BUSINESS IN BRIEF 18/6

Vietnam AutoExpo 2015 opens in Hanoi

A number of green vehicles are being showcased at the 12th International Exhibition on Automobile and Supporting Industry (Vietnam AutoExpo 2015) held at the Giang Vo Exhibition Centre in Hanoi from June 17.

On the display at the 10,000 square-metre exhibition site are different types of vehicles as well as their spare parts and maintenance services.

The exhibition also features famous automobile brands from Japan and the Republic of Korea (RoK) such as Subaru, JunJun Auto, Tata, Daewoo and Huyndai. Especially, the RoK’s VEAM automobile manufacturer introduced a 47-seat bus model, which is equipped with powerful engines and is environmentally-friendly.

Speaking at the event, Deputy Minister of Industry and Trade Ho Thi Kim Thoa said the exhibition will provide support for enterprises, create trade opportunities, attract investment and promote the exchange of science and technology.

She highlighted that stable economic growth, improvement in transportation infrastructure conditions and rising demand for vehicles will facilitate the development of automobile and motorcycle markets.

During the exhibition, the organising board and exhibitors will conduct a number of promotional programmes with gifts.

The exhibition will run until June 20.

Cisco supports Ho Chi Minh City in improving railway systems

Cisco, a worldwide leader in IT, and the Management Authority for Urban Railways of Ho Chi Minh City entered into an agreement to conduct a feasibility study relating to the Integrated Telecommunications Control Centre for the Ho Chi Minh City urban railways at the MAUR headquarters recently.

This feasibility study, with US$1.5 million funding, is being undertaken through a grant by the US Trade and Development Agency to support MAUR’s plan to acquire and implement information and communications technologies for the Ho Chi Minh City’s metro rail system control centre.

The project starts in June 2015 and is expected to be completed around November 2015.

The project aims to establish a strategic ICT plan, based on which MAUR will build an integrated telecommunications control system for its urban railway systems.

This is to improve operational efficiency and management, and to provide seamless operation and connectivity with other public transportation systems such as bus, taxi, and waterway transport.

Additionally, Cisco will provide consulting services, ICT architecture recommendations, technical standards and guidelines, and submit an implementation proposal to help realise MAUR’s vision for Ho Chi Minh urban railways.

“The project is an important part of the strategic development of our urban railway systems starting with the readiness of the Metro 1 Ben Thanh – Suoi Tien line which is scheduled to operate in 2020. Cisco’s world-leading ICT expertise is expected to provide an optimised and feasible solution to connect our urban railway systems,” said Bui Xuan Cuong, director of MAUR.

“Cisco strongly believes that the implementation and completion of this integrated ICT project will be the first step for the successful collaboration between Cisco and MAUR in the future to improve the city’s ICT infrastructure. This will also significantly contribute to the transformation of Ho Chi Minh City into a connected and smart city,” said Luong Thi Le Thuy, general director of Cisco Vietnam.

Revitalizing the Loc Ninh peppercorn brand

The Vietnam peppercorn industry has expanded over the past five years to become one of the world's top markets and is ideally situated to potentially become even a more significant player in the global spice market.

During the five-year period businesses in the industry have begun to nurture a greater appreciation for the stringent quality requirements for food product exports into major markets and as a result the image of the industry has improved somewhat.

At a recent seminar discussing the revitalization of the Loc Ninh peppercorn brand, participants suggested a concerted effort be made to invest in and develop the brand over the next three to five years.

Tran Duc Tung, head of office of the Vietnam Pepper Association (VPA) said at present, Vietnam’s exports account for approximately 37% of the market in the ASEAN region, 30% in Europe and 7% in Africa.

This vast market share demonstrates that Vietnamese growers and producers can compete head on with their counterparts in the more demanding markets Tung said— and with additional research and development could be even more highly successful.

At present, there are roughly 200 registered domestic and foreign export businesses throughout the nation. Several major foreign traders have only recently increased their presence in the Vietnam market.

Nguyen Thi Mai Oanh, vice president of the Vietnam Pepper Association (VPA) said the export price is much lower than other nations due to lack of compliance with good agricultural practices (GAP) standards.

To develop the Loc Ninh brand in both domestic and foreign markets, there should be greater effort from farmers and traders to adhere to GAP standards to control pests and diseases that negatively affect plant production.

If Vietnam wants to secure a solid foothold in the global market, businesses should attach importance to stepping up their game and concentrate on improving safety and hygiene, said Nguyen Tri Dung, a director of the Minh Tran Company.

Vuong Ngoc Bich, director of An Huy BT Co, Ltd also emphasized the importance of reducing the use of fertilizers, pesticides and herbicides in the cultivation process, noting, the world’s leading foreign peppercorn buyers are willing to pay premium prices higher than US$300 per tonne if no excessive pesticide residues are detected.

However the overuse of fertilizers, pesticides and herbicides by farmers has caused the peppercorn trees to degenerate and as a result they have become more susceptible to disease, which is negatively affecting sustainability of the industry, Bich said.

Mr Tung said in the first five months of the year, Vietnam exported 72,000 tonnes of peppercorns, grossing revenues of US$657 million. In the remaining months of the year, the industry needs to export 40,000 tonnes in order to fulfil the set target of 120,000 tonnes for the year.

The Southeast Asian nation has roughly 80,000ha under cultivation, 52,000ha of which can now produce harvests, with an average output of 2.4 tonnes per ha.  Binh Phuoc province takes the lead in building the Loc Ninh brand.

On March 25, 2014 the National Office of Intellectual Property of Vietnam (NOIP) granted certificates to 16 households that grow trees in Loc Ninh with a total cultivation area of more than 25 hectares.

Vo Dang Khoa, Director of the Centre for Investment, Trade and Tourism Promotion of Binh Phuoc province said the development of Loc Ninh brand should give fresh impetus to the cultivation of peppercorn trees in the province in the coming time.

Support industries need help

More Government support for local companies involved in the support industries was needed, according to the managing director of the Japan External Trade Organistion (JETRO)'s HCM City office.

Hirotaka Yasusumi said the investment by Japanese companies in Vietnam was still full of vigour, but "the biggest problem when investing in Vietnam is the deficiency in the supporting industry."

According to a JETRO survey, the percentage of local procurement in Vietnam for Japanese companies had improved by 11 % in the last four years, from 22 % in 2011 to 33.2 % last year.

But it was still low compared to 66 % in China, 55 % in Thailand, and 43 % in Indonesia, he said.

Although the supply of industrial materials and sub-components by Vietnamese firms to Japanese businesses had gone up by 2.5 % in the 2013-14 period, it still accounted for less than 45 % of total local procurement in Vietnam.

Yasusumi said Japanese firms investing in Vietnam want to buy industrial materials and sub-components from local companies to reduce costs.

But since most Vietnamese companies involved in the support industries are small- and medium-sized, many of them lack funds to invest in modern technology, as well as human resource training or necessary technologies.

Duangdej Yuaikwarmdee, deputy managing director and general manager of Reed Tradex Co, Ltd in Vietnam, said Vietnam has been a prime destination for foreign investment, resulting in a surge in local demand for industrial parts.

"It is vital for industry to understand factors affecting supporting industries, which play a major role in industrial development," he said.

Most of the global electronic brands have assembly plants in Vietnam.

"Compared to other ASEAN countries, you have good fundamentals, and the key thing is how we can develop the electronic support industry," he said.

"I think that the key concern is how to make local manufacturers adapt to new technologies to increase production.

Pho Nam Phuong, director of the Investment and Trade Promotion Center of HCM City, said in the first five months of the year, the city attracted around US$1.05 billion in new investments and additional capital of foreign investors, a year-on-year increase of 33 %.

"Japanese, Korean and Taiwanese manufacturers have been moving many of their factories and technology to Vietnam."

This offers an opportunity for domestic parts producers to become suppliers of these corporations, she said.

Time spent on customs procedures to be slashed

The General Department of Customs has set a target to reduce time spent on customs procedures to less than 10 working days for exports and 12 working days for imports by 2016.

The department will also seek to simplify procedures for businesses, with a target to reach the average of ease of doing business ranking of the ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) by the end of 2015 and the ASEAN-4 (Singapore, Malaysia, Thailand, Philippines) by 2016.

Further, the department has committed to continue effectively implementing the Law on Customs and speed the application of information technology, including assuring the smooth operation of the Vietnam Automated Cargo Clearance System and Customs Intelligence System (VNACCS/VCIS).

These are some of the targets set by the department to implement Government Resolution No 19/NQ-CP on improving the business environment and national competitiveness in 2015 and 2016 by reducing costs, time and risks involved in doing business in the country.

The Resolution noted the reduction in time spent paying taxes from 573 to 247 hours per year, expecting that this will be reduced to 167 hours per year thanks to changes to the Tax Law, which came into effect on January 1, 2015, even as the time spent on business initiation procedures was reduced from 34 to 17 working days.

The Resolution, dated March 12, 2015, requested ministries, agencies and localities to focus on consistent and effective implementation of key tasks and solutions to realising three strategic breakthroughs, together with restructuring the economy, changing the growth models, raising productivity, quality, efficiency and competitiveness. Also they seek the upgrading of Vietnam's rankings in business environments, as rated by the World Bank, and national competitiveness, as rated by the World Economic Forum. Vietnam has jumped two rankings to 68th place among 144 economies worldwide, according to the Global Competitiveness Report 2014-15, which the World Economic Forum (WEF) released last Wednesday in Geneva.

In the Southeast Asian region, Vietnam stands behind Singapore in second place.

The latest Doing Business report by the World Bank, released last October, ranked Vietnam 72nd among 189 countries in terms of ease of doing business.

At the mid-term Vietnam Business Forum 2015 held in Ha Noi last week, Minister of Planning and Investment Bui Quang Vinh said the country's investment climate has witnessed significant improvements following three challenging years of macroeconomic instability.

Prime Minister Nguyen Tan Dung told the forum that the Vietnamese Government would commit to improving the business and investment climate, as well as raise entrepreneurs' competitiveness.

Further, at a Government meeting earlier this month, the PM also expressed the Government's determination for improving the country's business climate, saying that it was critical for socio-economic development and has become an urgent task for Vietnam amidst rapid global integration.

Dung said ministries must come up with detailed measures aimed at administrative reform, including tax, customs and power access, and create a breakthrough in the business climate this year.

Power tariffs to follow market mechanism

Local retail electricity price will be adjusted under a market mechanism by 2016, said Minister of Industry and Trade Vu Huy Hoang.

Hoang said that power supply has been better since 2011, with preventive capacity meeting 25-30% of the country's total demand.

He noted that power price has to follow a market-based mechanism under the Government's supervision to ensure profits. Vietnam will implement a price roadmap transparently to make investors feel safe about investing in the sector.

However, most businesses, especially FDI firms, expressed their concern about power shortage in the southern region.

A Vietnam Business Forum (VBF)'s report revealed that FDI companies have not been worrying about increasing power prices as much as about unstable supply. The Government can increase the electricity tariff of enterprises that consume more power while ensuring adequate supply.

Responding to this situation, the minister remarked that it would require the Electricity of Vietnam (EVN) to ensure capital for a proper power transmission system.

"We have asked the EVN to implement nine supplemental power projects to supply electricity to the southern region, following a forecast of power shortage in 2017-18," he added.

Economist Nguyen Minh Phong said a market mechanism can be implemented if there is free competition. It meant that all economic sectors, including private, State-owned, and FDI, will be allowed to compete to sell electricity to distributors.

However, the retail price of electricity faces no competition as it is decided by the Government.

Phong pointed out it is impossible to have a market-based retail price by 2016 as the sector has been enjoying a monopoly. The Government's role still accounts for 97% of the total production and distribution, thus ensuring no competition.

He proposed to divide production and distribution to set the price of power under a market mechanism.

Sharing the ideas, Pham Quy Tho, a public policy specialist with the Ministry of Planning and Investment, said Vietnam lacks enough conditions to implement a mechanism.

According to Tho, the country should have a preference power price to help guide producers to clarify production costs.

 Japan’s electric company to increase production in Vietnam

The Japan-based Tabuchi Electronic Co. Ltd., a renowned manufacturer of power components and transformers, will invest 1.5 billion JPY (US$12.1 million) in building a workshop in its plant in Vietnam’s northern Bac Ninh province.

Under the company’s plan to increase production in Vietnam, the workshop will be able to manufacture an additional 60 million units in 2016, up 20% from the plant’s current output.

Among the products, power components used in printers and photocopiers will be sold to office machine manufacturers which are looking to move their production from China to Southeast Asian countries. Meanwhile, electric automotive components will be exported to Japanese companies in Thailand.

Tabuchi also plans to transfer production technology to its plant in Vietnam.

In the 2014 fiscal year, which ended in March, 80% of the company’s revenue came from the production of electric equipment used in solar inverters. Increasing its output in Vietnam is part of its plan to diversify its products and expand its markets in Asia.

Cement industry gets back on track

The Ministry of Construction has forecast that sales of cement and clinker in Vietnam will jump on-year by up to 4% to 74 million tonnes in 2015, of which domestic sales will be 54 million tonnes and exports 20 million tonnes.

In line with the forecast, the latest figures released by the Vietnam National Cement Association (VNCA) show that in the four months leading up to May domestic sales of cement jumped 3% year-on-year to 15.89 million tonnes.

For the month of April alone the VNCA statistics indicate that sales of cement shot up 113% on-year to 5.45 million tonnes, which represents a month-on-month increase of 28%.

However, during the four-month period actual production was estimated at 30.22 million tonnes— far outpacing sales resulting in higher inventory stockpiles, the VNCA reports show.

The VNCA reported the overproduction resulted from an unanticipated slowdown in domestic construction during and following the TET Lunar New Year holiday, which they say is inconsequential.

Le Van Toi, head of the Ministry of Construction’s Building Material Department agrees with the VNCA and is not deterred on the prospects for the industry throughout the remainder of the year.

The nation is experiencing an upturn in residential and commercial construction that will spill over and produce a vibrant cement market throughout the remainder of 2015, Toi said.

Meanwhile statistics from the Ministry of Construction seem to support Toi’s optimism as they show that for the January-April period, new residential construction in the two big markets of Hanoi and HCM City was up over threefold that of last year.

In southern region, FiCO Tay Ninh cement joint stock company (TAFiCO)’s cement consumption reported its sales were up 1.19% compared to the same period last year, while in the north, Vinacomin reported its sales rose 10%.  

Vietnam businesses in the industry are also seeking ways to implement better quality controls and expand sales markets both at home and abroad in addition to constructing new cement plants.

Hoang Canh Nguyen, General Director of TAFiCO, said the company targets to develop its trade name, increase the quality of products, boost flexible policy of selling goods and push services after sale in order to increase its competitiveness.

After traditional markets, the company aims for enlarging export markets in the coming time. Now the company is pushing to produce high-quality products to key markets such as Cambodia and Myanmar at about 10 tonnes per month.

The figure is expected to be higher in the future.

TAFiCO has been preparing to commence construction of two new cement plants, which will raise the company’s total production capacity to 3 million tonnes of cement annually.

When these plants are placed into operation, the company will be better positioned to meet the demand for high-quality products in both the domestic and international markets, Nguyen added.

In the near future, the real estate and building material markets will be busier with many new projects set to begin construction.

According to Savills Vietnam, from now until the end of 2015, the Hanoi residential real estate construction market will need cement for 14,000 units in 22 projects.

HCM City also shows signs of recovery.

Car importers will have to pay for emissions test

The Ministry of Finance has issued a draft circular that requires the importers of cars with less than seven seats to pay for fuel consumption tests and energy certificate labels.

Under the draft circular, which is currently open for ideas and opinions, organisations and individuals manufacturing, assembling, and importing vehicles with less than seven seats, will have to pay a fee of VND16,000,000 (US$734) for a fuel consumption test on a petrol vehicle and VND16,500,000 (US$757) for a diesel-run vehicle.

In addition to fuel consumption test fees, they should also pay for energy certificate labels, with VND100,000 (US$4.6) per vehicle.

Viet Nam Register will supervise the collection and management of fees for emissions and fuel consumption tests, as well as fees for energy labels.

ICDREC inks deal to make chips for Japan firm

The Integrated Circuits Design Research & Education Center (ICDREC) of the Vietnam National University HCMC on June 9 clinched a contract to produce chips for Japan-based firm CM Engineering.

Under the deal worth US$60,000, ICDREC will design the power supply part for the chips in one year but the center is expected to finish the contract within six months.

It took ICDREC two years to win the contract with CM Engineering, which specializes in designing integrated circuits (IC) used in wireless sensor devices. This is also the first contract of the center with a foreign firm,

Ngo Quang Vinh, ICDREC director, said the center is negotiating with several foreign chip designers to process the product for the Japanese firm.

Also on June 9, ICDREC reviewed its training course on designing Analog +1 chips for 15 trainees, raising the total number of people able to design ICs for the center to 125.

The course was the first human resource training program of the city’s master plan on chip industry development for the 2013-2020 period.

The plan envisages the program would train 2,000 engineers for the IC sector until 2020, including 1,500 engineers designing the chip and the rest in charge of operating a chip factory. Vietnam is expected to design ICs and have the chip factory in 2020.

However, experts said 2,000 people would not be enough for developing an IC industry.

The Government has approved construction of the chip factory planned to be put at the Saigon Hi-Tech Park in the city’s District 9 and invested by Saigon Industry Corporation with a total investment of VND6.6 trillion (US$302.96 million).

Once in place, the facility will make high security products such as ID cards, bank cards, and military equipment management systems.

HCMC sees exports up strongly since Vietnam’s WTO entry

Exports of HCMC have surged at least 3.6 times since Vietnam became a member of the World Trade Organization (WTO) nine years ago, according to a report of the HCMC government.

The city saw its outbound sales rising from nearly US$8.9 billion in 2006 to US$32.08 billion last year, up 3.6 times, said a review report on Vietnam’s international economic integration since the nation joined the global trade club in January 2007.

The report showed industrial products posted steady export growth in the period and accounted for 67.5% of the city’s total export turnover, excluding crude oil.

Local enterprises have reduced their heavy reliance on Asian markets, especially China, and exported their products to many more markets including potential markets like South Africa, Australia and New Zealand.

Enterprises have focused more on diversifying markets for their products.

According to the report, locally-made products have won the confidence of more local consumers in this economic hub of Vietnam. To further cash in on rising demand, local firms have imported more machines, equipment, parts and materials to turn out products and invest more in new and expansion projects.

To improve the business environment, the city government will continue to reform more State-owned enterprises, adjust policies to ensure fair treatment for enterprises of different economic sectors, and develop the private sector.

Vietnam second biggest apparel exporter to S.Korea

Vietnam has become South Korea’s second biggest exporter of apparel after China and accounted for more than one-fourth of the northeastern Asian market’s apparel imports.

According to the Vietnam Textile and Apparel Association (Vitas), Vietnam exported over US$627.4 million worth of apparel to Korea in the first four months of this year, up 8.25% against the same period last year and making up 25.15% of that country’s apparel imports.

Meanwhile, China’s apparel shipments to Korea in the same period were over US$1 billion, making up 41.27%. Indonesia and Myanmar were Korea’s third and fourth biggest apparel exporters, with 6.9% and 5.35% respectively.

However, most apparel products exported from Vietnam to South Korea are outsourced by Korean-invested companies.

Vitas said 17 out of the 18 companies with high apparel exports to Korea are 100% Korean-invested firms, including E.Land Vietnam, Daeseung Vina, Ivory Vietnam, Unico Global Vietnam and Geu-Lim Culture and Fashion. The Vietnamese company in the top 18 exporters is Bac Giang Garment Joint Stock Company.

Under the Vietnam-South Korea Free Trade Agreement (VKFTA), almost all apparel products of Vietnam meeting the rule of origin will enjoy a 0% tax when the pact becomes effective early next year instead of the current rates of 8-13%. This is a great chance for Vietnamese companies and South Korea firms to boost sales to that market.

Nguyen An, general director of Saigon Garment Manufacturing Trading Joint Stock Company, said earlier that South Korea was a small market in comparison with Vietnam’s other markets for apparel. Korea mainly imports small volumes of just 2,000-5,000 products, while local big companies normally opt for large orders.

Korean companies often have apparel products outsourced but outsourcing is not preferred by large-scale garment companies in Vietnam.

HCM City mulls metro track to Tan Son Nhat airport

The government of HCMC is looking for financial support to carry out the pre-feasibility study for a metro section linking Metro Line No. 5 with Tan Son Nhat International Airport in Tan Binh District.

The 2-kilometer-long section is envisioned going underground from the Cong Hoa station of Metro Line No. 5 to the biggest international airport in Vietnam and have two stations, according to the city government’s document sent to the Ministry of Planning and Investment on Tuesday.

The document said there has not been any study for building the planned metro section, which is expected to meet the demand of a large number of passengers for travelling to and from Tan Son Nhat airport.

The city government is seeking investors for a number of metro lines and will prioritize the public-private partnership (PPP) format for these projects.

The city government proposed the ministry consider and work with the Korea EximBank (KEXIM) over the technical support for the planned metro section.

At a meeting in HCMC last week, the Southern Airports Authority asked the city government to arrange more public transport services for people to and from the airport.

Currently, as there are a few bus routes connecting to Tan Son Nhat, many passengers have to travel by taxi to the airport but there is not much space for many taxis to park at the airport. This is the reason why many taxis have to park on the nearby streets, causing traffic congestion on these roads.

HCMC has plans to develop seven metro lines. The 19.7-kilometer-long Metro Line No. 1 from downtown HCMC to Suoi Tien Park in District 9 is under construction and costs US$2.4 billion with Japan’s official development assistance loan accounting for US$2.2 billion.

Work has started on the management building of Metro Line No. 2 designed to run 11 kilometers from the Ben Thanh station in front of the landmark Ben Thanh Market to Tham Luong in District 12. This project requires an investment cost of US$1.37 billion financed by the Asian Development Bank (US$540 million), German Reconstruction Bank (US$313 million) and European Investment Bank (US$195 million).

The city government is seeking some US$2.82 billion for Metro Line No. 3A with 19.8 kilometers from Ben Thanh to Binh Chanh District, US$1.87 billion for Metro Line No. 3B with 12.1 kilometers from Cong Hoa Intersection in Tan Binh District to Hiep Binh Phuoc in Thu Duc District and US$3.7 billion for Metro Line No. 4 with 36.2 kilometers from District 12 to Hiep Phuoc urban area in Nha Be District.

Metro Line No. 5 will stretch 23.44 kilometers from Saigon Bridge to Can Giuoc Bridge. The section of phase one from Bay Hien Intersection to Saigon Bridge costs 1.5 billion euros funded by the Spanish government, Asian Development Bank, European Investment Bank and German Reconstruction Bank.     

The first phase of the two-phase project is scheduled to get off the ground in 2018 and come online in 2023.

The second phase from Bay Hien Intersection to Can Giuoc is estimated to cost US$1.8 billion. The city government is finding finance for this section from South Korea.

Metro Line No. 6 from Ba Queo in Binh Tan District to Phu Lam Roundabout in District 6 will have 6.36 kilometers of underground track and cost US$1.33 billion. The city is looking for funding for this project.

Only VND154 billion disbursed for riot-hit firms in Binh Duong

Nearly VND154 billion of the VND1-trillion preferential loan package has been disbursed for the enterprises in Binh Duong Province affected by the worker protests against China’s illegal placement of a giant oil rig in Vietnam’s waters in May last year, heard a meeting on Tuesday.

After ill-intentioned elements incited the riots and damaged many enterprises and factories, the southern province approved VND1 trillion of preferential loans to help the affected enterprises resume production. Lending depended on damage levels but the highest amount is not higher than 50% of total costs or VND50 billion.

Loans of the three-year package carry an average interest rate of 7% but the affected enterprises have to pay half of the rate (3.5%) and the remainder is subsidized by the province.

The Bank for Investment and Development of Vietnam (BIDV) was picked to implement the loan package. Binh Duong Province estimated 37 enterprises were eligible for the loans when it was launched but the number of enterprises applying for such loans was small.

According to BIDV, just 11 enterprises have registered to take out loans from the package with a total of less than VND200 billion.

Regarding land and facility rent cuts and exemptions for the riot-hit enterprises, only ten enterprises have asked for this kind of support and the provincial Department of Finance has provided over VND9 billion to support them.

Statistics of the province indicated that the riots hit 453 enterprises with total damages worth some VND3.63 trillion.

Germany funds EUR6.9 million to develop Vietnam’s wind power

The Vietnam General Directorate of Energy and the German Agency for International Cooperation (GIZ) signed a EUR 6.9 million agreement to develop Vietnam’s wind power on June 12.

The project, which will be carried out until 2018, is sourced from the German government’s non-refundable official development assistance.

It targets to build a legal framework for developing wind power in Vietnam and support Vietnamese agencies working in the field, while boosting technological transfers and co-operation with Vietnamese partners.

Speaking at the signing ceremony, Deputy Minister of Industry and Trade Hoang Quoc Vuong said that Vietnam has been actively building programmes on developing renewable energy and wind power.

He said he hoped that with Vietnam’s determination and support from the German government, the country would make further progress in boosting and expanding the development of wind power.

According to Annette Frick, First Secretary of the German Embassy in Vietnam, the signing of the project illustrated the German government’s commitment to support the development of renewable energy, particularly wind power in Vietnam.

As Germany has significant experience in the field of wind power, the project will help transfer relevant technologies and techniques to Vietnam, she said.

Cotton imports grow strongly

Enterprises in Vietnam spent US$712 million importing 447,000 tons of cotton in the first five months of this year, up 35.2% in volume and 8.9% in value compared to the same period last year.

The volume included 105,000 tons of cotton worth US$166 million, growing 39.1% in volume and 8.9% in value, Vietnam Television (VTV) reports, citing figures of the Vietnam Textile and Garment Association (Vitas).

Vitas said cotton imports were higher than shipments of other materials used by apparel producers in the country in January-May. The import price of cotton in the period went down by 19.6% year-on-year to US$1,593 a ton.

In the year to May, Vietnam had imported 326,000 tons of fiber worth US$638 million, rising 11.2% in volume and 3.5% in value over the first five months of last year. The import price of fiber was US$1,954 a ton, down 6.8% year-on-year.

Vitas projected cotton imports would continue to surge in the third quarter of this year as local apparel companies need more material to turn out products to meet higher demand of importers. Some 62% of local apparel firms reported orders in this quarter have grown over 10% against the first quarter of this year.

Vietnam posted textile and garment exports of almost US$24.5 billion, increasing nearly 16% compared to 2013, according to a report by the Vietnam National Textile and Garment Group (Vinatex). Vietnam’s major export markets were the United States, Europe, Japan and South Korea.

Apparel exports in the first five months of this year went up 8.7% year-on-year to US$8.11 billion, according to the General Department of Customs. Apparel shipments in May alone were US$1.65 billion, up 0.8% year-on-year.

Vinatex expects Vietnam to export US$28-28.5 billion worth of textile and garment products for this year.

Vietnam major recipient of French aid

Vietnam is a major beneficiary of grants given by France with a record disbursement last year, executive director of the French Development Agency (AFD) in Vietnam Rémi Genevey told a press conference on June 11.

Genevey said a record amount of 111 million euros was disbursed for projects funded by AFD in 2014. Last year, AFD also pledged 89.3 million euros for Vietnam.

Of the funding, 69 million euros went to the urban railway No. 3 project in Hanoi and will be used to develop a rail line of 12.5 kilometers western Hanoi to the central station. The railway is scheduled to come online next year.

Besides, 20 million euros was pledged for a support program to respond to climate change (SP-RCC 5) aimed to include climate change adaptation to development policies of Vietnam.

For the first time the European Union assigned AFD to manage non-refundable aid worth six million euros for HCMC Finance and Investment Company (HFIC) along with the funding offered by KfW and AFD, according to Genevey.

Nguyen Thuy Anh, head of agriculture and rural development at AFD in Vietnam, said the agency would provide a 22 million euro loan and an 800,000 euro grant for rural and urban infrastructure development in Lao Cai Province this year.

Present in Vietnam since 1994, AFD has pledged more than 1.6 billion euros for 79 projects. Starting with its aid for rural development, AFD’s support for Vietnam has expanded to infrastructure development in the sectors of energy, transport, clean water and drainage.

Construction inspectors look into City Gate Tower

Inspectors of the HCMC Department of Construction on June 10 checked the impact of City Gate Tower project on Vo Van Kiet Street after the Saigon River Tunnel Management Center proposed suspending the housing project in District 8.

The center said that construction of the City Gate Tower project invested by Investment Joint Stock Company 577 has damaged a section of Vo Van Kiet Street near the project in Ward 16.

The center reported that there are cracks on the road section and drainage system near the construction site and that the pedestrian bridge in front of the project has subsided.

Earlier, the Saigon River Tunnel Management Center called for inspectors of the HCMC Department of Transport to look into the project. The investor was then told to suspend construction and take measures to repair damage but work was still going on at the project Wednesday.

An inspector of the HCMC Department of Construction told the Daily that the agency will ask the authority of Ward 6 to tell the investor to stop construction of the City Gate Tower project and repair the damaged section.

The City Gate Tower project covers 1.93 hectares and has four 28-storey apartment blocks with a total of 1,092 units. Around 250 units were put up for sale at some VND1.05 billion each at the end of last year.

The project has an investment of VND936.6 billion (US$43 million) and is scheduled for completion in May, 2017.

Rice price falls after Vietnam wins Philippine contract

The rice price in many parts of the Mekong Delta region has dipped since Vietnam recently won a contract to supply 150,000 tons of rice to the Philippines.

Some rice suppliers of unprocessed rice for export enterprises in Can Tho City and Dong Thap Province said the current buying price for IR 50404 rice is VND6,050-6,150 per kilogram, down around VND50 against the level recorded shortly after Vietnam’s winning the rice contract at a tender in the Philippines on June 5, and down VND100-150 against around 10 days ago.

Nguyen Thanh Tho, a rice trader at Ba Dac Wholesale Market in Tien Giang Province’s Cai Be District, told the Daily that a kilogram of IR 50404 rice is now sold at VND6,100-6,200, falling VND50.

The price of fresh IR 50404 paddy has dropped to VND4,100-4,150 per kilogram from VND4,250-4,300 days ago.

Explaining the declining rice and paddy prices, Lam Anh Tuan, director of Thinh Phat Co. Ltd., a member of the Vietnam Food Association (VFA), said rice exports via official channels to major markets have turned difficult while small rice export shipments to China have stagnated due to the northern neighbor’s border closure.

According to rice expert Nguyen Dinh Bich, rice exports will have to cope with more challenges as Thailand is facing higher pressure to reduce its huge rice inventories estimated at up to 11 million tons.

Many rice exporting countries have offered lower prices as demanded by importers.

Vietnam won the contract to sell 150,000 tons of 25% broken rice to the Philippines after it agreed to cut its bid to US$410.12 per ton from US$419.35.

The director of a major rice export company in the Mekong Delta region, who asked not to be named, said the winning bid of US$410.12 means the FOB price at Vietnam port is only US$340-350.

According to the director, the contract to sell 300,000 tons of rice to the Philippines Vietnam won on February 28 consisted of 150,000 tons priced at US$441 and 150,000 tons at US$421. However, when his company was assigned to export rice as part of the contract, the FOB price was around US$350.

“Therefore, with the new contract, the FOB price of rice cannot be high,” he said.

Rice export enterprises currently buy IR 50404 rice at VND7,000-7,100 per kilogram, equivalent to US$322-327 per ton. So the differential between the buying price and the FOB price is just US$25 per ton.


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

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