BUSINESS IN BRIEF 21/8

Mekong Delta farmers encouraged to grow GM maize

The State encourages the cultivation of genetically-modified (GM) maize varieties in 13 Mekong Delta localities, heard a workshop on bio-technology held in Can Tho city on August 18.

Pham Van Du, deputy head of the Plant Cultivation Department under the Ministry of Agriculture and Rural Development, said that the shift aims to increase economic efficiency in farming, thus improving farmers’ income and living conditions.

He added that under the plan on crop structure shift, there will be 30,000 ha under GM maize by 2015.

The GM maize varieties are resistant to insects and herbicides. Their average productivity is 19 percent higher than that of normal ones, while farming costs decrease by 10 percent. The area of land necessary to produce one ton of corn kernels is also 15 percent less that required for normal varieties.

Du cited results of surveys in nine out of the 13 localities in the region which showed that farmers earn between 20-25 percent more profit from GM maize than normal varieties.

He urged localities in the region to guide farmers in using new varieties developed by bio-technology.

The workshop was co-organized by the US Embassy in Vietnam and Can Tho University.

OceanBank offers special rate for export firms

OceanBank will be implementing a program offering a preferential interest rate of 2.8 per cent per year to export enterprises that borrow in US dollars from now till year-end.

According to OceanBank officials, the program aims to help the exporters supplement capital for production and business activities. The rate will be applied to all short – to long-term loans within six months.

The officials said the bank was also granting businesses incentives in the money transfer, e-banking and guarantee services.

Metro outlet wins ASEAN energy management award

Metro Cash and Carry Vietnam's Hiep Phu outlet has won the second prize in the ASEAN awards for best energy management practices by buildings and industries in the small- and medium-building category.

The wholesaler has installed the country's first solar lighting system, which helps it save VND300 million (US$14,000) per year and cut down 220 tons of CO2 emissions.

It also uses other technologies like food preservation and air-conditioning systems that are environmentally friendly.

"The technology helps us save energy, creating value for customers and reducing the negative impacts on the environment," Philippe Bacac, the company's Viet Nam managing director, said.

Cyber security contest opens to participants

Vietnamese youth who are interested in mastering cyber security are invited to take part in the WhiteHat Grand Prix, a contest organized by Bkav, a leading Vietnamese security company.

The competition aims to enhance learning and research on cyber security among the young, thereby increasing the number of cyber security experts in the country.

Under contest rules, interested parties may form teams of two to five members each, aged below 35 years. They must register their respective teams on whitehat.vn, a website that serves as a forum for aspiring cyber security experts, before September 15.

Tra fish distribution centre shaping at Belgian harbor

The concerned agencies are speeding up the establishment of a distribution centre for tra fish in the European market.

Head of the Directorate of Fisheries' Science, Technology and International Co-operation Department Nguyen Viet Manh said that they were coordinating with the Ministry of Industry and Trade's Export and Import Department, and Vietnamese Trade Office in Belgium to work with the trade agencies in Belgium's Flanders and Zeebrugge areas and a number of Belgium companies to establish the distribution centre.

The Vietnam Association of Seafood Exporters and Processors (VASEP) and Belgium's Zeebrugge Port late last year had also signed a Memorandum of Understanding (MoU) on establishing the centre.

Under the MoU, a centre will be built at Zeebrugge Port to receive, auction, and distribute Vietnamese tra products throughout the EU. The port's location between France's Le Havre and Germany's Hamburg makes it one of the European market's leading seafood distribution centre.

However, Hoe said, the biggest obstacle for the project was a regulation requiring 8% of Vietnam's total tra fish exported to the EU to go via the centre, while the sale or storage of tra fish at the centre was exporters' decision.

Hoe said that a series of detailed regulations and policies must be issued to have all Vietnamese tra fish go via the centre before being transported to distributors in the EU, and the quality and price of the fish needed to be maintained throughout.

Hoe said that the project would bring major benefits to Vietnam's tra fish industry as the centre would function as an importer bringing Vietnamese tra fish to Belgium and European retailers without using any intermediaries.

It will help Vietnamese tra fish exporters to save time and reduce costs, Hoe said.

Vietnam, Japan businesses hone exporting skills

Cooperation with Japanese businesses will sharpen the exporting skills of Vietnamese partners, enabling them to better compete in the global marketplace, said Nishiyama Akia, Director of Japan BSO company at a seminar in HCM City on August 19.

According to the Ministry of Industry and Trade, Japan is the third largest trade partner of Vietnam. In the first 7 months of the year, Vietnamese exports to the Japanese market jumped 13.3% on-year to US$8.5 billion, while imports rose 5.6% on-year to US$6.9 billion.

As of the end of July, Japanese businesses invested more than US$36 billion in 2,353 Vietnamese projects, comprising 13.9% of the total number of FDI projects in the country and 14.9% of cumulative FDI capital.

Vo Tan Thanh, Director of the Vietnam Chamber of Commerce and Industry (VCCI)’s branch in Ho Chi Minh City, said Japanese projects often have higher registered capital compared to other FDI projects, and their disbursed capital is also higher.

Additionally, Japanese investors better follow investment law and policies, he said, adding they mainly invest in processing and manufacturing industry and hi-tech.

Thanh emphasized that Japan has simplified visa procedures for Vietnamese citizens who work in the country, facilitating economic, investment, trade and tourism activities between the two countries.

BSO director Nishiyama said to successfully cooperate with Japanese businesses, Vietnamese businesses should build mutual trust, especially reputation.

Yamauchi Yuij, Director of Alaki Company, said through the seminar, Japanese experts want to help Vietnamese businesses update information and IT application to serve their trading activities and overcome geographic barriers and administration procedures.

Vietnam has many great businesses but they are much too weak in introducing information and promoting brand names so they find it difficult to locate potential cooperation partners, he said.

Vinamilk wins Global Food Industry Award

Vinamilk’s dedication to food science and technology has been acknowledged by the International Union of Food Science and Technology (IUFoST).

The IUFoST has honored Vinamilk with its prestigious Global Food Industry Award, which is given in recognition of the company’s efforts in advancing global food science and technology for the benefit of everyone.

Vinamilk surpassed 100 competitors from 70 countries around the globe in competition for the accolade.

The awards ceremony was held at the 17th World Congress of Food Science and Technology and Expo in Montreal city, Canada on August 19.

Vinamilk currently exports infant formula, powdered milk, baby food, condensed milk, fresh milk, soya milk, soft drinks, and yogurt to 31 countries and territories.

All five dairy farms operated by Vinamilk in Vietnam have received the distinguished French Bureau Veritas ISO 9001 Certification.

Accelerating ODA disbursement

The pace of disbursement of official development assistance (ODA) picked up by over 46% on-year in the first six months of 2014 to US$3.2 billion, meeting 58.7% of the year’s annual target.

Most notably, capital disbursement of World Bank (WB)’s loans hit a record high of more than US$1 billion during the reviewed period.

In a bid to further accelerate disbursements, Deputy Prime Minister Hoang Trung Hai has urged all agencies and ministries to reassess ODA-funded projects, including projects using preferential loans, to identify those falling behind schedule and take remedial action.

Despite the improvement, obstacles continue to hamper disbursement of ODA across sectors and localities, said Hai.

For instance, the number of projects in transportation, energy and urban development is higher than in health care, education and training, information, labor, and social affairs. Similarly, ODA disbursements in Hanoi and Ho Chi Minh City are higher than other localities.

Hai asked ministries, departments and localities to improve the quality of project appraisal work to minimize adjustments and changes during the implementation process to avoid waste, while carrying out comprehensive measures to raise the quality and performance efficiency.

He also authorised the Ministry of Planning and Investment (MoPI) to coordinate with the Ministry of Finance, the Ministry of Foreign Affairs, the State Bank of Vietnam and relevant agencies to monitor and manage the use of ODA and preferential loans.

Deputy PM Hai also gave out specific directions for several key projects which are slow going, such as Noi Bai-Lao Cai Highway, Hanoi Urban Railway Construction Project (Line 1) (Gia Lam-Ngoc Hoi), Trung Son hydroelectric power plant and Renewable Energy Development Project.

Japanese experts advise VN firms to conduct overseas promotions

Vietnamese companies need to further promote their products, especially online, if they wish to sell in foreign markets, a conference heard in HCM City yesterday.

Speaking at the conference to promote trade and business with Japan, an official from the Viet Nam Chamber of Commerce and Industry (VCCI) in HCM City said: "Japan will remain an important partner for Viet Nam in future. Expanding business with Japanese partners is necessary."

Yuji Yamauchi, president of Alaki Company Ltd, said working with many Vietnamese companies has shown that the internet was the best way to boost business.

Besides studying Japanese companies, Vietnamese companies should show how strong they are, and they have to do it online by uploading information about their products, quality, and service, he said.

If there are no advertisements, Japanese companies would know nothing about Viet Nam, he said, adding Vietnamese businesses should be confident about their products and technologies.

Nishiyama Akira, director of BSO Investment Consultant Company, told the conference that Vietnamese companies should learn from the experience of Japanese companies and then add their own strengths.

He told Viet Nam News that since his country lacks a young population it needs to co-operate with other countries including Viet Nam.

"Creating trust and being in time are very important," he said.

He told the 100-odd Vietnamese business executives about the habits and needs of Japanese companies and the way they think and act.

Last year Viet Nam's exports to Japan were worth US$13.7 billion.

The conference was organized by VCCI and attended by over 100 of companies.

Bac Giang told to attract FDI to agriculture sector

The northern province of Bac Giang should try and attract foreign direct investment into developing agriculture, President Truong Tan Sang said yesterday.

Sang visited the locality yesterday to examine its socio-economic development and defense security, including the combat readiness of army corps No 2 stationed in the province.

Although the province had good land for agriculture, it should use scientific and technological advances to create new farming techniques, he said.

The President asked authorities to also use hi-tech industries to generate higher added value for industrial products.

He suggested local departments and branches provide vocational training for rural laborers to create a firm foundation for industrial development.

According to the provincial People's Committee, the province has an annual industrial production growth of 30 per cent, attracted 247 projects with a total registered capital of VND10 trillion (US$476.1 million), and achieved a GDP per capita of $1,250.

However, about 9 per cent of families were living under the poverty line, a drop of 10 per cent from 2010.

Local authorities proposed the Government help Bac Giang become a key province in tourism and support enterprises investing in the locality.

Earlier, President Sang visited army corps No 2, the first mobile regular unit of the Viet Nam People's Army in the southern battlefield during the American war.

The unit participated in many campaigns and made outstanding exploits, deserving the trust of the Party, the State and people.

Later, he visited Wintek, a Taiwanese-owned company that employs 7,000 local people. The company, specializing in making mobile-phone screens, plans to increase its registered capital to $1.1 billion.

HCM City urges Dong Nai to build airport

HCM City's transport facilities will be overloaded by 2020 if the planned international airport in Dong Nai Province does not begin operations and ease the pressure on Tan Son Nhat Airport.

The deputy chairman of the city People's Committee, Nguyen Huu Tin, said the existing infrastructure would be overwhelmed if Tan Son Nhat Airport's handling capacity is raised from the present 20 million passengers to 25 million per year.

Tin was speaking at a meeting of the State Assessment Council for Long Thanh International Airport Project last Friday in Ha Noi.

He explained that to meet the additional 5 million passengers per year, the city must invest US$4 to 5 billion to upgrade the transport facilities, including an elevated railway and roads connecting with the airport.

Tin said HCM City had faced a shortage of land and space required for ensuring flight and aviation safety.

An expansion of Tan Son Nhat Airport, which is located in the centre of HCM City, will affect the city's urban development plans.

Therefore, construction of Long Thanh International Airport in neighbouring Dong Nai Province and a new airport operational after 2020 was a necessity, said Tin.

Sixteen members of the State Assessment Council have voted to approve the report on investment for the project to build Long Thanh International Airport.

With approval of the council's majority, the council will submit the report to the Government and the National Assembly for the NA's ratification in its meeting in October.

The minister of Planning and Investment and chairman of the State Assessment Council, Bui Quang Vinh, has asked the Transport Ministry to supply guidance to Airport Authority of Viet Nam – the investor of Long Thanh Project – to use the council's suggestions to complete its report on Long Thanh Airport Project for submission to the Prime Minister in October.

Approved by the Prime Minister on 14 June 2011, Long Thanh Airport is scheduled to open to the public in 2020 after the first phase of development, according to Dong Nai Provincial authority.

The airport, to be built in three phases, is expected to be fully operational by 2035, with an annual capacity of 100 million passengers.

Construction on the Long Thanh International Airport is scheduled to begin in 2015, and by 2020, it will be capable of handling 25 million passengers a year.

With an investment of more than US$10 billion and covering more than 5,000ha, Long Thanh is expected to become a competitive international airport and a key entry point to Southeast Asia.

Funding for the project will come from Government bonds, official development assistance (ODA) and private sources.

Government capital and ODA will be used for airport infrastructure and private funding will be sought to build the passenger terminal.

More than $6.7 billion will be spent on ground clearance and construction during the first phase. Airport capacity will double after the second phase and will be completed by 2030.

The airport, which will be located around 43km from HCM City, will serve 90 per cent of international and 20 per cent of domestic flights, diverting a major chunk of passenger traffic from Tan Son Nhat International Airport in HCM City.

Experts highlight key role of HR

For a business to be successful, focus should be on developing staff, participants said at a panel discussion on "CEO perspectives on HR management" held in HCM City yesterday.

Businesses depend on many factors, including capital, technology and human resources, but of these, HR plays a decisive role in success, said Nguyen Trong Dam, deputy minister of the Labour, Invalids and Social Affairs.

If a business has high-quality HR and a good management policy, it could promote their employees' potential, he said.

Nguyen Ngoc Hoa, chairman of Saigon Co.op, said HR was even more important in the time of economic integration.

HR practitioners must understand the business operations of their companies and their staff in order to develop appropriate HR strategies to maximize the latter's potential.

"Besides training, companies need to develop their business culture, and create a good working environment to retain people," he said.

Delegates at the event agreed that local companies were paying more attention to making their HR management more professional.

Enterprises investing in people and in HR management usually achieved great success, they said.

Edward Foong, assistant honorary secretary of the Singapore Human Resources Institute (SHRI), said Viet Nam had grown quickly after entering the World Trade Organization 2007.

HR managers in Viet Nam were becoming more capable, with more Vietnamese people taking leadership positions in HR departments today, he said.

In Viet Nam, companies had a more relationship focus and different companies had their own practices.

HR management in Singapore was more standardized across the entire country, and HR practitioners pulled together to share experience and knowledge, he said.

A combination of a relationship focus and standardization would be better for the HR community in Viet Nam, he said.

"The HR community needs to continue to upgrade to be more confident, to earn the seat next to the CEO of an organization and not see yourself as an administrator only doing transactions," he said.

"I see Viet Nam as being in a very similar situation to Singapore many years ago. More and more people enter the HR community because they realize the importance of the HR's contribution to the company.

A few years from now, Viet Nam HR community and Singapore HR community could be on par with each other, he said.

To recognize HR people as well as create a platform for HR practitioners to share experience, the Talentnet Corporation and the Labor and Social Affairs newspaper yesterday launched the Viet Nam HR Awards, the first of its kind in the country.

Endorsed by the Ministry of Labor, Invalids and Social Affairs, the awards aim to honor organisations that have achieved overall effectiveness in their HR and people management practices, and have established common codes for measuring HR management, said Tieu Yen Trinh, general director of Talentnet Corporation.

Based on the professional methods of the Singapore Human Resources Institute (SHRI), the awards also aim to connect enterprise owners and staff through raising awareness about HR's role.

Any business operating in Viet Nam for at least three years with a staff of at least 100 people is encouraged to apply for the awards.

Registration is now open until September 19, and awards will be presented in December.

SOEs urged to improve quality

The Ministry of Industry and Trade is calling for the renovation of technologies to enhance the quality of products and services of State economic groups and corporations under it.

The proposed renovation is expected to raise the quality and lower the prices of products and services of the economic groups and corporations, which all signed a co-operation agreement prioritizing the use of each other's products and services two years ago.

The agreement, a response to the campaign called "Vietnamese use Vietnamese products," aimed to increase local procurement rates and enhance the supply chain among State economic groups and corporations under the ministry. It also helped boost the production and lower the inventories of these groups and corporations.

Exactly 16 State economic groups and corporations signed a common agreement while 11 groups and corporations signed bilateral memorandum of understanding calling for the use of each others' products and services on October 9, 2011.

The implementation of the agreement led to the signing of numerous contracts estimated to be worth VND71 trillion (US$3.35 billion). The figure excludes the purchase contracts for electricity, oil and petrol, the ministry's report showed.

However, co-operation remained limited as locally-produced products only met a modest part of the demand.

According to the ministry, a good number of products made in line with the agreement were poor in quality and design and could not compete against imported products. The products also did not meet the quality standards of State economic corporations.

Nguyen Xuan Son, PetroVietnam Chairman, confirmed this yesterday when he said product quality was a major hurdle for his company.

Son said the group's fund for prioritizing the use of State corporations' products had not been used up because the products failed to meet the standards of the petrol and oil sector.

The petrol and oil sector each year must use millions of tonnes of steel for its work, but most of the steel that PetroVietnam used was imported because locally-produced steel was poor in quality, he added.

Tran Quang Nghi, Vinatex Chairman, said the ministry should evaluate the competitiveness of locally-manufactured in comparison with imported products.

If locally-manufactured products were of equivalent quality and price as imported ones, local products would be prioritized, Nghi said.

Besides enhancing product and service quality to meet international standards, the ministry also urged State economic groups and corporations to ensure competitive pricing of products by lowering production costs.

Solutions to boost cacao crop in Mekong Delta

In recent years, the cacao-growing area in the southern province of Ben Tre in particular and in the whole country in general tends to increase, according to the Communist Party of Vietnam Online Newspaper.

Cacao production in Ben Tre has been constantly growing both in quality and quantity.

At a conference about sustainable cacao development recently held in Ben Tre province, Deputy Head of the Department of Crop Production under the Ministry of Agriculture and Rural Development Nguyen Van Hoa affirmed that the demand of the world market for cacao is great and this intercrop in coconut gardens and orchards is the most relevant option at present.

Ben Tre is one of the leading provinces nationwide in term of cacao-growing area. A major cacao in Ben Tre province intercropped in coconut groves have helped farmers to double their income in the same area. Particularly, the cacao in Ben Tre province have been purchased by many large groups and businesses to produce chocolate such as Cargill and Puratos Grand Place.

However, cacao is still a new crop and has many pestilent insects; planting technique and preliminary treatment are quite complex and new for farmers. Moreover, the system of purchasing and preliminary treatment have not been built synchronously causing many difficulties for farmers.

To develop cacao sustainably for the Mekong Delta in the future, localities should implement synchronous solutions from research, selecting seed cacao, transferring techniques of planting, care, and pestilent insect prevention for farmers.

According to the Ben Tre provincial Department of Agriculture and Rural Development, the province has nearly 5,000 hectares of cacao. The low selling price discouraged farmers so they massively cut down cacao in late 2012 and early 2013 to change new plants such as green grapefruit, orange and lemon.

At present, it has 127 points to purchase and primary process cacao for farmers.

The cacao plantation area in Vietnam has increased to 22,000ha from 9,000ha in 2007, providing 5,000 tons of dried beans in 2013. The country plans to have 50,000ha under cacao cultivation and produce about 100,000 tons of fermented beans by 2020.

Businesses urged to invest in green production

Businesses have played an important role in promoting advanced manufacturing technology in an effort to create a green and sustainable economy, the Vietnam Business Forum Magazine (VBF) reported on August 18.

The workshop "Green Business Model Innovation - from Production to Management" recently organised by the Asian Institute of Technology aimed to introduce the green business model, particularly focusing on innovation in helping manufacturers produce cleaner and more friendly-environmental products.

The delegates discussed the need to improve green production criteria. Businesses can access new markets if their products have higher quality and meet the requirements of origin for export products.

Participants noted that in the international integration trend, cleaner production has become one of important strategies. Cleaner production is done by reducing the negative impact throughout the product lifecycle, from design to disposal.

Nguyen Quang Vinh, General Secretary of the Vietnam National Business Council for Sustainable Development (VBCSD) said that clean and green production would enhance the competitiveness of enterprises.

The small and medium-sized enterprises have found hard to successfully apply this production model due to difficulties in capital investment in technology.

Nguyen Van Tuyen, Director of Tien Dat Investment and Service Trading Production Co., Ltd, said that green manufacturers not only benefit themselves but also create sustainable value chain for society. In response to environmental degradation and increasing threat from climate change, many countries in Asia are beginning to transform their economic development pattern towards low carbon emissions. It is the economic development pattern that Vietnam is moving toward.

The Government has also issued several action plans aimed at efficient use of natural resources and all manufacturers are encouraged to adopt cleaner production model. The State also has been building the legal provisions; setting up economic tools; offering support measures; implementing guidelines to build cleaner production project for businesses.

Can Tho city aims to attain regional trade hub status

From now to 2020, Can Tho city will focus on developing trade intensively to improve its international integration and become a trade hub of the Mekong Delta region, a municipal official said on August 19.

At a meeting with representatives of the business circle, Vice Chairman of the municipal People’s Committee Dao Anh Dung said the city aims for trade – services accounting for 47.1 percent of its economic structure by the end of 2015, up 3 percent from 2013.

The sector is expected to make up 52 percent of the local economy, equivalent to 164 trillion VND (7.8 billion USD), by 2020, he noted.

The city is set to build 110 markets, 14 supermarkets, and 17 trade centres, including a regional-scale one, between now and 2020, Deputy Director of the municipal Department of Industry and Trade Bui Ngoc Vy said.

In the meantime, the locality plans to step up trade promotion abroad in a bid to seek more outlets for its aquatic products in Asia, the Middle East, Oceania, Europe, North America and Africa .

It targets export revenues of over 7 billion USD by 2020, four times higher than the 2013 figure.

Can Tho will also simplify administrative procedures to attract 120 trillion VND (5.7 billion USD) into the trade sector, innovate the manufacturing of export lines, and strengthen its ties with other localities as well as foreign economic organisations.

Since the beginning of 2014, local trade value has reached 49.7 trillion VND (2.36 billion USD), fulfilling 70.8 percent of the yearly goal, with some 900 million USD coming from exports.

The figures are forecast to reach 70.2 trillion VND (3.34 billion USD) and 1.5 billion USD respectively by the year’s end.

Nghe An sees craft villages as essential to development

Nghe An’s craft villages have attached great importance to provincial economic development, said the Vietnam Economic News.

According to the newspaper, the craft villages have created jobs for thousands of farmers, contributing to promoting economic development in the local region. Many villages are better off than others due to their craft businesses.

Nghe An province currently has 126 recognised craft villages, specialising in bamboo and rattan, food and foodstuff processing, sedge mats, reed brooms and votive paper, boat building, fine art wood products and bonsai.

In 2013, provincial craft villages reached a total production value of more than 1.85 trillion VND, provided stable jobs for more than 43,000 people with an income of 9-35 million VND per year per capita.

However, most of craft villages are facing water and air environmental pollutions due to using backward technology.

The Nghe An provincial People’s Committee has many policies to develop handicrafts, including product diversification and market expansion for better satisfying foreign and domestic markets’ demands. Provincial localities should redevelop multiply craft village models like seafood processing in Quynh Luu, Dien Chau and Cua Lo, and rattan and bamboo ware production in Nghi Loc, Quynh Luu, Dien Chau and Yen Thanh.

To bring into full play to the full strength of coastal craft villages in the province while minimizing environmental pollution, in the coming time local authority needs to reassess the real situation of craft villages and have relevant policies to develop these businesses without damaging environment.

The sectors and authorities will provide financial and technical assistance to protect environment while encouraging technology transfer and cleaner production.

Nestle Vietnam funds coffee replanting

Nestle Vietnam has promised to subsidize half of coffee seedlings prices for farmers to replant their old farms.

The company said in a statement that after three years of deploying a project to support coffee replanting, it had given coffee farmers nearly 6.9 million seedlings by the third quarter this year.

The number of farmers benefiting from the project has increased from 300 to 19,000 over the past three years.

According to the Ministry of Agriculture and Rural Development, the area of over-20-year-old coffee plants accounts for more than 20%, or 200,000 hectares, in the Central Highlands. In the next ten years, around 140,000-150,000 hectares of old coffee plants must be replaced by new ones.

However, coffee growers are not inclined to replant their farms since new trees run the high risk of dying.

A study of the Western Highlands Agriculture and Forestry Science Institute (WASI) showed that only 14% of replanted coffee plants can live for up to two years and the rest die due to nematode infections.

WASI has worked with Nestle Vietnam on a project called NESCAFE Plan to fight the nematode on replanted coffee trees in the Central Highlands provinces of Lam Dong, Dak Lak, Dak Nong and Gia Lai.

The project has created a coffee seedling which is resistant to nematode infection and can ensure output of seven tons per hectare, almost double the present average output.

Le Ngoc Bau, head of WASI, said the project has helped ease the difficulties in replanting old coffee trees.

Along with training coffee farmers on sustainable cultivation, Nestle Vietnam has supported the institute in many other works including upgrading laboratory, funding tissue implant multiplication equipment, and building an area for testing coffee trees which can resist nematode infections, he said.

As planned, NESCAFE Plan will transfer seven million coffee seedlings for growers and train 24,000 growers at major coffee areas in five Central Highlands provinces by the year-end.

FPT starts work on Danang property project

FPT Joint Stock Company has broken ground for the FPT Complex office building in the FPT Danang technology and residential area to mark its 10th anniversary in the city.

The VND454 billion grade-A office complex will be constructed on 5.9 hectares and can house 10,000 staff.

The project will have swimming pool, park, grass hill, soccer field, basketball court and other facilities for staff working there such as elevators for the disabled, wide stairs and roofed walkways.

The first phase of FPT Complex will be completed by the end of 2015 to provide working space for 3,200 employees.

As scheduled, FPT Software Danang will hire 2,500 employees in 2015 with the objective of turning Danang City into a center of software outsourcing beside Hanoi and HCMC to meet the increasing needs of international clients like Japan.

The project is recognized as an environmentally friendly and energy-saving complex by the Ministry of Construction.

Petrolimex bemoans low rate of return at 4.6%

Vietnam National Petroleum Group (Petrolimex) obtained a pre-tax profit of VND63 per liter of fuel sold and a 4.6% profit margin after tax in the first half of this year, but this company still complained that the rates are meager.

In an announcement, Petrolimex reckoned that the ministries of finance, and industry-trade did not calculate sufficient profits in the base fuel prices, leading to the low rate of gross profit of all items.

According to Petrolimex’s announcement on the production and business in the first half of 2014 released on August 14, the group’s net revenue reached VND106 trillion, a rise of 7% year-on-year.

Its consolidated profit before tax totaled VND856 billion, equivalent to 95% of the year-ago amount. Of the figure, more than 40%, or VND346 billion, came from lubricant trading and over 30% or VND260 billion from gasoline. The rest came from other business sectors.

The total profit after tax reached VND672 billion, equivalent to last year’s number. These financial indicators were calculated according to a total sales volume of 4.1 million units (tons or cubic meters) of oil and gasoline, equivalent to 97% of the year-ago amount.

With this result, Petrolimes’s profit fell just a few percentages yet the after-tax profit was equal to that of the same period last year.

The nation’s leading fuel trading firm, however, insisted on the irrationality in pricing by the ministries of finance, and industry-trade, which led to the low gross profit rate of all commodities, particularly in Quarter 1.

Additionally, the company incurred losses after the central bank devalued Vietnam dong by 1% against the U.S. dollar on June 19.

Nguyen Ngoc Nam, deputy general director of Petrolimex, said the exchange rate adjustment had little impact on all industries but his firm because 70% of its fuels are imported.

Regarding profits, Nam explained the interdisciplinary team representing the ministries of finance, and industry-trade last year had allowed the company to deduct a bigger amount from the fuel price stabilization fund, so the business result was better than this year.

In the first six months of this year, the deduction rate was lower.

Petrolimex plans a dividend of 8 – 10% for 2014. However, 95% of the company’s shares are held by the State.

Minimum wage spike seen piling pressure on employers

Many firms have expressed concerns over a recent proposal to raise the minimum wage by region by an average of 15.1% next year as agreed upon by the National Wage Council, saying it would put them into a more difficult position.

The director of a footwear company in Binh Duong Province said if the minimum salary is raised by 14-15% to VND3.1 million, bonuses would rise accordingly. The current pay for an apprentice in the company ranges from VND6 million to VND7 million.

However, the wage hike will send other relevant costs rising, making it hard for producers to maintain normal operations and at the same time keep prices competitive, the director said.

His company spends nearly VND10 billion paying for its workers a month but when the new wage takes effect, the payroll could surge to VND11-12 billion. “We have four production lines run by 1,200 employees. We could be forced to scale down operations if the minimum salary is up 15.1%, thus laying off certain staff,” he added.

He also noted workers’ living standards and businesses’ operations could be assured without having to raise the minimum salary if inflation is kept low.

Cao Tien Vi, general director of Saigon Paper Corporation, described the timing of the pay raise as inappropriate as the economy has yet to be out of the woods. “Given the sluggish economy, I think, the wage hike is not a really good thing to do. Moreover, if social insurance cost is up, working capital would shrink too,” Vi said.

About 1,500 employees at Saigon Paper Corporation have higher incomes than the new wage approved by the National Wage Council but social insurance is paid based on the current minimum salary.

Therefore, the Government should avoid piling more pressure on companies. The macro economy should be stabilized to support companies, then revise up the wage and social insurance for workers, Vi added.

Tran Van Linh, board chairman and general director of Thuan Phuoc Seafood and Trading Corporation in Danang City, said if the minimum salary is increased by 15%, the company would spend an extra big sum paying for 2,000 employees. This would lead its production cost to leap, eroding its competitiveness on global markets.

Selling prices of domestic products would soar as a result, affecting domestic consumption. A fall in companies’ sales would finally eat into workers’ incomes.

The goal of the salary raise is to balance the interests of employers and employees, but it would hit enterprises hard, Linh said.

M&A sets to drive banking market

The banking industry may see more merger and acquisition deals in the coming time, with more foreign partners involved.

Ernst & Young last week announced its annual Banking in Emerging Markets Survey covering 11 markets, which revealed the opinions of 17 banks in Vietnam, including one joint venture, two wholly-foreign-invested banks, three state-owned banks and 11 joint stock banks.

Some 60 per cent of respondents believed that the banking landscape over the next year would be driven by the acquisition of smaller banks by larger domestic banks.

Some 30 per cent believed the banking industry would be driven by foreign banks not currently present in the market, and 10 per cent thought that foreign banks already present in the market would provide momentum.

In terms of foreign competition, Japanese and European banks were highlighted as the greatest rivals.

Nine of 17 surveyed banks saw Japanese banks as competitors, because at least three Japanese banks have become strategic partners in Vietnamese banks, including Mizuho (holding 15 per cent in Vietcombank), Tokyo-Mitsubishi UFJ (holding 20 per cent in Vietinbank), and Sumitomo Mitsui Bank (holding 15 per cent in Eximbank).

However, Ernst & Young financial services senior partner Keith Pogson disagreed, “I don’t agree with this view, because in the coming years, the Vietnamese market will develop strongly in terms of retail, while Japanese banks don’t have much of an advantage in this sector. I think competitors to Vietnam’s banks will come from ASEAN.”

In fact, according to the survey, only 13 per cent of respondents said their main competitors would come from neighboring nations and China.

Malaysian banks also backed this opinion, with 66 per cent of those surveyed stating that banks from ASEAN were a key source of competition, and none viewed Japanese banks as rivals.

Meanwhile, eight surveyed banks saw European banks as competitors, citing European banks operating in Vietnam like Germany’s Deutsche Bank, BHF - Bank Aktiengesellschaft, Unicredit Bank AG and Landesbank Baden-Wuerttemberg, the UK’s Standard & Chartered and HSBC and France’s Natixis Banque BFCE, and Belgium’s Fortis Bank and Austria’s RBI.

Pogson said more mergers and acquisitions (M&A) between private banks would be seen in Vietnam.

“M&A would be a good move. When banks become bigger and stronger, their operations will become more stable and they will be able to invest in new technology and offer better services to customers,” he said.

He said the State Bank was allowing the sale of weak banks to stronger commercial joint stock or state-owned banks or foreign strategic partners. The State Bank was also encouraging local banks to consolidate.

For example, Sacombank recently asked the State Bank to allow it to merge with Southern Bank this year. If the deal is successfully concluded, it would enable Sacombank to expand its branches from 416 to 558 nationwide, and to increase its total assets by 48 per cent.

In another case, PG Bank is planning to find a partner to raise operational effectiveness, with Vietinbank rumoured to be in the picture.

Vietnam currently has 37 commercial joint stock banks, five wholly-foreign locally incorporated banks and four joint venture banks. The State Bank has planned to reduce the number of locally-owned banks to 15-17 in the coming years.

Most of the Vietnamese banks surveyed expected a slight improvement in the economic outlook, with 13 expecting the economy to improve a little, three expecting it to improve a lot and one predicting a slight deterioration.

Fifteen banks expect their performance to improve only marginally, one was far more positive, while one believed their results would ‘stay the same’.

The banks are also most optimistic about retail and corporate deposits, with nine rating the outlook for retail deposits as fairly good, five very good, two neither good nor bad and one provided no answer.

However, respondents also expressed concern about the prospect of rising non-performing loans (NPLs), cited by 76 per cent as the most important issue facing the industry.

With most banks concerned by NPLs, 10 banks expect managing credit risk to be their greatest challenge, six as a challenge and one as no real challenge.

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

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