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HCM City stops allocating fund for price stabilization

Fund for the price stabilization program in HCMC this year will not be sourced from the city’s budget, but from bank soft loans.

Five local banks on Saturday signed agreements to provide loans worth VND1.96 trillion to 59 price stabilizers under the arrangement of the city government. The five lenders are Vietnam Bank for Agriculture and Rural Development (Agribank), Vietnam Export Import Bank (Eximbank), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Bank for Investment and Development of Vietnam (BIDV) and Vietnam Bank for Industry and Trade (Vietinbank).

The banks will grant price stabilizers VND860 billion with a term of 12 months so that they can produce and supply goods to the market throughout this year and the Lunar New Year 2014. The interest rate for such loans is 6% per annum.

The remaining VND1.1 trillion will be lent to enterprises for investment in production and farming with an annual lending rate of 10%.

The HCMC government and departments will connect enterprises with the banks joining the price stabilization program, ensuring that enterprises can access loans with reasonable interest rates.

In previous years, funds for price stabilizers were sourced from the city’s budget with zero interest rate. This year, they will borrow soft loans from banks instead.

Le Ngoc Dao, deputy director of the HCMC Department of Industry and Trade, described this as a turning point for the program, marking its in-depth development. Price stabilizers will certainly face problems, but they will be all right with their experience and capability proven through previous programs, said Dao at a conference on the 2013 price stabilization program held last Saturday.

The sum of money borrowed by price stabilizers declined in the last two years. Several enterprises participated in the program without taking out loans.

Therefore, the HCMC budget fund for the program fell sharply. Last year, the city spent only over VND214 billion on the program.

The HCMC price stabilization program for essential food, medicine, dairy products and stationery products begins today and will last until March 31 next year. The program has attracted 64 participants, including 59 producers and five banks, a rise of 16 participants against last year.

The number of price stabilizers for each commodity group picks up, leading to an increase in goods types and volumes.

For instance, there are 35 price stabilizers for essential food items, including rice, sugar, cooking oil, meat, poultry, egg, processed food, vegetables and seafood. Price-stabilized food items will meet 20-30% of the market demand at normal times and 30-40% during Tet.

Thirteen enterprises are responsible for stabilizing prices of notebooks, briefcases-backpacks-bags and school uniforms during the new school year season. Their goods will account for 30-40% of the market demand.

Meanwhile, there are two price stabilizers for dairy products and 13 for drugs.

Price stabilizers are allowed to raise prices of their products when material prices and production costs surge 5-10%, but they have to reduce prices when the market prices go down 5%.

The price-stabilized items will have prices 5-10% lower than the market prices. Prices of dairy products will be kept stable throughout the year.

Property transactions seen picking up

The property trading situation in HCMC and neighboring provinces is improving slightly, according to a number of brokerage firms and project owners.

Danh Khoi A Chau Real Estate Co. in mid-March started offering apartments of the Nhat Lan 3 project in HCMC’s Binh Tan District for sale at VND562-750 million per unit. The project developed by Binh Chanh Construction Investment Co. is set for completion in September.

On the day of sale launch, 130 apartments found their owners, which was a surprising result to both the project owner and the broker. It also brings hope to other investors in the context of the frozen property market.

Doan Chi Thanh, general director of the real estate brokerage company Hoang Anh Sai Gon, said the number of successful transactions had been rising after the Lunar New Year holiday break. On average, Hoang Anh Sai Gon has found one buyer every day after Tet.

The best-selling products, according to Thanh, are budget condos priced at around VND1 billion each and apartments of the completed or near-completion projects with soft loans available for buyers.

Phu My Hung Corp. on March 16 offered 163 apartments of the Happy Valley project, and 80% of the apartments priced at VND30 million per square meter were booked after the launch.

Nguyen Van Doi, general director of SSG2 Construction and Real Estate Co., said his company had sold some 20 flats of the Thao Dien Pearl project after Tet. He predicted property prices would remain stable at low levels in the second quarter.

Homebuyers will certainly survey many projects before making their purchase decisions, while investors will choose apartments with good living conditions and potentials in the future, he said.

“The demand stimulus package of the Government and some policies recently introduced by ministries and banks reveal the great determination to rescue the property market, and businesses hope such policies will help them win back the confidence among the people.”

“However, rather than relying on supports, enterprises, in order to overcome difficulties, need to have good corporate governance, draw up viable strategies and ensure their responsibility for project development,” said Doi.

Nguy Thanh Vi, assistant general director of Phat Hung Real Estate Co., currently acting as broker for four projects in Saigon South, said the market, especially the land lot segment, in this area had prospered in the first quarter.

“We have 20 salesmen, and they effected 15 successful transactions last month, up 50% compared to before Tet. The value of each transaction was some VND2-2.1 billion on average,” he said.

Hoang Anh Tuan, general director of Tac Dat Tac Vang Co., said his company was acting as broker for the two projects Green River Villas and Price Town in Binh Duong. More customers have visited these projects after Tet, but there has been no sharp increase in the number of transactions, he said.

He said homebuyers might be waiting for the market support policies to bring about practical effects.

Dang Thi Kim Oanh, general director of Kim Oanh Real Estate Co., said her company’s daily sales had reached about 10 lots in the projects in Binh Duong and Dong Nai since the end of Tet holiday. On some particular days, there are 30 successful transactions, she said.

Le Quoc Duy, general director of Hoa Binh House Co., said the three trading floors operated by his company in HCMC had recently conducted some 15 transactions per month. Most of the customers are end-users, who are seeking condos with low prices and preferential payment methods.

Fuel price rise pushes up cost of basic necessities

Foods prices in Hanoi are increasing due to higher transport fees following the petrol price hike on March 28.

After the ministries of Finance and Industry and Trade raised the fuel price to VND24,580 per litre (USD1.18), vegetable prices in major wholesale markets in Hanoi on April 1 also increased by VND500-3,000 per kg.

The prices at retail markets are even higher than at the wholesale markets.

Ho Thi Nga, a trader in Dich Vong Market said they had to raise the prices because transport fees increased. Furthermore, bad weather damaged fields in the north.

“Some farmers had to harvest fresh vegetable since two or three in the morning, during the rain so they charge a little more.” a trader in Hanoi said.

Prices of poultry and eggs also increased. Traders at Dich Vong Market increased their poultry prices by VND3,000-10,000 per kg.

“How can people get through tough times if prices just keep increasing one after another, we just want stable prices.” Nguyen Hai Anh, a resident in Thanh Xuan District said with Vietnamplus.

However, the cost of beef, pork and aqua-products remained relatively stable despite the increased transport fees.

Traders said consumers had limited their spending to save costs since the start of recession. “We wouldn’t be able to sell anything if we raised prices too much.” said Nguyen Thi Van, a trader in Nghia Tan Market, Cau Giay District.

South Korea’s ethoxyquin standard worries Vietnamese shrimp exporters

Vietnam’s shrimp exporters are concerned by a new South Korean food safety regulations that will test shrimp imports for ethoxyquin for one year.

South Korea’s Animal, Plant and Fisheries Quarantine and Inspection Agency (QIA) said they would impose compulsory testing for Ethoxyquin in Vietnamese shrimp shipments on holding them up to the standard of 0.01 ppm.

The testing will last from January 1 through December 31, 2013.

Last year, South Korea and Australia were regarded as two most favourable markets for Vietnamese shrimp exports, which rose despite a drop in several other major markets.

In 2012, South Korea was Vietnam’s fifth largest shrimp export market, bringing in revenues of USD171.4 million, up 8.8% from the year before. Meanwhile, shrimp exports to other major markets decreased, including those to the EU, which were down 24.5%, as well as the US, down 18.6%.

Many shrimp exporters in Vietnam are worried about increasing difficulties this year, as the country has already faced Ethoxyquin testing imposed by Japan.

According to the General Department of Vietnam Customs, the country took in over USD242.2 million from shrimp exports in the first two months of this year, down 6% from the same period last year.

The US surpassed Japan to take lead in importing Vietnamese shrimp during this two-month period. However, local exporters are aware that shrimp exports to this country would continue to face difficulties due to US anti-dumping measures.

Due to lower demand triggered by economic downturn, the EU fell from third place to become the fourth biggest shrimp importer of Vietnam after China during the period.

Apart from difficulties in the export markets, the Vietnamese shrimp industry is expected to face other challenges, such as unstable supplies. This year there was a mass shrimp die-off in several major breeding areas across the country.

Vietnam attends ABAC meeting in Singapore

Hoang Van Dung, Vice President of the Vietnam Chamber of Commerce and Industry, is joining 150 other business leaders from Asia – Pacific Economic Cooperation (APEC) economies at the 2nd APEC Business Advisory Council Meeting (ABAC 2) in Singapore.

During the April 3-6 event, delegates will discuss measures to boost regional economic integration, promote sustainable development, develop micro-small, small and medium-sized businesses, and accelerate financial markets’ integration.

They will make recommendations to the upcoming APEC Minister Responsible for Trade meeting due to take place in Indonesia on April 20-21.

The third and fourth meetings of the ABAC will be held in Japan in July and Indonesia in October, respectively.

Twenty-one APEC member economies are Australia, Brunei, Canada, Chile, China, Hong Kong (China), Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, the Republic of Korea, Taiwan (China), Thailand, the United States, and Vietnam.

Vietnam, Cambodia boost trade cooperation

The Vietnam -Cambodia Trade Service Exhibition 2013 (Ho Chi Minh City Expo 2013) officially opened at the Mondial Centre in Phnom Penh on April 3.

The five-day exhibition features 250 booths displaying high-quality products in the field of household plastics food and foodstuffs processing, interior decoration, garments, footwear, leather footwear, handicrafts, cosmetics, electronics and construction materials.

In her opening speech, Cambodia’s permanent Deputy Prime Minister Men Som Ol praised Ho Chi Minh City’s sponsoring annual exhibitions in Cambodia as a pratical contribution to promoting bilateral economic trade and services cooperation and strengthening the traditional friendship between the two countries.

Vietnam’s investment in Cambodia has increased significantly in the areas of agriculture, telecommunications, air transport, banking and tourism, she added.

She wished that Vietnamese and Cambodian enterprises would spare no effort to contribute to sustainable growth and peace in the region.

Nguyen Thi Hong , Vice Chairman of the Ho Chi Minh City People’s Committee said the exhibition provides a golden opportunity for Vietnamese businesses to explore the investment environment in Cambodia.

A series of trade and tourism promotions and cultural exchanges will also be held during the exhibition.

Vietnam is Cambodia’s second largest trade partner. Two-way trade turnover between the two countries reached US$3.3 billion in 2012, 17 percent higher than last year’s figure.

Improving int’l economic integration efficiency

Vietnam needs to revise its policies to accelerate international economic integration, delegates said at a workshop in Hanoi on April 3.

Leading economic experts, including those from the Central Institute for Economic Management (CIEM), said Vietnam should continue with its administrative reform to create a sound business environment for all economic sectors.

Vietnam needs to ensure macroeconomic stability and implement macro-policies in a consistent and flexible manner based on accurate analysis and forecasts, they said.

In addition, relevant ministries and agencies need to draw up their strategies for negotiating and implementing regional free trade agreements (FTA).

They proposed that the designated ministries and agencies finalise legal documents in line with international norms and provide businesses with legal aid to settle trade disputes.

A CIEM report shows that five years after Vietnam joined the World Trade Organisation (WTO), its imports have exceeded exports.

The report reveals that the country’s annual export growth hit 18.9 percent over the period, about 0.6 percent lower than the import growth.

Its export revenue has jumped 2.4 times from US$39.8 billion in 2007 when Vietnam joined the WTO to US$96.9 billion in 2011. However, the growth rate is still a bit lower than the figure recorded in the 2001-2006 period which saw exports rise 2.6 times.

CIEM attributed the export growth to the global rapid trade development and improved competitiveness rather than the impact of Vietnam’s WTO membership.

In addition, Vietnam has focused more on new emerging markets, especially China and the Republic of Korea (RoK), as a result of regional FTAs.

Conversely, the nation’s imports surged sharply after joining the WTO, but has recently slowed because of domestic difficulties.

Other factors, including the nominal exchange rate and foreign direct investment (FDI), have also affected imports, causing growth to fall from a high of 40 percent in 2007, to an average of 18.9 percent over the five year period.

Imports from China, the country’s largest partner, saw the greatest increase among its major suppliers.

Cambodia supports Vietnam rubber projects

Cambodia creates favourable conditions for the Vietnam Rubber Group (VRG) to implement rubber projects on its land.

The first Vice President of the National Assembly of Cambodia, Nguon Nhel, made the statement at a reception for VRG general director Tran Ngoc Thuan in Phnom Penh on April 3.

Nguon Nhel praised VRG’s investment in Cambodia for contributing to the development of its economy and society, as well as improving the locals’ lives.

Local people in Kampong Thong province have appreciated VRG’s social welfare policies, including those to  provide financial assistance for the construction of two pagodas and create jobs for them, he added.

The group plans to plant 100,000 hectares of rubber trees in Cambodia by 2014.

Agricultural and seafood exports to Japanese market

Due to different crop and weather patterns, Vietnam has plenty of opportunity to export agricultural and seafood products to the Japanese market. But there remain snags in meeting Japan’s strict food safety and hygiene requirements.

According to the Vietnamese Embassy in Tokyo, Vietnam-Japan economic relations showed impressive growth in 2012. Trade exchange between the two countries rose fast to US$25 billion from US$21 billion in 2011, with exports to Japan reaching US$13 billion (up 21 percent), Vietnam had a continuous run for trade surpluses with Japan to US$1 billion last year.

Vietnam’s exports to Japan are likely to increase by 20 percent to more than US$15 billion in 2013.

In recent years, a host of successfully negotiated important economic agreements has created favorable conditions for Vietnam to increase its agricultural exports to Japan. A sharp reduction in tax rates for all farm produce has opened opportunities for Vietnamese businesses to gain ground.

Under the Vietnam-Japan Economic Partnership Agreement (VJEPA), Japan is committed to reducing its levies by nearly 84 percent of Vietnam’s agricultural export value. When the VJEPA went into effect, Japan immediately rescinded 784 out of 2,020 agricultural tax lines—36 percent of the total agricultural tax previously levied and 67.6 percent of Vietnam’s export value.

The VJEPA roadmap until 2020 specifies that more than 800 kinds of Vietnamese agricultural and seafood products exported to Japan will be granted tax exemptions. Fourteen products like glutamate, soya beans, ginger, rambutan, and banana are eligible to enjoy tax reductions within 3-5 years.

Japan will continue reducing and removing import tariffs levied on 72 agricultural tax lines for seven years while a roadmap to reduce and abolish tariffs will be applied to 210 tax lines for ten years.

Vietnamese export businesses are taking advantage of opportunities to export processed vegetables and fruits, corn, and spices to Japan. Sixty-four out of 330 seafood items are subject to tax reductions, accounting for 71 percent of Vietnam’s seafood exports to Japan. As of January 2013, Japanese import tariffs have been lowered to zero percent.

At a recent seminar on food safety and agro-forestry and seafood exports, Deputy Minister of Agriculture and Rural Development Nguyen Dang Khoa said that since the signing of VJEPA in 2008, up to 86 percent of Vietnamese goods exported to Japan have enjoyed preferential tariffs. The VJEPA is considered a real boon for Vietnamese seafood exporting and processing enterprises which are set to improve the quality of products in line with strict food safety and hygiene requirements.

Khoa said Vietnam’s agro-forestry and seafood products are exported to more than 160 nations. Vietnam is one of the world’s leading exporters of rice, coffee, cashew nuts, and shrimp, which earned US$27.5 billion last year including US$2 billion from the Japanese market alone although the figure was still fall short of both countries’ expectations.

Sharing this view, Vietnamese Ambassador to Japan Doan Xuan Hung remarked that many of Vietnam’s high-quality agricultural and seafood products are not available in the Japanese market. Hung said Japan is Vietnam’s biggest ODA provider, leading investor and important trade partner. However, in fact, Vietnam’s exports to Japan are worth just 1.7 percent of Japan’s total import volume. The two governments are encouraging businesses from both countries to increase trade exchange and cooperation in the food safety and hygiene area.

The ASEAN-Japan Centre’s Secretary-General Yoshikuni Onishi said that with an average income of US$1,500 per capita, Vietnam has become an attractive destination for Japanese enterprises. To mark the 40th anniversary of diplomatic ties between Japan and Vietnam, the Centre has introduced a series of initiatives aimed at promoting bilateral economic, trade, investment, and tourism cooperation.

HCM City to host int’l conference on aviation logistics

International logistics scholars and representatives from aviation agencies and logistics companies will meet in HCM City on April 25-26.

The international conference is co-organised by the Vietnam Civil Aviation Administration, the International Air Transport Association (IATA) and the International Federation of Freight Forwarders Associations (FIATA) to discuss Vietnam’s aviation logistics in 2013.

Participants will work out proper solutions to link businesses in the logistics sector for the benefit of future development.

They will consider new opportunities and challenges for the sector as far as its security regulations are concerned.

According to the Vietnam Civil Aviation Administration, last year the sector carried 17.5 million of passengers (up 5.2 percent) and transported 201,000 tonnes of cargo (up 1.98 percent) compared to the previous year.

This year, the sector plans to carry 19.2 million of passengers, (up 9.8 percent) and transport 214,000 tonnes of cargo, (up 9.9 percent).

Power demand up 12 pct in dry season

The Ministry of Industry and Trade (MoIT) has projected that the country’s total power demand in the peak dry month of April would increase nearly 12 percent over the same period last year, exceeding 11 billion kWh.

The MoIT has also affirmed that the national power system will meet this month’s demand.

According to the Vietnam Electricity Corporation (EVN), three new turbines in Khe Bo, Hua Na and Nam Chien hydropower plants with a total capacity of 240MW will become operational in late April.

However, it raised difficulties in power supply in the coming months in southern areas, where scorching heat is taking water of reservoirs in service of hydropower plants.

In the first quarter of this year, the country’s total commercial power was nearly 25.9 billion kWh, a year-on-year rise of 10.81 percent.

The total generated and imported power was 30 billion kWh, an increase of 10.45 percent, said EVN.

It called on everyone, especially those in the south, to use energy efficiency devices and apply measures to save power in the wake of drought-driven water shortages for power generation in some localities.

Drop in rice price after Gov’t stockpiling program

The Government stockpiling program of one million tons of winter-spring rice is now complete in the Mekong Delta; however, there is still a lot of rice in stock with prices also showing a slight drop.

The price of rice has fallen by VND200 a kilogram, compared to early March. A kilogram of normal rice is fetching VND4,900-5,000, long grain rice VND5,100 and Jasmine rice VND5,600-5,800.

Huynh Phu Loc, a trader in Lai Vung District in Dong Thap Province, said that they have stopped buying because businesses have completed stockpiling without further demand due to export difficulty.

Do Minh Nhut, deputy director of the Department of Agriculture and Rural Development in Kien Giang Province, said rice output was more than 2.2 million tons in the winter-spring crop.

After the Government stockpiled one million tons of rice, there is hundreds of thousands of tons in stock now, mainly fragrant Jasmine and high quality varieties.

The provincial authorities have asked seven rice export companies in the province to purchase the inventory for farmers from this month.

The agricultural industry has advised famers to cultivate 60-70 percent of fragrant and high quality rice in the winter-spring crop, but traders and businesses have focused on buying low quality IR 50404 rice variety.

Le Minh Duc, director of the Department of Agriculture and Rural Development in Long An Province, said that there is bad coordination among rice production, consumption and export. Businesses are not interested in ordering farmers to produce as per contracts.

Duong Van Chin, director of the Dinh Thanh Agricultural Research Center in An Giang Province, has proposed to authorized organs to boost large scale rice fields and attract several businesses so that farmers can cultivate as per contracts.

This will help farmers reduce costs and remain secure about demand, while businesses can tightly control the rice origin and quality.

According to the Vietnam Food Association, Vietnam has exported 1.45 million tons of rice worth US$641 million since the beginning of the year and has met with difficulties due to abundant supply of rice from India and Thailand.

The export price is $400-410 a ton of five percent broken rice, $40 lower than that of India and Pakistan. The price is $360-370 a ton of 25 percent broken rice, $30 lower than India.

Because of low export prices, rice price is VND1,000-1,200 lower than in the same period last year in the Mekong Delta.

Construction material market in severe deadlock

With the real estate market faced with a sudden and unexpected economic crisis over the last three years, market for construction material has struggled to survive, with many companies having shut down, temporarily halted operations, or even been taken over by foreign firms.

According to Nguyen Quang Cung, vice chairman of Vietnam Association for Building Material, consumption of building material in the first quarter of this year was less than in the same period last year by 20-30 percent.

In particular, consumption of cement was 10.94 million tons, accounting for 19.54 percent of this year’s target, and 95 percent of consumption in the same period last year with cement inventory at 5.5 percent.

Consumption of architectural glass was 60 percent compared to same period last year; tiles and bricks merely touched 65 percent; and consumption of unbaked bricks was 75 percent year-on-year. Thus, unless the situation improves in the second quarter, there will be a huge surplus of cement, tiles, stones, and bricks.

Difficulties lie not just in the local market, building material producers also have to deal with outside pressures. According to the association, some cement companies had to sell out to foreign companies. Figures showed that FDI companies accounted for 33 percent of the total capacity of the industry.

Steel producers were also under the same pressure. Steel manufacturing merely reached 350,000 tons in March while the average output is 400,000 tons. Until now, steel inventory was around 320,000 tons, much higher than the limit of 220,000-250,000 tons.

In February, four members of Vietnam Steel Association stopped production and some operated perfunctorily. Besides a frozen property market and high overheads, steel companies also had to deal with fierce competition from imported steel.

Data sent by the Customs Department of Vietnam showed that in the first two months of the year, steel imports hit 1.3 million tons worth US$941 million, up 9.3 percent.

Le Van Toi, head of Department for Construction Materials, under the Ministry of Construction, said building material market will hardly improve significantly. He hopes that the situation will not become worse than last year.

Solutions to find ways out of the deadlock, such as, setting up technical barriers to limit imports, lowering duties, shutting down technologically backward factories, and exporting, have all been drawn but barely show a path forward.

However, experts said that the problems of the building material market cannot be solved while real estate market remains stagnant.

This difficult situation has made several companies transfer their projects or sell their stakes to other companies. Since the end of 2012, the merger and acquisitions trend has became more vibrant in the sector. For instance, the Hanoi Export-Import Joint Stock Company (Geleximco) sold 70 percent stake of Thang Long Cement Company at $230 million to Indonesian cement producer Semen Gresik; leading producer in tile market in Vietnam, Prime, sold 85 percent stake (around VND5 trillion) to Thailand’s Siam Cement Group; and The Vissai Group bought Do Luong Cement Company from Housing and Urban Development Corporation.

The Vietnam Association for Building Materials recently sent a report to the Prime Minister and the Ministry of Construction to ask for revision in planning, reduction in number of projects, and preventing foreign companies from taking advantage of the present crisis to acquire local firms.

The association also proposed to the Government to implement measures to limit import of ceramic tiles, architectural glass, and paving stones, and set up technical barriers for building materials.

Market demand remains sluggish

The economy is still suffering from poor aggregate demand while supporting policies of the Government have yet to bring about effects, says a report of the National Financial Supervisory Commission released last Friday.

The total retail sales of goods and services in the first quarter picked up 4.5%, versus a growth of 5% in the same period last year. The volume of goods in circulation increased 4.9%, versus 10.3% in the year-ago period.

State-funded investment fell 4.9% year-on-year, while credit growth was a mere 0.03% and the number of business startups dropped 6.8% over the same period last year.

Inflation was restrained at a record low in March, dipping 0.19% month-on-month, the sharpest decline since 2009, and inching up 6.64% year-on-year, the smallest rise since 2005.

By the end of the first quarter, inflation had edged up 2.39% against the year’s beginning and up 6.91% over the same period last year, the lowest level in four years, reflecting the very weak aggregate demand and purchasing power.

Regarding the monetary market, the commission remarks credit fund for production has not increased much, indicating the capital adsorptive capacity of the economy is still limited.

As of March 21, credits had inched up 0.03% while deposits had risen 3.86% against end-2012, while government bond remained an attractive investment channel for credit institutions.

As long as bad debt had not been adequately settled, enterprises would still have troubles accessing bank loans. Therefore, the credit growth target of 12% is a great challenge, says the report.

In the context of widespread bankruptcy, modest credit growth, sluggish demand and investment disbursement only meeting 15.4% of the year’s estimate, resolutions 01 and 02 of the Government should have been implemented in a more effectively way, says the commission.

The commission forecast economic growth in the whole year would be 5.3%. However, the economy is still facing multiple problems, including stagnant production.

Inflation in the whole year will likely stay below 7% as the market demand and credit growth remain poor. This situation gives ground for lowering deposit rate to 7% and lending rate to 10%, says the commission.

Nation to fund all investment promotion costs

The State budget will cover all costs for investment promotion activities from May 5 given a circular recently released by the Ministry of Finance.

According to the Circular No. 31/2013/TT-BTC, the State budget will cover 100% of costs for promoting the investment environment in Vietnam as well as investment policies of the Government via mass media in and outside the country. Expenditures for publishing investment guideline documents and related publications will also be covered.

The central budget will also pay for costs for investment promotion articles, reports and video items published on various types of newspapers, fees to maintain, upgrade electronic portals as well as to connect them with official websites of local authorities and overseas websites.

Besides, investment promotion programs in key regions will also benefit from the policy with an aim to lure foreign capital to Vietnam and encourage local enterprises to make investments overseas.

The circular also stipulates supports in expenses for business trips of civil servants and staff who join national investment promotion activities.

Heavy penalties for illegal goods

Illegal goods importers and dealers will be fined VND80-100 million if contraband volume worth over VND100 million is detected by authorities.

Vehicle owners, drivers or deliverymen, and warehouse owners involved in transporting and storing such a volume of goods will face the same penalty.

If the value of illicit goods is from VND1 million to below VND100 million, importers, dealers and other involved partiers will incur a penalty of VND200,000-VND40 million, according to a decree on administrative sanctions against trade violations.

The decree drafted by the Ministry of Industry and Trade is currently open for comments and will come into force on July 1 if the Government approves it.

In comparison with Decree 112/2010/ND-CP, the sanctions imposed by the new decree are heavier. At present, those involved in illicit trade are liable for fines of only VND20-40 million.

As per the new decree, smuggled goods and transport vehicles may be detained and destroyed if they pose risks to human health.

The new draft decree is drawn up in response to the complaints of local market management offices about light penalties for the trade of counterfeit and contraband goods, making the fight against illicit trade utterly hopeless.

In the new decree, the trade ministry suggests those making and trading counterfeit products should be fined VND100 million if a volume worth VND30 million is detected.

If the counterfeits are food, drugs, animal feed, fertilizers, cosmetics, cement, steel and helmets, the violators will face double the penalty.

Contraband cigarette dealers will be subject to a fine of VND100-150 million if a volume of 1,000-1,500 packs is discovered. The fine will rise to VND150-200 million if they smuggle more than 1,500 packs or commit repeated violations.

Rice exports improve with floor price removal

After the Vietnam Food Association (VFA) loosened management over floor prices for export rice, many local enterprises have seen their business situation improve.

VFA earlier fixed minimum prices for various rice varieties such as 5%, 15% or 25% broken rice to prevent unhealthy competition among local exporters. The association removed these floor prices this year, retaining the floor price for only the 25%-broken type.

As VFA has now fixed a single floor price of US$370 a ton for exports of 25% broken rice, rice exporters can decide on export prices but they must be higher than the floor price of US$370.

Lam Anh Tuan, director of Thinh Phat Co. Ltd. in Ben Tre Province, a member of VFA, said that many importers only agree to buy 5% broken rice at below US$410 per ton, the minimum price regulated by VFA earlier. Therefore, enterprises had seen rice exports stagnate.

Therefore, VFA has changed this regulation to facilitate trading of local enterprises.

A report of VFA shows that its member enterprises as of March 31 signed contracts to export 3.5 million tons of rice, up 20% compared to the same period of 2012.

According to the Ministry of Agriculture and Rural Development, the nation exported nearly 1.4 million tons of rice worth over US$616 million in the first quarter, rising 34% in volume but falling 6% in value compared to last year.

These figures suggest that local firms over the past few months have lowered rice prices to obtain export contracts.

Pham Thai Binh, director of Trung An Co. Ltd. in Can Tho City, told the Daily that Vietnam will export no less than 7.5 million tons of rice this year. However, the most worrying thing is that local enterprises have kept offering low prices to compete for export contracts.

HCM City, Vietnam Airlines seek to lure passengers

The Ho Chi Minh City Tourism Association and Vietnam Airlines on April 2 announced a discount programme aimed at stimulating domestic travel demand this year.

Vietnam Airlines will offer discounts of 38-58 percent on domestic flights from HCM City and Hanoi to Hai Phong, Da Nang, Nha Trang and Phu Quoc for tourists booking at 11 travel firms.

They include Vietravel, Sai Gon Tourist, Fiditour, Hoa Binh, Lien Bang and Festival.

The travel firms announced discounts of 35-42 percent on package tours to Da Nang, 30-47 percent to Hanoi, 23-34 percent to Nha Trang, and 27-52 percent to Phu Quoc and began their sales on April 1.

Last year, a similar programme opened in May and became popular despite the economic situation.

By the end of the year, it attracted 15,800 customers who got discounts of 35-40 percent on package tours.

HCM City businesses confirm niche in Cambodia

Over 100 businesses from Ho Chi Minh City are introducing made-in-Vietnam products at the Vietnam-Cambodia trade and service exhibition (HCM City Expo 2013) that opened in Phnom Penh on April 3.

The five-day event accommodates 200 booths, mostly focusing on food and foodstuff, household plastics, garments, footwear, handicrafts, cosmetics, office supplies, agricultural and constructional materials and decorations.

Opening the event, Cambodian Deputy Prime Minister Mensom Ol praised HCM City’s efforts in organising the annual exhibition, which, she said, contributes to boosting economic, trade and service cooperation between the two countries as well as their friendship.

She attributed the growing bilateral trade ties to Cambodia’s socio-economic development over the past years.

Vietnam has invested in various areas in Cambodia, including agriculture, telecommunications, aviation, and banking, she said.

She expressed her hope that supported by the two governments, businesses will enhance their partnership for each country’s economic development as well as stability, development and peace in the region.

Vice Chairman of the HCM City People’s Committee Nguyen Thi Hong said the fair offers a good opportunity for the city businesses to explore the market and seek long-term partners.

Within the framework of the event, there will be a wide range of activities, including a seminar on trade promotion and a charitable programme.

Currently, Vietnam is Cambodia ’s second largest trade partners after Thailand .

Last year, two-way trade stood at 3.3 billion USD, representing a year-on-year increase of 17 percent.-

Lower car fees give a boost to second-hand market

The recent government decree reducing registration fees makes the used car market more exciting.

Under Decree 45/2011/ NDCP which took effect on April 2, car consumers pay 10 percent less than before to register a second-hand car. Those who buy a new car can save 5 percent.

The new car market will not be influenced much by the decree, as the 15 percent fee is only good news for consumers in the Hanoi market, where it was previously 20 percent.

In Ho Chi Minh City, the rate was already 15 percent and in others it was 10 percent. Moreover, the Hanoi market only accounts for 12-15 percent of car purchases.

The used car market is heating up thanks to the decree, which reduced the registration fee for used cars from 12 percent to 2 percent.

Visitors to used car showrooms have increased significantly, according to Tran Hai Duong, salesman in a Hanoi branch of Vietnam Anycar Company, which trades used cars.

Dương says his customers were looking to buy used car models such as Huyndai Getz, Avante, Kia Morning and Forte, which cost 300-600 million VND (15,000-30,000 USD).

The decree will not positively affect the used car market, insiders predict. Before, due to the high registration fee for used cars, both sellers and buyers often agreed not to change their ownership on paper – making it difficult for authorities charged with regulating vehicle ownership.

But now that the fee to register a used Kia Forte 2011 is 10 million VND (500 USD) instead of 60 million VND (3,000 USD), many buyers are paying for ownership papers.

Nguyen Thi Cuc, President of the Vietnam Tax Consulting Association, said that decree was not only warming up the local car but also helped authorities manage the vehicles.

Even more importantly, if more people registered their cars, the national tax could bring in more capital, she said.

Illegal import of sugar threatens domestic production

Over 1,000 tonnes of sugar is illegally imported into Vietnam everyday through the southern An Giang border gate.

According to Nguyen Thanh Long, Chairman of the Vietnam Sugar Association, the problem had been happening for years, and had taken on a more organised nature.

Illegally imported sugar caused a lot of difficulties for sugar producers on the domestic market, he said.
In 2012, only 514 tonnes of illegally imported sugar was seized, of 2 percent of the estimated volume.

Prudential Vietnam prospers amid turbulent market

Prudential Vietnam maintained its growth last year with record new business premiums of nearly $71 million despite a challenging macro-economic environment.

The company’s financial results for the year ending December 31, 2012 show its total premium income grew 9 per cent, to a record VND6.592 trillion ($314 million), or about 36 per cent of the total premium income of Vietnam’s life insurance industry.

With these upbeat outcomes, Prudential remained the market leader in Vietnam with the largest market share in both new and total premium income.

Alongside the growth of its insurance operations, Prudential Vietnam’s investment performance remained strong. Total investment income was up 20 per cent to VND3.434 trillion ($163.5 million).

The firm produced an operating profit of VND1.218 trillion ($58 million), comparable to the level achieved in previous years.

Its earnings in 2012 were VND2.031 trillion ($96.7 million). The balance sheet and solvency capital were strong with total assets amounting to VND32.959 trillion ($1.5 billion) as of December 31, 2012, an increase of 16 per cent compared to the prior year.

To coincide with the announcement of its 2012 financial results, Prudential Vietnam also declared another round of Special Reversionary Bonus amounting to VND760 billion ($36 million) to long-term customers with participating policies. This bonus has been included in the accounts of the company for the year ending December 31, 2012.

This is the fourth time since 2007 that Prudential has announced a special bonus, following the first one in 2007 and two in 2012. These bonuses are the result of the growth of Prudential’s insurance operations as well as the success of its investment activities in the recent years.

Vinamilk milks the market

Vinamilk – the number one domestic market liquid milk maker – is ramping up efforts for completion of its two landmark milk processing facilities costing more than VND4 trillion ($190 million).

The first facility, based in Vietnam-Singapore Industrial Park (IP) in southern Binh Duong province, was successfully commissioned on March 26.

Specialised in producing powdered milk for children with an annual capacity of 54,000 tonnes, the plant features a closed automatic production system, ranging from processing to packaging, and a state-of-the art electronic oversight system.

Particularly, its two drying towers are some of the biggest with leading edge technology in Asia.

The second liquid milk processing facility, covering 20ha in My Phuoc IP in Binh Duong province, is now in construction finalisation stage, preparing for launching on April 30.

With VND2.4 trillion ($115 million) in total investment, the plant will have an annual capacity of 1.2 million litres per day in the first phase which will be doubled in the second phase – tantamount to more than 800 million litres per year – equal to the production of Vinamilk’s nine existing plants and will be Asia’s biggest plant by that time.

“With these two cutting-edge facilities, we expect to save costs, while bolstering production efficiency,” said Mai Kieu Lien, general director of Vinamilk.

The two plants are constructed in line with environmentally friendly criteria ISO14025, which will help save energy consumption and handle waste properly.

Vinamilk’s products made inroads in 26 countries worldwide and 50 per cent of its powder milk production output was shipped abroad, occupying 70 per cent of the company’s export value, said Lien.

With these two super-plants coming on stream and gathering stable production, Vinamilk strives to materialise its goal of hitting $3 billion revenue target by 2017 and be listed among top 50 milk businesses globally.

Transport firms on a changing road

Transport sector firms need a big shake-up to survive in the tough business climate.

According to Ministry of Transport (MoT) chief Dinh La Thang, the transport sector would incur its largest shake-up this year with 33 member companies under diverse corporations subject to equitisation, three construction businesses and several units belonging to Vinalines and Vinashin being dissolved.

Particularly, 10 big corporations established under Decision 90 must complete equitising within 2013, including Cienco 1, Cienco 4, Cienco 5, Cienco 6, Cienco 8, Thang Long Construction Corporation, Vietnam Waterway Construction Corporation, Waterway Transport Corporation, Vietnam Auto Industry Corporation and Transport Engineering Design Incorporated (TEDI).

These businesses could not delay shake-up plans as earlier MoT executives had enacted a resolution stipulating the leadership at these companies would incur suitable sanctions, including changes of their current duties, if their businesses failed to complete equitising plans on time.

Of corporations established under Decision 91 which are the backbone of Vietnam’s economy, Vietnam Airlines would be the first business to complete equitising before the end of 2013.

Thang said streamlining the transport sector businesses was a MoT core task in 2013. Thereby, in parallel to reviewing and amending legal documents under MoT competency to create an enabling business environment the MoT will be working actively with the National Asset Management Company to help would-be-equitised businesses deal with bad debts.

“Businesses needed to rescue themselves through substantial restructuring plans but not with a hostile attitude to MoT instructions,” said Thang.

Scores of businesses in the transport sector are in a critical situation. MoT statistics show that over 7,000 workers in the sector now sit idle, accounting for 8 per cent of total labourers. Transport businesses owe to workers VND204 billion ($9.7 million) in unpaid salaries and VND223 billion ($10.6 million) in unpaid social insurance fees.

Whereas, a MoT Financial Department report reveals together with Vinashin whose equity capital was totally lost on the back of underperformance, Vinalines bore huge losses.

Losses of parent company Vinalines alone in 2012 might exceed VND2,400 billion ($116 million) if payment items were fully entered in the accounts.

“From now to 2015, Vinalines will further bog down in losses unless the shipping market would soon recover and credit organisations agreed to reschedule Vinalines’ loans for shipbuilding and purchases,” said Vinalines’ deputy general director Le Anh Son.

Rice export hits 1.4 mln tons in Q1

As of March 31, Vietnamese enterprises shipped over 1.45 million tons of rice abroad, earning around $641.4 million in free-on-board (FOB) value and $665 million in cost, insurance and freight (CIF) value, according to the Viet Nam Food Association (VFA).

Prices of dried rice in the Mekong Delta are now ranging from VND5.200 ($0.25) to VND5.300 ($0.26) per kilo.

The Association has reported that the program in which banks provided companies with interest-free credits to buy 1 million tons of rice for national reserves ended.

At present, farmers in the Mekong Delta are hastening their harvest of the winter-spring crop and preparing for the next crop.

Last year, rice exports hit a record high of 7.72 million tons, earning $3.45 billion (FOB value), representing an increase of 8.3pct in volume, but a fall of 2pct in value.

Tuyen Quang sugar factory creates thousands jobs

The Son Duong Sugar and Sugarcane JSC (Sonsuco) company held an inauguration ceremony yesterday to celebrate the opening of a new sugar refinery in the Binh Xa commune of the northern mountainous province of Tuyen Quang’ Ham Yen district.

The facility is expected to create jobs for 300 local workers and tens of thousands of farmers in the sugarcane plantation areas.

The VND703 billion ($33.7 million) refinery is designed to produce a maximum of 4,000 tonnes of sugar per day initially but the capacity will be upgraded to refine 6,000 tonnes of sugarcane per day in the future.

In 2013, Sonsuco plans to grow over 11,000 ha of sugarcane and produce 56,000 tonnes of sugar, raising the company total revenue to over VND920 billion ($44 million).

Addressing the inauguration ceremony, Deputy Prime Minister Nguyen Xuan Phuc, who is also Head of the Northwest Steering Committee, suggested that the plant should prioritise labour safety, environmental protection and creating a stable and long-term raw material sources for its operation.

The Deputy PM also praised Tuyen Quang authorities’ for their efforts in creating a dynamic business environment and favourable conditions for investors to operate in the province.

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