Home » Business » BUSINESS IN BRIEF 2/1

NewBUSINESS IN BRIEF 2-1 regulation seeks to refine urban planning process

The Prime Minister has issued a new regulation on urban planning aimed at curbing scattered and uncoordinated development and ineffective and wasteful investment.

Under Decision 11 taking effect in March, localities are required to subject areas to zoning according to residential use, new urban areas, for reservation or for special use.

The Head of the Ministry of Construction’s Department of Urban Development, Do Viet Chien, said that the regulation will help address current shortcomings such as incompatibility between new urban areas and existing infrastructure.

Until now, most localities have based their approvals of development projects on master plans and suggested sites for investors only according to perceived trends in neighbouring areas and without due consideration given to actual infrastructure conditions in their own area, Chien said.

Minister of Construction Trinh Dinh Dung said that urban development now faced growing challenges, including traffic congestion, encroachment on public land, illegal construction, and pollution.

Development projects, even in centrally-managed cities, were not planned properly, causing a waste of resources, he said.

About 55 per cent of cities and provinces nationwide have general plans and about one-fourth have detailed plans, Dung added, noting that the quality of planning was not sufficient to meet real-world demand.

The new decision also requires the establishment of management boards in designated urban areas. Urban development projects approved by the Prime Minister will be required to have management boards while their creation will be encouraged for other projects.

These boards will help authorities, including Ministry’s and People’s Committees, to monitor the development process and ensure that projects were compatible with existing infrastructure and other projects.

Government approves border zone development

The Government has approved a plan to develop a border gate economic zone in the Mekong Delta province of Long An.

The zone will be built on an area of more than 13,000ha and will become an economic, cultural and social centre in Long An’s western region.

The area also connects with Ho Chi Minh City, the rest of the Mekong Delta and border provinces of neighboring countries.

Balance of payment surplus estimated 10 bln USD

The surplus of the country’s overall balance of payment is estimated to hit 10 billion USD in 2012, much higher than any previous projection, Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh has confirmed.

SBV forecast early last year that the 2012 surplus would be roughly 3 billion USD against 2.6 billion USD in 2011. The 10 billion USD figure is a extremely high, and was last matched in 2007 when the country joined the World Trade Organisation and became a hot destination for foreign investors.

Binh attributed the improvement of balance of payment to the country’s trade surplus.

Vietnam recorded a trade surplus of 780 million USD last year, its first since 1993, according to the General Department of Customs.

International reserves doubled compared to the beginning of 2012, providing ample liquidity for the market without causing any inflation pressure, while maintaining a very stable foreign exchange market and exchange rate during the whole course of 2012.

According to the Ministry of Planning and Investment’s report on 2013 socio-economic development, Vietnam ’s forex reserve in 2012 reached 12 weeks of imports.

SBV forecast that this year’s overall balance of payment would be lower than last year, standing at roughly 7 billion USD.

Experts explore role of finance in tackling agriculture challenges

Agriculture finance faces a number of challenges in Viet Nam and measures to develop this service among financial institutions were discussed yesterday at a meeting held by the International Finance Corporation (IFC).

Agriculture finance was a value chain finance, which meant it occurred at different levels from pre-harvest to commercial trading, said IFC experts.

Some might assume that rural finance and agriculture credit are the same. But actually, rural finance encompasses the full range of financial services demanded by rural households, including loans, savings, payment and money transfer services, as well as risk management.

However, banks do not often finance agribusiness as they fear high risk profiles.

The experts clasified four types of agricultural risks: climate, market, crop and farmer’s risks.

“Some characteristics of rural areas are traditionally the risks that banks face, such as limited access to market and price information, low crop diversification and seasonal cash flows,” noted IFC’s Asia-Pacific Agrifinance specialist Hans Dellien.

Many rural economic activities were subject to seasonality and gestation periods, leading to a slow rotation of the invested capital and this was reflected in the cash flows of rural entrepreneurs, he explained.

“It is therefore important to select regions where agriculture risks are limited or easy to control and mitigate,” said Dellien.

The most suitable areas for piloting rural lending were medium-sized cities with strong ties to agricultural regions. These cities comprised of adequate access to markets, good road and production infrastructure, and were supported by the Government or private technology transfer agencies, he said.

In Viet Nam, the central highland was an ideal place to offer agribusiness financing. “The value of agricultural output is two or three times larger than industry output in the central highland,” he added. The region also led in terms of agricultural land use.

Meanwhile, according to an official from the State Bank of Viet Nam, Vietnamese farmers had the habit of producing in trends rather than exhibiting long-term planning. “So do banks,” he said, adding that “as these products are not consumed, banks cannot ensure their portfolios.”

It was also hard for banks to access the sector, because it was too complicated for farmers to deal with them, said IFC’s principal banking specialist Panos Varangis. “They (farmers) don’t know what banks want.”

It was important for banks to understand how farmers controlled risks and their demand for financial services.

Banks should then have detailed understanding of farmer’s profiles, including the key factor of household income, in order to design adequate financial products, Hans said.

For example, tea producers were a lower risk to provide financing as they have monthly cash flows and income diversification. Meanwhile, rice producers had higher risks due to their seasonal incomes and single income source.

With four kinds of risks in the agricultural sector, Hans proposed specific strategies to manage each.

Apart from some conventional risk control methods in terms of selecting regions, he suggested crop insurance, which was very new to Vietnamese lenders and insurers.

Financing for agriculture required long-term commitment to the sector, including developing long-term relationships with farmers, supporting them if needed during bad years and building special reserve funds to deal with cyclical downturns, according to IFC.

Viet Nam’s recent measures including boosting public-private partnership, green growth and land law revision “show that the Government is considering ways to encourage farmers to join the agriculture financing system,” said Steven Jaffee, senior economist of the World Bank.

Ha Noi inflation double that of HCM City in first month of 2013

Inflation in the capital city saw a one-month surge of 0.95 per cent in January, much higher than the 0.44-per-cent rate measured in HCM City during the month.

Officials blamed the spike in prices on rising consumer demand ahead of the Tet (lunar new year) holiday next month.

According to the Ha Noi Statistics Office, prices posted increases in 10 out of the 11 categories of goods and services used to calculate the consumer price index, with food and services rising by 1.84 per cent and garments and footwear by 1.47 per cent.

Only the cost of transportation saw a decrease, falling 0.14 per cent from December following a VND300/litre price drop in the retail price of petrol in late December.

In HCM City, the municipal Statistics Office reported that inflation in the southern city in January edged up by only 0.44 per cent over the previous month, a fairly low rate compared with the month of January in previous years.

Officials there suggested that consumer demand was low for this time of year due to diminished purchasing power caused by ongoing economic hardship.

Eight out of 10 categories of goods and services measured registered a hike in prices in HCM City in January.

The steepest rise of 1.43 per cent was seen in food products, although the prices of processed foodstuff and restaurant services rose at a more modest 0.17 per cent and 0.09 per cent, respectively.

The costs of transportation, telecommunications and other services dropped compared to the previous month.

The country’s largest economic hub, HCM City is on target for inflation in 2012 lower than the national target of 8 per cent.

Firms feted for high-quality products

There were 59 new winners and 42 who had won the annual recognition for 17 years in a row as 415 firms received the 2012 Producer of High Quality Vietnamese Goods award at a ceremony held yesterday.

The 415 firms were selected following 16,000 survey questionnaires sent to consumers nationwide by the Business Association of High-Quality Vietnamese Goods.

The winning firms were makers of sauces, spices, non-alcoholic beverages, drugs, dry foods, instant foods, frozen foods, plastic products and others.

The association co-operated with localities and relevant agencies to check the firms’ compliance with product quality management, their discharge of social responsibilities and other factors.

Yesterday’s ceremony was orgainsed by the association in collaboration with the Business Studies and Assistance Centre in HCM City and the Sai Gon Tiep Thi newspaper.

In a related development, a forum last week heard that increasing numbers of consumers were aware of the need to buy more locally made goods, three years after the Government launched its “Vietnamese use Vietnamese goods” campaign.

The forum focused on ways to raise consumers’ trust in Vietnamese goods and services.

A report tabled at the forum said cited survey results as showing around 59 per cent of consumers are satisfied with the Vietnamese products purchased while 38 per cent of respondents said they would advise their relatives to use Vietnamese goods.

The campaign has had a positive impact in increasing awareness and changing perceptions on using Vietnamese goods, the report said.

However, consumers’ preference for imported goods is based on verifiable origins and accurate information, high quality, effective marketing, and good customer care, said Dinh Thi My Loan, chairwoman of the Viet Nam Retailers Association.

She said a national strategy that effectively uses the resources and skills of management agencies, business communities and mass media is needed to raise consumers’ trust in Vietnamese goods and services.

As a bridge between producers and consumers, domestic retailers should be more active in implementing the “Vietnamese use Vietnamese goods” campaign, she added.

She said retailers should understand trends and shopping habits of consumers to introduce and promote Vietnamese goods in a proper way.

They must attach special importance to ensure reasonable prices, friendly service, and send consumer feedback to producers and distributors, she said.

Other forum participants said producers should be socially responsible and also transparent in providing information about their products and prices.

Business representatives attending the forum wanted the Government to strictly punish production and trading in fake goods to protect the legal interests of enterprises and consumers.

The Government can also do more to promote consumption of Vietnamese products, they said.

VASEP: anti-subsidy lawsuit is unreasonable

The Vietnam Association of Seafood Exporters and Producers (VASEP) has protested the US Department of Commerce (DOC)’s acceptance of the petition against Vietnamese frozen fresh-water shrimp which contain unreasonable allegations.

According to VASEP, the lawsuit, initiated by the Coalition of Gulf Shrimp Industries (COGSI), is groundless and will negative impact on Vietnamese shrimp exporters and producers, as well as US exporters and consumers and affect bilateral trade relations between Vietnam and the US.

If a countervailing duty (CVD) rate is adopted following the lawsuit, it will deal a severe blow to both shrimp importers and producers in the US and seafood farmers and enterprises in the seven involved countries, including Vietnam, it said.

VASEP pointed out that the COGSI lawsuit, which only represents 10 percent of shrimp suppliers in the US, is totally unreasonable.

COGSI’s accusations demonstrate illogical and unscientific comparison and arguments relating to the prices of domestic shrimp and imported shrimp, added VASEP.

VASEP affirmed that caught and farmed shrimps are different products, which are produced in different conditions. They are of different quality for target consumers. Therefore, the two kinds of products do not compete with each other in the market, and cannot be subject to the lawsuit, the association stated.

The prices of shrimp imported from the seven countries involved in the lawsuit are lower thanks to favourable natural conditions and standardized fishing and breeding processes. There is no denying that US importers and processors increasingly import shrimps from other countries to ensure a stable supply in the long run.

Involved in the lawsuit are Vietnam, China, India, Ecuador, Indonesia, Malaysia and Thailand.

Mekong Delta exports 88,600 tonnes of rice in Jan

Mekong Delta provinces have delivered 88,600 tonnes of rice to their overseas importers so far this year, earning US$41.4 million.

Unhusked rice prices remain stable, ranging from VND5,350/kg to VND5,700/kg, and five-percent broken rice prices hover around between VND7,250-7,400/kg.

This year, provinces in the region plan to ship abroad between 6.5-6.8 million tonnes of rice.

To meet the target, they will better make market forecasts, purchase farmer rice on time, and process and preserve rice to maintain its good quality.

They will work closely to prevent several businesses from gauging prices to corner the market, and develop more large commercial farms to supply high-grade products.

The localities will re-examine the ties between dealers, businesses and farmers to ensure farmers can enjoy a profit of 30 percent and beyond.

Last year, Mekong Delta localities exported more than 6.8 million tonnes of rice, earning US$3.1 billion.

Made-in-Vietnam furniture penetrates Korean market

Vietnamese furniture products have won consumer choice in the Republic of Korea (RoK).

Sale Manager Ja-Young Heo from Emart, which is the RoK’s largest retailer, said many Korean consumers have chosen made-in-Vietnam furniture and home utensils as Vietnam and the RoK share similarities in culture and consumer taste.

She spoke highly of the potential market for Vietnamese exports including garments, footwear, and wood furniture of high quality.

Ja-Young Heo also expressed keen interest in importing ceramic and porcelain products from Vietnam.

Vietnam is an ideal place from which RoK retailers and other businesses imported US$8 million worth of Vietnamese goods in 2012, she said.

Emart’s annual spending, mostly on importing  food and home appliances, is estimated at US$200 million.

Ja-Young Heo emphasised that in order to secure a firm foothold in the RoK market, Vietnamese exporters should focus on ensuring food hygiene and safety and qualifying for the Korea Food and Drug Administration’s (KDFA) certificates of origin.

Ta Hoang Linh, Deputy Head of the Trade Promotion Department under the Ministry of Industry and Trade (MoIT), said it is an opportune time for Vietnamese businesses to enter the RoK market. Some are encouraged to sell their products to large Korean trade partners including giant retailers like Emart.

Linh said Emart’s first supermarket will be open in Vietnam this year and 16 others in four years’ time.
One of Vietnam’s largest trading partners is the RoK, from which it earned more than US$5 billion in export revenue.

Garments secure firm foothold in four large markets

Vietnamese garments earned more than US$1 billion in export revenue from four big markets each – US$7 billion from the US, US$2.6 billion from the EU, US$2.1 billion from Japan, and US$1.1 billion from the Republic of Korea in 2012.

These figures show an increase in the competitiveness of made-in-Vietnam products on the global market.

The Vietnam Textile and Apparel Association (VITAS) said the world demand for garment products from Vietnam will grow slightly in 2013, by 5 percent in the US and 10 percent in Japan, which is likely to replace the EU as Vietnam’s second largest importer of Vietnamese garment and textile products.

It’s predicted that Vietnam’s garment export earnings from Japan will reach US$2.4 billion in 2013, a year-on-year increase of 18.5-19 percent.

Ocean Bank has cut the interest rate on mortgages to 13.5 per cent.

According to banking insiders, the 12 per cent credit growth target set for the year by the central bank is feasible especially since demand is seeing positive changes.

Many businesses showed signs of recovery by expanding production late last year, they said.

If this recovery holds in the coming months it would enable the economy to revive, they said.

A securities firm executive said things are looking up and banks would not find it difficult to achieve their credit growth targets.

The Government’s policies on bank lending are aimed at achieving higher credit growth rates in 2013 and loosening lending to sectors that were earlier ignored.

Inflation is under control and the economy generally looks more stable, all favourable conditions for bank lending to recover from the dire situation of last year.

Recent Government policies like Resolutions 01 and 02 are also expected to help the economy in general and businesses recover, encouraging the banking sector’s growth.

The former spells out key measures to achieve the socio-economic plan and budget targets for 2013, while Resolution No 2 is about overcoming businesses’ difficulties, reviving the markets, and resolving bad debts.

Japanese firms pour funds into Long An Industrial Park

Long Hau Industrial Park in Long An Province last year attracted 14 investors from Japan, which is the second-largest investor in the IP, with a total of 37 projects.

Vietnamese businesses account for most of the remaining projects.

On Friday, more than 10 Japanese companies came to explore business opportunities while the IP celebrated the 40th anniversary of diplomatic relations between Viet Nam and Japan.

Tran Hong Son, general director of the IP, said the park’s advantages included proximity to the deep-water port Saigon Premier Container Terminal and Sai Gon Hiep Phuoc Port, as well as to the Phu My Hung urban area.

Another advantage is the IP’s customer-service team, which offers a one-door policy specifically for Japanese investors to help them save time.

To ensure a stable workforce, the Long Hau IP manages a residential area for 6,000 workers, together with other conveniences, including a kindergarten, general clinic, mini-supermarket and green spaces.

To minimise misunderstandings, the IP has also offered courses to workers in Japanese, IT and Vietnamese laws.

It holds monthly meetings with investors to ensure that the best services are being offered.

Long An Province has 456 foreign-direct investment projects worth more than US$3.3 billion. Of the figure, Japan accounts for 52 projects worth US$188 million.

By the end of 2012, Japan ranked as Viet Nam’s top foreign investor, with US$28 billion and 1,700 projects.

Tra breeders suffer as prices fall

Tra fish breeding farmers in the Cuu Long (Mekong) Delta region are suffering losses of VND3,000-4,000 (US$0.14-0.19) per kilogramme as a result of declining raw fish prices, according to the local seafood association.

Raw material prices now range between VND19,500 ($0.93) and VND20,500 ($0.98) per kilogramme.

The Viet Nam Association of Seafood Exporters and Producers (VASEP) reported that in one week from December 26 to January 2 alone tra prices slumped VND500-1,000 ($0.02-0.05) in most provinces in the region.

Hoang The Viet, a fish farm owner in Can Tho Province told the Viet Nam Economic Forum website that tra prices had fallen sharply over the past months and he had lost around VND10 billion ($476,200) after selling 5,000-6,000 tonnes of fish.

Viet said that tra breeding areas had narrowed significantly in the region. “Many farmers have quit because of the tough conditions and I myself now leave 15ha of ponds idle waiting for profitable prices; we are losing about nine tenths of the usual profits,” he said.

The Cuu Long Delta has a total tra breeding area of over 1,300ha, but 70 per cent of tra farmers were suspending this occupation, the An Giang Seafood Breeding and Processing Association claimed.

The Viet Nam Economic Forum reported farmers commenting that a limited number of tra processors and dealers in the region (about 15 enterprises) had caused disadvantageous prices for farmers. Businesses facing declining export markets even bought the fish at VND500 lower than the prices that farmers could sell at local markets.

Farmers in Can Tho Province said that more and more enterprises were hiring land and ponds for breeding fish themselves and this made it easier for them to put pressure on prices. Increasing the price of animal feed, now mounting to about VND13,000 ($0.62) per kilogramme, also significantly pushed up costs for farmers.

General Secretary of the An Giang seafood association, Le Trung Dung, said, “If the current situation continues, we will have to close the tra fish industry at some point. Breeders won’t do their business when costs are too high and selling prices are too low.”

Farmers have called for new policies from the Government to effectively support the industry.

VietJetAir offers zero fare promotion to HCM City

VietJetAir has announced to launch a promotion, offering passengers 2,000 “zero fare” tickets for routes from Ha Noi, Hai Phong, Vinh, Hue, Da Nang, Nha Trang and Phu Quoc to HCM City from February 1 to February 9.

These tickets will be available at www.vietjetair.com from 9pm till 11.59pm on Thursday this week.

Dong Nai strives to attract hi-tech projects

The southern province of Dong Nai has targeted to attract investment capital of US$1 billion into its industrial zones this year, according to the provincial management board.

“We will focus on the project quality rather than filling our zone, board deputy head Nguyen Phuong Lan said, adding that top priority would be given to hi-tech, electric and electronics as well as support industries.

Enterprises urged to focus on FTA

Vietnamese enterprises need to take advantages of signed free trade agreements to better penetrate markets in partnering nations and to increase the value of their exports, according to deputy minister of Industry and Trade Nguyen Cam Tu.

Viet Nam has so far signed eight free trade agreements (FTAs) including multilateral ones with ASEAN and ASEAN+ and bilateral ones with nations such as Chile and Japan. The FTAs are expected to help boost the trading environment and improve competitiveness by offering preferential tariffs on selected products.

Viet Nam’s export value to FTA partner nations was US$53.5 billion last year, accounting for 46.7 per cent of country’s total.

Should the Trans-Pacific Parnership agreement be negotiated and signed in the near future, FTA markets are expected to account for 86 per cent of Viet Nam’s export value.

Meanwhile, according to the General Statistics Office, last year Viet Nam achieved a trade surplus of US$284 million after 20 years of running a deficit. In 2013, the country has targeted increasing its export value to $126.1 billion, ten per cent higher than that of last year.

However, experts still predict the next 12 months will be difficult for exporters.

Speaking at meeting last week, deputy minister Tu said that exports to FTA partner nations were reported to have increased in the last few years.

However, Vietnamese enterprises had yet take full advantage of the preferential tariff schemes regulated in FTAs, leading to limited applications in their business.

In many cases domestic enterprises only learned about the schemes when their partners asked for their certificate of origin, a document proving the products from the country are subject to the FTA signed by Viet Nam and the target country.

Head of the ministry’s Import-Export Department Phan Van Chinh said the special FTA tariffs meant that Vietnamese products were more competitive in those markets than in those of non-FTA countries.

He added that making the most of the FTA agreements would be key in the country achieving its export plan.

The Prime Minister has approved a plan to improve the management of issuance of certificates of origin so that enterprises may apply for preferential rates more easily and Chinh said that the ministry was drawing up a plan allowing enterprises to grant themselves the certificates if they satisfy all the criteria of origin.

“This means they will not need to ask the authorities for the valid certificate, which usually takes time and causes an administrative burden,” he said.

Deputy minister Tu added that restructuring the list of exported products and making use of domestic resources were also required.

He explained that most of Viet Nam’s key exports now still relied on cheap labour processing products while few contained a high concentration of technology.

Garment factory opens in Thanh Hoa province

Tien Son Corp inaugurated the first phrase of its VND120 billion (US$5.85 million) garment factory in the central province of Thanh Hoa on Saturday.

The factory covers a total area of 40,000sq m in Dinh Lien District. Its second phrase will be put into operation in 2015. All of its products will be exported to the EU and US.

Khanh Hoa tourism to get $200 million in projects

A joint venture has been set up to implement a US$200 million package for tourism, resort and hotel projects in Khanh Hoa central province.

The agreement on the joint venture, financed by Emirates NBD Bank PJSC Group, was signed between Swiss Attixs Hospitality Group and Ha Noi-based Bao Lam Investment and Trading Joint Stock Company on Friday.

CEO of Bao Lam Investment Joint Stock Company Nguyen Van Dung said the joint venture would start the construction of a complex of five-star resorts and villas in the north of Cam Ranh peninsula, with an estimated capital of $80 million.

Vietnam’s cosmetic industry struggles to revive brands

The cosmetics industry in Vietnam has many established brand names, but lack of promotional strategies and innovation of products to meet with current market trends led to these cosmetic brands being overshadowed by aggressively marketed multinational brand names.

According to data from the Ho Chi Minh City Chemical Cosmetics Association, during the period 2009-2011, average revenue from cosmetics across the country was around US$130-150 million, of which more than 90 percent came from foreign cosmetic companies, thanks to widespread distribution channels. While in Vietnam there were upto 430 companies and units that produced and traded cosmetics but merely accounted for 10 percent of market share.

Moreover, many Vietnamese well-known brand names have gradually vanished from the market while some fell into the hands of foreign companies because of poor competitiveness.

Earlier, Da Lan and P/S toothpaste were trademarks that accounted for upto 95 percent of market share in Vietnam. However, in just a few moves by foreign businesses, these Vietnamese trademarks disappeared from the market.

For instance, once the multinational group, Unilever, tapped the Vietnamese market, it promptly carried out negotiations to franchise the P/S toothpaste trademark for $5 million. This was an appealing price for a Vietnamese company and was considered as one of the biggest business deals at that time. However, after being franchised, P/S started to lose its foothold in the domestic market as its quality, design, and price was no longer suitable to local demand. Eventually, Unilever took over the company and P/S became a wholly foreign-owned company.

As for Da Lan toothpaste, after establishing a joint venture with Colgate Palmolive under a 70:30 percent stake, the brand continuously ran into loss and had to sell its 30 percent stake to its partner.

Meanwhile, other brand names have been dragging out a miserable existence. As a well-known and favorite brand in the domestic cosmetics market, Thorakao was seen to have much potential. Nevertheless, amid a flood of foreign brand names, Thorakao failed to run alluring advertising campaigns or improve quality and design of products. As a result, although Thorakao had developed and distributed 70 product lines, its market share remained low. Whereas, with the same product lines, Nivea, Hazeline and Ponds have almost dominated the entire Vietnamese cosmetics market, even in rural areas.

According to Nguyen Kim Thoa, chairwoman of Ho Chi Minh City Chemical Cosmetics Association, Vietnamese cosmetic manufacturers have strived to upgrade technology; however, most of them are small and medium companies so they were not able to catch up with technology of larger groups.

Currently, Vietnamese cosmetic products, such as Thorakao turmeric face-cream, Saigon, Cindy, Miss Saigon perfumes, and Fresh shampoo, were for consumers in the low and average-income segment. However, consumption remained poor because many medium-price foreign brand names have already rooted in the low-end market.

In the high-end segment, foreign companies have almost dominated the market share, while local companies merely stood on the sideline due to shortage of capital for product development and advertisement.

Even at supermarkets like Co.opMart and Big C, where Vietnamese products account for a large proportion, cosmetics displayed are mainly foreign-made or by multinational corporations. Vietnamese-made cosmetics account for a modest amount. Besides, Vietnamese-made cosmetics are not being sold at bigger shopping centers.

A recent research by Lan Hao Cosmetics Company showed that more than 80 percent of consumers are willing to buy Vietnamese-made cosmetics if the price is low.

In his own experience, Huynh Kien Nam, director of Gia Dinh Cosmetics Company, shared that low-income consumers accept a price of VND60,000 for a large-size shower cream, but refuse to pay VND90,000 for the same bottle of higher quality. Meanwhile, consumption of foreign products of the same kind which were sold at a double price remained strong.

According to experts, the quality of Vietnamese-made cosmetics was not far from that of foreign-made ones. However, the shortcomings existing among Vietnamese manufacturers were that they did not build strategies to develop their products as well as advertising campaigns to be more familiar with local consumers.

Foreign cosmetic manufacturers usually use natural ingredients in their products, which is their unique selling point. Vietnamese brands such as Lana, Saigon Cosmetics, and Thorakao, also have many products made from natural ingredients such as coconut oil, lemon, citronella, mint, turmeric, Gleditsia, and pomelo. However, with more attractive designs and aggressive marketing leading to higher visibility, foreign-made cosmetics are more familiar and preferred by consumers.

Therefore, Vietnamese cosmetic manufacturers should review their business strategy and upgrade their products to meet market demand so as to revive their brand names once again.

HCM City ensures adequate supply of essential goods for Tet

Provincial Agricultural Departments throughout the country confirm that supermarkets under the City price subsidized program have increased the volume of essential goods to meet the increasing demand ahead of Tet Lunar New Year.

At present, vegetable production in the country covers 830,000ha, supplying nearly 14 million tons of vegetables, in which the northern area grows 380.000ha, producing approximately 6 million tons, said Le Quoc Doanh, head of the Department of Crop Production under the Ministry of Agriculture and Rural Development.

To further ascertain, the Department of Crop Production under the Ministry of Agriculture and Rural Development sent three teams to inspect the production of vegetables in the localities. In case the Northern region faces a shortage of vegetables the Ministry will transfer vegetables from the South to the North, Doanh stated.

Meanwhile the Co.opMart supermarket chain in provinces has increased stockpiles by four times compared to normal months to ensure an adequate supply during the Tet holidays.

Co.opMart supermarket has stocked 11,000 tons of rice, 3,800 tons of sugar, 4,400 tons of cooking oil, 5,100 tons of meat, 2,370 tons of poultry meat, 2,250 tons of processed foods, 9 million eggs and 490 tons of seafood.

Besides essential items that are sold at 10 percent lower than market price under the City price subsidized program, Saigon Co-op will slash prices by an additional 10-50 percent on selected items.

The supermarket chain also plans to organize at least 150 mobile stores to the City’s remote districts as well as industrial parks and export processing zones.

Similarly, Big C supermarket chain has increased supplies by 15 percent compared to last year and offering a discount of upto 50 percent on nearly 3,000 Tet products from February 2.

Big C and Co.opMart are improving home-delivery services and increasing the number of staff to meet consumer demand.

Both chains are preparing an increased number of Tet gift baskets, with most of the items made in Vietnam.

Many electronic shops in HCMC, including Nguyen Kim, Thien Hoa and Cho Lon, are offering attractive discounts on TVs, cameras, mobile phones and electronic household appliances during the Tet festive season.

Market management steps up checks on food, tobacco items

The Market Management Board in Ho Chi Minh City has stepped up checks on food commodities and tobacco items since last week.

While checking on 16 food businesses, inspectors discovered six had no certificates to import commodities and confiscated 115 foreign-made wines, 52 barrels of beer, 528 cans of Redbull energy drink, 44 kilograms of Chinese-made powder seasoning packs, 79 cans of dairy products and other confectionary items.

In addition, inspectors’ uncovered one shop that had no food safety certificate, one selling food items without Vietnamese labels and one company selling 10,056 out-of-date Durukan imported sweet cans.

Of the 16 stores that inspectors visited, five did not list the price openly and two had no certificates to sell wine.

Market managers also dealt with 10 cases of smuggled cigarette cartons in shops in Districts 3, 10, 12 and Cu Chi, and seized 3,888 cigarette cartons from roadside stalls in District 5.

Increase in unemployed applicants across country

Le Quang Trung, deputy director general of the Department of Employment under the Ministry of Labor, Invalids and Social Affairs said that the number of unemployed applicants have increased because financial difficulties have forced many enterprises to cut down production and lay off workers.

Last year, there were more than 482,000 unemployed applicants across the country as compared to 526,000 in 2010 and 2011, Trung added.

At present around 432,356 people may get unemployment benefits. Insurance companies have paid unemployment benefits to 412,048 people, provided job consultation to 342,145 laborers, and given financial support to 4,776 people for vocational training.

In addition to paying unemployment benefits, the local government also asked enterprises to hire the unemployed laborers.

In the northern province of Bac Giang, more than 3,700 laborers of the Sanyo OPT Company were laid off, and the Department of Labor, Invalids and Social Affairs ordered the Job Center to complete formalities so that workers could receive unemployment benefits as soon as possible.

Corporate debt management poor

Debt management and payment capacity of Vietnamese enterprises are weak and on the verge of decline, says a survey of the 500 largest companies in Vietnam (VNR500) on their 2012 revenues.

The survey conducted by Vietnam Report JSC was announced last week. As per the survey, debt management at local large firms is poor as proven by their debt-to-asset ratios.

The average ratio of debts to total assets of the State corporate sector is 0.7, while the private sector has a ratio of 0.8 and foreign-invested enterprises (FIEs) 0.5.

“These figures show that Vietnamese enterprises rely heavily on loans. As lending rates cannot go down immediately, debt payment capacity of local firms will likely decline, affecting capital cost and indirectly pushing down their profits,” says a report on the survey.

The revenue growth rate of the country’s largest companies has constantly fallen over the years, the report reveals.

In 2010, their revenue picked up 7.83% against 2009, while the year-on-year growth rates in the two preceding years were over 40%. The rate last year dropped further to 2.37%.

The average return on equity (ROE) of VNR500 firms is 20%, meaning they earn VND2 in profit from every VND10 spent. ROE of FIEs is 39.22%, remarkably higher than the ratios of private firms and State-owned enterprises, at 16.28% and 15.53% respectively.

Thanks to effective cost control, FIEs enjoyed higher profits than the other sectors in the economy.

Samsung Vietnam greatly contributed to the total revenue of enterprises in Bac Ninh last year. For the first time since 2007, Bac Ninh made it to the list of the top five corporate revenue earning provinces.

Although there are only four Bac Ninh-based companies in the VNR500 list, revenues of these firms accounted for 3.18% of the total in VNR500 companies in 2012. Last year also marked the first time that Samsung Vietnam had appeared on the top four list in Vietnam, ranking fourth.

Telecom, chemicals, mechanical engineering and agriculture-forestry were the sectors with the highest ROE, over 25%. In contrast, power suffered a negative ROE.

Local and global gold price gap wider

When global gold increased slightly last Friday, the local price rallied much faster, thus widening the difference between world and domestic prices to VND3.3 million per tael from some VND2.6 million recorded early last week.

Gold at Saigon Jewelry Holding Company (SJC) last Friday marked up by around VND500,000 per tael to VND45.5 million for buying and VND45.8 million for selling. Meanwhile, the global price rose by only US$3.8 an ounce from the trading session on Thursday.

According to a representative of SJC, unlike the busy trading early last week when gold dropped by up to VND1 million per tael, SJC transactions during the rest of the week totaled around 1,000 taels. This figure was equivalent to the trading volume in the days before Government Decree 24 on gold trading management took effect on January 10.

However, customers have mainly bought gold in recent days after selling hefty volumes previously. Gold supply has turned scarce, pushing up the local price, he added.

Transactions at banks in general are not high. According to the director of a bank licensed to trade gold, customers prefer transacting with gold firms and banks known for gold trading, which is also the reason why SJC and banks like ACB and Sacombank always have more customers than other banks.

Moreover, the banker said that his bank would carefully consider trading gold with customers as the yellow metal holds price risk and many banks did not have experience in gold trading.

According to SJC, the restriction on gold selling points has not helped increase SJC’s profit as the firm no longer transacts with gold shops. Besides, gold trading depends much on price changes as customers often sell gold when the price is high and vice versa.

Moreover, SJC is not a bank, so it cannot refuse transactions with customers. Therefore, it is not true that SJC has benefited much from Decree 24, said SJC’s representative.


No comments yet... Be the first to leave a reply!