BUSINESS IN BRIEF 8/7

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US becomes largest importer of Vietnamese tra fish

Vietnam earned US$170.18 million from tra fish exports to the US in the first five months of 2013, up 16% from last year’s same period, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

In May alone, the figure was estimated at US$56.9 million, a year-on-year increase of 72%, making the US become the largest importer of Vietnamese tra fish.

The EU now ranks second, accounting for 22.4% of Vietnam’s total tra export turnover.

In the first five months, tra fish exports to this market fell to US$159 million, down 15.6% from a year earlier.

Meanwhile, there are an increase in both volume and value of tra exports to Southeast Asia, Brazil, China, Hong Kong, Saudi Arabia, Mexico and Colombia.

According to Vietnam customs statistics, export earnings from tra fish reached US$174.09 million in May, up 15.7% over the same month of last year, but the five-month figure was just US$708.89 million, down 1.5% year on year.

Tuna exports up 9.8%

Tuna export earnings saw a modest increase of 9.8% in the first five months of this year to US$253 million, reports the Vietnam Association of Seafood Exporters and Processors (VASEP).

The domestic tuna industry achieved a monthly growth rate of more than 50% during the whole of 2012.

However, it suffered a major setback in March with the growth falling 16 percent, and the downward trend has continued in the following months.

The industry is currently encountering numerous difficulties in production, including capital and material shortages, and especially the “Dolphin Safe” certification required by the Earth Island Institute (EII).

VASEP warns if Vietnamese businesses do not meet the EII’s strict requirements, they will lose out to regional rivals and their tuna products will not be sold in major lucrative markets.

So far, Vietnam has had 15 tuna fishing businesses certificated by the EII to export their products to the EU, US and Australia.

Sales at supermarkets slow due to high prices

Supermarkets are likely to increase prices of many products following recent increases in overhead such as worker pay and petroleum, causing worries among operators that the price hikes may slow sales.

According to Vu Vinh Phu, Chairman of the Hanoi Supermarkets Association, including both recent rises in petrol, one litre of petrol is now VND1,000 more than before. Since most goods bought in supermarkets are transported from the south, petrol prices have an impact on the cost of products.

Wholesalers have proposed increases of as high as 5% to 10% in coming weeks. The dilemma for many supermarket owners is whether to pass on the higher cost to the consumer, which could slow sales, or to take the losses.

A representative from Intimex Hao Nam Supermarket said, "Currently, the prices of many products at supermarkets are higher than they are in street markets. If these costs continue to increase, we may not be able to complete. Right now we are in negotiations with wholesalers for the best prices."

Prices of products such as candies, beverages, fruits and clothes at supermarkets can be as much as 20% higher than those in other markets.

Vu Thi Hau, Director of Fivimart supermarket chain, said that many supermarkets receive and sell goods on consignment, so if the producers' prices rise they will have no choice but to pass the cost to the customer.

On the other hand, food prices in many traditional markets have also been on the increase.

Businesses step up rice stockpiling in Mekong Delta

Companies from the Mekong Delta provinces including Kieng Giang and Long An are now stepping up purchase of summer-autumn rice for stockpiling under the Government program requiring one million tons in stock from June 15-July 31.

Huynh Van Ganh, director of the Department of Industry and Trade in Kien Giang Province, said businesses have already bought 33,000 tons out of the targeted 85,000 tons in the province.

They are now rushing to complete purchase of the remaining volume by end of this month, he said.

Local farmers have harvested 50,000 hectares of summer-autumn rice, accounting for 50 percent of total cultivable area in the province.

Rice price has hiked just a little and farmers have found consumption easier because businesses are speeding up stockpiling.

A kilogram of fresh normal rice fetches VND3,700-3,900 and a kilogram of fresh long grain rice is VND4,100-4,300 now.

Thirteen companies are also rushing to buy 91,000 tons of rice in Long An Province, where local farmers have harvested more than 70,000 tons of summer-autumn crop.

According to Vietnam Food Association, businesses have exported 3.48 million tons of rice, raking in about $1.5 billion since the beginning of the year.

HCM City sanctions 200 more FDI projects

The Department of Planning and Investment in Ho Chi Minh City on July 3 said they have licensed 184 new Foreign Direct Investment projects with total capital of US$227.1 billion in the first half of this year.

The number of projects and capital allotted account for 103 percent against 91.53 percent over the same period last year.

Of the new licensed projects is the $75 million medicine plant and research center of Sanofi Vietnam at Saigon Hi-Tech Park.

In the first six months of the year, investors of 59 FDI projects increased investment capital with $334.46 billion, accounting for 67.52 percent over the same period last year.

The Department of Planning and Investment has said they will continue to study and propose measures to improve investment and trade environment in coming months.

Slight price increase no help for livestock farmers

Though prices of livestock products have inched up, farmers are still suffering heavy losses, heard a review conference on the livestock industry held in Hanoi on Wednesday.

Nguyen Xuan Duong, acting head of the Animal Husbandry Department at the Ministry of Agriculture and Rural Development, said the livestock industry had struggled with poor sales in the first six months.

Tran Van Chien, chairman of Co Dong Co-operative in Hanoi, informed first-grade live pigs now sold at the co-operative for VND40,000-41,000 per kilo, up VND2,000 against a few months ago. With this price, farmers still incur a loss of VND3,000-4,000 a kilo.

Livestock farmers have been suffering losses since the middle of last year. Members of Co Dong Co-operative have sold their land and borrowed bank loans to cope with the situation, and now they are no longer able to repay debts, he said.

“Our endurance has reached its limit. If the market did not change for the better, many members of the co-operative would not be able to raise new herds,” he told the Daily.

Nguyen Dinh Thanh, owner of a chicken farm with 3,000 head in Tan Lap, Dan Phuong, Hanoi, said chicken was currently bought at VND25,000-26,000 a kilo, bringing farmers a loss of VND2,000-3,000.

He explained the cost of raising a chicken was about VND28,000 per kilo. With 500 full-fledged chickens for sale at present, he is making big losses.

The situation is less stressful at the households raising chickens under contracts with foreign companies. However, these households almost gain nothing from such contracts, he remarked.

“If the State did not have an adequate policy, the local livestock industry would belong to foreign players and our input costs and output charges would depend on them,” he said.

However, Duong said: “The livestock industry is regaining stability. Prices are rising and farmers are making profits.” He hoped there would be no meat undersupply from now to the year’s end.

In the year to date, some 2.62 million tons of meat has been produced, up 2.32% year-on-year, including 1.94 million tons of live pigs (74%), 439,200 tons of live poultry (16%) and 230,000 tons of live cows and bulls (9%).

The number of pigs and fowls has just increased slightly, while the total herd of cows and bulls has shrank. Currently, there are 26.9 million pigs (up 1.08%) and 314 million fowls (up 1.17%) nationwide, according to the Animal Husbandry Department.

Ba Ria-Vung Tau sets up development fund

The southern coastal province of Ba Ria-Vung Tau is going to establish its own development investment fund with charted capital of VND300 billion to provide one more capital channel for investment and development activities in the province.

As per the plan which is prepared by the provincial Department of Finance, the fund is a State-owned financial organization operating in line with the policy bank model and taking independent financial decisions. It will secure and develop capital and offset expenses and handle risks by itself as a non-profit organization.

The fund will have its VND300-billion chartered capital funded by the provincial budget for three years, from 2014 to 2016, and is allowed to mobilize long- and middle- term capital from local and foreign organizations and individuals based on related law.

The fund’s activities will be for direct investment in projects, investment loans and capital contribution to set up enterprises in the fields of socioeconomic infrastructure development upon the provincial People’s Committee’s approval.

The fund also specializes in entrusting investment loans, recovering loans, lending investment capital and issuing local government bonds to mobilize fund for the provincial budget at the request of the local authorities.

Tra fish firms expand farming areas

Tra fish processing enterprises are mobilizing capital to expand farming areas to secure material for their production, while individual farmers are finding the fish farming business tougher.

Viet An Joint Stock Company has sought to issue 10 million shares to develop two farming areas in the recent past. Capital mobilized as of late May had amounted to around VND54.6 billion, equivalent to 5.46 million shares.

Reporting to shareholders, general director Luu Bach Thao said that the amount mobilized from the share issue (estimated to be some VND100 billion) would be used as working capital for farming costs.

Similarly, the annual shareholders meeting of Go Dang Joint Stock Company late last month passed the plan developing 30 hectares of tra fish farming to provide material for the firm’s seafood processing plant which will be operational this September with a capacity of 150 tons per day. The farming area will cost a total of VND60 billion.

In addition, a project to acquire the second production line for the company’s plant in Ben Tre Province worth VND30 billion was also approved by shareholders.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (Vasep), said tra fish processors with their own self-supply schemes can now secure over 70% of material demand and the rate tends to rise further.

On the contrary, the number of households with small farming areas has declined strongly as they can not bear farming costs while the fish price is not as high as before.

Coffee firms dying due to inept core business

Coffee giants are mired in losses and debts due to heavy investment in their core operation that has turned out to be inefficient.

Thai Hoa Vietnam Group Joint Stock Company delists its stock today due to constant losses, while Vietnam National Coffee Corporation (Vinacafe) and Vinacafe Buon Ma Thuot Joint Stock Company are currently burdened with huge debts.

Whereas businesses in other industries run up debts due to investing in their non-core operations, coffee firms have fallen into debt due to the inefficiency of the large-scale projects in their core business field

Bad debts and overdue debts owed by coffee companies currently total some VND6.33 trillion, according to Vietnam Coffee and Cocoa Association (Vicofa).

Meanwhile, a report by Vietnam Development Bank reveals its outstanding loans for coffee exporters as of end-May had amounted to VND696 billion, accounting for 6% of the total loans the bank had given exporters.

In Dak Lak, the locality with the largest coffee growing area, 43 coffee firms and sales agents announced insolvency last year, with total debts of over VND300 billion, said the provincial Department of Industry and Trade.

With the Government guarantee, Vinacafe in 1999 borrowed 212 million French francs, or some VND424 billion, from the French Development Agency (AFD) to develop 40,000 hectares of Arabica coffee in some northern provinces. In 2005, the corporation admitted such a plan had failed.

Vinacafe has sold its headquarters and many other assets to repay nearly VND1 trillion to its creditors, including AFD and Agribank.

Similarly, Thai Hoa has invested in many coffee processing plants mainly on loans.

Doan Trieu Nhan, a coffee expert, is not surprised at Thai Hoa’s delisting, saying ‘what will come, will come’.

Thai Hoa has used short-term funding for long-term investment, building coffee processing plants in several provinces like Quang Tri, Nghe An and Son La, but the firm has not developed material zones to serve these plants, he demonstrated.

Meanwhile, Vinacafe Buon Ma Thuot has invested heavily in a storage system covering over 175,300 square meters, including five warehouses with a capacity of 350,000-400,000 tons. When the system was completed in late 2010, debts owed by Vinacafe Buon Ma Thuot had amounted to VND2.9 trillion.

However, due to underperformance of this storage system, Vinacafe has been able to repay only VND1.3 trillion.

Sky-high lending rates are said to be another force driving many coffee firms into severe debts.

“In the hot growth period of the coffee industry from 2008 to 2010, some companies accepted loan interest rates of 24% per annum. In the context of difficult agribusiness currently, hardly any item can generate a profit margin of 20%, whereas enterprises are changed an interest rate of 24%. It is understandable why they lose solvency,” said a coffee exporter in HCMC.

Banks turn to individual borrowers on low corporate demand

Banks have carried out many lending programs aimed at individual clients given the weak loan demand among businesses.

These lending programs are deployed in various forms, including credit cards, home loans and loans secured by cars, with simple procedures and quick disbursement.

Tien Phong Bank has just launched a program in which loans will be disbursed within one hour after car ownership certificates are secured. Individual clients can take out loans worth up to 60% of their car values, at most VND2 billion.

Meanwhile, OCB is advertising home and car loans for individuals with a preferential lending rate of 8.99% per year for the first three months and 12.49% for the following nine months. Since May, this bank has set aside VND700 billion as consumer loans with a fixed interest rate of 12.49% for the first year.

ACB is also promoting consumer credit, with a maximum credit limit 15 times higher than a borrower’s income. The bank only gives loans to those with a monthly income of VND6 million or above, except teachers and doctors, who only need to have an income of over VND4 million.

Comparing the costs of consumer credit with the profits from this activity, banks find this type of lending attractive, especially when businesses are facing many difficulties. Besides, consumer credit is a form of demand stimulus, which help businesses sell their goods, said Nguyen Thu Ha, former deputy general director of Vietcombank.

The time is now appropriate to boost consumer credit, she remarked, since the demand of local consumers and their incomes are on the rise.

A research by Vietcombank forecasts consumption via credit cards will grow by 25-30% in the 2013-2017 period. In addition, consumer goods sales will rise 20% and motorbike sales will increase 10% per year, showing the great potentials of the consumer credit market in Vietnam, says the research.

Home Credit, a company giving loans for buying motorbikes and household appliances, is doing its business well in Vietnam. As of end-June, the company had had 672,000 clients, up 20% over end-2012, with a network of 2,890 transaction points at motorbike stores and supermarkets nationwide.

By the end of 2012, there had been five forms of consumer credit, namely property loans, auto loans, motorbike loans, household appliance loans and credit cards.

Consumer loans are mainly granted by banks. Most financial companies just offer loans for purchase of motorbikes and household appliances, holding a 4% market share by late 2012.

Consumer loans usually have an interest rate of 13-25% per annum, charged by banks, and 24-65%, by financial companies. Credit card interest rates are around 15-25% a year.

Outstanding consumer loans as of end-2012 had totaled VND230 trillion, accounting for 8% of the total outstanding loans in the economy, said Ha.

In HCMC, outstanding consumer loans by late April had picked up 2.2% against end-2012, standing at 5.6% of the total outstanding loans in the city, according to the central bank’s branch in HCMC.

Operating in Vietnam poses many risks to consumer creditors. Ha suggested banks should develop their own systems of personal credit ratings and customer information to facilitate risk management.

Gov’t needs to improve governance

The Government needs to improve its governance and macro-economic management, reform the public service system and prevent corruption to meet demands of the country, said experts at a seminar on the Government vision held on Wednesday in Hanoi.

The seminar was held by the Central Institute for Economic Management and the Swedish International Development Cooperation Agency (SIDA) to discuss governmental reform.

According to Grayson Clarke, author of the draft report of the Government vision, if Vietnam does not reform the State apparatus, its economy will lag behind others.

Officials need to have the capability of performing their duties in the market economy. The recruitment of civil servants must be based on professional knowledge and achievements of applicants, not on other factors like politics or relations, he said.

The Government still carries out overlapping duties ineffectively. In addition, officials and civil servants interfere too much in life of the people and enterprises, according to Clarke.

The coordination between agencies and the Government especially in macro-economic management is still weak. Besides, there is a lack of coordination at the regional level, resulting in ineffective spending and waste in infrastructure projects.

The report also points out that corruption has become a big problem, especially in assigning the land use right of valuable public land sites and appointing those who are incapable of performing their current duties, not to mention new duties.

Nguyen Van Nam, former director of the Vietnam Academy of Social Sciences, said that Vietnam was aware of problems in the State apparatus, but it was not easy to surmount those problems.

Moreover, financial policies of the Government are more of administrative measures than creating a favorable and competitive environment for business.

Professor Ngo Quang Minh from Ho Chi Minh National Academy of Politics and Public Administration shared the opinion, saying that in the policy making process, the people and enterprises are still neglected. As a result, policies are not suitable with actual situations, he added.

The governmental reform was kicked off last August by the Vietnamese and Swedish governments. The final report will be completed this year.

Seafood export revenue leaps

Viet Nam expects a US$300 million year-on-year increase in the export value of seafood this year, said the Viet Nam Association of Seafood Exporters and Producers (VASEP).

This will bring total exports to $6.5 billion, said Nguyen Huu Dung, deputy chairman of the association.

Dung said the association expected seafood prices to recover as world demand was increasing. Supplies on the domestic market were also likely.

In June, exports started surging and reached $578 million, $100 million higher than May, the association said. In the first half of this year, the export value gained 0.9 per cent year-on-year rise to reach $2.88 billion.

To attain this year's target, seafood companies have been told by the association to continue cutting indirect and service expenditure, focus on food hygiene and safety and expand export markets.

Association secretary Truong Dinh Hoe said key exports of tra fish and shrimp still faced anti-dumping taxes and anti-subsidy taxes in the US.

However, he said seafood exporters still had opportunities to increase exports by promoting value-added products.

In addition, Hoe said by the end of this year, exporters would be able to access cheap capital due to cuts in the interest rate for banking loans.

Vu Van Tam, deputy minister of agriculture and rural development, said in the second half of this year, the industry would promote exports of brackish-water shrimps because of the large profit margin.

This is because producers from other countries in the region have faced difficulties in producing these shrimps due to disease.

Mexico asked to lift ban on shrimp

The Ministry of Agriculture and Rural Development (MARD) has asked Mexico to lift its temporary ban on shrimp imports from Viet Nam, according to a dispatch sent to the Mexican Embassy in Ha Noi recently.

The temporary ban on shrimp imports from China, Viet Nam, Malaysia and Thailand was issued by the Mexican Ministry of Agriculture, Livestock, Rural Development, Fisheries and Food on April 18 due to Early Mortality Syndrome (EMS), which affects shrimp, being present in those countries.

The syndrome, which devastates crustacean populations, first appeared in southern China and then spread to Viet Nam, Malaysia and Thailand. In order to prevent the disease from spreading throughout Mexico, shrimp must be certified that they are sourced from regions that are free of the syndrome.

However, a study carried out by the US's University of Arizona Aquaculture Pathology Laboratory recently confirmed that EMS-infected shrimp does not affect humans and frozen and defrosted shrimps are unable to transmit disease to living shrimps.

Lending stabilises, but bad debts rise

The total amount in outstanding loans that credit institutions in Ha Noi have accumulated had reached nearly VND664 trillion (US$31.6 billion) by the end of June.

The figure represents a rise of 1.7 per cent over the beginning of this year and an increase of 8.5 per cent year on year, according to the State Bank.

The agency said that lending has risen during the first half of the year despite dropping off in the first two months. At the end of May, lending in the capital accounted for 21 per cent of the total lending value in the economy.

Total deposits at the institutions had surpassed VND948 trillion ($45.1 billion), an increase of 5.7 per cent over last December. Savings are also estimated to have risen steadily, by 11.2 per cent.

These moves have helped struggling businesses and investors, supported the market and helped credit institutions to ensure liquidity, said the agency.

The structure of credits has changed for the better, with loans being focused on priority sectors including agriculture, rural areas and exports.

However, vice chairman of the Ha Noi People's Committee Nguyen Van Suu said at a municipal meeting on Monday that bad debts in the city were on the up. By April 30, bad debts represented 6.7 per cent of all outstanding loans, compared to only 5 per cent last December.

Suu noted that lending still lagged behind deposits since businesses still found it difficult to raise capital and local banks needed to stop bad debts from rising further.

The interest rates on loans offered by credit institutions in the city fell by 2-3 per cent during the first half of the year and short-term rates of 9-12 per cent and medium to long-term rates of 14.6-17.5 per cent are being applied to priority areas.

From last month, social housing developers began to enjoy an interest rate of 6 per cent on loans.

Kienlong Bank moves to new headquarters

The State Bank of Viet Nam has given permission to the Kienlong Commercial Joint-Stock Bank (Kienlong Bank) to move its head office.

Accordingly, the bank's new address is now No 16 – 18 Pham Hong Thai Street, Vinh Thanh Van Ward, Rach Gia Town, southern Kien Giang Province.

The bank is required to carry out the procedures for changing its head office in line with the Law on Credit Institutions.

Thaco to export locally assembled cars to Laos

The Truong Hai Auto company (Thaco) will deliver its first batch of domestically assembled cars to Laos next Sunday, the company confirmed on Wednesday.

Under an agreement signed between Japan's Mazda and Vina Mazda, a subsidiary of Thaco, in Hiroshima last week, the first 300 vehicles: Mazda 2, Mazda 3 and Mazda CX-5 cars, will be the first delivery.

The company expects to export 3,000 cars next year.This batch will prelude the automobile maker's plans to expand into the Cambodian and Myanmar markets in the near future.

Thaco plans to export 15,000 cars by 2020, and in partnership with French automaker Peugeot, will begin manufacturing the Peugeot 408 this year.

The largest automobile maker in Viet Nam has produced and already distributed vehicles for three car manufacturers including Kia from South Korea, Mazda from Japan and French giant Peugeot.-

Ministry projects cross-sector growth

Viet Nam's GDP was forecast to rise 5.5 per cent next year while CPI was to increase 7 per cent, the Ministry of Planning and Investment said.

In a document containing guidelines on setting up socio-economic development plans in cities and provinces next year, the ministry forecast a number of economic indices in the second half of the year.

This year, accordingly, Viet Nam would run a US$9 billion trade deficit as it was expected to reap $127 billion from exports, up 10.9 per cent over last year, and it was foreseen to spend $136 billion to import goods and services, up 19.5 per cent.

Index of Industrial Production (IIP) was expected to surge from 5.5-5.7 per cent this year, driven by stable growth of petroleum, electricity, cement, steel and iron, fertiliser, garments and textile sectors.

The agriculture, forestry and fisheries sector was seen to have continued facing many difficulties this year but it would meet the set target of 2.8 per cent growth, including 2.7 per cent growth of agriculture, 5.8 per cent growth of forestry and 2.7 per cent increase of fisheries.

Services and retail sales are expected to increase by 6.3 per cent and 16 per cent this year respectively.

Under the ministry's calculation, total public development investments this year would be equal to 29 per cent of GDP.

Earlier, the World Bank forecast Viet Nam's GDP would reach 5.3 per cent while HSBC saw the country's GDP rising to 5.1 per cent and City Bank predicted GDP growth would be 5.2 per cent this year.

The ministry said the country would focus on restructuring the economy to increase its effectiveness, ability and competitiveness in the months to come.

To the end, the ministry would submit the plan to the Government this September. The Prime Minister would assign duties for ministries and localities based on the approved plan before November.

Inspectors check on job progress

The Government Inspectorate will conduct a two-month inspection to assess Ha Noi's implementation of the National Employment Programme until 2010, the inspectorate said at a meeting on Wednesday.

Through the results collected, the inspection aims to review the challenges to the implementation of employment policies in the capital.

Nguyen Thi Bich Ngoc, deputy chairperson of the Ha Noi People's Committee, expressed her hopes that after the inspection, the Inspectorate would offer its own proposals and suggestions to the Government towards more practical and effective employment policies for Ha Noi.

The committee would learn from the results of the inspection to better solve the city's existing problems, she added.

The municipal People's Committee reported that during 2009-12, the city had helped over 540,000 workers find jobs. That means that about 135,000 workers were assisted to become employed each year during the period, realising its target of helping 135-145,000 workers get employed by 2010.

However, while the target was also to reduce the unemployment rate in urban areas to under 4 per cent by 2010, the city had only managed to reduce the rate from 5.17 per cent in 2009 to 4.8 per cent in 2012.

The Ha Noi People's Committee also revealed that by supporting small-and-medium enterprises and household businesses, the city had helped create 24-25,000 jobs on average each year.

It also said that by the end of last year, the city's Employment Fund was raised to over VND912 billion (over US$43.8 million), with an average growth of 5.4 per cent during 2006-12.

Through the fund, from 2005 to present, the city has helped nearly 18,000 business projects get loans, creating jobs for over 140,000 workers. Seventy per cent of the fund was spent on suburban areas, where the rate of people out of work has been high.

State officials said, however, that most of the fund (80 per cent) had been used to support small firms or small household businesses, which employed a few workers, while private enterprises, the employer of a large number of workers, had little access to the fund. In addition, the loan offered to businesses was said to be limited, not sufficient to keep up with the demand of the city's development and urbanisation process.

To better implement the national employment strategy, the Ha Noi People's Committee proposed to raise the minimum loan to VND30 million ($1,440) per worker, to raise of the National Employment Fund and enlarge the number of people able to access the fund.

Ngoc said earlier this week, the committee had decided to offer a financial support of up to VND200 billion (over $9.6 million) in the form of loans to near-poor households to help them raise incomes.

World Bank offers VN export advice

Viet Nam needs to improve its transport and logistical services, simplify trade regulations and restructure its supply chains to enhance the country's competitiveness and increase added value to ensure future export growth.

These issues were highlighted in a report titled "Trade Facilitation, Value Creation and Competitiveness: Policy Implications for Viet Nam's Economic Growth", that was jointly released yesterday in Ha Noi by Viet Nam's National Committee for International Economic Co-operation and the World Bank (WB).

The report said that Viet Nam had posted a strong trade performance during a difficult economic period, with exports rising 34 per cent in 2011, 18 per cent in 2012 and by nearly 20 per cent in the first quarter of 2013.

However, the advantages of trade liberalisation, in helping to encourage trade growing, was reaching it limits, said experts, adding that it's now time to have a new approach to speeding up a growth in exports.

According to Pham Minh Duc, WB's senior economist, Viet Nam faces a serious deficit with many major partners, especially China and other ASEAN countries, as the country's exports remain primarily low value goods.

In addition, Viet Nam still only produces and exports products of a low technological value.

Duc went on to say that Viet Nam was behind many of its regional competitors in terms of time, cost and reliability.

An inadequate transport infrastructure, inefficient customs and a lack of transparency were the three biggest challenges, he said.

The annual investment into transport infrastructure in 2009-11 was 3.1 per cent of the country's gross domestic product, still well below average for countries at the same development level, while exports are expected to triple by 2020.

"This might cause an imbalance as an upgrade of the transport infrastructure would fail to keep pace with the rapid growth in exports," said Duc.

"Viet Nam clearly needs to upgrade its deteriorating infrastructure, simply to maintain its export competitiveness, yet the current level of investment has been inadequate," said the report, pointing out that the participation of the private sector was crucial when public investment was clearly not enough.

Do Xuan Quang, Chairman of the Viet Nam Logistics Business Association, said that the poor awareness of logistics and services lagging behind global standards was another barrier to developing the trade.

The report also revealed that Viet Nam's regulatory procedures for imports and exports were slow, inconsistent and vulnerable to administrative corruption.

Regarding the third pillar, supply chains, the report said that weaknessesin Viet Nam's supply chains for anufacturers and agricultural products prevented the country from lowering its exports costs and gaining much needed added value.

Manufacturing mainly depends on imported materials while agricultural production was still low quality and extremely fragmented.

More Government commitment was needed along with the development and implementation of a national action plan to enhance trade competitiveness, said the WB.

The WB proposed setting up a National Committee for the Facilitation of Trade and a sound policy framework to carry out the action plan.

According to Paul Vallery, the WB's Transport Cluster Leader, efficient logistics is an important part of enhancing Viet Nam's competitiveness.

He said that modernising the customs system must be sped up, to ensure transparency and consistency, reduce time and costs and improve the reliability of cross-border trade.

The development of the haulage industry, which was now fragmented and an increase in business at Cai Mep-Thi Vai Port were also essential in the next five to ten years, he added.

Coffee farmers to brew success

About 1,500 coffee farmers in Viet Nam's Central Highland province of Lam Dong are set to receive free training in agricultural techniques to help boost their crop yields and quality of coffee beans.

The training is part of the Coffee Made Happy project, a programme on boosting sustainability of farming run by Mondelez International, which committed to invest at least US$200 million to empower one million coffee farming entrepreneurs in coffee-growing countries including Peru, Viet Nam, Brazil and Indonesia by 2020.

About 100,000 Vietnamese coffee farmers are expected to benefit from the programme during the next two years, according to the global coffee company.

Mondelez International's Global Coffee President Hubert Weber said the programme focused on helping farmers to become more successful entrepreneurs by working with partners to improve their coffee production and business skills.

"Farmers would learn how to manage their business more effectively through simple tools like profit-and-loss log books and they will also have a chance to use new skills to grow more coffee with fewer resources, leading to more productive and profitable farms," he said.

Deputy Director of Crop Production Department under the Ministry of Agriculture and Rural Development Pham Dong Quang said that although coffee was a key crop for Viet Nam, the sector was facing major challenges including poor links between farmers and enterprises, large aging coffee areas and limited farming techniques that reduced the quality of beans.

Last month, the Prime Minister approved a national plan on restructuring agriculture including coffee farming, he said, adding that the country would maintain its Robusta coffee growing area and expand the Arabica coffee area, while re-cultivating 150,000ha of aging coffee trees and boosting application of Good Agriculture Practices and links among growers and enterprises.

Last year, Viet Nam had about 622,000ha of coffee, producing 1.3 million tonnes, making the country one of the world's top coffee exporters. There are 500,000 households growing coffee, mostly in the Central Highlands (Tay Nguyen).

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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