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BUSINESS IN BRIEF 8/6
Tourism
sector aims for effective development
The
Ministry of Culture, Sports and Tourism has taken a number of approaches to
develop the sector effectively and sustainably in 2015 and following years.
The
ministry has proposed stablishing a fund to mobilise different resources for
the development of tourism.
The
fund, with 70 percent of its funding coming from businesses, is expected to
expand promotion activities and markets to enhance the competitiveness of the
sector.
The ministry
has also sought the approval of the Government to grant visa exemptions for
tourists from key markets to draw more international visitors to the country.
General
Director of the Vietnam National Administration of Tourism (VNAT), Nguyen Van
Tuan, argued that a more favourable visa policy would lure more foreign
arrivals.
Currently,
Under a
resolution just issued on June 1 this year by the government, visitors from
Meanwhile,
Vu The Binh, Vice Chairman of the Vietnam Tourism Association said a
favourable visa policy should be applied for key tourism markets and
countries that share good political and cultural relations with
The
association has suggested that
In 2014,
Vietnam
Air says agents, customers decide service charges
Vietnam
Airlines said service charges for ticket bookings and issuance are collected
on agreements between agents and buyers but will not cause total ticket
prices to exceed the ceilings set by the Ministry of Finance.
The
airline explained its fare structure after the ministry requested the Civil
Aviation Authority of Vietnam (CAAV) to tell the carrier to reregister its
economy-class domestic fares and clarify service charges.
The
ministry’s request comes after the flagship carrier’s airfares in its two
latest reports were found the same, except for the new fares registered for
its Buon Ma Thuot-Thanh Hoa/Haiphong flights.
Speaking
to the Daily, the airline said it quoted airfares for domestic flights based
on CAAV’s Document 5436/CHK-TC and the ministry’s Decision 3282/QD-BTC issued
in December last year and regulating the ceilings for economy-class fares for
domestic flights on the routes operated by a single airline.
The
ministry said if the carrier’s highest fares equal to 90% of the ceilings,
the ceilings could be broken when fares rise 15%.
In
response to this issue, Vietnam Airlines said the ministry’s Price Management
Department and CAAV approved its reports on tickets in the past. In Document
1236/TCTHK-TTBSP sent to the ministry, the airline noted that its one-way
fares excluding tax, fee and surcharge can be adjusted up by 15% depending on
the market situation but will not be higher than the highest permissible
levels.
This
means it can adjust fares by a maximum of 15% if one-way fares exclusive of
tax, fee and surcharge do not surpass the caps.
As for
surcharges for ticketing services, Vietnam Airlines said service charges for
ticket bookings and issuance were collected by the ticketing offices and
agents that offer the services to passengers.
Therefore,
agents and customers will agree on these service charges based on service
quality. However, agents must ensure one-way ticket prices excluding tax, fee
and charge will not be higher than the upper limits set by the ministry.
Vietnam
Airlines said the service charges help ticketing agents to improve service
quality and their competitiveness and passengers can select the best service
providers.
In case
passengers book tickets online, the airline will collect the two service
charges totaling VND50,000 (US$2.3) for economy-class domestic fares and
VND90,000 for business-class domestic fares including VAT.
Fruit
and vegetable exports to
However,
rice exports to
The
decline, according to
Besides,
Turkish lira has depreciated by over 10% against the U.S. dollar since the
beginning of the year, pushing up costs of importing rice from
Vigatexco
to build residential-commercial complex in Tan Phu
Thang
Loi Textile - Garment Joint Venture Company (Vigatexco) will spend VND2.8
trillion (US$128.6 million) developing a residential-commercial complex in
HCMC’s Tan Phu District.
Vigatexco
said the site of the complex is located at a prime location of the outlying
district and next to
Nguyen
Thi Dieu Phuong, general director of Vigatexco, said the project got the
green light from the government of HCMC early this year. Vigatexco is now
completing procedures for the project covering over 150,000 square meters.
Currently,
a number of companies have factories in the area such as Victory
International Spinning Company, Thang Loi International Garment Company and
Nam Phu Investment and Development Company.
Vigatexco
said it had asked the tenants to relocate their facilities from the area a
long time ago to make room for the project. However, some of them have yet to
move and Vigatexco had informed them of power and water supply cuts if they
delay relocation.
In
response, the tenants wrote to the city government and competent agencies
asking for assistance to extend their operations until December 31 next year.
