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BUSINESS IN BRIEF 30-1Vietnam Airlines opens Moscow-Nha Trang route

A ceremony was held in Moscow on January 28 to announce the official opening of a direct flight route between Moscow and Nha Trang.

Present were Minister Councilor of the Vietnamese Embassy in Russia Pham Thi Ngoc Bich, representatives from the Ministry of Transport of the Russian Federation, and other partners of Vietnam Airlines.

Vietnam’s national flag carrier announced that its first direct flight from Moscow to  Nha Trang will start on April 5.

It will have serviced one Boeing 777-200 flight per week in summer and two in winter.

Vietnam Airlines will also offer 10 percent airfare discount for return tickets from January 28 to June 30.

Nguyen Tien Nam, representative of Vietnam Airlines in Russia, said the new route aims to maintain large numbers of Russian visitors to Vietnam in the face of global economic slowdown.

In 2012, the number of passengers on the Moscow-Hanoi-HCM City flights rose by 10,000 over the previous year to 79,000.

At the ceremony, the representative office of Vietnam Airline in Moscow presented 4 business-class tickets to ERORKO and PAKECOM (two for each outstanding agent).

Tet products displayed at Giang Vo Spring Fair

Spring Fair 2013 officially opened at Hanoi’s Giang Vo Exhibition Centre on January 28 in the presence of Deputy Prime Minister Nguyen Xuan Phuc.

The event was co-organised by the Ministry of Culture, Sports and Tourism, the Hanoi municipal People’s Committee and the local Department of Industry and Trade.

On display are different kinds of food, beverage, garment and textile, footwear, electronics, interior decoration, pottery, art and handicraft products.

Among the most favoured are Tay Ninh grapefruit, Ly Son garlic, Thai Nguyen tea, Thai Binh peanut candy and Ham Yen orange.

Art performances will be held during the fair which is open until February 7.

SBV says will resort to compulsory reserve ratio

The State Bank of Vietnam (SBV) will this year resort to compulsory reserve requirements among many different instruments to regulate money supply to ensure targets of growth and inflation control, an official of SBV said.

According to the source, SBV in 2012 mainly used treasury notes to do the job as liquidity of member banks was different at that time, meaning the compulsory reserve instrument was yet to be used in an effective way.

“SBV always seeks ways to withdraw money. Compulsory reserve requirement and gold selling as other instruments are expected to help the central bank withdraw considerable volumes,” he remarked. And SBV can revise compulsory reserve ratio up to a reasonable level when necessary, he added.

Currently, the compulsory reserve ratio of Vietnam dong applicable to local banks is 3% of total deposits and the rate remained unchanged during 2012.

In related news, credit institutions having bad debt ratio of 3% or higher to total outstanding balances or certain ratios set by the central bank will have to transfer the debts to the Vietnam Asset Management Company (VAMC) that will be established soon. Those banks failing to do so will be inspected by the central bank or will be demanded to hire an independent audit company for re-assessing assets’ quality, owner equity and chartered capital.

This is one of the basic points of a draft decree on organization and operation of VAMC that the central bank presented for discussion in a meeting with local lenders in Hanoi last Friday. Based on inspection and audit results, credit institutions will have to transfer bad debts to VAMC to ensure their bad debt ratio will not exceed 3%. Banks burdened with bad debts will also have to undergo restructuring in line with SBV’s approval.

As per the decree, the management council of VAMC will consist of 11 members with six experts and five representatives of the ministry of Justice, Finance, Construction, Natural Resources and Environment and the central bank.

VAMC’s control board should have five members and its management board will have one general director but no more than five deputy general directors. The company will be allowed to set up branches in a number of provinces and cities.

Bitexco launches shopping center

Bitexco Group has brought into service the retail area of the 68-storey building Bitexco Financial Tower in downtown HCMC.

Brian Cannon, deputy director of Bitexco Financial Tower, said the city’s tallest structure’s Icon68 Shopping Center is opened to customers, featuring international fashion, home and leisure shops, cafes and international dining and a seven-screen Cineplex.

The Icon68 Shopping Center spreads over five floors with total floor area of almost 10,000 square meters. It will serve as a shopping and entertainment destination for families, giving a chance for them to cast a view upon the city from the building’s observation floor named Saigon Skydeck from the 49th floor, some 182 meters from the ground.

Around two years ago, the group opened the office area in the Bitexco Financial Tower, providing the local office market with 39,000 square meters of Grade A office.

Realty firms doubt market bailout feasibility

Though advocating the State policy of converting commercial housing projects to low-cost ones and buying unsold apartments for the resettlement purpose, real estate companies wonder how this policy is carried out.

Le Huu Nghia, director of Le Thanh Commercial Construction Co., said it is not easy to turn a commercial apartment project into a low-cost one. In this process, the apartment sizes must be reduced to meet the demand of buyers, and thus the number of residents in a project will increase.

Meanwhile, Nguyen Xuan Quang, chairman of Nam Long Investment Corp., said a commercial project is much different from a low-cost one. Therefore, not all projects can be converted into low-cost ones.

He predicted when those wanting to buy low-cost apartments can access low-interest loans, the market will start moving. Then, enterprises will be willing to switch to the low-cost segment.

Tran Minh Hoang, chairman of VinaLand, remarked that as many developers are seeking to pull out of the market, many commercial condo projects currently have lower prices than low-cost and resettlement housing projects. Therefore, it does not matter if a project is of the low-cost housing segment, but finance is the major problem.

“The State can offer homebuyers soft loans, rather than classifying projects as low-cost or not, because the conversion procedure is very complicated,” said Hoang.

He said rescuing the property market by promoting the low-cost housing segment would not produce any effect, but it would even pose a risk of bad debt. Buyers of low-cost houses have limited ability to repay debts, so banks will not dare to grant them loans, he explained.

Resolution 02 of the Government encourages localities to buy unsold apartments from commercial projects to use for resettlement.

Quang of Nam Long deemed this policy theoretically feasible, but the problem is whether localities have enough money to buy commercial apartments. In fact, owners of several commercial projects have lowered prices in a bid to quickly pull out of the market.

Nghia of Le Thanh said most of the unsold apartments have large sizes and high prices, not suitable for resettlement. Moreover, in the projects which have been partly sold, the buyers would object to turning the remaining flats into resettlement houses.

HCMC has bought more than 1,000 apartments from the resettlement project Rach Chiec developed by Duc Khai Co. and 470 condos of the Era Town project also developed by Duc Khai in District, together with some other projects in District 2.

In addition, the city placed orders for apartments of several projects, including 75 units from the Good House project and 160 units from the Carina project in District 8, but these deals were unsuccessful as the buyer failed to make payments on time.

HCM City to study UK financial district model

HCMC vice chairwoman Nguyen Thi Hong will visit the UK next week in anticipation of gleaning some insight there for the development of a financial and service center in Thu Thiem New Urban Area.

At a meeting with Hong at City Hall on Thursday, Crispin Simon, managing director responsible for trade development at UK Trade & Investment, said the UK would continue to assist HCMC in developing Thu Thiem Peninsula in District 2 into a world-class financial and service center. He hoped the municipal authorities would learn a lot about the financial district model in the City of London.

Crispin placed an emphasis on the quality of human resources in addition to management of the future financial district in Thu Thiem, and design and development of the area.

Bosch, Lilama 2 team up for technical training

Bosch Vietnam on Sunday signed a Memorandum of Understanding (MOU) with Lilama 2 Technical & Technology College to carry out a hi-tech vocational training program in line with German standards.

Vo Quang Hue, managing director of Robert Bosch Vietnam, said the program will cost both sides some US$2.3 million to acquire necessary equipment for training and practice activities in the first two years.

Lilama 2 will be in charge of providing theoretical knowledge while Bosch Vietnam will be responsible for training practical skills.

In the first phase, the program will focus on vocational training in the industrial mechanical sector and it will be expanded to other areas in the future.

The first course lasting for three years will be started in October, 2013 with around 30 students. Besides being given free training, students of the program will also receive allowances along with other benefits from Bosch.

Graduate apprentices of the program will be given certificates from the German Industry and Commerce (GIC/AHK) and Lilama 2. Specially, they will likely be employed by Bosch Vietnam’s automotive pushbelt manufacturing plant in the southern province of Dong Nai.

Bosch Group said it would also seek approval for developing a vocational center in its factory in Dong Nai’s Long Thanh Industrial Park.

Having operational in Vietnam since 1994, Bosch Group established its subsidiary Robert Bosch Vietnam in HCMC and opened branch offices in Hanoi and Danang in April, 2008. The push-belt plant in Long Thanh Industrial Park came into operation in August, 2008.

Consumers opt for familiar brands, says Nielsen

Up to 82% of Vietnamese consumers prefer new products of well-known brand names to those made by new producers, says a research on consumer behavior towards new products done by the market research firm Nielsen.

In addition, over 76% of consumers in Vietnam want manufacturers to introduce new products, but up to 72% wait until the products are proven useful to begin buying them, according to the research’s results announced last Friday.

The Nielsen Global Survey of New Product Purchase Sentiment surveyed more than 29,000 Internet respondents in 58 countries and territories, and it shows that brand familiarity is one of several key characteristics that resonate strongly with consumers worldwide.

Less than half (47%) of the Vietnamese respondents are ready to switch to a new brand, versus 57% in the Middle East, Africa, Pakistan and North America, 56% in Europe and 47% in Latin America. The figures in Thailand and Japan are the lowest, 30% and 23% respectively.

Launching new products from the popular brands with Asian consumers can become a wise business strategy for the companies currently eyeing this potential market, said Therese Glennon, Nielsen’s managing director of consumer insights for Asia Pacific, Middle East and Africa.

When studying the impact of new products and innovations, Nielsen adopted 21 different methods to approach consumers on all advertising channels. The research reveals that word-of-mouth, traditional advertising and the Internet are the most effective channels to market new products to consumers.

While 86% of the Vietnamese respondents are most affected by the advice of their family and friends on new products (versus the global average of 81%), the Internet (83%), trial samples (79%) and traditional advertising (68%) are also the main influential factors.

“There is no one-size-fits-all approach to successfully developing and marketing a compelling new product in all markets,” said Glennon.

“The Asian market is growing rapidly and consumer demand is also surging, but this does not guarantee success of new products here. By targeting the unknown demands, providing unique solutions and promoting well-run services, marketers and producers will have the best chance for success in Asia Pacific,” he said.

The research on consumer behavior towards new products surveying over 29,000 Internet users in 58 countries shows that familiar brands have a certain impact on consumers in Asia Pacific. Most consumers wait for the products to be tested and recognized by the market and then start to use them.

Positive signals for farm produce exports

The Ministry of Agriculture and Rural Development is expecting January’s agro-forestry and fishery exports to rise 39.7 percent compared to the same period last year, hitting USD2.17 billion.

The ministry estimates key agricultural exports will be valued at USD1.17 billion, up 46.6 percent; seafood at USD376 million, up 3.5 percent; and key forestry products at USD447 million, up 46 percent.

Vietnam shipped 534,000 tonnes of rice abroad for USD259 million in January, increasing 108 percent in volume and 76.4 percent in value. But, rice prices fell 10.8 percent on average to USD458/tonne.

Last year, China was Vietnam’s largest rice consumer, importing 6.7 times its 2011 volume. Other markets including Indonesia, Singapore and Senegal all fell considerably.

Coffee export earnings rose 70.7 percent in January to USD387 million. Last year’s average coffee price hovered around USD2,120/tonne, down 3.5 percent on 2011.

The US and Germany overtook Belgium to become Vietnam’s largest coffee consumers, making up 12.5 percent and 11.6 percent of the country’s coffee exports, respectively.

Tea production maintained steady growth, with January export earnings rising 16.4 percent to USD16 million. Pakistan was Vietnam’s largest tea export market in 2012, purchasing 20 percent of total export volume. Growth was seen in most big markets, excluding Russia, Saudi Arabia, and Germany.

In January, Vietnam exported 14,000 tonnes of cashew nuts for USD88 million, up 47 percent in volume and 17.9 percent in value, and retaining its position as the world’s leading cashew nut exporter. The US was Vietnam’s largest cashew nut consumer, importing 27.6 percent of the total.

Wood products saw export earnings rise 47.3 percent to USD425 million. Seafood exports endured relatively low growth of 3.5 percent. The US was the largest importer of Vietnamese seafood in 2012, followed by Japan and the Republic of Korea.

In contrast to the gloomy forecasts for the global economy, experts predicted that 2013 would deliver success to the agro-forestry-fishery export sector.

JFE takes step for steel project

Japan’s JFE Steel Corporation has completed a pre-feasibility study for a $4.5 billion integrated steel mill in central Quang Ngai province to be submitted for governmental approval, moving a step closer to gaining an investment certificate for the project.

A source familiar with the case said the pre-feasibility study had been sent to Quang Ngai Provincial People’s Committee. “JFE will submit the study to the Ministry of Planning and Investment after Tet holidays [late February] and then other relevant authorities for further discussion,” said the source.

The move indicates that JFE continues to pursue this huge project through acquiring stakes of Taiwan-based E-United Group, which secured a site in Quang Ngai’s Dung Quat Economic Zone (EZ) for the project development, despite the risks that Eiji Hayashida, president and chief executive officer of JFE, said to come from the competition of steel mills in southern China and also in Vietnam.

“JFE is still interested in this project, even the discussion between the investors and state authorities on incentives, land and feasibility is at a bit slow pace,” said the source, adding that JFE, the globe’s sixth largest steel-maker, could acquire from 80-85 per cent stake at the project.

Both JFE and E-United Group are expecting the Vietnamese government would approve the pre-feasibility study and then issue an investment certificate to this integrated steel manufacturing project within this year.

In March 2012, JFE officially announced it had signed a memorandum of understanding with E-United Group for study the feasibility of building and operating an integrated steel factory in Dung Quat EZ. According to the agreement between two steel-makers, JFE will acquire a majority stake in E-United’s $4.5 billion project as a step expanding its business in tbe Southeast Asia region to meet the increasing demand for steel products in emerging countries.

However, in December 2012 Hayashida said the corporation was not sure if it could beat the competition with other projects built in southern China and Vietnam as well. This concern forced JFE to delay giving final decision to invest in Vietnam.

The source said through the pre-feasibility study, the investors also discuss further about the Vietnamese government’s support to help them enhance competitiveness.

The $4.5 billion steel project is the second largest integrated one in Vietnam, following Formosa Plastics Group’s $10 billion project in central Ha Tinh province’s Vung Ang EZ. The Taiwanese investor is now constructing the first phase of the 250ha, 14-berth Son Duong port, and apartments for workers, office buildings and a 427-room guest house. The firm expects to start commercial operation of this project in 2015.

Cai Mep-Thi Vai international ports inaugurated

The Ministry of Transport and the Japan International Cooperation Agency (JICA) jointly inaugurated Thi Vai-Cai Mep international port complex in Ba Ria-Vung Tau province’s Tan Thanh district.

The project is intended to form a system of consistent deep water seaports, infrastructure facilities, and modern logistics services to meet the increasing demand for transportation in the southern region.

The complex will support direct maritime routes from Vietnam to other countries and cut travel time and costs, helping speed up the relocation of ports to HCM City’s suburban areas and ease traffic pressure in the city.

The project has a total investment capitalization of VND12,891 billion, sourced from the Japan International Cooperation Agency (JICA) and the Vietnamese government.

Among the six bidding packages, the first one is building Cai Mep container port capable of receiving 100,000DWT ships, and the second one is building Thi Vai port capable of receiving 50,000DWT ships.

Addressing the inauguration ceremony, Deputy Prime Minister Hoang Trung Hai praised relevant parties, especially JICA, for completing the project on time.

This is a chance for Vietnamese engineers and workers to learn from Japan’s advanced construction technology to modernize the country’s transport system, he said.

He noted that the inauguration of the port complex is one of the first activities to mark 40 years of diplomatic ties between Vietnam and Japan.

The Deputy PM took this opportunity to thank the government and people of Japan for providing assistance to Vietnam, including the Cai Mep-Thi Vai port complex project.

More Japanese investors keen on southern hub

A seminar took place in Tokyo on January 28 to attract Japanese investment into Vietnam’s southern Long An province.

Chairman of the provincial People’s Committee Do Huu Lam said Long An is located near Ho Chi Minh City – a major economic and trade hub of Vietnam. It has an abundance of human resources, and has to date secured 477 projects worth a total of US$3.7 billion.

Long An province is striving to improve administrative procedures and perfect policies and infrastructure, Lam added.

Masaichi Ichikawa, a representative from the Japan International Cooperation Agency (JICA), said Vietnam is emerging as an attractive destination for Japanese businesses. His agency is also actively assisting the province to implement projects so as to develop industries in an environmentally-friendly manner.

Vietnamese Ambassador to Japan Doan Xuan Hung said apart from creating a better investment environment and implementing the fifth phase of the Vietnam–Japan Initiative, the Vietnamese Government is taking positive measures to curb inflation and stabilise the macro-economy to help the national economy grow.

Hung said the embassy will do its utmost to assist Vietnamese localities, including Long An, and help Japanese investors seek cooperation opportunities.

Long An’s investment environment, incentives for foreign investors, and businesses’ experience in production and trading were also introduced at the seminar.

January’s industrial production index falls

The Industrial Production Index (IPI) in January dropped by 3.2 percent from December 2012 in several industries despite the upcoming Lunar New Year, according to the General Statistics Office.

In particular, mining fell 4.7 percent and the manufacturing and processing industry by 3 percent.

The electricity industry, and water supply and waste disposal sector saw less significant declines, with 1 percent and 0.4 percent respectively.

In January, the inventory index climbed 21.5 percent compared to the same period last year.

The number of workers at industrial enterprises increased by 5.2 percent against last year, despite numerous difficulties confronting industrial production, according to the General Statistics Office.

To ease the difficulties, the Ministry of Industry and Trade is taking measures to support agriculture, forestry and fishery production along with processing industry.

Besides, it is also pushing up the restructuring of State-owned enterprises so as to improve their competitiveness and efficiency.

Australian wool producers eye Vietnamese market

Australia is seeking to develop a sustainable supply chain for its wool industry in Vietnam.

Australian Wool Innovation (AWI), the research, development and marketing organisation for the Australian wool industry, has been implementing an Out of Vietnam project since last June, aiming to develop a sustainable supply chain in Vietnam, and expand its manufacturing sector.

With Australia currently sending about 80 percent of its wool to China and becoming increasingly reliant on this country, AWI sees the need to develop a new processing and manufacturing market for Australian wool, its General Manager for Product Development and Commercialisation, Jimmy Jackson, told the English-language daily Vietnam News.

“Vietnam comes out on top in comparison with other countries,” Jackson said.

“Vietnam meets a host of essential criteria, including its low sovereign risk, its well-established textile manufacturing industry and infrastructure, a large, skilled workforce, its large and growing exports of textile products, its large trade access including a Free Trade Agreement with the US and an abundant supply of water”,  he said.

After visits and meetings with potential partners, AWI has realised that “the time is right for wool in Vietnam.”

Jackson said the country offers an alternative to relying so heavily on China as the major buyer of Australian greasy wool.

“We have received a fantastic response to this project. Apart from the 30 partners we also have four new wool spinning plants looking to invest as well as about 20 knitters.”
AWI owns the Woolmark Company, which is the world’s leading wool textile organisation.

International acclaim for Vietnam’s agricultural development

The International community has praised Vietnam’s achievements in agricultural development.

The remark was made by Minister of Agriculture and Development Cao Duc Phat after the closing of the 43rd World Economic Forum (WEF) in Davos, Switzerland, which involved globally prestigious political figures, economists and scholars.

Minister Phat told the media that the event provided a good opportunity for the Vietnamese delegation to discuss with world leaders and entrepreneurs on issues of common concern and the results of applying the Public Private Partnership (PPP) model in agriculture.

He said Vietnam is one of the 11 nations applying the PPP model in agriculture and the Ministry of Agriculture and Rural Development (MARD) is carrying out a sustainable agricultural development programme in coordination with 20 leading agricultural groups in the world.

At the Davos forum, the Vietnamese delegation attended a host of rounds of discussions on initiatives such as “A New Vision of Agriculture” and “Green Growth Action Alliance”, food security, agricultural investment and adaptation to ASEAN diversity.

The focus of discussion was on the implementation of the PPP model in agriculture to boost production, stabilize markets for Vietnamese key agricultural products and promote “A New Vision of Agriculture” in Vietnam and the world.

The agricultural PPP model has been effectively implemented in Vietnam and appreciated by the WEF and other countries as a typical model of PPP cooperation in agricultural development.

In the trial run of the agricultural PPP model, the MARD is building a new cooperation mechanism for effective investment in agriculture to ensure sustainable agricultural growth and raise farmers’ incomes.

For the implementation of the “Green Growth Action Alliance” initiative, the WEF is mobilizing financial resources from the private sectors.

Vietnam is strongly committed to integrating green growth initiatives into its action programmes on socio-economic, agricultural and rural development.

The MARD will coordinate closely with “Green Growth Action Alliance” initiative groups in Vietnam to propose projects on green growth in agriculture, Minister Phat added.

Seeking outlets for VietGap products

The National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) and the FADQDC project management have co-sponsored a conference in HCM City to promote the distribution of VietGAP agricultural products.

The FADQDC project funded by the Canada International Development Agency through NAFIQAD, and implemented by domestic agencies in collaboration with Montreal University, aims to improve food quality and safety and broaden access to agricultural products in Vietnam. After four years of implementation, the project has achieved remarkable results in finding agricultural product outlets. The project is not only focused on providing technical assistance but also on introducing and implementing production and consumption initiatives.

While attending the conference, many purchasers signed consumer contracts under the VietGAP model. Three farms and safe fruit and vegetable cooperatives were granted official VietGAP certificates. The chicken and poultry breeding model was the first to have received the VietGAP certificate since the Ministry of Agriculture and Rural Development (MARD) applied new standards to the breeding sector. A total of 12 fruit and vegetable models in Hanoi, Thanh Hoa, Bac Giang, Lam Dong, HCM City, and Tien Giang have also been granted VietGAP certificates. Apart from meeting strict safety standards, the VietGAP models are also environmentally friendly.

A recent survey of the southern region showed safe products originating from HCM City’s Phuoc An cooperative, as well as Lam Dong Province’s Anh Dao cooperative and Phong Thuy farm have been on sale at many retail stores and major supermarket franchises such as Coopmart, Big C, and Metro. A number of other companies like Rong Do Trade and Service Co, Ltd have stored a huge volume of safe products for export or domestic consumption.

Nguyen Cong Thua, Director of the Anh Dao Agricultural Production and Services Cooperative, expressed delight at potential outlets for safe vegetables, saying they are now capable of supplying 6,000 tonnes per year.  Some companies have ordered in advance, but he is not sure to fulfill all orders.

He said the cooperative will expand its cultivation area by 15 percent to meet market demand. He was glad to see farmers actively engaging in the VietGAP programme.

The Phuoc An Agricultural Production and Service cooperative is another case in point.  With its supply capacity of 2–3 tonnes per day, the cooperative will focus on assisting at least 90 percent of its members to meet the criteria for VietGAP certification.

Huynh Van Sang, deputy head of the Hoa Loc cooperative, said it has signed a contract to export 100 tonnes of mangoes to Japan. More companies are keen to buy its products for export to European markets. He said under the VietGAP production model, input costs are low but product prices are highly competitive. In 2013, the cooperative will double its cultivation area to 60ha and admit 106 new members.

Huu Thinh Company Director Lam Quang Khiet said his company will set up a chain of stores to bring the Hoa Loc mango to consumers. Every year, it purchases 50 tonnes of products in advance for export to Southeast Asian markets.

In seeking outlets, FAPQDC has developed a trademark recognition system for each industry, including a range of VietGAP green label logos under the motto “Safe products are the leading option”.

The Copyright Office of Vietnam has granted a certificate of ownership to the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD). Vegetable enterprises certified by VietGAP are all eligible to use the VietGAP green label logo and motto for product promotion.

Developing trademarks for Vietnamese goods in Japan

A Vietnamese trademark development association officially made its debut in Kissarazu, Chiba prefecture, Japan on January 27.

President Ngo Hung Lam, said the association aims to help Vietnamese goods, especially farm products and handicrafts, penetrate the Japanese market. To this end, it will conduct market research to make more suitable to consumer taste and market trend in Japan.

On behalf of the Vietnamese embassy in Tokyo, minister-counselor, Nguyen Phuong Hong, expressed delight at the establishment of the association. She said Japan is Vietnam’s largest Official Development Assistance (ODA) donor and investor as well.

Hong said that both nations have great potential for strengthening bilateral relations, especially in the field of economics, trade, and investment. They will mark the 40th anniversary of the establishment of diplomatic ties this year.

Hiroyuki Ogawa, Secretary General and Executive Director of the Vietnam-Japan Association expressed hope that the association will grow fast to help bring more Vietnamese goods of high quality to the Japanese market.

National economy incurs risks, say researchers

The national economy is burdened with many hidden risks and does not develop sustainably, according to economic researchers.

Presenting reports at a workshop in Hanoi on January 26, participants concurred Vietnam made a number of important achievements last year that exceeded consensus expectations.

The inflation rate was kept as low as 6.81 percent, a trade surplus was obtained for the first time since 1993, interest rates were lowered, and the stability of exchange rates was maintained.

However, economic researchers and experts expressed concern about economic instability, citing risks carried over from 2012, such as production suspensions or bankruptcy filings of many businesses, the low 5.03 percent economic growth, and high budget deficits, bad debt ratios and inventory excesses.

Researchers suggested accelerating business restructuring and stabilising macro-economic balance

The freezing of the property market also negatively impacted the national economy, reducing business’ competitive capacity. Professor Pham Hong Chuong posited that the sluggish recovery of the property market is the inevitable consequence of long-term intensive investment.

The property market enticed all resources, eliminating business incentives. Almost all medium- and large-sized enterprises and other investors scrambled for their share of the real estate action, creating the ‘market bubble’ phenomenon. When supply exceeded demand, property bubbles deflated and the market lost liquidity. The economy became stagnant.

Extrapolating ahead, researchers and experts proposed solutions to fulfil development tasks in 2013 by re-establishing macro-economic balance. Some emphasised the close correlation between business restructuring and above-mentioned balance.

They argued that businesses can only restructure in a relatively stable macro-economic environment, enabling their access to important resources such as capital, human resources, technology and markets.

On the other hand, a stable macro-economic environment can only be created by balancing payments, budget spending, and the saving-investment ratio.

Such balances are only possible when businesses have strong local and global competitive capacities. Successful business restructuring paves the way for creating long-term macro-economic balance.

Economists also pointed out that during the restructuring process, businesses cannot deal with difficulties independently, and the banking system needs restructuring as well to supply sufficient capital for the national economy.

Due to limited resources, the government should ease difficulties confronting businesses, unfreezing capital for instance, so as to generate jobs and stimulate economic growth, they suggested.

Economists said that along with aggregate demand policies, the government should introduce aggregate supply policies to achieve sustainable economic growth.

Researchers of Hanoi National Economics University recommended that the government attach great importance to developing the non-State business sector, destined to replace the State-owned business sector at the vanguard of economic growth.

They underlined the need to increase business governance capacity and both management and operational transparency. They also proposed merging weaker banks to reduce total commercial bank numbers, many of which have zero equity.

Japan leads Vietnam’s January FDI investors

Japan has topped the list of 17 countries investing in Vietnam in the first month of 2013, with its newly licensed and additional capital totaling US$157.7 million.

Its value made up 56.1 percent of total investment capital injected into the country.

Thailand follows Japan with newly granted and additional capital of US$54.2 million, representing 19.3 percent of the total.

France came in third with its newly granted and additional capital of US$20 million, accounting for 7.1 percent.

Hirokazu Yamaoka, Chief Representative of the Japan Trade Promotion Organisation (JETRO) in Vietnam, said Japan has led the list of foreign investors in Vietnam for two consecutive years and it intends to continue the trend in 2013.

According to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA), FDI disbursement in January is estimated at US$420 million, up 5 percent year-on-year.

As of January 20, the whole country had 37 investment-licensed projects with US$257.1 million in registered capital, up 293.6 percent compared to the same period in 2012.

Nine projects attracted additional capital of US$24.3 million, equal to a 25.2 percent increase on the same period in 2012.

Total newly licensed and additional capital hit US$281.4 million, up 74 percent year-on-year.

The manufacturing and processing industry attracted the most investors out of the eight investment fields. It boasted 21 new projects with newly licensed and additional capital amounting to US$202.9 million, making up 72.1 percent of January’s total capital.

It is followed by science and technology, attracting US$13.9 million in capital value.

Dong Nai, Haiphong, and Binh Duong are the three most popular destinations for foreign investors.

Foreign investors seek opportunities in Quang Ninh

Many foreign investors have shown interest in expanding investments in the northern border province of Quang Ninh.

The provincial People’s Committee has worked with a delegation from Japan’s Mie Prefecture which is seeking investment opportunities.

Head of the delegation Ono Kinichi hoped to have long-term co-operation with Quang Ninh and expressed desires to develop agricultural complex plants here.

Provincial authorities worked with leaders of Au Lac Tuan Chau Co Ltd and Thailand-based Amata Corporation on an urban project that included a research institute and a green industrial zone. It was proposed to build on 3,000ha of land in Quang Yen township.

Thousands of workers on strike, demand Tet bonus

More than 3,000 workers at the Minh Phu-Hau Giang Seafood Processing Company in Chau Thanh District in the Mekong Delta province of Hau Giang stopped work on January 27 to demand for Tet bonus.

They congregated in front of the Nam Song Hau Industrial Zone, where the company is located, and asked the company leaders to pay them a full month salary as Tet bonus, same as in last several years. The company now gives them half a month salary as bonus.

At 10am on the same day, Tran Cong Chanh, chairman of the provincial People’s Committee came to Nam Song Hau Industrial Zone, to listen to the workers.

Most of the workers then dispersed with only some staying back to directly talk with leaders of the province and the company.

Chu Van An, deputy chairman of Minh Phu Seafood Corporation, parent company of Minh Phu-Hau Giang, said that they are meeting a lot of difficulties. Not only 3,200 workers in Hau Giang but also 7,000 others are also receiving half a month salary as bonus.

However, his explanation was not accepted by the workers who still asked the company to keep their promise to give a full month salary as bonus.

Chairman Chanh said that the company should attempt to meet the requirement of laborers and proposed that the Police seek out extremists who were taking advantage of the workers to cause public disorder.

Bumper rice crop in southern region in 2012

Last year the southern region had a very successful bumper rice crop with total output of more than 30 million tons, said Bui Ba Bong, Deputy Minister of Agriculture and Rural Development, at a meeting on January 25 to review rice production in the Mekong Delta province of Kien Giang.

Cultivable area increased and so did productivity and output to yield more than 30 million tons in the southern region last year, an increase of 1.45 million tons over 2011.

The total rice output of the country was nearly 44 millions ton in 2012.

This year, Vietnam wants to maintain the present rice cultivable area, strive to increase productivity and output, improve rice quality for export and broaden rice production under Good Agricultural Practice standards.

Extreme cold conditions kill more cattle in the north

The Department of Livestock under the Ministry of Agriculture and Rural Development on January 27 said that extreme cold wave conditions in the first 15 days of January killed about 520 cattle in the northern region.

Bac Kan Province reported 150 dead cattle while Cao Bang Province lost 100.

Cattle died because residents did not prepare sufficient stocks of feed and let them to pasture out on open fields.

From last January, livestock numbers have dwindled by four percent.

Steel industry needs government support to revive

With 2012 being full of turmoil for steel companies and forecasts that the steel industry will not recover for another year, steel firms need Government support to resolve issues on capital and consumption to achieve the growth target of 3 percent.

Figures of the Ministry of Industry and Trade show that steel production reached 9.1 million tons last year, of which construction steel accounted for 5 million tons; steel pipes for 0.6 million tons; and plated sheet metal for 1.3 million tons. Whereas consumption of construction steel merely touched 4.5 million tons, a decrease of 10 percent compared to that in 2011. Steel production also dropped by 14 percent compared to the same period last year.

According to Nguyen Tien Nghi, vice chairman of Vietnam Steel Association, earlier forecasts said that steel consumption would rise by 3-4 percent in 2012, but in reality it fell by 9 percent. Despite peak period of construction, monthly consumption was lower by upto 100,000-200,000 tons compared to previous years.

Last year, Vietnam Steel Corporation (Vnsteel) only produced 2.1 million tons, down 2.4 percent year-on-year, accounting for about 77 percent of last year’s target. Despite reduction in production, the company was still suffering high inventory of 101,000 tons of steel ingots, 123,000 tons of construction steel, 4,000 tons of steel plates, and 30,000 tons of laminated steel.

Besides, lower import tariffs on steel have helped foreign-made steel to flood the local market, sending local steel producers into a difficult situation. Due to poor consumption, most steel firms have had to reduce production to avert losses while some other companies have called a halt to investment projects or expansion of plans because of a financial crunch.

Le Phu Hung, CEO of Vnsteel, said that 2012 was the toughest year ever for steel manufacturers. Tightened credit policy, frozen real estate market, and an increase in import steel had sent local steel companies into despair. Vnsteel has 41 facilities which mainly produce construction steel but 10 of them suffered loses last year. Most facilities had to lower production and adjust output, so they merely operated at 40-50 percent of their capacities. Some even ran at 30 percent capacity to maintain manufacturing and workers.

Representatives of the Southern Steel Company said that most manufacturers have been facing fierce competition with both domestically-made and foreign-made steel. Although the price of material climbed strongly, firms had to run promotional campaigns to compete with each other so their manufacturing was not as steady as before.

According to experts, several remaining shortcomings such as high inventory, reduction in capacity, and a shortage of investment capital will still weigh on steel producers.

Fortunately, some companies still managed to achieve revenue targets last year. For instance, Viet Duc Steel Company revenues touched nearly VND6 trillion; Hoa Sen Group profited VND350 billion; and Hoa Phat Group hit a profit of VND1.1 trillion. These signals showed that steel industry still has opportunities to develop amid economic difficulties. Therefore, the industry set a growth target of 3 percent.

However, this year, China Steel Sumikin Vietnam Company will join Vietnam’s steel market with a capacity of 1.2 million tons so domestic companies will have to put greater efforts to win market share.

Vu Huy Hoang, Minister of Industry and Trade said that the ministry has proposed to the Government to restructure the domestic steel industry and will coordinate with the Ministry of Science and Technology to promulgate technical barriers against imported steel to protect domestically-made steel.

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

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