BUSINESS IN BRIEF 25/3 Seafood industry faces slow export growth Vietnamese seafood producers are facing slow export growth and a shortage in material, after the US Department of Commerce levied higher tariffs on export of frozen pangasius fish fillets, effective from August 1, 2010 to July 31, 2011. Figures by the Vietnam Association of Seafood Exporters and Processors show that export turnover of the country’s seafood industry merely touched US$6.2 billion last year, compared to a target of $6.8 billion. With a growth rate of nearly 1 percent, last year was considered the worst year for the local seafood industry in recent years, as breeding, producing, and exports, all faced difficulties. Breeders struggled with fluctuating prices and diseases since the beginning of the year, causing a decline in shrimp crops. Meanwhile, firms faced a financial crunch, shortage of material, and were forced to operate perfunctorily or even run the risk of bankruptcy. Last year, demand from the EU market, the major market of Vietnam’s seafood industry, sharply fell due to the region’s sovereign-debt crisis, so the US market officially became the biggest seafood importer of Vietnam with import value of more than $1 billion, up 6.7 percent year-on-year, accounting for 20 percent of the total seafood export turnover of Vietnam. Meanwhile, seafood export value to the EU market dropped 14.6 percent and merely accounted for 18.7 percent of the total seafood export turnover of Vietnam. Of which, four biggest importers consisting of Germany, Italy, Holland, and Spain posted a sharp drop of 15-17 percent. In Asian market, seafood export to Japan showed positive growth with more than 15 percent but Vietnamese firms have gradually lost competitiveness against other countries, such as India, Thailand, and Indonesia. Business results of seafood companies in 2012 were rather gloomy. Among 21 listed seafood companies, there were 12 companies with revenues declining compared to the same period last year, and 17 companies with post-tax profits dropping. In general, revenues of seafood companies fell 7.7 percent and post-tax margins plunged 35.7 percent while overheads climbed by 15-35 percent. Especially, epidemic diseases and the cost for ethoxyquin check also made the cost price of shrimps increase significantly. Moreover, breeders and seafood producers were unable to access low-interest loans, which affected production and export activities. As a result, stocks of seafood companies were no longer given priority by investors. Many stocks fell to below face value, including CMX, TS4, ANV, and FBT, while AVF, VHC, AGD, HVG and AGF were stricken by high anti-dumping tariff on pangasius, by the US Department of Commerce. Equities of seafood companies are therefore expected to decline drastically in the near future. Province to scrap industrial clusters The Department of Industry and Trade of the southern coastal province of Ba Ria-Vung Tau has proposed to do away with 12 industrial cluster projects which have not found developers, said Tran Thi Huong, director of the department. In the zoning plan, Ba Ria-Vung Tau has 29 industrial clusters with a total area of 1,443ha. However, only 17 of them have found developers so far, with five getting off the ground. The infrastructure construction at these industrial clusters is slow, falling far behind schedule, the department said. Investors have halted expansion or new projects as the demand of tenants declines. Developers of the industrial clusters have also met with many difficulties in capital and site-clearance compensation. In addition, the drastic increase of land rents has also forced several investors to give up their projects. The department, therefore, proposed the 12 clusters be eliminated to avoid impacts on residents at the sites. Five of the 12 clusters are in Tan Thanh District, five in Chau Duc District; and one each in Ba Ria City and Dat Do District. Their removal would not affect the province's industrial investment and development plan, the department said. To encourage industrial cluster development, experts have requested the province to assist with land rents if the enterprises could create products which were in demand and had the potential to attract other industries. The total investment capital of the17 industrial clusters that already have found investors was VND565 billion (US$26 million). Five have already started infrastructure construction at a total cost of VND549 billion ($26.2 million), with Hac Dich 1, Boomin Vina and Ngai Giao having six secondary projects in operation with a combined cost of nearly VND2.6 trillion ($123.8 million), creating jobs for about 4,000 workers.  $8 million animal feed factory opens Adeco Cooperation yesterday opened its animal feed factory in the Nhi Xuan Industrial Park at the Xuan Thoi Son commune in Hoc Mon District, HCM City. The VND168.9 billion (US$8 million) facility has a total area of over 15,000 square metres. Its main production lines were imported from the Netherlands. Other technological equipment was manufactured in Viet Nam under the supervision of Dutch experts. Fair honours high-quality products Developing a strong network of distributors and stepping up information dissemination can bring more Vietnamese products to consumers, according to experts speaking at the High-quality Vietnamese Products Fair that opened in the Cuu Long (Mekong) Delta province of An Giang on Tuesday. The fair was the first in a series of similar fairs being held across the country this year. The fair is hosting 400 booths of 180 businesses in and outside the province, offering a chance for distributors and businesses to discuss partnerships. It is also putting on an exhibition called "the Common House" where products exported to ASEAN and Chinese markets and locally-made items seeking distributors and consumption markets are displayed. Banks favour Government bonds Viet Nam's government bond market saw robust development last year and experts expect it will continue to grow this year thanks to high demand from commercial banks. According to Tran Van Dung, chairman and CEO of the Ha Noi Stock Exchange, G-bonds had continued to develop rapidly in the first quarter of this year on both primary and secondary markets. As of March 15, the northern stock exchange has mobilised nearly VND43 trillion (US$2 billion) worth of G-bonds for the State budget. The transaction value of G-bonds on the secondary market reached VND69.8 trillion ($3.3 billion), about three times higher than the first three months of last year. "I think demand from commercial banks for G-bonds will remain at a steady high in the near future, which could stem from positive macro-economic signals in the first two months as well as a soft increase in February inflation of just 1.32 per cent," Dung was quoted as saying by Lao Dong (Labour) newspaper. He said that bank liquidity was abundant at the moment due to growing deposits, while credit growth was unlikely to rise in the short term. In addition, the number of G- bonds maturing this year was rather large, creating a pool of capital for financial institutions to finance their investments. "Because deposit interest rates are likely to fall in the near future, G-bonds are drawing interest from commercial banks," he explained. According to the report "Asia Bond Monitor" by the Asia Development Bank in March 2013, Viet Nam's local currency bond market saw the most rapid growth among emerging East Asian nations, growing 42.7 per cent on a year-on-year basis in the last quarter of 2012. The growth of the country's bond market was entirely driven by the G-bond market which saw a 54.6 per cent increase year-on-year while its corporate bond market shrank 47.6 per year during the same period. Of the total $25 billion raised in the forth quarter last year, $24 billion came from G-bonds while corporate bonds were worth just $1 billion. "New issuance in Viet Nam's corporate sector remained constrained by a combination of high interest rates and investor concerns about corporate sector credit quality as Vietnamese banks have become more cautious about extending new credit," the report said. The rapid growth of the Vietnamese market has been attributed to the fact that it is one of the smallest markets in the region and thus has great potential for future growth and development. At the same time, Viet Nam's bond market is drawing higher participation of foreign investors thanks to its improved economic situation. According to 2012 statistics from the H Noi Stock Exchange, the value of winning bids by foreign investors in the primary market last year accounted for more than 10 per cent of the total market value. On the secondary market, foreign trading also made up over 29 per cent of total transaction value.