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BUSINESS IN BRIEF 7/3   2010-03-08 - VietNamNet

Electricity network gets timely upgrade 

The Ha Noi Power Company is investing VND471 billion (US$24.4 million) to upgrade the city's electricity network.

Company deputy director Bui Duy Dung said the project included the upgrade of 110kV electric grids, with a total length of 161.7km, plus the construction of transformer stations and a 220kV electric grid.

Existing power lines and power stations of 6-10kV would be upgraded to 22kV standard to increase capacity and radius, he said.

The company has also invested in building 420 sub-stations and upgrading 359 existing sub-stations.

Meanwhile, hot spells are forecast to hit the country this month, leading to higher electricity demand, which is predicted to sharply increase to an average of 260-265 million kWh per day from 220 million, and less hydro power supply.

The drought was forecast to continue on a large scale. Water levels of hydroelectric lakes in the north had already declined remarkably after 3 billion cubic metres of water was used for the winter-spring crop, while the volume of water flowing into these lakes was at its lowest in the past 100 years, Electricity of Viet Nam said.

Added to the problem, the volume of power bought from China also had to be reduced by 10kWh per day until March 12 because China's Yunnan Power Grid Company was carrying out maintenance and had ceased supplying 220-kV Tan Kieu-Lao Cai and Lao Cai-Ha Khau power lines.

In order to ensure power supply, apart from mobilising power sources from coal and oil, EVN has asked its affiliates to ensure the safe operation of the national grid, particularly the 500-kV north-south power transmission line, and to make sure they had the facilities to cope with any load problems as they arose.

The company, meanwhile, would continue to encourage and advise the public on the economic use of power.

EVN reported it had increased its electricity output in the past two months to 12 billion kWh, an increase of 19.4 per cent over the same time last year.

S Korea co-operates on development experience

South Korean researchers expect that Viet Nam will quickly shift from an agriculture-based economy to an industry and service-based one in the next 10 years. The insights were presented at a two-day Senior Policy Dialogue starting on Thursday between Vietnamese and South Korean policy researchers.

According to a report co-produced by the Korea Development Institute (KDI) and the Vietnamese Development Strategy Institute since June 2009, Viet Nam's GDP share of agriculture is projected to decline continuously from about 19.8 per cent in 2008 to 14.5 per cent in 2019. The GDP share of industry however will increase from 41.9 per cent to 44.1 per cent, while that of services will increase from 38.3 to 41.4 per cent during the same period.

Hahn Chinhee from the Korea Development Institute said with the transition forecasted, Korean researchers suggested that the country's legal framework needs to be continually amended and improved while public governance and the quality of education and training needs to be improved.

The research also projected that the Vietnamese annual average GDP growth rate for the period 2010-19 would decrease slightly and is expected to be 6.51 per cent in 2019. The slowdown is said to likely come from the slowdown of both capital and labour input.

Chinhee discussed several aspects of Viet Nam's development model for the coming period including attempting to establish efficient markets of all types; developing a system of efficient "hard" infrastructure and accompanying "soft" services; stimulating creativity and preventing macroeconomic problems such as inflation and high unemployment; and continuing to strengthen international linkages.

Besides evaluating Vietnamese development and growth potential up to 2020, four other topics were also discussed. They included monetary and financial policy for stability, efficiency and sustainability; nation-wide land use strategy; industrial technology development, and efficient and harmonious enterprise policies.

For monetary and fiscal discipline, Kim Joonk-kyung, a professor of the KDI School of Public Policy and Management proposed some recommendations including the stability of money flows should be examined regularly and that fiscal discipline remained a necessary condition to maintain the credibility of monetary discipline.

Korean researchers also suggested that Viet Nam should participate in the ASEAN+3 to contribute its financial co-operation initiatives, including the Chiang Mai Initiative, which was taken in 2000 by China, Japan and South Korea to expand an existing set of currency swap arrangements and establish a network of currency swap-and-repurchase arrangements.

The Vietnamese Government has had strong support in research and development (R&D), according to South Korean researchers. A rational approach to science and technology is necessary with increased R&D investment.

