Thứ Tư, 29 tháng 7, 2015

BUSINESS IN BRIEF 29/7


Official distributors appointed for The Krista
CapitaLand and the Khang Dien House Trading and Investment JSC, the developers of The Krista residential project in Ho Chi Minh City, have appointed two real estate exchanges - Seareal and Dat Xanh Dong A - as official distributors of the project’s apartments.
“After working together in opening sales at CapitaLand Vietnam’s projects, including The Vista, Vista Verde, and PARCSpring, we believe that this cooperation, which combines the developers’ reputation and capacity in developing the project and the capacity of Seareal and Dat Xanh Dong A, will provide our customers with perfect settlement solutions at The Krista,” said Ms. Nguyen Thuy Duong Dalia, Head of Sales & Marketing, Ho Chi Minh City, at CapitaLand Vietnam.
Located in District 2, The Krista has a total of 344 apartments and is tailored towards the needs of young families, with two types of apartments: apartments with two bedrooms and two toilets on 70.28 to 71.53 sq m, and apartments with three bedrooms and two toilets on 91.27 to 91.88 sq m.  
All apartments are fully designed according to Singaporean standards, ensuring good ventilation and lighting and bringing a healthy and enjoyable lifestyle to owners.
The project was also designed with more than 40 types of utilities and landscapes to meet the demand of residents, including a swimming pool with deep relaxation chairs, a gym, yoga rooms, playgrounds for children, and a barbecue area, among others.
Seareal and Dat Xanh Dong A are the distributors of numerous real estate products, including apartments, villas and town houses, especially in Ho Chi Minh City and southern provinces.
Savills Vietnam report notes differing factors behind increases in both cities.
Ho Chi Minh City’s residential index in the second quarter of this year was 89.4, an increase of 0.3 points quarter-on-quarter (q-o-q) and stable year-on-year (y-o-y), according to a recent Savills Vietnam report.
The overall absorption rate was 19 per cent, a decline of 2 percentage points q-o-q but an increase of 2 percentage points y-o-y.
The residential index has stabilized over the last two years after falling continuously from 2011 to 2012. The development of new projects from credible developers and the economic recovery have boosted sales and increased buyer confidence.
New projects with higher development standards contributed to the slight price improvement in the quarter. The residential q-o-q index is expected to remain stable in the next few quarters.
Due to a price increase in more than half of existing projects, Hanoi’s residential index in the second quarter was 139, up 27 points q-o-q and 38.7 points y-o-y, according to the report.
The quarter-on-base (q-o-b) index was 94 in the quarter, up 1.3 points compared to the first quarter. Both q-o-q and q-o-b continued to trend upwards.
The inventory ratio increased by 9 percentage points q-o-q due to new supply yet fell 20 percentage point y-o-y due to the continued strong performance of the whole market. The overall absorption rate decreased q-o-q but increased y-o-y, to 34 per cent.
The average price was VND25.4 million per sq m in the capital. Hoan Kiem, Ba Dinh and Tay Ho districts were the most expensive areas, due to project quality and their central locations.
The average price was VND25.4 million per sq m. Hoan Kiem, Ba Dinh and Tay Ho districts were the most expensive areas, due to their central locations and project quality.
Indian plastic firms want bigger share in fast-growing Vietnam
Indian plastic manufacturers are seeking opportunities to raise their market share in Vietnam, a fast-growing market in Southeast Asia, a representative of the Plastics Export Council of India (PLEXCONCIL) said at a recent exhibition in Ho Chi Minh City.
They are also eyeing cooperation with Vietnamese firms, B. Swaminathan, managing director of Enterprising Fairs India Pvt. Ltd., said Thursday at PLASTICS, RUBEXPO and COMPACK Vietnam 2015.
Besides a fast growth rate, any new business can join the plastic industry, anywhere, any time and with any size of investment, Swaminathan said.
This will help Vietnam create new employment opportunities and also save on the foreign currencies needed to import finished plastic products, he added.
Similarly, packaging is one area that needs an immediate makeover, as it offers solutions for ensuring the products are delivered intact, with shelf appeal, good protection and affordable costs.
"With many free trade agreements in place and soon to be in place, Vietnam, besides catering to the growing domestic market, will exponentially grow in exports too,” Swaminathan said.
“This means the country needs high-tech productive machines, new technologies and next generation raw materials and additives,” he added.
Vietnam is one of the fastest-growing plastic markets in Southeast Asia, with an output of 4.25 million tons per year, behind only Thailand.
India's growth in this industry has been a phenomenon in the past 25 years, as from humble output of 50,000 tons of polymers annually, the South Asian country currently produces 16 million tons per annum.
The production is expected to reach 20 million tons in 2020.
Office for lease market sees bright future ahead
The implementation of the revised Law on Real Estate Business is expected to attract a range of new investors to the office for lease market.
From July 1, foreign invested enterprises are allowed to re-lease their rented properties, and can acquire and own a completed building for their own use, provided that they did not develop it themselves.
“This is an important step in extending the business activities that foreign developers are allowed to participate in. The trend of long-term leasing or selling office space is becoming more popular, even in uncompleted office buildings. This is considered another investment channel, as investors look to diversify assets,” said Marc Townsend, managing director of CBRE Vietnam.
Investors are actively collecting new projects in line with this upcoming trend.
Mapletree, one of the biggest Singaporean real estate investors in Vietnam, recently bought The Centre Point in Ho Chi Minh City and Pacific Place in Hanoi, and are currently developing another grade A office building in Ho Chi Minh City.
Many new arrivals have appeared on the market.
Japan’s Daibiru recently announced its first business in Vietnam, taking over CornerStone, the latest grade A building in Hanoi, with a value of more than $60 million.
Meanwhile, UK-based Gaw Capital Partners recently bought four projects from Indochina Land, including the Indochina Plaza Hanoi, with office for lease space of more than 16,000 square metres.
With the expansion of the revised Law on Real Estate Business, experts said that foreign investors would not have to pour a large investment into a whole project, but could buy a portion of the project and re-lease it for profit.
A few domestic investors have been taking on this charge. IDJ Investment is now offering three floors in their Charmvit Tower, located on Hanoi’s Tran Duy Hung street. Office space here is sold at VND42million ($2,000) per square metre (excluding VAT). Sub-investors can buy this space for their office and re-lease it.
IDJ is ready to re-lease this space from the sub-investors after they purchase it. The company will find tenants and commit to a profit of up to 10 per cent per year, for the first 10 years of operation.
IDJ claimed that with this form of investment, sub-investors would only need 10 years for capital recovery. The following 30 years would be reserved for profit.
Experts also predict that the trend of selling and long-term leasing of office space will be more popular in the Vietnamese market.
Moreover, this trend could also apply for office buildings under construction, and could prove to be a new investment channel for investors who aim to diversify their portfolios.
Despite facing a large stock of office for lease space, the average rental is now standing at $30 per square metre per year for grade A, and $18 per square metre per month for grade B.
These rentals, according to experts, are sufficient to attract investors to the office for lease market.
Bac Ninh FDI tops $7.83b
The cumulative foreign direct investment in the northern province of Bac Ninh was worth US$7.83 billion as of June 20, ranking it ninth out of the country's 63 provinces and cities, the Foreign Investment Agency said.
In an online report on July 23, it said Bac Ninh ranked third out of 11 localities in the Red River Delta.
The manufacturing and processing sector accounted for $7.12 billion or 91 per cent of the FDI, with the property sector ranking second with around $332 million.
Almost all the FDI projects are wholly foreign-invested, with the rest being joint ventures, joint stock companies or business co-operation contracts.
Singapore topped the list of foreign investors, accounting for 35.6 per cent of FDI, followed closely by South Korea with 33.1 per cent and Japan with 10.5 per cent.
Singapore-registered Samsung Electronics' $2.5 billion project is the largest foreign-invested one.
The second largest investment is $1 billion by South Korea's Samsung Display Company Limited.
HCMC welcomes 2 million foreign visitors in H1
Ho Chi Minh City catered for over 2 million foreign visitors in the first half of 2015, seeing a year-on-year increase of 3% and meeting 46% of the year target.
In the January-June period, the tourism industry earned over VND 47 trillion, up 7% against the same period last year.  
Foreign arrivals chiefly came from the US, Japan, the Republic of Korea, China, Australia, France, ASEAN’s bloc namely Singapore and Malaysia.
The city’s tourism sector has organised series of domestic and international promotional events, such as the Southern Cuisine Festival or the Southern Fruit Festival.
Books and maps have been published in English in order to help international tourists around town.
The city also launched a website and hotline (call 1087) to provide tourism information.
The municipal Department of Tourism plans to improve the quality and diversity of tourism services, including waterway tourism and art performances throughout the city./.
Local firm milks massive dairy farm opportunity
Locally-owned TH Group is planning to implement the world’s largest concentrated dairy cow and fresh milk production project in Russia, with an expected capital of nearly $2.8 billion.
TH Group is due to join hands with Russian authorities in order to construct the world’s largest dairy processing plant
This project, expected to cover 140,000 hectares, will be 2.32 times bigger in capital and 3.78 times bigger in area than the group’s existing $1.2 billion, 37,000ha project operating in the central province of Nghe An’s Nghia Dan district.
If this project comes to fruition, it would be the biggest of its kind in the world. TH Group is currently working with Russia’s authorities on this project.
According to their plan, the project will include three stages, spanning from 2015 to 2025.
Specifically, the first stage, from 2015-2016, is expected to see $386 million invested in an area of 20,000ha. It will be focused on constructing three clusters of dairy farms, auxiliary facilities, an office area, workers’ housing, and a fresh milk processing plant with a daily capacity of 800 tonnes.
This stage will likely have 50,000 cows, of which 21,600 will be milked.
The second stage, from 2017-2019, will see the construction of another six clusters of dairy farms  with each cluster having three farms, auxiliary facilities, and another fresh milk processing facility with a daily capacity of 1,700 tonnes.
With the total investment capital expected to be $796 million, this stage will likely have 100,000 dairy cows, with 43,200 milked, and will cover an area of 40,000ha.
TH Group will build the third stage from 2020-2025, including another 12 clusters of farms, auxiliary facilities, and another mega fresh milk processing facilty. This stage, expected to cost $1.592 billion, will cover 80,000ha, raising the total area to 140,000ha for the three stages.
This stage will consist of 200,000 cows, including 86,400 milked. This will raise the total number of cows for the three stages to 350,000 including 151,200 milked.
The mega fresh milk processing facility will cover 1,000ha, including office buildings, warehouses, workers’ housing, a sports area, and a commercial display area.
This facility will have capacity of 3,400 tonnes per day, raising the total daily capacity of the project’s three stages to 5,900 tonnes.
The project plans to use the world’s most modern technology, imported from Israel.
All the milk products will be marketed in Russia, a country of 150 million people, where only 18 million tonnes of milk are currently produced. This project will supply nearly 50 per cent of the nation’s demand.
The total number of employees needed for the whole project is expected to be about 6,000.
At a July meeting in Moscow attended by Vietnamese Ambassador to Russia Nguyen Thanh Son and leaders from the TH Group, Moscow’s leaders said agricultural development, in particular, the dairy industry, would enjoy major incentives and support from Russia’s government.
Recently, the Asian Record Organisation officially recognised the group’s $1.2 billion dairy cow and fresh milk production project in Nghe An as “The largest concentrated hi-tech dairy farm complex in Asia”.
FLC Twin Towers to get underway shortly
The FLC Group plans to kick off construction of FLC Twin Towers, previously known as Cemaco Tower, at 265 Cau Giay Street in Hanoi’s Cau Giay district shortly, a month after it acquired the project.
According to Mr. Dang Tat Thang, Deputy Director Managing of FLC, the group is quickly completing all procedures to begin construction in early August. “Due to its favorable location, many investors and consumers have contacted to FLC to ask about the project’s construction progress as well as our plans for the sale of apartments,” Mr. Thang added.
After five years lying idle, the one-hectare project is now undergoing site clearance.
Under FLC’s plans, FLC Twin Towers will comprise twin towers, including a 50-storey residential tower and a 38-storey office tower, with apartments for sale on a total area of 66,484 sq m, office space for lease with a total floor area of 35,960 sq m, and a shopping mall on 25,000 sq m.
With total investment from FLC of VND5.2 trillion ($238.3 million), the project also includes other facilities to meet the needs of residents, including an international hospital, schools, indoor and outdoor swimming pools, and a green-space, among others.
The group is yet to reveal any information on apartment prices.
The FLC Group has attracted much attention in recent times after acquiring three real estate projects in Hanoi in 2014 and the early months of 2015, including two in Nam Tu Liem district and one in Ha Dong district.
It also became the owner and developer of the $260 million FLC Samson Beach and Golf Resort in the north-central province of Thanh Hoa and the $162 million Nhon Ly resort, villa and luxury entertainment complex in south-central Binh Dinh province.
FDI keeps rising in HCMC, Dong Nai
HCMC and Dong Nai are among the few localities seeing increases in fresh foreign direct investment (FDI) approvals in the first half of the year against the backdrop of falling FDI pledges in the country.
According to the Foreign Investment Agency (FIA), HCMC took the lead in new FDI approvals between January and June with around US$1.2 billion registered for fresh and operational projects, up 12.2% against a year earlier and equivalent to over 20% of the nation’s total.
Though FDI capital for new projects in HCMC dropped by 17.5% in the period, 84 operational FDI enterprises added an extra US$410 million, up a staggering 58% in number and 3.7 times in capital.
Therefore, the operational projects helped HCMC register more FDI than other parts of the nation, according to the FIA which is under the Ministry of Planning and Investment.
