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BUSINESS IN BRIEF 24/4
Giant Vinamilk
powdered milk factory enters operation
Prime Minister Nguyen Tan Dung attended the launching of the Vietnam Dairy Products Joint Stock Company (Vinamilk) giant powdered milk factory in the southern He praised the company’s rapid 23 percent growth in turnover, which hit VND27.3 trillion and contributed VND3 trillion to the State budget in 2012. The nearly VND2 trillion factory applies It is expected to yield VND60 trillion in revenue by 2017 and help Vinamilk enter the group of the world’s 50 largest milk producers. On the occasion, Vinamilk presented its first 10,000 cans of powdered milk, worth VND1 billion, to disadvantaged children. German group supports Vietnam’s wood industry TUV SUD PSB Vietnam, a subsidiary of Germany’s TUV SUD Group, will cooperate with Vietnam in the management of wood processing factories. To this effect, a cooperation agreement was signed between the company and the Ho Chi Minh City Handicraft & Wood Industry Association (HAWA) on April 22. As the world’s leading technical solution provider in product testing, certification and qualification, TUV SUD PSB Vietnam will provide technical training for factory managers involved, said the company’s General Director Sathish Kumar Somuraj. According to HAWA Chairman Nguyen Chien Thang, 300 members of the association in particular and Vietnamese wood businesses in general are small and medium-sized with weak competitiveness. He expressed his hope that the German company will help Vietnamese wood producers better integrate into the world market and increase exports, particularly to Europe and the The signing ceremony took place within the framework of the eighth session of the Vietnam-China Joint Economic and Trade Cooperation Committee that opened the same day. At the meeting, the two sides reviewed their economic and trade cooperation results since the seventh meeting and exchanged views on cooperation in trade and industry as well as other sectors to promote future trade and economic ties between the two countries. Deputy Minister of Industry and Trade Nguyen Cam Tu said since the last meeting, Vietnam-China trade ties has grown considerably, already exceeding US$41 billion in 2012. Currently, The two sides are committed to raising two-way trade to US$60 billion by 2015, reducing imports from The focus, Tu added, will be on ensuring the quality of projects involving Chinese contractors, particularly with preferential loans for infrastructure construction. The two sides pledged to remove obstacles and increase the effectiveness of strategic comprehensive partnership. Hanoi and HCM City CPI down in April The April consumer price index (CPI) for Hanoi decreased 0.15 percent, but still up 5.6 percent against the same period last year, according to a report from the Hanoi Statistics Office. Food and restaurant services saw a drop of 0.65 percent, while accommodation, electricity, fuel and construction materials group fell by 0.14 percent. Transport was the only group that soared over 1 percent (1.17 percent) and footwear and clothing saw a slight increase of 0.21 percent. Telecommunications and education remained the same as in the previous month. Eximbank lends US$100 million to Vietnam Airlines for B787 The Vietnam Export Import Commercial Bank (Eximbank) signed a contract on April 22 providing US$100 million in credit to the Vietnam Airlines Corporation (VAC) for the purchase of eight B787 aircraft. VAC General Director Pham Ngoc Minh said that the carrier plans to receive the first airplanes in the second quarter of 2015 to replace some of its current Airbus A320 planes. The fleet expansion will help the corporation maintain the quality of its service and extend its route system to ensure sustainable growth and meet customers’ growing demands. The national flag carrier also signed an agreement with EximBank in 2012 for a US$100 million loan to help it purchase four Airbus A320 aircraft. Vietnam Airlines is now operating more than 300 flights a day on 80 routes to 20 domestic and 26 international destinations. It plans to increase its fleet to 155 planes by 2015 and 170 by 2020. The new aircraft to be purchased include the Boeing 777, 787, and 787-9, as well as the Airbus A330. Garment exports pick up The garment sector is planning to boost its exports to the The General Statistics Office (GSO) of For instance, those to ASEAN markets hit US$111.4 million, (up 44.4 percent), including US$45.7 million (up 103 percent) from High export growth was also seen in To secure a firm foothold, Le Tien Truong, Vice Chairman of the Vietnam Garment and Textile Group (Vinatex), urged export businesses to restructure their production, and invest more in improving the quality of their products to meet the increasing requirements of traditional markets like the EU, the US, Japan and Russia. They should cooperate effectively with each other in maintaining the average annual growth of 10 percent to achieve US$2 billion in additional export value, Truong added. Hoang made the statement while attending the 19th Trade Ministerial Meeting of the Asia-Pacific Economic Cooperation (APEC) in Minister Hoang led the Vietnamese delegation in separate meetings with APEC partners, with a view to fostering economics, trade and industrial cooperation and promoting negotiations on free trade agreements (FTAs). He affirmed The Minister also proposed As an active member, On the sidelines of the 19th APEC Trade Ministerial Meeting, the Vietnamese delegation also took part in meetings on Trans-Pacific Partnership Agreement (TPP) negotiations. Minister Hoang held bilateral meetings with APEC ministers and head delegates from Vietnam Airlines increases flights during two-day holiday The national flag carrier, Vietnam Airlines, will operate 434 more flights than scheduled on April 30 and May Day. The airliner is prepared to carry as many as 57,900 passengers a day from April 26 to May 2 on both domestic and international flights, up 5 percent compared to the same period last year. There will be a sharp increase in the number of passengers to big cities such as The number of international flights from Purchase power of households shows increase On occasion of Hung Kings’ anniversary, the number of customers shopping in supermarkets showed a sharp increase, with a rise in sale of essential commodities like fresh fruits, vegetables and eggs. Fresh food items like squid, anabas, tomatoes, cucumber, watermelon, grapefruit, and coconut were much in demand. Besides edible commodities, household goods such as fans, liquidizers, and clothing were also selling well. Contrary to the scene in supermarkets, buying power in traditional markets during the holiday break showed a sharp decline. While price of fresh foods was stable in supermarkets in the past week, the price at retail stores of cosmetics, processed foods and clothing showed an increase. Toiletries like shampoo, conditioner, shower gels and body lotion went up by VND1000-2000 per item. Foods such as noodles, cooking oil and monosodium glutamate also went up from 2-5 percent. Price of eggs in traditional markets increased by more than 20 percent compared to early April. First quality eggs went up from VND 2,800-2,900 per egg; while second and third quality eggs went up by VND 2500-2700 per egg. First quality duck eggs went up by VND3600-3700 per egg; and second quality by VND3,500-3,600 per egg. The project has been under intense deliberation for the last three years. According to Ho Quoc Dung, permanent deputy chairman of the provincial People’s Committee, Petroleum Corporation of Thailand chose Binh Dinh Province as location for the oil refinery because Nhon Hoi Economic Zone has good infrastructure and is strategically located in the middle of the country with access to a port, making it more functional logistically to supply oil to countries in Southeast Asia. Other than the location, the land area is well spread out and not obstructed in any way, with a mountain towards the east and a bay area separating it from dense residential areas. Fresh water is readily available from nearby Petroleum Corporation has proposed to build the Oil Refinery over 2,000 hectares at a cost of US$27 billion, with capacity to process 660,000 barrels per day or 30 million tons of crude oil a year. Once established the refinery will employ well above 15,000 people. Sukrit Surabotsopon, the Thai deputy director general of Petroleum Corporation, said that once the Oil Refinery begins functioning it will add substantially to the country’s Gross Domestic Product. At a conference in As of now the feasibility report of the project has been completed and a viability report will be presented by 2015, with construction scheduled to begin by 2016 and the plant fully operational by 2019. The Nhoi Hoi Oil Refinery project has met with strong opposition from Vietnam Oil and Gas Company (PVN), who hold present monopoly of petroleum products in The annual capacity of Dung Quat Oil Refinery is 6.5 million tons of crude oil, which can meet 30 percent of domestic consumption. However, whenever the plant has to temporarily halt operations for any reason, importers increase petrol prices abruptly, even if closure is announced months in advance. Earlier this year, Vu Huy Hoang, Minister of Industry and Trade, chaired a meeting with representatives of The Ministry has now submitted the project report to the Prime Minister and asked Vietnam-Brazil trade may touch US$2 billion this year According to the Ministry of Industry and Trade, two-way trade between Many queries from Brazilian companies have been received asking for introductions to local companies as possible future business partners. In 2012, two-way trade between The People’s Committee in the Mekong Delta Tan Tao Investment and Industry Corporation was licensed by the Government to build the Thermal Power Plant on 600 hectares in Kien Luong District together with a deep seaport in Nam Du Island. The US$7.5 billion project was expected to break ground by end 2009, but it is still to take off. The Ministry of Industry and Trade agrees with Raw material a perennial challenge for export firms Vietnamese enterprises have to import a huge amount of raw material from other countries every year with several latent risks that pose a constant challenge for local companies. When first entering the global market, Vietnamese cashew was recognized as a high-quality product. However, in recent year, the country’s leading spot has shaken with many companies suffering losses and discouragement because they could not source raw material. At a recent conference, the Vietnam Cashew Association said that the area under cashew in the country has become narrower, so in order to supply the demand volume for export, the local cashew industry has to import 50 percent of the material. Nguyen Duc Thanh, CEO of Tan An Foods Processing Export Limited Company, shared that raw cashew was mainly imported from Similar to the cashew industry, the seafood industry has also been experiencing the same situation. Le Thanh Phuc, director of Phuc Moc Seafood Company, shared that except pangasius, the country’s seafood industry has had to import a large amount of fish, squid, shrimp, and crab from Asian countries to ensure material stock. In reality, some countries have plentiful resources, advanced means of fishing, and modern preservation technology but also have high import demand for seafood so they use it as a pretext to raise their selling price. As local material fails to meet demand, firms are forced to accept high prices to fulfill their orders in time. In case, firms import low-price materials from Besides these two industries, leather and footwear, garment and textile, and wood processing industries also have to deal with many risks as import countries set higher and higher technical barriers while producers are not able to control origin and quality of imported materials. In the face of a shortage in raw materials, many experts and associations have suggested developing growing areas to meet production demand. In fact, a scheme for each industry has been built for several years but to develop in accordance with plan is an extremely difficult task. According to the Vietnam Association of Seafood Exporters and Producers, import of raw seafood will increase by 20 percent compared to previous years with total import value possibly reaching US$1 billion. Although firms want to reduce import of raw seafood, the spirit is willing but the flesh is weak, as the number of seafood breeders suffering losses has increased. In 1993, breeders who profited accounted for 94 percent of total number of breeders. During 2002 to 2005, the rate dropped to 75 percent, and to 70 percent from 2005 to 2009. Between 2010 and 2012, this figure fell to around 50 percent so farmers became negligent in breeding seafood. Meanwhile, firms breeding scale was merely able to fulfill a part of the orders. As for cashew industry, most cashew trees were aging while growing area gradually narrowed compared to that of rubber and pepper. Parallel to this, growing area of cotton plants for textile and garment industry failed to improve in past years. Experts said that firms should choose prestigious suppliers and set specific quality requirements in the business contract to limit risks of receiving low-quality commodities. Moreover, firms also can choose to process products for exporters for which they will only have to produce products as requested and avoid other risks. In the long-term, the Government and relevant departments should promptly promote solutions to develop growing areas rationally and effectively so as to lessen dependence on imported raw materials. According to Jocelyn Tran, chairwoman of the American Chamber of Commerce in Firms strive to channel products through supermarkets The task of selling their products through modern distribution channels, especially foreign supermarkets like Metro, Big C, and Lotte, is always a difficult quest for local firms, with many having given up trying. “In 2002, when Metro officially joined the distribution network in “At that time, our distributors only received a discount of 5 percent so if we accepted Metro’s request we would destroy the existing distribution network that we built, as Metro would possibly sell to dealers at a discount of 15 percent and keep 10 percent for themselves. If this happened, no one would ever want to buy from our company”, he added. Up to now Bidrico’s products are present at all local and foreign-owned supermarkets, except Metro. After ten years, Mr. Hien and his partners decided to try to bring their products into Metro supermarkets again, however, after negotiating with the latter, they decided against it. Other companies also gave up after negotiations with Metro because Metro not only asks for high discounts and has strict requirements on payments and display shelves, but also sets many irrational regulations. A representative of a company said in fury that it seems Metro only thinks of its own benefits and forgets that benefits should be shared. The fact that some businesses gave up on initial negotiations seems to be a wise move. Many companies withdrew after entering Metro supermarket because they failed to meet requirements on advertising, display shelves, etc. In reality, every firm understands that bringing products into modern distribution channels will boost trademark value, increase popularity and consumer trust. Therefore, the race to bring products into supermarkets has never been less severe so for supermarkets with wide distribution network and high sales, requirements are stricter. However, it does not mean that distributors can set irrational requirements for suppliers. Currently, modern retail channels merely account for 20 percent of retail market while the rest are traditional channels. Of course, modern retail network has been developing strongly and rapidly but it still takes time for them to increase the ratio. Moreover, small traders nowadays have made many positive changes. As a supplier, selling products via traditional channels is much easier with less strict requirements, lower discounts, and faster capital rotation. Therefore, firms should not neglect this distribution channel. High-Quality Vietnamese Products Business Association had held many programs to bring Vietnamese-made products into traditional markets and to rural areas which attracted attention of many local companies. Diversifying distribution channels will help to bring products to more consumers and lessen dependence on crowded supermarket. In addition, while entering supermarkets, some firms were faced with the situation that they had to compete with their own products when they accepted supermarket’s private-label products. In the future, when more foreign supermarkets enter Transport Department authorities in The city is calling for investment in two kinds of 50 electric buses, one with four seats and the other with eight. Under the plan, which has been submitted to the municipal People's Committee for approval, the bus companies would operate like private taxi companies. The buses will be on-call like taxis, but will park in areas where tourists are located, including hotels and restaurants. In a separate bus-services plan, the city is also considering managing a public electric-bus route along Buses managed by the city end their routes no later than 9 pm. Besides the new electric buses, the city has updated its public bus service with Compressed Natural Gas-powered (CNG) buses. Currently, 28 CNG foreign made buses run from the city centre to western and northeastern areas of the city. Last year, the People's Committee assigned Saigon Transportation Mechanical Corporation (Samco) to manufacture 300 CNG-powered buses, which are expected to be ready in April next year. It has also assigned the Transportation Department to work with PetroVietnam to set up CNG retail stations in the city to supply fuel for the buses. Fuel costs for CNG-powered buses are 20-25 per cent less than fossil-fuel powered buses. The CNG buses also emit less toxic fumes and are not as noisy as fossil-fuel powered buses. The city has 2,869 buses that use an average of 30 million litres of petrol a year. The city's Transportation Department has also submitted a plan to the People's Committee to replace 1,678 old buses with new ones that meet environmental protection standards. A business delegation from At the press conference on April 22, head of the delegation and Director of the“portrait of technological innovation in Mr Pankov Dmitry Vladimirovich Viktorovna, editor-in-chief of “The Portrait of Technological Innovation in Russia” publication, said that since 2012, Vietnamese executive agencies, the Vietnam Union of Science and Technology Associations (VUSTA) and the Vietnam Academy of Science and Technology, have supported a series of long-term activities entitled “Russia-Vietnam: The New Economy”. The project aims to provide information and support the development of business cooperation between the two countries in advanced technology, apply the latest technologies in Vietnamese factories, and expand integration and cooperation among business circles involved in technology reform. From April 21 to 26, the delegation will meet and work with the Vietnam National Assembly and some Vietnamese ministries and hold a science and technology conference and a round table forum for scientists, officials and businessmen from both nations. Work starts on road linking A ground-breaking ceremony took place in The ceremony was jointly held by Houaphan’s Department of Transport and Chitchareune Company run by Vietnamese in According to Chitchareune’s General Director Nguyen The Hien, the three-year project will cost 52 million USD. Speaking at the event, Houaphan province’s Governor Khamhung Huongvongsi stressed the practical importance of the project, saying that once complete it will fuel local economic development, while broadening trade links between the province and other localities, including He pledged to direct relevant local agencies to ensure the quality and progress of the project. Powering islands to develop sea-based economy Authorities of the southern The two island districts, part of the UNESCO-recognised Kien Giang Biosphere Reserve, boast a great potential in ecotourism. In particular, Phu Quoc island, dubbed a “tourism paradise” in the south-western region, is in need of stable power supply for a new period of development after the inauguration of the Phu Quoc International Airport in December last year. According to the Ministry of Industry and Trade, the Prime Minister himself has instructed speeding up a 110 KV undersea cable project from inshore Ha Tien commune to Phu Quoc island. With a total investment of about 2.4 trillion VND (114 million USD), construction of the 55.8 km cable line with a designed transmission capacity of 131 MVA is expected to start in early 2014 so that the line can become operational in 2015. Currently, the Prysmian Powerlink SRL of Italy, the project’s EPC contractor, is producing cable for the project. In another move, Kien Giang province has asked the Ministry of Industry and Trade to consider and propose to the Prime Minister the construction of a power plant fuelled by liquefied natural gas (LNG) in Phu Quoc invested by the Vietnam National Petroleum Group. The plant, is expected to replace an earlier plan to build a 200 MW thermo electricity station which is scheduled to begin in 2015. Currently, pre-feasibility research for the LNG-fuelled power plant has completed, under which it will be built in the form of BOT in two phases: from now until 2020 and from 2020 to 2030. To bring electricity to Kien Hai island district, the province has hired the Power Engineering Consulting Company No.2 to devise a plan on building a sea-crossing overhead transmission line to bring power to Hon Tre island commune- the district’s administrative centre. The 13 km-long line will be built in 2014 and 2015 at a cost of 60 billion VND (2.8 million USD). Another commune in Kien Hai, Lai Son island, will have power supply from a solar power plant invested by the Hanoi-based Europe Distribution Joint Stock Company. Depending on the success of this plant, the model may be replicated in An Son and Nam Du island communes. PetroVietnam opposes USD27-billion refinery project Vietnam Oil and Gas Group (PetroVietnam) has proposed the Ministry of Industry and Trade to turn down proposals for a USD27-billion oil refinery project invested by PTT Public Company Limited (PTT). The investor has finished a feasibility study of the project which would be located at Nhon Hoi Economic Zone in Binh Dinh Province. The project has a designed capacity of 660,000 barrels per day, a five fold increase over the current Dung Quat Oil Refinery’s output. The People’s Committee of Binh Dinh Province is seeking government approval for adding the project to the province’s planning and allowing the investor implement the project. Earlier, the Thai firm worked with the Ministry of Industry and Trade on the project. According to PetroVietnam, the ministry should not approve the project in order to avoid an imbalance in the domestic oil and gas market. The country’s gas sector’s development planning by 2015 excludes the Nhon Hoi oil refinery plant. PetroVietnam also said that the huge project is located near to Vung Ro, Van Phong and Dung Quat which already have plans for the construction of oil refinery plants. Once entering operation, Vietnam’s biggest foreign-invested project, PetroVietnam’s USD9-billion Nghi Son Oil Refinery and Petrochemicals Complex and Dung Quat Oil Refinery could ensure 50% of the local demand annually. Dung Quat Oil Refinery currently meets just 30% of domestic petroleum demand. The Vietnam National Petroleum Group has also been assigned to implement Nam Van Phong Refinery project with an annual capacity of 10 million tonnes. Viettelpost forecasts strong business ahead Locally-owned Viettel Post Joint Stock Corporation (Viettelpost) is anticipating stronger business performance in 2013 following bumper profits last year. At its annual shareholder meeting 2013 last week, Viettelpost formally adopted its business plan for 2013, with total assets of VND246 billion ($11.82 million), up 26 per cent on-year. Viettelpost projects revenue for this year at VND1,015 billion ($48.8 million), up 15 per cent on-year. After-tax profit will total VND21.8 billion ($1 million), up 13 per cent on-year and dividend rate will be 12-15 per cent, according to the company’s plan. “Viettelpost is trying to become Vietnam’s leading post enterprise,” said a Viettelpost release. “To reap such targets, Viettelpost will continue its sturdy management. New business strategies’ effectiveness will be inherited by added value from old business strategies and be made by new ways.” Last year Viettelpost recorded total revenue of VND883 billion ($42.5 million), up 10 per cent against the initial plan, and up 48 per cent on-year. The corporation’s after-tax profit increased 5.72 per cent of the initial plan, and up 5.7 per cent on-year. Also in 2012, Viettelpost’s average income for staff rose 45.7 per cent on-year, while the dividend rate was 15 per cent, which has over the past four year been maintained, “affirming Viettelpost’s effective and sustainable development,” said the release. Viettelpost ascribed the achievement to its application of information technology to business and production, with a view to strictly managing costs and further meeting customers’ growing demand. Tra fish exports to Japan, India increase Vietnam’s tra fish exports to Japan and India are expected to increase, say seafood experts. Despite Vietnam’s modest revenue from exporting tra fish to Japan, growing imports in this market creates an opportunity for Vietnamese seafood companies to penetrate the country. At the Japan 2013 International Food and Beverage Exhibition Foodex last month, Vietnamese tra fish drew a lot of attention from Japanese consumers. Crispy tra fillet sticks were the most popular Vietnamese seafood dish on offer. Seafood companies evaluated that processed tra fish products will be able to enter the market with national and large-scale trade promotion programmes for the product in Japan. According to the Vietnamese Association of Seafood Exporters and Producers (VASEP), Japan has increased its import of tra fish while reducing other seafood products. Since the beginning of this year, Vietnam has exported more than $550,000 of tra fish to Japan, a year-on-year increase of 2.7 percent. Tra fish exports to India also saw a rise of 45 percent to $2.7 million over the same period last year, valued at $2.7 million. The product is mainly sold at seafood shops and supermarkets in India. Concrete problems for firms Mounting inventories of housing and commercial units amid a woeful real estate market have left Vietnam’s cement industry in the lurch, forcing policy makers and investors to review on-going projects. The Ministry of Construction (MoC) reported cement consumption reached 11 million tonnes in the first quarter of this year, roughly 95 per cent in comparison with the same period in 2012. However, by the end of March 2013, the industry’s inventory was 3.1 million tonnes, including 2.3 million tonnes of clinker and 850,000 tonnes of cement. “2012 saw cement firms going to the verge of bankruptcy and signs of improvements have yet to be on the horizon. Meanwhile, most cement exporters said export was only a stopgap solution in the current context,” said Tran Van Huynh, chairman of Vietnam Association for Building Materials (ABM). Last year, the local cement industry’s total designed capacity reached 67 million tonnes. But cement plants as a whole operated at a much slower pace with domestic consumption at 49.1 million tonnes, according to the MoC. Quan Trong Dan, deputy director of Holcim Vietnam Company, said the prospects for 2013 were not looking bright either. Difficulties were also forecast by Hoang Manh Truong, chairman of Vissai Cement Group, known as one of the biggest cement makers in Vietnam. “In 2013, even if Vissai put consistent efforts into the export market and won over major real estate projects, the group’s consumption is forecast to increase by only 5 per cent.” In the latest move, the prime minister approved the MoC’s proposal to scrap nine domestic cement plant projects from the nation’s cement industry development strategy during 2011-2020, with orientations towards 2030, as fearing the oversupply could result in market chaos. These scrapped projects include Ha Tien-Kien Giang, Truong Son-Ro Li, Hop Son, Ngoc Ha, Thanh Truong, Son Duong, Quang Minh and Cao Bang projects, each of which was supposed to produce less than 2,500 tonnes of clinker per day. The decision came as under ABM calculations cement consumption in the domestic market would drop 14-15 per cent during 2011-2013 against the forecast level in the strategy. ABM predicted by 2013 Vietnam would need around 60-65 million tonnes of cement to feed the domestic market against the forecast production output of 75-76 million tonnes in the strategy. “Removing low capacity and ineffective cement projects from the nation’s cement industry development strategy is indispensable. It would bring significant changes and greener production practices into Vietnam’s cement industry as well as save power consumed in cement production, amid Vietnam’s grave shortages of energy,” said Vu Ngoc Quy, deputy director of Taiwan’s Cement Chinfon Company, one of the biggest cement suppliers in Vietnam. Huynh said that domestic cement makers had to speed up their restructuring to increase their competition. The current time has proven hard even to market leaders like state conglomerate Vicem, which consists of eight member companies and controls over 33 per cent of the domestic market countrywide. This year, Vicem targeted to earn the revenue of $1.4 billion, up from last year’s figure of $1.3 billion. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR |
Thứ Ba, 23 tháng 4, 2013
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