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BUSINESS IN BRIEF 15-10Germany sponsors green economy

The German Government has committed to helping Viet Nam develop a green economy and vocational training by loaning the country EUR272 million (US$352 million).

The loan was included in an agreement on financial co-operation signed between the Vietnamese Ministry of Finance and the German Embassy in Ha Noi on Thursday.

Under the terms of the agreement, Germany will provide Viet Nam with EUR22 million in official development assistance (ODA), EUR5 million in non-refundable aid and EUR245 million in loans.

The provisions will be used for joint development programmes and projects between the two countries in Viet Nam, especially focusing on environmental protection and energy conservation as part of the national green economy strategy released by the Vietnamese Government last month.

The sum was the biggest ever pledged by the German Government to Viet Nam, according to the German Embassy in Ha Noi.

Insurance industry maintains high growth

The insurance industry maintained relatively high growth in the first eight months of the year, with premiums totalling VND25 trillion (US$1.19 billion), according to the Ministry of Finance’s Insurance Supervisory Authority.

Non-life insurance premiums accounted for about VND15 trillion ($714 million), an increase of 13 per cent over the same period last year, while life premiums totalled VND10 trillion ($476 million), representing a 12-per-cent increase.

PetroVietnam Insurance Corporation (PVI), which grabbed a market share of 24 per cent during the period, took the lead with premiums of VND3.5 trillion ($166 million), an increase of 11 per cent year-on-year.

Bao Viet Insurance followed with a market share of 22.5 per cent and premiums of VND3.36 trillion ($160 million), while Bao Minh Insurance reported premiums of VND1.38 trillion ($65.7 million), PJICO had premiums of VND1.2 trillion ($57 million) and Post and Telecommunications Insurance (PTI) VND1.1 trillion ($52 million).

The Insurance Supervisory Authority said several insurance companies had premium growth rates of over 50 per cent over the same period last year, including Cathay, Samsung Vina and ACE, while Aviation Company, Phu Hung Assurance Co, Vietinbank Insurance Co and AAA Life Insurance Co all saw declines in premiums.

The life insurance market exploited during the period, with 600,000 new contracts representing premiums of VND2.8 trillion ($133 million), an increase of 11 per cent over last year.

Bao Viet Life topped the life insurance market, capturing a market share of 24 per cent, following by Prudential, Manulife, Daiichi, ACE and AIA.

Insurance Supervisory Authority director Trinh Thanh Hoan predicted that the industry would try to maintain growth rates in the second half of the year while improving financial capacity and meeting requirements of international integration and competitiveness.

The insurance industry has targeted to achieve total premiums this year of VND42.5 trillion, including VND24.6 trillion ($1.17 billion) in non-life premiums and VND18 trillion ($857 million) in life insurance premiums.

Business climate draws investors from S Korea

South Korean investors are being attracted to central Da Nang city due to the introduction of favourable business conditions, according to the vice chairman of the municipal people’s committee, Vo Duy Khuong.

Khuong outlined the progress made at a Da Nang-South Korea business seminar yesterday.

“We have built up policies to attract more Foreign Direct Investment (FDI) projects and we hope that there will be more South Korean investors coming to the city in future,” he said.

“The seminar is an opportunity for businesses from the city and South Korea to discuss the advantages and disadvantages of the current investment environment. The city is prioritising policies in tax, land price, labour training and procedures to attract further investment.”

Viet Nam has attracted 3,000 projects worth a total of US$2.4 billion from South Korea.

Da Nang alone has secured 28 of these projects, worth $701 million so far.

The director of the Korean Chamber of Commerce and Industry (KCCI) in Viet Nam, Kim Ho-kyun, said the seminar was an annual business forum facilitating a boost in the investment opportunities between Viet Nam and South Korea.

“This year will be special for the two countries as we will celebrate the 20th anniversary of diplomatic ties,” Kim told the seminar.

“We have seen 2,800 South Korean businesses investing in Viet Nam, and enterprises from the two countries have come here to study the investment environment in both countries,” he added.

He said that Da Nang city was particularly attractive to South Korean businesses due to its 12 per cent growth in GDP.

The city has long tried to attract foreign investment with its policy decisions. The local authorities have offered low land rents to businesses of about $30-33 per sq.m per year, while foreign investors need only five days to process their business licences.

A recent report from the city shows that Da Nang has attracted 218 FDI projects with a capital of $3.45 billion.

Nguyen Cuong, from the Da Nang office of the Viet Nam Chamber of Commerce and Industry said that despite two-way trade between the two countries reaching a value of $18 billion, Vietnamese businesses have yet to significantly invest in South Korea.

Firms experience mixed fortunes

Despite today’s tough economic climate, many enterprises in HCM City are prospering by identifying business opportunities both at home and abroad.

While companies in the real estate market and wood-products industry have faced a lengthy downturn, the Savimex Joint-Stock Company, which exports furniture, has had success.

The company’s director, Bui Ngoc Quoi, told the Sai Gon Giai Phong (Liberated Sai Gon) newspaper recently that revenue for this year could reach about VND625 billion, a year-on-year increase of 50 per cent.

Quoi said his company had seen opportunities as more Japanese enterprises had chosen Viet Nam as a partner because of Japan’s recent political conflicts with China.

Savimex has already signed contracts that extend to the beginning of next year, and, next year, the company might even have too many contracts, according to Quoi.

Le Dang Quang, director of a printing and packaging firm, the Liksin Corp, said his company had received orders through the end of the year as well as for 2013.

With these orders, Liksin hoped to reach revenue of VND1 trillion this year, up by 5 per cent compared to last year, he added.

HCM City high-tech park proves a success

The HCM City-based Saigon High-Tech Park has attracted 61 projects owned by local and foreign investors, after 10 years of operation.

The project’s total investment capital is US$2.09 billion, including more than $395 million from 32 domestic projects, the park’s head of managing board, Le Hoai Quoc, said

At least 61 companies have been licensed , 29 of them from the US, Japan, Italy and other countries, accepting for a total of $1.72 billion.

Four projects have begun operations, while construction has started on 13 projects.

The park’s export value reached $3.55 billion in the last 10 years, with $1.6 billion recorded for the first nine months of the year.

Most investors are involved in key industries such as microelectronics, telecommunications and bio-technology.

The park is working to provide incentives to enterprises, draft long-term plans to support domestic companies and increase investment in infrastructure.

Apartment prices plunge further

The prices of apartments in Ha Noi continued to decline in the third quarter, reflecting the prolonged stagnation in the city’s real estate market.

According to a quarterly survey on the capital city’s property market conducted by property services firm Savills Viet Nam, secondary asking prices decreased in all districts, down 9 per cent from the previous quarter in Tay Ho District, 6 per cent in Cau Giay, and 5 per cent in Hai Ba Trung.

The declining values were also related to such key factors as infrastructure development and construction progress of each project, Savills said.

End users were now the main buyers in the apartment market, which investors largely abadoned this quarter due to the market’s low liquidity. Developers have also taken to offering shell apartments to further reduce the prices offered to buyers, said the head of Savills’ research division, Do Thi Thu Hang.

CB Richard Ellis Viet Nam’s third-quarter report on the Ha Noi property market showed similar trends.

“Secondary asking prices continued to drop by 5 per cent quarter-on-quarter to an average of about US$1,730/sq.m, following a downward trend that started in the last quarter of 2011,” said CBRE executive director Richard Leech.

“Looking ahead, in the current buyer’s market, the buyers’ purchasing power and mentality will drive the market recovery,” Leech said. “A dim economic outlook through to 2013 will further dampen buyer confidence, and the flight to safety will strengthen savings at the expense of investments. Cash is available, but does not flow into real estate. Consequently, the market is expected to pick up when the economy shows clear signs of improvement.”

Tran Nhu Trung, deputy director of Savills’s Ha Noi branch, said the trend of falling prices since the third quarter of 2011 had caused most investors to change their business strategies.

Leech agreed that business restructuring had been taking place as developers were faced with the challenges of outstanding debts and stagnant demand, and a number of local corporations with non-core competencies in real estate were exiting or looking to exit the market.

Developers have been revising business strategies in terms of target customers and types of products offered, putting greater efforts into sales and customer service and showing a willingness to compromise on prices and payment structures, he said.

“Looking forward, restructuring businesses and revising strategies would be a main focus to most developers in the next two years, as the market now demands better products at more reasonable prices,” he said.

Knight Frank, a foreign property services company, has predicted that prices on the Ha Noi apartment market would continue their downward trend through the final quarter of the year. The mid-end and affordable segments were recognised as the segments with the highest demand, with end users expected to keep playing the primary roles in the apartment sales market in the fourth quarter.

To save themselves from difficulties down the road, a few developers have planned soft launches for their next projects to test the market and to try to boost sales with ongoing promotion campaigns.

Some local developers expect to settle for smaller profit margins in order to offer apartments at more affordable prices, including smaller units at prices of less than VND15 million ($718) per square metre. Some have joined social housing programmes or sold entire residential buildings to government agencies or to major companies looking for accommodations for their employees.

Building material plants may have to move to IPs

All polluting and obsolete construction-materials factories in HCM City will be either closed down or moved to industrial parks by 2020.

The Department of Construction is making a study of brick kilns and cement and other plants since accurate data is not available to decide how many should be closed down, how many need to have their technologies upgraded, and how many should move to IPs.

They will move to Hiep Phuoc IP in Nha Be District, Southeastern IP in Cu Chi District, and Phong Phu IP in Binh Chanh District.

The department is also working with seven neighbouring provinces — Dong Nai, Tay Ninh, Binh Duong, Binh Phuoc, Long An, Tien Giang, and Ba Ria – Vung Tau — to ensure supply to the city.

Sai Gon Giai Phong (Liberated Sai Gon) newspaper quoted deputy director of the department, Phan Duc Nhan, as saying: “All manual brick kilns have stopped manufacturing. At many other workshops, people have started changing their career.”

“The Government offers many incentives to encourage manufacture of green materials using modern technologies, especially those who can take advantage of industrial waste,” he said.

Strange calls stick mobile users with high charges

BKAV, the country’s leading IT and telecom security firm, has warned mobilephone users that when they get a missed call from an unidentified number, they should not call back.

According to BKAV, a number of mobilephone users noticed missed calls from strange numbers, usually a long chain of digits. When they called back, they heard a ringtone but could not establish a connection.

However, their mobile accounts were charged the rate for international calls.

BKAV said it has identified those numbers as coming from satellite phones, or satphones, a type of mobilephone that connects to orbiting satellites instead of terrestrial cell sites.

The company said it has produced a security software for smartphone users that could prevent users from being contacted by fraudulent numbers.

The app, called BKAV Mobile Security, can be downloaded from the application stores of many smartphone operating systems including iOS, Android and BlackBerry.

French Hermes brand opens second branch

French luxury brand Hermes, which recently opened a store in HCM City, has expectations of reaching sales growth of 20-30 per cent within four years.

Its first store in Viet Nam, which opened in Ha Noi four years ago, has seen a similar growth rate.

The store showcases high-fashion clothing, leather items, watches, handbags, scarves, ties, jewelry and works of art.

Hermes has more than 200 stores in more than 20 countries.

SHB promotes online TOPUP service

The Sai Gon-Ha Noi Commercial Joint Stock Bank (SHB) launched a promotional campaign on Thursday for customers using its TOPUP service to pay for online telephone costs via internet banking, SMSBanking and bill payments nationwide.

The first 500 customers to use the service up to January 7 will receive an extra VND50,000 in their account.

Doosan Vina to make boilers for India

The South Korean Doosan Heavy Industries Viet Nam Co Ltd (Doosan Vina) will produce boilers for a thermal power plant in India after recently signing a US$77 million contract.

Doosan Vina’s general director Ryu Hang-ha said on Thursday that two boilers with a capacity of 800MW each would be installed at the Kudgi power plant in India’s south-western region in 2014.

These will be the two biggest boilers ever manufactured in Viet Nam, raising the company’s profile in designing and producing boilers for power plants in the world.

Doosan Vina has previously provided two boilers for Mong Duong 2 thermal power plant in northern Quang Ninh Province.

The company has also exported made-in-Viet Nam boilers to Brazil, Saudi Arabia, India and Egypt.

Phu Quoc fish extract receives protection

The term “Phu Quoc” was officially registered as a Protected Designation of Origin (PDO) for naturally fermented Vietnamese fish extract on Thursday.

It will be added to the list of more than 1,000 names of agricultural products and foodstuffs protected as either PGI (Protected Geographical Indication) or PDO. It is the eleventh non-EU product name to receive the protected status, following Colombian coffee, Indian Darjeeling tea and eight Chinese products.

FPT plans free repairs for customers

FPT will provide free maintenance for its laptop buyers in Ha Noi from October 15-20, the company said.

The service will be carried out at 68 Cau Giay street, Ha Noi.

This maintenance package, which normally costs VND330,000, will include external and internal cleaning.

MobiFone rewards subscribers

MobiFone subscribers who use Smartlink’s e-payment services on the MobiFone website will be able to take part in a lucky draw that will give away 10 Samsung Galaxy S3 I9300 mobilephones, 100 Nokia 110 mobilephones and thousands of pre-paid cards worth VND50,000.

For each VND50,000 paid through the service between September 24 and October 25, customers will receive a number that will be entered into the draw. The winners will be announced on October 30.

Smartlink clients will also be able to enter two other promotions.

IBM, Prism to provide cloud services

IBM and the US-based Prism Technology Service have signed a deal to deliver managed-IT services on the cloud in Viet Nam.

The partnership combines Prism’s services with IBM’s cloud-delivery platform technology. Infrastructure as a service, software as a service, and disaster recovery with business continuity will all be provided.

The partnership will expand Prism’s offerings on unified communications, computing power on demand, remote backup, and a range of IBM services delivered via the cloud.

With these services, companies will be free to focus on their core operational activities without having to pay extra for ownership of IT systems or invest large amounts of capital in IT projects. In addition, hardware infrastructure and software applications can be outsourced from remote data centres.

Computer tablet sales rise, mobiles fall

Mobilephone sales during the second quarter of the year dropped 18 per cent compared to the previous quarter, according to the International Data Company (IDC).

The number of sales for basic mobilephones fell by 20 per cent, while smartphone sales dropped by 4 per cent.

Nokia led the mobilephone market with 50 per cent of sales, and Samsung had the highest market share for smartphones.

IDC predicted that Vietnamese- and Chinese-made phones would ultimately take the highest market share for basic mobilephones and inexpensive smartphones.

While handphone sales slumped, computer tablet sales rose by 110 per cent in the second quarter.

The Apple iPad tablet leads the segment, with sales rising by 170 per cent compared to the first quarter.

Apple holds a market share of 78 per cent in the tablet category. IDC said that Samsung’s Galaxy Tab had suffered a loss of sales to Apple’s iPad.

GfK Viet Nam launches new services

New services, called “Network Intelligence Solution-NIS” and “GeoMarketing” to provide mobile data consumption and geospatial intelligence to network operators will be launched by GfK Viet Nam this month in Viet Nam.

NIS offer detailed information on mobile internet use and user behaviour, allowing stakeholders exclusive opportunity to monetise mobile web use with readily accessible unique information.

GeoMarketing involves the geographic analysis and visualisation of company data in order to spot trends and relationships which may otherwise go un-noticed, according to GfK Viet Nam managing director Tran Van Khoa.

The services will enable users to collect, store, process, analyse, report and display multiple layers of information in Geospatial format.-

Viet Nam celebrates World Food Day

Working together in co-operatives would enable farmers to buy agricultural utilities at more attractive prices, lower production expenditures and generate more profit from their work, according to Deputy Minister of Agriculture and Rural Development Bui Ba Bong.

Bong made the comments at an event held in the run up to the 32nd World Food Day, which falls on October 16.

The theme of this year’s workshop was “Agricultural co-operatives: key to feeding the world.” Talks highlighted the important role of agricultural co-operatives in combating poverty by ensuring food security and job creation.

According to Bong there are 19,500 co-operatives in Viet Nam, of which 9,000 are in the agricultural sector with a membership of 6.7 million. The rate of farmer households participating in co-operatives is about 58 per cent.

Since 2002, co-operatives have contributed an average 6.38 per cent of the gross domestic product, while consuming only 0.58 per cent of fixed asset investment. They have created 300,000 jobs and helped develop infrastructure in rural areas.

Bong said that as Viet Nam was restructuring the agriculture sector towards industrialised production, co-operatives had laid a good foundation for creating large-scale farming areas able to competitively produce high-quality products.

The United Nations Food and Agriculture Organisation (FAO) representative in Viet Nam, Yuriko Shoji, said that for FAO and its partners, agricultural co-operatives were natural allies in the fight against hunger and extreme poverty. Their importance has also been acknowledged through the United Nations’ declaration of 2012 as the International Year of Co-operatives.

Shoji cited the evidence showing that strong co-operatives and producers were able to mitigate the negative effects of food shortages and other crises.

She added that co-operatives had also been able to overcome market and policy constraints by providing their members with access to a range of assets and services, while also making it possible for them to voice their concerns and interests – and to play a role in decision and policy making processes.

The FAO representative said that her organisation would support member governments in helping co-operatives to thrive through the development of adequate policies, legal frameworks, economic incentives and forums encouraging dialogue on policy making.

Tripartite linkage gives livestock farmers a boost

Tripartite links between livestock farmers, feed suppliers and banks were expected to help Viet Nam’s livestock sector solve long-lasting problems such as increased input costs, unstable prices and outlet for their products, experts said.

The Vietnamese livestock sector, mostly consisting of small-scale household farming, outdated techniques and a shortage of investment for farming activities, has been experiencing a difficult time as farmers struggle to access loans and attempt to conform to environmental protection regulations.

A farmer named Minh, who raised pigs for over 10 years in the southern province of Tay Ninh’s Ninh Son Commune, told Tin tuc (News) newspaper that her family had stopped raising pigs and started to grow vegetables.

“I am always worried because raising pigs is risky, with diseases, low demand and poor quality animal feed,” Minh said.

In many cases, wholesalers control prices, posing more uncertainty for farmers.

Deputy head of the Livestock Production Department under the Ministry of Agriculture and Rural Development Dang Thanh Son said that financial shortages were a major problem for Vietnamese livestock farms, even modern facilities, because it was difficult for credit institutions to accept pigs as collateral.

Son mentioned a co-operative programme in southern Dong Nai Province, in which co-operation between farmers, feed suppliers and banks had been tightened.

Accordingly, the provincial Agriculture and Rural Development offered farmers loans with preferential interest rates, and feed producers sold their products directly without any middlemen and allowed farmers to defer payments.

Deputy minister Luong Le Phuong said that closer co-operation would bring many benefits.

The market for livestock products would be ensured as food processing companies committed to buy the goods, and food processors could have a stable supply and control the quality of input products. Feed producers would also have a stable market.

“Drastic measures are needed to boost co-operation,” he said.

A farmer named Dung in Dong Nai Province’s Thong Nhat District said that after joining the programme, his loans had been disbursed on time, and repayments were flexible.

By buying feed directly from companies which had joined the programme, my profits increased from 5-7 per cent, he said.

Director of Binh Minh Livestock Company Ltd Duong Anh Tuan said that his company was trying to build tighter connections with its distributors and animal feed providers.

By doing so, most of his company’s products are now sold in supermarkets, and he can also defer payments for feed suppliers.

He said that the company and his partners would co-operate to find a feed formula which was more suitable for local pigs and weather conditions.

Ha Giang depends on growth in tourism

Developing tourism is essential to improving the economy and living conditions of local people in Ha Giang, according to Nguyen Minh Tien, vice chairman of the provincial People’s Committee.

Tien made the comments last week at a seminar in Quan Ba District on the subject of developing community tourism.

Also participating in the seminar were local people who provide homestay services for tourists and domestic travel agents.

“Ha Giang is known for Dong Van Plateau and the terrace fields in Hoang Su Phi District, both of which have been recognised by UNESCO,” Tien said. “With its wonderful landscape, the province is an attractive destination for tourists who enjoy the homestay services and community tourism, helping them understand the unique local culture.

“Ha Giang has been the poorest province in the country for the past 20 years, so we must develop the provincial economy and people’s living conditions using the platform of developing tourism.”

“The hospitality of the people along with the wide range of culturally diverse and traditional activities on offer – a result of the 22 ethnic groups in the area – are advantages that can be used to develop community tourism.”

Hoang Van Kien, vice director of the provincial Culture, Sports and Tourism Department, gave an overview of the current situation of community tourism development in the province. He confirmed that people wanted to join authorities to develop tourism and receive guests to live in their home. They have actively and voluntarily moved breeding farming facilities from the stilt houses where tourists stay in order to meet hygiene standards.

However, he suggested that the investment to develop community tourism should focus on really spectacular villages.

“The number of tourism villages has increased in recent years, but when I made a recent survey I realised that some of these villages only receive a few guests a year,” he said. “We built up three Tay ethnic group villages with very similar features on the same route, and this was a wasted investment. In the future I think on one route to a district we should focus on only having a single village representing one ethnic group’s culture.”

Attending the seminar, local people from tourism villages in the whole province reported their condition of living and services they provided for visitors. They also stated difficulties they faced and expressed their expectations that they would receive support from the provincial government.

Hoang Van Trinh, an owner of homestay service in Na Rang Village, Xin Man District, said that he was proud of living in a village which attractedmany foreign guests.

“We have a cultural communal house to welcome tourists and organise festivals, but we still lack facilities and items such as musical instruments and decorative objects,” he said. “We also want to be sponsored to set up a troupe of art performers as well as a team of tour guides.”

Travel agents at the seminar confirmed their plans to conduct surveys in the villages and work with the local people to offer more tours in Ha Giang Province.

Jetstar Pacific expands Airbus fleet

Low-cost carrier Jetstar Pacific on Wednesday received one more Airbus A320 aircraft at Tan Son Nhat International Airport, taking to four the total number of its Airbus A320 fleet.

According to a statement released by Jetstar Pacific, the airplane manufactured by Airbus Group was transferred by the U.S.’s Aviation Capital Group Corporation. The carrier in August also took an Airbus A320 and expects to receive one more Airbus craft at the end of this year.

The carrier now has four Airbus A320 and one Boeing B737-400s. With this Airbus fleet, Jetstar Pacific is able to provide 2,500 more seats weekly compared a fleet of four Boeing B737-400s airplanes.

The carrier has plans to gradually replace Boeing airplanes with Airbus 320. Jetstar Pacific earlier had five Boeing and two Airbus planes but then returned four Boeing aircrafts to its partner.

Jetstar Pacific will return the last Boeing aircraft at the end of this year to maintain a fleet of Airbus A320 planes only. The carrier also has plans to expand its fleet to 15 aircraft in the next years.

The carrier today will launch the sale of 110,000 tickets for the 2013 traditional Lunar New Year holiday, or Tet.

For the Tet ticket sale, passengers can contact Jetstar Pacific customer care center via telephone number 19001550 or visit its website at www.jetstar.com.

Ceramic tile enterprises seek ‘fair deal’

The domestic ceramic-tile industry, struggling to sell inventory during the economic slowdown, has urged the Government to impose stricter control over imported ceramic tiles.

Last year, the Vietnamese ceramic-tile industry generated about 400 square metres of products, becoming ASEAN’s biggest tile producer, replacing Indonesia.

In early 2009, the ceramic-tile industry’s production capacity was only 299 million square metres per year, accounting for only two-third of the capacity of Indonesia.

According to the local Ceramic Tile Contractors Association, as of September this year, the Vietnamese industry was capable of producing 416 million square metres of tiles.

However, the prolonged recession at home and abroad has caused problems for the industry.

The association’s chairman, Dinh Quang Huy, said the market’s purchasing power had slowed down significantly because of the stoppage of many construction projects.

To cope with the higher volume of inventory, many domestic tile producers have had to cut their production capacity, and some have even stopped production for one or two months.

“On average, the tile industry is using only 70 per cent of its designed capacity,” Huy said. “The amount of unsold stock continues to rise and is now worth VND3 trillion (US$142 million), double the figure in normal conditions.”

In addition to the inventory problem, domestic tile producers have had to cope with other difficulties, including rising input costs and lack of capital.

Many banks have recently applied credit-loosening policies, but few ceramic-tile companies were able to access bank loans at soft interest rates.

Many of them are paying loan interest rates that are 2.6 times higher than those in Indonesia and three times higher than those in Malaysia. Such challenges put domestic tile producers at a disadvantage, particularly from ceramics products made in China, which has an annual capacity of 9 billion square metres of ceramic products.

In the first six months, of the year, the total value of ceramic tiles legally imported from China climbed to US$30 million, accounting for 95 per cent of Viet Nam’s total tile import turnover. The volume of illegally imported tiles from China was also large.

With such competition, the local industry, even with high exports of $300 million last year, has suffered a slowdown.

The tile association has sent two official letters to the Prime Minister and the Ministry of Construction, asking for tightening of tile imports and prevention of fraud and smuggling.

Vinacomin targets coal sales of 40 million tonnes

The Vietnam National Coal and Mineral Industries Group (Vinacomin) has set a target of producing 12.3 million tonnes of coal in the fourth quarter of this year in a bid to achieve sales of  about 40 million tonnes this year.

Despite encountering several business difficulties, Vinacomin was still able to produce 33.2 million tonnes of coal during the first nine months, a volume equivalent to 68 per cent of the yearly target.

Vinacomin has exported 9.5 million tonnes of coal so far this year. The Group’s total revenue in the first nine months reached VND60.4 trillion.

Apart from coal products, the Group produced 471 million tonnes of bar tin, over 5,000 tonnes of zinc, almost 35,000 tonnes of fine bronze ore and over 6,000 tonnes of plate bronze, 4,555 million KWh of power and other mechanical products.

High prices in City curb retail demand

Demand for goods in HCM City has remained depressed for long, affecting all manner of retailers, but they are unable to reduce prices as cost of fuel and other inputs are high.

At Tan Binh Market, 550 out of 12,000 shopkeepers have stopped doing business, while in Thi Nghe, sales are down an estimated 30 – 40 per cent from the same period last year.

Rentals on many famous shopping streets have plunged 25-40 per cent as shopkeepers are unable to pay high rents.

Supermarkets and shopping malls too are facing tough times, with some of them being forced to close down.

There are several reasons for the bleak situation: high prices, belt-tightening by consumers, and the popularity of fake and smuggled goods.

The reasons for the high prices are the usual suspects: high petrol, electricity, transport and raw materials prices and steep taxes and fees.

Nhan Dan (The People) newspaper quoted Tran Minh Phat, director of Vuong Dat Company Limited, as saying: “Large amounts of credit at low interest rates, a cut in taxes and fees, and affordable fuel and electricity prices are the only things that can help enterprises survive and reduce prices of goods.”

Le Ngoc Dao, deputy director of the city’s Department of Industry and Trade, said: “Consumption stimulus is the most important measure in the current situation. Manufacturing enterprises should co-operate with dealers to set proper prices that would encourage customers to buy.”

The department has started a training course to improve the management skills of the managers of traditional markets.

Another course on selling skills for shopkeepers will be held in all 24 districts.

Banks fail to meet credit targets

The goal set for credit growth this year was proving hard to reach and banks should shift focus to credit quality, said Pham Hong Hai, managing director, head of Global Banking and Markets HSBC Bank Viet Nam.

Accelerating credit quality was critical for banks to develop, Hai said. He told Thoi Bao Ngan Hang (Banking Times) newspaper that banks should select customers to provide loans, rather than promote credit growth at any cost which had caused bad debts to increase.

Hai said high interest rates were not responsible for low credit growth. Lowering rates would not improve credit growth because low domestic demand was holding back the growth of companies and the need to borrow. In addition, if the bank interest rates were lowered to 8-7 per cent while inflation was rising, Viet Nam dong would be withdrawn to be invested in foreign currencies or gold.

The credit growth target this year of 8-10 per cent would not be fulfilled, he said, forecasting a rate of 6-8 per cent.

“However, it is not a worrying situation,” he said.

Nguyen Xuan Thanh, public policy manager at the Fulbright Economics Teaching Programme, said slow credit growth after years of boom was inevitable when the banking system struck difficulties, as had occurred in other Southeast Asian countries. “The economy is regulating itself,” he said.

Meanwhile, Trinh Van Tuan, chairman of the Orient Commercial Bank, said bank liquidity should be prioritised.

Investment in Government bonds was the safest choice for both liquidity and profit, although the profit would not be high, Tuan said.

Deputy general director of the Viet Nam International Bank Le Quang Trung said State Treasury had mobilised Government bonds worth VND147.46 trillion (US$7.022 billion) since the beginning of the year, 95 per cent of which were from commercial banks.

Gold, forex trust operations to be halted

The State Bank of Viet Nam is expected to issue new regulations to tighten trust operations of credit institutions, including domestic and foreign commercial banks.

Banks that conduct trust operations are allowed to manage and trade in assets held in trust for clients, including gold and foreign currency.

Under a newly-released draft circular, credit institutions and foreign bank branches would not be allowed to take part in trust operations involving gold or foreign currency. The move would be consistent with the current State Bank strategy to more strictly control the gold and foreign currency markets.

Banking expert Nguyen Tri Hieu applauded the developments, saying that commercial banks should not be allowed to take part in trust operations and urging the central bank to separate commercial banking and investment banking operations. Commercial banks that conduct trust operations were doing the work of investment banks rather than ensuring capital flows for the economy, Hieu said.

The draft decree would not limit banks and other credit institutions from taking part in trust operations involving other types of assets. They would be allowed to act as trustees in one or more lines of banking services in accordance with the Law on Credit Institutions and the terms of their licences as granted by the State Bank.

“Two existing circulars govern trust operations but remain inadequate and difficult to apply,” the State Bank said in releasing the draft circular. “Provisions in the draft would help ensure fewer risks in trust operations and include detailed provisions on trustors and trustees and their responsibilities,” it stressed.

The draft circular would apply to such trustees including commercial banks, finance and financial leasing companies, co-operative banks, people’s credit unions and branches of foreign banks.

 Ministry fines LPG traders for failing to register prices

PetroVietnam Northern Gas Joint Stock Co and PetroVietnam Southern Gas Joint Stock Co will be fined VND30 million (US$1,430) each for not registering their sales prices with the Ministry of Finance in September.

The penalty was decided after the ministry inspected four liquefied petroleum gas (LPG) wholesalers which also included Saigon Petro Limited Co and Petrolimex Gas Joint Stock Co’s branch in Ha Noi.

Late last week, the MoF sent a letter to LPG importers nationwide asking them to register their sales prices before putting their products on the market.

City targets to sell 100 million ornamental fish, double exports

City authorities have targeted production of 100 million ornamental fish by 2015, with 20-30 million of that figure to be exported, up to double the current amount.

The main export markets for the ornamental-fish industry, which plays a key role in the country’s agricultural development, are the EU, the US and other Asian countries.

Vo Van Cuong, chairman of the city’s Ornamental Creature Association, told Viet Nam News that HCM City had long been a centre of ornamental-fish raising, due to its advantageous land and water sources as well as the skill of its farmers.

Under the plan, the city targets US$30-40 million in exports by 2015. This year, the city aims to raise a total of 70 million ornamental fish, of which 15 million would be exported. While the new plan is ambitious, experts have warned that ornamental-fish industry has experienced problems, particularly weak co-operation among fish-farmers.

As a result, the quality of ornamental fish from different farmers has been uneven.

Moreover, planning has been poor, especially because of export limitations, including strict trade procedures, Cuong told Viet Nam News.

To solve the problem, the city has developed a plan to support the industry, focusing on the districts of Go Vap, Cu Chi and Binh Chanh as well as 8, 9 and 12 as the centres of ornamental-fish raising.

The city also plans to set up a research centre in the Cu Chi High-Tech Zone, according to Nguyen Phuoc Trung, deputy director of the city’s Department of Agriculture and Rural Development.

In addition, ornamental-fish farmers will take part in international trade fairs abroad, such as those organised in Germany, Singapore and France. At the fairs, farmers can learn from other fish breeders and expand their businesses.

Under the city’s plan, co-operation among fish-farmers would be strengthened. Other provinces involved in ornamental-fish farming, including Dong Nai, Binh Duong, Tay Ninh, Long An, Tien Giang and Dong Thap, would be expected to work closely together.

Last year, the city exported 8.6 million ornamental fish valued at $12 million, according to the city’s agriculture department.

Currently, 300 households and two companies in HCM City raise 60 kinds of ornamental fish, producing a total of about 600 million fish.

Israel, Viet Nam forum to help boost trade ties

The Viet Nam-Israel Business Forum would be held in Ha Noi on November 5, according to the Ministry of Industry and Trade.

The event aimed to create favourable conditions for Vietnamese businesses to access the Israeli market and seek co-operation partners, the ministry said.

In the first seven months of this year, bilateral trade turnover between the two countries reached US$253 million, up 52 per cent compared to the same period last year. Among Viet Nam’s key export items to the Israeli market included garments and textiles, footwear, aquatic and agricultural products, machinery and equipment, rubber, diamond processing, computers and components.

Israel has so far invested in 14 projects in Viet Nam worth $30 million.

Da Nang refuses Coca-Cola factory expansion project

The central city of Da Nang’s People’s Committee has refused to give permission to Coca-Cola Viet Nam for a 5,000sq.m production line expansion project.

In a meeting with the local administration, vice chairman of the city Vo Duy Khuong said the city had provided the company an area of 40,000sq.m at a preferential price of US$0.647 per square metre a year since 2008, but the company had only developed two thirds of it.

He said the company should expand the production line on the remaining land.

Khuong also added that the company had reported losses since 2008, and that was the reason the city had refused the company’s proposal.

Last year, the city earned a modest amount from the company including VND4 billion ($190,000) in value added tax, natural resource tax of VND73 million ($3,500) and VND57.7 million ($2,700) from corporate income tax.

(VietNam Net)

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