BUSINESS IN BRIEF 11/4

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VietnamNet English - 33 month(s) ago 9 readings

Japan helps Vietnam develop e-customs



Japan will provide US$6.58 million to support modern technology application for Vietnam’s customs sector.

A project to this effect was signed in Hanoi on April 9 between the Vietnamese General Department of Customs and the Japan International Cooperation Agency (JICA).

The project aims to amend the current legal frameworks, create a viable strategy for information and technology, and human resources development, as well as to deploy the Vietnam Automated Cargo Clearance System (VNACCS) and the Vietnam Customs Information System (VCIS).

Nguyen Ngoc Tuc, Head of General Department of Vietnam Customs, says the project will greatly improve efficiency and contribute to reforming and modernizing the customs sector following the guidelines of the Government and the Ministry of Finance.

Vietnam needs to reopen its National Gold Exchange

Five commercial banks and Saigon Jewelry Company (SJC) have been asked to sold out gold to stabilise the market after domestic prices rose by VND3 million –VND4 million per tael over the world price in early September last year.

The gap in prices was immediately reduced but it was then gradually extended.

Following the Government Decree’s No.24 on the management of gold trading many experts insisted that the National Gold Exchange should be reopened.

Tran Thanh Hai, Director of the Vietnam Gold Business Corporation (VGB), said the reopening of the gold exchange will help iron out snags.

First, gold trading is usually thought to have a negative impact on the exchange rates. Actually, the exchange rate of the US dollar will only be affected by gold imports, not by gold trading that requires small amount of dollars.

Second, gold trading will contribute to stablising the gold market.

He cited lack of experience, technical tools and unreasonable rates of margin purchase as the main reasons for the recent closure of the gold exchange, he said.

For example, when purchasing a certain amount of gold, customers were only required to pay 7 percent of the total money in advance. However, if the gold price changed remarkably overnight, the customers might lose all of their money.

To prevent the situation, the Commodity Market Exchange (CME) in Chicago has often raised the rate of margin purchase by 20-30 percent when gold prices vary greatly. It is normal to see the rate being adjusted twice a month in the US, Hai said.

Rubber industry to focus on processing

Prime Minister Nguyen Tan Dung attended a ceremony to honour the Vietnam Rubber Group (VRG) with the Gold Star Order for its contributions to the industry in Ho Chi Minh City on April 8.

He urged the group to further invest in the rubber processing industry and science and technology, and develop infrastructure projects.

The VRG has developed 300,000ha of rubber plantations in Vietnam and more than 200,000 ha overseas, compared to just 40,000ha after the war.

Its production has continued to increase despite the global economic downturn with an average annual rise of 6 percent in area and 10 percent in productivity from 2001- 2010.

Export turnover has risen by more than 30 percent per year and hit nearly US$3 billion last year.

The PM asked the industry to expand the country’s rubber area to 1 million ha by 2015, of which the group would account for nearly half.

He also urged the VRG to improve the quality of Vietnamese rubber, promote exports and expand its markets.

VRG general director Tran Ngoc Thuan said they will focus on restructuring to improve effectiveness and raise their rubber plantation scale to 500,000ha to provide jobs for 175,000 workers.

Seminar looks at better cash aid programmes

The Ministry of Labour, Invalids and Social Affairs (MOLISA) in coordination with the World Bank and UNICEF hosted a seminar on April 9 in the Central Highland province of Lam Dong, to share their experiences in implementing programmes to provide money to poor children.

The seminar attracted representatives from eight provinces that have similar programmes, including Lam Dong, Gia Lai, Kon Tum, Quang Nam, Quang Ngai, Tra Vinh, Ha Giang and Lao Cai.

According to the organising board, besides sharing their experiences, reviewing and evaluating the implementation of policies related to funding in Vietnam and in particular provinces, they aim to create effective funding programmes for children, which is the main purpose of the seminar.

Participants at the seminar discussed and recommended measures such as ways of identifying programmes’ subjects, updating and managing lists of children in need, specific methods of assistance and the best way of assisting poor children, particularly those from minority ethnic groups.

MOLISA Deputy Minister Nguyen Trong Dam said that the ministry has applied many social welfare policies to support poor people in the past, however, they have not been effective enough.

He said overlapping policies, plus shortcomings in implementing processes are among the main reasons for the poor results, which need changing dramatically.

Recently, the Prime Minister ratified a cash aid project for children under 16 with ODA funds in the eight aforementioned provinces for 2013-2015, therefore the seminar should help the province to carry out the project more effectively.

Steel, cement makers suffer massive unsold stocks

With demand for steel and cement still in a steep decline, manufacturers, distributors and dealers of these two commodities are struggling to survive due to huge unsold inventories.

“Though it is the high season for construction, demand still dropped by 40 percent compared to last year, resulting in a bigger loss,” lamented S., who runs a large steel distributing facility on Ho Chi Minh City’s Ly Thuong Kiet Street.

The distributor used to stockpile thousands of tons of steel, but the figure is now only some 100 tons, she said.

“Of the 15-person workforce that loads the products, only three remain,” added Khang, who manages the 300-square-meter warehouse of the facility.

“In 20 years of working here, this is the gloomiest time I have experienced.”

Similarly, steel dealers and retailers on Bach Dang, To Hien Thanh, and Phan Xich Long streets also said they have sold almost no products over the last few weeks.

“The steel stocked in the warehouses has all become rusty,” said Yen, owner of Thanh Thien store on Ly Thuong Kiet Street.

Meanwhile, the company that transports the goods said they only have to work once or twice a week, while the figure used to be three times daily.

Meanwhile, dealers and distributors of certain cement manufacturers such as Ha Tieng 1, Song Gianh, Holcim, Nghi Son, and Cam Pha are also suffering from low consumption.

“I used to sell up to 800 cartons a week at this time last year,” said Mai, whose cement dealer is located on Van Kiep Street.

“But selling 40 cartons a week is now the best I can do.”

The warehouse, which is large enough to stockpile 2,000 cartons of cement, now has plenty of empty space, since goods are only stocked when manufacturers cut prices or offer discounts, said Mai.

Similarly Phuong, owner of the Loan Phuong construction material store, said her trucks have sat unused for several months.

“How could the business survive when demand has dropped by 40 percent compared to the same period last year, when the market was already sluggish?” Phuong said sadly.

There are several dozen steel manufacturers under the Vietnam Steel Association (VSA) with unsold inventories ranging from a dozen to hundreds of thousands of tons, according to figures obtained by Tuoi Tre.

Sold products have been on a steady decline since the beginning of this year, forcing some businesses to operate at only 60 percent of their design capacity.

Six manufacturers have even ceased production due to the slowed consumption.

D, chairman of a major HCMC-based steel maker, admitted that the unsold stock of his company is around 200,000 tons.

“Given a normal market development, such an inventory would be acceptable,” said D.

“However, amid this economic slowdown, businesses cannot survive with the figure.”

D said the unsold stockpile is worth some US$100 million, with each ton of steel fetching $470.

“With this huge sum, plus the bank interest, and transport and labor cost, I lose dozens of billions of dong every day,” lamented D.

Meanwhile, the CEO of another cement maker said that players in the cement manufacturing market have been fighting each other for survival, since “all are on the verge of bankruptcy.”

The chief, who wants to remain anonymous, said manufacturers have been offering unprecedentedly high commissions, plus a series of promotional programs to attract dealers and buyers.

“Buyers will get 9 to 13 cartons of cement free of charge for each order of 100 cartons, but consumption is still low,” he shared.

Figures from the Vietnam Cement Industry Corporation (VICEM) show that consumption has slumped by 26 percent year on year.

Unofficial statistics show that many producers have incurred losses worth thousands of billions dong, VICEM said.

“Those with the steepest losses are manufacturers who have used bank loans to install new production lines.”

Proposal to deregulate land prices

The Government has approved a proposal by the ministries of Finance and Natural Resources and Environment to reform out-of-date land prices structures and bring them more into conformity with market values.

The proposal will require final approval by the Nation Assembly, as land uses are governed by the Land Law.

Under the law, as amended in 2003, the Government sets a general land price frame-work for every city and province nationwide. Based on the framework, municipal and provincial People’s Committees are authorized to decide land prices within their jurisdiction, but the prices may not exceed ceiling price set in within the Government’s land price framework by over 20 percent.

However, due to the out-of-date land price framework, a square metre of urban land in Hanoi and HCM City is currently not allowed to exceed VND81 million (US$3,850), equal to only 30-60 percent of the actual maket value of the land, said the director of the Ministry of Finance’s public asset management department, Pham Dinh Cuong.

The situation was costing huge losses to the State budget in terms of land use fee revenue and was contributing to a rise in legal wrangling related land clearance and settlement, Cuong said.

After removing the current framework, the Government proposal would regulate only methods and principles for determining land value while local People’s Committees would set prices based on market principles. Higher values would result in higher land user revenues to the State Budget and would also allow authorities to pay higher settlements to persons whose land use rights were reveled, Cuong said.

He said that the ministry had also proposed that the clearance processes, promote and auctions and ensure greater transparency in the allocation of land use rights.

APEC telecom group meets in Da Nang City

The 45th meeting of the Asia-Pacific Economic Cooperation Telecommunications and Information Working Group (APEC TEL 45) opened in central Da Nang City yesterday.

Over 200 deputies from 21 countries and international organisations have participated in a series of seminars aimed to improve telecommunications and information infrastructure in the Asia-Pacific region by developing and implementing appropriate policies.

Speaking at the opening ceremony, Deputy Minister of Information and Communications Nguyen Thanh Hung said, "In connection with the 44th APEC TEL meeting, member economies will continue to address a wide range of issues such as green information and communications technology (ICT) for sustainable growth, Domain Name System Security, ICT in disaster management, internet usage, consumer protection and Cybercrime." He also said the working group played an important role in sharing information and exchanging views as well as experience on a wide range of regulatory issues.

The biannual meeting, which will close on Wednesday, is part of preparations for the 9th APEC Ministerial Meeting on Telecommunication and Information Industry to be held in St. Petersburg, Russia, on August 6-8.

Settlement period to be delayed

A shorter settlement period of two days following the initial share transaction cannot be implemented at this time, Viet Nam Securities Depository Centre general director Phuong Hoang Lan Huong said at a meeting last week.

Huong acknowledged, however, the need to gradually reduce settlement times as a method to increase stock market liquidity.

She said that implementation of the shorter settlement periods had to be delayed due to the poor financial status of securities companies, many of which lacked the capital resources or risk management mechanisms needed to carry out so-called T+2 settlements.

The centre was already helping many brokerages financially bridge themselves over the current T+4 period, she noted.

Huong held open the posibility for buyers to sell their securities on the T+3 date, but only if securities firms settled the transaction prior to 4pm on the T+2 date.

Saigon Securities Inc chairman Nguyen Duy Hung argued that "brokerages need regulations loose enough to boost investment."

If policies hindered investment, brokerages would be discouraged to raise funds, Hung said.

Economic zones to try harder

Deputy Prime Minister Hoang Trung Hai has called on the nation's key economic zones (KEZs) to become a driving force in sustainable development and take Viet Nam to the level of other industrialised nations.

He made the call while addressing a conference held last Saturday in Can Tho City to review socio-economic development of KEZs nation-wide and make plans for this year and the years to come.

Hai lauded the achievements of the KEZs in the 2006-2010 period but stressed much more remains to be done.

Between now and 2015, KEZs need to better deploy all their strengths to develop in a sustainable and environmentally – friendly manner, he said.

The deputy PM mentioned some targets that he said KEZs should strive for in the coming time.

The average per-capita income at KEZs should reach US$3000 per year, 1.5 per cent higher than the national level, he said. Their import-export turnover should increase by between 14 and 14.5 per cent annually, and contributions to the State Budget should account for 90 per cent of the total, he added.

To realise these goals, ministries, branches and localities need to work together to restructure investment in ways that reduces the use of State budget resources and mobilises more capital from the society at large, he said. He urged relevant ministries and branches to complete soon an overall development plan for KEZs that responds to the needs of new situations.

The deputy PM also outlined other tasks and solutions for the zones, saying they needed to develop high-tech industries and high-quality services in information technology, and focus on production of new materials.

The country now has four KEZs: the Northern Economic Zone, Central Economic Zone, Southern Economic Zone and the Cuu Long (Mekong) Delta Economic Zone.

These zones have many big clusters of ports like Hai Phong, Cai Lan, Da Nang, Thi Vai-Cai Mep, Cat Lai and Hiep Phuoc, and international airports like Noi Bai, Da Nang, Tan Son Nhat and Can Tho.

In the 2006-2010 period, the KEZs achieved an annual Gross Domestic Product (GDP) growth rate of 10.8 per cent, with average per-capita income of VND34.6 million (US$1,662), significantly higher than the national figures, the conference heard.

The total import and export value of KEZs during the same five-year period was US$602 billion, of which US$280 billion came from exports, accounting for 89 per cent of the country's total.

They attracted 12,478 foreign-invested projects worth US$162 billion, accounting for 91.32 per cent of the country's total, the conference heard.

The KEZs also contributed 88.6 per cent of State Budget revenues during the 2006-2010 period.

Speakers at the conference also highlighted several limitations that have been seen in KEZs development over the past several years.

They said due attention has not been paid to improving competitiveness and the use of land and labour was still ineffective.

While there have been improvements in physical infrastructure, these have not happened in a synchronous manner, limiting growth potential.

The KEZs have also failed to come up with innovative products in the knowledge-based economy, some speakers pointed out.

Others said environment pollution in the KEZs has worsened in recent years.

Deputy PM Hai said all the problems at the KEZs need to be addressed urgently to ensure sustainable development of KEZs in particular and the country in general.

Economist claims bankruptcy means better chance for enterprises

The Government should set up a fund that could take over the bad debts of bankrupted enterprises to help survive them in difficult situations, an economist said.

Economist Dr. Le Dang Doanh said the Government could sell their stakes in these enterprises to new employers when the firms overcome their challenging period.

While many people are worried about the prospect for Vietnamese enterprises after nearly 12,000 enterprises filed for bankruptcy in the first quarter of this year, Doanh had another viewpoint of the situation.

“It’s undoubtedly the case many of these enterprises went bankrupt due to incompetence and bad business decisions,” he noted.

In terms of the economy, according to him, bankruptcies offer a better chance for the development of enterprises as it means the same labour force, factories and facilities exist but with better management and more investment. In fact, a bankruptcy indicates a change in the enterprise’s leadership that could help it revive and develop more, he emphasised.

“One of the main weaknesses of Vietnamese enterprises is their lack of professionalism that results in unstrategic investment decisions,” he accessed.

He attributed the current large number of enterprises to the uncontrollable licensing process following the country’s entry to the World Trade Organisation (WTO). Many of them find it hard to survive in current difficult situation due to basic incompetence.

Some of the bankrupt businesses had operated efficiency, but fallen into their problems as a result of the decrease in purchasing power and export orders. Doanh suggested that the Government as well as banks should study measures to support enterprises in such a situation.

He said that it would not be a good solution to providing these enterprises with capital just to maintain their operations amid huge inventories.

“The Government has recently made policies to switch to using cement for the construction of transportation projects instead of asphalt in order to boost the consumption of locally made cement and steel and lower their inventories. The same move should be taken for other good items,” he recommended.

He emphasised the need to set up a fund to buy bad debts left by bankrupted enterprises for two to three years to help them survive their most challenging period.

“This policy has been applied in several other countries in the world as it facilitates such enterprises to continue to get bank loans and maintain their operations. The Government could privatise such firms and sell their stakes upon their revival,” he attributed.

He noted that careful consideration should be made during the process in order to ensure transparency and efficiency.

CSR should be part of development strategies

Corporate social responsibility (CSR) has increasingly caught attention of local enterprises who agree that this voluntary activity should be also treated as part of corporate development strategies, according to a seminar last Friday.

CSR activities have become popular among the local business community and have been continuously growing, said Pham Phu Ngoc Trai, chairman of Global Integration Business Consultants (GIBC), at the seminar co-organized by the Saigon Times Foundation (STF) under the Saigon Times Group and GIBC to mark STF’s tenth anniversary.

In many nations, the public has increasingly showed keen interest in responsibilities, duties and transparency of big brands. Recent studies indicated the reputation, business activities and social commitments of producers are decisive factors affecting consumer behaviors.

“CSR is not only a voluntary activity but also an indispensable part to business strategies for the sustainability of a company,” said Trai, who also serves as chair of STF Sponsorship Council.

Such thinking has been seen in local firms, with ‘Den Dom Dom’ by Dutch Lady, ‘Six Million Milk Glasses for Vietnamese Children’ by Vinamilk and VinaCapital’s sponsorship for poor children’s heart surgeries.

According to chief executive officer and co-founder Don Lam of VinaCapital, his company annually sets aside VND20-22 billion for health care and education support for poor children. The fund encourages its corporate investors to join social activities as well, he reckoned.

For the community’s benefits, STF has actively supported local firms in realizing their social responsibilities via scholarship programs for needy students besides other programs. As of late last year, the non-profit organization financed students nationwide with about VND2.5 billion contributed from enterprises.

Most participants in the seminar shared the view that CSR considerably supported companies in establishing deep-rooted relationships with the society, thus promoting their brands and helping them attract human resources easily.

Ngo Thi Hong Thu, deputy general director of wood processor Truong Thanh Furniture Corporation supposed that enterprises consider CSR their long-term investment. This means they need to pursue CSR activities as part of their own strategies and management rules, she added.

Vietinbank establishes subsidiary bank in Germany

The State Bank of Vietnam (SBV) has agreed in principle to allow the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) to set up a subsidiary bank in Germany.

The Vietinbank (Europe) Ltd is located at No. 44 on Reuterweg street in Frankfurt am Main city, with an estimated capitalization of Euro 50 million.

Before operating with its charter capital of Euro 25 million, it will have to complete legal procedures in line with Germany’s regulations in 24 months dating from April 9.

Agriculture and trade fair at Khanh Binh border gate

An agriculture and trade fair opened at the Khanh Binh border gate in the Mekong Delta province of An Giang on April 9, attracting 120 Vietnamese and Cambodian businesses.

On display are agricultural machinery, processed food products, plant seeds, electricity household appliances, clothes and interior decoration.

The event will last until April 15, providing a good chance for enterprises in the agricultural sector to exchange experience in production, environmental protection, and export business.

PepsiCo to export Vietnamese snacks

PepsiCo Vietnam plans to export some kinds of Vietnamese nosh like rice crust, prawn crackers and cassava chips to Southeast Asian countries.

This was announced by its Vietnam Snacks Chief Operating Officer, Richard Kaiser, on April 9.

He said the company will purchase about 1,200 tonnes of cassava from Vietnamese farmers for its production line.

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