BUSINESS IN BRIEF 25/8 Ha Noi courts Japanese investors Ha Noi will create the best possible conditions for Japanese investors, affirmed chairman of the municipal People's Committee Nguyen The Thao. He was speaking at a working session with a delegation representing Japan's Saitama prefecture on Tuesday. Thao stated that at present there are 448 Japanese-funded projects with a total capital of US$4.5 billion in Ha Noi. He suggested that Japanese businesses invest in fields such as high technology, urban transport, parking facilities and agriculture. Petrolimex official admits profits fall short of target Deputy General Director Tran Ngoc Nam told local press that profit from trading remained low for Viet Nam National Petroleum Corporation (Petrolimex). He attributed the low profit from domestic fuel trading to the Government's target to curb inflation, stabilise the macro economy and ensure social security. The deputy general director affirmed the poor earnings after many local newspapers quoted Petrolimex's financial report from the first half of this year and its whopping pre-tax profit of VND898 billion (US$42.69 million). Profit from trading fuel accounts for VND388 billion ($18.4 million) or 43 per cent of the total sum with an average of VND94 per litre. It is followed by earnings from the Petrolimex subsidiaries with VND302 billion ($14.3 million) or 34 per cent. This figure reached 46.27 per cent of this year's shareholder approved plan. Still, earning falls quite short of the full-year target of the country's largest fuel wholesaler at VND1.98 trillion ($94.2 million) in 2013. With only 45 per cent of the plan covered, Petrolimex said it will exert efforts to make it in the second half of this year. Nam said it was surprising information on newspapers, as Petrolimex and many other fuel trading companies have suffered from losses due to four retail price adjustments since the beginning of this year. He added Petrolimex's after-tax profit was VND687 billion ($32.7 million). Under the provisions of the current financial regime, as a fiscal year end, the after-tax profit will be allocated to funds to preserve capital and maintain the business performance of the corporation and pay dividends to shareholders. The State holds a 95.1 per cent stake in the corporation. He said Petrolimex will soon report to a higher administration about its project on transparency in fuel trading. Viet Nam fishing for seafood sector development Viet Nam's fisheries sector will produce seven million tonnes of seafood by 2020, according to a master plan ratified by the Prime Minister last week. Under the plan, the country's seafood exports are projected to rake in US$11 billion by 2020 with an average annual growth rate between 7 and 8 per cent. Aquaculture is expected to make up 65 per cent of the output. The plan lays out ambitions to industrialise the sector by 2020, with a view to modernise the industry by 2030, while staying committed to sustainable and competitive development to integrate into the global economy. The plan aims to improve the living standards of fishermen, protect the country's ecological environment and contribute to safeguarding national defence and security at sea and on islands. In the lead up to 2020, around half of Viet Nam's fisheries workers will be trained and the average per capita income will triple, according to the plan. The sector's total output is expected to reach 9 million tonnes between 2020 and 2030, 70 per cent of which will come from aquaculture. Export turnover is also projected to climb to $20 billion within the same time frame. Around 80 per cent of workers in the sector will receive training, with measures in place to ensure the effective development of technology, environmental protection, production management and international co-operation. Active Dong Nai woos foreign investors The southern province of Dong Nai has attracted about US$787 million in foreign direct investment (FDI) in the first eight months of this year, or meeting 78 per cent of its target set for this year. According to the provincial Department of Planning and Investment, 50 new projects worth $364.3 million have received investment licences, while 46 operating ones have been allowed to add $423 million in their capital during the period. Notably, the reviewed period saw an increase in number of foreign-invested projects specialising in services, hi-tech and support industries. In light of the tough economic climate, the province is paying special attention to administrative reforms and training to improve the quality of its labour force. In addition, it is investing in infrastructure and services in an attempt to reach the goal of drawing $1 billion in FDI by the year-end. The province also organises regular meetings between businesses and managing agencies to tackle difficulties as quickly as possible. As of July 20, the province is home to 1,045 valid foreign-invested projects with capital totalling $19.25 billion. Firms urged to follow TPP talks Vietnamese firms have to be proactive and keep themselves updated on the ongoing Trans-Pacific Partnership (TPP) negotiations, a senior official said yesterday. The attitude will help them to effectively tackle challenges and opportunities that will arise from the multilateral agreement, Luong Van Ly, former deputy director of the HCM City Department of Planning and Investment, stressed. He said at a seminar that according to his assessment, local firms have not yet prepared well their business strategies and plans for the TPP, which is part of the extremely competitive globalisation process. This means that when the TPP takes effect, many Vietnamese businesses will pay a high price for the lack of preparedness, including having to stop operations, he predicted. He said the Government as well as relevant agencies like the Viet Nam Chamber of Commerce and Investment (VCCI) should ensure that local businesses are able to access crucial, sector specific and phase specific information in time, so as to give them the best chances to survive and compete in the new situation. Diep Thanh Kiet, deputy chairman of the Viet Nam Leather and Footwear Association (Lefaso), agreed with Ly on the importance of keeping a close eye on negotiation rounds to spot both benefits and obstacles. One of the challenges is that foreign investors will be able to take advantage of Viet Nam joining the TPP to open production factories and export to other TPP members, Kiet said. He noted that Viet Nam's textiles and garment sector will have to follow the "yarn forward" principle, which would mean that every stage of garment production, including weaving, dyeing, finishing and sewing would have to be done in the country. Kiet said this principle would create major problems for the Vietnamese garment sector, which relies heavily on fabric imports. He said 58 per cent of Viet Nam's textiles and garment export turnover in 2012, worth US$17.2 billion, came from TPP member countries. Corresponding figures for the leather and footwear sector was 41 per cent of $8.7 billion, he added. Several economists said at the seminar that the TPP could create a more transparent trading environment and legal framework in all member countries including Viet Nam. However, they warned that the ensuing commitments to open up the domestic market would generate huge competitive pressures on Vietnamese businesses. The required adjustments to the legal system, the development of human resources as well as the institutional capacity to implement TPP commitments are significant challenges that the country will face, the economists said. Economist Pham Chi Lan said, "Viet Nam would have to do some heavy lifting to meet the TPP's demands on quality, trading standards and institutional reforms." She said Viet Nam needs to create more value-added products and services to be able to compete with many countries; and to do this, it should identify its advantages and focus on developing them. For instance, Viet Nam should combine agricultural production with two other economic sectors – the industrial and service sectors – to create more added value, she said. She also warned that the country would face a shortage of skilled workers, including in the tourism sector, when the TPP is signed because they would be able to move and work in other countries. The 19th round of TPP negotiations is scheduled to take place next week in Brunei. In the 18th round, Japan became the 12th country to join the negotiations. The other nations are Australia, the United States, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Viet Nam. Yesterday's seminar was jointly organised by the Sai Gon Economic Times in collaboration with the VCCI's WTO Centre. Gloom in construction material market Although this is peak construction season, enterprises dealing in construction materials are continuing to face huge inventory with little activity in the building trade. The largest national exhibition in the construction sector ‘Vietbuild’, which opens twice a year in Ho Chi Minh City, is seeing slow response in supply and demand. The event has attracted nearly 800 foreign and local firms displaying their wares in more than 2,160 booths, but like one participant complained that the number of visitors have decreased drastically and in five days, his company has signed only three contracts worth VND300 million (US$14,235), half compared to that in previous exhibitions. The situation is the same in construction material stores along To Hien Thanh and Thanh Thai Streets in District 10. Commodities flood stores but no customers are seen. Tran Thi Lan, a store owner in To Hien Thanh Street, said in previous years the store had monthly turnover of around VND1 billion (US$47,450) but the store now sells only bath showers, bidets or faucets in recent few weeks, although this is peak construction season. Vietnam Construction Materials Association said some companies have stopped cement production while others have reduced production. The same situation is taking place in other sectors, namely, ceramics, porcelain, glass and bricks. Meantime, local manufacturers are suffering high inventory, while imports still flood the market resulting in more difficulties for home firms due to severe competition. According to the Vietnam Steel Association, each month around 300,000 tons of steel is consumed in the country while the figure is more than 400,000 tons a month. Upto 350,000 tons of steel and 450,000 tons of steel billets are lying in inventory. As a result, steel manufacturers have reduced production to half or even stopped operations. More fisheries unions established in Quang Nam Two more fisheries unions have been established in Duy Hai and Duy Nghia communes in Duy Xuyen district, the central coastal province of Quang Nam, raising the number of such unions in the province to four, with more than 400 members. Launched on August 21, the unions consist of nearly 200 members and operate under the regulations of the Vietnam Labour Federation. Currently, Duy Xuyen district has nearly 400 fishing vessels with a total capacity of 8,068CV, bringing to shore about 9,000 tonnes of seafood every year. Nguyen Van Khuong, Secretary of the Duy Xuyen Party Committee said the establishment of fisheries unions will contribute to promoting the development of offshore fishing groups, thus better implementing the sea and island development strategy and protecting national sovereignty over seas and islands. He added that the fisheries unions are set to increase mutual support among fishermen while protecting their legitimate rights. On the occasion, the Tam long vang (Golden Heart) Fund of the Lao dong (Labour) newspaper presented two Icom sets and four houses valuing at 25 million VND each to poor fishermen in the province. The fund also handed over 20 gift sets at 500,000 VND each to poor fishermen and granted 60 scholarships worth a total 60 million VND to poor students with good learning results. Thai firm to build thermal power plant in Quang Tri The Thai electricity firm Egati will invest in a 1,200MW thermal power plant worth around US$2.26 billion in the central province of Quang Tri. Chairman of the provincial People’s Committee Nguyen Duc Cuong announced the investor and the Prime Minister’s guidance for the plant on August 21. The plant will be built along a Build-Operate-Transfer (BOT) model, and will be transferred to Vietnam after 25 years. According to Chairman Cuong, the plant, which will cover 450ha in Hai Lang district, will include two turbines, the first of which will be operational between 2019-2020, and the second in 2030. Once operational, the plant will generate 7.25 billion kWh of commercial electricity. Medical care costs rise a staggering 63.94% in Hanoi Rising healthcare costs in Hanoi drove the city’s August month-on-month consumer price index (CPI) up 3.16%, according to the municipal statistics office. However, analysts said consumer prices in Hanoi would have only increase by 0.58% had it not been for a decision to hike medical fees which took effect on August 1. Overall, inflation in the capital city went up 8.7% from a year earlier and 5.19% against the end of 2012. In August, transport costs were up 1.13% due to lingering effects of petrol price increases in mid-July. In Ho Chi Minh City, the CPI also rose but at a slower pace than Hanoi. Month-on-month consumer prices went up 0.31%, more than the 0.17% increase in July. Transport costs made the largest contribution to the CPI in Ho Chi Minh City after rising 1.24% from the previous month, followed by utility bills and construction materials, which as a whole rose 0.58%. Ministry seeks more effective property sector supervision A new circular from the Ministry of Construction requires property developers to regularly report on the progress of projects to enable authorities to improve oversight of the industry. Circular 11, to take effect in October, requires reporting on three main aspects: basic general information about the project, with changes incorporated when made; project's progress; and business before and after completion. The latter two include details of land clearance, construction progress, financial situation, and sales. The information has to be furnished to the Housing Management Department or local construction departments within up to 15 days after making changes or completing work. Besides, the departments are required to update the ministry every quarter and year on local real estate projects, land acquisition, and real-estate transactions. The ministry has said that departments of construction in provinces and cities have not fulfilled their responsibilities in managing local construction activities. But it blamed itself on the lack of regulations on such reports. The lack of co-operation among various agencies is also another reason, it said. The circular would greatly improve management of the real-estate sector, it added. Veggie market whets appetites in HCMC The vegetarian food market in HCM City has been busy since early this month as the Vu Lan festival approaches. "We're sorry, could you please call again later? We're very busy serving our customers at the moment," a salesclerk of the An Nhien vegetarian restaurant in District 3 told Viet Nam News yesterday evening. Taking place in the seventh lunar month or the spirit month, the festival promotes vegetarian food. Vegetarian restaurants are also doing brisk business in many parts of the city, attracting visitors with healthy food. Vegetarian food is sold not only at street markets but also in shops and supermarkets, such as Co.op Mart, Satramart, Big C and Maximark. Types of vegetarian food vary from instant, semi-processed to frozen, and come with a range of spices. According to retailers, vegetarian food has seen stable growth in recent years. At the same time, new kinds of products have been introduced into the market, especially on such special occasions as festivals and full moon days. Vegetarian food provided by companies such as Au Lac, Vissa, SG Food and Cau Tre are now popular. They do not only bring high quality but also different types of products to customers. "On occasions like this, restaurants in the city often make new-fangled kinds of vegetarian food to serve different tastes of a much greater number of customers," said vegetarian Dang Hong Ngoc. In addition to normal dishes like vegetarian rice and "beef" vermicelli, there are now also rolled noodles and "roast meat" vermicelli, she said. During the Vu Lan season, which according to legend is to remember the dead, supermarkets do not only increase the amount of vegetarian food but also launch promotional campaigns to encourage customers. Beverage sector toasts growth The beverage industry continued to grow over the first seven months of this year despite the difficult economic times that have resulted in many other kinds of companies struggling or going bust. According to the Chairman of the Viet Nam Beer, Alcohol and Beverage Association, Nguyen Van Viet, the beverage industry has seen a year on year growth of 9.1 per cent, much higher than the 5.8 per cent growth recorded in the rest of the processing and manufacturing sector during the period. It has produced over 1.6 billion litres of beer, an increase of 8.9 per cent compared to last year. The majority of the market share is still controlled by the Sai Gon Beer, Alcohol and Beverage Corporation (Sabeco), the Ha Noi Beer, Alcohol and Beverage Corporation (Habeco) and the multinational breweries Heineken and Carlsberg. Sabeco and Habeco produced 778.8 million and 373.2 million litres of beer respectively, up 8.2 per cent and 10.4 per cent, while the other companies made up the other 478.6 million litres, up 8.8 per cent. In the reviewed period, non-alcoholic beverages also witnessed an impressive growth, he said. Viet Nam's annual per capita consumption of soft drinks has also risen sharply in recent years, from three litres in 2007 to 23 litres at present, Tran Quy Thanh, Chairman of Tan Hiep Phat Beverage Group, said. However, consumption in the country remained only half that of the Philippines. Viet Nam – Laos border markers completed The completion of a project to upgrade and increase the number of border markers along the Viet Nam-Laos border will help to create a border of peace and friendly co-operation for the mutual development and interests of both peoples. This was agreed by Foreign Minister Pham Binh Minh and Laos' Deputy Prime Minister and Foreign Minister Thongloun Sisoulith, at a meeting to review the project today. Minh said there is a lot more work which requires finishing so that the entire project is completed in 2014. He suggested that both parties keep working closely together to draw up and sign legal documents relevant to border issues. These include the Protocol on Border Demarcation and Marker Planting, the new Agreement on Border Management Regulations and the Viet Nam – Laos Border Gates and Border Gate Management Regulations in order to satisfy border management requirements in the new situation. He also highly appreciated the efforts made by the joint committee's of both countries on planting border markers, especially those directly involved in field border marker planting. Laos' Deputy Prime Minister and Foreign Minister Thongloun Sisoulith stated that this outcome is a joint victory for both countries and plays a key role in politics, national defence, security and economic development. Viet Nam and Laos share a 2,000km border running from north to south. This is the longest land border that Viet Nam shares with a neighbouring country. Japan named top Viet Nam investor Japan remains the biggest investor in Viet Nam with its share of investment rising sharply in recent years, according to the Ministry of Planning and Investment. "In 2012 Japanese investment represented 50 per cent of the total investment the country attracted," Nguyen Ba Cuong, deputy head of the Foreign Investment Agency, told Sai Gon Giai Phong (the Liberated Sai Gon) newspaper. The newspaper quoted him as saying that as of June Japanese investors had sunk US$32.6 billion in 1,990 projects in the country. HCM City is one of leading provinces and cities in attracting Japanese investment. A spokesperson for the HCM City Export Processing and Industrial Zones Authority (HEPZA) said most of the Japanese projects in industrial zones are doing well, and many had expanded following a period of operation. The city's neighbouring province of Dong Nai has also attracted many investors from that country. In the first half of this year, it issued licenses for 20 Japanese projects with a total investment of more than $183 million, which accounted for 54 per cent of the total foreign investment. Analysts expect Japanese investment to continue to grow, especially with Prime Minister Nguyen Tan Dung signing a decision to approve Viet Nam's industrialisation strategy within the framework of Viet Nam – Japan co-operation. Also under the decision, Viet Nam will focus on six priority industries — electronics, agricultural machinery, agricultural and fisheries processing, shipbuilding, environment and energy saving, and automobiles and auto spare parts – to make them internationally competitive and bring high value addition. They will play a leading role in attracting domestic and foreign investment, especially Japanese, and creating technology and skilled workers for the economy in general. To further attract Japanese investors, the ministry said it would offer incentives and provide support to help them operate successfully. HEPZA said it would solicit investment in the machinery and electronics industries and plans to carve out a Viet Nam – Japan Industrial Area in the Hiep Phuoc Industrial Zone in HCM City. It will also organise trade promotion events in Japan to attract investors. BIDV wins prestigious banking award The Bank for Investment and Development of Viet Nam (BIDV) has been awarded the coveted Viet Nam Domestic Cash Management Bank of the Year by Asian Banking and Finance Magazine. The announcement came at the international 2013 Wholesale Banking Awards. BIDV won the prize for its achievements in improving its products and services, market effectiveness and flexibility. Last year the bank was also recognised for providing the Best Overall Domestic Cash Management Services and Best Overall Cross-border Cash Management Services by Asiamoney Magazine. Its BIDV Online Payment and Collection Solution was the only product in the Viet Nam Banking system listed in the top 10 of the Viet Nam Golden Product 2012 awards, organised by the National Office of the Intellectual Property of Viet Nam and the Ministry of Science and Technology. Export revenue to Malaysia jumps Viet Nam exported goods worth US$2.43 billion to Malaysia in the first half of the year, a 27.4 per cent year-on-year rise. The figures were released by the Industry and Trade Information Centre, under the Ministry of Industry and Trade. The two-way trade value reached $4.4 billion, increasing 23.7 per cent compared to the same period last year. Viet Nam has exported crude oil, rubber, rice, computers and their components, phones, coffee, seafood, steel, transportation vehicles and machinery. Meanwhile, the country has imported fat, vegetable oil, petroleum, chemicals and chemical products, plastic materials, oil products, wood, paper, milk and dairy products, which totally value $1.96 billion, up nearly 20 per cent year-on-year . Viet Nam is ranked the fifth in the ASEAN region in Malaysia's exports and imports while Malaysia comes third among regional countries in trade value with Viet Nam. Nation imports more Australian cattle Viet Nam is now importing more live cattle from Australia than ever, according to the South East Asia Livestock Services, one of Australia's largest exporters. The Australian Live Export Council estimates that about 20,000 heads of cattle have been exported to the country so far this year, with a large part of them contributed by Queensland cattle producers. Sid Parker, Manager of the Darwin Port for the South East Asia Livestock Services, said Viet Nam is a crucial market of Australia as it often imports heavy cattle of up to 400 to 500 kilos. SBV approves VietinBank charter plan VietinBank has received approval from the State Bank of Viet Nam (SBV) to raise its charter capital from VND32.661 trillion (US$1.55 billion) to VND37.234 trillion ($1.76 billion), the central bank said in a post on its website. The Ha Noi-based bank, officially known as Viet Nam Joint Stock Commercial Bank for Industry and Trade, can now increase its charter capital through issuing new shares to existing shareholders. The charter capital increase shall be implemented in accordance with the plan approved at its extraordinary general shareholders' meeting on July 13. The approval will be valid for 12 months. If VietinBank does not raise its charter capital within that time the approval will expire.- Corporate tax cut for clutch of industries Six highly competitive economic industries will be given special Government treatment, including a 10 per cent cut in corporate income tax (to 15 per cent), preferential loans and official development assistance. A seminar in Ha Noi on Thursday heard about the measures set to be implemented to support the nation's most lucrative sectors. Industries expected to benefit from the plan, which will be enforced during 2013-20, include agriculture and aquaculture, processing and manufacturing, construction, logistics and forwarding, hospitality services, and information and communications. Hoang Thinh Lam, deputy director of the Ministry of Planning and Investment's Planning Department, said industries must satisfy seven basic criteria to be considered for the special support. These include willingness to use available local labour and material resources; large domestic or export demand; developed industry and support services; and a dedication to promoting a green economy to ensure harmony between socio-economy and the environment, he said. On the basis of these requirements, the ministry drafted a list of 28 sub-sectors which have been considered particularly competitive. However, most of the participants at the seminar said that despite the high number of selected industries, the country was suffering from a shortage of strong sectors. Deputy Director of HCM City's Department of Industry and Trade Le Van Khoa proposed that the food and wood processing sectors be added to the list because of their impressive export growth. Timber exports raked in nearly US$5 billion last year, helping Viet Nam become Asia's second largest wood exporter and placing it sixth in the world. The food processing sector has also demonstrated its strengths and built a close relationship with the agriculture and aquaculture sectors. The two sectors have not only met the seven criteria but also boast competitiveness and high added values. General Secretary of the Viet Nam Cashew Association Dang Hoang Giang said the cashew sector has not been listed as a competitive industry despite meeting all the criteria. The country's cashew exports are globally popular and have not been affected by defensive factors such as trade or technical barriers. Chairman of the Mechanics Association Dao Van Long said spare parts for cement plants and chemicals have also not been mentioned in the list despite high growth and a large contribution to reducing the trade deficit. He added that the motor sector included in the list was not enough because the country's auto exports were very little. Meanwhile, a representative from the Ministry of Agriculture and Rural Development said placing rice on the list ran counter to the policy of restructuring the agricultural sector. He said less emphasis should be placed on how much this sector produced or exported and more placed on producing products at low prices so as to benefit farmers. Mai Anh Hong, deputy director of the Ministry of Information and Communications said a wider review of previous periods should have been undertaken before making a new list of competitive industries. Lam also revealed that the ministry was drafting a trade and export promotion programme and planned on building a number of bonded warehouses and goods distribution centres abroad in the near future. Rice purchase plan passes million mark Rice trading enterprises have already purchased 1 million tonnes of rice under the Viet Nam Food Association (VFA)'s plan, said an official from the VFA. The association chairman Truong Thanh Phong said that by August 15, 114 member enterprises of the association had met a target of buying 1 million tonnes of rice under the Government programme on purchasing produce. The June 15 - August 15 plan aims to ensure rice farmers, who have been harvesting their rice crop, make a profit from the current summer-autumn season. Assigned by the Viet Nam Food Association, 114 eligible enterprises have joined the programme with a targeted amount of rice to be bought in each province. In the Mekong Delta, Long An Province had a target of 91,000 tonnes, Kien Giang 85,000 tonnes and Bac Lieu and Hau Giang 10,000-15,000 tonnes. Deputy minister of agriculture and rural development Vu Van Tam said not all farmers gained a 30 per cent profit from the programme this year due to varying production conditions and export prices across different regions. The current economic downturn also made rice exports less profitable, said Tam. In 2012, the price of unhusked rice jumped by VND200-300 per kilo for those harvested from the winter-spring crop and by VND400-500 per kilo for those harvested from the summer-autumn crop under the Government programme. "This resulted in farmers gaining a 30 per cent profit," said Vo Thanh Do, deputy head of the Ministry of Agriculture and Rural Development's Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production. But, this year, if the Government purchasing programme was halted, the price of unhusked rice would fall further and farmers would be the first to suffer losses as the economic downturn has created disadvantages for rice trading, Do said. The association said prices for unhusked rice from the summer-autumn crop increased by VND1,000 per kilo to VND4,700-5,300 during the rice purchasing period. Phong said the after the rice purchasing period, the price would reduce slightly by the end this year as demand for rice at border gates with China and Cambodia increases. In the first seven months this year, Viet Nam exported 4.22 million tonnes, earning US$1.88 billion, the association said. The exports declined year-on-year by 11.3 per cent in volume and 13 per cent in value. The association expected Viet Nam to export 2.07 million tonnes in the third quarter and 2 million tonnes in the last quarter. In total, the nation is set to export about 7.5 million tonnes for this whole year. Garments, textiles maintain stable growth Vietnam’s garment and textile export turnover in the first seven months of this year surpassed 9.6 billion USD, up 16.3 percent over the same period last year. During the reviewed period, with a contribution of 13.2 percent to the country’s total export revenue, the sector maintained its high position in the US$1 billion club, only mobile phones and spare parts stand before it. The industry is expected to rake in over US$ 8 billion in the remaining months of the years, fulfilling the target set by the Government. Despite its stable growth, the sector is facing a range of difficulties in material production, according to the Ministry of Planning and Investment. Statistics show that the garment and textile sector spent more than US$7.6 billion purchasing materials from foreign countries in the past seven months, up 18.2 percent year-on-year. Given this situation, domestic and foreign businesses are pouring huge sum into the fibre supply chain, weaving and dyeing in order to raise the sector’s competitive edge while minimising its dependence on imports. Joining the move, the Vietnam National Textile and Garment Group kicked off the construction of Phu Hung fibre plant at the Phu Bai Industrial Park in the central province of Thua Thien-Hue. Hong Kong-based Texhong Group recently put into operation the first phase of its fibre plant in the northern province of Quang Ninh. Le Tien Truong, Vice Chairman of the Vietnam Textile and Apparel Association, said the sector is now confident it can compete in overseas markets. The Trans-Pacific Partnership (TPP) agreement, once signed, together with other bilateral and multilateral free trade agreements, is expected to stimulate the sector, he said. Major transport projects in Hanoi move at sluggish pace The construction paces of all 12 key transport projects currently underway in Hanoi remain sluggish due to problems with site clearance. The list includes Nhat Tan Bridge, Nhat Tan-Noi Bai Road, Noi Bai-Lao Cai Highway, Lang-Hoa Lac Highway, Noi Bai International Airport’s T2 Terminal, Ngoc Hoi-Yen Vien urban railway project and Cat Linh-Ha Dong Urban Railway. Tran Xuan Sanh, Head of the Ministry of Transport’s Transport Engineering Construction and Quality Management Bureau, said, most of the projects have seen slow site clearance, making them at risk of being finished behind schedule. He added that the ODA-funded projects, namely Nhat Tan Bridge and Nhat Tan-Noi Bai Road, Hanoi-Thai Nguyen Highway, Hanoi-Haiphong Highway and Cat Linh-Ha Dong Urban Railway are especially behind time. The invested capital of Nhat Tan Brige has been updated to VND13.62 trillion (USD619 million) from VND7.52 trillion (USD358 million), partially attributed to site clearance problems. The project is slated for completion by October 2014. Early this year, the Japanese contractor, Tokyu Construction Ltd. Co. proposed that the Ministry of Transport compensate them to the tune of VND200 billion (USD9.52 million) due to slow site clearance for the Nhat Tan Bridge project. The Minitstry of Transport replied that they will deal with the problem. The estimated price tag for the Nhat Tan-Noi Bai Road project has risen to VND6.74 trillion (USD320.9 million) from VND5 trillion (USD238 million). Hanoi authorities planned to finish site clearance by June, 2014. But, due to problems with site clearance, the date has been moved back to December. The Ministry of Transport has informed the prime minister of the sluggish site clearance leading to Hanoi’s major transport projects, according to Sanh. The sluggish site clearance has particularly affected ODA-funded projects in terms of disbursements of funds. Thai PTT confident of success for major oil refinery project It would not be very difficult for Thai PTT Public Company Limited (PTT) to build a USD27-billion oil refinery plant in Binh Dinh Province, a company official said. PTT Deputy General Director, Sukrit Surabotsopon, made the statement at a press conference about the project, which was held on August 15 in Quy Nhon City. “We’re really confident in our capacity because PTT has 50-years experience in this field and is among the top 100 biggest companies in the world. We would be working with several prestigious partners so it would not be too difficult for us to build such a major petrochemical/oil refinery plant, if we get approval from the Vietnamese government and support from Binh Dinh provincial authorities,” he noted. According to him, PTT decided to plan the building of the plant in Nhon Hoi economic zone, as this zone is eligible for the construction and operation of a large petrochemical/oil refinery area. It also facilitates the future expansion of the plant, in addition to favourable conditions for deep-water port construction and transportation. Le Huu Loc, Chairman of the provincial government said, “We believe that PTT would be able to succeed with the project as they promise.” The refinery would cover a 2,000-hectare area in the Nhon Hoi Economic Zone and would have the capacity to produce 660,000 barrels per day. If the project is approved, construction could start in 2016, with operations beginning in 2020. When operational, it would be the biggest oil refinery plant in Vietnam. Big profits for Petrolimex in first-half After previous successive loses, Vietnam National Petroleum Group (Petrolimex) posted a pre-tax profit of VND388.2 billion (USD18.5 million) from its fuel trading activities alone between January and June this year. According to the group’s January-June financial report, Petrolimex raked in VND898.3 billion (USD42.8 million) in total profit. A large portion of this came from fuel trading, an area in which they reportedly lost VND125 billion (USD5.9 million) in 2012. After taxes the company's total profits were estimated to be VND687 billion (USD32.7 million) for the period, up 84.4% compared to the same period of last year. The report also indicated that the group spent VND1.3 trillion (USD61.9 million) in labour costs, up 14.6% on-year. In the first half of this year, Vietnamese petroleum wholesalers adjusted fuel prices six times, three of which were price increases and three price cuts. Deputy PM: Power sector must restructure Deputy Prime Minister Hoang Trung Hai has made it clear that the restructuring of the power sector is now a must to improve its competitive edge and performance. Working with officials of the Electricity of Vietnam Power Generation Company (GENCO) 1 in the northern province of Quang Ninh on August 16, Deputy PM Hai said the company must work out a set of regulations if it wants to operate in a competitive market, instead of a monopoly market like it is now. In the first place, all GENCO should be grouped together, then each of them will be equitised gradually to move beyond the reach of its parent group EVN, he said. The rearrangement of GENCO in a short time without impacting on production is an initial success. If each GENCO is unsuccessful, the restructuring of the overall sector will go nowhere, Hai said. Responding to proposals at the event, Hai said each GENCO must be financially independent to lure more investment and reshuffle the executive board. EVN was also asked to devise a financial mechanism to make it easier for GENCO to enter the market while monitoring their financial situation to offer timely assistance. Added to this, Hai urged the power sector to satisfy growing demand for power use during the 2015-2020 period, saying that it is a top goal as the economy is set to rebound. EVNGENCO 1 Chairman Nguyen Loan said his company generated over 8.3 billion kWh of electricity between January 1, 2013 and late July, meeting 56.8 percent of this year’s target. Consultants for Nhon Hoi oil refinery announced PTT Public Company Limited (PTT) on Thursday formally announced a project to build Nhon Hoi Oil Refinery Complex in Binh Dinh Province with total investment of US$25-30 billion, and unveiled its strategic and technical consultants for the project. PTT has picked U.S. firm McKinsey Company as the consultant for project strategy management while Switzerland’s Foster Wheeler is the consultant for technology and design. IHS Company is the consultant for trade, input crude oil sources and final products. With invested capital estimated at up to US$27 billion, many people have cast doubts over the feasibility of the project, and await the announcement of a financial consultant for the mammoth project. However, the investor failed to announce its financial consultant at on Thursday’s briefing. Man Ngoc Ly, head of the authority for Nhon Hoi Economic Zone, where the project will be located, said that PTT will select a financial consultant by the end of the year after finishing a feasibility study over technology and trade. Besides the feasibility study, the investor is setting up a scheme to assess the refinery’s effects on the environment, human health, safety, the economy and society. Speaking at the briefing, Sukrit Surabotsopon, senior executive vice president of PTT, said that the group has set up a special team with support of international consultants to conduct a feasibility study for the refinery project from now until May. Once the feasibility study report wins approval from the Government, PTT will move on with front end engineering design and engineering-procurement- construction to begin construction. Construction is expected to last five years and the project will be launched into operation in 2020, Sukrit said. Explaining selection of Binh Dinh Province as its location, Sukrit said that Nhon Hoi Economic Zone can provide a 2,000-hectare area. The economic zone is far from residential areas and near a deep-water seaport, so it is convenient for PTT to build pipelines connecting crude oil vessels with the factory. Sukrit said that PTT can afford around 40% out of the total investment of US$25-30 billion and it will call for partners to contribute capital for the remaining sum. The project will consist of two phases, focusing on production of petrochemical products for domestic consumption and exports. The complex has an output of 33 million tons a year. Input material for the project is also a controversial issue. However, Sukrit said that there are many crude oil trading firms in the world, so PTT will negotiate with them to purchase crude oil. PTT’s fleet can carry two million oil barrels at a time to supply the project, so Nhon Hoi refinery is able to compete with small-scale oil refineries in the region, Sukrit added. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR