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BUSINESS IN BRIEF 9-3Raw material price hike causes burden for steel, packaging industry

Raw material prices for the steel and packaging industry have shot up a great deal, causing much difficulty and financial pressure on manufacturing companies in Ho Chi Minh City.
Several packaging companies are facing difficulty due to increase in raw material price (Photo: SGGP)

Despite the current freeze in the real estate market, steel prices have gone up by VND160,000-200,000 per ton to touch VND14.5 million in first week of March.

According to Do Duy Thai, director general of Pomina Steel Company, the steel price hike is due to import price increase on raw material.

Vietnam Steel Association has said that iron ore price has recently rocketed to US$158.5 per ton, the highest level in the last 15 months.

Pham Chi Cuong, chairman of the association, said that the price of raw materials like iron ore, scrap steel and steel billets have escalated due to high demand in China.

At present, the import price of steel billets from South Korea, Russia, Malaysia and Japan has increased by $20-30 per ton to reach $600-620 per ton.

The association reported that domestic steel consumption in February was only 250,000 tons, a reduction of 38 percent over the previous month.

Similarly, the Vietnam Packaging Association said that import material costs have shot up a great deal, while domestic supply has nearly depleted. Businesses do not have any more raw materials for production.

An official from the above association said that import material price has gone up by 40-50 percent, causing manufacturers a loss of VND1.1 million per ton on imports.

The association wants the Government to reduce import tariff to below 25 percent, after which it can increase the import volume from 10 percent to 40-50 percent to deal with the current shortage.

Packaging manufacturers and traders are lamenting on the low consumption, raw material prices and scarcity, which has led several to stop operations altogether.

Above all this, overheads on water, electricity, transportation and wages have placed a heavy financial burden on businesses.

Berjaya Corporation of Malaysia downsizes in Vietnam

Nguyen Hoai Nam, CEO of Berjaya Vietnam, on March 4 denied rumors that the company–a subsidiary of Berjaya Land Berhad in Malaysia, has decided to return two large-scale property projects in Ho Chi Minh City but confirmed downsizing its investments in an ailing real estate market in Vietnam.

Nam said that the company was over-optimistic when starting the Vietnam Financial Center in District 10 in Ho Chi Minh City. After several buildings were constructed in District 1–providing large retail spaces for lease–the company realized that it would not be able to compete with those in the downtown area. Therefore, the company had to adjust the design of Vietnam Financial Center from five 48-storey towers to two towers and a lower area serving as a shopping center later.

The new design which reduced the area for offices, apartments, and hotel rooms, was considered to be suitable with the current market demand. Hence, according to the original design, the project would cover an area of 600,000 square meters, but now the construction area had declined by half, dragging total investment capital down in tandem.

Nam said that his company had presented the new design to the City People’s Committee and was awaiting permission. He affirmed that the project will be carried out immediately on approval as his company had paid VND1 trillion for land rental five years ago and has just built a school at a cost of more than US$3 million recently, in District 10.

The 8.1-hectare Vietnam Financial Center project was licensed in February 2008 with a total investment capital of $930 million. The area is enclosed by Cao Thang, 3 Thang 2, and Le Hong Phong Streets in District 10. The project was expected to break ground in 2010 after site clearance finished but it has stood still since then.

In 2008, the City also licensed the company’s Vietnam International University Township which was funded at a cost of $3.5 billion and covers an area of 925 hectares in Hoc Mon District. According to the design, the investor will use more than 100 hectares to build the most modern training center in Southeast Asia.

Besides universities, the township will also provide 20 more schools of kindergarten, primary and secondary grade level. The rest of the area will be a complex zone, including residential areas, an administrative and culture center, a 15-hectare medical center, physical training center, entertaining center, and a park.

Nam said that the company had paid compensation for 200 hectares of land but it was drawing a new investment plan. If the company pays compensation for 900 hectares of land at once, it will not be able to start construction on the entire area instantly but will have to bury a large sum of money. So the company planned to ask for permission to construct on an area of 150 hectares first.

As for 11 projects that Berjaya has been investing in Vietnam, Nam said that two five-star hotels, a four-star hotel, and a securities company were in operation. The apartment project in Hanoi was almost complete but only 20 percent of houses were sold. Even in the Bien Hoa City Square only 50 percent of houses have been sold.

Late in 2012, the company returned the Nhon Trach New City Township project to Dong Nai Province which was licensed in October 2009. The project, which covers an area of 600 hectares, was funded at $2 billion.

Sectional interest groups face public criticism

Several proposals made by interest groups or professional associations have faced public criticism due to their sectional interests or overall lack of applicability.

Public concerns have recently been raised over a proposal by the HCM City Real Estate Association (HoRea) to levy taxes on deposits worth over VND500 million (USD23,912).

HoRea’s Chairman Le Hoang Chau, had proposed that while general bank deposits should be free from tax, those with large amounts of money which could be used buy bonds and bills of exchange should be subjected to a tax so as to increase state budget revenues and supposedly funnel investment into more productive areas of the economy rather than being tied up in deposits.

Many members of the public violently opposed the proposal, claiming they were completely unfeasible.

Five associations representing garment and textile, footwear, seafood, fine art wood, and cotton and spinning sectors proposed delaying the annual minimum wage increase to the end of the first quarter or early second quarter with an increase of only 15% per year. The proposal was conveyed to the National Assembly by the HCM City NA deputies as comments on the Ministry of Labour, Invalids and Social Affairs (MoLISA)’s minimum wage increase plans in late October 2012.

These associations disagreed with options to increase the minimum wage by 36% or 25%.

They opposed the MoLISA’s statement that current minimum wages only meet from 50%-60%  living costs, saying that enterprises in these industries had already adjusted wages to pay nearly two times higher than the minimum wages for their workers.

In order to minimise motorbikes and ease traffic jams, the Hanoi Automobile Transport Association proposed the Ministry of Transport should allow the importation of three or four-wheeled motorised vehicles. Currently, these vehicles are used in Thailand, India and Singapore.

According to the association, these vehicles would not be operated along national highways, but instead offer inter-communal and inter-district transport to carry passengers to bus stations.

Several experts said the proposal needed to be carefully considered as to whether it would be suitable for Hanoi’s transport plans.

MA. Khuat Viet Hung, Director of the Institute of Transport Planning and Management said the current road traffic rules do not address such proposed vehicles. If this was a good solution, it would still be unnecessary for Hanoi to import such vehicles as local producers were easily capable of manufacturing them.

In order to minimise the imports of luxury goods, the Vietnam Association of Financial Investors proposed applying fees on the right to buy cars and motorbikes. As a result, buyers of ordinary vehicles would have to pay a fee equivalent to the value of their vehicle. Those who buy luxury vehicles would pay a fee three to ten times higher than their vehicle’s value.

According to the association, the current taxes and fees have failed to discourage the import of luxury vehicles as despite their level, they are not sufficiently high to deter better-off buyers.

The association also proposed that the government not license the setup of new automobile and motorbike factories that are designed to serve the domestic market as there are currently too many producers.

Obstacles to competitive electricity market

Though the competitive power market has been in operation in Vietnam for some eight months, in practice EVN still holds a monopoly over the market.

The current market has 45 power plants, a number that may increase to 67 in the future. The sole buyer of the electricity they produce is Vietnam Electricity Group (EVN), which is also a power trading company. Many people expressed concern that expanding the market will only make it easier for EVN to buy electricity at low prices and sell it at high prices.

Last year, the Ministry of Industry and Trade gave the green light for EVN to establish three power generation companies, called Genco. These firms will eventually take over EVN’s electricity generating plants and then separate from EVN by 2015. By that time the rate of EVN’s power generation will be reduced to just 17-18%.

However, EVN said that at present these three companies are still in too weak financial position to separate. Their debts to equity ratios are all too high to access credit. EVN officials have stated that the company will continue to access credit on the behalf of the Gencos and make sure their projects continue uninterrupted.

“We will only have true competitive power generation market when the Gencos separate from EVN,” said Tran Dinh Long, Deputy Chairman of the Vietnam Electricity Power Association.

According to the development plan, two phases planned for a competitive market for power generation, the 2005-2014 period and from 2014-2022, it will start the wholesale electricity market plan, the retail electricity market will follow after 2022.

Many experts disagreed with the plan, saying it would need only five years for implementation, not 17. Long said that in order to create a truly competitive market a number of reforms and enterprise restructuring would be needed, in addition to modern technology and equipment.

However, the aim to begin a wholesale electricity market in 2014 seems impractical when the first phrase has not been considered a success.

“Enterprises who have monopolised the market for so long will not give up their profits easily. We need to speed up the restructuring process or we will not be able to meet our goals,” Long said.

Hong Kong investors want to take over Lai Vu IP

Two large textile groups based in Hong Kong now are in talks to either take over or rent Lai Vu Industrial Park (IP) in the northern province of Hai Duong which was earlier invested by Vietnam Shipbuilding Industry Group (Vinashin).

The IP project has been put on hold and now is put under the management of Vietnam Oil and Gas Group (PVN).

Well-informed sources told the Daily that Hong Kong’s Pacific and Tinh Loi Limited Company under the textile group Crystal are negotiating with PVN for taking over Lai Vu IP. The two companies want to become the park’s owners to continue exploiting the abandoned facility.

Two years ago, these two foreign firms won investment certificates from the provincial government for developing two large-scale textile and garment projects in Nguyen Giap industrial zone.

Pacific’s project specializes in making textile products and related materials at an estimated cost of over US$423 million. Meanwhile, the project of Tinh Loi specializing in making garment items is worth about US$115 million.

Tinh Loi has invested in another textile project in Nam Sach IP, which is also in Hai Duong with 6,000 workers. However, site-clearance troubles in the facility have resulted in the suspension of the two projects.

Therefore, the Hong Kong investors are seeking ways to buy Lai Vung IP which covers more than 200 hectares to continue the projects. The local authorities and PVN are seeking approval from the Government to transfer the park to the aforesaid investors.

Lai Vu IP is one of the seven projects of Vinashin where the governmental inspectors detected many wrongdoings in investment in 2011. As of October, 2011, the project had disbursed total investment capital of some VND600 billion which is said to be equivalent to the sum the Hong Kong buyers are offering to PVN.

However, both PVN and involved parties have declined to confirm the information.

Furniture makers to focus on U.S. market

The U.S. will remain the key buyer of Vietnam’s furniture products this year, after buying a large volume of wooden products in 2012, said a source from the Handicraft and Wood Industry Association of HCMC (Hawa).

Huynh Van Hanh, vice chairman of the Hawa, said Vietnam’s furniture shipment to the U.S. last year grew 24.4% year-on-year.

As for the European Union (EU), from March 3, furniture makers have to declare the origins of their products and prove them legal in order to export to this market. Because of this requirement, plus weakened purchasing power due to the economic downturn, furniture export to the EU market will hardly grow, if not contract, Hanh forecast.

Regarding the requirement of the EU, he said local wood product exporters should talk with importers to learn what they need. It is because importers are those to directly explain to the EU authorities.

Although 2012 was considered a difficult year, the export value of Vietnam’s wood and wood products reached US$4.67 billion, an increase of 18% over the preceding year. In particular, exports to the U.S. market grew 24.4%, China 14.3% and Japan 12.5% against 2011.

Lowering tra fish price not the wise strategy, says expert

Jean-Charles Diener, director of OFCO Sourcing Vietnam, a supplier of Vietnamese seafood to buyers all over the world, has called on Vietnam not to lower tra fish price, saying it is an unwise move that only harms the country’s fishery sector.

“Low price is really not as good as many suppliers think. It has made Vietnamese tra fish constantly face smears. Paradoxically, with higher prices, the market for Vietnamese tra fish can be expanded,” said Diener.

According to many tra fish processors and exporters, the quantity of export orders from the EU market is gradually rising after a difficult period.

The EU order volume is increasing because the EU remains the major market for Vietnamese tra fish. In addition, Vietnamese tra fish price is fairly low, which is considered an advantage over other white-meat fish species.

Diener pointed out that the above perception was not the right approach.

Low price is one of the major problems and without better cooperation among processors and between them and the Vietnam Association of Seafood Exporters and Producers (VASEP), the situation will not be improved, he said.

In addition, local processors should improve their sales strategies. “Tra fish farming and processing are very good, but sales strategies are not,” said Diener.

The quality of Vietnamese tra fish has been going down in recent two years and its price is too low not only in Europe, but also in many other countries around the world. Buyers are gradually losing interest in this fish because of its low price, he remarked

“Tra fish is a great item and probably the best fish in the world. But if there are no solutions for quality improvement, reputation and enormous potential of this species will be destroyed,” he warned.

Vietnam needs to be more careful and seek greater cooperation to better protect the future of this fish industry, he said.

Diener described tra fish as a perfect species for farming at present. “Species like tra fish can be a solution to many problems in the world,” he said

However, it is because of its inherent advantages that tra fish easily becomes a great rival of other species. Therefore, seafood producers around the world have launched smearing campaigns against Vietnamese tra fish.

Meanwhile, Vietnamese suppliers look for ways to lower quality in order to reduce prices in the hope of expanding their market, and thus unhealthy competition is created. “This becomes a vicious circle that should be stopped,” Diener said.

To restore the image of Vietnamese tra fish in the world market, three basic steps should be taken, he suggested.

The first step is to set export floor price. “Vietnam should stop reducing prices, because low price is a problem,” he stressed.

Secondly, the country should be more confident in tra fish products and develop effective marketing strategies. “Tra fish fillet can be a very good product and Vietnam should be more confident in its products,” he said.

The third step is to improve the quality.

NPK import posts strong growth

Vietnam imported nearly 50,120 tons of NPK fertilizer as of the middle of last month, picking up 48,000 tons against the same period last year, the General Department of Customs reports.

Le Quoc Phong, vice chairman of the Vietnam Fertilizer Association, ascribed the sharp growth of NPL fertilizer import to the fact that this year’s rice crop coming early has pushed up local demand for NPK and DAP products. Total output volume of local fertilizer makers is modest, forcing enterprises to import more fertilizers to satisfy the local demand.

Similarly, the nation has imported some 55,400 tons of DAP fertilizer, a year-on-year rise of over 31%, and imported more than 104,500 tons of kali fertilizer, jumping 20% in volume over the year-ago period. On the contrary, the import of urea is only over 8,000 tons, shrinking nearly twice year-on-year, and that of SA fertilizer is 107,500 tons, just equivalent to last year’s volume.

The Ministry of Agriculture and Rural Development predicts Vietnam to need about 10.3 million tons of fertilizer of various kinds in 2013, including two million tons of urea, 850,000 tons of SA, 950,000 tons of kali, 900,000 tons of DAP, 3.8 million tons of NPK and 1.83 million tons of phosphate.

Given fertilizer undersupply at home, the agriculture ministry plans to import around 2.5 million tons of fertilizer this year with a total value of US$960 million, including 850,000 tons of SA, 570,000 tons of DAP, 950,000 tons of kali and 100,000 tons of NPK. The ministry meanwhile will not import urea as local supply is expected to meet the nation’s demand.

According to the General Department of Customs, Vietnam in 2012 imported roughly four million tons of fertilizer of various kinds with a combined value of some US$1.7 billion, falling nearly 7% in volume and 5% in value year-on-year.

The country also exported nearly US$554 million worth of some 1.35 million tons of fertilizer last year, up some 25.5% in volume and around 17.5% in value year-on-year.

Urea prices in the Mekong Delta have risen by an average VND10,000-15,000 a 50-kilo bag compared to a fortnight ago. A 50-kilo bag of Phu My urea sells for VND490,000 while Ca Mau urea and Chinese products are priced at VND480,000 a bag in Tien Giang Province, a sales agent in Cai Lay District said.

Five more years for city’s metro to start service

Most of the metro projects in HCMC remain on hold due to multiple obstacles, especially financial distress, so citizens have to wait at least five more years to take the first metro ride.

Ten years ago, the feasibility studies for the first two metro lines of HCMC were put up for comments. Back then, people believed that the first urban railway would get off the ground in 2005 and start service in 2010, but reality proved them wrong

The Metro Line No. 1 from Ben Thanh to Suoi Tien was the first to be carried out among the six projects chosen by the city. After kicking off on August 28, 2012, the project is now in the stage of geological exploration.

“We have also begun construction of the overhead section along Hanoi Highway. For the underground section from the central station near Ben Thanh Market to the City Opera House, the bidding procedures are being finalized,” said Le Khac Huynh, deputy head of HCMC Management Authority for Urban Railways (MAUR).

Stretching 19.7 kilometers, including 2.6 kilometers underground, the Metro Line No. 1 with 14 stations will be financed by the official development assistance (ODA) of Japan.

On August 25, 2011, the Prime Minister gave the nod for the HCMC government to adjust the project, with ODA fund raised from US$1.09 billion to US$2.2 billion, or 88.4% of the total investment cost.

In addition, it was redefined that the project will be completed in 2017 and start operations in 2018.

The Metro Line No. 2 from Thu Thiem to An Suong Coach Station in District 12 with a total length of nearly 20 kilometers was the first to get going, with site leveling for Tham Luong Depot already begun on August 24, 2010. However, all that can be seen on the 22.3-hectare site now are fence, entrance and guard booth.

“The maintenance station is awaiting a contractor, then it will be built in line with the main packages,” Huynh said.

According to documents provided by MAUR, the design for the project was completed in late 2012. In the first quarter, MAUR will coordinate with the project consultant to issue bid invitation.

“The construction package will be given to the contractor in July, then the packages for equipment supply and installation… so that work will start on the underground section on Cach Mang Thang Tam Street later this year. All stages will be completed in December 2017, followed by a six-month trial run before the metro line starts official operations,” said Huynh.

Linking Thu Thiem New Urban in District 2 to the downtown District 1 and the western gateway of HCMC, the total investment cost of the Metro Line No. 2 is US$1.37 billion. Germany will provide the project with US$313 million of ODA through the German Development Bank (KfW), while the Asian Development Bank (ADB) and the European Investment Bank (EIB) will give US$540 million and US$195 million respectively.

Apart from the above two projects, the Metro Line No. 5 connecting Saigon Bridge-Hanoi Highway with the new Can Giuoc Coach Station in District 8 has mobilized part of the US$1.85 billion needed. To be developed under the engineering, procurement and construction (EPC) format, the first phase of this project, the 9-km section from Saigon Bridge to Bay Hien Intersection in Tan Binh District, will receive an ODA loan worth 500 million euros from Spain.

“However, as this loan only matches 40% of the expected sum, the HCMC government is still waiting to see if the World Bank (WB) will agree to finance about 190 million euros or not. In addition, the extended parts (in the second stage) from Ben Thanh to Thu Thiem and from Bay Hien Intersection to Can Giuoc Coach Station Bus Giuoc (14.5 kilometers long) are still awaiting funds,” said an expert of MAUR.

Together with other urban railway projects such as monorails and trams, preparations for the remaining metro projects are progressing slowly, mainly due to financial distress and difficulties in site clearance.

Regarding the Metro Line 4 stretching 22.6 kilometers from Nguyen Van Linh Street in District 7 to District 12, the municipal government has asked MAUR to extend this line to Hiep Phuoc Port Urban Area, so the study of the entire project can only be finished this year.

The 16-km Metro Line 3A from Ben Thanh to Tan Kien in Binh Chanh District and the 12-km Metro Line 3B from Cong Hoa Intersection to Hiep Binh Phuoc in Thu Duc District are being conceived. Meanwhile, the Metro Line No. 6 from Ba Queo to Phu Lam Intersection with a length of 6.7 kilometers is waiting for the consultant IDOM to complete the feasibility study with funding to be provided by the Spanish government.

AIA Vietnam keeps posting strong growth

Life insurer AIA Vietnam continued to post up positive business results in the fiscal year 2012 despite uncertainties of the local insurance market.

The insurer reported a 24% rise in value of new business and a 17% increase in total premiums compared to the previous year. Its embedded value also jumped a total 34% and the total insurance benefits payment grew up to 58%.

Stephen Clark, CEO of AIA Vietnam, commented that 2012 was a year filled with uncertainty of the local and global economy. These figures were the result of retentless efforts of its agents and employees during the past time.

Customer focus, competitive products and professional agents are the fundamental factors to help AIA Vietnam quickly achieve the goal of becoming the preferred life insurance company in Vietnam in the near future, Clark said in a statement released on Monday.

SBV sure on thinner global-local gold price gap

The State Bank of Vietnam (SBV) on Monday expressed a strong confidence in narrowing down the gap between local and international gold prices thanks to bold measures of managing agencies.

The central bank will implement measures to realize resolutions of the National Assembly and the Government to gradually match domestic gold prices to the world price. Given current laws on gold trading and managing tools, SBV has confidence in reaching this target, said Le Minh Hung, deputy governor of the central bank.

SBV will have specific calculations and considerations before carrying out these solutions. However, the plan still has to depend on macro-economic management policies, including monetary policies in each period, Hung said at an online discussion organized by Vnexpress.

Concerning current management methods over the gold market, Hung said Decree 24 aims at setting up a close legal framework for gold trading activities. Firstly, the decree re-organizes the gold market and prevents impacts of gold price fluctuations on foreign exchange rates.

Secondly, the decree improves the managing role of the State, prevents dependence on gold and seeks solutions to mobilize gold reserves kept by local people to facilitate socio-economic development.

Besides, the decree is an important legal basis to protect legitimate interests of people through specific regulations in gold bar production and transaction, imports and exports of material gold and jewelry trading.

Meanwhile, Le Hung Dung, chairman of Saigon Jewelry Company (SJC), said that the wide difference between domestic and international gold prices is not a new problem. The reason is that there is no connection between the two markets.

The most important task of Vietnam now is stabilizing the macro economy. To narrow down this gap, the nation has to spend a lot of money on gold imports, triggering the high risk of inflation and making the Government’s goal on inflation control impossible.

Although it is right to narrow down this gap, Vietnam has to choose the best thing for the economy in the current context. In addition, there are few large gold transactions despite the huge gold price difference, Dung said.

In a related development, Prime Minister Nguyen Tan Dung on Monday signed a decision allowing the central bank to take part in gold bar trading in the local market, according to the Government portal at chinhphu.vn.

Under Decision 16/2013/QD-TTg, the central bank has the right to buy and sell gold bars to intervene in and stabilize the local gold market based on the goals of the country’s monetary policies from time to time. The monetary authority is also allowed to buy gold bars to replenish State foreign reserves.

Power plants to run on diesel oil in dry season

Power plants will boost generation from diesel oil to ensure electricity supply for the southern region during the upcoming dry season.

Dang Huy Cuong, director of the Electricity Regulatory Authority of Vietnam, said the power demand in 2013 would be 133.4 billion kWh, up 11% against 2012. During the dry season, especially from March to June, some 64 billion kWh will be needed.

Power supply from March to June will be basically sufficient, unless there was a sudden rise in demand, a severe drought or a decline in backup power sources.

Anyway, power plants will increase the output of electricity generated from diesel oil. Around 1.2-1.5 billion kWh will be produced from diesel oil to tackle power shortage in the southern region in the dry season.

However, the cost of VND4,000-5,000 per kWh for power generation from diesel oil will affect the financial status of Vietnam Electricity Group, said Cuong at a press conference on industry and trade in the first two months held by the Ministry of Industry and Trade on Monday.

Regarding the price of coal sold to power producers, he said the Prime Minister had asked the Ministry of Finance and relevant agencies to adjust the coal price to gradually meet the market price.

Earlier, Nguyen Van Bien, deputy general director of Vietnam National Coal and Mineral Industries Group (Vinacomin), said the price of coal sold to the power industry was only 70% of the production cost. Every year, Vinacomin has to cover a loss of nearly VND7 trillion from sales of coal to EVN, making it difficult for the group to secure fund for development.

In the first two months of the year, nearly seven million tons of clean coal was produced, down 5.8% year-on-year. On the first day of the Lunar New Year, some 30,000 tons was exported to Japan, according to the trade ministry.

Brunei minister visits Phu My fertilizer plant

A delegation of Brunei’s Ministry of Energy led by Minister Pehin Yasmin last week visited Phu My fertilizer plant of PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo).

Bin Sokiaw, Managing Director of Brunei National Petroleum Company (Petroleum Brunei), also joined the plant visit.

The delegation’s aim is to work with Vietnam National Oil and Gas Group and study and seek cooperation opportunities between energy enterprises of both nations.

PVFCCo is committed to assist Brunei in constructing and operating a fertilizer plant when the nation develops a plant of this kind in the future.

According to PVFCCo’s financial report, the firm earned VND13.3 trillion in net revenue last year, up 44%. However, its after-tax profit dropped 2.2% year-on-year last year with around VND3.1 trillion.

Beihai-Ha Long Bay tourist route to launch in April

A maritime tourist route between Beihai in the Chinese province of Guangxi and Ha Long Bay in Vietnam’s northern province of Quang Ninh is to start operating early this April.

On March 5, high-speed cruise liner Beiyou 16 with 22-member crew on board safely docked at Tuan Chau port, the departing site for Ha Long Bay trip, to test-run the service.

Following the trial run, the first three-hour voyage will operate on the route this April with two trips carrying 800 passengers on average each a week.

The new service is expected to promote tourism and marine transport in Ha Long Bay, the world’s heritage site and wonder. It will offer the two countries a chance to boost bilateral trade and introduce their cultures in a more rapid, convenient and safe way.-V

Banks help with rice purchase for reserves

Twelve commercial banks have supplied food companies with loans to enable them to buy rice paddy and rice for reserves.

Under a Government programme, the banks have provided the companies interest-free loans for buying 1 million tonnes of products harvested from the winter-spring rice crop.

The Government is fully subsidising interest on the loans for three months.

The State Bank of Vietnam has approved Phuong Dong Bank’s plan to earmark 1 trillion VND (47.6 million USD) for the purpose.

Lien VietPostBank said it has been involved with the reserve-purchase programme since 2010.

According to the Government’s website, since the beginning of this year’s programme started on February 20, the food companies have bought nearly 212,000 tonnes of 1 million tonnes to be brought from the winter-spring crop.

The Government’s policy to buy rice for reserves has supported the grain’s prices, improving the farmers’ income, Deputy Minister for Industry and Trade Tran Quoc Khanh told provincial authorities from the Mekong Delta at a recent meeting.

The programme will also help regulate rice consumption and exports this year.

Exporters have so far signed contracts for over 2.8 million tonnes of rice this year, double last year’s volumes at the same time.-

Retail sales, services see 10.9 percent rise

Total revenue from retail trade and services during the first two months of 2013 was estimated at 422.2 trillion VND (20.59 billion USD), a surge of 10.9 percent year-on-year, according to the General Statistical Office (GSO).

Excluding the price factor, retail sales in January and February rose 3.6 percent year on year, the GSO said.

Trade accounted for the biggest percentage of the increase, hitting 328.2 trillion VND (over 16 billion USD), a yearly increase of 10.4 percent.

The hotel and restaurant sector posted annual growth of 13 percent, rising to 48.8 trillion VND (2.38 billion USD) and accounting for 11.6 percent of the country’s total figure.

The services sector grew 14.5 percent to 41.7 trillion VND (2.03 billion USD), making up 89.9 percent.

Notably, the tourism sector recorded a slump of 4.4 percent from a year earlier to 3.5 trillion VND (170.7 million USD) and accounted for a modest 0.8 percent.

According to the GSO, the value of retail sales rose by 16 percent in 2012 to 2.324 trillion VND (110.7 billion USD).

Inventories in the manufacturing and processing industries fell this year from 30 percent in the early months of 2012 to an average of 23 percent for the entire year, patterns expected to repeat in the coming months.

VNA, State Bank work for closer cooperation

The Vietnam News Agency (VNA) and the State Bank of Vietnam (SBV) have reached an agreement that looks the bank’s continued provision of information relating to monetary policy, finance, inflation control and macro-economic management for the agency.

At a conference in Hanoi on March 5, VNA General Director Nguyen Duc Loi and SBV Governor Nguyen Van Binh planned to work together to publicise the bank’s policies to prevent inaccurate information from sparking negative effects on the national economy and society.

These included the banks’ efforts to remove barriers for production and trading, support market operations, settle bad loans and restructure the banking system as well as gold trading management.

As a national agency, VNA can boost the effectiveness of legal regulations in the field by making readers aware of new policies, the VNA chief said.

The agency’s information will also focus on the stabilisation of exchange rate, the maintenance of economic growth and remove difficulties for the real estate sector this year, he added.

For his part, Governor Binh highlighted VNA’s accurate, prompt information and its significant role in disseminating information on the Government’s management of monetary policy.

VNA and SBV will look at possibilities to coordinate in joint training courses on finance and banking for reporters.-

Health sector fresh blood

The lack of high-quality hospitals, increasing income levels and the rising age of the general population in Vietnam is making healthcare a profitable sector for private investors.

Statistics from the Ministry of Planning and Investment’s Foreign Investment Agency show that there were 78 foreign-invested projects in Vietnam’s medical industry, including pharmaceutical production, as of February 20, 2013. According to the Ministry of Health (MoH), only six hospitals and 14,354 clinics in the country are under the management of foreign investors at this time, and 130 other hospitals are under management of domestic private firms.

Serving a population of 88 million, the healthcare system in Vietnam, both public and private hospitals, are lagging behind the growing demand for care. At some public hospitals, five or six patients even have to share a bed because of the overloading. Many wealthier Vietnamese are willing to pay more for better patient cares. Many Vietnamese people travel to the US, Singapore, Thailand, South Korea and China for medical care.

The MoF estimated each year Vietnamese spent about $2 billion on healthcare services abroad, due to the lack of high-quality hospitals in the country. This translates into opportunities for private investors, especially foreign ones, to expand business in Vietnam’s healthcare sector.

Marc Kealey, general director of Triple Eye Infrastructure Corporation, which is planning to build a 200-bed hospital in northern Hai Duong province, suggested that the official estimates were low—and that Vietnamese spent as much as $5 billion on healthcare abroad each year.

“We look at in this context that we could repay money back to the hospital, we could design and build hospitals and do all procurements. We could see even effect of 1 per cent of that $5 billion or 2 per cent is pretty good sake,” he said.

Rick Evans, chairman of the Malaysian hospital management firm Columbia Asia Group, said the healthcare demand in Vietnam was huge and growing fast.

Columbia Asia in April 2013 opened its new hospital in Vietnam, the latest addition to the group’s hospitals in the region. The Columbia Hospital-Binh Duong is the group’s 22nd healthcare facility in the region and the third Columbia facility in Vietnam after the one in Gia Dinh in Ho Chi Minh City. The group also has an international clinic in the city’s District 1.

Evans said the demand for healthcare depended on two main factors. Firstly, the overall income level of a population, and demographics. “As the income level of the population rises, the demand for healthcare services rise even faster,” he added.

Secondly, as the average age of a population rises, the demand for healthcare services in that population also rise. “Thus, in respect of the two most important factors in measuring the demand for healthcare services, Vietnam shows strong and increasing growth,” said Evans.

When Columbia Asia first opened in Vietnam in 1998, a large portion of its patients was expatriates and tourists. Over the last 12 years, as the living standards have increased, Vietnamese citizens became a greater percentage of the firm’s patients. In 2001, only 20 per cent of patients at Columbia Asia Gia Dinh International Hospital were local Vietnamese. But in 2012, 80-85 per cent of its patients were local Vietnamese, said Evans.

Some other domestic private investors also invested in healthcare sector to tap on this huge potential. Vingroup, a domestic property developer, one year ago inaugurated international-standard Vinmec hospital in Hanoi. This is the largest private hospital in Vietnam at this time with 600 beds, six times larger than the operating French Hospital of Hanoi.

And Hoa Lam-Shangri-La Healthcare Limited Liability Company, a Singapore – Vietnam joint venture, is building a $400 million International Hi-Tech Healthcare Park in Ho Chi Minh City, which is expected to be operational this year.

City International Hospital is the first hospital in this ‘Medical City’ that will be managed by a Singapore-based leading private healthcare group in Asia, ParkwayHealth. Under Parkway’s management, the hospital is expected to emerge as the premier healthcare provider addressing the current shortage of world-class, value-based integrated private healthcare services and facilities in Ho Chi Minh City.

Experts warn of substandard milk

Milk without sufficient protein content, which is being made by a number of companies in HCM City, can stunt the growth of babies, according to Do Thi Ngoc Diep, head of the HCM City Centre for Nutrition.

Diep was quoted as saying in Lao Dong newspaper that milk was the primary food for babies under two years old, providing children their major source of protein.

Depending on how much they weight, babies under six months old need 1.5 to 2.5 grammes of protein a day.

Babies between the age of one and three years old need 35–44 grammes of protein each day. Children between four and six years old require 44 to 55 grammes per day. For those between seven and 10 years old, 55-64 grammes are needed.

Dr Tran Dang, former head of the city’s Food Administration, said that milk powder for babies should ensure 34 per cent of protein and 26-42 per cent of fat.

However, according to Codex-International Food Standards, the rate of protein in milk produced in Viet Nam for babies under 12 months is 11-18 per cent and for babies 12-36 months is 18-34 per cent.

A recent inspection by the city’s Health Department at formula-milk production facilities of four companies found that many milk samples had a lower amount of protein than what was stated on the label of their products.

The companies are Nhu Trang in Tan Binh District, Hoang Khang in Binh Chanh, Tuan Cuong Phat in Binh Tan and Dai Hoa in District 6.

Maylac powder milk produced by Nhu Trang Company had just 14.97 per cent of powder but the figure on its labels say 34 per cent.

Four samples from the Tuan Cuong Phat Company showed that the milk powder had 7.37 per cent of protein, while 10 per cent was written on the label.

In addition, Holland Gold’s label says the product contains 20 per cent protein, but inspectors found that samples contained only 6.96 per cent.

Samples from New Zealand milk had 6.96 per cent compared to 10 per cent on the label, and Ha Lan had 6.9 per cent compared to 10 per cent on its label.

The Mikamax milk powder of Dai Hoa Company contained 7.48 per cent but its label showed 8-13 per cent.

Recently, the Health Department’s inspection of Tien Giang Province discovered that more than 1,000 Dinamlik containers had only 8 per cent of protein, but the products listed the amount as 26.99 per cent.

The company’s production facility located in Tan Phu District also violated food safety and hygiene standards. The city has ordered that the facility suspend operations.

MoF targets petrol smugglers

The Ministry of Finance has asked Tax and Customs offices in all provinces to prevent the smuggling of petrol by beefing up their patrols and inspections.

Sales of large amounts of petrol products to customers who fail to declare the purpose of their purchases have been banned.

Customs divisions will conduct round-the-clock patrols in areas that share borders with neighboring countries, while tax divisions, in coordination with related agencies, will check wholesalers, agents and traders of petrol products for sale invoices.

Domestic petrol retail prices are now much lower than those in bordering countries. Last week, the Ministry of Finance asked petrol traders to keep retail prices unchanged.

Banks provide loans to buy rice reserves

Twelve commercial banks have provided loans to food companies to enable them to buy paddy/rice for reserves while propping up prices.

Under a Government programme, the banks have provided the companies the credit interest-free for buying 1 million tonnes of products harvested from the winter-spring rice crop.

The Government is fully subsidising interest on the loans for three months.

Nguyen Van Hoan, deputy general director of OceanBank, said his bank is giving priority to food companies buying rice for reserves.

The State Bank of Viet Nam has approved Phuong Dong Bank’s plan to earmark VND1 trillion (US$47.6 million) for the purpose.

LienVietPostBank said it has been involved with the rice reserve-purchase programme since 2010.

The banks’ support for the programme has kept rice prices firm in 2012-13.

According to the Government’s website, since the beginning of this year’s programme started on February 20, the food companies have bought nearly 212,000 tonnes of rice, or 21 per cent of the target of 1 million tonnes to be brought from the winter-spring crop.

As a result, paddy/rice prices are slightly up in the Mekong Delta since the harvesting of the crop.

Fresh low-quality paddy is being sold (at the field) for VND4,400 per kilo, and high-quality paddy for VND4,600-5,300. These are VND150 to VND250 per kilo higher than a few months ago.

The Government’s policy to buy rice for reserve has supported the grain’s prices, improving the farmers’ income, Deputy Minister for Industry and Trade Tran Quoc Khanh told provincial authorities from the Mekong Delta at a meeting recently.

The programme would also help regulate rice consumption and exports this year, he said.

Exporters have so far signed contracts for over 2.8 million tonnes of rice this year, double last year’s volumes at this time of the year.

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

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