Stocks up on foreign investors' purchases

Domestic stock indices went up slightly last week, boosted by economic recovery and ongoing buys by foreign investors.

Viet Nam's gross domestic product (GDP) growth of 5.42 per cent in 2013 was lower than expected, but higher than the growth rate of 2012, according to annual economic data released last week.

The data also showed that the country attracted US$21.6 billion in foreign direct investment in 2013 and boasted a trade surplus of $863 million.

As of December 27, credit had expanded 11 per cent. However, around 17 per cent of the country's credit institutions reported losses this year.

The Viet Nam Asset Management Company bought VND36 trillion ($1.7 billion) worth of non-performing loans (NPL). In HCM City, commercial banks reported total profits of VND5.5 trillion ($259.4 billion) and an NPL rate of 5.5 per cent.

Although more than 100 institutions reported profits, half of them posted a 50 per cent decline in profits compared with 2012.

In the stock market, the VN-Index on the HCM City Stock Exchange ended last week 0.4 per cent higher, at 506.41 points. The trading value averaged more than VND1.2 trillion ($56.6 million), which represented a 17 per cent decline from the previous week's level.

On the Ha Noi Stock Exchange, the HNX-Index added 0.6 per cent compared with the previous Friday's close, to finish at 67.93 points. The average value of trades per session was VND450.9 billion ($21.2 million), lower by 6.7 per cent from a week ago.

Blue chips were favoured, in particular, were shares of steelmaker Hoa Phat (HPG), which were mainly bought by foreign investors. The scope for foreign ownership in the company has reduced to a mere four per cent after last week's trading.

Private equity group Masan (MSN) and Vinacafe Bien Hoa (VCF) were also eyed, while shares of property developer Hoang Anh Gia Lai (HAG), Vietinbank (CTG), Eximbank (EIB) and Sacombank (STB) were sold heavily by investors.

Hong Kong-based investment fund GaoLing acquired 23.13 per cent of Vinacafe Bien Hoa. YHG Investment, a GaoLing-related institution, also purchased a 1.13 per cent stake in the coffee processor. The transaction values VCF shares at VND135,000 ($6.3) per unit.

According to the latest data, by the end of last week, foreign investors bought a net total of $315 million in 2013. This figure does not include investments in the private equity sector and unlisted companies.

Market Vectors Vietnam ETF and FTSE Vietnam UCITS ETF were the two exchange-traded funds that helped to raise money from international investors.

In addition, the US Federal Reserve's quantitative easing measures, effective until the year-end, encouraged cash flows into emerging markets, such as the Philippines, Indonesia and Viet Nam.

The Ha Noi Stock Exchange announced last week that it expected to complete a trading mechanism for exchange-traded funds by the first quarter of next year. It has already finalised a draft regulation on the establishment and management of exchange-traded funds, which will be submitted to the State Securities Commission.

The exchange also hopes to develop the derivatives market by the second quarter and a bond index by the end of next year.

While blue chips were boosted by investor buying, selling pressure weighed on speculative stocks in the real estate and construction sector, including those of the FLC Group (FLC), An Duong Thao Dien (HAR), Vietnam Mechanisation Electrification and Construction (MCG), FeCon Foundation Engineering and Underground Construction (FCN), Tan Tao (ITA), Becamex Infrastructure (IJC) and Vietnam Electricity Construction (VNE).

Danang suggests bond issuance

Danang City’s government has sought approval from the Government to issue VND3.5 trillion worth of municipal bonds after the Ministry of Finance had earlier requested the city to stop the bond issue scheme.

The central coastal city is facing capital shortage, especially for basic construction. Last year, Danang issued VND1.5 trillion and expects to sell VND3.5 trillion more in 2014, Van Huu Chien, chairman of the city, said at the online meeting with the Government early this week.

In addition, the city has proposed an advance of VND500 billion from the State budget for unfinished capital construction projects.

Since 2012, Danang City has seen budget collection slumping since the real estate market has sharply declined. In 2011, collection related to land hit over VND5.1 trillion, or 38% higher than the target.

Last year, the city collected only VND1.3 trillion from land compared to the target of VND3.5 trillion. Therefore, the local government suggested issue of VND5 trillion worth of municipal bonds to raise funds for investment in 2012.

After VND1.5 trillion worth of bonds was issued, the Finance Ministry requested local government to halt issue of the remaining VND3.5 trillion worth of bonds, saying that the city’s loans had exceeded the allowable level.

Firms should make use of Internet to boost marketing

As the Internet has become an effective marketing channel, Vietnamese enterprises should invest in this channel to get closer to customers, heard a workshop on communications challenges held on Wednesday in HCMC.

Dang Dinh Hoang, CEO at Masso Consulting, said at the workshop held by the 2030 Businessmen Club that enterprises should make full use of data provided by tools of Google to improve the effectiveness of marketing campaigns.

“While it takes electricity 50 years, telephone 30 years and television 20 years to penetrate half of the U.S. population, the social network Facebook needs only five years. The Internet revolution has created a faster, stronger and more effective tool, and thus enterprises should not stand outside the game as their customers go online,” Hoang said.

Tran Thai Binh, chairman of VietAds Company, echoed the point, saying that enterprises should use keyword search tools of Google such as search engine optimization (SEO) and Google Analytics.

According to a survey of Google Analytics, by using SEO enterprises’ websites can have 8,000-16,000 visitors a day. Such a high number of visitors provides enterprises with opportunities to get closer to potential customers.

At the workshop, enterprises also shared other experiences in online marketing to promote the identities of products as well as brands on the Internet.

Number of SOEs halved after 13 years

The number of State-owned enterprises – with State ownership from 50% to 100% - had been halved to 3,135 as of January 2013 compared to 5,759 enterprises by 2000, according to the General Statistics Office’s Industrial Statistics Department.

Compared to 2000, the number of State-owned enterprises early this year was equivalent to 54.4%. However, revenues of such enterprises earned last year was 6.9 times higher than in 2000 while their total pre-tax profits and budget contribution amounts increased by 9.4 times and 8.1 times respectively.

According to the General Statistics Office, 2,854 out of 2,893 SOEs that responded to a survey were actually in operation (98.7%) and 39 enterprises had stopped operation (1.3%).

Besides, among 39 enterprises with suspended operation, enterprises waiting for dissolution and bankruptcy accounted for the highest proportion with 41%, those seeking rearrangements over 33% and those suspending to business for changing technology over 10%. Meanwhile, over 15% suspended due to other reasons.

The supply of products and services of State-owned enterprises accounted for a market share of around 32%.

Among 2,893 enterprises, there were 1,347 units required to turn shareholding and the rest had to be merged or converted into one member limited liability companies.

According to the survey, the ratio of profit to revenue of equitized enterprises tended to rise, with nearly 40% of the enterprises seeing an increase of over 10% and 37% of these enterprises recording a rise of less than 10%.

Overseas remittance to HCMC estimated at US$4.8 billion in 2013

Overseas national currency exchange sent to the City is estimated at US$4.8 billion in 2013, accounting for nearly 50 percent of the country’s total overseas national currency exchange, according to Mr Nguyen Hoang Minh, deputy director of the State Bank of Vietnam Ho Chi Minh City Branch.

By November this year, overseas national currency exchange sent to HCMC via commercial banks and economic institutions in the city exceeded $4.15 billion.

The flow of overseas remittance has helped to create foreign currency supply, stabilize exchange rate and monetary market, and contribute to the city’s economic development.

Noticeably, the amount of overseas remittance this year is mainly for business sector, helping to ease financial difficulties for local businesses. Particularly, 70 percent of overseas national currency exchange transferred to HCMC was for business sector; 20 percent was for real estate sector; and 10 percent was affirmed as financial support to family or relatives.

Overseas remittance sent to the City was mainly from European and US markets. However, this year, overseas remittance from two emerging markets, namely South Korea and China, posted rapid growth, accounting for 5-7 percent of total overseas remittance whereas it merely accounted for 1-2 percent in previous years.

Last year, the amount of overseas national currency exchange transferred to HCMC hit $4.1 billion.

Difficulties in fishing industry reduce productivity

The supply of seafood in Vietnam is expected to fall considerably in the near future because of rising fuel prices and bad weather.

Hundreds of ships have returned to Tho Quang Dock in Danang City, Quang Nam Province with small catches.

According to Le Dung, a ship owner, the final months of the year is usually high season for mackerel, tuna and squid, however their ships had to seek shelter from cold wind and rough waters much of the time.

Usually he could expect several tonnes of fish per year, but he faced a grimmer situation this year. After a week, Dung's ship used up 1,500 litres of fuel and huge amount of food for ten crew mates.

"Each trip costs VND40-50 million, but we can only earn an average of VND10 million(USD480) per venture. I want to take a few more trips times. I'm still hoping that we will be able to catch fish. Still rising fuel prices concern me, as now they account for 60-70% of our travel expenses,"  he said.

Another ship owner, Tran Ban, said they had to seek shelter four out of ten days at sea. The water became colder and the waves stronger this year, so that many types of fish have changed their migration routes, emptying the familiar fishing waters.

Ngo Van Cat, Deputy Manager of Tho Quang Lock said normally they receive 50-60 ships a day, but this month only three to four ships arrived. He said, "We needed over 100 tonnes of fish a day in order to meet the demands of hotels, restaurants and other customers, but production has sharply decreased."

As a result, fish prices have increased by 40-50%. Cat said the prices may increase as Tet nears.

FDI sector witnesses large trade surplus

The foreign direct investment (FDI) sector gained a trade surplus of around US$ 14 billion in 2013, according to the General Statistics Office (GSO).

In 2013, Viet Nam ran a trade surplus of US$ 863 million, representing 0.7% of total export revenue.

Although the FDI sector is mushrooming and generating numerous jobs, its contribution to the economy is still modest with low value-added processed and assembled products, according to GSO General Director Nguyen Bich Lam.

The country’s export turnover reached US$ 132.2 billion in 2013, a year-on-year increase of 15.4%. The domestic sector got US$ 43.8 billion from shipping goods abroad, up 3.5%. The FDI sector (including crude oil) earned US$ 88.4%, up 22.4%.  

Heavy industry products and minerals pocketed US$ 58.6 billion in export revenue, up 21.5% against last year and representing 44.3%.

The light industry and handicraft sectors earned US$ 50.3 billion, picking 16.3% and making up 38.1% of the country’s total export turnover.

The agro-forestry sector gained US$ 16.5 billion, down 1.9% against last year and holding 12.5%. Meanwhile, aquaculture exports amounted to US$ 6.7 billion, representing a year-on-year increase of 10.6% and accounting for 5.1%.

Import turnover valued US$ 131.1 billion, 15.4% higher than the previous year. The domestic sector bought US$ 56.8 billion in goods (up 5.6%) and the FDI sector US$ 74.5 billion (up 24.2%).

According to the GSO, Viet Nam is still heavily relying on imported materials as the domestic auxiliary industries remain weak.

Raw materials for assembling operations held a large proportion of export revenue. Accordingly, the country imported 33.3% of overseas telephones and spare parts. Fabric import occupied 48.3% of export volume of the garment and textile industry.

Public debt may account for over 98% of GDP

Vietnam’s real public debt may make up 98.2% of the national GDP, factoring in state-owned enterprise debts, which are not guaranteed by the government, as well as debt of the fundamental construction area.

These numbers were given by Dr. Pham The Anh at a meeting on marco-economic management policy for 2014, held by the Ministry of Planning and Investment recently.

Dr. Anh cited a report submitted by the government to the National Assembly recently, which said that the total debts of wholly state-owned enterprises (SOEs) were estimated at VND1,550 trillion (USD73.8 billion) in late 2012, equal to around 52.5% of GDP.

After deducting the rate of 11.7% of the debt guaranteed by the government, 40.9% of the SOEs are not guaranteed.

Despite not receiving the government guarantees, the government still has to support SOEs when they make losses to save them from bankruptcy.

He cited some typical examples, such as the USD600 million debt owed by Vietnam Shipbuilding Industry Group (Vinashin) and the debt worth thousands of billions of VND by Dong Banh Cement Company.

If the SOE debts, which are not guaranteed by the government, as well as the debts of the construction sector are included, Vietnam’s real public debt will account for 98.2% of the national GDP, he said.

At the same time, the Ministry of Finance recently announced that the country’s public debt was just 55.7% of the national GDP, still well below the debt ceiling of 65% of the GDP set by the National Assembly.

According to the Vietnamese Law on Public Debt Management, which took effect from January 1, 2010, the debts of SOEs are not considered part of the national public debts.

However, Dr. Anh said, in the context so many losses by SOEs, with many of them facing the risk of bankruptcy, their debts should be considered, including both those guaranteed and not guaranteed by the government.

According to Dr. Anh, 105 groups' and corporations' owe an estimated total of VND1,349 trillion (USD64.2 billion), holding more than 80% of the state-owned sector debt.

Among those, the Electricity of Vietnam (EVN) owes VND112.6 trillion, Vietnam Airlines VND27.8 trillion (USD1.32 billion), Vietnam Expressway Development Corporation VND14.3 trillion (USD666.7 million) and Vietnam Posts and Telecommunications Group VND6.9 trillion (USD333.3 million).

As of December 13 of this year, the total losses from these groups and corporations reached VND29 trillion (USD1.38 billion). Dr. Anh warned that in the end government may have to bear the burden.

Electronics retailers pin hopes on promotions

The electronic appliance market has seen buying power recovering strongly as many retailers have launched big promotion programs to attract shoppers during the shopping spree season.

Some retailers said that the current promotion programs are the biggest in the year as they wish to boost up sales to fulfill revenue targets. They also want to offload stockpiles to recover capital for new business plans in 2014.

In addition, producers have also lowered sale prices to clear stockpiles, recover capital and make room for new products.

Some electronic supermarkets in HCMC have received a large number of customers recently. Nguyen Kim shopping center in District 1 has seen the number of clients surge thanks to the Big Bang promotion program.

Similarly, the buying power at Thien Hoa Electronics & Furniture Shopping Center in District 10 and Cho Lon Electronics Shopping Center in District 4 has also increased strongly.

A representative of Nguyen Kim told the Daily that the buying power has been positive in the first two weeks of December, rising by three to four times at centers in HCMC and Hanoi and by four to five times in other localities. Some centers in Binh Duong Province, Can Tho and Danang cities have seen buying power soar by six times compared to that before the Big Bang program launched by the retailer.

Tran Tan Hoang Hau, marketing director of Thien Hoa system, said that sales have jumped by 200-300% in recent days compared to before the promotion program and by 110% against the same period of last year. The retailer has applied a strong discount program on over 100,000 products, offered lucky draws and interest-free installment payment on the occasion of its 12th anniversary.

Dinh Anh Huan, general director of the retail chain Dienmay.com, said that buying power in the first half of December increased by 30% month-on-month. Television sets, refrigerators and washing machines have sold well.

Hau of Thien Hoa said that the electronics market is recovering. Having saved money for a long time, local consumers are ready to disburse in new home appliances when prices have declined to a reasonable level.

Hau expected that electronics centers and supermarkets will launch more promotion programs from now to the Lunar New Year holiday, or Tet, due in late January. Retailers hope that the buying power for electronic appliances will surge by 200% to 300% compared to normal days.

Huan of Dienmay.com also said that buying power will keep rising in the coming time, especially 20 days ahead of the Tet holiday.

Resettlement progress in Thu Thiem lags

The program to build 12,500 resettlement apartments in Thu Thiem New Urban Area in HCMC’s District 2 is underway but only one-fourth of the total has been completed and handed over to residents.

According to statistics of the HCMC government, the implementation of resettlement projects in Thu Thiem such as the 17.3-hectare project in An Phu, the projects of 38.4 hectares and 30 hectares in Binh Khanh still sticks to the schedule.

There will be 1,080 more apartments completed and added to the resettlement plan late this year, raising the program’s total number of finished condos to 2,204 units.

Early last month the city government has asked the HCMC Department of Construction to accelerate the implementation progress of resettlement projects so that residents can receive apartments early.

In addition, the HCMC Department of Construction has been required to work with districts to allocate the housing fund consisting of 3,799 apartments and land lots to areas in need.

The city encourages resettlement in areas close to where residents are living instead of in far areas to avoid disturbance in living and working of residents.

Europe: Vietnam’s second biggest export market

The Ministry of Industry and Trade’s Trade Promotion Agency and the Netherlands Centre for the Promotion of Imports from Developing Countries (CBI) hosted a December 20 seminar in Ho Chi Minh City on Vietnamese agricultural and food product exports to Europe.

Europe is Vietnam’s third biggest trade partner and the second biggest export market, but Vietnamese businesses often find their expansion ambitions thwarted by the continent’s stringent food hygiene and safety and quarantine regulations.

Senior market experts attending the seminar discussed the current realities facing Vietnamese agricultural product exports, issues exporters commonly encounter when attempting to enter the EU and the lucrative market’s many opportunities and challenges.

The seminar was designed to encourage expanding export markets for local businesses by introducing representatives to potential EU partners.

Promoting border trade between Vietnam, Laos, and Cambodia

Nearly 200 Vietnamese, Cambodian, and Lao delegates gathered at a December 20 seminar in Tay Ninh to discuss promoting border trade between the three countries.

Participants examined ways of streamlining imports and exports via road networks linking Tay Ninh Province with Laotian and Cambodian localities.

Tay Ninh shares a 240km border with Cambodia incorporating the Moc Bai and Xa Mat international border gates as well as 14 other border gates.

Import-export activities conducted through Tay Ninh accounts for one-third of the total Vietnam-Cambodia import-export value. Two-way trade exceeded US$4.1 billion in 2012.

Southern businesses wanting to export products to Laos must currently cross over through Quang Tri Province’s Lao Bao border gate - an expensive 1,000km away.

Exporting via Tay Ninh would cut travel distances to only 350km.

Tay Ninh’s infrastructure can bear the demands of travel and goods transport, but border trade between Vietnam and Cambodia remains beset by cumbersome bureaucracy.

The three countries should align their administration policies to attract stable levels of investment and diversify goods and services.

Deputy Minister of Industry and Trade Nguyen Cam Tu said border trade between the three countries continues to grow.

Both the US$2 billion target for Vietnam-Laos trade and the US$5 billion target for Vietnam-Cambodia trade are well within reach.

Footwear exports hit US$7.9 billion

Vietnam’s 2013 footwear export value has hit US$7.9 billion, 14.9 percent higher than the same period last year.

The annual US$8 billion export target is within reach.

The US remains the key importer of Vietnamese footwear, with purchases worth US$2.3 billion in 11 months and accounting for more than 30 percent of the country’s total footwear export value.

The UK is Vietnam’s next most important footwear customer with imports worth US$496.8 million (up 8.9 percent), followed by Belgium with US$456.1 million (up 26.8 percent), Germany with US$388.9 million (up 11.8 percent), and Japan with US$349.7 million (up 16.8 percent).

Vietnam invests US$15.5 billion in overseas projects

Vietnamese enterprises have so far committed a total of US$15.5 billion in 742 projects abroad.

According to the Ministry of Industry and Trade, mining industry tops the list with 99 projects totalling US$4.6 billion, equivalent to 13.3 percent of overall projects and 46 percent of total investment capital.

Agro-forestry and food processing comes to second with 80 projects worth of US$1.9 billion, accounting for 10.8 percent of all projects and 23.6 percent of total investment capital, while power projects also attracted US$1.8 billion, accounting for 12.1 percent.

Vietnamese has expanded their investment to 59 countries and territories across the world.

Vietnam to export more farm products to Japan, RoK

Japan and the Republic of Korea (RoK) are still two potential export markets for Vietnamese farm products, according to the Asia-Pacific Market Department under the Ministry of Industry and Trade (MoIT).

The department said that apart from reducing and eliminating tariffs to promote the export of agricultural and seafood products to Japan and the RoK, it is necessary to break through their markets’ non-tariff barriers.

According to the United Nations Conference on Trade and Development (UNCTAD), non-tariff measures are generally defined as policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded or prices or both.

Different from normal tariff measures, non-tariff measures are difficult to quantify by concrete figures and closely associated with security, health and social purposes. Therefore, the impact of non-tariff measures on international trade are difficult to define and it is also difficult to ask nations to remove these tariffs.

Japan has tight controls over the quality of Vietnamese agricultural and seafood products. But Vietnam has not fully yet met its requirements.

The Japanese Ministry of Health, Labour and Welfare has recently decided to inspect Ethoxyquin (ETQ) residue in all frozen shrimps imported from Vietnam at the maximum residue limits (MRL) of 0.01ppm.

In addition, the RoK’s strict regulations on animal plant quarantine remain the biggest snag in the export of Vietnamese farm products, especially fresh fruit, cattle and poultry. Like Japan, the RoK has also inspected ETQ residue in shrimps imported from Vietnam, also at 0.01ppm.

Over the past three years, Vietnam’s total export turnover has achieved double-digit growth. For example, its exports to Japan and the RoK have increased by 27% and 40%, an average annual basis. Its export earnings from Japan and the RoK in 2012 was estimated at US$13.1 billion and US$5.6 billion, up 21.2% and 18.2% respectively against the previous year.

The Vietnam-Japan Economic Partnership Agreement (VJEPA) took effect on October 1, 2009, marking a milestone in the cooperative relations between the two nations. This was Vietnam’s first free trade agreement (FTA) ever signed since its admission to the World Trade Organization (WTO). Vietnam and the RoK have joined the ASEAN-Korea FTA (AKFTA) with preferential policies on the opening of trade of goods and services for both sides.

The VJEPA and AKFTA are aimed at improving bilateral trade exchange between Vietnam and Japan and between Vietnam and the RoK.

Japan’s sharp reduction in tariffs on imported agricultural and seafood products has opened up opportunities for Vietnamese businesses to penetrate the Japanese market. Last year, Vietnam earned over US$285 million from its farm products exported to Japan, double the figure of 2009.

Vietnam’s agricultural and seafood exports to Japan have increased dramatically in recent years, but they make up a small proportion of Japan’s total import volume.

The RoK has imported many agricultural and seafood products from other nations in the world, but Vietnam’s market share below 5%. This means there remains plenty of opportunity for VOV to increase its market share in the two potential markets mentioned above.

Vietnam appreciates WB assistance

Vietnam considers the World Bank a reliable development partner in terms of resources and policy consultancy, said a senior Party official.

Prof. Vuong Dinh Hue, head of Party Central Committee’s Economic Commissions, made the statement while receiving Victoria Kwakwa, WB Vietnam Country Director, at a working session in Hanoi on December 19.

Hue appreciated Kwakwa’s efforts in lobbying the World Bank and other development partners to maintain preferential official development assistance (ODA) to Vietnam, especially for poverty reduction and infrastructure construction projects.

The bank has also worked closely with the Economic Commission to support economic development in the country, he said.

Hue said Vietnam is currently restructuring its economy, with a focus on public investments, the banking system, and State owned businesses, which has brought about initial results.

The Economic Commission needs further assistance and policy consultancy from the World Bank to make valuable recommendations on socio-economic development to the Party Central Committee, he told Kwakwa.

He asked the WB to help seek development partners to back Vietnam’s plan on reviewing 30 years of the Doi Moi (Renewal) process and draw up national socio-economic development scenarios in the coming years.

Kwakwa hailed the close ties between the WB and Vietnam, saying both sides have coordinated well in speeding up WB loan disbursement.

She assured Hue that the WB will stand side by side with Vietnam in realizing socio-economic development targets.

Farm produce’s future export prospects

Vietnam’s agricultural products exported in 2013 have increased by 1.5% to US$25.25 billion, defying a fall in global market demand.

According to the latest report by the Ministry of Agriculture and Rural Development (MARD), November’s agricultural exports were estimated at US$2.42 billion in revenue.

Dr. Dang Kim Son, Head of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), is optimistic about future prospects of Vietnam’s agricultural products, both locally and internationally. He says the successful performance will depend on the possibility of ensuring food hygiene and safety and increasing the added value of products in the farming sector.

Metro Cash & Carry Vietnam Director General Philippe Bacac who has ten years of experience in developing trade infrastructure facilities and supply chains, says domestic farmers have huge potential for seafood, fruit, and vegetable production.

He recommends that they focus on improving the quality and competitiveness of products, and establishing closer links with exporters.

In mid-November, Vietnam had its first Shanghai-bound shipment of 23 tonnes of dragon fruit, paving the way for agricultural products to corner the Chinese market through the Metro distribution network. Metro operates in 32 countries and territories around the world.

Metro Singapore Office Representative Do Kim Dung said the first dragon fruit shipment was part of a contract signed by Rong Do Company and there will be more orders in the near future.

Dung says Metro is seeking potential partners to ensure a steady supply of high-quality garlic, ginger, lemons, rambutan, and strawberries from Vietnam.

She emphasizes the importance of strictly adhering to origin and quality regulations. Local exporters have to meet the British Retail Consortium (BRC) standards, International Food Standard (IFS), and Good Agricultural Practice (GAP), with strong commitments to providing an annual volume of 8,000 tonnes of farm produce for Asian and European markets.

Since early this year, Metro has purchased more than US$6 million worth of Vietnamese fruit, vegetables, and seafood for its 747 retail centres in the world. It plans to sign more contracts worth US$12 million with Vietnam next year.

Small farmers at crossroads in Vietnam

In order to increase Vietnam's competitiveness in agriculture many have proposed a policy of integration of small farms in order to increase production, but this may mean that millions of small households would fall behind.

Currently around 20 million people in Vietnam work in direct agricultural production, and the figure is increasing by 600,000 per year. However, Vietnam’s agriculture industry still mainly depends on small-sized household farms. As many as 99% out of total 10 million farms are small household-farms with less than two hectares of land for cultivation.

Despite their modest size, such households are currently considered the backbone of the country’s agriculture industry, which provide for both domestic consumption and export.

The strategy of integration poses many opportunities and challenges to these small farms that individually have modest resources and old technology.

Their challenges range from the effects of price fluctuations and lower profits to the possibility of contract cancellations and effects from bubbles in the world farm produce markets.

The question for policy-makers now is whether it is wise to go with domestic agriculture integration. Many say that this is the best path considering the trends of globalisation, urbanisation and migration from rural areas to urban ones. However the extent to which the country follows this path would depend on the development of non-agricultural industries and government policy, they say.

“In order to ensure sustainability in integration, it’s necessary to drive small households towards this goal, as well as provide them with support,” said Nguyen Lan Huong, a specialist from the UN’s Food and Agriculture Agency (FAO) in Vietnam, at the ISG Planary Meeting 2013 “International Economic Integration for Agriculture in Vietnam: New Challenges and Opportunities.

However, the problem of how to maintain such small households while at the same time helping them to integrate along with increasing production value, productivity and competitiveness, while the local economies further integrate into regional and the world economy is really a great challenge.

In order to increase the sector’s competitiveness, some economists have said that Vietnam should consider enlarging agricultural production with the application of technology, increase productivity and nurture sustainable development.

Truong Dinh Tuyen, former Minister of Industry, said that it is necessary to create a new production model to build up "multi-functional" agriculture. Tuyen described one that combines production and processing in order to lower the volume of exports of raw material, so as to increase productivity value and protect the environment, while at the same time preserving traditional Vietnamese values.

To this end, he said, the country should take a parallel approach to the problem by intensifying the use of technology and designing new models of production. This, he added, would foster cooperation between Vietnamese farmers and enterprises, especially in the case of taking advantage of public private partnerships.

Tuyen commented, “The GDP growth rate has been on the fall recently. Agricultural surpluses would fall if imports increase. Farmers would also suffer from lower profits due to the decrease in prices of farm products. This is a very real risk for small household-based farms. The development of large, concentrated rice fields could be a foundation for the sector."

Some representatives of international organisations and foreign donors have said that the increase of production is unavoidable if the country wishes to increase competitiveness. They also suggested more careful studies on the effects integration will have on small-sized farming households before mapping out new policies, adding that there needs to be a support system for smaller farms and ethnic minority groups.

Viettel, VinaPhone switch to e-payment

Several local mobile service providers, including Viettel and VinaPhone, now are switching to the e-payment segment in the context that their revenues from basic mobile services such as call, text and value added services have declined.

Speaking with the Daily, Nguyen Duc Hung in charge of sales and marketing of the value added service center of VinaPhone, said basic services like phone and text were already saturated and that charges of these services were falling due to the fierce competition from free over-the-top (OTT) services.  Because of this, telecom enterprises now are competing with one another in terms of the value-added service and payment service, Hung said.

“Basic and value added services have been tapped thoroughly by telecom companies while only payment is the final segment that is not yet utilized at present. This is the segment bringing huge revenue,” Hung analyzed.

Viettel and VinaPhone are two mobile service operators joining the e-payment sector actively while MobiFone is also making a plan to enter this area.

In particular, Viettel has launched the BankPlus service allowing customers to make payments for water and electricity bills, air ticket purchases and money transfers via mobile phones. The service now is connected among 16 local banks such as Vietcombank, Vietinbank, BIDV and Sacombank, with users set to pay VND11,000 per month to maintain the service.

Account transfers within the same bank costs a minimum VND3,000 for one transaction while account transfers among different banks is charged VND10,000 a time and the transaction check fee is set at VND500. However, certain banks offer free money transfers internally and only charge monthly service maintenance fees.

Pham Trung Kien, director of the e-commerce center of Viettel, informed that the BankPlus service of his firm had already connected 16 banks and attracted 2.4 million Viettel subscribers. Notably, over 1.5 million subscribers perform monthly transactions worth some VND5 million a month each, Kien remarked.

In the meantime, VinaPhone with the e-purse model Momo supports customers via payments for air tickets and game card purchases and other digital contents. At the same time, customers are also able to transfer money through the e-purse model with a maximum amount of VND5 million a day. The service now is being used by 700,000 VinaPhone subscribers.

Besides the basic payment, Viettel and VinaPhone said they were looking to connect with e-commerce websites as intermediate payment tools. According to Hung, VinaPhone is talking with several lenders over the payment channel connection besides cooperating with e-commerce websites to integrate the e-purse Momo as an online payment portal.

Similarly, Viettel is working with local e-commerce websites to launch its payment service in the e-commerce industry next year.

Gov’t urged to spur business support for recovery

The Government should further boost support for enterprises to help them catch up with opportunities surfacing alongside the economic recovery, heard a seminar on Vietnam’s economic prospects for 2014 in Hanoi on Thursday.

Experts at the seminar agreed that despite numerous economic problems, there are chances for recovery from next year if the Government is consistent in its support policies for enterprises. The seminar “Vietnam’s economic prospects for 2014: synergy from policy effects” was organized by the National Center for Socioeconomic Information and Forecast under the Ministry of Planning and Investment (NCEIF).

Mai Thi Thu, director of the center, was fairly upbeat on the economy, saying the worst is over now. Those enterprises that remain operational now have proved the feasibility in their business plans, she said.

“Therefore, if the Government is consistent in its support policies for enterprises, there will be a big chance for them to return to the growth path,” she said.

But other experts at the gathering stressed that the business community is still very frail now.

Doan Thi Quyen of the Enterprise Development Institute under the Vietnam Chamber of Commerce and Industry (VCCI) cited a recent survey conducted by VCCI to say that enterprises could not absorb capital for business expansion. Entrepreneurs polled in the survey said the Government’s support policies were not effective, she said.

“Up to 53.6% of surveyed enterprises say they have demand for capital compared to 57.3% in late 2012,” she said. Even worse, among those enterprises in need of capital, only some 36% were able to take out bank loans, Quyen added.

The overall business picture in 2013 is diverse but choppy, according to expert Tran Tien Cuong, with rising numbers of new business start-ups, disbanded enterprises and those with suspended operations.

Citing data from the Ministry of Planning and Investment, Cuong noted that there were 71,000 enterprises established in the January-November period with total registered capital of VND259.5 trillion, rising by 9.5% in the number of start-ups but falling 15.4% in capital year-on-year.

As many as 55,000 enterprises shut down in the first 11 months, rising 8.4% from a year earlier, including 8,850 that have completed liquidation procedures.

Such figures tell the story of blues as enterprises are still under huge pressure to survive, according to Cuong, adding that such a situation presaged difficulties in tax collection next year.

The light at the end of the tunnel is that as many as 12,700 enterprises that had earlier suspended operations have now resumed business.

A study by the National Center for Socioeconomic Information and Forecast suggests that despite improvements, the economy in 2013 is still facing big challenges, especially in terms of total investment, the people’s purchasing power, and business health.

The overall investment in the economy as of the end of the third quarter grew only 6.1% year-on-year, and the ratio of overall investment to the gross domestic product (GDP) has thus been declining to around 30% now compared to around 40% prior to 2008.

The people’s purchasing power is also falling as the people with smaller incomes are tightening their purse string, as seen in the slower growth of the total retail revenue of commodities and services, at 14.26% as of end-third quarter. The low inflation is partially attributed to the weak aggregate demand due to economic stagnation.

The interest rate has fallen sharply, but many enterprises still find it difficult to access credits, according to the center. Many cash-strapped enterprises therefore are near the verge of bankruptcy.

Another lingering bottleneck for economic development is the amount of bad debts that is far from being addressed, which will make the local economy lag further behind regional peers.

Revenues of CII’s toll stations rise strongly

Revenues of toll stations operated by HCMC Infrastructure Investment Joint Stock Company (CII) in HCMC increase by billions of Vietnam dong each month, according to the firm’s report sent to investors on Thursday.

Hanoi Highway toll station has collected VND22-27 billion a month since it began collecting the fees to recover capital for Rach Chiec Bridge on June 1, 2013. Meanwhile, revenues of Binh Trieu Bridge station have doubled to around VND8 billion per month since August 1, 2013 when CII was allowed to collect the fees for both directions.

Cam Thinh toll station in Ninh Thuan Province will increase the fees from next year, with revenues forecast to rise by 1.5 times to VND6 billion per month.

According to the report, the toll fee collection in the year’s second half is forecast to double that in the first half with an average of some VND40 billion per month. Besides, it will inch up by 25% next year due to increasing traffic and the toll fees rising by 1.5 times to around VND600 billion.

Le Quoc Binh, general director of CII, told the Daily that the fee increase was only one of the factors shortening the collection duration but how much time can be shortened depended on traffic volumes and bank loan interest.

According to Thai Van Chung, general secretary of the HCMC Goods Transport Association, the fee hike near the Lunar New Year holiday will push up prices of commodities and transport fees, and the ones suffering the most from the fee hike will still be consumers.

The HCMC People’s Council on Tuesday approved a proposal of increasing the toll fees at Hanoi Highway and Binh Trieu stations by a minimum amount regulated by the Ministry of Finance as from next year.

The toll fees imposed on under-12-seat vehicles, under-two-ton trucks and buses will increase by 1.5 times to VND15,000 per time or VND450,000 per month.

Vehicles of 12-30 seats and trucks of 2-4 tons will have to pay VND20,000 per time or VND600,000 per month, rising by 1.35 times.

The fees for vehicles of over 31 seats and trucks of 4-10 tons will be VND25,000 per time and VND750,000 per month, rising by 1.16 times.

Meanwhile, the fees imposed on trucks of 10-18 tons and 20-foot container trucks will remain at VND40,000 per time and VND1.2 million per month and those for over-18-ton trucks and 40-foot container trucks will be VND80,000 per time and VND2.4 million per month.

Deloitte offers ERM consultation to PVEP

Deloitte on Thursday signed a contract with PetroVietnam Exploration Production Corporation (PVEP) to provide consultation for the latter’s deployment of enterprise risk management (ERM) solutions.

Under the cooperation, Deloitte will help PVEP build its risk management strategy, policy and process; deploy the management system and conduct other activities to increase the enterprise management quality.

Do Van Khanh, board member and CEO of PVEP, said in a statement that the deployment of ERM was one of the firm’s strategic goals from now until 2015, targeting to become a strong oil-gas exploration and exploitation firm in the region in 2025.

The 2,000-strong PVEP currently has assets of over US$5 billion and manages 65 projects in Vietnam and 14 countries worldwide.

According to David Traylor, an expert at Deloitte, the deployment of ERM in different sector varies. With the banking sector the key point is how to reduce risks in investments while that for the oil and gas sector is not only how to reduce such investment risks but also reduce risks in terms of human livelihood and environment.

Kinh Do to sell stake to U.S. partner

A confectionery group from the U.S. will acquire 40 million shares of Kinh Do Corporation (KDC) by entrusting investment funds in Asia, said KDC general director Tran Le Nguyen.

The U.S. partner will also allow the local firm to make products under its brands and export them to Southeast Asian markets.

“We cannot disclose the name of the partner given an information security agreement between both sides. However, this is a global leader and it has launched products in the country,” Nguyen said.

The partner will support KDC in developing new products such as cooking oil and instant noodles, he added.

For the share selling price, the partner will enjoy a 20% discount of the average closing price in the last 20 sessions. KDC expects to earn around VND1.2-1.3 trillion from this issuance.

KDC is also negotiating with a Russian food enterprise to prepare for investment in Moscow. In the first stage, KDC will produce fresh pies and sponge cakes for this market.

Recently, Cau Tre Food Company has offered to cooperate with KDC, using KDC’s ice cream distribution network, transport system and freezers to distribute Cau Tre’s frozen food products. The cooperation is expected to begin next year.

ACB wants to sell bad debt to VAMC

Asia Commercial Bank (ACB) has written to Vietnam Asset Management Company (VAMC) proposing selling VND1.5 trillion bad debt, of which VAMC expects to take over VND1 trillion within this year if the procedure goes smoothly.

ACB general director Do Minh Toan told the Daily that the bank will transfer three packages of original bad debts worth VND500 billion each to VAMC.

As the year 2013 is nearing the end, only two packages could be transferred within this year. The bank expects to sell the final debt package to the company in early 2014.

All the bad debts are not related to the real estate sector. Selling out the VND1.5 trillion debts, ACB expects to cut its bad debt ratio from 3.1% in late November to 2%, Toan said.

However, around 40% of ACB’s debts were made in foreign currencies. Given the current rules, if VAMC buys foreign currency loans, it will have to convert the loans into dong, so banks will have to buy foreign currencies in the market to maintain their forex positions.

Some people have raised concerns that the regulation will affect stability of the dong-U.S. dollar exchange rate.

Nguyen Quoc Hung, vice chairman of VAMC, said that the enterprise is considering foreign currency debt purchases from credit institutions with value amounting to tens of millions of U.S. dollars.

“VAMC has not bought any bad debts in foreign currency as we are waiting for instructions from the central bank. We have plans to buy the first foreign currency debts at the end of this year but will find ways to prevent any impact on the exchange rate,” Hung said.

For the bad debt banks have transferred to VAMC, most of it has been made to purchase equipments for high-class construction projects.

Concerning impacts of foreign currency debt purchases on the exchange rate, Hung said that there is no good reason to worry about that. Only when VAMC buys huge debts worth hundreds of millions or billions of U.S dollar, the forex rate stability will be affected.

In addition, VAMC will seek supports from the central bank with purchase of foreign currency loans to avoid impacting on the forex market.

VAMC has bought some loans in gold, which has also been converted into dong. However, there have been no impacts caused to the gold market.

VAMC so far has bought VND21.8 trillion worth of bad debt with special bonds, equivalent to VND27 trillion of original debt. The enterprise expects to buy debts from 28 to 29 credit institutions this year, Hung added.

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