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BUSINESS IN BRIEF 9/10

 WB forecasts Vietnam GDP at 5.3 percent in 2013; FPT Company among top 500 global IT companies; Vingroup seeks to lure property buyers; Refinery investment to double

Gasoline price drops VND390 per liter

Vietnamese fuel traders lowered gasoline price by VND390 per liter on October 7 after the Ministries of Finance, and Industry and Trade ordered them to cut rate by at least VND387 per liter and continue to use VND300 per liter from the gasoline price stabilization fund.

Thus, after adjustment, retail price of RON92 gasoline will be VND23,880 per liter and retail price of RON95 gasoline will be VND24,380 per liter.

As for diesel, according to calculations by the ministries, price must be raised by VND517 per liter, at the most. However, in order to stabilize diesel price and share benefits harmoniously among the government, consumers, and businesses, the ministries ordered fuel companies to maintain same rate.

The ministries also ordered fuel companies to keep their target profits at VND100 per liter and use VND300 per liter from the gasoline price stabilization fund instead of VND400 per liter like before.

The price of kerosene and engine oil will also remain unchanged.

Vietnam, Russia’s economic potential introduced

Economic and investment potential in Vietnam and Russia’s Kursk region was introduced at a October 7 forum in Moscow.

Addressing the forum, Vietnamese ambassador to Russia, Pham Xuan Son described the event as a good opportunity to promote trade and economic cooperation among localities thus increasing two-way trade turnover to a higher level.

Kursk and Vietnamese localities have cooperated for years, especially in agriculture, food industry, mineral exploration and transport.

For his part, Kursk regional Mayor, Alexander Mikhailov thanked the Vietnamese embassy and the Ministry of Foreign Affairs for supporting the organization of the forum while hoping that both nations’ businesses will seek investment projects and diversify trade promotion to stimulate local economic development.

Entrepreneurs introduced potential and advantages of cooperation in such areas as agricultural production, food processing, fine arts & handcrafts, mineral exploration, and machinery manufacturing, medicine and pharmacy.

Kursk businesses showed their keen interest in broader cooperation in new fields like culture and tourism.

Trade turnover between Kursk and Vietnamese localities has now reached US$1.4 million. Vietnam’s major exports to the region include tea, coffee, and fine arts and handicraft products while its key imports are sugar, chemicals, fertilizer and automobile battery.

Ten cooperation agreements on food, farm produce processing, medicine and tourism were signed.

Hanoi to host Asia-Oceania tax conference

As many as 300 delegates and 200 senior tax experts are expected to gather in Hanoi for the 21stannual conference of the Asia-Oceania Tax Consultants Association (AOTCA 21) from October 17-18.

This is the first time Vietnam has been selected to host the event after five years of its AOTCA membership.

The conference will focus on six major topics regarding preferential tax policies for investment encouragement, an advance pricing agreement (APA), legal regulations on tax evasion and impacts on tax consultants, tax payers’ rights and obligations, taxable income and profit shifting – the cause and effects of developing countries and principles of Organization for Economic Cooperation and Development (OECD).

Vietnam Tax Consultants’ Association (VTCA) President Nguyen ThiCuc, said that AOTCA 21 would touch upon issues related to Vietnam’s financial and tax policies and gave the Vietnam Ministry of Finance and relevant agencies a chance to talk about the country’s economic development and international integration as well as tax policies, especially tax policy system reform.

The Vietnam Tax Consultants’ Association joined the AOTCA in 2008 as an observer and became the association’s full member in 2009.

HCM City prepares supply of commodities for Tet holiday season

Businesses in Ho Chi Minh City have already finished planning on supply of essential commodities and foodstuffs to meet the demand during the coming Tet festive season, three months ahead of Tet Lunar New Year.

Since early August, City leaders had instructed the Department of Industry and Trade and other relevant departments to make plans and prepare goods in order to ensure plentiful supply and stable prices during Tet for nine product groups in the price subsidized program, including cattle meat, poultry meat, poultry eggs, vegetables and fruits, processed foods, rice, sugar, cooking oil, and seafood.

Until now, businesses have purchased and stockpiled material and prepared seedlings, breeding stocks, to carry out production plans to provide goods for the markets during the festive season.

Businesses have pledged to supply enough goods and products, such as pork, poultry meat, poultry eggs, vegetables and fruits, in sufficient quantities during Tet holiday season.

