Home » Business » BUSINESS IN BRIEF 4/11

Exports to India surge thanks to FIEs

Vietnam’s exports to India have kept rising since the ASEAN-India Free Trade Agreement (FTA) came into forces in 2010, which is greatly attributed to foreign-invested enterprises (FIEs).

Vietnam exported US$992 million worth of products to India in 2010, doubling the figure in 2009, and US$1.55 billion in 2011, up 56.5% year-on-year. In the first nine months of 2012, exports to India amounted to US$1.22 billion.

In addition, Vietnam’s trade deficit with India has been falling, from US$1.2 billion in 2009 to US$754 million in 2010, US$792 million in 2011 and US$375 million in this year’s January-September period.

Tran Quang Huy, deputy director of the South West Asia and Africa Market Department under the Ministry of Industry and Trade, attributed such an export growth to the foreign-invested sector. He was speaking at a seminar on the two-year implementation of the ASEAN-India FTA held by the HCMC Department of Industry and Trade and the WTO Affairs Consultation Center of HCMC on Wednesday.

Cell phones and spare parts exported to India brought in the biggest turnover for Vietnam in 2011, accounting for nearly 24% of the total export turnover from this market. This was owing to mobile phone exports of Samsung, said Huy.

In addition, the second biggest turnover fetched by machines and equipment were mainly attributed to boiler exports of Doosan Vina.

Meanwhile, exports of pure Vietnamese items such as farm produce, coal, pepper, chemicals and wood generated quite modest turnovers.

Vietnamese exporters have not made full advantage of the ASEAN-India FTA. In the year’s first half, Vietnamese goods using C/O form Al to enjoy FTA tariff incentives when exported to India were valued at US$150 million only.

The advantageous products of Vietnam, such as apparels, leather-shoe, plastic, machines and equipment will have a slow tariff reduction schedule. Meanwhile, seafood, vegetables and processed food are in the exclusive list, meaning India does not commit to lower duties on these items.

As for pepper, tea and coffee, India has pledged to slash tax rates from 90-10% to 40-50% on December 31, 2019, heard the seminar.

Demand rises for US dollar loans

Loans in US dollars are in increasingly high demand thanks to low interest rates and stable foreign exchange rates.

Director of the Mifaco Furniture Company Dien Quang Hiep said businesses wanted loans in dollars as the exchange rate between the dollar and dong was stable, while interest rates for dollar loans were much lower than for loans in dong.

Interest rates on dong loans have begun to show signs of decreasing, however, the rates are still too high, far beyond the firm’s financial capacity. Therefore, dollar loans, especially in the short-term, are much better, according to Hiep.

Commercial banks are offering short-term dollar loans at an average annual interest rate of only 5-7 per cent, compared to 11-15 per cent on dong loans, according to a recent report from the State Bank of Viet Nam (SBV).

Director of a bank in Ha Noi, who declined to be named, also said that the exchange rate between the dollar and dong had only fluctuated slightly thanks to an improvement in the country’s foreign currency reserve, a sharp drop in the trade deficit and a crackdown on gold smuggling. He forecast that the rate would continue to be stable until the end of the year.

Due to rising demand for dollar loans and limited supply, banks are increasingly cautious about lending in the greenback and tightening rules on these loan applications.

Deputy director of the Thien Nam Lift Co Nguyen Tan Vu said his company was finding it increasingly difficult to secure dollar loans despite the firm being a regular customer at several banks and having a credit limit of $5 million.

According to current regulations, only firms that have an income stream in dollars, such as exporters, can borrow greenbacks from commercial banks.

Petrol, gas dealers slapped with fines

After three months of investigation into fraud allegations, inspectors from the Ministry of Science and Technology have fined 678 petrol and liquidified petroleum gas (LPG) dealers a total of over VND5.3 billion (US$254,000).

Violations included fraudulent metering of weights and measures, selling substandard products, and trademark violations, including companies making unauthorised and misleading use of the Petrolimex brand designation.

The announcement was made at a conference held here yesterday to review the results of inspections of over 5,200 petrol and LPG dealers nationwide. The number of distributors found in violation therefore accounted for 13 per cent of the total, including 508 petrol dealers and 107 LPG distributors.

The inspection team also revoked the licences of 56 gas dealers and 32 petrol stations, the ministry said.

The ministry’s chief inspector, Tran Minh Dung, said fraudulent measuring techniques had become more sophisticated even as the overall incidence of such fraud had seen a decreasing trend. In 2003, 29 per cent of investigated dealers were found to have committed such violations, while that fell to 18 per cent in 2008 and to 13 per cent this year.

Investigations were also conducted after several automobile fires were attributed to methanol, a low-quality petrol additive. Inspectors took 836 samples while other organisations took 1,329 samples for testing.

While inspectors discovered two samples mixed with the additive, it was difficult to take action as Viet Nam lacks standards or specific regulations on petrol additives. Fines of just VND300,000-500,000 ($15-25) were also too low to deter further instances, Dung said.

Gold demand falls as banks gain time for deposits

The demand for gold on the local market tumbles as banks are no longer in a rush to buy the precious metal to spur their liquidity, said the key trader of the benchmark gold SJC.

Nguyen Cong Tuong, deputy sales manager of Saigon Jewelry Company (SJC), said gold trade between last Friday and Wednesday hovered around 600 to 700 taels a day compared to 1,000-1,500 taels a day earlier. A tael equals 1.2 troy ounces.

On Wednesday, however, saw gold trade rise to some 1,000 taels owing to the price fall, he said, adding purchasers on Wednesday were mainly individuals rather than banks, who have slowed their purchase so as not to chase the gold price higher.

Banks in the city shared the view.

Nguyen Thanh Toai, deputy general director of Asia Commercial Bank, said his bank’s gold liquidity has much improved, and is now short of less than 100,000 taels. The bank no longer steps up buying to ease the market demand, as the central State Bank of Vietnam have given banks until June 30 rather than November 25 to attract gold deposits and to buy in so as to ensure their gold positions.

ACB has also cut the interest rate for gold deposits to 0.5% a year from the previous 1.4%-1.6%.

As the demand fell, the gap between local and global gold prices has been narrowed to around 2.6 million a tael compared to over VND3 million that had persisted over the past many weeks.

The local gold price on Wednesday declined to under VND46 million a tael before climbing back to VND46.13 million in the afternoon, while the global price in Europe on Wednesday rose US$10.2 to US$1,719.1 a troy ounce.

WTO commitments may force import tariffs down

The Ministry of Finance (MoF) has put up for debate possible amendments to import tariffs next year under the World Trade Organisation commitment.

Comments have been sought from officials and industry on cuts to 208 tariff lines of 0.29-25 per cent, with an average rate at 2.76 per cent, MoF’s Tax Policy Department director Ngo Huu Loi said.

Under the ammendments, the current rates of 48 per cent and 78 per cent would be replaced by 14 tax levels, ranging from 2 per cent to 71 per cent.

For example, automobile import taxes would be reduced by 4 percentage points and several kinds of imported wines would be reduced by 3 percentage points.

Many other products would also enjoy tax cuts, such as fishery products, cosmetics and digital cameras.

Meanwhile, Viet Nam has reduced the export tax on 24 categories of metal scrap every year since 2007 – when Viet Nam joined the WTO – until this year, the final year scheduled for tax cuts.

Hungary sees Viet Nam as strategic partner

With its foreign policy of “Opening to the East”, Hungary sees Viet Nam as a strategic diplomatic partner in the Asian region, Peter Szijjarto, State Secretary for Foreign Affairs and External Economic Relations said at a Hungary-Viet Nam Business Forum held yesterday in HCM City.

The forum was organised by the Ministry of Industry and Trade’s Trade Promotion Agency, the Hungarian Embassy and the Hungarian Investment and Trade Agency.

Szijjarto noted that two-way trade had increased from US$70 million in 2010 to $82 million last year. Hungary exported $48-50 million and Viet Nam, more than $30 million.

However, he added that it had yet to match the two countries’ trade potential.

“Bilateral trade is expected to rise to a three-digit figure in the near future,” Szijjarto said.

“The economic crisis has changed everything. Apart from traditional markets, Hungary has to seek new partners, and Asian countries are target destinations,” he added.

Viet Nam’s explosive, economic growth gives Hungarian companies exposure to an emerging market in Southeast Asia.

Despite global economic hardships, a steady GDP growth rate of more than 5 per cent for the last decade had made the country attractive for Hungarian businesses looking to expand their product and service offerings in Asia.

Szijjarto said Viet Nam should implement solutions to promote production and create more jobs for labourers, as Hungary has done.

In Hungary, the Government has promoted productions and created more jobs by reforming the tax system with a reduction of corporate income taxes and labour income taxes.

It has made an effort to control public debt and diminish administrative procedures to encourage investment.

At the forum, Peter Farago, chief advisor to the chairperson of the Hungarian Investment and Trade Agency, said HITA’s focus was on supporting foreign trade of Hungarian small – and medium-sized enterprises. It also had encouraged and helped foreign enterprises invest in Hungary.

Smaller companies have been one of the largest beneficiaries of growing economic ties between Hungary and Viet Nam. They are the backbone of growing industrialised nations.

SMEs from Hungary have been eager to set up joint ventures with Vietnamese partners in technology and are more directly targeted towards software development and information communications.

Hungary’s central European location and recent admission into the EU gives Vietnamese companies a foothold into the 450 million citizens of the EU. The World Bank’s “Doing Business Survey” ranks Hungary as one of the most business-friendly countries in its region.

Le Huong Giang, deputy director of the southern region’s Investment Promotion Centre under the Foreign Investment Agency of the Ministry of Planning and Investment, said Viet Nam had encouraged foreign investment in fields such as human resources, infrastructure, hi-tech, health and education.

According to the United Nations Conference on Trade and Development, Viet Nam was ranked as one of the top-eight priority-host economies for FDI in the conference’s World Investment Prospects Survey for the 2010-12 period.

Currently, the number of Hungary’s FDI projects remains modest, but Giang said she expected to see more investment in Viet Nam in the future.

The forum was held on the occasion of an official visit by Peter Szijjarto and a 50-member delegation.

Hungarian businesses operating in environmental protection, water management, information technology, agriculture, and education and health care attended business-to-business meetings.

Szijjarto said during his visit, the two sides reached a consensus on a number of specific measures to foster bilateral cooperation in the future, including starting new projects using the Hungarian Government’s conditional preferential credits for water-supply projects in central Quang Binh and Ha Tinh provinces and a population e-management project in northern Hai Phong Port City.

Co-operation in health also has a special significance to bilateral ties, which was marked by the signing of a contract between Can Tho City and the Kesz Novotrading partnership, to build the Can Tho Tumour Hospital worth 60 million euros. Construction is expected to begin by the middle of next year.

EVN lacks investment capital despite consumer price rises   

The State-owned Electricity of Vietnam (EVN) is currently short of nearly VND20 trillion (USD958.77 million) for this year’s investment plans.

To date, EVN has raised over VND54 trillion (USD2.58 billion) for investment projects this year, meeting around 73% of total demand.

The group is also facing difficulties in reaching agreements on power transmission lines and site clearance for several projects.

In the first ten months of this year, EVN pumped VND54.15 trillion (USD2.59 billion) into investment projects, meeting 74.1% of the annual target.

The group spent VND14.52 trillion (USD696.06 million) on paying interest and contributing to power projects during the period. The group, however, has not yet made public its total loans and interest and the name of its creditors.

EVN has just announced that it owes VND14 trillion (USD671.14 million) to the state-owned Vietnam Oil and Gas Group (PetroVietnam) and VND1 trillion (USD47.93 million) to the state-owned Vietnam National Coal-Mineral Industries Group (Vinacomin).

EVN said electricity revenue reached VND87.7 billion (USD4.2 million) in the first nine months of this year, up 11.85% from a year earlier.

The group is said to have made an additional electricity revenue of over VND3.7 trillion (USD177.37 million) after the power price hike on July 1.

Even though EVN has been allowed to adjust power prices on a quarterly basis and benefited from lower production costs, power prices are unlikely to ever fall.

Under the government’s Decision 854/QĐ-TTG, EVN was encouraged to concentrate on becoming profitable during the 2012-2015 period.

ADB plans to provide Vietnam with USD3.9-billion loan   

The Asian Development Bank (ADB) plans to lend Vietnam up to USD3.9 billion in the 2012-2015 period, said ADB’s Country Director in Vietnam Tomoyuki Kimura.

The figure is almost the same to the bank’s commitment for the country for the 2007-2010 period, said the bank official at a press conference held in Hanoi on October 31. He added that, during this phase, ADB will also offer Vietnam non-refundable aid of USD24.6 million.

According to Kimura, ADB plans to give Vietnam USD943 million for 2013 and 2014 and USD760 million in 2015 from its ordinary capital resources (OCR). The country will also receive USD385 million in 2013 and 2014 and USD395 million in 2015 from the bank’s Asian Development Fund (ADF).

He, however, noted that the real loan allocation from ADF for Vietnam in the 2013-2014 period will depend on the efficiency of the implementation of existing ADB-funded programmes in the nation. It means that if the current programmes show limited efficiency, the allocation will be reduced for even stopped.

Between 2012-2015, the ADB loan will focus on Vietnam’s six core areas: education, energy, finance, transport, water supply, and agriculture, natural resources and the environment. The transport sector will be the largest beneficiary, receiving 34% of the USD3.8 billion in total. The energy sector will receive funding for five projects worth USD700 million, while the environment sector will receive USD340 million.

The loans are aimed to help Vietnam to achieve inclusive growth and environmental sustainability and enhance economic efficiency, in which inclusive growth will be reached by improving infrastructure and rural development, improved access to economic resources and support to education.

Counterfeit drugs sales run rampant  

International experts discussed the issue of the production and trading of fake medicines in many regions in the world at a conference held on October 29 and 30 in Hanoi.

Hanoi’s Drug Administration hosted the event in conjunction with the Ministry of Health and similar agencies from Laos, Cambodia, France and Thailand. It was found that a large amount of fake or low-quality drugs have been sold and recalled.

Not only fake forms of common drugs, such as Tanganil, for the treatment of  vertigo, Mobic tablets for the short-term treatment of painful osteoarthritis are illegally made, but other specialised drugs such as Vastarel, for chest pain and Dogmatil, mental imbalances, have been on the market.

Colonel Long Sreng, Chief of the Interior Ministry’s economic police unit said that they just seized 22 tonnes of fake drugs and 516 tonnes of extremely low-quality foods being prepared for transfer into Vietnam. According to Cambodian police, many of these products originated from China and were meant to go through Vietnam en route to Cambodia.

Currently many people buy Viagra over the internet, not knowing that most of these drugs are fake. The WHO has reported that about 2.5 million people in Europe are using fake Viagra. The organisation further said fake drugs make up about 10% of the world’s market.

The Vietnam National Institute of Drug Quality Control said that in 2011, they discovered 31 different kinds being sold. After 48,261 drug samples were sent for testing 940 did not meet the standards.

According to regulations, after the discovery of low quality medication, the Vietnam Drug Administration or the local department of health must immediately issue a ban on that drug on hospitals, pharmacies and enterprises to purchase them. But the system has been slow in action and many of these drugs slipped through the cracks.

Ph.D Truong Quoc Cuong, head of Vietnam Drug Administration said all of the drugs imported to Vietnam are regularly checked and will be recalled if they are found to be unsafe. However, he said, it is hard to control all the new types of drugs on the market, since many of the bad effects are not known until patients have experienced them.

Sales promotion month kicked off

Shoppers in the capital city now have the chance to buy high-quality products at discounts ranging from 15 per cent upwards, the Ha Noi Industry and Commerce Department promised yesterday at the launch of sales promotion month at the Viet Nam Exhibition and Fairs Centre.

During the sales month, which started yesterday, 300 businesses, supermarkets, and commercial centres have committed to selling discounted products at 1,000 stalls around the city.

The Fivimart supermarket chain will offer a 50 per cent discount on 2,000 items (including food and domestic appliances) every weekend this month.

The campaign also includes a market gathering 250 stalls run by big domestic producers like Garment Company 10, Thuong Dinh Shoes and Vissan Foodstuff. The market opens from today to next Tuesday.

Major supermarkets including Big C, Hapro and Fivimart will bring goods to workers in the outlying district of Dong Anh. Daily necessities such as canned food, cooking oil, sugar and milk will be transported to serve customers in the districts of Thanh Tri and Gia Lam.

Switchboard 04.1081 operating from 7am to 9pm is providing information about the promotion stalls and receiving responses and recommendations from customers.

The big sale promotion campaign aims to stimulate consuming power and encourage people to use products made in Viet Nam.

Year end sees dull calendar sales in country

There had been hope earlier that calendar sales would go up slightly by 5-10 percent this year as compared to last year, however, sales continue to remain dull throughout the country.

Manufacturers usually release their new designs of calendars early in November, as the last months of the year are peak sale season for annual calendars.

The current economic downturn has greatly affected the market, and although many stores have launched very tempting promotional programs, so far only a few customers have placed orders.

The order volume this year is only one-third what it was last year.

Along Nguyen Thi Minh Khai Street, many book stores have displayed their stocks. At the Youth Store, owner Thuyen said he plans to offer a discount of 40 percent on large orders for smaller calendars and 20 percent for the bigger ones.

Many shop assistants in Tran Hung Dao and An Duong Vuong Streets in District 5 and on Le Van Sy Street in District 3 said people just browse around to see designs and ask prices but very few place orders. Thuy, manager of Pham Thuy Shop in Nguyen Thi Minh Khai Street, said her store has displayed the product for more than a month but only foreigners and companies have made purchases.

Designs of calendars this year are not much different to last year’s, which mostly center around the country’s scenery; bonsai flowers; feng shui designs in gold and silver items; various gods symbolizing happiness, wealth and longevity; and pictures of internationally well-known celebrities.

Small and medium-sized calendars are priced at VND16,000 (US$0.7) to VND20,000 ($0.96) while larger ones range from VND400,000-500,000 ($19-24).

Shop assistants said that this year people preferred the weekly calendars with designs of nature. Every year enterprises, commercial banks and insurance companies placed orders in bulk, but this year there are few clients.

Sensing the decreasing purchase trend, the Department of Publishing under the Ministry of Information and Communications has reduced the quantity  from 280,000 to 230,000, investing only about VND4 billion. As investment this year is risky, publishing companies are very worried about recovering costs.

At present, there is a paradox with most shops offering discount on large orders while retailers are being neglected. Vietnamese traditional notion is that a house should have one block calendar from which the first sheet on the first day of the New Year can be torn off to wish for a year of prosperity, happiness and health. But this tradition is fading fast as time passes by.

Mrs. My in District 8 in Ho Chi Minh City said she has rarely bought one for herself as usually friends gift them to her every year. One calendar can cost up to VND200,000, which is quite high for her.

In previous years, customers only paid attention to design and ignored the genuineness of the product, readily accepting fakes as long as they looked attractive. However this year, people are rejecting fake products and seeking quality in what they spend money on.

Inventory decreases but still high

According to the Ho Chi Minh City Department of Industry and Trade, the industrial manufacturing index in October rose by 7.2 percent compared to the previous month, and by 7.6 percent compared to the same period last year.

The industrial processing sector surged by 7.3 percent over the previous month, and by 7.5 percent over the same period last year. The 10-month industrial manufacturing inched up 4.3 percent year-on-year, of which industrial processing sector climbed 4.1 percent.

Among 57 manufacturing industries, 32 industries posted an increase higher than in the same period last year. Dairy manufacturing added 13 percent; printing industry 12.5 percent; beer and malt manufacturing industry 11.2 percent; electronic spare parts 9.7 percent; and medicines and pharmaceuticals 8 percent.

Meanwhile, motor vehicle manufacturing dropped 14.8 percent; cement, lime, and gypsum 6 percent; cigarette 4.9 percent; and footwear 4.2 percent.

Accordingly, inventory has been decreasing but still remained high. The inventory index of the industrial processing sector in October soared 20.3 percent compared to the same period last year. It was 21 percent in August, and 20.89 percent in September.

Countermeasures to curb smuggling of poultry: Dep PM

Because of a growing concern over the spread of bird flu in the country from infected smuggled poultry, Deputy Prime Minister Nguyen Thien Nhan held a meeting with related agencies to come up with countermeasures to control or stop smuggling of poultry from China.

Speaking at the meeting yesterday, Dep. PM Nhan warned the Ministry of Agriculture and Rural Development as well as local authorities to control sales of illegal poultry and totally destroy any infected consignments after testing, to curb the avian flu pandemic.

Illegal transport of poultry without proper quarantine or quality certification from China into Lang Son and Quang Ninh Provinces has increased the seriousness of the avian flu pandemic, in which new and more dangerous virus strains have appeared.

Accordingly, the Dep. PM asked the Ministry of Industry and Trade and Hanoi authorities to crack down on sales of smuggled poultry in Ha Vi Market in Hanoi, and simultaneously adopt measures to ensure adequate supply of water-fowl for customers, so as to avoid a slump in the market or an increase in prices in the last months of the year.

Hanoi authorities should also warn the average citizen of the harmful effects of illegal smuggled poultry that has not been tested.

The Ministry of Public Security should also play a key role in the fight against cross-border smuggling which is facing numerous difficulties since smugglers use trackers through forests or across mountains, to escape detection.

The Ministry of Industry and Trade has been asked to submit a project to combat smuggling of poultry across border crossings to the Prime Minister before November 30.

At another conference on combating and controlling the spread of infectious diseases in cattle and poultry, deputy minister Diep Kinh Tan stressed that from now until the beginning of 2013, avian flu is likely to spread widely because of the wet weather. Therefore, the local health watchdog should not be lax in taking precautions or else the pandemic will leave immense amounts of damages for farmers in the region.

Diep Kinh Tan, Deputy Minister in the Ministry of Agriculture and Rural Development stressed the above at a conference held in the Mekong Delta.

Authorities in the Mekong Delta must continue the vaccination campaign as it has been quite effective in the past, with no new reported cases of the C virus strain that has recently spread in many provinces in the north including Hai Phong, Ha Tinh, Ninh Binh, Nam Dinh, Bac Kan, Thanh Hoa and Quang Ngai.

As of now, the country has had to import 10,000-13,000 tons of chicken meat, according to the Department of Animal Health. At the moment purchase power is still weak but this may improve in the last months of the year.

Qualified farm experts must be hard to find

An official of the Ministry of Agriculture and Rural Development shook his head sadly at a recent conference and told Ha Noi farmers there was no hope of creating a market for vegetables that contained no pesticides or other production poisons.

His reply left them puzzled, especially since several stores in Ha Noi and HCM City are already selling chemically-free, organically grown fruit, vegetables, chicken and pork. It seems that customers do not mind paying an extra 10 or even 20 per cent for food as pure as it was 60 years ago before farming with chemicals started to seduce governments and people throughout the world.

Using hundreds of billions of dong in State financial assistance, farmers in northern provinces have developed nearly 15,000ha of market gardens producing safe vegetables. However, when they try to sell them, they are on their own. Most of the projects fail to include marketing, a vital piece of reality.

Other farmers share the same fate. Earlier projects helped hundreds of dairy farmers raise milk cows. Each received assistance of VND14 million (US$666) per milk cow. However, sales were low because there had been no promotion.

Similarly, many farmers in southern provinces received financial aid to grow fruit according to Global Good Agricultural Practices in the hope it would boost their exports. However, they could not obtain export contracts and had to cease specialised farming because it was costing them too much.

Although money keeps being funnelled into raising the quality and quantity of agricultural products, it seems little or nothing is earmarked for developing markets for better, safer products.

I totally agree with the leader of a large farm export company who said that authorities only cared about spending money on equipment, materials and technical issues when implementing projects, not marketing. However, as we all know, sales are the key to the whole farm investment process. Without sales, it’s pointless growing better and safer fruit, rice and livestock.

During 2009-11, investment projects in agriculture cost the State Budget a total of more than VND286 trillion ($13.6 billion). However, farmers who were desperate to sell their improved produce became the prey of traders who forced them to sell their super products at the lowest prices, sometimes for only a fourth of that paid by consumers.

Worse, many traders hoodwinked farmers into growing environmentally hazardous plants and animals, always with a promise to pay high prices. Thousands of ha of rice fields, orchards and fish farms were replaced by invasive alien species, such as yellow snails, Japanese water ferns, Mimosa Pigra (Giant Sensitive Tree), Sorghum Sundanese and various kinds of fish and reptiles. However, when the alien species started taking over, the traders vanished – with their promises, leaving the naive farmers on their lonesome. Many of their sorry victims had to shoulder heavy debts and were forced to give up farming.

Viet Nam is a country with a long, long history of successful agriculture. It still employs more than 70 per cent of the nation’s workers and last year earned more than $20 billion in exports alone. However, according to an Oxfam report published in October, poverty continues to be a predominantly rural phenomenon with 90 per cent of Viet Nam’s poor people living in rural areas. Agriculture remains the largest employer of the poorest people in the country. More than 9 million farming households survive on less than half a ha.

Farmers are often left without markets. They fall into the vicious circle of growing plants and animals that attract few customers and occasionally seek newer breeds or seeds for the next season.

So why do project developers and the authorities ignore the marketing of all these new products after investing in them? Is it really possible that they just sit in their offices and plan everything, but leave farmers to manage the consumption market by themselves?

Why don’t the authorities study the real demands of the agricultural market before deciding where and what to invest in? Farmers, particularly in Viet Nam, have always been primary producers. This means they are generally not skilled at selling their products competitively – and are not expected to. This is the traditional job of the middle men, the traders – and the retailers.

Maybe this simple fact has escaped the bureaucrats pushing the pens, I don’t think these so-called experts should start any investment projects without completing their home work. Farmers should not, again, become the poor victims of the urban class. And the State budget should not be wasted on half-cocked schemes that should not see the light of day.

State budget investment in agriculture is currently at 6.3 per cent, down from the 13.8 per cent of a decade ago, but it is still necessary. Comprehensive market research and well-informed vision are needed to popularise new and better farm products and procedures.

I am impressed by the suggestion that community-based organisations can help farmers get involved in the Government planning process by outlining their needs and aspirations. Farmers’ voices should be heard more.

Farmers have been the backbone of the Vietnamese nation for more than 4,000 years. If things can’t be done to improve their situation in modern times, then don’t make them worse! The hard working feeders of the nation are already busy enough dealing with climate change, pollution and losing vast amounts of land to industrial parks and golf courses.

VND20 trillion needed for EVN projects

Electricity of Viet Nam (EVN) is short of VND20 trillion (US$960 million) in funds targeted for work on electricity projects during the remainder of the year.

According to EVN’s report, the group has mobilised only VND54 trillion ($2.6 billion), which accounts for 73 per cent of its capital needs for 2012.

EVN’s 2012 development plan is part of a five-year plan that sets out targets on electricity production. Despite rising demand for power across the country, total productivity this year is 110MW lower than targeted.

According to Prime Ministerial decision 854/Qd-TTg, EVN’s productivity should reach an annual average growth of 13 per cent for the 2011-15 period.

For five years, EVN will operate 42 turbines at 20 power plants with total capacity of 11,600MW and improve more than 300 power transmission lines.

Total targeted investment for the five years is more than VND500 trillion ($24 billion). For this 2012, the amount is around VND74 trillion.

The shortfall in funds has led to calls for a delay in scheduled coal price hikes, over concerns that these price increases will lead to skyrocketing production costs for the electricity sector.

At the Ministry of Industry and Trade’s monthly review early this week, Dang Huy Cuong, Head of the Electricity Regulation Department, suggested a delay in increasing coal prices for the electricity sector.

Coal prices were scheduled to rise late this year or early next year, in what would be the third power price rise in this year.

According to Cuong, EVN’s calculation that electricity production will increase by 13 per cent next year was too high, as estimated GDP had risen at 5.5 per cent, a rate that was lower than expected.

In an interview with Nhan Dan (People) newspaper, a representative of the Finance Ministry said low electricity prices were one of the reasons for the shortfall in capital for power projects.

In addition, local investors do not have enough funds to invest in the projects and it takes time to mobilise capital from foreign sources, said the representative.

This year EVN has put into operation six turbines equivalent to 1,153MW, including turbine 5 and 6 at the Son La, Dong Nai 4 and Kanak hydro power plants. Ban Chat power plant is scheduled to generate electricity from its turbine 1 by the end of this year, with the second turbine set to begin generating power early next year.

In addition, EVN plans to start three projects with total capacity of 1,790MW. They are the Trung Son hydro power plant and O Mon I and Duyen Hai 3 thermal power plants.

Green Logistics Centre set up in Dinh Vu IZ

Today, Vietnam Container Shipping Corporation (Viconship) organised the grand opening ceremony of Green Logistics Centre in Dinh Vu Industrial Zone in northern Haiphong port city.

The centre is built in the area of 7.5 hectares in Dinh Vu Industrial Zone supplying container yard and warehouse service with the capacity of 100,000 TEU per year. The total investment of the centre is around VND168 billion ($8.4 million).

The Green Logistics Centre is invested by Viconship, which has selected Dinh Vu Industrial Zone of its strategic location and port advantages.

The land plot is opposite to the Dinh Vu general port system of 20,000 tonnes, which is an important key to the success of the project. In the meanwhile, the project takes advantages of the best tax incentives applied for economic zone and utilities connected up to the border of the land plot.

The Green Logistics Centre not only takes advantages of Dinh Vu Industrial Zone but also supplies logistics services to enterprises inside and outside Dinh Vu Industrial Zone.

After gaining success in investment attraction of phase one (164ha), Dinh Vu Industrial Zone is developing the phase two of 377 ha. Nearly 50 per cent of its phase two is occupied. The industrial zone has attracted 46 projects with the total investment of approximately $1.5 billion.

The industrial zone welcomes clients in petrochemical industry, heavy industry and general light industry such as Nakashima, Bridgestone, Shin-etsu, Chevron, PVTEX, Vinachem, Petrolimex, Dinh Vu steel, Proconco, Toyota Tsusho and Mitani.

Loud foreign investment warning

Vietnam’s investment authority is urging local businesses with investment ventures in Laos and Cambodia to pay heed to recent policy changes in these countries.

Under a Ministry of Planning and Investment’s Foreign Investment Agency (FIA) recent notice, Lao premier recently enacted an instruction saying that it stopped considering and granting new investment projects for mineral extraction and exploitation and planning rubber and eucalyptus on a national scale.

The move is to review the implementation and quicken pace of licenced projects. Time for temporary cessation in new licence provision will be from June 11, 2012 to the end of December 31, 2015.

Similarly, on May 7, 2012 the Cambodian premier enacted a decree stipulating that Cambodian government would temporarily halt allocating land for planting rubber. Accordingly, no further land area will be given to such projects until December 21, 2015.

Later in September 4, 2012 Cambodia delivered a notice on stopping wood extraction in allocated land areas hosting perennial forests except getting the government approval such as using woods to build houses for war invalids or for police in areas near the border lines.

These new policies may directly affect Vietnamese outbound investments in these two countries, according to FIA. In fact, the Cambodian government recently looked into land allocations and land lease to foreign investors, including Vietnamese investors. It argued that a vast project land has hosted perennial forests.

In this context, the MPI urged local businesses with outbound investments in Laos and Cambodia to scale up efforts to strictly observe their projects’ progress and targets and abide by Vietnamese and host country’s laws.

“This is to shield investors’ legitimate interests and avert legal risks to their projects,” according to a FIA source.

In respect to cash crop projects, Vietnamese investors were urged to carefully study land allocation procedures in the host country to ensure their projects’ legitimacy, in the meantime they should gather and keep relevant documents associated with the costs of materials and commodities they brought from Vietnam to Cambodia and Laos to protect their interests.

“The Vietnamese Investors Associations in Laos and Cambodia and Cambodia need to bring forth their supporting role to help projects run smoothly and timely detect difficulties Vietnamese investors face and deliver petitions to competent agencies in Laos and Cambodia to support investors,” said the FIA, citing that the Vietnam Rubber Industry Group needed to review entire investment projects planning rubber and cash crops under contracts signed between Cambodia Ministry of Agriculture, Forestry and Fisheries and Vietnamese businesses.

The move was to ensure the implementation of a memorandum of understanding signed between Vietnamese government and Cambodian and Lao counterparts covering investment cooperation in planning 100,000ha of new rubber areas.

By end of September 2012, Vietnam saw 214 on-going investment projects in Laos with a total committed capital of $3.45 billion.

In Cambodia by end of September 2012 there were 120 on-going Vietnamese projects worth $2.64 billion.



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