BUSINESS IN BRIEF 1/10

HCM City focuses on business sector boost

For the rest of the year, HCM City will take measures to help local businesses increase production and trade as well as settle bad debts, the chairman of HCM City People’s Committee, Le Hoang Quan, has said.

Speaking recently at a meeting to review socio-economic development in the first three quarters, Quan said if hindrances facing the city’s businesses were curbed in the fourth quarter, the city could attain high GDP growth, helping to bring the country’s GDP growth rate to 5.5 per cent in 2013.

The local economy has shown signs of recovery, based on recent figures from the city’s Taxation Bureau on the number of newly established businesses and those that have resumed operation.

In the first eight months of the year, 18,384 new businesses were established and 4,704 resumed operations. However, over the same period, 15,343 businesses were dissolved in the city.

Of the businesses declaring taxes on their profits, the figure rose from 36 per cent last year to 33 per cent in the first quarter and 28 per cent in the second quarter, according to Tran Thi Le Nga, deputy head of the Taxation Bureau.

The Deputy Director of the city’s Department of Industry and Trade, Le Ngoc Dao, was quoted as saying in Thoi Bao Kinh Te Sai Gon (Saigon Economic Times) news magazine that the rate of inventory in HCM City reached 15.7 per cent in early September.

Le Chi Hieu, the deputy chairman of HCM City’s Real Estate Association, said the city’s property market has been facing stagnancy, leading to high inventory and financial problems for property firms.

He added that many of them had suspended or scaled down operations and cut staff. Some of them had “retreated from the property market” altogether.

According to Thai Van Re, director of the city’s Department of Planning and Investment, HCM City has the potential to attain gross domestic product (GDP) of 10.3 per cent in the third quarter

The city attained GDP of VND532.414 triillion (nearly US$25.8 billion) in the first three quarters of 2013, a growth of 8.7 per cent compared with the same period last year.

As a result, the GDP growth for the year is estimated at 9.2 per cent, slightly below the target of 9.5 pert cent.

Retailers are turning away from shopping malls around the country because rents are too high but not enough customers to generate revenues.

A Tuoi Tre (Youth) newspaper report said in Lotte building in HCM City’s District 11, nearly 10 shops are unoccupied. In the children’s toys section, a 30sq.m area is empty.

At Sai Gon Square, the popular shopping centre on Nam Ky Khoi Nghia Street in District 1, many shopkeepers are looking to sublease.

“Most visitors coming to the centre these days seem interested only in window shopping.” Trang, the owner of a shop selling fashion garments there, told Tuoi Tre.

“The decline in sales in the last two years has made us miserable.

Lac, another shop owner, said she is seeking to sell or sublease her shop because business is stagnant and she is not making enough money to even pay her rent.

In Pico Plaza Building on Cong Hoa Street, Tan Binh District, many shops on the second floor are unoccupied.

Huong Thuy, who has a fashion shop there, said few customers visit during weekdays, and the weekend business is not high enough to make a difference.

The manager of a shopping centre in Tan Binh District said rents have been cut three times in the last one year after many tenants returned their shops to the owners.

The tenants are looking for space outside the centre to cut costs.

He added that three shopping malls – TS Plaza in District 7 and CMC Plaza and UPO in Tan Binh District – have been converted into restaurants.

According to a report from real estate services provider CBRE, many retailers have quit the market in the second quarter, leaving shops vacant at business centres and shopping malls in both inner and suburban districts in HCM City.

It said retailers leaving the inner districts of HCM City include Home One (returning 1,200sq.m), Gloria Jean’s (100 sq.m), Nike (150sq.m), Banana Leaf (100 sq.m), and Givral (100 sq.m)

High rents but small number of visitors plague the sector, it said.

According to a master plan from the Ministry of Industry and Trade, by 2020 Viet Nam will have 1,200 – 1,300 supermarkets (600 more than in 2011), 180 commercial centres, and 157 shopping malls.

Ornamental fish make profit splash

Exports of ornamental fish from HCM City and several Cuu Long (Mekong) Delta provinces have brought high profits for breeders this year, mostly due to an increase in the number of promotions.

In the first nine months of the year, HCM City exported 7 million ornamental fish, an increase of 3.5 per cent year-on-year, according to the city’s Department of Agriculture and Rural Development.

Tong Huu Chau, owner of the Chau Tong Ornamental Fish Enterprise in HCM City’s District 12, said that exporters had been successfully promoting their products over the year.

Many new partners from the US, Australia and Canada have placed orders this year, he said, adding that prices were not too high and were competitive.

Ho Nhuan Dang Son, general secretary of the Long An Province’s Ornamental Creatures Association, said that export orders had been rising since the beginning of the year.

Son said he earned a profit last year of nearly VND500 million (US$23,800) from raising 100 tanks of discus fish and 2ha of other ornamental fish.

The EU accounts for 73 per cent of Viet Nam’s ornamental fish exports and Asia and the US account for the remaining, according to the HCM City Fisheries Quality Assurance and Aquatic Resources Protection Sub-Department.

Enterprises said, however, that Vietnamese ornamental fish exports still faced several technical barriers from import countries.

Chau said that four carp exporters in HCM City have encountered such problems.

The city’s Department of Agriculture and Rural Development, along with the Agriculture and Forestry University, carried out a project to implement good manufacturing practices to produce ornamental fish between 2011 and October of this year.

This practice will be applied on a pilot basis at several ornamental fish farms next month, said the association.

Last year, the city exported VND400 billion (US$19 million) of ornamental fish, up two times against 2008, said the department.

The city now raises more than 63 million ornamental fish, up 14.5 per cent against the same period last year, it said.

Car makers take early imports turn

The struggling Viet Nam car making industry is already turning to importing vehicles well before the country joins the ASEAN Free Trade Area (AFTA) in 2018.

A report from the Viet Nam Automobile Manufacturers’ Association (VAMA) showed that its members sold 92,000 units in 2012, a fall of 33 per cent compared with 2011.

When the presently high taxes dropped to zero in 2018, cars from ASEAN countries are expected to flood into Viet Nam.

Toyota Motor Vietnam (TMV) will display Lexus cars from Japan at the Vietnam Motor Show to be held in HCM City next month. Honda Vietnam also plans to sell imported cars.

According to Honda Vietnam’s sales manager, Tomohiro Maruto, after three months of launching the model, the company has received more than 1,600 orders but delivered only about 300 units. It has raised production capacity to 600 units a year, but this is still not enough. The company also plans to import the Accord model by the end of this year.

Mitsubishi, whose strong position in four-wheel-drive vehicles, will also display two small sedans for women motorists at the motor show in HCM City.

And Ford Vietnam has recently started to import the pick-up Ranger from Thailand.

According to the Viet Nam Customs, more than 23,000 completely-built units have been imported to Viet Nam so far this year, a 22.5 per cent increase compared with the same period last year. Of these, 11,100 were cars and 10,000 heavy vehicles.

Deputy Director of Vinastar, Kiyoshi Teshima, said Mitsubishi had been assembling cars and selling imported ones.

At present, most cars from ASEAN sold in Viet Nam come from Thailand and Indonesia. In the future, cars imported from South Korea, China and Japan are expected to increase strongly.

Although the three countries are not members of ASEAN, the regional group will reduce their import taxes to 5 per cent by 2018.

Many car makers in Viet Nam said that price cuts were necessary because the import tax on spare parts in Viet Nam was high while it does not exist in Thailand and Indonesia.

They said to lower prices, they needed more locally-made spare parts, but the country’s support industry was still weak.

Rubber exports hit $1.68b in first 9 months of 2013

The country exported 100,000 tonnes of rubber this month, reaping a turnover of US$223 million, according to the Ministry of Agriculture and Rural Development’s statistics.

The latest addition has brought the volume of exported rubber in the first nine months total to 710,000 tonnes, earning the country $1.68 billion. The exports, however, experienced yearly decrease of 1.2 per cent in volume and 17.8 per cent in value.

China and Malaysia remained the two biggest importers of Vietnamese rubber during the reviewed period.

Can Tho businesses eager to penetrate UAE market

Businesses in Can Tho city would greatly benefit if they were able to penetrate the Dubai market, a workshop was told in the city on Friday.

Dubai, one of the seven emirates that make up the United Arab Emirates (UAE), is an important gateway to the Middle East and North Africa.

Vietnamese businesses and those in the Cuu Long (Mekong) Delta in particular, however, were facing tremendous difficulties as a result of the global economic recession and technical barriers when entering choosy markets like the US, EU and Japan, said Deputy Chairman of the municipal People’s Committee Dao Anh Dung.

Co.opmart offers large discounts for Women’s Day

Supermarket chain Sai Gon Co.op expects sales to increase by at least 50 per cent in October after it rolled out five big promotions to mark Viet Nam Women’s Day on October 20.

It is offering a 50 per cent discount on consumer goods and garments for women and utensils and a “buy one get one free” deal.

The discounts, to run until October 27, are also offered at Co.opXtraplus Thu Duc and Co.op Food convenience store chains.

Agro-forestry-fishery exports outstrip $20b mark

Viet Nam pocketed around US$2.39 billion from agricultural and fish exports in September, according to the Ministry of Agriculture and Rural Development.

The amount has raised the sector’s total export turnover in the first nine months of this year to $20.45 billion, representing a year-on-year increase of 0.5 per cent.

Among the export items, pepper and cashew recorded the most impressive growth in both volume and value.

Over the past three quarters, Viet Nam exported a total of 188,000 tonnes of cashew nuts for $1.19 billion, up 16.5 per cent in volume and 9.3 per cent in value.

The US, China and the Netherlands were key markets of Vietnamese cashew, accounting for 34.4 per cent, 16.6 per cent and 10.4 per cent of the country’s total export value respectively.

Meanwhile, pepper export volume rose by 20.2 per cent to 112,000 tonnes, earning $743 million, up 16.5 per cent year-on-year.

Wood and wood product exports brought home $389 million in September and $3.77 billion in the past three quarters, up 12 per cent over the corresponding time last year.

The sector’s export to major markets such as the US, China, Japan and the Republic of Korea grew strongly, ranging from 7.8 per cent to 49 per cent. The only significant exceptions were the German and French markets.

During the January-September period, seafood exports experienced a rise of 3 per cent year-on-year to $4.61 billion.

The US remains Viet Nam’s largest seafood consumer, making up 21.6 per cent of the country’s total export value, up 10.6 per cent against the same period last year.

While Viet Nam’s fishery export enjoyed remarkable growth in China, Canada and Thailand with 53 per cent, 13.8 per cent and 13 per cent respectively, the figures in Japan, the RoK and Germany dropped by 0.6 per cent, 14.1 per cent and 2.6 per cent.

The country exported around 471,000 tonnes of rice in September, bringing home $214 million. This fell far short of the country’s 650,000 tonne target, itself lowered from the 750,000 tonne goal previously set by the Viet Nam Food Association.

In the first nine months of this year, rice export saw decreases of 14.3 per cent in volume and 16.7 per cent in value with 5.35 million tonnes shipped abroad worth $2.35 billion.

China remains Viet Nam’s largest rice importer, consuming 1.62 million tonnes or 31.4 per cent of the country’s total rice export turnover.

Experts forecast that the fourth quarter will be gloomy picture for the country’s rice exporters, saying Vietnamese businesses are finding it hard to seek new contracts.

During the reviewed period, the Vietnamese coffee businesses delivered 1.03 million tonnes to foreign importers, garnering $2.21 billion, down 23.1 per cent in volume and 22.5 per cent in value year-on-year.

With the present performance, experts said the yearly target of $4 billion may be out of reach for the country.

Apart from Germany and the US, the largest overseas drinkers of Vietnamese coffee, countries such as Russia, the UK and Spain have shown their interest as well.

At the same time, Viet Nam’s agro-forestry-fishery imports enjoyed an increase of 10 per cent over the same period last year to $13.59 billion.

VN ranks in ‘dynamism’ study

A study by Grant Thornton has ranked Viet Nam 27th out of 60 countries in terms of “dynamism.”

The Global Dynamism Index, based on five drivers of an economy’s dynamism, gave the country a score of 54 per cent. This compares with 66.5 per cent for Australia, 62.7 per cent for China, 59.5 per cent for Malaysia and South Korea, 56.4 per cent for Thailand and 51.2 per cent for Indonesia.

“The ratings go well beyond basic GDP data,” Grant Thornton CEO Ed Nusbaum said.

“Five areas were identified as holding the key drivers to an economy’s dynamism: business operating environment, science and technology, labour and human capital, economics and growth, and the financing environment. Within these groups, there were 22 key data points that were analysed.”

Viet Nam was at seventh globally in the economics and growth potential category.

What affected its overall scores were the business operating environment (down 5 places to 47th), and science and technology (down 3 places to 44th), and it is in these areas that government and management need to improve to build on Viet Nam’s current standing in the world.

TPP drives textile, garment firms to step up production

Textile and garment enterprises in southern Dong Nai Province have, according to the regulations of the Trans-Pacific Partnership Agreement (TPP), made great efforts to improve production

The move aims to help them take the advantages of the agreement in export activities after the expected signing of the agreement at year’s end.

Nguyen Dinh Truong, deputy chairman of the Viet Nam Textile and Apparel Association (Vitas), said after the TPP is signed, Viet Nam’s textile and garment industry will have more advantages to develop further.

Localities such as HCM City, Dong Nai and Binh Duong provinces are expected to attract more foreign investors in the textile and garment industry in the future.

The Dong Nai Industrial Garment Company based in Bien Hoa City, Dong Nai Province, has paid attention to the TPP and received many Japanese partners coming to conduct discussions about co-operation after signing of the TPP, said Nguyen Thi Bich Lien, the company director.

To prepare for the TPP, the Dong Tien Joint Stock Company has started to build infrastructure for a support industrial complex for the textile and garment industry, said Vu Ngoc Thuan, the company general director.

The complex has already attracted five investors to develop support industrial products for the textile and garment industry.

Bo Ngoc Thu, director of the Dong Nai Planning and Investment Department, said US investors in Hong Kong have planed to invest US$1 billion in Dong Nai Province to produce material for textile and garments.

However, local textile and garment companies will have difficulty in getting a preferential export tax rate after the TPP is signed because, at present, they have had to import from many countries almost all of their raw material for production.

If they want to receive the export tax rate of zero under the TPP regulation, they must import the raw material for the textile and garment industry only from TPP member countries, Lien said.

To take initiative in raw material for production, the local enterprises must pour a huge investment capital into the textile and dye stages, she said.

Viet Nam imports 6 billion metres of cloth for production of garment exports while the local textile industry produces just 1.2 billion metres.

Thuan said the difficulty with raw material will not change over the next few years because investment in the textile and dye industries is not easy.

Many provinces and cities have not encouraged investment in these industries because they are afraid of environmental problems, he said.

Additionally, small and medium sized enterprises having difficulties in capital and workforce would not be able to approach production and business opportunities from the TPP, said Thuan, adding that these enterprises have yet made a planned way to get out of their situation.

Currently, Viet Nam’s textile and garment industry has 4,000 enterprises with 70 per cent of them being small and medium sized, he said.

Vietnamese enterprises prepared to expand in Asia

Many Vietnamese small enterprises are now ready to expand business in Asian countries, according to Thng Tien Tat, Executive Director of Singapore United Overseas Bank in Viet Nam.

Tat was quoted by Singapore’s daily The Business Times as saying that companies operating in the fields of manufacturing, trading and oil and gas are leading in expanding the presence of Vietnamese firms in Asian markets.

He said that UOB has set up a foreign direct investment (FDI) advisory department to provide support to Vietnamese businesses seeking to expand operations in Asia.

UOB’s statistics showed that trade flow between Viet Nam and other Asian markets through UOB jumped 20 per cent from the second half of 2012 to the first half of this year.

The two-way trade between Viet Nam and Asian countries also soared by 46.7 per cent from 2010 to 2012, reaching US$150.4 billion.

According to Edlyn Khoo, director of Singapore’s International Enterprise Development Centre in HCM City, the foundation of the UOB FDI advisory department would help to promote trades and businesses between the two sides.

The UOB has opened seven FDI advisory departments in Asian countries and territories, including Singapore, Malaysia, Thailand, China, Indonesia, Hong Kong and Viet Nam.

Two other FDI advisory departments were going to be set up in Myanmar at the end of this year and in India in the first half of next year.

Trade with India to surpass $5b

Two-way trade between Viet Nam and India is expected to reach US$5 billion by December and hit $7 billion in 2015.

These figures were released at an on-line conference organised between Ha Noi and New Delhci on Thursday.

According to the Ministry of Industry and Trade, India has become one of Viet Nam’s leading trade partners with bilateral trade increasing by 12.2 per cent a year from 2008-12.

The trade value hit $3.5 billion in the past eight months, up 40.2 per cent year-on-year.

Vietnamese products for the India market include mobile phones, computers, electronic products and components, the head of the ministry’s South Asian Market Department, Tran Quang Huy, said.

Huy also said the signing of a Trade And Service Agreement and an Investment Agreement between ASEAN and India would further boost economic ties between the two sides.

Sufficient potential existed for the two countries to raise trade to $25 billion by 2020, said a director from India’s Ishan International Co, Shantanu Srivastava.

He suggested the launching of a direct air route linking the two nations and the establishment of bank branches would help achieve this target.

Sugar stockpile reaches sweet spot

Sugar inventory reached 221,310 tonnes as of mid-September, 99,310 tonnes higher than the same period last year, according to the Department of Processing and Trade for Agro-forestry-Fisheries Products and Salt Production.

The volume sold between August 15 to September 15 was 36,300 tonnes higher than the same period last year, reaching 102,000 tonnes due to increased exports to China.

The price of sugar in the domestic market remained stable over the last month at VND15,000 (US$0.7) per kilo.

SBV revokes licences for new banks

The State Bank of Viet Nam (SBV) recently decided to revoke the licences for the opening of Lao-Viet Bank’s branches in Ha Noi and HCM City.

SBV also ordered the two branches to carry out asset liquidation in compliance with Circular 34/2011/TT-NHNN.

Lao-Viet Bank, established in 2009, was a joint venture between the Bank for Investment and Development of Viet Nam and Lao Bank for Foreign Trade.

Syrena Viet Nam offers land to investors

Syrena Viet Nam, a member of BIM Group, invited investors to build hotels and trade centres on 51 land parcels at the Marina Bay project in northern Quang Ninh Province’s Ha Long City.

The land parcels range in area from 800-6,200 square metres. Construction licenses were granted for buildings from four to 30 floors.

About 40 hotels and restaurants were built in the city in the last five years, according to Syrena.

Tomorrow, the company will also release for sale 90 land parcels in Hung Thang New Urban Zone ranging in size from 175sq.m to 300sq.m.

Businesses register for promotion month

About 500 businesses in Ha Noi, including big supermarkets and trade centres, have registered to participate in the city’s special promotion month in November, offering discounts of up to 50 per cent for many of their products.

The highlight of the month will be the two “golden days” on November 16 and 17 when products at special discounts will be available at 25 outlets around the city.

The capital city plans to spend VND3 billion (US$143,000 USD), including about VND1.2 billion from the city budget, on the promotional activities.

Mobile users to swap networks

Mobile phone users can now change networks and still keep their phone numbers, following Decision No.1178 of the Ministry of Information and Communications (MIC) published on Wednesday.

But don’t hold your breath, the new service is about four years away.

A national network transfer centre will be set up before June 30, 2015, at the Department of Telecommunications under the Ministry of Information and Communications.

The ministry will implement a six-month pilot service and finish it before June 30, 2016. The network transfer service will come into operation officially in January 1, 2017.

About 70 countries offer the same-number service for customers, including the United States, Germany, Japan and Sweden.

The new decision is expected to force mobile network providers to put more effort into attracting users. Customers will not have to pay much money to change networks.

Google reading app available

Vietnamese can now use Google’s e-book reading application named Play Books on Google Play store.

They can read free books or purchase millions of titles, including new releases, bestsellers and up-and-coming authors.

Google has also introduced the application to New Zealand and seven Asian countries.

The provider integrates many services in the application, such as Google Translate, Wikipedia and Google Maps.

Earlier, Google launched the application in India, then provided it for seven European countries.

Firms urged to take advantage of trade pacts

Import-export and logistics firms should take advantage of free trade agreements and Incoterms, a set of international trade regulations, experts have said.

Do Xuan Quang, chairman of the Viet Nam Logistics Business Association (VLA) and also chairman of the ASEAN Federation of Forwarders Association, told a workshop in HCM City yesterday that this would help double foreign trade.

Incoterms are a set of standard international regulations last updated in 2010 and used for commercial transactions and procurement and to communicate the costs and risks associated with goods delivery.

Companies who conform to Intercoms provisions would be able to control cost and time while providing transport and logistics services, he said.

“Most local import-export firms are taking advantage of tax incentives that are available if they have certificates of origin.

“During the economic downturn, taking advantage of tax incentives available under FTAs between Viet Nam and other countries is an effective way to increase exports.”

It would also help Viet Nam achieve this year’s export target of US$126.1 billion, 10 per cent jump over 2012, he said.

Viet Nam has signed eight FTAs, both bilateral and multilateral, Quang said, citing a Ministry of Industry and Trade report.

Six other FTAs are under negotiations, including the Trans Pacific Partnership Agreement that is set to be signed by year end and the Regional Comprehensive Economic Partnership to be signed in 2015.

If Viet Nam fully implements all agreements signed from now through 2018, its GDP will rise by an additional 3 percentage points per year.

“Import-export enterprises should switch to buying under FOB (free on board) mode and selling under CIF (cost, insurance and freight) mode,” Le Duy Hiep, deputy chairman of VLA, said.

Most import-export firms do exactly the opposite despite warnings about financial losses and job losses in sectors like maritime transport and insurance, he said.

The Government should have policies to enable firms to buy under FOB mode and sell under CIF mode for better logistics management and reducing risks, he added.

FPT helps Myanmar firms to modernise

U Nyan Tun Oo, Yangon Region Minister for Electricity and Industry, told leaders of domestic enterprises in a workshop yesterday that they needed to use more innovative technology if they wanted to integrate into the international economy.

At the workshop, representatives of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), Vietnamese Embassy staff in Myanmar and over 200 major enterprises in Myanmar discussed such technology.

They focused on Enterprise Resource Planning (ERP), a software application that helps enterprises manage their resources and operations more efficiently, and Distributor Management System (DMS), another IT solution that offers companies a professional end-to-end solution by automating sales processes, controlling distribution activities and maintaining inventory at optimum levels.

According to speakers at the workshop, DMS also helps save time and improve the performance of sales staff.

FPT Myanmar Chairman, Hoang Minh Chau, said that Myanmar had great opportunities for tremendous growth and that enterprises would play an essential role in accelerating this process.

However, he warned that managers needed to increase innovation and measure up to international standards if they did not want to be left behind.

“In our endeavours to contribute to Myanmar’s development through co-operation, FPT has established a representative office in Myanmar. We look forward to working with local IT companies in bringing IT applications to business activities based on our capabilities and experience and as a major partner of SAP and Oracle in Asia,” Chau said.

As Viet Nam and Myanmar share many similarities, managers in Myanmar hope to learn from Viet Nam’s experience of implementing ERP in order to create suitable solutions for their own organisations.

Based on the “on job training” model, FPT Myanmar hopes to help Myanmar train a large number of qualified IT engineers to meet the increasing demand for human resources.

FPT Myanmar also committed to provide experts and technologies compatible with the financial investment status of domestic enterprises in finance and banking, telecommunications, ERP and e-government.

The workshop was co-organised by FPT Myanmar, SAP (the world’s leading ERP solutions provider) and ACE Data Systems (one of the biggest IT companies in Myanmar).

Listed firms leave property market

Many listed companies are divesting from real estate to avoid negative impacts to their core business.

The profitability of the real estate market prior to 2010 made companies pour money into the sector, including seafood processor Dabaco (DBC) and Lam Son Sugar (LSS). However, once the economy became troubled, they faced a lot of challenges.

Lam Son Sugar’s profit in the first six months of this year plunged over 63 per cent compared to the same period last year, reaching only VND23.2 billion (US$1 million).

LSS shares by mid August dropped around 50 per cent compared to the corresponding period last year. Their shares currently trade at only VND12,000 per unit.

The sugar company has not finished its investments in several projects, including Lam Son Hotel, Linh Son Eco-tourism Area and other complexes, which cost VND325 billion ($15.3 million).

The company’s chairman Le Van Tam said since the beginning of this year he had restructured the company to stop investment in real estate and focus on sugar production.

Meanwhile, as of June, Dabaco recorded an unfinished investment cost of VND514 billion ($24.2 million). Three years ago the company established Dabaco Real Estate Co Ltd and issued bonds worth VND556 billion ($26.2 million) to pour into the property sector.

Around VND150 billion ($7 million) from the bond value was used. The company has decided to direct the remaining money into their main activity of seafood processing.

In the long term, if these lefthanders can sell their real estate projects, they would have resources to overcome the consequences of the current economic difficulties.

Tam said he hoped the business results in the second half of this year would improve as his company started to get rid of real estate.

BIDV MetLife to join insurance market next year

The Bank for Investment Development of Vietnam (BIDV), and Bank for Investment and Development of Vietnam Insurance Corporation (BIC) and MetLife Inc. have signed a contract to establish a life insurance joint venture (JV) in Vietnam.

Under the contract, the Hanoi-based JV named BIDV MetLife will focus on life and health insurance with a charter capital of VND1 trillion.

BIDV MetLife aims to become one of the top life insurance businesses in the Vietnamese market. To this end, BIDV MetLife and BIDV will sign and implement an exclusive distribution agreement through the branches in order.

The JV, which is expected to begin operation in 2014, will provide banking and insurance products to meet diversified customer demands and increase the competitiveness of Vietnam’s life insurance market, reduce sale costs and bring more benefits to customers.

According to BIDV, Vietnam is considered as one of the fastest growing economies and life insurance markets in Asia. The life insurance market will grow at a rate of 15% in the next five years as only 5 percent of the Vietnamese population has life insurance.

Established in 1868, as the largest life insurer in the US, Metlife has increased its presence in Asia for more than 60 years.

It was listed as one of the “World’s Most Admired Companies” by Fortune Magazine in 2011, and placed 40th in the 2013 Fortune 500.

Domestic sugar industry faces many challenges

Oversupply and contraband sugar seems to have now crippled the domestic sugar industry.

The Vietnam Sugar Cane Association said the sugarcane sector is expected to produce some 1.6 million tons of sugar this year plus stockpile over 370,000 tons and import around 70,000 tons, totaling around 2 million tons, which exceeds total demand of 600,000 kilograms.

However, due to smuggled sugar of 300,000 tons per year infiltrating the market, oversupply is becoming a serious issue.

Most of the sugar in stockpile is refined sugar for food production.

Oversupply and slow consumption has dragged down prices and domestic sugar price has dropped to only VND15,000 a kg.

Nguyen Thanh Long, Chairman of Vietnam Sugar Cane Association, said firms must buy at VND830,000 to VND850,000 per ton which can bring profits for farmers. With this price, firms have to sell at VND15,000 a kilogram, yet the price is on a downward trend.

Le Xuan Quang, Director of La Nga Sugarcane Company complained that firms must maintain the high prices to keep farmers continue cultivation but companies suffer heavy losses with such high prices.

Do Thanh Liem, Director of Khanh Hoa Sugar Company, said smuggled sugar has hurt the domestic industry as it fetches only VND 12,800 a kilogram. If sugar companies reduce price to compete with smuggled sugar, they are compelled to buy sugarcane at VND700,000 a kilogram, it will result in a larger area of sugarcane cultivation being switched to planting different crops and sugar sector will be on the brink of collapse.

Subbaiah, Director of KPC Company Vietnam, said that with current widespread smuggling of  sugar, the government should cut the Value Added Tax down zero percent to this sector; ban on temporary import and re export in order to prevent tax evasion cases.

Saigon Co-op wins Customer Service Excellence Award

Saigon Co-op has been awarded the Customer Service Excellence Award by the Federation of Asia-Pacific Retailers Association (Fapra) in Istanbul (Turkey).

The Fapra Award includes five prizes, namely, the Most Innovative Retail Concept Award, the Green Retailer Award, the Best Marketing Campaign Award, the Best Effort in Retail Employee Training, and Customer Service Excellence Award.

Accordingly, Saigon co-operative, Migros Ticaret A.S (Turkey) and Sa Sa International Holding Limited-La Colline Shop (Hong Kong) won the Customer Service Excellence Award.

The Fapra Awards 2013 honored businesses and individuals that had made outstanding achievements in the field of retail sales in 2013.

Fapra Awards was organized in 2009 and this is the third time the award has been given by the Federation of Asia-Pacific Retailers Association.

National budget revenue at 62.5 percent of yearly plan

National budget revenue was estimated at VND509.7 trillion by September 15, accounting for 62.5 percent of this year’s plan, while budget expenditure was estimated at VND640.4 trillion, accounting for 65.5 percent of this year’s plan.

Domestic budget revenue reached VND331.2 trillion, or 60.7 percent; revenue from crude oil touched VND77.5 trillion, or 78.3 percent; and revenue from import and export activities was at VND96.8 billion, or 58.1 percent of this year’s plan.

Of domestic budget revenue, revenue from state-owned sector was at VND98.4 trillion; revenue from foreign-invested sector, not including crude oil, at VND74.1 trillion; revenue from private sector trade -industrial tax at VND72.1 trillion; and revenue from individual income tax at VND35 trillion.

 Industrial employment index rises 4.2 percent

According to the General Statistics Office, the industrial employment index by September 1, rose 4.2 percent compared to the same period last year.

Of which, state-owned sector slid 1.4 percent; private sector inched up 1.1 percent; and foreign-invested sector jumped 8.4 percent.

The statistics also showed that the employment index of the mining industry fell 1.7 percent; industrial processing and manufacturing surged 4.7 percent; power generation and distribution increased 3.1 percent; water supply and waste and wastewater treatment emerged 2.9 percent; and vehicle manufacturing climbed 2.4 percent.

Meanwhile, some industries, including foods processing, beverage, and wood and wooden products, saw a decrease.

 Mekong Delta struggles to revive animal husbandry

While shrimp breeders have been enjoying profits, many households in the Mekong Delta who raise pigs, chickens, and ducks are in despair as prices have fallen drastically.

Mr. Tu Sum, a farmer in Tan Hoi Trung Commune in Cao Lanh District of Dong Thap Province, complained that with the current price of pig he earns less than VND500,000 per quintal in four hard-working months.

According to him, pigs are usually raised four to five months before being sold to traders. The price of pigs now is at VND4.1 million per quintal while the cost for feed and medicine is more than VND3.5 million.

Looking at the herd of more than ten pigs which he will be able to sell in the next two months, Mr. Sum groaned that with such high price of feed, he will definitely suffer losses.

Nguyen Anh Vu, a vet from Tan Hoi Trung Commune, said that there were around 700 pigs which are ready for slaughter. However, with the current price of VND4-4.1 million per quintal, farmers only manage to recover their overheads.

Many farmers worry that if they do not sell their swine at this price, and the price drops further to VND3.6-3.7 million per quintal like previous months, they will lose their capital. As usual, when the flooding season comes, the price of pigs also declines.

Mr. Vu said that besides concerns about further drop in price, farmers barter away their pigs mainly because the price of feed is too high. In addition, their banks loans have reached due date so when the price of pig inches up, they sell their pigs right away.

In Tien Giang Province, there were nearly 562,000 pigs ‘stuck’ in pigsties because of low price. Nearly 254,000 pigs in Long An Province, and 195,000 pigs in Dong Thap Province were in the same situation.

However, not only pig farmers but chicken, duck, and fish farmers in the Mekong Delta provinces were also experiencing such difficulties.

It is important to find a way out for farmers, especially to help them to start a new herd to serve the upcoming Tet holiday season.

Le Minh Duc, Director of the Department of Agriculture and Rural Development in Long An Province, said that besides shrimps which have showed signs of recovery, pigs, fish, and chickens have been suffering low prices, unstable consumption, and raging diseases.

Mr. Duc said that until now agricultural production in general and husbandry in particular has still not built a solid foothold but remains unsteady and vulnerable. The fact that the price will fall when farmers get bumper crops, or vice versa, occurs continuously. It is rare to see bumper crops and high prices at the same time.

According to the Departments of Agriculture and Rural Development in the Mekong Delta, the key shortcomings of husbandry industry are small-scale production; breeding stock of poor quality; and farmers not paying sufficient attention to market information.

Not to mention, veterinary technical infrastructure and management is still weak and not synchronized. Even the application of advanced technology in husbandry to improve product quality has not been given proper interest. Continual disease outbreaks have caused more difficulties for husbandry industry. As a result, several animal husbandry households, especially small ones, had to shut down because of loss and bankruptcy. Local authorities and relevant departments have struggled to help farmers to revive production but no positive signs have showed yet.

Mr. Duc said that disease outbreak easily arises from small-scale animal husbandry but is hard to control. In order to build modern large-scale animal husbandry units with tight control on input and output, husbandry industry should change and find a new direction to develop sustainably.

FDI firms’ transfer pricing remain out of control in Vietnam

A recent inspection conducted by the Government Inspector found that foreign direct investment (FDI) companies in Vietnam have continued reporting losses while expanding operations.

The phenomenon seems to show that their transfer pricing activities are devious, causing the state budget losses over the recent years.

The Government Inspector also performed tax audits on various enterprises in Hanoi, HCM City, Binh Duong and Dong Nai, and uncovered many FDI firms which have continued reporting losses.

The check on 399 companies at export processing zones in these localities showed that 125 firms have reported losses for the three consecutive years between 2009 and 2011.

Japanese-invested Sumitomo Bakelite Vietnam Ltd. Co. at Thang Long Industrial Park in Hanoi announced an accumulated loss of VND777 billion (USD37 million) during the period. Meiko Electronics Vietnam Ldt. Co’s loss was reported at VND300 billion (USD14.2 million) during the same period of time.

In Dong Nai Province, FDI companes with the big loss include Toshiba Industrial Products Asia Co. with VND430 billion (USD20.4 million), followed by Fujitsu Vietnam with  VND292 billion (USD13.9 million), Kureha Vietnam with VND264 billion (USD12.57 million) and Olympus Vietnam with VND256 billion (USD12.19 million).

Freetrend Industrial Vietnam Ltd. Co. in HCM City reported a loss of VND222 billion (USD111 million) and Saigon Stec Ltd. Co. in Binh Duong Province with VND218 billion (USD10.3 million).

However, despite these claimed losses, a number of them continued to expand. This has raised the public concerns over the transparency of transfer pricing.

An official from the Hanoi Taxation Department said these signs indicate the methods used by FDI companies in transfer pricing. They have transfer their profits to the parent companies in a foreign country, he said.

Phan Huu Thang, Former Head of the Foreign Investment Agency, said if tax agencies paid more attention to FDI companies’ revenues and taxable income, it would help the ability to assess whether they are being honest or not.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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