Vietnam to devise new incentives

 

Despite a number of difficulties Vietnam still attracts special attention from Japanese businesses.

 

The statement was affirmed by Japanese businesses at the fourth joint Japan-Vietnam Economic Conference held in Tokyo, Japan on May 30 by the International Friendship Exchange Council and the Vietnamese Embassy in Japan. Present at the conference were more than 100 Japanese businesses and Vietnamese Minister of Industry and Trade, Vo Hong Phuc and Vietnamese Ambassador to Japan, Nguyen Phu Binh as two main speakers.

 

Minister Phuc said Vietnam is in a bind, facing a high rate of inflation, huge trade deficits and budget overspending. At the moment, its priority is given to controlling inflation and stabilising macroeconomy. However, he affirmed that the country will be back on track as of 2012.

 

Japanese participants in the conference expressed their keen interest in the Vietnamese market.

 

Fukuda from the Shinkin Credit Fund said Vietnam is one of important destinations in the “China plus 1” strategy, which will help Japanese businesses reduce their risks of investing in China.

 

Japanese former ambassador to Vietnam Norio Hattori, said the investment relations between the two countries are not yet commensurate with their fine traditional relations. Hattori said this is due to lack of advertising and promotion of Vietnam’s investment environment as well as policies to attract investment, especially in high-tech and support industries.

 

Minister Phuc affirmed that the Vietnamese Government will consider amending laws and offering specific incentives.

 

Vietnam's electronics sector flounders

 

All development plans for the Vietnamese electronic industry could end up nowhere as imported products have already flooded the local market, industry insiders say.

 

According to the General Statistics Office, the import turnover for electronic products, computers and spare parts reached US$1.76 billion in the first four months of 2011, an increase of 29.7 percent over the same period last year.

 

Imports from China and Malaysia make up US$567 million and US$118 million of this figure, posting respective increases of 20.6 and 9.4 percent. Imports of electronic products from the Republic of Korea, tripled to US$462 million.

 

In May alone, import turnover topped US$500 million, a rise of more than 20 percent over the previous month.

 

Many importers attributed the import surge of the last five months to the launch of so many new products this year.

 

In addition, the US dollar exchange rate has "cooled down" recently, making it easier to buy the greenback from banks, with some selling it at lower than the listed price.

 

Enterprises have taken full advantage of these factors to import products in large volumes. They have also been motivated to do so by distributors’ predictions that this year's electronic market will experience high growth.

 

Agro, aqua products to have quality management 

 

Vietnam plans to spend VND1.5trillion (US$75 million) to improve the management of quality standards of agricultural and forest products during the period 2011-2015.

 

Under a project approved by the Prime Minister, the country will consolidate state-run organizations that monitor quality and safety of agricultural and forest products, as well as seafood and salt, to follow a consistent management of farm produce, from source to consumer.

 

Agencies established at some localities will advise, test and certify production process and quality of agricultural and forest products and seafood.

 

The technical facilities of management organizations will be upgraded to state-of-the-art standards.

 

Some experiment and verification labs will be built by 2015, meeting with regional standards. These labs will follow the ASEAN experiment and verification system.

 

Newly-established enterprises increase year-on-year

 

More than 32,300 enterprises with a total registered capital of VND194.9 trillion (US$9.28 billion) were set up in the first five months this year, according to statistics from the Ministry of Planning and Investment.

 

The number of newly-established enterprises in the first five months inched up by 1 per cent against the same period last year, however, the total registered capital was down by 5 per cent, the ministry said, attributing it to economic difficulties and the escalation of input costs on the back of rising global prices.

 

In May alone, more than 5,500 enterprises were set up, with a total registered capital of VND40.2 trillion ($1.91 billion).

 

The ministry estimates that the number of newly-established enterprises would reach 39,000 in the first half of the year, a 4 per cent increase against the same period last year. However, the total registered capital of the new firms would be only roughly VND232 trillion ($11 billion), down 5.4 per cent.

 

According to a recent survey by the Viet Nam Chamber of Commerce and Industry, up to two thirds of small and medium sized enterprises are either unable to borrow from banks or find it extremely difficult. Lending interest rates of 20-25 per cent per year are generally too high for many businesses.

 

State Bank of Viet Nam Governor Nguyen Van Giau said that for new firms, it was difficult to obtain credit from banks, but for established enterprises, this was not a problem. Credit provision for established enterprises had increased by 6.2 per cent, he said.

 

"Up until May 23, the total credit provided to the economy had reached VND135.8 trillion ($6.47 billion) this year, 6.2 per cent more than the same period last year, and 1.2 times higher than the country's GDP growth," said Giau.

 

VN leads foreign investment in Laos

 

Viet Nam has become the leading foreign investor in Laos, taking over the top position from China and Thailand, according to a newsletter issued by the Lao Ministry of Planning and Investment's Investment Promotion Department.

 

Vietnamese firms invested in 252 projects in Laos in the decade between 2000 and 2010, worth a total of about US$2.77 billion and putting Viet Nam ahead in the country's foreign investor rankings for the first time in a decade, the newsletter said.

 

Chinese firms have invested in 397 projects worth about $2.71 billion over the past decade, putting them in second place, while Thailand invested in 276 projects worth $2.68 billion.

 

"The value of Vietnamese investment has exceeded that of China and Thailand since the end of last year," the deputy director of the Investment Department, Manothong Vongsay, told theVientiane Times newspaper last week.

 

In recent years, Vietnamese firms have embarked on a number of mining and hydropower projects in Laos, causing investment by the country to increase rapidly.

 

"Another one of Viet Nam's major projects is a $1 billion golf course development in Vientiane," Vongsay said.

 

Laos amended and promulgated its Law on Foreign Investment Promotion in early 2010 aiming to attract more foreign firms to non-resources sectors. The law offers a number of investment incentives including tax breaks and the right to own residential land in Laos.

 

The law also created a one-stop service for foreign firms seeking investment licences in Laos and accelerated the process of approval for investment proposals.

 

The surge in investment also followed an agreement between Laos and Viet Nam to boost bilateral trade to $1 billion by 2010, $2 billion by 2015, and $5 billion by 2020.

 

Thai executive tells Thais to come to VN

 

A Thai entrepreneur based in Viet Nam has urged Thai companies to expand into Viet Nam in preparation for the imminent spurt in the flow of goods and services once the ASEAN Economic Community comes into being in 2015.

 

"Once the markets open up and there is free competition, companies that have not been outward-looking will have a tough time trying to compete," Suwes Wangrunarun, senior vice president of CP Viet Nam Livestock Corp, was quoted by the Bangkok Post newspaper as saying.

 

Speaking at a recent seminar in Bangkok, Suwes said Viet Nam had one of the cheapest labour forces in the region, even cheaper than China's.

 

With its large skilled and unskilled workforce, the country was poised to become a regional hub for trade and investment.

 

The Thailand-based CP Group, which had more than US$1.2 billion in annual sales in Viet Nam, had expanded over the years, and was looking at opening two new plants this year.

 

Other panellists said the cost of doing business in Viet Nam was so cheap that it would be difficult for countries like Thailand to compete.

 

Suwes said the monthly wage of an unskilled worker in Viet Nam was around 2,500 baht ($83) against nearly 9,000 baht ($300) in Thailand. A new graduate in Viet Nam would earn around 9,000 baht against 15,000 to 18,000 baht in Thailand.

 

Soraya Runckel, vice president of Runckel & Associates, said she was keen on investing in Binh Duong Province, an hour's drive from HCM City.

 

Factories and shops could take advantage of lower wages, a young population and enthusiastic workers.

 

Provincial officials had simplified foreign investment procedures by cutting regulations and advising on credit sources.

 

Viet Nam has a population of 86 million and establishing an export base there brings companies closer to China.

 

Japan enthusiastic about investment in Vietnam

 

Despite a decrease in FDI attraction, Japanese investors want to inject more investment or increase their involvement in Vietnam by way of purchasing Vietnamese company shares.

 

Many Japanese investors have recently sought further information on investment in Vietnam, especially on support industry companies, said Phan Huu Thang, Director of the Foreign Investment Research Centre.

 

Hirokazu Yamaoka, Chief Representative of the Japan Trade Promotion Organisation (JETRO) in Vietnam, said more than 500 Japanese companies came to Vietnam to learn about investment information from April, 2010 to March, 2011.

 

Japanese firms are interested in production of auto and motor spare parts, electric and electronic appliances, machinery components and packaging materials.

 

JETRO provided a programme to assist Japanese firms to make direct contact with leaders of 100 major Vietnamese companies for investment information.

 

Apart from learning about investment information, Japanese companies have recently bought shares of Vietnamese firms. For example, the Asia DI industrial investment fund a joint venture between Dream Incubator Vietnam and Orix Company, bought around 25 percent of shares of the Vietnamese company Nutifood.

 

Earlier, Japan’s Nippon Meat Packers and a joint stock company in Long An province set up the Nippon Golden Pig joint venture.

 

According to the Ministry of Planning and Investment, Japan had by April 2011 run 1,472 valid FDI projects with a total registered capital of US$21.2 billion, ranking fourth among 92 countries and territories investing in Vietnam.

 

Government set to slash public investment

 

The Vietnam Government will take drastic measures to rectify the direction of the economy by reducing public investment outlays estimated at over VND80 trillion, equal to 9 percent of the total social investment in 2011.

 

The action is part of measures to curb inflation and stabilise the macroeconomy as proposed in the Government’s Resolution No 11/ NQ-CP, which is being carried out nationwide by ministries, sectors and local authorities.

 

The Ministry of Planning and Investment (MoIP) revealed, after three months of implementing the Resolution, relevant ministries and branches have managed to reduce VND5.5 trillion of investment from the State budget in 2,048 projects and VND2.77 trillion in 126 projects funded by Government bonds.

 

State-owned economic have postponed 907 projects, with total investment capital of VND39.2 trillion, equal to 10.7 percent of planned development investment capital this year.

 

Ministries, sectors and localities nationwide have cut their regular expenditure by 10 percent or VND3.85 trillion and will strive to reduce overspending to less than 5 percent of GDP. The savings from regular spendings will be used for social welfare.

 

Tiger prawn processors lack raw catch

 

Some export giant tiger prawn processors are working at half capacity because of a shortage of raw crustaceans and consequent high prices.

 

Ut Xi Seafood Processing Joint Stock Company general director Nguyen Tuan Anh said processing factories were operating at half capacity because the giant tiger prawn had died off from disease in southern provinces.

 

"We have orders for Christmas and new year but the company can't get enough prawns so it doesn't dare to sign contracts," Anh said.

 

Southern Hau Giang Province Cafatex Corporation general director Nguyen Van Kich said that over the past 10 years prawn export processors have never before had such a serious lack of raw material.

 

There had been difficulties but they had always managed to compete to get what they required for production, Kich said.

 

Of major concern was the lack of work for labourers.

 

Viet Nam Association Seafood Exporters and Processors general secretary Truong Dinh Hoe said the death of prawns from disease in recent months had made it difficult to fulfil export contracts signed with partners in Japan and the US.

 

The serious lack of raw prawns would continue till August, Hoe said.

 

Soc Trang Seafood Joint Stock Company general director Tran Van Pham said many farmers had grown whiteleg shrimps instead of giant tiger prawns.

 

But that was a temporary solution because Vietnamese tiger prawns only had to compete with Indian tiger prawns while Vietnamese whiteleg shrimps had to compete with whiteleg shrimps produced in many countries, Pham said.

 

While enterprises had to spend more time and money growing whiteleg shrimp, Hoe said it was not viable to import raw prawns because world prices were high, making Viet Nam's exports too expensive.

 

Hoe said, however, that the association expected prawn exports to hit $2 billion this year despite lower volumes because the price was high.

 

Ca Mau Seafood Processing and Export Association general secretary Ly Van Thuan said farmers in southern Ca Mau Province had enough prawns for the whole year and while there were not enough to warrant building new factories, firms would be upgrading with modern equipment to improve capacity.

 

NZ firms show off their clean technology

 

New Zealand firms showcased sustainable and clean-technology innovations like windmills, solar lights, and waste-water processing solutions at a conference held in HCM City yesterday.

 

"Viet Nam is widely recognised as a leading emerging economy and it is increasingly looking forwards projects that use renewable sources of energy," Graham Sims, New Zealand consul and Trade Commissioner in the city, said.

 

"As a world leader in clean technologies, New Zealand can partner with Viet Nam to develop a range of solutions that will meet growing energy demands. "We are also uniquely placed to assist with developing sustainable and efficient systems to help with wastewater, clean drinking water, sustainable building systems, and other issues."

 

The New Zealand companies participating in the conference were Tourism Resource Consultants, Apex Environmental Ltd, Energy Mad, Energy Recovery Engineering and Construction Ltd, Intalok, and Solar Bright Ltd.

 

The event is organised by the New Zealand Trade and Enterprise – New Zealand's economic development agency — was attended by local environment consultants and officials, construction companies, architects, land developers, and investors.

 

Land database proves headache

 

The building of a computerised national land database has encountered numerous difficulties, said Tran Kiem Dung, head of Science Technology and International Co-operation Unit at the Ministry of Natural Resources and Environment's Department of Information Technology.

 

The Government ratified the plan seven years ago with the object of unifying Viet Nam's scattered land databases.

 

"To date however not one province or city has set up a complete computerised land database," he added.

 

One of the major reasons was the lack of synchronisation in land management among authorities and changing ownership, Dung said.

 

Land databases in hundreds of offices throughout the country fast became outdated, making it difficult to set up a national system, he added.

 

Officials from the Department of Land Management said it would take a great deal of time to set up a national database. To date, just 10 per cent to 15 per cent of communes have up-to-date land databases. Furthermore, local land databases had not been digitised in most localities, meaning that land reports sent to higher authorities were usually on paper, he said.

 

Dung emphasised the importance of building a national land database, which he said would improve public access to land and management transparency.

 

Foreign firms cannot keep talent despite pay hike

 

Companies continue to hike wages to retain talent but are not succeeding, a bi-annual survey by US-based Towers Watson Vietnam has found.

 

The survey of 167 foreign-invested enterprises (FIEs) in nine industries in Vietnam as of March 1 found that with employee turnover increasing by 2 percent year on year to 17.8 percent, the war for talent has intensified.

 

The pay gap between industries has widened due to the need for specialized talent, the survey, which polled manufacturing, financial services, high technology, pharmaceutical/healthcare, fast moving consumer goods (FMCG), trading, chemicals, petrochemical/oil and gas, and others, said.

 

Accordingly, the average salary increase by employee level varied from 14.4 to 16.4 percent in 2011, and projected increase for 2012 varied from 13.5-13.9 percent.

 

In terms of average salary increase by industry, manufacturing, trading, and FMCG enjoyed the highest rates of 16.1 percent, 15.1 percent, and 15 percent in 2011.

 

Next year chemicals and high technology are projected to enjoy the highest rises at 14.7 percent, followed by FMCG and pharmaceutical/healthcare with 14.2 percent.

 

Pharmaceutical/healthcare, FMCG, and manufacturing saw the highest staff turnover at 20.2 percent, 19.4 percent, and 17.7 percent respectively.

 

The labor market trend in Vietnam reflects a sustainable economic recovery, the survey said, since hiring projections continue to rise.

 

The average hiring trend for all levels for 2012 is 83 compared to 63 in 2011, of which the employment of clerical/general staff and officer/supervisor/technical staff will see the strongest growth of 89 and 21 compared to 74 and 17 this year respectively.

 

The trend will focus on sales, marketing and manufacturing with a growth of 21.8 percent, 10.4 percent and 9.1 percent respectively.

 

Training and development is the key reason (61.1 percent) for the increase in HR budgets, followed by introduction of new benefit policy (53.3 percent) and upgrade of HR functional capacity (3.9 percent).

 

Towers Watson’s report, the May 2011 HR Market Trends Survey, holds a positive view on long-term economic growth, saying business expansion will continue and competition to retain talent remains fierce.

 

Major concerns related to career development, including leadership development and succession and salaries will continue to rise with incentives being used increasingly as a motivational tool, it adds.

 

“Organizations should have a positive approach to the 2011 salary budget preparation, be open to add increments for key talent, and be able to adopt more flexible and practical ways to attract and retain talent,” Mark Mamalateo, Towers Watson’s project manager for data services, Asia-Pacific region, said.

 

“Focusing on tailor-made career development programs and designing medium- to long-term performance rewards are keys to keeping high performers and transform them into next generation leadership candidates,” he said.

 

Towers Watson has carried out its semi-annual salary surveys in Vietnam for the last seven years.

 

Advanced farming practices still yield little benefit

 

Efforts to promote fruit framing in accordance with Good Agriculture Practices (GAP) by the agriculture ministry are not paying off and the program is moving at a snail’s pace as farmers earn little profits compared to greater labor.

 

Growers say the GAP standard not only increases productivity and quality but also paves a smoother way for their fruits to enter choosy markets, but exports have so far been stagnant and most of GAP products are sold locally. Therefore, given a much higher cost of farming under the standard, farmers are now shying themselves away from GAP.

