BUSINESS IN BRIEF 9/5 Vietnam to face cement shortage The domestic market will probably face a cement shortage in the next 2–3 years if suitable measures are not taken early, industry insiders revealed. According to the Ministry of Construction, the construction industry is anticipated to grow by approximately 7–10% annually in the next few years. Domestic cement consumption this year is expected at approximately 65–67 million tonnes besides around 10 million tonnes for exports. Though the Prime Minister has so far approved the development plan of the country's cement industry in 2011–20 with a vision to meet the domestic cement demands by 2030, the construction of the approved projects has been slower than scheduled. Under the development plan, cement plants will churn out 75 million tonnes by 2015 and the figure will increase to 93–95 million tonnes and 113–115 million tonnes by 2020 and 2030, respectively. Between 2012–15, 24 cement production projects totalling a combined output of 24.76 million tonnes per year will be put into operation. The total investment capital of the projects is estimated at nearly VND50 trillion (US$2.38 billion). However, the implementation of the projects is too slow due to the lack of investment capital. Due to economic problems, many cement projects, which have been approved in the development plan of the country's cement industry, have failed to kick-start as scheduled due to a shortage of capital. After scrutiny, the government in February had to remove 9 such cement projects. Tran Van Duong, director of the Government Office's Sectoral Economic Department, noted that the capital to invest in a cement project is very large, especially in equipment purchase. Duong explained that previously, it was easier for cement project investors to construct cement plants as the government guaranteed them the investment capital for equipment purchase. Currently, the government no longer guarantees such investment, thus most of the cement projects face investment capital shortage. As some of the approved cement projects have been removed, the country will probably face a shortage of cement in the future if measures are not taken early. It takes at least approximately 3 years to complete the construction of a cement plant under ideal conditions. To deal with the anticipated shortage, Duong suggested that the Government should continuously scrutinise approved cement projects to remove unsuitable ones and add new and feasible projects to the development plan of the country's cement industry. Germany – lucrative market for tuna exports Germany has consistently remained the largest consumer of Vietnamese tuna within the European Union and the second single largest in the world over the past three years. The Vietnamese Association of Seafood Exporters and Producers (VASEP) reports that tuna exports to Germany tripled in the last five years to US$43 million in 2013, accounting for 8% of Vietnam’s total tuna export value. Although exports of canned tuna to the US – the world’s largest importer – have trended downward, export growth to Germany has seen steady incremental improvement. Currently, Germany imports tuna from 42 countries worldwide, including four ASEAN countries – the Philippines, Vietnam, Thailand and Indonesia. ASEAN’s tuna exports have faced difficulties in recent years on the back of material shortage and changes in the Generalized System of Preferences (GSP). However, Vietnamese tuna export businesses have managed to maneuver around these problems and exports have continued to inch their way upwards. After experiencing a temporary decline in 2010, Vietnamese tuna exports quickly rebounded to surpass Thailand and Indonesia and currently rank fifth out of 42 exporters to Germany, lagging behind the Philippines, Ecuador, Papua New Guinea and the Netherlands. The Philippines, Vietnam and Ecuador are now engaged in fierce price competition in the German market. Yet, despite the price competition, leading market analysts are optimistic about Vietnam’s increased export quality and output. Germany is the largest and most buoyant economy in Europe and has firmly cemented its position as an economic powerhouse, they say, adding that the country is a gateway to other EU countries and the world for tuna exports. Rice exports off target in April Vietnam failed to meet a target of shipping abroad 700,000 tonnes of rice in April – a key month for rice export, according to the Vietnam Food Association (VFA). The staggering 51% growth in the volume of rice exports to China could not offset sharp declines in other markets, especially Africa. Export prices in April increased slightly compared to the previous month due to the government’s decision to purchase farmer rice for reserves. The VFA forecast fierce price competition between Vietnamese and Thai rice in May. Vietnam recently won bids to ship 800,000 tonnes to the Philippines. However, rice exports to this market will be put under mounting pressure as Thailand is offering the Philippines its rice at a competitive price. China has been Vietnam’s largest rice consumer for the past two years, and it is expected to retain the status in the coming time thanks to large demands and less transport costs. Vietnam plans to export 6.2 million tonnes of rice this year, including 1.2 million tonnes in Q1, 1.8 million tonnes in Q2 and Q3, and 1.4 million tonnes in Q4. Cambodia hosts