BUSINESS IN BRIEF 22/6 Vietnamese farmers taken in by Chinese partners Many Vietnamese traders have been working with Chinese partners in deals that ultimately cheat Vietnamese farmers. Recently, Vietnamese traders, along with Chinese partners, create an increase in sweet potato prices. Due to the high prices, in recent years many farmers in Binh Tan District, Vinh Long Province, rushed change their plots from rice paddies and grow sweet potatoes. Impromptu trading areas have been set up where sweet potatoes are sold to traders in order to fulfill their contracts with Chinese partners. Most of these are in Binh Minh and Binh Tan districts certifying their standards. However, once farmers have changed their crops, the traders work together to force the prices down again because of the high supply. At their height, prices were around VND1 million (USD47.6) per 60kg, while after the price-fixing they dropped as low as VND200,000. Meanwhile, most contracts between farmers and traders are based on verbal agreements, further allowing the frequent price squeezes. Fields in many districts in Vinh Long Province growing sweet potatoes have been passed over by traders during harvest time. Mr. Tu Phuc, a farmer in Binh Tan District, said that the total cost per hectare for growing sweet potatoes can reach VND140-170 million, not including land rental fees, leaving farmers in a difficult position amid the price squeeze. Farmers in Binh Tan District have always looked up to a trader called Pham Trung T, who specialises in selling sweet potatoes to China. T had many contracts, but when his partners failed to make good, he fell into debt. It is said that T even turned to cheating his family to keep afloat. This does not seem to be a unique story. Many small seafood producers in Nam Can, Ca Mau Province have also fallen victim of Chinese traders. In the period between late 2011 and early 2012, Chinese traders flocked to there to buy crab at high prices, using Vietnamese intermediaries. At first they paid the Vietnamese traders up front, but soon fell behind in their payments, causing large losses for traders and farmers alike. Equitization brings back new opportunities The Vietnamese Government committed to restructuring the economy, focusing on investment, State-owned enterprises, and banking-finance, which opens up new opportunities for local and foreign investors, official said. Deputy Minister of Planning and Investment Nguyen Chi Dung told delegates to the Viet Nam Investment Forum 2014 in Ho Chi Minh City on June 19. Between 2014 and 2015, the Government planned to equitize 432 State-owned enterprises and investors can join the process. The opportunities are consolidated by the country’s efforts in improving the business environment through amending and supplementing the Laws on Enterprises, Investment, Real Estate Business, Housing among others. Mr. Dung said that over 17,000 accounts have been opened by foreign individuals and organizations in the Vietnamese stock market while a number of big investment funds and investors have expanded operations in Viet Nam. According to the Ministry of Planning and Investment, foreign direct investment reached US$5.51 billion in the first five months of 2014 and the disbursed value increased by 0.4% to US$4.6 billion. The FDI sector’s export volume accounts for 67% of the country’s total export figure, up 18.6% against the same period last year. VN, EU resolved to conclude FTA talks this year Viet Nam and the European Union are resolved to conclude the free trade agreement talks this year, according to an official from the Ministry of Trade and Industry. Deputy Minister of Trade and Industry Tran Quoc Khanh said that 90% of the Vietnamese products will enjoy tax exemption if the two sides sign the FTA, opening up vast opportunities for the Southeast Asian country to join the global supply chain. In June 2012, Viet Nam and the EU launched negotiations for the FTA with a view to ensuring an effective environment for trade and investment relations. The EU works closely with Viet Nam under the framework of a Partnership and Cooperation Agreement inked in June 2012, creating a solid foundation to intensify relations further in a broad range of areas. In a wider context, ASEAN as a whole represents the EU's 3d largest trading partner outside Europe (after the US and China). Of the ten ASEAN members, Viet Nam is the EU's 5th most important trading partner. Dak Nong to invest in aluminum project People's Committee of the Dak Nong Central Highland Province had a working session with the Tran Hong Quan Trading Co Ltd this week for the construction of a project. The working session was held to outline a plan for the construction of Dak Nong aluminum-electricity project at a total cost of US$500 million. During the first phase, the plant expects to have a production design of 300,000 tonnes of finished products during 2013-2015. In the second phase, the plan will have a capacity of 600,000 tonnes of finished products annually. The project is invested by Tran Hong Quan company, and raw materials for the plant production will be provided by the 650,000 tonne capacity Nhan Co Aluminum Plant in the same province, which is invested by the Nhan Co Aluminum Joint Stock Company under the Viet Nam Coal and Mineral Industries Group at a cost of more than VND11.5 trillion ($547.62 million. British group opens information centre The British Business Group Viet Nam (BBGV) opened its new information centre to create a bridge between the UK and Vietnamese businesses through various services including market research and business connections. Speaking at the ceremony in HCM City yesterday, British Ambassador Tony Stokes announced that he saw great business prospects in Viet Nam despite the high tension in the East Sea. According to the