BUSINESS IN BRIEF 10/2
Forestry, fishery exports to hit $40b by 2020
The country's agricultural sector will export US$40 billion worth of agro-forestry and fisheries products by 2020 under a masterplan approved by Prime Minister Nguyen Tan Dung last week.
Of this $40 billion, farm produce will account for $22 billion, fisheries products for $11 billion, and forestry products the remaining $7 billion.
The plan envisages an annual growth of 3.4 to 4 per cent for the farming, forestry and fisheries sectors.
It also targets production value of one hectare of land under agricultural cultivation to reach VND70 million ($330) per year.
Dung said that in order to achieve the set targets, the area under stable rice cultivation must be maintained at 3,812,000 ha while an additional 1.1 million ha of land would be reclaimed for agricultural, forestry and aquaculture purposes.
According to figures from the General Staticstics Office (GSO), in January 2012, the country's fisheries production reached 364,200 tonnes, a year-on-year increase of 2.2 per cent.
Aquaculture production was 172,000 tonnes, up 6.5 per cent compared with the same period last year, while seafood catch dropped by 1.4 per cent to 192,200 tonnes.
Higher demand for aquaculture products during the Tet (Lunar New Year) festival season had given the sector a boost, the office said in a report.
According to the Ministry of Agriculture and Rural Development, Viet Nam exported agro-forestry and fisheries products worth $25 billion last year, a year-on-year increase of 27.9 per cent.
Of this, the export of agricultural produce reached $13.7 billion, up 33.2 per cent; fisheries, $6.1 billion, up 21 per cent; and forestry products $4.1 billion, up by 12.7 per cent compared with 2010.
The value of Viet Nam's agroforestry and fisheries exports for last month is estimated at $1.8 billion, a year-on-year drop of 16.3 per cent.
The country exported 400,000 tonnes of rice worth $240 million in January, a year-on-year decrease of 25.4 per cent in volume and 14.2 per cent in value.
Coffee export amounted to 170,000 tonnes worth $350 million in January, a decline of 20.9 per cent in volume and 15.3 per cent in value compared with last year.
The country exported 4,000 tonnes of pepper worth more than $30 million last month, up 29.1 per cent in value over the same period last year.
It also shipped $370 million worth of seafood products in January.
January's rubber export is estimated at 60,000 tonnes.The country's total agro-forestry and fisheries export is expected to rise from $40 billion per year in 2020 to $60 billion by 2030, according the masterplan.
Shares slide on both bourses
Shares lost ground for an overwhelming majority of sellers. On the HCM City Stock Exchange, the VN-Index shed 1.55 per cent, finishing 405.02 points.
Losers largely outnumbered gainers by 185-57.
Market value edged down 8.7 per cent against yesterday's level, totalling VND704.6 billion (US$33.5 million) on a volume of 49.9 million shares.
The VN30 today retreated 1.4 per cent to 458.23 points. The index gained, however, 8.82 points over its debut session's preference price.
Of the 10 leading shares by capitalisation, only Phu My Fertiliser (DPM) and Sacombank (STB) managed to advance by 1.8 and 3.8 per cent, respectively.
Phu My Fertiliser last year profited around VND3.1 trillion ($147.6 million), increasing 82.2 per cent over 2010. In addition, headlines appearing this morning showing Phu My Fertiliser's mother company – oil and gas giant PetroVietnam – proposing the Government allow its subsidiary to have exclusive rights to distribute Ca Mau Fertiliser.
Meanwhile, there were rumours that the Ha Noi Stock Exchange listed Asia Commercial Bank (ACB) would appoint its CEO to manage Sacombank.
However, on the Ha Noi Stock exchange, ACB slid 1.7 per cent to VND23,200 per share.
Trading value on the northern bourse reached only 77.5 per cent of yesterday's session, standing at VND344.5 billion ($16.4 million), as the volume of trades dived 19 per cent to 45.7 million shares.
Habubank (HBB) was still the most active stock with some 6.2 million shares changing hands.
Banking shares help lift market
Stocks gained slightly on the HCM City Stock Exchange yesterday, with the VN-Index edging up by 0.45 per cent over the previous day's session to close at 411.39 points.
The value of trades jumped 20.8 to a total of VND771.5 billion (US$36.7 million), while volume rose by 15.5 per cent to 51.5 million shares.
Of the 10 leading shares by capitalisation, Sacombank (STB) hit its ceiling price, while Eximbank (EIB), software giant FPT, food processor Masan Group (MSN) and Vinamilk (VNM) all posted gains. Others in this group lost value or closed unchanged.
The four-day-old VN30 index, which tracks movements of a basket of leading shares, added 0.8 per cent to close at 464.73. The 30 stocks accounted for VND365.5 billion ($17.4 million) worth of the day's volume. Three banking stocks – Military Bank (MBB), EIB and STB – were most favoured by investors, each with 3.8 to 4.1 million shares exchanged.
On the Ha Noi Stock Exchange, the HNX-Index edged up 0.13 per cent, concluding the session at 63.82 points. Profit-taking boosted volume by 37.6 per cent to 56.4 million shares, while value reached VND444.3 billion ($21 million).
Habubank (HBB) emerged as the most-active share nationwide with around 9.2 million traded.
The nine listed commercial banks on both bourses have all released their 2011 financial statements, showing profits up an average of 35 per cent from 2010. Deposits in these listed banks as of December 31 totalled over VND915 trillion ($43.57 billion), up 18 per cent over the previous year.
Notably, HBB was the only bank that profited from securities investments, reporting gains of over VND385 billion ($18.3 million). Its profits were comparable to the previous year's but it held the dubious honour of the highest rate of bad debts among the nine banks – 4.7 per cent.
But the allure of HBB shares to investors was their low price. Buy orders at VND5,000-10,000 per share occupied much of yesterday's session.
Foreign investors continued to be net buyers on both exchanges yesterday, picking a combined net of VND79 billion ($3.76 million) worth of shares.
Trade deficit hits $100m in January
The country's trade deficit rose to US$100 million in January, accounting for 1.54 per cent of the total export value, the Ministry of Industry and Trade (MoIT) reported yesterday at a press conference in Ha Noi.
Total export value during January was at $6.5 billion, down 11 per cent against the same period last year.
Deputy Minister of Industry and Trade Nguyen Nam Hai attributed the low figure to an extended Tet holiday along with the global economic slowdown and tightened-belt policies of the countries in the world.
Of the total value, local companies exported $2.27 billion last month, a 33 per cent year-on-year decrease. However, foreign-invested firms earned $4.23 billion from exports, up 7.9 per cent. This partly helped ease the downturn in export turnover. Handphones and spare parts exports by foreign companies were especially strong earners.
However, the export values of most commodities decreased sharply. Rice exports suffered the biggest fall (at 53 per cent), while minerals, coffee, cassava and coal fell by about 40 per cent.
In contrast, export turnover of steel and iron products increased by 24 per cent, while vehicles and spare parts exports rose by 21 per cent.
Exports to almost all markets, including Asia, the EU, the Americas, Africa, Japan and China, decreased. Exports to the US showed the largest downturn of 14 per cent.
Viet Nam imported about $6.6 billion in January, of which Vietnamese firms saw $3.1 billion in imports, down 35 per cent against the same period last year, while foreign companies spent $3.5 billion on imports, up 5.2 per cent.
Imports of raw materials, accessories, machinery and equipment for the oil and gas industry, textile and garment sector and steel manufacturing saw decreases of between 25 per cent to 56 per cent. However, Viet Nam spent more on importing wheat and milk products.
Hai said the global economy would continue seeing volatility and the ministry would bolster trade promotion activities to meet targets on narrowing the trade deficit this year.
"The deficit was at about $10 billion last year, which was the lowest rate for the past decade," he said.
Analysts savour seafood shares
A lot of securities analysts have recently given a vote of confidence to shares of seafood processors, saying they were less affected during the global economic slowdown. Fisheries also enjoyed easier access to credit, and the weak domestic currency against the US dollar was a benefit to the export-focused industry.
Over the past month, seafood stocks have bucked prevailing market trends, posting sustainable gains. Most stocks rose sharply, ranging around VND20,000-30,000 (US$1-1.40) per share.
Twenty-six seafood firms are listed on the nation's two stock exchanges, and the Hai Viet Corp and Da Nang Sea Product Import-Export Co are traded on the unlisted public company market (UPCoM). Remarkably, 12 listed seafood companies were rated among the 500 largest private enterprises in a November report, with Minh Phu (MPC) and Hung Vuong (HVG) in the top 50.
Recent earnings reports from many of these companies have marked highlights in revenue and profit growth over the past year. Cuu Long Fish (ACL), Anvifish (AVF), Ngo Quyen Processing Export (NGC) and Hung Vuong posted growth between 90-227 per cent. Notably, Nam Viet (ANV) enjoyed an astounding 1,228-per-cent increase in net profit.
Overall prospects for the sector this year are positive thanks to reviving demand in export markets like the US and Japan, An Binh Securities Co analysts said. Nevertheless, they warned that input costs and borrowing cost have continued to affect the sector, taking a bite out of the profits of half of the listed companies. Profits of Ca Mau Frozen Seafood (CMX) and Gentraco Feed (GFC) dropped 481 and 513 per cent, respectively, while Basaco (BAS) and Cadovimex (CAD), after two consecutive years of losses, were highly likely to delist this year.
Among the 12 leading seafood firms, Vinh Hoan continued to lead in tra exports, with aUS$135 million turnover in the first 11 months of last year. The company currently feeds fish on 200ha, meeting about 50 per cent of its demand. Ninety hectares meet Global Good Agricultural Practices standards. The company's net profit last year topped VND337 billion, up over 80 per cent over 2010.
The US is the target market for Vinh Hoan, and the company became the second one in the world in October to receive the Best Aquaculture Practice certificate from the US' Global Aquaculture Alliance. Vinh Hoan also has an opportunity to become the first Vietnamese seafood processor to be withdrawn from the ongoing US anti-dumping case, expected to finalise after the seventh period of review next month.
Vinh Hoan has also invested VND121 billion (around $6 million) into two subsidiaries operating in rice processing and trading.
A number of enterprises in the sector have also tempted investors with high dividends. After paying a 25-per-cent cash dividends last year, Cuu Long Fish recently announced it would pay an additional 20 per cent more – placing it alongside Ben Tre Aquaproduct Import and Export Co as the company with the highest dividend rate among seafood companies.
On the other hand, investors are concerned about Hung Vuong. Although sales have increased in recent years, the company's profits have been unstable. Overhead has increased four-fold to VND132 billion, mainly due to the company's provision for bad debts owed by foreign clients, and the debts have continued to increase. This has adverse impacts not only on profits but also on cash flow.
Late last year, the seafood processor was also the subject a rumour that Saigon Securities Inc (SSI) was planning a takeover. However, Hung Vuong chairman Duong Ngoc Minh increased his stake to 34.78 per cent – saying that he did so not for fear that SSI would acquire the company but because "it was part of the plan" he had every year.
Danang port receives many cargo and passenger ships after Tet
40 cargo ships and 11 passenger ships have docked at Danang port in central Vietnam since early this year.
Last year, its total cargo handling rose to 114,400 TEU (twenty-foot equivalent unit), up 28 percent from a year earlier. In January alone, the port handled 336,443 tonnes of cargo and received 11 cruise ships with more than 11,700 passengers on board.
With the opening of additional routes, the port expects to handle 60 percent of Vietnam’s total container cargo by 2015 and 80-85 percent by 2020, thus turning itself into a modern cargo port in the future.
In its socio-economic development plan, Danang aims to build a regional centre for logistical for services in Danang by connecting transport links to distribute transit goods to the north, the south, and the central highlands, the southern region of Laos, and the northeastern region of Thailand.
The transportation of goods from the southern region of Lao to the northeastern region of Thailand through the port increased by 4-5 percent and is expected to make up 10 percent of the total volume in the 2012-2015 period and then 20 percent after 2015.
In 2012, the port will mobilize all resources to push through administrative reform and improve management skills and services.
In 2012, the port city strives to handle 4.1 million tonnes of cargo, of which container cargo reaching 135,00 TEU, receive 50 passenger ships to become an ideal and attractive destination for cruise ships around the globe.
Difficult to lower short-term lending rates of interest
Many Vietnamese businesses are gathering their strength to overcome difficulties after more than one year of facing high lending interest rates.
There are high hopes among the business community that commercial banks will lower interest rates in the near future.
The government’s tight monetary policy which aimed to curb inflation last year, however, led to a sharp decrease in cash and credit transfers.
Despite the declining rate of inflation from July to late 2011, great pressure continued to bear upon businesses as they had to struggle with high production costs.
According to the Ministry of Planning and Investment (MoPI), by September 2011, nearly 49,000 businesses had either suspended operations without further ado on tax payment or declared themselves bankrupt.
In more than one year of facing high interest rates, businesses had to make do with the difficult situation by carefully considering their financial and business plans with a focus on highly competitive products to make a quick return on investment in the domestic market.
To help businesses through hard times, the government has adopted a tax relief policy. Many domestic businesses are expecting declining interest rates on bank loans so that they can boost production and create more jobs for workers.
From late 2011 to early 2012, a continuous fall in the inflation index made it possible for banks to lower their interest rates sooner or later.
Regarding the 2012 roadmap for lowering interest rates, the Governor of the State Bank of Vietnam (SBV), Nguyen Van Binh, says there are certain advantages in lowering interest rates this year when the consumer price index (CPI) has gradually dropped to below 1 percent as from last August, showing a positive sign of inflation being under control.
Lowering interest rates should go along with other efforts to help ensure banks’ liquidity and rein in inflation, Mr Binh noted.
Over the past ten years, the Vietnamese banking system has developed strongly with its annual credit growth rate rising from 29.4 percent to 33 percent in 2010. However, some credit organizations have used up to 60-70 percent of their capital to fix medium and long-term interest rates on mobilized loans, even exceeding the SBV regulated level of 30 percent. Consequently, after the SBV moved to control inflation, many banks were put in a fix to ensure liquidity.
As the problem of liquidity can not be solved overnight, it is no easy task to lower interest rates.
Sharing his view with the SBV Governor, Dr Le Xuan Nghia, Vice Chairman of the National Committee for Financial Supervision, says the rate of inflation has dropped sharply as from last July to a 10- year record low during the lunar New Year Festival (Tet).
However, a lot of work needs to be done as banks are not out of the woods yet to maintain liquidity. Therefore, the business community’s hopes for short-term interest rates to decline are still far from coming true, Nghia says.
Central zone gets new master plan
An oil refinery and a number of industrial parks will be built on a total area of 2,682ha in the South Phu Yen Economic Zone between 2015 and 2025, under a master plan approved last week by the Prime Minister.
The plan covers the South Phu Yen – Northern Khanh Hoa region, which totals 351,500ha in the central province of Phu Yen Province's three southern districts of Song Hinh, Dong Hoa, Tay Hoa, and the two northern districts of Van Ninh and Ninh Hoa in Khanh Hoa Province.
The region is a gateway to the southern central coast and Central Highlands regions, by land, water and air, with the highest potential for marine-based economic development.
Under the plan, large-scale trade and service centres will be built in the South Phu Yen and Van Phong economic zones while regional urban areas such as Ninh Hoa, Ninh Sim and Hai Rieng become wholesale centres.
The region's population is expected to reach 715-725,000 by 2015 and about 840,000 by 2025. A 900-bed general hospital will be built in the southern Phu Yen economic zone along with other specialised facilities. Waterworks with a capacity of 125,000cu.m per day will also be built by 2015 to serve the economic zone.
FAO helps boost marine economy
The Food and Agriculture Organisation (FAO) will provide more than US$495,000 to extend a project to help develop the sea-based economy in the central province of Thua Thien – Hue.
On Saturday, the provincial People's Committee said the project was expected to help improve the living conditions for local people on the lagoon system through the sustainable management of aquatic resources and environmental protection.
The extended project will cover more than 22,000ha of water surface in the Tam Giang-Cau Hai region in five of the province's districts. The area is the largest salt-marsh in Southeast Asia which possesses a plentiful ecosystem and is home to thousands of species of aquatic creatures.
About 350,000 people currently make their living from the lagoon.
In 2009, the province established the 23.6ha aquatic product protection area in Phu Vang District. So far, more than 160ha are being regulated under five aquatic product protection areas in the Tam Giang-Cau Hai lagoon.
Vietnam-Brazil trade reaches over US$1.4 billion
Two-way trade between Vietnam and Brazil in 2011 hit more than US$1.4 billion, up 53.8 percent from a year earlier, according to the Brazilian Ministry of Development, Industry and Foreign Trade (MDIC).
This is the first time the two-way trade performance has exceeded US$1 billion. Brazil exported goods worth US$794 million to Vietnam and imported commodities valued at US$647 million from Vietnam.
Brazil’s key export items to Vietnam included soya beans, cotton, tobacco materials, corn, and iron. Meanwhile, Vietnam exported to Latin America’s largest economy footwear, frozen fish fillets, printer, rubber, fabric, cement, headphones, automobile tyres, electric engines etc.
According to statistics from MDIC, Vietnam-Brazil two-way trade has increased considerably since 2000, exceeding US$100 million for the first time in 2005 and US$937 million in 2010.
Garment sector short of orders
Only around 10 percent of Vietnam’s major garment businesses currently have orders for the third and fourth quarters.
This is a rather low figure compared to the same period last year when most businesses received bulk orders from their counterparts.
The Ministry of Industry and Trade (MoIT) said that the production of cotton fabric has also fallen due to the decline in export contracts and domestic consumption.
Synthetic fabric production in January decreased 22 percent and clothing exports were also down 10.9 percent.
MoIT Deputy Minister Nguyen Nam Hai said garment making and exports in January were affected by increases in labour and input costs as well as the current European debt crisis and Japan's tight budget policy.
Vietnam develops bird’s nest market in RoK
An agreement on developing the bird’s nest market between Vietnam’s Khanh Hoa Salanganes Nest Company and the Republic of Korea (RoK)’s Hellovina Company was signed at the Embassy of Vietnam in Seoul on February 5.
Among those present at the signing ceremony were Chairman of the Khanh Hoa provincial People’s Committee Nguyen Chien Thang, Vietnamese ambassador to the RoK Tran Trong Toan and other Vietnamese office representatives in the RoK.
The event was part of activities to celebrate the 20th establishment of diplomatic ties between the two countries.
In his speech, Chairman Thang said the RoK is a potential market for Vietnamese bird’s nest products and Vietnam is developing a special kind of healthy food from a combination of bird’s nest and Korean ginseng.
General Director of Khanh Hoa Salanganes Nest Company Le Huu Hoang promised to coordinate closely with the RoK’s Hellovina Company to bring more bird’s nest products to Korean consumers in the near future.
More than 279,000 tonnes of rice exported in January
Vietnam exported more than 279,000 tonnes of rice, earning over US$153 million in January, according to the Vietnam Food Association (VFA).
This is equal to half of the corresponding period last year’s rice export volume of 541,000 tonnes and value of US$282 million.
Major markets for Vietnamese rice in January 2012 were Asia and the US. Other markets in Africa, Australia, the Middle East, and the EU also imported a small volume.
The VFA said that rice exports from India and Pakistan continued to increase sharply while other exporters like Thailand, Vietnam and the US faced difficulties.
Economic experts attributed the decrease in rice export volume to long New Year holiday in Vietnam, China and India.
The price of paddy rice in the Mekong Delta region currently stands at VND5,600-5,750 per kilo.
Dinh An EZ attracts 7 investment projects
The Tra Vinh provincial People’s Committee granted licences to the Ha Long Investment Group in January for three projects worth a total of VND24.5 trillion in the Dinh An Economic Zone (EZ).
The projects include the Ngu Lac Industrial Zone, Duyen Hai urban residential area and Dan Thanh resettlement area covering more than 1,500 hectares.
Dinh An EZ has so far granted licenses to five investors for seven projects worth a total of VND116 trillion.
Four projects are now being implemented: the Tra Cu-Tra Vinh port, residential area infrastructure and seafood processing services, the Tra Vinh canal and Duyen Hai Thermo-electricity centre.
Tra Vinh province also approved investment plans and signed a memorandum of understanding for nine projects with VND111.8 trillion in registered capital on more than 4,700 hectares.
Bag exports target growth of 30 percent
Exports of bags hit more than US$120 million in January this year, up 14.2 percent compared to the same period last year.
For two consecutive years, this product has been listed among export items with more than US$1 billion in revenue.
Diep Thanh Kiet, Vice Chairman of the Vietnam Leather and Footwear Association (Lefaso), said bag exports have bright prospects for the next few years because international importers are tending to move their manufacturing work from China to Vietnam.
More than half of the 10 world-leading bag producers plan to shift their investment from China to Vietnam. If domestic businesses can successfully grasp this opportunity, invest in infrastructure and enlist technical support from importers, exports of bags will increase sharply in the future.
With export earnings of more than US$1 million in 2011, the Hanoi Leather Products and Footwear Company has achieved the highest export growth in recent years.
Its General Director Dinh Quang Bao said the bag market has seen great changes. In the past, most importers from the US, the EU and South America chose China, but now they are moving to Vietnam, providing a good opportunity for domestic businesses to boost exports.
However, domestic materials for producing bags meet just 20 percent of the demand. In addition, domestic businesses are weak in designing.
Few foreigners buying apartments in Vietnam
The Ministry of Natural Resources and Environment's General Department of Land Management reported that while overseas Vietnamese bought apartments in the country, foreigners rarely did so.
According to statistics, around 300 overseas Vietnamese and foreign individuals and organisations bought apartments in Vietnam before the Lunar New Year festival in 2012.
Vietnam has policies on selling apartments to overseas Vietnamese and foreigners that were put in place in 2008 by Resolution 19/2008/QH12 and Decree 51/2009/ND-CP.
The policies were expected to create breakthroughs in the domestic real estate market but they did not create as much interest as expected.
Experts said regulations on property trading for overseas Vietnamese and foreigners were now too strict; for example, they could own their own apartments but not their own houses.
More foreign invested projects licensed in Nghe An
The central province of Nghe An has recently granted investment licenses to a number of new foreign invested projects.
The projects include the BSE Vietnam electronics and telecommunications equipment factory invested by the Republic of Korea’s BSE Group at US$30 million with an annual output capacity of 250 million products; the Tien Phong Plastic Company factory that will produce 15,000 tonnes of plastic items each year with VND120 billion in investment capital; and a VND76 billion white stone powder grinding mill with a capacity of 45,000 cubic metres per year, invested by the Nghe An Mineral Joint Stock Company.
The province is also working on the final steps towards signing an agreement on February 5 for three investment projects in the Dong Nam economic zone invested with VND840 billion by the Thai Royal Frozen Food Company, Ltd.
Chairman of the provincial People’s Committee, Ho Duc Phuoc, said Nghe An will continue improving its business environment in 2012, in order to attract more investors.
The province will focus on the quality of projects, investors’ experience, and its local socio-economic development plan, giving priority to hi-tech projects that will create jobs for many workers, Mr Phuoc noted.
Nghe An has a number of key economic zones including Dong Nam economic zone in Vinh City and Cua Lo town in the southern part of the province, Hoang Mai industrial zone in the north, and Nghia Dan, Thai Hoa, Quy Hop and Tan Ky districts in the west region.
Border gate gets master plan
The Prime Minister has approved a master plan for the Thanh Thuy border gate economic zone (EZ) in northern mountainous Ha Giang province to 2030.
The zone is set to become a trade and tourism complex aimed at promoting international integration and socio-economic development while ensuring national security.
The EZ is expected to have a population of about 35,000 – 40,000 people by 2030, about 60 percent of whom will be workers.
Seven economic centres are also scheduled to be established, including Thanh Thuy and Lao Chai as the two largest. Tourism sites will also be developed at Lang Ping, Suu and Nam Tha springs along with the Phong Quan and Tay Con Linh protected areas.
Infrastructure development is a key focus for comprehensive development of the EZ. New roads and bridges over the Lo River will be constructed along with upgrades to the portion of National Highway 4 which goes through the zone.
The EZ spreads over an area of more than 28,700ha through seven communes in Vi Xuyen and Phuong Do districts.
Economic downturn slows auto sales
Vietnam imported 3,000 complete built unit (CBU) automobiles worth US$45 million in January, down 49.8 percent in volume and 55.1 percent in value from the same period last year, according to the General Statistics Office (GS0).
The number of imported CBU's matches last August's record low.
Industry insiders attributed the fall to economic difficulties, high lending interest rates and strict regulations on import procedures.
"The automobile market in 2012 will have no room for unofficial and small car importers," owner of Hanoi Auto Company Nguyen Van Dung said.
Officials believe Circular No 20 released last May by the Ministry of Industry and Trade which aims to re-establish order in the car import market, will put and end to car imports by unauthorised companies.
Analysts have noted that private car dealers have no other option but to shift into the used car business or change fields entirely, giving the playing field over to genuine sales agents selected by manufacturers.
"I have to sell all of my cars at discount prices and turn my auto showroom into a restaurant," said Dung, who has been selling imported luxury cars for more than 10 years.
Dung has changed the name of his 200 sq.m car showroom in Gia Lam District from Hanoi Auto Company to Hanoi Beer Auto Restaurant.
The decision by authorities in Hanoi and HCM City to increase the car ownership registration tax by five percent is another cause for the fall in CBU imports.
The country spent more than US$1 billion on 55,000 imported new cars in 2011, up 2.1 per cent in volume and 4.2 per cent in value against the previous year.
European enterprises optimistic about Vietnam’s economy
The 2012 survey on business indicators of European enterprises in Vietnam, conducted by the European Chamber of Commerce last month, showed that confidence and business prospects among European companies in Vietnam had stabilised and far more optimistic than in the fourth quarter of 2011.
The business climate index in Vietnam rose by 4 points to 56 points, reported the survey.
36 per cent of businesses participating in the survey said that they are doing ‘good’ or ‘excellent’, and showed a slight increase from 32 per cent in the previous quarter. However, this level is still much lower than 64 per cent businesses satisfied with their current business situation in the same period last year.
Moreover, 38 per cent of European companies plan to increase investment, while 31 per cent want to maintain their investment in 2012.
40 per cent of the businesses that participated in the survey belonged to the service sector, about a quarter in manufacturing and trading, and the rest in various other sectors.
Bagging an export treat
Vietnam expects a sharp rise in bag exports in 2012 amid a hostile business climate.
During 2010-2011 bags items earned $1 billion in annual export value and in 2011, the country gained more than $1.3 billion from bag exports, leaping 33 per cent against 2010. Export of bags and suitcases brought the country over $120 million in January 2012 alone, surging 14.2 per cent on-year.
Bag exports have great potential as leading bag manufacturers, currently doing processing in China, intend to move their production facilities to Vietnam, said Vietnam Leather and Footwear Association’s (Lefaso) deputy chairman Diep Thanh Kiet.
Kiet said local firms were capable of tapping this golden opportunity and taking advantage of import partners’ technical support.
In this context, TBS Group, based in southern Binh Duong province with two decades’ experience in footwear export production, has pumped $10 billion into building a bag manufacturing plant in the province’s Song Than Industrial Park in mid-2011. The plant, employing 3,000 workers and also encompassing design and sample production workshops, started production in October, 2011.
Before building the bag plant, TBS Group reportedly inked a $10 million contract for export bag production with Coach, one of five US leading bag brands. In later months of 2011, the group had shipped 20,000 bags to Coach.
Right in early 2012, the group clinched a big contract valued at $50 million for exporting 1.8 million bags to Coach in 2012.
Under TBS Group estimations, per capita revenue in the bag sector is 30-40 per cent higher than that in footwear sector as a bag has an export price averaging $30-50 against $20-25 for a pair of export shoes.
Ladoda’s general director Dinh Quang Bao said there were changes in global export bag supply market. In the past, importers from the US, Europe or South America mainly sourced products from China. Made-in-Vietnam leather products now grab their growing attention, entailing opportunities for local firms to raise export value.
“To make the most of forthcoming opportunities, each firm needs to mull suitable investment plans matching specific business criteria of different customer segments,” said Kiet.
Lefaso forecast total export value from leather and footwear products and bags could reach $8.6-$8.8 billion in 2012, with strong growth from the part of bag and leather purse groups compared to 2011.
Dung Quat Economic Zone aims high
Dung Quat Economic Zone is set for a big boost. It follows news the country’s leading industrial park developer VSIP and Singaporean Sembcorp Industries have agreed to invest into the central Vietnam facility.
Le Van Dung, deputy director of Dung Quat Economic Zone Management Authority, said the authority expected that there would be a plenty of manufacturing projects flocking in the zone, following the investments of VSIP and Sembcorp Industries.
VSIP, short for Vietnam-Singapore Industrial Park and Township Development, last September signed a memorandum of understanding with the province to conduct a comprehensive feasibility study of a 1,020 hectare integrated township and industrial park in Dung Quat, its fifth industrial park and township integrated project in Vietnam.
The proposed development comprises a 500ha industrial park located within this zone, where government-supported special economic zone incentives are made available to manufacturers. Separately, under consideration is 520ha zoned for commercial and residential purposes near downtown Quang Ngai city.
Sembcorp Industries, last month, also signed a memorandum of understanding with Quang Ngai Provincial People’s Committee to start exploring the feasibility of developing a 1,200 megawatt coal-fired power plant in Dung Quat Economic Zone.
“These two infrastructure projects are very significant to the zone’s development. VSIP is a well-known industrial park developer in Vietnam and could bring its potential customers here, while Sembcorp’s investment would ease the concern of power shortage,” said Dung.
“Once those two projects are developed here, I believe many foreign and domestic manufacturers will eye Dung Quat as the best choice for making investment in the central region,” Dung added.
According to VSIP, Dung Quat is located 100 kilometres from Danang and is ideal for labour intensive fast moving consumer goods and food and beverage manufacturing, serving both the northern and southern economic zones of Vietnam in addition to its central markets that stretch from Thua Thien-Hue to Phu Yen provinces.
The Vietnamese government has plans to build an expressway linking Quang Ngai and Danang, while it is also planning to upgrade Chu Lai airport, close to Dung Quat zone, to make it one of the largest cargo transshipment airports in Southeast Asia. These projects would further improve the infrastructure system connecting to the zone.
To date, Dung Quat Economic Zone Management Authority has granted investment certificates to 111 projects with total committed capital of around $8 billion, of which $4.8 billion has been disbursed.
Among these large projects, PetroVietnam is running an oil refinery there, Korean Doosan Heavy Industries has built a $300 million manufacturing factory and Taiwanese E-United Group is expected to start construction of its $4.5 billion steel manufacturing factory in the zone.
New opportunities open for Vietnamese expat workers in 2012
Year 2011 was unlucky for Vietnamese expat labourers working on foreign shores, what with the global economic crisis; impact of Japan’s triple disaster of the tsunami, earthquake and nuclear meltdown; 10,000 expat labourers being evacuated from Libya; and South Korea inflicting restrictions on Vietnamese workers’ contracts.
However, 2012 may see a reversal of fortune as Vietnam plans to send 90,000 workers abroad, with new employment opportunities opening up in Japan and Libya.
The Department of Overseas Labour said 88,289 workers were sent to 40 countries and territories last year, mostly to the traditional markets like South Korea, Taiwan and Malaysia.
Nguyen Ngoc Quynh, director of the department, said following a trip of Vietnamese Prime Minister Nguyen Tan Dung to Japan, an agreement has been reached to hire nurses and orderlies from Vietnam, creating an opportunity for Vietnamese expat workers to earn higher salaries in highly respected fields of work.
His department is also looking for more seasonal harvesting jobs in farms in Australia, New Zealand, Canada and the European countries.
Apart from stabilising jobs for expat workers, the government is determined to create more jobs, restructure the labour force and focus on improving living conditions for workers abroad.
The Ministry of Labor, Invalids and Social Affairs announced that Korean companies would like to recruit 15,000 Vietnamese expat workers this year, 27 per cent more than last year.
The Korean government will allow 1,000 migrant labourers who had registered for agricultural work to transfer to the construction sector, which is currently facing a huge shortage of workers.
These workers will have to take an examination to test their understanding of the Korean language. The exam will be held in May or October this year. Those living in remote and poor rural areas will be given priority.
Unlike previous years, the test questions will be available online and the expat workers will be asked to abide by contract rules. As per their contract they will be forbidden to work illegally or to change their Korean employer without proper documentation.
Meanwhile, Libya is expected to welcome back foreign workers, including from Vietnam, by June 2012. The turmoil last year forced the Vietnamese government to evacuate more than 10,000 workers.
In Malaysia, Vietnamese expat workers are appreciated for their integrity and hard work and for respecting the local norms and laws.
It is anticipated that in 2012, 140 Vietnamese labour exporters will send workers to Malaysia. Recently, Malaysia received a total 200,000 Vietnamese migrant workers for jobs as housewives, construction workers, servicemen and agricultural labour.
Furthermore, the Ministry has allowed five labour export companies to send 20 Vietnamese workers to the US.
Eighteen workers were sent by the Labour Export Joint Stock Company of Vietnam, Motor Industry Corporation and two from the Transport Ministry’s Advanced International Joint Stock Company.
The workers will receive monthly salaries between US$1,300 to $3,500. All are highly skilled, in good health, and scored a minimum 500 in the TOEFL test.
Nguyen Ngoc Quynh, director of Foreign Labour Management Department, said workers were checked thoroughly by the US embassy and consulate before they were granted visas.
Le Van Thanh, deputy director of the department, said workers had to pay his company a fee between $6,500 and $7,000, which included service charges and a one-way air ticket to the US.
Each worker paid a $15,000 down payment deposit to the company as a deterrent against staying permanently in the US, Thanh said in an interview with SGGP newspaper.
One of the areas in high demand in the US is shipbuilding, he said. The Vietnamese labourers will work in that industry as well as other skilled manual jobs.
According to the MoLISA, the total number of expat workers sent to other countries in 2012 will be 90,000. Most of them will be sent to Asian countries and territories, including Taiwan, Malaysia, South Korea and Japan.
Vietnamnet.vn
