Air conditioner (air cons) sales in Vietnam registered a 22 percent rise in the first five months of 2012 with nearly 76,000 more air con units snapped up by local consumers, said a recent report from GfK Vietnam.
“It appears that consumers in Vietnam are now ready to loosen their purse strings once again following the lackluster performance of air conditioner sales last year due largely to restrained spending as a result of high inflation,” said the report.
Inverter technology continues to gain traction among local consumers.
Vietnam’s air con market registered a vast improvement of 28 percent in value jump and to date is worth over $170 million.
Since the beginning of this year, some 422,000 air cons have been sold; with sales garnered in the month of May alone contributing to a third of the total sales for the five month period.
“The country enters into summer in early May and with the afternoon heat in some of the cities rising as high as 40 degrees, air conditioners have almost become a necessity to help households stay cool and comfortable,” said Van Tran Khoa, General Manager at GfK Vietnam.
“For this reason, the summer months which take place around the second quarter of each year are also traditionally the peak sales season when households are either buying additional units or upgrading their existing air con,” he said.
Increasing awareness towards environmental issues has also brought about gradually increasing number of discerning buyers who are switching to inverter air cons, even though it means forking out a higher price for these energy saving models.
GfK Vietnam findings revealed that whereas a non-inverter air con sold at an average price of $376, the average price of an inverter model hover around $504 per unit.
Despite this 34 percent difference in the price tag, volume sales of inverter air con jumped by 48 percent when compared to last year—far greater than the growth of non-inverter air con which registered only 16 percent.
“Today, almost one in four air cons purchased run on inverter technology as compared to only a fifth a year ago, and with the heightening public awareness of its energy and cost saving capabilities, we can anticipate the continued robust sales performance of eco-friendly air cons such as those with heat pumps,” said Van.
“At its low household penetration level of below 25 percent, the air con market in Vietnam holds great potential for continued growth, which is likely to achieve nothing less than 15 percent by the end of the year,” he said.
GfK Group is one of the world’s leading market research companies, with more than 11,000 experts working to discover new insights into the way people live, think and shop, in over 100 countries, every day.
The Germany-based firm delivers services in all major consumer, pharmaceutical, media and service sector market segments using the latest technologies and methodologies to give its clients the clearest understanding of their customers.
Food manufactures, sugar makers quarrel over sugar price
While food manufacturers have complained about the sugar import quotas, which prevent them from importing the good cheaply, sugar makers say the local supply is abundant.
Many local food manufacturers accuse the sugar makers are trying to sell at small amounts so that they can hoard the commodity to sell it at higher prices later.
Imported sugar is some VND4,000-5,000 a kilogram cheaper than locally produced sugar, so if the Ministry of Industry and Trade licenses an import quota of 70,000 tons for this year, they can save up to VND280-300 billion ($13.43-14.34 million).
Meanwhile, the Vietnam Sugar Association (VSSA) has said since there no shortage of local sugar, there is no need to import more of the good.
VSSA said the request for sugar import quota licensing from food processing businesses is primarily for cheap sugar.
Truong Phu Chien, General Director of Bien Hoa Confectionery Corp (Bibica), said every year the sugar import quota is allocated by the ministry within the first quarter.
With the quota, local businesses will begin imports because the need of sugar for local use often increases sharply due to seasonal factors, mostly before the Mid-Fall festivals and the Lunar New Year.
However, up to now, the third quarter of 2012, the import quotas have not been assigned to the enterprises, while the latest sugarcane crop was harvested two months ago, and finished products of sugar are now in stock at local firms.
"When companies cannot import under the quotas, we have to buy local products, and it turns out to be a golden opportunity for local sugar firms to hike prices due to rising demand,” Chien said.
Calculating for the price over the same period last year, businesses are paying VND5,000 a kilogram more for locally refined sugar, approximately the same rate paid by retail customers.
Currently, the price of refined sugar RE and RS that Bibica is buying stands at VND19,000 a kilogram and VND17,500 a kilogram, respectively, compared with the price of VND13,000-14,000 a kilogram with added tax of imported products.
"We still have to buy domestic sugar as the granted quota is insufficient. The problem is that the purchase of sugar faces many difficulties since local sugar companies refuse to sell in large quantities,” he confirmed.
Similarly, Vietnam Dairy Products Company (Vinamilk) said its demand for sugar production in 2012 is 113,201 tons, of which the firm sought for an import quota of 75,000 tons from the end of 2011.
"But to this day it remains unresolved, although we have continued to send written reports to the ministry," said Bui Thi Huong, director of external affairs of Vinamilk.
According to Huong, from early 2012 until now, Vinamilk had to buy 57,014 tons of domestic sugar at prices which are 35 percent higher than foreign sugar.
"But it is very difficult to buy since local producers show that they don’t want to sell the large amount we want, not to mention the quality often does not meet the standards in the production of our milk,” Huong said.
According to Huong, right when the VSSA said local supply was in a state of surplus, Vinamilk had to buy at the price of VND17,000-17,200 a kilogram, while at present the price of imported sugar remains around VND14,000 a kilogram with all added taxes.
“After we sent bid requests to nine domestic suppliers, only two enterprises replied, while the remaining said they have no sugar to sell," Huong said.
According to VSSA, the 2011-2012 sugarcane crop ended with a total sugar supply of 1.375 million tons, almost reaching the 1.4 million ton target to meet with the forecasted demand of the same amount set early this year.
In addition, a large amount of sugar smuggled from Thailand, currently estimated to be at 300,000 to 400,000 tons, has helped domestic supply remain plentiful, a small amount of which was even exported to China in the early months of 2012.
"Not to mention this year's sugar mills in the Mekong Delta will enter their new crop in August,” said Nguyen Thanh Long, VSSA president.
As the region provides 30 percent of the local supply, there will be no shortage until the year-end," he added.
Nguyen Thanh Long, president of VSSA, said the import quotas are delicious cakes that local food manufacturers want to share.
“That explains why they just inked deals with local sugar suppliers to buy until July this year, as then they can complain about quality and prices to put pressure on the trade ministry for the import quota licensing.”
Do Thanh Liem, chief executive of Khanh Hoa Sugar Company, said the import quota policy of the Ministry of Industry and Trade is unfair.
He states that there are thousands of businesses that use sugar in processing, but in reality only a dozen enterprises, often large ones, are granted the quotas.
With imported inputs lower in many countries, these enterprises have a competitive advantage compared to other businesses who are not granted the quota, leading to unfair competition.
According to Liem, Vietnam should run the import and export policies as flexibly as many countries in the region have already done.
The ministry can set up a sole importer who then offers biddings for domestic enterprises at the market price.
The amount of import-export gap will be reinvested to the sugar industry to improve competitiveness and reduce costs.
Gold shops turn into pawnshops to flout bullion ban
With their gold bullion trading activities set to be completely banned in the next six months, many gold shops have switched to functioning as pawnshops to slip through the law loophole to continue trading in the precious metal.
Gold shops are still allowed to trade gold bars for the next six months, after which only a few qualified facilities are eligible to maintain operation, according to Decree No 24, taking effect on July 1.
Qualified gold shops, as stipulated by the decree, are those that have a total registered capital of at least VND100 billion (US$4.8 million), a VND500-million contribution to the state budget in the last two years, and a branch network in at least three cities or provinces.
While it is still half a year to go, industry insiders said gold trading is no longer an attractive business, and they thus had to turn to the pawn sector.
“Some 50 percent of gold shops in the city are now also operating as pawnshops,” said an owner of a gold facility in Ho Chi Minh City’s District 8.
Meanwhile, another shop owner in Tan Binh District also said his main source of revenues these days is from pawning activities, rather than selling gold.
“Trading volumes on SJC gold bullion has slumped, and I also lost a great number of customers as the products’ creator, Saigon Jewelry Co, now refuses to buy back deformed bars,” he added.
SJC gold bullion has been chosen as a state brand name, after the government acquired the exclusive right to process gold bullion.
“Once the ban takes effect, gold shops can still manage to trade gold bullion under the disguise of a pawnshop,” he said.
“If authorities detect, we just say the gold is traded under a pawn contract.”
“It will be difficult for authorities to tell the pawned gold bullion from the traded one at the gold shop cum pawnshop,” the deputy head of a gold trading company in District 1 said.
While unqualified shops have been finding ways to maintain their gold trading activities, the eligible companies have also been luring smaller facilities to operate as their dealers, though this cooperation is prohibited by the State Bank of Vietnam.
Small gold trading facilities account for 70 to 80 percent of the total gold bullion trading volumes of large companies. And these will be removed from the market once the ban takes effect.
In a typical model, a small gold shop will be functioned as a branch of a business qualified for trading gold bullion, with its employees dressed in the company’s uniform and allowed to trade the precious metal, a CEO of a gold company said.
“Ineligible shops will be able to continue trading gold, while the large companies can spread their image without having to spend a single cent in investment,” he said.
A lesson learnt from lax management
A number of foreign businesses are cornering the domestic market in farm products, and strict regulations should be introduced to stop unhealthy trade practices.
Farmers work very hard all year round hoping that their agricultural products sell well to cover input expenses and earn a profit.
However, their genuine efforts to make a living are being abused by a number of foreign dealers who enter Vietnam and purchase farm products illegally, manipulating the domestic market and putting farmers at a disadvantage.
Farmers are hungry for profits and many pay a high price for their irrational decisions. The growing of Japanese sweet potatoes in the southern province of Vinh Long is a case in point.
Farmers in Vinh Long have paid a high price for growing sweet potatoes for foreign businesses
Not long ago foreign dealers placed large orders and offered high prices of Japanese sweet potatoes. Vinh Long was gripped by a fever to cultivate this vegetable which then spread to nearby localities, including Dong Thap and Can Tho.
Due to promised high profits, local farmers shifted from rice to Japanese sweet potatoes, causing the area devoted to rice cultivation to shrink considerably.
In fact, those dealers did not fulfil their orders, causing the price of the sweet potatoes to tumble sharply from VND5,000-6,000/kilo to just VND200-300/kilo.
As a consequence, farmers fell victim to market manipulation by foreign dealers, as Japanese sweet potatoes are exported to China under business-to-business contracts and there is not much demand for them in Vietnam.
The Can Tho Municipal Department of Industry and Trade (DoIT) has warned local farmers against such unhealthy trade practices by foreign dealers and asked them not to grow exotic varieties on their home soil.
Vietnam has been implementing an open-door policy for more than two decades to welcome foreign businesses to the country. However, as Can Tho DoIT vice director Le Van Hung puts it, investment policies should have strict binding regulations to ensure foreign businesses do not play dirty tricks on local farmers.
Coconut, pineapple, shrimp, fish and rice farmers in several Mekong delta provinces are in the same boat. Most recently, foreign dealers travelled to Thanh Hoa province, about 150km from Hanoi to buy hemstitches, and local residents rushed to the woods and get them the product.
Foreign dealers illegally entering Vietnam to purchase a number of key farm products has many implications for local farmers and businesses, as well as the market, says Phan The Rue, chairman of the Vietnam Retailers’ Association.
He further explains that by placing bulk orders and then cancelling transactions, they accidentally corner the market, thereby affecting domestic production and consumption.
According to Rue, as a WTO member, Vietnam welcomes foreigners to operate in the country provided that they comply with its legal system. Yet, manipulation of the farm product market by foreign businesses is unacceptable behaviour and should be prevented.
After they enter Vietnam, foreign businesses establish their own purchase and distribution systems themselves to export Vietnamese farm products abroad. They buy large amounts of key farm product exports such as coffee, pepper and sugar, creating numerous difficulties for domestic businesses and retailers.
Vietnamese law stipulates that foreign businesses are not allowed to travel to farms to purchase products directly. This raises the question why is the situation going on in the Mekong Delta without any intervention?
Nguyen Xuan Chien, a senior official of the Ministry of Industry and Trade, attributes the recent unhealthy market practices to lax local management, including lack of responsibility from provincial departments of industry and trade, tourism agencies, and organisations in charge of managing foreign workers.
Chien says that foreign businesses have taken advantage of loopholes in local management, citing tourist travel as a good way to enter Vietnam and do business illegally. In addition, due to short-term profits several Vietnamese businesses have even aided and abetted foreign dealers in their illegal activities in the country.
Solving the problem requires synchronous solutions and close coordination between relevant agencies, says Chien.
Our businesses and farmers should be aware of Vietnam’s legal stipulations for foreign businesses, and at the same time our purchase and distribution networks should be expanded to every farm to ensure farmers will enjoy the benefits, says Chien.
He also recommends strengthening market inspections to nip foreign business legal violations in the bud.
In a move to stop unhealthy market practices, Deputy Prime Minister Hoang Trung Hai recently assigned the Ministry of Industry and Trade to issue a circular in the third quarter of 2012, aiming to tighten control over foreign businesses buying farm products in Vietnam.
Gearing up to achieve export target
It’s no easy task to fetch US$109.5 billion in export turnover by the end of this year.
According to the Ministry of Industry and Trade (MoIT), Vietnam earned US$53.1 billion from exports in the first six months of 2012, or 48.5 percent of the set target, which is up 22.2 percent compared to the same period last year.
Of the total, the domestic sector accounted for US$20.5 billion (38.6 percent) and the foreign-invested sector US$32.6 billion (61.4 percent).
The average monthly export turnover was estimated at US$8.85 billion, US$1.6 billion higher than the figure recorded in the first half of 2011.
