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Southern fish catch up 43%, profits stable

Fishermen have managed a bumper catch this year due to the large quantities of fish living in the open ocean and the increased sophistication of fishing boats, the Department of Fisheries and Resources Protection has said.

They caught a total of 1.55 million tonnes of fish in the first nine months, up 4.3 per cent against the same period last year, the department, which is under the Directorate of Fisheries, said.

The southern fishing season from April to September accounted for 1.42 million tonnes.

High-value open-ocean, or pelagic, species like mackerel, scad, pomfret and tuna, have appeared in large numbers this year.

Provinces that accounted for large catches were Ca Mau, Kien Giang, Tien Giang, Ba Ria – Vung Tau in the south and Binh Thuan, Binh Dinh, Quang Binh, Nghe An and Thanh Hoa in the central region.

They exceeded their season targets by 12-25 per cent.

But profits are not much higher because of the higher fuel prices and lower fish quality and prices compared to a year ago, according to the department.

It blamed the low quality on the failure to pay attention to preservation of the catch.

The number of accidents at sea went through the roof, rising more than five-fold to 557 from 109 in the same period last year.

They included 143 cases of sinking due to strong winds and waves, nine of running aground, and 318 of engine failure. There were also 37 instances of collision.

They claimed 37 human lives. Another 124 remain missing while 425 were injured.

Fishermen recently began the northern fishing season which will last until March next year.

Speaking at a seminar held in Ba Ria- Vung Tau Province last Saturday, Deputy Minister of Agriculture and Rural Development Vu Van Tam, who is also the head of the Directorate of Fisheries, ordered the Department of Fisheries and Resources Protection to encourage fishermen to work in groups.

This would help increase the period they could stay out at sea and they could also save costs by taking turns to bring the catch to shore, he said.

He also urged provinces to persuade fishing boats to go out in groups and to collaborate for fishing and post-fishing activities — like preservation and sales of fish — at sea rather than work individually to increase their profits.

He also called on provinces to help improve the quality of fishermen’s catches and find more outlets for selling them.

To ensure a good catch in the northern fishing season, he instructed the Directorate of Fisheries to accurately indicate to fishermen the best fishing grounds.

He said the provinces have to carefully inspect fishing activities at sea to ensure the safety of fishing boats and prevent avoidable losses.

The catch is expected to be around 1.12 million tonnes during the northern season.

The country has a total of 124,411 fishing boats.

Local product market falls flat

A market of 250 stalls which opened in Ha Noi to promote Vietnamese-made products has failed to meet the expectation of Vietnamese customers.

The market being held at the Viet Nam Fair and Exhibition Centre was opened last Friday to mark sales promotion month and will close tomorrow.

Among the low turnout, some patrons said the presentation of the stalls was poor and the large number of products from China, South Korea and Japan – some of questionable quality – was disappointing.

A Market Management Department official said he could not understand how foreign products had come to be in the market, a place to promote Vietnamese products.

Many of the products were being sold at prices equal to or even higher than normal retail prices, which was surprising, given the market was advertised as offering cheaper prices.

Customer Nguyen Thi Nhung, from Hai Ba Trung District, said she was disappointed, while another visitor said she hadn’t found anything worth buying at the market.

Rice exports poised to set new record this year

Rice exports could reach a record high of 7.5 – 7.7 million tonnes this year, with shipments in the two remaining months exceeding a million tonnes, according to the Viet Nam Food Association.

Businesses had exported 6.48 million tonnes of rice for a free-on-board (FOB) value of US$2.87 billion in the first 10 months of the year, VFA deputy chairman Pham Van Bay said at a conference held in HCM City on Friday.

This represented an increase of 2.71 per cent in volume but a fall of 5.85 per cent in value over the same period last year.

Export of high-grade rice accounted for nearly half the shipments made in the first 10 months.

Countries in Asia and Africa were the main buyers of Vietnamese rice, accounting for 67.5 per cent and 24.7 per cent of the total export volume respectively.

As of October, enterprises had signed contracts to export nearly 7.65 million tonnes of rice, meaning more than one million tonnes of rice must be shipped in November and December, Bay said.

Total rice exports for the year, therefore, could reach 7.5 million tonnes or even 7.7 million tonnes, depending on new export contracts signed this month, said Truong Thanh Phong, VFA chairman.

However, enterprises have expressed concern that exporting 7.7 million tonnes of rice could push up domestic rice prices, reducing further the competitiveness of Vietnamese rice when compared to India and Myanmar.

But Le Minh Truong, general director of the Song Hau Food Company, said: “If we are too careful, we will lose the export opportunity as we did last year, when enterprises dared not sign export contracts.”

Besides, the higher price of rice would bring more benefits to farmers, he said.

Other delegates at the conference said there would be no shortage in the domestic market, given that rice is produced all year round in Viet Nam.

Phong said world rice prices are not likely to increase in the coming months because supply is abundant. Vietnamese rice will continue to encounter fierce competition in prices from India, Pakistan, and Myanmar, he said.

In addition, because of its higher purchase prices, Thailand has accumulated a large inventory, and many rice exporting countries worry that Thailand will slash prices to clear its stock, he added.

Phong said a general decline in world cereal production offered a good opportunity for rice exporting countries, including Viet Nam, to boost exports.

In the domestic market, the average price of unhusked rice in October increased to VND6,185 a kilo from VND5,970 in the previous month.

According to the Ministry of Agriculture and Rural Development, Viet Nam should produce about 42.5-42.8 million tonnes of paddy this year.

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 2.3.2.1 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.

Seasonings industry shows great potential in Vietnam

The seasonings manufacturing industry is rarely given any importance and is not even mentioned as a field of business, however, during the present economic situation it has shown that it has great potential and can be developed to suit consumer taste.

Seasoning is an essential product on the table of a normal Vietnamese family. With demand increasing more strongly by the day, and the domestic food industry developing swiftly at an annual pace of 150-200 percent in the past few years, seasoning as a product has great potential in Vietnam.

According to market forecasts, the number of consumers buying foods in supermarkets will rise by 150 percent each year as more consumers have started looking for distribution channels that supply safe and hygienic foods. The development of supermarkets will create favorable conditions for domestic seasonings market to grow robustly.

Currently, this market segment has welcomed various companies, such as Ajinomoto, Unilever, Masan, Truong Thanh, and Cholimex. Some retailers like Co.opMart and Big C even have their own product lines to attract consumers.

From 2011, seasoning granules Knorr by Unilever and Maggi by Nestle entered Vietnam’s seasonings market in tandem. Earlier, Ajinomoto and Vifon had held fierce competition for market share. According to a research conducted in 2003, Vietnamese market consumes around 10 million liters of soya sauce and about 1,500 tons of seasoning granules every year. Since then, there has been no other research in this market, but only a non-stop development of seasoning products, which makes it easy to realize that demand for the product is quite high.

There are more than 100 trade brands in the seasonings market currently. Thus, most people think that supply has met demand. However, seasoning producers say that seasonings consumption by Vietnamese families barely reaches average levels, so they can still achieve more.

According to Le Quang Thuc Quynh, Marketing Director of Co.opMart, seasonings have an impressive growth rate. In the first half of this year, sales of seasoning products increased by 80-150 percent compared to last year. Seasoning producers have also promoted creation of various convenience seasoning products for familiar dishes such as Pho and Hot Pot, with different flavors to serve every consumer.

Surveys by supermarkets showed that consumers’ preference for same products by different producers was mostly even. However, most consumers were said to choose products that are advertised a lot or showcased at eye-catching spots or run with promotional programs. Therefore, many seasoning producers said that local ones were overshadowed by foreign ones in this competition as they have not popularized their brands widely.

An advertising company revealed that the cost to advertise a new product at supermarkets and markets is never less than VND3 billion. Some brands even spent up to VND7 billion for advertisements. Thus, local seasoning producers are hardly able to compete with foreign ones due to a shortage of capital.

However, it is noticeable that most domestic seasoning producers mainly develop locally instead of nationally. But recently, Vietnamese companies have begun to take advantage of local specialties to have the upper hand. As a result, Phu Quoc and Phan Thiet fish sauce brands have won a majority of market share than other widely-advertised products. This shows that Vietnamese producers still have many opportunities to win back the local seasonings market.

At present, there are no standards to determine the class of seasoning products so the market and consumers merely distinguish by producers. Hence, they consider foreign-made products as high quality and domestic-made ones as low quality although the difference of price between the two products is marginal and price of some domestic-made products are even higher than foreign-made ones at times.

Moreover, the quality of most foreign-made products cannot be verified. Their advertisements are all hype, praising products to the skies and smearing those of rivals, counter influencing consumer sentiment. For this reason, the seasonings market is in dire need for a framework to control quality and advertising so as to develop competitively in a fair business environment.

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.

Firms continue to engage in corruption    

Up to 45% of enterprises in Vietnam bribe local authorities, according to a recent survey conducted by the World Bank.

The survey, which was conducted in 2009, was delivered at a recent anti-corruption seminar. The seminar, organised by the Central Steering Committee for Anti-corruption and the UK’s Department for International Development (DFID) focused on corruption at local level and was held in Can Tho City on November 1.

According to Tran Thi Lan Huong, a World Bank administrative expert, this rate is much higher than other countries, including Russia at 29%, the Philippines 18%, Indonesia 13% and Turkey 11%.

Most officials at the gathering said that corruption is still a major headache.

Over the past five years, the country had dealt with 1,450 cases of corruption nationwide. This meant that on average the country still had to deal with 291 cases of corruption a year.

Le Hung Dung, Vice Chairman of Can Tho municipal government said, “Corruption still remains common in several industries and is becoming increasingly sophisticated. Meanwhile, anti-corruption work remains ineffective.”

Can Tho conducted nearly 850 inspections and detected wrongdoings worth over VND15 billion (USD719,079) during the five-year period.

The city heard 18 corruption trials and prosecuted 28 offenders during the period reviewed.

Many people said that few people bothered denouncing corruption due to the lack of confidence in the authorities.

Addressing the seminar, Government Inspectorate Deputy Chief Tran Duc Luong said that Vietnam considered fighting against corruption an important task which should be strictly carried out at different levels, industries and localities.

The organisation of the seminar prior to an anti-corruption exchange was aimed to create a chance for localities, international organisations and state agencies to share experience on the issue, he added.

Vietnam’s public debts continue rising    

Vietnam’s public debts accounted for 55.4% of Vietnam’s GDP by late 2011, down 1.9% against late 2010; however, the rate is forecast to be higher in coming years, according to a government report.

The rise has been blamed on higher capital demands for infrastructure projects, especially in the context when the nation’s economic growth is expected to reach just 5.2 – 5.7% compared to the set target of 6 – 6.5%.

Japan remains Vietnam’s biggest lender, making up 17% of the country’s total foreign debts, followed by the World Bank with 13% and the Asian Development Bank (ADB) with 8%.

The report also showed that by the end of 2011, Vietnam got a total official development assistance (ODA) and preferential loan from foreign countries of around USD71.7 billion. Of the sum, USD54.1 billion is non-refundable aid. To date, USD33.41 billion of ODA has been disbursed.

The international loans have mostly been poured into electricity, petroleum, shipbuilding industry, water supply, highway, aviation, seaport and urban infrastructure projects.

According to the report, government projects using foreign loans have operated effectively and have made their debt repayments on time. By late 2011, only 55 of 580 projects which received foreign loans failed to meet their repayment schedules, which were attributed to market price changes and USD/VND exchange rate changes, particularly agricultural projects.

The government said debt repayments had been maintained at a safe level over the past ten years, accounting for less than 20% of the total budget revenues.

The government said Vietnam’s public debts would be controlled to account for not more than 65% of the national GDP by 2015.

The government would consider lending guarantees for urgent projects approved by the Prime Minister.

The government has pledged to ensure due repayment schedules would not to affect its international commitments.

PMI in deterioration zone for seven months

The October Purchasing Managers’ Index (PMI) announced by HSBC Vietnam on Thursday is still below the critical 50.0 mark, showing that the local manufacturing sector has suffered deterioration in business conditions for seven months running.

The seasonally adjusted HSBC Vietnam Manufacturing PMI posted 48.7 in October, down from 49.2 in September. Although the contraction rate in October was sharper than in the prior month, it was markedly slower than that signaled in July (which is the steepest in the 19-month series history), says a press release of HSBC.

This is the seventh time that HSBC has unveiled PMI based on the data collected through monthly surveys on operating conditions of Vietnam’s manufacturing sector. The reading above 50.0 points to improvement in business conditions, while that below 50.0 indicates decline.

Manufacturers reported further declines in output and new orders, as demand weakened on the back of a subdued domestic market and reduced global trade flows. Production fell for the seventh month in a row due to the decline in new export orders from clients in China, Japan and Taiwan.

“Weak global and domestic demand continues to weigh on the manufacturing sector; new export orders contracted at the sharpest pace since the series began. The rise of input costs did not help, as manufacturers could not pass off the costs to consumers due to sluggish demand,” said Trinh Nguyen, Asia Economist at HSBC.

“The output index level, although still signaling contraction, is stabilizing at close to fifty suggesting that the economy will likely recover towards the end of the fourth quarter of 2012,” she added.

The downturn in the manufacturing sector continued to influence levels of purchasing activity and inventory holdings during October. Reduced production requirements meant input buying volumes were cut back sharply and to a greater extent than during the prior survey period.

Stocks of purchases subsequently dropped for the twelfth consecutive month and at the fastest pace since July.

Inventories of finished goods were broadly unchanged for the fourth straight month, as input costs continued to rise. Average purchase prices rose for the third month in a row, reflecting higher costs for foodstuffs, fuels and transportation.

Meanwhile, average output prices dipped for the sixth straight month. “The pace of charge deflation remained solid, but was noticeably less marked than the severe rates seen during June and July of this year,” says the press release.

Thua Thien-Hue to assist travel firms during airport shutdown

Thua Thien-Hue Province will help tour operators carry tourists from Danang Airport to Hue City during the eight-month shutdown of Phu Bai Airport starting from March next year.

Vietnam Airlines will launch more flights to Danang during this period to meet the transport demand of tourists.

Ngo Hoa, vice chairman of Thua Thien-Hue, said when Phu Bai Airport was temporarily closed for runway repair, the province would send coaches from Hue to its neighboring city of Danang to pick up tourists. The province will soon inform travel firms of this plan, Hoa told the Daily on the sidelines of a meeting with the aviation authorities on Thursday.

Earlier, Vietnam Airlines Corporation sent a dispatch to the government of Thua Thien-Hoa, informing the province about a plan for shutdown of Phu Bai Airport. As planned, the airport will be closed in March 2013 for runway repair in 6-8 months.

Hoa said the provincial authorities had met a number of tour operators to discuss how to serve tourists during the shutdown of the airport.

At present, Phu Bai Airport receives three round-trip flights from HCMC and three others from Hanoi every day. On the peak days, there can be up to 3,000 tourists traveling from Hue to HCMC and Hanoi and vice versa.

“We will seek ways to further support enterprises so that they will not incur much loss and can maintain the growth rate of the tourism industry,” said Hoa.

Phu Bai Airport was once shut down for runway repair in May and June last year. Back then, travel firms were displeased at the local authorities for the airport shutdown upon short notice.

Thua Thien-Hue with the word’s heritage Hue Ancient Capital is one of the main destinations for tourists in the central region. The province last month welcomed nearly 2.2 million foreign and local tourist arrivals.

Major transport projects move at snail’s pace

Despite having capital for implementation, some major transport projects in southern Vietnam are moving slowly, mainly resulting from site clearance problems.

The National Highway 14 expansion project is among projects falling far behind schedule and has greatly affected people living along the highway.

Speaking to the Daily, Nguyen Van Huan, deputy director of the Ho Chi Minh Road management board, said that due to the urgency of the project, the Government has advanced funds from next year’s government bond sale scheme to finance the project. Some parts of the highway will be completed next year and the rest will be finished in 2014, he added.

According to Huan, the budget and government bonds are only sufficient to upgrade 242 kilometers of National Highway 14 in the Central Highlands, and 218 kilometers will be conducted under the build-operate-transfer (BOT) format with five sub-projects. However, the implementation progress is very slow as investors of these sub-projects fail to borrow loans.

Regarding the National Highway 20 upgrade project to serve transport of bauxite, Tran Viet Bong, deputy director of the Management Board No. 7, said that despite being kicked off last December, the project was moving slowly due to problems in site clearance.

The board will start work on three packages in Dinh Quan, Tan Phu and Phuong Lam in Dong Nai Province in the coming time.

According to Bong, Minister of Transport Dinh La Thang set a target of finishing the project in 2014. However, the project is encountering many difficulties, especially in clearing sites in residential areas.

Truong Huu Hiep, director of the Department of Transport in Lam Dong Province, said that Vietnam Coal and Mineral Industries Group (TKV) has only allocated over VND40 billion among a total of VND178 billion needed for the upgrade of Provincial Road 725, a road which transports bauxite from the Tan Rai alumina plant to National Highway 20.

30 hectares for square and park in Thu Thiem

HCMC will use 30 hectares to develop a central square and a riverside park in the Thu Thiem new urban area, according to the detailed 1/500 scale planning for the area approved on Monday.

Specifically, the central square and the riverside park will cover 20 and 10 hectares respectively.

The square will be a place where cultural exchange activities, festivals for tourists and daily activities of local residents will take place, and there will be functional facilities that existing urban area can not supply. Besides, architectural works and green trees will be highlights for the Thu Thiem new urban area.

According to the detailed planning designed by France-based Defrain Souquet Deso Associates, the construction density in the zone will be 5% at the maximum. The square’s basement will have to ensure a parking lot for at least 2,500 cars and include service works and supporting technical infrastructure.

The Thu Thiem new urban area’s management board and the design consulting firm will design a detail scheme in the next six months.

The HCMC government has asked agencies to study roads leading to the Thu Thiem new urban area so that they can handle over 500,000 people. Four roads linking to the urban area will be kicked off next June with a total investment of nearly VND10 trillion.

Salt stockpile falls, price doubles

Salt production output nationwide reached 762,035 tonnes as of October 18, nearly equal to the yield during the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).

Of the figure, 540,068 tonnes came from traditional production and the remaining from industrial production.

This year’s salt production activity is near completion, but the amount of salt inventory has dropped from last year.

As of October 18, the quantity of salt kept in stock by farmers and companies was 70,483 tonnes, or 35 per cent of last year’s stock during the same period.

Uunfavourable weather conditions have caused output to drop, leading to prices that have been twice that of last year’s salt.

Farmers in the north are selling salt for VND1,400-2,100 a kg, in the south-central region, VND1,000-1,700, and in the Cuu Long (Mekong) Delta, VND800-1,950.

In recent years, salt farmers have been affected by imported salt that has better quality and is cheaper than domestically produced salt.

This year, the country has imported 143,149 tonnes of salt, mostly from India and China.

Of the figure, 184 tonnes was imported under a quota granted by the Ministry of Industry and Trade (MIT).

Salt is imported by either complying with the MIT’s quota, which has preferential tariffs, or by buying unlimited quantities at high tariffs.

MIT granted import quotas for industrial salt that is used to produce chemicals, medicine and healthcare products.

Many salt farmers have gone out of business because many traders have preferred buying higher-quality imported salt, even with the higher tariffs that are charged, according to the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production.

With more than 3,000km of coastal line and a long tradition of salt production, the country’s area under salt production has fallen from 150,000ha five years ago to 14,157ha, consisting of 10,981ha of traditional production and 3,176ha of industrial production.

State management agencies have not issued detailed regulations to guide farmers and companies on how to produce industrial salt, experts have said.

They said that the Government should develop preferential policies and seek domestic and foreign investors already involved in industrial salt production.

The country faces a shortage of 200,000 tonnes of industrial salt a year, according to MARD.

Manufacturing, production slows

The seasonally adjusted Hong Kong-Shanghai Banking Corporation’s Viet Nam Manufacturing index was 48.7 in October, down from 49.2 in September.

The headline PMI had remained below the critical 50.0 mark for seven months running and while the rate of contraction was sharper than in the prior month, it was markedly slower than that signalled in July (which was the steepest in the 19-month series history).

Manufacturers reported further declines in output and new orders, as demand weakened on the back of a subdued domestic market and reduced global trade flows.

Production fell for the seventh month in a row, although the pace of contraction remained marginal overall. New orders and new export business both fell for the sixth consecutive month.

The decline in new export orders was the steepest in the survey history, as companies reported reduced demand from clients in mainland China, Japan and Taiwan.

Spare capacity remained available in October, as highlighted by a further solid decrease in work-in-hand (but not yet completed) volumes.

This reflected not only intentional efforts to clear backlogs of work, but also a slight increase in staffing levels. However, where job creation was reported, this was generally at those companies expanding production.

The downturn in the sector continued to influence levels of purchasing activity and inventory holdings during October.

Reduced production requirements meant that input buying volumes were cut back sharply and to a greater extent than during the prior survey period. Stocks of purchases subsequently fell for the 12th month running and at the fastest pace since July. Inventories of finished goods were broadly unchanged for the fourth straight month.

October data were consistent with a further squeeze on manufacturers’ operating margins, as input costs continued to rise at a time of reduced pricing power. Average purchase prices rose for the third month in a row, reflecting higher costs for foodstuffs, fuels and transportation.

Meanwhile, average output prices fell for the sixth straight month. The pace of charge deflation remained solid but was noticeably less marked than the severe rates seen during June and July of this year.

Average supplier lead times were unchanged over the month in October, following a 17-month period of improving vendor performance. Over 85 per cent of companies reported no change in lead times during the latest survey period.

Commenting on the Viet Nam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC, said: “Weak global and domestic demand continues to weigh on the manufacturing sector; new export orders contracted at the sharpest pace since the series began.

“The rise of input costs did not help, as manufacturers could not pass off the costs to consumers due to sluggish demand. The output index level, although still signalling contraction, is stabilising at close to 50, suggesting that the economy will likely recover towards the end of 4Q 2012.”

Half of real estate loans in default, minister says

Half of the nation’s outstanding debt related to real estate was in default, Minister of Construction Trinh Dinh Dung said yesterday.

Total outstanding real estate loans, including mortgages and construction loans, reached VND200 trillion (US$9.5 billion) at the end of August, according to figures published by the State Bank of Viet Nam.

Yet debts in the sector had now climbed to a total of about VND1,000 trillion ($48 billion), Dung said.

The nation’s real estate market had developed expansively without planning, resulting in an excess of supply, he said. There were 2,400 projects in progress in 44 cities and provinces on 71,000ha of land, he noted, with Ha Noi alone seeing 368 projects covering 20,000ha.

Inventories, meanwhile, included 16,500 apartments, 4,100 low-rise buildings, and 25,800sq.m of office space for lease.

Most of this inventory was in high-end and medium-level market segements, while property for low-income earners remained in low supply. Few properties on the market were suitable for households making less than $1,000 per year per capita, Dung said.

As the market has frozen and inventories piled up, bad debts have inevitably increased, with the stagnation having wider impacts on a number of industries, including construction, steel and other building materials. Cement inventories alone had risen to 2.57 million tonnes by the end of October.

The situation threatened to cause a crisis that would effect the security of the nation’s banking sector and the economy as a whole, Dung said.

He urged the Government to reform the legal system related to the management of construction projects, urban planning and the real estate development business.

Meanwhile, to ease inventories, banks should continue to extend credit to home buyers, especially social housing buyers, he said.

Dung also proposed that the National Assembly allow value-added tax (VAT) exemptions or reductions for first-time home buyers and to allow investors in social housing to enjoy the highest corporate income tax preferences.

He also suggested basing land use fees paid by real estate developers on their progress in selling or renting completed projects.

While State Bank chief inspector Nguyen Huu Nghia concurred that most of the nation’s bad debts were in the real estate market, the issue would resolve if the market became warmer.

State urged to help turn unsold apartments into social housing

A high level of unsold apartments have prompted real estate and economic experts to propose ways to spur the domestic property market.

However, the market lacked medium and small apartments or houses that were suitable for first home buyers.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, told an online dialogue the high level of unsold property was due to apartments being built for rich people, which were out of reach of mid- and low-income people.

Le Thuy Huong, general director of Truong Thinh Phat Real Estate Company, said apartments were not selling because the prices were too high for most people.

Also inconvenient locations, high interest rates, large apartment areas and low quality were factors against buying apartments, Huong said.

Therefore, enterprises would have to reduce prices with support from the Government, bank, contractors and material suppliers to sell the properties, she said.

Le Huu Nghia, general director of Le Thanh Company, said the State should provide market research and forecasts for the real estate industry like foreign firms used to do. Then enterprises could plan design their developments to suit the market.

However, economist Dinh The Hien said enterprises should do their own market research.

Nguyen Phung Thieu, director of the Sai Gon Gia Dinh Joint Stock Company, said the State should provide solutions for specific projects to help rescue the property market, like creating favourable conditions for enterprises to convert housing projects into social housing, which was where the demand was.

Source: VNN/VNA/VNS/VOV/VIR/SGT/SGGP/Dtinews/VGP

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