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BUSINESS IN BRIEF 1-1Inefficient telecom firms to go bankrupt

The Ministry of Information and Communications will allow a number of telecom companies which face difficulties to go bankrupt or withdraw from the telecom market.

The information was confirmed by Deputy Minister of Information and Communications Le Nam Thang at a recent meeting in Hanoi.

According to Thang, the ministry will propose measures to help deal with weak telecom businesses.

Failing companies such as Dong Duong Telecom will have their business license revoked and be forced to move into other business areas, he added. The official also said that members of poorly-performing telecom firms can set up joint stock or private companies voluntarily through negotiations.

The move was aimed at creating a healthy competitive telecom market with at least three companies in line with the prime minister’s instruction, the deputy minister said, adding that some small firms like EVN Telecom had merged with Viettel, while Gtel and S-Fone were likely to leave the market.

Earlier, Pham Hong Hai, Head of the ministry’s Department of Telecommunications, said the ministry would maintain a healthy competitive market. So only those companies which were capable would survive regardless of their size.

According to Deputy Minister Le Nam Thanh, the Vietnamese telecom market was considered one of the most competitive in Southeast Asia with better telecommunication service quality and relatively cheap prices. People in different areas, including those in remote areas, also had access to telecom services.

Confectionery producers must team with foreign brands to tap market potential

Even though confectionery goods have great potential in Vietnam, local sweetmeat producers have not diversified into this arena and hence continue to face much competition from foreign manufacturers.

For this reason they must associate with foreign companies to diversify their products and acquire new technology to bring more options to consumers.

The confectionery industry is one which has strong growth and barely affected by economic changes. Figures show that since 2008, retail sales of confectionery products in US dollars in Vietnam grew by 114 percent. At the same time, Vietnam’s confectionery market has attracted more local and foreign companies thanks to the country’s large population with high demand for a variety of foods.

Recently, it is said that Nabati, a popular brand from Indonesia, planned to build a factory in Vietnam. Meanwhile, foreign confectionery producers around the world have increased exports to Vietnam via local importers.

The flood of imported sweetmeats with high quality and spectacular designs in the market calls for local confectionery producers to upgrade their technology so as to improve productivity and quality to satisfy consumer demand. Especially, with a good understanding of local consumer psychology, Vietnamese confectionery producers can research and create new flavors suitable to the palate of local consumers.

Currently, local sweetmeat producers hold 75-80 percent of market share whereas foreign companies only hold 20-25 percent.
In recent years, Vietnamese brand names, such as Kinh Do, Bibica, Hai Ha and Pham Nguyen, account for a majority of gift baskets for Tet Lunar New Year. Moreover, with globalization, Vietnamese-made sweetmeats have been selling internationally. Exports of confectionery and cereal products touched US$192 million in the first six months of this year, up 8.4 percent year-on-year. Besides in neighboring markets such as China, Cambodia and Thailand, Vietnamese-made sweetmeats have entered and won consumers in large markets like Poland, the US and Japan.

Under competitive pressure, local producers have put great efforts to increase output as well as develop new product lines to attract consumers. For instance, for this year’s Lunar New Year festive season, besides regular products, local sweetmeat producers have also developed new products. Although the economy remains in recession, local producers still increased production by 10-20 percent to serve the market during Tet and vowed not to raise prices.

According to statistics, Kinh Do increased the most output for Tet festive season, adding its supply to about 38,000 tons of sweetmeats. In order to serve a high-class market, the company presented high-quality cookie product line under Korento trade mark with materials all imported from Europe. Moreover, the company also improved designs of other products for gifts during Tet holiday season. Nguyen Xuan Luan, deputy CEO of Kinh Do Group, said that his company will promote its distribution channels to bring their products even to rural areas to serve consumers.

According to Tran Quoc Hoang, deputy CEO of Bibica, the company has prepared about five million boxes of cookies, worth VND150 billion for the coming Tet festive season.

