BUSINESS IN BRIEF 21/4

Agriculture trade complex for Hanoi to take shape

The Ministry of Agriculture and Rural Development and the Korean Pan Asia Co., Ltd. are jointly studying the model of an agriculture wholesale and trading complex for Hanoi.

The ministry will coordinate with the Industry and Trade Ministry and the General Association of Agriculture and Rural Development to modernise the distribution system of the seafood and farm produce in the capital city.

Equipped with IT auction system, the complex is expected to reduce the go-betweens in trade to create bigger bring economic efficiency for local farmers, and help stabilize the market prices for their produce.

It is also hoped to supply quality goods for the 2019 Asian Sports Festival, and benefit exports via the remote auction system with the Republic of Korea and other countries.

Additionally, the Cold Chain System linking with the complex will be built to better the frozen food and materials distribution network.

A master plan for this project is scheduled to complete within this year.

Deputy Minister of Agriculture and Rural Development Hoang Van Thang highlighted the Memorandum of Understanding on the complex signed between the ministry and President of Pan Asia Huh Sul during his March visit to Vietnam.

Thang added that the company has also inked a similar document with the General Association on cooperation in the management and operation of the complex and human resource training.

Vietnamese seafood to China under pressure

China has emerged as the fourth largest importer of Vietnamese seafood lagging behind the US, Japan and the EU, and it is predicted to be a major Vietnamese seafood consumer in the coming years.

However, economists warn Vietnamese businesses will find it more difficult to break into this volatile market as competitive pressure is intensifying.

The Vietnam Association of Seafood Exporters and Producers (VASEP) reports China is a huge lucrative market for Vietnamese seafood for a number of reasons. It is close to the country which readily translates into lower transport costs. In addition, Vietnam can optionally transport products via land or sea routes on an economical and timely basis.

Furthermore, administrative quality procedures are not as strictly enforced as in other markets, reducing unnecessary administrative and other burdensome costs associated with long delays in transport and endless haggling and over technical matters.

Exports to China have surged sharply over the past 5 years, and shrimp exports have made a significant contribution to the common growth. The proportion of shrimp among total seafood exports to China rose from 13% in 2003 to 64% in 2011, 60% in 2012 and 66.6% in 2013.

Despite the global shrinking market, exports of key products to China have grown and flourished over the years, with shrimp rising 38.2%, Tra fish 23%, and octopus 4%. China is the fourth largest consumer of shrimp and the fifth of octopus from Vietnam.

China has recently introduced new regulations on protection of aquatic resources, but its seafood import-export scheme has not yet been completed.

Vietnamese businesses say the primary difficulty in trading with China is in the negotiation stage as the Chinese often bargain a lot and the final price is often the same as the starting price without much dickering.

China also strictly exercises tight control over the foreign currency in transactions so there are only a handful of companies allowed to process transactions with US dollars. In addition, China has not widely implemented the L/C payment method.

Since 2012, China has required all foreign seafood businesses to register information with Chinese authorities if they want to penetrate this market. For instance, Vietnamese seafood businesses have to register information with the Certification and Accreditation Administration of China (CNCA).

According to VASEP, cumbersome customs procedures are the biggest obstacle to Vietnamese seafood businesses. Meanwhile, Chinese customs procedures at the border gates are often unpredictable. For instance, China is ready to impose 100% of import tariffs on goods shipped through the Beilun border gate, but cut in half the levels through waterway transport.

Combating illegal trading poses yet another inherent risk facing Vietnamese businesses in the sector.

Retail traders often purchase unprocessed seafood products, especially shrimp and octopus, and transport them to China illegally, causing shortages of materials for domestic processors, negatively affecting contracts signed with partners.

By doing so, it is difficult to control the level of antibiotic residue on shrimp and other seafood products, badly tarnishing the reputation of Vietnamese seafood and more importantly creating imbalance in the seafood sector’s export structure.

China is seeking seafood suppliers to feed its population, creating plenty of opportunity for Vietnamese seafood producers. However, domestic businesses are advised to carefully study their partners if they want to increase their market share in China.

VN firms lax in using trade barriers

Vietnamese exporters are usually passive in pursuing trade-related lawsuits, while during difficult economic times, other countries started actively using trade defence instruments to protect their domestic production.

This observation was highlighted at a recent conference on effective response and use of trade defence instruments held in HCM City by Viet Nam Competition Authority (VCA) and European Trade Policy and Investment Support Project (EU-MUTRAP).

Experts agreed that the increased use of trade defence instruments in other countries led to Vietnamese products being stuck in more anti-dumping lawsuits, especially in the case of its key export products and key importing markets.

According to VCA, between 1994 and 2013, Vietnamese enterprises were involved in 74 trade remedy cases, including 43 anti-dumping cases.

During the 15 years between 1994 and 2007, there were 33 cases against Vietnamese exporters, but in the last five years, there were reportedly 38 cases in which the defendants were usually small and medium enterprises or foreign direct investment companies employing many labourers.

As published in Cong Thuong (Industry and Trade) newspaper last week, Dinh Thi My Loan, the chairwoman of the Viet Nam Chamber of Commerce and Industry's consultation council for international trade defence stated that the lawsuits caused losses to Vietnamese enterprises, including increased costs to pursue the lawsuits, thus reducing their competitiveness, threatening reduction in export value, or even losing markets.

"As Viet Nam is integrating deeper into the international economy, its access to free trade area agreements can not only help to boost exports and expand markets, but also face more trade defence lawsuits," Loan noted.

According to Deputy Head of Trade Remedies Board under VCA Pham Huong Giang, Vietnamese exporters adopted a passive approach towards lawsuits, as they did not have sufficient information and clear awareness about the risks of trade defence lawsuits and their consequences.

Moreover, they did not follow the lawsuits properly.

Giang asserted that the enterprises need to utilise trade defence instruments through increasing their understanding about the defence trade law.

Additionally, they have to participate in appealing procedures in a serious and responsible manner as well as cooperate with investigators and seek help from the state authorities and Viet Nam's trade counsellors based in foreign countries.

She added that currently, Viet Nam has set up an early warning system aimed at providing enterprises with information about key markets, their regulations, import-export data, and warnings on possible lawsuits.

As of now, the warning system provides information related to the major markets of US, EU, Canada, Brazil, India, Australia, Korea, and Japan and 11 key export products. Enterprises can find further information at the website canhbaosom.vn (Earlywarning.vn).

Nation in need of industrial push

Vietnam must work harder to industrialise, said United Nations researcher Ludovico Alcorta at the launch event for the latest UN Industrial Development Organisation (UNIDO) Industrial Development Report (IDR 2013).

Vietnam, which aims to become an industrialised country by 2020, "has been industrialising rapidly in the last few years," Alcorta said. This was why UNIDO chose it for the launch of the report.

Le Huu Phuc, deputy director general of the Ministry of Industry and Trade (MoIT)'s International Cooperation Department, agreed with Alcorta that it was necessary for Vietnam to adjust its industrial development policies to grow sustainably.

The new report's key findings and policy implications were "relevant to Vietnam " as the country sought "to find the appropriate policies to address short-term issues", said Phuc.

According to the MoIT official, the country is seeking ways to improve national competitiveness, promote growth, economic structural change and employment.

The country needs to prepare for a structural change because "at some point the country will face decreasing returns, which means the industry will not grow any more," the UN expert said. "Investing in technology is a way to avoid the middle-income trap".

Vietnam is currently a lower middle-income country with per capita income of 2,200 USD.

Experts warn that without major economic structural improvements, the country will fall into the middle-income trap.

One of the report's key themes is that countries need to move from lower-productivity to higher-productivity sectors, industries and activities if they want to develop industrially. The UN expert suggested the country industrialise its agriculture sector to make it more productive and expand the food and beverage industry.

A panel at the event underscored the role of manufacturing and its transformation in employment generation and drew policy implications for inclusive and sustainable industrial development in Vietnam . The country sees inclusive and sustainable industries as a great development opportunity as is stated in the Vietnam Socio-Economic Development Strategy for 2020, according to UNIDO representative in Vietnam Patrick Gilabert.

Training a skilled workforce is essential for sustainable industrial development, according to Alcorta.

Concurring with Alcorta, Ha Xuan Quang, rector of the Hanoi Industry University, said industrial development needed a skillful workforce, yet Vietnam lacked this key resource. He praised the report as a helpful reference for creating policies on training a workforce.

The report, according to vice chairwoman of the Vietnam Textile and Apparel Association Dang Phuong Dung, was an opportunity for Vietnam to "review economic development policies" to find out what challenges the country faced and what breakthroughs could potentially be achieved.

The report provides a detailed account of the structural changes that have taken place over the past 40 years. It also contributes a solid foundation to the debate on jobs in today's world as it indicates that manufacturing provided 470 million jobs, employing around 16 percent of the world's workforce of 2.9 billion in 2009.

Investors returns to high-end real estate

With low deposit interest rate and less attractive investment in other sectors, many investors have returned to the high-end real estate segment, the Vietnam Business Forum reported.

Investment activities in Vietnamese real estate market have mostly “disappeared” in recent years. Many housing developers suffered heavily from the bursting of real estate bubbles.

Trading in real estate has improved and prices stabilised, helping to boost customers’ confidence in the market, the weekly magazine of the Vietnam Chamber of Commerce and Industry quoted Minister of Construction Trinh Dinh Dung as saying.

Particularly, in the first two months of 2014, in Hanoi, there were about 1,300 apartments successfully traded, and in Ho Chi Minh City about 1,000 apartments.

The latest report by Ministry of Construction about real estate market showed some indicators of the 2013 real estate market considerably improved. In the first months of 2014, rapid inventory reduction rate marked 2.8 percent and 4.32 percent in Hanoi and Ho Chi Minh City respectively.The total remaining inventory decreased to nearly 93,000 billion VND.

In fact, volume of real estate transaction has recently improved. Especially, since the beginning of 2014, investors have returned to luxury real estate, which was mostly frozen in recent time. Thang Long Number One project (Number one of Thang Long Boulevard). Just in a short time open for sale, about 200 apartments were sold. Of overall 1,000 apartments, there are now only over 100 apartments left.

The project is favourably located, opposite Big C supermarket, near the National Conventional Centre, Amsterdam Secondary School. Especially, the project possesses beautiful landscape.

Invested by Viglacera Corporation, the project consists of 40 floors and 3 basements. The 20th and 21st floors being for green space makes this project stand apart from others.

According to Phan Thanh Diep, Director of Viglacera Real Estate Trading Company, trade volume of the project has been considerably good because of good location and reasonable price. Especially, the project is ready to be handed over to customers in the third quarter of 2014.

Hoa Binh Green City (Minh Khai, Hanoi) is another typical example when just in a short time, the project had sold over 400 apartments. There are now only about 100 apartments available.

Sharing with the press, Phan Xuan Can, Chairman of Sohovietnam assessed that commercial housing segment has shown a warming sign since late 2013.

Sharing the same viewpoint with Can, Le Minh Dung, Director of CB Richard Ellis Group Vietnam (CBRE) also said that currently luxury real estate segment has revealed positive changes.

“It can be proved by higher purchasing rate of luxurious apartment in 2013 compared to 2012. Inventories in the real estate market have continuously decreased since 2013. Presently, most inventories in the real estate market belong to uncompleted projects,” Dung said.

In Hanoi, Dung said in projects whose apartments are going to be handed over like Thang Long Number One, Star City Le Van Luong, Times City, etc have a high rate of successful transactions.

IT Optimization At A Time Of Economic Malaise

MISA Joint Stock Company has been awarded the Top Enterprise of the Year 2013 award in the “Outstanding product and service suppliers” category by Quang Trung Software City Development Corporation. The efficiency of the applied software it supplies has proved its worth.

In any economic turmoil, there is no place for wastefulness. This is especially true for all businesses as they optimize their existing resources, especially information technology (IT), including management supporting software solutions that help enterprises cut costs. Software application helps businesses not only improve management efficiency and labor use but also minimize operating costs.

After launching Google Drive – a file storage and synchronization service using cloud computing, Google has recently introduced “Add-ons” apps for Google Drive. This new service can generate considerable benefits for end-users by storing all files in one place.

As regards applications for businesses, a remarkable number of service software programs in the form of cloud computing have been introduced over the past couple of years. MISA is a pioneer in this aspect. As a supplier of accounting software products in Vietnam, MISA not only puts financial apps in the cloud but also offers a corporate management software program called Enterprise Resource Planning (ERP) for businesses via AMIS.VN. The site helps enterprises embrace comprehensive corporate management solutions and save 30% of costs of other software products.

AMIS.VN of MISA has included accounting, human resources and sales management software into a unique, connected system. The system enables a business to transfer information from related modules from one user to another, thereby helping standardization among teams in the company, save time, effort and costs, and minimize possible errors in data processing. In addition, working online allows leaders to supervise the operations of their company anytime and anywhere as long as Internet access is available.

Ly Truong Chien, chairman of Tri Tri Group and member of the International Council of Management Consulting Institutes, said: “A leader’s duty is making decisions. To make a proper decision, a leader must always have updated information. MISA’s AMIS.VN meets such a demand. It helps leaders get comprehensive information from accounting to human resources and sales so that they can make timely decisions.”

Implementation cost will concern enterprises most when it comes to making an investment decision. When launching AMIS.VN, MISA found that users do not need to invest in servers or software installation, upgrade and maintenance. They can make use of modules available at AMIS.VN and pay exactly for data capacity they use. Customers do not have to pay for updates.

Thai Vu Hoe, chairman of BBS Land, said: “AMIS.VN is a perfect product for business management, from financial to personnel and customer management. Moreover, the use of cloud computing keeps us from worrying about losses or disruptions of data whenever we are off or our computers crash due to viruses. We can work anywhere, anytime on any device, and this helps bolster work efficiency.”

AMIS.VN is wholly free of charge for startups while other customers can use it free for a certain period of time. So, users simply register at www.amis.vn.

Two new sections of Noi Bai-Lao Cai highway opened

Two road sections running through the northern provinces of Vinh Phuc and Phu Tho, parts of the Noi Bai – Lao Cai highway, were opened on April 6.

The first 22.12km section, worth nearly 2.3 trillion VND (108.5 million USD), links Vinh Phuc’s Tam Duong, Lap Thach and Song Lo districts and Phu Tho’s Viet Tri city.

The other, stretching 31.64km in Phu Tho province, was built at a cost of some 2.4 trillion VND (113.6 million USD).

The operation of these two segments is expected to ease traffic pressure from Hanoi to provinces further to the north.

The 245km Noi Bai-Lao Cai highway traverses Hanoi and the northern provinces of Vinh Phuc, Phu Tho, Yen Bai and Lao Cai. Its construction started in 2009 with a total investment of over 1.2 billion USD.

Excluding the new ones, three of the total eight sections have become operational so far.

As an important project in the Kunming-Lao Cai-Hanoi-Hai Phong road corridor, the highway is part of a cooperation programme among six countries in the Mekong Sub-region - Vietnam, Laos, Cambodia, Thailand, Myanmar and China.

Gov’t issues March regular resolution

Lending interest cuts in favor of business operation, speeding of SOEs equitization process, disclosure of corruption cases were key topics of the Government’s March regular resolution.

According to the newly-approved resolution, the Government asked ministries, agencies and localities to drastically implement Resolution 01/NQ-CP, dated on January 2, 2014 on major tasks and solutions guiding and directing the realization of the Plan for socio-economic development and state budget estimate in 2014.

The State Bank of Viet Nam is in charge of adjusting interest rates for old loans in order to extricate difficulties for the business circle and upholding the role of the Viet Nam Asset Management Company (VAMC).

The Ministry of Finance works with related ministries, agencies and localities to strictly control refunds of VAT and collect tax.

The Ministry of Industry and Trade is responsible for early conclusion of the Trans-Pacific Partnership Agreement (TPP), the European Free Trade Association (EFTA), the Viet Nam-Korean Free Trade Agreement (VKFTA) and the FTA with the Customs Union of Belarus, Kazakhstan and Russia.

The Government asks the Ministry of Agriculture and Rural Development to positively implement the Project on agricultural restructuring and keep a close watch on the flu epidemic.

Ministries, agencies and localities accelerate the implementation of the Master plan on economic restructuring with a view to attracting private and foreign resources, raising higher national competitiveness and improving the business environment.

The Government also requested the Ministry of Home Affairs to define and publicize the Public Administration Reform Index 2013 (PAR INDEX 2013).

The Government Inspectorate focuses on fields which are vulnerable to corruption and handles prolong complaints and accusations.

PVCFC, AGPPS join forces to form rice value chain

PetroVietnam Ca Mau Fertilizer Company Limited (PVCFC) and An Giang Plant Protection Joint Stock Company (AGPPS) on April 3 signed a strategic cooperation agreement on sustainable agricultural development as part of their joint efforts to complete a rice value chain.

The chain is aimed at raising incomes for the farmers who work with AGPPS. According to the pact, the chain also includes supply of fertilizer, insecticide and latest technological applications as well as rice consumption for the farmers participating in large-scaled paddy fields developed by AGPPS.

AGPPS will be a sole distributor of the products which are jointly developed by the companies and a strategic distributor of the products that PVCFC turns out in Cambodia.

Bui Minh Tien, general director of PVCFC, said the partnership would support the two sides in carrying out production and trading activities, including providing fertilizer for farmers.

Huynh Van Thon, chairman and general director of AGPPS, said the companies had joined hands to add value to Vietnam’s farm produce at home and abroad.

“As a result, this will help farmers improve their lives and develop a sustainable agriculture sector,” Thon said.

ODA projects cost dearly

Tomoyuki Kimura, country director of the Asian Development Bank (ADB) in Vietnam, has said construction costs of local projects funded by official development assistance (ODA) loans are often higher than original estimates.

According to local media, the construction cost of one kilometer of expressway here in Vietnam is three times higher than in other countries. Many infrastructure projects had been delayed for various reasons, with slow site clearance as the main cause, Kimura responded to the Daily’s question at a news briefing held by the ADB in Hanoi on Tuesday to publicize its Asian Development Outlook 2014 report.

Earlier, the nation suffered high inflation, so construction costs soared due to delays of one to two years. That was why investment costs of infrastructure projects in Vietnam were higher than elsewhere in the world, Kimura explained.

For instance, the investment capital for Nhon-Hanoi Station urban railroad project funded by France, the ADB and European Investment Bank is predicted at nearly 1.3 billion euros, a strong rise from the previous projection of 783 million euros.

Nguyen The Thao, chairman of the Hanoi People’s Committee, used to get mad at the management unit of the project over the long delay.

Victoria Kwakwa, country director of the World Bank (WB) in Vietnam, also shared the   view  at a recent interview with the Daily. In a recent study, Tran Dinh Thien, director of the Vietnam Economics Institute, asserted the higher construction costs of many road and bridge projects in Vietnam and other countries.

Thien said the construction cost of a kilometer of expressway was US$5.8 million in the U.S. in 2002, US$3.7 million in China between 2003 and 2006 and US$5.5 million in Indonesia in 2007. Meanwhile, the HCMC-Trung Luong Expressway cost US$9.9 million a kilometer in 2010, the HCMC-Long Thanh-Dau Giay US$18.3 million and the Ben Luc-Long Thanh US$28.2 million.

Recently, the State Audit of Vietnam uncovered that the cost of the 56-kilometer Cau Gie-Ninh Binh Expressway was VND5 trillion higher than originally estimated, up from VND3.7 trillion in 2004 to VND8.9 trillion in 2010.

According to the Ministry of Transport, the total investment of traffic projects has rocketed by an average 180% against the initial approval over the past years.

Funding for the first phase of the Ho Chi Minh Highway soared 292% while that for the HCMC-Trung Luong, Cau Gie-Ninh Binh, Quan Lo-Phung Hiep and Nam Song Hau projects were up 50-80%.

Meanwhile, Vietnam’s infrastructure quality is poorer than most of the other Southeast Asian nations. Between 2011 and 2020, Vietnam needs around US$170 billion for technical infrastructure for electricity, water supply, drainage and traffic, Kimura said.

In general, ODA projects have been facing risks due to corruption in auctions and procurement contracts. “We are aware of the problem and there should be a protection mechanism for partners to follow the ADB’s policies. The ADB and the Vietnamese Government would act to secure transparency for ODA projects…,” he added.

Meat, milk prices go up this month

Prices of red meat, milk and some other items subject to price controls in HCMC have edged up 5-7% this month, with producers attributing this to higher input costs.

Meat prices are up VND1,000-6,000 (4.7-28 U.S. cents) per kilogram while milk items are 5-7% higher than on previous days.

Nguyen Quoc Chien, head of the HCMC Department of Finance’s price office which is responsible for pricing matters in connection with the products under the price stabilization program, said the higher prices of those necessities resulted from the increases in input costs.

Nguyen Tan An, deputy director of Vissan Co., Ltd, a leading food processing firm in HCMC, said pork prices inched up before the Lunar New Year holiday, or Tet, early this year and then went down. However, the prices began edging higher early last month.

An said live pigs now sold at VND51,000-52,000 (US$2.42) per kilo, up 20% year-on-year, and 15% versus a month ago.

An said input costs had been up since the pre-Tet period but enterprises had managed to keep their prices stable as committed to the price stabilization program.

“The old prices were applied from early September last year. From April 1 this year when a new stabilization program kicked off, businesses were allowed to hike their selling prices and the new prices just help them break even,” said Chien.

Besides red meat and milk, other products falling under the program like pharmaceuticals, schooling items, sugar and food are retailed at the same prices as before April or at lower prices.

Participating enterprises of this year’s program must sell their products at prices 5-15% lower than those of similar products available on the market. They can adjust up their prices if input costs are up 5-10%.

In case the market prices are down around 5%, they should either lower their product prices or launch discounts for consumers.

Local-global gold price gap narrows in Q1

The disparity between global and domestic gold prices slid sharply in the first quarter of this year as the mild increase in local prices of the precious metal failed to catch up with the global uptrend.

Political tension in Ukraine pushed the global price of gold up to over US$1,390 an ounce on March 14, the highest in six months, before declining to more than US$1,300 an ounce on March 27. Closing the first quarter, gold stood at US$1,284 per ounce, down over US$100 compared to the record level.

Meanwhile, domestic gold just went up slightly on March 14, constricting the gap between local and international levels to VND1 million per tael, which equals to 1.2 troy ounces.

During the first quarter, the global gold price jumped 5% while the domestic gold price inched up a mere 1.1%. At the end of March, listed gold prices at Saigon Jewelry Co. (SJC) rose by VND400,000 per tael against early this year.

Both local and global prices dropped last week. However, as the global downtrend outpaced that in Vietnam, making a tael of gold VND2.6 million higher in this country than in global markets.

The domestic gold price for selling closed on April 3 at VND35.35 million a tael, slightly up VND20,000 compared to the day before. However, the yellow metal lost VND140,000 a tael against late March, narrowing the gap of prices at home and abroad to some VND2.46 million a tael.

According to representatives of local gold trading firms and banks, gold transactions were sluggish despite falling prices, a trend that was quiet different from previous years when people rushed to buy the precious metal when it prices were down.

SJC reported the lowest transaction compared to the entire last year. The country’s leading gold trading firm based in HCMC sometimes saw its transaction volume of just around 700 taels each day, a whopping drop compared to last year’s lowest volume of 1,500 taels.

Movements on the gold market went in line with expectations of administration agencies, with investors turning their back on the yellow metal while the gap between global and local gold prices reduced.

Banks had stopped all gold lending and mobilization activities, so they were no longer key players that could cause strong fluctuations on the gold market as in previous years.

Speaking to the press at the regular meeting in March, Nguyen Quang Huy, director of the central bank’s foreign exchange department, said that gold bar trading organizations have reported net buying in recent times.

Since early this year, the central bank has not held any gold bar biddings due to low market demand. The agency will intervene in the market in case of strong price fluctuations.

In the coming time, experts said that gold auctions should become a backup plan, meaning that the central bank will only sell gold given supply shortage and vice versa. At present, the gold market should be let to adjust itself.

Higher Phu My Bridge tolls forthcoming

The HCMC government has approved in principle to increase Phu My Bridge tolls but the increase must be passed by the HCMC People’s Council.

HCMC chairman Le Hoang Quan agreed on the upward adjustment of tolls at Phu My Bridge in accordance with Circular 159/2013/TT-BTC dated November 14, 2013 issued by the Ministry of Finance.

The HCMC departments of finance, and transport and other relevant agencies will work on a revised toll collection plan for the cable-stayed bridge for submission to the HCMC People’s Council for approval.

If the council’s approval is forthcoming, the higher tolls take effect from January 1, 2014.

The current lowest fee is VND10,000 for vehicles of less than 12 seats while the highest rate is VND80,000 for container trucks. The new toll rates will be VND15,000 and VND200,000 respectively (see box of toll rates).

Last month, HCMC chairman Quan told relevant agencies to solve all the remaining problems with the bridge project in the same month.

The initial investment capital of Phy My Bridge was VND1.8 trillion as approved by the HCMC government in 2004 but was adjusted up to VND2.077 trillion in 2007. However, the auditing firm confirmed the investment at VND3.25 trillion.

As toll collection was not enough for Phu My Bridge BOT Corp. to repay its loans, the company in 2011 suggested extending the toll collections or lending it VND1 trillion to pay debts over five years; otherwise, it would hand over the bridge to the city government in accordance with an agreement signed by the two sides.

Vietnam shipping lines hit by costly dispute with S.Korean contractor

The Vietnam National Shipping Lines, commonly known as Vinalines, has suffered monetary damage worth hundreds of thousands of US dollar after a vessel in its fleet was held by a South Korean company over a payment dispute in a sluggish transshipment port project.

Vinalines Sky, a cargo ship belong to the state-run shipping line, was held as “hostage” by SK E&C in mid-March, following a ruling by the Vietnam International Arbitration Center (VIAC) that Vinalines has to pay VND135 billion (US$6.37 million) in steel pile purchase and late payment interest for the South Korean company.

SK E&C has been contracted to supply the said steel piles for the Van Phong transshipment port project, based in Vietnam’s coastal Khanh Hoa Province, but Vinalines refused to check and take over the equipment and settle payment, saying the piles are below standard.

Vinalines Sky is a 42,714-ton cargo ship that was manufactured in Japan in 1997. The detained ship has caused $400,000 damage for Vinalines.

Vinalines is considering paying deposit to release its vessel, even though the detention of the ship over the payment dispute “is beyond normal limit,” said Nguyen Truong Son, director of the shipping line’s Project Management Board No.1.

Vinalines refused to check and take over the steel piles imported by SK E&C due to a number of conflicts, sending the South Korean company to put its Vietnamese partner to the VIAC.

The VIAC then ruled that Vinalines clear the VND135 billion payment for the piles that the Vietnamese company said do not meet the conditions to be checked and taken over.

The Vietnamese shipping line also lodged a lawsuit to the Hanoi People’s Court, asking to void the VIAC ruling.

“While the Hanoi court has yet to open a hearing for the case, the detention of Vinalines Sky is against the law and SK E&C has to be held responsible for all financial damages of Vinalines from this detention,” Vinalines said.

Son, the Vinalines official, said the batch of 544 steel piles supplied by SK E&C does not meet the quality standard to be checked and taken over.

The piles do not meet standard and lack the manufacturing records, he said.

In an assessment report, SK E&C also admitted that some of the piles were rusted during transport, and were later fixed by paint coating. But this solution was rejected by Vinalines.

The Van Phong transshipment port project broke ground late 2009 but was suspended in August 2010 due to a series of issues, including the pipe payment dispute between Vinalines and SK E&C.

Vietnamese goods make way into rural areas

Promotion and expanded distribution chains are vital measures to help Vietnamese goods penetrate rural areas more easily.

Vietnamese products has won lots of rural consumers thanks to various sales promotion programs such as Buy Vietnamese Goods which was seen as the a positive solution to Vietnamese goods sales in rural areas and bridging enterprises and rural consumers, said the Vietnam Economic News.

According to the Ministry of Industry and Trade’s statistics, since the implementation of rural Vietnamese goods sales programmes in 2009, localities across the country have conducted 1,150 rural sales trips, involving 11,500 business participants, attracting 2,288,731 local visitors and registering total sales revenue of more than 1.7 trillion VND.

Goods featured in these programmes included food, clothes, shoes, household equipment, and notebooks of clear origin, varied design, reasonable prices and appropriate after-sales services.

In addition to sales trips, Vietnamese producers have also managed to insert their products into rural distribution systems. To date, domestic brands such as My Hao, Kinh Do, and Vinamilk have gradually become familiar to rural consumers.

Despite initial positive successes, rural sales programmes are still facing difficulties. “The rural market is currently not attractive enough to businesses due to low purchasing power and high transportation costs. Currently only 10-15 companies producing consumer goods are commonly found in rural and remote areas including Unilever, Dutch Lady, P & G, Pepsi, Nestle, Vinamilk, Vina Acecook, My Hao and Kinh Do,” said Director of Business Studies and Assistance Center (BSA) Vu Kim Hanh.

While dairy and dishwashing products have dominated the rural market, textiles and footwear have not due to relatively high prices. For example, Viet Tien branded shirts are commonly priced around 300,000 VND, making them unaffordable for most rural consumers.

In addition, the construction and expansion of rural distribution systems also require appropriate strategy and considerable investment, which is a great obstacle for small and medium enterprises.

Ho Thi Kim Thoa, Deputy Minister of Industry and Trade and Deputy Director of Buy Vietnamese Goods Programme Steering Committee said: “This year, we will boost the fight against smuggling and trade fraud in order to protect domestic production and consumer rights.”

“In addition, we will continue to enhance the programme through asking the government support, for example, in the form of a national action strategy to promote Vietnamese goods consumption until 2020, with a vision towards 2030,” she said, adding that the Ministry of Industry and Trade will organize a vote for 20 best Vietnamese goods items and have support mechanism to increase their competitiveness.

“The most important factors to help businesses dominate the rural market are businesses should produce high quality products at competitive prices; consider traditional practices and ethnic culture in designing models; and promote advertising activities along with gradually expanding rural retail networks,” Chairman of the Central Committee of the Vietnam Fatherland Front Nguyen Thien Nhan noted.

He added that management agencies should improve current management control systems for enterprises in the application of standard systems for goods. These measures will probably help improve rural purchasing power of Vietnamese goods.

Binh Duong fosters PCI improvement

The southern province of Binh Duong is making every effort to improve the environment for investment, production and business in a bid to boost its provincial competitiveness index (PCI), according to Chairman of the provincial People’s Committee Le Thanh Cung.

The PCI ranking recently announced by the Vietnam Chamber of Commerce and Industry shows that the PCI of the province, one of the biggest economic hubs in the south fell behind 29 other localities nationwide. Despite this, the locality’s investment environment has seen a remarkable improvement in recent times.

According to Mai Hung Dung, director of the provincial Department of Planning and Investment, there are over 2,276 foreign enterprises operating in the province, making up more than 80 percent of the local industrial production sector.

In the first three months of 2014, foreign direct investment (FDI) poured into the locality accounted for 44 percent of the country’s total FDI, up two times against the same period last year.

Preliminary data showed that the production and export index saw strong increases in the first quarter of this year, with 12.3 percent and 12.7 percent rises in industrial production and export respectively.

The province has licensed 363 domestic enterprises worth 2 trillion VND (94 million USD) so far this year, while up to 56 FDI projects were granted investment licenses and registered to raise existing capital, with a total investment of 728 million USD during the last three months.

The performance shows investors had faith in Binh Duong’s investment environment and that the province is eager to support investors as part of its efforts to continually improve its business climate

The province recorded GDP growth of 12.8 percent last year and is targeting 13 percent growth for this year. It is predicted that the industry sector will grow 16 percent, trade and services 20 percent, and agriculture 4 percent this year, up on last year’s results of 8.7 percent, 19.6 percent and 1.8 percent respectively.

The PCI programme is part of the US Agency for International Development’s Vietnam Competitiveness Initiative (USAID/VNCI), which has been implemented since 2005. All 63 provinces and cities have used PCI to devise their own economic policies and development strategies.

Lobster industry struggles due to inadequate planning

The lack of industrial animal feed for lobsters, aquaculture zoning plans and lobster fry are causing major problems for the country's lobster farming industry, experts say.

Speaking at a seminar held in Phu Yen on Monday, Nguyen Tri Phuong, deputy director of the Phu Yen Department of Agriculture and Rural Development, said the province has been developing the lobster farming industry for 30 years but faces several challenges, including fry shortages and disease which are putting farmers in a vulnerable position.

Currently, the supply of lobster fry depends on what is caught at sea as lobster fry is yet to be produced in farming conditions successfully.

According to the Directorate of Fisheries, the country catches 7.5-9 million lobster fry every year, but at the moment demand is outstripping supply and the country has had to import lobster fry from neighbouring countries.

Participants at the seminar said most lobster breeding provinces do not have zoning plans for lobster aquaculture and in some areas, farmers are breeding lobsters in high density, breaching zoning plans.

Vo Van Nha of the Research Institute for Aquaculture No. 3, said to develop lobster culture sustainably, it requires the combined effort of a number of factions, as well as research into to producing lobster fry artificially and improving farming techniques.

The Institute of Aquaculture No. 3 has been researching lobster fry production for 20 years but so far, has not been successful.

Pham Khanh Ly, deputy head of the Ministry of Agriculture and Rural Development's Aquaculture Department, said provinces that have natural lobster fry resources must draft zoning plans for catching lobster fry to protect the supply and fishermen who catch lobster fry should be managed through licensing.

The Ministry of Agriculture and Rural Development will this year draft up a comprehensive plan for developing lobster cultivation between now and 2020, he said.

The ministry plans to implement measures for applying farming techniques and preferential policies such as loans, aquaculture extension and market development, he said.

The country breeds more than 43,000 lobster cages with a total output of 1,400 tonnes worth VND3.5 trillion (US$166 million) a year, according to the Directorate of Fisheries.

The country breeds several kinds of lobsters, including ornate spiny lobster, longlegged spiny lobster and rock lobster.

Lobsters are raised in the central provinces of Phu Yen, Khanh Hoa, Ninh Thuan and Binh Thuan in Viet Nam, which is one of few countries that has lobster farming.

Viettel Post covers itself with glory

The military-run Viettel Post Joint Stock Corporation has been listed among Vietnam's top 500 fastest-growing enterprises for last year.

At last week's announcement of the list of 2013's 500 fastest-growing enterprises in Vietnam (FAST500), Viettel Post was the sole small and medium-sized enterprise operating in the postal and delivery sector to be ranked.

The FAST500 rating was compiled by locally-owned ranking firm Vietnam Report and Vietnamnet.

Only domestic firms that have evidence of profitable operations for four consecutive years and a clean record for following government policies are ranked for inclusion on the list.

In 2013, despite the economy's difficulties, Viettel Post's revenues topped $54 million, up 24 per cent against 2012. Its after-tax profit increased 17 per cent, while labour productivity rose 29 per cent on-year. It contributed $2.58 million to the state budget, up 18.48 per cent against the previous year.

Viettel Post has targeted revenues of $69 million this year, up 30 per cent against 2013. The corporation's express delivery has set a 37 per cent growth target, with stationery services looking for a 50 per cent increase in growth.

Viettel Post's pre-tax reached $1.58 million, with post-tax profits worth $1.18 million, each up 12.68 per cent on-year. The company's return-on-equity ratio hit 21.4 per cent and income per share rose 12.66 per cent on-year. The company paid a dividend rate of 15 per cent.

This year, Viettel Post is targeting a $2.9 million contribution to the state coffers, up 12 per cent on-year.

Big Chinese signs: NO!

Concerned agencies in many Vietnamese provinces and cities are inspecting and punishing many restaurants and other eateries that use signboards with contents written entirely in Chinese, which violates applicable regulations.

In north-central Ha Tinh province, on the short road linking Ky Long and Ky Lien communes, Tuoi Tre reporters found about 40 signs of various sizes, many of which contain Chinese words only.

Owners of restaurants that use such signs told Tuoi Tre that many Chinese are working and living in the area and they have become regular clients of these eateries.

Nguyen Loc Hang, head of the Culture and Information Department of Ky Anh District, said, “We have first handled cases in which signboards are written entirely in Chinese, as this is a serious violation of current regulations.”

The Vietnamese law mandates that any sign must be presented in Vietnamese, and whenever foreign languages are used, they must be placed below the Vietnamese equivalents.

The department will later deal with other signs on which the sizes of Chinese letters are equal to or bigger than those of Vietnamese equivalents, Hang said.

In northern Hai Phong city, numerous signboards with Chinese words violating the foresaid regulation were seen on many streets, especially Van Cao in Hai An District and Quang Trung in Hong Bang District.

Pham Van Luan, chief inspector of the city Department of Culture, Information and Tourism told Tuoi Tre that the agency once handled such violations in late 2013 and forced owners of violating signs to remove them.

However, the situation has repeated recently and the department are strengthening their examination and punishing violators, Luan said

“Currently, the highest fine for violations on regulations on signboards is VND10 million (US$470) for individual violators, and VND20 million for organizations,” he added.

Such violations have also been seen in some other localities including south-central Binh Thuan province and central Da Nang City, where local authorities have been dealing with violators.

At the 15th conference of the Da Nang City Party Committee held on Wednesday, Party Committee Secretary Tran Tho said, “It is unacceptable for such hospitality businesses to create a ‘Chinatown’ in the city.”

He directed concerned agencies to immediately inspect and strictly penalize all signboard regulation violators.

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

Vietnamese seafood, trade barriers, real estate, rice value chain
 
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