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BUSINESS IN BRIEF 6/5

VN, Idaho firms plan to work together

Viet Nam is expected to become one of Idaho’s top 10 trading partners in the next decade, according to Laura M. Johnson, head of Idaho’s Department of Agriculture’s market development division.

“Our state’s diverse agricultural products combined with our success in other Asian markets and Viet Nam’s economic success” would pave the way for more trade between the country and Idaho, a state located in the US northwest, Johnson said.

Johnson and members of a trade mission, led by the state’s governor, C.L. “Butch” Otter, visited HCM City yesterday.

The mission included representatives from10 businesses specialising in agriculture, personal care products, semi-conductor and forestry products.

This is the second Idaho governor’s trade mission to Viet Nam, following one in 2008.

The first mission confirmed Viet Nam’s position as a potential investment area for the state, Otter said, adding that this year, the mission would begin negotiations for cooperation between Idaho and Vietnamese businesses.

Software testers prep for mobile world

More than 200 Vietnamese and foreign software testing professionals took part in the two-day Viet Nam International Software Testing and Automation Conference that closed in HCM City yesterday.

Speaking at the conference titled “Testing Modern Software in a Rapidly Changing World,” Nguyen Dinh Tao, head of the Ministry of Information and Communications’ office in HCM City, said: “In 2013 four key technologies will sweep the world — mobile communications, social networking, cloud computing, and big data.

“New software and updated versions replacing older ones require a strong contingent of software testers and developers.”

Since the first VISTACON was held in 2010, the event has managed to become a forum for software testers and quality assurance engineers to promote knowledge sharing and relationship.

Research by indicates that the number of laptops, tablets, and smart phones sold globally will reach 2.6 billion by 2016.

With a trend of diversification of usability and compatibility across multiple operating systems and cheaper prices, more consumers will have the opportunity to own smart mobile devices.

Since the life-cycle of mobile devices is decreasing, finding the fastest and most cost-effective testing and training techniques are vital to success in this industry.

VISTACON this year examined emerging issues and trends in the IT industry and issues like testing of mobile devices, test automation, and testing of complex systems.

It featured 12 speakers who shared their experience in how to know if test results achieved their goal, how good was the testing, what are the typical characteristics of good test automation, what are the characteristics of a good testing team, and what is the value of these characteristics.

VISTACON 2013 was hosted by LogiGear Corporation, the HCM City Computer Association and the Viet Nam Software and IT Services Association.

Vietnam – an attractive market for Hong Kong entrepreneurs

Vietnam’s cheap labour force and low land lease fees remain attractive to investors from Hong Kong (China).

Since 1970, Hong Kong-based Sunwah Group has effectively cooperated with Vietnamese businesses in such fields as agriculture, seafood, real estate and fund management.

Sunwah Group President Janathan Chois said in Hongkong’s Skypost newspaper on May 2 that Vietnam has attracted many foreign investors thanks to its simplified tax procedures, and low-cost labour.

He affirmed that the group will further invest in Vietnam although its investment in the country has made up nearly 50 percent of the total in Southeast Asia.

A leading economist from the Hong Kong Trade Development Council said that Vietnam’s investment environment is favorable for Chinese businesses to build factories as Vietnamese workers are technically qualified enough for employment.

Seafood exports down 4.6 percent in four months

Vietnam’s seafood export turnover was estimated at US$464 million, bringing its total earnings in the first four months of the year down to more than US$1.7 billion, 4.6 percent lower than in the same period last year.

The information was released by the General Department of Fisheries, under the Ministry of Agriculture and Rural Development (MARD).

The fall in export turnover was attributed to low demands from three major markets.  For example, Vietnam’s seafood exports to the US, Japan and the Republic of Korea were down 4.2 percent, 6.3 percent and 24.5 percent respectively. Only its aquatic exports to China and Thailand went up 50.2 percent and 23.7 percent compared to last year’s first quarter figures.

Tra fish exports from Ben Tre, Vinh Long and Can Tho were restricted by protective tariffs barriers in foreign markets.

GE investing in Vietnam

The first General Electric’s Technical Design Centre in HCM City will be put into operation by the end of this year, according to GE Group’s Oil and Gas Company.

GE Group Vice President, John G.Rice said that the centre will recruit 200 employees for the long-term development of the oil and gas industry in Vietnam and the region.

The group will build a factory in the northern city of Hai Phong to produce wind turbine components for ASEAN countries, he added.

Sri Lanka needs oil and gas supply from Vietnam

Sri Lanka wants Vietnam to supply oil and gas to the country in the long run.

This was confirmed at a meeting between Trade and Industry Minister Vu Huy Hoang and Minister of Petroleum Industries Anura Priyadarshana Yapa in Hanoi on May 2.

The two ministers agreed to implement the cooperation agreements which were signed in 2011 during President Truong Tan Sang’s visit to the South Asian country.

Export-import exchange between the two countries in 2012 hit over US$131.2 million, 16.1 percent higher than in 2011 with Vietnam’s exports estimated at US$95.3 million, a year-on-year increase of 14.3 percent and its imports at US$35.9 million, up 20.5 percent.

Vietnam’s PMI sees slight growth in early Q2

The Purchasing Managers’ Index (PMI) of Vietnam’s manufacturing sector posted 51 points in April, up slightly from 50.8 a month ago, signalling improvements in operating conditions for the first time in almost two years.

The figure was released by the Hong Kong and Shanghai Banking Corporation (HSBC) in its recent report on Vietnam ’s PMI at the beginning of the second quarter.

According to the report, announced on May 2, manufacturing output rose for the second successive month during April, albeit at a slightly slower pace than in March.

Higher output reflected a further increase in incoming new orders, as companies reported improved sales to domestic clients. Meanwhile, subdued international market conditions meant that the level of new export business showed only a negligible increase compared to one month earlier.

Manufacturing employment also rose for the second consecutive month thanks to job growth linked to the recent mild recoveries in production and new order volumes.

April data pointed to a further solid decrease in work-in-hand (but not yet completed) volumes. A number of firms reported that they had satisfied existing contracts from stock holdings to clear backlogs of work. Inventories of finished goods were depleted for the sixth month running.

The report also said average input costs increased again during April, with manufacturers reporting that they were paying higher prices in both domestic and world markets.

Vietnam manufacturers reported that competitive market conditions restricted their ability to pass on rising costs to their clients. Subsequently, average output prices declined for the first time in three months, with the sharpest rate of decrease since December 2012.

Some manufacturers revealed that they were offering discounted prices in order to support sales volumes.

Stocks of purchases declined again in April, meaning that inventories have fallen throughout the past one-and-a-half years. This was despite a solid increase in input buying volumes, which was partly initiated to reduce the pressure on raw material stocks.

The expansion of manufacturing activity reflects a gradual improvement of domestic demand, the HSBC said, adding the manufacturing sector continues to see growth symbolised in the rise of employment and output.

While the economy is weighed down by the underperformance of the state sector, the private sector, especially the manufacturing industry, continues to pull its weight to sustain the economy.

The year-to-date increase of foreign investment into manufacturing shows Vietnam’s still-strong competitiveness in labour-intensive manufacturing, said HSBC.

Vietnam urged to join Extractive Industries Transparency Initiative

A seminar was held in Hanoi on May 2 to discuss Vietnam’s participation in the “Extractive Industries Transparency Initiative (EITI).

Vietnam was mentioned in a feasibility study report as a destination for business involved in the exploitation of mineral ores, especially in the context of international integration.  

The report recommends that Vietnam should participate in the EITI to secure its role in the ASEAN region, and its link to the European Union in the process of building an ASEAN economic community by 2015.

Participants expressed hopes that the mining sector will make a greater contribution to the national growth when mineral ores are exploited in a transparent and scientific manner.

The UK ambassador to Vietnam, Antony Stokes, said Vietnam is very rich in natural resources and its participation in the EITI will make the exploitation and use of mineral resources more economic to improve the country’s prestige in the international arena.

Over 10,600 MoU and contracts signed at Mekong Expo 2013

Over 10,600 memorandums of understanding (MoUs) and contracts were signed at the Mekong Expo Vietnam 2013 which closed in Can Tho city on May 2.

During the six-day event themed “Cooperation and investment: Mekong Delta development and Trade Promotion”, the volume of retail goods sold by businesses was 30 percent higher than expected.

Consumers showed keen interest in local ceramics, fine art and handicrafts, rattan and bamboo products.

The number of visitors was estimated at over 110,000, most of them gathering at the weekend.

The highlight of the event included a seminar on tourism in the Mekong Delta, a talk on connectivity between manufacturers and distributors, and entertainment programs for visitors.

The expo, co-organised by the Ministry of Industry and Trade and Can Tho city’s People’s Committee, had 370 stalls put up by 200 domestic and foreign joint venture businesses to introduce their new products, promote investment and trade cooperation and develop trademarks.

Tuna fishing faces difficulty despite growth

Vietnam’s tuna exports have earned US$154 million so far this year, a year-on-year increase of 19 percent, and the highest growth among seafood exports.

However, its growth also causes concerns – a drop in tuna quality has resulted in a sharp fall in price.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), since the beginning of this year the US has imported US$57 million worth of Vietnamese tuna, an increase of 3 percent from the same period last year. It is followed by the European Union with US$32 million (up 37 percent) and ASEAN with US$9.4 million (up 81 percent).

Nevertheless, despite the high output, the quality of tuna is being threatened by an increasing number of fishermen using high pressure lamps to reduce costs and increase productivity.

As a result, tuna prices have seen a continuous decline over the past months, from VND60,000-VND65,000 (US$3) per kilo to VND50,000-VND55,000.

Meanwhile, increases in the prices of fuel, ice and other necessities raise fishing costs from VND150 million (US$7,200) to VND170 million for a month-long fishing trip.

Low incomes have made many fishermen quit and do other jobs. Now, a large number of ships in central provinces like Phu Yen and Binh Dinh cannot go fishing due to a lack of labour.

Chairman of the Vietnam Tuna Association Vu Dinh Dap forecasts a record tuna output of 17,000-18,000 tonnes this year. To enhance the quality, fishermen should avoid using high pressure lamps and use traditional fishing methods, he suggests.

Vietnam-Spain trade exchange hits 2 billion euro

Two-way trade turnover between Vietnam and Spain hit a record high of 2.003 billion euro in 2012, a year-on-year increase of 19.4 percent.

Of the figure, Vietnam’s export surplus continued to remain high.

According to the Spanish Customs, Vietnam’s exports to the country were estimated at US$1.799 billion euro (up 23.8 percent) and its imports at nearly 204 million euro (down 9 percent).

Vietnam mainly exports phones and components, footwear, coffee, garments and aquatic products while importing seafood, chemical products, machinery and equipment, mechanical tools, pharmaceuticals and materials for garment and footwear production.

Two-way trade exchange between the two countries hit 1 billion euro in 2008 and has grown considerably ever since.

Tuna fishing faces difficulty despite growth

Vietnam’s tuna exports have earned US$154 million so far this year, a year-on-year increase of 19 percent, and the highest growth among seafood exports.

However, its growth also causes concerns – a drop in tuna quality has resulted in a sharp fall in price.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), since the beginning of this year the US has imported US$57 million worth of Vietnamese tuna, an increase of 3 percent from the same period last year. It is followed by the European Union with US$32 million (up 37 percent) and ASEAN with US$9.4 million (up 81 percent).

Nevertheless, despite the high output, the quality of tuna is being threatened by an increasing number of fishermen using high pressure lamps to reduce costs and increase productivity.

As a result, tuna prices have seen a continuous decline over the past months, from VND60,000-VND65,000 (US$3) per kilo to VND50,000-VND55,000.

Meanwhile, increases in the prices of fuel, ice and other necessities raise fishing costs from VND150 million (US$7,200) to VND170 million for a month-long fishing trip.

Low incomes have made many fishermen quit and do other jobs. Now, a large number of ships in central provinces like Phu Yen and Binh Dinh cannot go fishing due to a lack of labour.

Chairman of the Vietnam Tuna Association Vu Dinh Dap forecasts a record tuna output of 17,000-18,000 tonnes this year. To enhance the quality, fishermen should avoid using high pressure lamps and use traditional fishing methods, he suggests.

Banks aim high despite market challenges

HCM City’s major joint-stock banks have set ambitious credit growth targets for this year though the market remains very difficult.

Last Saturday, DongA Bank said it would achieve 9 per cent growth to reach VND55.2 trillion (US$2.6 billion).

Its general director Tran Phuong Binh said the economy continued to be shrouded in difficulty like last year, with non-performing loans being a major problem.

Demand for credit showed no signs of improving while quality of credit posed other challenges, he said.

The bank would therefore have to cut costs, improve risk management, and expand strategic partnerships, he said.

Statistics from the State Bank of Viet Nam show credit grew by a mere 0.03 per cent in the first quarter compared to a decrease of 1.96 per cent a year earlier.

A day earlier, Eximbank’s shareholders agreed at the annual general meeting that credit growth would be set at 15 per cent to top VND86 trillion ($4.1 billion).

With corporate clientele being its strength, Eximbank will continue to lend to this constituency while also stepping up lending to individual customers. Late last year, it had allocated VND5 trillion ($240 million) for lending at preferential interest rates.

Sacombank’s shareholders last Thursday approved a credit growth of 12 per cent this year, with total outstanding loans reaching around VND109 trillion ($5.2 billion).

In addition, both Sacombank and DongA Bank plan to increase turnover from other activities to reduce dependency on lending operations.

DongA Bank also expects to increase the value of its assets to VND85 trillion ($4 billion), a 23 per cent increase year-on-year.

Its deposit target by the end of this year is VND72 trillion ($3.4 billion), up 21 per cent against last year, and it hopes to achieve a pre-tax profit of VND1 trillion ($47.6 million), a year-on-year increase of 29 per cent.

It plans to hike its chartered capital to VND6 trillion ($285.7 million) from the current VND5 trillion and then apply for listing on the stock market.

Eximbank targets assets of VND200 trillion ($9.5 billion), up 18 per cent; deposits of VND110 trillion ($5.2 billion), up 29 per cent; and gross profit of VND93.2 trillion ($4.4 billion), up 12 per cent.

Sacombank targets increasing assets by 14 per cent, deposits by 16 per cent, and pre-tax profit by 13 per cent.

It also plans to increase chartered capital by more than half to VND16.418 trillion ($781.8 million).

VN must spice up price of pepper

The Viet Nam Pepper Association (VPA) urged enterprises to enhance the quality of pepper while devising measures for brand positioning made-in-Viet Nam pepper to increase the products’ export value.

According to VPA, Viet Nam’s pepper products were present in more than 150 countries worldwide, accounting for 50 per cent of the global market share.

However, made-in-Viet Nam pepper products remained unknown to many consumers across the world.

VPA pointed out that up to 95 per cent of exported pepper had only undergone preliminary processing.

In addition, pepper products were exported through foreign partners before reaching customers, meaning the products were mainly sold under the brands of foreign processors.

This meant the export prices of pepper were often 30-40 per cent lower than the prices of ready-to-sell products.

Statistics showed the pepper price in the domestic market declined by roughly VND5,000-10,000 (US$0.24-0.48) per kilogram at the end of March.

The price gap of pepper between the domestic and world market also widened in the first three months of the year. The price gap of black pepper increased from $295 per tonne in 2012 to $389 per tonne currently while white pepper from $89 to $450-500 per tonne.

The export prices for black and white pepper were $92 and $436 per tonne lower than the average price of 2012, respectively.

VPA’s president Do Ha Nam said enterprises should analyse the relationship between supply and demand in the market, to prevent price falls by choosing the best times for the release of pepper.

He also attributed the low price of made-in Viet Nam pepper products to their quality, as some did not meet the requirements of importers in terms of hygiene and safety.

According to Nam, there is a huge gap between the export value of black and white pepper, so enterprises should increase the percentage of white pepper produced to earn more profits.

In addition, the industry should aim to meet the US’s ASTA standard (about the safety for spices sold in the US) for the quality of pepper products. The percentage of ASTA-approved pepper Viet Nam exported to Europe and the US remained limited.

Nam also urged the Ministry of Agriculture and Rural Development to roll-out detailed planning for the long-term sustainable development of the pepper industry.

In the first quarter of 2013, pepper exports reached 38,374 tonnes with a turnover of $254.1 million, representing rises of 23.5 per cent and 20 per cent on the same period last year, respectively.

Stores enjoy holiday sales surge

Several supermarkets in HCM City reported an upsurge in sales during the Liberation Day (April 30) and May Day holidays when they offered big discounts.

Big C supermarket, which offered discounts of 5-50 per cent, said the rise in sales reached its target.

Huynh Thi Ngoc Tram, head of Big C’s public relations in the south, said the supermarket had stocked 30 per cent more than on normal days, and sold a lot of ready-to-eat and processed foods, fruits, vegetables and soft drinks.

There was also big demand for discounted items like kitchen utensils, garments and cosmetics, she added.

Sai Gon Co.op Mart chain also reported higher sales.

Vo Hoang Anh, director of Sai Gon Co.op Mart’s marketing department, said sales of fresh and processed foods, fruits and vegetables, milk, and beverages increased sharply as people shopped for holiday parties.

Other retailers like Maximark and Citimart were also happy with higher sales.

To cope with the rush, the supermarkets employed more cashiers than normal and offered free delivery.

However, traditional markets like Thi Nghe and Tan Dinh reported normal sales.

Tran Thi Kiem Hoa of the Tan Dinh Market management board said only stalls selling fresh food like meat, seafood, fruits and vegetables reported higher sales than normal.

Prices were stable despite the high demand, except of chicken eggs and certain vegetables, but that was due to a supply shortfall, she said.

Cellphones lead export growth

Viet Nam’s exports in April edged up 9.1 per cent from a year ago to US$9.7 billion. Exports of mobile phones and components accounted for $5.8 billion, up 92.3 per cent year-on-year.

Other items enjoying high export volume included garments and textiles with $5.1 billion (up 20.3 per cent) and electronics and computers with $3.2 billion (up 46.1 per cent).

Items with lower export volume were seafood with $1.7 billion (down 4.8 per cent), coffee with $1.3 billion (down 13.7 per cent) and rubber with $639 million (down 20.6 per cent).

Total exports in the first four months of the year were estimated at $39.4 billion, up 16.9 per cent over the corresponding period last year.

The domestic sector accounted for $13.9 billion – an increase of 7 per cent – while the foreign invested sector surged 23.2 per cent to $25.5 billion.

According to a recent HSBC report, Viet Nam’s export growth will remain strong both this year and next, contributing greatly to the country’s gross domestic product and ensuring a continued account surplus.

The bank’s economists expect that by the end of 2014, exports will be responsible for about 90 per cent of Viet Nam’s economic growth. The continued rise of exports supported by remittance inflow will allow Viet Nam to maintain its account surplus for the next two years.

The bank expects Viet Nam’s trade surplus this year to account for 2.7 per cent of GDP, compared to 0.8 per cent last year. Viet Nam earned a trade surplus of $780 million in 2012.

Viet Nam exported an estimated $12.64 billion worth of mobile phones and spare parts in 2012, up 97.7 per cent from 2011 and the most growth seen anywhere in the manufacturing sector.

Samsung Electronics Viet Nam (SEV) was responsible for 98 per cent of those exports, according to the Ministry of Industry and Trade (MoIT).The South Korean mobile phone maker plans to aggressively expand its production in Viet Nam with a total investment of $2.2 billion for the period until 2020.

Samsung has overtaken Nokia as the top mobile phone brand for 2012 and opened up a decisive lead over Apple in the smartphone market.

Southern potters face bleak future

Many pottery makers in the Cuu Long (Mekong) Delta province of Vinh Long have stopped or cut back production because orders have declined in recent years.

The province has for long enjoyed the advantage of having plenty of the clay containing aluminium sulphate, which is needed to produce red terracotta products, as well as a skilled pottery workforce.

The province’s famous red terracotta products have been exported to many countries and territories, including the EU, US, Australia, South Korea and Japan.

However, the global economic slowdown has seen a sharp reduction in export orders in recent years.

Duong Hoang Son, who had three kilns in Long Ho District’s Thanh Duc Commune, stopped production three years ago. He said the province’s pottery sector was at a standstill. The more they produced, the greater the losses local potters suffered, he said.

Son said that a little more than a decade ago, it was a prosperous period for potters in the province with production unable to meet demand.

Ho Minh Chau, owner of the Van Thang Pottery enterprise which has three kilns in Thanh Duc Commune, said orders for the province’s famous red terracotta products had been declining over the last five years. He had closed one kiln and was operating the other two at half capacity.

He said a set of three pots that cost VND60,000 (US$2.8) ten years ago continued to fetch the same price today, while its production cost, including labour, materials and transport, had increased three times, leaving producers in a very difficult situation.

When things were going well, buyers paid potters in advance, but now, they could only receive money three to six months after delivery, he said.

“Many producers now lack capital, are in debt and facing bankruptcy,” he said.

In 2000, the province had more than 130 pottery makers, most of them located in Long Ho and Mang Thit districts, according to the Vinh Long Pottery Association.

During its pottery heyday, the province produced about 50-60 million pottery products of various kinds each year and earned average annual export revenues of US$40 million.

Last year, just 12 million pottery products were made, down 20 per cent against 2011.

The province has just 32 pottery producers now. Of these, one-third do not operate regularly.

Ho Van Vang, chairman of the provincial pottery association, said: “Orders have been declining every year and this year they have declined further.”

Besides, the industry was mired in several problems including small-scale production, outdated production techniques and lack of export information, he said.

The province’s pottery products are mostly exported via traders in the southeastern province of Binh Duong.

Viet Nam – Spain trade exceeds 2 billion euros

Two-way trade between Viet Nam and Spain reached a record high of over 2 billion euros (US$2.64 billion) last year, an increase of 19.4 per cent against the previous year.

In 2012, Viet Nam exported nearly 1.8 billion euros ($2.37 billion) worth of goods to Spain, a rise of 23.8 per cent. Imports went down nine per cent to around 204 million euros ($270 million), according to Spanish customs authorities.

Viet Nam mainly shipped phones and components, footwear, coffee, garments and aquatic products to Spain, while importing seafood, chemicals, machinery and equipment, garment and footwear materials and pharmaceuticals.

Two-way trade has continuously increased since it first hit 1 billion euros ($1.32 billion) in 2008, except for during 2009 due to the global financial crisis.

Purchasing index signals manufacturing expansion

The seasonally adjusted HSBC Viet Nam PMI (Purchasing Manufacturing Index) posted 51.0 in April, up slightly from 50.8 in March, signalling back-to-back improvements in operating conditions for the first time in nearly two years.

The PMI rose because of faster growth of new orders and employment and a further expansion of production volumes, according to the HSBC report issued yesterday.

Trinh Nguyen, Asia Economist at HSBC, said: “The expansion of manufacturing activity reflects a gradual improvement of domestic demand. The manufacturing sector continues to see growth, as indicative by the rise in employment and output.

“While the economy is weighed down by underperformance of the State sector, the private sector, especially the manufacturing industry, continues to pull its weight to sustain the economy. The year-to-date increase of foreign investment into manufacturing shows Viet Nam’s still-strong competitiveness in labour-intensive manufacturing.”

Manufacturing output rose for the second successive month in April, albeit at a slightly slower pace than in March.Higher output reflected a further increase in incoming new orders, as companies reported improved sales to domestic clients.

Meanwhile, subdued international market conditions meant that the level of new export business showed only a negligible increase compared to one month earlier.

Manufacturing employment also rose for the second consecutive month during the latest survey period, with job growth linked to the recent mild recoveries in production and new order volumes.

Ha Tinh paves the way for investment

The central province of Ha Tinh has granted investment certificates to six domestic and foreign-invested projects worth a combined VND55.4 trillion (US$2.63 billion).

During a conference to announce a master plan on socio-economic development for the province into 2020 late last month, People’s Committee Chairman Vo Kim Cu said the province would improve the investment climate and create favourable conditions for investors to successfully develop their projects.

Since 2011, 301 new projects worth more than VND346 trillion ($16.5 billion) have been licensed to operate in Ha Tinh. Among them there are 48 foreign projects with total registered capital of VND218 trillion ($10.4 billion), including those run by giants such as Formosa (Taiwan), Samsung (South Korea) and Mitsubishi (Japan).

Deputy Prime Minister Nguyen Xuan Phuc urged Ha Tinh to continue promoting its potential and master plan to businesses and regional countries in order to attract investment in priority sectors.

The province should also improve the quality of its human resources to serve economic zones and the demands of large projects, he added.

The master plan was based on the province’s competitive sectors, namely steel manufacturing; agriculture, forestry and fisheries; trade, transport and logistics; textiles and garments; construction; education and training; and information and communications, Cu said.

By 2020, the province aims to have an annual economic growth rate of 18.4 per cent, with the industrial, service and agricultural sectors accounting for 54.7 per cent, 32.2 per cent and 13.1 per cent respectively.

Drinks firm to build VN brewery

Viet Nam is quickly earning a reputation as a nation of beer lovers, with alcohol sales rising rapidly and local breweries flourishing.

Now the country has attracted the world’s largest beer maker, Belgium-based Anheuser-Busch InBev.

The company’s Chief Executive Carlos Brito told Reuters that Viet Nam was a natural place to go after their success in the Chinese market. Known best for its Budweiser brand, Anheuser-Busch InBev plans to make its drinks widely available in the country from late 2014 and build a large brewery to meet demand.

According to statistical research from Euromonitor International, an independent strategy research for consumer market companies, Viet Nam was the biggest consumer of beer in ASEAN in 2011 with 2.6 billion litres. In 2009 the figure was 1.6 billion litres and at the time there were 500 breweries in the country meeting the demand, including more than 400 private and small-scale producers. That number is believed to be significantly larger now.

According to Nguyen Van Viet, president of the Vietnam Beer, Alcohol and Beverage Association, the beer and wine industry achieves an average growth rate of 10 to 15 per cent every year. He said that the 100 registered and professional brewing companies produced 2.6 billion litres of beer alone, contributing VND13.6 trillion (US$647million) to the State budget – as much as 4 per cent of total revenue. With the hundreds of unregistered local producers included, the amount is estimated to be huge.

Viet revealed that the industry plans to produce 4 billion litres per year by 2020 and 6 billion litres per year by 2025.

These statistics go some way to explaining why beer brands such as Carlsberg, Heineken and SABMiller have retained a presence in the country.

Viet warned that this large-scale investment could be damaging to local beer companies, especially small-scale breweries with low-tech production capacity, but also pointed to the fact that it would take any international brewery company a lot of work to be successful in Viet Nam. He cited the examples of Fosters and Laser, who both left the market after initially exciting PR campaigns and early success.

Local footwear exports surge

Viet Nam ‘s footwear industry sees many favourable conditions to boost its exports as most local businesses have received steady orders for the second and third quarters of 2013.

According to the Viet Nam Leather and Footwear Association (Lefaso), many Vietnamese producers are now turning to new markets, including the US and Japan, in addition to their traditional consumers in the EU.

Statistics from the Viet Nam General Department of Customs show that the footwear export turnover hit US$1.73 billion by the end of March, or a year-on-year increase of 16.1 per cent, making it one of the country’s key 10 export items with total earnings in the first quarter of 2013 surpassing $1 billion.

The upcoming signing of the Viet Nam-EU Free Trade Agreement (FTA) and the Trans-Pacific Partnership (TPP) Agreement is expected to bring more advantages to the industry.

The TPP alone will help Viet Nam penetrate into a larger market of 2.7 billion consumers that makes up half the global GDP.

In addition, tariffs levied on imports to the US, one of Viet Nam’s key markets, will be slashed to zero per cent from the current 14.3 per cent on average.

Footwear and leather exports to TPP member states are expected to account for more than 47 per cent of the sector’s total value, with the US having the share of 31 per cent.

The Japanese market is also forecast to contribute significantly to the sector’s 20 per cent growth in orders this year, especially since the Tokyo Business Association sent 10 footwear businesses to Viet Nam to conduct market research at the end of last year.

Over half of these businesses have subsequently decided to shift their orders from other markets to Viet Nam.

The industry targets $9.7 billion in revenues this year, an increase of 10 per cent over 2012.

MA from ASEAN countries stronger

There has been an emerging wave of MA (mergers acquisitions) deals with investors from ASEAN countries taking over Vietnamese firms, according to a report announced by financial service firm Stoxplus last week.

Many groups from Thailand, Singapore, the Philippines and Malaysia have conducted MA deals with Vietnamese firms in recent times. Since 2012, large ASEAN groups have carried out 15 deals worth over US$634 million. In 2011, there were six deals totaling US$127 million.

Notably, Indonesia’s PT Semen Gresik Group has acquired a 70% stake in Thang Long Cement Company for around US$230 million.

Nguyen Quang Thuan, general director of Stoxplus, said in this report that these foreign companies have strong financial capability, ample cash and are capable of reaching cheap capital sources to realize these deals.

Meanwhile, Vietnamese firms being acquired are facing financial problems due to suffering expensive capital cost over a long period of time. Some enterprises have strongly used financial leverage, of which Thang Long Cement Company had a debt-to-equity ratio of 11 last year.

As local enterprises do not have long-term development strategy given the impacts of the financial slowdown, they have been devalued in these MA deals. This is a good chance for foreign companies to push up MA activities in Vietnam.

Digital media sales hit US$3.3 billion

Despite the domestic digital media industry still being in its infancy, it has generated sales of over US$3.3 billion for industry players, heard a forum on digital communication marketing in HCMC last week.

At the forum, Le Thanh Tam, general director of International Data Group ASEAN, said digital communication technology is developing vigorously on global markets and that Vietnam is no exception.

Tam noted that Vietnam’s advantages are developed information technology infrastructure, 31.1 million Internet users, and the diversity of terminals used for Internet and 3G services connection with competitive prices.

These advantages will drive the local digital communication industry to move at a fast pace in the next few years, he said.

IDG at the forum informed their research results showing that revenue of the local industry reached US$3.3 billion, which is mainly contributed by Internet users and online papers and magazines readers rather than digital communication services like social networks, e-commerce and online games and videos.

Despite the fast-growing development as evaluated by experts, the industry’s scale has still remained modest compared to other Asian nations.

For instance, digital communication services sales of some regional countries like Thailand and Indonesia posted up to US$4.9 billion and US$5.4 billion respectively. The two ASEN nations have shown a comprehensive development in all related areas such as online advertising, video games, digital music, digital content and e-commerce in line with the business-to-business model.

According to Tam, the local digital communication sector has still remained nascent and is yet to be invested properly while facing fierce competition from foreign entities. On the other hand, he said, State supporting policies for the development of the industry are still inconsistent.

“The copyright protection policy in Vietnam is already available but its deployment is still weak, seeing services and Internet content trading companies run into trouble,” he remarked.

One of the noticeable points of IDG’s report is that Vietnamese tend to spend more time connecting and searching information and joining social networks on the Internet.

The average Vietnamese spends 29.1 hours a week using Internet services while the average Singaporean spends 21.5 hours, Filipino 19.2 hours, Malaysian 17.4 hours and Indonesian 16.3 hours.

Postal firms boost e-commerce

Several postal companies have invested in e-commerce as they saw great opportunities from this activity while providing delivery and payment collection services for online sales sites.

Nguyen Duc The, general director of Netco, said online sales sites simply received and processed orders, while postal carriers took charge of delivery, payment collection and transfer of the money back to goods suppliers.

Because goods sold online are often cheap, remuneration for postal firms is very low, he noted. He found that postal companies could provide an e-commerce service, and thus has set up the online sales site netco.com.vn.

Similar to Netco, the HCMC Post Office since 2011 has been involved in e-commerce through goods delivery and payment collection. Currently, the post office is cooperating with around 300 enterprises and over 420 households selling goods via television, telephone and the Internet.

Every month, the HCMC Post Office collects around VND100 billion for e-commerce businesses. In 2012, its revenue from goods delivery and payment collection services doubled the figure from 2011.

The HCMC Post Office intends to invest heavily in e-commerce service this year. It is providing e-commerce service on a trial basis on the website buudienonline.com.

According to the Hanoi Post Office, along with the development of e-commerce, the number of items that e-commerce sites asked the Hanoi Express Center under the post office to deliver has significantly grown in the last two years, making up more than 30% of the total items delivered by the postal carrier. The Hanoi Post Office is considering whether to do e-commerce business or not.

Representatives of several online sales sites said delivery and payment collection services supplied by postal carriers were very suitable for them. Postal companies often have extensive networks across the nation and allow customers to make payment after they have received the goods, they explained.

PTI, Maritime Bank distribute home insurance product

Post Telecommunication Insurance Joint Stock Corporation, or PTI, and Maritime Commercial Bank cut a deal last week to distribute home insurance product M-HomeCare.

Maritime Bank under the agreement will become the sole distributor of the M-HomeCare product. Customers who buy this product will enjoy simple procedures, preferential insurance premiums and other assistances in home rentals and fees in architect hire, cleaning and fire fighting.

Initially, Maritime Bank has plans to distribute this product in key localities such as Hanoi City, HCMC, Danang City and Haiphong City before expanding the distribution network to other localities.

In 2010, PTI was also chosen as the insurance product provider for corporate customers of Maritime Bank.

Cho Gao Bridge put into use

Transportation across and along Cho Gao Canal in the Mekong Delta province of Tien Giang has now been easier as Cho Gao Bridge was officially opened to traffic on Wednesday.

Cho Gao Bridge is an important bridge on National Highway 50, connecting the Tien River and the Vam Co River. The bridge has a total length of 3.57 kilometers, with the main span stretching 595 meters and the two approach roads measuring 2.975 kilometers.

Having an investment of over VND1.3 trillion mobilized from Government bonds, the project was invested by the Project Management Unit No. 7 under the Ministry of Transport.

The bridge was officially kicked off in July, 2010. However, it was delayed in September, 2011 due to capital shortage and was not restarted until last August.

Previously, boats were often congested at the old bridge as it’s clearance height was small.

January-April FDI falls sharply in HCMC

While the nation’s foreign direct investment (FDI) has markedly picked up this year, HCMC, which was among the top localities with high FDI attraction in previous years, has seen a sharp decline in FDI inflow.

A recent report of the city’s Department of Planning and Investment shows that both fresh and additional investment capital in the city only reached US$348 million in January-April, shrinking more than 37% year-on-year.

With such low FDI inflow, according to the Foreign Investment Agency under the Ministry of Planning and Investment, HCMC was no longer in the top five localities for FDI attraction in the first four months and has fallen behind Thanh Hoa, Thai Nguyen, Binh Dinh, Binh Duong and Dong Nai provinces.

It is noted that the gap of investment attraction between HCMC and the leading FDI localities is huge, with Thanh Hoa posting up to US$2.8 billion in investment and Thai Nguyen more than US$2 billion in the past four months.

As per the report, among total pledges of US$348 million, 105 new projects totaling US$140 million were licensed, up over 32% year-on-year.

As such, the remainder of more than US$207 million as additional capital of FDI companies in operation citywide is higher than fresh amounts but still falls by over 53% over the same period in 2012.

The city recently granted an amended investment license for Japan’s Nidec Tosok Company to raise its capital by roughly US$96 million, taking its investment capital in Tan Thuan Export Processing Zone (EPZ) to a combined US$205.6 million. However, no considerable improvements in the city’s FDI inflow have been made in the past four months.

The report indicates that the four-month FDI attraction into the city mainly focused on investment projects outside EPZs and industrial parks (IPs) worth over US$183 million. Investment projects in EPZs and IPs contributed US$123 million and those in the city’s south over US$40 million.

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

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