Finance Ministry to control prices

Customers buy bread at Big C supermarket in Ha Noi. — VNA/VNS Photo Tran viet

HA NOI — The Ministry of Finance has said it will step in to control prices on the domestic market following predictions that they are expected to rise by the end of the year.

Nguyen Tien Thoa, director of the ministry's Pricing Management Department, said the recovery of the world economy and increasing demand for materials for production and business would push prices up on the world market by the end of this year.

He said the department should be able to keep the expected increases down to a modest level. However, the high demand for goods and services before Tet, plus any diseases in livestock would keep the pressure on prices.

Difficulty in raising capital for production and electricity costs would also add to the pressure.

Thoa said the State would check on the amount of goods in stock and register sales prices of 17 essential goods to avoid speculation.

By the end of December, prices of electricity, coal, paper, cement, tap water, transport would be stabilised.

Last week, Prime Minister Nguyen Tan Dung called on ministries, agencies and municipal and provincial authorities to implement strategies to stabilise the market and boost production.

Directive No1875/CT-TTg has been designed to ensure Viet Nam's growth rate reaches 6.5 per cent and the consumer price index (CPI) does not rise above 8 per cent. — VNS

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Businesses commit to price stabilization ahead of Tet

A consumer inspects sugar at the Co.opMart store on Nguyen Dinh Chieu Street in HCMC’s District 3 - Photo: Minh Tam

HCMC – Some 14 enterprises have pledged to join a price stabilization program in HCMC ahead of the forthcoming traditional Lunar New Year holiday, or Tet, despite market volatility in recent times.

The businesses said they had prepared larger stock than that assigned by the city’s Department of Industry and Trade and they are ready to supply the market with 6,000 tons of rice, 11,000 tons of sugar and 4,600 tons of livestock per month.

The companies have also completed goods storage plans to meet customer demands. For instance, meat processor Vissan has plans to launch 2,100 tons of pork, 360 tons of cattle meat and 3,400 tons of processed food in the lead up to the country’s biggest national holiday, higher than those registered with the department at 2,000 tons, 200 tons and 900 tons respectively. Vissan has also put around 2,000 tons of frozen meat in stock.

Saigon Co.op, the owner of the city’s leading retail store chain Co.opMart, has advanced VND300 billion for farms so that they can ensure sufficient food supply and low prices prior to the Tet season during which high demand often drives up prices.

According to the department, local consumers will be able to buy frozen and dried seafood from Ca Mau Province-based Phu Cuong Group at 10% low than market prices. The company says it will meet around 20% of demand in the city although it has got no preferential loans from the price stabilization program.

Phu Cuong is also committed to keeping prices unchanged from now to the end of next March.

The city kicked off the program on June 21 to stabilize prices of eight essential goods within this year and ahead of the upcoming Tet. The city offers interest-free loans to the 14 enterprises to store goods and sell them at prices 10% lower than market levels.

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Milk prices increased 16 times in three years

Milk prices in Vietnam have been adjusted upward 16 times over the past three years, causing difficulties for a lot of consumers, news website VietNamNet reported Sunday.

It quoted the Vietnam Chamber of Commerce and Industry (VCCI) as saying dairy companies had hiked their prices by 3-10 percent every two to three months.

Regular reasons cited by dairy firms included new package designs, higher input costs and increases in foreign exchange rates.

Milk prices have been raised by 4-10 percent this year by major brands including Abbott, Mead Johnson, Friesland Campina Vietnam, XO, Dumex, Meiji, VCCI said.

According to a recent report by the Vietnam Competition Administration Department, up to 80 percent of milk powder products in Vietnam are imported.

This means the local milk market is closely connected to the world market, but the problem is that domestic prices have continued to surge irrespective of global price trends.

The department said although it could not find evidence showing that dairy firms in Vietnam colluded with each other to hike prices, there was still a chance that such a ploy was used.

While milk prices keep surging, dairy farmers are struggling nationwide.

Nguyen Dang Vang, vice chairman of the National Assembly’s Science, Technology and Environment Committee, told Thanh Nien that dairy firms only pay local farmers around VND7,000 per liter of milk.

At this price, farmers suffer losses and find it too difficult to expand production, he said, noting that the country’s dairy cow population only grew 4.9 percent in recent years.

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Milk prices increased 16 times in three years

Milk prices in Vietnam have been adjusted upward 16 times over the past three years, causing difficulties for a lot of consumers, news website VietNamNet reported Sunday.

It quoted the Vietnam Chamber of Commerce and Industry (VCCI) as saying dairy companies had hiked their prices by 3-10 percent every two to three months.

