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BUSINESS IN BRIEF 26/7   2009-07-26 - Viet Nam Net

A waste of public land due to poor management
Preliminary statistics show that more than four million square metres of public land are abandoned and tens of millions more are not put into proper use in Hanoi and Ho Chi Minh city alone.

Many public houses, stores and grounds are in such a situation. Many organizations occupy a large area of land with a nominal lease or no lease at all. In most cases, they let their land go to waste or sublet it at a much higher rate than they have to pay the state. The wrong use of many valuable sites inside the cities causes a huge loss of public money estimated at thousands of billions of Vietnamese dong every year.

One reason for the problem is an overlap in state management of public land. For instance, in both cities public land is co-managed by the department of construction, the department of resources and the environment, and the department of finance. Consequently, it is not clear what agency has the major responsibility for land use oversight. A second reason is that inconsistency in regulations has blocked attempts to revoke land use rights.

On top of this, relevant state agencies have proved bureaucratic and incapable of managing public land in a proper manner. Some are completely ignorant of encroachments on public land, related disputes and illegal sales of public land to private individuals.

To make matters worse, quite a few businesses place their own interests above the common interest. Despite their ineffective use of land, they still insist on keeping it at their disposal.

Many people argue that the state’s land leases should be adjusted to be close to market prices with the aim of preventing the ongoing waste of public property. It is expected that with a more suitable financial policy put in place, economic sectors will have more equitable access to public land and other natural resources.

Central Vietnam’s tallest building under construction
A ground-breaking ceremony for Meridian Twin Towers, the highest trading, office and hotel complex so far in the central region, was held in Da Nang city on July 25.

The 48-storey building is 220 metre high, covering an area of more than 11,000 square metres.

Once completed in December 2012, the building will include a retailing mall, an international convention centre, hotels and luxury apartments.

The US$180 million building is designed by Mooyoung Architects & Engineers, a Republic of Korea construction advisory.

The three primary investors are Viendong Land, Viendong Corp., Trung Nam Group and Saigon Tel JSC.

HCM City’s industrial production recovers
Total industrial production value in HCM City reached VND237,500 billion in the past seven months, up 4.8 percent from a year ago.

Notably, the non-state sector posted a growth rate of 7.3 percent and the foreign-invested sector up 7 percent while state sector was down 3.2 percent.

Quach To Dung, deputy director of the municipal Department of Industry and Trade said that the recovery is attributed to the efficiency of the government’s stimulus packages.

As of July 15, HCM City disbursed more than VND76,110 billion in loans from the government’s stimulus packages. The municipal people’s committee also poured VND5,000 billion from its budget into priority projects in construction, investment, and technological renovation.

Ms Dung said from now till the end of the year, HCM City will continue to remove difficulties for enterprises in terms of capital, production, and expansion of consumption market.

In addition, it will actively help enterprises access subsidised loans from the government’s and the city’s stimulus packages.

The city will also help enterprises expand export markets to promote trade activities overseas and secure traditional markets such as the US, Japan and Russia as well as seeking new outlets in Europe, the Middle East and Africa.

Exports make a modest recovery
The export sector has overcome difficult times and begun to show signs of recovery after a long period of stagnation and decline, according to the General Statistics Office (GSO).

Rice is the only product that has maintained positive growth since the beginning of this year. Rice businesses have so far shipped nearly 4.3 million tonnes and fetched approximately US$2 billion, up 46 percent in volume and 4 percent in value from a year ago. 

Garments – another key export item – have only suffered a 1-percent decline, raking in more than US$5 billion.

Notably, precious gemstones have achieved the highest export growth in the last seven months, generating US$2.6 billion, a four-fold increase over last July.

Other farm products, including seafood, footwear and rattan and bamboo products have also seen a slight increase in their export value.

However, total export value has fallen 13.4 percent year on year to US$32.3 billion. Crude oil has seen the sharpest fall, at 45 percent, followed by rubber (43 percent), coal (18 percent), cashewnuts (17.7 percent) and coffee (16 percent).

One worry is that the trade deficit for July has reached a four-month record high of US$1.25 billion, bringing to US$3.4 billion the total trade deficit in the past seven months, making up 10.5 percent of the total export value.

The Ministry of Trade aims to earn US$64.57 billion from exports and maintain the trade deficit at between US$10-12 billion. To meet the target, it will continue to restructure export items, focusing on manufactured and processed products, and to develop new products in the remaining months of this year.

Business social awards kicked off

The Corporate Social Responsibility Award was launched yesterday in HCM City by the Viet Nam Chamber of Commerce and Industry (VCCI).

The award aims to encourage businesses to improve the working and living conditions of their employees and participate in environmental protection activities.

The competition also aims to enhance companies’reputation and competitive capacity, according to Doan Duy Khuong, VCCI deputy chairman.

Businesses involved in any sector in the country are eligible to enter the competition.

The award is co-sponsored by the United Nations Industrial Development Organisation, the UN Development Programme and the International Labour Organisation.

Consultants who have provided advice on socially responsible business practices include the Labour Science and Society Institute, the Institute of Labour Medicine and Environmental Hygiene, the Viet Nam Association of Small – and Medium-sized Enterprises, the Viet Nam Leather and Footwear Association and the Viet Nam Textile and Apparel Association.

For three years, the competition was open to garment and footwear companies only, but this year it has been extended to all business sectors.

The awards ceremony will be held in December in Ha Noi.

Sustainable systems access for managers

Small-and medium-sized Vietnamese enterprises are set to get increased access to international-standard sustainable management systems, thanks to a Germany-funded public-private partnership project launched yesterday in HCM City.

"Development of a Comprehensive Corporate Sustainable Management Programme", especially for SMEs in Viet Nam, is a joint initiative by TUV Rheinland Group, an international technical service provider, the GDEG (German Development Finance Institute), and Philippines-based ECC International.

Aru David, ECC country manager, said at the launch that the programme had the objective of bringing forward the needed shift towards a sustainable means of development by reducing environmental degradation, improving social accountability, and work safety standards.

"These will help enterprises gain better international acceptance and [have] a profound impact on the lives of the people (including employees, suppliers and customers), Government, NGOs and other stakeholders," he said.

Corporate Sustainability Management is a systematic and integrated approach to optimise management of the key economic, environmenta, and social impacts of a company’s products, services and processes, he explained.

Viet Nam was experiencing a concentration of its population and economic activities in a few geographical areas like HCM City, Binh Duong, Dong Nai, Ha Noi and Hai Phong, accounting for 63.1 per cent of all manufacturing employment and 54.7 per cent of all industrial firms, he said.

"According to a recent study by the World Bank, industrial pollution in Viet Nam is highly concentrated in certain areas, and originates from a few manufacturing sub-sectors. The SMEs manufacturing chemical products, footwear and textiles are identified as the top polluters in Viet Nam."

Roan Thai Trung, direct of TUV Rheinland’s Mobility, Products, Systems, said: "The 400,000-euro project will support top polluters in textile, footwear and chemical enterprises to enhance their competitive edge and maximise production by applying an integrated management system."

They include ISO 14001 – Environmental Management System, OSSAS 18001 – Occupational Health and Safety Management System, and SA 800-Corporate Social Responsibility Management System.

Phan Thanh Thuy, manager of TUV Rheinland’s training academy, said: "The 14-month project will help implement Corporate Sustainability Management at 10 SMEs, five in the north and five in the south."

But they must be involved in the textile, footwear and chemical industries and have already applied the ISO 9001 quality management standard.

By September 2008, SMEs accounted for over 90 per cent of the nearly 300,000 enterprises nationwide and employed 45-50 per cent of the labour force.

Firms want lower industrial park rents

The rentals of land in industrial parks must be adjusted to attract more investors, infrastructure development companies told a meeting yesterday.

Rental prices in industrial parks in Dong Nai and Binh Duong provinces as well as HCM City have increased by 30-50 per cent compared to previous years.

The Government’s Decree 142, enacted in 2006, called for land rentals to be adjusted every five years based on the market price.

However, Nguyen Thanh Binh, deputy general-director of Tin Nghia Company, said projects with a 50-year land lease would experience eight to 10 rental adjustments, thus impeding owners’ ability to forecast expenses and make business plans.

"We’re petitioning the Government to maintain rental prices for the entire project duration, and in cases of adjustment, the later charge should not exceed 15 per cent of the previous rate," Binh said.

He proposed that the Government apply one rate for an entire IP area.

"Calculating the rental based on its position from the main street is only suitable to small-scale projects," Binh said.

"While an IP usually covers 300-500ha and is situated not only on one street, it is hard to define the land rental based on its position," he added.

Nguyen Van Tinh, manager of Long An IP’s investment control department, said from 1995 to 2005 the Government issued many preferential policies, including land rental and corporate income tax exemptions.

However, under the Ministry of Finance’s Circular 130 that came into effect in January this year, such policies were discontinued, causing difficulty for IPs to attract investors during the economic downturn.

Participants at the meeting suggested that the Government continue preferential policies to industrial parks that had received investment licences before January of this year.

To ensure equity among investors in infrastructure, they said the Government should take into consideration the amount of land compensation companies paid to local residents prior to the 2006 decree, and make adjustment to land rentals based on those amounts.

Cleaner salt gives Can Gio farmers higher earnings

Salt farmers in HCM City’s Can Gio District are earning higher profits after shifting to production of clean salt by using plastic covers for their fields.

It began in 2007 when the city Sub-department of Agriculture Development and the Can Gio District Agriculture and Rural Development Office introduced the method on a trial basis.

Vo Van Binh of Tan Dien Village, among the first to try it, achieved remarkable success by increasing output by 40 per cent compared to the traditional method by cutting down production time substantially.

The clean salt he produced also fetched 20 per cent higher prices than traditional salt.

Following the successful trial, 29 families in Ly Nhon Commune volunteered last year to participate in producing clean salt.

They also became members of the Tien Thanh Salt Co-operative, which provides clean-salt production techniques and financial assistance to members.

Phan Thanh Thuoc, its head, said this year the co-operative had lent VND2.5 billion (US$147,000) to its members to buy plastic sheets.

It also buys all the salt produced by its members at 20 per cent higher than the price of normal salt.

Members now produce clean salt on an area of 50 ha.

Nguyen Van Tiep of the Gan Gio District Agriculture and Rural Development Office, an expert responsible for instructing farmers in production of clean salt, said the process of making clean salt is not complicated and all farmers could produce it.

He explained that most farmers are too poor to invest in the new method. It costs VND 30 million ($1,600) to carry out one ha of normal salt and around VND42 million ($2,200) for clean salt.

With a coastline of 13km, Can Gio District has 657 households producing salt on more than 1,500ha in Ly Nhon, Thanh An, and Long Hoa communes and Can Thanh Town.

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