Home » Business » BUSINESS IN BRIEF 11/10

South develops support industry

The authorities of the southern province of Ba Ria-Vung Tau proposed to build a zone for logistics services and support industry in the southern area of the Cai Mep Industrial Zone.

Sai Gon Construction Corporation, the investor of the Cai Mep Industrial Zone, had not put an investment in the southern area as it stated under its five-year plan in when it got approval from the provincial authorities.

The zone for logistics services and support industries would be developed by the Ba Ria-Vung Tau Urban Construction and Development Joint Stock Company.

Quang Ngai lures investment

Industrial zones in the central province of Quang Ngai have attracted 80 projects with a total registered capital of VND5 trillion (US$238 million).

Doan Tan Hau, head of the Quang Ngai Industrial Zone Management Board, said the province had three industrial zones with 71 per cent of the three zones occupied to build factories. During of the economic crisis period from 2010 to now, the province still managed to attract four foreign investment projects with a total registered capital of $30 million.

After 15 years of developing industrial zones in the province, the IZs posted a total industrial production value at VND14.87 trillion ($708 million).

Massive Chinese steel imports cause more pressure for domestic firms  

The massive import of low-priced steel has created more difficulties for domestic steel procedures which currently face high inventory.

According to the General Department of Customs, in the first eight months of this year, Vietnam imported nearly five million tonnes of different kinds of steel, up 2% against the same period of last year. Of the sum, Chinese steel import accounted for 1.4 million tonnes.

Between January and August, the import of China’s rolled building steel reached 156,000 tonnes, up 557% over same period last year of just 35,000 tonnes.

Nguyen Manh Ha, Chairman of Tien Len Steel Group, said Chinese steel prices have fallen to the record low levels, leading to the import increase into Vietnam. Currently, rolled building steel price are at over USD490 per tonne compared to around USD600 per tonne in the local market.

Meanwhile, the Vietnam Steel Association (VSA) said by the end of September, Vietnamese total steel inventories reached 330,000 tonnes.

Nguyen Tien Nghi, Vice Chairman of the association, said the Chinese steel imports were becoming a thorny issue for the Vietnamese steel sector. Chinese steel manufacturers produce steel alloy which benefits from free import taxes among ASEAN countries. This sensible manufacturing technique has caused difficulties for Vietnamese authorities.

After being imported into Vietnam, Chinese steel is sold at prices much lower than domestic products, affecting local manufacturers. Chinese steel products are mainly sold in rural areas.

Many companies said that they imported Chinese steel to produce welding rods, but in fact, sold it for construction works. “The country only needs around 2,000 tonnes of steel alloy for welding rods, but imported figures have climbed to hundreds of thousands of tonnes,” said an official from a domestic steel producer.

Kinh Te Do Thi Newspaper cited VSA as saying that despite being aware of the issue Vietnamese authorities have not yet worked out any solution to deal with this because they have to conform to ASEAN-China free trade commitments.

Nghi said authorities should take drastic actions to control the content of imported steel content, purpose of the imports and labelling regulations to protect local producers.

Construction ministry bans export of eight minerals

The Ministry of Construction has recently issued a circular to ban export of eight minerals used to manufacture construction materials.

The minerals are limestone and other materials used for manufacturing cement; building stone from the south eastern and south western regions; freestone; salted sand; construction sand; different kinds of gravel; felspat and all kinds of clay and soil.

Meanwhile, some kinds of minerals allowed for export, including white sand, limestone used for glass, ashlar paving stones, quartzite and pyrophuyllite, must be exploited at mines which have valid licenses.

The Saigon Times cited Le Van Toi, Head of the Ministry of Construction’s Construction Materials Department as saying that the ban was necessary to ensure domestic demand. Massive exports of sand over recent years could result in a serious sand shortage.

He added that stone in the northern and central regions could be exported thanks to their abundant volume; however, firms must conform to some specific requirements. Meanwhile, the southern region faces a shortage so it should be prohibited from export.

The Ministry of Construction has worked with agencies and ministries to conduct regular or spot checks on local mineral exports to detect violations.

Any individual or organisation breaking the regulations could be subjected to fines, compensations or civil proceedings.

The ministry’s newly-issued Circuilar No.04/2012/TT-BXD will take effect from November 6.

Japan manufacturers say unable to find local suppliers

Many Japanese manufacturers at the supporting industries exhibition in the city complained that they could not find local suppliers, which explains why the local supporting industries are still underdeveloped.

Vietnamese firms’ capability of supplying products for supporting industries is now limited to simple products, according to Japanese producers at the exhibition that wrapped up last week in HCMC.

As a firm specializing in producing printers for export, Canon regularly attends exhibitions on supporting industries to seek components suppliers for its two plants in Bac Ninh Province and one in Hanoi City, aiming to increase the local contents of its products manufactured in Vietnam.

According to Okada Kinya from Canon Vietnam, the firm can find some local component suppliers every year to increase the localization rate of printers and lower the product price. However, most of high-tech components are supplied by foreign-invested enterprises in Vietnam.

Meanwhile, Vietnamese enterprises only produce simple products such as paper boxes, plastic bags or products of low technology. After over ten years doing business in Vietnam, Canon has so far increased the localization rate to 70%, with around 60% of components supplied by foreign-invested enterprises.

Similarly, Toyota Vietnam has also joined the above annual exhibition for several years to find simple auto components such as plastic and rubber products also to increase the localization rate and lower the price.

With such exhibitions, Toyota Vietnam can normally build a database of potential suppliers. However, after close inspection and evaluation, there are very few suppliers meeting Toyota’s safety, environment and quality requirements.

Besides, Toyota Vietnam’s suppliers are mainly foreign-invested firms, with only one Vietnamese firm.

Some other Japanese producers such as Suzuki, Brother and Nidec said that the quality of products supplied by Vietnamese firms was not high.

The weakness of Vietnamese suppliers, according to Japanese firms, is that they are unfamiliar with the harsh competitive environment, which has hindered the development of Vietnam’s supporting industries.

According to a survey among 4,000 Japanese enterprises in Asia and Oceania conducted by the Japan External Trade Organization (JETRO) last year, the local contents ratio of Japanese products in Vietnam was only 28.7% compared to 60% in China, 53% in Thailand, 41% in Indonesia and India, and some 40% in Bangladesh and Malaysia.

This year’s exhibition on supporting industries attracted over 100 local suppliers and Japan manufacturing firms in the auto, motorcycle and electronic fields. Among these, there were up to 53 Japanese producers wanting to find Vietnamese suppliers.

Sotaro Nishikawa from JETRO said that the expo aimed to help Vietnamese firms expand transactions and boost sales of products to Japanese customers right in the local market.

“With the expo, we also open opportunities to help Japanese producers lower the production cost and operate smoothly in Vietnam,” he said.

Rice exports forecast at 7.5 million tons

There is a possibility that this year’s rice exports will reach 7.5 million tons, a rise of 300,000 tons compared to last year, Truong Thanh Phong, chairman of the Vietnam Food Association, said.

Speaking at the conference on developing paddy and building rice brands in the Mekong Delta in Soc Trang last week, Phong said the nation as of now has signed contracts to export roughly 7.2 million tons, equivalent to the total volume the country exported last year.

“Local rice inventories now are rather large, at more than 1.7 million tons, so we are able to meet export contracts as well as local demand,” Phong asserted.

Regarding the food price development in the near future, Phong said the global situation is unpredictable due to natural disasters.

“In India, as food prices in the nation are too high, the Government is launching the sale of 10 million tons of rice and wheat in an effort to lower the prices,” Phong noted. He predicted India might stop exporting white rice as their crop’s output volume will drop by 6-7% this year compared to 2011.

If the prediction becomes true, it will create a fantastic opportunity for Vietnamese rice exporters, especially shipments of low-grade types. Moreover, Russia, ranked second in the world after the U.S. in terms of grains exports, is facing a poor harvest slipping by half from the previous crop.

“It is likely that food prices will become higher in the near future but the forecast is also not certain,” Phong told the conference.

Few int’l buyers visit city’s woodworking expo

Participants at the HCMC International Furniture and Handicrafts Fair 2012 (HCMC Expo 2012) turned their focus on local visitors, as the number of international customers to the annual event was much smaller than expected.

Tran Trung Kien, director of Tien Giang-based An Viet Company, said his company had signed a number of contracts at the event that wrapped up last Saturday, with the biggest worth US$300,000.

Although targeting foreign customers, he was willing to sell the displayed products rather than transport them back.

“Foreign visitors mainly came to have a glance and leave their name cards. Only a few asked about designs and prices, and promised to pay a visit to our factory,” said Kien.

A representative of B.C. Furniture said the company joined the fair to meet with foreign importers. However, most visitors bought individual items for home decoration, or ordered small volumes.

Meanwhile, a representative of a wood material supplying company said the event this year lacked large wood firms, which is the main target of her company. Having participated in the event for the last five years, she said the number of local visitors had been rising, contrary to international visitors.

She said international customers might have attended several fairs also held in October in China and Malaysia, or are preparing for the High Point Market to take place in the U.S. from October 13 to 18.

In this context, exhibitors switched to local customers. At the booths of many enterprises, prices were even written in Vietnamese.

Nguyen Thanh Binh, director of Nguyen Thanh Furniture Co., said that in addition to the booth the company registered before the event, he hired the empty space at the back of the convention center to display products.

Dang Quoc Hung, vice chairman of the Handicraft and Wood Industry Association of HCMC (Hawa), remarked that participation in this event was a great effort of local enterprises.

“There are two problems faced by every firm, namely creating new products and innovating production technology to boost productivity and business efficiency,” he said.

“Many enterprises are seeking ways to cut costs, including the cost of attending this fair and marketing their products, but I think they should do the opposite thing,” Hung added.

Many participants launched new products at the event to lure customers. Goods were available, but visitors were scarce and were mainly local customers. “Therefore, even enterprises specializing in exports had to serve local visitors,” said Hung.

Shape right policies for future sustainability: IMF

The future of Vietnam’s economy greatly depends on the right policies shaped in the current tough times, said Sanjay Kalra, senior resident representative of the International Monetary Fund (IMF) in Vietnam.

Speaking at a meeting with Vietnamese economists at the Central Institute for Economic Management (CIEM) over the weekend, Sanjay stated all the shortcomings of Vietnam’s economy had been identified, such as the banking system, State-owned enterprises and public investment.

He said: “We are all aware of these structural shortcomings… The important thing is what the policies of Vietnam for these problems are. Different policies will lead to different results. Then, which way would Vietnam go?”

This was Sanjay’s reply to the question of economist Le Dang Doanh as to what Vietnam should do to overcome the current economic situation.

Sanjay advised Vietnam should learn from what the Soviet Union and the Eastern Europe had done over two decades ago, when they promptly set up a system of necessary institutions for reform.

“They used to suffer output decline, but later these economies strongly rebounded thanks to reform. On Monday, they have got better and their resistance is stronger. This is attributed to the fact that they introduced and selected polices quickly and effectively in such an important time of crisis,” said Sanjay.

He suggested developing nations like Vietnam should carry out reform with a long-term vision for 20-30 years, instead of for a short term.

“After all, the growth of a nation is its own choice. As we (Vietnam) grow fast, inflation and troublesome bad debts are the prices to pay.”

In response to Vo Tri Thanh, vice president of CIEM, who asked if Vietnam had any hope in the gloomy economic outlook forecast by IMF, Sanjay expressed a concern.

“Vietnam’s ability to recover depends very much on the banking system. The severity of crisis in the banking systems worldwide is falling, while that in Vietnam is on the rise,” he stressed.

He remarked the situation of the local banking system had worsened compared to early this year. “Now, the bad debt ratio is two times higher than the year’s beginning. Tackling bad debts is the top priority.”

Although the central bank has raised the credit growth targets for several banks, they still cannot give out loans. This is why credit growth is a mere 2% as of now.

“Commercial banks have money but they cannot offer loans due to rising bad debts. As such, the problem of Vietnam’s banking system is different from the situation in Europe and Spain. These countries lack money for loans, while Vietnam does not dare to give out loans. The story of Vietnam is different to the world,” said Sanjay.

He said IMF and the World Bank are working with the central bank and the Ministry of Finance on the bad debt problem of Vietnam.

In addition, he said the policy room for developing countries like Vietnam to take up to ride out the tough times is very limited.

Sharing the same view, Nguyen Dinh Cung, vice president of CIEM, said: “It is now very difficult for Vietnam to select policies for regaining the growth momentum.”

He added: “The policies expected to help regain growth, like fiscal or monetary loosening, obviously only worsen the problems of Vietnam’s economy. (Adopting) such policies will lead to further economic recession, instead of growth.”

Cung said he was worried and very sad when looking at the outlook for recovery of the economy in the coming time, in the context of cloudy global economic situation as predicted by IMF.

Vo Tri Thanh concluded that Vietnam’s economy would remain uncertain until the end of 2015, and thereafter would grow at a lower rate than expected. He agreed with Sanjay that Vietnam needs a long-term institutional reform to overcome the current situation.

‘VN banks can be manipulated’

Regulations have not kept pace with the nation’s fast-growing banking system, State Bank of Viet Nam Governor Nguyen Van Binh said on Sunday on a Dialogue with the People programme broadcast by Viet Nam Television.

Commercial bankings were not yet fully monitored due to a lack of capacity, Binh said, opening opportunities for groups or individuals to manipulate banks.

In some banks with only one or two shareholders or a group of dominant shareholders, about 70-90 per cent of bank loans were set aside for borrowers with ties to these shareholders, forming an interest group, he said. Such borrowers often used capital ineffectively, causing losses and driving banks toward insolvency.

“The existence of such groups is the biggest obstacle to the process of restructuring the nation’s banking system as they are able to manipulate banks and have an impact on the entire system,” Binh said.

Some groups of shareholders were also co-operating with local and foreign partners to provide incorrect information to bank regulators, he added, saying that their purpose was to confuse the public and slow the process of regulatory intervention.

However, Binh affirmed, the State Bank was determined to get rid of these groups to make ailing banks and the entire system healthier.

Regarding recent scandals involving major shareholders of Asia Commercial Bank, Binh urged the public to respond cautiously to such rumours. He said they could feel secure about the overall soundness of banking management and restructuring since the State Bank and other State agencies have mapped out all possible scenarios and solutions for each of them.

Binh also said that the current difficulties facing businesses were not due to tight monetary policies, explaining that interest rates would rise and liquidity decrease if such policies were applied. As it stands, he said, the country has seen a reduction in interest rates and improved liquidity over the past year.

The central bank’s monetary policies were not tightly controlled but remained flexible, Binh said.

Market trend unclear: brokers

Sideways movements along with low liquidity over the past two weeks have made the market trend unpredictable but the downside risk on the two stock indices seems to be high, securities companies said.

Both indices staged rallies last Friday, coupled with improved liquidity. At the close, the VN-Index gained 0.95% to 388.16 points, led by GAS, VCB and MSN, which together contributed two points. The HNX-Index increased a slight 0.31% to 54.34 points.

Viet Capital Securities Co. (VCSC) noted that foreigners turned net buyers on the southern bourse for the first time since September 21, though at a modest amount of VND11 billion while they extended the week long accumulation on the northern exchange with VND8 billion.

In total last week, the VN-Index still lost 1.12% and the HNX-Index tumbled 2.04%. Average daily trading value improved by 4% week-on-week on both bourses but slumped by 49% and 41% on the southern and northern exchange respectively compared to two weeks ago. The gold price rally had clearly taken part in diverting money away from the stock market, the broker said.

“We think that the uptrend observed on Friday will continue on next Monday, but both indices may correct when reaching resistance levels of 393 points for the VN-Index and 55.8 points for the HNX-Index. Therefore, if both indices can break above these short-term resistances, investors may consider disbursing or increasing the weight of disbursed tickers in the portfolio,” VCSC said.

Besides, VCSC noticed that real estate stocks showed positive signs in last Friday’s session. These stocks may lead the next uptrend of the market after losing points significantly recently. However, investors should still wait and see in earlier sessions next week before making investment decisions.

HCMC Securities Co. (HSC) said that the market is treading water albeit with scattered buying interest in some issues as investors await new developments on likely policies to deal with the key macroeconomic issues and challenges facing them. However, the market’s mood has been calmer this week although volumes remain very low.

“We reiterate our recommendation that long-term investors and institutional investors keep buying gradually into weakness mainly due to the area of 380-378 points is treated as a strong support. Short-term investors and traders able to move in and out of the markets with ease should wait until the VN-Index approaches its primary support or closing back above resistance at 391 points,” HSC said.

First HP Premium store opens

Hewlett-Packard Vietnam (HP), in coordination with Future Vision Co., last Saturday opened the first HP Premium store in Vietnam.

The store, on the third floor of Crescent Mall in HCMC’s District 7, displays HP products including laptops, desktop computers, printers and accessories such as mouse, keyboard and USB. Customers can also use and test HP products in-house.

Customers buying HP laptops in the first week of the store’s opening will be given valuable gifts.

FV Hospital woes

Vietnam’s State President Office has stepped into the controversial cases of three patients’ deaths at FV Hospital in Ho Chi Minh City.

It has demanded the Ministry of Health (MoH) investigate and report back by October 30.

The families of Hanoi man Mai Trung Kien, Ba Ria-Vung Tau woman Nguyen Thi Ngoat and Ho Chi Minh City woman Nguyen Thi Can sent a joint complaint dated September 25 to President Truong Tan Sang, blaming FV Hospital doctors’ lack of professionalism and carelessness for the deaths.

Kien’s family said he died on late August 11, four days after undergoing surgery to remove his vermiform appendix at the hospital. An ad-hoc panel set up by the Ho Chi Minh City Department of Health later concluded that his death resulted from internal bleeding after surgery and that the hospital failed to make a timely diagnosis and treatments to stop the internal bleeding.

FV Hospital disputed the findings, claiming its evidence indicated that Kien died of a heart attack.
Meanwhile, in the second case Ngoat was brought to FV Hospital on May 29 to treat a broken left thigh bone. After FV doctors conducted a surgery the next day, Ngoat suffered from vomiting, high fever, high blood pressure and abdominal pains on June 1, her family claims. Her belly was swollen and she had difficulty breathing. She fell into a coma, then died on June 16. Her family blamed her death on the hospital’s carelessness.

Can, a patient with chronic kidney disease who used a dialysis machine, also was admitted to FV Hospital for a surgery on a broken thigh bone last year. She died later and Can’s family also blamed the hospital for the death.

VietJetAir adds new domestic route

The low-cost carrier VietJetAir on October 7 launched a new route between Ho Chi Minh City and the northern port city of Hai Phong to meet rising demand from domestic and foreign passengers.

The route will use Airbus A320, operating one flight per day.

The carrier, which joined the Vietnamese market as its fifth air carrier in late 2011, plans to expand its service network nationwide, while increasing frequency on existing routes between Hanoi – Da Nang  and between HCM City – Hanoi, Da Nang and Nha Trang.

On this occasion, VietJetAir offered a promotional programme, selling 100,000 cheap tickets within three months at www.Vietjetair.com.-

Southern regions report increased inflow of FDI

The southern localities of Dong Nai, Binh Duong and HCM City have reported highly positive signs in attracting Foreign Direct Investment (FDI) this year.

The third quarter in particular has seen an increase in the number of new projects and investments, officials from these localities say.

Bo Ngoc Thu, director of the Dong Nai Department of Planning and Investment, said the province attracted a total FDI of US$1.063 billion in the first nine months of the year, including newly-registered projects and additional capital for existing ones. This marked a year-on-year increase of 45.6 per cent, he said.

Thu said, “The figures show that the investment environment in Dong Nai has improved and trade promotion activities have proven effective.”

Most of the investors are from Japan, South Korea and Singapore. Japanese firms are investing in 17 new projects worth $510 million, accounting for 44 per cent of the total number of FDI projects and 83 per cent of newly registered capital.

The new projects are mainly located in industrial parks. Some of them will promote development of the supporting industry, for example, assembling or manufacturing machinery parts, healthcare equipment and cable and satellite TV production.

Disbursed capital in Dong Nai also increased to $850 million in the first nine months, twice as much as the same period last year, marking an increase of 6.25 per cent compared to this year’s target.

Lu Thanh Phong, deputy director of the HCM City Department of Planning and Investment, said just in the third quarter of this year, 100 FDI projects were issued licenses, an increase of 9.89 per cent compared to the same period of last year.

Newly registered capital in the third quarter reached $199.42 million, an increase of 70.6 per cent over the same period last year.

In the first nine months of 2012, the city attracted 278 FDI projects, an increase of 3.35 per cent compared to the corresponding period of last year.

Phong said the countries bringing FDI capital into HCM City were mainly Japan, Singapore and the Philippines. For instance, Singapore has 44 projects worth nearly $242 million and Japan has 65 projects with a total investment capital of nearly $90 million.

The Binh Duong Department of Planning and Investment, meanwhile, said the FDI inflow into the province this year was mainly in the services and urban development sectors with several big investments including a $1.2 billion project by the Tokyu Corporation and a $95 million project by Aeon Viet Nam.

Rice export volumes up, revenues down

Total rice exports are set to reach 7.5 million tonnes this year, an increase of 300,000 tonnes over 2011, but this year’s revenues are not as high as last year, according to figures released by the Viet Nam Food Association (VFA).

In the first nine months of the year, local firms signed contracts for shipping 7.2 million tonnes of rice, the largest ever export volume, but export value dropped by 7.9 per cent compared with the same period last year, due to a sharp fall in global rice prices.

Average export price for Vietnamese rice in the first nine months was US$443.3 per tonne, $35.7 per tonne lower than last year.

In September 2012, export rice prices stood at $440 per tonne, down year-on-year by $80 per tonne.

Truong Thanh Phong, VFA Chairman, said bumper crops in rice-producing countries such as Thailand, Viet Nam and the US, the return of India as a rice exporter, and the entry of Cambodia and Myanmar into the market forced rice prices down in early 2012.

He said these pressures on rice prices will remain during the last months of the year as supply remains abundant.

Many exporters now have large volumes of rice in stock.

Le Minh Truong, Director of Song Hau Food Co, said he has asked the VFA not to apply a minimum export price for rice so that firms can sell their stock (at lower prices).

However, Le Viet Hai, Director of the Can Tho-based Mekong Co., rejected Truong’s proposal, saying a floor price should be set to prevent rice prices from dropping to less than $430 – 450 per tonne for the 5 per cent broken rice variety.

Several industry insiders are hopeful that paddy/rice prices will stabilise in the last months of the year, and are advising firms not to sell at very low prices.

Pham Van Bay, Director of the An Giang Food Import-Export JSC, said the country’s rice market would not be “pessimistic” in the last quarter of 2012, as the volume of rice to be exported was not so high at the moment.

Nguyen Trung Kien, Deputy Chairman of VFA, said there was still demand for high-quality rice from Viet Nam among African customers.

He said several Asian importers have sought to purchase high-quality rice from Viet Nam, so there is “no worry” about consumption in the last three months of the year.

Phong said despite stiff competition from India and Pakistan, there was demand for Vietnamese high-quality rice in African markets as it was more competitive than Thai rice.

He also said that while there was still the potential for Vietnamese rice to be sold to other Asian customers, adding that India and Russia may suspend rice and wheat exports in the near future.

Therefore, Phong said, local exporters should not rush to sell rice at low prices, and should continue purchasing paddy/rice from farmers.

Da Nang calls for high-tech investment

The central city’s administration has granted an investment license for Tokyo Keiki Inc in the 1,100ha hi-tech park, the head of Tokyo-based Da Nang city’s representative office Mai The Hieu said late last week.

It’s the first investment project from a Japanese company in the central city’s park this year. Da Nang will exempt 100 per cent land rent for infrastructure, research, training and housing project.

As scheduled, Keiki will invest US$40 million to produce electro-magnetic and hydraulic equipment next year.

The city currently has 55 investment projects from Japan, worth nearly $273 million.

Southern province pulls plug on 16 sluggish projects

The southern province of Ba Ria-Vung Tau has decided to withdraw the investment licences for 16 slow-moving projects, worth a combined total of US$187 million, since the beginning of this year, according to the municipal Department of Planning and Investment.

Among them were 13 foreign-invested projects worth approximately $87 million, the department said, adding that the province was also considering revoking licences of five other projects which are behind schedule.

WB cuts Vietnam growth outlook to 5.2%

The World Bank has lowered its economic growth forecast for Vietnam to 5.2% from its earlier forecast of 5.7% given in May, citing unfavorable environments in the region and the world.

In its East Asia and Pacific Economic Data Monitor released on Monday, the global lender also cut its economic growth forecast for Vietnam in the next year at 5.7 percent compared with earlier estimate at 6.3%.

In the East Asia and Pacific Economic Data Monitor issued in October, the World Bank also forecasted that growth the of East Asia and Pacific region might slow down by a full percentage point, from 8.2% in 2011 to 7.2% this year, before recovering to 7.6% in 2013.

According to the international financial institution, exports growth for East Asia slowed to 4.5% year-on-year in the second quarter of 2012 due to impacts of external environment, easily outpaced by import growth of 5.2%, and trade as a whole now no longer contributed to the region’s growth.

With the exception of China and Vietnam, all of the other major economies in the region saw a decline in exports, a sharp change from the 15–20% export growth rates recorded in 2011.

Imports, meanwhile, slowed down for most countries as well, but less rapidly so, and trade balances and current account balances deteriorated across the region in the first half of the year compared to last year.

In the Asian Development Outlook update released on October 3, the Asian Development Bank also forecast Vietnam GDP to grow by 5.1% this year and 5.7% in 2013, down from its earlier projection.

Feeding the future

The Government should have clear policies to attract foreign investment in the livestock industry, a senior official told a conference in HCM City on October 9.

Tong Xuan Chinh, deputy director of the Livestock Production Department, said

FDI in the livestock sector remains modest because of the high risk of diseases and a lack of clear policy.

The sector had attracted only 0.77 percent of total FDI in the 2000-10 period.

The Government should tweak foreign direct investment policies towards the public-private partnership (PPP) model, said Chinh.

The Ministry of Agriculture and Rural Development has worked with multinationals to develop PPP models for five products, including tea, coffee, and vegetables, to improve quality and productivity and develop them in a sustainable manner.

There are no PPP models for livestock, forestry, and fishery processing even though it is an important mechanism for strengthening the involvement of producers in developing the sector.

There are many fields related to the livestock industry that could profitably use the model, including slaughter and processing systems, human resources, and communications systems.

Delegates suggested that the Government should maintain existing incentives like waiver and reduction of corporate and import taxes and land rentals and others, especially to projects using bio-technology. In addition, it should enable FDI firms that invested in priority sectors to get loans from banks.

Support should also be provided to foreign firms that develop sources of raw materials for animal-feed production, delegates said.

Localities and relevant agencies should work to organise more training courses to improve human resources for the industry.

Foreign investment has contributed greatly to the development of the livestock industry in recent years.

Foreign firms have an advantage over their local rivals in many important areas like technology, development of breed stock, and veterinary drugs.

The animal-feed sector is the most attractive to foreign investors in the livestock industry.

They have owned 58 animal-feed production plants out of the country’s total of 233 plants, producing 10.6 million tonnes or 60 percent of total output.

But other sectors like raising breed stock and environmental treatment have failed to attract them.

“So, on one hand, we should encourage foreign investors, on the other, we should set aside capital to invest in these sectors.”, said delegates.

Hoang Kim Giao, Director of the Livestock Production Department, said the livestock industry has gradually shifted from household-based breeding to industrial farms, improving food safety and reducing pollution.

The industry has grown at 6-7 percent in the last decade to meet the burgeoning demand for meat, eggs, and milk.

Nguyen Xuan Duong, another deputy at the department, said as part of a national strategy the industry would strive to maintain annual growth of 6-7 per cent until 2015 and 5-6 percent in 2015-20, increasing the ratio of livestock production to total agricultural output from 27 per cent now to 42 per cent by 2020.

The industry would focus more on developing poultry in future instead of pigs as in the past, he said.

The strategy encourages investment in industrial farms, slaughterhouses and meat processing factories that use advanced technologies, and diversifying products to add value and organise production following a value chain to cut costs and improve efficiency, he said.

He urged localities to draft clear zoning plans for livestock production and concrete policies so that investment could be mobilised from all sources. For this they should also have favourable land polices in the initial period, he added.

Inactive urban zoning plans provoke fury

Displeasure at foot-dragging urban development projects and unfeasible urban planning schemes heated up the question and answer session of the sixth meeting of the HCMC People’s Council last Friday.

Focusing on the topic of urban planning, most questions were raised for the Department of Planning and Architecture and the Department of Natural Resources and Environment.

Deputy Tu Minh Thien asked: “How will slow-moving projects and unviable planning schemes be resolved in the coming time?”

He gave an example: “Relocation of colleges and universities from inner-city areas is a right policy. The scheme is available, but why hasn’t it been implemented after all these years?”

Another deputy wondered: “Why don’t planning schemes map out schedules and identify potentials for implementation, making them still remain on paper after decades?”

Foot-dragging projects and unviable planning schemes directly affect the lives of citizens. A voter in Binh Chanh District made a call to the Council’s meeting, saying he is living in an area zoned for a green park project, so he is only granted a permit for building a temporary house.

He asked: “The planning scheme has lasted 12 years, so when will it be carried out? If the planning scheme went ahead one year after people had built houses, their houses would be demolished without compensation, then who would be responsible for their damages?”

Dao Anh Kiet, director of the environment department, said there are many reasons for a slow-moving project, but the main one lies in site clearance and resettlement. “In the coming time, we will review all projects, and revoke foot-dragging projects,” he said.

Meanwhile, Tran Chi Dung, director of the planning department, said unfeasible planning schemes would be adjusted.

However, deputies were not satisfied with the answers of these senior officials. When asked by the Council chairwoman Nguyen Thi Quyet Tam for comments, HCMC vice chairman Nguyen Huu Tin said the municipal government would do what can be done right away, while the jobs requiring more time will be done in a specific schedule, with an aim to protect the interests of citizens .

Regarding slow-moving projects, he said the city would form a team in charge of inspection. As for the interests of residents in the areas of delayed projects and unviable planning schemes, Tin said it is a difficult problem but all will be settled in the spirit of protecting the legitimate interests of citizens.

He admitted there is a gap between regulations and practice of site clearance and compensation. To address this issue, the city will have to petition the central authority to revise the current policies.

Vietnam attends AFMIS 2012 in Hong Kong

A Vietnamese delegation led by Deputy Minister of Finance Truong Chi Trung has attended the 9th ASEAN Finance Ministers Investor Seminar (AFMIS) in the special administrative region of Hong Kong, China.

In his speech on October 9, Trung said Vietnam is focused on maintaining a stable macroeconomic environment to overcome immediate difficulties and achieve a long-term sustainable development goal.

Since early this year, the Vietnamese Government has adopted effective policies measures to control inflation, stabilize the macroeconomy, maintain reasonable growth, renew the growth model, restructure the national economy and ensure social welfare, Trung said.

As initial results show, the national economy is back on track to restore confidence in foreign and domestic investors.

Participants agreed with ASEAN financial leaders as well as regional and global banking managers that ASEAN will become a highly competitive economic region in terms of commodity trading, investment, sustainable economic development, poverty reduction and social injustice fighting.

AFMIS is annual event of the ASEAN financial cooperation channel with the aim of building the association into an attractive destination for ASEAN and non-bloc investors.

Foreign capital offers way out of economic crisis

Experts have urged Vietnamese businesses to be proactive in seeking foreign capital and reduce their reliance on loans from domestic banks.

Le Chi Hieu, chairman and general director of the Thu Duc House Development Joint Stock Co, said that businesses should take part in individual investment funds or seek international cooperation via joint-ventures with domestic or foreign companies.

Speaking at a seminar in HCM City on October 9, Hieu said companies could also issue international convertible bonds or list their companies on foreign bourses to mobilise capital.

Organised by the International Business Knowledge Corporation in collaboration with the Sai Gon Entrepreneur newspaper and HCM City Business Association, the seminar aimed to help local companies improve business competitiveness.

According to the online source Vietnam Report (www.vietnam-report.com), 75 percent of surveyed businesses said that banks remained their chief capital-mobilisation channel.

Pham Linh, deputy general director of Orient Commercial Joint-Stock Bank, said that foreign capital sources would be a reasonable solution in the current economic climate.

He noted that development opportunities were more plentiful in Asia, including Vietnam, than on many other continents.

The capital resources of international financial organisations such as the FMO (a Dutch entrepreneurial bank), the International Finance Corporation (IFC) and the Japanese International Cooperation Agency (JICA) are focused on projects in developing countries that emphasise environmental protection and energy savings.

Vietnam and other Asian countries are destinations for such capital sources and technical assistance.

To cope with capital shortages, Linh advised businesses to be more selective in their business orders so they could fulfill them quickly and reduce loan costs.

He also urged businesses to build close linkages with associations and other companies so they could find more channels for their products.

Linh pointed out that the IFC, in collaboration with the Orient Commercial Joint-Stock Bank and BNP PARIBAS, had offered many credit preferential programmes in the import-export sector as well as so-called green, energy-saving projects.

Pham Ngoc Hung, deputy permanent chairman of the HCM City Business Association, said businesses must develop strategies appropriate to the current business climate.

“It’s the right time for businesses to restructure and focus on their own competitive advantages,” he added.

At the seminar, several experts warned that the State’s support policies were only a jumping-off point, and the key factor was the initiative taken by enterprises themselves.

To increase competitiveness, businesses must improve technology, train and retrain human resources, and build trademarks.

Luong Van Tu, former head of the Vietnamese negotiation delegation for the country’s accession to the World Trade Organisation (WTO), said domestic businesses should invest in better technology to make high-quality products that could be distinguished from their competitors.

He noted that free trade agreements (FTAs) that Vietnam has negotiated with countries would make the market more competitive for domestic businesses.

Apart from outdated technology, Vietnamese enterprises lack high-quality human resources capable of using modern technology. Management capacity is also another weakness.

Hieu said that companies could attract more talented people with preferential policies.

“Human resources are a valuable asset, and the key deciding factor in the success or failure of a business,” he added.

Hieu also noted that, in times of crisis, trademark value is important as customers tend to choose products with reputable names.

He added that investors and foreign investment funds are also focusing on reputable businesses, and would continue to do so in the post-crisis period.

(Vietnam Net)

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