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BUSINESS IN BRIEF 24/3   2011-03-24 - Viet Nam Net

Farmers employ organic methods


Local farmers in Thua Thien- Hue Province have found a way to grow commercial vegetables free from chemicals thanks to a Japanese agricultural project that uses charcoal.

The Bach Ma Charcoal Project, organised by Bach Ma National Park and Tokyo University of Agriculture and Technology, with funds from the Japan International Co-operation Agency (JICA), has been operating in Khe Su Commune in Phu Loc District, on the edge of the national park, for three years.

The park management hopes the project will improve local livelihoods to discourage the 200 farming families in the commune from illegally using the national park as a source of income.

The project has carried out training, technology transfer and funding to farmers in the commune to help them produce charcoal and vinegar from agricultural waste like grass, saw dust, rice husk and hay.

Cao Thanh, a commune resident taking part in the project, says that he is happy to run his farm absolutely free from chemical fertiliser and pesticide.

"With two kilns built by the project to produce charcoal and vinegar, I have my own fertiliser and pesticide, which is good for the environment and our health," Thanh says.

The project provides charcoal for burning, treatment for pig skin diseases, and medicinal food for livestock.

Nguyen Vu Linh, deputy director of the park, says: "The charcoal from the project has made a considerable difference to the locals' income. It will be expanded in the next phase to other communes in the buffer zone around the park."

The three districts in the buffer zone are the province's Phu Loc and Nam Dong districts, and Dong Giang District in neighbouring Quang Nam Province.

"When the project expands, it could reach all 58,000 farmer households living in the park's buffer zone, contributing to a great change of livelihood and environment in the zone, and the protection of nature in the park," Linh tells Viet Nam News.

Charcoal, produced by heating organic materials without oxygen, is used as a non-smoke fuel, deodoriser, fertiliser, and water purifier. Charcoal can be made in two kinds of Japanese traditional kilns, made from either earth or bricks. They produce different types of charcoal.

Charcoal made from trees can be used as fuel or powdered to treat diarrhea in pigs, or to purify water for drinking.

Softer agricultural wastes like rice husk, sawdust, grass or hay produce charcoals that can be used as fertiliser for poor soil and extra food for pigs and chickens. This kind of charcoal can be mixed with Bokashi, a kind of compost, to produce charcoal Bokashi to replace chemical fertilisers. Compost is a product of decaying organic matter like leaves and manure.

The charcoal kilns produce a vapour at the chimney when the temperature is between 85 to 100 degrees Celsius. Vinegar is produced when the vapour condenses.

After a process of distilling the liquid to remove tar, the vinegar can be used as a pesticide; a skin disease treatment for cattle, and deodorant to sterilise sheds for new crops.

According to Phan Quoc Dung , the project's field assistant, these techniques have been used for more than 300 years in Japan and recently in Thailand and Cambodia.

Dung says he is applying for the charcoal and vinegar that he produces to be tested by Hue University of Agriculture and Forest and the Centre for Agricultural Research and Development to be officially approved as safe to humans.

When they get approval, the project managers plan to set up teams of farmers to grow vegetables commercially for the provincial market. So far, 45 out of 200 families in Khe Su Commune are part of the project. Around 10 of the families have started earning incomes from selling organic vegetables and souvenirs, while the rest have replaced chemical fertilisers and pesticides with organic charcoal products.

The park's management board has started to support farmers who make the unique charcoal souvenirs by displaying them at the park's tourist desk. The farmers have also supplied the park with charcoal fertiliser to grow strawberries in its green house.

The project management is willing to transfer its technology and achievements to any non-profit organisation nationwide to help improve the livelihood of farmers, says Saito Atsuko, the project's coordinator.

Linh of the park expects more JICA funding for the second phase of the project, which could include introducing homestay tourism.

"We will launch this homestay service in June if we get approval for the second phase. It is not only significant to the park in terms of enhancing the bond between the park and locals but also helps the farmers earn more income," he says.

Dong Nai businesses moan woes from credit tightening

High interest rates, inflation, problems buying dollars and reduced access to bank loans were high on the agenda of a seminar in the southern province of Dong Nai late last week.

The seminar attended by about 500 enterprises in the province attracted potential solutions from economists and businesses.

Phan Van Binh, director of Nhat Nam Company operating in wood manufacturing and mechanical products and services, said that 90% of his company’s turnover came from manufacturing, but all the money from services had to go back into staff and costs. He said most Dong Nai businesses didn’t have enough capital to run.

The high interest rates deterred enterprises from borrowing, he said. “Enterprises will not invest in new equipment and technology to make manufacturing capacity and quality more competitive,” he said, adding, “If the high interest rates continue, companies will go under.”

He suggested the Government should issue similar policies to 2009 with interest rate support and extended tax deadlines.

At the seminar, Nguyen Chi Cong, director of Cong Tri Co., Ltd, which breeds pigs in the province, said with the current high interest rates, his company was forced to rationalize business and cut staff. The company has 2,000 pigs from more than 10,000 pigs two years ago, because of low pork prices and increasing input costs and interest rates.

Cong complained that enterprises in the breeding sector were subject to price stabilization prices programs but didn’t get interest rate support from banks. “We are paying the same interest rates as industrial manufacturing enterprises, while price stabilization programs force us to keep prices down,” Cong said.

He said, Vietnam is an agricultural country where labor-intensive wet-rice is grown, but 90%  of livestock feed needs to be imported putting breeders at the mercy of the sharp increase in dollar value, bank interest and inflation.

“Now we must pay interest of 1.6% to 1.8% per month, while two years ago, it was only 0.8% per month,” he said, adding, “Many enterprises in the sector are selling their farms to pay the high interest.”

Cong suggested the government and banks should work together to bring the rate down to 0.8% per month.

On top of steep interest rates enterprises said it was very hard to get loans. To get a loan, Pham Duc Binh, chairman and general director of Thanh Binh Corporation said that some banks demand enterprises to be transparent and then charge hidden fees that don’t go on the accounts.

Binh said the central bank needs to control the items of the lending interest of commercial banks. For example he said steel prices are increasing, but some commercial banks gave steel trading companies loans to hoard steel to bump up the price more.

Many small and medium enterprises (SMEs) complained they can’t buy dollars from banks even though they were entitled to access to foreign currencies to do business overseas.

The central bank regulations state if you present documents showing you are going abroad for travel, education, medical treatment, and other legitimate reasons you can buy dollars, but they said that wasn’t the case at Dong Nai’s banks.

In discussions about the central bank’s credit tightening for property transactions, some enterprises complained that with the oversupplied market and inflated prices it is unnecessary for banks to pour money into the sector.

Tran Minh Tuan, deputy governor of the State Bank of Vietnam, said interest rates would drop when inflation falls. The support provided by the Government in 2009 was only possible because of different economic conditions, he said, adding it wasn’t possible now.

He said credit tightening for property transactions was needed to provide the capital to manufacturing sectors.


Workshop suggests Vietnam change growth model

Experts have proposed Vietnam should think about changing its growth model to ensure the sustainability of future growth.

High inflation and macroeconomic instability are due to the growth model being embraced by the country for a long time, Tran Dinh Thien, director of the Vietnam Institute of Economics, said at a recent workshop in the Mekong Delta city of Can Tho.

But this growth model is no longer appropriate in current conditions, he noted, adding changes should be made to enable it to adapt to the changing environment.

Thien suggested the banking system be restructured, the central bank be made independent and commercial joint-stock banks be overhauled.

The Government should cut public spending, raise wages in the State sector and modernize key industries, he said.

Economist Pham Do Chi stressed Vietnam should reduce its budget deficit from 4.5% of gross domestic product (GDP) in 2011 to 2.5% in 2015 and lower credit growth to 16-17%. As for this year, the central bank has set a target of keeping credit growth below 20%, down from last year’s 27.65%.

Ha Van Hien, head of the National Assembly’s Economic Committee, said at the workshop Vietnam had emerged as a middle-income country but was facing many challenges like inflation, volatile exchange rate, balance of payments deficit, and financial and monetary market instability.

There are other shortcomings such as poor infrastructure, low-quality manpower, environmental pollution and a widening rich-poor gap, he said.


Coffee industry should turn to local market: experts

Vietnam’s coffee industry should focus more on the local market as this is a way of ensuring sustainable development, international experts said.

The industry is still far from achieving sustainable development due to its heavy reliance on foreign markets, they said at the Buon Ma Thuot Sustainable Coffee Development conference held on Sunday in Dak Lak Province, the country’s key coffee growing area.

José Sette, executive director of the International Coffee Organization, said Vietnam was the world’s second biggest coffee exporter and biggest Robusta exporter with 18.4 million bags last year, but it exported almost all of its output.

Local coffee consumption in Brazil and Vietnam is in stark contrast, Sette said, adding Brazil exports nearly 40 million bags of coffee but saves 19 million bags for local sale while Vietnam sets aside just over 5% of its output for local consumption.

Robério Oliveira Silva, director of the Coffee Department of the Brazilian Ministry of Agriculture, Livestock and Food, said the mistake that producing countries usually make is to neglect local demand.

“We should learn from the past that neglecting the local consumption will make the producing country suffer if turbulence breaks out on global markets,” he said.

According to Silva, Brazil is prepared for any scenario. “We have set up coffee funds in order to protect farmers from losing out when coffee prices on the market collapse. We have to maintain their investments in farming and stockpiles. One of our rules in sustainable development is local consumption.”

“We compete in the global market on the one hand and try to satisfy local demand and stabilize prices on the other hand,” said. He reckons Vietnam has an important role in the global coffee industry and sustainability should be its key target for the time being.

Professor Tom Canon, economic strategist from the UK’s Liverpool University, who is set to publish a book on coffee, insisted national commitment be essential for a bright future in the coffee industry.

National commitment has to be real and deep, so Vietnam or any producer has to push domestic consumption, he said.


Garment sector benefits from FTAs with S.Korea, Japan

Domestic garment exporters are reaping the initial fruit from the region’s free trade agreements (FTA) with South Korea and Japan, said an industry source.

Le Van Dao, vice chairman of the Vietnam Textile and Apparel Association (VITAS), said recently that the garment industry had benefited from the ASEAN free trade pact with South Korea and Japan. However, he noted, the FTAs between ASEAN and other partners like China, New Zealand and Australia have offered little advantage for local apparel makers.

For the FTA with South Korea, the rule of origin is based on the production process rather than the content of apparel products.

According to Vietnam’s Customs, Vietnam’s textile and garment exports to South Korea last year increased by more than 78% to US$432 million. The same year saw Vietnam’s garment shipments to Japan surging about 14%.

Tran Quoc Khanh, deputy minister of industry and trade, said 80% of the nation’s exports to Korea in 2009 enjoyed preferential tariffs from the ASEAN-Korea FTA. Meanwhile, about 28%, 22% and 12% of Vietnam’s exports to Japan, China and ASEAN respectively benefited from the related FTAs.

Statistics from the Vietnamese customs show South Korea last year surpassed Japan to become the second biggest exporter of commodities to Vietnam, behind China. The value of South Korea’s products shipped to Vietnam accounted for 11.5% of the total import value of the ASEAN country.

In 2010, two-way trade between Vietnam and Korea rose 42% year-on-year to US$12.85 billion, with Korea importing US$3 billion worth of products from Vietnam, and exporting US$9.76 billion worth to the country. It means Vietnam still has a trade deficit with South Korea.

South Korea’s products imported by Vietnam are mainly clothing, materials for footwear production, equipment and machinery, steel, equipment components and parts. Last year, Vietnam imported US$1.2 billion worth of iron and steel, US$1.1 billion of clothing, and US$1.1 billion of equipment, component and parts from South Korea.


Huong Giang, Turkish Airlines cooperate in outbound packages

The local firm Huong Giang Travel is teaming up with Turkish Airlines for outbound tours for people from Vietnam to explore the destinations that the carrier flies to in parts of Asia, Europe and the Middle East.

Ngo Minh Duc, director of Huong Giang Travel, told the Daily on the phone on Monday the outbound tours arranged by the company and the airline took in attractive old and modern places, including ancient heritage sites in Turkey, Israel as well as Bangkok.

Duc said Huong Giang Travel had chosen Israel because Turkish Airlines currently offered convenient connectivity for its flights from HCMC to Bangkok, Istanbul and Tel Aviv. Moreover, Turkey and Israel are emerging as the destinations for Vietnamese travelers.

Turkish Airlines is the carrier of customers for the outbound tours while Huong Giang Travel makes use of the airline’s wide flight network to design appropriate programs for travelers from Vietnam to visit places of great historical and cultural value in Israel, Turkey and elsewhere in the world.

Duc said Huong Giang Travel would assist Vietnamese passport holders in completing all required procedures and getting visas from Israeli and Turkish embassies in Hanoi for their entry into the two countries.

Huong Giang Travel has launched a 10-day tour that combines renowned ancient destinations such as Nazareth, Jerusalem, Bethlehem and the Goreme Open Air Museum in Cappadocia. This “Hello Israel and Turkey” package costs US$3,719 for guests departing from HCMC and US$3,949 for those from Hanoi.

Huong Giang is working with Turkish Airlines over free and easy packages of air-tickets, hotel rooms and breakfasts for people in Vietnam to tour Bangkok. The prices start from US$259 per person for economy-class air-tickets and from US$409 for business-class reservations.

Duc expected the free and easy ‘one-stop-shop’ packages would attract customers who want travel from HCMC to Bangkok for a weekend of relaxation and shopping.

Huong Giang has launched the packages after Thailand’s aviation authority approved Turkish Airlines to disembark and welcome new guests on board its planes at Suvarnabhumi International Airport, including those passengers on its flights to and from HCMC.

Turkish Airlines commenced its Istanbul-Bangkok-HCMC service on Tuesdays, Thursdays, Saturdays and Sundays in late December last year. The airline uses the 270-seat Airbus 340 aircraft for this route, which arrives at Tan Son Nhat at 4:50 p.m. and leaves this international airport in Vietnam’s economic center at 8:30 p.m. of those days.


Soai Rap River dredging project to go up for bid again

The government of HCMC has allowed the Department of Transport to put up a Soai Rap River dredging project for rebid, citing the impact of the volatile exchange rate between the local currency dong and the U.S. dollar.

Tran The Ky, deputy director of the department, said the cost of phase one of the project had surged sharply due to the depreciation of the dong against the dollar, making it impossible for the investor to arrange as sufficient funding as approved.

Ky’s department has got approval from the city government to take over the project from Tan Thuan Industrial Promotion Company Ltd. (IPC) which originally planned to invest around VND1.5 trillion and raise this amount from other sources than the state budget.

In addition to HCMC, the project covers three other provinces – Tien Giang, Long An and Ba Ria-Vung Tau and is aimed at paving the way for carrying out a plan to relocate inner-city ports along the Saigon River.

In the original schedule, the river should have been dredged to a depth of 9.5 meters in 2009-2010 to allow 30,000-50,000 DWT ships to navigate, 11 meters in 2012-2013 for vessels of 50,000-70,000 DWT, and 12 meters after 2015 for ships larger than 70,000 DWT.


VinaProjects manages Nha Trang initiative

VinaProjects says it has been appointed as project manager for a multipurpose property initiative underway in the resort city of Nha Trang.

The project and construction management firm officially opened two representative offices in Danang and Hanoi recently to facilitate its business development in Vietnam in its bid to become a leading real estate provider in the country.

The Nha Trang Center project, located on the main beach of Nha Trang City, consists of a 15-storey tower with 115 serviced apartments, a 250-room four-star hotel tower and five floors of podium with a department store, retail, food and beverage outlets, a bowling alley, karaoke lounge and restaurants.

The company was also appointed as client representative for the five-star Sheraton Nha Trang. The hotel has 285 rooms and other serviced facilities such as spa, food and beverages and meeting rooms. The hotel was officially opened in May last year.

VinaProjects is a joint venture between VinaCapital Group and the Hong Kong-based inProjects Group.

“We have been working with clients on multiple projects located in northern, central and southern regions, thus these representative offices will further enhance our efficiency and improve our service delivery to all our clients countrywide,” said VinaProjects general director Paul James.

James said the company’s Vietnam portfolio has grown to some 30 management and urban planning projects after one year of operation.

Besides the two projects in Nha Trang City, the company has managed The Garlands in HCMC, Azura World Trade Center, Ocean Villas and Golf Club House in Danang, Times Square in Hanoi and Pho Noi in Hung Yen Province.

James said opportunities for project management consultancies were inevitably lower than before as many developers were waiting for the ailing real estate market to recover and others changed from high-end to mid-end residential to align with the growing change in market demand.

“It is no secret that we are facing tough times but opportunities still exist for companies who offer a diversification of quality services, good people and good systems to support their capability,” James said, adding that project managers would need to find new ways to set themselves apart from the competition.

James insisted that with a flood of high end apartments coming online this year, the Hanoi and HCMC markets were expected to experience aggressive competition between apartment developers. There were no clear signs from the local economy or financial market to boost the property market, making it very difficult for new high-end developments to sell.

James said there was a strong outlook for mid-end apartments located in HCMC, but this was dampened due to high interest rates, low payment capacity, lack of liquidity driving the majority of local residents and the investors’ ‘wait and see’ attitude.


City seeks changes to land law

HCMC authorities have called for an overhaul of the 2003 Land Law to cope with outstanding problems associated with this legislation though it has played in a role in the city’s development process.

The law has significantly contributed to the city’s social and economic development since it came into force in July 2004, said Dao Anh Kiet, director of the city’s Department of Natural Resources and Environment.

Speaking at a recent conference, Kiet said HCMC had attracted the largest number of foreign invested projects, at around 3,800 as of late last year. Those projects have total investment capital of US$29 billion, and the property sector accounts for a majority.

Kiet said that in the past seven years, the property sector had contributed significantly to the city’s budget, at about 7% of the city’s annual budget.

However, some provisions in the current land law have become inappropriate in current conditions, causing problems for not only law enforcement agencies but also land owners and property developers.

Among the 11 outstanding problems, Kiet cited inconsistent regulations as the most pressing issue. The laws on land, investment, construction and housing, and even Government decrees have exposed clashing provisions.

These laws have come out under different circumstances, so clashes between them abound, he said.

The land law lacks a mechanism to ensure equal benefits for all stakeholders, namely the Government, land users and project owners.

The land use fee, according to the law, must be decided by market prices, which is described as unfair for investors. Project developers use their own money to clear land and thus increase its value but the law specifies the land use fee is based on the value of cleared land which is normally far higher than the original value.

With such a regulation in place, the land use fee is a variable which makes it difficult for investors to project their internal rate of return.

Kiet said HCMC now had 46 housing projects that had completed the required procedures for land but had not been able to pay the land use fee since relevant agencies had yet to decide on what market prices to apply.

The city suggested land should be governed by the land law only to avoid clashes with regulations issued by different ministries.


PV Oil to build fuel plant in Cambodia

PetroVietnam Oil Corporation (PV Oil) is working on a project to build a gasoline and diesel oil manufacturing facility in Cambodia with an initial annual capacity of around 200,000 tons.

The affiliate of the state-owned Vietnam National Oil and Gas Group will spend a total of some US$50 million constructing the plant.

Le Nhu Linh, chairman of PV Oil, told the Daily late last week that the project would make it easy for the corporation to distribute its fuels in Cambodia, instead of transporting them from Vietnam as now.

Linh of PV Oil did not mention when work would start on the project but said the corporation was in talks with a Cambodian partner that has an available fuels distribution system to carry out this project.

PV Oil is also active in a number of regional markets. In neighboring Laos, PV Oil has a distribution system of 72 retailers accounting for around one-third of the fuels market, Linh said, adding it was in the process of expanding its fuels trading operations in Myanmar.

PV Oil is now responsible for about 22% of Vietnam’s total oil and gasoline market with a network of some 2,000 retailers around the country. It is looking to dominate 50% of the country’s oil and gasoline market with an estimated supply of some five million tons by 2015.


New standards to target shoddy fertilizer makers

The agriculture ministry’s department of crop production will standardize the process of making organic fertilizer in Vietnam to solve long-running management and quality monitoring issues.

The process will be submitted to the Government in June, Nguyen Tri Ngoc, director of the department, said at a government seminar on a new decree for fertilizer production and trading management in HCMC last week.

Ngoc told the Daily on the sidelines of the seminar there are 400 to 500 fertilizer manufacturing plants in Vietnam with over 4,000 products. As a result, authorities have found it hard check the quality of all the products.

“A fertilizer enterprise should have at least one technician with university level qualifications and five years of experience. I think the regulation will help reduce poor-quality products on the market,” Ngoc said, adding that large volumes of substandard and fake fertilizers have surfaced in recent years.

The decree would also require fertilizer traders to take training courses on fertilizer quality.

The Government last year issued a decree to impose administrative fines on fertilizer production and trading violations with maximum penalties of VND150 million. The department would increase the maximum fine.

“High fines and stricter production standards should have a good impact on fertilizer market,” Ngoc said.

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