State bank auctions more gold, demand stays high

The State Bank of Viet Nam (SBV) held its 51st gold auction yesterday, auctioning off 26,000 taels or approximately one tonne of gold.

Since March 28, the SBV has sold about 1.37 million taels, nearly 53 tonnes, however, the demand for gold seems to be endless.

At yesterday's auction, only 300 taels remained unsold as 15 different credit institutions secured the gold for between VND37.28 and 37.33 million (US$1,775-1,777) per tael.

On the local market, the price of gold increased by VND200,000($9.5) per tael compared with yesterday's price. At 4pm, the Saigon Jewellery Company (SJC) posted its gold prices at between VND37.35-37.65 ($1,778-1.793) on its website.

However on the kitco.com trading floor, the selling price for gold dropped to $1,290.3 per ounce, or $1,555 a tael, leaving gold prices in Viet Nam $238 higher per tael than global rates.

On the forex market, commercials banks were also paying more for the US dollar after the SBV's similar action yesterday.

Vietcombank listed the greenback selling/buying prices at VND21,070/21,140, up VND60 compared with two days ago. Similar increases were recorded at other banks.

HCM City seminar to highlight business opportunities

A seminar on year-end business opportunities for small and medium sized enterprises will be held next Tuesday in HCM City.

The seminar is being organized by the banking information portal Laisuat.vn in collaboration with the HCM City Union of Business Associations with sponsorship from VPBank.

The HCM City branch of the State Bank of Viet Nam, association leaders and leading economists including Tran Du Lich and Le Tham Duong will participate in the seminar.

It will deal with several topics including macro-economic policies and their impact on SMEs, and challenges and opportunities for SMEs from now until the end of the year.

$35 million factory to make automobile parts

The Yazaki Hai Phong-Viet Nam Co Ltd recently received an investment license to build a factory to manufacture spare parts for automobiles in northern Quang Ninh Province.

The US$35 million factory will be located on a 70,000 -sq.m plot of land in the province's Dong Mai industrial zone.

Construction of the plant is expected to be completed in August 2014.

Once in operation, the factory will generate jobs for about 3,000 workers.

The Yazaki group occupies one third of the global market in the car wiring sub-sector.

Vinacomin coal exports decline after tax hike

Viet Nam National Coal and Mineral Industries Group (Vinacomin)'s coal exports last month declined by 10 times over the previous month to 100,000 tonnes after a rise in export tax from 10 per cent to 13 per cent in mid July.

The rise in coal export prices caused many importers to seek other providers with lower prices, Vinacomin said.

The coal exploitation output and consumption in July also declined due to the wet season.

Statistics showed that the sold volume of coal in both domestic and foreign markets last month hit a record low, staying at only 2 million tonnes, equivalent to 60 per cent of the average volume of the first six months of this year.

Vinacomin said the demand of coal for electricity generation was down while the group had not received export contracts this month.

Previously, Vinacomin proposed the Government keep the coal export tax at 10 per cent as it was in the first six months of the year.

Fees and taxes imposed on coal mining are around 30 per cent, including national resource tax (5-7 per cent), export tax (13 per cent), value added tax (10 per cent), environmental fees (3 per cent).

According to the statistics of the Ministry of Industry and Trade, in the first seven months of this year, the export turnover of coal declined by 15.5 per cent year-on-year.

Coal exploitation output in the period was estimated at 24.8 million, 14 per cent lower than the same period last year.

Pepper Association urges caution before signing export contracts

Pepper enterprises needed to be aware of the risks in considering export volumes, prices, payment methods and delivery times when signing export contracts, the Viet Nam Pepper Association suggested.

The world economic recession along with the social and political changes in North Africa and the Middle East had influenced import/export, particularly when it came to payment, the association said.

Domestic pepper supply this year was estimated to reach only 115,000 tonnes, 87,600 tonnes of which had already been shipped abroad by July 15, the association said. It left a limited amount for export by year-end.

Viet Nam is currently the world leader in terms of pepper output. However, 70 per cent of its pepper exports are in the form of raw materials with low value.

The country exports pepper to more than 90 countries and territories but most consumers are unaware that it originated from Viet Nam because it is processed and packaged overseas.

Six foreign-invested businesses currently buy and process pepper in Viet Nam, accounting for nearly 40 per cent of the country's total pepper export turnover last year.

Association chairman Do Ha Nam said pepper businesses should work together to maintain their global market share while exporters must hone their competitive edge to stay ahead of foreign rivals.

Macroeconomic management to be consolidated under MPI

The Prime Minister has approved a plan that calls for closer collaboration between Government agencies in macroeconomic management with the Ministry of Planning and Investment (MPI) the chief coordinator.

The plan aims to ensure that macroeconomic policies are formulated and implemented in a proactive and flexible manner that responds quickly to new developments both in the domestic and world economies.

In addition, closer collaboration between different agencies is the foundation for more accurate forecasts of economic trends in the medium and long terms.

Under the plan, the MPI is in charge of overseeing and accelerating the co-ordination between relevant agencies and reporting to the Prime Minister on a monthly basis.

The MPI is also asked to work with the Ministry of Finance, Ministry of Industry and Trade and the State Bank of Vietnam to devise and implement the co-ordination mechanism on fiscal, monetary, credit, investment, trade and pricing policies right in 2013.

State bank auctions more gold

The State Bank of Vietnam (SBV) held its 51st gold auction on August 8, auctioning off 26,000 taels or approximately one tonne of gold.

Since March 28, the SBV has sold about 1.37 million taels, nearly 53 tonnes, however, the demand for gold seems to be endless.

At the August 8 auction, only 300 taels remained unsold as 15 different credit institutions secured the gold for between 37.28 and 37.33 million VND (1,775-1,777 USD) per tael.

The same day, the price of gold on the local market increased by 200,000 VND (9.5 USD) per tael compared with August 7’s price. At 4pm, the Saigon Jewellery Company (SJC) posted its gold prices at between 37.35-37.65 (1.778-1.793 USD) on its website.-

Consultants for giant oil refinery project soon to be named

Winners of the three international consulting packages for the US$27-billion oil refinery and petrochemical project in Binh Dinh Province will be named at a press conference slated for next Thursday, August 15.

Man Ngoc Ly, head of the authority for Nhon Hoi Economic Zone, where the project will be located, told the Daily that the press conference would take place in Binh Dinh’s Quy Nhon City. It will be the first media event on this colossal project organized by the Thai investor PTT Company.

At the press conference, PTT will name the chosen international consultants in finance, market and technology. The oil refinery project will officially get moving on this occasion.

PTT will also clarify where funding and crude oil would be sourced, where the products of this project would be sold and where technology and equipment would be bought.

Project planning and feasibility study will be done in nine months. After that, the project owner will make a report to the Government and relevant ministries, Ly informed.

On August 19, PTT will send a delegation to the University of Quy Nhon to discuss cooperation in training human resources for the project.

The government of Binh Dinh has decided to set up an advisory group consisting of experts with profound experience of oil refinery and petrochemical, finance-banking and environment. The group will assist PTT in replying to the questions of the concerned agencies during project planning.

Mixed opinions have surfaced after PTT had initiated the mammoth project worth US$27 billion in Nhon Hoi Economic Zone. Some cast doubt over PTT’s ability to cover the cost of this project.

In addition, with an annual capacity of 30 million tons, this project will likely lead to oil oversupply in Vietnam, given the existence of similar projects in Dung Quat, Quang Ngai and Phu Yen’s Nam Vung Ro.

There is also a concern about inputs for this oil refinery. In response, the Thai investor has said inputs would be sourced from the Middle East, Africa and the Americas.

Earlier, Binh Dinh’s Vice Chairman Ho Quoc Dung said Deputy Prime Minister Hoang Trung Hai had signed a document giving nod to the oil refinery and petrochemical project in Nhon Hoi Economic Zone.

In this document, the Government asks Binh Dinh Province to give PTT instructions in project planning and send a feasibility study report to the Ministry of Industry and Trade before submission to the Prime Minister. In addition, an environmental assessment report must be sent to the Ministry of Natural Resources and Environment.

The oil refinery and petrochemical project initiated by PTT if approved will be developed on 2,000 hectares in Nhon Hoi Economic Zone with an estimated capacity of 660,000 barrels of crude oil per day, or some 30 million tons per year. It would get off the ground in the first quarter of 2016 and start operations in 2019.

Vietnam’s mooncake exported to US, Cambodia

The Kinh Do Confectionery Corporation (KDC) on August 8 announced that it exported five containers of mooncake to the United States and Cambodia.

The company is expected to produce 2,400 tonnes of mooncake to serve the demand of domestic and foreign markets during this year’s mid-autumn season.

Last year, the volume was about 2,100 tonnes.-

BIDV lends VND2.9 trillion to highway upgrade project

Bank for Investment and Development of Vietnam (BIDV) on Tuesday signed a credit contract with a consortium of three enterprises to provide over VND2.9 trillion for a national highway upgrade project.

The build-operate-transfer (BOT) project will stretch nearly 34 kilometers on National Highway 1 from Nghi Son in Thanh Hoa Province to Cau Giat in Nghe An Province. The project was signed between BIDV and representatives of Civil Engineering Construction Corporation No. 4 (Cienco4), Corporation 319 and the two-member firm BOT QL1A Cienco4-319 Corporation in Hanoi City on Tuesday.

The loan has a term of 17 years with other banking services such as a four-side credit package, retail banking and insurance products.

According to a statement released by BIDV, upgrading the highway section will help complete infrastructure in Thanh Hoa and Nghe An provinces, and attract local and foreign investors to Nghi Son and Hoang Mai economic zones. The project will also help improve traffic safety on the highway.

In January, BIDV and the Ministry of Transport signed an agreement to arrange capital for BOT projects upgrading National Highway 1 from Thanh Hoa to Can Tho City. BIDV pledged to arrange a maximum of VND30 trillion for the projects with a credit limit up to 85% of total investment of each one.

The bank up to now has approved in principle to fund nine out of 17 projects with the total investment of VND17.7 trillion, of which over VND14 trillion will be provided by BIDV.

BIDV reported credit growth of 8.5% in the first six months of this year, the highest level among State-owned banks.

Thuan Phuoc Bridge re-opened on Thursday after repair

Thuan Phuoc Bridge, known as the country’s longest cable-stayed bridge in the central coast city of Danang, will be re-opened on Thursday after its repair schedule has been extended for an extra ten days.

The bridge was opened to traffic on July 19, 2009 at a total cost of up to VND1 trillion but local residents have already been familiar with repairing works done regularly on the bridge. The bridge repair this time started from July 20, with its road surface covered with a new layer by contractor BK Engineering and Construction Company (ECC).

Thuan Phuoc Bridge connects Danang City with Son Tra Peninsula which is on the other side of Han Estuary and links major traffic components in the East-West economic corridor.

The road surface on the bridge had usually got deformed since July 2010, especially in dry seasons which had caused a lot of traffic accidents. The scheme’s management therefore has banned the circulation of trucks on the bridge, minimizing its operational efficiency.

ECC has many times assigned workers to remove the old asphalt layer to cover it with a new one in the last three years but the more the bridge is repaired the worse its road surface becomes.

Dang Viet Dung, director of the city’s Department of Transport, said at a recent meeting of the People’s Council his department had asked ECC to study many materials and that the current one was finally approved by local authorities. “As the new material has for the first time been used in Vietnam, we requested the contractor to provide a warranty for ten years rather than two years as specified from the beginning,” he told the meeting.

HCM City seeks investors for two sluice gates

HCMC is calling on capable investors to participate in two sluice gate projects, namely Phu Xuan and Song Kinh, each costing about VND1.2 trillion.

Nguyen Ngoc Cong, deputy director of the Steering Center of the HCMC Urban Flood Control Program, said the city wanted these two projects to be developed under the form of build-transfer (BT) or public-private partnership (PPP).

As per the city’s flood control plan, eight sluice gates will be built in the city with a total cost of tens of trillions of dong.

So far, only Nhieu Loc-Thi Nghe sluice gate is under construction, set to be operational late this year. The remaining projects are still under evaluation and awaiting investors.

As proposed by the flood control center, Song Kinh sluice gate will lie about 110 meters upstream from Dong Dien Bridge. The flood control center is checking which businesses and households will be affected by the construction of this sluice gate.

Four sluice gates would get off the ground next year if the city managed to find funding and investors for them. They include Ben Nghe, Tan Thuan and Phu Xuan sluice gates and a sluice gate cum lock on the Nuoc Len Canal.

Scheduled for completion in 2017, these sluice gates will help reduce flooding in the low-lying areas along the Ben Nghe Canal in districts 1 and 4, the Te Canal in districts 4 and 7 and the Phu Xuan River in District 7 and Nha Be District. In addition, they will control water levels and regulate waterborne transportation.

Three other sluice gates are set for groundbreaking in 2015 and completion in 2017, namely Song Kinh, Rach Tra and Vam Thuat. The total cost of these three projects is nearly VND2.3 trillion, or nearly US$1.1 billion.

The above sluice gate projects are named in the plan for irrigation and flood prevention in HCMC approved in 2008. Under the plan, 13 sluice gates, with a length of 20-120 meters each, and a 173-km dike running along the Saigon River from HCMC and Long An will be developed.

Moon cake makers offer affordable products

Not so many types of expensive moon cakes are on sale this year as producers are aware of their customers’ tight budgets.

Many confectionary makers and hotels have launched their moon cakes into the market. The moon cake season begins several weeks ahead of the Moon Festival, which is due on September 19 this year.

Givral often starts selling moon cakes two and a half months before the Mid-Autumn Festival, but this year its moon cakes go on sale a half month later. Given the forecast about low growth, Givral will only launch some 500 tons of moon cakes, up 10% over last year, with prices picking up 7%.

“Last year, our output rose 20% over the previous year. We offer a slightly larger volume this year since 25 additional outlets have been opened nationwide, not because the market has improved. The market demand is unpredictable now,” said a representative of Givral.

Givral introduces many new types of moon cakes this year. The ordinary types sell for VND400,000-500,000 per box of four pieces, while the most expensive type is priced at VND1 million, coming together with a 20ml wine bottle and a tea box.

Like Givral, the Renaissance Riverside Saigon Hotel said it could not predict the market demand now. Knowing that consumers care much about prices this year, this five-star hotel has sought ways to lower prices and introduce new flavors to attract buyers.

A moon cake box made by the hotel is quoted at VND789,000, a slight drop from over VND800,000 last year.

Do Phan Tieu Khue, marketing and public relations manager of the hotel, said: “As customers care more about prices when buying moon cakes, we are trying to cut the cost of packaging to offer softer prices, luring buyers in the current tough times.”

The Renaissance Riverside Saigon Hotel expects to sell around 2,800 moon cake boxes this year, an increase of 300 boxes against last year.

Meanwhile, the five-star hotel Windsor Plaza said its moon cakes did not mark up this year, priced at VND688,000-880,000 a box. All moon cakes are made by the hotel’s chefs.

This year, the Windsor makes many types of moon cake with a smaller size so that each box can contain more cakes with more flavors.

Meanwhile, Kinh Do said it would launch about 2,400 tons of moon cakes this year, equal to the quantity last year.

Kinh Do not only sells its moon cakes at home but also exports them. Last month, the baker exported five containers to the U.S. and Cambodia.

A number of moon cake producers said that this year it would be very hard to find wholesale buyers, namely companies wanting to buy moon cakes for their customers and employees.

A representative of a moon cake company said his firm in previous years sold moon cakes to dozens of banks in HCMC, but now many of them had turned down its offer. In addition, struggling property firms have lower demand for moon cakes this year.

Footwear export orders up 10-15%

Most companies in the leather-footwear industry have won export orders sufficient for production until end-September or the year-end, showing a growth rate of between 10% and 15% year-on-year, said the Ministry of Industry and Trade.

According to the ministry, January-July footwear export value is estimated at a combined US$4.79 billion, a rise of 15.6% year-on-year, while the seven-month output volume is estimated at 148.7 million pairs, up 11% year-on-year.

The ministry attributed the good news to the fact that more foreign buyers now are shifting their orders from China to Vietnam.

Specially, as Vietnam is entering the final rounds of talks on the Trans-Pacific Strategic Economic Partnership Agreement (TPP) and is in negotiations for a free trade agreement with the European Union, many opportunities have emerged for foreign investment in the industry. This means local firms are given more chances of gaining access to advanced technologies and big global brands, the ministry explained.

Vietnam somehow enjoys benefits from the transfer of orders from the neighboring country of China, noted Diep Thanh Kiet, vice chairman of the Vietnam Leather and Footwear Association (Lefaso). Footwear exports to the U.S. have also been rising since U.S. importers are also bracing for the TPP, he remarked.

The U.S. and the EU are the two biggest importers of Vietnamese leather-footwear items but local shipments bound for the EU are falling while exports to the U.S. are on the rise, which is ascribed to the saturated demand and plenty of barriers in the EU.

Footwear exports to the EU represented over 52% of the country’s total footwear exports in 2008, which then slid to 36.7% in 2012. In the meantime, footwear exports to the U.S. jumped to 31.3% of total footwear export value of over US$7.2 billion in 2012 from more than 22.5% in 2008.

Imported urea flows to neighboring countries

Local traders have imported a sizeable amount of urea fertilizer this year to supply neighboring countries since local output is sufficient for domestic use, said the Vietnam Fertilizer Association.

Nguyen Hac Thuy, chairman of the association, said that the global urea fertilizer price has dropped lately, prompting local enterprises to import fertilizer then ship it to neighboring countries to earn profits.

Vietnam’s urea fertilizer import in the year’s January-July period totaled 246,000 tons worth US$87 million, falling 7% and 25% year-on-year, respectively. It is noted that the Ministry of Agriculture and Rural Development in late 2012 predicted that urea fertilizer would not be imported in 2013 as the domestic supply is sufficient.

According to the fertilizer association, if the urea fertilizer price remains low in the coming months, enterprises will boost import and then export it to make profits. Around 100,000 tons was exported to Laos and Cambodia in the seven-month period.

Statistics of the General Department of Customs showed that from the year’s beginning until July 15 Vietnam exported over 610,000 tons of fertilizer of all kinds with a value of nearly US$252 million. Last year’s fertilizer export volume was nearly 1.35 million tons valued at over US$554 million, up 25.4% in volume and 17.4% in value from the previous year.

The Ministry of Agriculture and Rural Development late last year forecast that Vietnam would need to import 2.5 million tons of fertilizer this year, with SA fertilizer accounting for 850,000 tons, DAP fertilizer 570,000 tons,  kali fertilizer 950,000 tons and NPK fertilizer 100,000 tons.

Vietnam’s fertilizer import volumes in 2011 and 2012 were 4.4 million and nearly 3.9 million tons respectively, with values of US$1.8 billion and US$1.72 billion.

SMEs benefit most from preferential credits

Preferential credits offered to small and medium-sized enterprises (SMEs) in HCMC made up a high ratio of the total loan amount for five priority sectors as of July, according to a report of the central bank’s HCMC branch.

Until July 11, total outstanding loans for the five sectors was over VND119 trillion, up 39.8% against year-end 2012, of which credits for SMEs posted up the strongest rise of 50%. The level was much higher than the total credit growth rate of the city at 5.56% in the January-July period.

As regulated by the central bank, the priority sectors are the agriculture and rural industry, export goods production, SMEs, supporting industries and high-tech enterprises.

However, the total outstanding loans for the five sectors accounted for just 13.3% of total outstanding loans of the city as of June 30. Local credit institutions reached total outstanding loans of nearly VND895 trillion as of the end of June and the figure was expected at VND903 trillion by July 31.

As per the Circular No. 16/2013/TT-NHNN taking effect from June 28, short-term lending rates in dong for the priority sectors are capped at 9% per annum, down from 15% on May 8, 2012. Since the end of last year, high-tech firms have been included in the priority group.

Land plots lure buyers with flexible payment scheme

Owners of land plot projects are offering buyers a flexible payment scheme which has resulted in transactions in this market segment becoming more active.

Although the value of each land plot is not high, investors allow their customers to pay by installment to relieve their financial burden. Some project owners even accept a monthly installment of less than VND20 million.

Kim Oanh Real Estate Company is offering land plots at its Green Life City in Dong Nai at VND320 million per unit with an 18-month payment schedule. The company in the past seven months has sold 100 land plots of this project.

The 26-hectare Green Life City comprises 350 land plots for townhouses and villas covering 95-800 square meters each.

In HCMC, land plots at Phuoc Long Spring Town developed by Thu Duc Housing Development Corporation in District 9 are currently on sale. In this first sale round, 38 land plots for townhouses covering 100-176 square meters each are offered at VND17.8-26 million per square meter, inclusive of tax. Land buyers have 18 months to complete payments. They are also provided discounts.

Covering nearly four hectares along Tang Nhon Phu Street, Phuoc Long Spring Town consists of a commercial street called Tigon Flower and a 14-story apartment building.

Also located in HCMC’s District 9, the residential project Tang Phu House developed by Phong Phu Corporation and Saigon Agriculture Incorporation is about to launch 50 land plots.

Nam Viet Real Estate Company, the project distributor, said land plots would have prices starting from VND13.5 million per square meter. Buyers will receive their land plots after making a down payment equal to 40% of the value of one unit and then settle the rest in 18 months’ time with no interest charged.

Tang Phu House costing some VND520 billion is built on nearly four hectares, comprising 75 land plots for townhouses, four villas, a commercial center and 295 apartments.

In District 7, Phat Dat Property Development Corporation is seeking buyers for 75 land plots for townhouses and villas at its The EverRich 3 project.

Market observers said Vietnamese people still preferred houses attached to land to apartments. Thus, villas and townhouses have recorded busy transactions.

In the second quarter, villas and townhouses in HCMC achieved a strong sales increase of 5-18% over the preceding quarter. There are currently some 3,300 villas and townhouses in supply, according to Savills Vietnam.

Corporate bond information center in the offing

The Vietnam Bond Market Association (VBMA) has drawn up a scheme for building a corporate bond information center for submission to the Ministry of Finance.

With the technical assistance of International Finance Corporation, the association has hired experts to act as consultants for the scheme. The experts have worked with participants and State management agencies to prepare the scheme, said General Secretary Do Ngoc Quynh.

“VBMA has submitted the scheme to the Ministry of Finance and is waiting for an official reply from the ministry to carry out this scheme. This is one of the great and challenging tasks for VBMA given the underdeveloped nature of the corporate bond market of Vietnam, from both the legal and the practical aspects,” said Quynh.

No one fully comprehends Vietnam’s corporate bond market due to the lack of a unit providing information about both the primary and secondary markets.

If the corporate bond information center that VBMA plans was put into operation, it would offer investors sufficient information about the market. Such a center would also help improve transparency, give the corporate bond market more opportunities for development and help the authorities manage the market in the most effective way, Quynh said.

Founded in 2009, VBMA is now collaborating with the Asian Development Bank (ADB) to conduct a survey of the legal framework for construction of a standard contract form for the bond repurchase agreement (repo) market.

VBMA has also laid down a code of conduct in bond trading and submitted a set of conventions on market practices to the finance ministry.

This set of conventions is to ensure buyers and sellers find common ground, which is very important for calculation of bond prices and yields. Any misunderstanding or dispute over payments can be prevented if the market participants comply with the agreed rules.

In 2010 and 2011, VBMA with the support of International Finance Corporation compiled a handbook for forming and managing a bond trading staff in a financial institution. The four largest market participants are piloting this handbook.

In 2012, VBMA and eight banks established and implemented agreements between market makers to provide the market with a standard bond price and increase the market liquidity.

The bond market’s potentials have not been fully unlocked because of the asynchronous legal system. Products are not diverse and investors are few, hindering the market development, said Quynh.

Therefore, the unity among the market participants to apply the standards set by VBMA is extremely important, he said.

Stronger trade with Denmark targeted

Two–way trade between Vietnam and Denmark is forecast to reach 500 million USD this year, with 305 million USD coming from Vietnam’s exports, according to the Ministry of Industry and Trade’s European Market Management Department.

However, bilateral trade had decreased by 10 percent year-on-year to 222 million USD for the first half of this year, mainly due to slumping import demands in Denmark.

During the period, Vietnam exported only 134 million USD worth of products to Denmark, down 6 percent year-on-year.

Export turnover of clothing and seafood, the country’s key items, dropped by 26 percent and 20 percent respectively to reach 42 million USD and 11.4 million USD, while the export value of wood and wooden products reached 6.7 million USD, equivalent to the same period last year.

The debt crisis in the eurozone has yet to show signs of recovery and the Danish consumers tend to tighten their spending, the department said.

The situation has a negative influence on Vietnam’s exports to the market, plus stiff competition from products of other countries.

In the reviewed period, Vietnam’s imports from Denmark also dropped by 16 percent to 88.3 million USD.

The Danish Government aimed to double export of essential goods to Vietnam over the 2011-2016 period.

According to statistics from the General Department of Customs, two-way trade turnover hit 468 million USD last year, up 11 percent on the previous year.

Of this figure, Vietnam’s exports to Denmark hit more than 276 million USD up 2 percent on 2011, while imports reached roughly 192 million USD, up 28 percent.

Local experts predicted that the Vietnam-EU Free Trade Agreement would open up a new page for the bilateral trade ties between the two countries.

HCMC eyes 4 satellite cities if okayed as municipality

If it is allowed to become a municipality, HCMC would build four satellite cities in its eastern, western, southern and northern parts, each with a different economic function, says a draft report on piloting the model of a municipality in HCMC.

As a municipality, HCMC would have 13 inner districts, four satellite cities, namely East City, West City, South City and North City, and three towns and 35 communes in suburban areas.

The head of a satellite city should be called chairman or mayor, holding an equivalent rank of a HCMC vice chairman, says the report by the HCMC Department of Home Affairs presented at an extraordinary meeting of the HCMC Party Committee on Wednesday.

East City will consist of District 2, District 9 and Thu Duc District, covering 211 square kilometers with a population of 890,000. With Thu Thiem New Urban Area lying in its heart, the city will be linked to HCMC-Long Thanh-Dau Giay Expressway, facilitating the development of financial and credit services, high technology and ecotourism.

South City will cover the entire District 7 and Nha Be District and parts of District 8 and Binh Chanh District, stretching over 169 square kilometers with 470,000 residents. Embracing Phu My Hung Urban Area, Nha Be Town and especially Hiep Phuoc Port Urban Area, this city will be a place for development of industries and port services.

West City will be home to 810,000 people, covering an area of 109 square kilometers across Binh Tan District and parts of District 8 and Binh Chanh District. Connected to National Highway 1, the city will mainly develop services, industrial parks and residential zones for resettlement of citizens from District 11, District 6 and Tan Binh District.

North City will stretch across District 12 and Hoc Mon District, covering 162 square kilometers with a population of 860,000. With Tan Thoi Nhi Commune as its center, the city will assist development of services, ecotourism, high-tech agriculture and residential areas to facilitate residential shifts from the districts of Go Vap and Tan Binh.

The scheme on piloting the municipality model in HCMC will be sent to the Government and later put forward at the sixth session of the National Assembly (NA) slated for October and November.

If the NA gave its nod to the scheme, HCMC would soon arrange personnel, determine the function of each satellite city and make budget estimates. All these jobs would be finished by 2015, so that the city could start applying the municipality model in 2016, when election of deputies to the NA and local people’s councils for the 2016-2021 tenure takes place.

HCMC covers a total of 2,095 square kilometers, including 24 districts with a population of nearly 10 million. It is one of the 40 most populous cities in the world.

The model of a local government is becoming increasingly inadequate for urban management and development. Therefore, in 2007, with the permission of the Party Politburo, HCMC started building a scheme for piloting the model of a municipality.

Confectionery firms compete to grab market for moon cakes

Moon cakes are already beginning to sell in shops along streets even though it is still one month for the Mid-Autumn Festival to begin.

This year, the slow economy has intensified competition in the market for moon cakes which are traditionally eaten during Mid-Autumn Festival.

As prices rise and consumer spending decreases, competition in the market for Mid-Autumn Festival moon cakes has reached fever pitch. For confectionery firms, Mid-Autumn Festival is the second biggest holiday in the year and that is why enterprises spend a lot in promotions and attractive packaging.

This year, Kinh Do Bakery plans to export five containers of moon cakes to the US and Cambodia and produce 2,400 tons of cakes for the local markets, a year-on-year increase of 15 percent, at retail price from VND30,000-100,000.

Kinh Do focuses on luxury cakes for gifts. For instance, a package of ‘Trang Vang Kim Cuong’ (Diamond gold moon) with 12 cakes costs VND2,500,000 (US$119) or ‘Trang Vang Bach Kim’ (Platinum gold moon) with six cakes and a tin of Wulong Tea at  VND1,200,000 (US$57).

Bien Hoa Confectionery Company (Bibica) has launched 550 tons of moon cakes in the market, an increase of 10 percent against the same period last year. Its luxury cakes range from VND790,000 (US$37.5) to VND1.2 million (US$57).

Other well-known brand names, namely, Dong Khanh, Nhu Lan, Duc Phat, Givral, Vinabico, Hy Lam Mon have also launched their products in the market.

In addition to beating each other on the price front, confectionery firms attract customers with lure of different fillings. For instance, Kinh Do makes moon cakes filled with strawberry jam, grapefruit marmalade or sugared lotus seeds.

Thanh Long confectionery manufactures moon cakes with five fruits, namely, banana, oranges, kumquats, pomelos, and finger citrons or Indian taro coconut fillings to satisfy the varied tastes of consumers.

Industrialization goal seen out of reach

The nation’s leading economists at a meeting on Tuesday voiced a grave concern that Vietnam would hardly achieve the target of industrialization and modernization by 2020.

Speaking at the meeting to give updates to economic diplomacy officials held in Hanoi on Tuesday, Tran Dinh Thien, president of the Vietnam Institute of Economics, said: “To become an industrialized country in just a short time is a too ambitious goal.”

He wondered what kind of industrialized country Vietnam was striving to become. “If it is the U.S., the target is too high. Ten years is not enough. France is an impossible target either. Neither is it with South Korea, whose per capita income is US$30,000, while ours is only US$1,500.”

Even with Thailand, whose per capita income is around US$8,000, Vietnam can hardly catch up, he stressed.

Businesses are a driving force for development of the country, but as many as 110,000 firms shut down during the last two years and an additional 25,000 went bust in the first six months of 2013, Thien said.

“These 25,000 businesses must have suffered two tough years, but now their endurance has run out. This is alarming,” he stated.

He remarked GDP growth had been gradually lower since 2007, while macroeconomic uncertainties had been building up.

Inflation is now under control, but it will likely pick up due to a salary increase and the recent power and petrol price hikes, he said.

Sharing his view, Vo Tri Thanh, vice president of the Central Institute for Economic Management, said the efficiency of resource allocation in Vietnam was very poor.

Incentives for some specific interest groups in access to credit, land and other important resources have distorted resource allocation, he said.

For example, State-owned enterprises (SOEs) accounted for over 38% of total investment in 2010 but only contributed 33.7% to the nation’s GDP and created jobs for just 10% of the workforce.

On the other hand, private firms made up 36% of total investment, but contributed 47.5% to GDP and provided jobs to around 86% of the labor force.

Thanh noted that if there was an implicit guarantee against collapse for SOEs and banks, they would not hesitate to borrow or give out a lot of loans.

However, when SOEs run into troubles, public funds will come to their rescue. “This is just like privatizing profits and equally sharing losses across the whole society,” he said.

Thanh said macroeconomic stabilization had always been a central task to prevent price distortion and inspire long-term confidence among citizens and entrepreneurs.

Thien suggested not making a plan for one single year, but for three years in a row for post-crisis recovery and restructuring. In addition, the thorniest economic problems during 25 years of reform related to land, State-owned enterprises and the State budget must be settled completely.

In a recent talk with the Daily, Minister-Chairman Vu Duc Dam of the Government Office also mentioned the status of Vietnam lagging behind.

“If we did not aggressively carry out reform and restructuring, we could not triumph. Vietnam is not facing the risk of lagging behind, but it is already lagging behind as neighboring countries are growing rapidly and their starting points are higher,” he said.

Deputy PM urges for rapid development of Phu Quoc island

Deputy PM Vu Van Ninh has told the Ministry of Planning and Investment (MPI) to submit to the Government specific mechanisms and policies needed to turn the country's largest island, Phu Quoc, into a special economic zone.

Ninh complained about the slow development of plans to turn the island into a city in southernmost Kien Giang province and gradually set up a special administrative and economic zone.

He said that although he had told the MPI to complete the plans in December last year, it has so far submitted only a draft to the Prime Minister.

To speed up the progress, Ninh required the Steering Committee for the West Southern Region and Kien Giang province to carry out feasibility studies on developing special procedures and policies for Phu Quoc.

He added that they should see the proposal of Quang Ninh on building policies for Van Don island as a reference.

Ninh also instructed local authorities to scrutinise investors who want to invest in the area with priorities given to large-sized, high tech and environment protection projects.

The local authorities recently said that they cancelled 93 projects on Phu Quoc island, with a total area of 5,500ha. These projects were stopped because investors could not find funding to implement the projects so that the implementation was slow or did not take place at all. Some projects are no longer suitable for the development plan of Phu Quoc island.

In the whole island, the total number of valid projects is said to be more than 200. They cover a total area of 8,900ha. Of these, 81 projects were granted investment certificates covering 3,800ha, with a total capital of 88 trillion VND, (4 billion USD) but only 13 are operating.

In the Master Development Planning of Phu Quoc island approved by the Government, the island is considered important as it is located in the centre of South East Asia.

Vietnam-Japan Investment Cooperation Economic Forum 2013 set to open

To mark the 40th anniversary of diplomatic relations between Vietnam and Japan this year and within the framework of Vietnam-Japan friendship year, the Ministry of Construction in cooperation with the Japanese Embassy in Vietnam and Japan International Cooperation Agency (JICA) will sponsor and support a series of events co- organised by events organiser FDI VIVINA Company Limited and the Vietnam Real Estate Association under the theme Vietnam- Japan Investment Cooperation Economic Forum 2013.

The forum agenda will cover three days from August 20 to 22, 2013 at Grand Plaza Hanoi Hotel encompassing a series of events including showrooms and exhibitions presenting priority investment projects of Vietnamese localities to Japanese investors, the Vietnam-Japan friendship golf tournament and field surveys.

The forum will be a platform for local businesses, organisations and investors, institutions, associations, representatives of the provinces and cities of Japan to communicate, meet, exchange and seek investment opportunities in diverse fields, focusing on infrastructure, construction, real estate and supporting industries.

The three-day forum will be an opportunity for the Japanese investors to know more about Vietnam and the Vietnamese people, giving support to strengthen and develop the traditional friendship relations between the two countries, in accordance with strategic partnership relations.

Toll collection right transfer proposed for expressway

Toll collection on the HCMC-Trung Luong expressway will likely be assumed by another enterprise from October 1, according to a proposal by the current operator Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (CIPM).

Le Duc Tuan, office manager of Cuu Long CIPM, told the Daily that his firm proposes the toll collection right transfer because it has only been doing the job on behalf of the Government. The proposal has been forwarded to the Ministry of Transport.

Since February 25, 2012 when CIPM officially collected toll fees on HCMC-Trung Luong expressway, the transport ministry has still been unable to find out any investor intending to purchase the toll collection right.

Under the transfer plan submitted to the transport ministry by CIPM, the transfer of the toll collection right of the 40-kilometer expressway will be carried out via a bidding round. The toll collection will last five years, while the transfer value is estimated at some VND1.6 trillion which will be paid in three installments within ten months.

Still, it is still unknown whether the ministry will seek ways to transfer the toll collection right again after five years or will stop the fee collection.

BIDV Expressway Development Company (BEDC) earlier had purchased the toll collection right of HCMC-Trung Luong Expressway for 25 years at more than VND9.1 trillion. However, due to financial constraints, this company returned the project and the ministry has assigned CIPM to collect the toll ever since.

Toll amounts totaled around VND380 billion in the first year, with VND65 billion spent on power consumption and maintenance services for the expressway annually, according to CIPM.

The HCMC-Trung Luong expressway has a total length of 62 kilometers developed at a cost of VND9.88 trillion, with the expressway section stretching 40 kilometers.

BASF sets up crop protection business in Vietnam

German’s chemical company BASF on Wednesday said it would sell its crop protection drugs directly to Vietnamese farmers rather than via local distributors.

Leon Van Mullekom, Business Area Director for Crop Protection ASEAN at BASF, said the direct selling is aimed to ensure efficient use of such drugs as the firm will provide technical training for farmers.

BASF will set up an expert team to train local farmers. The company currently focuses on providing drugs for coffee, rice and some other crops in the Central Highlands and the Mekong Delta.

Raman Ramachandran, BASF’s Senior Vice President for Crop Protection Asia-Pacific, said that in the coming time BASF would consider setting up AgSolution Farm as a model farm to introduce agricultural solutions to farmers, distributors and BASF staff. BASF has opened such farms in Thailand, the Philippines and Indonesia.

Talking about BASF’s plan in the Vietnamese market, a member of the Vietnam Pesticide Association (VIPA) told the Daily that local companies selling crop protection drugs were facing market share decline when foreign large companies sold their products directly to farmers rather than via distributors.

“Currently, 50% of the market for crop protection drugs is held by seven foreign-invested companies while the rest belongs to 300 local ones. And now with the direct selling of BASF, local companies will lose their market share, which is just a matter of time,” he said.

Regarding the model farm, according to VIPA, this is the strategy which only some large companies like BASF are capable of carrying out while others cannot due to limited financial capabilities.

According to the Ministry of Agriculture and Rural Development, Vietnam’s import value of pesticides and materials amounted to US$454 million in the January-July period, showing a year-on-year rise of 15.6%, with over half imported from China. Besides, around 90% of the crop protection drugs available on the market uses imported materials.

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