Regular reasons cited by dairy firms included new package designs, higher input costs and increases in foreign exchange rates.

Milk prices have been raised by 4-10 percent this year by major brands including Abbott, Mead Johnson, Friesland Campina Vietnam, XO, Dumex, Meiji, VCCI said.

According to a recent report by the Vietnam Competition Administration Department, up to 80 percent of milk powder products in Vietnam are imported.

This means the local milk market is closely connected to the world market, but the problem is that domestic prices have continued to surge irrespective of global price trends.

The department said although it could not find evidence showing that dairy firms in Vietnam colluded with each other to hike prices, there was still a chance that such a ploy was used.

While milk prices keep surging, dairy farmers are struggling nationwide.

Nguyen Dang Vang, vice chairman of the National Assembly’s Science, Technology and Environment Committee, told Thanh Nien that dairy firms only pay local farmers around VND7,000 per liter of milk.

At this price, farmers suffer losses and find it too difficult to expand production, he said, noting that the country’s dairy cow population only grew 4.9 percent in recent years.

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City sets up team to oversee prices and supplies of essential products

HCM CITY — A team of city officials will oversee prices of eight essential items until the end of March next year, according to HCM City's People's Committee.

The team will work with relevant authorities to check the supply capacity of manufacturers; distribution system; number of selling points for the essential items; volume of essential items on the market; food safety and hygiene; and prices and labels.

The eight essential items include rice, meat, poultry, egg, sugar, cooking oil, processing food and fruit and vegetables.

The city will expand the distribution system of the goods to serve a larger majority of consumers.

City officials have asked 14 businesses that participate in the programme to increase their supply capacity by at least 20-30 per cent to meet demand, and relevant departments and sectors to work with industrial parks and export processing zones to create favourable conditions for these businesses to implement the programme.

The city plans to build shops that sell only eight essential goods in rural areas and at industrial parks and export processing zones.

In addition, wholesale and retail shops in the city centre and outlying districts will be set up to sell the eight essential items.

City authorities said more signs that read "Place that sells stabilised-price items" must be installed.

The Department of Industry and Trade said it would penalise or fine any business that violates programme regulations.

Meanwhile, more than a fourth of the outlets participating in HCM City's price stabilisation programme have been shut down for violating the agreement.

Fourteen manufacturers and distributors signed up for the programme – and got soft loans – and they and their agents opened 1,983 outlets where all prices are to be displayed and no unauthorised price hikes may be made.

But 562 of them have been caught flouting one or more of the rules and ejected from the programme, according to the HCM City Department of Industry and Trade.

Speaking at a meeting organised to review the programme last Thursday, Le Ngoc Dao, deputy director of the city department of Industry and Trade said it had proved effective in stabilising the market, stamping out speculation, and keeping the consumer price index down.

But with each participating company having hundreds of outlets, she admitted. "It is hard for enterprises to avoid shortcomings in management."

The department had ordered market management authorities to step up inspections of the outlets to check violations and is determined to close down violators, Dao said.

It had reported to the People's Committee about the closed outlets and posted their names on its website to inform consumers.

"Consumers discovering any difference between listed and selling prices can report to authorised agencies," she said.

The prices of many essential goods would be likely to be very volatile until year-end, she warned, referring to the market outside the programme.

Some markets and supermarkets have recently increased the prices of imported cosmetics, beverages, and other consumer goods by 5-10 per cent.

Prices of sugar, rice, vegetables and fruits have also increased sharply in recent days.

From November, around 56 seafood items including shrimp, fish, frozen cuttlefish and dried shrimp and fish wouldbe sold through supermarkets and price-stabilisation outlets, Dao said.

By the end of this month, some businesses and distributors would start selling these products at supermarkets and stabilised-price selling points 10 per cent below the market price.

Other city departments will be required to monitor prices of items not on the essential-items list, according to Nguyen Thi Hong, deputy chairwoman of the city People's Committee. — VNS

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Recent price increases raise inflation jitters

Prices of consumer goods saw the most rapid hike in four monthsp this September, raising fears about spiking inflation late this year.

Prime Minister Nguyen Tan Dung has asked ministries and relevant authorities to “intensify” measures to stabilize commodity prices and help the country maintain its economic and inflation targets.

He ordered the Ministry of Industry and Trade to study production and distribution systems to ensure a balance between the supply and demand of essential commodities and services through the end of the year. The country will also make efforts to keep prices of electricity and coal stable.

In Hanoi, prices on some 300 items, including confectionery products, milk and sugar, rose by 3 to 10 percent in September, according to the Hanoi Supermarket Association.

The association’s chairman Vu Vinh Phu said the prices of essential food items have increased two or three times compared to those of two to three years ago. In the same period, local incomes have risen by just 25 percent.

Phu said the prices of consumer goods will see stronger increases from now until Tet in January 2011 due to holiday demand. “Prices of hundreds of consumer products increase every day,” he said.

Consumer prices climbed 8.92 percent in September from a year earlier, compared with an 8.18 percent advance in August, according to a report issued by the General Statistics Office. Prices rose 1.31 percent in September over the previous month.

Nguyen Thi Ngoc Van, head of the office’s general department, said factors such as the increase in the price of gasoline and school fees, which contributed to rising inflation last month, will continue to affect the consumer prices in the months ahead.

The devaluation of the Vietnamese dong will further drive the price of imported products higher, raising business input costs as well as consumer prices, she said.

“Most imported products have seen a price hike since the dollar increase,” said Vu Thi Hau, deputy director of Nhat Nam Company, which owns the supermarket chain, Fivimart. “But food prices experience bigger year-end increases than other products.”

Vu Dinh Anh, deputy director of the Institute of Market and Price Research, said the demand for imported products is expected to increase from now until the end of this year, while the dollar exchange rate is also expected to rise at both commercial banks and black market exchange locations.

This will only add to the inflationary pressures on the country’s economy.

Nguyen Xuan Phuc, chairman of the Government Office, said Vietnam will continue to tighten control over consumer prices through the end of the year as the country strives to keep inflation at 8 percent. He said it is necessary to keep an eye on milk and medicine prices in particular.

In a recent report, the Asian Development Bank predicted that Vietnam’s inflation would reach 8.5 percent this year and 7.5 percent next year.

These forecasts are down slightly from April’s outlook, owing to improvements in macroeconomic conditions and moderate growth in credit, the bank found. However, large swings in inflation, together with expectations of dong devaluation, suggest that even the forecasts are not firmly anchored.

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Recent price increases raise inflation jitters

Prices of consumer goods saw the most rapid hike in four monthsp this September, raising fears about spiking inflation late this year.

Prime Minister Nguyen Tan Dung has asked ministries and relevant authorities to “intensify” measures to stabilize commodity prices and help the country maintain its economic and inflation targets.

He ordered the Ministry of Industry and Trade to study production and distribution systems to ensure a balance between the supply and demand of essential commodities and services through the end of the year. The country will also make efforts to keep prices of electricity and coal stable.

In Hanoi, prices on some 300 items, including confectionery products, milk and sugar, rose by 3 to 10 percent in September, according to the Hanoi Supermarket Association.

The association’s chairman Vu Vinh Phu said the prices of essential food items have increased two or three times compared to those of two to three years ago. In the same period, local incomes have risen by just 25 percent.

Phu said the prices of consumer goods will see stronger increases from now until Tet in January 2011 due to holiday demand. “Prices of hundreds of consumer products increase every day,” he said.

Consumer prices climbed 8.92 percent in September from a year earlier, compared with an 8.18 percent advance in August, according to a report issued by the General Statistics Office. Prices rose 1.31 percent in September over the previous month.

Nguyen Thi Ngoc Van, head of the office’s general department, said factors such as the increase in the price of gasoline and school fees, which contributed to rising inflation last month, will continue to affect the consumer prices in the months ahead.

The devaluation of the Vietnamese dong will further drive the price of imported products higher, raising business input costs as well as consumer prices, she said.

“Most imported products have seen a price hike since the dollar increase,” said Vu Thi Hau, deputy director of Nhat Nam Company, which owns the supermarket chain, Fivimart. “But food prices experience bigger year-end increases than other products.”

Vu Dinh Anh, deputy director of the Institute of Market and Price Research, said the demand for imported products is expected to increase from now until the end of this year, while the dollar exchange rate is also expected to rise at both commercial banks and black market exchange locations.

This will only add to the inflationary pressures on the country’s economy.

Nguyen Xuan Phuc, chairman of the Government Office, said Vietnam will continue to tighten control over consumer prices through the end of the year as the country strives to keep inflation at 8 percent. He said it is necessary to keep an eye on milk and medicine prices in particular.

In a recent report, the Asian Development Bank predicted that Vietnam’s inflation would reach 8.5 percent this year and 7.5 percent next year.

These forecasts are down slightly from April’s outlook, owing to improvements in macroeconomic conditions and moderate growth in credit, the bank found. However, large swings in inflation, together with expectations of dong devaluation, suggest that even the forecasts are not firmly anchored.

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Chaos marks cooking gas market

A decree regulating the price of cooking gas, which became effective
earlier this month, has failed to contain chaos on the market in HCM
City.

Earlier this month, following a global gas price
hike, domestic gas-trading companies raised prices by 14,000-15,000 VND
for each 12-kilo cylinder, with prices around 272,000 VND a cylinder.

Many customers in HCM City are paying 275,000 VND for a 12-kilo
cylinder from Sai Gon Petro and VT gas, and 280,000 VND for Total gas.

Gas-trading companies have conceded that they did a poor job of managing sale prices offered by retail agents.

Retail shops are reportedly selling cooking gas at prices higher than that specified by gas companies.

Currently, most gas companies sell products via wholesale agents, who
then sell to other agents and retail shops on the basis of a buy-sell
contract.

This can lead to one business being an agent for different brands of gas.

While gas companies can only manage gas prices at wholesale agents,
retail prices to end-users are decided by agents and retail shops.

Since every gas company has its own policy for their agents, agents
will focus on promoting gas products that offer higher profits.

Le Thi Anh Man, deputy general director of the Sai Gon Petro Gas Co,
said some 650 retail shops had signed contracts to sell gas produced by
her company.

However, the company faces difficulties in price management of these retail agents.

If her company forced retailers to strictly follow the company's
regulations, the agents would shift to another company, she said.

However, several gas agents have even filled cooking gas canisters and
sold fake products, according to gas production companies.

One customer in Go Vap District said she discovered that she had
purchased a fake gas canister as the gas was empty after 18 days of use
instead of one month.

Late last month, police discovered
many gas cylinders with a weight much lower than that listed on the
cylinder at Tin Nghia II gas establishment in the southern province
of Binh Duong .

The country has more than 80 gas-trading
companies, but only 60 of them have a registered trademark for their
empty gas cylinders.

Local task forces said fake gas accounts for 30 per cent of the total gas volume being marketed in Vietnam .

To avoid buying fake gas cylinders, customers must examine canisters to
see if they are lighter than normal, have unclear logos or an
inconsistent colour on the seal, according to the Market Management
Department of HCM City./.

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Vietnam orders 150 firms to register prices

The Ministry of Finance has named 150 companies that must register their prices with the authorities, including major foreign-owned dairy firms.

The list of companies was published Thursday on the government website.

It named seven dairy firms, including foreign producers like Friesland Campina, Nestlé, Mead Johnson, Meiji and 3A Pharma, the official distributor of Abbott in Vietnam.

Also on the list are eight cement producers, 18 steel companies, eight sugar producers, 10 animal feed manufacturers and five liquefied petroleum gas (LPG) traders.

These companies will be required to register their prices when they launch a new product for the first time or whenever ordered to do so by the authorities.

Previous regulations required only companies with 50 percent state capital to register their prices with the authorities.

Last month foreign milk companies and the ambassadors of Australia, Canada, New Zealand, the US and the EU raised their concerns about the new price control effort. They said it would affect Vietnam’s commitments as a WTO member and warned that it could also hinder foreign investment.

Nguyen Tien Thoa, head of the Price Management Department at the Ministry of Finance, said the new regulation does not break any WTO commitments.

He said it is in accordance with a previous government decree that lists milk as one of the commodities whose prices must be kept stable.

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Vietnam coal group explains preference for exports

Vincomin, a state-run coal and mineral group, said it has had to use export profits to offset the losses caused by low prices at home.

Because the government set coal prices for cement and power producers at a low level, the more coal Vinacomin sold to these two sectors, the greater their losses became, according to Vu Manh Hung, general director of the group.

According to Vinacomin, the prices of coal supplied to power plants rose in March, but domestic prices are still 60-64 percent lower than export prices.

“If the pricing problem can be solved, coal exports will be cut back sharply,” Hung said. 

Vinacomin is set to produce 25 million tons of coal this year. Due to a decline in orders, the group plans to export 18 million tons this year, down 6 million tons from 2009.

But while a majority of local coal output has been set aside for exports, many cement plants were forced to shut down due to a coal shortage.

State-run Vietnam Cement Industry Corporation, also known as Vicem, said its factories require 5,000 tons of coal every day to operate but Vinacomin can usually only meet half of that demand.

Vicem, which accounts for 38 percent of Vietnam’s cement output, also rejected an accusation by Vinacomin that local cement plants use outdated technologies that require an excessive amount of coal.

Local cement producers are using Japanese and European technologies, Vicem said, arguing that the real problem lies in a domestic coal shortage.

Vietnam will gradually cut down on coal exports as local demand  surges and supply declines, Minister of Industry and Trade Vu Huy Hoang said in May.

The country is expected to start importing coal in 2015 when a number of new power plants go online.

Analysts say it’s time for Vinacomin to reconsider its export policies to ensure sufficient supplies for the domestic market first.

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Business briefs

• Vietnam’s exports this year may grow 19-21 percent while imports could rise 16-17 percent from 2009, said Le Van Duoc, director of the Industry and Trade Ministry’s Planning Department. Exports could rise 10 percent in 2011 to US$74.8 billion, while imports could increase 9.7 percent to $89.4 billion, creating a trade deficit of $14.6 billion, the Planning and Investment Ministry has projected.

• The government on Tuesday named a new chief executive officer for state-owned shipbuilder Vinashin, the fourth head of the group over the past two months. Truong Van Tuyen, former deputy general director of Vietnam Oil and Gas Group was appointed, replacing acting chief executive Nguyen Quoc Anh, who took the post on August 30. The two predecessors, Pham Thanh Binh and Tran Quang Vu, were suspended amid a financial investigation into the company.

• Major state-owned companies will receive a total capital injection of VND5.18 trillion ($265.9 million) to develop infrastructure projects in 2011, news website VnExpress reported on Tuesday, citing the Ministry of Planning and Investment. The capital includes VND3.5 trillion for oil and gas group PetroVietnam, VND45 billion for the Vietnam National Shipping Lines, VND1.33 trillion for Vietnam Railways, and VND215 billion for Electricity of Vietnam.

• The government has ordered the Ministry of Industry and Trade to take measures to reduce power cuts and ensure all power plants run at their full capacity. The ministry was also asked to supervise prices set by power producers in an attempt to make pricing more transparent.

• Inflation in Vietnam may rise 1.56 percent in the final three months of the year as commodity prices are stabilized, Hoang Trung Hai, deputy prime minister, said in a statement on the government’s website on Wednesday.

• Gold prices in Vietnam have exceeded world prices as investors accumulated the metal to repay bank loans taken out several months ago, which they had sold for cash, said Tran Thanh Hai, director of the Vietnam Gold Business Corp. Domestic gold prices hit a record VND33 million ($1,690) per tael on Wednesday, up 4.4 percent from the previous day. One tael is about 1.2 ounces of gold.

• The central bank may allow businesses to import gold to “stabilize the market” so that domestic prices will move closer to the international trend, online newswire VnEconomy reported, citing Nguyen Quang Huy, head of the State Bank of Vietnam’s department for foreign-currency management. Any imports will be based on a “suitable volume and timeframe,” the report cited Huy as saying.

• Air Mekong, a local private air carrier that has partnered with Skywest Inc., will start domestic flights on October 9, said Doan Quoc Viet, chairman of the carrier. The company will use four CRJ-900 aircraft produced by Montreal-based Bombardier Inc. for its flights.

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SBV licenses gold imports, gold prices slightly down

The State Bank of Vietnam officially licensed some local enterprises to import 10 tons of gold, or over 200,000 taels, pulling local gold prices down VND300,000 a tael to VND32.8million a tael on Thursday.

The gold import quota is 200-300 kilograms each, and the license will valid through next Tuesday.

Earlier, local gold prices climbed to its lifetime record high of VND33.2 million a tael after an brief ease back to VND32.7million a tael.

The enterprises were given quota for local gold-trading firms to import gold include Sai Gon Jewelry Holding Co (SJC), Phu Nhuan Jewelry Joint Stock Co (PNJ), Agribank Gold, Silver and Gemstone Co, and Sacombank Jewelry Co Ltd (SBJ) among others.

It is estimated that 36 tons of gold were exported in the first six months of the year, according to the General Statistics Office.

Domestic gold prices Wednesday soared to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over previously-quoted price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Hanoi and Ho Chi Minh City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 percent since January, when prices stood at about VND26.5 million ($1,360).

The increase made domestic gold price be VND1 million ($51.28) higher than global gold price, which ignites concerns involving gold smuggling to take profits. Domestic price is normally just VND200,000-300,000 higher than global price.

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Central bank may allow gold imports

Gold trading enterprises may be allowed to import gold if domestic
prices continue to surge, says the head of the State Bank of Vietnam's
Foreign Exchange Department Nguyen Quang Huy.

The statement was made on Oct. 7 after domestic gold prices soared in
the afternoon. One tael of gold (equivalent to 1.2 troy ounces) costs
33.05 million VND (1,690 USD), a record high.

"The central
bank may consider allowing dealers to import a suitable quota to
stabilise market prices in line with global changes," Huy said.

He added that the sudden surge in gold prices was caused by the
increase in global prices, which are now at a record high of 1,349 USD
per ounce. Speculation and psychological worries also likely effected
the inflation.

As of Oct. 7 afternoon, the price of gold
in the domestic market was 1 million VND (51.28 USD) per tael higher
than the global price.

"The imbalance between supply and
demand is making gold prices ‘crazy'," said Huynh Trung Khanh,
International Gold Council's senior consultant official in Vietnam. "The
supply is drying up."

In July, the State Bank allowed
enterprises to import seven tonnes of gold. However, dealers said the
volume was unable to meet the market's growing demand.

In
August, the Vietnam Gold Trading Association asked the central bank to
allow them to import more gold bars to process, but the proposal was
rejected.

The increase in the price of gold caused the US
dollar's exchange rate to increase to 19,850 VND on Oct. 7 from 19,750
VND on Tuesday./.

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Domestic gold prices set new record

Domestic gold prices soared on Oct. 6 to a new record of 33 million VND
per tael (1,690 USD), an increase of 1.4 million VND (72 USD) per tael
over Oct.5's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Hanoi and HCM City were thronged
with people and saw prices change at least four times in the morning,
with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau,
Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at
32.85/33 million VND.

Domestic gold prices have
increased by over 24.4 percent since January, when prices stood at about
26.5 million VND (1,360 USD).

Sacombank Jewelry
general director Nguyen Ngoc Que Chi said on Oct. 6's rush of buyers was
due to a large number of speculators who had bought futures contracts
in prior months and now sought to acquire gold before the price shot up
further, putting a run on the available supply of the precious metal.

SJC's Hanoi director, Luu Quang Dien, agreed,
adding, "Many big trades are made by phone and the supply is limited, so
the company has to select familiar customers to whom to sell."

The increase made domestic gold price be 1 million VND (51.28 USD)
higher than global gold price, which ignites concerns involving gold
smuggling to take profits. Domestic price is normally just
200,000-300,000 VND higher than global price.

Rumours were rife on the gold market last week that supplies were
falling short of demand and that gold prices would continue to set new
record highs,so State Bank of Vietnam Governor Nguyen Van Giau
attempted to counter the rumours and blamed any rises in prices on
speculation rather than a gold shortage.

"With this
kind of sensitive item, our policy is not to completely ban gold
imports, but gold companies are not permitted to import any volume they
want," Giau said.

"Despite the shortage of gold at
this time, I don't think the State Bank of Vietnam will allow
enterprises to import more because of foreign exchange rates and
inflation," commented the head of a jewelry company who asked to remain
unnamed.

On the global market on Oct. 6, spot gold rose as high as 1,349.80 USD per ounce, its eighth record in the past two weeks.

The US dollar on black market on Oct. 6 also rose by 170 VND to
19,750-19,850 VND while bank exchange rates remained unchanged at 19,500
VND per dollar./.

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Vietnam may allow gold imports if local prices jump

Photo: AFP

HANOI - Vietnam's central bank said on Thursday it would consider granting permits for gold imports if prices in the domestic market rose "unreasonably high", helping to drive world bullion prices up to another record.

Spot gold, which has rallied 8 percent over the past month, hit an all-time peak for a third straight session on Thursday, rising above US$1,355 an ounce, as a weak dollar pushes investors to bullion in the face of economic uncertainty and speculation of further monetary easing by central banks.

Nguyen Quang Huy, director of the foreign exchange department of the State Bank of Vietnam, said gold prices were still largely in line with world markets but the central bank was closely monitoring the situation.

"If gold prices in the country rise unreasonably high, the state bank may consider giving permission to businesses to import gold, at appropriate volumes and times, to stabilize the market so that the price of gold in the country sticks with the price of world gold," he said on the central bank's website, www.sbv.gov.vn.

Dealers said the Vietnamese comments helped nudge the price of gold up.

"People are going to focus on the fact that the Asian physical market will be tight. Last time Vietnam opened the door to gold imports, gold went up $20. In percentage terms, it could translate into $30 today," said a Singapore-based trader.

In Vietnam, gold rose to VND32.80/32.89 million per tael from VND32.67/32.75 million early on Thursday, according to Saigon Jewelry Corp, the country's biggest gold dealer. One tael equals 1.21 troy ounces.

The unofficial exchange rate stood at 19,800/19,850 dong per dollar at a major Hanoi gold shop, putting the gold price in Vietnam at a premium of about $20 to global market prices.

Vietnam banned gold imports in mid-2008 to help tackle a trade deficit as the economy overheated, but the central bank has granted import quotas on a selective basis since.

Repeat scenario

Foreign exchange dealers have said the rise in global gold prices, and curbs on imports, had fed smuggling. Demand for dollars to buy this gold overseas was pushing down the value of the dong.

The scenario appears to be a repeat of pressures that built up in Vietnam about a year ago, leading the central bank to grant quotas for several tons of gold imports.

The pressure on the dong continued, however, and the central bank devalued the currency and raised interest rates just weeks after relaxing the import ban.

Nguyen The Hung, chief executive officer of Vietnam Gold Corp, said domestic supply was limited as investors had sold and businesses had increased gold exports when prices hit VND29-30 million per tael.

He said the differential between domestic and world gold prices had to be addressed. "The gap requires measures from the central bank," he said.

Traders said there had been a significant amount of gold suggled into Vietnam from neighboring countries and Thailand.

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Domestic gold prices set new record

Domestic gold prices Wednesday soared to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over Tuesday's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Ha Noi and Ho Chi Minh City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 per cent since January, when prices stood at about VND26.5 million ($1,360).

Sacombank Jewelry general director Nguyen Ngoc Que Chi said yesterday's rush of buyers was due to a large number of speculators who had bought futures contracts in prior months and now sought to acquire gold before the price shot up further, putting a run on the available supply of the precious metal.

SJC's Ha Noi director, Luu Quang Dien, agreed, adding, "Many big trades are made by phone and the supply is limited, so the company has to select familiar customers to whom to sell."

The increase made domestic gold price be VND1 million ($51.28) higher than global gold price, which ignites concerns involving gold smuggling to take profits. Domestic price is normally just VND200,000-300,000 higher than global price.

Rumors were rife on the gold market last week that supplies were falling short of demand and that gold prices would continue to set new record highs, so State Bank of Viet Nam Governor Nguyen Van Giau attempted to counter the rumors and blamed any rises in prices on speculation rather than a gold shortage.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

"Despite the shortage of gold at this time, I don't think the State Bank of Viet Nam will allow enterprises to import more because of foreign exchange rates and inflation," commented the head of a jewelry company who asked to remain unnamed.

On the global market yesterday, spot gold rose as high as $1,349.80 per ounce, its eighth record in the past two weeks.

The US dollar on black market yesterday also rose by VND170 to VND19,750-19,850 while bank exchange rates remained unchanged at VND19,500 per dollar.

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Domestic gold prices set new record

HA NOI — Domestic gold prices soared yesterday to a new record of VND33 million per tael (US$1,690), an increase of VND1.4 million ($72) per tael over Tuesday's price, as speculators created a run on gold shops.

A tael is equivalent to 1.2 ounces.

The gold-selling districts in Ha Noi and HCM City were thronged with people and saw prices change at least four times in the morning, with Sai Gon Jewelry Co (SJC), Sacombank Jewelry Co, Bao Tin Minh Chau, Agribank Jewelry Co and Phu Nhuan Jewelry Co quoting buy/sell prices at VND32.85/33 million.

Domestic gold prices have increased by over 24.4 per cent since January, when prices stood at about VND26.5 million ($1,360).

Sacombank Jewelry general director Nguyen Ngoc Que Chi said yesterday's rush of buyers was due to a large number of speculators who had bought futures contracts in prior months and now sought to acquire gold before the price shot up further, putting a run on the available supply of the precious metal.

SJC's Ha Noi director, Luu Quang Dien, agreed, adding, "Many big trades are made by phone and the supply is limited, so the company has to select familiar customers to whom to sell."

The increase made domestic gold price be VND1 million ($51.28) higher than global gold price, which ignites concerns involving gold smuggling to take profits. Domestic price is normally just VND200,000-300,000 higher than global price.

Rumours were rife on the gold market last week that supplies were falling short of demand and that gold prices would continue to set new record highs,so State Bank of Viet Nam Governor Nguyen Van Giau attempted to counter the rumours and blamed any rises in prices on speculation rather than a gold shortage.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

"Despite the shortage of gold at this time, I don't think the State Bank of Viet Nam will allow enterprises to import more because of foreign exchange rates and inflation," commented the head of a jewelry company who asked to remain unnamed.

On the global market yesterday, spot gold rose as high as $1,349.80 per ounce, its eighth record in the past two weeks.

The US dollar on black market yesterday also rose by VND170 to VND19,750-19,850 while bank exchange rates remained unchanged at VND19,500 per dollar. — VNS

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Apparel sector enjoys robust export growth, good prices

Workers at a garment factory in HCMC. Increasing prices of garment and textile products have helped local producers boost exports - Photo: Le Toan

HCMC – The apparel industry has gained robust export growth of over 20% in the January-September period to earn US$8 billion due to good prices and ample orders, and is poised to fulfill its 2010 target of US$10.5 billion, sources said.

The Ministry of Industry and Trade said in a report on Monday that prices of garment and textile exports have increased by 15-20%, making life easier for garment exporters who have faced a surge in input costs including higher materials prices.

Furthermore, shipments to most markets except the slow-moving European market have recovered strongly, according to the report. In particular, the nine-month export revenue of the country’s garment and textile products to Korea had surged a staggering 80%, while that to Japan also increased by 15%.

Recognizing that apparel exports in the January-September period increased 20.6% year-on-year to US$8 billion, experts in the industry predicted that the target of US$10.5 billion in export revenue for this year will be highly obtainable.

The ministry said that although the labor cost in Vietnam is higher than in other nearby countries such as Bangladesh, Cambodia and Myanmar, many foreign buyers still prefer Vietnam’s products because the country’s garment producers can meet their choosy demands.

But many challenges are still ahead, according to the ministry.

These include the lack of laborers hindering garment enterprises from expanding production, the rising prices of imported materials and accessories for the industry, and especially the illegal import of garment and textile products from China stonewalling local enterprises from boosting their local market shares.

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Coffee prices should stay stable

HCMC – Local experts predict that coffee prices in Vietnam would be stable during the 2010-2011 crop, ranging from VND24,000 to VND29,000 per kilo.

Vietnam is the second largest coffee exporter in the world, so foreign coffee traders and enterprises here will try to keep the prices low to below VND29,000 per kilo to improve their profit margins, coffee expert Doan Thien Nhan said.

Recently robusta coffee bean prices in the Central Highlands hit a two-year high of nearly VND31,000 a kilo.

Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association (Vicofa), said coffee prices have risen on the global market due to low coffee stock. The world prices may move between US$1,700-1,800 per ton within the next month, keeping coffee prices in Vietnam high as well, he said.

According to Vicofa, both Vietnam and Brazil are drought affected. If there is not enough rainfall in October, the coffee crops from both nations would be impacted.

In addition about a third of the coffee trees in Daklak, Gia Lai, Dak Nong and Lam Dong provinces produce low quality beans because they are too old, contributing to a predicted 10-20% drop in output.

The International Coffee Organization estimates the world crop would increase by 7 million 60-kilo bags against last year to 133 million bags.

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WTO calls on US to cut farm subsidies

GENEVA – The World Trade Organization called on US  Wednesday to cut its farm subsidies, saying that they were so "considerable" that they could affect market prices.

In a report analysing Washington 's policies since 2007, the trade body said that while promoting its exports, the United States should also reduce "distorting measures ... including ... support for agriculture."

The WTO noted that support granted to the sector under the multi-billion-dollar 2008 Farm Act are mostly "linked to prices and or production."

Thanks to this support, "producers of cereals, oilseeds, and cotton are effectively insulated from market prices while sugar and dairy have market price support programmes," said the WTO.

"The large size of the agriculture sector means that the absolute amount of support is considerable, varies from one year to another depending on prices, and can affect world prices," it added.

Brazil also hit out against the US ' farm policies during the WTO's examination of Washington 's trade policies every two years.

"Agriculture accounts for only 0.8 percent of US GDP and it employs just 1.4 percent of its labour force," noted Roberto Azevedo, Brazil 's envoy to the WTO.

"Nevertheless, this sector displays a considerable arsenal of trade-restrictive and distorting measures."

Azevedo pointed out that most of the subsidies are concentrated on crops such as cotton soybeans and rice.

"When prices drop, those subsidies will be in place again precisely at the moment when they will provoke the largest distortions and most damage to producers elsewhere," he charged.

Washington 's subsidies to its agriculture sector is a key sticking point holding up long-stalled Doha negotiations for a new global free trade deal.

Its support for cotton producers has been judged illegal by the WTO, in a complaint brought by Brazil .

Brazil however agreed to not apply reprisals after both countries decided to wait for the new Farm bill in 2012 to see what modifications would be made.

 

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