BUSINESS IN BRIEF 24/11 Sumitomo Corporation wants to invest in HCM City Japanese Group- Sumitomo Corporation is keen to invest in Vietnam’s real estate projects, has said Hirokazu Higashino, General Manager of Sumitomo Corporation's Building and Overseas Real Estate Business Department. At a working session with Le Hoang Quan, Chairman of the Ho Chi Minh City People’s Committee on November 21, Hirokazu said the group wants to build a building in district 1 for Japanese businesses. The group is also interested in the Thu Thiem trade and finance centre on 20ha and expanding a school for Japanese children in district 7, he added. Over the past 20 years of operation, Sumitomo Corporation has set up two offices in Hanoi and HCM City, and 19 companies with a total of 3,600 workers. The same day, Quan received Japan’s newly appointed Ambassador to Vietnam Hiroshi Fukada. The Japanese diplomat expressed his hope that HCM City will be an attractive destination for Japanese investors. However, he said the city should continue with its administration reform to upgrade infrastructure facilities and protect environment. Currently, the City has around 600 Japan-invested projects worth more than US$3 billion.  Marketing tool attracts shoppers "Shopper marketing", a technical term meaning using any marketing stimuli to build brand equity, engage shoppers, and lead them tobuy, is helping European and Asian companies increase income by 20 – 25 per cent, even during the global financial crisis, international delegates heard at a conference in HCM City yesterday. "Shopper marketing is the new definition on how to directly approach and sell goods to shoppers, not to general customers," Phan Thi Tuyet Mai, deputy chairwoman of the Sai Gon Entrepreneur Club, said. Speaking at the conference on shopper marketing in Viet Nam, Mai said, "The new marketing definition has become familiar all around the world for around seven years, but in Viet Nam it is new. "It is the best solution to help enterprises during recession. It is very useful for making plans in 2014," said Trieu Ton Phong, general director of MSV company. Shopper marketing finds out how customers buy and why they choose certain brands. Many shoppers buy unconsciously, without calculation. "So, bring your brand name into the customers' unconsciousness. One shopper will decide because of the family, for example. A lot of companies have done well in the general market, but still have lost because they did not do well in the retail sector," Richard Burrage, Cimigo's executive director, said. In the retail industry, more commodities are being sold based on two factors: the first, on how to connect with shoppers, and the second on how to lead them from being a shopper to a buyer. For both retailers and brand suppliers, these two factors have become goals in order to increase their income. "There are seven principles for retail that can lead shoppers to becoming buyers, including reasonable price, convenience, available goods, benefits, services, surprise and the senses," Vu The Du, development director of MSV Group, said. According to MSV Group statistics, budgets allocated for shopper marketing have increased 21 per cent annually, and 73 per cent of brand suppliers and 86 per cent of retailers said shopper marketing was effective. At least 55 per cent of enterprises said they would increase budgets for shopper marketing within the next three years. And 59 per cent of consumers and 85 per cent of buyers confirmed that this would affect their decisions rather than outside factors. According to studies, consumers only trust advertisements 25 per cent of the time, while 70 per cent trust strangers who have knowledge of the products. Ninety per cent believe in relatives or friends who have used the products.  Capital welcomes importers from the RoK in bid to boost agricultural trade A conference themed "Market access - Trading with Republic of Korea (RoK) importers" to promote the export of Vietnamese farm products to the country was held in Ha Noi yesterday. The event looks to help Vietnamese exporters grasp information on requirements and specific standards demanded by Korean importers as well as seek trading opportunities and expand the export of agricultural products to the Korean market. Director of the Trade Promotion Agency (Viettrade) Do Thang Hai said the Korean market consumes a vast amount of farm produce and is regarded as potential for Vietnamese exporters. Trading between the two sides will be accelerated when they reach a Viet Nam-RoK Free Trade Agreement in the coming time, added Hai. Two-way trade turnover has seen a forty fold increase to US$20 billion compared to the $500 million figure recorded in 1992 when they established diplomatic ties. As of October 2013, Viet Nam earned $5.49 billion from its exports to the RoK, including 10 per cent that was contributed by farm products such as aquatic products, coffee, vegetables, fruits and cereal products. At the workshop, the RoK representatives also introduced the trends and purchasing process of their leading importers to participants, sharing effective methods to order pavilions at trade fairs in their country and the word.  Vinh Long eyes more investment projects Mekong Delta's Vinh Long Province wants to attract more investment projects as part of the delta's target of adopting a green and sustainable economy to eliminate the impact of pollution. The provincial People's Committee recently announced 47 projects awaiting investors through 2015. The projects have a total expected budget of more than VND23 trillion (US$1.09 billion). According to the local government, apart from attracting projects in trade and service sectors, Vinh Long is giving priority for projects in Binh Tan, Dong Binh and An Dinh industrial parks, countryside markets, wholesale markets and urban areas. The province said it would grant investment certificates for investors to build Phuoc Yen Trading and Service Centre, My Nga Residence, Binh Minh Vegetable and Fruit-Packing factory and Mang Thit cattle-feed factory. Dang Thi Ngoc Thinh, secretary of Vinh Long Province's Party Committee, told Vietnam News Agency that Vinh Long needed projects related to its native products. "The Mekong Delta is a region with potential and has an advantage for products such as rice, fruit and fish. Though much effort has been invested, the delta remains a backward region compared with others in the country," Thinh said. According to the Mekong Delta Steering Committee, investors have committed money to 159 projects with total registered capital of VND4 trillion ($190.5 million).  FPT announces 10-month revenue increase Software giant FPT Corporation posted revenue of VND22 trillion (US$1 billion) over the past 10 months, a year-on-year increase of 14 per cent. Before-tax profits reached VND2 trillion, a surge of 5 per cent against 2012. Earnings per share (EPS) were VND4,617 ($0.21), up 3 per cent. Technology and telecommunications, which include telecommunications networks and software, contributed the most to the group's profits. Software patches, which include software exports and software solutions, systems integration and IT services grew 21 per cent in revenue and 16 per cent in profit. Understanding the implementation of new amendments to electricity law The Government issued Decree 137/2013/ND-CP implementing the Law on Electricity on 21 October 2013. The Decree provides a master plan for investment in electricity development, electricity purchase and sale, electricity prices, electricity operating licences and State administration of electricity activities and electricity use. Master plan on electricity development The master plan on electricity development is amended every five years or in shorter cycles to meet the requirements of socio-economic development. The Ministry of Industry and Trade (MoIT) carries out the preparation and approval of a proposal and cost estimate to amend the national master plan on electricity development. The Provincial People's Committee (PPC) carries out the preparation and approval of a proposal and cost estimate to amend the provincial master plan on electricity development. MoIT exercises State administration of the master plan on electricity development, guides preparation of an annual plan on investment in electricity development based on the approved master plan, announces the approved national master plan on electricity and amendments, while also performing other duties. The PPC announces the approved provincial master plan on electricity development and amendments, arranges land to be used for electricity projects in the national master plan and the provincial master plan, closely co-ordinates with investors in electricity projects for site clearance, compensation payments, relocation and resettlement assistance, while also performing other duties. Investors in electricity projects must promptly provide adequate funding for site clearance, compensation payment, plus relocation and resettlement assistance as a result of their electricity projects, submit to the PPC relevant dossiers such as site clearance, safety corridors, housing for staff, etc... and co-ordinate with the units assigned by the competent State authority to conduct site clearance, compensation payments, plus relocation and resettlement assistance. Securing performance of electricity purchase and sale contract (Contract) The purchaser using an average 1,000,000 kWh or more a month, must carry out security measures for the Contract performance. The security value for Contract performance is agreed by the parties and does not exceed fifteen days' electricity energy calculated on the basis of the registered average monthly electricity in the Contract and the applicable normal hourly price of electrical energy. The seller may cease electricity supply to the purchaser if the purchaser fails to carry out the security measures or fails to maintain them. Offshore electricity purchase and sale The Prime Minister approves the policy in principle for offshore electricity purchase and sale via the national power grid involving voltages of 220kV or more. The MoIT approves in principle the electricity entity's proposal of offshore electricity purchase and sale via the national power grid involving voltages of below 220kV. The PPC guides, manages, supervises and inspects electricity purchases from foreign countries in border areas only. Electricity prices and fees The MoIT regulates the methods and procedures for preparation and evaluation of frameworks for electricity generation prices, electricity wholesale prices, electricity transmission prices, prices for providing support services to the electricity system, fees for managing the electricity system, plus fees for managing trading on the power market, after obtaining opinions from the Ministry of Finance (MoF). The Minister of Industry and Trade approves fees for managing the electricity system and fees for managing trading on the power market after obtaining MoF opinions, also overseeing the framework of electricity generation prices and electricity wholesale prices, electricity transmission prices and prices for providing support services to the electricity system. The two-component electricity price, comprising the output price and the electrical energy price will apply. The MoIT makes a schedule for implementing the two-component electricity price and the applicable entities, then submits it for the Prime Minister's approval. Conditions for issuance, amendment and supplement of electricity operating licences To obtain an electricity operating licence or to have such licence amended or supplemented, an organisation or individual must satisfy the following general conditions: (1) Be an organisation or individual established and operating under the laws; (2) Have registered business scope consistent with the scope required for licence; (3) Have eligible dossiers submitted for the electricity operating licence; (4) Have paid fees for the electricity operating licence. The Decree also provides specific conditions for licences of electricity generation operations, electricity transmission operations, electricity distribution operations, electricity wholesale operations, electricity retail operations, electricity import/export operations and other licences. The Decree takes effect on 10 December 2013 and replaces Government Decree 105/2005/ND-CP (17 August 2005). Indochina Land invests in affordable housing project The real estate fund manager Indochina Land officially become yesterday a partner of the Nam Long Investment JSC after investing in the on-going Ehome 3 Western Saigon, an affordable apartment project of Nam Long. Indochina Land has a 35 per cent stake in the VND1.47 trillion (US$70 million) project, which covers six hectares of land in HCM City's Binh Tan District. The project will develop 14 buildings offering more than 2,000 units. Sales began in August last year and 630 units found buyers. In September, 331 apartments were handed over to customers. Indochina Land's CEO Peter Ryder said Nam Long's solid development and strong commitment to its EHome brand was a major factor in his decision to invest in the project. "We appreciate Nam Long's long-term vision on the affordable and value-for-money EHome product in its plan to develop 14,000 such apartments over the five coming years," said Ryder. He added that the product suits the demand of the majority of Vietnamese. According to Nam Long chairman Nguyen Xuan Quang, the cooperation with Indochina Land will add value to the project, thanks to its reputation in the real estate sector. Mekong Capital and the London Stock Exchange listed fund ASPL are among foreign shareholders of Nam Long JSC. Indochina Land manages three funds totalling $500 million. Among its developments are Indochina Plaza Hanoi, Hyatt Regency Danang Residence, The Nam Hai – Hoi An (resort and villas) and River Garden (residence) in HCM City. Domestic retail market full of potential Domestic enterprises are still able to compete in Vietnam's increasingly competitive retail market, according to the Ministry of Industry and Trade (MoIT) official. The country's retail market is preparing for a massive influx of foreign retailer amid its World Trade Organisation (WTO) obligations, which will come into effect from January 11, 2015. Under the WTO commitments, Vietnam will have to permit the establishment of wholly foreign owned businesses, including retailers, with some of the world's leading retailers expressing an interest in the Vietnamese market. The changes have also attracted the interest of foreign investors eager to take advantage of the lax investment rules. In response, many domestic stakeholders have raised concerns with foreign retailers setting up shop in Vietnam. Fielding questions in an online forum held in Hanoi on November 13, Deputy Head of the MoIT's Domestic Market Department Tran Nguyen Nam said foreign firms will bring the benefits of financial resources and qualified workers. Domestic retailers, he said, need to adapt their management systems, training and customer service to compete with foreign firms, who are skilled in these areas. Statistics from the department showed that by the end of last year, foreign groups accounted for only 40% of around 700 supermarkets in Vietnam. Meanwhile, 31 out of 125 commercial centres in the country were foreign-invested. Dinh Thi My Loan, chairwoman of the Vietnam Retailers Association, said market share commanded by local retailers has increased in recent years. She said both domestic and foreign retailers have benefited from preferential Government policies. However, she commented that some localities have offered preferential policies for foreign enterprises. In one example, domestic firms are required to wait for longer periods to apply for land to build trade centres or supermarkets, while foreign companies receive easier access to land. Our association has reported the situation several times, she added. In addition, local retailers have faced difficulties with the economic downturn and decreasing purchasing power, she said, adding that domestic retail companies need to plan how they will compete in a liberalised market. She said domestic retailers have not been good at promoting co-operation between producers and companies as foreign firms. Talking about co-operation among four best big domestic retailers, Hapro, Satra, Phu Thai Group and Sai Gon Co.op, she said the association aims to strengthen logistic system. HR stability the biggest concern when restructuring What enterprises concern the most when restructuring is to rearrange personnel to ensure the stability of their human resources (HR), business executives said at the Vietnam HR Day 2013 taking place in HCMC on Sunday. A HR manager said that when his company restructured, many employees were let go and some others followed them to work for rival companies. This caused a chaotic situation in the sales department and made the company fall into a crisis when starting the restructuring, he added. According to Le Phuoc Vu, chairman of Hoa Sen Group, the firm had to restructure by re-building the distribution system and rearrange personnel a couple of years ago after many agents severed ties and created a system directly competing with Hoa Sen. Rearranging and offering appropriate HR policies are an important step helping the firm to finish restructuring. Speaking to the Daily at the event, lawyer Bui Trong Giao from CML Training Center said that many enterprises facing the protracted economic recession had to restructure business. Contributing capital, merging or changing the business structure led to a change in using and rearranging the human resource, he said. If there is any inappropriate personnel arrangement or the lack of cooperation of employees, the restructuring may not succeed. 70% of the restructured businesses failed due to in appropriate workforce arrangement, according to Giao. Meanwhile, a HR manager at a bank said that there were big changes in personnel arrangement at banks that are undergoing the process of merging or restructuring as ordered by the central bank. Employees and mid-level managers of many departments will become redundant and thus the new banks have to rearrange the workforce, she said. According to Cao Tien Vi, general director of Saigon Paper Corporation, a restructuring plan can never be supported by all and layoff is unavoidable. However, measures must be taken to avoid hurting the feelings of those who are laid off. Domestic waterfowl industry targets further growth Viet Nam plans to increase the meat output of waterfowl by 8-10 per cent a year in coming years, according to the Animal Husbandry Department. The waterfowl sector, which breeds mostly ducks, also targets the volume of waterfowl bred by industrial farming to reach 50 per cent by 2015 and 65 per cent by 2020. The country produces 280,000 tonnes of ducks and more than 2 billion duck eggs a year. Nguyen Van Trong, deputy head of the department under the Ministry of Agriculture and Rural Development (MARD), said the selection and development of breed stocks would be improved. Central breeding centres will help local centres produce parental breed stocks, he said. MARD now manages waterfowl purebred stocks and grandparent breed stocks. Purebred stocks and grandparent breed stocks are bred at the Ha Noi-based Dai Xuyen Duck Research Centre, the Binh Duong Province-based Ben Cat Duck Centre and the Hai Duong Province-based Cam Binh Duck Centre. Parental breed stocks sourced from grandparent stocks to produce commercial stock are managed by provinces and cities. However, up to 95 per cent of households and local breeding centres that raise parental breed stocks do not register with local agencies, according to the municipal and provincial departments of Agriculture and Rural Development. This has led to an imbalanced supply of commercial stocks among localities as local agriculture departments cannot manage the number of parental breed stocks and their quality. The northern provinces, for instance, often face a shortage of commercial stocks, causing the smuggling of commercial stocks via the border into the northern provinces. Nguyen Dang Vang, chairman of the Viet Nam Animal Husbandry Association, said to improve the economic value of waterfowl production, localities should improve their local waterfowl breed stocks by hybridising methods to create good hybrid stocks. To ensure outlets for products, the waterfowl sector should complete the production chain by selecting breed stocks and animal feed and reducing the death rate of waterfowl, he said "The association is consulting MARD to set up technical standards for animal husbandry farms," he said. Viet Nam has 80 million waterfowl, including ducks and geese and other species, and is the world's second largest waterfowl producer, after China, according to the department. The country has various waterfowl strains that have high yield and quality. The Hong (Red) and Cuu Long (Mekong) deltas are the country's two major waterfowl producers. Agribusiness fixes could spur growth Leading market research firm, Business Monitor International (BMI), has said Viet Nam's recent economic trends are providing new opportunities for the nation's agribusiness sector. In a new report released by BMI, Viet Nam's agriculture sector is facing a strong incentive to speed up the production, export and sale of traditional agricultural products, including rice, coffee, livestock, and dairy, to harness new growth opportunities. However, the report also shows growing competition faced by Vietnamese farmers in traditional markets, highlighting a need for the industry to make improvements to supply chain efficiency and product quality, in order to remain competitive. Among factors affecting the industry's export growth, the report described tumultuous periods of high inflation and fluctuations in the value of the dong as significantly impacting the value of exports. However, the report also acknowledged the Government's recent policy efforts in containing rampant inflation from previous years, restructuring State-owned enterprises and addressing imbalances in the economy through tax incentives and investment in infrastructure. The country is eager to attract foreign investment to multiple sectors, including agriculture, one of the most difficult and high risk areas as perceived by investors. Foreign direct investment (FDI) in agriculture is currently accounting for 1-3 per cent of the country's total FDI. The Government is hoping new efforts to improve the production capacity and commercial viability of the agricultural sector will attract more investors, particularly in the form of public-private partnerships (PPP), which will be used in specific agriculture sectors, such as cultivation, breeding and seafood industry. According to BMI forecasts, Viet Nam's rice production, cattle and poultry farming and milk industry are likely to grow by more than 10 per cent between 2012 and 2017. Viet Nam's exports are also set for periods of growth, with the country still competing favourably with traditional competitors, including Thailand, Indonesia, India and Brazil. Viet Nam is now one of the world's leading exporters of rice and coffee. In yet another siren call to the industry, the report affirmed the need for agricultural players to apply new technologies in production and raise standards in food safety to enhance the brand of Vietnamese produce. Experts say the measures, in the long term, will increase the value of Viet Nam's exports, and increase their competitiveness on the world market. Viet Nam's logistics industry finds potential growth opportunities Rising export turnover in recent years and the trade surplus achieved last year shows that there is potential opportunity for the growth of the logistics industry, experts have said. Deputy Minister of Industry and Trade Tran Tuan Anh told yesterday's Viet Nam Logistics Forum 2013 in HCM City that last year the country's import-export value was US$228 billion, up 12.4 per cent over 2011. Of the amount, exports exceeded $114 billion, outpassing imports $750 million. "This year exports are expected to rise 14.3 per cent to $141 billion and imports 15.6 per cent to $131.4 billion, and the strong trade activity development has highlighted the important role of logistics," said the deputy minister. Viet Nam has entered eight bilateral and multilateral economic agreements while another six are under negotiations, and these agreements aim at free trade, thus providing opportunity for the industry. According to Dr Bui Thien Thu, deputy head of the Viet Nam Maritime Administration, Viet Nam's logistics businesses have managed to provide insurance and transport services to 18 per cent of the country's total imports and exports. Currently, up to 90 per cent of Viet Nam's imports and exports are delivered by sea and the growth rate of container shipments was 17 per cent a year between 2001 and 2010. By 2015 Viet Nam's seaport throughput is expected to reach 400 million tonnes, 680 million tonnes by 2020, and more than 1.1 billion tonnes in 2030. Logistics costs remain high, weakening the competitiveness of service users, said experts at the forum organised by the Thoi Bao Kinh Te Viet Nam (Vietnam Economic Times). Deputy Minister Tran Tuan Anh said logistics costs in Viet Nam represent 25 per cent of the country's GDP, while the rate is 11-13 per cent in developped countries and 15-20 per cent in other developing countries. "Reducing the costs will surely help our economy improve its competitiveness in an integrated environment where competition has become fierce," he said. On the issue, he said factors including infrastructure, legal framework and services providers, should be considered. "We have spent a large amount from the State budget and ODA sources on infrastructure development to facilitate goods transportation and logistics service development. Our seaport systems have been built at a large scale and with modern handling equipment," he said. "However a problem remains: the poor connection with goods areas, which needs improvement," he said. He also wants logistics related regulations to be updated to match current realities. Meanwhile, domestic service providers have a lack of skills, networks and capital to invest in advanced technology. Do Xuan Quang, chairman of the Viet Nam Logistics Association, suggested that logistics companies should have a deep understanding of trade like payment and insurance regulations as well as tariff incentives from Free Trade Agreements to support importers and exporters. "On their part, importers and exporters should know about freightforwarding, transportation and other logistic services as well as trade agreements that Viet Nam has concluded so they and logistics companies will be able to support each other, and thus improve their competitiveness," said Quang. He further proposed the establishment of a State management organisation and a national logistics committee to guide the operations of logistics firms, both local as well as foreign. The organisation would be expected to act as a bridge between businesses and the State in mapping out strategies, policies and action programmes for the growth of the logistics industry. This in turn would help the country's trade and production development, he said. Wood industry urged to adopt veneer There is a big potential for Viet Nam's wood processing industry to expand its share in both foreign and domestic markets, both foreign and local experts concur. They were attending a seminar held on Saturday on the sidelines of the Viet Nam Furniture and Home Furnishing Fair. Viet Nam's wood processing industry has enjoyed strong growth over the past 10 years, with export value increasing at an average of 15.5 per cent a year. The industry earned US$4.6 billion from exports last year, a year-on-year increase of 17.9 per cent. The country is currently ranked first in Southeast Asia, second in Asia and sixth the world in terms of wood export turnover. The world furniture demand could reach $300-400 billion a year in the next 10 years, Heiko Woerner, Technical Advisor to the Vietnamese-German Forestry Programme, said. He added that Viet Nam's furniture export now meets just two per cent of the world demand. Therefore, Vietnamese firms have more room to boost exports. Per capita consumption of furniture products in the domestic market remained low compared to other countries, so a great opportunity exists for wood processing firms to boost sales in the domestic market as well, he said. However, the local wood industry faces several challenges, including wood material shortage and poor design capability, he said. Woerner said as much as 80 per cent of wood material used in furniture production in Viet Nam was imported. The country spent $1.5 billion on importing wood material last year. Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association of HCM City (Hawa), said: "Most indoor and outdoor furniture is currently made of solid wood." Hanh as well as other delegates at the seminar urged local wood processing firms to enhance the use of veneer in their products to minimise the use of wood material and conserve natural resources. Veneer is a thin slice of wood cut or peeled from a log. It is adhered to another surface of substrate, which can be made from wood or other materials like stainless steel and aluminum. The veneering technology makes it possible to get 800sq.m of veneer from one cubic metric of wood. By this way, firms can produce more products out of the same lumber used to create one solid wood product. If conserving natural resources is a priority, then furniture made of wood veneer would be a great choice, Hanh said. "Composing veneer sheets of different geometries, wood species, etc with one surface can result in a very special wood pattern or picture," said Dieter Fink of German firm Applikatio. The Viet Nam-Germany Forestry Programme, in collaboration with the ACIAR project and Hawa, has instituted the nation's first Veneer Award, it was announced at the seminar. They said the award aims to promote veneer use and innovation in Viet Nam's wood processing industry. It also seeks to support the local wood processing industry in shifting from using solid wood to veneer in their production, helping Viet Nam's furniture and interior design industry become more competitive. The competition is open to all local designers who can present a practical solution that has not been submitted before. The products submitted should use veneer as a main material – either for accessories (gifts, lamps, toys, and decors) or furniture (desks, chairs, shelves and wardrobes). Final chance to buy Happy Valley condos with golf view Phu My Hung Corporation will commence the final sale of Happy Valley condos this year. The 22-storey Block L in lot R15 is adjacent to Saigon South Golf Course and features a romantic river view. The condos in Block L are available in two sizes: 99 sqm and 134 sqm. This will be the final chance of the year to purchase these beautiful apartments looking over the golf course next to a quiet river. The developer has conjured up a convenient payment scheme capable of extending to nearly two and a half years. Happy Valley condo buyers will be given a special booklet on interior design published by Phu My Hung Corporation in co-operation with six interior design firms, including Nha Vui, Artsy Expressions, Song Tien Construction, ADT Décor, Urban Design and Thanh Danh. The booklet will provide plenty of inspiration for customers looking to create the perfect living environment while saving time. Phu My Hung properties are regarded as a premium choice for foreigners living and working in Ho Chi Minh City since they feature a green and peaceful living environment, good infrastructure and close proximity to shopping centers, restaurants, sports and entertainment facilities. Just 15 minutes by car from District 1, the location couldn’t be better. An increasing number of foreign invested enterprises (FIEs) are interested in buying Phu My Hung condos to house their staff. Recently, FIEs have bought eight Star Hill apartments for their employees. The companies found buying Phu My Hung condos a worthy cost-saving method, as they represent an asset for the company that makes better business sense than monthly spending into rental apartments. Phu My Hung condos are also easily transferable thanks to their high liquidity and comfortable leasing terms. In parallel to projects whose apartments are available for hand-over in the next two years with long payment schemes like Happy Valley and Star Hill, Phu My Hung also sells completed apartments that customers can move in immediately such as Riverside Residence, Canh Vien 3 and Riverpark Residence. If foreigners and foreign experts residing and working in Vietnam are unable to buy a residential house in Vietnam, the company offers a long-term leasing scheme. During leasing contracts, if the individual or corporate customers become eligible to buy residential houses in Vietnam and want to convert from leasing into purchasing, they will be assisted by Phu My Hung with the relevant procedures. Vinaconex scales up efforts to foster core businesses Vietnam’s state construction giant Vietnam Construction and Import-Export Joint Stock Corporation (Vinaconex) has claimed to have met its restructuring targets after successfully addressing shortcomings in the firm’s assets, capital sources and operations. The firm confirmed it would focus on core business areas and resolve outstanding debts in the near future. Vinaconex disengaged from several subsidiaries and member companies from early 2012. In the second quarter of 2012 the corporation put its stakes in Vinaconex Dung Quat and Vinaconex Luong Son-Hoa Binh Cement JSCs up for sale and later that year auctioned off its stake in Vinaconex-VCN and Vinaconex Hoang Thanh JSCs. In late October 2012 the corporation announced it had transferred its stake in Vinaconex Xuan Mai JSC It also announced its exit from Vinaconex 6 (VC6), Viconstone (VCS) and the North An Khanh project. Apart from these firms, the corporation also sold stakes in Vinaconex Thanh Hoa, Postal Insurance, Bao Minh Insurance and Ocean Thang Long. Vinaconex also considered divesting from several other firms, including Vinaconex 3, Construction Company No 4, Vinaconex Danang and Vinaconex Quyet Thang, but this proved more difficult as the firms were already struggling. Vinaconex also recently completed the sale of a 70 per cent stake in debt-ridden Cam Pha Cement together with resolving the debts accrued by Cam Pha Cement with Vinaconex acting as guarantor to the military-run Viettel Group. The corporation succeeded in raising its chartered capital to over VND4.4 trillion ($210 million) driving down its debt/equity capital ratio with support from major partners - the state investment fund SCIC and Viettel. Apart from massive capital divestments, Vinaconex has proven proactive in recovering debts, a move prioritised in 2012; recovering over $50 million last year alone. Lowering investments into non-core businesses and lessening its debts has helped Vinaconex basically fulfil its asset restructuring, capital and operational targets to foster its core construction business. Investors suspect TMG bond issue A bond issue by Vietnam’s Thien Minh Group, known for its acquisition of Victoria Hotels & Resorts two years ago, has come under scrutiny. Early last month Thien Minh Group (TMG) announced a $47.6 million bond issue which raised eyebrows as this amount is considerably over the group’s total equity value of $33.3 million. The issuance volume is just over the $45 million the group borrowed from the International Financial Corporation ($12 million) and banks including the ACB in 2011 to acquire the Victoria group. Victoria’s properties were put up as collateral for the loan. At the time of the acquisition, Thien Minh’s total assets were valued at around $23.8 million. Investors are concerned about the validity of reasons the company claimed for the issuance. According to a document released by Thien Minh explaining the bond issue, $18 million would be put into restructuring debts, the details of which remain unclear. Another $17.6 million was slated for investment into hotels and other projects. The collateral for the issuance is not clear in the document, which simply states it as “Thien Minh’s properties and other assets as per the agreement”. The value of the collateral versus that of the bonds was also not made clear. The document also fails to clarify the rate of return on the bonds and the schedule for debt payments. The lack of transparency has some investors very worried. “This is a large amount of money to raise at one time and I have no idea what exactly the money will be going into which makes me hesitant to invest,” said one investor. VIR’s attempts to contact Tran Trong Kien, chairman, and Ho Viet Ha, deputy general directors of Thien Minh, were met with silence. This is not Thien Minh’s first debt restructuring after its acquisition of Victoria. It was reported that by late 2012 the group reduced its short-term debts by half to around $13.8 million thanks to a successful restructuring. At the same time its long-term debts nearly doubled to $21.4 million including $4 million on a one-year deadline. Pressure to pay down interest rates following the acquisition resulted in the company’s pre-tax profits only hitting $1.37 million last year, despite a net rise of 28.2 per cent in revenue to $51.28 million. Its after-tax profits fell by 40.7 per cent to around $670,000 after the company changed its accounting practices following the acquisition. Businesses demand transparent TPP agreement Vietnam, along with 11 fellow Asia-Pacific countries, is stepping up negotiations for signing the Trans-Pacific Partnership (TPP) agreement later this year. Hanoi hosted a conference on November 15 discussing the TPP Agreement and Vietnam’s involvement. Deputy Minister of Industry and Trade Tran Quoc Khanh outlined the TPP’s negotiation process and basic requirements regarding tax cuts, garments, service liberalisation, investment, Government procurement, intellectual property, trade, environment, labour, trade unions, State-owned enterprises, and e-commerce. He pointed out opportunities and challenges that could face Vietnamese businesses as a result of implementing the agreement. Experts noted Vietnam can benefit from how the TPP will cut taxes and remove barriers against services and exports. This trade liberalisation would be a boon to Vietnamese clothes, footwear, and other key commodities in major markets like the US. Vietnam Textile and Apparel Association Vice Chairperson Le Tien Cuong summarised the garment sector’s views on the agreement, concurring with the presented opportunities, but noting new regulations governing origins, taxes, and competition will also introduce new challenges. Economist Vo Tri Thanh said Vietnam could benefit by as much as 5% from the agreement, compared to the average 1–2% enjoyed by other parties. But these estimates do not consider the impact of domestic institutional reform. Seven of the 11 negotiating parties already have free trade relations with Vietnam. Most of the TPP’s opportunities come from the remaining US, Canadian, Mexican, and Peruvian markets. Experts warned opening Vietnamese markets to the US and Japan could hurt its domestic automobile industry. Lowering barriers to American meat and poultry and Australian sugar might also threaten Vietnamese agriculture. Deputy Minister Khanh said as the TPP covers a wide range of areas, it is important to introduce transparent policies to bring huge benefits to domestic businesses. Credit promotion proves hard Banks are finding it difficult to achieve credit growth targets this year despite strenuous efforts to meet their goals. Banks have scaled up their efforts to reschedule debts, lower interest rates for old loans and offered new loans at preferential rates, hoping to bolster credit demand. Firms with bad debts but good production and business plans still have access to credit thanks to a dispatch from the State Bank (SBV) in mid-October that aimed to help firms recover and boost credit growth through the end of the year. Deputy director of the Ho Chi Minh City branch of the central bank Nguyen Hoang Minh said that by the end of October the city’s banks had rescheduled loans valued at $5.8 billion for more than 340,000 customers and lowered interest rates to under 13 per cent per year on another $8.3 billion for 60,000 plus clients. By the end of October, the city’s banks reported credit growth of around 5.2 per cent against early 2013. “Credit improved and is on the rise, but for the banking sector to achieve its 12 per cent target for this year, growth will have to hit at least 1.5-2 per cent per month in the final months of the year, a very challenging task,” said Minh. In the first nine months, state giant Vietcombank saw credit grow by only 4 per cent. Growth was under-par at other institutions including VietinBank, Eximbank, and DongA Bank while other small banks such as Southern Bank, Navibank, and PG Bank fell into negative growth. At other banks with more positive credit figures such as Sacombank, HD Bank, and NamA Bank, surging credit reportedly came mostly from individual customers. The SBV has proven not to strict in controlling credit growth to support banks credit targets. One example was the southern hub’s NamA Bank receiving the green light to grow credit from 9 to 30 per cent this year. The bank hit this target by the end of September and has applied for permission to go even higher. NamA Bank deputy general director Tran Ngoc Tam said that although the credit growth target of 30 per cent was surpassed by the end of September, the value was not so great, only in the tens of millions of dollars. According to former SBV Governor Cao Sy Kiem, firms’ main concern at this time is not interest rates but low consumption. Therefore, there is a need for policies that stimulate demand. He noted that it would take time for the policies to generate effects. “The banking sector’s credit expansion will reach 10 per cent this year if there are marked improvements in outstanding loans in the last quarter,” said Kiem, who added that the sector’s growth will improve next year as firms revive their operations on the back of more stable economic growth. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR