Business in brief 12 June, 2013
State sets new lending rates for VND loans
The Ministry of Finance issued a circular to set lending interest rates for State credit in Vietnamese dong for exports at 11.4 per cent per annum.
The news was reported by the government’s e-portal Chinhphu.vn.
The ministry also set lending rates for State credit in Vietnamese dong for investments at 9.3 per cent p.a.
The circular came into force on Tuesday.
HIPC borrows VND555 billion from VietinBank
Hiep Phuoc Industrial Park Joint Stock Company (HIPC) signed a contract on Tuesday to borrow VND555 billion (US$26.4 million) from the Viet Nam Bank for Industry and Trade (VietinBank).
The loan will enable the HIPC to continue with its second development stage.
In this stage, the industrial park will be expanded by around 600ha to house enterprises using environmentally friendly and advanced technology.
HIPC will focus on enterprises in the fields of high-class building materials, precision engineering, equipment manufacturing, food production, shipping and warehouse services.
In the first stage, the industrial park will cover around 310ha, attracting 95 enterprises with total investment of $471 million.
MoF may increase export tax on woodchips
The Ministry of Finance is collecting opinions on a tentative scheme to increase the export tariff on woodchips from 0 per cent to 5 per cent.
Limiting woodchip exports as proposed by the Ministry of Industry and Trade was necessary to avoid exploiting young timber and to reserve materials for domestic production, the ministry said.
Although exporting woodchips helps forest planters earn a higher price, they are still a raw material, so exporting them is inefficient, according to the Ministry of Industry and Trade.
Last year, the paper industry needed around 822,000 tonnes of pulp, with around 480,000 tonnes supplied by over 50 local plants and the rest imported.
According to the General Department of Customs, woodchip exports have increased steadily over the years, going from 4.13 million tonnes worth US$459.5 million in 2010 to 6.1 million tonnes worth $827.6 million this year.
Investors snap up Government bonds
The State Treasury sold out VND2 trillion (US$95.2 million) worth of five-year term bonds on Thursday. The bonds’ yield was 7.3 per cent per year, a decline of 0.48 per cent compared to the previous bidding.
Meanwhile, the Bank for Social Policies sold only half of its bond value yesterday. Among VND1 trillion ($47.6 million) worth of three-year and five-year bonds, VND500 billion ($23.8 million) of three-year bonds was sold, yielding 7.5 per cent.
VN’s richest men increase asset value
The value of shares held by the top 20 richest stock market investors hit over VND53.5 trillion (US$2.5 billion) in May, up 8.3 per cent from the previous month.
Former Sacombank (STB) chairman Dang Van Thanh and his son Dang Hong Anh left the top 20 after the bank sold their shares to clear debts.
Meanwhile, Pham Nhat Vuong – Vingroup chairman and the richest member of the list – added VND1.7 trillion ($80.9 million) to have VND19.3 trillion ($0.9 billion) in assets after partnering with investment fund Warburg Pincus.
In addition, steelmaker Hoa Sen (HSG) chairman Le Phuoc Vu rose to the seventh place as a result of inviting the limbless motivational speaker Nick Vujicic to Viet Nam
Fishery firm ups profit by 31 times
Fishery Commercial Investment Corp (ICF) hopes to increase this year’s revenue and net profit to VND424 billion ($20.1 million) and VND14.8 billion ($704,700).
The revenue figure represents a triple increase from last year, while net profit would jump almost 31 times.
The share closed yesterday’s session up 2.9 per cent. However, market value is low at just VND3,600 ($0.17) yesterday.
HCM City conference focuses on power of smarter technology
Smarter computing is the trend of the future as it allows enterprises to do more with less, speakers said at a conference in HCM City yesterday.
More than 1,000 attendees are taking part in the Technology Conference and expo at the city’s Intercontinental Hotel.
Innovative computing via smartphones and tablets are allowing companies to do more than ever before. But risks to data are higher as well.
The demand to protect data has grown as the amount of volume and different kinds of information have greatly increased.
By 2020, 450 billion online-business transactions are expected to occur each day, speakers said at the conference, held by IBM Viet Nam.
However, only one in five businesses are able to allocate more than half of their IT budgets to innovation, the conference heard.
Smarter computing, including leveraging cloud technology and unlocking the power of big data, saves companies and individuals time, costs, power and space at data centres.
Provinces hit magical export mark
Five provinces and cities registered export revenues of over US$1 billion in the first four months of 2013, according to the General Department of Customs.
HCM City was the largest exporter with $9.367 billion in the four months ending in April, followed by northern Bac Ninh and southern Binh Duong provinces, which earned $6.848 billion and $4.253 billion, respectively.
Southern Dong Nai Province came fourth, recording $3.296 billion, and Ha Noi was fifth with exports reaching $3.1 billion.
Other localities posting export revenues close to the $1 billion mark included Hai Duong, Hai Phong and Long An with $965 million, $924 million and $836 million, respectively.
In contrast, a number of provinces in the northern mountainous region reported disappointing export figures of less than $1 million for the January-April period.
Lai Chau, Bac Kan and Son La were the worst performers with corresponding export revenues estimated at $274,000, $570,000 and $906,000.
This is the first time the General Department of Customs has released a list of export revenues by separate localities.
Quang Nam draws tourism investment
Central Quang Nam Province has licensed four tourism projects with a total registered capital of VND2.27 trillion (US$108 million) over the past five months, an official from the provincial planning and investment department, Doan Ngoc Minh, confirmed yesterday.
He said the department had provided licences for 36 projects in the fields of garments, forestry processing, rubber plantation and ore exploitation with a total fund of VND3.8 trillion ($181 million).
"Tourism investment projects have shown the most rapid progress, accounting for 60 per cent of the province’s total investment projects over the past five months this year," Minh said.
"Phu Ninh eco-tourism, Agribank Hoi An and Trung Phu Hai resorts have been the biggest tourism investment this year," he said.
Minh also said the province had attracted 93 FDI projects with a capital of $5.2 billion, of which the Chu Lai Open Economic Zone alone licensed 20 projects with a registered investment of $4.2 billion.
Last year, the province hosted 2.8 million tourists, of which 1.3 million were foreigners, drawing revenue of VND1.4 trillion (US$67 million).
The province, home to world heritage sites Hoi An, My Son sanctuary and Cham Island biosphere reserve, had already attracted 110 tourism projects between 1997-12.
Investors had built 80 international standard hotels and resorts with a total 5,000 rooms while the provincial tourism industry had created 15,000 jobs.
Vice chairman of the provincial people’s committee Tran Minh Ca said the province was set to be the centre of the tourism industry among the central provinces by 2020.
Workshop covers CIO’s role in e-government
A workshop on the role of the Chief Information Officer (CIO) in developing an electronic government (e-government) in Viet Nam and the Republic of Korea (RoK) took place in Ha Noi on Tuesday.
At the event, organised by Viet Nam’s Ministry of Information and Communication, participants shared experiences in developing e-government and training CIO staff.
CIOs play a key role in defining a strategic vision and improving information technology (IT) application policies in order to develop e-governments.
They are also responsible for developing and expanding information systems and databases in agencies, sectors and localities, while instructing the making of policies and regulations on information safety.
Speaking at the workshop, Deputy Minister of Information and Communication Nguyen Minh Hong said Viet Nam had seen positive achievements in applying IT in state agencies and developing its e-government.
The movement would increase the transparency of state agency activities, as well as save time and money for agencies, organisations, enterprises and people, Hong stressed.
Viet Nam and the RoK have cooperated intensively in the field of IT and communication, especially in building policies and laws on IT, e-government and telecommunications.
In Viet Nam, IT application helps to ensure the country’s sustainable growth and development.
In the 2013-15 period, Viet Nam aims to develop its e-government through IT application in state agencies and provide level 3 online public services while striving towards a Connected Government by 2020.
Dollar sell rate peaks in Viet Nam
The State Bank of Viet Nam has been selling the US dollar with a cap of VND21,036 for the past two days after maintaining the price at VND21,005 for over a fortnight.
The new rate is the same selling price as commercial banks.
The buying price stayed at VND20,850 while the interbank rate is still VND20,828 against the dollar.
On the free market, the price also rose to VND21,280, up by VND40 compared to the previous day.
This was the second time in a month the central bank has pushed prices higher. On May 20, the dollar value also rose 0.26 per cent to VND21,005.
Some said that the increase on Thursday was due to increasing demand from commercial banks as interest rates on the domestic currency declined.
The central bank had halted the sale of foreign currencies to commercial banks for several days.
However, Vietcombank General Director Nguyen Phuoc Thanh said the demand for the US dollar to import goods had not risen significantly.
"The central bank will surely reduce the selling price to stablise the market," he affirmed.
Although demand climbed, the supply of foreign currencies was plentiful, Thanh added.
In the first five months of this year, the central bank bought around $5 billion, bringing foreign exchange reserves to over $30 billion.
The May trade deficit of $1.2 billion might also have an impact on the exchange rate.
The online newspaper vnexpress.net quoted sources saying that the State Bank had spent over a billion dollars on importing gold for its 27 auctions.
Agricultural sector poised for major revamp
A draft plan to restructure Viet Nam’s agriculture production to improve quality and sustainability has been heralded as the breakthrough needed following a downturn in the sector’s contribution to GDP and negative impacts on the environment.
Minister of Agriculture and Rural Development Cao Duc Phat told a conference on the draft plan that agricultural growth in recent years had been achieved mainly "through an increase in area" rather than focusing on sustainability, market forces and diversification.
Farming had reduced biodiversity, degraded natural resources and polluted water resource, Phat said.
Social capital in the agricultural sector was also distributed unequally, with 84 per cent being invested in irrigation systems to plant rice in the 2006-10 period.
"Over the past few years, we have focused too much on quantity rather than quality."
The annual growth rate of the sector in the past 10 years was 5.4 per cent but its share of total GDP had decreased from 24.5 per cent in 2010 to 21.6 per cent last year.
The time for band-aid measures was over, Phat said. "We need a radical solution."
Agriculture was crucial for the nation’s economic development and social and political stability. It ensured food security, created incomes for 70 per cent of the population and reduced poverty.
"Agriculture will have to compete for resources with other industrial and services sectors," Phat said, "and so will have to be more competitive on the basis of raising quality, value and food safety through structural adjustments and production technology improvements."
Nguyen Do Anh Tuan, an expert from the Institute of Policy and Strategic Policy for Agriculture and Rural Development, said the driving force for the robust growth of the agriculture sector in the 90s was favourable policies.
However, the previous policies were no longer effective, he said. Agriculture land was being taken over for industries and services while soil quality was being degraded through the overuse of fertiliser and pesticide.
Nguyen Lan Huong from the Food and Agriculture Organisation in Viet Nam, said the restructuring scheme being prepared by the Ministry of Agriculture and Rural Development, along with the support of international organisations, would be the breakthrough needed for the sector’s growth,
In the short run, the sector would implement a number of urgent measures, such as restructuring rice production towards reducing rice acreage in arid regions by approximately 200,000ha in favour of planting corn and soybeans.
The ministry would change farmers’ perceptions of paddy land so they would consider growing maize, potatoes, soybeans, vegetables or fruit trees, depending on the demand.
The Livestock Breeding Department would help households reduce costs and avoid losses while the Directorate of Fisheries would propose priority areas, solutions and strategies and encourage fishermen to become more effecting in off-shore fishing.
Under the draft scheme, the goal was to achieve average GDP growth in agriculture of 2.6 to 3 per cent per year in the 2011-15 period, and from 3.5 to 4 per cent during the 2016-20 period. By 2020, the income of rural households was targeted to increase by 2.5 times compared with 2008.
The investment in agriculture would be VND239.4 trillion (US$11.4 billion) for the 2011-15 period and increase to VND478.8 trillion ($22.8 billion) in the 2016-20 period.
The funds would be used mostly in rice planting and fisheries with the target of stabilising 3.8 million hectares of rice land, yielding a total annual output of 45 million tonnes. Investment in irrigation would not be a priority.
In aquaculture and seafood exports, shrimp would be a strategic product.
Phat asked that the draft restructuring scheme be ready for approval within this month.
Quang Ninh first to extend power grid to rural area
After two years of construction, the northern coastal province of Quang Ninh has become the first locality to complete a power grid for rural areas.
Under the VND370 billion (US$17.64 million) project, 178 transformer stations were built in the 2011-2012 period, bringing electricity to nearly 10,000 households in 12 districts, towns and cities in the province, local authorities announced yesterday.
The project aimed to create opportunities for economic development, improve the cultural and spiritual life of residents in remote areas and contribute to the successes of rural development programmes.
Minister of Industry and Trade Vu Huy Hoang yesterday asked the Northern Power Corporation and the Power Company of Quang Ninh province (PCQN) to continue cooperating with the province’s authorities to further improve power quality in deprived areas.
Dong Nai demands airport progress
Southern Dong Nai Province’s People’s Committee expects to speed up land clearance for the construction of the Long Thanh International Airport, which is slated to begin in 2015.
The construction planned to cover an area of over 5,000ha would affect 4,500 households in the province’s Long Thanh District, about 40km from HCM City. It is expected to surpass Tan Son Nhat International Airport and become the biggest airport in Viet Nam.
Speaking at a meeting about the preparation with Airports Corporation of Viet Nam and Japan International Co-operation Agency on Wednesday, vice chairman of the provincial People’s Committee Tran Van Vinh said the urgent task now was to speed up the land clearance and resettlement for households in affected areas.
Out of the 4,500 affected households, 3,000 would have to move to new areas, he said, adding that other facilities including religious buildings, schools and about 1,000 graves would be removed.
Compensation and resettlement would cost over VND15 trillion (US$714 million), he said.
He expected that project investors would arrange proper capital so that land clearance and compensation work would be started early next year and finish by 2015.
Vinh said that the province planned to develop two resettlements; each covers an area of 280ha.
The construction would need about 24,000 workers, he said, adding that the local authority would work closely with investors and contractors on employment for the dislocated residents to ensure their livelihoods.
Other facilities include water and power supplies, transport linkages and telecommunications were to be made ready for the construction work.
Long Thanh International Airport would cost an estimated 300 billion yen ($3.6 billion) for its major components, including the runway and air traffic control centre.
Mitsubishi Corp, Taisei Corp, Japan Airport Consultants Inc and Narita International Airport Corp used capital from JICA to conduct research on the project.
The airport is planned to become operational by 2020, when its capacity could reach 25 million passengers and 1.2 million tonnes of cargo per year.
By 2030, it is expected to have four runways and four terminals, one of the largest in the region with a designed capacity of 100 million passengers and 5 million tonnes of cargo every year, receiving 90 per cent of international flights and 20 per cent of local flights to and from HCM City.
Weather reduces coffee crop
Viet Nam is expected to produce a 25 per cent lower output of coffee this year against a record output of 315,500 tonnes last year, according to the Viet Nam Cocoa and Coffee Association (Vicofa).
The fall is due to lack of rain during the time coffee trees were flowering.
The Ministry of Agriculture and Rural Development (MARD) said coffee exports would slow down in coming months due to low stockpiles and slow sales.
The export of Vietnamese coffee fell by 29.9 per cent in April to 110,000 tonnes and was estimated to drop further in May.
Coffee exports in the first five months this year fell by 23 per cent in volume to 697,000 tonnes and by 22 per cent in value to US$1.49 million.
National stocks are low because growers sold a large volume of coffee when the price was VND43 million per tonne.
This could make coffee prices higher in coming months, the ministry said.
On Wednesday, coffee beans sold for VND41 million per tonne and the export price stood at $1,934 per tonne in the Tay Nguyen (Central Highland) provinces.
The association expects consumption of coffee on the world market to increase in the next 18 months from the 139 million bags (60kg/bag) last year.
Meanwhile, the world stock fell by 17.1 per cent to 15.1 million bags compared with the same period of last year.
In 2012, Viet Nam earned $3.5 billion from coffee exports, accounting for 5 per cent of the nation’s exports.
At present, coffee is grown on more than 500,000ha, but in an industry development plan, the Government wants to lower this figure.
To increase the quality of coffee plants, the association said one-third of the plants were ageing and need to be replaced.
It is forecast that in the next 10 years, about a half of the nation’s coffee plants must be replaced.
The association has sent a petition to the ministry asking for the establishment of a stabilisation fund for the development of the coffee industry.
The fund would come from coffee export revenue, plus money mobilised from the coffee-growers.
It has also asked the Government to lend the money to farmers at low interest rates.
Can Tho earns $162m from seafood
The southern city of Can Tho shipped abroad 57,000 tonnes of seafood in the first five months of this year, earning US$164.2 million or 33 per cent of the city’s total export turnover, local authorities have said.
The encouraging results were mainly attributed to the efforts of seafood enterprises in accelerating technical innovation to improve competition and better meet the needs of customers from Japan, the United States and the European Union.
Capital helps companies cut through the red tape
The municipal People’s Committee has established a steering board to help enterprises deal with administrative procedures in the latest move to help struggling firms recover.
The board has six working groups formed from relevant agencies and sectors. The director of the planning and investment department will lead a group promoting investments, speeding up construction projects and completing policies to enhance investment efficiency.
The finance department director is responsible for financial support and land rent reduction, while the director of the State Bank’s local branch is in charge of boosting lending and solving bad debts.
The taxation department head will address tax procedures, the deputy director of the construction department will focus on property market problems and the industry and trade department director will deal with reducing inventory and cutting production costs.
The People’s Committee assigned the planning and investment department to create a hotline to answer businesses’ queries, to which the steering board would have to respond within five to seven working days.
The committee asked the board to hold monthly meetings with enterprises and submit regular reports about their situation.
Admin reforms crucial to overcoming economic crisis
Furthering administrative reforms is crucial to improving Viet Nam’s investment environment and helping the nation overcome the current economic crisis, Deputy Minister of Justice Le Hong Son said at a meeting yesterday.
He said administrative procedures in Viet Nam are still costly and time-consuming, making the country less competitive than other countries in the region, discouraging foreign investors.
The Government needs to put an end to the long time taken to complete administrative procedures so that the country can attract more domestic and foreign investment, he said.
Other participants at the meeting said the Government needs to consider ensuring uniform administrative procedures in all 63 provinces and cities.
In many provinces, redundant and overlapping procedures are still common, they said.
Research done by the Justice Ministry’s Administrative Procedure Control Agency found that it took 155-340 days for getting an investment license for projects in the nation’s industrial parks, economic zones and export processing zones.
The agency suggested that this is shortened to between 125-180 days.
It also recommended that the time taken to get an investment license for a project that uses land outside industrial parks, economic zones and export processing zones is reduced to 335-450 days instead of the current 580-865 days.
The meeting was jointly organised by the agency and the International Finance Corporation, the private sector funding arm of the World Bank.
HCM City targets overloaded vehicles
The HCM City Cargo Transport Association has asked the Ministry of Transport to draw up a proposal on new fines related to overloaded vehicles and submit it to the Prime Minister for approval.
Nguyen Bat Han, deputy chief inspector of the city’s Department of Transport, said that current regulations include fines of VND3-5 million on drivers of overloaded trucks and withdrawal of licenses for one to two months.
Under those regulations, only drivers are held responsible for violations related to overloading trucks.
The association said that the leaders of ports, freight yards, industrial parks, export processing zones, and factories should be held responsible for overloaded trucks, as well as the owners of the transported goods and vehicles.
Han said that under current regulations it was impossible to resolve the problem of overloaded trucks, which damage roads and bridges and contribute to traffic accidents.
The association has recommended that overloaded trucks be checked at their departure points instead of on roads.
Ho Kim Lan, general secretary of the Viet Nam Seaports Association, said that seaport leaders were not involved in business deals regarding goods transport and should not be responsible for overloaded trucks.
It is the owners of the goods who should be blamed for overloading violations, he said.
Nguyen Minh Tam, general director of Tan Binh Import-Export Joint Stock Corporation (Tanimex), said that enterprises in industrial parks, which work directly with transport enterprises, should assume responsibility for the overloaded trucks.
"It is unreasonable to blame the problem of overloaded trucks on leaders of industrial parks, who only rent land and infrastructure to enterprises," Tam said.
Inspectors at the city’s Department of Transport have imposed total fines of VND20.5 billion (US$985,000) on nearly 6,600 overloaded vehicles this year.
Southern farmers celebrate solid winter-spring crop
The southern region has completed its harvesting of the winter-spring rice crop, with an average yield equal to last year’s crop, according to the Ministry of Agriculture and Rural Development.
The southern region, which planted more than 1.9 million hectares of rice in the winter-spring crop, has had an average yield of 6.67 tonnes per hectare.
The northern region has harvested 200,000ha of the winter-spring crop. It has planted more than 1.15 million hectares of rice in the winter-spring crop. Rice plants are developing well and promise to have a high yield.
The northern region is expected to harvest about 7.2 million tonnes of paddy in the winter-crop, down from about 52,000 tonnes because of a decline in cultivation area.
Northern provinces, especially the Hong (Red) Delta provinces, have also focussed on switching from planting low-quality rice varieties to high quality ones in the winter-spring crop.
The rice cultivation area under large-scale rice fields in the north has also continued to increase.
Eighteen of 31 provinces and cities in the north have set up 495 large-scale rice fields with a total area of 32,000 ha in the winter-spring crop.
As of the middle of May, the southern region has sowed more than 1.38 million hectares of the summer-autumn rice crop.
Of the figure, the Cuu Long (Mekong) Delta, the country’s rice granary, accounts for 1.27 million tonnes.
Besides rice, the country has planted 1.1 million hectares of cash crops and short-term industrial plants in May, up 10.5 per cent against the same period last year.
Aussie firm plans record seaport in Ca Mau
An Australian firm has unveiled a plan to build a US$3.5 billion deep-water seaport on Hon Khoai Island, roughly 15km off the southwest coast of Nam Can District in the southernmost province of Ca Mau.
The Ca Mau People’s Committee has submitted a proposal to build the port to the government, and is awaiting official approval pending the project’s inclusion into the national zoning plan for ports.
Meanwhile, Australia-based N&M Commodities Pty Ltd is completing necessary administrative procedures for going ahead with the project.
According to Ca Mau Province’s Department of Planning and Investment, the 320ha deep-water port will have 12 transshipment berths. Six of these will be used for loading coal, two for transporting containers, two for transporting oil, and the rest for other commodities.
The transshipment berths will be deep enough to receive vessels of 250,000 DWT.
The total investment for the project is estimated at $2.9 billion, of which $1.1 billion will be used for building facilities and the rest for developing infrastructure. The port’s construction is expected to begin at the end of 2016.
However, on its website, the Australian company says the project will cost $3.5 billion.
"It will cater for coal, bulk goods, container and RORO (roll-on/roll-off) berth plus two petroleum and LNG berths all capable of taking the largest vessels afloat.
"The Mega Port project, the biggest ever infrastructure project between Australia and Viet Nam, is set to break many records in logistical efficiency, capacity, security and most of all sustainability," the company says.
Once completed, the Hon Khoai Seaport is expected to become the gateway to Mekong (Cuu Long) Delta and HCM City. It will also become one of two leading ports in Viet Nam for industrial centres in the region.
With piers to bridge the port with the mainland in Ca Mau’s Nam Can District, a link will be established with the transnational R10 route that runs through Cambodia, Thailand and Myanmar.
The pier linking the port with the mainland will have two lanes and a railroad that will be used for transporting containers.
Mai Huu Chinh, director of Ca Mau Province’s Department of Planning and Investment, said the project has not been approved officially, and is waiting to be included in the national plan for developing Viet Nam’s port system.
"However, it’s likely that the project breaks ground early next year," Chinh said.
In response to Ca Mau’s proposal, the Prime Minister has directed the ministries of Transport and Industry and Trade to consider including Hon Khoai Port in the country’s port system.
The Mega Port Multi Cargo Facility is expected to become a commodity transport hub that supports logistics development in the Mekong Delta and helps reduce traffic burden in HCM City.
It is also designed to become a wholesale market for coal by importing the commodity via a designated port and wharves to serve thermal power plants in the Mekong Delta.
The potato-shaped island has an area of 561ha and off-shore water depth of between five to 27 metres, which is considered suitable for building deep-water seaports.
The island belongs to Ngoc Hien District’s Dat Mui Commune. It has so far remained free of exploitation.
It has been described as a "pearl of the cape" and an ideal site for developing eco-tourism. It is not clear how the new project will impact such plans.
Local officials say that upon formation of the ASEAN Economic Community, which is targeted to happen at the end of 2015, the port will play a strategic role in enhancing sea links with ports in Cambodia, Thailand and other countries in the region, boosting commodity transportation and tourism development.
More importantly, it will supplement the first stage of the Southern Coastal Corridor that links Viet Nam. Cambodia, Thailand and Myanmar. A 52km-long section of the corridor that runs through Ca Mau is under construction.
The project will also match with the 11,000ha Nam Can Economic Zone that has been approved by the government, creating a huge impetus for socio-economic development in the province and the delta.
They also say that when completed, the new port and the corridor will create new competitive advantages for Ca Mau, which will not only become an important economic area in the Mekong Delta, but also as a business gateway for ASEAN countries.
The southernmost province of Viet Nam is one of the four provinces belonging to an important economic zone in the Mekong Delta.
The nation’s biggest shrimp exporter is 350km from HCM City and 180km from Can Tho.
In recent years, Ca Mau’s economy has expanded by over 12 per cent annually.
Last year, the province’s GDP was VND3.13 trillion, a 10 per cent increase year-on-year. Its export turnover was $910 million.
Ca Mau, which used to be considered among the remotest and poorest provinces in the country, is calling for investment into 38 major projects in several fields including industrial zones, commercial centres, urban areas, transport, food processing and tourism development.
VN should stay with ITA despite tax losses - experts
Viet Nam should continue participating in the Information Technology Agreement (ITA) in order to give a boost to its fledgling IT industry, experts said on Monday.
Experts agreed that while Viet Nam would continue to lose taxes from IT product imports, the ITA would help local firms learn production technologies from world leading IT firms.
"The ITA will also help local customers access the world’s newest IT products for more reasonable prices, while the quality of life for local labourers will be improved," said Bui Manh Hai, chairman of the Viet Nam Association for Information Processing (VAIP).
ITA, effective since 1997, is a trade liberalisation agreement that was concluded in the framework of the WTO.
In accordance with the ITA, the contracting parties will eliminate customs duties as well as similar duties and charges on information and communications technology products.
Viet Nam’s IT industry saw robust growth since it joined the ITA in 2007, according to the Ministry of Information and Communications. Export value reached US$23 billion in 2012, compared to $1.3 billion in 2007, mostly thanks to FDI firms.
However, as the agreement eliminated import taxes for IT products, domestic firms could not compete with imports of world leading IT products from US, Japan and South Korea. Many of them collapsed or shifted from production to services.
In addition, as a member of the ITA, the country lost some $3 billion in 2007 and $200 billion in 2012 from the lack of tax revenue.
"Viet Nam should consider the disadvantages of quitting the ITA. The country should learn from countries that have similar economic situations such as Thailand and Indonesia," said Naoki Sigiura, Business Planning and Brand Development Director of Panasonic Viet Nam.
Viet Nam has cut import taxes on 300 IT products. According to the ITA’s requirements, from 2014, only 100 products can be taxed.
Automobile sector faces uphill road
Production dropped by 40 per cent for the automobile industry, showing that the sector had not yet recovered from the 2012 economic crisis, said participants in an automobile workgroup at the Viet Nam Business Forum held recently.
The industry sold 30,414 cars in the first four months of this year, a moderate increase compared with last year’s sales of 29,503 cars.
Viet Nam has a population of nearly 90 million, which is estimated to increase to 100 million in the next 10 years. GDP now stands at US$1,300 per head and is expected to rise to $4,000 by 2020.
There is one car for five hundred people, so the industry has significant potential to develop. However, manufacturers are in a difficult position as supply currently exceeds demand. Toyota Vietnam sold nearly 25,000 cars in 2012, far short of its production capacity of 36,500, according to the Vietnam Automobile Manufacturers’ Association.
Similarly, Ford Vietnam sold nearly 5,000 cars despite its capacity of 14,000 and General Motors Vietnam sold 5,600 with a capacity of 20,000.
Viet Nam also imposes one of the highest subsidy taxes in Asia. The price of domestic cars is usually two or three times higher than the world market price. Tariffs of 80 per cent are imposed on car imports, in addition to a special consumption tax of 45-70 per cent and VAT of 10 per cent.
These costs affected the price of devices and products, said workgroup members, which also affected Viet Nam’s ability to compete with other Asian countries. Meanwhile, the lack of a development plan drastically slowed domestic manufacturing.
To solve the problem, the workgroup proposed the Government cut the special consumption tax to 50 per cent for now and eventually eliminate it entirely. They also asked the Government to lift the consumption tax for motorbikes 170cc and over.
Apparel industry needs redesign
The Viet Nam textile and garment sector must make fundamental changes to develop sustainably as part of the global textile and garment chain, agreed participants in a conference in the southern province of Tien Giang yesterday.
First, the sector needed to develop a support industry that would produce raw materials domestically, reducing reliance on imported materials.
Additionally, it should develop the design industry, reduce processing, increase the localisation rate and reduce imports, which would in turn decrease manufacturing costs and dependence on foreign partners.
Enterprise representatives said the government should review and update the existing textile and garment strategy and build exclusive industrial zones for the sector.
They also planned to focus on developing a domestic textile and dyeing industry and joining the supply chain to export markets - especially the US market – as well as increasing the added value of garment products and developing further in the domestic market.
As for the Trans-Pacific Partnership Agreement (TPP), a free trade agreement that aims to integrate the economies of the Asia-Pacific region, the Viet Nam National Apparel Association expected the agreement to benefit Viet Nam’s economy because the member countries offered preferential import tax rates for key export sectors in Viet Nam, including textiles and garments.
However, this agreement would also bring challenges to the sector. Domestic enterprises would be required to import raw materials from TPP members, a major adjustment given that the domestic textile and garment industry currently imports 90 per cent of materials from non-TPP countries.
In 2012, Viet Nam’s garment industry earned US$20 billion in revenue, including $17 billion from exports. Half the exports were shipped to the US and the remainder to European countries, Japan and South Korea.
The industry needed 415,000 tonnes of cotton for production, while domestic producers could only supply 5,000 tonnes. Similarly, out of 6.8 billion needed metres of cloth, 6 billion were imported.
More than 40 textile enterprises from the provinces of Tien Giang, Long An, Vinh Long, Ben Tre, An Giang and Dong Thap attended the conference, which was organised by the Viet Nam National Apparel Association and the Tien Giang People’s Committee.
Summer-autumn rice shows slight hike in Mekong Delta
Two days after Prime Minister Nguyen Tan Dung signed a Decision to purchase one million tons of summer-autumn rice for stockpiling in the Mekong Delta, rice prices increased by VND100-200 a kilogram compared to that at the end of May.
On June 6, local traders have begun to purchase fresh normal rice at VND3,700 a kilogram and fresh long grain rice at VND4,100 a kilogram.
The Department of Cultivation under the Ministry of Agriculture and Rural Development said that the Mekong Delta has harvested more than 220,000 hectares of summer-autumn rice as of June 6.
Farmers will continue to harvest another 850,000 hectares from now until the end of July.
The Government rice stockpiling program will begin from June 15 until July 31. Banks will assist businesses with 100 percent interest rate to purchase rice within three months, beginning June 15.
The Prime Minister has instructed the Vietnam Food Association to work with provincial people’s committees to stockpile rice.
Unsold apartment volume falls
The volume of unsold apartments in HCMC fell about 13% in the first five months of the year, signaling that the frozen market might be thawing, according to the HCMC Department of Construction.
Some 1,880 apartments were sold in the first five months. Thus, the unsold apartment volume dropped from 14,490 to 12,610 units, worth nearly VND22.5 trillion.
There are 736 housing projects under construction in HCMC, while 308 projects have ground to a halt, said the construction department at a meeting with the HCMC government on Tuesday.
The department has received applications for conversion from 35 commercial projects, eight of which seek permission for transformation into low-cost housing projects.
In addition to low-cost projects, nine commercial housing projects have products covering less than 70 square meters each and priced below VND15 million per square, supplying around 2,260 apartments to homebuyers. These include Le Thanh Company with its An Lac residential zone project in Binh Tan District provides over 1,200 apartments, while Saigon-Gia Dinh Real Estate Joint Stock Company supplies 256 units with the Thoi An residential zone project in District 12.
Among the investors asking for project conversion, Binh Duong Construction Co. Ltd. wants to turn its 360-flat project in Thanh My Loi Ward, District 2 into a hospital with 500 beds.
The construction department said it would soon publish the list of commercial housing projects eligible for the VND30-trillion preferential credit program.
* The HCMC authorities from now until the end of 2013 will buy 3,000 low-cost apartments from enterprises to sell to eligible homebuyers, said Tran Trong Tuan, director of the HCMC Department of Construction.
An official from the construction department said many project owners had sold their products for only VND12 million, or even VND8 million per square meter, the same as their cost. “Therefore, they want to transform their projects into low-cost ones, hoping to sell their products to the city through the Government’s VND30-trillion credit program,” he said.
However, as there are many low-cost housing projects, commercial projects can hardly have any part in the city’s plan for buying 3,000 budget homes, said a source from Saigon Construction Corporation.
Saigon Construction Corporation has a low-cost housing project with 62 apartments near completion and will sell its products to the municipal authorities.
The production cost of this project is some VND12 million per square meter, or VND13 million with interest factored in. “But we don’t know which price the city will charge homebuyers,” said the source.
The list of 3,000 low-cost homes to be bought by the city will be announced this month, with their specific locations and prices.