The increase in export turnover was attributed to the growing volume of industrial products and those manufactured by foreign direct investment (FDI) businesses, such as mobile phones, spare parts, computers, and electronic products.
The export figures were considered a promising sign of economic growth in the first six months of this year. However, the MoIT says it requires greater efforts to meet the yearly target in the face of fierce competition during the global economic crisis.
In the first two quarters, agricultural and aquatic exports fell sharply to only US$10.4 billion. Most notably, rubber exports were down 31.6 percent, cassava 16.5 percent, and cashew nuts 10.1 percent.
In the meantime, shrimp exports to Japan, Vietnam’s biggest importer, faced numerous barriers including Japan’s decision to strengthen inspections of the quinoline-based antioxidant food preservative Ethoxyquin in shrimp.
The textile and garment sector, which is Vietnam’s biggest export earner, saw a slight increase of 8.7 percent, much lower than the same period last year.
The MoIT claims that 15 percent of textile and garment businesses did not have enough orders for 2012, as they failed to find new markets.
Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Producers (VASEP), proposes that the MoIT ask Japanese authorities to increase the limit for Ethoxyquin residue in shrimp products. He also said the MoIT should help shrimp exporters bring an anti-barrier lawsuit to the World Trade Organisation.
The VASEP has asked the MoIT to introduce necessary regulations for tra fish exporters to build their own processing factories and gain a leg up on international competition.
The MoIT plans to carry out national trade promotion programs to reach potential markets such as Hong Kong, the Republic of Korea, Thailand, Malaysia, and Australia.
The ministry will improve its forecasting and ask trade councilors to foreign countries to keep abreast of any changes in policy and import management mechanism, as well as other developments that could be unfavourable for Vietnamese exports to major markets, and report them promptly to State management agencies and businesses.
The MoIT will also work closely with the Ministry of Finance to implement Government Decree No. 75/2011/ND-CP, dated August 30, 2011, on State investment credit and export credit to help exporters get credit loans, while promoting investment credit guarantees for small- and medium-sized businesses.
The two ministries will continue adjusting export taxes and simplifying customs procedures to boost domestic production and export business.
FIEs in city still expand in gloomy outlook
Operational foreign-invested enterprises in HCMC are still expanding operation in the face of the gloomy outlook, as many of them have registered to increase their foreign direct investment (FDI) capital. Meanwhile, the amount of fresh FDI projects is plunging.
Recent statistics unveiled by the HCMC Department of Planning and Investment indicated that 50 FDI projects operating in the city have registered to spur their capital with a combined value of over US$495 million in the first six months, up 127% year-on-year. The figure nearly doubles that of newly-registered FDI projects in the same period.
This is a rare phenomenon in attracting FDI capital into HCMC so far and local analysts said the fact that FDI enterprises increase investment fund in HCMC showed their confidence in the local market. This also indicates that these firms are doing good business despite the current economic woes, they said.
According to the planning and investment department, existing project owners spurred investment capital to boost production and to expand business activities.
Prominent foreign-invested enterprises expanding investment in HCMC in the year’s first half include Singapore-based Vietnam Brewery Limited (VBL) with US$68.1 million, South Korea’s Lotte Vietnam with US$25 million, Singapore’s BMS Vietnam with US$11.8 million and Japan’s Sankyu Logistics Vietnam with US$9.5 million. A number of other foreign companies are also considering to scale up their investment in HCMC, including Japan’s Nidec company.
In the mean time, there had been a sharp fall in fresh FDI projects in the city in January-June. The whole city only lured about US$248 million worth of total investment funds from new FDI projects in the year to date, shrinking up to some 85% from the year-ago period.
Local relevant authorities attributed the slowing FDI inflow to the on-going global and local economic uncertainties. Besides, they noticed that economic restructuring policies the city had conducted over the past time are also the reasons behind the situation.
In fact, the city’s government is focusing on developing industries with high-value technology and services instead of labor-intensive sectors as in previous years. On the other hand, the number of realty schemes which had attracted considerable capital amounts of foreign investors in previous years is also tumbling given poor housing demands at home.
Similarly, new investment into technology development areas has been choked off as supporting sectors and high-quality laborers still remain a headache for foreign investors.
Regardless of this, the department asserted FDI capital flow is following the city’s orientation in gradually raising the ratio of the service sector which accounted for more than 50% of total FDI capital over the first six months. As such, HCMC is still affirming its leading position in economic development in the country’s south.
Banks open up to the housing real estate market
Many banks have started to provide low-interest loans for people real housing demand, which has fostered hopes of jumpstarting the stagnant real estate market.
Director of a trading floor on Khuat Duy Tien Street, in Hanoi, said, "We've seen an increased number of customers in June who want to borrow to buy homes."
Bui Nhat Tan, a worker in Hanoi bought a house in the Xa La urban area for VND1.2 billion (USD57,000). The price was considerably lower than the VND1.8 billion (USD86,000) asking price earlier in the year.
"We've saved for years to buy a house, but the prices were just too high. We only had about three quarters of what the house cost, so we decided to take out a loan. But since the interest rate is so low, we are not worried about borrowing," Tan said.
During the first months of the year the average annual interest rate for home loans was at 20.5%. Since then it has dropped to 17.5%.Tan, however, got a rate of 16.5% as a result of the banks preferential home loan policies towards workers, and the companies they work for.
Tan said that the lowered interest rate and the dip in housing prices have enabled her to buy a house, even on a labourer's salary.
Other banks have followed suit with such preferential loan policies due to the SBV lowering its deposit interest rate and loosening monetary policy.
ACB, for example, has implemented a programme that offers special low rates for individuals who are employed by businesses that are members of partnerships willing to sponsor the loans. Individual members of these partnerships are also eligible for preferential loans.
"We hope this programme will provide funds for people in need and help small business owners." ACB leader said.
Ministry throws lifeline to unregistered FDI firms
Hundreds of foreign-invested enterprises that need to have their business operations re-registered will be able to avoid dissolution or suspension if the Government approves a proposal from the Ministry of Planning and Investment.
Under the Enterprise Law and Investment Law, foreign-invested companies established under the Foreign Investment Law that did not register by July 1 of last year were supposed to have ceased operations and not be allowed to extend their expired licences.
The ministry has submitted two solutions to the Government. First, the Government would propose the National Assembly pass a resolution to remove the clause in the Enterprise Law issued in 2005 that requires foreign-invested enterprises to renew their licences.
However, despite the Enterprise Law taking effect on July 1, 2006, the National Assembly has adjusted the article twice to extend the time for re-registration to five years, as requested by foreign-invested enterprises.
Secondly, the ministry asked the Standing Committee of the National Assembly to allow these businesses continue to renew their registration before amending the Enterprise Law.
Director of the ministry's Foreign Investment Agency Do Nhat Hoang said the proposal could be considered as one of the measures to support foreign-invested firms in a difficult economic situation.
Hoang said a survey by the ministry showed that several foreign-invested companies were finding it difficult to ensure output and wanted to shift into new business lines. However, they failed to renew their business licences due to overly complicated regulations, that could result in the closure of their plants.
He said the ministry has supported the first solution, meaning that regulations asking foreign-invested firms to re-register to continue operations in Vietnam after the deadline would be removed.
Twenty-seven out of 672 foreign-invested enterprises with total registered capital of USD634.4 million in HCM City face closing down by the end of this year as they have only one month left for re-registration.
In addition, more than 700 foreign-invested firms in the city have not re-registered according to the regulation. However, the businesses had a longer business licence.
The director added that business licences for several businesses had expired as they were granted licences since 1990s.
He said the ministry has received re-registration applications from only 3,000 out of 6,000 foreign-invested businesses.
He said foreign-invested firms did not want to re-register because they lacked staff that could work through the complicated regulations.
Planned energy price increases cause worry
Reports that there will be 4 power price adjustments this year has been the cause of worry.
"Despite reductions in the price of power generation, the price of power is expected to rise several times this year," said economist Nguyen Minh Phong.
“I wonder about the social responsibility of the power sector, and whether they do not just have their own interests in mind," he added.
The power price hikes may negatively impact the manufacturing sector and the price of essential goods. The economist said that these things should be carefully considered before making such decisions.
Despite the decreasing price of petroleum and abundant water for hydroelectricity, planned price increases for power remain in place.
"The explanation that the increases are to offset losses from last year is insufficient since no official statistics have been released. With such flimsy arguments, it is no wonder that people are worried about further adjustments. Another price increase at this time would be unreasonable when the economy is in such a difficult period," he said.
According to Tran Viet Ngai, Chairman of Vietnam Energy Association, even if power price remains the same the power sector will make a profit. The current purchasing price is VND700/kWh, while the selling price is VND1,400-1,500/kWh.
Economist Le Dang Doanh said, “If the price of power is regulated based on the market mechanism, it should experience fluctuations during adjustments. We will not experience a lack of electricity this year, so it doesn't make sense to raise the price."
Economist Pham Chi Lan said, “In the past EVN raised raised prices because the price of coal has risen by 10%-11.5%, while petroleum and natural gas saw similar increases. But now these input materials’ prices have gone down."
Professor Le Dang Doanh suggested, “The power sector must pay attention to their non-core business investments. If they continue to raise the price of power to offset bad investments, there is no possibility for reductions in the future. The sector has claimed to have been suffering losses, but they need to clarify the reasons for these losses and which investments they are coming from. At the same time, salaries for officials in the sector are high in relation to others."
Vietnamese coffee prices rise
In July and August, the price of Vietnamese coffee is offering at US$80 per tonne more than that listed on the London Commodity Exchange (LCE) for September.
The greater gap in prices is due to the sharp decrease in the amount of coffee in stock from the country's harvest last year.
In the meantime, the total volume of coffee exports from Vietnam in July is estimated to drop to only half that in previous month.
According to the F.O. Licht International Coffee Report, the total yield of Vietnamese coffee in 2012-2013 could hit a record high of 23.7 million 60-kg bags compared to 22.7 million 60-kg bags for the current crop, which will be harvested in September.
The volume of Vietnamese coffee exports usually falls between July and September before the new crop harvest starts in October. It is expected to drop to 70,000-80,000 tonnes this month, equivalent to 1.17-1.33 million 60-kg bags.
The Volcafe Group says the regular rains in the large coffee plantations in Vietnam will help improve the country’s 2012-2013 crop. The US Department of Agriculture has predicted that Vietnam will produce 22.4 million 60-kg bags of coffee this season.
Wood exports aim to reach US$4.6 billion this year
The total value of Vietnam’s wood exports hit US$2.3 billion in the first half of 2012, up 25.9 percent over the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).
Timber exports to China increased by 35.3 percent, by 32.3 percent to the US and by 25.5 percent to Japan.
As one of Vietnam's hard currency earners with more than US$1 billion in annual revenue, wood furniture export turnover has risen impressively year after year. Vietnamese wood products have cornered the lion's share of the US market with 45 percent.
However, some experts argue that it will be difficult for Vietnam to fulfill its set export target of US$4.6 billion in 2012.
According to the MARD, the reason for this is that wood exporters are facing enormous challenges due to the ailing global economy, as well as technical barriers from importing countries and high input costs.
To meet growing consumer demands and international regulations regarding the legal origin and management of raw materials for exports, many businesses have to carefully control their quality and acquire international certificates to export their goods to certain markets.
Vietnamese wood products are shipped mainly to the EU and the US. However, these two markets are now imposing stricter new laws such as the US Lancey Act, which` came to effect in October 2010, and the EU Timber Regulation which will be implemented in March 2013.
This is troublesome for both resources of Vietnamese producers as the domestic woods do not have the International Council of Forest and Paper Associations (ICFPA)’s sustainable forest management (SFM) certification, while it is extremely difficult to control the origin of the imported timbers.
The fall in orders for woods from the EU is mainly due to the public debt crisis in the region. However, it is not easy to find new markets, especially when the price of raw materials, electricity, petrol, and transportation is on the rise.
The MARD has urged exporters to expand new markets to the Asia-Pacific, Middle East, Africa and Latin America, where the demand for wood is still high.
Long An promotes trade in Cambodia
A delegation from Long An province will take part in a trade fair in Phnom Penh, Cambodia from July 26-31.
Members of the delegation include representatives from the provincial Departments of Industry and Trade, and Planning and Investment as well as 20 local businesses.
The enterprises hope to learn more about the investment environment in Cambodia and promote their products in the local market.
A seminar on trade and investment promotion will be held during the trade fair, offering Long An a good chance to introduce its potential and advantages.
Business representatives in the Vietnamese delegation will be conducting a survery on suitable places to plant rubber and cashew in Cambodia.
The visit aims to create favourable conditions for businesses from Long An province to seek opportunities for cooperation with Cambodia.
Motor show attracts well-known trademarks
The 8th Vietnam motor show will take place at the Giang Vo Exhibition and Fair Centre in Hanoi from September 26 to 30.
The annual event will attract most members of the Vietnam Automobile & Manufacturer’s Association (VAMA), such as Ford, Honda, Mercedes, Mitsubishi, Suzuki and Toyota, as well as Audi, BMW, Land Rover, Luxgen, Porsche, and Renault.
In addition, there will be more than 100 stands displaying automobile spare parts, support industries and other services.
The event will provide a good chance for customers to access the latest automobile models and technologies and for managers, law-makers, and experts to discuss issues related to manufacturing, and assembly lines, taxes, fees and development policies.
This year’s show will be organized by CIS Vietnam Advertising and Exhibition JSC and Le & Brothers Co., Ltd (LeBros).
HCM City orders transport firms to cut fares
The city's Department of Finance has urged all transport businesses and associations in the city to reduce fares further, given that retail petrol prices have fallen five times since May.
Over the last two months, prices of petrol and DO oil have decreased respectively by a total of VND3,200 per litre and VND2,000 per litre, according to the department.
A reduction in transportation fares is necessary and rational as petrol prices account for 35 to 40 per cent of the charges, the department argues.
As of July 10, at the Mien Dong Bus Station, only six of 230 transport businesses had reduced their fares by five to seven per cent for routes between HCM City and Hai Phong and Ha Noi, according to Thuong Thanh Hai, deputy director of the station.
At the Mien Tay Bus Station, meanwhile, just four of 140 companies had reduced fares slightly (VND2,000-5,000 per passenger) on routes between HCM City, Ben Tre, Kien Giang and other destinations.
According to statistics released by the Department of Transport, since the first time retail petrol prices were cut, only nine out of 27 taxi firms in the city have reduced their fares by about five per cent.
The Mai Linh taxi group has reduced its fares by VND200-500 per km, but most of its competitors have not followed suit.
Nguyen Manh Hung, chairman of the Viet Nam Transport Association, told the online newspaper VnExpress that transportation firms increased their prices after petrol prices increased two times by a total of VND3,000 per liter.
The five recent reductions have brought prices down by VND3,200 per litre, so taxi fares should be reduced further now.
Many cargo transportation firms have reduced fares by just 2-3 per cent after repeated complaints from customers.
According to Hung, fixing transportation fares is not as simple as fixing prices of food items. Since it is a time and money consuming process, several tiny reductions in petrol prices creates difficulties for businesses in reducing their fares accordingly.
Hung recommended that the Government extend the time period between reductions of petrol fares and increase the quantum of such reductions.
The finance department has directed transportation firms and associations to reduce their fares and announce their new fares on or before July 20.
Any businesses failing to do so would be fined, it said.
Kien Giang calls for investment
The southern province of Kien Giang had been encouraging domestic and foreign investors to pump investment into its 131 prioritised projects, the local authorities have said.
These projects, worth from VND20 billion (over US$950,000) to VND1 trillion ($47.6 million), include a 10,000-ha aquaculture project in Kien Luong District, infrastructure constructions in Tac Cau Industrial Zone and Tac Cau fish port in Chau Thanh District, and the expansion of U Minh Thuong Road.
The province is also calling for investment in other sectors such as technology used in the agriculture and seafood industries, electronics, machinery and engineering, ship building, garments and textiles, construction materials, handicrafts and footwear.
In the first half of this year, the province attracted 15 projects covering a total area of 204.3ha, bringing the total number of projects registered in the province up to 483 and spanning 24,290ha. Of these projects, 30 are foreign-invested and worth above $3 billion in total.
The encouraging investment attraction was due to local authorities' ongoing efforts to speed up administrative reform and improve infrastructure facilities in order to better facilitate investors, said Tran Thanh Moc, director of the provincial Investment, Trade and Tourism Promotion Centre.
Accelerating land clearance to ensure sufficient "fresh land" for investors and further advertising the provincial investment potential and opportunities via investment promotion conferences had also made a contribution, Moc said.
Restructured firms threaten unfair competition
Reorganising State-owned enterprises is key to restructuring the nation's economy, but officials need to decide what to do about loss-making enterprises and unfair competition between State-owned and non-State enterprises, says Deputy Minister of Finance Do Hoang Anh Tuan.
Speaking to the Vietnam News Agency on the sidelines of this month's Ministry of Finance meeting held to review the economy in the first half of 2012 and set goals for the rest of the year, Tuan also said that "addressing the findings of the Government Inspectorate and State Audit will be an important step in the process of restructuring State-owned enterprises.
"The Finance Ministry has also asked all relevant bodies to reach a consensus on current loss assessments to avoid misunderstandings," he said. "For instance, PetroVietnam was asked to explain the spending of VND18.2 trillion (US$873.6 million) which includes some losses, but it turns out that PetroVietnam invested VND15 trillion ($714 million) in several special projects abroad on the nod of the Government. It can not therefore be said that the entire VND18.2 trillion is a loss."
The group also pumped VND600 billion ($28.5 million) into loans in some cities and provinces experiencing economic difficulties, he noted. These funds represented receivables and could not be counted as a loss to the State budget. The State Auditor planned to deal with such cases by requiring local authorities in the future to arrange for their own financing.
The objective of restructuring was also to create equality and transparency, he said, making it necessary to identify points of inequity between State and non-State enterprises. Currently, the State equity in groups and corporations was VND653 trillion ($31 billion) and that State enterprises didn't suffer the pressures of capital costs faced by non-State enterprises required to borrow at high interest rates.
This created unfair competition and allowed State enterprises to operate inefficiently, said the official. "We should carefully study equality to create fair competition between the sectors," added Tuan.
Rice growers grumble over meagre profits
Despite a bumper summer-autumn rice crop, Cuu Long (Mekong) Delta farmers are unhappy as prices of paddy, including high-grade varieties, have dropped since the harvest began a few weeks ago.
Based on the average production cost of VND3,993 for each kilogramme of paddy for this crop, as estimated by the Finance Ministry, farmers say they have earned meagre or no profit for their labour.
Nguyen Thanh Mien of Dong Binh Commune in Can Tho City's Thoi Lai District said it cost farmers VND3,900 per kilo to produce rice on their own land and VND4,500 per kilo if they did it on leased land.
Nguyen Van Be, who has grown rice on three ha in An Giang Province's An Phu District, said his field had an average yield of 6 tonnes of paddy per ha and he sold it for VND4,250 per kilo, getting a "very small" profit.
Be said that farmers who had other "unexpected expenses" such as fees for pumping water from flooded fields and higher reaping costs for fallen rice plants are likely to suffer losses instead of making any profit.
The programme to purchase 500,000 tonnes of rice for reserves beginning last week has helped increase paddy prices in the Cuu Long (Mekong) Delta. To ensure the targeted 30 per cent profit for farmers, paddy must be sold for VND5,200 per kilo.
However, it is not easy at all for farmers to sell their paddy for over VND5,000 per kilo. Only farmers who harvested their summer-autumn crop in mid-July sold paddy for over VND5,000 per kilo while most of the paddy harvested before mid-July was sold for less than VND4,800 per kg at their fields because the farmers did not want to bring their paddy home.
Authorities in Can Tho City have announced production costs of VND4,016 per kilo for the summer-autumn crop and proposed a price of VND5,300 per kilo for the reserves purchase plan.
However, according to Nguyen Thi Kieu, deputy director of the Can Tho Agriculture and Rural Development Department, to earn bigger profits, many traders have been purchasing paddy at prices much lower than those proposed by the city.
Farmers are agreeing to sell paddy to traders at prices offered by the latter for fear that prices may drop in the future and inflict post-harvest losses if they do not sell their produce as soon as the crop is harvested.
The modest increase in paddy prices as a result of the reserves purchase programme, that began on July 8, has been disappointing for farmers. On July 12, prices of summer-autumn paddy stood at between VND4,350 and VND4,500 per kilo, up VND50 to VND150 per kilo compared to a week earlier. The increase is not enough to bring the 30 per cent profit for rice growers that policy makers target.
Tra fish breeders, processors seek assistance
As prices of tra fish products dropped to record lows last week, both breeders and processors have been crying out for help from the Government.
Tra fish processors are facing capital shortages while owners of breeding farms say they are suffering losses of VND3,000 to VND5,000 per kilo.
Nguyen Thi Kim, who owns five breeding farms covering 15,000 sq.m in Can Tho's Ninh Kieu District, said she had to pay some VND5.5 million ($261.9) per day for fish feed plus VND16 million ($761.9) in bank loan interest every month.
"Production costs and feed prices are on the rise while that of tra products are declining," said Kim. "I'm sure of going bankrupt if prices of tra fish products do not increase in the near future."
Nguyen Ngoc Hai, chairman of the Thoi An Tra Fish Breeding Co-op in Can Tho's O Mon District, said members of co-op have "voluntarily" sold the fish to processing enterprises on credit of one to two months.
"It's is better than forcing them to shut down [by not selling them the tra fish]. Then there would be no buyer for our tra fish," Hai told Viet Nam News.
He said the Government provided support for animal husbandry and rice farming whenever they were in trouble, but the tra fish industry and seafood processors had not been as lucky.
According to Huynh Van Tuan, chairman of the Labour Confederation at the Can Tho Export Processing Zones and Industrial Parks, the city has 18 tra fish processing enterprises, employing over 13,000 workers.
Seafood processors have offered employment opportunities for a large number of people in the Cuu Long (Mekong) Delta. Therefore, the Government should provide them with financial support and prevent thousands of workers from losing their jobs, he said.