Former shipping chief urges Van Phong Port developers to ‘think big’

VietNamNet Bridge – Construction of Van Phong Port is set to begin in northern Khanh Hoa province in the near future. Dr. Chu Quang Thu, former head of the Vietnam Maritime Bureau (Vinamarine), warned that the developers are aiming too low. He says the site has the potential to become another Singapore.

Known up until now principally as a scuba diving paradise, Van Phong Bay, some 100 kilometers to the north of Nhatrang City on Vietnam’s central coast, is slated for development as a deepwater port.

According to Nguyen Trong Hoa, Head of the Management Board of Van Phong Economic Zone, site clearance for Van Phong port project has been completed, a road to the port site has been built and electricity is ready to be provided.

Thu told Tuoi Tre newspaper that “the worldwide trend is toward bigger container ships. They are more economical. It would be a big waste if at Van Phong we only build a harbor to handle ships in the 6000 to 9000 TEU range. [A TEU is a ‘twenty foot equivalent unit,’ that is, a standard shipping container]. The natural water depth is 16.5 metres in the bay’s Dam Mon area. Vietnam will not see Van Phong develop into a big international transit port if it cannot receive the biggest ships, 15,000 to 18,000 TEU.”

People still don’t understand why we should build big harbors for big ships, while Vietnam’s ships are just in the 200... TEU range?

Dr. Chu Quang Thu, former head of the Vietnam Maritime Bureau (Vinamarine)

Singapore and Hong Kong have become rich partially because they have international transit ports. Countries like Vietnam, which export to the US and Europe, must carry containers to Singapore, where they are classified and put into larger ships in order to save on costs.

Up till 2009, Vietnamese could not receive 4,000 TEU and bigger container ships. Typically, 2000 TEU ships carry goods from HCM City and Hai Phong to Singapore and Hong Kong for consolidation and transshipment.

Transshipping costs Vietnamese exporters an additional cost of $400 per every TEU. My former office, Vinamarine, has found that Vietnam ‘loses’ nearly $1.5 billion every year because big container ships cannot enter Vietnam’s ports.

If we develop an international transit port at Van Phong Bay, it will be able to earn big sums of money. 80 billion dong will fall into the pocket of Khanh Hoa province every time an oil tanker docks at the port. World-scale ports serve dozens or even several hundred ships every day. Van Phong will help the surrounding region prosper. It is nearer to [several] shipping routes than Singapore.

If we only build a harbor for 6,000-9000 TEU ships, we’ll exclude the most popular class of ships, the 12,000 TEU size. Unlike Hai Phong and Saigon ports, Van Phong is far from industrial zones. Its natural advantage is as a transhipment point, but if big foreign ships do not dock the port to load transit commodities, the port will sit idle. We must learn a lesson from Cai Lan port [near Ha Long Bay, northeast of Haiphong], which has been receiving few ships.

Some say we should only build small harbors because our financial resources are limited . . . .

We should not think that way. I do not think that we will lack capital for investment. Investors are ready to provide money if they think that the Government is heading the right way. The competition among international ports is now very stiff. If we aim too low because we don’t have funds in hand, and so the ships don’t use Van Phong, it will be a real loss.

We should build one pier for 15,000 TEU ships instead of two piers for 6000-9000 TEU ships, even though the cost will double.

How do you imagine Van Phong port should operate?

Vietnam should follow international practice. I think that we should design Van Phong port area as a bonded transit area.

If Vietnam still insists on unloading commodities for inspection and ignores international practice, foreign ships will stay away. If we really want to get into the global ‘game,’ however, we should waive the docking fee for five to ten years in order to attract foreign ships. Vietnam will still be able to earn a billion dollars a year from charges for transit services.

Without a world-class transit port, we and our grandchildren will have to keep carrying our goods to Singapore. The people there will earn the money we should be earning. We need to take sensible actions to awaken the potential of Van Phong Port.

VietNamNet/TT

Formaldehyde in China-made clothes confirmed, but no decision made

VietNamNet Bridge – The Hanoi Market Control Sub-agency has affirmed that China-made clothes contain formaldehyde, a substance which is harmful to human skin, with the content ratio of less than 2 percent. No official conclusion has been released because no regulation covers this issue.

Trinh Ba Quang, Senior Official from the Hanoi Market Control Sub-agency, said that the sub-agency joined forces with the Standard Measurement and Quality Department (STAMEQ) to take clothes samples from markets for testing and found that all the samples contained formaldehyde.

Quang said that all the samples were taken from Hoan Kiem street, a wholesale centre from which clothes are sent to many places.

However, no official conclusion has been issued.

“There are no concrete regulations about the safety level of products and the allowed levels of substances, including formaldehyde, which has created difficulties for government management agencies,” Quang said.

“We are still awaiting instructions from a higher level. If there were clearly stipulated standards for product quality, clothes that did not meet the required standards would be seized and demolished,” Quang added.

Meanwhile, when talking to local newspaper VnExpress, Tran Van Vinh, Deputy General Director of STAMEQ, said that as Vietnam is now a member of the World Trade Organisation (WTO), Vietnam will consider the quality standards set by the countries from which it imports products.

In this case, the clothes are imported from China, so Vietnam will refer to Chinese standards to reach a conclusion about the safety line for consumers.

The information about the toxic China-made clothes was spread in Vietnam on May 28 after Chinese press agencies reported that 1/3 of the products for children’s use made in Guangdong, China contained substances harmful to human skin. The information immediately shocked Vietnamese consumers because the majority of clothes available in Vietnam’s market are from China.

VietNamNet/VNE

Hanoians like products with well-known brand names

VietNamNet Bridge – An interesting absurdity has been revealed: Though Hanoians are thought to be thrifty, they are easily attracted to products like mobile phones and cosmetics with famous brand names.

According to a survey conducted by A.C. Nielsen in Hanoi and HCM City in April and May 2009, Hanoians are more influenced by others in making their consumption decisions than Saigonese.

The Personal Finance Monitor survey conducted by A.C. Nielsen in 2008 showed that consumers in HCM City borrow money from banks and financial institutions for their consumption needs, while 57 percent of Hanoians said they will not borrow money from any banks or financial institutions. This proves to coincide with the stereotype of Hanoians: They always care about how they appear in other people’s eyes. Financial reliance on others is looked down upon.

However, though commonly considered thrifty, Hanoians very much like high-grade products. 71 percent of polled people said they like products with well-known brand names. 52 percent of polled people said that they were ready to pay for high-grade products, while 79 percent said that purchasing high-quality products helped them save money.

On the contrary, consumers in HCM City pursue a ‘quick consumption’ tendency. They buy things they need and immediately when they need them. Saigonese still love high-grade products, but 48 percent of polled people said that luxury items are just suitable for those who like to show off and get other people’s attention. The city’s consumers say that they will only spend money on those things they need rather than on things to show off.

The survey by A.C. Nielsen also showed that Vietnamese consumers have good understanding about the economic downturn. Northern consumers, though they are more optimistic than southern consumers, still think that they have been significantly affected by economic crisis.

The omnibus survey by A.C. Nielsen conducted in May 2009 showed that Hanoians are interested more in food price increases, stable jobs, bills they have to pay, petroleum prices and their children’s futures. Meanwhile, in HCM City, people are interested in health, bills they have to pay, stable jobs and a balance between job and life and debts.

Both Hanoians and Saigonese are becoming increasingly concerned about the future. They all said they have cut spending on luxurious items, eating out.

Consumers in Hanoi said they will cut spending, but they will still use products of the same brand names, while consumers in HCM City said they will keep the same level of spending, but will purchase cheaper products with less well-known brand names.

Nielsen has advised Vietnamese enterprises to diversify business strategies and products for consumers in the two cities, because a single strategy will not be enough to attract all Vietnamese consumers.

VietNamNet/VNE

43 provinces register information to export fruit to China

VietNamNet Bridge – The National Agro-forestry and Fisheries Quality Assurance Department (Nafiqad) has sent an official letter to the Chinese side, providing a list of fruit-growing areas, fruit-packaging establishments and exporters of five types of fruit to China.

The official letter was sent on June 29 by Nafiqad to the General Administration of Quality Supervision, Inspection and Quarantine of China.

According to Nafiqad Deputy Director Nguyen Nhu Tiep, there are two ways of collecting and exporting fruit (litchis, longan, bananas, dragon fruit and watermelon) to China.

Merchants either collect fruit per order of Chinese clients and then export it in bulk to be packaged later, or collect fruit and then package it for direct export or sale to establishments that export to China.

Therefore, the lists the Vietnamese side sent to China include 1/ a list of fruit-growing areas 2/ list of establishments that collect fruit and export fruit in bulk and 3/ list of establishments that package fruit for direct export or sale to establishments that export to China.

The lists will be updated and sent to Chinese concerned agencies whenever there are changes or new information comes up.

Watermelon proves to be the type of fruit that has been registered the most, by 43 provinces. Fourteen provinces have registered to export litchis, including big litchi-growing areas in Hai Duong, Bac Giang, Quang Ninh, Thai Nguyen and Vinh Phuc. Twenty eight provinces have registered as longan-growing areas, 30 provinces have registered to export bananas and three to export dragon fruit.

The list of the establishments that collect and export fruit in bulk includes one enterprise and 56 establishments for litchi export, nine enterprises and 137 establishments for longan, one enterprise and five establishments for banana export, one enterprise and 19 establishments for watermelon export. There are also 44 enterprises and 14 establishments that have registered to export dragon fruit in bulk.

Currently, there are five establishments that package fruit for sale to establishments specialising in exporting fruit to China. All of them are in Binh Thuan province.

In the official letter, Nafiqad asked Chinese concerned agencies to create favourable conditions for Vietnamese establishments to maintain the existing ways of collecting and exporting fruit.

The agency has asked the Chinese side to provide a list of orchards and fruit-packaging workshops in China which export fruit to Vietnam prior to July 1 as agreed upon by the two sides at a meeting on January 9, 2009.

Ha Yen

Is petrol price in Vietnam high or low?

VietNamNet Bridge – One year ago, when the world’s oil price peaked at $147 per barrel, the domestic petrol price was 19,000 dong per litre. Nowadays, the world’s oil price has fallen by 50 percent to around $70 per barrel, but the domestic petrol price is 13,500 dong per litre.

Importers claim losses

Since the beginning of April, the domestic petrol price has increased four times by 2,500 dong per litre in total, or 22 percent. At the same time, the petrol import tax has been slashed from 40 percent to 20 percent currently. The Ministry of Finance has been trying to help ease the burden on petrol importers by allowing importers not to make contributions to the petrol stabilisation fund and not to pay debts to the state budget now.

However, petroleum importers still complain they are incurring losses.

Vuong Thai Dung, Deputy General Director of Petrolimex, which holds 60 percent of the market share, said that though the petrol price has been raised by 1,000 dong per litre since June 10, his company is still incurring heavy losses of 1,800-1,900 dong per litre of petrol sold, 1,500 dong per litre of diesel and 1,000 dong per litre of FO.

The same is said by other petroleum importers. Representative from Military Petroleum Company said that it is incurring the loss of 1,000 dong per litre of petrol, while Dong Thap Petroleum Company has reported the loss of 1,500 dong per litre of petrol.

“In fact, the previous petrol price increases just helped enterprises break even for several days. After that several days, the world’s oil price moved up again and the companies began losing money again,” said a representative from Petec.

Petrol distributors all say that the domestic petrol price was curbed at a low level for a long period. Therefore, the modest price increase of 1,000 dong per litre each time has done nothing to offset their losses.

They believe that the petrol price should be 15,500 dong per litre, which they say would allow them to break even.

Domestic price under pressure

If following the formula that the world’s oil price has dropped by 50 percent from the peak and the domestic price ought to drop by 50 percent as well, the domestic petrol price should be some 9,000 dong per litre only, or 4,500 dong per litre lower than the current price level.

Vuong Thai Dung of Petrolimex acknowledged that the domestic petrol price has not decreased in accordance with the world’s oil price decrease.

Dung has attributed this to the changed petrol pricing scheme. He said that at the time when the petrol price reached its peak, the State subsidised the petrol price, while the mechanism has stopped and now in Vietnam, the petrol pricing is following the market rules.

Petrol importers now have to pay higher taxes and fees than they did at the time of the world’s peak price. In July 2008, when the world’s crude oil price climbed to $147 per barrel, the import tax was 0 percent, while the petrol fee was just 500 dong per litre.

Dung said that the 19,000 dong per litre of petrol at that time was just a ‘virtual’ price, which did not reflect the actual production cost. The retail petrol price should have been 24-25,000 dong per litre at that moment. At that time, the 19,000 dong per litre was set because the state compensated importers for losses and accepted losses from petrol import taxes.

Meanwhile, Dung said, 30 percent of the production cost of every litre of petrol is being paid to the state budget, including the 20 percent import tax and the petrol fee which has been doubled to 1,000 dong per litre. Meanwhile, the VND/US$ exchange rate has increased by 200-300 dong per dollar.

In December 2008, when the crude oil price fell to the record low at $42 per barrel, down by 3.5 times from the peak price, the domestic petrol price decreased by 42 percent only to 11,000 dong per litre from the highest peak level of 19,000 dong per litre.

The modest petrol price decrease has been explained by the fact that the petrol import tax at that time was at a record high of 40 percent.

In the last two months, the crude oil price has increased by 71 percent from $42 per barrel to $72, while the price once hit the $79 per barrel threshold. If the crude oil price continues moving up, petrol importers may seek permission for another price increase.

Pham Huyen

BUSINESS IN BRIEF 30/6

Largest commercial complex under construction

The Hanoi Savico Joint-stock Company expects its plaza project covering 60,000 sq.m. would be put into operation by late 2011, becoming the largest of its kind so far in Vietnam.

The Savico Plaza Hanoi, construction of which started on June 26 in Hanoi ’s Long Bien district, has been designed to consist of a hypermarket, European and Asian food restaurants, fast food courts, cafes, entertainment spaces and cinemas.

More eight projects in Ninh Binh province licensed

Eight projects with a total capital of VND 700 billion have been licensed to invest in the industrial zones in Ninh Binh province in the past six months, announced Ninh Binh’s Department of Planning and Investment.

Out of these investments, the foreign direct investment (FDI) accounts for US$30 million. The amount is invested in such fields as: technology, cement, metal, footwears, textiles and others. These projects are being deployed so as to have them put into operation soon.

Contract for providing gas compressor module signed

The signing ceremony on providing gas compressor module to the project of collecting gas from the Mo Rong and Doi Moi oil fields was opened at the headquarters of Vietsovpetro in Vung Tau city, Ba Ria-Vung Tau province on June 29.

The project, with a total investment capital of US$42.4 million, is under the contract between the Vietnam-Russia Oil and Gas Joint Venture (Vietsovpetro) and Global Process Systems Company (Singarpore).

The gas collection project is one of the most important projects of Vietsovpetro and scheduled to be executed in 14 months. The project will help to collect gas during the oil exploitation process as well as avoid letting gas flare away in order to protect the ecological environment.

Gas worth thousands of US dollars has flared away. So, the urgent deployment on the gas collection project is a matter of great importance especially when the volume of exploited gas has been declining.

Bumper crop of winter-spring rice

The country has finished harvesting the 2009 winter-spring rice with an output of 18.6 million tonnes, up 312,000 tonnes compared to the last crop, according to the Ministry of Agriculture and Rural Development.

The average yield was also increased by 0.1 quintal a hectare to 60.9 quintals a hectare.

In the northern provinces, thanks to the favourable weather conditions, the natural water source is enough for the cultivation of 1.15 million hectares of winter-spring rice. The output is estimated to reach 6.8 million hectares, up 120,000 tonnes over the previous crop.

In the southern provinces, farmers also has a bumper rice crop due to the favourable climatic conditions along with many effective measures on controlling diseases and expanding cultivated areas. Because of the increasing cultivated area, the output of the Cuu Long river delta also went up by 23,000 tonnes to 9.8 million tonnes against the previous crop.

The Ministry of Agriculture and Rural Development also asked the southern provinces to sow rice seeds for the summer and autumn-winter rice crop in combination with encouraging farmers to expand cultivated area and increase the number of crops per year.

Japan-Vietnam alliance to advise high-speed railway project

An alliance between a Japanese and a Vietnamese consultancy firm has been chosen to study the feasibility of a high-speed railway project to link Hanoi and Ho Chi Minh City.

State-run Vietnam Railways, the investor, has tasked Japan’s Tonichi Engineering Consultants Inc. and Hanoi-based Railway Construction and Investment Consultant JSC consulting firms to assess the US$33 billion railway plan in one month.

The 1,630-kilometer high-speed railway will be built with aid from Japan.

A section of the route between Hanoi and Vinh, a town in the central province of Nghe An, as well as a section between HCMC and Nha Trang in the south-central province of Khanh Hoa, are expected to become operational in 2020. The whole line is scheduled for completion in 2035.

After analyzing three of the world’s most advanced high-speed railways – Japan’s Shinkansen, France’s TGV and Germany’s ICE – the project manager Vietnam-Japan Consulting Joint Venture suggested the use of the Shinkansen “bullet-train” model.

The track, with a wider gauge of 1.45 meters, will reduce the train journey between Hanoi and HCMC to less than 10 hours from more than 30 hours now with speeds of up to 360 kilometers per hour.

The country's north-south trains now travel 1,726 kilometers between the two cities on a single track with a narrow 1m gauge.

VietNamNet/VNA, TN, ND

Japan endorses historic Vietnam trade deal

Vietnam Government Website

Japan has endorsed a historic trade deal with Vietnam to reduce import taxes on the majority of goods traded between the two nations.

The Japanese parliament approved the Vietnam Japan Economic Partnership Agreement (VJEPA) on June 24, allowing the pact to take immediate effect.

The agreement sets a schedule for import tariff reductions over the next 10 years that will apply to a range of sectors, including as agriculture, industry, trade, investment, human resource development, tourism, environment and transport.

Vietnam’s National Assembly endorsed the agreement in May, after officials from the two nations concluded their negotiations on the terms of the trade deal last year.

Under VJPEPA, 92 percent of goods traded between Japan and Vietnam will not attract any import taxes.

Tariffs on as much as 86 percent of aquatic, agricultural and forest products and 97 percent of industrial items Vietnam exports to Japan will also fall.

Japan will slash the tax on cuttlefish and shrimp imported from Vietnam to 1 to 3 percent, while Vietnam’s mineral exports will be levied at zero percent tax.

The trade pact with Vietnam contains the biggest tariff reductions Japan has ever committed to with an Association of Southeast Asian Nations (ASEAN) country.

In return, Vietnam agreed to reduce import tariffs on nearly 88 percent of goods imported from Japan within 10 years.

Import taxes on spare parts for flat screen TVs and DVDs will fall to 3 percent, while the import taxes on digital cameras, color TVs and automobile spare parts will drop to between 10 and 20 percent.

VJEPA is the first bilateral trade deal Vietnam has committed to with another nation since being admitted to the World Trade Organization (WTO) in 2007.

Vietnam-Japan trade turnover reached more than US$15.5 billion last year, with Vietnam’s exports to Japan reaching $8 billion and Vietnam importing $7.5 billion of goods and services from Japan.

The two nations have agreed to lift two-way trade to US$17 billion by 2010.

Vietcombank shares jump on debut, index down

Reuters

Shares in Vietcombank, Vietnam's largest partly private lender, jumped by the maximum 20 percent allowed on their domestic debut on Tuesday, but the small size of its listing limited the impact on the main index, which ended lower.

The stock closed at VND60,000 in a partial listing of the Hanoi-based bank on the Ho Chi Minh City Stock Exchange, at the top of a range of investors' bids that started at VND59,000, Reuters data showed.

"Vietcombank's listing had no influence on the market at all because the bank only listed part of the IPO shares so its market capitalisation is very small," said Bui Hai Nguyen, a trader at Hanoi-based Bao Viet Securities.

The exchange's VN Index closed down 2.63 percent at 448.29 points as domestic investors took profits. The market has risen 42 percent this year.

Vietcombank, the first state-run bank in Vietnam to have an initial public offering, raised US$652 million from its IPO in December 2007.

The lender, also known as the Commercial Joint Stock Bank for Foreign Trade of Vietnam, is now valued at around $4 billion, based on its share close.

Stock market regulators have said foreign investors could buy all 112.3 million shares now listed, which represent 9.2 percent of the total shares of the lender, below the government's foreign ownership cap of 30 percent of a Vietnamese bank.

Vietcombank's listing after the June 25 debut by Vietnam's top insurer, Bao Viet Holdings, and ahead of VietInbank scheduled for July 16 could give the market a fillip after a slump last year.

But dealers said Vietcombank shares, along with those in Bao Viet Holdings, could face selling pressure.

"Vietcombank's starting price is high and after the first few 'market welcoming' sessions, it will pull down the index in the longer term," Nguyen said.

Most financial shares lost ground on Tuesday after the central bank announced it would keep its base rate steady in July at 7 percent.

Bao Viet Holdings closed up 4.95 percent at VND53,000, but Saigon Securities dropped 4.47 percent to VND64,000 and Sacombank fell 2.78 percent to VND34,900.

On the Hanoi Stock Exchange, Asia Commercial Bank, Vietnam's largest listed firm by capitalisation, eased 1.2 percent to close at VND49,000.

Fitch Ratings downgraded Vietnam's local currency sovereign rating to BB-minus from BB on Tuesday, citing sustained fiscal decline and structural economic weaknesses.

Finance Ministry expert says price increases are ‘no surprise’

VietNamNet Bridge – Three straight months of consumer price increases (0.35%, 0.44% and 0.55%) have raised public apprehension that another inflationary period is beginning. However, Dr. Vu Dinh Anh, Deputy Head of the Market and Price Research Institute at the Ministry of Finance is not worried. “The CPI increases are not a surprise at all,” he says, and predicts that they will not exceed 10 percent for all of 2009.

Vu Dinh Anh: “The CPI increases are not a surprise at all”

Anh told the online journal VnEconomy that “we can say for sure that the consumer price performance in the first six months of the year was according to economic laws. It followed exactly the same path that prices did in the first six months of 2007. The price went up in the first two months of the year (the Tet holiday – ed.), went down in March and then went up again for the next three months at an increasing rate.

However, the price increase every month so far this year was lower than that of 2007. For example, in May, the CPI increased by 0.44 percent, compared to 0.77 percent in May 2007. This month (June), the CPI will rise by 0.55 percent, while it was 0.85 percent in June 2007.

The CPI increases are not a surprise at all. We should be glad because the increases are relatively low.

Why is the CPI performance in the first six months of the year is similar to that in 2007?

Let’s recall the economic situation of 2007. That year, we strived to obtain a high economic growth rate of 8.5 percent. We loosened monetary policy, and finished the year with 8.48% growth.

The situation seems to be similar in 2009. We are striving to obtain a “not too low growth rate” instead of striving to obtain a “high growth rate.” I mean we still strive for economic growth, and similar policies have been applied.

The Ministry of Planning and Investment has announced that the total money supply (M2) has increased by 16 percent and the outstanding loans have increased by 17 percent compared to the end of 2008. How have these factors affected prices in the first half of the year?

The four percent interest rate subsidy program has caused a large amount of cash to be put into circulation. But that was a one time stimulus. If the increase in the money supply is held to 25 percent from now to the end of the year, there will be no possibility of inflation.

In general, an increase in the money supply will push up prices six months later. Thus the money supply increase of 2007 led to considerable inflation in 2008.

Do you mean that we will face high inflation in 2010 if we put a lot of money into circulation in 2009?

Money supply is just one factor that can cause high inflation. We still have to consider the spending of the state. The state budget deficit has been set at eight percent. If the state’s investments are effective, this will not cause high inflation.

Let’s me explain this. If the State spends money on building a road, it seems at first that this will cause inflation because the state puts money into circulation. However, if the state’s investment brings an economic benefit that stimulates additional production, this will not cause inflation.

In the first three months of the year, some 70 tons of gold were exported, which brought in $2.3 billion in cash. Do you think that the influx of cash will affect the CPI?

As far as I know, the $2.3 billion has gone to gold trading companies and banks and has been staying there.

Bank interest rates have been going up. Will this lead to interest rate increases by making capital costs higher and goods prices higher?

Think this way. When the interest rates go up, this will help reduce inflation because it will help lessen the supply of money in circulation.

Businesses will think twice before deciding whether to borrow money, and, if they borrow less, their production is likely to be less too.

Some experts have warned that high inflation is going to return. Do you agree?

It’s not worth worrying about, in my opinion.

We have implemented demand stimulus packages and we have hit our target for increased consumption (the total retail turnover of goods and services in the first six months of the year increased by 20 percent over the same period of the last year). This is a good thing. If we were to think that prices go up because of higher consumption and try to reduce consumption, of course that would undercut the objective of stimulating demand.

How high will be the inflation for 2009, then?

I think that the inflation will be held to below 10 percent.

VietNamNet/TBKTVN

Fertiliser industry needs strategy

VietNamNet Bridge – Viet Nam was importing up to 100 per cent of its fertiliser requirements, the Information Centre for Agriculture and Rural Development (Agroinfo) said.

Domestic fertiliser prices depend on fluctuations in world price, which often sit at high levels.

About 90 per cent of the urea used, 70 per cent of the potassium diammonium phosphate (DAP) and all the sulphate ammonia (SA), as well as potassium fertiliser, is imported to satisfy domestic demand.

The Ministry of Industry and Trade has estimated the demand for fertilisers for the coming summer-autumn rice crop of about 1.84 million tonnes will include 400,000 tonnes of urea, 170,000 tonnes of SA, 200,000 tonnes of potassium, 160,000 tonnes of DAP and 910,000 tonnes of NPK.

Domestic fertiliser prices depend on fluctuations in world price, which often sit at high levels. Fertilisers often accounts for 30 to 40 per cent of agricultural product prices.

Retail fertiliser prices in some regions have risen VND100-500 per kilogram. Urea price in the Southern provinces of Kien Giang and Dong Thap rose VND240 to VND6,540 (US$0.37) while that of potassium is between VND12,800-13,000 after rising VND200-500.

Demand for the summer-autumn rice crop is increasing sharply, which will have a negative influence on farmers' incomes.

Agroinfo manager Pham Quang Dieu said the industry would continue to operate without long-term growth strategies and management while policies remained passive.

Agroinfo's database on fertiliser industry shows Viet Nam has since 1999 had about 60 legal documents regulating the industry. All are continuously replaced and have limited use.

"To minimise dependence on imports, the ministry is boosting research on advanced fertiliser production technologies while encouraging farmers to use bio-fertilisers to reduce production costs," said the head of MARD's Cultivation Department, Nguyen Tri Ngoc.

Demand for fertiliser is expected to increase throughout the world and especially in many developing countries during the coming decades.

"Prominent fertiliser corporations worldwide will pour significant capital into developing countries and Viet Nam needs a long-term growth strategy for the industry," Ngoc said.

VietNamNet/Viet Nam News

Beer sales surge as mercury rises

VietNamNet Bridge – Vietnamese have been spending up large on beer and soft drinks during the summer, much to the delight of distributors.

Since the end of last month, sales of beverages and beer have increased sharply, as have prices in many areas.

"I could sell 25 to 35 cases of soft drinks a day," said a store owner from the central city of Da Nang. A retailer in Hai Chau district said his shop had its orders trebled compared to previous summers.

"Every summer, we ordered beer and soft drink delivers once a week. Now, we have to order every two days," he said.

Demand for beer also surged in Ha Noi; to meet demand, alcohol and beer companies have increased capacity, said Nguyen Van Hung, general secretary of the Viet Nam Alcohol Beer and Beverage Association.

The Ha Noi Alcohol, Beer and Beverage Company increased daily capacity from 160,000 litre of draught beer to 180,000. Some days, productivity was more than 200,000, Hung said.

Along with beer, demand for soft drinks and fresh beverage like sugar cane juice and coconut juice increased significantly.

"It is the season for soft drink sales, but this year the demand has strongly increased," said Le Duc Truong, an official of Sen Le Company, a soft drink distributor in Da Nang city.

"Every day, we supply about 1,200 cases to Hai Chau district. All of us had to run to meet demand," he said. Despite the efforts to hold prices, beer and soft drink prices have increased nationwide.

At a Ha Noi market, the cost of a case of 24 Ha Noi beer bottles has risen from VND125,000 (US$7) to VND240,000 ($13), while in central regions bottle prices are up about VND14,000 ($0.70).

Sugar cane juice

Nguyen Duc Phu, deputy director of the Ha Noi Alcohol, Beer and Beverage Company, said distributors increased prices, which affected the company's prestige and trademark.

Like beer, bottle prices for soft drinks have increased about VND2,000.

During some sweltering days in Ha Noi, the price of some cups of ice tea trebled to VND3,000 while cups of sugar cane juice doubled.

Ice producers can't match demand, so prices increased. That's why we have to increase the price of sugar cane juice, said Hoa, a seller in Ha Noi.

The association has demanded companies stabilise prices and has asked them to manage their systems so distributors can't raise prices by themselves.

VietNamNet/Viet Nam News

Time-share vacation apartments and villas multiply on central coast

VietNamNet Bridge – Wealthy Vietnamese are buying villas and apartments in coastal resort projects and using them to serve both their vacation and investment needs.

Purchasing apartments and villas both to stay in and to earn money

In years past, rich people in big cities would buy land in the countryside or at the beach and build villas where they would stay just a few days a year on holiday. However, these days, they choose to purchase apartments and villas at tourism complexes and then assign management to the project developers who arrange to rent the properties to other vacationers for short periods. With these investments, the owners can have a a place to stay during holidays, while their property still can earn money when they are in the cities.

Doan Duc Hoa, Deputy General Director of Thu Thiem Investment Company said that investment in resort real estate is taking shape in Vietnam and it will flourish in time to come.

Hoa said that having realized the high demand, his company is building a 21 hectare eco-tourism resort in Mo Cay district of Ben Tre province. The project is capitalized at 250 billion dong. The company will build apartments and villas for sale and lease. If the clients purchase villas and apartments but only plan to stay for just a few days a year, the company can manage the apartments and villas on the owners’ behalf. The profit from the leasing will be divided equally.

Indochina Land recently offered 150 apartments and 30 two story villas at the Hyatt Regency Da Nang Resort & Spa at $180,000 for each apartment and $1.3 million for each seaside villa. Within a month, more than half of the apartments and villas in the ‘time-share’ project have been sold.

Micheal Piro, an Indochina Land executive, says the buyers of the apartments and villas can stay in them at no cost for one to three months a year. The apartments and villas will be managed by the company in the remaining time and leased to visitors. In this case, investors act as ‘shareholders’ of the resort projects, while they do not have to spend tens of millions of dollars to build the whole resort.

Developers promise high profits

Also according to Indochina Land, the apartments will rent for $300-400 per night, and a villa will rent for $500. If an apartment is rented for 70 days a year, the apartment buyer will be able to recover his capital within seven years. And during that time, the buyers will be able to use the apartment for up to three months each year.

Thien Thai Hotel and Tourism Company is developing another Danang beach project, Ariyana. It has committed to rent the villas on behalf of buyers at some $1,000 per month.

Real estate developers said that if the resorts have good business and can attract a lot of vacationers, the owners of the apartments and villas will have high profits at the same time the value of the apartments and villas will increase. If so, they can easily resell the apartments and villas to other wealthy people who also like beach vacations.

Another real estate developer, CBRE, judges that investors can profit from time-share developments in Nha Trang, Mui Ne, Da Nang and Hoi An, well known vacation destinations with ideal natural conditions. However, CBRE doubts that beaches like Do Son (near Hai Phong City) will support the same sort of investments, because Do Son mostly serves middle class vacationers who can’t afford luxury rental charges.

VietNamNet/DV

Stocks tread water as trading volumes slow

VietNamNet Bridge – The VN-Index closed off a hair yesterday, June 29, to 460.02, a loss of just 0.21 per cent, as trading volumes on the HCM City Stock Exchange slowed to 27 million shares, worth a combined VND1.1 trillion (US$61.8 million).

Last week, capital began flowing away from real estate shares, and there were signs that it was being poured into the banking and finance areas.

Foreign investors finished the day as net buyers of 532,000 shares, with a net value of VND52 billion ($2.9 million) and an overall volume of 8 million trades.

On the Ha Noi Stock Exchange, the HNX-Index also dropped by 1.25 per cent to end the day at 153.80. The value of the day's trades on the northern bourse was VND505.5 billion ($28.4 million) on a volume of 14.3 million shares. Foreign investors there accounted for more than 3 million of this total, worth a combined VND140.3 billion ($7.9 million).

Banking shares continued to lead both markets, with Sacombank (STB) generating orders for 4.7 million shares, or 17 per cent of the total volume on the southern exchange, and Asia Commercial Bank (ACB) a volume of 2.1 million shares, 15 per cent of the trades on the northern bourse.

Last week, capital began flowing away from real estate shares, and there were signs that it was being poured into the banking and finance areas, said Sai Gon-Ha Noi Fund Management Co analyst Ngo Van Minh.

Meanwhile, domestic stock indices were still in a downward cycle of adjustments that began in mid-June, Minh said. Market moves were now "complicated and hard to predict [as] market psychology is a mix of hesitation, caution and hope".

All eyes have turned to the listing of shares by Vietcombank. Many investors expected the listing would support market growth, but "there are many opinions expressing concern that market increases will be opportunities for major organisations and funds to unload their holdings," Minh said.

He noted that Dragon Capital and PetroVietnam Finance had dumped large quantities of shares from their portfolios recently.

The spike in the price of Bao Viet Holdings (BVH) immediately after the shares were listed - with Vietcombank likely to turn in a similar performance - was "not very likely to be good for the market at this time," he added. Immediately before and after the BVH listing, he noticed, shares were gradually withdrawn from other insurance shares including Bao Minh Insurance (BMI), PetroVietnam Insurance (PVI) and Viet Nam National Reinsurance (VNR).

Minh predicted the market would play out the week with mixed developments and on overall downward trend. "Weakened demand during last week is truly hindering market increases," he said.

But Viet Capital Securities Co analysts wrote in a report that if capital flows remained stable this week with an average trading value of VND1.5 trillion per day, they could sustain the market. Below that level, he said, "the market would likely experience a phase of adjustments before second-quarter business results are announced."

The fledgling unlisted public companies market (UPCoM) continued to struggle, following another 6.89 per cent yesterday to 81.83. Only Phong Phu Pharmaceuticals (PPP), up 1.2 per cent, and cable producer Truong Phu Co (TGP), up 1.2 per cent, managed gains on the day.

Market value on UPCoM fell 20 per cent from the previous trading session to VND4 billion ($224,700) on a volume of nearly 278,000 shares. Market leader SME Securities (SME) accounted for 60 per cent of the volume, but with only about 170,800 shares traded.

VietNamNet/Viet Nam News

Positive signs for VN’s textile, garment sector

Wokers have jobs when textile and garment companies have orders. (Photo: SGGP)

VietNamNet Bridge - Due to the world economic downturn, businesses in the textile and garment sector faced a decline in exports and a lack of orders in the first few months of the year. However, there are clear signs of recovery, with the number of orders improving.

Increasing orders

At the end of this year’s second quarter, the number of orders at textile and garment businesses in Ho Chi Minh City have increased by 15-20 percent compared to the first few months of the year.

Most businesses have orders from foreign partners, which will keep them busy until the third of quarter.

According to Phung Dinh Ngo, director of Binh Hoa Garment Company, the company has had recent orders, with exports to the EU showing satisfactory results in the second half of the year.

Pham Xuan Hong, chairman of Sai Gon 3 Garment Joint Stock Company, said his company has earned US$25 million from garment exports this year. Exports to Japan accounted for 65 percent, with orders from America and the EU stabilizing.

Vietnam has achieved remarkable growth in garment and textile exports to Japan at a time when exports to its major markets, like the US and the EU, plunged.

According to textile and garment companies, many importers stopped orders or hastily cut orders during the economic downturn. When the world market began to improve, traders did not have enough goods to sell, leading to the recent increase in orders.

The quick recovery of Vietnam’s textile and garment industry has shown its particular advantages compared to other countries.

Chairman of The Vietnam Textile and Apparel Association (Vitas) Le Quoc An said Japanese importers are switching their orders from other countries to Vietnam, as they appreciate the consistency in the quality of Vietnamese made clothes and the skill of its workers.

Vietnam’s textile and garment exports in the first six months of this year totaled more than $4 billion, a decrease of 1.3 percent compared to the same period last year.

The decrease is much lower than the forecast of 15 percent and was relatively lower than other countries.

Textile and Garment exports still achieved growth rates in Japan, Korea, Taiwan and Norway.

The highest growth was for Japan at 25 percent.

The recent signing of the Vietnam-Japan Economic Partnership Agreement is expected to help further increase Vietnamese clothing exports to Japan.

Under the treaty, from July 1 Japan will eliminate import tariffs on Vietnamese textiles and garments that use raw materials of Vietnamese, Japanese or ASEAN origin.

Taxes are currently five to ten percent.

Pham Xuan Hong, deputy chairman of Vietnam Textile and Garment Association, said exports increased to Japan due to Vietnam’s quality orders and reasonable prices.

Increasing orders, decreasing workforce

Orders and workers are two the most difficult aspects at the current time for the textile and garment sector.

With the positive signs from the market and stable long term contracts, businesses do not have enough workers.

Many companies have had to outsource to fulfill contracts.

The serious shortage of workers has forced many garment companies to recruit untrained workers and offer attractive salaries. This compares to the number of job losses in the clothing industry worldwide.

At some businesses, there has been a 50 percent drop in the work force since the end of 2008.

Pham Xuan Hong, a member of the association, said some companies laid-off workers when they had no orders, but when they have orders they face difficulties in recruiting workers.

In the first few months of the year, many companies cut down on workers when they had no orders. This resulted in many of the trained workforce returning to their hometowns. Companies do not know where to find them in order to resume normal production.

Ho Chi Minh City based textile and garment companies, on average, are 10 -15 percent short in employees.

Many companies have offered more than VND2 million per month and ensured rewards for Tet, but are still struggling to recruit enough workers.

With the problems in hiring enough staff, the industry expects to make $9.1 billion compared with the initial target of $9.5 billion this year.

VietNamNet/SGGP