Ho Chi Minh City Expo 2014 An estimated 110 Vietnamese companies are participating in Ho Chi Minh City Expo 2014 which opened in Phnom Penh on May 7. At the exposition, an array of high quality Made-in-Vietnam products are featured in more than 200 stalls including food, plastics, garment and textiles, footwear, plastics, handicrafts, cosmetics, and interior decoration items. The event has attracted a great number of widely recognized Vietnamese brand names including Vinamik, Vissan, Cadivi, Vifon, DuyTan Plastics, and Vi Hung Plastics. Addressing the opening ceremony, Cambodian Acting Minister of Commerce Kem Sithan noted that Cambodia considers Vietnam its most important trading partner in the region, appending that bilateral trade has increased considerably over the years from over US$2.8 billion in 2011 to more than US$3.4 billion in 2013. He expressed his hope that the figure will continue to rise this year, spurring economic development in both nations and bolstering their long-term friendship. The five-day fair, organised by Investment and Trade Promotion Centre (ITPC), is also expected to help promote tourism activities between the two countries. A series of seminars on investment promotion and market surveys are being held to connect Vietnamese and Cambodian businesses and seek foreign distributors. Inflation expected to remain stable: HSBC HSBC's Vietnam at a Glance monthly report has said inflation is likely to gradually accelerate, especially in the second half, but remain under control, enabling the central bank to keep interest rates low. The prognosis is based on the fact that the April headline CPI rose slightly (4.4% year-on-year). However, core inflation decelerated to 5.3% from 5.7% in March. The latter excludes food and energy from the basket of goods whose prices are tracked. It expected the rate to end at 5.6% this year even with an assumption of higher social services and electricity costs in August and September. The manufacturing sector would be the main bright spot for Vietnam. Negotiations are underway for the Trans Pacific Partnership (TPP) agreement and the Vietnam-EU Free Trade Agreement. Should they prove successful, tariffs on Vietnam's key items such as garments and textiles should decline in major markets such as the US and EU. But more promising for the country's economic development is the discussion of non-tariff issues, including revamping infrastructure, streamlining administrative measures, reorganising the supply chain in sectors such as rice and textiles, and increasing energy production output by deregulating prices. Addressing these issues would help change how Vietnam competes in the international market in the future. Only then could the country replace raw, low-quality commodity and low-value added manufacturing exports with processed and high-quality products. The Purchasing Managers' Index (PMI) increased sharply to 53.1 in April from 51.3 in March. Output, new orders, new export orders, and employment all rose. New export orders have increased in the past two months to reflect rising demand from the US and eurozone. Output surged ahead in Q1 2014 and into Q2, as destocking measures in early years reduced inventories sharply. With new orders high, manufacturers increased production to keep up with demand. Even with stocks of finished goods increasing on the month in April in anticipation of better demand, inventories are still relatively low. This means that output is likely to increase in the coming months, as the leading indicator, new orders minus inventories, still shows a large gap. The rather red PMI heat-map mirrors export trends. Textiles, footwear, and mobile shipments rose on a year-on-year basis and are likely to perform better in the second half as new investments begin operations. Besides manufacturing goods, some agricultural commodities also benefitted from higher international prices: A drought in Brazil has stoked coffee prices, rice has done well in the year-to-date thanks to higher demand in places like the Philippines. However, Thailand is expected to dump its rice stockpile on the global market this quarter, pushing global prices lower and reducing the value of Vietnam's rice exports. Overall, the report forecast exports to benefit from higher manufacturing output. The trade balance too is likely to be slightly positive, thanks to lower costs of petroleum imports (due to both prices and higher domestic production), new investment in manufacturing, and low domestic demand for foreign goods. Jewellery, watch fair opens in HCM City Local and foreign companies are showcasing a wide range of diamonds, gemstones, watches, and the latest jewellery-making equipment at the 11th international jewellery and watch exhibition opened in HCM City on May 8. Organised by the World Trade Fair International Limited and VCCI Exhibition Service Co, Ltd, the event offers local jewellery firms the opportunity to source international quality products and equipment. It also provides overseas companies the chance to explore the Vietnamese jewellery market and find partners here. Leading Hong Kong jewellery producers like Aplus Gem Co, Copell Limited, Golden Master Jewellery Ltd, Hang Seng Jewellery Manufactory Co, and Tai Fook Holdings Ltd will introduce 14k and 18k gold, diamond, and gemstone collections. The exhibition is on at the Tan Binh Exhibition and Convention Centre until May 11. Improving competiveness of domestic goods Vietnamese goods are required to conform to the EU’s strict regulations on quality, food hygiene and safety and environmental protection, posing challenges for exports to this lucrative market. Perfecting standards and conformance on goods will help domestic businesses gain easier access to the EU market and expand to others such as the US, ASEAN and Japan, said Bui Huy Son, Director of the Trade Promotion Agency under the Ministry of Industry and Trade (MoIT), at a seminar in Hanoi on May 7. The EU has 28 member countries with a total population of 500 million and their GDP is around US$16,000 billion, accounting for one-third of the world’s economy. They consistently impose strict and demanding regulations on food hygiene and safety. David Martin, Multilateral Trade Assistance Project (Mutrap) expert, said the main technical barrier is common import rules and measures to protect EU consumers’ rights which are set out in five categories: quality, food hygiene, safety for customers, environment protection and labour standards. According to Mutrap, although Vietnam is drafting a bill on measurement, less than 40% of its standards meet international norms. To help Vietnamese products compete well in the market, the Vietnamese Government needs to not only raise competitive edge for its businesses but also promptly implement regulations on standards for exported goods. MoIT statistics show two-way trade between Vietnam and the EU reached US$33.7 billion in 2013, including more than US$24.3 billion from Vietnamese exports. In the first four months of this year, Vietnam’s exports to the market hit US$8.28 billion, an increase of 14.3% over the same period last year. Vietnam’s main exports are footwear, garment, seafood, handicrafts, bikes, coffee and tea, while its imports include machinery, equipment, technology, garment accessories, steel, pharmaceuticals, and chemicals. The Vietnam-EU Free Trade Agreement (FTA) expected to be signed late this year will bring much benefit for Vietnam’s sectors, in particular garment, footwear and food processing. Improving regulations and standards for domestic goods will help raise competitive edge and boost exports to the EU and the world, Son concluded. Da Lat clean vegetables to be shipped to RoK Anh Dao Cooperative in Da Lat city, the Central Highlands province of Lam Dong, has signed a contract to export its clean vegetables to a partner in the Republic of Korea (RoK). The first 30 tonnes of vegetables will be shipped on May 15, said Nguyen Cong Thua, director of the cooperative. Under the signed contract, each month, Anh Dao Co-op will provide 60 tonnes of vegetables for CJ Group, one of the major companies in the RoK. The cooperative will grow salad under VietGAP standards on a 60 hectares area and then other kinds of vegetable, Thua said. In addition to buying vegetables, CJ Group will also provide technical assistance for cooperative members, he added. Making use of ASEAN market to boost trade Vietnam considers ASEAN a big, lucrative market. However, its export growth to ASEAN does not match potential, and anti-dumping lawsuits are likely to occur at any time. To fully tap this market in the lead up to the establishment of the ASEAN Economic Community (AEC) in 2015, a seminar was held in HCM City on May 7 to examine weaknesses and propose viable solutions. The Ministry of Industry and Trade (MoIT) reported that Vietnam’s exports grew strongly despite the global economic crisis and domestic difficulties. The country has 22 products, 27 markets and 19 localities achieving an average export value of more than US$1 billion each. Export structure has shifted positively towards reducing raw products and minerals and increasing processed food and industrial products. Worthy of note is that national trade has gradually been balanced over the past two years. Yet, Tran Thanh Hai, Vice Director of the Import-Export Department under MoIT, said Vietnam’s exports remain unstable, noting its export structure heavily relies on key products, fields and markets. Although Vietnam is a major farm producer, it does not play an important role in controlling market prices in the global supply chain. In addition, the country’s support industry is in its infancy, the added value of industrial products is low, and trade deficit with several countries has surged. Trade value between Vietnam and ASEAN increased four folds from US$9 billion in 2003 to nearly US$40 billion in 2013. The country’s exports to the regional market reached US$18.5 billion in 2013, showing a year-on-year increase of 6.7% while imports were US$21.5 billion, up 2.8%. ASEAN is the third largest consumer of Vietnamese goods, after the US and EU. However, exports now seem to be slowing, and businesses have yet to take full advantage of incentives in ASEAN. Huynh Van Minh, President of the HCMC Union of Business Association, said to realize the goal of an ASEAN Economic Community (AEC) in 2015, member countries should adjust rules of origin in line with international standard to enjoy tariff incentives. In the face of globalization, businesses have no choice but to raise competitiveness, address global challenges such as trade and investment liberalisation, tariff cuts and exemptions, streamline procedures, and form common regulations for goods. Vietnamese businesses are advised to deeply penetrate the ASEAN market in 2014-2015, take advantage of tariff incentives in bilateral trade with Laos, and promote trade with Cambodia. When AEC is formed in 2015, most imported products within ASEAN will enjoy tariff incentives, posing a number of challenges for Vietnamese businesses. Vo Tri Thanh, Vice Director of the Central Institute of Economic Management (CIEM), suggested domestic businesses should be equipped with effective risk management tools, knowledge of technical barriers and macro-economic stability and policy adjustment. They should be provided with up-to-date information and take part in the global supply chain and new, potential areas such as infrastructure development and green growth, Thanh concluded. New Eximbank leaders named Vietnam Export Import Commercial Joint Stock Bank, better known as Eximbank, has announced new leaders for a new term, with Pham Huu Phu elected general director and  vice chairman of the lender. Earlier, Phu was the representative of Eximbank in Sacombank, holding an 8% stake in the latter. Phu was chairman of Sacombank before stepping down from this post on March 24 to join Eximbank. At an annual general meeting in HCMC on Monday, Le Hung Dung was re-elected chairman of Eximbank while Dang Phuoc Dua was elected vice chairman. Dung represents three individual shareholders and one corporate shareholder to hold more than 10.4% of chartered capital of Eximbank. Meanwhile, Dua is now chairman of the technical materials and resources import-export joint stock company Rexco. Last year, Eximbank’s total assets declined by 0.2% against late 2012 as the lender had to pay 340,000 gold taels worth over VND15 trillion to depositors as requested by the central bank. Eximbank also failed to increase chartered capital as planned due to its lower-than-projected profit last year. Earlier, the bank expected to raise capital from over VND12.3 trillion to roughly VND13.1 trillion. Eximbank posted VND828 billion in profit before tax last year, equivalent to 26% of the lender’s entire-year target. Dung explained that Eximbank had to lower lending interest rates and increase the credit risks provision among others. Eximbank targets pre-tax profit of VND1.8 trillion this year. Dung believed that this goal would be obtainable as the lender had earned some VND570 billion in the first four months of this year. HCM City to strictly monitor industrial wastewater HCMC will undertake a project to develop an integrated automated monitoring system this year to better manage treated wastewater at 15 export processing zones and industrial parks in the city. The HCMC government will spend VND35 billion (over US$1.6 million) installing 15 wastewater monitoring stations at the EPZs and IPs as well as a data collection facility at the city’s environmental monitoring and analysis center in order to monitor and address environmental problems. These stations will help prevent discharges of untreated or substandard wastewater. Under the project, data collection equipment will be installed at the environmental monitoring and analysis center to transmit wastewater-related information to the center so that the center will be able to detect violations immediately. A representative of the HCMC Department of Natural Resources and Environment told the Daily that the environmental protection office is the investor of the project, which is one of the 15 major projects to be funded by the HCMC People’s Committee this year. Pham Thanh Truc, head of the environment management department at the HCMC Export Processing Zone and Industrial Park Authority (Hepza), said that enterprises at the 15 EPZs and IPs discharged around 40,000 cubic meters of wastewater a day. Some infrastructure developers of industrial parks have invested in automated wastewater monitoring systems but their data about wastewater quality is not sent to the environment monitoring center. Experts skeptical about proposed halt to licensing new housing projects Experts have cast doubt on the construction ministry’s proposal to suspend the licensing of new real estate projects to ease an oversupply on the market. Minister of Construction Trinh Dinh Dung was quoted by local media as saying recently that many already-approved real estate projects were still put on hold. Dung said more than 680 projects with over 7,000 hectares of land in HCMC and 100 other projects in Hanoi had been stalled over weakened domestic demand. He stressed that there was no good reason to license new housing projects this year.    However, a number of experts have voiced their concerns over the proposal, saying it goes against basic market principles. Hoang Minh Tri, deputy head of the HCMC Institute for Development Studies, said the ministry’s suggestion was not convincing in terms of business efficiency. Tri said the country’s real estate market since early this year had shown positive signs as confirmed by the ministry. Therefore, it is unnecessary to suspend licensing new housing projects, he said. In an interview with Vietnam Television (VTV) a week ago, Dung said there were more than 4,000 housing projects covering some 102,000 hectares of land nationwide and about three million apartments would be built if all these projects were done. These projects require a combined investment of VND4,500 trillion and this is impossible, even in a medium term if the country’s economic situation is taken into account. However, lawyer Hoang Van Son from HCMC-based VNC Law Office said the ministry’s proposal had no legal basis. Son explained that the proposal ran counter to the Enterprise Law as this law allowed firms to do what is lawful. The lawyer also pointed out the proposal, to a certain extent, would restrict operations of newly-established real estate firms and would likely erode enterprises’ confidence in the ministry’s policies. Real estate enterprises are also concerned that the ministry’s suggestion would impact their interests. Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, questioned why the ministry did not find ways to support implementation of apartment projects eligible for the VND30 trillion home credit program which is proceeding at a snail’s pace. Duc also asked whether the ministry’s move was to support the property enterprises that are coping with high inventories. However, Minister Dung attributed huge property inventories to the ultra easy monetary policy in previous years. He added the suggestion was for this year only and that fresh projects could still be considered for licensing on a case-by-case basis, and the ministry would find solutions for bostering the market. Nonetheless, the Government has thrown its weight behind the ministry, saying that in the current situation, real estate enterprises should prioritize slashing inventories and finishing half-done projects. BIM kicks off VND1.5-trillion hotel complex on Phu Quoc BIM Group has started work on a hotel and recreation complex on Phu Quoc Island off mainland Kien Giang Province and this VND1.5-trilion project incorporates a hotel bearing Crowne Plaza brand. Syrena Vietnam Investment and Development Joint Stock Company (Syrena Vietnam), an arm of BIM Group, began to construct the foundation of the Crowne Plaza, a luxury brand of global hotel management company InterContinental Hotels Group (IHG). Crowne Plaza Phu Quoc is expected to be up and running late next year, nearly one year ahead of original schedule. Crowne Plaza Phu Quoc, the first component of the complex at Truong Beach, will consist of 400 seaview rooms, 88 apartments and five villas. In addition to the hotel, the project on 200 hectares will comprise a resort, a cruise pier, restaurants, areas for shopping and outdoor entertainment activities. Phu Quoc’s tourist arrivals increase by an average of 13% a year and Syrena Vietnam expects higher growth for the resort island of the Mekong Delta province of Kien Giang when transport and electricity infrastructure development is completed. As one of the international-standard hotels to be in service on Phu Quoc in the years to come, the investor pins high hopes that the Crowne Plaza Phu Quoc will magnetize not only international but also domestic tourists. A master zoning plan for tourism development of Phu Quoc until 2020 envisages many more new resorts and hotels of three- to five-star standards. The island will have 8,200 rooms next year, with three- to five-star facilities accounting for 55-60%, and 18,000 rooms, or 60-70%, in 2020. Phu Quoc, which will become a special administrative economic zone in 2020 as approved by the Government, is forecast to attract at least two million tourists that year, with international arrivals making up 35-40%. Lotte Mart expands to Mekong Delta South Korean retailer Lotte Mart plans to expand its network to the Mekong Delta following the successful opening of stores in HCMC, Hanoi, Danang and the southeastern region. The retailer will open its first outlet in Can Tho City. According to the city’s Department of Planning and Investment, local authorities have given the nod to the investor to set up Lotte Can Tho commercial center on over 15,700 square meters in Ninh Kieu District. The company plans to invest more than US$31 million in the project. However, the local government will have to consult the Ministry of Industry and Trade as retail is a conditional business field for foreign investors. Can Tho has become an attractive destination for local and international retailers due to rising consumer spending and higher living standards than other localities in the delta. Many distributors such as Metro Cash & Carry, Big C and Co.opmart have inaugurated their stores in the economic center of the Mekong Delta. Earlier, Lotte Mart got approval from the government of Ba Ria-Vung Tau Province for a commercial center. The project is expected to cover over 10,000 square meters at the corner of Ba Thang Hai and Thi Sach streets with a total investment of VND721 billion. It will start operating in 2015, comprising of supermarket, eateries, cafeterias and entertainment area, according to the provincial Department of Planning and Investment. The projects are part of Lotte Mart’s scheme to open 60 commercial centers throughout Vietnam until 2020. To realize the target, the firm has also cooperated with other retailers to expand its presence. Lotte Mart has joined hands with Pico to launch its products at Pico’s sales points such as Pico Plaza in HCMC’s Tan Binh District. Lotte Mart has been present in Vietnam since 2007 and has since opened seven commercial centers here in the country. The company now has two supermarkets in HCMC, one in Binh Thuan Province, one in Binh Duong, one in Dong Nai, one in Danang and one in Hanoi City. The enterprise has plans to inaugurate more supermarkets this year. In the short term, it will open a store at Pico Plaza in HCMC’s Tan Binh District, replacing Pico electronic supermarket. VAT refunds okayed for farm produce importers The Ministry of Finance has allowed agricultural product import enterprises to have a 5% value added tax (VAT) rate refunded when they complete all the procedures for customs clearance. The ministry’s move is to help importers and exporters of agricultural products avoid the problems related to VAT payment and refunding, Nguyen Quoc Toan, deputy head of the import-export tax office under the Customs Department of HCMC, told a recent dialogue with enterprises in HCMC. Toan said after having collected opinions of the ministries of Industry and Trade, and Agriculture and Rural Development, the Ministry of Finance had made a decision to apply a VAT break to unprocessed agricultural products and the raw materials used for animal feed processing, including corn. Representatives of enterprises said at the dialogue that customs agencies at ports had required them to fulfill their duty for a 5% VAT to have their corn imports cleared although this farm produce was not subject to VAT as regulated in Circular 219//2013TT-BTC, which was issued by the finance ministry late last year to provide guidance for implementation of the revised Law on VAT. In response, Toan said customs agencies had to collect the tax in accordance with the circular due to the same interpretation of provisions of the circular on animal feed and materials for animal feed production. Customs officers reported the problems with importers to agencies of higher levels. Later, the Ministry of Finance wrote to the two aforesaid ministries asking for their comment on appropriate tariffs for farm produce imports. As covered by the Daily previously, many enterprises in HCMC and Tay Ninh, Binh Duong and Ba Ria-Vung Tau provinces were told to pay the 5% VAT rate for their imports of agricultural products, semi-processed latex, corn and wheat or the taxman refused to refund their VAT payments due to confusing provisions in the circular. Electronics retailers offer big discounts Electronics supermarkets and distributors in HCMC and Hanoi have knocked up to 50% off TV sets and other items on the occasions of the national holidays and the upcoming 2014 FIFA World Cup tournament in Brazil this year. As observed by the Daily, a number of retailers in HCMC are offering discount prices for 40-inch television models or larger before the global football tournament takes place in the South American nation from June to July. Thien Hoa Electronics Center in HCMC has reduced prices by 39% for 39,000 products until May 15 plus gift vouchers and zero interest rates for the items subject to its installment payment plans. Furthermore, those with member cards can enjoy discounts of up to 50% for the holidays of Vietnam Reunification Day and International Labor Day. Nguyen Kim electronics store chain in collaboration with producers Samsung, Sharp, LG and Toshiba is offering discounts from VND4.8 million to VND27 million for televisions of different sizes and models coupled with vouchers until May 5. The chain also offers gift vouchers to buyers of air-conditioners and longer warranties for buyers of smartphones.   Media Mart supermarket has teamed up with Sony, Samsung and LG to lower prices of LED and 3D TVs, with discounts up to 50% for 1,000 televisions. HC electronics supermarket in Hanoi said it had cut prices of big-screen and full HD televisions by 29% while Long Gia Computer Ltd. Co. in HCMC has given its customers one 100-inch screening board when buying a Sony projector. Sony Electrics Vietnam has joined forces with supermarkets throughout Vietnam for a promotion campaign until July 13 on the occasion of the World Cup. Buyers of Sony Xperia smartphones will have a chance to win speakers, Smart Watches 2 FIFA, bluetooth headphones and many more. Duc Long Gia Lai aims for hefty rise in profit Leaders of Duc Long Gia Lai Group said at an annual general meeting last week that the group is looking to a 50-time spike in profit this year. The corporation posted last year’s revenue of more than VND800 billion (US$37.9 million) and after-tax profit of VND1.6 billion. This year’s respective targets are more than VND1.1 trillion and VND91 billion. In the first quarter this year, Duc Long Gia Lai reported more than VND183 billion in revenue and saw its profit after tax rising 32 times over the same period last year to VND15.6 billion. Duc Long Gia Lai set the targets based on the macro-economic improvements in the year to date. According to the group’s leaders, although the country’s economy still faces challenges, it has shown positive signs of recovery. This year, the group will focus its resources on carrying out build-operate-transfer projects in Dak Nong, Gia Lai and other provinces in the Central Highlands as these projects are estimated to generate revenue of some VND500 billion this year. Duc Long Gia Lai is also pinning high hopes that furniture exports will fare well. Therefore, it will provide capital for its subsidiaries operating in the wood sector in hopes of their higher contribution to the corporation’s revenue. The corporation will restructure its subsidiaries in infrastructure, commerce, manufacturing, transportation and energy sectors. Also in its plan for this year is to complete planting more than 8,000 hectares of rubber trees and 1,000 hectares of crops. PVN to reduce PV GAS stake Vietnam National Oil and Gas Group (PVN) will lower its ownership at PetroVietnam Gas Corporation (PV GAS) from 96.7% to 75% in accordance with PVN’s restructuring plan. PVN has asked the Ministry of Finance for approval to cut its stake at PV Gas by selling 16.7-19.7 percentage points of its stake to strategic partners and 2-5 percentage points to outsiders this year or next. PV GAS is looking for capable strategic partners, with priorities for those companies operating in gas pipeline operation and exploitation fields. GAS is now a sought-after blue-chip on the Hochiminh Stock Exchange and has great impact on the VN-Index because of its large listed share volume and high liquidity. GAS shares were traded at VND99,500 per share on Tuesday before the local stock market was closed for the public holidays until Sunday. PV GAS earned over VND65 trillion in revenue and nearly VND12 trillion in after-tax profit last year, and this revenue accounted for over 10% of PVN’s earnings. PV GAS is currently working on a number of major investments, including the LNG project in Ba Ria-Vung Tau Province, the first phase of Nam Con Son 2 project, Dai Hung and Thai Binh gas projects. At a recent general meeting, PV GAS agreed to increase last year’s dividend from VND2,000 to VND4,200 per share. The dividend will be VND3,300 per share this year. Vietnam building doctrine of growth Vietnamese authorities have earmarked nearly half a million U.S. dollars for a research institute to study and build up a doctrine of growth for the country, said an authoritative source. Le Xuan Ba, former director of the Central Institute for Economic Management (CIEM), said at the Spring Economic Forum 2014 in Quang Ninh Province on Tuesday that a state budget totaling VND10 billion had been provided for this scheme. A number of other delegates at the forum confirmed the news while speaking with the Daily. Ba said, “Vietnam now has no doctrine of growth. The doctrine should be based on the principle that we should do whatever is in the nation’s interest and the people’s interest. This is a good time for us to make preparations for the forthcoming 12th Party Congress.” A presentation which the Ministry of Foreign Affairs sent to the forum calls for a pinpointing of “market” and “socialist orientation” factors in the much-championed motto “institutions of a market economy with socialist orientation”. The ministry said in the presentation that the country’s economic institutions are particular but they should harmonize with mankind’s current mainstream. A market economy is a universal economic development system and the ministry asked whether Vietnam’s socialist orientation is the essence and role of the nation-state. The presentation proposed the State should focus on core functions such as stabilizing the macro economy, protecting the positive fundamentals of a market economy, solving shortcomings and failures of a market economy to ensure efficient distribution of resources, and guaranteeing social equality. HCM City seeks WB loans for bus, flood control projects The HCMC government has suggested the Ministry of Planning and Investment add its bus rapid transit (BRT) and flood control projects to the list of projects in need of the World Bank’s financial aid in 2015-2018. HCMC estimated more than US$1.5 billion would be required for around seven bus rapid transit and flood control projects planned for the period and expected most investments of these projects would come from the international lending institution. At a meeting held last month to announce the Government’s approval for a master plan on HCMC’s socio-economic development until 2020 with a vision to 2025, leaders of HCMC said that the city was looking for around US$470 billion for infrastructure and urban development between 2011 and 2025. Particularly, the investments for the 2016-2020 period alone will amount to US$140 billion but the city’s budget can cover a mere 10% of this. Apart from the WB’s official development assistance (ODA) loans, HCMC also plans to issue bonds and count on other channels to mobilize capital to beef up its growth. The HCMC People’s Council approved basic construction investments of nearly VND43.3 trillion from the city’s budget in 2013-2015, including over VND12.8 trillion for 2013, less than VND14.5 trillion for this year and nearly VND15.9 trillion for 2015. OCB reports profit of VND321 billion Orient Commercial Bank (OCB) obtained VND321 billion in pre-tax profit last year, meeting its full-year plan, according to a report released at an annual general meeting on Monday. At the end of 2013, OCB had total assets of nearly VND32.8 trillion, up 19.5% against 2012 and exceeding last year’s target. Mobilization increased 27.3% from 2012 to more than VND28.5 trillion while total outstanding loans rose 19% to over VND20.6 trillion. OCB has been listed as one of the top three banks in HCMC with the best return on equity (ROE). This year, the bank targets a pre-tax profit of VND350 billion, total assets VND34.6 trillion, chartered capital of VND4 trillion, deposits of VND29.7 trillion and loans of VND22.7 trillion. It aims to put bad debt ratio under 3%. OCB inaugurated Ben Cat transaction office in the southern province of Binh Duong last week, taking to 98 the total banking units in the country. Hoa Binh aims for higher profit Though the country’s real estate market remains in distress, Hoa Binh Construction and Real Estate Corporation (HBC) still looks to much higher profit after tax this year than last year. Hoa Binh announced this year’s targets of VND5 trillion in revenue and VND175 billion (some US$8.3 million) in after-tax profit at a general meeting last week. The corporation also plans a dividend of 15% for 2014. The targets are considered very ambitious given Hoa Binh’s sharp declines in both revenue and profit in 2013 compared to the previous year. Last year, the corporation registered revenue of VND3.43 trillion, dropping by 15.6% year-on-year, and after-tax profit of VND26.4 billion, plunging by 80%. Hoa Binh explained its lower-than-projected revenue and profit last year resulted from investors suspending or delaying implementation of their projects or signing construction contracts with the corporation. On top of that, the construction market is highly competitive in terms of price and many projects have been scaled down. In the first quarter of this year, the corporation posted only VND614 billion in revenue and VND1.18 billion in profit. This was a usual situation of the first quarter every year, as explained by Hoa Binh, when there were long holidays and fewer construction activities than the other quarters of the year. Hoa Binh said that its high aims for revenue and profit in 2014 were set depending on the many big projects it had won in the year to date. For instance, the corporation has surpassed many foreign rivals to become the main contractor of VietinBank Tower project, which is 363 meters high, probably the highest in Vietnam. Earlier this year, Hoa Binh was picked to undertake the second and third phases of Saigon Centre project in downtown HCMC. Hoa Binh calculated that fulfilling the deals it signed last year and this year as well as the projects under negotiation would generate revenue of VND8.5 trillion. Vinasun to buy 1,225 cabs for expansion in HCMC Vinasun Corporation is working on a major plan to increase its chartered capital and invest in 1,225 new taxicabs to mainly serve the HCMC market following a strong rise in revenue last year.   Most shareholders of Vinasun have voted for the plan to bring the company’s chartered capital to VND565.5 billion from the current VND435 billion by issuing more than 13 million more shares in order to have fresh money for the new cars. At a recent general meeting, leaders of Vinasun explained the new cars would enable the firm to meet the increasing demand for taxi service in HCMC, Danang and Nha Trang. Vinasun has been licensed to operate in the central coast holiday city of Nha Trang with 100 taxicabs in the initial time. Notably, Vinasun will expand its fleet in HCMC to around 1,000 cabs this year while the city government is restricting new taxicabs on the road to deal with worsening traffic congestion. However, Vinasun explained that the company had been allowed to do it because other taxi operators had not purchased new cars as earlier licensed, so there is room for Vinasun to buy fresh vehicles. Furthermore, Vinasun will replace 475 old cabs this year to better serve customers in the country’s southern economic hub where the firm holds 40% market share. Vinasun also plans to expand to Hanoi. Despite rising operational costs and other negative factors, Vinasun still looks to achieve total revenue of nearly VND3.46 trillion and after-tax profit of VND257 billion this year compared to the VND3.16 trillion and less than VND225 billion attained last year. In the first quarter of this year, the company posted revenue of nearly VND900 billion. CBU auto imports soar in April The import of completely built-up (CBU) autos surged to 5,000 last month and exceeded the average monthly volume of 3,000-4,000 units last year, according to the General Statistics Office. The auto imports also soared in value in the fourth month of this year. A report by the GSO showed around 5,000 units worth US$130 million were shipped into the country in April compared to 3,000 (US$65 million) in January, 3,000 (US$51 million) in February and 4,000 (US$84 million) in March. The automobile imports recorded in April rose by some 2,000 units and US$80 million compared to the same period last year. The imports of all CBU automobiles in the four-month period reached around 15,000 units worth US$329 million, up 53.4% and 76.6% year-on-year respectively. Auto traders credited the surging CBU automobile imports to an improvement of consumer spending in the local market, which is supported by the registration fee reduction to 10% from 15% for automobiles of less than 10 seats in HCMC since early this year. Moreover, the conditions for car loans have been relaxed as well. Another main reason for the strong imports is the tariff imposed on cars imported from other ASEAN countries has been lowered by 10 percentage points to 50% this year. More luxury brands, including Rolls-Royce, Bentley, Lexus, Infiniti, Mini and Peugeot, have entered the Vietnamese market this year. The steady sales rises in imported and domestically assembled cars are seen supporting higher growth of the local market this year. The Vietnam Automobile Manufacturers Association (VAMA) has revised up its automobile consumption forecast for Vietnam this year to 125,000 units compared to its initial projection of 120,000. There were 110,519 units sold last year. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR