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BUSINESS IN BRIEF 7-1Dong Van Stone Plateau welcomes New Year visitors

The Dong Van Stone Plateau in the northern mountainous province of Ha Giang welcomed the first international visitors from France, the US and European countries on the first day of the Ha Giang Tourism Year 2013.

The welcome ceremony was living proof of local efforts to develop tourism, reduce poverty, and introduce the image of the Dong Van Stone Plateau to both domestic and foreign visitors.

To lure more visitors to the province, the provincial People’s Committee has directed local authorities to promote tourism activities, build tourism infrastructure, develop community-based tourism cultural villages while preserving traditional crafts and other cultural values of ethnic minority groups.

Last year, the province welcomed more than 380,000 visitors including more than 90,000 foreigners, up 15 percent compared to the previous year, and earned nearly VND400 billion in revenue.

Especially, the number of domestic and foreign visitors to the four districts of Quan Ba, Yen Minh, Dong Van and Meo Vac increased considerably by more than 70 percent respectively since they were recognized by UNESCO as Global Network of National Geoparks (GGN).

Ministries to extend interval between fuel price changes

The Ministry of Finance has proposed the Prime Minister extend the interval between the adjustments of fuel prices from the current ten days to 15 days, according to the Ministry of Industry and Trade.

The industry ministry last Tuesday submitted to the Prime Minister suggestions for amendment to Decree 84 in order to make the pricing regulations more appropriate with the reality. The industry ministry had collected three solutions from the finance ministry to price adjustment intervals.

At the moment, increasing or reducing prices for two consecutive times needs a minimum interval of ten days. The finance ministry said this interval will help align the local fuel prices with global prices, as any fall in global prices will soon translate into lower local retail prices and vice versa.

However, this method will easily cause public outcries as price hikes may be more frequent.

The second solution is to fix a 30-day schedule to change fuel prices which is consistent with the fuel reserves required to be sufficient for 30-day consumption. This means that the base price calculation is based on the 30-day cycle, but under such a circumstance, local prices will hardly be in line with global prices in a timely manner.

To harmonize fuel storage and to make intervals between price adjustments suitable, the finance ministry suggested setting the average price adjustment period at 15 days. The schedule is considered appropriate with international markets’ moves whilst ensuring local price stability.

The industry ministry also repeated the proposal that the finance ministry need to issue specific regulations on maximum commission amounts for agents, saying such information is not provided for in the prevailing law. Decree 84 just fixes the profit level and business cost at VND600 and VND400 a liter respectively from 2009.

Jetstar Pacific completes plane replacement

Vietnam’s low-cost Jetstar Pacific Airlines has replaced all Boeing B737-400 planes with new Airbus A320 aircrafts as part of its strategy to improve performance in the face of increasing competition right in the domestic market.

Jetstar Pacific has operated a fleet of all five Airbus A320 aircraft now after the carrier removed its last Boeing B737-400 from services last Monday. The airline told the Daily on the phone on Wednesday that the single-aisle Airbus plane enabled it to transport more passengers as it was configured with 180 seats while the Boeing B737 had only 168 seats.

Le Hong Ha, chief executive officer of Jetstar Pacific, said in a statement that the plane replacement proved the carrier’s efforts to better meet passengers’ needs for travel and to offer more low fares to customers.

Jetstar Pacific was able to wrap up the plane replacement within less than six months with support of two major shareholders, Vietnam Airlines Corp. and Australia’s Qantas Group in line with its shareholder reshuffling as approved by the Prime Minister in Decision 94/QD.

Jetstar Pacific started to operate as a no-frills carrier in May 2008 and now conducts more than 200 flights connecting HCMC, Hanoi, Danang, Vinh and Haiphong.

CEO Ha said the airline transported nearly 1.9 million passengers on 11,445 domestic flights last year, with an average seat occupancy rate of 91% and revenue excluding fare sales up 50% compared to 2011.

In Vietnam, another budget carrier VietJetAir currently offers domestic flights and will fly between HCMC and Bangkok from February.

Only one-fourth of Hanoi firms pay income tax

Only one-fourth of companies in Hanoi paid corporate income tax to local State budget in 2012, resulting in the capital city’s budget revenue falling short of the year’s target, according to Hanoi City’s Tax Department.

The taxman said the number of enterprises reporting taxable income is small, just 21,508 out of 81,592 registered entities, accounting for 26%.

Statistics of the department show that the tax volume recorded in 2012 was VND17.71 trillion, just equivalent to 86.7% of the 2011 amount. The year 2011 saw 23,508 companies reporting taxable income, making up 34%.

In 2012, there were 46,787 enterprises or 57% reporting losses, rising 9.4% against the 2011 figure of 42,451 entities. The loss amounted to some VND43.9 trillion, up 4% over about VND42 trillion lost in 2011.

Some 40,817 tax declaration forms or 17% showed no taxable income. The fact that many local companies had not paid the tax is one of the reasons behind the local tax department’s failure to realize the target, collecting only VND131.28 trillion, or nearly 98% of the target.

As of end-November last year, only 15,043 newly-established businesses had been granted tax codes, the tax department reported. Meanwhile, up to 12,250 firms had stopped operations, with 420 dissolving, 5,273 halting business and 6,556 missing. Tax debts of these entities are VND651 billion and the sum is unrecoverable, the department said.

In addition, thousands of businesses suspending operations have yet to perform procedures to report their status to the department.

The tax authority ascribed the lamentable situation to the fact that business and production activities of local firms have been dreary. The number of new firms is small while the number of inactive companies has been rising due to piling inventories, steep lending rates and poor business efficiency.

Meanwhile, many large State-owned enterprises in 2012 also paid smaller tax sums compared to the same period last year.

Mobile Information Company contributed roughly VND3.45 trillion or equivalent to 85% of the year-ago period’s amount, the Post and Telecom Group paid VND505 billion or 53%, while VietinBank contributed some VND2 trillion or 98.6%.

The local State budget collected VND271 billion (83% of previous year’s figure) from Maritime Bank, VND265 billion (69%) from the Vietnam Television Station, VND60 billion (55%) from Vietnam Air Traffic Management and VND89 billion (63%) from Hanoi Alcohol Beer and Beverage Company.

Vinamarine to focus investment on key seaport projects

Vietnam Maritime Administration (Vinamarine) in the next few years will focus investment on key projects in Haiphong and Ba Ria-Vung Tau that will connect with regional and international routes.

The administration is reviewing projects in line with the Government’s instruction on sea transport and sea port development.

Speaking with the Daily after the survey and business trip in Ba Ria-Vung Tau, Nguyen Nhat, director of the administration, said the administration will only concentrate on building large ports in Haiphong’s Lach Huyen and Ba Ria-Vung Tau’s Cai Mep – Thi Vai port complexes.

The administration will convert the remaining ports in the central region and the Mekong Delta into special-use ports to transport materials for thermo-power plants. Small ports that had been planned for development will not be put into this time’s zoning plan if they are found not urgent, Nhat said.

According to the Vietnam Seaports Association (VPA), seaport zoning plans of Vietnam are yet to be synchronic and have still failed to meet rising sea transport demand.

In fact, the seaports having been developed or under planning over the past time have still been inappropriate with the overwhelming presence of small ports while the number of large ports, especially ports for container ships, is scant. Therefore, several ports are short of cargo, with many of them only operating between 20% and 30% of their designed capacities.

At VPA’s annual meeting in Danang in end-August, 2012, the association proposed the Government issue incentives to attract public-private partnership investment to develop large-scale seaports connecting regions with one another in an effective way.

Vietnam now has some 266 large and small seaports, the administration reports. Among these, nine ports are able to handle 50,000 DWT-ships.

Quality of coffee export to Japan needs tight control

The Vietnam Trade Office in Japan has urged local exporters to closely control coffee quality and hygiene when exporting the farm produce to Japan as the country will impose a tighter control on quality of imported coffee.

According to the office, the volume of Vietnamese coffee products consumed in Japan increased last year, but Japan has high requirements of imported food and beverage products. In order to maintain and boost coffee export to this market, Vietnamese enterprises need to fully understand regulations in Japan.

Specifically, under Japan’s Plant Protection Act, dried clean coffee beans that have not had heat treatment are still considered fresh ones and need to comply with plant quarantine requirements. Quarantine procedures are performed at airports and seaports under the supervision of Japan quarantine control agencies.

Ground coffee and processed products are not bound by requirements of the Plant Protection Act but they are subject to safe quarantine procedures of the Food Safety Law. Specifically, ingredients of imported coffee products will be closely controlled.

Besides, Vietnamese coffee products, when exported to Japan, must undergo checks for additives, residues of pesticides and many other substances that are banned from entering Japan. Besides, coffee products imported from Vietnam need to have clear origins.

The director of a HCMC-based coffee exporter said that local coffee enterprises have focused on the Japanese market over the past few years, but shipping coffee to this market was not easy at all. Japanese consumers not only require high quality but also care about branded products.

Japan normally imports coffee beans which will then be processed and packaged by Japanese enterprises. If Vietnamese enterprises can sell processed coffee products and build their brand names in Japan, Vietnam’s coffee export value will be increased, according to the director.

The current price of Vietnam’s coffee beans exported to Japan is 10-15% higher than in EU and the U.S.

According to the Ministry of Industry and Trade, the coffee export turnover earned in Japan reached US$128 million in 2011, which is the highest in the past three years and rose by 50% from 2010.

Meanwhile, the export turnover obtained in last year’s 11-month period was US$160.47 million, up 40% year-on-year.

Vietnam to start FTA talks with Israel

Vietnam is under preparation for free trade agreement (FTA) negotiations with Israel, and once the FTA is signed, Vietnam’s agricultural products will have more chances to enter this country.

The Ministry of Industry and Trade is currently collecting opinions about issues related to the FTA with Israel.

According to the Ministry of Agriculture and Rural Development, exported and imported goods of Vietnam and Israel will not directly compete but complement each other.

Once signed, the FTA will open up more chances for Vietnam not only to export agricultural products but also to get access to modern agricultural technologies, which will help increase the competitiveness of agricultural products and modernize the agriculture, said the agriculture ministry.

Israel has offered programs to support Vietnam’s agriculture over the past years such as providing technologies of raising and breeding milk cows in HCMC.

According to the General Department of Customs, Vietnam’s export value to Israel last year amounted to nearly US$225.5 million, with seafood, cashew and coffee as three major products. Meanwhile, Vietnam mainly imported fertilizers, computers, electronic components, machines and equipment, with a total import value of over US$126 million.

Japan investment forecast to rise further

Investment of Japanese enterprises is forecast to increase further in 2013, with a focus on the items for domestic consumption and export to Asia.

Japan is the biggest investor in Vietnam last year with newly-registered and additional capital reaching US$5.13 billion, accounting for 40% of total investment commitments to the country.

At a recent meeting on investment promotion with localities, Japanese Consul General in HCMC Harumitsu Hida said that while foreign direct investment (FDI) in Vietnam in general continued to decline, investment of Japanese firms would keep surging.

The yen appreciation, labor shortage, rising labor costs and shrinking market due to population aging, plus the impacts of earthquake and tsunami, make it less favorable to do business in Japan. Therefore, Japanese enterprises are shifting their investment overseas to Vietnam, Indonesia and Thailand among others.

Vietnam should take advantage of this opportunity by further improving the investment environment, said Hida.

Sharing this view, Mitsuhiro Mori, chairman of the Japan Business Association of HCMC (JBAH), believed that in the near future JABH would grow larger than or equal to its counterparts in Thailand and Singapore as Japanese firms tend to boost investment in Vietnam.

Atsushi Uehara, general director of Long Duc Investment Co. Ltd., developer of Long Duc Industrial Park in Dong Nai, said Japan’s investment in industrial parks in Vietnam in general and in Long Duc Industrial Park in particular would at least be equal to 2012. Japanese manufacturers are seeking ways to lower production costs and expand the market, especially in the ASEAN region, he explained.

In 2013, Long Duc Industrial Park continues to focus on attracting investment from Japan. “To do this, in Long Duc Industrial Park and in Japan, we have been organizing meetings with the investors who intend to make investments abroad,” said Uehara.

According to the Japan External Trade Organization (JETRO) in Vietnam, after a period of time searching for investment opportunities in China, Japanese investors are heading to Southeast Asia and Vietnam is considered a potential destination.

According to a number of Japanese investors, Vietnam is eyed for its cheap labor, great potentials in the domestic market and a platform for export to third countries.

Previously, Japanese investors mainly focused on industrial manufacturing, processing and assembly for export in order to make use of young, abundant and low-cost labor force. However, in recent two years, Japanese investors have been present in almost all areas that Vietnam calls for investment, especially the small and medium enterprises in spare part production.

Yasuzumi Hirotaka, director of JETRO in HCMC, said Japanese firms tended to invest in supporting industries for manufacturing and service sectors. In addition, they no longer focus on processing for export, but are trying to meet the demand of the Vietnamese market and ASEAN.

Haiphong surpasses Hanoi, HCMC in FDI attraction

Haiphong surpassed Hanoi and HCMC to take over the second spot in foreign direct investment (FDI) attraction in 2012.

As of end-December 2012, Haiphong had lured US$1.16 billion in FDI, only after Binh Duong Province with US$2.53 billion, as reported by the Foreign Investment Agency under the Ministry of Planning and Investment.

The latest data of the Haiphong Department of Planning and Investment, however, reveals that the city attracted US$1.23 billion of newly-registered and additional FDI in the whole last year.

Around 95% of this sum, or some US$1.2 billion, was poured into Dinh Vu-Cat Hai Economic Zone and the city-based industrial parks, said Mai Xuan Hoa, deputy head of the Haiphong Economic Zone Authority (HEZA).

Most projects apply clean technology and invest in supporting industries, consistent with Haiphong’s orientation for investment attraction. They are mainly carried out by Japanese investors, Hoa told the Daily on the phone.

In particular, Japan’s Nipro Pharma Corporation has received an investment certificate to build a factory specializing in producing medicine and medical equipment in Vietnam-Singapore Industrial Park (VSIP) Haiphong.

The factory, worth US$250 million, will supply high-quality pharmaceutical products for export. The investor commits to apply advanced technology in production.

Other typical projects are the US$119-million high-tech printer factory of Fuji Xerox and the eco-friendly tire plant developed by Bridgestone Corporation in Dinh Vu Industrial Park with a budget of nearly US$575 million.

The large-scale projects in Haiphong get going very quickly. For example, the project of Kyocera in VSIP Haiphong was kicked off only a few months after the investor was granted an investment certificate, according to HEZA.

In October 2012, the project launched the first printers made in Vietnam that will be mainly exported. From this year, the monthly output of the factory will be 6,000 products, while the current localization rate of 20% will rise to 80-90% when stable production is achieved.

Although 2013 is forecast to be a tough year, Haiphong City still pins high hope on FDI attraction, especially investment from Japanese firms.

Haiphong is considering establishment of an industrial park for Japanese manufacturers, specializing in supporting industries, said Hoa.

Manufacturing PMI falls back below average

The Purchasing Managers’ Index (PMI) of Vietnam’s manufacturing sector after hitting the record high in November once again slipped below the neutral 50.0 mark in December.

The December Manufacturing PMI unveiled by HSBC Vietnam on Wednesday stays at 49.3, versus 50.5 in November. The latest deterioration in operating conditions mainly reflects reduced new order inflows, disinvestment of inventory holdings and stagnating production volumes.

The average PMI reading in the fourth quarter of 2012 is 49.5, up from 46.9 in the preceding quarter and the highest outcome since the third quarter of 2011. The reading above 50.0 points to improvement in business conditions, while that below 50.0 indicates decline.

This is the ninth time that HSBC has revealed PMI based on the data collected through monthly surveys on operating conditions of Vietnam’s manufacturing sector.

According to the latest survey, the level of manufacturing output was broadly unchanged during December, which was largely attributed to the depletion of backlogs of work.

Market conditions remained subdued overall, reflected in reductions in both domestic and new export orders. The level of new export business fell for the eighth month running and to a greater extent than signaled in November.

The muted performance of the sector has yet to filter through to the labor market, as highlighted by job creation being recorded at manufacturers for the third successive month in December. Although the rate of increase in payroll numbers was again only mild, it was nonetheless still one of the fastest signaled since the survey began in April 2011.

Higher employment, alongside efforts to sustain production volumes, was also a prime factor underlying the substantial drop in backlogs of work.

Weak demand and rising costs impacted purchasing and stock holding decisions in December. Input buying volumes were unchanged compared to November levels, as lower demand discouraged companies from raw material purchasing.

Meanwhile, a preference for reduced inventory holdings led to lower levels of pre- and post-production stocks.

“Average input prices declined for the first time in five months in December, although the rate of reduction was only slight. Lower purchasing costs were mainly attributed to weak demand for raw materials, especially in the domestic market,” says a report of HSBC Vietnam.

December saw average output prices go down for the eighth consecutive month. Lower factory gate prices were attributed to weak demand and strong competition.

Trinh Nguyen, Asia Economist at HSBC said: “The economy is stabilizing, as indicated by the output level. However, the economic recovery process is still in its fragile state as external demand remains weak and consumer confidence is subdued.

“Price discounting measures are being helped by a reduction of input prices. A third expansion of employment shows the resilience of the economy. Still, while things will likely improve marginally next year, significant changes to consumption behavior are not expected unless meaningful reforms take place,” she added.

Foreign capital attraction to remain positive this year

Foreign investment through both direct investment and M&A (mergers & acquisitions) deals is expected to keep flowing into the local market this year despite challenges ahead, experts said.

Economic expert Pham Chi Lan said that capital flow from ASEAN enterprises will run strongly into Vietnam to take advantage of opportunities from the ASEAN+1 market in 2015.

Businesspeople from the Philippines, Indonesia, Thailand and Singapore will continue injecting capital into various fields in Vietnam.

American investors will also arrive in the country given the Trans-Pacific Partnership (TPP) although negotiation rounds have yet to finish. Similarly, European firms will not miss opportunities of the Vietnam-EU (the European Union) Free Trade Agreement while South Korean enterprises will also knock the door.

However, speaking at a recent talk with the Leading Business Club in HCMC, the expert said the strongest investment wave will be from Japan. Last year, Japan took the lead in pledged investment in Vietnam, making up 40% in a total US$10 billion disbursed.

Concerning FDI capital attraction in 2012, Lan said it was a positive sign as the gap between FDI capital disbursement and FDI capital registration, at US$10 billion and US$13 billion respectively, was narrowed.

This proves that enterprises want to stay in the local market in long term and FDI capital is expected to be high this year, Lan added.

Hoang Kim Thoa, director of Senkim Investment Company, said that 2011 and 2012 were the show of M&A deals between Japanese and Vietnamese enterprises.

Japanese investors are strongly penetrating into the local market in various fields such as financial and banking, information technology, retail, consumer goods and food. They have expressed a hope for long-term and transparent cooperation in these M&A deals.

Recently, Bank of Tokyo Mitsubishi UFJ has acquired a 20% stake in VietinBank at US$743 million, ending the year 2012 with active M&A deals.

HCM City’s new flyover to get off ground in Tet

To avoid traffic congestion at Lang Cha Ca Roundabout in HCMC’s Tan Binh District, the city’s Department of Transport will start construction of a steel overpass at the area on February 11 or the second day of the first lunar month.

Building the work’s foundation will be carried out during the upcoming Lunar New Year holiday when the traffic volume is low as the section regularly suffers traffic congestion, said Tat Thanh Cang, director of the department.

Deploying the project during the Tet holiday will not affect local travel demand whilst speeding up construction progress, Cang told the Daily after a meeting on the construction pace of steel overpasses in HCMC on Wednesday.

The overpass’s foundation will be complete when the Tet holiday wraps up while the construction of other components that does not affect the traffic flow will be implemented afterward.

The Lang Cha Ca steel overpass project is the third to be built in HCMC. It has a length of some 240 meters and a width of 6.5 meters, with two approach roads stretching 160 meters each.

The work is designed for motorbikes, cars of nine seats and below and buses traveling from Cong Hoa to Hoang Van Thu streets and vice versa. It is set for completion in the middle of this year with a total investment of nearly VND105 billion.

The two other flyovers in Hang Xanh and Thu Duc intersections whose construction have neared completion will be complete ahead of the Tet holiday.

Besides the three flyovers, the transport department is also considering developing one more steel flyover at Cay Go Roundabout, District 11.

Bad year for large Vietnamese firms

The bad business environment has forced several large Vietnamese firms into bankruptcy this year, while others have had to merge.

Established in 1989, with hundreds of branches around the country, and over VND4 trillion (USD192 million) in charter capital, the Hanoi Building Commercial Joint Stock Bank (Habubank) was incontestably a big player in Vietnamese financial market.

However, it was forced to merge with the Saigon-Hanoi Commercial Joint Stock Bank (SHB) and give up their trade name due to very large losses, over VND4 trillion.

The cause of Habubank’s fall has been widely blamed on the fact that they dealt with only a small number of large customers. The debt of Habubank’s 50 major customers accounted for 65% of their losses.

A large portion of those losses came from a loan to Vietnam Shipbuilding Industry Group (Vinashin) and investment in Binh An Seafood Joint Stock Company (Bianfishco), amounting to over VND767 billion. Both of these large clients ended up defaulting on their loans, costing the bank a substantial amount.

According to an audit conducted last year, the bank’s capital was VND195 billion and their non-performing loan ratio was 16.06%, by the measures of the Vietnam Auditing Standard.

On August 9, 2012, SHB spent about VND 2.1 billion to re-brand Habubank to SHB.

Well-known steel brand vanishes

The steel industry also saw merger and acquisition activities in 2012, involving well-established names, such as Pomihoa, of the Tam Diep Steel Company.

Pomihoa was established in 2000, and became a well-known name on the market. The company recognition for the quality of its steel and, in 2008, was the largest contributer to the state budget, paying in VND110 billion.

However, after the Japanese company Kyoei Steel launched a joint venture with Tam Diep Steel Company, Kyoei owned a 70% stake in the company, with the rest belonging to Tam Diep and the Pomihoa. The name of the company will now be changed to Kyoei Vietnam.

The Pomihoa plant was sold in 2011, amid the economic downturn, and many experts have blamed poor management.

Viettel acquires EVN Telecom

EVN Telecom of Electricity of Vietnam Group (EVN) was merged with Viettel Telecom Group.

EVN Telecom went into operation in 1995. It was provided modern facilities and equipment and skilled workforce. Still, after 15 years, EVN Telecom has shown enormous losses.

In 2009 EVN Telecom’s revenue was just VND3 trillion, a 19% drop from 2008.

According to the State Audit Office of Vietnam, EVN Telecom has continued to losing money since 2010.

On December 5, 2011, the Prime Minister ạpproved the merger EVN and Viettel Telecom, erasing the EVN Telecom name from the market.

Contractor suddenly pulls out leaving large project unfinished

The Nong Son thermal power plant in Nong Son District, Quang Nam Province, was left partially finished after the Chinese contractor refused to continue the project, relieving all workers.

Vietnam National Coal and Mineral Industries Group (Vinacomin) invested VND674 billion (USD32.3 million) in the project, which was designed to have a capacity of over 150 kWh per year.

It was hoped that after completion of the project the coal mines in Nong Son District would have been exploited in a more efficient and sustainable fashion. Now, however, it seems that the project has been abandoned.

The key component in the bid package went to the China National Heavy Machinery Corporation (CHMC) in 2008, with VND529 billion. Although they had promised to finish their part by April 2010, it continues to remain unfinished.

Mai Xuan Ha, Chief of Vinacomin’s Nong Son Coal and Power JSC, said the project was 56% completed.

Explaining the stagnancy, Ha said that the economic downturn increased prices for construction materials, which caused problems for contractors. He added that the storm which caused devastation in the area added to their difficulties by damaging equipment, but that the major issue was the inability of CHMC to carry out their part.

Cooperation between CHMC and other contractors was lacking, as well as funds. In April, 2012, CHMC stopped their work completely and sent all their 300 Chinese workers home.

CHMC asked to change the terms of their contract by raising their take, but, according to Ha, their demands were not acceptable. Currently Nong Son Coal and Power JSC is working with CHMC to solve the problems and send a revised proposal for approval by Vinacomin.

The unfinished project is not only a waste of money but also cause troubles to the locals.

Over 100 people from Nong Son who had been trained for employment on the project are now out of work. Nguyen Kim Dung, Chairman of Que Trung Commune’s People Committee, said people in that ward formerly had an average of about 30 ha of farmland, mostly used for agriculture. Since the average size of farmers’ land has been reduced by half because of the power plant project, this leaves them in a tough situation.

He added that pollution from the project has adversely affected agricultural production.

“We are urging Nong Son Coal and Power JSC to complete the project. Otherwise we will be the ones who see the bad effects,”  Huynh Tan Trieu, Chairman of Nong Son District’s People’s Committee said.

Regulation on petrol trading proves efficiency

The state-owned Vietnam National Petroleum Corporation (Petrolimex)’s market share has fallen to only around 50% from a previous 60%, according to a recent report.

The Ministry of Industry and Trade released a report scrutinising the implementation of Decree 84 on petrol trading as well as recommending amendments to the regulation.

The decree has helped established a healthy business environment and fostered the regulation of petrol prices in accordance with market fluctuations, the ministry assessed.

In addition, the decree has helped develop some public and transparent economic tools to replace administrative methods, including the petrol price stabilisation fund, and new ways of formulating prices.

To date, the country has 14 petrol wholesalers including nine state-owned enterprises and four non-state firms, with 300 general agents, 4,500 agents and around 10,000 petrol outlets.

By the end of October 2012, Petrolimex held 50% of domestic market. It was followed by PetroVietnam Oil Corporation with 16.6%, up from 13% in 2008 and the Thanh Le Import-Export-Trading Company with 5.3%, up from 1.8% in 2008.

Some enterprises reported a decrease in their market share, including Saigon Petro with 6.5%, down from 7.8% in 2008, Military Petroleum Corporation with 2.4%, down from 5.7% in 2008.

With the application of Decree 84, the government no longer provides subsidies and compensation for petrol trading.

According to the ministry, domestic petrol prices have been basically managed based on the world market changes, significantly discouraging petrol smuggling.

Before the issuance of Decree 84 on September 15, 2008, the government had to subsidise petrol wholesalers. The subsidy reached around VND33.6 trillion (USD1.6 billion) between 2007 and 2008.

Now petrol wholesalers are held accountable for their business without subsidies from the government.

FDI creates momentum for Quang Ninh

The northeast province of Quang Ninh aims to attract US$500 million for seven FDI projects this year.

They include two on-going projects, namely the US$150 million expansion of Hai Ha seaport, and a US$35.5 million rare earth processing plant.

The province is calling for foreign investment in hi-tech and environmentally friendly technology and hopes to attract Japanese investors to industrial parks, including Viet Hung and Dong Mai.

To develop itself into a service industry province by 2020 and a modern service industry by 2030, Quang Ninh will need US$38.286 million (about 127 percent of its GDP), of which 50 percent will come from FDI inflows in the 2013-2020 period.

A growing trend for online ordering services

E-commerce is becoming increasingly popular in Vietnam.

Online commerce has doubled its ratings in a number of analytic categories thanks to better awareness of security issues and the ability to access the internet using various types of devices.

This trend was confirmed in a 2012 consumer survey conducted by Visa.

The internet is now an indispensable part of most Vietnamese people’s lives. Vietnam’s internet usage is only one percent lower than the global average, with 76 percent of the population using the internet every day.

The outlook for e-commerce is promising. 98 percent of the survey’s respondents searched for products or online services in the past twelve months, 71 percent ordered online and 90 percent said they will continue buying online in the near future.

The reputation of online payment security is also improving. Nearly 70 percent of online customers said they use the internet to shop more frequently due to online security’s great advances.

Security information updates from banks and online sellers help reassure customers about the safety of their personal and financial information.

60 percent of Vietnamese businesses are still not capable of accepting online paymenst and only 20 percent of the population have opened bank accounts.

Healthcare services and products enjoyed the highest e-commercial growth  (4-12 percent in 2012), followed by children’s products,  fashion, and household appliances.

The popularity of smartphones and 3G networks contribute to e-commerce’s rapid development. With just a smartphone and a credit card, consumers can find anything they need from convenience stores in no time.

Around 39 percent of the survey’s respondents reported using mobile phones to pay their bills (14 percent), play games (14 percent), and access other digital content (13 percent).

Lorijion Bacci, Visa’s Country Manager in Vietnam, said the survey’s results  show  the security of online ordering services is a boon for customers.

85 percent of respondents said services like Verified by Visa (VbV) have dramatically changed their assessments of commercial website security, with 50 percent even saying they would buy more if other websites provided VbV.

Pangasius breeders disappointed with fall in price

According to the Ministry of Agriculture and Rural Development, the   Mekong Delta has 5,470 hectares under pangasius breeding and farmers have harvested 3,844 hectares with an average 279 tons per hectare, a year-on-year decrease of 26 tons per hectare.

The Vietnam Association of Seafood Exporters and Producers (VASEP) announced that currently around 160 pangasius exporters operate in the country, a decrease of 30 percent compared to 2011.

Among them, only 20 percent are maintaining steady operations while others are working sporadically.

In Dong Thap Province, Dinh Thi Huong, owner of 10 acres of pangasius breeding area in Tan Cong Chi Commune in Tan Hong District, is very disappointed over the fall in price after the fish sold for VND21,000 per kilogram, while she has to spend VND300 million (US$19,215) per day on feed. She suffers a huge loss by selling fish but she has no choice as she needs the money for feed.

Farmer Vo Van De in Thot Not District in Can Tho City said farmers are too tired to breed fish, as enterprises have reduced price on bumper crops and most farmers have stopped raising fish. Even though there is a big demand in the world these days, price still drops.

Even entrepreneurs worry about reduced markets for exports. Nguyen Van Dao, director of Go Dang Company, says low price has caused ineffectiveness in the processing factory.

Worse still, banks and credit institutions no longer want to lend money to pangasius farmers. Tran Thi  Ngoat in Thot Not District of Can Tho City said no farmers are accessible to bank capital although the State Bank of Vietnam announced  that it will provide more than VND38 trillion ($1.8 billion) to farmers; accordingly, farmers purchased feed from agents on credit and accepted interest rate of 20 percent per year.

Meanwhile leaders of VietinBank in Dong Thap said they had disbursed VND847 billion for pangasius farmers and the State Bank of Vietnam in Dong Thap said the bank has provided VND5,240 billion for sea food processing activities, mainly pangasius. However, both banks said they will only provide capital to a few select individuals and organizations.

India enhances ties with Vietnam

The Indian Embassy in Vietnam and the Da Nang Department of Foreign Affairs, on January 2 held a press conference to mark 41 years of diplomatic ties; six years of signing of Vietnam-India strategic partnership and 21 years of India and ASEAN relations.

This is part of activities to celebrate the 20th anniversary of the dialogue partnership between India and ASEAN and the 40th anniversary of diplomatic ties between India and Vietnam.

Ranjit Rae, Ambassador Extraordinary and Plenipotentiary of India to Vietnam, said India wants to seek extensive cooperation with Da Nang in the field of human resource training, culture, tourism cooperation through programs such as establishment of Indian English Language Center in Da Nang, granting of scholarships for Da Nang students to study in India; cooperation with the Cham Museum and funding the restoration projects of the Cham towers at My Son in Quang Nam Province.

The Indian Embassy in Vietnam will coordinate with the Vietnam Chamber of Commerce and Industry and Indian Chamber of Commerce in Vietnam to hold a seminar on Investment and Trade between India and Vietnam in Da Nang on January 3, he added.

Besides, India is also focused on expanding cooperation with Vietnam through friendship visits of military ships, exploration and exploitation of oil and gas on the seas off Vietnam as well as to open India-Vietnam direct flight routes.

In 2012 Vietnam and India strengthened bilateral cooperation in various areas, especially national defense and security. The two countries held a dialogue on national defense in New Delhi last September.

In the field of culture, India’s Shwaas Rock Band–a fusion rock band headed by Rajesh Prasanna from New Delhi, performed at Da Nang’s Technology College yesterday, January 2.

More than 200 students attended the performance, co-organized by the Embassy of India in Vietnam and Foreign Affairs Department in Da Nang, to mark 40 years of Vietnam-India diplomatic ties, five years of Vietnam-India strategic partnership and 20 years of India-ASEAN relations.

Founded in New Delhi in 2007, Shwaas has become one of most favorite bands in India, playing different types of music at international events.

The band is scheduled to perform in Ho Chi Minh City and Can Tho City on January 4 and 6 and then in Hanoi on January 7-8.

Authorities assure of adequate food supply during Tet Festival

Despite a rising demand during peak season at year end, the Ministries of Agriculture and Rural Development, and Industry and Trade have pledged to ensure adequate food supplies and prevent rise in prices during the coming Tet holiday season.

After authorities in the Northern Provinces carried out raids on smuggling of chickens, the price of poultry across the country has escalated day by day. Hanoi City, Bac Giang, Bac Ninh and Hai Duong Provinces have never seen such a sharp increase in chicken prices as in the last few days. In the past month, chicken prices rose 20-30 percent, of which industrial chicken saw the steepest rise from VND60,000 to VND90,000 per kilo; and homebred chicken climbed from VND130,000 to VND160,000 per kilo.

There was a shortage of chicken as illicit chicken had caused prices to drastically drop in last several months, sending local poultry breeders into heavy debt, so they quit raising chickens. Meanwhile, some other breeders expected price to increase at year end and kept their chickens to sell near Tet holidays at a higher price. Therefore, they unintentionally caused the current situation of scarce goods and increase in prices.

The price of eggs also rose by VND8,000 per kilo compared to the past few weeks. Brown chicken eggs were sold at VND28,000-30,000 for ten; white chicken eggs were at VND35,000; and duck eggs at VND30,000-33,000.

Recently, traders from southern and central provinces carried pigs to the north to sell to China via unofficial cross-border trade, after information that China was increasing buying of pork at year end. Lang Son and Mong Cai border gates saw trucks carrying pigs heading to China almost every day. This raised concerns that without control over cross-border trade of pork, the price of pork will skyrocket as it did last year.

For nearly a month, there were hundreds of trucks carrying cattle and poultry everyday from provinces in South Central Coasts, Dong Nai, and the Mekong Delta to Northern Provinces as price of cattle and poultry in the North fetched upto VND6,000-10,000 per kilo higher than in the South.

Nguyen Xuan Duong, deputy head of Department of Husbandry, said that the current price level remains under control. He affirmed that supply of foods during Tet festive season will be ensured though there will be a marginal increase in poultry price. However, consumers will have to accept that breeders need to earn some profit after suffering losses for a long time.

Cao Duc Phat, Minister of Agriculture and Rural Development, also affirmed that the ministry has been struggling to find measures to prevent prices from skyrocketing at year end. Currently, local husbandry industry is able to provide the market with 220,000-230,000 tons of pork and 50,000-60,000 tons of poultry a month. So foods supply will be ensured during Tet festive season.

Of late, People’s Committees in Hanoi and Bac Giang Province have coordinated to supply Hanoi with chickens from Bac Giang to prevent illicit trade. In order to control chicken quality, Bac Giang authorities have pledged to step up inspections and stamp the ‘Ga Doi Yen The’ (Yen The chicken) trade mark on approved products.

Solar New Year holidays see depressed purchasing power

The four day long holiday from December 29 till January 1 for New Year remained depressing for most businesses and traders in Ho Chi Minh City with purchasing power still showing a downward spiral.

Supermarkets complained that purchasing power was much less than expected and markets in District 9, Thu Duc and neighboring areas from HCMC to Binh Duong Province faced the same dilemma with very few buyers.

Nguyen Thanh Ha, deputy director of Thu Duc Wholesale Market, said that the volume of goods in the market had been increased by 200-300 tons from normal times to 3,500-3,700 tons a day. However low purchasing power did nothing to ease inventory of such a high volume of goods.

This only resulted in traders resorting to offering huge discounts of upto 50 percent to clear stocks.


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