Home » Business » BUSINESS IN BRIEF 18/12

Many employers lack funds for Tet bonuses

It is that time of the year when bosses begin fretting about bonuses for employees.

As the Tet (Lunar New Year) festival approaches, firms stuck in difficulties caused by the prolonged economic downturn are devising different approaches to paying bonuses for their employees.
Businesses pessimistic about 2013 economic prospects
The bigger firms plan to pay higher bonuses in order to build worker loyalty and retain talent, but there are others left searching for face-saving options.

In HCM City’s Binh Tan District, the 100 per cent foreign-invested Pou Yuen Viet Nam Company has prepared for Tet bonuses months ahead of the Tet. Cu Phat Nghiep, Chairman of the Trade Union of Pou Yuen Viet Nam, said despite the challenges facing the company, Pou Yuen earmarked VND600 billion (US$28.7 million) for giving Tet bonuses to its 75,000 workers to welcome the Year of the Snake.

He said this year’s Tet bonuses would be higher than last year and those who worked for the company for over one year would receive a bonus of at least one month’s salary. The bonus for those who’ve worked for less than one year would depend on the number of months they have been with the company, said Nghiep.

He said Tet bonuses would be transferred to workers’ ATM cards on February 6 and 7, three days before Tet.

In addition to the bonuses, workers from other provinces will enjoy a four-day holiday and can resume work on 18 February 2013 (the ninth day of the lunar year).

The chairman of the trade union at Duy Tan Plastics JSC, Tran Van Muoi Hai, said Tet bonuses for the company’s 2,000 workers would certainly be higher than last year. Duy Tan would also provide bus tickets for employees to return home for the Tet and use the company’s buses to take disadvantaged workers’ families home for the holidays. In the current difficult economic situation, many State-owned enterprises are trying hard to maintain their Tet bonuses and not have them lower levels than previous years.

Nguyen Xuan Hoa, Chairman of the State-owned Sai Gon Railroad Management Co., said that despite economic difficulties, giving higher Tet bonuses would encourage the company’s staff to work better.

However, some companies caught up in dire financial problems are giving festival bonuses in kind, not cash, so there are workers receiving bricks, rice, garments and even telephone cards.

By 2005, six years after its equitisation, the fortunes of what used to be the biggest tea processing factory of the Indochina region plunged drastically. The company, located in the northern province of Yen Bai, could only give its workers three kilos of sticky rice each as their Tet bonus.

Some years ago, a brick factory in Thai Binh province, decided to give the bricks that it produces to workers as the festival bonus.

A worker of the company said the 1,200 bricks he received as a Tet bonus was worth VND1 million, but the problem was that they could not be sold during the pre-Tet days. As a result, the workers had to return to their home villages to celebrate Tet with no bonus in hand. The worker said he had received bricks as Tet bonuses for three consecutive years now.

A securities company in HCM City has decided to give each employee 30 kilos of Nang Thom brand rice, each kilo priced at VND15,500, as its Tet bonus for 2013.

Auto, motorbike sellers

It is the peak season, but shops selling automobiles and motorbikes, both second-hand and brand new, are welcoming few customers these days.

Some manufacturers say the number of motorbikes sold in 2012 may drop by 25 to 30 per cent compared with last year, adding this could get worse if there is no change in the last two months of the year.

Tu Hoang, who used to sell motorbikes on Hoang Van Thu Street in HCM City’s Phu Nhuan District, said he had returned the shop to his landlord because business was stagnant. He started an online business, which helps him save VND20 million per month on house rents and staff salaries.

Hoang said few customers visit motorbike shops these days. “We have been burnt out and are now seeking some other kind of business to survive.”

Ngo Van Xong, owner of another motorbike shop on the same street, said at this time in previous years, second-hand motorbikes sold very well at shops in the area.

But now the situation has changed. Some shops are not able to sell a single bike for several days.

The house close to Xong’s shop, which was also a motorbike shop a month earlier, is now closed, and a “House for Rent” sign hangs in front.

The market for new motorbikes has fared no better, with hundreds stockpiled at shops’ warehouses.

The owner of a Honda agent in Tan Binh District, who declined to be named, said the number of motorbikes sold in December, the peak season for motorbike market, was just 70 per cent of the sales during the same period last year.

Duong Thi Hoa, a worker at a garment factory in Tan Binh District, said she planned to buy a new Honda motorbike to replace the inexpensive Chinese bike she was using, and was waiting for a decent Tet bonus to realise her “Dream” (the name of a popular Honda model).

According to figures from the Ministry of Industry and Trade, the number of motorbikes stockpiled in the first 11 months of 2012 rose by 95 per cent compared with the same period last year. By the end of November, Honda Viet Nam had 13,000 bikes in stock while Piaggio Viet Nam Co had 14,900.

The auto market, already in the doldrums for quite some time, is facing similar problems.

On Monday morning, the staff of Ford Ben Thanh salon in Tan Phu District were twiddling their thumbs.

“This time in previous years, customers brought their cars to the salon for maintenance services in preparation for Christmas and New Year trips. But the situation has changed this year,” said one of the employees.

A sales agent of Hyundai in HCM City has closed down after suffering monthly losses of VND200 to VND300 million for several months.

The large and prolonged promotion campaigns from auto manufacturers have received little response from customers.

FDI disbursement to reach $10.5b

Disbursements of foreign investment capital could reach a total of roughly US$10.5 billion this year, the Ministry of Planning and Investment estimates.

Pledges of new investment were expected to reach roughly $13 billion.

Japan, Singapore and South Korea were currently the country’s leading sources of foreign investment, the ministry said.

Foreign investment in manufacturing and processing, especially in support industries – a priority in Viet Nam’s policies to attract investment – had increased remarkably, said the director of the ministry’s Foreign Investment Agency, Do Nhat Hoang.

Some leading projects in manufacturing and processing included an $870 million electronic components plant to be built by Taiwan’s Wintek and an $830 million mobile phone plant being developed by South Korea’s Samsung.

The nation has recently tightened policies on foreign investment. New projects must effectively utilise natural resources, reinforce linkages with domestic enterprises, and lure additional investment into support industries, as well as such priority sectors as agriculture, services, information technology and high-tech industries.

The Government has instructed local authorities not to grant investment licences to energy or resource-intensive projects or projects which pollute or use outdated technology.

To further improve the quality of investment, experts have recommended that the Government encourage projects that use advanced technologies and produce competitive export products, while helping build the economic bases of local provinces.

Minister of Planning and Investment Bui Quang Vinh said that the nation has targeted pledges of $14-15 billion in foreign investment next year, of which $10-11 billion would be disbursed.

Booming e-commerce needs legal controls

To cope with the rapid development of e-commerce, the government must improve the laws on the industry and develop an infrastructure that can support it, an official told attendees at a conference in HCM City yesterday.

Tran Tuan Anh, deputy Minister of Industry and Trade, said that e-commerce was becoming more important in the context of globalisation.

More and more Vietnamese enterprises were promoting their brands and expanding their markets by using e-commerce, especially now during tough economic times.

Tran Huu Linh, head of the E-commerce and Information Technology Department under the Ministry of Information and Communication, said the country has a good platform for e-commerce to develop, with more than 120 million mobilephone subscribers and more than 34 million internet users, as well as a high growth rate of 3G subscribers.

A recent Yahoo survey found that in Viet Nam the internet was the most popular source of information, according to Linh.

“With e-commerce, local businesses can communicate with customers better, promote their products more efficiently and reduce costs and increase profits,” he said.

In addition, online search tools and social networks are used to connect with customers.

Still, there are many challenges, including internet security, the lack of staff for e – commerce, online payment issues and a lack of legal policies.

Other problems include tax transactions across country borders, management of group purchases and multi-level trading. Also, discovering and penalising violators is another issue that needs attention.

In 2006, a decree was issued on e-commerce but it was too basic, and should be amended, according to Linh.

The ministry said that it would complete a legal framework by next year. The amended laws would secure the rights of all beneficiaries, encourage development of e-commerce and help improve businesses’ competitiveness.

Ha Ngoc Son, deputy head of the e-commerce agency under the Department of Industry and Trade, said 97.3 per cent of companies in HCM City had internet connections, up 5.7 per cent compared to two years ago.

The companies use email and websites to promote their products and conduct trading activities.

The number of businesses using e-commerce in their businesses this year rose significantly compared to last year, he said.

However, the number of customers shopping online this year has declined this year as more online commerce websites violated regulations.

Le Minh Loan, a representative of the Hi-tech Crime Prevention Department, said his department had to deal with many violations this year.

He said that government agencies should verify and publicise information about the businesses that are eligible to conduct e-commerce.

Also, trading establishments that sell vouchers via their websites should pay a security deposit on those vouchers to ensure the rights of consumers.

Consumers who take part in e-commerce should carefully study information about providers and choose the most reputable ones.

Workshop held on medical equipment

A workshop on service engineer and customer service processes with medical equipment was organised in Ha Noi on Wednesday.

The workshop aims to enhance the skills and knowledge of service engineers at hospitals and clinics in the northern region of Viet Nam.

Over 100 people took part in the workshop organised by the Ministry of Health and Siemens Viet Nam.

Nguyen Thi Xuyen, Deputy Minister of Health, expressed the hope that the workshop would enable leaders and managers of hospitals to discuss and make sound recommendations to the ministry on selecting and managing medical equipment as well as issuing policies ensuring their quality and efficiency in the future.

Siemens Healthcare experts provided three dedicated training pillars: world-class technical, application and service business education by combining latest technology and innovative methods; expert knowledge; and outstanding teaching expertise.

The group has a strong global presence in training with centres in Germany, USA, China, UK, Brazil, Japan, India, Australia, South Korea, Singapore and other nations. These centres provide 3,800 classes that are attended by 32,300 people each year.

At the workshop, experts spoke of different training delivery methods to suit the individual learning concept, ranging from in-class training to e-learning, fellowships and clinical workshops, or virtual classes that supports remote access.

They shared with participants the best practices of service process in order to maintain the highest availability and reliability of medical systems within hospitals through the utilisation of Internet-based remote diagnostics technologies.

Another important topic dealt with was how a professional technical service can be converted to optimised workflow as well as related clinical benefits.

Basic training on ultrasound systems and useful tips for troubleshooting were also included in the workshop.

Banks forced to revise targets

A number of commercial banks have revised their business targets for the year due to declining profits and rising bad debt levels, according to a report carried by the publication Dau Tu (Viet Nam Investment Review).

The need to allocate additional capital to risk provision funds has also cut into the bottom line for banks, the report said.

The deputy director of the State Bank of Viet Nam’s HCM City branch, Nguyen Hoang Minh, said that lending was the primary line of business of commercial banks and slow credit growth had significantly restricted this source of earnings.

“With bad debt levels rising, the profits of banks in HCM City are likely to reach only about 27-30 per cent of where they were last year,” Minh said.

VietinBank has consulted its shareholders about a possible adjustment to its approved targets for the year due to unsatisfactory credit growth. At the end of the third quarter, the bank’s profits had reached VND6 trillion (US$285.7 million) – only 66 per cent of the goal for the entire year.

A loss of about VND1.25 trillion (nearly $60 million) in the third quarter whittled Asia Commercial Bank’s pre-tax profits for the first nine months of the year down to less than VND1.2 trillion ($56.2 million), a pace far off its full-year target of VND5.5 trillion ($262 million).

Eximbank general director Truong Van Phuoc said that, despite considerable efforts, the bank expected to meet just 70 per cent of its profit target this year. Eximbank has seen lending decrease by over 10 per cent and bad debts rise by 1.8 per cent so far this year, Phuoc said.

Sacombank projected VND3.4 trillion ($162 million) in pre-tax profits earlier this year and achieved 70 per cent of the figure by the end of October. But the bank’s general director, Phan Huy Khang, said its profits for the year were likely to meet only 75 per cent of the target since VND1.2 trillion ($57 million) would have to be allocated to risk provision.

DongA Bank general director Tran Phuong Binh said it was extremely difficult for many banks to achieve norms in the context of mounting bad debts which have put the brakes on further credit growth. The debt repayment capacities of borrowers were further weakening due to mounting inventories of unsold goods, Binh said.

It would be nearly impossible for the bank to reach its targeted profit of VND1.5 trillion ($71.4 million) this year, depsite a pre-tax profit of VND1 trillion ($47.6 million) in the first nine months, he added.

Low-rate plan to clear house stocks

Viet Nam Association of Financial Investors (Vafi) proposed to offer preferential interest rate of 7 per cent per year to home buyers with a property of less than VND2 billion (US$95,240) in the first three years.

This was among five Vafi’s recent proposals to the Government to help revive the dosmestic real estate market.

Accordingly, the Goverment would spend VND8 trillion to compensate interest rate subsid-ising during 2013-15 period.

Vafi estimated that the move, similar to the Government’s demand stimulus package worth USD $1 billion in 2008, might help attract investment of VND120 trillion, equal to 120,000 apartments while helping clear building material inventories.

The Vafi also said it’s time for Viet Nam to build a relocation housing fund of cheap price and high quality for the 2013-20 period when real estate saw strong decrease in the prices by 30-60 per cent.

The fund needed 25,000 appartments to meet the relocation demand of big cities and the money could be mobilised from the State Capital Investment Corporation and the Corporate Restructuring Fund.

The interest rate on foreign currency deposits should be lowered from currently 2 per cent to 1 per cent then 0 per cent while a value added tax at 10 per cent imposed on gold purchasing, according to the association.

With the two solutions, Vafi affirmed that Viet Nam could put an end to dollarisation and goldisation which occurred for past decades while the loan interest rate would be reduced to 10 per cent per year, short-term loan rate to 8 per cent and mobilising interest rate to 5 per cent by the end of June next year.

The association also stressed the roles of relevant ministries and organisations and local authorities, saying that the expeditiousness in solving business would be a solution of uttermost importance to revive the real estate market.

The close coordination among relevant authorities from central to local level was crucial to raise timely measures tackling arising real estate problems.

Property sales likely to pick up – in 2014

Despite dark predictions for the property market next year, local economists and real estate developers expect sales to pick up in 2014.

Speaking at a conference on the property market in HCM City on Wednesday , Dr Tran Kim Chung of the Central Institute for Economic Management, predicted that the market would remain sluggish until the end of 2013.

However, Chung pointed out that several projects had completed construction and sold well after a long period of being idle, especially middle-income apartment projects that have relatively low prices.

Some parts of the market will continue to develop well, especially low-end apartment buildings, but buyers are waiting for the prices to fall even more.

In Ha Noi, apartments priced below VND1 billion are marketable, but sales of luxury apartments and construction on such buildings continue to be low.

During the first nine months of the year, sales in general were poor, but the market is expected to have a new development cycle next year and in early 2014.

“If you buy property now, you will reap benefits about three years later,” he said.

Dang Duc Thanh, of the Viet Nam Chamber of Commerce and Industry, said supply still exceeded demand, and he urged investors and individual buyers to buy property now because prices had fallen by 50 percent since 2007.

He also noted that remittances sent from abroad to buy houses have increased year by year.

Last year, the country received US$9 billion and this year it will be over US$10 billion.

“Many overseas Vietnamese want to return to live here for the rest of their lives. A major amount of their money is invested in real estate,” Thanh said, adding that he had just bought an apartment in the Hoang Anh Thanh Binh Project in District 10, which had reduced prices by 50 per cent.

Nguyen Xuan Quang, chairman of the Nam Long Investment Joint Stock Company, which has been involved in projects in HCM City and other provinces had an optimistic view of the market.

He claimed supply was lower than demand. “The real estate market has developed since 2000, and the speed of country’s urbanisation is very fast, especially HCM City and Ha Noi. The biggest problem now is the bank interest rate,” Quang said.

However, Dr Pham Do Chi, a former financial expert for the International Monetary Fund, predicted that the market would remain in bad shape for the next three years.

Next year, several enterprises will collapse if the government does not issue proper policies.

Chi said that public debt, including the government and State-owned enterprises, was at least US$100 billion. Debt related to real estate is estimated to be about VND1,000 trillion. He said the bottom of the crisis would not be in 2013.

“Viet Nam’s situation is worse than the crisis that Thailand suffered in 1997. And Thailand did not have a debt equal to 100 percent of nation’s GDP like Viet Nam,” he said.

Several companies have started to lower than prices, and plan to continue to make cuts of 30 to 40 percent over the next three years.

Office leasing demand stirs in HCM City

The office leasing market in HCM City is showing signs of life, with stable rents and occupancy rates for grade-A office space, according to a report by property consulting firm CBRE Viet Nam.

Foreign and domestic companies in pharmaceuticals, law, and petroleum, among others, were enjoying expansionary phases, the report said

“As a result, we saw rents for mature grade-A buildings holding firm as occupancy levels remained stable over the past 12 months,” it said, noting a “healthy” rise in the occupancy rates for new buildings.

Buildings such as Kumho Asiana Plaza, Metropolitan, Sun Wah Tower, Diamond Plaza, Sai Gon Centre, Sai Gon Tower and Centec have all maintained occupancy rates of over 95 per cent over the past 12 months.

Vincom Center, which had 51-per-cent occupancy in the last quarter of 2011, was currently at 75 per cent after landing a number of new leases.

Bitexco Financial Tower has emerged as a highly sought-after location for law firms. Multinational firms such as Allen&Overy and Zico Law have established operations in the building within the past 12 months, pushing occupancy levels up from 40 in the fourth quarter of 2011 to 68 per cent in the current quarter.

The delay of major new grade A office supply has also helped ensure the stability of the market, with a number of major construction projects delayed due to the economic downturn.

This year saw the completion of two new grade A buildings, well below the five initially expected a year ago. President Place, with 9,100sq.m at the corner of Nguyen Du and Nam Ky Khoi Nghia, and Empress Tower, with 20,000sq.m on Hai Ba Trung Street, have both been completed and are now leasing.

The Lim Tower project on the corner of Ton Duc Thang and Le Thanh Ton streets, targeted for completion in the second quarter of 2013, will put another 34,300sq.m on the market. It is already over 60-per-cent committed with Techombank Bank confirming that it will relocate its corporate headquarters to this location as the anchor tenant.

CBRE said it has received strong interest from occupiers seeking to upgrade office accommodations but currently leasing in mature buildings with limited capacity to meet expansionary needs.

Meanwhile, tighter budgets and more cautious approaches are likely to shift demand towards the grade-B office market during 2013. Within the past 12 months, grade B buildings have emerged have already emerged as desired and cost-effective options for many tenants. The Maritime Bank Tower, for instance, with 54 per cent occupancy in late 2011, has seen occupancy rates soar to 87 per cent this quarter.

The Me Linh Point Building, a B+ property, was maintaining 100-per-cent occupancy.

An Phu Plaza, at 117-119 Ly Chinh Thang Street, was completed in August and has commitments for 30 per cent of its 11,000sq.m from various multinational legal, financial and construction companies.

The average asking rent for Grade A office space as of the third quarter of this year was approximately VND642,000 (US$30.56) per square metre per month. The average rent for grade B space was VND362,000 ($17.25). Average vacancy rates for grade A and grade B office space respectively were 15.3 and 11.8 percent.

Quang Ninh halts 179 slow projects

The People’s Committee of northern Quang Ninh Province has halted 179 investment projects that are progressing too slowly, dragging down the provincial economy.

Of these projects, 65 had their land lease decisions revoked, while the rest came to a complete halt.

Many of the projects were allocated land 9 or 10 years ago but had not used it, according to the provincial Department of Natural Resources and Environment.

The province would ask investors to pay a fee equal to 20 per cent of the project’s investment capital next year, and would return the fee in a manner commensurate with progress.

New park to be built west of capital

The Ha Noi People’s Committee asked the municipal Department of Construction to instruct the Hong Ngan Real Estate Company to complete plans for the construction of a park in the western area of the city and submit them for ratification before December 30.

The project, located on an area of more than 84,000 square metres near Mai Dich Cemetery, would implement the build-transfer model.

The project’s total capital was estimated at VND657 billion (US$31.29 million), about 48 per cent of which would be spent on compensation for land clearance and relocation.

The city also asked relevant authorities in the districts of Cau Giay and Tu Liem to urge investors to implement the project as scheduled.

Ha Noi proposes to cut land taxes by 50%

Ha Noi proposed to the Government that the land use tax be halved for enterprises that lack land use right certificates or land leasing contracts to help them overcome their difficulties.

The city also proposed a review of the amendments of Decree No 121/2010/ND/CP, which covers land and water surface leasing fees, and recommended that policies on reducing land use fees and exempting certain enterprises from such fees continue to be implemented through 2013.

A value added tax reduction would also help support troubled enterprises, the city said.-

Canon launches new cinema cameras

Imaging solution provider Canon launched two professional cinema cameras in Viet Nam on Wednesday, the Cinema EOS C500 4K Digital Camera and the digital single-lens reflex EOS 1D. C Camera.

The advance features of the C500 support the recording of both 4K and 2K resolution video and RAW data output that achieve outstanding video results without a loss in quality, while the EOS 1D. C is designed to go into hostile environments and cramped spaces.-

Ben Tre sells more rambutans

The rambutan VietGAP Tien Phu co-operative in the Tien Long commune, Chau Thanh District, southern Ben Tre Province has signed a contract to export 20 tonnes of rambutan to the US this month.

More than six tonnes have already been exported at prices 20 per cent higher than in the domestic market.

In May, the US Plant Quarantine Organisation granted export licence codes for Vietnamese rambutan and required the fruit to be irradiated before being shipped.

The Tien Phu co-operative has 1,500ha of rambutan in three communes, Tien Long, Tien Thuy and Tan Phu. However, the co-operative has to buy in product from other provinces, including Tra Vinh, Vinh Long, and Binh Phuoc, to meet its orders. Last year, the co-operative exported 60 tonnes of rambutan.-

Chatis rebrands as AIG

US insurance company Chatis Viet Nam has returned to its original name AIG Viet Nam Insurance Company in a bid to strengthen its market share.

The development follows AIG’s repayment of US$182 billion in US government assistance it needed to address insolvency several years ago.

General Director Antony Lee said he would focus on increasing service quality via further human resources training and risk management improvement.

The company, with a 200 agent network, has gained high annual premium growth rate since 2009 of between 40-45 per cent compared to the average 20-25 per cent in Viet Nam’s non-life insurance market.

DHG sells Eugica trademark

Hau Giang Pharmaceutical JSC. (DHG) has sold the Eugica trademark to Mega Lifesciences Limited (Thailand).

The sale will widen the market for Eugica, an herbal medicine used to treat coughs and flu. The medicine is currently sold in over 25 countries.

Established in 1983, Mega Lifesciences is engaged in manufacturing, marketing, selling and distributing medicines in developing countries, including herbal and nutritional supplements as well as over-the-counter and prescription drugs.

Shrimp firm turns down Thai bid

Shrimp processor Minh Phu MPC) would not sell shares to Thailand’s CP Foods for the proposed price of VND50,000 (US$2.3) per share, the company said yesterday.

“Shareholders opposed the plan because it would make us an easy target for acquisition,” Minh Phu chairman and general director Le Van Quang said.

In the company’s search for strategic partners, two other investors offered the prices of VND45,000 ($2.1) and VND59,000 ($2.8) per share.

But Quang said his company did not need money desperately, so they would wait until next year or even 2014 to “get better prices”.

He also pledged to sell shares for at least VND50,000, and hoped the price would reach as high as VND90,000 ($4.2).

However, the MPC market price has not even reached VND40,000 ($1.9) this year. It closed yesterday at VND29,900 ($1.4), a decline of 22 percent compared to the highest level. The stock’s liquidity is also low, averaging only a few thousand shares per session.

The firm leader added that the business situation would improve next year thanks to increasing shrimp prices, so the processor was not in a hurry to sell.

Minh Phu’s revenue this year was around $370-380 million. The company aims to reduce inventory to 4,500 tonnes and outstanding debt to VND2.8 trillion ($133 million).

Meanwhile, as the share price plunged too low compared to the book value, shareholders urged the company to buy back shares to keep the price stable.

The decision was made yesterday that Minh Phu would use around VND40 billion ($1.9 million) from the investment development fund to buy 1 million treasury stocks.

In October, CP Foods reportedly spent $60 million to purchase 40 per cent of Minh Phu.

The Vietnamese exporter said only that it was in the negotiation process of selling 30 million shares to a foreign partner, and did not specify whether that partner was the Thai investor.

State farms lose land to encroachment

State agricultural and forestry lands are poorly managed, with substantial losses each year to encroachment from neighbouring farms, according to participants in a workshop held here on Thursday.

Managers of State farms and forest plantations and leaders from the Ministry of Agriculture and Rural Development (MARD) and the Ministry of Natural Resources and Environment (MNRE) told the workshop that few lessons have been drawn in a decade of restructuring in the State agricultural sector.

The director of registration and statistics of the Ministry of Natural Resources and Environment’s General Department of Land Administration, Tran Hung Phi, conceded that disputes over land ownership and unlawful land leases were retarding reform efforts. He pointed to such root causes as inaccurate maps that have resulted in overlapping land claims among households and enterprises.

“These problems have existed for many years, but no effective solutions have been found,” said Phi.

In the Central Highlands, he said, the situation was somewhat different. “The main cause of problems there is loose land management by local authorities, including management of State farms. Large areas of land allocated to these farms have been encroached upon by local inhabitants,” Phi said.

According to statistics, land of 54 State farms with a total area of more than 11,000ha have seen encroachment.

The deputy director of MARD’s Agriculture Enterprises Renovation and Management Committee, Dinh Quang Tuan, said that State enterprises have been allocated land but not been granted the land use rights.

“This is the root cause of the problem,” Tuan said.

In addition, they have been assigned to manage very large acreages, but didn’t have sufficient capital for proper production, he said.

The deputy director of the policy department from the Viet Nam Forestry Administration, Le Van Bach, said that ineffective use of State forest lands was due to poor inventories of forest lands. This has led to the loss of over 100,000ha of forests annually and caused over half of all State forestry enterprises to operate at a loss.

Phi urged MARD and its affiliated agencies to review land use by each State enterprise and then regulate SOEs’ agricultural land use in each province and city.

“We should dissolve State farms which are operating at a loss,” he said. “For State farms located in remote or border areas, we should turn them into public farms so that they can receive allocations from the State budget to help them develop, since one of their important secondary functions is to ensure national security and defence in border areas”.

He also recommended that the Government draw lessons from State farms that have been equitised.

“For State farms that have had land revoked, it is imperative that the farms hand the land over to provincial or municipal People’s Committees so they can make out plans for other uses of the land,” Phi said.

There are about 664 State farms and forestry enterprises nationwide, managing about 6.8 million hectares, of which 315,000ha is currently fallow, according to the workshop.

Co-operatives keen to help faltering farmers

The noise of a fruit-cleaning machine and workers’ chitchat dispelled the grey gloom of a foggy afternoon in Dong Tam Co-operatives’ large yard.

It was getting more and more lively when a local farmer entered the yard in northern mountainous Bac Kan Province’s Na Ri District, driving a three-wheel vehicle with big bags trailing behind.

“My family has been harvesting canna rhizome this morning,” said 56-year old Ma Van Chang of the Nung ethnic group, hurriedly unloading canna bags and urging workers to bring scales for weighing.

Besides rice and corn, canna is among the few crops that grow well on the mountainous district’s sloping land, over 230km away from Ha Noi.

“We started growing canna three years ago as there was an increasing demand for the provincial speciality – cellophane noodles (mien dong) which is made from canna starch,” he said.

Having gradually expanded from 2,000sq.m to one hectare (10,000sq.m), Chang’s family can now produce about 70-75 tonnes of rhizome each year.

Previously, he took his harvested rhizome to markets across or outside the province. On good days he sold out, but on unlucky days, he had to take the surplus home with him, Chang said.

But since last year this has no longer been a problem, he added, explaining that the problem was solved by an offer to buy all of his canna from Dong Tam Agriculture Products Processing Co-operative based in the district’s Kim Lu Commune.

“The co-operative also helps us with breeding and teach us how to grow and nurse canna in a productive way,” Chang said.

“It pays us VND1,800 for each kilo of canna rhizome, equal to the market price,” he added.

Head of the co-operative Hoang Doanh Thang said it was established in 2009 and specialised in making cassava and canna starch which have been then sold to other firms to produce vermicelli.

He revealed that both demand and growing areas for canna have increased in the last few years but small co-operatives like Thang’s found it difficult to expand production due to financial constraints. Until early this year, his co-operation was eligible for nearly VND2 billion (US$95,000) in aid from the province’s Agribusiness Promotion and Investment Fund (APIF).

“With that sum plus contributions from co-operative members, we bought three machines to make starch and vermicelli and built a workshop,” Thang said, noting that they can process 30 tonnes of raw material or produce two tonnes of vermicelli each day.

At present, the co-operative employs 27 workers, providing seedling and canna farming techniques for over 200 poor households in the district.

Vice director of the province’s Planning and Investment Department Hoang Van Giap said that canna farming and vermicelli production had helped raise income for local residents who previously earned their living mostly from rice/corn farming and forestry.

Pointing to the environmental benefits of the initiative, he added that waste discharged from vermicelli production can be used for raising pigs and making biogas, providing people with energy and a more efficient alternative to firewood. “At present, the province is home to about 1,800ha of canna fields, representing a staggering three-fold increase on last year,” Giap said, adding that the province was studying market demand to make appropriate land allocations for canna farming development.

“The move is needed to avoid an oversupply of canna which could lower its value,” he said.

The province launched a $2 billion project assisted by APIF, the first of its kind in in the locality in March 2011 as a tool to leverage private investment from enterprises in and outside the province by co-financing business initiatives to reduce poverty.

The fund provides financial assistance from $30,000 to $100,000 for each investment initiative and in special cases, the figure can reach up to $250,000.

So far, the province has approved five investment initiatives with total investment worth VND23 billion ($1.09 million), of which APIF funded about VND15 billion ($714,000).

Giap said that attracting investment to the province was still a tough task as it was among the least competitive provinces in the country due to disadvantages including its mountainous location, lack of seaports, country borders, railways and airports, as well as general poor infrastructure.

“Offering financial assistance to private enterprises, we expected to make use of their ability in using capital and accessing market more effectively than individual farmers,” Giap said, noting that most local farmers are from ethnic groups and face difficulties in keeping pace with market trends.

The fund is part of a six-year project on Pro-Poor Partnerships for Agro-Forestry Development funded by the International Fund for Agricultural Development (IFAD) in the province which started in 2009 in the districts of Ba Be, Na Ri and Pac Nam . It also receives technological support from the Netherlands Development Organ-isation.

“APIF is an excellent initiative encouraging public-private partnership in the fields of agro-forestry and tourism,” said Henning Pedersen, IFAD Country Director in Vietnam.

“I hope the fund will create a breakthrough and lay strong foundations for rural financing and investment promotion, which will greatly benefit Bac Kan Province and its poor rural farmers.

“It will also help reduce poverty reduction in remote and ethnic regions by creating new jobs, while bringing expertise and new technology from the private sector,” he said.

Japanese telecom company joins Vietnam market

Global Data Services JSC (GDS), a joint venture between the NTT Com and Vietnam Posts Telecommunications (VNPT), has begun supplying domestic and international network services in Vietnam.

According to the NNT Com’s announcement on December 13, the project has got off the ground after GDS became the first foreign-capital enterprise to gain a telecom license from the Ministry of Information and Communications on November 26.

NTT services in Vietnam include intranet data network access, direct link to the domestic internet exchange (IX), internet access, and online and video conferences.

GDS designs and provides low cost and reliable services, including online gaming and e-commerce, for enterprise customers.

It also provides networking services supported by SLA to connect suppliers national wide.

Established in 2008, GDS-run Thang Long Data Center has proved to be Tier-3 data one with USO27001-certified information security management.

Regulations on non-cash payments

In order to better manage the opening, blocking and closure of individual payment accounts, the Government issued Decree No 101/2012/ND-CP on November 22. The new decree will apply to non-cash payment service providers, payment intermediary services, and users.

Under the decree, the purposes of payment accounts, and the rights and responsibilities of accountholders and regulations on use of these accounts must be clearly provided in writing.

(VNS) Account holders may use their accounts for cash deposit and withdrawal and to request payment service providers to carry out lawful payment transactions and provide information on transactions and balances on their accounts. Payment service providers may reject improper payment orders of account holders, or when the account balance is insufficient, unless otherwise agreed.

Persons opening individual payment accounts must have civil legal and acting capacity and, if between the ages of 15 and 18, meet property ownership requirements and have legal guardians.

The decree specifies four cases in which an account may be blocked: (i) under a written decision or request of an agency authorised under the law; (ii) when the payment service provider detects an error in money transfer; (iii) when the payment service provider detects a payment-related fraud or violation of the law; or (iv) when there is a dispute among the joint holders of a common payment account.

The decree will take effect on March 26, 2013.

Draft governs balance of payments

A draft decree revising Decree No 164 of 1999 on management of the country’s balance of international payments has recently been circulated with specific proposals on the statistical scope of items in the balance of payments. Under current regulations, the statistical scope of such elements of the balance of payments as imports, exports, foreign direct and indirect investment, and offshore loans and investments, have has not yet been specified, leading to inconsistent understanding of the statistical method being applied and resulting in disparity in the statistical data released by related ministries and sectors.

To address these limitations, the draft decree would define the balance of payments as covering all kinds of changes in ownership of assets between residents and non-residents. Excluded from the calculation would be assets brought across the border without any transfer of ownership between a resident to a non-resident, including gold imported or exported by the central bank for management of State foreign reserves.

The draft would further stipulate that foreign direct investment would include cash and other lawful assets brought into Viet Nam and profits re-invested by non-residents who directly manage investments in Viet Nam. Indirect foreign investment would transactions between residents and non-residents whereby non-residents buy securities and other valuable papers issued by residents or contribute capital to or buy shares directly from Vietnamese enterprises or through investment funds or other intermediary financial institutions but do not participate in the management of their investment in Viet Nam.

Offshore direct investments would be defined as overseas investments made with cash or other lawful assets brought from Viet Nam as well as profits earned overseas by Vietnamese nationals who directly manage their overseas investment projects. Offshore indirect investment would include residents’ purchase of stocks or other valuable papers issued by non-residents.

The State Bank of Viet Nam says the draft regulations have been devised in line with IMF guidance on international balance statistics as well as relevant domestic laws.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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