Vigatexco
has a leasing contract with the HCMC Department and Natural Resources and
Environment to use the land lot.
Selection
of local firm backed for Ba Son development
The
Ministry of Planning and Investment has thrown its weight behind the Ministry
of Defense’s proposal to pick
HCMC
Commercial Service Joint Stock Company to develop commercial and service
facilities at the premises of Ba Son Shipyard in HCMC.
In the
investment ministry’s Dispatch 2171/BKHDT-QPAN sent to the Government,
Minister
Bui
Quang Vinh advised the Prime Minister to assign the Ministry of Defense to
select a financially capable investor to buy the existing assets and land in
Ba Son Shipyard area.
The
defense ministry explained selecting a competent investor is in line with the
Prime Minister’s approval late last year for selling the assets and
transferring the land use right in Ba Son area.
On March
30, the Ministry of Defense in Document 2490/BQP-CNQP proposed the Government
allow HCMC Commercial Service Joint Stock Company to buy the properties of Ba
Son in line with the land prices approved by the city government and under
the existing regulations.
The
ministry explained earlier that the investor chosen to develop the Ba Son
area must be experienced in managing
and
implementing large-scale property projects and can advance around VND4.5
trillion this year and next to accelerate relocation and construction of a
new shipyard for Ba Son, pay enough money for land and meet other criteria
related to financial aid for Ba Son Corporation.
The
selection of a Vietnamese investor is aimed at ensuring national interests
and supporting the development of local enterprises. Meanwhile, the ministry
said picking a foreign investor would take more time to complete legal
procedures, thus affecting the process of relocating the shipyard.
The
ministry suggested the zoning plan for development of the existing Ba Son area
should be in harmony with the city’s socio-economic development strategy.
Binh
Dinh to cancel slow-moving tourism project
The
Economic Zone Authority of Binh Dinh Province has been assigned to take steps
to cancel a resort project worth around US$250 million in Vinh Hoi hamlet in
Phu Cat District as it has fallen far behind schedule.
After
the project was licensed in 2007, the investor pledged to develop a golf
course, villas, five-star resort, marina and sport facilities. However, the
investor has yet to implement any component of the project covering 300
hectares. But the site allocated to the project remains deserted.
The
project is part of the national key tourism corridor of Phuong Mai-Nui Ba.
A number
of local and foreign companies want to invest in large-scale tourism and
property projects in Binh Dinh, but they cannot translate their investment
plans into reality as many projects were licensed before, according to the
central province’s
As a
result, the province will review foot-dragging projects and urge their
investors to start work. If they are incapable, their projects would be
cancelled.
Recently,
Binh Dinh decided to do away with the Nhon Phu new urban area project of
Asia-Pacific Investment Joint Stock Company (API) covering 24.35 hectares in
Nhon Phu Ward in
In
addition to this VND2.3-trillion urban area project, API applied to develop
the Ban Thanh residential development project in An Nhon Town with an
estimated cost of VND280 billion. However, according to the center, the
investor has not broken ground for its projects and the province will issue
decisions cancelling these projects in the coming time.
Binh
Dinh has also granted investment certificates to some projects like the Ky
Co-Nhon Hoi hydrotherapy resort worth VND109 billion. The 50-hectare project
is developed by Quy Nhon Port Logistics Service Company.
Meanwhile,
Vingroup is implementing a Vinpearl amusement park capitalized at some VND3.5
trillion and FLC Group will invest around VND4 trillion in a high-end resort
in Binh Dinh province. Sun Group is also planning to invest in a big tourism
project in the province.
More
remittances flow into property, production sectors
HCMC’s
real estate and manufacturing sectors have been recovering since early this
year, supported by more incoming remittances and credits.
Incoming
remittances in the city between January and May were up 18% year-on-year to
US$1.7 billion and the figure for all of 2015 is forecast to reach US$5.3-5.5
billion, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC
branch.
The
remittance flowing to the real estate sector, business and production
improved versus the previous year, rising 0.9 percentage point and 1.1
percentage points to account for 21.8% and 72% of the total remittances
respectively. The remaining 6.2% was sent to relatives of overseas Vietnamese
to spend on overseas study or illness treatment.
Meanwhile,
outstanding loans for the property sector amounted to VND115 trillion by
end-March, or 12.6% of the total, a significant improvement from 9.72% at the
end of 2012, 11% at end-2013 and 11.5% at end-2014.
Since
2012, credit for the realty sector has registered annual growth of over 10%,
making up 10-13% of the total outstanding loans. The sector now has a bad
debt ratio of around 2.6%.
The city
saw more credits going to project developers than individuals who needed
money to buy or repair homes. Credits for urban area projects accounted for
23% of the total outstanding loans for the realty sector, up five percentage
points against early this year.
Loans
for high-rise office building projects made up 18.3%, up two percentage
points, while those for home repairs and purchases stood at 10.27%, a rise of
1.7 percentage points.
According
to a report on the city’s socio-economic situation, local banks reported
total outstanding loans of VND1,113 trillion in the first five months, up
4.3% from the end of 2014 and 16.1% year-on-year.
Credits
in the domestic currency stood at VND944.8 trillion, or 84.8% of the total
outstanding loans, and those in foreign currency hit VND169 trillion, or
15.2%.
Medium
and long-term credits made up 54.1% of the total outstanding loans, up nine
percentage points against late 2014, while short-term loans accounted for
45.9%, a 0.76-percentage-point decline.
Regarding
the Government’s VND30-trillion loan package for the real estate industry,
credit institutions had pledged to lend over VND2.9 trillion to nearly 3,800
customers by the end of the first quarter of 2015.
Local
banks’ mobilization hit VND1,358 trillion at the end of May, up 1.05% against
late 2014 and 15.8% year-on-year. Deposits in dong reached VND1,163 trillion,
or 85.6% of the total mobilization, and that in foreign currency was VND195
trillion, making up 14.4%.
Vietnamese
consumers spent well over half a billion U.S. dollars on smartphones in the
first quarter of this year, data from a market tracker shows.
The
Vietnamese company declined to be named as it is not allowed to reveal the
nonpublic information to the media.
The more
than three million unit sales were collectively worth VND13.6 trillion
(US$624.71 million), meaning the price of a smartphone averaged VND4.5
million ($207), according to data from the same source.
The
strongest sales were recorded during the first two months, when
Vietnamese
consumers have increasingly preferred smartphones to feature phones, with a
wide range of brands to choose from, including Samsung, Oppo, Mobiistar,
Q-Mobile, Asus, Sony, Apple and Microsoft. Oppo reported the strongest growth
thanks to numerous promotional campaigns.
More
smartphone users in
Handsets
whose price averaged VND4.5 million were the bestsellers in the Jan-Mar
period. Microsoft, Samsung, and Oppo have many products in this price
segment.
Global
smartphone sales in the first quarter of this year reached 310 million units,
up seven percent from Q4-2014, GfK said in a press release on May 15. The total
value was $96.2 billion, an eight percent increase from a quarter earlier.
Spending
by consumers in
Vietnamese
consumers also spent more than VND36 trillion, or $1.65 billion, on technical
consumer goods in the first quarter, with telecommunications accounting for
the most sales.
Vietnam’s
telecommunications sector generated sales of VND15.7 trillion ($721.18
million), mostly driven by the healthy demand for mobile handsets, in the
three-month period, GfK said in another press release, citing findings from
its TEMAX Vietnam Q1 2015 quarterly report.
LienVietPostBank,
MobiFone to jointly issue new Sim Card
Lien
Viet Post Joint Stock Commercial Bank (LienVietPostBank) has pledged VND10
trillion (US$460 million) to MobiFone Telecommunications Corporation
(MobiFone) to assist them in short- and long-term projects.
The
signing ceremony between LienVietPostBank and MobiFone. Photo ptqnews.com
A
signing ceremony was held between the two sides in Ha Noi on June 3.
Under
the agreement, the two sides will cooperate to issue a new SIM card, Macca,
with an aim to raise public awareness of the development of macadamia trees
in
Macca
SIM card users will be automatically updated about the Government's
preferential policies, business environment, market prices, and other
services related to the growth, investment, and development of macadamia.
The SIM
card is part of the efforts of LienVietPostBank and Him Lam Joint Stock
Company to develop macadamia in
Following
the agreement, the two sides will also cooperate to provide payment
facilities via bank accounts for services provided by MobiFone. They will
also provide FastBank services, which will allow customers to use the payment
services of the bank through MobiFone apps, such as FastBank USSD, Fast Bank
Application, and FastBank WAP.
NCB
reserves $33 million for
The
National Citizen Bank (NCB) has reserved preferential loans worth VND700
billion (US$33.33 million) to support homebuyers across 16 projects in
The
National Citizen Bank has reserved preferential loans to support homebuyers
across 16 projects in HCM City.Photo laisuat.vn
Novaland
Group, one of the property firms, has joined the programme with projects such
as
Novaland
homebuyers can choose annual interest rates of either 7.2 per cent for a
preferential term of one year or 9.0 per cent for two years.
Of the
remaining two property developers, the Hoa Binh House Company offers Soho
RiverView and
The customers
of the two developers will enjoy an annual interest rate of either 7.5 per
cent for 12 months, or 9.0 per cent for 24 months.
Entrepot
to be built in Lang Son
An
entrepot will be built in the
The
143ha centre, to cost an estimated VND986 billion (US$45.2 million), would be
built in the Dong Dang border gate economic zone, Vice-Chairman of the
provincial People's Committee Nguyen Van Binh said.
The
centre will accommodate warehouses and quarantine and quality-testing
centres. Businesses can also organise trade fairs and classify, pack and
preserve their products there.
The
industry and trade ministry has worked with the provincial authorities on the
implementation of the project.
A
representative from the ministry said the centre would help to effectively
deal with the problem of products getting accumulated at the border gates,
before being exported to China.
The
centre would also serve as a venue for Chinese businesses to seek information
about the Vietnamese market and vice versa.
An
average of 1,200 trucks transporting agricultural products, chiefly
watermelons and litchis for export to China, go through the customs at border
gates in Lang Son each day.
Blockages
at the border gate have been occurring for several years, especially when
seasonal crops such as watermelons and litchis are harvested.
An
estimated 100,000 to 130,000 tonnes of watermelons are exported to China
under the small-scale trade each year.
Russia's
Primorye to boost trade with Da Nang
The
representatives of the Chambers of Commerce and Industry from Da Nang and
Russia's Union Primorye (Primorsky) signed an MoU on trade, investment,
export, and tourism on June 4.
Representatives
of Chambers of Commerce and Industry from Da Nang and Russia's Union Primorye
(Primorsky in Russian) sign a Memorandum of Understanding (MoU) on trade,
investment, export and tourism. Photo Cong Thanh
President
of the Primorye Chamber of Commerce and Industry Boris Stupnitsky said the
MoU would help boost Da Nang's exports and create business opportunities for
the enterprises of both sides.
According
to Stupnitsky, Primorye has been planning to open a representative office in
the central city of Viet Nam to create favourable conditions for Russian
businesses as well as the exports to the East-West Economic Corridor that
links Da Nang, Laos, Thailand and Myanmar via Da Nang port.
A
representative of Primorsky noted that cargo shipment between the central
city's port and Vladivostok Port in Russia had remained poor for years, while
budget airline Vietjet Air had been planning to open air routes between
Vladivostok in Russia and a number of Vietnamese regions such as HCM City, Nha
Trang, Da Nang, Hue, and Phu Quoc.
While
the central city's port has a capacity to accommodate 5 million tonnes of
cargo per year, some 13 shipping companies are operating at the city's ports,
including Tien Sa and Lien Chieu.
Intel
to move part of production from Malaysia to Vietnam
U.S.-based
chipmaker Intel Corporation will relocate a part of its production facility
in Malaysia to Vietnam as well as China in an effort to cut labor costs,
according to government website chinhphu.vn.
The
relocation of the Intel plant in Kulim to facilities in Ho Chi Minh City and
Chengdu (China) will result in the layoff of 600 Malaysian workers at the
plant, chinhphu.vn reported, quoting Malaysian news website The Star.
In
addition to the relocation, the Kulim plant, specializing in manufacturing
motherboards and assembling processor packaging since 1995, will receive new
technology products from places like Costa Rica to support the server market
and other trendy consumer electronic products, The Star reported.
Intel
has employed about 8,000 Malaysian workers, more than 40 percent of whom are
working for the Kulim plant.
That
smartphones are increasingly popular has led Intel to change strategy and
promote the production of processors at a higher level, the Malaysian news
website said.
Many
technology corporations like Samsung, LG, and Microsoft have also been also
moving production bases to Vietnam due to the advantage of cheap labor and
the strategic location of the country as a gateway to the Southeast Asian
region.
Intel
Products Vietnam CEO Sherry Boger in November last year announced that the
company would install a second production line to manufacture computer CPUs
at its Ho Chi Minh City factory, part of Intel’s effort to expand the
production of its flagship products in the Southeast Asian country.
Four
months earlier, Sherry Boger had said that eighty percent of the Intel
semiconductor chips used in computers around the world would be made at its
plant in Ho Chi Minh City by August 2015.
Meanwhile,
the 4th generation Haswell CPUs would be produced at the plant in the Saigon
Hi-Tech Park in District 9 by October last year, Boger told local media then.
To
achieve the target, the company had imported 71 pieces of equipment from
factories in Malaysia and Costa Rica and sent 105 Vietnamese engineers to the
Malaysian factory for training.
It would
import 159 more devices to ramp up CPU production in Vietnam, she added.
Intel
Products Vietnam has more than 1,000 local employees and it took them only
two months to be certificated to produce the Haswell processors, which the
CEO said was an unexpected success for such a hard-to-make product.
The
Vietnamese plant is making two of Intel’s flagship products, the SOC (system
on a chip), used for tablets and smartphones, and the Haswell CPU after the
chip-making titan began its operations at the SHTP in 2010, Boger told Tuoi
Tre (Youth) newspaper in July last year.
It took
the Intel factory in China’s Chengdu fifteen years, and one in Malaysia 40
years, to reach a similar milestone, Boger added.
In April
2014, Intel announced that it would transfer the assembly facility from Costa
Rica to Asia to enhance competitive advantage.
Legal
framework requisite for infrastructure exploitation right sale, experts
Experts
attending a seminar hosted by the Central Institute of Economic Management
yesterday agreeing with selling exploitation rights of public infrastructure
works such as canals, seaports and airports to private investors but emphasizing
the need of building a close legal framework for this field.
Many
countries have seen workers go on strike demanding salary increase after
privatizing some railway and airway works, they cited. This has greatly
affected these countries' socioeconomic activities.
It was a
pressing requirement for Vietnam to build a legal framework including a
specific act on equitization before selling the exploitation right of
seaports, airports and other works, they said.
On the
other hand, the scale of Vietnam’s private economic sector is rather small.
Few businesses are with strong capital source and experienced in operating
such large infrastructure works. Therefore, relevant agencies should consider
inviting foreign investors to attend in possible operation phases with a
suitable capital ratio.
Experts
warn of more inflation risks
Economic
experts have warned of a return of high inflation at the end of this year and
next though the consumer price index (CPI) was low in January-May.
The
General Statistics Office (GSO) announced that the CPI nationwide grew 0.16%
last month against April and 0.95% over the same period last year. The CPI
inched up a mere 0.83% in January-May compared to the same period last year.
If price
increase factors for food and energy were excluded, the nation’s inflation
went up 0.14% last month against April and 2.1% against the same month last
year.
However,
economic expert Nguyen Minh Phong said the risk of an inflation rise this
year was higher than in 2014 as pressure on interest rate hikes is rising and
crude oil prices on global markets are unpredictable.
Phong
was quoted by VietnamPlus as saying that the world crude oil price exceeded
US$60 per barrel in mid-May, which was much higher than the US$47 early this
year. The U.S. dollar has been firmer than many other currencies.
On the
domestic market, prices of many goods are seen rising, coupled with the
impact of lax monetary policy aimed to fuel economic growth this year and
higher credit growth this year on inflation. Early this year, the Government
set gross domestic product growth of 6.2% and the Government still has much
work to do if it wants to achieve the target.
Retail
indicator improved in the first five months of this year with total sales up
10.2% year-on-year to VND997 trillion. However, more spending went to luxury
products, which is evident in a 185.7% rise in completely-built-up auto
imports totaling US$2.3 billion in the period.
Phong
said a pickup in inflation would challenge domestic enterprises as they are
not yet out of the woods despite there are more businesses set up and less
firms dissolved in the first five months.
More
than 3,880 enterprises were dissolved and stopped operations from January to
May, declining 0.5% compared to the same period last year, according to the
GSO. The number of business suspensions in the period drop by 5.3% to 22,705.
Late
last month, the Vietnam Center for Economic and Policy Research (VEPR) warned
of a new circle of high inflation and volatile foreign exchange rate next
year as macro-economic uncertainties may come back.
VEPR
director Nguyen Duc Thanh said budget deficit is a major challenge this year
and next. But the Government will find it hard to mobilize enough funds to
finance this budget deficit, according to a report released by VEPR late last
month.
The
report said if the Government focused much on financing the budget deficit,
monetary and fiscal disciplines may be breached. This would create a bad
precedent and erode confidence in monetary policy and fiscal transparency.
