BUSINESS IN BRIEF 28/1

Piaggio VN recalling scooters for service on fuel pipe defects

Piaggio Viet Nam said it is recalling 628 imported scooters manufactured between May 13, 2009 and August 31, 2010 to check and repair possible fuel pipe defects, Vietnamplus reported.

The Piaggio series being recalled this time includes the Beverly, Vespa GTS and the Vespa LXV. Specifically, Piaggio Viet Nam will provide free services for two Piaggio Beverly 125 models.

The Italian motorbike manufacturer's periodic quality checks had revealed that there is some problem with the rotor of the fuel pipe in these particular scooters. The defect might cause difficulties in starting the engine or even stopping it when the vehicle is used constantly and the surrounding environment's temperature is high. The free service is being provided since January 23 at all Piaggio branches nationwide.

Power lines to reach poor households

Viet Nam would need at least VND30 trillion (US$1.42 billion) to bring stable power to the remaining disadvantaged communes, Minister of Industry and Trade Vu Huy Hoang said.

Of that amount, the country would receive VND3.059 trillion ($145.6 million) in Official Development Assistance funds to work on installing power lines from 2013 to 2020, he said.

The ministry will need to raise VND27 trillion ($1.28 billion) from private enterprises, foreign investors and the Government to install the necessary power systems and improve the quality of existing lines in disadvantaged areas.

It will cost the ministry VND5 to 10 billion ($238,000 to $476,000) to give power to one commune that already meets new standards for rural areas on upgraded infrastructure and living conditions. However, he said, it would be more difficult and costly to bring power to mountainous, less developed areas. It would cost about VND100 million ($4,760) per household.

Prime Minister Nguyen Tan Dung on January 15 approved EVN's plan to spend $3.3 million to create power systems and improve existing ones for more than 61,600 households in disadvantaged areas in 10 provinces, including Dien Bien, Lai Chau, Son La and Gia Lai.

The project, set to end in 2016, aims to improve people's working and living conditions by installing power lines for them.

According to EVN, Viet Nam currently has 91 communes with 550,000 households that aren't connected to the national power network and 750,000 households in disadvantaged areas using substandard power.

Deputy PM greenlights Vinatex-Mart supermarket chain equitisation

Deputy Prime Minister Vu Van Ninh has approved a plan to equitise Vinatex-Mart supermarkets in 2015.

The Vinatex-Mart supermarkets chain, owned by the Viet Nam National Textile and Garment Group (Vinatex), was established in 2001 to sell Vinatex's products and several other local textile brands.

By 2013, 58 Vinatex-Mart outlets had been opened across 26 cities and provinces nationwide. Vinatex-Mart supermarkets stock 60,000 items of five main categories of goods, including garment and textiles, fresh food, cosmetics and home appliances.

Majority of listed companies report Q4 gains in Hanoi

More than 30 companies, listed on the Ha Noi Stock Exchange, have announced their operational results for the fourth quarter of 2014, with most of them reporting positive results.

According to data from the exchange, the number of companies reporting losses fell, compared with the same period in 2013, especially in terms of the number of firms and the extent of the losses being reported.

At least 13 listed companies saw their profits swell, notably Central Hydropower (CHP), PetroVietnam Nghe An Investment and Trading (PXA), Saigon Petrolimex Gas Taxi (PGT) and PetroVietnam Coating (PVB).

CHP earned a net profit of VND215.8 billion (US$10.13 million) in the fourth quarter, making up for the losses reported during the first nine months, adding that its accumulating profit jumped 69 per cent from 2013 to VND213 billion ($10 million). This clearly surpassed an earlier target of VND115 billion ($5.4 million) fixed by the company.

Other companies reporting gains included PXA and PGT, which also turned their loss-making operations profitable to avoid being delisted. While PXA reported a profit of only VND317 million ($14,880), PGT pegged its profit at VND10.2 billion ($478,870).

As for PVB, its profit during the fourth quarter of last year rose to VND15.3 billion ($718,300), pushing the annual profit to VND147.5 billion ($6.9 million), which was 2.5 times more than 2013.

Some 17 other enterprises also announced profitable results, but they pointed out that their profits had declined, from a year ago. Some reported a drop of almost 100 per cent, including Kon Tum Sugar (KTS) and Viet Nam Construction No 7 (VC7).

Meanwhile, three firms reported losses. They are PetroVietnam Gas City Investment and Development (PCG), Song Da Yaly Cement (SDY) and HCM City Textbook Printing (SAP).

Rural areas could see Tet shortages

The supply of essential goods for the Tet festival is expected to be enough for the local market, though there might be shortages in rural and remote areas, experts said.

Vo Thanh Do, deputy head of the department of processing and trade for agro-forestry-fisheries products and salt production, said that there will be an estimated high volume of 1.5 million tonnes of rice available for the Tet festival in February.

The rice prices will be stable and even fall slightly by VND200 to VND300 per kilogram in the south due to the harvest season of the winter-spring rice crop.

The official from the Ministry Agriculture and Rural Development said that the demand for rice will reach an estimated 70,000 tonnes in Ha Noi and about 1,200 tonnes in HCM City for the Tet festival.

Supplies of fresh food such as meat and seafood are expected to be high, said Do.

Fresh food prices have been stable over the recent past, and could fall due to petrol price reductions, he added.

The livestock department said that in the first two months of this year, the total supply of meat, eggs and milk for Tet will increase by 20 per cent against normal months. The total output of meat has reached 580,000 tonnes.

Tong Xuan Chinh, deputy head of the livestock department, said that the rising demand for these products will lead to a slight increase in their prices. However, their supply will meet the local market demand.

The total area used for growing vegetables has reached 180,000 ha, 15,000 ha more than the same period last year, the department of plantation said.

Therefore, the supply of vegetables for the Tet festival will meet the local demand, if there is no bad weather.

However, there is likely to be a shortage of essential goods during Tet in some rural and mountainous areas as well as industrial zones, and so the state offices should regulate the market to ensure circulation of goods, said Do Thang Hai, Deputy Minister of Industry and Trade.

Plastic industry leans on imports

Increasing exports notwithstanding, the plastic industry faces some serious difficulties, including a continued shortage of raw materials, according to the Viet Nam Plastic Association (VPA).

The industry is highly dependent on imports, buying about 80 per cent of the polyethylene, polyvinyl chloride E, and polyvinyl styrene it needs (around three million tonnes a year), mostly from South Korea, Taiwan, Thailand, Singapore, Saudi Arabia, Japan, and Malaysia, the association said.

It can only source certain raw materials like polyvinyl chloride, polyethylene terephthalate, and polypropylene locally.

Speaking at a review meeting organised in HCM City last Saturday, Ho Duc Lam, VPA's chairman, said plastic exports reached US$2.05 billion last year, a year-on-year rise of 15.8 per cent.

The products are shipped to many markets like Cambodia, Laos, India, Sri Lanka, Japan, China, the EU, Taiwan, and the US.

The Viet Nam-EU Free Trade Agreement, for which negotiations are underway, could be an opportunity for Vietnamese plastic firms exporting to the EU, which bought 25 per cent of Viet Nam's total exports last year.

However, the EU has some non-trade barriers in place, which could deprive Vietnamese exporters of tax breaks, Lam said.

For instance, the EU requires exporters to clearly state the origin of the chemicals they use and do research on the impacts caused by their products, which would also result in higher production costs, he said.

Failure to satisfy the conditions would not only mean they cannot benefit from lower tariffs under the FTA, but could even be banned in that market, he said.

The consumption of plastic products has shot up in the past few years. For instance, it was 22kg per capita per year in 2008 while by 2013 it was up to 35kg.

It is expected to rise to 45kg by 2020, according to industry insiders.

This has sparked a scramble among producers to improve technologies and thus their products so that they can capitalise on this demand.

Ford Vietnam revs up dealership openings

Ford Vietnam opened a new authorised dealership in the southern province of Binh Duong last week and upgraded two others in Ho Chi Minh City, affirming the company’s continued commitment to improving customer services in Vietnam.

The new additions have been invested in with more than VND120 billion (nearly $6 million), helping to bring the total number of dealerships in the Ford Vietnam network to 27.

“This dealership will not only be a place where our customers come for advice on a car that can cater to different needs in their lives, this will also be where they become members of the extended Ford family and experience the best services from Ford,” said Dave Schoch, Ford Motor Company’s group vice president and president in Asia Pacific. “Bringing the best to the Asia Pacific is a key part of Ford’s 2020 global growth goal, and Vietnam will play an important role in helping us achieve these goals.”

Located on Hung Vuong street, the new Binh Duong dealership boasts a 5,400 square metre area. The most significant investment of the dealership is the workshop and customer service area, which covers an area of 3,500sqm, and includes 14 general maintenance and repair bays, as well as three quick service bays which will give the facility a service capacity of up to 60 cars per day.

The new Binh Duong Ford dealership has the total investment capital of VND78 billion (nearly $3.9 million) and uses advanced equipment and well-trained staff, making it fully in compliance with Ford Motor Company’s global standards.

In addition, Ford Vietnam has also upgraded its Pho Quang branch (part of its Saigon Ford network) into a sales, service and spare parts outlet, providing customers with an expanded range of service options. Saigon Ford also announced that its new boutique will open on Tran Hung Dao street, District 1 in Ho Chi Minh City, which will help to better serve the city’s customers.

“Ford Vietnam had a very successful 2014, and a big part of this success has been our continuous investment in our customer experience,” said Metelo Arias, managing director of Ford Vietnam. “The investment in our new Binh Duong dealership, as well as the upgrade of our Pho Quang branch, are both about ensuring that we are continuously meeting the evolving needs of motorists in Vietnam. I’m very pleased to be able to kick off 2015 with such a positive announcement.”

The Ford Motor Company recently announced that its overall 2014 retail sales for the ASEAN region rose more than 5 per cent from the previous year to a record 100,824 units. The company’s ASEAN sales were driven by record full-year performances in the Philippines, Vietnam, Malaysia, Cambodia, and Myanmar, as well as full-year market share gains in Thailand despite a significant domestic industry slowdown.

In Vietnam, Ford delivered a record full-year performance with total retail sales rising 71 per cent to 13,988 units, including December sales that increased 64 per cent to an all-time best monthly total of 1,650 units.

Hepza to attract $700 million in 2015

Ho Chi Minh City’s Export Processing and Industrial Zones Management Authority (Hepza) is expected to draw in investments worth of $700 million into the local zones this year with 60 per cent arriving in the form of foreign direct investment capital.

Last Friday, Hepza released a report on the investment attraction of industrial and export processing zones (IZs and EPZs) in 2014 and the development plan for 2015, showing that Ho Chi Minh City lured in a total of $752.39 million worth of investments signifying a 23.52 per cent increase compared to the previous year and exceeding its referent target by 136.8 per cent.

Foreign direct investment (FDI) capital in the second city’s IZs and EPZs hit $347.5 million in 2014, a slight decline of 4.39 per cent compared to 2013. Meanwhile, the domestic investment sum was estimated at more than VND8.5 trillion ($404.89 million),  a 64.8 per cent increase over the previous year.

Tran Cong Khanh, a senior official of Hepza said that the total export revenue of IZs and EPZs increased by 7.84 per cent compared to 2013, totalling at  $5.5 billion in 2014.

According to Hepza’s Investment Management Office director Tran Viet Ha, most foreign invested projects in 2014 were in textile and garment, services, electronics, machinery, tobacco and foodstuff  plastic and rubber processing sectors.

Imperia sets sights on Hanoi

HBI Joint Stock Company – the developer of Imperia An Phu in Ho Chi Minh City – officially broke ground last week at its Imperia Garden complex in Hanoi.

Located on a 42 hectare site in Thanh Xuan district, Imperia Garden is a multi-function complex consisting of offices, residences, and a trading centre, and will cater for a population of 5,000.

It is adjacent to the ring road, and the elevated railway system which is currently under construction. This offers convenient access to the city centre and other new urban development areas. Other on-site facilities include a four-season swimming pool, healthcare services, a beauty spa, a gym, a supermarket and intelligent parking services. Ranging from 65 to 174 square metres, each apartment is designed according to modern and eco-friendly standards.

Imperia Garden will be developed in line with its sister project, Imperia An Phu, which was voted one of Ho Chi Minh City’s five best modern apartment projects. Scheduled for completion at the end of 2017, Imperia Garden will mark a strong step forward for HBI JSC into the real estate market of the northern region.

Ascott opens its first serviced residence in Haiphong

CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has opened its first Somerset serviced residence in the northern port city of Haiphong.

The 132-unit Somerset Central TD Haiphong City is located on a prime urban area in the city’s new central business district. The new property is the first international branded serviced residence in Haiphong and reinforces Ascott’s presence as the largest international serviced residence owner-operator in Vietnam. Ascott currently has over 2,000 apartment units in 13 properties across four cities in the country – Hanoi, Ho Chi Minh City, Haiphong and Danang.

“Ascott has established a presence in Vietnam for two decades and we remain confident in the long-term economic outlook of the country, underpinned by its large, young workforce and pro-growth policies. We expect strong demand from the influx of expatriates to Haiphong as the city further urbanises,” Mark Chan, Ascott’s country general manager for Vietnam, said. “The local government’s strong support for the development of the infrastructure as well as new industrial parks in Haiphong will further spur economic growth in the city. Ascott will have the first mover’s advantage by being the first international branded serviced residence operator to offer quality serviced accommodation in this growing market”.

To celebrate the opening of Somerset Central TD Haiphong City, Ascott is offering special introductory rates starting from VND1,650,000++ per night or VND30,450,000++ per month for a Studio Executive from now until April 30, 2015.

For reservations or more information, please visit www.somerset.com, call (84-31) 3810000 or email enquiry.haiphong@the-ascott.com.

Besides Somerset Central TD Haiphong City, Ascott operates three properties in Hanoi – Somerset Grand Hanoi, Somerset Hoa Binh, Somerset West Lake and five other properties in Ho Chi Minh City – Somerset Chancellor Court, Somerset Ho Chi Minh City, Somerset Vista, Vista Residences and Diamond Island Luxury Residences. The company will be opening more properties in Vietnam including Somerset West Central Hanoi, Somerset Danang Bay and Ascott Waterfront Saigon in 2016.

Beating a path to regional Integration

As Vietnam’s gateway to the East-West Economic Corridor which links Laos, Thailand and Myanmar, the central province of Quang Tri is preparing for deeper integration into the region’s markets.

The East-West Economic Corridor (EWEC) is an economic development programme initiated in order to promote development and integration of Myanmar, Thailand, Laos, and Vietnam. The economic corridor is based on a 1,450-kilometre road terminating at the Myanmar port city of Mawlamyine in the west and Danang in the east.

In  order  to  bring  into  play  the  special  friendship  between  Vietnam  and  Laos  and  promote  the potential of the EWEC, the Vietnamese government has established Lao Bao Special Economic and Commercial Area  (SECA).

Lao Bao is also the gateway of the EWEC to Vietnam, the shortest and most favourable route to  expand  the  exchange  of  goods,  tourism  and  services with  Laos,  Thailand, Myanmar  and  other countries in the Greater Mekong Sub-region (GMS). It has an industrial zone, export processing zone, economic border gate zone and special non-tariff area. The SECA offers the highest investment and business incentives currently available under Vietnamese law.

The establishment of Lao Bao has positively contributed to the economic growth of Quang Tri and the EWEC. During the 2004-2010 period, around 56,000 to 58,000 vehicles annually travelled along the EWEC road through the Lao Bao Border Gate. Cross  bordered  freight  turnover  increased  dramatically  from  $58  million  in  2000  to  $251 million in 2010.

As the ASEAN Economic Community will be established in 2015, trade of goods and services between ASEAN members along the EWEC will be intensified.

The province wants more from the growth of the EWEC, and so the Quang Tri Provincial People’s Committee plans to develop Lao Bao as an economic hub in the west of the province, making it home to industrial manufacturing, agricultural and forestry processing, and tourism services.

Vietnam and Laos officially opened the new La Lay International Border Gate last year linking  Quang Tri and Lao province of Salavan. The new border gate is expected to boost co-operation and trade between the central provinces and Lao, Thai and Cambodian localities along the EWEC. It is also expected to promote economic, investment, cultural and tourism ties between neighbouring provinces of Vietnam and Laos.

In addition, the province is conducting a $101.6 million Asian Development Bank-funded project helping transform the corridor towns of Dong Ha and Lao Bao economic hubs by improving urban-environmental infrastructure and strengthening institutional capacities of the  local authorities. This project aims to enhance the competitiveness of towns and support the development of the Greater Mekong Sub-region’s transport routes into vibrant economic corridors.

Quang Tri rolls out investment invite

The central province of Quang Tri – home to one of the bloodiest battlefields during the American War – is now renowned as one of the country’s top investment locations.

The Electricity Generating Authority of Thailand, better known as EGATI, is making Quang Tri its chief focus as it develops its overseas business in Vietnam. EGATI has gained in-principle approval to build a 1,200-megawatt thermal power plant which will cover 450 hectares in Hai Lang district.

According to the Quang Tri Provincial People’s Committee, the $2.26 billion power project will operate under the build-operate-transfer (BOT) model. Once completed, it will play a key role in ensuring national power security as well as bolstering the local socio-economic development.

EGATI is not the only investor setting up shop in Quang Tri. Data from the province’s Department of Planning and Investment shows that by October 2014 the province had attracted more than 200 private investment projects, with the total investment capital of more than $2 billion.

Some projects operating there have achieved remarkable success, including Geruco MDF wood processing mill, Phong Phu garment and textile factory, Hoa Tho garment and textile factory, Super Horse energy drink plant, Camel motorbike tyre plant, ICall mobile assembling plant and Uni-President Ltd’s facility.

Situated in central Vietnam, Quang Tri borders Quang Binh to the north, Thua Thien-Hue to the south and Laos to the west. The province is traversed by the Highway 9 which is part of the East-West Economic Corridor running through the Lao Bao International Border Gate, providing ample opportunities for the development of trade, tourism, and investment co-operation between Vietnam with ASEAN members.

Although the province recorded an average per capita income of just VND19.5 million (around $900) in 2013, the province’s economic structure has greatly improved in recent years, with industry and construction accounting for 38 per cent of the province’s output, followed by agriculture, forestry and fisheries at 23.8 per cent, and services accounting for the remaining  38.2 per cent.

Despite the fact that Quang Tri remains one of the poorest provinces in Vietnam, it currently holds massive potential by virtue of its 120-kilometre coastline and the 60-100 billion cubic metres of high quality gas resources it possesses.

According to the government’s gas industry development master plan, a gas transmission system to Quang Tri will be constructed during the 2014-2016 period. This system will be capable of transporting 1-3 billion cubic metres of gas per year. Once completed this will obviously provide favourable conditions for the development of the gas-nitrogen industry and hi-tech product processing in the province.

Quang Tri also has 8,400 square kilometres of fishing grounds for raisin tiger shrimp, cuttlefish, greater amberjack fish and sea-cucumber, providing an annual catch of some 17,000 tonnes. The province has another 4,000 hectares of water surface for shrimp and crab farming. More than 3,000 hectares are already being used for aquaculture with the annual output of 7,500- 8,000 tonnes.

Low oil prices both good and bad for Vietnam

Vietnamese authorities are trying to find ways to cope with tumbling world oil prices, but are optimistic about long-term benefits for the economy.

World oil prices have dropped UD10 a barrel for RON92 to USD54 in the past month, hitting a six-year low of USD46 on January 13.

Vietnam Petroleum (PVN) contributed 26 percent of the overall state budget in 2014, and declining fuel prices will have an impact on state spending. The Minister of Planning and Investment, Bui Quang Vinh, said if the price dropped to USD40 a barrel, the state budget might lose VND70trn (USD3.3bn) in revenue.

"If the price stays at USD60 a barrel then there's not much of a disturbance, but when the oil price drops to USD40, Vietnam will have to reduce its oil production by 1.8 million tonnes," he said.

The Ministry of Industry and Trade planned to export 14.74mn tonnes of oil this year, and a price drop to USD40 would affect many investment plans. The target GDP growth of 2015 would fall by one percentage point to 5.2 percent.

PVN cuts oil production

PVN already cut oil production this year by some 450,000 tonnes in oil fields with production costs of USD60 to USD70 a barrel.

The Minister of Finance, Dinh Tien Dung, said there were positive factors even if oil stays under USD50 or falls to USD20.

"It would be a start of an economic boom in the long-term, which would be good for Vietnam," he said, "The ministry also has other plans to balance the budget."

Vietnam imports more oil than it exports, and a consequence of lower prices would be a decline in transportation costs and price falls in other areas, which would be a boost to the economy.

But authorities are worried about a boom in gasoline smuggling, because fuel in Vietnam, is already cheaper than neighbouring countries such as Cambodia, China, Thailand and Laos.

Finance ministry wants better controls on transport charges

The Ministry of Finance has requested the Ministry of Transport and local governments to slap fines on transport enterprises which hesitate to reduce charges in accordance with fuel price cuts in the country in the past months.

The finance ministry made the request after local fuel trading firms slashed retail prices on Wednesday afternoon, with the prices of RON92 petrol and diesel falling by VND1,900 per liter to VND15,670 and VND1,460 per liter to VND15,170.

In Document 931/BTC-QLG sent to the transport ministry and local governments, the finance ministry wanted violators to have their names published on mass media in addition to heavy fines.

According to the finance ministry, inspections by relevant agencies showed that a large number of transport enterprises have not adjusted down their fares despite multiple fuel price cuts in the past months. Therefore, the transport ministry and the agencies concerned were urged to check the situation and impose fines on firms slow in registering for charge reductions in line with prevailing regulations.

Local authorities should check those transport companies which have already made fare reductions but lower than required and can fine violators.

Article 11 of Decree109/2013/ND-CP regulates fines of VND5 million to VND30 million for enterprises which violate regulations on price registrations. Besides, violators must revise their prices in line with the regulations.

Lending rates may inch up in Q3

Lending rates are likely to rise in the third quarter of this year if monetary and fiscal policies are not implemented consistently, warned a member of the National Advisory Council for Financial and Monetary Policies.

Dr. Le Xuan Nghia told a seminar on this year’s economic scenarios in HCMC on January 22 that inflation is not worrisome this year as it is forecast to grow between 3% and 3.3% if the pricing factors from fuel and foods are excluded.

But the lending rates will depend much on inflation and money supply of the central bank, Nghia said. Early this year, the central bank set a target of bringing the medium-term and long-term interest rates down to below 10% per year, and may control money supply to achieve the target.

Nghia noted such a target is not easy to be reached. If government bonds continue to be issued in bulk like now and there are no consistent policies, the lending rates will possibly go up in the third quarter.

The new rates may be not much higher than the existing levels but will hit enterprises which are still in difficulty. Therefore, the Government needs to implement policies harmoniously, otherwise the rates will move up, affecting policies for economic reform and recovery of enterprises, the according to Nghia.

Last year, the borrowing and lending rates declined by 1.5-2 percentage points and two percentage points per year respectively. The common lending rates of last year were 7-9% for short-term loans and 9.5-11% for medium- and long-term ones.

According to figures Nghia mentioned at the seminar, the government bonds still take an lion’s share of the total bonds in circulation in Vietnam with a rate of 75.38% (equivalent to over VND496 trillion), followed by bonds guaranteed by the Government with 22.12% (over VND145.5 trillion) and municipal bonds with 2.5% (over VND16.4 trillion).

Some 35.2% of the G-bonds carry a two-year term, 34.5% three years, 21.8% five years, 6.1% ten years and 2.3% 15 years. The average term of G-bonds is 2.35 years and the Government wants to raise it to 3.5 years.

Trade ministry okays tenders for sugar import quota

The Ministry of Industry and Trade has agreed on picking importers for the annual sugar import quota via tenders this year rather than appointments as in previous years.

Ha Huu Phai, chief representative of the Vietnam Sugarcane and Sugar Association (VSSA) in Hanoi, told the Daily that the ministry approved in principle such tenders for the import of 81,000 tons of sugar this year as committed to the World Trade Organization (WTO).

Phai said the trade ministry gave the nod at a meeting with the ministries of agriculture-rural development and finance and VSSA on Tuesday. But relevant ministries and agencies and the association will have to discuss detailed procedures for the tenders.

Earlier, VSSA had many times proposed the ministries of industry-trade and agriculture-rural development adopt a new mechanism to select candidates to fulfill for the sugar import quota instead of appointing importers.

In previous years, Vietnam had to import at least 70,000 tons annually in accordance with the country’s commitment to the global trade club WTO and importers were appointed to fulfill this quota.

VSSA chairman Nguyen Thanh Long said Vietnam imported 72,200 tons of sugar last year and the trade ministry picked processing firms to buy 40,000 tons of the volume and the rest for sugar mills and enterprises, including Bien Hoa Sugar Company (15,000 tons), Thanh Thanh Cong Tay Ninh (10,000 tons) and Lam Son Sugar Company (5,000 tons).

Long said the old mechanism triggered unhealthy competition among domestic sugar companies as the chosen importers would benefit much from the price difference of locally-refined and imported sugar products.

Phai calculated the price of imported sugar was VND2,000-4,000 per kilo lower than that of local sugar in previous years, and 15,000 tons of sugar could bring about tens of billions of dong in profit for the importer.

“This sparks unhealthy competition among sugar enterprises,” Phai said.

This is the reason why VSSA has requested the trade ministry to change the appointment mechanism to stop an ‘ask-and-give’ mechanism between sugar enterprises and administering agencies.

Indian apparel firms come knocking

Representatives of nearly 40 Indian enterprises have paid a five-day trip to Vietnam to sound out business prospects on this market, especially the apparel sector.

Milind Hardikar, managing director of Welspun Group, one of the world’s leading producers of household apparel products, said the group is considering investing in apparel projects in Vietnam to turn out products for export to the United States.

Welspun has seen new opportunities in Vietnam as the country is determined to join the Trans-Pacific Partnership (TPP) agreement, he told the Daily on the sidelines of the Vietnam-India trade forum in HCMC on Wednesday.

The delegation, led by Indian Deputy Minister of Commerce and Industry Rajeev Kher, also included companies operating in the fields of leather-shoe, pharmaceutical, agriculture, food processing, banking and engineering. As scheduled, they wrapped up their Vietnam trip on January 22.

Kher said India is a big producer of cotton and fiber while Vietnam is strong in textile and garment. Therefore, Indian producers can provide materials for Vietnam and guarantee stable supply for enterprises in this market.

Siddhartha Rajagopal, managing director of the Cotton Textile Export Promotion Council of India (Texprocil), told the Daily that Indian firms are serious in exploring investment opportunities in Vietnam’s apparel sector and are making efforts to boost trade and investment ties with Vietnamese counterparts.

Do Huu Huy, head of the West Africa and Southwest Asia Markets Department under the Ministry of Trade and Industry, said the ministry and India’s Ministry of Commerce and Industry on Tuesday signed an agreement to prop up trade cooperation between the two countries.

Vietnam requested India to remove barriers to imports of Vietnamese products into India such as high tariffs on cashew nuts and safeguard and anti-dumping investigations into several products imported from Vietnam.

India pledged to provide a US$300-million credit to support cooperation between the two countries in the apparel sector.

Two-way trade between Vietnam and India stood at US$5.6 billion last year, including US$2.5 billion worth of Vietnam’s exports. The two countries target US$7 billion this year and US$15 billion in 2020.

Many firms slow in social insurance payment

More and more enterprises have been slow in paying social insurance premiums for their employees due to business difficulties, Vietnam Social Insurance (VSI) agency said.

Do Van Sinh, deputy general director of VSI, told a recent review conference in Hanoi that business difficulties have forced many enterprises to scale down and suspend their operations, and go bankrupt.

VSI reported that the total insurance premium arrears of enterprises neared VND7.3 trillion last year, equivalent to 4% of the amount the agency should collect in the same year. Of which, overdue social insurance premiums accounted for nearly VND5.6 trillion, unemployment insurance debts for VND336 billion and health insurance debts for over VND1.3 trillion.

Localities with high social insurance arrears last year were Lai Chau Province (12.6%), Hanoi (6.7%), Hoa Binh Province (6.4%), Binh Dinh Province (6.2%) and Phu Yen Province (5.1%).

Cao Van Sang, director of HCMC Social Insurance agency, said enterprises based in the city had social insurance premium arrears of over VND1.4 trillion last year. To protect legitimate rights of laborers, the agency took legal action against over 1,700 companies and collected a total of VND129.9 billion.

According to VSI, 50 municipal and provincial social insurance agencies sued over 5,830 companies for slow health insurance premium payment of VND2.445 trillion but got only VND621 billion, equivalent to a mere 8.6% of the insurance premium debts.

VSI said agencies collected insurance, health and unemployment insurance premiums of nearly VND198.2 trillion last year, or 2.52% higher the year’s target.

Local enterprises unprepared for further regional integration

The chairman of the Hanoi Young Business Association has pointed out the fact that the majority of Vietnamese businesses are not yet well prepared for more competition triggered by the country’s further integration into the region, especially after the ASEAN Economic Community (AEC) is formed this year.

Le Vinh Son quoted a survey of the association as saying that up to 80% of corporate respondents do not pay attention to the country’s regional integration and only 20%, mainly big enterprises like Viettel and BIDV, do.

 “We find that Vietnamese enterprises lack knowledge of the integration. Most of them are rather passive and don’t know what will be happening to them ahead though the integration (the AEC establishment) is very close,” Son told an online dialogue organized by the Government portal on January 22.

He said the concerns are that Vietnamese businesses, especially small- and medium-sized enterprises will be affected when with the AEC is established as more enterprises of ASEAN and ASEAN+ which are more active and more competitive will enter the local market.

“I’m really concerned about that. Though it’s late now, it’s necessary to make local enterprises aware of the integration,” Son said.

The Government should have helped enterprises and business associations to better know what to prepare for the nation’s further integration, Son added.

Nguyen Hong Son, rector of the Vietnam National University’s University of Economics and Business (UEB), shared the same viewpoint, saying that Vietnamese enterprises’ preparations for AEC are below average.

A survey of UEB showed that 60% of Vietnamese enterprises do not know about AEC.

According to Son, integration will pose more challenges for producers of consumer goods.

“As we can recognize, more Thai goods are entering the Vietnamese market. In addition, the middle-class consumers favor foreign products thanks to higher quality,” Son said.

The second challenge is the skilled labor shift. “Only 20% of Vietnam’s human resources are skilled and they may shift to the foreign direct investment (FDI) sector or other ASEAN countries while foreign, skilled laborers will move to Vietnam,” he analyzed.

Meanwhile, Deputy Minister of Industry and Trade Nguyen Cam Tu is optimistic about the future when he said that “Just look at the big things we have done, from zero to what we are having now, to instill confidence in integration.”

According Tu, the gap between Vietnam and other ASEAN countries 10-15 years ago was huge. In the past, Chinese goods flooded the Vietnamese market, but now there is no place for Chinese beer or Thai sugar.

“We have a growing economy, a large number of enterprises, diverse and competitive products,” Tu said when he tried to prove Vietnam has been ready for further regional integration.

“We should see in that way so that we are confident that we will integrate successfully,” he continued.

Vietnam and Singapore score over 90 out of 100 points in adopting priority measures for the AEC integration while the average score of ASEAN countries is 82, according to Tu.

“We have built a system of legal documents suitable for a market economy… Our legal system is more comprehensive than that of many other countries,” Tu said, implying the Government has made preparations for integration.

At the dialogue, participants agreed that further integration would speed up internal reforms and make the country prosper.

Japanese firms in need of many workers

Japanese companies in the south are seeking to recruit more than 6,000 employees to work in different fields, including component assembly, software programming, design and translation.

Some 23 Japanese firms operating in HCMC, Dong Nai and Long An took part in a job bazaar in HCMC on Wednesday to look for thousands of qualified candidates. Most of them are small and medium, and the companies in need of many workers included Wonderful Saigon Electrics Co. Ltd. and Nidec Seimitsu Vietnam.

According to Masaaki Shooka, senior manager of Global Recruiting Division, local laborers have many opportunities to work for 1,500 Japanese companies in Vietnam. But he noted they should improve their soft skills such as Japanese proficiency and computer skills, and change their working attitude to meet the needs of employers.

Kenta Chisaka, a representative of Pasona Global, told the Daily that most jobseekers focus on big and well-established companies while new and small companies offer them more job opportunities.

According to employers, many applicants could not pass tests on what they did write in their job applications because they falsified their skills.

Vuong Quoc Bao of the 100% Japan-owned Wonderful Saigon Electrics, advised applicants to state what they could do for employers to arrange proper jobs for them.

One more foreign ice-cream brand introduced

Orana Vietnam has inaugurated a facility producing ice-cream with the Osterberg brand in HCMC after 13 years of processing products from fresh fruit.

In addition to ice-cream, the US$2-million facility produces jam, fruit juice and syrup products with the Osterberg brand.

The new investment will enable Orana Vietnam to turn out around 6,000 tons of products per year, doubling the company’s current output.

Orana Vietnam will make ice-cream base for sale at the Osterberg shops to be opened in the city, with 60-70 tons planned this year.

In 2013, the parent company Orana opened ice-cream shops in Copenhagen, Denmark. In Vietnam, the first Osterberg ice-cream shop will be in place in District 1 after the Lunar New Year holiday, also known as Tet.

The current foreign ice-cream brands in Vietnam include Dairy Queen, Baskin Robbins and Swesens.

Located at Tan Thoi Hiep Industrial Zone in HCMC’s District 12, Orana Vietnam is a joint venture between Orana Denmark and local firm Phu Cong Minh. It now supplies materials for dairy companies.

Seafood, agro-forestry exports drop 14% in January

Vietnam earned an estimated US$1.95 billion from exports of agro-forestry-fishery products in January, a year-on-year decline of 13.8%, according to the Ministry of Agriculture and Rural Development.

Of the figure, farm produce exports were valued at US$859 million, down 11.8%, while exports of seafood saw a decrease of 25.6% to US$412 million and forestry product export generated US$520 million, down 8.2%.

Export items saw an increase included tea, cashew nuts, cassava and cassava products.

In January, Vietnam shipped abroad 9,000 tonnes of tea, raking in US$17 million, up 1.4% in volume and 5.7% in value year on year.

Meanwhile, cashew nuts brought home US$29 million from 18,000 tonnes, representing respective year-on-year increases of 16% and 20%.

However, rice exports generated US$152 million, a year-on-year decrease of 12.7% for a volume of 312,000 tonnes, down 14.5%.

Coffee exports were US$202 million, down 23.6% in the reviewed period.

Germany inaugurates coffee processing plant in Dong Nai

A US$12 million coffee processing plant was officially launched by the German group Neumann Gruppe on January 26 in the An Phuoc Industrial Zone, Long Thanh district, southern Dong Nai province.

Covering an area of 5ha, the plant is designed to process around 26 tonnes of coffee per hour or 100,000 tonnes per year by 2017 with finished coffee to be shipped worldwide.

The newly-built plant is the second of its kind invested by Neumann Gruppe in Vietnam, after the first constructed in 1992 in southern Binh Duong province.

Vice Chairman of the Dong Nai provincial People’s Committee Nguyen Phu Cuong expressed his hope the plant will help expand local coffee growing areas, and vowed to facilitate the company’s operation.

The German group currently has 46 coffee processing plants in 28 countries around the world which contribute to 10% of global coffee exports.

Vietnam’s livestock sector in a changing landscape

Vietnam’s livestock sector has always been considered by most leading economists to be particularly vulnerable to regional and global trade liberalisation, largely because it is dominated by smallholder production systems typified by the traditional family farm.

The argument has been that agricultural trade liberalisation would give undue advantage to large commercial scale production systems such as those in neighbouring Thailand at the expense of the family farmer resulting in a deterioration of the trade balance for the industry.

However, other economists have said not so fast, regional trade liberalization in particular would bring with it a reduction in costs for the smallholder in Vietnam along with an increase in sales prices relative to costs and thereby increase their income.

It would also provide the opportunity for those able to reinvest those profits or corral alternative sources of investment to boost research, modernise their equipment and scale up their systems enabling them in the long run to compete on an equal footing.

We are now beginning to see early signs that the latter economists may have been on target with their analysis.

Take for example, Ba Huan Co, Ltd, a smallholder egg supplier in Vietnam. It was able to muster investment for a modern factory in Long An province it just inaugurated in early 2015, which incorporates all the latest technologies.

Earlier, the company erected a VND100 billion factory to process eggs in the Binh Chanh district, HCM City and a standard breeding farm in Binh Duong after it was able to round up VND320 billion.

With an investment of VND60 billion, the company also implemented a new factory in Long An province specialising in producing fresh chicken, chicken sausages, chicken and duck eggs, flan cakes, and some fast food products made from of chicken.

In addition, it has plans to forge a fresh path with a new line of products, which details it is keeping closely under wraps for now, with the support of food experts, technological engineers, marketing staffs and well-trained workers.

The company is well on its way to becoming the largest supplier of egg products in Vietnam with aims of dominating the ASEAN marketplace in the future.

As another case on point, Thuong Chi Thien, director from of the Vinh Thanh Dat joint stock company said after pumping all the available monies they could get their hands on into research, the company assembled sufficient monies to launch a novel new line of instant egg products.

These products have increased the life of their products on the supermarket shelves from four to six months thereby gaining a competitive advantage. Thien said the launch of new product line gives them a sizable advantage in the domestic market, which will carry over to the ASEAN market.

Vietnam Meat Industries Limited Company (VISSAN), a smallholder member company of Saigon Trading Group (SATRA), in turn has experienced success through efforts to put a food investment in a processing industrial complex into operation in Long An province soon.

The company is cooperating with Hoang Anh Gia Lai group and moving with haste to launch an unprecedented beef product line later this year. Vissan General Director Van Duc Muoi is banking these on the products becoming a sensation and really soaring when the AEC takes effect.

Recently, the Thailand's Department of International Trade Promotion (DITP) has invited a large number of Vietnamese enterprises companies to participate in the VIV Asia 2015 – the Asian region’s largest trade show for the international feed industry which will be held for Bangkok this upcoming March 11-13.

This invitation demonstrates Thailand’s avid interest in cooperating with Vietnam in the livestock industry.  It also demonstrates Vietnam smallholders can be competitive in the region given the right entrepreneurial spirit mixed with investment and research.

Dr. Tong Xuan Chinh, deputy head of the Animal Husbandry Department under the Ministry of Agriculture and Rural Development, cautions that too many smallholders may be taking a lackadaisical approach to the formation of the AEC.

Chinh said there remains considerable lack of preparedness for the establishment new ASEAN regional marketplace and these smallholders are particularly vulnerable.  They most likely will suffer and go out of business.

Only those smallholders who take a proactive approach to the AEC formation have any chance at succeeding he said.

Mr Chinh suggests smallholders in the livestock industry speed up trade promotion activities touting the advantages of high quality produced in Vietnam livestock products such as meat, duck eggs, milk, and honey.

They need to start looking to forming cooperation agreements and forming supply chains with other ASEAN member nations to collectively cooperate in the US and European markets, particularly in light of the Trans Pacific Partnership (TPP) in the offing.

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

Piaggio VN, Ha Noi Stock Exchange, Ford Vietnam, oil prices
 
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