BUSINESS IN BRIEF 19/12

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VietnamNet English - 34 month(s) ago 7 readings

Sector’s feet stuck in cement



Vietnam’s cement producers are battling stockpiles despite low prices.

According to the latest data of the Ministry of Construction (MoC), Vietnam sold over 44 million tonnes of cement in 2011.

The data shows that the domestic cement producers will struggle to bet last year’s 50 million tonnes of consumption. Many companies have sold at discounts, but failed to boost consumption.

Some like Dong Banh cement factory in northern Lang Son province faces stopping production and shutting down.

Vu Van Nam, board chairman of Dong Banh, said measures were needed to lift manufacturing operations into the New Year.

High inflation, lending interest rates and cuts to public investment are pushing firms into a corner. Additionally, most cement projects were invested with loans so repayment is investor’s big burden.

In the most recent meeting with the cement industry, a Ministry of Finance representative said rising production and sales figures would not mean firms were running at profits since the sector’s return on equity rate remains low of less than 9 per cent only.

Vietnam’s state-run cement conglomerate Vicem is facing heavy losses of over VND230 billion ($10.9 million) from the beginning of the year after a dip in the country’s cement consumption. Vicem’s market share fell from 40 to 36 per cent.

A Vicem representative said: “With current low profit rates, it is difficult for cement producers to convince banks to loosen the pulse-rings.”

“Rising production costs, poor ranges of products especially the lack of specialised cement products are hurting Vicem operations,” said Vice Minister of Construction Nguyen Tran Nam.

“Boosting consumption and loan repayment will still be big problems for cement companies in the coming period in the face of current credit squeezes,” said Nam of Dong Banh Cement.

Japan wrong on GMO detection in Vietnam rice noodle

Japan admits its recent test saying that rice noodle produced by a Vietnam-based food processing enterprise contains genetic modified organism (GMO) BT protein was wrong, reported Bui Ba Bong, deputy minister of Agriculture and Rural Development.

Since Vietnam has evidence that the country does not produce GM rice as well as no presence of BT protein found in instant rice noodle, Japan discovered their shortcomings during a recent testing procedure.

As a result, Japan canceled this announcement and is allowing the previously suspected products to go back on sale. Japan has also sent documents from early this week.

Japan found the presence of GMO in materials of rice noodle produced by a food processing enterprise in the Mekong Delta Province of Dong Thap two months ago.

However, Quality Assurance and Testing Center 3, or Quatest 3 tested all suspected products and found no GMO substance BT protein in these products, paving the way for the country to request Japan to check up on their testing and then cancel its announcement.

Depreciation pressure stalks bullion price

Price of gold in Vietnam and global prices both declined slightly on December 12 as investors felt insecure about the European sovereign-debt crisis.

Sacombank Jewelry Company bought gold at VND44.5 million and sold at VND44.75 million as of 10:45am Vietnamese time.

Saigon Jewelry Company, the biggest gold processing and trading company in Vietnam, collected gold at VND44.45 million and sold at VND44.7 million around 11:20am Vietnamese time.

Hanoi-based Phu Quy Jewelry Company purchased SJC-brand gold at VND44.47 million and sold at VND44.75 million at 11:22am Vietnamese time.

Bao Tin Minh Chau Jewelry Company quoted the price at VND43.6 million for buying, and VND43.9 million for selling at 12:48am Vietnamese time.

According to some jewelers, trading volume on the bullion market continued to go down in recent days. Sacombank Jewelry Company said its trading volume currently fell to below 1,000 taels of gold per day.

Domestically, SJC-brand gold fetched around VND1 million a tael, higher than global price.

On the black market, one dollar was bought at VND21,100, and sold at VND21,140, a decrease of VND20-30 per dollar over last weekend.

The dollar exchange rate was stable for five consecutive weeks on bank market. The interbank exchange rate remained at VND20,803, while commercial banks sold dollars at VND21,011 per dollar.

Internationally, gold slid as European financial leaders failed to draw a convincing plan to completely address the region’s tenacious debt crisis. Europe secured a historic agreement to draft a new treaty for deeper economic integration in the eurozone on Friday, but Britain, the region's third largest economy, refused to join the other 26 countries in a fiscal union and was left isolated.

Gold for immediate delivery fell as much as $2.1 an ounce to close at $1,710.2 an ounce at 9:55am Vietnamese time.

Last week, gold lost 2 per cent as European Central Bank dashed expectations for more bond buying.

According to some experts, gold was proving a direct proportion relation to the US stock market. Thus, bullion might advance this week if Wall Street manages to maintain its rising trend. However, Wall Street’s movement will mainly depend on the US major economic statistics on retail sales and inflation rate.

This week, the US Federal Reserve will have a policy meeting on Tuesday, but it is not expected to put forward a new policy this time.

Japan invests in Viet Nam

To date, Japanese companies have invested in 1,623 foreign direct investment (FDI) projects throughout the country, said head of the Foreign Investment Agency Do Nhat Hoang, addressing a conference in Tokyo yesterday.

Of the total number, around 1,007 projects are focused on the processing and manufacturing industries, with total registered capital of US$22.4 billion.

"Seeing as Japan is strong in these fields, investment matches the local development trend," Hoang said.

He stressed that Viet Nam, with a clean investment environment, has become increasingly attractive to foreign investors, especially those from Japan.

The Conference on Vietnamese Investment was organised to run in Tokyo and Nagoya between yesterday and today.

Sugar surplus may be exported

The Viet Nam Sugar and Sugarcane Association (VSSA) has submitted a proposal to the Government to allow local producers to export sugar surpluses.

After 10 years of producing sugar to meet domestic demand, this would mark the first time the industry has a surplus to export.

The Ministry of Industry and Trade has discussed the proposal with the Ministry of Agriculture and Rural Development, according to VSSA President Nguyen Thanh Long.

The association said its initial overseas market would be China.

During the 2011-12 period, more than 1.4 million tonnes of sugar is expected to be refined from the sugarcane crop, according to the association.

This amount, in addition to 100,000 tonnes stocked in sugar mills and 70,000 tonnes imported under Viet Nam’s import-quota commitment to the World Trade Organisation, would lead to an excess of sugar.

The local market’s demand is only around 1.4 million tonnes per year, according to the VSSA.

Earlier this year, the association made proposals to halt and then resume imports in an aim to regulate the local market.

In September, the VSSA raised objections to the import of sugar, saying that it was causing a sugar surplus in the local market.

But a few months before that, the association had asked the Government to resume imports, blaming the need for the illegal export of hundreds of thousands of tonnes of sugar to China, which threatened to cause a domestic shortage.

Prior to that, the association had also tried to persuade the Government to halt imports, saying that reserves would be sufficient until the new season and that imports were dominating the domestic market.

Ever since sugar refineries began to increase their production few years ago, the number of sugarcane farms has also increased. The country now has 270,000 ha of sugarcane cultivation.

Fifteen years ago, the Mekong River Delta region had about 100,000ha of sugarcane farms, but farmers failed to sell their produce to sugar refineries, which continuously suffered losses until farmers reduced their cultivation areas to 48,000ha.

The Ministry of Industry and Trade has been planning to reduce imports next year, but it will still have to grant the 70,000-tonne import quota required under its WTO commitment.

Low-income families to get apartments

Top officials from the Ministry of Construction (MoC) said that housing developers had been given priority regarding tax exemption, land use tax breaks, soft loans from banks and a building density increase in order to help them build low-priced apartments.

Deputy Minister of Construction Nguyen Tran Nam said that his ministry, on behalf of the State, has controlled the prices of these housing units while allowing developers to enjoy a average profit of 10 per cent, satisfying both businesses and residents.

However, Nam suggested that low-income customers be given incentives to take out loans from banks and use the 10-year-rent-mortgage method in order to help them purchase their own apartments. He said that Viet Nam needed to step up research in material technology and interior design in order to create high-quality, affordable apartments.

Currently, MoC has planned to set up a housing savings fund to support low-income people, supplied in part by the State budget in addition to contributions from buyers. The fund is expected to be managed by a not-for-profit company which is established by company.

Due to tightened monetary policy over the past few months, buyers have begun to withdraw from bids on low-priced apartments. Many people have cancelled their purchasing contracts, stirring concerns over whether the supposedly “affordable” apartments deserved their title.

In response, Nam said bids from buyers have still outnumbered available units.

He maintained that the calculated price of VND10 million (US$480) per square metre was totally reasonable, but noted that in small cities such as Da Nang, Hue and Thanh Hoa, prices could drop even lower to about VND5-6 million ($240-288) due to lower land costs and available infrastructure.

MoC is now considering a draft decree that would allow housing developers to build apartments for lease, giving poor families the opportunity to rent in lieu of purchasing.

According to the ministry, around 5 per cent of low-income families who were unable to make payment would be given priority to lease under the new decree.

Stronger corporate governance urged

A report by the International Finance Corporation (IFC), the World Bank’s private sector arm, calls for stronger commitment to corporate governance by Vietnamese companies, which will make them more competitive in attracting investments and better able to contribute to Viet Nam’s economic growth.

The Corporate Governance Scorecard for Viet Nam 2011 released late last week urges improvements in the rights and treatment of shareholders and stakeholders, roles and responsibilities of a company’s board, especially its accountability for risk oversight, as well as better disclosure and transparency.

It studied corporate governance practices at the 100 largest companies listed on the Ha Noi and HCM City stock exchanges.

While the average corporate governance score rose slightly to 44.7 per cent in 2010 from 43.9 per cent in 2009, it is well short of the score of 80 per cent which indicates a company meets global best practices.

“Adoption of better corporate governance practices and code will help enhance companies’ ability to attract higher quality of capital at a lower cost,” Simon Andrews, IFC’s regional manager for Viet Nam, Cambodia, Lao PDR, and Thailand said.

“We expect the scorecard will help companies and regulatory agencies identify strengths and weaknesses in corporate governance practices, leading to further reforms in this area at both company and regulatory levels,” he said.

Vietnamese companies are still in the early stages of adopting international corporate governance standards and best practices.

Corporate governance continued to be practised largely to meet regulatory requirements rather than to improve business practices.

India apparel firms seek opportunities

A delegation of Indian apparel and textile trading companies under the Apparel Export Promotion Council of India (AEPC) met executives of Vietnamese companies in HCM City yesterday, seeking trade and investment opportunities.

Premal Udani, AEPC chairman, said the delegation wanted to learn about production facilities, productivity in the garment sector, cost advantages in apparel manufacturing, labour policy, and incentives, if any, given by Government of Viet Nam.

This would help open up discussions on collaborations including the establishment of joint ventures, he said.

AEPC is open to an exchange programme under which Vietnamese students can attend courses at the Institute of Apparel Management. It can also offer support for the Viet Nam Textile and Apparel Association to train its employees with various training programmes in production technology, computerised pattern making, quality control techniques, merchandising management and other areas, Udani said.

Pham Gia Hung, director of the Viet Nam Textile and Apparel Association’s External Affairs Department, said Viet Nam has 3,710 companies in the garment and textile sector, of which 70 per cent were producing apparel, while the spinning, weaving and dyeing were not very strong.

Hung said under the industry’s latest five-year development plan until 2015, investment would be increased in raw material production to increase the localisation rate.

The industry will also focus on research and development and human resources training in order to become more competitive, he said. Priority will be given to designing, new product development and the development of supporting services to shift the apparel business from a CM mode (contract manufacturers in which manufacturers are provided with all input materials and designs by foreign buyers) to FOB production or original design manufacturers (ODM), he said.

Hung said building Vietnamese apparel brands was very important to boost the industry’s international profile.

The industry will also focus on restructuring production and relocating factories to minimise pollution risks and take advantage of less labour-intensive areas, he said.

Pepper exports to hit 130,000 tonnes

The Ministry of Agriculture and Rural Development (MARD) estimates the total volume of exported pepper this year to reach nearly 130,000 tonnes, which is worth more than US$775 million.

This new prediction is down by 13,000 tonnes in volume and $100 million per tonne in value against its forecast in September.

“If the prediction is true, the export turnover in 2011 will have nearly doubled last year’s figure,” the ministry said.

General Secretary of the Viet Nam Pepper Association, Tran Duc Tung attributed the down-turn in forecast to the limited supply from domestic farmers.

“It is a pity that most domestic farmers have not stockpiled pepper. They sold out to the traders when the price climbed to about VND100 million ($4,760) per tonne. At that time, demand in the world market strongly increased while the demand has since come down due to bad weather,” Tung said.

He added that most of the pepper currently belonged to traders who were speculating to get a higher profit. Due to that, the volume of exported pepper has sharply fallen.

According to the ministry, in November of this year, the pepper export volume was 6,000 tonnes, valued at $40 million. With this, the total pepper export volume and value in 11 months was 122,000 tonnes and $713 million respectively.

“Compared to the same period last year, the volume is up by 10.5 per cent and the value has surged by 83 per cent,” the ministry added.

The US is still the leading importer of Vietnamese pepper.

Thermo-power plant project in Delta approved

Deputy Prime Minister Hoang Trung Hai has given his approval to the Malaysia-based Toyo Ink Group to build a thermo-power plant in Hau Giang Province.

The Song Hau 2 thermo-power plant, with a capacity of 2,000MW, will be built at Song Hau Power Centre under the BOT (Build-Operate-Transfer) model at a cost of US$2.5 billion, according to Hau Giang Province People’s Committee.

Under the project, coal imported from Indonesia and Australia will be used to generate electricity, in addition to DO (diesel oil) from Dung Quat and Nghi Son oil – refinery plants.

The plant is expected to be operational in 2018. Toyo Ink said it would begin the project as soon as the licence was issued.

DHL Express connects Vietnam to major Asian hubs

Following heavy investment in facilities in Vietnam, DHL Express has commenced its new direct flights to link HCMC to Asia’s major hubs Hong Kong and Bangkok to support ease of trade for businesses in this market.

The world’s leading express service provider operates the Boeing 727F with 22,000 kilograms of inbound and outbound uplift to Vietnam five days a week. The aircraft will fly from HCMC to Hong Kong, Bangkok and return to this economic hub of Vietnam.

DHL Express said the new service would provide customers with outbound access to the company’s Asia air network hub in Hong Kong and also improve the throughput to the key Vietnamese trade lanes of Europe and the United States.

Christopher Ong, new general director of DHL-VNPT Express, said in a statement that customers were offered levels of connectivity through the DHL global network as the key fundamental in delivering logistic solutions to customers.

Ong said launching the new direct flights came at an opportune time as businesses were able to ride on the growing demands to expand their businesses overseas. “The global demand for Vietnamese products and the Vietnamese market’s demand for imported goods have never been higher,” he said.

Ong told the Daily last week that DHL Express was investing much in increasing its air network capacity in Vietnam and other markets in Asia to cash in on growth within this region. “We continue to see very strong growth in Vietnam,” Ong said, adding that Vietnam still had advantage in cost competitiveness.

“Vietnam presents not only just as a location for outsourcing, manufacturing goods but also a great domestic market... so, it presents a great market for us,” Ong said. He named apparel, textile, footwear, and machine parts in the list of products on the company’s flights from and to Vietnam.

“We are very bullish and we will continue to invest (in the Vietnamese market). We are looking to constantly upgrade and enhance our infrastructure, and the new service is just one example of driving our business growth,” Ong said.

DHL Express unveiled its fully-equipped US$1.4-million facility at Noi Bai International Airport last month, more than a year the company opened a US$5-million gateway facility at Tan Son Nhat International Airport. The company’s new depot recently went online in the southern province of Long An.

Investors pledge VND14.6 trillion for Ninh Thuan

Over VND14.6 trillion was pledged for investment projects in Ninh Thuan Province in south-central Vietnam, provincial Chairman Nguyen Duc Thanh said at the opening of a conference on Saturday.

At the event to announce the master plan on socio-economic development of Ninh Thuan until 2020 and investment promotion in 2011, the province awarded investment certificates for five projects with the total registered capital of over VND4.4 trillion. These projects are in the areas of aquaculture cultivation, tourism and clean energy development.

In particular, HD Investment Joint Stock Company will invest some VND3.7 trillion to develop Phuoc Hai wind power plant with the capacity of 97.5MW. Other projects include the Ninh Thuan-HVB shrimp breed farming center costing VND100 billion by Hung Vuong-Ben Tre Group, and the five-star Hon Do high-grade resort project by Hon Do Ninh Thuan Investment and Development Co. worth VND460 billion.

At the conference, graced by Prime Minister Nguyen Tan Dung, the province also gave its approval in principle to six projects worth nearly VND7.2 trillion, the biggest one being the solar and wind power project worth VND4 trillion by LandVille Vietnam.

Besides, Suc Song Xanh Co. committed to invest VND90 billion to construct the infrastructure for Tri Hai industrial cluster, while Lam Son Co. will invest VND50 billion in a wheat starch processing factory.

In the list of would-be investors are also the U.S-based Kachay Home with a project to develop a hi-tech agricultural zone in Ninh Thuan, and Impsa of Argentina signing a memorandum to develop a factory to produce wind turbines and towers worth as much as VND3 trillion.

Ninh Thuan’s master plan on socio-economic development until 2020 was conducted by Monitor Group of the U.S. and Arup of England. The two foreign consultancy firms identified six economic pillars as the focus for development in Ninh Thuan, including four major industries namely clean energy, tourism, agri-aqua-forestry, manufacturing and processing, and two supporting industries being education and property.

As planned, by 2020, these industries will account for some 91% of the gross domestic product (GDP) and make up 85% of the labor demand in the entire province

Under the national sea strategy, Ninh Thuan will likely become the economic hub in the South Central and Highland areas, especially with the country’s first two nuclear power plants to be located there, according to the government portal chinhphu.vn.

US restaurant chains eye franchises in Vietnam

With ten US-based food and restaurant enterprises visiting Vietnam to seek franchise cooperation earlier this month, the local fast food sector is likely to heat up with the arrival of many popular brand names.

J. Marc Mushkin, senior vice president of International Development of Pollo Tropica, a chain popular for its grilled chicken, said Vietnam has one of the highest rates of chicken consumption in the world.

This appealing potential haslead to Pollo Tropica eyeing a venture into the Vietnamese market, Mushkin said.

“We have chains in eight countries, but Vietnam is the first Asian country we want to enter,” he said.

Another member of the US delegation was the restaurant chain Round Table Pizza, which has recently reached a deal with the Mesa Group to open its first franchise in Vietnam in Q1 next year.

The chain said it is taking advantage of the rapid growth of the fast food industry in the country, adding that it is targeting to open 20 stores countrywide.

Round Table Pizza has posed many high requirements for its franchise partner, including importing all raw materials from the US, as well as having Vietnamese staff trained by their US counterparts.

Focus Brands Group, another visiting corporation who owns popular brand names such as Carvel’s, Cinnabon, and Moe’s Southwest Grill, said it will offer strong support to Vietnamese partners as long as they have suitable store premises.

Scott Lehr, deputy chairman of the international development of the International Franchise Organization, said that US businesses have planned to develop their brand names and operation outside the US.

“The current troubled national economy provides a golden chance for them to reach beyond the country border,” he said, adding that Vietnam, and other Asian countries, are their first choice.

Most of the businesses visiting Vietnam hold a positive view on the Vietnamese market.
Phil Crimmins, president of the international division of Applebee's International, said it will take one to two years for a franchisor and franchisee to reach an agreement on their cooperation.

“But these meetings over an extended time period will help the parties build up trust and forge a solid relationship,” he said.

“What is important is that we build relationships.”

However, the US franchisor may face problem in pricing when operating in Vietnam.

Lehr of the IFO said that prices of the US franchise restaurants in Vietnam will not be cheap.

“But if consumers want to enjoy the globally-branded services, they will accept such high prices,” he said.

He said many US brands faced such hindrances 15 years ago when they first entered the Chinese market.

“But things are now totally different. We just need time.”

Tran Tinh Minh Triet, CEO of the franchise consultancy Best Fortune, said that 90 percent of international franchises in Vietnam are in the food and restaurant sectors.

Franchises in these sectors have a higher rate of success compared to other sectors such as education or retailing, Triet said.

He said that US franchisors often seek experienced partners with strong financial ability and comprehensive knowledge of the domestic market.

“[The US franchisors] are not targeting the small and medium enterprises,” Triet said.

“The average investment for a franchise can be as much as several million US dollars.”

Receiving salary via ATM presents major problems

Although most businesses countrywidehave been paying their workers via ATM for the last three years, the system’s infrastructure has yet to adequately develop, making wage-withdrawing troublesome for workers.

Duong Nam Hung, a worker in the Tan Thuan processing and exporting zone, said he has had to receive salary via ATM since he first starting working there two years ago.

“But nine out of the ten times I go to the ATM booths, I have to wait in a long queue for my turn to withdraw,” he said.

“Last month, I had to queue from 6pm to 8:30pm in order to get a mere VND3 million.”

Nguyen Thi Ha, who works for Duy Hung Co in the Binh Duong-based Song Than Industrial Park, said she often goes to withdraw her wages as early as 6am to avoid a long wait.

But, even that early in the morning, Ha sometimes has to wait an hour to receive her money, she said.

She added that she always fears that the machine will go broken, something that has occurred many times before.

“The ATM simply returned my card without any banknotes when I went to withdraw my salary last month,” she said.

“At least the bank told me that the transaction could not be processed since the machine had experienced a breakdown.”

Workers in the Song Than Industrial Park said there are only three Techombank ATM booths in the park to serve around 6,000 workers.

They said the machines usually break down at various points during a given month, and they often suspend services at the time of wage paying.

T.H, a worker at Hansoll Vina Co, which is also located in the park, said workers in her company receive salary via ATMs on the 30th day of every month.

Oftentimes, some workers have to wait nearly a week to be able to withdraw their money, since there are so many of them that need to use the three machines, she said.

But, she added, “last week the bank informed us that the three machines would be out of commission from December 31 to January 2, 2012, so that the bank can finalize their year-end balance sheet.”

“With the machines set to be suspended, I do not know when I can get my money this time,” she said, adding that she has no idea why the whole ATM system has to be halted for the bank to calculate their financial report.

“This is unreasonable, since no nearby banks suspend their ATMs for this reason.”

Many workers at the Song Than Industrial Parks said Techcombank’s ATMs have stopped working almost every month when came time for workers to withdraw their wages.

On the other days of the month, only one or two machines were operational, while on the rest of the days they often produced errors or ran out of money, they said.

K, a worker from northern Thai Binh province, said the bank has given many excuses for the ATMs problems during the salary-paying times.

“There was even a ridiculous reason ‘like the ATM booths have been struck by lighting’,” he said, adding that the machines had to cease operation for five weeks after that accident.

Workers also complained that there were cases when workers could not get the full wages their companies had paid.

Sau, a worker at Hansoll Vina, for instance, said she had receive only VND1.8 million in wages last month, while the company had informed her that the figure would be around VND3.78 million.

The company assured her that they had transferred the adequate amount of salary, and asked her to complain to the bank.

For its part, the bank asked her to wait up to a month while it looked into the issue.
“This means that I have to wait until the salary payment at the end of December to receive the wages of last month,” she lamented.

New gasoline scam discovered in HCMC

Mixing A92 gasoline with methanol for retail sales is a new method of creating substandard gasoline that is becoming more popular among cheats on the outskirts of Ho Chi Minh City, Tuoi Tre discovered.

The dishonest trick is said to have negative effects on both human health and the durability of motorbike engines.

The scandal involving 11 dishonest fuel dealers mixing A83-grade gasoline with A92 and A95 fuel to make substandard products detected by Ho Chi Minh City authorities, and the subsequent crackdown on this practice, has resulted in the spread of this new trick.

Hung, a dealer from Tan Phu District with ten years experience in the petroleum field, told Tuoi Tre that those who are distributing mixed gasoline to roadside households on the outskirts of the city have all switched to this new way of cheating, since it is more profitable.

By mixing 20-30 percent of methanol into a liter of A92 gasoline, distributors can make a profit of VND4,000-6,000 per liter of mixed-A92 sold.

Sinh, the owner of Quang Hung chemical store on Vo Van Van Street in Binh Chanh District, told Tuoi Tre that many such distributers order the ready-to-go 30-liter containers of methanol for VND310,000 each at his shop. For big customers, those containers will be delivered to their homes or businesses on call.

The mixers often perform their job right at big gas stations or newly-opened ones with 30-liter containers already filled with 5-7 liters of methanol – which is nicknamed PU. The mixing process is the filling up of those containers or the redistributing of methanol into every container before filling them up with gasoline.

Many of them gather at Comeco gas station No.29 on provincial road No.80 in Binh Tan District’s Binh Hung Hoa Ward.

Then, the swindlers bring their mixed-A92 gasoline to retailers, which are located about 200 meters from one other along the roads and alleys of Binh Chanh and Hoc Mon districts.
Last Wednesday, Tuoi Tre tracked Quynh, a distributer, to a retail sales point owned by Thanh in Hoc Mon District’s Ba Diem Commune.

Thanh said she has sold A92 gasoline distributed by Quynh for a year at a price of VND20,300 a liter, while the official price is VND20,800 a liter. She said she cares about neither the origin nor the ingredients of the product.

By following Quynh to other retailers, Tuoi Tre found that they have the same attitude as Thanh, with some thinking that the product ‘may be mixed with jet-fuel’ or that ‘the distributers buy it in big volumes to get a cheaper price’.

Quynh and other distributers who sell 300 liters of mixed-A92 gasoline a day can earn around VND1 million for their efforts.

Distributers also stock a large volume of methanol for future use.

Dinh, a distributer within a network of 10 men, has bought 1,000 liters of methanol worth some VND11 million to store in 50 containers in the front yard of his house in Binh Chanh District.

Dinh’s customers, many of whom don’t know about his house, often get all the pumping equipment installed and repaired right at their homes, and are advanced some 30-liters of substandard gasoline for sales before paying any money.

Da, a friend of Dinh who is also from northern Thai Binh Province, is the mastermind behind the mixing technique, the intermediary selling methanol to his colleagues who come from the same area, and the boss of a distributing network.

Those networks often change the gas stations they gather at in case there is a threat of detection, divide their influence areas very clearly, and cooperate in buying methanol and other substances.

They are ready to abandon their customers if they detect any threats, Hung, a retired distributor in Binh Chanh District, told Tuoi Tre.

They can sell the right to distribute to a big customer who buys up to 300 liters a day for VND100 million, since switching to new customers can make up the sum in just a few months, he added.

This new method of cheating has now spread from outlying districts like Hoc Mon, Binh Chanh and 12, to inner districts like 8, Go Vap, Tan Phu and Tan Binh.

Earlier this month, Tuoi Tre discovered the mixing A83-grade gasoline with A92 and A95 fuel to make substandard products as the common trick of the 11 dishonest fuel dealers that have recently been detected by Ho Chi Minh City authorities.

Though most of local major fuel wholesalers no longer import A83 gasoline, and the Quang Ngai-based Dung Quat Oil Refinery does not produce this commodity, the low-quality gasoline is still produced by some domestic fuel wholesalers.

Industry insiders said fuel dealers or companies can buy the necessary chemicals and make the gasoline themselves.

Methanol is a highly flammable and poisonous type of alcohol which, when ingested, even in quantities as small as 10 milliliters (two tea-spoonfuls), can cause permanent blindness, and 100 milliliters may be fatal.

Created by the catalytic oxidation of methane (from natural gas), methanol can be used as an alternative fuel or as a gasoline additive. It can be mixed with water and most organic liquids such as gasoline.

Some countries have already allowed the mixing with a rate of one liter of methanol in 100 liters or 1,000 liters of gasoline, under strict inspection and management. Mixing at 20-30 percent is very dangerous to human health and the durability of motorbike engines, said Dr. Nguyen Huu Luong from the Vietnam Institute of Petroleum under PetroVietnam.

When mixed with gasoline, it increases carbon monoxide and oxide emissions, thus harming the environment as well.

The substance can be detected by its strong scent and the visible effect it has on the crystal color of gasoline and unusual roar of an engine that is using it, said Dr. Le Huy Ba, from the HCMC University of Industry.

Vietnam firm to ship 300,000 tons of rice to Malaysia

Vinafood2, a major rice exporter of Vietnam, has secured a contract to ship 300,000 tons of 5% broken rice to Malaysia with delivery starting in March next year, according to the Vietnam Food Association.

Both the exporter and the association did not tell the export prices. However, Malaysian newspaper The Star said Tuesday that the deal would be worth nearly $150 million.

Malaysian Agriculture Ministry data show that the country has imported around 400,000 tons of rice from Vietnam in the first 10 months, up from around 300,000 tons in the same period last year.

Vietnam expects to ship 7 million tons of rice next year, according to the country’s Ministry of Agriculture and Rural Development data.

The Vietnam Food Association told a rice export review meeting in the Mekong province of Tien Giang last week that Vietnam shipped overseas 7.35 million tons of rice between January and November, up 4.3% on the same period last year. A total of 617,000 tons will be delivered this month, according to the association.

Production units gear to meet year-end targets

Although economy is in crisis because of inflation and global downgrade, local production businesses are flourishing and making all efforts to reach a high revenue target by the end of this year.

Liksin Corporation's production complex in Duc Hoa District in Long An Province is running full capacity to complete contracts and finish year-end targets.

Industrial production value is estimated to reach VND253.5 billion in 2011, presenting a year-on-year increase of 9 percent; production turnover reached VND848.5 billion, increasing 22 percent compared to the same period last year. Workers have an average income of VND83.8 million per year, up by 13 percent over the last year.

The Liksin production complex has tried to maintain trading and production as per policy plans, keeping market orientation, improving living standards of laborers, saving on extra expenses, enhancing worker capacity, implementing effective trading and production methods and creating solidarity amongst workers.

Liksin has seen a large number of orders from local and foreign partners, said Mr. Le Dang Quang, director general of Liksin.

Bui Quang Hai, Chairman of the Mechanical and Industrial Construction Company (IMECO) said that trading and production results of 2011 achieved over 16 percent of the turnover of VND153 billion.

IMECO has signed many valuable contracts with clients in European countries, added Mr. Hai.

Some countries see a recovery in their economies, thus local enterprises should strengthen their marketing activities and connect with previous partners as well as expand into new markets, said Mr. Hai.

The government should have flexible monetary policies, such as reduction and exemption of taxes to help enterprises garner new business opportunities said economic experts.

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