ambassador, Viet Nam must implement three factors to lure more foreign enterprises: accelerate licensing procedures, lift more foreign ownership limits and handle corruption effectively. Highway expansion hits a rocky slope A lack of suitable rock is likely to slow down the construction of part of Ho Chi Minh Highway running through the Central Highland provinces of Dak Nong and Binh Phuoc. Director of the highway management board Lam Van Hoang said that 11 stone providers were unable to supply crushed rock because their licences had expired. "It takes them at least six months to get an extension or apply for new ones," Hoang said. He said the demand for stones would increase when work speeded up during the dry season that started in Novemner. "Now is the time for quarry merchants to make sure they have sufficient supplies,"" Hoang said. Nguyen Dinh Tuyen, director of Truong Hai Ltd Company, a quarry based in Dak Nong Province, said that in January, the provincial People's Committee allowed the company to continue mining even though its licence was invalid. The company, which has supplied about 40 per cent of crushed rock for the highway in Dak Nong, is now waiting for licence extension procedures to be approved by Ministry of Natural Resources and Environment. Last month, the ministry asked the company to stop mining because the province was not authorised to grant a temporary mining licence. Khang Thinh Stone Mining Ltd Co in Binh Phuoc Province's Bu Dang District submitted an application to explore for sources of stone last month after its mining licence expired. Hoang, from the highway management board, said the Ministry of Transport was being allow mining sites to operate normally while waiting for their applications to be processed. "An exception is needed because the highland through central provinces is planned to open for traffic by the end of next year," he said. Farmers look for higher value The Cuu Long (Mekong) Delta province of Tra Vinh will convert 9,000ha of fields from rice to high-value crops for this year's summer-autumn and autumn-winter crops. Tran Trung Hien, director of the province's Department of Agriculture and Rural Development, said the area to be converted accounted for only 3 per cent of the province's total rice cultivation. The decision is part of the Government's plan to restructure the agricultural sector, he said. In Cau Ke District, many farmers have shifted to another crop on their rice fields, especially in Chau Dien Commune. Thach Truong, one of the first rice farmers in Chau Dien's Rum Soc Hamlet who switched to red chilli and corn, said he had earned VND50 million (US$2,400) in annual profits from one crop of bird's-eye chillis and one crop of waxy corn on 5,000 square metres of land. Luu Trong Dien, chairman of the Chau Dien Commune Youth Association, said the conversion of ineffective rice fields into other high-value crop areas would raise farmers' incomes. The cultivation model of growing bird's-eye chillis and waxy corn on converted rice fields has yielded profits three to four times higher than rice, he said. The provincial Department of Agriculture and Rural Development is working with district People's Committees to identify ineffective rice fields that should be used for other crops. It is also teaching farmers how to choose plants like corn, red chilli, peanuts and orange trees for converted rice fields. Duong Van Dom, head of the Cau Ngang District's Agriculture and Rural Development Bureau, said the district would convert 600 ha of ineffective rice fields on mounded land to other crops in this year's summer-autumn crop. The district will also develop large-scale fields to grow crops, he said. Under the Government's plan to restructure the agriculture sector, the Government has decided to finance VND2 million ($95) per hectare for farmers who convert ineffective rice fields to other crops. Dong Van Lam, chairman of the provincial People's Committee, has told departments and agencies to raise local farmers' awareness about the Government's policy to convert ineffective rice fields into other crop cultivation areas. However, if there is a need to ensure the country's food security, farmers will have to grow rice on these areas again. Falling output likely to hit tra fish exports Viet Nam's exports of tra fish (pangasius) is expected to not exceed US$1.75 billion this year because of a decline in the number of aquaculture ponds and output, heard a conference held by the Viet Nam Pangasius Association in Can Tho City this week. Last year, the country had 5,556 ha under tra fish breeding, only 93 per cent compared with 2012, according to figures released by the Fisheries General Department (under the Ministry of Agriculture and Rural Development). Total tra fish production last year was only 88 per cent of 2012. However, exports of tra fish to the US fell while exports to the EU increased in the past few months, making the EU the biggest market for Viet Nam's tra fish, while the US ranked second, according to figures from the Viet Nam Customs Bureau. The Mekong provinces accounted for 87 per cent of the areas under tra fish breeding in the country. The conference, chaired by Vu Van Tam, the deputy minister of Agriculture and Rural Development, also introduced a new decree to local seafood enterprises in the region. From June 30 this year, seafood enterprises will have to obtain confirmation of signed contracts from the Viet Nam Pangasius Association for their tra fish exports as regulated in a new government decree. The Decree 36/2014/ND-CP says tra fish exporters will have to seek approval from the association for deals they have signed with their customers before they are allowed to deliver the fish. The association will check to see if enterprises have met all the requirements provided in the