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BUSINESS IN BRIEF 26/7   2010-07-26 - VNA, SGGP

ietnamese firms focus more on Cambodia


Vietnam ’s business groups have over the past year revved up investment in Cambodia and actively contributed to the local social security programmes, said the Association of Vietnamese Investors in Cambodia (AVIC).


At a review meeting in Siem Reap city on July 25, the AVIC said Vietnam has become the third largest foreign investor in Cambodia , after China and the Republic of Korea .


According to statistics presented at the meeting, Vietnamese businesses were granted licences for 63 projects within the past year with a combined investment capital of 900 million USD.


Various economic groups and corporations in Vietnam have entered the Cambodian market, investing in different areas including telecommunications, finance and banking, air transport, agriculture, light industry, rubber and industrial tree planting, mining, energy and healthcare.


Prominent among Vietnamese investors are the Vietnam military telecom corporation (Viettel), the Bank for Investment and Development of Vietnam (BIDV), the Vietnam Coal and Minerals Corporation (VINACOMIN), Vietnam Airlines and Hoang Anh Gia Lai group.


Asides from trade and investment activities, Vietnamese businesses have over the past year provided funding to the local social welfare schemes, with the total pledge mounting to 6 million USD.


As part of the move to promote Vietnamese investment in the country, the Bank of Investment and Development of Cambodia, a Cambodia-based affiliate of BIDV, launched a new branch in Siem Reap.


The BIDC has earlier set up two branches in Ho Chi Minh city and Phnom Penh in order to create a link between the financial markets of Cambodia and Vietnam and provide the most perfect financial services packages for Vietnamese enterprises wishing to invest in Cambodia.


Trade deficit climbs to 7 billion USD


The country’s trade deficit is expected to hit nearly 7 billion USD in the first seven months of the year, accounting for 19.8 percent of total export revenue, according to VietnamGeneral Department of Customs.


Export revenue in the first seven months of the year reached 35.21 billion USD, an increase of 18.2 percent compared to the same period last year, while import revenue was 42.2 billion USD, a year-on-year increase of 28.5 percent.


The trade deficit in the first half of July reached 690 million USD, much higher than the same period of last May and June. The country earned 2.72 billion USD from exports, but spent 3.41 billion USD for imports.


The trade deficit from July onwards is usually higher than previous months because enterprises will import more materials for production to prepare for the year-end season, according to economists.


To narrow the trade deficit in the remaining months of the year, experts said the Government should impose drastic measures to control imports, particularly products that local companies can make.


Yoghurt expected to lead growth in dairy market


The Vietnamese dairy industry hopes to grow at 20-25 percent annually through the next decade spearheaded by yoghurt products, according to the Animal Husbandry Department.


Yoghurt accounts for just 12-20 percent of milk-based products in Vietnam compared to 50 percent in many countries.


The Vietnam Dairy Products Joint Stock Company, or Vinamilk, is the largest player in the dairy market, selling fresh and processed milk, sweetened condensed milk, yoghurt, and other products.


Its revenue from yoghurt sales last year was 2 trillion VND (105.3 million USD), which accounted for 60 percent of the total yoghurt market.


Many other companies like the International Dairy Products Joint Stock Co (IDP) and Kido Dairy Products JS Co have recently entered the yoghurt market, some with success.


Nguyen Tuan Dung, deputy general director of IDP, which makes Ba Vi yoghurt, said realising the potential of the market, IDP has bought probiotics, a kind of micro-organism that aids fermentation, from Denmark to make yoghurt products.


For IDP, revenue from yoghurt is growing at the fastest pace among all dairy products, he revealed, adding that its Ba Vi brand is becoming popular around the country, especially in the north.


To improve their competitiveness, many companies are developing their own dairy farms to source raw materials while some others have opted to have tie-ups with dairies.


IDP, for instance, offers interest-free loans to farmers in Ba Vi district near Hanoi to buy dairy cows and equipment like milking machines, with farmers repaying them by supplying milk.


This has not only helped the company set up a stable source of supply but also brings a considerable income to farmers, Nguyen Manh Khan, deputy chairman of the Tan Linh Commune People’s Committee in Ba Vi, said.


Work starts on Vietnam’s first sponge iron plant 


The Kobelco Iron Nugget Vietnam Limited Company (KINV), a subsidiary of Japan’s giant Kobe steel group, started July 24 to construct the first sponge iron plant in Vietnam at a cost of US$1 billion.


At the ground-breaking ceremony for Vietnam’s first sponge iron plant in the central province of Nghe An on July 24


The plant will cover an area of more than 60,000 square meters in the Hoang Mai Industrial Zone, Quynh Luu District, the central province of Nghe An.


The plant will apply environmental-friendly ITmk3 technology, which does not discharge fumes.


Construction of the plant is divided into two phases, with two plants built in each phase.


The first plant is set to be put into operation in 2013 with an annual capacity of one million tons, half for domestic consumption and the rest for export to Japan.


KINV’s plant will mainly exploit iron ore from Thach Khe iron mine in Ha Tinh province and coal from Quang Ninh province.


Once in operation, the plant is expected to create employment for 200 skilled workers.


Thai fruits leave domestic fruits behind 


While domestic fruits do not have a market and are experiencing a freefall in prices, Thai fruits are flooding local wholesale markets along the southwest border of Vietnam, causing trouble for fruit planters in the Mekong Delta.


Most of fruits sold at Chau Doc, Tinh Bien and An Phu border markets in the Mekong Delta province of An Giang are from Thailand. They include durian, mango, mangosteen, tamarind and langsat.


Trucks from Cambodia carrying Thai fruits, queue up daily at the Tinh Bien International Border Gate for customs declaration to enter Vietnam.


Hundreds of tons of foreign fruits are imported to An Giang Province everyday; afterwards, they are distributed to all over the Mekong Delta region, Ho Chi Minh City, and even to central and northern provinces.


Tu Tieu, a trader of Thai fruits at the Tinh Bien border market said, “I have singed contracts with Cambodian wholesale markets to import average 7-10 tons of various fruits per day to sell in the province and to wholesale markets in provinces from Can Tho City to Ca Mau Province and in Ho Chi Minh City.”


She said Thai fruits are much cheaper than their Vietnamese counterparts. But due to customers’ habit of using foreign products, traders usually raise prices by two or three times when selling to other provinces.


Nga, a wholesaler in Ninh Kieu Wharf of Can Tho City, said Thai langsat, mangosteen and tamarind are all sold at VND35,000 per kilogram. Though the price is high, many people still buy them.


Shoppers like Thai fruits because they are delicious and look beautiful. It seems more polite to present someone with Thai than Vietnamese fruit, she added.


Meanwhile, prices of Mekong Delta fruits, especially dragon fruit, guava and rambutan are up and down irregularly.


Le Quang Tu, a farmer from Vinh Long Province’s Tra On District, groaned that “Though my orchard is currently full of ripened rambutans, I am unhappy. A few months ago, merchants came to my farm to suggest buying them at a price of VND10,000-15,000 per kilogram, now the price has dropped to VND3,000-4,000 per kilogram.”


“Few days ago, I brought them to Can Tho to sell retail, but they also fetched only VND6,000 per kilogram,” he added.


In the same boat, farmer Thanh in Cho Gao District, Tien Giang Province, said, “Yesterday, we brought few hundreds of kilograms of dragon fruit to Can Tho to retail at VND3,000 per kilogram on sidewalks, but they didn’t sell.”


On the contrary, prices of local specialties including durian, mangosteen, langsat, king orange and high-quality rambutan are so high, about VND25,000-35,000 per kilogram, that people do not want to buy them.


Most Thai fruits imported into Vietnam via the southwest border are cheaper than Vietnamese fruits of the same kind.


At present, a kilogram of mangosteen or langsat which is purchased from Cambodian wholesale markets goes for US$1, then they are sold in Vietnam at VND25,000-30,000 per kilogram, from VND10,000 to 15,000 cheaper than their Vietnamese counterparts.


Monthoong durian from Thailand and Campot durian from Cambodia are traded at VND25,000-30,000 per kilogram, while Vietnamese durian costs VND35,000-40,000 per kilogram.


Dr. Nguyen Minh Chau, head of the Southern Fruit Research Institute, said prices of Vietnamese special fruits are high because they have to go through so many traders before reaching markets.


In reality, planters sell their fruits at very low prices, he added.


Dr. Chau said prices of Thai fruits are low and stable because Thai farmers’ production technology and distribution system are very simple and cost little.


Many foreign buyers have ordered hundreds of tons of Mekong Delta fruits for purchase, but provinces have failed to supply fruits that meet required quality, hygiene and safety standards, he said.


Local farmers have yet to focus on developing areas specializing in the growing of some specific fruits, instead they have grown whatever other farmers grow, he added.

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