Vietnamese firms eager to invest in Cuba

Cuba has become increasingly attractive to Vietnamese investors
following changes to the country's trade policies that are designed to
attract foreign firms in the service and production sectors, according
to the Ministry of Industry and Trade's American Department.

Nguyen Xuan Khien, the department's head, said Cuba is particularly looking for real estate investors.

He said Cuba has begun actively looking for foreign investment at
the beginning of this year, mostly in the fields of tourism, plastic
packaging, paper processing, mining and foodstuffs.

Khien said investors in golf courses would be permitted to rent land for 99 years.

Dang Xuan Cuong, from the Vietnam Food Industries Company, said his
company is looking into Cuba , which is a new market for his firm.

Last month, the Vietnam Northern Food Corporation signed a contract to sell 200,000 tonnes of rice to Cuba .

Every year, Cuba imports about 400,000 tonnes of rice from Vietnam .

Despite the latest trade incentives, exporters are still facing difficulties, such as late payment, Cuong said.

He said his firm often receives payment 300-500 days after the goods are delivered.

Because of continued late payment, Cuong said his company has to
export goods to Cuba through a firm in a third country that paý more
promptly.

However, he said Cuba had an
attractive investment climate and that Vietnamese firms should closely
study this new market.

To boost trade relations
between the two countries, the Ministry of Industry and Trade plans to
hold an investment forum in Havana , the country's capital.
Particular emphasis will be on sectors such as information and
technology, rice, footwear, garments and pharmaceuticals./.

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Asia-Pacific firms worried over carbon laws - survey

MELBOURNE - Asia-Pacific firms are worried that tougher laws on greenhouse gas emissions will hit financial performance and uncertainties on the issue are already limiting their ability to raise capital, a survey published on Monday showed.

The survey by Standard & Poor's and carbon analytics firm RepuTex also found only a minority of firms demonstrated a high understanding of risks associated with tighter carbon laws.

"Respondents from all sectors across the entire Asia-Pacific region clearly stated that they anticipate climate change to progressively affect their financial statements," it said.

The study found 41 percent of the respondents reported that to a degree they were already feeling the impact of carbon regulations on their fund-raising activity.

It indicated some firms were actively exploring strategies to turn financial risks associated with greenhouse gas emission laws into opportunities to gain a competitive advantage, but only a minority showed a high understanding.

"Existing levels of awareness around factors such as carbon prices, expected climate change regulation, financial risks, and opportunities are relatively low, indicating that there is a substantial knowledge gap that may need to be addressed to achieve effective risk management," said the survey, released at at the annual Carbon Expo Australasia conference.

The survey polled 300 firms but was based on responses from 28 companies although the results also included data from 1,657 Asia Pacific companies monitored by RepuTex.

Around 90 percent of respondents expressed concern about the impact of physical climate change on their industry, with most concern shown by firms operating in Japan, Malaysia, and India.

By sector, real estate, metals and mining, consumer products and transportation saw climate change as having the most physical impact on their operations.

According to data provided by RepuTex, the most carbon-intensive sectors in the Asia-Pacific region are utilities, responsible for 58 percent of the region's emissions, energy, accounting for 18 percent, and materials, 13 percent.

The data showed Japan produced the largest portion of carbon emissions in the region, accounting for 31 percent, followed by China, on 29 percent, and South Korea, 11 percent.

The survey found that 46 percent of a respondents recognized carbon change commitments as a possible source of competitive advantage, leading them to analyze future carbon liabilities while building carbon-management strategies.

Investors wary of carbon risk

Firms in the survey also indicated they believed the evolving regulatory and physical environment in the region meant investors were increasingly identifying firms which posed the greatest risk to their investment portfolios over potential carbon liabilities.

Investors were increasingly seeking to buy stock in carbon-efficient leaders, the companies in the survey believed.

The participating firms also recognized that behavioral change and the use of new technology to reduce carbon footprints opened up opportunities to cut exposure to higher energy costs.

Nearly 80 percent of the respondents chose implementing energy efficiency measures as the most preferable and feasible option to mitigate carbon exposure.

Investing in clean technologies, innovation, and renewable energy, and retrofitting and optimizing existing processes, were chosen by 71 percent of the respondents.

"We believe that this indicates that respondents are taking advantage of low-hanging fruit such as energy-efficiency measures, which often result in cost savings," Standard & Poor's/RepuTex said.

They said the oil and gas, metals and mining, electric utilities, and integrated gas sectors anticipated significant carbon exposure under future emissions trading schemes, and were already performing direct-emissions forecasting to determine future carbon liabilities.

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Be original, add value

Local firms advised to realize economic potential of creative industries

Vietnamese footwear products displayed at a shopping mall in Ho Chi Minh City. Experts say local products need more distinctive designs to make a bigger mark in both export and home markets.

Local enterprises should get involved in and take advantage of creative industries to add value to their business, experts said at a meeting held in Ho Chi Minh City last week.

They said although the industries, which cover a range of activities like advertising, designing, performing arts, architecture, crafts, toys and games, were relatively nascent in Vietnam, they had the potential to make significant contributions to the national economy.

At the meeting organized by the Vietnam Creative Enterprise Network in HCMC, Edward Gomez, a Filipino design consultant, and Vietnamese fashion designer Ngo Thai Uyen shared their ideas about global market trends and creativity with participants from the textile, garments, advertising, plastics, furniture, communication and shoe-making industries.

Gomez said many buyers and consumers were seeking unique products that combine ethnic elements with contemporary designs.

He said competition at the low-end segment was strong and required significant production capacity while the luxury market focused more on distinctive designs, higher quality and smaller quantities with greater flexibility in pricing.

Gomez also said that buyers were now seeking other suppliers than Chinese firms that were now focusing on their home market.

Dang Vo, chairman of the network, told Thanh Nien Weekly that creative industries are becoming an increasingly important component of the national economy. The government should see it having the potential to make significant contributions to the country’s gross domestic product and issue policies to support its development, he said.

The development should start from training, said Tran Ngoc Danh, managing director of Arts and Design School, a member of the Creative Enterprise Network.

Danh said the school, supported by the British Council, would start its first training course next month that focuses on creative skills for designers in key export industries like furniture, garment, plastics, handicrafts and toys.

Tu Minh Thien, director of the Investment and Trade Promotion Center, said HCMC authorities considered the industries essential for growth.

“Authorities want the development of the city attached to the added value provided by creative industries,” he said at a meeting held July to announce the city’s Creative Saigon 2010 Plan to develop four of the creative industries, including communications, interior décor, information technology, and packaging and labeling.

Thien said the plan aimed to promote designing activities through training courses, fairs and contests.

The British Consul General in HCMC, Tim Brownbill, said his government considered assisting Vietnam in creative industries as a strategy to further its trade and investment relationship with Vietnam.

Britain is one of the European states with a strong development of creative industries, earning 5 percent of the nation’s total exports.

No parallel

Globally, creative industries rake in revenues of US$3 trillion and account for a significant part of national economies in Asia, said Thien.

Thien said the industries added 12 percent to Thailand’s GDP, 6.5 percent to Indonesia, 5.8 percent to Korea and 5 percent to the Philippines, but in Vietnam, this was miniscule.

Danh of the Arts and Design School said the furniture, interior décor and advertising industries have grown strongly in the country, luring investment from foreign firms and their supporting agencies.

However local industries were not making full use of the creative potential, he said.

Most export-oriented industries are implementing contracts where the importers supply the designs, and this is negatively impacting their own creativity and competitiveness, he added.

Vo Van Yen, deputy head of the Gia Dinh Textile and Garment Corporation’s Sales Department, conceded the corporation has not invested much in designs for both domestic and export markets.

“The designs that we create are mostly based on consumer trends or that used by other producers.”

The network’s chairman Vo said many local firms were yet to develop their design functions as they were afraid of being copied, while other firms worried about how much they would cost.

They were also not accustomed to outsourcing their design needs, said Danh.

Ong Din Han, country manger of Global Sources, said local firms should change their mindset about creative industries and invest in them. They would otherwise find it difficult to get new customers, he said. Global Sources is a Hong Kong-based service firm that connects buyers and sellers globally.

Vietnamese furniture was unique in the international market but other products like handicrafts did poorly in attracting customers, said Han. His company would hold a fair for Vietnamese export products next year to showcase their creativity, besides quality and prices.

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Be original, add value

Local firms advised to realize economic potential of creative industries

Vietnamese footwear products displayed at a shopping mall in Ho Chi Minh City. Experts say local products need more distinctive designs to make a bigger mark in both export and home markets.

Local enterprises should get involved in and take advantage of creative industries to add value to their business, experts said at a meeting held in Ho Chi Minh City last week.

They said although the industries, which cover a range of activities like advertising, designing, performing arts, architecture, crafts, toys and games, were relatively nascent in Vietnam, they had the potential to make significant contributions to the national economy.

At the meeting organized by the Vietnam Creative Enterprise Network in HCMC, Edward Gomez, a Filipino design consultant, and Vietnamese fashion designer Ngo Thai Uyen shared their ideas about global market trends and creativity with participants from the textile, garments, advertising, plastics, furniture, communication and shoe-making industries.

Gomez said many buyers and consumers were seeking unique products that combine ethnic elements with contemporary designs.

He said competition at the low-end segment was strong and required significant production capacity while the luxury market focused more on distinctive designs, higher quality and smaller quantities with greater flexibility in pricing.

Gomez also said that buyers were now seeking other suppliers than Chinese firms that were now focusing on their home market.

Dang Vo, chairman of the network, told Thanh Nien Weekly that creative industries are becoming an increasingly important component of the national economy. The government should see it having the potential to make significant contributions to the country’s gross domestic product and issue policies to support its development, he said.

The development should start from training, said Tran Ngoc Danh, managing director of Arts and Design School, a member of the Creative Enterprise Network.

Danh said the school, supported by the British Council, would start its first training course next month that focuses on creative skills for designers in key export industries like furniture, garment, plastics, handicrafts and toys.

Tu Minh Thien, director of the Investment and Trade Promotion Center, said HCMC authorities considered the industries essential for growth.

“Authorities want the development of the city attached to the added value provided by creative industries,” he said at a meeting held July to announce the city’s Creative Saigon 2010 Plan to develop four of the creative industries, including communications, interior décor, information technology, and packaging and labeling.

Thien said the plan aimed to promote designing activities through training courses, fairs and contests.

The British Consul General in HCMC, Tim Brownbill, said his government considered assisting Vietnam in creative industries as a strategy to further its trade and investment relationship with Vietnam.

Britain is one of the European states with a strong development of creative industries, earning 5 percent of the nation’s total exports.

No parallel

Globally, creative industries rake in revenues of US$3 trillion and account for a significant part of national economies in Asia, said Thien.

Thien said the industries added 12 percent to Thailand’s GDP, 6.5 percent to Indonesia, 5.8 percent to Korea and 5 percent to the Philippines, but in Vietnam, this was miniscule.

Danh of the Arts and Design School said the furniture, interior décor and advertising industries have grown strongly in the country, luring investment from foreign firms and their supporting agencies.

However local industries were not making full use of the creative potential, he said.

Most export-oriented industries are implementing contracts where the importers supply the designs, and this is negatively impacting their own creativity and competitiveness, he added.

Vo Van Yen, deputy head of the Gia Dinh Textile and Garment Corporation’s Sales Department, conceded the corporation has not invested much in designs for both domestic and export markets.

“The designs that we create are mostly based on consumer trends or that used by other producers.”

The network’s chairman Vo said many local firms were yet to develop their design functions as they were afraid of being copied, while other firms worried about how much they would cost.

They were also not accustomed to outsourcing their design needs, said Danh.

Ong Din Han, country manger of Global Sources, said local firms should change their mindset about creative industries and invest in them. They would otherwise find it difficult to get new customers, he said. Global Sources is a Hong Kong-based service firm that connects buyers and sellers globally.

Vietnamese furniture was unique in the international market but other products like handicrafts did poorly in attracting customers, said Han. His company would hold a fair for Vietnamese export products next year to showcase their creativity, besides quality and prices.

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Interest rates, power cuts top enterprise concerns

High credit costs and power cuts are factors that most worry enterprises in the country, according to survey results released last week by the Vietnam Chamber of Commerce and Industry (VCCI).

The high interest rate on loans as well as power cuts in the second quarter had pushed up production costs, respondents said in the Vietnam Business Insight Survey that was supported by the Lee Kuan Yew School of Public Policy’s Asian Competitiveness Institute and the Asia Foundation, as well as the General Statistics Office.

The survey, which covered 380 firms across the nation, found 64 percent of the respondents paying interest rates of between 12 and 16 percent on short-term loans. They said the rate was high and unreasonable at a time when global economic crisis-related difficulties still remained.

Head of the VCCI’s Business Development Institute, Phan Thi Thu Hang, said the rates were at the peak of what firms could suffer at 16 percent.

About 94 percent of the respondents wanted reasonable rates of less than 12 percent, the quarterly survey found.

Prime Minister Nguyen Tan Dung in May told the State Bank of Vietnam to order lenders to bring down borrowing costs to 12 percent and cut the deposit rate to 10 percent.

Hang said local firms were optimistic that recent efforts by the government in reducing interest rates would succeed, but they also felt more efforts were needed.

Power supply

More than half the survey respondents said regular power cuts in the second quarter – two to three times a week in some areas – significantly impacted production.

The survey did not report any loss suffered by local firms from the power cuts, but said 40 percent said the impacts were “serious” and 16 percent said they were “very serious.”

Hang said the power cuts had raised awareness among the firms of the importance of power-saving measures.

The survey showed 60 percent of the respondents setting the goal of effecting 10-20 percent power savings over the next three years.

Another institute official who did not want to be named said local firms in the Mekong Delta were facing the challenge of finding skilled workers as they expected increases in production and sales in coming quarters.

The survey showed that a shortage of skilled workers was a big concern for the firms in the delta, a region that lacks professional training centers, he said.

Sales and inventory

A report issued last week by the General Statistics Office said production and sales posted growth rates of 13.7 and 12 percent respectively in the first seven months while inventory climbed 37.5 percent.

Vu Van De, head of the office’s Industry Statistics Department in HCMC, said the crisis has passed and local firms had reported recovery that was reflected in production and sales growth, but cautioned inventory had also increased at the same time.

“There is an unbalance in production and sales,” said De, suggesting that firms need to take steps to address this.

He said the biggest growth rates of over 20 percent in sales were achieved by ceramics, alcohol beverages and dairy products in the first seven months of the year.

However, non-alcohol beverages had the highest inventory that was up six times over the same period last year, De said, adding this industry was followed by cement, with more than two times higher than last year’s January-July inventory.

The tobacco industry had the lowest inventory, dropping 39.2 percent year-on-year, while seafood, foodstuff, and vegetables posted similar inventories to last year, De said.

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Local drug firms say didn’t lobby for flu pill stockpiling plan

Huynh Tan Nam, general director of Pymepharco, talks with local reporters in HCMC on Monday - Photo: Dao Loan

HCMC – Four local pharmaceutical firms involved in the Government’s Tamiflu-like drug stockpiling plan in 2005-2006 said on Monday they did not resort to any connections to win a contract as news reports about his had emerged recently.

Imexpharm, Stada Vietnam, Pymepharco and Pharimexco said in a joint press conference in HCMC that they had not lobby for the deal to sell Oseltamivir 75 mg pills, which is used to treat H5N1 bird flu patients, to the Ministry of Health.

The general directors of Imexpharm, Stada Vietnam, Pymepharco denied an inquiry by the Government Inspectorate which had asked these companies to deposit more than US$2.8 million in the inspectorate’s temporary account pending an official settlement.

The central inspection agency had suspected the amount was what the companies received from Stada IE Hong Kong as commissions, but the drug producers insisted it was the compensation from the foreign supplier of pharmaceutical material.

The general director of Pharimexco was not present at the news conference as he was late for his flight, reporters were told.

Local news reports that have surfaced suggest the price of imported material was too high and that Imexpharm, Stada Vietnam, and Pymepharco received commissions worth hundreds of thousands of U.S. dollars from the supplier.

“In late 2005, the Ministry of Health asked pharmaceutical firms to urgently find material to produce Oseltamivir 75 mg for H5N1 treatment. We were selected because of our capacity of seeking material at a time of falling supply of flu pill material worldwide and of producing the medicine,” said Tran Thi Dao, general director of Imexpharm.

The four companies are big enough to fulfill the order from the ministry in this emergency situation as they hold 20% of the local medicine production output.

Huynh Tan Nam, general director of Pymepharco, said the firms had inked the deal to provide the drug to the ministry, not material, so it was the companies’ right to decide who supplied material. Pharimexco chose a Singaporean supplier while the other three selected Stada IE Hong Kong.

“We bought material at a higher price but we sold the drug at US$1.75 per pill, lower than the US$2.49 quoted by Roche,” Dao of Imexpharm said.

The firms claimed they sold the medicine at a loss because the price was fixed by the ministry. “Our actual price was US$1.9, US$1.91 and US$1.92 per pill. We did not want to lose the deposit of US$2 million for material, so we had to produce the medicine,” she explained.

The ministry still owned the companies VND8 billion in the deal, according to these companies.

Ong Van Dung, general director of Stada Vietnam, said Stada IE Hong Kong sent US$986,000 to Imexpharm, and US$930,000 to each of Stada Vietnam and Pymepharaco to compensate for the lower-than-expected production.

“The supplier pledged that one kilogram of material could be used to produce 10,100 pills but the actual production was lower. That was why we received the compensation. This was included in our deal,” Nam of Pymepharco said.

However, the firms declined to give figures of the real production when asked by reporters but promised to do so soon after reviewing their data.

The ministry on January 17, 2006 inked a deal to buy five million Oseltamivir 75 mg pills from the four companies at a price of US$1.75 per pill.

Dao of Imexpharm said around half of the total volume fell due but it still met quality standards. The firms are asking the ministry to consider whether to extend the expiry date. “As a rule, the producer can ask the drug administration to test the medicine to see whether to extend the date,” she said.

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IT firms fail to invest in R&D

Photo: Reuters

Most Vietnamese IT firms have failed to make adequate investment in research and development due to limited financial capacity and a lack of skilled personnel, said HCMC Computer Association chairman Chu Tien Dung.

In the past 10 years, firms focused on creating IT products to meet short-term market demands rather than properly investing in research and development (R&D), Dung said.

Domestic IT businesses that took on outsourcing work from foreign partners found it difficult to make sufficient investment in R&D because most of them were small and medium-sized, said Vietsoftware chairman of the board Tran Luong Son.

Some of the companies realised the importance of R&D but due to insufficient financial capacity, their R&D investment had yet to bring satisfactory results, he said.

While investing in R&D seems to be difficult for small IT firms, several larger enterprises have invested in R&D, resulting in new production technologies and unique products that have played a decisive factor in sharpening their competitiveness.

TMA Solutions, a large software outsourcing company, recently opened its first R&D centre in the Quang Trung Software Park in HCMC to expand its business in training, mobile service and business solutions.

Chairman of TMA Solutions Nguyen Huu Le said the company accepted outsourcing contracts from foreign companies over the past 12 years and also executed R&D projects under contracts with foreign partners.

"To date, TMA has accumulated good experience in innovation technologies from these projects and we can produce many items in Vietnam," he said.

Mobile provider Viettel also established an R&D centre to develop new telecommunication equipment. The company has developed a USB with integrated 3G, the VT1000-3G, and plans to put it on the market by the end of the year.

CMC Group has also announced that it will set aside US$2 million to research or acquire new technology.

Establishing R&D centres in Vietnam, however, still faced tax barriers and difficulties with equipment testing procedures, Le said, adding that it took his company three years to complete all relevant procedures.

Le suggested the Government should offer incentives for R&D projects.

Dung agreed. He said that Vietnamese ICT companies were seeing big opportunities in technology transfer from global IT companies as they move their R&D centres to Vietnam to cut costs.

Several local outsourcing companies have seen a chance to receive R&D centres from foreign partners. The centres brought comprehensive technology and increased profits for local outsourcing companies, he noted.

To encourage more enterprises to shift to R&D, Dung suggested the Government rethink its tax policy for ICT companies that invested in R&D projects or R&D labs.

 

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Credit centre rates 539 listed firms

The Credit Information Centre on Aug. 25 published its 2010 credit
ratings of the nation's listed firms, with 165 of the 539 companies
scoring the highest ranking, an increase of 46 percent over 2009.

The ratings system was developed by the centre and global firm Dun & Bradstreet.

The number of listed firms rated average in terms of creditworthiness
increased to 15, which was blamed on the impact of the global debt
crisis, said Credit Information Centre deputy director Nguyen Huu Duong.

Companies earning the average level in 2009 was only 9, he said.

Listed firms in HCM City posted better creditworthiness than those
in Hanoi , with companies in the rubber and paper industries earning
the highest ratings, followed by consumer goods and manufacturing
enterprises, Duong added.

Credit Information Centre
director Pham Cong Uan said the ratings would improve market
transparency and provide investors with a useful basis for evaluating
their investments.

Vietnam Association of Securities
Businesses general secretary Nguyen Thanh Ky said quality and timely
information was decisive to every investment decision in the stock
market.

Nicholas Teoh, vice president of Dun &
Bradstreet's Asia Pacific Partnerships, said Dun & Bradstreet would
invest 110-130 USD million to improve access to this information online
over the next three years./.

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