IFC helps Bac Ninh reduce environmental pollution

The International Finance Corp (IFC) will work with the Bac Ninh Natural Resources and Environment Department to seek cooperation for reducing environmental pollution at the provincial traditional craft villages, said IFC Vice President Dorothy Berry.

At a working session with authorities of the northern province of Bac Ninh on Tuesday, Dorothy Berry said the Bac Ninh should prioritize the settlement of urgent environmental pollution issue in its traditional craft villages.

Both the host and guest agreed that Bac Ninh’s business and investment environment has been considerably improved thanks to bilateral cooperation programs on the simplification of procedures and enhancement of inter-branch coordination in settling construction investment and land access procedures.

Bac Ninh ranked 10th in the Vietnam province competitiveness index (PCI) in 2009 and is among three leading localities in business environment improvement.

Chairman of the Bac Ninh Provincial People’s Committee Tran Van Tuy proposed the IFC continue cooperating with his province in helping its all eight districts setting up a one-stop business section.

Also on same day, the IFC delegation made a fact-finding tour of the Phong Khe paper craft village in Bac Ninh City where IFC and the province are discussing cooperation possibilities for experimentally reducing environmental pollution.

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ADB ups stable Vietnam’s economic outlook

The Asian Development Bank has raised Vietnam’s GDP growth forecast for this year and next year by 0.2 percent to 6.7 percent and 7 percent due to the country’s efforts to maintain economic stability.

Vietnam has successfully shifted from the strong fiscal and monetary stimulus to tackle the global recession last year to a more balanced policy to stabilize financial and economic conditions, it says in its annual flagship publication, the Asian Development Outlook Update, which was released in Hanoi Tuesday.

The steps taken by the government to stabilize the economy have contributed to an improvement in the economic growth: GDP grew by 6.2 percent in the first half of this year compared to 3.9 percent in the same period last year.

Policy tightening and a good rice harvest have helped pull back inflation from 9.5 percent year on year in March to 8.2 percent in July and August.

The trade deficit has narrowed from $8.1 billion in July-December 2009 to an estimated $3.8 billion in the first half and the current account deficit from $8 billion to $2.7 billion.

The current account deficit, as a ratio to GDP, is forecast to narrow from 7.5 percent in 2010 to 5.4 percent in 2011 due to the shrinking trade deficit and increasing remittances and tourist arrivals.

The balance of payments situation has been improving due to higher foreign direct investment.

The bank is optimistic about the inflation situation since the country’s economy and world oil and commodities prices have been stable. It has cut down its earlier estimation of 10 percent inflation this year to 8.5 percent and from 8 percent to 7.5 percent next year.

However, it foresees a risk to the economy if there is a premature easing of monetary or fiscal policies or a perception of looser policy by financial markets and domestic investors.

“An early easing, or the perception of a relaxation, could derail the macroeconomic stabilization efforts, putting inflation on an upward trajectory and pressure on external accounts.”

So the authorities should maintain a firm and consistent policy stance, and communicate such a position effectively to the market until inflation is clearly on a downward track and foreign reserves increase, the bank warns. The other major challenge is to raise the efficiency of the economy and reduce supply-side constraints through structural reforms.

Ayumi Konishi, ADB’s country managing director for Vietnam, said at the release that the government should be very cautious about maintaining macroeconomic stability and effectively inform the people about the policies while promoting further reform.

The most important factor is providing quality and up-to-date information to businesses and potential investors, he added.

Last year, it ratified a total credit of $16.1 billion for the country’s loans, non-refundable and technical assistance projects.

The Asian Development Outlook and other ADB reports analyze the economic conditions and prospects in Asia and the Pacific and are issued every April and September.

Vietnam will host the ADB’s 44th annual summit in Hanoi next May.

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High-tech multinationals invest in Vietnam

Many giant corporations like Intel of the US, Nidec of Japan and Robert Bosch of Germany are pouring more money into the high-tech field in Ho Chi Minh City.

Intel Vietnam , for example, has opened its plant, one of the largest in the Asia-Pacific region that makes and tests electronic chips.

The plant, which is located in the Sai Gon Hi-Tech Park (SHTP) in District 9, began operating its first production line for test purposes earlier this year.

Le Thi Thanh My, deputy head of the management board of the SHTP, said since July Intel had exported goods for more than 30 orders.

In addition, Germany Robert Bosch Vietnam next month will put into operation the Centre for Research and Production of Software, one of only two centres of the company in the Asia-Pacific region. The other centre, located in India , employs 70,000 engineers.

Vo Quang Hue, managing director of Robert Bosch Vietnam Company, said the company had also disbursed 24 million euros (US$31.2 million) out of the total committed capital of 55 million euros ($71.5 million) for a project to develop an assembly-line plant to make automatic automobile gear boxes.

The plant, in Dong Nai southern province's Long Thanh district, has a capacity of 2.3 million products per year.

Robert Bosch Vietnam will develop the second phase of the project and disburse the entire capital of 55 million euros by 2015.

Vietnam is the only market in Southeast Asia in which Robert Bosch has invested in all three areas of operation, including sales, production and research.

According to Lu Thanh Phong, deputy director of HCMC's Department of Planning and Investment, of the 3,000 foreign direct investment (FDI) projects with a total capital of $37 billion in the city, Japanese businesses account for 397 projects. They operate in mechanics, spare parts production, food processing and others.

Japan has been cautious in expanding its investment in the hi-tech field in HCM City due to limited capital resources.

However, many Japanese corporations that produce semi-conducting spare parts had increased their investment in HCM City recently, Phong said.

According to Nagamori Shigennobu, chairman of the Japan-based Nidec Corporation, Nidec will continue to invest in research and development at the SHTP.

Nidec has developed three projects and recently received a licence for another project. Total capital for the projects at the park is $500 million.

Nagamori Shigennobu has also committed to encouraging small and medium-sized Japanese businesses to invest in the park. Most of the businesses make spare parts for Nidec products.

With more high-tech projects in the pipeline, Vietnam has more opportunities to promote investment and enhance its competitiveness capacity in the field.

Hue said Vietnam has advantages over other countries in the region due to its low labour costs and good location for transporting products to other countries in Southeast Asia and other parts of the world.

Vietnam should create the most favourable conditions for foreign corporations so that they can produce and export hi-tech products here, Hue added.

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SCIC to sell capital in 90 State-owned enterprises

Photo: Reuters

The State Capital Investment Corporation (SCIC), the representative of state-owned capital at state-owned enterprises, expects by the end of this year to sell capital at 90 state-owned enterprises, the corporation said.

The 90 enterprises are small and medium-sized companies with capital of no more than several billions of Vietnamese dong each.

The plan to sell the state-owned capital for the remainder of the year, is expected to be carried out successfully as the global economy recovers. This year, the corporation has targeted to sell capital at 170 state-owned enterprises.

However, a representative from one of 15 securities companies that trade in stake divestment, said the SCIC should ensure more diversity and flexibility in selling capital, especially after the experiences gained in divestment in previous years.

At present, the SCIC sells state-owned capital under public auctions and securities companies act as consultants and trading agencies at the auctions.

To have effective auctions, the corporation has been urged to improve production and business at enterprises to ensure the quality of securities before they are sold at auction. The timing of auctions is also crucial.

In coming years, the selling of state-owned capital would be one of the major tasks of the corporation as state-owned capital at state-owned enterprises is reduced in industries that do not need a great deal of State control.

The State plans to focus capital spending on key economic industries, said SCIC deputy director Hoang Nguyen Hoc.

The corporation's target is to hold state-owned capital at only 100 state-owned enterprises by 2012.

So far this year, the corporation has sold capital at 81 state-owned enterprises.

Last year, the corporation sold state-owned capital at 238 enterprises, a record high against previous years. It gained the good result because the state created favourable conditions for the sales.

 

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Apparel exporters to pass benchmark

The textile and garment sector's export value is expected to earn US$7.5 billion during the first nine months, a 17 percent increase against the same period last year, reports the Vietnam Textile and Apparel Association.

The industry is likely to surpass its scheduled $10.5 billion benchmark for the year.

The sector's solid performance is attributed to an increase in orders from foreign clients and the products' prices increased by 15-20 percent.

Export growth to the European market keep stagnant, while other markets remain accelerating during the period.

The country's export to the US market increases around 20 percent and to Japan raises by 15 percent and to ASEAN nations goes up by 17 percent.

Especially, the trade agreement between ASEAN with the Republic of Korea has helped boost Vietnamese garments' export to the market with the sharp increase of 80 percent.

The association reported that many garment makers had so far received enough orders for export this year, and signed contracts for export next year.

However, the association claimed that the early orders may shrink profit of the enterprises amid on-rising prices of input materials, accessories and higher salaries.

To satisfy increasing demand of international contracts, ten companies under the Vietnam National Textile and Garment Group (Vinatex) have recently made production expansion investments to meet increasing orders from foreign partners as well as higher demand at the local market.

The Nha Be Garment Joint stock Co has approved a plan to inject thousands of billions of dong to implement tens of projects on textile, garment, washing and dyeing.

The Dap Cau Garment Joint Stock Co invested nearly VND100 billion ($5.13 million) in a new factory in the northern province of Bac Ninh. It was put into operation in February and has the capacity to produce 9 million products annually.

Nguyen Dang Luan, chairman of Dap Cau Co, said the new facility would help the firm meet the rising number of export contracts.

"When the factory was prepared to begin operating the first 16 production lines the firm had already signed export deals for the whole year with three partners, generating 1,800 jobs," Luan said.

 

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IMF boss sees low risk of 'currency war'

Photo: AFP

WASHINGTON – The risk of a global currency war is "low" but cannot be ruled out, IMF managing director Dominique Strauss-Kahn said on Tuesday, following a spate of currency interventions.

Amid mounting anger that economic powers are pouring money into currency markets to make exports cheaper at the expense of rivals, Strauss-Kahn insisted the potential impact of an all-out currency war should give countries pause.

"I don't feel today that there is a big risk of a currency war. But that's part of the downside risk," Strauss-Kahn told reporters in Washington.

"I think the probability is rather low, because everybody can understand that too big conflicts... will have a negative impact. Nevertheless it may happen."

His comments come a day after Brazilian finance minister Guido Mantega vented his anger at the impact the rising Brazilian real has had on the country's vital export sector.

"We're in the midst of an international currency war," Mantega said in Sao Paulo hinting that intervention could come soon. "This threatens us because it takes away our competitiveness."

In recent weeks nearly a dozen governments from Colombia to Singapore have admitted to buying up local currency in the hope of driving down the price of the currency to make exports cheaper.

The dollar has fallen by about 25 percent so far this year against the Brazilian real.

"The talk of currency war is a bit exaggerated, I would say, but there is definitely a growing risk of a lower-level confrontation between countries trying to protect their exports in an unstable global economy," said analyst David Gilmore of Foreign Exchange Analytics.

But the latest rumblings come against a background of heightened tensions between the United States and China over the value of the yuan and as country's scramble to regain their competitive edge after the global economic slowdown.

The United States has complained for years that China has held down artificially the value of its currency, preventing it from rising to reflect the strength of China's foreign exchange earnings from exporting, notably to the US market.

US lawmakers were expected to vote on Wednesday to introduce sanctions against China if the undervalued yuan is not allowed to rise against the dollar.

The legislation enjoys strong support from Democrats and Republicans some five weeks before November elections shaped by deep US voter anger at the sour economy and historically high unemployment hovering near 10 percent.

The currency issue now looks set to feature prominently when finance ministers and central bankers gather in Washington next week for the IMF's annual meetings and at upcoming group of 20 summits in South Korea.

"I think it is one of the questions which will be very much discussed during the annual meetings and during the two meetings in Korea in October and in November," said Strauss-Kahn.

But according to one former IMF official the Fund is at least partially to blame for the the ratcheting tensions.

"The IMF has abdicated its surveillance responsibilities, it is a free-for-all out there, you can do whatever you want," said Morris Goldstein, former IMF official and member of the Peterson Institute for International Economics.

"If China can be intervening and and manipulating its exchange rate for seven or eight years in a row and the Fund does not say anything, then why shouldn't everyone else do it?"

 

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Imported Chinese toothpicks dominate domestic market

Workers make toothpicks in Dien Chau town in the central province of Nghe An. The higher price of domestic toothpicks have reduced their competitiveness. — VNA/VNS Photo Tran Canh Yen

HCM CITY — The bamboo toothpick market in HCM City, once dominated by domestic producers, has been inundated with Chinese products.

The Sai Gon Customs Department Zone 1 reported that during the first eight months of the year, 911 tonnes of bamboo toothpicks were imported through the Cat Lai Port, 200 tonnes in August alone.

The imports reached a turn over of US$125,000.

Tran Van Phuoc, owner of a company that imports bamboo toothpicks in HCM City, said the imported products only cost VND2.6 million ($135) per tonne, which was half the price of their locally made counterparts.

"Because of the huge price difference, many businesses prefer to buy imported products," he said.

Chinese toothpicks are more diverse in price, packaging and appearance, with prices ranging from VND2,300 ($0.12) to VND23,000 ($1.2) for 10 packages.

Nguyen Lan Huong, a customer in Tan Binh District said "Chinese toothpicks are white, smooth and clean, while some Vietnamese-made products do not look clean and are even rough."

A representative from Tre Viet Enterprise in Central Highlands' Lam Dong Province said that Vietnamese producers often made toothpicks manually while Chinese companies used more advanced technology.

"Our labour is more expensive and the products do not look as good as Chinese ones," he said.

Leader Vu Ngoc Quynh of Dong A, another toothpick producer, holds a different view, however.

He said "toothpicks are most frequently used in restaurants in Sai Gon, not in households, and restaurant owners choose Chinese toothpicks because they are cheaper".

"We have lost about 30-40 per cent of our customers this year," Quynh said, adding that each month their company sells about four tonnes of toothpicks.

To compete with the imported toothpicks, Quynh said his company was planning to produce a cheaper variety to meet the needs of different types of customers.

"We will try to cut down on costs for large packages to restaurants and supermarkets," he said. —VNS

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