Nguyen Chi Nguyen, general secretary of Food and Foodstuff Association of Ho Chi Minh City, said that local confectionery producers have many more advantages than foreign ones, such as understanding of taste, demand and behavior of Vietnamese consumers. This is an advantage for domestic producers to exploit market potential. However, machinery and technology of Vietnamese producers have not caught up with foreign producers yet, so in order to ease pressure, the former should associate with the latter to acquire new technology or coordinate with them to produce sweetmeats.

At present, many importers claim to bring in high-quality sweetmeats from Europe, but in fact these are produced in Asia and packed in Vietnam. If Vietnamese confectionery producers become official distributors of world famous brands, consumers will definitely benefit more.

Vietnam one of attractive destinations for tourists in 2013

Vietnam ranked second in the list of attractive destinations for foreign tourists in 2013, according to a recent survey conducted by the United States Tour Operators Association (USTOA).

The results were announced at the USTOA’s annual conference in Hawaii on December 25.

Myanmar, Vietnam, and India are three most-favoured destinations, followed by Peru, Cambodia, Brazil, China, Colombia, Costa Rica, and Ecuador.

In the USTOA’s 2012 survey, Vietnam tops India, Ecuador, and China in the list of emerging tourist attractions.

Since the beginning of this year, Vietnam has welcomed more than 6.6 million foreign visitors, up 9.6 percent over last year.

The USTOA consists of major travel agents and tourism service providers around the globe.

Most New Year holiday tours booked in advance

Viettravel has cooperated with international and domestic airlines in organizing 300 tours for travelers to book in advance.

It is expected to welcome 75,000 travelers in the first quarter of 2013, up 25 percent from a year earlier.

The number of visitors to Sapa, Hanoi, Hue, Danang, Hoi An and some others places of interest not far from Ho Chi Minh City, is growing fast.

Saigontourist has introduced more than 50 tours for those Vietnamese who want to enjoy New Year celebrations in the US, Australia, Europe, South Africa, Japan, the RoK and Taiwan.

It plans to serve 6,000 tourists during the New Year holiday (up 10 percent) and 20,000 during the Lunar New Year Festival (up 15 percent) from a year earlier.

Most out-bound tours, which will start on the second day of the Lunar New Year Festival are fully booked.

Nguyen Thanh Tra, a representative from Saigontourist, said most tour prices remain the same. Only tourists leaving Vietnam for Thailand or Singapore have to pay 5-7 percent more than before.

State bank to offer USD1.9 billion in loans for house buyers

The State Bank of Vietnam (SBV) will provide between VND20 trillion (USD952.3 million) and VND40 trillion (USD1.9 billion) for commercial banks to provide home loans at reasonable rates next 10 years.

The move was announced by SBV Governor, Nguyen Van Binh, at a recent meeting to seek  ways of easing difficulties in the real estate market. Binh added that the Government will focus on settling from VND100 trillion (USD4.76 billion) to VND150 trillion (USD7.1 billion) in bad debts in the property sector next year.

During an online meeting between the Government and localities on December 25, Deputy Prime Minister Hoang Trung Hai said, dealing with bad debts and the high inventory at many companies will be top priority of the Vietnamese Government next year.

Under Government request, localities which have high real estate inventory must take steps to minimise the use of State budget for building resettlement areas, and allocate it for housing projects for low-income families, those who work in the military and students.

According to Deputy PM Hoang Trung Hai, the Government will propose a slashing of corporate income taxes to 10%, for buying, selling and leasing homes, to the National Assembly. The VAT currently applied to apartments less than 70 square metres and sold for less than VND15 million (USD714.28) per square metre will be recommended for a reduction of 30%.

Companies will also be provided with reasonable interest rates to carry out low-income housing projects. The Government will create more favourable conditions for foreign individuals and organisations to buy houses in Vietnam.

Industrial growth slows to 4.8 percent

The nation’s Index of Industrial Production (IIP) slowed to its lowest in three years, rising just 4.8 percent in 2012, according to the General Statistics Office (GSO).

IIP growth rose by 7.3 percent last year and 9 percent in 2010.

Experts blamed the global recession which had lowered domestic purchasing power as well as falling demand from major export markets.

Manufacturing and processing industries, which make up the bulk of the country’s industrial output, edged up only 4.5 percent, equivalent to half of last year.

Despite inventories 3 percent lower than the previous year, the two industries had a stockpile index of 20.1 percent this year.

Among industrial products to record significant slowing growth were car and motorbikes (down 15 percent), paper (down 10 percent), coal (down 9.5 percent), and gas and electricity (down 8 percent).

On a brighter note, other products did manage to increase production, with sugar surging 18 percent, pharmaceuticals up 15 percent, crude oil exploitation up 10 percent, and beer up 9.5 percent.

HCM City attracts US$1.29 billion in FDI

HCM City has attracted US$1.29 billion in foreign direct investment (FDI) this year, according to the Municipal Statistics Bureau.

It licensed 401 projects capitalised at US$541 million, up 21 percent year-on-year.

Besides, 118 ongoing projects registered to increase their investment capital for an additional US$747 million, up 73 percent against 2011.

Singapore made up the largest percentage of investment capital with US$282 million (accounting for 52 percent of all FDI capital), followed by Japan and France.

Giants crush mom’n’pop retailers

Domestic retailers are unable to compete with their foreign traders for lack of financial and managerial skills.

A Thoi Bao Tai Chinh Viet Nam (Vietnam Financial Times) report cites the Association of Vietnam Retailers (AVR) as admitting that five years after becoming a member of the World Trade Organisation (WTO), Vietnam has not taken full advantage of its membership status.

AVR chairwoman Dinh Thi My Loan says foreign retailers have secured a firm foothold in the market, despite suffering losses in the initial stage of operation in Vietnam.

The main problem is that high distribution costs and selling prices have made Vietnamese retailers less competitive in the long run, she says.
Most of them are too cash-strapped to invest in infrastructure upgrade, technology renewal, human resources training.

For instance, domestic retailers have not focused on meeting consumer demand for more convenience stores, thus lagging far behind other countries like Thailand and Indonesia in the region.

Another obstacle for domestic retailers is related to the lack of support from the Vietnamese legal system, the Thoi Bao Tai Chinh Viet Nam adds.

However, it points out legal amendments are needed to protect domestic companies in line with WTO rules.

Moreover, the retail sector has no strategic plans like those developed by the government for other sectors.

Retail sales are predicted to increase by about 23 per cent per year until 2014.

With a large number of consumers going shopping at supermarkets and convenience shops, domestic retailers should pay more attention to changing the mode of operation, the report says.

It also quotes experts as saying that the Government should encourage more investment in the retail sector to help domestic corner the market, the report says.

For their part, they should closely co-operate with distributors to promote their sales and marketing.

VinaFruit aims for US$1 billion in export earnings next year

The Vietnam Fruits and Vegetables Association (VinaFruit) said it is striving to raise its export turnover to US$1 billion next year, up 30 percent from this year’s figure.

According to the association, vegetable exports in 2012 are estimated at US$770 million, more than 30 percent higher than the set target.

VinaFruit Vice President, Huynh Quang Dau, attributes the success of the fruit and vegetable sector to its efforts to build farming areas meeting Global GAP standards.

Vietnam’s key import markets are China, Japan, the US, Indonesia, Singapore, Taiwan, the Republic of Korea, Holland and even Thailand which has great potential for planting and exporting fruits and vegetables.

Ward-level units puzzled by road use fee

From January 1, 2013, road use fee for motorbikes will be collected by grassroots administrative units, but so far the ward-level authorities in HCMC have yet to receive any specific guideline from the upper level.

As per a circular on road use fee collection and management compiled by the Ministry of Finance, motorbike owners will have to pay VND50,000-150,000 per year depending on the vehicle types.

The specific fees will be set by the local people’s councils. However, at local people’s council meetings in early this month, this issue was not mentioned.

At a conference on road use fee implementation in the southern region on December 19, Deputy Minister of Transport Nguyen Hong Truong said that if local people’s councils had not decided the specific fees, the minimum fees should be temporarily applied.

In particular, motorbikes with engine capacities of below 100cc are charged VND50,000, while those of over 100cc are subject to a fee of VND100,000.

Owners of motorbikes bought before January 1, 2013 will have to make fee payments for the whole next year. Those buying motorcycles in the first half of 2013 will pay fees for the second haft, while those buying in the second half will make payments in the following year.

Vo Truong Binh, chairman of Son Ky Ward of Tan Phu District, said his ward as well as the others had not received any document regarding road use fee collection from higher authorities.

Meanwhile, Pham Thanh Kien, vice chairman of District 1, said he had not received any guideline from the HCMC Department of Transport or the municipal government. Therefore, he could not instruct the lower units to implement the scheme.

Duong Hong Thanh, deputy director of the city’s transport department, said his agency had to make report to the HCMC government on establishment of the local fund council. When the council is formed, specific guidelines will be released.

Another question is whether owners or users of motorbikes that have yet to change entitlements are to pay road use fee. At the conference on December 19, the finance ministry said that because this fee is a service use fee, it must be paid by the users.

Rice exports likely to reach 8.1 million tonnes

Vietnam’s shipment of  603,000 tonnes of rice in December will raise its total export volume this year to 8.1 billion tonnes worth at US$3.7 billion.

The Ministry of Agriculture and Rural Development (MARD) says figures show an increase of 13.9 percent in volume and 2.1 percent in value over 2011.

On average rice prices in the past 11 months fell by 10.4 percent to US$457 per tonne, compared to the same period last year.

There are wild fluctuations in the rice markets. China has become Vietnam’s largest importer with a sharp increase in volume and value (nearly 6.5 times and 5.5 times, respectively).

In the meantime, Vietnam’s rice exports to Indonesia, Singapore Senegal and the Philippines have dropped in both volume and value.

Vietnam- Uruguay trade hits a record high

The exchange of goods between Uruguay and Vietnam in 2012 has hit US$63 million, up over four times compared to five years ago.

A Memorandum of Understanding (MoU) was signed by Vietnam’s Trade Promotion Agency and Uruguay’s Investment and Export Promotion Agency in Hanoi on December 26.

Under the MoU, both sides give priority to sharing information on market trends, exchanging trade delegations, assisting businesses in trade fairs and exhibitions and training human resources.

Uruguayan Ambassador to Vietnam Carlos Irigaray said over the years, the two countries have cooperated effectively in the areas of trade, investment, agriculture, seafood aquaculture, seafood processing, telecommunications, tourism and infrastructure construction.

He expressed hope for closer cooperation in the process of international integration.

Grain output in 2012 estimated at 48.5 mln tones

Vietnam’s total output of rice and corn in 2012 is expected to reach 48.5 million tonnes, a year-on-year increase of 1.24 million tonnes, according to the Ministry of Agriculture and Rural Development (MARD).

Of the figure, rice registered over 43.7 million tonnes (up 1.26 million tonnes) and corn 4.8 million tonnes (down 0.7 percent) compared to the 2011 figures.

The ministry attributed the increase in rice output to the favourable weather conditions, and the decrease in corn output to the shrinking cultivated area in the northern provinces.

Currently, rice growers nationwide are sowing seeds for the 2012-2013 Winter-Spring crop.

Exports to France exceed US$3 billion

Two-way trade between Vietnam and France has reached US$4.35 billion in 2012, with Vietnam’s exports exceeding US$3 billion, nearly 10 times the figure of US$380 million in 2000.

