HCM City outlines garment ambition
Authorities in HCM City plan to double the garment and textile industry’s export turnover by 2015 over the 2010 figure of US$3.3 billion.
The city, which sees the industry as one of its five key exports from 2011 to 2015, has asked manufacturers to expand production, improve product quality and find new markets.
In a report released on Tuesday, the Thoi Bao Kinh Te (Viet Nam Economic Times) said that most garment and textile factories had moved to rural areas, which there is a rich source of manual labourers.
In recent years, garment companies in HCM City have improved product quality and design by investing in advanced technologies.
As a result, many companies such as Anh Phuoc, Thai Tuan, Viet Thy, Viet Thang and Phong Phu have increased their market share in the country.
HCM City is also developing a plan to reduce the industry’s reliance on imported raw materials, according to the report.
A draft plan calls for more local production of materials used in the garment and textile industry, including cloth and accessories like zippers. Currently, most raw materials are imported.
The plan targets increasing the amount of locally produced raw materials from 45 per cent to 65 per cent by 2020.
The city’s five-year plan drawn up for the industry also calls for a design centre, a factory to produce accessories for the industry, and a plant to produce machinery for garment factories.
Currently, more than 5,400 garment and textile manufacturing and trading companies are operating in HCM City, with a total of 306,000 labourers.
The output of the city’s industry accounts for 37 per cent of the total figure nationwide.
According to the city’s Department of Industry and Trade, the local garment industry has maintained growth despite many challenges during tough economic times.
Last year, the industry’s export turnover reached more than $4.3 billion, a year-on-year increase of 11.5 per cent.
Inquiry launched into tax-free car scam
Phuong Nam Company in HCM City has denied being involved in the import of five luxury Lexus cars registered as assets of Overseas Vietnamese, according to Da Nang Customs Office.
The law allows overseas Vietnamese settling down here to import their used cars or motorbikes without paying import and value-added taxes.
The cars in question, including three Lexus LX 570, one Lexus GX 460F and one Lexus RX 350, were sent to Phuong Nam Company from Oakland in the US and from Hong Kong.
In letters sent to the Da Nang Customs Office, the company said that the cars were sent to the wrong address.
The case is being investigated by the General Department of Customs and Investigation Police Agency of the Ministry of Public Securities.
If the importers fail to prove the cars were the “used” assets of overseas Vietnamese settling down in Viet Nam, the cars will be declared illegal imports.
The office said that if the cars had been imported under normal rules the State would have collected tens of billions of dong in taxes.
At present, 21 cars registered as assets of returning Vietnamese are being held at Da Nang Port in the central region. Insufficient proof has been provided to date on their tax-free status.
Customs statistics show that 178 used cars imported by overseas Vietnamese are being held at ports around the country.
Deputy Director of the Viet Nam Customs Nguyen Van Can said those found to have abused car import rules will be reported to Customs’ Anti-smuggling Investigation Department.
Can said those who forged papers to import cars would be charged criminal liability. The imported cars may also be confiscated.
VF1 to become open-ended fund
The investors of the Viet Nam Securities Investment Fund (VFMVF1) decided to convert from a closed-end fund to an open-end fund at an extraordinary investors’ meeting yesterday.
VFMVF1, which was the first closed-end public fund, will have its final trading day on the HCM City exchange on September 24 and re-start operations as an open-end fund on November 7 this year.
Transactions will be carried out two times a month.
The net asset value (NAV) of the fund ending March reached over VND1.734 trillion (US$82.6 million) with first-quarter profit of VND214.5 billion ($10.2 million).
As of June 20, investments in listed stocks made up 67 per cent of the portfolio, with 64 per cent focusing on large-cap stocks. Cash occupied 31 per cent of the fund’s assets.
The fund will continue its balanced investment strategy, allocating 80 per cent of assets to stocks and this proportion can increase to 90 per cent in case of an optimistic market outlook. Another 20 per cent will be assigned to Government and corporate bonds and cash.
According to the fund, foreign ownership in an open-end fund will not be capped at 49 per cent. This means that through capital contribution, foreign investors can increase their holdings in major companies in which the room for foreign investment has been almost exhausted.
“Converting the fund is a good option to satisfy the diverse investment demand of investors,” the fund’s representative said.
Taxation imposed on fund share transactions is no different between the two types of funds.
Open-end funds are popular schemed around the world, but were only introduced to Viet Nam in March last year.
An open-end fund is deemed to offer a more flexible investment option as investors can buy and sell shares directly from the fund itself.
It contrasts with a closed-end fund which typically issues all the shares at the outset, with such shares being tradable between investors thereafter.
Snail-paced projects revoked in Quang Ngai
Licences for 42 out of 117 snail-paced projects in central Quang Ngai Province had been revoked, local authorities announced.
The revoked projects, including 11 in Dung Quat Economic Zone and eight in provincial industrial zones, had made no progress since the day of licensing because of financial shortages.
By the end of 2012, the province had 262 projects licensed, worth VND190 trillion (US$9 billion).
Firms told not to rely on banks
Small- and medium-sized enterprises must try to generate more capital on their own and not rely on bank loans, a seminar heard yesterday.
The seminar, which discussed cash flow solutions for SMEs, was organised by the HCM City Union of Businesses Association in collaboration with banking portal laisuat.vn under the sponsorship of SeABank.
Dang Bao Khanh, general director of SeABank, said economic growth had relied on loans from commercial banks and that enterprise-owned capital represented only 20 per cent of total needed capital for business.
Banks are also businesses and must preserve their capital, he said, adding that banks and businesses need to work together to unfreeze capital flows.
SeABank’s current liquidity is high and the bank is ready to support funds for enterprises, he said.
But companies need to demonstrate that their projects are feasible and prove they can generate cash flow to convince credit institutions to approve loans.
To support SMEs, the bank is offering a credit package worth a total of VND2,000 billion with preferential interest rate of 9-11 per cent per year between March 15 and December 31. At least VND200 billion of that amount has been disbursed to businesses.
In addition to the provision of support to enterprises in urban areas, SeABank is also focusing on business households in the rural areas with small loans and preferential interest rates.
Nguyen Trung Kien, manager of the HCM City branch of State Bank of Viet Nam’s general research department, said the SBV’s decision to reduce interest rates was done primarily to help SMEs.
The current loan interest rate has fallen by 3-4 per cent to 8-10 per cent per year for sectors such as agriculture, exports, support sector, hi-tech and SMEs.
The interest rate is equal to that in the 2005-06 period and lower than in 2007, he said.
In the coming time, the SBV will ask commercial banks and credit institutions to settle bad debts and restructure their organisations to support businesses, especially SMEs.
Tran Du Lich, member of the Economic Committee of the National Assembly, said “the development of SMEs is a key condition in promoting a sustainable economy”.
He pointed out that SMEs should not depend heavily on commercial banks.
Currently, in Viet Nam, 97 per cent of all short-, medium- and long-term loans are provided by commercial banks, he said.
“Challenges continue to face both the global and local economy, but opportunities do exist for businesses who know how to recognise and grasp them,” Lich said.
Despite a mixture of opportunities and challenges, it is a good time for businesses to restructure and develop in a sustainable way, contributing to a healthier market, he added.
The Vietnamese economy can recover by the end of the year if the Government’s resolutions No 1 and No 2 and support package of VND30 trillion for the property sector are implemented effectively.
The country’s growth rate is expected to reach 5.5 per cent by the end of this year and 6 per cent next year.
To reach those goals, inflation should be controlled and trust in the market should be restored.
Lich also suggested that the inflation rate should be maintained at 7 per cent from now to 2015.
PetroVietnam exploration arm surpasses oil and gas target
The PetroVietnam Exploration and Production Corp (PVEP) tapped 1.8 million tonnes of oil and 701 million cu.m of gas in the first half this year, surpassing its targets by 6 per cent and 17 per cent respectively.
In the period, PVEP also signed two new oil and gas contracts with domestic partners and put four new oil fields into operation.
In the remaining half of this year, PVEP needs to make every effort to complete its output targets.
This could be a challenge for the corporation because reserves in existing fields are falling sharply while new, smaller fields are likely to fall behind schedule.
Supermarkets in HCM City launch major Family Day promotions
Supermarkets in HCM City launched massive promotions to mark the Viet Nam Family Day on June 28.
Sai Gon Co.op has cut prices by up to 45 per cent on more than 2,000 items, mainly essential goods, until July 14 at all of its outlets – Co.opmart, Co.opFood and Co.opXtra Plus Thu Duc.
To celebrate the Viet Nam Family Day and mark its own 15th anniversary, the Big C supermarket chain is offering discounts of 5- 50 per cent on 1,200 products including fresh and processed food, dry food, household appliances, fashion items, cosmetics, electronic products and other goods until July 1.
