|
BUSINESS IN BRIEF 8/10
FPT to fund new
hi-tech IT centre
The
Software Technology Centre under the FPT Corporation will invest VND400
billion (US$19.04 million) to build an information technology (IT) centre in
The
centre received an investment certificate from the
Board
head Le Hoai Quoc said that the project aims to teach highly qualified people
about scientific research and technology transfer in the IT field.
With
the project, FPT will focus on inventing robots, intelligent machines and
software [artificial intelligence] as well as developing cloud computing [the
delivery of on-demand computing resources over the Internet], network
infrastructure and information security.
According
to the board, the high-tech zone has attracted two IT projects so far this
year, including a centre for research and development of the Microsoft
corporation in May.
Banks
decrease rates to revive business growth
Banks
should increase lending based on firms' projected future revenues, analysts
have said.
Banks
have slashed lending rates on the State Bank of Vietnam (SBV)'s orders, and
businesses can now get loans at well below 10% – sometimes even at zero
interest – compared to more than 20% in 2011.
Many
also offer incentives to attract borrowers. HDBank, for instance, offers
loans at zero interest for the first month.
The
rate cut has eased the enormous pressure on costs companies faced until
recently, a double-whammy considering the economic slump.
Nguyen
Van Tan, director of the Thong Tan Food Company, said the lower cost of
funding is helping revive businesses' confidence to sustain production or
even expand.
But
analysts said it is still not easy for companies, especially small-and
medium-sized ones, to borrow because most did not have assets to put up as
collateral.
To
overcome this problem, they said banks should switch to lending based on
revenues instead of assets.
It is
a new form of lending based on a company's predictable or recurring revenues
that does not require it to put up collateral.
By
studying a company's cash flows and projections, banks would be able to
clearly know the former's ability to repay, the analysts said.
The
deputy director of a commercial bank in
"[But]
banks would only do this when they know that their loan will be used
effectively and for the right purpose and the company's revenues are adequate
to repay the principal and interest. Our bank plans to use this method of
lending to fully capitalise on its advantages to achieve the credit growth
target for this year," he said.
Taiwan
firms explore opportunities in Vietnam
Executives
from 46 Taiwanese companies are in
At an
exchange organised on October 4 by the Taiwan Trade Centre (Taitra), they
showcased products like cosmetics, home appliances, machinery, automobile
parts, many of them technologically advanced.
Food,
foodstuff, cosmetics, and other companies looking for franchise partners were
introduced to Vietnamese companies, the first time Taiwanese franchise
opportunities have come up here, a Taitra official said.
Many
Vietnamese companies have benefited from cooperating with Taiwanese companies
and Taitra is looking for more opportunities, she said.
Trade
ties between
Eighteen
businesses are showcasing their products at the international food and
beverage fair ANUGA 2013 in
The
On the
opening day on October 5, the
The
fair is expected to help Vietnamese businesses maintain regular contacts with
importers in
Do Vu
Thanh, a member of the Vietnamese delegation, said as the EU economy is
showing signs of recovery, such a well-known fair offers a good chance for
Vietnamese businesses to meet potential partners around the globe.
ANUGA
is the world´s leading food fair for the retail trade and the food service
and catering market.
This
year’s event has attracted 6,700 businesses from 100 countries and
territories around the world. It’s expected to draw about 155,000 guests to
visit, carry out transactions and sign contracts.
Tra
fish exports estimated at US$1.8 billion
Tra
fish exports are expected to reach around 1.8 billion due to high demand from
export market, according to the Ministry of Agriculture and Rural Development
(MARD).
Despite
a hike in the price of the fish, many local businesses succeeded in signing a
number of contracts to ship abroad until the end of this year.
The
tra fish export activities in the first eight month of this year were dull.
The
Ministry said,
Vietnam
runs trade deficit with Laos
Its
exports to
Wood
and timber products and metals and minerals were two key groups of import
items, valued at US$246.7 million and 18.5 million, respectively, and
accounting for more than 80% of the total import value.
The
Vietnam Customs reported despite the high export growth, the market share of
the Vietnamese products in
In
2012,
Meanwhile,
Customs
collect $7.27bn in taxes
The
General Department of Customs collected nearly VND160 trillion (US$7.27
billion) in taxes and duties in the first nine months of this year, up 13.8
per cent year-on-year.
However,
the figure met only 67.6 per cent of the annual target.
Value
added tax (VAT) accounted for VND55.8 trillion ($2.53 billion) or 34.87 per
cent, while collections from imports and exports, special consumption and
environment protection duties were VND104 trillion ($4.72 billion). Another
VND200 billion ($9.09 million) came from other taxes.
The
customs department aimed to collect VND237.5 trillion ($10.79 billion) this
year, a year-on-year increase of 20 per cent.
In
efforts to minimise tax fraud, this week the customs department required its
province-level agencies to scrutinise VAT refunds for products exported
across the border.
The
move was a response to last year's discovery that a number of exporters with
VAT tax refunds had a suspiciously sharp rise in both the volume and value of
export goods.
Most
export products eligible for VAT refunds are for the agriculture, forestry
and fishery sectors; the category also includes construction materials and
mobile phones.
The
customs department attributed the tax fraud increase to loose regulations on
setting up and dissolving firms as well as allowing firms to print red
invoices on their own.
Loopholes
in regulations allowing foreigners to open currency accounts to pay export
and import duties in Vietnamese dong are also frequently exploited.
Last
year, the department generated $9.48 billion in taxes, a drop of 8.8 per cent
from 2011 that met 88.4 per cent of the annual plan.
Petrol
station owners to face heavier fines for metre rigging
Petrol
stations found scamming customers will face a fine of up to VND50 million
(US$2,400) and have their business licence revoked following a new decree
which comes into force next Thursday.
As a
result, those who intentionally rig pump metres or commit similar frauds will
be fined VND50 million instead of the VND30 million ($1,400) that was
stipulated in the previous decree issued in 2011.
The
new regulation also states that enterprises which mix petrol with cheaper
substances to increase profit margins will be fined up to 2.5 times the value
of the petrol.
"I
really hope that the decree will discourage fraudulent activities at petrol
stations, which are becoming quite widespread and directly affect consumers'
interests," said Pham Hong Xuan, a resident of Ha Dong District, adding
that she herself witnessed a scam take place at a local filling station
several weeks ago.
As a
state official, vice head of the Ha Noi Market Watch Nguyen Dac Loc said that
the decree rectified the shortcomings of its predecessor.
"The
new decree specifies the fine imposed for the adulteration of petrol with
other cheaper substances, which was not stipulated in Decree 97," Loc
told the Nguoi lao dong (The Labourer) newspaper.
However,
according to Nguyen Van Truong from Dong Da District, the fines are still not
high enough to deter violators from continuing because the huge profits they
earn fraudulently far outweighed the fines they could have to pay.
"Authorities
should not only impose heavier punishment on violators but also strengthen
inspections of petrol trading to detect frauds which are not easily
discovered by customers," Truong added.
Under
the newly-issued document, stations using inaccurate devices in which the
error is of a technical nature will receive fines of VND10-20 million
($480-960)
In
addition, petrol stations and exporters engaging in any one of the above
violations will have their licenses for petrol trading and export withdrawn
for up to six months and could even be forced to halt their business
altogether for up to three months.
So far
this year, the Ha Noi Department of Science and Technology has carried out
inspections of 31 filling stations and imposed fines totalling VND15 million
on administrative violations in petroleum trading.
Inspections
will be also conducted in another 50 stations by the end of this year,
according to the department vice director, Vu Nhu Hanh.
VCCI
promotes role of business in rural development
Despite
many new State policies, enterprises remain hesitant to invest in rural
development, according to General Secretary of the Viet Nam Chamber of
Commerce and Industry (VCCI) Pham Thi Thu Hang.
"The
number of enterprises operating in rural areas is only about 30 per cent of
those nationwide. Most of them are small-scale and earn lower profits than
those in urban areas," Hang said.
Secretary
General of Association of Hi-tech Application Agricultural Enterprises Ngo
Tien Dung added that enterprises were reluctant to invest in the agricultural
sector because of its "high probability of risk and slow recovery of
capital."
Three
years ago, a national programme for rural development aimed to draw 20 per
cent of its funding from enterprises and co-operatives, supplemented by the
State and provincial budget, credit loans and local communities.
Yet
enterprises have so far contributed VND 3.501 trillion (nearly US$167
million), which accounts for only five percent of total capital. Funds
mobilised from the State and provincial budget make up 50 per cent.
The
government issued Decree No.61/2010/ND-CP on incentive policies for
enterprises investing in agriculture and rural areas in 2010. However, the
decree is too general to be effective, according to Nguyen Minh Tien, Deputy
Director of the Economic Co-operation and Rural Development under Ministry of
Agriculture and Rural Development (MARD).
As
many as 1,800 of the 9,000 communes across the country will meet the new
rural standards by 2015. To realise this target, all power resources need to be
mobilised more efficiently, especially from the business community.
Therefore, to engage more enterprises in building new rural areas, the
Government should have preferential policies to encourage enterprises to
invest in hi-tech applications to agriculture, Dung said. The MARD proposed
creating more favourable conditions for enterprises to invest in specific
products and professions, according to Tien.
So
far, as many as 9,000 infrastructure works worth VND30.1 trillion ($1.4
billion) have been improved and built in rural areas, including 38,000
kilometres of road and 15,000 kilometres of canals.
Banks
decrease rates to revive business growth
Banks
should increase lending based on firms' projected future revenues, analysts
have said.
Banks
have slashed lending rates on the State Bank of Viet Nam (SBV) 's orders, and
businesses can now get loans at well below 10 per cent – sometimes even at
zero interest – compared to more than 20 per cent in 2011.
Many
also offer incentives to attract borrowers. HDBank, for instance, offers
loans at zero interest for the first month.
The
cut in rates has eased the enormous pressure on costs companies faced until
recently, a double-whammy considering the economic slump.
Nguyen
Van Tan, director of the Thong Tan Food Company, said the lower cost of
funding is helping revive businesses' confidence to sustain production or
even expand.
But
analysts said it is still not easy for companies, especially small- and
medium-sized ones, to borrow because most did not have assets to put up as
collateral.
To
overcome this problem, they said banks should switch to lending based on
revenues instead of assets.
It is
a new form of lending based on a company's predictable or recurring revenues
that does not require it to put up collateral.
By
studying a company's cash flows and projections, banks would be able to
clearly know the former's ability to repay, the analysts said.
The
deputy director of a commercial bank in
"[But]
banks would only do this when they know that their loan will be used
effectively and for the right purpose and the company's revenues are adequate
to repay the principal and interest.
"Our
bank plans to use this method of lending to fully capitalise on its
advantages to achieve the credit growth target for this year," he said.
Rubber
exports stretch to fetch $4.5 billion in 2013
The
rubber industry expects to bring home US$4.5 billion in export this year,
according to Tran Thi Thuy Hoa, General Secretary of the Viet Nam Rubber
Association (VRA).
Hoa
said that last year the sector's total export value reached $4.26 billion.
Overall, rubber ranked eighth among the country's export staples after
garment and textiles, telephones, crude oil, electronic products, footwear,
seafood and machinery.
She
said that the increasing global rubber demand in recent years encouraged
Hoa
added that the country also ranked fourth in terms of the amount of natural
rubber for export, which accounted for 10.6 per cent of the market share in
2012.
The
nation's rubber tree productivity is about 1.707 tonnes of latex per ha,
generating VND105 million, ranking third after
Market
difficulties had arisen this year due to the insufficient recovery of the
global economy, the increase of world supply and the growing amount of
competition, Hoa noted.
For a
sustainable rubber export strategy, she said the VRA was working with the
Trade Promotion Department of the Ministry of Industry and Trade to rebuild a
trade attraction programme with more focus.
It was
also encouraging companies to exchange information on price, consumption and
market situation to create a suitable trading plan.
Rubber
companies, for their part, should improve product quality to meet the demand
for export, Hoa said, adding that the VRA was planning to establish a rubber
trading floor in 2015 to ensure transparent prices for both the buyers and
the sellers.
Industrial
parks and export processing zones in
Announcing
this, the city's Export Processing and Industrial Zones Authority (HEPZA)
said foreign direct investment accounted for more than $341 million, a
year-on-year jump of 114 per cent.
But
only $63.6 million of the investment was in new projects.
Services,
pharmaceuticals, plastic, mechanical engineering, apparel and textile, and
food processing attracted the largest investment.
But
domestic investment declined 15 per cent to $138.8 million.
Food
processing, mechanical engineering, electronics, software, and plastic were
the major sectors attracting investment.
Exports
by firms based in IPs and EPZs rose by 6 per cent to $3.4 billion while
imports fell 10 per cent to $2.5 billion.
HEPZA
attributed the decline in imports to the lack of orders and rising input
costs.
Firms
in IPs and EPZs employ nearly 270,000 people, including 1,900 foreigners.
Central
Thua Thien -
According
to Le Quang Dung, deputy director of the province's Construction Department,
the land plots are located at the corners of large streets in the southern
part of the city and the construction heights for buildings are not limited
by heritage conservation requirements in the northern part.
The
plots include land bordered by Hung Vuong, Ba Trieu and Ton Duc Thang
streets, land at the corner of Ha Noi - Ly Thuong Kiet streets, and plots
planned for a trade centre in the An Van Duong new urban area, and other plots
in busy Tran Hung Dao and Le Loi streets.
In the
northern part, which is separated from southern section by the
Local
authorities are also inviting investors to a wholesale market in Phu Hau Ward
and a centre for trade fair and exhibition at An Dong Ward.
Dung
said the Department of Planning and Investment would give 15sq.m of land to
the wholesale market project and 62,000sq.m to the exhibition centre. Height
limit for the centre is 17 stories. It will also assist investors in site
clearance.
The
city also planned to make land plots for several offices and agencies in the
city's centre, including offices for the Department of Education and
Training, Department of Construction, Department of Health, and the Press
Association, and give plots to big investors for trade and tourism complex
projects.
Tran
Ba Man, deputy director of the Finance Department, said land prices would
range from VND27 million (US$1,230) to VND71 million ($3,230) per one square
metre, depending on its location. Plots at Le Loi and Tran Hung Dao are the
highest.
The
information was released at an online conference held by the provincial
People's Committee last week.
Phan
Ngoc Tho, deputy chairman of the committee, said the province is doing well
in land management and the issuance of land use and lease certifications at
the locality has reach 83 per cent.
As for
delayed projects in the ‘golden land' plots which have investors already,
including the plot at the corner of Ha Noi - Nguyen Tri Phuong streets, the
department of planning and investment said economic downturn and loss in
business prevented the investors from completing the buildings.
Its
deputy director Phan Thien Dinh pledged to revoke the investment licenses for
long delayed projects.
During
the online conference, local and
Speaking
at a meeting held by the city's Department of Industry and Trade with its
counterparts from 20 southern provinces and cities late last month, Le Ngoc
Dao, its deputy director, said the two sides introduced their strong areas of
business hoping to set up trade co-operation programmes.
The
Sai Gon Trading Corporation (SATRA) has invested in seven agricultural areas
in Dong Nai, Binh Duong, Lam Dong, Long An, Tien Giang, An Giang, and Dong
Thap provinces.
To
ensure stable supply for its processing facilities, Vissan, a subsidiary of
SATRA, has invested VND600 billion (US$28.36 million) in five
animal-husbandry projects in An Giang, Binh Duong, Dong Nai, Long An, and Ba
Ria – Vung Tau provinces. It also supplies goods valued at VND2.4 trillion
($113.5 million) annually to these localities.
The
city supplies brood animals to 13 southern provinces and invested VND192
billion in building a plant making goods for export.
Ba Huan
Co has undertaken three co-operative projects with farmers in Long An, Kien
Giang, and Binh Duong. It provides them with brood animals, feed, and animal
husbandry techniques worth VND350 billion and sells other products worth
VND500 billion per year.
Sai
Gon Co.op has five projects to set up distribution networks, co-operate for
production, provide funding, and to buy products worth around VND700 billion
a year from these localities.
It has
outlets in 19 provinces and is expected to open another one early next year,
thus having Co-op Mart outlets in all 20 southern provinces that have signed
co-operation deals with
The
three wholesale markets in
The
co-operation programme has also helped HCM City-based businesses expand their
retail markets and develop distribution networks across the country.
Together,
they have so far opened 64 supermarkets in southern provinces.
With
two new mini-marts in An Giang and Binh Phuoc, Vinatex has 19 mini-marts in
14 out of the 20 provinces.
It is
also provided capital of VND25 billion a year for market stabilisation in
Binh Duong and Binh Phuoc provinces.
With
support from these localities, Sai Gon Co.op and Vinatex plan to open
convenience stores in Dong Nai, Dong Thap, and An Giang before expanding to
the other provinces.
At the
meeting, the department heads agreed to enhance exchange of information,
especially about demand and supply of goods, to prevent possible speculation
and gouging.
They
will also create favourable conditions for firms from other southern
localities to access the distribution networks in
FDI
exceeds target
Foreign
direct investment in the first nine months was worth over $15 billion,
meaning it has already exceeded the whole year's target.
Processing
and manufacturing attracted the largest inflows with science and technology
projects coming in at a surprising third place.
Investment
and the number of new projects in science and technology are on the rise,
according to the Ministry of Planning and Investment's Foreign Investment
Agency (FIA).
There
were 116 new projects with a total investment of $380 million against just
$99 million in the whole of last year.
It
accounted for a third of all the investment in the sector over the last 25
years of $1.1 billion. According to the FIA, processing and manufacturing
attracted investment of nearly $13 billion, $7.6 billion of it in new
projects, followed by the property sector with over $587 million.
The
last quarter has already seen a sharp increase in FDI with Samsung getting a
licence for an electronic components plant costing $1.2 billion at the
Samsung Thai Nguyen Hi-tech Complex.
FDI to
have actually been brought in this year is around $8.6 billion, a 6.4 per
cent year-on-year jump, and the target of $10.5-11 billion seems achievable.
VietJet
has high hopes
The
country's first private air carrier VietJet Air is confident it can raise the
funds required to buy the 100 Airbus A320 aircraft for which it has already
inked deals, according to Luu Duc Khanh, its managing director.
He
signed an MoU with the European manufacturer on September 25.
The
agreement is for buying 42 A320neo (new engine option), 14 A320ceo (current
engine option) and six A321ceo aircraft, leasing eight from a third party,
and an option to buy 30 more A320s, according to a press release from Airbus.
The
order, not including the option, is worth about $6.1 billion at listed
prices.
Khanh
said while the sum is huge, the carrier has identified the sources to raise
it already.
They
include Government programmes to fund aircraft purchases, loans from foreign
financial institutions, and an IPO, he said.
The
foreign banks would only provide 20 per cent of the amount needed, he said,
revealing that VietjetAir held negotiations with many of them and had the
loan deals in the bag before signing the MoU with Airbus.
The
aircraft to be bought would themselves be used as security for the loans.
VietjetAir
has also approached the governments' financing channels, which promises
promising results since authorities have a good impressions about
VietjetAir's business model, he said.
The
carrier made a pre-tax profit of VND120 billion ($5.67 million) in the first
seven months of this year, which was beyond its expectations, he admitted.
At the
time it started in December 2011 VietjetAir had hoped to break even only
after three years.
Its
fleet has expanded from three in the beginning to 10 now.
"With
the number of passengers and volumes of cargo it transports, VietJet needs
five to 10 aircraft every year," he said. Demand for air transport in
Viet Nam is rising and VietJet would have to expand to every destination for
which there is demand, he said.
Bribery
remains urgent issue to Vietnam's economy
Bribery
is still an urgent issue in Vietnam, which has caused great difficulties for
enterprises and slowed down the country's development, according to
economists.
The
issue was discussed at the dissemination workshop 'Vietnam: Trade
Facilitation, Value Creation, and Competitiveness' held by World Bank and
Vietnam Chamber of Commerce and Industry (VCCI) on October 4. Vietnam's
competitiveness index is lagging behind its neighbours because the of the
high cost of logistics, underdeveloped infrastructure and lack of
transparency in the customs system.
Pham
Minh Duc, an expert from World Bank said, "From 1997 to 2011, the volume
of freight traffic has increased 12% a year and economic growth rate is about
18% a year, yet the growth rate of infrastructure investment is 0%. Our
infrastructure and services are weak because we heavily depend on public
investment even though it is said to be ineffective."
Luis
Blancas, another expert from World Bank agreed with Duc, saying,
"Average logistics costs of other countries is only accounted for 9%-13%
of GDP, but this figure in Vietnam is estimated at 25%." He went on to
say that the logistics costs are so high because firms have to pay extra
money for customs and traffic police. Bribes for traffic polices could take
up to 13% of a total cost of a shipping container.
According
to the World Bank, complicated procedures in the customs system costs
Vietnam's economy hundreds of millions of USD each year. For example, customs
clearance work in Vietnam lasts three to four days longer than in other
countries. Because of the slow work, firms have to spend extra money to
warehouses. In 2012, the economy lost USD96 million because on storage fees
and it may increase to USD182 million in 2020 if Vietnam does not act
quickly.
"Complicated
procedures create loopholes for bribery so we need to use more high-tech
methods and limit manual work. This way, customs officials will have little
contact with the firms and fewer chances to ask for bribes," Duc said.
An
export-import company also said, "Not every officials asks for bribes.
It's just that our regulations are so inconsistent and we want our work to be
dealt with quickly, so we have to 'grease the wheel'."
World
Bank suggested the government issue clearer and more consistent regulations
along with frequent inspections at state offices.
Atkins
seeks to join infrastructure projects
Atkins
is looking for more opportunities to participate in projects in
infrastructure and other areas in Vietnam after the global design,
engineering and project management firm has involved in a number of hotel and
commercial projects in this country.
Alex
Winchester, regional business development and commercial director of Atkins
for Asia Pacific, said the company expected the chance to plan, design and
enable projects in Vietnam, as the country was in dire need to speed up
infrastructure development, including metro and urban rail projects in HCMC and
Hanoi as well as new airports around the country.
“We
will look at all the opportunities that are on for tender… We are exploring,
discussing with people how we can assist whether it is a metro or the new
airport,” Winchester said.
Winchester
told the Daily about the chance for Atkins to join the major infrastructure
projects underway in Vietnam, including the big-ticket Long Thanh airport
project in Dong Nai, before he left Vietnam on Thursday after a business
trip.
Winchester
told reporters that Atkins had discussed with HCMC’s relevant authorities
about metro development and the feedback was that they were keen on the
expertise and others that the company was able to offer. He emphasized the
company would continue discussion with the city on this topic.
“We
need to learn the best work that the authorities here want. We need to
understand what is the best way for us to work in order to realize their
expectations,” Winchester said and added that doing something critical for
the first time like the metro required much time.
HCMC
is making every effort to develop metro lines with combined investment
capital of billions of U.S. dollars in order to ease traffic pressure in this
economic hub of Vietnam and to increase the transport capacity of public
means, which now meet less than 10% of the demand.
Winchester
noted it was not easy to build a metro line in a heavily-populated urban area
in general, especially where there are historical buildings when having to
ensure construction to progress while traffic flow still went. Therefore, the
experience and know-how of global companies will help much in this case.
Given
Vietnam’s growth and its infrastructure development, Winchester said Atkins
had placed Vietnam in its list of three new key markets in Asia Pacific. The
others are Malaysia and Singapore.
Atkins
is also eyeing other promising markets of the region, including Indonesia,
the Philippines, Thailand and Myanmar. “But, that’s later. So, Vietnam is our
first selection for our business development,” Winchester said.
Atkins
has opened an office in Vietnam. Winchester said Atkins had worked on the
concept designs for a number of projects in Vietnam, including Vung Ro Bay
master plan and hotels in HCMC and Nha Trang.
“All
the projects are at the concept stage. As we spoke earlier that learning how
to work in a new country means learning about the time, from one stage to
another,” Winchester said.
Foreign
organisations still casting doubts over economic prospect
A
range of international organizations have reported weak business sentiment in
Vietnam, stifling the country’s economic growth.
The
Asian Development Bank (ADB) last week released its Asian Development Outlook
Update 2013 stressing that private consumption in Vietnam would remain
subdued due to sluggish job creation and continued weak consumer confidence.
The
ADB cited TNS, a world leader in market research, global market information,
and business analysis, as saying that Vietnam’s consumer confidence index,
with 100 scores being the highest level, had decreased from 89 in 2008 to 56
in 2013.
The
rate of those believing the value of the Vietnamese dong would worsen climbed
from 5 per cent last year to 25 per cent this year, while those predicting a
“far worse” economy jumped from 5 per cent to 9 per cent.
A
further vote of no confidence was seen in a Fitch Ratings report released
last week which said: “The prospect of a sharp improvement in growth
prospects is not obvious.”
“We
remain doubtful as to whether Vietnam’s gross domestic product (GDP) growth
rate can pick up sharply and revert to a 7 per cent level - as was the case
in the last decade,” the report said.
Fitch
saw the Vietnamese banking system’s fragility as one of the major reasons,
encumbered as it is by substantial bad loans.
“We do
not think the current asset restructuring measures - through the creation of
a state-owned asset management company (VAMC) - will replenish capital
sufficiently or swiftly enough to bring about a healthy pace of credit
extension to the productive sector any time soon.”
ADB
country director for Vietnam Tomoyuki Kimura underscored that unless
structural reforms for banks, including the resolution of non-performing
loans (NPLs) and state-owned enterprises, were accelerated, the economy could
face a prolonged period of lackluster growth languishing well below the 7-8
per cent pace set in 2002-2007.
Credit
institutions reported that their NPL ratios rose to 4.5 per cent of total
loans in the first half from 4.1 per cent by late 2012. The State Bank
estimated NPLs at 6 per cent in February 2013, based on its off-site
surveillance of banks.
“Gradual
progress in resolving NPLs will improve business sentiment,” said Kimura. “As
this happens, policy stimulus, including the cuts in interest rates this
year, could gain traction in boosting credit and GDP growth.”
Navya
Kumar, an assistant manager at Deloitte Research, Deloitte Services LP, noted
in the Asia Pacific Economic Outlook for October 2013 that the Vietnamese
economy was a shade better in Q2 2013, but not what it used to be. “It is
still expected to register one of the lowest rates of annual growth in 14
years,” Kumar wrote.
“The
situation is driven in part by global factors, but more so by the sluggish
pace of domestic economic reforms. Slow reforms have significantly affected
the country’s banking sector, which remains mired in bad debt and wary of
lending, thus hindering economic growth,” added Kumar.
Firms
binge on dietary foods
Many
foreign enterprises are gnawing into Vietnam’s lucrative market for dietary
supplements.
At
last week’s international festival of functional foods in Hanoi, many foreign
functional food firms told VIR they had been looking to establish a niche in
Vietnam.
Vietnam
Mannyon Trading Co., Ltd, a branch of North Korea’s state-owned Mannyon
Trading Group, established in 2012 with the total capital of $300,000 has
already proved successful.
“We
are operating well in Vietnam. The number of products we are selling, which
are all imported from North Korea, have doubled from seven last year due to
the market’s huge potential,” said Vietnam Mannyon’s general director Kim Se
Un.
“Vietnam
Mannyon is North Korea’s first company of the type to invest in Vietnam. We
will soon increase the company’s investment capital and register more
products,” Kim told VIR.
South
Korean-backed Pyunkang Medical Corporation and Foundation established its
company in Hanoi in June 2013 with the total capital of $50,000, operating
under the Pyunkang Pah name.
“We
will raise our investment capital. If business goes well in Hanoi, we will
open branches in other localities,” said Bong Kil Choi, vice president of the
corporation’s international business development division.
One of
the main reasons behind’s Pyunkang presence in Vietnam is that its products
had played a role in helping cure 50,000 patients suffering from skin
diseases, 60,000 patients with chronic rhinitis and 43,000 patients with
chronic asthma in South Korea.
“So
many people in Vietnam are being hit by such diseases. That offers big
opportunities for us,” Choi said.
Chinese-invested
Tiens Company, the biggest functional food maker in Vietnam, reaped the total
revenue of $60 million last year in Vietnam, up 20 per cent against 2011, and
the firm was expecting a 10 per cent growth this year.
Tiens’
existing $25 million factory in the northern Hai Duong province’s Dai An
Industrial Park is expected to bring the company an annual average turnover
of $150 million in the future.
“Tiens
has begun exporting its products to Europe, Bangladesh and Thailand, while
expanding its markets via online sales,” said a Tiens source.
Tiens,
which operates in 190 nations and territories, currently has 30 agents in
Vietnam with more than 40,000 distributors. The firm markets 12 functional
food products in the country.
Chinese-backed
Tasly International Vietnam Co., Ltd under China-based Tasly Group, recently
decided to distribute the group’s functional food products in Vietnam after
13 years of operating in Vietnam.
“We
are seeking distributors and then will register about five to seven products.
In 2012, the company’s revenue surged 131 per cent on-year, and this rate may
reach 115 per cent this year. However, with the contribution from functional
foods, the company’s total revenue will be far higher,” said Nguyen Viet
Dung, the company’s commercial specialist.
According
to Vietnam Association for Dietary Supplements, functional foods appeared in
Vietnam about 10 years ago. But the country is now home to nearly 1,600 local
and foreign firms producing and importing about 2,000 products. Some 52 per
cent of their products are foreign made.
The
association’s chairman Tran Dang said this rate would likely rise to 65-70
per cent over the next few years. The advantage foreign firms have in modern
technology has provided them with a competitive edge, with products having a
shelf-life of up to a decade compared to local products that can be sold for
an average two years.
Vietnam’s
functional food market has grown annually by about 25-30 per cent, Dang said.
Ministry
plans change to foreign investment procedures
Investment
authorities are mulling changing registration procedures to help streamline
the process of and make the country more attractive to incoming foreign
investors.
“Business
and investment registration procedures of foreign invested enterprises (FIE)
are currently viewed as overly complicated and difficult and are likely to be
a major area of change when the Enterprise Law amendments are submitted to
the National Assembly’s upcoming session in late October,” said deputy head
of the Ministry of Planning and Investment’s (MPI) Business Registration
Management Department Bui Anh Tuan.
Deputy
head of the MPI’s Legal Department Quach Ngoc Tuan said the current law
requires incoming projects to get both business registration and investment
certificates. This slows their entry into the market.
“One
of the key amendments in the draft is allowing foreign investors to apply for
and receive business registration certificates first, the foreign investors
then execute other procedures to invest in Vietnam and be given investment
certificates,” explained Tuan from the legal department.
“New
businesses must pay due heed to market entry conditions while those already
doing business and looking to change or expand must critically analyze the
conditions required,” he added.
The
proposed change was welcomed by participants of a recent Ho Chi Minh City
workshop which sourced opinions on potential amendments to the Enterprise
Law. It was notably lauded for recognising recent market developments such as
foreign investors pooling resources and buying stakes in Vietnamese firms.
The
law will allow investors to buy stakes in or accept capital transfers from
Vietnamese firms before going through the investment registration process.
“The
amended law will create a legal framework that welcomes foreign investors and
efficiently facilitates investment management authorities, while also
supporting enterprises in dealing with their problems quickly and effectively,”
said registration department Tuan.
There
will also be another five proposed amendments regarding the registration of
new businesses, information transparency and publication, governance of
dissolutions and operation termination, acquisition of and restructuring of
businesses, and corporate governance.
Hyupjin
Vina’s subcontractors funding row wreaks havoc
The
disappearance of South Korean-backed Hyupjin Vina is wreaking havoc on 39
domestic and foreign sub-contractors which were involved in the construction
of the JW Marriott Hanoi Hotel.
The
sub-contractors claimed Hyupjin Vina owed them $2.1 million as part of the
construction of the hotel, but the firm has disappeared following the
bankrupcy of its parent company in South Korea.
According
to Le Mai from P&V Vietnam, one of the 39 affected firms, they need
support from the authorities to protect their rights and enforce their
contracts.
“We
have been trying to resolve the debt for over a year, since Hyupjin reneged
on our contracts, and we have seen little progress. We are appealing to the
authorities to support us and the other contractors,” Mai explained.
Byung
Joo Kim, the project manager under Hyundai E&C, confided in VIR last week
saying that the company’s contract with Hyupjin Vina was terminated as the
latter had failed to fulfil obligations.
“All
payments related to work under Hyupjin’s purview were made, including
equipment and materials. Hyundai has completed its part of the payment
process,” Kim confirmed.
“Hyupjin
is responsible for all outstanding payments to the sub-contractors and
suppliers it hired in accordance with the contracts signed by all parties,”
he added.
Kim
related that after terminating its contract with Hyupjin, Hyundai had to
spend a great deal of time working with their contractors to ensure the
project’s success. This required Hyundai to outlay even more capital on top
of the fees.
“It is
not only the sub-contractors who are suffering, we are too. We sustained
financial losses due to Hyupjin’s failure to meet its obligations and we do
not believe we have any responsibility for debts that Hyupjin received money
for and was required to pay out,” he explained.
When
VIR attempted to contact Hyupjin’s representatives in Vietnam, they were
unavailable for comment. One representative from EIA, another of the 39
sub-contractors, revealed that Hyupjin’s office had been closed for months
and their mobile phone were terminated.
Kim
from Hyundai also said he had not heard from Hyupjin for several months.
“We
expect them to appear to bring this issue to some kind of conclusion, but we
have no idea where they are. Hyupjin’s mother company Hyupjin Group filed for
bankruptcy last year,” Kim said.
Dinh
Van Khoi, representative of the sub-contractors, said they were in the dark
about when and if they would ever get paid as Hyupjin Vina had disappeared
completely off the radar.
“We
have no idea when we will get paid,” Khoi said. He added that the
sub-contractors were now turning to local authorities, police, and tax bodies
to help them recover the debt.
Mai
from P&V Vietnam said they had petitioned police where the hotel is
located. “We are awaiting further guidance,” she said.
Though
it has refused to provide any financial assistance or compensation to
sub-contractors, Kim said Hyundai would make a reasonable, diligent, good
faith effort to assist the parties in settling their dispute.
But
the disappearance of Hyupjin does not bode well and the group of
sub-contractors may have to wait for more time to be paid.
The
nine-storey JW Marriott Hanoi Hotel has been under construction since October
2007. It boasts 450 high-end rooms and is located just behind the National
Convention Centre in the west of Hanoi.
Source:
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
|
Thứ Hai, 7 tháng 10, 2013
Đăng ký:
Đăng Nhận xét (Atom)
Không có nhận xét nào:
Đăng nhận xét