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International organizations help Quang Nam develop tourism

UNESCO, the International Labor Organization (ILO) and the Food and Agriculture Organization (FAO) have just organized a workshop on sustainable tourism in Hoi An with an aim to offer higher benefits to local craft villages.

Participants in the workshop have discussed establishment of a general brand for tourism products for the community benefits, redesign and reinforcement of tourist information centers, introduction of new tourism products and the issues that need supports in the future.

QUO, a foreign company famous for branding strategy and communication, especially in the fields of tourism and hospitality services, has been invited to the workshop to share its experience.

The company has pledged to assist relevant parties in making guidelines for the branding strategy for locally-made products, aiming at the markets of the local tourism industry. A representative of QUO said a general brand for all products would highlight the features of the region and encourage tourists to buy locally-made products.

Typical craft villages in Quang Nam are Hoi An lantern village, Kim Bong wood carving village, weaving village of the ethnic minority people Co Tu, Hiep Duc bamboo-rattan village and Thanh Ha and Duy Xuyen pottery villages.

Dinh Hai, director of the Quang Nam Department of Culture, Sports and Tourism, said the workshop had a great meaning to Hoi An Town in particular and Quang Nam Province in general via a constructive and innovatory cooperation. Assistance and collaboration of the aforesaid organizations will help Quang Nam gain more benefits from tourism and help local craft villages launch their products into the market.

Road planning revised down due to capital shortage

The Ministry of Transport has adjusted down the target of building the road traffic network until 2020, focusing on expressway projects having a high transport volume and major arteries only.

According to conclusions drawn at a recent meeting of the ministry, the target of constructing 3,000 kilometers of expressways from now until 2020 is now unfeasible due to the limited budget and difficulties in mobilizing other capital sources. It is also difficult to complete around 600 kilometers in 2015 and 2,000 kilometers in 2020 as planned by the ministry.

Some projects which are going to be kicked off such as Ben Luc-Long Thanh and Danang-Quang Ngai will have their designs adjusted and unnecessary components left out to lower the construction costs.

The ministry previously approved the Ben Luc-Long Thanh expressway project with an investment of VND31.320 trillion and a length of 58.5 kilometers.

According to a report of Vietnam Expressway Corporation (VEC), during preparations for this project, the rising labor cost and building material prices have increased the project’s total investment by an additional VND10 trillion from the previous estimate.

However, to ensure the approved amount, the ministry has adjusted the designed speed and change some overpass locations. Besides, the structure of Phuoc Khanh and Binh Khanh bridges on the expressway will be changed from steels to reinforced concrete. With such adjustments, the construction cost for the Ben Luc-Long Thanh project is reduced by VND8.464 trillion.

Meanwhile, the total investment of the 149-kilometer Danang-Quang Ngai expressway project has also been cut by over VND3 trillion from VND27.968 trillion after components were adjusted.

The planning of the north-south road network also needs to be adjusted, with expressways having a high transport volume such as Trung Luong-Can Tho, Ninh Binh-Bai Vot and Danang-Quang Ngai constructed before 2020, and the rest after then.

In addition to expressway projects, the plan of upgrading national highways will be changed, with priority given to the projects of upgrading National Highway 1A to have four lanes in 2016. Some highways which will be upgraded by 2020 are 14, 18, 19, 20, 91, 50 and 51 as the target of upgrading all highways by 2020 seems unobtainable.

The Government will continue to tighten investment, inspect and allocate capital for major urgent transport projects, according Deputy Prime Minister Hoang Trung Hai in a meeting last week.

Tough to convert commercial condos into low-cost homes

It is not feasible to change commercial homes into low-cost ones at the moment if the Government doesn’t give a helping hand, local realty developers said.

At a recent dialogue with local realty companies, Minister of Construction Trinh Dinh Dung proposed property developers convert commercial homes into low-cost ones to reduce prices, increase supply for budget-conscious home buyers and arrest a build-up of unsold condos in the country.

However, several project owners are still doubtful about the solution’s feasibility, citing the current troublesome procedures along with related problems. According to enterprises in the property industry, converting housing projects may encounter technical and legal difficulties.

For instance, it is not simple to change a complete project as its infrastructure has been developed and investment capital has already been disbursed. Local developers also find it hard to do the job even if commercial home projects are exempted from land use fee like low-cost projects.

“We cannot sell low-cost homes as commercial products as the State caps the selling price and dictate who can buy,” Pham Trung Ha, director of Hoa Phat Real Estate JSC, said. This is the reason why few developers are interested in this field of business, he explained.

Meanwhile, Vu Khoa, chairman of Vietnam’s Association of Construction Contractors, said the biggest difficulty in changing commercial homes into low-cost homes is the difference between policies applicable to the two products.

For commercial homes, project owners have to apply for land allocation and do site clearance work before developing the projects, and they will have to pay land use fee as well.

As for low-cost housing schemes, the State hands enterprises cleared land and only charge them a construction fee, so changing the homes will spell trouble for them.

Another developer said the change helps companies avoid land use fee payment but they will have to face troublesome State procedures instead.

The policy mainly targets those enterprises having available land that was already planned for building commercial homes, Ha said. They can turn their condos into low-cost products in the context of the current low market liquidity.

Moreover, the policy is also appropriate with businesses keen to implement their projects in the near future, he added.

Pham Sy Liem, vice chairman of the Vietnam Construction Association, said low-cost homes are a separate segment of the housing market. He urged the Government to give incentives to suppliers and buyers to boost the segment’s development.

Doosan Vina makes desalination plants for Saudi Arabia

Korean-invested Doosan Heavy Industries Vietnam (Doosan Vina) announced that it has received an order to manufacture four 4,000-ton seawater desalination plants for Saudi Arabia.

The order came from Doosan Vina’s parent company Doosan Heavy Industries & Construction of South Korea who earlier had announced a US$1 billion order from the state-run Saline Water Conversion Corporation of Saudi Arabia.

The complete Saudi Arabian desalination order is for six units, four of which will be built at Doosan Vina plant in Dung Quat complex in Quang Ngai Province and two will be built in Korea.

The four high tech multi-stage flash desalination plants will each weigh approximately 4,000 tons and are of the size of a football pitch. Once operational they will each produce an estimated 92 million liters of water per day by converting salty seawater into fresh potable water that is safe and ready for human consumption.

The massive “plug-and-play” units will be completely fabricated in Vietnam and shipped in one piece to the installation site where they can be connected and operational in short order.

When these four desalination plants are completed it will bring the total number of Vietnam-made desalination plants working around the globe to eight, helping to quench a thirsty world’s need for water, producing over 734 million liters of water per day.

The company said that it just shipped the final 972 tons of boiler components to a 1,370 MW thermal power plant in India. All the design, fabrication and assembly of the two 685 MW boiler units were done by the Boiler Division of Doosan Heavy Industries Vietnam bearing the “Made in Vietnam” label.

Increased credit targets not easy to obtain

While they were still determined to achieve higher credit targets approved by the central bank in September, several banks now admit it is hard to obtain such targets as capital absorptive capability of businesses is low.

Dang Quang Tien, deputy general director of Military Bank (MB), told the Daily that reaching the new target was a challenge for MB. As of end-October, MB’s credits had grown 17% against the end of last year, meeting the old target, but still below the new target of 25%.

In fact, MB has approved a lot of applications for loans, but capital absorptive capability of businesses is limited.

Loan applications of many companies have been granted, but they did not come to the bank to take out loans. In addition, some applications were initially considered as qualified, but at the time of loan disbursement, borrowers no longer satisfied the requirements.

MB is urgently looking for new corporate borrowers. The fact that many banks hesitate to give loans to new borrowers is a chance for MB, said Tien, explaining that among those in need for bank loans, there will be good businesses.

Nevertheless, appraisal of collateral will be done carefully to avoid risks, he said.

Meanwhile, credit growth at HDBank is some 20% in the first ten months, versus the new credit target of 30%. Le Thanh Trung, deputy general director of the bank, said his bank would strive to meet the new target, though knowing that it is not easy.

He explained the demand for loans among enterprises was low given the huge volume of inventories. In addition, lending rates are still high, making lending for production and business potentially risky.

Therefore, enterprises are hesitant to take out loans at present. “During the final months, the demand for loans to make Tet goods often surge compared to other months. However, the situation this year is quite different as the demand of corporate clients is not as high as previous years, though lending rates are going down,” said Trung.

Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, said banks could hardly obtain the increased credit targets.

He forecast credit growth of HCMC in the whole year would be at 5.4%, failing to meet the revised target of 8-10%. This figure is exclusive of bonds because government bonds are mainly paid by the budget and the volume of corporate bonds issued is negligible, he explained.

HCMC is still promoting connection programs between banks and businesses. On Tuesday, Sacombank will sign a loan contract with price stabilizers and small traders worth some VND1 trillion in preparation for the Tet season.

In 2013, both banks and enterprises will face greater problems as the macro-economy does not improve much. Therefore, credit growth in 2013 will not be an easy target, said Minh.

Technology transaction floors quiet

Many technology transaction floors in the country are operating perfunctorily and have to shift business to acting as sales agents for foreign manufacturers.

