PM requires careful monetary policies
On June 18, PM Nguyen Tan Dung issued Instruction No. 19 on the socio-economic development plan and budget estimates for 2013, and State budget investment plan from 2013-2015.
In the Instruction, the PM set targets for 2013, including economic development targets related to economic restructuring.
The main tasks in developing the economy during the next year include monetary polices, credit, tax, land, administrative innovation, and improved economic growth to reach GDP growth of 6-6.5%.
Restructuring the economy will focus on three main fields, including investment, the financial markets, and enterprises.
The PM also urged the restructuring of State-owned enterprises, improved competitiveness and better operational effectiveness of state economic groups. Serious and explicit sanctions need to be applied to raise the effectiveness of state-owned capital and assets.
Monetary policies will favour private enterprises to help them access capital, raising the level of credit to reasonable levels.
In the next year, electricity, coal, petroleum prices and some other services will be stabilised more strictly with a suitable road map.
The PM also outlined in the Instruction that 22-23% of GDP would be drawn into the state budget in 2013. Domestic incomes (except for raw petroleum and land tax) will grow by at least 14-16% compared to this year.
Bad debts hamper bank restructuring
The primary task for restructuring commercial banks is to resolve bad debts and simplify lending procedures, say economists.
They explain that besides some certain successes in the integration process, Vietnam’s commercial banks reveal several shortcomings in terms of administration, human resources, rising bad debts and a low level of liquidity.
Vietnam now has more than 80 banks, an excessive number compared to the economic demand, which has resulted in some of the smaller banks facing serious shortages of capital and low liquidity levels.
Vu Thi Phuong Hoa, an official from the Ministry of Finance, says Vietnam’s financial system depends mainly on the banks, which along with non-banking credit organizations account for 75 percent of the financial sector’s total assets.
However, after recording some massive developments, some banks had breached principles of business administration and risk management, resulting in their increasing bad debts.
The current macroeconomic difficulties have raised business debts across the country while the stagnant stock and real estate markets have run up even more bad debts with the banks.
The State Bank of Vietnam (SBV) estimates that by the end of the first quarter of 2012, the bad debt rate stood at 3.6 percent, or over VND85 trillion (US$4 billion). Yet the figure is said to be higher due to lack of transparency in financial reports.
Pham Ngoc Hung, Vice President of the Ho Chi Minh City Business Association, states that restructuring should pay attention to how banks ‘look’ at businesses. The more difficulties the economy experiences, the more small businesses are affected and they find it even harder to access bank loans.
The banks themselves say that they want to lend to businesses, based on their financial transparency and how feasible their projects are, but businesses’ financial reports are unreliable.
Vo Thanh Ly, Deputy General Director of the Mekong Housing Bank, says that his bank is ready to share the economic burden when businesses meet all requirements laid down by the SBV.
AirAsia expands operations in Vietnam
Asia’s biggest budget carrier, AirAsia, will operate more flights from Southeast Asian nations to the central coastal city of Nha Trang in Vietnam.
The airline opened a route to Danang earlier this year, and has continually expanded its operations in Vietnam by launching more flights between Vietnam and other regional countries.
AirAsia has been known as the region’s best low-cost carrier for many years and is operating long distance flights from Malaysia to China, Japan, Newland, the Republic of Korea and Australia.
Rice exports surge in five months
Vietnam exported 2.5 million tonnes of rice in the first five months of this year, earning more than US$1 billion, according to the Vietnam Food Association (VFA).
In May alone, nearly 790,000 tonnes of rice was shipped abroad, the largest volume since January 2010.
However, the VFA says, the export price of Vietnamese rice has dropped significantly in recent months.
VFA Deputy Chairman Pham Van Bay attributes the steep decline to a sudden increase in the supply of rice from other Asian countries, including Thailand.
The Thai government is currently negotiating trading rice with Indonesia and Bangladesh – two major importers of Vietnamese rice, Bay adds.
However, he says, Vietnamese rice exporters will maintain their secure foothold in these markets as the price of five-percent broken rice from Thailand is always higher than that from Vietnam.
The VFA will announce the price of rice for the 2012 summer-autumn crop soon and make plans for its allocation and consumption.
Bac Lieu attracts investment into key projects
Bac Lieu is calling on domestic and foreign businesses to invest in key projects, especially in agricultural infrastructure.
The province has planned to develop its rural transport, irrigation, electricity and communication systems to serve local production and people’s daily life.
It will upgrade Ganh Hao port at a total cost of VND600 billion and build high-tech agricultural production zones valued at VND1,362 billion.
Nguyen Quoc Nam, Vice Director of the provincial Trade, Investment and Tourism Promotion Centre, said the province has offered a number of incentives for investors, such as financial preferences, land rental and corporate income tax, reduction and/or exemptions and employee training support. It has timely dealt with their difficulties to create the best environment for investors.
Despite difficulties, Bac Lieu province has achieved a relatively high economic growth rate of 11.87 percent in the first half of this year.
Its industrial production value increased by 11.8 percent to nearly VND1,600 billion.
The province harvested 346,100 tonnes of rice, up 13.38 percent and 130,000 tonnes of aquatic products, up 18.6 percent.
PM approves US$147 mln urban development project
Prime Minister Nguyen Tan Dung has recently approved an urban development project along the corridor of the Greater Mekong Subregion (GMS),worth US$147,2 million, of which US$130 million is sourced from the Asian Development Bank (ADB).
The project aims to expand roads, build waste-water treatment plants and river dybe systems, improve water supply systems, and enhance urban management capacity.
It will held support local socio-economic development and turn traffic corridors into real economic corridors.
The project is scheduled to be implemented from 2013 to 2018.
State construction firms to be equitised
The Ministry of Construction announced plans to equitise eight State-owned enterprises, of which four are general corporations established in the 1990s and four others are corporation member companies.
Once equitised by the target date 2015, the State will hold 65 per cent of charter capital of Viet Nam National Construction Consultants Corporation (VNCC) and more than 50 per cent each of Construction Company No 1 (CC1), of Building Materials Corporation No 1 (FICO) and Viet Nam Urban and Industrial Zone Development Investment Corporation (IDICO).
IDICO will hold more than 50 per cent of the charter capital of the to-be-equitised Urban and Industrial Zone Development Investment Ltd (IDICO-UBIZ). Meanwhile VNCC will keep more than 50 per cent of Union of Survey Company Ltd (USCo).
In the meantime, the ministry asked the corporations and their member companies to solve debt problems and restructure capital.
Deputy Minister Tran Van Son said there remained difficulties in equitisation since the targeted enterprises were of large scale with investment capital scattered in businesses across the country. Equitisation therefore would take time, he said.
Between now and 2013, the enterprises had to focus on restructuring member companies and sparing capital for major investment fields in order to smooth the operations of the equitised corporations and companies.
However, the sales of the shares of the equitised enterprises with big volumes would not be an easy task, particularly at a difficult time for the stock market.
To facilitate the equitising process, the Construction Ministry proposed that the Government announce appropriate regulations in appraising business properties in industrial zones and residential areas; valuing land use rights of areas allocated to build accommodation for workers in industrial zones.
Regarding equitisation policies applying for those specialising in consultantcy and training services, the ministry asked for a modification to encourage high quality staff to continue working for a business after equitisation.
New checks for seafood exports
The Minister of Agriculture and Rural Development Cao Duc Phat has decided to revise some measures to check the chemical and antibiotic residue on seafood before being exported to Japan and Canada, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).
The minister has annulled Decision 2654/QD-BNN-QLCL, effective from 2011, on strengthening the control of Enrofloxacin and Ciprofloxacin residues and testing from samples of 100 per cent of consignments of shrimp, tra and basa fish or processed seafood products before exporting them to Canada and Japan.
The ministry will conduct strict inspections on consignments processed by domestic seafood producers which Japan has warned of violating food safety laws against chemical and antibiotics residues. The violated seafood producers will be permitted to lift the inspection only when they satisfy essential requirements under the current regulations.
This adjustment was made after the Vasep made its recommendation to the Minister to ease difficulties for domestic seafood producers.
According to VASEP, the Law on Food Safety effective from July 1, 2011 clearly states that the certificate of origin and certificate of sanitation are issued only as requested by importers. However, Japan does not require the inspection and issuance of certificates from exporters.
Industrial zones draw investors
Industrial and economic zones in northern cities and provinces have so far attracted more than 3,000 domestic and foreign-invested projects worth more than US$40 billion, according to reports at a meeting held in the central province of Thua Thien-Hue late last week.
Addressing the meeting of management boards of the zones, chairman Pham Thuyen said that the zones’ projects accounted for nearly 40 per cent of the total number of projects invested in industrial and economic parks across the country.
Major zones that have operated efficiently include Dinh Vu-Cat Hai in the northern port city of Hai Phong and Van Don in Quang Ninh province.
Attendees said that the zones had contributed significantly to the economic and social development of the cities and provinces. However its works on environment protection, accommodation for workers and taking care of employees’ living conditions remained inadequate.
They said that policies related land clearance and investment attraction to the zones, especially those in disadvantageous areas, should be supplemented to help the zones better grow.
To make industrial and economic zones to further develop, the Ministry of Planning and Investment has recently planned to scrutinise the existing policies to be able to launch new and more effective regulations for the zones this year.
However, the ministry also urged the zones authorities to focus on their planning and expanding registered projects in conformity with the country’s socio-economic development and with consideration of local strengths.
The zones authorities should also prioritise high-tech Northern industrial and economic zones accommodate over 3,000 projects.
VN, Iranian firms urged to accelerate co-ordination
There is still untapped potential for Vietnamese and Iranian enterprises to further accelerate co-ordination, the Iranian Ambassador to Viet Nam, Hossein Alvandi Behineh told the Viet Nam-Iran Business Forum yesterday in Ha Noi.
Besides trade, the ambassador also outlined investment, energy, agriculture, seafood, construction, pharmaceuticals, food, garments and tourism as promising sectors for bilateral co-operation between the firms in the coming time.
Insufficient information about each other’s economy and trade and a lack of understanding remained major challenges for the two countries’ businesses to enhance co-ordination, said S Seyed Babaei, managing director of Iranian ENN Complex, which provides consultancy and training services for managers.
Currently, many Vietnamese goods were imported to the Iranian market through intermediary companies. Thus, direct sharing of business opportunities was necessary, the director cum the head of the Iranian business delegation said.
Another delegation of large Iranian companies will come to Viet Nam late this year to seek opportunities in the country, he said, calling for a similar move from the Vietnamese business community.
Le Thai Hoa, deputy head of the Ministry of Industry and Trade’s Southwest Asian and African Market Department agreed that accelerating the exchange of business delegations and organising business forums were necessary for closer co-operation.
Conducting market surveys in each country and carrying out trade promotion activities should also be included, he said.
He encouraged firms to make use of existing channels for information on the business environments and opportunities, such as chambers of commerce and industry, embassies, and other trade promotion institutions of both sides, as well as take initiatives to participate in trade fairs and exhibitions in each country.
The bilateral economic relations between the two nations have developed significantly over the past years. Two-way trade hit US$186 million last year and $52 million in the first five months of this year.
Among Viet Nam’s key exports to Iran are tea, seafood, steel, machinery and rubber.
HCM City apartment builder gives payment extension
Tan Binh Investment and Construction Joint Stock Company, developer of the Tan Mai apartments in HCM City’s Binh Tan District, is giving buyers a three-year period to pay after making a down payment.
They would have to pay 35 per cent of an apartment’s value up-front and pay the rest in monthly instalments but without interest.
The company is also offering a 12 per cent discount for customers making full payment.
Pham Thi Phuong Lien, its director, said around 60 apartments are on sale in this the second phase of selling.
French business delegation studies opportunities in VN
A delegation of seven French businesses starts a four-day working visit today to study Viet Nam’s mechanical engineering industry. The visit is conducted by the French Trade Office, Ubifrance.
The four-day working visit will help French businesses further understand business performance and grasp opportunities and special characteristics of Viet Nam’s market so as to create a sustainable economic, industrial and technological relationship.
Viet Nam now has to import almost all its equipment for the mechanical engineering industry, a total import value up to US$20 billion last year.
Ha Noi tops TripAdvisor list of low-cost destinations
Ha Noi has topped the list of cheapest global tourist destinations in the summer of 2012, according to the Trip Index recently announced by the world’s largest travel website ‘TripAdvisor’.
The rating is based on the average cost of one night’s accommodation for two at a four-star hotel, including dinner and return taxi fares over a 3.2 kilometre route.
The other cities from Asia are Beijing, which came in second, closely followed by Bangkok and Kuala Lumpur.
Cities in Europe have once again come out as the most expensive destinations.
The most expensive is London, followed by Oslo in Norway, Zurich in Switzerland, Paris in France and Stockholm in Sweden. The results were from a survey of US cities, which received the largest number of international visitors during the period from June 1 to August 31.
Cable maker to scale back operations
Sai Gon Cable (CSG) may reduce its charter capital as part of a move to downsize its scope of business and focus on its main product lines, but analysts are seeing the measure as a way for the company to substantially scale back its operations and defend itself from creditors.
“Meeting earnings targets this year is hardly feasible due to the declining telecommunications cable market,” CSG said. If the company fell into further difficulties with creditors, meanwhile, assets could easily be threatened.”
The proposed decrease in charter capital suggested that survival was the company’s top target, said independent financial expert Bui Dinh Nhu.
“I think this decision is no longer a rare case but signals a new trend of defense when the business environment throws up unpredictable risks,” Nhu said.
The plan would include two steps, CSG revealed. From June 28 to July 10, it would reduce its holdings of treasury stocks by a total of VND30.6 billion (US$1.4 million), reducing capital to VND266.8 billion ($12.7 million). In the subsequent step, from June 29 to August 17, the company would require all of its shareholders to sell back 80 per cent of the shares they held at a price of VND13,000 per share, reducing the company’s charter capital to VND53.4 billion ($2.5 million).
At its general shareholders meeting in April, CSG had asked shareholders to dissolve the company. While nearly 65 per cent of the shareholders agreed to the proposal, the proposal required a supermajority of least 75 per cent.
By buying back shares, the company said it would ensure fairness to all shareholders. “Furthermore, a reduction in capital would limit the downsides of outright dissolution,” the company said.
Nguyen Thanh Binh, an investor in Ha Noi, also commented that this plan was preferable for both small and large shareholders. “The offer price of VND13,000 per share is quite reasonable,” Binh noted.
Hanoi to cut tax and customs fees up to 15%
The Hanoi municipal People’s Committee will cut tax and customs procedure fees for individuals, organisations and businesses by 10-15%, in response to Government Resolution No.13/NQ-CP issued on May 10, 2012, aiming to ease difficulties for businesses.
The city authorities will carry out synchronous measures to assist businesses including delaying the payment of value added tax (VAT), corporate income tax and land use taxes, as well as lowering lending interest rates and restructuring business loans.
The municipal leaders will also accelerate capital disbursement for projects funded by the State budget and administrative reforms related to production, business, investment, taxation and customs.
The electronic banking and tax declaration systems will also be boosted to facilitate easier payment and reduce the necessary time for customs clearance.
Shrimp breeders put off by absurd insurance policies
Shrimp breeders in the Mekong Delta have been suffering severe losses over the years with diseases ravaging large shrimp farming areas, yet they seem least interested in insuring their shrimp crops as absurd insurance policies along with lengthy, complicated and unnecessary procedures have only put them off.
According to a Government pilot project for agriculture insurance, poor households will receive back as much as 80-100 percent of the insurance amount. However, such a high return amount still fails to lure any of the shrimp breeders.
Nguyen Trung Thanh, chairman of the Ngoc To Commune People’s Committee in My Xuyen District of Soc Trang Province, said that the Commune has 420 poor households who breed shrimps but none of them wish to buy insurance cover.
According to Mr. Thanh, farmers feel intimidated from so much paperwork and red-tape.
For instance, the Bao Viet Insurance Company requires breeders to write down the breeding process and report to the Commune’s People’s Committee on the health condition of their shrimps every week.
In case shrimps fall sick, breeders must report to the Commune authorities within 24 hours. The Commune’s People’s Committee then has to inform the insurance company within 48 hours.
Related sides will come to take samples for testing. This process takes at least a few weeks.
Another problem is that the insurance premium amount for tiger shrimp and white leg shrimp is widely different. The rate on white leg shrimp is much higher than that on tiger shrimp.
Le Thanh Binh, an insurance agent and also an official of Ngoc To Commune, said that if a shrimp farm reports dead shrimps due to disease, its owner will not be compensated unless his Commune authorities proclaim an epidemic.
This regulation is absurd, as an epidemic means that the entire shrimp crop in the region would be more or less destroyed, said Binh.
Country has more retail outlets to stabilize prices
Under the price stabilization program, the country currently has 6,540 retail outlets where people can buy goods at prices 5-15% lower than market levels, which plays a vital role in controlling the domestic consumer price index.
The statistics was released by Deputy Prime Minister Hoang Trung Hai at an online meeting on the price stabilization program last weekend.
There were only 17 enterprises joining the program in 2002 but the number of participants has surged to 250 with total commodity value of around VND11 trillion.
In the coming time, the Government will reduce capital support for participating enterprises so as to minimize the state intervention, said the deputy prime minister.
In particular, HCMC now has 4,000 retail stores offering products at subsidized prices with 29 enterprises taking part in the program.
Thanks to preferential loans made available under the program, Vissan has offered consumers a large amount of pork at lower prices since it joined the initiative between 2003 and now, said Van Duc Muoi, general director of Vissan.
“From June 15, Vissan cut VND3,000- 5,000 on pork prices after calculating input materials costs,” said Muoi.
As of now, Vissian has taken out bank loans worth VND500 billion at preferential rate of 11.5% per year to purchase livestock for the price stabilization program.
Retail market potentials remain huge despite downgrade
Despite Vietnam losing its position among the top 30 attractive retail markets worldwide as surveyed by the U.S.-based A.T. Kearney Consultancy Group, experts said the country remains a destination of choice for retailers. However, they point out the application of Economic Needs Test (ENT) coupled with local economic hardship as the reason why Vietnam is de-listed from the top 30 attractive retail markets worldwide.
Tran Nguyen Nam, deputy head of the Domestic Market Department under the Ministry of Industry and Trade, said such a result is not surprising although Vietnam used to be the world’s most appealing retail market in 2008.
Under the commitments made to the World Trade Organization (WTO), Vietnam will open door to international investors, and foreign retailers are allowed to establish wholly-owned companies. However, in fact, the country still limits the number of foreign retailers opening businesses in Vietnam to protect local distributors, said Nam.
He stressed ENT is the main reason why Vietnam has lost its appeal to foreign retailers. ENT is a technical barrier and dissatisfaction with this barrier is reflected by international distributors.
Under WTO commitments, foreign retailers are free to open their first retail outlets, but from the second ones onwards, they have to comply with ENT. Foreign investors who want to set up chains of supermarkets and retail stores must apply for licenses for each store.
Local trade departments adopt a lot of criteria to decide whether to grant licenses or not. This is why many foreign distributors have difficulties getting business licenses.
Another obstacle, Nam said, is poor infrastructure and high rentals.
Pascal Billaud, CEO of Big C Vietnam, said infrastructure development always costs the most capital. Meanwhile, Nguyen Thi Anh Hoa, owner of the CitiMart supermarket chain, stressed rentals make up 50% of the operational budget for a supermarket.
High interest rates result in rising domestic goods prices, forcing consumers to tighten their purse strings. This is another reason for the less attractive retail market.
Hoa of CitiMart said the rankings of A.T. Kearney will not affect the business plans of investors who have thoroughly studied the Vietnamese retail market.
She informed several foreign distributors have shown interest in entering the local market via the business network of CitiMart.
Despite the aforesaid obstacles, international retailers still find Vietnam a potential retail market.
Billaud remarked Vietnam, with a population of nearly 90 million, is one of the most dynamic emerging markets in South East Asia. Consumer goods sectors have kept growing, creating a foundation for the development of a consumption market.
The fact that inflation was well restrained in the first half of 2012 improves purchasing power of consumers.
In the distribution sector of Vietnam, modern shopping makes up less than 20% of the total revenue with weaker competition than in the neighboring markets. Therefore, potentials for retail development remain huge, stated Billaud.
This explains why the operational foreign distributors in Vietnam such as Big C, Parkson, Metro Cash & Carry, Lotte Mart and Family keep expanding their networks, while large international distributors like Aeon and E-Mart are still ready to join the playground.
Cash flow expected to go into real estate
No one can tell when the frozen property market starts to thaw, but given that deposit rates go down sharply, while other investment channels become less attractive, cash flow is expected to run into the real estate sector in the coming time, said a leader of the Ministry of Construction.
People still keep a huge amount of money, estimated at US$25-40 billion, and part of the savings will flow into the property sector in the coming time, Deputy Minister Nguyen Tran Nam told European entrepreneurs in HCMC on Saturday.
With the deposit rate ceiling slashed to 9% per year, savings is no longer an appealing investment channel. Meanwhile, the fact that gold and foreign currency channels are under strict control makes investors hesitant, said the deputy minister.
In addition, forex rate is forecast to remain stable as the country’s forex reserves are quite large. Given that many businesses have to shut down, the stock market also becomes less attractive to investors, he added.
Nam after referring to such factors predicted the cash flow will change direction to the realty market, but the point is it will take time for homebuyers and investors to regain their confidence in the market.
“The frozen property market will thaw, but not immediately like ice melts in your glasses, instead it will warm up gradually in line with the recovery of the economy,” the deputy minister told the European Chamber of Commerce in Vietnam (Eurocham) at the meeting in HCMC last Saturday.
The property market is seen as a locomotive of the economy. Once this market runs into troubles, it will lead to sluggish liquidity and rising bad debts in the banking system, Nam explained.
However, the measures to restore the realty market must be put in the general context of the economy when the Government is still on the alert for high inflation to rear its head, he stressed.
In the short term, all housing projects in new urban areas are removed from the loan-discouraged list and the projects slated for completion in 2012 are allowed to take out new loans. As such, real estate firms can have easier access to credit with lower interest rates.
The current challenges have eliminated non-professional investors from the market and forced other players to restructure themselves to supply products meeting the market demand.
Nam expected the real estate market will warm up gradually in the late 2012 and make recovery in 2013.
Loosened credit has sparked a ray of hope for the property market. Instead of waiting for the market to turn rosy, several investors are seeking ways to approach potential customers, especially end-users.
Thu Duc Housing Development Corporation (Thuduc House) is putting up for sale 100 apartments in the two projects TDH-Truong Tho in Thu Duc District and TDH-Phuoc Binh in District 9, HCMC with incentives and flexible sales policy. The apartments are offered at VND14.9 million per square meter, or some VND950 million per unit.
Thuduc House has also launched 38 land plots of street-front houses in the Antigone commercial town in District 9 at prices ranging around VND19.5-26 million a square meter.
Meanwhile, HVK, a joint venture between Hung Viet Co. and KRDF03 of South Korea, is seeking buyers for The Eastern condo project in HCMC’s District 9. The project owner has launched the first 100 apartments priced at VND1.2-2.4 billion each.
Similarly, Singapore-based property developer CapitaLand is exploring the purchasing power of the market for the project PARCSpring in District 2. This is one of the two mid-end projects with some 1,700 flats that the group is developing in HCMC
Park Jong Woo, deputy general director in charge of sales and marketing at HVK, said the latest interest rate cut creates prospect and motivation for economic recovery. The market has shifted focus from investors to people with real needs for housing.
“Despite the unstable property market in Vietnam at present, it is obviously a dynamic market with enormous potentials,” said Park.
Smart City Week 2012 slated for Oct 29-Nov 2
Nikkei Business Publications said in a statement that the “Smart City Week 2012” international conference and exhibition will be held at the Pacifico Yokohama to make suggestions for and introduce Japan’s approach to urban reconstruction to the rest of the world.
“In Japan, toward urban reconstruction in the wake of the Great East Japan Earthquake, people are continuing to search for a new smart city image incorporating safe and sustainable concepts,” the statement says.
“As a first step in our advance from the concept stage to the stage of implementation, we hope that discussions at Smart City Week 2012 will provide some hints and at the same time serve as an opportunity to transmit Japan’s approach to urban reconstruction to the rest of the world.”
The forthcoming event – which is slated for October 29 till November 2 this year – will be bringing together the cities, the people and the hardware needed to draw their roadmap to business growth, Yosuke Mochizuki, executive organizer of Smart City Week 2012 and director of NikkeiBP Cleantech Institute, says on http://expo.nikkeibp.co.jp/scw/2012/exhibitors/english/.
In Smart City Week 2011 speakers from Japan, Europe, the U.S. and emerging countries gave insightful input on the present state of smart city projects.
Based on the New Smart City Declaration issued in light of those speeches, this year key persons involved in smart city projects worldwide, and central and local government personnel are expected to attend the international conference to look into specific examples of smart city business, directions for and business models in the smart city market.
An exhibition and numerous seminars on constituent elements and elemental technology will take place during the event.
Businesses seek markets for unsold products
Many businesses are seeking ways to reduce their inventories by promoting and diversifying distribution channels from urban to rural areas, with a focus on traditional markets.
Speaking at a seminar held by the Association of High-Quality Vietnamese Goods Producers last Friday in HCMC, Nguyen Thi Hong Huong, general director of the Binh Duong-based TDM Company, said the demand for cheap products at industrial parks and rubber plantations is huge.
TDM has joined forces with a company with a 10,000-strong labor force at an industrial park to open an 80-square-meter convenience store nearby, which is now operating very effectively. Huong said on normal days the store gains at least VND20 million in revenues, which doubles on payday.
The company also shipped products to 11 rubber plantations in Binh Duong, and “all goods there sell well”.
To cope with 32,000 units of ready-made garments in stock since mid-2011, the private garment firm Phuc Long in HCMC has cooperated with a company in Binh Phuoc to deliver goods to traders at remote markets in Binh Phuoc, Dac Nong and Gia Lai provinces.
Producers of Chinsu fish sauce and My Hao dishwashing liquid have put their products on shelves at traditional markets. These two companies have the best-laid plans to bring their products to traditional markets, said experts
Meanwhile, Vissan is spending VND150 billion reforming its delivery system. Vissan general director Van Duc Muoi said 1,000 dealers nationwide are being turned into distributors.
Other enterprises like Nguyen Tam Foci and PNJ are promoting online sales, with higher discount rates and promotions for holidays.
The most applied methods are discounts, promotions, sharing profits and adding shelves.
Surveys show that up to 70% of products sold at traditional markets are of Chinese origin and unknown origin, but consumers no longer like Chinese goods and as such Vietnamese enterprises should seize opportunities to fill such a void.
Stricter requirements set on rice mills
Rice mills must set up laboratories in the coming time to meet new criteria for processing rice for export, a move by an agency under the agriculture ministry to cut down the number of players in the sector.
In order to get qualification certificates for processing rice for export, rice mills must establish laboratories equipped with specialized analytical and experimental devices to classify paddies.
In addition, processing facilities are required to have grinding and milling lines with a minimum capacity of 10 tons per hour, according to the draft regulations prepared by Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production under the ministry.
A representative of an enterprise said with the earlier release of Decree 109 on rice trading, policymakers wanted to reduce the number of rice exporters to around 100, or half of the previous number. However, 150 enterprises have satisfied the requirements of the decree.
Therefore, the imminent issuance of the new standards for the food sector is aimed at nothing other than cutting the number of qualified rice exporters to 100, as the new regulations require enterprises to invest more, the source said.
According to Cuu Long Milling Enterprise under the Food Company of HCMC Ltd. (Foocosa), a color separation machine to improve the quality of finished rice products, especially fragrant rice and high-grade rice, together with a rice mixing system, costs more than VND2 billion.
Do Van Nam, director of the agro-forestry-fisheries department, declined to give comment on the draft regulations prepared by his agency.
The draft standards also demand rice mills to have bathrooms with sinks and sanitary equipment, located in convenient places away from the production areas. More specifically, enterprises must set up at least one bathroom for every 25 workers.
In explanation for this requirement, the agro-forestry-fisheries department said the inspectors had found that many processing facilities in the Mekong Delta lacked bathrooms for workers.
Hospital leaves the province in fine health
Northern Hai Duong province is to get an international standard hospital following an investment agreement between Dai An Industrial Park’s developer and Canada’s Trip Eye Company.
The agreement was signed in Canada during a recent business visit led by Hai Duong Provincial People’s Committee chairman Nguyen Manh Hien. The 200-room hospital which will see $160 million spent on the first phase is expected to start construction in early 2013 and come online in 2015 to serve 20,000 workers at the park and the public.
“We are working with the investor so that the project will take shape soon,” said Mai Duc Chon, Hai Duong Provincial Industrial Parks Management Authority director. About half an hour drive from Hanoi, Hai Duong is emerging as one of Vietnam’s top destinations for given its geographical location and synchronised policies.
The proposed hospital will meet Vietnam’s growing need for quality medical services as the nation has 20.5 beds for every 10,000 citizens. This ratio is low compared to 33 considered to be the minimum level set by the World Health Organization. It is 86 in South Korea and 140 in Japan.
In a similar development, foreign-invested City International Hospital, first hospital in the International Hi-Tech Healthcare Park (IHHP) developed by Hoa Lam-Shangri-La, is on track to complete the construction by the end of 2012.
The hospital, consisting of 319 beds, will be managed by Singapore-based private healthcare group ParkwayHealth. The $400 million IHHP, covering around 37.6 hectares in Ho Chi Minh City’s Binh Tan district, is a fully integrated ‘Medical City’ with approximately one million square metres of gross floor area upon completion and 1,750 beds. It is expected to be developed over a period of 10 years.
Besides, domestic Vingroup in January this year officially put a 600-bed hospital in Hanoi into operation and is the largest private hospital in Vietnam at the moment. The hospital has 19 departments with 31 specialties and intensive support and high-tech units. In particular, Vinmec is the first hospital in Vietnam to offer single patient rooms, including 25 VIP rooms and two president suites, furnished to five-star standards.
QTSC looking for tax breaks for its investors
Vietnam’s biggest software park has asked the Ho Chi Minh City to exempt individual income tax for its investors.
The proposal is designed to help Quang Trung Software Centre (QTSC) investors keep their heads above water in current difficult times. QTSC chairman Chu Tien Dung last week told Ho Chi Minh City’s People Council’s delegates that QTSC needed to remain competitive to attract software investors to Vietnam.
The QTSC, presently home to 102 software and IT services firms, received many incentives during 2010-2011. However, since the QTSC transferred from a company under the direct management of the city’s Department of Information Technology to a member limited liability company in 2011, some incentives came to an end, said Dung.
Dung said investors in the park now had to wait longer for an investment certificate and many investors asked QTSC for offering them preferential policies in assessing land prices, instead of market-based prices.
“I suggest the government continue to support enterprises and IT experts working in our focused software centre by exempting personal income tax (CIT),” said Luxsoft Vietnam managing director La Manh Cuong.
Mai Dinh Tiep, manager of Mai Anh Nam – investor of Anna Building in the QTSC, said CIT exemption would help specialised IT enterprises increase competitiveness amid the downturn.
Currently, 75 per cent of products and services of investors in QTSC serve overseas markets. When the economic crisis broke out, some big customers in America and Europe moved to Vietnam for software outsourcing to make use of cheap costs in Vietnam.
Last year, enterprises in QTSC generated revenue of $95 million, with $49 million from foreign markets.
Of the 102 investors in QTSC which occupy 93 per cent of the park, there are many prestigious multi-national companies such as HP, SHP Far East, IBM, Global Cybersoft, Luxsoft with production and research and development activities.
More than 22,000 people are working and studying in the park with the annual force labour growth rate at over 25 percent.
Recently, the Vietnamese government decided to expand the QTSC model to a series in provinces and cities nationwide. A plan to build the second QTSC in Ho Chi Minh City is also on the table.
JFE leading way to zone
High-profile Japanese investors plan to follow JFE Steel Corporation to Vietnam’s central Quang Ngai province after it moved to acquire a major stake in E-United Group’s $4.5 billion project.
The Dung Quat Economic Zone Management Authority last week received a group of Japanese investors who expressed interest in investing in Dung Quat Economic Zone, to supply the world’s sixth largest steel-maker.
Le Van Dung, management authority deputy director, said JFE Steel Corporation had significantly contributed to make the zone more attractive to investors, adding that other Japanese investors had contacted the authority to learn about its investment climate.
“After an investment by a big investor, there are always investments from suppliers. We expect to see a boom of Japanese investment here soon,” said Dung.
JFE had proposed to build a new steel manufacturing factory in Dung Quat in 2008, but it was never implemented due to global economic recession. However, E-United Group’s project has proved just the ticket.
JFE, two months ago, announced it had signed a memorandum of understanding with the Taiwanese group to study the feasibility of building and operating an integrated steelworks in the zone, for which JFE Steel would be a majority shareholder.
A source at Guang Lian Steel, a subsidiary of E-United Group, said both sides were examining the feasibility of building and launching by 2016 a steelworks with an annual capacity of 3.5 million tonnes.If the study reaches a favourable conclusion, JFE would partner E-United to launch a steel production operation in Vietnam.
Retailers ignore price listing rule
The pilot system for street trading requiring the use of listed prices on Ba Trieu Street, in Hanoi, seems not to have been effective, as many retailers have ignored the regulation.
District authorities have informed all local traders about the programme. Since June 15 any stores caught violating the new rules will be subject to administrative sanctions. Still, on the afternoon of June 16, many stores had failed to comply.
Large stores in the commercial centre have been quick to list prices of their products, while a number of smaller stores used price tags but did not honour them.
Numerous clothes shops on the street did not even bother putting on false price tags. Shop owners claimed that their items were so cheap that they did not require tags, and that it would be too labour intensive to use them.
The owner of a coffee shop where drinks were listed but food was not, said “Food prices fluctuate all the time. We’d have a lot of trouble explaining to customers why prices have gone up if we added prices to the food menu.”
One furniture store on Ba Trieu Street priced their items in chalk. Others hung signs outside with one price for all products. However, once inside, prices varied, and some were not marked at all, leaving customers to bargain.
Stores selling expensive items like motorbikes were also in violation of the regulation.
A bike shop owner at 190 Ba Trieu Street said, “We are waiting to see how other shops react to this new regulation. However, listing prices isn’t an effective way to protect consumers. Prices among shops selling same products can differ anywhere from tens of thousands of VND to several of hundred thousand. If customers don’t shop around they will end up paying high prices.”
A shop owner who sells roasted peanuts also complained about the rule, saying, “Even though we sell the same thing every day, prices differ between wholesale and retail sales. They also depend on whether the order is for delivery or not.”
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