Home » Business » BUSINESS IN BRIEF 10/11

Rice, seafood exports not benefiting farmers

Rice and seafood are the two main exports of Vietnam, raking billions of US dollars a year; however, rice farmers and seafood breeders remain at a disadvantage with unstable incomes caused by fluctuating prices.

At the end of October, Vietnam was ranked the biggest rice exporter in the world. According to Vietnam Food Association, in the last ten months, rice exports of 6,484 million tons yielded US$2.9 billion in revenues.

From now until the end of December, another 1.1 million tons will be ready for export. As a result, Vietnam rice exports might reach 7.5-7.7 million tons this year.

These figures however do little to stabilize the income of rice growers, which remains relatively low and unstable–from constant fluctuation in prices. This has not helped in improving the average life of a farmer.

Huynh Van Ganh, director of the Department of Industry and Trade in Kien Giang Province, said that the procedures followed by the Vietnam Food Association for the export of rice had some serious flaws.

He said that rice exports should actually fall under the jurisdiction of the Ministry of Industry and Trade. For this the Government should set up a self-regulatory rice export association for the Mekong Delta in particular, the largest rice growing area in Vietnam.

Duong Nghia Quoc, director of the Department of Agriculture and Rural Development in Dong Thap Province, said that the Government must invest in facilities for drying and stocking of rice and come forward for purchasing rice at steady prices to ensure that farmers gain a sizeable profit.

When rice prices skyrocket in markets, the Government should permit businesses to auction stocks so as to benefit farmers. The Government should also assist cooperatives with loans to buy and stockpile rice for farmers.

Similar conditions should also be applied to the seafood industry. In the last ten months, export turnover from seafood exports touched $5 billion, cementing the country’s position among the top 10 seafood exporters in the world.

Pangasius breeders are suffering losses of VND3,000-4,000 a kilogram and several have stopped breeding fish and switched to other means of livelihood.

Since 2011, shrimp breeders have had to deal with ongoing diseases in most of their seasonal crops, resulting in unforeseeable losses of tens of billions of dong.

Phan Kim Sa, deputy director of the Department of Industry and Trade in Dong Thap Province, said that the Government should set up strict regulations to determine floor prices, which businesses must adhere to, so that any sudden decrease in prices does not affect farmers.

Kim Thanh international border crossing opens in Lao Cai

International border gate No. 2 – Kim Thanh linking the mountainous northern province of Lao Cai and China ’s Yunnan province was officially open to traffic on November 8.

As part of the Lao Cai – Hekou international border gate, the crossing at Kim Thanh serves as an important trade hub connecting the Con Minh – Lao Cai – Hanoi – Hai Phong economic corridor.

Speaking at the inauguration ceremony, Chairman of the provincial People’s Committee Nguyen Van Vinh, pledged to facilitate trade and exchange between the countries’ businesses and people, creating a gateway for cooperation, peace and friendship for local and regional socio-economic development as part of global integration.

Capital deals with population challenges

The local authorities of Ha Noi have set a target to reduce gender imbalance at birth by 2015 to minimize negative social impacts of the issue.

The city will reduce the gender ratio, especially in hot spots of gender imbalance, and strive to keep the gender ratio under 116 boys over 100 girls.

Earlier, Ha Noi had issued the Plan to implement the National Strategy on Population and Reproductive Health by 2015 to improve human resource quality and living stands for local residents.

In the next three years, Ha Noi will center on dealing with challenges on population quality in terms of physical, mental and spiritual features, ensuring appropriate birth rates as well as strictly implementing the two-child policy.

By 2015, the capital is expected to have a population of 7.3 million./.

Goldenisation and dollarisation put under control 

The prevention of dollarisation and goldenisation (or reversion-to-gold) has yielded initial outcomes in the Vietnamese market.

As of 2011, the Vietnamese economy had around USD120 billion. Experts estimated that up to 300-400 tons of gold worth of around USD 15-20 billion were not put into investment, production and business.

The public gold and foreign currency blockage amounted to 30-40% of GDP and was equivalent to the total social investment every year. The problem of goldenisation and dollarisation is unfortunate for socio-economic growth and causes negative impacts on the economy.

In Vietnam, gold and foreign currencies have been used as payment tools, leading to complications in currency policy management.

Gold prices increased by 9.1 times in the 2001-2010 period, a 3.5-fold rise against the growing CPI. High gold prices posed psychological pressure on inflation expectation.

Accordingly, the Government issued Decree 24 on the gold market management and Decree 95 on gold and foreign exchange trading.

The inflow of foreign currency to Vietnam increased relatively, including USD10-11 billion of overseas remittances; USD9 billion of FDI disbursement and USD6.5 billion to be predicted to come from international tourism, for 2012.

So far, the banking system has bought 60 tons of gold equal to USD3 billion, serving to reduce goldenisation and mobilize capital for the economy.

After ten months, even though gold prices surged by 2%, people did not rush to buy gold. The import of precious stone and jewelries decreased sharply against previous years.

The exchange rate dropped by 0.88% on average in the first ten months, showing a rare sign over the last five years. The State Bank of Vietnam bought USD10 billion in foreign reserve.

These outcomes contributed to improving liquidity and reducing pressure on inflation expectations.

However, there are some problems in the domestic and foreign currency markets including the gap between domestic and global gold prices, weak linkages between the domestic and global gold markets and the enactment of regulations on gold bar production.

Smartlink, Banknetvn card unions merge

A memorandum of understanding will be signed on Wednesday between the nation’s two biggest card unions, Smartlink Card Services Joint Stock Company (Smartlink) and Vietnam National Financial Switching Joint Stock Co. (Banknetvn), to merge the former into the latter.

According to a source from the State Bank of Vietnam (SBV), the agreement marks the first step of merging three card unions on the market into a single brand of Banknetvn. Besides Smartlink, Vina Smart Card Joint Stock Company (VNBC) is expected to merge into Banknetvn in the first half of next year.

After the merger is complete, Banknetvn will become the only card switching company on the market with the central bank holding a 25% stake.

Explaining why Banknetvn is partially held by the central bank, the representative said that SBV must play a role in the enterprise given social distinctions of the switching network and the non-cash payment market. The central bank will continue to maintain its 25% stake in the enterprise after the merger with Smartlink and VNBC.

Auditing and evaluation organizations will be invited to examine enterprises to be merged into Banknetvn following the Company Law, he added.

Banknetvn actually has taken over switching function from the two card unions since 2011. Members of VNBC have also completed direct connection with Banknetvn switching system.

The three card unions have reached agreement on adjustments, technical connection and card payment infrastructure. Large banks belonging to the three unions that account for 90% of the card market have technically connected, allowing card users to transact at almost all automated teller machines countrywide.

Besides, cardholders are also able to pay at any POS (points of sale), not only POS of one issuer like before.

The merger is part of a project establishing a national card switching center approved by the Government.

The representative also said the Banknetvn after the merger will develop following the model of China UnionPay, building an automated clearing house (ACH). Currently, banks are connecting with one another to perform retail clearing transactions such as electricity, water and insurance fee payments. ACH will gather all these retail payments into a package and help clear this package among banks.

Banknetvn will also build up a common POS network for all banks in Vietnam to reduce scattered POS development of local lenders at the moment.

Banknetvn general director Ngo Ngoc Dong in a statement published on the SBV website said that the company is expanding connection with foreign switching organizations such as UnionPay of China, UC of Russia and those belonging to the Asian Payment Network such as South Korea’s KFTC, Thailand’s ITMX and Malaysia’s MEPS. This will allows holders of debit cards issued by Vietnamese banks to make transactions overseas and vice versa.

Long An has new housing projects

Nam Long Investment Joint Stock Co. has started work on the first phase of Provincial Road 830, facilitating the development of An Thanh residential area and Waterpoint residential area in Ben Luc District.

The 36-hectare An Thanh residential area will consist of market, school, clinic and park while the 355-hectare Waterpoint will include the district’s administrative center.

Some amenities of the An Thanh project have been put into operation, and 120-square-meter land lots in the project are offered at around VND600 million per unit. Buyers can make payments in seven phases over six months.

Meanwhile, Viet Gia Phat Co. via distributor A Chau Anh Duong Real Estate Co. has launched the sale of 68 land lots in the Green Town project which is next to Provincial Road 10 in HCMC’s Binh Chanh District at VND1.8 million per square meter. Infrastructure of the project is complete and buyers will have to make payments within four months.

According to Savills Vietnam, the land lot segment in this year’s third quarter helped improve the property market in HCMC while sales in the villa and adjoining house segments on the primary market dropped slightly.

