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BUSINESS
IN BRIEF 6/3
Dairy
product prices under microscope
The finance and
trade ministries will set up delegations to inspect dairy production and
trading companies after these companies submitted proposals to increase the
prices of their products.
Nguyen Anh Tuan,
director of the Price Management Department under the Ministry of Finance
(MoF), revealed the information following a March 4 meeting between the MoF,
the Ministry of Industry and Trade (MoIT) and other relevant ministries,
aiming to stabilise the local milk market.
Tuan said the
delegations are to inspect factors affecting the selling prices of dairy
products of the five companies and determine whether the companies have
violated the Law on Competition and the Law on Price, and to present
recommendations to the two ministries.
The companies
include Mead Johnson, Nestle
The ministries will
then issue a public report on the inspection results and whether there have
been violations of existing legal regulations, and if there is, they will
respond to such violations.
If dairy prices
keep rising, the relevant offices could apply ceiling price mechanism on such
dairy selling prices in the local market under the Law on Price.
The Price
Management Department reported the dairy production and trading companies
increased prices by 5 to 10% in December 2013
They have continued
registering increases in prices since early this year, though the ministries
have offered many solutions to ease the pressure on the local market.
The department said
it has asked dairy production and trading companies to list prices of their
products, since December 2013 for Mead Johnson, since January for Nestle
“Recently, prices
of input materials throughout the world have increased by 5 to 48%. And those
prices are expected to continue increasing. Additionally, the cost of direct
and indirect labour of the Friesland Campina rose 15% on average since April
2013. But the company had not changed prices,” said Truong Van Toan, External
and Legal Director of Friesland Campina.
“The company has
proposed increasing selling prices for 16 out of its total 47 products to
obtain investment for research and development of products and to assure the
use of good quality materials. It has planned to hike those prices since
February 25 but in fact the prices for the 16 products have remained
unchanged.”
According to Nestle
But the department
asked Nestle
Workshop
highlights eco-innovation in SMEs
The Asian Institute
of Technology in
The workshop aims
at introducing the trend towards Eco-innovation to enhance the enterprises’
competitiveness in the market settings of sustainable consumption nowadays
and in the future.
Eco-innovation is
the development of products and processes that contribute to sustainable
development. It is the development and application of a business model which
will lead to a company’s environmental sustainability performance through a
combination of significantly improved or new product (service), processing,
market approach and organisational structure.
Doctor Nguyen Van
Hop from the AIT-VN said that eco-innovation, or green innovation, enhances
enterprises’ competitiveness while ensuring environmental protection and
making them tap ecological resources effectively.
He also introduced
participants to the results of the Sustainable Product Innovation (SPIN) project,
which is sponsored by the European Union and implemented in
The project has
helped businesses boost sustainable production, he added.
Under the project,
around 2,000 products, including handicrafts, bags, kitchenware and
furniture, were also re-designed or newly-designed to be environmentally
friendly.-
Nearly 100 Japanese
businesses on March 4 gathered at a forum in
The event, jointly
held by the Vietnam Ministry of Agriculture and Rural Development and the
Vietnamese Embassy in
According to
Commercial Counsellor to Japan Nguyen Trung Dung, agro-fisheries cooperation
has significantly contributed to the two countries’ economic development.
Apart from
traditional realms such as the manufacturing industry and trade, Japanese
firms could be potential investors in
To Thi Tuong Lan,
Deputy General Secretary of the Vietnam Association of Seafood Exporters and
Producers, pointed to the fact that while
Between 1993 and
2011,
Along with
fisheries, Vietnamese fruits such as mango, durian, grapefruit and dragon are
also seeking ways to enter
Nguyen Thanh Binh,
Director of VEGETEXCO JSC, said last year
At the forum, a
representative of Yasaka - a Japanese firm operating in
Pham Quynh Mai, an
official of the Multilateral Trade Policy Department under the Ministry of
Industry and Trade (MoIT), said MoIT Minister Vu Huy Hoang attended all
sessions of the February 22-25 meeting and
Despite all-out
efforts, participating parties did not reach consensus on a number of issues,
including intellectual property, market access, and State-owned enterprise
restructuring, Mai said.
The TPP pact aims
for total trade liberalization, with 100% of import tariffs to be slashed.
Over 90% of the tariffs will be cut as soon as the agreement comes into
effect.
However, some
countries such as the
With
TPP will bring
economic benefit to all 12 participating countries, namely Australia, Brunei,
Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US,
and Vietnam.
