Dairy product prices under microscope

The finance and trade ministries will set up delegations to inspect dairy production and trading companies after these companies submitted proposals to increase the prices of their products.

Nguyen Anh Tuan, director of the Price Management Department under the Ministry of Finance (MoF), revealed the information following a March 4 meeting between the MoF, the Ministry of Industry and Trade (MoIT) and other relevant ministries, aiming to stabilise the local milk market.

Tuan said the delegations are to inspect factors affecting the selling prices of dairy products of the five companies and determine whether the companies have violated the Law on Competition and the Law on Price, and to present recommendations to the two ministries.

The companies include Mead Johnson, Nestle Vietnam, Vinamilk, and 3A Nutrition STC, which distributes Abbot dairy products, and Friesland Campina.

The ministries will then issue a public report on the inspection results and whether there have been violations of existing legal regulations, and if there is, they will respond to such violations.

If dairy prices keep rising, the relevant offices could apply ceiling price mechanism on such dairy selling prices in the local market under the Law on Price.

The Price Management Department reported the dairy production and trading companies increased prices by 5 to 10% in December 2013

They have continued registering increases in prices since early this year, though the ministries have offered many solutions to ease the pressure on the local market.

The department said it has asked dairy production and trading companies to list prices of their products, since December 2013 for Mead Johnson, since January for Nestle Vietnam, February for Vinamilk and Friesland Campina, and March for 3A Nutrition JSC distributing Abbot dairy products. The companies must also explain the reasons for increasing their selling prices.

“Recently, prices of input materials throughout the world have increased by 5 to 48%. And those prices are expected to continue increasing. Additionally, the cost of direct and indirect labour of the Friesland Campina rose 15% on average since April 2013. But the company had not changed prices,” said Truong Van Toan, External and Legal Director of Friesland Campina.

“The company has proposed increasing selling prices for 16 out of its total 47 products to obtain investment for research and development of products and to assure the use of good quality materials. It has planned to hike those prices since February 25 but in fact the prices for the 16 products have remained unchanged.”

According to Nestle Vietnam, the increase was due to high import prices and labour and transport costs, the department said.

But the department asked Nestle Vietnam to provide more details in its explanation and said the company must leave prices unchanged until it offers more information about its reasons behind price hike.

Workshop highlights eco-innovation in SMEs

The Asian Institute of Technology in Vietnam (AIT-VN) held a workshop on eco-innovation for small and medium enterprises in Hanoi on March 4.

The workshop aims at introducing the trend towards Eco-innovation to enhance the enterprises’ competitiveness in the market settings of sustainable consumption nowadays and in the future.

Eco-innovation is the development of products and processes that contribute to sustainable development. It is the development and application of a business model which will lead to a company’s environmental sustainability performance through a combination of significantly improved or new product (service), processing, market approach and organisational structure.

Doctor Nguyen Van Hop from the AIT-VN said that eco-innovation, or green innovation, enhances enterprises’ competitiveness while ensuring environmental protection and making them tap ecological resources effectively.

He also introduced participants to the results of the Sustainable Product Innovation (SPIN) project, which is sponsored by the European Union and implemented in Vietnam , Laos and Cambodia during 2010-2014.

The project has helped businesses boost sustainable production, he added.

Under the project, around 2,000 products, including handicrafts, bags, kitchenware and furniture, were also re-designed or newly-designed to be environmentally friendly.-

Vietnam, Japan eye further agro-fisheries cooperation

Nearly 100 Japanese businesses on March 4 gathered at a forum in Chiba prefecture, Japan, to exchange success stories and experience in investing in agriculture and fisheries in Vietnam.

The event, jointly held by the Vietnam Ministry of Agriculture and Rural Development and the Vietnamese Embassy in Japan, created partnership opportunities for 13 participating Vietnamese companies as well.

According to Commercial Counsellor to Japan Nguyen Trung Dung, agro-fisheries cooperation has significantly contributed to the two countries’ economic development.

Apart from traditional realms such as the manufacturing industry and trade, Japanese firms could be potential investors in Vietnam’s agro-fisheries, he said, adding that the partnership in the field will be a win-win one.

To Thi Tuong Lan, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers, pointed to the fact that while Japan is Vietnam’s third largest seafood exporter, making up 7.8 percent of the country’s market share, the Southeast Asian country ranked eighth among Japan’s seafood providers with 9 percent in 2012.

Between 1993 and 2011, Japan remained the largest single import market of Vietnam’s seafood, accounting for an average 26 percent.

Along with fisheries, Vietnamese fruits such as mango, durian, grapefruit and dragon are also seeking ways to enter Japan, where market requirements are particularly strict.

Nguyen Thanh Binh, Director of VEGETEXCO JSC, said last year Vietnam shipped 1,000 tonnes of dragons to Japan, suggesting Vietnamese businesses pay more attention to improving the quality of products.

At the forum, a representative of Yasaka - a Japanese firm operating in Vietnam for two decades - affirmed the significance of technical transfer in the preservation of fruits and other farm produce, saying this is the key for Vietnamese fruits to conquer the Japanese market.

Vietnam highly appreciated in TPP negotiations

Vietnam has shown its flexibility and held its clear view in bilateral and multilateral negotiations of the Trans-Pacific Partnership (TPP) Ministerial Meeting held recently in Singapore.

Pham Quynh Mai, an official of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MoIT), said MoIT Minister Vu Huy Hoang attended all sessions of the February 22-25 meeting and Vietnam’s view was acknowledged by all TPP members.

Despite all-out efforts, participating parties did not reach consensus on a number of issues, including intellectual property, market access, and State-owned enterprise restructuring, Mai said.

The TPP pact aims for total trade liberalization, with 100% of import tariffs to be slashed. Over 90% of the tariffs will be cut as soon as the agreement comes into effect.

However, some countries such as the US and Japan are dickering on tax reduction and product protection matters. Only when negotiations on these issues are attained, can negotiations move forward.

With Canada, Japan and Mexico joining the trade pact, experts say negotiations will last longer than expected.  

TPP will bring economic benefit to all 12 participating countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam.

HNX raises $1b from Government bonds

The Ha Noi Stock Exchange (HNX) announced that it has mobilised VND25 trillion, or US$1.19 billion, from seven government bond auctions in February.

Out of them, the State Treasury raised VND23 trillion, or $1.09 billion, the Vietnam Development Bank mobilised VND1.25 trillion, or $59.5 million and the Vietnam Bank for Social Policies sold VND820 billion.

HNX said that the number of bonds mobilised in the primary market increased 15.9 per cent compared with that in January.

The interest rate ranged from 6.15 to 6.58 per cent for two-year bonds, from 6.7 to 7.84 per cent for three-year bonds and from 7.67 to 9 per cent for five-year bonds.

In the secondary market, the total number of government bonds in outright transactions reached 336 million that was equivalent to VND35.8 trillion, or $1.7 billion.

The total volume of government bonds in repurchase transactions reached 89.2 million, equivalent to VND8.99 trillion, or $428.2 million.

The value of government-guaranteed bonds was over VND8.19 trillion, or over $390 million, in outright transactions and more than VND4.48 trillion, or $213.4 million, in repurchase transactions.

In February, foreign investors bought bonds worth more than VND5.08 trillion, or $241.9 million, and sold VND3,584 billion, or $170.6 million. In the secondary market alone, the State Treasury sold 7.4 million bonds, equivalent to over VND710 billion, or $33.8 million, to international investors.

Japan boosts trade ties with Vietnam

Nearly 100 Japanese businesses have attended a Vietnam forum on trade and investment promotion in the agro-fishery sector, showing their keen interest in cooperation with Vietnam.

The event, held in Chiba prefecture on March 4 by the Vietnam Ministry of Agriculture and Rural Development and the Vietnamese Embassy in Japan, aimed to introduce Vietnamese products and attract investment from Japanese enterprises in the field.

Addressing the forum, Nguyen Trung Dung, Trade Counsellor at the Vietnamese Embassy in Japan, affirmed over the years, agro-aquatic and seafood cooperation between Vietnam and Japan has been swelling, boosting the economies of both countries.

He said cooperation between the two countries in such field is mutually beneficial, contributing to the application of advanced technology in cultivation, production and agricultural and aquatic products processing.

It directly translates into increased crop yields and profits, facilitating Vietnam in meeting production quotas for the domestic market of more than 90 million consumers and demand for exports as well.

To Thi Tuong Lan, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP), discussed the opportunities and challenges in fisheries trade of Vietnam and Japan.

She said Japan is Vietnam’s third largest seafood supplier, accounting for 7.8% of the market share, while Vietnam ranked 8th among countries providing aquatic products to Japan, making up 9% of the market share in 2012.

From 1993 to 2011, Japan was the largest single market for Vietnam's aquatic sector with an average proportion of 26% of seafood export turnover each year.

This is also a great opportunity for Vietnam's fruit growers to seek and penetrate the Japanese market, said Nguyen Thanh Binh, General Director of the Vietnam Vegetexco.

He said some Vietnamese fruits including Hoa Loc mango, Chin Hoa durian, Nam Roi grapefruit, and dragon fruit, made well-known brands in the Japanese market.

Binh stressed that in order for Vietnam’s fruit and vegetable sector to find a niche in the Japanese market, Vietnam enterprises need to pay detailed attention to the quality of products based on Japan’s strict criteria.

In 2013, Vietnam exported 1,000 tonnes of dragon fruit to Japan, meaning high-quality Vietnamese products are finding inroads into the market, he added.

At the forum, Japanese companies such as Maple Food and Yasaka also shared their experience in investment in Vietnam’s agro-fishery sector.

A representative from Yasaka Company considered technology transfer to Vietnam in fruit and agricultural products preservation as the key to conquering the Japanese market.

Long An increases cooperation with Cambodian province

The southern province of Long An will help the Cambodian province of Prey Veng develop infrastructure, agriculture and health care.

The agreement was reached at a working session in Long An on March 4 between leaders of the two provinces.

The Vietnamese locality will build Tan Hung-Svai A Ngoong bridge, upgrade a power supply system, provide farming techniques, supply vaccines, and train medical staff in Prey Veng.

Both sides agreed to sign a document on border security management and protection.

Since Long An and Prey Veng signed their bilateral cooperation agreement a year ago, they have opened a pair of auxiliary border gates, provided medical check-ups and treatment for more than 1,000 people in their shared border, and trained Cambodian officials in Vietnamese language.  

The Prey Veng delegation made a fact-finding tour of a big paddy field, a rice cross-breeding farm, a dragon fruit garden in a number of districts in Long An on March 3.

Travel agents to charge for VN Airlines bookings

Ticket agents would be allowed to determine additional charges for booking from March 15, instead of applying charges fixed by Vietnam Airlines as it was being done.

However, the total ticket prices (excluding value added tax) would not be allowed to exceed the ceiling prices set by the Civil Aviation Authority of Viet Nam.

The additional charges include fees for booking, ticket printouts and other services.

Vietnam Airlines said that this would enhance competition among agencies and encourage them to improve the quality of services.

Vietnamese firms aim to invest more in Laos

Vietnamese firms in Laos expressed their determination to achieve the US$2-billion goal for bilateral trade at Monday's meeting held by the Viet Nam Embassy in Laos.

Representatives from 50 Vietnamese enterprises attended the meeting.

Viet Nam currently has 412 investment projects in Laos with a total registered capital of US$5.012 billion, and ranks third among the countries with investments in Laos. In 2013 alone, a total of $138 million was poured into 12 projects.

The main investment sectors include mining, agriculture, construction, banking, insurance and services.

HCM City hosts international expos

More than 470 companies from over 28 countries and territories are showcasing new and advanced products and technologies at two exhibitions, Propak Viet Nam and Plastic & Rubber Viet Nam, which opened yesterday in HCM City.

The three-day Propak is the leading international showcase for Viet Nam's growing food, drink, and pharmaceutical industries, featuring packaging solutions, machinery for producing confectionery, food ingredients, and others.

Plastic & Rubber Viet Nam is offering to manufacturers a range of high-end technologies and equipment catering to all factory production needs, and is being held along with Propak because over 35 per cent of plastics relate directly to the packaging industry.

"Propak Viet Nam and Plastics Rubber Viet Nam can support Viet Nam's growth," Tran Viet Dung, deputy director of the Viet Nam Chamber of Commerce and Industry Exhibition Centre, said.

"The events will encourage industrialists to develop their business and seek new technologies and innovations while networking with world-famous companies."

Viet Nam's food processing industry has grown rapidly in the last few years, while total sales of pharmaceutical products is expected to reach US$5.2 billion by next year.

Plastics exports are expected to grow at 13.5-16.5 per cent this year.

The event will also feature conferences and seminars on industry trends, regulations, packing design improvements, 3D printing, and food engineering development and challenges.

Visitors can meet business executives from Singapore, Thailand, Italy, South Korea, and Germany.

Twelve Italian manufacturers have been taking part in the exhibition.

According to the Italian Trade Commission in Viet Nam, these companies introduce their technologies related to packaging, plastic and rubber manufacturing during the events, with the aim to seek business opportunities with Vietnamese partners.

The exhibitions are being held at the Sai Gon Exhibition and Convention Centre in District 7.

Long Tet holiday hits motorbike sales

Viet Nam's motorbike market was badly hurt by the prolonged Lunar New Year holidays and accompanying sluggish demand, with sales in the first two months reported at record low levels.

According to the Viet Nam Association of Motorcycle Manufacturers (VAMM), while January saw 335,000 motorbikes sold, that was still down 97 per cent year on year, and February may experience a record slump, with around 200,000 units sold.

Of this figure, Honda accounted for 219,000 bikes and 115,000 motorbikes in January, and February, respectively.

Honda's General Director, Masayuki Igrashi, who is also the chairman of VAMM, attributed the slowdown to the prolonged holiday and economic difficulties, which generally dampen demand.

Known locally as Tet, the celebration of the Lunar New Year is Viet Nam's most important holiday and triggers a surge in consumption and travel, ahead of an extended nationwide shutdown.

But this year, critics are arguing that the popular, protracted Tet holiday is actually hurting the already fragile economy.

"This is the worst time since I started the business 15 years ago. I am thinking about closing the dealership and turning it into a restaurant," said Pham Manh Sy, director of the Viet Phu Company, a prominent Yamaha dealer in Ha Noi.

Sy told Viet Nam News that unlike previous years when they had enjoyed better sales numbers during the period around Tet, he only sold three motorbikes last month.

Motorbike sales in Viet Nam have shown a decline in the last three years, largely due to a slowdown in the country's economic growth.

Domestic motorbike sales for 2013 dropped to some 2.5 million, compared to 3.1 million in 2012, according to the Viet Nam Auto Motorcycle and Bicycle Association.

In addition, 2012's growth was down 5.03 per cent over 2011, the slowest pace in 13 years, the association reported.

Viet Nam's motorbike market is the fourth-largest in the world, after China, India and Indonesia.

Last month, the VAMM made its debut with the goal of building a healthy motorcycle industry and overcoming the current difficulties.

The association's five founding members include Honda, Yamaha and Suzuki of Japan; SYM of Taiwan; and Piaggio of Italy, which account for more than 96 per cent of Viet Nam's market.

Meanwhile, the market for high powered motorbikes is expected to boom after the government moved to relax policies on driving licences, which took effect this month.

Last year, the Ministry of Transport removed regulations on providing the special A2 licences for motorbikes with an engine capacity of more than 175 cc. The licence was previously limited to specific applicants, typically police officers, military personnel and motorsport athletes.

According to the ministry, the A2 licences will be granted to applicants who pass driving tests for high-capacity motorbikes.

Market insiders said, despite tight regulation on A2 licensing, the high-powered motorbike market had seen rising sales in recent years.

Meanwhile, many people have been reportedly trying to join motorsport clubs, just to become eligible for the licences.

Nguyen Van Dung, director of Viet Nhat Corporation, a leading dealer for imported bikes in Ha Noi, said last year his company began importing a range of high-powered bikes.

"I think there will be a influx of high-powered imports from now on to service the boom in demand after the A2 law is removed," he said.

HCMC assists Tay Ninh with key projects

The southern provice of Tay Ninh needs HCM City to boost consumption of farm produce from Tay Ninh, help establish areas for cultivation of clean and safe vegetables, further develop dairy farming and introduce hi-tech industries, officials said on Saturday.

They also called for greater co-operation in tourism development and developing a skilled human resource base for the health sector.

The province also needs more help in dealing with its environmental problems, the officials said at a conference that reviewed socio-economic cooperation between the two localities in the 2007 – 2013 period and set tasks and orientations for the next seven years.

The conference heard that businesses based in HCM City have invested more than VND17 trillion (over US$805 million) in the southern border province.

A report submitted at the conference that reviewed socio-economic co-operation between the two localities for the 2007 – 2013 period said the money has been invested in over 100 investment projects. Of these, 49 projects with a total investment of VND7.86 trillion ($373 million) are operational and 19 others worth VND4.17 trillion ($197.5 million) are under construction.

City businesses are also preparing to carry out 30 other projects with a registered capital of nearly VND4.2 trillion.

The municipal administration is helping Tay Ninh with a number of transportation projects including VND5 billion for building a road running around the Southern Revolution Historical Monument complex that costs a total of VND33.5 billion, and VND9 billion support for a VND18 billion project to expand the provincial Road No 12.

HCM City has also provided VND11 billion for upgrading the road leading to the complex and VND26.5 billion for upgrading the 4.4 km Loc Phuoc – Song Lo Road.

The Sai Gon Transport Engineering Corporation has provided 23 buses worth VND29 billion to improve travel and transport services in the province.

The two localities have also co-operated in areas including health, education, radio and television, culture, sports and tourism, industrial and business development, science and technology, agriculture and rural development, mineral resources and environment, and banking.

Looking ahead, Le Hoang Quan, Chairman of HCM City People's Committee, asked officials of both localities to strengthen co-operation towards optimum exploitation of the potentials and advantages of each locality. These included science and technology transfers and the development of hi-tech agriculture, he said.

Energy production sees steady rise in February

The country's energy sector witnessed a relatively high growth rate in the initial two months of 2014 compared to the same period last year, stated the Ministry of Industry and Trade.

The figures released at a press meeting held in Ha Noi, on Tuesday, showed that the electricity production in February was estimated at 9.31 billion kWh, reducing 7 per cent as compared to the previous month, but increasing19 per cent in comparison to the same period last year.

The power output in the first two months of the year reached 19.33 billion kWh, posting a10 per cent year-on-year increase.

The petroleum sector also reported high growth of all key products in the period.

The coal exploitation output increased last month, while consumption was estimated at 2.78 million tonnes, reducing by 9.5 per cent in comparison to the corresponding period last year.

The total coal consumption in the first two months of the year reached 5.7 million tonnes, recording a 9.4 per cent year-on-year decrease.

Last month, the coal exports were recorded at 0.87 million tonnes, bringing the total during the two-month period to 1.4 million tonnes.

The domestic coal consumption during the period was 4.4 million tonnes, increasing 1.3 per cent over the same period last year.

The ministry also noted that the steel consumption during the period saw a 30 per cent year-on-year decrease and was recorded at 300,000 tonnes.

The steel inventory during the period saw a sharp increase of 40 per cent as compared to the same period last year.

Le Phu Hung, the general director of Viet Nam Steel Corporation (Vinasteel) said that steel production and consumption were still facing difficulties due to the low purchasing power.

Hung added that the corporation reported losses in the last two consecutive years, though it accounted for 40 per cent of the country's market share.

Its revenue in the initial two months of the year was recorded at VND7.2 trillion (US$342.86 million), accounting for 14.2 per cent of the entire year's target.

The ministry claimed that the steel supply surpassed the demand, thus making it difficult for businesses to increase prices while retaining customers. It has forecast that the total steel consumption for 2014 will be 12.2-12.5 million tonnes, increasing only 3-5 per cent over the last year.

With regard to investment in the sector, Deputy Minister Le Duong Quang requested Vinasteel to make the Thai Nguyen Steel Factory operational as per set schedule.

In addition, Quang urged the corporation to accelerate its restructuring process in order to reduce intermediate costs.

"Vinasteel should carefully review its capacity of Engineering, Procurement and Construction (EPC) or it will have to focus on restructuring its member companies," he explained.

Fielding questions on a possible increase in electricity tariff, Dang Huy Cuong, the head of the ministry's Electricity Regulatory Authority of Viet Nam reported that they had not yet received any proposal from the Electricity of Viet Nam for any adjustment.

"The adjustment will have to follow several legal documents, such as Decision 69/2013 on average electricity mechanism and electricity retail price framework," he noted, adding that they would also take into consideration macroeconomic factors and CPI.

Jan-Feb budget collection reaches 6.18 billion USD

State budget revenue in the first two months of this year was estimated at over 129.8 trillion VND (6.18 billion USD), according to the Ministry of Finance.

The sum accounted for 16.6 percent of the whole year’s budget estimates and represented a year-on-year rise of 12.9 percent.

Of the amount, 93 trillion VND came from domestic taxes, equivalent to 17.3 percent of the year’s estimates. The outcome was attributed to bustling economic activities in the last months of 2013 and the first months of 2014.

The 11.6 percent increase in total retail sales and consumption service revenues greatly contributed to the two-month budget collection, plus 1.8 trillion VND from dividends of State capital at State-owned companies and 2.1 trillion VND from small- and medium-sized enterprises’ corporate income tax.

32 trillion VND was collected from import-export activities, or 14.3 percent of the estimates.

The ministry also revealed an estimated budget spend of 150 trillion VND during the period, accounting for 15 percent of the forecast and up 4.3 percent year-on-year.

To cover a budget overspend of 20.2 trillion VND, the management agencies issued more than 51 trillion VND worth of Government bonds, fulfilling 17.5 percent of the yearly plan.

Nhon Trach 2 power plant meets electricity targets

The Nhon Trach 2 thermal power plant in the southern province of Dong Nai has supplied 12 billion kWh to the national grid annually since becoming operational in October 2011.

Since early this year, it has generated some 900 million kWh of electricity, fulfilling 77 percent of its Q1 plan and on track to provide 4 billion kWh for the national grid this year, equivalent to 5-6 percent of the national output, said the PetroVietnam Power Nhon Trach 2 Company on March 4.

In partnership with the National Load Dispatch Centre, the Electricity of Vietnam and its transmission units, the plant ensures that its supply of power to the national grid will remain stable.

Built by the PetroVietnam Power Corporation and the PetroVietnam Power Nhon Trach 2 company, the 700 million USD plant, with three turbines, is designed to churn out an average of 4.2 billion kWh each year.

It also plays an important role in supplying electricity to the southern key economic region.-

Agricultural reform for farmers' benefit: analysis

Vietnam has a relatively high rate of the population living in rural areas and participating in the agricultural sector. However, the majority of farmers in the country have to accept the paradox of bumper crops resulting in low prices, and seeing high prices only after poor crops.

An analysis by the Communist Party of Vietnam (CPV) online newspaper said this is a factor that makes farmers’ life very hard. In the value chain of exported rice, although farmers’ role is essential, their benefit is of secondary importance. The paradox has existed for many years and the sad fact is that there has been no feasible solution.

In the message early this year, one of the important issues Prime Minister Nguyen Tan Dung clearly stated was to restructure the agricultural sector. This shows that the structure of the agricultural sector now has many shortcomings and it needs to be changed.

In parallel, it is necessary to change the way of thinking and doing in order to build a modern agriculture. In the new agriculture, farmers not only know how to apply high technology to increase the value of products, but also change methods of transaction, trading traditional agricultural products and applying more advanced and effective business method.

In developed countries, agriculture is mechanised at the very high level of technology from the stage of harvest, drying and processing. Moreover, farmers also set up a web to connect with rice-trading centres, extensively promote their products to sell faster at higher prices. Thanks to this, many farmers reduce risks in the production process, save labour costs and get higher profits than their colleagues in developing countries, including Vietnam.

Farmers are not only the dominant force in production but also beneficiaries of their fruits. If things are not changed, for many years, tens of millions of Vietnamese farmers will still suffer, working hard but for an income which doesn't match their efforts.

The large-field model has taken shape and gained initial success. This is not only the inspiration of managers, agronomists but also farmers who have been put under compulsion in small fields of the outdated and backward agriculture for generations. It is impossible to have a strong and modern agriculture with small fields separated by thousands of edges.

In the process of restructuring the agricultural sector in the coming time, the Government should quickly create favourable conditions for private enterprises and foreign direct investment (FDI) businesses to participate in this field.

Moreover, it should dissolve unprofitable State-owned enterprises in the sector, end the monopoly, create a level "playground" for all businesses so af to facilitate a healthy competition within the business community involving in the sector.

In the coming years, authorities need to prepare basic steps towards building a market for agricultural product trading, auction like some developed countries to help farmers avoid having to sell at low prices. In addition, it is essential to establish an agricultural price insurance fund to protect farmers against natural disasters and epidemics.

Besides the role of the State, farmers must also adapt themselves to changes to develop. Particularly, the application of high technology in production as well as trading agricultural products requires a deep understanding and more professional skills. In this regard, the role of farmer’s associations, human resources training centres for the agricultural sector, and agronomists is very important.

The recent economic crisis has proved that the agricultural sector is a platform of the global economy. Not many countries in the world become well-off thanks to agriculture, but every country also considers agriculture as a fundamental factor behind long-term prosperity. The key elements of agriculture make many countries change their development strategy in recent years, pay attention and pour more investment into this field.

For Vietnam, restructuring agriculture in the overall restructuring of the whole economy is not a mission impossible. However, for the successful restructuring, in addition to the determination of the political system, special attention must be paid to the benefit of farmers.

Tobacco company hits out at proposed tax hike

A top official of the Vietnamese tobacco industry has proposed an urgent crackdown on smuggling instead of raising a special consumption tax on tobacco products in order to save money for the State budget.

He made the suggestion after the Ministry of Finance unveiled a plan to raise the consumption tax on cigarettes to 75 percent by July 2015 and 85 percent by 2018, as part of draft amendments to the Law on Special Consumption Tax.

In a recent interview with the Vietnam News Agency, Chairman of both the Vietnam Tobacco Association and the State-owned Vietnam National Tobacco Corporation Vu Van Cuong said the hike will pave the way for smuggling, reducing the domestic tobacco industry’s market share, translating into poorer takings to the State budget.

As smugglers can evade tax, they can offer lower prices than those of locally-made products. The domestic smokers thus easily turn to the contraband, irrespective of its harm on their heath, he said.

He cited the tax hike from 45 percent to 55 percent in January 2006 and the current 65 percent in 2008 as the reason for a 50 percent growth of contraband tobacco from 2006-2012, or some 6 billion cigarettes

The 2012 survey by the International Tax and Investment Centre and Oxford Economics showed that Vietnam is the second largest consumer of smuggled cigarettes among 11 surveyed Asian nations.

In 2013 alone, illicit cigarettes took away 20 percent of domestic market share. The State loses an estimated 6.5 trillion VND (309 million USD) in tax each year. As these products are not subject to any regulation on displaying health warnings and their tobacco content, their quality is not ensured.

Cuong suggested the Prime Minister direct a nationwide anti-smuggling campaign, previously successful in the 1990s, especially near south-western border gates where contraband tobacco products often make their way to vendors and pharmacies.

He said once smuggling is stopped, the tobacco tax can be raised along a suitable roadmap, adding that the sector contributed nearly 20 trillion VND (nearly 1 billion USD) to the State budget.

Amended law expected to remove business bottlenecks

In a bid to implement the guidelines in the Prime Minister’s 2014 New Year Message, authorities of various levels are working to collect comments on the amendments to the current Law on Enterprises, according to the Government Portal.

The revised law is expected to remove the bottlenecks for businesses, especially the registration of business lines.

Under a draft version, ministries, ministerial-level agencies, provincial People’s Councils and Committees are not allowed to issue regulations on business lines that are prohibited or conditional as well as regulations on business conditions.

Enterprises may not have to register business lines, according to the amendments.

Many experts and business leaders said the new provision on business registration is a strategic breakthrough in facilitating the start-up and operation of enterprises.

The current Law on Enterprises only allows enterprises to operate in areas that are not restricted by law but the notion “law” is so immense. It means that enterprises have to overcome a burden of administrative procedures.

On the other hands, the current law stipulates that enterprises have to operate in accordance with the business lines that they have registered.

Under the amended version, the right to issue regulations on business prohibition and conditional business belongs to the National Assembly, the its Standing Committee, and the Government. No other agencies have such right.

Enterprises can expand business lines and they only need to report the change to the business registration agency.

Some warns that the above amendments would make it difficult for the State management. However, as written in the PM’s New Year message, the State should function as the development facilitator while State organs and cadres and civil servants can only do things that law allows.

In this spirit, the draft version reflects the State’s effort to create further favourable conditions for citizens and enterprises.

In a broader view, the amended versions of the Law on Enterprises and the Law on Investment are part of the institutional reform which is considered as an inevitable requirement.

Prime Minister Nguyen Tan Dung pointed out that over the past 30 years of renewal, the country’s outstanding achievements have close relations with institutional reform process and now it is time to refresh this process to generate greater impetus for fast growth and sustainable development.-

Honda Vietnam head promoted, to leave Vietnam

General director of Honda Vietnam Masayuki Igrashi is being promoted and will leave Vietnam after two years leading Vietnam’s biggest motorcycle manufacturer.

At the launch of the new Honda RSX F1 motorcycle in Hanoi late last week, Igrashi said he would be leaving the country on March 31 and added that he had been promoted to be managing director of Honda Asia. He will be responsible for Honda’s motorcycle business throughout Asia and Australia.

Igrashi was made general director of Honda Vietnam in 2012, replacing previous general director Koji Onishi who held the position for five years. Over the past two years, Igrashi has faced a tough marketplace amid economic difficulties. Every manufacturer has reported declining revenue.

In 2013, Honda Vietnam sold 1.87 million motorcycles, falling 9 per cent on-year. This year the company plans to export 100,000 units, a steep rise against the 40,000 units sold overseas last year. This increase is hoped to offset declining local sales.

In similar news, Honda Vietnam announced it would open its third factory in the country this year. It has been under construction in Ha Nam province for the last two years and was suspended because of the market decline. But it has been renovated to focus on motorcycles rather than scooters.

$73.9 million ODA loan to expand southern hydropower plant

Vietnam and Japan recently signed a $73.9 million ODA loan agreement to expand the Da Nhim hydropower plant in the south.

According to the Japan International Cooperation Agency, the ODA donor to the project, the objective is to increase the output of the plant particularly at peak times by installing an additional power generator.

The loan will go toward civil works and equipment necessary to expanding the plant’s current 160 megawatt capacity as well as consulting services. Da Nhim hydropower plant started construction in 1959 with reparations from Japan to Vietnam and started operations in 1964.

In 1997 a Japanese ODA loan supported renovations to the plant’s deteriorated transmission and conversion facilities.

Because of the history of the Da Nhim plant, Vietnam has high expectations for further support from Japan.

According to JICA, letters of invitation for consulting services will be issued this month and the new facilities are expected to be put into service in August 2016.

According to the Seventh National Power Development Master Plan (2011-2020), the government plans to add nearly 50,000 megawatts to the national grid by building new power plants.

The southern area of Vietnam alone will need an additional 23,735 megawatts by 2020.

Modest results from ethanol projects

Member units under state giant Vietnam National Oil and Gas Group are swallowing a bitter pill on their ethanol investments.

The PetroVietnam group is currently taking the lead of the state’s ethanol industry development with three factories planned to produce 300,000 tonnes per year in Phu Tho, Binh Phuoc and Quang Ngai provinces.

Five years have gone by since the establishment of a steering committee for implementing bio-fuel projects which is headed by the chairman of PetroVietnam and the projects currently in the development pipeline have seen slow progress.

At the Phu Tho biofuel plant, construction is only 78 per cent complete. This is largely blamed on PetroVietnam’s Construction Joint Stock Corporation having little experience with the engineering-procurement-construction (EPC) contract model and its own financial struggles.

In this context the project’s founding shareholders’ were split on how to address the problem and PV Oil – a PetroVietnam member – has reduced its stake to 39 per cent and therefore cannot make major decisions.

For the project, PV Oil has two options – sourcing outside shareholders who have an interest in its continued involvement or selling its stake and exiting the project, said a PetroVietnam source.

In regard to the Binh Phuoc biofuel project, although it was opened in 2013 it had to suspend production due to poor sales.

PV Oil has a 29 per cent stake in this project and the other two shareholders – Japan’s Itochu and local firm Licogi 16 – reportedly want to sell their shares, preferably to PV Oil. But the company has not decided due to the problems with the other projects.

PetroVietnam estimates that Binh Phuoc’s suspended operations will amount to a loss of around VND270 billion ($12.8 million) a year from interest, machinery amortisation and operating costs.

The Dung Quat biofuel plant in central Quang Ngai province produced 27,000 cubic metres of ethanol last year, but only 10 per cent was sold domestically and the rest was exported with limited returns.

A feasibility study done for the project put the input material (cassava) cost at around VND1,800 per kilogram with end-use ethanol fetching VND10,000 per litre on average. But during 2012-2013 the price of cassava rose by VND5,000 per kilo while ethanol only went up to VND13,000 per litre. Higher production cost has yielded limited returns.

Since ethanol production is new to Vietnam, EPC contractors have little experience which has led to projects having higher than expected costs and longer construction times.

Vinaconex issues profitability boast despite slow market

Vietnam’s leading construction firm Vinaconex announced significant profits last year despite a sharp fall in revenues from real estate trading.

Particularly, thanks to an asset transfer valued at VND337.6 billion ($16 million) from Cam Pha cement project to Cam Pha Cement Co., the company reported a rise in profits in the last quarter of last year.

Vu Quy Ha, general director of Vinaconex, said their construction business made up a majority of total profits, offsetting frozen real estate activities. The proportion of revenues from construction increased from 3.09 per cent in 2012 to 60.12 per cent in 2013 and were valued at VND6.8 trillion ($325 million).

As expected, real estate activity revenues fell from VND1.8 trillion ($85 million) in 2012 to just over VND1 trillion ($51 million) in 2013, while revenues from industrial production and consultancy services saw no significant changes.

By the end of last year, Vinaconex reported revenues of more than VND11.3 trillion ($540 million), falling VND1.3 trillion ($63 million) compared to 2012.

Last year, Vinaconex’s financial activities dropped to VND54 billion ($2.6 million) from VND150 billion ($7.1 million) in the previous year while dividends skyrocketed to VND159 billion ($7.6 million).

Financial revenues included the corporation earning profits of VND8.4 billion ($400,000) from selling securities this year while in 2012 it earned no profits from this activity. Vinaconex also reduced its short-term securities investments from VND7.3 billion ($347,619) in 2012 to VND956 million ($45,523) in 2013.

The corporations interest payments on loans last year fell by VND305 billion ($14.6 million) against the previous year as a result of banks’ reducing their interest rates.

Despite lower revenues in 2013, Vinaconex saw a 683 per cent rise in profits against 2012. The sharp increase was attributed to the company laying-off more than 1,600 labourers which reduced, specifically, management costs to VND420 billion ($20 million) against 2012’s VND800 billion ($38 million).

In the area of property trading, Vinaconex divested from the Park City Project in Hanoi’s Ha Dong district. The corporation transferred 3.75 million shares, or 25 per cent of the chartered capital of Vinaconex Hoang Thanh – the investor in the Park City Project - to Perdana, an affiliate of Malaysia’s biggest timber cutting group Samling.

Last year, Vinaconex also put its position in the Splendora township – invested in by An Khanh JVC, a joint venture between Vinaconex and South Korea’s Posco E&C – up for sale. Vinaconex currently owns 50 per cent of the chartered capital of the $2 billion project but has yet to get a buyer to bite.

Although Vinaconex has pulled out of some projects, it still remains a real estate giant with property developments such as the 423 project and two urban area projects in Hanoi, the Housing Complex at the B3 Bloc in Danang, and the Cat Ba Amatina project in Haiphong.

But these projects seem to be a growing concern for Vinaconex as of late, they require vast amounts of capital amid a static real estate market.

Vietnam’s failing cement makers fear foreign buy-outs

Cement industry insiders are worried that foreign investors will swallow up domestic producers through merger and acquisition activities as many Vietnamese companies are on the verge of bankruptcy.

Foreign investors are keen to buy into Vietnam’s failing cement makers in order to access clinkerPhoto: Duc Thanh

A representative of state-run Vietnam Cement Industry Corporation (Vicem), Vietnam’s largest cement producer, admitted that many domestic firms were on the verge of bankruptcy due to the falling domestic demand, high interest rates and oversupply. Vicem itself is already burdened by profligate and inefficient affiliates, while the total debts owed to Vicem are approximately four times its total equity capital.

Despite the rich potential offered by mergers and acquisitions (M&As) in the sector, no domestic strategic investor has sufficiently strong financial resources to be able to purchase weak cement factories.

Nguyen Quang Cung, chairman of Vietnam Cement Association (VCA) said foreign investors were poised to buy cash-strapped domestic cement firms to ease entry into the Vietnamese market and pick up cheap licences to quarry clinker. He worried that as foreign investors become the main shareholder, it was hard to control export cement prices or clinker mines.

Many foreign investors have said they were willing to buy faltering cement firms but only on the condition that they can pick up the licences to exploit clinker production.

Harish Ta Paria, director of Alliance Mineral said that domestic cement firms would struggle if they did not own clinker quarries.

Foreign-invested firms now accounts for up to 30 per cent of the Vietnamese cement sector’s total output, according to VCA.

However, Nguyen Ngoc Dao, a consultant for Gimpex Group said “Why do we have to worry? We have policy and tax tools. These should encourage foreign investors to enter the Vietnamese market while ensuring our mineral resources stay in-country.”

In the past three years some ten M&As have occurred in Vietnam’s cement sector. The recent M&A deals showed that foreign investors, mostly from ASEAN countries, remain keen on Vietnam’s cement sector, the Vietnam Association of Financial Investors claimed last year.

Tan Sri Francis Yeoh, managing director of Malaysia’s YTL Cement Bhd which could become an investor in Vinaconex’s $285 million Cam Pha Cement facility in the northern province of Quang Ninh was quoted as saying, “The group already has a presence in Vietnam. We’re already providing power services in the country and hope to strengthen our presence.”

PT. Semen Indonesia Tbk, previously known as Semen Gresik, Indonesia’s largest cement producer, bought the Thang Long cement plant.

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