VietNam Business

Monday, February 14, 2011

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

Call to boost faith in dong

US dollar transaction at Quoc Trinh Gold Shop in Ha Noi. About 20 per cent of all currencies in circulation in Viet Nam are foreign. — VNS Photo Truong Vi

HA NOI — Viet Nam should expend more effort in raising people's confidence in the dong, while co-operating with neighbouring countries on resolving overuse of foreign currencies, the Asian Development Bank said in its latest study.

Regional co-operation on monetary and financial issues to exploit economies of scale, introduce good practices and facilitate the adoption of common regulatory standards will help the country tackle economic and developmental challenges posed in the transitional period, the book Dealing with Multiple Currencies in Transitional Economies: The Scope for Co-operation in Cambodia, the Lao People's Democratic Republic, and Viet Nam, stated.

"Dealing with dollarisation and multiple currencies is ultimately an issue of national economic policy, and in this regard, Viet Nam has made good progress in de-dollarisation," Ayumi Konishi, ADB Viet Nam country director said at the book's launch in Ha Noi last Friday.

"Yet, authorities, especially the State Bank of Viet Nam, are fully aware that administrative measures alone will not be effective."

In order to de-dollarise the Vietnamese economy, it is essential to enhance people's confidence in the Vietnamese dong through sustainable and high economic growth, stabilisation of the foreign exchange rate, reforms in monetary policies, and by strengthening the capacity of financial institutions, the ADB representative said.

The study shows other countries' currencies, particularly the US dollar, are in wide use in the three Indochinese countries – Laos, Cambodia and Viet Nam.

In Viet Nam, about 20 per cent of all currencies in circulation are foreign; in Laos the figure is 50 per cent; while in Cambodia it is 90 per cent.

The study highlighted the costs and benefits of dollarisation. On the plus side, dollarisation can impose discipline on governments since they cannot easily finance budget shortfalls by printing money. In addition, if dollarisation leads to a near fixed exchange rate, prices can be less volatile.

However, the use of multiple currencies reduces the control of economic authorities over monetary and exchange rate policies. It also restricts the power of central banks to act as "the lender of last resort" in the event of a banking crisis, the study said.

"Dollarisation blunts the tools for macroeconomic stabilisation, especially monetary and exchange rate policy, that a country like Viet Nam needs in order to tackle a variety of economic and developmental challenges, such as rising inflation," the book's co-editor Jayant Menon, principal economist at ADB's Office of Regional Economic Integration, said.

Meanwhile, sharing information and experiences would help the monetary authorities of Viet Nam, Lao and Cambodia find a solution to the dollarisation issue, said co-editor Giovanni Capannelli, principal economist at the ADB. — VNS

Intel to launch $1b chip plant

Vietnamese use Samsung computers with Intel programmes. Intel plans to open an assembly and testing facility in Viet Nam by the end of this year. — VNA/VNS Photo MInh Tu

HA NOI — Intel Corporation, the world's leading chip maker, will open a US$1 billion assembly and testing facility in Viet Nam at the end of this month, Intel Asia-Pacific general manager Navin Shenoy told The Wall Street Journal last week.

Intel Corp began construction of the facility in 2007, and the plant is expected to provide jobs for 4,000 people when operational.

Intel's investment in Viet Nam was aimed at tapping growth opportunities in emerging Asian markets, said Shenoy, noting that Viet Nam's young population and low PC penetration rate made it a particularly attractive market.

Intel already operates assembly and test sites in Malaysia, the Philippines and China.

"We expect Asia's PC market to continue to grow by more than 20 per cent annually in the next few years," he said, noting that, while market sentiment was weak in US and European consumer markets, Asian consumers and enterprises continued to buy PCs.

Intel reported more than $11 billion in quarterly revenue in the third quarter, with $6.4 billion, or 58 per cent, coming from the Asia-Pacific region, compared to $5.3 billion a year earlier. — VNS

Vietnam becomes hand-made hub

China, Turkey and Sweden are looking to Vietnam for cheap, well-made handicrafts

Vietnamese pottery products on display at an exhibition in Ho Chi Minh City. Local suppliers of hand-made products are highly competitive on the global market, experts say.

International manufacturers are looking to Vietnam to make their hand-made products thanks to the country’s cheap labor and competitive pricing.

In the meantime, growing Chinese wealth has translated to skyrocketing imports of high-end Vietnamese furniture.

IKEA, the world’s largest furniture retailer plans to double its orders from Vietnam in the next three years. At the moment, the conglomerate is the largest buyer of Vietnamese hand-made products.

Mikael Demitz-Helin, manager of IKEA Trading in Southeast Asia, says Vietnamese suppliers of products like textiles, furniture, handicrafts and ceramics were highly competitive on the global market.

IKEA, which has been doing business in Vietnam for 14 years, shipped out 25,000 containers of hand-made Vietnamese products last year to its stores worldwide. Its Southeast Asian headquarters are based in Ho Chi Minh City and the firm currently does business with 42 Vietnamese companies producing textile, wood and metal products. IKEA has 1,047 suppliers, worldwide.

Demitz-Helin told Thanh Nien Weekly that Vietnam is a choice manufacturing destination due to its competitive advantages of cheap, skilled labor and abundant raw materials.

He said many Vietnamese firms hoping to break into the global market have been hindered by a shortage of investment. Without proper funding, many hand-made product manufacturers find themselves unable to increase their production to meet soaring international demand.

“Local businesses have utilized the nation’s low labor costs and need to invest in technology [to meet] bigger orders from international buyers,” said Demitz-Helin.

He said IKEA has extended technical support to small manufacturing firms seeking to become IKEA’s long-term suppliers.

Talking Turkey

Selman Aycan, a representative from Turkish Businessmen and Industrialists in Vietnam (TUSKON) said buyers in the European-Asian country have discovered Vietnam as a new source of home products like furniture, rattan and bamboo handicrafts in addition to products like building materials and plastics.

Aycan said that two-way trade between Turkey and Vietnam doubled last year nearing US$500 million.

An unofficial source said the exchanges amounted to $390 million during the first eight months of this year.

Turkish buyers had been previously unaware of Vietnam due to the geographical distance between the two countries, said Aycan, who led a delegation of Turkish businesses to join an export exhibition of furniture in HCMC last week.

He said the association will invite a delegation of Vietnamese craft sellers to visit the Turkish market next summer.

Fine China

China has emerged as a major buyer of Vietnamese handmade products, according to an official from the Handicraft and Wood Industry Association of HCMC or HAWA.

Dang Quoc Hung, deputy chairman of the association, said furniture factories have reached their capacity to fill orders from international importers, especially Chinese buyers.

“It is strange that local firms have received many orders for high-quality products from China, the world’s biggest wooden product exporter,” said Hung.

Hung told Thanh Nien Weekly that Vietnam’s export of high-quality furniture to China soared from $100 million to $230 million in the first eight months of this year. Vietnam exported $890 million and $270 million worth of furniture to the US (the world’s largest importer) and Japan respectively in the same period, according to HAWA.

China’s manufacturers have focused on low-priced products and left a big hole for high-quality furniture in the domestic market, said Hung, adding that demand for the product has grown as China’s high-income demographic continues to flourish.

Expanding Chinese wealth could bring opportunities for other producers as well, he said.

Meanwhile, Vietnam’s rattan and bamboo furniture exports have been valued at $2.41 billion and $153 million respectively. The figures represent a 34.5 and 18 percent year-on-year increase in the first nine months of 2010, according to the General Statistics Office.

The office also said the country shipped $8 billion worth of textiles and garments – a 20 percent increase from January to September.