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HCM City plans to boost exports

The HCM City Industry and Trade Department has drafted a plan to expand exports by 16 per cent annually this decade and double exports in 2011-15 to US$100 billion.

Until 2015, the city will continue to focus on industries that are labour-intensive and use locally-sourced raw materials like seafood processing, footwear, and textile and garment.

From 2015, technology products will account for 10 per cent of exports and software for 2 per cent.

The agricultural, forestry and seafood sectors will improve quality and choose their best products for export to make up 23 per cent of exports.

Logistics, software services, exhibitions and fairs, technical support and consulting will all be improved to promote exports.

According to the draft plan, to achieve these targets, a strong push is needed from State agencies, professional associations and businesses.

Huynh Khanh Hiep, director of the department, said the city would develop infrastructure, increase some key products, improve human resource training and administrative performance to help boost exports.

Developing robust infrastructure to link land and sea routes with ports and storage facilities was an urgent task, he said.

“In the long term, the city should not build more multi-purpose economic zones, only industry-specific ones,” an economist said, commenting on the draft.

He also highlighted the important role of international exhibitions in popularising Vietnamese products globally.

The draft speaks about putting in place various export support models, creating material supply hubs and improving inter-regional co-operation to boost exports.

Identifying new markets is another important task, it says.

Viet Nam should actively take part in the global production and value network, focus on building national brands and value-added products, it stresses.

Hiep added: “We plan to bridge the trade deficit by limiting import growth to 15 per cent annually.”

Banks forecast to fall short of credit targets

The banking sector’s credit growth target for the year has been trimmed and adjusted to a very modest rate of between 8 and 10 per cent, but banks are finding it difficult to realise it.

According to the latest figures released by the banking sector, while deposits increased by 10.26 per cent over last year, credit growth has been a measly 1.4 per cent by August 20.

National Advisory Council for Financial and Monetary Policy member Dr Tran Du Lich said the central bank had injected VND180 trillion (US$ 8.57 billion) into the economy by the end of July, and most commercial banks had tried their best to cut their interest rates.

However, this flow happened mainly within the banking sector and only a modest volume was being pumped into the market, he said.

Given the abysmally low figures of the last several months, the credit growth target of between 8-10 per cent that the Government has set for the year-end was almost impossible to achieve, he said.

It would require a growth rate of 2 per cent per month (equivalent to VND100 trillion) during the remaining months of the year, he calculated.

Business demand for capital often increased significantly in the final months of the year, but the rise was not expected to be as dramatic this year in light of large inventories, depressed consumer demand, and shrinking export markets, Lich said.

Exports in the first eight months of the year surged by 17 per cent year-on-year, but the rise was mainly attributable to foreign-invested enterprises, according to the General Statistics Office. While retail sales revenue during the period increased 17.5 per cent, the inventory index remained high at 20.8 per cent.

Many enterprises, already saddled with heavy debt burdens, would only be able to take out new loans if the Government forces commercial banks to refinance existing debts at lower interest rates.

Lich’s assessment was made at a recent meeting between HCM City banks and enterprises that sought ways to increase borrowings.

A representative of the Bank for Investment and Development of Viet Nam (BIDV), who declined to be named, agreed that credit had grown so slowly over the last eight months that the annual target was very difficult to reach. Over the last few months, the central bank had continuously applied several methods to pump more money into enterprises, one of which was to allow 10 credit institutions to increase their allotted credit growth targets from 15 and 17 per cent to 25 and 30 per cent, he said.

Meanwhile, commercial banks have vied with each other to launch several preferential credit packages worth thousands of billions of dong with lending interest rates even lower than the rate of short-term loans.

The HCM City Development Joint Stock Commercial Bank (HDBank), for instance, has lowered its interest rate to 8.6 per cent per year for the first three months, lower than the 9 per cent fixed by the central bank for short-term loans.

However, these efforts had not produced the results hoped for, Lich said.

He said interest rates were no longer the biggest obstacle preventing enterprises from taking bank loans.

“Rising inventory is the main cause,” he added.

To tackle the inventory problem, it is necessary to have measures that stimulate the market’s purchasing power via Government investment channels.

For instance, funds can be set up to enable more people to buy houses on instalment plans.

If such measures were implemented strongly, they could help banks pump more money into the economy, but this should happen at a “proper level” so that inflation does not increase, Lich said.

Senior economist Dinh The Hien agreed with Lich, saying rising inventory was a national problem that needed to be tackled urgently.

If this problem was settled, enterprises wilould able to push up their production and business activities and the economy would benefit, Hien said.

Firms urged to use promotions to clear stock

Product promotions and discounts are essential for struggling enterprises to maintain their purchasing power, a leading economics director has said.

As a number of experts suggested ways to combat the tough economic conditions, director of the Southern Economics Study Centre Tran Sinh said that regular turnover of inventories was essential for buoyancy, adding that enterprises should even accept losses if it meant avoiding insolvency.

Currently, many merchants are offering discounts of up to 50 and even 70 per cent to boost consumption.