According to Commercial Counsellor Nguyen Canh Cuong, Vietnam has exported mobile phone, electronic parts, furniture, household utensils, garment, footwear, seafood and coffee while importing pharmaceuticals, cosmetics, machines, energy equipment and transport vehicles.

Cuong noted that Vietnamese businesses are facing difficulties in the French market such as the local economic slowdown, severe competitions from China, India, Central and Eastern European countries, Thailand, Malaysia and Brazil, local consumers’ strict requirements and high transport costs.

He suggested they build strategies to access the French market, trends, consumer tastes, culture, and set up long-term partnership with local businesses.

Cuong also emphasised the need to hold trade promotion programmes and international fairs while strengthening ties with Vietnamese entrepreneurs in France.

Vietnamese companies should prepare to expand investment and market share in the face of risks inherent in the signing of a Free Trade Agreement (FTA), he said.

At present, France has 216 projects in Vietnam and third countries with a total capitalization of US$3 billion. Around 240 French businesses are operating in 24 provinces and cities and employing more than 24,000 Vietnamese labourers.

ACB suffers big loss in gold business

The rising gap between local and international gold prices continued to dampen foreign exchange and gold business of Asia Commercial Bank (ACB) in the fourth quarter, causing its profit to shrink sharply.

ACB has this year seen its forex and gold trading activities incur a total loss of up to VND1.7 trillion, said the bank’s CEO Do Minh Toan at the general meeting on Wednesday.

The lender’s overall after-tax profit is estimated at around VND1.2 trillion this year, slumping compared to VND3.2 trillion in 2011. Its total assets have declined 30% because some senior officers of the bank were prosecuted in August.

ACB incurred a loss of VND520 billion in the third quarter, the first unprofitable one after many years of making gains.

Speaking at the extraordinary general meeting on Wednesday, ACB general director Do Minh Toan said the central bank’s ban of gold mobilization is the cause of its falling assets and profits. Accounts receivable and other sources created during transferring from gold to dong have also declined.

As all gold mobilization activities had to stop on November 25, ACB had to buy gold in the country at high prices to repay its customers.

In addition, deposit and lending activities on the inter-bank market have scaled down this year. At the meeting, the bank’s board of directors admitted mistakes in operations that resulted in heavy losses this year.

ACB chairman Tran Hung Huy said that the bank’s exposure to Nguyen Duc Kien, a former co-founder of ACB who has been arrested for suspicion of conducting illegal business, and his related parties amounted to VND7 trillion, equivalent to nearly 7% of its loan book.

These loans are collateralized and now re-valued by Price Waterhouse Coopers for collection purpose. After Kien’s arrest, these companies have picked new leaders and are restructuring to pay debts to ACB, Huy added.

The meeting approved all four candidates nominated to the board of directors, including Tran Mong Hung, ACB’s ex-chairman, Dam Van Tuan, ACB’s deputy general director, Nguyen Thanh Long, former chairman of Eximbank and general director of Saigon Jewelry Company (SJC), and Tran Trong Kien, chairman of Thien Minh Corporation. Long and Kien are independent members.

Concerning next year’s situation, Toan said difficulties will remain and ACB will be cautious on lending activities, delay capital increase plan and focus on network expansion and customer care. The bank set a credit growth target at 15-20% and deposit growth at 30%.

Shareholders at the meeting also asked ACB leaders to explain causes of loss in gold business, solutions for this loss and possibility to recover VND720 billion deposited at another bank.

Vietnam, Laos, Thailand localities promote cooperation

Representatives from nine Vietnamese, Lao and Thai localities using the Road No. 8 and 12 have met in Vinh City, Nghe An province to review the results of cooperation.

They agreed that the central provinces of Ha Tinh, Nghe An and Quang Binh in recent years have encouraged many busineses to invest in Laos and Thailand for mutual economic benefits. Exports from Quang Binh and Nghe An have reached US$23 million and US$39.548 million respectively. They mainly include materials, consumer goods, agricultural and seafood products, rubber saplings and medicines.

All participants in the meeting pledged to promote further cooperation, especially in the fields of investment, production, services, trade, tourism, culture and sports to strengthen the traditional friendship and mutual understanding between the three nations.

An international trade fair has been held on this occasion from December 24-26 to promote tourism services on the threshold of the new year 2013.

Vietnam-South Africa trade exchange picks up

The trade exchange between Vietnam and South Africa has hit US$750 million in 2012.

Of the figure, export turnover was estimated at US$630 million, up 5 percent compared to the set target of US$600 million while imports stood at US$120 million.

South Africa is Vietnam’s largest importer in Africa of coffee, cashew nuts, pepper, rice, garment and textile, footwear and electronics products.

Vietnam’s commercial counselor to South Africa Le Kinh Thang said Vietnamese businesses can increase their market shares if they learn how to advertise their products at exhibitions and fairs.

He advised them to keep close contact with Vietnam’s trade offices in foreign countries before negotiating and signing any contracts.

Ministry proposes no ownership fee on private vehicles

The Ministry of Finance has proposed to the Government not to charge any ownership fee on private vehicles.

Accordingly, the Ministry of Transport has submitted a proposal to the Government to collect a road maintenance fee from motorized vehicle owners as collection of ownership fee on private vehicles will overlap with road maintenance fee.

Also, the Ministry of Finance proposed reducing registration fee on upto ten-seater automobiles to ten percent at time of first registration and two percent the second time round.

Dalat Hasfarm exports flowers to Russian market

On December 25, Bernhard Schenke, deputy director general of Dalat Hasfarm, said the company has exported the first two shipments of flowers to Russia, each batch containing 7,000 to 8,000 branches.

From these shipments, the company will study the Russian consumer taste as well as swiftly complete the phytosanitary procedures for   regular flower exports to the Russian market from the beginning of 2013.

According to Bernhard Schenke, flowers of Dalat Hasfarm ensure quality and meet the requirements of the Russian market.

However, he added, the difficulty remains in the difference in temperature–Russia being at present minus 20 degrees celsius–so the company has to adjust the time for cutting flowers.

Dalat Hasfarm has exported to 10 countries and territories and the export volume in 2012 was 54 million branches and 200,000 seedlings.

Seafood exports to touch US$6 billion this year

Seafood exports this year are expected to increase by about one percent over last year to touch US$6.12 billion, said a report from the Ministry of Agriculture and Rural Development.

This figure will fall short of the $6.5 billion target set for the year, said the report, citing global economic difficulties, rising input costs, and capital shortage.

According to statistics of Vietnam Association of Seafood Exporters and Producers (VASEP), shrimp exports this year faced major challenges since Japan, the US and South Korea increased testing for ethoxyquin levels in shrimp imported from Vietnam.

Therefore, seafood exports to the EU in the last quarter decreased sharply, dropping by 12 percent from the same period a year ago, while shipments to the US and Japan also declined from 1.5 to 2 percent, informed VASEP.

An official from the General Department of Seafood said that the department would enhance monitoring of seafood breeding and feeding practices next year to further enhance the quality of the country’s seafood products.

Many seafood producers have upgraded their aquatic areas to meet the higher quality standards required, he noted.

Many seafood breeders this year told reporters that they took steps to comply with the higher standards of import countries.

Vietnam Railways weighed down by huge demand of Tet tickets

Vietnam Railways Corporation is currently hard pressed to justify the commotion in hard purchase of Tet train tickets, explaining its inabilities as skyrocketing demand far exceeding supply and lack of facilities to handle the volume of people.

In a report sent to the Ministry of Transport, the corporation explained that it had stepped up control to tackle almost 100,000 login accounts on the first day of online sale of Tet tickets. However, their website crashed with hundreds of people accessing at the same time.

Explaining why the corporation does not continue selling tickets online but requires customers to buy through agencies which takes a lot of time–Nguyen Huu Tuyen, head of the sales division, said that different sales methods were necessary for a wider infrastructure, limit speculation and ensure all people have access to tickets.

Hanoi Railway Station sells tickets during peak time of the Tet season via agencies, while Saigon Railway Station only applies this method before and after peak time, to limit speculation.

The railway industry operates at maximum capacity but still fails to meet travel demands which usually skyrocket during the Tet festival season.

Tuyen said it is very difficult to deal with hard purchase of Tet tickets because the gap in supply and demand during the Tet holiday season exceeds all limits.

The railway industry is currently developing a program for the electronic sale of tickets which is expected to come into operation by 2014.

Higher minimum wage rise to burden businesses

The minimum wage increase for areas set to be in effect starting January 1 will add burdens to companies that have already been facing difficulties.

The new scheme was outlined in Decree 103/2012/ ND-CP, dated December 4, 2012 on minimum salaries for the private sector, replacing Decree 70/2011/ND-CP dated August 22, 2011.

Under the Government’s new Decree, the minimum wage will be raised to VND1.65-2.35 million (USD79.1-112.7) per month, from the current of VND1.55-2 million, depending on the areas.

Despite the rise being only half of that proposed by the Ministry of Labour, Invalids and Social Affairs, it still poses difficulties for companies struggling to find markets for their goods during an economic downturn.

One footwear company with 4,000 workers in southern Binh Duong Province calculated that it will have to spend additional VND2.1 billion (USD100,000) per month if the minimum wage rises by VND300,000 (US$14.2) per worker. They will have to spend VND25 billion (USD1.2 million) more annually.

Pham Minh Huan, Deputy Minister of Labour, Invalids and Social Affairs, said the rise of VND200,000-300,000 per month is suitable. According to Decree 103, businesses have to increase the minimum wages for workers and are not allowed to cut allowances.

Dien Quang Hiep, Director of Mifaco, a furniture manufacturing firm in Binh Duong Province, said that if enterprises do not raise the salary as regulated, workers will move to other companies. Many businesses which are unable to implement the salary increases will have to apply to pay on a volume-based system.

This compromise could be good for businesses, but detrimental to workers who still have to buy the necessities amid high inflation.

According to many companies, the Government should consider lowering VAT from 10% to 5% and slash land rental fees in half.

Debt crisis threatens taxi giant

Mai Linh Group, one of the largest taxi companies in Vietnam, may have to sell its assets to settle outstanding debts, threatening 6,000 staff with unemployment.

In recent months, 28,000 employees of Mai Linh Group have lived in fear of the group’s debts. “We only hope that the company will pay us our salaries and insurance,” Nguyen Van Nam, a taxi driver said.

Ho Huy, Chairman of Mai Linh Group admitted that the company was in difficulties and they were trying to work it out.

The Mai Linh Group currently has debts with 800 individuals and organisations worth VND500 billion (USD24 million). Due to ineffective businesses of its subsidiary companies across the country, the group has incurred debts and is unable to pay the interest on the loans.

Huy said the group had asked to borrow VND500 billion from a low interest stimulus package. “If we can’t get this support, we’ll have to sell our assets such as cabs, factories or offices and 6,000 employees may face unemployment.” he said. “Our first priority is to pay our staff’s wage. However, the staff may not receive Tet bonuses this year.”

Due to the financial problems, the company still owes social insurance contributions. The HCMC Social Insurance Agency said that by the end of November, five subsidiary companies in HCMC owed VND38.7 billion.

In October, the Mai Linh Group proposed to HCMC authorities that they would pay VND2.2 billion a month so that the debt would be repaid by 2013, but the HCMC Social Insurance Agency refused the proposal.

The company’s five subsidiaries in HCMC have paid only VND470 millions and have no solid solutions to deal with the problem.

The Social Insurance Agency in District 7, HCMC has decided to take the matter to court in order to protect the company’s employee rights. The trial will start on December 28.

Nguyen Trong Nam, official of Social Insurance Agency said if Mai Linh Group did not pay the insurance, the employees may not receive their allowances and redundancy pay.

Vietnamese fishing vessels deemed substandard

As much as 99% of fishing ships owned by fishermen in Vietnam have wooden hulls, posing high risk of accidents, one official said.

Nguyen Ngoc Oai, Director of the Vietnam’s Fisheries General Department’s Aquatic Resource Protection and Exploitation Division, said on December 25 that only a few number of fishing ships have steel or composite hulls.

According to Oai, the country had a total of around 124,500 fishing ships. Of that total, nearly 26,500 ships had an engine capacity of more than 90 CV; and 75% with less than 50 CV capacity engines. Only 300 fishing ships measured over 24 metres.

Around 23,000 ships are operating offshore but a modest number of them are equipped with modern facilities.

Only a half of the total ships were equipped with lifebuoys and hull protecting equipment. Nearly 15% of ships were equipped with long distance communication devices and from 30%-35% with location devices, he added.

In order to ensure safety, the government has approved a programme to pilot upgrading offshore wooden-hulled ships to metal in Quang Ngai Province’s Ly Son Island District.

According to the Ministry of Agriculture and Rural Development, in order to upgrade the country’s fishing fleet, it’s necessary to change ship building construction materials.

The ministry said that the traditional building of wooden ships has led to the uncontrollable deforestation in many localities, adding to climate change and serious flooding in the low land areas.

With support from the government, Vinashin Business Group (Vinashin) signed contracts with authorities in Quang Ngai to pilot the construction of 22 metal hulled fishing boats with a horsepower of from 400-80 and logistics vessels with capacity of 1,000 horsepower. The construction estimated to cost a combined VND120 billion (over USD5.7 million).

The project will benefit fishermen in Ly Son and the coastal districts of Binh Son, Tu Nghia, and Duc Pho. The first new fishing vessels are expected to enter service by the end of this year.

After the Ly Son pilot, the model will be expanded into 28 other cities and provinces nationwide, but costs will remain a concern.

A wooden fishing boat maker in Tien Giang Province’s My Tho City estimated that it currently costs from VND3.2-3.5 billion (USD153.3-167.7 million) to build a wooden-hulled fishing ships, while metal-hulled ships cost over VND4.5 billion (USD215.6 million), according to the Vinashin.

Maintenance of steel-hulled ships also costs more.

Huynh Huu Tri, Deputy Director of Tien Giang Provincial Department of Fisheries said wooden boats can continuously operate on the sea and only need maintenance once a year while metal-hulled ships need maintenance twice yearly, driving up fishing costs.

8.5 trillion VND spent on Hanoi’s new rural areas

To date, Hanoi has invested more than 8.5 trillion VND (404 million USD) to build new rural areas.

The figure was released at a conference reviewing the implementation of a construction programme in the capital city on December 26.

According to the programme’s steering board, new production models have significantly improved agricultural efficiency in rural areas. This year, agricultural, forestry and fishery production value is estimated at 199 million VND per hectare, a year-on-year increase of 5.3 percent.

Living standards for local people have also improved with per capita income being estimated at 17 million VND, 86 percent of rural inhabitants having access to clean water, and concrete roads making up 75 percent of the rural network.

However, the steering board also pointed out some of the programme’s shortcomings, including low-value and uncompetitive products.

Nguyen Cong Soai, Permanent Vice Secretary of the municipal Party Committee and head of the steering board, said that in 2013, all sectors and agencies should finalise agricultural development planning, effectively implement projects and raise the quality of managing and technical officers.

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

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