Vietnam will focus less on the amount of foreign direct investment (FDI) registered capital, but more on FDI disbursement next year, expecting to dole out US$10-11 billion, said an official.
The country sets a target of attracting $15-16 billion of FDI registered capital in 2012, with a focus placed on improving the projects’ quality and efficiency, and enhancing the State’s management, said Do Nhat Hoang, Head of the Foreign Investment Agency under the Ministry of Planning and Investment at a press briefing in Hanoi on December 30.
Areas for investment will also be carefully selected, with priorities to infrastructure, "green" industries that are friendly to the environment, supporting industries, and high-tech industries of highly global competitiveness. Meanwhile, limit will be in non-production areas that may increase the imports or pollution.
In 2011, Vietnam attracted $14.7 billion in FDI, down 26 percent from the previous year, but total disbursement hit $11 billion, the same as in 2010, which accounted for nearly 26 percent of the total social investment. The FDI sector contributed $3.5 billion to the country's remittances, up 15 percent year-on-year.
Industry and construction lured 76.4 percent of the total FDI capital, while the real estate accounted for only 5.8 percent, down from 34.3 percent in 2010.
By December 25, there are 13,667 FDI projects operating in Vietnam with a total registered capital of $198 billion.
Singapore is the largest foreign investor with a total registered capital of $24 billion, followed by the Republic of Korea, Japan, and Taiwan .
The southern economic hub of Ho Chi Minh City took the lead in attracting FDI capital with $32.67 billion, followed by the oil-rich province of Ba Ria-Vung Tau, Hanoi capital city, and southern provinces of Dong Nai and Binh Duong.
Hanoi Sofitel Metropole's company fined $24,000
The State Bank of Vietnam yesterday handed a hefty fine of VND500 million (US$24,000) to the company that manages the Hanoi-based Sofitel Metropole Hotel for violating the financial and monetary regulations.
In particular, the joint-venture Thong Nhat Metropole Hotel Co Ltd, based at 60 Ly Thai To, Trang Tien Ward, Hoan Kiem District, has listed prices in its restaurant and bar menus and signed space renting contracts with local customers in US dollars, which is against the law.
In Vietnam, all transactions, payments, advertisements and price listings are banned from being conducted or quoted in foreign currencies, except those carried out by banks, airports and customs agencies.
Besides slapping a steep fine on the violator, the central bank also ordered that it stop listing and signing contracts in the foreign currency.
Meanwhile, the Ho Chi Minh City branch of the central bank has also levied a VND400 million fine on the owner of the gold shop My Hong – My Dung in Thu Duc District for trading foreign currencies without a license.
Earlier on November 24, the central bank also imposed hefty fines on FPT University, Ngoc Long Gold Processing Co, and My Phuong Co, all based in Hanoi, for breaching violations on foreign currency management.
Accordingly, Hanoi-based Ngoc Long Co was fine VND100 million for offending the regulation regarding trading and paying in foreign currency. The company also had the traded sum of US$12,195 confiscated.
FPT University, a private information technology university headquartered in Hanoi, was also penalized for quoting its tuitions for some courses in US dollars.
The central bank imposed a VND500-million fine on the university, ordering it to stop listing, advertising, or announcing school fees in dollars.
Private gold trader My Phuong, located in Hanoi’s Dong Da District, was caught red-handed selling $1,000 to a customer.
Earlier on October 21, the government issued a new decree which established higher fines for violations in the financial sector.
Accordingly, the penalties imposed on those quoting the prices of goods and services in foreign currencies were increased by 7 times, to VND500 million.
Making payments in foreign currencies or gold and other violations of gold trading regulations are now subject to a fine of VND50 to 100 million. In the past these violations went without penalty.
The HCMC branch of the central bank said that after the authorities had strengthened crackdowns on violations in the monetary sector, many travel agencies, language centers, and international schools had filed documents seeking permission to list their service prices in US dollars.
However, the central bank has yet to produce any response to these requests.
Vietnam garment hanger faces suits in US
Vietnamese steel wire garment hanger exports to the US are facing anti-dumping and anti-subsidy lawsuits from three American manufacturers, said the Ministry of Industry and Trade’s Competition Management Agency.
According to the announcement posted on the agency’s website, the US-based VORYS law office, which represents the US manufacturers, on December 29 filed dossiers to call on the US Department of Commerce, and the US International Trade Commission, to conduct anti-dumping and anti-subsidy inspections into steel wire garment hangers imported from Vietnam.
The US manufacturers charged the Vietnamese hangers coded HS 7326.20.0020 and 7323.99.9080 imported to the US with having the dumping margins range between 82.87 percent and 159.20 percent.
They also demanded federal investigations into products imported from Taiwan for the alleged dumping margins of 57.01 to 166.19 percent.
Figures from the US authorities show that China, Vietnam, and Mexico are the top three exporters of the hanger coded HS 7326.20.0020 into the US.
The US Department of Commerce will have the final decision on whether to file lawsuits against Vietnamese exporters within the next 20 days.
According to the Vietnam Chamber of Commerce and Industry, last year the US also conducted inspection on tax evasion in steel wire garment hanger imported from Vietnam.
This is the third time Vietnamese exports are challenged by anti-dumping and anti-subsidy lawsuits in the US, the Saigon Times Online reported.
Earlier on November 15, four American manufacturers asked the US Department for Commerce to conduct anti-dumping inspections on steel pipes imported from Vietnam, India, Oman and the United Arab Emirates.
In May 2010, the US imposed anti-subsidy taxes of 5.28 to 52.56 percent, and anti-dumping tariffs of 52.3 to 76.11 percent on PE bags imported from Vietnam.
This has raised concerns in industry insiders on many possible trade remedies lawsuits local exporters may face in the future.
VN among top 10 nations with highest remittances
Vietnam in 2011 received over US$9 billion from overseas, which is among the top 10 highest levels, said Nguyen Danh Khoi, deputy director of a center under the HCMC Association for Liasion with Overseas Vietnamese.
Remittances to Ho Chi Minh City account for 69% of the whole nation.
The $9 billion figure is $1 billion higher than last year.
The amount is expected to increase further as remittances transferred to Vietnam through banking systems rise.
The association and the HCMC Fatherland Front Committee are scheduled to hold a meeting with overseas Vietnamese on January 7, 2012 to welcome the Lunar New Year.
Vietnam’s inbound remittances doubled from $135 million in 1991 to $285 million in 1995.
The figure increased six-fold to $1.757 billion in 2000, and in 2005 reached $3.8 billion. The remittance only saw a drop to $6.238 billion in 2009 from $7.2 billion in 2008 due to the global recession.
Over the past two years, despite global economic difficulties, Vietnam has seen a strong inflow of overseas remittances from the US, Canada, Australia and other markets such as Malaysia, Taiwan and Japan.
In other news, by the end of this year, Vietnamese investors have committed a total of US$10.8 billion in 627 projects in 55 countries and territories around the world.
Tea exports declined last year
Tea exports last year fell 4.3 per cent in volume and 0.8 per cent in value over the previous year, the Ministry of Agriculture and Rural Development said.
The country exported 131,000 tonnes of tea last year, totalling US$198 million. The price increased by 3.5 per cent.
Tea exports have declined in most markets, the notable exception being Indonesia.
Chairman of the Viet Nam Tea Association Nguyen Van Thu attributed the decline to a 5 per cent fall in yield due to wet weather.
In addition, many consumers chose other drinks thanks to better economic conditions.
Cement, iron stocks need to be cleared
For the third consecutive year, the construction-material sector has an abundance of stock, with around 2 million tonnes of cement and 500,000 tonnes of iron that cannot be sold.
"For iron, the acceptable amount to be in stock should be around 250,000 tonnes. Also, the industry must pay interest on loans of VND150 billion (US$7 million) each month right now," said Nguyen Tien Nghi, vice chairman of the Viet Nam Iron Association.
For cement, if the real estate market remains stagnant and fewer infrastructure projects go on line as is expected, many cement plants will have to stop producing, and some of them might face bankruptcy.
"The only thing that would improve the situation would be significant policies on interest rates that could boost production and consumption," added Nghi.
Because of the increasingly limited local market demand, the two industries must seek customers outside Viet Nam.
In 2011, the iron industry exported 1.87 million tonnes, an increase of 44.5 per cent compared with 2010.
To maintain those results, iron companies have been told to promote co-operation with the Viet Nam Chamber of Commerce and Industry to increase trade promotions and prepare for more anti-dumping lawsuits from the US, the number of which has increased recently.
The Viet Nam Cement Association plans to export 6 million tonnes in 2012 and sell 52 million tonnes for the local market.
The African market is one with potential for the Vietnamese cement industry, but most of the companies are not eager to sell there because cement is bulky and has low value. Transport expenditures are the main barrier.
Southeast Asia and South Asia are also promising, but competition from cement plants from Thailand, mainland China, Indonesia and Taiwan makes selling more difficult to achieve.
Local enterprises find it difficult to compete at these markets because of high amortisation rates since most production chains have been bought recently. There are also high interest rates.
The iron and cement industries have faced challenges since 2009 as the Government decided to reduce State investment in order to control inflation. In addition, interest rates doubled from 12 per cent to 24 per cent a year.
Weak earnings to cast pall on trades
Fourth-quarter earnings data will begin hitting the market this week, but many market insiders expect a mixed result to further rattle investor confidence in the first trading week of the new year.
Preliminary data from the State Securities Commission suggests that 60 per cent of listed companies saw their profits decline in 2011 compared to the previous year, with 14 per cent suffering losses in the third quarter. Poor performance of listed companies was attributed to unfavourable domestic market conditions accompanied by towering lending rates and high inflation.
The time for companies to close their books for the end of the year has passed, so some of the factors that might increase pressures on investors to unload shares have eased, giving some traders hopes that the market will see more lively sessions in the first week of the year.
"However, the fundamentals have not changed, and the market continues to trade in high-risk areas," in-house analysts of the financial portal vietstock.vn wrote in their weekly report.
Pessimistic investor psychology continued to dominate last week's transactions. On the HCM City Stock Exchange, the VN-Index lost another 1.3 per cent from the previous week's close, concluding Friday's session at 351.55 points. The value of trades during the week averaged VND747 billion (US$35.6 million) per session on an average volume of 52.5 million shares.
On the Ha Noi Stock Exchange, the HNX-Index was more of a surprise, managing to gain a cumulative 1.28 per cent during the week, with two rising sessions out of five, before closing on Friday at 58.74 points.
Heavy sales helped push up trading volumes. Market volume increased 8.6 per cent to an average of over 32.3 million shares, with the average daily value of trades reaching VND269.6 billion ($12.2 million).
Fourteen out of 24 sectors posted losses last week, with insurance shares declining by over 12 per cent and securities shares were down nearly 4 per cent.
Land, house taxes may be used for infrastructure
Land is a national resource that can be used to fund infrastructure projects, at a time when public investment for such projects is declining.
Speaking at a conference about using real estate funds to support infrastructure development held in Ha Noi yesterday, director of the Finance Ministry's Institute of Financial Strategy and Policy Vu Nhu Thang said infrastructure investment accounted for 9.2 per cent of GDP over the last five years, but funding for next year would be lowered to VND180 trillion (US$8.5 billion) or 6.5 per cent of GDP.
According to Thang, land taxes and fees have been a major source of income for the State and it was time for Viet Nam to think about other ways to better take advantage of real estate.
Pham Sy Liem, director of the Institute for Urban Studies & Infrastructure Development, said Viet Nam had yet to impose house and land taxes, which is an important feature of taxation in countries with high urban populations, and suggested having a different tax rates for different sized houses.
Such a tax would help maintain and build public infrastructure and public goods such as pavement, trees and street lights, Liem said.
"It's the public infrastructure that adds value to the surrounding land and property," he said, using property values along the national highway as an example.
He also said instating a fee for developing social infrastructure such as schools and hospitals would also help infrastructure development.
Among the top three state income earners last year, nearly VND1.4 trillion ($66.6 million) was from land tax, about VND50 trillion ($2.4 million) from land-use fees and VND3 trillion ($142.6 million) from land lease fees.
Head of the ministry's Bureau of Public Property Management Pham Dinh Cuong said land-use fees, which accounted for 90 per cent of land-related income, were often fixed for long periods, so land lease fees were a more flexible option for the 500,000 enterprises renting land.
The Government could reclaim leased land easier if the land was under planning for projects without paying compensation or arranging resettlement.
He noted land clearance and compensation payments were a bottleneck for most infrastructure projects despite.
However, Cuong said that it would be difficult to raise land lease fees with the current pressures of inflation.
He also recommended mobilising money from beneficiaries of infrastructure projects to help fix infrastructure in need of repair, which could be handed to the Government.
Conference participants also discussed the establishment of "clean" land banking that provides data about areas available for the development of new projects where investors did not have to worry about land clearance or compensation, which would streamline the process.
Southern region starts looking for hi-tech, green solutions
Industrial parks and export processing zones in the southern region, including HCM City and the provinces of Dong Nai, Binh Duong and Ba Ria – Vung Tau, are turning their attention to attracting hi-tech and supporting industry projects that are environmentally friendly.
Speaking at a meeting held to review the operation of IPs and EPZs in 2011 on Thursday, the head of the HCM City EPZs and IPs Authority (HEPZA), Vu Van Hoa, said that for the 2011-15 period, HCM City EPZs and IPs will target investment projects that use green technology, manufacture high value-added products and employ qualified labour forces.
This will include projects in electronics, telecommunications, IT, chemicals and pharmaceuticals, and food processing sectors.
"We aim to attract investment projects in support industries and support industry-related services," Hoa said.
At present, most investment projects in the city's IPs and EPZs are labour-extensive facilities that manufacture low value-added products, such as those in leather and footwear, textile and garment and electronic assembly industries.
Up to 73 per cent of the foreign-invested enterprises in the city's EPZs and IPs have a registered capital of less than US$5 million each.
Explaining the situation, Hoa said in the first decades of development following doi moi (renewal), the city authority had aimed to fill up the city's IPs and EPZs to the extent possible, create employment opportunities for its residents, access investment capital and management expertise from foreign investors.
However, they had failed to focus on green projects, he added.
"Now we aim to attract annual investments of $4 billion and export growth of 15 per cent for IPs and EPZs in the city," said Hoa.
According to a HEPZA report, in 2011, the city's IPs and EPZs received 18 new investment projects with a combined investment of nearly $1.04 billion plus additional investments of $198 million for projects under operation.
The deputy head of Dong Nai IP Authority, Nguyen Manh Van, said the southern province will pursue a clear policy in selecting investment projects for IPs in the 2012 – 15 period. Priority will be given to hi-tech and support industries that are less labour-extensive and more environmentally friendly.
He said Dong Nai has asked for permission from the Prime Minister to grant incentives for support industry projects.
Despite several challenges, Dong Nai has reached its target of attracting investment projects capitalised at over $720 million for its IPs in 2011, said Van.
A representative of Binh Duong IPs Management Board said that in 2011, the province's IPs attracted a combined investment of $818 million, including investments in support industry projects licensed to Japanese investors such as the projects to manufacture computer components by Finecs, to produce cables by Tokyo Rope and to make gloves, by Showa Gloves.
Dr Le Tuyen Cu, deputy head of the Economic Zones Management Department under the Ministry of Planning and Investment, said the shift towards attracting investments for high-tech and support industry projects was the need of the hour.
It will help restructure the country's economy and make it more efficient, he said.
Posco VST may cut production
Viet Nam's biggest supplier of stainless steel Posco VST has said that it might cut production and close several factories.
The move was due to poor competitiveness of domestic products compared to imported ones, despite a 5 per cent rise in import tax next year, according to the company.
Posco VST manufacturers stainless steel in the southern province of Dong Nai with a capacity of 85,000 tonnes per year and has been building another US$130-million manufacturing plant since 2010 which will become operational next year.
Mine site clearance almost complete
The Nui Phao Mining Joint Venture Company (Nuiphao Mining) has announced it has completed 95 per cent of site clearance at the Nui Phao multi-metallic mine project in the northern province of Thai Nguyen.
NuiPhao Mining, the biggest mining project in Viet Nam with a total investment of VND10 trillion (US$500 million), covers an area of 670ha in Dai Tu District, which has reserves of 21 million tonnes of volfram, the second largest in the world, 19 million tonnes of florit and a large amount of bismuth, bronze and gold.
The company plans to build two ore processing plants which are scheduled to run trial tests at the end of next year and will become operational in 2013.
Residential project gets licence
A subsidiary of Malaysia's largest construction and property development group WCT Bhd Group announced this week it had been licensed to undertake a residential and commercial development project in HCM City.
Under the deal, the WCT and Viet Nam's Southern Land Corp JSC will establish a joint venture called WCT-DPN with initial charter capital of US$25.15 million.
The company will build middle- and high-end residential apartments and commercial properties for lease or sale. The project is located on an area of 46,577sq.m in HCM City's new southern urban development area.
Dienmay.com opens new stores
Nationwide electronics retailer dienmay.com opened three new electronics stores in the southern provinces of Vinh Long and Tay Ninh and HCM City on Thursday.
These stores were built with an investment of VND10-15 billion (US$476,000-714,000) each, and will sell thousands of electronics products from computers to home appliances.
With three new stores, dienmay.com has opened a total of seven electronics stores after only one year of operation. The company is scheduled to expand to 50 stores nationwide next year.
Construction technology on show
A three-day Viet Nam construction technology fair called Vietconstech 2012 will be held for the first time in Ha Noi from June 27, 2012.
Domestic and international enterprises and organisations will have opportunities to share experiences and knowledge about applying technology in the field of construction, building materials, equipment and software.
The fair will also host workshops, consultation programmes and present new technologies. It will be organised by the Ministry of Construction in co-operation with relevant bodies.—
Rice producers urged to add value
Rice production in Viet Nam should be revamped to gain higher value for producers from exports and domestic sales, a group of experts have said.
"Viet Nam has enjoyed years of good production and exports of rice but practices need to improve in the future to increase the value of production," said Bui Ba Bong, deputy minister of agriculture and rural development.
Bong said different models of rice production had developed at rice fields in the Cuu Long (Mekong) Delta region and the domestic farming sector should undergo a comprehensive overhaul to win in competition with foreign companies entering Viet Nam's rice trade in the future.
The establishment of trade mark for rice grown in the region under the national trade mark programme would help Vietnamese rice in the world market, he said.
Rice expert Vo Tong Xuan said current capacity of production needed to improve to increase profits for all stages of production.
Modernisation of rice production in the region in the future would bring stability and higher incomes for farmers, Xuan said.
The Ministry of Agriculture and Rural Development reported only 25 per cent of farms in Viet Nam had approached authorities for market information, while 60 per cent of farm products had been sold below market prices and 40-50 per cent of production costs for export rice were for importing production materials.
Rice production had suffered from high costs in import materials, such as fertiliser but levels of consumption should offer farmers a stable price.
Therefore, meeting target profits for farmers was important in ensuring economic security, the ministry reported.
The Cultivation Department under the Ministry of Agriculture and Rural development said the floods of 2011 in the region had gained increased output of rice, bringing the output in Viet Nam to 42.3 million tonnes this year, 2.3 million tonnes higher than last year.
In 2011, Viet Nam exported 7.2 million tonnes of rice, gaining US$3.7 billion, a 22-year high in the volume of export.
Online bid process still faces hurdles
Despite initial success, wider application of e-bidding in Viet Nam still faces several challenges, including a lack of IT infrastructure and shortages of qualified personnel, deputy head of the Ministry of Planning and Investment's Bidding Management Department Nguyen Son has said.
Speaking at a conference on implementation of e-bidding during the 2009-11 period held on Thursday in Ha Noi, Son said the inappropriate e-Government system which resulted in difficulties in checking registration information online and applying e-payment also hampered the development of e-bidding across the country.
Over past three years, the ministry has successfully carried out e-bids at three enterprises; namely the Electricity of Viet Nam, the Viet Nam Post and Communications Group and the Ha Noi People's Committee. More than 55 package deals have been successfully made via the internet.
More State organisations such as the Ministry of Health, the Ministry of Education and Training, the Ministry of Planning and Investment as well as the Government Office would be selected to implement e-bidding next year, the ministry said.
E-commerce and e-bidding in public procurement is an inevitable trend and indispensable way that many nations over the world are applying to build e-government. Applying e-bidding would help save costs and time for the Government and promote healthy competition among enterprises, experts have said.
Customs confab to offer practical tips
The Viet Nam Customs Duty Conference 2012, titled Planning & Problem Solving, will cover all the practical aspects that businesses need to take into consideration in navigating Viet Nam's customs procedures and laws that have changed a lot since the country joined the World Trade Organisation (WTO).
The conference, organised by the Irving Seminar&Training Company, will be held in February in HCM City.
Well-known experts from firms like Baker&Mckenzie, Duane Morris, Dfdl Mekong, Ernst&Young, PWC and the Viet Nam Administrative Procedure Control Agency will share their knowledge and experiences at the conference.
The event aims to provide a detailed understanding of the application of taxes, with participants able to learn of tax consequences from real-life cases.
The conference themes include: How to determine the value of imported goods for customs duty purposes?; AFTA: What's going to happen in 2012 on the commercial, legal and logistic level?; Duty reduction schedules under free trade agreements: learn how to use them in practice; Exemption and suspension of customs duty: practical pitfalls; Interpreting and applying exemption of customs duty for foreign invested enterprises; and Resolving disputes with the Customs Department.
Plenty of good fruit, but prices too low
Le Van Thai, a farmer in the Cuu Long (Mekong) Delta province of Vinh Long, is getting ready to harvest a bumper crop of rambutan in his 5,000sq.m orchard, but he is not a very happy man.
His bumper crop is no guarantee that he can make a profit.
Thai, who lives in Long Ho District's Hoa Ninh Commune, has found it difficult to find an outlet for his rambutan and is having to sell the fruit for just VND1,700-2,000 (nearly US$0.1) a kg.
"The money from selling rambutan is not enough to cover the cost of buying fertilisers and pesticides," he said.
Thai is among many Vinh Long farmers who are in trouble because they are not able to find stable outlets and good prices for their produce.
The prices of several other fruits are also in decline during the harvest season.
The Nam Roi grapefruit, a provincial speciality, is now being purchased by traders for VND7,000-8,000 (nearly $0.4) a kg, down by half against the same period last year.
The difficulty in applying national and global cultivation standards in small-scale farms makes it difficult for fruit grown in the province to compete in both domestic and overseas markets, according to the provincial Department of Agriculture and Rural Development.
Department director Phan Nhut Ai said the province is yet to arrange for fruit cultivation on a large scale. Some medium and small-scale areas specialising in fruit cultivation have been set up, but the fruit quality is not even and output is not stable, he said.
Ai said the province has, in recent years, paid attention to setting up brand names for speciality fruits such as Tam Binh Orange and Binh Minh Nam Roi grapefruit which are cultivated under Global Good Agriculture Practices (Global GAP) standards.
However, some growers were not able to maintain their registered brand names because of financial difficulties, he said.
Previously, the My Hoa Nam Roi Grapefruit Co-operative and the Hoang Gia Private Enterprise had been granted Global Gap certificates for cultivating Binh Minh Nam Roi grapefruit.
While Hoang Gia has been able to renew its certification, the My Hoa Nam Roi Grapefruit Co-operative does not have enough money to apply for renewal.
The Hoang Gia Private enterprise now exports thousands of tonnes of Nam Roi grapefruit to the US and EU every year.
Provincial authorities are hoping more enterprises will invest in building fruit brands under Global GAP standards so as to boost exports, Ai said.
He said the province would always create favourable conditions for enterprises to invest in establishing international brand names for fruit, including the cost of applying for the Global GAP certificate for the first time.
The province is now trying to build a brand identity for the Tuc Khanh rambutan in Tra On District's Tuc Thien Commune, which will be cultivated under Global GAP.
Vinh Long has a total of 350,000ha under fruit cultivation that gives a yield of more than 350,000 tonnes a year. The main fruits grown in the province are king oranges, grapefruits, mangosteen, longan and rambutan.
Public-private partnership may be better for farmers
The Government is being urged to encourage private investment in agriculture to boost sustain-ablility and the use of technology by 2020 amid depleting natural resources and the growing threat of climate change.
A national project currently being drafted by the Ministry of Agriculture and Rural Planning for the 2011-15 period aims to boost agricultural growth by 3 per cent annually, and to reduce the number of poor households and lower carbon emission contributed by agricultural activities by 2 per cent.
For the past 10 years, agricultural production has contributed about 3.7 per cent annually to the nation's gross domestic product.
However, the sector has met numerous challenges, such as pollution, over-exploitation of natural resources and low levels of competitiveness due to small-scale production.
The Food and Agriculture Organisation estimates that more than half of Viet Nam's labour force works in agriculture. But because the sector is not mechanised, rural workers have fallen behind their urban counterparts when it comes to socio-economic progress, experts warned.
Dang Kim Son, director of the Institute of Policy and Strategy for Agriculture and Rural Development, said the Government should provide more favourable policies for businesses and the private sector to invest in agriculture.
He said that to increase the value of agricultural products, Viet Nam must monitor more closely the entire supply chain, from input materials, production and processing to storing, trading and transportation to consumers.
It has been forecast that over the next 10 years, food prices would continue to remain high and that agricultural food processing would generate higher revenue.
Victoria Kwakwa, World Bank director in Viet Nam, said by 2020 the world's demand for food would at least double present levels.
Viet Nam has made remarkable progress in agricultural production but the sector has been unable to cope with global challenges that require major changes in farming models to improve farmers' living standards and exploit natural resources more sustainably.
Steven Jaffee, co-ordinator of the World Bank Agriculture Department, said restructuring the agricultural sector required Viet Nam to attract private investment in areas such as technology transfer, agricultural branding and boosting competitiveness of the supply chain.
Dung said the growing trend in public-private partnership had proven effective in agricultural production, as evidenced by the successful establishment of model fields in the Cuu Long (Mekong) Delta. However, he said greater effort needed to be made to apply more advanced technologies to production and with providing more training for farmers.
Phat said the national project to restructure agriculture from 2011-15 would look at ways to change the breeding structure, apply high-technology and practise GAP (Good Agricultural Practices) to increase the value of agricultural products.
The animal husbandry sector will gradually shift from small-scale production to large farming models that meet industrial standards. In aquaculture, priority would be given to shrimp, tra fish, and with developing sustainable, large-scale growing models that also protect the environment.
Time to wake up and smell the coffee
More changes are needed to promote forward coffee transactions at Vietnam’s first coffee exchange centre.
Buon Ma Thuot Coffee Exchange Centre (BCEC) statistics showed that in the first three months of a forward coffee transaction trial at the centre the transacted value totalled around VND250 billion ($12.07 million) averaging VND5 billion ($24,000) per session. Besides, an average 56.5 tonnes of coffee were traded in each section in the first 45 sections against BCEC’s minimal trading volume requirement of 18 tonnes per section.
Alongside some positive signs such as producers gradually getting accustomed to trading via an exchange centre and BCEC staff becoming more professional, some limitations arose.
According to BCEC’s deputy general director Vo Thanh Chau, mechanism woes and poor finance were major hindrances to the centre’s development.
Since BCEC’s operation totally depends on budget allocations, it is not in a position to develop a complete infrastructure system to satisfy customer requirements.
Besides, a ‘market maker’ was urgently needed to boost market liquidity, Chau said.
Therefore, in its 2011’s first-half report, the BCEC sets forth a group of proposals to help revive coffee transactions.
The BCEC has asked the Ministry of Industry and Trade (MoIT) to soon enact regulations on the tasks, functions and operational rules of ‘a market maker’ and the relationships between the market maker and the commodities exchange centres.
Besides, it proposes the government allowing securities firms to do business at commodities exchange centres to diversify capital flows and ameliorating market liquidation.
The report also said the MoIT should propose the State Bank make public regulations relevant to the operation of clearing houses at commodities exchange centres. The MoIT might work with competent government agencies to offer policy incentives encouraging coffee trading firms to get involved in market operations.
Mekong Delta earns $4bln from seafood exports
The Mekong Delta provinces earned an estimated $4 billion from seafood export in 2011, up 27 per cent from the previous year.
According to the regional trade sector, the main consumption markets include 29 countries from North America, EU, Asia, Oceania and the Middle East.
During the period, the provinces of An Giang, Dong Thap, Vinh Long, Ben Tre and Can Tho city took the lead in exporting tra fish with shipments of 600,000 tonnes worth nearly $1.7 billion.
Meanwhile, the provinces of Ca Mau, Bac Lieu and Soc Trang led in exporting prawns. The total export of shrimps of various kinds in the region reached 190,000 tonnes, valued at $1.8 billion.
The regional provinces raised nearly 2.2 million tonnes of aquatic products in the year, up 252,000 tonnes from 2010.
Thanks to the perfection of irrigational system, strengthened control of breed quality, expansion of farming model under the GAP and CoC standards, and promotion of human resource training, the region saw an increase in seafood export in both volume and value during this year.
Firms resist switch to self-printed tax forms
Enterprises must begin printing their own value-added tax (VAT) invoices effective on January 1, instead of buying invoices from tax offices as previously.
Most companies have made orders to have their own invoices printed, but many smaller firms are still unsure about how to use them lawfully.
Lawyer Tran Xoa, director of the Minh Dang Quang Law Firm, said many small businesses lack experiences using the invoices and need more instruction from tax officials to comply with the new regulations.
Meanwhile, companies are being forced to check with authorities regarding the validity of their invoices, he said. When their new invoices have been printed, they have been required to send notices to the tax authorities in a bid to get official recognition of the new forms.
Without this approval, many tax offices are regarding the invoices as non-compliant, Xoa said.
Other companies have delayed printing invoices due to planned changes in office locations.
"Our lease will expire early in 2012, and we plan to move but have not yet selected a new place, so we have delayed printing invoices," said Nguyen Van Quoc, director of the La Quoc Co Ltd in Ho Chi Minh City’s District 4.
TQN Accounting Consult Co director Tran Quoc Nam said early 2011, many businesses did not know the regulations on self-printing invoices or they knew but intentionally hesitated to act until faced with the deadline. As a result, the limited number of printing houses have been overloaded with orders and tax offices are still providing invoices to businesses.
Taxation authorities have urged businesses to print invoices early and have even asked companies to report their oders with printing houses or sign commitments upon receiving tax agency guides on using self-printed invoices.
Nam said that the greatest difficulty presented by self-printing of invoices is the additional expense. Although the number of printing houses has risen, and printing prices have fallen somewhat since 2011, the cost of each invoice book is now about VND80,000. Invoices bought from tax agencies, meanwhile, only cost about VND16,000.
Metro Cash & Carry’s high-flying strategy for Vietnamese market
Metro Cash & Carry’s unique wholesale business-to-business model has set out a high-flying business strategy for the Vietnamese market, targeting to have 30-35 stores across the country during the next three to five years.
Seeing the potential of Vietnam as one of the fastest-growing economies in Asia, the worldwide leader in self-service wholesale Metro Cash & Carry opened its first outlet in the business metropolis in Ho Chi Minh City in 2002.
Since then, Metro Cash & Carry has operated 16 wholesale centres throughout the country - three in Ho Chi Minh City, two in Hanoi, as well as one Bien Hoa, Binh Duong, Vung Tau, Can Tho, Long Xuyen, Quy Nhon, Danang, Haiphong, Vinh, Halong and the latest is in Nha Trang.
It also operates four distribution centres and warehouses in Vietnam, including the vegetable and fruit distribution centre in Dalat (Lam Dong), the fresh food distribution centre in Binh Duong, and the dried food and non-food warehouses in Hanoi and Ho Chi Minh City.
Metro Cash & Carry’s wholesale and distribution network employs more than 3,500 people and has become one of the country’s major employers. In its business strategy, Metro Cash & Carry is focusing on professional customers such as hotels, restaurants, caterers, small and mid-sized retailers, as well as service companies and offices.
Randy Guttery, Metro Cash & Carry Vietnam managing director, said: “Our business is wholesaling. So all our customers are professional business owners or they work for a business and they buy for that business. Basically, all our customers are restaurant owners, small business owners, mom and pop shops, doctors, lawyers, farmers. They are people that own their own business. This makes our customer base.”
He added that: “Our customer base is really based upon many customers who have been doing business with us for a long time. This year our customers have been much more cost conscious, which means they are really looking for bargains. This year we’ve seen, let’s say, customers come to the store less often to save time and money.
Basically, they are coming to the store and buying more, but they are coming less often. But this year our customer base has increased. Why? Because customers are looking for ways to save money. They are looking for alternatives. So at this kind of a time period, our business is fairly resilient because we provide services to the customers that hopefully can help them run their business and be able to run their business more efficiently and at better cost.”
Metro Cash & Carry has offered the above target customer group greater efficiency than the multilayered supply chain, thus helping them improve their business. The greater efficiency is realised by offering customers one-stop solution for their purchases, helping them improve their assortment, offering them high quality products at reasonable and transparent prices and providing them a consistent supply source.
The key to Metro’s success boils down to its flexible business philosophy that can adapt itself to customers’ demands and the particular characteristics of each country Metro Cash & Carry operates in. This is part of the comprehensive strategy of Metro group, one of the world’s biggest retail giants present in 33 countries with over 700 self-service wholesale centres.
Metro Cash & Carry has a special way of doing business in that customers will come to Metro stores to buy and transport goods for themselves rather than ordering the goods through suppliers.
Additionally, Metro Cash & Carry has set basic requirements for suppliers of quality, commodity brand, modern supply chain, safety and hygiene. Particularly, Metro Cash & Carry has made one of the major improvements in Vietnam by putting into use a modern in-country transportation system of heavy multi-compartmentalised refrigerated vehicles. This has helped ensure the stable and fresh quality of products while being transported.
In some provinces and cities, Metro has partly succeeded in developing direct goods supply, contributing to reducing shrinkage and offering farmers’ good prices, while bringing customers quality and traceable products.
Guttery said Metro’s business-to-business model had proven its primacy for emerging economies like Vietnam. “We are increasing our investment here to access more customers, broaden our scope of business, help domestic enterprises to grow up, and Metro can have more sales opportunities from these potential customers”.
Guttery said Metro Cash & Carry Vietnam in 2010 opened four stores and in 2011 another four stores in Vinh, Halong, Nha Trang, and Buon Ma Thuot cities. These stores are of similar size with the one in Buon Ma Thuot a little bit smaller measuring 4,200 square metres in selling space, while those in Nha Trang, Vinh and Halong are each around 5,000 square metres in selling space.
“Basically, we looked for cities where there are enough potential small and large businesspeople for a store. For each store we have around 60,000 to 80,000 customers to make the store successful. So when we look at these cities we decide what city we want to go to, basically we look for cities that can give us that many customers,” Guttery said.
He said Metro Cash & Carry this year 2012 expected to open four more stores across the country, striving to have a total 30 to 35 stores in Vietnam in three to five years. “We remain bullish on Vietnam, which is the world’s second largest expansion market for Metro and where Metro still wants to come and build stores and invest,” Guttery said.
Basically by the end of this year, Guttery said, Metro Cash & Carry Vietnam would have an almost fully-integrated supply chain, including non-food, dried food, fresh food, and ultra-fresh meat and fish. “We will have had a cold chain entirely fish and have enough capacity to ship to all of our stores. This system should be big enough then to last until we have around 30-35 stores in the next three to five years”.
“We have worked very hard to build new stores and we have modernised the store base. We worked very hard to make it easier for these businesspeople to purchase at our stores,” he added.
“The first thing we did was enhance the facility to get a card. So if you are a business owner, you come to Metro and all you have to do is to prove you own a business. Within 10 minutes you can have a card and you can be purchasing in the store. The number of cards you receive is based on the size of your business. So most small businesses have four cards.
Very large businesses sometimes have up to 14 cards depending upon how many branch offices or how many purchasing offices of this kind of business. The first thing we did is make it very easy now for potential customers to get a card. Walking into the store within 10 minutes you should be able to do your purchasing in the store.”
“The second thing is that we have worked very hard on the safety of our stores because our stores are really warehouses. We worked on the safety of our stores and we allowed children into the store.”
“The next thing, which is a major improvement, is because we enhanced our supply chain, our in-stock position is much improved. Now all of our aqua-products are typically around 98 almost 99 per cent in stock. So, when you come into the store, there should be no reason why you can’t find everything that you want to buy in the store because of our enhanced supply chain.”
“The other thing that we did is we spent several million dollars at this juncture on upgrading our entire front and checkout system. We have new cash register, a new system, faster printer, and basically we upgrade and modernise our checkout system. So that’s much faster than it used to be. It depends on how much you want to buy.
Our customers tend to have very large orders because they’re buying their purchases to resell or they buy for their office. Our orders tend to be eight times or 10 times bigger than, let’s say, average retailers’. We have a lot fewer customers but a lot bigger orders. The cash register is faster, quieter and can give you the invoice right away.”
“All in all, purchasing in our stores is, let’s say, compared to three years ago is much faster, friendlier, and is an efficient way to buy. Apart from this, our store base has been modernised and most of our stores are less than three years old.
Basically by the end of this year we will have really refurbished our brand new store base. In 2010, 2011, and 2012, we build four new stores each year.”
Vietnamese business invests in rubber plantation in Laos
The Dau Tieng Rubber Corporation will hire 4,739 hectares of land in southern Laos to plant rubber trees.
The project will be implemented in Bachiangchaleunsouk and Paksong districts in Champasak province, and Laykhonpheng and Lao Ngarm districts in Salavan province over 40 years.
The land leasing contract was signed in Vientiane, Laos on December 30 by Ahom Toulanom, Laos’ Deputy Minister of Natural Resources and Environment, and Le Chi Hoang, General Director of Dau Tieng Rubber Corporation.
Speaking at the signing ceremony, Ahom Toulanom highly appreciated the investment cooperation of Vietnamese businesses in Laos. He said they made contributions to protecting the environment, raising social welfare, eliminating hunger and reducing poverty.
For his part, Hoang confirmed that the rubber tree planting project will create jobs for local people and that the company will transfer technology to the locality. He expressed hope that central and local authorities will continue to create favourable conditions for the company to carry out the project effectively.