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BUSINESS IN BRIEF 17/2   2011-02-17 - Viet Nam Net

Delta seafood firm processes for export


Go Dang Seafood Joint-stock Co (GODACO), one of the first enterprises in My Tho Industrial Park, in the Mekong Delta province of Tien Giang, has produced 1,350 tonnes of processed aquaculture and fishery products following the Lunar New Year holiday.


The goods earned the company US$3 million in export revenue due to stable inputs and labour costs, said Nguyen Van Dao, general director of Godaco.


Quality to lift sales of dragon fruit


Dragon fruit exports to quality-conscious markets like the US, Japan, and South Korea are expected to double this year to 2,600 tonnes, according to exporters.


An Phu Irradiation Joint Stock Co (API) began exporting dragon fruits to the US immediately after Tet last week.


Vuong Dinh Khoat, API's director, said dragon fruit exports to that market had been constantly increasing after Vietnamese exporters improved quality control and US consumers became familiar with it.


"In the past, dragon fruits exported to the US by sea suffered a lot of spoilage. Now, export companies control quality from orchard to port and so the spoilage rate is low."


Exporters are eyeing shipments of 1,500 tonnes this year against 856 tonnes last year.


They are also hoping to sell the fruit to markets and supermarkets other than just those in Vietnamese and Chinese neighbourhoods.


Exports to Japan are expected to pick up this year after the country lifted its ban on Vietnamese dragon fruit last year.


Nguyen Hong Hung, deputy director of Yasaka Fruit Processing Company based in southern Binh Duong Province, said exports to Japan are likely to top 600 tonnes this year from 420 tonnes last year.


Yasaka is also promoting exports to South Korea which lifted its own ban last October.


South Korean experts are expected to come next week to inspect his company's hot steam sterilisation facilities for dragon fruit, he said.


"At the end of this month or early March, Viet Nam's first container of dragon fruit will be sent to South Korea."


South Korea is a promising market which could buy 500 tonnes this year, Tuoi Tre (Youth) newspaper quoted an official from the Plant Protection Department as saying.


This month the US is likely to lift its ban on Vietnamese rambutan fruit, according to the Department.


Nguyen Huu Dat, director of the Post-Import Plant Quarantine Centre No 2, said fruits shipped to the US must have the growing area code and packing code and be irradiated.


Rambutan could be a better choice for export to the US than dragon fruit since Viet Nam has experience in exporting it and irradiation facilities, he added.


Khoat of API said his company was set to apply for the growing area code and has worked with US partners to prepare for rambutan exports to the US when the ban would be lifted.


The country now has an X-ray irradiation facility in HCM City and Binh Duong Province.


The third with an annual capacity of 150 tonnes will open in the Cuu Long (Mekong Delta) province of Vinh Long in May.


Profits from coffee exports increase by 13%


Viet Nam exported 100,000 tonnes of coffee, worth US$175 million in the first month of this year, said the Ministry of Agriculture and Rural Development (MARD).


MARD added despite a decrease of 30.3 per cent in volume, the export value in January still increased by 13.2 per cent over the same month of last year.


The ministry attributed the high value to record coffee prices.


The price of coffee in the first days of this year stood at VND40 million ($1,900) per tonne.


This had been the highest level within four recent years, the ministry affirmed.


Currently, domestic coffee prices are increasing to between VND40.2 million ($1,910) and VND40.5 million ($1,940) a tonne.


Record prices and farmers deciding to stockpile coffee to wait for higher prices would limit the supply in the coming days. Exporters were also strongly buying coffee. These factors would further push the price up, said General Director of CafeControl Company Nguyen Nam Hai.


Agreeing with Hai, chairman of the Viet Nam Coffee and Cocoa Association Luong Van Tu said the price would continue to rise in the near future.


Tu predicted that coffee prices would increase to about $2,080 per tonne in May, an increase of 48 per cent compared with the last days of 2009.


These results are unsurprising considering a Government decision this year to loan farmers to harvest, stockpile and produce coffee.


With this loan, farmers no longer have to sell coffee in big volumes to recoup their capital like in the past, Tu explained.


In 2011, MARD forecasts coffee production will be more developed with about 548,000ha devoted to the crop, a year-on-year increase of 1.8 per cent. This year, the total yield is estimated to be 1.1 million tonnes, up 4.6 per cent over last year.


Viet Nam has recently become the biggest robusta coffee producer and the second biggest coffee exporter in the world.


Fuel wholesale traders to get more money


The Ministry of Finance has agreed that from today, petrol wholesale traders would receive more money from the fuel price stabilisation fund to retain stability on the domestic petrol market as the world price of oil has increased to around US$105 per barrel.


According to official letter 1786/BTC-QLG issued yesterday, the new rate increased by VND450 per litre to VND1,650 for petrol, by VND700 per litre to VND2,300 for diesel and to VND1,400 for fuel oil and by VND 950 per litre to VND2,150 for kerosene.


The Ministry of Finance has clarified that the fuel price stabilisation fund has not run out of money.


It said VND1.97 trillion remained in the fund and would help keep fuel prices stable until the end of February.


However, oil companies have been claiming that just VND551 billion was left in the fund.


Launched in 2009 by collecting a VND400 surtax on every litre of petrol sold, the fund has been governed by the Ordinance on Price.


The mechanism limits the number of times oil prices may be raised in a year.


Oil companies can increase retail prices by 7 per cent if world prices rise by a similar amount within 30 days. If global prices rise by 7-12 per cent, they are permitted to increase prices by 7 per cent plus 60 per cent of the surplus. The difference will be made up by using money from the fund.


If prices rise by more than 12 per cent, the Government will cut the import tax.


Petrol wholesale traders have been complaining recently that they incur a loss of VND2,400 on every litre they sell.


The Viet Nam National Petroleum Corporation (Petrolimex) said the price of a barrel of A92 petrol had surged to $105.4.


After adding expenses, the domestic retail price should be set at VND18,461 for a litre of petrol to break even but traders have to sell at VND16,400, a loss of more than VND2,000.


Claiming the subsidy from the fund fails to make up this loss, some companies have reduced commissions for retailers, causing petrol stations to stop or cut sales.


Tuoi Tre newspaper quoted a Ministry official as admitting that some petrol stations had not reopened after Tet.


The ministry would instruct oil companies to persuade their agents to sell petrol, he said.


They could not stop selling just because of lower profits, he said, warning the Market Management Department would crack down on such violations, even cancelling licences if required.


Global recovery sputtering, says accountancy group


The global economic recovery, which had slowed down in the past few months, has now gone into reverse, according to a worldwide survey of finance professionals by the UK's Association of Chartered Certified Accountants (ACCA).


The results of ACCA's Global Economic Conditions survey for the fourth quarter of 2010, show that twice the number of accountants as compared with the previous quarter (28 as opposed to 14 per cent) believe that the recovery is slipping away.


Faith in the recovery is also at its lowest level in 18 months, with less than a third of respondents (32 per cent) believing that conditions are improving - or are about to. In the previous quarter nearly a half (47 per cent) were optimistic about economic prospects, said an ACCA release.


As a result, business confidence, as recorded by the survey of more than 600 professional accountants from around the world, has now gone into negative territory for the first time since the third quarter of 2009, with the share of respondents reporting no change in their confidence levels (37, down from 42 per cent in Q3, 2010) falling below that of respondents who had lost confidence in their organisations (38, up from 28 per cent).


Manos Schizas, Senior Policy Adviser with ACCA, said: " The issue for finance professionals for some time now has been the question of whether the economy, which had been showing signs of recovery, had taken a pause for breath or was about to take a downturn."


According to him, the findings of this survey suggest that finance professionals think the downturn is now the more likely scenario.


While the SME sector appears to be the most resilient, followed by the private, non-financial sector, there has been a significant drop in confidence among accountants working in large financial services companies.


This may be a response to developments such as the economic crises in some European countries. Confidence levels among public sector accountants are lower than were seen during the depths of the downturn and the loss of confidence in this sector continues to accelerate, the survey shows.


Regulations aim to boost stock liquidity


The Government aims this year to complete the legal framework governing the securities market, says Deputy Minister of Finance Tran Xuan Ha.


"We intend to revise all regulations, from decrees to circulars, creating a complete system of regulations at the second level of legal effect for the stock market," Ha said earlier this week, as the stock market reopened following the week-long Tet (lunar new year) holiday.


Earlier, Nguyen Son, head of the market development division of the State Securities Commission, had also said that provisions which would improve the liquidity of shares on the market would be included in the draft circular on securities transactions, including provisions allowing investors to open multiple trading accounts and permitting margin trading (securities to be bought and sold within a single trading day).


"The commission is currently editing the circular and will soon submit it to the Ministry of Finance for approval and issuance," Son said.


Changes in the Law on Securities, recently passed by the National Assembly, might help increase the level of investor participation in the market, agreed Sai Gon Asset Management general director Louis Nguyen.


However, although there had been many improvements, the regulatory framework still lacked provisions allowing for open-ended funds and large-scale exchange-traded funds (ETFs), Nguyen said.


As the global economy strengthened, the Vietnamese stock market would once again become a popular destination for foreign investment, especially from Japan, Taiwan and South Korea, said MBCapital general director Phan Anh. Therefore, market regulators needed to improve the legal framework, introduce new products, as well as boost market transparency and increase investor confidence in the market.


"To create favourable conditions for investment funds to attract foreign capital, State administrative agencies should revise the legal framework to allow for new products in the asset management market such as open-ended funds, securities investment companies and real estate funds," Anh said.


Foreign investors pulled US$1.9 billion out of the market in 2008 and $230 million in 2009, but they poured $900 million back in 2010, said State Securities Commission chairman Vu Bang, who pointed to the latter figure as a positive sign that foreign capital inflows could further increase this year.


"While foreign capital inflows tended to shrink worldwide in 2010, they rose in Viet Nam," Bang said.


Optimism over foreign investment


Viet Nam's Foreign Investment Agency (FIA) was optimistic about the level of foreign investment in Viet Nam this year, predicting 10 per cent growth on last year.


FIA said in the first month, total registered foreign investment reached approximately US$1.2 billion, four times higher than the same period last year.


The bulk of the investment so far has come from the First Solar project in the technology sector. Siemens has recently been granted a major licence which they are hoping to expand on this year.


The largest US-based manufacturer of solar panels, First Solar received a Vietnamese investment permit to build a $1 billion factory in Cu Chi District, HCM City. The total investment capital for the project in the first phase (till 2012) was $300 million.


Vice President of First Solar Tymen de Jong said the construction of the plant to produce thin-film solar modules was expected to start this month to be ready for operation in September next year.


He noted his group chose Viet Nam because of the competitive business environment and the Government's enthusiastic support.


Economists said it was one of the biggest foreign-invested projects in Viet Nam and would lead the way for more solar panel production projects here as US companies looked offshore to build their factories.


Chairman and general director of Siemens Viet Nam Erdal Elver expressed optimism about Siemens' operation in Viet Nam.


He said the company was waiting for the adjustment of the new investment licence to increase business operations and production capacity of its factory in the southern province of Binh Duong to keep pace with increasing orders.


The planned expansion would produce more high-technology busbar systems and introduce new product lines in Viet Nam.


Siemens Viet Nam also aims to expand its bulb factory to increase operational efficiency.


Herb Cochran, executive director of Amcham in HCM City, forecast more US companies in hi-tech sector would invest in Viet Nam this year.


According to the latest survey of consulting firm Grant Thornton, 65 per cent of 200 company leaders said they had a positive outlook about the Vietnamese economy in the next 12 months.


Seafood exports hit $320m in January


The country's seafood exports topped US$320 million in January, up 2.3 per cent year-on-year, according to the Ministry of Agriculture and Rural Development's Directorate of Fisheries.


Seafood producers were encouraged by the news after previous warnings indicated they would face difficulties this year, it said, adding that Japan, South Korea, mainland China, Hong Kong and Germany remained key importers of Vietnamese seafood products.


Experts predicted that the domestic seafood industry had a chance to reach the $5 billion export goal set for this year because the world's seafood demand was forecast to increase sharply while some other exporting countries were experiencing depleting fishery supplies.


In order to improve export value, the ministry suggested the sector to make adequate investment in qualified and hygienic breeding to ensure sufficient supply and to further develop key products such as shrimp, tra and tuna.


Adequate overseas trade promotion, effective market predictions and closer links among domestic seafood processors were also necessary, it said.


Viet Nam's seafood exports ranked sixth among the world's 10 leading seafood exporters and fifth in Asia behind China, India, Indonesia and the Philippines.


Last year, the country's seafood export value reached $4.94 billion, an increase of 16.3 per cent on the previous year's figure. Results could be attributed to the Government's policies that support fishermen and encourage them to use modern processing and preservation technology.


The fishing industry aims to increase production by 8-10 per cent per year and to export 6.5-7 million tonnes of seafood worth $8-9 billion by 2020, under a development strategy approved recently by the Prime Minister.


Under the plan, which would require an estimated VND57.4 trillion ($2.9 billion), the industry would be industrialised and developed to increase output, improve quality and enhance competitiveness.

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