VietNam Business

Tuesday, January 25, 2011

Vietnam orders 150 firms to register prices

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.

Import reliance slowing down animal feed industry

Import reliance slowing down animal feed industry Overly dependent on imported agricultural raw materials, Vietnam’s animal feed industry could do with some policy help that reduces their reliance, industry insiders say.

They see irony in the situation that a major agricultural exporter is heavily reliant on imports of the same sector’s products to support a local industry that has significant growth potential.

According to the Ministry of Agriculture and Rural Development, there are 240 animal feed factories in the country with a combined capacity of around 10 million tons a year. In the first half of 2010, these factories produced 4.9 tons of animal feed.

Experts say the industry’s growth is clearly hampered by the reliance on foreign raw material.

“Even if we want to use local materials, there is not enough to buy,” said Pham Duc Binh, general director of an animal feed company in the southern province of Dong Nai.

Over the past month, his company has been trying to buy 10,000 tons of corn, but there was a shortage in local supply even during the harvest season. He said it was much easier to buy materials from foreign suppliers, at higher prices.

Binh said most materials needed for animal feed production, like corn, cassava, wheat and soybean meal, have to be imported. Local corn supply can only meet half of the existing demand of animal feed producers.

Most of these materials should be made available here, he said. In fact, the country used to be able to meet all of its demand not so long ago. But since the economy has opened up in recent years, imported materials have surged, accounting now for 90 percent of the total supplies for the domestic animal feed industry.

Vietnam imported more than US$2.1 billion worth of animal feed products and materials last year, including $1 billion of soybean meal and $300 million of corn. In the first eight months this year, the import value reached $1.475 billion, up 15.6 percent from the same period last year.

“Frankly speaking, the shortage in materials for the animal feed industry is because of agricultural policies,” Binh said. Local producers have been hungry for materials for years, but the country’s corn-growing area keeps shrinking, he said.

Crop yields in Vietnam are also too low compared to those in other countries, said Vu Ba Quang, an industry expert. Low output combined with shrinking crop area further weakened the supply of local materials for production, he said.

The country needs to have a large cultivation area that can ensure enough material supplies, he said. It will help lower prices of animal feed products and, in the end, benefit local farmers.

Binh said many places in Vietnam are not really suitable for rice cultivation, but these areas have not been shifted to growing other crops.

Farmers in coastal areas in the central region and the Central Highlands can earn more from growing corn instead of rice, he said, arguing that the government has been focused on rice growing for too long.

Nguyen Tri Ngoc, director of the Cultivation Department at the agriculture ministry, admitted that the authorities have not paid enough attention to developing areas specialized in growing corn and soybean.

He said the ministry is trying to improve the yields of these crops. The goal is to increase the area for corn from 1.1 million hectares to 1.3 million and its yield from four tons per hectare to six tons.

The government has announced it will start planting genetically modified crops in the next five years, including corn, cotton and soybean.

Monday, January 24, 2011

Import reliance slowing down animal feed industry

They see irony in the situation that a major agricultural exporter is heavily reliant on imports of the same sector’s products to support a local industry that has significant growth potential.

Experts say the industry’s growth is clearly hampered by the reliance on foreign raw material.

“Even if we want to use local materials, there is not enough to buy,” said Pham Duc Binh, general director of an animal feed company in the southern province of Dong Nai.

The country needs to have a large cultivation area that can ensure enough material supplies, he said. It will help lower prices of animal feed products and, in the end, benefit local farmers.

Binh said many places in Vietnam are not really suitable for rice cultivation, but these areas have not been shifted to growing other crops.

The government has announced it will start planting genetically modified crops in the next five years, including corn, cotton and soybean.

Vietnam coal group explains preference for exports

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.

Hungarian eco-disaster offers cautionary tale to Vietnam

Hungarian eco-disaster offers cautionary tale to Vietnam The recent aluminum mining accident in Hungary serves as a “warning” for Vietnam to tread carefully as it prepares to develop bauxite projects in the Central Highlands, an official of the state mining group said.

Vietnam is developing two bauxite mining and processing complexes in the region.

Duong Van Hoa, Deputy General Director of the state-run National Coal-Mineral Industries Group, said the projects will have eight sludge reservoirs, enough to store 12 years worth of toxic waste.

In case a reservoir faces technical problems, Hoa said, there will always be another one ready to store the toxic sludge.

Careful environmental precautions will be taken to ensure that the sludge is neutralized properly, he said.

Each reservoir can store a total two-year amount of sludge, and after three years the sludge will be toxin-free.

Three villages in southwest Hungary were flooded Monday with a wave of toxic red sludge from an alumina plant reservoir.

Environmental group WWF-Hungary said the main threat posed from sludge was its alkalinity, with a pH as high as 13. The sludge is a byproduct of refining bauxite into alumina.

Vietnam’s bauxite reserves are among the largest in the world at 5.5 billion tons, according to the Ministry of Natural Resources and Environment.

Sixty-six percent of the construction of Vietnam’s first bauxite mining project in Lam Dong Province, Tan Rai, has been completed, Vietnam News Agency reported Tuesday.

The project is scheduled for completion at the end of this year.

Construction at the second project, Nhan Co in Dak Nong Province, began in March.