French businesses encouraged to invest in Vietnam

Vietnam will encourage more private investment in infrastructure under the Public-Private Partnership (PPP) model to increase the efficiency of capital sources.

Minister of Planning and Investment Bui Quang Vinh was addressing a meeting of more than 100 leading French businesses in Paris on April 7.

The new policy will create plenty of opportunity for French businesses as   infrastructure construction projects using foreign loans have been undertaken by the State, Vinh said.

In addition, he said, Vietnam is restructuring State-owned and private businesses, offering a good chance for French companies to seek and establish partnerships.

Vinh elucidated that Vietnam has gone to great lengths to restructure its economy in a manner focusing on raising productivity on a balanced scorecard basis, properly taking into consideration modernization of technology to increase both quantity and quality of products to avoid the middle-income traps.

The country’s investment environment is much improved thanks to breakthroughs in three key areas – transparency in development policy, human resource training and modern transport and energy infrastructure, he said.

Vinh highlighted the prospect of cooperation between Vietnam and France and the rest of Europe when a single, united ASEAN community will be established in 2015 and Vietnam will be the gateway to this lucrative market of approximately 600 consumers.

Vietnam is also a dynamic economy in the Asia-Pacific region which makes up two thirds of the world’s population.

For her part, Thierry Courtaigne, Vice President of the French Business Association (Medef) and managing director of MEDEF International, said Vietnam is developing dynamically and reforming strongly, facilitating French businesses’ operations in the country.

Michel Drobniak, Economic and Commercial Counsellor of the French Embassy in Vietnam, in turn expressed his appreciation for the cooperative potential and prospects between the two countries based on Vietnam’s stable economy growth, young, skilled labour force, and rapid reform process.

At the meeting, Minister Vinh fielded questions of those in attendance related to difficulties in bidding and implementing projects, such as building HCM City Metro route No2, Hanoi urban railway No 3, and renewable energy projects.

Earlier Minister Vinh held talks with Minister of Foreign Affairs Laurent Fabius.

The ministers agreed economic and trade ties between the two countries remain modest that should be promoted in the coming itme.

They touched upon France’s strong areas such as transport infrastructure, urban development, nuclear energy, aviation technology, health care, and food processing from which Vietnam needs assistance.

They agreed to support broader Vietnam-France cooperation in the spirit of frank dialogue and mutual trust.

WB: Vietnam’s economy to grow 5.5 percent in 2014

The Vietnamese economy is expected to grow at a moderate rate of around 5.5 percent this year, according to the East Asia Pacific Economic Update report released by the World Bank (WB) at a press conference in Hanoi on April 7.

Addressing the event, Axel van Trotsenburg, WB East Asia and Pacific Regional Vice President, said East Asia and the Pacific has served as the world’s main growth engine since the global financial crisis.

He added that stronger global growth this year will help the region expand at a relatively steady pace while adjusting to tighter global financial conditions.

In its report, the WB forecasts that developing countries in the East Asia and Pacific region will see stable economic growth this year, thanks to a recovery in high-income economies and the market’s modest response to the Federal Reserve’s tapering of its quantitative easing.

The report said developing East Asia will grow by 7.1 percent this year, largely unchanged from 2013, adding that with this growth, it will remain the fastest growing region in the world, despite a slowdown from the average growth rate of 8.0 percent from 2009 to 2013.

Bert Hofman, Chief Economist of the WB’s East Asia and Pacific Region, said that over the longer term, to keep growth high, developing East Asia should redouble efforts to pursue structural reforms to increase their underlying growth potential and enhance market confidence.

According to the report, the regional countries could also benefit from structural reforms, such as facilitating international trade and promoting foreign direct investment, especially in the services sector. In this context, the establishment of the ASEAN Economic Community in 2015 could boost intra-regional investment and exports and provide an important source of growth.-

New horizon for Dong Nai fruit exporters

The southern province of Dong Nai has signed a number of juicy contracts to ship its farm produce, especially fruit specialties, to foreign markets.

This has opened up numerous opportunities for local businesses and farmers to enhance their export turnover and enter more potential overseas outlets as long as the beneficiaries can maintain their cultivation in large areas.

Head of the Suoi Lon mango cooperative in Xuan Hung commune, Xuan Loc district Nguyen The Bao, said at the beginning of this year, his cooperative signed a contract to export mangoes to Ukraine at prices double that of domestic markets.

Apart from the major importers of Ukraine and other European countries, Dubai is expected to order this fruit – which is grown on an area of nearly 10,900 ha. The average mango output is estimated at 10 tonnes per ha per year. Some cooperatives can double this figure thanks to new farming techniques, said the local Department of Agriculture and Rural Development.

Meanwhile, the Xuan Thanh agricultural services cooperative in Long Khanh town has agreed to supply unlimited amounts of durian and rambutan to Japan’s Aeon supermarket chain in 2014 under a long-term deal with the Japanese side, said head of the cooperative Pham Phu Quoc.

In another deal, the local Long Khanh Fruit Co., Ltd. will ship jackfruit to China , about five tonnes per week, revealed Director Huynh Van Hai.

Chairman of Vinh Cuu district People’s Committee Nguyen Huu Ly said provincial authorities have allowed the Tan Lam Breeding and Forestry Co., Ltd. in Bien Hoa city to invest in a South America-originated bananas growing project in the district, which is scheduled to be carried out on an area of 108 ha within 30 years and export to Japan and China, worth 1,100 USD per tonne.

Many businesses from the US , Japan and the EU plan to import fruits from Dong Nai with prices 1.5-2 times that of domestic markets, conditioned that the products must have Good Agricultural Practice (GAP) certificates and maintain their quality during transportation.

To meet these requirements, local authorities have shaped up large-scale areas specialising in growing such key local products as pepper, coffee, durian, grapefruit and mango.

They have also built and realised a number of programmes promoting the trade names of the aforesaid products between 2011 and 2015, Director of the local Department of Agriculture and Rural Development Pham Minh Dao said.

According to the department, producers fetched 219 million USD in the first quarter of 2014 from exports, up 37 percent against the same period last year, with cassava, vegetables and coffee topping the list.

US opens wide door for Vietnamese exporters

Ministry of Industry and Trade statistics show last year’s Vietnamese garment and textile exports to the US reached 8.6 billion USD, up 14.2% from the previous year, radio The Voice of Vietnam (VOV) reported on April 7.

Especially, the US remains Vietnam’s largest export market for such items as footwear, handbags and suitcases with a total export turnover of 3.46 billion USD, making up 33.6% of the sector’s total revenue.

The US is a highly lucrative export market for Vietnam businesses, said President of Sourcing at Magic, Chris Griffin who is also in charge of foreign customers of the Magic-Las Vegas Sourcing 2014 organising board at a recent seminar discussing strategies to penetrate and expand to the US market.

The US is the world’s biggest consumption market for garment and textile exports, which currently stand at over 100 billion USD per year. In 2013, the US economy encountered difficulties, leading to the fact that garment and textile exports to the market experiencing only a modest increase of 3.6% against 2012’s figure.

However, Chris Griffin said that, the US economy is recovering from the financial crisis in 2008. In the early months of this year, the US GDP rose by 3-4% while the securities market and consumer trust in the economy have also markedly increased.

“All of these positive signs will offer a good opportunity for Vietnamese businesses to penetrate the US market” he said.

Griffin compared the US market to the European and Japanese markets which also have been stagnant and in a crisis mode, but the US economy has turned the corner and is solidly on the rebound and gaining momentum.

US manufactures and retailers are actively searching for ways to reduce their dependence on China and are searching worldwide for alternative suppliers to replace China, which creates an excellent opportunity for Vietnam to find a niche in the US market, added Chris Griffin.

He articulated that China now takes is the leading exporter of goods into the US market. However, costs in China are increasing and this provides Vietnam is a perfect alternative option for US business thanks to its political stability, hardworking and responsible people.

For example, at the Magic-Las Vegas Sourcing fairs in the US, all major American importers were gathering at the Vietnamese pavilions expressing their viewpoints that Vietnam has a stable and competitive labour costs compared to other nations. In addition, Vietnamese exporters are interested in conquering the US market.

Chris Griffin noted that to expand exports to the US, local businesses should learn more about market differentiation according to age, style, price and quality and export goods through different distribution channels-retail, wholesale and agent.

Two potential distribution channels for Vietnamese businesses are wholesalers which own strong trademarks and major retail centres.

Ministry of Industry and Trade representatives suggested Vietnamese businesses should pay special heed to legal formalities and technical barriers in the US market if they want to achieve greater penetration.

Like Europe, the US requirements for footwear imports are becoming increasingly more difficult and complicated due to a series of regulations, strict requirements and security investigations that must be met.

Additionally, each state in the US has its own regulations and laws, so importers should pay attention to not only federal laws but also the laws of each state.

To enjoy sustainable exports to the US market, Griffin said that businesses should take care to join and become active participating members of US trade associations, to have the advantage of their expertise and technical support, and strictly comply with the demanding legal requirements of doing business in the US.-

Promoting Vietnam-China border trade

The Ministry of Trade and Industry (MoIT) will introduce new initiatives to improve Vietnam and China border trade, facilitating business activities of both countries.

Tran Thanh Hai, Deputy Head of the MoIT’s Import-Export Department made the statement at a regular press briefing in Hanoi on April 7 amidst growing concerns about watermelon stockpiling at the Tan Thanh Border Gate in Lang Son.

Thousands of trucks carrying watermelon have been lined up on the road to the Tan Thanh border gate, waiting for customs procedure clearance to China. Dealers complain about administrative procedures and they fear watermelons will spoil before they get the permit.

The MoIT is working closely with the Chinese Embassy and Guangxi province to address farmer concerns to find satisfactory solutions to all matters hindering border trade, Hai said.

One of the measures that has already been implemented to speed up the shipment of watermelons to China is an extension of the working hours for border personnel until 9-10pm and other preparatory measures are under consideration and should be given effect, Hai said.

The MoIT suggested localities should devise improved measures to regulate the volume of exported agricultural products to China. As an example, Chinese traders only purchase first and second grade watermelon while the remaining lesser grades have to be returned back or thrown away.

Controls need to be put in place to ensure only higher quality watermelons are transported to the border gate. Further regulations of the first and second grade shipments should be timed to avoid overloading the border crossing, resulting in unnecessary and long delays, Hai said.

In the long-term, Vietnam will upgrade warehouses for agricultural products at border gates, he concluded.

Ninh Thuan to host international wine festival

A three-day International Grape and Wine festival will be held in Phan Rang City in Ninh Thuan Province from April 17-19 with the aim of promoting exchange, seeking investment opportunities and attracting tourists.

The information was released by the provincial People’s Committee at a press conference in Ho Chi Minh City on April 7.

The festival is expected to draw more than 100 booths showcasing products made from grapes of domestic and foreign wine-producing companies including France, Chile, Argentina, Australia, Hungary, the US, South Africa, Germany and local farmers.

Seminars on grape farming and grape wine processing will be held during the three-day event.

Ninh Thuan province has the largest acreage under grape cultivation in Vietnam (about 2,500ha), mostly in Ninh Phuoc, Ninh Hai and Phan Rang city.

Every year it harvests approximately 15,000 tonnes of grapes and ships more than 10,000 tonnes to provinces and cities across the country.

Gold Coin feed mill inaugurated in Hai Duong

American Feeds Company, a wholly US invested company of the Gold Coin Group, inaugurated its feed mill in Binh Giang district, Hai Duong province, on April 7.

The US$12 million mill is the 2nd largest of its kind in the north of Vietnam, with a design capacity of churning out 300,000 tonnes per year.

Once put into operation, the factory will meet feed demands of farms in the northern and central regions of Vietnam.

Addressing the ceremony, Ian David Glasson, CEO of Gold Coin Group, said that the feed mill applies advanced technology in the world, with production lines imported from Switzerland, and storing equipment purchased from the US.

"The objective of the company is to supply high quality food, contributing to increasing productivity and value, and ensuring food safety. The company will exchange experience on feeding skills and epidemic prevention with farmers," said David Glasson.

The factory is expected to create jobs, raise local farmers’ incomes, and improve the competitiveness of livestock products.

Experts hone new ODA skills

The oversight and effective management of official development assistance (ODA) on projects is vitally important to the socio-economic development of Vietnam, requiring highly trained inspectors.

At a conference on ODA-funded projects held in Hanoi on April 7 participants discussed procedures for effectively resolving issues related to corruption in the bidding process, and dealing with contractors’ complaints, inspection rights, and auditing bidding profiles among others.

Speakers pointed out that it is not easy to detect fraud, particularly in the bidding process, so inspectors need to have a heightened sense of awareness and if there is any indication of corruption, relevant authorities must be notified and a complete and thorough investigation undertaken.

Most importantly, those who have found to violate public trust must be strictly dealt with in order to deter others.

To raise the ODA management and supervision capacity in localities, participants, especially contractors and project managers must be cognizant of their responsibility and the importance of diligently performing their duties to avoid losses and misappropriation of ODA funds.

Vietnamese shrimp to enjoy zero tax rate in Japan

Japan is considering abolishing tax rates imposed on seafood, including Vietnamese shrimp, imported into its market.

The Japanese daily Nikkei reported Japan will grant a zero tax rate on seafood imports from a number of countries, including tuna from Australia, crab from Canada, shrimp from Vietnam and fish powder from Peru and Chile.

However, Japan will still impose tax on seaweed products to protect local farmers’ interests.

Japanese seafood imports hit US$14.4 billion in 2012 and the figure is expected to increase considerably when the Trans-Pacific Partnership (TPP) agreement is signed.

Exports to Indonesia enjoy high growth

Vietnamese exports to Indonesia in the first two months of 2014 reported 16% growth in sales volume compared to the same period last year to US$386.85 million according to official statistics.

During the two-month period, Vietnamese key export items to Indonesia included telephones and spare parts, steel products, transport vehicles, rice, and garments and textiles.

Telephone exports experienced astonishing growth, nearly doubling in the reviewed period to US$119.9 million, accounting for over 30% of Vietnam’s total export value.

Petrol took the lead in export growth (up 1,193.2% from a year earlier) although its value was still modest (around US$4.3 million).

With a large population and stable economic growth, Indonesia is an appealing market for Vietnamese exporters, particularly those actively involved in exporting fresh fruits, fruit juices, vegetables, fast foods, snacks, seafood, chicken products, or spices.

Lenders' survey illustrates rise in business confidence

The business environment of the banking and finance sectors improved in the first three months of this year compared with last year, according to the State Bank of Viet Nam.

The central bank announced this on Thursday, citing its latest quarterly survey of the business trends of credit institutions and foreign bank branches in Viet Nam for the second quarter.

About 53 per cent of the lenders said that their business situation was currently "good", up from 29 per cent recorded in the previous survey; while 46.5 per cent said it was "normal". They said they would concentrate on human resource training and upgradation of technology in the coming months.

The institutions said that their customers had revived their financial capacity. With economic recovery now certain, they anticipated stiff competition among lenders in the near future.

Most of the lenders assessed the customers' demand for banking services to be "normal" or "high". A majority of them predicted that the deposit and lending interest rates would further ease this year, and 40 per cent said they planned to reduce service charges.

Almost all of the lenders said that they had no intention of downsizing staff this year, and over a third said that they were short of staff and might recruit more people. Only 7.4 per cent cut down employees in the first quarter.

Most estimated that they were having "good" liquidity for both dong and foreign currencies, and hoped to maintain that throughout this year. They expected deposits and loans to grow at a rate between 10 and 20 per cent in 2014.

The majority of the credit institutions assessed the risks involved for their customers to be "normal" and said the risk levels were tending to decline.

But the lenders remained cautious about the future of the banking sector, as they didn't anticipate any breakthroughs for an economic rally this year.

Nam Dinh closures increase

The number of enterprises that stopped operations in the first quarter of this year has outstripped the number of new start-ups in northern Nam Dinh Province, according to the provincial Planning and Investment Department.

The department granted business licenses to 140 newly-established enterprises in the first quarter, with a combined registered capital of VND440 billion (US$20.95 million). This brought the total number of enterprises in the province to 5,090 units with a total registered capital of VND38.66 trillion ($1.84 billion).

However, more than 180 enterprises were reported to have stopped operations, dissolved or gone bankrupt in the same period. Around 20 enterprises and branches had their business licences revoked.

Production also stagnated due to depressed consumption, discouraging enterprises from taking out loans to expand production, the department said.

According to the branch of the State Bank of Viet Nam, by March 31 total outstanding loans in the province had reached VND21.9 trillion ($1.04 billion), 1.1 per cent lower than the beginning of the year.

Meanwhile, the department said industrial production in the first quarter had seen a year-on-year increase of 15.8 per cent to VND8.79 trillion ($418.6 million). Large enterprises accounting for the biggest slice of production also reported stable business results, including the Nam Dinh Textile and Garment Joint Stock Company, Son Nam Textile Joint Stock Company, Song Hong Garment Joint Stock Company and the Nam Ha Garment Joint Stock Company.

Nguyen Van Tuan, Chairman of the People's Committee of Nam Dinh, said the province would streamline administrative procedures, remove barriers to production and create favourable conditions for loans. He also said the province would give lending priority to the agriculture and export sectors, the support industry, small-to-medium enterprises and those using advanced technologies.

The province would also design policies to attract more investors to industrial zones and generate support for enterprises to export goods, he said.

Prices of key export products plunge, pulling down growth

A sharp price decline in the country's several key export products, including agriculture, seafood, and minerals, lays heavy on Viet Nam's 10 per cent growth rate target set this year.

Nguyen Tien Vy, the head of the Ministry of Industry and Trade's Planning Department elaborated that the total import-export revenue in March was estimated at US$12 billion, increasing $2.46 billion over the previous month.

The total import-export turnover in the first quarter of the year was recorded at $33.35 billion, posting a 14 per cent year-on-year increase.

Of this figure, domestic enterprises enjoyed an export turnover of $10.9 billion, increasing 9.8 per cent over the same period last year, while foreign-invested businesses reported $22.47 billion worth of export turnover.

Vy informed the press meeting yesterday in Ha Noi that the processing industry made the highest contribution to the export results, as the group roped in about $23.5 billion, accounting for 71 per cent of the total.

Of this figure, wood and wooden products saw the highest growth of 23 per cent, following by garment and textile at 22 per cent, shoes at 26 per cent, phones and spare parts at 23 per cent.

US remained Viet Nam's largest importer in this quarter with an import turnover of $5.9 billion, increasing 23 per cent over the corresponding period last year. EU followed with a turnover of $5.9 billion, ASEAN $4.7 billion, China $3.8 billion, and Japan $3.6 billion.

However, he pointed to a fall in prices and the quantity of exports of key staples in the first quarter of the year.

As per statistics revealed by the ministry, the export prices of agricultural products, including coffee, rubber, cassava, and cassava products, reduced 2-25 per cent due to the bad weather conditions.

Ore and minerals noted a maximum decrease of 66 per cent in the material and mineral group, while coal price reduced 27 per cent.

He remarked that the decrease revealed the country's heavy reliance on weather, which was a limitation in increasing its output.

Vo Van Quyen, the head of the ministry's Domestic Market Department, reported the low prices of agricultural and fishery products despite the high output, due to a lack of association.

Tran Minh Toai, the deputy director of the southern Can Tho Province's Department of Industry of Trade shared the same viewpoint, stressing that businesses in the locality had no information on export markets, and thus faced problems in finding buyers for their products.

Toai requested the ministry to start a website focussing on market information to update import demands on agro-forest and fisheries products.

Deputy Minister Le Duong Quang urged the relevant agencies to hold timely meetings with businesses for tackling their difficulties.

Quang emphasised that the producers should improve their reserve capacity and quality in order to enhance competitiveness, especially in the case of rice.

Sugar inventories surge as industry confronts difficulties

Sugar inventories in the first quarter of this year rose 50 per cent over last year to 600,000 tonnes, while prices at processing plants fell to the lowest level in five years.

Statistics from the Ministry of Agriculture and Rural Development showed that by the end of March, the sugar sector produced 1.17 million tonnes of sugar, about 120,000 tonnes more than during the same period last year.

The ministry estimated that sugar output this year would reach 1.6 million tonnes, while domestic consumption would be recorded at 1.4 million tonnes, resulting in sugar supplies being 200,000 tonnes larger than demand this year.

In addition, as part of the country's World Trade Organisation's commitment, Viet Nam would have to import 77,000 tonnes of sugar. The import amount, together with sugar inventories from the previous years and illegal importing of sugar over borders, would leave the nation's sugar stocks at 400,000 tonnes.

Ha Huu Phai, head of the Viet Nam Sugar and Sugarcane Association (VSSA)'s Ha Noi Branch, was quoted by Nong Thon Ngay Nay (Countryside Today) as saying that sugar selling prices have been continuously decreasing, causing difficulties for the industry.

For instance, sugar prices at plants were reduced from VND18,000-19,000 (US$0.86-0.90) per kilo in 2011 to VND14,000-15,000 ($0.67-0.71) per kilo in 2013.

Further, in the first three months of 2014 sugar prices saw a sharp decline to VND12,000-13,000 ($0.57-0.62) per kilo, while illegally imported sugar was selling for only VND11,000 ($0.52) per kilo. Also, sugar prices on the world market fell from $800 to $465.9 per tonne.

Phai said slower consumption and larger stockpiles have caused sugar processing plants to cease operating, such as Long My Phat Sugarcane Plant in southern Hau Giang Province and Kien Giang Sugarcane Plant. This has pushed sugar farmers into a corner, as they had been unable to sell their sugar. Further, several farmers have had to shift to growing other crops.

Some large plants, such as Lam Son Sugar Corporation, also suffered losses. It processed some 12,000 tonnes of sugar in the first quarter of the year, meeting only 10 per cent of the year's target, while processing 50,000 tonnes in the same period last year.

Phai said the Government should allow the sector to export sugar to China, as a solution to reduce stockpiles.

The association forecast that sugar output for the 2013-14 crop in China would be 14.2 million tones, while its domestic demand would be 16.3 million tonnes.

VSSA proposed to export 300,000-400,000 tonnes this year, in addition to meeting its export quota of 200,000 tonnes.

The association also asked the Government to use funds for reinvestment in the sector by supporting sugar farmers and developing sugar planting areas.

The association requested that the ministries of Finance and Industry and Trade apply zero tax on sugar imports by 2018, instead of 2015 as planned, to help processing plants set aside more time to prepare for competition from foreign countries.

VSSA estimated that illegal sugar imports from Thailand reached 400,000 tonnes, thus causing domestically produced sugar to be stockpiled.

Ministry of Industry and Trade officials, meanwhile, said it would allow an additional 200,000 tonnes of sugar to be exported if the sector fulfilled its current quota of 200,000 tonnes.

Demand for organic rice rises in Viet Nam

Organic rice is increasingly being preferred by many Vietnamese consumers despite its higher prices, the Tuoi Tre (Youth) newspaper reports.

The rice has become more popular for several reasons, including clear labels of origin and production that follows organic standards or national and international standards like VietGap and GlobalGap.

HCM City resident Pham Phuong Hong is one of many local residents who buy organic rice as well as fruit, vegetables, fish, meat at an organic food shop in District 3.

She says she prefers the rice because the labels show where and when the rice was planted and the date of harvest.

Companies are investing more in organic rice and vegetables, including the Ca Mau-based Vien Phu Organic and Healthy Foods Joint Stock Corporation, which has received organic production certificates granted by the US and EU.

Vo Minh Khai, general director of Vien Phu, said the company initially planned to export its organic rice to high-end markets but local demand had now surpassed export orders.

Co May Co Ltd in Dong Thap Province has also been selling three kinds of rice under the Nosavina brand.

There is a QR (quick response) code on each of the rice packages that tracks the product's origin, said Nham Ba Phuong, co-founder of Nosavina brand rice.

Consumers are concerned about quality, he said, but they are paying as much or more attention to the safety of the rice.

For that reason, the company invested US$5 million to establish its rice material area and processing plant that meets HACCP standards, an internationally recognised method of managing food safety and protecting consumers, he said.

Along with organic rice, rice that contains high nutrients and other ingredients that can assist medical treatment is sold on the market.

Apart from white organic rice, Vien Phu supplies red, purple and black rice, Khai said, noting that this rice has higher nutrients and minerals than normal rice. The prices range from VND45,000-75,000 ($2.1-3.5) per kilo.

Similarly, An Giang Plant Protection Joint Stock Company has introduced to the market Vibigaba sprouted rice, which can help stabilise blood glucose levels of diabetics.

HCMC's stable office rents could end soon

The high rate of occupancy and period of rent stability in the commercial leasing sector in HCM City may be short-lived, and the rents for most grades in Ha Noi should continue the downward trend, Cushman & Wakefield has said in a report.

While the solid start to 2014 in HCM City has continued into the second quarter, over 50,000sq.m of office space is due to come into the market this year from three projects in the CBD area and a further 110,000sq.m in the first quarter of 2015, subverting this stability, it said.

In Ha Noi, more than 800,000sq.m of office space across all grades is expected to hit the market in the next two years, keeping a downward pressure on asking rents, it said.

C&W expects 2014 to be a favourable year for tenants, while landlords will have to suffer from fierce competition from new supply.

The first quarter saw opposing trends in the commercial leasing sector in Ha Noi and HCM City, according to Alex Crane, C&W's national head of commercial agency.

Office occupiers in Ha Noi tended to move west due to the competitive rentals there and large incentives on offer from developers, while occupiers in HCM City desired to go back to the CBD area, he said.

Rents in the two cities have stopped moving in correlation, he added.

In HCM City, there were no new office buildings in any grade.

Grade A segment occupancy went up by 3 percentage points from the previous quarter to 91 per cent, but rents continued downward, decreasing by 1 per cent quarter-on-quarter to VND987,000 (US$46.8) per square metre per month.

Grade B occupancy remained unchanged at 91 per cent quarter-on-quarter. While its rents too remained unchanged from the previous quarter at VND529,800 ($25.1), they were down by 4 per cent year-on-year.

The total absorption of both grades stood at nearly 14,000sq.m, including nearly 5,600sq.m for grade A.

In Ha Noi, the first quarter witnessed the entry of five grade B projects — Eurowindow Multi-complex, Times City, Song Hong Parkview, Gelex Building, and PV Oil Building — taking total supply to 723,000sq.m, an increase of 12.1 per cent quarter-on-quarter.

Grade A stock remained unchanged at 330,000sq.m.

A 10 percent tax would be imposed on carbonated soft drinks under a revised draft of the special consumption tax law released by the Ministry of Finance last Friday, which would take effect in July 2015.

The ministry cited several studies that point out the potentially harmful effects of soft drinks on public health, suggesting that their consumption should be controlled in the same way as that of cigarettes and alcohol. However, some experts are vehemently opposed to the tax.

"These products are popular and consumed in almost all rural areas, so it would be bad for consumers," said Phan Huu Thang, Director of the Global Integration Business Consultants, who argued that the move would also hurt the sugar manufacturing industry, retail distribution system and individual businesses.

Herb Cochran, director of AmCham Viet Nam in HCM City, said the imposition of a special consumption tax on products such as non-alcoholic carbonated soft drinks was "unfair" for consumers.

Special consumption tax was applied only for luxury products, which served the needs of a small group of people with high income, and products that had a negative impact on the environment and people's health, he said.

Nguyen Thi Cuc, President of the Viet Nam Tax Consultancy Association, said Viet Nam should consider imposing such a tax, as many other countries have already done.

Tran Kim Chung, Deputy Director of the Central Institute for Economic Management, estimated that if the tax was imposed, the Government would collect US$8.4 million, the beverage industry would lose US$40.5 million, the country's economy would lose US$12 million and GDP growth could decrease by as much as 0.01 per cent.

Moreover, demand for non-alcoholic soft drinks would reduce by 28 per cent, he said.

"At the beginning, tax collecting might increase a bit, but gradually it will go down," Chung said. "On the flip side, labourers, jobs and suppliers of sugarcane and other materials will be negatively affected."

Dropping export prices pose challenge

The average prices of many key export items such as farm-aquatic produce and minerals are dropping, posing great challenge to the country in its bid to raise export value by 10 percent this year, according to the Ministry of Industry and Trade (MoIT).

Speaking at the MoIT’s online conference on April 7, Director of the Planning Department Nguyen Tien Vy said farm produce saw their export prices reduce by between 2 and 24.8 percent in the reviewed period.

Ores and minerals, including coal, face the same problem, with their prices dropping by as much as 66.3 percent.

The export volume of these two groups of products also decreased, resulting in a reduction of around 390 million USD in their export turnover compared to Quarter 1 last year.

With the set target of 145.4 billion USD in export turnover for this year, the country must earn an average of 12.1 billion USD each month, but the monthly figure for the first three months stood at only 11.12 billion USD. Therefore, experts urge more efforts to remove difficulties for exporters if the target is to be met.

At the same time, the management of import is also under pressure when import is required to be controlled at under 10 billion USD. However, the import of luxury goods has surged the first quarter, with a 78.7 percent rise in the import of under-nine seat cars and a 25.3 percent increase for mobile phones.

Deputy Minister of Industry and Trade Le Duong Quang asked the ministry’s agencies to keep close contact with enterprises in order to timely tackle arising problems and complaints.

Particularly regarding farm produce, the ministry will work to enhance its capacity of stockpiling and price management to counter price fluctuation in the world market.

In addition, the MoIT asked relevant ministries and sectors to continue giving priority to farmers in accessing loans to purchase production materials as well as to enterprises engaging in production for export.

On the macro level, the negotiations on free trade agreements between Vietnam and foreign partners will be expedited with a view to expanding market for the country’s exports.

Vietnam’s export revenues reached 33.35 billion USD, up 14.1 percent from the same period last year, while imports stood at 32.34 billion USD in the first quarter of this year.

The processing industry alone earned more than 23.5 billion USD, up 17.6 percent year on year.

However, crude oil export revenues dropped by 8.3 percent to 1.7 billion USD, and cassava and cassava products earned only 367 million USD, a 14.8 percent reduction. Another staple, rubber suffered from a 39.2 percent drop, bringing home 306 million USD while coal posted an export value of 217 million USD, a 25.4 percent decrease.

The Vietnam Food Association (VFA) forecasts rice exports in the second quarter of the year will continue to face fierce competition from Thai rice and domestic rice market fluctuations.

Vietnam exported 583,294 tonnes of rice in March, realizing gross revenue of US$256.184 million (FOB), up 77.7% compared to February.

Roughly 1.219 million tonnes of rice were shipped in the first quarter of the year, fetching US$529.777 million (FOB), down 15.41% in volume and 16.9% in value against the same period last year.

According to the VFA, exports in March surpassed the set plan but accumulated three-month exports were much lower than the same period last year due to low inventories, limited supply, and a relatively high domestic price amid a declining world price.

Apart from the Philippines, other Vietnamese rice consumers saw a sharp decline in volume compared to a year ago.

Although China accounted for more than 40% of Vietnam’s total export volume in the first quarter, it saw a 20% fall year on year.

Vietnamese rice shipped to Cuba and Africa also decreased over 51% and nearly 63% respectively in the reviewed period.  

At a recent meeting on rice purchase and exports, the VFA said the export price of 5% broken rice was quite stable in January and early February at US$405-410 per tonne and then declined to US$390 per tonne in late March.

The fall was attributed to a low inventory level, short supply, and increased domestic rice prices, putting Vietnamese rice at a disadvantage on the world market.

The VFA predicts rice exports in April will face a number of challenges as Thailand is to resume rice exports, offering competitive prices.

Unconfirmed sources say Thailand plans to sell 200,000 tonnes of 5% broken rice to Malaysia’s leading rice processor Bernas at a highly competitive price of US$385 per tonne.

Meanwhile, the Philippines is tendering contracts for 800,000 tonnes of 15% broken rice on April 15 and both Vietnam and Thailand are expected to submit strong competitive bids.

To win Philippine bids, Vietnamese businesses will have to offer lower prices, while they have yet to predict pricing trends for shipments till August 2014.

Agricultural experts said that challenges lie ahead for the Vietnamese export market as the domestic price currently stands at very high level and is going to put pressure on export prices.

The VFA forecasts Vietnam will export 700,000 tonnes in April based on signed contracts.   

The Ministry of Agriculture and Rural Development (MARD) said Mekong Delta provinces have begun harvesting the winter-spring rice crop.

133 businesses have purchased 349,267 tonnes of rice for stockpiling, meeting 34.93% of the plan. A MARD working mission will be dispatched to monitor rice purchase for reserves in the Mekong Delta region this month.

Minh Phu Seafood Corp aims at 550 mln USD in exports

The Minh Phu Seafood Corporation of the southernmost province of Ca Mau has set a target of earning 550 million USD from exports by the end of 2014, following the optimistic outcomes of the first months of this year.

According to deputy director Chu Van An, the group posted over 140 million USD in export turnover at the beginning of this year, the highest ever recorded.

It currently tops the list of 10 local businesses that have strength in processing aquatic products. Despite difficulties in the year just gone, the group recorded 520 million USD compared to one billion USD in export turnover of the province.

Its frozen seafood products are being sold in over 40 countries and territories.

To realise the target, An said the most important thing is to stabilise the source of materials for supplying factories.

Local authorities should plan and develop the shrimp industry in a sustainable manner, while farmers are advised to select high quality shrimp and avoid using antibiotics.

The corporation will continue to focus on upgrading the design and improving the quality of its aquatic products to ensure their competitiveness in traditional markets and choosy ones such as Japan , the US and Europe.

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