Luong Tu Son, manager of the HCMC Technology Transactions Floor, said since the establishment in March this year, his floor has performed only four technology transfer projects, with only two having been successfully transferred to enterprises as buyers.

“We are offering free services for customers, including evaluation and technology assessment services as well as free brokerage, but activities at the floor are scant due to economic difficulties,” he told the Daily.

In the same boat is Hai Phong Technology and Equipment Transaction Floor (Hatex), which has seen very few transactions since the middle of last year as enterprises have sought to cut costs.

The number of contracts signed via the floor since the year’s beginning is 212 with the total value of over VND300 billion, but 12 major contracts have been delayed due to capital shortage on the part of buyers, said Nguyen Dinh Vinh, director of the floor.

Vinh said his floor’s total revenue this year had tumbled by 30% year-on-year in the year’s first three quarters to only VND1.2 billion.

He added that local technology products still fail to meet buyers’ requirements, prompting them to import products from other countries.

New challenges for Long Xuyen Quadrangle

Long Xuyen Quadrangle, (LXQ) with many economic achievements in the past 20 years, will face new challenges in its next stage of development, especially the impact of climate change, heard a workshop last week.

Nguyen Minh Nhi, former chairman of An Giang’s government, said climate change would be a great challenge for the development of LXQ and even the Mekong Delta in the future.

“To cope with climate change, we have to conduct studies and take action immediately,” said Nhi at the workshop “Twenty years of socio-economic development in Long Xuyen Quadrangle”.

Many experts at the workshop suggested evaluation of the impact of natural conditions on LXQ in particular and the Mekong Delta in general.

“The autumn-winter rice crop in the Mekong Delta is necessary, but its economic efficiency and effects on relevant issues should be taken into account. We should not look at the good side of the matter only, but should have an overview,” said Professor Nguyen Ngoc Tran, director of the Mekong Delta Development Research Institute.

He added that although agriculture had developed well, farmers were still struggling with rising input costs and unstable outlets, constantly falling into the good crop-poor price situation.

LXQ covers an area of more than 470,000 hectares in An Giang, Kien Giang and Can Tho. Over 20 years ago, the area suffered salinity and acidity intrusion, so agricultural production was underdeveloped.

However, since 1988, the socio-economic situation of the area has been changing significantly. The area affected with salinity and acidity was narrowed down and thus the major agricultural zone of the Mekong Delta and of the nation was formed

“Prior to 1988, people in Long Xuyen Quadrangle were very poor; the annual rice output was only some 600,000 tons. However, by 2010, people’s lives had been improved; rice output had surged to 4.28 million tons,” said Le Minh Tung, chairman of the An Giang Union of Science and Technology Associations.

In addition to rice, seafood has become a competitive advantage of Long Xuyen Quadrangle.

Before 1988, the seafood output of LXQ accounted for less than 6% of the total seafood and food export volume of the region. As of 2011, the figure had risen to 11-12%, said Tung.

“Seafood volume has been growing strongly over the years, showing that seafood is an advantage of Long Xuyen Quadrangle, contributing to agricultural profile shift, improving living conditions of local people,” said Nguyen Minh Nhi.

Seven SOEs dissolve, go bust in city

There were 108 companies with 100% State-owned holdings under the HCMC authorities as of the middle of this month, with seven enterprises currently doing procedures for dissolving and going bankrupt.

The information was given in a report on business situation of local State-owned enterprises (SOEs) provided by the municipal Department of Finance on Monday. There are three bankrupt firms, namely Saigon Traffic Construction Co., Industrial Installment Co. and Lam Ha General Joint Venture Co.

Others firms going to be disbanded include Tedco Technology Development Co., Go Vap District General Foodstuff Processing National Co., Nha Be Forestry and Agro-products Exploitation and Processing Export Co. and Lang Re Plantation.

Besides, four other State-owned enterprises are to be sold to other investors, including Industrial Civil Construction Co., Construction No.2 Co., Thanh Danh Decorative Brick Co. and District 3 Export-Import Trading & Production Co.

Regarding the remaining SOEs, the department said these firms’ activities are encountering many difficulties given low demand and high inventories, with their sales tumbling nearly 25% against last year.

For example, Saigon Real Estate Corporation only achieved 94% of this year’s sales target as its products could not find buyers.

Even worse, Hung Vuong Food Processing Export Co. only obtained 5.67% of the 2012 sales plan since the firm had only been active until the end of the first quarter of 2012 and has stopped major business and production areas since April. Its revenues have mainly come from leasing out warehouses, and thus incurring a loss of about VND2.4 billion.

In addition, three other SOEs have only realized less than half of the year’s plan in sales, comprising Hi-tech Area Development One Member Ltd. Co. with 46.13%, District 11 Public Services One Member Ltd. Co. with 45.93% and District 12 Public Services One Member Ltd. Co. with 37.5%.

Mong Duong thermo plant uses locally-made boilers

The Mong Duong II thermoelectric power plant, located in the central province of Quang Ngai, will be the first of its kind using made-in-Vietnam coal-fired boilers in power generation.

The boilers, which are considered as the heart of a thermal power plant, were designed and manufactured by the RoK-invested Doosan Heavy Industries Co. Ltd, Doosan Vina.

The Vietnamese Government is concentrating on developing the boiler manufacturing industry to gradually end the country’s dependence on imports when building thermal power plants. It also aims to turn Vietnam into a hi-tech boiler producer and exporter in the world.

According to Dale Gerstenslagr, Communications Director of Doosan Vina, the Engineering-Procurement-Construction (EPC) contractor of the project, 25 percent of the plant’s workload have completed.

The first turbine of the 1.3 billion USD plant is expected to start generating electricity in December 2014 and the second one, June 2015.

Mong Duong II will add 1,200 MW of electricity to the national grid.

The project is implemented under a Business-Operate-Transfer (BOT) agreement signed between Doosan Vina and US-based AES-VCM Group with Vietnam in April 2010.

Quang Ninh looks to realise potential for sea ports

The northeastern province of Quang Ninh has a 250-km long coastline and many islands, which hold great potential for developing deepwater ports.

The northeastern province has built a port network from Mong Cai city to Yen Hung district. Prominent among those is the Hon Gai port – a national port complex comprising the Cai Lan container port and depot and satellite specially purposed wharves.

Quang Ninh’s port network is assessed to be at an advantage compared to others thanks to their location in deep water areas and logical development planning with synchronous infrastructure and improved logistics services.

The province has just put into operation docks No. 2, 3 and 4 at the Cai Lan port. The docks, costing 155 million USD to build, have storing area of 14 hectares and are equipped with modern cranes with a combined capacity of handling 30 containers an hour.

Taking advantage of the favourable conditions, the Ha Long Shipbuilding Company has applied advanced technologies in building large tonnage ships for foreign customers, for example 1,016-1,730 TEU container ships or a 53,000 tonne ship for the UK . The company has handed over nine 53,000- tonne ships to overseas customers.

Additionally, several ship maintenance factories and a support industrial complex for the shipbuilding sector have also got investment for construction. The Rung Ferry Shipbuilding Company has invested 4.5 trillion VND (214 million USD) to build three shipbuilding and engine manufacturing factories. The projects have affirmed the advantage and breakthrough capacity of the Quang Ninh shipbuilding industry amid the trend of globalisation.

To facilitate the development of coastal economic and industrial zones, Quang Ninh has given priority to building essential infrastructure.

At the Van Don economic zone, apart from building 22 technical infrastructure projects with a combined investment of 4.59 trillion VND, Quang Ninh is calling for investment in other key projects such as Van Don airport, Van Tien bridge, the road system, entertainment facilities and resorts, as well as seafood farming and exploitation projects.

The Van Don economic zone has to date attracted 79 projects with a total registered capital of 9.8 trillion VND (466 million USD).

In addition, Quang Ninh has established four concentrated industrial zones with a total area of 922 ha and eight district-level industrial clusters covering 215 hectares, of which three have leased 80 percent of their land.

According to experts, the establishment of coastal economic and industrial zones give Quang Ninh a competitive advantage in the current trend of looking to the sea.

Industrial inventory levels decline

The Index of Industrial Production (IIP) increased by 4.8% in November, showing signs of decreasing industrial inventory levels, according to the General Statistics Office (GSO).

November’s IIP saw a year-on-year increase of 6.7%.

Noticeably, industries enjoying lower inventory levels include building materials (up 9.3%); garments and textiles (down 2.2%); footwear (down 3.8%) and sugar production (down 48.2%).

In the first 11 months, IPP went up 4.6% against the same period last year. Mineral exploitation expanded 4%; industrial processing and manufacturing 3.9%; electricity distribution and fuel 12.4%; water supply, sewage treatment 8.1%.

As of November 1, 2012, the processing and manufacturing industry had an inventory level of 20.9% following unexpected surge in high-class mobile producers.

Mr. Nguyen Thanh Hoa, Deputy Director of the Planning Department under the Ministry of Industry and Trade said that it is normal that some industries have high inventory levels as they are storing up goods for the upcoming Lunar New Year Festival.

Industry urged to conserve electricity

The Ministry of Industry and Trade yesterday officially launched a campaign to reduce energy consumption by industrial sectors and State agencies.

The campaign, which will run until 2015, aimed to cut national energy consumption by 5-8 per cent, said the organiser (MoIT).

With technical support from the Embassy of Denmark in Viet Nam and International Finance Corporation, the campaign will focus on raising awareness and supporting key energy consumers in making improvements.

“MoIT considers the campaign to be one of the focuses of the National Programme on Energy Efficiency, as it is necessary to fulfill Viet Nam’s goal of building a green economy,” said Tran Tuan Anh, deputy minister of MoIT.

Danish Ambassador John Nielsen added: “I believe a concerted effort between State agencies and the business sector can improve energy efficiency, bring higher revenues for companies and contribute to more sustainable economic growth in Viet Nam as well as the global fight against climate change.”

Within the campaign’s framework, a variety of business-oriented communication activities will be carried out to raise companies’ awareness of energy efficiency benefits such as reductions in production costs, enhanced competitiveness and improvements in prestige and image.

Participating companies will be provided with technical assistance on energy audits and access to various financial resources, both direct government funding and funding from local financial institutions which have energy efficiency financing programmes.

“More and more companies are now realising that energy efficiency and cleaner production bring them not only direct economic benefits, but also help reduce their environmental footprint and enhance their reputation in the market,” said Simon Andrews, IFC regional manager for Viet Nam, Cambodia, Laos and Thailand.

Energy usage contributes up to 35 per cent of total greenhouse gas emissions in Viet Nam and the country has committed to reduce emissions, the workshop on Nationally Appropriate Mitigation Action (NAMA) heard on the same day.

NAMA contains a set of policies and actions that countries of ASEAN+3 (10 members of the Association of Southeast Asian Nations plus China, Japan and South Korea) have undertaken as part of a commitment to reduce greenhouse-gas emissions.

The Government has approved a target programme in the second phase of 2012-15 with a fund from the State Budget of VND350 billion (US$16.7 million).

Under the programme, four most energy-hungry industries – cement, steel, paper and chemical production – have been ordered to use energy-efficient equipment.

All public high-rise buildings built in 2012 also have to obey energy-efficiency regulations.

In addition, Viet Nam has two pilot mitigation projects under ASEAN+3. The first project, worth $1.97 million, aims to reduce greenhouse gas emissions in cement production. The second project, worth $67,000, has targeted the waste management.

Red river farm produce on display

Farm products and agricultural materials are being showcased at the 2012 Red River Agricultural Exhibition and Trade Fair, which opened in Ninh Binh province on November 29.

On display at 200 stalls are agro-forestry and aquatic products, as well as materials and tools for agricultural production.

The five-day event aims to boost investment in the agricultural sector and create a good opportunity for local businesses to introduce their products and seek trade partners. It is regarded as a bridge between businesses and consumers.

Deputy Minister of Agricultural and Rural Development Vu Van Tam said that the exhibition and trade fair is part of activities to promote trade and investment in the Red River delta region.

The ongoing fair, which will last until December 3, has attracted thousands of visitors across the country.

Vietnam, Angola boost agricultural cooperation

Vietnam and Angola have agreed to boost bilateral cooperation in the growing of rubber, coffee and wet rice.

During the Vietnamese delegation recent working visit to Angola, State Minister of Angola Jode Amaru Tati highly valued Vietnam’s practical experience in developing the agricultural sector and expressed hope that the visit will contribute to further tightening ties of the friendship, solidarity and cooperation between the two countries.

The Vietnamese delegation conducted a survey into wet rice cultivation in Bie and Luanda provinces and exchanged experiences with local official and people in building transport and irrigation systems as well as models of rice cultivation.

Both sides pledged to complete and submit a feasible study into wet rice cultivation in Luanda to the two governments as soon as possible.

Challenges to Vietnam-EU FTA negotiations

The Free Trade Agreement (FTA) between Vietnam and the European Union (EU) will likely open up new opportunities but also pose challenges to the national economy.

Many delegates to the seminar “Challenges 2013 – The road ahead for Vietnam-EU FTA” held in Hanoi on November 29 raised their concerns over public procurement and the protection of intellectual property rights when Vietnam and EU are moving toward the signing of FTA.

Jean Jacques Bouflet, Minister Counsellor and head of the Trade and Economic Section of the EU delegation to Vietnam, highlighted great prospects for stronger economic and trade cooperation between the EU and Vietnam, and expressed his belief that the Vietnam-EU FTA will open a sustainable entrance for both sides’ products and services. This will help Vietnam remove tariff barriers and help the country integrate into the global supply chain.

However, Luong Hoang Thai, head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MOIT) was worried about Vietnam’s lack of experience in negotiating newly-emerged issues, including public procurement and the protection of intellectual property rights. In addition, he said, Vietnam and EU have different cultural and trade concepts that may cause difficulties in their negotiations.

He pointed out that when exporting meat, Vietnam only focuses on food hygiene and safety, while the EU pays due attention to consumers’ health, animal rights, and environmental protection.

Nevertheless, Jean Jacques Bouflet said Vietnam should not worry about these technical issues, adding that EU negotiators will conduct separate negotiations on specific technical issues. The core matter is how to ensure sustainable growth and expansion of markets for the benefit of both sides, he noted.

Some delegates argued that Vietnam-EU FTA negotiations are taking place at an inconvenient when the two sides are confronted with numerous difficulties caused by the global economic downturn. Therefore, it requires them to make strong commitments, they said.

Against the odds, they all agreed that the singing of Vietnam-EU FTA will provide a fresh impetus for both parties to develop along a right track.

Pepper exports rise sharply

Vietnam shipped more than 100,000 tonnes of pepper abroad for US$750 million in the past eleven months, up 6.1 percent compared to the same period last year, according to the Ministry of Industry and Trade.

In November alone, Vietnam’s pepper export volume is estimated to reach 7,000 tonnes, earning US$53 million.

More than 80 countries and territories have imported Vietnamese pepper.

The US is the largest importer of Vietnamese pepper, followed by Germany, and the United Arab Emirates.

The average export price in October was US$6.798 per ton, up 17.1 percent from a year earlier.

Industry remains sluggish, inventories high

Industrial production continued to see low growth this month with the nation’s Index of Industrial production (IIP) increasing just 4.8 percent over October, according to the General Statistics Office (GSO).

The index for the past 11 months has risen by just 4.6 percent over the same period last year.

The rate of increase in the IIP this year has been much lower than in comparable periods in 2011 and 2010, said GSO expert Vu Quang Ha, noting that the IIP rose 6.9 percent last year and 9 percent in 2010.

The low industrial growth was due to the impact of the global recession which has lowered domestic purchasing power as well as demand in major export markets, such as the US, EU and Japan.

In specific industries, electrical generation and distribution grew 12.4 percent, water supply and treatment, 8.1 percent, but manufacturing and processing industries, which accounting for over 70 percent of all industrial production value, rose only 3.9 percent. The mining industry achieved a similarly anaemic four-percent growth.

For a number of leading export-driven sectors, it was even worse. The garment industry saw rapid growth of 3.4 percent, while the wood product processing industry grew 1.9 percent. Some sectors even saw negative growth, including footwear (down 0.6 percent), cement (down 6.2 percent), paper (down 9 percent) and machinery (down 14 percent).

The low figures reflected the stagnation in many of these industries, which have seen many production facilities closed and many enterprises liquidated.

Among the few bright spots, the manufacturing of telecommunications devices saw rapid growth of 50.4 percent, while electronics grew 18.3 percent, pharmaceuticals, 15.3 percent, and crude oil production, 11 percent.

The consumption index of products of manufacturing and processing industries lagged behind the production index. October saw the consumption index at a 10-month low of only 3.3 percent.

Due to weak consumption, inventories continued high, with no improvement since August. As of November 1, the inventory index was 20.9 percent. Telecommunications devices, fertiliser, motorbikes, tobacco, cement, paper and fisheries were among those with high inventories.

Workshop discusses Vietnam-EU prospects

A workshop was held in Hanoi on November 29 to help businesses keep abreast of Vietnam’s economic prospects in 2013 and future challenges when a free trade agreement between Vietnam and the EU is signed.

Doan Duy Khuong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), noted that the EU is one of Vietnam’s largest trade partners, making up more than 80 percent of the country’s exports.

Despite the crippling debt crisis in Europe, he said, two-way trade between Vietnam and the EU in 2011 increased 36 percent over 2010, hitting US$24 billion.

Vietnam is implementing its 2011-2020 socio-economic development strategy and emerging as a dynamic economy in Southeast Asia.

It signed the partnership and cooperation agreement (PCA) with the EU in June 2012 and kick-started negotiations for a free trade agreement with the European bloc at the same time.

The PCA will help remove technical trade barriers, offering the business communities of both sides opportunities to enhance their competitiveness in international economic integration, Khuong concluded.

Luong Hoang Thai, head of the Multilateral Trade Policy Department under the Ministry of Industry and Trade, said the PCA will create a favourable environment for Vietnam in trade exchange with the European bloc when tariffs on farm products, food, footwear and garments imported from Vietnam are slashed to zero.

The agreement will open up prospects for Vietnam to enter this lucrative market in the long term and attract more investment from this bloc, he said.

Jean Jacques Bouflet, Minister Councillor of the European Commission delegation to Vietnam, pointed to the fact that the EU and Vietnam have great potential for stronger economic and trade ties as the EU is a large market of approximately 500 million consumers.

The EU is the fourth largest foreign direct investor in Vietnam, committing US$1.77 billion in 2011. It is also a key provider of official development assistance (ODA) for Vietnam.

He expressed his belief that the PCA will bring substantial benefits to Vietnam, helping improve its economy in the global production chain.

Selection of FDI capital – a thorny problem

Vice President of the Vietnam Association of Foreign-Invested Enterprises, Nguyen Van Toan, said what remains an open question is why more investment has not come from advanced nations such the US and EU member states.

As he put it the problem does not totally lie in the attraction of FDI inflows. In general, Vietnam is still an attractive destination for foreign investors who wish to make quick profits from the use of a cheap labour force and preferential treatment procedures, according to which they are not committed to technology transfer to help Vietnam get involved in global supply chains.

A recent study from the Vietnam Chamber of Commerce and Industry noted that enterprises funded by FDI in Vietnam are operating on a relatively small scale (only five percent of them in the modern technology sector which require high skills).

Other figures released by the Foreign Investment Agency under the Ministry of Planning and Investment showed the FDI sector made up around 20 percent of GDP, equivalent to roughly 26 percent of total investment and contributing about 10 percent to the State budget.

The Prime Minister recently approved a project on improving the efficiency of managing FDI capital. Based on targets set by the State the project covers three key areas- optimisation of legal frameworks, synchronisation of data bases with a new system of reporting statistics of FDI inflows and reinforcement of inspections and coordination among relevant agencies. The main focus is on how to manage FDI inflows effectively through strict inspection, examination and supervision by all relevant agencies.

Under the project, the Ministry of Planning and Investment will co-ordinate with other ministries to perfect the legal framework for inspection and supervision of FDI inflows into Vietnam to ensure that major projects can get off the ground on schedule.

However, selecting suitable specific FDI projects is no easy task for local authorities.

At a recent conference on attracting foreign investment, Minister of Planning and Investment Bui Quang Vinh said they are weak at analyzing the pros and cons of FDI inflows despite the Foreign Investment Agency’s regular release of latest information in this connection.

25 years ago, when Vietnam began to open its doors to foreign investors, it faced a seriously shortage of capital but at the time, there was still standardised criteria in place to select FDI projects. Now not a few localities are just after achievement in the competitive capacity index and care little about the quality of FDI projects.

In fact, the FDI sector has contributed considerably to the country’s socio-economic development in recent years. From 2001 to 2011, through various types of fees and taxes, it contributed more than US$15.5 billion to the state budget and made up 20 percent of total GDP. From 2000 to 2010, it generated more than 1 million jobs. But the sector has also left behind some negative effects on the environment.

Companies like Vedan, Tung Kuang and PangRim Neotex, for instance, have been caught discharging waste into the surrounding areas as FDI-funded businesses imported obsolete production facilities, turning Vietnam into a dumping ground for unwanted equipment from foreign countries.

Minister Vinh affirmed that only projects on hi-tech and support industries receive preferential treatment.

Vietnam’s increasing role in financial dialogues

The East Asian Financial Stability Conference closed in Hanoi on November 28.

After its plenary session, the National Financial Supervisory Council held a press briefing to announce the adoption of a joint statement, including a number of recommendations from the host country.

The Council’s Chairman Vu Viet Ngoan said that this was the first time Vietnam hosted such a financial conference with the participation of more than 400 delegates who focused their discussions on financial reform.

Ngoan said that Vietnam learned a lot of experience from other others, such as Japan, the Republic of Korea (RoK), Thailand, and EU in dealing with the financial crisis and settling bad debts. Accordingly, the country will focus on building a financial safety mechanism and improving macro policies based on sound market forecast and analysis, he said.

He also stressed the need to settle bad debts as soon as possible.

Rubber exports to South Asia rise sharply

Vietnam earned US$145 million from rubber exports to the South Asian market in the first three quarters of this year, representing a year-on-year increase of 154 percent.

The Ministry of Industry and Trade (MoIT) said the sharp rise in export earnings from South Asia has helped Vietnam reduce its trade deficit.

Key export items included computers and electronic spare parts, up 66 percent to US$105 million, machinery and components, up 44 percent to US$181 million, and mobile phones, up 12 percent to US$302 million.

In particular, clinker and rubber rose 172 percent and 154 percent to US$175 million and US$145 million, respectively.

According to the General Department of Vietnam Customs, Vietnam’s export earnings from the South Asian market by September 2012 hit US$1.69 billion, or 6.6 percent higher than a year earlier. Key importers were India (US$1.23 billion) and Sri Lanka (US$73.31 million).

Trade surplus hits US$20 million

Vietnam’s trade surplus in the past 11 months of this year is estimated at US$20 million, according to the General Statistics Office.

Its total exports showed an increase of 18.4 percent over from a year earlier to US$104 billion and its imports also rose by 6.8 percent to nearly US$104 billion.

In November, the country exported a large volume of goods worth US$10.2 and its two key items were namely garments and textiles, telephones and accessories.

Vietnam-Russia trade turnover to hit record high in 2012

Two-way trade between Vietnam and Russia is estimated to reach US$3.7 billion this year, up 15 times higher than a decade ago.

A joint conference in HCM City on November 28 heard that bilateral trade fetched US$1.77 billion in the first nine months of this year, of which over US$1.13 billion was generated from Vietnamese exports.

Major export items to Russia include telephones, garment and textiles, agro-forestry and seafood products while key import items are oil and gas, steel and iron, machinery and other equipment.

To the end of September this year, Russia has poured approximately US$919 million to 78 projects, ranking 23rd among foreign investors in Vietnam.

Russian investment in Vietnam has increased rapidly in recent years, focusing on fields such as mining, industrial processing and manufacturing, banking and telecommunications.

Nguyen Tan Thanh, deputy general secretary of the Vietnam Chamber of Commerce and Industry (VCCI), said both nations should promote further cooperation in areas such as energy, science, technology, education and training, and tourism. In addition, it is necessary to strengthen the diversification of cooperative channels to realise their goal to bring two-way trade turnover to US$7 billion by 2015.

Vietnam will also prioritise negotiations for a free trade area with the Customs Alliance (Russia-Kazakhstan-Belarus) in early 2013.

Kardo Sysoev Alexander, representative of the Russian trade office in Vietnam, said that Russian businesses are keen to invest in Vietnam in fields such as oil and gas exploration, banking, and light industry.

It is expected that an FTA between Vietnam and the Customs Alliance will lead to preferential conditions in investment and trade activities, especially in the customs sector, Alexander said.

However, he suggested businesses should improve their competitive capacity in terms of price and quality, the reputation of providers and conditions for the payment of contracts to seize these opportunities.

Meanwhile, two-way trade between Vietnam and the EU has similarly grown, from US$17.75 billion in 2010, to US$24.29 billion in 2011 and US$18 billion in the first eight months of the year. The EU has consistently been one of Vietnam’s leading trade partners, with their share of two-way trade representing between 15-20 percent on average.

The conference examining business potential in Russia and the EU was joint organised by the HCM City VCCI chapter, the Ministry of Industry and Trade and the Russian trade office in Vietnam.

UK donates US$10 million to business fund

The UK Government has invested US$10 million in the Vietnam Business Challenge Fund (VBCF), which debuted in Hanoi on November 28.

According to Vietnamese Deputy Minister of Planning and Investment Dang Huy Dong, the VBCF is the continuation of the Vietnam Challenge Fund (VCF), which received several non-refundable grants from the UK government through their Department for International Development (DFID).

The fund aims to provide support to private businesses with community-based ideas that help low-income people escape poverty and to establish closer links with the economy.

VBCF activities will be in accordance with the country’s socio-economic policies and sustainable and green development strategies.

Fiona Louise Lappin, Head of DFID Vietnam, said the fund will serve as an important tool for private enterprises to become involved in poverty reduction, which traditionally is a responsibility solely held by government.

The Business Challenge Fund has been a positive influence on the poor in many Asian and African countries by providing them  with access to social services.

On a scale 10 times larger than its predecessor, the launch of VBCF shows the UK government’s strong confidence in the creative and innovative potential of the private economic sector, which is considered a critical component for economic growth in Vietnam.

Following the mechanism of co-investment under the management of the Netherlands Development Organisation (SNV), VBCF will sponsor a maximum of 49 percent of the total investment capital for projects operating in agriculture, green growth and infrastructure services for the poor.

Priority will be given to those projects that affect larger numbers of low-income people, especially women and children. The VCBF contribution could potentially raise up to US$800,000 for a particularly promising project.

However, enterprises who seek funding purely for financial and business skills support may face some hurdles, said VBCF CEO Javier Ayala.

Their innovative ideas and business models have to be able to demonstrate considerable benefits for low-income people. In addition, to be eligible for funding they will have to contribute the same amount of capital when implementing a project, which will be required to run for a   minimum of two years.

Established in 2009 and wound up in August 2012, the VCF was co-funded by the UK Government and the Asian Development Bank. VCF sponsored 11 agricultural projects, seven of which were successfully implemented and helped increase the incomes of 16,900 people and create more than 2,000 jobs.

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