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BUSINESS IN BRIEF 8-2Illicit cigarettes face crackdown

Vietnam has strengthened the campaign against cigarette smuggling with the release of a new circular.

A meeting to disseminate the inter-ministerial Circular No. 36/2012/TTLT/BCT-BCA-BTP-BYT-VKSNDTC-TANDTC dated December 7, 2012 on handling infringements of smuggled cigarettes and cigarette material trading was recently held in Hanoi by the Steering Committee on Fighting against Smuggling, Counterfeit Goods and Commercial Fraud (Steering Committee 127) and Vietnam Tobacco Association (VTA).

The illicit cigarette trading typically violates health laws, reduces taxes to the state and damages sales of legitimate dealers. The circular defines more clearly how to deal with criminal infringements and proof of trading of smuggled cigarettes, and cigarette materials.

In particular, the circular toughens the penalties for those who trade in, transport, and hoard smuggled tobacco.

For example, offenders who smuggle a quantity from 1,500 to fewer than 4,500 packs of cigarettes will be subject to criminal prosecution and shall be imprisoned from six months to three years, from 4,500 to fewer than 13,500 packs, the term will be from three to seven years, and from 13,500 packs or more the term will be seven to 15 years.

“I believe that the introduction of this circular with more serious sanctions as well as strong efforts of relevant state management agencies will successfully fight against smuggling cigarettes, which assures that there will be no tax loss for the Vietnamese government and helps to establish a fair playing field for legal domestic tobacco companies,” said Pham Kien Nghiep, VTA’s general secretary.

In fact, smuggled cigarettes led to a VND4.32 trillion loss ($207.7 million) of Vietnam’s state budget in 2012. What’s worse, almost all of smugglers trade in cash, which results in foreign currency drain out of the country.

In addition to tax loss, cigarette smuggling cases have seriously affected agricultural sector as it was unable to sell 17,000 – 18,000 tonnes of tobacco leaves, equivalent to 10,000 hectares of tobacco plantation areas, and more than 43,000 farmers lost their job for 4 – 5 months. In addition, 180,000 people working in the tobacco industry have been unemployed.

According to VTA, among smuggled cigarettes, for example, Jet and Hero brands produced by Indonesia’s Sumatra Tobacco Company are almost not used by the Indonesians, but they are imported illegally into Vietnam.

Those illegal cigarettes do not comply with any Vietnam laws and they do not have imported stamps or health warnings. Moreover, their quality is not tested by Vietnamese authorities in charge. The smuggling of Jet and Hero cigarettes into Vietnam and their illegal consumption have lasted for 15 years.

VTA claimed that the quantity of smuggled cigarettes in Vietnam had been increasing significantly year by year, which critically threatened the domestic tobacco industry as well as Vietnamese people’s health because of un-guaranteed quality.

According to VTA, smuggled cigarettes have recently accounted for at least 20 per cent of the market share or about 800 million packs.

In order to fight against cigarette smuggling, since 2007, the Vietnamese government has issued related legal documents to deal with smuggled cigarettes and counterfeit cigarettes, setting up greater punishments and mobilising funds for anti-smuggling cigarettes campaigns.

Ad expense rules need reform, chambers say

Despite an expected increase on the cap on advertising and promotion expenses, the business community in Vietnam has continued proposing to eliminate the cap entirely, which many say will  help create a fair and competitive environment.

In the draft amendments to the Corporate Income Tax Law, the Ministry of Finance (MoF) proposed to raise the cap on advertising and promotion (A&P) expenses from 10 per cent to 15 per cent.

Currently, the Corporate Income Tax Law only recognises a maximum A&P expenses of 10 per cent of the total cost base, which means that any promotional spending above that ceiling is taxable.

The cap was introduced in an attempt to prevent companies from overstating their A&P expenses to lower their income tax payments.

According to the MoF, the management reality showed that apart from foreign invested enterprises, multi-national companies and especially European companies, most of enterprises had A&P expenses under the current cap and also did not propose for its removal.

However, Dinh Thi My Loan, chairwoman of the Association of Vietnam Retailers, disputed MoF’s explanation, saying that the association members and some others frequently shared their viewpoint on negative impacts of this cap on their production and business activities.

“With the important role of A&P on building and developing Vietnamese trademark, maintaining domestic market shares and promoting exports, the cap needs to be erased,” said Loan.

In case the cap cannot be removed yet, A&P expenses limit of 15 per cent should be calculated on the total yearly revenue of businesses, not on the total cost base as currently, she added.

Economist Nguyen Minh Phong said that it was necessary for enterprises to actively decide A&P expenses while the state should only interfere through regulations and sanctions on this sector.

“A&P expenses are included in businesses’ corporate costs costs to be calculated in the selling prices. Consumers accepted to buy a product, which means that they accepted this expense,” said Phong.

Previously, Vietnam Business Forum’s (VBF) Tax Sub-Group, also called for a review of the A&P cap.

“We urge the Vietnamese government to consider removing the A&P cap policy totally,” said the sub-group representative Vu Thu Huong. “Any further delay in removing the cap will impact the investment attractiveness of Vietnam and the confidence of investors.”

The cap, Huong said, interferes into the right of companies to do business and distorts economic relations between transacting parties. And it now becomes a hindrance to big Vietnamese companies seeking to develop their own brands to compete on regional and global markets.

Medicine needed for health investment

The search for health sector investment in 2013 is moving up on Vietnam’s agenda.

According to Minister of Health Nguyen Thi Kim Tien, state investment into the health sector in 2013 will increase slightly from 4 to 5 per cent against 2012. Meanwhile, the health sector aims to exercise thrift to set aside 10 per cent of concurrent expenses and 10 per cent of collections from businesses under Ministry of Health (MoH) management to cover additional payroll amounts pursuant to the government pay hike roadmap.

In the face of finite capital sources versus rising demands for health checks from people, the MoH is contemplating a wide range of measures to appeal for capital from diverse economic sectors at home and abroad.

Accordingly, in respect to social investment sources, the MoH envisages calling investors backing systems that improve people’s access to quality healthcare services.

Projects such as a health sector university and satellite hospitals to bolster service quality are reportedly being planned by relevant government agencies.

In the meantime, to further attract and boost efficiency of foreign direct investment (FDI) into health sector, several FDI projects have either kicked-off construction or confirmed capital disbursement commitments.

These projects include the building of Hue Central Hospital’s trauma centre capitalised with $17 million from Austrian government investment; the Global Alliance for Vaccines and Immunisation (GAVI)-funded project costing $47 million, and project on provincial-level hospital development funded by Japan International Cooperation Agency (JICA) valued at $104 million, just to name a few.

In a recent workshop hosted by the MoH in cooperation with the US Embassy, US Ambassador to Vietnam David Shear said the US would scale up support to Vietnam for implementation of public-private partnership (PPP) projects in the health sector.

“In the near term, a PPP task force will soon be established to facilitate project implementation,” said Shear.

Increasing visibility of private health facilities is also a viable option to attract capital into this field.

“Non-state health system helps reduce load at public health facilities. However, these units need further training on legal aspect and increased supervision is important to make a timely detection of violations,” said director of Hanoi Health Department Nguyen Khac Hien.

Siemens on track with train order

ÖBB Austrian State Railways has ordered the first 100 regional trains from German-invested Siemens Company.

The Supervisory Board of Austrian State Railways (ÖBB) has authorized the company’s executive board to call up the first 100 regional Desiro ML-type trainsets from a master agreement with Siemens.

The 550 million euro ($715 million) contract is set to be signed after expiration of the stand-still period stipulated under public procurement law.

Siemens was awarded the contract in April, 2010 after one of the largest pan-European invitations to tender for electric regional trains. The three-unit electric trainsets are to be delivered from the end of 2015 onwards. Final production of the trains is to take place at the ÖBB plant in German’s Jedlersdorf. The bogies will come from the Siemens plant in Graz.

Thirty trains are destined for service with the S-Bahn in the Austrian capital Vienna and Lower Austria, and 70 for regional rail services in Upper Austria and in Styria.

“We have once again won out in a tendering procedure with our Desiro platform. This shows that our vehicle is not only optimally designed for urban short-haul traffic, but also meets all the requirements of regional operations,” said Jochen Eickholt, chief executive officer of the Siemens Rail Systems Division.

Desiro ML-type trainsets are flexible and proven vehicles, which thanks to their conception as single-car trains, can be specifically adapted to the passenger volumes concerned. With their improved drive systems, with which it has been possible to achieve further reductions in energy compared with predecessor models, they are especially environmentally friendly. The design of the trains too makes use of ecologically sound materials, for example in the paint finish and internal fittings.

ÖBB is opting for a basic vehicle of the Desiro ML type, comprising a three-car multiple unit. The S-Bahn trains feature 244 seats, while the regional trainsets boast 259 seats. The Desiro trains can attain a top speed of 160 kilometers per hour.

LG rings in spectacular results

LG full-year 2012 financial statement just unveiled with all business units reporting improved operating incomes against 2011.

In late January 2013, Korea-based LG Electronics Inc. (LG) announced consolidated revenues of $ 45.2 billion and a net profit of $ 80.7 million for full-year 2012.

Despite a 6 per cent revenue decrease from 2011, operating profits increased significantly in 2012 to $1.01 billion from $342 million in full-year 2011.

Fourth quarter 2012 consolidated revenues were $12.3 billion with an operating profit of $98 million.

The LG Home Entertainment Company reported record sales of flat-panel TVs with 9.3 million units in the fourth quarter resulting in a 17.4 per cent revenue increase quarter-on-quarter to $5.9 billion and full-year operating profit of $480 million.

Revenues from 3D and Smart TVs increased with higher unit sales in the United States, Europe and CIS countries. Although the Home Entertainment Company had the strongest quarter of the year in terms of revenue, profitability declined somewhat due to lower average selling prices and increased competition.

LG will continue to aggressively market 3D and Smart TVs and plans to expand its share of the premium TV segment in 2013 with Ultra HD TVs and OLED TVs.

The LG Mobile Communications Company reported a 7 per cent unit increase quarter-on-quarter in mobile handset shipments to 15.4 million with more than half of the units coming from smartphones.

Smartphone shipments grew 23 per cent compared to the previous quarter, increasing to 8.6 million devices from the 7 million in the third quarter.

Fourth quarter revenues were the highest of the year, growing 15 per cent to $2.5 billion quarter-on-quarter. Sales of premium LTE smartphones such as Optimus G and Vu:2 increased in the fourth quarter, as did the L-series and Google Nexus 4.

With more European and emerging markets introducing LTE services this year, LG plans to increase smartphone revenues and market share by launching follow-up devices to Optimus G and the L-series as well as the new F-series.

The LG Home Appliance Company posted almost flat revenues year-on-year, with sales of $2.7 billion in the fourth quarter as strong sales in the U.S. and CIS countries were largely offset by sluggish demand in Europe, the Middle East and Latin America. Profitability was affected by unfavorable foreign exchange rates and increased marketing investments, even though average selling prices for home appliance products rose in the fourth quarter. The company plans to improve its revenue and profitability in 2013 with more competitive products, advanced technologies and a stronger focus on profitable regions.

The LG Air Conditioning & Energy Solutions Company reported sales of $626 million in the fourth quarter, essentially unchanged year-on-year. For full-year 2012, the company recorded revenues of $3.8 billion and operating profit of $138.4 million. The priority in 2013 will be to introduce more energy-efficient and localised products to bolster revenue growth.

For 2013, LG Electronics is targeting a revenue goal of $47.4 billion with plans to spend $2.2 billion on capital expenditures.

Wind power project begins on Phu Quy

PV Power has started operating its wind farm on southern Binh Thuan province’s Phu Quy Island, advancing the opportunity for exploiting the renewable energy potential to spur the island’s economic growth.

The $17 million Phu Quy wind farm, which is invested by PetroVietnam Power Renewable Energy Limited Company (PV Power RE) under PV Power, will has three turbines with the combined capacity of 6 megawatts (MW).

When operational, the new wind farm is scheduled to supply 25.4 million kilowatt hour (Kwh) each year, meeting the electricity demand of Phu Quy commune.

Nguyen Duc Hoa, administrative chief of Binh Thuan Provincial People’s Committee, said that Phu Quy wind farm would help develop the local economy.

Because Phu Quy island is located 60 sea miles far away from the mainland, Hoa explained, connecting the national power grids to the island is not feasible.

In the past, Phu Quy island was totally supplied with electricity from diesel source whose prices have been on the rise by Binh Thuan Power Corporation under state-run Electricity of Vietnam’s (EVN) Southern Power Corporation.

Specifically, the power tariff in the island is VND2,40–3,200/kWh (11.5-15.3 UScents), almost doubling the current level in the mainland. Expensive power tariff in the island even forced some local seafood processing factories to shut down.

“The power supply in Phu Quy island used to last 16 hours per day. Now, Phu Quy wind farm is expected to supply islanders with electricity around the day, helping to improve their living conditions,” said Hoa.

According to Binh Thuan’s authorities, the province is now home to 16 wind power projects with the combined capacity of 1,300MW.

Located in a subtropical zone with a long coastline, Vietnam is said to have great advantages for developing wind power. Therefore, the Vietnamese government is boosting investments in developing wind power to replace exhaustible fossil fuels and protect the environment.

According to a World Bank survey, under the Asia Sustainable and Alternative Energy programme, 8.6 per cent of Vietnam’s areas is considered having potential for wind power development, mainly in central, central highlands and southeastern provinces.

According to the Ministry of Industry and Trade, many foreign investors such as Belgium’s Enfinity, German Donier Aircraft Leasing Limited, Swiss Aero.Plus Company, Norway’s SN power and German Fuhrlaender AG among others, are working on wind power projects in Vietnam.

PetroVietnam seeks fund for the $9bn refinery

State-run PetroVietnam and its foreign partners are working on procedures to seek fund from international lenders for the construction of Vietnam’s massive Nghi Son oil refinery and petrochemical complex.

According to PetroVietnam, the complex development would require the total investment capital of nearly $9 billion, $5 billion of which will be mobilised from international banks and the rest will be contributed by the project developers.

Nghi Son complex, located in central Thanh Hoa province, 215 kilometres south of Hanoi, is jointly developed by Kuwait Petroleum International (35.1 per cent), PetroVietnam (25.1 per cent) and two Japanese companies – Idemitsu Kosan Company (35.1 per cent) and Mitsui Chemicals (4.7 per cent).

In 2011, the International Financial Corporation, an arm of the World Bank Group, committed to provide $600 million loans to Nghi Son complex.

Licenced in 2008, the complex developers expected the total investment capital of Nghi Son at $6.2 billion and the complex would be put into operation in 2014.

In the latest move, the Vietnamese government officially gave guarantees to push forward the long-delayed construction of Nghi Son complex in the middle of January. Going along with this, the engineering-procurement-construction contract was last week given to the group of contractors – Japan’s JGC Corporation and Chiyoda Corporation, France’s Technip, South Korea’s GS Engineering & Construction and SK Engineering & Construction and Malaysia’s Geoproduction.

Once completed the complex will have an annual capacity of 10 million tonnes of crude oil, or 200,000 barrels a day. It will produce liquefied petroleum gas (LPG), gasoline products A92, A95 and A98, jet fuel and diesel oil and is expected to meet 40 per cent of the domestic fuel demand.

Nghi Son complex is not the only giant project which has had to raise its total investment capital.

Licenced in 1997, PetroVietnam’s Dung Quat oil refinery was initially capitalised at $1.5 billion. Its investment capital was later raised to $2.5 billion in 2005 and then to $3.05 billion in 2010 when it was put into operation.

Similarly, Long Son petrochemical complex in southern Ba Ria-Vung Tau province saw its investment capital rise from $3.7 billion to $4.5 billion. The complex is jointly developed by PetroVietnam (18 per cent), state-run Vietnam National Chemical Corporation (11 per cent), and both Thailand’s Vina SCG Chemical Company and Thai Plastic and Chemicals Public Company (46 per cent), and Qatar Petroleum International (25 per cent).

A source from the Long Son Petrochemical Joint Venture Company said that the project’s slower – than – expected progress since it was licenced in 2008 meant the complex investors would have to raise the investment capital to cover increased expenses.

He also said the announced additional fund would be used to expand the complex’s production capacity and develop more facilities at the complex such as ports, wharves, water drainage and supply, power supply, stations and storage among others.

Fibre makers bring synergy to textile and garment sector

Vietnam’s growing textile and garment sector is known as a bustling, labour-intensive producer of profitable exports – but one that still needs to heavily rely on  imported raw materials.

Many said that the sector was appealing to global investors involved in the production of fibres, which could enable Vietnam to have a larger stake in the industry’s global value chain.

Austria’s Lenzing Group chairman Peter Untersperger recently met with state-run Vinatex leaders to discuss a top-grade synthetic fibre production project in Vietnam.

“If two sides reach an agreement, later this year our group will team up with Vinatex to develop an integrated manufacturing system to produce wood powder and viscose fibre to feed Vietnam’s textile and garment industry,” a Lenzing Group source said.

According to Vinatex, Untersperger came to Vietnam twice in the recent months, showing the Austrian group’s commitment to step up the project progress.

Lenzing’s interest is not unique. In later part of December 2012, the textile and garment sector attracted numerous foreign firms interested in exploring connections with Vinatex in production of material and accessories projects.

Vietnam is an ideal place to apply a vertical production model that Lenzing Group has been practicing in Austria over the past 75 years, according to Untersperger.

Vinatex’s other supporting industries projects for the textile and garment sector also involves cooperation with Japan’s Itochu Group.

According to a Vinatex source, the two sides came to an agreement on building a $120 million fibre production plant on 20 hectares site in northern Nam Dinh province’s Bao Minh Industrial Zone. The plant will have an annual production capacity of 50,000 spindles.

Under this project, the fibre made in the plant will be top-of-the-line used in the production of high value-added textile and garment products.

Both Vinatex and Itochu Group are now in legal stage with plans to start construction of the Nam Dinh plant in the middle 2013.

According to the Ministry of Industry and Trade, the textile and garment sector has grown into a leading hard currency earners for Vietnam in the recent years.

In 2012, Vietnam reportedly earned $17 billion from exporting textile and garment products with the sum of $1.8 billion coming from yarn and fibre exports.

However, the sector’s total import value was also big at $11.3 billion last year. Of this, $1.4 billion came from importing yarns and fibres and $2 billion from accessories, reflecting sourcing input materials overseas remains a big hurdle despite the sector’s robust export growth.

OrthoLite steps in with new factory

The shoe industry fixture OrthoLite® – a leading supplier of foam insoles for famous footwear brands like Nike, Adidas, Reebok, Timberland and Clarks, last week started construction on its first factory in Vietnam.

The facility is located in southern Binh Duong province’s Thuan An town, about a 45-minute drive from Ho Chi Minh City. The new facility, measuring 13,000 square meters in size, will employ 300 workers and produce roughly three million pairs of insoles per month. As with OrthoLite’s other factories, the company said its new Vietnam factory would be environmentally friendly.

The OrthoLite Vietnam factory is designed to provide better service to the company’s local customers by offering shorter lead times and local customer service. Furthermore, OrthoLite will also employ local staff for product development and sampling for customers based in Vietnam. The manufacturer hopes to broaden the awareness of their brand in Vietnam to footwear brands and local factories.

“Footwear brands want to get their products to consumers faster than ever. With the opening of our first factory in Vietnam, we will have the ability to provide better services to our customers by giving them the OrthoLite products they need with shorter lead times,” said Pamela Gelsomini, OrthoLite president.

“This new facility further underscores the brand’s commitment to service, innovation and industry leadership,” he added.

OrthoLite said it had secured an environment protection certificate from the local government and the factory will produce eco-materials for name-brand customers. The company announced that OrthoLite Vietnam would continue to strive to create a green and clean working environment for its workers and find new ways to make their production processes as green as possible.

Because of rising wages in China, shoemakers are increasingly outsourcing work to Vietnam, where the labour cost remains relative cheaper against China, India or Indonesia. Ortholite’s new factory complements this trend.

Nike last year announced that Vietnam had surpassed China to become the top producer of Nike brand shoes in 2010 by claiming a 37 per cent share in production, compared with 34 per cent for China. The shoemaker plans to continue increasing production in Vietnam in the future when the Vietnam joins the Trans-Pacific Partnership Agreement with other countries including the United States, Mexico, Singapore, New Zealand, Australia, Canada, Peru and Chile.

Lacoste, the famous French fashion firm, is also eyeing Vietnam as a new manufacturing base to increase its production capacity to meet the global demand.

Black cloud still hovering over enterprises

Many consumers and enterprises in Vietnam are still glum about 2013.

According to the “Consumer Confidence 2012-2013” survey released late last month by TNS Vietnam, Vietnamese consumers’ confidence index, with 100 being the optimal score, has dropped to a score of 56, down from 68.

The score has slipped considerable from the optimism of 2010 and 2011, with respective scores of 79 and 78. In those days, an international survey found the Vietnamese to be the world’s most optimistic people.

“The consumer confidence index has fallen in just six months, driven by consumer fears across most indices and due to poor Vietnamese economic performance,” said Ralf Matthaes, regional director of TNS Vietnam, which is part of the world’s largest custom research company TNS Global.

Specifically, the rate of those saying the value of the Vietnamese dong would worsen climbed from 5 per cent last year to 25 per cent this year. The rate of those predicting a “far worse” economy jumped from 5 per cent last year to 9 per cent.

Moreover, the rate of those believing their employment status would worsen doubled from 6 per cent in 2012 to 12 per cent in 2013. Also, the rate of those lamenting their living costs would be far worse grew from 4 per cent last year to 11 per cent this year.

Meanwhile, the rate of those saying their living costs would be little better reduced from 26 in 2012 to 18 in 2013.

Le Duc Khoi, Hanoi branch director of Indo-Trans Corporation, told VIR: “Like so many local companies, I am pessimistic about our company’s performance both in 2012 and 2013. It is because last year saw hikes in petroleum and transport fees, while transportation volume was low.”

“This year’s market will become more difficult than last year, due to continued increases in petroleum and other input costs. We will have to try our best to keep our revenue of $3 million in 2013 like in 2012.”

Bui Van Thieng, vice director of Saigon-Phu Tho Beer Joint Stock Company, shared the view. “I also feel not so optimistic about our performance this year. We have had to lower our revenue growth target for this year from 15 to 7 per cent due to unfavourable conditions in the market. Last year, our revenue totalled VND1 trillion ($48 million), up 15 per cent on-year.”

Bui Quy Dung, chief of Hanoi representative office of R.E.E Electric Appliances Joint Stock Company producing air conditioners, switchboards, air diffusers and chillers, said in 2012 R.E.E reached its revenue target, but its profit remained low.

“I am not upbeat about our company’s performance and Vietnam’s economic outlook this year. There is no sign for better outlook now. It would be very difficult for our company to reach set revenue and profit targets in 2013,” Dung said.

According to those businesses, they would feel less difficult only in 2014 when the nation’s economy could expectedly recover.

“It is because Vietnam’s three largest export markets of the US, EU and Japan are now in great difficulty and expected to recover by late next year,” Khoi said.

Inflation cools down hot news

Vietnam is on red alert regarding the consumer price index, despite industrial production and export gains in January.

The Vietnamese government last week reported that in January, Vietnam’s export turnover reached $10.1 billion, up 43.2 per cent on-year and its import turnover was $9.9 billion, up 42.3 per cent on-year. Thus, the country enjoyed a trade surplus of $200 million in the first month of this year.

“This is a very positive result, after Vietnam last year saw a trade surplus, at $284 million,” said Vu Duc Dam, Minister of the Government Office.

Some export items witnessed remarkable on-year growth, like telephones and spare parts (105.5 per cent), electronics and computers (94.9 per cent), garments and textile (28.4 per cent), wooden products (50.3 per cent) and machinery (25.5 per cent).

Notably, the export turnover of telephones and spare parts, almost all exported by South Korea’s mobile phone maker Samsung Electronics Vietnam, took the helm with $1.5 billion. Last year, the firm’s total export turnover touched $12.72 billion, holding 12 per cent of Vietnam’s total export turnover.

It was forecasted that Samsung Electronics Vietnam would continue making greater contributions to Vietnam’s total export turnover this year, with the estimated $16.3 billion value.
Dam said local production had been recovering gradually, thanks to bigger imports and exports.

Specifically, Vietnam’s index for industrial production (IIP) in January 2013 augmented 21.1 per cent on-year, with many key sectors hitting big IIP rises. For example, the growth rates were 4.7, 26.3, 20.7 and 10.3 per cent for mineral exploitation, manufacturing, power production and distribution, and water supply, respectively. Some products with high IIP growth included garments (49.1 per cent), footwear (52.5 per cent), telecommunications equipment (52.6 per cent) and animal feed (23.6 per cent).

However, the Vietnamese government reported that the consumer price index (CPI) in January climbed 1.25 per cent from a 0.27 per cent rise last December.

This monthly CPI rise recorded the highest monthly level since last year’s February, excluding a sudden 2.2 per cent hike in September 2012 caused by rising prices of education and medical services.

“January’s abnormally high CPI is a warning signal for us as it may affect the government’s target of taming inflation [at around 6 per cent for 2013]. We must take greater caution in macro-economic monitoring,” Dam said.

This CPI rise was ascribed by governmental agencies to 10 cities and provinces in January increasing prices of drugs and medical services, which were up 9.5 per cent on-month, and to a lack of foodstuff due to bad weather affecting local farming production.

Prime Minister Nguyen Tan Dung last week asked governmental agencies to make sure sufficient goods available for coming Tet in order to prevent high price hikes.

Vicem’s woe prompts cementing

The performance of state-run  cement conglomerate Vicem and its members in 2012 and measures to weather hardships in 2013 are coming into focus.

Vicem reported that its customers bought 2.9 percent less cement in 2012 from the previous year while a big decline in exports resulted in disappointing revenues and profits.

Vicem general director Nguyen Ngoc Anh said 2012 was a tough year for the cement sector as the group fell short on most of its targets for the year, dragged down by its exports. Vicem members exported 801,000 tonnes, only 38.3 per cent of its yearly projection.

“Poor exports came as Vicem faced the hustle-bustle in the marketplace and could not ensure cash flows for its members. Besides, our members underestimated rising expenses, leading to low export efficiency,” Anh said.

In terms of other targets, Vicem respectively achieved 95 per cent target in clinker production, 82 per cent in cement production, 85 per cent of targeted revenue, 88 per cent of its set profit and around 87 per cent in budget contribution.

Each of Vicem’s eight member units failed to meet revenue and profit targets. Five of the eight experienced a decline in consumer consumption with Vicem Ha Tien, Bim Son and Hai Van as the exceptions.

Among the others, Vicem Hoang Thach, a top cement brand in the northern market, earned the modest profit of VND250 billion ($12 million) compared to the target of VND427 billion ($20.5 million) and the revenue of VND4 trillion ($192 million) against the set VND5 trillion ($240 million).

In 2013, Vicem Hoang Thach said it would aim to bolster cement consumption and cut down clinker production volume and striving for higher revenue. The company is also pursuing wide-ranging measures to curtail fuel and material expenses and boost labour efficiency.

Vicem Hoang Mai, meanwhile, posted the VND90.9 billion ($4.3 million) profit tantamount to 55 per cent of their projection. Currently, Vicem Hoang Mai is committed to slashing production costs.

“Huge production against meager consumption will detrimentally affect cash flows and loan repayment like Vicem Hoang Mai,” said the company’s director Nguyen Truong Giang.

In 2013, Vicem planned to reach over VND30 trillion ($144 million) revenue and at least VND500 billion ($24 million) profit against VND27.637 trillion ($132 million) revenue and VND661 billion ($31 million) pretax profit in 2012.

Vietnam’s cement consumption this year was forecast to hover in the range of 45.6-47 million tonnes, slightly up compared to 2012’s versus the estimated supply of 73 million tonnes.

No substitute for HP cartridges

Hewlett-Packard, better known as HP, said a study it commissioned has confirmed that its own original HP print cartridges, compared to substitute ones, deliver greater reliability and quality that reduce waste and the hassles of failed prints.

The study found that 93 per cent of customers were satisfied with original HP toner cartridges compared with only 51 per cent for non-original toner cartridges. Another survey revealed that 95 per cent of customers were satisfied with their text and document print-outs using original HP ink compared with only 50 per cent for alternative cartridges.

“Customers want to save money on printing and often put up with the hassles of unreliable printing when using non-original cartridge options,” said Irving Oh, general manager, Printing and Personal Systems Group, Hewlett-Packard Vietnam.

“Original HP print cartridges can help customers save more over time with high quality and reliability that save time and reduce waste from failed prints,” he added.

Non-original ink cartridges and non-original toner cartridges tested were found to produce streaked, blotchy or faded prints. These non-original cartridge options were also more likely to be “dead on arrival” or fail prematurely.

Reprinting failed print-outs waste time, energy and resources, adding additional costs to the printing expenditure.

When it comes to office printing, unusable prints can result in missed deadlines, poor communication with clients and negative impact to the bottom line. When accounting for the hidden costs of reprinting failed prints, replacing unusable cartridges and purchasing additional cartridges to achieve the desired yield, using non-original cartridges can become more expensive.

But customers using the HP Deskjet Ink Advantage systems can enjoy HP-quality and reliability at a running cost of up to 600 pages at $9.

A study by Gartner, a global technology research firm, suggests in its title that “Saving Money on non-original cartridges is harder than it sounds” and recommends users stick with their original equipment manufacturer due to discrepancy in yield, overall image quality and the likelihood of cartridge failures.

Gartner goes on to note, “Most non-original supplies lack the kinds of certifications that would satisfy all concerns about yield, failure rates, image quality and environmental practices.”

In addition, HP also declared that customers who want reliable, affordable printing that meets their environmental objectives can feel confident in choosing original HP cartridges over non-original cartridge options.

According to the firm, all original HP cartridges returned to HP through the Planet Partners programme go through a multiphase recycling process. The HP ink and LaserJet toner cartridge “closed loop” recycling process uses plastic from recycled original HP cartridges and other post consumer sources to create new original HP ink and LaserJet toner cartridges.

HP also designs cartridges to use recycled content and still deliver exceptional print quality and reliability. For original HP ink cartridges that use recycled materials, up to 70 per cent of the cartridge is made from recycled plastic.

For original HP LaserJet toner cartridges manufactured with reclaimed materials, up to 20 per cent of the cartridge is made from recycled and recovered content.

Delta fish farmers boost exports

Mekong Delta provinces this year plan to earn the region up to US$2 billion from tra fish exports.

This requires an output of 1.2-1.5 million tonnes, of which 650,000 tonnes would be shipped overseas.

The Delta this year will allocate an additional 6,000ha of aqua-cultural areas to tra fish breeding, mainly in Can Tho city and the provinces of Dong Thap, An Giang and Ben Tre.

The localities are striving to supply 4 billion quality fry and 3.3 million tonnes of fish foodstuff to breeders.

Farmers are being encouraged to work closely with production and consumption businesses to minimise their risk and costs.

The provinces will focus on using scientific technology in breeding, processing, preserving and diversifying products, as well as providing farmers with information on tra fish production and consumption trends in both domestic and global markets.

They will also improve capacities to help tra breeders adjust production and avoid losses; make it easier for farmers to expand domestic consumption with a variety of products; improve their access to credit.

In 2012, Delta provinces farmed tra fish on 5,910ha, yielding 1.29 million tonnes of tra, of which 645,000 tonnes were exported.

Dubai company plans large-scale residential area

Dubai-based company Global Sphere has announced it will take part in real estate development worth US$10 billion in Ha Noi, the United Arab Emirates newspaper Khaleej Times reported.

The company plans to build about 70 residential towers on 35 sq.km of land, 4km from Noi Bai international airport.

“The project will be an integrated community with a total estimated value of $30 billion. The first phase, valued at $10 billion, is expected to be completed by 2020,” Global Sphere chairman Dr Abdullah Al Sayegh said in a statement, the Times reported.

The engineering plan for the project resembles Downtown Dubai, he said. The project would accommodate between 300,000 to 400,000 residents after completion in 2030 and have full city services.

Established more than 10 years ago in Dubai, Global Sphere is associated with European and American companies arranging funds for large projects, to commercial companies or governments to build large projects in different fields including the construction and oil sector.

VPBank offers Tet promotion for Western Union customers

VPBank and Western Union have launched a “Spring Reunion, Tet Gatherings” promotion programme. Those receiving funds via Western Union at any VPBank transaction office nationwide will receive a lucky scratch card for each transaction performed during the promotion, which concludes at the end of this month.

These scratch cards can be redeemed immediately for various prizes. Among the offerings are three trips to Korea, 15 trips to Malaysia and Singapore and more than 20,000 cash and non-cash prizes.

Three VPBank customers have already won trips to Malaysia and Singapore and thousands of customers have received other prizes.

Garment maker opens major fashion design centre in HCM City

Viet Tien Garment Joint Stock Co has opened an 18,000 sq. m fashion design centre in HCM City as part of its efforts to reach a growth rate of 15 per cent in 2013.

In 2012, the corporation marked an export turnover of US$445 million, thanks to major markets including Japan (accounting for 29 per cent), the US (24 per cent) and the EU (23 per cent). These markets are also key export markets for Viet Nam’s textile and garment industry in 2013.

The Viet Nam Textile and Apparel Association forecast a slight increase in global demand for textiles and garments in the year, including a 3 per cent increase in the US, 18 per cent in Japan and 5 per cent in other markets.-

Asiana Airlines to buy 50% stake in HCM City shopping centre

South Korea’s flag carrier Asiana Airlines said that it will buy a 50 per cent stake in the Kumho Asiana Plaza Sai Gon commercial centre and hotel complex in HCM City from an affiliate.

The 50 billion won (US$47 million) acquirement will be carried out this month, according to the carrier.

The US$225 million centre is located at 39 Le Duan Boulevard, District 1, and consists of a 21-story five-star hotel with 300 guest rooms and three 32-story office and apartment buildings.

Kumho Asiana Plaza Sai Gon is a joint venture between Kumho Engineering&Construction, with a 65 per cent stake, and two local partners – Saigontourist and HDSC – with a combined 35 per cent per cent.

Both Asiana Airlines and Kumho Engineering&Construction are owned by Korean Kumho Asiana Group.-

Dairy-processing facility meets international food safety standards

The Friesland Campina Ha Nam milk factory in northern Ha Nam province was certified by the Royal FrieslandCampina Group as meeting the requirements of the Food Safety and Quality System (FoQus), an international quality management system.

Following a number of improvements to its management process, infrastructure and equipment in the last two years, the factory received an A-rating (the highest FoQus grade) in December.

The rating will allow Friesland Campina Ha Nam to produce infant and baby milk formula.

Steel inventories fall sharply

Inventories of finished steel products plunged by 16.6 per cent in January, compared to the same month a year ago, the Viet Nam Steel Association has announced.

The steel industry has set a modest growth target of 2-3 per cent this year in the face of uncertain economic situations domestically and internationally, said association chairman Pham Chi Cuong.

The oversupply of some products, including steel pipe, galvanised steel, construction steel, and cold-rolled steel, remained the leading challenge facing the industry, he added, noting that mounting inventories had forced many steelmakers to cut production.

As Viet Nam’s WTO commitments continued to take effect, the lowering of tariffs was also putting enormous pressure on domestic steelmakers who were now forced to compete with imported products, especially from China, Cuong said.

Domestic steelmakers were also facing greater difficulties penetrating foreign markets in which technical barriers and threats of anti-dumping actions have discouraged exports of Vietnamese steel products. Last year, cold-rolled steel from Viet Nam faced anti-dumping lawsuits in both Thailand and Indonesia, while welded steel pipe was challenged in the US. Other markets have already issued warnings against galvanised steel and tinted steel from Viet Nam

The nation’s steel production in January totalled 360,000 tonnes, a decline of 36,000 tonnes compared with December but an increased of 75,000 tonnes over January 2012, the association said. Domestic steel consumption remained stable from December but was 127,000 tonnes higher than last year.

The nation also imported 600,000 tonnes of steel in January, representing a month-on-month decrease of 1 per cent but a year-on-year rise of 19 per cent.

Electronics dealers sell directly from warehouses to cut costs

Some retailers of electrical and electronics products in Ha Noi and Da Nang are adopting a new marketing strategy: direct sales at their warehouses at discounts.

The model offers them the advantage of reducing spending on attractive showrooms and scores of salespeople, while consumers get the products 10-20 per cent cheaper.

The model has for long been popular abroad, but is only now catching on in Viet Nam.

Ebest Outlet Da Nang adopted it last October.

A spokesperson for the electronics store said it helps cut rental, salary, and advertising expenses to the tune of 20-30 per cent of cost.

TopCare, a Ha Noi-based electronics retail chain, adopted the model last month.

Le Tung, its marketing director, said: “TopCare has the motto of delivering product to consumers at cheaper than market prices.”

He said a Sanyo 140l refrigerator costs VND3.99 million at the company’s showrooms, but only VND3.69 million at its warehouse. For a 7.2kg LG washing machine, the rates are VND3.99 million and VND3.79 million.

Ha Noi-based BTM International Trade Company sells interior-decoration items, mats, and other products imported from Italy, Malaysia, and Thailand at a 20 per cent discount at its warehouse.

In 2009, when Pico Electronic began to sell products directly at its warehouse, turnover doubled from the previous year.

It offered them at 10-15 per cent cheaper than at its’ showrooms.

Vietnamese hotels urged to improve level of services

While the rapid growth of Viet Nam’s tourism industry has benefited the hotel sector, experts warn that not all hotels meet the industry’s basic requirements.

Most hotels in the country are small, with less than 20 rooms, and lack professionalism in terms of design, management and staff training, said Le Mai Khanh, Director of the Hotel Department of the Viet Nam National Administration of Tourism.

Although the agency has issued various hotel regulations since 1994, these are outdated and largely fail to meet international standards.

The Ministry of Culture, Sports and Tourism is currently developing a national standard for grading tourist accommodations.

Credit provided to power transmission company

The Vietnam Development Bank (VDB) has pledged long-term credit worth VND662 billion (about US$31.5 million) to the National Power Transmission Corporation (NPT) to implement the 500kV Quang Ninh – Mong Duong transmission line, which plays an important part in the country’s power development strategy in the Northeast.

Stretching over 25.2 km, the line will connect the Mong Duong 1 and 2 thermal electricity plants to the national grid.

The credit will be used to pay for equipment and relocate people living in the project area.

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

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