BUSINESS IN BRIEF 2/4
Greater cooperation needed for central region tourism

Tourism remains an advantage of the central region in luring investors, but the regional localities need to increase mutual cooperation for better tourism promotion and investment attraction, said a local economist.

With many beautiful beaches along a 1,430-km coastline, the central localities have formed many coastal urban areas like Chan May-Lang Co, Danang, Hoi An, Van Tuong, Quy Nho, Tuy Hoa, Nha Trang, Phan Rang-Thap Cham and Mui Ne. These coastal urban areas lay a foundation for establishing and boosting cooperation in tourism development with other regions, said Tran Dinh Thien, head of Vietnam Economics Institute.

He was speaking at a workshop named “Tourism Development for the Central Coastal Region of Vietnam” held in Danang City last Friday.

In addition to sea tourism, the central region also holds high potential for tourism development in the Truong Son Mountain Range in the Central Highlands.

Although Vietnam’s central coastal region holds great appeal to the world, each regional locality must find its distinctions in order to woo investors, said Thien.

“The central region has striking cultural and ethnic characteristics, providing its tourism resources with distinctive features… However, it is essential to make such distinctions attractive to the world and this must be done in a systematical way in order to create a high-grade status for Vietnam’s sea tourism,” he stressed.

He remarked the cooperation among the central localities was not close enough. They have just joined hands in organizing events, but have yet to jointly develop tourism products, explore markets and promote tourism, he said.

Gerhard Merkel from Merkel & von Schweinitz GmbH Business Partner said Vietnam should adopt the global business philosophy in tourism development, focusing on nature and culture conservation instead of rapid tourism development.

“Don’t repeat the mistake of Thailand. Phuket was a peaceful beach but it is now too noisy and crowed, no longer suitable for a vacation. Bali is another example,” he said.

Sharing this view, Kai Schroter, general director of EuroCham Tourism and Hospitality Sector Committee, said Vietnam had attracted a large number of tourists and the recent data suggested no problem for Vietnam’s tourism.

However, confidence among European investors in Vietnam is declining.

“Investors needs an attractive and dynamic business environment, a fair playground, transparent administrative procedures, highly reliable and practical documents, commitments and fulfillment of such commitments,” said Schroter.

Many investors warned that Vietnam is not their only option. Therefore, Vietnam needs to make certain reforms and take prompt actions to lure and retain investors.

Rice exporters dodge rules via consignment contracts

Export of rice, coffee and cashew has been proposed as conditional business in a bid to eliminate unqualified exporters from the playground, but small traders still evade the rule via consignment contracts.

With the introduction of Decree 109 on rice trading and export, the Vietnam Food Association (VFA) hoped the number of rice exporters would drop from 262 to 100. Still, many traders who fail to get rice export licenses, by not meeting the requirements on processing and storage facilities, make use of consignment contracts to continue to export rice without going against Decree 109.

The director of a rice company with a branch in HCMC told the Daily that she had spent billions of dong buying an old seafood processing plant in An Giang to turn it into a rice processing plant satisfying Decree 109. Even so, her company was still not granted a rice export license.

However, she continues to export rice via consignment contracts with eligible exporters, paying them a few dollars per ton. Because her company has an advantage in high-grade rice for export to several markets like China, Malaysia and Taiwan, she does not worry much about prices.

“The greatest concern is the consignees might entice the customers that we have made all-out efforts to find,” she stressed.

Therefore, ineligible rice traders attach the most importance to the selection of reliable partners to entrust them with the export job.

A source in charge of fragrant rice export of an unlicensed rice firm in HCMC said his company had been exporting rice through consignment contracts for over two years.

Under consignment contracts, the consigners pay the consignees US$2-5 per ton of rice. This charge is not high, but it is beneficial for the trading companies exporting rice under the name of reputable companies that are VFA members, he said.

“Ineligible rice exporters only worry about the lack of contracts for export at good prices. Finding consignment contracts is easy,” he said.

Similarly, coffee export is also proposed as conditional business by the Vietnam Coffee and Cocoa Association (Vicofa). Coffee traders must have a processing capacity of 5,000 tons a year and have been exporting coffee in at least two consecutive years to be granted export licenses.

If the requirements suggested by Vicofa were approved, ineligible coffee exporters might also make use of consignment contracts.

To avoid this situation, Nguyen Viet Vinh, general secretary of Vicofa, said Vicofa would impose specific regulations for coffee producers and traders with small export volumes.

Meanwhile, Nguyen Duc Thanh, chairman of Vietnam Cashew Association (Vinacas), said the association would likely eliminate the requirement for an annual capacity of 2,500 tons from the draft decree on conditional cashew export. Instead, Vinacas will use food safety and hygiene as a requirement.

There are currently some 330 cashew exporters nationwide, up 30 against the statistics of Vinacas in late 2011.

Russian businesses keen to invest in Vietnam

Russian businesses invested US$924 million in 83 projects in Vietnam last year. Most of them were from major groups such as Zarubezhneft and Gazprom, Rosatom and KamAZ.

Victor Lavrenko, director of Nigma Technologies Company emphasized the need for a regular survey into the Vietnamese market to ensure further success in doing business in Vietnam.

Vladimir Yurlov, a Russian entrepreneur who has worked in Vietnam for 30 years, said feedback from the Russian people who have stayed long in Vietnam is very important as they are familiar with business investment in the country.

There is plenty of opportunity for Russian businesses to invest in real estate, tourism, interior decoration, agricultural and aquaculture processing, said Victor Lavrenko.

In fact, many Russian companies like Ashmanov or Softline have been operating successfully in the country.

Belgian businesses keen on Vietnam market

A large number of businesses from Belgium’s West Franders region learned about Vietnam’s investment incentives and opportunities at a recent workshop in Hasselt city.

Many of them are operating in such areas as steel production, construction, food processing and medical equipment manufacturing.

Among them was Petercam, an independent investment firm specializing in private asset management and estate planning in institutional asset management and in investment banking activities.

Patrick Vande Kerchhove, director of the Hasselt-based Petercam Office, noted that Vietnam is a developing economy that has achieved impressive growth over the years.

He made an in-depth analysis of Vietnam’s macro-economy, socio-political stability foreign investment attraction, inflation, foreign trade and labour force, which he said are useful Belgian businesses wishing to invest in the Southeast Asian nation.

Vietnam has an open, potential economy which many Belgian businesses find attractive to place investments, he said.

Petercam’s lead economist Bart Van Craeynest echoed Patrick’s view that Vietnam is one of a handful of emerging markets that have had impressive development, and said that it will continue to be an attractive address for EU investors, especially those from Belgium.  

For his part, Vietnamese Ambassador to Belgium Pham Sanh Chau briefed participants on Vietnam’s efforts to weather the global economic recession and said the country is proactively taking part in negotiations of bilateral and multilateral trade agreements such as the Trans-Pacific Partnership (TPP) and free trade agreements (FTA).

He said the growing ties between Vietnam and Belgium over the past 40 years are presenting numerous opportunities for the two countries to strengthen cooperation in various areas.

Belgium became Vietnam’s 7th largest European Union (EU) trade partner in 2012, with a two-way trade turnover of US$1.55 billion.

It also ranked 35th amongst foreign direct investors in Vietnam. The two countries are implementing 41 joint cooperation projects ranging from bio-technology, banking, education and training, to water resource treatment.

There are more than 90 Belgian representative offices in Vietnam, mainly in the fields of footwear, garment and textiles, seafood, coffee, agricultural products, electronics, software and ship-building.

Electronics market struggles to survive

Though the electronics market foresees negative growth in 2013, enterprises are struggling to avail of every possible opportunity to survive in this fiercely competitive field.

Electronic outlets are even trying to cover far off rural districts to sell their stock and lower inventory, besides continuing to create promotional programs in their existing outlets.

In 2012, electronics sector saw negative growth and it is forecast that losses this year will hit this sector again, despite promotional campaigns that stores have launched.

Except for well-known outlets such as Nguyen Kim, thegioidienmay.com, Pico, Thien Hoa and Idea, other small outlets were once near state of bankruptcy.

Thegiodidong.com was set up in 2004, and in 2007, Mekong Capital bought 33.5 percent of its market share. Since then, it has opened a series of outlets in Ho Chi Minh City and poached on markets of other electronic outlets. In 2012, thegioidienmay.com established itself as the biggest retailer in the country.

Using the example of Thegiodidong.com, many electronic enterprises are now considering tie-ups with foreign investors.

Vietnam Airlines opens flight from Nha Trang to Moscow

Vietnam Airlines has just announced the opening of a direct flight route from Nha Trang City to Moscow, starting April 5.

The national flag carrier will launch its first direct flight from Nha Trang to Moscow on April 5 via Boeing 777. Every Friday, a flight will depart Nha Trang City at 10.25 am and arrive in Moscow at 8pm local time.

The carrier will soon increase two flights per week on Monday and Friday to meet customer demand from October.

On its debut flight, a return ticket from  Nha Trang City to Moscow will cost VND10.5 million (US$503.5), excluding VAT and additional charges, from April 1 to March 31--except for two holidays, April 30 and May 1.

This is the third direct flight between Vietnam and Russia that Vietnam Airlines has opened.

Nguyen Tien Nam, a representative of Vietnam Airlines in Russia, said the new route aims to maintain large numbers of Russian visitors to Vietnam in the face of global economic slowdown. In 2012, the number of passengers on the Moscow-Hanoi-HCMC flights rose by 10,000, to reach 79,000 visitors.

VietJet Air prepares for summer holiday season

Vietnam’s fastest growing airline is preparing for a long summer holiday season, adding an extra 1,600 flights with 300,000 more seats, to serve vacation travellers from mid-May until end of August.

Now officially Vietnam’s largest budget airline, VietJet Air has become known as a fun and friendly choice for holidaymakers travelling to some of the country’s most famous beaches and holiday destinations.

The Hanoi-Da Nang route will have two to three flights a day, while flights from Ho Chi Minh City to Nha Trang, Phu Quoc, Vinh and Hai Phong will double from May 20 to August 31.

During the summer break, VietJet Air will open new routes from Hanoi to Nha Trang, one of the country’s most famous beach destinations, starting with two round trips per day.

There will also soon be a daily flight from Ho Chi Minh City to the coffee capital of Vietnam, Buon Ma Thuot in the Central Highlands. Existing routes from Ho Chi Minh City to Hai Phong and Bangkok as well as from Hanoi to Da Lat are also due to increase in frequency.

Bookings can be made via www.vietjetair.com, or by calling +84 190 018 86 or contacting your nearest VietJet Air sales outlet in Vietnam or Thailand.

“We are committed to creating more low-cost flights for our customers by expanding our network and scheduling more flights,” said Desmond Lin, Business Development Manager of VietJet Air.

VietJet Air has grown from strength to strength since its debut on December 31, 2011. The airline now has more than 400 flights a week, on Airbus A320 aircraft, and has served more than one million passengers.

The carrier also boasts 10 routes with domestic connections and one international route, and according to Lin, will soon introduce more international flights to major cities in Asia.

Market remains sluggish in spite of stimulus

Poor purchasing power and high inventory has left several firms in turmoil and although many stimulus measures were launched, the market has not shown signs of recovery.

Directly affected by a long-lasting frozen property market, several companies dealing in construction material were agonizing over poor sale of merchandise. Many companies in steel, cement, and terracotta had to halt operations or cut production to avert losses.

According to the Vietnam Steel Association, steel production reached 260,000 tons in February, down 83,000 tons compared to the same period last year. Last month, consumption of steel was at 250,000 tons, a decrease of 153,000 tons compared to previous month and 139,000 tons year-on-year, raising steel inventory to above 320,000 tons, up 40,000 tons year-on-year.

Notably, although consumption was poor, the price of materials for steel manufacturing tended to rise in international market, whereas retail steel price was not able to climb, remaining at around VND16-18 million per ton. With the current production and consumption, most steel producers were running at a loss. Meanwhile, competition in this sector was expected to become more severe.

According to forecasts, there will be five more steel factories being put into operations this year with a capacity of 1.5 million tons annually, increasing the country’s total steel production to 11 million tons per year, while real consumption was at around 5 million tons per year. A surplus supply will boost competition in the market.

Despite a surplus of steel in the local market, last year the country imported about 5 million tons of steel at a cost of US$5 billion, mainly from China, whereas steel exports merely touched 2 million tons, worth nearly $2 billion.

Nguyen Tien Nghi, deputy chairman of Vietnam Steel Association, said if consumption remains sluggish, many companies will halt operations as most of their working capital depended on loans. Just in February, four members of the association shut down while some others reduced capacity and operated perfunctorily.

Similarly, the Ministry of Construction said that consumption of cement was estimated at 3.7 million tons in February, accounting for 7.4 percent of this year’s plan, and cement exports touched 0.52 million tons.

Cement market remained subdued though producers continued to offer 3-5 bags of cement for free on 100 bags of cement. According to plan, demand for cement will be around 56-57 million tons, of which cement for domestic consumption will be around 48.5-49 million tons and cement for export at 7.5-8 million tons.

However, in reality, most cement producers were running at 70 percent of capacity with factory delivery price swinging between VND1.4 million and VND1.7 million a ton. The Saigon Construction and Building Material Association said that besides steel and cement producers, ceramic, brick, and glass producers also cut production by 50-70 percent due to high inventory.

Although the first quarter of this year is almost over, purchasing power in the market remains weak as the economy is still in slump, urging consumers to become more cautious in spending.

At supermarkets and retail markets, only essential goods and fast moving consumer goods still saw strong purchasing power. Meanwhile, as for other sectors, though the promotional campaign for International Women’s Day was not over, distributors still launched other promotional campaigns on thousands of products with a discount of upto 49 percent. In other words, at this time, most supermarkets had to do what it takes to clear inventory and reclaim their capital.

Director of a supermarket in Ho Chi Minh City said that purchasing power was never as weak as this year. This situation would likely persist to the end of the second quarter. The sole solution to stimulate consumption was to run promotional campaigns though many products had to be sold at breakeven price.

Bui Hanh Thu, deputy CEO of Saigon Co-op, said that as for slow moving consumer goods such as electronic appliances, refrigeration appliances, household appliances, clothes, and footwear, producers had to coordinate with distributors to seek effective solutions to boost consumption.

According to the Ministry of Industry and Trade, processed products were highly consumed in February but inventory index of processing and manufacturing sector marginally dropped compared to the previous month and the same period last year. The inventory index by February 1 of industrial processing and manufacturing industry climbed 19.9 percent year-on-year.

Among industries with high inventory index, sugar rose 28 percent; beer soared 49.9 percent; cigarette surged 49 percent; ready-to-wear clothing mounted 25.2 percent; clothes hiked 27 percent; footwear edged up 31.9 percent; and crumpled paper and packing paper increased 33.7 percent.

Handicraft industry eyes fresh markets

Seeking new markets will increase consumption of locally made wooden and handicraft products, a seminar heard yesterday in HCM City.

At the seminar, leading experts in the field outlined the potential and limits of the local wooden and handicraft industry and ways to find new customers in new and traditional markets.

Nguyen Chanh Phuong, a member of the Handicrafts and Wood Industry Association of HCM City (Hawa)'s executive board, said Viet Nam's wooden industry had struggled in the past three years due to the impact of the economic crisis.

With the world economy still sluggish, this year will continue to be a difficult year for local furniture exporters, he said.

Local companies will have to reform their trading methods and seek new export markets as well as increasing exports to traditional markets, he said.

"The Middle East, India, Singapore and Malaysia are among the potential markets that local furniture companies should pay more attention to this year," he said.

Phuong called on local firms to conduct market surveys and understand consumers' taste to develop more suitable products.

Nguyen Ngoc Hung, general director of Dun&Bradstreet Viet Nam, said that, as the housing market in the US recovered, demand for furniture products was expected to increase.

Local companies should take this opportunity to increase exports to the market, he said.

Herb Cochran, executive director of Amcham, said local companies had many opportunities to export their products to the US.

However, they must comply with strict requirements on product quality and safety as well as labour and working conditions set by the US.

Regarding global design trends, Dam Huy Binh, Dun&Bradstreet Viet Nam's business development director, said foreign buyers were looking for green, sustainable and healthy designs, multi-functional designs, and alternative materials.

Speaking at the seminar, Nguyen Thi Hanh, head representative of the E-Commerce and Information Technology Agency in HCM City, said that exporters must actively seek new outlets and restructure their organisations.

She urged local exporters to use e-commerce to promote their brands and expand their markets.

"With e-commerce, local businesses can communicate with customers better, promote their products more efficiently and reduce costs and increase profits," she said.

Despite economic difficulties worldwide, the industry earned US$4.67 billion from exports last year, a year-on-year increase of 17.9 per cent.

The seminar was jointly hosted by HAWA and Dun&Bradstreet with FedEx and AIG Viet Nam Insurance Company

Lao Bao Border Gate to extend opening times

The Lao Bao Border Gate in central Quang Tri Province will officially extend its opening time to 15 hours a day from the beginning of April, to cater for increases in cross-border traffic.

The Viet Nam and Laos gateway will be in operation from 7am until 10pm every day, including weekends and holidays.

The opening times extension has already been piloted at the gate from last February. As a result, the crossing has welcomed an increase of 32,000 people and 8,500 vehicles during the first six months of the extension, compared to the same period in 2011 when it was open from 7am until 7.30pm.

The move brings the gate's opening times in line with those of Laos' Savannakhet Border Gate, as well as Thailand's Mukdahan Border Gate between Laos and Thailand.

China to become Viet Nam's largest trading partner

hina is anticipated to become Viet Nam's top trading partner by 2030 after taking over the position of the US, according to an HSBC Trade Connection Report released yesterday.

The report, however, notes that the US and Japan will remain the key sources of demand for Viet Nam and among the country's top three export markets in 2030.

Since signing a bilateral trade agreement with the US in 2000 and joining the WTO in 2007, Viet Nam has become the second-largest supplier of clothing and footwear to the US behind China.

Exports to Asia, excluding Japan, are forecast to grow by more than 15 per cent a year to 2020.

Beyond China, Bangladesh, India, Indonesia and Malaysia will also be fast growing export partners for Viet Nam.

Plans to expand the ASEAN Free Trade Agreement to zero tariffs on all goods by 2015 will be an additional factor supporting Viet Nam's trade with other economies in the region over the medium term.

As well as enjoying strong export growth, Viet Nam will also be an increasingly large importer, both of capital goods to meet its large infrastructure needs and of consumer goods to meet the needs of its rapidly expanding consumer market.

India, China, Turkey and Bangladesh will be its fastest growing import partners in the decade to 2030.

Viet Nam has been able to grow its textiles sector rapidly in recent years, helped by its wage competitiveness.

Indeed, clothing and apparel will make up around a fifth of the growth in Viet Nam's exports from 2013 to 2015, said Jasmine Lau, head of HSBC Vietnam's commercial banking.

The country's exports are largely weighed towards clothing and apparel, textiles and wood manufactures and telecoms equipment. These are key sectors which advanced economies tend to need to import in quantity, she said.

She also noted that it is well located to take advantage of emerging Asia's undisputed status as the most dynamic trading region in the world.

China, India, Malaysia, Indonesia, Bangladesh and South Korea will all be among the 10 fastest-growing export routes over the next 20 years.

Export growth to Europe, excluding Russia, is expected to average almost 10 per cent a year from 2013 to 2020.

Export growth to Australia, New Zealand and Oceania will pick up sharply in the longer term and will average 10 per cent from 2016 to 2020.

Exports to Latin America will grow by an average of more than 10 per cent from 2013-20, with trade routes to Brazil proving particularly dynamic.

Sub-Saharan Africa offers a massive domestic market with large import needs both in terms of capital goods for infrastructure development and in terms of consumer products for the domestic market.

The region offers strong growth prospects over the next twenty years, albeit from a relatively low base; export growth to this region is forecast to pick up from 8.8 per cent a year from 2013-15 to averaging more than 12 per cent a year from 2016-20.

Viet Nam's wage competitiveness means it has a strong advantage in low-cost manufacturing sectors such as clothing, textiles and wood manufactures and as a result it has been able to grow these industries rapidly, which will together contribute around a third of export growth from 2013-30.

According to Lau, increasing production costs in China will be advantageous to Viet Nam.

Industrialisation means that the country has substantial infrastructure needs and, as a result, industrial machinery will contribute more than 30 per cent of import growth in the decade to 2030.

"Rapid industrialisation and increasing wages, coupled with maturing consumer demand in many of the countries along the South-South corridor, are driving different types of global trade growth. This report highlights how these trends are changing the types of goods imported, manufactured and subsequently exported.

"As countries shift towards higher value sectors there are significant opportunities for companies to evolve and grow. Some of the faster growing, emerging markets show a shift from basic commodities trading in sectors such as cereals or sugar, to become a refiner or producer of branded goods based on those raw materials.

"In many of the developed markets there is a shift towards increasingly specialised sectors such as chemicals and pharmaceutical products as companies seek opportunities for higher returns," the report said.

Regarding the business environment of Viet Nam, Lau said the Government has put in place good measures including the control of inflation at around 7 per cent, and lowering interest rate.

Other things to do will include addressing bad debt, stabilising the dong value, and applying good corporate governance, especially in the banking sector, to regain confidence in the market.

Japan's Nidec outlines latest Viet Nam investment plans

Japan's Nidec Corporation plans to expand its investment in Viet Nam to US$1.5-2 billion from now to 2015, focusing on the manufacturing of car spare parts and robots, Nidec Chairman Shigenobu Nagamori has said.

In an interview granted to Tuoi Tre newspaper during his market research tour in Viet Nam, Nagamori said Nidec has been investing in 30 countries worldwide, and has established nine factories with a combined investment capital of $800 million in Viet Nam alone.

Nidec has designed plans to conduct product research and development – the phases which were once done in the US and Japan before going to producers, along with opening plants and workshops in Viet Nam.

The research-development model has been applied in the corporation's plants in the Tan Thuan export processing zone and is being carried out in the HCM City Hi-tech Park, according to the Nidec executive.

However, he said, this model needed the Vietnamese government's assistance in human resources training and preferential policies to become productive.

The executive spoke of the importance of recruiting excellent Vietnamese students to work for Nidec's research and development centres and hi-tech manufacturing plants in Viet Nam.

He also talked about the development of the support industry in the future, mentioning the fact that his factories in Viet Nam still import components and spare parts from China and Thailand.

The Nidec executive said his corporation has taken the support industry as an important factor for considering investment expansion in Viet Nam.

Nidec's upcoming strategy aims to enable Vietnamese businesses to produce all necessary spare parts of a product in the long run.

In the short run, it will be increasing Vietnamese businesses' participation in the corporation's production chain to 50 per cent from the current 20 per cent, according to Nagamori.

Nidec corporation's nine companies in Viet Nam are employing more than 20,000 workers. All together, they make revenues of $800 million per year.

Five of the companies are located in the Sai Gon Hi-tech Park, namely Nidec Sankyo VN, Nidec VN Corporation, Nidec Servo VN, Nidec Copal VN and Nidec Seimitsu VN Corporation.

Southern hub solves business difficulties

HCM City authorities will continue to remove barriers in the real estate market and closely co-operate with the State Bank to offer loans for firms in prioritised sectors.

These include agriculture businesses – particularly those in rural areas –as well as support industries and those producing goods for export.

Besides implementing "the Vietnamese value Vietnamese goods" campaign to help enterprises improve their business in the local market, the city will also boost industrial production and help companies sell products and reduce inventories.

Improving the local investment climate and drawing more foreign investment will also be major priorities.

HCM City's gross domestic product (GDP) rose by 7.6 per cent in the first quarter of this year, a little higher than last year's corresponding period, said the municipal People's Committee chairman Le Hoang Quan.

"This growth shows that the city's production has gradually recovered. However, more challenges lie ahead," Quan said.

Deal on fruit and vegetable co-operation signed

Viet Nam and the Netherlands have signed an agreement on vegetable and fruit cooperation.

Under the deal, the European country will transfer technologies, particularly those relevant to breed selection, management support and improving quality and safety.

Both sides will also cooperate in plant protection and quarantine, supply chain improvement, acceleration of clean production and climate change adaptation.

Deputy Minister of Agriculture and Rural Development Nguyen Dang Khoa said the agreement marked a new chapter in bilateral agriculture cooperation, raising the potential for Viet Nam's fruit and vegetable sector to improve food security and safety and increase farmers' income.

Mekong Delta buoyed by an impressive year for tourism

The Mekong Delta attracted more than 19.4 million visitors and earned about VND4.3 trillion (US$205 million) from tourism-related activities last year, an annual increase of 23.2 per cent.

In 2013, regional cooperation will be expanded with tourism programs covering Long An, Tien Giang, Ben Tre, Vinh Long and Tra Vinh provinces, according to the Mekong Delta Tourism Association.

The famous travel website Lonely Planet listed the region as one of the best-value destinations in the world last year.

Transport sector restructure receives green light from PM

The Ministry of Transport aims to restructure its wholly state-owned enterprises completely in 2013 to make them highly competitive, with better governance and operations that can match local and global competitors.

Enterprises in the sector have been advised to gradually tackle remaining bad debts and work on market development, according to instructions issued by Transport Minister Dinh La Thang at a meeting in Ha Noi on Wednesday.

During this process, the target companies should conduct state audits in an open and transparent manner, the minister said.

By the end of 2012, the ministry had 88 wholly State-owned enterprises. The restructuring has received approval from the Prime Minister.

DPM sets expansion target with new fertiliser project

PetroVietnam Fertiliser and Chemicals Coporation (DPM) plans to begin production of ammonia and ammonium nitrate in 2017.

DPM and its partners will invest in a US$900 million complex with an annual capacity of 450,000 tonnes of ammonia and 200,000 tonnes of ammonium nitrate.

The corporation is also expected to start producing hydrogen peroxide in 2015, rolling out 30,000 tonnes of the chemical per year.

The news was released on Tuesday, the same day the firm celebrated its 10th anniversary and received the First Class Labour Medal.

Deputy Prime Minister Hoang Trung Hai said at the award ceremony that the company had provided the market with six million tonnes of fertilizer, accounting for 40 per cent of the market demand.

It has also exported around 100,000 tonnes of products to Cambodia, the Philippines, South Korea and other countries.

VPBank honoured for progress on automated payments

VPBank received the Straight Through Process (STP) Award 2012 from New York Bank (BNY Mellon) on Wednesday for the seventh consecutive year.

STP is the standard electronic transfer rate for international payments. The STP award recognises operational accuracy by bank operators in general and international payment officers in particular.

This is one of the most important criteria to evaluate the quality of automatic payment at banks.

First-quarter growth raises revival hopes

The economy in HCM City has shown positive signs in the first three months of the year as the Gross Domestic Product growth rate rose and the Consumer Price Index rate fell, Le Hoang Quan, chairman the municipal People's Committee, reported at a meeting yesterday.

He said GDP growth was 7.6 per cent during the first quarter, with the service sector recording the highest growth rate at 8.3 per cent.

"The GDP has increased only a little in the first three months, but it is a positive sign. However, economic growth is not really stable, with the potential to fall again," Quan told city officials during the meeting.

Thai Van Re, director of HCM City's Department of Planning and Investment, said the CPI fell by 0.29 per cent this month because the city had launched several price stabilisation programmes.

The first quarter's CPI rose only 1.15 per cent compared with December last year.

The figure was 2.35 per cent during the first quarter last year, Re said, adding that industrial production had also begun to recover recently.

As of March 20, 4,823 new local enterprises have been granted investment licences, with total registered charter capital of VND17.5 trillion (US$833 million).

According to a representative from the city's Department of Planning and Investment, the number of enterprises that had closed or suspended operations has fallen recently.

At least 1,830 enterprises that had once suspended operations have registered to resume business.

During the first quarter, the city granted investment licences to 63 foreign direct investment projects, with total registered capital of US$234.5 million, an increase of 207 percent of capital compared with the first quarter of 2012.

With more companies resuming operations along with newly opened businesses, the city has provided jobs to over 70,300 workers, creating roughly 30,000 new jobs in the first quarter, an increase of 0.69 percent compared with the same period last year.

According to Nguyen Thi Hong, deputy chairwoman of the municipal People's Committee, in the first quarter of 2013, the number of foreign tourists to the city was more than 1 million, a year-on-year rise of 8 per cent, and 25.6 per cent of the year's target.

The city earned tourism revenue of more than VND20.6 trillion, a year-on-year rise of 20 per cent.

During the second quarter, the city expects to reach 9 per cent GDP growth. It has set GDP growth at 9.5 per cent for the entire year.

The deputy chairman of the city's People's Committee, Hua Ngoc Thuan, said the year would pose serious challenges to the government and the people.

Drought kills 10 tonnes of fish

Drought in the northern mountainous province of Lao Cai has killed nearly 10 tonnes of salmon worth billions of dong in the past two weeks.

Trieu Thiet Nghia, deputy head of Sapa District, said the drought that started at the beginning of February had exhausted the district's springs which were the main source of fresh, cold water for the salmon ponds.

Water shortages had hit 30 of the 35 salmon farms in recent weeks, he said.

Light rain yesterday did little to improve the situation, he added.

Nguyen Van Luy, head of the Can Ho A salmon breeding co-operative, said they had lost more than 1.5 tonnes of mature salmon.

Nguyen Thai Thinh, director of Thinh Mo Company, said about five tonnes of salmon had died after the Ta Phin spring dried up.

The company had tried to pump water from the spring and other sources to create oxygen in the ponds, but the water was not cool enough and muddy, he said.

Nghia said the district asked salmon farms to temporarily reduce the number of salmon during the dry season and use water refinery equipment to take advantage of the rest of water left in the spring.

Salmon breeding activities were largely dependent on the weather because they had no space or reservoirs to store water to deal with such a situation, he said.

Last year's drought was less serious than this year.

Sa Pa District, with 20,000 sq.m of salmon ponds, produces 170 tonnes per year. Each kilo of salmon costs VND200,000 (US$9.5).

The district is also the main source of salmon roe for the provinces of Lai Chau, Lao Cai, Yen Bai, Thanh Hoa and Lang Son, where the weather reaches 15 degree Celsius and there is a large volume of cool water from springs available.

Industrial output plummets in Q1

The country's Index of Industrial Production (IIP) increased 4.9 per cent over the first quarter last year, a record three-year low.

General Statistics Office (GSO) experts attributed the low increase to declined production in the processing and manufacturing industry, which accounts for nearly 71 per cent of the country's total industrial production.

The production of televisions decreased more than that of any other product, dropping 12.1 per cent to 504,000 units. Textile industry output reached only 190.1 million square metres, down 11.3 per cent, while seasoning powder decreased 6.5 per cent to 58,900 tonnes.

However, production enjoyed strong growth in several sectors: urea fertilizer, which grew 94.2 per cent, mobile phones, which went up by 20.6 per cent, and motorbikes, which rose 13.7 per cent.

The industrial sector's inventory index stood at 16.5 per cent, down 3.5 per cent from the previous month.

However, the GSO said that the slowdown was not because of increased consumption but rather because industrial producers turned to other sectors or sold off products to retrieve capital.

To overcome these difficulties, experts recommended industrial producers restructure production so they could churn out high-quality products and sell them to a wider market.

They also suggested the Government provide firms with easier access to capital and improve tariffs and the business environment.

Q2 rice export forecast hardly to break through

The price of rice continued declining during the first quarter of this year, creating problems for rice exporters despite an increase in rice exports.

Rice prices were down 14 per cent against last year in the first quarter, while rice exports in the first three months grew by 34.3 per cent in volume. The result was a 5.7 per cent drop in export turnover to $616 million, as prices fell to $450 per tonne.

According to Viet Nam Food Association chairman Truong Thanh Phong, the fall in prices due to abundant supplies. India, for example, now has 35 million tonnes in stock while it only needs 14-15 million tonnes to ensure domestic food security. Thailand is also capable of supplying 21 million tonnes to the world market in the next crop while its inventory is 14 million tonnes.

"Many enterprises have made heavy investments in an effort to obtain licences to export rice. But I think they should not invest more because demand is too low," Phong told Viet Nam News.

Agricultural production is by its nature not stable. Therefore, prices will be adjusted following market movements, said chairman.

He predicted that farmers' earnings this year may be lower than 2012 given tough competition from Thailand. India is now also offering rice at US$30 a tonne higher than that of Viet Nam, so it is difficult for Vietnamese firms to raise their prices, he added.

Last year, the nation had 144 rice exporters, with the 71 largest exporters accounting for 91 per cent of the country's total rice export turnover, said Phong.

By the end of this month, Viet Nam had signed contracts to export 3.5 million tonnes and has already shipped 1.1 million tones, up 20 per cent and 12 per cent respectively on last year.

Ha Noi-Cambodia flights taking off

Travellers bound for Cambodia can now take direct flights from Ha Noi to both Phnom Penh and Siem Reap via new routes launched by Cambodia Angkor Air.

Yesterday, the airline also kicked off a four-day promotional tour from Ha Noi – Phnom Penh – Siem Reap, offering travellers a VND9.2 million (US$420) package deal, VND2,5 million lower than the normal cost. The tour starts every Thursday.

Along with the official opening of a representative office in Ha Noi late last month, Angkor Air also announced direct flights Phnom Penh – Bangkok and Siem Reap – Bangkok, with rates starting at $59.

Cambodia is one of the world's newest and most exciting destinations, boasting the world-famous Angkor Wat complex and the beach resort of Sihanoukville.

Luxury cruise ship docks in Ba Ria

Luxury cruise ship Voyager of the Seas operated by the Royal Caribbean brought thousands of Australian and European tourists to the southern province of Ba Ria-Vung Tau on March 21.

Upon arrival at Phu My Port, the visitors went on a one-day tour arranged by the Asia Destination Travel Company to several places in HCM City, Long Hai, and the Cuu Long (Mekong) Delta.

Voyager of the Seas set sail in Australia and dropped anchor in Thailand before coming to Viet Nam. It is headed next for Singapore.

In June, Mariner of the Seas, another Royal Caribbean luxury cruise vessel, will visit Phu My Port, Da Nang, Hue, and Ha Long.

HCM City-Nha Trang train ride boost

Eleven more train trips have been arranged between HCM City and the central city of Nha Trang during the holidays next month to accommodate an additional 7,000 passengers.

The holidays include the Hung Kings' death anniversary on April 19, Viet Nam Reunification Day on April 30, and Labour Day on May 1.

People can buy tickets at the station or call 08-3843-6528 in HCM City for free home delivery.

Travel agencies in the city said the number of travellers booking domestic and overseas tours has skyrocketed since April 30 falls on a Friday this year.

Travel firms offer sizeable discounts

Following Tet last month many travel firms in HCM City are offering steep discounts to attract domestic tourists, especially those touring by air to the central and northern regions.

Viet Media Travel said since this is the low season the firm is joining hands with airlines and service companies to offer discounts of up to 30 per cent on these tours.

Its five-day tour to central Viet Nam is now priced at VND5-6 million instead of the normal VND8-9 million, while a five-day tour of Ha Noi, Ha Long, and Sa Pa now costs VND7-8 million compared to the usual VND12 million.

Vietravel is offering discounts of 45 per cent on tours to Phu Yen, Kien Giang-Cambodia, Da Lat, and Nha Trang as well as to the northern and central regions.

Saigontourist Travel Service Company offers a 40 per cent discount for customers buying tours and staying in its hotels.

Others such as Lien Bang Travelink and Fiditourist have also launched promotional programmes though with lesser discounts.

Sustainable wood import-export discussed

Difficulties facing the wood industry and measures to promote sustainable wood import and export in Vietnam were tabled during a policy dialogue in Ho Chi Minh City on March 29.

At the event, Deputy Minister of Agriculture and Rural Development (MARD) Ha Cong Tuan suggested that in 2013, the State issue a set of standards on sustainable forest management and build a project to speed up the granting of Vietnam’s forest certificate.

According to Tuan, the world is trending to using furniture made from timber granted the Forest Stewardship Council (FSC) certificate or having legal origin.

In the meantime, Vietnam still depends much on imported materials for furniture production due to inadequate domestic supplies, making the wood processing industry unsustainable and uncompetitive, Tuan said.

Unstable timber supply and loans with high lending rates will continue affecting the production and export of wood and forest products in the future, he noted.

Huynh Van Hanh, Vice President of the Handicrafts & Wood Industry Association of Ho Chi Minh City (HAWA), said the country’s wood exports are likely to face market reduction in the absence of proper mechanisms.

The Ministry of Agriculture and Rural Development forecast that in 2013, Vietnam’s wood exports will enjoy a growth of between 10-15 percent against the previous year, with the US, China and Japan remaining major markets.

Stronger measures to save businesses

The Vietnamese Government will take stronger measures to save businesses, said Minister and Chairman of the Government Office Vu Duc Dam.

At a recent Government meeting, Minister Dam said the national economy showed positive signs in the first quarter as export turnover maintained its growth.

Last year, foreign invested businesses saw export growth but the domestic economic sector is currently operating at 10 percent higher than last year.

More than 7,600 out of 13,000 (approximately 60 percent) businesses that stopped their operations in 2012 resumed work in the first quarter of this year.

However, there is growing concern about the socio-economic situation as the number of newly registered businesses remains low while that of businesses in difficulty is still high, Dam said.

Based on this fact, the Government has considered drastic solutions to help businesses overcome challenges, such as reducing corporate income tax and valued added tax and implementing more measures to create a favorable business environment.

The Government discussed ways to keep inflation at a normal rate in order to ensure business costs are maintained at a reasonable level.

To ease market and business difficulties, relevant agencies and ministries have been asked to work with the State Bank of Vietnam (SBV) to research a project to set up a National Debt Purchase and Sale Company, which would help deal with bad debts.

According to a Government report, total export earnings in the first quarter of 2013 reached US$29.69 billion, up 19.7 percent over the same quarter last year.

Total import turnover hit VND29.2 billion, up 17 percent, with the domestic economic sector increasing by 7.9 percent and the foreign-invested sector by 25.5 percent.

As of March 15, total State budget revenues were estimated at VND136,000 while budget spending was VND172,000 billion.

The first quarter’s GDP grew 4.89 percent, slightly more than the 4.75 percent recorded during the same period last year. The growth in the agricultural sector rose by 2.24 percent, industry and construction by 4.93 percent, and services by 5.65 percent.

PVEP, Vietsovpetro sign oil and gas contract

The Vietnam Oil and Gas Group (PetroVietnam) has signed a production-sharing contract (PSC) for Block 42 on the continental shelf waters of Vietnam with a consortium of

contractors including PetroVietnam Exploration and Production Corporation (PVEP) and the Russia-Vietnam oil and gas joint venture, Vietsovpetro.

Under the agreement, which was signed in Hanoi on March 29, PVEP will work as the manager for the project and will have a 51 percent share.

Covering an area of 4,682 sq.km, Block 42 in Phuc Quoc basin is seen as a lot holding considerable oil and gas potentials.

Speaking at the function, PetroVietnam General Director Do Van Hau said the contract manifests the close and effective cooperation between PetroVietnam and Russia’s Zarubezhneft through Vietsovpetro joint venture.

The PSC is the fifth contract that Vietsovpetro has engaged in Vietnam , following others in Bach Ho (White Tiger), Rong (Dragon) and Doi Moi oil fields.

Zarubezhneft General Director Sergei Kudryashov described Vietsovpetro as a bridge for the solidarity and friendship between Vietnam and Russia , while the newly-signed PSC further consolidates the effectively friendly and cooperative relations between the two nations.

The exploration and exploitation of Block 42 are expected to open new prospects for Phu Quoc basin and attract more stable investment in the area, contributing to the Vietnamese oil and gas sector’s development strategy and the national energy security programme.

Sanofi to invest in hi-tech drug plant in HCM City

Sanofi Group Chief Executive Officer Christopher A. Viehbacher has announced the French-based global pharmaceutical producer’s plans to build its third factory in HCM City’s high technology park during a press conference on March 29.

The new state-of-the-art plant will expand Sanofi’s manufacturing capacity in Vietnam to meet the Vietnamese pharmaceutical market’s surging demand as well as serve as an export platform to other ASEAN countries.

The US$75 million to be invested in the new plant represents Sanofi’s largest investment in Vietnam to date.

With an initial output capacity of 90 million units per year—and a possible extension of up to 150 million units—the facility will produce high-quality pharmaceuticals and consumer healthcare products.

The plant is scheduled to be fully operational by the end of 2015, joining Sanofi’s existing emerging market network comprised of 40 manufacturing sites.

“This new production and development centre is the largest investment ever made by Sanofi in Vietnam and illustrates our commitment to bringing high quality medicines to a broader population in Vietnam”, said Viehbacher.

“Sanofi has operated in Vietnam for more than 50 years and secured a market-leading position in one of the most dynamic South East Asian countries. This new investment will contribute to further strengthening Sanofi’s leadership in emerging markets,” he added.

Guinea to buy 300,000 tonnes of Vietnamese rice per year

The Republic of Guinea will annually import 300,000 tonnes of rice from Vietnam under a contract lasting until the end of 2015.

The information was released in a Memorandum of Understanding (MoU) signed by the Minister of Industry and Trade Vu Huy Hoang and Guinea’s Minister of Trade Mohamed Dorval Doumbouya in Hanoi on March 29.

Addressing the signing ceremony, Minister Vu said the MoU’s signing creates a stable, legal foundation for rice purchases, ensuring food security for Guinea and contributing to the strategic partnership between the two countries.

Rice regularly contributes 60–80 percent of Vietnam’s total export turnover to the Guinean market.

Vietnam’s 2011 US$78 million export turnover to Guinea was a high water mark, subsiding to US$23 million in 2012.

The MoIT has assigned its Department for Africa, West Asia, and South Asia Markets to co-ordinate with relevant ministries on addressing the fall.

Their target is negotiating the direct export of Vietnamese rice to Guinea, thereby improving the international reputation of Vietnam’s rice trademark.  

The MoU signing with Guinea is especially significant considering rice exports to Africa that makes up approximately 20 percent of the Vietnamese industry’s total turnover.

Minister Hoang emphasised Vietnam continues to consolidate its position as one of the world’s leading rice exporters and is a valuable contributor to the maintenance of international food security.

PM pledges support for Vietnam-Russia oil groups

The Vietnamese Government will provide the best conditions for two Vietnam-Russian oil and gas groups operating in Vietnam as a practical contribution to the two countries’ strategic partnership.

The pledge was made by Prime Minister Nguyen Tan Dung while receiving Director General of Zarubezhneft Oil and Gas Group, Kudriashow Sergei Invanovich, in Hanoi on March 28.

He highlighted the initial success of a Vietnam-Russian oil and gas joint venture established by Zarubezhneft Group and Vietnam National Oil and Gas Group (PetroVietnam), describing this as a model of effective cooperation between the two countries.

The joint venture has helped strengthen bilateral ties in both scope and scale, PM Dung said.

For his part, Zarubezhneft Director General Invanovich vowed to boost the cooperation between his group and PetroVietnam, saying that the joint venture will fully perform its role as a bridge of friendship between Russia and Vietnam.

He praised both sides’ efforts to overcome difficulties and effectively implement oil and gas exploration and exploitation projects.

The successful results of the joint venture have laid a foundation for the two countries to boost cooperation in the energy sector, he noted.

Vietnam’s mango exports pick up

After penetrating the Japanese market, Hoa Loc mangoes are seeking outlets to Russia and China.

The Tien Giang provincial Department of Agriculture and Rural Development says there are about 20 households in Hoa Loc commune, Cai Be district, which grow mangoes on 11 ha for export.

Cai Be annually ships 50-100 tonnes of mangoes to Japan and is keen to approach Russian and Chinese markets.

The mango acreage in the Long Hoa commune and Can Thanh town, Can Gio district, Ho Chi Minh City is about 135 ha.

Similar mangoes meeting VietGAP standards are being grown in Tien Giang, Dong Thap, Ben Tre and Vinh Long provinces.
Pham Thiet Hoa from HCM City’s Department of Agriculture and Rural Development said the logo of Can Gio mango will be designed to secure its trade mark overseas.

Businesses need to save their bacon

Many businesses have successfully overcome challenges to secure their foothold in the global market after 54,000 others were dissolved under the negative impact of the global economic crisis in 2012.

Nguyen Thi Thuan, Chairwoman of Traphaco’s executive board, said that her pharmaceutical firm was badly affected by low consumer demand and high interest rates of more than 18 per cent To remove obstacles, she said, Traphaco has decided to increase the quality of its products and provide better customer service to consolidate consumer trust.

Traphaco is in the lead of Vietnam’s medicinal herbs industry, Thuan said, adding that her firm earned around VND1,400 billion in revenue last year. “My firm has no bad debts and high inventory levels,” she said.

“We are set to increase our production output and improve our management skills to reduce inventory levels.”

Hoa Sen Joint Stock Company is a case in point. Over the past years it has maintained a domestic market share of more than 40 percent to become the largest steel producer in Southeast Asia.

Hoa Sen’s chief executive officer Le Phuoc Vu said that his company has earned trillions of Vietnam Dong (VND) in revenue, from VND8 trillion in 2011 to VND10 trillion in 2012. This year’s figure is estimated at VND12 trillion.

Vu was worried about bank interest rates and trade restrictions which might put domestic businesses in a fix and let trans-national groups gain the upper hand.

Against this backdrop, he argued, it is urgent for them to sharpen their competitive edge against strong foreign rivals.

Vu proposed restructuring business operations, cutting administration costs, improving product quality and making the best use of capital resources.

He stressed the need to prevent speculation and ensure social welfare for the whole community.

Many economists agreed that to protect themselves from the impact of the global economic crisis, small-and-medium-sized enterprises (SMEs) should grasp new opportunities to corner the domestic market and then expand their investment overseas. 


Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
market, steel industry, handicraft, trade, revenue
 
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