Last update 7/26/2012 7:00:00 AM (GMT+7)
  

BUSINESS IN BRIEF 26/7
Penny stocks attract investors
 
On the HCM City Stock Exchange yesterday, the VN-Index Composite fell 0.65 per cent to 412.91 points compared to the previous day's close.

Decliners overwhelmed advancers by 153-71. About 43.5 million shares changed hands on a turnover of VND707 billion (US$33.6 million).

The rally of seven of the 30 leading shares tracked by the VN30 failed to lift the index, as they were less influential than the remaining 23 shares. The VN30 finally retreated 0.6 per cent, reaching 488.37 points.

Among penny stocks, mineral shares were heavily sold, including Bac Giang Minerals Co (BGM), Na Ri Hamico Minerals (KSS), Binh Thuan Mineral (KSA) – which all bottomed out – and Tay Bac Mineral Investment Co (KTB).

Meanwhile, small-cap Lu Gia Mechanical Electric Co (LGC) yesterday emerged to be a very active listed code with over 1.7 million shares changing hands. It closed at a ceiling price of VND17,900 ($0.80).

HCM City Infrastructure Investment Co (CII) is showing interest in LGC, intending to acquire a major stake in the company. While CII aims to reduce its ownership in subsidiaries and affiliates, it wants to increase the holding percentage from 26.19 to over 51 per cent in LGC.

Le Quoc Binh, director of CII and chairman of LGC, said the market price of LGC shares was lower than book value, while LGC had potential.

LGC's business would be beneficial to CII's infrastructure projects, Binh said.

On the Ha Noi Stock Exchange, the HNX-Index lost another 0.23 per cent from Tuesday's session, standing at 69.68 points.

Blue chips in Ha Noi, such as Asia Commercial Bank (ACB), insurer PVI Holdings (PVI) and construction giant Vinaconex (VCG) were the main force to help the HNX30 decline at the lowest speed among indices. This 13-day-old index slid 0.17 per cent to 132.08 points.

The overall value of trades fetched nearly VND346.9 billion, dropping 27.6 per cent compared to Tuesday's level, on a volume of 37.4 million shares.

PetroVietnam Construction Co (PVX) was still the most heavily traded stock with some 6.5 million shares exchanged.

"Although the declining rate of the market has slowed, investors are more cautious," Hoa Binh Securities Co analyst Nguyen Thi Huong wrote in a note.

Indices were coming back to their previous support levels after four successive sessions of decrease. "Any new recovery will need an improvement in trading volumes to define market trends in the short term," she said.

Huong also advised investors not to buy shares if rally signals were not clear.

VSIP set to get new lease of life

Leading industrial park and township developer VSIP will get 20 more years for operating an industrial park and township project in nothern Bac Ninh province.

Deputy Prime Minister Hoang Trung Hai on July 5 directed the land usage time and the operating lifetime of the township area in VSIP Bac Ninh project be implemented in accordance with the Decree 84/2007/ND-CP issued in 2007 and the Decree 121/2010/ND-CP issued in 2010.

While Decree 84 regulates a foreign-invested residential development project will have land usage time of 70 years, Decree 121 regulates operating lifetime of this kind of project is equivalent to land usage time. This means land usage time and township lifetime will be extended from 50 to 70 years. Hai’s move was in response to a Bac Ninh Provincial People’s Committee proposal sent to the prime minister in April.

The township area is part of VSIP Bac Ninh project, 18 kilometres north of Hanoi. VSIP, a joint venture between Singaporean Sembcorp Parks Holdings and Vietnam’s Becamex IDC, received an investment certificate for the project in 2007 and planned to pump $103.7 million into the industrial park and township.

According to the developer, the industrial park, covering 500 hectares, would be home to non-pollutive, high-tech, high value-added, capital intensive industries such as those in the electronic and pharmaceutical sectors. Furthermore, a 200ha township also will be developed near the industrial park, including commercial and residential developments as well as services to support residents of Bac Ninh province and the surrounding areas.

A senior VSIP Bac Ninh officer said the lifetime extension would ensure this township has a lifetime similar to other residential property projects in the country. “We are preparing to receive adjusted investment certificate,” he said.

This new industrial and township is part of VSIP’s strong footprint in northern Vietnam after the success of two similar projects in southern Binh Duong province, VSIP I and VSIP II.

So far, VSIP Bac Ninh has attracted several well-known transnational companies such as PepsiCo and Nokia. PepsiCo, the world’s second largest food and beverage manufacturer decided to build a $70 million beverage factory there. Nearby, Nokia is building a mobile phone manufacturing factory.

Rusalka project rebirth with new name but old backer

The prime minister has been asked to accept a new developer for the long-stalled Rusalka resort project, involved in an infamous fraud scandal six years ago.

According to a Khanh Hoa Provincial People’s Committee document sent to Prime Minister Nguyen Tan Dung, the local government asked for Focus Travel Nha Trang Corporation to be Rusalka’s new developer, which would inherit all the rights, responsibilities and debts of the old developer Rus-Invest-Tur Corporation (RIT).

In a surprising move the head of the new developer is the once disgraced backer of the Rusalka project. The resort was initially developed by RIT, a joint venture between three Russian entities, from 2002 with registered capital at $15 million. The project, covering 46.1 hectares, is situated in one of the most beautiful locations in famous Nha Trang.

However, the project was stopped in 2005 as Nguyen Duc Chi – the only lawful representative of RIT – was accused of buying 31,400 tonnes of rice from Tra Vinh Food Company without pay $5.7 million. The investigation by police at that time also accused Chi of forging signatures and documents to illegally gain a licence for developing Rusalka.

One year later, police distrained Rusalka resort for investigation while the Ministry of Planning and Investment (MPI) revoked the investment licence of the resort without liquidating it. In 2008, Chi was sentenced to five and a half years imprisonment.

But, the People’s Supreme Court announced that Chi’s crime “was not related to petition for investment licence of Rusalka project” and removed the distrainment record after Chi was released from the prison in 2010, giving him the property back.

In the Khanh Hoa Provincial People’s Committee document, the local government said the property now belonged to Chi, but if he wanted to keep going on with the project, he would have to establish a new legal entity and pay all money RIT had owned contractors.

Focus Travel Nha Trang Corporation was established by Chi under an MPI proposal and the agreement of Prime Minister Nguyen Tan Dung. Since late last year, the corporation has widely announced to pay debts owned by RIT. As a result, 12 contractors, organisations and people were negotiating with the corporation over debts worth $1.43 million.

“Focus Travel Nha Trang is suitable to the situation of this project as well as legal regulations,” said the provincial committee in the document. However, Focus Travel Nha Trang Corporation still needs Dung’s blessing to get started and the resort will be known as Champarama Resort & Spa.

Textile sector gets stitched up

That is despite Korea-backed Hansae Vietnam early this year deciding to build a $30 million factory in the Mekong Delta’s Tien Giang province, its third factory in Vietnam. This project will be operational in 2012’s third quarter, adding 30 million textile and garment items to the company’s production annually. The company’s two existing plants - Hansae Ho Chi Minh City and Hansae Tay Ninh presently has the capacity of 70 million textile and clothing items per year.

In the first five months of 2012, the company’s export value surpassed $160 million. The company expected its full-year export value to climb to $400 million in 2012, according to the company’s general director Kim Chul Ho. However, Hansae is just one of a few foreign investors jumping into garment and textile sector in Vietnam at this moment.

Vietnam Textile and Apparel Association (Vitas) figures show that FDI inflows in Vietnam’s textile and garment peaked from 2000-2008, with 2002 being an exceptional year when the sector wooed 149 FDI projects capitalised $406 million However, FDI flow trended downward during 2009, 2010 and 2011 when the sector only received 63, 72 and 80 new projects, respectively.

In the first four months of 2012, 11 new foreign direct investment (FDI) projects came to Vietnam’s textile and garment sector valued at $19 million. The figures underline the sector’s diminishing attractiveness. During 2009-2011 the sector attracted a total $804 million, out of $32 billion committed to the country.

Many investors, especially South Koreans, are targeting Vietnam’s garment sector which requires less investment and benefits from low-cost workforce.

A United Nations’ Industrial Development Organization (UNIDO) Vietnam Industrial Investment Report 2011 released in late June 2012 shows that Korean investors topped the list of investors stepping into low-tech areas in Vietnam. “This was proven by a large percentage of Korean firms operating in textile-garment and footwear production in Vietnam,” the report stated.

Vitas’ former chairman Le Quoc An said the lack of sizable spinning and dyeing facilities to feed raw materials for local production were obstacles hindering FDI inflows in the sector.

He believed the sector’s weak point would translate into enormous investment opportunities on the heels of proper development orientations. Since early this year, some foreign investors have built textile factories in Vietnam to provide raw materials for local producers.

For example, construction of China’s Texhong Group’s $300 million fibre plant in northern Quang Ninh province got off the ground two weeks ago, following its first operating plant with the capacity of 210,000 spindles per year in southern Dong Nai province’s Nhon Trach Industrial Zone.

Meanwhile, by the end of this year, Vietnam National Textile and Garment Group and Japan’s Itochu Group would start construction of a $120 million fibre plant in northern Nam Dinh province’s Bao Minh Industrial Park.

Labour exports not plain sailing

Labour export’s dark side is under the spotlight. Around 90 per cent of export labourers returning home face debt problems and high-paid labour export markets are afraid of absconders.