Besides products under the price subsidized program, the Department of Industry and Trade is also encouraging businesses to stockpile other essential products, such as wine, beer, soft drinks, cookies, and sweetmeats, so as to meet a diverse demand of consumers.

Le Ngoc Dao, Deputy Director of the Department of Industry and Trade, said they have instructed businesses under the program to stock goods to help distributors maintain a stable supply, and prevent shortage which could cause prices to boom.

Accordingly, supermarkets need to coordinate better with businesses under the price subsidized program to make sure that their products are widely available to consumers.

In order to ensure better distribution and circulation of goods, the department will collaborate with other relevant departments and districts to increase inspections on price fixing, quality, packing, food safety, dubious and counterfeit products at supermarkets and shopping malls. In case of violations, inspectors will immediately slap strict penalties instead of issuing a warning.

Crude cashew imports up sharply

Vietnam spent over US$470 to import a total of 503,000 tons of unprocessed cashew from January through September, jumping up to 81% in volume, according to Vietnam Cashew Association (Vinacas).

Vinacas estimates this year’s crude cashew import volume at around 600,000 tons, a rise of 50% against the planned figure from earlier this year. As such, the import volume of the local cashew industry is projected to make up roughly 70% of local processing demand compared to previous years.

“Importing such a large crude cashew volume indicates huge demand from the local market,” Dang Hoang Giang, general secretary of Vinacas, remarked.

Most cashew batches are imported from East and West Africa and smaller volumes from Cambodia and Indonesia. Vietnam’s stronger cashew imports are partly because many cashew farming areas in Dong Nai and Binh Phuoc as the country’s key cashew farming regions have been replaced by other crops with higher economic value like pepper and rubber.

January-September cashew nut exports totaled 192,000 tons worth US$1.22 billion while the figure from the same period last year was 160,000 tons worth about US$1 billion.

This year’s cashew export prices are lower than those in 2012 but the demand from foreign markets now is bigger, with the eight-month export price averaging out at over US$6,355 a ton, dropping nearly US$454 a ton from the average level in the same period in 2012, Giang stated. He predicted the local cashew industry to generate export value of roughly US$1.8 billion this year, 20% higher than the target and the highest up until now.

Vietnam exported 223,000 tons of cashew nut with a total value of US$1.48 million last year. Vinacas earlier this year set a target of exporting about US$1.5 billion worth of cashew nut annually from 2013 to 2015.

The three biggest importers of Vietnamese cashew are still the U.S. with an import volume accounting for 34.5% of the country’s total cashew exports, China with 16.6% and the Netherlands with 10.4%, the Ministry of Agriculture and Rural Development reports. In particular, cashew nut exports to India this year posted a staggering rise of 102% in volume and about 68% in value year-on-year, says the ministry.

WB forecasts Vietnam GDP at 5.3 percent in 2013

World Bank (WB) forecast that Vietnam’s economic growth will be at 5.3 percent this year, and 5.4 percent in the next two years, in a report released on Monday.

The report also said that the country’s inflation will possibly reach 8.8 percent in 2013 then decline to 7.4 percent and 7.7 percent in 2014 and 2015, respectively.

According to the WB, the country’s macro-economy will continue to post stable improvement as policies and measures implemented during the past two years have helped to reduce inflation, strengthen fiscal and external deficit and stabilize the exchange rate.

FPT Company among top 500 global IT companies

The FPT Software Group has just announced that their Information Technology Company has been listed among the top 500 Software Companies in the world in Software 500, with revenue of US$81.5 million.

Software 500 is based on revenue of outstanding software companies and service providers. Accordingly, FPT Software is ranked 296th on the list. With this, FPT Software becomes the first Vietnamese Information Technology Company on a global list.

Vingroup seeks to lure property buyers

Vingroup has announced further stimulus packages to attract customers to the group's real estate properties.

Residents Times City and Vincom Village of Royal City, can use the areas' indoor and outdoor swimming pools, tennis courts and other sport facilities free of charge, announced Vingroup's press release yesterday.

The company is also eliminating management fees for the next 10 years, said a representative of Vingroup.

Biscafun exports first biscuits to Russia

Quang Ngai-based candy and biscuit manufacturer Biscafun, under the Quang Ngai Sugar JS Company, has exported its first shipment to Russia.

The VND5 billion (US$238,000) shipment weighs 75 tonnes.

Under an agreement signed this year between Biscafun and Russia's Vy Prom Group, Biscafun will export 350 tonnes of sweets worth $1.5 million to Russia in the fourth quarter.

Next year, they will increase the shipments to 600 tonnes per month.

Vietbuild 2013 sees over 2,300 contracts signed

Domestic and foreign businesses signed 2,340 contracts worth more than VND200 billion (US$9.4 million) during the five-day Vietbuild 2013 International Exhibition in the Mekong Delta City of Can Tho.

The inked deals focused on the trading of industrial and civil construction equipment and products. In addition, many foreign firms decided to establish representative offices and sign up distributors in Can Tho and other major cities nationwide.

An estimated 40,000 visitors came to the event, which took place from October 2-6 and featured 450 pavilions run by more than 200 exhibitors from nine countries.

Refinery investment to double

Vung Ro Petroleum Ltd has received a modified investment licence from the People's Committee of central Phu Yen Province for the development of the planned Vung Ro oil refinery project.

The committee allowed project investment capital to be increased from US$1.7 billion to $3.18 billion, which will double the plant's annual output to eight million tonnes, following Government approval.

The refinery would be built in Hoa Tam Industrial Zone in Nam Phu Yen Economic Zone using a land area of about 680ha and water surface of 500-1,300ha, instead of on more than 185ha in Hoa Tam and Hoa Xuan Nam communes.

The investing company petitioned for the adjustments based on market demand, since the project was first licensed in 2007.

Addressing the licensing ceremony on Sunday, Deputy PM Hoang Trung Hai said the new move marked an advance for the large-scale project, which would play an important role in the nation's energy industry development and the socio-economic progress of the south-central region.

He urged relevant parties to promptly implement the next steps of the project.

On Sunday, Vung Ro Petroleum signed an overall design contract with Japan's JGC Group, and entrusted this company as an EPC (engineering, procurement and construction) contractor.

The province was concentrating on clearing ground and building traffic, water and electricity infrastructure for the project, according to the local Department of Planning and Investment.

Construction of the refinery could possibly begin in November, an unnamed People's Committee official told VnEconomy.

As planned, the plant would be completed within four years and would annually produce 90,000 tonnes of liquefied petroleum gas, 487,000 tonnes of RON 92 gasoline, 1.6 million tonnes of ROM 95 gasoline, 325,000 tonnes of jet fuel, 2.3 million tonnes of diesel and 1.4 million tonnes of fuel oil.

Vung Ro Petroleum is a joint venture between British Virgin Islands' Technostar Management Ltd and Russia's Telloil Group.

Banks in a rush to clear bad loans

Around 10 credit institutions are queuing up to sell their non-performing loans to the Viet Nam Asset Management Company (VAMC), in an attempt to shore up their balance sheets

VAMC's Vice Chairman, Nguyen Quoc Hung, told local press that banks below the required 3 per cent level were also keen to rid themselves of bad loans.

A full applicant list is yet to be released, meanwhile VAMC will prioritise buying back loans from banks running a bad debt ratio of above 3 per cent.

Nguyen Van Le, general director of SHB, which plans to sell about VND1 trillion (US$47.3 million) of bad debt to the VAMC, told Tuoi Tre that selling the loans would help lower the bank's bad debt ratio, consolidate balance sheets and allow special bonds to trade on the Open Market Operation (OMO).

OCB's Chairman, Trinh Van Tuan, told Tuoi Tre that VAMC's buying programme was the best way to resolve non-real estate secured loans, which accounted for a big share in the bank's bad debt structure.

The sale would help the bank to put capital in circulation for business operations, Tuan said.

Late last week, VAMC purchased VND170 billion ($8.04 million) of bad debts from PGBank, with the deal helping to lower the bank's bad debt ratio from 8 per cent, to around 3 per cent by the year's end.

The long list of applications to sell loans fast accumulated after VAMC's purchase of 11 bad debts for VND1.7 trillion ($80.6 million) from Agribank using its bonds-scheme early last week. The deal wiped 7.56 per cent of the bank's bad debt, leaving Agribank's bad debts worth around VND33.52 trillion ($1.58 billion).

The central bank is currently deciding how much the Ha Noi-based bank will get, but early predictions show the bank will not receive more than 70 per cent of the bond's value.

VAMC has also been verifying procedures necessary to buy debts from commercial banks. As planned, the company will issue bonds as much as VND30 trillion ($1.4 billion) to buy debt from now until the end of this year.

The State company, which is monitored by the State Bank of Viet Nam, is hoping the actions will encourage foreign investors to buy the assets, estimated to have substantial market value.

Vinacomin aims to shrink coal stockpile

The Viet Nam Coal and Mineral Industries Group (Vinacomin) plans to sell 39-41 million tonnes of coal while reducing the volume of coal in stock in the latter months of this year.

The goal is in reach, as Vinacomin has inked a deal to export approximately 3 million tonnes of coal in the fourth quarter and the local demand was expected to increase in the coming time, the group said in its report on nine months' performance.

Vinacomin general director Le Minh Chuan, however, said over the past nine months, the group has encountered many difficulties, with slow power sales due to sinking exports being the biggest.

The period also saw a slump in the volume of coal sold to households, as hydro-electric plants, owned by Electricity of Viet Nam, had operated at full capacity while coal power plants did not.

Difficulties brought by natural resources taxation, policies on environment and labour shortages have also caused headaches, Chuan said, adding that the group had no choice but to cut costs and reduce prices.

In the January-September period, Vinacomin had shipped 8.4 million tonnes of coal abroad, representing a year-on-year decrease of 13 per cent, or fulfilling only 53 per cent of the target set for this year. This has resulted in 7.8 million tonnes of coal in stock.

During the period, Vinacomin also reported a VND38 trillion (over US$1.8 billion) revenue on coal.

Last month, the Ministry of Finance decided to cut the coal export tax from 13 per cent to 10 per cent in a move to help coal producers reduce their high stockpiles.

The move was made following a Vinacomin proposal. The group asked the Government to revoke a July hike in export tariffs, saying it had made a disastrous impact on its business.

According to the group, since the Government raised the coal-export tax from 10 per cent to 13 per cent in July, its coal export volume has dropped to only 120,000 tonnes a month, equal to a tenth of the previous amount.

The group said the rise in tariffs meant that export prices had to increase significantly.

Taxes and fees now make up 30 per cent of the production cost of export coal, and 20 per cent of coal sold to domestic customers.

Ministry lays out plans for new railroads

The Ministry of Transport has unveiled plans to lay eight broad-gauge railway tracks in the southern and south-central regions by 2020.

The rails will measure 1.435 metres between the inner edges instead of the current one metre.

To be built mostly in and around HCM City, they are estimated to cost VND341 trillion (US$16.2 billion), and will be sourced from ODA loans, Government bonds, and the private sector besides public funds.

Nguyen Van Doanh, deputy chief of the Department of Railways, said the railway network and facilities would be improved in HCM City and its surrounding provinces.

The Southern Transport Engineering Design Incorporation, which drafted the comprehensive plan, said a total land area of 1,458 hectares would be needed for the project, including 508ha in HCM City, 377ha in Dong Nai Province, and 314ha in Binh Duong.

The department has urged localities to inform residents and relevant agencies about the land areas that would be acquired so that they would be prepared.

Passenger trains would travel above or below ground in the city centre, it said.

Dang Minh Hai, deputy director of the Southern Transport Engineering Design Incorporation, said the wider gauge would allow trains to run at a speed of at least 120 kilometres an hour.

The construction of the new rail would not affect the operation of the existing one-metre-gauge railway, he said.

All eight would have twin tracks for trains to run in both directions at the same time. The trains will run on electricity instead of diesel as they do now, causing less damage to the environment.

Hai said technology would be used to reduce the noise of trains and improve level crossing systems in residential areas.

The existing 2,000km of tracks, which were built more than 100 years ago by the French, have become decrepit and are in urgent need of upgrades and renovation.

It takes trains around 30 hours to cover the 1,726km between Ha Noi and HCM City.

Banking sector saw total assets rise in August

Total assets for the entire banking industry by the end of August reached VND5,248.57 trillion (US$238.57 billion), up by VND35.2 trillion ($1.6 billion) against last month.

Compared with December last year, assets rose 3.89 per cent, according to the State Bank of Viet Nam (SBV)'s data.

The rise in total assets for the banking industry was mostly due to an increase in assets of 5.43 per cent by State-owned banks and 0.89 per cent in assets for commercial joint stock banks.

Financial and financial leasing companies reported a decline of 1 per cent in assets in the period.

Equity of the entire banking industry also rose VND1.399 trillion ($63.59 million) to VND445.025 trillion ($20.228 billion) by the end of August, of which State-owned banks made up VND158.267 trillion ($7.193 billion) and VND177.898 trillion ($8.086 billion) was from commercial joint stock banks.

Charter capital for the entire sector also surged 3.97 per cent from the end of July to VND407.714 trillion ($18.53 billion) by the end of August, but the capital adequacy ratio (CAR) inched down to 13.66 per cent.

The ratio of short-term capital for medium- and long-term loans surged from 16.84 per cent at the end of July to 17.24 per cent at the end of August.

However, the loan-to-deposit ratio (LTD) dropped to 87.42 per cent from 87.75, proving that credit growth is still facing difficulties.

The central bank's latest data showed that overall credit growth fell from 6.45 per cent at the end of August to 5.83 per cent on September 18.

Industry insiders are concerned that credit growth, despite improvements in the last two quarters, is currently low compared to the 12 per cent annual target.

Petrol traders commanded to decrease retail prices

The Ministry of Finance and the Ministry of Industry and Trade yesterday ordered traders to drop retail petrol prices by 1.6 per cent per litre from 8pm.

Prices for RON 95 and RON 92 petrol were subsequently reduced to VND24,380 ($1.15) and VND23,880 ($1.13) per litre respectively. The diesel and kerosene prices were unchanged.

The decision was made shortly after the Ministry of Finance publicised the updated status of Viet Nam's petrol price stabilisation fund, which has been used to keep petrol prices down.

The fund stood at VND58.6 billion ($2.7 million) at the end of September after rising over VND3 billion ($141,911), the Ministry of Finance has stated in the quarterly report on its website.

According to the latest statistics, of the 12 petrol dealers who contributed to the fund, six of them had a positive fund balance. Petrolimex's balance until the end of September stood at over VND205 billion ($9.7 million). It was followed by the Military Petroleum Corporation with over VND180 billion.

However, until September 30, PVOil reported a negative fund balance of more than VND209 billion ($9.88 million) and Petec Trading&Investment Corporation also saw a loss of over VND145 billion ($6.86 million).

Recently, Minister of Finance Dinh Tien Dung stated that the ministry would publish data every quarter rather than every month to save the time and expenses of relevant agencies, adding that this was a perfectly appropriate policy.

Banks see appeal of corporate bonds

With large amounts of money lying idle due to the credit squeeze, banks are increasingly investing in corporate bonds.

As the economy declines, Government bonds and deposits are becoming less attractive, while demand for corporate bonds rises.

In August, coal and mineral group Vinacomin issued VND5 trillion (US$235.8 million) in bonds, 1.7 times more than the expected volume.

At the beginning of this year, the market absorbed VND2.5 trillion ($117.9 million) worth of Vinacomin bonds.

The buyers, mainly commercial banks, doubled Vinacomin's issuance last year, according to the group's general director Nguyen Van Bien.

The group issued only VND3.5 trillion ($165 million) in bonds during the whole 2007-12 period.

Also in August, the Bank for Investment and Development of Viet Nam (BIDV) exceeded its VND3 trillion ($141 million) issuance target by 5 per cent – 60 per cent higher than the VND2 trillion ($94.61 million) decided on when the bank surveyed market demand.

Given these achievements, many enterprises plan further issuances this year.

"Demand for bonds is there, and the market is getting on well," Bien said.

Unlike last year, investors are jumping for corporate bonds with lower interest rates. Vinacomin bonds yielded 14.5 per cent last year; the yield is now 11 per cent.

The total amount of bonds traded in the first nine months reached VND28.1 trillion ($1.3 billion) compared to VND17 trillion ($801.8 million) last year.

After the next three issuances, it could hit VND34 trillion ($1.6 billion).

Farm produce exporters want VAT removed

Some associations of farm produce exporters have proposed that the value added tax (VTA) be removed to help enterprises avoid problems and prevent frauds.

The Vietnam Coffee and Cocoa Association (Vicofa) and Vietnam Sugar and Sugarcane Association (VSSA) have sent documents to the General Department of Tax to ask for VAT reduction from 5% to 0%.

Tax evasion has occurred over the past time while enterprises have met difficulties in VAT refunds, resulting in high risks in their business, the associations explained.

As Vietnam exports almost of its coffee output, levy of VAT then refund are not necessary, Vicofa said.

Do Ha Nam, vice chairman of Vicofa and general director of Intimex Group Joint Stock Company, said that VAT should be abolished as coffee exporters will get tax refund. Therefore, enterprises will save time for conducting tax refund procedures, Nam said.

Meanwhile, member enterprises of VSSA also want VAT to be removed, saying that this will help them compete with imported sugar.

Nguyen Ba Chu, general director of Société De Bourbon Tay Ninh Company, in a recent meeting said that 41 sugar factories in the country have generated revenue of around VND22.5 trillion each year and contributed over VND2 trillion of VAT and corporate income taxes to the State budget.

However, administering agencies have yet to release specific policies to support the industry. Smuggled sugar still dominates the market, reaching up to 400,000 tons a year, or 30% of total sugar output in the country, Chu said.

Concerning this suggestion, Bui Van Chuan, deputy head of Daklak Province’s Tax Department, said that the General Department of Tax and the Ministry of Finance will invite related sides to a meeting to discuss the problem in the next few days. Representatives of provincial tax agencies from Dong Nai, Binh Duong, Daklak and Lam Dong and the associations will join this meeting.

PVcombank starts official operation

Vietnam Public Bank, or PVcombank, the consolidated bank after the merger between PetroVietnam Finance Corporation (PVFC) and Western Bank, started official operation on Thursday.

The bank has a chartered capital of VND9 trillion and total assets of over VND100 trillion. PetroVietnam is the biggest shareholder in the bank with a 52% stake, followed by Morgan Stanley with 6.7%.

PVcombank has a network of 102 banking units, including one head office, 30 branches and 67 transaction offices. In the coming time, the bank will continue to focus on credits for economic organizations in the fields of oil and gas, mining and electricity.

PVcombank will also increase the ratio of individual credits by taking advantage of facilities of Western Bank.

PVcombank’s subsidiaries such as PetroVietnam Insurance Company and PVFC Fund Management Joint Stock Company will focus on the banking and investment sector.

PetroVietnam has plans to reduce its stake in the bank to 47% but it has not yet set up a specific road map for the divestment.

Maritime Bank launches facility for Chinese clients

The office, the first of its kind in the country, has Chinese-speaking staff to better services for the Chinese community in the city. All forms and papers at the facility are also available in Chinese - Photo: Courtesy of Maritime Bank

Military Bank (MB) has said it is offering an overdraft facility for local companies active in neighboring Laos.

The new service is designed to meet clients’ working capital needs as they can draw on funds in excess of the amount in their deposit accounts. The advantage of the product is when corporate customers have urgent needs for working capital, they can resort to this service, instead of signing credit contracts, a process that takes time.

This type of funding allows MB clients to repay the funds at their convenience, which means repayments automatically occur whenever money arrives at businesses’ accounts. The interest rate is decided by the actual time the funds are used.

The service is applicable to the U.S. dollar and Lao kip and the maximum overdraft amount for a single customer is VND5 billion.

With the new service in place, MB expects to boost lending to enterprises, particularly those operational in Laos.

MB’s Laos unit has been in service since late 2010, with thousands of companies doing business in Laos becoming the bank’s customers.

FMCG consumption on the rise

The Fast-Moving Consumer Goods (FMCG) market in cities has reached double-digit growth for the first time at 10% in value after several months of stagnant growth, while FMCG growth in rural areas has touched its highest level since the end of 2012 at 14%, according to Kantar Worldpanel.

The enterprise made its survey during a 12-week period ending on August 11. Most key channels enjoy early signs of improvement, especially hyper and supermarkets where growth is gaining speed, though not at fast a pace as last year, it said.

Personal care continues to lead the value growth in the urban FMCG market. Demand for baby care and facial care products is leading the way, with value growth recorded at 34% and 26% for each sector respectively.

Meanwhile, the recent boom in in-home consumption of beverages is notable among rural families.

Among all beverage categories, carbonated soft drinks (CSD) have recorded the most outstanding performance with doubled volume consumption against a year ago.

CSD has recruited an additional one million rural households while managing to achieve a 63% increase in average household consumption, partly thanks to price-off campaigns of global giants.

Accounting for 70% of the population, contributing 60% of gross domestic product (GDP) and with an annual two-digit income growth rate, rural Vietnam is now a potential yet indispensable target in manufacturer’s growth plans, Kantar Worldpanel said.

According to its Lifestyle Survey in late 2012, one out of every two families owns a fridge at home. The expanding penetration of fridges may, in turn, encourage the consumption of dairy products, beverages and other food items.

David Anjoubault, general manager of Kantar Worldpanel Vietnam, said that with much lower incomes than their urban counterparts, an average rural household spends only VND540,000 per month on FMCG with the biggest part dedicated for packaged foods.

However, with moderate FMCG brand availability, which equals only half of the urban market, the rural market is providing a huge consumer business opportunity and plenty of first entry advantages, he said.

Over one million tonnes of rice for export next year

The Ministry of Industry and Trade has assured that there will be sufficient rice for export from now to the end of the year, with more than 1 million tonnes expected to be ready for export next year.

The ministry said the country expects to harvest about 3.7 million tonnes of rice during the remaining months of this year, adding that rice stockpiles are estimated at about 1.44 million tonnes.

Meanwhile, rice domestic consumption would total around 2.18 million tonnes in the last three months of the year and some 1.54 million tonnes of rice will be delivered under signed export contracts, leaving more than 1 million tonnes in stock.

The country exported around 471,000 tonnes of rice in September, bringing home 214 million USD. This fell far short of the country’s 650,000-tonne target, itself lowered from the 750,000-tonne goal previously set by the Vietnam Food Association (VFA).

In the first nine months of this year, rice export saw decreases of 14.3 percent in volume and 16.7 percent in value with 5.35 million tonnes shipped abroad worth 2.35 billion USD.

China remains Vietnam ’s largest rice importer, consuming 1.62 million tonnes or 31.4 percent of the country’s total rice export turnover.

Experts forecast that the fourth quarter will be gloomy for the country’s rice exporters, saying Vietnamese businesses are finding it hard to seek new contracts.

They pointed to India ’s heightened efforts to become the world’s top rice exporter, Thailand ’s increasing rice stockpiles and China ’s move to reduce rice imports this year.

The VFA has lowered its rice export target for 2013 to between 7 - 7.2 million tonnes from the initial 7.5 million tonnes due to low export volume and falling prices.-

Hanoi: 38 trillion VND worth of goods to be sold in Lunar New Year

Hanoi’s retail sector is expected to earn 38 trillion VND (1.8 billion USD) during the upcoming Lunar New Year (Tet) festivities, the city’s Industry and Trade Department has forecast.

The Tet holiday, a time of huge national celebration, will take place from the end of January to early February 2014.

The projected sales figure represents a rise of up to 18 percent compared with other months of the year.

The department has calculated that to prepare for the traditional holiday in the capital, 65,000 tonnes of food is required. The demand for meat is about 12,000 tonnes; seafood, 5,000 tonnes; processed food, 4,000 tonnes; vegetables, 90,000 tonnes; and confectionaries 1,500 tonnes.

The Northern Food Corporation has planned to reserve 50,000 tonnes of rice to serve through Tet while the Hanoi Beer, Alcohol and Beverage Joint Stock Company (JSC) is expected to provide 100 million litres of beer and 7 million litres of wine.

In the run up to New Year, the demand for goods will surge, creating chances for enterprises to boost goods production and trading.

To serve the demand of city residents, trade centres like Metro, Big C, Co.op Mart, Fivimart and Intimex have prepared to stock 2.5 trillion VND (117.5 million USD) worth of essential commodities.

The Industry and Trade Department will keep a close watch on goods and service supply and demand to ensure balance in the market.

Vietnamese farm produce exhibited in Germany

High-quality agricultural produce and beverages produced in Vietnam are being showcased at an international fair that opened in Cologne city, Germany on October 5.

Eighteen Vietnamese businesses are displaying their wares across several eye-catching and well-stocked pavilions at the Anuga 2013 fair. Visitors have been strongly drawn to the tables of Vietnamese fruit and vegetables, processed cashew nuts and Phu Quoc fish sauce, among many other products.

The fair is helping the Vietnamese exhibitors maintain their trade ties with German and EU partners while also expanding into new markets with more varied export categories.

It is also serving as a prime opportunity for businesses to popularise Vietnamese cuisine, quality food and farm produce to the German market and the EU at large.

The presence of Vietnamese enterprises at the event will make them more accessible to customers and trade partners all over Europe due to the increasingly positive outlook facing the continent’s economy, said Do Vu Thanh, a member of the organising board of the Vietnamese delegation to the event.

Anuga, Germany’s largest and most important food and beverage fair, has attracted around 6,700 exhibitors from 100 countries and territories across the world this year and will run until October 9.

Tra fish exports forecast at 1.8 billion USD

Exports of tra fish are expected to reach around 1.8 billion USD due to high demand from export market, according to the Ministry of Agriculture and Rural Development.

Despite a hike in the price of the fish, many local businesses succeeded in signing a number of contracts to ship abroad until the end of this year.

The tra fish export activities in the first eight month of this year were dull. Vietnam ’s tra fish exports recorded a yearly increase of 3.23 percent in volume but a year-on-year decrease of 7.93 percent in value during the first eight months of this year.

According to the Ministry of Agriculture and Rural Development, Vietnam’s seafood export turnover in the first nine months of this year reached over 4.6 billion USD, a year-on-year increase of three percent.-

More SE Asia companies issue bonds in Singapore

More and more companies in Southeast Asia have come to Singapore to issue high-yield bonds, acknowledging that the Singapore bond market is still substantial and getting along healthily.

Data from Thomson Reuters showed that nearly 5 billion SGD (4.02 billion USD) of high-yield deals were done in the first nine months of this year, compared with 4.4 billion SGD in 2012 and 3 billion SGD in 2011.

Many of these deals were for amounts smaller than 100 million USD and many bonds issued by such unrated firms as Rajawali Group and Indofood Agri Resources of Indonesia, and others from Thailand and Malaysia.

The issuers are being attracted by the ability to print bonds at lower coupons than they would get in their home markets. Meanwhile, Singapore has become a consistent source of funds for issuers in the region because Singaporean investors became renowned for embracing perpetual securities and for chasing yields.

Indofood Agri Resources of Indonesia has announced its plans to diversify into the Singapore market via a new 500 million SGD programme. A number of Indian and lower-rated Thai companies are looking at coming to Singapore with bonds.

Gov’t urged to equitize good SOEs to ease budget pressure

The Vietnam Association of Financial Investors (VAFI) has proposed the Government to equitize good State-owned enterprises (SOEs) as one of five measures suggested to ease pressure on the State Budget that is facing falling revenues.

The proposal has been sent to the Prime Minister, relevant ministries and the National Assembly. The association said if letting big and effective State-owned companies like Mobifone and Viettel go public, or selling State stakes in big firms like Sabeco, Habeco, and Vinamilk, the national budget could have US$5 billion.

“If State stakes (in these enterprises) are retained, huge assets will not be used effectively while the Government has to borrow money for public investment,” VAFI said. In addition, the Government would face the threats of shrinking values of national assets given bad corporate governance at State-owned companies.

This idea has also been echoed by experts like Le Xuan Nghia, member of the National Financial and Monetary Policies Advisory Council. He said the Government should sell stakes in corporations that Government did not have to maintain ownership like Vinamilk, as well as to fasten equitization of other effective corporations.

VAFI also suggested big cities like Hanoi and HCMC to sell State-owned valuable real estates in the center to get money for investment in infrastructure and solve current chaotic traffic situation in those cities. The State still holds stakes in or own many of such real estate assets, including trade centers, and luxury hotels like the Daewoo complex, the Rex, and the Caravelle.

“Those valuable assets haven’t generated any money to these cities’ budget as the profits belong to State-owned enterprises, which can evaporate due to their ineffective operation,” said the organization. It also suggested that the cities should auction those golden real estate assets to gain money for the cities’ budgets.

The third suggestion of VAFI is to convert big effective State-owned groups and corporations into new-model companies with three shareholders being the Government, the Trade Union, and the Party entity in the company, aiming to collect dividends. Under VAFI’s estimate, big firms like VNPT, PetroVietnam, Viettel, EVN, and Vinaphone could bring the dividends of around US$2 billion.

The next suggestion is to impose special consumption tax on gold to reduce the usage of gold for payment as they are also luxury items whose trade and consumption require the Government’s intervention.

The last suggestion of VAFI is the Government should develop the securities industry into a spearhead sector and a main funding channel for the economy besides the banking sector.

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

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