BUSINESS IN BRIEF 28/7

Opportunities await rice exporters

Experts said opportunities are waiting for Vietnamese enterprises to boost rice exports in the final months of the year as the Philippine government plans to import an additional 400,000 tons of rice and China’s demand is bouncing back.

According to the National Food Authority (NFA) of the Philippines, the country intends to buy 400,000 tons of rice towards the year-end to increase the national rice reserve after the country was heavily affected by Typhoon Rammasun.

Vietnam News Agency cited Francis Pangilinan, President Assistant for Food Security and Agricultural Modernization, as saying that the government would work with NFA soon to finalize the rice import plan to prevent a domestic price hike.

Speaking to the Daily, Lam Anh Tuan, director of Thinh Phat Co., Ltd., a member of the Vietnam Food Association (VFA), said the Philippines has high demand for rice though the country has yet to decide where to import.

Nguyen Cong Khanh, a rice trader in the northern city of Haiphong, said that his clients in China are ordering a large volume of rice. Ngo Ngoc Yen, director of Yen Ngoc Company in HCMC, confirmed there is an increase in the number of clients in Haiphong.

Rice prices in the Mekong Delta region have continued to hike in the past days due to the higher demands of domestic enterprises.

Unprocessed rice prices in Tien Giang and Dong Thap provinces were VND7,200-7,300 per kilogram of IR 50404, VND8,400-8,500 for IR 50404 rice and VND8,900-9,000 for the processed rice of OM 5451 and OM 4218 on Sunday, up VND200-300 per kilogram from around five days ago.

The price of IR 50404 fresh paddy in the region has inched up to VND4,600-4,700 per kilogram compared to VND4,400-4,500 offered by traders some days ago. A kilogram of long-grain rice is sold at VND5,000-5,100, up VND200.

As the domestic rice prices have increased significantly in recent days, some Vietnamese traders have turned to Cambodia to purchase more rice.

Duong Van Men, a rice trader in Dong Thap Province, explained that Vietnamese firms will find it easy to buy rice in Cambodia at lower prices in Vietnam.

According to VFA, its members have signed contracts to sell nearly 5.2 million tons of rice as of this month, with commercial contracts accounting for nearly 3.6 million tons.

Besides, VFA members have exported over three million tons of rice at FOB price, with total revenue of US$1.3 billion this year, down 13.71% in volume and 13.77% in value compared to the same period last year. The average export price is US$431.5 per ton, down US$0.31 per ton.

The rice inventory at VFA members is over one million tons, with Vietnam Northern Food Corporation (Vinafood 1) accounting for 114,500 tons and Vietnam Southern Food Corporation (Vinafood 2) for 281,570 tons.

Vietnamese auto industry aims high by 2020

Vietnam aims to produce 227,000 units of automobiles and become a supplier of spare parts and high-value items in the world automobile production chain by 2020.

This is part of the goals under a master plan on Vietnam’s automobile industry development by 2020, with a vision up to 2030 recently approved by the Prime Minister.

Under the plan, nine-seat cars will make up 60 percent of the total production by 2020 and 70 percent by 2030. Those with more than 10 seaters will account for 90 percent and 92 percent by 2020 and 2030, respectively.

By 2020, trucks and special-purpose automobiles will make up 78 percent and 15 percent. As many as 20,000 will be made for export while spare parts exporters are expected to bring home 4 billion USD at this time.

Support industry for automobile manufacturing will satisfy 30-40 percent of home demand. By 2025 and 2030, the figure will be 45 and 50 percent.

To achieve the goals, the government will make it easier for industry players to access preferential credit and incentives, especially manufacturers of eco-friendly automobiles.

It will also encourage the public use by offering the lowest taxes on 16-24 seat coaches.

Vehicles of nine seats and more will be subject to maximum taxes while models with an engine capacity of more than three litres will face high environment fees.

Foreign funds seek to invest in local tech firms

Two foreign investment funds Monk’s Hill Ventures and Digital Media Partners will look for opportunities to pour their money into new Vietnamese technology firms taking part in Tech in Asia Arena, which kicked off in Ho Chi Minh City on July 22, according to a local newspaper.

The Saigon Times Daily said the two funds are expected to invest approximately 30 million USD in the five technology startups chosen to make presentations at the event.

As scheduled, Monk’s Hill Ventures director Kou-Yi Lim and Digital Media Partners president Khor Chieh Suang will participate in Tech in Asia Arena.

Tech in Asia Arena gives firms the opportunity to call for funds and learn how to expand their presence to Southeast Asia.

The event also includes seminars for seasoned investors to share expectations from technology business startups and experiences for companies to expand their operations to the region and the world.

Monk’s Hill Ventures intends to invest 1-5 million USD and Digital Media Partners plans from 500,000 USD to 1 million USD in each of the firm they pick at the event in the initial time. Digital Media Partners will add 3 million USD to every of its chosen firms when they expand.

Vietnam looks to restructure transport sector by 2020

Vietnam will strive to build 2,000km of its highways by 2020 under a project to restructure transport sector approved by Prime Minister Nguyen Tan Dung on July 22.

The transport of goods and passengers on road will hold a respective market share of 54.4 percent and 93.22 percent. National Highway 1A linking Hanoi in the north and Can Tho city in the south will undergo a makeover and expansion before 2016.

Land for urban traffic will make up 16-26 percent with priority given to public transport, especially in Hanoi and Ho Chi Minh City. All district roads across the country will be asphalted or concreted.

The project also aims to upgrade the north-south railway system and consider building hi-speed railways connecting Lao Cai and Hanoi, Hanoi and Hai Phong, Hanoi and Dong Dang, Bien Hoa and Vung Tau, Ho Chi Minh City and Can Tho, Lach Huyen seaport and others in Hai Phong, the Central Highlands and seaports.

By 2020, domestic transport of goods and passengers by sea aims for 32.38 percent and 0.17 percent of market share, respectively. Along with major routes, river lines linking the Mekong Delta with Ho Chi Minh City, and those along Tien Giang, Hau Giang, Red and Thai Binh rivers will be upgraded.

National shipping operators will reach a 25-30 percent increase in the handling of exports and imports. The development of national seaports and international gateway ports in key economic zones will continue with Lach Huyen and Cai Mep – Thi Vai seaports in Hai Phong and Vung Tau being put into the best use. At the same time, foreign investment will be drawn to Van Phong international transhipment port.

About aviation services, budget airliners will broaden their market shares by extending their links with regional and global partners. Besides traditional markets in Southeast Asia, Northeast Asia, China and Oceania, the sector is expected to launch more routes to Europe, North America, Latin America and Africa.

International airports such as Noi Bai, Tan Son Nhat, Da Nang, Can Tho and Cam Ranh will have a facelift.

This year, the national flag carrier Vietnam Airlines will be equitised with the State holing a stake of 65-75 percent.

MOST promotes post harvest technologies of seafood, fruits

The Ministry of Science and Technology (MOST) has decided to boost the application of post-harvest technology in agricultural production to be able to gain stronger foothold in global markets, the Vietnam Economic News reported.

Minister of Science and Technology Nguyen Quan said post-harvest preservation and processing technology is an important phase to improve product quality and competitiveness of agricultural products.

The project on application of post-harvest technology in producing surimi for export has brought an encouraging result. This project aimed at exporting surimi to hard-to-please markets like Japan (100 tonnes) and the Republic of Korea (over 6,000 tonnes) at a price of 1,750 USD per tonne.

Project director Le Duc Manh said “in the future, products of the project will surely be exported to Europe and countries in other regions.”

Another successful project was the application of heat pump drying to reduce tea material losses by10-15 percent compared with the old technology. This processing method met the standards regulated by the Ministry of Health. At present, these products started to be supplied to institutes of traditional medicine and medical centres nationwide. In addition, many advanced technologies in preserving woods, mushrooms, fresh milk and seafood have also been applied and produced good results.

The MOST has recently carried out a project applying Japan ’s ABI group CAS preservation technology with total investment of 1 million USD. The State-of- the- art technology has provided long-time preservation capability on fresh vegetables, fruits and foodstuffs. It has also been applied on preserving Luc Ngan litchi; Hung Yen longans, Vinh oranges and Tien Giang mangoes which produced good results and ensured food hygiene and safety.

In the future, more post- harvest technologies are expected to introduce to the preservation of Vietnam’s seafood and agricultural products, as a result of it, more Vietnamese products will be exported and farmers’ earnings will be improved.

Seven-month CPI sees lowest rise in 13 years

The consumer price index (CPI) in July rose only 0.23 percent over the previous month, driving the seven-month figure up 1.62 percent, the lowest increase in 13 years.

The July figure also represented a rise of 4.94 percent compared to the same period last year, announced the General Statistic Office (GSO) on July 24.

In the month, all 11 groups in the commodity basket experienced price hikes ranging from 0.04 percent to 0.44 percent. The highest was recorded in transport services as a result of petrol price increases in late June and early July.

Meanwhile, culture, entertainment and tourism services registered the most modest price rise.

Prices of restaurants and catering services continued to see a remarkable increase of 0.26 percent. Medicine and health services had their prices unchanged.

Experts forecast the CPI will continue to rise in August as the new school year begins.

Green infrastructure for small and medium sized cities discussed

Mega-cities and big cities have endured dangerous impact from climate change, but small- and medium-sized towns will suffer the most, according to experts.

Like many other towns of its size in the world, Can Tho has faced many challenges, including rapid urbanisation, climate change and increasing urban population, Assila Pathirana, representative of the Netherlands-based UNESCO-IHE Institute for Water Education, said.

Pathirana spoke at an international conference held in Can Tho on climate-change adaptation and green infrastructure for medium-sized cities on July 23.

Can Tho, with a population of 1.2 million, is located on a land depression in the Mekong River delta, and is surrounded by the Hau river system, a branch of the Mekong River.

Water is a rare resource but also a potential threat to the city, Pathirana added.

In recent time, the Hau River’s water level has risen due to unsustainable development activities of Mekong River upstream nations.

Climate change, which has increased the average temperature, has caused more thunderstorms and whirlwinds.

“However, daily human activities have also been responsible for severe flooding, as well as dry weather, land erosion and saltwater intrusion,” said Ky Quang Vinh, Director of the Can Tho Climate Change Co-ordination Office.

“Therefore, stabilising livelihoods for the local resident community and developing a green economy is required, which Can Tho’s authority will put into practice,” he added.

Vinh also said the Can Tho City People’s Committee has set up a steering committee for climate change and a climate change co-ordination office.

International experts from the Bangladesh Delta Master Planning Project said that managers and scientists should learn from real experiences of global cities to build development plans and solutions for a sustainable future.

Sharing and learning experiences from studies about several medium-sized cities in the world would help cities increase their own capability in flood prevention and green infrastructure development, while maintaining economic growth and the local community’s livelihood, Pathirana said.

According to a report from the Netherlands-based UNESCO-IHE Institute for Water Education, the world has had the fastest urbanisation rate in human history in recent times.

Around 50 percent of the global population now lives in cities and the rate is increasing.

Urbanisation is continuing to occur rapidly in poor and developing nations, and in small- and medium-sized towns, where 70 percent of the world’s urban population lives.

Urbansation is putting pressure on cities and town authorities to develop solutions to accommodation, public services, environmental pollution, flooding and climate change impact.

Major coastal apartment and resort projects in Danang stalled

Many projects in what Vietnamese investors once termed the “golden land”, along coastlines in Danang City and Quang Nam Province, have been stagnant for years and authorities have not revoked the land.

The Da Phuoc New Urban Area Project in Hai Chau District, Danang City covers an area of 210 hectares, including 180 hectares along coast. If construction would have gone according to schedule, it would arguably have been the most prominent urban area in the city. But the site lies idle and is an eyesore for nearby residents.

The complex was to include a resort, an 18-hole golf course, a marina, an large hotel, a meeting hall, high-end offices, trade centres and villas. The total cost was estimated at USD 300 million.

However, only the site clearance phase has been completed, leaving the entire land unused for years.

The Hon Ngoc A Chau project on Truong Sa Road in Ngu Hanh Son District covers an area of 17 hectares. The municipal government granted an investment license to the project on July 2009 and the project’s estimated cost was VND1.551 trillion (USD73 million).

The project initiated in early 2010 with a spectacular ceremony. However, to date the high-end apartments and villages have remained on paper for nearly four years. The construction site has been abandoned and materials are aging.

Dozens of other projects in Danang and Quang Nam Province have faced the same fate. Still, local authorities seem hesitant to revoke the land.

When asked about the situation, leaders from the Danang municipal Department of Environment and Natural Resource confirmed that they would seek for approval from the municipal government to revoke land from stagnant projects.

In early 2014, the city’s Party Committee requested the municipal government to scruntinise all investment projects citywide and to revoke investment licenses of incompetent investors.

In March, the municipal Department of Environment and Natural Resources had requested that the investors of three sluggish coastal projects sign commitment agreements. They intend to ask around 20 more project investors to do the same.

“We’ll seek city government approval for revoking the investment license of any stagnant project,” said an official from the department.

HCM City to replant trees after metro station construction

After 41 old trees in front of the Opera House were felled to make room for construction of Metro Line No. 1, the HCMC Urban Railway Management Unit said it will replant trees in the area after the first station is completed.

Le Khac Huynh, deputy head of the unit, explained that the area would be excavated to move in equipment and machinery to build underground works for the four-floor metro station.

According to Huynh, the trees on Le Loi Boulevard are also cut down to make room for building the metro line and upgrading Nguyen Hue Boulevard. After the Opera House metro station is finished, trees will be replanted above the station, he said.

Che Dinh Ly, deputy director of HCMC National University’s Institute of Environment and Natural Resources, told the Daily that the lines of trees in front of the Opera House are not rare species and so chopping down the trees for the metro line development is necessary.

However, Ly recommended that trees to be replanted should not be the ones with taproots as they may affect the station.

According to HCMC Green Tree and Park Company, to facilitate construction of the underground station of Metro Line No. 1 and upgrade Nguyen Hue Boulevard, a total of 51 trees have been uprooted, with ten trees moved to other areas for replanting and the old and sick ones chopped down.

Fuel firms earn much profit as import prices down

Local fuel trading firms are making much profit though the domestic prices of diesel, kerosene and heavy fuel oil were revised down last week thanks to lower fuel prices from the main suppliers of petroleum products for Vietnam.

A fuel price chart posted on the website of the Vietnam Petroleum Association indicated the price of RON 92 petrol in Singapore fell to US$117.02 per barrel on Monday, the lowest in the past month and down nearly US$2 per barrel against last Friday. The RON 92 price had gone down by Monday but inched up to US$118.13 on Tuesday.

The association reckoned the 30-day base price used to calculate fuel retail prices in Vietnam has also dipped, at VND26,221 per liter of RON 92 on Monday and VND26,182 on Tuesday.

The world’s average 30-day price was US$122.45 per barrel on Monday and US$122.26 per barrel on Tuesday.

With the current base price and VND670 per liter extracted from the national fuel price stabilization fund, local trading firms can earn VND128 per liter of RON 92, VND135 a liter of diesel 0.05S, VND143 a liter of kerosene and VND103 a kilogram of heavy fuel oil. These earnings exclude a pre-calculated profit of VND300 per liter for the fuel trading firms.

NHO begins work on Binh Duong condo project

National Housing Organization Joint Stock Company (NHO) has started work on its First Home Premium condo project with a total investment of VND582 billion (US$27.45 million) in the southern province of Binh Duong.

The project on an area of 9,740 square meters comprises 952 apartments measuring 49-73 square meters each and priced at around VND13 million per square meter.

NHO chairman Lawrence Tham said the housing project consists of two buildings with each having 18 stories and will be ready two years after its groundbreaking on Tuesday.

Home buyers of the project are offered loans worth up to 85% of an apartment’s value and with an annual interest rate of 8% from the Bank of Investment of Development of Vietnam (BIDV) and Vietnam International Bank (VIB).

Located on Binh Duong Boulevard, the First Home Premium is located near school, hospital, supermarket, and trade center. This is the second condo project branded First Home Premium of NHO and the fifth project the company has implemented this year.

NHO is a joint venture between Singapore-based TAG JSC and HCMC-based NIBC Investment Co., Ltd.

Report on market-oriented economy completed

The Party Central Committee’s Economic Commission has completed a final report on developing a market-oriented economy for Vietnam and submitted to the Party Central Committee.

Vuong Dinh Hue, head of the Economic Commission, told a meeting in Hanoi yesterday that the report is a comprehensive review of theoretical and practical issues after 30 years of doi moi (renovation) policy in Vietnam.

The report has been sent to a limited number of agencies under the Party Central Committee responsible for reviewing the renovation period in the country.

The Economic Commission has also finalized another report on boosting industrialization and modernization in Vietnam after 30 years of renovation.

Hue said Party leaders have highly evaluated the two reports in terms of quality.

The commission will complete a draft version of another report on five years of implementing Resolution 6 of the 10th Party Central Committee on further improvements of the market-oriented economy for submission to the Politburo.

Canada launches probes into Vietnam steel pipes

Canada has decided to launch anti-dumping and anti-subsidy investigations into steel pipe imports from Vietnam, not long after the product encountered an anti-dumping probe in the United States, according to the Vietnam Competition Authority under the Ministry of Industry and Trade.

The authority said last Monday, the Canada Border Services Agency (CBSA) announced to initiate anti-dumping and anti-subsidy investigations into the oil country tubular goods (OCTG) shipped from India, Indonesia, the Philippines, South Korea, Thailand, Turkey, Ukraine and Vietnam, and anti-dumping probes into the OCTG imports from Taiwan.

The decision of CBSA came after two Canadian steel firms Tenaris Canada and Evraz North America Inc. sent their petitions to CBSA in April this year.

This is the first time Canada has opened anti-dumping and anti-subsidy investigations into Vietnamese products.

Previously on July 11, the U.S. Department of Commerce (DOC) announced its final decision confirming dumping margins for the OCTG imports from Vietnam, India, South Korea, the Philippines, Saudi Arabia, Taiwan, Turkey and Ukraine as well as steel pipes made in India and Turkey.

Steel firm SeAH Steel Vina Corporation, one of the two compulsory defendants in Vietnam subject to the U.S. investigations, was imposed an anti-dumping duty of 24.22% while Hot Rolling Pipe must pay a general anti-dumping margin of 111.47% for steel exporters in Vietnam as it refused to fill in DOC’s questionnaire.

The rate levied on Hot Rolling Pipe and other companies in Vietnam is the highest anti-dumping margin claimed by petitioners, according to the Vietnam Competition Authority.

By August 25, the U.S. International Trade Commission (ITC) is expected to decide whether the U.S.’s steel industry is suffering material injury caused by imports from Vietnam and other markets. If proof is found, DOC will apply anti-dumping and anti-subsidy duties on the steel pipes imported from Vietnam and other markets from September 2.

Second Lim Tower building ready next year

Cho Dui Trading and Services Co., Ltd., a unit of Hoa Lam Corporation, and its partners have organized a topping-out ceremony for Lim Tower II in HCMC to mark the completion of the shell building of the office and trade center project. The project is scheduled to be up and running in the first quarter of next year.

The property at the corner of Vo Van Tan and Cach Mang Thang Tam streets in District 3 consists of three basements and 18 floors with total floor space of more than 25,460 square meters.

Tran Thi Lam, chairwoman of Cho Dui Trading and Services Co., Ltd., said when in place, Lim Tower II would set aside some 12,700 square meters for lease to banks and companies in other sectors. The building also has three basements covering 6,255 square meters able to service about 120 vehicles.

Lam added there are 12 elevators and escalators, including four high-speed lifts for office workers installed at the second Lim Tower project, which Hoa Lam Development and Investment Corporation has jointly developed with its partners.

The first Lim Tower building in District 1 with 34 floors and two basements started business in mid-2013. This project offers more than 34,000 square meters of grade-A office space.

McDonald’s Vietnam says no meat imported from China

McDonald’s Vietnam imports meat from Thailand, Malaysia, Australia, the United States and other markets, but not from China, the director of the company said.

McDonald’s Vietnam takes food materials from the global suppliers of McDonald’s, Nguyen Huy Thinh, director of McDonald’s Vietnam, told the Daily after a Chinese firm was reported to supply expired meat for fast-food restaurants.

According to Reuters, Shanghai police have detained five people in an investigation into Shanghai Husi Food Co Ltd, a unit of U.S.-based OSI Group LLC, which supplies foreign fast-food brands, including KFC, McDonald’s Corp and coffee chain Starbucks Corp, over allegations the firm supplied old and rotten meat.

In addition to chicken imported from Malaysia and Thailand, McDonald’s Vietnam purchases pork and potatoes from the U.S., beef and fish from Australia, and vegetables grown in Vietnam’s Dalat. The company buys bread made in Vietnam and from the region, excluding China.

Thinh said McDonald’s Vietnam does not require the franchisee to buy material from producers of the fast-food chain and the franchisee can use material meeting quality standards of McDonald’s but the U.S. fast-food chain has a team in charge of supervising this.

McDonald’s Vietnam currently has to import many types of material since few local suppliers meet product quality, Thinh said.

Another reason for the low ratio of local material used by McDonald’s Vietnam is that it does not have high demand for food materials as it has only two restaurants in HCMC at the moment. Therefore, buying food materials of the global supply chain is cost-effective.

Once McDonald’s Vietnam expands its operations here in this market with a population of more than 90 million, the proportion of local food material might be higher.

Draft rule on State agencies’ IT outsourcing remains unclear

A draft rule allowing State agencies to use outsourced information technology (IT) services was released early this week but it fails to stipulate important issues such as payment mechanism, evaluation methods and supplier selection.

The Ministry of Information and Communications has published the draft on its website to field suggestions from enterprises in the industry.

Given the draft rules, IT firms will provide software products and technology systems under the mode of service packages to State agencies.

The systems will run on the suppliers’ platforms. Customers can order the services they want and pay for service packages, while the service providers will take the responsibilities for all the stages of the service deployment, from operation to maintenance.

Therefore, State agencies can cut expenses, save time, improve productivity and reduce labor cost.

However, many enterprises have raised questions on the draft, saying this is just a general frame regulating IT services that can be offered to State agencies. The draft has yet to make clear key issues such as payment, financial sources for agencies to use the services.

Do Cao Bao, chairman of FPT Information System Company, said that relevant agencies must give specific instructions to State agencies.

Nguyen Xuan Hoang, general director of Misa Joint Stock Company, said the Government should have a mechanism allowing State agencies to use the service, and instruct them to choose suppliers.

It is necessary to create a legal foundation for data assets. For instance, cloud computing-based data must bear ownership verification, Hoang said.

The ministry in the draft also proposed two projects encouraging State agencies to use the services.

The Ministry of Finance, Ministry of Planning and Investment and local authorities will take responsibility for balancing budgets and arrange annual financial resources for State agencies to use the service.

Booth rent discount offered to local exhibitors at VSI Expo

Local firms will be given a 50% discount for booth rent when they put their names down to join VSI Expo 2014, an exhibition for supporting industries to take place in HCMC on September 17-20.

This large-scale exhibition, which will be held in the city for the first time, has been recognized by the Ministry of Industry and Trade as part of the national trade promotion program, said Nguyen Phuong Dong, deputy director of the HCMC Department of Industry and Trade, the organizer of the event.

Dong told a press conference in HCMC on Tuesday that participating local enterprises will pay rent of only VND6 million for a nine-square-meter display booth, just half of the normal rent for exhibitors at the event.

The four-day event will be organized at HCMC’s Tan Binh Exhibition and Convention Center (TBECC) for enterprises of the sectors of apparel-footwear, electronics-information technology, automotive, engineering and high technology. The objective is to prop up development of supporting industries.

The exhibition is also expected to help build a strong bridge between enterprises, establish a value chain for industrial products, find outlets for supporting industries, and increase ratios of local content and added value of locally-made products.

Dong said the event will create opportunities for domestic supporting-industry enterprises to improve product quality, spur exports, join the global supply chain, and reduce their reliance on accessory and component imports.

Around 200 companies will introduce their products and services at more than 300 booths at VSI Expo 2014 to local and foreign partners.

Also on the agenda will be seminars on the Government’s policies and incentives as well as solutions for development of supporting industries in Vietnam.

Vietnam’s supporting industries can meet 10% of the demand of producers and assemblers compared to 40-60% in other regional countries, forcing enterprises in this market to count on material imports.

The Prime Minister has recently approved a number of master plans and strategies for development of industries and supporting industries that are deemed as crucial for sustainable development of the industrial sector.

Agricultural Ministry seeks measures to develop dairy breeding

The Ministry of Agriculture and Rural Development on July 23 held a conference discussing measures and policies to develop dairy cattle breeding industry to reduce reliance on foreign milk in Hanoi.

Deputy Minister Vu Van Tam said that Vietnam began milk production in the 1960s but until 2001 the Government issued Decision 167 to develop the industry.

After 13 years, milk productivity averaged 5.18 tons per cow, higher than that in other countries in the region. It is 3.2 tons in Thailand, 3.1 tons in Indonesia and 3.4 tons in China.

Large domestic companies have joined in milk processing industry like Vinamilk and TH True milk.

Hoang Anh Gia Lai Group has built a project to breed 100,000 milk cows in 2014-2016 and work with three large companies from Ho Chi Minh City to prepare outlets.

Some businesses in the southeastern region have planned to convert some low-yield rubber areas into dairy farms.

However Vietnam’s dairy breeding is still behind demand of the milk processing industry, according to the ministry representative. Domestic production accounts for only 28 percent of local market share.

Deputy Head of the Livestock Department Nguyen Xuan Duong proposed to develop not only large-scale dairy farms but also household breeding to increase output and reduce imports.

Private breeders will be gathered and managed under cooperatives to ensure food safety and facilitate consumption, he said.

Vietnam’s geographical condition does not permit immense grasslands like in Netherlands and Israel. The combination of the two breeding methods is believed to bring about effectiveness, Mr. Duong explained.

Betting on the future of Vietnamese dairy industry

There is at least one official of the Ministry of Agriculture and Rural Development (MARD) who is not optimistic about the prospect of milk processing factories in Vietnam.

The dairy industry in Vietnam is relatively new compared to other countries. However, because of the rising demand for fresh milk, the market has drawn the attention of a number of producers and processors.

This week MARD, in conjunction with the U.S Diary Export Council, held a meeting on new technologies and the development of Vietnam’s diary industry. The meeting came on the heels of the implementation of a 2001 government decision to stimulate the sector.

La Van Thao, an official from MARD’s Department of Animal Husbandry said that selling prices for dairy farmers in Vietnam have been too low. While other countries with a tradition of producing and consuming dairy products have created a system of cooperatives, which sustain price levels for farmers, Vietnam lacks such a system. Thao suggested that Vietnam set up a national milk committee that could coordinate farmers, processors, consumer associations and state agencies.

Thao added, “In the long-term the situation for milk processors in the country does not look bright since Vietnamese consumers are becoming more aware and prefer fresh milk to reconstituted milk products. Also, domestic processing factories rely largely on imported milk powder.”

Relevant ministries, including MARD, Ministries of Health, Science and Technology, Industry and Trade and the police should intensify inspection to test the accuracy of the amount of fresh milk advertised on labels.

Nguyen Xuan Duong, deputy dector of the Department of Animal Husbandry, said that after recent drastic measures, labeling of fresh milk has become more accurate and transparent.

Duong also commented that Vietnam’s diary industry has great potential for development as Vietnam’s annual per capita milk consumption stands at only 15 litres, much lower than the average in developed countries, around 100 litres per year. Currently, domestic fresh milk production meets only 30% of demand, imported milk meeting the rest of demand.

He noted that one of the biggest challenges to Vietnam’s diary industry is the lack land allotted to dairy farms.

“If we really want to foster sustainable development of our domestic diary industry, it’s important to increase the size of dairy farms. Currently the average dairy farm is just five cows. This should be increased to 25 to 35. Farmers must also take an active role in the industry. This way we could increase production and generate jobs,” he noted.

SCIC says hard to transfer State stakes

The State Capital Investment Corporation (SCIC), in a recent report on its operation in this year’s first half, said that it encountered many difficulties in receiving, selling and transferring State stakes.

The firm received documents from some ministries and provinces which wanted to transfer State stakes in State-owned enterprises under their management to SCIC, but many issues remained to be solved before SCIC could take over such stakes.

SCIC has assessed and identified numerous issues and demanded that such issues be made transparent in the process of equitization before the Government’s finance arm could receive such stakes, but no progress has been made, according to a report released by SCIC’s general director Lai Van Dao.

The report gives the names of administering agencies that want to transfer State stakes to include the ministries of Industry and Trade; Agriculture and Rural Development; and Transport; as well as Haiphong City and Lam Dong Province governments.

Lai Van Dao said that the progress of transferring State-owned shares from ministries and localities has been slow.

Regarding the selling of State stakes held by SCIC, the corporation has divested State stakes in 31 companies, including sales of entire State stakes at 26 firms and partial stakes at five enterprises. SCIC collected VND863 billion from such transfers, meeting 65% of its target and surging 47% year-on-year.

However, SCIC said that the number of companies where State capital has been transferred is still far smaller than its target due to recent difficulties in the economy, the stock market and the investment environment.

On the other hand, SCIC has contacted some State-owned groups and corporations to obtain information on their plans to divest capital from non-core businesses, and SCIC will consider whether to take over those stakes.

Some big State-owned enterprises have sent their information to SCIC to help it consider stake transfers, including Vietnam Rubber Group (VRG), Vietnam Electricity Group (EVN), Vietnam National Oil and Gas Industries Group (PVN), Vietnam Coal and Mineral Industry Group (Vinacomin), and Vietnam National Shipping Lines (Vinalines) among others.

As of now, SCIC has invested VND12 trillion in many projects and enterprises and is eyeing more investment plans this year in financial, transport infrastructure, and medicine areas.

Relating to financial investment, SCIC has sold corporate bonds issued by Development Investment Construction Corporation (DIC), which helped it regain VND350 billion in its initial investment and VND154 billion in profit.

As of June 30, SCIC’s portfolio had included stakes in 335 enterprises with the value of over VND15 trillion and combined chartered capital of VND65 trillion.

As of December last year, the value of State-owned capital managed by SCIC at 349 companies had reached VND71 trillion or 6.8 times higher than the book value of VND10.5 trillion.

SCIC will withdraw capital from 376 enterprises, according to its restructuring plan toward 2015.

Steel makers hike prices to offset rising input costs

The Vietnam Steel Association (VSA) said steel producers in the country have started to increase their prices in the third quarter of this year to offset rising input costs following decisions of Government agencies to allow higher fuel retail prices and a slight devaluation of the local currency.

Pomina Steel Joint Stock Company will increase its selling prices by VND100,000 a ton of steel from today and this is the company’s second price hike since the beginning of this year. The company sells a ton of steel at around VND14.9 million in HCMC.

Do Duy Thai, general director of Thep Viet Steel Corporation, the parent company of Pomina, said the price rise resulted from soaring input costs, including those for transport and raw materials.

VSA said more steel makers will increase their prices towards the year-end although demand for this product has not improved remarkably, particularly in the third quarter as construction activity is usually low in the rainy season.

In the first half of this year, local companies turned out nearly 2.6 million tons of construction steel, up 4.6% year-on-year.

VSA estimated Vietnam imported US$4 billion worth of nearly seven million tons of steel and steel billets in the January-June period and posted revenues of nearly US$1.5 billion from exporting 1.7 million tons. This means the country had a trade deficit of US$2.5 billion in the period.

The association projected 12 million tons of steel would be consumed this year, a year-on-year increase of 5-7% over last year.

Currently, steel supply still outpaces demand and this is why local construction steel mills run at only 40-60% capacity, according to VSA.

Farmers unwilling to sell sugarcane to refineries

Farmer in the Mekong Delta are not willing to sell their sugarcane to local refineries due to low buying prices and the different practices of sugarcane delivery.

The Hau Giang Department of Agriculture and Rural Development estimated farmers in the province have grown sugarcane on around 16,000 hectares in this year’s crop and have already found mills for their products.

Can Tho Sugar Company, which has agreed to consume the cane grown by farmers in Hau Giang Province, said the firm will buy a kilogram of cane at VND830 for the average commercial cane sugar (CCS) rate of 10% with delivery at the company’s mill.

However, grower Nguyen Van Dua in Phung Hiep District in Hau Giang Province said farmers would not benefit from selling to the company due to a low buying price and the cost of transport to the firm. In previous crops, farmers sold to traders right at their fields.

Nguyen The Tu, head of the Agriculture and Rural Development division of Phung Hiep District in Hau Giang Province, calculated the production cost is VND760 per kilogram of sugarcane for this year’s crop and farmers will not earn profits if they have to transport their sugarcane to the company at a price of only VND830 per kilo.

Tran Van Tam, head of the Agriculture and Rural Development division of My Tu District in Soc Trang Province, said Long My Phat Sugar Company has agreed to purchase sugarcane produced on 700 out of 2,400 hectares in the locality.

Tam said Long My Phat will buy a kilogram of sugarcane at only VND700 at growers’ fields, which is lower than their production cost.

Agriculture authorities said farmers in Hau Giang, Soc Trang and other provinces in the Mekong Delta start to harvest their sugarcane of the 2014-2015 crop in the middle of September this year.

Statistics of the Vietnam Sugar Association showed farmers yielded 1.58 million tons of sugarcane in the 2013-2014 crop from more than 289,000 hectares.

HCMC needs 17,000 workers in August

Employers in HCMC are predicted to need about 17,000 laborers next month, according to the HCMC Center for Forecasting Manpower Needs and Labor Market Information (FALMI).

The demand for manual workers and workers of intermediate vocational level is the highest with approximately 5,100 in each segment, while the demand for college graduates is estimated at 4,250 people. The demand for skilled workers and those of basic vocational level makes up the balance.

Tran Anh Tuan, deputy director of FALMI, said employers will still focus on recruiting employees with skills and qualifications in the final months of this year. Therefore, new graduates from colleges and universities should equip themselves with useful knowledge and skills to meet enterprises’ demands.

In the third quarter, the city’s labor demand is estimated at 55,000 in a wide range of areas including manufacture, business – retail/wholesale and information technology (IT), the last-named sector needing more skilled workers due to the expansion of the foreign IT companies in Vietnam.

Tuan estimated the city will need 150,000 laborers in July-December, in which the demand for seasonal workers is estimated at 40,000.

The labor demand will continue to rise in the sectors of business, services, textile-garment, leather-footwear, tourism, consulting and real estate.

Firms support rice farmers to shift to higher yield crops

A number of enterprises have teamed up with research institutes and agricultural promotion centers for pilot schemes to support farmers to shift their low-yield paddy fields to corn and other high-yield crops.

The enterprises and organizations have joined forces after the Government has a policy to provide finances for farmers to buy seeds to replace their poor paddy production with high-yield crops. As a result, corn is proved as one of the alternatives for farmers.

Syngenta Vietnam Co., Ltd. said in a statement that the company has cooperated with the Institute of Agricultural Science for Southern Vietnam to develop a model in support of corn production on 20 hectares of former paddy field in My Hanh Bac Commune, Duc Hoa District in Long An Province.

The company said one hectare could bring average output of 8-10 tons of corn and farmers could gain profit of VND8.4 million per hectare higher than rice production if a kilogram of fresh corn is sold at VND4,000.

Dekalb Vietnam has worked with the Agricultural Encouragement Center of An Phu District in An Giang Province over a pilot program on crop change. Initial results indicated farmers could yield 10.8-12.3 tons on one hectare for two harvest seasons of a year and earn VND50 million per hectare, including profit of nearly VND24 million. This profit is three times higher than that farmers can obtain from rice production.

According to the Cultivation Department under the Ministry of Agriculture and Rural Development, some provinces in the Mekong Delta such as Dong Thap, An Giang, Tra Vinh, Soc Trang and Long An have carried out programs to replace rice with corn to help farmers improve earnings.

Nguyen Thanh Tung, director of the Agricultural Encouragement Center of Long An Province, said the province considers corn as the most important option in the program, followed by sesame and peanut.

Tung said more corn would be grown on low-productivity paddy fields and the firm Ecofarm has invested in a complex of facilities to dry and process corn in preparation for buying all the corn produced by local farmers.

The Ministry of Agriculture and Rural Development estimated around 112,000 hectares of low-yield paddy field in the Mekong Delta will make room for corn and soybean farming. To facilitate fast changes, the Government will provide farmers with VND2 million to buy seeds for each hectare.

The Government issued the policy on the fact that rice farmers have not been able to obtain a 30% profit margin as targeted and Vietnam has to spend US$4.5 billion importing corn, soybean and other materials for animal feed production every year.

The ministry expected shifting from rice to corn and soybean will help the country reduce imports.

The Institute of Agricultural Science for Southern Vietnam believed the Government’s financial support plus the close cooperation between enterprises and institutes will encourage more rice farmers to turn their resources to high-yield crops.

“We encourage farmers to change low-productivity rice production to other crops to improve their incomes,” said Le Quy Kha, deputy rector of the institute.

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

BUSINESS IN BRIEF 28/7