Suh Joong-hae from the same institute reported that in 2007, Viet Nam's expenditure on science and technology was VND612 billion (US$32.2 million), which accounted for 0.19 per cent of the GDP. The majority of funding to support R&D came from the government, which accounted for 66 per cent. About 18 per cent of the funding came from universities and 15 per cent from business.

His research suggested that Vietnamese government should increase investment in R&D to 1 per cent of the country's GDP and the state should get more enterprises involved in investing in this field. The investment for R&D should be contributed equally by governmental and private sectors.

The researchers also made recommendations to the Vietnamese government to build a land management information system in order to increase the efficiency of land use planning and land usage related policy.

Other research and policy recommendations on governance of economic groups and technological human resource development were also presented at the forum.

Ngo Doan Vinh, president of the Vietnamese Development Strategy Institute, co-chair of the forum said that he appreciated the valuable recommendations made by the South Korean researchers and his institute would take them into consideration while consulting the Government on relevant policy making processes.

All the research was co-conducted by the Korea Development Institute and the Vietnamese Development Strategy Institute under the Knowledge Sharing Programme sponsored by the South Korean Ministry of Strategy and Finance. The programme, which started in 2004, aimed to provide policy consultation to developing partnership countries on the basis of Korea's development experiences.

Speaking at the forum, the South Korean ambassador to Viet Nam said he hoped that the programme would be expanded in the future and its research would cover more fields including Vietnamese applied science and agriculture.

Domestic market crucial to garment makers
The success of the Vietnamese apparel industry in recent years, even during the global economic downturn, can be attributed to its focus on the domestic as well as foreign markets.

"The apparel industry has never disregarded the domestic market," according to Le Tien Truong, deputy general director of the Viet Nam National Textile and Garment Group (Vinatex).

Most apparel companies have for many years seen the local market as a venue in which they could show off their creativity, Truong said.

The industry has extended its distribution network to all 63 provinces and cities nationwide, including 15,000 sales points in rural areas and another 3,000 points at supermarkets and trade centres.

Many textile and garment companies have also increased investment in retail networks and built brand names in the domestic market.

Vinatex, WOW, Sanding, Foci, An Phuoc and Thai Tuan, for example, have built retail stores, worth VND30-40 billion each, to sell their own products.

The Viet Tien Garment Import-Export Corporation, one of the most successful, is well-known by many Vietnamese consumers thanks to its 12,140 shops nationwide.

The company's deputy general director, Phan Van Kiet, said it had been offering a variety of products at low to high prices to meet consumers'different demand.

Late January, the company introduced a new office fashion trademark Viet Long, aimed at serving low-income earners like workers and students.

This collection sells shirts, trousers, T-shirts, jeans and ties at prices from VND80,000 to VND180,000.

Previously, Viet Tien sold products primarily for high – and medium-income earners with trademarks such as Sanciaro, Manhattan, TT-up and Smartcasual.

Tran Thi Sinh Duyen, director of the Hai Garment Company in northern Hai Phong City, said many companies had hired professional fashion designers which has helped diversify products for both rural and urban markets.

Despite the global recession last year, Viet Nam's textile and garment industry still earned more than VND60 trillion, a year-on-year increase of 15 per cent.

In an aim to reduce risks and develop in a sustainable manner, Truong of Vinatex said the apparel industry planned to use 30 per cent of its production capacity for the domestic market and 70 per cent for the overseas market between now and 2020.

Truong said it was also essential to reform management methods and improve production capacity to ensure that high quality products at highly competitive prices could be made.

If enterprises are able to accomplish this, domestic consumers would have even more confidence in local brands, he added.

Rising costs cause enterprises to miss export targets 

Many enterprises in HCM City expect to fail to reach their export targets for the first quarter of this year, due to the increasing costs of imported materials, petrol and electricity.

According to HCM City's Industry and Trade Department, exporters are set for a tough time in the coming months, due to the lingering impacts of the global economic crisis that have made it difficult for exporters to hit their targets in this climate, said the department.

Electricity hungry enterprises in the garment sector faced many difficulties in production and business during the first quarter, due to an increase in the price of electricity, said Phung Dinh Ngo, director of the Binh Hoa Garment Joint Stock Company.

On top of this, the company lacked skilled workers and could not fulfil some of its contracts, he said.

The company is expected to reach 60-70 per cent of its export target for the first quarter of the year, Ngo said.

The Binh Hoa company does not have enough capital or workshops to keep materials in stock so it has to spend a lot on transportation because of the high petrol price, he said.

Dien Quang Hiep, director of the Minh Phat 2 Company, said domestic prices had increased and it was proving difficult to get importers to agree to higher prices.

Most exporters in HCM City said beside trade promotion programmes, the State should stabilise the exchange rate between the Vietnamese dong and the US dollar to help them overcome current obstacles and calculate production costs as well as build long-term export plans.

Laptop production plant back on track 

Taiwan-based Compal Electronics, the world's second-largest maker of notebook computers, has equipped its new manufacturing facility in Vinh Phuc Province in preparation for a production launch in the second half of this year, according to representatives of the province's industrial zones management board.

Construction began on the US$500 million plant in November 2007. Production had been expected to begin in the first quarter of last year, but the plans were delayed during the global recession, said Compal chairman Rock Hsu.

The new facility was conceived with a capacity of 1.2 million laptops per month or 15 million a year, but this figure had been scaled back to 500-600,000 units per month due to depressed demand, Hsu said.

Compel supplies notebooks to such major brands as Dell, HP, Acer, Toshiba, Fujitsu and Lenovo.

Dell's chairman for the Asian region Amit Midha has said that Dell was in the process of researching the Vietnamese market and intended to build a production facility here due to the country's advantages in terms of labour and other costs.

The Ministry of Information and Communications plans to introduce additional measures later this year to promote the further development of the IT industry, with a focus on attracting foreign investment.

Shares climb for third day
VN-Index continued its upswinging yesterday but by a slowed 0.29 per cent, ending the day at 513.39 points. Meanwhile, trades on the HCM City Stock Exchange continued to pick up steam, reaching a total value of VND2 trillion (US$105.3 million) on a volume of over 45 million shares.

Cable and Telecommunication Materials (SAM) made the most impressive showing, responsible for 2.2 million trades and gaining 3.3 per cent on the day to close at VND31,000 per share.

The company will hold its annual shareholders' meeting at the end of this month, when shareholders will vote on a decision to pay a 25-per-cent cash dividend and a 5-per-cent dividend in shares on last year's profits.

Tong Minh Tuan, deputy head of analysis at BIDV Securities Co, said that this week's rally reflected growing investor interest in the market.

"The increasing excitement is the most supportive factor for market moves, and it is based on the expectation of increased capital flows into securities," said Tuan, suggesting that concerns over inflation had cooled on reports that food prices had begun to stabilise with the passing of the Tet (lunar New Year) holiday.

The State Bank of Viet Nam's monetary policies had also helped ease investor concerns over bank liquidity and tight credit, Tuan said.

Fiachra Mac Cana, head of research for HCM City Securities Co, had a positive outlook in the medium-term on the stock market. "We feel there are increasing signals that March CPI will come in well below the February number, although we still have several weeks to run."

The company said that inflationary pressures were peaking and that, once it saw sustained evidence of a month-on-month decline, the State Bank could well start to ease some aspects of monetary policy by allowing more liquidity to flow into the banking system.

On the Ha Noi Stock Exchange yesterday, the HNX-Index also gained 1.07 per cent to close at 170.16. Volume reached 31.6 million shares, worth a total of VND1.1 trillion ($57.9 million). Kim Long Securities Co (KLS) continued to see heavy activity, accounting for a whopping 6.1 million shares traded.

Foreign investors yesterday were net sellers on both exchanges by a net volume of 194,100 shares.

Ha Noi shipbuilding expo attracts global interest

The 5th International Exhibition on Shipbuilding, Marine Technology and Transportation – Vietship 2010 will open on March 17 at the National Conventional Centre in Ha Noi.

More than 600 organisations have registered to exhibit at the fair, the largest industry exhibition of its kind. Representatives from Japan, South Korea, China, Germany, among other countries will be present.

The exhibition aims to assist the Viet Nam shipbuilding industry achieve its target of sourcing 60 per cent of inputs from local suppliers by 2015.

Quality products to debut at plastic, rubber fair in City

Hundreds of local and foreign companies and firms, including plastics manufacturer Borouge will join in an international fair on high-quality plastic and rubber products at the Saigon Exhibition and Convention Centre from March 18-20.

This is an important step for Borouge to exploit the potential Vietnamese market and meet with customers in a number of industries, William Yau, its marketing director said.

Firm wins contracts to build waste-treatment plant

PEB Steel Buildings Co Ltd has won contracts to build a hi-tech solid waste treatment complex, an integrated waste management facility, and a green factory producing shoes.

PEB was selected by project investor, Viet Star Co, an affiliate of the US-based LEMNA Corporation, to build the second phase of a high-tech solid waste treatment complex in Cu Chi District, HCM City.

The second phase involves constructing 45,000sqm of the 68,000sqm complex. PEB had completed building the first phase in 2008.

The company has also won a contract to build an integrated waste management facility for Viet Nam Waste Solutions in HCM City's Binh Chanh District, invested in by California Waste Solutions of the US.

It has also been asked to construct the Green Industrial Project Nike Shoe Factory in Tay Ninh Province. The 135,000sq.m factory, invested in by South Korean-invested Tae Kwang Vina, will be built on 25ha in the Moc Bai border economic zone.

HCM City attracts over US$330 million in foreign investment

In the past two months, Ho Chi Minh City has granted licences to 29 foreign investment projects (FDI) worth US$333.4 million and five other projects to expand operation, a four-fold year-on-year increase.

Le Thanh Phong, vice director of the City Department of Planning and Investment says that the figure is much lower than the set target of attracting US$8.4 billion in FDI capital in 2010. The city has encouraged businesses to invest in added value fields, such as machinery, automation, bio-technology, information technology, and new materials, he added.

Hi-tech parks, such as Quang Trung Software Park, and industrial processing zones have listed projects to call for foreign investment with attractive incentives.

The city has quickly implemented land compensation and clearance for key zones, such as North-East Urban Area, the Thu Thiem New Urban Area, and the Cang Hiep Phuoc Urban Area to attract more investors. 

Expanding rubber plantation overseas

The Vietnam Rubber Group will accelerate planting rubber trees in Laos, Cambodia, Myanmar and South Africa in the near future.

Currently, the group is managing 160,000ha of rubber with an output of nearly 300,000 tonnes per year. The group aims to exploit around 520,000ha of rubber trees in 2020.

By 2020, Vietnam aims to export around 1 million tonnes of rubber, and become of one of the world’s leading rubber exporters.

Last year, the group earned nearly US$1 billion from exports and US$200 million from profits.

Entrepreneur Forum celebrates 100th International Women's Day 

A forum for women entrepreneurs took place as part of Vietnam’s National Week for Women to mark the 100th anniversary of International Women’s Day (March 8).

On March 6, the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Vietnam Women Entrepreneurs’ Council organized a forum entitled “The Vietnamese economy in the post-crisis period: Opportunities and Challenges.”

Addressing the forum, Deputy Prime Minister Nguyen Sinh Hung praised the role of Vietnamese women in the country’s Doi Moi (Renewal) process and its deep international integration.

VCCI Chairman Vu Tien Loc said that small-and-medium sized enterprises managed by women are mostly involved in trade, services, consumer goods production and farm product processing which are very important areas in the Vietnamese economy, helping create jobs and reduce poverty to boost socio-economic development.

The forum offered a good opportunity for women entrepreneurs to share experiences in emerging from the global economic slowdown and create links to support sustainable development in the near future.

On the occasion, VCCI presented insignias “For the Cause of Business Development” to women entrepreneurs who have won the Golden Rose Cup Award in the 3 consecutive years and to individuals who have positively supported the Vietnamese business community.

First seafood festival to be held in April

Around 100 businesses have registered to take part in the “Potential, Co-operation and Development” event which will be held in Can Tho City on April 22-25.

On March 5 the organising board announced that the festival will focus on the two main issues of seminars and trade promotion.

There will be seminars to discuss planning and developing sustainable aquaculture in Vietnam, orientations to export seafood to potential markets, and developing seafood trademarks. Trade promotion activities will include fairs to introduce achievements in aquaculture, seafood processing, and exports.

The organising board is gearing up preparations for the event such as advertising, organising receptions, logistics, security and capital mobilisation.

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