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BUSINESS IN BRIEF 27/3   2010-03-27 - VietNamNet

Closing trade gap to be difficult in coming months 

The target of restricting the trade deficit to 20 percent of export turnover this year looks to be a daunting task, since the deficit over the past three months is estimated at US$3.51 billion, or around 25 percent.
The trade deficit over the past three months is esitmated at US$3.51 billion, or around 25 percent of export turnover

The Industry and Trade Ministry made the statement March 25 at a meeting with groups, associations and enterprises to seek measures to curb the trade gap.
The ministry said the trade gap in the first two months of the year was US$2.16 billion, equal to 24.4 percent of export turnover.
The ministry blamed the increase on a spike in global prices.
It asked other ministries, sectors and enterprises to coordinate closely and make efforts in the coming months to constrain the deficit to 20 percent, or US$12.2 billion, for 2010.
Huynh Dac Thang, deputy head of the ministry’s Planning Department, said to close the gap and increase exports, measures should be taken that relate to the industry but not trade sectors.
When imports decrease, the deficit will fall. However, as a long-term measure, it’s necessary to develop domestic industries, especially auxiliary ones to reduce the import of raw materials, and thus boost local production and exports, he added.
Le Tien Truong, deputy general director of Vietnam Textile and Garment Group, said the credit growth rate set for the textile and garment industry should be raised because at the current rate of 25 percent, enterprises have faced many difficulties in conducting business.
Related agencies need concrete solutions related to mobile credit to facilitate production, he added.
Deputy Minister Nguyen Thanh Bien said the ministry will monitor imports of commodities that can be made in the country through taxation and non-taxation measures within the framework of Vietnam’s laws and commitments in global economic integration.
The ministry has also asked the Central Bank to order commercial banks to create favorable conditions for enterprises, especially those who produce commodities for export, to obtain loans, and not let loans with negotiable rates offered for other purposes affect their businesses.
Vietnam’s business environment becomes more friendly 

Business environment in Vietnam has been becoming more friendly, affirmed Chairman and CEO of the Japan External Trade Promotion Organisation (JETRO) Yasuo Hayashi.  
Talking to a Vietnam News Agency correspondent in Tokyo on the occasion of JETRO’s announcement of its report on Japanese businesses’ overseas activities in the 2009 fiscal year, Hayashi stressed that more and more Japanese enterprises pay attention to Vietnam when they expand their operations overseas.

According to a JETRO survey, Vietnam leaped up one rank from the previous fiscal year to stand at sixth among the economies Japanese businesses want to expand their sale activities in the next three years. It also jumped two places to stand at fifth among the markets where Japanese partners wants to expand research and development (R&D) activities.

It now stands third in the list of the economies where Japanese companies want to expand their production and ranks ninth among the markets where the Japanese business circle want to expand distribution activities.

The survey, conducted from November to December 2009 on 3,110 Japanese businesses, also shows Japanese companies’ attention to such areas as chemical, coal, oil and gas, IT equipment and electronic parts.

Yuichi Bamba, Deputy Director of the Asian and Ocean Division under JETRO’s Overseas Research Department, said the business environment in Vietnam has been improved thanks to the Vietnamese government’s efforts and the implementation of the Vietnam-Japan Joint Initiative on improving Vietnam ’s business environment and strengthening its competitiveness.

However, Hayashi said that several Japanese enterprises are still concerned about business risks in Vietnam , especially risks from the country’s poor infrastructure and uncompleted legal system.

Coffee prices in the Central Highland region increase again
Coffee prices in the Central Highland region on March 26 rose by VND600-800 per kilogram compared to one week ago.

In Dak Lak and Dak Nong provinces, the price of coffee only reached VND24,300 per kilogram, up VND1,000 per kilogram against last week. According to the forecasts of many coffee export businesses, the prices will continue to rise in the next 2 months.

In London, the price of coffee on the world market on March 26 increased by US$55 per tonne to US$1,342 per tonne.

According to experts, the cause of the sharp rise in coffee prices is the proposal by the Vietnam Coffee and Cocoa Association that the Government buy 200,000 tonnes of coffee for reserves this year.

Buying for reserves has a great influence on the balance of supply and demand on the world’s coffee transaction floors because Vietnam is one of leading countries exporting coffee Robusta.

Seminar boosts ASEAN cooperation in trade and investment
A seminar was held in Bangkok, Thailand on March 26 to enhance cooperation in trade, investment and tourism towards the establishment of an ASEAN Economic Community (AEC) in 2015.

The event was attended by trade representatives from ASEAN countries’ embassies and more than 300 businesses keen on the Asian and ASEAN markets.

The seminar aimed to spotlight opportunities and challenges in ASEAN countries as well as preparations for their involvement in the AEC in 2015, and provided information on trade, investment and tourism for businesses to seek investment opportunities in each member country.

In regard to the trend of Vietnam’s trade relations with ASEAN countries from now through 2015, when Vietnam fully participates in the AEC, The Trade Counselor of the Vietnamese Embassy in Thailand, Nguyen Thanh Hung said Vietnam’s trade ties with ASEAN countries, especially with Thailand, are growing and flourishing. Thailand has been increasingly easing non-tariff barriers and implementing ASEAN commitments in reducing tax rates under the roadmap. This will help Vietnamese businesses achieve a greater penetration of the Thai market and other markets in the world as Thailand is an international gateway in the region.

A tax reduction to 0 percent and the removal of non-tariff barriers to boost intra- bloc trade will facilitate the participation of Vietnamese businesses into the regional market, Mr Hung noted.

Concerning Vietnam-Thailand trade relations, assistant to the Thai Minister for Commerce, Veerasak Jinarat said, “Vietnam holds great potential for development and has a high growth rate. The seminar aims to provide information for Thai businesses to intensify their investment in Vietnam. Thailand and Vietnam are the biggest rice exporters in the world so we should boost closer cooperation in this field, particularly on prices and markets.”

This year, Thailand is set to up its trade turnover with ASEAN countries to US$70 billion and with Vietnam to not less than US$10 billion.

ASEAN is currently Thailand’s largest export market. Last year, two-way trade turnover between Thailand and the other 9 ASEAN countries hit US$57 billion in which Thailand exports US$32.5 billion and imports US$24.5 billion.

Vietbuild 2010 international exhibition to kick off
Vietbuild 2010 international exhibition under the theme of “construction-building materials-real estate and interior decoration” will be held in Hanoi from April 1-5.

The large-scale event aims to celebrate the 52nd anniversary of the traditional day of Vietnam’s construction industry.

This year, the number of businesses taking part in Vietbuild 2010 increased by 40 percent compared to last year, with nearly 1,300 stalls from over 400 units from 15 countries and territories such as the Republic of Korea, the United States, Malaysia, Indonesia and the host, Vietnam.   

Under the framework of the exhibition, a seminar on high-technology for the construction industry and Nano technology applications in pottery and porcelain products along with a forum for businesses will take place.

Also the organising board will award Golden Cups for strong trademarks in Vietnam’s construction industry and gold medals for high-quality products.    

Agro-forestry products, seafood exports down
The country earned US$3.49 billion from the export of agro-forestry products and seafood in the first three months of the year—a four percent year-on-year decrease--according to the Ministry of Agricultural and Rural Development.

The ministry said that despite the prices of those products increasing, export value was still low due to the world economic crisis.

Of the total export value, the value of farm produce was US$1.9 billion, a year-on-year increase of 11 percent, while forestry products earned US$706 million, a year-on-year increase of 15.3 percent, and seafood, US$771 million, up three percent.

Exports of wood and wood works made a breakthrough with US$655 million, up 16.3 percent over the same period last year.

Exports of seafood saw optimistic signs. Pangasius and frozen shrimp were major export items, earning over US$312 million, making up 58 percent of the total export value from seafood.

The EU is Vietnam’s largest importer of seafood, buying over 24.7 percent, followed by the US and Japan.

Farm produce exports saw a gloomy picture. Exports of coffee dropped sharply both in volume and value. The country exported only 326,000 tonnes of coffee for US$466 million, year-on-year decreases of 24 and 28 percent, respectively.

Exports of rice also dropped in the reviewed period. The nation shipped only 1.2 million tonnes of rice abroad and earned US$650 million, more than 30 percent and 20 percent decreases, respectively.

At present, the Philippines is Vietnam’s biggest rice importer, contributing nearly 66 percent to the rice export value.

Tea was the only farm produce with increases in volume and value. Vietnam exported 24,000 tonnes of tea for US$33 million, 6 percent and 14 percent reflecting increases over the same period last year. Russia is the largest market for Vietnamese tea, followed by Pakistan.

The export values of rubber, cashews and pepper were up due to price increases. They obtained a growth in export value of 54.2 percent, 6.4 percent and 1.54 percent, respectively.

JICA to help Vietnam ensure construction quality
Japan International Cooperation Agency (JICA) will launch a project to help Vietnam improve its capacity to ensure the quality of construction.

The agreement was signed by the head of JICA’s representative office in Vietnam, Motonori Tsuno, and Vietnam’s Vice Minister of Construction, Bui Pham Khanh, on March 26.

Under the project, JICA will provide equipment and experts for personnel training in Japan and will be responsible for cost of research and training, including transportation and accommodation.

The Vietnamese government, meanwhile, will provide a tax reduction for the Japanese experts and pay for operational stages of the project.

The project will help ensure the quality of construction works by improving project management methods; clarifying the responsibilities of involved parties such as project managers, investors, engineers, and contractors; improving the state’s construction assessment system; and providing training to quality assessors.

The project is scheduled to last three years.

Vietnam receives its largest oil tanker
Vietnam’s largest and most modern oil tanker The Van Phong 1 vessel arrived at the Van Phong bonded oil warehouse in the southcentral coastal province of Khanh Hoa on March 26.

The ship built in the Republic of Korea at a total cost of US$44 million weighs almost 105,600 DWT and can carry over 125,200 cubic meters of cargo.

Once the ship becomes operational, the national petroleum corporation (Petrolimex) will have a large oceangoing oil fleet with a total weight of 453,000 tonnes. The current fleet is capable of transporting 80 percent of the corporation’s imported oil.

The Chairman of Petrolimex’s Board of Directors, Vu Ngoc Hai, said the Van Phong 1 vessel will also help his company to take the initiative in signing long-term contracts to purchase oil from major foreign oil firms. Petrolimex, he said, plans to import large consignments of oil to ensure a stable oil supply for domestic industries and reduce the per-unit cost. Mr Hai added that this is part of the corporation’s strategy to begin offering oil and petrol transport as one of its world-wide services.

Petrolimex has invested in the Van Phong bonded oil warehouse and an oil refinery complex with a capacity of one million cubic meters in Van Phong Bay. The warehouse, which has four quays to receive ships weighing up to 150,000 tonnes, is expected to become a major international depot for petrol and oil.

The UK ups investment in Vietnam to US$3 billion
The UK’s target is to boost its investment in Vietnam to US$3 billion in the next few years, said Scott Wightman, Director for the Asia-Pacific of the UK Foreign and Commonwealth Office in his recent first visit to Vietnam.

The UK is one of Vietnam’s biggest investors with a total investment of US$2 billion and its exports to Vietnam in 2010 are predicted to rise by 25 percent over last year. The UK views Vietnam as one of its major export markets so its businesses are very keen on expanding their involvement.

The UK Department For International Development (DFID) is carrying out a ten-year support project in Vietnam. DFID and Vietnam will conduct a mid-term project to review the results over the past few years and set orientations for the next five years, said Mr Scott.

Finding outlets for farm produce needs a revolution
Farmers across the country are faced with increasing pressures as the prices of several categories of farm produce, such as rice, coffee, cashew nuts, salt and water melons, continue dropping sharply.

Sharp declines in prices cause deep concern among farmers and ministries. The harsh reality of “good harvest, but lost profit” will come back to haunt farmers as long as there is no revolution in production and agricultural development strategy.

There was a time when many lorries carrying out water melons had to wait desperatedly in a long line at the Lang Son border gate and were forced to sell the fruit at VND1,000 per kilogram. With rice, coffee and salt faring no better farmers are sinking into despair.

Several weeks ago, the prices of rice dropped so steeply that the Government decided to buy for reserves to reduce losses for farmers. Salt and coffee share the same story, so the Ministry of Industry and Trade proposed the Government buy for reserves and the Coffee Association asked the Government to purchase 200,000 tonnes.

The problem is that farmers can produce a huge volume of products but are unable to control prices. Vietnam now ranks first or second worldwide in terms of rice and coffee exports, but finds it difficult to manage exports of farm produce.

It is something of paradox that Vietnam pours much investment into producing more products but lacks export markets. Preventive measures should have been put in place before production got underway.

It is easy to see that the weakness of Vietnamese businesses is lack of capital and storehouses, enabling foreign importers to drive down buying prices. Rice is a typical example. Taking advantage of declining rice prices, importers seek to pay at an unreasonably low level.

The agricultural sector drew special attention from the Government, especially when it strictly implemented a programme to link regions and four entities: the State, farmers, scientists and businesses. However, it did not produce as efficiency as expected, and several problems arose. Farmers are still worried, even if they have a bumper crop. Over the past years, the prices of farm produce have not remained stable and the story “good harvest but lost profit” is heard again and again.

Vietnam has not yet devised a mechanism to keep the prices of rice, coffee and other farm produce stable to ensure the farmers’ rights. A proposal to form a mechanism to intervene in a timely fashion when the prices of farm produce drop sharply or to establish a fund to stabilize market prices has not become a reality.

It is clear that finding output markets for agricultural products needs a strategic orientation. Band-aid solutions, such as buying for temporary reserves are insufficient. In addition to a fund, specific strategies need to be employed to get farmers focused on the dynamics of supply and demand and more store houses need to be built.

Thailand has a good experience that Vietnam can learn from. In addition to setting up a modern storehouse system which can store 10 million tonnes of rice, in 2000 Thailand invested nearly US$2 billion in implementing a mechanism to keep rice prices stable. According to the mechanism, farmers can sell their rice to the Government’s agencies at the ceiling prices and can re-buy all their rice within 90 days at an interest rate of 3 percent. As the ceiling price is always higher than the market price, the Government becomes a direct purchaser from farmers and is also in charge of exporting rice through its contracts, bidding or selling on the farm produce exchange.

Exports of dragon fruit to the US rise sharply
Vietnam exported 110 tonnes of dragon fruits to the US from January 15 to March 15, equal to the total export volume last year, according to the Ministry of Agriculture and Rural Development.

In March, dragon fruit export growth has been the same as in the first two months.

Nguyen Hong Hung, vice director of the Yasaka Fruit Processing Company in Binh Duong province said that exports of the fruit to Japan have reached 2.5 tonnes per day.

US firm helps domestic businesses to boost tra, basa fish exports
Representatives from the US Mazzetta company and the Vietnam-France Animal Feed Production Joint Stock Company (Proconco) have worked with the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade in an effort to boost the export of tra and basa fish to the US.

During the working trip from March 24-26, the representatives also discussed issues such as fish origins and sustainable development in the aquaculture sector with officials at the An Giang provincial Department of Agriculture and Rural Development and the provincial Association of Fisheries.

The representatives visited local fish farms and advised Vietnamese fish exporters on the standards and requirements of the US seafood market, in which feed plays an important role in ensuring seafood quality.

Proconco has agreed to invest in research and development to produce quality feed for tra and basa fish and provide Vietnamese farmers with technical support to ensure that their products meet the North American standards.

HCM City: Overseas remittance in 1st quarter up 18 pct
Overseas remittance to Ho Chi Minh City in the first quarter reached US$964 million, up 18 percent compared to the same period last year, announced the State Bank of Vietnam (SBV).

This has helped improve the supply of foreign currencies to customers, the bank said.

In the first quarter, commercial banks in HCM City bought more than US$12.3 billion and sold over US$12.2 billion. The buying and selling of US dollars and other currencies almost hung in the balance.

Sacombank named Vietnam’s best retail bank in 2009
The Asian Banker Journal has selected Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) as Vietnam’s best retail bank in 2009.

Last year, Sacombank expanded its network of over 320 transaction points in 45 cities and provinces of Vietnam as well as in China, Laos and Cambodia.

In 2010, Sacombank targets 45 percent growth rate over the past year and VND2.4 trillion in pre-tax profit.

Vietnamese beverage market lures investors
Vietnam has emerged as one of the world most potential market for beer, attracting foreign investors, according to the latest report in food and beverage released by the Business Monitor International (BMI).

BMI forecast that the alcoholic drink sales in Vietnam will increase by 50.6 percent from now to 2013 with the revenue expected to increase by 16 percent a year.

BMI is a wholly independent, London-based company, specialized in the analysis of global emerging markets since its foundation in 1984.

According to its report, consumption of beer made up 98 percent of alcoholic drinks sales in 2008 and the figure is predicted to rise 50.7 percent this year and soft drink is expected to go up by 37 percent.

BMI said many foreign beverage companies are seeking to penetrate Vietnam or raise their market share there.

For instance, Denmark’s Carlsberg has announced its plan to acquire 50 percent of stake in central Vietnam’s Hue Brewery Company after it increased its stake at the Hanoi Beer-Alcohol-Beverage Company (Habeco) from 16.07 percent to 30 percent. Meanwhile, the Coca-Cola plans to invest about US$200 million in Vietnam in the next three years.

Crown Holdings Inc. of the US, the world’s third largest metal packaging producer, also plans to inject US$25 million into a production line of cans for soft drinks in the southern province of Dong Nai. Additionally, PepsiCo, Diageo, San Miguel, SABMiller, S&N, Heineken, Budweiser, Kronenbourg and Bitburger have strengthened their market shares by investing in new technology and production lines.

Canada grants US$17 million for safe pork in HCM City
The agricultural quality control arm of the Canadian International Development Agency (CIDA) has agreed to help Ho Chi Minh City devise and monitor hygiene standards for pork.

The Food and Agriculture Products Quality Development and Control Project (FAPQDC) and the municipal Department of Agriculture and Rural Development signed an agreement on March 23 for the purpose.

Nguyen Phuoc Trung, the department’s deputy director, said the project would cost around US$17 million to be provided by CIDA.

The project will go on until December 2013.

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