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BUSINESS IN BRIEF 18-3Japan calls for better development strategies

Viet Nam needs to solve its problems of infrastructure development, human resources and institutions and policies to strengthen its industrialisation strategy from the perspective of Japanese industrial cooperation.

This opinion was voiced by Japanese Ambassador to Viet Nam Yasuaki Tanizaki at the international conference on Viet Nam-Japan strategic co-operation to improve Viet Nam’s industrial capacity, held in Ha Noi yesterday.

At the conference, the State management agencies, scientists, Vietnamese and Japanese businesses examined the impact of Japanese investment on Viet Nam’s industrial development, as well as challenges and solutions to industrial production in the country.

Addressing the event, Deputy Minister of Industry and Trade Tran Tuan Anh said that Japan was the most important partner country for Viet Nam with regard to foreign direct investment (FDI) as well as official development assistance (ODA) in the industry-related sectors.

Meanwhile, Kenechi Ohno, from Japan’s National Policy Research Institute, co-leader of the Viet Nam Development Forum (VDF) said he thought Japan also needed Viet Nam, especially if Viet Nam improved its industrial capability greatly.

Therefore, there would be good scope for promoting Japanese industrial co-operation with Viet Nam’s industrial policy, provided the latter was improved significantly by adopting the selectivity and concentration principle.

Pham Hong Chuong, manager of the National Economy University’s Department of Scientific Management, said Viet Nam had good conditions to meet Japanese requirements and the country was expected to become the biggest industrial production base of Japanese co-operation.

However, to grasp this “golden opportunity”, the Vietnamese Government had to identify Japan as a strategic partner in industrial development, taking advantage of Japanese assistance to develop supporting industries, along with absorbing technology and improving skills, renovating the formulation of industrial policies and ensuring macro-economic stability, he said.

Besides, it was also important for Vietnamese enterprises to shorten the gap in business thinking between Vietnamese and Japanese enterprises and to take advantage of Japanese assistance to enhance management and production capacity and to apply the managerial experiences of Japanese enterprises.

The national industrialisation plan is one of the key co-operation projects between Viet Nam and Japan that has received a lot of attention from the Vietnamese Government.

Viet Nam hopes to receive Japanese consultants and experts to draw up a development plan for a number of key industries, aiming to realise its industrialisation strategy by 2020 with a vision to 2030.

Duong Dinh Giam, director of the Industrial and Strategic Study Institute under the Ministry of Industry and Trade, presented the strategy with three main points, including adjusting the growth model, developing the priority industries and adjusting industrial geographical distribution.

The strategy sets up the breakthrough solutions of developing systems of industrial service and improving the quality of the labour force. According to Ohno, Viet Nam needs to change not only its policy content but also, more fundamentally, policy making methods that produce industrial strategies and action plans.

Policy making in Viet Nam was highly scattered and without focus, with many projects and programmess being carried out separately, Ohno said. Viet Nam needed to create policy focal points instead of pursuing too many policies without linkage, he added.

Ambassador Tanizaki reaffirmed the Japanese government’s commitment to maintain ODA to Viet Nam, including assistance for industrial development.

The event was organised by the National Economic University in co-ordination with Japan International Co-operation Agency, Industrial and Strategic Study Institute and the Ministry of Industry and Trade.

This is a project of Japan’s FDI in the industry largest ever in the city of Hai Phong with a total investment of US$575 million in 2012…—VNS file photo

On the same day in HCM City, the Tuoi Tre (Youth) newspaper and Japan’s Mainichi newspaper held a joint conference on the Vietnamese market and the investment trend of Japanese enterprises.

Japanese small- and medium-sized enterprises saw Viet Nam as one of its most attractive investment destination, business leaders have said.

Nakajima Kazuo of Brain Works Group, an investor in Viet Nam, said more than 99 per cent of Japanese enterprises were small- and medium-sized enterprises. Most big companies had invested in Viet Nam.

Japan has 1.787 million enterprises and 1.775 million of them were small and medium in size, Kazuo said.

Japan’s economic crisis and the consequences of the tsunami were among the main reasons that businesses had shifted their investment flow into Viet Nam as well as Southeast Asia, Kazuo said, adding that Viet Nam’s market was still young and had a great deal of potential.

“The disaster has made the Japanese think again and estimate the investment risk and to think of entering new markets in Asia,” he said.

Kazuo pointed out that Japan’s population was 130 million and Viet Nam’s 90 million.

The population of Viet Nam is young, with nearly 60 per cent of population below 25 years old, while the population of Japan had a higher ratio of older people.

“We see big opportunities to do business in Viet Nam, which has a good market, because the business skills of local enterprises are still at a low level. The market in Japan is shrinking and the market in Viet Nam is widening,” he said.

Japanese investors said Viet Nam at present was similar to their country during its development period.

Kazuo predicted that the service, retail and restaurant sectors were attractive to Japanese enterprises.

Last year, 225 Japanese enterprises invested in Viet Nam, the highest number compared with previous years.

More companies would come, including those in healthcare and agriculture, experts said. The retail market was one of the targets of Japanese enterprises.

According to Le Manh Ha, deputy chairman of the HCM City People’s Committee, bilateral trade between the two countries reached US$25 billion last year.

As of 2012, Japan was the biggest investor in Viet Nam, with 1,800 projects worth $29 billion.

Japan is ranked fifth in investing in HCM City, with 555 projects worth $2.7 billion, he said.

According to the Japan External Trade Organisation (JETRO), Japanese investment in Viet Nam hit a record-high over the past two years.

Last year, Japan’s investment contributed to a quarter of all new projects in the country, equivalent to around 50 per cent of its total capital invested.

JETRO said that 65.9 per cent of 4,000 surveyed businesses said they would choose Viet Nam as an investment destination during the next two years.

JETRO predicted there would be a great number of Japanese businesses investing in Viet Nam this year despite the global economic downturn

Shrimp industry beset by problems

Shrimp production has declined in recent years because of outbreaks of disease, falling demand from importers and lack of capital for production.

Few farmers in the Cuu Long (Mekong) Delta have not begun shrimp production this year as they are still recovering from losses during the last crop.

The Viet Nam Association of Seafood Export and Processing (VASEP) said that the total yield of shrimp this year would be lower than 200,000 tonnes, a drop of 13 per cent compared to last year’s.

Last year, the country had 100,000ha of shrimp production damaged because of disease, leading to financial losses and higher bank debts for farmers.

In addition, VASEP said the import needs of Japan and Korea had declined, while exports of Vietnamese shrimp to the US are currently being subject to an anti-dumping petition filed by the US’ Department of Commerce.

There is also fierce competition from other shrimp exporters like Thailand, Indonesia, Ecuador and India.

India sells shrimp to Japan at $8.6 a kilo, while Vietnamese shrimp is sold for US$11.2 a kilo.

Truong Dinh Hoe, VASEP’s general secretary, said the industry was beset by several problems, including disease, competition in buying pre-processed shrimp from Chinese dealers, lower demand from Japanese and Korean markets, and increasing competition from other exporters.

The General Department of Seafood is pessimistic about the challenges it has to overcome. Pham Anh Tuan, deputy director of the department, said that planning for production was still weak and disease control was not being done properly.

Meanwhile, shrimp fries for production cannot be controlled, and thus, threats from disease and the sudden death of shrimp en masse could not be prevented.

The department is scheduled to start a campaign to check the substances used in shrimp feed.

Another problem facing the industry is lack of capital. Vietnamese exporters said they were finding it difficult to expand markets because of a shortage of money.

Resolution outlines SBV tasks

Under a resolution issued by the Government in February, the State Bank of Viet Nam will be required to regulate its monetary policies in way that would reduce interest rates.

The requirements are expected to help commercial banks increase their credit growth in line with the government’s targets set for 2013. They would support production and business activities while ensuring control of inflation.

The government has also asked the central bank to monitor and regulate the exchange rate, so that it stands at a proper level suitable to market demand.

The plans to restructure credit institutions and debts, and to use risk reserves to settle bad debts in 2013, should be implemented soon, the resolution states.

Under the resolution, the central bank is also required to submit credit institutions’ bad-debt settlement plans soon, as well as its plans to set up a national asset management company and its charter to the Government for approval.

This year, the central bank will have to closely cooperate with the Ministry of Construction to remove difficulties facing the domestic real estate market.

In addition to the central bank, the Government has also required all ministries, agencies and localities to strictly implement policies and measures that are designed to remove barriers to production and business, support the market and reduce bad debts.

All of this is required in order to stabilise the macro-economy while curbing inflation.

The ministries of Planning and Investment and Finance will have to coordinate with other ministries, agencies and localities to handle existing difficulties to increase the disbursement of public investment capital, Official Development Assistance capital, direct investment capital and private domestic investment for projects that have a major impact on the economy and society.

Dong Nai drafts master plan

The southern province of Dong Nai has asked for feedback from local residents and experts on its draft master plan for 21,000ha around the Long Thanh International Airport.

According to the master plan, industrial clusters, small-scale industries, trade service and goods transport will exist along with international level medicine-education-sport-resort services as well as research and training centres.

It is expected that by 2020, when the Long Thanh International Airport comes into operation, around 40 – 50 per cent of human resources in the region will serve the airport.

The master plan is based on major regulations covering infrastructure, and multi-vehicles for transport.

The Long Thanh International Airport was approved by the Prime Minister on August 2011 with its main function as a transit centre in Southeast Asia. Under the master plan, it would have the ability to compete with other regional international airports.

The airport will be built to accommodate big airplanes like the A380-800 and have the capacity to handle 100 million passengers and 5 million tonnes of cargo per year.

The investment plan for the airport has been divided into three stages. Total investment for the first stage, up to 2020, is US$6.75 billion, of which $6 billion is slated for construction and the rest for ground clearance and compensation. All works will begin in 2015, and the first stage would be finished in 2020.

On the southwest side, the airport’s backbone road will be linked with the Bien Hoa – Vung Tau Highway which would connect with the HCM City – Long Thanh – Dau Giay Highway (now under construction). On the northeast side, the airport road will be linked with HCM City’s Belt Road No 4.

The airport will also be connected with a high-speed railway system from HCM City – Nha Trang as well as the Thu Thiem – Long Thanh railway system. — VNS

By 2025, at least 5,000 hectares will include a runway, airport station and other service facilities for the airport.

The total of 21,000 hectares planned for the airport area would cover six communes in Long Thanh District and three communes in Cam My District.

North of the airport, nearby HCM City will have 5,720 hectares for airport staff accommodations, services, resettlement and green space.

The area will be developed thanks to the HCM City – Long Thanh – Dau Giay highway.

In an area of 4,400 hectares in the south, there will be an international transit centre, industrial park, perennial fruit trees and parks.

The area will be linked with the Ben Luc – HCM City – Long Thanh Highway and Highway 51 toward the coastal province of Ba Ria – Vung Tau.

Agricultural production, rural residences, resorts and storage will be located near the northeast and southwest runway with a total area of 11,000 ha.

“This is the most favourable place for an airport because it is the gateway of the south – thanks to many highways, which are under construction and that connect HCM City and other Mekong Delta provinces – that links with the rest of the world,” said Ly Thanh Phuong, deputy director of the Dong Nai’s Construction Department, who was quoted in the Tuoi Tre (Youth) newspaper.

However, Phuong also pointed out that residential areas with high populations would cause difficulties in land clearance and compensation.

Construction on the 21,000 ha will be planned in three stages.

From 2012-2020, the first stage would include the Loc An residential project and road systems linking HCM City – Long Thanh – Dau Giay Highway.

The second stage from 2020 – 2025 will comprise urban areas, international hospitals and resorts built in the east.

The third stage will begin in 2025 when the airport is expected to reach maximum capacity. During that time, all planned construction would be completed, along with completed infrastructure that would connect with other southern provinces.

“We’ve worked with the Ministry of Construction to hire foreign experts for the master plan. We are waiting for more feedback. After that, we will submit the plan to the Government for approval,” said Dinh Quoc Thai, chairman of the Dong Nai People’s Committee.

My Son Community Tourism Village opens

My Son Community-based Tourism Village in Duy Phu commune, central Quang Nam province, was opened on March 14 by the provincial Department of Culture, Sports and Tourism and the International Labour Organisation (ILO).

The village, funded by the Luxembourg Government, is located close to the World Cultural Heritage Site of My Son.

Forty households took part in the project, 30 of them from My Son hamlet.

To ensure the effectiveness and sustainability of community tourism, five households built service facilities with a total sum of US$15,000 mobilised by ILO.

ILO representative Charles Bodwell said that the village helps improve local residents’ well-being and popularises My Son Heritage Site to domestic and foreign visitors.

Vietnam runner up at Most Popular Destination 2013

Vietnam has ranked second at the Go Asia Award-Most Popular Destination 2013 awards from the International Tourism Bourse (ITB).

Thailand topped the list while Singapore was in third place.

Founded in 2003, Berlin-based Go Asia includes more than 3,000 small and medium companies involving in the tourism sector.

Earlier, 26 Vietnamese businesses attended ITB 2013, held in Berlin, Germany, from March 6-10.

Disagreement on power price hikes proposed by EVN

Several experts have gone on record as saying that the price hikes proposed Electricity Group of Vietnam (EVN) are unfair to consumers.

According to EVN, power consumption in March may reach 355 million kWh per day, with the national power output fluctuating between 17,700 and 17,900 MW.

Water levels at several large hydropower facilities in the central and central highlands regions have caused concern because they are at below-normal levels.

An anonymous EVN official said that, nationwide, hydropower dams are facing a deficit of 5.29 billion cubic metres.

The modest capacity of these hydropower facilities poses a risk to regions in the south. With no new power sources on the horizon, this leaves EVN to rely on diesel fueled sources to fill in the gap.

EVN is said to be considering another price hike, even with decreased output. One economist said that Vietnam National Coal-Mineral Industries Group is now taking huge losses, which will likely be passed on to the consumer in the near future.

Dang Huy Cuong, Director of the Ministry of Industry and Trade’s Electricity Regulatory Authority, said that the prime minister had assigned the Ministry of Finance to coordinate with other agencies to stabilise coal prices for electricity production.

Cuong noted that if the Prime Minister were to adjust coal prices for electricity production to accurately reflect world market rates, it would result in a 30% increase of electricity prices.

The Ministry of Industry and Trade recently made a proposal to the Prime Minister in a draft decision on power regulation that they be allowed to adjust prices every three months, which would give the group authority to increase prices by a maximum of 5% of their claimed production prices.

The new policy will be enforced if the Prime Minister does not respond within 15 days. This would give EVN the right to adjust prices four times a year instead of the current limit of two.

Petrolimex Chairman: Fuel pricing in Vietnam is transparent

Among the goods and services sold in Vietnam, petrol prices remain the most transparent, said Vietnam National Petroleum Group (Petrolimex) Chairman, Bui Ngoc Bao.

He made the remark at a press conference held on March 13 addressing issues surrounding the start up of the Vietnam Petroleum Association.

Although so far petrol prices in the country have been stabilised by government regulation, there is lingering public concern over the prices as the market adapts to those of the global market.

The rates for fuel on the international market remain something that is difficult to assess, he said, adding that, “However the integration with the global market place manifests itself, there will be an adjustment in prices in Vietnam.”

“It is impossible to accurately predict petroleum prices. There is nobody who can say for sure what the price of a barrel of oil will cost in the future. So traders are looking to expert analysis from other sources,” he said.

In addition, there are a number of loopholes that traders have learned to take advantage of, on the import and re-export of petroleum-based products. For example, some traders import petroleum, claiming that it is for re-export, with the intention of selling it domestically.

An expert from the Vietnam Petroleum Association (VINPA) said that it is important to create a level playing field to promote competition in the market. State-owned petroleum traders receive government support for their loss, but private ones do not, he added.

According to the association, the aim of Vietnam Petroleum Association is to facilitate the link between producers, traders and consumers, protect the member groups and ensure national energy security.

Tourism industry in Vietnam remains dysfunctional

Despite a number of promotions to attract visitors, Vietnam’s tourism industry continues to face obstacles because of lack of cooperation between agencies.

After the SARS outbreak was brought under control in Vietnam in 2003, airline companies made an effort to cooperate with luxury hotels in order to draw more visitors. But tour companies had a bleaker view of the industry and were not receptive to these efforts.

In 2009, in an attempt to stimulus tourism, the Ministry of Culture, Sports and Tourism called on tour agencies and hotels to lower their prices by 30-50%, but the request met with resistance. Hotel operators said, lacking any specific forecast about the drop in the sector, there was no benefit for them in lowering their prices, rendering stimulus programmes unsuccessful.

Pham Manh Ha, head of a tourism company, said that their foreign partners complained that their tour costs in Vietnam were much higher than in neighboring countries, making Vietnam less attractive to visitors.

The price for a four or five star hotel room in Bangkok is 20-30% cheaper than in Vietnam. The tour agencies said they regularly see sudden price increases in Vietnam, especially for transport fees.

Meanwhile, Vietnamese agencies have been lax in developing strategies to predict market trends and have also shown themselves to be slow in reacting to sudden drops in numbers of international tourists.

“It’s necessary for us to collaborate in reducing costs in order to attract more foreign tourists, which will prop up the industry and create more jobs,” said Pham Trung Luong, Deputy Director of the Institute of Tourism Research and Development.

Currently many estimates show that tourism companies in other countries, such as Russia and South Korea, are ahead of their Vietnamese counterparts in attracting tourists to Vietnam.

Blue dragon fruit prices soar in Tien Giang Province

Traders are paying a record high price of VND23,000-25,000 a kilogram for blue dragon fruit in Cho Gao District in the Mekong Delta province of Tien Giang, which specializes in growing blue dragon fruit.

Several traders have paid in advance at VND17,00-18,000 a kilogram for unripe blue dragon in Quon Long Commune in Cho Gao District.

Tien Giang Province has more than 2,500 hectares of blue dragon cultivation with total output of nearly 40,000 tons a year, concentrated mainly in Cho Gao District.

Blue dragon is one of seven fruits with a competitive advantage in Tien Giang Province and is moving to further enhance both quality and grip in the market.

According to the Southern Fruit Tree Research Institute, blue dragon is an export fruit commodity with the highest and very steady growth rate.

State Bank offers low interest rate for housing

The State Bank of Vietnam on March 13 announced an ease in loan interest rates upto six percent per annum for prospective future house buyers.

Civil servants, low income groups and investors of social housing projects will enjoy a six percent interest rate, applicable for first three years of a five to ten year loan term.

The loan duration period must be at least a maximum of ten years for individuals and five years for businesses.

After April 15, 2016–deadline for the first three year period– customers will continue to enjoy another preferential interest rate being offered by the State Bank.

Civil servants and low income groups will receive at least 80 percent of the total amount for housing in the form of a loan. The maximum loan amount for businesses will be 70 percent.

Commercial banks must use at least three percent of their total outstanding loans, calculated by the end of the previous year. State Bank will however sponsor VND30 trillion (US$1.433 billion) for the above purpose.

FDI investment capital shows increase in 2012

Foreign investments touched US$16.3 billion in Vietnam last year, including newly registered and additional capital, showing an increase of $3 billion as compared to the provisional data announced earlier.

Japan remained the biggest investor with $5.6 billion in newly registered and additional capital, accounting for 34.2 percent of total FDI investment capital in Vietnam in 2012.

Binh Duong Province still attracted the most FDI capital with $2.8 billion, accounting for 17.1 percent. Ha Tinh Province followed with more than $2 billion, or 13.1 percent. Hanoi and Ho Chi Minh City took third and fourth spots in tandem, with around $1.34 billion.

This year, the country is targeting about $13-14 billion in registered capital, and $10.5-11 billion in implemented FDI capital.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, last year, total newly registered and additional investment capital of Vietnamese companies in foreign countries touched nearly $1.55 billion, accounting for 61.11 percent of that in 2011.

By December 31 last year, there were 719 projects of Vietnamese companies in foreign countries licensed with a total capital of $29.23 billion, of which, capital of Vietnamese investors reached $12.87 billion. Up to now, Vietnamese investors have brought in about $430 million.

Ministry sets guidelines for switch from commercial to social housing

The Ministry of Construction has recently issued guidelines to process the transfer of commercial housing projects and urban residential areas into social housing.
Building projects for commercial houses can be changed to projects for social houses from April 22, 2013 to December 31, 2014

Accordingly, any approved commercial housing project will now be allowed to switch to social housing or service apartments, only if the project no longer meets consumer demand or is taking too long to launch.

Local authorities should take no more than 30 business days to give their approval or refusal to this conversion.

Enclosed in the guidelines are details of procedures to follow as well as necessary forms required to apply for the approval.

The Department of Construction in each province or city under the central government will accept application forms and carefully verify them before handing them to the People’s Committee of a province.

In order to process the approval, each Department of Construction is requested to ask for permission from the following offices including the Department of Planning and Architecture; Department of Natural Resources and Environment; Department of Finance; Department of Planning and Investment; and People’s Committee of the district where the project will be launched.

Any refusal to these application forms will be accompanied by a clear explanation, so that the People’s Committee of the related province is able to reconsider and give their final decision.

When receiving the minutes of meetings between local Departments of Construction and related agencies along with final draft of the approval or refusal, the provincial People’s Committee should issue an official license within seven business days at the latest.

However, any project to build more than 500 houses should await the decision of the Ministry of Construction in no more than 15 business days.

The total amount of time to consider and accept or refuse the application form for the transfer should take 30 business days at the maximum.

HCMC finds ways to reduce housing inventory

The Department of Construction in Ho Chi Minh City on March 14 reported to the People’s Committee on housing inventory and measures to deal with the present dire condition.

According to the Department, the City now has 1,321 housing projects with 572,420 apartments, of which only 131 projects have been built with 27,000 apartments. The value of unsold apartments is about VND24.5 trillion (US$1.171 billion).

Several investors have asked to transfer commercial projects into social housing, so as to enjoy preferential and assistance policies. The Construction Department has proposed to the City People’s Committee to permit them to do so if they meet certain requirements.

The price of an apartment of less than 70 square meters should not exceed VND12 million ($573) per square meter, including Value Added Tax. The State will not spend on unsold apartments but investors will trade directly with customers.

Civil servants and those in the military and police forces should be given loans at reasonable interest rates to buy apartments. This will not only allow them affordable housing but also help businesses sell their inventory.

Le Hoang Quan, chairman of the City People’s Committee, said that the City will not support all real estate projects but focus on specific projects.

GTelMobile roams to VinaPhone

GTelMobile Joint Stock Company has officially used VinaPhone’s network infrastructure to supply mobile services.

This is the first such roaming deal between two mobile brands in Viet Nam’s telecom industry, where the brands are owned by different companies. Vinaphone is operated by the giant Viet Nam Post and Telecommunication Group and the new Gmobile brand is run by GtelMobile, which is owned by the Ministry of Public Security.

Under the co-operation, which will become valid in one year and can be extended, Gmobile subscribers can call, send text messages and use VinaPhone’s value-added services.

Actavis seeks to acquire drug company

NYSE-listed drug company Actavis will look for opportunities to acquire a local pharmaceutical firm for further development in Viet Nam, said the company vice-president for North Asia and Indonesia, Thomas Runkel, on Monday.

He considered Viet Nam a potential market, with his company enjoying more than 100 per cent growth last year, and said Actavis was seeking a suitable partner for an acquisition deal or for setting up a joint venture.

Late last year, Watson Pharmaceuticals bought Actavis for US$6 billlion and took its name. In January, the company acquired a Belgian firm, Uteron, for $305 million.

The company is now the third-biggest drug firm globally, focusing on developing, manufacturing and distributing generic, brand and biosimilar products. It has had an office in Viet Nam since 2007.

FDI figure revised for 2012

Foreign direct investment (FDI) pledged in the country rose by 4.7 per cent to US$16.3 billion in 2012, according to a revised report released by the Ministry of Planning and Investment’s Foreign Investment Agency on Monday.

Earlier in December, the agency announced that the country had attracted $12.7 billion in FDI for the year, down by 18 per cent year-on-year due to the global economic slowdown.

According to the new report, up to 1,287 new foreign-invested projects were granted licences with a total registered capital of $8.6 billion in 2012 or equivalent to 71.2 per cent of the total figure.

The reviewed period also saw a slight decrease of 4.9 per cent in FDI disbursement, reaching $10.46 billion.

In another bright spot, 550 operating projects were allowed to increase their levels of capital by $7.7 billion, over doubled the figure of the previous year.

Manufacturing and processing attracted the lion’s share of FDI, reaching $11.7 billion or 72 per cent of the country’s total registered capital. The real estate industry followed with $1.9 billion, 12.1 per cent of the country’s total capital.

The report showed that Japan remained Viet Nam’s largest foreign investor with $5.59 billion, 34.2 per cent of the total FDI registered in the country. It was followed by Taiwan ($2.6 billion) and Singapore ($1.9 billion). The country’s other major sources of investment included South Korea, Samoa, British Virgin Islands and Hong Kong.

The southern province of Binh Duong was the most attractive destination to foreign investors last year with more than $2.79 billion, accounting for 17.1 per cent of the country’s total registered capital. The central province of Ha Tinh, Ha Noi and HCM City followed with $2.14 billion and $1.3 billion, respectively.

As of December 31, the country is home to 14,522 valid foreign-invested projects with capital totaling $210.5 billion with manufacturing and processing being the most attractive industries to foreign investors.

Tight loans hinder “tra” processors

Tra processing factories in the Mekong Delta region are running out of fish because many farmers have empty ponds due to lack of money.

According to the Ministry of Agriculture and Rural Development (MARD), loans are difficult to obtain for both fish breeders and processors.

The problem was raised in a ministerial report after a survey of tra fish production in Dong Thap, Can Tho and An Giang provinces last year, which was sent to the State Bank of Viet Nam (SBV) and the Ministry of Natural Resources and Environment (MNRE) recently.

Deputy Minister Vu Van Tam of MARD said the survey at Chau Phu Fisheries Cooperative in An Giang shows that many households cannot get credit from banks because they do not have enough assets to secure new loans.

Meanwhile, they suffer losses from last year’s production due to the fish’s selling price of VND2,000-3,000 (US$0.095-0.14) a kilogram lower than costs.

All of the cooperative’s members need credit, he said. However, only few can borrow money from the Viet Nam Bank for Agriculture and Rural Development (Agribank) with preferential rates, but most with low credit limits.

The survey found only 13 members of the cooperative have been given loans from Agribank since last August, but most of these are extensions of the maturity of old debts.

So, in fact, farmers do not get additional money to invest in breeding, said the ministry, adding that procedures at Agribank are still complicated while interest rates at other banks remain high.

The same situation has also hit processors. The survey at three difficult enterprises — Thuan An, Viet An and Viet Ngu — found these companies are always short of capital.

Current loans from banks are not enough for the companies’ demands while they do not have mortgages for their new loans.

The enterprises are calling for higher evaluation of inventories as mortgages for higher credit limits.

According to An Giang Province People’s Committee, local enterprises encountered difficulties in accessing loans last year despite support from the Government.

Vice-president of the province’s Seafood Breeding and Processing Association, Le Chi Binh, said loan procedures at banks were complicated and credit limits low, adding that few households were given loans with interest rates of below 11 per cent a year.

Meanwhile, costs such as electricity, water and feed prices keep increasing for enterprises and farmers.

Duong Ngoc Minh from the Viet Nam Association of Seafood Exporters and Producers estimated that 80 per cent of the enterprises were facing financial problems.

MARD blames the problem on the fact that enterprises and farmers cannot get mortgages for new loans while banks do not lower interest rates. As well, loan terms (often only four months) are not appropriate for production cycles, which run from eight to 12 months.

HCM City’s manufacturing sector sees 3.2% growth

HCM City’s industrial production rose by 3.2 per cent in the first two months of 2013, doubled the number from a year ago.

According to figures from the municipal Department of Industry and Trade, the processing grew at 3.1 per cent.

Fifteen of 26 groups of products achieved positive growth in the period, with leather and footwear growing by 36.5 per cent, construction materials by 23.9 per cent, chemicals by 16.9 per cent, and beverages by 11.2 per cent.

Last year manufacturing growth topped 4.9 per cent.

Exports were worth nearly US$4.5 billion, a year-on-year increase of 21.4 per cent over the same period last year.

The public sector reported a 23.8 per cent growth, the domestic non-State sector, 6.7 per cent, and the foreign sector, 31 per cent.

Nguyen Van Lai, director of the municipal Department of Industry and Trade, said in March his department would work with other agencies to explore ways for businesses overcome their difficulties.

The department would also implement trade promotion programmes launched by the city to help businesses renovate equipment and technologies, expand scale and improve product quality, lower costs and prices, and make their products more competitive, especially those making essential and export goods, he said.

To promote consumption and reduce stockpiles, the city plans to organise further trade promotion campaigns in the domestic market, and strengthen the distribution system to reduce costs, he said.

Businesses and distributors are being encouraged to do the same, he said.

The department has also made plans to further streamline the market stabilisation programme for goods like food and foodstuff; students’ utensils; pharmaceuticals; and dairy products this year, he said. The programme will last from April 1, 2013, to March 31 next year.

Raw material price rises prove damaging

The price of many raw materials used in industry has increased recently, creating huge difficulties for enterprises.

According to President of the Viet Nam Steel Association Pham Chi Cuong, the rising costs of iron ore, scrap steel and steel billets had damaged domestic production.

Prices of steel imported from Korea, Russia and Malaysia have soared by US$30 per tonne to an average of $620, meaning domestic steel price has also been increased by as much as VND200,000 per tonne. The association estimated the amount of steel sold last month decreased 38 per cent over the previous month.

They say that prices increased in spite of low domestic demand due to China’s decision to stock up on their steel reserves.

In the field of paper production, raw materials in the industry’s domestic market are becoming rare and their prices recently increased by 40-50 per cent.

According to a representative from the Viet Nam Packaging Association, with the current prices of raw material, enterprises made a loss of about VND1.1 million per tonne of paper in comparison with three months ago.

He added that the short-term solution would be to increase imports of raw materials to deal with the scarcity.

Pham Thi Thuy Nga, director of a packaging company, told the Sai Gon Giai Phong (Liberated Sai Gon) that the company was forced to increase prices, but at a rate equal to only one quarter of the increasing rate of raw material prices, while enhancing savings to reduce losses.

A director of a mechanics factory in HCM City’s Binh Tan District said that many raw material providers planned to reduce production meaning it would be difficult to find stable supply sources of raw materials with reasonable prices.

Fruit and vegetable exports continue decade of growth

Viet Nam earned US$119 million from fruit and vegetable exports in the first two months of this year, up 16 per cent on the same period in 2012.

The result continues the sector’s target of a 10-year growth in exports.

This year’s fruit and vegetable export turnover is expected to hit $1 billion.

Thanks to the advantages of favourable climates in growing regions, exports of fruit and vegetables have grown strongly since 2004. Export turnover last year was 5.5 times higher than 2003’s figure, with an average growth of 20.7 per cent annually.

This growth has increased rapidly in the past two years: 38.1 per cent in 2011 and 33.1 per cent in 2012.

The country’s 13 primary markets exceeding $10 million included China ($218.1 million), Japan ($54.6 million), the US ($39.9 million), Russia ($28.4 million), South Korea ($22.6 million) and Thailand ($20.4 million).

Large volumes of specialty fruits are being shipped abroad, such as longan, mango, orange, grapefruit, lychee, banana and dragon fruit, as well as fresh vegetables and flowers.

However, Viet Nam still spends significant amounts on fruit and vegetable imports. They totalled $294 million in 2010, $293.5 million in 2011, $335 million in 2012 and $51 million in the first two months of this year – up 11.2 per cent on last year.

Sustainable export growth will require Viet Nam to focus on improving quality, controlling illegal imports, and ensuring food hygiene and safety.

Vietnam Airlines inks deal with Taiwan bank

Vietnam Airlines yesterday signed an agreement with Cathay United Bank (CUB) to receive a US$60 million financing deal to buy a new Airbus A321 aircraft from French manufacturer Airbus.

Accordingly, the Taipei-based bank has worked with four other Taiwanese banks to arrange the loan for Vietnam Airlines’ purchase of the Airbus A321, expected to be delivered this month.

Meanwhile, according to Vietnam Airlines President and CEO Pham Ngoc Minh, the carrier had signed a contract with Airbus for the delivery of 26 units of A321 aircraft during the 2011-15 period.

This would support Vietnam Airlines in expanding the fleet, he said. “We hope to ensure our partnership with Cathay United Bank is one of long-term growth.”

Meanwhile, the bank’s senior executive vice president Lee Wei Cheng said Vietnam Airlines had always been regarded as one of the most important partners.

“Vietnam Airlines is the only airline in the southeast Asian region to become a member of the global airlines alliance – SkyTeam,” he said.

CUB in December also provided the Vietnamese carrier with a similar syndicated loan. CUB has been co-ordinating with PetroVietnam Finance Corporation to support the carrier in purchasing new engines for the A321 aircrafts and other financing projects.

Jetstar Pacific launches two new routes

The budget airline Jetstar Pacific will operate two new routes to Buon Ma Thuot in the Central Highlands from March 26.

The new HCM City-Buon Ma Thuot and Buon Ma Thuot-Vinh routes, the city’s first low-cost air service, will use 180-seat Airbus A320 aircraft.

Brazil inspects seafood safety control

Inspectors from Brazil’s Ministry of Agriculture, Livestock and Food Supply and the Ministry of Fisheries and Aquaculture are in Viet Nam this week to assess its seafood safety control system.

The inspectors will tour the National Agro-Forestry-Fisheries Quality Assurance Department’s regional quality management centres, seafood processing factories, and shrimp and fish farms. Hai Vuong Ltd Company, Khanh Hoa Canned Food, Hung Vuong JSC, Cuu Long (Mekong) Delta Food Factory, Southern Fishery Industries Ltd Company and Nam Viet JSC will be visited.

Stable prices reflect success of programme

HCM City’s Price Stabilisation Programme, which started 11 years ago, has been a success story, managing to keep under control the prices of over 350 essential goods in the city as well as neighbouring areas.

Last year it focused on four groups of essential — food and foodstuff; students’ utensils; pharmaceuticals; and dairy products.

Nguyen Thi Hong, deputy chairwoman of the HCM City People’s Committee, said the city supplies essential goods not only to its 10 million population but also to cities and provinces around the country.

In 2012 an agreement was signed between the Ho Chi Minh Communist Youth Union and the Women’s Union of HCM City and Sai Gon Trade Corp and Sai Gon Co.op to expand the network of outlets selling goods under the programme.

As a result, 53 new stalls were established.

The unions set up a further 135 new stalls at traditional markets and 448 stalls at residential areas in the city.

In all, 2,448 new outlets were set up last year, bringing the total number to 6,439.

In addition, nearly 700 mobile shops (on trucks) were sent to suburban districts to sell goods to residents in remote areas.

By supplying large volumes of goods to the market, the programme has helped stabilise the prices of essential goods, keeping inflation and social discontent in check.

Hong said the programme has helped HCM City authorities contain inflation at 4.07 per cent in 2012, much lower than the 6.81 per cent recorded the previous year.

Businesses joining the programme too benefited, not only by being able to promote their products but also getting preferential loans, she added.


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