The average selling prices of villas and adjoining houses on the secondary market were still in decline. Meanwhile, the average price of land lots in seven major districts increased by 2% in the third quarter from the previous quarter.

Ministry gets tough on quality of pay TV services

Authorities are seeking ways to put pay TV services in order as operators have continuously revised up service fees whilst failing to improve the services’ quality accordingly.

Pham Hong Hai, director of the Authority of Telecommunications under the Ministry of Information and Communications, said: “The information ministry now is outlining a circular to control the quality of pay TV services and will issue it soon.”

The ministry will issue technical standards relating to the quality of pay TV services, Hai said, adding it will apply criteria to inspect the services from 2013.

As soon as the circular comes into force, those companies offering services with poor quality will be fined. Besides, the circular will tighten control on contents of pay TV services as well.

According to Tran Minh Tuan, deputy director of the National Institute of Information and Communication Strategy, his institute is currently drafting a plan to develop the nation’s broadcasting and television services by 2020.

Moreover, the draft is also prepared in a way that ensures control on fees and costs set by enterprises active in the local pay TV industry, he noted. In fact, local providers now have the right to fix pay TV service fees on their own.

Luu Vu Hai, director of the Department of Broadcasting and Electronic Information of the information industry, said there have been no regulations directly adjusting prices of pay TV services so far.

Rice exporters should have warehouses: expert

The Government should adjust Decree 109/2010/ND-CP on rice trading to encourage rice exporting firms to invest in material areas, said director Le Van Banh of the Mekong Delta Rice Research Institute.

Specifically, in addition to requiring rice firms to have at least one warehouse with a storage capacity of over 5,000 tons and milling lines of at least 10 tons per hour, Decree 109 should also require exporters to have stable rice material areas.

Currently, only plant protection drug and fertilizer firms buy rice from farmers under the large-scale rice field model in Mekong Delta provinces, while rice exporters do not, Banh said.

According to Banh, if one exporter consumes 5,000 hectares, rice exporters can consume 700,000-800,000 hectares per rice crop.

“If so, the consumption and storage of around 1.5 million hectares of winter-spring crop and 1.6 million hectares of summer-autumn will be solved,” he said.

According to many experts, Vietnam’s rice storage capacity is poor. This is because the rice supply is huge in harvest time, while rice exporters do not invest in warehouses and only store rice when they have export contracts.

Banh said that if Decree 109 requires exporters to have material areas, it will help exporters have an available rice supply, help farmers sell rice and encourage firms to invest in warehouses.

Science institute to give coffee farmers seedlings

In the 2012-2013 crop, the Western Highlands Agriculture & Forestry Science Institute (WASI) will give coffee farmers nearly 300,000 seedlings, enough for replanting some 270 hectares.

Nguyen Viet Vinh, general secretary of the Vietnam Coffee and Cocoa Association (Vicofa), said those wanting to get free seedlings should register with their local departments of agriculture and rural development and then come to WASI to receive the seedlings. Vicofa will spend VND2 billion on this coffee replanting program.

In the next two years, around 50,000-60,000 hectares of coffee will reach the age of 25 or above, so they will need replanting, said Vinh. The number of seedlings supplied by WASI will help Dak Lak, Lam Dong, Dak Nong, Gia Lai and Kon Tum provinces renew their coffee farming zones.

Vinh said the program of Vicofa is only an encouragement for coffee growers. In the long term, there should be a similar program done by the Government, he suggested.

“WASI will be the only supplier of coffee seedlings because it has conducted researches on coffee replanting and the seedlings planted by WASI have a survival rate of 90-95%,” said Vinh.

According to Vicofa, it will take about three years for replanted coffee trees to bear fruits. During this time, farmers will have to spend VND100-120 million per hectare, in which seedling and fertilizer costs make up 60%.

Vietnam, RoK and Denmark go green

Vietnam will team up with the Republic of Korea and Denmark to promote green growth – an issue that was set forth in the country’s Green Growth Strategy for 2012-2020, and to 2050.

A memorandum of understanding (MoU) on the tripartite alliance was signed in Hanoi on November 7 by Vietnamese Deputy Minister of Planning and Investment Cao Viet Sinh, Danish Ambassador John Nielsen and RoK Ambassador Ha Chan-Ho.

The agreement will enhance the exchange of information and technologies to spur green growth and reduce gas emissions.

Speaking at the signing ceremony, Sinh said the MoU will shape the way the three countries will work together in protecting the environment.-

Vietnam’s tourism to be introduced at Travex Fair

The Vietnam National Administration of Tourism (VNAT), in association with the national flag carrier Vietnam Airlines, will take part in Travex Fair 2013 in Vientiane (Laos) from January 21 to 24.

The joining in the tourism fair aims to promote the beauty of Vietnamese people and landscape as well as introduce specific tourism products to foreign friends.

The fair is part of ASEAN Tourism Forum 2013, the most significant tourism promotion activity of countries in the ASEAN region.

Currently, VNAT is inviting travel agencies to register kiosks of Vietnam’s tourism at the fair. Kiosks of Vietnamese tourism businesses will be displayed on a site of 54 square meters, introducing Vietnam’s prominent landscapes as well as cultural values.

Travex 2013 is expected to attract about 150 ASEAN officials, 800 ASEAN exhibitors, 400 International customers, 150 media agencies, and 100 tourism business in the region.

Helping businesses through a difficult time

Many businesses have asked the Government to help them with economic stimulus packages similar to the one it offered three years ago.

Over the past ten months, more than 41,000 businesses were dissolved or had to suspend production and by the end of September inventories remained high, accounting for 50 percent of total production volume in some industries like cement, steel and plastics.

Nguyen Minh Quang, General Director of the Hanoi Infrastructure Investment and Development Company, says many businesses are finding it hard to realize their feasible projects for lack of capital coupled with slow progress in site clearance. Those operating in Hanoi are confronted with bad debts and high inventory levels in the face of low purchasing power, he adds.

Others are waiting for the Government to adopt incentive policies, extend tax payment deadlines, reduce tariffs, and increase bank liquidity.

Chairman of the Vietnam Small-and-Medium-Sized Enterprises Association (VINASME), Cao Si Kiem, says it is essential to identify the obstacles to national economic development and map out appropriate measures to facilitate business operations.

He proposes drastic measures to settle bad debts, reduce inventories land develop long-term plans in minute detail.

Phuong Quoc Hien, Chairman of the National Assembly Finance and Budget Committee, says we need to have a more optimistic attitude towards the national economy so that we can get out the woods step by step. To deal with bad debts, he says it is necessary to increase the purchasing power through sales and marketing campaigns. In addition, banks should offer local businesses preferential loans.

The Government has identified nine groups of solutions to stabilize the macroeconomy, control inflation and remove obstacles to business operations. Accordingly, businesses, especially agricultural producers and exporters, will enjoy low-interest loans as funds will be set up to help them through a difficult time.

In order to reduce public spending and improve the investment climate the Government is urging ministries, agencies and local administrations to support cash-strapped businesses, especially those involved in the real estate sector.

Vietnam, UK set US$3bn trade target

Vietnam and the UK have agreed to raise two-way trade turnover to US$4 billion in 2013 with the latter’s foreign direct investment in Vietnam reaching US$3 billion.

The target was set at the sixth meeting of the Vietnam-UK Joint Economic and Trade Committee (JETCO) in London on November 8.

The two sides discussed measures to deal with trade disputes effectively, promote intellectual property rights and accelerate the implementation of Vietnam’s commitments to the World Trade Organisation (WTO).

The UK Minister of State for Foreign and Commonwealth Affairs, Hugo Swire, described Vietnam as a reputable market that has attracted a large number of foreign investors, including English businesses. He expressed hope that Vietnam will remain an attractive destination for foreigners.

Vietnam’s Deputy Minister of Industry and Trade Ho Thi Kim Thoa said the UK has helped Vietnam train banking and financial officials and reform the banking system.

She suggested that JETCO press ahead with its activities to promote bilateral economic, trade and investment cooperation.

Tokyo seminar discusses investment in Vietnam

More than 100 representatives from Japanese companies gathered in Tokyo on November 8 to attend a seminar on investment and insurance in Vietnam.

The event was co-organised by the HDI Gerling Insurance Company and the Oil and Gas Insurance Corporation PVI.

At the seminar, Vietnamese Ambassador to Japan Doan Xuan Hung said that Japan remains the top investor in Vietnam.

During the past ten months, Japanese businesses have injected around US$5 billion into Vietnam, making up half of the total foreign investment for the period.

Ambassador Hung affirmed that Vietnam has always created favourable conditions for foreign investors, especially those from Japan, to do business in the country.

A representative from international law firm Duanne Morris said that despite difficulties, Vietnam remains an attractive investment destination with a young labour force and high economic growth.

Businesses showcase wood products in HCM City

The Vietnam Furniture & Home Furnishing Fair 2012 (VIFA HOME 2012) opened in HCM City on November 8.

Timber products such as tables, desks, beds, and cupboards, along with interior decorations including lamps, curtains, pillows, and handicraft ceramics are on display across more than 300 stalls.

The event has attracted over 80 businesses representing well known brands such as Scansia, Nha Xinh, Thanh Dung, Ha Nam, Eurowindow, Mifaco, Debao, and Tavico.

According to the Ministry of Industry and Trade, wood products have become one of Vietnam’s key exports in recent years. Last year, wood exports increased by 13.8 percent on the 2010 figure.

During the past ten months, wood exports reached US$2.23 billion, up 18.3 percent against the same period last year.

The trade fair is part of activities to support local businesses in overcoming difficulties and to respond to the “Vietnamese people use Vietnamese goods” campaign.

Le Van Khoa, deputy director of HCM City’s Department of Industry and Trade, said that Vietnam’s wood products are distributed to 120 nations and territories around the world. It is also the region’s leading timber products provider, with export turnover reaching close to US$4 billion per year.

However, the local industry still has room for growth given that only 20 percent of revenue from wood products goes to Vietnamese businesses, while 80 percent goes to foreign enterprises.

Worldtech to build US$300 ml solar panel plant

The government has given the green light to a US$300 million solar panel manufacturing plant in the central province of Thua Thien-Hue.

The plant is backed by Vietnam’s WorldTech Transfer Investment in coordination with the United Arab Emirates’s Global Sphere.

Phase one of the project, located in the province’s Phong Dien Industrial Park, covers an area of 15ha with a total investment worth US$300 million.

The groundbreaking ceremony will be held in late December and the plant will take shape in May 2015.

US$24 ml to be invested in weaving, knitting plant

Thien Nam Investment and Development JSC and Sunrise Shangzhou textile company of China have inked a joint venture agreement to establish Thien Nam Sunrise Textile JSC.

The joint venture will build a factory in Bao Minh Industrial Park in northern Nam Dinh province at a cost of US$24 million, with a capacity of 1 million metres of woven fabrics and 300 tonnes of knitting fabrics a month.

Thien Nam is a leading spinning enterprise in Vietnam, owning four spinning factories with a yarn production capacity of 25,000 tonnes per year.

Over 70 percent of its products are exported to overseas markets such as Turkey, Brazil, Indonesia, the Republic of Korea, and China.

Helping businesses through a difficult time

Many businesses have asked the Government to help them with economic stimulus packages similar to the one it offered three years ago.

Over the past ten months, more than 41,000 businesses were dissolved or had to suspend production and by the end of September inventories remained high, accounting for 50 percent of total production volume in some industries like cement, steel and plastics.

Nguyen Minh Quang, General Director of the Hanoi Infrastructure Investment and Development Company, says many businesses are finding it hard to realize their feasible projects for lack of capital coupled with slow progress in site clearance. Those operating in Hanoi are confronted with bad debts and high inventory levels in the face of low purchasing power, he adds.

Others are waiting for the Government to adopt incentive policies, extend tax payment deadlines, reduce tariffs, and increase bank liquidity.

The Chairman of the Vietnam Small-and-Medium-Sized Enterprises Association (VINASME), Cao Si Kiem, says it is essential to identify the obstacles to national economic development and map out appropriate measures to facilitate business operations.

He proposes drastic measures to settle bad debts, reduce inventories and develop long-term plans in minute detail.

Phung Quoc Hien, Chairman of the National Assembly Finance and Budget Committee, says “we need to have a more optimistic attitude towards the national economy so that we can get out of the woods step by step”.

To deal with bad debts, he says it is necessary to increase the purchasing power through sales and marketing campaigns. In addition, banks should offer local businesses preferential loans.

The Government has identified nine groups of solutions to stabilize the macroeconomy, control inflation and remove obstacles to business operations. Accordingly, businesses, primarily agricultural producers and exporters, will enjoy low-interest loans as funds will be set up to help them through a difficult time.

In order to reduce public spending and improve the investment climate, the Government is urging ministries, agencies and local administrations to support cash-strapped businesses, especially those involved in the real estate sector.

(Vietnam Net)

No comments yet... Be the first to leave a reply!