Thứ Sáu, 28 tháng 2, 2014

 Gate for overseas cars narrows with new rule 

The government is set to tighten regulations on overseas Vietnamese bringing foreign cars into the country by imposing a limit on vehicle usage overseas in order to prevent tax evasion.
The new regulation is set to take effect this April and will allow Viet kieu who come back here to settle to bring one car and one motorbike, provided that the car to be registered for at least six months with at least 10,000 kilometers accumulated overseas. The motorbike must also be registered overseas before the Viet kieu receives a permit to bring it to Vietnam.
It said the vehicles also need to be legal in Vietnam and less than three years old, Thoi bao Kinh te Saigon Online reported.
The Viet kieu owners of the vehicles will be exempted from import tariffs but still have to pay value-added tax, special consumption tax, and registration fees.
They can transfer the vehicles to other people in Vietnam and the latter will have to pay registration fees.
Current regulations only require the cars to be registered before the Viet kieu receives a residency permit in Vietnam. But those rules have been taken advantaged of for the smuggling of vehicles to Vietnam, the ministry said.
It said the number of vehicles imported to Vietnam as Viet kieu assets surged significantly in 2012 and 2013.
Viet kieu are defined as Vietnamese people holding valid foreign passports or papers of equal value, or those living overseas with legal papers for permanent residency.
Thanh Nien News

 Global warming will cost the world $1.45 trillion, says UN report

Global warming will cut global crop production, wreak $1.45 trillion of economic damage and force mass migration from East, South and Southeast Asia coastal areas, warns a draft UN report on the environment

Parched land in Bakersfield, California where farmers have been forced to buy hay to support their cattle as grasslands dry up, while facing diminishing crop water. The US state is facing its third straight year of unprecedented drought and its driest year in 500 years (David McNew/Getty Images/AFP)
TOKYO: A draft UN report on the environment says global warming will reduce the world's crop production by up to two per cent every decade and wreak $1.45 trillion of economic damage by the end of this century.
Japan's Yomiuri Shimbun revealed details of the document a month ahead of it being presented by the Intergovernmental Panel on Climate Change (IPCC), a Nobel-winning group of scientists.
The draft report which came after a five-day meeting in Japan, is the second volume in a long-awaited trilogy by the IPCC in its first great overview of the causes and effects of global warming, and options for dealing with it, since 2007.
According to the draft, if global temperatures rise by 2.5 degrees Celsius (4.5 Fahrenheit), the world's aggregated gross domestic production will fall by 0.2 to 2 per cent.
That would translate into some US$147 billion to US$1.45 trillion in economic losses, calculated against the world's total GDP in 2012.
The planet's crop production will decline by up to two per cent every decade as rainfall patterns shift and droughts batter farmland, even as demand for food rises a projected 14 per cent, said the report.
Other effects from global warming include the loss of land to rising sea levels, forcing hundreds of millions of people to migrate from coastal areas, with the most vulnerable regions including East, South and Southeast Asia.
The draft report, which will be reviewed in the March 25-29 meeting in Yokohama, calls for mitigation measures to reduce the vulnerability of environments to climate change such as flood protection projects and research on the prevention of infectious diseases, it said.
In the first volume of the three-part review, the IPCC said it was more certain than ever that humans were the cause of global warming and predicted temperatures would rise another 0.3 to 4.8 degrees Celsius (0.5-8.6 degrees Fahrenheit) this century.
Heatwaves, floods, droughts and rising seas are among the threats that will intensify through warming, it said in in the report released in September in Stockholm.
UN climate chief Christiana Figueres said the report was "an alarm-clock moment for the world".
"To steer humanity out of the high danger zone, governments must step up immediate climate action and craft an agreement in 2015" against greenhouse gases, she said at the time.
The IPCC has delivered four previous assessments in its 25-year history.
Each edition has sounded an ever-louder siren to warn that temperatures are rising and the risk to the climate system is accentuating.
The projections for this century are based on computer models of trends in heat-trapping greenhouse gas emissions, especially from coal, oil and gas, which provide the backbone of energy supply today.
A Japanese environment ministry official declined to comment on the report, citing IPCC's request to keep it behind closed doors until the final version is approved in Yokohama.
 Vietnam receives the most Japanese ODA

Japanese ODA is an important financial source for Vietnam in improving its infrastructure
Japanese ODA is an important financial source for Vietnam in improving its infrastructure

Nhan Dan Online - Vietnam received the greatest amount of Japanese Official Development Assistance (ODA) out of all recipients in 2013, with US$1.64 billion donated to the country, according to the Japan's ODA White Paper for 2013.
Following Vietnam, Afghanistan received US$873 million, India US$704 million and Iraq US$360 million. Among ASEAN countries, Cambodia ranked seventh, Myanmar 17th and Laos 18th.
The White Paper also stated that the Japanese ODA would help ASEAN countries accelerate the construction of infrastructure and narrow intraregional development gaps toward the goal of boosting regional 'connectivity'.
“While supporting ASEAN’s efforts toward integration, it is hoped that the Japanese government will work harder to realise ODA that will also contribute to building a basis for overseas deployment of Japanese companies,” the paper says.
During the past 20 years, Japan has provided Vietnam over US$20 billion of ODA, making it Vietnam’s largest bilateral donor. Japan also ranks first in the number of underway-foreign direct investment (FDI) projects in Vietnam and is the third biggest trading partner of Vietnam.
 Art & Entertainment News Headlines 1/3
Hue to hold world food festival
The central province will be the host of the Hue International Cuisine Festival, slated to be held between April 15-19 as part of the 2014 Hue Festival.
The festival will introduce culinary specialties from the ASEAN and Asian countries and 10 Vietnamese dishes that were recognised by the Asian Records Organisation.
A beer festival, sponsored and organised by the Hue Brewery company, will also serve visitors and tourists during the Hue festival, running from April 12-20.
According to organisers, the Hue-based company will pay VND6 billion (US$285,000) towards the beer festival's costs.
The Hue festival has been the biggest cultural event in the central region since 2000.
Phu Tho ready for Hung Kings’ worship ceremony
The northern province of Phu Tho has worked hard to have facilities and activities ready for this year’s festival to commemorate the nation’s legendary founders, the Hung Kings.
The Hung Kings Temple Festival will begin on April 5 (the sixth day of the third lunar month) at the Hung Kings Temple Relic Site with the participation of several provinces nationwide, including Bac Ninh, Quang Binh, Vinh Long and Long An, which represent the three regions of the country.
Some five million visitors are expected to make a pilgrimage to Phu Tho to offer their respect to Lac Long Quan and Au Co - the ancestors of the Vietnamese, and the Hung Kings.
An array of activities will be held during the five-day event, including art performances, photo exhibitions and a contest to make Chung and Giay square and round sticky rice cakes.
Apart from festive activities, traditional rites will be organised to honour the two world cultural heritage - the worship of Hung Kings and Phu Tho Xoan singing.
In addition, special foods from 13 districts and towns throughout the province will be displayed at the festival.
The annual Hung Kings Temple Festival commemorates 18 Hung Kings, the founders of the country and who started a golden age in Vietnamese history. It was recognised as a national event in 2007.
