Home » Business » BUSINESS IN BRIEF 18/9

US stimulus buoys local shares

Stocks on the HCM City Stock Exchange posted modest gains over the course of last week but declined in Ha Noi despite a strong performance on Friday driven in part by the positive response of world markets to the announcement of a new round of US stimulus measures.

The US Federal Reserve said last week that it would pump US$40 billion into the economy each month through a bond-buying progamme already being referred to as QE3 (the bank’s third round of quantitative easing).

On Friday afternoon in HCM City, the VN-Index closed at 398.87 points, an increase of 0.35 per cent over the previous week’s close. Stronger trading on Friday also helped push up the overall volume of trades last week by 19 per cent ot over 40 million shares per day, worth an average daily value of VND610.8 billion ($29 million).

Sell pressures also declined after the ministries of Finance and Industry and Trade decided to cut the import tax on fuel by 2 percentage points in order to hold petrol prices steady.

Nevertheless, investors remained cautious. Only nine out of 24 sectors posted gains, led by hospitality and entertainment stocks, which rose by an average of 4.25 per cent, and insurance stocks, which saw an average increase of 3.43 per cent, largely driven by a spike in the price of market leaders Bao Viet Holdings (BVH), which reached its ceiling price three days in a row.

On the Ha Noi Stock Exchange, the HNX-Index lost 1.92 per cent from the prior week despite rising strongly in the last two sessions of the week. It closed on Friday at 59.23 points.

The volume of trades improved by 11 per cent over the previous week but continued to be modest, averaging 28.8 million shares, worth a daily average of only VND210 billion ($10 million).

Foreign investors continued to put funds into the domestic market last week, picking up shares worth a net of VND133 billion ($6.3 million) on both exchanges.

While analysts expected that buoyant global markets would be able to keep the market in positive territory early this week, Saigon Securities Inc (SSI) analysts predicted that the performance of most listed enterprises would not be improving anytime soon this year, with credit growth still stagnant and a number of recent, high profile violations of securities laws likely to erode investor confidence in the domestic market.

Accordingly, domestic gold prices climbed to a one-year high last week, reaching VND47.4 million ($2,270) per tael. (One tael is equivalent to 1.2 ounces.)

Illegal foreign trade causes headache for authorities   

Despite the increased number of illegal foreign traders in Vietnam, the Government has found it hard to prosecute them because of help they get from locals.

At a conference on raising awareness about laws governing foreign trade in Vietnam, held by the Ministry of Industry and Trade (MIT) in Nha Trang on September 12, the leaders of 14 local market management departments from the central and highlands regions, said that it is difficult to monitor and manage these activities.

According to the MIT, the foreign traders, especially Chinese traders have been buying massive amount of agriculture products since May last year.

Many of the traders do not have commercial licenses in Vietnam, but continue to buy up a number of products in many provinces, such as litchis from Bac Giang, tea from Tuyen Quang and Thai Nguyen, bees from Ha Tinh and crabs from Ca Mau.

Nguyen Dang Khoa, legal head of the Market Management Department said that the law clearly lays out penalties for illegal trade by foreign firms. These include confiscation of goods and fines.

However many of the firms provide employment to locals, which has caused some difficulties for enforcement agencies. Khoa suggested that the immigration authorities work in closer co-operation with police to catch violating entities or individuals.

Many foreign traders have fled before authorities could come to levy fines, leaving the Market Management Department holding evidence they cannot confiscate.

Pham Van Huu, deputy head of Khanh Hoa Province’s Department of Market Management, said, “We discovered that one company in HCMC was producing aqua-products in Cam Ranh Bay. Although the buyers are foreign, the management and technicians are Vietnamese so we are unable to deal with them properly. When we hear reports of firms selling to foreign traders, we monitor their activities until we can catch them in a violation.”

Quang Ngai Province’s Department of Market Management echoed the same difficulties. “Many traders use tourist visas and hire Vietnamese traders to do business on their behalf. So far we have only been able to fine two traders for illegal activity.”

He said the job would be easier if locals stop helping the illegal traders. “We should raise awareness about laws and long-term benefits rather than immediate profits.”

Colonel Le Thai Ngoc, deputy head of the Border Guard High Command, said, “The current management and co-ordination system is inefficient. Localities should consult with us when setting up coastal economic zones to ensure border and island security. However, since 2011, only three out of 15 provinces, and only 10 out of 233 enterprises seek consult with the border guard for their projects. Many localities made the excuse that they couldn’t divulge all the pertinent business information because they wanted to create favourable conditions for economic development.”

Singaporean firms eye M&A opportunities in Vietnam

Mergers and Acquisitions (M&As) by Singaporean companies in Vietnam reached US$72 million during the past 12 months, accounting for 9 percent in terms of quantity and 3 percent in terms of value of all M&A deals.

The figure for Singaporean investors increased by more than three times compared to last year’s level, which stood at US$23 million, and is an all-time high for Singaporean investors here.

According to London-based financial data provider Mergermarket, since August 2007, Singaporean companies have invested around US$203 million in the Vietnamese market and carried out more than ten M&A deals.

These M&As were mostly in the chemical and biotechnology industries, while the construction, consumer goods, transport and financial sectors also saw deals.

Worthy of note  was the acquisition of Fortis Healthcare International for a 65 percent stake in Hoan My Medical Corporation at US$64 million in August last year. The company’s name was then changed to Fortis Hoan My Group.
Earlier in 2008, Singaporean automotive group Jardine Cycle and Carriage purchased a 12-percent stake in Truong Hai Auto for US$41 million.

While Singaporean firms were increasingly expanding M&As in Vietnam, Japanese investors still dominated with eight deals worth up to US$803 million over the last 12 months.

Although French investors carried out only two M&A deals during the period, they topped the table in terms of value, with US$1.3 billion in investment. The biggest M&A deal took place in February when ConocoPhillips, the third largest US oil company, sold its assets in Vietnam to French partner Perenco.

Bank governor to attend IMF/WB 2012 annual meetings

Prime Minister Nguyen Tan Dung has approved sending a Vietnamese delegation led by bank governor Nguyen Van Binh to the International Monetary Fund (IMF) and the World Bank (WB) Group annual meetings in Tokyo, Japan, from October 8-14.

The meetings will discuss economic growth and international finance, as well as policies to spur growth and help countries overcome hunger and poverty.

More than 10,000 people from all over the world will take part in the meetings to debate global economic issues. The event is also an international cooperation forum for the IMF and WB to help them serve their 187 members better.

Doosan Vina products exported to Saudi Arabia

The Chemical Processing Equipment Plant (CPE), a subsidiary of Doosan Heavy Industries Vietnam (Doosan Vina), has exported 21 heat exchangers weighing more than 320 tonnes to the International Polymer Company in Saudi Arabia.

This is CPE’s seventh shipment of the year to the global market.

Located in the Dung Quat economic zone in Quang Ngai province, Doosan Vina has exported its products to ten countries namely Syria, Saudi Arabia, Chile, Algeria, Egypt, Singapore, Australia, the Philippines, Turkmenistan and Canada.

The Dung Quat oil refinery also uses “Made in Vietnam” chemical processing equipment produced by Doosan Vina.

The shipment to Saudi Arabia raises the total export tonnage of the five Doosan Vina plants in 2012 to 13,000 tonnes, with CPE accounting for 3,800 tonnes, a tenfold increase over the same period last year.

Vietnamese businesswoman swindles Japanese partner

On September 15, the Investigation Police in Hanoi announced a hunt for former deputy director general of Protechno Vietnam, who is on the run after swindling her Japanese partner of thousands of US dollars.

Dao Thanh Nhi, a resident on Huynh Thuc Khang Street in Dong Da District in Hanoi, and former deputy director general of Protechno Vietnam has been indicted on charges of “abusing trust to appropriate assets”.

The Investigation Police in Hanoi have informed that Dao Thanh Nhi had taken advantage of Sugimoto Hiroyuki, chairman of Sugitec Company, who had expressed a wish to invest in Vietnam, to swindle him of thousands of US dollars.

Nhi appropriated US$867,000 off her Japanese partner under pretense of purchasing a land plot for a factory to make car spare parts in Pho Noi A Industrial Zone in the northern province of Hung Yen. In 2008, Sugimoto Hiroyuki arrived in Vietnam and Nhi showed him a certified copy of a certificate of investment. The Japanese man then transferred US$1.1 million to her account to pay for the cost of construction and other expenses.

After Sugimoto Hiroyuki reported the case to the police, Nhi produced papers with signatures of him to prove that the Japanese had leased the entire land to set up Protechno Vietnam Company and also other documents showing that the Japanese national had used the money from the joint account to pay her.

However, after verification, investigators concluded that all these papers had been forged by Nhi and prosecuted her for fraud.

Police obtained an arrest warrant and raided her house on September 14, but by then Nhi had fled her residential premises and is now in hiding.

Hung Vuong buys into feed firm

Hung Vuong Corporation (HVG) has bid for an additional three million shares of Viet Thang Feed Company (VTF) to facilitate its closed production and business chain.

Hung Vuong has recently proposed buying three million VTF shares for VND26,100 each to raise its stake in the feed producerto 28.54%.

Duong Ngoc Minh, chairman of HVG, said that holding a majority stake in VTF is part of HVG’s strategy approved at the recent shareholders meeting.

Hung Vuong currently has a total seafood farming area of 500 hectares, including of its subsidiary An Giang Fisheries Import & Export and in farming cooperation with Ben Tre Forestry and Aquaproduct Import Export Company. Its daily fish processing capacity is 1,700 tons and the enterprise can meet 80% of its material demand.

Minh said the VTF share acquisition will help Hung Vuong speed up the process of developing a closed production process from feed production to farming, processing and export of fish fillets.

As input material costs for feed production have increased, acquiring a feed firm will help reduce impacts on prices of finished products and raise profitability, Minh added.

Cooperative wants to produce more VietGap rice

HCMC-based Tho Viet Agricultural Cooperative says it will cooperate with farmers in Cu Chi District to cultivate 50 hectares of rice meeting standards of Vietnamese Good Agriculture Practices (VietGap), with all output of the farm produce to be bought by the cooperative.

At a seminar on VietGap rice production in HCMC on Wednesday, some farmers from Cu Chi District expressed their concerns about finding outlets for the rice.

Tho Viet in 2011 jointly deployed VietGap rice farming on a total area of 20 hectares with a number of households in several communes in Cu Chi, and purchased the rice produced by the farmers at that time. According to Tho Viet, rice farming applying VietGap standards is costlier for farmers as the productivity is 15-20% lower compared to the traditional farming.

“When we called for local people to grow rice conforming to VietGap standards, the fi rst question they posed to us is whether the price would be higher than the market’s levels,” director Nguyen Thi Anh Ngoc of Tho Viet Cooperative noted.

Besides, Nguyen Thi Hoa, vice director of the cooperative, said her entity has no other choice but to accept the fact that local farmers may sell rice to other traders for higher prices. However, she said, this also gives Tho Viet a good chance to select loyal farmers for long-term cooperation.

Tho Viet has plans to develop an additional 200 hectares of rice in accordance with VietGap model in the near future, with 50 hectares set for Cu Chi.

JQA to recognize Quatest 3

Japan Quality Assurance Organization (JQA) is moving towards recognizing assessments by Vietnam’s Quality Assurance and Testing Center 3, or Quatest 3.

Speaking at a workshop to introduce Japan’s conformity assessment activities held in HCMC on Wednesday, Noriaki Kobayashi, chief operating officer of JQA, said the two sides were promoting mutual recognition of conformity assessment and quality control on products exported from Vietnam to Japan and vice versa.

Both JQA and Quatest 3 are members of the Asian Network Forum (ANF), which groups leading certification organizations in Japan, South Korea, China, Singapore, Taiwan and Vietnam.

Kobayashi said the number of certified reference materials for Vietnamese products exported to Japan had increased signifi cantly in recent times, as Vietnamese exporters consider Japan as a big market.

Conformity assessment of JQA is conducted in three ways, by JQA, by the producers monitored by JQA and by a third testing center recognized by JQA, such as Quatest 3 in Vietnam. However, so far JQA has only recognized a few standards, mainly in the field of mechanical engineering.

Therefore, the two parties are holding talks to reach a consensus on technical standards, so as to harmonize the standards of both sides, aiming towards mutual recognition, firstly in the fi eld of electricity-electronics.

Meanwhile, Quatest 3 will be assigned to carry out assessment activities in Vietnam, and Japan will accept these assessments. Th is will lower the costs of standard assessment.

Hoang Lam, deputy director of Quatest 3, said moving towards mutual recognition under the motto “evaluated once, accepted everywhere” JQA will provide technical assistance and personnel training.

Shrewd trades buoy Vietnam’s foreign reserves

Vietnam’s foreign reserves have surged to 23 billion USD, equivalent to 11.5 weeks of imports, according to a member of a research team from the Bank for Investment and Development of Vietnam (BIDV).

The State Bank of Vietnam has been buying up foreign currency each month since the beginning of the year, even soaking up over 600 million USD last month after the arrests of two leading figures in the banking industry sent shockwaves through local markets.

On August 23, the State Bank lifted nearly all remaining policy barriers to encourage the selling of foreign currencies to banks.

A shrinking trade deficit has also helped strengthen reserves and stabilise exchange rates. Imports in the first half of the year totalled 53.7 billion USD while exports were 52.9 billion USD.

Weakening imports therefore resulted in a trade deficit of just 800 million USD during the period, far below last year’s 9.84 billion USD level.

Disbursements of foreign investment have also contributed 5.4 billion USD in foreign currency to the local economy, while remittances from abroad brought in another 4 billion USD and disbursements of official development assistance (ODA) added in 600 million USD more.

The slowed pace of imports also reflects diminished economic activity. Government policies to curb inflation and tight credit have restrained growth.

The State Bank is aware of the dangers of higher inflation in the closing months of the year, as well as higher imports and a wider trade deficit, as construction and consumer spending increases before the Tet (Lunar New Year) holiday.

Together with the narrowing gap between interest rates paid by banks on deposits in domestic and foreign currencies, higher inflation could encourage more people to hold onto foreign currency.

Mekong Delta earns 1.1 billion from tra fish exports

The Mekong Delta has exported 377,000 tonnes of tra fish, worth 1.1 billion USD so far this year, to 133 countries and territories across the world.

This represents a drop of 3.2 percent against the same period last year, according to the Mekong Delta’s steering committee for tra fish production and consumption.

The US, EU and ASEAN currently consume 59 percent of the region’s total tra fish exports.

This year the region has produced 833,000 tonnes of tra fish, which were reared in over 3,000 hectares of fish farms, with an average productivity of 265 tonnes per hectare.

The acreage of fish farms has increased by 66 percent and productivity is up 25 tonnes per hectare over the same period last year.

However, the sector is facing a wide range of difficulties including a decline in prices since the end of March this year and a shortage of capital.

To deal with these difficulties, the Ministry of Agriculture and Rural Development has instructed the Mekong Delta to retain a minimum of 5,500 hectares for breeding this year.

It is essential for regional provinces to pay more attention to the quality of the fry and the fish food when breeding, while developing the market for tra fish.

The ministry has also proposed that the Government introduces a series of supportive measures for businesses, including extending the deadlines on loans and providing businesses that have capital difficulties with access to loans.-

LG plaudits for green products

LG Electronics’ efforts towards innovating ‘green’ products have paid off.

The South Korean chaebol early this month won the Global Efficiency Medal from the Super-efficient Equipment and Appliance Deployment (SEAD) Initiative, which recognised LG CINEMA 3D Smart TV 47LM670S model the most energy efficient product in the European market. The 47LM670S model features Local Dimming Technology to help improve a TV’s energy efficiency by enabling users to control the brightness of each region of the TV screen separately. Additionally, because the LED light source is configured in a direct line, electricity consumption is significantly lowered. Collectively, the TV’s energy-related functions eliminate unnecessary energy waste while maximising energy stinginess.

For the evaluation of TVs in the European market, SEAD separated products by screen size with small screens (below 27 inches), mid-sized screens (29 to 42 inches) and large screens (42 inches and above). LG’s CINEMA 3D Smart TV emerged the winner in the large screen category and was formally recognised as the most energy efficient TV with a score of A++ after being evaluated as the most efficient product among all three categories.

Established in 2010 to help transform the global market for efficient equipment and appliances, SEAD is a multinational government organisation evaluating the energy efficiency of TVs, monitors, computers, home appliances and lights sold in North America, Europe, India and Australia. Its medal was awarded to LG Electronics at IFA 2012, the world’s leading trade show for consumer electronics and home appliances in Berlin. “We’re delighted to be recognised by SEAD,” said Seog-ho Ro, executive vice president and head of TV Business in LG Electronics Home Entertainment Company. “This distinction is another indication that LG has a very solid position in the TV industry.

We already have strong, differentiated 3D technology, innovative smart features and a progressive slim bezel design. However, now we’re also starting to see a lot of praise for the energy efficiency in our large screen TVs.” LG Electronics also announced that its front load washing machines have been honoured with the Green Product Mark from TÜV Rheinland, the respected German-based consumer goods testing authority. The Green Product Mark is a much sought-after certification which identifies appliances with excellent environmentally friendly attributes.

LG’s front load washing machines are the first products in the home appliances sector to be awarded with this mark and this can be largely attributed to LG’s Inverter Direct Drive motor, which reduces energy consumption by up to 50 per cent in comparison with conventional washing machine motors. “Eco-friendly standards are getting considerably higher and at the same time, consumers are becoming much more aware of which home appliances are truly green,” said Seong-jin Jo, executive vice president of LG Home Appliance Company’s Washing Machine Division.

“Having our efforts recognised with this Green Product Mark is extremely gratifying. We’re also delighted that our products are maximising washing efficiency and creating energy savings for the consumer. Moving forward, LG will continue to strive for green innovations that protect our planet’s resources,” he added.

Mercedes-Benz continues to set pace

Amid the ongoing economic woes, world-famous Mercedes-Benz remains shining with bigger investment and new products in the Vietnamese automobile market.
Michael Behrens

It was a spring day in early February 2006 when Ho Chi Minh City was overwhelmed with the fantastic atmosphere of the traditional Tet festival.

However, German-invested Mercedes-Benz Vietnam’s over 400 workers seemed not to be thinking about such atmosphere, but about another more important thing: how to secure their employment. Some new car models were about to be marketed and the company’s managing board was in a meeting to make an important decision: whether the company would continue its local manufacturing or import completely built units? Risks would lessen if the company shifted from local production to import completely built units. At that time, taxes inflicted on vehicles had just increased vehemently and suddenly, causing a high level of vehicle inventory and low sale revenues.

After a two-day discussion, the board decided to invest more capital into production, then this inspired all company staff. This was the second time (the first one was in 1999) that the company made such a bold decision, and also the second time Mercedes-Benz Vietnam’s great confidence into the Vietnamese market won a big windfall.

The continued investment laid a firm foundation for the company’s new development stage. With its sound pricing and marketing strategies, the company witnessed “unbelievable growth” over the next five years, with an annual sale of 3,000 units during the 2009-2011 period – a record for Mercedes-Benz Vietnam.

It would need several million dollars for a new car model to be produced, assembled and marketed under the complete knock down (CKD) form in Vietnam. That’s why very few car firms dare to invest.

Mercedes-Benz provides assorted car ranges with the same quality globally, no matter where the factory stands. Thus, the company won in 2008 a prize of C-Class production factory from its mother group Daimler and a prize on after-sales service.

Mercedes-Benz Vietnam now occupies over 60 per cent in the market share of Vietnam’s high-end segment and this rate is among the world’s highest ranking.

“We take the lead in high-end models as we make the strongest commitment in this market and we have most faithful customers. We invest much more in production, network and customer care services,” said Mercedes-Benz Vietnam’s chief executive officer Michael Behrens.

“Vietnam’s customers like dealers having after-sales services near their home. That’s why we have expanded our new agencies,” he said.

Mercedes-Benz Vietnam workers celebrated a golden milestone by turning out the firm’s 20,000th car in Vietnam three years ago

Over the past 12 months, Mercedes-Benz has spent $13 million opening an additional four sales and service agencies in Ho Chi Minh City, Danang, Haiphong and Can Tho cities. At present, the company has 12 sales and after-sales dealers nationwide. This figure will be increased in the coming time.

This year is full of challenges for many sectors in Vietnam. However, Mercedes-Benz has invested another $9 million into building an electrodeposition coating paintshop with environmental friendly modern technology, and anti-erosion and heat-resistant Zircobond paint used in the spaceship technology. This paintshop, located within the 10 hectare Mercedes-Benz factory area in Ho Chi Minh City’s Go Vap district, will come into operation in 2013’s first quarter.

“We find Vietnam boasts great potential, though the country’s economy remains in difficulty. We will continue our investment as we want to keep our existing top position in Vietnam’s luxury segment,” Behrens said.

On the occasion of the official visit this week to Vietnam by German Vice Chancellor Philipp Roesler, who is also Germany’s Minister of Economics and Technology, Mercedes-Benz Vietnam shows it has also actively contributed to boosting the bilateral cooperation between Germany and Vietnam.

In Southeast Asia, Mercedes-Benz has also swollen its investment in “strongly developing markets.” For the first time in its history, Mercedes-Benz has begun to assemble the last stage of sport utility vehicles (SUV) like the M- and GL-Class models outside the main SUV manufacturing factory based in the US’s Alabama state’s Tuscaloosa city.

From now on, all remaining assembly stages of the M-Class model using semi-products and enclosed components will be completed in three nations, in service of the local consumption. The M-Class model will begin to be assembled in these nations this year, while the GL-Class will be assembled in India and Indonesia in 2013.

Mercedes-Benz Vietnam is also about to make the debut of a new GLK car model later this September. This model is locally assembled and also Mercedes-Benz Vietnam’s strategic vehicle model. Vietnam will also be the third nation for this model to be marketed, after Germany and the US.

After three years for over 1,000 GLK vehicles to be sold to Vietnamese customers, the new GLK vehicle now boasts modern headlights likened to “living eyes” and a forefront is likened to a “shark face”.

It is clear that Mercedes-Benz Vietnam has begun its new adventure in the Vietnamese market with this new GLK model.

Tongwei’s appetite to succeed

China-backed Tongwei Company has inaugurated Tongwei animal feed factory in the northern Hai Duong province’s Lai Cach industrial zone.

This is the second factory of China-based Tongwei Company to operate in Vietnam. The first factory located in southern Tien Giang province coming online in 2007.

The $10 million factory, covering 30,000 square metres, is equipped with the latest technology to process food for domestic animals. The new facility has a designed capacity of 200,000 tonnes per year.

“The factory will recruit around 200 workers from the local market. With huge development potential of the animal feed industry, we decided to build this factory with an aim to meet the market’s increasing demand. Tongwei Company will expand from three to five its affiliates in the next three to five years in Vietnam,” said the company’s general director Tang Ming.

He added that the factory was built with safe and clear norms to supply quality animal feed product for Vietnam’s market.

China-based Tongwei Company was founded in 1984 specialising on aquaculture, producing and trading animal feed. One of China’s key leading enterprises in agriculture industrialisation, Tongwei operates nationwide as well as in Southeast Asia with more than 110 subsidiary companies.

The market share of Vietnamese companies faces a challenge amid the expansion of foreign competitors.

In July of this year, Japfa Comfeed Vietnam, an affiliate of Japfa — one of Indonesia’s leading groups in producing and trading animal feed and breeding animals–started work on the fifth animal feed factory in Vietnam, with the 7.6 hectare plant in northern Hoa Binh province coming with VND600 billion ($28.8 million) price tag. Japfa Comfeed Vietnam is targeted to reach the animal feed output of one million tonnes by 2015 and two million tonnes by 2020.

In March, Cargill Vietnam, an affiliate of the US-based Cargill Group, inaugurated its ninth animal feed plant in the country. The new $18 million facility, covering four hectares in northern Ha Nam province, turns out 240,000 tonnes of feed per year.

Vietnam Animal Feed Association chairman Le Ba Lich said that Vietnam was home to more than 20 foreign-invested animal feed companies which accounted for up to 70 per cent of the market share and nearly 180 Vietnamese businesses but the market share of the local firms made up only 30 per cent.

Nearly 47,000 newly enterprises established

As many as 6.100 enterprises were established with a total registered capitalization of VND73.6 trillion in August, up 3.3 percent compared to the previous month, according to the Government Office’s report.

Since early this year, the whole country has seen more than 46,000 newly established, higher than the number of businesses who had to break up or temporarily stop operating.

Industrial production has changed much for the better. The Index of Industrial Products (IIP) in the first eight months rose 4.7 percent over the same period last year, while the volume of goods in stock decreased by 20.8 percent.

Local firm wins construction contract in Laos

A Vietnamese construction company has signed a new contract to build the National Library in Laos, with an estimated cost of US$5 million sourced from the Lao Government.

The signing ceremony took place in Vientiane on September 16.

The project, covering nearly 12,000 square metres, is scheduled for completion in the next two years.

The company has just finished building the Vientiane-Ho Chi Minh City friendship school, and the national institute for social sciences, and some other projects in Laos.

Businesses need to boost exports to Australia, New Zealand

A large volume of Vietnamese goods cannot penetrate Australia and New Zealand due to their strict non-tariff barriers against imported products.

In order to promote export activities, businesses need to improve the quality of their products.

According to the General Department of Vietnam Customs, in the past seven months of this year Vietnam’s exports to these two markets reached US$1.7 billion.

Cao Thanh Diep from the Multilateral Trade Policy Department said exports of crude oil, mobile phones, wood, furniture and cashew nuts to Australia enjoyed a remarkable advantage of zero taxes but garment and footwear products were levied 5 -19 percent in New Zealand and even much higher in Australia.

It is a fact that they remain as strict as the US, the European Union and Japan in terms of their intellectual property rights, regulations on packaging and controls of plant and animal products to prevent foreign exporters from gaining a leg up on local businesses.

So to speak, Vietnamese exporters should closely follow market trends and customer demands by keeping close contact with wholesalers and retailers in these two countries.

As Australia and New Zealand have committed to further cutting their taxes, Vietnamese exporters should pay due attention to their Code of Origin (C/O) declarations as they are valid for one year under the ASEAN-Australia-New Zealand Free Trade Agreement.

They can contact with 18 Import-Export Offices of the Ministry of Industry and Trade (MoIT)’s Market Departments for more information.

The Asia-Pacific Market Department said they need to use ANZ form when shipping goods to Australia and New Zealand.

Experts said consumers in these two markets are not demanding but they prefer to choose products of good quality. Moreover, Australian businesses want to receive offers which are close to the actual prices and work directly with the producers to minimize intermediate fees.

Hundreds of urban projects remain on paper in Hanoi    

Hundreds of urban and residential projects that had been approved for implementation in erstwhile Ha Tay Province and Vinh Phuc’s Me Linh District before they were merged into Hanoi have given the capital city the dubious distinction of having the country’s largest collection of “on-paper projects,” or those that will never be completed.

On August 8, 2010, Hanoi was expanded under a government master plan by merging with the whole Ha Tay Province, Vinh Phuc Province’s Me Linh District, and four communes in Luong Son District of Hoa Binh Province. The expansion was done while the projects in Ha Tay and Vinh Phuc had only received the go-ahead, and no construction work has ever been started.

In Me Linh District there are as many as 110 projects zoned for construction, and site clearance has been carried out on 2,312 hectares of land plots, whose owners have been relocated and compensated.

However all of these projects, 40 of which are to develop urban areas, now sit abandoned and covered with weeds.

Emerging as the most notable of them is the urban – golf course complex planned by debt-laden Vinashin, where all work stopped after panels introducing the project were erected in paddy fields across Me Linh District.

Convinced that the complex would provide a facelift for the countryside, local farmers were happy to receive compensation and had their agricultural land reclaimed to make way for the project. And now, six years after that happy day, locals say they have yet to see any work done on the complex.

“We have no idea if Vinashin is capable of continuing the project, given its current financial hardship,” said Tran Huu Hien, who had a large area of paddy field cleared for the project.

“They told us about bright scenarios when they inaugurated the project, and we haven’t seen any of them realized.”

Similarly, the Thach That urban area project approved by the People’s Committee of erstwhile Ha Tay Province also received the right to reclaim land days before the province was merged with Hanoi.

The project was intended to develop a “mega urban area,” which would be among the largest of its kind in Hanoi, locals who had to give their land plots to the project said.

More than 800 hectares of agricultural land in the locality were supposed to be cleared and handed over to the Nam Cuong Corporation since July 2008, according to Tran Anh Dung, chief of the inspectorate of the Hanoi Department of Natural Resources and Environment.

However, the project was told to stop implementation after the newly-merged Hanoi conducted a review over all planned projects in the capital city.

“The Inspectorate found that Nam Cuong had yet to carry out any work on site clearance and compensation, and the project was no longer suitable for implementation under the master plan approved by the government in July 2011,” said Dung.

Dung said the land plots zoned to be reclaimed will thus be returned to farmers so they can continue their agricultural production.

“The city will soon sign the decision, and inform local residents so that they can continue their work at ease,” he asserted.

Vietnam launches first civil pilot training centre   

Vietnam’s first civil pilot training centre made its debut in Cam Ranh peninsula, the central coastal province of Khanh Hoa after sending out the first 23 certified graduates.

The centre, covering an area of over 46.5 sq. m to the north of the Cam Ranh peninsula, was built with the French Government’s loan worth about EURE30 million.

The centre plans to turn out between 20 and 35 civil pilots a year from now to 2020.

Previously, Vietnamese pilots used to be trained abroad, mainly in France , at a cost of about 120,000-150,000 USD per person.

Statistics show that the Vietnamese aviation sector has to pay between USD30-40 million to hire foreign pilots.

Currently, Vietnam Airlines employs 600 pilots with more than 200 being foreigners.

Beverage plant breaks ground in Ha Nam

Construction of Number One beverage factory began on the 26ha site in northern Ha Nam province, setting it to become the biggest non-alcohol beverage factory in Northern Viet Nam to date.

Speaking at the ceremony, Deputy Prime Minister Hoang Trung Hai praised efforts of the Ha Nam Province in attracting investments over the past five years and making it a reliable destination for domestic and foreign investors.

Hai highlighted the previous efforts of clearing the land and training workers for the project and urged the province to continue supporting the construction of the project.

The Deputy PM also suggested the investor focuses resources on construction to maintain the working schedule while simultaneously ensuring food and environmental safety.

With a total investment of almost 2 trillion VND (95.2 million USD) made by Tan Hiep Phat Group, the state of the art complex features cutting edge European technology, providing an annual output of 600 million litres per year.

According to the investor, the project is divided into two phases, with the first stage of production expected to be operational by the end of next year.

When the factory is in full operation by 2020, it will contribute 800 billion VND (38.1 million USD) to the State Budget and give jobs to 2,000 local workers.

The factory will sit in the Kien Khe Industrial Complex I in Kien Khe Commune, Thanh Liem district, Ha Nam province.

Idemitsu to oil up lubricant market

Japanese petroleum giant Idemitsu Kosan will expand its footprint in Vietnam.

Idemitsu Kosan will open a lubricant manufacturing and sales company in northern Haiphong port city to tap into growing demand for motorcycle engine oil and will start blending lubricating oil in Vietnam from January 2014.

The newly minted firm will have the total chartered capital of $23.3 million to produce engine oil for motorcycles and automobiles, general industrial lubricants and related products.

Idemitsu officials said the plant was in line with its corporate priority of “enhancing functional materials business.” Entering into overseas lubricant markets has also been identified as one of Idemitsu’s investment priorities over the next three years.

The firm said Vietnam had good growth fundamentals and in 2010 the number of motorcycles sold in Vietnam reached 3.8 million units. Demand for high-performance lubricants including oil for motorcycles is expected to continue to increase at a constant rate in Vietnam.

A representative of the new firm, said its lubricant blending facilities would cover 60,000 square metres with a manufacturing capacity of approximately 35 million litres of lubricants per year in Haiphong’s Dinh Vu-Cat Hai Economic Zone.

“Under the investment certificate, our project operation time is 46 years and construction will start in November 2012 and we launch first commercial products in 2014,” said the representative.

Idemitsu Kosan will target a lubricant sales volume of 20,000 litres per year and an annual turnover of $35 million by 2015.

Tokyo-based Idemitsu Kosan labeled Vietnam as a “core business” interest in its 2011 financial consolidated report, mainly as a result of its significant investment in Nghi Son oil refinery project which fulfills its strategy aimed at “business expansion through entry into growing overseas markets.”

The Nghi Son oil refinery, about 200 kilometres south of Hanoi, is slated to be operational by 2014 and have an oil crude refining capacity of 200,000 barrels per day.

Idemitsu Kosan holds a 35.1 per cent stake in Nghi Son as part of an international consortium tasked with developing the project. Kuwait Petroleum International, a unit of state-owned Kuwait Petroleum Corp, holds 35.1 per cent, while Vietnam’s state-run PetroVietnam and Japan’s Mitsui Chemicals Inc. own 25.1 and 4.7 per cent, respectively.

2012 rice export target within reach

A recent meeting in Ho Chi Minh City heard the Vietnam Food Association (VFA) confirm that Vietnam was closing in on its seven million tonne rice export target set for 2012.

VFA Secretary General Huynh Minh Hue said in August 2012 Vietnam exported over 928,000 tonnes of rice, an increase of 22 percent compared with July and up 33 percent compared with August 2011. In the first eight months of 2012, about 5.5 million tonnes of rice were exported, bringing revenue of US$2.47 billion, down 9.1 percent compared with the same period last year.

The decrease was attributed to a decline in the export volume as well as the export price of Vietnamese rice in the first quarter of 2012. Asia continued to be the main export market of Vietnamese rice (1.6 million tonnes), followed by Africa (1.2 million tonnes). High-grade rice with five percent broken rice accounted for nearly 49 percent of the total export volume; medium-grade rice with 15 percent broken rice accounted for 19 percent; and low-grade rice about 12 percent.

Recently the export price of Vietnamese rice increased considerably. Notably, since mid August 2012, the price increased by US$40-45 per tonne compared with the beginning of the month as food production decreased by 50-60 percent due to drought in some countries including the US.

The amount of Vietnamese rice exported to Thailand via Cambodia recently increased strongly. Via the Tinh Bien Border-crossing in An Giang Province for example, more than 5,000 tonnes of rice was exported per day. Rice exports to China via border-crossings in the north also increased. In the first eight months of 2012, China bought more than 1.3 million tonnes of Vietnamese rice and took the lead among countries and territories importing Vietnamese rice.

VFA President Truong Thanh Phong said due to lower prices of Vietnamese rice compared with Thai rice, the volume of high-quality export rice increased sharply, accounting for 62 percent of the total. However, rice businesses should not hurry in signing export contracts, especially big contracts, because prices will possibly increase again in the time to come.

What VFA must do now is buying rice from farmers at good prices to prevent losses for farmers. Rice exporters must reserve 10 percent of the total export volume in the first six months of 2012 and sell rice according to the guidance of the Ministry of Industry and Trade, the VFA or the people’s committees of provinces in order to stabilize the market when there are sudden price changes. Decree 109 indicates that rice businesses are allowed to sign export contracts only when they keep in store at least 50 percent of the volume of rice to be exported.

The VFA’s plan for 2012 is to export seven million tonnes of rice. The actual export volume will possibly be higher. In Ho Chi Minh City and southern provinces, rice businesses still keep large volumes in store with continuous supplies from storage facilities in the Cuu Long (Mekong) Delta.

In the North, the VFA has assigned the Vietnam Northern Food Corporation (Vinafood 1) to provide statistics on the stockpile of its member companies in order to ensure market stability in the coming between-crop period. Businesses should not sign in a hurry with foreign partners rice export contracts, especially big contracts.

They must keep a close watch on the situation in the world market as well as in the border areas between Vietnam and Cambodia and between Vietnam and China. The VFA will soon propose the price floor applied to rice exports so that Vietnam can export rice at prices which benefit it.

Recently the Ministry of Industry and Trade submitted to the Government new rice export management measures for approval. Specifically, the ministry asked the Government not to limit the number of businesses engaged in exporting rice. So far, 153 domestic companies have been licensed to export rice. Of these, 80 companies which own storage facilities with total capacity of over 5,000 tonnes of rice and rice mills with minimum capacity of 10 tonnes per hour have been granted five-year licenses.

Some companies which have not received a five-year rice export license said it is necessary to limit the number of businesses engaged in exporting rice. In their opinion, if this number is not limited, it will be more difficult to control the market and rice export prices will fall. Moreover, if the number of rice exporters is limited, small traders will not be able to be engaged in exporting rice. Joint efforts of strong rice businesses will allow Vietnam to better control export prices, ensure the quality and enhance the competitiveness of Vietnamese rice./.

Vietnam Airlines leases second Airbus aircraft

The Vietnam Aircraft Leasing Joint Stock Company (VALC) recently received a second Airbus A321-200 aircraft in Hamburg in Germany and leased it to Vietnam Airlines.

The A321-200 coded MSN 5275 left Hamburg for Baku and New Delhi on September 6 and arrived at Noi Bai International Airport in Hanoi on September 8. It will then fly domestic and regional medium-distance routes.

VALC General Director Nguyen Duy Vien said that buying 10 A321-200 aircraft was one of the VALC’s major projects with total investment capital of over US$600 million.

Prior to that, on August 22, the VALC received the first A321-200 aircraft under a contract to buy 10 A321-200 aircraft between the VALC and Airbus./.

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