These are prominent issues reflected by a survey conducted during 2010-2011 by Ministry of Labour, Invalids and Social Affairs’ (MoLISA) Institute of Labour Science and Social Affairs (ILSSA) in eight Vietnamese locations featuring high rates of export labourers including Thai Binh, Phu Tho, Vinh Phuc, Bac Giang, Hai Duong, Thanh Hoa, Ha Tinh and Ho Chi Minh City.

Japan, South Korea, Taiwan and Malaysia attract 70 per cent of Vietnamese labourers.

Accordingly, “the average income of export labourers is far higher than when they work in Vietnam. For instance, it is over seven times more for labourers going to work in Japan, 9.5-fold more for those in South Korea, nine times more for those in Taiwan and up 3.9 times for those working in Malaysia,” the survey read.

For a three-year contract, an export worker in Japan could save an average VND312 million ($14,800), in South Korea VND243 million ($11,500), in Taiwan VND145 million ($6,900) and in Malaysia VND51 million ($2,400).

“The problem is that top labour export markets report highest rates of absconders,” said MoLISA deputy minister Nguyen Thanh Hoa, citing that with incomes averaging VND10 million ($470), or even VND30 million ($1,400) per month Japan and South Korea are the top targets for the majority of local export labourers. However, these two markets also witness highest rates of absconders.

For instance, in South Korea every three export labourers terminated labour contracts, one absconded from returning home and stayed illegally in South Korea to continue working. Such rate is also the top among 15 nations signing contracts on labour export with South Korea.

ILSSA’s survey also pointed out the reason why the labourers absconded. That was chiefly because nearly 58 per cent of export labourers had to pay expenses for having the opportunity to work abroad many times higher than regulated amount.

For example, to work in South Korea many of them had to pay $10,000 against required amount $700. Most of the excessive amount was loans, so that a number of export labourers absconded after their contract termination and stayed in the host country to work illegally for extra earnings.

In other cases, firms operating in labour export service did not clearly explain contract terms to export labourers. Consequently, in foreign markets export labourers had to perform harmful work at low pay different to what they were promised before departing.

“Current woes in labour export mainly came from poor management,” said National Assembly’s Social Affairs Committee former deputy chairman Dang Nhu Loi.

Loi said only 30 per cent out of nearly 200 labour export service firms have been operating effectively.

ILSSA’s survey also shows after returning home export labourers have to use nearly 35 per cent of their savings abroad to pay associated debts. Of the remaining amount, nearly 29 per cent was spent on construction and house repair costs, around 11 per cent on luggage purchases while a little proportion was spent on production-business expansion (8.79 per cent) or study (3.67 per cent).

Besides, up to 76 per cent of export labourers could not find jobs after returning home, partly because export labour support policies are vague in content and localities lack the database about labour market and job information.

“What other countries are acting in this area must be taken as a useful reference to find out a remedy. We also need to weigh over how to assist export labourers after they return home,” said Hoa.

Over 40,000 Vietnamese labourers went to work abroad in 2012’s first five months, equalling 86.5 per cent compared to the same period in 2011 and tantamount to 44.6 per cent of the year’s projection, according to MoLISA’s Overseas Labour Management Department.

Fish breeding stations fall idle in Highlands

Many breeding stations in the Central Highlands province of Kon Tum have been unused due to a lack of water supplies.

These stations, completed after four years of construction with Government funding of VND17 billion (US$816,000), aimed at supplying 1 million breeds, including young fish, per year to localities.

Representatives of stations said that due to a scarcity of water, only several of the 45 stations are working, while the rest are disused and covered with wild grass.

The provincial agriculture department said that dredging lake beds and using water resources from local lakes would help overcome the problem, but it will cost up to VND5 billion ($240,000).

VietJetAir opens new route

VietJetAir will open a new flight route from HCM City to Nha Trang on August 3 to satisfy high holiday demands.

To mark the event, it will hold a special three-day promotion, starting tomorrow.

Passengers can buy air fares on-line at a discount price of VND19,000 (US90 cents).

The discount fares will prevail through August, October, November and December.

Further information can be found at www.vietjetair.com

In April and May, the airline opened flight routes from HCM City to Da Nang and from Ha Noi to Nha Trang.

Petrolimex increases oil prices

The Viet Nam National Petroleum Group (Petrolimex) officially increased retail prices of petroleum products and diesel by VND400 (US$0.019) per litre and kerosene by VND300 late yesterday.

The move by Petrolimex followed a report from the Ministry of Finance showing that costs were higher than retail prices.

The price of RON 95 petrol has been raised to VND21,500 per litre; RON 92 to VND21,000 per litre; diesel to VND20,300 per litre, and kerosene to VND20,150 per litre.

This is the first time the price has gone up this year following five consecutive cuts.-

Da Nang seeks US investors

The central city of Da Nang has been calling for investment from US businesses in solar energy, electronics production, waste treatment and seaport and airport management.

Da Nang People's Committee chairman Van Huu Chien issued the call during a trip to the US cities of San Francisco and San Jose this week.

On his US visit, Chien also signed a memorandum of understanding on friendship and co-operation with representatives of the city of Houston.

Chien said the city would create favourable conditions for the SunPower Co to invest in renewable energy projects in Da Nang, which has set a goal to become a green city by 2020.

Mineral processing plants open

Mills that reclaim ilmenite and zircon from ore were inaugurated by the Quang Tri Mineral Joint Stock Co yesterday in Quan Ngang Industrial Zone in the central province of Quang Tri. The total cost of the facilities was VND110 billion (US$5.2 million).

The annual production capacity of the two plants are 20,000 and 4,500 tonnes, respectively.

The facilities are expected to generate job for about 240 workers at an average income of VND4 million ($190) per month.

Ha Tinh attracts foreign projects

The central province of Ha Tinh currently has 238 investment projects worth a combined total of VND287 trillion (US$13.7 billion).

Of these, 42 are foreign-invested projects, worth a combined $12 billion.

The province has rolled out its socio-economic plan through 2020, addressing infastructure improvements and adminstrative reforms aimed at attracting more investment.

IFC funds small business loans

Orient Commercial Bank (OCB) has received a US$10 million loan package from the International Finace Coporation (IFC). The money will be used to extend the bank's capacity to lend to small- and medium-sized enterprises (SMEs), under its so-called OCB SME Loan Programme.

The programme would allocate $25 million, including $15 million directly from IFC funding, for loans to promote exports by SMEs, with $5 million allocated to businesses owned by women.

Cement prices decline in first half

The price of cement dropped to VND100,000 per tonne in the first six months of this year due to high stockpiles and low demand, according to the Viet Nam Cement Association.

During the period, cement production reached about 24.3 million tonnes, a 10 per cent decrease from the same period a year earlier, and domestic consumption fell 10 per cent to 23.6 million tonnes.

Cement businesses have actively sought export markets for clinker and cement. They exported about 3 million tonnes of clinker and 700,000 tonnes of cement in the first half.-

City aims to improve land management

HCM City authorities will step up inspections of agencies working in housing and land management in the coming months in an effort to stem rising corruption.

People's Committee Chairman Le Hoang Quan told a meeting of the city's Corruption Prevention Steering Committee that corruption was rife in several divisions of the municipal administration as well as administrations at the ward, commune and district levels.

He said a recent investigation had found 68 cases of paper procedures unsolved because related petitions were transferred from one agency to another with no one taking the responsibility of dealing with them.

However, reports submitted at the meeting also said that the widespread corruption at all levels were not of great magnitude. Most of the cases had to do with officials taking "tips" for smoother procedures.

As of July, 135 inspections had been conducted and 26 agencies found engaged in wrongdoing with the total amount involved estimated at VND4 billion (US$191,000). Seven cases were brought to court.

A significant part of "emerging" corruption mostly concerned construction permits and land use transfers at ward, commune and district levels.

In one case, residents accused a commune administration of recording that a family owned 21,000sq.m of land though the actual area was 5,000sq.m.

In the remaining six months of the year, inspections will focus on agencies engaged in land management including the departments of natural resources and environment, construction, planning and architecture.

In major cases, the culprits will be brought to court by the year-end, the meeting heard.

Major cities see modest deflation
 
The Consumer Price Index (CPI) in major cities has continued to drop this month due to the impacts of falling prices and lower purchasing power.

Falling gas and petrol retail prices had also had an effect, according to statistics offices in Ha Noi and HCM City.

Lower purchasing power was attributed to the economic crisis and falling incomes.

The Ha Noi Statistics Office reported yesterday the capital's CPI in July fell 0.29 per cent against the previous month, but increased by 4.64 per cent year-on-year.

This was the biggest fall in CPI since the start of this year, the office said.

The cost of food and services fell 0.21 per cent, housing, electricity, water, fuel and building materials were down 1.2 per cent, and transport dropped 2.9 per cent.

In July, prices plunged by 1.51 per cent for rice, 0.57 per cent for food and by 8 per cent for a 12-kg gas canister.

Eight other commodity groups saw prices increase in July, the highest of which was the garment, hat and footwear at 1.09 per cent, followed by household utensils at 0.81 per cent.

CPI in HCM City fell 0.57 per cent in July against the previous month, but increased by 4.3 per cent year-on-year, according to the HCM City Statistics Office.

This was the highest fall for the month since 2003, the office said.

Prices dropped between 2 and 3 per cent for the transport and housing and building material sectors.

The cost of catering services also dropped 0.57 per cent in line with falling rice and food prices.

Firms urged to join Ukraine trade fair

The HCM City Investment and Trade Promotion Centre (ITPC) is urging local businesses to take active part in an international trade exhibition to be held in Ukraine's Kiev City from 16-22 September.

The exhibition is titled "A path that links Eastern and Western markets".

At a meeting yesterday to introduce the Ukraine market and the exhibition, which is held by ITPC in collaboration with Thai Son General Co and N-M Ltd Co, Nguyen Thanh Xuan, deputy director of the centre, said the event would be a good opportunity for local businesses to strengthen their position in a potential market.

Businesses from several countries in Asia and East Europe, including Viet Nam and Ukraine, are expected to participate in the exhibition that will have a display area of 12,000sq.m, at the Rainbow Trade Centre.

The fair will showcase a wide range of goods including agricultural products like tea, coffee, seafood and processed foods, consumer goods, textiles and garments, furniture, cosmetics, medicines, electronic items, household appliances, and construction materials.

Xuan said both Ukraine and Viet Nam were newly emerging markets regarded as having great potential because of high economic growth in recent years.

Ukraine had a population of 45.4 million with a GDP of US$136 billion in 2010. Its strength in science and technology offered many co-operation opportunities for foreign businesses including Vietnamese, she said.

Ukraine has great demand for agricultural products like coffee, rice, fruits and vegetables as well as footwear, textiles and garments all of which are major Vietnamese export items.

Another advantage is that about 10,000 overseas Vietnamese live and work in Ukraine, providing a bridge between the two countries and contributing to wealth generation on both sides.

Viet Nam and Ukraine have enjoyed a long-term, traditional relationship of more than 60 years, and the two countries have forged co-operative ties in politics, culture, education, science and technology.

Bilateral trade was $255.7 million in 2010 and increased to nearly $300 million last year, which fails to match either the potential or the aspirations of both sides.

As of last year, Ukraine had 10 investment projects in Viet Nam with a total investment capital of $23.3 million, ranking 59th of 92 foreign investors. Viet Nam has invested in five projects in Ukraine.

Popular brands created by design

"Vietnamese businesses do not pay enough attention to promoting their brands or spend only limited amounts on design development," Da Nang Architecture College interior design lecturer Nguyen Thi Hong Tuoi told the Innovation by Design conference here yesterday.

"It reflects the limited vision of business managers and the underdeveloped design industry in Viet Nam," Tuoi said. "Businesses lack a long-term strategy and forget that promoting their brands consistently plays an important role in boosting production."

In a recent survey of 500 Vietnamese businesses, 70 per cent had not yet developed designs for their brands and products, 25 per cent had not spent any money on design, and only 8 per cent had allocated resources to brand development, she said.

Some of these, she noted, included such globally-known brands as Pho 24. The Pho 24 restaurant chain, which debuted in 2003, has 80 shops in Viet Nam and 30 abroad.

"The owner of Pho 24 has taken advantage to boost brand design and improve sales outside the country," Tuoi said.

The central city of Da Nang has also successfully built its brand as a tourist destination with outstanding architectural features, promoting such landmarks as the bridges crossing the Han River, the Ba Na Hills Mountain resort and Son Tra peninsula beaches.

Also addressing the conference, Kim Yun-jib from the South Korea Institute of Design Promotion said developing a design industry helped enhance the competitiveness of products.

"Viet Nam should map out a strategic plan for developing the design industry, which includes human resources training, marketing and international co-operation," Kim said. "The Government needs to provide priority policies and assistance to design businesses, recognising they are a driving force for businesses to build brands locally and internationally."

The conference, which was co-organised by the Ministry of Trade and Industry's Trade Promotion Agency and the Korea Institute of Design Promotion, drew 200 Vietnamese and South Korrean designers and businesses. The conference also focused on a Viet Nam-Korea design-sharing project which aimed to enhance the design capacity of both countries.

Room to develop VN-Russia trade
 
There was plenty of room for bilateral relations between Viet Nam and Russia to develop further when several barriers are overcome, Viet Nam Chamber of Commerce and Industry chairman Vu Tien Loc told a conference yesterday in Ha Noi.

Loc outlined the barriers as administrative procedures, ineffective distribution channels, inconvenient payment proceedings, lack of market information and harsh competition from other countries.

He said the forum was an opportunity to get a clearer overview of the Russian market.

Two-way trade between the two nations has grown 17 per cent annually during the past 11 years – from US$400 million in 2000 to about $2 billion last year.

Of these figures, Vietnamese exports contributed $122 million and $1.28 billion respectively, recording an annual growth rate of 25 per cent.

During the first six months of this year, trade rose by 30 per cent against the same period last year to $1.1 billion. And $682 million of this came from Vietnamese exports, up 34 per cent year-on-year.

As of July 17, Russia ranked twenty third among 95 countries and territories investing in Viet Nam. Russian companies have pumped $920 million into 80 projects, mostly in mining, construction, processing and real estate.

However, the figure still lagged behind the potential, Loc said, adding that many Vietnamese exporters faced challenges in penetrating the Russian market.

The chief representative of the Russian Trade Office in Viet Nam, Golikov Urievic, said Russia had been speeding up administrative reforms, focusing on customs and licensing, to make it easier for overseas enterprises.

He encouraged Vietnamese firms to push exports of food, agricultural and seafood products which were in great demand in Russia.

Vietnamese companies at the conference said they were concerned about payment methods, technical transfers and preferential credits for Vietnamese enterprises that wanted to export to Russia.

Large-scale rice farms lack financial support
 
Production efficiency at large-scale rice fields in the Mekong Delta has been lower than expected because of a lack of co-operation from rice-trading companies.

According to statistics from the Department of Crop Production, additional profit of VND2.2-2.7 million (US$105-130) per hectare was gained with the large-scale rice field programme.

However, rice traders had shown little interest in this new production model, said deputy chairman of the Viet Nam Plant Protection Association, Nguyen Tho.

"If rice trading companies do not co-operate with farmers, it will be difficult to develop more large-scale rice fields and produce rice in a sustainable way," he said.

Head of the Cuu Long Delta Rice Research Institute Le Van Banh pointed out that in order to take part in the programme, rice-trading and plant-protection companies must have a strong financial capacity to provide farmers with seeds, materials and equipment.

However, most of the participating companies were small-and medium-sized companies with limited financial means.

In addition, joining these programmes might lead to losses during the first few crops, but most companies wanted to see immediate results, Banh said.

Deputy chairman of the An Giang Province People's Committee Huynh The Nang said that the programme had offered preferential loans for companies to build warehouses and rice-husking plants, but implementation had not been very effective.

Nguyen Huu Huan, deputy head of the ministry's Plant Protection Department, also said that farmers received little guidance from agricultural experts but often planted rice seeds and sprayed pesticides under the guidance of plant-protection companies. Plant-protection companies sell pesticides, and some have been advocating the use of more pesticides.

"Increasing the quality of rice is a priority to help increase profits for farmers in a sustainable way," said the principal of Tan Tao University, Prof Vo Tong Xuan.

Xuan pointed out that the price of Viet Nam's rice was always $7-20 per tonne lower than that of Thailand of the same quality, and even $220 less than that of the US, adding that standards for the certification of production processes of agricultural products (Global Gap or VietGap) must be applied in rice plantations to increase quality as well as creating a rice brand in the world market.

Xuan also suggested applying a joint-stock model in rice trading, in which farmers and traders assist each other. "The model would help protect farmers' profits when rice prices fluctuate," Xuan said.

He explained that if a farmer harvested seven tonnes, they would sell 6,700kg and the rest would be contributed to the company as stock. Then by the year end, the company's profit would be calculated and divided between farmers based on their contributions.

Co-operation among farmers, State organisations, enterprises and agricultural experts should also be enhanced to ensure the success of the programme, said deputy director of the An Giang Department of Agriculture and Rural Development Doan Ngoc Pha.

He also said that farmers should be provided with more support in terms of input materials, advanced farming techniques and post-harvest technology.

The programme was launched as a pilot scheme in An Giang Province last year, beginning with an area of 1,070ha by the state-owned An Giang Plant Protection Company.

Because farming incomes rose, the ministry decided to expand the programme.

Under the model, rice-trading and plant-protection companies ask farmers whose fields are near one another to produce the same variety of rice, using the same farming techniques and scheduled production dates.

The aim is to reduce production costs and increase profits for farmers.

The area with large-scale fields increased from 7,800ha for the 2010-11 summer-autumn crop to 19,720ha for the 2011-12 winter-spring crop, more than 4 per cent of the Crop Production Department's target. To date, 12 provinces in the Delta and six northern ones have joined the programme.

The department targets increasing the area of large-scale rice fields in the Delta to 1 million hectares in the future.

Rice trading companies would be involved in building their own large-scale rice fields to ensure output meet 30-50 per cent of export demand by 2015 and 50-80 per cent after 2015.

Delta needs rice drying rooms

Farmers in the Mekong Delta region should use rice drying-rooms to reduce production costs and improve quality of rice exports, experts have recommended.

Ho Minh Khai, director of Co Do Agriculture One Member Ltd Company and Co Do Farm in Can Tho City's Co Do District, said his company had built 63 rice drying rooms with a capacity of 12-15 tonnes, at a total cost of VND12 billion (US$576,000).

He said the rice drying-rooms could dry and preserve about 750-800 tonnes of rice per day, which can meet the demand of all rice-cultivation areas in the district, as well as other districts in Kien Giang and Hau Giang provinces.

Co Do Farm cultivates two rice crops a year: winter-spring and summer-autumn. It covers an area of 5,600ha, with an annual output of 60,000 tonnes, of which high-quality rice accounts for 75 per cent.

According to Khai, rice that is dried by being put on asphalt grounds under the sun is not of high quality and usually does not meet standards for export.

The use of drying rooms can improve preservation of the rice and its quality.

To ensure rice output, the company plans to buy all wet rice from farmers for drying and storing to prepare for export.

Ngo Sy Tien, deputy director of Song Hau Farm in Co Do District's Thoi Hung Village, said the farm had built more than 20 drying rooms with a capacity of 10-25 tonnes, meeting the demand of drying rice for farmers in the village.

The traditional way of drying rice outside on the ground consumes more money and human resources.

In addition, after harvesting, farmers are unable to dry a large volume of rice under the sun in a short period of time, which can affect the quality of rice.

Tien said that a drying room with a capacity of 10-25 tonne costs about VND200 million ($9,600), but farmers can recover the capital after three years of operation.

The cost for drying one tonne of rice is VND120,000, around VND30,000 cheaper than drying under the sun, according to Tien.

Duong Xuan Qua, director of Nam Nha company that produces drying rooms in An Giang Province's Long Xuyen City, said a drying-room includes a burning-oven system, and fans and conveyor belts to transfer rice into and out of the drying room.

Huynh Hiep Thanh, director of the An Giang Agricultural Extension Centre, said An Giang Province has the highest number of rice-drying rooms in the Delta region.

Every year, it dries about 1.3 million tonnes of rice, accounting for 70-80 per cent of rice in the province.

Rice in the Delta accounts for 53 per cent of the country's total rice output and 96 per cent of exports.

Yet only 40 per cent of the region's rice output is done through these machines, according to Le Van Banh, head of the Cuu Long Delta Rice Research Institute.

Banh said the rice post-harvest technology was still poor, with a loss-proportion of 13 per cent, especially during the drying process.

If the drying process does not meet standards, farmers can incur a loss of 2 million tonnes of rice every year.

The current number of rice drying rooms meets only 40 per cent of demand in the Cuu Long (Mekong) Delta region, which targets doubling the number to ensure a sufficient volume of exports.

Second-hand gadgets to be banned from Vietnam  

The Ministry of Information and Communications (MIC) will impose a ban on second-hand electronic devices from September 1.

Devices such as mobile phones, tablets, laptops, printers and loudspeakers will be written off the import goods list into Vietnam.

The ruling will also be applied to second-hand accessories and spare parts.

New imported products will be required to have labels written in Vietnamese or English.

Products that are sent aboard for maintenance and repair will be allowed back into the country. The MIC will also allow the import of spare parts and other devices if they are to be used for repairs or creating new export products or research models.

Waste that is generated during the manufacturing process will have to be exported or dealt with in accordance with environment law.

The MIC also instructed organisations and individual businesses to report on imported goods, inventories, and export and import activities each year for inspection.

The new regulation will take effect from September 1, and the MIC said that it will co-operate with management agencies to carry out random inspections.

Difficulties for Hanoi's urban railway projects   

The development of an urban railway system has been considered an useful solution to help ease Hanoi's traffic, but various problems have slowed the pace.

Hanoi plans to build eight urban rail projects included in its transport development plan by 2020 under the capital city’s master plan by 2030 with a version to 2050.

In an interview with DTiNews, Toshio Nagase, Senior Representative of Japan International Cooperation Agency (JICA) in Vietnam, said that the revocation of land that had already been granted for site clearance is among the biggest difficulties facing railway projects in Hanoi.

JICA has just completed the technical design for urban railway route No.1 (Giap Bat-Gia Lam). The site clearance of the area near Long Bien Bridge poses difficulties because Hanoi plans to build a second Long Bien Bridge about 30 metres away from the current one. The railway will run on the new bridge to the opposite side of the river. He hoped that it could be complete by 2017.

He added that, each urban railway project has a different donor, so to manage projects in a co-ordinated way has also been a large concern.

Tran Van Luc, Director of the Railway Project Management Unit under the Vietnam Railway Corporation, said that site clearance for a path to a particular station along route No. 2A (Cat Linh-Ha Dong) is lagging behind schedule. It was supposed to be finished by June. He urged the People’s Committee of Ha Dong District to finish the work by August this year.

Route No. 3 (Nhon-Hanoi Station), slated to be finished in 2016, also faces risks of running behind schedule due to shortage of capital.

Nguyen Van Doanh, Deputy Head of the Vietnam Railway Administration, admitted that there were some outstanding problems with urban railway projects, including lack of management expertise and the implementation of related technological and EPC contracts.

According to Toshio Nagase, JICA is willing to lend its support to the city in carrying out routes No. 1 (Giap Bat-Gia Lam) and No. 2 (Nam Thang Long-Tran Hung Dao), which have received Japanese ODA. They have co-operated with the Ministry of Transport and Hanoi People’s Committee to create a feasibility study on the construction of urban railway route No. 5, which would link the southern part of West Lake to Ba Vi District under a public-private partnership.

JICA is also assisting HCM City’s Japanese-funded urban railway project No. 1 (Ben Thanh-Suoi Tien). JICA is studying to help Hanoi and HCM City to set up a company specialising in the operation, management and maintenance of urban railway routes.

When asked about the North-South high-speed railway, the JICA official said that they are in continuous co-operation with Vietnamese agencies to do feasibility study, but to date nothing specific has been decided.

He suggested prioritising the construction of key sections, as opposed to trying to build the entire route system at once.

S-Fone to pay their former workers VND43 billion
   
S-Fone's biggest shareholders, Saigon Post and Telecommunications Services Corporation (SPT), will pay former S-Fone employees their severance packages in installments.

S-Telecom Mobile Phone Center, whose network brand name is S-Fone, was established by SPT along with three foreign partners. In 2010 SPT and its South Korean partner, SK Telecom announced a change in their partnership from a business cooperation contract to a joint venture.

During the process of the changeover, 500 employees were let go due to a capital shortfall. The employees still have not received their salaries or insurance.

At a meeting held between the related parties on July 18, SPT said the total money they owe the former workers is VND43 billion (USD2.1 million), of which insurance accounted for over VND19 billion (USD910,000). The company vowed to try to pay all the owned money within 6-9 months.

Each month SPT will pay around VND5 billion to workers who retired on March 1. Beginning in August it will pay 1.5 month's salary to workers who were dismissed on June 11.

Hoang Si Hoa, General Director of SPT, said that the total amount, VND43 billion, is a large burden on the company during their restructuring.

Who benefits from the new fuel management?

No sooner had the Ministry of Finance transferred the right to adjust fuel retailing prices into the hands of wholesalers than the latter began to announce the very first price hike after five consecutive drops beginning in May.

Starting at 10pm on July 20 Petrolimex, the country’s largest fuel wholesaler, PV Oil, and Saigon Petro, all increased the retailing prices of A92 gasoline, diesel oil, and fuel oil by VND400 a liter.

The price hikes were made following the wholesalers’ proposal that was green-lighted by the finance ministry, in accordance with the new regulation released late June that allowed fuel wholesalers to propose fuel price adjustment through their own initiatives.

Although the ministries of finance and of industry and trade hold the final decision, industry insiders said the fiat is incomprehensible in the context that there is almost no competition in the fuel market, which is in fact a monopoly of the wholesalers.

“The new rule creates a hole in the market, which will only fatten the fuel wholesalers,” they said.

The most noteworthy fact is that such a regulation was once imposed in late 2009, but soon had to be withdrawn as it was the wholesalers themselves that declared the rule inefficient enough to create as competitive a market as they had expected.

Now it seems like there is a vicious circle in fuel market management, as the rule has been applied again.

Under the new regulation, wholesalers can adjust prices by different amounts based on their own input – output costs, but the first price hike saw them simply raise prices by the same amount, and at the same time.

“Such a move from wholesalers showed that consumers will hardly be able to enjoy competitive fuel prices,” an expert, who asked not to be named, said.

The new management scheme will create a huge advantage for wholesalers, as consumers are not able to obtain enough data to detect whether the price hike is reasonable or not, other industry players said on condition of anonymity.

Moreover, the finance ministry did not mention what penalty can be levied on wholesalers in case they provide illogical price adjustments, they added.

Since there has yet to be a real competitive fuel market, it is infeasible that wholesalers hold the right to adjust prices, commented economic expert Nguyen Minh Phong.

There are currently 13 fuel wholesalers in the country, but the market in fact lays in the hands of only two or three big shots, the expert said.

To date Petrolimex, PetroVietnam, and Petec hold more than 90 percent of the market share, which economist Ngo Tri Long said is a sign of monopoly.

“Once a company holds a very large market share, it’s a monopoly,” he said.

Long stated that under the Law on Price Management, it is the government who determines the prices of the monopolist commodities.

“In other countries, businesses can determine prices when the market is actually competitive, while our fuel market has never been competitive,” he said.

Long added that the current fuel management scheme is going against the price management law.

“The government should have sought to solve the issue of creating competitiveness in the fuel market,” he concluded.

 
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