HNX raises
$1b from Government bonds
The Ha Noi Stock
Exchange (HNX) announced that it has mobilised VND25 trillion, or US$1.19
billion, from seven government bond auctions in February.
Out of them, the
State Treasury raised VND23 trillion, or $1.09 billion, the Vietnam
Development Bank mobilised VND1.25 trillion, or $59.5 million and the Vietnam
Bank for Social Policies sold VND820 billion.
HNX said that the
number of bonds mobilised in the primary market increased 15.9 per cent
compared with that in January.
The interest rate
ranged from 6.15 to 6.58 per cent for two-year bonds, from 6.7 to 7.84 per
cent for three-year bonds and from 7.67 to 9 per cent for five-year bonds.
In the secondary
market, the total number of government bonds in outright transactions reached
336 million that was equivalent to VND35.8 trillion, or $1.7 billion.
The total volume of
government bonds in repurchase transactions reached 89.2 million, equivalent
to VND8.99 trillion, or $428.2 million.
The value of
government-guaranteed bonds was over VND8.19 trillion, or over $390 million,
in outright transactions and more than VND4.48 trillion, or $213.4 million,
in repurchase transactions.
In February,
foreign investors bought bonds worth more than VND5.08 trillion, or $241.9
million, and sold VND3,584 billion, or $170.6 million. In the secondary
market alone, the State Treasury sold 7.4 million bonds, equivalent to over
VND710 billion, or $33.8 million, to international investors.
Japan
boosts trade ties with Vietnam
Nearly 100 Japanese
businesses have attended a
The event, held in
Addressing the
forum, Nguyen Trung Dung, Trade Counsellor at the Vietnamese Embassy in
He said cooperation
between the two countries in such field is mutually beneficial, contributing
to the application of advanced technology in cultivation, production and
agricultural and aquatic products processing.
It directly
translates into increased crop yields and profits, facilitating
To Thi Tuong Lan,
Deputy Secretary General of the Vietnam Association of Seafood Exporters and
Producers (VASEP), discussed the opportunities and challenges in fisheries
trade of
She said
From 1993 to 2011,
This is also a
great opportunity for
He said some
Vietnamese fruits including Hoa Loc mango, Chin Hoa durian, Nam Roi
grapefruit, and dragon fruit, made well-known brands in the Japanese market.
Binh stressed that
in order for
In 2013,
At the forum,
Japanese companies such as Maple Food and Yasaka also shared their experience
in investment in
A representative
from Yasaka Company considered technology transfer to
Long An
increases cooperation with Cambodian province
The southern
The agreement was
reached at a working session in Long An on March 4 between leaders of the two
provinces.
The Vietnamese locality
will build Tan Hung-Svai A Ngoong bridge, upgrade a power supply system,
provide farming techniques, supply vaccines, and train medical staff in Prey
Veng.
Both sides agreed
to sign a document on border security management and protection.
Since Long An and
Prey Veng signed their bilateral cooperation agreement a year ago, they have
opened a pair of auxiliary border gates, provided medical check-ups and
treatment for more than 1,000 people in their shared border, and trained
Cambodian officials in Vietnamese language.
The Prey Veng
delegation made a fact-finding tour of a big paddy field, a rice
cross-breeding farm, a dragon fruit garden in a number of districts in Long
An on March 3.
Travel
agents to charge for VN Airlines bookings
Ticket agents would
be allowed to determine additional charges for booking from March 15, instead
of applying charges fixed by Vietnam Airlines as it was being done.
However, the total
ticket prices (excluding value added tax) would not be allowed to exceed the
ceiling prices set by the Civil Aviation Authority of Viet Nam.
The additional
charges include fees for booking, ticket printouts and other services.
Vietnam Airlines
said that this would enhance competition among agencies and encourage them to
improve the quality of services.
Vietnamese
firms aim to invest more in Laos
Vietnamese firms in
Representatives
from 50 Vietnamese enterprises attended the meeting.
The main investment
sectors include mining, agriculture, construction, banking, insurance and
services.
More than 470
companies from over 28 countries and territories are showcasing new and
advanced products and technologies at two exhibitions, Propak Viet
The three-day
Propak is the leading international showcase for Viet Nam's growing food,
drink, and pharmaceutical industries, featuring packaging solutions,
machinery for producing confectionery, food ingredients, and others.
Plastic &
Rubber
"Propak Viet
"The events
will encourage industrialists to develop their business and seek new
technologies and innovations while networking with world-famous
companies."
Plastics exports
are expected to grow at 13.5-16.5 per cent this year.
The event will also
feature conferences and seminars on industry trends, regulations, packing
design improvements, 3D printing, and food engineering development and
challenges.
Visitors can meet
business executives from
Twelve Italian
manufacturers have been taking part in the exhibition.
According to the
Italian Trade Commission in
The exhibitions are
being held at the Sai Gon Exhibition and Convention Centre in District 7.
Long Tet
holiday hits motorbike sales
According to the
Viet Nam Association of Motorcycle Manufacturers (VAMM), while January saw
335,000 motorbikes sold, that was still down 97 per cent year on year, and February
may experience a record slump, with around 200,000 units sold.
Of this figure,
Honda accounted for 219,000 bikes and 115,000 motorbikes in January, and
February, respectively.
Honda's General
Director, Masayuki Igrashi, who is also the chairman of VAMM, attributed the
slowdown to the prolonged holiday and economic difficulties, which generally
dampen demand.
Known locally as
Tet, the celebration of the Lunar New Year is
But this year,
critics are arguing that the popular, protracted Tet holiday is actually
hurting the already fragile economy.
"This is the
worst time since I started the business 15 years ago. I am thinking about closing
the dealership and turning it into a restaurant," said Pham Manh Sy,
director of the Viet Phu Company, a prominent Yamaha dealer in Ha Noi.
Sy told Viet Nam
News that unlike previous years when they had enjoyed better sales numbers
during the period around Tet, he only sold three motorbikes last month.
Motorbike sales in
Domestic motorbike
sales for 2013 dropped to some 2.5 million, compared to 3.1 million in 2012,
according to the Viet Nam Auto Motorcycle and Bicycle Association.
In addition, 2012's
growth was down 5.03 per cent over 2011, the slowest pace in 13 years, the
association reported.
Last month, the
VAMM made its debut with the goal of building a healthy motorcycle industry
and overcoming the current difficulties.
The association's
five founding members include Honda, Yamaha and Suzuki of
Meanwhile, the
market for high powered motorbikes is expected to boom after the government
moved to relax policies on driving licences, which took effect this month.
Last year, the
Ministry of Transport removed regulations on providing the special A2
licences for motorbikes with an engine capacity of more than 175 cc. The
licence was previously limited to specific applicants, typically police
officers, military personnel and motorsport athletes.
According to the
ministry, the A2 licences will be granted to applicants who pass driving
tests for high-capacity motorbikes.
Market insiders
said, despite tight regulation on A2 licensing, the high-powered motorbike
market had seen rising sales in recent years.
Meanwhile, many
people have been reportedly trying to join motorsport clubs, just to become
eligible for the licences.
Nguyen Van Dung,
director of Viet Nhat Corporation, a leading dealer for imported bikes in Ha
Noi, said last year his company began importing a range of high-powered
bikes.
"I think there
will be a influx of high-powered imports from now on to service the boom in
demand after the A2 law is removed," he said.
HCMC
assists
The southern
provice of Tay Ninh needs HCM City to boost consumption of farm produce from
Tay Ninh, help establish areas for cultivation of clean and safe vegetables,
further develop dairy farming and introduce hi-tech industries, officials
said on Saturday.
They also called
for greater co-operation in tourism development and developing a skilled
human resource base for the health sector.
The province also
needs more help in dealing with its environmental problems, the officials
said at a conference that reviewed socio-economic cooperation between the two
localities in the 2007 – 2013 period and set tasks and orientations for the
next seven years.
The conference
heard that businesses based in
A report submitted
at the conference that reviewed socio-economic co-operation between the two
localities for the 2007 – 2013 period said the money has been invested in
over 100 investment projects. Of these, 49 projects with a total investment
of VND7.86 trillion ($373 million) are operational and 19 others worth
VND4.17 trillion ($197.5 million) are under construction.
City businesses are
also preparing to carry out 30 other projects with a registered capital of
nearly VND4.2 trillion.
The municipal
administration is helping Tay Ninh with a number of transportation projects
including VND5 billion for building a road running around the Southern
Revolution Historical Monument complex that costs a total of VND33.5 billion,
and VND9 billion support for a VND18 billion project to expand the provincial
Road No 12.
The Sai Gon
Transport Engineering Corporation has provided 23 buses worth VND29 billion
to improve travel and transport services in the province.
The two localities
have also co-operated in areas including health, education, radio and
television, culture, sports and tourism, industrial and business development,
science and technology, agriculture and rural development, mineral resources
and environment, and banking.
Looking ahead, Le
Hoang Quan, Chairman of HCM City People's Committee, asked officials of both
localities to strengthen co-operation towards optimum exploitation of the
potentials and advantages of each locality. These included science and
technology transfers and the development of hi-tech agriculture, he said.
Energy
production sees steady rise in February
The country's
energy sector witnessed a relatively high growth rate in the initial two
months of 2014 compared to the same period last year, stated the Ministry of
Industry and Trade.
The figures
released at a press meeting held in Ha Noi, on Tuesday, showed that the
electricity production in February was estimated at 9.31 billion kWh,
reducing 7 per cent as compared to the previous month, but increasing19 per
cent in comparison to the same period last year.
The power output in
the first two months of the year reached 19.33 billion kWh, posting a10 per
cent year-on-year increase.
The petroleum
sector also reported high growth of all key products in the period.
The coal
exploitation output increased last month, while consumption was estimated at
2.78 million tonnes, reducing by 9.5 per cent in comparison to the
corresponding period last year.
The total coal
consumption in the first two months of the year reached 5.7 million tonnes,
recording a 9.4 per cent year-on-year decrease.
Last month, the
coal exports were recorded at 0.87 million tonnes, bringing the total during
the two-month period to 1.4 million tonnes.
The domestic coal
consumption during the period was 4.4 million tonnes, increasing 1.3 per cent
over the same period last year.
The ministry also
noted that the steel consumption during the period saw a 30 per cent
year-on-year decrease and was recorded at 300,000 tonnes.
The steel inventory
during the period saw a sharp increase of 40 per cent as compared to the same
period last year.
Le Phu Hung, the
general director of Viet Nam Steel Corporation (Vinasteel) said that steel
production and consumption were still facing difficulties due to the low
purchasing power.
Hung added that the
corporation reported losses in the last two consecutive years, though it
accounted for 40 per cent of the country's market share.
Its revenue in the
initial two months of the year was recorded at VND7.2 trillion (US$342.86
million), accounting for 14.2 per cent of the entire year's target.
The ministry
claimed that the steel supply surpassed the demand, thus making it difficult
for businesses to increase prices while retaining customers. It has forecast
that the total steel consumption for 2014 will be 12.2-12.5 million tonnes,
increasing only 3-5 per cent over the last year.
With regard to
investment in the sector, Deputy Minister Le Duong Quang requested Vinasteel
to make the Thai Nguyen Steel Factory operational as per set schedule.
In addition, Quang
urged the corporation to accelerate its restructuring process in order to
reduce intermediate costs.
"Vinasteel
should carefully review its capacity of Engineering, Procurement and
Construction (EPC) or it will have to focus on restructuring its member
companies," he explained.
Fielding questions
on a possible increase in electricity tariff, Dang Huy Cuong, the head of the
ministry's Electricity Regulatory Authority of Viet Nam reported that they
had not yet received any proposal from the Electricity of Viet Nam for any
adjustment.
"The
adjustment will have to follow several legal documents, such as Decision
69/2013 on average electricity mechanism and electricity retail price framework,"
he noted, adding that they would also take into consideration macroeconomic
factors and CPI.
Jan-Feb
budget collection reaches 6.18 billion USD
State budget
revenue in the first two months of this year was estimated at over 129.8
trillion VND (6.18 billion USD), according to the Ministry of Finance.
The sum accounted
for 16.6 percent of the whole year’s budget estimates and represented a
year-on-year rise of 12.9 percent.
Of the amount, 93
trillion VND came from domestic taxes, equivalent to 17.3 percent of the
year’s estimates. The outcome was attributed to bustling economic activities
in the last months of 2013 and the first months of 2014.
The 11.6 percent
increase in total retail sales and consumption service revenues greatly
contributed to the two-month budget collection, plus 1.8 trillion VND from
dividends of State capital at State-owned companies and 2.1 trillion VND from
small- and medium-sized enterprises’ corporate income tax.
32 trillion VND was
collected from import-export activities, or 14.3 percent of the estimates.
The ministry also
revealed an estimated budget spend of 150 trillion VND during the period,
accounting for 15 percent of the forecast and up 4.3 percent year-on-year.
To cover a budget
overspend of 20.2 trillion VND, the management agencies issued more than 51
trillion VND worth of Government bonds, fulfilling 17.5 percent of the yearly
plan.
Nhon Trach
2 power plant meets electricity targets
The Nhon Trach 2
thermal power plant in the southern
Since early this
year, it has generated some 900 million kWh of electricity, fulfilling 77
percent of its Q1 plan and on track to provide 4 billion kWh for the national
grid this year, equivalent to 5-6 percent of the national output, said the
PetroVietnam Power Nhon Trach 2 Company on March 4.
In partnership with
the National Load Dispatch Centre, the Electricity of Vietnam and its
transmission units, the plant ensures that its supply of power to the
national grid will remain stable.
Built by the
PetroVietnam Power Corporation and the PetroVietnam Power Nhon Trach 2
company, the 700 million USD plant, with three turbines, is designed to churn
out an average of 4.2 billion kWh each year.
It also plays an
important role in supplying electricity to the southern key economic region.-
Agricultural
reform for farmers' benefit: analysis
Vietnam has a
relatively high rate of the population living in rural areas and participating
in the agricultural sector. However, the majority of farmers in the country
have to accept the paradox of bumper crops resulting in low prices, and
seeing high prices only after poor crops.
An analysis by the
Communist Party of Vietnam (CPV) online newspaper said this is a factor that
makes farmers’ life very hard. In the value chain of exported rice, although
farmers’ role is essential, their benefit is of secondary importance. The
paradox has existed for many years and the sad fact is that there has been no
feasible solution.
In the message
early this year, one of the important issues Prime Minister Nguyen Tan Dung
clearly stated was to restructure the agricultural sector. This shows that
the structure of the agricultural sector now has many shortcomings and it
needs to be changed.
In parallel, it is
necessary to change the way of thinking and doing in order to build a modern
agriculture. In the new agriculture, farmers not only know how to apply high
technology to increase the value of products, but also change methods of
transaction, trading traditional agricultural products and applying more
advanced and effective business method.
In developed
countries, agriculture is mechanised at the very high level of technology
from the stage of harvest, drying and processing. Moreover, farmers also set
up a web to connect with rice-trading centres, extensively promote their
products to sell faster at higher prices. Thanks to this, many farmers reduce
risks in the production process, save labour costs and get higher profits
than their colleagues in developing countries, including Vietnam.
Farmers are not
only the dominant force in production but also beneficiaries of their fruits.
If things are not changed, for many years, tens of millions of Vietnamese
farmers will still suffer, working hard but for an income which doesn't match
their efforts.
The large-field
model has taken shape and gained initial success. This is not only the
inspiration of managers, agronomists but also farmers who have been put under
compulsion in small fields of the outdated and backward agriculture for
generations. It is impossible to have a strong and modern agriculture with
small fields separated by thousands of edges.
In the process of
restructuring the agricultural sector in the coming time, the Government
should quickly create favourable conditions for private enterprises and
foreign direct investment (FDI) businesses to participate in this field.
Moreover, it should
dissolve unprofitable State-owned enterprises in the sector, end the
monopoly, create a level "playground" for all businesses so af to
facilitate a healthy competition within the business community involving in
the sector.
In the coming
years, authorities need to prepare basic steps towards building a market for
agricultural product trading, auction like some developed countries to help
farmers avoid having to sell at low prices. In addition, it is essential to
establish an agricultural price insurance fund to protect farmers against
natural disasters and epidemics.
Besides the role of
the State, farmers must also adapt themselves to changes to develop.
Particularly, the application of high technology in production as well as
trading agricultural products requires a deep understanding and more
professional skills. In this regard, the role of farmer’s associations, human
resources training centres for the agricultural sector, and agronomists is
very important.
The recent economic
crisis has proved that the agricultural sector is a platform of the global
economy. Not many countries in the world become well-off thanks to
agriculture, but every country also considers agriculture as a fundamental
factor behind long-term prosperity. The key elements of agriculture make many
countries change their development strategy in recent years, pay attention
and pour more investment into this field.
For Vietnam,
restructuring agriculture in the overall restructuring of the whole economy
is not a mission impossible. However, for the successful restructuring, in
addition to the determination of the political system, special attention must
be paid to the benefit of farmers.
Tobacco
company hits out at proposed tax hike
A top official of
the Vietnamese tobacco industry has proposed an urgent crackdown on smuggling
instead of raising a special consumption tax on tobacco products in order to
save money for the State budget.
He made the
suggestion after the Ministry of Finance unveiled a plan to raise the
consumption tax on cigarettes to 75 percent by July 2015 and 85 percent by
2018, as part of draft amendments to the Law on Special Consumption Tax.
In a recent
interview with the Vietnam News Agency, Chairman of both the Vietnam Tobacco
Association and the State-owned Vietnam National Tobacco Corporation Vu Van
Cuong said the hike will pave the way for smuggling, reducing the domestic
tobacco industry’s market share, translating into poorer takings to the State
budget.
As smugglers can
evade tax, they can offer lower prices than those of locally-made products.
The domestic smokers thus easily turn to the contraband, irrespective of its
harm on their heath, he said.
He cited the tax
hike from 45 percent to 55 percent in January 2006 and the current 65 percent
in 2008 as the reason for a 50 percent growth of contraband tobacco from
2006-2012, or some 6 billion cigarettes
The 2012 survey by
the International Tax and Investment Centre and Oxford Economics showed that
Vietnam is the second largest consumer of smuggled cigarettes among 11
surveyed Asian nations.
In 2013 alone,
illicit cigarettes took away 20 percent of domestic market share. The State
loses an estimated 6.5 trillion VND (309 million USD) in tax each year. As
these products are not subject to any regulation on displaying health
warnings and their tobacco content, their quality is not ensured.
Cuong suggested the
Prime Minister direct a nationwide anti-smuggling campaign, previously
successful in the 1990s, especially near south-western border gates where
contraband tobacco products often make their way to vendors and pharmacies.
He said once
smuggling is stopped, the tobacco tax can be raised along a suitable roadmap,
adding that the sector contributed nearly 20 trillion VND (nearly 1 billion
USD) to the State budget.
Amended law
expected to remove business bottlenecks
In a bid to
implement the guidelines in the Prime Minister’s 2014 New Year Message,
authorities of various levels are working to collect comments on the
amendments to the current Law on Enterprises, according to the Government
Portal.
The revised law is
expected to remove the bottlenecks for businesses, especially the
registration of business lines.
Under a draft
version, ministries, ministerial-level agencies, provincial People’s Councils
and Committees are not allowed to issue regulations on business lines that
are prohibited or conditional as well as regulations on business conditions.
Enterprises may not
have to register business lines, according to the amendments.
Many experts and
business leaders said the new provision on business registration is a
strategic breakthrough in facilitating the start-up and operation of
enterprises.
The current Law on
Enterprises only allows enterprises to operate in areas that are not
restricted by law but the notion “law” is so immense. It means that
enterprises have to overcome a burden of administrative procedures.
On the other hands,
the current law stipulates that enterprises have to operate in accordance
with the business lines that they have registered.
Under the amended
version, the right to issue regulations on business prohibition and
conditional business belongs to the National Assembly, the its Standing
Committee, and the Government. No other agencies have such right.
Enterprises can
expand business lines and they only need to report the change to the business
registration agency.
Some warns that the
above amendments would make it difficult for the State management. However,
as written in the PM’s New Year message, the State should function as the
development facilitator while State organs and cadres and civil servants can
only do things that law allows.
In this spirit, the
draft version reflects the State’s effort to create further favourable
conditions for citizens and enterprises.
In a broader view,
the amended versions of the Law on Enterprises and the Law on Investment are
part of the institutional reform which is considered as an inevitable
requirement.
Prime Minister
Nguyen Tan Dung pointed out that over the past 30 years of renewal, the
country’s outstanding achievements have close relations with institutional
reform process and now it is time to refresh this process to generate greater
impetus for fast growth and sustainable development.-
Honda
Vietnam head promoted, to leave Vietnam
General director of
Honda Vietnam Masayuki Igrashi is being promoted and will leave Vietnam after
two years leading Vietnam’s biggest motorcycle manufacturer.
At the launch of
the new Honda RSX F1 motorcycle in Hanoi late last week, Igrashi said he
would be leaving the country on March 31 and added that he had been promoted
to be managing director of Honda Asia. He will be responsible for Honda’s
motorcycle business throughout Asia and Australia.
Igrashi was made
general director of Honda Vietnam in 2012, replacing previous general
director Koji Onishi who held the position for five years. Over the past two
years, Igrashi has faced a tough marketplace amid economic difficulties.
Every manufacturer has reported declining revenue.
In 2013, Honda
Vietnam sold 1.87 million motorcycles, falling 9 per cent on-year. This year
the company plans to export 100,000 units, a steep rise against the 40,000
units sold overseas last year. This increase is hoped to offset declining
local sales.
In similar news,
Honda Vietnam announced it would open its third factory in the country this
year. It has been under construction in Ha Nam province for the last two
years and was suspended because of the market decline. But it has been
renovated to focus on motorcycles rather than scooters.
$73.9 million
ODA loan to expand southern hydropower plant
Vietnam and Japan
recently signed a $73.9 million ODA loan agreement to expand the Da Nhim
hydropower plant in the south.
According to the
Japan International Cooperation Agency, the ODA donor to the project, the
objective is to increase the output of the plant particularly at peak times
by installing an additional power generator.
The loan will go
toward civil works and equipment necessary to expanding the plant’s current
160 megawatt capacity as well as consulting services. Da Nhim hydropower
plant started construction in 1959 with reparations from Japan to Vietnam and
started operations in 1964.
In 1997 a Japanese
ODA loan supported renovations to the plant’s deteriorated transmission and
conversion facilities.
Because of the
history of the Da Nhim plant, Vietnam has high expectations for further
support from Japan.
According to JICA,
letters of invitation for consulting services will be issued this month and
the new facilities are expected to be put into service in August 2016.
According to the
Seventh National Power Development Master Plan (2011-2020), the government
plans to add nearly 50,000 megawatts to the national grid by building new
power plants.
The southern area
of Vietnam alone will need an additional 23,735 megawatts by 2020.
Modest
results from ethanol projects
Member units under
state giant Vietnam National Oil and Gas Group are swallowing a bitter pill
on their ethanol investments.
The PetroVietnam
group is currently taking the lead of the state’s ethanol industry
development with three factories planned to produce 300,000 tonnes per year
in Phu Tho, Binh Phuoc and Quang Ngai provinces.
Five years have
gone by since the establishment of a steering committee for implementing
bio-fuel projects which is headed by the chairman of PetroVietnam and the
projects currently in the development pipeline have seen slow progress.
At the Phu Tho
biofuel plant, construction is only 78 per cent complete. This is largely
blamed on PetroVietnam’s Construction Joint Stock Corporation having little
experience with the engineering-procurement-construction (EPC) contract model
and its own financial struggles.
In this context the
project’s founding shareholders’ were split on how to address the problem and
PV Oil – a PetroVietnam member – has reduced its stake to 39 per cent and
therefore cannot make major decisions.
For the project, PV
Oil has two options – sourcing outside shareholders who have an interest in
its continued involvement or selling its stake and exiting the project, said
a PetroVietnam source.
In regard to the
Binh Phuoc biofuel project, although it was opened in 2013 it had to suspend
production due to poor sales.
PV Oil has a 29 per
cent stake in this project and the other two shareholders – Japan’s Itochu
and local firm Licogi 16 – reportedly want to sell their shares, preferably
to PV Oil. But the company has not decided due to the problems with the other
projects.
PetroVietnam
estimates that Binh Phuoc’s suspended operations will amount to a loss of
around VND270 billion ($12.8 million) a year from interest, machinery
amortisation and operating costs.
The Dung Quat
biofuel plant in central Quang Ngai province produced 27,000 cubic metres of
ethanol last year, but only 10 per cent was sold domestically and the rest
was exported with limited returns.
A feasibility study
done for the project put the input material (cassava) cost at around VND1,800
per kilogram with end-use ethanol fetching VND10,000 per litre on average.
But during 2012-2013 the price of cassava rose by VND5,000 per kilo while
ethanol only went up to VND13,000 per litre. Higher production cost has
yielded limited returns.
Since ethanol
production is new to Vietnam, EPC contractors have little experience which
has led to projects having higher than expected costs and longer construction
times.
Vinaconex
issues profitability boast despite slow market
Vietnam’s leading
construction firm Vinaconex announced significant profits last year despite a
sharp fall in revenues from real estate trading.
Particularly,
thanks to an asset transfer valued at VND337.6 billion ($16 million) from Cam
Pha cement project to Cam Pha Cement Co., the company reported a rise in
profits in the last quarter of last year.
Vu Quy Ha, general
director of Vinaconex, said their construction business made up a majority of
total profits, offsetting frozen real estate activities. The proportion of
revenues from construction increased from 3.09 per cent in 2012 to 60.12 per
cent in 2013 and were valued at VND6.8 trillion ($325 million).
As expected, real
estate activity revenues fell from VND1.8 trillion ($85 million) in 2012 to
just over VND1 trillion ($51 million) in 2013, while revenues from industrial
production and consultancy services saw no significant changes.
By the end of last
year, Vinaconex reported revenues of more than VND11.3 trillion ($540
million), falling VND1.3 trillion ($63 million) compared to 2012.
Last year,
Vinaconex’s financial activities dropped to VND54 billion ($2.6 million) from
VND150 billion ($7.1 million) in the previous year while dividends
skyrocketed to VND159 billion ($7.6 million).
Financial revenues
included the corporation earning profits of VND8.4 billion ($400,000) from
selling securities this year while in 2012 it earned no profits from this
activity. Vinaconex also reduced its short-term securities investments from
VND7.3 billion ($347,619) in 2012 to VND956 million ($45,523) in 2013.
The corporations
interest payments on loans last year fell by VND305 billion ($14.6 million)
against the previous year as a result of banks’ reducing their interest
rates.
Despite lower
revenues in 2013, Vinaconex saw a 683 per cent rise in profits against 2012.
The sharp increase was attributed to the company laying-off more than 1,600
labourers which reduced, specifically, management costs to VND420 billion
($20 million) against 2012’s VND800 billion ($38 million).
In the area of
property trading, Vinaconex divested from the Park City Project in Hanoi’s Ha
Dong district. The corporation transferred 3.75 million shares, or 25 per
cent of the chartered capital of Vinaconex Hoang Thanh – the investor in the
Park City Project - to Perdana, an affiliate of Malaysia’s biggest timber
cutting group Samling.
Last year,
Vinaconex also put its position in the Splendora township – invested in by An
Khanh JVC, a joint venture between Vinaconex and South Korea’s Posco E&C
– up for sale. Vinaconex currently owns 50 per cent of the chartered capital
of the $2 billion project but has yet to get a buyer to bite.
Although Vinaconex
has pulled out of some projects, it still remains a real estate giant with
property developments such as the 423 project and two urban area projects in
Hanoi, the Housing Complex at the B3 Bloc in Danang, and the Cat Ba Amatina project
in Haiphong.
But these projects
seem to be a growing concern for Vinaconex as of late, they require vast
amounts of capital amid a static real estate market.
Vietnam’s
failing cement makers fear foreign buy-outs
Cement industry
insiders are worried that foreign investors will swallow up domestic
producers through merger and acquisition activities as many Vietnamese
companies are on the verge of bankruptcy.
Foreign investors
are keen to buy into Vietnam’s failing cement makers in order to access clinkerPhoto:
Duc Thanh
A representative of
state-run Vietnam Cement Industry Corporation (Vicem), Vietnam’s largest
cement producer, admitted that many domestic firms were on the verge of
bankruptcy due to the falling domestic demand, high interest rates and oversupply.
Vicem itself is already burdened by profligate and inefficient affiliates,
while the total debts owed to Vicem are approximately four times its total
equity capital.
Despite the rich
potential offered by mergers and acquisitions (M&As) in the sector, no
domestic strategic investor has sufficiently strong financial resources to be
able to purchase weak cement factories.
Nguyen Quang Cung,
chairman of Vietnam Cement Association (VCA) said foreign investors were
poised to buy cash-strapped domestic cement firms to ease entry into the
Vietnamese market and pick up cheap licences to quarry clinker. He worried
that as foreign investors become the main shareholder, it was hard to control
export cement prices or clinker mines.
Many foreign
investors have said they were willing to buy faltering cement firms but only
on the condition that they can pick up the licences to exploit clinker
production.
Harish Ta Paria,
director of Alliance Mineral said that domestic cement firms would struggle
if they did not own clinker quarries.
Foreign-invested
firms now accounts for up to 30 per cent of the Vietnamese cement sector’s
total output, according to VCA.
However, Nguyen
Ngoc Dao, a consultant for Gimpex Group said “Why do we have to worry? We
have policy and tax tools. These should encourage foreign investors to enter
the Vietnamese market while ensuring our mineral resources stay in-country.”
In the past three
years some ten M&As have occurred in Vietnam’s cement sector. The recent
M&A deals showed that foreign investors, mostly from ASEAN countries,
remain keen on Vietnam’s cement sector, the Vietnam Association of Financial
Investors claimed last year.
Tan Sri Francis
Yeoh, managing director of Malaysia’s YTL Cement Bhd which could become an
investor in Vinaconex’s $285 million Cam Pha Cement facility in the northern
province of Quang Ninh was quoted as saying, “The group already has a
presence in Vietnam. We’re already providing power services in the country
and hope to strengthen our presence.”
PT. Semen Indonesia
Tbk, previously known as Semen Gresik, Indonesia’s largest cement producer,
bought the Thang Long cement plant.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Tư, 5 tháng 3, 2014
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