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Vietnam – a major trade pBUSINESS IN BRIEF 2-3artner of Malaysia

Vietnam currently ranks fifth among Malaysia’s ASEAN trade partners, with its two-way trade turnover reaching US$7.9 billion in 2012, up 17 percent from a year earlier.

Last year, Vietnam’s exports to Malaysia earned US$4.5 billion, a year-on-year increase of 56 percent, while its imports from this market fell by 13 percent to US$3.4 billion.

Among Vietnam’s top ten foreign investors, Malaysia ranks eighth with 428 projects worth over US$10.1 billion in total.

The two countries are facilitating trade promotion and preparing for the second meeting of the Vietnam-Malaysia Joint Trade Committee in Hanoi in March 2013 on the sidelines of the 19th ASEAN Economic Ministers’ Meeting.

They are expected to promote bilateral cooperation in dealing with anti-dumping issues and protecting the legitimate rights of businesses in both countries.

Vietnam and Malaysia are gearing up for the 40th anniversary of their diplomatic ties in 2013, with the aim of strengthening the comprehensive strategic partnership in the framework of 13 agreements on cooperation in various fields, including trade, investment, science and technology, post and telecommunications, and sports.

Cashew exports likely to remain stable

Cashew businesses expect to export 220,000 tonnes this year, equivalent to 2011’s figure, according to the Vietnam Cashew Association (Vinacas).

At a conference in HCM City on February 26, Nguyen Van Chieu, Vinacas deputy chairman, said enterprises shipped 18,479 tonnes worth US$109.7 million abroad in January.

The shipments marked an increase of 52.86 percent in volume, but the average export price fell 20.5 percent to US$5,939 per tonne, Chieu said.

The US, EU and China are the main importers of Vietnamese cashew products.

Delegates at the conference said farmers can enjoy a bumper crop in 2013 if the rainy season begins early.

“If the rains do not come soon, cashew flowers will fade, badly affecting the yield,” said Le Quang Luyen, chairman of the Phuc An Company.

Farmers in many provinces have started to harvest cashew since early February.

With local supply falling short of demand, enterprises need to import about 400,000 tonnes of raw cashew from other countries to be processed for export, Vinacas deputy chairman Chien said.

They imported 25,430 tonnes of raw cashew worth US$24.3 million in January, up 64.5 percent in volume over the same period last year, mostly from Cambodia, Ivory Coast and other African countries.

Rising exports help boost trade surplus

Vietnam achieved a significant trade surplus of nearly US$1.4 billion between January 1 and February 15, according to the General Department of Customs.

Sharp export increases, up to 29.1 percent, were the main reason for the higher trade surplus Vietnam enjoyed in the period.

Foreign-invested enterprises scored a 33 percent growth in export turnover and domestic enterprises a 23.3 percent growth compared with the same period last year.

Products attaining high export growth rates included pepper, cassava and cassava products, hats and umbrellas, timber and wooden products, textiles and garments, steel, computers, electronics and components, telephones and components, and means of transport, and spare parts.

The textile and garment sector took the lead in export turnover with over US$2.1 billion, followed by telephones and components with nearly US$1.95 billion, and electronics and components with export turnover of nearly US$1.1 billion.

Milk prices boil over after Tet

Dairy product prices have gone up by an average of 10 per cent since the Tet holiday, milk traders say.

“The price increase applies to both domestic and imported milk products. Prices of all powdered and fresh milk have risen after Tet,” the staff of an online milk shop, www.sua.vn, told VietNam News.

She said firms like Vinamilk, Nutifood and Dutch Lady have already announced new prices, up by around 10 per cent.

Foreign dairy firms have not increased their prices, but they have cut down on their promotion schemes, she added.

The owner of a retail shop in Le Van Luong Street, District 7 said immediately after Tet, her shop had received announcements of new prices from almost all the milk companies.

“They did not say why. However, like previous year, the new price came soon after Tet,” she told Viet Nam News.

Milk companies that Viet Nam News contacted confirmed that they had increased the price, citing higher costs of imported raw material as the main reason.

“We started to increase the prices this Monday. The price of imported raw material after Tet was very high, so we were forced to raise our prices as well,” said a Nutifood representative.

An Abbott representative also affirmed a price increase in March for the same reason.

Vinamilk told the Tuoi Tre (Youth) newspaper that they had pushed the prices of some products by about 7 per cent. It was necessary to do so because raw material prices had climbed up by about 20 per cent since the middle of last year.

Such biggest milk producers said they would uphold their commitment to not increase the prices of some products for children and elderly people until the end of March 2013.

A Tuoi Tre report said yesterday that the Price Control Department was examining the increase.

However, a department representative said that it was difficult for them to act.

Although the Price Law had taken affect this year, documents guiding its implementation were yet to be issued, he said.

Moreover, many milk products for children were registered as “nutrition milk,” so their prices could not be controlled right away, he said

PM: Retail petrol prices remain unchanged

Prime Minister Nguyen Tan Dung yesterday decided to prevent petrol retailers from raising their prices in a move aimed to stabilise the domestic market.

The PM said the Government would use the Price Stabilisation Fund and other financial measures to compensate petrol retailers’ losses while keeping the domestic petrol price stable in the wake of the global fuel hikes.

Dung also instructed relevant authorities to closely monitor petrol prices both on domestic and global markets to ensure they can recommend suitable measures for stabilising the macro-economy, controlling inflation and safeguarding market prices.

According to the Ministry of Finance, Vietnamese petrol prices are currently around VND2,000 per litre lower than that of China, VND4,000 lower than Laos and VND5,300 lower than Cambodia.

Previously, petrol companies asked the Ministry of Finance for a price increase, saying they were suffering losses due to the global price hike.

Industry insiders estimated that if retail petrol prices were adjusted upwards by VND1,000 per litre, as had been proposed by petrol businesses, March’s CPI would rise an additional 0.1 per cent.

Agricultural exports hit US$4.83 billion

Turnover for agricultural exports in the first two months of this year were estimated to reach US$4.83 billion, representing a rise of 31.5 per cent over the same period last year.

According to the Ministry of Agriculture and Rural Development, more than 53 per cent of the total came from farming products, while fishery products accounted for more than 18 per cent and forestry products, 18 per cent.

Director of the ministry’s Centre for Information and Statistics Nguyen Viet Chien said most products saw increases in export turnover, except rice.

During the two-month period, rice exports reached 677,000 tonnes in terms of volume, increasing by 68.2 per cent. However, total export value decreased 15.4 per cent to $310 million due to a price fall of more than 20 per cent.

China remained the biggest Vietnamese rice importer with a 34.7 per cent market share, followed by Singapore (7.27 per cent), South Korea (5.64 per cent) and the Philippines (5.64 per cent).

Meanwhile, coffee and tea maintained growth with export values of $884 million (up 38.1 per cent) and $33 million (up 18.6 per cent), respectively.

Rubber, pepper and cashew, despite decreases in export volume, saw increases in value thanks to price rise, according to the ministry.

About 179,000 tonnes of rubber were exported during two months with a turnover of $518 million, a 31.5 per cent fall in volume but a rise of 16.6 per cent in value compared to the same period last year.

The export volume of cashew was reported to have decreased by up to 60.7 per cent to 33,000 tonnes but its value rose by 35.5 per cent to $204 million.

Pepper saw a fall of 7.3 per cent in volume but its value rose 105.7 per cent.

Exports of wood products totalled $831 million, a rise of 36.2 per cent year-on-year with strong growth in major markets such as the US (up 79.89 per cent), Japan (up 56.03 per cent), China (up 92.4 per cent) and South Korea (up 30.67 per cent).

Cassava was included in the ministry’s report for the first time due to a 310 per cent increase in export volume and a 55.4 per cent in turnover to reach $308 million.

Cashew exports likely to remain stable as farmers eye bumper crop

Viet Nam’s cashew exports in 2013 will be the same as last year at about 220,000 tonnes, according to the Viet Nam Cashew Association (Vinacas).

Speaking at a conference in HCM City yesterday, Nguyen Van Chieu, Vinacas deputy chairman, said enterprises exported 18,479 tonnes of cashew worth US$109.7 million in January.

The shipments marked an increase of 52.86 per cent in volume, but the average export price in January, $5,939 per tonne, marked a reduction of 20.5 per cent over the same period last year, Chieu said.

The US, EU and China are the main importers of Vietnamese cashew products.

Delegates at the conference said farmers can enjoy a bumper crop this year if the rainy season begins early.

On the other hand, “if the rains do not come soon, cashew flowers will fade, badly affecting the yield,” said Le Quang Luyen, chairman of the Phuc An Company.

Ta Quang Nguyen of the Hoang Son 1 Company said that with the prolonged hot weather it is experiencing, the cashew crop in southern Binh Phuoc Province is expected to end between the end of next month and early April.

It will not be prolonged to the end of April or middle of May as in previous years, he said.

Pham Ngoc Khiem, representative of Donafood Dong Nai, said that he and other Vinacas members had come to the “initial conclusion” that the weather is likely to be favourable for cashew trees to develop without diseases this year.

Their assessment was made after visiting gardens in southern Dong Nai, Binh Phuoc and Binh Duong provinces, three major cashew-growing areas in the country, before the Tet (Lunar New Year) holiday.

However, with the current hot weather, the cashew crop may end early this year due to a lack of water, he said.

Farmers in many provinces have started to harvest cashew since early this month.

The price for cashew was currently about VND22,800-VND23,000 a kilo in Dong Nai Province and VND23,000-VND23,500 in Binh Phuoc Province, Khiem said.

“Cashew quality this year has been very good, with a loss rate of 10-12 per cent compared to 15 per cent in previous years,” he added.

Nguyen Duc Thanh, Vinacas chairman, said the association will organise another field trip to the three key cashew cultivation provinces so that it can come up with more specific recommendations for the industry.

With local supply falling short of demand, enterprises will need to import about 400,000 tonnes of raw cashew from other countries to be processed for export, Vinacas deputy chairman Chien said.

Domestic enterprises imported 25,430 tonnes of raw cashew worth $24.3 million in January, up 64.5 per cent in volume over the same period last year, mostly from Cambodia, Ivory Coast and other African countries.

In general, the quality of raw cashew imported from India, Tanzania, Nigeria and other countries is much better than last year, he said.

However, Thanh said that enterprises faced many risks in importing raw cashew from African countries, especially regarding quality, because they had a lot of old cashew still in stock.

Managing the quality of imported raw cashew is very important, he said, adding that local enterprises must act together in carrying out this task.

Outlook brightens for tra producers

Orders for Vietnamese tra fish from European Union (EU) countries are gradually increasing after a long time of gloom, said the general secretary for the Viet Nam Association for Seafood Exporters and Producers.

According to general secretary Truong Dinh Hoe, the EU remained one of the main importers of Viet Nam’s tra fish, in large part due to the reasonable export price of Vietnamese fish in contrast to seafood from other countries.

Additionally, he said the export price of Vietnamese tra fish to the EU has been rising as consumers demanded quality products, bringing the selling price up.

In the past few years, more and more Vietnamese seafood exporters have met EU standards for farmed tra fish.

Recently, five more domestic tra fish producers and processors received the Aquaculture Stewardship Council (ASC)’s aquaculture production certificate, bringing the number of local firms with ASC certification to 13.

In order to obtain this recognition, a tra fish producer or breeder must meet certain criteria on their environment and social impact, such as engaging in responsible land and water usage and minimising water pollution.

Last year, Viet Nam exported US$425 million worth of tra fish to the EU, a decrease of 19 per cent in value compared with the previous year, according to the association’s statistics.

The association and local seafood exporters were heavily promoting future tra fish exports to the EU, Hoe said.

Additionally, the association would cooperate with ministries and other sectors to organise seminars advertising Vietnamese tra fish at large trade fairs in Europe.

“The adverts will include information about products as well as the production process, from raising the fish to packaging the finished products for export,” he said.

Conference discusses future of nation’s coffee industry

The Central Highlands province of Dak Lak will host a conference focused on the prospects of Viet Nam’s coffee on March 10.

Participants will discuss sustainable coffee production methods and ways to improve the value of Vietnamese coffee on the global market.

Leading experts from domestic and international organisations like Nestle, Vinacafe, and Trung Nguyen will share information, negotiate mutually beneficial partnerships and hone Vietnamese coffee’s competitive edge.

Four additional seaport projects near completion

The southern coastal province of Ba Ria-Vung Tau will begin operations on four additional seaport projects this year, boasting a combined capacity of around 20-25 million tonnes.

The projects are Vung Tau Petro, Cai Mep-Thi Vai International, SSIT and Gemalink’s first phase.

The province aims to process around 50.7 million tonnes of cargo and roughly 125,000 passengers at local seaports. More than VND4.2 trillion (US$202 million) will be pumped into implementing the seaport projects, an increase of approximately 10 per cent from last year.

Last year, Ba Ria-Vung Tau border guards completed entry-exit procedures for more than 4,300 international ships with a total cargo volume exceeding 28 million tonnes, an increase of more than 6.4 million tonnes compared to 2011.

Ha Noi increases funding for transport infrastructure

The Ha Noi People’s Committee will increase investment in a major urban traffic development project to 9,664 billion VND (about US$460 million).

The committee will also make changes in planned express bus routes and flyovers.

Garment makers see bright future for exports

Local garment and textile businesses felt excited in the first two months of 2013 as orders from abroad came in droves.

Experts predicted that the garment and textile sector will maintain its growth rate of 12-15 per cent to pocket around US$19.3 billion in export turnover this year.

For the goal, the sector needs a large workforce, senior advisor to the Viet Nam Textile and Apparel Association (VITAS) Le Quoc An said, suggesting the employment of additional 200,000 workers.

In 2012, the sector kept topping the country’s export list, raking in $17.2 billion, a year-on-year rise of 8.5 per cent.

The sector aims to continue being the country’s spearhead hard currency earner in at least 10 years.

Vietinbank shareholders approve strategic partner

Vietinbank (CTG) approved the selection of the Bank of Tokyo-Mitsubishi UFJ as its foreign strategic partner at an extraordinary shareholder meeting yesterday in Ha Noi.

More than 90 per cent of shareholders with voting rights attended the meeting.

The lender will issue nearly 644.4 million shares, equivalent to a 19.73 per cent stake, to the Japanese bank at a price of VND24,000 (US$1.15) a share.

The issue follows an agreement signed late in December between the two banks.

Total proceeds from the issue are forecast to reach VND15.46 trillion ($740 million).

Vietinbank chairman Pham Huy Hung said the total money to buy the shares would be paid in cash and Tokyo-Mitsubishi UFJ would send two members to join Vietinbank’s board of directors.

After the issue, the bank’s charter capital will increase from the current VND26.22 trillion ($1.25 billion) to over VND32.66 trillion ($1.56 billion), of which the State will hold a 64.46 per cent stake, Tokyo-Mitsubishi UFJ 19.73 per cent, International Financial Corporation (IFC) 8.03 per cent and others 7.78 per cent.

“The capital rise is necessary to enhance the bank’s financial capacity and expand its operational performance, which will drive it to be the premier bank in Viet Nam and in the region,” the bank said in its proposal to shareholders.

The increased capital will help strengthen the bank’s credit as well as be spent on network expansion, infrastructure and technology investment, development of new services and promotion of new joint ventures.

This year, the bank has targeted the growth of total assets of 13 per cent; total deposit increase of 10 per cent; total lending and investment of 13 per cent; profit of 5 per cent; return on equity ratio from 15-18 per cent; return on assets ratio of 1.5-1.8 per cent and capital adequacy ratio of above 10 per cent.

Last year, Vietinbank’s net profit decreased 1.3 per cent from the previous year, totalling nearly VND6.18 trillion ($295.7 million), while its credit growth was 13.5 per cent, also lower than the yearly plan of 15 per cent. Its bad debt ratio was 1.46 by the end of 2012.

Domestic gold soars past global prices

The gap between global and domestic gold prices reached a record VND5.5 million ($264) per tael last week, prompting measures to resolve the situation in order to protect the macro-economy.

According to Kitco, last Thursday the gold price on the global market stood at US$1,557 per ounce (equivalent to VND 39.3 million per tael).

Meanwhile the domestic gold price was between VND44.97 million ($2,160)and 45.17 million ($2,640) per tael.

The difference was about VND5.5 million per tael.

On Saturday, the gold price in HCM City was between VND 44.92 and 45.07 million per tael while the rate in Ha Noi was between VND 44.96.1 and 45.07 million.

The gap between the global and domestic gold prices was reduced but very modest, standing at VND4.9 million per tael.

The gap between the global and domestic gold prices was partly due to demand.

Experts said negative information regarding the domestic economy, including the possibility of petroleum price increases and foreign exchange movements, had encouraged more investors to buy gold.

However, gold trading enterprises were not keen to cut gold prices even when the global price fell sharply.

Senior economic expert Nguyen Minh Phong told the Dau Tu newspaper that it was the monopoly in trading gold that caused the demand to exceed supply, thus causing chaos in the domestic market.

The gap between the global and domestic gold prices not only caused losses for domestic investors but also affected the forex rate between the Vietnamese dong and the US dollar.

In fact, late last week the forex rate between the dong and the US dollar reached VND21,000 per dollar, compared to VND20.800 per dollar that had been the rate for nearly a year.

As a result, the central bank had to ask commercial banks to strengthen selling of the US dollar to bring the forex rate to the old level.

A director of a gold trading company said the big gap between the global and domestic gold prices encouraged speculators to buy the greenback to import gold bullion to make a profit.

This meant that if the gold price difference was not reduced, it would increase the forex rate again, he said.

Nguyen Duc Thanh, director of the Viet Nam Centre for Economics and Policy Research, said the big difference in gold prices showed the limitations of the nation’s gold management policies.

An official of the central bank also admitted the difference in gold prices was caused by a shortage of gold bullion.

To solve the problem, the Central Bank had to allow several commercial banks, Dong A, Viet A, Sacombank and Techcombank, to temporarily export non-SJC gold bars and import gold materials to cast SJC bullion, he said.

However, this was only a temporarily solution.

The Central Bank said the difference in the gold price would end, along with the instability in the gold market, when it (the bank) was officially allowed to trade in the gold market with gold trading organisations. Then selling and buying prices would be decided by the bank governor.

When the market fluctuated, the Central Bank could then move to reduce the difference in the global and domestic gold prices.

Dinh Nho Bang, general secretary of the Viet NamNam Gold Business Association, said the bank’s interjection in the gold market was necessary but it should not be too invasive.

Central banks in other parts of the world did not directly become involved in gold trading and fixing gold prices, he said.

Do Minh Phu, chairman of the DOJI Gold and Gems Group agreed. He said when the gap between the global and domestic gold prices exceeded VND500,000 to 700,000 per tael, the Central Bank should get involved.

Gold bidding to be tested

The State Bank of Viet Nam will conduct a gold bidding trial with the participation of banks and businesses, said Nguyen Quang Huy, director of the Foreign Exchange Department of the State Bank.

The announcement was made during a signing ceremony for a gold bar casting contract between the State Bank (SBV) and the Saigon Jewellery Company Limited (SJC).

He said the SBV was preparing to participate in the gold market as a gold seller with a view to narrowing the gap between global and domestic gold prices.

This is the first time the central bank will conduct a gold auction.

Huy said that the signing of this contract was an important step for the central bank’s gold bullion production.

In the next few years, the bank plans to sell its gold bars in order to stabilise the gold market.

Le Hung Dung, JSC Chairman, said that after the signing, the domestic gold price would be closer to the global price.

SBV would become a big business, he added.

In his view, strengthened resources and an improved legal system would help further narrow the price gap.

The central bank confirmed that the contract would help it actively produce gold bullions so as to better regulate the local gold market.

Under the contract, processing of gold bullions will be closely monitored, from the control of mold to gold delivery.

The State Bank has submitted a drafted Decision of the Prime Minister on the purchase and sale of gold bars on the domestic gold market and has promptly completed the necessary regulations in order to join the efforts to stabilise the local gold market.

Vinacas advises better packaging for cashew exports

Vietnam Cashew Association (Vinacas) has advised cashew exporters to improve packaging of shipments to China.

Cashew exporters were not using disinfectant paper and anti-moisture grains in containers being shipped to China, said Vinacas.

Previously, cashew exporters used anti-moisture grains to prevent humidity during transport, but when China tightened food safety measures it prohibited these measures because of health issues.

If Vietnamese cashew exporters do not improve packaging of their product, they stand to lose their largest market in China.

This year, Vietnamese exporters have signed contracts to export 300 containers to China at a pretty good price, according to the Vietnam Cashew Association.

At a conference in Ho Chi Minh City on February 26, Nguyen Van Chieu, deputy chairman of Vinacas, said enterprises shipped 18,479 tons abroad in January, worth US$109.7 million.

Delegates at the conference said farmers can enjoy a bumper crop in 2013 if the rainy season begins early. Farmers in many provinces have started to harvest cashew crops since early February.

China, the US and EU are the main importers of cashew products from Vietnam.

Vietnam imported 25,430 tons of raw cashews worth US$24.3 million in January, up 64.5 percent in volume over the same period last year, mostly from Cambodia, the Ivory Coast and some African countries.

Ministry sets import quota for sugar, salt, eggs

The Ministry of Industry and Trade, in coordination with the Ministry of Agriculture and Rural Development, has set a quota for import of sugar, salt, and poultry eggs this year.

Quota for salt has been set at 102,000 tons, same as previous years; refined sugar and raw sugar has been set at 73,500 tons, up by 3,500 tons from last year; poultry eggs at 42,000 dozens have increased by 2,000 dozens from last year.

Import quota for salt will be allocated directly to businesses that use salt as an ingredient to produce chemicals, medicines, and related products. Quota for poultry eggs will be given to firms that own a business registration certificate for actual import demand.

Time for import quota will be determined by the Ministry of Agriculture and Rural Development so as not to affect domestically produced salt, sugar, and poultry eggs.

Prime Minister vetoes petrol price hike

Prime Minister Nguyen Tan Dung on February 26 decided not to increase the retail price of petrol, despite strong recommendation from the Ministry of Finance.

PM Dung was speaking at a meeting with concerned ministries and departments on adjustment of petrol price.

According to the Ministry of Finance, price of petrol has increased recently worldwide but domestic retail price continues to be lower than that of some countries in the region, whereby businesses are facing losses.

Despite this, Prime Minister Dung has decided not to increase the price just yet, preferring to use other financial resources to stabilize domestic petrol prices.

The PM has tasked authorized organs to keep a close eye on global petrol prices as well as in the region, and propose measures to curb inflation and price hike.

Illicit cigarettes take toll on the economy

Illicit cigarette imports, particularly from Cambodia, are continuing to badly affect Vietnam’s cigarette production and tax collection.

The Vietnam Tobacco Association (VTA) said illicit cigarettes currently remained a big challenge to the local tobacco industry. Such cigarettes came to Vietnam illegally in many ways, with the Vietnamese-Cambodian border the leading source.

Notably, a pair of cigarette brands, Hero and Jet, are being smuggled from Cambodia to Vietnam at estimatedly 300 million packs a year, contributing to the domestic tobacco industry’s loss of nearly $200 million annually.

VTA reported that 11.4 billion cigarettes were smuggled into Vietnam from Cambodia in 2011, causing the loss of $171 million. With little being done at the border to prevent smuggling, that number jumped to 12.9 billion last year for the grand total of $193.5 million in loss for domestic cigarette producers.

A VTA analysis of the market in 2011 said smuggled cigarettes made up 18-22 per cent of 3.5-3.8 billion packs consumed in Vietnam.

British American Tobacco (BAT), which produces brands such as ARA and 555, estimated that the illicit tobacco trade from Cambodia into Vietnam generated the profit of about $16 million per year.
“The legitimate industry simply cannot compete on a level playing field with the transit brands that do not pay all their taxes in full,” a BAT spokesperson said.

In a bid to tackle the problems at the Cambodian-Vietnamese border, the VTA has asked the Vietnamese government for tougher anti-smuggling measures, while releasing information about it to the public via the press.

“In the course of working negotiations at a national level between Cambodia, Laos and China, it is suggested that [Vietnam] should pay attention to the collaboration in fighting illicit and trading of illegal tobacco through borders, especially in Cambodia,” said VTA secretary general Pham Kien Nghiep.

Cambodia’s Department of General Customs and Excise signed a memorandum of understanding in April 2011, with Vietnam vowing to put in place stronger border checks.

The World Health Organization (WHO) is also asking the Cambodian government to prevent cigarette smuggling, and trying to convince the government to increase taxes on cigarettes in order to steer people away from the habit.

“Certainly, smuggling is already contributing to the problem [of smoking], because it prevents people from making the right decision on whether or not to smoke because it is so cheap,” said Peter Van Maaren, WHO’s country representative to Cambodia.

Consumerism, with a jolt of caffeine gets caffeinated

As the incomes of consumers perks up, Vietnam has emerged as a new market for famous coffee and foodservice brands to exploit.

Starbucks Coffee Company, the largest coffee chain in the world, on January 31, 2013 officially opened the doors to its first store in Vietnam, following an expanded long-term relationship with Hong Kong Maxim’s Group.

The flagship store, which has been designed to reflect Starbucks 42-year coffee heritage while embracing Vietnam’s distinctive local traditions and coffee culture, is conspicuously featured on a traffic circle in the aspirational lifestyle neighbourhood of Ho Chi Minh City’s District 1.

According to Starbucks, the opening of the two-story store “marks the beginning of the global iconic brand’s Vietnam journey.” Vietnam is Starbucks’s 12th market across the China and Asia Pacific region.

“Vietnam is one of the most dynamic and exciting coffee markets in Asia and we are proud to be entering the market with Hong Kong Maxim’s Group, a close and long-term partner that shares many of the same values that Starbucks was founded on,” said John Culver, president of Starbucks China and Asia Pacific.

One day before Starbucks opened first store in Vietnam, Dunkin’ Donuts, another famous American chain for coffee and baked goods, announced it had signed a franchise agreement with Vietnam Food and Beverage Co. Ltd., to develop the brand in Vietnam.

The agreement calls for the development of Dunkin’ Donuts restaurants across the country over the next several years, with the first locations planned for the Ho Chi Minh City area. This makes Vietnam the 33rd market for Dunkin’ Donuts in the world.

“We are excited to partner with Vietnam Food and Beverage Co. Ltd., which has a deep knowledge of the Vietnamese consumer, to open the first Dunkin’ Donuts restaurants in Vietnam,” Giorgio Minardi, president of Dunkin’ Brands International, said in a statement. “We look forward to working with them to bring Dunkin’ Donuts’ delicious offerings to guests across the country.”

Apart from Starbucks and Dunkin’ Donuts, McDonald’s, a well-known American fast-food chain, is also considering to enter Vietnam market – especially in Ho Chi Minh City, a senior official of McDonald’s revealed when visiting the Ministry of Planning and Investment (MPI) last August for studying the market potential.

Vietnam has already been attractive to international chain brands like Paris Deli, KFC, Pizza Hut and Lotteria over the past decade. So why do giant brands Starbucks, Dunkin’ Donuts and McDonald’s want to enter Vietnam market at this time but not sooner?

One reason is rising prosperity. There is no poor country in the list of markets where Starbucks and Dunkin’ Donuts have been presented so far. Starbucks in the statement noted that it “firmly believes that its success is only possible when there are thriving communities where it does business.”

The senior official from McDonald’s said in the meeting with MPI that the rapidly growing economy and increasing income of young population in Vietnam made the firm care about this market.

He revealed that a delegation of the McDonald’s Corporation last year came to Vietnam several times for studying feasibility to set up its restaurant chain in this country. The visits also aimed at learning about Vietnam’s policy for fast-food industry, franchising and its real estate market. He added the potential in Vietnam market had been bigger since the country joined the group of middle income nations in 2010.

According to Vietnam’s General Statistics Office, the average income per capital in Vietnam in 2012 was $1,600. The average income per capital in Ho Chi Minh City, where there brands are planned to debut, was $3,600 in 2012. Certainly, when the income increases, the purchasing power in the market also increases.

“The market presents tremendous opportunity for Starbucks over the long term. Ho Chi Minh City is our first stop and we aim to open our stores in key metropolitan cities across Vietnam, including Hanoi, in the future,” John Culver from Starbucks said in the statement. Culver, on the occasion of the opening in Vietnam, even told media Starbucks could open hundreds of stores in this market.

For Dunkin’ Donuts, it may have experience in penetrating into Vietnam market as its sister brand, Baskin-Robbins, entered Vietnam in January 2012 and currently has 13 locations in the country.

“We’re delighted to bring the brand to cities across Vietnam in the years ahead, and look forward to making Dunkin’ Donuts the coffee and baked goods brand of choice for our Vietnamese guests,” said Le Hong Thuy Tien, chairman of Vietnam Food and Beverage Co. Ltd., Dunkin’ Donuts franchisee in Vietnam.

Baskin-Robbins, the world’s largest chain of ice cream speciality shops, signed a master franchise agreement with Blue Star Food Corporation, a Vietnamese food manufacturing company, to develop the brand in Vietnam.

The agreement calls for approximately 50 Baskin-Robbins restaurants to be opened in that country over the next several years.

Supporting industries engineer growth

There are brighter signs for Vietnam’s supporting industries with new foreign invested manufacturing projects recently licenced.

Before the Lunar New Year, United States-based OrthoLite Company, the world’s leading supplier of insoles for shoe-makers, officially inaugurated its cell foam shoes insole manufacturing factory project in southern Binh Duong province.

Meanwhile, Japan-invested Ohashi Tekko Vietnam recently got the thumbs up for its car and motorcycle spare parts manufacturing factory in northern Vinh Phuc province’s Binh Xuyen Industrial Park. The $14 million factory is expected to come online in early 2014.

In northern Bac Giang province, scores of foreign direct investment (FDI) projects in supporting industries were granted investment certificates in early 2013.

Korea-based Shingshung Vina received an investment certificate to develop the $2 million car and mobile telephone component plant with a designed capacity of 22.5 million products per year. The new facility will be built in Song Khe-Noi Hoang Industrial Park covering 10,000 square metres.

In February, Bac Giang Provincial People’s Committee granted a new investment certificate for South Korea’s Dae Gwang Vina Company to develop the third phase of its mobile telephone components manufacturing factory worth $6.4 million and the designed capacity of 9.5 million products per year.

In early 2013, Korea’s Heasung Tech Company set foot in Bac Giang province to develop its $665,000 electronic spare parts processing and assembling factory with the annual production capacity of 60 million products.

Previously, in late December 2012, another South Korean firm, Sung Dwang Company was licenced to develop its $300,000 mobile telephone’s cover and electronic components factory in Bac Giang province.

Kim Yong Seok, planning director of Samsung Electronics Vietnam, said the suppliers’ new manufacturing factories in Bac Giang would provide parts for northern Bac Ninh province-based Samsung’s mobile phone manufacturing factory.

Seok said that by late 2012, there were 69 foreign suppliers following the steps of Samsung, the biggest mobile phone maker of the world, to come to Vietnam.

He also said the number of foreign suppliers was forecasted to rise when Samsung expands its investment capital to $1.5 billion from $670 million in developing its complex in Bac Ninh and especially its $2 billion new facility in neighbouring Thai Nguyen province will be officially kicked-off this year.

Also, Nokia’s mobile phone manufacturing factory in Bac Ninh province and LG’s large scale project in Haiphong also will create good opportunities to attract supporting industry investors to Vietnam.

Nguyen Van Dao, deputy director of Samsung Vina Company, which is operating a TVset manufacturing facility in Ho Chi Minh City, said Vietnam should introduce better investment incentives for supporting industry investors.

FDI projects to charm Year of the Snake

Vietnam is looking forward to licencing some large-scale foreign direct investment  projects in the Year of the Snake.

Dang Xuan Truong , director of Thai Nguyen Provincial Industrial Zones Management Authority, said it was likely that a Samsung project with the investment capital of $2 billion would be one of the largest and earliest foreign direct investment (FDI) projects in the Lunar New Year 2013 in the province.

“As soon as getting approved by the relevant government agencies, we will grant an investment certificate to the South Korean firm to start work within this March,” Truong said.

On February 6, Samsung signed a contract for leasing 100 hectares of land at the province’s Yen Binh Industrial Park to build a plant for manufacturing handsets and electronic parts.

At the beginning of the Lunar New Year 2013, Duong Ngoc Long, chairman of Thai Nguyen Provincial People Committee, made a field trip to check the progress of land clearance at the project site. It’s understandable for Thai Nguyen authorities to be eager because of successful $1.5 billion Samsung Electronics Vietnam complex in neighbouring Bac Ninh province. Last year, Samsung Electronics Vietnam reported an export value at $12.72 billion and employed 28,000 local workers.

In another example, South Korea’s LG will make an investment of $300 million to build an electronic manufacturing plant on an area of 400,000 square metres in northern Haiphong port city ,according to information released on a South Korean website last week.

Currently, LG is operating plants to manufacture televisions, refrigerators, washing machines and air conditioners in Hanoi, Haiphong and Hung Yen province.

Pham Thuyen, director of Haiphong Municipal Industrial Zones Management Authority, confirmed the report of LG’s planned investment but offered no other details.

“We set the target of attracting $1-$1.5 billion of FDI this year, and if nothing were changed, Haiphong would be one of the leading FDI hotspots in 2013,” Thuyen said.

Also, at the end of January 2013, Haiphong granted an investment certificate for IHL Infrastructure Asia to develop its manufacturing factory in the city’s Dinh Vu Industrial Zone. The investment for the first stage was only $47.7 million, but according to Thuyen, this Japanese investor had plans for the second stage with the investment capital up to $500 million.

The licenced plant will manufacture steel structural materials (6,000 tonnes per year), reinforced concrete (80,000 cubic metres per year), and facilities (90 items per year). IHL Infrastructure Asia planned to start the construction of the factory in February 2013, which will have trial operation in April 2014 and officially come into operation from January 2015. This is the ninth project of Japanese investors at Dinh Vu Industrial Zone.

Meanwhile in the south, Dong Nai authorities recently issued an investment certificate to Japanese Terumo’s $100 million medical equipment manufacturing facility in the province and they are appraising two other foreign invested projects with the total investment capital of $60 million.

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

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