Under its “Am ap gia dinh Viet” (Warming Vietnamese family) programme, the VinatexMart supermarket chain is also offering big discounts on garments and other products until July 11.
Banks push bad debt reforms
The State Bank of Viet Nam (SBV) should reduce the 65 per cent rate of real estate collateral for loans being sold to the Viet Nam Assets Management Company (VAMC), bankers said in a Ha Noi meeting on Wednesday.
According to the SBV draft circular on the VAMC’s operation, the assets firm will only buy non-performing loans (NPLs) backed by collateral, while at least 65 per cent of the collateral value must be real estate.
At the meeting to make recommendations for the draft circular, representatives from banks said the 65 per cent rate was too high, hindering banks from selling NPLs to the VAMC as intended by the central bank.
Agribank said loans with 65 per cent collateral in real estate were only held by real estate businesses. For other production companies, which preferred investing in machinery and factories to land, this ratio was insignificant.
Deputy head of Vietcombank’s Debt Capital Market Division Nguyen Thi Kim Oanh said the rate was typically 50-60 per cent at his company, adding that 65 per cent was unfeasible.
The central bank should lower the rate to roughly 40 per cent so banks could realistically sell loans to VAMC, Vietcombank suggested.
Director of the Bank for Investment and Development of Viet Nam (BIDV)’s Legal Division Bui Minh Khai pointed out that the draft circular did not regulate who – VAMC or credit institutions – would appraise real estate collateral for loans.
Vietcombank’s Oanh posited that VAMC would decide the appraisal of collateral after obtaining recommendations from independent advisory companies.
Bankers also proposed reconsidering the provision that VAMC will only buy individual loans worth more than VND1 billion (US$47,200).
Banks, especially Agribank, could not sell bad debts lent to household businesses and producers, as most of the loans were less than VND1 billion, BIDV’s Khai added.
Seafood exporters face net of red tape
The draft circular on controlling the quality of seafood exports, from raw materials through to the finished products, presents many challenges to seafood exporters, says the Viet Nam Association of Seafood Exporters and Producers.
The draft contained many amendments to existing Circular 55 and would not only focus on the control of quality of finished products before shipping.
If the draft was accepted, the department would assess the quality of the entire production chain, as well as batches of the finished product, the National Agro Forestry Fisheries Quality Assurance Department said.
However, association deputy general secretary Nguyen Hoai Nam said the draft regulations on production and food quality standards were too strict and would create difficulties for exporters.
The draft stipulated firms must stop exporting products if they had more than three batches of similar products that failed to meet the quality and food safety standards of export markets.
Nam said producers received warnings from export markets for products that did not meet antibiotic residue standards.
Nam said antibiotics were introduced in the rearing process on aquatic farms so the department needed to push for more controls on their use.
Viet Nam the second biggest SE Asia market for Bosch Group last year
The Vietnamese market generated US$286.4 million in turnover for Bosch Group last year, accounting for 31.3 per cent of the group’s turnover in Southeast Asia.
The news was announced by the world leading technology and service supplier in HCM City on Wednesday.
The German firm said its global revenue last year hit $68.3 billion, an increase of 1.9 per cent, including $16.4 billion sales in Asia. Southeast Asian markets generated $912.6 million.
Vo Quang Hue, General Director of Bosch Viet Nam said Bosch was now the leading European investor in Viet Nam, with operations in Ha Noi, HCM City, Da Nang and Dong Nai.
Viet Nam was the firm’s second major market in Southeast Asia and a strategic investment destination, said Hue.
Last year, despite the difficult economic situation, Bosch Viet Nam increased its workforce by 36 per cent to 1,200.
Vinatex plans to plant 10,000ha of cotton in Quang Tri by 2015
The Viet Nam National Textile and Garment Group (Vinatex) has set a target of planting 10,000ha of cotton in the central province of Quang Tri by 2015.
To realise this target, the group plans to implement a 2,000ha project in Trieu Phong District in the 2013-14 period.
The provincial Department of Planning and Investment and relevant departments have been asked to help Vinatex carry out a feasibility study on the project.
The district People’s Committee will work with the Departments of Agriculture and Rural Development, and Natural Resources and Environment to allocate land to Vinatex for a trial plantation.
Seafood exports expected to earn US$6.5 billion this year
Vietnam’s seafood export earnings in 2013 are likely to reach US$6.5 billion, an increase of US$300 million against last year’s figure.
