Home » Business » BUSINESS IN BRIEF 3/10

Shares fall on economic fears

Shares continued to fall during yesterday’s session as a scandal that hit the banking sector continues to weigh down on the stock market. However, the decline on the bourse was slower than on Monday.

In positive developments, the HCM City Stock Exchange began applying market orders in trading from today.

Brokers can now buy or sell stocks immediately at the best available current prices, and are not restricted on the buy/sell price or the time frame in which the order can be executed.

After three months of pilot execution, the exchange officially applied this type of continuous order matching to increasing liquidity by improving conditions for both buyers and sellers in terms of order matching speed for trades.

On the southern exchange, most stocks closed unchanged from the previous session. Eighty listed shares managed to post gains but failed to boost an earlier rally of the VN-Index. The index ended yesterday 0.58 per cent lower at 384.32 points.

The VN30, representing the bourse’s top shares, reached 448.97 points after losing 0.57 per cent.

Among the 30 stocks tracked by the VN30, five blue-chips edged up, while property developer Tan Tao (ITA), financial firm Ocean Group (OGC) and PetroVietnam Finance (PVF) continued to bottom out.

The overall value of trades reached VND357.5 billion (US$17 million) on a volume of nearly 26.1 million shares.

On the Ha Noi Stock Exchange, trading was more sluggish. Market value stood at just VND136.6 billion ($6.5 million), as only 21.56 million shares changed hands.

The HNX-Index retreated 0.6 per cent to 53.94 points. Blue chips sent the HNX30 down 0.34 per cent, fetching 99.56 points.

Meanwhile, securities analysts were still pessimistic over economic conditions. “Domestic consumption remained low, as private consumption – which accounts for nearly 70 per cent of gross domestic product (GDP) – rose only 3.3 per cent in the third quarter,” said ACB Securities Co analyst Cao Tan Phat.

Based on the current condition, Viet Nam’s GDP by the end of this year would rise by only 5.1-5.2 per cent, he added.

Experts criticize provisions in business laws

Experts at a roundtable discussion in HCMC on Wednesday criticized many provisions in business laws, lamenting on overlapping and complicated regulations in the Investment Law and the Enterprise Law.

Taking the sharpest tongue is the Investment Law, which according to experts has imposed red-take burdens on enterprises. The roundtable was jointly organized by the Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Planning and Investment, and the Vietnam Business Forum.

Speakers at the meeting said the Investment Law overlaps several other laws such as the Enterprise Law, the Land Law, and the Taxation Law. As such, the Investment Law fails to improve the business environment, but even worse, it hinders business development.

One point of discussion is provisions on preferential treatment specified in the Investment Law. Speakers said incentives on taxation have been provided for in the Taxation Law, while incentives on land rent have been available in the Land Law.

Despite such facts, the Investment Law still covers these incentives, and as such, the law not only overlaps other legislations, but also causes problems for investors regarding administrative procedures.

Dau Anh Tuan, an official with VCCI’s legislation department, said regulations on business registration and project assessment in the Investment Law should be abolished as such provisions are already mentioned in other laws.

Tuan said definitions on direct and indirect investment are also vague and confusing, making investment procedures more complicated for investors.

Nguyen Viet Khoa from the HCMC Economics University said the Investment Law is a major hindrance to business activity.

Khoa suggested that regulations on investment procedures in the Investment Law should be made identical to those in the Enterprise Law to create a better environment for business registration.

Khoa even went greater lengths to call for abolishing the Investment Law altogether as part of the nation’s administrative reform so as to create a more liberal investment environment for all enterprises.

Meanwhile, Lawyer Tran Thanh Tung from the law firm Phuoc & Partners proposed transforming the Investment Law into the Investment Promotion Law, meaning the law will only center on such issues as investment policies, investment protection, and conditional investment encouragement.

The Enterprise Law, meanwhile, heaps praise from experts for improving the country’s legislation process in international integration. The law was said to have created a better legal framework that protects the business rights of enterprises and promote the entrepreneurship among the people.

However, after years of implementation, the law has also exposed shortcomings that need to be remedied.

Experts at the roundtable called for improvements of the law, including more liberal business rights for organizations and individuals, shorter time for business registration, and reorganization of State agencies overseeing enterprises.

Delegates at the event also suggested changes to regulations in the Enterprise Law so as to make it easier for enterprises to register business, as well as to make rules clearer on mergers and acquisitions.

VietinBank teams up with LotteMart

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) will provide services for South Korea’s LotteMart supermarkets according to a comprehensive cooperation deal signed by the two sides in HCMC on Thursday.

At the signing ceremony, deputy general director Nguyen Van Du of VietinBank said his bank will provide finance and banking services to the retail stores of the South Korean firm.

Under the agreement, VietinBank will issue cards and accept card payments and offer modern banking services at LotteMart supermarkets. Besides, both sides will jointly deploy marketing programs and enhance strategic cooperation to expand the supermarkets’ network across the country.

“The finance and banking market and the retail market have a close relationship with each other as retailers always need lenders to assist customers to make payment,” Pyong Gyu Hong, general director of LotteMart, told the Daily.

There are about 5,000 to 10,000 customers shopping at the supermarkets each day and most of them have yet to use cards for payment, he said, adding this is a good chance for VietinBank and LotteMart to promote their own strengths.

South Korea’s fifth largest retail group entered the Vietnamese market in 2008 and now it has two shopping centers in HCMC. The firm plans to open two more in the nation, with one in the central city of Danang and the other in the southern province of Dong Nai.

Pledged FDI capital in Jan-Sept down

With over US$1 billion of FDI capital approved this month, the total pledged FDI capital in Vietnam in the nine-month period has been raised to US$9.52 billion, declining by 27.9% year-on-year, according to the Foreign Investment Agency.

The agency said FDI capital in the processing and manufacturing sector has continued to obtain the highest proportion with 65.5% of the total. Especially, most of capital increases since the year’s beginning, at around US$3.4 billion, has been poured into this sector.

Meanwhile, the property sector has obtained the second highest capital amount with US$1.8 billion despite the domestic property market is still in distress.

However, according to authorities, the high FDI inflow of the property sector mainly resulted from a huge investment of US$1.2 billion poured into the Tokyu Binh Duong urban area project in Binh Duong Province early this year. Therefore, such high FDI capital of the property sector does not clearly indicate that investors will pour more capital into this sector.

The wholesale, retail and communications sectors have attracted over US$400 million each while that of other sectors is insignificant.

According to the Foreign Investment Agency, in the nine-month period, Japan continued to take the lead in FDI capital pledged for Vietnam mainly in supporting industries and precision engineering, with a total amount of US$4.67 billion in 203 projects.

Some other countries and territories with high FDI capital pledged for Vietnam are Samoa, South Korea and British Virgin Islands with US$889 million, US$711 million and US$611 million respectively.

Small- and medium-scale projects accounted for 90% of the total of 775 projects licensed in the January-September period. There was only one project worth over US$1 billion and 64 projects worth over US$10 million each.

The export turnover of the FDI sector reached US$52.5 billion in the nine-month period, equivalent to over 62% of Vietnam’s total export turnover.

Bayer colours fresh green development

German-invested Bayer Vietnam is eager to cultivate solutions to root out agriculture climate change issues in Vietnam.

Bayer Vietnam, specifically the subgroup responsible for the agriculture business Bayer CropScience, said that the company would continue working with Vietnam’s government, localities and farmers to apply climate-smart agriculture technologies to act as a driver of green growth for the fast-industrialising country, whose 70 per cent of population rely on agricultural activities for livelihood.

At the “Second Global Conference on Agriculture, Food Security and Climate Change: Hunger for Action” in early September 2012 in Hanoi, in which Bayer acted as the sole sponsor, Bayer CropScience in Vietnam country head Torsten Velden highlighted climate change’s impacts on agriculture in Vietnam and company’s solutions to support local farmers to ensure the sustainable development of rice crops.

According to the United Nations Development Programme’s early September-released updated climate change fact sheet for Vietnam, for the next 30 years Vietnam is ranked 23rd of 193 countries and is one of 30 “extreme risk” countries.

Without major action such as dyke reinforcements and improved drainage, a one metre rise in means sea levels off Vietnam would threat 17,423 square kilometres or 5.3 per cent of Vietnam’s total land area. Specifically, it would threaten 39 per cent of the Mekong Delta, 10 per cent of Red River Delta, over 2.5 per cent of central coast provinces, and over 20 per cent of Ho Chi Minh City.

While Bayer CropScience has a unique position with a portfolio combining leading crop protection solutions and high-performing hybrid rice seeds, the company has provided solutions and advice to farmers to minimise climate change impacts. With the aim to enabling farmers to increase output and quality in a sustainable way, Bayer CropScience Vietnam has worked with Cuu Long Rice Research Institute to introduce the ‘Much More Rice’ concept. This concept helps farmer to increase agricultural efficiency, productivity and income by reducing losses, improving stress tolerance, reducing input fertilisers and pesticides, increasing quality and maximising yields.

At the conference, Bayer Vietnam also hosted a side event to exchange ideas with representatives from the Ministry of Agriculture and Rural Development, local partners and country representatives on solutions for a sustainable agriculture in Vietnam.

Joachim Schneider, head of public affairs at Bayer CropScience AG, was the keynote speaker at the event and he shared information about Climate Change Programme of Bayer and Bayer CropScience. This programme has received a high interest from all participants. Schneider demonstrated the interconnections between climate change and agriculture, and underscored how Bayer CropScience’s complete portfolio of climate-smart solutions could help mitigate the global climate change challenge.

“Vietnam is in critical need of experience, knowledge and technologies from foreign countries, organisations and donors to build its low-carbon agriculture and implement its action programme in response to climate change of agriculture and rural development for the 2011-2015 period,” said Minister of Agriculture and Rural Development Cao Duc Phat.

According to Bayer, food security would remain a critical issue for Vietnam and the international community, given that global food production must rise by at least 70 per cent in 2050 in order to feed nine billion people. It recognised that food security, poverty, climate change, and sustainable development are closely linked, and could no longer be considered separately and that agricultural policies have an important role to play with regard to these challenges.

“As an inventor company Bayer aims at green approaches and sustainable development,” said David John Champion, general director of Bayer Vietnam.

Bayer has operated in Vietnam for more than 17 years with two current factories located in Binh Duong and Dong Nai provinces. Since September 2009, its three subgroups office staffs which are Bayer CropScience, Bayer Healthcare and Bayer MaterialScience have moved altogether to CentrePoint office building in Ho Chi Minh City as its second branch office in Vietnam.

Over US$1.3 billion FDI poured into Chan May-Lang Co EZ

As of October 2012, Chan May-Lang Co economic zone (EZ) in the central province of Thua Thien-Hue has attracted 32 investment projects, including 11 foreign owned, capitalized at US$1.3 billion.

Major economic groups have implemented projects in the EZ, such as the US$1 billion Laguna eco-tourism zone from Singapore’s Banyan Tree Company.

Thua Thien-Hue has injected more than VND1.733 billion in building technical and social infrastructure to attract investment projects. The EZ boasts the Chan May deep-water port near Lang Co Bay and Highway 1A, which can handle vessels up to 50,000 tonnes. In addition, infrastructure has been upgraded to fully tap the advantages of Lang Co beach.

The province has completed more than 80km of roads connecting the port to Highway 1A, creating favourable conditions for investors.

It has completed construction of three 110/22KV electrical transformer stations with a total capacity of 75MVA and the Chan May water plant with a capacity of 6,000 cubic metres per day and more than 20 km of pipelines to ensure a sufficient power and water supply for projects. A 5,000 cubic metre wastewater collection and treatment system has also been put into operation.

Preferential policies to attract investment in the Chan May-Lang Co EZ are also being offered, including a four year exemption from corporate income tax and a 50 percent income tax reduction for high income earners who work in Lang Co.

Seminar discusses Japanese business difficulties in Vietnam

A seminar was held in Hanoi on October 1 to review the results of a survey on difficulties faced by Japanese businesses operating in Vietnam.

Deputy Minister of Planning and Investment Dao Quang Thu said that the survey will provide a basis for his ministry’s research to improve the legal system and devise solutions to obstacles and provide better support for Japanese businesses in Vietnam.

Do Nhat Hoang, head of the Foreign Investment Agency, said that according to the survey of 500 Japanese businesses, most are encountering difficulties related to infrastructure and human resources, in addition to ponderous administrative formalities and regulations for laws, accounting, auditing, taxes, investment and business operations.

Japanese enterprises proposed that the Vietnamese Government upgrade infrastructure, provide enterprises with useful and relevant information, and offer incentives to facilitate their long-term investment in the country. They complained about power shortages during summer that has affected production and their commitments to customers.

Representatives from many Japanese businesses also mentioned tax reforms, and Vietnam’s renewed budget collection mechanism in the future. The local customs sector was also urged to improve its capacity, especially regarding a “one-stop shop” policy and e-customs.

As of the end of September 2012, Japan had 1,748 valid direct investment projects in Vietnam with total registered capital of US$28.6 billion, making it number one among the 96 nations and territories currently investing in Vietnam.

Vietnam tops Southeast Asia for beer drinking

With nearly 2.6 billion litres of beer consumed in 2011, Vietnam ranks first in Southeast Asia for beer drinking, followed by Thailand and the Philippines.

According to Euromonitor International, Myanmar was at the bottom of the list, drinking only 30.4 million litres.

The amount of beer consumed in Myanmar, Singapore, Laos, Cambodia, Malaysia and Indonesia combined equaled only half the 1.6 billion litres drunk in the Philippines.

In 2010, Euromonitor International predicted that the Vietnamese beer market would grow rapidly. The country consumed 1.6 billion litres in 2009, which was 56 percent more than in 2004.

Earlier this year, Japanese beer company, Kirin Holdings, reported that Vietnam was among the top 25 beer consumers in the world, seeing an increase of 15 percent, behind Nigeria (17.2 percent), India (17 percent) and Brazil (16 percent).

Cartel to prop up prices of coffee

On the eve of this year’s coffee harvest, Viet Nam Coffee and Cacao Association is urging banks to once again provide credit to buy up crop surpluses.

This year’s coffee harvest began yesterday, and the coffee growers group has already proposed buying 300,000 tonnes of the 2012-13 coffee for temporary stockpiles, an increase of 200,000 tonnes over last year.

Last year, the association partnered successfully with Agribank, Techcombank and Military Bank to finance purchases of about VND16 trillion (US$761.9 million) aimed at maintaining the stability of coffee prices on the market and regulating export volumes, the association said. Meanwhile, the association has also been encouraging enterprises in good financial condition to use excess capital to temporarily buy up coffee.

The association was also calling on the Government to establish a fund to regulate coffee supplies and advising farmers to avoid flooding the market and depressing prices by selling off large volumes.

Viet Nam Coffee Club general secretary Nguyen Nam Hai said local traders were competing with foreign rivals to purchase coffee for processing and export. Co-operation with farmers was therefore essential to developing strong working relationships and ensuring there were sufficient supplies of raw materials for processing, he said.

Meanwhile, coffee exports were expected to reach a record of 1.6 million tonnes this year, a year-on-year increase of 400,000 tonnes, due to increase in the world market demand, the Viet Nam Coffee and Cacao Association said.

Exports in the first nine months of this year totalled 1.36 million tonnes and earned $2.85 billion, a year-on-year increase of 36.8 per cent in volume and around 30 per cent in value.

During that period, the two leading export markets for Vietnamese coffee, the US and Germany, saw increases in terms of both volume and value, but exports to Belgium, another leading export markets, fell by half against the same period last year.

By August, Viet Nam remained the world’s largest exporter of coffee, the association said.

Overseas remittances rise in first nine months

Remittances from overseas Vietnamese to HCM City in the first nine months of the year amounted to US$2.8 billion, nearly 81.5 per cent of the figure for 2011.

In the first eight months of the year, remittances through commercial banks in HCM City accounted for 72 per cent of the $3.1 billion remitted through this channel in 2011, according to the deputy director of the State Bank of Viet Nam HCM City Branch, Nguyen Hoang Minh.

Minh said a large proportion of the remittances in recent years had been sent in the fourth quarter. Thus, total remittances for the year are expected to increase by 20 to 25 per cent compared with last year.

The managers of the HCM City remittance firm, Sacomrex, said the company had received remittances of $1.2 billion in the first eight months of the year, up by 20 per cent compared to last year.

Sacomrex’s major markets are the US, Australia and Asia, including Japan, South Korea and Taiwan, which employ many Vietnamese guest labourers.

Trinh Hoai Nam, deputy director of Dong A remittance company, said the company had already received more than $1 billion in remittances from overseas Vietnamese in the first eight months of the year.

He said the company was expected to receive between $1.4 billion and $1.5 billion in remittances this year.

In the past few years, most overseas Vietnamese remittances have been sent to rural and remote areas where families of overseas guest labourers live.

According to the State Committee for Overseas Vietnamese, the money remitted home by overseas Vietnamese in the first half of the year amounted to $6.3 billion, contributing to 70 per cent of total remittances last year.

Around 4.5 million Vietnamese, including 500,000 guest labourers, live in more than 100 countries and territories around the world.

With remittances of $8.26 billion in 2010, Viet Nam was ranked among the top nine developing countries with the largest amount of remittances sent from abroad.

Last year, Viet Nam received remittances of $9 billion, which helped make up 92 per cent of the country’s trade deficit.

Freight industry faces serious staff shortage

The logistics sector, which is growing in the country, is in serious need of personnel, according to Tran Huy Hien, secretary general of Viet Nam Freight Forwarders Association (VIFFAS).

At a workshop held last Saturday by Logistics Knowledge Company in HCM City, Hien pointed out that Viet Nam could become a cargo trans-shipment centre for populated markets because of its location on a maritime axis.

In recent years, the Government has placed more emphasis on the logistics sector, which aids manufacturing and distribution systems as well as cargo flows.

Many long-term strategies for logistic-service development have been approved, including one that is part of an overall strategy on the development of the service sector by 2020.

The aim is for the logistics sector to reach 20-25 per cent of gross domestic product (GDP) by 2020.

To achieve this, the Government has increased investment in the building of highways, airports and ports.

According to Research and Logistics Development Institute under VIFFAS, more than 18,000 people are needed for the next three years for the logistic services sector.

Manufacturers as well as trading and service businesses will be in need of one million staff with logistic knowledge by 2020.

According to VIFFAS, the current supply of human resources for the sector only meets around 40 per cent of demand, with most logistics services faced with a shortage of qualified staff.

Duong Thi Kieu Chinh, head of the Logistics Knowledge Company, said many students did not know about the field, and that universities and other organisations should provide guidance about potential careers.

A university specialising in logistics should be established in Viet Nam, according to Hien.

He said that people who wanted jobs in this sector could attend short-term training courses.

Currently, short courses in logistics are offered by the International Federation of Freight Forwarders Association, the International Air Transport Association and the institute.

The Viet Nam Logistics Review Online website recommends that the country develop a long – term strategy at a national level, including funding and technical support and the development of standards and certification.

In addition, it suggested that the Ministry of Education and Training encourage universities and colleges of economy and trade to open more logistics faculties, and help them develop standardised curricula.

Provinces with the potential for seaport services and logistics such as Ba Ria-Vung Tau Province should also create training programmes for management pesonnel and local authorities to enhance their understanding of the sector, the online website said.

Manufacturing sector index shows signs of life

The HSBC Viet Nam Manufacturing Purchasing Managers’ Index (PMI) rose from 47.9 to a five-month high of 49.2 last month, signifying some measure of stabilisation regarding manufacturing activity in the country.

An HSBC press release yesterday said that the PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 manufacturing companies.

It explained that the PMI is a composite index based on five of the individual indices: New Orders, Output, Employment, Suppliers’ Delivery Times and Stock of Items Purchased. An index reading of above 50 indicates an overall increase in that variable, and below 50 an overall decrease.

“The stabilisation of manufacturing activity in Viet Nam is a positive development, especially given the downturn of the global trade cycle and the still-fragile domestic business environment,” the release said, quoting Trinh Nguyen, Asia Economist at HSBC.

However, the PMI still signalled a worsening of manufacturing sector’s operating conditions during September, “although the rate of deterioration was only slight”, the release said.

Manufacturing output in September did not change much since August, following a solid reduction in July.

New orders decreased again in September, and this can be attributed to “subdued market demand conditions”, the release said, adding that the rate of decline in new work was “the weakest in the current five-month period of contraction.

“In contrast, the pace of reduction in new export business accelerated since the month before. Although only modest, the latest decrease in foreign orders was the sharpest recorded by the series to date,” it said.

The size of the manufacturing sector workforce also showed little change in September.

Meanwhile, “backlogs of work declined at a sharp rate that was the steepest in the short series history. The latest decrease in outstanding business extended the current period of reduction to six months”, the release said.

Purchasing activity continued to fall in September, but the rate of decline in input buying was only slight, having eased markedly for a second successive month, it said.

Companies continued to report shorter lead times from vendors, reflecting sufficient stock of inputs at suppliers.

“Average input costs faced by goods producers rose for a second successive month in September, with the rate of inflation accelerating to a five-month high,” the release noted.

It cited an “overwhelming” number of survey respondents as saying the main reason for a rise in average prices was that raw material costs had increased over the month. Some also mentioned higher fuel prices.

Despite the rise in average costs, goods producers reduced their output charges during September in an attempt to attract new business, although the rate of discounting was slight.

Hau Giang to lure investors

The Cuu Long (Mekong) Delta Province of Hau Giang plans to seek more investment from all economic sectors to meet funding needs of at least VND14-16 trillion (US$670-$765 million) a year until 2015.

Tran Cong Chanh, chairman of the provincial People’s Committee, said the province, which specialises in agriculture, had encouraged investors to pour money into bio-technology.

He said his province planned to organise activities to call for investment for the next three years.

Authorities will help investors by resolving land-clearance issues and create favourable conditions for handing over land.

They will also work to improve infrastructure in industrial parks and clusters and the traffic network throughout the province.

Chanh said from now to 2014, about 10 key investment projects would be put into operation to mark the 14th anniversary of the establishment of the province.

Despite economic difficulties, Hau Giang enjoyed a 14 per cent growth rate in the first nine months of the year.

Revenue from exports of seafood, rice and other farm produce increased strongly during the period.

Per-capita income in the province reached an estimated VND24 million ($1,148) this year.

In the first nine months of the year, nearly 250 businesses were established with total registered capital of more than VND1.1 trillion ($52.4 million).

In addition, the province has granted investment certificates to six projects with combined registered capital of more than VND700 billion ($33.3 million).

Bordering Can Tho City, Vinh Long Province on the north, Bac Lieu Province on the south, Soc Trang Province on the east, and Kien Giang Province on the west, Hau Giang specialises in growing rice and fruit trees. It is also a centre for aquaculture, industry, trade and services.

Ha Noi seeks $714m for forests

Ha Noi People’s Committee Vice Chairman Tran Xuan Viet has urged the city’s Agriculture and Rural Development Department to finalise a plan to protect and develop forests in the expanded city.

Ha Noi has 29,100ha of forest and forestry land, accounting for 0.17 per cent of Viet Nam’s forest and forestry land.

The city’s figure includes 14,000ha of forest, 5,000ha of protection forest (used to prevent erosion) and 10,150ha of special-use forest (for bio-diversity or to protect relics). Forest covers 6.94 per cent of the city area.

However, forest land has been reduced, the quality and economic value of the forest is low and forest management is poor, resulting in forest fires.

Population growth and the high demand of land for housing, industry and tourism are being blamed for the reduction in forest land. Moreover, management mechanisms for forests were said to be insufficient.

Under the plan, the city targets forest coverage of 7.3-7.5 per cent of the city area.

It also outlines measures to develop high value forest products, biotourism and environmental services.

It is expected that by 2020, forest will provide 10,000-15,000 jobs, helping to improve living standards and national security. Earnings from each ha of forest was expected to increase fourfold over the current annual VND10-15 million (US$476-714) per ha.

The Agriculture Department estimates VND1.5 trillion ($71.4 million) is needed to implement the plan, of which, 57 per cent will come from the State budget, 14 per cent from loans, 12.9 per cent from joint venture contributions and 9.1 per cent from provision fund accounts.

Twin expos set to attract 230 companies

Around 230 companies from 13 countries and territories, including Thailand, Taiwan, mainland China, Singapore, Japan and the US will participate in two concurrent exhibitions held between October 24-27 at the Sai Gon Exhibition and Convention Centre in the Phu My Hung Urban Area.

The first expo, VietnamPlas, has four sections – plastics and rubber, packaging and printing, food processing technology and label printing. The other one, Viet Nam Linkage, focuses on industrial machinery and automation.

Vinh Long Province earns $310 million from exports

The southern province of Vinh Long has fetched approximately US$310 million from exports over the first nine months of this year, marking significant turnover increases for many exports, according to the provincial People’s Committee.

The encouraging results were attributed to the provincial enterprises’ great efforts in diversifying export products, seeking new outlets and establishing closer links with co-operatives and farms to ensure raw material sources for exports.

Italy to host Vietnamese Goods Week next year

A week showcasing the finest goods Viet Nam has to offer is scheduled to take place in Italy early next year, according to the Ministry of Industry and Trade.

The event, to be held as part of celebrations marking Vietnamese Day and the 40th anniversary of the establishment of Viet Nam-Italy diplomatic ties, is expected to help Vietnamese goods penetrate the European market, the ministry said.

The Ministry believes that promoting Vietnamese trademarks could benefit businesses and consumers in their respective countries.

The week will be based at the headquarters of Coop-Italy in Torino and will also feature in other major Italian cities.

Certification granted for tree company

The Forest Products Export Company (Forexco) has obtained certification from the Forest Stewardship Council (FSC) for its nearly 1,500 ha of forest in central Da Nang and Quang Nam Province.

Forexco is the first member of the Global Forest and Trade Network in Viet Nam and the sixth company in the country to obtain certification. The trade network is a partnership led by the World Wide Fund for Nature.

Forexco and a number of other companies in Viet Nam have pioneered sustainable forest management, following a chain of custody in line with requirements of the Forest Law on Enforcement, Governance and Trade Initiative for timber exports to European markets.

“This achievement is beneficial to both environmental protection and Forexco’s business,” said Le Cong Uan, Viet Nam coordinator for the Global Forest and Trade Network.

“As a highly credible certification recognised worldwide, the FSC certificate has become necessary for timber companies to conquer demanding international markets,” he added.

Private small – and medium-sized companies often find it financially difficult to meet the technical and management requirements for FSC certification.

The Global Forest and Trade Network Viet Nam helps companies like Forexco to improve management systems to sustainable levels that meet international global environmental, social and economic standards.

Forexco first considered FSC certification in 2006 for 4,000ha of planted forest, but due to a land-use tenure issues, the project was delayed until July, 2011.

Since then, two assessments have been conducted, the pre-assessment in October, 2011 and the main assessment in August of this year.

Supply chain congress mulls new challenges

Representatives of leading companies in several sectors will discuss opportunities for Vietnamese industry in a setting of global economic uncertainty at the Vietnam Supply Chain Congress 2012 yesterday in HCM City.

Other topics discussed at the congress, which has adopted “Source. Make. Deliver” as its motto, will include indirect procurement in Western Europe, the relationship between purchasing and production and the retail distribution network in Viet Nam.

Delegates will also discuss competitive advantages from more productive distribution and improved customer service and strategies for multiple supply chains for the future.

More than 300 professionals and enterprises in the supply chain industry will attend the 3 day annual congress organised by Vietnam Supply Chain Community.

Securities firm eyes foreign ownership

Maybank Kim Eng Viet Nam wants to become the first 100-per cent foreign-owned securities company when the Government allows such status beginning on September 15.

Currently, the State Securities Commission is drafting guidelines for regulations covering the participation of foreign investors in the Vietnamese stock market. Market participants are encouraged to send comments to the commission before October 12 this year.

CEO Le Minh Tam said he was awaiting guidelines for implementation.

Maybank Group took over a 49 per cent stake in the company from Singapore’s King Eng Holdings after the Malaysian group acquired the company last Thursday.

The remaining 51 per cent of the company is held by Vietnamese shareholders.

Maybank Kim Eng Viet Nam has a charter capital of VND300 billion (US$14.5 million), which will be doubled this year by issuing new shares to existing shareholders, as decided by its shareholders in an annual meeting earlier this year.

Tengku Dato’ Zafrul, group chief executive for Maybank Kim Eng, said MBKE Viet Nam would accelerate the corporate financial consultancy activity, including advice on listing overseas, while enhancing brokerage activities.

It is the first company in Viet Nam to launch a mobile-trading application for iPhone and iPad, offering investors the option to trade-on-the-move securely, with access to real-time information.

Exports up to $113b forecast in tough year

The nation’s exports are expected to total US$113 billion this year, $4 billion over the target earlier in the year, said the director of the Ministry of Industry and Trade’s planning department, Nguyen Tien Vy, in an online meeting held yesterday to review the first three quarters of the year.

Overall growth in export turnover would likely not exceed 10-12 per cent this year due to market challenges, Vy said.

Export turnover reached nearly $83.8 billion in the first nine months, a 19-per-cent increase over the same period last year. Foreign-invested enterprises accounted for $52.5 billion, or 63 per cent of the total.

Asian markets generated 79 per cent of the country’s export turnover during the nine months. Of this figure, China accounted for 25 per cent, other Southeast Asian nations, 18 per cent, and other Far East nations, 57 per cent.

Eighteen classes of goods saw exports in excess of $1 billion in the first nine months. The textile and garment industry took the lead, with exports worth $11.25 billion; followed by mobile phones and accessories, $8.55 billion; crude oil, $6.3 billion; electronics and computers, $5.36 billion, and seafood, $4.14 billion.

Some key classes of exports, including electronics and agriculture, were unable to increase their productivity, Vy said, calling on the Government to introduce policies to support businesses during the economic downturn.

Viet Nam Cashew Association vice chairman Nguyen Duc Thanh said that cashew exports in the nine-month period grew by 39 per cent over the same period last year, but the growth was not sustainable due to stricter food safety regulations in importing countries, slower demand and the difficulties of exporters in accessing credit.

Deputy Minister of Industry and Trade Le Duong Quang said the biggest challenge facing exports were protectionist trends in key markets. Trade promotion would be key to overcoming these difficulties, he said, urging businesses to focus on markets which offer an immediate demand, such as Cambodia, Laos and Myanmar.

Meanwhile, Vy said, the nation’s imports during the nine-moth period reached $83.8 billion, an increase of 6.6 per cent over the same period last year, and Viet Nam enjoyed a trade surplus of $34 million during the period.

Foreign-invested enterprises accounted for $43.9 billion worth of imports, or 52 per cent of the total. High import turnover was seen in electronics ($9.28 billion), petroleum ($7.1 billion), and steel ($4.5 billion).

Ports, logistics need upgrading in Vietnam

The Ministry of Transport recently convened a meeting to discuss the planning and maximum exploitation of ports and logistic services in Vietnam, looking into all the weak and vulnerable areas so as to improve the port system across the country.

The Vietnam Freight Forwarding Association (Viffas) said that the Vietnam Port Association (VPA) has listed 30 ports with 166 harbors and 350 wharfs in the country.

Of these, only some that were rendered operational after 2006 are equipped with state-of-the-art loading and unloading facilities. This shortage has reduced loading capacity in Vietnam to only 50 percent compared to advanced ports in other countries in the Asian region.

Fragmented investment and out-dated equipment use are a result of laws established by the ministry whereby the central government plans and the local government provides land and issues licenses, said Nguyen Van Cong, Deputy Minister of Transport.

Sometimes, coordination between the ministry and the local government is not good enough and the execution of the project suffers. The ministry must review port planning and demand project feasibility and together with the local government revoke investment licenses of projects that do not follow regulations.

Vietnam has around 800 domestic logistic companies but most of them are small businesses and only 10 percent of these companies truly provide logistic services and the remainder just work for foreign companies.

The Vietnamese logistics industry has attracted a number of foreign investors and there are currently close to 1,000 companies that have established in the country. Vietnamese companies are only able to supply simple logistic services. About 70 percent of the market share is captured by foreign companies; hence logistic services contribute little to the country’s GDP.

The association says that Vietnamese logistic services have not yet fulfilled their potential. More than 90 percent of imported and exported commodities are transported via the sea and it is predicted that around 600 million tons of goods will be transported this way by 2015 and around 1,100 million tons by 2020. Total container-handling capacity through ports is as much as 15.2 million twenty-foot equivalent units (TEU) as of 2015, and 29.2 million TEU as of 2020.

Viffas adopted an emergency action to improve the logistics industry, for which the Deputy Prime Minister would be appointed leader of a committee to control all activities in the logistics industry.

First of all, the traffic system and logistic services supporting ports should be developed to provide roads, railways and seaways to all ports, especially deep water ports and international ports. Warehouse systems should be established in large ports and customs clearance sites for satisfying the import-export demand.

The southern province of Ba Ria-Vung Tau, which has the Cai Mep – Thi Vai International Terminal, can accommodate vessels of up to 150,000DWT, and must be developed into a logistic and maintenance service center for the country.

VPA and Viffas should adopt a transparent legal environment and clear policy mechanism to push up competition in domestic logistic companies.

Participants at the meeting said the country should strive for the sea economy to contribute around 55 percent towards the country’s GDP, after petroleum and logistics.

Air Astana opens direct flights to HCMC

Air Astana, Kazakhstan’s national airline, has signed a lucrative commercial tie-up with Vietnam to open direct flights to Ho Chi Minh City by December 2012.

According to Peter Foster, President of Air Astana, the carrier sees great economic potential in the Asia Pacific region.

International Air Transport Association IATA has predicted that Vietnam will become the third fastest growing cargo and passenger transport market in the world by 2014, after China and Brazil. In addition, Vietnam has already become a favorite tourist destination for international visitors.

Air Astana will operate two flights per week from Kazakhstan’s Almaty airport to Ho Chi Minh City, with a transit stop-over at Bangkok in Thailand.

The carrier flies to some 60 destinations throughout the world and was awarded the prestigious 4-Star rating by Skytrax World Airline.

Vietnam has now become a popular destination for international visitors, particularly for Russian tourists and travelers to neighboring countries. Previously, most Russian visitors travelled to Vietnam to avoid the freezing winter in their homeland, but now many Russians visit the coastal tourist sites of Phan Thiet, Nha Trang and Da Nang even during the summer months. This was one of the reasons that prompted Air Astana to open direct flights to Vietnam.

Air Astana President said that travelers are attracted to Vietnam’s wild and beautiful beaches, delicious food and past tragic history of struggle for freedom, independence and national construction.

State enterprises rack up estimated USD9.52 billion in bad debts    

Vietnam’s stated-owned enterprises (SOEs) have racked up an estimated VND200 trillion (USD9.52 billion) in bad debts.

The figures were compiled by Dr. Dinh Tuan Minh and were included in a report sent to the National Assembly Standing Committee on September 9.

SOEs account for up to 70% of Vietnam’s bad debts, with corporations and groups accounting for 53% of the total, he said.

The expert added that these bad debts account for 30-35% of their outstanding debts from commercial banks.

The total outstanding debts of 12 Vietnamese state-owned economic groups have climbed to nearly VND218.74 trillion (USD10.4 billion). Among these, PetroVietnam accounted for the highest proportion, with VND72.3 trillion (USD3.44 billion), followed by EVN with VND62 trillion (USD2.95 billion) and Vinacomin with VND19.6 trillion (USD933.3 million).

SOEs also account for a huge proportion of the Vietnam Development Bank (VDB)’s bad debts. Vinashin received a preferential loan of VND300 billion (USD14.2 million) at zero percent interest from the bank for salaries and staff bonuses; EVN received more than VND5 trillion (USD238 million) from the bank and Dong Banh Cement Plant borrowed VND290 billion (USD13.8 million).

Dr. Minh cited Nguyen Quang Dung, General Director of VDB as saying that, state-owned corporations and groups held 75-80% of VDB’s total outstanding loans.

SOEs are offered preferential credit so they tend to use more loans than businesses in other economic sectors, Minh commented.

He noted that SOEs will face difficulties to deal with bad debts because it is not easy for them to sell their assets or shares due the current context of economic slowdown.

Meanwhile, Vietnam’s public debt is now quite high (estimated at 54.8% at the end of 2011) and the country’s risk of a budget deficit this year will affect the Government’s support for SOEs.

(Source: VietnamNet)

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