BUSINESS IN BRIEF 8/5

European pork, beef heading to Vietnam prior to trade deal conclusion

More European pork and beef exporters have been licensed by Vietnamese authorities to sell their products in the 90 million-strong market in Vietnam.

A consumer buys Australian beef at a store in Ho Chi Minh City.

These firms want to establish a strong foothold and expand their market share in Vietnam before the EU and the Southeast Asian country sign their free trade agreement in the remaining months of this year.

France is the latest to do so after over 100 French beef exporters got their licenses from the Vietnamese Ministry of Agriculture and Rural Development to sell their boneless beef from cows under 30 months old in the Southeast Asian market, starting this month.

The licenses allowing French beef to be sold in Vietnam were issued based on the assessment of the disease control situations on cattle farms in France, conducted by the Department of Animal Health, with its results released in early March this year, according to the ministry.

There are 106 French enterprises specializing in processing unit terrestrial animal products, including beef, pork, chicken, and duck, which are eligible to export their products to Vietnam.

Since early this year, the ministry has also granted certification to 16 countries and territories so that they can ship meat to Vietnam, bringing the total number to 31 worldwide.

Thirteen out of 19 Eurozone countries are included in that figure, according to the ministry.

On April 20, the European Livestock and Meat Trades Union and the Polish Union of Producers and Employers of the Meat Industry co-organized a press conference in Ho Chi Minh City to introduce European beef and pork to the Vietnamese market, Phap Luat TPHCM(Ho Chi Minh City Law) newspaper reported.

They also drew up a complete promotion plan on the quality and taste of meat for Vietnam following the coming conclusion of the Vietnam-EU trade pact.

Mariusz Boguzewski, Counselor for Economic Affairs at the Polish Embassy in Hanoi, said over 100 European enterprises, including 40 Polish companies, were licensed to export meat to Vietnam in an effort to raise European shipments by five percent in 2015.

According to EU meat exporters, the 2015 goal is within reach, considering that in 2014, Vietnam imported 6,149 tons of pork from European countries, a 700 percent rise compared to 774 tons in the previous year.

Last year, those nations also sent 1,720 tons of beef to Vietnam, over 70 times the amount in 2012.

European producers have shifted their attention to the high-end market of hotels and restaurants and domestic processing businesses, Phap Luat TPHCM quoted Boguzewski as saying.

They found that they could not compete with Australian and American meat in prices, he added.

In March, a Canadian delegation led by Minister of Agriculture and Agrifood Gerry Ritz also visited Vietnam to promote their beef for local restaurants and hotel chains, Phap Luat TPHCM reported.

Domestic cow production, which meets only 75 percent of local demand, saw a 23 percent year-on-year drop in the number of cows raised locally last year with 5.23 million, according to the Animal Husbandry Association of Vietnam.

Meanwhile, Vietnam imported 181,534 cows and buffaloes from Australia and India in 2014, as the average meat production costs there were about 35 percent cheaper than the local rates, the association said.

According to statistics from the Vietnam Customs, Vietnam imported over 115,200 cows and buffaloes worth approximately US$124 million in the first quarter of this year, up 74.6 percent in quantity and 107 percent in value compared to the same period in 2014.

Frozen chicken imports also grew rapidly to over 34,000 tons in the first three months, up over 45 percent year on year in quantity.

Many local food trading companies told Tuoi Tre (Youth) newspaper that the imports of live animal and frozen meat of Vietnam in the first three months continued to increase sharply due to competitive prices and rising domestic demand.

In particular, the biggest gain was the number of imported live cattle for slaughtering locally.

The country imports over 30,000 live cattle from Australia for slaughter every month this year, making it the world’s biggest importer of Australian cows.

VNPayTV wants floor charges for pay TV

The Vietnam Pay Television Association (VNPayTV) has suggested floor fees for pay TV services in the country in a plan submitted to the Ministry of Information and Communications.

The services are now available in different formats such as cable TV, digital terrestrial TV, digital satellite TV and Internet protocol TV (IPTV).

VNPayTV proposed the ministry apply monthly charges of VND60,000 (US$2.79) to VND90,000 for the analog cable TV service with 40-72 channels, VND180,000-220,000 for high-definition (HD) cable TV service with 110-120 channels, VND65,000-80,000 for digital terrestrial TV service with 75-85 channels, VND90,000-250,000 for digital satellite TV service and VND85,000-90,000 for IPTV.

Many pay TV service providers currently offer charges much lower than the suggested floor fees. For instance, An Vien Group (AVG) quotes the digital satellite TV service with 70 channels at VND33,000 per month while Vietnam Television Corporation (VTC)  charges the digital terrestrial TV service at VND60,000.

Le Dinh Cuong, vice chairman and general secretary of VNPayTV, said floor charges are necessary to ensure healthy competition as some providers have undercut charges to woo customers.

As more telecom corporations will join the pay TV market in the coming time, competent agencies need to improve their management capacity to restore order in the market.

Earlier, VTV and VASC called for the ministry to have effective measures to head off a fee undercutting race among pay TV service providers.

The ministry is drafting a decree on management and charges for TV and radio services in which service providers with market share of more than 30% would be required to register new service fees with authorities.

New CEO appointed for BASF Asia Pacific

BASF Asia Pacific is now led by Sanjeev Gandhi, a senior executive with 22 years of work experience at the German firm.

Since May 1, Gandhi has officially been in charge of BASF’s operations in the Asia Pacific region. For this role, he is currently based in Hong Kong, the firm’s regional headquarter.

Gandhi began his career with BASF in a sales role in India in 1993. He subsequently held a number of management positions in marketing, product management and business management between 2000 and 2010.

From 2010 to 2014, Gandhi was the president of BASF’s Intermediates division, based in Ludwigshafen, Germany. He joined the firm’s board of executive directors in December 2014.

Gandhi holds a Bachelor’s Degree in Engineering (Chemical Engineering) and a Master’s Degree in Business Administration (Marketing) from the University of Pune, India.

Established 150 years ago in Germany, BASF is now a world-renowned chemical company, whose portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas.

The firm strives to create chemical products for a sustanable future, demonstrated through its contributions to ensuring nutrition, conserving resources, and improving quality of life.

For 2014, BASF had sales of over €74 billion ($82.8 billion) and 113,000 employees as of the end of the year. BASF shares are traded on stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (AN).

Shoppers prefer modern retail formats

One-third of the Vietnamese consumers (34 per cent) love shopping at hypermarkets, supermarkets, and other modern channels, according to the latest Future of Grocery Report prepared by Nielsen.

The report is based on an online survey of more than 30,000 respondents across 60 countries in Asia-Pacific, Europe, Latin America, the Middle East, as well as Africa and North America. The survey was held to examine how modern and digital shopping channels have been changing the retail market scene.

According to the report, 42 per cent consumers in the Philippines have made purchases at supermarkets more often in the past 12 months.

The report also highlights the growing importance of convenience stores as another modern retail format for consumers to buy foods and groceries. More than one-fourth of the consumers in the Philippines shopped for foods and groceries at convenience stores more often last year. The figures in other regions are: 22 per cent in Viet Nam, 21 per cent in Thailand, 15 per cent in Indonesia, and 14 per cent globally.

Kaushal Upadhyay, Nielsen's executive director of client service in Southeast Asia, North Asia, and Pacific, said supermarkets and hypermarkets have already been dominant in developed countries and will attract more consumers in developing countries in Southeast Asia. However, smaller stores have also gained a considerable market share, he noted.

He added that it means producers should understand where and what consumers are shopping. Producers should consider goods distribution based on the combination of both channels.

In addition, the report also revealed that online shopping has been an important way for retailers to integrate digital channels with shopping experience. Some 28 per cent of the Vietnamese consumers shopped online, while the global figure for the same was 25 per cent.

Products such as body wash, shampoos, and conditioners were popular items shopped online by Vietnamese consumers, according to the survey that was conducted between August 13 and September 5 last year.

Vu Vinh Phu, chairman of Ha Noi's Supermarket Association, told online newspaper vnexpress that smaller stores still have their advantages as customers can make a quick buy because of their proximity.

Phu remarked that these stores can compete with modern shopping channels by offering professional services and good quality products at competitive prices.

Some 80 per cent of the time, the future of these stores depends on their owners, who must develop their own brand names and services.

Statistics from the Ministry of Industry and Trade shows that by the middle of 2014, the country had 724 supermarkets, 132 commercial centres, more than 400 convenience stores and 1 million small shops. Modern retail channels accounted for 25 per cent of the market share, much lower than that in other countries in the region.

The country is expected to have 1,200 to 1,300 supermarkets and 337 commercial centres by 2020.

ATM fees may rise after VAT refund denied

Users of automated teller machines (ATMs) may have to pay increased fees, according to Phap luat Thanh pho HCM (HCM City Law) newspaper.

Previously, banks believed that all input costs related to ATMs qualified for VAT refunds. However, tax authorities recently said that ATM services will not receive VAT refunds and will fine banks for non-payment.

The move has raised concerns that costs related to ATMs will rise, causing banks to increase ATM users' fees to offset the jump in costs.

Banks said that ATM operations provide payment services for clients, and funds on deposit have already been assessed for the VAT. ATM machines do not provide credit services, said bank officials.

However, tax agencies believe that ATM machines are also used to obtain credit, through the use of credit cards, which constitutes a loan from the bank and, therefore, requires the payment of the VAT.

Banking experts Nguyen Tri Hieu said that levying VAT taxes on ATM operations will drive up service fees, which might be in conflict with the Government's policy to encourage citizens to use non-cash transactions.

Therefore, he said, it would be more consistent for tax agencies to levy VAT taxes only on credit card transactions, rather than all ATM transactions.

In recent years, the Government and the State Bank of Viet Nam encouraged the public to use cards for payments. Commercial banks have also issued promotions and preferential policies for clients who use cards for purchases and services.

According to the Department of Payment under the State Bank of Viet Nam, there were roughly 80 million bank accounts, 16,000 ATMs and 168,000 point-of-sale (POS) machines in Viet Nam at the end of 2014, mainly owned by Vietcombank, VietinBank, Agribank and BIDV.

HCM City state budget collection surpases goal

HCM City's state budget collection for the first four months of the year amounted to VND98,146.8 billion (US$4.51 billion), increasing by 9.63 per cent year-on-year.

The collection haul satisifed 36.93 per cent of the city's yearly target, according to the City's Finance Department.

Domestic collection amounted to VND57,946.8 billion ($2.66 billion), collection from crude oil was VND8,700 billion ($400.2 million), and collection from import - export activities was VND31,500 billion ($1.44 billion).

The city's budgetary expenses for the first four months was VND11,716 ($539 million).

Singapore dye-chemical firm boosts VN operations

Singapore-based supplier of sustainable dyes and chemicals, Huntsman Textile Effects, announced it will expand its operations in Viet Nam in the hopes of tapping into the textile and garment industry.

"We are pleased to announce the opening, later this month, of a new bonded warehouse near HCM City, at the Long Binh inland container depot in Bien Hoa," said company president, Paul Hulme, at a media briefing in HCM City yesterday.

The warehouse, with an expandable capacity of 250 tonnes, will help the company cut down on delivery time.   

Farmers reap gains from new model

Tran Van Quang, a farmer in Hau Giang Province in the Cuu Long (Mekong) Delta, has increased his profit from rice farming by at least 18 per cent since he began to apply a new farming model developed locally.

Some 88 farmers in Vi Thanh Commune, Vi Thuy District, had adopted the "3 down-3 up" model to increase productivity, quality, and economic effectiveness and reduce the use of fertilisers and pesticides, he said.

The model, developed by the province's Agriculture and Fisheries Extension Centre, had enabled farmers like him to reduce seed usage by 30-40kg per hectare and nitrogenous fertilisers by 50-70kg and save 30 per cent on pesticides compared to traditional farming methods, he said.

On the other hand, productivity had reached "an average of 6.1 tonnes per hectare compared with 5.8 tonnes in nearby fields that did not adopt in the model," he added.

In Thanh Dong A Commune, Kien Giang Province, many rice farmers have adopted a technique called "alternate wetting and drying", or AWD, and benefited.

Do Ngoc Kim, one of them, said that the new farming method had helped his family reduce fertiliser and pesticide use while increasing rice yields by 10 per cent and profits significantly.

At his co-operative, where members had applied the new farming method on 270ha a year ago, the figure had increased to 500ha now, he said.

Phan Huy Thong, director of the National Agriculture Extension Centre, said with its more than 1.8 million hectares under rice, the delta contributed more than half of the country's rice output and 92 per cent of exports.

But farmers' incomes were very low due to high costs and unstable prices, he told a forum titled "Improving economic efficiency and reducing greenhouse gas emissions in rice production in the Cuu Long (Mekong) Delta" in Hau Giang on May 5.

The overuse of chemical fertilisers and burning straw after harvest following traditional farming methods caused greenhouse gas emissions, he said.

In 2000, CO2 emissions in Viet Nam had been over 150 million tonnes of which the agricultural sector accounted for 65.09 million tonnes, with emissions from rice farming accounting for well over half.

To reduce the emissions and improve economic efficiency in rice production, many new and advanced farming models have been adopted in the country, especially the delta.

They include the System of Rice Intensification (SRI), "3 down-3 up", AWD, and the "1 must-5 decrease" (Must use certified seeds, reduce sowed seeds, crop protection chemicals, nitrogenous fertilisers, water use, and post-harvest losses).

Huynh Quang Tin of the Mekong Delta Research Development Institute said after four years of piloting the AWD model in five places in the delta, productivity had increased by 10 per cent and profits by 17 per cent compared to traditional methods.

Furthermore, efficient irrigation methods helped effectively reduce greenhouse gas emissions, he said.

Hoang Van Hong of the National Agriculture Extension Centre said last year the centre had implemented the "3 down-3 up" and SRI models in 13 places in the delta.

This models helped farmers not only save seeds, agricultural inputs, and irrigation costs, but also make optimal profits, improve soil quality and reduce green house gas emissions, he added.

Thong said despite their benefits, the new farming models were expanding very slowly since farmers were not provided with sufficient information, and this should be improved.

The agricultural sector would consider expanding the low-carbon farming model to produce high-quality rice to meet consumer demands and make agriculture sustainable, he said.

Local authorities and farmers should consider their land conditions to adopt a suitable new farming method, he added.

Organised by the centre and the Hau Giang Department of Agriculture and Rural Development, the forum attracted more than 400 delegates, including 250 farmers from the delta.

One-door customs mechanism launched

The national one-door customs mechanism was officially launched at ports in five localities, namely Quang Ninh, Hai Phong, Da Nang, HCM City and Ba Ria-Vung Tau, yesterday.

Under the mechanism, all businesses operating in the field of sea transport will complete procedures relating to exit and entry activities and sea vessels in transit as well as freight information at the national one-door portal https://www.vnsw.gov.vn.

The Quang Ninh Customs Department said it has prepared computers with Internet-connection at all ports and has assigned officials on duty to assist businesses in utilising the system.

The department got relevant state management agencies at ports in the five localities to assign officials on duty around the clock to help deal with information on the portal.

The system was launched on a trial basis in the northern port city of Hai Phong last November.

The national one-door customs mechanism has been launched with the aim of reducing customs clearance time from 21 days to 14 days for exports and 13 days for imports, and bringing down costs by 10-20 per cent as well as reducing customs clearance time for businesses by 30 per cent.

With the convenient national one-door customs mechanism, businesses can now save costs and time. In addition, export-import procedures and records will become more clear and simple.

The mechanism can be useful for e-customs processes as well as procedures for granting commodity origin certificates for export goods, following an agreement among ASEAN member states on preferential tariffs on imports and exports.

Viet Nam established a steering committee in 2011, with Deputy Prime Minister Vu Van Ninh as the head, for the ASEAN one-door mechanism.

To implement the mechanism, participating countries must have their own system, that is, the national one-door customs mechanism. All the export-import documents and papers of businesses will be posted on this system. Management agencies related to export-import activities, such as the Ministry of Industry and Trade and the Ministry of Finance, can also exchange information through the system.

Offices in downtown Hanoi appeal to tenants

Office tenants are eyeing downtown Hanoi once again as leasing prices in other areas are rebounding, a realty expert has said.

The impending Trans-Pacific Partnership and the Vietnam-European Union free trade agreement are likely to boost office rental demand, said Director of CBRE Vietnam Office Services Greg Ohan.

Some foreign companies have even set aside budgets to rent office spaces over a 5-10 year span at stable prices, which they believe will be profitable once a wave of foreign investment returns.

Nigel Smith, Managing Director of Landlord Office Agency, Asia, said offices in prime locations are well-rented thanks to its proximity to urban infrastructure, and that the trend is also seen in Hong Kong and Bangkok.

In major metropolises, office towers around 500-800 metres from subways and shopping outlets also have an advantage.

Report outlines forecasts for 2015 economic performance

Inflation this year will fluctuate at about 3 percent due to adjustments in public services, taxes and fees, the Vietnam Institute for Economic and Policy Research (VEPR) has forecast.

If no price hike is seen in public services, such as health care and education, environment protection taxes and road fees, the inflation rate will be about 1 percent, the institute says in its latest report.

The report further says that prices of basic commodities are likely to continue to decrease from now until the end of the year, however, a significant change in oil prices will put pressure on inflation.

As for foreign exchange rates, the report forecasts that the central bank could adjust the dollar/dong exchange rate up 2 percent, as planned this year. The adjustment, if it is taken, will be in the final quarter of this year. In January 2015, the State Bank of Vietnam devalued the dong by 1 percent, from 21,246 VND to 21,458 VND per US dollar, which was the first exchange rate adjustment since June 2013.

The report projects that Vietnam's economic growth this year will be 6.3 percent if oil prices average roughly 60 USD per barrel throughout the year.

Lower oil prices, however, may cause a State budget deficit higher than expected, the report says, estimating that this year's budget deficit will be roughly 45 trillion VND (2.08 billion USD), or roughly 6-6.5 percent of GDP if oil prices average 60 USD per barrel.

Such a deficit will force the Government to cut investment spending this year, the same as in 2014, VEPR warns.

It also forecasts that the country will have a trade deficit this year, after three consecutive years of trade surpluses, however, the overall balance will remain as a surplus thanks to an offset from foreign direct investment (FDI) capital and overseas remittance flows.

Also in the report, the institute has recommended the Government make a breakthrough in its policy reforms and actively create favourable conditions for private enterprises.

New policies should be mapped out to create a fair investment environment for all economic sectors, it says.

Foreign countries turn to Vietnam to ease labour shortages

In the four months leading up to May, foreign countries have been increasing the number of Vietnamese guest workers opening the door to broader job opportunities, according to the Overseas Labour Management Department.

The latest figures from the department show that for the January-April period, the number of workers jumped 4% on-year to almost 36,000 workers with Taiwan (China) employing the most followed by Japan, Malaysia, Saudi Arabia and the Republic of Korea (RoK).

“Taiwan continues to be the main overseas market for guest workers thanks to its businesses providing good pay and working conditions buttressed by the government’s emphasis on protecting worker rights,” said Tong Hai Nam, deputy head of the department.

“In particular, Taiwan has made remarkable changes in its guest worker programs and has increased the worker quotas significantly, which has opened up great employment opportunities” Nam said.

In addition, Nam said that other markets like Japan, Thailand, Indonesia and the Philippines also have also increased their limits due to shortages of domestic workers in a wide variety of industries.

Most notably, Japan has high recruitment needs and many companies have initiated three year apprentice programs to attract highly-skilled workers in fields such as engineering, medicine and nursing.

Earlier on April 10, Vietnam and the RoK signed a memorandum of understanding allowing for an additional 2,900 worker increase under the Employment Permit System (EPS) program for manufacturing, construction and agriculture positions.

Major FDI projects aimed for Vietnam

Vietnam is to receive several FDI projects worth tens of billions of US dollars this year, with Samsung reportedly considering shifting LCD production from South Korea to either China or Vietnam.

AJU Business Daily reported Samsung may choose Vietnam in order to save production costs.

The Bac Ninh provincial People’s Committee is considering granting power to the Bac Ninh industrial park management board to directly sign an agreement for the Samsung Display’s project.

Meanwhile, the Binh Dinh provincial government held two meetings last week to discuss implementation of the Victory Nhon Hoi oil refinery project.

It is expected to complete procedures to grant an investment license to the USD22bn project in the second quarter of this year.

And a build-operate-transfer (BOT) contract for the Van Phong 1 thermal power project may be signed in the third quarter of 2015, allowing an investment license for the USD2bn project to be grated this year.

In March, the EUNSAN and OUE Groups from South Korea proposed a plan to invest USD5bn in real estate near Ba Son shipbuilding facility in HCM City.

The project is expected to be launched September 2, but must first get government approval as the area earmarked for the project is under the management of the Ministry of National Defense.

Several other foreign investors are seeking approval for BOT investments in Vietnam’s electricity industry.

Economists urged caution, saying more attention should be paid to the effects of major FDI projects to Vietnam’s socio-economic development instead of focussing on registered capital.

“We should assess how FDI projects have changed the status of Vietnam’s industrial sector,” said Tran Dinh Thien, the director of the Vietnam Institute of Economics (VIE), under Vietnam Academy of Social Sciences.

NFSC: Back to high growth path

The local economy has started returning to its high growth path, which is evident in more positive macroeconomic indicators, according to the National Financial Supervisory Commission (NFSC).

The commission said in a recent report that development investments in the first quarter inched up 9.1% year-on-year and was well above the 3.8% growth in quarter one of last year.

As of April 20, credit had grown 2.78% compared to the modest rise of 0.53% in the same period last year. January-April FDI disbursements rose 5% to US$4.2 billion, while investments from the State budget edged up by 2.4%.

In addition, aggregate demand has recovered in the first months of this year.

Total retail sales of goods and services in the year’s first four months increased nearly 8% (if the price factor is excluded). This was higher than the respective rises of 6.1%, 4.6% and 5.5% in the same period of three previous years.

The strong recovery of manufacturing and construction is one of the main factors for high economic growth.

Between January and April, the index of industrial production increased 9.4% against a year earlier, with the manufacturing-processing industry climbing 10.1%.

The growth of construction in the first quarter was 4.4%, one percentage point higher than in last year’s quarter one. Real estate surged 2.55% from 2.43% a year ago.

Last year average revenues, assets and equity of enterprises went up 19.61%, 19.51% and 18.9% respectively compared to 2013.

Business confidence is recovering though there are many challenges out there in the market. Enterprises are re-investing in production.

Small- and medium-sized enterprises (SMEs) posted positive growth last year after experiencing negative growth in 2013. Last year’s revenues, assets and equity of this sector jumped 28.31%, 25.58% and 19.2% respectively compared to the falls of 29.37%, 13.64% and 3.17% in 2013. Such growth rates are the highest since 2009.

Regarding business efficiency, the return on assets (ROA) and the return on equity (ROE) ratios soared last year after sharp declines in the 2009-2012 period with 7.34% and 17.87% respectively, up 1.03 and 2.01 percentage points against 2013 and up 3.27 and 7.16 percentage points against 2012.

Nielsen: More consumers favor hypermarkets

More Vietnamese consumers like shopping at hypermarkets, supermarkets and other modern channels as found in the latest Future of Grocery Report of Nielsen.

The report showed more than one-third of Vietnamese consumers (34%) have shopped at hypermarkets and 29% have gone to supermarkets more often than they did 12 months ago.

The market research firm did the report based on an online survey of more than 30,000 respondents in 60 countries in Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America to examine how modern and digital shopping channels are changing the retail market.

According to the report, 42% of Philippine consumers have made purchases at supermarkets more often in the past 12 months.

The report also highlighted the growing importance of convenience stores as another modern retail format for consumers to buy foods and groceries. More than one-fourth of Philippine consumers (27%) have shopped for foods and groceries at convenience stores more often in the past 12 months. The figures are 22% in Vietnam, 21% in Thailand, 15% in Indonesia and 14% globally.

Kaushal Upadhyay, Nielsen’s executive director of client service in Southeast Asia, North Asia and Pacific, said supermarkets and hypermarkets which are already dominant in developed countries will attract more consumers in Southeast Asia’s developing countries. Besides, smaller stores have gained a considerable share, and for manufacturers this means their distribution efforts must rely on a mix of both channels.

“Understanding where consumers are shopping and what product categories is critical to market-by-market distribution strategies,” he said.

The survey also looked into the importance of online shopping and how retailers were integrating digital channels into the shopping experience. There were 28% of Vietnamese consumers shopping online with home delivery while the global figure was 25%.

Items like body wash, shampoo and conditioner were popular items shopped online by Vietnamese consumers as shown in the survey, which was conducted from August 13 to September 5 last year.

HSBC: PMI marks record rise in April

The Purchasing Managers’ Index (PMI) rose to 53.5 in April from 50.7 in the previous month, signaling a solid strengthening of operating conditions as improving client demand led to stronger rises in output and new orders.

In a report released on May 4, HSBC Bank said the improvement was the strongest since the series began in April 2011. Business conditions have now strengthened in each of the past 20 months.

Higher production requirements supported increases in both employment and purchasing activity. Meanwhile, further falls in both input costs and output prices were recorded, although in each case rates of reduction eased.

Andrew Harker, senior economist at Markit which cooperates with HSBC in the PMI report, said growth of the Vietnamese manufacturing sector stepped up a gear last month, with the latest set of numbers the most impressive in the four-year survey history.

He said in the report that central to the improvement was success for firms in securing new clients, helped by a continued lack of inflationary pressure.

Manufacturers took on extra staff in order to help meet production requirements in April and a modest rise in employment followed a decrease in the previous month.

Besides, higher new orders led to the 19th successive monthly increase in manufacturing, with the rate of expansion quickening to the fastest since April 2011.

Output growth resulted in a further reduction in backlogs of work as firms reported efforts to complete orders quickly. That said the rate of depletion was the weakest in the current four-month sequence of falling outstanding business.

As has been the case in each month since last November, input costs decreased. Panelists reported lower costs for materials including oil, iron and steel, while some respondents had requested price reductions from suppliers.

The latest fall in input costs was the slowest in five months. Dropping input prices was the main factor behind a further reduction in charges at Vietnamese manufacturing firms. The rate of decline eased for the third month running.

However, suppliers’ delivery times lengthened for the second month in a row amid reports of material shortages at vendors. The rate of deterioration in lead times was only marginal as prompt payments led some suppliers to quicken their deliveries.

Increases in new business led to a sharp rise in purchasing activity during April. Input buying has now risen in each of the past 20 months, with the latest expansion the strongest since April last year. This rise in purchasing led to an accumulation of pre-production inventories, the first in four months.

Stocks of finished goods also increased, following a decline in the previous month. Some panelists reported that finished products were awaiting delivery to clients.

Phu Quoc Island set to host first golf tourney

Vinpearl Golf Club Phu Quoc tournament will tee off on May 16 on Phu Quoc Island off Kien Giang Province with total prize money amounting to VND2 billion.

The event aims to mark the opening of the Vinpearl Golf Club Phu Quoc, the first international standard 27-hole golf course on the island.

It is expected that 80 golfers who are new members of the Vinpearl Golf Club and invited guests will join the tournament.

Two grand prizes of A Ducati Scrambler worth VND300 million and a Mercedes-Benz C200 worth VND1.3 billion will be granted to the par-3 hole winners.

Par 3 is one of the most challenging and appealing hole as it requires techniques of golfers to overcome lots of challenges of trees, sand and water.

The organizers will also offer special prizes to golfers at a lucky draw in the award ceremony and gala dinner the same day.

Vinpearl Phu Quoc golf course covers an area of 100ha and is the second largest island golf course in Vietnam after Vinpearl Nha Trang.

The golf course is located in the luxury Vinpearl Phu Quoc Resort featuring five-star hotels, villas, swimming pools and a system of Vincharm spas and the Vinpearl Land with hundreds of indoor and outdoor games.

Developed by Vingroup Joint Stock Company (Vingroup) the resort came into service last November.

Gold trading firms want more import quotas

Many enterprises have petitioned the State Bank of Vietnam for more quotas on gold import to replenish their stocks that are being depleted following feverish buying these days.

A senior executive of Saigon Jewelry Holding Co. (SJC) said his company imported over two tons of the yellow metal this month, but the volume was almost consumed in times of strong trading last week.

Last week, for instance, trading volume at SJC reached an average of some 10,000 taels every day, equivalent to 375 kilos of gold, the executive added.

He said that the company has been seeking more import quotas to increase the supply, which help narrow down the gap between local and world prices in line with the target set by the central bank.

On Monday, the gold trading volume was not as strong as in previous days, showing a sign of slowdown in the demand for gold. SJC, thus, would choose the right time to buy gold from the global market, instead of importing the precious metal at any cost as seen during the gold fever earlier.

Similarly, Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Joint Stock Co., (PNJ), said that her firm had already submitted the suggestion last week, but had not received any feedback from the central bank.

However, Cuc observed that at present enterprises found it easier to ask for more quotas, since the central bank wanted to bring local and global prices on parity.

During last week alone, the selling volume of PNJ reached over 3,000 taels of gold every day, which doubled the previous week’s figure. Sometimes, the company could not have the imported one arriving on time, prompting it to halt bullion trade at times.

Meanwhile, Nguyen Ngoc Que, general director of Sacombank Jewelry Co., (SBJ), noted that in previous days the selling volume far exceeded the buying amount, leading to the need to complement the supply.

Sacombank, the parent company of SBJ, also sent the same petition to the central bank, and SBJ has just been granted with a quota of one ton of gold.

Overall, the whole system of Sacombank had sold around 20,000 taels per day during last week, but the demand is now seen taking on the downtrend to about 6,000 taels on Monday.

Despite the lower demand these days, the differential between local and global prices still remains due to the time needed for the imported gold to arrive in the country, said a leader of a big gold trading company.

For example, the price at home on Monday was still VND1.2 million per tael higher than the global price. A tael equals 1.2 troy ounces.

Importing gold requires a big volume of foreign currencies, so the central bank has to take gold import into careful consideration for macroeconomic stability. A gold trader said efforts must be taken on the part of the central bank to strengthen public confidence in Vietnam dong and thus minimize the demand for holding gold.

Luxury cars still sell well despite tough times

Luxury Audi car sales in Vietnam have strongly increased this year compared to that in regional markets, according to Audi AG in a press release introducing its new car model.

The total amount of Audi cars sold in the first seven months had a year-on-year increase of 169%, equivalent to last year’s whole sales. Audi Q7, A8 and Q5 were among the top-selling models, contributing to Audi’s high sales in the period.

General director Tran Tan Trung of Lien A International Co., the official Audi dealer in Vietnam, said Audi had 223 cars sold in Vietnam last year and hoped car sales to double until the year-end. The company had completed 53% of this year’s plan so far.

The first Audi A7 Sportback 3.0 TFSI Quattro was introduced in Vietnam on Monday with a suggested price of VND3.427 billion. Orders of this model in Vietnam have reached 30% of the company’s expected sales.

The Ministry of Industry and Trade’s Circular 20 on restricting car import did not have much effect on Lien A Co. but slowed down importing progress due to extensive procedures, Trung added.

The General Statistics Office recorded that some 42,000 completely built-up cars were imported worth US$782 million in the first eight months, up 30% and 31.8% in number and value respectively.

Foreign arrivals see slowdown in eight months

The tourism sector welcomed over 3.96 million foreign visitors in the January-August period, rising by 18.4% year on year, but the growth rate is lower than that of 35.2% in the same period last year.

According to the General Statistics Office, arrivals from China saw a year-on-year growth rate of 47.8%. The growth rate for arrivals from South Korea was 4.5%, the U.S. some 7.1%, Japan 10.5% and Cambodia 67.3%.

Cambodia has recently surpassed Taiwan and Australia to become the fifth largest visitor-generating market for Vietnam’s tourism.

The neighboring countries China and Cambodia are responsible for one-third of the total number of international visitors at the moment with 1.16 million arrivals.

HCMC, the biggest tourism center of the nation, recorded a lower growth in foreign tourists compared to the whole country. According to the city’s Department of Culture, Sport and Tourism, HCMC has welcomed 2.12 million international visitors as of August, increasing by 10% against the same period in 2010.

Experts say ‘Thu Thiem 2 Bridge project should wait’

Experts at a seminar last Friday suggested that HCMC postpone construction of Thu Thiem 2 Bridge as the traffic demand between downtown areas and the new urban center had yet to flourish at the time.

Most experts reasoned that the bridge project, scheduled to get off the ground next year for completion in 2015 as presented by the HCMC Department of Transport, would not help ease the overall traffic congestion in the city.

The huge cost for the project, at VND1.6 trillion or some US$770 million, should be used for other infrastructure projects of greater urgency, they said at the seminar titled “Suggestions on Building the Thu Thiem 2 Bridge.”

Dong Van Khiem, vice chairman of the HCMC Ornamental Creatures Association, pointed to the scant demand for transport between the city center and the new urban area to call for a postponement. It is necessary to give careful consideration to the construction to avoid the sporadic traffic after completion as seen at the Thu Thiem 1 Bridge at present, he said.

“We do not object to the construction of the bridge but the project owner must clarify its efficiency and should take into consideration whether the bridge should be built now or not based on the current conditions,” Khiem said.

So far, the Thu Thiem 2 project owner has yet to make reports on the project’s cost-effectiveness, such as the impact of the bridge on addressing traffic woes in the city, or the amount of vehicles passing through it after the bridge completion.

Seconding Khiem’s view, Nguyen Ngoc Giao, chairman of the HCMC Union of Science and Technology Associations, was concerned that currently the Thu Thiem 1 and Phu My Bridges failed to show their efficiency as they were quite deserted.

“As the Thu Thiem Tunnel crossing the Saigon River is about to open to traffic in November, could it be efficient to build another bridge?” Giao wondered.

Therefore, the city should prioritize building those works of greater urgency first, experts said.

After listening to the feedback, deputy director of the HCMC Department of Transport Bui Xuan Cuong said that the department considered the construction of the Thu Thiem 2 Bridge as a basis for developing the infrastructure in Thu Thiem.

“The Thu Thiem new urban area is forecast to have some 120,000 residents with 350,000 daily commuters in 2030. As mentioned in its master plan, HCMC until 2030 should have four bridges spanning the Saigon River to Thu Thiem, plus a pedestrian bridge and a new tunnel,” Cuong continued.

He explained further that bridges and roads should be built first while infrastructure would be developed later.

Vietnam Construction and Import – Export Joint Stock Corporation (Vinaconex) has been appointed as the Thu Thiem 2 Bridge project owner under the form of build-transfer by the HCMC government.

The bridge is expected to have four lanes, a 2-meter-long divider for planting flowers, and pedestrian lanes on the two sides of the bridge. The length of the whole bridge and its approach roads was around 1.2 km.

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

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