According to director of Vinh Thanh Dat Food Company Truong Chi Thien, inventory products could be taken for sale at supermarkets or traditional markets. He said enterprises could work with supermarkets to manufacture products labelled by the supermarket brands, pointing out that the co-operation would help reduce costs while ensuring a stable output.

Many businesses prefer to boosting sales through websites or TV shopping channels and director of Foci Fashion Company Ngo Thi Bau said on-line sales helped Foci cut distribution costs dramatically.

Another idea for weathering the economic storm came from director of Viet Nam National Chemical Group Nguyen Dinh Khang, who proposed a temporary reduction of value-added tax to ease the burdens on enterprises.

The Ministry of Industry and Trade said it was important to understand difficulties hitting enterprises in order to effectively tackling them.

Adding that enterprises would be encouraged to prioritise exporting domestic output if there was more input material. The ministry also said that promotional activities would be accelerated, particularly the enhancement of the campaign “Vietnamese use Vietnamese products.”

Polish meat exporters eye VN market

Interest in the Vietnamese market is increasing among European meat producers, particularly Polish businesses, according to Agnieszka Rozanska, director of international projects in Union of Producers and Employers of the Meat Industry.

Speaking at a press conference held yesterday in HCM City, she said that Poland was one of the biggest producers of pork and poultry in Europe.

Wojciech Gerwel, economic counselor at the Polish Embassy in Ha Noi, said Poland wanted to strengthen business relations with Viet Nam, especially in the agricultural sector.

Fifty-four per cent of Polish products exported to Viet Nam since the beginning of the year have been agricultural products.

Polish exports of fresh, chilled or frozen pork to Viet Nam increased from 23 tonnes in 2010 to 25 tonnes in the first nine months of the year.

“The EU and Poland can be good partners for the Vietnamese market as suppliers of high-quality meat and meat products, as well as partners for information exchange about technology and quality of meat production,” Rozanska said.

South Korea is Poland’s biggest importer of meat, with about 20,000 tonnes of frozen pork exported last year.

On June 27, Viet Nam and the EU signed a new Partnership and Co-operation Agreement that will provide a comprehensive framework to further bilateral ties.

The day before, they continued negotiations on a bilateral Free Trade Agreement.

Viet Nam is a key partner within ASEAN and will act as ASEAN coordinator for relations with the EU until 2015.

Telecoms fret over extra frequency bands

Mobile service providers are voicing concerns over plans to authorise additional wireless frequency bands.

At the 13th Meeting of the Asia Pacific Telecommunity Wireless Group being held here this week, Viet Nam Authority of Radio Frequency Management general director Doan Quang Hoan said: “Participants have joined in discussions on solutions to frequency spectrum and radio communications technology, as well as sharing experience in managing telecommunications.”

Viet Nam has been using the frequency spectrum of 806-960MHz for the increased popularity and use of wireless mobile services as well as the 3,400-3,600MHz frequency for satellite and international mobile technology.

“We really want to expand the mobile phone service market, so we need a policy statement from State authorities on management of the 500-800MHz frequency band,” said Nguyen Van Hung, a representative from Viettel, one of the nation’s leading telecom companies. “Telecommunications service providers are also eyeing frequencies of over 2,000MHz for wireless services and new technology.”

“Viet Nam has made efforts in planning and developing mobile technology effectively for future demand, and mobile technology has seen the quickest growth in Viet Nam in recent years,” Hoan also said yesterday.

The Asia Pacific Telecomnunity Wireless Group meeting, which has drawn 250 participants, will continue through Saturday.

City to reform property market

HCM City has unveiled plans to thoroughly restructure the real estate market to resolve outstanding problems and ensure sustainable development in future.

The Department of Construction is calling for experts’ opinions to develop the plans.

Analysts have said that the property market faces problems like unplanned and unsustainable development that have to be addressed if it is to develop.

Nguyen Xuan Thanh, Public Policy Manager at the Fulbright Economics Teaching Programme, told the department at a recent meeting that the city should collect property tax, pointing out that, globally, development of the market is based on the tax.

The tax revenue could be used by the city to invest in infrastructure and real estate projects, he added.

Other analysts pointed out that though Viet Nam was a poor country many people wanted to have their own houses. But world-wide, people in major cities lived in rental houses, and the city should thus focus on building public housing and encouraging people to live in them, they added.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said in the absence of comprehensive studies of the city’s real estate market, the demand and supply situation was not clearly known, and this resulted in an imbalance and instability.

Clearly, the market had excessive supply because the city had thousands of property projects in addition to those in neighbouring provinces, he said.

But he said the market lacked two highly popular products: rental apartments at around VND2 million (US$90) per month for low-income State employees and apartments sold with 20- to 30-year payment terms.

So the city first needed to carefully study the market before making restructuring plans, he added.

PetroVietnam told to submit new plan

Prime Minister Nguyen Tan Dung has ordered State-owned oil and gas giant PetroVietnam to complete its restructuring plan and submit it to the Ministry of Industry and Trade for consideration.

In a recent meeting, the Government acknowledged the role that PetroVietnam has played as a major economic group, contributing considerably to the State budget, developing the domestic petroleum industry and even expanding operations to foreign countries.

However, it has continued to maintain ineffective non-core investments and demonstrate shortcomings in corporate governance, with a number of affiliated enterprises operating without sufficient supervision.

The Prime Minister is therefore urging the restructuring plan to focus on rearrangement of PetroVietnam affiliates into five main business concentrations or sectors.

Any plan would also forbid PetroVietnam from forming member councils in single-member limited liability companies it controls, including PetroVietnam Exploration and Production, PetroVietnam Oil, PetroVietnam Power, Binh Son Petrochemical Refinery, Dung Quat Shipbuilding and Ca Mau Fertiliser.

The PetroVietnam reorganisation plan would also need to build a roadmap for divestment from non-core lines businesses, particularl in securities, civil engineering, real estate development, and tourism and leisure.

In a meeting in July, PetroVietnam chairman Phung Dinh Thuc admitted that the group had invested over VND5 trillion (US$238 million) in non-core lines of business and had targeted to gradually withdraw from these sectors by 2015.

However, he proposed to the Prime Minister to retain holdings of 18-20 per cent in PetroVietnam Finance Cor, and PetroVietnam Insurance Corp, arguing that these were essential to core its operations. However, the Government rejected the proposal for PetroVietnam Finance and urged the group to devise a specific plan for divesting from the corporation.

ASEAN competition conference opens

A conference on competition organised by the ASEAN Economic Co-operation Work Programme and Viet Nam’s Competition Authority opens in HCM City today.

“In the context of global economic decline, M&A (mergers and acquisitions) is one of the most effective tool for enterprises to restructure and increase their efficiency,” Bach Van Mung, head of the Competition Authority told a press meeting held to introduce the conference.

“The conference will discuss whether M&A should be controlled to avoid monopoly and cause bad impacts,” he added.

The conference, the second of its kind, is titled “Mergers and Acquisitions impacts on ASEAN”.

In the first half of this year, M&A by ASEAN-based companies were worth a record US$26.2 billion, higher than in the whole of last year ($23.2 billion).

The two-day event will discuss the legal framework on M&A in ASEAN member nations, impacts of mergers on the regional economy, and international experience in managing and supervising M&A, especially trans-border ones.

Officials from competition-management agencies in the ASEAN member countries, Australia, Japan, New Zealand, South Korea and the US, and local businesses will participate.

The first conference was held in Bali last year.

Five of the member states, including Viet Nam, have full-fledged competition laws in place, and all 10 are expected to have them by 2015.

Twenty-four companies get rice export licences

Twenty four companies have recently received licences from the Ministry of Industry and Trade to ship rice abroad from now to 2017.

Up to 99 enterprises have been allowed to export rice since Decree 109 on rice export businesses took effect in early 2011.

The decree requires enterprises to meet criteria such as having a warehouse with a capacity of at least 5,000 tonnes of rice in stock, at least one rice husking workshop with a minimum capacity of processing 10 tonnes of rice per hour and export volume of at least 10,000 tonnes of rice each year.-

Securities firm Dai Nam fined $12,000

The State Securities Commission recently imposed a VND250 million (US$12,000) fine on Ha Noi’s Dai Nam Securities Co for conducting illegal share trading activities.

The commission said Dai Nam Securities Co lended shares to its clients who then sold them to each other, violating recent securities regulations. Additionally, Dai Nam did not have the necessary permissions to engage in such trading.

The SSC’s regulations state that securities and fund management companies are not allowed to sell or lend any shares when they neither own them nor possess permission to trade.

Dai Nam, accordingly, was fined VND150 million ($7,100) for the illegal share lending violation and VND100 million ($4,800) for trading without permission.

The commission has asked depository banks in charge of keeping assets or shares on behalf of clients to transfer money and assets to clients’ accounts immediately after transactions so as to avoid money laundering.

It said investors should not borrow or lend shares to avoid hidden risks, such as property losses and disputes.

City sees gradual increase in purchasing power

According to the Ministry of Industry and Trade, in the month of August alone total retail turnover and earnings from services was an estimated VND190.3 trillion, an increase of 0.7 percent compared to the previous month, and 12.4 percent over the same period last year.

Total retail turnover and revenue from services reached VND1,517.7 trillion in the first eight months of this year, up 17.9 percent year-on-year. Excluding the price increase factor, total retail turnover and revenues from services in the first eight months of this year rose by 6.8 percent year-on-year.

In Ho Chi Minh City, after 10 days of the ‘Sale Promotion Month’ campaign, purchase power showed significant improvement. Purchase power mainly increased in essential commodities, including foods, cosmetics, and clothes.

Co.op Mart Supermarket said that sales of essential commodities grew sharply, not only because of the promotional campaign but also because of demand to stockpile goods to deal with price increase.

Noticeably, while purchase power showed signs of recovery, export turnover fell by 3.8 percent over the previous month to US$9.8 billion in August as crude oil exports dropped 369,000 tons and prices of some farm produce declined. Export turnover was estimated at more than $73.3 billion in the first eight months, up 17.8 percent compared to the same period last year.

Industrial manufacturing growth rises in August

At its regular monthly meeting, the Ministry of Industry and Trade announced that industrial manufacturing in August posted a growth of 3.8 percent over the same period last year.

In the first eight months of this year, industrial manufacturing growth rose by 4.7 percent year-on-year. Although growth was low compared to the same period last year it showed positive changes month after month. Industrial manufacturing growth was 4.1 percent in the first three months of this year, 4.3 percent in the first four months, 4.2 percent in the first five months, 4.5 percent in the first six months, and 4.8 percent in the first seven months, indicating that firms have gradually resolved difficulties.

However, the ministry considered that the current situation remained challenging as the government’s policies have started to take effect but needed more time to bring about desired results.

As domestic demand decreased, affecting consumption, inventory of consumer goods and building material continued to climb. Inventory index of processing and manufacturing industries on August 1 rose by 20.8 percent compared to the same period last year. Of which, beer inventory surged 28.8 percent; cigarette inventory soared 99.4 percent; clothes inventory climbed 24 percent; and fertilizers and nitrogen compound inventory increased 81.6 percent.

New tariff spells doom for rubber exporters

After a 50 percent decrease in export price of rubber and an inappropriate increase in tariff, many rubber companies have been left with little choice other than to shut down completely and lay off all workers.

Five years ago, the Import-Export Joint Stock Company in the southern province of Binh Phuoc invested in eight German-made centrifugal machines for producing rubber sap in its factory, at a cost of nearly US$1.5 million.

The factory was running successfully, producing more than 50,000 tons of rubber for export each year and bringing in a turnover of $200 million in 2011.

However, circumstances changed in 2012 and the factory has now shut down with all the workers laid off.

Dong Minh Toan, the company’s director said the factory shut down after the Ministry of Finance issued a new tariff of 3 percent on latex and compound rubber products.

In addition, the government issued a tax for environment, pushing up prices of products and deterring exports.

With the new tariff policy of 3 percent, products in the local market increased by $100 a ton while selling price was $2,200 per ton, a decrease of 50 percent compared to the same period last year.

Accordingly, Vietnamese rubber cannot now compete with Malaysian, Thai and Indonesian rubber, hence enterprises find production unaffordable.

With hundreds of companies having to suddenly shut down, thousands of manual laborers have been laid off, said Toan, resulting in a loss of valuable foreign exchange for the country.

Hung Thinh Company in the southern province of Tay Ninh suffered such a fate. At the end of 2011, the company spent $400,000 for constructing a rubber processing factory with capacity to produce 1 ton of rubber sap in an hour, and employing 50 laborers working a 10 hour shift a day. But when the management heard of the new tariff policy, they closed the factory completely.

Le Ba Tho, head of the Business Division of Tay Ninh Rubber Company, said the company exported around 13,000 tons of rubber sap this year worth VND11 billion ($528,000), therefore they just shifted to producing another rubber sap variety.

The new tariff was applied in December 2011 to give boost to domestic rubber production instead of export of natural rubber. However, enterprises say this tariff is inappropriate.

Tran Ngoc Thuan, chairman of Vietnam Rubber Association, said he sent a document to the two ministries of Industry and Trade, and Finance asking for tariff exemption on latex and compound rubber.

Enterprises call this tariff unfair as exports are suffering at a great cost just to boost domestic enterprises only. The Vietnam Rubber Association has sent a petition to the Ministry of Finance asking for exemption from PE package which does not pollute the environment.

Farmers’ glum over rising rice prices in Mekong Delta

Recent increase in rice prices in the Mekong Delta has failed to bring any enthusiasm to farmers as they have already sold off their crops at low rates while traders and enterprises are reaping profits from early purchases, as farmers regretfully look on.

Up to now, farmers have harvested almost 1.6 million hectares of summer-fall rice crop, with most of them having sold off their unhusked rice directly from fields to pay for daily expenses, pay off debts for fertilizers, pesticides etc.,  and for cultivating their next fall-winter crop.

Farmers feel depressed with the increased rice price. Currently, low quality fresh IR50440 in the Mekong Delta is selling for VND5,000 (US$0.23) per kilogram; dried variety for VND5,800 ($0.27) a kilogram; and high quality long rice for VND6,000 ($0.28) a kilogram in Cai Rang, Thot Not Districts in Can Tho City, Sa Dec town in Dong Thap Province and Cai Be district in Tien Giang Province.

Farmer Nguyen Van Be Hai in Chau Thanh District of Dong Thap Province moaned that he sold all his rice cultivated on his four hectare farm for VND4,000 a kilo so as to be able to pay for old debts. Also because of lack of warehouse facilities to stock rice, he lost VND1,200 on every kilogram.

This is a tragic paradox that farmers who directly produce rice have to suffer the most losses while enterprises and traders made a killing on profits. Moreover, enterprises also benefit from preferential financial policies for collecting rice directly from farmers.

Duong Quoc Nghia, director of the Department of Agriculture and Rural Development in Dong Thap Province, said farmers in the Mekong Delta lack facilities to stock rice at home or in their locality and most of them sell to companies and traders immediately upon harvesting.

According to information provided by Vietnam Food Association (VFA), export rice price in August increased by $45 per ton, but  the association has cautioned enterprises not to be in a hurry to sign contracts to sell rice at low rates, as markets were showing signs of going buoyant.

Vietnam should take a lesson from Thailand, whose government offers subsidizes to farmers. Le Van Banh, director of the Cuu Long Delta Rice Research Institute, said that the government’s preferential policy to farmers can help surge rice prices and weak competition in the market.

Thai farmers benefit a lot from the above policy while Vietnamese farmers always face losses.

Banh added that their Thai counterparts had shared during their trip to Vietnam that they paid little heed to being at first or second position, as their main concern was the farmers and how they can benefit. Many agricultural experts and scientists who have lived for many years in the Mekong Delta agree to this policy.

Vietnamese government should not strive to become the first and biggest exporter in the world but consider farmers’ plight and long-term prosperity and national food security.

City the convergent point of tourism promoters

Travel agencies in HCMC during this week will be busy with a series of programs to promote tourism and introduce products among local and foreign tour operators.

A number of programs are hosted in coincidence with the Travel Expo HCMC 2012 (ITE HCMC) from Thursday to Saturday.

Tomorrow India will kick off its tourism promotions in the city with road shows introducing the country’s tourism at the Sofitel Saigon Plaza followed by the Cambodian night on Thursday. In addition, local tourism promotion agencies from Haiphong, Khanh Hoa or Binh Phuoc will also organize scores of other events in HCMC to promote images, events and new products of their localities.

The city has become the focus of tourism marketing activities as the number of agencies engaged in international travel here makes up nearly a half of the total number of tourism companies nationwide. Up to 435 foreign tour operators and 324 domestic ones are present in HCMC, with most of the country’s leading enterprises based in the city.

The number of foreign arrivals to the city accounts for about 58% of the total while the number of domestic visitors of the city also grows by 20-30% annually.

A lot of tourism firms in HCMC have become the major ones to take travelers to other provinces. According to the departments of Culture, Sports and Tourism of Lam Dong and Binh Thuan provinces, the majority of visitors to their localities are handled by city-based tourism companies. In Lam Dong alone, the number of visitors handled by travel agencies in HCMC amount to up to 45% of the total.

Tax cut will help Vinacomin maintain business: official

The Ministry of Industry and Trade proposes lowering the coal export tariff in a bid to help Vietnam National Coal and Mineral Industries Group (Vinacomin) survive the tough times and preserve its credit rating to take out soft loans.

Nguyen Khac Tho, deputy director of the General Department of Energy, under the trade ministry, said the proposal for slashing the coal export tax rate from 20% to 10% is necessary to reduce the huge inventory volume of Vinacomin and avoid affecting the livelihood of over 100,000 coal workers.

“The top goal is to ensure sufficient goal supply for domestic consumption, especially for power generation and only export the types of coal that are not consumed in the local market,” said Tho.

“The State manages the coal industry by export quotas. For example, Vinacomin is allowed to export only 14.5 million tons this year, so whether the export tariff was raised to 30% or cut to 0%, the industry could only export 14.5 million tons,” he told a press briefing on the production and trade situation in the first eight months.

Export tax reduction will also provide Vinacomin with more capital to reinvest in production and keep the group at the credit rating that enables it to borrow soft loans, said Tho.

The Prime Minister has assigned the trade ministry and the Ministry of Finance to consider the proposal for lowering the coal export tariff and increasing the prices of coal sold to the power sector.

Regarding the petition for raising the prices of coal sold the power sector, Tho explained the current selling prices are equal to only 50-60% of the production costs, leading to the shortage of investment capital for the energy industry.

More importantly, the low price also fails to encourage households to consume energy efficiently, he stressed.

Meanwhile, the Ministry of Finance has also suggested the Prime Minister to halve coal export tariff to 10% to remove the difficulties for Vinacomin.

In a press release coming out on Monday, the finance ministry said Vinacomin produced 21.8 million tons of coal in January-July (14.6 million tons supplied to the local market and 7.2 million tons exported), or 47.9% of the year’s plan.

As of end-July, the inventory volume reached nine million tons, due to shrinking domestic consumption and falling export prices. Vinacomin has reduced costs, but the tariff of 20% pushes up export prices, so the group can hardly export its products.

The finance ministry estimated that if the export tax rate was slashed to 10%, Vinacomin could export 6.5 million tons of coal in the rest of the year, pulling down the inventory level and ensuring jobs for workers. Moreover, the State budget would gain additional revenue from the export of unsold coal.

Once the market has recovered, and the global coal prices pick up, the export tariff could be adjusted again, said the ministry.

The ministry noted tax reduction is a common trend in other countries.  For example, in Indonesia, where 280 million tons of coal is exported each year, and Australia, coal exporters are enjoying a zero tax rate.

Even in China, where over three billion tons of coal is produced every year, the export tariff is set at 10%. Meanwhile, Mongolia levies a coal export tariff of 7% and Russia imposes 5%.

Auto sector still faces a bumpy road

The ministries of Finance, Industry and Trade’ proposed move to loosen auto import regulations has encountered strong actions from car manufacturer association.

The ministries of Finance, Industry and Trade (MoF and MoIT) are considering removing a regulation requiring car importers to show evidence they were authorised dealers of genuine car manufacturers or traders in a bid to allow more car importers and dealers to join the market while boosting supplies of imported cars with a wider variety of brands.

The regulation is part of MoIT’s Circular 20/2011/TT-BCT dated May 12, 2011, effective from June 26, 2011 stipulating additional procedures for import of brand-new cars from nine seats and under.

In this context, the Vietnam Auto Manufacturers’ Association (VAMA) took steps forwarding a letter to the government and relevant agencies asking to maintain Circular 20.

According to VAMA, at this time only Peugeot brand was non-existent in Vietnam whereas other 23 global brands either have Vietnam-based manufacturing plants like Toyota, Ford, Mercedes, Honda and Mitsubishi or authorised distribution agents like Audi, BMW, Porscher, Volkswagen or Renault.

VAMA argued the forthcoming eighth Vietnam Motor Show this late September with proposed presence of many global car brands showcased a healthy market competition, an allegedly offspring of Circular 20/2011/TT-BCT where creating a bona-fide playground for locally based car manufacturer and authorised dealers.

Unauthorised car dealers are inferior to authorised dealers in guarantee and maintenance policies as well as professionalism degrees, according to VAMA. Besides, in case where recall orders were issued from the part of Vietnam Register and manufacturers the interests of customers purchasing cars from unauthorised dealers would not be protected.

Commenting on a proposal to remove a regulation requiring car importers to show an authorised paper from genuine car manufacturers or traders, a car business said under Circular 20 to import brand-new cars from nine seats and below importers must have authorised paper from genuine car manufacturers, traders and have maintenance workshops meeting regulations in Ministry of Transport’s Circular 43/2011/TT-BGTVT.

However, it is not easy to get certification to meet Circular 43 from the Vietnam Register. Circular 43’s Clause 6 requires importers’ application record to include car manufacturer’s authorised paper for guarantee and maintenance services or a certification of satisfying standards catered to guarantee and maintenance workshops by car manufacturers. This means these units must get approval from auto manufacturers to perform the service.

According to authorised car dealers to get approval from car manufacturers, these workshops must satisfy strict requirements for technical equipment parallel to Vietnam Register regulations.

Investment cost into genuine equipment would be not less than $800,000.

Based in these above arguments VAMA assumed supporting small car dealers through removing one of two requirements in Circular 20 would be just a halfway measure whereas abolishing Circular 20 after less than 20 months enforcement reflected policy inconsistency, thus driving up firms’ concerns.

International tourism expo opens in HCM City

500 businesses from more than 30 countries and territories are participating in the 2012 International Travel Expo (ITE HCMC), which opened in Ho Chi Minh City on September 12.

Speaking at the opening ceremony, Vice Chairman of Ho Chi Minh City People’s Committee Nguyen Thi Hong said the event, the largest professional one, is an opportunity for travel and tourism businesses from the participating countries to seek partners and establish long-term cooperation, contributing to sustainable tourism development in the region and the world.

Themed “Vietnam-Laos-Cambodia-Myanmar, Four Countries, One Destination”, the event comprises a series of new activities for the four countries such as the first Meeting of their Tourism Ministers, a meeting for senior tourism officials and a conference on tourism market in four Lower Mekong cities of Ho Chi Minh City, Phnom Penh, Vientiane and Yangon.

A highlight of the expo is the International Hosted Buyer Programme, which aims to ce ment the implementation of global and regional integration in advancing both inbound and outbound market interests of the show players, attracting 180 key global buyers from 33 major markets that include ASEAN countries, Australia, Canada, China, Europe, Hong Kong, India, Japan, the Republic of Korea, North America, Russia and the United Arab Emirates.

Organised for the first time in 2005, ITE HCMC is designed to promote not only the tourism market within the region but also major tourist destinations around the world

Japan helps develop Hanoi infrastructure

The Hanoi People’s Committee and the Japan Bank for International Cooperation (JBIC) on September 12 signed a memorandum of understanding on promoting investment in infrastructure of the capital city.

Under the agreement, the two sides will create favourable conditions for the private sector to engage in urban infrastructure and industrial projects in the forms of public-private partnership (PPP) and built-operation-transfer (BOT).

The projects can see the participation of Japanese companies, as investor or contractor, and others which qualify for receiving JBIC’s financial assistance.

Earlier, the project for Hanoi ’s metro railway No. 5 was chosen for PPP investment.

Telco yet to find buzz brand

What brand used in the post-Beeline period remains unknown.

More than a month later GTel Mobile will have to stop using Beeline brand, the brand using by Russian partner Vimpelcom in Indochina, under an agreement with Vimpelcom when it acquired entire 49 per cent stake of the Russian partner in the joint venture. GTel Mobile is a joint venture between the Global Telecommunications Corporation (GTel) and Vimpelcom. After the stake acquisition in late April 2012, it was wholly owned by GTel.

About the new brand, GTel Mobile just said ‘The name Beeline will no longer be used among GTel Mobile products. The new brand will be developed capitalised on Beeline brand strong points and advantages.’

At this time the trademark Beeline is still used as usual. A big volume of SIM cards carrying Beeline brand have yet to be activated. At Hai Son Company, a GTel Mobile distribution agent, there are 1,519 Beeline SIM cards with numbers offered for sale through webpage Simbeeline.com.vn, but only nearly 700 SIM cards found buyers.

A GTel Mobile media representative said the company has nailed down an explicit plan for brand conversion.

“As negotiated, GTel Mobile will stop using Beeline brand by the end of October. Hence, later this month our company will unveil details about new brand as well as plan relevant to GTel Mobile operations after the brand conversion move,” said the representative.

At the time GTel Mobile acquired 49 per cent stake from partner Vimpelcom, the former’s general director Nguyen Van Du confirmed “After Vimpelcom conceived the idea for stake transfer, we looked at it as a good opportunity for GTel as Vietnam’s mobile phone market still has enormous growth potential.”

However, 2012 White Book on Information and Communication Technologies, just released by the Ministry of Information and Communications (MIC), shows that telecom sector revenue in 2011 shed 26 per cent on-year, particularly revenue coming from mobile services slid 5.6 per cent to $5.42 billion in 2011 from $5.74 billion in 2010.

The MIC attributed sliding revenue to mobile services providers taking move to scale down service fees on the back of stiff market competition to woo customers.

The ICT White Book 2012 also indicates GTel Mobile’s market share in 2011 remained modest at 3.21 per cent, far below those of top three players Viettel, VinaPhone and MobiFone.
GTel Mobile is the first joint venture in mobile phone market in Vietnam with capital contribution ratios at the time of foundation (July 8, 2008) as Vimpelcom holding 40 per cent stake and GTel the remaining 60 per cent.

In April 2011, Vimpelcom declared to put $500 million more on the joint venture during 2011-2013 to hike stake to 49 per cent.

On April 23, 2012 Vimpelcom decided to sell entire 49 per cent stake to GTel Mobile for $45 million.

Vimpelcom became the second foreign telco after SK Telecom, the foreign partner in business cooperation contract with S-Fone, to withdraw from Vietnam’s telecom market.

BIDV picked to develop Thu Thiem land lot

The Ho Chi Minh City authorities have entrusted BIDV as the investor of a land lot in Thu Thiem new urban area after failing to attract investors for the site over the past year, according to Thu Thiem New Urban Area Management Board, or Thu Thiem Authority.

Covering about 23,000 square meters, the land lot in Thu Thiem which was earlier put up for bidding is located along the East-West Highway in An Thanh Dong ward in Ho Chi Minh City’s District 2.

It is planned to be developed into a commercial building project of multiple functions, including some 80 per cent set aside for offices areas, 10 per cent for retail spaces and the remainder for housing.

Nguyen Le Dung, deputy head of Thu Thiem Authority, said Shindo, a South Korean company, had also showed keen interests in the land but it was eliminated due to the unqualified bidding document. Now the local government has agreed in principle to allocate the land to BIDV.

The starting price for the bidding round of the land, which is the second area of Thu Thiem to be given to BIDV, was set at VND62.5 million (some $3,000) a square meter.

The city had previously handed over to BIDV a 25-hectare area in An Thanh Dong ward along the highway. The land will be constructed into a low-storey residential area of no more than eight levels.

Regarding resettlement schemes, Dung said Thu Thiem Authority in May had signed a contract with Duc Khai JSC to purchase apartments of the Binh Khanh resettlement project. As such, the city will arrange roughly VND1.1 trillion to buy 1,080 flats from the scheme.

Based on the contract, Thu Thiem Authority calculated it will spend about VND4 trillion buying 4,216 condos of the Binh Khanh residential area developed by 21st Century International Development Co.

Beside, the city is also calling for the participation of another investor to replace South Korea’s Daewon as the company has withdrawn from the 2,200-flat resettlement project in this urban area.

The city already asked the authorities of District 2 to review local demands for resettlement so that it will arrange tenders for land use rights of some 900 land lots of the 90-hectare Nam Rach Chiec resettlement area.

Some 710 out of 720 hectares of the new urban area have been cleared. Meanwhile, construction of the four backbone routes in the locality will get off the ground in the near future.

Dung said the municipal government had spent approximately VND16 trillion on site clearance compensation in District 2, with loans worth about VND10 trillion for local infrastructure development.

Building material suppliers are hammered

Building material makers are in dire straits on the back of punishing economic vulnerabilities.

Unsold stock at pottery and porcelain firms reportedly surpasses 40 million square metres valued at VND3.5 trillion ($166 million) at this time, while quality material autoclaved aerated concrete bricks suffered the same fate.

Vietnam is home to 12 autoclaved aerated concrete production plants with combined capacity of 1,500cu.m per year. However, they just run at 15 per cent capacity.

“Compared to other building materials, autoclaved aerated concrete bricks sustain double hardships in consumption – sinking demands and consumer’s cautious approach towards using a new product,” said Song Da-Cao Cuong Autoclaved Aerated Concrete Company chairman Kieu Van Mac.

These plants are bogged down in losses and face the possibility of going out of business.

SCL shares of Song Da-Cao Cuong Company were placed among shares failing to meet deposit transaction conditions from August 20, 2012 due to the company’s poor performance.

SCL’s after-tax profit contracted more than VND2.7 billion ($128,000) in 2012’s first half, according to the firm’s first six month audited financial statement.

Among building materials construction glass suffers the most. Inventory at four floating glass factories amounted to 264,000 tonnes at the end of June, tantamount to five production months, according to Vietnam Association for Building Materials (VABM) general secretary Nguyen Van Chung.

Financial statements of these glass factories in the year to date were in negative territory. For instance, Dap Cau Viglacera Joint Stock Company incurred VND20 billion ($1 million) losses in the first seven months of 2012.

In this context, Vietnam Construction Porcelain and Ceramic Association chairman Dinh Quang Huy proposed the government soon introduce policies to boost consumption, particularly in realty and construction markets to help firms drain out stock.

VABM asked the government to take actions to rescue firms such as requiring construction works, including those of foreign EPC contractors or those using foreign capital, to use locally produced building materials and minimising usage of imported items.

In respect to imports, the proposal was to review and supplement technical barriers to limit imports of building materials already facing a domestic market glut.

Charges loom against FV

French-invested FV Hospital in Ho Chi Minh City has been mired into a million-dollar compensation for the family of a Hanoi man, who had died following treatment at the hospital.

Mai Thu Huyen and Mai Thi Thu Trang, daughters of Mai Trung Kien who died on August 11 as a result of an appendectomy misdiagnosis, last week publicised their viewpoints on what FV said was a “difficult case”.

The family’s lawyers asked for a compensation of about $1.5 million. This amount Trang said was lower the level of $2 million insurance which FV Hospital would be paid in case of death caused by its doctors.

The family and the hospital have not reached an agreement on the compensation. The family has also pressed for criminal charges to be laid against the doctor allegedly at fault. According to Huyen and Trang, their 57-year-old father was brought to FV with symptoms of appendicitis on August 8.

They told doctors he used to have heart disease and was taking anticoagulation medicine.

An appendectomy was then performed. Two days later, Kien complained of chest and abdominal pains, but FV doctors did not conduct scans, tested his blood and diagnosed him with a heart attack.

FV then transferred him to Tam Duc heart hospital next door, where doctors found that his
appendectomy had internal bleeding and he was in critical conditions due to blood loss. He was brought back to FV immediately for another medical operation, but his heart stopped before surgery could happen.

Huyen’s and Trang’s viewpoint was Tam Duc doctors found internal bleeding immediately, while FV doctors failed to. In addition, when Tam Duc doctors proposed emergency surgery at this hospital, FV doctors refused and brought him back to FV.

The Ho Chi Minh City Department of Health concluded August 29 that the reason of Kien’s death was internal bleeding after surgery and the hospital failed to make timely diagnoses and treatments on this internal bleeding.

On September 4, FV announced that his case was “a very difficult” case, and six highly professional doctors of FV joined hands to treat Kien, but none of them suspected of internal bleeding. This caused the incorrect diagnoses.

Faserkraft enters Quang Nam

A Russian firm plans to build a $150 million water supply  plant in central Quang Nam province  to help solve severe regional clean water shortages.

Faserkraft is planning to set up a joint venture with Ho Chi Minh City-based Pha Le to develop Vu Gia water supply plant in Dai Loc district.

Deputy chief of the Quang Nam Provincial People’s Committee’s Office Nguyen Ngoc Nam said the plant, with a capacity of 250,000 cubic metres per day, will be fed with water from Vu Gia River.

Recently, local leaders had worked with Faserkraft on the project and the Russian company would conduct a field survey and provide a detailed report to the committee, Nam said.

Quang Nam, home to two world cultural heritage sites – Hoi An Ancient Town and My Son Holy Land – welcomes a large number of domestic and international tourists each year. However, many places in the province, particularly mountainous and coastal areas, are facing severe clean water shortages.

The province has 387 integrated clean supply works with a combined designed capacity of 40,679 cubic metres per day, of which only 65 works have stable operations, accounting for 16.8 per cent. The water use rate meeting the national technical regulation on domestic water quality stands at merely 14.9 per cent.

“The Vu Gia water plant is planned to supply clean water to the entire Quang Nam province and central Danang city. The provincial authorities support the investor in this project as the proposed plant is expected to largely deal with the water shortages in the region,” said Nam.

Last month, Faserkraft Vietnam was also licenced to build a clean water supply plant with the total investment capital of VND75 billion ($3.6 million) in the Mekong Delta’s Tra Vinh province.

The plant, located at Long Duc Industrial Park and designed to have a daily capacity of 9,500 cubic metres, will be constructed in two years and have a life span of 43 years. When operational, the new facility will supply clean water to the local people in Tra Vinh and surrounding areas.

(by VietnamNet)

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