conjunction with other operators.

Luong Van Thang, President of the Viet-Tiep Lock Joint Stock Company’s Executive Board, reports his company continues to seek an edge over its competitors. His company’s strategies focus on producing high-quality products at low prices, ensuring capital circulation, limiting credit loans, and reducing costs to a minimum as a means of stabilising business operations.

Le Ngoc Hoa, General Director of the Transport and Construction Project Corporation No 4, says it is seeking to overcome the current difficult environment by accelerating some key projects to enable early handovers to investors, thereby creating revenue to pay workers’ salaries and invest in other projects.

At the same time many ministries, sectors, and localities are implementing their own measures, including lowering interest rates, restructuring debts, and offering preferential tax rates. The Ministry of Industry and Trade has proposed reducing value added tax (VAT) from 10 percent to 5 percent for several sectors as well as lowering land rent by 50 percent.

Nguyen Thanh Hoa, Deputy Head of the Planning Department under the Ministry of Industry and Trade, says the Domestic Market Department will assist businesses from State groups and corporations to deal with excess stock by encouraging them to consume each others’ goods.

The Ministry has also worked with local industry and trade departments on solutions to the difficulties businesses are experiencing. The Government will allocate VND30,000 billion from the 2013 capital investment construction in advance to ensure key projects are completed on schedule.

Ironing out snags for businesses

The Ministry of Finance has organised a dialogue involving over 500 businesses in order to identify their difficulties with tax and customs procedures.   

Businesses highlighted the obstacles arising from e-customs procedures, environmental protection tax, and land rent as particular concerns.

In relation to select provinces, 81 percent of businesses reported suffering negative added value tax over the first nine months of 2012, mainly because of lax sales.

The ministry has recently accelerated tax and customs procedure reform in an attempt to facilitate business operations. Customs procedures now number 178, down from a height of 239 procedures in 2008. More than 60 percent of customs bureaux currently use e-customs clearance.
 
Hoang Viet Cuong, Deputy Head of the General Department of Customs, noted e-customs has only just been implemented in a number of bureaux so some obstacles must be expected. Japan will assist the sector with applying the time-saving technology more effectively.

Businesses complained about the unreasonable disparities between land rent increases for domestic companies compared to foreign ones. Land rent is adjusted every five years.

Foreign businesses must pay an increase of around 15-20 percent but there is no such increase ceiling for domestic businesses.

Nguyen Thanh Nhan, an investor at Tan Phu Trung Industrial Zone in HCM City, said his land rent rose from VND250 per sq.m in 2010 to VND5,940 per sq.m now.

The MoF listened to participants’ concerns and promised to seek solutions to their problems in the future.

Breakthrough opportunity for exports

The number of businesses searching for capable producers through e-commerce is ever increasing, creating excellent opportunities for Vietnamese exporters to boost their market penetration.   

Vincent Wong, Senior Managing Director of Buyers, Services, and Development at e-commerce site Alibaba.com, explains that major importers previously searched for goods and resources from traditional markets like India and China. He believes their priorities are changing, encouraging more to seek products from new markets with better quality and lower costs.

Three Vietnamese product groups are currently much sought after by customers via Alibaba.com - agricultural products (20 percent), food and beverages (19 percent), and building materials and real estate (8 percent).
Most customers are from the US (9 percent), India (8 percent), and China (8 percent).

The fact that China and India - two of the world’s major supply markets - are sourcing Vietnamese products demonstrates the significance of the changes underway in the global supply of resources.

The search rate for Vietnamese products on Alibaba.com originating in China alone increases by 2 percent year-on-year.

Apart from its daily online transactions, Alibaba.com has recently dealt directly with major global groups’ demand for Vietnamese suppliers working in a variety of sectors. The global groups, primarily the world’s leading retailers, include Kmart, Carrefour, OfficeMax, and Walmart. Vietnamese products are evidently seizing the attention of the international consumer.

Tran Dinh Toan, Deputy Director of investment and technology joint stock company OSB, is optimistic about the e-commerce future for Vietnamese products.

Statistics from B2B Alibaba.com indicate Vietnam places in the world’s top ten most sought after markets.

There are already 230,000 Vietnamese Alibaba.com members, eager to exploit the nearly unlimited opportunities to find customers via the e-commerce channel.

Toan stressed the capacity for sellers to connect directly with potential buyers through the website. He feels savvy businesses should be able to take advantage.

