The US Department of Commerce (DOC) has agreed to a zero-percent tax rate for all products that the Can Tho-based Binh An Fishery Joint Stock Company (Bianfisco) exports to the US until 2012.
This is the second time DOC has cleared Bianfisco from its tariffs, making the company the sole Vietnamese tra and basa fish exporter enjoy the zero-percent tax in the US market in the two consecutive years.
Bianfisco CEO and Director General Pham Thi Dieu Hien said the DOC based on the secured quality of Bianfisco’s products to make that decision, which will enable the company to accelerate its penetration into the US market, the one of a high potential.
Bianfisco has invested heavily in building a fish material breeding zone to the Global Partnerships for Good Agriculture Practice (GAP) and applied a management system to track down the entire processing process of its products, from breeding zone to dinner table.
Established in 2005 with initial charter capital of 500 billion VND (26.3 million USD), Bianfisco has emerged as one of the top ten tra and basa fish exporters in Vietnam in 2010.
The company has recently focused on developing a fishery research institute with a staff of more than 20 scientists and experts working in the fields of fish farming, organic chemistry, pathology, biology, water organisms, analytical chemistry, aquatic heredity, reproduction, nutrition, food industry, biotechnology and food processing with the aim of ensuring its product quality.
At present, Bianfisco’s products are sold in more than 80 countries and territories worldwide, with its key markets being the US and the European Union.
If the DOC gives the zero-percent tax rate to Bianfisco for the third time after 2012, the Vietnamese company will enjoy this tax preferential treatment forever, said Bianfisco CEO Hien.
Plans accelerated for refinery projects
The State Steering Committee on Key Oil and Gas Projects on Sept. 13 reviewed their work concerning the first oil refinery in Dung Quat and other projects, and developed plans and timelines for their completion.
The National Oil and Gas Group was assigned to take measures to effectively manage and operate the 3 billion USD Dung Quat Oil Refinery. The ministries of Construction and Finance were asked to help with measures to quickly reach a balanced budget. The committee asked provincial authorities in Quang Ngai to focus on management support for resettlement and compensation.
The Dung Quat refinery has a designed capacity of 6.5 million tonnes of crude oil annually, or more than 140,000 barrels per day. Capacity is expected to expand to 10 million tonnes per year by 2013-14.
The refinery project began in the 1980s and came into operation in early 2009. As of last month, the refinery is operating at its full designated capacity. More than 5.7 million tonnes of crude oil have been imported for the refinery to produce 4.98 million tonnes of high-quality products.
However, investors and contractors still had to work to fix technical problems and strike a balanced budget, said Deputy Prime Minister Hoang Trung Hai, who chaired the meeting.
The meeting also discussed measures to complete the investment mechanism for the Nghi Son Petrochemical Refinery in Tinh Gia District, in the central province of Thanh Hoa. The procedures for ground clearance and infrastructure construction are also being sped up for the project.
Construction of Nghi Son Refinery, Vietnam’s second planned refinery, is expected to start this year and become operational by 2013. More than 90 percent of the required area for the 6 billion USD project have been cleared. Authorised bodies are conducting the necessary negotiations and evaluating the project’s environmental impact report.
The refinery has a designed capacity of 10 million tonnes of crude oil per year with possibility to expand to 20 million tonnes.
Preparation activities for initial investment in the Southern Petrochemical Refinery complex, the third of its kind in the country, were also discussed yesterday. The national steering committee asked relevant bodies to boost their management of completed projects and to review completion plans for others.
Global fertiliser prices on the rise
Fertiliser prices have increased following the appreciation of the US dollar against the Vietnamese dong as well as higher prices on the global market, spurred by high demand in many countries like India.
Le Quoc Phong, director of Binh Dien Fertiliser Company, said there were limited supplies and a shortage of reserves on the global market.
Vietnam had had to import a large volume of fertiliser every year to satisfy local demand since its local production met only one-third of consumption, Phong said.
A kilo of DAP fertiliser has risen to 11,200 VND (0.57 USD), compared to 11,000 VND earlier this month and 10,600 VND in August.
Similarly, the price of a kilo of urea fertiliser increased from 6,200 VND (0.3 USD) in August to 6,250 VND in earlier this month to 6,350 VND currently.
China is currently the biggest supplier of fertilisers to Vietnam, accounting for nearly 45 percent of the country’s total imports, followed by Russia, the Republic of Korea and the Philippines.
In April, Chinese authorities raised the fertiliser export tariff from 35 percent to 135 percent.
The Vietnamese Government recently issued a circular calling for an increase of the fertiliser import duty from 5 percent to 6.5 percent. This pushed up prices of fertilisers, experts have said.
Most farmers are worried about the higher prices, which will add to their production costs.
More than 318,600ha under the autumn-winter rice crop in the Mekong Delta region are in the growing stage, which are in dire need of fertilisers.
To stabilise the fertiliser market and help farmers feel more secure about production, experts have urged the Government to adopt new policies.
Local fertiliser producers should restructure their distribution network and regularly check selling prices to prevent agents from raising prices freely.
Currently, the Government did not have incentive policies for enterprises to import fertiliser to keep in reserve. Fertiliser prices, thus, depended on the fluctuation on the world market, Phong said.
Fertiliser reserves were like a double-edged sword, he added. They worked well when prices increased, but when they dropped, businesses had to sell at market prices and losses were unavoidable.
The Government, he said, should create measures to ensure security for businesses and others who participate in price-stabilisation programmes. Soft loans and support when prices drop should be included, he said.
Punters yawn at new trading hours
The introduction of extended hours for continuous order matching, expected to boost activity on the HCM Stock Exchange, failed to stimulate any investor excitement on Sept. 13, as the VN-Index shed another 0.91 percent to close at 447.27.
Volume fell 11.7 percent from Sept. 10’s session to just 45.7 million shares, worth just 1.1 trillion VND (56.4 million USD).
Under the new trading hours, the market will now spend 105 minutes in continuous order matching, instead of the previous 60 minutes. The opening and closing sessions of periodical order matching were shortened to 15 minutes each.
Viet-Han Corporation (VHG) was the most-active share, with 1.5 million changing hands, after the share gained a cumulative 20 percent over the course of several sessions last week, encouraging investors to realise profits on Sept. 13.
VHG shares closed short of their ceiling price at 20,900 VND.
On the HanoiStock Exchange Sept. 13, the HNX-Index fell for a second day to 128.22 points, a loss of 2.23 percent. Trading value dropped below the 1 trillion VND-level to895.9 billion VND (45.9 million USD), on a meagre volume of 37.56 million shares.
PetroVietnam Construction (PVX) remained the most-active share nationwide, with 5.3 million shares traded.
Foreign investors on Sept. 13 were net buyers nationwide of a net of 2.1 million shares, for a net value of 72.2 billion VND (3.7 million USD).
Experts call for new FDI strategy
Experts have called on authorities to provide strong, clear conditions, not merely open offers for foreign investors, before granting FDI licences.
The new concept in luring foreign direct investment (FDI) was prompted by the fact that a number of major FDI projects have had their licences revoked or have been liquidated and shifted to other investors due to slow deployment or inefficient operations.
Prof. Dr. Nguyen Mai, the country’s leading expert in FDI, said the FDI strategy should focus on quality and efficiency, sustainable development, minimal carbon emissions and commitments to transfer advanced technology and skilled personnel.
He said that if advanced technology was applied to steel production, the industry may save up to 40 percent of energy and cut by half the emission of carbon to the environment.
These figures are very significant at a point when Vietnam is popular with the major world producers in steel production, which is always a leading energy guzzler, Mai pointed out.
Dr. Nguyen Minh Phong from the Hanoi Institute of Social Economy warned of risks if authorities care only about economic interests.
Management agencies and local administrations should take into account national security during the FDI project licensing procedures, especially in regard to those projects using vast areas of land, afforestation and mining located in strategic positions, Phong said.
For all these reasons, experts called on responsible agencies to make public both conditions and offers or take initiative in gaining information about foreign investors before granting licences.
These steps are necessary to avoid “bad” or “virtual” projects, and being able to apply incentives to those projects that are proven to be positive and sustainable, they argued.
The Foreign Investment Department estimated that Vietnam is expected to attract some 21 billion USD in FDI and disburse between 14 and 15 billion USD in 2010.
Industrial sector bigger but still uncompetitive
Vietnam has continuously enjoyed a growth in its industrial export of between 15-20 percent over the past decade but its products accounted for only 0.74 percent of the global market.
According to the Ministry of Planning and Investment, Vietnam ’s turnover from industrial exports in the first eight months of this year reached nearly 23 billion USD, an annual rise of 16 percent. However, the increase is due to high prices rather than greater volume of exports as several staples such as crude oil and coal have seen a drop in exports.
In addition to the slow recovery of the world market after the economic crisis, poor competitiveness from out-dated production technologies is a major factor behind the poor sale of Vietnam ’s industrial goods.
Out of the country’s exports, industrial goods account for almost 60 percent, mainly products from labour-intensive sectors that depend mostly on imported materials. The export turnover of hi-tech products is estimated to make up only 10 percent of the country’s total industrial export turnover.
Former Trade Minister Truong Dinh Tuyen said Vietnam ’s industrial sector mainly depends on processing and assembling while supporting industries are yet to develop.
He expressed concerns that foreign assembly plants may withdraw from the Vietnamese market as they can’t find local suppliers of spare parts and rising labour costs are putting them under pressure .
To increase the competitiveness of Vietnamese industrial goods’, the Ministry of Industry and Trade has recently submitted a plan to the Government to develop supporting industries.
Under the plan, supporting industries for five key industries, including garments, footwear, electronics, auto parts and mechanical engineering will enjoy preferential policies in terms of investments, developing the market as well as science and technology and infrastructures.
Projects in these fields will be exempt from corporate income tax for four years since they have taxable incomes and enjoy a 50-percent tax reduction in the following nine years.