The Vietnam Association of Seafood Exporters and Producers (VASEP) says seafood export turnover already reached roughly US$2.88 billion in the first six months of the year, up 0.9 percent against the same period last year.
Vietnam’s largest seafood importer was the US, making up 20.4 percent of its total turnover.
In the first five months of the year, the country earned US$470.4 million from exporting aquatic products to the US, up 5.5 percent over last year’s figure.
Its aquatic exports to China and Thailand have also grown by 40.6 percent and 22.7 percent respectively, from a year earlier.
VASEP general secretary Truong Dinh Hoe says there are promising prospects for exporting seafood products to the US despite its anti-dumping and anti-subsidy duties against Vietnamese tra fish and shrimp.
From now until the end of this year, domestic businesses hope to enjoy lower interest rates or bank loans.
Deputy Director of the Department of Fisheries Nguyen Huy Dien says the seafood sector is trying its best to achieve the export target of US$6.5 billion.
Deputy Minister of Agriculture and Rural Development Vu Van Tam says that in the remaining months of the year, the agricultural sector will focus on exporting shrimp to make a higher profit as other nations in the region are facing difficulties in export because of shrimp disease.
Vietnam-China Border Trade Fair to open in November
The 13th Vietnam-China Border Trade Fair, themed “Cooperation-Friendship and Integration – Development,” will take place in the city of Lao Cai, in the northern border province of the same name, from November 13-18.
As part of the national trade promotion programme for 2013, the fair is expected to accommodate 650-700 stands run by 500 enterprises from both countries.
The fair is organised annually, alternating between Lao Cai province and China’s Yunnan province, with the goal of promoting trade cooperation between the neighbours.
On display at this year’s event will be a wide range of commodities such as agro-forestry, seafood products, machinery, electronic and electrical devices, handicrafts, fine art products, pottery and wooden furniture.
Several tours in the economic corridor, which links Vietnam’s northern localities of Lao Cai, Hanoi , Hai Phong and Quang Ninh with Yunnan ’s Kunming city, will be also promoted at the fair.
According to Le Tien Dung, Director of Lao Cai province’s Trade, Investment and Tourism Promotion Centre, his province and Yunnan will continue promoting the fair in the run up to November in order to lure even more businesses to set up stalls at the event.
Price of poultry and pork falls, feed hikes
While feed price has seen a continuous rise in the last six months, price of poultry and pork has fallen by 40-46 percent compared to the beginning of the year, said the Ministry of Agriculture and Rural Development on June 25.
According to the Ministry, the breeding industry has faced much difficulty in the last six months, especially in the southern region. Selling price has been lower than cost price causing huge losses to breeders.
A kilogram of industrial chicken fetched VND32,500 in January but has now dropped to only VND17,000-19,000 a kilogram in the southern region.
Egg price has plunged from VND24,000-27,000 per pack of ten to VND18,000-19,000.
While raw material for feed production has escalated by 24-42 percent.
Millions no longer under personal tax bracket after July
Once the new threshold for personal income tax is increased to VND9 million (US$430) per month starting July 1, millions of people will no longer come under the personal income tax bracket.
The Ministry of Finance is submitting a plan to the government asking for amendments to the tax law and raising the threshold of personal income tax from the current VND4 million ($190) to VND9 million per month and deduction for families from the current VND1.6 million to VND3.6 million per dependant per month.
This means that only single persons who earn less that VND9 million per month and people with one dependant who earn less than VND12.6 million will not be obliged to pay tax from July 1.
With the new threshold, the state budget revenue will decrease by VND5,200 billion ($247,000) and about 2.8 million people will no longer pay tax on their income starting next July.
In addition, there will be other allowances such as toxic allowance or for people who have contributed in wartime, and tuition fee for laborers’ children who study in oversea countries. These will all be exempt from tax.
Income from transfer property assets between husband and wife, parents and children, parents-in-law, meal wages, night shift wages and overtime work wages will also see tax exemption.
The new tax law also provides for reduction of tax if people face natural disasters, fire, illnesses and such accidents.
The Ministry of Finance also announced that taxpayers and their dependants will receive reduction only if they have a tax code, without which they cannot file for exemption. Taxpayers have three months to submit documents of dependants to the Ministry.
Nguyen Van Phung from the Ministry said organizations and companies have been instructed with procedures to follow and the Tax Department said it will issue a tax code to taxpayers after July 1.
HCM City businesses bemoan exorbitant licensing fees
Foreign firms which want to invest in Vietnam often have to spend between USD10-20,000 to get a license, said Do Kim Dung, Vice Chairman of the municipal Advertising Association.
The HCM City Investment and Trade Promotion Centre joined with some local departments to hold a dialogue on June 26 between municipal authorities and enterprises in the city.
According to Dung, many foreign companies plan to invest in the Vietnamese advertising sector, however, complicated administrative procedures discourage them. They have requested to submit their application documents to the city’s Department of Planning and Investment which will seek approval from the ministries of planning and investment, industry and trade, culture, sports and tourism and information and communications. Therefore, businesses have to wait at least two months for this stage.
Then enterprises are suggested to directly come to Hanoi to meet with management agencies to get answers for their procedural questions, taking much time and cost. After receiving the feedback from the ministries, they have to wait for the HCM City People’s Committee’s approval. As a result, it takes them from 6 to 18 months to be granted with an investment license.
“A number of consulting firms charge between USD10,000 and USD20,000 for an investment license, including bribes. Many foreign advertising companies complained to us about the high fees, meanwhile the registered capital for an enterprise in this sector is around USD100,000,” he noted.
Nguyen Hoang Minh, Deputy Director of the HCM City Department of Planning and Investment said the department is seeking measures to support enterprises but due to licensing relating to many agencies at different levels, speeding up the processing of the applications was beyond their control.
Minh added that his department had informed the city People’s Committee of the licensing issues and also raised them at ministries and agencies meetings. However to date no solution has yet been worked out.
Truong Thanh sells 20% stake to foreign partner
Truong Thanh Furniture Corporation (TTF) intends to sell a 20% stake to a foreign partner as part of its charter capital increase plan.
Vo Truong Thanh, chairman and general director of TTF, said that the stake purchase with a partner from an East Asian country aimed to increase charter capital and reduce dependence on bank loans. He declined to give the foreign partner’s name, however.
According to Thanh, TTF plans to have two share issuances, with 14.4 million shares priced at VND5,000 each and issued for existing shareholders in the first phase. Meanwhile, the second share issuance will be for the foreign partner.
The management board presented to shareholders the share issuance plan of issuing 14.4 million shares to increase charter capital from VND590.6 billion to VND735 billion at a meeting in April. The expected time for first issuance is in the second or third quarter.
Thanh said that the in-principle deal has been signed. If it works, the stake proportions at TTF will have a big change, with equal stake amounts seen among the three groups of Thanh’s family, local shareholders and foreign shareholders.
TTF entered its difficult period in last year’s second quarter when many banks lowered credit limits and the firm was in need of stable working capital to meet the increasing production demand.
The credit limit reduction at banks has interrupted the firm’s cash flow, resulting in weaker production. After that, banks have continued to cut credit limits when seeing lower business results at TTF.
TFF earned only VND2.5 billion in after-tax profit last year while the figure obtained in this year’s first half is VND5 billion.
Vinacomin warns of State loss on coal export tax hike
As the export tariff on some types of coal is now raised to 13%, coal exports in the second half of the year may be only three million tons instead of seven million, causing a loss of some VND500 billion to the State budget, said the State-owned coal corporation.
Vietnam National Coal and Mineral Industries Group (Vinacomin) gave such a warning after the Ministry of Finance issued Circular 71/2013/TT-BTC on coal export tariff hike. From July 7, the tariff on stone coal, briquette, coke, semi coke, lignite and peat, whether agglomerated or not, will be raised from 10% to 13%.
Nguyen Van Bien, deputy general director of Vinacomin, told the Daily that Vinacomin in the year to date had exported seven million tons of coal.
Initially, the firm expected an additional seven million tons would be exported in the rest of the year. However, the increase in coal export tariff may slow down coal export.
To avoid losses, Vinacomin will have to raise export prices. Thus, many buyers may switch to other countries with more competitive prices, he said.
He forecast only three million tons of coal would be exported from now to the year’s end, down four million tons from the initial expectation.
If three million tons of coal was exported with a tax rate of 13%, export tax revenue would rise by VND130 billion. However, revenue from natural resource tax, value added tax and environment fee would drop by an estimated VND500 billion, he said.
Regarding the price of coal sold to power plants, he said the price must be hiked further because it currently stood at only 85-87% of the cost of coal production in 2013. Therefore, the price of coal sold to the power sector will soon be adjusted to match the production cost and follow the market mechanism.
On April 20, Vinacomin increased the price of coal sold to the power industry by 27%, dealing a hard blow to power plants because coal price now makes up 50-70% of the total cost of electricity production at coal-fueled power plants.
Dairy products lead FMCG sector
Dairy products continue to record healthy growth and lead the fast-moving consumer goods (FMCG) sector, according to a report by Kantar Worldpanel Vietnam.
Dairy products have achieved 12% growth in urban areas and 20% in rural areas, gaining top spot in the local FMCG industry.
Experts have remarked the local dairy market is in a hot growth period, with an average growth rate of some 20% per year.
Dairy products take a major part of the spending on FMCG in urban areas. Recently, this group of items has made a significant breakthrough in rural areas, says the report.
In urban areas, the average monthly spending on FMCG is VND1.13 million per household, in which VND372,000, or 32%, is spent on dairy products.
Meanwhile, in rural areas, an average VND515,000 is spent on FMCG every month, with spending on dairy products reaching VND114,000, the third largest part of the total sum, only after food and beverages.
As per the report, growth in the FMCG market is slowing down in both urban and rural areas. Most shopping channels in urban areas have recorded modest growth due to the overall market decline.
Currently, about 60 dairy producers are competing in the local market, mainly in the fresh milk segment.
The powdered milk segment also witnesses fierce competition, with a profit margin of up to 40-50% for producers, said Tran Bao Minh, managing director of International Dairy Products Co. (IDP).
In this segment, there is a wide gap of some 50% between the prices set by local dairy producers like Vinamilk and Nutrifood and those quoted by foreign dairy firms, meaning locally-made powdered milk is currently half the price of foreign milk. Yet, their quality is essentially the same, Minh noted.
Local and foreign powdered milk are made from ingredients of the same source with the same formula applied, produced in equally modern production lines, and contained in the same kind of package. Foreign milk has higher prices because Vietnamese consumers still prefer foreign products and marketing strategies of foreign dairy firms are very good, he said.
Vinamilk is competing fairly with foreign rivals and gradually shifting to production of high-quality products.
Last year, Vinamilk sold around four billion units. The sales volume will rapidly increase when the company starts operating two new factories with much higher capacity in Binh Duong.
Vinamilk said its revenue target of VND32.5 trillion for 2013 was attainable because the company so far had accomplished half of its goal.
Private firm opens advanced rice dryer in Mekong Delta
Nam Nha Private Enterprise on Wednesday inaugurated the demonstration model of an automatic fixed-bed rice dryer in Long Xuyen City, An Giang.
The model worth over VND5 billion is sponsored by the Danish Embassy to Vietnam under the Global Competitiveness Facility for Vietnamese Enterprises. It can process 100 tons per 10-12 hours and each time requires only five operators.
Such a rice dryer is suitable for the Mekong Delta. It minimizes labor and operating costs, and thus increases corporate profits.
In addition, the rice dryer saves construction space. Its capacity can be raised at just a low cost.
Duong Xuan Qua, director of Nam Nha, said his firm had received eight orders for this rice dryer from individuals and businesses in the Mekong Delta.
Nam Nha will seek ways to further lower the cost of installing such a facility to meet the affordability of rice mills. In addition, the enterprise will give advice on efficient use of husk and electricity as fuels.
Huynh The Nang, vice chairman of An Giang Province, said An Giang currently had the largest number of rice dryers in the Mekong Delta. The fixed-bed rice dryer manufactured by Nam Nha is considered the most advanced one in Vietnam.
Animal feed imports rise despite troubled livestock sector
The country in the year to date has imported US$1.21 billion worth of animal feeds and ingredients, up 48.2% year-on-year, although the local livestock industry is still in trouble.
The livestock industry since early this year has been struggling with rampant diseases and shrinking output. Many households cannot continue farming due to the lack of funds.
In this context, foreign-invested livestock firms have expanded operations to increase their market shares. This is the reason why animal feed imports have surged by nearly 50% even though local farming households are facing multiple problems, said experts.
Foreign-invested enterprises (FIEs) with industrial livestock farming have imported a large volume of animal feeds in the first six months. In addition, they have boosted imports of animal feed ingredients from their parent companies to cut costs, leading to a strong rise in imports of this item.
Meanwhile, animal feed production at enterprises catering to household husbandry is on the decline.
