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BUSINESS IN BRIEF 3/8   2010-08-03 - VietNamNet/VNA

PetroVietnam company launches office in Malaysia

 

 
The Vietnam Petroleum Technical Services Corporation (PTSC) launched its branch office in Kuala Lumpur on August 2, paving the way for setting up PTSC’s subsidiary company in Malaysia.

 

Addressing the launching ceremony, Dinh La Thang, head of the board of directors of the Vietnam National Oil and Gas Group (PetroVietnam), stressed that opening the office in Malaysia marks the unceasing development of the PTSC.

 

Through international bids, PTSC has exported service packages worth up to hundreds of millions of USD to Malaysia in recent years, thus meeting its revenue target as well as contributing to the country’s foreign currency resources, PTSC General Director Nguyen Hung Dung told a Vietnam News Agency correspondent.

 

A member of the Vietnam National Oil and Gas Group, PTSC provides technical services to the oil and gas industry.

 

According to the PTSC General Director, the office in Malaysia will help to the corporation further penetrate the southeast Asian nation and affirm its commitment to providing high-quality services.

 

PTSC has won contracts to provide oil and gas-related technical services to partners in Malaysia . PTSC joined hands with Malaysia International Shipping Corporation (MISC) to win an international contract for providing, installing, operating and maintaining the FPSO Ruby II floating tank under an eight-year contract for the Petronas Carigali Vietnam Limited (PCVL). They also provided the FSO Orkid oil ship for Talisman Malaysia and other services.

 

PTSC has a fleet of more than 20 ships and strives for 100 ships by 2050.

 

FDI fails to meet quality target

 

Foreign direct investment (FDI) has undoubtedly played a major role in the country’s economic growth but it is a mixed blessing, according to economists.

 

It is the Government’s hope that FDI will help develop the industrial and agricultural sectors by bringing in modern technologies but foreign investors have chosen to focus on services.

 

At a recent review of 20 years of FDI flows, economists pointed out that while the money invested has risen sharply, the quality of investments – based on criteria like technology transfer, improving workers’ skills, and modernisation – has not made much progress.

 

Nguyen Mai, chairman of the Foreign Business Association, spoke about an unusual situation that is developing.

 

In the early years, foreign investors mostly entered into joint ventures with local businesses, investing just 70-75 percent of the capital. But now many of them are starting 100-percent-owned businesses.

 

"Although the situation has not been studied enough to understand the consequences, I think it is high time to consider this," he said.

 

Pham Chi Lan, a senior economist, pointed out that many foreign companies falsely report losses to evade tax.

 

She cited the example of the automobile industry. Last year, during the global financial crisis, 60 percent of foreign companies announced losses. The rates in 2007 and 2008 were 70 and 61.3 percent, respectively.

 

Another economist, Bui Kien Thanh, said many FDI enterprises set up factories and hire workers at very low cost in Vietnam , imported raw materials and produced goods for export at very competitive prices.

 

"For a pair of shoes, they cite a price of 10-15 USD on the invoice and pay little or no tax claiming very low profitability. But when the shoe reaches a third nation, they sell it at a much higher price," he said.

 

Since 1996, the Government has provided incentives for foreign investment in agriculture, forestry, and aquaculture. In 2005, the Government conferred special status on these sectors.

 

But all this has failed to attract foreign investors. While investment in these sectors declined, investment in services skyrocketed.

 

In 2008, almost a quarter of FDI was in real estate.

 

"Cash flows into services significantly increased but it did not have much impact on technology transfer and labour skills," Phung Xuan Nha, a researcher said.

 

Around 10 percent of businesses still use technology from the 1970s, 30 percent from the 1980s, and 50 percent from the 1990s, he said.

 

"Quality should be the first criterion for FDI in modernised economies," Mai said.

 

Tran Dinh Thien, head of the Vietnam Economics Institute, said: " Vietnam has for too long exported minerals. Foreign businesses are also allowed to do so. This must stop."

 

In the last three years, Da Nang has cancelled licences it issued for four FDI projects, including a golf course to be built at a cost of 12 million USD.

 

The central province of Quang Nam is completing the formalities to cancel the licence issued for a gigantic tourism project with an investment of 10 billion USD by two US-based companies, TANO Capital and Global C&D, because they did not pay the deposits despite getting a licence as long ago as September.

 

Seafood export values to increase

 

The total export value of seafood is expected to increase by 13.4 percent to 4.8 billion USD this year, the Ministry of Agriculture and Rural Development’s Centre of Informatics and Statistics has announced.

 

World prices for many types of seafood had increased sharply since early this year due to a short supply, the centre said. The shrimp price jumped by 40 percent to 14 USD per kilo in the US while tra fish fillet saw a 20 percent price jump to 3.5 USD per kilo against April prices.

 

The shrimp price in Japan also surged by 18 percent over the early months of the year.

 

The oil spill in the Gulf of Mexico and crop failures in shrimp exporting countries, including Thailand and India , resulted in advantages for Vietnam ’s seafood export enterprises, said the Vietnam Association of Seafood Exporters and Producers (VASEP).

In the first seven months of this year, shrimp overtook tra for first place in export value among Vietnam ’s key seafood export products, the ministry said.

 

The export value of shrimp in the first seven months had a year-on-year increase of 22 percent to 717 million USD, accounting for 35.5 percent of the country’s total seafood export value.

 

The value of tra exports and tuna exports jumped by 7.9 percent and 88 percent, respectively, in the first seven months.

 

In that period, the total national seafood export value increased by 11.6 percent to 2.45 billion USD over the same period last year.

 

Vietnam has exported seafood to 143 countries and territories, with the European Union being the largest export market so far. Seafood exports to the EU reached 164,000 tonnes for 502 million USD in earnings, accounting for 24.5 percent of the country’s total.

 

Other major export markets included the US , Russia , Ukraine , Japan , China and ASEAN countries.

 

Local investors eye overseas projects

 

Vietnamese investors spent a total of 400 million USD for 60 new and existing overseas projects during the first half of the year, according to the Ministry of Planning and Investment’s Foreign Investment Agency.

 

Although the total amount declined compared to the same period last year, investment in overseas industry and retail sectors increased.

 

Vu Van Chung, deputy head of the Foreign Investment Agency’s Foreign Investment Division, said the quality and effectiveness of overseas-investment projects were more important than the total number of projects or total investment volume.

 

Overseas investment projects also help to promote domestic production and exports, Chung added.

 

The agency is currently reviewing the implementation of 500 overseas projects worth more than 8 billion USD.

 

The department is reviewing all of the projects that have received investment licences, especially those that used funds from the State budget.

 

Under the review, about 200 projects have submitted results of their operations.

 

The ministry is also collecting information and opinion from Vietnamese investors to amend Decree 78 on direct overseas investment.

 

The amendment aims to strengthen inspections of overseas projects and to simplify administrative procedures.

 

Most Vietnamese overseas projects are in industry, construction, agro-forestry, fisheries, oil exploration or services.

 

New technologies for fertilizer production in Cambodia

 

 

The Cambodian International Five Star Fertilizer Company on August 2 signed an agreement with China’s Jiangsu Right Machinery Group to transfer technologies for fertilizer production in the Cambodia capital city of Phnom Penh.

 

Two production chains equipped with new liquefied urea technology will be installed for the 65 million fertilizer plant which is jointly invested by Vietnam’s Five Star Group (FSG) and the Cambodian Investment and Development company of Vietnam, a subsidy of the Bank for Investment and Development.

 

As the first modern plant in Cambodia, it expects to produce 500,000 tonnes of fertilizers per year with more than 40 kinds of high-quality products, including environmentally-friendly NHK, organic fertilizers which contribute to balancing the ecological environment and bring about high productivity. It is expected to be put into operation by the end of 2011.

 

With 20 years in operation, the FSG is working on various projects, including a fertilizer plant in the southern province of Long An which began operating in 2006 with a capacity of 300,000 tonnes per year.

 

FDI fails to meet quality target

 

Foreign direct investment (FDI) has undoubtedly played a major role in the country’s economic growth but it is a mixed blessing, according to economists.

 

It is the Government’s hope that FDI will help develop the industrial and agricultural sectors by bringing in modern technologies but foreign investors have chosen to focus on services.

 

At a recent review of 20 years of FDI flows, economists pointed out that while the money invested has risen sharply, the quality of investments – based on criteria like technology transfer, improving workers’ skills, and modernisation – has not made much progress.

 

Nguyen Mai, chairman of the Foreign Business Association, spoke about an unusual situation that is developing.

 

In the early years, foreign investors mostly entered into joint ventures with local businesses, investing just 70-75 percent of the capital. But now many of them are starting 100-percent-owned businesses.

 

"Although the situation has not been studied enough to understand the consequences, I think it is high time to consider this," he said.

 

Pham Chi Lan, a senior economist, pointed out that many foreign companies falsely report losses to evade tax.

 

She cited the example of the automobile industry. Last year, during the global financial crisis, 60 percent of foreign companies announced losses. The rates in 2007 and 2008 were 70 and 61.3 percent, respectively.

 

Another economist, Bui Kien Thanh, said many FDI enterprises set up factories and hire workers at very low cost in Vietnam , imported raw materials and produced goods for export at very competitive prices.

 

"For a pair of shoes, they cite a price of 10-15 USD on the invoice and pay little or no tax claiming very low profitability. But when the shoe reaches a third nation, they sell it at a much higher price," he said.

 

Since 1996, the Government has provided incentives for foreign investment in agriculture, forestry, and aquaculture. In 2005, the Government conferred special status on these sectors.

 

But all this has failed to attract foreign investors. While investment in these sectors declined, investment in services skyrocketed.

 

In 2008, almost a quarter of FDI was in real estate.

 

"Cash flows into services significantly increased but it did not have much impact on technology transfer and labour skills," Phung Xuan Nha, a researcher said.

 

Around 10 percent of businesses still use technology from the 1970s, 30 percent from the 1980s, and 50 percent from the 1990s, he said.

 

"Quality should be the first criterion for FDI in modernised economies," Mai said.

 

Tran Dinh Thien, head of the Vietnam Economics Institute, said: " Vietnam has for too long exported minerals. Foreign businesses are also allowed to do so. This must stop."

 

In the last three years, Da Nang has cancelled licences it issued for four FDI projects, including a golf course to be built at a cost of 12 million USD.

 

The central province of Quang Nam is completing the formalities to cancel the licence issued for a gigantic tourism project with an investment of 10 billion USD by two US-based companies, TANO Capital and Global C&D, because they did not pay the deposits despite getting a licence as long ago as September.

 

Biological fuel fails to attract consumers

 

Biological E5 ethanol, produced by Vietnam National Oil and Gas Group, officially went on sale on August 1, but the environmentally friendly fuel has yet to be embraced by motorists.

 

The fuel, a mixture of 95 percent A92 petrol and 5 percent bio-ethanol produced from cassava, tobacco and sugar cane, is now available at 20 filling stations in Hanoi , HCM City , southern Ba Ria-Vung Tau province and northern Hai Phong and Hai Duong provinces.

 

However, demand is limited.

 

At Hanoi-based Thai Thinh filling station, there were typically long queues of drivers waiting for A92 petrol on August 2, but few callers for E5.

 

Nguyen Van Duc, a petrol pump attendant, said few motorist wanted E5 petrol, even though it was cheaper than other kinds of fuel.

 

E5 costs 15,500 VND (0.8 USD) per litre, while regular A92 costs about 16,000 VND (8.4 USD) per litre.

 

"Many people do not know about this kind of petrol, while those that are familiar with it are hesitant to change their behaviour and are not sure about quality," Duc said.

 

However, he said the number of motorists using E5 had gradually increased partly because it was cheaper but also because it was "cleaner and safer."

 

He said motorists should be made fully aware of E5’s benefits.

 

"I didn’t know that E5 was already on sale," Tran Hoang Nam , a motorist from Hai Ba Trung district, said.

 

"I have no idea if the fuel is as good as regular petrol, so I will wait until it becomes more popular," he said.

 

Nguyen Xuan Son, director general of Viet Nam Petrol Oil Corporation, said E5 had been thoroughly tested to ensure it was suitable for all vehicles.

 

E5 petrol was launched as part of the Government’s biofuel development master plan (up to 2015).

 

E5 petrol will next go on sale at three stations in central Da Nang city, three in central Thua Thien-Hue province and five in the Mekong Delta’s Can Tho city.

 

It will be sold at more than 4,000 stations by the end of 2012.


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Seafood export values to increase   2010-08-03

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