Ministry asks steel firms to cut costs

The Ministry of Finance has asked the Viet Nam Steel Corp (VinaSteel) and Vinakyoei to cut production costs to stabilise steel prices and curb inflation.

In a document sent to the two steel companies this week, the ministry's Price Management Department asked them to postpone hikes proposed last December.

In their price registration documents sent to the department, VinaSteel and Vinakyoei said they were encountering higher prices of materials, fuels and labour costs.

The department said the two companies had increased prices in November.

However, the prices of materials, fuels and labour costs for steel production had been stable, according to the department.

The price of steel ingots on the world market in December was not higher than the previous month, and fuel prices had stablised since August last year.

In addition, electricity prices and workers' salaries had remained stable in December.

PVN halts $1b in bond sales overseas

The PetroVietnam Group has indefinitely postponed its planned sale of corporate bonds overseas, the State-owned petroleum giant announced at a press conference on Tuesday.

The sale, worth US$1 billion, had been set to transpire in the fourth quarter of last year.

"PetroVietnam will choose an appropriate time in the future to sell the bonds because this point of time is not favourable for us," said chairman Dinh La Thang.

Some other State-owned enterprises have also put plans to issue bonds on ice, including mining giant Vinacomin, which shelved a planned $500 million issue. Much of the blame has fallen on the difficulties that troubled shipbuilder Vinashin has had repaying $600 million it owes to Credit Suisse.

PetroVietnam has taken pains to distance itself from the problems of its fellow State-owned enterprise.

"In recent years, Petro-Vietnam has restructured and equitised its affiliated companies," said Thang. "The changes have been aimed at sharpening the competitive edge of our companies in an atmosphere of rapid global change."

Late last year, PetroVietnam-affiliated companies sold over 60 million shares at an average price of VND31,000 ($1.50) per share, raising a total capital of VND1.9 trillion ($90.5 million).

PetroVietnam presently has 37 affiliates listed on the HCM City or Ha Noi stock exchanges, with plans to list an additional 13 later this year.

The group expected to equitise Nhon Trach Power Plant No 1 this year, affirmed PetroVietnam deputy director Le Minh Hong.

PepsiCo launches $250m plant

Food and beverage giant PepsiCo yesterday officially launched its largest food and beverage plant in Viet Nam with a groundbreaking of its production facility in northern Bac Ninh Province.

Located in Bac Ninh's Viet Nam-Singapore Industrial Park, the facility forms the first part of a US$250 million investment programme – announced in August, 2010 – that PepsiCo is undertaking in Viet Nam over the next three years.

The plant in Bac Ninh will produce a range of PepsiCo key products, including traditional carbonated soft drinks, purified water, sports drink and convenience foods.

Dairy firm to pay farmers more

Dutch-owned FrieslandCampina Viet Nam, which makes Dutch Lady and other brands of dairy products, has increased the price it pays farmers for milk by VND700 (US$0.03)per kilogramme to VND10,000 ($0.48).

The increase on Tuesday was its third time this year, and the company said it was meant to help farmers cope with high raw material costs and encourage them to sell more milk of better quality.

FrieslandCampina Viet Nam is one of the largest milk buyers in Viet Nam, purchasing more than 170 tonnes a day through direct contracts with more than 2,500 farming households.

Joint venture to build herbicide plant

Phu My Fertilisers Co and Viet Nam Pesticide Co signed a memorandum of understanding on Tuesday to partner in developing a glyphosate herbicide plant with a capacity of 20,000 tonnes per year. Under the terms of the MoU, the parties will establish a joint venture company to build and operate the facility, with Phu My to hold at least a 64-per-cent interest.

Companies voice cautious optimism

Sixty-two per cent of privately-held business owners said they were optimistic about their country's economic performance, according to the 2011 Grant Thornton International Business Report (IBR).

The percentage put Viet Nam at the 16th of the 39 economies worldwide surveyed by Grant Thornton.

The Viet Nam figure was significantly higher than the global average of 23 per cent and higher than the average of 50 per cent for the Asia-Pacific region (excluding Japan), according to the report.

The IBR is a survey of medium to large privately held businesses that conducted research on the opinions of more than 5,700 businesses in the fourth quarter of 2010. More than 11,000 businesses are surveyed on an annual basis.

The survey found that confidence levels were higher in Latin America than any other regions of the world, which recorded a 75 per cent optimistic rate.

This is the first year that Latin America has led the world in that category.

Globally, Chile (95 per cent) scored the highest optimism of any country, followed by India (93 per cent), Philippines (87 per cent) and Switzerland (85 per cent).

North America was only 26 per cent, with Europe the least optimistic region, at 22 per cent.

Survey respondents were chief executive officers, managing directors, chairmen or other senior executives from 39 economies, primarily across five industries: manufacturing (25 per cent), services (25 per cent), retail (15 per cent) and construction (10 per cent), with the remaining 25 per cent spreading across all industries.

The managing partner of Grant Thornton Vietnam, Ken Atkinson, said: "In recent years, the global focus for emerging economies has been on the BRIC economies of Brazil, Russia, India and mainland China. However, this survey helps confirm that a wider view of Asian and Latin American economies reveals many other countries with strong levels of business confidence and high forecast growth rates in 2011."

Asia-Pacific, last year's leading region for business optimism, saw a fall in overall optimism from 64 per cent to 50 per cent as economies such as mainland China (down from 60 per cent in 2010 to 42 per cent), Australia (down from 79 to 37 per cent) and New Zealand (down from 66 to 35 per cent) showed large negative swings in optimism.

Viet Nam also saw a decrease in optimism from one year earlier (down from 72 to 62 per cent).

Atkinson said inflation and rising interest rates had had an impact on the levels of Vietnamese optimism. Thus, the 62 per cent rate in Viet Nam on optimism was actually a fairly strong result, he added.

The survey showed that business owners around the world expected to see only moderate levels of investment in 2011.

Around 35 per cent more businesses expected to see increases in investment in plant and machinery, and only 24 per cent expected to see an increase in research and development (R&D).

A notable exception to this trend is mainland China, where 47 per cent of businesses expected to increase investment in plant and machinery and 61 per cent expected to increase their R&D.

Despite somewhat declining optimism, businesses in Viet Nam continued to take a long-term view.

A balance of 41 per cent of businesses expected to increase expenditures on R&D (global average: 24 per cent); 34 per cent expected to increase investment in plants and machinery (global average: 35 per cent); and 78 per cent (global average: 29 per cent) expected to hire more employees.

Ministry calls for less public investment

The Government should reduce public investment to 3.5 per cent of the GDP this year, the Ministry of Planning and Investment has said.

The Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) newspaper reports that the ministry has also said that State Budget spending should not exceed levels accepted by the National Assembly and that the Government should not invest in trade promotion and other services that private sectors can do more efficiently.

These are part of 13 solutions mooted by the ministry to successfully restructure and increase efficiency of public investment.

Economic efficiency should be the first and most important basis for investment by the Government, according to the ministry.

Government investment in infrastructure should also be reviewed and adjusted in each sector.

The strategy should be for the Government to slowly reduce its investment (almost 10 per cent of GDP) while strongly encouraging other sectors to do so.

The newspaper says that ratio of State contributions to social investment has been the highest, but this has been marked by low economic efficiency.

Management weaknesses and corruption in State investments have had serious impacts on the economy and should be addressed firmly.

Large-scale investments from the State budget along with an open fiscal policy have contributed to high inflation and unstable macroscopic economy.

At the same time, the low economic efficiency of these investments has meant that long-standing problems have not been solved, so it was difficult to attract capital from different economic sectors. For the last decade, Viet Nam's incremental capital output ratio (ICOR), which measures the amount of investment capital necessary for an entity to generate the next unit of production, has been sharply increasing, especially in government investment, and was at a high level compared to neighbouring countries.

VN hits record pepper exports

Vietnam achieved a record high in pepper export value last year, retaining its position as the largest exporter of the spice in the world, said the Ministry of Agriculture and Rural Development.

The ministry said the country exported 116,000 tonnes of pepper, earning US$419 million in revenue. Exports marked a year-on-year reduction of 13.3 per cent in volume but an increase of 20.5 per cent in value.

Do Ha Nam, chairman of the Viet Nam Pepper Association, said Viet Nam accounted for 60 per cent of total pepper exports on the world market; meaning it could control global price of the product.

Foreign experts admitted that Viet Nam's pepper industry had a great effect on supply and demand, and global prices, Nam said.

Those successes were the results of the domestic pepper industry's sustainable development process, and increased focus on quality, Nam said.

Vietnam has 17 modern pepper factories able to process a total of 60,000 tonnes per year, including 10 factories meeting international quality standards.

Some partners from Japan, India and the Netherlands had put investment to phases of purchasing, processing and exporting pepper products to contribute to export value and competitiveness of Vietnamese pepper on the world market.

Meanwhile, local exporters had added value through the application of modern processing and diversified products for export to push the price of pepper up.

The association encouraged its member enterprises to increase output of white pepper that required modern processing technology for growth in export value, Nam said.

White pepper output accounted for 20 per cent of the total pepper exports in 2010, a dramatic increase over the 5 per cent of 2002.

The association expected demand and the price of the spice on the world market to remain high this year. Viet Nam would produce 100,000-110,000 tonnes of pepper, with 100,000 tonnes earmarked for export, Nam said.

Both stock indices retreat on improved market liquidity

Shares retreated today on the two national exchanges, but market liquidity slightly improved.

In HCM City, the VN-Index backslide during the final minutes of trading, closing slightly lower than yesterday's mark to 481.86.

Market value rose 16 per cent to VND807.9 billion (US$38.5 million) as more than 31.3 million shares changed hands.

Losers outnumbered gainers by 127-78.

Blue chips continued to perform poorly. Out of the 10 largest capitalised shares, two codes - insurer Bao Viet Holdings (BVH) and industrial conglomerate Hoa Phat Group (HPG) - posted gains.

BVH rose 1.4 per cent, its fourth consecutive day of gains, and HPG was up 1.3 per cent.

Bank shares, which registered losses today, were still the most heavily-traded stocks on the southern bourse.

Eximbank (EIB), the most active stock with 1.86 million shares exchanged, dropped 1.3 per cent and Sacombank (STB), with 1.15 million shares traded, closed unchanged.

In Ha Noi, the HNX-Index dropped by 1.26 per cent to close at 110.04.

Trading volume rose by 35 per cent to 26.5 million shares, while the value of today's trades also increased by 32 per cent to VND508.7 billion ($24.2 million).

Decliners doubled advancers.

Ha Noi Bank (HBB) reclaimed the position of the most active stock on the Ha Noi bourse, with 2.46 million shares changing hands. It closed unchanged at VND11,100 (0.53) per share.

Coffee exports down in 2010

The coffee industry last year experienced declines in both export volume and value, reported the Ministry of Agriculture and Rural Development.

The sector exported 1.1 million tonnes of coffee worth US$1.67 billion, a 5 per cent decline in volume and 4 per cent fall in value.

Global coffee prices hit record highs last year, when the bean sold for $2,000 per tonne, a 50 per cent increase against the previous year's figures. Domestic prices held steady at about VND37.4 million (US$1,824) per tonne.

Local coffee exporters were facing high risks for losses because of sluggish payments from foreign clients.

Viet Nam Coffee and Cocoa Association's general secretary Phan Huu De urged domestic firms to thoroughly research the financial capacities of foreign clients and to seek consultation from legal experts before signing deals.

The enterprises should focus on buying directly from coffee growers.

PV