decree, and customs officers will depend on confirmation by Viet Nam Pangasius Association to complete clearance procedures for the exporters. The decree clarifies that exporters must have fish farms located in the zoned areas approved by the Ministry of Agriculture and Rural Development and meet the criteria for fish processing and exporting. It also requires trade agreements between processing enterprises and the households and cooperatives that supply the fish. If the processors and fish farmers do not have any trade agreement, Viet Nam Pangasius will decide the export price of fish and arrange agreements for the two sides to avoid a situation in which exporters sell tra filets at much higher prices than they offer to farmers. The decree also requires that, from December 31, 2015, owners of tra fish farms will have to meet Vietnamese Good Agriculture Practices (VietGAP) or global standards such as GlobalGAP and ASC. Norway, Sweden, Germany and Belgium have set requirements for Vietnamese tra fish in line with standards set by the Aquaculture Stewardship Council (ASC), which was established by the WWF and the Dutch Sustainable Trade Initiative in 2009. Meanwhile, GlobalGAP standards are usually applied to products exported to North America. The new decree also regulates an ice topping rate of lower than 10 per cent for every kilo of tra fish filets. It also requires that local exporters meet the standards of importing countries. Forum looks forward to AEC opportunities Viet Nam hopes to take full advantage of the ASEAN Economic Community that will be established next year as it further integrates into the regional market, a seminar heard in Can Tho on Tuesday. Deputy Minister of Industry and Trade Nguyen Cam Tu told the seminar titled "ASEAN Economic Community (AEC) and Free Trade Agreements" that the establishment of the AEC would mark comprehensive integration of Southeast Asia's economies. It would be a united production, trade, and investment bloc in a region that has a huge population of 600 million and an annual GDP of around US$2 trillion, he said. Organised by the Ministry of Industry and Trade and the European Trade Policy and Investment Support Project, the workshop was aimed at helping businesses and the Government better understand the AEC and the free trade agreements that Viet Nam has signed. Bui Huy Son, chief of the Trade Promotion Agency, said amid the unstable regional situation, it is important to enhance solidarity and co-operation between ASEAN and other nations. Hoang Van Phuong of the Multilateral Trade Policy Department spoke about Viet Nam's commitments with regard to trade, services, and investment under FTAs it signs. Tran Thi Thu Huyen of the Ministry of Finance's International Cooperation Department spoke about the commitments on import tariffs under FTAs and the time frames agreed for tariff cuts. Vu Hung Thinh of the Import-Export Department urged businesses to follow the preferential rules of origin when exporting to preferential-tariff markets. He spoke about various tariff preferences, preferential rules of origin, and procedures for obtaining certificates of origin and verification of origin. The 2008 ASEAN Charter seeks to build an ASEAN community based on three fundamental pillars: the AEC, the ASEAN Political Security Community and the ASEAN Social and Cultural Community. ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. Since 2004 the bloc has signed FTAs with countries like China, South Korea, Japan, Australia, New Zealand, and India. In 2008 Viet Nam signed the Economic Partnership Agreement with Japan and a bilateral FTA with Chile. Viet Nam is currently negotiating on FTAs with the EU Customs Union; the Regional Comprehensive Economic Partnership; and EU Free Trade Bloc; and Trans-Pacific Partnership (TPP). ASEAN is one of Viet Nam's leading trade partners, accounting for 15 per cent of its total trade and quadrupling over the last decade to $40 billion last year. Economic outlook still ‘modest,' says Maersk report Viet Nam's economic outlook remains modest in the face of challenges to its competitiveness, according to the first report in 2014 released by shipping firm Maersk Line Vietnam yesterday. In spite of declining foreign direct investment, the country still enjoys macroeconomic stability with inflation on target, a steady exchange rate, and a strong export sector posting a surplus, it said. However, with regard to long-term growth, Viet Nam continues to experience constraints and obstacles to its global competitiveness. Despite boasting a trade surplus all year and a booming production sector, Viet Nam's competitiveness within the region is on the decline. The country's logistics costs represent 25 per cent of its GDP, which is higher than most of its competitors in the region. This is partly due to vague government regulations that result in additional operational costs and lower productivity for enterprises. It is estimated that Viet Nam's shipping companies spend US$100 million annually on costs related to import-export clearance delays, which could increase to $180 million by 2020. Furthermore, although Viet Nam has been enjoying a trade surplus, the goods being exported tend to be low value-added products that are labour-intensive and require little technical skills or technological inputs. Bich Nguyen, general director of Maersk Line Vietnam & Cambodia, said: "The market growth that we have experienced in the first quarter of the year mirrors the trends in Viet Nam's overall trade balance. "The domestic economy may continue to be hampered by the slow pace of structural reforms of state-owned enterprises and the banking sector, but its heart – manufacturing and production – still remains robust. "Viet Nam has been benefitting from a growing influx of young workers which has provided the