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India tipped to import Viet Nam rice

Update: November, 15/2009 - 00:00

Business Beat

(16-11-2009)

India tipped to import Viet Nam rice

by Le Hung Vong

Viet Nam will be able to meet India’s reported intention to import 2 to 3 million tonnes of rice, the deputy chairman of the Viet Nam Food Association Nguyen Tho Tri has said.

The statement was made after the Indian Press Trust reported on November 4 that the Government of India has a plan to import 2 million tonnes of rice from Viet Nam and Thailand because of India’s decreasing rice output due to the impact of drought and floods.

Speaking in an interview with the Thoi Bao Kinh Te Sai Gon, Tri affirmed that Indian diplomats had informed him that the South Asian giant was looking to buy 3, not 2 million tonnes of rice, as previously reported.

Tri said Vietnamese enterprises will be able to meet the demand, adding that the delivery date will coincide with Viet Nam’s winter-spring crop harvest in January and February 2010, when the supply will be plentiful.

He explained that Viet Nam can supply more than just white rice to India, which accounts for 20-30 per cent of the total sum of 3 million tonnes.

However, Tri said, India should change their import regulations to facilitate the business.

Under Indian regulations, he said, rice imports must be examined at the destination port and the results will be released one or two months after arrival. Payment will be made only after the test results are released. Under international practice, after rice is loaded onto ships, exporters receive payment through a letter of credit (L/C).

If India concludes that the rice is of low quality and refuses to accept the product, then exporters must keep goods at destination ports or ship them elsewhere, resulting in exporters having to leave their capital idle for months.

Cautious

As many as 22,560 apartments will come into the HCM City market in the next three quarters, but buyers are likely to be cautious because of the high personal income tax (property gains tax) they have to pay if and when they decide to sell the property.

According to a quartely report released by property consultancy firm CB Richard Ellis Viet Nam last month, over the last seven quarters, a total of 14,967 condo units in 46 projects were launched in HCM City. It said a combined 22,560 units in 44 projects are expected to come on the market in the next three quarters – from October 2009 to June 2010.

Among property projects which are (or soon to be) on sale are 200 apartments by the housing development joint venture company Daewon-Thu Duc; the Tan Tao Plaza Building with 360 apartments developed by the Tan Tao Group; the An Lac Plaza Project with 284 apartments invested by Binh Chanh Construction-Investment Co., and Belleza Project with 968 apartments invested by Sacombank Real Estate joint-stock Co. (Sacomreal).

However, the demand for apartments is not as high as expected because customers are finding it more difficult to access bank loans. Buyers now fear that their investment in apartments could be "buried" and profits expected from these projects are low.

Many property investors have avoided luxury serviced apartments for fear of the personal income tax on housing transactions, which came into effect in September this year. Most of these luxury apartments have changed hands several times, leaving the selling prices extremely high compared with the price offered by the developer to the first owner of the apartment.

The director of a property trading floor in HCM City, who declined to be named, said most property investors would like medium and low priced apartments which can be sold easily.

He said with the capital needed for a luxury apartment, an investor can buy a few medium priced apartments and make profits in a shorter period of time. The investor would also face lower risks with medium and low priced apartment, he added.

Insurance

Many enterprises have sought to avoid paying unemployment insurance that became mandatory nearly one year ago by offering seasonal labour contracts to workers.

Nguyen Thi Linh, who works for a garment company in northern Hai Duong Province, said despite her two-year work experience at the same enterprise, she could obtain only a seasonal labour contract.

Linh was not aware that with a labour contract for a working period of more than 12 months she and her boss would have to pay unemployment insurance that will help her receive unemployment benefits if she lost her job, and to access training courses that can help her find another.

"It is our boss who decides the kind of labour contract. We [labourers] just have to put our signatures on it," Linh was quoted by the Sai Gon Marketing newspaper as saying.

A similar situation prevails in most enterprises in HCM City, especially those employing a large number of workers.

According to new regulations, from 1 January 2009, workers who have signed contracts for more than 12 months are entitled to get unemployment insurance. This amounts to two per cent of the salary that is split between the employee and the employer.

However, according to figures released by the international development agency ActionAid in Viet Nam, 70 per cent of migrant labourers working in city enterprises are female workers, 24 per cent of whom work under seasonal labour contracts and 10 per cent do not sign any contract despite having permanent jobs.

Pham Minh Huan, deputy minister of Labour, Invalids and Social Affairs, said the one reason for employers trying to avoid paying unemployment insurance was the increase in minimum wages.

The 1 per cent of an employee’s salary and the additional 1 per cent of the Labour Union fee paid by employers since 1 January 2009 make production costs higher. "That’s the reason enterprises have sought to dodge the fees," said Huan.

He said the Ministry has drafted a decree on administrative punishments for social insurance violations, including a VND12 million fine for enterprises which evade paying unemployment insurance for their employees. — VNS

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