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BUSINESS
IN BRIEF 24/3
Binh Duong
earns over 2.9 billion USD from two months’ exports
The southern
Of the figure,
domestic enterprises contributed 343.6 million USD, a 13.5 percent rise,
while that of the foreign-invested sector was 1.75 billion USD, an increase
of 12.3 percent.
However, the
province saw a sharp month-on-month drop of 24.7 percent in February’s
exports, reaching only 899.6 million USD due to the long Lunar New Year
festival.
During the month,
the domestic sector experienced a 19.1 percent decrease at 153.6 million USD,
while FDI firms suffered a drop of 25.7 percent to earn only 745.9 million
USD.
In February total
export revenue, wooden products made up 14.4 percent, reaching 129.2 million
USD, down 16.2 percent over the previous month. Meanwhile, the province
earned 148.7 million USD from garment and textile exports, decreasing by 12.9
percent.
The footwear sector
reported a decline of 15.2 percent at 77.7 percent. However, it still made up
8.6 percent of the province’s total export revenue in the month.
This year, thanks
to the General System of Preferences (GSP) applied in the EU market,
Vietnamese footwear firms have enjoyed a tax cut down to 3-4 percent compared
to the previous level of 13-14 percent, making them more competitive in the
market.
At the same time,
Binh Duong’s import revenue in February was also estimated to decrease
sharply by 28.3 percent at 733.6 million USD. The result pushed the total
imports in the first two months to 1.757 billion USD, up 12.1 percent over
the same period last year.
In a statement
passed to the General Department of Customs, the American Chamber of Commerce
in
According to
AmCham, the VNACCS/VCIS system was developed 18 months ago but is scheduled
to be up and running on April 1 this year, and this is a short duration.
Therefore,
Besides, there
should be a duration of grace before fines are imposed on exporters, customs
brokers and service suppliers for misunderstanding or accidental violation.
The new customs
declaration process in VNACCS/VCIS is rather complicated, requiring 109 data
filings for export and 133 filings for import to be declared correctly.
As a result, AmCham
proposes the General Department of Customs delay the use of the VNACCS/VCIS
system nationwide until a guiding document is available.
The General
Department of Customs should coordinate with
Banks
prudent in 2014 profit targets
Banks’ profit
targets for this year are proving very modest compared to those of previous
years as they face mounting bad debts.
In the past banks’
general shareholder meetings would adjourn and announce profit goals and
other numbers 20-40 per cent up against the previous year.
But things are
different this year with scores of banks anticipating lower credit indexes
compared to last year as their key issue is controlling bad debts.
Eximbank just
unveiled their Board of Directors’ Resolution with major business indexes for
2014.
Accordingly, this
year the bank said it expects a 21 per cent jump in deposits and 23 per cent
increase in lending with pretax profits forecasted at VND1.8 trillion ($85.7
million).
It also said it
plans to keep its bad debts at around 3 per cent and dividend at 8.5 per
cent.
Compared to 2013,
the bank’s profit expectations this year are actually halved as bank executives
admit they are looking at a difficult year; some even said the figure was
still too high.
Bank leaders have
argued that the meager 1.5-2 per cent disparity between deposit and lending
rates is only enough to cover operating costs.
Last year, despite an
11 per cent credit increase against 2012, the bank only realised 31 per cent
of its annual profit goal. It earned VND2.736 trillion ($130 million) in net
profits, 44 per cent down against the previous year.
In another case,
although Ho Chi Minh City-based Sacombank achieved its full-year pretax
profit target of VND2.8 trillion ($133 million) and eyed 13 per cent credit
growth last year, it was very prudent with its profit target.
The lender set a
pretax profit goal of VND3 trillion ($143 million), only slightly up against
last year.
“We came to this
number after careful consideration as we realised it was unlikely to achieve
high profits in the current context,” said Sacombank chairman Pham Huu Phu.
DongA Bank dropped
its pretax profit target of VND1 trillion ($47.6 million) and only saw
limited credit growth last year, and so was mulling very modest targets for
2014.
“It is essentially
necessary to reduce our profit targets and while DongA Bank is among the top
players with our high service quality and numerous card holders, we have to
be cautious in our financial expectations for the year,” said the bank’s
general director Tran Phuong Binh.
State giant Bank
for Investment and Development of Vietnam (BIDV) has released a reasonable
pretax profit goal of VND6 trillion ($285 million) for this year and bad debt
rate of below 2.6 per cent, though last year it saw an increase of 23 per
cent to more than VND4 trillion ($190 million) in post-tax profit.
Other state giant
Vietcombank was also careful in its profit targets despite reaching VND5.7
trillion ($272 million) in 2013.
From 2008 to now,
these banks had presented dwindling year-on-year profit goals amid a highly
challenging business climate.
Many
skeptical about tobacco tax hike goals
The jury is still
out on whether a higher tax would help scale down smoking and its possible
impacts on the tobacco industry and state coffers.
Results from a 2012
survey conducted by the International Tax and Investment Centre and Oxford
Economics showed that
Figures show 104.8
billion cigarettes were consumed in
Also according to
the VTA, from 2006 to 2012 the volume of smuggled tobacco spiked 50 per cent
(tantamount to six billion cigarettes) following successive rises of the
special consumption tax (SCT) rate on cigarettes, from 45 per cent in 2005 to
55 per cent in 2006 and 65 per cent in 2008.
As such, the
Ministry of Finance’s (MoF) newest SCT hike proposal has triggered concerns
over a possible upsurge in tobacco smuggling.
Under the MoF
proposal, the SCT on cigarettes would increase to 75 per cent in July 2015
and again rise to 85 per cent from January 2018.
The VTA estimates
In fact, whenever
the tax on cigarettes has risen notorious tobacco smuggling regions such as
the southwest of the county, Quang Ninh mountainous area, coastal provinces
and central region localities bordering neighbouring countries were vibrant
with the influx of illegal products.
This is both
because locally produced tobacco bears the additional cost of increased taxes
and efforts to stymie illegal imports have thus far been ineffective.
Another factor is
that local demand for tobacco products is huge despite a number of campaigns
to educate people on the harmful effects of smoking.
Consumers cannot be
expected to participate in the battle against illegal products by opting not
to buy cheaper and therefore likely illegal products as many people in
Another
repercussion is that the tobacco industry and its workers, including tobacco
growers, feel the negative effects of smuggling.
The VTA is assuming
that a higher SCT rate in the current context would only result in downsized
local production and very little increase to state coffers as smuggling would
commensurately increase.
Instead, it has
proposed the government ramp up anti-smuggling efforts to first stabilise the
situation and ensure the state budget is getting its share of the profits.
A suitable tax hike
plan would be important once illegal tobacco smuggling was under control.
The HCMC government
has proposed the Steering Committee for Housing and Real Estate Market Policy
extend the Government-initiated VND30 trillion home loan program to 60 months
from the original 36 months from June 1, 2013.
The city is also
seeking extensions for corporate income tax and value-added tax payments
until the end of this year to help property enterprises lower prices to prop
up sales.
According to the
city government’s proposal, the property market here is still in distress. A
slew of projects are struggling with sluggish sales despite discounts and
promotions while some others have suspended construction work due to
financial woes.
There are 27
projects having registered for conversion from commercial apartments into
budget ones or service facilities and 15 others having proposed splitting
their commercial apartments into smaller units to boost sales.
Five projects have
been changed into budget ones so far with 6,733 units and one project with
360 apartment units has been converted into a hospital with 500 beds.
Last year 5,077 of
14,490 units in stock in the city found buyers with a total value of VND8.92
trillion.
Though the home
loan program started in the middle of last year, a mere 2.53% of VND30
trillion has been disbursed last year. Early last month, the central bank
lowered the interest rate for home loans to 5% per year from the previous 6%.
Rock-bottom
vegetable prices hit farmers
Quang Dien District
is located in the extremely low-lying area of the central Thua Thien -
Thus, the land of
the local people is flooded for four months every year, from the lunar month
of July to October.
In the lunar month
of November, the people start sowing seeds to meet the increasing market
demand for vegetables during Tet (Lunar New Year) and the post-Tet months
when the prices are high.
But they are in
trouble this year because the prices have nearly hit rock-bottom.
"The price for
my lettuce now is 5,000 dong for 50 kilogrammes. It is so cheap that I don't
want to harvest it for sale," said Tran Van Cu of Thanh Trung village in
the district.
"It is painful
to sell two big baskets of lettuce over which I spent a lot of effort to grow
and harvest them.
The villagers continue
to use traditional methods of carrying the vegetables, which involves hanging
two baskets on either ends of a pole balanced on the shoulder. Cu gets up at
1am to harvest the lettuce crop so that the trader can transport them to
faraway markets by 4 am or 5 am.
He cannot calculate
how much loss he has suffered, saying: "The problem now is that I don't
have enough money to buy seeds and fertilizers to continue cultivating."
Cu does not want to
harvest his crop and lets his lettuce bloom, which means they cannot be used
as food anymore. This means that he cannot start cultivating anew on his
0.2hectare field.
Almost all farmers
in the village are in trouble because it is an area of intensive vegetable
cultivation of lettuce and some herbs.
These are not eaten
by pigs so that local people dumped the vegetables as waste. They could not
give the vegetables to neighbors too as almost every household in the village
has its own vegetable stock.
The people in
another village, Tan Thanh, grow the same species of vegetables and they too
faced the problem of rock-bottom prices. Tran Thuc, a farmer, said he
expected to earn some money for his living but the situation now is bad.
"My efforts
were wasted. I got up at 1am waiting for traders, but none stopped for my
lettuce," he said. Thuc dumped the lettuce and prepared the land again
to cultivate a new lettuce crop, hoping for better prices.
According to Le
Quang Tuan, deputy chairman of the People's Committee of Quang Thanh Commune,
which includes Thanh Trung and Tan Thanh villages, a total of 65 hectares
cultivate vegetables for a yearly revenue of nearly VND13 billion.
"It will be a
big problem if the farmers quit cultivation for other jobs," he said.
There are several
causes for the low prices and the problem of a "bumper crop leading to
falling prices" is right on top.
Viet Nam News
investigated and found that a bundle of about three bunches of lettuce,
weighing 0.1 kilogramme, costs VND5,000 in the market, which is equal to the
cost of two baskets of 50 kilogrammes of lettuce that the traders paid to
farmers in the field.
This means the
lettuce sold in the market is 500 times more expensive than the lettuce sold
in the field.
Another factor for
the low prices is the abundance of vegetables in the market. According to
sellers in markets around
They were surprised
at vegetables being transported from the Central Highlands at a time when
supply exceeds demand in
Viet Nam News
failed to get a proper explanation from the local market control division as
the office did not specify which sections deal with the issue.
Adding to the
supply from the other provinces, many villages in the district, which had not
been growing vegetables, have began to cultivate them.
"The villages
in the neighboring Quang Tho Commune, where flowers are grown to meet the
demand during Tet, began to cultivate vegetables too in their flower
fields," said Ho Van Tung, a farmer in Thanh Trung village in Quang
Thanh Commune.
Tung and other
farmers in the village blamed this on the district's agriculture promotion
division, which encouraged the flower farmers to grow vegetables along with
flowers to make more profit.
The farmers in the
commune identified another reason for the abundant vegetable supplies, saying
that the evening fog makes the vegetables grow faster and thus many plants
turn ripe for harvest at the same time.
Officials at the
local agriculture division refused to comment on the factors mentioned by the
farmers as well as on measures to be taken to deal with the situation that is
hitting the local farmers hard.
The floods this
year will give the farmers more nightmares. As usual, they will endure the
hardships coming from the two-month or three-month joblessness. They pin
their hopes on the dry lunar month of November, when they can start
cultivation and expect a profitable crop. But with the fall in prices, the
farmers will find it hard to survive the flood season with hope.
Land rental
rates could be increased
The Finance
Ministry has proposed increasing land rental rates as part of a draft decree
on land rental, water surface rental and land use fees that will likely be
submitted to the Prime Minister next month.
The land rental
rate currently ranges from 0.25 to two per cent of the land price, depending
on what the land is used for and any investor incentives that the province or
city offers.
However, under the
proposal, the rent would start at one per cent of the land price. Rates in
urban areas, commercial or transport hubs and crowded residential areas could
reach three per cent of land prices.
At a meeting in the
capital on Monday, representatives from Ha Noi and northern
At a similar
meeting in
The minimum rent
increased from 0.25 per cent in 2005 to 0.75 per cent in 2010, and the land
price went up 10-15 times as a result, they pointed out.
Chairman of HCM
City Real Estate Association Le Hoang Chau said that land prices in the city
were so high that they depressed investors.
"To get land
for operations, investors mostly pay compensation based on market prices,
which are much higher than those imposed by local authorities. They also have
to pay land rental based on future land prices, meaning they pay twice for
the same land plot," he said.
Deputy director of
the HCM City Finance Department Ta Quang Vinh suggested that rental rates be
based on what the land was used for.
It should also be
made clear when the land rental rate was based on the land price frame and
when it was lowered by the provincial People's Committee as an incentive, he
added.
Businesses
turn away from luxury neighbourhood
A number of luxury
house spaces for rent in the new urban area of Trung Hoa-Nhan Chinh are being
abandoned because of fleeing businesses and high rental fees despite economic
downturn.
According to a
broker, a 300-square metre space there is leased out for several hundreds of
millions of VND per month. However, most businesses have moved out after just
a few months. The broker said, "The owners do not come here at all
unless they're showing a space for rent."
Two years ago, the
Trung Hoa-Nhan Chinh urban area was the real estate hub and attracted a lot
of trading floors headquarters. Then several services, such as restaurants
and cafes followed and were opened here to serve the office workers. However,
most of the houses in this neighbourhood are being abandoned.
Hai, a businessman
said in 2011 he spent VND500 million (USD24,000) to open a restaurant but
only lost money. "I calculated everything very carefully but it still
failed. The economy has gone south fast since that year," he said.
Another former
business-owner in this area said she had to close her cafe because of
dwindling customers. She said, "Two or three companies shut down in just
over a month. My brother's trading floor next door was not in good shape
either, so when I shut down this cafe, he also shut down his trading
floor."
The rent in Trung
Hoa-Nhan Chinh urban area was around USD6,000-10,000, even before the
economic downturn, not many domestic companies could afford to stay here for
long.
On the other hand,
owners of these buildings remain relatively unaffected by the recession and
often own numerous properties. An owner even said he is keeping his house
empty because he still cannot find a tenant. He said, "As my previous
contract stated, I leased out this place to a real estate company for three
years but they moved out and still owe me rent. I fear that some nameless
company will ruin the space somehow so I'd rather lock it up and let it be
for now."
Meanwhile, another
owner said his space had been ruined when a cafe owner tried to renovate the
first floor. If somebody wants to move in and live here, he will have to
spend a lot of money to fix the house. "I don't want to lease it out, I
don't want to live in it." he said.
Female
entrepreneurs weather the storm
Despite crunch time
as result of the economic slowdown, Vietnamese female entrepreneurs have
stood firm and ridden out the crisis to run their business efficiently.
Calamity is man's
true touchstone. The domestic and global economic slowdown is a genuine
test for businesspeople, especially females, to show off their best qualities
to steer their companies through difficult times.
Though
businesswomen are burdened with housework, they, with their intelligence,
creativity, diligence, patience, and compassion, many have reaped much
success at work, raising their profile domestically and globally.
The Vietnam Chamber
of Commerce and Industry (VCCI) recently presented the Gold Rose Award to
female entrepreneurs, in recognition of their outstanding performance and
contribution to the community.
Bui Thi Quy,
general director of the Long My Phat sugarcane and alcohol company in Hau
Giang province, starts her daily routine at 5.00am and leaves the office in
the evening.
Despite her age,
she still shuttles daily between her home and the office managing the
company’s operation, maintaining cooperation between farmers and the company,
and generating jobs for local people.
Last year, the
company earned more than VND100 billion in revenue and generated jobs for
approximately 500 people, mostly local labourers.
Quy recalls the
award as a testament to the company’s effort in maintaining production and
growth in difficult times. Apart from the profit target, she has joined many
charity campaigns, showing her responsibility toward the community.
“The current low
sugar prices put growers at a disadvantage. Therefore, the most important
thing for the sugarcane industry is purchasing all the material from growers
to ensure they benefit from the purchase and keep growing sugarcanes,” Quy
says.
“The company and I
myself do our utmost to stabilise material prices for farmers in order to
develop our long-term and close-knit relationship.”
Nguyen Thi Bach
Mai, general director of Dong Nai port JSC in Dong Nai province, is known for
her outstanding managerial skill in cargo handling – a profession normally
reserved for men.
To reap present-day
success, Mai says she pays special attention to developing human resources
and creating an innovative working environment to motivate employees to show
off their skills and creativity.
Assuming the chair
in 2009, Mai has built a contingent of competent managers and skilled
employees who managed not only to ride out difficult times but prosper,
typified by the opening of a route linking the port to the national transport
system which raised the competitive capacity of the port itself.
Since late 2011,
the amount of cargo to Dong Nai port has increased dramatically and the
company’s employees have worked three shifts a day to handle bulk cargos.
Although its
container warehouse has been enlarged capable of containing cargos equivalent
to 5,000TEU in total, it has yet to meet ship owners’ demand at times.
“There is no secret
about the success, except for our strong resolve,” Mai confides. “The bottom
line is creating a conducive, dynamic and innovative working environment, and
at the same time promoting unity among workers into a strong collective.”
“I encourage an
organisational change to create the best possible conditions for my workers
to contribute to the company.”
VCCI President Vu Tien
Loc says in
“In the context of
crunch time, women are able to run their business better than men,” Loc says.
“The fact shows over the past three years, many businesses owned by women
have not only ridden out the crisis but also turned challenges into
opportunities, expanding outlets, increasing profit and promoting brands.”
Business is a
battlefield and Vietnamese businesswomen know how to lead their companies
through difficult times, seize opportunities and move forward. They are the
nation’s ‘generals’ during peacetime, instilling work passion and determination
to win in young generations to reap future successes.
Transport
market to be restructured
The PM has recently
passed the Strategy on the development of transport services by 2020 with a
vision towards 2030.
The strategy aims
to better transport service quality, cut fees, maintain transport order and
safety, protect the environment, meet the rising transport demand for goods
and passengers, and raise national competitiveness.
The domestic
transport market would be restructured until 2020 in which road transport
would be reduced and the market shares of railway and inland waterway would
become bigger.
By 2030, total
transport output would reach 4.3 billion tons of products and 14 billion of
passengers. In the 2021-2030 period, transport of goods and passengers would
grow 6.7% and 8.2% yearly.
The strategy also
looks to open new air routes to other destinations, improve transport quality
and safety for taxi services.
It also targets to
speed up equitization process of domestic transport enterprises./.
Dong Nai
eyes accessing
The southern
This year, it will
carry out programs on trade promotion, economic restructuring, industrial
promotion, and those on labour and credit to ease business difficulties.
It will organise
business conferences to capitalize on free trade agreements (FTAs) and the
Trans-Pacific Partnership (TPP) agreement due to be signed later this year.
The provincial
Department of Industry and Trade (DIT) Director Le Van Danh says the
He says the
department is striving to keep regular contact with businesses to more timely
address their concerns so as to boost exports to the
To this end, it
will conduct trade promotion programs and strengthen links with
representative offices of economic groups in
Recently, the
provincial People’s Committee sat down with the American Chamber of Commerce
(AmCham) in
Nguyen Ngoc Tuan,
Vice Chairman of the Dong Nai Import-Export Association, says this year the
Since late 2013,
the purchasing power of products, such as garments, footwear, ceramics,
timber products, and machinery and equipment has been on the rebound,
especially in the
Based on the number
of signed contracts for these products so far this year, this trend is
anticipated to continue and bodes well for exports throughout the remainder
of 2014.
In 2013
When the TPP is
signed, the
Key products which
have a tremendous opportunity of finding a footing in the
From now until
2015, the province aims to develop corollary markets, such as
Office space
booms across the capital
The
The new emerging
central business district (CBD) in the West continues to show considerable
development, but on the other hand, the current CBD area around the Hoan Kiem
district is also considered a favourable office location.
In the last five
years, the number of Grade A and B office buildings have increased
significantly from 35 units to 76 units, an increase of 117%. As a result,
the availability of Grade A and B office buildings nearly tripled from
330,000 square metres to approximately 1 million square metres by the end of
the final quarter of 2013.
This is a boom
period for tenants, as high supply and low prices have created favourable
conditions, and the tenants have a wide-array of available options that can
match their expectations, according to Nguyen Bich Trang, a senior manager
from the
Due to the
aforementioned increased availability of office space, rentals in West, Mid
Town, and CBD have remained under check due to competitive pressure over the
past few years.
For instance, in
the last quarter of 2009, the highest average asking rent for a Grade A
office space was recorded at a level of US$50 per square metre per month,
which at that time was amongst the highest rents in the Southeast Asian
region.
Currently, the
average asking rent for a Grade A office space broadly ranges between
US$18-43 per square metre per month, with the later being approximately 50%
lower as compared to the rental levels in 2009, noted CBRE, one of the
foreign property service providers in Vietnam.
One has to take
into account that the current asking rents are excluding incentives, such as
rent-free periods, free parking, or longer fit-out periods. Depending on the
tenant, the size, and lease term, total incentives can reach up to 20%.
The Grade B office
rentals showed a downward trend from US$25 - 35 to US$15 – 24 per square
metre per month in 2013, which represents a staggering decrease of
approximately 30-50%.
Despite this
decline, CBRE expects that the Grade B office rentals have yet to see their
lowest levels and that the
For the Grade B
market, CBRE also expects that this year, a further increase is inevitable.
Regarding the Grade A market, the forecast looks less dramatic as the Lotte
Center Hanoi is the only upcoming Grade A development in the capital city.
Another inevitable
effect of the additional office stock is increased availability. Vacancy
itself is not a bad thing as up to 5-10 percent is considered an acceptable
rate in any given market, according to CBRE.
However, last year,
the available space increased to 20-50%. The only downward trend was apparent
in Grade A buildings in the West, where the
The increasing
office stock has helped to strengthen the net absorption in
"
"It,
therefore, becomes attractive for especially large tenants to relocate and
expand their
Construction
material sales fall
Consumption of
building materials in
Figures show
consumption has dropped by as much as 50 per cent year-on-year despite being
at the height of the annual building season, according to local traders.
Traders selling
building materials in District 2, Thu Duc and Binh Thanh say that the annual
building season in
They say that most
of their customers are only buying materials to finish private projects they
started last year.
Huynh Tan Hien,
owner of a shop in Thu Duc District, said that the volume of customers coming
to his shop this year was half of last year and most of them were small
retailers rather that big construction companies.
Hoang Thi Hang who
sells enamelled tiles in the same district, is in the same situation. She
said that since the beginning of this year, her shop has received all the
latest new models and styles from her suppliers, but customers just weren't
interested.
A steel trader said
in the first two weeks of this month he sold only a couple of tonnes of
steel, which was a massive drop from last year despite that prices remained
unchanged.
Retailers said that
cement prices normally increased by nearly 10 per cent, but not this year.
Prices of most building materials like tiles and bricks have stayed the same.
Explaining the
situation, Nguyen Tien Nghi, former deputy chairman of the Viet Nam Steel
Association said that it would take some time for the real estate market to
show signs of recovery but the slump would be forgotten by the second quarter
of this year .
Rice prices
inch up amid competition from Thai imports
Rice prices in the
Mekong Delta increased slightly after the government approved the purchase of
one million tonnes for a national temporary reserve last weekend.
Early last week,
the price for winter-spring rice remained high, but then it suddenly fell,
partly due to competitive pressure from Thai rice.
Farmers like Le Van
Tam were surprised by the sudden plunge in price.
Tam had planted
8,000sq.m of rice this year, yielding nearly eight tonnes. He was paid
VND4,700-4,800 per kg on March 9 but due to a late harvest of five days, the
price fell to VND4,200 per kg.
Tam said he then
began to store rice at home, waiting for a higher price.
Traders also
stopped doing business as prices declined sharply. Many of them were even
willing to lose deposits that farmers had put down for advance purchases.
"Rice-export
companies buy rice through traders. I had deposited money to buy 50ha in Thoi
Lai District in the southern
"This is the
first time ever that the price for winter-spring rice has unexpectedly
dropped to such as low level," said Duong Quoc Nieu, a warehouse owner
at the 21st rice port in An Nong commune, Tinh Bien District.
According to
figures from the Viet Nam Food Association (VFA), in mid-February,
The Thai Government
also plans to sell 1 million tonnes per month and Thai farmers another 5
million tonnes by the end of March.
"
Meanwhile, demand
from international rice importers has not been high as they are waiting for
the expected lower prices.
However, after the
Vietnamese government decided to buy one million tonnes of rice last weekend,
farmers and traders resumed business as prices inched up.
Since early this
year, the five biggest rice exporters in the world, including
According to the
Ministry of Agriculture and Rural Development, this year's winter-spring rice
crop will have a high yield and there will be great pressure to export.
Mekong Delta
provinces this year have harvested 650,000 of a total of 1.6 million ha of
rice, with total expected capacity of nearly 11 million tonnes, an increase
of 34,000 tonnes compared to the same period last year.
By the end of
February, VFA's members had exported 638,000 tonnes for $275 million, a drop
of 13.5 per cent in quantity and 16 per cent in value compared to 2013.
Lukewarm
response to export credit insurance
Only 46 export
credit insurance policies were taken after three years of implementing a
Government's pilot prog-ramme, according to the Ministry of Industry and
Trade's Export and Import Department.
The insurance was
applicable for the export of products worth VND12.59 trillion (US$572.36
million). The total premium for the exported goods was VND17.23 billion
($820,000), while compensation was VND13.33 billion ($634,000).
The export credit
insurance pilot programme during the period between 2011 and 2013 initially
targeted to insure 3 per cent of the country's import-export turnover. As the
country's annual export value hit US$120-130 billion, the pilot programme
failed to meet its set target.
The department
acknowledged that the number of insurance policies taken by the exporters in
the pilot programme was modest, though such insurance is considered an
effective measure to help domestic exporters to minimise their payment risks.
The department
attributed the restriction to the challenges faced by both the exporters and
insurers during the implementation of the programme.
The insurance
companies still lacked the necessary experience in promoting the export
credit insurance, while the local exporters failed to pay due attention to
the insurance, as it has remained unfamiliar to them, the department claimed.
Online news
Vietnam-Net quoted Nguyen Thi Thu Ha, the general director of Saphia
Packaging Company in Long An province as saying that she lacked information
about the insurance products.
"I tried to
contact a lot of Vietnamese insurance companies to seek information about the
export credit insurance, but the staff there told me they did not know about
this," she said.
In 2010, the
Government launched the pilot export credit insurance scheme, under which it
committed to prop up 20 per cent of the original insurance premiums, in an
effort to encourage export companies to opt for export credit insurance
policies. For instance, if the insurance policy is valued at $20,000,
businesses will only have to pay $16,000.
However, the
financial support is not enough to persuade businesses to spend money on
insurance policies.
Seven out of the
total 30 non-life insurers in
The beneficiaries
of the Government's financial support are a group of 8 farm and seafood
producers and a group of 14 industrial producers, manufacturing products,
such as garments, shoes, electronics, and computer parts.
However, Huynh Thi
My, the secretary general of the Vietnam Plastics Association, admitted that
very few plastics companies have their exports insured, or have the intention
of taking export credit insurance policies, according to VietnamNet.
To boost insurance,
the department emphasised that the insurers must streamline rules on export
credit insurance, while the Government should continuously offer support to
the insurers to raise awareness about insurance among the local exporters.
The finance
ministry has also proposed the Government to entrust it and the State Bank of
The ministry has
also planned to revise the debt provision regulations so that the exporters
using the export credit insurance will not have to set aside money for
provision.
Farmers from the
Mekong Delta provinces plan to use 112,000 ha of land for growing subsidiary
crops like maize and soybeans from now to 2015 in order to contain the spread
of summer-spring rice disease.
The disease, along
with a water shortage during the dry season, affected the grain output, which
varied from 3.5 to 4.2 tonnes per hectare.
The shift is
therefore expected to protect over 1.6 million ha of grain and stablise the
output of over 9 million tonnes of the product during the summer-autumn crop,
according to the local Plant Cultivation Department under the Ministry of
Agriculture and Rural Development.
The department
suggested upgrading irrigation work and equipping local farmers with better
cultivation techniques.
It is also
necessary to seek consensus between businesses (consumers) and farmers (manufacturers)
through economic contracts, agriculturists said.
The Mekong Delta
region – the country’s largest rice granary - comprises of 12 provinces and
one centrally-run city with a total area of 40,000 square kilometres and a
population of 18 million.
The Mekong Delta
produces 4.3 million tonnes of winter-spring rice, reported the Ministry of
Agriculture and Rural Development (MARD).
In March and April,
the figure stood at 3.2 million tonnes.
According to the
Ministry of Industry and Trade (MoIT), the nation exported 753,000 tonnes of
rice worth 322 million USD up until March 10, down a huge 93.7 percent and
97.7 percent in volume and value, respectively, as its consumption abroad has
turned sluggish.
It forecast that
the overseas shipment of the grain will hit nearly 1.2 million tonnes in
January-March quarter, down 300,000 tonnes year-on-year.
Orders for rice
delivery from January to March 10 totalled 1.89 million tonnes. Of those,
1.14 million tonnes are on the waiting list while over 513,000 tonnes remain
in stock.
At the mid-March
meeting on rice production and trading in Can Tho city, Prime Minister Nguyen
Tan Dung requested that MARD immediately purchase 1 million tonnes of rice
for stockpiles lasting four months.
Relevant units and
rice exporters were also asked to extend their commercial reach, both in
regular and new markets.
The Government and
MoIT will negotiate with other countries to sign State-level cooperation
deals in this regard.
For long-term
solutions, it has been advised that regional localities cut about 112,000
hectares of summer-autumn rice to ease selling pressure. The acreage of rice
should be cultivated with or supplanted by fruit or industrial trees such as
corn, soybean, sesame, peanut and watermelon.
Fragrant and
high-quality rice should be prioritised.
Up to March 10, the
region harvested 620,000 out of 1.6 million hectares of rice with an average
output of 6.83 tonnes per hectare.
Exporters
told to prepare for trade defense measures
Trade defense
measures adopted by other countries against
These include 43
anti-dumping cases, 15 self-defense cases, five anti-subsidy cases, and ten
tax evasion charges. This year to date, there have been two new cases,
according to the seminar.
On January 30,
2014,
Steel, footwear and
yarn are the three products of
Statistics about
trade defense of the Competition Authority show that Vietnamese goods have
frequently been affected by self-defense measures taken by developing
countries like
Self-defense is a
quick tool which does not need much effort collecting statistics like
anti-dumping or anti-subsidy measures. Besides, a self-defense case does not
direct at a specific business, and thus Vietnamese enterprises do not pay
much care to this but suffer huge losses if self-defense measures are
employed.
Lower
deposit rate cap won't have significant impact: banks
The State Bank of
It cut policy
interest rates by 0.5 percentage points, and the refinancing rate now stands
at 6.5 per cent, the discount rate at 4.5 per cent, and the overnight rate at
7.5 per cent.
"The cut is
supported by factors including inflation being controlled (less than 6 per
cent in February) and loan demand from both enterprises and individuals remaining
modest," HSBC Viet Nam's deputy general director, Pham Hong Hai, said.
"Mobilisation
by commercial banks might reduce but there will be no significant
changes," he said, though admitting that investors might now consider
other asset classes.
There is little
possibility that banks would compete to get deposits by flouting the rate cap
because liquidity is abundant, according to Hai, adding it would have no
impact on foreign exchange rates either. The rate cap for US dollar deposits
also went down by 0.25 per cent.
Nguyen Hung,
general director of TPBank, too believed the cut would have no impact on
deposits, saying banks were already offering low interest rates on short-term
deposits.
Meanwhile, many
people have changed their investing habit to deposit for longer terms to
enjoy higher interest rates, he added.
Le Quang Trung,
deputy general director of the Viet Nam International Bank (VIB), said credit
growth would benefit from the cut and the growth target of 12-14 per cent for
this year is now feasible.
The Bank for
Investment and Development of Viet Nam (BIDV) yesterday announced deposit
rates of 5 per cent for one month for individuals, and 5.5, 6.0, 6.5, and 7.5
per cent for two, three-five, six-to-11, and 12 months and above
respectively.
The short-term
lending rate may be fixed at a maximum of 8 per cent, with seven – to
12-month terms carrying a rate as low as 5.5 per cent, the bank said.
Tuoi tre (Youth)
newspaper quoted Nguyen Son of the
"The cut will
encourage cash flow into business operations only if the economy is well
restructured," he said.
If other solutions
to stimulate economic development were not implemented effectively, the cash
would find its ways into gold, property, and securities, which could create a
bubble, he said.
He called for
focusing on restructure of the State-owned enterprises and allowing
real-estate companies to go bankrupt if needed.
He also suggested
measures like tax cuts to boost consumption since taxes make up 26-27 per
cent of the GDP against around 20 per cent on average for developing
countries.
"The interest
rate issue is no longer a matter of concern for enterprises, the focus is now
on [market] demand," LienVietPostBank Vice Chairman Nguyen Duc Huong
informed the Voice of Viet Nam (VOV). He suggested that public investments
should be accelerated, and the stock market should offer more room to foreign
investors in order to attract more capital for such investments.
A representative of
Vietcombank Securities Company reported that while bad debts and the health
of businesses remained the major decisive factors leading to limited credit
growth, the lowered deposit interest rate cap was positive news, as the stock
market was likely to see more capital inflows.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Chủ Nhật, 23 tháng 3, 2014
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