Thứ Hai, 20 tháng 2, 2017

Nghe An urged to make top 20 on provincial competitiveness index
Prime Minister Nguyen Xuan Phuc has asked Nghe An province to improve its investment environment and strive to be listed in the top 20 localities nationwide with the highest competitiveness index over the next two years.
The Prime Minister made the request at a working session with the province’s key leaders on February 19 to review the locality’s socio-economic achievements in 2016 and the first months of 2017.
He hailed the province for fulfilling 25 out of 27 criteria regarding socio-economic development in 2016.
Accordingly, Nghe An recorded the highest budget collection with over VND11 trillion last year. A total of 152 communes in the province have been recognised as new-style rural areas. The locality has also gained positive progress in culture, security and social safety.
Outlining tasks for the province in 2017, Prime Minister Nguyen Xuan Phuc tasked Nghe An to continue its robust implementation of the Politburo and Government’s resolutions.
The locality was requested to enhance economic restructuring, develop hi-tech agriculture, protect the environment, improve people’s living conditions, and maintain security and social order.
It was also assigned to stand out as an incubator for start-up businesses and work out solutions to raise the quality of human resources as well as protect and uphold indigenous cultural characteristics.
Foreign animal feed frenzy verges on monopoly, local makers allege

Competition in Vietnam’s animal feed industry is falling out of balance, with foreign firms dominating more and more of the local market.

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Le Ba Lich, chairman of the Vietnam Animal Feed Association, told VIR that local authorities “cannot force foreign animal feed makers, who are investing heavily in the country, to stabilise their product prices or call them ‘monopolists’, because they are not violating Vietnam’s law and they are operating under market law”.
Currently, 58 foreign firms operating over 70 plants occupy close to 65 per cent of the domestic animal feed market share.
At a recent shrimp development conference in the Mekong Delta province of Ca Mau, local firms told the government that animal feed prices in Vietnam are at top-tier international levels due to these foreign firms’ monopoly. They asked the government to establish limits on the market.
However, Lich said these firms are in fierce competition with one another, which prevents them from “entering co-operation to establish a monopoly over the market”.
Under the Competition Law, an enterprise is considered to hold the dominant position in a market if it has a market share of 30 per cent or more in a relevant market or is capable of considerably restricting competition.
A group of enterprises is considered to hold a dominant market position if they take concerted action to restrict competition, falling into one of the following categories: (a) two enterprises with total market share of 50 per cent or more on the relevant market; (b) three enterprises with total market share of 65 per cent or more on the relevant market; (c) four enterprises with total market share of 75 per cent or more on the relevant market.
The law also stipulates that an enterprise is considered to hold a monopoly if there is no enterprise competing in the goods or services dealt on the relevant market.
“No enterprise in Vietnam is either holding a dominant position or a monopoly over the local animal feed market,” Lich said. “For example, though Thai-backed C. P. Vietnam Livestock Corporation is Vietnam’s biggest foreign animal feed producer, it occupies only 15-17 per cent of the local market share.”
Last year, C.P. made three million tonnes of feed - a big portion of Vietnam’s total output of 21 million tonnes produced by over 200 firms.
“Foreign animal feed makers have to report their product prices on a monthly basis to the Ministry of Finance’s Price Management Department. Thus they can’t raise their prices without cause,” he added.
A source from the Ministry of Agriculture and Rural Development’s (MARD) Livestock Production Department told VIR that “It is impossible to say that foreign firms are monopolising or holding a dominant position in the local animal feed market, because no firm has a market share of 30 per cent or more, as laid down in the Competition Law.”
He added that since mid-2016, the rate of foreign firms asking permission from MARD for importing animal feed materials rose 10-15 per cent. “A great number of foreign animal feed firms are expected to enter Vietnam this year to undertake big projects, due to rising local livestock production,” he said.
A big Japanese group is planning to invest $100 million into making animal feed in the southern province of Dong Nai this year. And also this year, US-based agribusiness conglomerate Cargill Group will put into operation its 12th animal feed mill in Vietnam, a $30 million initiative in the southern province of Binh Duong. This mill will have a total annual capacity of 260,000 tonnes.
South Korea’s CJ Group will also invest millions of dollars into a new plant, its sixth, in the south-central province of Binh Dinh. This 120ha project will also comprise a pig-breeding farm. 
And other major foreign producers are getting on the feeding frenzy. Chinese animal feed producer Tequhope plans to set up 12 animal feed plants in Vietnam through 2020. Currently, Tequhope operates a plant in the northern province of Bac Giang.
Production of animal feed is also growing fast, at about 21 per cent on-year over the past few years.
Cross-ownership status in banks difficult to stop

The State Bank, while admitting that it is difficult to eliminate cross-ownership in commercial banks, said in many cases, institutions and individuals borrow money from credit institutions to buy bank stakes or contribute capital to banks.

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Analysts, when talking about relations among Vietnamese banks, commented that this is a ‘spider’s web’. Though the central bank has stated that the cross-ownership status must be eliminated, while setting up limits in bank ownership ratios, the problem still has not been settled.

In fact, commercial banks have been trying to withdraw their capital contributed to other banks. Maritime Bank has divested from MB and it now holds less than 5 percent of MB’s charter capital instead of 8.96 percent as previously.

Meanwhile, VietinBank has lowered its ownership ratio in Saigon Bank from 10.39 percent to 4.91 percent.
The State Bank, while admitting that it is difficult to eliminate cross-ownership in commercial banks, said in many cases, institutions and individuals borrow money from credit institutions to buy bank stakes or contribute capital to banks.
Vietcombank contributes the most capital to other banks. It now holds stakes in four other credit institutions: 7 percent of capital of MB bank, 8.24 percent of Eximbank, 4.72 percent in OCB and 4.37 percent in Saigonbank. It also has 10.91 percent of stakes in the Cement Finance JSC.

Which shares will Vietcombank retain and which it will sell? Vietcombank’s chair Nghiem Xuan Thanh said the State Bank has allowed Vietcombank to maintain the current ownership ratio at MBB, a profitable bank.

He revealed that Vietcombank will only retain the capital contribution to two banks, while it will consider the market situation and banks’ business plan to make a decision on whether to keep the shares. As for OCB and Saigonbank, its share value is less than VND100 billion, a small investment compared with Vietcombank’s total assets.

As for Eximbank, though it held shareholders’ meetings twice in 2016, the withdrawal of 8.76 percent of capital from Sacombank was not mentioned. The cross-ownership ratio has been a big problem for Eximbank for many years because it causes personnel problems and internal conflicts.

In June 2016, Vietinbank successfully lowered its ownership ratio in Saigon Bank to 4.91 percent, followed by the move to withdraw capital from Sai Gon Port JSC and Hai Phong Port JSC.

In April 2016, MobiFone registered to sell its shares at SeABank and TP Bank. However, no investor showed interest in SeABank stakes.

Meanwhile, TP Bank could only find six investors who bought 8.7 millions shares. VNPT, a telecom group, still has not divested from Maritime Bank.

Bui Quang Tin from the HCMC Banking University said that it was not easy to find partners to transfer bank shares.

In most cases, the share prices at the time when banks contributed capital were higher, which means that banks would take a loss if selling shares now.

Chi Mai, VNN

Chủ Nhật, 19 tháng 2, 2017

PM sets bar high for shrimp exports
The Ministry of Agriculture and Rural Development (MARD) has set a shrimp export target of US$10 billion by 2030.


However, Prime Minister Nguyễn Xuân Phúc disagreed with this, saying the target is too low and can be reached by 2025.
He went on to say that Việt Nam should become the world’s shrimp production base.
But analysts are divided on this.
Some said reaching $10 billion even in 2025 would be difficult since the agriculture sector faces many challenges like the small, household scale of production, climate change and international integration.
Besides, global seafood exports now are worth around US$130 billion, with shrimp accounting for only around 10 per cent or $13 billion, they said.
According to the Food Agriculture Organisation of the United Nations, the exports are growing at an average rate of around 15 per cent a year.
But in reality, it will not be easy to achieve the 15 per cent growth rate.
Even if it is achieved the global trade in shrimp will only reach $30 billion by 2025.
For Việt Nam to achieve the $10 billion export value by 2025, it would have to both increase shrimp output and value addition of shrimp products.
Experts calculate that if the added value of shrimp is doubled by 2025, the country would earn $6 billion from exports.
For the $4 billion remainder, it would have to produce an additional 1 million tonnes of shrimp.  
Last year shrimp exports were worth $3.1 billion. To achieve this, the country had to produce 650,000 tonnes.
Việt Nam might be able to produce an additional 1 million tonnes of shrimp, but almost certainly cannot double value addition because its companies already process shrimp using advanced technology.
Lê Văn Quang, chairman of the Cà Mau-based Minh Phú Seafood JSC, said his company has set a target of exporting $2 billion worth shrimps by 2021.
It is a feasible plan since the company plans to make major changes to production, marketing and technology application, according to the chairman.
PM Phúc said if Minh Phú alone could export $2 billion, Cà Mau Province’s total exports could be $4 billion and the remaining $6 billion could be managed by other provinces and cities, and the $10 billion target could be achieved by 2025.
Some analysts concurred with Phúc, saying Việt Nam’s shrimp industry has all the conditions necessary to develop and become the world’s shrimp production hub.
But they hastened to point out that the country needs to step up investment in infrastructure for shrimp farming and processing to boost productivity as well as value addition.
Now a full 70 per cent of costs in shrimp production goes towards feed and medicines, most of which are imported.
Moreover, processors import 17 per cent of the shrimp they require.
Banks plagued by bad debts, continue to pay low dividends
Trần Thiện Nguyên, who owns shares in a joint stock bank based in HCM City, hopes this year it will pay higher dividends than in previous years.
In recent years banks had been paying very low dividends or even nothing, he said.
As a result, dividend payments have always been a hot topic at lenders’annual shareholders meeting in recent years.
Analysts blame the low dividends on banks’ high bad debt levels and their slow recovery.
The chairman of a HCM City-based bank with a chartered capital of VNĐ5 trillion (US$220 million) said last year pre-tax profits were VNĐ484 billion, or 10 per cent higher than the target.
But it only intends to pay a dividend of around 5 per cent, the same as the 2015 rate.
He explained that the bank had to set aside a considerable amount of money for risk provisioning since the market was still beset by many difficulties.
The banking sector still has non-performing loans worth about VNĐ200 trillion (US$8.8 billion) bought by the Việt Nam Asset Management Company (VAMC) but remaining unresolved.
To settle bad debts, banks are having to use considerable sums of money for their risk provision accounts, which has a big impact on their bottom line.
Eximbank for instance had to set aside VNĐ1.2 trillion last year for provisioning, or 82 per cent of its net interest income. In the event, its pre-tax profit was only VNĐ300 billion.
Therefore, Eximbank’s after-tax profit was only VNĐ202 billion, 70 per cent down from 2015.
VIB Bank’s provisioning was VNĐ532 billion, or 56 per cent of its net interest income.
At the same time banks are also struggling to adopt international bank management standards prescribed under the Basel II accord as required by the central bank.
Basel II requires minimal capital requirements, regulatory supervision and market discipline.
To achieve this goal, banks must increase their capital to meet capital adequacy ratio (CAR) norms. Under Basel II standards, they need to have CAR of around 9 per cent.
State giant BIDV is one of the lenders that would have to mobilise more capital to meet the 9 per cent norm.
Opportunities to invest in agriculture
The Việt Nam Rubber Group (VRG) plans to equitise along with 20 of its subsidiaries in the third quarter of this year.
The valuations of the targeted companies have more or less been completed.
VRG is working with auditing firms to check the legal provisions on valuations, and has outlined concrete plans for converting its member companies into shareholding businesses. The company is also looking for strategic investors after equitisation.
The Việt Nam Southern Food Corporation (Vinafood 2), whose plan to equitise was approved by the Government, is set to equitise in the fourth quarter.
VRG and Vinafood 2 are among several large companies under the agriculture ministry due to go public this year.
Others include Agriculture Materials Company, Vinafood 1, Việt Nam National Coffee Corporation, and Hạ Long Fisheries Company.
In the first quarter the ministry will disinvest from several companies: Việt Nam Fisheries Corporation, Sugar and Sugarcane Company, and Việt Nam Maize Development and Investment Company.
It is planned that around VNĐ2.19 trillion worth of disinvestments will be carried out in the agriculture sector in 2017-20.
Market observers said the fact that several major agricultural companies would be equitised this year and the Government would disinvest from many large companies would provide several opportunities for those who want to invest in the agricultural sector.
By Thiên Lý, VNS
Mellowing out in the Mekong Delta in Vietnam

Editor’s note: LeiChandra Truong is a Vietnamese American who spent two years living in Ho Chi Minh City and Hanoi. She submitted this story to Tuoi Tre News from the San Francisco Bay Area, where she now lives.

A man and woman fish in the Mekong

On the peaks of the Himalayan Mountains, springtime warmth melts abodes of snow, sending icy water on its 4,500 kilometer journey south, to the Mekong Delta, known as Mien Tay or the southwestern region of Vietnam. The water brings an abundance of growth, so much so that it’s overflowing with locals set to reap its benefits.
Sitting on a rickety wooden motorboat, my friend Nancy and I playfully splashed water on each other, mesmerized by the vast expanse of green foliage on this riverway, verdant trees shading the path, and floating lotus lily pads resting on the water’s surface. It was like entering a different world, where life moves slower.
It was nice for both of us to escape the hustle and bustle of Ho Chi Minh City. My friend was working for a seafood export company and brought me along to the city of Long Xuyen for a few days. Though my visit to the Mekong back in 2011 was short, the place, people and culture still hold a warm place in my heart.
After our boat trip, Nancy introduced me to some of her friends. They are a generation older than us and I was shocked that I could address them as anh and chi (brother and sister) even though it’s not socially or culturally correct. They wanted to place importance on the friendship and not the typical hierarchy of seniority inherent in Vietnamese culture. Without a doubt, my new friends were the coolest people ever.
A colourful woman rows her load of bananas towards Chau Doc Town in the Mekong Delta for sale at the market. Photo: McKay Savage
We all spent time together at the beach, coffee shop, restaurants, and spent time in the mountains as well. I loved being with them because of their hospitality and kindness. They would playfully joke around, all smiles, and showed that they cared about our well-being. After being in Ho Chi Minh City, I was accustomed to people who were more business-oriented and said things that they didn’t mean, leaving me wondering about the true message behind their words. However, with Mekong people, the message was straightforward. They are blunt, honest, and say what they mean.
People in this region are more easygoing than people from other regions of Vietnam because of the plentitude of food available. Over 50% of Vietnam’s rice production is from the Mekong Delta region. There are also lots of fish. If a person is hungry, he or she can just catch a fish and eat it. When people don't have to worry about being fed, they relax and take their mind off survival. The weather is hot all year round here so people don't have weather out the cold either. There’s always going to be enough food and warmth.
Though the Mekong Delta region is great to visit, the area has its issues. Those residing in the outskirts of cities like Long Xuyen and Can Tho live in poverty. Women and children are prone to becoming victims of human trafficking.
Pollution is another problem the region faces. One local told me that people used to be able to eat a fish the same day it is caught. Now, because of water toxicity, people put live fish in a bowl of water for a week to purify its flesh before cooking it.
In spite of the problems in the Mekong, I enjoyed my visit and have hope that things will change for the better there. There are several NGOs working towards sustainable farming practices and human trafficking prevention, among other issues.
It’s been several years since I last visited the Mekong. Though I can’t go back and visit often, I aspire to be more like the Mekong people – kind, generous, truthful, genuine, humble, and thankful. Abandon the scarcity mindset and know that there’s always going to be enough to go around. The earth, water, and rivers will provide enough resources for us all. There’s no need to worry or hurry, just lie back in a hammock under a tree and sip on some coconut juice.
U.S. carrier group patrols in tense East Vietnam Sea

A United States aircraft carrier strike group has begun patrols in the East Vietnam Sea amid growing tension with China over control of the disputed waterway and concerns it could become a flashpoint under the new U.S. administration.

Sailors man the rails as the USS Carl Vinson aircraft carrier departs on deployment from Naval Station North Island in Coronado, California, U.S. January 5, 2017. Reuters

China's Foreign Ministry on Wednesday warned Washington against challenging its so-called sovereignty in the East Vietnam Sea.
The U.S. navy said the force, including Nimitz-class aircraft carrier USS Carl Vinson, began routine operations in the East Vietnam Sea on Saturday. The announcement was posted on the Vinson's Facebook page.
The strike group's commander, Rear Admiral James Kilby, said that weeks of training in the Pacific had improved the group's effectiveness and readiness.
"We are looking forward to demonstrating those capabilities while building upon existing strong relationships with our allies, partners and friends in the Indo-Asia-Pacific region," he was quoted as saying by the Navy News Service.
Friction between the United States and China over trade and territory under U.S. President Donald Trump has increased concerns that the East Vietnam Sea could become a flashpoint.
China wrapped up its own naval exercises in the East Vietnam Sea on Friday. War games involving its own aircraft carrier have unnerved neighbors with which it has long-running territorial disputes.
China lays claim to almost all of the resource-rich East Vietnam Sea, through which about $5 trillion worth of trade passes each year.
Brunei, Malaysia, the Philippines, Taiwan and Vietnam also claim parts of the waters that command strategic sea lanes and have rich fishing grounds, along with oil and gas deposits.
The United States has criticized Beijing's construction of man-made islands and build-up of military facilities in the sea, and expressed concern they could be used to restrict free movement.

Thứ Bảy, 18 tháng 2, 2017

 State monopoly bill deemed “regressive”

The Ministry of Industry and Trade’s new draft decree on goods, services, and localities subject to state monopolies has received barracking from local and international experts.
The Ministry of Industry and Trade (MoIT) has submitted to the government a draft decree on goods, services, and localities subject to state monopolies. The draft includes a controversial list of 20 sectors and professions subject to state monopolies (see box).
Sesto Vecchi, managing partner of the US law firm Russin & Vecchi, questioned the list. “Why is MoIT creating new monopolies? No justification is provided and the justification is not self-evident,” Vecchi told VIR.
He said that even when state participation can be justified, in many cases, the private sector may also contribute in some sectors like irrigation, hydro plants, power distribution, and the importation of cigarettes and cigars.
“The state is only one of several stakeholders. The draft appears regressive as the private sector already participates in some named sectors. Would the monopoly remove their participation?” argued Vecchi.
Tran Trong Binh, senior attorney from Hanoi-based French law firm Audier and Partners, told VIR that such a list is “irrational”, and if it is approved, it will “vex” the market, which is now required to be more transparent, with less state monopolies, especially in the context of Vietnam’s deeper international integration.
“The draft decree has gone against the Constitution adopted in 2013, which states that enterprises are allowed to do business in the sectors not banned by law, and also against the laws on Investment and Enterprises issued in 2015,” Binh said. “While the government is boosting the establishment of start-ups and restructuring state-owned enterprises (SOEs), this new document will undermine the market’s competitiveness by preventing private investors from investing in many sectors on the list.”
The Law on Commerce 2005 stipulates that the government shall specify a list of goods, services, and localities subject to state monopolies. This specific list has taken 12 years to create.
“I don’t understand why the draft decree is now being made. It should have been enacted 12 years ago. And now such a decree is unsuitable to Vietnam’s development,” said Nguyen Dinh Cung, head of the Central Institute for Economic Management. “Who will take responsibility for such a delay?”
According to Cung, many of the sectors prescribed in the list should not be banned and can be engaged in by private firms. The state should hold a monopoly over some sensitive sectors only, such as electricity transmission or railways, so that access to these services can be ensured.
MoIT responded to the negative reactions to the draft decree by stating that the decree is built to fulfil the Law on Commerce 2005, which allows the state to monopolise for a given period of time the trading in a number of goods and services in certain localities in order to protect national interests.
“The list is aimed to help enhance the systemisation and transparency of all goods, services, and geographical areas that are subject to state monopolies in commercial activities in line with Vietnam’s international commitments, and existing policies and regulations,” said an MoIT document released last week to explain the issuance of the draft decree.
“The list also acts as a foundation for state management bodies and other entities in society to perform their supervision over state monopolies in the listed sectors.”
But Dau Anh Tuan, head of Vietnam Chamber of Commerce and Industry’s Legislation Department, said that the reasoning behind MoIT’s enacting the list is “unpersuasive”.
“In the list, it is likely that some sectors will find it difficult to lure the investment of private firms, such as public goods and services,” Tuan said. “Under existing regulations, these sectors are sill engaged in by some private firms as they are not monopolised by the state.”
By Thanh Dat, VIR