Timber goods’ market on target
The timber products market needs to promote local business and develop the export market this year to deal with the greater difficulties, said the HCM City Fine Art and Wood Processing Association.
The association reported in 2011 that the wood processing industry gained its target of US$3.9 billion, an increase of $500 million from the previous year.
But, in fact, wood processors earned a small profit from exports due to the European economic downturn. Europe is a major export market for Vietnamese wood, as well as an area of low competition, the association said.
It reported that in 2011, 55 per cent of the total domestic wood producers suffered losses and produced moderately. Thirty per cent of them broke even while 15 per cent saw little profit.
Tran Quoc Manh, vice chairman of the HCM City Handicraft and Wood Industry Association (HAWA), said that in 2012 domestic wood exporters would still face many challenges, such as the European Union’s Forest Law Enforcement, Governance and Trade (FLEGT) that would come into effect on March 3 and the tight monetary policy in the US.
The trend in wooden product export moved from outdoor furniture to indoor furniture. Wooden product exporters should make prices suitable for each export market and improve the quality and design of products, he said.
On the other hand, exporters would compete more because large companies would have more orders, while small businesses would lack orders.
Right now, the exporters should boost trade promotion, especially on the domestic market.
According to the association, most companies had growth in business last year because they paid attention to both the export and domestic markets.
The association advised the wooden product makers to strategise their advertising and distribution of products at the domestic market to avoid dependence on export markets.
Nguyen An Diem, chairman of the Fisico management board, a company specialising in wood export trade based in central Binh Dinh Province, said exports of handicrafts and outdoor furniture were advantageous in the past. But now, Fisico did not sign large export contracts, producing other wooden products and focusing on the develop-ment of business at home.
Ngo Thi Hong Thu, deputy chairman of Truong Thanh Furniture Company, said in addition to exports, the company also served the domestic market with middle-class and luxury wooden products.
Her company had distribution systems at supermarkets and provided furniture to resorts, luxury hotels, buildings and trading centres.
Nguyen Van Chuong, director of BA Co Ltd, promoted business for luxury furniture at the domestic market when the company had disadvantages in export. It professionally invested in wooden furniture, from design to selling price, to compete with Chinese furniture made from other materials such as metal and plastic.
Manh, the association’s vice chairman, said companies should maintain their traditional export markets and also expand to new markets via international trade fairs for furniture on the world market.
Viet Nam became the largest exporter of timber and wood products in ASEAN last year with US$3.9 billion in exports, said the ASEAN Furniture Industries Council (AFIC) which is focused on promoting the interests of ASEAN furniture industries.
Wood products accounted for more than 80 per cent of Viet Nam’s total wood and timber exports, a significant increase over the previous level, according to the Handicraft and Wood Industry Association of HCM City.
Dhanakorn Kasetruwan, Vice President of AFIC, said he believed that the timber trade volume could improve significantly if a timber production zone with stable and competitive pricing was established in the region to help ASEAN exporters enhance their competitiveness, productivity and efficiency before the birth of the ASEAN Economic Community.
ASEAN would become a single market by 2015, with larger capital flow, information and labour forces, he said.
AFIC is made up of Thailand, Malaysia, Singapore, Viet Nam, Myanmar, Indonesia and the Philippines.
2012 a transitional year for VN’s economic restructuring
This will be an important transitional year for Vietnam to implement its plan on restructuring the economy, with the main focus put on the state-owned enterprises, Deputy Minister Hoang Trung Hai said at a conference yesterday.
The other two major tasks are the investment and finance-banking restructurings, the deputy PM told delegates at the Economist Conferences’ Vietnam Summit in Hanoi yesterday, which gathered business leaders and academics to debate and discuss issues critical to Vietnam’s economy.
Hai said that while Vietnam does not underestimate the risks facing the economy at a time when the global economy is unpredictable and fluctuating, the country still has a bright outlook on its potential for economic growth.
Speaking with Charles Goddard, head of the Economist Intelligence Unit’s editorial team in Asia-Pacific, on the SOEs restructuring, Deputy PM Hai said that although the country’s economy is still in an unstable state, with high inflation and a wide trade deficit, it still can be said that the Vietnamese government has gradually stabilized the macro-economy.
“Businesses want to see immediate results from the government measures to curb inflation and stabilize the macro-economy, but it takes time to finalize this progress,” Hai was quoted by newswire Saigon Times Online as saying.
He said that although the full-year figure of inflation last year was more than 18 percent, figures recorded in the last six months of 2011 showed that inflation was on the decline.
Meanwhile, Vietnam enjoyed a balance of payment surplus of US$2.5-$3 billion, and foreign reserves increased against the narrowed trade gap, he added.
Hai said the government will create more effective measures to further narrow the trade deficit, while promising that the top priority is macro-economic stabilization, rather than economic growth.
Regarding the SOE restructuring, Hai said the number of state-run enterprises was reduced from 6000 to 1,069 companies last year, and the government is targeting to bring the figure down to 650 by 2015, and even lower by 2020.
The restructuring is aimed at increasing SOEs’ operational effectiveness and creating a more equal environment for their operation compared to their private counterparts, he said.
He said many factors have affected the process of restructuring the SOEs in the past, and the government has learned from these experiences.
For instance, in regards to the proposed plan to put certain SOEs up for sale under the process of restructuring, some insiders objected, saying the sales cannot be conducted with high prices.
“However, the SOE restructuring is not intended to gain high profits, but to create a more effective administrative system and healthier competition environment,” Hai said.
“Increasing SOEs’ competitiveness is the government’s final target in the restructuring.”
Hai also admitted that local businesses, both in the public and private economic sectors, have low competitiveness.
“This will hinder the country’s development in the future.”
PVFCCo targets more fertiliser this year
The PetroVietnam Fertiliser and Chemicals Company (PVFCCo) revealed that this year it targeted for production of 800,000 tonnes of nitrogenous fertiliser and 100,000 tonnes of export fertiliser with a turnover of VND15 trillion (US$714.3 million).
Last year, PVFCCo produced 800,000 tonnes, 4 per cent above its target. Its revenue of 2011 reached VND8.936 trillion ($425.5 million), increasing 28 percent over the previous year.
PVI wins magazine insurance award
PVI Holdings has been listed as the Vietnamese Insurance Company of the Year in Viet Nam by World Finance, a British finance magazine.
It is the second time in succession that the company has won the prize. In 2011, PVI Holdings’ revenue reached VND5,200 billion (US$247.6 million), 6 per cent above target. Profit was VND450 billion ($21.4 million), up 34 per cent over the previous year
HANSAE invests $30m in industrial zone
HANSAE Joint Stock Company started the construction of a garment plant at Tan Huong Industrial Zone in southern Tien Giang Province yesterday. The project, worth $30 million, will be built with an annual capacity of 30 million products. Apart from the plant in Tien Giang, South Korean HANSAE Corporation also owns two others in HCM City and Tay Ninh Province.
Garuda Indonesia opens branch in Viet Nam
Garuda Indonesia National Airline has recently accepted TransViet Promotion Company as its representative in Viet Nam. TransViet Promotion will carry out activities such as selling, marketing and helping customers book tickets in Viet Nam.
Electronic payments OK for auction site
Electronic payment gateway, NganLuong.vn co-operated with Online Auctions Site, 24bid.vn to help customers of 24bid.vn make faster and more convenient payments.
Using intermediary payment tools for online trade improves electronic business and promotes cashless payment in the future.
Contract for new VN thermo-power plant signed
Company PECC2 of Electricity of Vietnam Group and Malaysia-based Toyo Ink Group signed a contract in Ho Chi Minh City on Jan. 11 to provide consultancy for drafting the Song Hau 2 Thermo-Power Plant project.
The signing was a follow-up to Memorandum of Understanding between Toyo Ink and PECC2 in 2009.
Located at Song Hau Power Centre in Chau Thanh district of the southern Hau Giang province, the plant will have a designed capacity of 2,000 MW annually, once put into operation by 2018.
Toyo Ink, a Malaysia-based multi-sectoral group, has paid special attention to Vietnam’s electricity sector and was permitted to invest in the Song Hau 2 Thermo-Power Plant project by the Vietnamese Government.
PECC2, Power Engineering and Consulting Joint Stock Company 2, is one of the leading energy industry consultancy companies in Vietnam, specialising in providing consultancy services and design surveys for hydropower and thermo-power projects.
In the next decade, the electricity sector will build 95 power plants, with a total capacity of 50,000 MW and investment capital of $39.58 billion.
Vietnam dong could weaken by up to 6 pct this yr: advisor
Vietnam’s currency, the dong, could lose 5-6 percent of its value against the dollar this year, a government advisory agency predicted on Monday.
The dong has suffered since 2008, pummelled by volatile inflation, a persistent trade deficit and low foreign exchange reserves. Annual depreciation of up to 6 percent could be seen as a “positive result”, the National Financial Supervisory Commission said in a report.
During 2011, the central bank lowered the dong’s midpoint rate by 9.1 percent, including an 8.5 percent one-off devaluation in February. Currently, the currency is allowed to trade around that rate in a band of 1 percent on either side.
The exchange rate quoted between banks shed some 7.3 percent while the unofficial, or black market, exchange rate ended the year at 21,190 dong per dollar, just 0.7 percent weaker than its level at the start of the year, based on data compiled by Reuters.
The State Bank of Vietnam has regulated the dong through a “crawling peg” system whereby the value of the currency is allowed a certain amount of depreciation each year relative to the U.S. dollar.
Other “positive results” the country is likely to achieve this year, according to the National Financial Supervisory Commission, include keeping inflation below 10 percent and containing the trade deficit to less than 10 percent of 2012’s export total, the report said.
At the end of 2011, inflation was running at 18.6 percent. It peaked in August, when annual inflation hit 23 percent.
Le Xuan Nghia, deputy chairman of the commission, predicted that inflation and currency depreciation would not be Vietnam’s biggest macroeconomic concerns this year.
Rather, a liquidity squeeze in the troubled banking system could threaten the economy, he said at a conference on Monday.
Several banks have been offering annual interest of 19-21 percent for dong deposits despite the central bank’s cap of 14 percent, highlighting the funding squeeze, he said.
Vietsovpetro’s revenues exceed $5.6 bln
The Vietnam-Russia oil and gas joint venture Vietsovpetro has announced that its revenues from the sale of crude oil exceeded US$5.6 billion in 2011.
The figure was 57.6 percent higher than the target set for the whole year and 1.68 billion USD higher than its earnings recorded in 2010, Vietsovpetro General Director Nguyen Van Tuyen said at a conference in Hanoi on Jan. 10.
Of the total sum, the Vietnamese side made contribution to the state budget and profit of 3.55 billion USD, while the Russian partner’s profit surpassed $580 million.
Tuyen stressed that the figures marked the second highest revenues and profits in history of Vietsovpetro, only behind 2008.
In the year, Vietsovpetro exploited about 6.4 million tonnes of crude oil, 90,000 tonnes higher than the yearly plan.
For 2012, Vietsovpetro has set a target of pumping up at least 6.14 million tonnes of crude oil, bringing in total revenues of $4.14 billion.
VN metro targets 60 pct export growth
Ho Chi Minh City will focus more on services in its continued effort to restructure export from now until 2015, a seminar has heard.
Huynh Khanh Hiep, deputy director of the city’s Department of Industry and Trade, said by the end of 2020, the city aims to bring service export to 60 percent of total export turnover.
The city targets an average export growth of 17 percent from 2011 to 2015, and a total export turnover of more than US$100 billion (excluding crude oil) by the end of 2015.
More staffs will be trained for service export activities as well.
Export support programs on software products and services will be continued, with the aim of enhancing added value, from software outsourcing to production activities.
Many export support programs will be implemented, including the expansion of e-custom procedures, support-industry development, and the construction of an export goods introduction centre.
In general, the city’s export turnover is on a recovery trend and has had a fairly good growth rate.
Last year, despite economic difficulties, the city’s export turnover (excluding crude oil) reached $19.7 billion, an increase of 21.7 percent compared to 2010.
The US, ASEAN, the EU, Japan and China are still key markets for the city’s key export items, such as agricultural products, textiles and garments, seafood, computers and electronic parts, Hiep said.
In 2010, the Asian region accounted for a large proportion (62.6 percent), thanks to a Free Trade Agreement between ASEAN and China.
This was followed by Europe (33.5 percent) and the Americas (20.5 percent).
Bui Thi Thanh An, Head of the HCMC office for the Vietnam Trade Promotion Agency, said exporters should be more active in participating in international exhibitions and seek partners to increase business transactions.
Companies should also schedule more business trips to survey foreign markets.
At the seminar, Prof Dr Vo Thanh Thu, a member of the Vietnam International Arbitration Council, said that one of the major challenges for the export industry was to reduce its heavy dependence on imported raw materials.
The textile and garment sector imports nearly 60 percent of its raw materials, and the footwear and electronic industry imports 90 percent.
Every year, the seafood sector spends about $500 million for raw material imports.
Each key sector exports to more than 100 countries, but the US, the EU and Japan account for more than 60 percent of export turnover.
If these markets applied strict trade protection measures or trade barriers, the country’s exports would be damaged heavily.
Another challenge for the export sector is the small scale of many companies, which makes it difficult to access the world market and hinders the development of the support industry.
High interest rates and an unstable exchange-rate policy are also worrisome issues for Vietnamese exporters.
Poor prospect for realty market: consultancy firm
Hanoi’s realty market did not rally in the fourth quarter of 2011 regarding the number of products sold as usual, heralding a dull prospect in 2012, CB Richard Ellis Vietnam (CBRE) has said.
In its latest overall report released recently, CBRE said that the condo supply in Hanoi in the last quarter was 4,500, an extremely modest number compared to 25,000 for the whole year’s volume.
The housing supply downtrend at the year-end is attributed to the weak demand at home.
Given the current economic uncertainties, up to 45 percent of apartments put up for sale late last year and early this year is worth less than VND25 million per square meter.
The above price excludes values of promotion and discount programs that have been widely launched by project owners in a bid to woo homebuyers.
Compared to early 2008, however, the housing price in 2011, albeit low, had risen by 76 percent in the low-cost housing segment, 43 percent in the middle segment, 20 percent in the high-grade segment and 5 percent for high-end products, CBRE said.
The weakened financial capacity on the part of buyers hindered the realty market from recovery at the end of last year.
The property services provider quoted reports by some local banks as saying the ratio of overdue loans accounted for up to 10 percent of total outstanding housing loans in end-2011.
Meanwhile, only 5 percent was recorded as overdue housing loans at the beginning of that year.
On top of that, the monetary tightening policy has discouraged home buyers from accessing bank loans.
It is predicted there will be 60 more projects with 22,000 flats to be launched into Hanoi’s market this year.
This means more pressure will be put on developers as the number of successful transactions will get lower.
Developers are forced to compete fiercely with land-lot investors, who had been mired in the falling price in the last quarter last year.
CBRE said the market’s recovery would depend on the economy. Meanwhile, projects owned by secondary investors will be put under higher pressure for discount prices.
The firm also expected more transactions at the end of this year’s first quarter than late last year as prices would further slide.
In other words, this year remains a challenging time for the local housing market.
Animal-feed firms face pressure
Domestic feed companies face bigger challenges as many foreign-invested companies plan to widen their investments in Viet Nam, according to the Viet Nam Feed Association (VFA).
Chairman of the VFA Le Ba Lich said that when the widening plan was implemented, market shares of domestic companies would surely be narrowed.
“Domestic companies risk suffering the increased burdens of capital shortage and high interest rates. Additionally, many small companies may face bankruptcy,” Lich said.
Meanwhile, he added, big foreign companies were financially strong with the advanced technology to easily expand in Viet Nam.
The association’s worry is reasonable, as the country has 233 feed companies. Of that figure, 46 are foreign-invested companies, 176 domestic and 11 are joint-ventures.
In 2011, the association reported, products of domestic companies accounted for 60-65 per cent of the total market share. The other portion was occupied by foreign-invested and joint-venture companies.
Recently, many companies announced their openings in Viet Nam. Particularly, a company from Japan plans to invest US$426 million to build a new feed plant with a capacity of 200,000 tonnes per year in the country.
While the association expressed its concern, many businesses saw the foreign company expansion as a bright signal.
Talking to the Viet Nam Economic Times, Tran Vinh Du, director of the TNK Capital Investment and Consultant Company, said foreign companies would bring many lessons to domestic companies.
This was a very good thing, he said.
Du used the pharmaceutical sector as an example.
He said that in the past, domestic companies encountered a tough time when foreign pharmaceutical companies came to Viet Nam. In the short term, however, they got lessons and caught up with foreign companies
To avoid the case of losing market shares, experts affirmed that weakness in Vietnamese companies must be absolutely improved.
The chairman of one feed company said that in Viet Nam, companies often operated in different fields with out-of-date technologies, thereby making it difficult to merge.
If they wanted to merge, they had to re-structure and re-build. Meanwhile, foreign companies did not buy small domestic companies, he said.
To limit expansion, he suggested the Government permit foreign companies to manufacture only products that Viet Nam cannot make.
Small banks breach interest-rate cap
Nguyen Thy Nguyet Cam of HCM City’s District 3 said a joint stock bank offered her 3 per cent extra interest on top of the central bank limit of 14 per cent on her deposit of VND1 billion (US$47,600).
The 3 per cent would be brought to her house in cash the day she deposited the money, the bank told her.
After lying low for several months, several banks, especially smaller ones, appear to be again breaching the 14 per cent cap.
Branches of DongA Bank and HD Bank had been, in mid-September, caught violating the rule, and related officials were dismissed.
Speaking at an annual review meeting held by the central bank on Tuesday, Truong Thi Thuy Nga, head of Vietcombank’s HCM City branch, said deposit interest rates were again being pushed up to 16-17 per cent.
She herself had to talk to many large customers to persuade them against withdrawing their deposit, and often had to put up with it since customers found deals elsewhere.
“If deposits keep flowing out of our bank to others, we have to have some flexibility to retain our customers, but will make an honest report to the State Bank of Viet Nam,” she said.
Dao Hong Chau, deputy general director of Eximbank Viet Nam, noted that a number of smaller banks were breaching the cap due to lack of liquidity.
Nguyen Ngoc Thang, deputy head of the HCM City office of the central bank, said deposit mobilisation by lenders, especially joint-stock banks, in HCM City fell significantly in September and October last year. Since September 7 they have in fact reported an erosion of 10.5 per cent in deposits.
He said deposits by individuals at joint-stock banks declined by almost VND41 trillion ($2 billion) between September 7 and November 10 due to the regulation on 14 per cent cap, with part of the amount going to State-owned banks. State-owned banks reported an increase of VND1.442 trillion ($69 million) in that period.
Investment in gold had also caused a fall in deposits at joint-stock banks.
Rapid renovation key to handling economic crisis
Viet Nam could achieve high economic growth at 6.5 per cent and retain a single-figure inflation this year if it implements renovations rapidly and systematically, said Nguyen Mai, chairman of the Viet Nam Association of Foreign-invested Enterprises.
He made the statement at the conference “Economic Forecast 2012-15” that was held by the Ministry of Planning and Investment (MPI) on Tuesday in Ha Noi.
International and local experts forecast that the global economy, including Viet Nam’s, would continue to face many difficulties in 2012.
According to the International Monetary Fund (IMF), the global economy will likely keep an average growth rate of 4 per cent this year. Citigroup, Fitch and Goldman Sachs reported expected rates of 2.9, 2.7 and 3.2 per cent respectively for this year. The expected figures are lower than those from last year.
In the face of economic crisis, authorities of the EU, the US and many others countries in the world will tighten their belts, raise tariffs, and reduce public expenses, among other actions. In addition, the unemployment rate in the world will accelerate, causing lower consumption.
These will negatively impact Viet Nam’s economy, in terms of trade, foreign investment, business performance and others. According to an official report of the Ministry of Planning and Investment, more than 48,700 enterprises have dissolved or stopped operations last year, up around 22 per cent from one year ago. Many companies have had to narrow production and suffer losses.
Before-tax profits of State corporations only stood at 13.1 per cent, lower than the interest rate of commercial banks.
“The great challenge for this year is how to stabilise the macro economy, reduce inflation, but still not “strangle” production and business. To do this, we have to flexibly implement monetary, fiscal and exchange rate policies,” said Vo Tri Thanh, director of the Central Institute for Economic Management (CIEM).
Nguyen Mai said that the development scenario of the Vietnamese economy in 2012 would heavily depend on the world economic situation, and the ways Viet Nam respond to the international market fluctuations.
He pointed out five key elements. They include synchronised and rapid innovation on macroeconomic policies; enhancement of the State management capacity; and favourable conditions for business and investment environment with attractive legal frameworks.
To bolster development of local firms, he mentioned the two remaining elements: enterprises must map out professional development strategies and seek new initiatives; they also must improve the qualification of leaders and staff.
Also at the conference, the MPI reported that it expected to obtain a total foreign direct investment capital of US$15 billion this year from both new projects and ongoing ones.
According to the ministry, Viet Nam’s entire FDI capital influx was about $14.7 billion last year, 26 per cent lower than one year earlier.
Do Nhat Hoang, director of the MPI’s Foreign Investment Agency, blamed the poor FDI performance on the global economic downturn. Additionally, he said Viet Nam paid more attention to the quantity of investment projects rather than quality.
He added: “We also should focus on the disbursement process of FDI capital resources.”
Among the newly registered FDI projects last year, about 76 per cent were of the agricultural and construction sectors, and nearly 6 per cent in real estate.
FDI firms earned $47.8 billion from exports last year, a year-on-year increase of 29.3 per cent.
Marketers unprepared for changing landscape
A majority of the world’s top marketing executives recognise a critical and permanent shift occurring in the way they engage with their customers, but seem unprepared to manage the change, an IBM study has revealed.
The study, released yesterday in HCM City, polled over 1,700 chief marketing officers (CMOs) in 64 countries and 19 industries, including 70 CMOs in ASEAN member countries.
While 59 per cent of ASEAN CMOs (global 63 per cent) think return on marketing investment will be the primary measure of the marketing function’s effectiveness by 2015, even among the most successful enterprises, they could not provide specific numbers.
Most of them say they lack significant influence in key areas such as product development, pricing, and selection of sales channels.
Customers are sharing their experiences widely online, giving them more control and influence over brands, a shift in the balance of power from organisations to their customers that requires new marketing approaches to stay competitive. CMOs are aware of this changing landscape, but are struggling to respond.
“The inflection point created by social media represents a permanent change in the nature of customer relationships,” Giuseppe Bruni, head of the strategy and transformation, global business services, IBM ASEAN, said.
Collectively, the study findings point to four key challenges that CMOs everywhere are confronting: the explosion of data (ASEAN 56 per cent, global 71 per cent), social media (ASEAN 64 per cent, global 68 per cent), channel and device choices (ASEAN 48 per cent, global 65 per cent), and shifting demographics (ASEAN 52 per cent, global 63 per cent), which are expected to be pervasive and game changers for their marketing organisations.
To grapple with data explosion, ASEAN CMOs are more likely to use social media (ASEAN: 93 per cent, Global: 82 per cent), customer analytics (ASEAN: 89 per cent, Global: 81 per cent), and customer relationship management (ASEAN: 85 per cent, Global: 81 per cent) tools.
CMOs are looking at three key areas for improvement – delivering value to empowered customers, fostering lasting connections, and capturing value and measuring results.
The majority of the CMOs surveyed are still focused on traditional sources of information such as market research (ASEAN 84 per cent, global 82 per cent), competitive benchmarking (ASEAN 83 per cent, global 80 per cent), and sales campaign analysis (ASEAN 61 per cent, global 68 per cent) to make strategic decisions.