 

Lo Ren Vinh Kim Star-Apples Cooperative, widely known for its high-quality star-apples, has rapidly expanded its GAP-cultivated fruit orchards from only seven hectares to the current 55 hectares since it acquired the Global GAP in 2008.

 

However, the cooperative has been able to export some 10 tons of the fruit to England and Canada out of its total annual yield of 400 tons, leaving almost all its produce for local consumption, said Nguyen Van Ngan, head of the cooperative.

 

“I’m afraid that the area under GAP cultivation will shrink in the coming time if the cooperative couldn’t find ways to export the fruit,” said the head of the cooperative in Tien Giang Province.

 

“Although a Global - GAP star apple is sold a few thousand Vietnam dong higher than the normal fruit, the revenue is not attractive enough as farmers have to invest a large amount of time and effort in the farming,” he said.

 

Similarly, Tran Van Sang, head of the Nam Roi Pomelo Cooperative in Vinh Long Province, told the Daily that the cooperative last year exported just 30 tons or two containers of Global GAP fruit out of its annual yield of 600 tons.

 

According to the Agriculture Ministry, there have been 103 cooperatives with 2,500 hectares applying Global GAP and its localized version Viet GAP. Despite encouraging results including higher productivity and better quality owing to less chemical use, unstable sales are menacing the future of GAP cultivation.

 

Nguyen Minh Chau, director of the Southern Fruit Research Institute in the Mekong Delta province of Tien Giang, GAP cultivation needs a careful master plan in terms of kinds of fruit, cultivation area, selection of strains, techniques, training for farmers and especially the outlet for the crops.

 

“Although the ministry has issued a decision in 2008 to guide the certification of VietGAP, it is not sufficient to guarantee a sustainable future for safe fruit and vegetables in Vietnam,” he said.

 

The agriculture ministry said last week it would deploy the Viet GAP program in plantation, husbandry and seafood sectors. The ministry has required southern provinces to select and round up the most valuable fruits into specialized areas, each ranging from 200 to 500 hectares, for en-masse production.

 

Natural conditions have favored fruit cultivation in Vietnam, especially in the southern region where the total area has amounted to more than 770,000 hectares now from nearly 570,000 hectares ten years ago.

 

Firms home in for moving solution

 

Firms are on the tenterhooks with their proposed removal from Bien Hoa 1 Industrial Zone.

 

In light of Dong Nai People’s Committee plan to turn Bien Hoa 1 Industrial Zone (IZ) into a residential, trading and recreational complex, many businesses face to be removed to another location.

 

The removal upsets scores of IZ businesses, particularly that recently built new production facilities.

 

For instance, Bien Hoa Chemical Company has placed three factories at Bien Hoa 1 IZ, one of which just moved to the IZ from Ho Chi Minh City’s Tan Binh district.

 

“Once removed, we would need to build new factories from scratch and it would eat up huge money. Besides, businesses face losing customers and these disadvantages were yet to be mentioned in the removal support plan,” said the company representative.

 

Meanwhile, the greatest concern to labour intensive firms in the IZ is labour retention, particularly skilled workers. Removal of equipment and machinery also causes costs.

 

A Bien Hoa Sugar Joint Stock Company representative claimed the proposed support package of at most VND500 million ($24,000) for each firm was far from enough.

 

Similarly, Pascimex’s general director Nguyen Thi Mai assumed the management authorities only worked on general policy support measures, while businesses’ bigger problems such as how the companies would perform after removal or they would face losing labourers were not properly addressed.

 

At a meeting of Bien Hoa 1 IZ Removal Steering Committee in late May 2011, Dong Nai People’s Committee’s deputy chairman Dinh Quoc Thai asked Bien Hoa Industrial Zone Development Corporation to consolidate the overall plan and scrutinise support measures towards businesses and soon submit it to the provincial management for approval.

 

Bien Hoa 1 Industrial Zone was built in 1963 on a scale of 335 hectares. The IZ area was leased out with over 100 investment projects.

 

Bien Hoa Industrial Zone Development Corporation was trusted by the provincial authorities to preside over the plan to turn Bien Hoa 1 IZ into a modern residential, trading and recreational complex.

 

Under the plan, the current IZ businesses will be removed to Giang Dien IZ in the province’s Trang Bom district. They will be financed VND3.7 trillion ($180 million) to partly cover removal, land lease and infrastructure usage fees out the overall plan total financial package of around VND17 trillion ($821 million).

 

Ben Luc receives the kiss of life

 

Developer Vietnam Expressway Corporation recently gave the kiss of life to get its Ben Luc-Long Thanh highway project off the ground.

 

Last week, developer Vietnam Expressway Corporation (VEC) and Asian Development Bank (ADB) inked a $636 million loan package agreement for the 57.8 kilometre long Ben Luc-Long Thanh expressway.

 

“With the loan, VEC became ADB’s largest recipient in Asia with a total loan portfolio reaching $2.2 billion for its three highway projects,” said ADB Vietnam country director Ayumi Konishi.

 

According to VEC, this week the Japan International Cooperation Agency (JICA) will send an expert group to work with VEC on the highway project before clinching an agreement to lend Vietnam $634.8 million for the project.

 

The Ben Luc-Long Thanh highway project reportedly uses a mixed loan scheme. The ADB loan will be disbursed on construction of the highway’s eastern and western sections, a JICA loan will cover construction costs in highway’s mid-sections and the Vietnamese government’s reciprocal capital of $336.9 million will be spent on site clearance, people’s resettlement and taxes.

 

Lying in the southern key economic zone, the expressway is particularly attractive to road investors. Accordingly, under project consultant estimates the economic internal rate of return (EIRR) of the highway project is over 30 per cent resuming the tool is set at VND1,000 per kilometre for vehicles.

 

Besides, the highway is a section of Ho Chi Minh City’s beltway 3 - an arterial route in southeastern region - whose core functions are to promote travel between southwestern and southeastern areas with no transit through Ho Chi Minh City and directly connects to important highways, Hiep Phuoc, Thi Vai-Cai Mep seaports and Long Thanh international airport.

 

The highway will also link to the prospective Ho Chi Minh City-Vung Tau expressway to form part of the southern key economic corridor in the Greater Mekong Subregion (GMS) crossing Bangkok (Thailand), Phnom Penh (Cambodia) and Ho Chi Minh City and Vung Tau city.

 

VEC is now busy working on the project’s technical blueprints and tender invitation dossiers. Selection of construction contractors under international competitive bidding method would take place in late 2011 and construction would begin in early 2012, said VEC chairman Tran Xuan Sanh.

 

Construction of the $1.6 billion Ben Luc-Long Thanh expressway will be divided into two stages. The first stage involves building a 27.5-metre-wide road with four lanes. The highway will consist of eight lanes at completion. The whole highway will consist of 11 river-crossing bridges and several viaducts. Construction of the first phase was slated in 2012 and completed in 2017.

 

Vinacomin jumps for TIC stake

 

State-run Vinacomin recently proposed to buy bad debtor Vinashin’s 5 per cent stake in Thach Khe Iron Joint Stock Company.

 

“We got the nod from Vinashin for the deal and are waiting for a written consent from Vinashin to come up with relevant legal procedures,” said a Vinacomin executive.

 

As planned, by May 15, 2011 the shareholders of TIC’s iron mining project were obliged to sufficiently contribute 48 per cent of TIC’s total charter capital of around VND1.2 trillion ($58 million).

 

However, prior to that date the shareholders only paid in around VND700 billion ($33.8 million). Some shareholders, including Vinashin, had failed to handle their capital contribution obligations on time.

 

TIC’s board of directors then came to the decision to take back the share of disobedient shareholders in TIC to provide to other shareholders who had finalised their capital contributions.

 

Vinh Phuc welcomes $65 mln project

 

VinaCapital Group and Vietnam Infrastructure Limited (VNI), the first publicly traded fund to focus on infrastructure assets in Vietnam yesterday broke ground for contruction of the Ba Thien 2 Industrial Park, a greenfield development in northern Vietnam.

 

The 308-hectare Ba Thien 2 project is owned by Vina-CPK Company Ltd, a joint venture between VNI and CPK Vinh Phuc JSC. Ba Thien 2 is in Vinh Phuc province, 50km from Hanoi and near to Noi Bai International Airport and the seaports at Haiphong and Cai Lan.

 

VNI holds a majority stake in Vina-CPK Company Ltd, which was granted an investment licence in February 2009 for the Ba Thien 2 project.

 

Phase 1 comprising 65 hectares was handed over to Vina-CPK in January 2011. Compensation of an additional 50ha is in progress and is expected to be completed in June 2011. Vina-CPK has signed one tenant for a 20ha parcel, and negotiations are underway with other potential tenants.

 

Commenting on the project’s development progress, Tony Hsun, managing director of VNI’s investment manager, said: “We are very pleased with the progress of the Ba Thien 2 project, which we believe will stand as a model for industrial park development in northern Vietnam. The project is strategically located and will benefit from the continued arrival of multinational companies in Vietnam, including those migrating from plants in China to take advantage of Vietnam’s lower costs.”

 

VNI also holds a majority stake in the Long An SEA Industrial Park and Seaport project in southern Vietnam. The fund also invests in telecommunications, transport, power, logistics and agriculture-related infrastructure.

 

Striking back to stop labour unrest

 

The Ministry of Labour, Invalids and Social Affairs (MoLISA) deputy minister Pham Minh Huan said MoLISA was sourcing comments from relevant ministries and departments for the amended Labour Code which highlights labour relations and labour dispute settlement, striving to establish increasingly professional mediator teams, reduce strikes and create a standard investment environment.

 

“In the coming months, the MoLISA will submit to the government a salary hike proposal to partly ease labourer burdens while not hindering company performance,” Huan said.

 

Besides, the MoLISA is working on a plan to back industrial zones and export processing zones workers. The plan will be finalised two months later encompassing both long-term support policies and immediate support measures.

 

According to the Ministry of Planning and Investment’s (MPI) recent survey on labourer incomes at industrial zone businesses, the current incomes average VND2 million ($97) per month, including diverse kinds of allowances.

 

The survey also indicates that 30.7 per cent of the respondents said their current wages and allowances were insufficient to cover minimal daily expenses. Up to 48.2 per cent said their current pay was too low and they had to work extra hours to seek additional incomes.

 

In fact, with current escalating living costs, labourers have to spend from 55-62 per cent of their wages on food. Low wages was reportedly the core reason behind 80 per cent of strikes in Vietnam.

 

According to Haiphong city’s Tan Nguong Shoes Company report sent to the MoLISA, the company incurred losses of $40 million from workers’ nine-day strikes in mid April 2011. The worker’s wages now stand at VND1.8 million ($87) per month after four revisions.

 

Deputy chairman of the Vietnam General Confederation of Labour Mai Duc Chinh said low wages trigged an increasing number of strikes at foreign invested businesses, particularly those active in textiles, garments and footwear production.

 

Chinh said some businesses developed a payroll of 30-35 levels, with a difference of only VND10,000 to VND20,000 between each level to minimise wage hike overheads. Some others introduced too high productivity norms, making their workers trying hard to reach the norms, let alone getting bonuses.

 

However, in the present context of spiraling inflation and lending rates, businesses and the workers needed to increase dialogues to raise mutual understanding, thus helping bring down strike number, Chinh said.

 

Retail sales growth slows due to inflation

 

The retail sales value of goods and services increased by only 0.68 per cent to VND156 trillion ($7.4 billion) during May.

 

Compared to previous months, May saw the lowest increase in sales value, according to the Domestic Market Watch Board run by the Ministry of Industry and Trade.

 

The total retail sales value during the first five months of 2011 reached VND762.7 trillion ($36.3 billion), an increase of 22.5 per cent over the same period last year. Considering inflation, the value rose by only 6.4 per cent, however.

 

The board attributed the slower pace of retail sales to high inflation, which has caused consumers to cut spending. Increased commodity prices have also caused sales volumes to fall.

 

During the first five months, commercial sector revenue, which accounted for nearly 80 per cent of the nation's total consumption revenue, rose by 23.6 per cent in comparison with the same period last year.

 

Last year, the country's total retail sales value of goods and services jumped by 24.5 per cent to VND1,561 trillion ($74.3 billion) against the previous year.

 

Modern retail chains currently account for 20 per cent of distribution in the country. This level is low compared with regional countries. However, experts have predicted this figure will grow to around 31.2 per cent by 2015.

 

Managing Partner at Athena Retail Consulting Vu The Du said that there still remained a multitude of investment opportunities in Vietnam, especially throughout its untapped rural areas.

 

"Whilst rural sales have grown by 30-40 per cent annually, retail sales in rural areas, housing 74 per cent of the country's population, still provide major investment potential," Du said.

 

The retail industry annually contributes more than 15 per cent of the country's gross domestic product (GDP) and employs more than 5.4 million workers, representing over 10 per cent of Vietnam's total workforce.