A survey conducted by Nielsen, a global information and measurement company, reveals Vietnamese buyers prefer to connect directly with prestigious producers without going through a middleman.

Vietnamese businesses are thus able to transport their products to large markets without exporting to a third country.

The economic slowdown has meant quality and reasonable prices are even more important to the importers who select their goods and resources from the range of countries that can meet their stringent demands,

Pho Nam Phuong, Director of the Trade and Investment Promotion Centre in HCM City, agrees e-commerce could encourage an export surge. She argues, however, that developed country markets are still difficult to penetrate, mostly because of the stricter application of trade barriers. Vietnamese businesses sometimes also struggle with correctly ascertaining the desires of global importers.

Experts urge businesses to remember the unique speed of the e-commerce environment and recognise the need to give customers regular and rapid feedback. Without constant two-way communication, the potential of the e-commerce search channel can never be properly realised.

Vietnamese businesses must also protect themselves against trade frauds plaguing e-commerce floors. Swindlers from new markets have previously committed trade frauds involving tens of millions of US$. Vietnamese businesses number among their victims, sometimes losing tens of thousands of US$ in hasty transactions with partners who have not been properly verified.

Incomplete statistics from the African, West and South Asian Markets Department in the Ministry of Industry and Trade show that since 2011, Vietnamese businesses have sent 70 letters to regional trade offices requesting verification of the identities of their partners. All the results of those requests found the partners to be fraudulent.

Ly Quoc Hung, Head of the African, West and South Asian Markets Department, says that maintaining long-term trade links will require Vietnamese businesses to study the business traditions of Africa and the Middle East, meet potential partners in person, and carefully consider products before buying.

Hung also urges Vietnamese businesses to participate in exhibitions, fairs, and trade promotion programmes in partner countries, assiduously comply with relevant regulations and legislation, and always verify the identities of the businesspeople involved.

Brazil, Vietnam promote trade, investment cooperation

The office of the Vietnam Chamber of Commerce and Industry in Ho Chi Minh City (VCCI-HCMC) in conjunction with the Brazil Embassy in Vietnam held a seminar in the city on October 5.

Tran Ngoc Liem, Deputy Director of the VCCI-HCMC, said that trade relation between Vietnam and Brazil has been unceasingly strengthened and developed over the past years. The bilateral trade turnover reached almost US$937 million in 2010 and exceeded US$1 billion for the first time in 2011.

The two countries have also signed many agreements, creating a legal foundation and favourable conditions for boosting bilateral cooperation in many fields, especially in economics, trade and investment.

According to Victoria Alice Cleaver, Brazilian Ambassador to Vietnam, the country’s businesses are trying their best to seek investment opportunities in the Vietnamese market.

Therefore, the two countries’ investment promotion agencies should update information and incentives, as well as answering queries for businesses keen to penetrate into the market.

First Vietnam rubber company makes debut in Laos

The Dien Bien Rubber Company has begun operating at Somphom commune in Muanghoun district, Oudomxay province.

Duong Dinh Bang, Chief Representative of the Vietnam Rubber Group (VRG), announced the commencement on October 5.

The establishment of the company testifies to the comprehensive cooperation between the Vietnamese government and Laos.

After four years of necessary formalities, the Laos Government licensed the VRG to invest in Oudomxay province. The Dien Bien Rubber Company was allowed to implement its planned 5,000 ha project in the Lao districts of Namo, Muanghoun, and Muangbaeng. It has so far planted 90 hectares of rubber trees.

Under the cooperative franchise model, Dong Nai Rubber Corporation has also concluded the required bureaucratic procedures for another 1,000 ha project in Laos.

As part of the preparations for the Oudomxay province project, the Dien Bien Rubber Company completed construction on 15kms of roads, meeting the transport infrastructure demands of local residents. It also built 350 square metres of housing and installed a power supply system that will be used for production activities and in people’s everyday lives.

Industrial processed products earn US$53.19 bil

Export earning from industrial processed products in September were estimated at US$6.2 billion, down 9 percent against August but up 17.1 percent from a year earlier.
According to the Ministry of Industry and Trade (MoIT), the total export volume in the nine months of 2012 reached US$53.19 billion, up 25.5 percent compared to the same period last year.

Items with high turnover growth were telephones and computers (77 percent), and electronics products and components (220 percent).

In the meantime, the group of garment and textile, wood products, footwear, crude oil, and aquatic products achieved slow growth, due to the impact of global economic downturn.