Last update 3/2/2012 7:00:00 AM (GMT+7)
  

BUSINESS IN BRIEF 2/3
Forum seeks ways to sustainably develop forests

The Government should develop support policies for forest owners to prevent harvesting of immature forest, speakers at a conference said on Friday in HCM City.

More than 200 policymakers and business executives attended the forum, organised by the Ministry of Agriculture and Rural Development to discuss ways to develop the forest industry in a sustainable manner.

Viet Nam's forest areas have increased by 30 per cent in the 2006-10 period compared to the 1998-2005 period, according to Nguyen Ton Quyen, deputy chairman and general secretary of the Viet Nam Timber and Forest Product Association.

The timber volume from plantation forests has increased in recent years, from four million cubic metres in 2009 to 5.5 million cubic metres in 2010 and 6.5 million cubic metres last year.

The forest industry has also helped improve the incomes of the poor in many localities in recent years, but development has focused on quantity while quality and efficiency remains problematic.

Tran Duc Sinh, general director of Viet Nam Forest Company, said that the pace of growth in a number of forest plantations had not been sustainable.

Few linkages between forest planters and processors have forced more wood-processing enterprises to import a large amount of wood materials annually.

Forest-plantation households and enterprises as well as wood-processing companies are facing many difficulties, including a shortage of capital and land for forest cultivation, according to Quyen.

Attendees at the meeting agreed, saying that capital was the most significant obstacle to funding forest-plantation enterprises and households, as it would take up to 10 years or more to produce one crop.

Most planters cannot access preferential loans and have to borrow from commercial banks at high interest rates.

With limited capital and few skilled workers, households often plant small trees that cannot meet the demand of wood-processing companies.

Due to financial difficulties, households usually harvest their forests before they mature.

This kind of practice provides very low profits, with many of the households exporting wood chips to China, according to attendees at the conference.

One tonne of five-year-old trees sells for only VND600,000, but the value can increase up to four-fold if the trees are harvested in the 10th, 11th or 12th year of growth.

Many conference attendees said the Government should help small households access loans at a lower interest so that forest planters can plant big trees to provide raw-material sources for wood-processing companies.

Forest planters would continue to sell wood chips from immature trees as it does not require as much capital or skill as the sawing of mature trees, according to Huynh Van Hanh, deputy chairman of HCM City's Handicraft and Wood Industry Association.

To curb the number of sale of wood chips to China, Hanh and other meeting attendees said the Government should consider setting an export quota for wood chips and impose export taxes on products.

However, some attendees did not agree, saying that such a move at this time would harm farmers who depend on the sale of wood chips.

Participants also suggested that the Government map out specific zoning plans for forest-plantation areas.

Diep Kinh Tan, deputy minister of Agriculture and Rural Development, called on forest growing households, forestry farms and wood-processing companies to co-operate to raise the competitiveness of the forestry and wood-processing industry.

He also suggested that research institutes develop new high-quality seedlings and teach forest owners planting techniques so they can improve efficiency.

EVN pumps $476m into grid
 
The National Power Transmission (NPT) says it has invested VND9.3 trillion ($476.9 million) to build a 500kV electric grid connecting five provinces and HCM City.

The 437km network, which will spread across the provinces of Gia Lai, Dac Lak, Dak Nong, Binh Phuoc, Binh Duong and HCM City, will increase the electric back-up capacity in the southern part of the country for the 2014-2015 period, NPT said.

It will also boost power connectivity within the country and throughout Viet Nam, Laos and Cambodia after 2015, according to the company, which is a subsidiary of Electricity of Viet Nam.

Meanwhile, the Project Management Board of Central Power Projects (AMT), also a subsidiary of EVN, will act on behalf of NPT to implement the project.

While the equipment side of the project will be funded by the Asia Development Bank (ADB), the installation and ground clearance will be financed by Viet Nam Bank for Industry and Trade (Vietinbank) and Viet Nam Development Bank (VDB).

The 500kv Pleiku-My Phuoc – Cau Bong project, will also include maintenance of 8km of the existing 500kv grid in HCM City and two power transmission stations in Pleiku and Cau Bong.

Project construction will be completed by 2013 and will be supervised by the Electricity Construction Consultancy companies No2 and No4.

Electricity of Viet Nam (EVN) last month said it would borrow US$3 billion in official development assistance (ODA) sources and foreign commercial banks in order to finance electricity projects this year.

Lenders will include the World Bank, the German Reconstruction Bank, the Asian Development Bank, the French Development Agency and the Japan International Co-operation Agency.

Funds will be used to complete the O Mon 3 and 4 thermoelectric projects, improve the national distribution grid and assist the electricity sector in reforming policy.

On Tuesday EVN announced they would target reducing production costs by VND1.8 trillion (US$85.7 million) in 2012.

EVN's total capital expenditure this year is estimated at a total of VND75.5 trillion ($3.5 billion), an increase of 18.7 per cent over last year.

Agricultural co-operatives struggle for viability

Fifteen years after Viet Nam's first laws governing co-operatives came into effect, the agricultural model has failed to develop its full potential.

This comment was made at a workshop in Ha Noi yesterday by the director of the Southern Centre for Support and Development of Co-operatives and Small and Medium Enterprises, Le Binh Hung.

He said agricultural co-operatives should take the initiative to raise competitiveness in the marketplace as well as helping reduce poverty and create jobs and social security.

"Co-op farm production is often not in line with the demands of either its members or the market," he said.

Hung said co-ops only produced about 7 per cent of their own fertiliser needs and about 13 per cent of seed needs, while private farming enterprises provided 52 per cent and 43 per cent respectively.

He said the inefficient operation of co-ops was often because local authorities were not well aware of the value the model could provide.

According to deputy director of the Ministry of Planning and Investment's Co-operative Department, Phan Thi Thanh Ha, at present co-ops receive little support from the Government in terms of tax, credit, training and audits.

She said they also had limited management skills. Statistics from the Viet Nam Co-operative Alliance show that more than 30 per cent of co-op leaders did not have a high-school diploma. Few of them had ever received professional training.

In addition, most members of farming co-ops were poor and had little knowledge of economics. The benefits of joining were often unclear to them, limiting their contributions.

Operating principles and fair distribution of responsibilities would help ensure the efficiency of operations, Ha said.

But this was not always true. Evergrowth Co-operative of dairy farmers in southern Soc Trang Province earned net income of more than VND3.5 billion (US$166,700) last year.

Meanwhile, Hung said co-ops should be less dependent on external assistance and take the initiative in developing production, seeking customers, building their brands and expanding their markets.

He said trade promotion was of crucial importance for co-ops, adding that training was also important to raise the capacity of officials, enhance the application of technology and improve productivity.

"Promoting member's participation is the key to economic success," he stressed.

Throughout the country, there are nearly 19,000 co-operatives of all types with over 12.5 million members. More than 6,000 are involved in agriculture.

Over $123m for afforestation to 2021

The Ministry of Agriculture and Rural Development has approved a US$123 million project on sustainable management of protective forests.

The project, which is backed by official development assistance from the Japanese government, will include the planting of nearly 18,000ha of protective forest as well as work on improving the quality of 2,690ha of existing forest and placing another 34,500ha under protection.

The project also aims to improve management of forests and will be implemented in 11 provinces, including Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Thua Thien-Hue, Quang Ngai, Binh Dinh, Phu Yen, Ninh Thuan and Binh Thuan, from now to 2021.

Stock Market An Attractive Investment Channel

While many economic experts are still worrying about Vietnam’s economic situation, stock investors seem to ignore the woes as their operations have helped the local stock market continue to gain points. Dragon Capital Group ranks Vietnam’s third among Asian bullish stock markets these days.

The unexpected growth is ascribed to positive macro policies recently taken by the Government. Investors have also pinned their hope on positive analyses by both foreign and domestic specialists.

The report assessing the Vietnamese economy released by HSBC on Monday morning puts Vietnam’s 2012 gross domestic product (GDP) growth at 5.7%. Likewise, a Standard Chartered report says that after a year of hyperinflation, prices of commodities in Vietnam have no longer increased steeply.

Given the decelerating inflation, Standard Chartered expects that the central bank’s policies on cutting interest rates will take effect in the second half of this year when authorities revise down rates. Moreover, Standard Chartered also hopes for Vietnam’s GDP growth attaining 5.9%, the same as in 2011.

Aside from the above positive information, analysts maintain that Vietnam’s stock market is becoming attractive again considering its profitability. During the 2007-2011 period, the market saw a long time of accumulation, particularly last year when it shed 30% of its value due to inflation and the dong depreciation. What’s more, the Vietnamese stock market is being appraised lower than its market value compared to other markets in the region. In addition, the stock market is always the thermometer for the economy and indicates investors’ expectations.

In the meantime, chronic problems such as inflation and interest rates are improving. According to the latest report by the offices of statistics of Hanoi and HCMC, the consumer price index of both cities may increase less than 1.45% over January. The rise is mostly due to price hikes during the Lunar New Year festival and power price increase earlier this year.

Analysts say the nationwide inflation in February may be lower than the 2.09% level in February 2011 and even below 1.89%, the average of the past decade. They predict the ratio will be between 1.5% and 1.89%. This will pave the way for the Government to cut interest rates. As long as medium- and long-term issues relevant to inflation and interest rates improve, the stock market will turn out to be an attractive investment channel.

At the close of the February 21 trading session, the VN-Index lost 3.07 points, or 0.74% of its value, to stand at 410.91 points, with more than 59.08 million stocks traded, worth VND791 billion. On the Hanoi bourse, the HNX-Index shed 0.38 point, or 0.59% of its value, to stand at 63.89 points, with 80.58 million stocks traded, worth VND648 billion.

Banks fear having no borrowers, despite cut rates

Despite the recent cut imposed on lending interest rates, many banks still worry that there will not be many borrowers.

With credit accounting for a large proportion of their total revenue, many banks are on the verge of having lower annual profits than last year, Saigon Tiep Thi newspaper reported.

Vietcombank and Agribank are offering the lowest lending interest rate of only 14.5 percent a year, for borrowers operating in the agriculture and rural, and export sectors.

The two major banks have set a new trend for other commercial banks such as ACB, VIB, and HDBank to cut their rates.

However, despite the reduced interest rates, many bank executives still hold a negative outlook on the market.

For instance, Nguyen Phuoc thanh, CEO of Vietcombank, said this year his bank set a credit growth target of only 15 percent, while the figure assigned by the State Bank of Vietnam is 17 percent.

The main reason is that local businesses will continue to face challenges for their outlets this year, he said.

Last year, Vietcombank focused most of its credit to the export sector. But many of the borrowers fell into a tough spot by the end of last year, and it continued to be on the downward trend from the beginning of this year.

Rice, seafood, cashews, and peppers -- all of them have had their prices reduced on the global market, said Thanh.

“Businesses borrowing capital from Vietcomabnk are struggling to solve the problem of finding customers,” he said.

“Consequently, even when they can access bank loans with lower interest rates, if they have no customers, exporting businesses still cannot survive.”

Thanh admitted that Vietcombank may earn lower profits from credit activity than last year.

“We will try to increase revenues from other activities, but after all, the full-year profit is likely to be affected.”

The profit pressure has burdened many banks recently.

Many small banks have also had to join the race with major banks to cut lending interest rates, while they still have to mobilize deposits at high rates.

A CEO of a Ho Chi Minh City-based bank said his institution has been mobilizing deposits at exorbitant interest rates. As a result, it is not likely for the bank to meet its profit target.

“We have planned to adjust the target this March,” he said.

The chairman of the board of members of Agribank said it would also optimize expenses in administration and operation, to ensure revenues and profits at this hard economic time.

Economic zones left deserted in Kon Tum, Binh Dinh

Despite huge investments worth billions of dong, the Bo Y international border gate in the Central Highlands province of Kon Tum, and the Nhon Hoi economic zone in the Binh Dinh Province have been left deserted without any investors or operational projects.

Spanning more than 70,000 hectares, and consisting of three industrial parks, the Bo Y economic zone was expected to provide incentive for linkage and economic development between Vietnam, Laos, and Cambodia.

However, 8 years after its establishment in 2003, the zone is still an abandoned site with only a few plants to process wood, cassava, and construction materials. There are scarcely any customers visiting the duty-free supermarket at this northern Central Highlands border gate.

Nguyen Trong Hao, head of the provincial management board of the economic zone, said 58 investment projects worth VND1.12 trillion (US$57.6 million) have been implemented to develop infrastructure for the zone.

However, he added, only 8 businesses have begun operations in Bo Y, with capital disbursement of only VND100 billion.

“Most of the operational projects are small, and require little capital,” said Hao.

“We are still hoping to receive huge projects in the high-technology sector, and those with FDI funding.”

The duty-free trading policy at the border gate economic zone, which allows customers to buy no more than VND500,000 worth of tax-free goods, does not seem efficient in a locality like Kon Tum, whose economic development is not high, the provincial People’s Committee said in a recent report.

Since the duty-free supermarkets fail to stimulate customers to purchase goods, investors are not interested in sending their money to the zone, the report said.

Consequently, the Bo Y border gate economic zone has experienced poor services and tourism development, it concluded.

The Kon Tum People’s Committee also said that the annual funding of only VND240 billion from the state budget invested in the zone is too modest.

“We need nearly VND80 trillion for Bo Y’s development in the 2011-2015 period.”

Similarly, the Nhon Hoi economic zone in Binh Dinh was also considered to be a bright sign of the development of the key economic area in central Vietnam, when it reached completion in 2007.

At that time, local authorities announced that the zone had inked memorandum of understanding with investors for a total sum of as much as $3.5 billion, to be flown into Nhon Hoi.

Yet over the last five years, not a single penny of the $3.5 billion has been disbursed.

Le Huu Loc, chairman of the provincial People’s Committee, said only two projects are expected to invest in Nhon Hoi this year.

Meanwhile, more than VND2 trillion has been sunk into the infrastructure development of the zone. The government also earmarked VND850 billion for site clearance and compensation, and to build roads to connect Nhon Hoi with local traffic system.

At present, the Nhon Hoi economic zone is still a desert, with titanium the only appealing factor to many investors.

Investors have scrambled to exploit the mineral in Nhon Hoi, and nearly exhausted the reserves, until last year when local authorities banned all titanium extractive activities at the zone. The economic zone has since returned to its abandoned state, and is dusted with sand on a daily basis.

Man Ngoc Ly, head of the zone’s management board, said it costs them VND500 million a year only to clear the dust covering the zone, and maintaining the water sewage system.

“If there are no timely solutions for the dust problem, Nhon Hoi will continue to face difficulties in attracting investors,” he admitted.

Fish, timber exports stay stable
 
Viet Nam's agro-forestry and fishery exports in the first two months this year are forecast to reach US$3.6 billion. This figure is on par with the same period last year, said the Ministry of Agriculture and Rural Development (MARD).

The export values of rice, coffee and rubber declined, while those of other traditional Vietnamese agro-forestry products continued to rise, such as cashew nuts, tea and pepper.

Pepper topped the exports list with an increase of more than 40 per cent over the same period last year. In the first two months, 6,000 tonnes of pepper were exported, earning US$42 million.

The export prices of many main agro-forestry and fishery products have been on a downward trend since late last year. As a result, the total export value of these products reached nearly US$2 billion, a decrease of 13.2 per cent over the same period last year, MARD explained.

Rice exports in the first two months reached 756,000 tonnes, worth US$437 million, which represented a 26.6 per cent drop in quantity and a 16.1 per cent drop in value. So far this year, rice exporters have not signed many export contracts. Indonesia is still the biggest importer of Vietnamese rice, accounting for more than half of the country's total rice exports. However, the export volume and value to the Indonesian market this year only reached two-thirds of last year's figures.

Coffee export volume in the first two months of this year reported 312,000 tonnes worth US$632 million, a decline of 13 per cent and 11.8 per cent in quantity and value respectively against the same period last year. Big market importers reported a sharp decline in the first two months. Coffee exports to Italian and Belgian markets were reduced by half and one-third each. Rubber exports decreased at all large markets due to the global economic upheaval. Rubber exports are estimated at 80,000 tonnes worth of US$220 million.

Tea exports reached 19,000 tonnes, valued at US$ 28 million, which indicated an increase of 14.8 per cent and 19.2 per cent in terms of quantity and value respectively. Major tea import markets such as Pakistan and Russia saw dramatically lowered demand, but new markets stepped up to take their place. Export volume doubled in Indonesia and rose 1.8 times in Saudi Arabia.

Value exports of forestry products and wooden items in the first two months were estimated at US$626 million, marking an increase of 18.7 per cent. Seafood products earned US$763 million, up 12.7 per cent over the same period last year.

VN industrial production slows to 3.9%

The national industrial production growth rate decreased to only 3.9 per cent in the first two months of the year against 12.3 per cent in 2011 due to economic slowdown, according to the General Statistics Office.

The GSO affirmed that the industrial sector had been facing difficulties on the market and in production.

Consumption of Viet Nam-made products shrunk due to the economic crisis, affecting many import markets the GSO said, adding that the consumption index of the industrial sector decreased 17 per cent, resulting in an inventory index of 17.4 per cent.

Accelerating input costs, due to material price hikes and high interest rates, also hindered industrial growth, the GSO added.

The manufacturing and processing industry, which accounts for more than 70 per cent of the country's total industrial production value, surged only 2.4 per cent in January-February compared to 18.2 per cent in 2011 and 18.8 per cent in 2010.

Electric cable and line production decreased by nearly 20 per cent while paper and packaging production fell by 18.8 per cent. The steel, fertiliser, textile and pottery industries reported declines of between 7.5 and 14 per cent.

Despite these declines, the shipbuilding, vegetable and fruit processing, dairy, and medicine-chemical production industries saw sharp increases, contributing to a slight growth in industrial production.

The shipbuilding industry surged up to 203.5 per cent in the first two months against the same period last year, followed by the vegetable and fruit processing industry up 42.7 per cent and dairy production, seafood processing and motorbike production, ranging between 11.5 and 18.3 per cent.
 
Binh Duong aims to attract FDI
 
The southern province of Binh Duong aimed to attract US$1 billion in investment this year with a focus on hi-tech and support industries, said the provincial People's Committee Chairman Le Thanh Cung.

The province would continue to perfect the infrastructure within industrial zones (IZs) to make things easier for investors while limiting the investment flow into industries that could cause environmental pollution and those that use a high number of labours, Cung said.

Speeding up administrative reforms, improving the quality of personnel resources and accelerating trade promotion would also be included in the activities, he said.

We did not intend to establish IZs that would only meet the needs of support industry investments but we would set aside land in our existing zones for those investors, he said.

Many foreign investors, especially those from Japan, have expressed a desire to invest in support industries here, he added.

Despite global and domestic economic difficulties, the province attracted $2.37 billion in investment capital last year, including $1.12 billion in foreign direct investment (FDI). Its leading sources of FDI included Japan, South Korea and Singapore.

In January alone the province attracted $157 million in FDI and VND3.5 trillion ($167 million) from 65 domestically – invested projects.

The new addition has brought the number of foreign-invested projects to date to 2,000, totalling more than $15 billion and almost 13,000 domestic projects worth VND95 trillion ($4.5 billion).

No cut in store for duty on buses
 
The Ministry of Finance and the Ministry of Industry and Trade have sent documents to the Government Office to oppose the Ministry of Transport's proposal to cut bus import duties to zero per cent.

Earlier this month, Minister of Transport Dinh La Thang asked the Government for permission to slash the current import tax of 70 per cent for complete-built units (CBUs) and 10-32 per cent for spare parts of buses to zero per cent between now and 2015 to stimulate the development of public transport systems in Ha Noi and HCM City.

The Ministry of Industry and Trade suggested that domestically-made vehicles should be given priority to developing traffic systems in the cities, explaining that the domestic automobile manufacturing industry was now capable of producing buses that could serve home demand.

Taxes for CBUs and accessories should continue to be applied in accordance with roadmaps stipulated in commitments with the World Trade Organisation as well as trade agreements with ASEAN, it said.

The Ministry of Finance said current laws only permitted import tax exemption to be applied for certain vehicles used in technological chains specified by the Ministry of Science and Technology, and buses weren't named on the list.

It warned that such tax exemption would discourage and negatively affect the local automobile industry.

The Ministry of Finance, however, noted that tax payers could ask the Government for consideration if they meet difficulties due to objective causes - as stipulated in Government Decree No 87/2010.

It suggested the Ministry of Transport provide more information related to the values of imported and domestically-made vehicles and manufacturers' production capabilities to submit to Prime Minister Nguyen Tan Dung for consideration.

Freight sector experiences difficulties

The freight market was expected to experience more difficulties this year due to global economic turmoil and an oversupply of cargo vessels, according to experts.

Nguyen Canh Viet, General Director of Vinalines said this year would still be a hard year for the freight market and recovery couldn't be expected until sometime after 2012 when the world economy had a chance to recover.

To take advantage of the recovery, the domestic maritime industry should liquidate old and inefficient vessels to build capital for the purchase of modern vessels, said Viet, adding that Vinalines planned to buy more vessels with a total capacity of 150,000-200,000 dead weight tonnes (DWT) in the second quarter of this year.

"In 2012, freight charges on domestic routes and also routes from Viet Nam to other countries will not change significantly compared to 2011," Do Xuan Quynh, Viet Nam Shippers Council (VNSC) chairman told Dau tu (Investment Review) newspaper.

According to the VNSC, the container freight market would continue to reduce its fees. World trade activities had reduced, boosting the number of container ships waiting for cargo to 700 vessels.

Before Viet Nam had deep water ports, container ships were forced to collect Vietnamese goods through transport hubs in Hong Kong and Singapore before being transferred to larger vessels.

Now that Viet Nam has its own deep water ports, large cargo vessels can come here directly to drop off and pick up goods, meaning domestic container ships can now compete with foreign firms.

According to the Viet Nam Maritime Administration, 1,033 out of the total 1,633 vessels flying the Vietnamese flag have specialised their operations to domestic routes. Their main cargo is dry goods that weigh less than 5,000 DWT. The country has 38 container vessels, most with a capacity of less than 1,000 TEUs (twenty-foot equivalent units). Only two ships have transport capacity of more than 1,000 TEUs.

"We offer surplus tonnage for small vessels shipping dry cargo and containers but we lack specialised vessels and large vessels," said Nguyen Ngoc Hue, former director of the administration.

Shipping agents have also faced the pressure of high interests rates which have reached 23-24 per cent per year. These high rates had gobbled up a lot of shipping revenue, said Tran Thien, director of Bien Dong Transport Company.

Food corp to purchase 3.8m tonnes of rice

The Viet Nam Southern Food Corporation (VINAFOOD 2) is planning to purchase about 3.8 million tonnes of rice to hold in reserve despite slow rice exports.

Chairman of the Viet Nam Food Association (VFA) Truong Thanh Phong told the online newspaper VnPlus that so far this year, the Cuu Long (Mekong) Delta provinces had cultivated the IR50404 rice-variety in more than half of the growing areas. However, due to lower export demand, the price of rice was forecast to fluctuate dramatically.

VINAFOOD 2's plan was in line with the VFA's proposal of buying rice for reserves in March and April.

The VFA suggested that the price of rice should be set at about VND5,000 (24 US cents) per kilo due to production costs which were estimated at VND3,400 (16 cents) per kilo.

Experts estimated that Viet Nam would export 6.5 million tonnes of rice this year, 9.72 per cent down against last year due to challenges on the domestic and world markets. The total export volume of rice for the first half of the year is expected to reach 3.5 million tonnes.

The domestic rice market would experience a tough time this year because of increased domestic rice output and greater world rice stocks that climbed to a record high of 100 million tonnes against global rice trading activities that had been reduced by 5-8 per cent, according to the VFA.

According to the Bangkok Post newspaper, Thailand might lose its leadership in rice exports to Viet Nam soon because of the government's rice mortgage scheme.

"Viet Nam, India and Myanmar are key competitors in the rice market but Viet Nam is the strongest competitor as the country is determined to become the world's leading rice exporter," said president of the Thai Rice Exporters Association Korbsuk Lamsuree.

She said Viet Nam could surpass Thailand within five years.

According to the Agriculture and Cooperatives Ministry, the countries would each export 6.5 million tonnes of rice this year.

Thailand and Viet Nam provided the largest share of rice to the global market last year.

However, their market share declined slightly from 2010 due to the rising demand for Indian rice, the newspaper said.

Wood-processing faces labour shortage

Wood-processing companies cannot fulfill big export contracts because of a labour shortage, the Nguoi Lao Dong (Labourer) newspaper reported yesterday.

Nguyen Quang, director of Phu Long Tan Co. in Binh Duong Province, said that after the Lunar New Year holidays, only 10 workers out of 100 returned to work.

Many workers who did not go back to work were highly skilled. Most of them moved to other companies, resulting in a significant labour shortage.

The company has struggled to execute its export orders because of the shortage.

In order to fulfill signed orders on time, the company has had to employ outside subcontractors. The company is in critical need of skilled labourers.

"We have really been hit by production problems because of the labour shortage," Quang said.

At a wood-craft village in Trang Bom District in Dong Nai Province, many businesses were forced to curtail their production because of a shortage of labourers after the Lunar New Year.

The products made by the villages are for export, but few of the companies will sign big contracts, fearful there will not be enough workers.

Nguyen Thanh Nhan, owner of Thanh Nhan fine-art wood production facility, said his facility had only 20 workers and could not fill big orders.

"For big contracts, I do not dare because I can't find skilled workers," Nhan added.

Most of the workers in the wood-processing industry are unskilled and high school graduates. They are trained directly in factories or production facilities to meet the job requirements.

The salary for labourers is considered to be fair, with businesses frequently paying VND100,000-150,000 a day for apprentices and VND300,000-400,000 a day for skilled employees.

Huynh Van Long, owner of Minh Hanh wood facility in HCM City's Hoc Mon District, said "despite the high salary, it's very difficult to retain the workforce because skilled workers usually jump to other jobs. Employees with professional skills open small-scale production facilities. So the human resource shortage has become really serious."

In order to keep and attract labourers, the wood processing companies have improved working conditions, salaries and allowance policies.

Nguyen Thanh Nhan said his company always give priority to recruiting local labourers, especially skilled workers. The company trains the disabled and offers salaries and bonuses for them just as it does for anyone else.

Thanh Nhan facility has invested in machines and modern technology to improve productivity and working conditions.

According to Viet Nam Forestry and Wood Association, the country has 2,600 wood-processing enterprises and 27,000 small-scale wood processing facilities, with a total of 300,000 people.

The industry has set up wood-processing industrial clusters on a large scale in HCM City, Dong Nai Province, Binh Duong Province, the Central Highlands, the south-central coast, and Ha Noi.

Vietinbank to help finance Ha Noi metro

The State Bank of Viet Nam (SBV) has assigned the Viet Nam Bank for Industry and Trade (Vietinbank) to arrange funds for the Ha Noi Train Station – Nhon urban metro rail project.

According to the SBV, Vietinbank will arrange a total of 783 million euros (US$1.01bi llion ) towards the city's first metro line (line 3), connecting Ha Noi Railway Station to the suburb town of Nhon.

Financing includes 293 million euros ($381 million) from the Asian Development Bank (ADB), 250 million euros ($325 million) in Official Development Assistance (ODA) from the French Government, 110 million euros ($143 million) in ODA from the French Development Agency (AFD), 73 million euros ($94.9 million) in ODA from the European Investment Bank (EIB) and 130 million euros ($169 million) from the Ha Noi City budget.

The 12.5 km route will include 8.5 km of aerial track connecting the Nhon depot with Thu Le and 4 km of underground track connecting Thu Le with Ha Noi Railway Station.

The line will start at Nhon and travel to Cau Giay via National Highway 32, Ho Tung Mau and Xuan Thuy streets. It will also pass through Kim Ma, Nui Truc and Quoc Tu Giam streets.

The Ha Noi Metropolitan Rail Transport Project Board (HRB) will oversee the project, which will include a viaduct, power supply stations and a depot.

Expected to become operational in 2015, the line will carry 150,000 passengers per day, to increase to 500,000 by 2030.

The metro project is part of a Viet Nam Ministry of Transport master plan aimed at reducing the use of private transport to enhance the urban environment.

Banking shares spearhead rally

Stock indices ran up another winning day yesterday, with banking stocks continuing to draw heavy investment despite warnings by many analysts that prices were becoming inflated.

Eight of nine listed banks gained value, with five soaring to their ceiling prices, including Eximbank (EIB), Ha Noi Housing Bank (HBB), Sai Gon-Ha Noi Bank (SHB), Asia Commercial Bank (ACB) and Nam Viet Bank (NVB). Only Sacombank (STB) declined after four consecutive sessions of ceiling prices.

With the sudden market rally in recent weeks, many shares have increased by a cumulative 15-20 per cent in value, a situation which was destined to prompt investors to sell and lock in gains, said the managing director of individual investment for Kim Eng Viet Nam Securities Co, Kim Thien Quang.

"Latecomers can therefore face risks when rushing to buy," Quang said, encouraging investors to buy on the basis of understanding companies. "This is how foreign investors are doing it."

On the HCM City Stock Exchange, the VN-Index rose by over 1 per cent to close at 427.95 points. Large-cap shares such as insurer Bao Viet Holdings (BVH), food processor Masan Group and Eximbank (EIB) all hit their ceiling prices, lifting VN30 Index – which tracks the performance of the 30 leading shares by capitalisation and liquidity – to 491 points, an increase of 1.2 per cent over the previous session.

The value of trades slumped by 33.5 per cent from Wednesday's highs, however, totalling VND1.53 trillion (US$72.9 million) on a volume of just over 89.5 million shares.

On the Ha Noi Stock Exchange, the HNX-Index also rose by over 1.3 per cent to close at 69.58 points. The value of trades reached nearly VND587.4 billion ($28 million), down 15 per cent from Wednesday, while volume declined 24 per cent to 64.3 million shares.

Stocks continue to soar on both exchanges

Vietnamese stocks continue to soar with nearly VND2 trillion (US$95.2 million) worth of shares changing hands on both of the nation's stock exchanges this morning.

On the HCM City bourse, the VN-Index hit another winning day, gaining 2.72 per cent to close today's session at 439.60 points.

Advancers overwhelmed decliners by 207-56, of which more than 90 codes increased by the daily limit of 5 per cent, led by blue chips including Bao Viet Holdings (BVH), Masan Group (MSN), Ocean Group (OGC), PetroVietnam Finance (PVF), Vincom (VIC) and Saigon Securities Inc (SSI).

Large-cap gaining also lift the VN30 Index, which measures the 30 leading shares by market value and liquidity, by another 2.55 per cent to 503.54 points.

Total market volume dropped nearly 9 per cent from yesterday, however, to reach 81.7 million shares, but value of today's trades fell 19 per cent to more than VND1.24 trillion ($59 million).

Military Bank (MBB) continued to see the heaviest trades today with over 14 million shares changing hands, hitting the ceiling price at VND15,600 ($0.74).

On the Ha Noi Stock Exchange, with over 60 per cent of codes posted gains, the HNX-Index jumped 3.08 per cent over yesterday, closing at 71.72 points.

Trading value rose 20 per cent to nearly VND704.3 billion ($33.5 million), while market volume increased 15 per cent to 73.8 million shares.

As many as 121 shares hit the ceiling prices this morning. Ha Noi Investment General (SHN) surprised the market when becoming the most active stock in Ha Noi today with over 8 million shares traded – the position earlier held by Ha Noi Housing Bank for many sessions. SHN increased 1.8 per cent to close today at VND5,700.

India helps upgrade Vietnam’s IT sector

Twenty nine representatives from the Vietnamese and Indian governments on February 29 signed a Memorandum of Understanding (MoU) on upgrading Vietnam’s capacity to carry out high efficiency calculation.

This is part of a program to strengthen cooperation om information technology (IT) between the two countries.

Under the MoU, signed by Vietnamese Deputy Minister of Education and Training Bui Van Ga and the Indian Ambassador to Vietnam Ranjit Rae, the Indian Government will help Vietnam set up a modern supercomputer network using the latest cutting edge technologies at Hanoi University of Technology.

India will also supply Vietnam with two centres for grid computing and displaying as well as transferring the necessary technologies and training their Vietnamese counterparts in high efficiency calculation.

The project will not only help the Vietnamese government improve its efficiency calculation capability, but will also enable the technology to be applied in training, research and other applications such as weather forecasting, disaster management and data processing.

The system is scheduled to be put into operation in late 2013.

Dragon Capital to raise Vietnam investment fund

Dragon Capital, the largest institutional investor in the Vietnamese stock market, is raising up to US$100 million in a new fund that will invest in Vietnam, Laos and Cambodia.

Its Chief Executive Dominic Scriven said on February 29 that the group looks for investment opportunities as the Vietnamese government embarks on a major effort to privatize state-owned assets.

"We are hoping to reach a first close in the first half of this year, raising US$50 million to US$$100 million...This will be used to invest in private companies in Vietnam, Cambodia and Laos," he said adding that most of the money to be raised by Dragon's new IndoChina Opportunities Fund will go to Vietnam.

"Vietnam is our big home market. In geopolitical terms, and therefore also in economic terms, Vietnam is creating a zone of influence in Indochina principally as a counterweight to the influence of China.”

“There are strong flows of capital, politics, aid and people from Vietnam to Laos and Cambodia. More people in the Laos and Cambodian governments speak Vietnamese than any other foreign language.”

Scriven, who is British, speaks Vietnamese and also sits on the boards of several Vietnamese firms.

"At the end of the first quarter, the government will have signed off on 41 big state-owned enterprise master plans. These are the top 41 state owned enterprises," he said.

Dragon Capital, based in Ho Chi Minh City, started investing in Vietnam in 1994 with an initial US$16 million and now has about US$1 billion worth of assets under management in the country, which has started to more openly embrace capitalism since its membership in the World Trade Organization in 2007.

About US$750 million of Dragon's assets are in Vietnamese stocks, with another US$100 million in real estate, US$100 million in private equity and $50 million in fixed income.

Israeli delegation seeks investment opportunities in Dong Nai

An Israeli delegation of businesses paid a working visit to the southern province of Dong Nai on March 1.

They specialize in providing equipment and technological solutions in such fields as construction, waste treatment, water supply and drainage in industrial parks, and residential and urban areas.

In addition, they are seeking cooperative opportunities in hi-tech agricultural production and organic agriculture in Vietnam.

The delegation worked with local authorities and businesses to discuss issues of mutual concern.

Piaggio inaugurates new plant in Vinh Phuc

The new Piaggio Group engine plant officially made its debut in Binh Xuyen industrial park in the northern province of Vinh Phuc on March 1.

The plant will be put into operation in April and aims to increase its productivity from 140,000 to 300,000 engines per year. It is located next to the Piaggio Vietnam vehicle assembly plant, which produces Vespa, Liberty and Fly scooters.

The Group’s Chairman and Chief Executive Officer, Roberto Colaninno, said that the new factory will also produce a new global range of scooter engines with the lowest rate of fuel consumption in the world for vehicle assembly in Italy, Vietnam and India.

As scheduled, in the 2012-2014 period, Piaggio Group in Vietnam will invest EUR70 million in newly-emerging markets to increase the number of scooters to 1 million. Piaggio expects that Asia will make up 50 percent of the group’s total revenue in 2014, compared to 8 percent in 2003 and 25 percent in 2009.

Piaggio Vietnam’s vehicle assembly plant began operations in Vietnam in June 2009 and has launched 180,000 scooters in the market so far. It also helps the Group penetrate new markets in South East Asia, especially Indonesia, Thailand, Taiwan and Malaysia.

Japanese investors show interest in Hoa Phat group

A delegation of Japanese investors have visited Vietnam seeking business opportunities with the Hoa Phat Group (HPG), a renowned Vietnamese group in furniture and steel production.

HPG General Director Tran Tuan Duong briefed the delegation on his group’s achievements in 2011 and market predictions in 2012.

Despite having to cope with the global economic downturn, HPG’s revenues reached nearly VND18,120 billion last year, 3.5 percent higher than the set target and 25 percent higher than in 2010, Duong said.

HPG’s steel production sector alone surpassed all the set targets and contributed 79 percent of the group’s total revenues and 75 percent of its profit.

Although Vietnam’s construction steel market fell in 2011, HPG’s market share increased from 12 percent in 2010 to 13.3 percent in 2011, with output reaching near 100 percent of factory capacity.

Hiroshi Hiramoto, Managing Director of the Japan Securities Institute (JSI) and a representative from the Japanese delegation, said Japanese investors admire the excellent performance HPG has recorded over the past 20 years and praise its status in the Vietnamese market.

According to Hoa Phat, many Japanese companies are currently keen to invest in the Vietnamese market and HPG is one of Vietnam’s major companies whose trademark is promoted in different ways in the Japanese market to boost investment cooperation in the future.

Vinamilk CEO listed among Asia's most powerful

Mai Kieu Lien, CEO and chairwoman of Vinamilk -- Vietnam’s largest dairy producer -- is amongst the 50 noteworthy path-breakers in the Asia's 50 Power Businesswomen list, released Wednesday by US business magazine Forbes.

The only Vietnamese woman to be listed, Lien, 58, was described as a dynamic CEO that has built the company “not only into one of Vietnam's most profitable brands but also a respected name across Asia.”

“Dairy promoters have long touted the nutritional qualities of milk, saying it has something for everybody. In Vietnam they have another trump card: Mai Kieu Lien,” the report remarked.

“This is a full surprise to me, and I am very happy,” Lien shared with Tuoi Tre following the news.

“It is also a mark of pride to Vietnamese businesswomen, and it means that the world has recognized the contribution of local businesswomen to national economic development.”

Forbes said that the inaugural Asia's 50 Power Businesswomen focuses on honoring businesswomen who are actively engaged in profit-seeking businesses.

“These women are part of an increasing force in the region’s remarkable economic rise,” it said.

Lien was born in France and educated in Moscow. In 1976, she returned to Vietnam and joined Southern Milk & Café, which is Vinamilk's predecessor, helping to modernize the old state dairy collective. She became chairwoman after privatization in 2003.

In 2010, Vinamilk also received the Forbes Asia’s 2010 Best Enterprise award among Top 200 best enterprises in Asia.

It was the first time that a Vietnamese enterprise to be acknowledged among 151 new others and awarded the title "Best Under A Billion" for small and medium-sized businesses with capital worth less than $1 billion by the professional financial magazine.

Last year, Vinamilk achieved its revenue target of US$1, a year earlier than expected. The diary producer posted total revenues of VND22.279 trillion, up by 38 percent against 2010.

Vinamilk also passed its target in export turnover, with total export turnovers last year rising 72 percent year on year to $140 million, the highest rate the company has ever enjoyed since its foundation.

The company said it targets to become one of the world’s 50 largest dairy producers with annual revenue of $3 billion by 2017.
 
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