BUSINESS IN BRIEF 4/2

Saigon Securities divests from confectionery with sale of more than 3 million shares

Saigon Securities Inc (SSI) has reported that its SSI Asset Management Ltd Co (SSIAM) has completed sale of over 3 million shares in confectionery firm Bibica Corp (BBC), accounting for nearly 20 per cent of BBC's charter capital.

The buyer information has not been disclosed.

After the deal, SSI's holding in Bibica decreased to a tiny 0.02 per cent, thus Bibica is no longer its affiliate. Korea's Lotte currently holds a 44-per-cent stake in Bibica.

Bibica general director Truong Phu Chien said the withdrawal of SSI would not affect the company's future development plans.BBC stocks hit their ceiling price on Friday at VND57,500 (US$2.69) a share, while that of SSI declined 2.2 per cent to VND26,300 ($1.23).

Vinatex and Itochu embark on ambitious project

Vinatex and the Itochu Group, two leading textile and garment makers of Vietnam and Japan, have just inked a framework cooperative agreement on implementing a string of new projects on finished textiles-dyeing products and raw materials in Vietnam.

The string of projects aims to help Vinatex increase its self-reliance on material sources and expand its portfolio of finished textile, dyeing and raw material projects.

The initial stages of the project items are designed to primarily serve Vinatex’s member units.

In last October Itochu spent more than $9 million on buying a 3 per cent stake in its local partner Vinatex when the latter hosted its initial public offering (IPO).

According to Itochu Textile Prominent Asia CEO Shimizu Motonari, Vietnam is an important market in Asia for textile and garment investment, especially appreciating in light of Vietnam’s ongoing negotiations over diverse free trade agreements (FTAs).

Motonari stressed in particular the Trans-Pacific Partnership Agreement (TPP), negotiations over which will soon reach conclusion, then approaching the signing stage.

“More cooperative projects will be placed underway in the upcoming time between members of the two sides as Itochu is both a stakeholder and a long-time business partner of Vinatex,” said Motonari.

The string of projects is expected to generate $60 million in total revenue in the course of the next five years, and create thousands of jobs at project sites such as Nghe An and Quang Binh provinces.

Though the total investment capital of these projects is still withheld, it is expected to amount to several million US dollars since textile and dyeing tends to be a capital intensive investment.

Vinatex general director Le Tien Truong said, “Through having Itochu as a stakeholder and partner, Vinatex expects to expand its markets, access state-of-the art technology, and more importantly, tackle the bottleneck of costly textile-dyeing investment, striving to build up a comprehensive supply chain in textile and garment for Vinatex, as well as Vietnam’s textile clothing industry.”

As Japan’s third largest multi-sector group behind Mitsubishi Corporation and Mitsui &Co, with core businesses in textile clothing, metals/minerals, food, equipment and machinery, energy and IT, Itochu is in a strong position to support Vinatex when the two sides embark on a long-term cooperation.

Until present, Itochu is the first non-credit institution from Japan that invests in a Vietnamese state-owned enterprise, such as Vinatex.

To date, Itochu has developed trading relations with about 100 Vietnamese companies in the textile and garment fields.

According to Motonari, growing Japanese investment into the raw materials sector provides the opportunity for the Vietnamese textile garment industry to take advantage of the yard forward principle and gradually meet the technical and environmental standards to become a major exporter to Japan.

This year, Vietnam’s total export value of textiles and garments to Japan is expected to hit $2.9 billion, a 9 per cent jump from 2014.

Vietnamese manufacturing on the rise: HSBC report

Vietnamese manufacturing continued to strengthen in January, supported by a further growth in new orders, according to HSBC's Vietnam Manufacturing Purchasing Managers' Index monthly report released on February 2.

As a result, employment increased at a solid pace that was the sharpest since December 2013.

Meanwhile, input costs decreased at the fastest pace in the survey's history as a result of falling fuel prices. This in turn led manufacturing firms to reduce their output prices sharply.

The headline seasonally adjusted Purchasing Managers' Index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – pointed to a further modest strengthening of business conditions at Vietnamese manufacturing firms, posting 51.5 in January compared to 52.7 in December.

Operating conditions have now improved in each of the past 17 months, it said.

Both output and new orders continued to rise at the start of 2015, albeit at weaker rates than seen in December. Improving client demand had been behind the rise in new work, in turn leading firms to raise production. New export orders, meanwhile, rose only slightly amid some reports of weakening demand in export markets.

A slowdown in growth of new orders, as well as reported productivity improvements, led to a reduction in backlog of work in the sector. The decline in outstanding business was also reflective of a solid rise in employment. Moreover, the rate of job creation was the sharpest in just over a year, and one of the fastest in the history of the series.

Falls in the global price of oil led a number of respondents to report reduced fuel costs in January. Consequently, input prices decreased at the sharpest pace in the survey's history, surpassing the previous record set in June 2012.

In response to sharp reductions in input costs, manufacturers lowered their prices accordingly. Charges decreased for the fourth month running, and to the greatest extent in 30 months.

A modest improvement in vendor performance was registered in January, with panellists suggesting that faster payments and requests for quicker deliveries had resulted in shorter lead times. Delivery times have now shortened in each of the past four months.

Purchasing activity increased for the 17th successive month, albeit at the weakest pace since October. Where purchasing rose, this was linked to higher production requirements.

Despite a rise in input buying, stocks of purchases decreased for the first time in three months. According to respondents, inputs purchased in previous months had been used for production in January.

Stocks of finished goods also decreased as products were delivered to clients. The fall in post-production inventories ended a six-month sequence of accumulation.

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC, said, "The deceleration of global demand is taking a bite at output growth, although competitive pricing helps counter the slowdown of external demand.

"Despite slowing new export orders, employment rose sharply, highlighting strong demand for Vietnamese goods, necessitating new headcount.

"With input prices decelerating, thanks to the sharp decline in oil prices, and inventories low, we expect output to continue to expand in February, although the Lunar New Year festivity means there will be some seasonal slowdown."

Vietnam to mobilise development capital equal to 30% GDP

With its efforts in dealing with foreign debts and building financial and credit relations with foreign countries, in the 1993-2013 period foreign donors committed to provide Vietnam with US$78.19 billion in official development assistance (ODA).

The country has received US$58.36 billion and disbursed US$37.6 billion.

According to the Ministry of Finance, ODA garnering and using since 1993 have obtained positive results. ODA fund becomes an important source for investment in important sectors in the industrialisation and modernisation process, particularly in socio-economic infrastructure, agricultural and rural development and poverty reduction.

It has helped Vietnam successfully restructure its foreign debts and the State budget, and invest in socio-economic development.

The ODA fund has been used in implementation of infrastructure projects such as electricity, transport, irrigation, water supply, agricultural and rural development, poverty reduction, healthcare development, education and training, capacity building, administrative reform, law, economic management and environment protection.

This year the Government aims to mobilise around VND1,345 trillion development capital, equal to around 30% of GDP, including VND275 trillion from foreign direct investment (FDI) and VND30 trillion from other sources.

Mekong Delta exports 516,000 tonnes of rice in January

The Mekong Delta provinces earned 229 million USD from export of 516,000 tonnes of rice in January, up 3.2 percent over the same period last year, according to the Steering Committee for the Southwestern Region.

In 2015, regional provinces are planned to ship abroad 6.2 million tonnes of rice, worth 2.9 billion USD, a year-on-year increase of 3.4 percent.

The localities will boost trade promotion and marketing activities with a view to seeking more customers in the European Union, North America, the Middle East, China, the Republic of Korea, Japan, Indonesia, the Philippines, Australia and New Zealand.

They continue diversifying types of rice for exports.

To ensure sufficient rice for exports, the provinces will put an additional 4.2 million hectares of land in rice cultivation while selecting more high-yield varieties suitable to soil and ecology in each locality.

In 2014, Mekong Delta provinces exported 6 million tonnes of rice, raking in 2.8 billion USD. Of the amount, 80 percent was consumed in Asia and Africa, 17 percent in the EU and North America and the remaining in the Middle East and Oceania.-

Vinaconex secures funding for water pipeline project

Vinaconex has secured a loan from a commercial bank to fund the construction of a new water pipeline bringing water from Da River to supply to Hanoi residents.

The 18-year loan will provide 85 percent of the project’s total investment of 1.2 trillion VND (55.8 million USD), according to the company.

This will be the second Da River water pipeline, which is slated to supply around 40,000 cu.m of water to the city.

Construction of the pipeline will start before the Lunar New Year holiday.

The first Da River water pipeline was put into use in 1997 and had been broken on six separate occasions. Tens of thousands of households suffered water shortages for days on each occasion.

Currently, there are 18 water plants in Hanoi. Vinaconex Clean Water JSC supplies 30 percent of the city's total water demand.

Construction sector goes green

Vietnamese officials and international donors held a roundtable meeting on construction green growth in Hanoi on February 2.

The sector reportedly consumes 36 percent of total electricity usage nationwide, heard the meeting.

The implementation of green initiatives could conserve up to 30-40 percent of its current demands, it added.

Jesper Dilefsen, an advisor from the Danish Energy Agency, said Vietnam should employ sustainable methods in existing and future buildings as soon as possible.

Other sponsors voiced opinions on the prioritisation of energy-saving programmes such as building capacity for the technical system, designing eco-friendly products and enacting relevant measures and regulations.

They advised the construction ministry take part in long-term and multi-sector projects rather than limiting activities within their field.

According to Phan Thi My Linh, Deputy Minister of Construction, the roundtable meeting provides a practical discussion platform between her agency and foreign partners, which contributes to improving green development policies.

The sea level is expected to rise by 98 centimetres by the end of the 21 st century, flooding 20 percent of Ho Chi Minh City ’s surface area and directly affecting 10 percent of Vietnamese population. These impacts are predicted to reduce the national GDP by 10 percent.

Hanoi retail market retains lustre

The retail market in Hanoi is still attractive for investors, even though it has experienced business impediments during the past, a Hanoi Industry and Trade Department official said.

Last year was continuously marked by numerous fluctuations in the modern retail market nationwide, as well as in Hanoi, which encountered many challenges in business, said Tran Phuong Lan, Director of the Department.

Some trading centres in the city had to sell or temporarily stop their operations, including the Thai Berli Jucler Group buying Metro Vietnam, and the operations at Parkson Landmark 72 and Trang Tien Plaza being stopped for restructuring of retailers in the plaza, Lan stated.

The market share of the modern retail model stooped to a new low, she said, with the circulation of good in the modern distribution system accounting for 15 percent of the market and other goods distribution systems being traditional markets and sale agents of producers.

These trading centres faced difficulties in business because there was a growing supply of retail spaces in the medium and high-end segments, while almost all retailers were small and medium-sized enterprises, Lan explained.

They have also found it difficult to seek retail spaces that were suitable for their financial ability. If they leased spaces in trading centres for a high rent, their goods would also have to be priced higher and would become difficult to sell.

Meanwhile, low purchasing power at present due to the economic crisis also affected the consumption of goods at these trading centres, said Lan, adding that customers could also buy goods via other channels, such as online trading, direct orders at home and through sales agents abroad and did not need to go shopping at trading centres.

However, in general, trading centres in Hanoi follow a high development level, and have garnered attention from many foreign and home investors, such as the South Korean Lotte Group, the Japanese AEON Group, the Thai Central Group and Vietnam's Vingroup, according to Lan.

According to CBRE's report, Hanoi was ranked 13th in the list of 19 hot retail markets in the world and one of the top ten cities in the world that retailers planned to open their retail system in 2014.

This is because the retail system in Hanoi has been developed strongly in scale and quality to meet demand from the local people and foreign visitors.

In 2015, approximately 397,000 sq. m of retail space from 19 projects enter the market. Of these, two projects have been completed, but their opening date is uncertain, and nine projects are currently being fitted out, according to Savills Vietnam.

In 2016, five projects will come online with an area of 356,000 sq. m. Four projects are currently under construction.

"The retail market is on its way to improvement and seems to have found the right direction. The new trend is focused on developing supermarket models, food and beverage items and entertainment, with the main purpose being satisfying the clients' needs," said Do Thu Hang, the Head of Research and Consultancy, Savills Hanoi.

According to CBRE Vietnam stable economic factors in the future are expected to boost sales and boost buyers' confidence.

Rents are constantly dropping to maintain occupancy, but at a modest pace. The expansion of retail space and the arrival of new entrants are expected to drive the retail market in 2015 due to Vietnam's commitments to the World Trade Organisation. But, the Economic Needs Test (ENT) has remained a barrier for foreign retailers.

Projects have been restarted and the production of future supplies has sped up, following an economic recovery, according to the report.

Coffee exports fall in January

The country exported an estimated 100,000 tonnes of coffee in January, earning a turnover of more than 200 million USD, according to the Agriculture and Rural Development Ministry.

The exports, however, represented a year-on-year decrease of 28.9 percent in volume and 23.6 percent in value, the ministry noted.

Vietnam is currently the world's leading exporter of robusta coffee. Last year, the nation earned 3.62 billion USD from shipping 1.73 million tonnes of coffee abroad, up 33.4 percent in volume and 32.2 percent in value.

Germany and the United States remained the two largest importers of Vietnamese coffee in 2014, accounting for 14.13 percent and 10.17 percent respectively of the country's total coffee export turnover.-

40 Thai food businesses seek trade opportunities in HCM City

A delegation of over 40 Thai businesses operating in the field of food has visited Ho Chi Minh City to promote trade and investment activities.

Through similar programmes, a number of Thai firms found trade and investment partners in Vietnam, said Thai Consul General in Ho Chi Minh City Panpimon Suwannaphongse.

An increasing number of Thai companies have come to the city to seek for business opportunities and expand partnership in the city since 2011 because Vietnam is regarded as among the region’s promising markets, she added.

During a meeting between Thai and local businesses, Nguyen The Hung, Depuy Director of the Vietnam Chamber of Commerce and Industry (VCCI)’s Ho Chi Minh City branch, noted that Thailand has remained among Vietnam’s large trade partners.

He called for drastic measures from both sides to fulfil their growth targets and improve trade balance.

Total trade volume between the two countries in the first 11 months of 2014 reached over 9.6 billion USD, of which Vietnam’s exports to Thailand were 3.1 billion USD.

Thailand ranked 10th in the list of countries and territories investing in Vietnam with 6.6 billion USD injected in more than 370 projects.

Vietnam’s achievements highlighted at dialogue in France

Vietnam has made remarkable achievements in its socio-economic development, elevating the country’s position in the international arena after  

30 years of “Doi Moi” (Reform) buoyed by the Party’s judicious policies.

Vietnamese Ambassador to France Nguyen Ngoc Son made the statement during a dialogue to discuss Vietnam’s achievements after adopting an open-door policy, held in Paris on January 29.

Son underscored that Vietnam has established diplomatic ties with over 180 countries and strategic partnerships with 13 countries, while joining almost all major regional and international organisations. Bilateral ties between Vietnam and numerous countries in the world have deepened across politics, defence, security, culture and society.

However, he also noted that Vietnam is facing a number of challenges, such as poor infrastructure and the low competitive capacity of enterprises and the economy as a whole.

A number of French scholars took the occasion to express their view on Vietnam’s development, including former French Ambassador to Vietnam Antoine Pouillieute who recommended that Vietnam should avoid the middle-income trap by increasing purchasing power as well as promoting education and efficient investments.

Christian J.P. Weets, an international financial consultant at W.I Finance Company, said apart from developing industrial sector, Vietnam should focus on agricultural investments to enlarge its market share because agriculture is the country’s strength.

Director of the observatory on dialogue and social intelligence Jean- Francois Chantaraud emphasised that Vietnam is drawing global attention thanks to its achievements in renovation.

Vietnam Airlines aims to better tap Russian market

The national flag carrier Vietnam Airlines is working towards overcoming the challenges left behind from 2014, which was one of the most difficult years for the aviation and tourism industry operating in Russia.

According to representative of Vietnam Airlines in Russia, the country’s aviation market saw a significant drop of 20 percent compared to 2013, with many tourism companies and airlines’ ticket dealers went bankrupt due to low turnovers and fierce competition.

In that context, Vietnam airlines in 2014 had to reduce the number of flights to Russia from seven flights per week to five. The average turnover reached only 80 percent of its expectation, while proceeds from ticket sales agents also decreased greatly.

Nguyen Huu Tung, branch manger of Vietnam Airlines in Russia said 2015 will continue to be a difficult year for the business. Therefore, the  

Airline has decided to cancel the Russia – Nha Trang route from February to the end of October while maintaining the number of flights from Hanoi and Ho Chi Minh city.

In 2015, Vietnam Airlines will complete its two years project, elevating its position to a four-star airline from a three-star one.

The carrier will also put into operation new aircrafts, including 6 Boeing 787 and 4 Airbus A350, he said, adding that Vietnam Airlines is also remodelling its brand awareness scheme, from changing uniforms, to advertisement, to deliver a more high-class service.

Despites the challenges in the Russian market in 2015, Vietnam Airlines in Russia is determined to maintain its goals of effective operation, improved service quality and sustainable growth.

Thai Nguyen tea fest draws the crowds

For a Vietnamese couple living overseas for many years, the Tea Festival in Dai Tu district in the northern province of Thai Nguyen is an unforgettable experience.

Mathilde Tuyet Tran and her husband, who live in France, said they enjoyed the festive atmosphere and learning more about the Vietnamese tea drinking culture.

The festival, which took place on January 25-27, promoted the tea growing and drinking culture of the Vietnamese people. It attracted many visitors.

Organised as a cultural festival and trade fair, the event presented 200 booths introducing tea products and handicrafts from villages in Dai Tu.

There was a competition to honour tea makers and to exchange the technology used in tea processing by businesses, co-operatives, villages and households.

Tourists also enjoyed singing, a typical music genre of the Tay, Nung and Thai ethnic groups who reside in Thai Nguyen. Songs were also sung around a campfire at night, accompanied by a musical instrument called dan tinh (with a sound-box made from a dried gourd).

Tuyet Tran said she felt the joy of the local people as they introduced tourists to different products.

She said she was amazed by a drumming performance by high-school students. She felt the beat reflected the soul of their homeland.

Tourists were impressed by a traditional market displaying specialities such as com lam (rice cooked in a bamboo tube), nem chua (fermented pork and pig skin), banh gio (pyramidal rice dumpling) and banh chung (square glutinous cake).

Blessed with favourable soil and climate, Dai Tu District has the largest tea plantations in the province. More than 6,200ha yield about 57,000 tonnes of leaves each year, making up one third of the province's total tea output.

Dai Tu is pround of its prosperity associated with the industry. This is also reflected in farmers' increasing incomes, according to Dang Viet Thuan, Vice Chairman of the provincial People's Committee.

"The tea festival has become a tradition for local people," he said. "It creates a chance to promote the products to tourists and develop the name of Dai Tu tea."

Thai Nguyen tea products are popular in Vietnam and are also highly valuable exports.-

January business shutdowns up 23 percent

Nearly 11,000 businesses were dissolved or suspended their operations in January, reflecting a 23 percent increase from a year ago, according to the General Statistics Office.

Of these, the number of dissolved firms, which were mostly small-and medium-sized enterprises (SMEs) was 993, with a registered capital of less than 10 billion VND (470,000 USD), while more than 9,700 companies suspended operations.

However, the official figures revealed that over 2,800 businesses had resumed operations.

Around 6,900 enterprises were newly established, with a total registered capital of 31.7 trillion VND (1.48 billion USD), representing 27 percent drop from last year.

Accordingly, the average registered capital was pegged at 4.6 billion VND for each company, down 20 percent in comparison with the same period last year.

In addition, the number of labourers for newly-established companies slipped by 7.4 percent from the corresponding period last year.

Notably, some sectors saw a growth in the number of new firms, such as entertainment with 147 percent, education and training at 45 percent and real-estate trading at 42 percent.

The sectors of healthcare, electricity, gas and water distribution, as well as mineral exploration, wholesale, retail, and automobile repairs, saw fewer new companies being opened.

GSO said the number of labourers in localities with a big industrial scale, including Thai Nguyen, Hai Duong, Binh Duong, Dong Nai, as well as  

Quang Nam, Hai Phong and HCM City sharply surged from the same period last year.

The Economist: Vietnam’s GDP picking up steam

London’s leading weekly financial newspaper – The Economist – recently reported that Vietnam’s real GDP growth will pick up to 6.2% in 2015.

Real GDP growth will be supported by rapid growth in exports and a faster increase in investment, before accelerating to 6.4% a year in 2016-19 the newspaper continued.

Reforms to state-owned enterprises and the banking sector will make slow progress, with the high level of bad debts still an issue.

The Hong Kong-Shanghai Bank Corporation (HSBC) also recently announced the Purchasing Managers’ Index™ (PMI™) of Vietnam showed signs of strengthening during December, 2014, inching up to 52.7 from 52.1 in November and the highest reading since April.

In 2014, growth in the industrial sector was estimated at 7.1%, up 1.7%  over the same period of one year earlier, HSBC said adding that Vietnam’s agriculture sector also maintained an average annual growth rate of 3.5%.

Binh Dinh ships second batch of tuna fish to Japan

The central coastal province of Binh Dinh has exported seven tuna fish to the Japanese market.

They were selected from 100 tuna fish caught and preserved using Japan’s advanced fishing technology by Japan's Kato Office firm and Binh Dinh fishery joint stock company (Bidifisco) on January 31.

The tuna fish will be shipped to Japan by air.

Earlier in August last year, 9 tuna fish caught by Binh Dinh fishermen were auctioned off to the highest bidder for VND220,000 (US$11) a kilogram at the Osaka central wholesale market.

Mekong Delta zones longan specialized area for export to US

Mekong Delta provinces have drawn up a zoning plan for the production of safe longan in accordance with GobalGAP and VietGAP standards to export to the US.

The US Department of Agriculture (USDA) has allowed Vietnam to ship longan and litchi to the US market as from October 6.

The Southern Horticultural Research Institute (SOFRI) reported that southern provinces has around 34,000 hectare under longan trees qualified for VietGAP and GlobalGAP standards.

Nguyen Van Liem, Deputy Director of the Vinh Long provincial Department of Agriculture and Rural Development, said Mekong Delta provinces should focus on pest and disease control to increase the productivity and quality of longan to meet requirements of foreign importers, he added.

Hoang Trung, Deputy Director of the Department of Crop Production (DCP), said Vinh Long, Dong Thap, Ben Tre and Tien Giang provinces have expanded the existing longan area and coordinated with the DCP to raise the quality of longan for export.

With experience learnt from the growing of rambutan and dragon fruits, the DCP is providing further training for Mekong Delta farmers to help them strictly follow VietGap standards and regulations on the use of pesticides to meet requirements of demanding markets like the US, Trung noted.

PetroVietnam the epitome of Vietnam-Russia bilateral ties

More than five decades ago, an official visit of President Ho Chi Minh City to Baku City, the capital of Azerbaijan laid the foundation for Vietnam and the Soviet Union (now Russian Federation) oil and gas cooperation.

Since then, PetroVietnam, the Vietnam National Oil and Gas Group, relations with their Russian counterparts in the industry have developed harmoniously, in line with the overall blossoming of Vietnam-Russia bilateral relations.

The evolution and growth of the Vietsovpetro, a Vietnamese-Russian joint venture established in 1981 has been an idyllic example of how the cooperative relations between the two nations have matured.

Vietsovpetro started out with only 168 employees and most all of its equipment, techniques and technologies were Russian. It has progressed remarkably and now has over 8,000 highly qualified employees skilled in all phases of the oil business.

It has nurtured young scientists and technicians, encouraging them to take on responsibility for everything from searching, exploring and exploiting oil to teaching them the importance of social responsibility.

With its outstanding track record of accomplishments, Vietsovpetro has been honoured the Labour Hero title twice, Ho Chi Minh Order, Vietnam Gold Star Order, and many other accolades.

The success of the venture has been a tribute to the teamwork and dedication of the venture’s staff to master technologies and fulfil their assigned tasks.

From a small unit with inadequate facilities and weak human resources, Vietsovpetro has weathered all the storms to emerge the largest oil and gas producer in Vietnam and a leading producer in northern Russia.

The Rusvietpetro Company which was formed in 2008 by Zarubezneft (51%) and PetroVietnam (49%) has been has been another shining example of the exemplary cooperative relations between the two nations.

The joint venture has been exploring and exploiting oil and gas at 13 oil fields on 4 plots in the Nhenhexky Autonomous Region in Russia.

Despite all the difficulties and severe weather, Rusvietpetro produced its first industrial oil in September 2010. By the end of 2012, it began exploiting three additional oil fields – North Khosedaiu, Visovoi and West Khosedaiu.

Another brilliant strategic success has been the Gazprom joint venture, which has been in operation for 15 years and currently operates nine oil projects. The Gazpromviet joint venture was formed by Gazprom (51%) and PetroVietnam (49%) to explore the Nagumanov and North Purov oil fields.

In recent years, cooperative ties between PetroVietnam and Gazprom have expanded from oil and gas exploration to the production of Liquefied petroleum gas (LPG), which has been used to fuel automobiles.

Currently, Vietnam and Russia have been negotiating yet another cooperative project to form a joint venture in this field and they plan to supply LNG gas from the Far East to the Southeast Asian region.

In short, Gazprom, Zarubezhneft, Russia’s largest state-owned oil and gas company and midsized Rosneft have played a strategic position in Vietnam’s economy and ensured national energy security.

Over the past 65 years during times of peace and adversity, Vietnam-Russia bilateral relations have continually expanded. With significant support of former Soviet Union in the past and Russia today, PetroVietnam has become a dominant force in the oil and gas industry.

Recently a PetroVietnam executive was quoted as saying his group is now ready to not only engage in oil & gas projects in Russia, but help Russian oil & gas companies penetrate the ASEAN market, a positive sign we can expect more good things in the future.

FTAs provide plentiful opportunities for agriculture

An array of free trade agreements (FTAs) coming into effect this year will open up a wide range of new blindingly bright opportunities for the agricultural sector leading to improved investment opportunities along the entire value-chain.

A more perplexing dilemma however, is determining the best business model and strategy to lift agriculture from the production of low value staple food commodities higher up the value chain to make the best of the opportunities.

It was not by chance that the 45th World Economic Forum (WEF) held recently in Davos (Switzerland) placed the issue of food security for more than 7.2 billion people in the world to the forefront of its agenda.

This fact clearly shows the increasingly important role that food producers and suppliers play and most notably highlight Vietnam’s critically important role in ensuring food security in the world.

However, despite being one of the world’s leading agro-forestry-fishery exporters, Vietnam's agriculture reveals weaknesses— low value products at cheap prices, inefficient use of land and natural resources, limited agricultural investment and poor hygiene and food safety.

With the current status of productivity and quality of agricultural products, Vietnamese farmers and businesses are in a pickle to take advantage of the coming golden opportunities absent extensive investment and renovation. Thus, opportunities could be missed and leave Vietnam stagnant, producing low value commodities.

 Investors from the Republic of Korea, Australia and Japan are actively looking for favourable investment opportunities and have embarked on a number of land lease projects for production, processing and exports in Vietnam.

If Vietnamese farmers are off the mark in negotiating these agreements they could find themselves simply working as farm labour for foreign investors, or in other words –  they will just be employees on their soil.

In the face of limited agricultural investment, foreign direct investment (FDI) inflows in agriculture are invaluable. Therefore it is critically important that these agreements be structured in a manner that enables local farmers and agro businesses to team up with foreign investors on an equal partnership basis.

On a positive note, in recent times, a series of big enterprises across many fields have shifted their investment in the agricultural sector to large-scale agricultural projects based on high-tech models which have brought higher efficiency.

The expanding capital inflows into the agricultural sector show that sufficient resources to restructure the sector are available – it’s just a matter of sitting down at the negotiating table and working out the details.

To this end however, businesses need the support of the government and more incentives to help entice foreign investors to fund land and infrastructure purchases as well as acquire the necessary technologies to revamp the agriculture sector.

To call for more agricultural investment, the Vietnam Ministry of Agriculture and Rural Development (MARD) has been working hand in hand with multinational groups to implement the public–private- partnership (PPP) model.

Additionally, the MARD, last year, drafted a strategy for attracting FDI in the agro- forestry- fisheries sector until 2030 for submission to the Prime Minister for approval.

Agriculture is the biggest advantage of Vietnam’s economy and it logically follows therefore that agricultural restructuring is crucially important in negotiating free trade agreements. Restructuring is seen as a monumental opportunity that will benefit the whole national economy.

Successful restructuring will not only enable Vietnam to become an agricultural power, but also a promoter of the industry and service sectors in furtherance of transforming into an industrialized and modern nation by 2020.

Cement consumption rises 30%

Cement consumption in the country posted a 30 per cent year-on-year rise in January 2015, reaching 5.87 million tonnes.

The latest figures from the Department of Building Materials under the Ministry of Construction showed that local cement consumption in the first month of the year was higher than those in the previous month and in the same period last year.

Specifically, the consumption was 4.37 million tonnes, which is 6 per cent and 47 per cent higher than last December and January, respectively.

Of the total, the Viet Nam Cement Industry Corporation (VICEM) sold 1.41 million tonnes of cement in local markets, 46 per cent higher than its sales in the corresponding period last year.

In addition, the amount of cement exported was estimated at 1.5 million tonnes.

The department said that the selling price of cement last month was more stable than its price last year, thanks to the balance in supply and demand of cement production and consumption.

By the end of last month, the cement inventory was 2.69 million tonnes, primarily comprising clinker.

Furthermore, the ministry predicted that cement consumption this year would reach 71 to 73 million tonnes, which would be a 4 to 7 per cent rise from that in 2014. Of this total, local consumption is expected to be 52 to 53 million tonnes and exports will reach 21 to 22 million tonnes.

Director of the Department of Building Materials, Le Van Toi, noted that as Vietnamese producers have been part of the cement export market for four years, they have experience in market exploration and contract negotiation.

Chairman of Viet Nam Cement Association, Nguyen Quang Cung, agreed with this view, adding that most cement manufacturers in the world target foreign markets because exports can help balance supply and demand.

Cung also pointed out that local cement businesses made significant investments in modern production lines, branding Viet Nam as a major cement exporter among countries in Southeast Asia.

Moreover, the cement sector should adopt proper methods to promote its export by 2025-30.

Several private cement producers have seen positive results in their exports.

Chairman of the Vissai Cement Group in northern Ninh Binh province, Hoang Manh Truong, affirmed that they had been active in their production and consumption activities, adding that the company's cement exports were equivalent to domestic consumption.

Truong also remarked that the group had signed an export contract of 1.2 million tonnes of clinker with Bangladesh, which brought its market count to 20 countries and territories. These include Germany, Mozambique, Congo, Indonesia, China, Hong Kong, France, Australia and the United States.

VN food consumption to surge 5.1% every year: MoIT forecast

Viet Nam's food consumption is expected to grow by 5.1 per cent annually to an estimated US$29.5 billion by 2016, according to a Ministry of Industry and Trade (MoIT) forecast.

The forecast also pegged food consumption per capital growing to VND5.8 million (about $276) by 2016, reflecting an increase of 4.3 per cent.

The expected growth is a result of consumers' increasing incomes and the development of the retail industry.

At present, Vietnamese consumers still focus on the daily essential food demand.

However, the trend will change when the income of urban residents rises, which will allow them to spend more on high-quality food and beverages.

"In order to meet demand from local consumers, the quality of local food products need to be controlled more closely," said Bui Truong Thang, Deputy head of MoIT's Light Industry Department.

Thang told Dien Dan Doanh Nghiep (Enterprise Forum) newspaper that most Vietnamese food processing enterprises have weak competitive capacity in the regional and global market.

The reasons are many, but a lack of capital, poor machinery and out-of-date technology, are some of the causes that have been identified.

In order to improve the situation, some local companies have invested in building a breeding farm and processing factory to form a closed manufacturing chain.

For example, the Massan Group began construction of the Massan food industry centre in the central province of Nghe An last November.

However, the investment in food processing with standard technology is still modest, according to MoIT.

EU promotes exports and investments to Vietnam

14 companies from eight countries in Europe paid a visit to Vietnam recently to map the country’s export and investment opportunities.

The trip was financed by the European Union under the EU-Vietnam Business Network (EVBN) project with an objective of  increasing EU exports and investments to Vietnam in particular by small and medium enterprises (SMEs).

EVBN had organised the Agrofood Trade Mission to offer European companies a unique opportunity to discover the Vietnamese market and meet potential business partners. The trade mission took place in both of the largest Vietnamese cities, Hanoi and Ho Chi Minh City from January 19-23.

The companies had customised B2B meetings with Vietnamese importers, distributors and buyers. A total number of around 175 meetings were organised between 14 European companies and Vietnamese partners within the framework the trade mission.

The European businessmen had attended an informative seminar organised in Hanoi officially opened by Ambassador Franz Jessen, head of the EU Delegation to Vietnam.

EVBN also organised points-of-sales visits for the 14 European companies at BIG C stores and Annam Gourmet shops to demonstrate a real site to EU companies.

As a part of the trade mission, some companies also participated in the food and beverages exhibition called “Le Bon Marche” in Ho Chi Minh City.

2015 will mark an important year of bilateral cooperation between Vietnam and the EU over the past 25 years.

Nestlé Vietnam has new general director

It was announced on January 30 that Ganesan Ampalavanar has officially been appointed as country manager at Nestlé Vietnam starting February 1.

He has had more than 20 years working at Nestlé across the globe. In Sri Lanka, Ganesan demonstrated his extensive commercial experience and leadership capabilities in delivering improved business results and working effectively with all stakeholders.

Leadership capability and experience gained in previous assignments equip him well for his country management role in Vietnam.  

Nestlé is the world’s leading nutrition, food and beverage corporation with experience of more than 150 years. It has more than 500 factories in 86 countries around the world and 339,000 employees.

Officially beginning operation in Vietnam 20 years ago, as of now, Nestlé has five factories and employs more than 2,000 people nationwide. Its brands include Nescafé, Nestlé Milo, Maggi, Nan, Lactogen, Cerelac and Lavie.

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

Vinatex, Itochu, HSBC, Mekong Delta, rice export
 
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