BUSINESS IN BRIEF 13/5

Steel giant chairman faces sack due to poor performance

Vietnam Steel Corporation (VNSteel) has been warned that if it continues to run at a loss this year, its management, particularly the chairman could be replaced.

Controversy has dogged the corporation. Prior to the company’s shareholder annual general meeting in late April, its general director was replaced on the back of poor performance leading to the company’s running at losses for the past two years.

VNSteel’s cumulative losses mounted to VND830 billion ($39.5 million) in 2012-2013 period. This year, the company sets to post VND12.7 trillion ($605 million) in net revenue and approximately VND36 billion ($1.7 million) in pre-tax profits.

Poor performance has been blamed for the company’s failure to secure a foreign strategic partner despite VNSteel holding its initial public offering back in 2011. Four foreign investors, including well-known international players such as Japan’s Nippon Steel Corp and Marubeni Itochi Steel Inc., Russia’s Novolipetsk Steel and  

Luxembourg-based Evraz Group SA all initially expressed a desire to become the company strategic partners, but none pursued the opportunity.

Techcombank receives prestigious international awards

Vietnam Technological & Commercial Joint Stock Bank (Techcombank) has become the first and only bank in Vietnam honoured by Global Banking & Finance Review- a globally leading online portal in banking and finance of UK- with four category awards in 2014, namely “Best Internet Bank Vietnam 2014”, “Best Retail Bank Vietnam 2014”, “Best Customer Service Bank 2014” and “ Best Commercial Bank Vietnam 2014” for its outstanding achievements in retail, commercial, and internet banking; simultaneously well satisfying the needs of individuals and enterprises.

Along with many awards on technology as Asia Award 2013 on “E-commerce solutions for bridging digital divide” by Asia Pacific Council for Trade Facilitation and Electronic Business (AFACT), “Best Internet Bank Vietnam 2013” by Global Banking & Finance Review, “Best Retail Bank Vietnam” in 2011, 2012, 2013 by Asian Banking & Finance, “Tin & Dung” award 2013 by Vietnam Economic Times, and many others domestic and international valuable awards, these four awards by Global Banking & Finance Review again recognise the bank’s strong commitments to investing in technology infrastructure, improving its products & services, hence, better satisfying the increasing demands of customers, and contributing to the development of Vietnamese businesses.

Cai Mep-Thi Vai port complex tightens global security

Vietnam Customs introduced a radiation screening system for goods at ports in the Cai Mep-Thi Vai port complex on May 9.

Accordingly, goods transited via each port in the Cai Mep- Thi Vai port complex will be screened to detect radiation. The system has been installed at three ports including Tan Cang-Cai Mep port, Tan Cang-Cai Mep International Container Port and SP-PSA International Port.

The project aims to prevent the illegal transport of nuclear and radiation materials at the Cai Mep-Thi Vai port complex under the framework of the Megaports Initiative between the US and Vietnam.

Vietnam’s participation in the initiative has affirmed its goodwill in protecting and contributing to global and national security. Since the Vietnamese, Prime Minister agreed in September 2010 to implement the Megaports Initiative at the Cai Mep-Thi Vai port complex,

Vietnam Customs and the US Department of Energy have conducted surveys and carried out the installation of the system. The US’ total funding for the project equates to nearly US$4.42 million.

Japan group opens acerola plant in Tien Giang

Japan’s Nichirei Suco Vietnam on May 9 opened an acerola processing plant in Tien Giang province, which boasts the largest cultivation area of this fruit among Mekong Delta provinces.

Built at a total cost of VND90 billion (US$4.2 million) 14 months ago, the plant now occupies 3,500 sq.m, making it possible to store nearly 130 tonnes of the fruit from the shrub, much more than its daily capacity.

Currently, over 1,200 local farming households are relying on 230ha of acerolacultivation for a living, mostly in BinhAn, BinhNghi and Tan Dong communes in Go Cong Dong district.

Their annual output is estimated at 4,000 – 5,000 tonnes, which is distributed across the nation and overseas.

Earlier, Nichirei Suco Vietnam invested some VND6 billion (US$280,000) in an acerola research centre in Binh Nghi commune. It has trained local growers in adopting effective techniques in the hope that they are able to harvest better-quality crops.

Ministry urges market price stabilization

The Ministry of Finance (MoF) has asked cities and provinces across the countries to firmly keep prices of essential goods and services under control amidst worries that recent increased transport costs will fuel market prices.  

General Statistics Office (GSO) statistics show the Consumer Price Index (CPI) for April rose slightly (at 0.08%) over March due to a 0.33% increase in transport costs.

The Ministry of Transport’s recent decision to examine overloaded trucks caused transport costs to soar, affecting the prices of essential goods on the market.

In addition, complications from epidemics in humans and livestock are putting inflationary pressure on the prices, requiring localities to address the matter appropriately.

The MoF asked provincial and municipal People’s Committees to strictly monitor businesses’ listed prices towards stabilized goods including transports costs and milk prices for children under six, as well as prices of pharmaceuticals, cement, iron and steel, gas and cattle feed.

AIA, Citibank team up to offer life insurance products

AIA Vietnam and Citibank NA Vietnam officially signed a strategic agreement in HCM City on May 9 to distribute life insurance services through the banking channel.

Pursuant to the agreement, Citibank will exclusively distribute AIA’s life insurance products in Vietnam – one of 11 major markets in the Asia-Pacific region under a regional strategic cooperation agreement unveiled by AIA and Citibank in December 2013.

In Vietnam, AIA’s diverse products including group and individual life insurance products, will be introduced to Citibank’s clients through its distribution channels in an initial period of 15 years.

Citibank Vietnam's Consumer Business Manager Raul Paredes said that the deal is expected to meet the increasing demand of Vietnamese people by providing intelligently and creatively financial solutions.

AIA Vietnam CEO Stephen Clark said that such a cooperation model will help foster Vietnam’s life insurance market to benefit local people.

RAL raises 2013 dividend rate to 35%

Rang Dong Light Source and Vacuum Flask Company (RAL) has decided to increase its cash dividend for 2013 by 5 per cent to 35 per cent thanks to positive business results.

The company had already made a 30 per cent dividend payout on April 29. Last year, the company earned a total profit of VND116 billion (US$5.5 million), exceeding its annual target by 66 per cent.

However, business slowed down in the first quarter of this year, with net profit reaching just VND18.2 billion ($863,000), down 33.4 per cent from the same period last year.

PM approves Vinatex IPO plan

The State-run Viet Nam National Textile and Garment Group (Vinatex) will sell a portion of its stock and issue more shares to raise capital under an IPO (initial public offering) plan that the Prime Minister has approved.

Vinatex will sell nearly 122 million shares to the public, equivalent to 24.4 per cent of its capital, while offering 120 million shares, or 24 per cent of total capital, to strategic investors, and three million shares to employees.

The State will retain a 51 per cent stake after the IPO.

The Prime Minister has authorized the Ministry of Industry and Trade (MoIT), representative of State capital in the group, to decide the opening price for the IPO and select an intermediary financial institution and stock exchange to sell shares.

Lotte to build $2b complex in HCM City

South Korean Lotte Group has been approved to establish a hi-tech complex in Thu Thiem New Urban Area in the city's District 2.

The $2 billion project is expected to become one of the key constructions in the city and the Southeast Asian region.

Covering an area of 10 hectares, the complex will include major commercial centre, hotels, apartments and offices.

The project is expected to complete detailed planning this year and develop in several phases in line with the infrastructure development of the Thu Thiem New Urban Area.

National Housing to build 25,000 apartments

The National Housing Organisation Company (NHO) has announced to build 25,000 apartments with a total investment of VND20.6 trillion ($1billion).

Accordingly, the company will implement 14 projects with total areas of 230 hectares in HCM City, Ha Noi, Da Nang, Binh Duong, Quang Ngai and An Giang.

NHO has made a commitment with the Construction Ministry to provide around 100,000 apartments to the market in the next 10 years. It was expected to start constructions of some major projects such as First Home An Giang in May, First Home Binh Duong in August, First Home District 9 in October and First Home Ha Noi in December.

Dong Nai to set up four new industrial parks

Southern Dong Nai Province will establish four new industrial parks (IPs) and move the Bien Hoa IP 1 to a trade and service centre.

Under the province's planning, by 2020 with a vision to 2025, the four IPs will include Phuoc Binh, Gia Kiem, Cam My and Suoi Tre with total areas of 970 hectares.

In addition, the areas of existing IPs, including Amata, An Phuoc, Long Duc, Dinh Quan, Xuan Loc, Tan Phu and Agtex Long Binh, will be expanded to 1,002 hectares.

The province will also call for investment in Long Thanh Hi-tech IPs with an area of 400 hectares and for establishing a 1,400 hectare urban and science service area.

Deputy PM rejects proposal to stop new projects

Deputy Prime Minister Hoang Trung Hai and head of the Central Steering Committee on Housing Policy and Real Estate Market has instructed to continue allowing new residential projects this year.

In a document responding to the Ministry of Construction's proposal to stop new property projects, Hai required the localities to keep the limit of new commercial housing projects to a maximum but not forbid it.

In addition, he asked the ministry to implement administrative reforms in investments of social housing projects to ease the difficulties for businesses.

The ministry stated that the proposal was raised due to a large inventory in the property market, and that the supply of high-end housing was higher than the supply of low-and middle-level segments.

Vietnam Medi-Pharm expo 2014 to open in Ha Noi

The 21st International Medical-Pharmaceutical Exhibition will take place at Hanoi Friendship Cultural Palace, 91 Tran Hung Dao Street, Ha Noi, this month.

The exhibition is jointly organised by the Vietnam Advertising and Exhibition Joint Stock Company and Vietnam Medical Products Import-Export Joint Stock Company from May14–17. The four-day expo expects 350 businesses from 30 countries and territories, including Argentina, Korea, India, the United States, Japan, Malaysia, Philippines, Singapore to participate.

About 450 booths will display medical and pharmaceutical technical equipments. The organiser of the event announced that the exhibition will provide opportunities for businesses to exchange experiences, to invest, to establish joint ventures and to advertise their pharmaceutical products.

Vietnamese students in regional business contest

A team of five Vietnamese students will travel to Singapore in June to compete against teams from Thailand, Indonesia, Philippines, Singapore, and Malaysia in the P&G ASEAN Business Challenge.

The Spart team consists of Pham Thien Phu of RMIT Viet Nam, Nguyen Thi Kim Yen of Foreign Trade University in HCM City, Pham Hai Duong of Foreign Trade University in Ha Noi, Le Trung Hieu of Singapore's Nanyang Technological University, and Le Ngoc Anh Phuong of the Viet Nam National University-HCM City.

Their group beat four others who reached the final from out of more than 1,500 students. The final was a week-long intensive challenge to develop a marketing strategy for a global P&G brand meeting corporate objectives while addressing business and management issues faced in a global organisation.

Positive signs of textile, footwear exports

The Ministry of Industry and Trade (MoIT) reports the textile and leather & footwear sectors achieved impressive growth in April buoyed up by numerous export contracts.

MoIT statistics  show that garment and textile export earnings reached over US$5.9 billion by the end of April, up 20% compared to the same period last year.

Le Tien Truong, Deputy General Director of the Vietnam National Textile and Garment Group (VINATEX), says the sectors’ strong growth was projected at the beginning of this year due to large numbers of orders. Many businesses are currently operating at full capacity to meet orders till the end of the third quarter, even late this year.

The textile sector is working hard to ensure shipments to Vietnam’s traditional markets such as the EU, the Republic of Korea, Japan and the US.

The 24th International Fair on Garments and Textiles Equipment and Accessories (Saigon Tex 2014), the largest of its kind, was held in HCM City in early April, providing an excellent opportunity for local enterprises to get access to the latest technology, so as to increase localisation rate and improve value-added products.

Recently, the Vietnam National Textile and Garment Group (Vinatex), Foshan Sanshui Jialida Company (China) and Luenthai Company (Hong Kong, China) worked with Nam Dinh province to establish Rang Dong textile industrial park.

The goal of the project is to develop a textile supply chain from spinning, knitting, dyeing, printing and finishing. As planned, the project, covering an area of 1,400 -1,500 hectares, will generate approximately 200,000-300,000 jobs. It is a large project in terms of scale and investment capital, to turn Nam Dinh into one of the biggest textile centres in the country.

Acknowledging the textile sector’s achievements, MoIT Deputy Minister Le Duong Quang notes the sector will enjoy many advantages when Vietnam completes the signing of free trade agreements, especially the Trans-Pacific Partnership (TPP) agreement, with its partners. He asked the sector to be well prepared for this golden opportunity.

The leather and footwear sector earned US$2.9 billion from exports in the first four months of the year, an increase of 21.9% over the same period last year. Of the total, export earnings of handbags, suitcases, umbrellas, and hats rose 48.1% to US$821 million.

It maintained high export growth in its traditional markets such as the US, Japan, Belgium, Germany and France. Exports to some niche markets also increased sharply, including Chile (up 80.85%), Israel (120.41%), Greek (up 78.2%), and Poland (up 161.7%)

Furthermore, economic recovery from key export markets, especially the EU, helped fuel Vietnam’s export growth. Many domestic enterprises have to date signed contracts to ship products abroad till the end of August.

The Vietnam Leather and Footwear Association (Lefaso) is upbeat about the export prospect of the sector in the near future, attributing it to incentives from the Generalized System of Preferences (GSP) and the upcoming signing of the TPP.

Vietnamese footwear and leather handbags for example will have competitive advantages in powerhouses like the US, Japan and other TPP member states.

However, Lefaso warns that businesses need to upgrade their technologies, modernise production, and develop brand names, aiming to increase quality and quantity for export products.

Incentives lure investors to Phu Quoc Island

With the recent introduction of a number of preferential policies, Phu Quoc island district is attracting strong domestic and foreign investment, says Huynh Quang Hung, vice chairman of the district.

Between 2011-2013, as many as 94 projects, covering 4,214 hectares, were licensed with a total investment capitalisation of more than VND101,000 billion. Thirteen  projects, worth VND4,200 billion, were put into operation, and 16 others capitalised at VND7,000 billion are under construction.

Phu Quoc island achieved significant socio-economic development in the period 2011-2013 with an annual high economic growth rate of 24.8%. In its economic structure, trade-services accounted for over 47%, and industry – construction, 20%, and agro-forestry-fishery making up the remainder.

One of the major projects is the 110KV submarine cable system from Ha Tien city to Phu Quoc Island, connecting the country's largest island to the national grid.

The system, the longest in Southeast Asia, stretches 57.33km from Thuan Yen village in Ha Tien town to Phu Quoc district’s Ham Ninh village. It includes two 110/22kV-40MVA transformers in Ha Tien and Phu Quoc.

At an investment promotion conference held in Singapore last month, Vietnamese representatives briefed foreign delegates on Phu Quoc island’s investment potential and incentives.

Vietnam is developing a project to turn Phu Quoc into a Special Economic Zones, offering numerous incentives.

Singaporean enterprises said they plan to invest in eco-tourism zones, urban areas, and hi-tech industrial parks on the island with a total area of  4,000 hectares.

SCTV heats up cable TV market

Saigontourist Cable Television is challenging the pay TV market landscape.

Founded in Ho Chi Minh City more than a decade ago, Saigontourist Cable Television (SCTV) principally serves the south together with Ho Chi Minh City Cable Television (HTVC).

But from last year, SCTV started to develop its cable network infrastructure in the north of the country and has entered into competition with VTVCab, French-invested K+, VTC, AVG and MyTV.

In preparation for the move, SCTV has co-operated with Hanoi Cable Television (HCATV) to resolve license issues and take advantages of the partner’s infrastructure and subscriber pool for future market expansion.

SCTV has also accompanied market expansion with technology upgrades, specifically offering high-definition (HD) broadcasting in anticipation of the growing digitisation of Vietnam’s television broadcasts.

In late 2013, SCTV added four HD channels, raising the total number of HD channels to 30 out of the 140 TV channels they currently offer subscribers.

SCTV currently owns five of the ten top rated channels in Ho Chi Minh City and places orders for making two episodes of new television series and two comedy series a day.

In term of pricing, to lure customers in the north, the company has announced attractive subscription packages.

During April and May, customers registering for SCTV’s cable television services will receive free HD/SD receivers and installation fees.

The company’s monthly cable TV subscription fee is a competitive VND80,000 ($3.8), plus VND49,000 ($2.3) per month for additional television cable services.

Vietnam Cable Television’s current monthly subsription fee in comparison is VND110,000 ($5.2).

Director of Hanoi SCTV Trinh Hung Hanh said that SCTV was set to further improve service packages with new channels, ensure transmission quality while offering competitive fees customers to accelerate the pace of television digitalisation, particularly in Hanoi. Boasting Europe standard cable infrastructure, SCTV could provide quality multimedia services.

SCTV is currently the market leader holding 40 per cent cable television market share. Vietnam Cable Television (VTVcab) is second, with 30 per cent market share and Ho Chi Minh City Television (HTVC) claims a 15 per cent market share.

Cable television subscribers now total 4.4 million with SCTV alone reporting more than two million subscribers.

KPMG helps OCB manage risks

International consulting group KPMG on May 8 inked an agreement to give advice to Orient Commercial Bank (OCB) on deploying a comprehensive risk management system with a focus on internal credit rating, credit portfolio and bad debt management.

The system is designed to enable OCB to build an effective credit management model, improve corporate governance and business efficiency; categorize customers; better manage deposits and loans; provide supporting services for customers; and protect the bank from potential risks.

OCB general director Nguyen Dinh Tung said the bank was making great efforts to become one of the leading retail banking services providers. This requires the bank to manage risks effectively to ensure safety and sustainable development.

Bac Giang reveals export target

The northern province of Bac Giang has been taking measures to bring its export turnover to 2.1 billion USD in 2014.

Around 800 million USD of the amount will be contributed by the garment sector, 550 million USD from electronic products, 545 million USD from computers and components, and approximately 51 million USD from farm produce.

Bac Giang has been quickening up the reform of administrative formalities related to tax and customs declarations and investment procedures. It is also planning to attract investment in agriculture, and is encouraging the application of advanced technologies to produce quality agricultural exports.

The province has intensified practical activities to attract investment in its industrial parks and has created favourable conditions for businesses to promote their export projects by facilitating the development of supporting industries.

Besides the upgrade of commercial facilities, the locality is active in boosting trade promotion activities with traditional importers from China, the Republic of Korea, the EU, the US, ASEAN, Japan and new markets of Africa and the Middle East.

Bac Giang-based enterprises have been required to pay more attention to renovating their existing production technologies in order to diversify exports and improve their quality.

According to data released by the provincial Department of Industry and Trade, Bac Giang earned 560 million USD from its exports in the four first months of this year, a 15-percent surge year-on-year. The turnover was mainly from garments (230 million USD), computers and components (150 million USD) and electronic products (148 million USD).

Cargill expanding Vietnam feed, cocoa output

American corporation Cargill has increased investment in its Vietnam cocoa and animal feed business, with newly-launched facilities in Binh Dinh and Ba Ria-Vung Tau provinces.

Cargill’s feed and nutrition business unit late last week celebrated the completion of its $20 million expansion of its animal feed plant in the central province of Binh Dinh.

The expanded plant is one of Cargill’s eight feed production facilities in Vietnam and will extend the company’s ability to meet growing demand for animal feed. With this expansion, Cargill has invested more than $110 million in Vietnam’s livestock and aquaculture industry over the last decade.

“The expansion of our Binh Dinh plant will allow us to even more effectively serve our customers in Vietnam, so we can deliver the right products, expertise and capabilities and support faster business growth,” said Jorge Becerra, general manager for Cargill Feed & Nutrition Vietnam.

The expansion, which began in 2012, has increased the plant’s capacity by four times, from 60,000 tonnes per year to 240,000 tonnes.

“Our investments demonstrate our confidence and commitment to the growth and future of Vietnam’s feed industry,” said Joe Stone, Cargill’s animal nutrition business leader.

Cargill is one of Vietnam’s leading animal nutrition firms. In 2012, the company committed itself to double their feed capacity to 1.5 million tonnes a year by 2015 to meet growing demand.

Cargill has also trained over 1.5 million Vietnamese farmers in best practices in animal health and nutrition to help raise farming productivity and incomes. Late this April,  

Cargill opened the first cocoa technology transfer centre in Ba Ria-Vung Tau for use by the Xa Bang Cocoa Co-operative and the province’s Agriculture and Rural Development Department.

The $60,000 centre, constructed with Cargill’s support, acts as a cocoa training campus for about 2,000 novice farmers in Ba Ria-Vung Tau, Dong Nai and Binh Thuan.  

The centre, together with its technical training programmes, is expected to help farmers improve yields by 30-50 per cent in three years.

Cocoa is a relatively new crop for Vietnam. It is current cultivated by about 25,000 farmers in the Central Highlands, Mekong Delta and southeast provinces. Cargill expects the centre to promote greater knowledge, skills and expertise to achieve higher cocoa yields.

Cargill started its cocoa business in Vietnam in 2004, with the aim of establishing a supply chain of good quality fermented cocoa beans. It has three buying stations in Dak Lak, Ben Tre and Binh Phuoc provinces. The beans are meant to supply Cargill’s cocoa processing plants in Europe and its soon-to-open processing facility in Indonesia.

Q1 bank results on the up

According to its financial statement from the first quarter, Techcombank achieved consolidated pre-tax profit of VND673 billion ($32 million), up 69 per cent on-year and equivalent to 57 per cent of the annual target.

Similarly, Eximbank achieved satisfactory business results in the first four months, with profits estimated at VND580-600 billion ($27.6-28.5 million) two-thirds of profits made in the whole of 2013.

The bank plans to reach a pre-tax profit of VND1.8 trillion ($85.7 million) in 2014, double that of 2013.

Another strong performer in the first quarter was Saigon-Hanoi Bank (SHB), with pre-tax profits of VND271.5 billion ($12.9 million), a VND53.9 billion ($2.56 million) increase against last year. The lender’s credit growth rate, pre-tax profit and dividend rate are expected to stay at 22.8 per cent, VND1.27 trillion ($60.47 million) and 9 per cent through this year.

The first quarter also saw credit grow more quickly at many banks. VIB’s was at 7.1 per cent and TPBank at 12 per cent. Some other bank such as BIDV and Techcombank also reported a 2-3 per cent rise.

Such increases are considered very high compared with common rate of the banking system of 0.62 per cent as of April 20.

These increases are astronomical compared to the banking sector’s 0.62 per cent average.

Many experts have said banks are seeing solid profits. For joint stock banks, profit centers are mainly banking services and retail while for state-run banks they are credit activities thanks to their relationships with SOEs.

Outstanding loans to individuals make up 30-40 per cent of the total at joint stock banks while at big state banks 75-80 per cent is made up of loans to state groups and enterprises.

Businessmen seek eternity through pagoda-building

Several Vietnamese wealthy businessmen have recently been donating large sums to towards building pagodas and temples not only through their devotion, but also to keep their names alive.

One such example is the 450ha Dai Nam Quoc Tu tourism project, with a price tag of nearly VND3 trillion (USD142.8 million) funded  by Huynh Huy Dung. It includes a chain of temples, walls, artificial rivers, mountains and live animal exhibits. The grounds stretch nearly 20km.

“I even thought about this project in my sleep. I was determined to carry out it by any means.” Dung said he now eats vegetarian food four days per month.

Dung disclosed that he will sell his entire property, estimated at around VND2 trillion (USD95.2 million), to build 17 temples nationwide; five in the north and six in the central and the southern regions.

Nguyen Van Truong, another wealthy businessman who rarely appears in the news, is in the process of building Bai Dinh Pagoda. Another converted vegetarian, he is focusing his efforts and capital on constructing the 80ha religious complex to be located adjacent to the old capital Hoa Lu.

Not to be outdone, entrepreneur Tram Be broke ground on yet another pagoda in Cambodia at a cost of USD600,000. This is the 9th pagoda he has poured his money into. Most of the others are located in his home province of Tra Vinh.

Tram Be, a Chinese-Vietnamese businessman who grew up in the Khmer community, sees this as a way to remember his origins, and has so far spent hundreds of billions of VND building pagodas in disadvantaged Khmer regions.

VFA revises down rice export target

The Vietnam Food Association (VFA) has adjusted this year’s rice export target down to 6.2 million tons due to tougher competition on global markets.

The association earlier projected the country could ship 6.5-7 million tons this year.

VFA explained Vietnam was facing fierce competition from Thailand and other major rice exporting countries. As a result, Vietnam’s rice market share in Africa is declining and losing to Thailand, which manages to sell its rice to have money for paying to farmers and reduce its inventory of 14-17 million tons.

The VFA estimated India had had 20.27 million tons of rice in stock as of April 1.

Those countries importing large volumes of Vietnamese rice in previous years are eyeing Thailand. According to VFA, Malaysia has imported rice from Thailand to meet its demand for this year.

Therefore, Vietnamese rice exporters have to count on China, which has become Vietnam’s biggest rice importer in the past two years and will maintain its top spot in the coming time due to its increasing demand.

However, experts have warned local exporters of undercutting and contract cancellation risks when global rice prices fluctuate.

Vietnam exported 6.61 million tons of rice worth some US$2.95 billion via official channels last year, down over 17% in volume and nearly 20% in value against 2012. The average export price was US$435 per ton, down 5% compared to the previous year.

As for the nation’s one-million-ton rice stockpiling scheme for the winter-spring crop in 2013-2014 that ended on April 30, VFA said 130 rice exporters purchased 995,494 tons, or 99.55% of the target.

Ministry okays textile growth plan

The Ministry of Industry and Trade has ratified the textile and garment industry development plan 2020, with a vision for 2030.

The plan is expected to boost the industry's growth, said deputy minister Do Thang Hai at a meeting early this week.

Under the plan, the industry aims to achieve 55 per cent localisation rate by 2015, which will increase to 65 per cent and 70 per cent by 2020 and 2030 respectively.

During the 2013-2020 period, the industry plans an annual production growth rate of 12 to 13 per cent.

Exports in the 2013-2015 period are expected to increase by 10 to 11 per cent yearly, increasing by 9 to 10 per cent in the 2016-2020 period, and by 6 to 7 per cent in the 2021-2030 period.

The growth rate of the domestic market will be 9 to 10 per cent in the 2013-2015 period and 10-12 per cent in the 2016-2020 period, according to the plan.

Labour-intensive textile and garment firms will be moved to the rural areas, while those specialising in fashion production as well as in the supply of related services will be placed in urban areas.

According to the Viet Nam Textile and Apparel Association, Vietnamese clothing products are being exported to 50 countries and territories. The US is the largest importer of Vietnamese textiles and garments, accounting for 48 per cent of the industry's total export revenue.

Viet Nam's textile and garment exports have grown 15 to 17 per cent per year since 2007, said Nguyen Van Tuan, deputy head of the Viet Nam Cotton and Spinning Association and deputy secretary-general of VITAS. The export turnover is estimated to reach $40 billion in the 2020-2025 period, requiring 12 billion square metres of fabric and five million workers.

Textiles and garments currently make up 13.6 per cent of the country's total export value. That percentage is expected to rise when the country signs trade agreements.

The country is currently negotiating the Trans-Pacific Partnership Agreement (TPP) and the Viet Nam-EU Free Trade Agreement, which are expected to come into effect in the next couple of years.

When these agreements are signed, Vietnamese garment and textile products will enjoy zero per cent tax rate in the US and EU. At present, the average tax rates are 17.5 per cent and 9.6 per cent in these two markets, respectively.

Viet Nam's exports to the US and EU are still limited, according to experts. The US and EU markets spent $105 billion and $260 billion on garment and textile products respectively, last year. However, Viet Nam's exports accounted for only 8 per cent and 3 per cent of the US and EU market shares respectively.

KfW may up VN development fund

KfW, the German Development Bank, has targeted a loan commitment of EUR500 million (US$692 million) per year for development projects in Viet Nam, up from EUR200-300 million per year over the last two years, an official from KfW has said.

"It has not been done yet, but our target depends on the criteria to be met by Viet Nam," Dr Ulrich Schroder, CEO of KfW, a state-owned German bank, told Viet Nam News on Wednesday during his visit to HCM City.

"We see a huge potential for Germany and other European countries to invest in Viet Nam," he said.

However, to have more access to financial assistance like Official Development Assistance (ODA), Viet Nam needs to simplify administrative procedures, fight corruption and improve its secondary school and higher education system, he said.

In addition, he noted that the energy and health sectors remain dominated by the State sector.

"So it's a good thing for the country to open these sectors to the foreign private investment sector," he said. "Of the loan commitment, we would focus on long-term investments such as energy like wind power, infrastructure, roads, and the health and education sectors."

He said that German companies believe Viet Nam has huge potential in IT and software, and are interested in investment in these areas.

Germany provides loans for Viet Nam in several fields, including a metro system, forestry, secondary education, microfinance and the electricity sector.

Commenting on the slow progress of the Metro's Line No. 2 in HCM City, Schroder said that the project had to deal with geographical and geological issues just as metro projects in other countries do.

In general, the delay of projects in Viet Nam is often due to complicated administrative procedures as well as corruption, he added.

Viet Nam is KfW's third-largest strategic partner in Asia, following China and India.

Total investment capital that KfW committed to Viet Nam, has reached EUR1.2 billion ($1.66 billion), with a total of 71 projects, of which EUR594 million ($822 million) has been disbursed.

Govt to control prices of low-cost apartments

The Government will control ceiling prices for social and low-income housing projects to prevent investors from selling these apartments at high prices, said Trinh Dinh Dung, construction minister.

Dung spoke to reporters on Wednesday at a conference held in HCM City to review the draft law on real estate businesses, noting that current housing prices were high because investors had to pay to rent land.

Social housing projects have been given support in land-use rental, taxes and preferential credits. This is why such projects should have lower prices.

However, apartment prices of low-income housing projects have been higher than commercial projects despite a frozen property marke.

Two years ago, Sai Dong low-income housing project in Ha Noi's Long Bien District was sold at VND13 million a square metre , VND3 million per square metre higher than flats at Dai Thanh commercial project in south of Ha Noi

Several low-income projects offer prices VND3-6 million per square metre higher than commercial ones. Pham Sy Liem from the Viet Nam Construction Association, said the Government should remove low-income housing projects as the definition was unclear

The recent investigation by the Ministry of Construction revealed that several investors have misused 20 per cent of the land fund for social housing projects.

The investigation revealed that only three out of 11 projects had built social housing areas in the allotted land, three others had changed into rehabilitation apartments. The remaining projects were asked to change into commercial housing projects.

The ministry also reported that it has approved 13,000 social housing apartments. However, most of the projects had started construction.

The ministry reported that in Ha Noi alone, demand for social housing apartments was 80,000, of which those for officers in ministries and central units was around 30,000.

Soft inflation may ease money policy

Persistently soft inflation may encourage further money easing in Viet Nam, ANZ Bank states in an economic update dated May 8.

April headline inflation was at 4.45 per cent year-on-year, with a sequential marginal gain of 0.08 per cent month-on-month. Inflation undershoots market expectations, reflecting weak domestic demand.

In a bid to nudge credit growth, the State Bank of Viet Nam (SBV) in March slashed its refinancing rate by 50 basis points to 6.5 per cent, and reduced caps on various deposit rates. It had earlier planned to reduce interest rates by 150-200 basis points throughout the year.

"We remain of the view that further policy easing would have a limited impact on credit growth due to tight credit supply as banks continue to grapple with high bad debt ratios," the report said.

The central bank estimates non-performing loans (NPLs) at VND308 trillion, or US$14.7 billion, by the end of February, about 9.71 per cent of the total loan books in the system.

Despite the decrease in the refinancing rate, credit barely rose 0.62 per cent as of mid-April. Due to the lack of credit, failures of local business continue to rise.

According to the Department of Business Registration Management, total dissolution of enterprises or temporary suspension of operations reached 21,500 in the first quarter of this year, rising by 9.4 per cent over the same period last year.

The report said, while banks remain hesitant to extend credit as most borrowers fail to present feasible plans to clear inventory, domestic liquidity remained ample with increasing deposits, healthy foreign direct investment inflows, and the manageable external trade.

ANZ expects the weak growth in domestic demand to remain within the next three to four years, while the robust backdrop provided by the external sector will underpin overall growth prospects.

Most ISPs connected with IPv6 network: official

Eleven out of 18 Internet providers have connected with the national Internet Protocol Version 6 (IPv6) network, after it came into operation on May 6 last year.

The information was provided by Nguyen Truong Thanh, director of the technical department from the Viet Nam Internet Network Information Centre (VNNIC), at a conference on Tuesday in Ha Noi.

The event is part of the country's activities organised by the Ministry of Information and Communications (MIC) to summarise its achievements in boosting transition from IPv4 to IPv6 and popularise IPv6 supporting devices.

Thanh said that there are six enterprises in Viet Nam manufacturing supporting devices for IPv6 such as Viettel and VNPT. Nevertheless, he also expressed his concerns about the lack of domestic firms developing software for IPv6 and local companies manufacturing terminal devices.

Year 2014 is considered a hinge year for the second phase of MIC's national action plan for IPv6. The ministry was the first organisation to implement IPv6 on its online portal at.

Speaking at the conference, Deputy Minister Le Nam Thang said that in the first quarter of this year, the ministry had asked the task force to carry out its main duties, including issuing a set of standards for IPv6 and building a roadmap to import devices for IPv6 into Viet Nam. He also referred to Decree No. 72 of the government regulating IPv6 as advanced technology, with priority for investment and development. Activities relating to research, production and importing devices and software for IPv6 would receive preferential treatment and support as written in the High Technology Law, he said.

Tomohiro Fujisaki, from Japan Network Information Centre, said that in Japan, fixed line Internet service providers offered commercial IPv6 service not only to enterprises but also to consumers. Its big mobile operators such as NTT Docomo and KDDI also provided IPv6 service in their 3G networks.

Not only Japan but other countries in the world have also seen an increasing number of consumers using IPv6. Since launching IPv6 on June 6, 2012, there have been 21,500 websites, including Facebook, Google and Yahoo, implementing IPv6. In the United States, the rate of IPv6 usage increased from 0.9 per cent to seven per cent to date. In the Asia-Pacific region, South Korea, Singapore and Australia have gained remarkable results.

According to the ministry's action plan, Viet Nam will finish its introduction period in 2015 and move to a transition period from 2016 to 2019.

In preparation, programmers of content providers and Internet service providers attended a training course on programming based on IPv6, receiving instruction from Malaysian experts, from May 5-7. Along with the conference, the course will help enterprises and organisations to build and implement IPv6 applications.

MoIT to control petrol prices

Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Industry and Trade (MoIT) and the Ministry of Finance (MoF) to complete the draft decree on petrol trading.

Accordingly, Hai required the two ministries to complete the draft decree and submit to the prime minister before May 16 for consideration, including a period for the calculation of petrol base price. In addition, they were asked to adjust the amplitude of fuel retail prices in line with the economic conditions including three levels: less than 2 per cent, over 2 per cent to less than 7 per cent and above 7 per cent.

Specifically, if the base price is increased by 2–7 per cent, authorities will review stabilising measures, such as using stabilisation fund.

If the base price is higher than 7 per cent or affects the economy, the prime minister will decide a stabilising solution. If the price is less than 2 per cent, petrol traders will be allowed to self-decide selling price or increase VND500 per litre.

Hai has also approved the handing over of control rights in the domestic fuel market from MoF to MoIT.

In addition, the provincial Department of Industry and Trade will have the authority to grant certificates to agencies to sell petrol. Previously, the MoIT was granting certificates.

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

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