The temple is located on Nghia Linh Mountain, Phong Chau district in Phu Tho province, about 100km northwest of Hanoi. It is a complex of ancient tombs, monuments and temples.
Vietnamese artists scoop int’l photo prizes

 food festival, Hung Kings, photo prizes, Canadian singer, photo book
The winning photo.

Photographer Truong Huu Hung from Binh Thuan Province won first-place prize at the International Photo Contest Circle 8 Marzo 2014 in Italy.
Hung won the prize for his piece titled “On Way to the Market”.
The contest was organized by the Italian Federation of Photographic Associations and the International Federation of Photographic Art. Themes for submissions this year were “Freedom” and “Woman in Society”. The competition attracted photographers from 52 countries. Photographer Ha Van Dong won the United Press International second-place prize for the photo “Drawing Up a Net”.
An international award ceremony for the competition will be held in Montevarchi City on March 15.
Hung also won a first-place prize at the International Photographic Competition in Meski, Tukey for his piece “Fishermen”.  The competition attracted photographers from 33 countries around the world.
Other Vietnamese photographers won FIAP and second-place awards in the competition including Nguyen Vu Phuoc, Le Chau Dao, Truong Nhat Vy, Vo Thi Huynh, Tan Kieu and Nguyen Quoc Huy.
An international exhibition and award ceremony for the competition will be held at Mersin City on March 22.
Lunch Beat comes to Vietnam
The Swedish Embassy held an event in Hanoi on February 27 called Lunch Beat for the first time in Vietnam, in which attendees use their lunch breaks to dance and eat.
The event attracted many participants from the media, office staff and young Hanoians. Vegetarian sandwiches and soft drinks were served along with dance music and a place to move around during the hour-long event.
Many danced with plates of food and drinks in their hands and used the exciting atmosphere to break the ice, strike up conversation and generally have a fun lunch break.
Ms. Bich Van, who works in an office in Hanoi, said despite hearing about Lunch Beat before, this was the first time she came. She said dancing at lunchtime helped her to releive stress and she felt more energized upon returning to work. She hoped that Lunch Beat would become a regular event.
A concept originally envisioned by 28-year old Molly Raenge, Lunch Beat rapidly swept across Sweden and now has spread to more than 90 countries worldwide.
It started off small in May last year with just 14 people in a garage in Stockholm. After she received immediate and positive feedback, she realised it could grow beyond an underground movement.
Canadian singer/pianist performs at Boudoir Lounge
Canadian singer, composer, vocalist and pianist Mary Ancheta will serenade guests at Boudoir Lounge of the Sofitel Saigon Plaza from now until May 4 from 8 p.m. every day of the week except Monday.
With a philosophy to connect people all over the world through music, Ancheta inspires people with her unique melodies and intuitive mix and match musical compilations. She has entertained audiences internationally in Asia, the Middle East, across North America and Europe.
Growing up in Hamilton, Ontario, Ancheta taught piano at the Ontario Conservatory of Music where she attended McMaster University obtaining her B.A. in Music. She released a solo pop album “Live Life”, as well as an electronic music album with Transient World “All Things Transient”.  Transient World boasts over 50 songs which feature in films and TV. The group was also finalists two years in a row in the John Lennon Songwriting Contest.
Ancheta also scored the film “Everyone” which won the Golden Zenith award at the Montreal Film Festival.
In 2009 she released collaboration “The Near Forever” with co-conspirator and Grammy nominated pianist Geoffrey Keezer.
Past notable performances include opening for John Mayer with Mani Khaira, appearing on CBC for Asian Heritage month, the Grand Opening of the MGM Grand Hotel in Macau and the 2010 Vancouver Winter Olympics.
Tran Anh Hung to shoot French film
Vietnamese-French director Tran Anh Hung will shoot Eternité (Eternity) this summer. The movie is adapted from a novella by French writer Alice Ferney, titled L’élégance des Veuves.
Set in the late 19th century and early 20th century, the movie features three women belonging to different generations who are faced with harsh tragedies and misery during their lives.
This is Hung’s first French movie. His previous films were Xich lo (Cyclo), Mui du du xanh (The Scent of Green Papaya), Mua he chieu thang dung (The Vertical Ray of the Sun) in Vietnamese; Norwegian Wood in Japanese and I Come with the Rain in English.
The movie will feature Inglourious Basterds star Melanie Laurent, Audrey Tauton from The Da Vince Code and Bérénice Bejo who was nominated for an Oscar in The Artist.
Eternité’s budget is estimated at US$14 million.
Hung’s first movie Mui du du xanh won the Golden Camera Award at the Cannes International Film Festival 1993. He also won the Golden Lion Award for Xich lo in 1995.
HCM City kicks off photo exhibition on Border Guard
A photography exhibition titled ‘City Border Guards for Today’, held by Ho Chi Minh City Border Guards Command, Photographers Association and Soldier Photography Club, is open for viewing at the Border Guard Command Head Office on February 27.
This exhibition marks the 55th anniversary of Traditional Day of Border Guard and the 25th anniversary of whole People Border Day on March 3.
The exhibition showcased more than 55 images from 22 photographers selected from a list of hundreds of members of HCMC Photographers Association and Soldier Photography Club. The photos portray lives of soldiers.
German photo book of HCMC hits shelves
“Ho Chi Minh City-Mega City” photo book featuring 1,000 pictures has been released by Michael Waibel, a senior researcher and project leader in urbanism at the Department of Geography of the University of Hamburg, and Henning Hilbert, a scientific coordinator at the Vietnamese-German University in HCMC.
The publication is funded by the German National Ministry of Education and Research’s project, “Research for Sustainable Megacities of Tomorrow”.
HCMC is recognized as Vietnam’s first megacity, according to the book. The metropolis is rapidly changing due to globalization yet has preserved many of its traditional character.
Waibel and Hilbert present to readers challenging questions of the city’s future development during an era of rapid population increase.

 France grants aid to Hanoi metro route

(VOV) - The French Development Agency (AFD) has committed a EUR110.5 million aid package, including EUR0.5 million in non-refundable aid, to Hanoi’s metro line project.
The route, running from the Hanoi Railways Station to Nhon, has 12.5km in length, with 8.5km overground and 4km underground, and is scheduled to be put into operation by 2018.
The route will be extended to 21km by 2020 and 48km by 2030.
The project aims to meet the demand of half the number of local people travelling by public transport, minimize urban pollution, and improve the people’s living conditions. It will help ease traffic congestion and reduce green house effects.  
The route is designed to serve 230,000 passengers per day by 2018, 428,000 by 2020 and 750,000 by 2030.
Other stakeholders of the project are the Reserve for Emerging Economies (RPE) under the French Ministry of Economy and Finance, the Asian Development Bank (ADB), and the European Investment Bank (EIB).
The project has also received EUR1.27 million in non-refundable aid package from the French Global Environment Facility (FFEM).
It will be carried out by the Hanoi Metropolitan Railway Management Board (MRB) and the French Systra Corporation at a total cost of nearly EUR1.2 billion.
The French Development Agency is considering an additional EUR 70 million in loans for the project.
 Capital still flows into gold as a hedge

According to the latest report from the World Gold Council (WGC), Vietnam ranks seventh in the world's total gold consumption in 2013. Fluctuation of the prices of the precious metal has drawn the attention from not only speculators but also people who keep it as a hedge.

gold investment, hedge 

The sharp decline of the gold price after three months has made the transactions in golds vibrantly. An insight by the Vietnam Business Forum, the weekly magazine of the Vietnam Chamber of Commerce and Industry.
The domestic gold price is being adjusted after reaching its highest level in the recent three months. Gold trading becomes thriving in the period the market is still fluctuating. On early morning of February 20, the price of gold fell by 250,000 VND (14 USD) per tael (one tael equals 1.2 troy ounces) compared to the previous day. The Doji Group listed the gold price down from 36.37 million VND to 36.45 million VND per tael. This is the lowest level since the market rose sharply from mid-May.
Contrary to many pessimistic forecasts in 2014, the gold price has increased significantly since the beginning of the year. Ending the session on February 17 in the US, each additional ounce of gold rose by 10 USD to 1,329 USD.
Although the price of gold has been readjusted after that, the investors are forced to reconsider their assessment of the gold price this year.
The driving forces to support the gold price which come from the concerns of the economic growth of the US and the devaluation of the US dollar have led to the investment in gold, pushing up the precious metal prices to the highest level since early November last year. Since the beginning of the year, the gold prices have increased by 10 percent after falling by 28 percent last year.
T he domestic market is put in the same scenario in which the domestic gold price always climbs faster than the world price and goes down more slowly.
The difference between two markets is made bigger at 2.7-2.9 million VND per tael. Converted at the bank rate, a tael of gold on the world market is equivalent to about 33.79 million VND, not including taxes, fees and processing. The domestic price is at around 36.37 million VND to 36.45 million VND per tael.
On the world's major markets, the price of is expected to continue to rise again, that of the contract of April has been increasing in the nine consecutive sessions, the longest rise since May 7, 2011.
The price tends to increase since the domestic demand for gold has increased due to the concerns of the rising price in the future.
Suppliers have certified that the gold sales have increased sharply. The PNJ company said that the volume of gold transacted on February 25 had increased while the sales were virtually unchanged. At the gold selling points, the number of buyers had increased by 20 to 30 percent compared to the time before the Lunar New Year.
It is said that the gold price has been adjusted differently from that at the beginning of the year.
The WGC's report predicts the gold price could rebound this year while the sales of the trust funds will slow down. However, this year's sales are not strong; the SPRD Gold Trust, the largest world gold trust fund, has just sold only a small amount.
According to the Trend Report 2013 of the WGC, the gold demand will rise sharply in 2014. The WGC estimates that the gold demands in the Vietnamese market in the last year are equal to 92.2 tonnes, worth more than 4.1 billion USD. Both the demands for gold jewelry and investment tend to increase.
Notably, the demand for the precious metal has fallen by 15 percent on the international markets but increased by 20 percent in Vietnam in 2013. Vietnamese people put special trust in this precious metal. It is reasonable to predict that gold demand will not rebound strongly this year as the price is expected to rise.
This year the economy is still projected to be difficult. The savings rates tend to fall due to the stagnation of manufacturing business operation. The inflation which has been curbed for the past three years is under the risk of returning. This makes many people decide to buy gold to secure their capital and wait for a better economy.
The gold price has risen by 10 percent at the beginning of the new year, which makes people more determined to buy gold to avoid the idle cash. It is also a fact that in the Vietnamese market, people often rush to buy gold once the "gold fever" signals a start. However, the loss caused by the sharp decline of the gold price has made the buyers more cautious. This makes people be cautious of their investment in gold even though the price declines after the "gold fever" period.
Vietnam dismisses bitcoin as legal currency
The State Bank stated on February 27 that bitcoin and other virtual currencies are not legal tender or a permitted means of payment in Vietnam.
Credit institutions are not allowed to use them while supplying services to customers.
The ownership and trading of bitcoin and similar currencies poses many risks as they are not protected by the law.
The bank warned organisations and individuals not to invest or conduct any payment with them.
First appearing on the Japan-based Mt.Gox exchange in June 2010, bitcoin has been widely used since early 2013 for payment and investment.
Many governments, including Thailand, Russia, France, China and Norway, do not recognise it as a legal currency.
Metro Cash & Carry launches new business strategy
Metro Cash & Carry Vietnam has embarked on a new business strategy in Vietnam, aiming to become the preferred choice of professional businesspersons.
This was announced by Philippe Bacac, Chairman and Managing Director of Metro Cash & Carry Vietnam on February 27 at conference in Ho Chi Minh City that saw more than 1,000 business representatives in attendance.
Addressing the event, Philippe Bacac underscored that fundamentally the strategy focuses on creating better management information systems and distribution channels that link up suppliers with manufacturers.
With the assistance of METRO, suppliers will have improved capabilities to understand and meet the expectations of manufactures with quality product produced on a timely and economical manner and in turn boost sales and profitability.
19 Metro Cash & Carry distributors throughout the country have now served about 1 million professional customers. The volume of Vietnamese goods at METRO centres account for over 95%.
Annually, the group also directly and indirectly purchases made-in-Vietnam goods worth up to US$50 million to provide a number of METRO centers worldwide.
Dong Nai bridge project gets approval
Construction of a new bridge linking Binh Duong city and Bien Hoa city has received final approval and will get underway in early 2015.
A total investment of VND800-billion has been allocated for the new bridge crossing the Dong Nai River, which aims to shorten travel time between the two provinces and promote economic development in the southern and southeast economic regions.
Having an estimated length of over 2.8 kilometers, the bridge will have four lanes for vehicles with a design speed of 80 km per hour.
The construction will be built under Build-and-Transfer (BT) and build-operate-transfer (BOT) models.
Lotte wants to further operations in Vietnam
With the hope of expanding future operations in Vietnam, executives of the Lotte retail group from the Republic of Korea plan to develop Lotte Vietnam into one of its leading branches abroad.
Visiting and exploring investment opportunities in the northern province of Ha Nam is part of the scheme, said Director General of Lotte Centre Hanoi Lee Jong Kook during his working session with local authorities on February 27.
The official spoke highly of the province’s socio-economic progress in recent years and its foreign investment attraction policies.
He also underlined the encouraging transport links as a local advantage to facilitate operations for overseas investors, including Lotte – which hopes to make contributions to the locality’s development.
The group was suggested a list of places where it can pour money into building trade centres.
Lotte operates in many countries such as China, Japan and Indonesia in trade and high-quality services.
Lotte Mart trade centres can be found in Ho Chi Minh City, central Danang city and Binh Thuan province, and the southern provinces of Binh Dinh and Dong Nai.
The Hanoi centre will be launched in March.
South Africa seeks wood industry ties with Binh Dinh
South Africa wants to partner with the central province of Binh Dinh in the wood industry and tourism.
South African Ambassador to Vietnam Kgomotso Ruth Magau expressed the desire during a workshop held in the province on February 27.
The ambassador stressed that Vietnam is now one of her country’s important economic partners so that South Africa is willing to create the best conditions for Vietnamese investors.
First Secretary of the Republic of South Africa MC Van Der Westhuizen said the wood industry is a very promising sector in his country, where there is abundant resources of raw materials.
Meanwhile, Binh Dinh is one of Vietnam’s three largest wood production localities, generating US$2.3 billion in export turnover since 2010. The locality ships its wooden products to 70 countries and territories across the world.
South Africa is calling for investment in farm produce processing, automotive and support industries, chemicals and plastics, electronics, IT and communications, metallurgy, transportation, garment and textiles, footwear and tourism.
In 2013, Vietnam’s exports to South Africa hit US$1.061 billion and imported US$155 million worth of goods from the country.
Foreign tourists up in February
The number of foreign guests to Viet Nam in February picked up 8.48% against last month and 47.6% against the same period last year.
In the first two months, 1.6 million foreigners arrived in Viet Nam, posting a year-on-year increase of 33.4%.
Up to 992,129 came for tourism, up 33.37%. The number of business visitors was 270,854, up 32.31%. Those visiting relatives and for other purposes were 268,981 and 86,236, respectively.
Markets sending a high number of visitors were Germany, Hong Kong, Russia, China, Cambodia, the Philippines and Italy.
During the reviewed period, domestic guests touched 9.5 million.
The tourism sector earned VND 47 trillion in turnover.
This year, Viet Nam hopes to welcome 8 million foreign visitors and 37 million domestic guests.
IFC helps build more homes for mid-income earners in Vietnam
International Finance Corporation (IFC), a member of the World Bank Group, is financing Nam Long Investment Corp to build 8,000 apartments for mid-income homebuyers in Ho Chi Minh City by 2017.
The financial support aims to alleviate an acute shortage of affordable housing in the country’s biggest city.
IFC, in a statement released today, states that the $7.5 million equity investment will support Nam Long’s plan to build more housing units under its EHome brand, which was launched 10 years ago as its first affordable-housing project.
Nam Long is a market leader of affordable-housing developments in Ho Chi Minh City at present. The company has sold more than 3,000 housing units, costing between $25,000 and $50,000 each. The costs equal two to four times the average annual income of most households in Ho Chi Minh City. This has contributed to fulfilling the estimated demand of about 70,000 housing units a year from low- to mid-income earners in the city.
“IFC’s investment is a stamp of approval for our competitive advantage in affordable housing and in Vietnam, especially given the funding constraints in the capital markets now. This also serves as recognition of our strong commitment to corporate governance and quality products,” said Nguyen Vinh Tran, chief executive officer of Nam Long Investment Corp.
In addition to the financing package, IFC is helping the company improve its environmental and social practices, and adopt higher energy-efficiency standards for its buildings.
With IFC’s advice, Nam Long is developing a pilot building with green features that comply with Vietnam’s Building Energy-Efficiency Code, which took effect on November 15 and aims to cut energy costs and greenhouse-gas emissions. The new building is expected to reduce energy consumption by 20 per cent and is a step toward raising industry standards and promoting sustainability and energy efficiency in Vietnam.
“Although the last few years have been challenging for Vietnam's property market, there is still strong, fundamental demand for affordable housing as Vietnam continues to urbanize,” said Simon Andrews, IFC’s regional manager for Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam.
“Nam Long sets the quality benchmark for affordable housing in Vietnam with well-planned and well-built developments. By supporting the company, we help more of Vietnam's growing middleclass achieve their dreams of home ownership,” he added.
Agribank, NongHyup Bank in money transfer deal
Agribank and NongHyup Bank on Tuesday struck a cooperation deal to provide money transfer service for Vietnamese guest workers in South Korea.
In addition to the remittance service, the two sides will be joining hands to offer financial support for Vietnamese employees through the employment permit system (EPS).
EPS allows employers who cannot hire native workers to legally employ foreigners. This system of the Korean government is designed to monitor foreign guest workers in Korea.
To subscribe to the service, Vietnamese workers should open an account at NongHyup Bank and maintain it until they have settled all their loans owed to Agribank.
Main customers of Agribank and NongHyup Bank are in the agriculture sector.
High export targets and challenges for Vietnam
Vietnam hopes to achieve export growth of 10 percent this year compared to that of 2013 under the 2014 socio-economic development plan approved by the National Assembly, Nhan Dan (People) online newspaper reported on February 20.
This is indeed a major challenge for the country at a time when the world economy is forecast to face continuing difficulties that will reduce consumption demands and lower the prices of many types of export goods.
In addition, protectionism is generally increasing around the world, particularly in the form of anti-dumping lawsuits and technical barriers, making it difficult for Vietnamese exporters to develop markets and seek partners.
The structure of Vietnam's exports is also not optimised, with a low proportion of processed goods and an abundance of low value-added products (especially agricultural products), in addition to a heavy dependence on imported materials and equipment from abroad.
The export revenue of foreign-invested companies accounts for a large proportion of the total, particularly that of high-tech products such as computers and phones.
To fulfill the target set for 2014, there must be close co-ordination between ministries, sectors and enterprises, with the leading role played by the Ministry of Industry and Trade.
It also requires comprehensive measures to ease difficulties for enterprises and facilitate their business activities in gaining access to loans, purchasing or leasing land and performing administrative procedures.
It is necessary to increase activities seeking out markets and those expanding and boosting trade promotion programmes, with the focus placed on developing countries, potential and emerging markets.
There should be policies put in place to support the consumption and export of agricultural and aquatic products, in addition to major export products such as textiles and footwear.
To reduce the dependence on imported materials, domestic production needs to be fostered, particularly the enhancement of supporting industries and industries with great comparative advantages and high levels of competitiveness.
The communication work and the role of the Vietnamese trade offices abroad are also of great importance, as they will expediently grasp the changes of policies and mechanisms related to exports, announcing them to domestic agencies which can then better handle potential problems.
This year, Vietnam is on the way to negotiate free trade agreements with other partners, including the Trans-Pacific Partnership (TPP), which once signed are expected to open up big opportunities for the country's major exporting products.
Thus, domestic enterprises should utilise the favourable conditions from such agreements to boost export and enhance the efficiency of exports to other member countries.
Vegetable and fruit exports to Japan to increase 25%
Viet Nam will promote fruit and vegetable exports to Japan in coming years due to high demand from there, noted the Ministry of Industry and Trade's Asia Pacific Market Department.
The department said the total export value of Vietnamese vegetables and fruits to Japan is expected to increase to US$77 million in 2015 and $135 million in 2020.
Koshida Ryu, a farming expert of the Japan International Cooperation Agency (JICA), claimed that not only dragon fruit and mango but also other kinds of Vietnamese fruit could enter the Japanese market, including rambutan, milk fruit and longan, reported the Thoi bao Kinh te Viet Nam (VnEconomy) newspaper.
Japanese consumers have tasted Vietnamese fruits during tours to the Cuu Long (Mekong) Delta region, and they enjoy the local fruit taste.
According to Viet Nam's General Customs Department, the export value of the country's vegetable and fruit products to Japan gained a year-on-year increase of 16.78 per cent in 2012, reaching $54.65 million, and of 12.03 per cent in 2013, reaching $61.22 million.
Some kinds of Vietnamese fruit have built a strong reputation in the Japanese market, such as Hoa Loc mango, Chin Hoa durian and Nam Roi grapefruit.
The increase was due to preferential tariffs created under the Viet Nam–Japan Economic Partnership Agreement (VJEPA).
However, Vietnamese vegetable and fruit export volume is still only a small segment of Japan's total vegetable and fruit imports, accounting for only 0.6-0.9 per cent of the total.
To promote exports to Japan, Viet Nam should pay attention to the quality of those products because Japan has strict quality and food hygiene and safety standards.
Additionally, by 2020, Vietnamese enterprises should diversify vegetable and fruit products to Japan, especially for tropical fruits, such as bananas, pineapples, mangoes, oranges, lemons, onions, ginger, carrots, and peppers.
Amended law aims at more transparent investment climate
Creating a more transparent investment climate, amending and adding new administrative procedures and addressing difficulties in gauging investment performance are the key targets of the amended Investment Law.
This was discussed at a workshop held to gather opinions from industry insiders in Ha Noi yesterday.
Speaking at the workshop, Deputy Minister of Planning and Investment Dang Huy Dong said the amended Investment Law needed to clarify four issues: defining foreign investors, procedures to set up a business with foreign investors, procedures for capital contributions to buy shares and essential issues to implement a one-door policy.
A representative of the Viet Nam Oil and Gas Group (PetroVietnam) noted that the amended investment law is adaptable to localities and provinces as these areas are thirsty for foreign investments.
The difficulty was that foreign investors were still skeptical about the implementation of administrative procedures for business registrations or investment certificates, he said.
Nguyen Thanh Tra, a representative of a law firm, remarked that foreign investors were now unwilling to buy stock from local companies. The existing law did not stipulate whether investors who buy shares that constitute less than a 49 per cent stake in a local company should obtain an investment certificate. He added that the amended law needed to clarify this issue.
To ensure consistency and transparency, the draft regulations should not discriminate between domestic and foreign investors. If the law is changed, incentives for investors should remain unchanged.
In addition, the open-door policy was also enacted to address procedures on investments, land and construction through the agency of investment certification.
The amended law will be submitted to the National Assembly for approval this year. The current Investment Law consist of 10 chapters and 77 sections enacted in 2005.
After more than eight years of implementation, the current Investment Law has proved to have a number of limitations and shortcomings.
In particular, the sections on investment industries and investment areas are haphazard and ineffective. The provisions on investment conditions and procedures are still unclear and unfeasible. This does not create an equal legal framework for both domestic and foreign investors. –
Rung Toan Cau tries to collect on empty promise
More signs of evident scams from Rung Toan Cau Company continue to surface, prompting Thanh Hoa Province authorities to issue warnings.
Rung Toan Cau belongs to a group of eight joint-venture companies whose charter capital is claimed to be around VND78 trillion (USD3.7 million).
Nguyen Thi Thuan, the headmistress of a nursery school in Thanh Hoa Province, said one of her students gave her an invitation. The student told Thuan that a stranger gave it to him.
The letter was on Hien Vinh Company letterhead. The company apparently helped to organise conferences and meetings for Rung Toan Cau. Thuan said, "They want to do charity for disadvantaged children and households. They also promised a support for us worth VND17 billion, but we haven't heard from them since. We were also warned by police to be careful with this company."
There is no primary address listed for Hien Vinh, and neighbours who live near the secondary address say the company moved out years ago.
Reporters disguised as customers approached Rung Ben Vung Toan Cau, at an office located on Khuat Duy Tien Street in Hanoi. Only three employees were seen working in a five story building.
According to employees at the site, the company offers individuals or groups who wish to start an agricultural business a chance to borrow capital. After submitting land-use permits and VND27,250,000 the organization or individual "will receive share in our company, worth VND545 million," according to one employee.
Colonel Nguyen Van Binh, deputy head of Public Security Department in Thanh Hoa Province said, "A few years ago, some individuals and organisations gathered books on land-use rights in order to invest in a forest development project. The project was never implemented. The same scam was used again in 2013. In that case we also recovered nearly 1,000 law books on land-use rights."
On January 25, Thanh Hoa Province People's Committee issued directives warning against so called charity funds from eight joint-venture companies who do not have the financial capacity to carry out their promises. On February 12, the local Department of Agriculture and Rural Development also warned other agencies against cooperating with these companies.
MobiFone sale to ignite telecoms
Giant mobile service provider MobiFone is expected to be detached from its state-owned parent, the Vietnam Posts and Telecommunications Group, in a move experts hope will bring more competition to the telecommunications market.
At a recent seminar, it was proposed that MobiFone, one of Vietnam’s three largest mobile network operators, be separated from its parent (VNPT), which is also the operator of Vinaphone, one of MobiFone’s main rivals.
Pham Hong Hai, head of the Ministry of Information and Communications’ (MoIC) Telecommunications Department believes that the proposal could see the local  telecommunications market reach new heights.
Currently, Vietnam has three national telecom providers - Vinaphone, MobiFone and Viettel. According to the MoIC’s White Book on information and communications  technology for 2013, Viettel holds the largest mobile market share of 40.05 per cent, then MobiFone 21.4 per cent and VinaPhone 19.88 per cent.
Former Deputy Minister of Post and Communications, now MoIC, Mai Liem Truc claimed that with all three major players being state owned, they were inherently inefficient.
“In the long term, they will not develop strongly. The domestic telecommunications market developed strongly first, but development has slowed compared to the global telecommunications market,” Truc said.
The Central Institute for Economic Management’s vice head Vo Tri Thanh said the restructuring of the telecommunications market, including the separation of MobiFone,  would enable the market to develop and promote more healthy competition.
“An equitised MobiFone joined by private investors with modern technology and management experience will pressurise VinaPhone and Viettel,” Thanh stressed.
At present, MobiFone largely focuses on mobile services. However, the firm’s chairman Le Ngoc Minh stated that if MobiFone became an independent firm, it would diversify  into more competitive services.
Outside of the three large-scale telecommunications groups, there is also a collection of small-scale players. Also according to the White Book, MobiFone, VinaPhone and  
Viettel hold 81 per cent of the mobile market, the remaining part of the cake belonging to more obscure operators such as Vietnamobile (10.74 per cent), Gmobile (3.93 per  cent) and SFone (0.01 per cent).
Of them, only Vietnamobile, with more than 10 million subscribers, is considered to be viable, while Gmobile, with nearly 5 million subscribers faces difficulties and SFone is  on the brink of collapse. These operators receive almost no incentives from the state.
If the equitisation of MobiFone is realised, and the market becomes more competitive, these small-scale operators would find it increasingly difficult to survive.
However, the MoIC’s Pham Hong Hai clarified that the Law on Telecommunications allowed private firms unlimited participation in the market.
“In the telecommunications sector, firms can shift to other business sectors if they fail to operate well in mobile services. After EVN Telecom was merged into Viettel, its  customers were still able to use Viettel’s services.
Cement firms remain stuck
Another tough year is forecasted for cement firms amid an oversupplied and sluggish property market.
Total cement consumption in 2014 is estimated at 62-63 million tonnes, up 3 per cent against 2013. Of this, 48.5-49 million tonnes is to serve the domestic market and 13.5-14 million tonnes is for export, according to the Ministry of Construction’s latest forecast.
Assuming that consumption matches expectations and cement firms do not amend their capacity, about seven million tonnes will be overproduced, irrespective of another seven million tonnes set to be sourced from five new production lines to be commissioned in the second half of this year.
According to general director Hoang Xuan Vinh of Cam Pha Cement JSC based in northern province of Quang Ninh, huge oversupply and fierce competition among firms has required Cam Pha Cement to take creative measures, reform its sales methods, consolidate distribution and improve its management efficiency.
This year, the company has targeted sales of 1.7 million tonnes of cement in the domestic market while 650,000 tonnes of clinker are set for export, worth some VND2.7 trillion ($128 million) in total predicted revenue. “Our entire company will execute a wide range of measures from the early period of this year and will provide better support to customers to reach the set target,” Vinh said.
Cam Pha Cement, with more than VND6 trillion ($285 million) in total investment capital and 2.3 million tonnes in annual capacity, began operations in 2008 and incurred more than VND1.7 trillion ($81 million) in cumulative losses by mid-2013.
In October 2013, leading telecom group Viettel bought a 70 per cent stake in Cam Pha Cement, giving the company better hopes for the future.
Last year, the company reported VND2.3 trillion ($109 million) in revenue, up 10 per cent against 2012, and sold approximately 1.3 million tonnes domestically and shipped over 813,000 tonnes abroad. Despite these reasonable figures, the company still accumulated VND19 billion ($905,000) in losses since it had to pay interest payments of VND364 billion ($17.3 million) in addition to other financial costs.
This year, state cement conglomerate Vietnam Cement Industry Corporation (Vicem) set a 21 million-tonne target, producing 16-17 million tonnes of clinker, revenue of more than VND30 trillion ($1.4 billion) and profits of about VND500 billion ($23.8 million).
These targets were down on 2013 figures, revealing Vicem’s cautious approach.
Vicem’s subsidiaries were also liable for repayments on debts, with Vicem But Son JSC incurring over VND100 billion ($4.7 million) in losses since it had to deduct VND730 billion ($34.7 million) in investment cost repayments in addition to paying over $4.7 million due to exchange rate fluctuations.
Input costs also rose constantly last year, with coal price increasing 37-41 per cent from April and electricity growing 5 per cent from August.
In this context, cement firms have regarded export as a way to boost sales despite the lower profits.
Vicem said it would support member units in spurring exports to reach 2.6 million tonnes in cement and clinker export this year, up 300,000 tonnes over 2013.
Cam Pha Cement intends to surpass its one million tonne cement export target this year.
Substandard cement projects axed as demand decreases
The government last week rejected nine substandard projects from its cement industry development plan for 2011-2020, with orientation towards 2030, according to the Vietnam Association for Building Materials.
The scrapped projects include the Ha Tien-Kien Giang, Truong Son-Ro Li, Hop Son, Ngoc Ha, Vinafuji Lao Cai, Thanh Truong, Son Duong, Quang Minh and Cao Bang projects, each of which was planned to produce less than 2,500 tonnes of clinker per day.
The decision came as the Association for Building Materials (ABM) forecast cement consumption in the domestic market would decrease 14-15 per cent against the levels projected during the state’s planning for 2011-2015.
“Removing low capacity and ineffective cement projects from the cement industry plan is vital. It will bring significant changes and greener production practices into Vietnam’s cement industry as well as save power consumed by cement manufacturing amid Vietnam’s grave shortages of energy,” said Vu Ngoc Quy, deputy director of Taiwan’s Cement Chinfon Company, one of the biggest suppliers in Vietnam.
Under the new cement plan, investors in new cement projects with a capacity of 2,500 tonnes of clinker per day must invest in waste heat recovery systems to generate power.
Projects already in operation or under construction will also be forced to complete the investment in waste heat recovery systems before 2015, while additional plans will completely transform technology from blast furnaces to reverse furnaces with the gradual termination of outdated technology.
Tran Van Huynh, chairman of the ABM added that besides extending deadlines and removing weak plants, cement firms also have to speed up their restructuring to increase competition. Current times have proven hard even for market leaders like state conglomerate Vicem, which consists of eight member companies and controls over 33 per cent of the market countrywide.
“Each Vicem member should scale up efforts to maintain their traditional home markets since it will be difficult for firms to increase sales in new areas due to high transportation costs,” said Vicem general director Nguyen Ngoc Anh.
Vietnam was estimated to encounter oversupply of 8-12 million tonnes of cement each year from 2010- 2012. The oversupply was a result of a mushrooming of cement factories in recent years. At present, Vietnam has 106 cement factories with total annual capacity of 63 million tonnes.
The Ministry of Construction has estimated cement consumption will reach 62-63 million tonnes in 2014, a mere 1.5-3 per cent increase in comparison with 2013. It targets to export 14 million tonnes this year, equal to that of 2013.
Lower fees proposed for transport firms
A proposed Ministry of Finance draft circular would give transport businesses a number of new benefits if passed.
The Ministry of Finance (MoF) just turned to the Ministry of Transport (MoT) for comments on a draft to the MoF’s Circular 197/2012/TT-BTC, dated November 2012, guiding collection, payment, management and use of roads by units of vehicles. This is aimed at helping reduce the financial burdens now on transport companies.
Accordingly, the first benefit transport firms would see is a new regulation covering truck drivers.
The existing circular regulates the collection of road tolls from tractor trailers and/or semi-trailers, whereas the draft version combines the weight of both vehicles to calculate charges.
This means firms using trailer trucks will pay fees on trailers correlative to their tractor number.
According to Le Van Tien, owner of a big tractor business and chairman of Haiphong Freight Transport Association, if the draft is passed into law, transport firms could save up to VND10 million ($500) in road use charges each month.
“In fact, some firms have 50 tractors carrying 70 trailers. Under the draft they would pay fees on the 50 tractors with relevant trailers but not the total 70 trailers,” said Tien.
The second new point in the draft is that transport firms with accrued road use charges of VND50 million ($2,380) per month can pay on a monthly basis, but not every six months as at present.
Chairman of the Vietnam Auto Transport Association Nguyen Van Thanh said the new regulation would help alleviate businesses’ burdens as they pay big amounts every 6, 12, 18 or 24 months now and could instead pay smaller amounts each time.
My A Forwarding Joint Stock Company general director Vo Thi Phuong Lan seconded this, saying existing regulations require firms to pay road use charges on units of vehicles following a longer-term registry period, depending on the type of vehicle (second-hand or brand new.
Under this regulation, firms with large numbers of vehicles often have to borrow money to ensure they meet their payment obligations.
Another new point in the draft that is being welcomed by transport firms is that vehicles would not have to pay charges if their use has been suspended for 30 or more consecutive days.
If firms already paid these fees, they would be refunded or deducted from a later payment.
In fact, for a number of reasons, many vehicles are left unused for a month or more while firms still pay road use charges on them. The new regulation helps avoid this and reduce the financial burden on businesses.
According to Deputy Minister of Finance Vu Thi Mai, the MoF will start sourcing comments from other government agencies and localities on the draft circular once it gets input from the MoT.
Binh Duong drives future growth
The southern province of Binh Duong has acted as a magnet for both Vietnamese and foreign investors, helping drive future growth.
The local authorities inaugurated a new integrated administration centre in Binh Duong New City on February 20, marking a milestone in the province’s development and providing fresh opportunities for investors.
Located in the Binh Duong New City project, the new hub includes 20-storey twin towers and a helicopter pad.
Work on the centre started in November 2010 and the towers now house the province’s party, government and public agencies.
The new Becamex IDC-constructed centre cost more than VND1.4 trillion ($67.54 million), and was designed by Singapore’s infrastructure development and management services provider CPG, with French group Apave as project supervisor and manager.
Deputy Chairman of the Binh Duong Provincial People’s Committee Tran Van Nam said the new administration hub was a symbol of the province’s development, and marked the efforts of the local authorities to provide fast, transparent and modern administration.
Only an hour’s drive from Ho Chi Minh City, the Binh Duong New City project is home to the hub and will be the focus for a central government-managed Binh Duong City by 2020. Set for completion by that year, the project will house 125,000 residents and provide work for 400,000 people.
Part of the new city is the $1.2 billion 1,000-hectare Tokyu Binh Duong Garden City, which is being developed by Becamex Tokyu, a 35-65 per cent joint venture between Becamex IDC and Japanese town developer Tokyu Corp.
“By 2020, the Binh Duong New City project will become Binh Duong City’s core district to further foster the whole province’s sustainable development,” Nam said, adding that the province was working on plans to build a railway line with funding from the Japanese government to link the new city with Ho Chi Minh City’s first metro rail route Ben Thanh-Suoi Tien, which is currently under construction.
Also on February 20, the local authorities introduced a raft of key projects for this year, including developing an express bus service to connect the new city with neighbouring areas in the province and Ho Chi Minh City.
Another project is Sora Gardens, which will consist of a residential, service and shopping complex in the Tokyu Binh Duong Garden township including three quarters - Gate City, Core City and Gardens City. The concept design architect is Tokyu Architects and Engineers Inc., the architect is Australian firm PTW, and France’s Apave is the tender consultant. Sora Gardens would include up to eight tower blocks with 1,500 residences, together with commercial facilities.
Other projects include a new Binh Duong Television centre, construction of the Binh Duong Development Fund Office, opening of Japanese retailer Aeon’s 62,000-square metre shopping mall and building new major roads including a road linking Binh Duong New City with Thu Dau Mot City, construction of Tan Van Logistic Centre and Port Complex, finishing An Son Port Services Complex, and building a 1,500-bed general hospital. Aeon is due to open the $95-million Binh Duong Canary mall in October 2014 and will be its second shopping centre in Vietnam after Aeon Celadon Tan Phu in Ho Chi Minh City.
A major project is to turn Ben Cat district into Ben Cat municipality and Bau Bang district, to transform Tan Uyen district into Tan Uyen municipality and North Tan Uyen district. The project also includes construction of the 300-hectare Bau Bang Industrial Park (IP) for garment and textile companies, and supporting industries.
Nam said the Bau Bang IP was tasked with finding new opportunities as Vietnam prepared to sign the Trans-Pacific Partnership Agreement. In its development strategy, the province has attached great importance to industrial development, and from being an agricultural province 15 years ago, Binh Duong has transformed itself into an industrial force.
As part of efforts to lure more investors, Binh Duong has completed infrastructure in 26 of the province’s 28 IPs, developed human resources and enhanced its service quality by simplifying administrative procedures and promoting transparency, said Mai Hung Dung, director of the Binh Duong Provincial Department of Planning and Investment. The local IPs include popular Vietnam-Singapore Industrial Parks I and II, Dong An, and Song Than.
The province recorded its GDP growth of 12.8 per cent last year and is targeting 13 per cent growth for 2014. It is predicted the industry sector to grow 16 per cent, trade and services 20 per cent, and agriculture 4 per cent this year, up on last year’s results of 8.7 per cent, 19.6 per cent and 1.8 per cent respectively.
Binh Duong’s efforts to attract foreign direct investment (FDI) have been rewarded, with the province having this year already attracted $715.7 million in FDI, equal to almost three quarters of its $1 billion year target by February 20, said Dung. Among the new inflows, $189.8 million was from 20 newly licensed projects, and $525.9 million was added to 19 already operational projects.
He added the performance showed investors had faith in Binh Duong’s investment environment and that the province was eager to support investors as part of its efforts to continually improve its business climate.
Tata not set to wave Vietnam farewell
The failure of Tata Steel’s $5 billion steel project in the central province of Ha Tinh appears not to have put off Tata Group’s interest in Vietnam.
Indronil Sengupta, chief executive of Tata Sons Limited – the holding company of Tata Group – in Vietnam, told VIR that Tata’s belief in the country “stands unshaken.” His announcement followed reports in the local media outlining Tata Steel’s withdrawal from a $5 billion investment plan in Ha Tinh’s Vung Ang Economic Zone. Tata reluctantly withdrew from the steel project last May following disagreements with the local authorities over the cost of site clearance.
Previously, Tata Steel asked for the same amount of financial support for site clearance that had been offered to Taiwan’s Formosa Group for their nearby $9.9 billion steel manufacturing and seaport complex. Ha Tinh provincial authorities instead demanded that Tata Steel should foot the entire bill for clearance.
“We were extremely serious and had spent over five years trying to develop the project. However, despite our sincerity and strenuous efforts, we could not successfully implement the project. We were disappointed as we had spent a significant amount of time and resources,” said Sengupta, who was previously chief executive of Southeast Asia Projects at Tata Steel Limited.
“Although it has been a setback, our confidence in Vietnam remains and we are pursuing a power project with proposed investment of $2 billion in the Mekong Delta province of Soc Trang,” he said, noting that Tata Power was also working towards an earlier commissioning date on the project which is reflective of its interest, confidence and faith in Vietnam.
Sengupta said Tata Steel was still considering participation in the steel and mining sector in Vietnam in the future “if the global dynamics and the local environment are conducive to the development of such projects.”
Tata is currently focusing on the power sector. Tata Power last November signed a memorandum of understanding with the Ministry of Industry and Trade for investing in Long Phu 2 project in the southern province of Soc Trang. The power investor quickly started engineering studies and geological surveys following the agreement, Sengupta said.
“We are very positive about Long Phu, and we don’t see site clearance issues arising as we are satisfied with the co-operation we have received from the leaders of Soc Trang so far,” he added.
With the potential growth of the economy and the expanding market, Sengupta believes that Vietnam will remain at the top of Tata’s list of interests. Tata products are already available in Vietnam via Jaguar and Land Rover passenger vehicles, Tata Daewoo buses and trucks and Titan watches.
“Several of our group companies have global marketing plans and will enter the Vietnam market based on demand,” said Sengupta.
NPL cancer grows, profits hit
High non-performing loan ratios are continuing to cause expenses for banks as they are forced to invest in provisions. Larger banks particularly are finding it difficult to both battle bad debt and achieve profits.
According to ACB’s 2013 consolidated financial statement, its pre-tax profit was VND1.035 trillion ($49.2 million), lower than VND1.042 trillion ($49.5 million) in 2012. While profits dropped, non-performing loans (NPLs) grew, with the bank’s potential irrevocable debt (debt group 5) doubling compared to the end of 2012 to reach VND2.123 trillion ($101 million).
Similarly, Eximbank suffered a sharp drop in pre-tax profit in 2013, down 70 per cent on-year. The bank’s debt group 5 increased significantly by 35.4 per cent, reaching VND1.073 trillion ($51 million).
According to Techcombank’s statements, the bank’s consolidated pre-tax profit of 2013 was about 13.7 per cent lower than 2012. The decrease was blamed on provisions put aside to battle bad debt. The bank’s NPL ratio still stands at 3.65 per cent, significantly high to warrant the forced sale of the debt to the Vietnam Asset Management Company (VAMC).
Notably, these three banks have foreign strategic shareholders, a competitive advantage. HSBC and Sumitomo Mitsui Banking Corporation (SMBC) hold a 20 per cent stake in Techcombank and Eximbank respectively, while Standard Chartered Bank is ACB’s foreign strategic partner.
A raft of other banks have announced positive profit growth, but their NPLs have continued to increase sharply.
Sacombank’s debt group 5 increased by 13.5 per cent, and now makes up 63 per cent of the bank’s total bad debts. BIDV’s same debt group increased by 14 per cent.
Vietcombank saw the highest debt growth as the lender’s debt group 5 reached VND3 trillion ($142.6 million), 200 per cent higher than 2012’s figure.
According to banking expert Nguyen Tri Hieu, debt group 5 increases show the deteriorating quality of bad debts in general.
In contrast to the biggest banking players, smaller banks seem to have escaped the worst, especially those which underwent restructuring.
In 2013, SHB decreased its NPL ratio to 4.05 per cent from 8.5 per cent after merging with debt-ridden Habubank in 2012. The bank also reported outstanding credit growth of 34 per cent. Its 2013 pre-tax profit was VND1 trillion ($47.6 million), while it bore a loss in 2012.
TPBank surpassed their yearly profit target by earning VND350 billion ($16.6 million), double 2012’s total. The lender’s NPL ratio is also looking good at less than 2 per cent.
VPBank in 2013 posted surprising credit growth of 30 per cent, while pre-tax profit was 30 per cent higher than 2012.
While these modest success stories show how drastic restructuring can help banks escape their present difficulties and emerge stronger in the future, in general, banking profits are sliding.
NPLs continue to threaten the system. A new Moody’s report titled Vietnam Banking System Outlook estimates the figure to comprise at least 15 per cent of total assets.
“Profitability remains stagnant in a challenging operating environment in which an improved external position has yet to revive domestic demand. Weak loan demand is depressing bank margins, which remain insufficient to offset rising credit costs and improve internal capital generation,” stated the Moody’s report.
New law offers small steps forward
Real estate developers anticipate a better environment if the draft revised Law on Real Estate Business and the draft revised Law on Residential Housing are approved by the National Assembly later this year.
Foreign real estate developers may welcome the revised law, but expatriate buyers may find the lack of progress on equal treatment disappointing Photo: Le Toan
According to David Lim, head of the Land Sub Group under the Vietnam Business Forum (VBF), provisions have been inserted in the draft revised Law on Residential Housing (LRH) to expand the rights of foreigners to purchase and use residential property.
However, there continue to be limitations on the rights of foreigners who will still not be permitted to lease their property, own residential houses other than in prescribed commercial residential housing projects, or use property as collateral to access loans from the bank.
“We think the amendment of the laws to allow greater rights for foreigners would be very beneficial for a foreign developer when they can sell a large number of apartments in a specific building for a foreign investor, then this investor can re-sell or re-lease those properties,” Lim said.
Regarding the draft Law on Residential Housing (LRH), foreign commentators said that while some meagre efforts had been made to increase the rights of foreign investors to undertake real estate transactions in Vietnam, foreign investors were still not permitted to purchase houses and buildings for resale or lease, be allocated land by the state, receive and transfer land use rights or invest in infrastructure for transfer or for leasing land with infrastructure.
Lim optimistically claimed that the participation of foreign investors in the real estate market would help the real estate market to mature further.
“Over the years, we have seen domestic investors gain in experience and capabilities arising from a thriving real estate market which includes the contributions of foreign investors. It is not uncommon today to see many iconic developments undertaken by domestic developers. The risk that domestic investors will be disadvantaged by allowing foreign developers more rights in Vietnam continue to diminish over time. The granting of more equal rights to foreign developers wouldn’t be at the expense of domestic investors in any way,” said Lim.
Nguyen Manh Khoi, vice director, Housing and Real Estate Market Administration under the Ministry of Construction said the two draft laws had addressed those issues.
“Supplements will be made to the draft to allow foreign investors coming to Vietnam for the first time to deal in property. For example, instead of requiring registered real estate trading as an eligible line of business, first time foreign developers may be required to provide proof of capital competency or track records and real estate trading capacity in another country,” Khoi said.
Initially the government opened the housing-for-sale market to foreign developers with the Phu My Hung project in Ho Chi Minh City and Ciputra in Hanoi. Since then, foreigners have slowly gained more rights.
According to real estate expert Dang Hung Vo, foreign investment was helping stimulate the real estate market. “If the rights for foreigners are improved in the current revised land laws, the real estate market could revive more quickly,” Vo said.
South Fork case offers experience
The South Fork lawsuit against Binh Thuan provincial People’s Committee is a lesson for state authorities in dealing with future litigation with foreign investors.
Information released by the Ministry of Justice showed the US’ South Fork Development Company failed in their suit at an international arbitration tribunal when it asked the committee to compensate $3.7 billion for causing construction delays to its mammoth tourism project in the province.
The committee did not respond to VIR’s requests for comment last week, and South Fork has similarly avoided media contact.
Le Net, a partner at law firm LNT & Partners and also an arbitrator at the Vietnam International Arbitration Centre, said the case was a good chance for Vietnam to learn about and handle possible lawsuits in the future.
“State authorities took the initiative, faced the lawsuit and complied with arbitration regulations. These were the keys to success in this case,” said Net.
He also added that the Ministry of Justice had hired capable lawyers and was confident in the nation’s legal opinion and strategy.
The South Fork Twin Capes project was licensed in 2004 by the Ministry of Planning and Investment. It would have comprised luxury resorts, golf courses, villas, luxury condo complexes, a large community yacht and marina and entertainment areas.
In December 2009, Binh Thuan provincial People’s Committee handed over more than 333 hectares to South Fork for developing the project, demanding the company to implement the project within five months since the handover, or otherwise, the committe would recover the land.
The lawsuit came after the committee revoked the license in 2010 due to long delays.
South Fork laid the blame on the committee, saying they had allowed Duong Lam Company to exploit titanium on the project’s land, causing construction delays.
The committee’s defence was that South Fork was responsible for the delay and was aware of the mineral exploitation as evidenced by an agreement it signed with Duong Lam.
The dispute raised more than a few eyebrows in 2011 when South Fork announced it would sue the committee in an international arbitration tribunal and set damages at $3.7 billion.
Immediately after South Fork announced the suit, former director of Binh Thuan’s Planning and Investment Department Luong Van Hai said local authorities began collecting evidence defending their case.
A source from the Ministry of Planning and Investment said the government also formed a team to handle the dispute immediately after lodging a request for legal recourse to the charges.