BUSINESS IN BRIEF 28/7

Trade liberalization helps SMEs grow: ABAC

The third meeting of the APEC Business Advisory Council (ABAC) has wrapped up with a strong message of support to trade liberalization in a bid to help small and medium-sized enterprises (SMEs) grow stronger.

Tony Nowell, chair of ABAC's Regional Economic Integration Working Group (REIWG), said trade liberalization would stimulate the development of businesses, so it could be a measure to protect vulnerable SMEs at a time of economic hardship.

Protectionism is contrary to liberalization and it is really dangerous to SMEs, said Nowell at a press conference held in HCMC on Thursday. Therefore, he added, APEC’s viewpoint and stance is to fight against protectionism and strongly support trade liberalization.

According to Nowell, the relationship between SMEs and large firms in a supply chain is a symbiotic one. For example, a recent survey of Procter&Gamble (P&G) shows a surprising result that the multinational has more suppliers than customers.

P&G has some 126,000 suppliers worldwide, most of which are SMEs, said Nowell. When P&G business takes off, SMEs will also grow well, he added.

Experts suggested Vietnam’s Government should open the door wider and select certain industries to boost trade liberalization. Furthermore, to lure more foreign investors, the State needs to offer them favorable conditions in terms of licensing procedures, together with simpler and more transparent policies.

The public-private partnership (PPP) format was also highlighted as a highly viable investment channel.

From now to 2020, Asia-Pacific demands US$8 trillion for infrastructure development, said experts. The regional governments could hardly afford such a huge amount, so PPP format is a must.

PPP is also the topic of a meeting between foreign investors and the ministries of finance and industry-trade taking place in Hanoi on Friday, with an aim to remove barriers.

Anthony Nightingale, director of Jardine Matheson Holdings, a member of Hong Kong ABAC, said a PPP project should pay attention to three factors, namely setting reasonable tariffs, site clearance, and financial sources.

Especially, with road projects, private investors cannot carry out site clearance on a large scale, with multiple residents involved, but the Government should play a role in this aspect. Moreover, investors are also concerned about the payback period.

Red tape hits business hard

Although the Government has made efforts to streamline the administrative procedures, enterprises still find it tough to meander through the time-consuming and complicated approval process.

The leather and footwear, textile and apparel and fisheries associations of Vietnam last Friday held a conference on labor regulations and administrative reform in export and import activities.

At the conference, over ten enterprises voiced concerns and talked about the difficulties in administrative procedures which they encountered day in, day out.

Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), said administrative procedures have become more entangled, making life more difficult for enterprises.

Thailand, the major rival of Vietnam’s fisheries, normally classifies exporting enterprises into grades A to D, and with Grade A consisting of outstanding performers, and Thailand will inspect their export shipments every three months, according to Dung.

However, Vietnamese authorities scrutinize one in every five shipments and this can cause long export delays at the expense of exporters.

Dung said the Government’s effort to reduce administrative procedures for enterprises had yet to help. VASEP has recently sent 10 requests to the Ministry of Agriculture and Rural Development, but a few of them, mostly small, have been tackled.

The administration reform program began in 2007, especially the piloting of electronic customs, and it is expected that all customs offices nationwide will apply the electronic customs system next year.

However, according to Nguyen Hai Trieu, director of New Wind Seafood Co., the customs reform only facilitates customs officers, not enterprises.

“There is no improvement indeed. Reform should benefit enterprises first,” Trieu said.

Besides, enterprises attending the conference were also concerned over the Tax Management Law which is being amended. With this amendment, when importing materials to produce products for export, enterprises can only secure a grace period when having guarantees from banks.

If this regulation takes effect, it will help customs offices but cost enterprises dearly.

FDI flows into supporting industries

The foreign direct investment (FDI) inflow into Dong Nai in the year to date has exceeded the province’s target for the year, with a considerable amount of it poured into supporting industries.

Bo Ngoc Thu, director of the Dong Nai Planning and Investment Department, said the province so far has attracted US$986 million in both fresh and additional FDI, rising 113% year-on-year and exceeding the province’s forecast for the year by 9.5%.

In particular, 30 projects were granted new investment certificates with total registered capital of US$588 million while 42 operational projects raised their capital by US$398 million, Thu told a press conference last Friday on the January-June FDI situation of Dong Nai.

Thu said the new projects were committed mainly to the industrial sector, with about 50% of them active in supporting industries, which account for 85% of the total registered capital.

For the first time the province has lured more FDI in supporting industries than other areas. Most of these projects involve Japanese firms.

Other sectors with FDI projects are mechanical manufacturing, food processing and cosmetics. In particular, there are two projects producing hi-tech equipment for healthcare, cable television, security and telecommunications.

Thu said this is consistent with the province’s FDI attraction policy, with a focus on hi-tech industries that generate high added value in production and supporting industries.

Dong Nai, she added, prioritizes FDI projects committed to supporting industries so as to develop manufacturing, with investors from Japan on the radar.

After the investment promotion trip to Japan in April, Dong Nai has welcomed hundreds of Japanese investors to the province to sound out investment opportunities. This, in the long run, will attract more Japanese investors into supporting industries in the province, said Thu.

She remarked despite the economic woes, FDI enterprises still carry out their projects, with a total amount of disbursed capital reaching US$370 million, up 8.8% over the same period last year. The accumulated realized capital of FDI firms active in the province so far has amounted to US$9.71 billion, or 47.8% of total pledged capital.

Many projects are disbursing capital on schedule, Thu noted.

In the rest of the year and in the coming years, Dong Nai will not focus on the number of projects but the quality of projects, said Thu.

In the first five months, the province saw 38 local companies applying for dissolution, 23 branches and representative offices asking for termination and 31 businesses requesting suspension. Most of them were small and medium enterprises. The major causes were inefficient business, poor consumption and financial distress.

C.bank says to stabilize lending rates for at least one year

The governor of the central bank, Nguyen Van Binh, has committed to keep lending rates at 15% a year for at least one year and to do his best to ensure interest rate stability for a couple of years to pull the economy out of the doldrums.

“As the governor of the State Bank of Vietnam, I reassure you that the lending rate of 15% will be kept stable for at least one year and we will try to ensure rate stability in the future,” Binh told business executives at a dialogue held by the central bank and Hanoi City last Friday.

Binh attributed his commitment to the fact that the national inflation only stays at 7-8% this year, allowing commercial banks to push lending rates down below 15% as targeted. “The orientations and measures to lower the rates below 15% are very clear and what we are doing now is to turn it into reality,” Binh responded to firms that urged SBV to order member banks to conform to the rate cut.

Thu Ha, director of Lexim, which specializes in trading construction machinery and equipment, said local banks have lent to her business at an annual rate of up to 24% in 2010-2012. Therefore, she insisted lending rates should be slashed to 15% and should remain unchanged for at least one year.

Ha noticed Eximbank already adjusted down its lending rate to less than 15% at the governor’s request but she wondered how long the rate will stay there.

Tran Anh Vuong, representative of the Hanoi Youth Business Association, expressed his concerns over whether the central bank’s instruction that forces lenders to lower interest rates of old loans to 15% could work.

“I suggest the governor should announce the addresses and phone numbers of relevant authorities so that local companies could inform them of any problems that arise,” Vuong said.

Governor Binh admitted a specific ceiling lending rate is not mentioned in the prevalent regulations. “SBV has only called on commercial banks to lower rates for old loans to help corporate borrowers get out of the woods. This means the monetary authority cannot punish violators, if any, based on the current legal system.

“The point is we must be fully aware of social responsibility as banks are supposed to reduce interest rates as soon as conditions allow them to do that.”

Only five days after the central bank released the instruction on rate cuts, most credit institutions in the country have pledged to do as told.

He asserted: “We declare the banking system will only strive for credit growth of 8-10% as the increase is appropriate and would not cause inflation in the years to come.”

Nguyen Thi Mai Suong , director of the Hanoi Branch of the central bank, noted all 12 commercial banks and eight finance leasing companies based in the capital city and branches of State-owned lenders had revised down old loans rates to a maximum of 15%.

According Suong, banks in Hanoi have already reduced rates for 30-50% of the old credit contracts with rates of over 15%. At two State-run banks, Vietcombank and BIDV, interest rates for all credit contracts have went down below 15%, Suong said, adding other lenders in the city are racing to complete their rate cuts this month.

Veggies meet VietGAP

Some 90 hectares under vegetable cultivation in HCMC has met Good Agriculture Practice (VietGAP) standards and an additional 200 hectares will be added as four more veggie cooperatives are accredited.

The city’s Department of Agriculture and Rural Development’s recognizing Phuoc An and Tan Trung cooperatives as meeting VietGAP standards for the 90 hectares is part of a project funded by the Canadian International Development Agency (CIDA) to improve the quality of farm products. Around 50% of total VietGAP veggies output is sold at supermarkets and the remainder is sold at traditional markets.

VietGAP standards will be applied at four more cooperatives, namely Nga Ba Giong, Phu Loc, Phuoc Binh and Hung Dien, said  Nguyen Van Tien, head of plant protection at the city’s Department of Agriculture and Rural Development.

Apart from VietGAP application, the project is also designed to develop retail stores at wholesale markets such as Binh Dien and Thu Duc to provide consumers with safe veggies.  

The US$16 million project is underway in 16 provinces and cites nationwide, including HCMC.

Online tax registration increases by geometric progression   

The number of businesses applying online tax registration has surged sharply by geometric progression, according to the General Department of Taxation under the Ministry of Finance.  

As of July, about 130,000 businesses in 50 provinces and cities have applied online tax registration, up 86.6 times against the same period of 2009.

The figure is impressive as 30% of domestic enterprises have involved in online tax registration, said Mr. Pham Quang Toan, Deputy Director General of the IT Department under the General Department of Taxation.

According to Mr. Toan, online tax registration has brought back numerous benefits for both businesses and tax agencies, setting a foundation for relevant ministries to speed up digital signature services instead of paper documents.

The General Department of Taxation estimated that online tax registration would cover 150,000 businesses in 2012; 200,000 in 2013 and 80% of businesses in 2015.

In the 2014-2015 period, tax agencies will set up online payment gateways with commercial banks to handle online tax payments and provide querying services via websites and SMS for tax payers.

New Zealandand Vietnam start bilateral WHS implementation

The New Zealand Embassy in Hanoi and the Ministry of Labour, Invalids and Social Affairs of Vietnam(MOLISA)announced today that the bilateral arrangement to establish a Working Holiday Scheme (WHS) - Vietnam’s first such scheme with any other country - will enter into effect on July 31, 2012, sevenmonths after its signature.

Entry into effect of this arrangement will openup valuable opportunities each year for up to 100 young people from each country to holiday in the other country for up to 12 months togain exposure to foreign languages, cultures and values, while being allowed to take up temporary employment to supplement their travel funds and enrol in short-term training or study courses.

Young people aged 18-30 from both New Zealand and Vietnam who wish to participate in this scheme will be able to apply from Tuesday July 31, 2012.

Places on the scheme will be allocated on first-come first-served basis to applicants who meet all criteria. Competent authorities of New Zealand and Vietnam expect places on the scheme for citizens from both countries to fill fast.

Criteria for Vietnamese applicants include possession of a tertiary education qualification, proof of functional English ability to IELTS 4.5 level, and proof of funds to support the holiday. Criteria for New Zealand applicants include possession of a National Certificate of Education Achievement Level or above, and proof of funds to support the holiday.

Interested applicants are urged to consult updated information on the scheme available on the New Zealand Embassy website (www.nzembassy.com/viet-nam), or the website of the Bureau of Employment of MOLISA(http://www.vieclamvietnam.gov.vn/tintuc/WorkingHoliday.aspx) or the website of the Department of Overseas Labour of MOLISA(http://dolab.gov.vn).

The launch of the WHS further boosts the recent strong growth in the relationship between New Zealand and Vietnam. It is expected that the scheme will help to broaden people-to-people linkages and contribute to two way bilateral linkages in areas such as tourism and education.

To mark the launch of the WHS, the MoLISAand the New Zealand Embassy in Hanoi will co-organise a workshop on July 31 to increase the awareness and understanding of interested parties about the scheme. This will be followed by a bilateral exchange of diplomatic notes to confirm that each side has completed its legal requirements necessary for the WHS arrangement’s entry into effect.

$4.1bn Saigon Atlantic stuck beneath the waves

US’ Winvest Investment is crying for help to remove site clearance obstacles for its $4.1 billion Saigon Atlantic resort project in southern Ba Ria-Vung Tau province.

At the end of June, Winvest Investment asked Deputy Prime Minister Hoang Trung Hai to assist with its land clearance issue which had delayed the project for four years. Hai immediately ordered Ba Ria-Vung Tau Provincial People’s Committee to get to the bottom of the issue.

Saigon Atlantic received its first investment certificate in November, 2007 with total registered capital of $300 million. Two years later, the developer decided to expand its investment capital to $4.1 billion, making it one of the largest tourism projects in Vietnam.

The resort covers 307 hectares of land and 610ha of land reclaimed from the sea and once completed, it will comprise 332 villas, 11,960 five-star hotel rooms and 16,127 high-end apartments. The developer also estimated this project would create 15,000 jobs for locals. As initially planned, the site clearance had to complete within 2009. However, approximately 100ha out of 307ha has been cleared despite efforts to seek local governmental solutions.

“There are many problems related to the calculation of land compensation. There are also a lot of claims from residents,” said Huynh Xuan Vinh, vice head of Foreign Cooperation and Investment Division, under Ba Ria-Vung Tau Provincial Department of Planning and Investment.

Last year, the developer paid $4.71 million in advance for site clearance while the local government pumped nearly $4.8 million to handle this issue. However, this was not sufficient. The project’s site clearance has made no progress during last 12 months.

The total estimated compensation for the project’s site clearance is more than $28.81 million. Vinh said the province had difficulties in mobilising this sum.

Nix waste plan heads for the bin

Hanoi Minerals Metallurgy, developer of $71.4 million nix waste treatment facility in Van Phong Economic Zone, is to lose its investment certificate.

Nguyen Trong Hoa, head of Van Phong Economic Zone Management Authority in central Khanh Hoa province, said the authority had sent a report to Khanh Hoa Provincial People’s Committee about its proposal to revoke the investment certificate of the delayed project as construction remained standstill since it was licenced three years ago.

“Van Phong Economic Zone Management Authority will check all expenses which the developer has invested in this project. Then, we will look for the reasonable solution,” said Hoa.

On December 14, 2009, under a contract signed between Hyundai-Vinashin (HVS), a joint venture between South Korea’s Hyundai Group and state-run Vinashin, with Hanoi Minerals Metallurgy, a facility to treat 330,000 tonnes of nix waste per year would take shape. The construction was expected to complete in March 2011.

The project has the total registered investment capital of $71.4 million, with Hanoi Minerals Metallurgy to borrow $47.6 million from Vietnam Development Bank (VDB). However, the project implementation suspended in early 2011 without any reason reported.

In July 2011 the local authorities asked Hanoi Minerals Metallurgy to complete assessing the project’s technology and the facility had to come online in 2012’s fourth quarter. The possible licence withdrawal of Hanoi Minerals Metallurgy’s project would push the contract of nix waste treatment with HVS to the wall.

From 1999-2007, HVS imported 809,000 tonnes of nix and used around 800,000 tonnes. As of July 2007, HVS stopped importing nix grains. In July 2008, the Ministry of Natural Resources and Environment asked Khanh Hoa authorities to take stronger measures to prevent environmental problems that could be caused by the operation of HVS and the company was asked to stop using nix grains.

However, in 2010, HVS continued importing 20,000 tonnes of nix grains without approval.

Local authorities then required HVS to treat all waste discharged by its used nix grains before using newly imported grains.

Auto importers looking for a big pick me up

Registration fees for pick-ups have increased anxiety among customers and automotive industry firms in Vietnam.

Many pick-up models sold in Vietnam have been hit with inconsistent registration fees in many cities and provinces. In Hanoi and many northern provinces, the ownership tax rate for pick-ups is 2 per cent, while in Ho Chi Minh City and some southern provinces, this rate is ranging from 10 to 20 per cent, according to Vietnam Automotives Manufacturers’ Association (VAMA) petition sent to the General Department of Taxation.

For example, customer Ha Van Dinh paid 15 per cent or VND102 million ($4,900) of registration fee for the pick-up Ford Ranger imported from Thailand in April in Danang Customs. However, the Mitsubishi Triton GLS bought by Nguyen Lu Trong Nhan in Binh Duong was subject to a 10 per cent registration fee.

Actually, there were even inconsistent ownership tax rates for the same model in the same provinces or cities, especially for Toyota Hilux, Ford Ranger and Isuzu D-Max, the petition claimed. A Toyota Hilux bought by Hoa Nong A Chau in May was subject to a 15 per cent registration fee, while another customer Vu Van Hoa paid only 2 per cent of that tax.

A pick-up vehicle-goods-carrying is not subject to an ownership tax rate of 10-20 per cent under Official Letter No.2824/BTC-TCT and should enjoy an ownership tax rate of 2 per cent, according to VAMA. Official Letter No.2824/BTC-TCT issued by General Department of Taxation guides Circular No. 124/2011/TT-BTC on registration fee for pick-ups.

VAMA added that the certificate of conformity from inspection of quality technical safety and environmental protection for imported motor vehicles issued by Vietnam stated a vehicle which was registered as “ a pick-up with double cab” was subject to a 2 per cent ownership tax rate.

Furthermore, when being imported into Vietnam, those pick-ups enjoy 5 per cent ASEAN Common Effective Preferential Tariff (CEPT) import duty, as similar as import duty rate for trucks or a pick-up vehicle-goods-carrying.

VAMA concluded cities or provinces not applying the 2 per cent ownership tax rate to the above mentioned pick-up are in contradiction with the instruction provided by Official Letter No.2824/BTC-TCT.

So far, VAMA has been able to convince several tax offices to apply the “right” ownership rate, including Hanoi, Haiphong, Quang Ninh, Danang, Dong Nai and Binh Duong provinces.

But, all the other provincial tax department are reluctant to impose the rate of 2 per cent given the instruction in the above-mentioned regulations are not clear enough.

Int’l airports built only to serve domestic flights

Only two out of the five international airports in Vietnam are operating with a gain, and most only receive domestic flights, despite their name.

Even so, the country has planned to double the number of international terminals by 2020.

In January the VND3-trillion (US$114 million) Can Tho International Airport was officially put into operation, and has since only received a couple of chartered flights from Taiwan of national flag-carrier Vietnam Airlines (VNA).

The flights were intended to serve Vietnamese brides in Taiwan who wanted to visit their home country, and such services are only offered on the occasion of the Lunar New Year.

Can Tho’s terminal now only sees the presence of two airliners, VNA and Vasaco, who offer domestic services between Can Tho and Ho Chi Minh City, Phu Quoc, and Con Dao on the frequency of six to eight flights a day.

Similarly, many terminals elsewhere in the country were upgraded into international airports, only to continue serving domestic air services.

Hai Phong-based Cat Bi International Airport, for instance, hasn’t received any international flights since March 2010 when its only global partner, the low-cost carrier Viva Macau, ceased operation.

Cam Ranh airport too only serves chartered flights from Russia and Korea, while most of the time it has to offer services for domestic flights.

Even at Da Nang International Airport, considered an active destination for tourism in central Vietnam, only Silk Air and Air Asia currently offer service on the Da Nang – Singapore route, with four flights a week.

Can Tho’s terminal was invested with an enormous $114 million, which enabled it to receive large aircraft such as Boeing’s 777 and 747 while serving 3 million passengers a year.

The airport was expected to see new air routes connecting the Mekong Delta city with South Korea, Thailand, and Hong Kong after its inauguration, but has gained only disappointment.

With a small number of flights enjoying services at the terminal, Can Tho airport has been gaining a modest sum compared with the massive investment it received.

Lai Xuan Thanh, deputy head of the Civil Aviation Administration of Vietnam (CAAV), said Can Tho is in an advantageous geographical position, from which air services to Cambodia, Singapore, Malaysia, and Indonesia can be launched.

“But what a pity that no such services have ever been offered,” he said.

A CAAV chief official said his agency has invited international airliners to Can Tho to see if they can open air routes to the city following the inauguration of the terminal.

“The carriers’ feedback is that the terminal infrastructure is quite good, but they all commented that Can Tho is not an attractive destination for an international air route to be opened,” the official, who wished to remain anonymous, said.

“They said local tourism is unappealing, while the economy has nothing to attract investors, which means any international air service will surely incur losses,” he added.

Budget carrier Jetstar Pacific said it used to offer service between Hanoi and Can Tho, but had to stop after just five months.

“We had few passengers, and suffered a $2 million loss,” said Thanh.

Meanwhile, it is expected to take Lien Khuong airport in the Central Highlands province of Lam Dong as long as 30 years to recoup the huge VND1.7 trillion earmarked for its upgrade.

“The terminal is capable of serving international flights and receiving up to 2 million passengers a year, but it now suffers poor revenues and low flight frequency,” an aviation expert said on condition of anonymity.

Foreign banks asked to clarify credit plans

The State Bank of Vietnam on July 23 issued a document to request foreign credit institutions and banks in Vietnam to send reports on their credit products and programmes to the central bank before August 2.

The move is part of Resolution No13 NQ/CP, issued by the Government on May 10, this year. The resolution is aimed at finding solutions for struggling enterprises while supporting the market.

Credit products and programmes undertaken from now to the end of this year will help deal with the obstacles facing businesses.

The reports must provide comprehensive details of products and campaigns; their duration; applied subjects; participation conditions; total outstanding loans for the programmes; and interest rates.

Budget airlines offer $1 flight to Nha Trang

Local budget airline VietJetAir will launch a Big Sale promotion offering tickets from Ho Chi Minh City to beach destination Nha Trang for as little as VND19,000 (US$1) starting tonight.

According to information from the airline, 10,000 budget tickets are available for travelers to grab, starting from 9pm to midnight between July 24 and July 26.

Reservations should be made on the airline’s website www.vietjetair.com during the offer time. Payments can be made online by credit cards or by cash at ticket offices and HDBank transactional branches.

In order to be eligible for the sale travel must be made from 3 August to 30 August, 2012 and from 1 October to 30 December, 2012.

Local SMEs join business fair in China

Around 70 small-and medium-sized enterprises (SMEs) from Vietnam will take part in the 9th International Small and Medium Enterprises Fair (CISMEF 2012), scheduled to take place in Guangdong, China this September.

The event will focus on energy and environmental protection and is expected to attract a large number of Chinese companies, as well as nearly 4,000 businesses from 20 countries and territories around the world, that will display their products at 5,000 international standard pavilions.

Speaking on July 24 in Beijing at a press briefing for the fair, Vietnamese Trade counselor to China, Bui Huy Hoang, praised the event, saying it has greatly benefited to participants, including Vietnam.

The Ministry of Industry and Trade is cooperating with relevant agencies to boost dissemination information about the fair in Vietnam and abroad, he said.

The annual CISMEF is an excellent chance for SMEs in Vietnam and other countries to study the markets, seek investment opportunities and build partnerships, Hoang added.

Exports to India increase slightly

Two-way trade turnover between Vietnam and India in the first six months of this year reached US$1.84 billion, an increase of 0.45 percent over the same period last year.

According to the Export-Import Department under the Ministry of Industry and Trade, Vietnam earned nearly US$800 million from exports to India, up by 22.6 percent, while its imports from the South Asian nation were down 11 percent.

Vietnam’s trade deficit with India was estimated at nearly US$340 million, 45 percent less than the same period last year.

In addition to traditional goods such as agricultural and craft products, Vietnam has also been exporting high value-added products such as steel, rubber and coal to India.

Experts say that India has a huge demand for agricultural and forestry products from Vietnam so it is crucial for Vietnamese businesses to take full advantage of the Vietnam-India Free Trade Agreement and seek more trading partners in the country.

Local businesses should also improve the quality and competitive edge of their products and keep updated on India’s customs procedures, they said.

Etihad Airways launch UAE-Ho Chi Minh City route

Etihad Airways has announced its plan to begin daily direct flights between Ho Chi Minh City and the United Arab Emirates (UAE) in October next year.

The Abu Dhabi-based airline said the service to Ho Chi Minh City is meant to meet the growing demand from Vietnam’s rapidly expanding economy and will support the country's increasing commercial ties with the UAE, especially Abu Dhabi.

It will be Etihad's sixth destination in the region after Bangkok, Jakarta, Kuala Lumpur, Manila and Singapore.

HCM City’s trade surplus hits US$1 billion in 7 months

Ho Chi Minh City’s trade surplus in the past seven months has reached more than 1 billion, including US$0.42 billion in July, according to the municipal Department of Statistics.

Its exports in the reviewed period are down 1.1 percent to US$16.1 billion but its imports up 4.5 percent to US$15.03 billion.

In July alone, exports from the State-owned sector accounted for the highest proportion of 48.7 percent, followed by the foreign-invested sector (28.2 percent) and the non-State owned sector (more than 23.1 percent).

The non-state owned sector took the lead in terms of import value (46.7 percent), followed by the State-owned sector (26.8 percent) and the foreign-invested sector (26.5 percent).

Debate on time to process sugarcane crop to ensure profits

Sugarcane farmers in the Mekong delta provinces are concerned about the time to process the next sugarcane crop, as price of sugar has fallen and a large inventory is still in stock.  Accordingly, the Vietnam Sugarcane and Sugar Association convened a meeting with 10 sugar companies in the region to discuss ways to ensure profits for both farmers and companies.

Farmers in Phung Hiep District in the Mekong delta province of Hau Giang are still angry at the loss of hundreds of hectares of sugarcane crop from severe flooding last year.

Having suffered from this devastating loss last year, the province spent VND153 billion ($7,3 million) on embankments and dykes to protect around 5,000 hectares of sugarcane.

However, these could not be completed for various reasons and as a result, thousands of hectares of sugarcane fields are now under threat of flooding.

Bui Thi Quy, chairman of Long My Phat Sugarcane Company, said they are ready for the new crop as scheduled, and 40,000 tons of sugarcane will be converted into sugar in August and more than 9,000 tons of sugarcane will be processed in September.

On the other hand, chairmen of other companies said it was not wise for processing to be done in August because then companies will have to buy premature sugarcane.

Moreover, Co Tri Dung, chairman of Soc Trang Sugar Corporation said sugar processing units still have stock of more than 250,000 tons of sugar which is difficult to move in the market although wholesale price of sugar has plunged from VND18,000 before Tet to VND16,500 now, but consumption rate is far too low.

In addition, 70,000 tons of sugar is going to be imported into the country as per WTO commitment, raising the total amount of sugar to more than 320,000 tons, which might take three months to consume, said Dung.

The Ministry of Agriculture and Rural Development has just ordered sugar processing units not to make sugar from premature sugarcane to avoid losses for farmers and even companies.

Nguyen Thanh Long, chairman of the Vietnam Sugarcane and Sugar Association, proposed to the Department of Agriculture and Rural Development to take samples and decide the time for the next crop by the end of July. The new crop should not be damaged by flooding and should also guarantee that farmers’ receive profits.

Motorbikes sales plunge despite promotion race

Sales of motorcycles are sharply plunging even though agents in partnership with manufacturers are rushing to launch a vast array of promotions, including supporting registration fees for buyers or pulling the prices down.

At Honda Vietnam (HVN), the country’s largest motorcycle maker, it is unlikely that the target set by former general director Koji Onishi to sell about 2.3 million vehicles this year will be realized. It is nearly undeniable when Koji’s successor, Masayuki Igarashi, admitted that his company has no other choice but to lower the target due to poor demands since the year’s beginning.

HVN has two factories in the northern province of Vinh Phuc with total output of two million units annually, which produced 2.15 million units in 2011. Now it has had to revise down the production plan for 2012 to a mere 1.93 million.

According to Igarashi, the current stagnant business is threatening the future of the third plant HVN is constructing in Ha Nam Province. Now the plant is still constructed and targeted to be completed on schedule but when it will be put into operation is still unknown.

In fact, large numbers of distributors of HVN in HCMC complained the newly-adjusted target is still higher than actual trading situation at their shops. A large agent owner of HVN revealed sales at his stores have plummeted by half over the past few months, resulting in high inventories, although HVN has actively given supports to his stores to woo customers.

Since the middle of May, HVN had launched a promotion to give gift vouchers worth VND888,000 to buyers of PGM-FI vehicles. It has continued stimulating local demands by paying all registration fees for Air Blade buyers until late next month.

In recent times, HVN has shifted to offering gift vouchers worth VND888,000 to buyers of Wave 110S, Wave RS and vouchers worth VND2 million to PCX purchasers until the middle of September. Regardless of this, the firm has seen no improvements in it sales performance so far.

Likewise, other motorbike producers are also suffering the same headache. They have joined the race to entice customers with various supporting forms but they are still unable to pull themselves out of the somber business as expected.

For instance, Piaggio Vietnam at first promised to pay all registration fees for buyers of Vespa LX i.e and Vespa S e.i from the middle of March to the middle of April. Now the enterprise is offering VND4 million to buyers of Vespa LX and VND3 million to Fly purchasers.

Similarly, Suzuki is trying to lure clients with registration fee payment for buyers of Hayate 125.

Under the current climate, all motorbike manufactures shared the view that they are forced to sell a number of products at the prices below the levels announced earlier. Several dealers said they must accept losses or inconsiderable profits, from VND300,000-500,000 each, when doing so but it is still better than doing nothing and seeing inventories ballooning.

PCX scooters are now priced at some VND53.5 million a unit compared to HVN’s list price of VND59 million and Lead products at around VND34.5-35.5 million a unit compared to the VND35.5-36.5 million set by the maker.

Most agents attributed the sluggish business to the on-going economic slump. They predicted the situation will continue in the coming months, especially in July and August.

The combined production output of all motorcycle manufacturers in the country is set to reach five million products a year by 2015, but given the current business tempo, it is estimated that total sales by then should reach between only 3 million and 3.5 million products, meaning manufacturers will have to boost exports in the coming time.

Goldman Sachs, OPIC eye highway upgrade project

Goldman Sachs and the Overseas Private Investment Corporation (OPIC) have worked with the Ministry of Transport to discuss the financial arrangements for the National Highway 20 upgrade project, an official said.

Nguyen Ngoc Toan, director of BT 20 Co., told the Daily that in the meeting with the transport ministry last week, both sides mentioned the financial arrangements for the project. Although no agreement was signed between two sides, the project has attracted the attention of these international financial institutions, he added.

“Currently, only one package of the upgrade project is being carried out in Lam Dong Province, and we will begin two other packages next month. Meanwhile, Dong Nai Province is accelerating the site clearance progress to hand over the site for contractors,” Toan said.

The upgrade project constructed under the build-transfer (BT) format aims to serve the transportation of bauxite from the plant in Lam Dong to Go Dau Port in Dong Nai Province.

The National Highway 20 upgrade project was kicked off late last year and divided into two components. With the first component worth VND4.467 trillion, 123 kilometers of the highway starting from Dau Giay Intersection in Dong Nai Province to Provincial Road 725 in Lam Dong Province will be upgraded and completed in late 2014.

Meanwhile, the second upgrade component worth VND3.058 trillion will start from Provincial Road 725 to National Highway 27.

The upgrade project’s consortium includes Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (Cuu Long CIPM), Western Mekong Co. Ltd, Petroleum Construction Joint Stock Co. No.1 and Building Materials Corp. No.1.

VEC mulls temporary road linking city to expressway

Vietnam Expressway Corporation (VEC) is studying a scheme to develop a temporary road connecting HCMC with the HCMC-Long Thanh-Dau Giay Expressway, as the expressway section in the city has not finished site clearance.

The HCMC-Long Thanh-Dau Giay Expressway will be partially opened to traffic in late this year, but site clearance has yet to be completed in the 4.2-km approach in HCMC’s District 9, said Le Manh Hung, director of the authority for the southern expressway projects.

At present, HCMC still lacks VND900 billion for site clearance compensation. The municipal government requests the districts to hand over cleared sites to the contractor no later than September this year.

However, even when site clearance is done, it will take around 30 months to handle the mud pockets and the soft soil in the area that the expressway runs through. Therefore, VEC is studying a plan to open a temporary road from Do Xuan Hop Street in District 9 to connect the city to the expressway, said Hung.

According to schedule of VEC, the contractor has finished some 55% of the workload. Particularly, the package 1A for building a 3.5-km section in District 9 will be finalized within this month and the package 1B for bridge development will wrap up in December.

The HCMC-Long Thanh-Dau Giay Expressway has a total length of 55 kilometers, connecting HCMC and Dong Nai.

S. Korea helps Vietnam improve design capability

South Korea will help Vietnam improve the design and consultancy capability and provide support in specialized design under the project “Vietnam-Korea Design Sharing”.

This was informed at a seminar named “Innovation by Design” held by the Korean Institute of Design Promotion (KIDP) and the Vietnam Trade Promotion Agency Vietnam (VIETRADE) in Danang City last Friday.

In addition to 200 participants representing the design firms in the central region, the seminar was attended by more than 10 South Korean designers. Local business representatives and South Korean designers shared their skills, processes and experience in designing packages through brand identity systems and designing products through television advertising skills.

Kim Yunjib, director of the policy and design plan committee at KIDP, said South Korea always has policies to promote the design industry in an intensive and systematic way.

In particular, South Korea’s government supports the development of design companies, contributing to the overall economic development. Furthermore, the government also fosters the development of the cultural life in order to offer citizens convenient and safe products, and often organizes awards and exchange activities.

There are more and more professional design companies in South Korea, with a skillful design staff of over 90,000 at present, versus 5,000 in the 90s, said Kim.

“We not only develop at the central level, but also invest in design development at the local level, as this is seen as a key industry of the country. Given the current potentials, I think Vietnam should also go in this direction,” he stated.

Ta Hoang Linh, deputy director of VIETRADE, hoped that the joint projects between Vietnam and South Korea will offer chances for local design firms to learn from South Korea designers’ experience and knowledge, gradually promoting design and export.

Vinh Tan 2 thermo-power plant up and running next year

Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Finance to support Vietnam Electricity Group (EVN) in seeking capital for the Vinh Tan 2 thermo-power plant and related power grid works in order to put the first turbine of the plant into operation in December 2013.

Located in the south-central coastal province of Binh Thuan, Vinh Tan Power Center consists of four thermo-power plants with total output of 5,600 MW targeted as a key power supply center for the southern region in 2013-2020.

Work on the plant Vinh Tan 2 started in August 2010 with two turbines with total installed output of 1,244MW at a total cost of about VND23.48 trillion.

The first turbine of the Vinh Tan 2 is scheduled to be operational late next year while the second turbine will be put into service in June 2014.

The other factories of the power center are the Vinh Tan 1 and 3 under the format of build-operate-transfer (BOT) and the Vinh Tan 4. The Vinh Tan 1 scheme will be kicked off in 2014 and the construction of Vinh Tan 3 and 4 projects will be started in 2015.

All these plants apply traditional turbine technology with total coal consumption of about 8.8 million tons a year plus around 50,000 tons of fuel oil.

In his instruction, the Deputy Prime Minister also asked Vietnam Coal and Mineral Industries Group (TKV) to quickly initial an agreement with EVN to ensure coal supply for this power center.

According to a directive released from the Government Office last week, the Government had urged relevant agencies to hand over land to involved contractors in August to ensure the construction progress of the power plant under the management of EVN as project owner.

In this quarter, the Ministry of Industry and Trade will also complete the negotiation and signing of the BOT contract of the Vinh Tan 1 project with total investment capital of roughly US$1.9 billion.

TKV now is preparing for necessary documents and procedures in line with the contract with China Southern Group for the Vinh Tan 1 as well.

Japan backs public finance management

The Ministry of Finance (MoF) and the Japan International Cooperation Agency (JICA) today launched a seminar on macro-economic challenges in Hanoi.

This marks the first activity of the renewed Memorandum of Understanding (MoU) between MoF and JICA on capacity development on public finance management this year. According to JICA, the seminar helped explore many questions from public finance managers. Professor Aroyoshi of Hitotshubashi University and Professor Kaizoji of International Christian University gave lectures from international practices.

Also at the seminar, the Japanese professors provided valuable advice for those willing to make further research at universities. “It is getting harder to provide macroeconomic response policies adequately and timely due to the complexity and fluctuation of international and local situations. By sharing international practices and experience from other countries including Japan, we would contribute to the settlement of some urgent needs in public investment and public finance management in Vietnam,” said Motonori Tsuno, chief representative of JICA Vietnam.

Under this framework, the topic of a bubble economy and disposal of non-performing loans from Japan’s experience are highlighted. Besides, industrial revitalisation and tackling a bubble economy have been shared from JICA and other related agencies in donor meetings as well as a seminar in May, this year.

In the 2011 financial year, the MoF and JICA jointly provided training to 92 officials in Vietnam.

The successful outcomes have prompted MoF and JICA to extend their cooperation until March 2013, supporting Vietnam in coping with some urgent needs such as macro-economic stability, SOEs reform and programme management. 

 
*
*
*
  Send