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BUSINESS IN BRIEF 15-1Bird-nests prove lucrative swoop

Authorities in Can Gio District, a coastal area that is part of HCM City, have asked the city for permission to expand their swift bird-nest farming business.

As part of a pilot project that began in 2008, 10 concrete buildings in Tam Thon Hiep Commune have been built to attract swifts that build nests that can be sold at very high prices. The nests are considered a health tonic.

For the past two to three years, the owners of the buildings have been able to attract the birds by playing recordings of their chirps from 5:30am to 6pm every day.

Two of the 10 buildings have produced a steady supply of nests, with an average profit of VND600million (US$28,500) to VND1billion ($47,600) a year.

Vo Van Dung, who owns one of the buildings, has attracted the highest number of swifts, about 4,000. His swift-house produces at least 3 kg of nests a month.

Speaking at a recent meeting in Can Gio, Nguyen Phuoc Trung, deputy director of the city’s Department of Agriculture and Rural Development, said that annual revenue of VND4.8 billion could be generated from raising swifts on one hectare of agricultural land.

In contrast, the average annual revenue of one ha of agricultural land in HCM City generates only about VND230 million.

Households that grow orchids or ornamental fish generate the agricultural sector’s highest revenue, about VND1 billion a year.

However, Trung said it was important that the pilot model on swift-raising be continued in a sustainable manner.

According to the Can Gio District’s People’s Committee, many people have been raising swifts illegally in Tam Thon Hiep Commune, as well as the communes of Binh Khanh, Ly Nhon and An Thoi Dong.

There are a total of 187 houses that are being used to attract the birds. Some of the buildings are producing more than 10 kilos of nests a month.

Ministry to introduce new food labelling standards

Deputy Minister of the Agriculture and Rural Development Nguyen Thi Xuan Thu has announced a raft of new measures to ensure food safety at a conference on agricultural product distribution.

Under the plans, four food types will soon be sold with green labels to inform consumers that they meet the standards of the Good Aquaculture Practices (VietGAP) and were produced under the Food and Agricultural Products Quality Development and Control Project (FAQDC).

The four categories will be: vegetables, fruit, pork and chicken.

Speaking at the conference run by the Canada-funded FAQDC, Thu said the labels would also help ensure the food origins and hygiene, while preventing the appearance of fake VietGAP products, she said.

The green labelled goods will be supplied to schools and retail distributors such as BigC and Co-opMart, accompanied by a large advertising campaign covering mass media, transportation means and retailers.

Nguyen Van Thuan, an assistant to the project, said FAQDC had focused on assisting farmers through technical support and promoting consumption.

Tran Duc Vinh, chaiman of the Yen My Co-operative in Thanh Tri District, said the project had helped change the traditional production process of local farmers. Currently, goods produced in the co-operative were sold at its four retail stores in the city and to four city-based companies.

Thanks to this, profits earned by local farmers had increased by up to 20 per cent, Vinh said.

Sugar makers seek to export 300,000 tonnes

The Viet Nam Sugar and Sugarcane Association is asking the Ministry of Industry and Trade to permit its member enterprises to export 300,000 tonnes of refined sugar in order to help reduce surpluses.

Sugar consumption nationwide last month reach 97,500 tonnes, an increase over November but still lower by 11,500 tonnes than consumption in December 2011. Additional production this month of over 300,000 tonnes would continue adding to surpluses, the association said.

Refined sugar smuggled in from Thailand through southwestern border gates was also undercutting domestic sugar by VND5,100/kilo, creating additional difficulties for domestic producers.

More Ha Noi enterprises declare taxes online

The number of businesses making tax declarations online last year rose to over 59,000, or 32 per cent of enterprises operating in the capital city.

According to the Ha Noi tax department, 95 per cent of these companies were declaring taxes online on a monthly basis.

This year, the department intends to make online tax declarations faster and easier. For instance, the department intends to co-operate with operators of ATM networks to enable tax payments to be made by ATM.-

Trade Ministry tasked to boost production, support market

PM Nguyen Tan Dung requested that the Ministry of Industry and Trade (MIT) take drastic measures to clear obstacles to production and business support market growth in 2013.

He made the request at a videoconference that the MIT held in Hanoi on January 11 to launch its work in 2013.

Accordingly, the MIT should cooperate with other ministries, agencies and businesses to boost production and improve the Index of Industrial Production (IIP) and Gross Domestic Product growth, he added.

The MPI needs to improve the quality and effectiveness of its import and export management and should give top priority to accelerating export and controlling trade deficit, the PM stressed.

Besides increasing the competitiveness of Vietnamese products, the ministry should also take the lead in restructuring businesses and enhancing the effectiveness of State-owned-businesses, the PM emphasised.

Deputy Minister of Industry and Trade Nguyen Cam Tu said that the ministry successfully accomplished its goals in 2012, citing raising the IIP up by 4.8% against in 2011 and obtaining total retails and services turnover of VND 2,324 billion, up 16%.

Total export turnover in 2012 reached US $114.6 billion, up 18.3%, which was higher than the st yearly target of 13%. Total import turnover stood at US $114.3 billion, up only 7.1%.

The ministry’s plans for  2013 include raising the added value of the industrial and construction sector  to 6.7%, making an export value of US $126.1 billion (up 10%) and an import turnover of US $136 billion (up 19), and total retails and social services revenues of around US $2,742,000 billion, up 12%.

To the end, the ministry has set to step up production, strengthen the mobilization and effective use of investment, expand export markets, accelerate border trade activities and improve forecasting capacity.

Many Indian firms eager for investments in VN

Deputy PM Vu Van Ninh on January 10 received the heads of the Federation of Indian Chambers of Commerce and Industry and executives of many big companies during his visit to India.

Deputy PM Vu Van Ninh affirmed that Viet Nam always welcomes and create favourable conditions for Indian companies to invest in Viet Nam in such fields as electricity, electronics, hi-tech, manufacturing engineering, and oil and gas development.

The Deputy PM proposed the Federation of Indian Chambers of Commerce and Industry coordinate with the Viet Nam Chamber of Commerce and Industry to hold seminars, exchanges and investment forums in each country to introduce each side’s economic and investment cooperation potentials and enhance mutual understanding and trust.

Mr. Praveer Sinha, Chief Executive Officer and Executive Director of TATA Electricity Company, Head of the Indian business delegation, said Indian enterprises highly value Viet Nam’s investment environment and are interested in the country’s electricity, oil and gas, energy, mining and software industries.

He pointed to many cooperation opportunities for Vietnamese and Indian firms when India and ASEAN sign a free trade agreement, especially those in the fields of goods, trade and investment.

India has had 63 projects totaling over US$234 million in processing, manufacturing, mining, oil and gas and sugar industries in Viet Nam.

Quang Ninh: Tourism as pillar for development

Quang Ninh Province, home to the World Heritage site of Ha Long Bay, plans to receive 7.2 million tourists, including 2.6 million foreigners, and make tourism revenues of VND5 trillion this year.

To realize those targets, Quang Ninh’s People’s Council (tenure XII), at its 7th meeting in mid-December 2012, adopted a resolution on management, preservation and exploitation of the Ha Long Bay in the period 2013-2015 and visions to 2020.

Accordingly, the Bay is described as an important factor for the province’s socio-economic development.

The province’s Chairman Nguyen Van Doc confirmed that tourism is one of most important “pillars” for Quang Ninh’s sustainable socio-economic development.

Quang Ninh is selecting US group BCG as a consultant for making its tourism development plan. It is improving tourism services, vigorously handling street vendors and trade frauds, improving tourism infrastructure and manpower.

The province will this year hold the 2013 Ha Long Carnival, invest in entertainment centers at Ha Long Bay, extend the expressway to Quang Ninh, build the Van Don Airport.

In 2012, the province welcomed 7 million visitors and gained tourism revenues of VND4.1 trillion, up 16 times against 2011.

Firm chosen to temporarily import, re-export iPhones

The Ministry of Industry and Trade has approved Thuan Hung Export-Import Joint Stock Co to temporarily import and re-export 10,000 Apple iPhone smartphones purusant to a contract with Bo Fung Transportation Hong Kong and a China-based trade company.

The new phones would be temporarily imported into Viet Nam by air through Noi Bai International Airport and then re-exported through the Mong Cai international border gate in the northern province of Quang Ninh.

This firm also asked for permission to temporarily import iPad tablets for re-export, but the ministry refused since this product is not in its list of products approved for re-export.

Real estate prices likely to keep falling

Real-estate prices are expected to continue falling across the board this year, a report released by the CB Richard Ellis Viet Nam Company (CBRE) has revealed.

CBRE have said that prices became much more affordable last year, with developers cutting some by as much as 40 per cent. This has hit property owners hard, as they suffered losses of up to 30 per cent on property value, the report added.

However, last year price reduction ultimately proved ineffective, according to the company. Statistics showed that by the end of 2012 there were 20,400 unsold apartment units in Ha Noi, which may take up to four years to sell.

The “wait and see” attitude of buyers and their distrust of investors’ ability to deliver on their commitments were factors preventing final purchases, the company said.

CBRE forecast that this year would see further falls in the secondary prices for apartment sales. They dropped 15 per cent last year and are expected to fall another 10 per cent. Transactions are expected to remain low, with a small number of deals taking place for projects with the lowest prices and positive construction progress.

CBRE also said projects would fail to attract buyers until the primary price reduction rate reaches 30-50 per cent of the original price.

Regarding villas and townhouses, the company reported that prices at the end of last year had reduced by about 30 per cent from the peak recorded in the second quarter of 2011, and predicted that 2013 would be a year of end-buyers, not speculators.

However, using estimated household savings, the company said that only 2 per cent of all households in Ha Noi could afford a new house.

They also declared that offices for rent would continue to fall in price, following the downward trend seen throughout 2011. New office hubs were expected to gradually form in the districts of Ba Dinh and Tay Ho District.

According to CBRE, the vacant offices and new supply areas will account for an estimated 1 million square metres by 2015, while the average annual take-up will remain at around 100,000sq.m. “It will take up to 10 years to absorb the current free space and additional supply,” a company representative said.

Real estate company Savills Viet Nam also predicted that the real estate market would continue to encounter many difficulties this year.

According to Tran Kim Chung from the Central Institute of Economics and Management, the recovery of the real estate market would greatly depend on the stability of the macro-economy as well as progress in resolving bad debts, restructuring the banking sector and strengthening the trust of buyers.

Le Chi Hieu, a real estate company chairman, said that the Government’s policies to stimulate demand and stabilise the economy were expected to take effect midway through the year. “This will create opportunities for investors,” he said.

Dang Duc Thanh, director of another real estate company, also expected the real estate market to show signs of recovery in the fourth quarter this year, providing that the Government continued to support enterprises in clearing inventories and resolving bad debts.

Food firms stay afloat amid hard times

Most members of the HCM City Food and Foodstuff Association (FFA) last year reached their business targets for volume and revenue, according to the FFA chairman Van Duc Muoi.

Some enterprises, including the Coastal Fisheries Development Corp (Cofidec), ABC Bakery Company and San Ha Foods Company, enjoyed a very successful year.

Le Thanh Liem, director of Cofidec, a member of the Saigon Trading Group, said the company’s profits had reached VND12.6 billion last year, three times higher than that in 2011.

Similarly, Cao Sieu Luc, general director of the ABC Bakery Company, said profits had increased by 22 per cent compared to the previous year.

With the economy expected to remain sluggish this year, the association would take action to help member companies stay afloat, Muoi told a meeting held yesterday to review the association’s performance last year and set tasks for this year.

The association plans to organise more seminars, fairs, training courses and trade promotion programmes to help members improve competitiveness and expand to other markets.

In addition, activities will be organised to enhance linkages and improve mutual support among members, according to Ly Kim Chi, FFA’s standing deputy chairwoman.

The association has asked the government to urgently adopt measures to adjust taxes and fees, Chi said.

She also proposed the city to strengthen inspection of illegal imports and trade of products with unclear origins and poor quality, especially food and foodstuff.

In addition, the city should also implement measures to increase sales in a bid to reduce the high volume of inventory at many enterprises, she said.

Established in 1998, FFA has 198 members.

Prime Minister approves 2013 audit plan

The Prime Minister had approved the State Audit of Viet Nam’s proposals to carry out 20 audits this year, said SAV’s deputy inspector general Ngo Van Khanh at a press conference on Thursday.

Khanh said that Petrolimex, Housing and Urban Development Corp, Viet Nam Bank for Social Policies, the Ministry of Natural Resource and Environment, the Ministry of Industry and Trade, the State Bank of Viet Nam and the State Securities Commission were among those included, and more would be added at a later date.

The audits will focus on finance, banking, securities, the gold market, import-export, public asset management, land and housing, mineral exploitation and processing, and construction investment.

In the first quarter, the management responsibilities of the State Bank of Viet Nam and the State Securities Commission in the gold and securities markets would be looked at for the first time, Khanh said.

State auditors would also inspect several national programmes as well as the business performances of State-owned groups and corporations.

The audits would aim to uncover violations and make recommendations to help relevant bodies streamline current policies and procedures.

PM urges industrial expansion

The Ministry of Industry and Trade (MoIT) should join hands with relevant ministries and sectors to remove difficulties for local enterprises to help them expand production and foster exports, advised the Prime Minister.

PM Nguyen Tan Dung was addressing a conference in Ha Noi yesterday to launch the industry and trade sector’s targets for the year ahead.

Dung highlighted the most urgent problems the ministry should deal with, chiefly low industrial productivity, poor product quality and competitiveness, lax market management and high inventories.

He suggested the ministry to further improve the efficiency of state management, review law provisions and then eliminate regulations that were hindering business development.

Hanoi aims to stabilise prices, ensure supplies

The capital city of Ha Noi will lend VND376 billion (US$17.9 million) to 15 enterprises at zero-per-cent interest to help them stabilise the prices of essential goods during the upcoming Tet (lunar new year) holiday, municipal People’s Committee vice chairman Nguyen Van Suu said on Thursday.

The committee has also asked the Ha Noi Trade Corporation to set up 300 open-air stalls to sell food and confectionery items in the city. Other firms will organise farm produce and flower markets and such events as Tet market days and spring fairs.

“Tet 2013 still faces economic difficulties with declining personal incomes, but sufficient goods will be made available,” Suu said.

Economists have noted that despite plentiful supplies, consumer purchasing power remained weak. Many small businesses were therefore hesitating to increase production or add products to inventories, the website tinmoi.vn reported.

However, the Ha Noi Department of Industry and Trade predicted that local consumer demand would increase by 20-25 per cent during the Tet shopping season. The value of goods to be reserved to meet the rising demand was expected to reach around VND6 trillion ($285.7 million), the department said.

The Ministry of Finance’s price management department said recently that businesses in the capital city had actively stockpiled goods to ensure that they would be able to meet a 20-per-cent hike in consumption over the course of the next month.

However, in light of the recent lengthy cold spell, the Ministry of Agriculture and Rural Development would also need to make a special effort to ensure production and preservation of vegetables, particularly in the city’s outlying districts, Suu said.

Department of Industry and Trade deputy director Nguyen Thi Nhu Mai said market management forces would actively collect information to forecast and deal in a timely manner with price fluctuations, noting that demand would rise particularly for such articles as beer and other alcoholic beverages.

Dung also emphasised the importance of increased transparency for gas and electricity prices.

The ministry should further better its analysis and forecast capacities to help firms seek new opportunities in traditional export markets as well as find new outlets, he said.

Top priority should also be given to developing local markets with a focus on encouraging Vietnamese people to use Vietnamese goods, while bettering market management and price stabilisation to help the domestic production and control inflation.

During the conference, the PM spoke highly of the sector’s 2012 achievements, highlighting the industrial production value increase of 4.8 per cent and export growth of 18 per cent, both of which made important contributions to stabilising the macro economy.

Deputy Minister for Industry and Trade Nguyen Cam Tu said the ministry recorded positive results in all aspects, especially in building development plans, expanding the domestic market and ensuring a balanced supply-demand of essential goods.

The ministry stepped up business and investment activities while raising production capacity to serve domestic consumption and export, he added.

Many bilateral economic and trade agreements came into force, creating opportunities and favourable conditions for boosting production, export and investment attraction, Tu said.

“We aim to generate US$126.1 billion from exports this year, a 10 per cent increase on 2012 and keep trade deficit at 8 per cent of export turnover,” he said, adding that retail sales were set to rise 18 per cent over the previous year.

Speaking at the event, HCM City People’s Committee vice chairwomen Nguyen Thi Hong petitioned the PM to direct relevant ministries to review and perfect technique standards for imported goods, as it could help prevent low-quality and fake goods.

“Building barriers and effective tax policies are vital to protect domestically-made products,” she said.

Thriving service sector leads the way

Viet Nam’s rapidly expanding service sector shows that the country’s economy is undergoing a broad structural transformation, said deputy head of the General Statistics Office (GSO) Tran Thi Hang.

Preliminary results of the 2012 census revealed that of the country’s 313,000 operating businesses, 212,400 were service enterprises.

This number represents a 31.6 per cent jump since the previous census in 2007.

The number of people working in the service sector also increased 40.2 per cent in the last five years, from over 9 million to about 12.7 million.

Meanwhile, the number of enterprises in the agriculture/forestry/ aquaculture sector and industry/ construction sector saw a slight increase, around 13 per cent.

Until last year, the number of people working in agriculture enterprises was about 357,000, 6.6 per cent lower than in 2007.

Over 9.37 million people were employed in manufacturing and construction enterprises, 35 per cent more than in 2007.

Hang said that the service sector also led in terms of investment and revenue, demonstrating its bigger role in the national economy.

In 2011, over VND10,123 trillion (US$486.3 billion) was invested in the service sector, accounting for 66.6 per cent of total investment into the three major economic sectors [agriculture /forestry/ aquaculture, industry/ construction and service].

The sector’s net revenue was over VND6,000 trillion ($288 billion).

She noted that the number of enterprises and employers in real estate, education and healthcare had grown at a high rate, with an average yearly increase of about 20-30 per cent.

According to the GSO’s socio-economic development report, around 51.7 million of the country’s 52.58 million people of working age are employed. Of them, 31.4 per cent were employed in the service sector, a slight increase over the previous year.

EVN ensures electricity in 2013

Demand for electricity this year may surpass 2012 as the industrial production sector begins a likely recovery, an official from Electricity of Viet Nam (EVN) has predicted.

Speaking at a conference on 2013 plans in Ha Noi yesterday, EVN’s Deputy General Director Dinh Quang Tri said the power system was still capable of supplying the economy and domestic market without sudden changes in hydrology and problems at big plants.

However, the North-South power transmission system and the southern electricity system could face overload, during which, those in the south could face an unbalanced supply-demand at some stages of the year, he said.

Furthermore, all power plants would join the competitive power generation market this year, making power system management more complicated, Tri added.

To ensure the plan to produce and buy more than 130.5 billion kWh of electricity, (an 11 per cent increase on 2012), EVN has added over 2,300 MW of capacity to all sources since last month. The group has also put a number of transmission and distribution grids into its system to ensure regular supply for southern areas.

“As we have defined 2013 as the year for doing business and serving customers, we will ensure the production aligns with the weather and hydrology situation and will effectively exploit hydro-power plants in the dry season to safeguard enough electricity and water for agriculture production and daily life,” Tri said.

Speaking at the conference, Deputy Prime Minister Hoang Trung Hai reiterated that EVN needed to ensure enough water for agricultural production and disburse VND106 trillion (US$5 billion) of investment this year.

He also urged the group to focus on human resources development and work seriously on the earthquake problem at Song Tranh hydro power plant, which had raised concerns among local people in central Quang Nam Province.

The Deputy PM asked the group to especially pay more attention to recycle energy source development to ensure future energy security while taking climate change into account.

Hai said 2012 was a fruitful year for EVN, during which the group business gained business profits, reduced losses and increased the trust of donors over the groups’ capital use.

“Starting the operation of a series of power plants, worth VND71 trillion ($3.3 billion) in total, was a great effort by the group,” Hai said.

Last year, EVN produced 54.4 billion kWh, which was nearly 3.6 billion kWh more than planned. It was reported to have reduced losses from 2011 by VND3.5 trillion ($167 million).

By the end of 2012, the group had provided electricity to more than 19.8 million households, representing a 1.08 million increase on the previous year and covering 97.5 per cent of the country’s population.

Following Government policy, the group sold electricity to 2.9 poor million households nationwide at subsidised prices. Hundreds of poor communes and districts could buy subsidised electricity directly thanks to the newly-installed rural power grids.

Mega-city to provide financial stability

Experts have urged Viet Nam to learn from the experiences of neighbouring countries that recovered from the financial crisis of 1997-1998 by launching major state projects, thus helping companies avoid bankruptcy.

During the Asian financial crisis in 1997, many countries began state projects that helped avert financial doom for many companies.

Plans for a mega-city in southern Viet Nam would also help financial stability, experts said.

“HCM City is a large metropolitan area with a strong business community and should be the centre for a mega-city. But the question is how best to connect the city and other neighbouring provinces,” said Le Thanh Tam, CEO of the International Data Group (IDG) ASEAN, and forum organiser.

Tam spoke at the second CEO World Forum held yesterday in HCM City. Attending the forum were policymakers and leaders from HCM City and the provinces of Dong Nai, Binh Duong, Long An, Ba Ria–Vung Tau and Lam Dong, as well as international researchers, local enterprises and foreign investors.

Le Manh Ha, deputy chairman of the municipal People’s Committee, said that a natural linkage between HCM City and other provinces had been established on traffic, healthcare, education, science and technology and creation.

“Telecommunications and the internet have helped connections all over the world,” he added. “But how can we tighten State management and reduce inadequacies related to the region’s socio-economic development?”

Dinh Quoc Thai, chairman of the Dong Nai People’s Committee, said the central government had already approved the master plan for the southeastern region with six provinces and the HCM City region with eight provinces.

“All our investment and development activities have been carried out based on these two plans, but in reality there has not been much connection among provinces,” he said.

Le Manh Ha said local deployment was critically important to the success of the master plan.

“The central government should release instructions along with a clear budget. If we don’t have a fixed amount of money for regional development, how can the local governments build a mega-city,” he said.

To solve the problem, Nguyen Tri Dung, president of the Japanese-based NICD company, said that a regional council should be set up immediately with a standing secretary board that would ensure that regional activities occurred more frequently.

The participation of enterprises would be important as well, he said.

In addition, smaller provinces should solve minor problems while the central government should focus on big issues.

“A science-technology consultancy council, including the involvement of enterprises, should be created and should work along with the regional council,” he added.

At the forum, participants heard opinions from the International Monetary Fund’s representative about Viet Nam’s and ASEAN’s economic development prospects.

A five-panel roundtable discussed various issues, including a mega-city infrastructure; opportunities for enterprises and investors; public-private partnerships across different cities; and opportunities and challenges for small- and medium-sized enterprises in a mega-city.

Also discussed were wholesale and retail market development; opportunities for supply-chain enterprises; and development of a smart city. Leading international researchers, local enterprises and foreign investors would all be involved in such efforts.

Recession decimates auto sales

Automobile sales in Viet Nam fell by a record 37 per cent in 2012, with an industry group claiming the plunge could be attributed to the economic recession.

Vehicle sales for the 12 months of 2012 totalled just 93,000 units, the Viet Nam Association of Automobile Manufacturers (VAMA) said in a statement.

The association said the decline was worsened by the series of fees and taxes introduced which have dissuaded potential buyers from making a purchase.

Car sales fell by 27 per cent to 26,000 units, while sales of multi-purpose vehicles and commercials vehicles also slipped 26 and 23 per cent to 17.000 and 35.500 units respectively.

Of the 18 VAMA members, only the Viet Nam Engine and Agricultural Machinery Corporation (VEAM) registered growth – at an impressive rate of 34 per cent – while all of the remaining members suffered severe declines. The most vulnerable brands were GM which slid 46 per cent, Ford 45 per cent, Vinaxuki 41 per cent and Truong Hai 25 per cent.

According to VAMA’s chairman Laurrent Charpentier, auto sales for 2013 were projected to hit around 100,000 units, up some 8 per cent from 2012.

Earlier in April, the Ministry of Industry and Trade forecast that Viet Nam’s total car sales for 2012 would see a drastic drop back to 2007’s level of 80,000 units.

In 2011, sales reached 138,000 units, a drop of 5 per cent compared to the previous year.

Government abolishes a number of car fees

The government recently issued a resolution to help struggling businesses and stimulate the slowing economy by cushioning the blow of planned motoring fees.

The 02/NQ-CP resolution will reduce the new car registration fee to 10 per cent of its total value and 2 per cent for second hand cars across the country.

Meanwhile, it will cancel the implementation of car ownership fees which would have seen each car owner pay VND20-50 million per year, in an attempt to restrict rising car numbers that cause chronic traffic congestion.

In March, VAMA asked the Government to postpone the implementation of a series of car fees initiated by the Ministry of Industry and Trade, saying the Government should first build a policy to develop and diversify the transportation network.

If the proposed fees are applied, it will be impossible to achieve the Government’s auto development plan towards 2020, which is regarded as a pillar of the country’s economy.

In that case, Viet Nam will have to spend approximately US$12 billion per year on car imports, which will negatively affect the trade balance.

The recession in the local auto industry will also dim the annual contribution of the sector to the State budget, which is estimated to total $2 billion annually.

Expert says ‘ministries are making unwise moves’

Citizens and businesses are suffering higher fees and prices of power and water, inconsistent with what the Government has vowed to do and reflecting the heartlessness of ministries, said economist Pham Chi Lan.

In late 2012, the Ministry of Finance proposed a lower corporate income tax of 20% for small and medium-sized enterprises, along with value-added tax cuts. Though agreeing with this proposal, Lan suggested the finance ministry should petition the Government to take stricter control on price and fee hikes.

“The Government gives with one hand and takes back with the other, but it takes more than it gives,” she told the Daily in an interview.

While tax reductions are awaiting approval of the National Assembly, local enterprises are burdened with fees.

Directly impacted by the road use fee, transporters are seeking to raise charges, while producers have to cope with higher transport charges and production costs, as power and water prices are also up.

Citizens are suffering more. Due to higher power and water prices, they will likely curtail spending during the upcoming Tet holiday, said Lan.

“The Government fully realizes this paradox, but still allows ministries to do so. If generating revenues for the State budget is given as an excuse, it is totally unconvincing,” she stressed.

The reason why the State budget revenue was off target in 2012 lies in the desperate trouble of local enterprises, she explained. Fee hikes create more difficulties for them when they are unable to sell goods and raise prices as purchasing power is very poor.

“Ministries are making unwise moves. When it is necessary to nourish sources of revenue, they do the opposite. This shows that they are indifferent to people’s livelihood and difficulties of businesses,” said the economist.

She expressed concern that many enterprises could not survive 2013 and as a result, a lot of workers would be jobless. Then, consumption would further weaken and so the vicious circle would continue, she noted.

High inflation will remain a headache in 2013, she predicted. The consumer price index (CPI) will likely rise at a same rate, but what matters is the reason behind it, she noted.

By the end of 2012, CPI had picked up 6.81% against end-2011. Still, the average growth rate in 2012 against the average rate in 2011 was still some 10%.

“In comparison with other countries in the region, CPI in Vietnam is higher, yet growth is lower. The reason is shrinking consumption rather than improved productivity and efficiency,” she said.

The key solution for this problem, according to Lan, is economic restructuring, in which the central task is to reallocate resources to all economic sectors in a transparent way. The resources should not be prioritized for State-owned enterprises any longer.

Restructuring of State-owned enterprises, the banking system and public investment must continue to be done. Meanwhile, in the short term, ministries should cut back on their spending and investment, she suggested.

SBV to take drastic measures against bad debts this year

The State Bank of Vietnam (SBV) at a review conference on Wednesday said that strong measures will be continued to tackle bad debts in 2013 while deposit rate cap may be removed given the improved liquidity in banks.

According to a report released after the conference, bad debt grew 2% monthly in the final half of 2012 compared to a monthly 8% in the first half. The success was due to credit institutions having applied solutions to curb new bad debts, collect overdue debts and handle existing bad debts.

As of the end of November, risk provisions amounted to VND78.6 trillion, or 58.3% of bad debts and up 33% compared to the end of 2011. Bad debts tackled by banks totaled VND45 trillion (USD2 billion).

Many banks last year reduced profits, cut expenditures and even employee wages to deduct for the risk provision funds to handle bad debts.

To basically handle bad debts, the central bank has submitted to the Government two projects for tackling bad debts and setting up an asset management company. SBV also has plans to realize the two projects within 2013 and build up organization and operation rules to launch the asset management firm into operation.

Concerning management of monetary policies in 2013, SBV will adjust interest rates following developments of the macro economy, the monetary market and inflation. Dong deposit rate ceiling will be maintained to stabilize the market but SBV will consider removing this cap if liquidity of the banking system really improves.

If inflation in 2013 goes down compared to 2012, the central bank will continue slashing interest rates, the report said.

Meanwhile, credit growth in 2013 will be curbed at 12% but be adjusted flexibly in line with the reality. The central bank will not control lending ratios in sectors that are not encouraged.

The nation’s credit growth was put at 8.91% as of the end of 2012. Of which, dong credit growth reached 11.51% while that in foreign currencies dropped 1.56% against the end of 2011.

The central bank will also combine with the Ministry of Construction to give guidelines for budget home purchase to ease difficulties of the real estate market.

Besides, after defining nine commercial banks seen as ailing ones, the central bank has had international audit firms audit and inspect these lenders.

SBV has told these banks to build up restructuring schemes in accordance with the law and the credit institution restructuring plan in the 2011-2015 period to fix problems and shortcomings of each bank.

The central bank has sought suggestions from the Government for schemes restructuring eight out of nine weak banks. Accordingly, three of these banks have been merged into one and another bank has been merged with another one.

Vietnam’s fisheries hardest hit by climate change

Climate change is estimated to have already cost Vietnam 5 percent of its GDP, equivalent to USD15 billion annually, and the impacts could be more serious in the coming years, a newly released report claims.

The data was included in the study Climate Vulnerability Monitor 2012 which was released in Hanoi on January 10 by representative of Climate Change Working Group, on behalf of DARA International.

According to the study, Vietnam tops the list of countries suffering from the impact of climate change on the fisheries industry. It’s estimated the sector lost USD1.5 billion in 2010. The figure is forecast to reach as much as USD25 billion by 2030.

“If no effective solutions are applied, climate change could have greater impacts on the country’s economy, estimated at around 11% of its GDP by 2030,” said Nguyen Quang Thanh, an official from Centre for Research Support and Development of Culture, and the centre of Live and Learn for Environment and Community (Live & Learn).

Vietnam is followed by China with an estimated loss of USD15 billion in the fisheries industry in 2010 and USD15 billion by 2030; and Peru with a loss of USD1.25 billion in 2010 and USD15 billion in 2030.

Thailand’s fisheries industry lost USD700 million in 2010 and may lose USD8.5 billion by 2030 while Indonesia incurred a loss of USD650 million in 2010 and the loss may reach USD7.75 billion by 2030, the report said.

The situation is said to be results of the vulnerability of tropical coastal areas and unsustainable fish reserve management. This means it will be necessity to build capacity to reverse or minimise the effects of climate change on the industry via improving fisheries management.

The working group undertook field research in the Mekong Delta province of Ben Tre.

While such industries need large amounts of capital, it also faces the largest risk due to serious impact of climate change.

There is currently a lack of regulations on minimising fishing and protecting fish resources.

Experts said that water temperature and pH levels are basic conditions for fish or oyster raising ponds and could decide how serious a disease outbreak could be. However, there has been still a lack of suitable guidance for farmers during severe weather to prevent potential losses.

They added that the quality of breeding animals also made a difference. In order to improve the situation, it will be necessary for strict regulations to be introduced to ensure the highest quality of breeding animals possible are used and that help is provided to farmers to access higher standard breeding stocks.

Ministry to introduce new food labelling standards

Deputy Minister of the Agriculture and Rural Development Nguyen Thi Xuan Thu has announced a raft of new measures to ensure food safety at a conference on agricultural product distribution.

Cu Chi District residents shop for rice and other agricultural products that were produced under VietGap standards by the Tho Viet Agricultural Co-operative.

Under the plans, four food types will soon be sold with green labels to inform consumers that they meet the standards of the Good Aquaculture Practices (VietGAP) and were produced under the Food and Agricultural Products Quality Development and Control Project (FAQDC).

The four categories will be: vegetables, fruit, pork and chicken.

Speaking at the conference run by the Canada-funded FAQDC, Thu said the labels would also help ensure the food origins and hygiene, while preventing the appearance of fake VietGAP products, she said.

The green labelled goods will be supplied to schools and retail distributors such as BigC and Co-opMart, accompanied by a large advertising campaign covering mass media, transportation means and retailers.

Nguyen Van Thuan, an assistant to the project, said FAQDC had focused on assisting farmers through technical support and promoting consumption.

Tran Duc Vinh, chaiman of the Yen My Co-operative in Thanh Tri District, said the project had helped change the traditional production process of local farmers. Currently, goods produced in the co-operative were sold at its four retail stores in the city and to four city-based companies.

Thanks to this, profits earned by local farmers had increased by up to 20 per cent, Vinh said.

Government clamps down on fake goods

Prime Minister Nguyen Tan Dung vowed to take serious measures to fight against the trade and production of fake goods at a conference to review the industry and commercial sector.

At the conference on January 11, the PM requested that this year the first and foremost task of the Ministry of Industry and Trade is to assist enterprises to overcome the difficult times. Via industry associations, the ministry could help enterprises reduce the inventory and expand their businesses.

He also praised the programmes that connect enterprises with banks because, he said, banks ultimately depend on enterprise.

He added that the country needed to boost demand using such tools as credit and public investment.

Though the government set the credit growth rate goal of 12%, there are still many things must be done in order to boost rate.

The PM also said agencies must protect the domestic market from fake and low-quality imported goods. “The ministries and management agencies must put very tight controls on imported counterfeits, or they could pose a real risk for our businesses.” he said.

According to the Ministry of Industry and Trade, management agencies inspected 177,205 cases last year and discovered 87,136 violations, including 15,045 smuggling cases, 11,726 cases of fake goods or copyright violations, 42,389 cases that did not have business licenses and 17,924 cases in violation of the regulation on prices.

The fine was up to total VND395 billion (USD19 million), and VND55 billion worth of goods was destroyed.

In 2012 demand and purchasing power decreased greatly amid economic downturn. The index of industrial production was also low, increased only 4.8% compared to 2011.

As of December 1, 2012, though inventory levels in the processing and manufacturing industry went down to 20.1%, it was still considered high.


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