Online forum aims to boost exports

VietNamNet Bridge – Industry and trade officials and enterprises met on July 8 in an online conference between Ha Noi, Da Nang and HCM City to discuss ways to boost exports and industrial values over the next five months.

Industry growth was expected to reach 10 per cent, while export growth was expected to hit 3 per cent.

The sector must try harder to gain better results, said Bui Xuan Khu, deputy minister of Industry and Trade.

Khu said that although the National Assembly had reduced targets for industrial products and exports, the sector still needed a push in the right direction.

Industry growth was expected to reach 10 per cent, while export growth was expected to hit 3 per cent. But according to ministry data, the industrial production values and exports of the country had fallen, including a decrease of 11.7 per cent against the same term last year for industrial value and a decrease of 10.13 percent for export turnover, which had reached only VND27.6 trillion (US$1.5 billion) in the first six months.

Khu asked relevant authorities to try to ease difficulties for enterprises so that they could boost production. He asked the Electricity of Viet Nam to boost their management and operate their grids effectively to better serve families and local demands. He also asked the Viet Nam Garment and Textile Group to boost its exports and expand the domestic market, giving priority to low-income clients.

The ministry would co-operate win relevant enterprises and localities to help increase exports of rice, fisheries and other agriculture products to give more jobs to farmers.

They would focus on the Japanese market, which had a lower import tax for farming products for Viet Nam, as well as find new markets for rice, coffee and mechanical products in Africa and the Middle East, said Khu.

Khu asked domestic enterprises to build their own projects to get support from national trade promotion and to take advantage of the stimulus package.

The Ministry of Industry and Trade would work with the Ministry of Finance to change import and export taxes to increase exports and build the export credit insurance project.

Khu asked for more market studies to strengthen the domestic market and to sell more products to rural areas.

Le Quoc An, chairman of the Viet Nam Garment and Textile Association, asked the Government to better reform administrative procedures, especially to speed up customs procedures and to reduce electricity prices during peak times for the sector.

An also asked for the restructuring of the industry, under which they would build more factories with lots of workers. He asked for land to accommodate garment workers.

Huynh Minh Hue, deputy chairman of the Viet Nam Food Association, asked for better and more transparent policies on rice exports.

VietNamNet/Viet Nam News

Outstanding loans rise 17.5 pct in Vietnam

VietNamNet Bridge - Vietnamese banks’ total outstanding loans rose 17.53 percent in the six months ending June compared with a year earlier, the central bank said in a statement on its website Tuesday.

Credit in the banking system grew 17 percent during the period compared with the end of last year, the State Bank of Vietnam said. Total deposits gained 7.64 percent from a year earlier and rose 16.2 percent from the end of 2008, according to the statement.

State-owned commercial banks’ lending rates in Vietnamese dong ranged from 8.5 percent to 10.5 percent, while the borrowing costs of joint-stock commercial banks were between 10 percent and 10.5 percent, according to the statement. Interest rates on loans subsidized by the government were between 4.5 percent and 6 percent.

Interest rates of loans in US dollars ranged from 4 percent to 6 percent. The cost of credit card and consumer borrowings were between 12 percent and 16.5 percent, said the statement.

As of July 2, banks had lent VND372.3 trillion (US$21 billion) to businesses as part of the government’s loan-subsidy program, the central bank had said on its website late last week.

Banking figures

Saigon Thuong Tin Commercial Joint-Stock Bank, the third-largest company traded on the Ho Chi Minh Stock Exchange, had outstanding loans of VND47.6 trillion and total assets of around VND83 trillion by the end of June, it said in an e-mailed statement Tuesday. The lender did not mention comparable figures for the previous year.

Deposits at Sacombank, as the lender is known, reached VND70 trillion in the same period, and its bad debt ratio was 0.71 percent.

The Ho Chi Minh City-based bank reported pretax profits of VND905 billion ($51 million) for the first six months of the year.

Meanwhile, DongA Commercial Bank’s total outstanding loans reached VND27.4 trillion, up 23 percent from the same period last year, the lender said in an e-mailed statement Tuesday.

Total deposits at the HCMC-based lender were VND31.7 trillion, a yearon-year increase of 26.2 percent, according to the statement.

Its pretax profit totaled VND385 billion ($21.6 million) in the first six months, down 4.7 percent from a year earlier. Pretax profit in the January-to-June period made up 51 percent of the annual forecast, the statement said.

The bank had reported pretax profits of VND404 billion in the first six months last year.

An Binh Bank, an unlisted HCMCbased lender known as ABBank, said Tuesday credit grew to more than VND8.6 trillion ($483 million) in the first six months, 32 percent higher than six months ago.

Total deposits at the lender reached over VND11.6 trillion ($652 million), a 60 percent increase compared to December 31, 2008.

The bank reported first half pretax profits of more than VND172 billion ($9.6 million), 6 percent higher than its target.

With a 15 percent stake owned by Malaysia’s top lender Maybank, ABBank has forecast its pretax profits to rise to around VND400 billion ($22.4 million) in 2009.

The bank had reported a slump in gross profit last year to just VND70.2 billion ($3.9 million), well below the forecasted VND465 billion ($26 million), due to high operating costs and losses from trading foreign currencies and securities.

The lender plans to expand its network to nearly 100 branches across the country next year.

VietNamNet/TN

Banks’ big profits please banks but grieve businesses

VietNamNet Bridge – Commercial banks have gladly announced high profits for the first six months of the year. However, the banks’ joy has made businesses feel touched, since businesses have been promised by banks that they can share profit and success with banks.

Techcombank has announced profits of 1,031 billion dong ($60 million) for the first six months of 2009, which make it one of the most profitable joint stock banks. Military Bank announced profits of 720 billion dong, leaving it only 100 billion dong short of its target for the year.

"Our profit has dropped so dramatically since May. Some of that was due to fluctuating exchange rates, but still I feel sad. “Today (June 23), I need $30,000, and the bank told me that I must pay an additional 550 dong for each dollar, a so-called ‘foreign currency conversion fee.’ “This is the highest fee level so far. I can’t understand why I have to pay the 550 dong? Maybe my knowledge is not deep enough? Excerpt from a businessman’s letter to VNExpress

Ten other banks have also reported that they were well ‘in the black’ for the first half of 2009. Analysts still await reports from two big names in joint stock banks, Sacombank and ACB. A source from ACB said the bank’s first-half profits are estimated to reach 1,200 billion dong. Meanwhile, Sacombank’s profits are estimated at 900 billion dong.

The high profit announced by banks in these difficult times has caused businesses to feel sorry for themselves. The director of a business commented bitterly to a VNExpress reporter that “the banks all say they will share difficulties, profit and success with businesses. Meanwhile, while businesses have been struggling with crisis and many of are reporting losses, some are on the verge of bankruptcy, but banks still reap fat profits.”

Commercial banks themselves well understand what businesses think. Many are thus wary of publishing details about their profit. A senior manager of a joint stock bank told a reporter that though he was happy with his bank’s successs, he did not want the local press to report about it. One bank is rumored to have deliberately lowered its announced profit in 2008.

The director of an import company in HCM City sent a letter to VNExpress, confiding that he was compelled to purchase dollars from banks at prices two or three percent higher than the officially quoted prices. He said a lot of his friends, also businessmen, have met difficulties in purchasing foreign currencies. If the businesses did not agree to purchase foreign currency at the high prices, they would not have money to make payment for the foreign partners.

Bank reports show that core banking services, including the money exchange trading and lending have brought the biggest profit to banks. Traditional services made up 70 percent of Techcombank’s total profit, while the rest came from investments like bond or gold trading.

Loans still make up 50 percent of Techcombank’s total turnover, and 60 percent at Military Bank.

Commented about the banks’ high profit, Banking Academy Deputy Director To Kim Ngoc, said that banks almost never post a loss. Lately they have been profiting from the Government’s demand stimulus package. Trading in the interbank monetary market has also brought considerable profit to banks. More profit flows in from loans with high interest rates under contracts signed some time ago, or from bond trading.

“If banks can make fat profits while businesses have difficulties, it’s a reflection of the injustice in sharing profit in the society,” Ngoc said. However, she said, it is impossible to force banks to ‘sacrifice’ profit for businesses. Besides, banks must not be allowed to go bankrupt, because this will badly affect the whole banking system and the national economy.

Ngoc is not as optimistic as other experts about the business results banks will report in the second half of 2009. She noted that Vietnamese businesses have not yet felt all the follow-on shocks from the global economic crisis. Also, Vietnamese businesses and banks have been enjoying big support from the Government. Once the support is reduced, businesses may face bigger difficulties. The big loans banks are providing now could become a burden on them later, if businesses, unable to sell their products in shrinking export markets, cannot pay their debts to banks.

VietNamNet/VNE

Expat living cost survey ranks HCMC with Sydney, Hanoi with Boston

The annual Mercer survey of living costs for expats in 143 ‘world cities’ finds Hanoi and Ho Chi Minh City surprisingly expensive.

HCM City

Dethroning Moscow, Tokyo and Osaka, Japan reclaimed the top spots in the annual expat living costs survey conducted by Mercer, a multinational human resources firm. The company’s 2009 survey was released on July 7 and registers currency fluctuations and dollar strengthening impacts of the global economic crisis.

The Mercer survey compares the cost of over 200 items in each of 143 ‘world cities,’ including rental housing, transport, international schools, a Westerm diet, clothing, medical care, household goods and entertainment. Emphasis is on consumption of ‘international brands’ where they are available.

In Southeast Asia, Hong Kong is #5 in the 2009 report, Singapore #10, Shanghai #12, Guangzhou #23. Then, considerably down the list at #58, Mercer reports that it costs a generic expat as much to live in Hanoi as it does in Hamburg, Cairo, Taiwan or Boston. Just as in last year’s report, Mercer finds that it’s a little cheaper in HCMC, which at #69, ranks just behind Sydney, Washington and Mumbai. Then it is a long way down to other Southeast Asian capitals. KL’s at #96 and Bangkok at #98, bracketing Cleveland, Ohio, USA, #97. Jakarta’s at #106 and Manila is way down in 126^th position.

Expressing the cost data another way, Mercer calculates that an expat living in Hanoi will spend only 77% of what he’ll need to spend to live comfortably in New York City, #8. If the expat moves to Saigon, he’ll gain another two percent on NYC.

The Mercer ratings are used by governments and multinational companies not only to decide how much to pay expat staff stationed in these various cities but also (at least in the case of companies) whether to send the staff at all. So in that regard, it’s not good economic news for Hanoi and HCMC to learn that expat living here costs somewhat more than in Bangkok, Jakarta or KL.

VNN

Chinese household furnishings giving Vietnamese producers headache

VietNamNet Bridge – Vietnamese producers of wooden household furnishings are determined to compete with the China-made products which have been flocking into Vietnam. However, this is shaping up to be a difficult task.

Customers prefer China-made products

Quoc Thong, who has many years of experience in importing and selling interior furniture, said that Vietnamese consumers still purchase China-made products even though they know that the products are sourced from China and are not high-quality and not durable.

“Vietnamese consumers’ habits have changed. Nowadays, they do not want to purchase furniture to use for their whole lives; they prefer fashionable products. Meanwhile, China-made products can meet the new tastes of customers at reasonable prices,” Thong said.

Vo Thi Phuong Mai, an executive from Nha Dep, an interior decoration company, said that the most important factor is reasonable price.

“China-made products have good designs which attract customers, while their prices are reasonable,” Mai said.

Minh, a customer, said that he does not care much about where products come from. He just wants products which look beautiful, are suitable for his house and have acceptable prices.

Customers like Minh abound.

Which way for Vietnamese enterprises?

“It is really hard to live next to a big arsenal which makes products for the whole world like China,” Thong said.

Vietnamese producers say that in order to effectively compete with China-made products, they have no other choice than trying to make high-quality products with diversified designs.

Mai from Nha Dep said that Nha Dep has to lower production costs in order to compete with China-made products.

“We have necessary materials and we can make the frames for salons. We have qualified designers and we well understand the tastes of customers which allow us to make products with colours and designs suitable to customers in different areas,” Mai said.

Truong The Phong, Marketing Director of Rossano, said that Rossano also imports China-made products (5 percent of products on sale) so it well understands these products. And the company has realised that it needs to make products with higher quality and durability than China-made products.

“Our advantages are qualified designers from Singapore and Malaysia who always offer new designs. Our customers can place orders and choose colours, materials and sizes they want,” he said.

According to Nguyen Quoc Khanh, Director of AA, Vietnam’s woodwork industry has a big advantage in its skilful labour force that is very good in doing details that need to be done half-manually. The cost of these workers is still 30 percent lower than in China.

Khanh does not think that the small scale of workshops in Vietnam is a disadvantage; on the contrary, he thinks that small scale is an advantage because a shop can receive orders in a flexible way.

“They key now is that enterprises need to make investment in diversifying designs and increasing the value of products,” he said.

Khanh said that Vietnamese enterprises need to know their advantages and disadvantages and choose suitable customers. Nha Xinh, for example, targets medium-class and high-class customers. “If you have products with high quality which fit customers’ tastes, you will be able to sell products, even if the prices are a bit higher than imports’ prices,” he said.

VietNamNet/SGTT

Money can’t buy me… retail premises in HCM City

ietNamNet Bridge – High-class retail premises in HCM City are now so scarce that even those who have money cannot find satisfactory places to set up shop.

According to local newspaper Saigon tiep thi, HCM City now has 25 modern trade centres which have retail premises for lease to enterprises or individuals. Of these 25 centres, only 11 are considered high-class trade centres, including Diamond Plaza, Zen Plaza and Parkson and Saigon Paragon, which has been operational since June 2009.

The most important criterion which trade centres must have to be called ‘high-class’ is that the goods on sale are imported products of well-known brand names or high-class products made in Vietnam. For example, Opera View only has around 10 stalls, but it is still considered the ‘pinnacle of luxury shopping’, because Louis Vuitton brand name products are dominating in the stalls.

Tax and Zen Plaza trade centres, which are located in the centre of district 1 and have stalls selling valuable diamonds, shoes with the world’s well-known brand names are considered the number two, because they are selling Vietnamese brand-name products like Viet Thy, YF, Nino Maxx, Viet Tien, Dong Hai and Bita’s. Meanwhile, Diamond Plaza and Saigon Paragon are considered first-class trade centres because only products with the most famous brand names are selling here, namely CK, Baly, Clarins, Christian Dior, Lancome, Lancel or Omega.

As owners of the trade centres prove to be very fastidious about selecting retailers, not every retailer who has money can lease retail premises in high-class trade centres. Even those who are ready to pay leasing fees 3-5 times higher than in other places and sign long-term leasing contracts cannot set foot in the trade centre if their products are not ‘well-known brand name products’.

Dang Quynh Doan, Director of Viet Thy Fashion Company, has confirmed the information, saying that even Vietnamese companies which are well-known for high-quality products have been refused for premises in luxury trade centres.

Meanwhile, explaining why he said ‘no’ to Vietnamese companies, Le Van Canh Director of Artex Saigon, the owner of Opera View, said that he needed to choose retailers who sell high-class products, because the products fit the main clients the trade centre is targeting.

Louis Vuitton has become a long-term client at Opera View with Louis Vuitton’s stall in the most advantageous position at the centre. Therefore, Canh said that other stalls should also be reserved for well-known brand names, or they would be left idle.

Currently, all high-class trade centres are fully occupied. At Zen Plaza, Tax, Diamond or Parkson, clients have to register to lease premises and their names are put on waiting lists. And just to make it onto the list, ‘candidates’ have to meet a lot of requirements set by the trade centres.

Therefore, most clients say that they cannot negotiate leasing fees with trade centres. The premises for jewellery, watches and cosmetics stalls prove to be the most expensive, over $200 per square metre. The premises for footwear and clothes stalls prove to have ‘softer’ fees, $55-150 per square metre. Consumer product stalls on higher floors have lower leasing fees of $30-80 per square metre.

VietNamNet/SGTT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How do you imagine Van Phong port should operate?

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

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

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

VietNamNet/TT

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

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

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

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

However, no official conclusion has been issued.

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

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

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

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

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

VietNamNet/VNE

Hanoians like products with well-known brand names

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

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

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

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

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

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

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

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

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

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

VietNamNet/VNE

43 provinces register information to export fruit to China

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

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

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

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

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

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

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

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

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

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

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

Ha Yen

Is petrol price in Vietnam high or low?

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

Importers claim losses

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

However, petroleum importers still complain they are incurring losses.

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

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

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

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

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

Domestic price under pressure

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

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

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

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

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

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

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

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

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

Pham Huyen

BUSINESS IN BRIEF 30/6

Largest commercial complex under construction

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

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

More eight projects in Ninh Binh province licensed

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

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

Contract for providing gas compressor module signed

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

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

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

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

Bumper crop of winter-spring rice

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

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

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

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

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

Japan-Vietnam alliance to advise high-speed railway project

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

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

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

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

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

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

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

VietNamNet/VNA, TN, ND