Home » Business » BUSINESS IN BRIEF 15/11

Surplus stocks further sweeten sugar prices

Sugar prices in the domestic market will continue to decrease thanks to abundant supply, according to the Ministry of Finance’s Price Control Department.

The commodity’s price went down by roughly VND1,000 per kilo over September to VND19,000-23,000 per kilo.

The department said that 11 sugar mills had started producing the 2012/13 crop by the middle of last month and another seven mills would also begin production this month.

This crop’s total output was estimated to exceed 100,000 tonnes, the department said.

Minister of Industry and Trade Vu Huy Hoang said that Viet Nam would also have to import 100,000 tonnes of sugar this year according to the country’s commitment to the World Trade Organisation.

Hoang said that the ministry accepted an import quota of 70,000 tonnes in August, adding that the ministry would work closely with the Ministry of Agriculture and Rural Development and the Viet Nam Sugar Association to decide the most suitable time for granting sugar import quotas to avoid negatively impacting domestic production.

However, Hoang said that the country needed roughly 1.4 million tonnes of sugar yearly so he expected that the sugar import, since it accounted for only a small proportion of the country’s total demand, would not significantly affect domestic production.

Sugar sales topped 47,600 tonnes between September 15 and October 15, roughly 25,800 tonnes lower than the same period last year, according to the Ministry of Industry and Trade. The increase provided domestic sugar producers with an inventory of 110,400 tonnes as of October 15.

Surplus supply lowers fertilizer prices

With excessive supply and far less consumption, fertilizer prices fell drastically in October, said the Vietnam Fertilizer Association.

Vietnamese farmers are no longer worried about hike in fertilizer prices because of surplus supply.

The Ca Mau Fertilizer Plant, Phu My Fertilizer Plant and Ha Bac Fertilizer Plant are all operating at full capacity and producing an estimated amount of 550,000 tons for the market in year-end months.

In addition, fertilizers in stock across the country are around 140,00 tons and imported fertilizer is around 150,000 tons, adding to a total of 850,000 tons.

Accordingly, in the fourth quarter of the year, the supply will exceed demand by around 300,000 tons. Fertilizer for the coming winter-spring crop is ensured; hence the association has warned importers to consider before placing more orders.

A surplus supply of fertilizer resulted in decreased prices since October. In the Mekong Delta, the price of fertilizer slumped drastically as compared to July. For instance, Phu My fertilizer reduced by VND90,000 on a 50 kilogram bag and it is forecast that prices will decrease more as consumption lessens.

Diammonium phosphate (DAP) fertilizer and NPK fertilizer reduced by VND30,000 per 50 kilogram bag in the Mekong Delta.  A bag of DAP made in the Philippines fetches VND815,000 per 50 kilogram bag while Chinese-made DAP costs VND700,000 per 50 kilogram bag.

Vietnamese farmers are no longer worried about hike in fertilizer prices because of surplus supply.

RoK tops list of investors in Hanoi

The Republic of Korea (RoK) is the largest foreign direct investor in Hanoi with 636 projects, accounting for nearly 31 percent of total FDI projects in the city.

It now ranks second in the Vietnamese capital city in terms of registered capital, totalling more than US$3.5 billion.

The figures were unveiled at a meeting in Hanoi on November 12 between Nguyen Thi Bich Ngoc, vice chairwoman of the Hanoi municipal People’s Committee, and Choi Young Joo, President of the RoK-Vietnam Friendship Association.

Both sides expressed their delight at the constant growth of economic cooperation in recent years.

Since 1996, the capital cities of Hanoi (Vietnam) and Seoul (the RoK) have established the ties of friendship and cooperation and signed many agreements and memorandums of understanding in this connection.

Most recently, they have agreed on a plan to develop areas along the banks of the Red River and created favourable conditions for Korean businesses to invest in Vietnam and Hanoi students to take part in training courses in the RoK.

UK businesses seek investment opportunities in Vietnam

A UK business delegation led by the Harvey Nash Group’s CEO Paul Smith is currently on a visit to Vietnam from November 12-16.

The aim is to seek investment opportunities and establish ties of cooperation with Vietnamese partners in Hanoi and Ho Chi Minh City.

At a press briefing in Hanoi on November 12, Smith termed Vietnam as a potential market for foreign investors and wished that the country would push through reform to make the investment environment ever more attractive.

Japan to pour investment into Vietnam

A major business delegation led by the Japanese Ministry of Economy, Trade, and Industry (METI) and representatives of the Mainichi newspaper has arrived in Vietnam to seek cooperative business opportunities.

The delegation’s four-day visit (November 11-14) also aims to prepare for the MEIT’s Cool Japan project in Vietnam.

Naoyuki Kawagoishi, deputy director of the Cool Japan project, said that the project has introduced the world to a variety of unique products from Japan’s diverse prefectures.

Mr Kawagoishi said that this December, the three Japanese localities Kyoto, Hokkaido, and Tokushima will exhibit their products in Vietnam, including fashion, animated films, and other regional specialties.

He added that both countries will collaborate to create new services taking advantage of Japan’s management experience. One potential example could be a boon to the talent stocks of Vietnamese sports, with Japan coordinating the opening of football, volleyball, and martial arts training centres.

Japanese investors are looking for quintessential Vietnamese input over the long term. The cooperating businesses hope to offer services capable of attracting and meeting the demands of both the Vietnamese and Japanese markets.

Russia to open air route to Cam Ranh

There will be direct flights from Chelyabinsk Airport to Cam Ranh in Vietnam and Sharjah in the United Arab Emirates (UAE), according to Interfax-Ural News Agency.

It quoted a press release from this airport as saying the monthly frequency of flights to popular tourism destinations in winter will increase by three times to Hurghada (20 flights) and by two times to Sharm El Sheikh in Egypt (10 flights) –both in Egypt – as compared to last year.

In addition, flights to Bangkok and Phuket in Thailand, Dubai in the UAE and Goa in India will also be resumed.

Banks poised to lend more as year-end approaches

Commercial banks in HCM City are preparing large volumes of capital to meet the demand for loans in the last few months of the year.

To attract customers, the banks are offering flexible lending policies and low interest rates.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam’s branch in HCM City, said that in the first 10 months of the year, banks had a credit growth rate of only 2.2 per cent from the end of 2011.

Credit growth rate is expected to reach 5 – 6 per cent by the year-end, according to Minh.

Local banks have prepared about VND200 trillion (US$9.6 billion) to supply capital for the market from now to Tet (Lunar New Year ) .

Banks have also allowed some borrowers to use their products as collateral.

The leader of a small bank in the city who declined to be named said that his bank was ready to lend VND2 trillion at the interest rate of 14-15 per cent per year.

His bank would also accept enterprises’ products as collateral, but this would only be allowed in some cases.

A major bank in the city is also planning to provide soft-interest loans worth thousands of billions of dong for dozens of enterprises that participate in the city government’s price-stabilisation programmes during Tet.

The bank also plans to give financial assistance to small merchants at 20 markets in the city with a lending interest rate of only 10 per cent per year and a three-month term, according to a bank representative.

Pham Quang Thang, director of Techcombank, said that most commercial banks had for years implemented capital disbursement for borrowers every three or six months, causing difficulties for enterprises.

Due to the short term length, many enterprises could not pay back the banks on schedule because their products sold too slowly, Thang said.

To solve this problem, Techcombank has launched a new kind of loan with terms of up to 12 months.

Collateral would likely be savings books, certificates of deposits, bonds and promissory notes or properties, he said.

Despite the increased number of preferential credit packages, banks in the city continue to strictly control the quality of loans to minimise bad debts.

Many banks have asked enterprises to mortgage their money paid through the banks as a proof of business ability and capacity.

To do this, enterprises would have to transfer turnover equivalent to at least 50 per cent of their loan value. With this condition, banks said they would be able to collect their loans more easily.

The Governor of the State Bank of Viet Nam has also issued a directive asking banks to cut costs so they can more easily reduce lending interest rates.

The directive also requires commercial banks not to collect loan fees except those that are regulated by the central bank.

FDI firms outperform local businesses

Many foreign direct investment (FDI) enterprises have accelerated investments and are now outperforming domestic firms in many major Vietnamese export sectors.

According toTuoi tre (Youth) newspaper, Sai Gon Precision, a wholly Japanese-invested mechanics company, has added US$25 million in equity to develop a new plant and recruit more workers as it rushes to meet new orders.

South Korea’s Nobland Viet Nam Co has decided to increase its capital by $17 million and expand its garment production lines by an additional area of 11,000 sq.m in HCM City’s Tan Thoi Hiep Industrial Zone.

Lee Ho Young, a company official, said the more advantageous investment environment in Viet Nam compared to neighbouring countries prompted the expansion.

China’s textile company Texhong in the southern Dong Nai Province has boosted its production capacity from 30,000 tonnes to 150,000 tonnes of products per year, aided a capital increase from $80 million to $150 million.

Taiwan’s textile producer Formosa also supplemented its investment capital with $30 million late last month.

Viet Nam Textile and Apparel Association vice chairwoman Dang Thi Phuong Dung said FDI enterprises represented about 60 per cent of the country’s total garment and textile product export value, which was worth over $12 billion in the first ten months of the year.

Nguyen Tan Phuoc, deputy head of the HCM City Export Processing and Industrial Zones Authority, said FDI firms here are expanding production, with many involved in footwear, garment, and electronic products widening investments into other provinces.

Viet Nam Steel Association vice chairman Nguyen Tien Nghi said South Korea’s Posco Group now represents about half of the domestic rolled steel market, causing significant difficulties for local manufacturers, including the Viet Nam Steel Corporation and the Thong Nhat Flat Steel Joint Stock Co.

“Modern production technology, optimal materials and fuel saving methods help keep the prices of FDI firms’ products much more competitive than those of domestic steel makers,” he said. “They are likely to gain greater market shares in the coming time.”

Vice chairman of the Viet Nam Leather and Footwear Association, Diep Thanh Kiet, said that in recent years, FDI footwear producers achieved an annual growth of 16-18 per cent, while domestic firms only managed 10-12 per cent.

Foreign firms also represent up to 70 per cent of the quantity of well-known clothing and footwear products exported worldwide.

“With their strategic visions, outstanding financial capacity and flexibility in regulating business areas with global operations, it’s natural that FDI enterprises account for great ratios in export balances,” he said.

He noted that FDI companies know how to take full advantage of national-level trade agreements, especially benefits related to export taxes, in developing their businesses. Kiet said domestic enterprises obviously saw opportunities on the horizon, but low financial capacity and labour productivity, as well as high interest rates still cause them to lag behind.

Ministry of Industry and Trade official Phan Thi Dieu Ha said the Government should help local businesses by offering more preferential policies related to loans and interest rates.

According to National Assembly reports, while FDI enterprises’ export turnover reached $58.5 billion in the first ten months, rising 32.2 per cent year-on-year and accounting for 62.6 per cent of the nation’s total export turnover, export turnover from the domestic sector only posted a modest increase of 1 per cent.

Farmers, seafood processors seek loans

Farmers and seafood processors urgently need easy access to soft loans to tide over the difficulties facing them now, officials of the South West Steering Committee were told last Friday.

Representatives of the Viet Nam Association of Seafood Exporters and Processors (VASEP) put forward several proposals at a meeting with committee officials held in Can Tho City, seeking ways to help the fisheries sector recover and meet its export potential.

VASEP general secretary Truong Dinh Hoe said at the meeting that in the first nine months of the year, over 600 enterprises involved in seafood exports recorded a combined export value of more than US$4.5 billion, a modest increase of 4.3 per cent over the corresponding period last year.

The export growth was not as much as expected, Hoe said, adding, “the main reason is that both farmers and processors are facing many difficulties, including a serious shortage of capital, raw materials and markets.”

Of these, capital shortage is the biggest problem since it seriously affects the entire fishery industry’s business and production activities, he said.

The Government and the central bank have helped with several measures including lower interest rates and restructuring of old debts, but very few farmers and enterprises have benefited from them, he added.

In the first six months of this year, 40,000ha of shrimp ponds, accounting for 6.49 per cent of the total area in the Cuu Long (Mekong) Delta, were hit by diseases, and farmers lost thousands of billions of dong, according to the Fisheries Department.

To continue farming after suffering such losses, farmers and small and medium enterprises really need soft loans from the banks.

However, most of them are unable to meet the strict requirements imposed by banks, including not having any bad debt, having feasible business projects, and assets used as collateral.

Complicated lending procedures are also a part of the problem.

For instance, farmers are asked to show sales and purchase invoices before a loan agreement can be signed, while Vietnamese farmers typically engage in “hand-to-hand selling and buying.”

At present, the lending interest rates for borrowers in the fisheries industry have been cut to under 11 per cent per year, but this is still expensive for farmers, given their financial capacity. The rates are also higher than in many countries in the region, making Vietnamese seafood less competitive.

Hoe suggested that the South West Steering Committee petitions the State Bank of Viet Nam (SBV) to create conditions for farmers and enterprises involved in producing and processing seafood for export to get easier access to short-term loans in foreign currencies that carry low interest rates.

Nguyen Phong Quang, deputy head of the committee, agreed with Hoe’s suggestion, saying it was a rational move considering the difficult situation that the industry is facing.

“The committee will make a proposal to the SBV asking it to delay application of the new circular that aims to tighten lending in foreign currencies by credit institutions until the end of 2013 so that seafood processors can access this cheap capital channel,” said Quang.

The central bank on March 8 had issued a circular under which foreign currency loans for importing goods and services would be given only if borrowers demonstrate they have sufficient foreign currency to repay the loans.

“Foreign currency loans now have an interest rate of only 4 per cent per year, much lower than the dong loans’ 11 per cent,” he said.

Meat imports could rise for Tet

The livestock industry is seeking ways to ensure a sufficient volume of meat for next year’s Tet (Lunar New Year) holiday, as stock has fallen this year, according to the Livestock Department.

Since April, the livestock industry has faced several difficulties, forcing many farmers out of business.

The price of animal feed has continued to rise, but meat prices have remained about the same.

Live pigs have been selling for VND35,000 to 38,000 per kilo; chicken for around 22,000 per kilo; and eggs for VND1,650 each.

The number of live pigs and poultry has fallen by 3 per cent and 2 per cent, respectively, according to the General Statistics Office.

Independent market experts are worried about insufficient supplies of meat products later this year.

Pham Minh Bau, deputy director of the Agriculture and Rural Development Department of Dong Nai Province, has the highest number of livestock farms in the country. He said there was a plentiful supply in that locality.

Although several pig farms have closed, the locality’s pig herd still numbers 1.3 million, two million more than last year’s figure, Bau said, adding that the weight of each pig was also higher.

However, poultry production at both small and big poultry farms in the province had fallen dramatically.

“The number of live poultry in the province is only 30 per cent of what we had during the same period last year, so supplies for Tet are expected to fall,” said Pham Duc Binh, director of Thanh Binh Company.

Vu Manh Hung, chairman of the Binh Phuoc Province’s Poultry Association, said Indonesia-based Japfa Comfeed Company in Binh Phuoc Province had asked member farms to raise only two brood of chickens a year rather than four or five.

Some other companies also have plans to reduce the number of chicken in order to cut costs.

“These changes would affect supply of chicken for the market with a drop estimated to be 50 per cent for the rest of the year,” Hung said.

Nguyen Thanh Son, deputy director of the Livestock Department, said there would likely be a shortage of chicken for the rest of the year but it would not be a serious problem since purchases were expected to rise by only 8 to 10 per cent, much lower than the 18-20 per cent in previous years.

To ensure supplies, a large volume of chicken would be imported, Son said.

“In coming months, about 240,000 and 250,000 tonnes of domestically-produced meat and 40,000 tonnes of imported meat will be sold on the market each month,” he said.

“The department is collecting information about supply and demand of food, particularly meat, from localities to draw up specific plans to be sure there is enough food for Tet, said Nguyen Xuan Duong, another deputy director of the Livestock Department.

Building materials sector in a jam

Despite approaching the year-end months typically considered the peak time for construction projects, the domestic building material market currently finds itself in a gloomy situation.

A report from the Viet Nam Building Materials Association showed that in the first 10 months of the year, inventories of unsold ceramics rose by 20 per cent.

The ceramic tile sector recorded an inventory of 40 million sq.m, equivalent to VND3 trillion (US$142.8 million). Roughly half of ceramic tile factories had to halt their production as a result.

The glass industry also saw difficulties as four float glass plants produced 273,000 tonnes while domestic consumption was just 191,000 tonnes.

The cement sector also saw a shortfall, as it was expected to produce 65 million tonnes this year, while domestic consumption was estimated to hit 48 million and exports 8 million tonnes.

Statistics from the steel industry showed the sector planned to increase productivity of 3-4 per cent this year, but in reality, its surplus inventory reached 300,000 tonnes. Adding to the woes, forecasts expect steel consumption in the year-end months to be much lower than that of previous years.

Chairman of the Viet Nam Building Materials Association Tran Van Huynh said the the high inventories are due to the economic slowdown as well as Government policies to cut public investment. In addition, increasing prices of raw materials and high interest rates have prevented businesses from accessing loans.

Huynh said domestic producers are also battling imported products which cause consumption to fall and inventories to rise.

He said the association has proposed the Government reduces interest rates, extends debts and takes measures to increase building demand.

He added that the Government should adopt policies to encourage building projects using domestically-produced products, possibly by putting a limit on imports.

In addition, the sector should expand promotion campaigns to foreign markets in a bid to further reduce inventories, he said.

State-funded projects get less capital next year

The Government plans to continue to tighten the allocation of capital for new State-funded projects next year.

The move is part of a State budget capital-allocation plan announced by the Ministry of Planning and Investment.

Under the plan, the Government will set capital-allocation priorities for major national projects and projects related to national defence, security, borders and islands. Investment focus will also be given to projects involved in agricultural, forestry and fishery areas.

In addition, the Government will use State budget funds as corresponding capital for Official Development Assistance (ODA) projects. Capital from the State budget and Government bond capital will be given only for urgent, new projects.

Authorised ministries, branches and localities will have to ensure a sufficient supply of capital for any project that was expected to be completed this year or before this year.

Projects to start in 2013 will likely receive State budget capital or Government bond capital if they are listed in an investment plan that has been approved by authorised agencies and are in line with the Directive No. 1792/CT-TTg of November 12, 2011.

Projects will also be required to have capital origins identified and sufficient capital balance to ensure that they will be implemented on schedule, thus limiting waste of State budget funds.

Vietnam’s beverage sector draws investors

Despite the economic slump that is forcing consumers to cut spending, local and foreign investors believe that the food and beverage industry in Vietnam continues to remain attractive.

Seeing that demand and growth in this field is huge, manufacturers have been promoting their investments to win more market share. Recently, Coca Cola announced that it will pump in more investments of upto US$300 million, starting next year. This investment will be used to improve operations of its three factories in Hanoi, Da Nang and Ho Chi Minh City.

In addition, Coca Cola Beverages Vietnam Ltd also signed an agreement with Saigon Co.op for business dealings, effective beginning of next year.

After developing in the seasonings sector for several years, Vedan realized the potential in the Vietnamese market so it started to encroach into the beverage sector with Thien Tra trademark.

In order to promote its operations, PepsiCo established a joint venture with Japanese beverage producer Suntory in Vietnam, in which the former held 49 percent stake and the latter 51 percent stake. This joint venture will concentrate on expanding foods and beverages to help PepsiCo firm its grip on the Vietnamese market.

PepsiCo had invested around $500 million and built five beverage factories since its debut in Vietnam in 1994. Its latest factory opened in October in Bac Ninh Province with a total investment of $73 million, which is considered the largest foods and drinks factory in the global PepsiCo network.

According to the Vietnam Beer-Alcohol-Beverage Association, Vietnam’s non-alcohol beverage market has been catching the attention of many investors as its growth reached an impressive 20 percent in the past five years. Currently, a Vietnamese merely drinks three liters of a non-alcohol bottled drink in a year while an average Filipino consumes 50 liters a year. Thus, Vietnam’s market has great potential.

Domestic beverage companies have also confidently expanded their operations after seeing huge investments pouring in from foreign beverage producers. For instance, the Tan Hiep Phat Beverage Group built Number One Chu Lai Factory in central Vietnam and Number One Ha Nam Factory in the north, increasing the group’s annual capacity to 2 billion liters.

Currently, with foreign investors showing a great deal of interest in the Vietnamese beverage market, firms should coordinate with foreign investment funds for capital, management, and technical support.

Vietnam struggles to retain position as leading rice exporter

According to the Vietnam Food Association (VFA), the country is struggling to retain its position as the leading rice exporter in the world since late September, however with rice exports ready to hit a record 7.7 million tons by the end of this year, Vietnam may hold onto it position this year.

A report by VFA said that in October firms exported 646,196 tons of rice at an average price of US$445.3 per ton, up $5.23 per ton compared to the previous month. Domestic rice price rose as firms had signed contracts to export 300,000 tons of rice to Indonesia last month. As a result, long-grain paddy climbed to VND6,185 per kilo while common paddy was bought at VND6,025 per kilo in provinces in the Mekong Delta.

In the first ten months of this year, the country exported 6.484 million tons of rice, bringing in $2.877 billion. According to the plan, Vietnam will export about 1.05 million tons of rice in the last two months of this year so rice exports will reach 7.5 million tons or even 7.7 million tons if there is a favorable market.

Besides, figures from the Department of Cultivation show that farmers have completed sowing of the autumn-winter crop on 730,000 hectares, up 130,000 hectares compared to the plan, of which 50 percent of the crop has been harvested by now, with production of 3.7 million tons of paddy, up 500,000 tons compared to forecasts. They have also sowed the next rice crop on 200,000 hectares with production likely to reach 860,000 tons, of which 100,000 tons will be ready to harvest next month.

Meanwhile, according to calculations by the Ministry of Agriculture and Rural Development, the amount of rice for export this year was 7.5-7.7 million tons and 8.6-8.8 million tons if including inventory rice of local firms since 2011. Thus, it is feasible to export 7.7 million tons of rice this year.

However, if Vietnam exports 7.7 million tons of rice, the domestic rice price will climb steeply, causing a set back for exports. Because global rice prices will not be able to catch up with domestic prices, especially when India and Myanmar sell rice at $30-$100 per ton respectively, lower than Vietnam. But if firms are cautious they will lose their chance to export rice at high prices, as they experienced last year.

Although, by volume, Thailand dropped to third rank; by value, it was still the leading rice exporter in the world as the quality of Thai rice is better. Currently, five-percent-broken rice from Thailand was bought at $570 per ton, whereas Vietnamese rice was bought at $490 and Indian rice at $460. Therefore, Thailand remained the leading rice exporter with $3.5 billion. Vietnam followed with $2.45 billion and India came next with $2.29 billion.

Officials from the Ministry of Commerce of Thailand and Thai exporters also said that Thailand will win back its leading spot by the end of this year.

Sometimes, the amount of rice exported to Cambodia through unofficial cross-border trade, which is then moved to Thailand, is huge. Tinh Bien Border Gate in An Giang alone sees up to 5,000 tons of rice passing through a day. However, since September, rice exports through unofficial cross-border trade to Cambodia dropped sharply as Thai traders no longer buy rice as much as before.

Meanwhile, rice exports to China in the past nine months touched 1.7 million tons, and upto 2 million tons if including unofficial cross-border trade.

According to experts, though it helped to lift up domestic rice price, an increase in rice exports to Cambodia and China will do more harm than good as it might cause a shortage of rice for firms to fulfill their export orders. In addition, Thai and Chinese traders will use Vietnamese rice against Vietnamese rice in the global market.

This is a great challenge for Vietnam’s rice export industry as up to now the country has not had any strategy for exporting and trading rice. The Ministry of Agriculture and Rural Development only has a strategy on food security, focusing on balancing production and consumption, but has not taken into consideration production for rice exports. If authorities are able to solve this shortcoming, the country’s rice exports will become more stable and bring in high value.

Lenders ready to make home loans

Despite the current high lending rates at local banks, homebuyers have still had many opportunities to obtain home loans at affordable rates.

After a long time of saving money, Quoc, a resident in HCMC’s Binh Thanh District, has decided to buy an apartment in Thu Duc District with a total value of over VND1 billion. A small commercial bank has agreed to provide him with a loan accounting for 60% of the condo’s value with an annual rate of 17%. The lender asks for a simple loan application but Quoc has yet to apply for the disbursement as he has found out that numerous banks offer much lower lending rates, with certain banks quoting the rate at a mere 12%.

The fact shows that loan rates of local banks are different.  Many big lenders have revised down their lending rates to below 14% per annum, while smaller banks either restrict lending or provide loans with rates of 16-17%.

Meanwhile, a number of small banks don’t announce lending rates for home loans publicly but they still disburse money upon customers’ requests. But interest rates of these banks are higher than other lenders.

According to the director of the Tan Binh Branch of a small bank, the interest rate at her bank is 17% a year and borrowers can take out credit by handing in land, homes or assets as collateral. She ascribed the bank’s high loan rates to its liquidity problem at the moment.

Regarding the aforesaid high lending rates, Trinh Van Tuan, chairman of Orient Commercial Bank (OCB), noticed the annual average deposit rate stands at 12-13% at multiple small banks.

Therefore, he said, lending rates of those banks have also been adjusted accordingly. A number of credit institutions have a vast array of supporting programs to lure customers but they also tighten lending conditions, he added.

Meanwhile, large numbers of big lenders holding ample capital but failing to lend out on the inter-bank market are seeking ways to disburse loans, including Bank for Foreign Trade of Vietnam (Vietcombank).

Nguyen Phuoc Thanh, general director of Vietcombank, said his bank over the past few months had considerably slashed lending rates to attract borrowers.

Vietcombank offers an annual rate of 12% for the first year, with rates of the following years set in line with savings rates. Regardless of the low rate, the bank had only disbursed a combined VND1 trillion as of late last month after launching a credit line of VND2 trillion for home loans a few months ago.

Similarly, Vietnam Export Import Commercial Bank (Eximbank) has set aside VND5 trillion for home loans at 12% per year. Eximbank borrowers will enjoy a fixed rate of 12% in the first three years, with the rate in the following years being the savings rate plus two percentage points.

ANZ also offers home loans with rates 2-3% lower than the normal level at the bank, allowing customers to take out loans having a term of 20 years and accounting for up to 100% of the mortgaged asset.

October automobile sales barely up

October automobile sales slightly recovered from previous months thanks to a series of new models introduced by car makers and promotions offered at the “Vietnam Motor Show 2012” in Hanoi in late September.

Many car producers reported their October sales volumes slightly increased against the preceding month.

Ford Vietnam last month sold 536 units, a slight increase of 10 units month-on-month, and Toyota Vietnam sold nearly 2,500 cars, marking up 230 cars. Suzuki Vietnam sold 376 cars, up 145 units while Vinastar had some 300 units consumed, a pickup of about 120 units, and Honda Vietnam sold 218 cars, up 117 units.

Several car makers explained the slight sales increase in October is due partly to the contribution of selling contracts clinched after the motor show. Besides, local consumers tend to purchase cars in the final months of the year, they said.

However, many other car producers are still facing difficulties owing to poor demand despite their supporting programs to attract buyers so far. GM Vietnam in October only had 501 units consumed, plummeting 8 units from September, or Mercedes Benz Vietnam sold 129 units, dipping 54 units, while Truong Hai sold 2,136 cars, tumbling 64 units.

The majority of car makers described last month’s sales as a sharp fall from the same period last year, with Toyota Vietnam recording a sales decrease of roughly 500 units, Truong Hai 749 units, GM Vietnam 390 units and Ford Vietnam 116 units.

Sales of the whole auto market this year has slumped around 30% over the year-ago period, car makers said. With the gloomy sales performance lasting for months, it is difficult for the auto industry to achieve this year’s sales target of 100,000 units in spite of more than 140,000 units sold in all of 2011, they predicted.

The current negative economic condition is still seen as the main reason for the declining auto consumption volume. A slew of companies in the industry noticed that local consumers are still hesitant to purchase cars as they found the Ministry of Transport’s announcement not to collect circulation fees in the next few years uncertain.

Due to the current slackened demand, industry insiders all said they don’t expect business result to sharply accelerate in the rest of the year.

U.S. seek garment producers in Vietnam

Many U.S. enterprises are seeking garment producers in Southeast Asian countries, especially in Vietnam, as they do not want to depend much on the supply from China.

According to TigerTrade Service’s representative office in Vietnam, there are currently 128 U.S. businesses looking for plants producing apparel products in Vietnam to export to the U.S. in the coming time. U.S. enterprises have demands for many apparel products produced under the sub-contract or FOB models.

Two among the 128 enterprises arrived in Vietnam last week and visited some garment plants.

Nguyen Manh Hung from TigerTrade Service said that most of these U.S. businesses have not cooperated with Vietnamese firms before. They want to shift from China to Southeast Asian countries and pay special attention to Vietnam, he added.

Besides, TigerTrade Service next month will help a group of six U.S. businesses look for Vietnamese footwear producers to export to this market.

According to the Vietnam Textile and Apparel Association (VITAS), U.S. is currently the largest market of Vietnam’s textile-garment export, with an import turnover from Vietnam reaching US$5.6 billion in the January-September period, up nearly 8% year-on-year. Meanwhile, Vietnam is the second biggest providers of apparel products for the U.S., after China.

China’s garment export to the U.S. in the eight-month period was US$26.2 billion compared to over US$5 billion of Vietnam. However, the export price of Vietnam increased by 8.48% from the same period last year and was 1.5 times higher than that of China.

Tra fish farmers incur losses despite price rise

Although material tra fish prices in the Mekong Delta have bounced back, farmers are still incurring losses.

Export-qualified tra fish was sold at around VND20,000 per kilo a few days ago, but now the prices have risen to VND22,500-23,500, according to Nguyen Huu Nguyen, member of the An Giang Fishery Association (AFA), a tra fish farmer in An Giang’s Chau Phu District.

Specifically, tra fish material prices are VND22,200-22,500 a kilo for buyers who pay farmers immediately. For those who make payments one month after purchase, the prices are VND23,000-23,500 a kilo, up VND1,000-2,500 against two weeks ago.

Le Chi Binh, vice chairman of AFA, said the reason for the increase in material tra fish prices had not been identified. Perhaps, exporters expect that the market will prosper, he guessed.

Meanwhile, Nguyen Van Kich, general director of Cafatex Corp. in Hau Giang, said the reason might be a decline in tra fish supply after many farmers ran into losses and had no money to raise new stocks.

Despite the rise in material prices, farmers still suffer losses because tra fish production cost is some VND24,000-24,500 per kilo.

“My 6,000-square-meter fish pond can harvest 200 tons, and as the buyer offers the price of VND23,000 a kilo, I have to incur a loss of at least VND200 million,” said Nguyen.

Many farming households expect tra fish material prices would pick up on the occasion of Christmas and New Year holidays. So far, the situation remains gloomy.

“Fish prices surged to VND28,000 a kilo at this time in previous years; all fish farmers pin their hopes on this period. However, up to now, the situation remains dreary,” said Nguyen.

Kich of Cafatex explained importing countries, who want to consume tra fish during Christmas and New Year, had already placed their orders from July to September. “Now enterprises are processing goods for delivery to their partners, there is no hope for new export orders,” he said.

The Vietnam Association of Seafood Exporters and Producers (VASEP) informed tra fish exports had increased sharply compared to the third quarter. However, the whole-year export turnover is forecast to be equal to last year’s figure.

In particular, tra fish exports in the fourth quarter are estimated to bring in US$470 million, rising 7% over the third quarter, taking the total turnover in 2012 to US$1.8 billion, equivalent to 2011’s figure.

Rubber sector needs to bend with the times

The rubber industry’s development has been brought sharply into focus.

To cultivate the local rubber industry’s growth, the prime minister rubber-stamped Decision 750/QD-TTg outlining rubber industry development planning to 2015, with vision towards 2020.

Under the decision, by 2015 Vietnam was expected to host 800,000 hectares of rubber fields and post 1.2 million tonnes of rubber latex, according to Vietnam Rubber Association (VRA).

General Statistics Office figures show that in 2011 there was 834,200ha of rubber fields in Vietnam, outpacing the target set for 2015, generating over 1.2 million tonnes of rubber latex. The rubber area is forecast to hit 900,00ha generating an estimated 1.4 million tonnes of latex in 2012.

“These figures show that Vietnam possesses natural rubber sources which are vital to future rubber industry development,” said VRA’s office chief Tran Thi Thuy Hoa.

Industry experts, however, assumed several thorny problems persisted.

First, albeit Vietnam ranks fifth worldwide in respect to natural rubber output and fourth in natural rubber export volume, made-in-Vietnam rubber products remain monotonous. Tires account for around 70 per cent of total products, with the remainder being simple items like rubber gloves, carpets or mattresses.

Tire production sector in Vietnam began developing from the 1990s only and had yet to turn out competitive complex items serving motorbike and auto industries, said Ho Chi Minh City Plastic Rubber Association chairman Nguyen Quoc Anh.

Tire-makers are only in a position to satisfy local consumption for motorbike and small van tires whereas up to 50 per cent of truck and passenger car tires need to be imported.

Second, unhealthy competition exists between domestic and foreign direct investment (FDI) capital businesses. That is because FDI firms positioned in Vietnamese export processing and industrial zones benefit from some tax incentives, whereas local firms do not, badly affecting the competitiveness of made-in-Vietnam rubber items.

Experts assumed Vietnam could grow into not only a top natural latex supplier but also potential major rubber item maker in the not distant future, given the country’s huge latex output and relatively stable product price of around $3,000 per tonne.

Forum talks up CLV development triangle

A Dak Lak province business forum late last week discussed measures to further promote investment in the Cambodia-Laos-Vietnam Development Triangle.

About 300 delegates and guests from the three countries attended the forum, organised by the Vietnam’s Ministry of Planning and Investment (MPI), in partnership with Vietnam’s Association of Foreign-Invested Enterprises (VAFIE) and the Vietnam-Laos-Cambodia Association for Economic Cooperation Development.

Dang Xuan Quang, deputy head of the Foreign Investment Agency, said the Vietnamese government was encouraging Vietnamese companies to invest in the development triangle. Many Vietnamese enterprises have gained encouraging successes in doing business in Cambodia and Laos, he said.

He proposed the Cambodian and Laos sides speed up licencing investment projects by Vietnamese companies, especially large-scaled hydropower, mining and industrial crops projects.

The triangle comprises 13 provinces – Mondulkiri, Stung Treng, Rattanakiri and Kratie of Cambodia, Attapeu, Saravan, Sekong and Champassak of Laos, and Kon Tum, Gia Lai, Dak Lak, Dak Nong and Binh Phuoc of Vietnam.

The region covers 144,600 square kilometres with a population of 6.7 million. The whole area’s socio-economic development level was still low, according to MPI. Most provinces in the triangle are located in mountainous or highland areas. Carrying out cooperation projects in infrastructure development is later than scheduled, according to the ministry. One of things the triangle should do more effectively is calling for official development assistance funds from overseas, like Australia and Japan, and international financial institutions like the World Bank, Asian Development Bank.

Some of the cooperation directions for the border region are to continue the work in its preferential mechanism to reduce the customs clearance time and costs of goods crossing the borders.

Cao Van Ban, from the Vietnam-Laos-Cambodia Association for Economic Cooperation Development, said triangle traffic links were mostly through roads, though the three countries had waterways and air links. “Therefore, road upgrades and development will play an important role,” said Ban.

National Highway 14 linking Ho Chi Minh City with Dak Lak province, Vietnam’s coffee growing hub, has many rough sections in the province, Dak Nong and Binh Phuoc. It normally takes 10-12 hours to drive through the 300km.

Le Ngoc Bau, director of the Central Highlands Agriculture Forestry Science and Technology Institute of Vietnam, said the country had advantages for cooperation in coffee and rubber development in Laos.

Vietnam has many coffee nursery technical advances can be transferred to Laos such as irrigating and fertilising coffee trees techniques, he said.

Phung Ngoc My, vice chairman of Gia Lai People’s Committee, said his province was calling investors for projects of a beer brewery, tanning factory, engineering products factory, vegetable oil factory, and a tire and inner tire project.

MPI vice minister Dao Quang Thu said: “The three Mekong countries have many investment cooperation opportunities. Therefore, implementing investment cooperation activities effectively will make more contributions to socio-economic development of each country.”

Also at the forum, MPI announced the three master plans for socio-economic development until 2020 of Vietnam’s Central Highlands, Southeast Region and Mekong Delta.

Three-quarter seafood exports hit $4.5 billion

Vietnam earned $4.5 billion from seafood exports in the three quarters to September, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The export value in the nine-month period rose 4.3 pct compared to the previous year.

The United States has overtaken the European Union as the largest market for Vietnam’s seafood shipments.

VASEP Vice Chairman Nguyen Huu Dung said that the US demand remained steady but catfish exports to the country experienced a setback due to falling prices.

However, revenues from the US market still increased as a result of the rising shipments of tuna, squid and octopus, added Dung, with tuna surging 45 pct and squid and octopus rising 30 pct over the same period last year.

In the EU market, these types of seafood also posted strong growth, with squid and octopus up 21.9 pct and tuna up 51.6 pct year on year.

Seafood exports to Australia also rose a staggering 44 pct to hit $79.2 million in the first three quarters of 2012.

Dung said that Australia saw the strongest growth of Vietnam’s shrimp exports in the January-September period and its demand will remain strong in the final months of the year.

In Southeast Asia, Malaysia is the largest importer of Vietnam’s catfish with $15.05 million in the first seven months of 2012, accounting for one third of the country’s $44.4 million spending on frozen fish imports.

Tuna fishing management seminar

A seminar to increase the managerial capacity of ocean tuna fishing was held in the central city of Da Nang on November 13. The event was part of a project sponsored by the Western and Central Pacific Fisheries Convention.

As an important source of revenues to the Vietnamese fisheries, stocks of ocean tuna roaming offshore Vietnam are estimated to amount to 665,000 tonnes.

The catch of ocean tuna is increasing in the central provinces of Binh Dinh, Phu Yen and Khanh Hoa, with a fleet numbering 2,400 boats in total.

According to the Vietnam Association for Seafood Exporters and Producers, the country exported $450 million of tuna by mid-October, marking a year-on-year increase of 55 per cent.

The US remains Vietnam’s leading tuna importer.

At present, global demand for tuna exceeds supply. It is forecast that Vietnam’s tuna exports in 2012 will continue to increase, doubling the value of last year’s return.

Source: VNN/VNA/VNS/VOV/VIR/SGT/SGGP/Dtinews/VGP

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