BUSINESS IN BRIEF 13/2

Read the original news 

VietnamNet English - 41 month(s) ago 4 readings

Shoemakers build on success

Most domestic leather-shoe makers are confident that the industry will achieve robust growth this year based on last year's results, says Diep Thanh Kiet, vice chairman of the Viet Nam Leather and Footwear Association.

The leather and footwear sector's export revenue last year reached nearly US$5.1 billion, a year-on-year increase of nearly 25 per cent, Kiet said.

Despite many difficulties including incomplete recovery in traditional export markets, anti-dumping duties, high interest rates and inflation, the sector performed impressively last year to become the second biggest export earner behind garment and textiles.

It would strive to maintain the momentum this year, Kiet said. Many positive signs had emerged from the US market that would give local footwear businesses more opportunities to widen their market share, he added.

Another favourable condition for the industry this year was that markets in ASEAN region, Japan and China have also opened their doors wider for Vietnamese shoes. Moreover, with high consumption demand in the domestic market, local footwear also had a great opportunity to grow at home, Kiet said.

Many footwear enterprises and experts believe that the European Commission will soon remove the anti-dumping tariffs on Vietnamese shoes, which would help boost exports to the industry's largest market.

Furthermore, the Ministry of Industry and Trade has approved a growth strategy for the sector from now till 2020 that will focus on the development of support industries as well as material supply.

"This will be a major driving force for the sector's sustainable development", Kiet said.

Kiet said that despite the favourable conditions, the domestic leather and shoes industry also faced several obstacles this year, including high interest rates and inflation, as well as the rising cost of raw material.

High interest rates had pushed many companies to lower their scale of operations until conditions improved, he said.

If interest rates would not reduce soon, it would surely affect the sector's growth since businesses would not dare to start new projects or expand production.

The industry in the past years encountered several difficulties due to the rising cost of input materials in the world market, and this was set to continue since it was still heavily reliant on imported materials and accessories, Kiet said.

High inflation had also caused difficulties for industry workers while businesses had struggled to raise salaries to retain their staff. At present, Viet Nam's footwear products, mainly sports shoes, cloth and leather shoes and sandals, are exported to 50 countries and territories worldwide. The country is one of the world's 10 leading footwear exporters.

In-bound tourists up 20 percent during Tet

The tourism industry in Vietnam saw an increase of domestic tourists by 20 percent during the five days of the Lunar New Year festival (Tet) from February 3-7 against last year’s period.

The Ho Chi Minh City Department of Culture, Sports and Tourism announced that 75,000 Vietnamese traveled around the country during the holidays.

Among the most favorite destinations include Hoi An ancient town in the central province of Quang Nam, the ancient capital of Hue, the beach cities of Nha Trang and Phan Thiet, the mountainous city Dalat, as well as Phu Quoc Island and other locations in the Mekong Delta provinces.

Meanwhile, Dalat, Da Nang and Hue were the most-selected venues for Tet travelling by foreign tourists, according to the department.

In total, 70,000 local and foreign travelers arrived in Dalat during Tet, while Hue received 25,000 – an increase of 10 percent and 22 percent, respectively.

The uptick in visitors created a surge in room prices. In Dalat, tourists paid VND150,000 – VND200,000 (US$7.5 - $10) for a room for one day, up by 60% over the off-peak season rate.

Sales boom in imported electronics

The Ministry of Industry and Trade anticipates that sales of imported electronic goods will soar by between 5-10 per cent this year if the Government carries out its plan to cut import duties.

The ministry said that if import tariffs were reduced, made-in-Viet Nam electronic goods would be less cost effective.

The proposed tax cut meets the country's obligations under the Viet Nam-Japan Economic Partnership, the ASEAN-China trade agreements and its World Trade Organisation commitments.

The Ministry of Finance said it planned to cut import taxes by 1-6 per cent on nearly 1,000 items that included electronic products to meet its World Trade Organisation commitments.

According to the ministry, the value of imported electronic goods and spare parts rose by 23 per cent in 2010 against the previous year, which it partly attributed to the decline in the value of the Vietnamese dong against the US dollar in the last quarter.

Meanwhile, consumers spent US$5.14 billion on imported electronic products and components last year, against the ministry's forecast of $4 billion, which boosted the country's trade deficit to $12.3 billion.

The ministry said 60 per cent of imports came from China. The second biggest exporter to Viet Nam was South Korea, followed by Japan.

Nguyen Van Nam, from the Nam Hong Export-Import Co said China dominated imports because its prices were more competitive than other countries. He also said domestic importers were allowed to pay in yuan for goods, which added to China's competitiveness.

Portfolio investors likely to return

Analysts expect foreign portfolio investment inflows to become stronger this year.

Louis Nguyen, chairman of Sai Gon Asset Management Corporation (SAM), said last year foreign investors were afraid of the dong being devalued and high inflation and shifted their investments to Indonesia, Taiwan, Malaysia, and Singapore.

The State Bank of Viet Nam has devalued the currency by more than 10 per cent since November 2009.

However, this year, foreign investors considered Viet Nam as an attractive market that could generate high returns because of its economic and political stability, he said.

"With the market becoming stable, investment funds are expected to raise more funds."

Viet Nam has increasingly open investment policies to attract foreign investors.

Johan Nyvene, general director of the HCM City Security Company, said last year portfolio investment was mainly in property, not stocks, and property would continue to attract investments this year.

Investment funds have been investing in real-estate companies in recent times: The Prudential Viet Nam Fund Management Co has invested in Kien A Investment and Services Co Ltd's Imperia An Phu apartment project while fund manager SAM has poured $5 million into a property firm called Century 21 Joint Stock Company.

Prudential director Tran Le Khanh said in the second quarter the company will invest in another four or five property projects.

Also this year the company would set up its second property fund in Viet Nam, he said.

SAM plans in the first or second quarter to announce a new investment fund focusing on property companies or projects and companies to be listed.

Tuna exports keep growing

Exports of tuna products would continue to increase this year after a successful 2010, said the Viet Nam Association of Seafood Exporters and Producers (VASEP).

The association expected to export 120,000 tonnes of tuna in 2011, earning US$300 million. Exports would jump by 16,400 tonnes in volume and $13 million in value compared to last year.

The Food and Agriculture Organisation said consumption of seafood, including tuna products, would continue increasing in Asia and Europe as increasing numbers of consumers looked for healthy alternatives to meat, the association said.

To attain their target, local tuna exporters would focus on improving the quality of tuna products, developing the Vietnamese tuna brand and diversify products, said VASEP expert Nguyen Minh Tam.

At the end of last year, the Viet Nam Tuna Association was established to act as a bridge between fishermen and enterprises. The association would increase the sustainable development and branding of Vietnamese tuna products in the coming period, she said.

The association would also develop modern tuna trawler crews to match international standards. Last year, the fisheries industry noted a year-on-year 49.5 per cent increase in tuna exports to 82,600 tonnes and a 62 per cent jump in value to $287 million.

The increase was aided by high export prices for tuna products and high demand, Tam said. Average annual export prices registered a year-on-year increase of 8 per cent to $3.49 per kilo for Vietnamese tuna products in 2010.

In 2010, the US imported 35,000 tonnes of tuna products with a total value of $135 million. Exports surged by 54.6 per cent in volume and 94.6 per cent in value compared with 2009. Meanwhile, Viet Nam exported 170,000 tonnes to the EU, earning $62 million in 2010.

Exports increased by 3.9 per cent in volume and 12 per cent in value against 2009. The association said the EU would continue to be a major market for Vietnamese tuna products in the coming period.

However, local exporters needed to ensure quality and food safety standards to guarantee the sustainable development of the market for Vietnamese tuna.

Meanwhile, European importers have resumed signing contracts to buy tra fish at a price of US$3/kg for fillets but remain reluctant to order in large quantities or enter into contracts of longer than two months due to what they see as temporarily inflated prices.

A few tra breeders were offering prices of $2.90-2.95/kg, but if exporters failed to adhere to this price, a new price floor would be imposed, VASEP said.

According to a market survey conducted in Spain in December, sources of white-meat fish in Europe have continued to decline, so demand for imports were expected to increase, with current high prices likely to ensure higher profit margins for exporters.

Duong Ngoc Minh, chairman of VASEP's Freshwater Fish Commission, said the output of fish processors would continue to be limited at least through September to ensure strong prices for exporters. Higher prices, Minh said, would also help reduce the imposition of technical barriers in many export markets.

Vietnam - a preferred destination for int'l financial investors

In the "Vietnam Financial Sector Forecast to 2013" report, the company wrote: "Vietnamese financial market has rapidly expanded during the past few years and has gained great strategic importance at the global level.

With the rapid liberalisation, privatisation and globalisation of the market, Vietnam has become a preferred destination for international financial investors.

The key financial sectors banking and insurance are attracting huge foreign investments as both of these sectors represent highly untapped potential."

According to the report, posted on website "www.researchandmarkets.com" on January 25, Vietnam's banking sector is transforming and ongoing deregulations will fuel the sectors growth in the coming years.

The research noted that most of the Vietnamese are still unbanked and use traditional ways of saving their money and financing their needs. This represents a highly untapped and potentially lucrative market for existing as well as new market players. The projected 29 per cent CAGR (Compound Annual Growth Rate) of banking asset (during 2011-2013) further confirms industry's attractiveness.

The company also reported that Vietnam's insurance sector has expanded rapidly during the last few years and has witnessed increase in the presence of foreign players, which helped intensify the market competition and benefit consumer the most.

The company said in the report that micro financing has huge potential in Vietnam as the demographic indicators have been supportive in nature with around 73 per cent population living in rural areas and about 54 per cent of the national workforce working in agriculture sector.

As of now, total loans outstanding in rural areas comprise only 17 per cent of the total bank credit and more than 80 per cent of the rural population does not have access to any kind of institutional financial sources.

There is no comment

Please Sign up or Login to comment.

Top page