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Over 200 BUSINESS IN BRIEF 9-10firms in Ca Mau go out of business

More than 200 enterprises in the southernmost province of Ca Mau have gone out of business since the beginning of this year, said the provincial People’s Committee.

Ineffective business and debt were given as the main reasons for their collapse or halt. Most of the enterprises had evaded tax amounting to tens of billions of dong and had not announced their situation to the authorities.

Committee chairman Pham Thanh Tuoi proposed that trade banks create favourable conditions to rescue surviving enterprises from bankruptcy.

“Bank support is expected to help enterprises overcome difficulties and operate effectively,” Tuoi said.

As for those who went out of business, Tuoi asked authorities to identify them and to ensure all bankrupt enterprises completed procedure in accordance with the law.

There are more than 20,000 enterprises operating in the province with a total registered capacity of over VND13 trillion (US$625 million), generating about 20,000 jobs.

Slowdown sees smart phone slump

Sales of mobile phones fell sharply in the second quarter of this year, as consumers reigned in their belts in response to the bleak economic outlook.

Around 5.4 million mobile phones were sold in the second quarter of this year, representing an 18 per cent drop on the previous quarter, according to a report from the International Data Corporation’s (IDC).

Feature phone shipments accounted for the bulk of sales (4.5 million), but this still represented a fall of 20 per cent. Smart phone sales (900,000) proved more resilient and fell by only 4 per cent.

According to Vo Le Tam Thanh, market analyst for Client Device Research at IDC Viet Nam, the falling sales can be attributed to the pause in consumer purchasing in light of high inflation and the global recession, which have hindered disposable income in the country.

Thanh highlighted smart phones as a potential tool to help boost the market.

“Migration from feature phones to smart phones has been very aggressive in Viet Nam, added Thanh “Last year, sales of smart phones in Q2 only hit 300,000; now they have rocketed to 900,000.”

He predicted that smart phones will bounce back in the next three months as vendors are introducing more affordable models. At the same time, providers are about to reduce their third generation technology (3G) data prices.

The IDC’s statement also reported that Nokia finished the second quarter as the top mobile phone seller, accounting for more than half of the total mobile phone sales in Viet Nam.

Samsung’s entry-level devices continued to top the list of smart phones in the country.

City grapples with suspended projects

Members of the HCM City People’s Council at a meeting yesterday continued to search for solutions to the problem of suspended development projects that has negatively affected the lives of many city residents.

The director of the city’s department of Natural Resources and Environment, Dao Anh Kiet, said the reason behind the suspension of many development projects was not a shortage of land for resettlement programmes. Rather, the main causes were delays in compensation and land clearance.

Council members at the meeting asked city authorities to propose measures to cope with the delays in site clearance.

The deputy chairman of HCM City People’s Committee, Nguyen Huu Tin, said the city would re-consider the status of many suspended projects.

The projects to be maintained will be publicised in the media and the interests of residents in the places where these projects are located will be ensured.

Until the end of the year, city authorities said they would accelerate the implementation of projects in which investors have completed 100 per cent of the site-clearance compensation.

For projects that have had only 50 per cent of compensation paid, the city will create favourable conditions for investors if they follow a predetermined schedule to carry out the projects.

For projects in which the investors and affected residents cannot reach an agreement on the level of compensation, the city authority will transfer these projects to the Construction Department for the next steps under the current regulations, according to Tin.

In her concluding remarks, the chairwoman of HCM City People’s Council, Nguyen Thi Quyet Tam, said the city authority would provide not only enough resettlement houses but also vocational training and jobs for families affected by the many development projects in the city.

She said the city would also try to improve the quality of the city’s urban planning and re-consider whether to resume or end work on all the suspended development projects in the city.

Tam asked several Government agencies to resolve the issues facing the delayed projects in an effort to reduce the negative impact on local residents’ living conditions.

Another council member, Le Hong Son, said he was concerned about the shortage of schools and classrooms in several districts, especially in new urban areas, export processing zones and industrial parks.

Tran Tri Dung, director of the city’s Planning and Architecture Department, said the department must co-operate with the education sector to build schools.

Dung said construction of schools must fit the education sector’s school development scheme and the population density in each district.

In reply to council member Tran Van Thien’s question about the low quality of urban planning, Dung said there was a shortage of staff. The Planning and Architecture divisions at the district level have a total of 300 staffers, including 46 architects.

He said the city’s Department of Planning and Architecture has worked with universities to train more staff in these fields. It has also cooperated with foreign agencies in further training for existing staffs.

