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BUSINESS IN BRIEF 5/1   2011-01-05 - Viet Nam Net

Lack of electronic payment options hamper growth of online commerce


Credit cards and other electronic payment systems essential to online shopping remained underutilised in Viet Nam, said Viet Nam Vat Gia Joint Stock Co director Nguyen Ngoc Diep.


About 30 million people nationwide were using the internet as of October of this year, with the figure expected to surge to 40 million over the next three years, but few Vietnamese consumers had or used credit cards and so have not yet established habits of buying merchandise online, Diep said.


"Meanwhile, buyers and sellers have not established any trust since many e-commerce websites are operated without care and with low security. Due to poor marketing, e-commerce stands at a low level among consumers," he said. "It's an uphill battle for e-commerce companies."


Businesses involved in e-commerce needed to promote their images while helping consumers better use their services, he added.


But business investment in e-commerce remained low, accounting for only 5 per cent of total business expenditure while bringing in up to a third of customer orders, according to a recent Ministry of Industry and Trade survey of about 2,000 enterprises. Businesses themselves also placed about 28 per cent of their total orders online.


Vu Thi Bach Nga, an official of the Viet Nam Competition Administration Department under the Ministry of Industry and Trade, said e-commerce helped cut intermediaries in distribution and saved time and money for both sellers and buyers.


Nga said that e-commerce included business-to-business, business-to-consumer, and consumer-to-consumer formats using the internet, mobile phones and email.


However, fraud was also increasing rapidly, undercutting consumer trust in e-commerce, she said, noting that the draft Law on Consumer Protection was expected to address measures to protect consumer rights in using e-commerce, helps the growth of the online industry.


Meanwhile, banking has become one of the leading fields in successfully applying e-commerce, with substantial efforts made to upgrade technology in order to manage transactions online.


Fruit imports rise by nearly 4%


Imports of fruit and vegetables into Viet Nam reached US$264 million in the first 11 months of the year, an increase of 3.9 per cent over the same period last year, according to the Viet Nam Fruit and Vegetable Association.


Imports in November alone totalled $30 million, largely due to a surge in imports from China. Fruit such as oranges, apples and pears constituted over 85 per cent of the imports.


Agricultural products from preferred importers must meet minimal food safety and pesticide inspections but were not checked for the presence of preservatives or stimulants, said a Ministry of Agriculture and Rural Development official who asked to have his name withheld.


Products with a certificate of origin from China receive the preferential treatment and are exempt from import taxes pursuant to the ASEAN-China Free Trade Agreement.


Merchants who had registered to open an import declaration might import products without limit, confirmed Tran Vu Hoang, a customs official at the Lao Cai International Border Gate.


Without the import tax procedures, the safety inspections and efforts to protect domestic agricultural products had become too lax, Hoang said.


Nguyen Tri Ngoc, director of the ministry's Cultivation Department of said that many of the imported fruits were also grown on domestic farms but were hard-pressed to compete with Chinese produce in terms of variety, price or quality.


Domestic farmers needed to improve the quality of produce to compete with imported products, Ngoc said.


They also needed to deal with such issues as climate change, rising fertiliser prices in the northern region, and flooding in the central region, he added, although good weather currently would likely guarantee sufficient produce to meet high consumer demand ahead of the Lunar New Year.


ADB to help Mekong nations


The Asian Development Bank (ADB) will provide a technical assistance grant to help countries in the Greater Mekong Subregion (GMS) achieve greater connectivity through co-ordinated railway development.


The ADB grant will assist GMS countries in preparing a detailed plan for setting up the GMS Railway Co-ordination Office (RCO), including a business and financing plan for its first five years of operation.


The RCO will be jointly managed by members of the GMS, which includes Cambodia, China's Yunnan Province and Guangxi Zhuang Autonomous Region, Laos, Myanmar, Thailand and Viet Nam.


Railways in the GMS countries have developed independently. With the exception of a connection between China and Viet Nam, the GMS countries' national railways are not interconnected, according to an ADB press release.


"The initiative to establish the RCO reflects the growing realisation by the GMS countries of the need for an interconnected and integrated railway network in the subregion," said James Lynch, director for transport and urban development in ADB's Southeast Asia Department.


In view of increasing subregional trade, growing concerns over climate change and sharply fluctuating fuel costs, the GMS countries have progressively recognised the importance of upgrading their national railway networks and interconnecting these with those of their neighbours.


Recognising that an integrated railway system offers an efficient and environmentally friendly transport mode to link their economies, the GMS countries requested ADB's assistance in undertaking a GMS Railway Strategy Study in 2009.


The study led to the development of a Strategic Framework for Connecting GMS Railways, which recommended the establishment of the RCO.


Quality key to Japan seafood market


Vietnamese firms should focus on food safety standards if they want to export seafood to Japan, a seminar held in HCM City on Wednesday heard.


Vo Thanh Ha, deputy head, North East Asia Division, at the Industry and Trade Ministry's Asia Pacific Market Department, said: "Japanese consumers are particular about quality, durability, and convenience of products."


Last year the Japanese government lifted a ban on Vietnamese dragon fruits after they began to be treated to get rid of melon flies in accordance with Japanese standards.


Ha apprised delegates about Japanese Industrial Standards for industrial products and Japan Agricultural Standards.


Officials from the Japan Environment Association urged exporters to apply for "Ecomark," a certification that a product does not harm the environment.


Exporters need to find information about business and technical barriers in Japan from Vietnamese commercial counsellors, Japan External Trade Organisation, and trade groups to crack the market, Ha said.


Ha noted that apart from quality and other requirements, the severe competition from other countries would also be a challenge for Vietnamese firms eyeing Japan.


Le Quang Lan, deputy head of the ministry's Multilateral Trade Policy Department, said: "Japan has promised assistance for several Vietnamese projects to improve quality and food hygiene and safety to improve access to the Japanese market."


Interbank rates see decline


Interbank interest rates declined by 0.45 – 2.47 percentage points last week, depending on loan terms, indicating more stable system liquidity after some weeks of tension, the State Bank of Viet Nam announced yesterday.


Overnight rates for loans denominated in Viet Nam dong saw the strongest decrease, dropping 2.47 percentage points to a rate of 10.42 per cent per year.


Average borrowing costs for one-week, six- and 12-month terms fell by 0.45-0.58 per cent to a range of 12.72-13.01 per cent. Rates on one-year terms fell to a range of 13-13.25 per cent.


At commercial banks, interest rates for dong-denominated loans to prioritised borrowers – e.g., enterprises operating in agriculture and rural development or exports, and small- and medium sized enterprises – declined to a range of 12.5-14.5 per cent, with other commercial rates continue to average 18-20 per cent per year.


Interbank rates for loans in US dollars, meanwhile, rose by 0.65-2.02 per cent to a range of 1.11-3.25 per cent per year, depending on terms. Commercial bank rates for loans in dollars were being offered at rates of 5.5-8 per cent per year.


High speed Phu Quoc boat service opens


A high-speed boat service has officially opened between Rach Gia and Phu Quoc at a price of VND260,000 (US$12) per passenger.

The Song Hong (Red River) Co Ltd invested VND14 billion ($667,000) in the boat using modern technology from New Zealand and can travel at a speed of 28 nautical miles per hour. It can carry about 100 passengers.


Ha Noi expands seafood cultivation


The area used for seafood cultivation in the capital's suburbs has increased by 5 per cent over the same period last year, bringing the total area to 20,500ha. The area is expected to produce 56,600 tonnes of seafood this year, a year-on-year increase of 37 per cent.


Authorities have provided preferential policies to create favourable conditions for farmers to expand production.


Quang Ngai Sugar Co raises capacity


Quang Ngai Sugar Co has doubled its processing capacity to 2,000 tonnes of sugar cane per day and purchased all available raw material in the central province.


The plant is expected to purchase and process over 400,000 tonnes of sugar cane and produce about 40,000 tonnes of refined sugar next year.


Salt output increases 50 per cent


Salt harvests totalled 1.2 million tonnes this year, an increase of 50 per cent on last year. Industrial salt output is expected to reach 240,000 tonnes and handmade salt output 960,000 tonnes. Authorities purchased stock from farmers when salt prices plummeted recently.


Vinacas to set floor price for cashew


The Viet Nam Cashew Association (Vinacas) wants to set a floor price for cashew products to protect cashew enterprises, according to vice chairman Nguyen Duc Thanh. The setting of a floor price will help stabilise prices for cashew products domestically and prevent enterprises from unsuitable price reductions.


Ben Thanh Services to list 3 million shares


Ben Thanh Services Co plans to list 3 million shares on the Ha Noi Stock Exchange on January 5 under the code of BSC. The company, operating primarily in food and tourism services and real estate, has charter capital of VND30 billion (US$1.4 million), of which Ben Thanh Corporation presently holds 45 per cent and Nam Long Joint Stock Co 21.54 per cent.


Sacomreal to issue convertible bonds worth $19m


Sai Gon Thuong Tin Real Estate Co (SCR) will issue VND400 billion (US$19 million) worth of corporate bonds to finance the Phu My housing complex in HCM City. The bonds, with a face value of VND1 billion ($47,619), will have fixed terms of 3.5 years and will be offered to credit institutions and investment funds.SCR has also announced it would invest an additional VND44 billion ($2.1 million) in its subsidiary Sacomreal Trading Service Co, raising its total capital contribution to VND50 billion ($2.4 million).


Deutsche Bank ups stakes in pharmaceuticals, bakery


Deutsche Bank AG London has became the largest shareholder in Vien Dong Pharmaceutical Co (DVD) after increasing its stake in DVD from 4.96 per cent to over 5 per cent. Deutsche Bank also became the leading shareholder in HCM City bourse-listed Kinh Do Corp (KDC) after acquiring 29,690 additional KDC shares, raising its stake in the commercial bakery company to over 5 per cent.


Phu My Fertilisers posts $88m profit, an increase of 21%


Phu My Fertilisers (DPM) will post a profit of VND1.85 trillion (US$88.1 million) for the year, an increase of 21.7 per cent over the previous year and surpassing targets for this year. This year, DPM produced about 800,000 tonnes of urea, an increase of 5.9 per cent over the previous year and 8 per cent over targets. It also imported 150,000 tonnes of fertiliser in order to meet domestic demand.


DPM has targeted production of 770,000 tonnes of urea in 2011 and a net profit of VND1.45 trillion ($69 million).


Quang Nam Mineral Co pays two-year dividend


Quang Nam Mineral Industry Co (MIC) has set January 12 as the deadline for existing shareholders to register to participate in its two-year dividend payout. MIC will pay the first phase of dividends on January 24, paying 15-per-cent in cash, while a 17-per-cent dividend in form of shares will be paid later in the second phase.


MIC will also offer an additional 2.5 million shares at VND15,000 (US$0.7) to existing shareholders at a ratio of 1:1. Shareholders can transfer their buy rights from January 19 to March 4 and make payment until March 8.


Yesterday, MIC also listed additional 513,000 shares it previously issued to the strategic shareholders on the northern bourse. However, the share closed yesterday down 6.48 per cent to VND60,600 ($2.89).


Foreign buys lift blue chips


Heavy buys in blue chips helped lift the VN-Index to a close yesterday of 481.4 points, a gain of 0.55 per cent over Wednesday's finish, but low trading volume on the HCM City Stock Exchange suggested dampened investor enthusiasm.


Gains by major shares like insurer Bao Viet Holdings (BVH), Masan Group (MSN), Vietcombank (VCB) and PetroVietnam Finance (PVF) were largely driven by foreign investors, noted Nguyen Thanh Binh, head of analysis for a Ha Noi-based securities firm.


Foreign investors, who were net buyers of 1.5 million shares overall on both exchanges, worth a net of VND58.2 billion (US$2.8 million), accounted for over 90 per cent of trades in BVH and over 96 per cent of activity in MSN shares, Binh said.


"However, the rally in blue chips wasn't enough to attract local investors," he said, noting low volume by the order matching method of just 37.3 million shares, worth VND920 billion ($43.8 million).


The total volume of trades was a more respectable 57 million shares, worth VND1.5 trillion ($71.4 million).


On the Ha Noi Stock Exchange, the HNX-Index fell for the second day, losing a quarter of a percentage point to close at 112.64 points. Volume was lower than Wednesday's at 41 million shares, with a value of VND833.4 billion ($39.7 million).


PetroVietnam Construction (PVX) was the most-active share, with 10 million traded.


Analysts of Stoxplus Corporation expected sluggish trades in the final session of the year today due to holiday sentiment and market uncertainty.


Au Viet Securities Co analyst Dang Lan Huong blamed the low volume on the fact that commercial banks temporarily paused lending against securities collateral to review the books at year-end.


The markets will be dark on Monday for the New Year holiday, but trading will resume on Tuesday.


State Bank goes after counterfeit currency


The State Bank of Viet Nam (SBV) has approved a project to prevent the circulation of counterfeit money.


The VND10 billion (US$500,000) two-phase project will also help raise awareness among the public about security features on bank notes and how to identify counterfeit money.


In the first phase from 2010 to 2012, the project will focus on training banking staff, producing documents on the issue and conducting surveys.


In the second phase from 2013 to 2015, the project will provide further training to banking staff as well as treasury accountants and cashiers.


The project will also be broadcast through the mass media, with instructions on what to do if someone passes fake money and the methods counterfeit money dealers use to help prevent circulation in banks and the market.

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