BUSINESS IN BRIEF 2/10

India imports more tra fish from Vietnam

Over the past three years, Vietnam’s tra fish has become a favourite dish at Indian restaurants.

India’s seafood output grew by 7% in 2008-2009 but by 3.5% in 2012-2013.

In 2012, Vietnam’s frozen fish exports to India hit US$7.69 million, making up 73% of India’s total imports worth US$10.503 million.

In the first eight months of this year, the figure reached US$7.67 million, compared to US$5.903 million in the same period last year.

According to the Vietnam Association of Seafood Exporters and Processors (VASEP), India wants to learn Vietnam’s experience in raising tra fish output as it has a plan to become one of the world’s five leading seafood producers.

Vietnam-Singapore trade turnover picks up

By the end of August, two-way trade turnover between Vietnam and Singapore hit more than SGD11 billion, a-year-on-year increase of 3.5%.

According to the Singapore Department of Statistics, Vietnam fetched SGD2.1 billion from its exports to Singapore in the first eight months of 2013, 18.5% higher than the same period last year.

Three groups of high-value earners included phones and spare parts (up 14% to SGD405 million), machinery, equipment, and tools (up 47% to SGD383.7 million), and crude oil (up 43% to SGD127 million). Glass and glassed products saw a sharply decrease of 18.3%, followed by printers, faxes, photocopy machines and spare parts with 9%.

Since April 2013, Vietnam’s natural sand has reappeared in the Singapore market with a trade turnover of SGD52.4 million.

Singapore’s exports to Vietnam were valued at SGD$8.974 billion in the first eight months of 2013, up 0.5 percent compared to the same period last year. The volume of goods imported from Singapore fell by 4% to SGD3.944 billion while those re-exported increased by 4.5% to SGD5.03 billion.

Vietnam mainly imported petroleum and products (SGD1.5 billion), machinery, equipment, and tools (SGD628 million), paper and industrial products (SGD428.6 million), and plastics (SGD127 million).

By the end of September, Singapore had 1.186 investment projects operating in Vietnam with total registered capital of US$28.84 billion, ranking 2nd among 100 foreign investors in Vietnam.

Two localities promote investment in the RoK

Despite the impact of global economic downturn, Vietnam achieved its high growth of 5.8% in 2011 and 5.03% in 2012.

Ambassador to the Republic of Korea Tran Trong Toan emphasised this at a conference held in Seoul, the RoK on Sept 30 to promote investment in Ha Tinh and Ha Nam provinces.

Toan appreciated the two provinces’ initiative to organise the conference in the context of growing cooperation between the two countries, especially since Korean President Park Geun-hye’s visit to Vietnam in early September.

He analyzed Vietnam’s development requirements until 2020 and opportunities for Korean businesses to invest in Vietnam, particularly in Ha Tinh and Ha Nam provinces.

The ambassador spoke highly of the two provinces’ potential, such as abundant labour and good infrastructure in terms of electricity, water supply and transport. He expressed his hope that the two provinces will become attractive destinations for Korean investors in the near future.

At the opening ceremony Park Young Man, Managing Director of the Korean Chamber of Commerce and Industry (KCCI), reviewed the positive results of bilateral economic cooperation. He affirmed the conference provided a good chance for Korean businesses to seek investment opportunities in Vietnam, particularly in Ha Tinh and Ha Nam provinces.

Leaders from the two provinces briefed participants on their development plans and the local investment environment and pledged to improve administration procedures, infrastructure facilities and labour forces to create an equal, stable, transparent and open business environment for Korean businesses.

At the conference, Korean businesses, who have been operating effectively in Ha Tinh and Ha Nam province explained the reasons why they decided to invest in these two localities.

Chairman of the Ha Tinh provincial People’s Committee Vo Kim Cu took part in signing cooperative agreements between the province and the Korea Federation of Small and Medium Business, and the Association of People loving Vietnam, which aim to promote Korean investment into the province.

In addition, the managing board of Vung Ang Economic Zone in Ha Tinh signed investment schemes with Chunil Cargo Transportation, Han Engineering Company, Tae-Lim Vina Company to carry out transport, steel, and engineering projects and build villas, restaurants and hotels in the zone.

Halong-Fangchenggang cruise route back in service

The northern province of Quang Ninh will reopen a sea cruise route connecting its city Halong and Fangchenggang of Chinese province Guangxi this Sunday after a period of interruption.

The Halong-Fangchenggang route is jointly operated by local and Chinese travel firms, said Doan Manh Linh at Quang Ninh Province’s Department of Culture, Sports and Tourism.

This sea tourism service was suspended as ships failed to meet travel service quality requirements.

Guangxi is considered a major potential source of tourists for Vietnam, so the reopening of the route is believed to contribute to increasing Chinese tourist arrivals in Quang Ninh by sea.

Quang Ninh now has another sea cruise service connected to Beihai with two trips per day and a lot of international ships bringing tourists to Halong Bay.

According to Linh, from this October until next April, Halong will welcome over 200 ships carrying international tourists, up 18% year-on-year. Many of these ships make scheduled visits.

Siemens solution helps Medic ease workload

Medic on Thursday turned on Siemens’ next generation Aptio Automation equipment, which provides a comprehensive solution for the medical center in HCMC to address increasing workload and offer better healthcare services to patients.

Siemens described its Aptio Automation as an adaptable solution that transforms laboratory operations by combining Siemens’ workflow expertise with peak performance and technology. This helps Medic meet its high workload and at the same time achieve turnaround time goals for all samples in an optimized workflow.

“We chose Aptio Automation because it not only handles increasing daily workloads in the laboratory but also enables us to improve the turnaround time. Further, the system footprint is small which helps to save the operation costs.” Nguyen Thanh Tong, vice director of Medic said in a statement on Thursday.

Siemens’ next generation Aptio Automation platform at Medic is the first installation in the ASEAN region.

SHB, Viglacera strike deal

Saigon-Hanoi Commercial Bank (SHB) has clinched a deal with Viglacera Corporation to assist the latter in capital and banking services.

SHB said in a statement on Thursday that it would provide short, medium and long-term loans to help meet financing needs of Viglacera and its members as well as associated units.

The bank will also fund projects of Viglacera or act as an arranger of domestic and foreign financing for the corporation and help it access preferential loans from other countries, the World Bank and the Asian Development Bank, among others.

SHB will provide Viglacera and its units with banking services such as international or domestic payment, guarantees, cash management, deposit and corporate financial services.

In the next two quarters, SHB will fund distribution agents and showrooms of Viglacera.

Slackened demand hits State firms in city

With subsidiaries suffering losses due to slackened demand and falling export prices, seven out of 17 corporations and parent companies under the management of the HCMC government have incurred a sharp fall in revenue in January-September, heard a meeting between the city’s leaders and involved companies on Thursday.

Huynh Huu Loi, chairman of Saigon Agriculture Incorporation, ascribed a contraction of 23% in the nine-month revenue of his firm to a sharp fall in pig, chicken and farm produce prices.

The company in the nine-month period had no other choice but to export a total of 25,000 tons of rice at lower-than-expected prices to retain customers. Meanwhile, export rubber prices have dropped considerably, which were over VND70 million a ton at the end of 2012 but now slip to some VND41 million a ton only, Loi said.

Similarly, the January-September revenue of Saigon Jewelry Holding Company (SJC) has declined nearly 66% over the same period in 2012. According to an executive of SJC, the sharp fall in its revenue has resulted from the weakened local demand besides the fact that the enterprise no longer makes gold bars and only specializes in processing gold while its revenue from gold assessment services has tumbled.

Speaking at the meeting, Tran Viet Trung, deputy general director of Saigon Pharmaceutical Company (Sapharco), reported a huge volume of unsold products and materials in stock at his firm. Trung’s company is still unable to sell imported syrup products worth up to VND4.5 billion. As these products will expire in the middle of next year, the firm is compelled to lower the selling prices to cut the mounting inventories.

City’s budget loss to double next year on tax incentives

Revenues for the State budget in HCMC next year will suffer a loss of some VND8.34 trillion, or US$400 million, more than twice the loss of this year due to tax incentives introduced to revive the economy, the city’s taxman said.

Le Xuan Duong, deputy director of the city’s Tax Department, told a review meeting on the city’s economy in the January-September period that the shortfall results from tax reductions, reschedules of tax payments and lower tax rates.

This year, the shortfall is estimated at VND3.6 trillion, he said.

Much of the shortfall is ascribed to the reductions of land rents, value-added tax rates for budget homes, corporate income tax, and personal income tax.

The amount of tax sums owed by enterprises this year has increased by 25% year-on-year as the city’s economy remains mired in difficulties, especially in areas of property, construction, and building materials among others.

Despite such problems, the city’s economy is rising, with the growth rate accelerating after each quarter, said Thai Van Re, director of the HCMC Department of Planning and Investment.

The city’s gross domestic product (GDP) grew 7.6% in the first quarter, 8.1% in the second quarter, and 8.7% in the third quarter. “It is expected that the city’s GDP will grow 10.7% in the fourth quarter, which shows that the economy is on the path of recovery,” Re said.

However, foreign trade in the city has slowed down.

In January-September, export revenues of the city totaled US$19.7 billion, contracting 4.5% year-on-year, while import spending rose 12% to US$18.7 billion.

A point of concern on Thursday’s review meeting was the sluggish property market, but the Construction Department reported some signals of development.

Tran Trong Tuan, director of the department, said as many as 4,437 apartments found buyers in the year to date, accounting for 37.6% of the total number of housing units in stockpile.

Ministry to impose price controls at airports

Prices of goods and services at the country’s airports will be decided by the Ministry of Transport in the wake of harsh criticisms of exorbitant prices there.

Luu Thanh Binh, deputy director of the Civil Aviation Authority of Vietnam, said the ministry had not controlled prices at the airports before. However, as the Pricing Law took effect this year, ministries and other government agencies will get more involved in price management and stabilization, he added.

According to Binh, the aviation authority has included prices of non-aviation services in the draft amendments to the Law on Civil Aviation.

The airports will have to negotiate prices with suppliers and then report to the transport ministry and other authorities for approval.

“If any wrongdoing is detected, suppliers will be fined to protect the interests of consumers,” he said.

In recent times, passengers have complained much about sky-high prices of goods and services whose quality remains questionable. Therefore, the transport ministry has added price controls to the amended Law on Civil Aviation.

PM asks ministries to control milk price

The Prime Minister has asked several ministries to add milk products to a list of certified products for children under the age of six, and also to control prices of such products.

The Ministries of Health, Finance, and Industry and Trade and other related agencies have been asked to draw up a list of certified milk products before October 5.

According to existing regulations, the price of nutritional products is not controlled by any State office.

Hence, several baby formula producers are selling their milk products under nutritional food labels in order to avoid reporting any price hike to authorities.

The price of milk is not controlled by the Government, resulting in prices of dairy products increasing frequently.

The World Health Organization and the United Nations Children’s Fund have warned of ambiguity that could badly affect the health of Vietnamese children.

Global bodies warn that milk substitutes put babies at risk

WHO and UNICEF have warned that Vietnamese children’s health could be at risk because of inappropriate labelling and marketing of breast milk substitutes on sale.

Incorrectly renaming breast milk substitutes as “complementary food” or “nutrition products”, makes them fall outside the regulatory authority of the Ministry of Finance, they said.

Also, the price of breast milk substitutes on sale in Vietnam remains a controversy. Much of the media refer to the cost as vastly inflated.

At the same time, the labelling issue affects the implementation of the Law on Advertisements which came into force in January. This law bans advertisements for breast milk substitutes for children up to two years.

The use of these terms is said to be confusing for consumers, distracting buyers from the global evidence that provide clear recommendations for feeding infants and young children.

WHO and UNICEF said that infants should be exclusively breastfed for the first six months of life to achieve optimal growth, development and health. From the age of six months, breast milk remains the most appropriate liquid part of a diet for most children up to two years of age, once complementary feeding has begun.

WHO warns that specially formulated milks or so called “follow-up-milks” are not necessary, and even unsuitable when used as a breast-milk replacement.

Current formulations lead to higher protein intake and lower intake of essential fatty acids, iron, zinc and B vitamins than those recommended by WHO for adequate growth and development of infants and young children.

In Vietnam wrongly labelling formula milk as “complementary food” has already caused confusion.

Complementary feeding refers to the period when breast milk alone is no longer sufficient to meet the nutritional requirements of infants and young children, and other foods are needed, along with breast milk.

Simply because a product is fed during the complementary feeding period between eight and 24 months as in the case of “follow-up” formula, does not mean it is a complementary food.

Nguyen Thanh Lan, mother of an 18-year-month boy in Hai Ba Trung district, said she did not pay attention to the labelling of formula milk as complementary foods or baby formula when choosing milk powder products.

“I do not clearly understand the differences between quality of milk products labelled as supplementary foods and baby formula.”

Early this year, a scandal involving Danlait milk product raised concern about milk quality. Danlait, a goat milk product from France imported by Manh Cam Company, was found to wrongly labelled as baby formula instead of food supplement by the importer.

To safeguard the health and development of Vietnamese children, WHO and UNICEF strongly recommend that the Ministries of Health and Finance classify “follow-up” formulas correctly as milk products. This would ensure that they will subject to price control and covered by marketing restrictions as contained in the International Code on Marketing of Breastmilk Substitutes.

Vietnam, Italy promote economic cooperation

A forum on Vietnam-Italy economic cooperation took place in Milan, Italy on September 30.

The event was organized by the Ministry of Industry and Trade (MoIT) and the Embassy of Vietnam in Italy in co-ordination with the Italian Trade Promotion Agency (ICE), Assolombarda – Lombardy Industrial Federation and Milan Investment and Trade Promotion Organization.   

At the forum, participants reviewed the development of cooperative relations between Vietnam and Italy in recent years, especially after the two countries established their strategic partnership and committed to establish a joint commission on economic cooperation between Vietnam’s MoIT and Italy’s Ministry of Economic Development.

Vietnamese Deputy Minister of Industry and Trade Ho Thi Kim Thoa expressed her belief that the joint commission on economic cooperation will create favourable conditions for the two sides to consult, exchange and complete the legal framework and plans for closer business cooperation and investment, particularly in the context of promising bilateral economic cooperaiton.

She noted that Italy’s big businesses such as Oil and Natural Gas Company ENI, Piaggio, Ariston, Bonfiglioli, Perfetti, Datalogics and Mapei consider Vietnam as a key destination for their market expansion in the Asia-Pacific region.

Thoa introduced Italian businesses to the current situation and investment environment in Vietnam, and the prospects for long-term economic cooperation between the two countries.

After the forum, the participants had a round-table discussion on topics related to the cooperation potential in the fields of energy and retail distribution, development and investment promotion plans in the industrial sector and first-hand experience of Italian investors in Vietnam.

During their meeting, Vietnamese and Italian representatives agreed to launch “Vietnam Days in Milan” in October in celebration of the 40th anniversary of Vietnam-Italy bilateral relations.

Government mulls lifting foreign cap for private business ownership

The Government will consider increasing the foreign ownership cap for non-State-owned enterprises, said Minister and Chairman of the Government Office Vu Duc Dam.

At a press conference on September 29, the minister said the administration of foreign owned corporations needed to be clear, transparent and in line with international standards.

He said the Government would soon devise a foreign-ownership ceiling for private businesses across each sector. In the banking system, big banks including Vietinbank, Vietcombank and BIDV have all equitised.

The Government currently enforces a maximum foreign-ownership quota of 30%, but is set to lift the quota in favour of private sector development.

The Government would also act to protect the legal rights of ownership to guarantee certainty and stability for investors, said Dam.

The move follows a ten year campaign to re-arrange and equitise state-owned enterprises, cutting back on non-core businesses from 12,000 to 1,300.

“We have followed a scheduled road map and we will continue to carry out equitisation of these enterprises,” said Dam.

In an interview with Bloomberg in New York last week, Prime Minister Nguyen Tan Dung said the Government had planned to let foreign companies own up to 49% of local banks in the near future.

There are also plans to sell shares in companies such as Vietnam Airlines Corp, Vietnam PostsTelecommunications Group, and Vietnam OilGas Group.

Forum connects Vietnam-UK businesses

The Vietnam Chamber of Commerce and Industry (VCCI) has coordinated with the British Embassy in Hanoi to hold a forum between the two countries’ business circles to seek business and investment cooperation.

The forum took place in Hanoi on September 30 as part of activities marking the 40th anniversary of Vietnam–UK diplomatic relations.

Speaking at the forum, Vice Standing Chairman of the VCCI Hoang Van Dung valued British firms’ cooperation in such areas as education, finance and banking in Vietnam.

The UK ranks fourth among European countries investing in Vietnam with 163 projects, capitalised at US$2.69 billion. A number of its businesses in banking, oil and gas, insurance, and especially education, have gained a firm foothold in Vietnam, he added.

Vietnam and the UK are striving to bring their two-way trade turnover to US$4.5 billion this year. Vietnam exports garments, tea, coffee and farm produce to the UK while importing machinery, medicine, and other products from the country

The UK Prime Minister’s Trade Envoy for Vietnam, Laos and Cambodia, Lord Puttnam said Vietnam has a high economic growth, and UK businesses consider the Southeast Asian country a potential destination for investors. He expressed hope that the business circles of the two countries will develop an effective strategy for investment cooperation.

Vietnam advised to prioritise key industries

Vietnam should restructure its industrial sector, with priority given to key industries, Republic of Korean experts suggested at a workshop in Hanoi on September 30.

From a poor, war-torn country with limited natural resources, the RoK is now considered the 11th biggest economy in the world, and the success lies in choosing key industries for development of an export-driven economy.

Hwang Inseong, Vice Chairman of the Samsung Economic Research Institute (SERI)’s Global Research Department, said the RoK has gradually undergone different periods of the industrial era, from light to heavy, chemical and knowledge-based industry.

Vietnam is currently shifting its economy from an agriculture-based to the manufacturing and assembling industry. Therefore, it might later follow the RoK’s steps, learning from its experience and choosing a proper development policy, Hwang said.

Development Strategy Institute (DSI) Director Duong Dinh Giang said Vietnam can learn strategies from the RoK, by identifying comparative advantages of the industry in the integration process and then developing highly competitive industries.

To do this, he suggested restructuring what he called ‘the industrial space’ in Vietnam by establishing ‘core’ and ‘buffer’ industrial zones.

The core zone will develop market-based industries while the buffer zone will focus on support industries, Giang said.

New investment capital up 35%

As of September 20, Vietnam had licensed 872 new investment projects with total registered capitalization of US$9.3 billion, up 34.9% from a year earlier.

It also approved 340 operational projects registering for a combined additional capital of US$5.7 billion, up 37.9%.

Overall, the country attracted US$15 billion worth of newly licensed and increased capital, a year-on-year rise of 36%, according to the Foreign Investment Agency, under the Ministry of Planning and Investment.

Processing and manufacturing topped the list of investment areas with 400 newly licensed projects, capitalized at nearly US$13 billion or 86.4% of the country’s total.

It was followed by the real estate sector (US$588.11 million) and the science and technology sector (US$380.59 million).

Among 48 foreign investors pouring capital into Vietnam, Japan took the lead with US$4.736 billion in newly registered and added capital. Singapore came in second with US$3.95 billion and the Republic of Korea tanked third with US$2.636 billion.

In the nine-month period, US$8.62 billion worth of foreign investment was disbursed, up 6.4% against the same period in 2012.

Foreign businesses earned US$63.949 billion from exports (including crude oil), showing a year-on-year increase of 22.4% and occupying 66.29% of the country’s total export value.

The Foreign Direct Investment (FDI) sector gained an export surplus of US$9.45 billion while the country ran a trade deficit of US$124 million.

Local businesses seek opportunities in Algeria

Eighteen Vietnamese businesses will make a fact-finding tour of Alger City, Algeria, from October 18-24, according to the Africa, West Asia and South Asia Department.

During their stay in the country, they will conduct market research, meet with potential partners and promote their products to boost exports to this African nation.

They will focus on products, such as rice, coffee, pepper, coconut rice, frozen seafood, civil electronics, computers and components, agricultural machines, chemicals, steel, automobile spare parts, motorbikes, and construction materials.

Algeria has high demands for these products due to local insufficient supplies. In addition, located in North Africa, Algeria is a gateway for Asian products to penetrate West and Middle Africa.

Bilateral trade between Vietnam and Algeria has increased significantly in recent times. Vietnam’s exports hit US$129 million in 2012, a year-on-year increase of 28%, while imports were modest just reaching US$1.2 million.

Algeria ranked fifth among importers of Vietnamese products in Africa.

Vietnam’s exports to the country in the first seven months of this year rose by 15% to US$101.33 million. Coffee topped the list of export items, earning US$31.52 million, followed by rice, telephones and components, pepper, seafood, machinery, equipment and tools, and steel.

To boost exports to the market, the Africa, West Asia and South Asia Department will work with relevant Algerian agencies and the Vietnamese Trade Office to organise a seminar and conduct fact-finding tours of companies, seaports, commercial centres and management agencies to gain a better understanding about import-export and investment policies.

Hanoi moves to stabilise price of consumer goods

The Hanoi Department of Finance tightened its market management as part of its efforts to stabilise prices, curb inflation and ensure the supply of essential goods until the end of the year and the up-coming Lunar New Year in early 2014.

Accordingly, the Department is monitoring price movement for essential commodities and services such as food, foodstuff, sugar, medicine, oil and gas, fertilizer, cattle-feed and transport service.

Based on its investigation, the Department will propose the municipal People’s Committee for taking necessary measures to stabilise the market, while increasing commodity storage to meet consumption demands.

The city also gave s uitable assistance to enterprises, by providing zero-interest loans up to 318 billion VND (roughly 15 million USD) for them to stabilise prices of essential goods between July 2013 and April 2014.

Enterprises which join the price stabilisation programme must sell goods at prices as committed and can only increase prices if approved by the Department of Finance with adjustments within 10 percent of the market price.

This year’s programme aims to give priority to industrial parks, low-income residential and remote areas with the focus on providing clean and high-quality food for consumers.

The city authorities also plan to organise about 38 trade fairs at 16 suburban districts and other 400 mobile goods outlets to provide subsidised goods to local consumers.

Ha Tinh, Ha Nam provinces seek RoK investors

Ha Tinh and Ha Nam provinces introduced their business opportunities and investment incentives at a conference in Seoul on September 30 with the hope to attract investors from the Republic of Korea (RoK).

Addressing the opening ceremony, Chairman of the Korea Chamber of Commerce and Industry (KCCI) Park Young-man said this is a good chance for RoK investors to study investment opportunities in Vietnam in general and in the two provinces in particular.

Vietnamese Ambassador to RoK Tran Trong Toan said the investment-trade promotion conference took place at a good time when Vietnam-RoK cooperation ties are growing in both width and depth, especially after RoK President Park Geun-hye’s Vietnam visit in early September.

The ambassador highlighted the peaceful environment and socio-political stability in Vietnam , as well as the country’s active international integration.

He said the two provinces, Ha Nam in the Red River Delta and Ha Tinh in the central region, both have potential for investors, as they have large workforces and good infrastructure from power and water supply to transport.

During the workshop, officials from the provinces pledged to continue improving administrative procedures, infrastructure and the quality of human resources in order to create a fair, stable, transparent and convenient business environment for RoK investors.

Several RoK firms operating effectively in Ha Tinh and Ha Nam shared their reasons why they chose these provinces as investment and business destinations.

Vietnam, Singapore trade turnover keeps rising

Two-way trade turnover between Vietnam and Singapore exceeded 11 billion SGD in the first eight months of this year, an increase of 3.5 percent year on year, according to a report.

The Singapore Department of Statistics (DOS) said on October 1 that imports from Vietnam kept a moderate increase of 18.5 percent, reaching 2.1 billion SGD, despite a four percent decline in the country’s total import turnover in the first eight months of 2013.

Telephones, accessories, machineries, equipment and crude oil imported from Vietnam were among products that saw the highest rise.

Meanwhile, Singapore ’s exports to Vietnam hit nearly 9 billion SGD, a slight increase of 0.5 percent over the same period last year, mostly from petrol and other crude oil related products, machineries, equipment and accessories, publications and printing products, according to DOS.

In the first nine months of this year, Singapore businesses invested in 89 projects in Vietnam with a total registered capital of 4.16 billion USD.

As of September, the country ranked second among 100 countries and territories investing in Vietnam with 1.186 projects and a total registered capital of 28.84 billion USD.

Aviation sector profits soar across-the-board

All six companies in the aviation sector reported profits, said Lai Xuan Thanh, head of the Civil Aviation Authority of Vietnam (CAAV).

Vietnam Airlines Corporation, Vietnam Air Navigation Services Corporation and Airports Corporation of Vietnam have never seen losses and continued to grow this year.

Vietnam’s budget private carrier, VietJetAir, also reported 120 billion VND (5.7 million USD) pre-tax profits for the first seven months of the year while Jetstar Pacific and Vietnam Air Service Company (VASCO) announced profits for the first time.

VietJetAir’s Executive Director Luu Duc Khanh said that making a profit was beyond the company’s expectations after only two years of operation. They initially set a modest goal of breaking even within three years.

A representative from VASCO said that the company had a balance of 23 billion VND in the eight-month period and had effectively exploited the domestic routes.

The information surprised experts, given that airline companies faced many difficulties in the past three years with several firms closing.

In February, Air Mekong temporarily ceased operation to restructure; Jetstar also experienced financial difficulties.

Luu Thanh Binh, Deputy Head of CAAV, expressed optimism about the market, saying that Asia in general and Vietnam in particular had seen double digit growth despite the slowdown in the world market.

He predicted that the domestic aviation market would have a growth rate of 15 percent in terms of passenger transport.

Luu Thanh Binh attributed the strong showing to increasing interest in air travel as well as Vietnam becoming one of the most popular destinations for international tourists.

He said air crew restructuring helped Jetstar Pacific become profitable, while changing from the Boeing 737-400 to A320 model helped the company save 17 percent of control costs over the same period last year.

However, both experts warned that the increasing popularity of budget carriers posed a significant threat to both economy and high-class market segments that could show an effect by the end of the year.-

German group pledges to fund wind power project in Soc Trang    

The German Enercon Industries Corporation has pledged to arrange funding and supply equipment for a wind power project in the Mekong Delta province of Soc Trang.

The project, projected to cost 1 billion EUR and have a design capacity of 2,600MW, is part of the province’s wind power development plan.

The group made the commitment after making a fact-finding tour to the province to assess local wind power potential.

Experts of the German group said Soc Trang has favourable conditions to develop wind power, particularly the coastal area.

The province has outlined a master plan on wind power development until 2020 with a vision to 2030, under which the coastal Cu Lao Dung and Tran De districts and Vinh Chau commune are zoned for the purpose.

Total investment for projects under this plan is estimated at nearly 8,300 billion VND (390 million USD).

Chairman of the provincial People’s Committee Nguyen Trung Hieu said he will create all favourable conditions for investors to carry out their work.

SSC deepens links to international markets

The State Securities Commission (SSC) has recently announced that it signed on to Appendix A of the International Organisation of Securities Commission’s Multilateral Memorandum of Understanding (IOSCO MMoU) on September 18 in Luxembourg.

“This is an important milestone, a new stage of deep integration with the international capital market to attract investment into Vietnam,” the SSC said.

The memorandum sets an international benchmark for cross-border cooperation critical to combating violations of securities and derivatives laws. In 2011, Vietnam joined Appendix B, which offers measures to countries wanting to fully participate in the cooperation and information exchange.

Following two years of compliance with Appendix B, Vietnam has been accepted as a signatory of Appendix A, where parties commit to support each other in the enforcement of cross-border supervision.

“It proves that the global market has recognised the development of the Vietnamese stock market,” said a statement from the SSC.

The memorandum was developed in 2002, aiming to strengthen market surveillance and information exchange between member countries.

Countries not eligible for Appendix A were considered to have inconsistent and non-transparent legal frameworks, the SSC said.

It noted that Financial Stability Committee would rate a market based on its membership with the IOSCO MMoU.

“Countries not party to the memorandum face disadvantages in attracting foreign investors.”

The SSC stated that being party to level A of the memorandum would earn domestic capital markets credibility and a better reputation with foreign investors.

The SSC added that it would be able to gain from the experience of other countries in cross-border trading to mitigate the risks of cross-border transactions to the financial market.

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 Vietnam Logistics Business Association (VLA) and also chairman of the ASEAN Federation of Forwarders Association, told a workshop in HCM City on September 27 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, adding that it would also help Vietnam achieve this year’s export target of 126.1 billion USD, a 10 percent jump over 2012.

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

Le Duy Hiep, deputy chairman of VLA, said most of import-export firms do exactly the opposite despite warnings about financial losses and job losses in sectors like maritime transport and insurance.

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

Animal feed import reduction necessary for VN

Viet Nam needs to develop local sources for animal-feed inputs to reduce the overwhelming reliance on imports and keep the market stable, analysts have said.

Though the country is agricultural, most inputs like maize, soybean, and fish powder are imported.

Le Ba Lich, chairman of the Viet Nam Feed Association, said the country spent more than US$2.5 billion to import eight million tonnes of raw materials for animal feed last year.

Lich said this is a consequence of the country not paying adequate attention to developing crops required for making animal feed in the last few years.

With its high population density, Viet Nam must have plans for cultivating each kind of crop, agricultural experts said.

Before 2000 the cultivation of rice to ensure food security was a top priority, but now the country should gradually move to other crops, they said.

The reliance on imports has been causing a great deal of volatility in animal feed prices in recent years, causing difficulties for farmers.

Tran Thi Minh Diep, owner of a pig farm in the Mekong Delta’s Tien Giang Province, said she had to reduce the number of animals she breeds since feed prices have been rising but not pork prices.

There are 194 firms in the feed industry, of which only 15 are foreign-invested or joint ventures, but they account for 65 per cent of market share and basically determine prices.

According to analysts, producers will break even at VND8,000 per kilogramme of feed, but most products in the market are sold at more than VND11,000.

Lich said to grow the crops required for the feed industry, the agricultural sector must have long-term plans.

“Viet Nam currently has more than one million hectares under maize with an average yield of four tonnes each.

“We must strive to increase the area to 1.7 million hectares and use new seeds to raise productivity to seven tonnes per hectare, the norm in other countries,” he added.

The sector must also invest more in harvesting and processing technologies to improve maize quality, and the Government should offer incentives to encourage investment in processing, he added.

Pham Dong Quang, deputy head of the Crop Production Department, said his department has envisaged increasing the area under maize from 1.1 million hectares to 1.5 million hectares under the development plan for the sector for the period through 2020.

It is also planned to use new strains of the grain and technologies to improve productivity, he said.

Farmers would switch from rice to maize in low-yield areas in the northern, central, Cuu Long (Mekong) Delta, and south-eastern regions, he said.

As for green feed for cattle, he said localities must expand grass cultivation in mountainous areas and on infertile and forest lands.

The Government should reduce import taxes on the inputs needed for animal feed and provide businesses with low-interest loans for buying and processing agricultural produce to make animal feed, experts said.

They also suggested that the animal feed sector should maximise use of local materials, including straw and sugarcane waste to produce cattle feed and low-quality rice to produce other kinds of animal feed.

Climate change threatens agricultural development

Climate change is one of the key factors having great impact on production activities and socio-economic development in Viet Nam.

According to Pham Quang Dong, deputy director of the Plant Production Department, the Ministry of Agriculture and Rural Development (MARD), agriculture production suffers the most. As a result, main crop production is likely to be reduced by 10 per cent and the total plant production yield will be reduced from 1-5 per cent a year.

It is projected that in the near future, production in the Cuu Long (Mekong) Delta is likely to lose at least 7.6 million tonnes per year, an equivalent of about 40 per cent of the total rice output of the entire country.

In addition, the sea level rise will push salt water infiltration deeper into the inner fields and about 2.4 million hectares of rice fields will be affected. At present, salt water infiltration is already recorded to be four parts per thousand in areas of the Cuu Long (Mekong) Delta that are located at about 30-40km from the sea. Additionally, in the northern Song Hong (Red River) Delta some 1,300ha are reported to be also be affected by sea water infiltration.

For the mountainous regions in the north and Central Highlands, farmers are facing serious drought due to extreme weather. In the last Winter-Spring season, the coastal areas suffered from severe drought. It is forecast that the upcoming Autumn-Winter crop will also severely be affected by drought.

That’s not all, climate change is also the root cause for the increasing use of pesticides in the fields. In the past three years, the rice yields in the Cuu Long (Mekong) Delta were heavily reduced due to destruction by pests.

Quang also said that CO2 emission from agriculture production in Viet Nam accounts for about 43 per cent of the nation’s total emissions, of which 58 per cent is generated from wet rice cultivation, 22 per cent by agriculture land use activities and 12 per cent by the livestock production.

“To cope with such a situation, in the 2008-12 period, Viet Nam introduced many measures to cut down CO2 emissions and to promote a green and sustainable agriculture industry,” Quang said.

To cope with the negative effects of climate change, MARD on September 5, 2008 issued the Action Plan Framework for Adaptation to Climate Change in the Agriculture and Rural Development Sector for 2008-20.

Since then Viet Nam has executed many national programmes, including a plan to have 3.8 million hectares for rice cultivation, of which 3.2 million are reserved for two crops per year in order to ensure food reserves for the nation.

Additionally, MARD has given instructions to localities nation-wide to implement several groups of measures to ensure sufficient water for irrigation during the dry seasons and to prevent land erosion in wetlands as well as introducing better systems of crop plants adaptive to climate change.

In addition, MARD has also promoted the work of agriculture extension activities for farmers to cope with climate change. Viet Nam set a target to cut down CO2 emission from agricultural activities by 20 per cent in 2020.

Viet Nam is one of the countries that are frequently hit by natural calamities, including tropical storms, floods, drought and desertisation and others.

It is reported in the last 15 years, natural calamities have claimed 11,000 lives and an asset loss valued at about 1.5 per cent of the GDP per year.

According to Nguyen Van Tinh, deputy director of the Irrigation Department, in the 2006-12 period, the government invested more than VND3trillion (US$142 million) to upgrade the river dikes nationwide and some VND6trillion ($284 million) to build sea dikes.

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

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