VEPR
proposed suitable adjustment for the exchange rate between Vietnam dong and
the U.S. dollar and other foreign currencies in line with market conditions.
According to the report, the local currency started to appreciate against
other currencies in the region since 2011.
VEPR
envisaged two scenarios for GDP and inflation growth in 2016 with the local
economy expected to grow 6.1% to 6.3% and inflation expanding 1.9% to 3.2%.
RoK
investors contribute to Hoa Binh’s development
Chairman
of the People’s Committee of the northern Hoa Binh province Nguyen Van Quang
has spoken of the contributions by investors from the Republic of Korea (RoK)
to the locality’s economic development.
Quang
had a working session with a delegation from the Korean Trade and Investment
Agency (KOTRA) led by RoK Ambassador Jeon Dae Ju on June 4.
He told
the guests that his locality is carrying out measures to improve its business
climate, while supporting enterprises to overcome difficulties to efficiently
implement invested projects.
He
expressed his hope that the ambassador and KOTRA will work closely with the
province to introduce and promote its potential, advantages and preferential
policies to RoK investors.
RoK Ambassador
Jeon Dae Jun showed his interest in human resources quality, water supply in
the Da River left bank industrial zone and traffic safety for workers.
RoK
investors are now running 11 projects in Hoa Binh with a total registered
capital of over 100 million USD, ranking first in the number of
foreign-invested projects in the province.
Hanoi’s
six-month economic growth expected to reach four-year high
Hanoi
economy is expected to grow at 7.8 percent during the first half of this year
- the fastest pace in four years, reported the Ha Noi Moi (New Hanoi) daily
newspaper.
The
gross domestic product expansion in the first six months has seen nearly all
sectors with a higher growth pace than 2014, according to a draft report read
at a regular meeting of the municipal People’s Committee on June 4.
Industrial
production rebounded with an expected value increase of 6.7 percent while
budget revenue will exceed 72.43 trillion VND (3.33 billion USD), excluding
collections from dividends and remaining profits of State-owned companies.
The
draft reveals that the capital city succeeded in ensuring demand and supply
balance of goods and price stability, especially during the Lunar New Year
holiday in mid-February.
Hanoi
still faced major problems despite such substantial progress, said Chairman
of the municipal People’s Committee Nguyen The Thao, pointing out business
bottlenecks, export declines and the prevalence of small-scale
foreign-invested projects.
He added
sluggish basic construction and administrative reform, along with
mismanagement of land, construction and investment.
He
stressed that for the remainder of the year, municipal agencies need to
continue addressing business difficulties, improving the investment climate
and harnessing resources to complete key projects.
More
attention should also be paid to solving pressing civil issues, ensuring
social welfares, creating jobs and reducing the rate of low-income
households, Thao noted.
DHL
Express provides express delivery services to Vietcombank
DHL
Express – the world’s leading logistics company on June 4 announced that it
will provide express delivery services to the Joint Stock Commercial Bank for
Foreign Trade of Vietnam (Vietcombank).
Vietcombank
Deputy General Director Pham Thanh Ha said by partnering with DHL Express,
Vietcombank can deal with the current challenges to provide their customers
with better services.
Ms
Yasmin Aladad Khan, Senior Vice President of South East Asia and South Asia
Region at DHL Express underscored the importance of the DHL Express global
network and Vietcombank’s comprehensive access to the local market and
highlighted the effective cooperation between the two sides in offering high
quality express delivery services.
Director
Commercial at DHL-VNPT Express Ltd, Md. Miarul Haque has pledged to provide
maximum support for human resources training and expertise to help its
partners maintain and expand business activities.
AEC
could spell trouble for the furniture industry in Vietnam
Furniture
executives from around the globe are knocking at the door of Vietnam, a
rapidly emerging supplier for high quality and some of the least expensive
woodwork exports on the global market.
With
goods at prices competitive with those made in neighbouring China, Vietnam is
being courted by US manufacturing and retail executives looking to purchase
inexpensive desks, chairs, and household items made from pine, cajuput or
rubber wood.
As a
result, Vietnam currently ranks fourth in the world, second in Asia and first
in Southeast Asia in exporting wood furniture and furnishings and is rapidly
becoming a leading exporter to the US, according to official sources.
However,
despite all the successes in the overseas markets – domestic businesses have
only managed a 40% market share in the local market – which leading market
analysts believe should be much higher.
Vo Van
Quyen from the Ministry of Industry and Trade (MoIT) said imports account for
60% of the local market with the nation importing on average nearly US$2
billion annually— 40% for the real estate industry and 60% to meet domestic
consumer demand.
Quyen,
who is in charge of domestic trade affairs at the MoIT, said Vietnam has
roughly 4,000 companies in the industry, primarily very small and medium
sized businesses located in trade villages.
They
will face increasing difficulties competing at home Quyen stressed, as
Vietnam joins trade pacts and lowers import duties in line with its
obligations under the ASEAN Economic Community (AEC) early next year.
Huynh
Van Hanh, deputy head of the Handicraft and Wood Industry Association (HAWA)
of HCM City in turn echoed Quyen’s concerns and said domestic companies are
sure to face increasing difficulties when the lower tariffs under the AEC
kick in.
Hanh
said domestic companies need to take heed and should make plans to shore up
market share in the domestic marketplace with increased brand recognition for
customers or they’ll lose out from the AEC formation.
For its
part, the Vietnam Wood and Wood Product Association said it is aware of no
less than 26 countries that are planning, or have made moves, to expand into
Vietnam’s furniture industry – including China, Thailand, Japan, the
Republic of Korea (RoK) and the UK.
According
to the HAWA, the local market has been neglected as domestic companies have
focused on pursuing big orders from foreign partners.
As a
result they have failed to meet domestic customers’ tastes, establish
distribution networks and develop brand names recognition.
There is
near unanimity among the experts that limits in connectivity, trade promotion,
and establishment of distribution networks have led to domestic companies and
craft villages neglect of the domestic market.
This is
the major cause that sales of imported goods have taken off and cornered the
market in Vietnam.
It is
time for companies in the industry to pay more attention to the domestic
market, they advise adding that focusing on the domestic market helps
businesses avoid overdependence on certain foreign markets.
In
addition, it also helps businesses minimize risks in the integration process.
HAWA
cautioned that though Vietnamese woodworks are exported to many countries in
the world including demanding markets like the US, Japan and EU – it does not
necessarily follow that they meet with the domestic demand.
Businesses
must conduct market research, develop value chains for production and
distribution along with good marketing and promotion policies to meet the
domestic demand—or else AEC will spell trouble for the domestic market.
HSBC to stop offering monthly manufacturing indicator
for Vietnam
The Hong
Kong and Shanghai Banking Corporation (HSBC) has announced that it will stop
publishing the Purchasing Managers' Index (PMI) for Vietnam after five years
of offering it for free for the Southeast Asian country, along with others worldwide.
With the
announcement released on Monday along with the HSBC Vietnam Manufacturing PMI
for May 2015, Vietnam will no longer receive the PMI starting next month.
This
will be the final HSBC PMI index published in Vietnam and other countries,
HSBC said in a press release.
PMI
comprises of many economic indicators derived from monthly surveys of
companies from the private sector conducted by Markit Group, which prepares
PMIs for over 30 countries worldwide, and the Institute for Supply Management
(ISM), which provides PMIs for the US.
The
Vietnam Manufacturing PMI, a composite index of five sub-indicators including
production level, new orders from customers, supplier deliveries, inventories
and employment level, have been conducted by Markit for the last five years.
The
collaboration with Markit to carry out the PMI surveys has been a success,
HSBC said without citing the main reason for the move.
Kawasaki
Heat Metal Vietnam employees work at the company's plant in Binh Duong
Province, located in southern Vietnam.
In the
last Vietnam Manufacturing PMI, it is reported that growth in the Vietnamese
manufacturing sector gathered pace in May, with rising client demand leading
to record expansion of output and new orders.
Moreover,
the rate of job creation also picked up during the month.
Meanwhile,
input costs increased for the first time in seven months, but firms continued
to lower their output prices, said the report.
The
headline seasonally-adjusted PMI – a composite indicator designed to provide
a single-figure snapshot of operating conditions in the manufacturing economy
– rose for the second month, running to 54.8 in May, up from 53.5 in April.
The
marked improvement in operating conditions signaled by the latest reading was
the strongest since the series began in April 2011. Business conditions have
now improved in each of the past 21 months.
Central
to the marked strengthening of the sector’s health was a record increase in
new business, as respondents indicated that the rise mainly reflected a
greater need for products among customers.
New
export orders also rose, albeit at a much weaker pace than seen for total new
business.
As
client demand increased, manufacturers raised production accordingly, resulting
in increased output for the twentieth month in a row, and at the strongest
pace in the series history, said the report.
The
Vietnamese manufacturing sector gained further momentum in May and growth
rates are now the best in four years of data collection so far.
“Central
to the recent success of firms in Vietnam has been their ability to secure
new work in a competitive environment, and the recent 1% devaluation of the
dong against the US dollar by the State Bank of Vietnam should help efforts
to maintain international competitiveness,” said Andrew Harker, senior
economist at Markit.
“On the
other hand, some firms did report a rise in costs as a result of the weaker
currency, leading to a first rise in input prices in seven months,” he added.
Thu
Duc BOO Water Plant supplies tap water
Thu Duc
BOO Water Plant on Wednesday began supplying tap water to three districts
east of HCMC with an initial daily output of 100,000 cubic meters after
successful test runs and connection to Saigon Water Corporation’s pipe system
for pressure testing last week.
Le Vu
Hoang, general director of the water plant, said that site clearance for the
installation of the pipelines that will link the plant to two more areas
south of the city, namely District 7 and Nha Be District, is almost complete.
The pipelines will raise the plant’s daily capacity to 300,000 cubic meters
by September.
Invested
with nearly VND1.5 trillion, the plant broke ground in September 2005 and was
scheduled for completion by August 2007. Slow site clearance delayed
completion for nearly two years, however.
Speaking
at the inauguration ceremony, general director of Saigon Water Corporation
Tran Dinh Phu said that although District 7 and Nha Be District are not yet
getting water from the plant, the higher pressure that is a result of the
operation of the plant will help Sawaco raise capacity to these districts by
an extra 5,000 cubic meters a day.
Saigon
Water Corporation, or Sawaco, as the key water supplier in the city is
swiftly executing third-phase construction of Thu Duc Water Plant adjacent to
Thu Duc BOO Water Plant and second-phase construction of Tan Hiep Water
Plant. The company is also coordinating with Water and Environment Joint
Stock Co. to hasten the progress of Kenh Dong Water Plant in Cu Chi District,
according to Sawaco.
“When
construction of the projects is completed in 2010, Sawaco will be able to
supply over 800,000 cubic meters a day on top of the current supply of 1.3
million cubic meters,” Phu said.
Saigon
Port says loose cargo upsurge the cause of congestion
A huge
volume of loose cargos like cassava, sand, bran, and animal foodstuff has
been said as the culprit of the current congestion at piers of the Saigon
Port system, the port operator explained on Wednesday.
Such
cargoes account for up to 80% of goods having arrived at the ports over the
past few months while packaged cargoes and containerized cargoes like steel
and iron and other were primary items earlier.
Tran Huu
Chieu, deputy general director of Vietnam National Shipping Lines, said that
regional ports are equipped to receive just containerized cargoes while
Saigon Port’s facilities can handle all kinds of goods. Besides, loading
charge for loose cargoes is low, just over VND10,000 per ton, while container
loading charges may be US$43 each TEU.
More
ships have flocked to Saigon Port as they had been rejected by other ports or
to reduce transport fees to HCMC and Mekong Delta provinces. Moreover,
loading charges at other ports are high, Chieu added.
To make
mater worse, five pairs of buoys at Saigon Port have been cleared to
facilitate Thu Thiem Tunnel project. The port earlier had around 20 pairs of
buoys which could receive over 30 ships at a time, said Saigon Port’s deputy
general director Nguyen Van Minh.
Around
29 ships are offloading goods at the port and 13 others are waiting to call
on. Meanwhile, the port is capable to receive 25 ships at a time only.
Le Cong
Minh, general director of Saigon Port, noted that the cargo throughput at the
port has also increased strongly in the year to date.
Around
6.4 million tons of goods were handled at Saigon Port during the first four
months of this year, a 43% year-on-year increase. The amount of loose cargos
also increased to over 3.8 million tons from 900,000 tons in the year-earlier
period.
To ease
the congestion, Saigon Port’s general director Le Cong Minh has decided to
provide storage charge free since on Wednesday. The solution will help ship
owners carry goods to warehouses before packing to make room for other
waiting ships at piers.
The port
also suggested ship owners and agents to steer their ships to nearby ports
like Ben Nghe, Lotus, Baria-Series, Interflow, Tan Thuan Dong, Dong Nai, Phu
My, and Cat Lai or wharfs in the Saigon, Dong Nai, and Soai Rap rivers.
Source :
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Chủ Nhật, 7 tháng 6, 2015
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