Apparel firms struggle to meet export growth targets

HA NOI — Apparel enterprises have some serious challenges ahead, as inflation and high materials costs are affecting profit margins, and the economic crisis cuts into key export markets.

Diep Thanh Kiet, chairman of the HCM City Association for Textiles, Garment, Embroidery and Knitting, said apparel enterprises are having difficulties maintaining the high export value growth rates that they saw in the first nine months of this year.

This will make it difficult to achieve the necessary monthly target of US$900 million needed to reach the industry’s annual target of $9.5 billion.

In the first nine months of the year, the industry achieved an export value of $6.8 billion, an increase of 20.2 per cent over the same period last year.

The Viet Nam Textile and Apparel Association (Vitas) said that textile and garment exports would be tough following the US financial crisis, since the country was the largest export market for Vietnamese textiles and garments. Consumption in the US had already started to decrease.

Enterprises were also facing cuts in exports to the European Union, the second largest importer of Viet Nam’s textile and garments, the association said.

Many enterprises reported that their partners had already cut orders in recent contract negotiations.

Tran Thanh Lam, director of a company specialising in textiles and garments for export in Binh Duong Province, said last month that his company signed contracts with three partners in the US, UK and Canada to produce a total of 130,000 pairs of women’s trousers and 50,000 jackets. The company had already completed half of the orders, but two of the three partners had proposed to cut their orders by 30-40 per cent.

This would mean a huge loss for the company, as it had already bought all the materials to produce the initial orders, Lam said.

Lam said that many other garment firms were finding themselves in the same situation.

La Kien Ban, director of Dat Thanh Production, Trade and Garment Ltd, Co in HCM City, said that enterprises in the textile and garment industry had slowed down their operations, but their profit in recent months had only been enough to pay production costs and workers’ salary.

Le Ngoc Duc, director of Van Thanh Ltd Co in HCM City, said that newly-established enterprises with large investments and a large number of workers were in the most difficult situation.

Duc said many enterprises were turning to the domestic market, but local consumption had also declined.

In addition, the enterprises are facing other difficulties, including high inflation, high interest rates, high material prices and a lack of workers, according to Kiet. —

VN-Index dives amid global market downturn

HA NOI — Local investors seem to be paying more attention to what’s going on in the global market rather than the better-off local economy, sending the VN-Index down by 3.16 per cent to 384.61 after two upward sessions.

The HCM City Stock Exchange yesterday saw 119 of 160 listed shares decline, 25 codes rise and 14 close unchanged.

Almost all blue chips dove yesterday, dragging the market index down with them.

Trading volume was nearly half of Wednesday’s, at 16.49 million shares, equivalent to a total value of VND483.96 billion (US$28.81 million).

STB Sacombank saw 2.26 million shares change hands, while other active shares included SAM of Cable and Telecom Materials and HPG and Hoa Phat Group, although they had less than 1 million shares traded each.

Overseas traders perked up, purchasing 5.02 million shares on the local exchange, up from over 2 million shares on Wednesday. This sector focused on some blue chips such as PVD of PetroVietnam Drillings, DPM of Phu My Fertiliser and VNM of Vinamilk.

In Ha Noi, the HASTC-Index lost 5.93 per cent to 124.28, with half of Wednesday’s trading volume at 7.93 million shares.

This figure represented a turnover of VND216.58 billion ($12.89 million), of which financial stocks like ACB of Asia Commercial Bank, PVS of PetroVietnam Securities and KLS of Kim Long Securities contributed significantly.

Many investors at An Binh Securities said that world-wide stock activity has recently discouraged buyers.

Asian stocks plummeted, led by the largest single-day decline of the Nikkei of 11.4 per cent, as fears grew of a more protracted and sharper global slowdown than initially expected, according to AFP reports.

“It’s not a good sign when global investors sell equities en mass. Something bad is going to happen to the US economy, maybe a real crisis,” said Phan Thu Huong, an An Binh Securities member.

Nguyen Son, head of State Securities Commission’s Market Development Department, said that the connection between the US and Viet Nam was not obvious, and the impact should be insignificant.

“Local investors should pay attention to internal economic factors which are getting better. Then they can make reasonable decisions with securities investment on the local exchange,” he said. —

Intermediary financial institutions strive for market stabilisation

HA NOI — A new State Securities Commission (SSC) directive is calling for intermediary financial institutions to work closely with administrative and management bodies involved with securities trading to ensure the stabilisation of the stock market.

The SSC asked brokerage houses to strictly implement the move of investors’ accounts to commercial banks, as well as review institutional investment capital to reduce risk in securities trading.

“In addition, the firms need to promote analysis and consultancy, providing investors with reasonable guidelines for their investment,” the SSC said in the report.

The firms were also asked to limit the extent of securities repossessions and securities derivative methods, it added.

Fund management companies were ordered to strengthen internal supervision and risk management.

“The companies must also follow Securities Law in defining the net value of investment funds, as well as the total value of investment portfolios trusted by investors,” said the document.

The same requirement was stressed on commercial banks who do securities deposits and supervision.

In emergency cases, institutions were told to inform the commission for timely action.

“The commission will also enhance inspection and apply strict punishment to violators,” the document stated. —

Hyundai inks plans for lotus-shaped tower in City

HCM CITY — Korea’s Hyundai Engineering and Construction (E&C) Company yesterday signed the main package contract for a 68-storey lotus-shaped tower developed by the Binh Minh Import-Export, Production and Trading Corp.

The package, worth US$93 million before VAT and import tarrifs, also includes the supply and installation of the tower’s electrical and engineering systems.

The Bitexco Financial Tower, located in HCM City’s Dist. 1, is bound by the streets of Hai Trieu, Ngo Duc Ke and Ho Tung Mau. The total investment for the tower is estimated at US$220 million.

Bitexco chairman Vu Quang Hoi said he expected the project, one of the highest buildings in Viet Nam with a height of over 262m, would be completed in 2010.

It will have three basements of over 12,000 sq.m, around 100,000 sq.m for office space, a convention centre and a shopping mall.

The 47th floor will be an observation spot for tourists to look over the city.

Hyundai E&C has participated in various projects in Viet Nam, including the Pha Lai 600MW Thermal Power Plant No 2 and Hyundai-Vinashin Shipyard, according to its president J.S. Lee.

Bitexco has become a large real estate developer with residential complexes The Manor Ha Noi and The Manor Sai Gon, and The Garden – an office, hotel and shopping mall complex. —

Coffee export prices take a dive

Farmers harvest coffee in Ia Sao New Economic Zone in Gia Lai Highland Province. The export price of coffee fell this year due to the impact of the global crisis. —VNA/VNS Photo Sy Huynh

HA NOI — The export price of coffee this week fell to between US$1,600-1,700 per tonne, a reduction of $1,000 per tonne compared with the beginning of the year, said the Viet Nam Coffee and Cocoa Association (VICOFA).

VICOFA consultant, Doan Trieu Nhan, said the decrease was not caused by an imbalance in supply and demand, but was due to the global financial crisis.

Coffee traders are finding it difficult to re-negotiate credit lines with commodities focused banks due to the global credit crunch.

In February, a tonne of coffee sold for $2,500, and the price remained stable until last month.

Coffee export volumes have also been falling as key importers Germany, Italy and the United States have bought less coffee in the last few months.

In August, coffee exports to the United States dropped 48 per cent, exports to Germany and Italy fell 23 and 22 per cent, respectively.

Coffee growers in the central highlands provinces of Dak Lak and Lam Dong are facing difficulty. At the beginning of the year, coffee growers earned around VND42,000 ($2.5) per kilogram of coffee. The price dove to VND26,000 ($1.5) per kilo on Tuesday. This means coffee growers will lose around VND14 million ($800) per tonne of coffee.

Dak Lak coffee growers are finding this a bitter pill to swallow as they expect the next harvest to be a bumper crop of about 400,000 tonnes, representing a loss of approximately VND6.4 trillion ($400 million).

The sector as a whole will lose around $1 billion assuming a countrywide harvest of 1.2 million tonnes.

Production costs are also on the increase, putting growers under further pressure. Fertiliser – accounting for around 60 per cent of production costs – in particular has become increasingly expensive.

Doan Trieu Nhan, however, said there was still some hope on the horizon. Brazil will set aside 12 million 60kg bags of the 51 million bags expected to be produced in the 2008-9 period, an increase of nearly 150 per cent from the 5 million bags stored last period, in an effort to stabilise prices by reducing supply. This would hopefully help coffee farmers worldwide, he said.

Global coffee production is estimated to be 131 million bags a year, while consumption is said to be 128 million bags per year. —

Website contest puts e-commerce under spotlight

HCM City — The Ministry of Industry and Trade and Nguoi Lao Dong (The Labourer) newspaper will promote the use of e-commerce through a newly created website contest.

Prizes will be awarded to 30 winners of the best websites at the end of the year.

Only 40 per cent of a surveyed 350,000 local small – and medium-sized enterprises have a website and engage in e-commerce, according to the Electronic Commerce Department of the Ministry of Industry and Trade.

Of the businesses that have a website, only 15 per cent of their revenue comes through e-commerce.

Tran Huu Linh, head of the department, said the number was modest as competition among local and foreign enterprises was fierce.

Linh said most businesses had not paid sufficient attention to building their brand names and products.

For more information about the contest, see the newspaper’s websites www.nld.com.vn and www.webvang.nld.com.vn. —

PetroVietnam, refinery ink $3b crude oil deal

HA NOI — The PetroVietnam Oil Corporation (PV Oil) and the Dung Quat Oil Refinery factory yesterday signed contracts worth just over US$3 billion to supply crude oil and materials for distribution when the factory opens next year.

PV Oil will supply 2,160,000 tonnes of crude oil to the Dung Quat Oil factory, of which 160,000 tonnes will be for a trial period. PV Oil will also provide straight-run oil for the preparation of the test-run and chemical products and catalysts for the factory.

Established in June, 2008, PV Oil, which comes under the PetroVietnam Group, imports and exports crude oil and oil products and supplies oil refinery factories in Viet Nam. —

Idaho trade mission eyes opportunities

HCM CITY — A trade delegation from the northwestern US state of Idaho is in HCM City to pursue business opportunities in the country.

Led by Idaho Governor C.L. “Butch” Otter, the delegation includes officials from the state departments of agriculture and commerce, as well as nine companies based in Idaho.

The Idaho trade mission is expected to hold working sessions with the HCM City Investment and Trade Promotion Center, the HCM City branch of the Viet Nam Chamber of Commerce and Industry, the city People’s Committee, and the Binh Dong Flour Factory of the Southern Foodstuff Corporation.

Speaking at a press briefing yesterday, Otter said Idaho saw great trade potential in Viet Nam.

“We are here to introduce many of our products and services and investigate buying opportunities in Viet Nam,” he said.

He said agriculture was the mainstay of Idaho’s economy. “Idaho and Viet Nam both have the opportunity to grow and develop by helping each other.”

Idaho’s main agricultural products are beef, potatos, processed food and fruit.

He said two-way trade between Viet Nam and Idaho in the past two years increased by 67 per cent.

Although Idaho is the seventh largest state in the US, its population is only 1.4 million. —

Imports up on electronic goods

Customers in front of a display of electronic products in Hung Vuong Plaza in HCM City. Some electronic firms in the city have increased imports for the year-end shopping season. — VNA/VNS Photo The Anh

HCM CITY — Several firms in HCM City have increased imports of electronic products by 20-30 per cent over previous months as they prepare for the year-end shopping season.

Tran Huu Tai, director of an electronics import company, said most imported items are home appliances not made in Viet Nam currently. These were mostly imported from Southeast Asian countries including Thailand, Singapore, Malaysia and Indonesia that offer cheap prices and enjoy low import tariffs.

Lien An Thach, sales and marketing director of the Cho Lon Electronic Supermarket, said prices of both imported and locally produced electronics products have decreased by 10-30 per cent compared to the beginning months of the year.

Local producers concerned

With only two months to go before Viet Nam is bound to fully open its retail market as part of its WTO (World Trade Organisation) commitments, domestic producers are concerned about their ability to hold on to their market shares.

Local electronic firms say they have gradually reduced production of highly competitive products like televisions and music systems while increasing that of refrigerators and other home appliances that can fetch reasonable prices.

Some enterprises note that with the five per cent tax rate levied on completely-built-units and 3-4 per cent on electronic spare-parts, importing the former is more profitable than assembling them here. So they plan to combine imported and locally produced products for the upcoming season.

Nguyen Hoang Chuong, deputy general director of JVC Viet Nam, said his company was still maintaining its normal manufacturing schedule while watching the market closely to make proper adjustments in time.

According to Nguyen Van Dao, deputy general director of Samsung Viet Nam Co.Ltd, his company plans to import products that Samsung does not manufacture in Viet Nam to diversify their range in the local market.

Local electronic companies are concerned that imported products will penetrate deep into the domestic market with cheap prices once Viet Nam reduces import tariffs for all regions under its WTO commitments by 2010. —

HCMC e-customs still not ready despite 3-year trial

HCM CITY — The HCM City Customs Department reported modest initial results after a three year trial period starting in October 2005 for electronic customs (e-customs) clearance procedures.

The new service allows businesses to file applications and track customs clearance progress online. The businesses only need to access a website, fill in forms with the customs offices online instead of on paper and wait for the clearance of their goods.

Much like Hai Phong in the north, the test run of the e-customs declaration and clearance system failed to achieve its planned targets, said Dang Hanh Thu, deputy head of the Viet Nam General Department of Customs.

According to customs statistics, the number of enterprises using this new model in customs procedures is negligible. Only 180 enterprises in HCM City officially participated, accounting for just 1 per cent of the total number of declarations.

The e-customs clearance identified several shortcomings, said Nguyen Hoang Hoa, deputy director of the Sai Gon Industrial Corporation.

One of the project’s biggest shortcomings stemmed from the e-customs website’s limited bandwidth, causing information and valuable work and time to be lost.

Another obstacle is that the current model of e-customs has yet to be connected to trade organisations, state agencies including the State treasury, banks, the Department of Planning and Investment, tax offices or relevant service organisations. This has forced businesses to go back and forth among relevant offices to complete various procedures.

Furthermore, after fulfilling customs declaration online procedures, businesses still have to bring their printed documents to customs agencies for re-inspection, wasting company time and money.

Do Huu Toan, deputy head of the city’s E-Customs Department admitted the software for customs clearance procedures was inadequate and failed to account for all the problems arising during customs clearance.

The E-Customs Department’s operations have yet to be fully computerised, which complicates the application of the e-supervision for goods clearance.

Moreover, the system is not an automatic process as it still requires both customs offices and enterprises’ involvement in manual handling.

The city’s customs department has submitted a new e-customs plan for the next few years that is hoped to boost efficacy to the General Department of Customs.

The plan focuses on improving the declaration software, building a customs information infrastructure, improving dialogue between the customs offices and businesses and providing more assistance for importers and exporters.

Also, officials should expand various electronic customs clearance services, including e-database provisions, warehousing, and e-confirmation between customs offices and businesses. —