BUSINESS IN BRIEF 15/4
Steel consumption increase ‘shortlived'

Steel consumption in March climbed by nearly 80 per cent to 450,000 tonnes over the previous month, according to the Viet Nam Steel Association (VSA).

The association told Viet Nam News yesterday that its members produced about 448,000 tonnes of steel in March.

"Some people say this is a good sign for the industry. We, however, do not agree," said Nguyen Tien Nghi, VSA deputy chairman.

Nghi said that sales in March last year was about 522,000 tonnes.

"Month-on-month, it jumped this year because February was a short month, with a long holiday for Lunar New Year," he said.

In addition, after a long period of stagnancy, many traders had decided to buy steel to increase their stockpile.

Other experts said consumption climbed in March thanks to a lower interest rate on bank loans, which fell by 1 percentage point to 11 per cent on March 26.

According to Nghi, about 27.4 per cent of sales came from State-owned companies, while 20.8 per cent were from joint-venture companies. Other companies purchased 51.8 per cent.

The VSA said that total production volume in the first quarter of this year was more than 1 million tonnes, while sales reached more than 1.1 million tonnes, equivalent to 96.8 per cent of the amount in the same quarter last year.

Meanwhile, the stockpile volume still stands at the same level as last year's.

By the end of March, the inventory volume was 285,000 tonnes, Nghi said.

Although a report on March exports has yet to be issued, Nghi said exports had been stable, with good growth in February.

Nghi predicted that it would be difficult for the steel industry to recover strongly in the second quarter.

"It may increase, but not by much," he said.

Mao Khe thermal power plant inaugurated

The Vietnam National Coal and Mineral Industries Group (Vinacomin) on April 12 held a ceremony in northern Quang Ninh province to launch Mao Khe thermoelectric power plant, one of the country’s key projects for stable power supply.

Covering a total area of nearly 73 hectares, the 440 MW plant has a total investment of over 9.3 trillion VND ($442 million), sourced from the Import-Export Commercial Joint Stock Bank (Eximbank) of Vietnam, the Export-Import Bank of China, the Bank of China and Paris-based BNP Paribas.

Two of the plant’s turbines are currently operating at their intended capacity, generating 1.2 billion kWh, helping offset possible power shortages during this year’s dry season.

The plant is expected to add about 2.86 billion kWh to the national power grid every year, serving the country’s socio-economic development and creating jobs for local residents.

Telecom staff receive Lao friendship medal

The Lao People’s Army has awarded the friendship medal to 13 Lao and Vietnamese staff of Laos-based Unitel Company, a joint venture between Lao-Asia Telecom and Vietnam’s military telecoms group Viettel.

The medals were presented at a ceremony held on April 12 in Vientiane.

Addressing the event, Major General Duong Van Tinh, on behalf of Viettel, affirmed the group’s consistent policy to expand investment in Laos to help implement the Vietnam-Laos cooperation strategy in the 2011-2020 period.

Since its establishment four years ago, Unitel, also known as StarTelecom, has become one of Laos’ leading telecom providers, covering most of the country’s provinces and cities, and generating jobs for thousands of people.

Moreover, Unitel has been active in social welfare activities, including providing free Internet connections for more than 600 schools, and funding the building of two hospitals in Attapeu province, among others.

The company was presented the World Communications Award (WCA) for the best communications services in a developing market last year.

France becomes HCM City’s key trade partner

Ho Chi Minh City Party Committee Deputy Secretary Nguyen Thi Quyet Tam has praised the results of the cooperation between Vietnam and France.

At April 12 meeting in HCM City that marked the 40th anniversary of Vietnamese-French diplomatic ties (April 12, 1973–April 12, 2013), Tam highlighted municipal authorities’ constant efforts at strengthening the city’s multifaceted relationship with French localities in areas including art and culture, education and training, science and technology, and health care.

Last year, two-way trade turnover between HCM City and France hit US$720 million. France’s current 152 projects worth US$825 million places it among HCM City’s 15 largest foreign investors, she noted.

Tam said HCM City is intent on boosting trade and investment cooperation with France even further, especially in climate change adaptation, urban lighting, personnel training, cultural exchange, technology, and people-to-people diplomacy.

At present, more than 300 French businesses are operating in Vietnam, generating employment for nearly 30,000 local workers. France is also a leading ODA provider to Vietnam.

The French Consul General in HCM City, Fabrice Mauries, said France wants to foster bilateral cooperation in science, education, research, culture, and national defence. France will follow the orientations of the strategic partnership agreement framework that was recently developed by the two countries’ respective foreign ministries.

Telecom staff receive Lao friendship medal

The Lao People’s Army has awarded the friendship medal to 13 Lao and Vietnamese staff of Laos-based Star Telecom Company Unitel, a joint venture between Lao-Asia Telecom and Vietnam’s military telecoms group Viettel.

The medals were presented at a ceremony held on April 12 in Vientiane.

Major General Duong Van Tinh, on behalf of Viettel, affirmed the group’s  determination to expand investment in Laos to help implement the Vietnam-Laos cooperation strategy over the 2011-2020 period.

Since its establishment four years ago, Unitel has become one of Laos’ leading telecom providers, covering most of the country’s provinces and cities, and creating jobs for thousands of people.

The company has been active in social welfare activities, including providing free Internet connections for more than 600 schools, and funding the building of two hospitals in Attapeu province.

It was honoured with the World Communications Award (WCA) for the best communications services in a developing market last year.

VND24,000 billion investment for Central Highlands

Nearly VND24,000 billion will be allocated to the areas of the Central Highlands region’s strength such as coffee processing, rubber, eco-tourism and modern industry.

The second conference on investment promotion for the Central Highlands of Vietnam was held in the Central Highlands province of Gia Lai’s Pleiku City on April 12 in the presence of Prime Minister Nguyen Tan Dung and Minister of Public Security General and Head of the Steering Central Highlands Committee Tran Dai Quang.

Addressing the conference, Minister of Planning and Investment Bui Quang Vinh underscored the need to prime the pump for the development of the transport system in the region, particularly the national highway 14 and attract more investors in the key processing industries to fully tap the existing potential and advantages.

The Chairman of the Lam Dong provincial People’s Committee stated that the region needs to have high-quality human resources to meet requirements for socio-economic development and strengthen regional connectivity to attract foreign investment and official development assistance (ODA) funding.

In his speech, Prime Minister Nguyen Tan Dung called on ministries, sectors and the Central Highlands region to mobilize all resources for developing modern infrastructure facilities with a focus on key transport projects.

The region needs to pay heed to training high-quality human resources, adopt appropriate incentive policies aimed to lure more foreign investment and encourage the application and transfer of technological advances, enhance administrative reform to create an open investment environment and sharpen competitive edge, Dung noted.

The Government leader requested the Ministry of Planning and Investment to soon issue preferential mechanisms for boosting the Central Highlands’ socio-economic development and ensuring its national defense and security through 2020.

At the conference, several banks pledged to provide credit capital for investment projects in the Central Highlands region with VND12,900 billion from the Vietnam Bank for Agriculture and Rural Development (Agribank) and VND7,500 billion from the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).

13 businesses were also committed to pouring VND16,200 billion and US$11.5 million into the region while investors and other businesses contributed VND248 billion to social welfare.

Changes of Vietnamese markets discussed

A conference was held in Hanoi on April 12 to discuss changes of markets in Vietnam from an anthropological viewpoint.

Jointly held by the Vietnam Institute of Ethnology and Max Planck Institute for Evolutionary Anthropology, the event focused on the relations between markets and State’s policies during the renewal (doi moi) process.

Studying the market from an anthropological angle is a topic of interest in Vietnam as it is not only a place to exchange goods and do business but also contains many socio-cultural aspects.

Rector of Vietnam Institute of Ethnology Vuong Xuan Tinh said not many contemporary researchers take interest in studying the dynamic private trade activities during the period Vietnam followed the policy of State subsidy.

Meanwhile, Dr. Kristen W. Endres said that Vietnamese policies for market development are not appropriate and lack a practical approach, resulted in the failure of many projects on building modern markets in rural areas.

Binh Duong praised for effective ODA utilization

Chair of the Audit Committee of the Finnish Parliament Tuija Brax has applauded Binh Duong southern province’s effective utilisation of Finnish aid in building a plant making organic fertiliser from waste.

Tuija Brax led a delegation from the Finnish Parliament to pay a working visit to the province on April 12.

At the meeting, Deputy Chairman of the provincial People’s Committee Tran Thanh Liem thanked Finland for its support in environmental projects, including the fertiliser plant.

Liem expressed his hope that Finland will help the province access different sources of aid and loans to implement other projects in social security, environmental protection, education and health care.

The same day, the Finnish delegation toured the fertiliser plant, which is an integral part of the Nam Binh Duong solid waste treatment complex, funded by capital from the Finnish Government totalling EUR6.7 million.

PM launches Hai Phong gateway port project

Prime Minister Nguyen Tan Dung issued an order on April 14 to break ground on a project to build the Hai Phong International Gateway Port.

The port (component A of the project) is invested with VND25,000 billion sourced from Japanese ODA and the Vietnamese Government’s charter capital.

This is a particularly significant project aiming to boost socio-economic development, ensure the defense and security of Hai Phong and affirm the status and advantages of the country’s marine economy.

As one of the important transport infrastructure projects in the period up through 2020, the Hai Phong International Gateway Port will be equipped with uniform, modern unloading facilities capable of handling 100,000 ton ships.

The project, the first Public-Private Partnership (PPP) between Vietnam and Japan, is scheduled to be completed by 2016 and will play a crucial role in creating a dynamic and effective logistical system for bringing Vietnamese goods directly to European and American markets without going through other regional ports such as Singapore and China.

Addressing the ground-breaking ceremony, PM Dung highlighted the project as important for dealing with the overload of goods in transit through Hai Phong port and boosting trade links between Vietnam’s northern provinces and countries around the region and the world.

Dung noted that, together with the Cat Bi airport expansion, Hanoi-Haiphong and Haiphong-Quang Ninh highways, and Dinh Vu-Cat Hai bridge, the Haiphong port project will add fresh impetus to socio-economic development in Hai Phong and the entire region.

The Government leader also asked investors, contractors and relevant agencies to comply with legal regulations to ensure the project is finished on schedule and meets all safety and quality criteria.

Building material businesses on verge of bankruptcy

Many building material factories in Vietnam have had to cease operation in recent months as they cannot find outlets for their products.

A number of them are on the verge of bankruptcy as they are unable to pay large loans.

The sluggish real estate market and deep cuts in public investment have driven the level of material stockpiles to a record high. Those involved in producing tiles, for instance, have had to lay off half of their workers and about 60 million metres of tiles and one million pieces of sanitary ware remain in stock.

Some 12 Autoclaved Aerated Concrete brick (AAC bricks) factories across the country are faring no better. Each has a design capacity of nearly 1.5 million cubic metres per year, but currently produces just 15 percent of this amount due to flagging sales.

There are also no promising signs for the glass works sector, which has an estimated 60 million metres of glass remaining in stock.

Many building material factories in Vietnam have had to cease operation in recent months as they cannot find outlets for their products.

Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA), admitted that many steel companies are finding it difficult to sell their products and planning to reduce their production capacity as they are unable to pay off debts.

He said some have stopped operating for good. In fact, they are completely dissolved but not yet to declare bankruptcy. The remaining firms are struggling hard to iron out snags in boosting exports, but the demand for construction steel has fallen by 10 percent.

Cuong urged administrative agencies to issue a policy that ensures a stable outlet for steel production.

The cement industry, which is capable of producing 68 million tonnes per year, currently turns out only 54 million tonnes to fill orders for domestic use and export.

After estimating the level of local consumption at 60-61 millions and export figures at 10 million tonnes by 2015, the Ministry of Construction has proposed to stop nine out of 24 major cement projects and delay the implementation of the remaining 15 projects.

Nguyen Tu Thanh, Deputy Head of the Strategy Department under the Vietnam Cement Industry Corporation, said in addition to adjusting their production, cement companies need to boost their export business.

Tran Van Huynh, Chairman of the Vietnam Association for Building Materials, cited three urgent measures to solve the issue of material stockpiles.

First, production should be based on the balance between demand and supply. No new investment will be poured into production lines of cement, ceramic and granite tiles, sanitary ware, building glass and steel as the capacity of existing factories to produce such building materials can meet requirements until 2015.

Second, infrastructure construction should be in tandem with the growth of the real estate market to stimulate the demand for building materials.

Last but not least, he said, imports of building materials should be restricted under foreign Engineering, Procurement and Construction (EPC) contracts by requiring concerned parties to use domestic materials.

US$200 million shopping centre to take shape in Hanoi

AeonMall Vietnam Co, Ltd has been licensed to invest US$200 million in a shopping mall in Hanoi, according to CBRE Vietnam.

Earlier in July 2012, the company also received an investment license to build a shopping mall - Binh Duong Canary with a total investment of US$95 million.

Aeon plans to inaugurate the first shopping centre- Celadon City in 2014 in Tan Phu district, HCM City and will open 20 other shopping centres till 2020.

Aeon is a major Japanese company operating in such fields as retail business, finance and project development with 250 years of experience behind it.                                                        

The company boasted more than 5,209 billion JPY in business revenue during the fiscal year 2011 (from March 2011 to February 28, 2012). It has so far had over 180 subsidiaries throughout the world.

Footwear businesses receive orders until Q3

The footwear sector plans to earn US$9.7 billion in export revenue this year, up 10 percent on 2012.

The Vietnam Leather and Footwear Association (Lefaso) hopes that the sector’s export orders will increase by 20 percent compared to the previous year.

Orders from Japan is likely to rise sharply after the Tokyo Business Association sent representatives from ten footwear firms to Vietnam to learn about the market in late 2012.  More than half of them have already decided to import from Vietnam rather from China.

Some large Vietnamese businesses claim to have received orders for the second or third quarters, said Lefaso.

The footwear sector’s export earnings in the first quarter of this year hit US$2.46 billion, 20 percent higher than last year’s same period.

Challenges confront seafood exports

The Vietnam Association of Seafood Exporters and Producers (VASEP) said in the first quarter of the year export turnover reached around US$1.2 billion, a year-on-year decrease of 8 percent.

Two key export commodities, pangasius and frozen warm water shrimps, slumped by 8 percent. The challenge for the country now is shortage of raw material and more barriers in export procedures from countries. This also places a hurdle for the country’s export target of $6.5 billion.

For years, the Mekong delta province of Ca Mau has large areas for breeding shrimp and earns high revenue from exports. This situation is being threatened by rapid decrease in breeding area.

The provincial Department of Agriculture and Rural Development said the first quarter saw a decrease of 30 percent against last year. Nearly 18 shrimp processing factories stopped operations due to shortage of capital and material. In addition, scorching weather resulted in high salinity causing huge losses for shrimp farmers.

The departments of agriculture and rural development in Mekong delta provinces worry that hot weather could delay breeding in 2013 and many fish crops may die.

Tran Hoang Dung, deputy head of the Department of Agriculture and Rural Development in Tran De District of Soc Trang Province said farmers have cultivated 600 hectares of farm land for breeding shrimps, however diseases have killed more than 10 percent of the crop.

Staffs from the departments have warned farmers to wait for right time to cultivate shrimps in a bid to reduce losses. Accordingly, there is a severe shortage of shrimps, resulting in closed doors for many processing factories.

Meanwhile, pangasius price is down to $2.6 per kilogram and the presence of Vietnamese pangasius in the US market has helped the profit margin of US catfish to plummet, which prompted the US Department of Commerce increase tax on Vietnamese pangasius.

Despite hard times, enterprises are struggling to survive and applying new techniques and opening export markets, similar to what the Go Dang Company did. Nguyen Van Dao, the company director, said thanks to right direction that the company took; it has seen an increase of 10 percent in export turnover in three first months forecasting it will wrap up 2013 with a $45 million export turnover.

Meanwhile, Nam My Company’s policy is to widen its market base, which proved right as company’s revenues hiked by 10 percent.

According to experts, difficulties prevail in small firms with no long-term strategies. The existing problem is that price is still low which cannot reap profits for farmers.

Duong Ngoc Minh, VASEP’s deputy head, proposed a punishment on deceiving firms that destroy the image of the country’s pangasius industry. Minh said the goal should be not on export targets but on improving the quality.

Stock exchange upgrades trading system

The Ha Noi Stock Exchange will adopt an upgraded system for transactions this quarter that includes innovations like At The Close Order (ATC).

ATC prevents the manipulation of closing prices by changing the way the closing price is determined, in line with international standards.

In the new system, the closing price will be the price that generated the greatest trading volume, rather than the last transaction price.

The new system will also have a much higher processing capacity "suitable for both listed and unlisted markets and even futures markets," according to a representative for the exchange.

The system can handle up to 20-30 million orders in a single session, simultaneously fixing them at a frequency of 15,000-20,000 orders per second – more than 10 times the current capacity.

The system will also add various types of orders such as market pricing, stop orders (which investors commonly use before leaving for holidays or entering a situation where they are unable to monitor their portfolio for an extended period) and iceberg orders (orders divided into smaller lots for the purpose of hiding the actual order quantity).

By hiding its large size, the iceberg order reduces the price movements caused by substantial changes in a stock's supply and demand. Other special techniques used in foreign markets will also be applied.

The system is currently in its test run with the Viet Nam Securities Depository and securities companies. Over 92 members have registered to join the pilot.

Rural sales improve bottom line

More than three months of the year 2013 have passed, but the director of Minh Long Hung Company Ltd, which makes children's clothes, still cannot believe what his business accomplished last year.

While many companies struggled to survive and some even closed production, Ly Thanh Sinh's business recorded a growth rate of 300 per cent in 2012.

"Unbelievable," said Sinh, adding that the success was due to the efforts of his staff and to the national programme "Bringing Vietnamese Goods to Rural Areas", which holds trade fairs in the countryside.

Since the first day his company began participating in the fairs, more and more people nationwide have bought its products, he added.

While the economic downturn left many businesses bankrupt or suspending operations, Minh Long Hung and many other companies benefited from the rural-area programme, which began four years ago.

Sales have grown for both experienced veterans, like My Hao Chemical Cosmetics Joint-Stock Company and Nhon Hoa Scale Manufacturing Company Ltd, and young companies like Tam Lan Tea One-member Company Ltd.

After taking part in the fairs, the companies said they saw growth rates of at least 10-15 per cent, and many of them decided to open three to five shops in the provinces where the fairs were held.

Rural markets are now part of many companies' business strategies, especially during tough economic times, according to company representatives.

"The rural areas are really an ideal market for Vietnamese companies," said Vu Kim Hanh, chairwoman of the Association of Vietnamese High-Quality Goods Producers, which co-organises the fairs with the Business Studies and Assistance Centre.

"While it costs a lot of money to open a store in big cities and hire people to promote the products, it costs less in rural areas," she added.

Many companies choose rural areas to introduce their products, and after they achieve success, they return to penetrate markets in big cities, according to Hanh.

Since the first fairs were held, at least 200 companies have displayed their goods. Fifty of the companies regularly take part in the fairs.

The national programme has received strong support from companies and provinces, as well as local residents, with 99 fairs held with total revenue of nearly VND95 billion (US$4.5 million) over a four-year period.

"The rural market is the foundation of the economy," said Bui Dinh Thang, deputy director of the Nhon Hoa Scale Manufacturing Company Ltd. "It has helped us to develop our business, so we have targeted this market strongly."

He added that the fairs had not only helped to increase sales but had offered free publicity for his products and enhanced the reputation of his company.

Countryside retail programme expands

The 100th fair of the programme "Bringing Vietnamese Goods to Rural Areas" will be organised in the Cuu Long (Mekong) Delta province of Dong Thap from April 12-14 with 50 participating companies.

Visitors will be able to buy high-quality Vietnamese-made products such as electronics, plastic products, cosmetics, food and medicine.

During the fair, the organisers will also offer a mobile library, where guests can read or surf the internet.

Several conferences on nutrition and marketing/sales will also be held at the same time.

Yokohama sign urban pact with Da Nang

Representatives from the cities of Da Nang and Japan's Yokohama yesterday signed a Memorandum of Understanding on technical co-operation in urban development.

According to the agreement, Yokohama will provide technical assistance for Da Nang in the fields of eco-friendly development, education, science, economics, environment and investment.

The two cities also agreed to encourage investment from the private sector and science organisations in ecological urban development.

Da Nang and Yokohama also plan to open direct flights between the central city and Haneda in the coming years.

Deputy mayor of Yokohama Suzuki Takashi said he hopes enterprises from Yokohama would flock to the central city in the near future.

Vice chairman of the Da Nang's People's Committee Phung Tan Viet said the city will create favourable conditions such as one-stop shop procedures for Japanese investors.

Da Nang has 241 foreign direct investment (FDI) projects with total capital of US$3.6 billion, of which Japan has 60 projects worth a total of $350 million.

Exports from Japanese enterprises accounted for 37 per cent of the city's total imports, while 30 per cent of the city's industrial production value comes from Japanese FDI projects.

As scheduled, groups of Japanese investors will come to study the feasibility of sewage treatment and water supply projects as well as work on improving the city's sea ports this year. The central city and Yokohama also plan to hold an Investment Promotion Conference in Yokohama, Japan this July, aimed at boosting economic co-operation and investment between the two cities.

Carmakers race to lure customers

Auto firms are racing to launch new cars or give their customers more supports to increase their market shares.

Although the registration fee for cars under 10 seats has been reduced from 20% to between 10% and 15% and that for used car slashed from 10-12% to 2%, the market has not seen any positive change.

Several automakers said they did not really expect sales growth at present since most consumers remained hesitant. Instead, auto firms have introduced new versions and new models to lure buyers.

The leading automaker in the local market Toyota Vietnam has quickly updated its two familiar products in Vietnam, Innova and Fortuner, to 2013 versions. Notably, Fortuner 2.5G is equipped a new engine, making the car more powerful and fuel efficient, the features that Toyota strongly emphasizes to attract buyers.

Similarly, Honda Vietnam has launched the 2013 version of CR-V, with prices starting from VND998 million. The new CR-V with many improvements is considered the key product for Honda Vietnam to compete in the domestic auto market.

Meanwhile, General Motors Vietnam (GM Vietnam), aware of growing consumer interest in pickups, has for the first time imported the completely built-up (CBU) pickup Chevrolet Colorado from the plant of GM in Thailand.

In addition to new products, carmakers compete with one another by lower prices, better services and more incentives for customers.

Thaco Kia has recently equipped its sedans with more advanced accessories such as LED light bulbs, DVD players integrated with GPS and cameras. These additional accessories are completely free.

Meanwhile, VinaMazda has announced discounts on all of its vehicles in Vietnam. CX5, the model assembled in Vietnam, has received the sharpest price cut of over VND100 million, while imported CBU cars have got a much more modest reduction of VND20-30 million.

* Japanese electric scooter manufacturer Terra Motors is on the way to the Asian market and will soon arrive in Vietnam, said Shingo Hayashi, director of Terra Motors Vietnam.

The company is recruiting staff in preparation for its debut in Vietnam this year.

Terra Motors was established in 2010 and so far has captured a 40% share of the electric scooter market in Japan, according to a press release sent to the Daily.

Last week, Terra Motors introduced its electric tuk-tuk in Japan. This three-wheeled passenger vehicle can accommodate up to six people and travel 50 kilometers per battery charge, with a maximum speed of 50 kilometers per hour. The vehicle will go on sale for an estimated US$6,000.

Terra Motors is aiming to become the top electric scooter maker in Asia. The firm hopes to sell 100,000 vehicles from now to 2016.

Jewelry export tariffs reviewed

The Ministry of Finance is weighing to impose a new tariff on jewelry exports as the current tax rate, which has been applied since 2011, is no longer suitable to the current context.

Speaking at a seminar on jewelry market development organized by the Vietnam Gold Business Association in HCMC on Saturday, Nguyen Thi Thanh Hang from the ministry’s tax policy department said that local enterprises have no longer exported gold under the form of unprocessed jewelry. Therefore, the current tax rule as a preventive measure is no longer effective.

The ministry is calculating suitable tax rates to stimulate jewelry exports, especially to assist enterprises that want to export jewelries with high gold content. Jewelry exports in Vietnam are now subject to a tax rate of 10%.

Hang said the ministry may only levy taxes on jewelry products with gold purity of over 99% to prevent exports of gold under the form of jewelries. Exports of jewelries with gold content from 80% are now imposed with a tariff of 10%.

Besides, the ministry is also considering the second plan, reducing tariffs on jewelry exports.

Enterprises under the Vietnam Gold Business Association early this year proposed the ministry to abolish the export tax on jewelries, saying that domestic demand for gold jewelry has been low given the prolonged economic slump, while exports have been affected by the tariff.

Besides, other countries in the region have cut taxes on exports of jewelry and gold artworks to 0%, helping their jewelry industry fetch high export revenues. For instance, Thailand earns around US$3 billion in jewelry export value every year.

Vietnamese 20k (83.33%), 22k (91.66%) and 24k jewelries and others are popular in countries like Turkey, Dubai and China. Therefore, the ministry should lower taxes to encourage exporters, the association said.

Nguyen The Hung, general director of the Vietnam Gold Investment and Trade Corporation, noted that only SJC (Saigon Jewelry Company) gold bars are much more expensive than the world price while material gold price is only US$10 higher than the global price for an ounce.

Therefore, there should be no worries about gold export under the form of jewelries, and as such, tax reduction is a suitable policy to help exporters earn profits.

Italy’s Autogrill ready to serve tables in Vietnam

Italy’s Autogrill, a global leading firm in the travel dining sector, said it would open more than 80 points of sale in Vietnam’s main airports through a joint venture with Imex Pan Pacific Group.

The move showed the group’s ambitious growth strategy in emerging economies, Autogrill said.

"With this operation we are entering a country of high growth potential and strategic importance for further development, also in other travel channels in Vietnam and emerging markets in Asia," Autogrill CEO Gianmario Tondato Da Ruos said.

The joint venture – Autogrill VFS F&B Company – was set up with Vietnam Food and Beverage Services Company, a member Imex Pan Pacific (IPP), a huge food and beverage provider in Vietnam.

The new company will operate its food and beverage business consisting of 28 points of sale that IPP already operates at Danang Airport, Ho Chi Minh City’s Tan Son Nhat Airport, and Phu Quoc Airport on Phu Quoc Island, a tourism hub popular among international visitors.

An additional six points of sale will be starting operations at Hanoi’s Noi Bai Airport in the second half of the year.

Autogrill said under “an aggressive development roll out resulting in a further 48 stores over the next 18 months”, it would expand its operations to cover Vietnam’s top six airports. On reaching capacity planned by the end of 2014, the new business would generate estimated annual overall revenues of more than $20 million.

Autogrill said that after China and India, Vietnam expected to see the fastest growth in terms of passenger traffic, at an average of 8.6 per cent till 2020. To meet this rising demand Vietnam’s government would invest $20 billion to develop the airport sector over the next few years, added Autogrill. Around 90 per cent of the 37 million passengers moved by Vietnamese airports every year are concentrated in the country's top three airports in Ho Chi Minh City, Hanoi and Danang, where the new venture would start up its operations.

Infant formula companies blamed for low rate of breastfeeding

Experts are worried that infant-formula companies are contributing to the sharp decline in the rate of breastfeeding.

The Vietnam National Assembly's Institute of Legislative Studies held a conference with several international organisations on new policies about child rearing.

Dr. Alessandro Lellamo from WHO said breastfeeding could prevent 75-93% risks of death from diarrhoea and 80% death from pneumonia. Breastfed babies could also benefit from IQs 3 to 5 points higher than those raised on formula.

David Clard from UNICEF said sub-optimum breastfeeding accounted for 1.4 million deaths in children under five annually. Clard also warned that powdered infant formula is not a sterile product and may occasionally contain pathogens in factories.

However, the rate of breastfeeding in the Southeast Asia only jumped from 28% to 29% while the figure increased from 34% in 1995 to 43% in 2011 in other parts of the world.

Representatives from UNICEF and other international organisations agreed that corporate greed is the main cause for the low rate of breastfeeding.

Yeong Joo Kean of International Baby Food Action Network said annual sales of infant formula milk amounted to USD25 billion. The Pacific-Asia is the biggest market for the products, accounting for 37% of market share.

To improve sales, corporations often spend huge amounts on advertising. Annual advertisement costs in the UK were just GBP12 million while in Hong Kong, spending reached USD300 million in 2012.

Yeong Joo Kean said the corporations made use of their relationships with hospitals and even bribed medical staff to advertise their products. At a conference held by Vietnam Nutrition Association, a labour and delivery nurse admitted that they helped in selling formula milk in exchange for overseas trips.

An official from the Ministry of Health Dinh Thi Thu Thuy said, "Many adverts hint that formula milk are either a perfect substitute or even better than breast milk."

She added that some banned products were still on sale at many chemists or sold by medical staffs who earn profits from corporations. Meanwhile, inspections were slow and few.

Government urged to loosen housing regulations for foreigners

Several officials and experts have publicly said that Vietnam should ease regulations on foreign individuals and organisations on owning property.

The government has begun a review of the implementation of National Assembly’s Resolution 19, which addresses ownership rights over the past five years.

The new regulation provided the chance for foreigners who invest, work and live in Vietnam to buy and own real estate.

Even with the change in policy, however, the number of people eligible to own property in the country remained modest, only 427 compared to the estimated 80,000 who live and work in Vietnam.

Most real estate experts agree that Vietnam's current regulations on the matter are strict compared to other highly-populated nations in the region such as Japan and Singapore.

According Credit Suisse, in some Asian countries, recent years have shown a tight relationship between real estate policy and stable economic development. Generally, those countries that applied policy to encourage foreign investment in real estate, including Japan, Singapore, Malaysia and Hong Kong, benefited economically.

Experts said that Vietnam has among the tightest policies of ASEAN nations for foreigners owning real estate.

They proposed that the government allow all foreigners with demand to be able to own property in the country, instead of the current policy that requires them to invest and work in Vietnam or who are married to a national.

Bui Kien Thanh, a financial expert, said that the trend for most countries in the world is to open opportunities for foreigners to buy and own houses, and that Vietnam should follow this trend. He added that it would only invigorate the market.

Deputy Minister of Construction Nguyen Tran Nam said, “Vietnam is fully capable of having similar policies as developed countries. Even if foreigners can own property in Vietnam, this is not an asset that they can bring home with them."

Infrastructure Vs. Location

Quang Trung Software City has become a destination of choice for local and foreign ICT companies. Aside from being a hub of potential partners, the park also has the great bonus of infrastructure conveniences.

Quang Trung Software City (QTSC) has so far attracted 106 information and communication technology (ICT) companies. Among them are 48 foreign firms and 58 local ones. HP, IBM, KDDI, Luxoft, TMA, GCS and MISA are only a few outstanding names.

According to Lam Nguyen Hai Long, QTSC deputy director, the software park has a host of competitive advantages which are attractive customers, old and new. “We tell potential partners that we have reasonable rents, excellent offices, high-speed Internet and stable power sources,” Long says. Rents, inclusive of operation expenditures like office lease, Internet, power, water and hygiene and convenience fees like dining and parking, at QTSC are over 40% lower than in downtown districts.

Enterprises operating in QTSC also confirm that the park has been a very reliable supporter capable of helping them handle unexpected problems. Through periodic meetings of the CEO, Investors and Human Resources clubs, companies have chances to discuss and set up partnership. They have pledged not to recruit others’ former employees to stabilize their personnel. The successful partnership in projects between Larion and Digi-Texx is a typical example. QTSC is cooperating with Larion and Soongsil University (Korea) in opening training courses on ICT management.

Ngo Van Toan, deputy general director of GCS, says since his main office was moved to QTSC in May 2007, the company has achieved great success. Its work force has risen from 400 to 600, and its annual revenue growth has been 25% a year. GCS has also expanded its business scope. “We once thought about the location disadvantage,” Toan says. “But now I’m quite sure our company made a right decision back then because QTSC is a hub for ICT players where partnerships are abundant.”

Nguyen Huu Le, chairman of TMA Solutions, one of the first customers of QTSC, says in 2007, TMA Solutions began to transfer its big projects to the new office in the park. Now, the park has becomed the company’s biggest facilities with half of its 1,300 employees working there. Moreover, at QTSC, the company has been in better conditions to intensify its training schedules. TMA has set up an internship center for students and installed an R&D center or mobile lab in the software park.

“After six years in QTSC, TMA has doubled the work force to 1,300 and will have 2,000 employees by 2015,” Le says. “Comprehensive infrastructure and incentives were what prompted TMA to choose the park. In addition, QTSC’s hearty support has helped TMA settle in after an initial difficult move.”

Lam Nguyen Hai Long says the steel overpass at Lang Cha Ca roundabout in Tan Binh District will be commissioned later this month. The new traffic structure will help enterprises shorten the distance from the downtown to QTSC. In the future, a series of subway routes will be built, and QTSC will become an ICT bridge linking HCMC and other southern localities such as Dong Nai, Binh Duong, Long An and Tay Ninh.

Long says investors at QTSC are proceeding with works on offices for lease and other conveniences. For instance, Long Yen Co.’s office building project is under construction while Hong Minh Duc is investing in an apartment building for experts. Other projects are also in the pipeline. Among them are a backup data center by Hochiminh Stock Exchange and a building for software production and training by Vietnam Invest Joint Stock Co.

Bao Viet in an ambitious mood

Bao Viet Holdings’ operational focus in 2013 is becoming a train in motion.

According to the group’s chief operation officer Hoang Viet Ha, this year Bao Viet Holdings would scale-up cooperation with its strategic partner, particularly in life insurance, and strive to tap broader market opportunities.

Accordingly, since becoming Bao Viet Holdings’ strategic partner in late 2012, Japan-based Sumitomo Life Insurance outlined explicit cooperation programmes between both sides for 2013.

Particularly, Sumitomo Life Insurance is committed to supporting Bao Viet Holdings in development of distribution channel, development of information technology system, promoting products and quality control.

“We are now busy working on the technical support and capacity transfer minutes and will further discus concrete action programmes in the upcoming time,” said Sumitomo Life Insurance representative in Vietnam.

Ministry of Finance (MoF) Insurance Supervisory Authority statistics show that by the end of 2012, UK-based Prudential Life Insurance was the top life insurer in the Vietnamese market, holding 36 per cent of total premium income and Bao Viet Life Insurance second with 27.5 per cent.

However, in respect to new premium income Bao Viet held 25.22 per cent of the market share, whereas Prudential was lower at 25.12 per cent.

This outcome came as Bao Viet made great endeavours in acquiring new policies.

Between January-February 2013, Bao Viet Life Insurance’s revenue jumped 20 per cent, also market record.

Besides, albeit it was not the leader in total premium income in 2012, Bao Viet Life Insurance took the lead in key products.

“With new factors from this year, we expect to secure the number one position in a not distant future,” said Bao Viet Life Insurance deputy general director Nguyen Quang Tam.

There are 15 businesses operating in Vietnam’s life insurance market at present, the latest was PVI Sun Life which was licenced in early 2013.

The market features tough competition between top players Bao Viet and Prudential, which secured two-thirds of Vietnam’s life insurance market share in many years in succession.

The Insurance Supervisory Authority figures also reflect over one million new life insurance policies were secured in 2012, surging 12.5 per cent on-year, generating revenue of VND5.339 trillion ($254 million), up 15.8 per cent.

New policy premium averaged VND5.3 million ($250), up 3 per cent against 2011.

Last year saw the roll-out of 32 new product lines in life insurance.

In 2012, Bao Viet Holdings reported audited consolidated pretax profit of VND1.862 trillion ($88 million), jumping 22.4 per cent on-year and its total consolidated revenue surged 7.6 per cent on-year to VND16 trillion ($762 million).

Hoa Phat Energy tops 500 fastest growing firms

Hoa Phat Energy Joint Stock Company has been named top performer in the 2012 list of 500 enterprises with the highest revenue growth rate.

The list, known as Fast500, was released yesterday by Vietnam Report, a business data provider, and compiled based on the compound annual growth rate over the 2008-2011 period.

Hoa Phat Energy, a subsidiary of Hoa Phat Group, recorded impressive growth when its revenue skyrocketed from VND21 billion ($1 million) in 2008 to VND3 trillion ($144 million) in 2011.

The core business of Hoa Phat Energy, which is headquartered in northern Hai Duong province, is coal production and power generation.

The other companies in the top five, which had an average growth rate of 374pct during 2008-2011, are Intimex Nha Trang JSC, Thanh Thanh Dat Company, Eurowindow and Thanh The Seafood Company.

Overall, revenue of the 500 enterprises rose by an average of 62.2pct during the 2008–2011 period, higher than the 54pct and 57pct during the 2006-2009 and 2007-2010 periods respectively.

However, their profit growth was not commensurate with the increase in revenue.

Data shows that only 26pct of firms with doubling revenues in that period recorded the same growth rate in profits.

A breakdown of economic sectors shows that property developers dominate the list with the highest number of firms, followed by the number of agriculture and forestry companies.

However, in terms of growth rate, the mechanic industry recorded highest growth during 2008-2011, averaging 86pct, followed by telecoms firms with a growth rate of 72.7pct during the same period.

Guinea – promising market for Vietnamese exporters

Vietnam will annually ship 300,000 tonnes of rice to Guinea under a contract reached by the two countries recently.

In an interview granted to a local reporter, Guinea Minister of Trade Mohamed Dorval Doumbouya said that located in western Africa Guinea has a population of 11 million and needs to import 350,000-400,000 tonnes of rice each year.

He suggested Vietnam, as the world’s second largest rice exporter, should further explore the Guinean market.

In 2011, Vietnam’s export earnings from Guinea were estimated at US$95 million, including US$78 million worth of rice, he noted.

The recent signing of a new rice export contract, he added, will help strengthen bilateral trade and economic ties. The two countries should also boost cooperation in the food processing industry that is their untapped potential.

The Guinea official pledged to promote the regulate exchange of senior officials and businesses, and create the best possible conditions for them to do market research.

He proposed that Vietnam boost the export of garment and textile, footwear, steel, tobacco, fertilizers, and motorbike components to Guinea in exchange for cashew nuts, timbers, and minerals.

Minister Doumbouya insisted that the Guinea Ministry of Trade and the Vietnam Ministry of Industry and Trade (MoIT) regularly provide updated information on incentive policies, business opportunities, international trade fairs, and lists of reputable exporters and importers from both countries.

Vietnam and Guinea have enjoyed fruitful cooperation since they established their diplomatic ties in October 1958.

Auto sales up 97 percent in March

Domestic auto sales hit nearly 8,390 units in March, down 4 percent over the same period last year, but up a significant 97 percent since February, said the Vietnam Automobile Manufacture’s Association (VAMA).

Compared with February, sales of commercial vehicles rose by 75 percent to more than 2,800 units, while trucks grew 111 percent to 5,600 units.

Of the total, domestically assembled autos accounted for nearly 7,000, increasing 103 percent against February, while vehicle made up 1,400, up 74 percent.

VAMA chairman Laurent Charpentier said its members’ sales are 400-500 units higher than forecast, showing a positive sign for the country’s automobile industry.

In March, Toyota continued to be the market leader with sales of more than 2,400 units, followed by Truong Hai with 2,200 and Ford, 498.

Vina Mazda saw the highest growth of 318 percent over the same period last year, ahead of Honda at 287 percent and Vinastar 95 percent.

Toyota contributed several best selling models with its sedans and SUV/MPV series.

Micheal Behrens, general director of Mercedes Benz Vietnam, said the increase is due to the reduction of registration fees for under-10 seats cars and used vehicles.

He told Vietnam Economic Times that the fee reduction will help the market improve as it will cost customers less to buy a car.

Despite the increase, he said VAMA expected auto sales of around 100,000 units in 2013, 8 percent higher than 2012.

New Zealand-invested projects pay off in Binh Dinh

New Zealand will orient its cooperation with Vietnam to a strategic partnership with the intensive development of projects in Binh Dinh province, said Ambassador Haike Manning.

New Zealand Ambassador to Vietnam Haike Manning made the statement at a press briefing in Quy Nhon city on April 10.

He highly valued the effective implementation of New Zealand-invested projects which focus on trade, education and research.

The Ambassador said his country will continue providing graduate and post-graduate scholarships for Vietnam’s State officials and university lecturers.

New Zealand is ready to help Binh Dinh train its medical staff, he noted.

According to the diplomat, the two sides should cooperate in woodwork production as Binh Dinh boasts strength in processing timber and forest products and New Zealand can provide a large amount of timber.

Currently, two New Zealand-funded projects have been effectively implemented in Binh Dinh province, including the US$1.7 million project on sustainable rural livelihood, and the other on modernising land management using over US$12 million from the World Bank’s loan. The second project has also been carried out in other eight provinces across the country.

On the occasion, Ambassador Haike Manning conducted a fact-finding tour of two other projects on improving the quality and use of mother and child healthcare services, and pre-school education in Binh Dinh province.

Vietnam-Slovakia trade hits US$300 million

Two-way trade turnover between Vietnam and Slovakia was estimated at more than US$300 million in 2012.

Addressing a Vietnam-Slovakia business forum in Hanoi on April 11, Deputy Minister of Industry and Trade Ho Thi Kim Thoa said bilateral trade revenue is yet to match the two countries’ full potential.

Vietnam mostly exports electronics and spare parts, garments and textiles, along with footwear to Slovakia, she said.

Thoa also revealed that Slovakian businesses are currently getting involved in five projects in Vietnam with a total registered investment of US$235 million, ranking it 31st among 98 foreign investors in the country.

Deputy Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Doan Duy Khuong emphasised that Vietnam and Slovakia share many similarities and hold huge potential for stronger trade ties.

As a member of the European Union (EU), Slovakia can capitalize on Vietnam’s WTO membership to export its products to this market and others in Southeast Asia, Khuong said.

Vietnam considers Slovakia an important trade partner to promote local products in the EU market, he added.

Slovakian Deputy Minister of Economics PavolPavlis said the government of Slovakia attaches importance to strengthening economic and trade relations with Southeast Asian countries, including Vietnam, which is a key partner of Slovakia.

Slovakia is also interested in Vietnam’s sectors of comparative advantage, such as national defence technologies, energy production, food processing, finance and banking, plastics production, mineral exploration, information technology, and petrochemicals.

Boosting exports through FTAs

Businesses need to capitalise on free trade agreements (FTAs) to expand markets, boost exports and balance trade, experts said at a forum in Hanoi on April 11.

Vietnam raked in US$29.69 billion from exports in the first quarter of this year, a year-on-year increase of 19.7 percent.

Experts attributed the impressive growth to the positive impact of a range of FTAs that Vietnam has signed with countries and organisations over the years. Notably, they said businesses made full use of preference deals in FTAs to sharpen their competitive edge against other international suppliers.

Vietnam has so far signed eight FTAs with countries that account for 25 percent of total global consumption.

Tran Thanh Hai, deputy head of the Import-Export Department under the Ministry of Industry and Trade, said FTAs play an important role in boosting Vietnamese exports as they help increase the competitive capacity of Vietnamese products in big export markets.

The increase in FTAs is of great significance, given the fact that low labour costs and abundant natural resources are no longer Vietnam’s chief competitive advantage, he said.

Undoubtedly, the reduction and/or removal of tariff and non-tariff barriers makes it easier for Vietnam to penetrate the markets of FTA signatories and their dialogue partners.

When there is a boom in bilateral and multilateral FTA signings, Vietnam will be caught lagging behind unless it accelerates FTA negotiations, Hai warned.

However, experts said Vietnamese businesses fail to capitalise on the opening of markets that FTAs bring about, saying many neither understand nor pay due attention to tariff preferences, thus reducing their competitiveness overseas.

They also fail to keep abreast of annual updates on tariff cuts that Vietnam has committed to in many FTAs.

In addition, Vietnam has yet to develop a powerful support industry capable of supplying all input materials which are currently imported in large quantities.

To this end, the Ministry of Industry and Trade is speeding up the negotiation of FTAs, considering it a key solution for increasing exports from now until 2020.

It is also introducing incentives to encourage investment in support industries with the aim of raising the proportion of domestically produced product.

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