BUSINESS IN BRIEF 1/5

Quality issues hurting rice exports

Some rice traders are mixing low quality rice into export shipments of fragrant rice, threatening the integrity of Vietnam's rice export industry.

The Agriculture and Rural Development Ministry said that in the first three months of 2015, exports of fragrant rice rose 47 percent on a year earlier.

Vietnam Food Association said fragrant rice was fetching USD500-600 a tonne.

But a representative of a rice processing and exporting company in Can Tho said, "Some firms buy low quality fragrant rice and mix it with export quality rice. They sell it at low prices, but still advertise it as high quality fragrant rice to attract customers."

Vietnam lacks a testing system for monitoring the consistency of rice being sold for export.

Tran Ngoc Trung, the director of Vinh Phat JSC, said Japanese and US markets have more than 600 rules relating to imported rice and Vietnam is only able to meet a third of those on its own. Rice has to be sent to Thailand, Japan or the US for testing.

Vietnam is facing growing new competition from the likes of Cambodia for market share.

The director of Vietnam Southern Food Corp, Huynh The Nang, said better infrastructure and more testing equipment was needed to monitor quality.  

ALSTOM, EVN start operation of gas turbine reconditioning workshop

Alstom and state-owned Vietnam Electricity (EVN) last week officially inaugurated a gas turbine reconditioning workshop in Phu My district in the southern province of Ba Ria-Vung Tau, the first reconditioning workshop in Vietnam and the first for Alstom’s network in Asia.

The €22 million ($24 million) facility, which is part of the joint venture formed in 2012 between Alstom and EVN, employs 150 and has area of 5,500 square metres. At full capacity, it can refurbish several hundred sets of gas turbine components per year.

“Establishing this reconditioning workshop is part of a major long term investment in Vietnam and shows our commitment bringing local capabilities to this fast growing region. Having a reconditioning workshop located in the heart of Asia is instrumental for Alstom’s continued growth in the region,” said Michael Rechsteiner, senior vice president of Thermal Services at Alstom.

The joint venture was established by and between three parties: Phu My Thermal Power Company, a subsidiary of Electricity of Vietnam (EVN), Alstom Asia Pacific and Alstom Vietnam. Located in Phu My, it aims to provide reconditioning services locally to EVN customers and for export under Alstom network.

Alstom operates in power generation, power transmission and rail infrastructure. The group employs 93,000 people in around 100 countries. It had sales of over €20 billion in 2013/14.

EVN, formed in 2006, operates in electricity generation, transmission, distribution and sales. Among other partnerships between Alstom and EVN are thermal power plants, such as the Phu My gas-fired power plant, and major hydro projects such as the 2,400 MW Son La, the largest hydropower plant in Southest Asia, the 1,200 MW Lai Chau and the 520 MW Huoi Quang.

Honda Vietnam at odds with ministry over almost $10mn tax arrears

The Vietnamese unit of motor maker Honda and the Ministry of Finance still fail to reach an agreement on a preferential tax treatment the company is supposed to enjoy, thanks to which it refuses to pay nearly US$10 million in tax arrears.

Honda Vietnam Co. Ltd. has been asked to pay VND182 billion ($8.48 million) in tax arrears and fines, Deputy Minister of Finance Do Hoang Anh Tuan said at a government meeting on Saturday.

While the company has followed the order, it still owes “a large sum of money” to the state budget, Tuan added without elaborating the violations of the motor manufacturer.

Honda Vietnam went under a tax inspection in 2014, and was eventually asked to pay nearly VND400 billion ($18.64 million) in tax debts and fines, another finance ministry official told Tuoi Tre (Youth) newspaper on Sunday.

The company, which has two motor-manufacturing plants and a car-making facility in Vietnam, has so far paid only VND182 billion of the sum, and thus still owes around VND200 billion ($9.32 million), according to the official.

Also on Sunday, a Honda Vietnam top official told Tuoi Tre that the tax inspection into the company should not be mistaken with those aimed at foreign firms under suspicion of transfer pricing.

The inspection into Honda Vietnam is a planned, regular one and has nothing to with transfer pricing dispute, Ho Manh Tuan, First Deputy General Director of Honda Vietnam, underlined.

The General Department of Taxation last week unearthed wrongdoings worth VND507 billion ($23.63 million) at Metro Cash & Carry Vietnam, and has said it will continue looking into other major firms with similar suspicion.

Tuan said Honda Vietnam had fulfilled its tax duties in the years 2013 and 2014, but still disagrees with the almost VND200 billion tax arrears the finance ministry requested it to pay.

“The ministry and Honda Vietnam have yet to reach an agreement on the real amount of tax debts the company has to cover as the two sides have different understanding of a preferential tax treatment policy,” Tuan said.

Honda Vietnam said it should have been allowed to enjoy the preferential tax treatment from 1998, when the company sold the first Dream motorbikes assembled from imported complete knock-down spare parts to the market, to 2013.

A complete knock-down, or CKD, kit is a kit containing the parts needed to assemble a product that are typically manufactured in one country or region, then exported to another country or region for final assembly.

But the Vietnamese finance ministry said the motor maker began importing 2,000 CKD kits in 1997, so the period must start from that year and end in 2012, a year earlier than Honda Vietnam’s calculation.

The difference results in the tax Honda Vietnam had to pay in 2013, when the preferential treatment was no longer in effect, according to the finance ministry.

“Honda Vietnam and the ministry are still in dispute over the issue and we need an explanation and decision from a higher level authority,” Tuan said.

The finance ministry is collecting feedback from relevant agencies before it brings the issue to the Prime Minister, the ministry official told Tuoi Tre.

He added that the ministry will have “necessary and strict measures” to ensure that Honda Vietnam fulfill its tax liabilities.

Growing demand in Vietnam for foreign meat

The Vietnam government has given the green light to the importation of fresh and frozen meat from the US, Canada, Australia, and European Union (EU).

At a recent press conference in HCM City, representatives of the Union of Producers and Employers of the Meat Industry (UPEMI) said they welcomed the opening of the market.

It provides the opportunity for European-standard meat products to get a ‘vital foothold in this key market’ they said, adding that Vietnam is not just a new market, it’s the highest value market in the Southeast Asian region.

The country with its young growing population, presents promising prospects for, most especially, Polish meat exports both in the short term and the long term.

They were hopeful that the decision by the governmental officials would spill over and have a positive effect on their ability to gain access to other markets in the region as well.  

The union has also undertaken a campaign to promote the quality and flavour of the meat European meat processors will ship to the market with the aim of bolstering sales throughout the nation.

Over the past few years, from supermarkets to retail stores, Australian and US beef have flooded the Vietnamese market.

Vietnam has surpassed China to become the second-largest importer of Australian cattle, and retail stores throughout the nation have been replacing, particularly, domestic with Australian beef.

In June 2014, Vietnam also opened the door to Japanese beef, enabling more than 20 meat exporters from Japan to officially distribute the famed Kobe beef brand in the country.

Recently, in March 2015, the Minister of Agriculture of Canada led a corps of the country's meat producers to promote Canadian beef in Vietnam focusing on a restaurant chains, hotels and retailers.

“Currently there are more than 100 meat exporters from the EU licensed by Vietnam veterinary authorities to ship meat to Vietnam,” said Ms Agnieszka Rózanska, managing director of UPEMI.

For 2015, the EU has targeted to boost meat exports to Vietnam by 5% over the figures for 2014 she said, adding that Vietnamese love of pork is fueling the growth.

In 2013, Vietnam imported only 744 tons of pork from the EU but in 2014, that number bellied up to 6,149 tons.

As of the end of 2014, Vietnam also imported more than 1,720 tons of beef from Europe (more than 70 fold that sold in 2012).

Economic growth, a flourishing hospitality and food services industry and changing consumer tastes all have given rise to an elevated demand for imported meats in the country, she stressed.

She added that this presents a great opportunity for Polish meat suppliers to further capture this growing and vibrant market.

Poland uses the latest frozen meat preservation technology. Its meat products can be preserved for up to 18 months and still remained stable— far surpassing the 14-21 days Vietnamese meat can be preserved.

Mariusz Boguszewski, economic counselor at the Poland Embassy in Vietnam, in turn revealed there are now up to 40 Polish government licensed meat imports into Vietnam.

Thighs and boneless pork tubes are the leading products shipped to Vietnam he said, adding that Poland is the fourth largest meat exporter of the EU with frozen meat leading the pack.

Vietnam Golden Food Brand awards applaud Vinamilk

Vinamilk was recently bestowed four – Vietnam Golden Food Brand – awards for its fresh milk, yogurt, powdered milk and ready to drink nutritional milk products at an awards ceremony in Hanoi.

The ceremony, co-organised by the Ministry of Health, the Ministry of Industry and Trade, and the Ministry of Agriculture and Rural Development aimed to recognize superior brands that contribute to the nation’s health and domestic food and agriculture industries.

At the event, Deputy Prime Minister Nguyen Xuan Phuc and Health Minister Nguyen Thi Kim Tien also named Mai Kieu Lien, the company’s CEO, as the Vietnamese entrepreneur who most contributed to the health of the nation over the past year.

As one of the country's leading brands in the field of nutrition and health, Vinamilk seeks to produce the highest of quality products, satisfying the desires of Vietnamese consumers, said Lien in accepting the award.

According to figures published recently by the market research firm Nielsen, Vinamilk ranks first in Vietnam in terms of sales and production in the segment group fresh milk brands.

Agro-forestry-fishery exports continue to disappoint

The export turnover of Vietnamese agro-forestry-fishery products is estimated to reach 2.61 billion USD in April and total 9.13 billion USD in the first four months of 2015.

The total figure represented a year-on-year reduction of 6 percent, but showed positive signs compared with the 13.2 percent decrease in the first quarter, according to the Ministry of Agriculture and Rural Development.

The export of main farm produce brought home 4.47 billion USD, also down 6 percent against the same period last year.

Cashew nuts recorded rises in both volume and value. During the period, Vietnam earned 635 million USD from selling 85,000 tonnes of cashew products, up 36.3 percent in value and 14.1 percent in volume from the same period last year.

Meanwhile, tea and pepper saw decreases in export volume but increases in value. The country exported 33,000 tonnes of tea and 56,000 tonnes of pepper for 54 million USD and 513 million USD, respectively.

Coffee continued to record high drops in both volume and value. During January-April, Vietnam shipped abroad an estimate of 466,000 tonnes of coffee for 970 million USD, down 41 percent in volume and 39.3 percent in value. Germany and the US remain Vietnam’s two biggest coffee importers, accounting for 18 percent and 12.5 percent of the total.

In the period, an estimate of 1.95 million tonnes of rice was sold to other countries for 849 million USD, down 4.8 percent in volume and 9.2 percent in value. China continues to be the largest importer of Vietnamese rice, making up 27.3 percent of the market share.

The export turnover of seafood reached 1.87 billion USD, a fall of 16.4 percent from the same period of 2014. The US remains Vietnam’s biggest seafood importer, accounting for 19 percent of the total. Seafood exports recorded growths in China (17 percent), Thailand (13 percent) and the Netherlands (11 percent).

VN firms urged to secure business trademarks

Vietnamese enterprises need to accelerate measures developing their trademarks with a view to increasing their competitiveness in the process of regional and international integration, the Dai Bieu Nhan Dan (People’s Representative) newspaper said.

The newspaper said currently in Vietnam, 98 percent of small and medium enterprises (SMEs) are lacking in strategies to develop their brands. For those which do pay attention to this issue, weak financial capacity prevent them from building long-term and effective plans for the purpose.

A protected trademark allows enterprises to develop, forge closer business links and roll out their brands in international markets, particularly when the country opens up the market in line with free trade agreements it has signed.

Intellectual property (IP) is especially important to the pharmaceutical industry as most FTAs pay attention to protecting patents and test data.

IP specialists have proposed that domestic firms quickly register for trademark protection.

Any firm with a brand certificated by the National Office for the Intellectual Property of Vietnam is also suggested to utilize the Madrid Protocol, a convenient and economical means of securing trademark registration which was adopted in 1989.

The Vietnamese Government is advised to help domestic firms access market information and increase their capacity for building trademarks through training courses.

Deputy Director General of the Ministry of Industry and Trade’s Trade Promotion Agency, Do Kim Lang, who is also Deputy General Secretary of the National Branding Programme, pledged support for enterprises via training and counseling, to help improve their competitiveness.

Vietnam permits import of French beef

Vietnam has allowed the import of French boneless beef from cattle less than 30 months old, provided that the product satisfies the country’s quality requirements.

The Department of Animal Health under the Ministry of Agriculture and Rural Development sent a document announcing the decision to the Hanoi-based French Embassy recently, the department said.

The move is part of an agreement reached at the third annual high-level Vietnam-France economic dialogue in Hanoi on April 15. It is also part of wider efforts to remove trade barriers between the two countries.

At the dialogue, France also asked Vietnam to lift barriers blocking imports of French apples.

Vietnam fishing for success with Koi carp exports

An unusual form of tourism is making a splash in Ho Chi Minh City’s Cu Chi district: Koi carp tours.

Vietnam’s first ornamental carp tourism model was officially unveiled at Hai Thanh Koi Farm in the district’s Trung An commune. The farm is one of the largest enterprises breeding the Japanese Koi carp in Vietnam, with a capacity to hold nearly 100,000 fish. After decades of research, the farm has produced high quality Koi worth thousands of dollars to export to foreign markets, where they are used for decorative purposes.

According to the Head of HCM City’s Fishery Department, Tran Dinh Vinh, Koi fish production holds huge economic potential, with HCM City already earning 20 million USD from Koi exports. The department will now do its utmost in supporting enterprises participating to the new model, he added.

Covering an area of 12 hectares, Hai Thanh Farm will diversify its tourism model in a bid to become an interesting destination in the southern city’s river tourism sector.

Deputy Chairman of Cu Chi district People’s Committee Nguyen Viet Dung, said the province has planned a riverside area of 4,650 hectares which spread through eight communes to develop local tourism.

HCM City has an interlacing river and canal system with total length of 1,000 kilometres, and each year the area welcomes about 15,000 tourists in river tours.

Koi carp were created by cross-breeding experiments more than 200 years ago and some believe that they can live over 100 years. Koi have four basic colours of white, red, yellow and silver grey, and come with many different patterns.

PM approves loan for ensuring land transport quality

The Prime Minister has approved a draft agreement on a loan for equipment procurement to ensure the quality of country’s land transport system.

The PM has assigned the Ministry of Finance (MoF) to sign the procurement agreement with Austria’s UniCredit Bank, upon the appraisal of the project solvency.

Other relevant ministries, including the Ministry of Foreign Affairs and the Ministry of Justice are to facilitate the procedure.

PM approves deal to import more sugar from Laos

The Prime Minister has approved a proposal to order an additional 50,000 tonnes of sugar from Laos.

The extra sugar import was suggested by the Ministry of Industry and Trade and the Ministry of Agricultural and Rural Development.

The produce, which was produced under a Laos-based project invested by the Hoang Anh- Gia Lai Group, will carry a 2.5 percent import tax.

The PM requests the two ministries issue instructions on the effective implementation of relevant legal regulations.

In January, the two ministries agreed on an initial quota of 81,000 tonnes of sugar.

Industrial production up by 9.4 %

Viet Nam's index of industrial production (IIP) grew by 9.4 per cent year-on-year in the first four months of 2015, the General Statistics Office (GSO) has reported.

The GSO economists said that the encouraging IIP growth in these four months, double than what was recorded in the same period last year, was spurred by the significant rise in the industrial consumption index in the first quarter of the year. It rose by 13.9 per cent, considerably higher than 5.5 per cent during the same period last year.

This significant rise in the industrial consumption index also resulted in IIP increases in case of several industries. Among them were mobile phones that reflected an 89 per cent rise, , motorized vehicles 58.4 per cent, television sets 41.8 per cent, and paper production 20.8 per cent.

Other industrial sectors that posted industrial production hikes during the same period were leather and footwear (24.7 per cent), food for aquatic products (23.9 per cent), rolled steel (17.3 per cent), chemical paints (17.8 per cent) and electricity production (11.1 per cent).

Moreover, till April 1, the inventory index increased by 11.3 per cent, lower than the 13.9 per cent growth recorded during the same period last year.

Also, some industrial products that showed lower levels of inventory included furniture (39.5 per cent), tobacco (19.9 per cent), electronic equipment (14.2 per cent), and chemical goods (11.8 per cent).

Till April 1, the number of labourers working for industrial enterprises rose year-on-year by 5.5 per cent, according to the GSO.

More interest shown at Ha Noi auctions

A greater number of investors participated in the equity auctions held on the Ha Noi Stock Exchange in April, the northern bourse reported.

Five auctions were organized on the Ha Noi Stock Exchange in April, including three initial public offerings (IPOs) of State-owned enterprises, one auction of share purchase rights, and one share offering in the form of direct negotiation with investors present at the auction.

The exchange reported an increase in the number of participants, with an average of 103 investors per auction, a rise of more than 39 per cent, as compared to March.

As many as 310 million shares were offered for sale, of which 24.1 million were sold out, bringing in a turnover of VND241.8 billion (US$11.2 million).

The auction of more than 5 million share purchase rights of Tran Phu Electric Mechanical Joint Stock Company, owned by the Ha Noi People's Committee, was the most successful, with the bid volume being 7.4 times higher than the offering rights. A few investors registered to purchase at a price of VND90,000 ($4.17), which was 5.2 times higher than the starting price.

All the rights were sold, earning the Ha Noi People's Committee VND298.5 billion ($13.8 million).

Moreover, of the three IPOs, the equity auction of the Infrastructure Development and Construction Corporation (Licogi) of the Ministry of Construction saw the highest results, with the entire offering being sold to 106 individual investors. It brought in more than VND212.8 billion (nearly $10 million), higher than the expectation of VND126.7 billion (almost $6 million).

Of note, auctions of equity of those companies under the Viet Nam National Coal Mineral Industries Group (Vinacomin) witnessed poor results.

Vinacomin Power Holding Corporation sold only 1.2 million shares of a total offering of nearly 236.4 million shares, while Vinacomin Minerals Holding Corporation sold just 1.3 million shares of the 46.7 million shares up for sale.

The sale of shares of Cam Ranh Port Limited Liability Company saw only one participating investor, selling just 307,000 shares of the total offering of 5.69 million shares.

According to the Ha Noi Stock Exchange auction plan, three equity auctions will be held in May—one for Saigon Posts and Telecommunications Service Joint Stock Corporation on May 14, the Ha Noi Cadastral Survey Company Limited on May 19, and Vinacomin VietBac Mining Industry Holding Corporation Limited on May 27.

Inspections to target stock-feed additives

Authorities are set to intensify checks on animal feed producers and traders and pig farmers and slaughter houses around the country, an official from the Animal Husbandry Department told a conference in HCM City on Friday.

They would focus on small and medium-sized production establishments and those without a clear place of origin, Chu Dinh Khu, head of the department's Animal Feed Division, said.

It was aimed at improving the quality and safety of feed, and anyone found adding banned substances to animal feed or giving it to animals would be severely penalised.

Last year an inspection of 88 animal feed manufacturers, 71 feed distributors, 256 pig farms, 33 pig slaughterhouses and 14 pork trading establishments had found the use of banned substances in animal feed production and animal breeding continuing in many places, especially at times when pork prices surge.

Of 329 feed samples collected, 14 per cent had violated quality and safety norms and 5.2 per cent tested positive for banned substances.

Besides, almost 4 per cent of 311 pig urine samples had tested positive for harmful substances while 17.7 per cent of 346 samples of pork meat, liver and kidneys contained antibiotic residues.

Last year individuals and organisations had been fined a total of VND545.55 million (US$25,303) for violations.

The country had produced 14.46 million tonnes of feed last year, but imported 11 million tonnes of raw materials for it, mainly protein and energy-rich materials and additives.

All the imports had been checked and the incidence of violations was well down from previous years.

Delegates at the conference, while complaining that a shortage of staff made it hard to oversee the industry, agreed that intensifying checks of feed production and animal husbandry establishments was essential.

Phan Minh Bau, deputy director of the Dong Nai Province Department of Agriculture and Rural Development, proposed more severe penalties to deter repeat violations.

The country has 203 feed producers, of which 61 are foreign-invested or joint ventures accounting for over half the market share.

Toshiba Asia Pacific opens HCMC office

Toshiba Asia Pacific Pte. Ltd. has opened a representative office in HCMC to promote Toshiba’s business in the industrial, environmental and computer control systems sectors.

This office will also be responsible for product planning, trading promotion and market research in this market, Toshiba said in a statement.

Toshiba recently organized an innovation seminar in the city in a bid to assert its position as a leading innovator, environmentally-friendly firm.

The seminar looked into 13 scopes of Toshiba’s business that are and will be operational in Vietnam. They include digital products, electronic devices and components, social infrastructure systems, home appliances, automotive business and network services, environmentally conscious products, and new lighting systems.

In December last year, Toshiba built Toshiba Industrial Products Asia Co. Ltd (TIPA), a new industrial motor manufacturing facility at Amata Industrial Park in the southern province of Dong Nai.

The plant will be operational this year, serving as a key production center for high efficiency motors for the global market, according to the statement.

Vietjet Air adds flights during national holiday

Vietjet Air will increase its services to meet the high travel demand during the upcoming national holiday marking the country’s reunification anniversary (April 30) and Labour Day (May 1).

The carrier announced on April 27 that it will add flights on its busiest routes linking Ho Chi Minh City and Hanoi and from the two cities to Da Nang City, Phu Quoc Island, Nha Trang, Da Lat, Singapore and Thailand, offering an additional 30,000 seats to the public.

Vietjet Air opened a Hanoi – Quy Nhon city route on April 26 linking the capital with central Binh Dinh province, while flights connecting Ho Chi Minh City with Dong Hoi city in central Quang Binh province and Chu Lai in central Quang Nam province are soon to be launched.

A Vietjet Air official said the additional flights will be operated with newly bought Airbus A320 and A321 aircraft.

Tickets are available on its website ( www.vietjetair.com ), Facebook page, call centre 19001886, booking agencies and ticket offices nationwide. Payments can be made via credit card online or in cash at ticket offices.

Vietjet Air has a fleet of 22 A320 aircraft and one A321 plane, offering 150 flights daily throughout the country and to several international destinations, such as Singapore, Thailand, the Republic of Korea, Taiwan, China and Cambodia.-

Metal container production plant inaugurated

The TAMADA Viet Nam Company Ltd. officially inaugurated a metal container production plant on April 24 in the Dinh Vu Industrial Zone in the northern Hai Phong Port City.

Delegates break the ground of a metal container production plant on April 24 in the Dinh Vu Industrial Zone in the northern Hai Phong Port City. Photo dddn.com.vn

Covering an area of 23,226sq.m, the newly built plant would adopt the production of tanks and accessories, which the company had produced in Japan.

In addition, the company is considering new metal tank production projects with KAWATEX, a long-term partner of the company. The project for tank production mainly involves the manufacturing of machinery products and pressure producing equipment.

It is targeting an annual production capacity of 2,800 tonnes, which would grow to 5,800 tonnes per year after three years of operations.

The company is committed to contributing to the development of Viet Nam and Japan, and to the long-lasting development of the project.

The company, which was established in 2013, with a total investment of US$13 million contributed by two investors, includes TAMADA Industries Inc., Japan that accounts for 70 per cent of the total capital and KAWATEX Co. Ltd.

TAMADA Industries Inc. has a history of 65 years of manufacturing different types of underground tanks. Currently, the company has the largest market share in the field of petrol and oil tanks manufacturing in Japan. It currently has three plants in Japan specialising in the manufacturing and production of tanks for petrol, oil, and water. The main materials used for production are steel and synthetic plastic FRP.

The Dinh Vu Industrial Zone, located within the Dinh Vu–Cat Hai Economic Zone, has received strong support from the Government and the city, with regards to the standardised development of transportation infrastructure, power supply, water supply, water drainage, and for providing excellent advantages to enterprises for their production and trade activities.

A number of large projects have been invested in, built, and nearly finished, or are getting ready to be utilised, which would provide convenient conditions for travelling and transportation of commodities.

Some of these projects are part of the Ha Noi–Hai Phong Highway project, the development and upgradation of the Cat Bi airport to an international airport, which is expected to be completed in 2015 and the international gateway port project, which is expected to be completed in 2016.

Once these important projects are finished, the import, export of goods and distribution of products of enterprises in the Industrial Zone will become more convenient.

So far, DVIZ has attracted over 55 investors from various countries and industries, with a total investment capital of nearly $3 billion. Among these are 13 Japanese investors.

Vietnamese exporters should limit antibiotic residues in seafood, find new markets: association

The Vietnam Association of Seafood Exporters and Producers (VASEP) has asked local seafood exporters to keep the antibiotic residues in their exports within limits, and try to find new markets for their products to offset the losses in traditional markets.

The VASEP requirement came after the U.S. Food and Drug Administration (FDA) refused to grant the import licenses for 140 shipments of frozen shrimp found with high rates of antibiotic residuesfrom India, Malaysia, China, and Vietnam in the first three months of this year.

Of these, 96 shipments were imported from Malaysia, 25 from Vietnam, 13 from India, five from China, and one from Indonesia.

According to the VASEP, the FDA said the exported shrimp was found containing nitrofurantoin, an antibiotic used to treat urinary tract infection, and other veterinary drug residues.

The Vietnamese firms listed by the FDA over the veterinary drug residues found in their shipments include Ngoc Tri Seafood Joint Stock Co, Bac Lieu Fisheries Co. Ltd., and Hoang Phuong Seafood Factory.

Last month, the FDA announced that it refused 107 shipments of shrimp from India, Malaysia, China, and Vietnam in the first two months of 2015, a year-on-year rise of 224 percent in terms of the number of shipments found contaminated with antibiotic residues. It was also the highest rate in the last 10 years.

Tran Van Linh, general director of Thuan Phuoc Seafood JSC, toldPhap Luat (Law) newspaper that the same rules, like what the FDA has used, are applied to Vietnamese seafood exports to other foreign markets like the EU and Japan.

In recent years, Japan has checked all of shrimp shipments from Vietnam for some periods after many of such exports were found contaminated with antibiotic residues.

The East Asian country's authorities have also said that if the situation does not improve, Japan will consider adopting more stringent measures, including a temporary suspension of shrimp imports from Vietnam, Linh said.

Therefore, Thuan Phuoc spends US$1 million a year controlling antibiotic residues in exports, by sending its staff to supervise the farming process and examine the materials provided by merchants, he added.

Truong Dinh Hoe, secretary general of VASEP, told Phap Luat that the majority of Vietnamese enterprises follow very strict regulations to control the quality of input materials, but some have faced problems as they failed to keep a check on their input from the selection of materials provided by farmers.

As reported by the Agro-Forestry-Fisheries Quality Assurance Department, Vietnamese trade commissions in the EU, Japan, and the United States continued to receive many warnings about seafood shipments containing antibiotic residues exceeding the permitted level in 2014.

Total shipments with chemicals, antibiotics to the EU market have increased sevenfold, from only seven shipments in 2013 to 51 in 2014.

In the U.S. market, frozen shrimp and catfish shipments given a warning also increased 1.6 times to 58 ones in the first three months of 2015.

According to the Vietnamese Ministry of Agriculture and Rural Development, shrimp exports in 2014 were estimated at $4.1 billion, accounting for 52 percent of the total seafood shipments and an increase of 25 percent compared to 2013.

In particular, the U.S. was the largest export market of Vietnamese shrimp with over $1 billion.

Nguyen Hoai Nam, deputy secretary general of VASEP, said local firms should be more proactive in finding new markets to offset the losses in traditional markets, according to government website chinhphu.vn.

In the U.S. market alone, due to the influence of the anti-dumping taxes levied on Vietnamese shrimp by the U.S. Department of Commerce, the export value of the item in the first quarter of 2015 decreased 44 percent.

Meanwhile, Vietnam’s seafood exports to other key markets, such as Japan and the EU, also fell 11.73 percent.

During this time, although there were many efforts from the authorities and Vietnamese businesses, seafood exports to Russia still did not recover.

Nam said that local seafood exporters are currently turning to find new partners and new export markets like Australia, South Korea, China, Hong Kong, and a number of Arab countries.

While the Korean market is a potential one with only a few technical barriers, Arab countries have a good impression of Vietnamese products though having just imported a few shipments.

Meanwhile, the Chinese and Hong Kong markets have many similarities in culture and cuisine, so it is easier for Vietnamese exporters to ship their products there.

The problem is the method of payment, Nam said.

Securities firm SSI sees revenues, profit skyrocket

Saigon Securities Inc. did well last year because it accurately forecast the micro-economic situation to work out suitable business plans, chairman Nguyen Duy Hung told the annual shareholders meeting in HCM City on Thursday.

The company will pay a 10 percent dividend for 2014 and issue a bonus share for every five held. Photo bizLIVE

The company's revenues stood at VND1.56 trillion (US$72 million), more than twice the 2013 figure, and net profit at VND860 billion, up 162 per cent.

In terms of market share, SSI tops the list of brokerages operating on the HCM Stock Exchange and is second in Ha Noi. It ranks first in combined market share.

It was named the Best Consultant in Vietnam and the Best Investment Bank in Vietnam by The Asset and Finance Asia magazines.

The company will pay a 10 percent dividend for 2014 and issue a bonus share for every five held.

It targets gross profit of VND1.021 trillion (US$47 million) on revenues of VND1.318 trillion this year.

Building materials set for rapid growth

The Ministry of Construction has set a 10-15% annual growth target for exports of building materials so that they can reach US$2-2.5 billion by 2020 under a plan to develop the industry it has submitted to the Government for approval.

In envisages that by 2020 the country will export 20-28 million tonnes of cement, 100-130 million tonnes of ceramic tiles and 6-7.5 million tonnes of granite tiles, 6-8 million sanitary products and 100-110 million square metres of glass.

To achieve them the ministry will help the industry's exports become competitive, consolidate traditional overseas markets and seek new outlets for products like cement, granite tiles, porcelain tiles, and sanitaryware.

A ministry official, who asked not to be named, said the targets were predicated on the recent recovery in both the domestic building materials and construction industries.

In 2014 the building materials industry registered growth of 10.2% and is expected to grow by at least 10% this year.

Insiders admitted conditions were very favourable for the building materials industry to achieve its growth plans this year.

They were referring to the fact that many large construction projects are due this year in HCM City — like Vinhomes Central Park Tan Cang, The landmark, Masteri Thao Dien, the R6 Vinhomes Royal City, Vinhomes Riverside, and Imperia Garden.

A total of 169 transport projects are also scheduled to get underway this year, including some key projects like the Ninh Binh-Thanh Hoa-Vung Ang Expressway and Trung Luong-My Thuan Expressway.

Several factories and warehouses are set to be built across the country in anticipation of an economic recovery and increase in foreign direct investment flows.

Cement producers will have the opportunity to pare inventories and get decent prices because demand has tended to rise in recent times and new supply is limited.

As of the end of last year the country had 74 cement plants with a combined capacity of 77.35 million tonnes a year. Domestic market was 70.6 million tonnes after rising by 15%, helping significantly narrow the gap between supply and demand.

This year demand is expected to rise by 3 million tonnes, helping reduce inventories.

In the construction plastics sector, competition is fierce. There are four major products of construction plastics, all of them listed, namely Binh Minh Plastics (BMP), Tien Phong Plastics (NTP), Danang Plastics, and Dong Nai Plastics.

BMP and NTP, among them, account for 50% of the market share.

To compete with them, smaller companies have had to increase commissions for agents and reduce prices if they want to bid for projects, affecting both their profits and the industry's growth.

The 40% drop in fuel prices has been a boon for building materials producers, especially those that make plastic pipes and stones for construction since they are based in areas far away from the market.

Analysts said major building materials producers with wide distribution networks, good management and the ability to expand production could develop further and expand their market share since demand was rising again.

ASEAN may signal ‘Death Knell’ of Vietnam’s auto industry

Vietnam saw auto industry revenues surge in 2014 amid the rapid expansion of a young, style-conscious middle class following 15 consecutive years of economic growth of over 5%.

While major regional vehicle markets Indonesia and Thailand experienced annual declines in sales last year, revenues in Vietnam shifted into high gear, lunging 43 per cent on-year, according to the Vietnam Automobile Manufacturers Association (VAMA).

Toyota, Mercedes-Benz, Ford and Honda all reported solid annual sales increases, despite relatively high import taxes imposed on both completely built-up (CBU) vehicles and completely knocked down (CKD) imports.

Completely built-up and completely knocked-down

Quite simply, when a resident purchase a foreign vehicle brand in Vietnam, they have the option of choosing either a CBU or a CKD version.

In order to protect the local auto industry the government has levied higher import duties on all CBU foreign vehicles. This, in substance, serves as a penalty tax and has created an economic incentive for the manufacturer to opt to sell the CKD version.

A CBU vehicle is imported as a fully finished unit, ready to drive once it arrives on Vietnam’s shores. One can think of it as 100% foreign made, being that it was assembled by a foreign workforce generally using parts made in its country of origin.

In short, no Vietnamese labour or assembly were involved. As such, the import duty levied on a CBU vehicle is determined in accordance with the ASEAN Trade in Goods Agreement (ATIGA).

The ATIGA pact, signed in February 2009, came into effect on May 17, 2010.  Under it, Vietnam has agreed to phase out vehicle-import duties from ASEAN countries from 50% this year to 40% by 2016, 30% by 2017 and completely eliminate it in 2018.

Although there is a common belief that a CBU vehicle is completely manufactured and assembled in its country of origin, this is not always the case. Quite a few CBU models – particularly from Honda and Toyota – imported into Vietnam have been assembled in Thailand.

A CKD vehicle is imported as a knock-down kit that relies on local assembly. While most of the individual parts have usually been manufactured in the vehicle brand’s country of origin, the assembling of the vehicle was performed in a local plant by a Vietnamese workforce.

To receive additional tax preferences, many manufacturers have also incorporated local content (Vietnamese-made parts like tyres, windows, and headlights) into the vehicle. In view of the jobs created by CKD vehicles, the import duty imposed on them has been significantly lower.

A number of leading importers have said that while high taxes have put the brakes on Vietnam's domestic auto market in the past, the complete elimination of tariffs on the other hand, will most likely destroy the market entirely.

Yoshihisa Maruta, general director, of Toyota Vietnam said the situation has put his company’s business strategy in limbo and it has not yet decided which path to follow, either to continue assembling vehicles in Vietnam or importing vehicles for domestic sale.

With the tariffs being phased out, it obviously will be less expensive for the customer to import a CBU vehicle as opposed to the current CKD model the company has been following.

In addition, the reduced tariffs are also certain to bring about stiffer competition from other manufacturers in the industry – especially from India he said, hinting that the company may be forced to close all operations in Vietnam.

Toyota Vietnam led the market in car sales for 2014, selling 41,200, holding a 31 per cent of the market share. Any legitimate cost benefit analysis won’t support gearing up financial investment and automotive manufacturing in Vietnam at these modest levels of production.

Vinastar, a joint venture assembling Mitsubishi vehicles, has already announced it will switch to the CBU model by 2018 adding that this really isn’t a difficult decision as consumers naturally will migrate to the lower cost model.

Suzuki Vietnam has declined to talk about its future business plans. However, the manufacturer late last year chose Ertiga, a 7-seat car imported from India as its strategic car model to compete with other rivals.

Hyundai, a well-known RoK brand for which many Vietnamese hoped would invest in the automotive industry, has recently announced that it will shift its focus on production to Malaysia.

For his part, Dezan Shira & Associate suggested that without government support Vietnam, vehicle manufacturers will be forced to make the clear cut financial decision to import vehicles rather than assemble them in country.

Banks to operate in month-end holidays

The State Bank of Vietnam (SBV) has instructed in writing its subordinate units and credit institutions to keep operation in the Sounthern liberation and National Reunification Day-April 30 and May Day holidays.

They should have plans to run the interbank payment system and meet payment and cash withdrawal demands.

Banks have been instructed to arrange officials and staff on duty to ensure service quality and the thorough operation of ATM stations. Any arising issues should be solved timely.

They have also been asked to supply enough foreign currencies for their subsidiaries to meet the money exchange demand of tourists in the holidays.

 Masan Nutri-Science turns into Vietnam’s leading animal feed platform

Masan Nutri-Science just becomes the biggest external pig feed player and second biggest overall feed player in the Vietnam’s feed sector.

Masan Group Corporation (HOSE: MSN) on April 27, 2015 announced it successfully acquired a 52 per cent and 70 per cent equity interest in Vietnam French Cattle Feed JSC (Proconco) and Agro Nutrition Company JSC (Anco), respectively, with the purchase of 99.99 per cent of the shares of Sam Kim Co. Ltd. The Group has subsequently renamed the Company Masan Nutri-Science (MNS).

With deep local insights and a unique business model, MNS is committed to becoming the Vietnam’s feed champion and creating value for the Vietnamese farmers. The company will invest in its product innovation, research and development capabilities and human resources with a mission to enhance Vietnam’s protein productivity, providing Vietnamese consumers with affordable and quality protein products.

The acquisition is a key step to increasing the productivity of Vietnam’s protein sector – Vietnam’s GDP per capita is one tenth of the US, but Vietnam’s protein price per kilogramme is 1.5-2 times more expensive due to the prevalence of small scaled households which have limited access to good and affordable feed products and genetics. As aresult, Vietnamese pig farmers require 3.5kg of feed to produce 1kg of pig meat on average against 2.5 kg in the US. Animal feed is an integral component of the protein value chain and innovation in this space will be critical to close the productivity gap between Vietnam and the developed world.

The acquisition and establishment of MNS instantly provides the group a leading platform to serve the growing $6 billion animal feed sector. Proconco and Anco, as a combined business, is the number one external pig feed and second overall animal feed player in Vietnam, supplying farmers with over 1.7 million metric tonnes of animal feed products in 2014 and is well on track to deliver revenue of $1 billion in 2015.

The group plans to transform MNS by bringing the best practices of the FMCG industry to further strengthen the company’s operating platform. In particular, Masan’s aim is to build “power brands”, develop the leading distribution network in terms of coverage and effectiveness and produce innovative products that conform to international standards. The combined animal feed and FMCG platform will create significant synergies and will be critical in achieving MNS’s 2020 objective: a market share of 50 per cent in Vietnam’s animal feed market.

“We saw a big unmet need years ago in the food and beverage space, and today we see a similar big unmet need in Vietnam’s animal protein sector. I am confident that we can fulfill this big unmet need as we did in the food and beverage space, because we have a team that has the same passion, dedication, and capability to create value,” said Danny Le, CEO of MNS,

Farming is a crucial part of Vietnam’s agriculture, accounting for 25 per cent of the agriculture sector in 2014 and is expected to make up over 40 per cent in the next five years. Feed plays a critical role in the whole farming value chain, making up over 70 per cent of farming production cost. However, the farming value chain, especially the animal feed link, has been controlled by foreign players with 60-70 per cent of the market shares. Major foreign players include CP, Cargill, Hope Group and ANT.

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

Quality issues hurting rice exports, Growing demand in Vietnam for foreign meat, Agro-forestry-fishery exports continue to disappoint, Vietnam permits import of French beef, PM approves deal to import more sugar from Laos
 
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