BUSINESS IN BRIEF 17/7

Pepper exports soar but stocks left bare

The country now has almost no pepper left for export for the second half of the year, according to the Ministry of Agriculture and Rural Development.

For the first six months of the year, Viet Nam, the world's top pepper producer, exported 85,000 tonnes worth US$552 million.

"I'm amazed at the figure of 85,000 tonnes of exported pepper," said a representative of an exporter in Binh Duong Province after surveying the latest crops in the provinces of Dong Nai, Ba Ria-Vung Tau, Binh Phuoc, Dak Nong, Dak Lak and Gia Lai.

The Viet Nam Pepper Association (VPA) predicts that this year's pepper yield will be 90,000-95,000 tonnes. About 60,000 ha are under cultivation.

The VPA said from 10,000 to 15,000 tonnes of pepper imported from other countries in the region would be used for re-export, thus bringing "the total availability" of pepper eligible for export to 105,000-110,000 tonnes this year.

Based on these estimates of yield and export volume, local farmers now have about 10,000 tonnes of pepper in stock.

Meanwhile, local pepper demand remains about 5,000 tonnes annually. With such demand, the amount needed for export cannot be met.

According to figures from the Ministry of Agriculture and Rural Development, pepper exports in the first five months of this year reached 68,000 tonnes, bringing home $446 million, a year-on-year increase of 14 per cent in volume and 9.6 per cent in turnover.

The average pepper export price stood at $6,554 a tonne in the first five months, shrinking more than 4 per cent year-on-year.

The agriculture ministry's figures show that export volume surged despite price falls in the last six months.

According to Nguyen Quang Binh, director of the HCM City-based Chanh Tinh Anh Co. Ltd., the price of black pepper in the local market did not fluctuate as sharply as the prices of other farm produce, such as coffee and rubber.

The January-May export rice price, for example, averaged $445 a tonne, tumbling 7.7 per cent year-on-year, bringing down local paddy prices to only around VND4,000 per kilo at times.

In addition, the five-month average export price for rubber was $2,595 a tonne, a decrease of more than 15 per cent over a year ago, with natural rubber prices hovering around VND40-42 million a tonne.

In the past few months, the price of black pepper ranged between VND110,000 and VND130,000 per kg. On July 10, black pepper sold for VND115,000 per kilo in Pleiku, VND118,000 per kilo in Binh Phuoc, and VND120,000 per kilo in Ba Ria – Vung Tau.

"The gap in prices of black pepper depends on the distance between the growing areas and the processing centres, which are normally based around ports, such as ports in HCM City," Binh told Viet Nam News.

The stability of pepper prices helped a small number of local farmers keep their goods in stock, waiting for higher prices, said Binh.

Most of the country's exports are semi-processed pepper. The VPA has encouraged its members to invest in processing technology, turning low-priced black pepper into high-priced white pepper.

However, Binh said that farmers had other priorities.

"To earn an additional $200 – $300 on one tonne of exported pepper by processing black pepper into white pepper is not the long-term target of Viet Nam's pepper sector. The industry is now aiming to bring Vietnamese pepper to dining tables at restaurants, hotels and dining rooms of families around the world," said Binh.

Drop in FDI

Viet Nam is attracting foreign direct investment (FDI) at a slightly lower rate than a number of countries in the region, but it is not being "left behind," according to the Minister of Planning and Investment (MPI).

Speaking to VTV last week, MPI Minister Bui Quang Vinh said Japanese investors now have 7,000 projects in Thailand and 1,500 projects in Viet Nam.

"It's easy to understand," Vinh said, adding that Thailand and Indonesia have more FDI projects than Viet Nam because their economies are more developed than Viet Nam and have been open to global trade for a longer period.

"These ASEAN countries also have better investment environment and more modern administration," he said.

"In addition, these two countries, compared to Viet Nam, have better-developed support industries and better-skilled labour forces," said Vinh.

However, Viet Nam had been speeding up its administrative reform, making its investment environment more transparent, and encouraging development of support industries through preferential investment policies, he noted.

The volume of FDI into Viet Nam has been stagnant due to the global economic crisis, but it has been regaining some strength recently.

Viet Nam's FDI reached its peak in the 2005 – 2009 period when attracting investment capital was the number-one priority of the Vietnamese Government.

During this period, the Government issued major investment incentives while restrictions on project assessment and management were loosened.

With the advantage of cheap labour costs at that time, Viet Nam was able to attract many labour-intensive projects. However, they consumed large volumes of minerals and caused environmental problems.

Vinh said the current investment environment was quite different from that period.

As the country's macro-economy developed to a certain level, the Government began to license hi-tech projects that are environmentally safe, and launched high value-added projects instead of investment projects.

Vinh said that the country's investment environment could no longer maintain its competitiveness on cheap labour costs as labourers' salaries risen along with economic growth.

"Registered capital has not been as high as the peak investment period, but disbursements are much bigger. These are more economically effective, and they create more jobs with higher salaries," said Vinh.

To better manage FDI projects, MPI has learned from Indonesia's experiences in licensing investment projects.

When a foreign investor is granted an investment certificate after entering Viet Nam, management agencies will closely check disbursements and the progress of investment projects after their registration, Vinh said.

The investment licence will be granted to an investor only when requirements on facilities, technological and environment infrastructure are completed as the investor has pledged under its commitments.

"These formalities will help to reject fraudulent projects that were done for other purposes, such as to misappropriate plots of land," said Vinh.

Further questions asked of Metro sturgeon origin

After a week of controversy, Ha Noi Market Watch will check with suppliers over the origins of sturgeon being sold at the Metro supermarket, the authority's deputy director Nguyen Cong San has said.

Questions were raised about the sources of the sturgeon last week when Le Anh Duc, chairman of the Viet Nam Sturgeon Group, denounced Metro supermarket for selling what he claimed to be illegal fish.

He said the supermarket chain in the north imported between 50-70 tonnes of sturgeon every month, while production in this area was unlikely to exceed 30-40 tonnes. Duc also believed that in the official documents, Metro's sturgeon was said to have come from the northern province of Lao Cai, but the farmers there did not rear them.

On Tuesday, market watch officials checked sturgeon at two Metro supermarkets, in Hoang Mai and Tu Liem districts. Labelling said the fish had come from Viet Nam and senior Metro officials were in possession of documentation proving the origin of the fish.

According to a Metro representative, the enterprises that supplied the fish were Seaprodex Ha Noi/Hasimex Company and Hieu Ngan Food Company.

The Viet Nam Sturgeon Corporation estimates that up to 15 tonnes of unauthorised fish are brought into Viet Nam every day, equivalent to 5,000 tonnes a year.

The latest incident marks the second time this year that a foreign invested supermarket chain has been pulled up for alleged infringements. In April, the Big C supermarket in Tu Liem District was found to be selling green grapes from Ninh Thuan province, but with a Chinese flag on the label.

Further questions asked of Metro sturgeon origin

After a week of controversy, Ha Noi Market Watch will check with suppliers over the origins of sturgeon being sold at the Metro supermarket, the authority's deputy director Nguyen Cong San has said.

Questions were raised about the sources of the sturgeon last week when Le Anh Duc, chairman of the Viet Nam Sturgeon Group, denounced Metro supermarket for selling what he claimed to be illegal fish.

He said the supermarket chain in the north imported between 50-70 tonnes of sturgeon every month, while production in this area was unlikely to exceed 30-40 tonnes. Duc also believed that in the official documents, Metro's sturgeon was said to have come from the northern province of Lao Cai, but the farmers there did not rear them.

On Tuesday, market watch officials checked sturgeon at two Metro supermarkets, in Hoang Mai and Tu Liem districts. Labelling said the fish had come from Viet Nam and senior Metro officials were in possession of documentation proving the origin of the fish.

According to a Metro representative, the enterprises that supplied the fish were Seaprodex Ha Noi/Hasimex Company and Hieu Ngan Food Company.

The Viet Nam Sturgeon Corporation estimates that up to 15 tonnes of unauthorised fish are brought into Viet Nam every day, equivalent to 5,000 tonnes a year.

The latest incident marks the second time this year that a foreign invested supermarket chain has been pulled up for alleged infringements. In April, the Big C supermarket in Tu Liem District was found to be selling green grapes from Ninh Thuan province, but with a Chinese flag on the label.

Crop rotation key to southern agricultural success

The southern region should switch from low-yield rice to higher-value cash crops, participants said at a meeting held by the Ministry of Agriculture and Rural Development in Dong Thap Province on Thursday.

The country's rice farmers are facing declining sales and prices, and the switch would help diversify crop cultivation and increase farmers' incomes.

Speaking at the meeting, Le Quoc Doanh, head of the ministry's Plant Cultivation Department, said the region has favourable conditions for planting corn and soybeans. Imports of corn, soybeans and sesame crops could be significantly reduced if the yield of these plants was high.

To make animal feed, Viet Nam imports about 1.5 million tonnes of corn, 600,000 tonnes of soybeans and other agricultural produce worth about US$3 billion annually.

Participants said that profits from planting other cash crops were higher than that of rice.

In Dong Thap Province, for instance, farmers earn profits of VND25.3 million per hectare from planting sesame, VND16.6 million per hectare from planting corn and VND2.5 million per hectare from planting rice.

In recent years, Dong Thap, along with other southern provinces, planted one cash crop and two rice crops on the same field each year. The rotating cash crops include corn, soybean or sesame.

The model of rotating cash crops and rice crops on the same field yields higher profits than the model of cultivating three rice crops a year, according to the province's report.

Crop rotation will also help replenish the soil and reduce disease outbreaks compared to rice on the same field.

However, many attendees at the meeting expressed their concerns about guaranteed outlets for rotated crops.

A representative from Bac Lieu Province's Department of Agriculture and Rural Development warned that little research had been conducted on the level of demand for varieties and prices of cash crops.

If outlets for cash crops cannot be guaranteed, farmers will face even more difficulties than now, according to a representative from Binh Phuoc Province's Department of Agriculture and Rural Development.

Mai Thanh Phung, deputy director of the National Agriculture Extension Centre, said the switch to cash crops should be done on a large scale.

This would help increase sales and promote the sustainable development of rotated crops, he added.

He said that planting must be tailored to each province's advantages, including soil type and other factors.

"Rotation priority must be given to short-term crops that have high competitiveness and to those that can replace imported produce like corn, soybeans and peanuts," he said.

Huynh Minh Doan, deputy head of the Southwestern Regional Steering Committee, said that crop rotation should be based on market demand and that farmers, enterprises, scientists and the Government should work together to develop plans.

Addressing the meeting, Vu Van Tam, deputy minister of Agriculture and Rural Development, urged the southern provinces to designate the areas suitable for these crops and set out new plans.

Advanced farming techniques should also be used, he said, adding that cooperation between farmers and enterprises was important to guarantee sales outlets for farmers.

With sustainable sales, farmers will be able to continue to plant these crops year after year.

Under the ministry's plan, corn and soybeans are two main crops to be used for rotation on rice fields.

C Highlands farmers gain juicy profits from litchis

Many farmers in the Central Highlands, especially in Dak Lak Province, have escaped poverty by growing litchi formerly cultivated only in the north.

Consumers in the south prefer Tay Nguyen litchis from Dak Lak, Dak Nong and Lam Dong provinces as the fruits have a beautiful red color, juicy fragrant flesh, and have a pleasant sweet-and-sour taste, according to traders.

Demand for the fruit is especially high in Da Lat and HCM City, they said.

Nguyen Duy Tien, who earns an average profit of VND400 million (US$19,000) a year from his one-hectare orchard, is a native of the northern province of Hai Duong, where litchi fruit cultivation is a specialty.

Tien, who lives in Dak Lak's Krong Pak District, moved to the province in 1981, but did not start his litchi orchard until 1996.

He planted 80 litchi trees taken from Hai Duong, and after three years they bore fruit, but not much.

So Tien began to learn more about planting techniques and decided to cut down his one hectare of old coffee trees that were no longer yielding much fruit.

In 2003, he planted 235 litchi trees, and in 2006 the Central Highlands region, which consists of five provinces, began a project to cultivate litchi trees. Experts from Ha Noi taught local farmers new planting techniques.

Two years later, Tien said, he began grafting several litchi varieties onto his litchi trees. In 2011, he harvested 19 tonnes of litchis and earned revenue of VND760 million ($36,200)

His litchi trees are now harvested 30 days earlier than the litchis planted in the north.

Like Tien, other farmers in Dak Lak Province have planted litchi in recent years.

Nguyen Van Hoa in Ea Kar District has 600 litchi trees, earning annual revenue of about VND1 billion.

Most of the litchi farmers in Dak Lak are natives of northern provinces, including Hai Duong, Hung Yen and Bac Giang, all of which are well-known for their litchi produce.

Nguyen Nhat Le, director of the Dak Lak Agriculture Extension Centre, said many other farmers had also cut down their old coffee trees to plant litchi.

"Many of them have escaped poverty from planting litchi," he said, adding that farmers in the Highlands had formed a club to exchange information about farming techniques.

The quality of Dak Lak's litchi is now as high as those from the north, according to farmers.

Not only do Dak Lak's litchi trees have a high yield, but the earlier harvest season allows farmers to sell the fruit at a higher price.

Litchi trees, which can live a long time, begin to bear fruit after three to five years of planting, yielding 100-150kg of fruit a year from the sixth year.

Dak Lak Province now has 234ha of litchis, mostly in Eaka, Krong Pak, Krong Nang, Krong Ana and M'drak districts, Le said. Of this area, 184ha have borne fruit.

PM outlines aid distribution

Agro-forestry, fisheries, rural development, healthcare and education are among the areas prioritised for assistance from NGOs during the 2013-17 period.

Under the national programme on mobilising assistance from NGOs issued by the Prime Minister announced on Wednesday, priority will also be given to vocational training, climate change, social and environmental issues and consequences of the war and natural disasters.

The aid will prioritise poor, mountainous and ethnic areas.

In rural areas, the programme encourages projects that contribute to poverty reduction in poor districts, socio-economic development for ethnic minority people, vocational training, job generation and micro-finance programmes.

It also encourages the development of agro-forestry programmes and small-scale production infrastructure such as pumping stations, roads and irrigation works.

In urban areas, the programme priorities vocational training and job generation, the development of small and medium sized businesses, HIV/AIDS, drug abuse and prostitution.

The programme is aimed at mobilising aid from NGOs and using it efficiently to contribute to poverty reduction and socio-economic development in Viet Nam.

Assistance from NGOs needs to be used in line with the country's socio-economic development plan and poverty reduction strategy.

Housing package delays prompt City frustration

Members of the HCM City People's Council have blamed the city government for not making use of the VND30 trillion (US$1.4 billion) housing loan package as housing remains a pressing issue in the country's most populated city.

"It will be bad if the city cannot help more people and enterprises access the package," Deputy Vo Van Sen said at a question session yesterday.

As of yesterday, only 18 people and three property developers were doing the paperwork to get the loan, according to figures from the construction department.

At least half of the developers currently building 3,000 public housing units are eligible to borrow, adding that liquidating inventories would be the priority, Tran Trong Tuan, deputy director of the department said.

"We will apprise the State Bank of Viet Nam about the difficulties borrowers face in accessing the package."

HCM City has more than 63,000 companies that employ more than five million workers, so demand for housing is huge.

Since 2006, the city has approved 25 public housing projects.

"Most of [them] face a funds shortage issue," Tuan said.

Not surprisingly only four projects have been completed while six are under construction and ground will be broken soon for four others.

The other 11, with 13,912 apartments, have made no progress and require at least VND7.8 trillion ($371 million), according to the department.

The city now has 14,490 apartments that have been completed or are under construction remaining unsold.

He hoped that 40 percent of them would be sold this year.

Some 14 percent were sold this year, he added.

Meanwhile, unauthorised construction is on the rise in outlying districts, according to Deputy Thi Thi Tuyet Nhung.

She said at least 600 houses have been built illegally on agricultural land in Binh Chanh District, a problem also seen in Cu Chi and Hoc Mon Districts.

In the first six months of this year the department found 2,626 violations of construction norms, mostly in Binh Chanh, Thu Duc, Binh Thanh, Binh Tan, and 9 districts.

Deputy Huynh Cong Hung said most violators are medium- or low-income people with real need for housing. More public housing should be built in the city, he added.

Leading economic zone faces imminent human resource shortage

Within the next three years, the Vung Ang Economic Zone in the north central province of Ha Tinh--among the five largest in the country--will need about 67,000 more employees, with only 12,000 working there as of now.

This was announced by the Ministry of Labor, Invalids and Social Affairs and the People’s Committee of Ha Tinh Province, at an online conference chaired by Deputy Prime Minister Nguyen Thien Nhan in Hanoi on July 11.

The conference was held to discuss future human resource training for the Vung Ang Economic Zone.

According to Nguyen Thien, Deputy Chairman of the provincial People’s Committee, 226 projects were licensed for Vung Ang EZ till June 30 this year.

Twenty six of them, including four foreign invested projects, have come into full operation. The remaining 28 projects, including 14 of foreign companies, are under implementation.

According to estimations made by the Ministry of Education and Training, the Ministry of Labor, Invalids and Social Affairs and Ha Tinh Province, the Vung Ang EZ will need at least 67,000 more employees by 2015.

Bui Van Ga, Deputy Minister of Education and Training, said that three universities in the north central region were tasked to train about 1,200 students for Vung Ang EZ in 2012. However, they were able to recruit only 14 students.

The Ministry is continuing to seek the help of three schools to train another 1,200 students for the EZ this year.

However Nguyen Dinh Toan, Deputy Minister of Construction, said that it will be very difficult to attract students. This is because investors of the projects at the IZ have neither ensured the recruitment of graduates nor specified the salary grades.

Japan leads in FDI projects in Vietnam

The Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, on July 10, held a seminar to help Vietnamese businesses and their counterparts from Japan’s Aichi Province to exchange experiences, seek trade opportunities, and find solutions to difficulties in investment in Vietnam.

Participants paid attention to problems on tax policies, environment protection, export and import, investment in processing zones, and wage control.

According to Nguyen Ba Cuong, Deputy Director of FIA, the country has attracted more than 15,000 FDI projects with total registered capital of more than US$218 billion until June 2013.

Japan ranks first among countries and territories investing in Vietnam with 1,990 projects worth US$33 billion. Japan’s investment capital accounts to 50 percent of foreign investment capital in Vietnam until 2012.

Price of rice shoots up in Mekong Delta

Rice prices have shot up suddenly by VND300-500 a kilogram in the last few days in the Mekong Delta, as compared to prices at the end of June.

By the afternoon of July 14, traders paid VND4,300-4,400 a kilogram for fresh normal rice and VND4,600-4,700 a kilogram for fresh long grain type in Dong Thap, Kien Giang and Long An Provinces.

According to traders and rice export companies, the rice price hike is thanks to the recent sunny weather, which facilitated timely harvest and better rice quality. Besides, rice consumption has also risen.

The Ministry of Agriculture and Rural Development informed that the Mekong Delta is in peak harvest of the summer-autumn crop, which will complete by end of August.

Local farmers have also already sown about 300,000 hectares of autumn-winter rice in the last few days.

Thousands of workers go on strike in HCM City

More than 1,000 workers from two companies in HCM City have stopped working to protest against poor policies from their managers.

The strikes occurred on July 10 at Thuan Phuong Embroidering Garment Limited Company in Binh Chanh District and Hoang Ngoc Truc Limited Company in Tan Binh District.

Some workers at the Hoang Ngoc Truc Company complained that since March any workers who took leave to deal with private issues suffered from pay cuts based on overtime wages instead of normal wages.

“Our normal wage is VND11,000 (USD0.52) per hour but when we take off work we are docked based on our overtime wage, which is from VND17,000-19,000 (USD0.80-USD0.90) per hour. Sometimes they even use the overtime hours we already worked to reimburse for our off days. It’s really unfair,” one worker said.

Another worker said that any workers who need time off because of health or family problems may have their pay level reduced.

“After all kinds of pay cuts, our salaries are very modest. Many of us get paid the same amount to work on weekends as on working days,"  she added.

Workers at Thuan Phuong Company said many of them had worked 50-60 hours of overtime over the course of a month, including at least two weekends, but were disappointed by their meager paychecks when they came.

“In June I worked 54 hours of overtime, including two weekends, but they paid me for only 24 hours of overtime and did not include any weekends. When I complained they said they used part of our salaries to pay for social insurance fees for the remaining six months. I find that really suspicious,” one worker said.

Even though Hoang Ngoc Truc Company employees around 300 people, more than 200 of them do not have labour contracts or social insurance policies.

“Many people who have worked here for over two years have asked for labour contracts but the company refused. Initially they pledged to pay us VND300,000 (USD14.26) per month each for 'diligence'. At first they paid half that, but now the payment has completely disappeared,” a worker said.

Another worker said they have to request days off for the weekends. Anyone who takes a three-day weekend is reported, adding that the company sets high productivity targets and forces employees to work overtime, even on weekends, to meet those quotas without proper pay.

Phan Thi Lan, Chairwoman of District 6’s Labour Union, said Hoang Ngoc Truc Company has headquarters in District 6 and has relocated their factory to Binh Tan District.

“All the company’s trade union officials have stopped working and we received little support from the company during the relocation process,” Lan said.

The company announced on July 10 that they would reconsider and return missing payment for workers’ overtime hours by July 13 and would improve their policies in the coming months, she added.

Real estate bailout package little help to low-income earners

The Ministry of Construction has announced a list of 30 projects and several enterprises to benefit from the VND30-trillion (USD1.42 billion) real estate stimulation package, but low income individuals are not yet among them.

As a result, 30 projects to build social housing or change commercial housing into social housing would get support. However, the ministry has yet to address the difficulties faced by low income people in getting access to home loans.

Of the projects, 15 registered for their loans before the government issued the real estate bailout package, Resolution 02, and 12 registered after its issuance.

According to the ministry, the package would provide support to enterprises of different sectors without prioriotising state-owned enterprises.

“Among selected projects, only four belong to state-owned enterprises,” the ministry noted.

The Bank for Investment and Development of Vietnam (BIDV) has agreed to lend Vicoland Housing Development and Construction Group VND117.7 billion (USD5.6 million) to invest in a social housing project in Thua Thien – Hue Province.

The bank has also decided to lend VND540 billion (USD25.67 million) to Hoang Quan Real Estate Services, Trading and Consulting JSC for a project to change a commercial housing project into social housing in HCM City.

Several officials, including Deputy Minister of Construction, Nguyen Tran Nam, and Nguyen Viet Manh, head of the State Bank of Vietnam's credit department all said that the package would help “warm up the real estate market".

Concerned parties are speeding up the implementation of the package.

Gas companies post good six-month results

Liquefied petroleum gas (LPG) trading companies continued to achieve good business in the second quarter, further consolidating their six-month performance.

According to a just-released financial report of CNG Vietnam Joint Stock Company, the firm obtained nearly VND250 billion in sales in the second quarter, growing 21% over the same period in 2012. It enjoyed more than VND37.6 billion in after-tax profit, shrinking about VND800 million over the year-ago period.

CNG attained total sales of roughly VND448 billion in the first six months of the year, jumping 25% year-on-year and meeting 50.5% of the year’s plan. CNG posted more than VND66.1 billion in after-tax profit, a slight pickup compared to the same period in 2012.

Meanwhile, other listed gas suppliers like PetroVietnam Gas Corporation (GAS), PetroVietnam Southern Gas Joint Stock Company (PGS) and PetroVietnam Northern Gas Joint Stock Company (PVG) have yet to release their financial reports for the second quarter. However, they are all expected to fare well in the period.

Nguyen Si Thang, chairman of PetroVietnam Southern Gas Joint Stock Company, told the Daily the six-month sales and profit of his company both beat the targets set for 2013 but he declined to elaborate on the specific figures.

Thang ascribed the good performance to the recovery of local consumption, with sale volume marking a quarter-on-quarter increase in the second quarter.

Dunlopillo opens first mattress showroom

Dunlopillo Vietnam Co., Ltd on Thursday opened its first showroom in Vietnam to tap the market after over 15 years operating in the country.

With investment of around VND2 billion, the 140 square meter showroom is located in HCMC’s District 10 at 228-230 Ngo Gia Tu Street, a street specializing in selling furniture.

Dunlopillo merged with the Spanish producer of sleeping products Pikolin last year to develop and expand its brand. Together with experience, resources and technologies of Pikolin, Dunlopillo targets to become a big mattress retailer in Vietnam.

According to Thinaharan Muthusamy, managing director of Dunlopillo in Asia, Vietnamese is a potential market and has an impact on neighboring countries. In addition to the plant in Binh Duong Province’s Vietnam-Singapore Industrial Park, Dunlopillo wants to make more investment in Vietnam in the future.

Products from the plant are not only supplied for the domestic market but also exported to the Middle East, South Korea, Hong Kong, Singapore and Malaysia.

Smuggled sugar poses threat to domestic industry

Sugar inventories have amounted to hundreds of thousands of tons, but the domestic market is still awash with smuggled sugar as relevant authorities have failed to find out effective cures for the problem, heard an online meeting in Hanoi on Wednesday.

At the meeting “Removal of difficulties for Vietnamese sugar enterprises” organized by Industry and Trade newspaper on Wednesday, an agriculture official said sugar plants turned out a total of 1.51 million tons of sugar in the crop 2012-2013.

The agriculture ministry forecast sugar oversupply at more than 300,000 tons in the current crop, said Doan Xuan Hoa, deputy director of the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production under the agriculture ministry.

Nguyen Thanh Long, chairman of the Vietnam Sugarcane and Sugar Association (VSSA), noted sugar inventories at VSSA member companies totaled up to 500,000 tons as of June while total sugar volume smuggled into Vietnam is 400,000-500,000 tons annually as estimated by VSSA.

How to contain sugar smuggling is a big question to many people at the meeting.

Market monitors have detained a combined 1,300 tons of sugar illicitly flown into the nation since 2010, with 200 tons in 2010, 331 tons in 2011, some 700 tons in 2012 and 362 tons detained in An Giang Province so far this year, said Do Thanh Lam, deputy director of the Market Monitoring Department under the Ministry of Industry and Trade.

This amount as the tip of the huge iceberg indicates that smuggled sugar volume is on the rise, Lam said.

There are two types of the illicit trade, one via the country’s border areas and the other as temporary imports for re-exports, said Nguyen Do Kim from the General Department of Customs. But he said it is very difficult to deal with these illegal practices.

Kim said it is a tough job to fight the illegal activity as smugglers tend to sneakily store commodities in warehouses along the country’s border areas thanks to cooperation from their accomplices.

Timber import from EU surges

The import of wood materials from the European Union (EU) has increased strongly in the past months although prices are higher than before, according to importers.

Vo Quang Ha, director of Dong Nai Province-based Tan Vinh Cuu Joint Stock Company, said the volume of wood imported from EU countries has risen by 15-20% since the year’s beginning.

HCMC-based Thien Thanh Phat Timber Company said that the firm’s wood import from the EU has doubled year-on-year due to the increasing demand of wood processing and exporting enterprises. Most wood processors have gained orders sufficient for production in the next 6-12 months, making the demand for wood materials higher than last year, he added.

Wood processing and exporting enterprises said that EU countries had strict regulations on legal origins of wood.

Most wood materials from the EU are planted and exploited under Forest Stewardship Council (FSC) standards. Therefore, wood materials of clear origins imported from the EU will ensure the legality of Vietnam’s wood products when exported to choosy markets.

According to the General Department of Customs, Vietnam’s expenditure of wood imports from EU countries in the year’s first five months increased strongly year-on-year. The wood import from Germany alone rose by 82% to US$7.66 million.

Similarly, the import from Finland, Denmark and France in the five-month period went up by 22%, 66% and 80% respectively.

In addition, the prices of wood imported from the U.S., EU and Africa have increased by an average of some 20% compared to 4-5 months ago due to a recovery in the U.S. construction market and the low supply of wood in Africa, said Huynh Van Hanh, vice chairman of the Handicraft and Wood Industry Association of HCMC (Hawa). This may leave an impact on profit targets of local wood processing and exporting enterprises.

HNX: Foreign investors not fleeing bond market

The Hanoi Stock Exchange (HNX), which manages the local government bond market, has rejected rumors on the exodus of foreign investors from the bond market, giving statistics to prove that they are still net buyers on the debt market this year.

“Net buying of foreigners in the first half this year was VND3.7 trillion,” said Tran Anh Tuan, head of the bond department at HNX.

The exchange’s statistics showed that the net purchases by foreigners on the secondary bond market amounted to VND2 trillion in January, VND2.5 trillion in March, VND3.7 trillion in April, and VND1.9 trillion in May. They were net sellers only in February and June with VND0.7 trillion and VND5 trillion respectively.

Tuan said those were the just outright trading value and if counting repo trading value, the total traded value would double.

In contrast with the buying trend in the early months this year, foreign investors in the past few weeks have sold government bonds. A source told the Daily that in the first six days of July, foreign investors were net bonds sellers with VND750 billion, while the most updated figures for the past couple of days are not available.

“However, statistics in the first ten days of this month showed that the (foreigners’) trade caused no big change on the market as the average trading value on HNX has remained normal,” said Tuan of HNX.

Trinh Hoai Giang, deputy director of Hochiminh City Securities Co. (HSC), said foreigners were net sellers in the past two weeks but that was just a normal practice of locking in profits. Therefore, such a practice cannot constitute a conclusion that it was an exodus from the market as seen in the crisis in 2008, he said.

Explaining the foreigners’ current selling, Tuan said the government bond yield had risen due to falling interest rates, most clearly on the two- and three-year terms.

The government bond supply is rising, but the money for bond investment was still ample given banks’ low credit growth. Therefore, the high supply could not be the reason for saying that there was an exodus from the bond market, he added.

There were 27 securities companies, 19 local banks and six foreign banks being members on the HNX’s bond market as of May this year.

Transactions by foreign investors have remained stable, making up around 30% of the secondary bond market’s total trading value. Their total trade in the first half this year amounted to more than VND100 trillion.

HSBC warns Vietnam of underperformance next decade

Vietnam will likely underperform in the next decade if there are not necessary reforms to resolve major bottlenecks in the economy, including the inefficient banking system and state-owned sector, HSBC said.

The bank’s researchers in a new report on Asian economies expect the country GDP growth this year would slightly increase to 5.1% from the level of 5% in 2012. The 5.1% level is lower than the country’s target of 5.5% set by the Government early this year.

Weak domestic demand reflected through low credit growth continues to hammer economic activities. Major growth indicators, including HSBC manufacturing PMI, consumer price index, and trade prints reflect sluggish domestic activities, said the report published by the bank’s global research department.

“The second half of the year could determine whether Vietnam will muddle through or resume its former fast growth in the next decade. Although some signs of progress are in place including the Prime Minister’s approval of the asset management corporation (AMC), evidence of sweeping changes to improve corporate governance is not yet seen,” said the report.

Exports, especially manufactured goods of the foreign-invested sector, are supporting the economy, contributing to final demand and employment growth. Electronics, textile and garment manufacturing are expanding robustly while commodity exports are being hit by weak global prices. This trend is forecast to continue for the rest of the year, said the report.

Inflation will be under the Government’s control given weak domestic demand and low global commodity prices. HSBC expects this year’s consumer price index will increase 5.9% compared to 8% last year.

However, as revenue collection is decreased due to falling corporate tax, value added tax especially import VAT, the Government can potentially raise the costs of public services.

Aspect Software and FPT IS announced strategic partnership

Aspect, a leading provider of customer contact and Microsoft platform solutions, today announced a partnership with Vietnamese information technology leader, FPT Information System (FPT IS).

Under the terms of the partnership, FPT IS will represent, market and implement Aspect’s Interaction Management offerings in Vietnam.

As Vietnam’s leading information technology company, FPT IS has a proven track record across 46 local cities and provinces, as well as 14 countries globally, in enabling businesses in Vietnam to realise their true business value in today’s competitive environment.

“Through Aspect’s partnership with FPT IS, businesses in Vietnam will benefit from the best of ourleading Interaction Management solution that is delivered and distributed by one of the country’s most trusted leaders in the information technology sector,” said Jagannath Narendran, senior vice president, APAC and Middle East, Aspect Software. “We treasure this relationship with FPT IS and believe that their expertise in the financial sector, and their marketplace knowledge, make them an excellent choice for Aspect’s Global Channel Partner Program.”

As more businesses in the region start to recognise the growing role of the contact center as the center of the customer experience, there will continue to be an increasing trend for businesses to invest in interaction management platforms to optimise every interaction with their customers and foster winning relationships.

“Customers have always been our top priority, and our business ethos have always been about selecting technologies to help the businesses of our clients reach new levels of productivity,” said Cam Linh Vu, FPT IS Business Development manager. “We recognised the strength and depth of Aspect’s brand and technologies and believe that their Interaction Management solution will enable us to further empower our clients with an interactive experience that nurtures lasting loyalty.”

With Aspect’s Customer Interaction Management solution, FPT IS will offer businesses in Vietnam the ability to consolidate and streamline all customer conversations on one platform by the end of 2013. This added offering is in addition to FPT IS’s current areas of expertise, including software development, system integration, and IT services.

Mitsubishi aircraft-part plan readies for take-off

Mitsubishi Heavy Industries will increase the production of aircraft parts for Boeing aeroplanes in Vietnam by building a second commercial part factory in the country.

Japan’s media last week reported that the company’s officials had revealed a plan to build its second factory in Vietnam next summer, which will be situated near the first plant in Thang Long Industrial Park, Hanoi.

VIR failed to contact with MHI Aerospace Vietnam Company, the wholly-owned of Mitsubishi Heavy Industries in Vietnam and also the investor of the first factory, to find out more about the investment expansion plans.

According to Japanese media, the new factory will produce components for the Boeing 777 jumbo jet that are currently made at the Mitsubishi Heavy Industries’ Nagoya Aerospace Systems Works.

Mitsubishi Heavy Industries built their first factory in Vietnam in 2007 and started production in 2009. The factory, capitalised at $7 million, produces flaps for the Boeing Next-Generation 737. It remains the only company in Vietnam to manufacture ship aircraft components.

Mitsubishi Heavy Industries presently has multiple large-scale projects under way in the aerospace sector, including production of components for Boeing planes and Mitsubishi Regional Jets.

The company’s flap production in Vietnam is part of its initiative to partly shift its metal component assembly work overseas, where abundant human resources are available, and to focus its domestic facilities on high value-added operations.

With the investment expansion of aircraft-part production in Vietnam, the Japanese firm will further strengthen Vietnam’s position on the aerospace supply chain map.

At present, Korean Aerospace Industries Ltd, South Korea’s aeroplane maker, is planning to build a manufacturing facility in Vietnam to manufacture equipment and components for Airbus manufacturers, the European Aeronautic Defence and Space Company. The facility will be built in Danang’s Hi-Tech Park. According to the park’s management, Korean Aerospace Industries Ltd could obtain their investment certificate for the project next year.

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

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