Bosses, Now It’s Your Turn: 6 Ways to Get Ahead
By Jeff Haden | August 22, 2011
Bosses spend the vast majority of their time helping others succeed: Employees, customers, the business itself… the list goes on and on. That’s your job — but it’s also your job to focus on yourself, at least part of the time, if only because your success can create success for others.
The problem is that even though performance, not persona, is what matters most, getting ahead is at least partly based on getting noticed — and getting noticed means being different.
Here are six ways you can get noticed through actions that make you stand out from the pack.
1. Be known for something worthwhile. Meeting standards, however lofty those standards may be, often won’t help you stand out. Go above the norm. Be the supervisor known for turning around struggling employees. Be the manager who gets a higher percentage of employees promoted. Be the business owner who makes a few deliveries a week to personally check in with customers. Pick a worthwhile mission and put in the extra effort required to excel at that mission — while still meeting all your other responsibilities, of course.
2. Be first… with a purpose. Lots of bosses are the first to arrive. Great — but what do you do with that time? Organize your thoughts? Get a jump on your email? Instead of taking care of “personal” tasks, do something visibly worthwhile for the organization. Take care of unresolved problems from the day before. Set things up so it’s easier for employees to hit the ground running when they arrive. Chip away at an ongoing project that others have ignored. Whatever you choose, do it consistently. Don’t just be the person who turns on the lights — be the person who arrives early and gets things done.
3. Create your own project. Excelling at an assigned project is expected. Excelling at a project you create helps you stand out. The key is to take a risk with a project, and do it on your own time so your company or customer doesn’t share that risk. For example, (many) years ago I decided to create a Web-based employee handbook we could put on the company intranet. I worked on it at home, showed it to a few managers, but the HR manager hated it so it died on the spot. I was disappointed but the company wasn’t “out” anything — and partly as a result a few months later I was assigned to a high-visibility, company–wide process improvement team. The same works for business owners: Experiment with a new process or service with a particular customer in mind. If nothing else they will appreciate the extra effort you put into trying to better meet their needs — and you’ll stand out.
4. Put your money where your mouth is. Lots of people take verbal stands, especially in meetings. Fewer take a stand and volunteer to put effort behind their opinions. Say you think a project has gone off the rails; instead of simply showing everyone how smart you are by pointing out its flaws, volunteer to help fix it. Or if you think an employee deserves another chance, don’t just pay lip service — ask to have him transferred to your area. It’s easy to talk about what’s wrong, what should be changed, what could be improved… the people who stand out are the ones who do something about it.
5. Show a little of your personal side. Personal interests help other people to identify and remember you, an especially important advantage in large organizations or crowded markets. Just make sure your personal interests don’t overshadow professional accomplishments. Being “the guy who ran a marathon” is fine, but being “the guy who is always training and traveling to marathons” is not. Let people know a little about you; a few personal details add color and depth to your professional image.
6. Work your butt off. Nothing — nothing — is a substitute for hard work. Look around: How many of your coworkers or competitors are working as hard as they can? Very few, if any. The hardest way to stand out is to out-think and out-work everyone else.
It’s also the easiest — because you’ll be the only one trying.
http://www.bnet.com/blog/small-biz-advice/bosses-now-its-your-turn-6-ways-to-get-ahead/3924?promo=713&tag=nl.e713
Wednesday 24 August 2011
Saturday 20 August 2011
How To Create a Personal Brand
How To Create a Personal Brand
By Geoffrey James | July 14, 2011
Contrary to popular belief, personal branding is not complicated. It’s relatively easy, even in today’s hyper-connected world, to create a recognizable “brand” for yourself. It takes about a day, at most. Here’s exactly what you do:
STEP #1: Define your exact name. Decide what version of your name that you’re going to use. If it’s similar to a famous person, you’ll probably want to use an initial or something to prevent confusion. If you have an unusual name, if it’s memorable, embrace it (e.g. “Zig Ziglar”), but if it’s just difficult, simplify it. If it’s just a plain awful name (e.g. “Lipshitz”) change it, even if the change annoys your parents.
STEP #2: Define your exact product. Decide what value you provide to the world and come up with an appropriate “product name” for what you do. This can be as simple as a job title, but if you want people to remember you, you’ll need to articulate — in a few words — why you’re different from everyone else. For example, I position myself to clients as “world’s only sales fanboy.”
STEP #3: Create your public image. There are two parts to this: your public photos and the way you present yourself in person or on video. Have a professional photographer take a professional portrait that “fits” your product. Avoid anything outre or sexy, unless that’s what you’re selling. Same thing with how you dress. Your face-to-face appearance must reinforce your brand.
STEP #4: Standardize your messages. Go through ALL your social networking sites and change your name, product description and photos to match what you defined in Steps #1 through #3. Remove as much as you can all personal and career data that’s irrelevant to your brand. Then change your business card, stationery, website, etc. to match.
STEP #5: Deliver on your “brand promise”. While branding gurus talk about brand as if it’s the be-all and end-all of business, the simple truth is that brand is largely a reflection of the product. Once you build up a track record of success, it will be that success that creates your person brand, and the stuff above won’t matter so much.
It’s really that simple. So simple, in fact, I’m amazed that so many people have confused and confusing personal brands.
By the way, you CAN have a Facebook page for your friends and family, but you should use some other moniker so that it doesn’t create brand dissonance. And never, ever link to it on your business sites.
http://www.bnet.com/blog/salesmachine/how-to-create-a-personal-brand/16670
By Geoffrey James | July 14, 2011
Contrary to popular belief, personal branding is not complicated. It’s relatively easy, even in today’s hyper-connected world, to create a recognizable “brand” for yourself. It takes about a day, at most. Here’s exactly what you do:
STEP #1: Define your exact name. Decide what version of your name that you’re going to use. If it’s similar to a famous person, you’ll probably want to use an initial or something to prevent confusion. If you have an unusual name, if it’s memorable, embrace it (e.g. “Zig Ziglar”), but if it’s just difficult, simplify it. If it’s just a plain awful name (e.g. “Lipshitz”) change it, even if the change annoys your parents.
STEP #2: Define your exact product. Decide what value you provide to the world and come up with an appropriate “product name” for what you do. This can be as simple as a job title, but if you want people to remember you, you’ll need to articulate — in a few words — why you’re different from everyone else. For example, I position myself to clients as “world’s only sales fanboy.”
STEP #3: Create your public image. There are two parts to this: your public photos and the way you present yourself in person or on video. Have a professional photographer take a professional portrait that “fits” your product. Avoid anything outre or sexy, unless that’s what you’re selling. Same thing with how you dress. Your face-to-face appearance must reinforce your brand.
STEP #4: Standardize your messages. Go through ALL your social networking sites and change your name, product description and photos to match what you defined in Steps #1 through #3. Remove as much as you can all personal and career data that’s irrelevant to your brand. Then change your business card, stationery, website, etc. to match.
STEP #5: Deliver on your “brand promise”. While branding gurus talk about brand as if it’s the be-all and end-all of business, the simple truth is that brand is largely a reflection of the product. Once you build up a track record of success, it will be that success that creates your person brand, and the stuff above won’t matter so much.
It’s really that simple. So simple, in fact, I’m amazed that so many people have confused and confusing personal brands.
By the way, you CAN have a Facebook page for your friends and family, but you should use some other moniker so that it doesn’t create brand dissonance. And never, ever link to it on your business sites.
http://www.bnet.com/blog/salesmachine/how-to-create-a-personal-brand/16670
When Not to Hit 'Reply All'
When Not to Hit 'Reply All'
By Dave Johnson | August 18, 2011
Now that email has been around for 30 years or so, you’d think that common messaging activities — like using the Reply and Reply All buttons — would just be common sense. Alas, based on all the pain I see at work, in email from BNET readers, and out there on the Web in general, it’s clearly not the case. Here’s my take on when and how you should use Reply and Reply All to avoid causing problems in the office.
Use Reply All
In general, all the time. What? That’s crazy, right? Nope. Someone crafted the addressees in the email you are reading for a reason, and respect that. I’m referring, of course, to typical email threads with a small group of people — there are exceptions, and I’ll get to those in a moment. But if you click reply to a mail with a bunch of addressees on it, you identify yourself as either clumsy and thoughtless or someone who doesn’t respect the people on the CC line enough to include them in the conversation. Which of those would you like to be known as?
Use Reply
When an email has an extremely wide distribution — such as to an entire division. Don’t ever reply all to a request for information from an admin, for example. You’ll annoy hundreds of people and probably start a firestorm of “stop replying all” messages that will only make matters worse.
When you need to narrow the focus of the conversation. If there are a half-dozen people on the thread and you want to branch the subject or interject something confidential or sensitive, be highly aware of whom you are cc’ing.
Don’t Use Either
If you’re inclined to make a joke at someone’s expense, say something impolitic, or be otherwise insensitive, don’t. I’ve heard advice like “be sure to narrow the audience if you’re going to say something at the expense of someone cc’d on the mail,” but that is just dumb. Remember that email lives forever, and it can be forwarded — accidentally or intentionally — without your permission at any time. Don’t risk it.
http://www.bnet.com/blog/businesstips/when-not-to-hit-reply-all/12229?promo=713&tag=nl.e713
By Dave Johnson | August 18, 2011
Now that email has been around for 30 years or so, you’d think that common messaging activities — like using the Reply and Reply All buttons — would just be common sense. Alas, based on all the pain I see at work, in email from BNET readers, and out there on the Web in general, it’s clearly not the case. Here’s my take on when and how you should use Reply and Reply All to avoid causing problems in the office.
Use Reply All
In general, all the time. What? That’s crazy, right? Nope. Someone crafted the addressees in the email you are reading for a reason, and respect that. I’m referring, of course, to typical email threads with a small group of people — there are exceptions, and I’ll get to those in a moment. But if you click reply to a mail with a bunch of addressees on it, you identify yourself as either clumsy and thoughtless or someone who doesn’t respect the people on the CC line enough to include them in the conversation. Which of those would you like to be known as?
Use Reply
When an email has an extremely wide distribution — such as to an entire division. Don’t ever reply all to a request for information from an admin, for example. You’ll annoy hundreds of people and probably start a firestorm of “stop replying all” messages that will only make matters worse.
When you need to narrow the focus of the conversation. If there are a half-dozen people on the thread and you want to branch the subject or interject something confidential or sensitive, be highly aware of whom you are cc’ing.
Don’t Use Either
If you’re inclined to make a joke at someone’s expense, say something impolitic, or be otherwise insensitive, don’t. I’ve heard advice like “be sure to narrow the audience if you’re going to say something at the expense of someone cc’d on the mail,” but that is just dumb. Remember that email lives forever, and it can be forwarded — accidentally or intentionally — without your permission at any time. Don’t risk it.
http://www.bnet.com/blog/businesstips/when-not-to-hit-reply-all/12229?promo=713&tag=nl.e713
Why You're Wasting Your Time Trying to Limit Social Media Use
Why You're Wasting Your Time Trying to Limit Social Media Use
By Jessica Stillman | August 16, 2011
Recently, when Ken Wisnefski, the CEO of WebiMax, an online marketing firm, wrote in to BNET’s Ask the Expert’s column complaining that his employees were wasting too much time on social media, two out of three responding experts took a hard line on the issue. Beth Schroeder, a partner at Silver & Freedman, for instance, suggested that if employees needed to use social media for work, bosses set up dedicated computers or try “looking over their shoulders.”
Christina Stovall, director of HR at Odyssey One Source, had a similar take on the issue, saying, “While you may not be able to restrict these sites completely, you can proactively use available technology — firewalls and web-filtering services — to limit access. In extreme cases, have your managers or the IT department note which employees are abusing their access to personal sites and handle those situations with disciplinary action.”
So are these HR experts right to take such a strict stance on social media use at work? Not according to a recent Business Insider post. The piece is based on a simple and probably fair assessment: “Your employees are Facebooking and Tweeting at work. Face it. We’ve all learned to accept it as a fact of life.” Rather than dissipate your resources and antagonize your employees with an endless battle to snuff out social media use at the office, BI suggests you put employees’ love of Facebook, Twitter and the like to good use.
That employee who spends all day on Facebook? Put him to work setting up your LinkedIn account. That lady in sales that loves to Tweet may be able to teach you a few things. Set up a company Twitter account and create a presence for your company there.
And even if your company already has a flourishing social media presence and doesn’t need more contributors, fighting against social media use may still be misguided, according to the post:
Networking also can help with research. That project you assigned to the new intern? She had no idea where to find the information she needed, so she pulled up her Facebook account and posted the question to her 5,000 friends and family members. Within ten minutes she found out her friend from high school works with someone who would love to answer any questions she has. The end result of that project is far above anything you could have come up with on your own. All because of social networking.
Still sure your employees’ social media use isn’t directly benefiting their work? Who cares, says BI. It may be indirectly helping them keep their sanity.
For the most part, employees use social networking as stress relief. While some employees can get carried away, many of today’s workers are used to multitasking. At home they watch TV, surf the Internet, and talk on the phone, all at the same time. We, as a society, have grown restless when single-minded focus is required and cutting back and forth to social media throughout the day allows us the diversion we need to recharge.
Recent research supports this conclusion, finding that social media can actually improve productivity by helping the brain recharge, or can be harnessed with tools like Yammer to improve inter-office communication.
But perhaps there’s an even simpler reason to stop trying to micromanage social media use at your office — you’re pissing off your employees by treating them like children. Sure, if an individual employee isn’t meeting performance targets or completing tasks because they’re glued to Facebook, fire them. But if a worker is meeting the goals you set for them, is the anger and oppositional relationship your engendering with your social media paranoia really likely to improve their performance or increase the likelihood of them sticking around for awhile? Maybe if you can’t trust your employees to do their work without minute-by-minute scrutiny, you haven’t hired the right employees.
What do you think — does fighting social media use at work do more harm than good?
http://www.bnet.com/blog/entry-level/why-youre-wasting-your-time-trying-to-limit-social-media-use/5316?promo=713&tag=nl.e713
By Jessica Stillman | August 16, 2011
Recently, when Ken Wisnefski, the CEO of WebiMax, an online marketing firm, wrote in to BNET’s Ask the Expert’s column complaining that his employees were wasting too much time on social media, two out of three responding experts took a hard line on the issue. Beth Schroeder, a partner at Silver & Freedman, for instance, suggested that if employees needed to use social media for work, bosses set up dedicated computers or try “looking over their shoulders.”
Christina Stovall, director of HR at Odyssey One Source, had a similar take on the issue, saying, “While you may not be able to restrict these sites completely, you can proactively use available technology — firewalls and web-filtering services — to limit access. In extreme cases, have your managers or the IT department note which employees are abusing their access to personal sites and handle those situations with disciplinary action.”
So are these HR experts right to take such a strict stance on social media use at work? Not according to a recent Business Insider post. The piece is based on a simple and probably fair assessment: “Your employees are Facebooking and Tweeting at work. Face it. We’ve all learned to accept it as a fact of life.” Rather than dissipate your resources and antagonize your employees with an endless battle to snuff out social media use at the office, BI suggests you put employees’ love of Facebook, Twitter and the like to good use.
That employee who spends all day on Facebook? Put him to work setting up your LinkedIn account. That lady in sales that loves to Tweet may be able to teach you a few things. Set up a company Twitter account and create a presence for your company there.
And even if your company already has a flourishing social media presence and doesn’t need more contributors, fighting against social media use may still be misguided, according to the post:
Networking also can help with research. That project you assigned to the new intern? She had no idea where to find the information she needed, so she pulled up her Facebook account and posted the question to her 5,000 friends and family members. Within ten minutes she found out her friend from high school works with someone who would love to answer any questions she has. The end result of that project is far above anything you could have come up with on your own. All because of social networking.
Still sure your employees’ social media use isn’t directly benefiting their work? Who cares, says BI. It may be indirectly helping them keep their sanity.
For the most part, employees use social networking as stress relief. While some employees can get carried away, many of today’s workers are used to multitasking. At home they watch TV, surf the Internet, and talk on the phone, all at the same time. We, as a society, have grown restless when single-minded focus is required and cutting back and forth to social media throughout the day allows us the diversion we need to recharge.
Recent research supports this conclusion, finding that social media can actually improve productivity by helping the brain recharge, or can be harnessed with tools like Yammer to improve inter-office communication.
But perhaps there’s an even simpler reason to stop trying to micromanage social media use at your office — you’re pissing off your employees by treating them like children. Sure, if an individual employee isn’t meeting performance targets or completing tasks because they’re glued to Facebook, fire them. But if a worker is meeting the goals you set for them, is the anger and oppositional relationship your engendering with your social media paranoia really likely to improve their performance or increase the likelihood of them sticking around for awhile? Maybe if you can’t trust your employees to do their work without minute-by-minute scrutiny, you haven’t hired the right employees.
What do you think — does fighting social media use at work do more harm than good?
http://www.bnet.com/blog/entry-level/why-youre-wasting-your-time-trying-to-limit-social-media-use/5316?promo=713&tag=nl.e713
Easing the Squeeze: The 2011 Working Capital Scorecard
Easing the Squeeze: The 2011 Working Capital Scorecard
As sales revive and coffers swell, companies seem less intent on wringing cash out of working capital.
David M. Katz - CFO Magazine
July 15, 2011
For months after the Great Recession officially ended in June 2009, the need for cash trumped all else. With credit still scarce, companies continued to squeeze cash out of their supply chains. Finance chiefs led the charge to tighten bill collection, loosen their own payment terms, and dump inventory.
Related Articles
All in the Timing
Does Growth Require Cash?
Captains of Capex
To Cut Working Capital, Try Bonuses
Working It Out: The 2010 Working Capital Scorecard
Today, cash is no longer a problem, as corporate coffers are filled to the brim. But don't be too quick to credit working capital improvement. The 2% decrease in days working capital (DWC) last year qualifies as downright modest, some say, although it is certainly an improvement, given that DWC increased 9.9% the prior year, the worst performance in half a decade. (Remember that a decrease in DWC represents improved working capital performance.)
Many CFOs disavow any connection between companies' strong cash positions and an apparent lack of emphasis on working capital. How strong? One thousand of the biggest publicly reporting nonfinancial companies registered an 11.5% jump in revenue last year, according to the 2011 CFO/REL Working Capital Scorecard. (By comparison, revenue dropped by 12.1% in 2009.)
Mixed Signals
All three components of DWC showed similarly scant levels of improvement. Days sales outstanding (DSO) declined 0.1%, while days inventory outstanding (DIO) and days payable outstanding (DPO) each improved just 1.1%.
To some experts, such sluggishness bespeaks complacency born of abundant cash. "The energy and focus have now been placed much more on the [profit-and-loss] statement," says Mark Tennant, a principal with REL, a working capital consulting firm. "There isn't a continuous focus on cash flow and working capital."
If, indeed, bulging coffers are to blame for a new spirit of complacency, the result could be a false sense of security. Corporate balance sheets may not be nearly as impervious as they seem, says Stephen Payne, Americas leader of working capital advisory services at Ernst & Young. Despite an impressive recent comeback in corporate productivity, high unemployment continues to plague the economy, he explains.
To produce sustainable growth, companies will "have to hire people and invest via capex, and that's going to start depleting their cash hoards," says Payne. (However, few companies seem poised to do that — see "Treading Water.") In the case of U.S.-based multinationals, much of that cash is sequestered abroad and more or less unavailable domestically, thanks to the 35% tax on repatriated profits.
Nevertheless, the stress that led many companies to try to wring cash from working capital during the recession has been eased by some signs that consumer demand is beginning to rebound. If sales forecasts continue to improve, corporations are bound to put more resources into driving revenue than into process improvements.
At The Kroger Co., which recently celebrated its 29th straight quarter of growth in food sales, for example, there's little doubt where its priorities lie. Acknowledging that he sees an opportunity to derive as much as $600 million in cash via working capital improvements at the $82 billion (in revenues) supermarket chain, finance chief Mike Schlotman says he would only go about it gingerly. "As the CFO, I could easily get it out and say I've got a few hundred million dollars of cash," he says. "But if it hurts sales, that's not such a great accomplishment."
Industrial Strengths — or Weaknesses
A major determinant (some might say limitation) of how a company regards the relationship between revenue and working capital hinges on its particular industry. There are severe curbs on how much cash a company like Integra LifeSciences Holdings can generate by slimming down its supply chain, demanding payment on time from its customers, or taking longer to pay its suppliers, for instance. Because of that, working capital improvements take a back seat to efforts to boost sales, according to Integra CFO John Henneman.
There's very little excess to trim in the supply line for the surgical implants and other time-sensitive orthopedic products that are Integra's specialties. "An awful lot of inventory is either held by sales reps — so they can be ready for surgery on very short notice — or held in hospitals for the same reason on consignment," Henneman says. "That requires quite a lot more inventory than you would need if you were in a business that had longer lead times."
Further, the $732 million company is caught in a receivables/payables squeeze: its hospital customers insist on longer payment terms than Integra can get from its own suppliers. "There's really nothing you can do about that if you want to play in the market, because other medical-device companies will take your business [otherwise]," he says.
On the other hand, the company must buy parts like screws or plates in such small quantities that it carries little clout with its vendors in negotiations on payment terms. Further, it must overbuy its inventory to have the right parts for any eventuality, even though most patients fall into a narrow range of possible needs.
In addition to such limitations, the high gross margins of the orthopedics industry diminish the incentive to make supply chains more efficient. Because Integra and firms like it retain a big portion of their sales as gross profit, it's worse for them to lack the inventory to fill a back order than to pay for redundant supplies, says Henneman.
For competitive reasons, however, companies in industries where working capital improvements are hard to come by may still be moved to make them. For example, inventory-turnover ratios in the aerospace and defense industry "are not world-class," says Bob George, CFO of Esterline Technologies, a $1.5 billion specialized manufacturer that derives most of its revenue from those sectors. Yet, Esterline is working hard to bring that ratio down.
In 2010, for instance, the industry saw its median DIO rise to 53 from 52 and its DWC increase to 90 from 86. In contrast, the auto-components business recorded median inventory days of 29 last year, down a day from the previous year, and 29 days of working capital — more than 9 days less than it was in 2009.
Related Articles
All in the Timing
Does Growth Require Cash?
Captains of Capex
To Cut Working Capital, Try Bonuses
Working It Out: The 2010 Working Capital Scorecard
Indeed, given the length of time it takes to design and fashion a jet, just-in-time manufacturing "is not really a general concept that we wrestle with" as much as automakers do, adds George. Still, Esterline is striving to "crush lead times" in order to stay at the top of its class as a supplier, he says. The numbers appear to bear him out: between 2009 and 2010, the company reduced its DIO from 71 to 63, a 12% improvement compared with the 2% median deterioration of the industry as a whole.
Contrary to the theory that abundant cash leads to poor working capital performance, George sees the two spheres as completely separate. He says the incentive to streamline the company's supply chain is driven by the demands of its customers for shorter lead times and flexible terms. "They want to say, 'Look, I don't want inventory until I need it, and I want you to be able to respond,'" says George. Ultimately, it boils down to the promise of future revenue, since Esterline's major customers, which include Boeing and Airbus, want suppliers that can operate as leanly as possible.
Having a significant cash cushion has nothing to do with how hard the company works to turn around its inventory, says the finance chief: "Simply because we have cash on the balance sheet does not influence that focus at all."
Give It to the Shareholders
Bob Daleo, CFO of Thomson Reuters, maintains that companies that fail to manage their working capital are doing a great disservice to their investors. "So because we have more cash, we're going to let customers and vendors keep our cash longer? That's dumb," he says. "Instead of giving it to their vendors and customers, why don't they give it back to their shareholders?"
Thomson Reuters, a $13 billion information, data, and news provider, has little inventory to cut. With 40% of its revenues coming from outside the United States, the company is also geographically locked in to a mix of longer bill-collection times. Thus, it devoted its efforts to making working capital improvements in the area over which it has the most control: payment terms. The effort yielded an increase in DPO from 12 in 2009 to 15 in 2010.
As part of its focus on improving its working capital performance, Thomson Reuters consolidated its payment process in India, using a centralized payment-processing team to implement standardized policies," says Daleo.
In the current economic climate, however, the top line of the income statement appears to be a much higher priority than cash on the balance sheet. Yet while the focus on improving working capital performance may have dimmed, some companies are striving to sustain the gains they achieved during the recession.
Take Cytec Industries, for example. In the wake of the 2008 financial meltdown, Cytec, a $2.7 billion supplier of specialty chemicals and materials, was faced with debt and liquidity challenges. To make sure it had adequate cash on hand, the company embarked on a major effort to boost its working capital performance. As part of the push, Cytec curbed its past focus on net income and linked employee pay to the company's working capital goals.
By the end of 2009, the company's DWC dropped 27%, from 90 to 66. Although its revenues decreased 22% that year, it was able to offset the loss with the cash it had freed up by cutting working capital days. Spurred by the revival of the chemical industry in 2010, Cytec's revenues rebounded by 13% that year. With its incentive-compensation programs in place, however, the company was able to cut its DWC even further, to 61 days. The decrease in DWC improvement from 27% in 2009 to 8% in 2010 may simply mean that the company had made the most of its existing opportunities in 2009, says Cytec CFO David Drillock.
Still, the reduction in working capital days has produced enough cash flow to enable the company to reinvest in itself as well as restore dividend payments and launch a share-buyback program. "It really doesn't matter what industry you're in — if you have strong cash flow, you're generating value for shareholders," says Drillock. But if sales pick up in a big way, it may be hard for other finance chiefs to follow suit.
David M. Katz is New York bureau chief and senior editor for accounting at CFO.
http://www.cfo.com/article.cfm/14586631
As sales revive and coffers swell, companies seem less intent on wringing cash out of working capital.
David M. Katz - CFO Magazine
July 15, 2011
For months after the Great Recession officially ended in June 2009, the need for cash trumped all else. With credit still scarce, companies continued to squeeze cash out of their supply chains. Finance chiefs led the charge to tighten bill collection, loosen their own payment terms, and dump inventory.
Related Articles
All in the Timing
Does Growth Require Cash?
Captains of Capex
To Cut Working Capital, Try Bonuses
Working It Out: The 2010 Working Capital Scorecard
Today, cash is no longer a problem, as corporate coffers are filled to the brim. But don't be too quick to credit working capital improvement. The 2% decrease in days working capital (DWC) last year qualifies as downright modest, some say, although it is certainly an improvement, given that DWC increased 9.9% the prior year, the worst performance in half a decade. (Remember that a decrease in DWC represents improved working capital performance.)
Many CFOs disavow any connection between companies' strong cash positions and an apparent lack of emphasis on working capital. How strong? One thousand of the biggest publicly reporting nonfinancial companies registered an 11.5% jump in revenue last year, according to the 2011 CFO/REL Working Capital Scorecard. (By comparison, revenue dropped by 12.1% in 2009.)
Mixed Signals
All three components of DWC showed similarly scant levels of improvement. Days sales outstanding (DSO) declined 0.1%, while days inventory outstanding (DIO) and days payable outstanding (DPO) each improved just 1.1%.
To some experts, such sluggishness bespeaks complacency born of abundant cash. "The energy and focus have now been placed much more on the [profit-and-loss] statement," says Mark Tennant, a principal with REL, a working capital consulting firm. "There isn't a continuous focus on cash flow and working capital."
If, indeed, bulging coffers are to blame for a new spirit of complacency, the result could be a false sense of security. Corporate balance sheets may not be nearly as impervious as they seem, says Stephen Payne, Americas leader of working capital advisory services at Ernst & Young. Despite an impressive recent comeback in corporate productivity, high unemployment continues to plague the economy, he explains.
To produce sustainable growth, companies will "have to hire people and invest via capex, and that's going to start depleting their cash hoards," says Payne. (However, few companies seem poised to do that — see "Treading Water.") In the case of U.S.-based multinationals, much of that cash is sequestered abroad and more or less unavailable domestically, thanks to the 35% tax on repatriated profits.
Nevertheless, the stress that led many companies to try to wring cash from working capital during the recession has been eased by some signs that consumer demand is beginning to rebound. If sales forecasts continue to improve, corporations are bound to put more resources into driving revenue than into process improvements.
At The Kroger Co., which recently celebrated its 29th straight quarter of growth in food sales, for example, there's little doubt where its priorities lie. Acknowledging that he sees an opportunity to derive as much as $600 million in cash via working capital improvements at the $82 billion (in revenues) supermarket chain, finance chief Mike Schlotman says he would only go about it gingerly. "As the CFO, I could easily get it out and say I've got a few hundred million dollars of cash," he says. "But if it hurts sales, that's not such a great accomplishment."
Industrial Strengths — or Weaknesses
A major determinant (some might say limitation) of how a company regards the relationship between revenue and working capital hinges on its particular industry. There are severe curbs on how much cash a company like Integra LifeSciences Holdings can generate by slimming down its supply chain, demanding payment on time from its customers, or taking longer to pay its suppliers, for instance. Because of that, working capital improvements take a back seat to efforts to boost sales, according to Integra CFO John Henneman.
There's very little excess to trim in the supply line for the surgical implants and other time-sensitive orthopedic products that are Integra's specialties. "An awful lot of inventory is either held by sales reps — so they can be ready for surgery on very short notice — or held in hospitals for the same reason on consignment," Henneman says. "That requires quite a lot more inventory than you would need if you were in a business that had longer lead times."
Further, the $732 million company is caught in a receivables/payables squeeze: its hospital customers insist on longer payment terms than Integra can get from its own suppliers. "There's really nothing you can do about that if you want to play in the market, because other medical-device companies will take your business [otherwise]," he says.
On the other hand, the company must buy parts like screws or plates in such small quantities that it carries little clout with its vendors in negotiations on payment terms. Further, it must overbuy its inventory to have the right parts for any eventuality, even though most patients fall into a narrow range of possible needs.
In addition to such limitations, the high gross margins of the orthopedics industry diminish the incentive to make supply chains more efficient. Because Integra and firms like it retain a big portion of their sales as gross profit, it's worse for them to lack the inventory to fill a back order than to pay for redundant supplies, says Henneman.
For competitive reasons, however, companies in industries where working capital improvements are hard to come by may still be moved to make them. For example, inventory-turnover ratios in the aerospace and defense industry "are not world-class," says Bob George, CFO of Esterline Technologies, a $1.5 billion specialized manufacturer that derives most of its revenue from those sectors. Yet, Esterline is working hard to bring that ratio down.
In 2010, for instance, the industry saw its median DIO rise to 53 from 52 and its DWC increase to 90 from 86. In contrast, the auto-components business recorded median inventory days of 29 last year, down a day from the previous year, and 29 days of working capital — more than 9 days less than it was in 2009.
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Indeed, given the length of time it takes to design and fashion a jet, just-in-time manufacturing "is not really a general concept that we wrestle with" as much as automakers do, adds George. Still, Esterline is striving to "crush lead times" in order to stay at the top of its class as a supplier, he says. The numbers appear to bear him out: between 2009 and 2010, the company reduced its DIO from 71 to 63, a 12% improvement compared with the 2% median deterioration of the industry as a whole.
Contrary to the theory that abundant cash leads to poor working capital performance, George sees the two spheres as completely separate. He says the incentive to streamline the company's supply chain is driven by the demands of its customers for shorter lead times and flexible terms. "They want to say, 'Look, I don't want inventory until I need it, and I want you to be able to respond,'" says George. Ultimately, it boils down to the promise of future revenue, since Esterline's major customers, which include Boeing and Airbus, want suppliers that can operate as leanly as possible.
Having a significant cash cushion has nothing to do with how hard the company works to turn around its inventory, says the finance chief: "Simply because we have cash on the balance sheet does not influence that focus at all."
Give It to the Shareholders
Bob Daleo, CFO of Thomson Reuters, maintains that companies that fail to manage their working capital are doing a great disservice to their investors. "So because we have more cash, we're going to let customers and vendors keep our cash longer? That's dumb," he says. "Instead of giving it to their vendors and customers, why don't they give it back to their shareholders?"
Thomson Reuters, a $13 billion information, data, and news provider, has little inventory to cut. With 40% of its revenues coming from outside the United States, the company is also geographically locked in to a mix of longer bill-collection times. Thus, it devoted its efforts to making working capital improvements in the area over which it has the most control: payment terms. The effort yielded an increase in DPO from 12 in 2009 to 15 in 2010.
As part of its focus on improving its working capital performance, Thomson Reuters consolidated its payment process in India, using a centralized payment-processing team to implement standardized policies," says Daleo.
In the current economic climate, however, the top line of the income statement appears to be a much higher priority than cash on the balance sheet. Yet while the focus on improving working capital performance may have dimmed, some companies are striving to sustain the gains they achieved during the recession.
Take Cytec Industries, for example. In the wake of the 2008 financial meltdown, Cytec, a $2.7 billion supplier of specialty chemicals and materials, was faced with debt and liquidity challenges. To make sure it had adequate cash on hand, the company embarked on a major effort to boost its working capital performance. As part of the push, Cytec curbed its past focus on net income and linked employee pay to the company's working capital goals.
By the end of 2009, the company's DWC dropped 27%, from 90 to 66. Although its revenues decreased 22% that year, it was able to offset the loss with the cash it had freed up by cutting working capital days. Spurred by the revival of the chemical industry in 2010, Cytec's revenues rebounded by 13% that year. With its incentive-compensation programs in place, however, the company was able to cut its DWC even further, to 61 days. The decrease in DWC improvement from 27% in 2009 to 8% in 2010 may simply mean that the company had made the most of its existing opportunities in 2009, says Cytec CFO David Drillock.
Still, the reduction in working capital days has produced enough cash flow to enable the company to reinvest in itself as well as restore dividend payments and launch a share-buyback program. "It really doesn't matter what industry you're in — if you have strong cash flow, you're generating value for shareholders," says Drillock. But if sales pick up in a big way, it may be hard for other finance chiefs to follow suit.
David M. Katz is New York bureau chief and senior editor for accounting at CFO.
http://www.cfo.com/article.cfm/14586631
10 Tips for Easing Information Overload
10 Tips for Easing Information Overload
By Wayne Turmel | July 18, 2011
As managers, you’re always told to communicate. But for many of us the problem isn’t not enough information, it’s too much. Handling all the email, messages, memos and stuff coming at us is like trying to drink from a fire hose. Here are some tips for getting a grip.
In his new book “Overload-How Too Much Information is Hazardous to Your Organization”, author Jonathan Spira says it’s not just personal productivity that suffers. Too much information to handle effectively costs the US economy $900 Billion a year in bad decisions, delays and wasted time.
The biggest challenges to productivity are also the easiest to abuse: Email and interruptions. Here are 10 tips he offers in the book for gaining some measure of control in your worklife.
Don’t email someone, then immediately follow up with an Instant Message, a phone call and a tweet. it wastes your time and interrupts them, maybe while they’re trying to get you an answer.
Don’t combine multiple themes or requests in a single email. It’s too hard to pick out exactly what you want and if they store the information somewhere they may not find it again.
Make sure the subject of your email actually says what your request or information is about.
Read your email over for tone and clarity before sending it out. One badly written email starts a whole thread of explanation. Get it right the first time.
Don’t overburden people with unnecessary replies like “Great!” and “Thanks”. And for heavens sake don’t reply to everyone unless everyone needs to know.
Don’t get impatient if people don’t respond right away. They may be, you know, busy.
Keep your status up to date on IM and email. If you’re out of the office and won’t be around, tell people so they don’t try to hunt you down.
Recognize that the intended recipient of your email or message isn’t a mind reader. Take the time to give them necessary information about who you are, what you want and what they need to know. This will prevent multiple inquiries.
Recognize that typed words can be misleading in both tone and intent. Strive for simplicity and clarity in your communication. This means we can even forgive an emoticon or two if it helps set the right tone :-)
Understand that as overwhelming as information overload is for you, it’s no easier for anyone else. Do your part to make your team’s life easier.
http://www.bnet.com/blog/virtual-manager/10-tips-for-easing-information-overload/1552?promo=713&tag=nl.e713
By Wayne Turmel | July 18, 2011
As managers, you’re always told to communicate. But for many of us the problem isn’t not enough information, it’s too much. Handling all the email, messages, memos and stuff coming at us is like trying to drink from a fire hose. Here are some tips for getting a grip.
In his new book “Overload-How Too Much Information is Hazardous to Your Organization”, author Jonathan Spira says it’s not just personal productivity that suffers. Too much information to handle effectively costs the US economy $900 Billion a year in bad decisions, delays and wasted time.
The biggest challenges to productivity are also the easiest to abuse: Email and interruptions. Here are 10 tips he offers in the book for gaining some measure of control in your worklife.
Don’t email someone, then immediately follow up with an Instant Message, a phone call and a tweet. it wastes your time and interrupts them, maybe while they’re trying to get you an answer.
Don’t combine multiple themes or requests in a single email. It’s too hard to pick out exactly what you want and if they store the information somewhere they may not find it again.
Make sure the subject of your email actually says what your request or information is about.
Read your email over for tone and clarity before sending it out. One badly written email starts a whole thread of explanation. Get it right the first time.
Don’t overburden people with unnecessary replies like “Great!” and “Thanks”. And for heavens sake don’t reply to everyone unless everyone needs to know.
Don’t get impatient if people don’t respond right away. They may be, you know, busy.
Keep your status up to date on IM and email. If you’re out of the office and won’t be around, tell people so they don’t try to hunt you down.
Recognize that the intended recipient of your email or message isn’t a mind reader. Take the time to give them necessary information about who you are, what you want and what they need to know. This will prevent multiple inquiries.
Recognize that typed words can be misleading in both tone and intent. Strive for simplicity and clarity in your communication. This means we can even forgive an emoticon or two if it helps set the right tone :-)
Understand that as overwhelming as information overload is for you, it’s no easier for anyone else. Do your part to make your team’s life easier.
http://www.bnet.com/blog/virtual-manager/10-tips-for-easing-information-overload/1552?promo=713&tag=nl.e713
Do You Have “Superstar” Potential?
Do You Have “Superstar” Potential?
By Penelope Trunk | July 12, 2011
It’s easy to know what the superstar looks like after the person’s star already is shining. But it’s much harder to identify that diamond in the rough. BusinessWeek reports that 90% of managers believe they are in the top 10% in performance.
This is hilarious. Until you are working with one of those people. And then you start to ask yourself: Am I like this? Am I delusional? How strong a performer am I really?
It’s hard to look at yourself objectively, but a while back, I noticed that I was good at recognizing talent. The last company that I founded,Brazen Careerist, focuses on identifying high performers for companies, and helping people early in their career reach their potential. So I have a lot of experience in this area, and I’ve noticed that there are a few telltale signs of “star” potential.
You bet big on yourself.
Today, I live on a farm, and Brazen Careerist is run by Ryan Healy, a guy I partnered with when he was just a year out of school. When I met him, our fights were mostly about me thinking he’s immature. After three years of working together our fights got really interesting because he was my equal. (There’s an extra piece of advice: you can judge your co-workers by how well they fight with you.)
One of things that made Ryan stand out to me was his willingness to take risks. He started a blog when few people were blogging. He left a great job at IBM to do a startup. He moved across country with no money in his pocket. He was willing to bet on himself, which made other people want to bet on him.
You take alternative paths.
Being great means being different from everyone else. So you are not likely to stand out if you are on that common path. Instead, you are likely to go to a common place.
The way you can tell if you are taking an alternative path is by how many people are telling you you’re an idiot. Today entrepreneurship is the new safety net, moving back with your parents is totally acceptable, and job-hopping is the default. So if those are your ideas of alternative, forget it.
Alternative is something people have no patience for because it sounds so self-destructive to the mainstream.
You’re overly focused.
The recent star-worthy twentysomething I’ve started working with is Melissa. She quit her high-flying job in Asian finance to be a photographer. While she was making a lot of money at finance, she decided she would never be truly great at it. Whereas she believes she does have a chance at being world-renowned as a portrait photographer. Maybe she will be, maybe she won’t. But part of being a star is taking a path that looks loony because it’s intrinsically limiting - you end up having a longer list of what you don’t do than what you do.
You were a mediocre student.
Stellar students spend their 20s in complete shock and indignation that school rewards rule followers but work does not. Life is not fair. (Luckily you can rescue your own children from this pitfall by unschooling them.) There is reams of evidence to show that good grades do not correlate to good careers. And, many mediocre students have a sixth sense about what matters and what doesn’t matter, and they kick into really high gear when it’s about what they are interested in and not about grades. It’s a sign that you have star potential in the business world if you did not have star potential at school.
You read. A lot.
It doesn’t matter what you read. But unproven hotshots spend a lot of time reading because they have a natural curiosity and level of engagement. It’s true that not everyone is a reader, but this is an odds game, and you make your odds of being a workplace hotshot by reading a lot. You can read comics, car specifications, Garden &Gun magazine - you can read anything. (Also, click that last link. I love that magazine. I subscribed because the title sounds so ridiculous. I keep reading because the writing is totally great… actually, maybe Melissa should take photos for them.)
Your goals align with your Myers Briggs score.
You can only be a star in a field that matches up with your Myers Briggs score. (You can check out your own Myers Briggs score here.) If you’re an ENTJ, for example, you absolutely must have people to lead. There is no way around it. There are no ENTJs who are hotshot designers locked up alone in a room lit only by a disco ball. That doesn’t happen. Or at least it doesn’t happen without some long-term psychic cost to either the worker or the co-workers or both. People need to do what their personality was born to do.
Another no-go: An INFP can’t manage other people. You might envision your great ascent up the corporate ladder, but if you’re an INFP, managing corporate goals and mediating other peoples’ interpersonal issues, will eventually drive you to insanity.
So you lack star potential?
You might not actually have the temperament to be a star at work. Your star power might lay somewhere else - like home with kids. But that’s okay. You can only be who you are. It’s just nice to know who you are while you work toward becoming it. You know how your kindergarten teacher told you the whole class is full of bright stars? It’s true. It’s just that some of you were meant to work the monkey bars.
http://www.bnet.com/blog/penelope-trunk/do-you-have-8220superstar-8221-potential/524?promo=713&tag=nl.e713
By Penelope Trunk | July 12, 2011
It’s easy to know what the superstar looks like after the person’s star already is shining. But it’s much harder to identify that diamond in the rough. BusinessWeek reports that 90% of managers believe they are in the top 10% in performance.
This is hilarious. Until you are working with one of those people. And then you start to ask yourself: Am I like this? Am I delusional? How strong a performer am I really?
It’s hard to look at yourself objectively, but a while back, I noticed that I was good at recognizing talent. The last company that I founded,Brazen Careerist, focuses on identifying high performers for companies, and helping people early in their career reach their potential. So I have a lot of experience in this area, and I’ve noticed that there are a few telltale signs of “star” potential.
You bet big on yourself.
Today, I live on a farm, and Brazen Careerist is run by Ryan Healy, a guy I partnered with when he was just a year out of school. When I met him, our fights were mostly about me thinking he’s immature. After three years of working together our fights got really interesting because he was my equal. (There’s an extra piece of advice: you can judge your co-workers by how well they fight with you.)
One of things that made Ryan stand out to me was his willingness to take risks. He started a blog when few people were blogging. He left a great job at IBM to do a startup. He moved across country with no money in his pocket. He was willing to bet on himself, which made other people want to bet on him.
You take alternative paths.
Being great means being different from everyone else. So you are not likely to stand out if you are on that common path. Instead, you are likely to go to a common place.
The way you can tell if you are taking an alternative path is by how many people are telling you you’re an idiot. Today entrepreneurship is the new safety net, moving back with your parents is totally acceptable, and job-hopping is the default. So if those are your ideas of alternative, forget it.
Alternative is something people have no patience for because it sounds so self-destructive to the mainstream.
You’re overly focused.
The recent star-worthy twentysomething I’ve started working with is Melissa. She quit her high-flying job in Asian finance to be a photographer. While she was making a lot of money at finance, she decided she would never be truly great at it. Whereas she believes she does have a chance at being world-renowned as a portrait photographer. Maybe she will be, maybe she won’t. But part of being a star is taking a path that looks loony because it’s intrinsically limiting - you end up having a longer list of what you don’t do than what you do.
You were a mediocre student.
Stellar students spend their 20s in complete shock and indignation that school rewards rule followers but work does not. Life is not fair. (Luckily you can rescue your own children from this pitfall by unschooling them.) There is reams of evidence to show that good grades do not correlate to good careers. And, many mediocre students have a sixth sense about what matters and what doesn’t matter, and they kick into really high gear when it’s about what they are interested in and not about grades. It’s a sign that you have star potential in the business world if you did not have star potential at school.
You read. A lot.
It doesn’t matter what you read. But unproven hotshots spend a lot of time reading because they have a natural curiosity and level of engagement. It’s true that not everyone is a reader, but this is an odds game, and you make your odds of being a workplace hotshot by reading a lot. You can read comics, car specifications, Garden &Gun magazine - you can read anything. (Also, click that last link. I love that magazine. I subscribed because the title sounds so ridiculous. I keep reading because the writing is totally great… actually, maybe Melissa should take photos for them.)
Your goals align with your Myers Briggs score.
You can only be a star in a field that matches up with your Myers Briggs score. (You can check out your own Myers Briggs score here.) If you’re an ENTJ, for example, you absolutely must have people to lead. There is no way around it. There are no ENTJs who are hotshot designers locked up alone in a room lit only by a disco ball. That doesn’t happen. Or at least it doesn’t happen without some long-term psychic cost to either the worker or the co-workers or both. People need to do what their personality was born to do.
Another no-go: An INFP can’t manage other people. You might envision your great ascent up the corporate ladder, but if you’re an INFP, managing corporate goals and mediating other peoples’ interpersonal issues, will eventually drive you to insanity.
So you lack star potential?
You might not actually have the temperament to be a star at work. Your star power might lay somewhere else - like home with kids. But that’s okay. You can only be who you are. It’s just nice to know who you are while you work toward becoming it. You know how your kindergarten teacher told you the whole class is full of bright stars? It’s true. It’s just that some of you were meant to work the monkey bars.
http://www.bnet.com/blog/penelope-trunk/do-you-have-8220superstar-8221-potential/524?promo=713&tag=nl.e713
Vietnam - News and Regulations
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With Compliments
Oliver Massmann
Rechtsanwalt
General Director – Duane Morris Vietnam LLC
Hanoi Office: 13th Floor, Suite 1307/08 Pacific Place, 83B Ly Thuong Kiet, Hoan Kiem District
Ho Chi Minh City Office: 15th Floor, Suite 1503/04, Saigon Tower, 29 Le Duan Street, District 1
INVESTMENT – German Talanx subsidiary to buy 25 pct of Vietnam insurer
Reuters
A subsidiary of Germany's third-biggest insurer, Talanx, has agreed to buy a 25 percent stake in the enlarged share capital of Vietnam's PVI Holdings for 1.92 trillion dong ($92 million), PVI said on Wednesday.
The transaction with HDI-Gerling Industrie Versicherung AG is expected to take place before the end of the year, pending local regulatory approval, and another Talanx firm, Hannover Re (HNRGn.DE), will provide support, PVI said in a statement.
The agreed purchase price was 36,000 dong per share, it said.
PVI stock rose 5.13 percent on Wednesday to 16,400 dong in trading that ended before the announcement of the agreement.
PVI Holdings, a Hanoi-listed subsidiary of state oil and gas group PetroVietnam, is the leading non-life and industrial sector insurer in Vietnam, with a 24 percent market share and gross written premiums in 2010 of $183 million, the statement said.
EU invests about $31b FDI in Vietnam
Vietbiz24
So far, European Union (EU) has been always amongst leading FDI (foreign direct investment) partners in Vietnam with a total pledged capital of some $31 billion, according to Multilateral Trade Department.
EU investors have been present at almost all important economic sectors of Vietnam, but most concentrated in industries and construction (accounting for 50.1 percent in the total number of FDI projects and 50.6 percent in the total pledged investment).
In which, heavy industry sector has lured 180 FDI projects capitalised at nearly $4.2 billion, and followed by oil and gas exploitation with 19 projects worth $2.5 billion. EU’s investments in the service sector accounted for about 40 percent in the total number of projects and 42 percent of total investment capital.
Vietnam – EU bilateral trade relations are progressing positively. Within 11 years from 2000 to 2011, the trade turnover between Vietnam and EU has increased 4.3 times from $4.1 billion in 2000 to $17.75 billion in 2010. Of which, Vietnam’s exports to EU posted a four-fold increase from $2.8 billion to $11 billion and Vietnam’s imports from the EU increased 4.89 times from $1.3 billion to $6.3 billion.
In recent four years, except for time of global financial crisis in 2009, the average annual growth reached 25 percent. Particularly in the first two months in 2011, the total export import turnover between Vietnam and EU reached $3.08 billion, up 28 percent over the same period last year.
Foreign investors eyeing domestic real estate projects
TBKTSG
A lot of real estate project assignment deals where buyers are foreigners have been reported so far this year, while the number is expected to increase towards the end of the year since the assignments, which are now under negotiations would be finalized by that time.
Difficulties of some could be opportunities for others
Many real estate developers are reportedly facing big difficulties because they cannot access bank loans and find it hard to find the buyers for their products. However, the difficulties of the developers are really the big opportunities for financially capable investors. Foreign investors, through the foreign brokerage companies which have representative offices in Vietnam are exploring the opportunities of doing business in Vietnam.
Marc Townsend, Managing Director of CB Richard Ellis Vietnam, a real estate service provider, said that a lot of foreign investors are seeking investment opportunities in Asia, including Vietnam.
According to him, South Korean investors are coming back to Vietnam after they withdrew from the market in 2008. Some Russian and Chinese investors have also asked consultancy firms to give advices on the opportunities on making investment in office buildings and apartments in Vietnam.
A senior executive of Sacomreal, a real estate developer, said that in the first six months of the year, some foreign investment funds came to learn about the cooperation opportunities with Sacomreal in Sacomreal’s projects.
Mapletree Investments, a subsidiary of Singaporean Temasek Holdings, came to learn about the projects on office buildings and apartments, while South Korean Sung Chang has expressed its interests in retail projects, and Israeli EngelInvest also came to seek information about Vietnamese market.
The managing director said that the high population density and the high profitability of the real estate projects in Vietnam are the main factors that attract foreign investors, despite the current gloomy real estate market.
In fact, domestic real estate developers are also seeking foreign investors to cooperate because they cannot rely on their financial resources to develop projects. The currently applied tightened monetary policies have kept many real estate developers away from the official credit channel. As a result, domestic investors have to look for the financial sources from foreign investors.
Su Ngoc Khuong, Analysis Director of Savills Vietnam, also a real estate service provider, said he has received a lot of domestic investors, who ask for the help to connect foreign investors. Khuong said that the number of cases, where domestic investors use the company’s consultancy services has increased by 20 percent.
He went on to say that Asian investors, including Japanese, South Korean and Singaporean, who believe that they have enough knowledge about Vietnamese market and Vietnamese business habits, have determined to make investments in the market. They have been not only interested in apartment and office projects, but also in villa projects.
According to Khuong, it takes an affair about one or two years to be completed. It took Jones Lang LaSalle Vietnam, for example, one year to arrange the assignment of Center Point office project on Nguyen Van Troi road in HCM City between Refico, the initial investor, and Japan Asia Vietnam – a Japanese real estate investment fund.
Savills is reportedly acting as the broker for the assignment deal of the trade-office-apartment complex worth 120 million dollars in HCM City, having revealed that the affair may be wrapped up by the end of the year.
Existing investors speeding up
While new foreign investors still keep cautious when approaching the Vietnamese market, the experienced investors have been trying to expand their investment portfolios.
Singaporean CapitaLand, for example, has purchased 70 percent of the stakes of the residential quarter project in Binh Trung Dong ward in district 2 of HCM City from Khang Dien Saigon. The project is expected to cover an area of 2.9 hectares, which will contain 974 apartments. Of the total investment capital of 70 million dollars, CapitaLand is holding 70 percent of the capital contribution, while Khang Dien is holding the other 30 percent.
Just two weeks later, the group made another deal when it purchased 65 percent of stakes of Quoc Cuong Saigon at 121 billion dong. Quoc Cuong Saigon possesses a 9000 square meter land plot in Binh Chanh district in HCM City, which has got the license to develop a project on 800 apartments.
China's FDI into Vietnam crosses $3 b mark
Vietbiz24
From early this year to July 2011, Chinese investors have invested in 805 FDI (foreign direct investment) projects in Vietnam, according to the General Department of Vietnam Customs (GDVC).
In recent years, the friendship and comprehensive cooperation between Vietnam and China have been constantly evolving. In 2010, the bilateral trade turnover between the two countries reached $27.328 billion, up 29.8% over 2009′s figure. In particular, Vietnam’s import value was $20.019 billion and export turnover reached $7.309 billion.
The figure from GDVC also showed in July, Vietnam’s trade deficit from China was nearly $1 billion. Totally in Jan-Jul, the country’s import value from China was $13.03 billion while Vietnam’s export turnover to China reached only $5.56 billion, leading a trade gap of $7.46 billion in Jan-Jul, or 140% of the country’s trade deficit in the period.
From beginning of this year till July, 2011, Chinese investors have invested in 805 FDI projects with a total pledged investment capital of $3.184 billion.
In 2010, ASEAN – China Free Trade Area (ACFTA) officially applied a strong commitment on tax reduction from both China and the ASEAN countries. Accordingly, the ranges of goods will have import tariffs of 0-5%, including the agricultural and industrial products.
However, in fact, during the 2007-2010 cooperation period, Vietnam has been always providing raw materials and agricultural products, while China exports industrial products to Vietnam with bigger volume.
Vietnam Chamber of Commerce and Industry (VCCI) said it hopes that enterprises of the two partners should seek and take advantage of cooperation opportunities on trade, investment, production joint ventures.
FDI firms' trade deficit increases 12 times m-o-m
DVT
The import value of FDI (foreign direct investment) enterprises in July was over $3.991 billion, rising 3.9 percent from the previous month and accounting for 48.5 percent of the country's total import value in month.
Meanwhile, the export turnover of FDI firms reached nearly $3.887 billion, up 1.4 percent on month and accounting for 41.7 percent of the country's total export turnover in month.
Thus, in July, FDI firms posted a trade deficit of $104 million, equalling to 13 times from nearly $8 million in previous month.
Totally in Jan-Jul, FDI businesses imported $25.7 billion, up 25.8 percent year-on-year, bringing the trade gap of FDI firms in Jan-July to $1.77 billion, accounting for 32.71 percent of the country's total trade deficit.
HCM City grants investment license for 175 FDI projects
Dan Viet
In the first seven months of this year, HCM City has granted investment license for 175 FDI (foreign direct investment) projects with a total pledged capital of over $1.73 billion, up over 57 percent from the same period last year, according to HCM City Department of Planning and Investment.
If including the raised capital of 61 existing FDI projects in the city, in Jan-Jul, the city has attracted over $2 billion FDI capita, rising nearly 70 percent year-on-year, of which, processing and manufacturing industries made up nearly 62 percent of the total capital for 25 projects.
US-Vietnam trade still in strong growth momentum
The Saigon Times Daily
A foreign customer scrutinises apparel products of Garment Company No. 10 at a recent exhibition in HCM City. Apparel still tops the list of Vietnamese products exported to the US market in the first half of this year - Photo: Kinh Luan
Despite difficulties in the US, two-way trade between this country and Vietnam continue to register a double-digit increase as showed by updates of the US Census Bureau on its website.
Figures at www.census.gov/foreign-trade/balance indicated the US trade in goods with Vietnam surpassed $10.15 billion in the first half of this year, a year-on-year rise of over 21 percent.
The US imported merchandise worth more than $8 billion and earned export revenue of over $2.14 billion from Vietnam in the January-June period, as compared to some $6.6 billion and $1.7 billion in the first half of 2010.
Noticeably, Vietnam's export revenue from the US market rose month-on-month in the second quarter of this year, from nearly $1.36 billion in April to more than $1.43 billion in May and $1.52 billion in June. On the opposite direction, Vietnam saw the US imports down to more than $351 million in May from $385 million in April before inching up to $358 million in June.
Apparel still topped the list of Vietnamese products shipped to the country's biggest export market in the first half of this year as this brought about revenue of over $3 billion, recording strong growth of around 18.5 percent over the same period last year.
Footwear was Vietnam's second biggest earner from the selective market in the six months ended in June as its export value stateside rose 27 percent year-on-year to nearly $968 million, followed by furniture with 4.5 percent and $837 million respectively.
Electronic items and seafood were also among Vietnam's major export products bound for the US in the year to June, with the latter's earnings up 49 percent to more than $332 million.
Fabric and fiber appeared as the top US merchandise exported to Vietnam in the January-June period, with a whopping year-on-year increase of 155 percent to over $262 million. The other major export earners included steel, machinery, equipment and accessories.
Last year, bilateral trade between the US and Vietnam neared $19 billion, a significant rise of about 20 percent over the year earlier. Vietnamese exports accounted for more than $14.8 billion of the total number.
ECONOMY – World Bank assists anti-corruption competition
Vietnamplus
The final round of competition of Vietnam Anti-Corruption Initiative, VACI 2011 was launched on August 16 by the government Inspectorate and the World Bank (WB) in Hanoi.
Addressing the opening ceremony of the final round, deputy Chief Inspector Tran Duc Luong said success in the battle against corruption would require great efforts from State agencies and positive support and involvement of the entire society.
VACI 2011 aimed to raise public awareness of anti-corruption law and bring into play the role and responsibility of the people, agencies, organisations, units and public employees in combating corruption, he said.
The programme was expected to enhance cooperative relations between Vietnam and the international community in anti-corruption activities and aimed to reflect Vietnam's responsibility as a member of the United Nations Convention against Corruption, he added.
World Bank Country director in Vietnam Victoria Kwakwa affirmed that VACI 2011 was the results of cooperation between Vietnam and the WB in combating corruption.
The involvement of organisations and individuals in VACI 2011 proved that the fight against corruption in Vietnam had received attention and the participation of the social community, she said.
She said she hoped VACI 2011 would give fresh impetus to the Vietnamese government in combating corruption more effectively.
The programme, themed "Strengthening public integrity and law implementation for effective anti-corruption" was officially launched on December 9, 2010. It included an innovation competition and knowledge exchange in order to formulate and assist innovative ideas on the issue.
VACI 2011 was jointly sponsored by the Australian Agency for International Development (AusAID), the UK Department for International Development, and the embassies of Belgium, Finland and Sweden.
Vietnam's trade surplus touches $ 5.41b mark in Jan-July period
Vietbiz24
The country's trade deficit in the first seven months touched $5.41 billion, decreasing sharply against $6.44 billion in the same period of 2010, the local newswire reported.
In July alone, Vietnam earned a $9.32 billion record from exports, up 10.2 percent month-on-month while the import spending fell 4.6 percent to $8.22 billion, representing the trade surplus of $1.1 billion - the first surplus in 28 months.
According to GSO, the exports of gemstone, precious stone and products in July brought in $1.11 billion, up 38 percent against June. Therefore, the exports of this group of commodities reached $2.318 billion by late June 2011, a year-on-year rise of 51.6 percent.
Garment and textile exports also gained over $1.35 billion last month, increasing 2.8 percent.
Meanwhile, the imports of machines, equipments and other components, though falling 2.7 percent between June and July, still were at high, $1.2 billion.
So, till the end of July, total exports turnover of Vietnam attained more than $52.51 billion, surging 36.2 percent over the year earlier and equaling to 66.1 percent of the full year's plan; import spending was around $57.92 billion, +25.8 percent and 61.9 percent, respectively.
7-month trade deficit of Vietnam, thus, was posted at $5.41 billion.
The general Statistic Office (GSO) said in its website [www.gso.gov.vn], generally, seven months' total export turnovers reached $51.5 billion, up 33.5 percent from last year' same period. Seven months' import turnovers reached $58.1 billion, up 26.2 percent from last year' same period, including $32.7 billion of the domestic economic sector, up 23.8 percent; and $25.4 billion of the FDI sector, up 29.5 percent.
Trade deficit in 7 months of this year was 6.64 billion USD, equaling 12.9 percent of total export turnovers. If gold was excluded, it was at an estimation of $8.4 billion, equaling 16.9 percent of total export turnovers.
FINANCE - Real interest rates surpassing 'ceiling level'
Vietbiz24
The ceiling interest rate of savings in dong, which is ruled at 14 percent a year, is only applied on small deposits of less than 100 million dong by banks and the real deposit rate has surpassed the ruled level.
Real saving rates which banks are paying to depositors now are ranging between 16 and 17 percent pa and especially 18 percent pa is applied on the deposits of more than 1 billion dong. A customer in Cau Giay Dist (Hanoi) enjoyed 22.5 million dong per month on her deposit of 1.5 billion dong, equaling to the real interest rate of 18 percent a year.
However, recently the State Bank of Vietnam Governor Nguyen Van Binh said that the interest rate may be 17-19 percent in September. Other signals from the interbank market also are promising good news for the coming time.
In the interbank market, the overnight loan rate decreased to 11 percent per year last week while other terms also went down to 14 percent pa instead of 15-18 percent pa in July. Therefore, people expected that the dong lending rate would continue declining in the forthcoming time.
Similarly, the real deposit rate of US dollar is standing at 3-4 percent a year against the ceiling level of 2 percent pa. As a result, the lending rate has risen from 5-6 percent to 7.5 percent a year.
Primary data of the SBV in Jan-June showed that the credit growth of the dong was 2.72 percent whereas that of US dollar jumped 22.21 percent.
Last week, the Central Bank reported that the US dollar trading interest rate on the interbank market soared in most terms. Overnight trade of US dollar reached $1.401 billion, accounting for 53 percent of total trading value, showing that the demand for the greenback kept rising strongly.
ENERGY - Investing in renewable energy to save power
VOV
Many families and businesses have started using energy-saving products to cope with the soaring prices of electricity, petrol, and gas. However, there remain certain snags in developing renewable energy in Vietnams.
Innovations
Many innovations have been introduced in response to the energy-saving campaign launched by the Ho Chi Minh City Power Corporation.
The family of Nguyen Thi Ngai in Tan Binh district is one of 800,000 families in Ho Chi Minh City who can now save nearly VND100,000 a month after replacing the old incandescent lamps with compact light bulbs. Le Thi Xuan in District 3 says her family has decided to use a solar-powered water heater and turn off all light bulbs in the house at peak time in the evening when need be.
Nguyen Anh Vu, Head of the Public Relations Department of the HCM City Power Corporation, says his company recently launched a communication campaign to raise public and business awareness of the need to save energy and has received a positive response from many families and businesses in the city.
In the first six month of 2011, the city saved as much as 198.59 million kWh of electricity (85.41 percent of the annual target). Of the total, 40.9 million kWh was saved in public lighting (21.6 percent) 101.7 million kWh in daily lighting (51.2 percent) and 34.2 million kWh in production (17.2 percent).
Hoang Minh Ba, Director of the JSC Technical Services Telecom – TST member Group Posts, says not a few businesses are still using backward technologies which consume much power.
In addition, power waste in households remains a big problem as they have no energy-saving equipment.
Challenges
In order to ensure the sustainable development of businesses and improve their competitive edge, it is imperative for them to use renewable energy such as wind, solar, and bio energy.
However, the cost of investment in renewable energy projects is very high beyond the reach of domestic businesses.
Tran Anh Hao from the HCM City Department of Industry and Trade cites another reason for low foreign investment in such projects is the low price of electricity in Vietnam.
The HCM City Department of Industry and Trade is sponsoring an energy-saving exhibition (Enertec Expo 2011) in the hope that visitors will be able to gain access to energy-saving technologies and products and contribute to implementing the national strategy on energy efficiency and reduction of environmental pollution.
Third turbine of Son La hydropower plant to be operation on August 25
Vietnambusiness.asia
The Electricity of Vietnam (EVN) announced yesterday that the third turbine of Son La hydropower plant with designed capacity of 400 MW had been put into idle operation successfully.
As planned, the hydropower plant will officially put the third turbine into operation on August 25, joining the national grid in five days earlier, supplying additional 10 million KWh per day.
Each day, the three turbines of Son La hydropower plant supply about 30 million KWh to the national grid now.
The first two turbines of the hydropower plant has supplied about 3 billion KWh to the national grid so far.
RESOURCES - PetroVietnam to ramp up production
Vietnamplus
PetroVietnam is to be one of the nation's leading groups, both inside and outside the country, with sharpened competitive edges and growth of up to 20 percent a year, according to a five-year plan approved by the prime minister.
The group aims to increase oil and gas reserves and petroleum exploration output by 35-40 million tonnes and 23-34 million tonnes of oil equivalent per year respectively.
By 2015, PetroVietnam would be able to produce about 16-17 million tonnes of refined oil, meeting 50-60 percent of domestic petrol demand and 60-70 percent of nitrogenous fertiliser demand.
By 2015, around 50-60 percent of materials demand for petrochemical and petrochemical products would be satisfied.
At the same time, the group would put three bio-fuel plants into operation while developing bio-fuel production and distribution systems nationwide.
Petroleum services would be encouraged to grow at an average rate of 20 percent per year, the plan says.
PetroVietnam was eligible to use foreign currencies for its investment projects or those carried out by its subsidiaries via service contracts, according to a new circular issued by the Ministry of Finance.
The circular said the group was allowed to use foreign currencies to contribute capital to joint ventures.
PetroVietnam could use foreign currencies to pay principal, interest and fees on its borrowings for those investment projects and other maturity debts.
The group was expected to collect foreign currencies from petroleum contract revenues inside and outside the country.
The new circular would not apply for PetroVietnam subsidiaries.
Petrolimex to Start Operations at Vietnam Oil Terminal in 2012
Bloomberg
Vietnam National Petroleum Corp., the state-owned company known as Petrolimex, plans to begin commercial operations at its 505,000 cubic-metre Van Phong bonded oil terminal next year.
The facility will be commissioned in April, Henry Yau Win Onn, project manager at unit Petrolimex Singapore Ltd, said by telephone today.
The 29-tank Van Phong terminal in southern Khanh Hoa province will be capable of storing 230,000 cubic meters of gasoil and 125,000 cubic meters of gasoline, Petrolimex Singapore said in an e-mailed statement today.
The facility, which will have four jetties and be able to accommodate vessels with displacement of as much as 150,000 metric tonnes, will also have a capacity to store 150,000 cubic meters of fuel oil, the company said in the statement.
Petrolimex is Vietnam's biggest gasoline and diesel supplier.
Gov’t approves $1bln imported gas docks
VIR
The Prime Minister has approved a project on building a system of gas import docks at Ham Tan district in the central province of Binh Thuan , according to Do Khang Ninh, general director of PetroVietnam Gas (PV Gas).
Accordingly, the docks will include a port where ships go to have gas put on or taken off them and buildings used for storing gas. The docks project has a total investment of more than $1 billion.
As scheduled, once completed and put into operation, the docks will be capable of receiving about 2-3 million tonnes of imported gas per year.
The project planning will be accomplished by PV Gas later this year. The construction was expected to be started by 2012.
INFRASTRUCUTRE - Hanoi to build nine industrial zones
VNS
Hanoi will build nine industrial zones between now and 2015 and plans to build an additional 15 of the zones in the next 15 years.
At the moment, the city has only eight industrial zones that account for 10 per cent of the city's industrial production value, 45 per cent of its export revenues and 20 per cent of its GDP. These zones also employ about 110,000 workers.
According to the Management Board of Hanoi Industrial and Export Processing Zones, up to June 2011, Hanoi's industrial zones had attracted 537 projects, including 253 foreign direct investment projects with a total investment of $3.63 billion.
Slow construction industry weighs on materials sales
VNS
The building materials market has had a tough time lately due to a downturn in the building industry and increased production.
The Viet Nam Building Material Association said production at factories making cement and ceramic tiles had increased against the same period last year while consumption had reduced.
Nguyen Thi Thuy, owner of Tien Thuy building material shop in Hoang Quoc Viet Street, said sales always fell in the wet season but this year they were down from the beginning of the year and hadn’t recovered.
Pham Thanh Trung, owner of Son Tung shop in Tay Ho Street, Ha Noi, said the shop had a year-on-year reduction of 70 per cent in revenue to VND300 million (US$14,527) in June.
Nguyen Tien Nghi, deputy chairman of the Viet Nam Steel Association, said consumption of steel had fallen to 298,000 tonnes in June and recovered to 359,000 tonnes in July, still much lower than the average consumption of 400,000 tonnes a month.
Sales were not expected to improve before the end of this year due to reduced public investment and expenditure on construction in a period of high inflation, Nghi said.
Consumption of cement in July had also reduced by 360,000 tonnes against June to 3.59 million tonnes, said Le Van Diep, head of the administrative office at the Viet Nam Cement Association.
To promote sales of building materials, producers and retailers had offered large discounts.
Viglacera Ha Long, a building ceramics producer, usually discounted at the end of the year but this year 10-15 per cent was applied since mid-year, Thuy said.
Meanwhile, large steel and cement producers had sought to export their products.
This was a temporary solution because the export value was not high, Diep said.
Exports of clinker and cement reached 2.5 million tonnes in the first half and 133,000 tonnes of steel in the first seven months.
LEGAL NEWS – Vietnam requests customs declaration when carrying over $5,000, 15m dong
Stoxplus
The State Bank of Vietnam has issued Circular No 15/2011/TT-NHNN requesting all individuals to declare at the customs if they carry over $5,000 or foreign currencies equivalent to $5,000 or if they carry over 15 million dong.
The Circular was issued on August 12, 2011 but it did not state when it will come into effect.
Earlier in 2006, Vietnam set the maximum free carry of $7,000 under the Decree 160/2006/ND-CP.
Those who bring under $5,000 or foreign currencies equivalent and wish to deposit into a current account at a foreign bank have to declare too.
The move is seen as Vietnam's effort to stabilise its forex market.
New regulations on cross-border carrying of cash
Vietnamplus
The State Bank of Vietnam has issued a circular, stipulating the bringing of foreign currency in cash and dong in cash by individuals when leaving or entering the country.
Under the Circular No. 15/2011/TT-NHNN, individuals who carry over 5,000 USD or other foreign currencies that have equal value and more than 15 million VND must make customs declarations at border gates.
For individuals who carry into Vietnam foreign currency equal to or less than 5,000 USD, or other foreign currencies have equal value and wish to send this amount of foreign currency to account of payments in foreign currency of individuals opened at credit institutions or branches of foreign banks licensed to conduct foreign exchange transactions must also declared to the border gate customs.
The entry-exit declaration certified by the border customs of the foreign currency in cash brought into is the basis for licensed credit institutions to send foreign currency in cash to the account of payments.
The entry-exit declaration verified by the border gate customs is only valid for individuals to send foreign currency in cash to the account of payments within a maximum of 60 days from the date on the declaration of entry-exit.
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With Compliments
Oliver Massmann
Rechtsanwalt
General Director – Duane Morris Vietnam LLC
Hanoi Office: 13th Floor, Suite 1307/08 Pacific Place, 83B Ly Thuong Kiet, Hoan Kiem District
Ho Chi Minh City Office: 15th Floor, Suite 1503/04, Saigon Tower, 29 Le Duan Street, District 1
INVESTMENT – German Talanx subsidiary to buy 25 pct of Vietnam insurer
Reuters
A subsidiary of Germany's third-biggest insurer, Talanx, has agreed to buy a 25 percent stake in the enlarged share capital of Vietnam's PVI Holdings for 1.92 trillion dong ($92 million), PVI said on Wednesday.
The transaction with HDI-Gerling Industrie Versicherung AG is expected to take place before the end of the year, pending local regulatory approval, and another Talanx firm, Hannover Re (HNRGn.DE), will provide support, PVI said in a statement.
The agreed purchase price was 36,000 dong per share, it said.
PVI stock rose 5.13 percent on Wednesday to 16,400 dong in trading that ended before the announcement of the agreement.
PVI Holdings, a Hanoi-listed subsidiary of state oil and gas group PetroVietnam, is the leading non-life and industrial sector insurer in Vietnam, with a 24 percent market share and gross written premiums in 2010 of $183 million, the statement said.
EU invests about $31b FDI in Vietnam
Vietbiz24
So far, European Union (EU) has been always amongst leading FDI (foreign direct investment) partners in Vietnam with a total pledged capital of some $31 billion, according to Multilateral Trade Department.
EU investors have been present at almost all important economic sectors of Vietnam, but most concentrated in industries and construction (accounting for 50.1 percent in the total number of FDI projects and 50.6 percent in the total pledged investment).
In which, heavy industry sector has lured 180 FDI projects capitalised at nearly $4.2 billion, and followed by oil and gas exploitation with 19 projects worth $2.5 billion. EU’s investments in the service sector accounted for about 40 percent in the total number of projects and 42 percent of total investment capital.
Vietnam – EU bilateral trade relations are progressing positively. Within 11 years from 2000 to 2011, the trade turnover between Vietnam and EU has increased 4.3 times from $4.1 billion in 2000 to $17.75 billion in 2010. Of which, Vietnam’s exports to EU posted a four-fold increase from $2.8 billion to $11 billion and Vietnam’s imports from the EU increased 4.89 times from $1.3 billion to $6.3 billion.
In recent four years, except for time of global financial crisis in 2009, the average annual growth reached 25 percent. Particularly in the first two months in 2011, the total export import turnover between Vietnam and EU reached $3.08 billion, up 28 percent over the same period last year.
Foreign investors eyeing domestic real estate projects
TBKTSG
A lot of real estate project assignment deals where buyers are foreigners have been reported so far this year, while the number is expected to increase towards the end of the year since the assignments, which are now under negotiations would be finalized by that time.
Difficulties of some could be opportunities for others
Many real estate developers are reportedly facing big difficulties because they cannot access bank loans and find it hard to find the buyers for their products. However, the difficulties of the developers are really the big opportunities for financially capable investors. Foreign investors, through the foreign brokerage companies which have representative offices in Vietnam are exploring the opportunities of doing business in Vietnam.
Marc Townsend, Managing Director of CB Richard Ellis Vietnam, a real estate service provider, said that a lot of foreign investors are seeking investment opportunities in Asia, including Vietnam.
According to him, South Korean investors are coming back to Vietnam after they withdrew from the market in 2008. Some Russian and Chinese investors have also asked consultancy firms to give advices on the opportunities on making investment in office buildings and apartments in Vietnam.
A senior executive of Sacomreal, a real estate developer, said that in the first six months of the year, some foreign investment funds came to learn about the cooperation opportunities with Sacomreal in Sacomreal’s projects.
Mapletree Investments, a subsidiary of Singaporean Temasek Holdings, came to learn about the projects on office buildings and apartments, while South Korean Sung Chang has expressed its interests in retail projects, and Israeli EngelInvest also came to seek information about Vietnamese market.
The managing director said that the high population density and the high profitability of the real estate projects in Vietnam are the main factors that attract foreign investors, despite the current gloomy real estate market.
In fact, domestic real estate developers are also seeking foreign investors to cooperate because they cannot rely on their financial resources to develop projects. The currently applied tightened monetary policies have kept many real estate developers away from the official credit channel. As a result, domestic investors have to look for the financial sources from foreign investors.
Su Ngoc Khuong, Analysis Director of Savills Vietnam, also a real estate service provider, said he has received a lot of domestic investors, who ask for the help to connect foreign investors. Khuong said that the number of cases, where domestic investors use the company’s consultancy services has increased by 20 percent.
He went on to say that Asian investors, including Japanese, South Korean and Singaporean, who believe that they have enough knowledge about Vietnamese market and Vietnamese business habits, have determined to make investments in the market. They have been not only interested in apartment and office projects, but also in villa projects.
According to Khuong, it takes an affair about one or two years to be completed. It took Jones Lang LaSalle Vietnam, for example, one year to arrange the assignment of Center Point office project on Nguyen Van Troi road in HCM City between Refico, the initial investor, and Japan Asia Vietnam – a Japanese real estate investment fund.
Savills is reportedly acting as the broker for the assignment deal of the trade-office-apartment complex worth 120 million dollars in HCM City, having revealed that the affair may be wrapped up by the end of the year.
Existing investors speeding up
While new foreign investors still keep cautious when approaching the Vietnamese market, the experienced investors have been trying to expand their investment portfolios.
Singaporean CapitaLand, for example, has purchased 70 percent of the stakes of the residential quarter project in Binh Trung Dong ward in district 2 of HCM City from Khang Dien Saigon. The project is expected to cover an area of 2.9 hectares, which will contain 974 apartments. Of the total investment capital of 70 million dollars, CapitaLand is holding 70 percent of the capital contribution, while Khang Dien is holding the other 30 percent.
Just two weeks later, the group made another deal when it purchased 65 percent of stakes of Quoc Cuong Saigon at 121 billion dong. Quoc Cuong Saigon possesses a 9000 square meter land plot in Binh Chanh district in HCM City, which has got the license to develop a project on 800 apartments.
China's FDI into Vietnam crosses $3 b mark
Vietbiz24
From early this year to July 2011, Chinese investors have invested in 805 FDI (foreign direct investment) projects in Vietnam, according to the General Department of Vietnam Customs (GDVC).
In recent years, the friendship and comprehensive cooperation between Vietnam and China have been constantly evolving. In 2010, the bilateral trade turnover between the two countries reached $27.328 billion, up 29.8% over 2009′s figure. In particular, Vietnam’s import value was $20.019 billion and export turnover reached $7.309 billion.
The figure from GDVC also showed in July, Vietnam’s trade deficit from China was nearly $1 billion. Totally in Jan-Jul, the country’s import value from China was $13.03 billion while Vietnam’s export turnover to China reached only $5.56 billion, leading a trade gap of $7.46 billion in Jan-Jul, or 140% of the country’s trade deficit in the period.
From beginning of this year till July, 2011, Chinese investors have invested in 805 FDI projects with a total pledged investment capital of $3.184 billion.
In 2010, ASEAN – China Free Trade Area (ACFTA) officially applied a strong commitment on tax reduction from both China and the ASEAN countries. Accordingly, the ranges of goods will have import tariffs of 0-5%, including the agricultural and industrial products.
However, in fact, during the 2007-2010 cooperation period, Vietnam has been always providing raw materials and agricultural products, while China exports industrial products to Vietnam with bigger volume.
Vietnam Chamber of Commerce and Industry (VCCI) said it hopes that enterprises of the two partners should seek and take advantage of cooperation opportunities on trade, investment, production joint ventures.
FDI firms' trade deficit increases 12 times m-o-m
DVT
The import value of FDI (foreign direct investment) enterprises in July was over $3.991 billion, rising 3.9 percent from the previous month and accounting for 48.5 percent of the country's total import value in month.
Meanwhile, the export turnover of FDI firms reached nearly $3.887 billion, up 1.4 percent on month and accounting for 41.7 percent of the country's total export turnover in month.
Thus, in July, FDI firms posted a trade deficit of $104 million, equalling to 13 times from nearly $8 million in previous month.
Totally in Jan-Jul, FDI businesses imported $25.7 billion, up 25.8 percent year-on-year, bringing the trade gap of FDI firms in Jan-July to $1.77 billion, accounting for 32.71 percent of the country's total trade deficit.
HCM City grants investment license for 175 FDI projects
Dan Viet
In the first seven months of this year, HCM City has granted investment license for 175 FDI (foreign direct investment) projects with a total pledged capital of over $1.73 billion, up over 57 percent from the same period last year, according to HCM City Department of Planning and Investment.
If including the raised capital of 61 existing FDI projects in the city, in Jan-Jul, the city has attracted over $2 billion FDI capita, rising nearly 70 percent year-on-year, of which, processing and manufacturing industries made up nearly 62 percent of the total capital for 25 projects.
US-Vietnam trade still in strong growth momentum
The Saigon Times Daily
A foreign customer scrutinises apparel products of Garment Company No. 10 at a recent exhibition in HCM City. Apparel still tops the list of Vietnamese products exported to the US market in the first half of this year - Photo: Kinh Luan
Despite difficulties in the US, two-way trade between this country and Vietnam continue to register a double-digit increase as showed by updates of the US Census Bureau on its website.
Figures at www.census.gov/foreign-trade/balance indicated the US trade in goods with Vietnam surpassed $10.15 billion in the first half of this year, a year-on-year rise of over 21 percent.
The US imported merchandise worth more than $8 billion and earned export revenue of over $2.14 billion from Vietnam in the January-June period, as compared to some $6.6 billion and $1.7 billion in the first half of 2010.
Noticeably, Vietnam's export revenue from the US market rose month-on-month in the second quarter of this year, from nearly $1.36 billion in April to more than $1.43 billion in May and $1.52 billion in June. On the opposite direction, Vietnam saw the US imports down to more than $351 million in May from $385 million in April before inching up to $358 million in June.
Apparel still topped the list of Vietnamese products shipped to the country's biggest export market in the first half of this year as this brought about revenue of over $3 billion, recording strong growth of around 18.5 percent over the same period last year.
Footwear was Vietnam's second biggest earner from the selective market in the six months ended in June as its export value stateside rose 27 percent year-on-year to nearly $968 million, followed by furniture with 4.5 percent and $837 million respectively.
Electronic items and seafood were also among Vietnam's major export products bound for the US in the year to June, with the latter's earnings up 49 percent to more than $332 million.
Fabric and fiber appeared as the top US merchandise exported to Vietnam in the January-June period, with a whopping year-on-year increase of 155 percent to over $262 million. The other major export earners included steel, machinery, equipment and accessories.
Last year, bilateral trade between the US and Vietnam neared $19 billion, a significant rise of about 20 percent over the year earlier. Vietnamese exports accounted for more than $14.8 billion of the total number.
ECONOMY – World Bank assists anti-corruption competition
Vietnamplus
The final round of competition of Vietnam Anti-Corruption Initiative, VACI 2011 was launched on August 16 by the government Inspectorate and the World Bank (WB) in Hanoi.
Addressing the opening ceremony of the final round, deputy Chief Inspector Tran Duc Luong said success in the battle against corruption would require great efforts from State agencies and positive support and involvement of the entire society.
VACI 2011 aimed to raise public awareness of anti-corruption law and bring into play the role and responsibility of the people, agencies, organisations, units and public employees in combating corruption, he said.
The programme was expected to enhance cooperative relations between Vietnam and the international community in anti-corruption activities and aimed to reflect Vietnam's responsibility as a member of the United Nations Convention against Corruption, he added.
World Bank Country director in Vietnam Victoria Kwakwa affirmed that VACI 2011 was the results of cooperation between Vietnam and the WB in combating corruption.
The involvement of organisations and individuals in VACI 2011 proved that the fight against corruption in Vietnam had received attention and the participation of the social community, she said.
She said she hoped VACI 2011 would give fresh impetus to the Vietnamese government in combating corruption more effectively.
The programme, themed "Strengthening public integrity and law implementation for effective anti-corruption" was officially launched on December 9, 2010. It included an innovation competition and knowledge exchange in order to formulate and assist innovative ideas on the issue.
VACI 2011 was jointly sponsored by the Australian Agency for International Development (AusAID), the UK Department for International Development, and the embassies of Belgium, Finland and Sweden.
Vietnam's trade surplus touches $ 5.41b mark in Jan-July period
Vietbiz24
The country's trade deficit in the first seven months touched $5.41 billion, decreasing sharply against $6.44 billion in the same period of 2010, the local newswire reported.
In July alone, Vietnam earned a $9.32 billion record from exports, up 10.2 percent month-on-month while the import spending fell 4.6 percent to $8.22 billion, representing the trade surplus of $1.1 billion - the first surplus in 28 months.
According to GSO, the exports of gemstone, precious stone and products in July brought in $1.11 billion, up 38 percent against June. Therefore, the exports of this group of commodities reached $2.318 billion by late June 2011, a year-on-year rise of 51.6 percent.
Garment and textile exports also gained over $1.35 billion last month, increasing 2.8 percent.
Meanwhile, the imports of machines, equipments and other components, though falling 2.7 percent between June and July, still were at high, $1.2 billion.
So, till the end of July, total exports turnover of Vietnam attained more than $52.51 billion, surging 36.2 percent over the year earlier and equaling to 66.1 percent of the full year's plan; import spending was around $57.92 billion, +25.8 percent and 61.9 percent, respectively.
7-month trade deficit of Vietnam, thus, was posted at $5.41 billion.
The general Statistic Office (GSO) said in its website [www.gso.gov.vn], generally, seven months' total export turnovers reached $51.5 billion, up 33.5 percent from last year' same period. Seven months' import turnovers reached $58.1 billion, up 26.2 percent from last year' same period, including $32.7 billion of the domestic economic sector, up 23.8 percent; and $25.4 billion of the FDI sector, up 29.5 percent.
Trade deficit in 7 months of this year was 6.64 billion USD, equaling 12.9 percent of total export turnovers. If gold was excluded, it was at an estimation of $8.4 billion, equaling 16.9 percent of total export turnovers.
FINANCE - Real interest rates surpassing 'ceiling level'
Vietbiz24
The ceiling interest rate of savings in dong, which is ruled at 14 percent a year, is only applied on small deposits of less than 100 million dong by banks and the real deposit rate has surpassed the ruled level.
Real saving rates which banks are paying to depositors now are ranging between 16 and 17 percent pa and especially 18 percent pa is applied on the deposits of more than 1 billion dong. A customer in Cau Giay Dist (Hanoi) enjoyed 22.5 million dong per month on her deposit of 1.5 billion dong, equaling to the real interest rate of 18 percent a year.
However, recently the State Bank of Vietnam Governor Nguyen Van Binh said that the interest rate may be 17-19 percent in September. Other signals from the interbank market also are promising good news for the coming time.
In the interbank market, the overnight loan rate decreased to 11 percent per year last week while other terms also went down to 14 percent pa instead of 15-18 percent pa in July. Therefore, people expected that the dong lending rate would continue declining in the forthcoming time.
Similarly, the real deposit rate of US dollar is standing at 3-4 percent a year against the ceiling level of 2 percent pa. As a result, the lending rate has risen from 5-6 percent to 7.5 percent a year.
Primary data of the SBV in Jan-June showed that the credit growth of the dong was 2.72 percent whereas that of US dollar jumped 22.21 percent.
Last week, the Central Bank reported that the US dollar trading interest rate on the interbank market soared in most terms. Overnight trade of US dollar reached $1.401 billion, accounting for 53 percent of total trading value, showing that the demand for the greenback kept rising strongly.
ENERGY - Investing in renewable energy to save power
VOV
Many families and businesses have started using energy-saving products to cope with the soaring prices of electricity, petrol, and gas. However, there remain certain snags in developing renewable energy in Vietnams.
Innovations
Many innovations have been introduced in response to the energy-saving campaign launched by the Ho Chi Minh City Power Corporation.
The family of Nguyen Thi Ngai in Tan Binh district is one of 800,000 families in Ho Chi Minh City who can now save nearly VND100,000 a month after replacing the old incandescent lamps with compact light bulbs. Le Thi Xuan in District 3 says her family has decided to use a solar-powered water heater and turn off all light bulbs in the house at peak time in the evening when need be.
Nguyen Anh Vu, Head of the Public Relations Department of the HCM City Power Corporation, says his company recently launched a communication campaign to raise public and business awareness of the need to save energy and has received a positive response from many families and businesses in the city.
In the first six month of 2011, the city saved as much as 198.59 million kWh of electricity (85.41 percent of the annual target). Of the total, 40.9 million kWh was saved in public lighting (21.6 percent) 101.7 million kWh in daily lighting (51.2 percent) and 34.2 million kWh in production (17.2 percent).
Hoang Minh Ba, Director of the JSC Technical Services Telecom – TST member Group Posts, says not a few businesses are still using backward technologies which consume much power.
In addition, power waste in households remains a big problem as they have no energy-saving equipment.
Challenges
In order to ensure the sustainable development of businesses and improve their competitive edge, it is imperative for them to use renewable energy such as wind, solar, and bio energy.
However, the cost of investment in renewable energy projects is very high beyond the reach of domestic businesses.
Tran Anh Hao from the HCM City Department of Industry and Trade cites another reason for low foreign investment in such projects is the low price of electricity in Vietnam.
The HCM City Department of Industry and Trade is sponsoring an energy-saving exhibition (Enertec Expo 2011) in the hope that visitors will be able to gain access to energy-saving technologies and products and contribute to implementing the national strategy on energy efficiency and reduction of environmental pollution.
Third turbine of Son La hydropower plant to be operation on August 25
Vietnambusiness.asia
The Electricity of Vietnam (EVN) announced yesterday that the third turbine of Son La hydropower plant with designed capacity of 400 MW had been put into idle operation successfully.
As planned, the hydropower plant will officially put the third turbine into operation on August 25, joining the national grid in five days earlier, supplying additional 10 million KWh per day.
Each day, the three turbines of Son La hydropower plant supply about 30 million KWh to the national grid now.
The first two turbines of the hydropower plant has supplied about 3 billion KWh to the national grid so far.
RESOURCES - PetroVietnam to ramp up production
Vietnamplus
PetroVietnam is to be one of the nation's leading groups, both inside and outside the country, with sharpened competitive edges and growth of up to 20 percent a year, according to a five-year plan approved by the prime minister.
The group aims to increase oil and gas reserves and petroleum exploration output by 35-40 million tonnes and 23-34 million tonnes of oil equivalent per year respectively.
By 2015, PetroVietnam would be able to produce about 16-17 million tonnes of refined oil, meeting 50-60 percent of domestic petrol demand and 60-70 percent of nitrogenous fertiliser demand.
By 2015, around 50-60 percent of materials demand for petrochemical and petrochemical products would be satisfied.
At the same time, the group would put three bio-fuel plants into operation while developing bio-fuel production and distribution systems nationwide.
Petroleum services would be encouraged to grow at an average rate of 20 percent per year, the plan says.
PetroVietnam was eligible to use foreign currencies for its investment projects or those carried out by its subsidiaries via service contracts, according to a new circular issued by the Ministry of Finance.
The circular said the group was allowed to use foreign currencies to contribute capital to joint ventures.
PetroVietnam could use foreign currencies to pay principal, interest and fees on its borrowings for those investment projects and other maturity debts.
The group was expected to collect foreign currencies from petroleum contract revenues inside and outside the country.
The new circular would not apply for PetroVietnam subsidiaries.
Petrolimex to Start Operations at Vietnam Oil Terminal in 2012
Bloomberg
Vietnam National Petroleum Corp., the state-owned company known as Petrolimex, plans to begin commercial operations at its 505,000 cubic-metre Van Phong bonded oil terminal next year.
The facility will be commissioned in April, Henry Yau Win Onn, project manager at unit Petrolimex Singapore Ltd, said by telephone today.
The 29-tank Van Phong terminal in southern Khanh Hoa province will be capable of storing 230,000 cubic meters of gasoil and 125,000 cubic meters of gasoline, Petrolimex Singapore said in an e-mailed statement today.
The facility, which will have four jetties and be able to accommodate vessels with displacement of as much as 150,000 metric tonnes, will also have a capacity to store 150,000 cubic meters of fuel oil, the company said in the statement.
Petrolimex is Vietnam's biggest gasoline and diesel supplier.
Gov’t approves $1bln imported gas docks
VIR
The Prime Minister has approved a project on building a system of gas import docks at Ham Tan district in the central province of Binh Thuan , according to Do Khang Ninh, general director of PetroVietnam Gas (PV Gas).
Accordingly, the docks will include a port where ships go to have gas put on or taken off them and buildings used for storing gas. The docks project has a total investment of more than $1 billion.
As scheduled, once completed and put into operation, the docks will be capable of receiving about 2-3 million tonnes of imported gas per year.
The project planning will be accomplished by PV Gas later this year. The construction was expected to be started by 2012.
INFRASTRUCUTRE - Hanoi to build nine industrial zones
VNS
Hanoi will build nine industrial zones between now and 2015 and plans to build an additional 15 of the zones in the next 15 years.
At the moment, the city has only eight industrial zones that account for 10 per cent of the city's industrial production value, 45 per cent of its export revenues and 20 per cent of its GDP. These zones also employ about 110,000 workers.
According to the Management Board of Hanoi Industrial and Export Processing Zones, up to June 2011, Hanoi's industrial zones had attracted 537 projects, including 253 foreign direct investment projects with a total investment of $3.63 billion.
Slow construction industry weighs on materials sales
VNS
The building materials market has had a tough time lately due to a downturn in the building industry and increased production.
The Viet Nam Building Material Association said production at factories making cement and ceramic tiles had increased against the same period last year while consumption had reduced.
Nguyen Thi Thuy, owner of Tien Thuy building material shop in Hoang Quoc Viet Street, said sales always fell in the wet season but this year they were down from the beginning of the year and hadn’t recovered.
Pham Thanh Trung, owner of Son Tung shop in Tay Ho Street, Ha Noi, said the shop had a year-on-year reduction of 70 per cent in revenue to VND300 million (US$14,527) in June.
Nguyen Tien Nghi, deputy chairman of the Viet Nam Steel Association, said consumption of steel had fallen to 298,000 tonnes in June and recovered to 359,000 tonnes in July, still much lower than the average consumption of 400,000 tonnes a month.
Sales were not expected to improve before the end of this year due to reduced public investment and expenditure on construction in a period of high inflation, Nghi said.
Consumption of cement in July had also reduced by 360,000 tonnes against June to 3.59 million tonnes, said Le Van Diep, head of the administrative office at the Viet Nam Cement Association.
To promote sales of building materials, producers and retailers had offered large discounts.
Viglacera Ha Long, a building ceramics producer, usually discounted at the end of the year but this year 10-15 per cent was applied since mid-year, Thuy said.
Meanwhile, large steel and cement producers had sought to export their products.
This was a temporary solution because the export value was not high, Diep said.
Exports of clinker and cement reached 2.5 million tonnes in the first half and 133,000 tonnes of steel in the first seven months.
LEGAL NEWS – Vietnam requests customs declaration when carrying over $5,000, 15m dong
Stoxplus
The State Bank of Vietnam has issued Circular No 15/2011/TT-NHNN requesting all individuals to declare at the customs if they carry over $5,000 or foreign currencies equivalent to $5,000 or if they carry over 15 million dong.
The Circular was issued on August 12, 2011 but it did not state when it will come into effect.
Earlier in 2006, Vietnam set the maximum free carry of $7,000 under the Decree 160/2006/ND-CP.
Those who bring under $5,000 or foreign currencies equivalent and wish to deposit into a current account at a foreign bank have to declare too.
The move is seen as Vietnam's effort to stabilise its forex market.
New regulations on cross-border carrying of cash
Vietnamplus
The State Bank of Vietnam has issued a circular, stipulating the bringing of foreign currency in cash and dong in cash by individuals when leaving or entering the country.
Under the Circular No. 15/2011/TT-NHNN, individuals who carry over 5,000 USD or other foreign currencies that have equal value and more than 15 million VND must make customs declarations at border gates.
For individuals who carry into Vietnam foreign currency equal to or less than 5,000 USD, or other foreign currencies have equal value and wish to send this amount of foreign currency to account of payments in foreign currency of individuals opened at credit institutions or branches of foreign banks licensed to conduct foreign exchange transactions must also declared to the border gate customs.
The entry-exit declaration certified by the border customs of the foreign currency in cash brought into is the basis for licensed credit institutions to send foreign currency in cash to the account of payments.
The entry-exit declaration verified by the border gate customs is only valid for individuals to send foreign currency in cash to the account of payments within a maximum of 60 days from the date on the declaration of entry-exit.
Vietnam - News and Regulations
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INVESTMENT – Vietnam tries to attract more FDI from Japan
The Saigon Times Daily
Local agencies are rushing to develop investment promotion programmes aimed at attracting foreign direct investment (FDI) from Japan as instructed by the prime minister, said a Ministry of Planning and Investment official.
Do Nhat Hoang, director general of the ministry's Foreign Investment Agency, told a press conference in Hanoi on Tuesday that several programmes in collaboration with Japanese partners have been put on the agenda.
The press conference was held to brief reporters of the conference titled "Japan's Recovery Scenarios - The Outbound Investment Trends" that would be held in Hanoi next month by the ministry and Japan's Nikkei newspaper.
Hoang told reporters that the conference and other forthcoming events were "programmes to be launched at the instruction of the prime minister."
The conference next month will have the participation of about 300 Japan-based enterprises and discuss investment opportunities in Vietnam.
The Ministry of Planning and Investment will also organise another conference in association with the Japan Business Federation, commonly known as Keidanren, on Vietnam's supporting industries in Tokyo, Hoang said. Currently, deputy minister Dang Huy Dong is in Tokyo to discuss the organising of conferences on investment in Vietnam's infrastructure projects under the public-private partnership.
Besides, some other localities have also prepared road shows to attract Japanese investors.
The HCM City government, for example, will organise an investment promotion trip to Tokyo in September or October, while Dong Nai Province would also schedule a conference next Friday to attract investment from Japan, Hoang said.
January-July FDI disbursement of Japan's projects in Vietnam dropped to $720 million from $1.3 billion of the same period last year, said the Foreign Investment Agency's head.
The Nikkei newspaper said many Japan-based enterprises wanted to invest overseas after their country was hit by the earthquake and tsunami last March. Besides, when considering investment opportunities in Vietnam, Japan would not take the unstable economy serious as inflation was a global issue.
HCM City, Delta show opportunities to investors
saigon-gpdaily
Investor when thinking of putting money into Vietnam's Mekong Delta should give top priorities to fisheries, then agriculture and forestry,Agriculture deputy minister Luong Le Phuong told an investment promotion conference in HCM City Tuesday
Phuong was addressing as a key speaker at the conference, held to introduce to both local and foreign investors potentials and advantages of HCM City and the 13 Mekong provinces.
The provinces are Ca Mau, An Giang,, Long An, Ben Tre, Dong Thap, Soc Trang, Bac Lieu, Hau Giang, Tra Vinh, Can Tho City, Kien Giang, Tien Giang, and Vinh Long.
The investment promotion conference, which saw more than 500 delegates, is part of the Mekong Delta Economic Cooperation-Ca Mau 2011 Forum.
Deputy minister Phuong said among fisheries, agriculture and forestry, the first one is the fastest profit-making area.
The sector includes catching fish and aquaculture, as well as processing aqua-products for export, he added.
The delta has seen its total aquaculture acreage increase from 233,500 hectares in 2000 to 746,000 hectares last year, with output soaring from 444,000 tonnes in 2001 to 1.94 million tonnes in 2011, said Phuong.
According to him, Vietnam houses more than 500 aqua-product processing factories. Of them, 330 have been put into the European Union-accepted list, and more than 70 percent of the EU-accepted factories are located in the Mekong Delta.
Vietnam's prime minister Nguyen Tan Dung established in March 2010 the Mekong Delta Economic Cooperation, or MDEC, to further support the whole region's development. MDEC-Ca Mau 2011 is part of MDEC.
The delta region contributes over half of the country's rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the MDEC Secretariat.
In introduction, the secretariat says HCM City and the Mekong Delta hold lots of advantages for agriculture (agriculture, fisheries and forestry) and marine economy. The two regions are endowed with a convenient network of transportation that includes roads, air routes and waterways.
HCM City and the 13 provinces cover nearly 4.3 million square km, making up 13 percent of Vietnam's area.
The delta has about 2.63 million hectares of farmland, including 1.9 million ha fore rice, almost 576,000 ha for fruits and over 746,000 ha for aquaculture, according to the secretariat.
During the full-day conference in HCM City, investment promotion officials from all the 13 delta provinces displayed their economic potentials and advantages at a sideline show.
The delta has a total of 151 industrial parks. Can Tho City and the provinces of Long An and Kien Giang have attracted more investment capital from HCM City than others, the secretariat says.
Long An, which borders HCM City, has attracted from the city 420 projects worth more than VND60 trillion (US$2.9 billion) since 2000.
Kien Giang has received 103 projects worth VND88 trillion ($4.2 billion) over the past five years.
Can Tho City, the Delta's hub, reports it has attracted 61 investment projects worth VND23 trillion (US$1.1 billion) over the past 10 years. Most projects are in tourism, infrastructure development and retailing.
The investment promotion conference called for capital into such fields as high-tech agriculture; processing and preservation of post-harvest agricultural products; trade; infrastructure; agricultural services; development of material zones; and other agricultural activities.
Speaking at a meeting held Monday to review economic development cooperation between HCM City and the Delta, city chair Le Hoang Quan said the metropolitan government has actively promoted the Delta's business opportunities to foreign and local investors.
He said the city has worked with several sectors, including infrastructure development, environmental protection, healthcare, hydropower development and others.
After the investment conference, a workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.
October will also see a conference on promoting the delta's development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.
In addition, the province will host the Leaders Conference on MDEC-Ca Mau 2011 in the same month.
INFRASTRUCTURE - Japan, US agencies to sponsor major projects
BusinessAsia
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries.
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries under the public-private partnership (PPP) model.
JICA and USAID expect to implement their first project in Vietnam and are next year scheduled to propose a plan to the Vietnamese Government, to establish a new investment fund.
JICA plans to set up a fund worth 400-500 million USD in March 2012 for PPP projects and contribute to the fund with investments or loans.
USAID will guarantee half of the value of projects’ loans and seek cooperation from Vietnamese and US financial organisations.
The projects of the two agencies’ cooperative strategy include power plants and other energy establishments, information and telecommunications, roads, traffic and sewerage and water supply systems./.
Foreign firms now opt for imports over production
VIR
For example, UK-backed oil and gas maker Castrol BP Petco Company and French-backed tyre maker Michelin Group supplemented business codes to boost imports.
Swedish-backed Tetra Pak, the world’s leading food processing and packaging company, and Japanese-backed Panasonic AVC Vietnam have all stepped up importation business arms in Vietnam.
Meanwhile, South Korean-backed Samsung Vina supplemented its business codes to boost distribution in Vietnam.
The list also includes Japanese-owned electronics firms like Sony, Toshiba, Sanyo, Sharp, Hitachi and South Korean-backed Kumho Tire which have also been approved to import electronic products and tyres and then sell directly in Vietnam.
Yuzo Otsuki, general director of Sony Vietnam which disbanded its joint venture with locally-owned Tan Binh Electronics Company late last year to focus on importing electronic products into Vietnam, said: “The company’s business grew by 60 per cent in 2010 and is expected to continue growing at the same rate this year, with many new [imported] products marketed in Vietnam.”
Dao Ngoc Hoang Giang, general director of Ho Chi Minh City-based Sao Mai Office Equipment Joint Stock Company under locally-owned Sao Mai Group specialised in importing office equipment, said many FIEs like Japanese-backed Fuji Xerox and Sharp had applied for permission to wholesale and retail their imported products in Vietnam.
Mochizuki Kentaro, chairman of Sanyo HA Asean Corporation, said previously, firms were slapped an average import tax level of 50 per cent when they imported goods into Vietnam. When Vietnam joined the ASEAN Free Trade Agreement in 1995, the tax level was reduced to 20 per cent and then 5 per cent as is the case now. The reduction meant that investors would choose to become importers, not manufacturers.
Vietnam Customs reported that the foreign direct investment sector’s total import turnover in the year’s first six months was $27.5 billion, up 23 per cent against last year’s corresponding period.
Before Vietnam joined the WTO, FIEs enjoyed various priorities on the understanding that they invested into manufacturing in Vietnam to generate employment. They were allowed to import goods to serve their manufacturing in the country, not to directly trade and distribute them in this domestic market.
However, when Vietnam became a full WTO member, many FIEs took advantage of the distribution rights to import goods from their overseas companies and then resell them in Vietnam.
For example, with current import tariffs of 3-20 per cent for electronic components, and 5 per cent for completely-built electronic goods, electronics firms have chosen to become importers.
An expert from Thanh Hoa Provincial Department of Planning and Investment’s International Relations Division said with fewer employees and curtailed costs of manufacturing and land leasing, “it is clear that importing is more profitable than manufacturing.”
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the Vietnamese government targeted to lure foreign direct investment into manufacturing sector, not in non-production sectors.
“It will need more time to revise all related regulations governing FIEs’ operations in Vietnam,” he said.
TRADE – GOOD NEWS - Most EU states want to terminate Vietnam shoe duties
Reuters
The European Commission is expected to decide in September whether to propose extending dumping duties on imports of leather shoes from Vietnam, but most EU states want them scrapped, EU sources said.
Last October, the Commission which oversees trade policy for the 27- country European Union extended duties of up to 10 percent on Vietnamese leather shoes and 16.5 percent on those made in China, pending a review.
A majority of EU countries had opposed that move.
Industry and diplomatic sources with knowledge of the case told Reuters last Friday they expected Brussels to complete its review and submit its proposal for approval by member states by the end of September.
The Commissions proposal is expected to be submitted to member states in September. But as it stands the majority, or at least 15 member states, favor termination, one source said.
Britain, Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden want the duties scrapped immediately, before the lucrative Christmas retail period, an EU diplomat said.
Major shoe-producing countries like Italy, Spain, France and Poland are all leading the charge to keep the duties, the diplomat added.
EU is the largest market for Vietnamese leather shoes and Vietnam is also the second biggest exporter of the products to EU, after China.
Last year the bloc imported US$2.5 billion worth of leather shoes from Vietnam, up 33.9 percent from 2006, figures from the Vietnam Leather and Footwear Association show.
The Ministry of Industry and Trade has asked local footwear exporters to strengthen their sales to EU as the demand for footwear imports of the bloc is expected to increase by 5.3 percent this year.
Vietnams total footwear exports in the first half this year dropped by 8.8 percent to $2 billion compared to the same period last year. However, the Vietnam Leather and Footwear Association noted that export figures have already improved since the second quarter.
EU split
The EU regularly splits over dumping cases between its member countries supporting freer trade and those worried about competition against their own manufacturers.
The shoe duties were introduced in 2006 only after a compromise deal to keep them in place for just two years, instead of the usual five. If extended again, Commission sources say the duties would last at least five years.
But the industry and diplomatic sources said a compromise being considered by EU Trade Commissioner Catherine Ashton a Briton would allow the duties to lapse once they expire on January 3.
This would give certainty either way to EU importers before the busy Christmas period and at the same time allow EU producers the time to adapt and plan against cheaper imports from Asia, another source said.
European retailers and global shoemakers, led by sports shoe producers such as Adidas, Asics, Nike and Puma want the shoe taxes axed given the gloomy economic outlook and dwindling consumer spending in Europe caused by the worst financial crisis in about 80 years.
But European manufacturers say they are unable to compete against low-cost producers in China and Vietnam and accuse those Asian governments of giving unfair subsidies that lower costs.
A review can take between 12 and 15 months, but the Commission had said it hoped to complete its work more quickly. It said it could reimburse the extra tariffs imposed during the review should it be proven that the duties were unnecessary.
If we get a termination, that will be enough. We are not going to try and make life any harder for ourselves and threaten the Commission, a representative from an EU importer said.
FIE losses turn to profits
VIR
The alarming tax evasion trend in foreign-invested enterprises is easing.
Nguyen Trong Hanh, deputy director of Ho Chi Minh City Department of Taxation, said while 60 per cent of foreign invested enterprises (FIEs) operating in the city had reported losses for many years, in the first seven months of 2011, 30-40 per cent of these enterprises reported profits.
The city’s tax collection reached 67 per cent of its annual plan of VND110.4 trillion ($5.3 billion) for this year and increased by 23 per cent compared to the same period last year.
Hanh said the department had worked with about 40 FIEs and found “fake loss” situations at most of the enterprises.
“After being inspected, most of these enterprises’ financial reports showed profits. Especially, an enterprise reported a profit of more than VND100 billion ($4.8 million) after reporting losses for 10 consecutive years,” he added.
It was a similar story at 17 FIEs who produced and traded tea in Lam Dong province. For the past 10 years, the Lam Dong Department of Taxation did not collect any corporate income tax (CIT) from these enterprises who reported losses for consecutive years.
However, Lam Dong Department of Taxation deputy head Phan Thi Vinh said after inspections, many FIEs admitted the” fake loss” situation by transfer pricing.
“After establishing that these enterprises made profits since 2005, the department collected tax arrears with the collected tax of VND8 billion ($386,473) because these enterprises still enjoyed a 50 per cent CIT tax reduction rate in accordance with Vietnam’s preferential tax policy for FIEs,” said Vinh.
According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 FIEs as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2,230 billion ($107 million).
As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years. The GDT’s Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance (MoF) across 2011.
The MoF said it was considering amending the Tax Management Law which would set additional provisions to treat tax frauds and price transfer. It is expected that the amended law would be submitted to the National Assembly for ratification by 2012.
ECONOMY - Vietnam inflation accelerates to 22.16 pct, highest level in Asia
Bloomberg
Food, transport and construction-material prices have stoked consumer-price growth in Vietnam.
Vietnamese inflation accelerated for an 11th month in July after the central bank cut a key interest rate even as the nation faces the fastest price gains in Asia.
Consumer prices rose 22.16 percent from a year earlier, compared with June’s 20.82 percent pace, data released by the General Statistics Office in Hanoi showed today. Prices climbed 1.17 percent from June.
The central bank reduced its repurchase rate to 14 percent from 15 percent on July 4 after a spate of increases since November to fight inflation, leading the International Monetary Fund to say the cut may confuse investors. The benchmark VN Index of stocks is down 16 percent this year, on concern price gains will hurt the economy.
“The markets were very surprised by the easing,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “It’s too early to go into a full-blown easing cycle given that inflation and inflation expectations remain elevated.”
Vietnam will find it “very difficult” to slow inflation to 17 percent by the end of 2011, Ha Van Hien, head of the National Assembly’s Economic Committee, told the opening of the body in Hanoi on July 21. It may peak as high as 23 percent in August before slowing to 18 percent by year-end, Sofat said.
The VN Index fell 0.9 percent yesterday to 409.2, while the dong weakened 0.1 percent, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, risking costlier imports.
Food, transport costs
Food, transport and construction-material prices have stoked consumer-price growth, according to Australia & New Zealand Banking Group Ltd. Transport prices rose 21.7 percent from a year earlier in July, today’s data showed. July’s annual inflation rate is the highest in a basket of 17 Asian economies tracked by Bloomberg.
Prime Minister Nguyen Tan Dung in February cut the credit- growth target and ordered a tighter monetary policy to try to tame inflation, revive confidence in the economy and prevent another credit-rating downgrade. This month’s rate cut wasn’t a “policy signal,” the central bank said in a July 8 statement.
“We assume policymakers are again demonstrating their low tolerance for slower growth,” Christian de Guzman, a Singapore- based assistant vice president at Moody’s Investors Service, said in a note on July 11.
The nation’s economy expanded 5.6 percent from a year earlier in the first half of 2011. Moody’s said that a “tight” monetary policy would threaten the government’s full-year target of 6 percent.
‘A bit concerned’
“We are a bit concerned that the cut in rates will confuse the market about the government’s commitment to sustaining the stabilization effort under Resolution 11,” Benedict Bingham, the IMF’s senior resident representative in Vietnam, said this month. Resolution 11 refers to the steps Dung took in February.
“A strong commitment to sustaining this effort is essential to re-establishing confidence in the dong and restoring macro-economic stability more generally,” Bingham said.
The State Bank of Vietnam had increased the repurchase rate for the seven-day term from 7 percent at the start of November 2010 before this month’s cut. It appears to have become the benchmark for monetary policy, according to JPMorgan Chase & Co.
Price escalations should not be blamed on Chinese businesspeople
VNS
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce.
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce. However, experts have pointed out that the main reason behind the problem is the mismanagement.
The general Statistical Office (GSO) has announced that the CPI in July increased by 1.17 percent, which is higher than the 1.09 percent increase of June, raising the total CPI increase in the first seven months of the year to 14.6 percent.
Some analysts believe that the fact that Chinese businesspeople scrambling for farm produce has caused chaos in the market and pushed the CPI increase more sharply.
However, Dr Nguyen Van Nam, former Head of the Trade Research Institute, argued that when there are many buyers, farmers will have the chances to sell farm produce at higher prices. Meanwhile, the problems which have been arisen from the massive material collection should be blamed on the bad management of Vietnamese state agencies.
Foreign businesspeople have gained the upper hand over domestic enterprises in collecting materials in the market, while the scrambling for materials by foreign businesspeople has pushed the prices up.
According to Nam, there is no other country in the world which allows foreign businesspeople come to their countries to collect materials so easily. State management agencies should have learned to find out for what purposes the foreign businesspeople collect materials in Vietnam. It is really the thing that needs to be done. In the past, the campaigns of collecting anise roots and buffalo toenail, once sabotaged Vietnam's agricultural production.
Dr Nam believes that Vietnam should not prohibit serious foreign businesspeople, who plan long term business in Vietnam. However, they must be registered businesses and they must pay tax as stipulated by the current laws.
When carrying goods out of the national boundary, the businesses must pay tax. Meanwhile, other business activities undertaken by the businesspeople in Vietnamese territory must be supervised to be sure that the activities do not cause chaos to the domestic market.
While domestic businesspeople always bear strict supervision by the state management agencies, foreign businesspeople seem to be "given a free hand".
Dr Nam also thinks that this should be seen as a lesson for domestic enterprises and they should change the way they collect farm produce from farmers. The collection should be based on the principle of mutual benefit, while enterprises need to take act on their own initiative and don't sit at their office and ask farmers to bring farm produce.
Meanwhile, Vu Vinh Phu, Chair of the Hanoi Supermarkets' Association, has attributed the price escalations to the bad distribution network.
According to Phu, farmers sell farm produce at their fields very cheap, but customers still have to buy high. It is because the products go through many intermediary hands before reaching out to consumers. In general, the retail prices are 3-4 times higher than the original prices.
A kilogram of fish in Thanh Hoa is priced at 8000 dong, while it is selling at 30,000-40,000 dong per kilo in Hanoi. A kilogram of tomato is sold by farmers in the provinces neighbouring to Hanoi at 500 or 1000 dong, while Hanoians have to pay 8000 or 9000 dong.
In April and May, sugar refineries, which had 500,000 tonnes in stocks, sold to general sales agents at 16,000-17,000 dong per kilo only. However, the retail price on the market was 25,000 dong.
A question has been raised that why supermarkets do not cooperate with each other to force the prices down. If distributors can buy goods straightly from producers and then sell directly to consumers, the prices will be much lower.
The answer is, according to supermarket chains, they cannot contact producers and importers of essential goods.
The problem is that producers and importers do not sell goods directly to supermarkets, but they only sell to their general sales agents who will later sell the products to sales agents at lower levels.
As such, the loosened management over the wholesale activities has led to the consequences that Vietnam cannot control the retail activities.
Economic meltdown hits interior makers in central province
SGGP
An economic turmoil has force many furniture makers in the central province of Binh Dinh to reduce operation or shut down this year.
Statistics show there are 160 furniture manufacturers in the province with the total fabricating output of 345,000 cubic meters of wood per year.
Binh Dinh Province’s export turnover of furniture amounted to more than US$1.1 billion in the period of 2006 and 2010, an equivalent of nearly 61 percent of the province’s figure.
Most of local producers are small- and medium-size enterprise, which meet up quality requirements of big foreign traders.
“Local furniture makers focus solely on outsourcing. They are not eager to upgrade equipments and techniques to boost output, as well as create their exclusive patterns,” an expert told Dau Tu Tai Chinh Newspaper.
“Their competitiveness remains low due to a shortage of skilled workforce and poor cooperation with their counterparts.”
Therefore, local manufacturers struggle to weather the economic meltdown, he says.
So far this year, input cost of the furniture sector has surged more than 30 percent so far this year, while export prices have remained unchanged, according to furniture makers in Binh Dinh Province.
“A high lending rate combined with low profit margin are scaring off local producers,” says a director of a furniture maker, who asked to be unnamed.
Financial experts ask businesses should focus on interior furnishings in an effort to boost the interior output to 40 percent of the province’s figure by 2015.
The Binh Dinh Province People’s Committee announces it will subsidize 30 percent of the expense that interior makers are required to make for setting up the environment impact assessment of their investment projects.
It will also finance 15 percent of the cost of building waste water treatment system and 70 percent of the expense of training manual workers.
The local authorities help interior manufacturers to hire experts in order to improve their fabricating techniques twice a year.
The top export product from Vietnam to the EU last year was footwear, valued at 1.75 billion euros. It was followed by textiles and garments, coffee, seafood and furniture.
Developing industries and industrial zones
VOV
More than 60 percent of areas in industrial zones (IZs) and one-fourth of areas in industrial complexes (ICs) have been rented so far.
The information was announced at an international seminar on the development of industrial zones and complexes in Da Nang on July 27.
Since 1991, the country has established 260 IZs, more than 170 of which have been put into operation. IZs with an area of under 20ha account for nearly half, while IZs with an area of under 100ha make up one-fifth.
Coordination among foreign and domestic invested businesses is low, leading to weak competitiveness.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Research and Management under the Ministry of Industry and Trade, said that to further develop ICs, large international groups like Canon and Samsung need to increase their cooperation with domestic partners. He stated that by transferring technology which would help Vietnamese businesses to develop, competitiveness could be improved, thus contributing more to national GDP.
ENERGY - Vietnam expects to attain 6pct of renewable energy by 2030
Saigon Times Daily
Vietnam is determined to prioritise the development of renewable energy such as wind, solar and gas-fueled power so that this source of energy will account for 6 percent of the nation's total power output by 2030.
At the moment, the country produces a very modest amount of renewable power which is estimated at less than 3 percent of the country's total power capacity.
According to the 930 trillion dong (US$48.8 billion) national plan for power development between now and 2020 with a vision toward 2030 that was approved by the government last week, the country will produce and import 210 billion kilowatt hours by 2015 and up to 834 billion kilowatt hours by 2030 to meet the increasing power demand.
The nation, as part of the plan, aims to increase wind power capacity to up to 1,000 MW by 2020 and up to 6,200 MW by 2030 to reach 2.4 percent of total power production of the country, a remarkable development compared to a very small capacity at the moment.
The plan also prioritises developing hydropower plants, particularly ones with three combined functions of flood prevention, water supply and power production.
The capacity of hydropower generation is expected to increase to 17,400 MW by 2020, nearly double the present capacity of 9,200 MW.
Vietnam will also operate the first nuclear power generator in a decade's time. By 2030, nuclear power will contribute around 10 percent of the country's power output with total capacity of 10,700 MW.
Vietnam Electricity Group (EVN), Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Coal and Mineral Industries Group (Vinacomin) are the three companies with the responsibility of developing the power sources for the country, according to the plan.
POWER - Vietnam approves a 10 year national power development plan
VNA
VNA reported that Prime Minister Mr Nguyen Tan Dung has approved a 10 year national power development plan that targets production and import of 330 billion KWh by 2020.
Under the 2011-20 plan, 3% of this total will be imported. The remaining 97% will comprise 19.6% of hydropower, 46.8% of thermal power, 24% of gas generated power, 4.5% of renewable energy and 2.1% of nuclear power.
The competitive power market will be developed with various forms of investment in building power plants and trading of electricity. The monopolized State control of the transmission line system remains to ensure the national energy security.
Priority will be given to developing renewable energy sources including solar and wind power as well as energy production from biomass. The plan envisages electricity production from renewable sources to increase from 3.5% in 2010 to 4.5% in 2020 and 6% in 2030.
Wind power capacity will be raised to 1,000 MW in 2020 and around 6,200 MW in 2030, equivalent to 0.7% of the country’s total output in 2020 and to 2.4% in 2030. Hydropower generation will be increased from the current 9,200 MW to 17,400 MW in 2020.
By 2020, the first nuclear power plant in Viet Nam will be put into operation and in 10 years, the sector will produce a total of 10,700 MW, equivalent to 10.1% of the country’s total output.
The plan also aims to supply electricity to all families in the country’s rural areas by 2020.
RESOURCES - Dinh Vu IZ hooks big project
BusinessAsia
Drilling Mud Corporation (DMC), a PetroVietnam member and the Dinh Vu Industrial Zone (IZ) authorities have inked a land lease contract for a petrochemical service supply project.
With investment of VND270 billion ($13.04 million), the project consists of a propylene resin store, a container depot with an annual capacity of 100,000 20-foot equivalent unit (TEU) and a 5,760 square metre warehouse.
Construction of the project will be kicked-off in early fourth quarter of 2011 and the project will come online in the second quarter of 2012. The Dinh Vu petrochemical service supply base will be one of DMC’s key logistic service supply chains in northern Vietnam.
DMC’s Dinh Vu base is the fifth project of PetroVietnam’s member firms and the 35th project in Dinh Vu IZ.
DMC’s investment decision showcased the IZ’s compelling advantages with internal 20,000 dead weight tonnage general port system, convenient transport links to key areas and lucrative tax incentives for domestic and international investors, said Dinh Vu IZ Joint Stock Company deputy general director Do Thi Kim Thanh.
Petrolimex offering is well received
VIR
Petrolimex, Vietnam’s leading oil importer and distributor, raised VND412.3 billion ($20.1 million) via its initial auction on July 28 .
The state firm sold entire its offering of 27.43 million shares, representing for 2.56 per cent its registered capital, according to Hanoi Stock Exchange. The average price was VND15,032, little higher than the starting price of VND15,000.
Investors previously bid for 30.1 million shares, 10 per cent higher than the firm’s expectation. Some 304 individuals registered to purchase more than 22 million shares and three institutions bid for eight million.
That result outperformed that of big state-owned firms including Vietnam Steel in early June and Mekong Housing Bank a week ago. The steel giant sold more than 39 million shares, or 60 per cent of its total offer, at the price of just VND10,100 per share.
The state lender missed its target with 18 million shares sold, or 28 per cent of its offer, at an average price of VND11,025 per share.
Foreigners were not allowed, by Vietnam’s Ministry of Industry and Trade, to bid for the auction, due to energy security reasons.
INDUSTRY - Economic uncertainties make steel association worried
VNS
The Vietnam Steel Association (VSA) is worried that uncertainties in the national economy would deeply hurt the local steel industry despite agreeable growth.
Speaking at a seminar in Hanoi last Friday, VSA vice chair Dinh Huy Tam said steel consumption would decline compared to last year. The sector earlier targeted a growth rate of 8-10 percent in 2011.
"We can affirm that the target is unachievable and the figure may even decrease against last year," Tam said.
Tam attributed the gloomy forecast to concerns on shrinking foreign direct investment (FDI) capital disbursement while the real estate market has been frozen for a long time.
According to the Ministry of Planning and Investment, FDI disbursement in the first half of 2011 was $5.3 billion, or a slight fall of 2 percent year-on-year. Worse yet, the figure is on the downtrend, falling from $1.4 billion in March to $1 billon in April, $900 million in May and $750 million in June.
Tam also pointed out the challenges facing large steel projects in the country. The $4.5 billion Tycoon-E.United ISM steel mill project in Dung Quat, Quang Ngai Province is facing financial difficulties after the government approved it in May. "We are worried the project will be mired in unpredictable delays," Tam said.
Meanwhile, the government has withdrawn the investment license of a steel project in Ninh Thuan Province as investors Lion Group and Vinashin have failed to push it forwards. Meanwhile, the $7.5 billion Formosa steel project in Ha Tinh Province is in still its first steps of site clearance after being licensed for several years.
Last year, the local steel sector fetched $1 billion in export value while it spent up to $7 billion on imports of both materials and finished products.
In fact, the sector still posted growth in the first half of 2011. According to VSA, construction steel consumption reached over 2.4 million tonnes, a 12 percent year-on-year increase while steel output was 2.6 million tonnes.
Consumption of steel pipe, cold rolled steel and plated iron sheet grew by 20 percent, 24 percent and 43 percent respectively.
Industrial growth slows to just 8.8pct in Jan-Jul
VNS
The country's Index of Industrial Production (IIP) slowed during the first seven months of this year to 8.8 percent, according to a general Statistical Office (GSO) report.
Production lowered due to the modest 1.7 percent growth rate experienced by the mining industry while the manufacturing and power-gas- water sectors experienced growth rates of between 11.9 and 10 percent.
Unsatisfactory performance was additionally attributed to the slow consumption power experienced in the textiles, beverage, footwear, cement, fruit and vegetable processing industries, according to the GSO.
Meanwhile, the stockpile index of petroleum rose by 92.4 percent against the same period last year while the indices of furniture and beverages surged by 84.4 percent and 73.5 percent, respectively.
However, some industrial sectors did manage to record significant growth rates over the January-July period including 18.2 percent in fibre and cloth, 14.3 percent in steel and 14.2 percent in automobile production.
Earlier, minister of Industry and Trade Vu Huy Hoang said that local industries, already feeling the pinch, were set to experience more hardships during the next several months.
An increase in global commodity prices on the back of rising oil prices was expected to have a serious impact on local manufacturing and production sectors, Hoang said.
He continued by saying that, in order to maintain growth rates, industrial producers needed to strengthen measures aimed at controlling inflation, using only domestically produced machinery and materials in order to minimise negative impacts resulting from dependence on imports.
FINANCE - Vietnam money supply must increase to avoid stagflation
Reuters
Vietnam’s central bank should pump more money into the economy, while taking care to ensure it doesn’t fuel inflation, a senior Vietnamese government advisor said.
Money supply expanded at 2.45 percent in the first six months of the year, well below the government’s 16 percent annual target, which has also led to slowing credit growth in the country.
"Money supply has been too tight in the last six months. Money should be supplied equally throughout the year," Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee said.
"Raising money supply doesn’t mean loosening monetary policy," he said on the sidelines of a meeting on Friday.
Overly tight money supply could also reduce production of goods and therefore raise inflation, he said. "We need to avoid stagflation," Nghia said.
July’s consumer price index hit 22.16 percent year on year.
"The central bank is going to accelerate anti-dollarization measures," Nghia said, referring to the practice of making dollar loans less attractive by raising banks’ foreign currency reserve ratio, increasing demand for dong loans.
By June 20, dong-denominated loans have risen by a mere 2,76 percent this year, compared with 23,47 percent growth in dollar loans, central bank data shows.
The other fallout of the faster jump in dollar loans is the pressure on the exchange rate at the time of repayment, Nghia warned.
"This could create huge demand for foreign currency at the end of the year when dollars loans are due and if dollars supply from the export market is difficult at the same time it would cause tension to build in foreign currency market," he said.
"We have been informing the government to come up with measures right now to avoid that risk."
Six-month terms interbank interest rate falls over 4pct
SBV
On July 25, the interbank interest rate fell in most terms, of which the 6-month term interest rate decreased from 18 percent on July 21 to 13.88 percent per annum (p.a.), State Bank of Vietnam (SBV) posted on its website.
In particular, the overnight interest rate slipped from 12.78 percent p.a. to 12.73 percent p.a. and the interest rate for one-month term declined by 0.46 percent from 12.58 percent p.a. to 12.12 percent p.a.
Notably, the six-month term interest rate decreased from the highest 18 percent p.a. to 13.88 percent p.a. and the 3-month term interest rate stood at the highest 14.01 percent p.a.
In the previous week, while 6-month interest rate climbed to 18 percent p.a., the central bank net withdrew two trillion dong in the week.
According to Thang Long Securities Joint Stock Co, the central bank's move of money withdrawal made the interest rate on interbank market increase again, especially when refinancing terms fall due by the end of July.
Presently, the interest rate on open market operations (OMO) stands at 14 percent p.a. for 7-day term.
Petroleum fund comes under scrutiny
VIR
The State Audit of Vietnam (SAV) is looking into the use of the petroleum price stabilisation fund from July 22 to the end of August.
The audit will focus on nine petroleum wholesalers, including the state-owned Vietnam National Petroleum Corp (Petrolimex) and PetroVietnam Oil Corp (PV Oil).
The Ministry of Industry and Trade, along with the Ministry of Finance will also come under scrutiny for their responsibility in overseeing the fund.
The inspection, which focuses on period between 2009 and 2010, aims to find the details about how the fund was operated and used, as well as uncover any possible misuses.
The audit, it is hoped, will clear away doubts about Petrolimex’s transparency, following the recent release of its financial reports for the period from 2008 to 2010. After having claimed large losses for years, the state-owned petroleum trading firm released financial reports that showed profits.
Still, an anonymous SAV official said that the inquiry would not focus on these discrepancies in Petrolimex’s bookkeeping, but on the overall efficiency and use of the fund.
From October 22, 2010 through to February 24 this year, the country has used VND6.369 trillion ($307.7 million) from the petroleum price stabilisation fund to help stabilise the domestic petroleum market because of fluctuations in world prices.
CONSTRUCTION - New circulars regulate construction contracts
VNS
The Ministry of Construction issued Circular 09/20111/TT-BXD on June 28, establishing templates for construction contracts using 30 per cent or more of State capital, including funds from the State budget, official development assistance (ODA), State development credit, credit capital guaranteed by the State, and investments by State-owned enterprises.
The construction contract templates attached to Circular 09 guide the relationship between investor and contractor and between general contractor and subcontractor, and they include equipment installation contracts. The accompanying regulations on contract prices and payments vary depending on the type of contract, and a single contract may include various types of services and be subject to different regulations.
Regulations on contractual provisions, work volume, hiring consultants, advance payments, performance security, warranty, payment time limits, installment payments, suspension and termination of the contract, and other provisions are expressly subjected to Government Decree No 48/2010/ND-CP of May 2010. The new circular takes effect on August 15.
On the same day, the ministry also issued Circular 08/2010/TT-BXD, establishing a contract template for consultancy in construction works using 30 per cent or more State capital, including surveys, financial and investment consultancy, consultancy on preparation of technological reports or feasibility studies for construction works, and design consultancy.
Circular No 08 includes a construction consultancy contract template which can be modified by investor and contractor based on the specific consulting work to be offered for tender.
The circular also requires contracts to specify work volume, requirements of quality and quantity, payment provisions, contract performance security (if any), settlement, term, and termination. This circular also takes effect on August 15.
LEGAL NEWS - Tax return processing to be outsourced
VNS
The general Department of Taxation will speed up plans to outsource personal income tax accounting to make the work faster and more accurate, according to department IT section deputy director Nguyen Thi Thuan.
It is expected that around 10 million tax declarations will need to be dealt with this year.
FPT to supply tax management application
FPT Information System (FPT IS) has won a bid to carry out infrastructure for a personal income tax management application.
Deputy minister of Finance Pham Sy Danh recently signed the decision approving FPT IS as the provider of information equipment and implementation services for the technological infrastructure of a personal income tax management application worth nearly VND260 billion (US$12.6 million).
In this project, FPT IS will construct technological infrastructure, including hardware components and so
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INVESTMENT – Vietnam tries to attract more FDI from Japan
The Saigon Times Daily
Local agencies are rushing to develop investment promotion programmes aimed at attracting foreign direct investment (FDI) from Japan as instructed by the prime minister, said a Ministry of Planning and Investment official.
Do Nhat Hoang, director general of the ministry's Foreign Investment Agency, told a press conference in Hanoi on Tuesday that several programmes in collaboration with Japanese partners have been put on the agenda.
The press conference was held to brief reporters of the conference titled "Japan's Recovery Scenarios - The Outbound Investment Trends" that would be held in Hanoi next month by the ministry and Japan's Nikkei newspaper.
Hoang told reporters that the conference and other forthcoming events were "programmes to be launched at the instruction of the prime minister."
The conference next month will have the participation of about 300 Japan-based enterprises and discuss investment opportunities in Vietnam.
The Ministry of Planning and Investment will also organise another conference in association with the Japan Business Federation, commonly known as Keidanren, on Vietnam's supporting industries in Tokyo, Hoang said. Currently, deputy minister Dang Huy Dong is in Tokyo to discuss the organising of conferences on investment in Vietnam's infrastructure projects under the public-private partnership.
Besides, some other localities have also prepared road shows to attract Japanese investors.
The HCM City government, for example, will organise an investment promotion trip to Tokyo in September or October, while Dong Nai Province would also schedule a conference next Friday to attract investment from Japan, Hoang said.
January-July FDI disbursement of Japan's projects in Vietnam dropped to $720 million from $1.3 billion of the same period last year, said the Foreign Investment Agency's head.
The Nikkei newspaper said many Japan-based enterprises wanted to invest overseas after their country was hit by the earthquake and tsunami last March. Besides, when considering investment opportunities in Vietnam, Japan would not take the unstable economy serious as inflation was a global issue.
HCM City, Delta show opportunities to investors
saigon-gpdaily
Investor when thinking of putting money into Vietnam's Mekong Delta should give top priorities to fisheries, then agriculture and forestry,Agriculture deputy minister Luong Le Phuong told an investment promotion conference in HCM City Tuesday
Phuong was addressing as a key speaker at the conference, held to introduce to both local and foreign investors potentials and advantages of HCM City and the 13 Mekong provinces.
The provinces are Ca Mau, An Giang,, Long An, Ben Tre, Dong Thap, Soc Trang, Bac Lieu, Hau Giang, Tra Vinh, Can Tho City, Kien Giang, Tien Giang, and Vinh Long.
The investment promotion conference, which saw more than 500 delegates, is part of the Mekong Delta Economic Cooperation-Ca Mau 2011 Forum.
Deputy minister Phuong said among fisheries, agriculture and forestry, the first one is the fastest profit-making area.
The sector includes catching fish and aquaculture, as well as processing aqua-products for export, he added.
The delta has seen its total aquaculture acreage increase from 233,500 hectares in 2000 to 746,000 hectares last year, with output soaring from 444,000 tonnes in 2001 to 1.94 million tonnes in 2011, said Phuong.
According to him, Vietnam houses more than 500 aqua-product processing factories. Of them, 330 have been put into the European Union-accepted list, and more than 70 percent of the EU-accepted factories are located in the Mekong Delta.
Vietnam's prime minister Nguyen Tan Dung established in March 2010 the Mekong Delta Economic Cooperation, or MDEC, to further support the whole region's development. MDEC-Ca Mau 2011 is part of MDEC.
The delta region contributes over half of the country's rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the MDEC Secretariat.
In introduction, the secretariat says HCM City and the Mekong Delta hold lots of advantages for agriculture (agriculture, fisheries and forestry) and marine economy. The two regions are endowed with a convenient network of transportation that includes roads, air routes and waterways.
HCM City and the 13 provinces cover nearly 4.3 million square km, making up 13 percent of Vietnam's area.
The delta has about 2.63 million hectares of farmland, including 1.9 million ha fore rice, almost 576,000 ha for fruits and over 746,000 ha for aquaculture, according to the secretariat.
During the full-day conference in HCM City, investment promotion officials from all the 13 delta provinces displayed their economic potentials and advantages at a sideline show.
The delta has a total of 151 industrial parks. Can Tho City and the provinces of Long An and Kien Giang have attracted more investment capital from HCM City than others, the secretariat says.
Long An, which borders HCM City, has attracted from the city 420 projects worth more than VND60 trillion (US$2.9 billion) since 2000.
Kien Giang has received 103 projects worth VND88 trillion ($4.2 billion) over the past five years.
Can Tho City, the Delta's hub, reports it has attracted 61 investment projects worth VND23 trillion (US$1.1 billion) over the past 10 years. Most projects are in tourism, infrastructure development and retailing.
The investment promotion conference called for capital into such fields as high-tech agriculture; processing and preservation of post-harvest agricultural products; trade; infrastructure; agricultural services; development of material zones; and other agricultural activities.
Speaking at a meeting held Monday to review economic development cooperation between HCM City and the Delta, city chair Le Hoang Quan said the metropolitan government has actively promoted the Delta's business opportunities to foreign and local investors.
He said the city has worked with several sectors, including infrastructure development, environmental protection, healthcare, hydropower development and others.
After the investment conference, a workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.
October will also see a conference on promoting the delta's development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.
In addition, the province will host the Leaders Conference on MDEC-Ca Mau 2011 in the same month.
INFRASTRUCTURE - Japan, US agencies to sponsor major projects
BusinessAsia
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries.
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries under the public-private partnership (PPP) model.
JICA and USAID expect to implement their first project in Vietnam and are next year scheduled to propose a plan to the Vietnamese Government, to establish a new investment fund.
JICA plans to set up a fund worth 400-500 million USD in March 2012 for PPP projects and contribute to the fund with investments or loans.
USAID will guarantee half of the value of projects’ loans and seek cooperation from Vietnamese and US financial organisations.
The projects of the two agencies’ cooperative strategy include power plants and other energy establishments, information and telecommunications, roads, traffic and sewerage and water supply systems./.
Foreign firms now opt for imports over production
VIR
For example, UK-backed oil and gas maker Castrol BP Petco Company and French-backed tyre maker Michelin Group supplemented business codes to boost imports.
Swedish-backed Tetra Pak, the world’s leading food processing and packaging company, and Japanese-backed Panasonic AVC Vietnam have all stepped up importation business arms in Vietnam.
Meanwhile, South Korean-backed Samsung Vina supplemented its business codes to boost distribution in Vietnam.
The list also includes Japanese-owned electronics firms like Sony, Toshiba, Sanyo, Sharp, Hitachi and South Korean-backed Kumho Tire which have also been approved to import electronic products and tyres and then sell directly in Vietnam.
Yuzo Otsuki, general director of Sony Vietnam which disbanded its joint venture with locally-owned Tan Binh Electronics Company late last year to focus on importing electronic products into Vietnam, said: “The company’s business grew by 60 per cent in 2010 and is expected to continue growing at the same rate this year, with many new [imported] products marketed in Vietnam.”
Dao Ngoc Hoang Giang, general director of Ho Chi Minh City-based Sao Mai Office Equipment Joint Stock Company under locally-owned Sao Mai Group specialised in importing office equipment, said many FIEs like Japanese-backed Fuji Xerox and Sharp had applied for permission to wholesale and retail their imported products in Vietnam.
Mochizuki Kentaro, chairman of Sanyo HA Asean Corporation, said previously, firms were slapped an average import tax level of 50 per cent when they imported goods into Vietnam. When Vietnam joined the ASEAN Free Trade Agreement in 1995, the tax level was reduced to 20 per cent and then 5 per cent as is the case now. The reduction meant that investors would choose to become importers, not manufacturers.
Vietnam Customs reported that the foreign direct investment sector’s total import turnover in the year’s first six months was $27.5 billion, up 23 per cent against last year’s corresponding period.
Before Vietnam joined the WTO, FIEs enjoyed various priorities on the understanding that they invested into manufacturing in Vietnam to generate employment. They were allowed to import goods to serve their manufacturing in the country, not to directly trade and distribute them in this domestic market.
However, when Vietnam became a full WTO member, many FIEs took advantage of the distribution rights to import goods from their overseas companies and then resell them in Vietnam.
For example, with current import tariffs of 3-20 per cent for electronic components, and 5 per cent for completely-built electronic goods, electronics firms have chosen to become importers.
An expert from Thanh Hoa Provincial Department of Planning and Investment’s International Relations Division said with fewer employees and curtailed costs of manufacturing and land leasing, “it is clear that importing is more profitable than manufacturing.”
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the Vietnamese government targeted to lure foreign direct investment into manufacturing sector, not in non-production sectors.
“It will need more time to revise all related regulations governing FIEs’ operations in Vietnam,” he said.
TRADE – GOOD NEWS - Most EU states want to terminate Vietnam shoe duties
Reuters
The European Commission is expected to decide in September whether to propose extending dumping duties on imports of leather shoes from Vietnam, but most EU states want them scrapped, EU sources said.
Last October, the Commission which oversees trade policy for the 27- country European Union extended duties of up to 10 percent on Vietnamese leather shoes and 16.5 percent on those made in China, pending a review.
A majority of EU countries had opposed that move.
Industry and diplomatic sources with knowledge of the case told Reuters last Friday they expected Brussels to complete its review and submit its proposal for approval by member states by the end of September.
The Commissions proposal is expected to be submitted to member states in September. But as it stands the majority, or at least 15 member states, favor termination, one source said.
Britain, Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden want the duties scrapped immediately, before the lucrative Christmas retail period, an EU diplomat said.
Major shoe-producing countries like Italy, Spain, France and Poland are all leading the charge to keep the duties, the diplomat added.
EU is the largest market for Vietnamese leather shoes and Vietnam is also the second biggest exporter of the products to EU, after China.
Last year the bloc imported US$2.5 billion worth of leather shoes from Vietnam, up 33.9 percent from 2006, figures from the Vietnam Leather and Footwear Association show.
The Ministry of Industry and Trade has asked local footwear exporters to strengthen their sales to EU as the demand for footwear imports of the bloc is expected to increase by 5.3 percent this year.
Vietnams total footwear exports in the first half this year dropped by 8.8 percent to $2 billion compared to the same period last year. However, the Vietnam Leather and Footwear Association noted that export figures have already improved since the second quarter.
EU split
The EU regularly splits over dumping cases between its member countries supporting freer trade and those worried about competition against their own manufacturers.
The shoe duties were introduced in 2006 only after a compromise deal to keep them in place for just two years, instead of the usual five. If extended again, Commission sources say the duties would last at least five years.
But the industry and diplomatic sources said a compromise being considered by EU Trade Commissioner Catherine Ashton a Briton would allow the duties to lapse once they expire on January 3.
This would give certainty either way to EU importers before the busy Christmas period and at the same time allow EU producers the time to adapt and plan against cheaper imports from Asia, another source said.
European retailers and global shoemakers, led by sports shoe producers such as Adidas, Asics, Nike and Puma want the shoe taxes axed given the gloomy economic outlook and dwindling consumer spending in Europe caused by the worst financial crisis in about 80 years.
But European manufacturers say they are unable to compete against low-cost producers in China and Vietnam and accuse those Asian governments of giving unfair subsidies that lower costs.
A review can take between 12 and 15 months, but the Commission had said it hoped to complete its work more quickly. It said it could reimburse the extra tariffs imposed during the review should it be proven that the duties were unnecessary.
If we get a termination, that will be enough. We are not going to try and make life any harder for ourselves and threaten the Commission, a representative from an EU importer said.
FIE losses turn to profits
VIR
The alarming tax evasion trend in foreign-invested enterprises is easing.
Nguyen Trong Hanh, deputy director of Ho Chi Minh City Department of Taxation, said while 60 per cent of foreign invested enterprises (FIEs) operating in the city had reported losses for many years, in the first seven months of 2011, 30-40 per cent of these enterprises reported profits.
The city’s tax collection reached 67 per cent of its annual plan of VND110.4 trillion ($5.3 billion) for this year and increased by 23 per cent compared to the same period last year.
Hanh said the department had worked with about 40 FIEs and found “fake loss” situations at most of the enterprises.
“After being inspected, most of these enterprises’ financial reports showed profits. Especially, an enterprise reported a profit of more than VND100 billion ($4.8 million) after reporting losses for 10 consecutive years,” he added.
It was a similar story at 17 FIEs who produced and traded tea in Lam Dong province. For the past 10 years, the Lam Dong Department of Taxation did not collect any corporate income tax (CIT) from these enterprises who reported losses for consecutive years.
However, Lam Dong Department of Taxation deputy head Phan Thi Vinh said after inspections, many FIEs admitted the” fake loss” situation by transfer pricing.
“After establishing that these enterprises made profits since 2005, the department collected tax arrears with the collected tax of VND8 billion ($386,473) because these enterprises still enjoyed a 50 per cent CIT tax reduction rate in accordance with Vietnam’s preferential tax policy for FIEs,” said Vinh.
According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 FIEs as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2,230 billion ($107 million).
As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years. The GDT’s Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance (MoF) across 2011.
The MoF said it was considering amending the Tax Management Law which would set additional provisions to treat tax frauds and price transfer. It is expected that the amended law would be submitted to the National Assembly for ratification by 2012.
ECONOMY - Vietnam inflation accelerates to 22.16 pct, highest level in Asia
Bloomberg
Food, transport and construction-material prices have stoked consumer-price growth in Vietnam.
Vietnamese inflation accelerated for an 11th month in July after the central bank cut a key interest rate even as the nation faces the fastest price gains in Asia.
Consumer prices rose 22.16 percent from a year earlier, compared with June’s 20.82 percent pace, data released by the General Statistics Office in Hanoi showed today. Prices climbed 1.17 percent from June.
The central bank reduced its repurchase rate to 14 percent from 15 percent on July 4 after a spate of increases since November to fight inflation, leading the International Monetary Fund to say the cut may confuse investors. The benchmark VN Index of stocks is down 16 percent this year, on concern price gains will hurt the economy.
“The markets were very surprised by the easing,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “It’s too early to go into a full-blown easing cycle given that inflation and inflation expectations remain elevated.”
Vietnam will find it “very difficult” to slow inflation to 17 percent by the end of 2011, Ha Van Hien, head of the National Assembly’s Economic Committee, told the opening of the body in Hanoi on July 21. It may peak as high as 23 percent in August before slowing to 18 percent by year-end, Sofat said.
The VN Index fell 0.9 percent yesterday to 409.2, while the dong weakened 0.1 percent, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, risking costlier imports.
Food, transport costs
Food, transport and construction-material prices have stoked consumer-price growth, according to Australia & New Zealand Banking Group Ltd. Transport prices rose 21.7 percent from a year earlier in July, today’s data showed. July’s annual inflation rate is the highest in a basket of 17 Asian economies tracked by Bloomberg.
Prime Minister Nguyen Tan Dung in February cut the credit- growth target and ordered a tighter monetary policy to try to tame inflation, revive confidence in the economy and prevent another credit-rating downgrade. This month’s rate cut wasn’t a “policy signal,” the central bank said in a July 8 statement.
“We assume policymakers are again demonstrating their low tolerance for slower growth,” Christian de Guzman, a Singapore- based assistant vice president at Moody’s Investors Service, said in a note on July 11.
The nation’s economy expanded 5.6 percent from a year earlier in the first half of 2011. Moody’s said that a “tight” monetary policy would threaten the government’s full-year target of 6 percent.
‘A bit concerned’
“We are a bit concerned that the cut in rates will confuse the market about the government’s commitment to sustaining the stabilization effort under Resolution 11,” Benedict Bingham, the IMF’s senior resident representative in Vietnam, said this month. Resolution 11 refers to the steps Dung took in February.
“A strong commitment to sustaining this effort is essential to re-establishing confidence in the dong and restoring macro-economic stability more generally,” Bingham said.
The State Bank of Vietnam had increased the repurchase rate for the seven-day term from 7 percent at the start of November 2010 before this month’s cut. It appears to have become the benchmark for monetary policy, according to JPMorgan Chase & Co.
Price escalations should not be blamed on Chinese businesspeople
VNS
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce.
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce. However, experts have pointed out that the main reason behind the problem is the mismanagement.
The general Statistical Office (GSO) has announced that the CPI in July increased by 1.17 percent, which is higher than the 1.09 percent increase of June, raising the total CPI increase in the first seven months of the year to 14.6 percent.
Some analysts believe that the fact that Chinese businesspeople scrambling for farm produce has caused chaos in the market and pushed the CPI increase more sharply.
However, Dr Nguyen Van Nam, former Head of the Trade Research Institute, argued that when there are many buyers, farmers will have the chances to sell farm produce at higher prices. Meanwhile, the problems which have been arisen from the massive material collection should be blamed on the bad management of Vietnamese state agencies.
Foreign businesspeople have gained the upper hand over domestic enterprises in collecting materials in the market, while the scrambling for materials by foreign businesspeople has pushed the prices up.
According to Nam, there is no other country in the world which allows foreign businesspeople come to their countries to collect materials so easily. State management agencies should have learned to find out for what purposes the foreign businesspeople collect materials in Vietnam. It is really the thing that needs to be done. In the past, the campaigns of collecting anise roots and buffalo toenail, once sabotaged Vietnam's agricultural production.
Dr Nam believes that Vietnam should not prohibit serious foreign businesspeople, who plan long term business in Vietnam. However, they must be registered businesses and they must pay tax as stipulated by the current laws.
When carrying goods out of the national boundary, the businesses must pay tax. Meanwhile, other business activities undertaken by the businesspeople in Vietnamese territory must be supervised to be sure that the activities do not cause chaos to the domestic market.
While domestic businesspeople always bear strict supervision by the state management agencies, foreign businesspeople seem to be "given a free hand".
Dr Nam also thinks that this should be seen as a lesson for domestic enterprises and they should change the way they collect farm produce from farmers. The collection should be based on the principle of mutual benefit, while enterprises need to take act on their own initiative and don't sit at their office and ask farmers to bring farm produce.
Meanwhile, Vu Vinh Phu, Chair of the Hanoi Supermarkets' Association, has attributed the price escalations to the bad distribution network.
According to Phu, farmers sell farm produce at their fields very cheap, but customers still have to buy high. It is because the products go through many intermediary hands before reaching out to consumers. In general, the retail prices are 3-4 times higher than the original prices.
A kilogram of fish in Thanh Hoa is priced at 8000 dong, while it is selling at 30,000-40,000 dong per kilo in Hanoi. A kilogram of tomato is sold by farmers in the provinces neighbouring to Hanoi at 500 or 1000 dong, while Hanoians have to pay 8000 or 9000 dong.
In April and May, sugar refineries, which had 500,000 tonnes in stocks, sold to general sales agents at 16,000-17,000 dong per kilo only. However, the retail price on the market was 25,000 dong.
A question has been raised that why supermarkets do not cooperate with each other to force the prices down. If distributors can buy goods straightly from producers and then sell directly to consumers, the prices will be much lower.
The answer is, according to supermarket chains, they cannot contact producers and importers of essential goods.
The problem is that producers and importers do not sell goods directly to supermarkets, but they only sell to their general sales agents who will later sell the products to sales agents at lower levels.
As such, the loosened management over the wholesale activities has led to the consequences that Vietnam cannot control the retail activities.
Economic meltdown hits interior makers in central province
SGGP
An economic turmoil has force many furniture makers in the central province of Binh Dinh to reduce operation or shut down this year.
Statistics show there are 160 furniture manufacturers in the province with the total fabricating output of 345,000 cubic meters of wood per year.
Binh Dinh Province’s export turnover of furniture amounted to more than US$1.1 billion in the period of 2006 and 2010, an equivalent of nearly 61 percent of the province’s figure.
Most of local producers are small- and medium-size enterprise, which meet up quality requirements of big foreign traders.
“Local furniture makers focus solely on outsourcing. They are not eager to upgrade equipments and techniques to boost output, as well as create their exclusive patterns,” an expert told Dau Tu Tai Chinh Newspaper.
“Their competitiveness remains low due to a shortage of skilled workforce and poor cooperation with their counterparts.”
Therefore, local manufacturers struggle to weather the economic meltdown, he says.
So far this year, input cost of the furniture sector has surged more than 30 percent so far this year, while export prices have remained unchanged, according to furniture makers in Binh Dinh Province.
“A high lending rate combined with low profit margin are scaring off local producers,” says a director of a furniture maker, who asked to be unnamed.
Financial experts ask businesses should focus on interior furnishings in an effort to boost the interior output to 40 percent of the province’s figure by 2015.
The Binh Dinh Province People’s Committee announces it will subsidize 30 percent of the expense that interior makers are required to make for setting up the environment impact assessment of their investment projects.
It will also finance 15 percent of the cost of building waste water treatment system and 70 percent of the expense of training manual workers.
The local authorities help interior manufacturers to hire experts in order to improve their fabricating techniques twice a year.
The top export product from Vietnam to the EU last year was footwear, valued at 1.75 billion euros. It was followed by textiles and garments, coffee, seafood and furniture.
Developing industries and industrial zones
VOV
More than 60 percent of areas in industrial zones (IZs) and one-fourth of areas in industrial complexes (ICs) have been rented so far.
The information was announced at an international seminar on the development of industrial zones and complexes in Da Nang on July 27.
Since 1991, the country has established 260 IZs, more than 170 of which have been put into operation. IZs with an area of under 20ha account for nearly half, while IZs with an area of under 100ha make up one-fifth.
Coordination among foreign and domestic invested businesses is low, leading to weak competitiveness.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Research and Management under the Ministry of Industry and Trade, said that to further develop ICs, large international groups like Canon and Samsung need to increase their cooperation with domestic partners. He stated that by transferring technology which would help Vietnamese businesses to develop, competitiveness could be improved, thus contributing more to national GDP.
ENERGY - Vietnam expects to attain 6pct of renewable energy by 2030
Saigon Times Daily
Vietnam is determined to prioritise the development of renewable energy such as wind, solar and gas-fueled power so that this source of energy will account for 6 percent of the nation's total power output by 2030.
At the moment, the country produces a very modest amount of renewable power which is estimated at less than 3 percent of the country's total power capacity.
According to the 930 trillion dong (US$48.8 billion) national plan for power development between now and 2020 with a vision toward 2030 that was approved by the government last week, the country will produce and import 210 billion kilowatt hours by 2015 and up to 834 billion kilowatt hours by 2030 to meet the increasing power demand.
The nation, as part of the plan, aims to increase wind power capacity to up to 1,000 MW by 2020 and up to 6,200 MW by 2030 to reach 2.4 percent of total power production of the country, a remarkable development compared to a very small capacity at the moment.
The plan also prioritises developing hydropower plants, particularly ones with three combined functions of flood prevention, water supply and power production.
The capacity of hydropower generation is expected to increase to 17,400 MW by 2020, nearly double the present capacity of 9,200 MW.
Vietnam will also operate the first nuclear power generator in a decade's time. By 2030, nuclear power will contribute around 10 percent of the country's power output with total capacity of 10,700 MW.
Vietnam Electricity Group (EVN), Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Coal and Mineral Industries Group (Vinacomin) are the three companies with the responsibility of developing the power sources for the country, according to the plan.
POWER - Vietnam approves a 10 year national power development plan
VNA
VNA reported that Prime Minister Mr Nguyen Tan Dung has approved a 10 year national power development plan that targets production and import of 330 billion KWh by 2020.
Under the 2011-20 plan, 3% of this total will be imported. The remaining 97% will comprise 19.6% of hydropower, 46.8% of thermal power, 24% of gas generated power, 4.5% of renewable energy and 2.1% of nuclear power.
The competitive power market will be developed with various forms of investment in building power plants and trading of electricity. The monopolized State control of the transmission line system remains to ensure the national energy security.
Priority will be given to developing renewable energy sources including solar and wind power as well as energy production from biomass. The plan envisages electricity production from renewable sources to increase from 3.5% in 2010 to 4.5% in 2020 and 6% in 2030.
Wind power capacity will be raised to 1,000 MW in 2020 and around 6,200 MW in 2030, equivalent to 0.7% of the country’s total output in 2020 and to 2.4% in 2030. Hydropower generation will be increased from the current 9,200 MW to 17,400 MW in 2020.
By 2020, the first nuclear power plant in Viet Nam will be put into operation and in 10 years, the sector will produce a total of 10,700 MW, equivalent to 10.1% of the country’s total output.
The plan also aims to supply electricity to all families in the country’s rural areas by 2020.
RESOURCES - Dinh Vu IZ hooks big project
BusinessAsia
Drilling Mud Corporation (DMC), a PetroVietnam member and the Dinh Vu Industrial Zone (IZ) authorities have inked a land lease contract for a petrochemical service supply project.
With investment of VND270 billion ($13.04 million), the project consists of a propylene resin store, a container depot with an annual capacity of 100,000 20-foot equivalent unit (TEU) and a 5,760 square metre warehouse.
Construction of the project will be kicked-off in early fourth quarter of 2011 and the project will come online in the second quarter of 2012. The Dinh Vu petrochemical service supply base will be one of DMC’s key logistic service supply chains in northern Vietnam.
DMC’s Dinh Vu base is the fifth project of PetroVietnam’s member firms and the 35th project in Dinh Vu IZ.
DMC’s investment decision showcased the IZ’s compelling advantages with internal 20,000 dead weight tonnage general port system, convenient transport links to key areas and lucrative tax incentives for domestic and international investors, said Dinh Vu IZ Joint Stock Company deputy general director Do Thi Kim Thanh.
Petrolimex offering is well received
VIR
Petrolimex, Vietnam’s leading oil importer and distributor, raised VND412.3 billion ($20.1 million) via its initial auction on July 28 .
The state firm sold entire its offering of 27.43 million shares, representing for 2.56 per cent its registered capital, according to Hanoi Stock Exchange. The average price was VND15,032, little higher than the starting price of VND15,000.
Investors previously bid for 30.1 million shares, 10 per cent higher than the firm’s expectation. Some 304 individuals registered to purchase more than 22 million shares and three institutions bid for eight million.
That result outperformed that of big state-owned firms including Vietnam Steel in early June and Mekong Housing Bank a week ago. The steel giant sold more than 39 million shares, or 60 per cent of its total offer, at the price of just VND10,100 per share.
The state lender missed its target with 18 million shares sold, or 28 per cent of its offer, at an average price of VND11,025 per share.
Foreigners were not allowed, by Vietnam’s Ministry of Industry and Trade, to bid for the auction, due to energy security reasons.
INDUSTRY - Economic uncertainties make steel association worried
VNS
The Vietnam Steel Association (VSA) is worried that uncertainties in the national economy would deeply hurt the local steel industry despite agreeable growth.
Speaking at a seminar in Hanoi last Friday, VSA vice chair Dinh Huy Tam said steel consumption would decline compared to last year. The sector earlier targeted a growth rate of 8-10 percent in 2011.
"We can affirm that the target is unachievable and the figure may even decrease against last year," Tam said.
Tam attributed the gloomy forecast to concerns on shrinking foreign direct investment (FDI) capital disbursement while the real estate market has been frozen for a long time.
According to the Ministry of Planning and Investment, FDI disbursement in the first half of 2011 was $5.3 billion, or a slight fall of 2 percent year-on-year. Worse yet, the figure is on the downtrend, falling from $1.4 billion in March to $1 billon in April, $900 million in May and $750 million in June.
Tam also pointed out the challenges facing large steel projects in the country. The $4.5 billion Tycoon-E.United ISM steel mill project in Dung Quat, Quang Ngai Province is facing financial difficulties after the government approved it in May. "We are worried the project will be mired in unpredictable delays," Tam said.
Meanwhile, the government has withdrawn the investment license of a steel project in Ninh Thuan Province as investors Lion Group and Vinashin have failed to push it forwards. Meanwhile, the $7.5 billion Formosa steel project in Ha Tinh Province is in still its first steps of site clearance after being licensed for several years.
Last year, the local steel sector fetched $1 billion in export value while it spent up to $7 billion on imports of both materials and finished products.
In fact, the sector still posted growth in the first half of 2011. According to VSA, construction steel consumption reached over 2.4 million tonnes, a 12 percent year-on-year increase while steel output was 2.6 million tonnes.
Consumption of steel pipe, cold rolled steel and plated iron sheet grew by 20 percent, 24 percent and 43 percent respectively.
Industrial growth slows to just 8.8pct in Jan-Jul
VNS
The country's Index of Industrial Production (IIP) slowed during the first seven months of this year to 8.8 percent, according to a general Statistical Office (GSO) report.
Production lowered due to the modest 1.7 percent growth rate experienced by the mining industry while the manufacturing and power-gas- water sectors experienced growth rates of between 11.9 and 10 percent.
Unsatisfactory performance was additionally attributed to the slow consumption power experienced in the textiles, beverage, footwear, cement, fruit and vegetable processing industries, according to the GSO.
Meanwhile, the stockpile index of petroleum rose by 92.4 percent against the same period last year while the indices of furniture and beverages surged by 84.4 percent and 73.5 percent, respectively.
However, some industrial sectors did manage to record significant growth rates over the January-July period including 18.2 percent in fibre and cloth, 14.3 percent in steel and 14.2 percent in automobile production.
Earlier, minister of Industry and Trade Vu Huy Hoang said that local industries, already feeling the pinch, were set to experience more hardships during the next several months.
An increase in global commodity prices on the back of rising oil prices was expected to have a serious impact on local manufacturing and production sectors, Hoang said.
He continued by saying that, in order to maintain growth rates, industrial producers needed to strengthen measures aimed at controlling inflation, using only domestically produced machinery and materials in order to minimise negative impacts resulting from dependence on imports.
FINANCE - Vietnam money supply must increase to avoid stagflation
Reuters
Vietnam’s central bank should pump more money into the economy, while taking care to ensure it doesn’t fuel inflation, a senior Vietnamese government advisor said.
Money supply expanded at 2.45 percent in the first six months of the year, well below the government’s 16 percent annual target, which has also led to slowing credit growth in the country.
"Money supply has been too tight in the last six months. Money should be supplied equally throughout the year," Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee said.
"Raising money supply doesn’t mean loosening monetary policy," he said on the sidelines of a meeting on Friday.
Overly tight money supply could also reduce production of goods and therefore raise inflation, he said. "We need to avoid stagflation," Nghia said.
July’s consumer price index hit 22.16 percent year on year.
"The central bank is going to accelerate anti-dollarization measures," Nghia said, referring to the practice of making dollar loans less attractive by raising banks’ foreign currency reserve ratio, increasing demand for dong loans.
By June 20, dong-denominated loans have risen by a mere 2,76 percent this year, compared with 23,47 percent growth in dollar loans, central bank data shows.
The other fallout of the faster jump in dollar loans is the pressure on the exchange rate at the time of repayment, Nghia warned.
"This could create huge demand for foreign currency at the end of the year when dollars loans are due and if dollars supply from the export market is difficult at the same time it would cause tension to build in foreign currency market," he said.
"We have been informing the government to come up with measures right now to avoid that risk."
Six-month terms interbank interest rate falls over 4pct
SBV
On July 25, the interbank interest rate fell in most terms, of which the 6-month term interest rate decreased from 18 percent on July 21 to 13.88 percent per annum (p.a.), State Bank of Vietnam (SBV) posted on its website.
In particular, the overnight interest rate slipped from 12.78 percent p.a. to 12.73 percent p.a. and the interest rate for one-month term declined by 0.46 percent from 12.58 percent p.a. to 12.12 percent p.a.
Notably, the six-month term interest rate decreased from the highest 18 percent p.a. to 13.88 percent p.a. and the 3-month term interest rate stood at the highest 14.01 percent p.a.
In the previous week, while 6-month interest rate climbed to 18 percent p.a., the central bank net withdrew two trillion dong in the week.
According to Thang Long Securities Joint Stock Co, the central bank's move of money withdrawal made the interest rate on interbank market increase again, especially when refinancing terms fall due by the end of July.
Presently, the interest rate on open market operations (OMO) stands at 14 percent p.a. for 7-day term.
Petroleum fund comes under scrutiny
VIR
The State Audit of Vietnam (SAV) is looking into the use of the petroleum price stabilisation fund from July 22 to the end of August.
The audit will focus on nine petroleum wholesalers, including the state-owned Vietnam National Petroleum Corp (Petrolimex) and PetroVietnam Oil Corp (PV Oil).
The Ministry of Industry and Trade, along with the Ministry of Finance will also come under scrutiny for their responsibility in overseeing the fund.
The inspection, which focuses on period between 2009 and 2010, aims to find the details about how the fund was operated and used, as well as uncover any possible misuses.
The audit, it is hoped, will clear away doubts about Petrolimex’s transparency, following the recent release of its financial reports for the period from 2008 to 2010. After having claimed large losses for years, the state-owned petroleum trading firm released financial reports that showed profits.
Still, an anonymous SAV official said that the inquiry would not focus on these discrepancies in Petrolimex’s bookkeeping, but on the overall efficiency and use of the fund.
From October 22, 2010 through to February 24 this year, the country has used VND6.369 trillion ($307.7 million) from the petroleum price stabilisation fund to help stabilise the domestic petroleum market because of fluctuations in world prices.
CONSTRUCTION - New circulars regulate construction contracts
VNS
The Ministry of Construction issued Circular 09/20111/TT-BXD on June 28, establishing templates for construction contracts using 30 per cent or more of State capital, including funds from the State budget, official development assistance (ODA), State development credit, credit capital guaranteed by the State, and investments by State-owned enterprises.
The construction contract templates attached to Circular 09 guide the relationship between investor and contractor and between general contractor and subcontractor, and they include equipment installation contracts. The accompanying regulations on contract prices and payments vary depending on the type of contract, and a single contract may include various types of services and be subject to different regulations.
Regulations on contractual provisions, work volume, hiring consultants, advance payments, performance security, warranty, payment time limits, installment payments, suspension and termination of the contract, and other provisions are expressly subjected to Government Decree No 48/2010/ND-CP of May 2010. The new circular takes effect on August 15.
On the same day, the ministry also issued Circular 08/2010/TT-BXD, establishing a contract template for consultancy in construction works using 30 per cent or more State capital, including surveys, financial and investment consultancy, consultancy on preparation of technological reports or feasibility studies for construction works, and design consultancy.
Circular No 08 includes a construction consultancy contract template which can be modified by investor and contractor based on the specific consulting work to be offered for tender.
The circular also requires contracts to specify work volume, requirements of quality and quantity, payment provisions, contract performance security (if any), settlement, term, and termination. This circular also takes effect on August 15.
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INVESTMENT – Vietnam tries to attract more FDI from Japan
The Saigon Times Daily
Local agencies are rushing to develop investment promotion programmes aimed at attracting foreign direct investment (FDI) from Japan as instructed by the prime minister, said a Ministry of Planning and Investment official.
Do Nhat Hoang, director general of the ministry's Foreign Investment Agency, told a press conference in Hanoi on Tuesday that several programmes in collaboration with Japanese partners have been put on the agenda.
The press conference was held to brief reporters of the conference titled "Japan's Recovery Scenarios - The Outbound Investment Trends" that would be held in Hanoi next month by the ministry and Japan's Nikkei newspaper.
Hoang told reporters that the conference and other forthcoming events were "programmes to be launched at the instruction of the prime minister."
The conference next month will have the participation of about 300 Japan-based enterprises and discuss investment opportunities in Vietnam.
The Ministry of Planning and Investment will also organise another conference in association with the Japan Business Federation, commonly known as Keidanren, on Vietnam's supporting industries in Tokyo, Hoang said. Currently, deputy minister Dang Huy Dong is in Tokyo to discuss the organising of conferences on investment in Vietnam's infrastructure projects under the public-private partnership.
Besides, some other localities have also prepared road shows to attract Japanese investors.
The HCM City government, for example, will organise an investment promotion trip to Tokyo in September or October, while Dong Nai Province would also schedule a conference next Friday to attract investment from Japan, Hoang said.
January-July FDI disbursement of Japan's projects in Vietnam dropped to $720 million from $1.3 billion of the same period last year, said the Foreign Investment Agency's head.
The Nikkei newspaper said many Japan-based enterprises wanted to invest overseas after their country was hit by the earthquake and tsunami last March. Besides, when considering investment opportunities in Vietnam, Japan would not take the unstable economy serious as inflation was a global issue.
HCM City, Delta show opportunities to investors
saigon-gpdaily
Investor when thinking of putting money into Vietnam's Mekong Delta should give top priorities to fisheries, then agriculture and forestry,Agriculture deputy minister Luong Le Phuong told an investment promotion conference in HCM City Tuesday
Phuong was addressing as a key speaker at the conference, held to introduce to both local and foreign investors potentials and advantages of HCM City and the 13 Mekong provinces.
The provinces are Ca Mau, An Giang,, Long An, Ben Tre, Dong Thap, Soc Trang, Bac Lieu, Hau Giang, Tra Vinh, Can Tho City, Kien Giang, Tien Giang, and Vinh Long.
The investment promotion conference, which saw more than 500 delegates, is part of the Mekong Delta Economic Cooperation-Ca Mau 2011 Forum.
Deputy minister Phuong said among fisheries, agriculture and forestry, the first one is the fastest profit-making area.
The sector includes catching fish and aquaculture, as well as processing aqua-products for export, he added.
The delta has seen its total aquaculture acreage increase from 233,500 hectares in 2000 to 746,000 hectares last year, with output soaring from 444,000 tonnes in 2001 to 1.94 million tonnes in 2011, said Phuong.
According to him, Vietnam houses more than 500 aqua-product processing factories. Of them, 330 have been put into the European Union-accepted list, and more than 70 percent of the EU-accepted factories are located in the Mekong Delta.
Vietnam's prime minister Nguyen Tan Dung established in March 2010 the Mekong Delta Economic Cooperation, or MDEC, to further support the whole region's development. MDEC-Ca Mau 2011 is part of MDEC.
The delta region contributes over half of the country's rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the MDEC Secretariat.
In introduction, the secretariat says HCM City and the Mekong Delta hold lots of advantages for agriculture (agriculture, fisheries and forestry) and marine economy. The two regions are endowed with a convenient network of transportation that includes roads, air routes and waterways.
HCM City and the 13 provinces cover nearly 4.3 million square km, making up 13 percent of Vietnam's area.
The delta has about 2.63 million hectares of farmland, including 1.9 million ha fore rice, almost 576,000 ha for fruits and over 746,000 ha for aquaculture, according to the secretariat.
During the full-day conference in HCM City, investment promotion officials from all the 13 delta provinces displayed their economic potentials and advantages at a sideline show.
The delta has a total of 151 industrial parks. Can Tho City and the provinces of Long An and Kien Giang have attracted more investment capital from HCM City than others, the secretariat says.
Long An, which borders HCM City, has attracted from the city 420 projects worth more than VND60 trillion (US$2.9 billion) since 2000.
Kien Giang has received 103 projects worth VND88 trillion ($4.2 billion) over the past five years.
Can Tho City, the Delta's hub, reports it has attracted 61 investment projects worth VND23 trillion (US$1.1 billion) over the past 10 years. Most projects are in tourism, infrastructure development and retailing.
The investment promotion conference called for capital into such fields as high-tech agriculture; processing and preservation of post-harvest agricultural products; trade; infrastructure; agricultural services; development of material zones; and other agricultural activities.
Speaking at a meeting held Monday to review economic development cooperation between HCM City and the Delta, city chair Le Hoang Quan said the metropolitan government has actively promoted the Delta's business opportunities to foreign and local investors.
He said the city has worked with several sectors, including infrastructure development, environmental protection, healthcare, hydropower development and others.
After the investment conference, a workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.
October will also see a conference on promoting the delta's development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.
In addition, the province will host the Leaders Conference on MDEC-Ca Mau 2011 in the same month.
INFRASTRUCTURE - Japan, US agencies to sponsor major projects
BusinessAsia
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries.
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries under the public-private partnership (PPP) model.
JICA and USAID expect to implement their first project in Vietnam and are next year scheduled to propose a plan to the Vietnamese Government, to establish a new investment fund.
JICA plans to set up a fund worth 400-500 million USD in March 2012 for PPP projects and contribute to the fund with investments or loans.
USAID will guarantee half of the value of projects’ loans and seek cooperation from Vietnamese and US financial organisations.
The projects of the two agencies’ cooperative strategy include power plants and other energy establishments, information and telecommunications, roads, traffic and sewerage and water supply systems./.
Foreign firms now opt for imports over production
VIR
For example, UK-backed oil and gas maker Castrol BP Petco Company and French-backed tyre maker Michelin Group supplemented business codes to boost imports.
Swedish-backed Tetra Pak, the world’s leading food processing and packaging company, and Japanese-backed Panasonic AVC Vietnam have all stepped up importation business arms in Vietnam.
Meanwhile, South Korean-backed Samsung Vina supplemented its business codes to boost distribution in Vietnam.
The list also includes Japanese-owned electronics firms like Sony, Toshiba, Sanyo, Sharp, Hitachi and South Korean-backed Kumho Tire which have also been approved to import electronic products and tyres and then sell directly in Vietnam.
Yuzo Otsuki, general director of Sony Vietnam which disbanded its joint venture with locally-owned Tan Binh Electronics Company late last year to focus on importing electronic products into Vietnam, said: “The company’s business grew by 60 per cent in 2010 and is expected to continue growing at the same rate this year, with many new [imported] products marketed in Vietnam.”
Dao Ngoc Hoang Giang, general director of Ho Chi Minh City-based Sao Mai Office Equipment Joint Stock Company under locally-owned Sao Mai Group specialised in importing office equipment, said many FIEs like Japanese-backed Fuji Xerox and Sharp had applied for permission to wholesale and retail their imported products in Vietnam.
Mochizuki Kentaro, chairman of Sanyo HA Asean Corporation, said previously, firms were slapped an average import tax level of 50 per cent when they imported goods into Vietnam. When Vietnam joined the ASEAN Free Trade Agreement in 1995, the tax level was reduced to 20 per cent and then 5 per cent as is the case now. The reduction meant that investors would choose to become importers, not manufacturers.
Vietnam Customs reported that the foreign direct investment sector’s total import turnover in the year’s first six months was $27.5 billion, up 23 per cent against last year’s corresponding period.
Before Vietnam joined the WTO, FIEs enjoyed various priorities on the understanding that they invested into manufacturing in Vietnam to generate employment. They were allowed to import goods to serve their manufacturing in the country, not to directly trade and distribute them in this domestic market.
However, when Vietnam became a full WTO member, many FIEs took advantage of the distribution rights to import goods from their overseas companies and then resell them in Vietnam.
For example, with current import tariffs of 3-20 per cent for electronic components, and 5 per cent for completely-built electronic goods, electronics firms have chosen to become importers.
An expert from Thanh Hoa Provincial Department of Planning and Investment’s International Relations Division said with fewer employees and curtailed costs of manufacturing and land leasing, “it is clear that importing is more profitable than manufacturing.”
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the Vietnamese government targeted to lure foreign direct investment into manufacturing sector, not in non-production sectors.
“It will need more time to revise all related regulations governing FIEs’ operations in Vietnam,” he said.
TRADE – GOOD NEWS - Most EU states want to terminate Vietnam shoe duties
Reuters
The European Commission is expected to decide in September whether to propose extending dumping duties on imports of leather shoes from Vietnam, but most EU states want them scrapped, EU sources said.
Last October, the Commission which oversees trade policy for the 27- country European Union extended duties of up to 10 percent on Vietnamese leather shoes and 16.5 percent on those made in China, pending a review.
A majority of EU countries had opposed that move.
Industry and diplomatic sources with knowledge of the case told Reuters last Friday they expected Brussels to complete its review and submit its proposal for approval by member states by the end of September.
The Commissions proposal is expected to be submitted to member states in September. But as it stands the majority, or at least 15 member states, favor termination, one source said.
Britain, Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden want the duties scrapped immediately, before the lucrative Christmas retail period, an EU diplomat said.
Major shoe-producing countries like Italy, Spain, France and Poland are all leading the charge to keep the duties, the diplomat added.
EU is the largest market for Vietnamese leather shoes and Vietnam is also the second biggest exporter of the products to EU, after China.
Last year the bloc imported US$2.5 billion worth of leather shoes from Vietnam, up 33.9 percent from 2006, figures from the Vietnam Leather and Footwear Association show.
The Ministry of Industry and Trade has asked local footwear exporters to strengthen their sales to EU as the demand for footwear imports of the bloc is expected to increase by 5.3 percent this year.
Vietnams total footwear exports in the first half this year dropped by 8.8 percent to $2 billion compared to the same period last year. However, the Vietnam Leather and Footwear Association noted that export figures have already improved since the second quarter.
EU split
The EU regularly splits over dumping cases between its member countries supporting freer trade and those worried about competition against their own manufacturers.
The shoe duties were introduced in 2006 only after a compromise deal to keep them in place for just two years, instead of the usual five. If extended again, Commission sources say the duties would last at least five years.
But the industry and diplomatic sources said a compromise being considered by EU Trade Commissioner Catherine Ashton a Briton would allow the duties to lapse once they expire on January 3.
This would give certainty either way to EU importers before the busy Christmas period and at the same time allow EU producers the time to adapt and plan against cheaper imports from Asia, another source said.
European retailers and global shoemakers, led by sports shoe producers such as Adidas, Asics, Nike and Puma want the shoe taxes axed given the gloomy economic outlook and dwindling consumer spending in Europe caused by the worst financial crisis in about 80 years.
But European manufacturers say they are unable to compete against low-cost producers in China and Vietnam and accuse those Asian governments of giving unfair subsidies that lower costs.
A review can take between 12 and 15 months, but the Commission had said it hoped to complete its work more quickly. It said it could reimburse the extra tariffs imposed during the review should it be proven that the duties were unnecessary.
If we get a termination, that will be enough. We are not going to try and make life any harder for ourselves and threaten the Commission, a representative from an EU importer said.
FIE losses turn to profits
VIR
The alarming tax evasion trend in foreign-invested enterprises is easing.
Nguyen Trong Hanh, deputy director of Ho Chi Minh City Department of Taxation, said while 60 per cent of foreign invested enterprises (FIEs) operating in the city had reported losses for many years, in the first seven months of 2011, 30-40 per cent of these enterprises reported profits.
The city’s tax collection reached 67 per cent of its annual plan of VND110.4 trillion ($5.3 billion) for this year and increased by 23 per cent compared to the same period last year.
Hanh said the department had worked with about 40 FIEs and found “fake loss” situations at most of the enterprises.
“After being inspected, most of these enterprises’ financial reports showed profits. Especially, an enterprise reported a profit of more than VND100 billion ($4.8 million) after reporting losses for 10 consecutive years,” he added.
It was a similar story at 17 FIEs who produced and traded tea in Lam Dong province. For the past 10 years, the Lam Dong Department of Taxation did not collect any corporate income tax (CIT) from these enterprises who reported losses for consecutive years.
However, Lam Dong Department of Taxation deputy head Phan Thi Vinh said after inspections, many FIEs admitted the” fake loss” situation by transfer pricing.
“After establishing that these enterprises made profits since 2005, the department collected tax arrears with the collected tax of VND8 billion ($386,473) because these enterprises still enjoyed a 50 per cent CIT tax reduction rate in accordance with Vietnam’s preferential tax policy for FIEs,” said Vinh.
According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 FIEs as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2,230 billion ($107 million).
As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years. The GDT’s Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance (MoF) across 2011.
The MoF said it was considering amending the Tax Management Law which would set additional provisions to treat tax frauds and price transfer. It is expected that the amended law would be submitted to the National Assembly for ratification by 2012.
ECONOMY - Vietnam inflation accelerates to 22.16 pct, highest level in Asia
Bloomberg
Food, transport and construction-material prices have stoked consumer-price growth in Vietnam.
Vietnamese inflation accelerated for an 11th month in July after the central bank cut a key interest rate even as the nation faces the fastest price gains in Asia.
Consumer prices rose 22.16 percent from a year earlier, compared with June’s 20.82 percent pace, data released by the General Statistics Office in Hanoi showed today. Prices climbed 1.17 percent from June.
The central bank reduced its repurchase rate to 14 percent from 15 percent on July 4 after a spate of increases since November to fight inflation, leading the International Monetary Fund to say the cut may confuse investors. The benchmark VN Index of stocks is down 16 percent this year, on concern price gains will hurt the economy.
“The markets were very surprised by the easing,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “It’s too early to go into a full-blown easing cycle given that inflation and inflation expectations remain elevated.”
Vietnam will find it “very difficult” to slow inflation to 17 percent by the end of 2011, Ha Van Hien, head of the National Assembly’s Economic Committee, told the opening of the body in Hanoi on July 21. It may peak as high as 23 percent in August before slowing to 18 percent by year-end, Sofat said.
The VN Index fell 0.9 percent yesterday to 409.2, while the dong weakened 0.1 percent, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, risking costlier imports.
Food, transport costs
Food, transport and construction-material prices have stoked consumer-price growth, according to Australia & New Zealand Banking Group Ltd. Transport prices rose 21.7 percent from a year earlier in July, today’s data showed. July’s annual inflation rate is the highest in a basket of 17 Asian economies tracked by Bloomberg.
Prime Minister Nguyen Tan Dung in February cut the credit- growth target and ordered a tighter monetary policy to try to tame inflation, revive confidence in the economy and prevent another credit-rating downgrade. This month’s rate cut wasn’t a “policy signal,” the central bank said in a July 8 statement.
“We assume policymakers are again demonstrating their low tolerance for slower growth,” Christian de Guzman, a Singapore- based assistant vice president at Moody’s Investors Service, said in a note on July 11.
The nation’s economy expanded 5.6 percent from a year earlier in the first half of 2011. Moody’s said that a “tight” monetary policy would threaten the government’s full-year target of 6 percent.
‘A bit concerned’
“We are a bit concerned that the cut in rates will confuse the market about the government’s commitment to sustaining the stabilization effort under Resolution 11,” Benedict Bingham, the IMF’s senior resident representative in Vietnam, said this month. Resolution 11 refers to the steps Dung took in February.
“A strong commitment to sustaining this effort is essential to re-establishing confidence in the dong and restoring macro-economic stability more generally,” Bingham said.
The State Bank of Vietnam had increased the repurchase rate for the seven-day term from 7 percent at the start of November 2010 before this month’s cut. It appears to have become the benchmark for monetary policy, according to JPMorgan Chase & Co.
Price escalations should not be blamed on Chinese businesspeople
VNS
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce.
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce. However, experts have pointed out that the main reason behind the problem is the mismanagement.
The general Statistical Office (GSO) has announced that the CPI in July increased by 1.17 percent, which is higher than the 1.09 percent increase of June, raising the total CPI increase in the first seven months of the year to 14.6 percent.
Some analysts believe that the fact that Chinese businesspeople scrambling for farm produce has caused chaos in the market and pushed the CPI increase more sharply.
However, Dr Nguyen Van Nam, former Head of the Trade Research Institute, argued that when there are many buyers, farmers will have the chances to sell farm produce at higher prices. Meanwhile, the problems which have been arisen from the massive material collection should be blamed on the bad management of Vietnamese state agencies.
Foreign businesspeople have gained the upper hand over domestic enterprises in collecting materials in the market, while the scrambling for materials by foreign businesspeople has pushed the prices up.
According to Nam, there is no other country in the world which allows foreign businesspeople come to their countries to collect materials so easily. State management agencies should have learned to find out for what purposes the foreign businesspeople collect materials in Vietnam. It is really the thing that needs to be done. In the past, the campaigns of collecting anise roots and buffalo toenail, once sabotaged Vietnam's agricultural production.
Dr Nam believes that Vietnam should not prohibit serious foreign businesspeople, who plan long term business in Vietnam. However, they must be registered businesses and they must pay tax as stipulated by the current laws.
When carrying goods out of the national boundary, the businesses must pay tax. Meanwhile, other business activities undertaken by the businesspeople in Vietnamese territory must be supervised to be sure that the activities do not cause chaos to the domestic market.
While domestic businesspeople always bear strict supervision by the state management agencies, foreign businesspeople seem to be "given a free hand".
Dr Nam also thinks that this should be seen as a lesson for domestic enterprises and they should change the way they collect farm produce from farmers. The collection should be based on the principle of mutual benefit, while enterprises need to take act on their own initiative and don't sit at their office and ask farmers to bring farm produce.
Meanwhile, Vu Vinh Phu, Chair of the Hanoi Supermarkets' Association, has attributed the price escalations to the bad distribution network.
According to Phu, farmers sell farm produce at their fields very cheap, but customers still have to buy high. It is because the products go through many intermediary hands before reaching out to consumers. In general, the retail prices are 3-4 times higher than the original prices.
A kilogram of fish in Thanh Hoa is priced at 8000 dong, while it is selling at 30,000-40,000 dong per kilo in Hanoi. A kilogram of tomato is sold by farmers in the provinces neighbouring to Hanoi at 500 or 1000 dong, while Hanoians have to pay 8000 or 9000 dong.
In April and May, sugar refineries, which had 500,000 tonnes in stocks, sold to general sales agents at 16,000-17,000 dong per kilo only. However, the retail price on the market was 25,000 dong.
A question has been raised that why supermarkets do not cooperate with each other to force the prices down. If distributors can buy goods straightly from producers and then sell directly to consumers, the prices will be much lower.
The answer is, according to supermarket chains, they cannot contact producers and importers of essential goods.
The problem is that producers and importers do not sell goods directly to supermarkets, but they only sell to their general sales agents who will later sell the products to sales agents at lower levels.
As such, the loosened management over the wholesale activities has led to the consequences that Vietnam cannot control the retail activities.
Economic meltdown hits interior makers in central province
SGGP
An economic turmoil has force many furniture makers in the central province of Binh Dinh to reduce operation or shut down this year.
Statistics show there are 160 furniture manufacturers in the province with the total fabricating output of 345,000 cubic meters of wood per year.
Binh Dinh Province’s export turnover of furniture amounted to more than US$1.1 billion in the period of 2006 and 2010, an equivalent of nearly 61 percent of the province’s figure.
Most of local producers are small- and medium-size enterprise, which meet up quality requirements of big foreign traders.
“Local furniture makers focus solely on outsourcing. They are not eager to upgrade equipments and techniques to boost output, as well as create their exclusive patterns,” an expert told Dau Tu Tai Chinh Newspaper.
“Their competitiveness remains low due to a shortage of skilled workforce and poor cooperation with their counterparts.”
Therefore, local manufacturers struggle to weather the economic meltdown, he says.
So far this year, input cost of the furniture sector has surged more than 30 percent so far this year, while export prices have remained unchanged, according to furniture makers in Binh Dinh Province.
“A high lending rate combined with low profit margin are scaring off local producers,” says a director of a furniture maker, who asked to be unnamed.
Financial experts ask businesses should focus on interior furnishings in an effort to boost the interior output to 40 percent of the province’s figure by 2015.
The Binh Dinh Province People’s Committee announces it will subsidize 30 percent of the expense that interior makers are required to make for setting up the environment impact assessment of their investment projects.
It will also finance 15 percent of the cost of building waste water treatment system and 70 percent of the expense of training manual workers.
The local authorities help interior manufacturers to hire experts in order to improve their fabricating techniques twice a year.
The top export product from Vietnam to the EU last year was footwear, valued at 1.75 billion euros. It was followed by textiles and garments, coffee, seafood and furniture.
Developing industries and industrial zones
VOV
More than 60 percent of areas in industrial zones (IZs) and one-fourth of areas in industrial complexes (ICs) have been rented so far.
The information was announced at an international seminar on the development of industrial zones and complexes in Da Nang on July 27.
Since 1991, the country has established 260 IZs, more than 170 of which have been put into operation. IZs with an area of under 20ha account for nearly half, while IZs with an area of under 100ha make up one-fifth.
Coordination among foreign and domestic invested businesses is low, leading to weak competitiveness.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Research and Management under the Ministry of Industry and Trade, said that to further develop ICs, large international groups like Canon and Samsung need to increase their cooperation with domestic partners. He stated that by transferring technology which would help Vietnamese businesses to develop, competitiveness could be improved, thus contributing more to national GDP.
ENERGY - Vietnam expects to attain 6pct of renewable energy by 2030
Saigon Times Daily
Vietnam is determined to prioritise the development of renewable energy such as wind, solar and gas-fueled power so that this source of energy will account for 6 percent of the nation's total power output by 2030.
At the moment, the country produces a very modest amount of renewable power which is estimated at less than 3 percent of the country's total power capacity.
According to the 930 trillion dong (US$48.8 billion) national plan for power development between now and 2020 with a vision toward 2030 that was approved by the government last week, the country will produce and import 210 billion kilowatt hours by 2015 and up to 834 billion kilowatt hours by 2030 to meet the increasing power demand.
The nation, as part of the plan, aims to increase wind power capacity to up to 1,000 MW by 2020 and up to 6,200 MW by 2030 to reach 2.4 percent of total power production of the country, a remarkable development compared to a very small capacity at the moment.
The plan also prioritises developing hydropower plants, particularly ones with three combined functions of flood prevention, water supply and power production.
The capacity of hydropower generation is expected to increase to 17,400 MW by 2020, nearly double the present capacity of 9,200 MW.
Vietnam will also operate the first nuclear power generator in a decade's time. By 2030, nuclear power will contribute around 10 percent of the country's power output with total capacity of 10,700 MW.
Vietnam Electricity Group (EVN), Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Coal and Mineral Industries Group (Vinacomin) are the three companies with the responsibility of developing the power sources for the country, according to the plan.
POWER - Vietnam approves a 10 year national power development plan
VNA
VNA reported that Prime Minister Mr Nguyen Tan Dung has approved a 10 year national power development plan that targets production and import of 330 billion KWh by 2020.
Under the 2011-20 plan, 3% of this total will be imported. The remaining 97% will comprise 19.6% of hydropower, 46.8% of thermal power, 24% of gas generated power, 4.5% of renewable energy and 2.1% of nuclear power.
The competitive power market will be developed with various forms of investment in building power plants and trading of electricity. The monopolized State control of the transmission line system remains to ensure the national energy security.
Priority will be given to developing renewable energy sources including solar and wind power as well as energy production from biomass. The plan envisages electricity production from renewable sources to increase from 3.5% in 2010 to 4.5% in 2020 and 6% in 2030.
Wind power capacity will be raised to 1,000 MW in 2020 and around 6,200 MW in 2030, equivalent to 0.7% of the country’s total output in 2020 and to 2.4% in 2030. Hydropower generation will be increased from the current 9,200 MW to 17,400 MW in 2020.
By 2020, the first nuclear power plant in Viet Nam will be put into operation and in 10 years, the sector will produce a total of 10,700 MW, equivalent to 10.1% of the country’s total output.
The plan also aims to supply electricity to all families in the country’s rural areas by 2020.
RESOURCES - Dinh Vu IZ hooks big project
BusinessAsia
Drilling Mud Corporation (DMC), a PetroVietnam member and the Dinh Vu Industrial Zone (IZ) authorities have inked a land lease contract for a petrochemical service supply project.
With investment of VND270 billion ($13.04 million), the project consists of a propylene resin store, a container depot with an annual capacity of 100,000 20-foot equivalent unit (TEU) and a 5,760 square metre warehouse.
Construction of the project will be kicked-off in early fourth quarter of 2011 and the project will come online in the second quarter of 2012. The Dinh Vu petrochemical service supply base will be one of DMC’s key logistic service supply chains in northern Vietnam.
DMC’s Dinh Vu base is the fifth project of PetroVietnam’s member firms and the 35th project in Dinh Vu IZ.
DMC’s investment decision showcased the IZ’s compelling advantages with internal 20,000 dead weight tonnage general port system, convenient transport links to key areas and lucrative tax incentives for domestic and international investors, said Dinh Vu IZ Joint Stock Company deputy general director Do Thi Kim Thanh.
Petrolimex offering is well received
VIR
Petrolimex, Vietnam’s leading oil importer and distributor, raised VND412.3 billion ($20.1 million) via its initial auction on July 28 .
The state firm sold entire its offering of 27.43 million shares, representing for 2.56 per cent its registered capital, according to Hanoi Stock Exchange. The average price was VND15,032, little higher than the starting price of VND15,000.
Investors previously bid for 30.1 million shares, 10 per cent higher than the firm’s expectation. Some 304 individuals registered to purchase more than 22 million shares and three institutions bid for eight million.
That result outperformed that of big state-owned firms including Vietnam Steel in early June and Mekong Housing Bank a week ago. The steel giant sold more than 39 million shares, or 60 per cent of its total offer, at the price of just VND10,100 per share.
The state lender missed its target with 18 million shares sold, or 28 per cent of its offer, at an average price of VND11,025 per share.
Foreigners were not allowed, by Vietnam’s Ministry of Industry and Trade, to bid for the auction, due to energy security reasons.
INDUSTRY - Economic uncertainties make steel association worried
VNS
The Vietnam Steel Association (VSA) is worried that uncertainties in the national economy would deeply hurt the local steel industry despite agreeable growth.
Speaking at a seminar in Hanoi last Friday, VSA vice chair Dinh Huy Tam said steel consumption would decline compared to last year. The sector earlier targeted a growth rate of 8-10 percent in 2011.
"We can affirm that the target is unachievable and the figure may even decrease against last year," Tam said.
Tam attributed the gloomy forecast to concerns on shrinking foreign direct investment (FDI) capital disbursement while the real estate market has been frozen for a long time.
According to the Ministry of Planning and Investment, FDI disbursement in the first half of 2011 was $5.3 billion, or a slight fall of 2 percent year-on-year. Worse yet, the figure is on the downtrend, falling from $1.4 billion in March to $1 billon in April, $900 million in May and $750 million in June.
Tam also pointed out the challenges facing large steel projects in the country. The $4.5 billion Tycoon-E.United ISM steel mill project in Dung Quat, Quang Ngai Province is facing financial difficulties after the government approved it in May. "We are worried the project will be mired in unpredictable delays," Tam said.
Meanwhile, the government has withdrawn the investment license of a steel project in Ninh Thuan Province as investors Lion Group and Vinashin have failed to push it forwards. Meanwhile, the $7.5 billion Formosa steel project in Ha Tinh Province is in still its first steps of site clearance after being licensed for several years.
Last year, the local steel sector fetched $1 billion in export value while it spent up to $7 billion on imports of both materials and finished products.
In fact, the sector still posted growth in the first half of 2011. According to VSA, construction steel consumption reached over 2.4 million tonnes, a 12 percent year-on-year increase while steel output was 2.6 million tonnes.
Consumption of steel pipe, cold rolled steel and plated iron sheet grew by 20 percent, 24 percent and 43 percent respectively.
Industrial growth slows to just 8.8pct in Jan-Jul
VNS
The country's Index of Industrial Production (IIP) slowed during the first seven months of this year to 8.8 percent, according to a general Statistical Office (GSO) report.
Production lowered due to the modest 1.7 percent growth rate experienced by the mining industry while the manufacturing and power-gas- water sectors experienced growth rates of between 11.9 and 10 percent.
Unsatisfactory performance was additionally attributed to the slow consumption power experienced in the textiles, beverage, footwear, cement, fruit and vegetable processing industries, according to the GSO.
Meanwhile, the stockpile index of petroleum rose by 92.4 percent against the same period last year while the indices of furniture and beverages surged by 84.4 percent and 73.5 percent, respectively.
However, some industrial sectors did manage to record significant growth rates over the January-July period including 18.2 percent in fibre and cloth, 14.3 percent in steel and 14.2 percent in automobile production.
Earlier, minister of Industry and Trade Vu Huy Hoang said that local industries, already feeling the pinch, were set to experience more hardships during the next several months.
An increase in global commodity prices on the back of rising oil prices was expected to have a serious impact on local manufacturing and production sectors, Hoang said.
He continued by saying that, in order to maintain growth rates, industrial producers needed to strengthen measures aimed at controlling inflation, using only domestically produced machinery and materials in order to minimise negative impacts resulting from dependence on imports.
FINANCE - Vietnam money supply must increase to avoid stagflation
Reuters
Vietnam’s central bank should pump more money into the economy, while taking care to ensure it doesn’t fuel inflation, a senior Vietnamese government advisor said.
Money supply expanded at 2.45 percent in the first six months of the year, well below the government’s 16 percent annual target, which has also led to slowing credit growth in the country.
"Money supply has been too tight in the last six months. Money should be supplied equally throughout the year," Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee said.
"Raising money supply doesn’t mean loosening monetary policy," he said on the sidelines of a meeting on Friday.
Overly tight money supply could also reduce production of goods and therefore raise inflation, he said. "We need to avoid stagflation," Nghia said.
July’s consumer price index hit 22.16 percent year on year.
"The central bank is going to accelerate anti-dollarization measures," Nghia said, referring to the practice of making dollar loans less attractive by raising banks’ foreign currency reserve ratio, increasing demand for dong loans.
By June 20, dong-denominated loans have risen by a mere 2,76 percent this year, compared with 23,47 percent growth in dollar loans, central bank data shows.
The other fallout of the faster jump in dollar loans is the pressure on the exchange rate at the time of repayment, Nghia warned.
"This could create huge demand for foreign currency at the end of the year when dollars loans are due and if dollars supply from the export market is difficult at the same time it would cause tension to build in foreign currency market," he said.
"We have been informing the government to come up with measures right now to avoid that risk."
Six-month terms interbank interest rate falls over 4pct
SBV
On July 25, the interbank interest rate fell in most terms, of which the 6-month term interest rate decreased from 18 percent on July 21 to 13.88 percent per annum (p.a.), State Bank of Vietnam (SBV) posted on its website.
In particular, the overnight interest rate slipped from 12.78 percent p.a. to 12.73 percent p.a. and the interest rate for one-month term declined by 0.46 percent from 12.58 percent p.a. to 12.12 percent p.a.
Notably, the six-month term interest rate decreased from the highest 18 percent p.a. to 13.88 percent p.a. and the 3-month term interest rate stood at the highest 14.01 percent p.a.
In the previous week, while 6-month interest rate climbed to 18 percent p.a., the central bank net withdrew two trillion dong in the week.
According to Thang Long Securities Joint Stock Co, the central bank's move of money withdrawal made the interest rate on interbank market increase again, especially when refinancing terms fall due by the end of July.
Presently, the interest rate on open market operations (OMO) stands at 14 percent p.a. for 7-day term.
Petroleum fund comes under scrutiny
VIR
The State Audit of Vietnam (SAV) is looking into the use of the petroleum price stabilisation fund from July 22 to the end of August.
The audit will focus on nine petroleum wholesalers, including the state-owned Vietnam National Petroleum Corp (Petrolimex) and PetroVietnam Oil Corp (PV Oil).
The Ministry of Industry and Trade, along with the Ministry of Finance will also come under scrutiny for their responsibility in overseeing the fund.
The inspection, which focuses on period between 2009 and 2010, aims to find the details about how the fund was operated and used, as well as uncover any possible misuses.
The audit, it is hoped, will clear away doubts about Petrolimex’s transparency, following the recent release of its financial reports for the period from 2008 to 2010. After having claimed large losses for years, the state-owned petroleum trading firm released financial reports that showed profits.
Still, an anonymous SAV official said that the inquiry would not focus on these discrepancies in Petrolimex’s bookkeeping, but on the overall efficiency and use of the fund.
From October 22, 2010 through to February 24 this year, the country has used VND6.369 trillion ($307.7 million) from the petroleum price stabilisation fund to help stabilise the domestic petroleum market because of fluctuations in world prices.
CONSTRUCTION - New circulars regulate construction contracts
VNS
The Ministry of Construction issued Circular 09/20111/TT-BXD on June 28, establishing templates for construction contracts using 30 per cent or more of State capital, including funds from the State budget, official development assistance (ODA), State development credit, credit capital guaranteed by the State, and investments by State-owned enterprises.
The construction contract templates attached to Circular 09 guide the relationship between investor and contractor and between general contractor and subcontractor, and they include equipment installation contracts. The accompanying regulations on contract prices and payments vary depending on the type of contract, and a single contract may include various types of services and be subject to different regulations.
Regulations on contractual provisions, work volume, hiring consultants, advance payments, performance security, warranty, payment time limits, installment payments, suspension and termination of the contract, and other provisions are expressly subjected to Government Decree No 48/2010/ND-CP of May 2010. The new circular takes effect on August 15.
On the same day, the ministry also issued Circular 08/2010/TT-BXD, establishing a contract template for consultancy in construction works using 30 per cent or more State capital, including surveys, financial and investment consultancy, consultancy on preparation of technological reports or feasibility studies for construction works, and design consultancy.
Circular No 08 includes a construction consultancy contract template which can be modified by investor and contractor based on the specific consulting work to be offered for tender.
The circular also requires contracts to specify work volume, requirements of quality and quantity, payment provisions, contract performance security (if any), settlement, term, and termination. This circular also takes effect on August 15.
LEGAL NEWS - Tax return processing to be outsourced
VNS
The general Department of Taxation will speed up plans to outsource personal income tax accounting to make the work faster and more accurate, according to department IT section deputy director Nguyen Thi Thuan.
It is expected that around 10 million tax declarations will need to be dealt with this year.
FPT to supply tax management application
FPT Information System (FPT IS) has won a bid to carry out infrastructure for a personal income tax management application.
Deputy minister of Finance Pham Sy Danh recently signed the decision approving FPT IS as the provider of information equipment and implementation services for the technological infrastructure of a personal income tax management application worth nearly VND260 billion (US$12.6 million).
In this project, FPT IS will construct technological infrastructure, including hardware components and so
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INVESTMENT – Vietnam tries to attract more FDI from Japan
The Saigon Times Daily
Local agencies are rushing to develop investment promotion programmes aimed at attracting foreign direct investment (FDI) from Japan as instructed by the prime minister, said a Ministry of Planning and Investment official.
Do Nhat Hoang, director general of the ministry's Foreign Investment Agency, told a press conference in Hanoi on Tuesday that several programmes in collaboration with Japanese partners have been put on the agenda.
The press conference was held to brief reporters of the conference titled "Japan's Recovery Scenarios - The Outbound Investment Trends" that would be held in Hanoi next month by the ministry and Japan's Nikkei newspaper.
Hoang told reporters that the conference and other forthcoming events were "programmes to be launched at the instruction of the prime minister."
The conference next month will have the participation of about 300 Japan-based enterprises and discuss investment opportunities in Vietnam.
The Ministry of Planning and Investment will also organise another conference in association with the Japan Business Federation, commonly known as Keidanren, on Vietnam's supporting industries in Tokyo, Hoang said. Currently, deputy minister Dang Huy Dong is in Tokyo to discuss the organising of conferences on investment in Vietnam's infrastructure projects under the public-private partnership.
Besides, some other localities have also prepared road shows to attract Japanese investors.
The HCM City government, for example, will organise an investment promotion trip to Tokyo in September or October, while Dong Nai Province would also schedule a conference next Friday to attract investment from Japan, Hoang said.
January-July FDI disbursement of Japan's projects in Vietnam dropped to $720 million from $1.3 billion of the same period last year, said the Foreign Investment Agency's head.
The Nikkei newspaper said many Japan-based enterprises wanted to invest overseas after their country was hit by the earthquake and tsunami last March. Besides, when considering investment opportunities in Vietnam, Japan would not take the unstable economy serious as inflation was a global issue.
HCM City, Delta show opportunities to investors
saigon-gpdaily
Investor when thinking of putting money into Vietnam's Mekong Delta should give top priorities to fisheries, then agriculture and forestry,Agriculture deputy minister Luong Le Phuong told an investment promotion conference in HCM City Tuesday
Phuong was addressing as a key speaker at the conference, held to introduce to both local and foreign investors potentials and advantages of HCM City and the 13 Mekong provinces.
The provinces are Ca Mau, An Giang,, Long An, Ben Tre, Dong Thap, Soc Trang, Bac Lieu, Hau Giang, Tra Vinh, Can Tho City, Kien Giang, Tien Giang, and Vinh Long.
The investment promotion conference, which saw more than 500 delegates, is part of the Mekong Delta Economic Cooperation-Ca Mau 2011 Forum.
Deputy minister Phuong said among fisheries, agriculture and forestry, the first one is the fastest profit-making area.
The sector includes catching fish and aquaculture, as well as processing aqua-products for export, he added.
The delta has seen its total aquaculture acreage increase from 233,500 hectares in 2000 to 746,000 hectares last year, with output soaring from 444,000 tonnes in 2001 to 1.94 million tonnes in 2011, said Phuong.
According to him, Vietnam houses more than 500 aqua-product processing factories. Of them, 330 have been put into the European Union-accepted list, and more than 70 percent of the EU-accepted factories are located in the Mekong Delta.
Vietnam's prime minister Nguyen Tan Dung established in March 2010 the Mekong Delta Economic Cooperation, or MDEC, to further support the whole region's development. MDEC-Ca Mau 2011 is part of MDEC.
The delta region contributes over half of the country's rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the MDEC Secretariat.
In introduction, the secretariat says HCM City and the Mekong Delta hold lots of advantages for agriculture (agriculture, fisheries and forestry) and marine economy. The two regions are endowed with a convenient network of transportation that includes roads, air routes and waterways.
HCM City and the 13 provinces cover nearly 4.3 million square km, making up 13 percent of Vietnam's area.
The delta has about 2.63 million hectares of farmland, including 1.9 million ha fore rice, almost 576,000 ha for fruits and over 746,000 ha for aquaculture, according to the secretariat.
During the full-day conference in HCM City, investment promotion officials from all the 13 delta provinces displayed their economic potentials and advantages at a sideline show.
The delta has a total of 151 industrial parks. Can Tho City and the provinces of Long An and Kien Giang have attracted more investment capital from HCM City than others, the secretariat says.
Long An, which borders HCM City, has attracted from the city 420 projects worth more than VND60 trillion (US$2.9 billion) since 2000.
Kien Giang has received 103 projects worth VND88 trillion ($4.2 billion) over the past five years.
Can Tho City, the Delta's hub, reports it has attracted 61 investment projects worth VND23 trillion (US$1.1 billion) over the past 10 years. Most projects are in tourism, infrastructure development and retailing.
The investment promotion conference called for capital into such fields as high-tech agriculture; processing and preservation of post-harvest agricultural products; trade; infrastructure; agricultural services; development of material zones; and other agricultural activities.
Speaking at a meeting held Monday to review economic development cooperation between HCM City and the Delta, city chair Le Hoang Quan said the metropolitan government has actively promoted the Delta's business opportunities to foreign and local investors.
He said the city has worked with several sectors, including infrastructure development, environmental protection, healthcare, hydropower development and others.
After the investment conference, a workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.
October will also see a conference on promoting the delta's development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.
In addition, the province will host the Leaders Conference on MDEC-Ca Mau 2011 in the same month.
INFRASTRUCTURE - Japan, US agencies to sponsor major projects
BusinessAsia
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries.
The Japan International Cooperation Agency (JICA) and the US Agency for International Development (USAID) have agreed to jointly sponsor infrastructure development projects in Vietnam and other Southeast Asian Countries under the public-private partnership (PPP) model.
JICA and USAID expect to implement their first project in Vietnam and are next year scheduled to propose a plan to the Vietnamese Government, to establish a new investment fund.
JICA plans to set up a fund worth 400-500 million USD in March 2012 for PPP projects and contribute to the fund with investments or loans.
USAID will guarantee half of the value of projects’ loans and seek cooperation from Vietnamese and US financial organisations.
The projects of the two agencies’ cooperative strategy include power plants and other energy establishments, information and telecommunications, roads, traffic and sewerage and water supply systems./.
Foreign firms now opt for imports over production
VIR
For example, UK-backed oil and gas maker Castrol BP Petco Company and French-backed tyre maker Michelin Group supplemented business codes to boost imports.
Swedish-backed Tetra Pak, the world’s leading food processing and packaging company, and Japanese-backed Panasonic AVC Vietnam have all stepped up importation business arms in Vietnam.
Meanwhile, South Korean-backed Samsung Vina supplemented its business codes to boost distribution in Vietnam.
The list also includes Japanese-owned electronics firms like Sony, Toshiba, Sanyo, Sharp, Hitachi and South Korean-backed Kumho Tire which have also been approved to import electronic products and tyres and then sell directly in Vietnam.
Yuzo Otsuki, general director of Sony Vietnam which disbanded its joint venture with locally-owned Tan Binh Electronics Company late last year to focus on importing electronic products into Vietnam, said: “The company’s business grew by 60 per cent in 2010 and is expected to continue growing at the same rate this year, with many new [imported] products marketed in Vietnam.”
Dao Ngoc Hoang Giang, general director of Ho Chi Minh City-based Sao Mai Office Equipment Joint Stock Company under locally-owned Sao Mai Group specialised in importing office equipment, said many FIEs like Japanese-backed Fuji Xerox and Sharp had applied for permission to wholesale and retail their imported products in Vietnam.
Mochizuki Kentaro, chairman of Sanyo HA Asean Corporation, said previously, firms were slapped an average import tax level of 50 per cent when they imported goods into Vietnam. When Vietnam joined the ASEAN Free Trade Agreement in 1995, the tax level was reduced to 20 per cent and then 5 per cent as is the case now. The reduction meant that investors would choose to become importers, not manufacturers.
Vietnam Customs reported that the foreign direct investment sector’s total import turnover in the year’s first six months was $27.5 billion, up 23 per cent against last year’s corresponding period.
Before Vietnam joined the WTO, FIEs enjoyed various priorities on the understanding that they invested into manufacturing in Vietnam to generate employment. They were allowed to import goods to serve their manufacturing in the country, not to directly trade and distribute them in this domestic market.
However, when Vietnam became a full WTO member, many FIEs took advantage of the distribution rights to import goods from their overseas companies and then resell them in Vietnam.
For example, with current import tariffs of 3-20 per cent for electronic components, and 5 per cent for completely-built electronic goods, electronics firms have chosen to become importers.
An expert from Thanh Hoa Provincial Department of Planning and Investment’s International Relations Division said with fewer employees and curtailed costs of manufacturing and land leasing, “it is clear that importing is more profitable than manufacturing.”
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the Vietnamese government targeted to lure foreign direct investment into manufacturing sector, not in non-production sectors.
“It will need more time to revise all related regulations governing FIEs’ operations in Vietnam,” he said.
TRADE – GOOD NEWS - Most EU states want to terminate Vietnam shoe duties
Reuters
The European Commission is expected to decide in September whether to propose extending dumping duties on imports of leather shoes from Vietnam, but most EU states want them scrapped, EU sources said.
Last October, the Commission which oversees trade policy for the 27- country European Union extended duties of up to 10 percent on Vietnamese leather shoes and 16.5 percent on those made in China, pending a review.
A majority of EU countries had opposed that move.
Industry and diplomatic sources with knowledge of the case told Reuters last Friday they expected Brussels to complete its review and submit its proposal for approval by member states by the end of September.
The Commissions proposal is expected to be submitted to member states in September. But as it stands the majority, or at least 15 member states, favor termination, one source said.
Britain, Austria, Belgium, the Czech Republic, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Latvia, Luxembourg, Malta, the Netherlands and Sweden want the duties scrapped immediately, before the lucrative Christmas retail period, an EU diplomat said.
Major shoe-producing countries like Italy, Spain, France and Poland are all leading the charge to keep the duties, the diplomat added.
EU is the largest market for Vietnamese leather shoes and Vietnam is also the second biggest exporter of the products to EU, after China.
Last year the bloc imported US$2.5 billion worth of leather shoes from Vietnam, up 33.9 percent from 2006, figures from the Vietnam Leather and Footwear Association show.
The Ministry of Industry and Trade has asked local footwear exporters to strengthen their sales to EU as the demand for footwear imports of the bloc is expected to increase by 5.3 percent this year.
Vietnams total footwear exports in the first half this year dropped by 8.8 percent to $2 billion compared to the same period last year. However, the Vietnam Leather and Footwear Association noted that export figures have already improved since the second quarter.
EU split
The EU regularly splits over dumping cases between its member countries supporting freer trade and those worried about competition against their own manufacturers.
The shoe duties were introduced in 2006 only after a compromise deal to keep them in place for just two years, instead of the usual five. If extended again, Commission sources say the duties would last at least five years.
But the industry and diplomatic sources said a compromise being considered by EU Trade Commissioner Catherine Ashton a Briton would allow the duties to lapse once they expire on January 3.
This would give certainty either way to EU importers before the busy Christmas period and at the same time allow EU producers the time to adapt and plan against cheaper imports from Asia, another source said.
European retailers and global shoemakers, led by sports shoe producers such as Adidas, Asics, Nike and Puma want the shoe taxes axed given the gloomy economic outlook and dwindling consumer spending in Europe caused by the worst financial crisis in about 80 years.
But European manufacturers say they are unable to compete against low-cost producers in China and Vietnam and accuse those Asian governments of giving unfair subsidies that lower costs.
A review can take between 12 and 15 months, but the Commission had said it hoped to complete its work more quickly. It said it could reimburse the extra tariffs imposed during the review should it be proven that the duties were unnecessary.
If we get a termination, that will be enough. We are not going to try and make life any harder for ourselves and threaten the Commission, a representative from an EU importer said.
FIE losses turn to profits
VIR
The alarming tax evasion trend in foreign-invested enterprises is easing.
Nguyen Trong Hanh, deputy director of Ho Chi Minh City Department of Taxation, said while 60 per cent of foreign invested enterprises (FIEs) operating in the city had reported losses for many years, in the first seven months of 2011, 30-40 per cent of these enterprises reported profits.
The city’s tax collection reached 67 per cent of its annual plan of VND110.4 trillion ($5.3 billion) for this year and increased by 23 per cent compared to the same period last year.
Hanh said the department had worked with about 40 FIEs and found “fake loss” situations at most of the enterprises.
“After being inspected, most of these enterprises’ financial reports showed profits. Especially, an enterprise reported a profit of more than VND100 billion ($4.8 million) after reporting losses for 10 consecutive years,” he added.
It was a similar story at 17 FIEs who produced and traded tea in Lam Dong province. For the past 10 years, the Lam Dong Department of Taxation did not collect any corporate income tax (CIT) from these enterprises who reported losses for consecutive years.
However, Lam Dong Department of Taxation deputy head Phan Thi Vinh said after inspections, many FIEs admitted the” fake loss” situation by transfer pricing.
“After establishing that these enterprises made profits since 2005, the department collected tax arrears with the collected tax of VND8 billion ($386,473) because these enterprises still enjoyed a 50 per cent CIT tax reduction rate in accordance with Vietnam’s preferential tax policy for FIEs,” said Vinh.
According to a General Department of Taxation (GDT) report for the first half of 2011, it treated 107 FIEs as having reported fake losses for three consecutive years from 2008-2010 with tax arrears collection of VND2,230 billion ($107 million).
As planned this year, the GDT entrusted 63 local departments to inspect 870 FIEs which showed transfer pricing signals or reported losses for three consecutive years. The GDT’s Inspectorate will check 40 FIEs and 82 other units in a supplemented list from the Ministry of Finance (MoF) across 2011.
The MoF said it was considering amending the Tax Management Law which would set additional provisions to treat tax frauds and price transfer. It is expected that the amended law would be submitted to the National Assembly for ratification by 2012.
ECONOMY - Vietnam inflation accelerates to 22.16 pct, highest level in Asia
Bloomberg
Food, transport and construction-material prices have stoked consumer-price growth in Vietnam.
Vietnamese inflation accelerated for an 11th month in July after the central bank cut a key interest rate even as the nation faces the fastest price gains in Asia.
Consumer prices rose 22.16 percent from a year earlier, compared with June’s 20.82 percent pace, data released by the General Statistics Office in Hanoi showed today. Prices climbed 1.17 percent from June.
The central bank reduced its repurchase rate to 14 percent from 15 percent on July 4 after a spate of increases since November to fight inflation, leading the International Monetary Fund to say the cut may confuse investors. The benchmark VN Index of stocks is down 16 percent this year, on concern price gains will hurt the economy.
“The markets were very surprised by the easing,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, said before the release. “It’s too early to go into a full-blown easing cycle given that inflation and inflation expectations remain elevated.”
Vietnam will find it “very difficult” to slow inflation to 17 percent by the end of 2011, Ha Van Hien, head of the National Assembly’s Economic Committee, told the opening of the body in Hanoi on July 21. It may peak as high as 23 percent in August before slowing to 18 percent by year-end, Sofat said.
The VN Index fell 0.9 percent yesterday to 409.2, while the dong weakened 0.1 percent, according to data compiled by Bloomberg. The currency was devalued by about 7 percent in February, the most since at least 1993, risking costlier imports.
Food, transport costs
Food, transport and construction-material prices have stoked consumer-price growth, according to Australia & New Zealand Banking Group Ltd. Transport prices rose 21.7 percent from a year earlier in July, today’s data showed. July’s annual inflation rate is the highest in a basket of 17 Asian economies tracked by Bloomberg.
Prime Minister Nguyen Tan Dung in February cut the credit- growth target and ordered a tighter monetary policy to try to tame inflation, revive confidence in the economy and prevent another credit-rating downgrade. This month’s rate cut wasn’t a “policy signal,” the central bank said in a July 8 statement.
“We assume policymakers are again demonstrating their low tolerance for slower growth,” Christian de Guzman, a Singapore- based assistant vice president at Moody’s Investors Service, said in a note on July 11.
The nation’s economy expanded 5.6 percent from a year earlier in the first half of 2011. Moody’s said that a “tight” monetary policy would threaten the government’s full-year target of 6 percent.
‘A bit concerned’
“We are a bit concerned that the cut in rates will confuse the market about the government’s commitment to sustaining the stabilization effort under Resolution 11,” Benedict Bingham, the IMF’s senior resident representative in Vietnam, said this month. Resolution 11 refers to the steps Dung took in February.
“A strong commitment to sustaining this effort is essential to re-establishing confidence in the dong and restoring macro-economic stability more generally,” Bingham said.
The State Bank of Vietnam had increased the repurchase rate for the seven-day term from 7 percent at the start of November 2010 before this month’s cut. It appears to have become the benchmark for monetary policy, according to JPMorgan Chase & Co.
Price escalations should not be blamed on Chinese businesspeople
VNS
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce.
The consumer price index (CPI) sharp increases in the last few months have been blamed on Chinese businesspeople who have flocked to Vietnam to collect farm produce. However, experts have pointed out that the main reason behind the problem is the mismanagement.
The general Statistical Office (GSO) has announced that the CPI in July increased by 1.17 percent, which is higher than the 1.09 percent increase of June, raising the total CPI increase in the first seven months of the year to 14.6 percent.
Some analysts believe that the fact that Chinese businesspeople scrambling for farm produce has caused chaos in the market and pushed the CPI increase more sharply.
However, Dr Nguyen Van Nam, former Head of the Trade Research Institute, argued that when there are many buyers, farmers will have the chances to sell farm produce at higher prices. Meanwhile, the problems which have been arisen from the massive material collection should be blamed on the bad management of Vietnamese state agencies.
Foreign businesspeople have gained the upper hand over domestic enterprises in collecting materials in the market, while the scrambling for materials by foreign businesspeople has pushed the prices up.
According to Nam, there is no other country in the world which allows foreign businesspeople come to their countries to collect materials so easily. State management agencies should have learned to find out for what purposes the foreign businesspeople collect materials in Vietnam. It is really the thing that needs to be done. In the past, the campaigns of collecting anise roots and buffalo toenail, once sabotaged Vietnam's agricultural production.
Dr Nam believes that Vietnam should not prohibit serious foreign businesspeople, who plan long term business in Vietnam. However, they must be registered businesses and they must pay tax as stipulated by the current laws.
When carrying goods out of the national boundary, the businesses must pay tax. Meanwhile, other business activities undertaken by the businesspeople in Vietnamese territory must be supervised to be sure that the activities do not cause chaos to the domestic market.
While domestic businesspeople always bear strict supervision by the state management agencies, foreign businesspeople seem to be "given a free hand".
Dr Nam also thinks that this should be seen as a lesson for domestic enterprises and they should change the way they collect farm produce from farmers. The collection should be based on the principle of mutual benefit, while enterprises need to take act on their own initiative and don't sit at their office and ask farmers to bring farm produce.
Meanwhile, Vu Vinh Phu, Chair of the Hanoi Supermarkets' Association, has attributed the price escalations to the bad distribution network.
According to Phu, farmers sell farm produce at their fields very cheap, but customers still have to buy high. It is because the products go through many intermediary hands before reaching out to consumers. In general, the retail prices are 3-4 times higher than the original prices.
A kilogram of fish in Thanh Hoa is priced at 8000 dong, while it is selling at 30,000-40,000 dong per kilo in Hanoi. A kilogram of tomato is sold by farmers in the provinces neighbouring to Hanoi at 500 or 1000 dong, while Hanoians have to pay 8000 or 9000 dong.
In April and May, sugar refineries, which had 500,000 tonnes in stocks, sold to general sales agents at 16,000-17,000 dong per kilo only. However, the retail price on the market was 25,000 dong.
A question has been raised that why supermarkets do not cooperate with each other to force the prices down. If distributors can buy goods straightly from producers and then sell directly to consumers, the prices will be much lower.
The answer is, according to supermarket chains, they cannot contact producers and importers of essential goods.
The problem is that producers and importers do not sell goods directly to supermarkets, but they only sell to their general sales agents who will later sell the products to sales agents at lower levels.
As such, the loosened management over the wholesale activities has led to the consequences that Vietnam cannot control the retail activities.
Economic meltdown hits interior makers in central province
SGGP
An economic turmoil has force many furniture makers in the central province of Binh Dinh to reduce operation or shut down this year.
Statistics show there are 160 furniture manufacturers in the province with the total fabricating output of 345,000 cubic meters of wood per year.
Binh Dinh Province’s export turnover of furniture amounted to more than US$1.1 billion in the period of 2006 and 2010, an equivalent of nearly 61 percent of the province’s figure.
Most of local producers are small- and medium-size enterprise, which meet up quality requirements of big foreign traders.
“Local furniture makers focus solely on outsourcing. They are not eager to upgrade equipments and techniques to boost output, as well as create their exclusive patterns,” an expert told Dau Tu Tai Chinh Newspaper.
“Their competitiveness remains low due to a shortage of skilled workforce and poor cooperation with their counterparts.”
Therefore, local manufacturers struggle to weather the economic meltdown, he says.
So far this year, input cost of the furniture sector has surged more than 30 percent so far this year, while export prices have remained unchanged, according to furniture makers in Binh Dinh Province.
“A high lending rate combined with low profit margin are scaring off local producers,” says a director of a furniture maker, who asked to be unnamed.
Financial experts ask businesses should focus on interior furnishings in an effort to boost the interior output to 40 percent of the province’s figure by 2015.
The Binh Dinh Province People’s Committee announces it will subsidize 30 percent of the expense that interior makers are required to make for setting up the environment impact assessment of their investment projects.
It will also finance 15 percent of the cost of building waste water treatment system and 70 percent of the expense of training manual workers.
The local authorities help interior manufacturers to hire experts in order to improve their fabricating techniques twice a year.
The top export product from Vietnam to the EU last year was footwear, valued at 1.75 billion euros. It was followed by textiles and garments, coffee, seafood and furniture.
Developing industries and industrial zones
VOV
More than 60 percent of areas in industrial zones (IZs) and one-fourth of areas in industrial complexes (ICs) have been rented so far.
The information was announced at an international seminar on the development of industrial zones and complexes in Da Nang on July 27.
Since 1991, the country has established 260 IZs, more than 170 of which have been put into operation. IZs with an area of under 20ha account for nearly half, while IZs with an area of under 100ha make up one-fifth.
Coordination among foreign and domestic invested businesses is low, leading to weak competitiveness.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Research and Management under the Ministry of Industry and Trade, said that to further develop ICs, large international groups like Canon and Samsung need to increase their cooperation with domestic partners. He stated that by transferring technology which would help Vietnamese businesses to develop, competitiveness could be improved, thus contributing more to national GDP.
ENERGY - Vietnam expects to attain 6pct of renewable energy by 2030
Saigon Times Daily
Vietnam is determined to prioritise the development of renewable energy such as wind, solar and gas-fueled power so that this source of energy will account for 6 percent of the nation's total power output by 2030.
At the moment, the country produces a very modest amount of renewable power which is estimated at less than 3 percent of the country's total power capacity.
According to the 930 trillion dong (US$48.8 billion) national plan for power development between now and 2020 with a vision toward 2030 that was approved by the government last week, the country will produce and import 210 billion kilowatt hours by 2015 and up to 834 billion kilowatt hours by 2030 to meet the increasing power demand.
The nation, as part of the plan, aims to increase wind power capacity to up to 1,000 MW by 2020 and up to 6,200 MW by 2030 to reach 2.4 percent of total power production of the country, a remarkable development compared to a very small capacity at the moment.
The plan also prioritises developing hydropower plants, particularly ones with three combined functions of flood prevention, water supply and power production.
The capacity of hydropower generation is expected to increase to 17,400 MW by 2020, nearly double the present capacity of 9,200 MW.
Vietnam will also operate the first nuclear power generator in a decade's time. By 2030, nuclear power will contribute around 10 percent of the country's power output with total capacity of 10,700 MW.
Vietnam Electricity Group (EVN), Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Coal and Mineral Industries Group (Vinacomin) are the three companies with the responsibility of developing the power sources for the country, according to the plan.
POWER - Vietnam approves a 10 year national power development plan
VNA
VNA reported that Prime Minister Mr Nguyen Tan Dung has approved a 10 year national power development plan that targets production and import of 330 billion KWh by 2020.
Under the 2011-20 plan, 3% of this total will be imported. The remaining 97% will comprise 19.6% of hydropower, 46.8% of thermal power, 24% of gas generated power, 4.5% of renewable energy and 2.1% of nuclear power.
The competitive power market will be developed with various forms of investment in building power plants and trading of electricity. The monopolized State control of the transmission line system remains to ensure the national energy security.
Priority will be given to developing renewable energy sources including solar and wind power as well as energy production from biomass. The plan envisages electricity production from renewable sources to increase from 3.5% in 2010 to 4.5% in 2020 and 6% in 2030.
Wind power capacity will be raised to 1,000 MW in 2020 and around 6,200 MW in 2030, equivalent to 0.7% of the country’s total output in 2020 and to 2.4% in 2030. Hydropower generation will be increased from the current 9,200 MW to 17,400 MW in 2020.
By 2020, the first nuclear power plant in Viet Nam will be put into operation and in 10 years, the sector will produce a total of 10,700 MW, equivalent to 10.1% of the country’s total output.
The plan also aims to supply electricity to all families in the country’s rural areas by 2020.
RESOURCES - Dinh Vu IZ hooks big project
BusinessAsia
Drilling Mud Corporation (DMC), a PetroVietnam member and the Dinh Vu Industrial Zone (IZ) authorities have inked a land lease contract for a petrochemical service supply project.
With investment of VND270 billion ($13.04 million), the project consists of a propylene resin store, a container depot with an annual capacity of 100,000 20-foot equivalent unit (TEU) and a 5,760 square metre warehouse.
Construction of the project will be kicked-off in early fourth quarter of 2011 and the project will come online in the second quarter of 2012. The Dinh Vu petrochemical service supply base will be one of DMC’s key logistic service supply chains in northern Vietnam.
DMC’s Dinh Vu base is the fifth project of PetroVietnam’s member firms and the 35th project in Dinh Vu IZ.
DMC’s investment decision showcased the IZ’s compelling advantages with internal 20,000 dead weight tonnage general port system, convenient transport links to key areas and lucrative tax incentives for domestic and international investors, said Dinh Vu IZ Joint Stock Company deputy general director Do Thi Kim Thanh.
Petrolimex offering is well received
VIR
Petrolimex, Vietnam’s leading oil importer and distributor, raised VND412.3 billion ($20.1 million) via its initial auction on July 28 .
The state firm sold entire its offering of 27.43 million shares, representing for 2.56 per cent its registered capital, according to Hanoi Stock Exchange. The average price was VND15,032, little higher than the starting price of VND15,000.
Investors previously bid for 30.1 million shares, 10 per cent higher than the firm’s expectation. Some 304 individuals registered to purchase more than 22 million shares and three institutions bid for eight million.
That result outperformed that of big state-owned firms including Vietnam Steel in early June and Mekong Housing Bank a week ago. The steel giant sold more than 39 million shares, or 60 per cent of its total offer, at the price of just VND10,100 per share.
The state lender missed its target with 18 million shares sold, or 28 per cent of its offer, at an average price of VND11,025 per share.
Foreigners were not allowed, by Vietnam’s Ministry of Industry and Trade, to bid for the auction, due to energy security reasons.
INDUSTRY - Economic uncertainties make steel association worried
VNS
The Vietnam Steel Association (VSA) is worried that uncertainties in the national economy would deeply hurt the local steel industry despite agreeable growth.
Speaking at a seminar in Hanoi last Friday, VSA vice chair Dinh Huy Tam said steel consumption would decline compared to last year. The sector earlier targeted a growth rate of 8-10 percent in 2011.
"We can affirm that the target is unachievable and the figure may even decrease against last year," Tam said.
Tam attributed the gloomy forecast to concerns on shrinking foreign direct investment (FDI) capital disbursement while the real estate market has been frozen for a long time.
According to the Ministry of Planning and Investment, FDI disbursement in the first half of 2011 was $5.3 billion, or a slight fall of 2 percent year-on-year. Worse yet, the figure is on the downtrend, falling from $1.4 billion in March to $1 billon in April, $900 million in May and $750 million in June.
Tam also pointed out the challenges facing large steel projects in the country. The $4.5 billion Tycoon-E.United ISM steel mill project in Dung Quat, Quang Ngai Province is facing financial difficulties after the government approved it in May. "We are worried the project will be mired in unpredictable delays," Tam said.
Meanwhile, the government has withdrawn the investment license of a steel project in Ninh Thuan Province as investors Lion Group and Vinashin have failed to push it forwards. Meanwhile, the $7.5 billion Formosa steel project in Ha Tinh Province is in still its first steps of site clearance after being licensed for several years.
Last year, the local steel sector fetched $1 billion in export value while it spent up to $7 billion on imports of both materials and finished products.
In fact, the sector still posted growth in the first half of 2011. According to VSA, construction steel consumption reached over 2.4 million tonnes, a 12 percent year-on-year increase while steel output was 2.6 million tonnes.
Consumption of steel pipe, cold rolled steel and plated iron sheet grew by 20 percent, 24 percent and 43 percent respectively.
Industrial growth slows to just 8.8pct in Jan-Jul
VNS
The country's Index of Industrial Production (IIP) slowed during the first seven months of this year to 8.8 percent, according to a general Statistical Office (GSO) report.
Production lowered due to the modest 1.7 percent growth rate experienced by the mining industry while the manufacturing and power-gas- water sectors experienced growth rates of between 11.9 and 10 percent.
Unsatisfactory performance was additionally attributed to the slow consumption power experienced in the textiles, beverage, footwear, cement, fruit and vegetable processing industries, according to the GSO.
Meanwhile, the stockpile index of petroleum rose by 92.4 percent against the same period last year while the indices of furniture and beverages surged by 84.4 percent and 73.5 percent, respectively.
However, some industrial sectors did manage to record significant growth rates over the January-July period including 18.2 percent in fibre and cloth, 14.3 percent in steel and 14.2 percent in automobile production.
Earlier, minister of Industry and Trade Vu Huy Hoang said that local industries, already feeling the pinch, were set to experience more hardships during the next several months.
An increase in global commodity prices on the back of rising oil prices was expected to have a serious impact on local manufacturing and production sectors, Hoang said.
He continued by saying that, in order to maintain growth rates, industrial producers needed to strengthen measures aimed at controlling inflation, using only domestically produced machinery and materials in order to minimise negative impacts resulting from dependence on imports.
FINANCE - Vietnam money supply must increase to avoid stagflation
Reuters
Vietnam’s central bank should pump more money into the economy, while taking care to ensure it doesn’t fuel inflation, a senior Vietnamese government advisor said.
Money supply expanded at 2.45 percent in the first six months of the year, well below the government’s 16 percent annual target, which has also led to slowing credit growth in the country.
"Money supply has been too tight in the last six months. Money should be supplied equally throughout the year," Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee said.
"Raising money supply doesn’t mean loosening monetary policy," he said on the sidelines of a meeting on Friday.
Overly tight money supply could also reduce production of goods and therefore raise inflation, he said. "We need to avoid stagflation," Nghia said.
July’s consumer price index hit 22.16 percent year on year.
"The central bank is going to accelerate anti-dollarization measures," Nghia said, referring to the practice of making dollar loans less attractive by raising banks’ foreign currency reserve ratio, increasing demand for dong loans.
By June 20, dong-denominated loans have risen by a mere 2,76 percent this year, compared with 23,47 percent growth in dollar loans, central bank data shows.
The other fallout of the faster jump in dollar loans is the pressure on the exchange rate at the time of repayment, Nghia warned.
"This could create huge demand for foreign currency at the end of the year when dollars loans are due and if dollars supply from the export market is difficult at the same time it would cause tension to build in foreign currency market," he said.
"We have been informing the government to come up with measures right now to avoid that risk."
Six-month terms interbank interest rate falls over 4pct
SBV
On July 25, the interbank interest rate fell in most terms, of which the 6-month term interest rate decreased from 18 percent on July 21 to 13.88 percent per annum (p.a.), State Bank of Vietnam (SBV) posted on its website.
In particular, the overnight interest rate slipped from 12.78 percent p.a. to 12.73 percent p.a. and the interest rate for one-month term declined by 0.46 percent from 12.58 percent p.a. to 12.12 percent p.a.
Notably, the six-month term interest rate decreased from the highest 18 percent p.a. to 13.88 percent p.a. and the 3-month term interest rate stood at the highest 14.01 percent p.a.
In the previous week, while 6-month interest rate climbed to 18 percent p.a., the central bank net withdrew two trillion dong in the week.
According to Thang Long Securities Joint Stock Co, the central bank's move of money withdrawal made the interest rate on interbank market increase again, especially when refinancing terms fall due by the end of July.
Presently, the interest rate on open market operations (OMO) stands at 14 percent p.a. for 7-day term.
Petroleum fund comes under scrutiny
VIR
The State Audit of Vietnam (SAV) is looking into the use of the petroleum price stabilisation fund from July 22 to the end of August.
The audit will focus on nine petroleum wholesalers, including the state-owned Vietnam National Petroleum Corp (Petrolimex) and PetroVietnam Oil Corp (PV Oil).
The Ministry of Industry and Trade, along with the Ministry of Finance will also come under scrutiny for their responsibility in overseeing the fund.
The inspection, which focuses on period between 2009 and 2010, aims to find the details about how the fund was operated and used, as well as uncover any possible misuses.
The audit, it is hoped, will clear away doubts about Petrolimex’s transparency, following the recent release of its financial reports for the period from 2008 to 2010. After having claimed large losses for years, the state-owned petroleum trading firm released financial reports that showed profits.
Still, an anonymous SAV official said that the inquiry would not focus on these discrepancies in Petrolimex’s bookkeeping, but on the overall efficiency and use of the fund.
From October 22, 2010 through to February 24 this year, the country has used VND6.369 trillion ($307.7 million) from the petroleum price stabilisation fund to help stabilise the domestic petroleum market because of fluctuations in world prices.
CONSTRUCTION - New circulars regulate construction contracts
VNS
The Ministry of Construction issued Circular 09/20111/TT-BXD on June 28, establishing templates for construction contracts using 30 per cent or more of State capital, including funds from the State budget, official development assistance (ODA), State development credit, credit capital guaranteed by the State, and investments by State-owned enterprises.
The construction contract templates attached to Circular 09 guide the relationship between investor and contractor and between general contractor and subcontractor, and they include equipment installation contracts. The accompanying regulations on contract prices and payments vary depending on the type of contract, and a single contract may include various types of services and be subject to different regulations.
Regulations on contractual provisions, work volume, hiring consultants, advance payments, performance security, warranty, payment time limits, installment payments, suspension and termination of the contract, and other provisions are expressly subjected to Government Decree No 48/2010/ND-CP of May 2010. The new circular takes effect on August 15.
On the same day, the ministry also issued Circular 08/2010/TT-BXD, establishing a contract template for consultancy in construction works using 30 per cent or more State capital, including surveys, financial and investment consultancy, consultancy on preparation of technological reports or feasibility studies for construction works, and design consultancy.
Circular No 08 includes a construction consultancy contract template which can be modified by investor and contractor based on the specific consulting work to be offered for tender.
The circular also requires contracts to specify work volume, requirements of quality and quantity, payment provisions, contract performance security (if any), settlement, term, and termination. This circular also takes effect on August 15.
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