Foreign reserves surge to $20b, says ADB

Viet Nam’s foreign reserves have surged from a level of just $9 billion last year to US$20 billion at the end of last month, equivalent to 2.4 months of imports and the highest level since 2009, according to Asian Development Bank figures released on Wednesday in the bank’s report, Asian Development Outlook 2012.

A research team from the Bank for Investment and Development of Viet Nam (BIDV) has pegged the nation’s foreign reserves at an even higher level of $23 billion.

A shrinking trade deficit has helped strengthen reserves and stabilise exchange rates. The General Statistics Office has reported that, in the first nine months of the year, the nation had a trade surplus of $34 million, with an improved balance of payments. The Asian Development Bank (ADB) has also forecast that the current account deficit this year would be lower than previous estimates as exports were exceeding targets.

At the end of the first quarter of this year, the ADB set the country’s foreign reserves at $17 billion, equivalent to two months of imports and $3.5 billion higher than the estimate of the International Monetary Fund (IMF).

The Government has said that foreign reserves could cover 12 weeks of imports by the end of the year. The Prime Minister has approved a strategy for 2011-20, requiring foreign reserves to rise to at least 200 per cent of total short-term foreign debt.

Vacancy rates fall for retail space

Though the economy remains mired in difficulty, the property market’s retail business segment is showing encouraging signs with vacancy rates falling in the third quarter, according to property services companies.

A report by CBRE Viet Nam says the total vacancy rate for both department stores and shopping centres has decreased from 15.5 per cent in the previous quarter to 12.4 per cent.

The monthly rental is around US$103 and $105 per square meter respectively for department stores and shopping centres in the downtown area, unchanged in case of the former and 3.4 per cent down for the latter.

Outside the downtown area, the rents are respectively $47.5 and $30, 2.5 per cent down in case of department stores and unchanged in case of shopping centres.

The third quarter saw notable activity within the technology sector. Telecom operator FPT opened 13 retail stores across 10 cities, including three in HCM City. HTC opened two concept stores in HCM City at the Crescent Mall, District 7, and Nguyen Hue Street, District 1, while Sony opened a new store on Dong Khoi Street, District 1.

Fashion and food and beverages also accounted for a large portion of demand. Ninomaxx and Nine West opened new stores, and global ice cream chain Baskin-Robbins continued its expansion with the opening of two stores in Diamond Plaza and the Crescent Mall.

Trung Nguyen Coffee expanded notably in the quarter, opening two stores on Dong Khoi Street. It also rolled out a new concept of “coffee corner” to sell ground coffee at Vinatex and Citimart.

It is well known that a number of major international F&B retailers are looking to enter or expand. The immediate consequence has been a concerted drive by local brands to expand and reinforce market share.

A prime example of an international F&B group expanding into Viet Nam is Johnny Rocket’s, the fast food chain, which is scouting for a location for its first restaurant in HCM City, to be followed by others in Ha Noi and central Da Nang City.

Apartments at reasonable prices, with good quality, and built by well-known developers got a positive response from buyers.

Nam Long’s Ehome 3 project in Binh Tan District saw strong turnout at the launch and swiftly sold over 50 per cent of available units.

Sunview 3 in Go Vap District also saw around 200 bookings.

In the last four years the affordable sector has seen less price fluctuation and tended to retain value better than other segments, according to CBRE Viet Nam.

Affordable units now cost an average $706 per square metre, down 0.3 per cent from last quarter and 3.1 per cent from a year ago. For the high-end ones, the fall has been 2.4 and 7.7 per cent respectively.

Almost 3,000 units have been completed in Q3, an increase of 19.9 per cent and 22.2 per respectively.

The market appears to have broken into three distinct brackets, the first tier comprising of well-funded developers who are able to finish their projects on schedule and maintain sales rates.

The second tier has developers who have slowed their projects and typically offer the biggest discounts to get them back on track again.

The third tier has projects delayed indefinitely, with their promoters suffering significant brand damage.

Unlike in the previous quarter, 87.7 per cent (or 2,620 units) of the new units in Q3/2012 were in the high-end segment. The remaining was from an affordable project in Binh Chanh District.

The majority of developers continued to try and hold prices at levels witnessed in recent quarters. But the third quarter has indeed seen isolated examples of developers offering significant discounts. This typically occurs at projects where pricing appears to be inappropriate or where the developer needs to stimulate sales and cash flow to move a development forward.

Savills Viet Nam said four 3-star and two 4-star hotels with more than 600 rooms entered the market in the third quarter, while one 3-star in District 5 closed. Thus the total number of 3 – to 5-star hotel rooms grew by 4 per cent quarter-on-quarter and 13 per cent y-o-y.

The average occupancy was 64 per cent, decreasing 2 per cent this quarter in spite of the average room rate (ARR) falling by 8 per cent to VND1.845 million/ room/ night.

All three grades had lower ARR than in the second quarter. The 4-star segment saw the sharpest decrease of 8 per cent followed by 5-star (4 per cent) and 3-star (1 per cent).

The overall revenue per available room, or RevPAR, decreased by 9 per cent this quarter, but increased by 1 per cent year-on-year. The sharp decrease was mainly due to 4-star rates falling by 20 per cent and 5-star rates by 7 per cent.

In the first nine months, tourist arrivals in Viet Nam increased by 10 per cent compared with the same period last year.

The number of business travellers was up 19 per cent against the same period last year, a good sign for the 4 – and 5-star segments.

In the next two quarters three 5-star projects with 873 rooms are expected to hit the market, negatively affecting the segment’s occupancy rate.

A further 25 3 – to 5-star projects are in the works, and will add more than 5,400 rooms to the market.

Hotels are beginning to be built in new urban areas. One 4-star and 5-star hotel each with around 1,000 rooms will be built in District 7.

IT firms struggle in own market

Information technology hardware and electronics have witnessed a high growth rate in Viet Nam but local companies are struggling against foreign-invested firms to get a foothold in their own market.

Revenue of the ICT hardware and electronics industry reached more than US$11.3 billion last year, accounting for 82 per cent of total turnover of the whole sector last year, and over 100 per cent against the previous year, according to data from the Viet Nam ICT White Book 2012.

However, Vietnamese enterprise production accounted for only 10 per cent of the total value and the three sub-sectors generating the largest revenues – electronics and telecommunications, mobile phones and computers – were in the hands of foreign-invested companies.

Nguyen Trong Duong, director of the Information Technology Department under the Ministry of Information and Communication, said high growth last year was thanks to the export turnover of foreign-invested companies such as Samsung, Canon, Panasonic, Foxcomm and Nokia.

“These companies have built new plants and have begun to export,” Duong said.

Total export turnover of spare parts, computers, electronic products and telecommunication equipment reached $10.89 billion last year, an increase of 92 per cent over the previous year, White Book revealed.

Mobile phones earned the highest export revenue with $6.89 billion, accounting for more than 60 per cent of the total, while revenue from hardware products was small and tended to reduce.

Viet Nam has been developing its ICT hardware and electronics industry for the last 20 years but domestic companies are still struggling to get a foothold in the domestic market. Currently, most Vietnamese enterprises are operating in manufacturing and assembling desktop computers but the localisation ratio of products remains modest as most accessories and parts must be imported.

Analysts said that with the small market capacity, high production cost and underdeveloped research and development, Vietnamese enterprises would find it difficult to compete with Chinese products. They suggested Viet Nam focus on developing support industries, with Vietnamese companies working as satellites for foreign-invested companies, and increase investment in R&D.

Duong said producing computers and mobile phones, like other big foreign companies were doing, was not suitable to most Vietnamese small and medium enterprises.

$1.3 billion invested in central EZ

As much as US$1.3 billion has been invested in the Chan May – Lang Co economic zone in the central province of Thua Thien Hue so far this year.

The registration amount is allocated from 11 foreign direct investment projects in the province.

Of these projects, Singapore’s Banyan Tree has invested the most by far, with nearly $1 billion in eco-tourism projects.

According to the provincial People’s Committee, the Lang Co – Chan May economic zone has attracted up to 32 investment projects for the province.

The committee said the zone’s location near national road 1A and Lang Co Bay makes it highly attractive to investors, as does its deep-water port, which is very convenient for transport on both land and sea.

The province has invested an additional VND1,733 billion ($36,4 million) in improving and establishing essential infrastructure in the zone including a 130 metre-long quay, a 80-kilometre road, and three electrical transformer substations with total capacity of 75MVA, among others.

Also, many priorities have been made to attract investment such as tax exemptions for four years after, a 50 per cent tax reduction for the following nine years and a 50 per cent tax income for any high-income employees.

Real estate projects in line for the chop

A multi-ministry team has begun to inspect real estate projects in cities and provinces across Viet Nam this month to determine which to close down.

Deputy Construction Minister Nguyen Tran Nam said representatives from construction, finance, government office, investment and planning and natural resources and environment ministries would take part.

Nam said inspectors would examine on-going and delayed projects, deciding which to close down and which to be allowed to continue or be restructured.

He added that many property investors had developed luxury residential projects with the co-operation of local authorities who had ignored real market demand.

Many developers built luxury complexes in areas with poor infrastructure and social services, such as lack of safe water, schools and markets. This was why no one was interested in buying their properties, Nam said.

Selling plots of land to attract capital from housing developers created over-heated land prices and a fake increase in demand.

Experts said developers should build small apartments for first-home buyers rather than targeting the rich and speculators.

Export industrial processed products earn $6.2 billion

Viet Nam exported US$6.2 billion worth of industrial processed products in September, down 9 per cent against August but up 17.1 per cent from last year’s Septermber, according to the Ministry of Industry and Trade.

This has brought the total export value of these products this year to $53.19 billion, a 25.5 per cent rise compared to the figures from the same period last year, and 64 per cent of the country’s total export turnover.

Export items recording the highest turnover growth included telephones and computers (77 per cent), and electronic products and components (220 per cent).

However, other export products have achieved slow growth due to the global economic downturn’s impact. These include items such as textiles, wood products, footwear and crude oil.

Desalination equipment shipped to Saudi Arabia

A Vietnamese firm operating in central Quang Ngai Province has delivered 350 tonnes of desalination components to a plant in Saudi Arabia, Doosan Heavy Industries Viet Nam confirmed the transaction to the Viet Nam News on Thursday.

The cargo, which included 631 sections of steel pipe and four flash tanks, was shipped to the Ras Al Khair development projects in Saudi Arabia on Monday by Doosan Vina’s ‘Water Business Unit’.

Desalination is the process of removing salt and other minerals from saline water.

SCG develops human resources programme

SCG, one of the leading conglomerates in ASEAN, is to hold a recruitment programme at a special job fair to be held at the University of Technology in HCM City today.

Students can learn more about job opportunities across a range of divisions including chemicals, paper, cement, building materials and distribution.

The SCG booth at the fair will offer information and advice from experts about the company’s employee development procedures. SCG has continuously honed its human development management in order to take better care of employees and prepare them for future growth. They hope that this ethos will attract talented new graduate students from leading universities in Viet Nam who will help to build a high quality team to support SCG expansion within the ASEAN.

Big C opens 20th outlet in Binh Duong Province

The supermarket chain Big C, a subsidiary of French retailer Casino Group, has opened its 20th outlet in the country in southern Binh Duong Province’s Thu Dau Mot City.

Covering 6,500 sq.m, the supermarket sells 4,000 items, including food, cosmetics, clothes and household goods, with 95 per cent of them locally made.

In addition, more than 30 stalls from well-known brands like KFC, Lotteria, Trung Nguyen Coffee, Samsung and PNJ sell their goods in leased spaces in the supermarket’s lobby.-

Cushman and Wakefield offer upbeat forecast for office space

Cushman and Wakefield Viet Nam predicts that the year end will still see an increase in the supply for Grade A office space in the Central Business District (CDB). Large areas of new supply and continued vacancy of some 132,000 sq.m. will put strong pressure on rents which are forecast to continue to decrease.

Q3 saw no new Grade A or Grade B office buildings entered the market. The current supply is at approximately 137,000 sq.m from seven Grade A office buildings and 570,000 sq.m from 42 Grade B buildings.

Net asking rents remained unchanged quarter-on-quarter for both grades, but decreased by some 2 per cent year-on-year for Grade A and 7 per cent year-on-year for Grade B.

Asking rents for Grade A are currently in the region of US$39 to $60 per sq.m per month and from $16 to $39 per sq.m per month for Grade B (serviced charge included, VAT excluded). As rents keep decreasing, Grade A occupancy rate increased by 2 per cent quarter-on-quarter, to around 88 per cent; Grade B increased by 3 per cent quarter-on-quarter, standing at 87 per cent.-

First property fair to lay down foundations in Ha Noi next month

The capital city’s first real estate fair is set to be held from October 19-21 and aims to create a bridge between traders and customers, according to the Viet Nam Real Estate Association.

Phan Thanh Mai, the association’s general secretary, said the association planned to hold the fair every year in Ha Noi and HCM City to bring transparent information about property products to customers and promote investment in the local property market.

The fair would have 30-50 pavilions to introduce property enterprises and trading floors, including the Northern Green Land Company, AsiaInvest, DTJ and Maxland. Property showcased at the event is located in Ha Noi, Ha Long, Hai Duong, Da Nang and HCM City.-

Property buyers need better rights protection, say experts

Viet Nam needs an association to protect the rights of people who buy property, according to experts.

Viet Nam has many associations protecting large real estate investors but individuals who buy property have little protection, especially people who have bought apartments in high-rise buildings.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said there are two associations protecting the interests of property buyers: the Consumer Protection Association and the Viet Nam Real Estate Association.

Chau said the main issue was that regulations on fees and management for apartment buildings were inconsistent, and the interests of people living in the apartment buildings did not receive enough attention.

HCM City Securities leads brokerages

HCM City Securities Co led the market in terms of brokerage services in the third quarter with a 12.5-per-cent market share, according to the HCM City Stock Exchange. Other top brokerages included Saigon Securities Inc (SSI) with a nearly 11-per-cent market share and ACB Securities Co with an 8-per-cent market share. Compared to the second quarter, VietCapital Securities, Vietinbank Securities and Bao Viet Securities replaced Phuong Nam Securities, VietDragon Securities and Agriseco in the top 10.-

Sai Gon AM gets three-year extension

Sai Gon Asset Management’s Viet Nam Equity Holding and Viet Nam Property Holding funds have been allowed to extend their operations by three years and the firm will continue a share buyback programme. The firm expects to transform the two funds into open-end funds in 2014, laying the groundwork for more investment opportunities once the market recovers.

“The current economy environment appears challenging, but the long-term prospects for Viet Nam remain bright,” said Sai Gon Asset Management chairman and CEO Louis Nguyen.

Hoa Phat Group to pay large dividends

Steelmaker Hoa Phat Group (HPG) will pay a dividend on last year’s profits in the last quarter of this year. The dividend will be paid in the form of 69.8 million shares to be issued for this purpose. HPG had a retained profit as of June 30 of over VND2 trillion (US$95.2 million). After the dividend payment, the company’s charter capital will be increased from nearly VND3.5 trillion ($166 million) to nearly VND4.2 trillion ($200 million). HPG also plans to pay a 10-per-cent cash dividend on current year profits in November.

Landmark Tower provides tidy profit

Real estate developer FLC (FLC) saw revenue in the first nine months of this year of over VND1 trillion (US$47.6 million), completing approximately 70 per cent of its target for the year. Around VND600 bilion ($28.5 million) of the total came from apartment sales at FLC Landmark Tower.-

Cotton-field expansion plan fails to meet target as profits remain low

A Government plan to expand the country’s cotton cultivation area to 30,000ha by 2015 will likely fail to meet targets due to the low economic value of cotton compared with other crops.

Under the government’s plan for the 2010-15 period, the country would have to plant a total of 20,000ha of new cotton.

However, for the 2010-11 period, only 790ha of new cotton were planted, according to a report in carried by Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times) newspaper.

In the first three-quarters of this year, the country planted only 200ha of new cotton, which did not meet even 10 per cent of the plan for the period.

Experts said that farmers were reluctant to grow cotton because of low profits. Cotton prices are between VND17,000 and 18,000 a kilo (US$0.8-0.85).

In addition, investment in intensive farming and equipment for cotton farming was still low.

The cotton output in the country meets only 2 per cent of the demand of the textile industry.

Experts said the Government should assign the Ministry of Agriculture and Rural Development to set up detailed cotton-zoning plans in Tay Nguyen (the Central Highlands) and the northwestern and south-central regions, the country’s largest cotton cultivation areas.

Phan Huu Ton, director of the Ha Noi University of Agriculture’s Centre for Conservation and Development of Crop Genetic Resources, said the country’s current cotton varieties had low yields and poor quality.

Cotton varieties planted in the north have a cultivation period of 145-160 days but have low resistance to green leafhoppers, and have a low yield of about 1.2 tonnes per hectare.

The Nha Ho Research Institute for Cotton and Agricultural Development in southern central Ninh Thuan Province has been conducting research on inter-cropping cotton and other short-term cash crops in major cotton-growing areas.

In the Tay Nguyen (Central Highlands) region, the intercropping of corn and cotton brought VND1.3-2.5 million more in profits per ha compared to fields planted only with cotton.

The profit was VND5.4-8.5 million higher per hectare compared to fields planted only with corn, according to the institute.

Province to boast revenue from farms

Dong Nai People’s Committee will invest VND46 billion (US$2.2 million) in developing sustainable agriculture.

The three-year project aims to help farms produce more products with competitive prices for domestic use and export. It also targets to minimise adverse effects that agricultural production might have on the environment.

The push to improve farming stems from the fact that product quality hasn’t measured up, thus prices have been low, dissuading farmers from increasing farm production.

Under the project, the province will grant preferential loans to farms which produce goods for export.

A fund to encourage agricultural production will be used to support the application of technology into production to minimise post-harvest losses. This will apply to farming and aquatic products.

The Southern province will fully fund product trademark registration and website construction.

Besides, farm owners will get free consultations on how to protect their trademarks.

Training courses on farm management, marketing and trade promotion will be held for farm owners and their staff. These courses will receive support from provincial authorities.

With such support, the provinces will set a target to raise revenue from each farm to VND6 billion ($288,000) a year from the current VND2.6 billion ($127,000).

Under the project, the number of the farms meeting standards will increase from around 2000 to 2,500 by 2015 and 3,000 by 2020.

Of the 2,161 farms, 524 specialise in cultivation and 1,539 in animal husbandry.

The province has three farms planting forests, 25 raising shrimp and fish and 41 combining tree planting and animal raising.

Most of the farm owners have equipped themselves with machines to improve productivity and hundreds of others have applied information technology to production and trading.

Farmers urged to grow high quality rice

Rice farmers in HCM City who cannot switch to other crops because of geographical conditions or other reasons should grow high quality rice or produce rice seeds with high economic value to increase their profits, experts said.

Under the city’s policy to develop agriculture, about 20,000ha of rice fields in outlying districts have been converted to cultivate vegetables, flowers, shrimp, ornamental fish and other crops with successful results over the past years, according to the city’s Department of Agriculture and Rural Development.

Vegetable cultivation, for example, now brings in a revenue of about VND600 million (US$28,500) per hectare a year, several times higher than rice cultivation.

Under the city’s zoning plan for agricultural land, it will only have about 3,200ha of rice in outlying areas, mostly in Cu Chi and Binh Chanh districts, by 2020.

However, the disadvantage of rice cultivation in the city was its low productivity, experts said.

In addition, not all rice fields can be converted to grow other crops because there have been low-lying areas and alum contaminated areas which were only suitable for rice cultivation, they said.

Speaking at a meeting middle last month, Nguyen Huu Hoai Phu, deputy chairman of the Cu Chi District People’s Committee, said despite rice not being a crop with high economic value, its cultivation cannot disappear rapidly in outlying districts, especially in Cu Chi.

Besides geographical conditions, traditional cultivation habits and an unwillingness to apply new production models, especially among older farmers, were posing obstacles, he said.

He explained that the older farmers were not willing to switch to new production models if they did not see in advance their effectiveness.

With a farming area of 26,000ha, Cu Chi now still has about 5,000ha of rice fields.

Phu said the district would prioritise investing in infrastructure for agricultural areas which have conditions to create large-scale fields for rice and vegetable cultivation.

This would enable farmers to plant high quality rice and co-operate with companies in selling their produce, he said.

Nguyen Thi Anh Ngoc, chairwoman of the Tho Viet Agriculture Co-operative in Cu Chi, said her co-operative would co-operate with local farmers to grow 50ha of rice under the Viet Nam Good Agriculture Practices (VietGap) standards in this year’s winter-spring crop.

In Cu Chi, some communes’ vegetable farming areas were inundated by rainwater for about four months a year and farmers can take this time to plant rice, she said.

In last year’s winter-spring rice crop, Tho Viet co-operated with several farmers in Tan Phu Trung, Trung Lap Ha and Tan Thong Hoi communes to plant 20ha of fragrant rice varieties, including Jasmine, ST and Nang Hoa 09, under VietGap standards.

“Planting rice under VietGap standards has helped farmers reduce by nearly 50 per cent the use of chemical fertilisers and pesticides, get higher selling prices and have guaranteed sales,” Ngoc said.

Le Hung Lan, director of the Hoa Tien Seed Co Ltd in Go Vap District and creator of the fragrant rice variety Nang Hoa 09, said it was suitable for planting in alum contaminated areas and was resistant to drought and diseases caused by brown plant hoppers.

This high-quality rice variety is now exported to the US and Australia at prices of $800-850 a tonne and its seeds for cultivation are now sold at a high price of VND18,000 a kilo.

The high price was a good incentive for outlying districts to produce seed of this rice variety, Lan said.

Le Minh Dung, deputy director of the Department of Agriculture and Rural Development, said to help rice farmers increase their income, districts should define and zone cultivation areas clearly so the city can invest in infrastructure and provide extension services for planting high quality rice or producing rice seeds that have high economic value.

Gov’t warns wood furniture exporters of anti-dumping lawsuits

At the International Travel Expo at the Saigon Exhibition and Convention Center in Ho Chi Minh City, local wood furniture manufacturers and handicraft businesses were warned to offer competitive export prices for the US market, so as to avoid anti-dumping lawsuits.
Wooden furniture exporters need more support from the government (Photo: SGGP)

The Vietnam Trade Promotion Agency said that 76 wood furniture items coding HS bound for the US market, accounting for 24.6 percent of total exports to the US, were in high risk of facing an anti-dumping lawsuit by US authorities.

Bach Van Mung, head of the Vietnam Competition Authority, said the trend was for commodities to be exported to many countries in the world, thus helping enterprises expand their production and create more jobs for Vietnamese laborers.

Along with the positive side, there is a growing worldwide trend that more and more countries adopt the policy to protect domestic production. Accordingly, more foreign businesses have banded together and filed anti-dumping petitions against Vietnamese exporters.

From 1994 to 2007, there were 20 anti-dumping lawsuits against Vietnamese commodities. Within three years, from 2008-2011, Vietnam faced 10 such suits and in the first six months of the year, there were two anti-dumping suits against Vietnamese exporters.

Vietnamese wood furniture is one item at high risk of facing an anti-dumping lawsuit, although profits in this product is less than 5 percent, since 80 percent of the raw material has to be imported, according to the Vietnam Timber and Forest Product Association (Viforest). Vietnam ranks second in Southeast Asia in terms of wood products exports, shipping goods to 120 countries.

Exports of wooden furniture totaled US$1.82 billion in the first eight months, up 20 percent year-on-year. The industry hopes to increase that to $3.1 billion this year and has enough export orders on hand to hit the target.

These lawsuits will place enterprises in difficulties in operations and if they lose the case in court, they will forfeit a high anti-dumping tax that will totally destroy their competitive ability. For instance, the US has imposed new anti-dumping taxes on Vietnamese pangasius since 2002 and an anti-dumping lawsuit against frozen warm water shrimp in 2003. Recently, some more new commercial protection tools appeared along with threat of anti-dumping lawsuits.

Since Vietnam is not recognized as a global market economy nation, some countries take advantage and file anti-dumping lawsuits. Vietnamese businesses only concentrate on expanding markets rather than gather information of countries that they intend to export to.

As a result, since 2008, the Ministry of Industry and Trade has unveiled a new early warning system to inform businesses about possible anti-dumping cases in foreign markets. The system works on data from foreign markets which includes quantity of commodities, domestic production decline and price decrease.

The color-coded system is available on the website www.canhbaosom.vn and its English version, www.earlywarning.vn. The website categorizes export items in three colors: green for low risk of being sued, yellow for medium risk, and red for high risk. Based on this, businesses can make timely price adjustments to avoid legal proceedings.

Vietnamese firms have so far faced 36 anti-dumping and anti-protection lawsuits since 1994, mostly by the US and the EU, according to the Vietnam Chamber of Commerce and Industry.

The new system has been set up under a project financed by the Danish-funded Global Competitiveness Facility.

Vietnamese handicrafts sold in 100 countries

Vietnamese handicraft products are being exported to more than   100 countries in the world, said Duong Dinh Giam, director of the Industrial and Strategic Study Institute under the Ministry of Industry and Trade, at a seminar in Da Lat on October 5.

The seminar was being held to discuss the various world markets open for Vietnamese handicraft products that are made in central and highland provinces of Vietnam.

Vietnamese handicrafts and furniture products are being exported to 100 nations and territories in the world, including traditional markets such as China, Hong Kong, Singapore, Japan, South Korea, the US and EU countries.

Vietnamese handicrafts are made from materials like rattan, bamboo, leaves, porcelain, lacquer, and cloisonné, with some exploiting fabric embroidery.

Total turnover of art and craft exports in the first eight months of the year reached US$1.1 billion and expected to touch $1.6 billion by year end.

However, the weakness of the Vietnamese handicraft sector is that businesses are pursuing backward technologies and there is no brand development strategy for any products.

Participants at the seminar said that the government must develop handicraft villages in such a way as to connect them with tourism programs, help in creating brands and adopt more environmental protection policies.

Domestic gas prices shadow global increases  

The Ministry of Finance has agreed for five gas enterprises to raise their prices from October as they said the request was reasonable.

According to the Department of Price Management under the Ministry of Finance, five wholesalers including the PV Gas Trading under Petrovietnam Gas JSC, Saigon Petro, Petrolimex Hanoi, Petrolvietnam Southern Gas JSC and the Petrolvietnam Northern Gas JSC should all register their proposed increases.

The PetroVietnam Gas East Company Limited (PVGas Saigon) must also register their price ranges.

As of October 2, the Department of Price Management had received requests from all six enterprises and agreed to increase the price by VND13,500-16,590 (USD0.65-0.80) per kilo.

Domestic prices will increase because of the global gas price in October increased by USD45 per tonne compared to last month. After considering the import tax and fees and other expenses, gas prices had increased by an additional VND16,299 per 12 kilo cylinder.

The wholesale price at port warehousing also increased VND1.1 million-1.4 million per tonne, an increase of 4.41-5.38% compared to September.

The retail price to consumers this month in HCMC has increased by VND16,000 per 12 kilo cylinder to around VND434,000, the price in Hanoi also increased by VND13,464 per 12 kilo cylinder to VND449,000.

According to the results, the requested price rise was reasonable and meets global price trends.

However, the department reprimanded the Petrolvietnam Northern Gas JSC for mistakes in their gas price application. They had adjusted their prices on October 1 while their incorrectly completed dossier was sent on October 2, violating price registration regulations.

SOE restructuring moves ahead  

53 giant State-owned groups in Vietnam have made their restructuring plans in the context of the nationwide policy.

As of July, 2012, 3,952 out of 5,657 State-owned enterprises (SOEs) were equitised while another other 1,905 enterprises were merged, sold or converted into one-member limited liability company.

According to plan, in a round of restructuring which take place in the period between 2011 and 2015, 899 are to be restructured, 93 of which will be done by the end of 2012.

Many State-owned groups have been implementing cost-cutting solutions and implementing new means to attract customers. These corporations reported that they have saved VND4.4 trillion (USD211 million) by cutting down expenses in 2012.

The Ministry of Finance (MoF) has said the inspection and review process is still being carried out, taking into account adjustments for the capital mobilisation capicity for each enterprise, delaying or extending deadlines for certain projects when necessary. The enterprises also must divest from non-core businesses and spend less money on conference organisation and equipment.

The restructuring of State-owned enterprises has been set as one of the key task for economic development.

The MoF said the number of State-owned enterprises has been reduced but a number of companies in important sectors such as electricity or petroleum will continue to be run by the State, but with streamlined management and administration.

In many cases outdated administrative procedures and shortcomings in the State’s role over many enterprises has led to losses, debts and corruption.

Public investment proves costly but ineffective   

Public investment accounts for nearly 30% of the country’s total investment, however, it has proven relatively ineffective in past years, according to Vietnam Annual Economic Report 2012.

Public investment accounts for nearly 30% of the country’s total investment, however, it has proven relatively ineffective in past years

The report, jointly complied by a group of senior Vietnamese economists, mentioned challenges for the Vietnamese economy in its goal of restructuring, one of these being ineffective public investment.

The report stated that, after becoming a member of the World Trade Organisation (WTO) in 2006, Vietnam poured massive amounts of money into State-owned businesses, leading to massive investment in non-core activities.

The Government has often selected SOEs for infrastructure projects even though many of them have showed poor performance, and caused waste.

The amount of investment in Hanoi-Thai Nguyen Expressway project, which is under the management of the Directorate for Road of Vietnam, has been adjusted four times, now totaling VND2 trillion (USD95.2 million), while the initial estimate was VND568 billion (USD27 million). This was largely due to its sluggish site clearance work.

Another typical example is Thang Long Bridge. Since March, 2010, the bridge has undergone three other repairs. Despite the efforts of both foreign and domestic experts, cracks remain.

“It is selection bad development strategies that has resulted in waste for the national budget. Too many priority projects are offered to State-owned groups,” Dr. Nguyen Duc Thanh, Director of Vietnam Centre for Economic & Policy Research.

Private enterprises contributed just 10% to the GDP in the last decade, which partly explains why Vietnam has faced such difficulties in global economic integration, Thanh added.

According to the report, localities have been allowed to approve their projects and then seek funds from the State budget, making many all too eager to approve projects to assure fund allocation. Since most of the projects become are carried out by State-owned enterprises it has left the Government bearing most of the risk. At the same time the Government has shown lax supervision over project implementation.

Over the past years there has been a rush to build industrial parks, but to date; only 46% these have been utilised. Many have no waste treatment systems and cause serious harm to the local environment.

The report indicated that ineffective public investment is a major cause the increasing public debt. By 2010, the public debt rate was estimated to be 56.7% of GDP, a figure that rose to 58.7% in 2011.

Up to 40% of the Vietnamese public investment is poured into infrastructure projects,while the investment in agriculture, technology and education has fallen.

Economists have suggested that Vietnam should build a legal framework to target a larger percentage of funds towards Public Private Partnership model for project implementation in order to mitigate risk to the Government. They also suggest that the Government intensify supervision over localities in their project licensing and implementation process.


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