Despite of having been set up for just one year, Hanoi Trade Corp. (HAPRO) have reached good results over the past year with total revenues in 2004 of VND3,779 billion and revenues in the first six months of this year of VND2,000 billion, up 10 per cent against the same period last year. Export in the first half of this year amounted to US$29.9 million.
According to the deputy general director of HAPRO, “This is a demonstration of the sound policy of Hanoi authorities of re-organising large-scale firms in the locality to make them strong economic corporations that have the ability to compete with foreign firms in the trend of further integrating into the world economy.”
With 23 affiliated members operating under the corporation’s umbrella, HAPRO has been proving its high position, especially its first place in import and export of agricultural and foodstuff products regarding both revenues and market share. HAPRO’s commodities are available in 62 countries and territories.
However, according to Mr. Canh, in the context that costs for inputs are surging sharply, HAPRO is facing difficulties and the corporation needs support in capital and mechanisms from the local authorities to become a large economic consortium. For example, sharp increases in the price of petroleum, electricity and water have created many difficulties for the development of the corporation. In a time when the prices of inputs and the pressure of enhancing salaries for its 6,500 labourers are growing, the corporation is really having a hard time due to the government’s policy of asking large-scale corporations not to raise the price of their outputs. They cannot raise prices to ensure profit, Mr. Canh said. HAPRO produces agricultural and foodstuff products which directly affects the lives of farmers. If the farmers boycott us we won’t have stable materials supply sources, and this negatively affects our export contracts.
Therefore, the only way to escape from its current difficulties is by re-organising its operation structure and maximally reducing production and management costs. Currently, HAPRO is a wholly state-owned firm with 23 subsidiaries that are wholly state-invested. HAPRO plans to equitise all its members in order to enhance decisive rights in their businesses. The corporation will intensify measures of reducing goods prices. It will also support farming houses in production and focus on researching domestic and international consumption habits for boosting domestic sales and export, Mr. Canh said.
Integrating into the world economy is opening great opportunities but also creating challenges for Vietnamese enterprises, particularly challenges to firms that have low competitiveness. HAPRO cannot avoid this situation. Maintaining or expanding market share is not a simple affair. Joint ventures or wholly foreign-invested enterprises can actively carry out business strategies with big losses in their first years of operation. But this is an impossible method for Vietnamese companies because they don’t have enough investment. In addition, the slowness of approving projects (due to the inappropriate co-ordination between local authorities) caused damages to corporations. Moreover, some regulations regarding to costs before calculating taxes on corporate income are not suitable to new management mechanisms under the decree No. 199/CP, circular 133/BTC, Mr. Canh stressed.
To help HAPRO become a strong economic corporation as planned by Hanoi authorities, there must be more flexible policies that can provide momentum for those firms to further develop, bringing more benefit to the economy.
Hien Nga
Vietnamese