An animal feed producer in Lai Thieu, Binh Duong, said the sales volume of his company in the year’s first half had dropped by nearly 50% over the same period last year.
“We are focusing on recovering old debts and thus do not prioritize production. The purchasing power has significantly weakened because many livestock farmers in the southeastern region have stopped farming.”
“In such a difficult situation, there’s hardly any animal feed producer able to achieve growth. Therefore, it is unlikely that animal feed makers increase imports of animal feeds and their ingredients,” he said.
Pham Duc Binh, vice chairman of the poultry association in Dong Nai, remarked the livestock industry had begun to eliminate the players with limited experience and financial capability. These businesses may go bankrupt and small-scale livestock farming can hardly survive in the future.
This is both a challenge and an opportunity for the livestock sector to overcome the current difficulties and progress to industrial farming for better control on diseases and production costs, he said.
Cement exports rise sharply
Cement exports totaled nearly 5.2 million tons in the year’s first half, much higher than 3.2 million tons in the same period last year, with Taiwan, Singapore and Indonesia as major buyers of Vietnam’s cement, said the Ministry of Construction.
The ministry in a recent report states that cement sales have amounted to 27.9 million tons this year, posting growth of 18.3% year-on-year. Of which, cement export volume was around 5.2 million tons, jumping 70% over the-year ago period.
Due to slackened demand at home, many companies in the industry have focused on shipping products abroad, said Tran Van Huynh, chairman of the Vietnam Construction Materials Association. The cement industry expects to export over 10 million tons of products this year, or 15% of the nation’s total output, he informed.
Taiwan, Singapore, Indonesia and Cambodia are the major buyers of Vietnamese cement products, with the export price ranging from US$40 to US$42 a ton, some US$8-10 a ton lower than the global average price, Huynh told the Daily.
Exports have helped reduce this month’s inventories compared to last month, at around 2.6 million tons only, with the unsold volume of Vietnam Cement Industry Corporation (VICEM) accounting for a half, the construction ministry reports.
There have been no changes of cement selling prices in the market in the first six months despite the higher coal, power and fuel prices which have pushed up production costs and caused difficulties for industry players. The gap between cement supply and demand is seen as inconsiderable at home.
The cement industry turns out a combined 66 million tons annually while this year’s total cement consumption volume is forecast at 56-57 million tons.
Bulk of FDI flows into processing-manufacturing
The first half of the year has seen positive results in foreign direct investment (FDI) attraction, with the processing and manufacturing sector the strongest FDI magnet.
In the year to date, 554 new FDI projects have been granted investment certificates with total pledged capital of more than US$5.8 billion, a rise of 3.7% over the same period last year. Better still, 217 ongoing projects have increased capital by US$4.66 billion, up 35.7% year-on-year.
Overall, the country has lured over US$10.47 billion of FDI, up 15.9% compared to the same period in 2012, said the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.
Notably, the majority of such FDI inflow has gone into the processing and manufacturing sector. Some 260 processing and manufacturing projects have received more than US$9.3 billion of fresh and additional FDI, accounting for 88.9% of the total FDI inflow so far.
Most of the projects in this sector have large registered capital. For example, Samsung Electronics Vietnam Co. Ltd. has pledged US$2 billion for a project for manufacturing and assembly of electronic products in Thai Nguyen.
Meanwhile, Bus Industrial Center Co. Ltd. of Russia has registered US$1 billion to build a bus parts production and assembly plant in Binh Dinh.
Real estate despite many difficulties comes in second place with total fresh and additional FDI of nearly US$420 million, making up 4% of the total.
The third place goes to wholesale, retail and repair, with 79 new projects and total newly-registered and additional capital of more than US$178 million.
Another highlight in the FDI attraction picture is stable disbursement, said FIA. So far, an estimated US$5.7 billion has been disbursed, up 5.6% year-on-year, which is described as a fairly high growth rate in the context of economic woes.
With such good results, analysts said the target for total FDI inflow of US$13-14 billion and realized capital of about US$10.5-11 billion set by the planning ministry was within reach and might even be exceeded.
In the year to date, Vietnam has received investment from 45 nations and territories. Japan is the largest investor with total fresh and additional FDI of nearly US$4 billion, accounting for 38.1% of the total capital inflow, followed by Singapore with US$3.41 billion, 32,6%, and Russia with some US$1.01 billion, 9.7%.
The project of Nghi Son Oil Refinery and Petrochemical Co. Ltd. in Thanh Hoa with a capital increase of US$2.8 billion contributes the most to the total FDI inflow in the first six months, followed by the US$2-billion project of Samsung in Thai Nguyen.
MA outlook still bright
Although the value of merger and acquisition (MA) deals in Vietnam sharply dropped in 2012 and early 2013, experts still believe in a bright outlook for this activity in the future.
In the first quarter of 2013, the market recorded 14 MA deals worth US$676 million, versus some US$1.5 billion in the same period last year, says the Vietnam MA Report 2013 by Stoxplus.
Ten of these 14 deals involved foreign entities. Among them, the most prominent deal is the U.S.-based private equity firm KKR pouring US$200 million into Masan Consumer, raising its stake in this company from 10% to 18%.
In March, Mekong Capital sold part of its stake in Thegioididong to a strategic financial investor at US$110 million, and thus its shareholding fell from 32.5% to 25.8%. Two months later, Thegioididong introduced two new investors, namely Robert A. Willet, former CEO of BestBuy International, and CDH Electric Bee Limited.
Thai firms continued to be dynamic in MA activity in the first quarter. Minor International Hospitality Group acquired Life Heritage Resort and Life Resort Quy Nhon at US$16 million, while Berli Juker took over Ichiban, a soybean company, via a US$4.7-million transaction.
According to Stoxplus, MA deals in 2012 totaled US$4.9 billion, sharply down from US$6.3 billion in the preceding year. Such a decline is ascribed to less active local investors, while foreign investors remained aggressive, making deals worth about US$3.5 billion, equivalent to the same period in the previous year.
Japanese investors kept flocking to Vietnam with total MA value of US$1.2 billion in 2012, which is forecast to grow further this year.
So far, there has been no official report on the number of MA deals in the first half of the year. The figure will be revealed in August, when the Vietnam MA Forum takes place.
MA has been a thriving market in recent years. However, it seems indirect investment has not been recorded by State agencies and has not accounted into the total foreign investment inflow.
Despite the MA value decline, experts at Stoxplus still believe the MA market will remain lively in the coming time and there will be a shift from FDI to MA.
In the construction industry, the companies stuck in the frozen property market will be attractive targets for foreign investors.
The silence in the financial and banking sector will be broken when restructuring begins, with the number of banks to be reduced from 39 to around 13-15 by 2017.
Among the 39 existing banks, only 15 have foreign strategic investors. The fact that foreign investors are now allowed to hold higher stakes in banks is expected to stimulate MA activity in the banking sector.
Sources said foreign food and beverage giants like Asahi, Sapporo and Kirin of Japan, San Miguel of the Philippines, Thai Beer, Heineken, Carlsberg and SABMiller have make plans to boost investment in Vietnam through MA.
Poor labourers offered chance to work abroad
The administration of Ho Chi Minh City will help members of ethnic minorities, families who have made contributions to the revolution, and eligible poor to work abroad, mostly in Japan and Malaysia.
Under the city’s 3.3 billion VND (145,000 USD) programme, these people will be provided with free vocational training and instruction in foreign languages.
According to the city’s Department of Labour, War Invalids and Social Affairs, the city will also continue to operate a programme that offers soft loans of up to 100 million VND ( 4,700 USD) to poor individuals.
The loans are sourced from the Fund for the Poor, the Social Policy Bank, and the Bank for Agriculture and Rural Development.
The department has assigned the Overseas Manpower Service Company (Suleco) to implement the new programme through the end of the year.
Tran Hieu Liem, deputy head of the department’s Labour, Wage and Salary Division, said that about 600 labourers would be send overseas by the end of the year.-
Treasury collects budget from Gov’t bonds
The State Treasury mobilised 2.115 trillion VND in Government bonds through a tender organised by the Hanoi Stock Exchange (HNX) on June 27.
The HNX put forward Government bonds worth 6 trillion VND in total for tender on the day.
The mobilised funds include 1.1 trillion VND in two-year bonds with an annual interest rate of 6.78 percent, 200 billion VND in three-year bonds with an annual interest rate of 7 percent and 815 billion VND in 10-year bonds with an interest rate of 8.9 percent.
Five-year bonds worth 600 billion VND failed for tender as the annual interest rate offered was as much as 8.5 percent higher than the ceiling interest rate imposed by commercial banks.
The State Treasury has so far this year mobilised nearly 94 trillion VND in Government bonds via tenders.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR