Vietnam exports to Cambodia forecast at US$1.6 billion

HCMC – Vietnamese enterprises expect to export US$1.6 billion worth of goods to Cambodia this year, up from the US$1.1 billion recorded last year, said an official of the Ministry of Industry and Trade.

Chu Thang Trung, deputy director general of the ministry’s Department of Trade Policy for Asia-Pacific Markets, told the Daily on Tuesday that Cambodia had recently become one of the most potential Southeast Asian markets for Vietnam.

In the first six months of the year, he said, Vietnam’s shipments to the neighboring market amounted to US$728 million, a year-on-year increase of 34%.

Trung said the Vietnamese products for which the demand was running high in Cambodia included steel, machines, garment and textile materials, plastics, fertilizers, consumer goods and foodstuff.

To further promote local goods in Cambodia, Trung said, the HCMC Investment and Trade Promotion Center, or ITPC, will continue organizing two major exhibitions to introduce high-quality Vietnamese products to Cambodian consumers in late November with some 200 enterprises taking part.

Cambodia’s demand for Vietnamese products has rapidly increased in recent years. Two-way trade between the two countries has surged 30% a year on average since 2001.

Trung noted Cambodia was not only an increasingly important market for Vietnam but a key destination for investment as well.

Vietnamese enterprises have pledged around US$900 million in 63 projects in Cambodia and these projects have generated jobs for 30,000 local people. Vietnam is the third largest investor in Cambodia in terms of investor numbers after China and Korea.

The industries where Vietnamese enterprises are committed to Cambodia include finance, energy, telecommunications, agriculture and mineral mining.

Multinationals Bring Multiple Benefits

The presence of multinationals and their long-term commitments bring many benefits to Vietnam, boosting the country’s image in the eyes of the international business community and helping improve the foreign investment policy

To date, multinationals operating in various industries such as automobile, hi-tech, retail, electronics and consumer goods production have set up shop in Vietnam, seeing the country as a large market with more than 86 million people as well as a good base for export production. Big names like Toyota, Honda, Mercedes-Benz, Intel, PepsiCo, Coca-Cola, P&G, Metro Cash & Carry and Unilever, are all present here. They have contributed large revenue to the national budget, brought modern technologies and created jobs for locals. They have also helped change the local economic structure from agriculture to industry.

Large revenue

A typical example is investment by Japanese firms Toyota and Honda in the northern province of Vinh Phuc. Their investment has helped change the agriculture-based province into one of the seven localities with the largest industrial production in Vietnam. Last year, Vinh Phuc became one of the top five provinces having the largest tax revenue in the country with more than VND10 trillion. The tax revenue paid by Toyota Vietnam alone made up nearly 65% of the total, with US$304 million.

Motorbike maker Honda has also contributed a large share to the local budget. Its market share in Vietnam in 2009 was more than 60%, behind only that in China, India and Indonesia. Encouraged by the success, Honda Vietnam has announced further investment of US$70 million to increase motorbike production to 2 million units a year to meet rising market demand, especially for scooters. Since beginning operation in Vietnam in 1994, the company has turned out more than 7 million bikes and its total investment has amounted to some US$423 million.
German automaker Mercedes-Benz Vietnam is also a big taxpayer in HCM City. Over the past three years, the company has paid an average VND500 billion annually to the local budget. Last year, the tax payment reached VND1.4 trillion, putting the company on the list of the top 10 taxpayers in the city.

Another German investor, Metro Cash & Carry, has seen Vietnam as a potential market and has been keen on expanding operation here. The company has so far set up nine large wholesale centers in big cities around the country and is planning more in other localities.

Besides the local market, multinationals also seek to export products made in Vietnam. In the middle of this year, Unilever Vietnam opened a household detergent factory with designed capacity of 180,000 tons per year in Tay Bac Cu Chi Industrial Zone, HCM City. The facility will export a large part of its output to 12 markets; among them are New Zealand, Australia, Hong Kong and Taiwan. Unilever has so far invested a total of more than US$60 million in its factory complex in the industrial zone. The factories, which employ 1,300 workers, have cooperated with 85 local material suppliers and service providers to produce a wide range of consumer goods such as detergent, shampoo, instant tea, food seasoning and toothpaste.

Honda Vietnam and Toyota Vietnam also export part of their products to some regional countries. Meanwhile, Metro Cash & Carry has supported local farmers in producing clean, high-quality products for sale in its wholesale centers worldwide.

The multinationals have also attracted satellite companies to Vietnam to produce and supply parts for their production.

Hi-tech production

Most multinationals operating in hi-tech production like information technology and electronics see Vietnam as a safe investment destination with a hardworking labor force and a large market as well. According to experts, their commitment to hi-tech production has played a large part in promoting Vietnam as a destination in the global hi-tech production chain.

Last year, Samsung, the world’s second largest mobile phone maker, opened a factory in Yen Phong Industrial Zone in Bac Ninh Province. With investment capital of some US$1 billion, the facility has the most modern technology compared with six other Samsung’s phone factories in the world. It will produce all categories of mobile phones, from low-end to high-end, with more than 90% of output for export. “Samsung aims to be the world’s number-one mobile phone maker. The Vietnam factory plays an important role in helping achieve this goal,” said Choi Gee-Sung, Samsung Electronics chairman. He said this year, the factory is expected to boost production by fourfold to some six million products per month and its labor force should increase to 10,000 workers. Upon full operation in 2012, the factory will turn out some 100 million products per year. For this year, the export target is nearly US$5 billion, putting Samsung on the list of the top exporters in Vietnam.

Samsung’s long-term investment in Vietnam has attracted many satellite companies of the group who have come here to produce parts to supply its production. In the long term, they will form a network of part suppliers for the IT and telecom industries in Vietnam, thus contributing to the development of the supporting industries.
Another hi-tech producer, Japanese electronics company Canon, has also made the same effort. Canon has invested in laser and color printer production in Thang Long Industrial Zone in Hanoi and Que Vo Industrial Zone in Bac Ninh Province. Canon satellite companies have also followed suit, coming here to make parts for the production, forming a supporting industry for the electronics industry in Vietnam.

Some years ago, U.S. chip giant Intel made headlines in the international media when it decided to invest US$1 billion in a chip assembly and testing plant in HCM City. Despite the global economic recession, the project has been progressing on schedule. Intel has also trained quality human resources to prepare for the operation of the plant, scheduled for October this year. The plant in Saigon Hi-tech Park, Intel’s seventh facility in the world, is expected to support the chip giant’s operations in Southeast Asia. It will also supply products for Intel’s global market, including big multinationals such as Dell, HP and Lenovo, original equipment manufacturers (OEM) and related customers.

The Intel project has attracted many material and part suppliers as well as service providers to Vietnam. Many leading Japanese companies have closely watched the development of the hi-tech industry in Vietnam and have chosen the country to set up shop. A typical investor is Nidec Corp., the leading producer of hard disk drives and motors for computers. The company has just received the license for investment in a US$70-million project to produce high-precision compact motors and motor parts. The Nidec Copal Precision Vietnam (NCPV) is the company’s fourth and also most capital-intensive investment project in Vietnam. Shinji Kondo, general director of NCPV, said the company has received many orders and is preparing for operation in April next year. The project will turn out high-precision motors for digital equipment like cameras, mobile phones, laptops, printers, hard disk drives and blu-ray drives. It is expected to generate annual export revenue of US$60 million in the first two years of operation and US$120 million later.

With this project, Nidec has increased its total investment in Vietnam to US$190 million as part of its commitment to pouring US$500 million into the hi-tech industry within the first five years of operation.

According to experts, other hi-tech multinationals like Foxconn, Teco and Compal will resume investment in capital-intensive hi-tech projects in Vietnam as soon as the global economy is out of the doldrums. Foreign investors still see Vietnam as an attractive destination due to high economic growth, low production cost, a stable labor force, strong growth potential and government support. However, the country should increase investment in infrastructure development and human resources to meet their demand.

Hanoi in National Day

From the early morning, thousands of people queued to visit the Ho Chi Minh Mausoleum. Amusement centers were very crowded. VietNamNet Bridge introduces some photos taken in Hanoi on the morning of September 2.

The Ho Chi Minh Mausoleum opens at 7am to welcome people and tourists.

A very long queue of people stand outside the mausoleum.

Hanoi’s streets are decorated with flags and flowers.

A torch procession took place at King Ly Thai To statue.

Martial arts and modern dance performances attract many people.

At Thong Nhat Park.

Kids hold national flags.

A little girl is interested in animal toys.

Traditional to he toys

At some shops and supermarkets, salesmen wear special uniforms featuring the national flag.

Da Nang holds its lead in IT Readiness

The report was released last week by the National Steering Board for IT and the Vietnam IT Association.

At the bottom were Son La and Cao Bang provinces. Both are in the northern mountainous region.

Specifically, Da Nang ranks first in Vietnam for IT application and development, followed by HCM City and Hanoi. It ranks second in IT human resources, behind the Red River delta province of Vinh Phuc and ahead of HCM City.

Da Nang is the best in applying IT, followed by Dong Thap in the Mekong Delta and the northern port city of Hai Phong.

Hanoi, HCM City and Dong Nai earn the three top positions for IT business. Da Nang ranks fifth in this category.

In terms of IT organization and policy, Bac Giang, a northern province stood first, followed by the HCMC suburb of Binh Duong and Da Nang.

Among ministries and ministerial agencies, the Ministry of Education and Training climbed from second to first position, followed by the Ministry of Finance. The Ministry of Information and Communications jumped from eigth to third this year. Ironically, the Vietnam News Agency and the Vietnam Institute for Social Sciences are at the bottom.

According to this report, the IT application readiness index of ministries and ministerial agencies is generally higher than provinces and cities. Ninety percent of officials at ministries and central agencies can use computers compared to 76 percent of officials in provinces and cities.

Only 3.7 percent of ministries and central agencies have in-house IT experts, up 0.4 percent from 2009. All ministries have official websites, and so do all but one percent province

Manufacturers embittered by power cuts

Le Minh Chuan, a senior officer of Vinacomin, the Coal and Mineral Industries Group, said that in May alone, 20 mining companies in the group collectively endured over 400 hours of power cuts.

“In May, despite outages, we fulfilled 90 percent of our production goal. When the power is cut so regularly, the coal companies can’t provide the coal needed for power, cement and steel production,” Chuan warns. “The power cuts push up our costs of production and jeapordise our ability to provide coal at the prices we have negotiated.”

According to Chuan, it is very dangerous for mines if the power is cut and then restored unexpectedly. Subsidiaries of Vinacomin have endured cuts of up to 16 hours. Most of the companies have electricity generators, but these cannot not sustain production. The generators are just sufficient to run water pumps and blowers.

The Textile Sector

Diep Thanh Kiet, chairman of the HCM City Garments, Textiles, Embroidery and Knitting Association, said that none of the Association’s member companies escaped repeated power cuts in April, May and June.

Kiet said that many enterprises were idled for many days, notwithstanding delivery deadlines. A lot of enterprises had to pay penalties because they could not deliver according to their contracts.

The biggest problem, Kiet says, is that the power is cut without notice. In general, workers begin their morning production shift at 7 am. If the power is cut at 8 am, workers will have to sit idle, while enterprises will still have to pay wages to workers. If enterprises were informed of a pending power cut, they could rearrange production shifts.

Kiet said that the enterprises have petitioned the HCM City authorities about the regular, unannounced power cuts. However, enterprises doubt the petition will accomplish much. They are resigned to ‘eating’ the losses caused by the power cuts.

Digital Equipment Distributors

Bao An Company is a leading distributor of computers and electronic equipment used in supermarkets. On the afternoon of June 17, Director Phan Dinh Son left the office for a bia hoi (draught beer) restaurant because he could no longer endure the heat, fully 40°C. Power cuts over the last few days have caused chaos in the office, Son said. “My company loses tens of millions of dong every day when the power goes off. This is the fourth time so far this month!”

When the power is cut, the company fires up a generator, but it provides just enough power to turn some fans. Customers stay away, because it is too hot at the shops where the power is off.

The Steel Sector

A manager of a steel company in Vinh Phuc province says that the power is being cut one time a week, reducing the company’s productivity by 20 to 30 percent. Some 700 workers sit idle when the power is off, so the losses caused by the power cut could total hundreds of millions of dong.

“Steel prices are dropping, so we are afraid that we may incur losses. Meanwhile, we have to worry about the electricity cut as well,” he complained

Techcombank launches internet credit card

HCMC – Technological and Commercial Bank of Vietnam, or Techcombank, has combined with Rêv Asia Pacific Co. to launch a virtual card called Rêv Visa Internet Card that allows customers to buy goods via the internet.

Rêv Visa Internet Card is a pre-paid card and does not require the holder to have a bank account.

A customer just needs to buy a scratch card with the desired amount of money, then goes to the website www.revinternetcard.com.vn to activate the card. He or she then can use that account to buy goods on local and international websites accepting payment by Visa card.

In HCMC, customers can buy the card at Coop Mart supermarkets on Nguyen Dinh Chieu, Nguyen Kiem, and Dien Bien Phu Street or Sinh Telecom Co. in District 10. The bank, which is the first bank to launch this virtual card in Vietnam, said these cards would be widely distributed in the near future.

Techcombank now issues many kinds of payment cards comprising local debit card, Visa debit card, Visa credit card, and a card under cooperation between the bank and Vietnam Airlines.

As of late June this year, Techcombank’s total assets had amounted to VND107.9 trillion. At this time, Techcombank has nearly 230 branches and transaction offices nationwide and plans to raise the number to 300 by the end of this year.

HSBC, holding a 20% stake in Techcombank, is now the strategic investor of the local institution.