country with a competitive advantage in labour costs. "However it is critical to increase our labour productivity to convince more investors to set up their factories here, and one of the ways we can have significant productivity gains is through technological transfer." Many challenges facing enterprises can be addressed by focusing on productivity improvements through implementing e-solutions. Automating systems and transactions are the key to increasing productivity, accuracy, transparency, and visibility of data and reducing costs. Maersk Line recently did a survey of its customers in Viet Nam, which found that 7 out of 10 find e-commerce important to their business. Bich said: "E-solutions mean less time, less mistakes and less, if not, zero additional cost being incurred due to documentation errors.". PJICO compensates riot-hit Chutex Petrolimex Joint Stock Insurance Corporation (PJICO) has compensated Chutex Vietnam Co Ltd in southern Binh Duong Province with VND20 billion, or around US$952,400. The Singaporean Chutex is among a number of foreign direct investment companies affected by the recent riots in the area. So far, PJICO has received notices of loss from more than 40 companies, including Yanglin Vietnam Ltd from Taiwan and Hsiang Jiuh Vietnam Ltd from South Korea. Young author’s book on effective marketing becomes bestseller A book entitled “Facebook Marketing from A to Z” written by young Vietnamese author Trung Duc, made its debut in early June with 5,000 copies sold on the first day of release. The popularity of the book is a positive sign that Vietnamese readers are keeping pace with global internet marketing industry trends. The 12-chapter book provides readers with a thorough introduction to basic marketing strategies in general and advanced marketing techniques in particular such as SEO, Email Marketing, and Viral Marketing. Vinalink CEO Anh Tuan Ha said the book is a repository of information on effective utilization of Facebook and introduces useful information to those who have a passion for Facebook Marketing as well as those just beginning to use Facebook Marketing for their business. VietMoz CEO Le Nam said that the book is very different, adding that “If you just read and follow the instructions in the book, you will find that Facebook Marketing will become easier than ever”. Trung Duc, the 25-year old author has also organized free training courses on Marketing Online for students and those beginning to study in the field. Singapore leads foreign investment in HCM City Singaporean companies are very pro-investment in Vietnam and have emerged the prominent leader among foreign companies investing in HCM City in the early months of 2014. Le Manh Ha, Vice Chairman of HCM City’s People’s Committee told this to participants at a recent Vietnam-Singapore business forum. In the three months leading up to April, HCM City granted investment licenses to 71 foreign-invested enterprises (FIEs) with total investment capital tallying in at nearly US$750 million. The total included nine Singaporean FIEs capitalised at over US$200 million, comprising 31% of the total, Ha said, adding that Singaporean companies have cumulatively invested in over 667 projects capitalized at nearly US$7 billion. Ha emphasized that the confidence demonstrated by the continued investment in the City is reassuring following the recent anti-China protests in May. It demonstrates the Singaporean Government and business community were reassured by Vietnam’s timely response and that the actions taken restored their faith that both Vietnam and the City are committed to maintaining a favourable, stable and safe investment environment for FIEs. Edlyn Khoo, Director of the International Enterprises (IE) Singapore's Ho Chi Minh Centre in turn said that HCM City leads in attracting investment from Singapore, followed by Quang Ngai, Hanoi, Bac Ninh, Binh Duong and Ba Ria Vung Tau provinces. Ms Edlyn Khoo emphasized that Singapore’s future goal is to strengthen its partnership with HCM City as well as with and other Vietnamese provinces in Vietnam Singapore is desirous of expanding cooperation with Vietnam in a host of areas including trade, import-export, technological transfer and preservation of food and farm produce to increase the value of Vietnam’s agricultural sector. In addition, Singapore’s famous brand names are keen on the Vietnamese consumer market, and cooperating in franchising opportunities in such fields as retail, food and service, Khoo concluded. EU grants over 300, 000 euro to SMEs The University of Northampton recently announced it has been awarded 311,000 euro from the EU for a project aimed at enhancing the technical competitiveness of Vietnamese small and medium sized enterprises (SMEs). The project will begin implementation in July in collaboration with the Vietnam Leather and Footwear Association (Lefaso), specifically concentrating on improving the capacity of SMEs to comply with the technical requirements of international export markets. Vietnam, EFTA hold trade pact talks in Geneva Vietnam and the European Free Trade Association (EFTA) held the 8th round of free trade agreement (FTA) negotiations in Geneva, Switzerland, from June 3-6, examining the opening of the market for goods, services and investment. Sources from the Ministry of Industry and Trade (MoIT) say both sides reached consensus on a number of issues, including the possibility of opening each other’s markets, as well as sensitive issues, so as to accelerate the negotiation of the trade pact in the following rounds. They agreed to convene the 9th round in Hanoi from August 25-28, focusing on the opening of the market for goods and services. The Vietnamese delegation to the trade talks was represented by the Ministry of Industry and Trade, Ministry of Finance, Ministry of Agriculture and Rural Development, Ministry of Planning and Investment, Ministry of Transport, Ministry of Information and Communication, Ministry of Science and Technology, Ministry of Labour, Invalids and Social Affairs, Ministry of Natural Resources and Environment, Ministry of Foreign Affairs, and State Bank of Vietnam. Last year, the EFTA (comprising Iceland, Liechtenstein, Norway, and Switzerland) signed a memorandum of understanding with Vietnam, recognising the country’s market economy status and agreeing to kick-start bilateral FTA negotiations. Unicity to expand operation in Vietnam Unicity, an American international multi-level marketing company, is scheduled to build a new factory in Dong Nai province from July to December 2014. Christopher Kim, Unicity president in the Asia-Pacific region, said on June 13 the company wants to break into Vietnam, a market of more than 90 million consumers who have a high demand for dietary supplements. Unicity is committed to supplying quality products to help improve local people’s health, Kim said. The Unicity Vietnam factory will be built at AMATA Industrial Park and is due to begin operation from February 2015. Once put into operation, the facility will meet the demand for domestic use and for export to neighbouring markets such as Thailand and Malaysia, while generating thousands of jobs for local people. Unicity Vietnam in collaboration with the Make Life Better Foundation has regularly organised many charity activities to support the poor in remote areas every 2-3 month. The company recently opened a new office at Plaza Building, Tan Binh District, HCM City. After a year of operation, the number of its staff has now increased to nearly 50 from just 10 at the beginning. State debt per capita rises to over US$905 The public debt of Vietnam continues to rise and now stands at over US$81,885 billion, accounting for 47.7% of the nation’s GDP, according to the Economist.com Global debt clock. In the past three months, the website reports that Vietnam’s total public debts have increased US$1.815 billion and the average public debt per person has risen by US$18.82 to US$905.00. The website reports that the global average public debt per person is US$905.18 and the total public debt is over US$53,551 billion. According to a report by Finance Minister DinhTien Dung at the National Assembly (NA)’s session on June 11, Vietnam’s public debt has been on the uptick in recent years. The debt-to-GDP ratio has risen from 51.7% in 2010 to 54.1% in 2013. Dung affirmed that public debts are now below the current rate of 65% set by the NA. He attributed the rapid increase in public debts is to the shortage of state’s capital sources for economic development, especially in developing infrastructure. Regarding the restructuring of public debts, 50% are from foreign debts while the remaining comes from domestic loans through issuance of government bonds. Therefore, the pressure on new loans to repay old loans remains relatively high, Dung said. Foreign investors eye Vietnam’s wood industry With enormous advantages, Vietnam’s handicraft and timber processing industry is garnering the attention of many foreign investors. Deputy General Director of Mekong Capital, Chad Ovel, made the remarks at a seminar in HCM City on June 12 where he described Vietnam as a good investment destination with a stable macro-economy, controlled inflation, reasonable credit growth, abundant labour force and promising consumption market. He noted that Vietnam is actively engaged in the Trans-Pacific Partnership (TPP) agreement negotiations, which will offer a great opportunity for the local handicraft and timber processing industry to boost its exports in overseas markets, including the US. Deputy Director Ovel also suggested businesses concentrate on developing high-quality products with higher added value and improving productivity and workers’ skills. Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) Nguyen Quoc Khanh was optimistic about the wood industry’s future, saying there are bright prospects for exports despite instability in the region and the world. “Vietnam is emerging as a stable and lucrative market for foreign investors,” he added. Over the past year, Khanh said, HAWA has reaped success in penetrating the global market and generating higher added value, reducing reliance on imports of manufacturing raw materials. Vietnam seeks to foster exports to FTA markets Opportunities and challenges for Vietnam’s exporters in accessing international markets, especially now that the country has entered into free trade agreement (FTA) negotiations, were analysed at a workshop held in the northern province of Ha Nam on June 12. Speaking at the event, Phung Thi Lan Phuong from the WTO Centre under the Vietnam Chamber of Commerce and Industry (VCCI), underlined the importance of signing FTAs to improve the competitiveness of Vietnamese goods in lucrative export markets. Through the reduction and exemption policies of tariffs and nontariffs, Vietnam’s goods can easily access its partner nations’ markets within FTAs, she said. She mentioned challenges for Vietnamese businesses in overcoming barriers on technical standards, quarantine procedures and proof of product origin. She also stressed the necessity of further promoting regulations to the business community and trade associations so as to help them produce goods that meet export standards. Dr. Le Dang Doanh, former Director of the Central Institute for Economic Research and Management , said Vietnamese enterprises should not only take advantage of benefits from FTAs but also pay heed to expanding their markets to promote exports. Quang Ninh: border trade with China still normal Business activities and trade in the border gates of Mong Cai, Bac Phong Sinh and Hoanh Mo-Dong Van in the northern province of Quang Ninh are operating as normal despite ongoing tensions at sea between Vietnam and China, according to the provincial Department of Industry and Trade. Vice Chairman of the Mong Cai city’s People Committee Nguyen Tien Dung said the Chinese side has tighten management in border gates so goods volume exchanged between the two countries’ border localities has decreased. However, Chinese traders have still retained their business in border markets in Mong Cai city. There are about 800 continuing as normal in the city. According to Director of the Department Pham Ngoc Thuy, the local authorities are still working to maintain stable prices for several essential commodities, including rice. In spite of the impacts caused by China’s illegal act of placing its oil rig in Vietnam’s waters, the number of Chinese holiday-makers to Quang Ninh increased again from June 1, Thuy said. He added that the local agencies will do their utmost to ensure safety for foreign tourists, including those from China, when they visit the locality. Sales of imported cars up by 75% According to statistics from the automobile sector,  in the first five months of the year, sales of imported cars increased by 75%. The Vietnam Automobile Manufacturers Association (VAMA) forecasts that, approximately 125,000 vehicles will be sold this year, 14% higher than last year’s figure. In May alone, around 12,134 cars have been sold, including 3,182 imported cars, up 42% from the previous month. Meanwhile, the number of domestically assembled cars, has decreased by 2%. Total revenue for the whole market, up until the end of May, soared by 33% compared to last year’s same period. Bright horizon for sustainability in the pepper industry The booming pepper industry is rewriting the rules of the Vietnam economy with huge implications for everyone from consumers and food processors to farmers. According to the Ministry of Agriculture and Rural Development (MARD), Vietnamese pepper exports jumped 35.5% in volume and 40.4% in value in April over the same period last year. MARD reports that in April the country exported 23,000 tonnes of peppers fetching US$157 million, bringing cumulative exports for the first four months of the year to 72,000 tonnes grossing US$493 in total revenue for the period. With this in mind, the pepper export target of US$1 billion is well within reach this year, said MARD report The Vietnam Pepper Association (VPA) reports that the new plateau in pepper exports is the result of benefits from improved monitoring of the market by Vietnamese exporters and concurrent improvements in competitive pricing. Vietnamese export enterprises are more actively implementing enhanced management information and inventory control systems allowing for tighter controls over purchase products at optimum times and prices reducing transportation and storage costs while selling them at premium prices, allowing for greater profitability. With these new tools and much improved pricing strategies, companies can best ensure goods are readily available to meet their long-term commitments prior to entering into major export contracts. The transformation is having a dramatic effect on the concentration of businesses in the industry as smaller less competitive businesses fall by the wayside.  The country now has only 94 export pepper businesses and local businesses comprise 76% of total market by volume, according to MARD. Asia is the primary consumer market for Vietnamese pepper exports, accounting for 47.1% of the total exports in the first quarter of this year, followed by Europe (24.7%), America (20.5%) and Africa (7.7%). Not only businesses, but farmers are also becoming more alert to the importance of actively monitoring market prices and conducting their purchasing and sales activities in a more organized cohesive manner, supporting better overall profitability. However, problems still remain to be resolved for many smaller family farms.  The majority are not able to store peppers for long and as a consequence remained forced to sell their harvest at the current market price, less it spoil, MARD cautions As world demand burgeons, pepper prices are blossoming as well. In April, pepper prices hit a record high in the Indian, Indonesian, European and American markets. Black pepper stood at US$8,000 per tonne while white pepper was sold at US$11,000 per tonne. The supply source of pepper in the world market in the first four months came mostly from India and Vietnam. Until the end of April, Vietnam harvested 95% of 2014’s pepper crops with output increasing by 5% compared to 2013. In addition, MARD reports pepper growers are facing huge difficulties such as drought and epidemics which directly impact productivity. The International Pepper Community (IPC) forecast that the world’ s pepper output this year will stand at around 320,000 tonnes, down 20,000 tonnes from last year’s figure. The IPC is also bullish on the pepper market, optimistically forecasting that pepper prices will continue to be stable from now through the end of the year on the back of increasing demand in the US and European markets. To ensure the pepper industry maintains its output and exports in the future, the important thing is to take precautionary measures to forestall epidemics. According to the VPA, MARD needs to direct major provinces to strengthen plant protection and eliminate pesticide residues in order to develop the pepper industry sustainably and meet international requirements of exports. As the experience of Vietnamese businesses and farmers grows and better management systems are put in place, competitive pricing and enhanced competitiveness are transforming the pepper industry, painting a brighter horizon for sustainability. Taiwan steel project given tax breaks The Government has agreed to offer import tax incentives to the Formosa Ha Tinh Steel Project to create the most favourable conditions for the project's implementation. According to a report in the Dau tu (Viet Nam Investment Review) newspaper, Deputy Prime Minister Hoang Trung Hai exempted the company from import taxes on a number of machines and equipment to create fixed assets for the giant steel and port project in the central province of Ha Tinh. Besides, the project is also exempted from natural-resources tax on sand to level the project's surface. The move was made following a proposal from the project's investor – the Taiwan's Hung Nghiep Formosa Ha Tinh Steel Limited Company, a subsidiary of Formosa Plastics Group – late last year. After scrutiny, authorities said some machines, equipment and construction materials imported to build the project were not produced or manufactured in the country. Therefore, these goods would also be exempt from import tax in accordance with the current regulations. Besides, the Government also agreed to exempt import taxes on the project's heat-resistant bricks and electric cable lines, even though the materials are produced in the country. The materials had to be imported to fit with the project's initial designs. The project has registered investment capital of nearly US$10 billion. It is expected to begin operations in 2015. Local authorities expected that the complex, with an annual output of 7.5 million tonnes, would create 10,000 local jobs in the first phase, with the figure to grow to 30,000 upon completion of the second phase. Australia trade: VN has $410m surplus Viet Nam has experienced a trade surplus of US$410 million with Australia in the last four months, according to the Vietnamese Trade Office in Australia. During the period, Vietnamese exports to Australia grew 11.5 per cent over the same period last year, reaching approximately $1.07 billion. Of Viet Nam's 32 export products to Australia, 13 products recorded a turnover of at least $10 million. These goods accounted for 89.1 per cent of the nation's total export value to the market. Among these reviewed goods, crude oil led with an export turnover of $497.4 million. Mobile phones and components ranked second, with $119.2 million, followed by steel and steel products, garment and textile, seafood, cashew nuts and footwear. Meanwhile, agricultural exports were lacklustre. Coffee exports slumped 30 per cent compared with the same period last year, gaining $8.5 million. Pepper exports also declined by 6 per cent, hitting $3.2 million. Rice exports remained flat at roughly 2,000 tonnes during the period. Analysts stated that it will be hard for Vietnamese rice exporters to foster their shipments to the market in the coming time due to stiff competition from Thailand. During the January–April period, Viet Nam imported $658.3 million worth of goods from Australia, 1.5 times higher than the same period last year, with major imports including wheat, metals, iron, steel scrap, coal, pharmaceuticals, vegetable and fruits, machine and equipment as well as milk and milk products. In ASEAN bloc, Australia has attached importance in enhancing bilateral relations with Viet Nam, the Ministry of Industry and Trade's Industry and Trade Information Centre revealed. Latex prices plunge, rubber trees axed Farmers in central and southeastern provinces have cut down more rubber trees as the price of latex has plummeted. The 1.5-ha rubber garden of farmer Ho Van Thanh in the central province of Quang Tri was planted in 1996, but this year he has cut down all of his trees. The price for one kilo of fresh rubber latex was only VND15,000, a significant fall compared with last year's price of VND30,000 – 40,000 per kg. "With 1.5 ha of rubber, I can earn less than VND100,000 (US$5) per day). If I hire workers to harvest latex, I will lose around VND200,000 ($10) per day. So, I have to cut the trees down and cultivate another kind of tree," Thanh was quoted as saying in Tuoi Tre (Youth) newspaper. The capacity and quality of rubber in the two central provinces of Quang Tri and Quang Binh fell sharply because of a storm that hit the area in late 2013. As a result, farmers spent at least VND14 million ($700) to clear their land. In southeastern provinces like Binh Duong, Binh Phuoc and Tay Ninh, the situation was the same. "I don't know when the latex price increased, but the cost of taking care of the trees and fertilisers is too much," said farmer Vo Hung Lam, who lives in Phu Chanh commune, Tan Uyen District, Binh Duong Province. "The latex price is the lowest in the last 10 years and farmers have to cultivate something that is more stable," Lam added. In 2007 when latex prices rose, Nguyen Thi Nga in Dong Nai Province's Thong Nhat District replaced her two-hectare garden of durian and mangosteen with rubber trees. The two fruits had turnover of VND70 million ($3,500) per year. "If I had kept the durian and mangosteen, I would be earning now more than VND600 million ($30,000)," Nga said. In 2010, Bui Van Rai, of Binh Phuoc Province's Hon Quan District, spent VND1 billion ($45,000) to buy one hectare of young rubber. Now he wants to sell at half price, but no one has asked. At Dau Giay Rubber Plantation in Dong Nai Province, over the past year, 60 per cent of labourers of nearby Tran Hung Dao Hamlet in Tan Thanh Commune worked on rubber trees, but their monthly salary was only between VND500,000 and VND1.5 million ($24-71), half compared with the previous income. "In the past, it was not easy to become a plantation worker, but now hundreds of workers have left within a two-month period," said worker Tran Minh Tuan, who has quit. "The remaining people are those near retirement." Along with Provincial Road DT 785 from Tan Chau Town in the southern province of Tay Ninh to the Ka Tum border gate with Cambodia, young rubber trees were cut and replaced. "I have to cut a 7-ha rubber garden at a loss of VND450 million ($22,000) and plant cassava because I cannot invest in more rubber," farmer Nguyen Van Chau in Tan Chau District, said. In Tan Chau District, 160 hectares of rubber trees have been cut, and cassava plants have replaced them. The figure in Tan Bien District is 410 hectares. "We have persuaded farmers to keep the rubber trees because they have invested a lot of money and time, but they have a right to cut down their rubber trees," said Nguyen Dac Hung, head of the Tan Bien District's Agriculture and Rural Development Department. Most Vietnamese rubber-latex sales depend on Chinese traders. Rubber prices reached their peak in 2011, but prices have now fallen by one-third. "Most Vietnamese rubber plantations produce a small quantity, so most of them must export to China. If we want to seek another market, we must have at least 1,000 tonnes of rubber latex at one time to export. But that figure is huge for the limited capacity of Vietnamese plantations," said Nguyen Van Minh, director of Viet Trung Rubber Limited company, in the central province of Quang Binh. Seafood exports to reach $7b The Viet Nam Seafood Exporters and Producers (VASEP) association predicted total seafood exports would reach some US$7 billion in 2014, a 5 per cent increase over 2013. The imports will include $3.5 billion from shrimp exports, $1.7 billion from tra fish, $450 million from tuna, and $470 million from squid and octopus. Of note, at a VASEP conference in HCM City on Thursday, business insiders said, for the first time VASEP witnessed a 10 per cent decrease in its membership, as difficulties and risks have forced some businesses to go bankrupt, reported the Tin tuc newspaper. Officials asked managerial agencies to issue concrete regulations on aquaculture and more favourable policies to assist their operations. Nguyen Thi Thu Sac, general director of the Hai Nam Ltd Company, said domestic seafood companies have often faced difficulties in purchasing materials due to competition with Chinese traders, as they must import materials. Therefore, she said the state should put in place policies on attracting capital for developing material regions and encouraging fishermen to increase their volumes of exploiting seafood products. Also, the association said Viet Nam's aquatic exports have been recovering in the first five months of 2014, with a year-on-year increase of 21 per cent in value to $2.86 billion. Reports at the conference said the shipment of shrimp had brought home revenues of $1.4 billion, jumping a huge 63 per cent from the same period last year, and accounting for 49 percent of the total aquatic exports. Notably, the value of shrimp destined for the US, the Republic of Korea and Switzerland soared by 120 per cent, 108 per cent, and 109 per cent, respectively. Over the same period, the shrinkage of tra fish farming areas and output, as well as falling demand from EU countries and the US, cut this commodity's turnover by 7.6 per cent to $655 million. Meanwhile, a 23 per cent drop was seen in earnings from exported tuna, standing at $195 million, due to a fall in the shipment to some key markets, such as the US, Japan and the EU. At the same time, Viet Nam gained $172 million from the export of squid and octopus, rising 8.5 per cent from one year before. VASEP officials said, under a fisheries development strategy until 2020 approved by the Prime Minister, that Viet Nam targets $8 billion in aquatic exports in 2015 and $10 billion in 2020. Firms delay dividend payout worth billions of dong Many firms have announced delay in dividend payout as their businesses are struggling. Sai Gon Machinery Spare Parts Jsc, listed on HCM City Stock Exchange as SMA, delayed in paying dividends of 2011 to shareholders eight times. The company attributed money shortage for dividend payout to the rising cost in the construction of Dak Glun hydroelectric plant, coupled with the prolonged economic recession resulting in tightened credits. SMA targeted to pay the dividends of three years — 2011, 2012 and 2013 — within this year. Still, the company was making effort in restructuring to be able to arrange money for dividend payout. It was estimated that with 16 million shares listed, the company required VND19 billion (US$904,000) to pay off dividends to investors (at a payout ratio of 12 per cent). Meanwhile, on its balance sheet as of March 31, the company had only VND14.6 billion ($695,000) in cash and cash equivalents and undistributed profit was modest at about VND8 billion ($380,000). Song Da 9.06 (S96) has recently delayed to pay 2010 dividends, worth VND22 billion ($1.04 million), to the end of 2014. This was the sixth time within the last three years that dividend payout has been delayed. To make matters worse, the company was delisted from Ha Noi Exchange in May 30, with a negative profit of more than VND50 billion ($2.38 million) and only VND140 million ($6,600) in cash. Song Da 7 (SD7) also delayed dividend payout, worth nearly VND15 billion ($714,000) at a payout ratio of 16 per cent, of the year 2010 to the next year because the capital withdrawal and debt collection failed to meet its plan. Previously, An Binh Bank had planned to pay around VND120 billion ($5.7 million) dividends to investors on May 30 but it was postponed. The bank stated that payout will be conducted as soon as the bank receives the approval of the State Bank of Viet Nam. As rights of small shareholders were infringed with delayed dividend payout, the capital market group of the Viet Nam Business Forum proposed that updates of dividend policies and payouts must be announced on the enterprises' websites for investors to follow. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR