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BUSINESS IN BRIEF 17-12Farm produce exports rise on volumes

The nation’s export values of major agricultural products like rice, coffee and cashew have surpassed those in 2011 thanks to higher export volumes rather than better prices this year.

Pepper is the exception as its export volume has tumbled compared to the previous year but its export revenue has risen due to higher prices.

The nation exported 110,000 tons of pepper worth US$750 million in the January-November period, dropping 8.9% in volume but rising 6% in value compared to the same period of last year, according to the Vietnam Pepper Association. Pepper export prices average out at US$6,800 per ton, rising by US$930 per ton against 2011.

For cashew, the Vietnam Cashew Association (Vinacas) expects to see this year’s export volume and value exceeding targets set up early this year.

Vinacas general secretary Dang Hoang Giang said that local firms have exported 220,000 tons of cashew nuts, up nearly 40,000 tons against 2011, while value has risen by US$150 million to US$1.45 billion. Cashew export prices hover at around US$6,500-6,700 per ton this year, down by 10-15% year-on-year.

A report of Vietnam Food Association (VFA) shows that Vietnam exported over 7.2 million tons of rice worth US$3.2 billion as of December 6. In 2011, the nation exported 7.1 million tons worth US$3.5 billion.

VFA expects local firms to export around 7.7 million tons of rice in 2012 with around US$3.5 billion earned, suggesting that Vietnam rice export prices have declined although export volume has increased by 300,000 tons against last year.

Similarly, the coffee sector has also met this year’s target due to higher export volume. The Vietnam Coffee and Cocoa Association (Vicofa) at a conference in November said that coffee export volume jumped 23% to 1.6 million tons with value reaching nearly US$3.4 billion.

This is the highest ever coffee export volume of the nation thanks to favorable weather conditions. The nation’s coffee output in the next 2012-2013 crop is 1.5 million tons, up 300,000 tons compared to earlier expectation, Vicofa said.

However, coffee export prices average out at US$2,000 per ton this year, down by around US$200 against the average level of the 2010-2011 crop.

Eight border-gate EZs get development priority

Eight border-gate economic zones (EZs) have been given the priority for investment and development on the State budget in the next three years, weeks after the Government had announced similar incentives for five groups of coastal economic zones.

The Prime Minister last week gave the nod to the scheme for review and selection of some border-gate EZs for investment and development on the State budget in the period 2013-2015.

The chosen border-gate EZs are Mong Cai in Quang Ninh Province, Dong Dang-Lang Son in Lang Son, Lao Cai in Lao Cai, Cau Treo in Ha Tinh, Lao Bao in Quang Tri, Bo Y in Kon Tum, Moc Bai in Tay Ninh and An Giang in An Giang Province.

The Prime Minister noted these eight border-gate EZs must be listed in order of priority. In each EZ, the urgent projects must be implemented first so as to promote efficiency of the EZ.

The Ministry of Planning and Investment is assigned to coordinate with relevant ministries and localities to allocate at least 70% of the funds from the central budget for infrastructure development in the aforesaid border-gate EZs.

Earlier, the Prime Minister has agreed to select five groups of coastal EZs to prioritize State budget funds in the period from 2013 to 2015.

They are Chu Lai in Quang Nam and Dung Quat in Quang Ngai; Dinh Vu-Cat Hai in Hai Phong; Nghi Son in Thanh Hoa; Vung Ang in Ha Tinh; and Phu Quoc Island and An Thoi Archipelago in Kien Giang.

Online shopping doubles in 2012: Visa

A survey of the international payment technology company Visa announced on Tuesday shows that growth of online shopping in Vietnam has doubled this year.

The survey shows that Vietnamese people have increasingly adopted online shopping channels due to the rising popularity of Internet services. This also means that local people have stronger trust in online payment security solutions.

The research indicates that the ratio of Internet users in Vietnam is nearly equivalent to the global average figure of 68%, with 67% of local users accessing the Internet daily. This has helped form a suitable environment for e-commerce development.

According to Visa’s research, 98% of local respondents said they had searched for products and services on the Internet over the past twelve months. In that category, 71% of people had purchased products via online services while as high as 90% said they would continue to do the online shopping in the future.

The popularity of smartphones and 3G networks is also a driver of e-commerce at home. Up to 39% of respondents use mobile phones to search for online services and products.

Local consumers’ solid confidence in the security level of online payments has also contributed to the development of e-commerce in Vietnam. Nearly 70% of customers doing the online shopping said an improvement in security had persuaded them to use the service more regularly.

Up to 83% of respondents said they felt more secure about online payments.

With such high growth, Visa predicts the local e-commerce industry will grow further next year due to the fact that some 60% of local companies have still been unable to accept online payment transactions, while only 20% of citizens own bank accounts as recorded by Visa.

Buildings near city center have greater edge

High-rise office buildings near the city center will have more opportunities to attract tenants as supply of grade-A offices in the downtown area is limited as a result of the slow progress of many projects in HCMC.

Market research firms early this year forecast the city would have an additional supply of grade-A offices in the heart of the city of 77,000 square meters this year. However, the total area of office space launched onto the market so far this year is some 21,000 square meters.

Only the President Place at the corner of Nguyen Du and Nam Ky Khoi Nghia streets and the Empress building can enter the market this year. Meanwhile, it is impossible for a number of buildings in the city center like the Saigon One at the corner of Ham Nghi and Ton Duc Thang streets to be complete within this year.

According to real estate service provider Cushman &Wakefield, as the future supply declines while demand has been rising over the past time, office rent has stabilized after three consecutive years of decline.

The offered price of grade-A office space averages out at some VND642,000, or US$30.5, a square meter. And the average rate of grade-B offices is around VND362,000, or US$17, a square meter.

CB Richard Ellis Vietnam (CBRE) said downtown grade-A buildings such as Kumho Asiana Plaza, Metropolitan, Sun Wah Tower, Diamond Plaza, Saigon Center, Saigon Tower and Centec have maintained a high occupancy rate of roughly 95% in the last four quarters.

Similarly, new buildings like Vincom Center have seen a considerable occupancy rate, rising from 51% at the end of last year to 75% at present. Also, Bitexco Financial Tower has posted occupancy of nearly 68%.

Greg Ohan, director of office services of CBRE, said tenants’ tight spending and prudence in the search for new offices were what had defined the market this year.

The slower-than-expected supply of new office space has created favorable business conditions for grade-B office buildings near the city’s center. There is a high possibility that the phenomenon will continue into next year.

This is evident in high occupancy rates of several new grade-B buildings chosen by banks, law firms, multinational companies and pharmaceutical enterprises.

For instance, the Maritime Bank building on Nguyen Cong Tru Street has leased out 87% of its total area. And the newly-completed An Phu Plaza with nearly 8,800 square meters of office space and 54 serviced apartments has found a customer willing to occupy 30% of the total area.

The office leasing market in HCMC now has around 1.9 million square meters of office space available. Grade-A offices account for about 305,000 square meters and grade-B areas make up approximately 802,000 square meters, with the remainder belonging to the grade-C segment.

Huge funds needed for irrigation development in Delta

The Mekong Delta will need huge funds for irrigation development in the coming years, estimated at VND41.4 trillion, or some US$2 billion, in the next eight years and four times that sum until 2050, an official said.

Vu Van Thang, deputy director general of the Directorate of Water Resources, told the conference “Irrigation Development in the Mekong Delta” held in Can Tho City on Tuesday that capital should be mobilized from various sources to meet the investment demand.

The colossal budget of VND171.7 trillion required for irrigation in the Mekong Delta, however, should be disbursed in three stages: VND41.4 trillion until 2020, VND49.45 trillion for 2021-2030 and VND80.85 trillion for 2031-2050.

“By area, the left bank of the Tien River should be allocated VND33.98 trillion; the area between the Tien and Hau rivers some VND85.28 trillion; Long Xuyen Quadrangle about VND13.44 trillion; Ca Mau Peninsula and islands a respective VND37.78 trillion and VND1.22 trillion,” he said.

He added that funds for the irrigation planning would come from annual central and local budgets, government bonds, ODA, capital of the climate change response program, contributions of flood victims and other sources.

The goal is to develop a complete irrigation system, meeting the requirements of agriculture and aquaculture in the context of climate change and sea level rise, contributing to socioeconomic development and environmental protection in the Mekong Delta.

Deputy Minister of Agriculture and Rural Development Hoang Van Thang suggested the planning should focus on the urgent projects for development of agriculture and aquaculture, avoiding dispersed investments.

“To maximize the effectiveness of the irrigation planning, I propose detailed planning schemes of localities should be consistent with the general planning of the whole region, meeting the requirements for climate change-sea level rise responses.”

“The Government should conduct scientific research to determine the feasibility of the planning,” said Luong Quang Xo, deputy director of the Southern Institute for Water Resources Planning.

According to the statistics of the Southern Institute for Water Resources Planning, the Mekong Delta currently has over 15,000 kilometers of canal and level-1 channels, nearly 27,000 kilometers of level-2 channels and some 50,000 kilometers of smaller channels.

As for flood control works, the whole region has over 13,000 kilometers of dykes and embankments, of which 7,000 kilometers is to protect the summer-autumn rice crop and over 200 kilometers is to store water to prevent forest fire.

The coastal provinces have 450 kilometers of sea dyke, 1,290 kilometers of river dyke and some 7,000 kilometers of embankment along the inland waterways to prevent seawater intrusion, tides and storms.

Road fund to reduce budget burden: Ministry

The budget allocated for road repair and maintenance has met only 40% of needs and is on the decline, and thus the collection of road maintenance fees from next year is necessary, according to the Ministry of Transport.

The ministry on Tuesday said that road maintenance fee collection would start next month despite the overwhelming negative response and proposals to delay collection to share the burden with enterprises, especially transport firms.

However, the capital amount allocated by the State to manage and maintain roads is not enough.

According to the ministry, after many years of receiving insufficient capital, the quality of many key roads, including National Highway 1A, has deteriorated seriously, affecting traffic safety.

The road maintenance fee collection, with many methods of collection proposed such as collecting directly every month, based on every kilometer, or percent of transport costs or collecting indirectly via fuels is impractical as it is unable to separate between diesel oil used for road transport and diesel oil used for other sectors.

Therefore, the collection of road maintenance fees via each vehicle is workable and will contribute capital to the road maintenance fund and reduce the burden on the State budget.

Besides, the authorities of wards, communes and towns will be in charge of collecting the fees from motorcycle owners.

Regarding concerns over the management and use of the road maintenance fund, the Ministry of Transport said that the fund would be managed and used as closely as any other revenues of the State budget.

With the road maintenance fee collection, toll collection stations will be removed from next month. However, the ministry will keep some stations to recover capital for expressways, build-operate-transfer projects and to pay investment loans.

Trade cooperation behind success of price subsidized program

A trade cooperation program between Ho Chi Minh City and 20 provinces in the southern region has been the main reason behind the success of the price subsidized program, said Nguyen Thi Hong, deputy chairwoman of the HCMC People’s Committee.

According to Ms. Hong, the trade cooperation program is a platform for businesses to broaden their scope of investment, advance towards a closed distribution system, cut down on middle men and offer affordable prices.

The program is being conducted for the last one year by the Department of Industry and Trade in HCMC, seven southeastern provinces and 13 Mekong Delta provinces.

Le Ngoc Dao, deputy director of the Department of Industry and Trade in HCMC, said the City has determined the strength of each province to build a supply and demand chain for farm produce and food items for City markets.

Livestock and chicken meat is being provided by Dong Nai, Ba Ria-Vung Tau, Long An, Tien Giang, Tay Ninh, Binh Duong and Binh Phuoc Provinces. Eggs are been supplied by Dong Nai, Long An, Tien Giang, Kien Giang, An Giang and Dong Thap Provinces. Vegetables are coming from Lam Dong, Long An, Tien Giang and HCMC.

HCMC has also determined the ability of each province to help source consumer commodities.

According to calculations made by provinces, the volume of commodities supplied to HCMC account for 50 percent of their general output. Dong Nai and Lam Dong Provinces provide the City with 70 percent of their total output.

HCMC is consuming an average of 1,000-1,100 tons of commodities and 3-3.5 million chicken eggs a day. Of these, the City can only meet 15-20 percent of the demand, with the remaining volume coming from provinces or imports.

So far businesses with distribution systems in HCMC like Saigon Co.op, Vinatex and Fahasa have built their own supermarkets in the above 20 provinces and working to develop chains of convenient stores also.

Provinces have played an important role in supplying commodities to HCMC, the largest market to consume farm produce in Vietnam.

Nguyen Phuoc Trung, deputy director of the Department of Agriculture and Rural Development in HCMC, said that the trade cooperation program has gained a lot in strength.

However HCMC has still not found optimal solutions to help businesses to purchase farm produce from provinces to process for domestic markets or for exports. Provinces have also not pointed out how they will help City businesses to develop sustainably, he said.

Restrictive draft decree offers little opportunity for cross-border vehicle travel

Foreign tourists can bring their autos and motorbikes to Vietnam as a means of transport, according to a Ministry of Transport draft decree.

However, the draft decree on the management of the vehicles used by foreign travellers stipulates that foreign tourists are permitted to stay in Vietnam for no more than 30 days, with a maximum extension of 10 days. The regulation applies to vehicles with less than nine seats and for some reason, only with left-hand steering.

The tourists must come to the country in groups organised by travel firms.

The visitors must have certificates for technical safety and environmental protection, registration as well as civil insurance for their vehicles, and are obviously required to show their driving license.

When participating in Vietnam’s road traffic, the visitors must obey Vietnam’s current traffic laws, go in groups and follow the approved travel routes. They are also guided by a tourist company vehicle.

Travel companies have to inform the Ministry of Transport of foreign tourists who will drive the vehicle, people who go with them and specific details about their vehicle such as type, colour and number plate. Within five days, the Ministry of Transport will appraise the procedures for approval.

Under the ministry’s proposal, the decree will take effect from January 1, 2013.

According to the ministry, several road tourism services such as auto and motorbike self-drives across ASEAN countries, including Vietnam have developed. Therefore, the decree would help to develop the country’s tourism sector.

Vietnam issued Decree 80 in 2009 to permit foreigners to take right-hand drive vehicles into the country.

Ministry urges companies to quicken disbursement

The Ministry of Construction (MoC) has given warning to companies that have been slow in disbursing funds for public investment projects.

In 2012, the MoC received VND1.821 trillion (USD86 million) from state budget for development projects. The money was provided for 23 projects in which the MoC are investors in five projects with investment of VND1.650 trillion.

The MoC reported as of November 30, only VND735.172 billion has been disbursed, with several key projects still lagging on their disbursement.

For example, VND150 billion was supposed to be invested in the construction of National University campus in Hoa Lac urban area, Hanoi in 2012 but the companies had only spent VND18 billion.

The National Museum of History had planned investment for 2012 of VND30 billion but only VND3.4 billion was spent.

The National Assembly House project also showed signs of slow disbursement. It was supposed to receive VND1.376 trillion of investment in 2012 but had only utilised VND694 billion.

The main reasons for such slow rates of disbursement were sluggish bidding processes. The contractors and consultants also took long time in solving administrative problems.

Two months ago, the MoC urged the investors to quicken the process and requested monthly reports on their work.

The ministry agreed to disburse all of the allocated money for their five projects in 2012. The MoC warned construction companies that they would not be given more investment for the coming year and would face punishment if they failed to disburse their funds and report on their progress.

Travel agencies benefit from long Tet holiday

Having almost finished selling tours for the New Year holiday, local travel agencies have started to sell tours of the Tet holiday, this time with a much higher buying power thanks to the long holiday which was informed early.

According to some travel firms in HCMC, while the demand for New Year tours is not very high, the number of customers buying Tet tours is quite impressive and is expected to increase by dozens of percents from the previous Tet holiday. This year, customers buy tours early and mainly buy tours by air.

Vietravel estimated the buying power would increase strongly during Tet, or the Lunar New Year, thanks to nine consecutive days off. Currently, 40% of seats of tours to Southeast Asian countries, South Korea, Japan, the U.S. and European countries have been booked while many tours by air to northern and central Vietnam have almost been sold out.

“We expect to have around 75,000 domestic and outbound tourists during the holiday, up 30% from the same period last year,” said Nguyen Minh Man, media manager of Vietravel.

At Saigontourist Travel Service Company, tours by air are preferred by customers. The firm served around 20,000 tourists last Tet holiday, and the figure is estimated to grow by 10% in the coming holiday.

“There are more days off and more journeys this year. Tours departing on good days, especially on the second day of the lunar calendar, have almost fully booked,” said Doan Thi Thanh Tra, marketing manager of Saigontourist.

The He Tre Travel and TST Tourist have also received many bookings for tours in the holiday. Other travel firms such as Du Lich Viet, Ben Thanh Tourist and Lien Bang Travelink are also busy selling Tet tours.

The prices of tour in the coming Tet holiday largely stay unchanged, but many travel firms have offered promotion programs to attract customers and encourage them to buy tours early.

For example, from December 20 to next March 19, customers buying tours at Vietravel offices and branches nationwide will have a chance to be given diamonds as well as several other valuable gifts. The total value of the firm’s promotions in this period amounts to VND10 billion.

Meanwhile, Du Lich Viet has offered a discount of up to VND3 million for customers buying tours before December 31. Customers can also enjoy more discounts if buying tours in group.

Many FIEs in Binh Duong raise capital

Binh Duong in the year to date has lured some US$2.6 billion in foreign direct investment (FDI), including a considerable amount of additional capital from operational foreign-invested enterprises (FIEs).

In particular, the provincial government has granted investment certificates to 105 fresh projects with total registered capital of US$1.58 billion, while over US$1 billion is additional capital of 114 operational FIEs. This result has exceeded the province’s FDI attraction target of US$1 billion for the whole year.

Binh Duong vice chairman Tran Thanh Liem attributed the large amount of additional FDI capital to the province’s favorable polices for investors. For example, the province has production facilities and labor training centers meeting the demand of foreign investors.

Three FIEs in Binh Duong have raised their capital by over US$100 million. One of them is Sun Steel Joint Stock Company, which has boosted its capital by US$120 million to a total of US$420 million in order to expand its galvanization and color coating systems to serve domestic consumption and export.

Wada Yuji, general director of Sun Steel, said that although the global economic situation remained difficult, the company’s investment and development plan and supporting policies of Binh Duong Province allowed it to spend more.

Similarly, Saigon STEC Co. Ltd. has increased its capital by US$175 million to expand its production in the Vietnam Singapore Industrial Park II (VSIP II). With the additional sum, the total investment capital of Saigon STEC is now US$340 million.

The company producing electronic circuit boards for use in mobile phone cameras looks to raise its capacity to 225 million products per year.

Meanwhile, Wonderful Saigon Electric Co. Ltd. operating in VSIP I has injected an additional US$150 million to increase its annual capacity to 245 million products. The company specializes in manufacturing camera modules, high-capacity integrated circuits and printed circuit boards for use in next-generation network devices.

FDI in Binh Duong mainly flows into high technology fields, such as electronic chips, computer accessories, cameras and auto parts.

So far, Binh Duong has had 2,117 projects worth US$17.3 billion with foreign involvement.

Despite unfavorable changes at home and abroad, Binh Duong has reached its export target for 2012 with US$12.13 billion pledged, up 16% against 2011. FIEs have exported over US$9.9 million worth of products, up 19.3% year-on-year.

VFA says rice export more difficult next year

The Vietnam Food Association (VFA) forecasts that Vietnam’s rice export next year will encounter many difficulties which are even worse than those in the first few months of this year.

According to Pham Van Bay, vice chairman of VFA, no rice exporting contracts with large volume have now been sealed for execution early next year. Meanwhile, early this year, the country shipped abroad around 800,000 tons carried over from 2011.

The rice volume which will be delivered from this month onwards is 951,000 tons, with 550,000 tons delivered this month. Therefore, if based on the contracted volume left, 400,000 tons of this year’s contracts will be delivered next year, according to VFA.

“We are striving to seek contracts, especially big ones, but have found none so far,” Bay said.

However, Pham Thai Binh, director of Trung An Co. based in Can Tho City, said that the situations were not that serious. It is because countries have now finished the year’s import targets, and thus having no new exporting contracts at this point of time is nothing abnormal.

“I think VFA complains just to enjoy incentives of the Government. However, this is an excuse taken by importing countries to lower the price of Vietnam’s rice,” Binh said.

According to the latest statistics of VFA, Vietnam’s rice export volume amounted to 7.256 million as of December 6, with a value of US$3.234 billion, rising by around 150 million tons from last year. Despite having a higher export volume, the rice export value has been nearly US$300 million lower than last year.

The average export price in the January-November period reached US$445.56 per ton, declining by US$43.03 per ton from the same period last year, according to VFA.

Explaining the low price, Bay said that Vietnam’s rice had to face tough competition from low-price rice of India, Pakistan and Myanmar.

Pig prices poised to rise further ahead of Tet

Prices of live pigs, having risen staggeringly over the past weeks, are forecast to rise to VND48,000 a kilo ahead of the Lunar New Year holiday before going down, said Nguyen Tri Cong, chairman of Dong Nai Livestock Association.

Cong’s prediction is based on the fact that the pig prices in Dong Nai and several southern provinces have continuously increased from VND38,000 to VND44,000-45,000 a kilo over the past two weeks.

Prices of live pigs had stayed low in the past nine months, causing losses among local farmers, Cong said. Therefore, the current VND44,000-45,000 a kilo has helped farmers break even or make small profits, he noted.

Cong predicted prices of live pigs would continue to rise in the near future. It is because many enterprises and residents now have begun stocking up on commodities for the upcoming Lunar New Year holiday, thus pushing up live pig prices.

According to Dong Nai Livestock Association, live pig prices are soaring but pig farmers have still found the prices too unattractive to raise new herds at this time. As the surging prices are due to the coming Tet, farmers can only decide to raise new herds if live pig prices remain high after the Tet holiday.

Nguyen Xuan Duong, deputy head of the Husbandry Department under the Ministry of Agriculture and Rural Development, ascribed the rising meat prices to the fact that relevant authorities have been able to control the import volume of poultry smuggled via the country’s borders in recent weeks. In addition, about 300-400 tons of live pigs are exported to China every day now and the volume may go up in the weeks nearing Tet.

Duong told the Daily that farmers might enjoy profits with the present prices after nearly one year suffering losses, which will encourage them to raise new herds. This will pull up prices of breeder pigs and breeder chickens but it is not a problem for farmers, he said.

Over a month ago, the Husbandry Department forecast prices of pigs and poultry to mark up at the year’s end. The department also estimated that the import volume of meat would hover around 10,000 tons a month, doubling the average import volume in the middle of 2012.

Seafood sector waning despite export growth

The local seafood industry will still record growth in export value this year, but this growth will rely more on products made of imported materials.

By the end of this year, the total seafood export turnover is predicted to exceed the level of US$6.1 billion in 2011. However, materials imported for processing and export will account for more than US$1 billion, higher than last year, said Duong Ngoc Minh, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP).

“Exports will grow, but the fisheries sector is actually going down due to the poor health of local enterprises; those still active must import materials for processing and export as domestic material supply is insufficient,” he said.

He forecast raw shrimp supply would get ample again in June 2013, so local processors would have to cope with a material shortage until then. As for tra fish, the output as of now is only enough to serve operations of the industry players until April 2013.

Nguyen Van Nhiem, chairman of My Thanh Shrimp Association in Soc Trang Province, said the association members had no shrimp to sell to processing plants because of recent diseases.

Customs statistics as of November 15 show that Vietnam’s seafood export turnover had reached over US$5.36 billion, up 3.6% year-on-year. However, the export values of the two leading seafood items of Vietnam, shrimp and tra fish, had declined by 4.8% and 1.7% respectively.

HCM City port relocation plan lags

Despite the Government’s financial assistance, the relocation of Saigon Port from the center of HCMC is moving at a snail’s pace due largely to capital shortages.

Huynh Van Cuong, deputy director of Saigon Port Co. Ltd., told the Daily that to move Saigon Port out of the downtown area, construction of Hiep Phuoc Port should be completed first to make room for Saigon Port.

But the Hiep Phuoc Port project is just 38% complete, Cuong said.

“We will finish construction of a 200-meter pier soon. The port may be ready but the road connecting Hiep Phuoc Industrial Park and the current port is not yet widened, making it hard for trucks to travel,” he stressed.

“We are drafting a proposal for submission to the Ministry of Transport and the Ministry of Finance in which enterprises will be invited to develop the road to Hiep Phuoc Port using their own capital,” he noted. “This is the only way to speed up Saigon Port’s relocation.”

Since the Government’s Resolution 11 on public spending cuts came out, the project has  lacked capital for the relocation work. Of the VND2.7 trillion budget approved for the project, about VND780 billion has been disbursed, Cuong said, adding when the relocation job is complete remains unknown.

As per Decision 46/2010/QD-TTg of the Prime Minister, the city should have had five ports moved out of the inner city by 2010 but only Tan Cang Port had moved to Cat Lai while relocation of the others is still underway.

The Government has agreed to reschedule the relocation of Ba Son shipyard until 2015. Similarly, Tan Thuan Dong and Rau Qua ports are seeking approval for relocation delay to 2020.

Under a zoning plan approved by HCMC authorities, after the inner-city ports are relocated, the Ba Son shipyard site will be developed into the Saigon-Ba Son financial, office, and hotel complex.

The Saigon Port location near Nha Rong Wharf will be turned into a tourism port. Relocating ports to the city’s outlying districts is aimed at easing traffic congestion in the city center.

Strong demand for Gov’t bonds despite low yields

The annual coupon of government bonds has plummeted over the past month but the demand for the valuable papers, especially from Vietnamese large banks and foreign lenders, has yet to cool down.

Coupons of government bonds and government-guaranteed bonds have lost a combined 50-100 basis points in the last month and have tumbled by some 50-60 points against early last month. Rates of bonds with terms of two and three years have recorded the sharpest falls to hover around 9%, 9.15% and 9.55% annually for terms of two, three and five years respectively at present.

The State Treasury issued VND5 trillion worth of bonds with two or three-year term last week with the respective rates of 9% and 9.25% per annum. The Social Policy Bank last week also issued VND2.3 trillion worth of bonds with terms of two to five-year with annual rates of 10.8% to 11.04%, dipping 5 to 6 basis points from a week earlier.

Within the past one month, coupons of treasury bills have also strongly gone down, especially at a 182-day term with 40 points lost in the primary market.

It is noted that interest rates have continuously contracted but government bonds still sell like hot cakes. According to the Hanoi Exchange (HNX), credit institutions last week purchased VND9.2 trillion worth of government bonds out of the total value of VND11.5 trillion.

Since the middle of last month, the State Treasury has continuously launched onto the market large volumes of bonds, about VND3-4 trillion a week.

Even when government bond yields are on the downtrend in short term, foreign investors net bought bonds with a value of nearly VND2.3 trillion in November alone.

Therefore, there is a high possibility that the State Treasury will continue to open tenders for government bonds this month to mobilize more capital for State budgets which are in deficit.

The volume to be mobilized in 2012 is estimated at more than VND170 trillion. However, interest rates in the primary market are forecast to slightly decrease as there is no longer issuance pressure.

Credit institutions predict demand for government bonds will still stay high this month despite a large number of bonds valued at some VND6.6 trillion falling due in the month, three-fold higher than the previous month.

They believe that the demand for short-term bonds among credit institutions will remain high and that interest rates of short-term bonds will continue to plummet at the year’s end. It is because all forecasts and present conditions point to the possibility that the central bank will continue to lower the ceiling deposit rate to around 8% for terms of less than 12 months either within this month or nearly next month.

Furthermore, liquidity of the banking system has still remained strong.

Credit growth of the banking system has shown no signs of recovery while concerns over rising inflation have been eased. The November inflation rate only picked up 0.47% over the preceding month and inflation in all 2012 is estimated to be the lowest since 2009.

Statistics of the State Treasury as of end-November shows that the total value of government bonds and government-guaranteed bonds successfully issued this year is around VND137.36 trillion. The amount includes some VND97.47 trillion worth of bonds issued by the State Treasury, VND26.66 trillion worth issued by the Vietnam Development Bank and VND13.23 trillion issued by the Social Policy Bank.

Local banks have still been the major investors in the primary bond market, accounting for up to 77-83% of the total value. Also, foreign commercial banks have actively participated in the primary government bond market, making up between 11% and 12%.

In the meantime, securities firms and other financial institutions only make up 11% of the total value.

Footwear, leather bag exports to fetch US$8.5 billion

The leather and footwear sector is trying to meet this year’s US$8.5 billion export earning target despite numerous difficulties in the market.

Footwear exports alone may reach US$7.5 billion, and the remainder come from the export of handbags and other leather products, according to the Vietnam Leather & Footwear Association (LEFASO).

LEFASO reported that the sector has achieved steady growth over the past 11 months. However, the number of orders businesses have received from importers has fallen 25-30 percent year on year.

Many footwear makers are concerned about the export growth due to rising input costs that affect their production plans.

They have adjusted production, cut costs, increased product quality, and even accepted breakeven to maintain orders.

Some businesses have exported their products to Asian and South American markets, while others have established workshops overseas to take advantage of low labour costs there.

Quang Ninh attracts 2.2 million foreign arrivals

The northern border province of Quang Ninh has so far this year welcomed 6.4 million holidaymakers, including 2.2 foreigners, up 9 percent and 6 percent respectively.

Tourism services generated VND4,000 billion in revenue, representing a year-on-year increase of 20 percent, the provincial Department of Culture, Sports and Tourism reported.

In the reviewed period, nearly 2.9 million visitors, including 1.2 million foreigners, chose Quang Ninh to stay during their holidays, up 20 and 15 percent respectively.

The number of visitors to cultural and historical sites rose 11 percent to 2.4 million. However, those to UNESCO-recognised Ha Long Bay fell 9 percent to 2.4 million.

The provincial tourism sector expects to have a busy year in early 2013 as many cruise ships are due to dock at Ha Long Bay from now until April 2013.

Ha Long Bay has been recognised twice by UNESCO for its natural and geological beauty.

Supermarket numbers to soar

Viet Nam will have between 1,200-1,300 supermarkets and 180 commercial centres by 2030 under a master plan approved by the Ministry of Industry and Trade (MoIT).

This marks an increase of 585-695 in the number of supermarkets recorded nation-wide in 2011, while the number of commercial centres goes up by 82.

Not surprisingly, the highest number of both supermarkets and commercial centres will be located in Ha Noi and HCM City.

In late October, the ministry issued decision No 6184/QD-BCT approving a development plan until 2020 and with vision to 2030 for the national network of supermarkets and commercial centres.

The plan targets building a modern network of supermarkets and commercial centres based on a “logical structure of systems” and distribution channels with the participation of all economic sectors and types of organisations.

The development will take place in a competitive environment under the State’s macroeconomic management and regulations.

The plan envisages that the network of supermarkets and commercial centres will become the major retail channel of goods in the domestic market.

It expects that the circulation speed of goods is accelerated, and that their price and quality remain stable.

The plan sees increasing diversification of quality retail services that promotes the urbanisation and ensures higher living standards.

Retail sales via the expanded network is predicted to increase by between 26 and 27 per cent per year until 2015 and by 29 and 30 per cent per year during the 2016-2020 period.

The network would also account for between 27 and 30 per cent of the country’s total sales in 2015 and for this ration to increase to 43 and 45 per cent in 2020.

The plan also targets building mechanisms and policies on insurance businesses that are comprehensive, transparent, equitable and synchronous. This will facilitate development of the market and ensure compliance with international commitments and obligations.

To realise targets outlined in the plan, relevant agencies will create a favourable investment environment for organisations, individuals and enterprises in different economic sectors, particularly for outlets in remote areas.

The trade ministry’s supermarket development plan is touted as a “handbook” that retail enterprises can use to design their own development plans.

More companies closing down, curbing production

The number of enterprises which dissolved or halted operations had reached 48,000 in the first 11 months and were anticipated to hit 55,000 by the end of this year, Deputy Minister of Planning and Investment Dang Huy Dong reported at an investment forum on Tuesday.

The numbers were lower than the number of newly established businesses, which totalled nearly 62,800 in this period, Dong said.

“We need to assess the business situation and trends correctly,” he said. “In 11 months, dissolutions occurred mainly in real estate and stock market sectors, while new enterprises were in such areas as education and healthcare.”

Nguyen Hoa Cuong, deputy director of the ministry’s corporate development department, said, “A massive collapse won’t happen, especially in the case of small- and medium-sized enterprises which are highly resilient to tough conditions.

“There has been a strong shift from risky sectors to more sustainable areas.”

Small- and Medium-sized Enterprises Association chairman Cao Sy Kiem said it was necessary for the country to analyse exactly the situation of enterprises in order to have relevant policies.

For example, it needed to define how many firms had left one sector for a new area so that appropriate lending policies could be put in place.

“It’s because we haven’t thoroughly grasped their situation . . . that the many difficulties businesses have been complaining about from the beginning of the year haven’t been solved,” he said. Kiem said that while enterprises faced many challenges like capital shortages, high inventories and narrowing export markets, the Government’s support policies — including tax payment extensions and land rent reductions — were not up to expectations.

Firms even had to cope with electricity and gasoline price hikes and additional road-use fees, he said, adding there was a lack of effective co-operation among relevant agencies in supporting enterprises.

Senior economist Pham Chi Lan said tax payment should be considered a basis for assessing a company’s health. She said that with 40 per cent of local businesses now incapable of paying taxes, according to recent taxation sector’s data, many firms had had to cut back production, while still remaining operational.

“Enterprises dissolving were a real fact which resulted in thousands of workers losing their jobs, while newly registered companies haven’t yet been able to prove anything,” she said. “Don’t think that new businesses can compensate for those which have died.”

An unnamed economist told Vietnam Economic Times that lending interest rates had fallen but were not enough for enterprises to absorb capital at present.

The economist was reported to have said if inflation reached 7.5 per cent, banks could set lending rates at around 10.5 per cent to be profitable, but many were offering higher levels.

More support from banks and credit guarantee funds were needed to prop up enterprises, in addition to the Government’s tax reduction and exemption policies, the economist said.

Tighter laws on competition urged

More detailed regulations could help Viet Nam control anti-competitive practices, claims a report compiled by the Viet Nam Competition Authority (VCA).

After assessing the competitiveness of the ten major sectors in Viet Nam’s economy, the organisation released this report yesterday, which includes an overview of the market, a list of the barriers to joining or promoting the market and the competitive status of the five manufacturing sectors and five service sectors.

These sectors include medicine distribution, life insurance, advertising and vegetable oil production.

According to the report, the four manufacturing sectors (except paper production) have a high concentration ratio, which may lead companies in these sectors to abuse their dominant positions and promote anti-competitive strategies, said Tran Phuong Lan, head of VCA’s Competition Supervision and Management Department.

However, Lan said, not many anti-competitive practices have been uncovered in the five surveyed manufacturing sectors.

In fact, the sectors face tougher competition, Lan said, citing high inventories in paper and building glass production and competition between domestic products and imported ones.

“The main anti-competitive practice is falsely advertising,” she said.

Tran Hung, General Secretary of the Viet Nam Advertising Association, said that more legal documents should be written explaining the Law on Advertising and related decrees, which he said were too general and led to confusion for management bodies and enterprises.

“We need legal documents that define clearly what counts as false advertising,” he said.

Hung said that his association was in the process of drafting a professional ethics code that would help enterprises compete properly.

VCA Director Bach Van Mung said that the report would hopefully raise awareness about competition-related policies and regulations and build a healthy competitive business environment.

The report is part of a project to improve the VCA’s capacity to boost market economy mechanisms in Viet Nam, which is supported by AusAID and United Kingdom Department for International Development through the Beyond WTO Programme, which provides technical support for newly-admitted WTO nations.


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