BUSINESS NEWS IN BRIEF 22/8

Mekong Capital divests from Asia Chemicals

Mekong Enterprise Fund II, a unit of Mekong Capital, has completely divested from Asia Chemicals Corporation (ACC) and taken in US$8.9 million, a 2.6-fold increase over its initial investment, after a seven-year holding period.

According to a press release issued by Mekong Capital on August 10, in 2011, MEF II invested US$3.8 million in ACC, which was its 10th investment, after others in Mobile World Investment Group (The Gioi Di Dong), Golden Gate, Vietnam Australia International School and International Consumer Products.

However, MEF II has now divested from all of its 10 earlier investments. The divestments have helped the fund generate a gross return multiple of 4.5 and a gross internal rate of return of 22.5%.

Early this year, MEF II sold five million shares at Mobile World, generating a gross return multiple of 56.9 and an IRR of 61.1%, making it one of the most successful investments in Asia.

Also, the fund’s full exit from Vietnam Australia International School and Golden Gate had resulted in a gross return multiple of 4.5 and 9, respectively.

Mekong Capital is an unlisted private equity firm, focusing on the consumer goods sector. Its funds have made 33 investments in Vietnam, of which 25 investments have been fully exited.

Its latest fund, Mekong Enterprise Fund III, has invested in seven companies, including pawn shop chain F88, Nhat Tin and ABA logistics firms, Chao Do restaurant chain, Ben Thanh Jewelry, English teaching organization Yola and mattress sleep solution provider Vua Nem.

FastGo expects to capture ride-hailing market share of 30-40%

FastGo Vietnam Co Ltd. expected to gain a 30-40% market share in the local ride-hailing market after the first two years, a representative of the company said at the launching ceremony of FastGo, a ride-hailing app, on August 10.

The representative insisted that besides providing its services in Hanoi City and HCMC, FastGo will quickly extend its presence in provinces and cities across the country.

The firm confirmed that FastGo will skip collecting commissions from drivers, but charge each driver a maximum VND30,000 per day. Typically, foreign ride-hailing firms collect a 20-25% commission.

FastGo Vietnam on the occasion also launched the ride-hailing app FastBike, which provides customers with motorbike services in HCMC and Hanoi City. When FastGo was introduced in Hanoi City on June 12, the firm only offered three services, namely FastCar, FastTaxi and FastLuxury.

FastGo director Nguyen Huu Tuat said that compared to other ride-hailing services, FastGo has more features, including payment via credit cards, ATM cards and scanning QR codes. Fares of FastGo services are lower than those of other firms, Tuat stressed.

FastGo is targeting those customers who use bank cards for payments or pay online for FastCar and FastBike services. Thanks to the non-cash payment form, the firm’s promotional programs will be better controlled during the initial period, the company said.

Ministry proposes dissolution of Road Maintenance Fund council

The Ministry of Transport has proposed the Government dissolve the Council for the Road Maintenance Fund as it has become redundant after five years of operation.

Established in December 2012, the council was tasked with managing the Road Maintenance Fund, but since 2017, all revenue for the fund has been channeled directly to the State budget. Moreover, all costs for road maintenance and repair are also covered by the State budget. Therefore, the council’s management role is now defunct, according to the ministry.

Since 2017, the revenue for the Road Maintenance Fund collected from vehicle owners across the country has been submitted to the State budget, in accordance with the Law on Fees and Surcharges and the Law on the State budget. All expenses for operating the fund have been backed by the State budget since then. In addition, the Ministry of Finance advised the prime minister to allocate 35% of the collected fees to the road maintenance funds of localities nationwide.

The Council for the Central Road Maintenance Fund will propose amendments to regulations on fund collection, consider approving financial plans every year and make decisions on allocating road fees collected from automobiles annually for the local funds.

The Transport Ministry suggested the prime minister allow it to take control of the Central Road Maintenance Fund. It also proposed that the minister or deputy minister of transport function as the fund’s chairman, while the Central Fund Office is shut down. The fund’s expenses and revenues will be managed in line with the Law on the State Budget and the relevant legal policies.

Many people had earlier voiced concern over the road maintenance fee collection as it would require complicated procedures and consume the State budget. Collecting fees for road maintenance and providing subsidies from the budget to operate the fund are deemed unnecessary as most of the road maintenance fees are now collected through vehicle registration agencies.

Government to set up General Department of Market Surveillance

Prime Minister Nguyen Xuan Phuc has decided to upgrade the Market Surveillance Agency under the Ministry of Industry and Trade into the General Department of Market Surveillance.

The Government leader recently issued Decision 34/2018, which defines the functions, tasks, powers and organizational structure of the General Department of Market Surveillance. The decision will take effect on October 12.

The general department will be organized into a vertical system from the central to the local levels, while fulfilling the requirements set by the minister of industry and trade. The department will have one general director and up to four deputy general directors.

It will be responsible for preventing and handling the trade of smuggled, fake and banned commodities; dealing with violations such as infringements of intellectual property rights and the breaking of regulations on the quality and safety of products; and protecting the rights and interests of consumers.

The structure of the general department will be upgraded and improved by six agencies – the office of the department; the department of personnel and organization; the general, planning and financial department; the department of policy and legal affairs; the department of inspection; and the bureau of market management.

As many as 63 provincial-level market surveillance departments will be established under the umbrella of the General Department of Market Surveillance.

Market management agencies at the district level will fall under the management of these provincial-level departments instead of the departments of industry and trade.

The Prime Minister has asked the Ministry of Industry and Trade to work with the provincial People’s Committees on the transfer of the local market surveillance agencies. The handover should be completed by October 12.

The ministry has also been tasked with devising a scheme for establishing interprovincial market surveillance bureaus. The scheme needs to be submitted to the Prime Minister by December 2019.

Meanwhile, as many as 681 market management agencies at the district level are expected to be merged with 305 inter-district agencies by 2020.

Deputy Minister of Industry and Trade Do Thang Hai remarked that the restructuring of the market surveillance apparatus is aimed at strengthening cooperation and fighting against trade fraud and the trade of fake goods more effectively.

CAAV asks carriers not to hike airfares

Government to set up General Department of Market Surveillance, Ministry proposes dissolution of Road Maintenance Fund council, Environment projects in HCMC in need of investment

The Civil Aviation Administration of Vietnam (CAAV) has asked local carriers to refrain from increasing airfares to stabilize prices during fuel price hikes, in accordance with the prime minister’s request, the local media reported.

The Government and the Ministry of Transport have requested the relevant agencies to stabilize prices to maintain an inflation rate below 4% this year. 

Earlier, in June, data from the General Statistics Office showed that local budget carriers Vietjet and Jetstar Pacific had hiked the fees of their fringe services, leading to a rise in airfares by 2.59%. Deputy Prime Minister Vuong Dinh Hue had asked the Transport Ministry to perform an inspection and work on price monitoring as traffic service costs make a 1.04% contribution to the consumer price index of the country.

According to CAAV, as of March, the Jet A1 fuel price in Asia had hit US$86.7 per barrel, with import tariffs of 7%, environmental taxes at VND3,000 per liter and the exchange rate of Vietnamese dong versus the U.S. dollar reaching VND23,260. The final price of this fuel will cost some VND2.6 million per barrel when entering Vietnam.

CAAV concluded that the volatility of fuel prices and exchange rates have raised the costs per flight by an average 17% versus August last year.

Added value for products created at SHTP on the rise

The value added to products created by enterprises at the Saigon Hi-Tech Park (SHTP) is growing gradually, with the current rate at some 23%, Le Hoai Quoc, head of the SHTP Authority, told a press conference on August 15.

Prior to 2011, the added value of products at SHTP had amounted to an average of 10-12%, similar to that of products made in industrial zones. The figure went up to 23% on average over the past five years, Quoc said.

Notably, a laborer working at SHTP was reported to contribute US$300,000 to production value in 2017, soaring 15 times against the value generated by a laborer in an industrial zone, Quoc stressed. The added value from a laborer at SHTP is 20 times higher than that from a worker in an industrial zone, he added.

SHTP is soaring high, attracting various projects invested in by hi-tech corporations such as Intel, Nidec, Jabil, Sonion, Sanofi, FPT, Nipro, Datalogic and Samsung.

Enterprises at SHTP saw their annual production value rise steadily from US$0.5 billion in 2010 to US$1 billion in 2011, over US$2 billion in 2012, some US$2.9 billion in 2013, US$3.3 billion in 2014, US$4.6 billion in 2015, US$7.6 billion in 2016 and US$12 billion in 2017.

The production value reached an estimated US$5.7 billion during the first six months of this year, up by 14.6% year-on-year. The export value reached an estimated US$5.08 billion, rising by 10.3% year-on-year, while the import value amounted to US$5.03 billion, growing at a staggering 21.3% against the same period in 2017.

According to Quoc, the cumulative production value of SHTP to date has totaled some US$40 billion, with export and import value reaching US$38 billion and US$35 billion, respectively, while the proportion of machines and equipment makes up 15-20% of the total import turnover.

The export revenue generated by businesses at SHTP showed a whopping increase from 9.17% in 2010 to 25.26% in 2012, accounting for 30% of the city’s total export value over the past three years.

SHTP forecast the production value will reach US$20 billion by 2020. Currently, SHTP has 146 projects, with total domestic capital of US$1.9 billion and foreign direct investment of US$5.43 billion.

With the growth of added value for hi-tech products created at SHTP, the park is expected to contribute 10% to the gross regional domestic product of HCMC by 2020.

SHTP will organize three international conferences in 2018---“Nanotechnology and New/Advanced Material Applications” on August 31, “Grab the Trend-Nurture Creations” on September 28 and “Robot and Artificial Intelligence” on November 16 and 17---aiming to research and develop hi-tech applications and solutions.

Tra fish exports show signs of recovery

Vietnam’s tra fish exports to the European market have made a slight rebound thanks to marketing campaigns to promote the high quality of the products. The welcome news comes in the wake of a strong drop in exports owing to false allegations being publicized in Europe, reported the VietnamPlus news site, citing Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP).

VASEP signed an agreement with Globally Cool to introduce tra fish marketing programs in Europe between March and December 2017. Besides this, the association established a website, https://youreverydayfish.com, to introduce Vietnamese tra fish to the world and to respond to the false information on the quality and hygiene of Vietnamese tra fish. The multilanguage website offers information in English, German, Italian, Spanish and Dutch.

Vietnam’s tra fish exporters and processors are currently creating new high-end products, improving product quality, raising added value and reducing the glazed ice percentage to boost exports. The prices of tra fish products have risen significantly due to the limited supply since end-2017.

Hoe noted that tra fish prices have recently gone up in the market as other types of white-flesh fish were found to be in short supply. The consumption of Vietnamese tra fish as a replacement contributes in part to the recovery of the tra fish exports and export revenue from tra fish shipments to Europe.

Statistics from the General Department of Vietnam Customs indicate that Vietnam has seen revenue from tra fish exports to Europe rise by 16.5% year-on year, reaching US$139 million over the first seven months of 2018. Some tra fish importers reported a sharp increase in purchases of Vietnam’s tra fish, including in the Netherlands, with a 43% rise, and Italy, with 83% growth.

Europe, Vietnam’s third-largest tra fish importer, accounts for 11.6% of the country’s total supply, behind China and the United States.

Despite these positive movements, experts have voiced concern over the negative rumors that have tarnished the image and reputation of the country’s tra fish sector, suggesting that the authorities of the sector should create a plan to build a trademark for Vietnamese tra fish and map out a strategy for bolstering exports of these products to Europe and other markets across the world.

It is known that in January 2017, a Spanish TV station aired video footage containing false information on Vietnam’s tra fish farming industry, leading to a drop in Vietnamese tra fish distribution in Spain and elsewhere in Europe.

Baby product retailer Con Cung complies with law: Trade ministry

Con Cung (Beloved Kid), a retail store chain specializing in mother and baby products, has been found to have conformed to regulations on the rights and interests of consumers, product quality and traceability, the Ministry of Industry and Trade said on its website.

Earlier, a customer had complained that a Con Cung outlet had replaced a product’s “Made in Thailand” label with another that read, “CF,” which stands for “Con Cung Fashion.”

Following up on the complaint and media reports, the ministry set up an interdisciplinary inspection team to check whether the company had complied with regulations on the production and trade of goods and commercial services, competition and the protection of consumers’ rights and interests from July 30 to August 10.

The team inspected 75 samples of Con Cung products and examined its activities for violations of regulations protecting the rights and interests of consumers.

Based on the inspection results, the team concluded that the company had met the legal requirements.

The team also noted that the company’s documents on the import of goods are valid and in line with regulations on import procedures.

However, upon inspecting 192 Con Cung outlets, market surveillance divisions found some violations by the company, including violations of regulations on the labeling of goods, promotions and ecommerce.

The ministry has directed the Market Surveillance Agency and its divisions to deal with Con Cung’s administrative violations.

In addition, the ministry has demanded that the company take corrective action and further review its regulatory compliance in trading activities.

For products violating labeling regulations, the ministry has asked the company to correct the labeling of their products before making them available on the market.

North-South express railway project being accelerated

The Association of General Consultants presented a plan and process for researching the cross-country high-speed railway, separated from the national railway network, to the Minister of Transport at a meeting on August 16, reported Lao Dong newspaper.

The north-south express track, with a length of 1,545 kilometers, is expected to run from Hanoi City to HCMC, crossing 20 provinces and cities.

The project, designed to avoid complicated and rough regions, is slated to have 23 railway stations and five depots.

Speaking at the meeting, a representative of the association introduced an effective model for the project and emphasized the deployment of passenger and cargo trains and their connectivity, in addition to proposing the application of suitable technology, as well as adjusting train speeds and investment methods.

Addressing the meeting, Transport Minister Nguyen Van The asked the transport consulting firms to focus on completing the report and then consult the relevant agencies and departments on the express railway construction at a meeting in August.

The minister also requested the association to learn about the previous projects and research the results found by international organizations, adding that the report must have adequate essential information and data. Besides this, the association should work with the governments of HCMC, Danang City and Nghe An Province to determine directions for the trains and the locations of stations.

The underground and elevated lines will account for 70% of the railway, on which trains will be able to travel at a maximum speed of some 200 kilometers per hour.

The ministry will start work on the project between 2020 and 2030. The express track will have a width of 1.435 meters, allowing trains to travel at a speed of 160-200 kilometers per hour. Infrastructure for sections that can allow a maximum travel speed of 350 kilometers per hour will be developed later and will be in use from 2050.

The association includes Transport Engineering Design Inc., Construction Consultant JSC and Transport Engineering and Design Inc. South.

Saigon Co.op promises high profits for farmers growing clean rice

The nation’s leading retail store chain operator, Saigon Co.op, has confirmed that Vinh Long Province’s farmers will earn high profits by growing clean rice.

The firm has agreed to set the purchasing price of clean rice produced in accordance with the organic farming model of the retailer at 40% higher than the market price.

In 2016, the province established the Tan Tien Cooperative to execute a clean rice-growing project in My Loc Commune on a 31-hectare farming area and then on an area of 45 hectares.

The results of the project, released at a conference on reviewing three years of execution of the cooperative model, show that My Loc Commune benefited from clean rice cultivation under the model in terms of socioeconomic development and soil efficiency. The average rice output increased from four tons per hectare in the 2016 summer-autumn crop to more than six tons per hectare in the 2017-2018 winter-spring crop. As a result, each farming household earned from VND14 million per hectare to more than VND30 million per hectare.

The 2017 profit amounted to an estimated VND40 million per hectare in a year with two crops against the 2016 profit of more than VND20 million per hectare in a year with one crop. Meanwhile, in 2018, the profit has reached more than VND40 million per hectare in a year with two crops to date, rising by over VND10 million year-on-year.

According to Saigon Co.op, the project contributed to improving farmers’ awareness and farming methods, including the use of biofertilizers instead of chemical fertilizers or pesticides to protect the environment and ensure the quality of rice.

To achieve these positive results, the Vinh Long authorities not only improved the agricultural structure for sustainable growth, but they also successfully dealt with the consumption problem, thanks to Saigon Co.op’s purchase of the entire output of rice sown in the clean area.

Pham Trung Kien, deputy general director of Saigon Co.op, noted that the firm had joined the project to turn the agricultural sector into a secure one, ensuring stable development to improve farmers’ income.

Saigon Co.op’s Co.opMart, Co.opXtra and Co.op Food supermarkets have been selling two types of rice---jasmine and Huong Xuan rice---which are being grown as part of the project. The monthly average consumption of these supermarkets amounts to some 20 tons of clean rice.

To further develop and expand the project, the strengthening of governance and control of cooperatives are necessary tasks. Cooperatives should be encouraged to follow the model of growing clean rice to raise their income.

Saigon Co.op will continue to purchase the entire clean rice output in Vinh Long Province to ensure the income and profits of farmers, added the retailer.

Ecofarm wants to develop agrotourism in Dong Thap

Ecology Farming Corporation (Ecofarm) proposed investing in agriculture, as well as developing agricultural tourism, or agrotourism, in Dong Thap Province, as was stated during a meeting between Ecofarm and the provincial People’s Committee held on August 17 in Dong Thap.

Addressing the meeting, Tran Thanh Tam, vice chairman of Ecofarm, remarked that the Kien Giang-based firm wants to carry out a project to build an organic agrotourism park on Tan Thuan Dong Islet, in the provincial city of Cao Lanh.

The river islet is an agriculture-only area, which boasts potential for developing ecotourism combined with organic agriculture, said Nguyen Hong Quang, Ecofarm chairman. The locality currently rents an area of 17 hectares on this islet to some 40 farming households for cultivating fruit trees. Quang added that this location should be invested in to specialize in organic fruit production to ensure future prosperity.

Ecofarm pledges to convert Tan Thuan Dong into the first organic agricultural islet in the Mekong Delta region in the years to come, if it receives approval from the local government, Quang stressed. He also expected that Dong Thap will join with Ecofarm to multiply the agrotourism model on many more islets in the province.

In addition, Ecofarm suggested injecting money into a hi-tech agricultural zone, combined with ecotourism in Thanh Binh District from now until 2020, adding that it has high hopes on investing in other hi-tech agrotourism projects, comprising a hi-tech zone for the flower-cultivating sector in Sa Dec City.

Speaking at the meeting, Nguyen Thanh Hung, vice chairman of the provincial government, asked relevant departments and agencies to support Ecofarm in their research to carry out the projects.

Old mindset harms state capital divestment

If the domestic market is better exploited and the protection of the domestic market implemented wisely, it won’t be a too heavy burden to shoulder even when key markets such as the U.S. and the EU turn sour

The hesitation for State capital divestment of many State management agencies like the Ministry of Transport shows that such agencies do not give priority to improving the business efficiency of State-owned enterprises (SOEs) but focus more on maximizing profit from State capital sale

According to the recent announcement of Vietnam Airlines Corporation (VNA), after the company issued new shares at a 1:0.1558 ratio to existing shareholders, the Ministry of Transport has bought 164,730,291 shares at VND10,000 per share, equivalent to 15.58% of the total VNA shares under its ownership, thus retaining its stake at VNA at 86.16%.

VnEconomy, quoting sources from Vietnam Capital Securities Company, reported that the ministry will pay VNA VND578.4 billion in cash for buying 57.8 million shares, and the remaining 106.9 million shares will be paid with money from its fund for enterprise reform assistance on the VNA balance sheet.

Earlier, as planned, the ministry was allotted more than 1.057 billion share buying rights, and it decided to auction 371,533,127 rights at a reserve price of VND6,026 per right on April 12. However, only 10 individuals registered for buying a total of 272,000 rights when the registration time came to a close. On the auction day (May 22), nine investors bid for a total of 262,000 rights at an average price of VND6,026 per right, but upon the deadline, none made payment nor came to get back their deposits. Therefore, more than 371 million rights put up for auction was unsaleable.

On July 5, Vietnam Depository Receipt announced the extension of the time for executing the rights to buy VNA shares from May 5-July 2 to May 5-July 31. However, the result was disappointed as described above.

The slump in VNA share sale this time raises the question about the responsibility of the Ministry of Transport. After the unfavorable outcome of registering and auctioning the buying rights in May, the ministry should have lowered the reserve price so that it could sell the most rights, but obviously it did not want to do so.

It’s probable that the ministry has “regretted” to sell the rights at a low price, as the average price of a VNA share on the market was over VND30,000 at the time of offer while the buying price for the new shares was only VND10,000 per share. If this market price stays until VNA, which is currently listed on the Market for Unlisted Public Companies (UpCom), moves to the Hochiminh Stock Exchange (Hose) in the third quarter as planned, it would be beneficial for the ministry to hold all the new shares.

If there is a sound reason for the “regret,” one may question why few investors were interested in such a good investment, i.e. the share buying right. Is it probable that the ministry “made difficulties” for the registration of share buying rights, a scenario similar to the bidding for many build-operate-transfer (BOT) projects where only one contractor has registered for participation though management agencies have affirmed they have duly completed the bidding procedure.

Nevertheless, even if the ministry did regret to sell the rights due to its beneficial calculation, whether the calculation comes true or not is uncertain. The price of VNA shares has declined drastically since the beginning of this year. It’s not certain that the decline would not continue further after VNA share listing on Hose, thus making the ministry’s calculation premature. 

Meanwhile, with the injection of huge funds to buy VNA shares plus the proceeds expected to gain from selling the share buying rights, the ministry, or more exactly the State budget, would  obviously have room for spendings which are more necessary, meaningful and efficient than the earnings from VNA shares. It should be noted that VNA has set a much lower profit target for 2018 than its 2017 profit.

Furthermore, as per the original plan, the equitization of VNA is aimed to reduce the State stake to 75% and further to 51% by 2020. True, the slump in the sale of the share buying rights has made the ministry hesitate in the divestment of State capital from VNA, but the move, whether unintentional or on purpose, again makes the target of reducing State stakes after SOE equitization unachievable. 

More importantly, in the future the ministry may cite similar reasons to refuse State capital divestment. This attempt would not only set a precedent or bad example for SOEs and representatives of State ownership at other enterprises to follow but also turn the primary goal of SOE equitization—improving the business efficiency of SOEs—elusive.

The hesitation in State capital divestment, as shown in the case of the transport ministry, shows that many management agencies do not give priority to improving the business efficiency of SOEs but focus on selling State capital at the best price. This mindset would create a vicious circle: The State is unwilling to divest its capital and reduce its shares at SOEs, so local and foreign investors hesitate or are not eager to buy SOEs’ shares and improve their business efficiency; and thus the SOEs become less attractive to investors, making it harder for State capital divestment.

In reality, prices of VNA shares have fallen. This is evidence that the heavy representation of State capital ownership has an adverse impact on VNA’s business quality and efficiency. 

In the future, Vietnam’s stock market may be affected due to the volatile and uncertain situation at home and worldwide. Then, the equitization, capital divestment and initial public offering of SOEs may face delay over an indefinite time if the priority is still maximizing profit for the State. Therefore, the Government should have plans for different scenarios and lay emphasis on minimizing the State representation in enterprises.

Business ethics must prevail

When it comes to morality, especially when social welfare or people’s well-being is concerned, a widely-accepted norm dictates that the pursuit of business profit should be on the back foot, and business ethics must be held aloft.

Such a perception, however, does not seem to be exercised in the handling of the deadly flooding in the north, especially in Nghe An Province, these days when business-minded people have failed to pay due care to the safety of the people.

Storm No. 4, internationally known as Bebinca, that hit the country’s north last week had been forecast days earlier, and while many people had braced themselves for its coming, certain hydropower plant operators had acted like outsiders.

As downpours triggered by the storm continued in Nghe An over the weekend, flooding a wide swath of areas there, the inundation was further aggravated by water discharged from Ban Ve hydropower plant, which is the biggest dam in the province. Muong Xen Town in the province’s Ky Son District, for example, was all submerged with some sites submerged under three meters of water within just an hour after floodwaters rushed downstream. According to initial estimates, the calamity has killed 10, including six in Nghe An, plus two reported missing, all in the aftermath of the storm.

Secretary of Nghe An Province’s Party Committee Nguyen Dac Vinh, instructing rescue effort in the locality on Friday, stressed that “human lives are of utmost importance,” but at the same time, Ban Ve hydropower plant was still discharging water at a rate of 2,000 cubic meters per second, according to the news site Vnexpress. The strong water release is said to be smaller than the inflow of water upstream, at more than 3,000 cubic meters per second.

In this case, the mandatory role of hydropower reservoir operators to minimize flooding in downstream areas, apparently, has not been rightly worked out. If Ban Ve operator had discharged water days before the storm made landfall, it would have been able to retain more water during the rainy days, and thus the discharged volume would be minimal, if any. In such a scenario, the operator would face a business risk of the storm not coming as forecast, and the lack of water would affect its power generation and thus its revenue in the coming time.

However, for certain business-minded people, such a risk is unacceptable, and the consequences as seen in the human and property losses none of their business.

It is high time to rethink this approach in business, especially in areas that may put people’s well-being or safety at risk, from hydropower to mining and quarrying and many more, since numerous innocent lives have been lost over the years, many not due to natural calamities, but the ignorance of the responsible people. In all relevant processes, from project screening, licensing and operation, business ethics must prevail.

Dong Nai encourages large-scale fields, cooperatives

The pooling of fields to create large-scale fields and cooperatives for growing clean produce in southern Dong Nai province has benefited farmers and companies.

While most pepper farmers in the province have suffered losses for the past two years because of the sharp decline in prices, more than 750 households growing pepper in Cam My district have earned profits by pooling their lands.

The Lam San Agriculture Cooperative in Lam San commune exports the spice to the EU.    

Nguyen Van Quang, one of the members, said the cooperative guarantees purchase of the entire pepper output at 10,000 – 20,000 VND a kilogramme higher than the market price.

Thus, the households do not suffer losses though pepper prices have fallen, he said.

Under the large-scale field model, farmers with contiguous lands grow the same crop using the same techniques and schedules and are instructed by a company or, a cooperative (if they are members).   

Nguyen Quy Tan, whose land has been part of a large-scale cacao field in Dinh Quan district’s Gia Canh commune for three years, said since joining he had not been worried about prices.

The Trong Duc Cacao Products Limited Company, which helped establish the large-scale field, pays him 1,000 – 2,000 VND higher than market prices per kilo, he said.

In the past cacao prices had been volatile and sometimes fell by 2,000 VND a kilogramme, he said.  

If the company had not overseen the setting up of the large-scale field, he would cut down his cacao trees to plant other crops, he said. “After I tied up with the company, I feel secure.”

Huynh Thanh Vinh, Director of the provincial Department of Agriculture and Rural Development, said the establishment of large-scale fields and cooperatives to grow clean crops yielded positive results. However, their number in the province was not large, he said.

He attributed this to farmers and companies not achieving benefits, the lack of markets, insufficient support from the authorities, and the small size and scattered nature of farm lands.

Dong Nai has 18 large-scale fields with a total area of nearly 6,000ha pooled by around 5,000 participating households, according to the Department of Agriculture and Rural Development. The area accounts for 2 percent of the province’s arable lands.

To ensure sustainable development of agriculture, the province has called on farmers and companies to strengthen their cooperation and simplified access to preferential credit and land policies.

It will also co-operate with other agencies to provide farmers, cooperatives and companies with market information, especially about key local agricultural produce.  

"When authorities do a good job of forecasting the market, companies and co-operatives know precisely about the market’s demand and strengthen collaboration with farmers to set up large-scale fields to grow the crops that are in demand," Vinh said.

The province plans to help managers of co-operatives acquire management skills and participate in trade promotion activities in the country and abroad.

Vietnamese gov’t to finance cooperatives

Cooperatives have so far grown contributing 5.6 percent to the country’s Gross Domestic Product, said participants at a conference in Hanoi yesterday; accordingly, Deputy Prime Minister Vuong Dinh Hue proposed financing them.

The conference presided by Deputy Prime Minister Vuong Dinh Hue was about implementation of the government’s Decree No. 98/2018 on policies of production and consumption alliance and the Prime Minister’ Decision No. 461 on developing 15,000 cooperatives.

Participants said cooperatives have grown more and with the present growth, it is totally possible that Vietnam can have 15,000 cooperatives by 2020.

According to the Ministry of Agriculture and Rural Development, by June, 2018, the country has 39 agricultural cooperative alliances and 12,596 cooperatives. Through a study conducted in 2017 , just 12 percent of cooperatives ( or 1, 115 cooperatives) are operating well while 34.3 percent of them have fairly operated.

Speaking at the conference, Deputy Prime Minister Vuong Dinh Hue said that thanks to competent agencies’ efforts, cooperative started to develop contributing 5.6 percent to the country’s GDP; accordingly, Vietnam can have 15,000 cooperatives in 2020.

Notwithstanding, Mr. Hue stressed that the government and the PM take heed to cooperatives quality rather than quantity. It is a long difficult time to have efficient cooperatives like present.

The next step is to strengthen quality of 4,400 good cooperatives and 1,500 of them have to adopt high technologies whereas weak cooperatives must work efficiently by 2020.

As per Mr. Hue, household business used to gain achievement before yet household business owners must unite to grow. Accordingly, setting up cooperatives with the participation of scientists is the best way to help agriculture sector growing more and implement the Party, the National Assembly and the government’s decision.

Mr. Hue proposed the state bank of Vietnam to soon change the decree No.55 to provide more funding in the field of agriculture, rural plan while the Ministry of Agriculture and Rural Development, local administrations to re-assess land and property to facilitate cooperatives loan borrowing.

HCMC housing price rises due to specification

In its report to the Ho Chi Minh City People’s Committee, the Department of Construction said that city housing price has lately risen due to specification.

There has been an increase in prices of houses and land in the city. The Department affirmed the volatility of housing segment in the property market follows the laws of supply and demand.

Notwithstanding, more people bought houses as there has been rise in price of land; consequently, land price has gone up more.

Speculation and incorrect information resulted in high transaction value, even 70 percent rise compared to same period last year.

The Department said present high land price is in some areas which have poor traffic and infrastructure.

Accordingly, in its document to People’s Committee, the Department wants to take steps to curb property bubble in some areas for a transparent and sustainable development of real estate.

The Department said in its document that participation of related agencies, local governments and state bank of Vietnam is needed to curb the property bubble.

Specifically, the Department of Environment and Natural Resources, the Department of Construction and people’s committees in districts should publicize the information of construction pace of condominium projects, urban transport infrastructure.

Additionally, district administrations have to enhance management on separating farm land in urban and rural areas. Police officers and local governments will issue harsh fines on those spread incorrect information of projects or swindlers.

HCM City leader listens to enterprises’ opinions to assist them

Ho Chi Minh City People’s Committee Chairman Nguyen Thanh Phong said that city authorities always listen to enterprises’ opinions and provide support to them.

The Chairman made the statement while he and representatives of agencies August 14 worked with some enterprises in Vinh Loc Industrial Park in Binh Chanh District.

Chairman Phong affirmed the city's business association plays a vital role in the city’s economic development; therefore, city leaders usually meet the association once a year to listen to enterprises’ wishes from which city authorities can improve business environment to strengthen the city’s economic growth in the future.

He added the association should connect enterprises together to expand business development.

Of 6,000 enterprises, just around some hundreds of them have registered capital of over VND1 trillion up. Once connected, the large-scale ones will help small enterprises to develop more. Accordingly, Chairman Phong expected the association to connect enterprises together and reflect their opinions to city authorities.

At the end of meeting, Mr. Phong suggested the Department of Industry and Trade to work with Food and Foodstuff Association (FFA), the Department of Science and Technology, and the Food Safety Management Board to work out a program to deal with existing matters. The Department of Industry and Trade should listen to the association’s proposal and then submit to the People’s Committee to resolve these matters, said Mr. Phong.

Noticeably, Mr. Phong said that enterprises can seek assistance from agencies to by sending opinions to FFA which will then submit to the authorities.

The city leader said around 6,000 hectare will be reserved for building industrial parks by 2020; at present, industrial parks cover an areas of 4,000 hectare. The city will allocate one land section for start-up firms. He insisted that the city will not lure foreign-invested companies by all means.

Speaking at the meeting, FFA chairwoman Ly Kim Chi said in the first six months of the year, the city’s Gross Regional Domestic Product (GRDP) hit VND 585,635 billion ($25,180,214,808), a year-on-year rise of 7.86 percent. The rate of four key industries was 10 percent in GRDP, apart from this, food and foodstuff processing accounted for 3 percent.

Notwithstanding, through initial survey, up to 85 percent food enterprises have little knowledge to integrate with the world.

One of difficulties which enterprises are facing is that they have not got access to stimulus package with low interest rate. Worse, to enable to put products into modern distribution channels, enterprises offer discount of 15 percent to 35 percent which might be its profits. Some enterprises complained also that they had been ordered to pay tax arrears of ten years ago and associated fines.

Additionally, food and foodstuff companies said they are encountering difficulties with the governmental regulation No. 09/2016 requiring enterprises to add nutritional supplement into food. People’s Committee has petitioned to resolve the problem, yet until now it has not been resolved.


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