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Is-Sibt, 14 ta’ Lulju 2007

Vietnamese people changing their consumption habits: research


16:59' 13/07/2007 (GMT+7)

VietNamNet Bridge – There will be big changes in the shopping and consumption habits of Vietnamese people, according to research conducted by the Trade Research Institute.


The institute has forecast that the final consumption fund (referring to the amount of money consumers put aside for consumption) in comparison with Vietnam’s GDP may reach VND840-860bil ($50bil) in three years.

In the last few years, Vietnam has ranked third in the world in terms of consumption ratio. Vietnamese people have been spending more money to satisfy their demands, while middle-class consumers have appeared.

Nguyen Van Nam, Head of the Trade Research Institute, talks more about that.

What will the big changes in the consumption habits of Vietnamese people be like in the next three years?

There will be big changes in the consumption habits of Vietnamese people. They will require not only good food and fine clothing, but also choose the kinds of food that are good for health. A recent survey announced by TNS Market Research showed that 62% of Vietnamese people do not eat at home every day. The consumption style will also be different: more spending and less saving in young families.

Will traditional Vietnamese products like fish sauce, seasoning powder, instant noodles, vegetable oil, green tea and coffee be affected by the new consumption habits?

All Vietnamese people use these products everyday as a long-standing habit, no matter if they eat at home or restaurants. All the tastes and habits of Vietnamese consumers will stay the same.

However, the requirements of new consumers will be stricter as they will demand safer and cleaner products. This will bring more opportunities to Vietnamese enterprises, while also be a big challenge for them.

Let me take the case of the soy sauce with the high level of 3-MPCD as an example. Since the information about the toxic substance was released consumers have ‘boycotted’ the unsafe product, a move that shows that consumers now have behaviour different from what they did before.

What should you do to control the quality of goods?

Someone may fear that the opening of the distribution market to foreigners will kill the domestic distribution network. However, they should realise that many bad-quality products, including China-sourced ones, can be seen everywhere on the domestic market due to many reasons. One of the reasons is the bad domestic distribution network.


Vietnamese producers should understand that only good-quality products can be sold, while distributors should distribute good-quality products only.

Why do you say that the bad distribution network is the reason behind the bad-quality imports?

Local distributors now sell everything they can, both the good and bad products. Meanwhile, if foreign distributors can operate on the market, they will standardise sale items: i.e. only good and safe products will be put on sale. Bad-quality products will have no room in their distribution chains. I also have to say that the backward distribution network will not help encourage production, and cannot meet the demand of modern consumers.

Thailand once had the same fear as Vietnam when it opened its retail market. However, the result of the market opening was very good: the quality of its products has become better and its export turnover is 10-fold higher than Vietnam’s.

(Source: Viet Nam Net)

Mergers & Acquisition: many problems remain


16:44' 13/07/2007 (GMT+7)

Vinamilk has joined hands with Campina to develop together
VietNamNet Bridge – There were 18 mergers and acquitisition (M&A) cases in Vietnam in 2005 totalling US$61 million. The figure rose to 32 M&A in 2006, with a total value of $245 million.

M&A to quickly develop

M&A is a very important form of foreign direct investment (FDI). For Vietnam, M&A activities have been performed but it is still a new form of business. Thus, research and seeking solutions for promoting M&A will contribute to create a new and important FDI attraction channel in Vietnam in the coming time, said Nguyen Thi Bich Van, Deputy Head of the Foreign Investment Agency under the Ministry of Planning and Investment.

In the past ten years, these activities have developed robustly and created a fever in many developed and developing countries. FDI performed in the form of M&A accounts for 57%-80% of the total FDI in the world.

According to PricewaterhouseCoopers, there were 18 M&A in Vietnam in 2005 with a total value of 61 million. The figure was nearly double in 2006, 32, valued at $245 million.

“This year and in the next few years, M&A operations will develop quickly in Vietnam, especially in the fields of banking, financial services, consumer goods, textile-garment products and retailing,” said Bui Van Tuynh, General Director of the Dai Viet Securities Joint Stock Company (DVSC).

According to some economic experts, the trend of forming multi-area groups or cross investment in the form of becoming strategic shareholders is one way of economic concentration and this will facilitate M&A activities.

Problems…

According to Mr. Bui Van Tuynh, some companies conducted M&A some years ago, but this was not true M&A because those cases were done under the recommendation of management agencies.

It was not until the Foreign Investment Law 2005 took effect that M&A was really able to assume its true nature. Many transactions have been conducted successfully, for example the affairs between Campina milk group of the Netherlands and the Vietnam Dairy Products JS Company, Japan’s Daii insurance group and Bao Minh CMG.

However, along with the development of M&A, the ineffectiveness of the Investment Law 2005, Enterprise Law 2005, the Securities Law 2006 and the differences in those laws have hindered M&A operations.

Many problems associated with M&A have been mentioned and Vietnamese companies have asked the government to consider dealing with those problems soon to promote M&A.

“According to international experience, M&A is an important factor for economic development, helping local firms access technology, management, skills on market and exports. So we need a clear, sufficient legal corridor as the foundation for M&A activities, to restrict economic concentration and unhealthy competition,” said Mr. Tuynh.

(Source: Viet Nam Net)

Il-Ġimgħa, 13 ta’ Lulju 2007

Power shortage seen less severe than expected


16:18' 13/07/2007 (GMT+7)

VietNamNet Bridge – State utility Electricity of Vietnam (EVN) has said a shortage of electricity would not be as severe as earlier forecast for it has found solutions to deal with a reduction in gas supply for a major southern power complex.


The Nam Con Son Pipeline was suspended from Monday as scheduled and the down-time lasts eight days under a plan to install a new air compressor for the platform in offshore Block 06.1 off the coast of Vung Tau City.

The suspension of gas supply was earlier believed to cause a serious power shortage as Phu My 1, Phu My 3 and Phu My 2.2 power stations with a combined output capacity of 4,000MW in the Phu My power complex in Ba Ria-Vung Tau Province run on gas supplied by the Nam Con Son project.

In a report, the electricity supply regulator AO of EVN forecast the power shortage in the daytime would reach 1,000MW a day.

However, Ngo Son Hai, deputy director of AO, said the office had asked local electricity companies to practice thrift. EVN will make the most of power stations that will switch from running on gas to diesel oil.

AO experts have forecast a power shortage of around 400MW in peak hours.

During the downtime of Block 06.1, Dinh Co gas terminal will not be shut down but the gas flow will be reduced. Therefore, some small-scale power plants with a total generation capacity of 1,000MW are continuing running on gas and other power plants with a total capacity of 3,000MW in cities and provinces will be fueled by diesel oil, Hai explained.

Hai stressed that if EVN effectively practiced electricity savings, it could ensure sufficient power supply.

EVN also plans standby solutions to deal with all possible contingencies to limit electricity cuts. In case of a huge power shortage, EVN will cut electricity supply for household users to ensure sufficient power for the manufacturing sector.

Block 06.1 is scheduled to close three times - July 9-14, August 29-September 6, and September 29-30.

According to BP, the operator of the Nam Con Son Pipeline project, Block 06.1 will be suspended for 14 days in September but the Nam Con Son Pipeline would be down for only eight days, and after eight days, the pipeline would potentially continue transportation of a maximum of 2.7mil cubic meters of gas a day from KNOC's Block 11.2.

Lan Tay and Lan Do gas fields in Block 06.1 that are being tapped by India's ONGC with a 45% stake, BP Vietnam (35%) and PetroViemam (20%) can supply an average three billion cubic meters of gas a year for the Phu My power complex over 20 years to produce 12bil kWh a year, 40% of the current national demand.

(Source: Viet Nam Net)

Visiting Dray Sap waterfall in Central Highlands


13:09' 12/07/2007 (GMT+7)

VietNamNet Bridge – In the Central Highlands, travelers wandering about 30 kilometers south of Buon Ma Thuot City to Krong No District in Dac Nong Province will find themselves in the misty world of the Dray Sap waterfall.

A view of the upstream of Dray Sap waterfall in the central highlands.
A view of the upstream of Dray Sap waterfall in the central highlands.
The Dray Sap is one of a popular group of waterfalls in the Central Highlands including Gia Long, Dray Nur and Trinh Nu (Maiden). It is called the waterfall of smoky mist because Dray Sap in the E De ethnic people’s language means ‘fall of smoke.’

To reach the waterfall, visitors must cross many small slopes and a wooded area where visitors will sometimes see ethnic people with papooses in their back.

There are not many tourism services at the waterfall except for a ticket entrance and a beverage booth since Dac Nong Province has not yet started developing tourism services at the popular group of waterfalls.

Visitors begin the journey to explore this giant waterfall by climbing down a moss-grown staircase. There are two ways to discover the waterfall, one is the roundabout route to the top and one will lead visitors to the foot of the waterfall.

Dray Sap Falls extend 500 meters divided into three parts; the upstream, the middle and the lower stream. The water is supplied by two rivers, the Krong No, which means river of the husband in the M’Nong ethnic people’s language, and the Krong A, the river of the wife. There are usually legendary stories associated with famous landscapes and Dray Sap is no exception.

Dray Sap’s legend is about a beautiful E De girl named H’Mi. Many rich M’Nong and E De men love her and propose to her but she denies them because she falls in love with a poor man from her village.

H’Mi usually makes an appointment with her boyfriend to go to work together in the mountain fields. Once, when they sat side-by-side on a mountain rock, a bird-like beast appears and lands near them.

The beast has a large trunk and its trunk drills down into the ground making water erupt into the air. It starts raining heavily and H’Mi changes into a cloud drifting in the sky while her boyfriend changes into an ancient tree.

The ground that the beast bored, turns into Dray Sap Falls. Nowadays, visitors can find a huge ancient tree beside a large rock upstream of the waterfall.

The path upstream of the fall is rather rocky. At first, visitors should climb down the moss-grown stairs and pass a small wooded area. Then, visitors will pass a wooden bridge and mountain fields of the ethnic people.

Visitors continue to follow a small path to arrive upstream. Standing at a height of 20 meters upstream, visitors can contemplate the vastness and the mightiness of the waterfall.

Visitors who want to explore the lower stream can return by following the old, rather rocky, path. It is suggested that visitors wear sandals on the journey to discover the waterfall.

(Source: Viet Nam Net)

Land still largest barrier


08:23' 13/07/2007 (GMT+7)


VietNamNet Bridge – According to a survey by the International Finance Corporation (IFC) on the acquisition of land by small- and medium-sized enterprises (SMEs) of Vietnam, of every four SMEs only one is directly allocated or able to lease land from the state.

Some 75% of developing SMEs say that the biggest hindrance for their development is land shortage.

It is estimated that in 2007, around 50,000 SMEs will be established. The increase of new enterprises has made the demand for land to build factories, offices, shops increase dramatically.

Most enterprises want to be allocated land from the state to be assured in production. However, the fund of land is limited and usually only big enterprises can directly access land allocated by local governments, mainly foreign-invested projects.

According to Nguyen Thi Chuyen, Chairwoman of the Minh Tam Pottery and Lacquare Cooperative, the land reserve for industrial zones is still large but SMEs are unable to implement long-term plans to use large areas of land in industrial zones. They mainly use land owned by their own families or hire small plots of land and thus, face limitations in expanding investment and production.

Dao Trung Chinh, Vice Head of the Land of the Ministry of Natural Resources and the Environment, also affirmed that private companies that wanted to have land often had to hire land from state-owned firms at high prices and for unspecified durations.

According to most SMEs, seeking land to serve production is the most complicated, most costly, time-consuming task among all the administrative formalities necessary to establish a new firm.

A survey of GTZ reveals that normally, to be allocated land from the state, enterprises must fulfill seven kinds of formalities which require around 230 days for completion and they have to go through many related state agencies.

The dissatisfaction of enterprises revealed in the survey regarding the land use right licencing process is quite high. Meanwhile, most enterprises complain of competent agencies’ sluggishness in this issue.

Recently, land registration centres have been established in almost all provinces and cities, contributing to reduce administrative formalities related to land. However, the time needed to fulfill those formalities remains long.

Besides access to land, the biggest worry for investors at present, particularly small- and medium-size ones which have enterprises located outside industrial zones, is the constant change of land-use plans of local governments.

According to Truong Thai Son, Deputy General Director of the Hoang Quan Real Estate Company, land-use plans are not good because the registration system and grassroots information (social-economic, natural resources, development forecast information) for making decisions on planning are insufficient. The making of land-use plans is sometimes based on the orientations of the upper level and inaccurate reports from the lower level, which make land-use plans frequently change, causing difficulties for production plans of enterprises.

In addition, the planning process doesn’t witness the participation of enterprises and people.

According to Mr. Son, in Vietnam the need for intermediate services on land for production is a fact but the market scale is not large enough to encourage the appearance of professional service providers. At present, an enterprise that seeks land for production often thinks of going to the local government to submit its project and ask for land allocation, not to land brokerage agencies.

More than 50% of SMEs of Vietnam in IFC’s survey said that it was very difficult to find a suitable plot of land on the secondary market. Up to 66% of SMEs that have been successful in seeking land have been so thanks to their personal relations. This shows that the improvement of information infrastructure can have positive impacts on the information balance of the land market.

One thing needed to improve the transparency of the market is the efforts of the local government in creating and making public the land reserved for production. Moreover, local government and management boards of industrial zones also have to permit the construction of industrial zones with small plots of land suitable for small- and medium-sized enterprises, instead of only those for big enterprises.

(Source: Viet Nam Net)

New difficulties for Vietnam’s textiles and garments


08:26' 13/07/2007 (GMT+7)


VietNamNet Bridge - WTO membership has brought about many advantages for the textile-garment industry of Vietnam. However, new difficulties have emerged.

Textile-garment products are the key export items of Vietnam. The textile-garment industry has posted an average annual growth rate of 20%. Without barriers, growth rate would be 30% per year and the target of US$10-12 billion of export turnover by 2010 is feasible.

However, the growth rate of this industry since the abolition of quotas is low compared to other countries, because of lack of labour and low FOB ratio (under FOB production modality, all input materials are purchased by Vietnamese firms).

FOB: the play field for foreign businesses

It has only been a short period of time since quotas were done away with but the growth rate of the textile-garment sector (20-30%) is a good number, though low compared with China (80%) and Indonesia (48%), because Vietnam still has time to increase the growth rate.

However, the textile-garment industry of Vietnam will have difficulty reaching its desired target in the coming time as most of the enterprises are doing CMT contracts (CMT refers to a production modality where Vietnamese firms are provided with all input materials from foreign buyers).

The FOB ratio is very low, around 20-30%, of the total volume of textile-garment products for export. Input materials are the key to solving the FOB problem. Vietnam currently imports up to 80% of input materials and this is the reason for the failure of Vietnamese firms compared to foreign-invested ones in the FOB playing field.

It is hoped that with many new projects developing on-the-spot material sources, domestic firms will take initiative in raising the FOB ratio. It is forecast that this year, local firms that shift to signing FOB contracts will increase by 5-10%.

Pham Xuan Hong, General Director of the Saigon Garment No3 Company, said that local textile-garment companies could exist only when they produce FOB items. Though their export revenue will increase, the profit of local companies still performing CMT contracts will be low.

Textile-garment products no longer attractive to workers

“It is easier to invest in modern equipment than to seek skilled labourers.” That is the common opinion of textile-garment firms and a fact of this industry at present.

Textile-garment companies have been facing difficulties in seeking labour, especially since the lunar New Year (Tet). In HCM City, the monthly average salary has increased to VND1.5 million (US$90) but textile-garment companies can’t easily recruit workers.

American partners have recently asked the Saigon Garment No 2 Company to increase its export output from 80,000 female suits to 100,000-200,000 suits/month but the company current can’t meet the demand because of labour shortage.

Nguyen Huu Toan, the company’s Deputy General Director, said that his firm now lacked around 2,000 workers to fill up 40 production lines at its No 1 factory in Cu Chi District, HCM City. Currently, only 15 production lines are in operation.

In the central province of Quang Ngai, there are seven garment factories but four of them have stopped operating and the main reason is labour shortage. Nearly 3,000 workers are working in the remaining three factories, with a monthly wage of VND800,000 ($50).

Apart from difficulties in purchasing materials and high transport costs to big cities, garment firms here can’t find skilled labourers. Those companies are recruiting workers in a very easy manner but they are still unable to recruit enough workers since the source of labour in the area seems to be exhausted.

A local firm has recently advertised it was recruiting 1,000 garment workers for its factory in Tinh Phong Industrial Zone but it recruited just several dozen workers.

Van Huu Thanh, Director of the Dung Quat Garment Factory, said that his company now needed an additional 500 workers and he had had to visit mountainous communes to recruit workers but couldn’t.

The Vietnamese textile and garment industry has had many advantages since accessing the World Trade Organisation. The biggest difficulties of this sector currently are not orders but the workforce and the ability to increase FOB ratio.

(Source: Viet Nam Net)

Small farmers deliver fresh food to consumers

NEW YORK (AP) -- For 27-year-old Ben Sippel a steady push for greater efficiency on his Ohio farm has meant tossing freshly washed batches of lettuce into the washing machine's spin cycle and tracking expenses with painstaking precision.

art.farm.pick.ap.jpg

Ben Sippel picks golden zuchinnis for the community supported agriculture members in Mount Gilead, Ohio.

While such steps -- sterilizing an old washing machine to run loads of bagged lettuce -- aren't so unusual on small farms, Sippel's bid to hold down costs and make it as a full-time farmer began with a more prosaic gambit: Do away with the middleman.

Rather than selling to distributors or grocery stores, Sippel is among a growing number of farmers who enlist fresh-food devotees to pay in advance for their own slice of a farm's bounty.

"It was easier to go to the bank and say 'We have these people who want to buy our produce,"' said Sippel, who, like his wife, grew up in the suburbs. It was during college that he developed an interest in agriculture that tries to do right by the environment by largely hewing to organic principles.

Referred to in shorthand as a CSA, for community supported agriculture, these arrangements require consumers pay upfront, or at least make an early down payment, in exchange for a share of what the farm produces.

Though exact figures are harder to come by than the lettuce, tomatoes and peppers the Sippels grow on their land, the number of farmers forging direct financial ties with those who consume their food has increased in recent years, observers say.

Estimates put the number of CSAs at 1,500 or so nationwide; in many cases, existing CSAs also appear to be growing more food for more people, some who follow such farms say.

For the Sippels and others like them, forming a CSA seemed to be the best way to carve out a living from farming.

Typically, farmers retain about 19 cents of every dollar in food they sell. The rest goes to things like processing, transportation and marketing. With CSAs, farmers aren't forced to spend as much, helping boost their earnings in many cases.

"Costs are pretty out of control right now," Sippel said, referring to demand for land and rising prices for supplies that he faces in running his 77-acre farm with his wife, Lisa.

Sippel said getting a predictable amount of money early in the season makes it easier to balance expenses. Efficiency and sustainability have become watchwords of his efforts and have allowed him some of the sure-footedness he displays in overseeing his farm in Mount Gilead, a village of about 3,300 people in central Ohio.

But beyond the steady money, farmers and shareholders draw satisfaction from an increased connection to the land. Consumers whose previous relationships with fruits and vegetables might have been no more intimate than the quick thumbing over one gives a vegetable at a grocery store are now signing up for more serious commitment.

Once a week or so, shareholders stop by the farm or a designated spot and pick up their allotment. The mix of fruits and vegetables -- and, in some instances, meat and dairy products -- often shifts as different foods become available, but each CSA shareholder is usually apportioned the same amount and variety of food.

The Sippels added 25 shareholders this year, bringing the total to 175; they charge $560 for a share that brings about 30 weeks of food -- a bit more than 20 or so weeks that is typical of many CSAs in their area.

James Sturz, a writer in New York, contends he saves money by participating in a CSA, but says the financial benefits weren't what motivated him.

"I was someone who wanted to be a healthy eater and I saw this is as my opportunity as well as a chance to participate in a farm cycle."

Andrea Beaman, a self-described holistic health counselor, said her interest in fresh, locally grown food produced without use of pesticides led her to CSAs. Beaman, who has a frying pan hanging from her living room wall signed by fellow contestants on the reality show "Top Chef," conducts classes on healthful cooking.

"The people who are eating locally now are the people who were eating organic four to five years ago," she said. "It's a natural progression."

While often bountiful, farming can also produce headaches and financial hardship. Unlike farmers' markets, where shoppers can bypass wilted lettuce or bruised vegetables, both CSA farmers and shareholders face risks like disease or damaging weather. Sippel noted

This allows farmers to spread some of the financial risks of farming beyond simply depending on insurance policies.

"Part of insulating risk is the number of plantings and the diversity of crops we raise," Sippel said, noting that generally one crop a year will fail but that other harvests make up for the loss.

Sippel noted that some CSAs fail because they don't set their prices high enough or they give participants too much food, making consumers feel wasteful and hesitant to participate in future years.

Despite its risks, CSA farming can be fruitful.

Deborah Kavakos, a farmer in South Cairo, New York, grows fruit and vegetables for 10 of the 50 or so CSAs in New York City and this year saw the number of participants in her CSAs reach capacity months earlier than in years past.

To keep spirits high and avoid groans like "Not more broccoli!" CSA farmers tend to produce a rich variety of food. Kavakos grows about 45 to 50 crops on the 40 acres she farms with her husband, Pete. This requires an intricate dance to balance planting and harvesting.

"You're continually planting and replanting. In the morning it's mizuna (a type of Japanese salad green), by the afternoon it's transplanted back to lettuce again." she said.


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