Steel prices to continue rising

Domestic steel prices are expected to continue increasing due to high input costs and economic conditions, including high interest rates and fluctuating foreign exchange rates.

Viet Nam Steel Association chairman Pham Chi Cuong said the price of materials, including iron and coal, was also likely to continue rising.

Cuong said the price of finished steel products was expected to increase by 0.6-0.7 per cent due to higher price of electricity. He said a 30 per cent cut in electricity volume at present had reduced steel production and forced producers to import pig iron to meet domestic demand.

Steel was currently VND17-19 million (US$795-889) per tonne. However, the price would not increase much in the future because if the new price was too high, the sales of steel products would reduce, Cuong said.

Viet Nam was estimated to produce 6.7 million tonnes of steel for this year, 4.2 per cent higher than last year, said the Ministry of Industry and Trade. Meanwhile, the demand for steel ingots was expected to be 6 million tonnes. Viet Nam was expected to be able to produce only 60 per cent of that total, and would have to import a further 2 million tonnes.

In the first two months of this year, member companies of the association produced 850,000 tonnes of steel, 25.1 per cent more than the same period last year.

Ministry urges protections for consumers

The business community, consumers and Government agencies should work together to create a fair, competitive business climate that acknowledges consumer rights, an official from the Ministry of Industry and Trade said.

Addressing a workshop on consumer rights in HCM City yesterday, Deputy Minister Le Danh Vinh said the Law on Consumer Protection passed by the National Assembly in November said the entire society should be aware of the importance of consumer rights.

“Consumers have their own power. The case of the lawsuit against the (Taiwanese MSG producer) Vedan is a clear example,” he said, adding that consumers could have forced an earlier resolution if they had refused to buy the company’s products.

Instead, lawsuits were filed and the company offered compensation to farmers affected by the pollution caused by the company’s illegal discharge of untreated waste water in a river.

Currently, the ministry is drafting two decrees guiding the implementation of consumer protection laws and compliance policies as well as a governmental regulation on protecting product trademarks.

Vinh said consumers should read product labels and get invoices in case they wanted to file a complaint later. Businesses must ensure that they were offering good products to consumers, he added.

Bui Duy Duc, chairman of the HCM City Association of Businesses, said that consumer protection also benefited businesses themselves because purchases resulted in profits.

Duc said businesses in the association were being encouraged to produce quality products.

According to its deputy director Le Thi Dao, the HCM City Department of Industry and Trade is making concerted efforts to prevent the sale of fake products in the city market, and is continuing its price-stabilisation programme on essential goods.

The workshop was organised by the ministry and the Multi-lateral Trade Assistance Project on the occasion of World Consumer Rights Day on March 15.

Conference seeks to tap rural retail potential

Experts discussed potentials and challenges in Viet Nam’s retail market and shared ideas on developing an effective local distribution system at a conference in HCM City yesterday.

Ly Truong Chien, an economics expert, said Viet Nam had a large young consumer market mainly targeted in urban areas that account for only a quarter of the population.

While rural sales have grown by 30-40 per cent annually, the major potential still lies in retail sales in rural areas, where 74 per cent of the population live.

Vu The Du, managing Partner of the Beautiful Mind Consulting and Athena Consulting, said total revenue from the retail sector last year reached US$78 billion.

Revenue from modern trade channels occupied 24 per cent of the total, Du said, noting there were still many opportunities for investors in modern trade channels in Viet Nam, especially in untapped rural areas.

The retail sector might have achieved very strong growth in recent years, but it was much less than its potential, Chien said.

He blamed the absence of development strategies of local producers and distributors, loose collaborations among producers and distributors and a lack of patience and determination. Human resources especially at the management level were another problem, Du said.

Ly Quoc Hung, supply chain director of Nuticooking Company, said road and port infrastructure inadequacies continued to thwart distribution.

Chien called on local producers and distributors to invest more in market research as consumer demands change quickly.

“Businesses should objectively evaluate their situation, their own strengths and weaknesses to draw up an appropriate development strategy, not just copy other strategies that were successful.”

Producers and distributors also need more communication lines to agree on a common goal, Chien said.

“Most producers in Viet Nam are small-medium sized enterprises, therefore businesses in the same sector should co-operate to develop a general distribution system to reduce cost,” he added.

At the conference organised by the Viet Nam Supply Chain Insight, representatives from Jebsen & Jessen Communication Viet Nam Company and Business Solution Netika Viet Nam Company made presentations on IT solutions to more than 130 local producers and distributors.

Clearer policy on land values needed

The Government should establish one land price instead of the two at present – one set by State authorities and the other by the market, delegates to a conference agreed in Ha Noi yesterday.

The conference was held by a committee set up to review and modify the 2003 Land Law and the municipal People’s Committee. It collected ideas from agencies in the city and neighbouring provinces.

In a speech to the gathering, the Minister of Natural Resources and Environment, Pham Khoi Nguyen, said the Government had produced more than 65 documents guiding the implemetation of Land Law.

“The law has helped improve land use and management in the nation – and in the capital in particular,” Nguyen said.

However, deputy director of the city’s Natural Resources and Environment Department Nguyen Huu Nghia said there were difficulties in implementing the law as land policies were not unified.

This slowed down compensation, resettlement and land clearance in the city.

Nghia said this had driven up land prices.

He suggested the Government stipulate a framework for calculating land prices which could be used for three to five years.

He said this would create more land stability as well as save money to adjust them every year.

“The price frame should be updated and supplemented according to market changes,” he said.

Sharing his idea, head of the city’s Land Clearance Steering Committee Nguyen Duc Ben said the law should define the difference between land ownership and land-use rights to avoid illegal land occupancy.

“People should have to demonstrate that their land is being legally used, as many households encroach on public land, lakes and roads, especially in rural areas, and then ask for compensation when asked to shift,” he said.

He said up to 80 per cent of the total cost of a project could be dramatically reduced if there was a clear policy on withdrawal.

Lam Anh Tuan, vice chairman of the Hai Ba Trung District People’s Committee, said there were numerous complaints relating to land clearance.

“The city should solve this matter to encourage investors,” Tuan said.

Banks ordered to provide public forex services

The State Bank of Viet Nam has asked credit institutions licensed to provide foreign exchange services to sell foreign currencies in cash to citizens.

According to Document 2033/NHNN-QLNH sent to commercial banks last Saturday, the central bank’s Governor Nguyen Van Giau called on commercial banks to help citizens, who have a legal demand for foreign currencies, open international debit and credit cards for spending money abroad.

The document was issued once the black foreign currencies market halted operations last week, posing a challenge to citizens in need of other currencies.

According to regulations aimed at tightening control over foreign exchange activities, people in need of foreign currencies for legitimate purposes can buy at commercial banks.

However, many individuals complained that commercial banks have refused to sell in cash.

This was caused by banks’ foreign currency supply shortages.

Cash transactions were also more costly for the banks to process.

The SBV is now also considering several solutions to make it easier for individuals to purchase foreign currencies at reasonable prices from banks in an effort to get rid of black market operations all together.

Tran Phuong Binh, general director of DongA Bank, said the bank’s Viet Nam dong deposit increased by VND10 billion last Friday, while US dollar deposits fell by $500,000.

People withdrew and sold dollars, and deposited money in dong to cope with the tighter forex market. Meanwhile, a leader of Eximbank said dollar deposits had increased sharply in recent days, but the demand for dollar loans had not risen correlatively.

The bank had to adjust the dollar deposit rate down from 5.5 per cent to 5.35 per cent per year early last week.

The State Bank denied a rumour that it would tighten the forex market by asking individuals to specify the legitimate origin of their foreign currency.

Because of the rumour, more people began selling dollars to store dong, and others were depositing dollars into banks to avoid being penalised or having their money seized.

Orient Bank unveils online services

The Orient Commercial Joint Stock Bank yesterday unveiled internet banking services at all of its 80 branches and transaction offices.

Customers can make payments and money transfers and also obtain information about their accounts online by accessing http://ebanking.ocb.com.vn.

Sabeco launches second brewery

Sai Gon Beer Company (Sabeco) has opened the Sai Gon-Song Lam Beer mill in the central city of Vinh, following a year of construction.

The mill, Sabeco’s second plant, has an investment capital in the first phase of VND1 trillion (US$46.5 million).

Logistics services open Vung Tau office

Global logistics provider Agility has opened a new branch office in Vung Tau and relocated its Ha Noi office to a new, larger facility.

The company’s main focus is logistics support for the oil and gas industry via trade lane management, customs clearance charters, material management, export compliance analysis, rig management and other related supply chain management solutions.

The HCM City office would remain the headquarters for Agility’s operations in Viet Nam, Cambodia and Laos and continue to offer a wide range of logistics services, said regional managing director Michel Khaou.

Israel, Viet Nam boost co-operation

An Israeli agricultural technology delegation will hold official talks with the Ministry of Agriculture and Rural Development on hi-tech agriculture and opportunities for co-operation today in Ha Noi, as part of a two-day visit that started yesterday.

The delegation will also meet with the Investment and Trade Promotion Centre of HCM City and the Viet Nam Chamber of Commerce and Industry.

The visit is expected to create a good chance for the two countries to strengthen co-operation and exchange.

Garment maker Vinatex woos Taiwan investors

The Viet Nam Textile and Garment Group (Vinatex) will send a delegation to Taiwan next month to draw investment to the new Bao Minh Industrial Zone in Nam Dinh.

The delegation will work with around 50 businesses from the Taiwan Association of Computational Mechanics, the Taiwan Textile Federation and other makers of farm processing products and consumer goods. The delegation expects to sign three contracts worth US$2-3 million each with Taiwanese counterparts.

Rising world food demand to lift exports

Increasing demand in overseas markets will push the value of Viet Nam’s fruit and vegetable exports up significantly this year, the Vietnam Economic Times reports.

Nearly 50 per cent of Vietnamese fruit and greens exports are to the Chinese market where demand for these products are rising.

The consumption of fruits and vegetables in other markets in the world was also expected to increase sharply in the 2010-15 period, the report said.

Viet Nam’s fruit and vegetable export revenues were estimated at more than US$471 million last year, 7.4 per cent higher than the previous year. Fresh and processed fruits accounted for the majority of the total revenue, taking up 36.6 per cent of the 2010 export value. They would continue to be the major export products this year, said the Viet Nam Fruit and Vegetable Association (Vinafruit).

Dragon fruit was the most exported product, posting revenues of $58 million in 2010, an increase of more than 70 per cent over the previous year. Last year, a large number of dragon fruit growers in Viet Nam received Global GAP and EU GAP certification which has boosted exports of their produce.

Vegetable exports, meanwhile, were valued at more than $94 million last year, accounting for 25 per cent or so of the total fruit and greens exports.

Last year also saw a remarkable increase in export value of flowers, nearly 40 per cent higher than in 2009.

The export value of Vietnamese fruits and vegetables to the Chinese market, mostly fruits, reached $235 million last year.

Japan is the second biggest market behind China for Vietnamese fruits and greens. Export revenues from this market reached $54.5 million, over 26 per cent higher than 2009. The export volume of fruits and greens to the Japanese market has been increasing every year by at least 10 per cent since 2007. More than 20 new varieties of fruits and greens have been added to the exports list to this market since last year.

Meanwhile, export revenues to the US last year topped $26 million, making it the fifth biggest consumer of Vietnamese fruits and vegetables after China, Japan, the Netherlands and Russia. In recent years, the US has been importing more fresh produce rather than canned products from Viet Nam.

The US would import 1.2 million tonnes of fruits each year in the coming years, according to the Food and Agriculture Organisation. This means Viet Nam has a big chance to boost exports to this market, the Vietnam Economic Times said, adding that it was necessary for Vietnamese firms to have a long term strategy to improve exports to the American market.

Shrinking land for cultivation and disadvantageous weather conditions all over the world would result in increased prices of fruits and vegetables in the international market, the report cited local firm Vinafruit as saying.

The EU and other developed countries will remain the biggest consumers of fruits and greens in the coming years, with the former increasing its imports of vegetables by 1.8 per cent a year. Their demand for tropical fruits was expected to grow faster, at 8 per cent a year, the report said.

Agricultural processors lack credit to buy raw materials for production

The shortage of capital in the country is now affecting the agricultural sector.

A report from the Viet Nam Cashew Association said although several companies’ operational capacity had doubled, domestic raw cashew volume was not predicted to increase this year.

Cashew companies are importing raw cashews to meet the sector’s demand. The sector needed about VND10 trillion (US$476 million) to buy raw materials from farmers and VND12 trillion ($571 million) to import the needed cashews, the association said.

In the past, a company could import 5,000 tonnes of raw cashew with VND100 billion ($4.7 million), said chairman of the Viet Nam Cashew Association Nguyen Thai Hoc, which was not the case anymore due to inflation.

Chairman of the Viet Nam Coffee and Cocoa Association Luong Van Tu said foreign companies were pouring money into their sector to buy raw material in Viet Nam because the price of the commodity was cheaper here than on the world market.

Agriculture companies that export their products said that they also needed capital to buy raw materials.

If the companies do not have enough money, then their material will be sold to foreign companies in Viet Nam.

Meanwhile, bank loan limits for agriculture companies this year has not been readjusted.

Do Ha Nam, an official from Intimex Import-Export Joint Stock Company in HCM City, said this year due to the higher price for many agricultural products, capital demand from agricultural companies was two to three times higher than in the past.

The price of coffee on the domestic market nearly doubled this year, standing at about VND49 million ($2,300) per tonne. Pepper prices increased three fold and the price of raw cashews jumped by 150 per cent.

M&A deals thrive despite market slump

While the stock market has been in a sustained slump, merger and acquisition deals continue on the rise.

Late last month, Germany’s ERGO Insurance Group acquired a 25-per-cent stake, or 10 million shares, in the Vietnamese non-life insurer Global Insurance Company, forming a strategic partnership.

The deal was worth VND380 billion (US$18.1 million) and attracted substantial media attention at a time when other insurers were having difficulties in selling stakes or increase their charter capital as requested by the Ministry of Finance.

Also at the end of February, the Viet Nam Post Corporation invested in the Lien Viet Bank by using charter capital from it subsidiary Viet Nam Postal Savings Service Co, valued at VND163 billion ($7.8 million).

After the deal, the bank changed its name to Lien Viet Post Commercial Bank and its charter capital is expected to increase to VND5 trillion ($238.1 million).

Other significant deals include leading distiller Diageo’s purchase of a 23.6-per-cent stake in the Ha Noi Liquor Joint Stock Co (Halico). The deal, worth $51.6 million and to be complete by the end of June, is expected to boost Diageo’s presence in Viet Nam’s growing drinks market.

Analysts said the trend of both foreign and domestic institutional investors buying into profitable enterprises would continue this year, as these investments would allow new partners to get involved in companies’ corporate restructuring, making them more valuable, and enabling them to maximise profits after they list on the stock market.

Shares of all of the targeted companies in these deals are traded on the OTC market and are considered sound shares with high liquidity.

Villages urged to prevent illegal logging

The legality of timber and wood products should be promoted to curb illegal logging, according to a meeting in Ha Noi yesterday. The conference, held by the Forest Legality Alliance (FLA) and people and

Nature Reconciliation (Pan Nature), also called for concerned agencies, including the Government, businesses and households, to ensure that only legal timber is used.

To Xuan Phuc, a programme analyst from Forest Trends, an international non-profit organisation promoting sustainable forest management, said the Vietnamese wood sector had been challenged by the new regulations in the big export markets, including the EU Forest Law Enforcement, Governance and Trade (FLEGT) Voluntary Partnerships Agreement and the US’s Lacey Act.

He said the regulations could affect Viet Nam’s wood business as they asked companies exporting wood products to Europe and the US to provide documents proving that all timber was legally logged. Documents must state the timber’s scientific name, the quantity being exported, the import value, the country of origin or come with an EU FLEGT certificate.

Companies found selling products made from illegitimate timber sources would face severe penalties, such as confiscation of the goods, heavy fines or possible jail time for involved parties. “Eighty per cent of wood materials used for Viet Nam’s exported wood products were imported from 600 different resources in 26 countries and territories, equivalent to 4 to 5 cu.m annually or US$1 billion. The huge amount of imported material makes it difficult for the country to control the origin of the wood,” he said.

Andrea Johnson from the FLA said illegal trading and exploitation of wood had been on the rise globally, and was becoming a serious issue affecting climate change. She said illegal exploitation undermined forest management and harmed communities.

“Around $10-15 billion is lost annually due to the illegal exploitation of wood. Illegal logging and trade has also generated conflicts, abused people’s rights and even incited violence,” she said.

According to Johnson, volunteer policies were not enough to prevent the situation, prompting countries to create a legal framework, such as the Lacey Act Amendments of 2008 in the US and the EU Illegal Timer Regulations 2010.

Nguyen Hai Ly, an advisor from the European Forest Institute, FLEGT Asia to Viet Nam, said the EU Timber Regulation, aimed to ensure that no illegal timber is sold in the EU market, required companies to verify the origin of all wood.

“Viet Nam has been one of six countries participating in negotiations with the EU about the regulation to set up controls and licensing systems providing governments with guarantee of legality,” Ly said.

Phuc from Forest Trends said the Government had striven to complete negotiations with the EU on the Volunteer Partnership Agreement to prepare for the Lacey Act and the FLEGT, which take effect in March 2013. Viet Nam Timber and Forest Product Association’s Secretary General Nguyen Ton Quyen said wood exporting businesses should consider using material-saving technologies, which could save 15 per cent of wood materials annually.

“It is necessary to reduce input costs, including production lines, improving capacity and power-saving,” he said.

Viet Nam has 13 million hectares of forests, covering 39.1 per cent of its land. And it now has over 3,000 businesses that process and export wood products.

Last year, Viet Nam exported wood products to 26 countries and territories with a turnover of $3.4 billion. Its products have been sold in 120 countries and territories, with the US, the EU and Japan being the three biggest importers.

New rules outline ratio of charter capital in State-owned enterprises

The State will hold 50 per cent of the charter capital of power production companies with minimum capacity of 500MW instead of 100MW in accordance with the new requirements.

This is one of the regulations stated in Decision 14/2011/QD-TTg that was signed by Prime Minister Nguyen Tan Dung, which stipulates the ratio of charter capital that the State will hold in State-owned enterprises (SOEs).

Under the decision, the State will hold 100 per cent of charter capital in enterprises operating in sectors involving national defence and security and in military/economic enterprises that are located in strategic and/or remote areas. The State will also hold 100 per cent of charter capital in enterprises managing infrastructure systems such as the national railways, urban areas, airports, important and large-scale seaports and television stations.

Dung asked ministries, ministerial-level agencies, People’s Committees of provinces and centrally-governed cities, economic corporations and groups set up under the PM’s decisions to continue classifying and re-arranging their one-member limited liability companies, before reporting to the Prime Minister for approval.

The decision will become effective on April 20.

Pham Duc Trung, deputy head of the Enterprise Committee under the Central Institute for Economic Management, said State-owned groups and corporations would be more active in selecting affiliates which would be equitised.

However, it also puts pressure on the groups and corporations because these enterprises are required to complete and submit their plans concerning corporate renewal and equitisation to the Prime Minister for approval during the second quarter of the year.

Enterprises that the State will hold 50 per cent of their charter capital include businesses that produce public products like media outlets, lighting companies and agro-businesses.

The State will hold 50 per cent of stake in businesses that play a key role in ensuring the stability of the national economy; stabilising markets such as electricity; exploiting minerals, coal, bauxite, copper, iron, tin, gold and precious stones; producing more than 500,000 tonnes of pig-iron and steel per year; and companies that provide financial, credit and insurance services.

Italian quality systems assist farm-food firms

Italian and local experts in food hygiene and safety management are comparing notes on quality systems in the agro-food sector at a two-day training seminar which opened in HCM City yesterday.

Organised by the Italian Trade Commission, Italy’s official trade promotion agency, it is meant to enhance the capacity of local agricultural, veterinary, food-testing and other authorities to guide and supervise the upgrade process in the country and perform their day-to-day tasks.

“The seminar aims at creating a foundation for co-operation between Italy and Viet Nam in quality systems in the agro-food sector, an area that is crucial to both countries,” Marco Saladini, the Commission director, said.

“Italy possesses know-how relevant to Viet Nam at this stage of its industrial development, both in terms of the understanding of the biological features of the materials to be processed and of the equipment to correctly process food.”

In HCM City, there are 59,952 facilities producing and trading foodstuff, according to Pham Viet Thanh, director of the Department of Health, and they meet only 15-20 per cent of the city’s needs.

Nearly 30 per cent of them lacked food safety and hygiene certificates, he said.

Besides, most were small operators, making it difficult for them to ensure food hygiene and safety, Thanh said.

However, the shortcomings in the food management system is also owed to the shortage of trained official. he said. A similar seminar will be held in Ha Noi on Thursday and Friday.

Transport cuts made to ease inflation

The Ministry of Transport has pledged to cut down public investment to rein in inflation and ensure macro-economic stability.

Minister Ho Nghia Dung said half of the transportation projects that use Government bonds would be reduced this year, which means about VND11 trillion (US$523 million) would be funnelled into key, urgent projects and those set for completion this year.

Earlier, between VND20 trillion and VND25 trillion ($952 million-$1.1 billion) in Government bonds were expected to be disbursed to this year’s projects.

Dung said the ministry had also slashed about 10 per cent of its regular spending in response to a Government appeal urging ministries, departments and local governments to enforce Resolution 11 to curb inflation and stabilise the economy.

He shared this information in an online forum titled “Transport sector needs synchronous measures for rapid and sustainable development” on the Government website in Ha Noi yesterday.

The minister said measures would be taken to help enterprises stabilise and develop their businesses, as would measures to slash investment in public projects.

“The ministry will try its utmost to support enterprises in the current difficult context,” said Dung.

He said the ministry would focus on speeding up land clearance for projects that were not postponed. It would also work to improve the management abilities of project board, post-check fund disbursement and make it easier for enterprises to get building materials ready.

Dung affirmed the Party and the Government’s consistent policy to mobilise individuals and organisations to help encourage foreign and private enterprises to invest in transport infrastructure.

“This is increasingly meaningful in the face of cutting down public investment,” he said.

Viet Nam has a series of measures to promote the implementation of BOT (build, operate, transfer) and PPP (public-private partnerships) projects. Dung revealed that the Government had recently assigned the Ministry of Transport to build a legal system in line with Vietnamese law and international rules.

“The framework will be important for attracting investment,” he said.

He said loans with preferential interest rates were needed and the time alotted to refund the principal should be adjusted.

Dung said the ministry would raise the number of BOT projects to between 30 per cent and 35 per cent of the total transportation projects this year and the next year to compensate for the deficiency in the State budget.