Home » Business » BUSINESS IN BRIEF 27/11

Economic crisis hits 60% of SMEs

Most small and medium-sized enterprises (SMEs) in Vietnam have become vulnerable under the impact of the global economic crisis, says a report announced by the Central Institute for Economic Management on Wednesday.

The report named “Characteristics of the Vietnamese business environment – Evidence from a small and medium enterprise survey in 2011” is based on a survey of some 2,500 SMEs in ten cities and provinces nationwide, including Hanoi, HCMC and Haiphong.

As much as 60% of the surveyed enterprises said they had suffered the negative impact of worsening business environment because of the global economic crisis in 2011. This percentage is much higher than 17% in 2009.

About 71% of SMEs in the southern region said they had run into more problems last year.

The survey shows that 39% of SMEs faced difficult access to credit capital. Nearly 90% of the respondents had to borrow loans from unofficial sources given the problems in the official credit market.

The report says unofficial loan was of small value, accounting for around 9% of the total investment, but it was a regular component in financial plans of SMEs.

Pham Thi Thu Hang from the Vietnam Chamber of Commerce and Industry (VCCI) said: “This indicates credit demand of businesses is very high and barriers against credit access have not been removed.”

The report notes the percentage of enterprises improving their products tended to fall. In the current context, when the main market of local enterprises is the home market and smuggled goods remains a headache, it is very essential that they improve their products in order to conquer the local market and the niche market.

“If this trend continued, SMEs would soon have to leave the market. In fact, in the early months of the year, the problem of inventory forced more than 42,000 enterprises to halt operations and disband,” Hang warned.

Meanwhile, John Rand from the University of Copenhagen of Denmark, conductor of the survey, suggested the State should pay more attention to micro-enterprises, saying that they are the main force for job creation and poverty reduction in Vietnam.

Nearly 10% of small and medium-size enterprises (SMEs) withdrew from the market, according to the latest report released Wednesday by Central Institute for Economic Management (CIEM).

The survey was carried out among 2,500 enterprises in 10 provinces and cities across  Viet Nam between 2009 and 2011.

CIEM Vice President Vu Xuan Nguyet Hong said SMEs are becoming the center of socio-economic development in Viet Nam.

However, the survey shows that during the 2009-2011 period, SMEs reduced investment rate from 61% down to 56%, leading to shrinking credit loans from 52% down to 47 %.

Prior to 2009, nearly 12% SMEs believed that the crisis had created a number of opportunities for business circle, especially big ones. The rate fell down to just 5.6% in 2011.

Of the 2,508 surveyed SMEs in 2009, up to 20% of them had to shut down operations in 2011.

Credit access is attributed the biggest barrier for the development of SMEs in Viet Nam. Last year, around 39% of them could experience limited access to loans.

Ms. Pham Thi Thu Hang, General Secretary of the Viet Nam Chamber of Commerce and Industry said it is alarming that the rate of enterprises renovating products tends to reduce.

Market leaves investors dispirited

“Dispirited and given up” was the general description of investors throughout last week’s trading, which caused declines in both stock indices and value of trades on both national exchanges.

On the HCM City exchange, the VN-Index lost more than 1 per cent over the course of the week, finishing Friday’s session at 381.71 points, while the HNX-Index on the Ha Noi bourse slumped 1.12 per cent to close at 51.23 points.

Trading value slid on the two exchanges, averaging just VND324.6 billion (US$15.5 million) per session on the HCM City market and over VND113.4 billion ($5.4 million) per day on the Ha Noi market.

Modest increases of inflation in November in the two major cities, Ha Noi and HCM City, helped the market recover slightly on Wednesday. However, the market quickly retreated in the ensuing sessions.

“Slowing growth of the CPI this month was predicted in advance and its impact has declined in recent time,” stock analysts commented on the financial website vietstock.vn.

Late last week, the November national inflation was reported to rise 0.47 per cent against last month, almost half of the increase of 0.85 per cent seen in October. Compared to December 2011, the inflation rose just 6.52 per cent, well in line with the Government’s target of one-digit inflation this year.

The lack of positive information made any efforts in pushing up the market in vain, they said, adding few investors wanted to buy shares even if sellers did offer low prices.

Blue chips failed to support the market evidenced by the top 30 shares on the southern exchange decreasing 1.3 per cent of the VN30 over the week, standing at just 449.73 points.

The bleak market also discouraged foreign investors. They concluded as net sellers on the Ha Noi market, unloading shares worth VND6.4 billion ($306,000), but they were net buyers on the HCM City bourse with a modest net of VND4.3 billion ($206,000).

The conclusion of the National Assembly’s meetings last week failed to improve investor psychology while the decision to increase the personal income tax rate had a negligible effect on the vision of a difficult economy ahead, FPT Securities Co analyst Nguyen Van Quy wrote in a report.

The market was heading to the nearest bottom of 375 points and efforts of bottom feeders would likely increase, boosting a new recovery, Quy said.

“However, given low liquidity in recent times, investors are encouraged to be cautious when the market tests the supporting level of 380 points this week,” he said.

Companies to pay cash dividends

Two companies on the HCM City Stock Exchange have announced they will pay dividends next month.

Seaprodex Refrigeration Industry Corp (SRF) will pay a dividend at 15 per cent on December 21. The list of participants will close on December 10.

Building material company Nui Nho Stone Co-operation (NNC) will pay 20 per cent on December 27. All participants must register no later than December 7.-

Plug pulled on Au Viet Securities Co

Ha Noi Stock Exchange will stop trading of Au Viet Securities Co from December 28 following the firm’s application to terminate its membership, the bourse announced.

The exchange will cut its links to the stock market and UPCoM (Unlisted Public Company Market) and stop providing information services for the company.

Au Viet Securities Co has withdrawn its membership on both national stock exchanges and stopped providing brokerage services. The firm’s business now focuses on consultation and self-trading. In the period ending September, the company reported a loss of VND9 billion (US$431,000).

Foreign stake in REE blocked

State Securities Commission (SSC) has approved in principle to a block on foreign ownership in Refrigeration Electrical Engineering Corporation (REE) but the rate of the block must be based on the result of REE’s bond issue, the commission has announced.

REE asked to block foreign ownership in the company at the ratio of 10 per cent of its total charter capital to save foreign room for its upcoming issuance of convertible bonds.

REE plans to issue VND558 billion (US$26.7 million) worth of convertible bonds to Platinum Victory Pte Ltd, a wholly owned subsidiary of Singapore’s auto distribution and retail giant Jardine Cycle&Carriage Ltd. The bonds will be converted into shares after three years at the price of VND22,000 ($1.05).

Transport companies rail at road fee

A proposed circular on the road-maintenance fee from the Ministry of Finance, expected to come into effect early next year, is causing alarm among transport companies.

“[The fee] will increase the number of transport companies going bankrupt, which will have serious impacts on society, including increasing the unemployment rate,” Truong Tri Minh, vice chairman of the Hai Phong Cargo Transport Association warned.

Companies in the sector already have to pay taxes on vehicles, registration, and number plates, verification fees for the vehicles, income tax, and others, he said.

Around 40 per cent of the 2,000 cargo transport companies in his city have either gone bust or switched to other businesses due to economic difficulties, he claimed.

Tran Huy Hien, general secretary of the Viet Nam Freight Forwarders’ Association, said the increase in transport costs due to the new fee would push up prices and, thus, affect competitiveness vis-a-vis foreign firms.

The draft envisages monthly fees of VND130,000 to VND1.04 million (US$6-50).

Industry insiders also complain that allocating 1 per cent of the fee to the registration and inspection centres, 3 per cent to the Viet Nam Register, and 15-30 per cent to localities would significantly reduce the investment in road building and maintenance.

They want to know how the money will be managed and the road quality improved.

The draft also requires payment in advance for a 12-month period, which businesses consider unfair.

Participants at the seminar held to collect opinions about the draft agreed that the Government should consider delaying introduction of the fee to support them at this difficult time.

Measures to boost market

The gloom surrounding the Viet Nam stock markets could lift next year since the Ministry of Finance and the State Securities Commission are considering measures to ensure sustainable growth of the market.

SSC chairman Vu Bang said they include a likely 20 per cent reduction in the securities depository fee from early next year, though he insisted that the current fee of half a dong per share per month was reasonable.

Securities companies normally pay the fee instead of passing it on to their customers.

Sai Gon Securities Inc said the fee cost it VND14 billion (US$667,000) in 2010 and 2011.

Brokerages want some reduction in the fee due to the fact that many of them have been suffering losses.

Increasing the margin ratio from 40:60 (which means a securities company can lend a customer 40 per cent of the amount required to buy a share) to 50:50 is under consideration. If approved, it is likely to improve liquidity.

The SSC is preparing to introduce several new products next year, including exchange-traded funds.

ETFs are mutual funds that track indexes like the Dow Jones on the New York Stock Exchange, for example. When people buy into an ETF, they buy shares of a portfolio that tracks the index. The shares are traded on stock exchanges just like all other securities.

Pension funds with their important role in social security would also be studied, Bang said.

But the bottom line is that any recovery depends on the economy.

Property values to go online

From the first quarter of 2013 HCM City real-estate investors can refer to official indexes to be posted on the web sites of the Department of Construction and HCM City Real Estate Association, and in the media.

They will be released on quarterly and yearly bases.

The city People’s Committee has already issued regulations for creating and publishing the indexes, which will also include prices and other details of transactions.

There will be indexes for different types of properties and for different areas of the city.

The Construction Department has been entrusted with working out the database and calculating and creating the indexes. It is likely to hire competent agencies to do the work.

Property services company Savills Viet Nam recently launched its own price indexes for the residential segment, the QoQ (quarter-on-quarter) and QoB (quarter-on-base) indexes, with the first quarter of 2009 as the base.

They are based on a sample of more than 200 primary and secondary projects in the city. The company admitted it is not easy to obtain the exact prices of transactions.

The People’s Committee has also classified apartments – those priced at VND60 million (US$2,850) per square metre and above; VND30-60 million; VND15-30 million; and below VND15 million.

These rates include value-added tax and will be adjusted annually depending on market prices.

Customs officials set up hotline

A hotline to report violations of customs procedures will be officially launched by the Viet Nam General Department of Customs’ Risk Management Board at the end of this month.

The hotline will receive and settle problems involving violations, obstacles and limitations involving customs procedures.

Customer can report cases on +84.4521122 during working hours, or via mobile on +84.902245656.

The board said that informants would remain anonymous and receive feedback of investigations if requested.

However, only grounded information will be proceeded, according to the board.

HCM City strengthens focus on hi-tech agriculture

Over 14 projects with a total investment of VND452 billion (US$21.6 million) have been granted licenses in HCM City’s Agricultural High-tech Park (AHTP) since 2004.

Covering 56 of the 88.2-ha park, these projects have specialised in bio-technology, hydroponic cultivation, seed reproduction, preservation and processing, and horticulture.

Several modern technologies are being applied at the park.

“We are researching and will soon launch a vegetable production model with high productivity that effects 70 per cent savings in the use of fertilisers, pesticides and water,” said Huynh Doan Thong, director of the Chanh Phong Agriculture Company.

He said the model would also spend 50 per cent less on human labour.

HCM City is focusing on hi-tech agriculture as a way of coping with rampant urbanisation, which is stealing an estimated 1,000ha of agricultural land each year.

“The city’s agriculture sector should be redesigned to follow new development trends in urban agricultural production,” said Dr. Duong Hoa Xo, director of the AHTP.

More importantly, the park is ready to transfer new agricultural technologies to organisations and individuals.

The AHTP will support new agricultural high-tech companies by creating the most favourable conditions for them to join the market. Companies will also receive financial support and technology assistance from the park.

“Qualified scientists and modern technology is one of HCM City’s strengths, therefore, the city will co-operate with other southern provinces to create a wide agricultural production area.

“The city will provide seeds, production technologies as well as post-harvest technology in preservation and processing,” said Le Minh Tri, deputy chairman of the municipal People’s Committee.

In the future, the city will promote construction of several facilities including the Biotechnology Centre in District 2 and the Agricultural Products Exhibition Centre in Cu Chi District.

The AHTP would be expanded to more than 397ha soon, officials say.

It is expected that in the 2015-20 period, the city will launch four or five new agricultural high-tech centres.

Strong global brand identity needed to boost tea prices

The price of Vietnamese tea was almost the lowest of the world’s largest tea exporters due to its failure to build a strong global brand, said vice chairman of the Viet Nam Tea Association Doan Trong Phuong.

Phuong said despite being one of the world’s largest tea producers, the country’s tea price was only roughly US$1,160 per tonne, just 60 per cent of the average global price.

Without a strong brand, Vietnamese tea exporters had to fully depend on foreign middlemen, who often squeezed prices, he said.

Low production from small-scale farms, poor quality maintenance and loose links between enterprises and planters were also hindering the development of the industry.

According to the association, the country had 133,000ha of tea plantations in 2011 and its output has been increasing at a rate of 6 per cent per year. Roughly 65 per cent of plantations were under the management of planters, but they produced 30 per cent less than larger enterprises.

The country wanted to double tea prices to about $2,200 a tonne and earn an export turnover of $440 million by 2015.

To meet the target, experts said that the tea industry needed to set up standards to manage the production processes, from plantation to processing, and export standards.

During the first 10 months of this year, the country exported 110,000 tonnes of tea with a turnover of $182 million, an increase of 9 per cent in both volume and value compared to the same period last year.

S Korean inspectors, auditors improve ties with counterparts

A delegation from South Korea’s Board of Audit and Inspection, led by its chairman, Kun Yang, is concluding a four-day visit to Viet Nam during which it sought ways to boost co-operation with Vietnamese counterparts.

At a reception for the delegation in Ha Noi on Saturday, Deputy Prime Minister Nguyen Thien Nhan said he was pleased with strong developments in multi-faceted co-operation between Viet Nam and South Korea.

Cultural similarities and other conditions were favourable for the two countries to continue boosting multifaceted ties in a more intensive, effective and comprehensive way during the 20th anniversary this year of diplomatic ties between the two countries, Nhan said.

Nhan spoke highly of the close and effective co-operation between the Vietnamese Government Inspectorate and South Korea’s Board of Audit and Inspection, expressing his wish that the two sides would continue strengthening co-operation, particularly in sharing experience and in personnel training.

Kun Yang said he hoped that his delegation’s visit would help further develop the board’s relations with the Government Inspectorate.

Earlier on Saturday, the delegation had a working session with Vietnamese Auditor General Dinh Tien Dung, who noted important developments in bilateral relations since an agreement on bilateral exchange and co-operation was signed in 2007.

The two sides have exchanged working visits and experience in public sector auditing, said Dung, adding that South Korea helped the State Audit of Viet Nam successfully host the 42nd meeting of the executive committee of the Asian Organisation of Supreme Audit Institutions (ASOSAI) in August 2010.

Kun Yang informed Dung of recent ASOSAI activities and the primary issues to be discussed at the 63rd session of the executive committee of the International Organisation of Supreme Audit Institutions (INTOSAI).

Gas investors mark project completion

Three investors in the Block 06.1 offshore gas project met last Friday in Ha Noi to mark 10 years of safe operations, over 27 million man-hours recorded, and the successful completion of a new gas field development project.

Addressing the celebration, Deputy Minister of Industry and Trade, Tran Tuan Anh, spoke of his appreciation of the contributions made to the gas industry of Viet Nam by the Block 06.1 investors – who are Indian National Oil Company ONGC, PetroVietnam Exploration and Production Corporation, and the operator of the project, TNK Viet Nam.

“Block 06.1 is a key energy sector project and you should be proud to have achieved 10 years of safe operations, reflecting the professionalism and safety compliance of the operator team,” Tuan Anh praised.

Block 06.1 is located 370km offshore of Ba Ria Vung Tau Province to the southeast. It operates in the natural gas fields of Lan Tay and now Lan Do, which were discovered in the early 1990s.

Since production started in Lan Tay Platform in November 2002, Block 06.1 has safely and reliably produced 37 billion cubic metres of gas and 13 million barrels of condensate to meet around 22 per cent of Viet Nam’s generation of electricity.

“As the operator, we feel pride that for every day over the last 10 years, every member of our team has arrived home safely to their loved ones, and has made a material contribution to Viet Nam’s domestic energy needs,” said Hugh McIntosh, TNK Viet Nam General Director at the ceremony.

Block 06.1’s investors have also welcomed the arrival of the first gas production from Lan Do field, which finally came in October 2012 after two years of execution.

The Lan Do development is aimed to extend the block’s production plateau and ensure that it remains the largest gas producer in Viet Nam. The project was delivered on time and on budget.

The field has two vertical sub-sea wells in a water depth of 185 metres, which link back to the existing Lan Tay platform infrastructure.

Power firm shakeup ticked

Prime Minister Nguyen Tan Dung has approved a scheme to restructure the Electricity of Viet Nam (EVN) company over the next three years.

The plan will see EVN focus more on manufacturing and trading electricity, in the hope that this will improve the corporation’s competitiveness as well as ensuring there is a sufficient supply of electricity to the economy.

EVN currently operates in four main areas of business. They are: production, distribution and trading of electricity; import and export of electricity; investment and management of power projects; and operation, management, maintenance and upgrading of electrical equipment and power transmission systems.

The scheme will also see EVN rearrange the internal operation of the organisation, improve its governance mechanism and strengthen its authority and responsibility over other enterprises where it has invested capital, and which it thinks fit in with its central aims.

Dung has asked the company to ensure that its affiliate companies increase their specialisation and avoid internal competition.

It is expected that after implementing the new measures, the charter capital of EVN will be more than VND143.4 trillion (US$6.86 billion) following the re-valuation of assets.

EVN is also required to divest capital from six enterprises by the end of 2015, including An Binh Bank, An Binh Securities Co, Global Insurance Joint Stock Co, Sai Gon Vina Real Estate Joint Stock Co, EVN Land Central and the Vietnam Investment and Construction Electricity Company.

In July this year, EVN announced that they wanted to withdraw more than VND1.1 trillion ($52.6 million) from affiliates whose operations are not in line with their main business aim. However, they encountered difficulties in negotiating an acceptable selling price.

By the end of last year, EVN invested around VND757 billion ($36.2 million) in An Binh Bank, held shares worth VND125 billion in Global Insurance Co, invested VND103 billion ($5 million) in property projects and poured VND114.8 billion ($5.5 million) in An Binh Securities Co.

Soai Rap River dredging to enhance City’s port system

Dredging of Soai Rap River in Ho Chi Minh City will help create a shorter route for vessels coming into Hiep Phuoc Port area in Nha Be District, and will also prove to be a significant turning point in the development of the City’s port system.

HCMC has scheduled the second phase of the dredging project of the Soai Rap River to begin on November 24.

One hundred years ago, the port began taking shape on the Saigon River, greatly contributing to the development of the City. Vessels had only one route to move from the sea to Saigon Port on Long Tau River.

Initially, constructors of Saigon Port had planned to use Soai Rap River as the main entry route for vessels coming in from the sea to enter the Port area. However, many shallow spots in the Soai Rap River deterred them and they chose Long Tau River instead.

Dredging of Soai Rap River will allow it to be the main entry route for vessels to move into the new Hiep Phuoc Port in Nha Be District and also open a new phase in the development of the port system in HCMC.

Hiep Phuoc Port was constructed in Nha Be District to replace Saigon Port area, which is located too close to the center of HCMC and is now causing much environmental pollution and traffic congestion.

According to the management board of the Soai Rap River dredging project, a 54km section starting from Saigon Premier Container Terminal and ending at the sea edge will be dredged for vessels to move in freely.

The width of the dredged route will be from 120-160m and the depth will be 11.5m, enough to allow vessels of 50,000-70,000 tons to pass  through. Currently the Long Tau River can receive vessels of 30,000 tons only.

The Soai Rap River route will cut the distance shorter from the sea to Hiep Phuoc Port by 40km from the present route on Long Tau River.

Le Hoang Minh, director of the project, said that dredging will be complete in 14 months at a cost of euro 76 million (US$98.6 million), provided by a preferential loan from Belgium.

The Vietnam Seaport Association said that at present, commodities from the Mekong Delta are being transported through Nuoc Man Canal to Soai Rap River and to Saigon Port where they are loaded onto vessels.

When the Soai Rap River route is dredged, cargo will be transported straight to Hiep Phuoc Port, reducing the distance and saving costs.

Tran The Ky, deputy director of the HCMC Department of Transport, said that the current port on Saigon River has contributed a great deal to the development of the City. However it has also caused environmental pollution and traffic congestion.

Together with Cai Mep-Thi Vai route in Ba Ria-Vung Tau Province, the Soai Rap River route will turn the southern region into a key economic zone and an important trading port in Asia and for the world.

The Transport Department has submitted to the HCMC People’s Committee a project to build a road system for better access to Hiep Phuoc Port. Construction of the roads will be done simultaneously with the Soai Rap River dredging project.

Hydro-power plant gets the green light

Deputy Prime Minister Hoang Trung Hai gave the go-ahead for the construction of Trung Son hydro-power plant in the central province of Thanh Hoa on Saturday.

The project, the first hydro power plant in Viet Nam to be funded by the World Bank, would not only supply power, but was also expected to prevent flooding and droughts, Deputy PM Hai said.

The power plant would benefit the environment and create better living conditions for local people, he said, expressing his hope that the project, with the assistance of WB experts, would meet the strictest environmental and safety standards and ensure social security.

The project has a total investment of US$410.7 million, of which the WB has provided a $330 million loan.

According to WB Viet Nam Director Victoria Kwakwa, the project was expected to meet environmental and social requirements and bring practical benefits to the Vietnamese people.

The plant will supply low-cost, clean and sustainable electricity, with an annual output of over 1 billion kWh.

Ngo Viet Hai, chairman and director of Trung Son Hydro-Power company, a subsidiary of the State-run power supplier Electricity of Viet Nam (EVN), said the project would contribute to the climate change agenda in Viet Nam by lowering carbon dioxide emissions by about 1 million tonnes per year.

He said the plant’s reservoir was also expected to lower emissions and provide flood control benefits through a water storage capacity of 112 million cubic metres.

Up to 1,516 local households in eight communes will be directly affected by the project.

Around 98 per cent of them are ethnic people from the Thai, H’Mong, Muong and Kho Mu communities. One third of the households will be provided with financial assistance to relocate before water first reaches the plant’s dam in October 2016.

By the end of December, a 20-km road to the plant will be completed.

Sam Sung C&T and State-run Construction Company 47 have been contracted to work on the plant, while AECOM New Zealand and East Asia Investment and Construction Consultant Company (EASIA JSC) are the construction supervisors.

The plant should be completed in 2017.

Accounting helps farmers turn a profit

Applying household bookkeeping has taught many farmers in northern and central provinces about financial acumen to improve their businesses and understand how to manage their money.

For the family of 60-year-old farmer Nguyen Viet Chua from Ha Noi’s Chuong My District, two years of using the model has taught them not only how to balance daily, monthly and yearly expenses, but also how to invest wisely in what to cultivate or raise.

“It has helped my family increase their income and manage investments,” Chua said.

Chua’s family is among those who took part in a project to promote book keeping for small farming households in Viet Nam, with the aim of helping them to change traditional habits in business and management.

“In reality, the project has helped to reduce poverty and increase the number of middle-income households,” Chua said.

Starting from 40 farming households in Ha Noi’s My Duc District in late 2007 as part of a programme run by the Ha Noi University of Agriculture and Oxfam America, the model was expanded to more than 1,000 households across Ha Noi, Thai Nguyen, Phu Tho, Yen Bai and Ha Tinh and Nghe An.

“After only eight months, the project reported back positive results,” said the university’s Professor Pham Thi My Dung. “It enables small-scale farmers to monitor and analyse financial and investment decisions.”

Nguyen Thi My, deputy president of the Farmer’s Association in the central province of Ha Tinh’s Can Loc District, said more than 300 people in the locality had been trained in the past two years.

“The project has encouraged many practical applications, and farmers have agreed and responded to keeping accounts,” she said.

“The project has also helped to empower rural women since they often have to take responsibility for their families’ financial records,” My said. She added that they were very keen to expand the programme to all farmers, especially the poor. She suggested arranging visits for farmers new to the programme to experienced participants to help them understand the benefits.

Le Nguyet Minh of Oxfam America said farmers involved in the project had reportedly found the model interesting and useful.

“However, reality shows that adjustments are needed to adapt book keeping to different businesses,” Minh said.

Reclaimed Mekong land is top producer

Reclaimed more than two decades ago, the Long Xuyen Quadrilateral Region is now a major rice and aquaculture production area.

The region has a total area of about 489,000ha and spans Kien Giang, Can Tho and An Giang provinces in the Cuu Long (Mekong) Delta.

Last year, the region produced more than 4.73 million tonnes of paddy, accounting for 20 per cent of the Delta’s total paddy output, compared to 600,000 tonnes in 1988, according to Huynh The Nang, deputy chairman of the An Giang People’s Committee.

Nang spoke about the region’s socio-economic future at a seminar held in An Giang Province on Thursday.

In 1988, the late Prime Minister Vo Van Kiet decided to reclaim the region, which had more than 50,000ha of land left fallow because of its high-alum soil.

The investment in irrigation systems, dykes and roads were major factors contributing to the successful reclamation of the region, said participants at the seminar.

In the late 90s, the regional authorities dredged the Vinh Te Canal, dug new canals (T4, T5 and T6), and built new flood regulation dams (Tha La and Tra Su) and sluice gates to prevent salt-water intrusion along coastal areas.

The Vinh Te and T5 canals play important roles in helping release floods from and wash alum in rice fields. They also have aided in the expansion of rice cultivation in the Long Xuyen Quadrilateral region.

T5 Canal, which was dug in 1997, was renamed the Vo Van Kiet Canal.

With the development of such infrastructure, more than 50,000ha of formerly alum-rich land has become a fertile area.

Rice cultivation in the region has also increased from one to three crops a year.

However, the region faces many challenges in reaching its full potential.

The quality, value and competitiveness of agricultural products in the region remains low.

Nguyen Ngoc Tran, former deputy chairman of the State Committee of Technology and Science, said: “Rice and aquaculture are the strengths of the region, but the region’s localities have not properly invested in rice husking and seafood processing.”

In addition, tourism activities and sites are diverse, but they have not been developed properly to attract tourists.

International border gate areas, including Tinh Bien, Vinh Xuong and Xa Xia, also need more attention, according to Tran.

The region is expected to be affected seriously by climate change, rising sea water levels, water flows from upstream areas and hydro-power projects on the Mekong River.

The structure of its agricultural production should be changed to adapt to the changes, Tran said.

Rice accounts for up to 80 per cent of agricultural production value, according to the Cuu Long Delta Development Research Institute.

The seminar was held by the Viet Nam Union of Science and Technology Associations, the Southwest Region Steering Committee, and the provinces of An Giang, Kien Giang and Can Tho. More than 150 people attended.

Vietnam needs standardizing tra fish

Authorities should discuss and select standards for Vietnamese tra fish to facilitate export activity.

Duong Ngoc Minh, chairman of the Freshwater Fish Committee under the Vietnam Association of Seafood Exporters and Producers (VASEP), shared this view at a ceremony to announce the local tra fish industry had met Aquaculture Stewardship Council (ASC) standards. The event was organized by the World Wide Fund for Nature (WWF) and the General Directorate of Fisheries on Wednesday.

Vietnamese tra fish producers now have to comply with multiple sets of standards, including ASC, GlobalGap (Good Agriculture Practice) and BAP (Best Aquaculture Practice).

To lift the standard burden on tra fish, VASEP, the General Directorate of Fisheries and the Ministry of Agriculture and Rural Development should select a number of sets of standards and promote them in the major tra fish importing markets of Vietnam like the U.S. and Europe. Then, the standards chosen by most consumers should be widely applied by tra fish traders and farmers, instead of applying different standards for different markets as now, said Minh.

Over the past ten years, Vietnam’s tra fish material output has sharply risen from tens of thousands of tons to over one million tons per year. Enterprises have focused on selling but have ignored the standards for tra fish that foreign consumers require, he said.

Every year, the State spends heavily to help local seafood firms participate in seafood fairs in Europe and the U.S., but there has been no plan for building the Vietnamese tra fish brand, he remarked.

Therefore, foreign countries can stop importing Vietnamese tra fish when it fails to meet the standard on food safety or other standards.

“We have no room to maneuver, so we are forced to apply GlobalGap in the European market, BAP in the U.S. and recently ASC in some European nations,” said Minh.

To produce tra fish meeting ASC standard, each hectare must be invested some VND50 million, or each kilo will cost an additional VND5, while prices of ASC-qualified tra fish are often 20-30 U.S. cents per kilo higher than the normal level.

At present, GlobalGap and ASC are both accepted in Europe, but ASC is preferred, said Minh.

Export paving stones stuck at port

Dozens of export paving stone containers worth hundreds of thousands of U.S. dollars have been stuck at Quy Nhon Port for nearly two weeks as their owners, stone producers in Binh Dinh, have bought materials from quarries with no processing license.

Pham Xuan Thuy, chairman of the Binh Dinh Stone Association, told the Daily that the cause of this incident was the recently issued Circular 04 of the Ministry of Construction, which has been effective since November 6.

The circular regulates minerals used as export building materials must be extracted from mines with mining and processing licenses. This provision is troublesome as no quarry in Binh Dinh has a processing license, Thuy stressed.

“After receiving complaints from the member stone exporters, we have sent a proposal to the Ministry of Construction. This Friday, representatives of the ministry’s Department of Building Materials will come to Binh Dinh to work with our association over this issue,” he said.

Thuy informed it would take around two months to deliver stones to foreign partners. If the problem was not timely resolved, stone exporters in Binh Dinh would likely violate the export contracts and incur heavy losses because each container of high-grade paving stones is worth at least US$10,000.

The Binh Dinh Stone Association has about 35 members, who are miners and processors of high-grade paving stones such as marble and granite.

European buyers eye Vietnamese paving stones

Local paving stone producers said many customers from Europe had come to seek paving stone supply in Vietnam to replace Chinese supply.

Duong Van Len, deputy director of Hung Loc Phat Construction and Manufacturing Co. Ltd. in Long An, said China for a long time had been the paving stone factory of the world. However, European customers have recently switched to Vietnam because Chinese stone is subject to high import duties in Europe, such as 60% in Turkey.

Len said his company had successfully exported three shipments of high-quality marble to Europe, the Middle East and Japan at prices many times higher than prices at home. Paving stones are now sold at VND1-2.5 million per square meter in the local market.

Tomorrow, Hung Loc Phat will open a marble factory in Long An’s Can Giuoc District with a capacity of nearly 600,000 square meters per year, mainly producing high-grade marble for export. Input materials of the factory will be sourced from local quarries and foreign sources.

According to the Ministry of Construction, there are 325 quarries nationwide with a total reserve of 37 billion cubic meters, which can be processed into hundreds of billions square meters of paving stones for domestic use and export.

Commissions for fuel retailers stay high

Commissions for fuel retailers have over the past one month stayed at VND700-750 per liter, higher than the level specified by the Ministry of Finance.

Speaking to the Daily on Wednesday, a senior source from a fuel wholesale company in the southern region revealed his firm was giving sales agents a discount of VND700-750 a liter.

This is a popular rate in the market at the moment. Some wholesalers even offer higher rates, at up to VND800 per liter.

As such, fuel wholesalers are giving their sales agents commissions much higher than the regulated level. The finance ministry sets the fuel trading cost at VND600 per liter, including commissions for retailers and management fees.

However, representatives of several fuel firms said the level of VND600 was not enough, explaining that they had to constantly adjust discounts for sales agents to compete with one another. Meanwhile, sales agents must receive a discount of at least VND500 per liter to do business efficiently.

Therefore, wholesalers have to use the profit margin of VND300 allowed for each liter of fuel to cover the trading cost.

Based on the calculation method of the finance ministry, each liter of diesel oil is now fetching a profit of VND150 while petrol is bringing in VND100-120.

However, those are the prices of the old shipments, when RON92 petrol was US$114.8 per barrel and DO 0.25S, US$124.8 a barrel. Prices in recent days have not guaranteed profitability, said the source mentioned above.

Commission for fuel retailers has become a hot topic after the Finance Ministry introduced a draft circular on fuel pricing and use of the fuel stabilization fund to replace Circular 234. The draft circular stipulates the maximum ratio of commission for fuel sales agents to the total trading cost, which face opposition of fuel traders.

Saigon Petro has written to the finance ministry asking for adjustments of this provision.

The company suggested the State should only regulate a specific fuel trading cost and let wholesalers decide commissions for their sales agents.

Sharing this view, Le Thanh Man, deputy general director of Petimex, said discounts for retailers should be flexible in accordance with the actual business situation. Businesses should have the right to make their own decisions in the market-driven economy, he stressed.

Meanwhile, Tran Ngoc Nam, deputy general director of Petrolimex, said that if there was a maximum level, there should be a minimum level as well.

Ministry keen to ban foreign ships on local routes

The Ministry of Transport now is awaiting a response from the Ministry of Industry and Trade over whether or not to ban foreign ships from operating in local sea transport routes.

The cargo volume being transported by foreign ships on the local routes is growing, at up to some 40% of the total, as recorded in a recent report of the Vietnam Maritime Administration, Deputy Minister of Transport Nguyen Van Cong said.

Therefore, the transport ministry now is working on a plan to replace foreign ships by Vietnam-registered ones. The Vietnam Maritime Administration at a meeting held last Wednesday presented a project to replace 15 ships of seven foreign shipping lines by local ships.

The transport ministry had proposed the industry ministry suspend the operation of foreign ships with a total capacity of some 500,000 DWT in the local container transport routes from early next year. Cong said he was waiting for an official reply from the industry ministry on the issue.

The transport ministry has stopped granting new licenses for foreign ships on the domestic routes. But it has yet to find out specific solutions to deal with foreign ships that are already operational.

“Besides ensuring the development of local ships, we need to consider many factors for the benefits of the socio-economic development as well as securing the competitiveness of export and import cargo via sea transport fees,” Cong cited.

Related ministries have still been unable to reach an agreement to solve the complicated job so far, he stressed.

“We are considering either completely replacing foreign ships or gradually replacing them,” he noted. “As 80% of export and import commodities are carried by foreign ships, we need to consider capacity, charges or operations schedules to have the most feasible measure,” Cong added.

According to the Vietnam Maritime Administration, the container fleet of Vietnam has 20 ships with a combined capacity of more than 228,000 DWT.

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