Experts predicted FDI flows into HCMC would continue to rise as some big-ticket projects have been licensed and a number of major investors have pledged expansion in the coming time.
The city government has recently granted an investment certificate to a complex worth US$1.2 billion to be developed by Empire City in District 2. The U.S.-based Jabil signed a memorandum of understanding with the city to invest an additional US$500 million to expand its production at Saigon Hi-Tech Park in District 9.
Meanwhile, Dong Nai Province has beaten its FDI target of US$900 million for the entire year as the figure in the first six months alone amounted to US$1.03 billion already.
Notably, the southern province attracted more foreign investors to the sectors where the province is calling for investments.
According to Bo Ngoc Thu, director of the Dong Nai Department of Planning and Investment, one of the reasons for such high FDI approvals is that the province has sped up administrative reform, especially in the investment, tax and customs fields, to help enterprises save time and money on administrative procedures.
Thu said Dong Nai has focused its investment promotion activities on countries with many potential investors.
According to the FIA, foreign firms registered a total of only US$5.49 billion for projects in Vietnam in the first half, a year-on-year decline of 19.8% and the lowest recorded in the same period since 2012.
The FIA said the period saw 23 cities and provinces attracting less than US$50 million and no new FDI flowing into 21 other localities.
Dai-ichi Life opens new general agency office in HCMC
Dai-ichi Life Vietnam in collaboration with Hoang Gia Phat Co. Ltd. has inaugurated the second general agency (GA) office in HCMC’s District 11 as part of the Japanese life insurer’s strategy to expand its office network and enhance services for local clients.
The GA office on the fifth floor of Lu Gia Plaza Building has increased the total number of its sales and GA offices to 142 nationwide.
Tran Dinh Quan, general director of Dai-ichi Life Vietnam, said in a statement that HCMC is the firm’s primary market in the south.
Besides 10 operational GA offices in districts 6, 8, 10, 11, 12, Go Vap, Tan Binh, Tan Phu, Binh Thanh and Thu Duc, the second GA office in District 11 demonstrates the firm’s commitment to improving service quality for customers.
Quan said Dai-ichi Life Vietnam is striving to meet the diversified financial needs of customers and at the same time offer more job opportunities for local residents.
The company said with improving living standards, the financial protection and accumulation for individuals and their families against unexpected risks have become the essential needs of people.
Last month, Dai-ichi Life Vietnam launched An Thinh Dau Tu, a life insurance product which combines the life insurance protection benefits and wealth growing opportunities through the flexible choice of investing in different portfolios. The product aims at helping customers secure a financial future for them and their families.
Dai-ichi Life Vietnam is among the top five life insurance firms in this market. It reports new business premiums of over VND525 billion in the first half of this year, an increase of over 35% against the same period of 2014.
The company reported total premiums of nearly VND1.39 trillion in the period, soaring 35% year-on-year.
Mobile commerce grows fast in Vietnam
Mobile shopping in Vietnam has thrived with growth in the number of consumers shopping by smartphone ranking 5th in the Asia-Pacific region after Malaysia, Taiwan, New Zealand and India, according to a recent survey of MasterCard.
MasterCard announced the results based on interviews done between October and December 2014 with a minimum of 500 respondents aged 18-64 in each of the 14 surveyed markets. They included Thailand, China, Japan, Korea, Australia, Malaysia, New Zealand, Taiwan, Vietnam, Hong Kong, Indonesia, Singapore, India and Philippines.
The survey showed Vietnam ranked 8th in terms of the ratio of consumers shopping by mobile phone. However, the country recorded the 5th highest growth in the region, with the percentage of consumers making at least a purchase through their smartphone in the past three months expanding from 39.4% in 2013 to 45.2% in 2014.
Overall, Chinese (70.1%), Indian (62.9%) and Taiwanese (62.6%) consumers are most likely to make purchases by smartphone. Nearly half of the respondents across Asia-Pacific (49.5%) considered convenience the most convincing reason for smartphone shopping. Other motivating factors are the ability to shop on the go (43.9%) and the growing emergence of apps supporting online shopping (39.5%).
The most popular mobile shopping items in Asia-Pacific are clothing and accessories (27.9%), followed by apps (21.2%) and daily deal coupons (19.2%). More than one third of consumers in China (37.4%) and Korea (36.0%) use smartphones for clothing and accessories shopping. Meanwhile, apps top the list of items Thai (33.8%) and Vietnamese (31.8%) shoppers purchased by smartphone.
Consumers also use smartphones to compare prices between physical and online stores as well as conduct online research before making an actual in-store purchase.
Hanoi Gift Show 2015 expected to boost export opportunities
The Hanoi Gift Show 2015 is hoped to promote the export of handicraft and ethnic items of around 1,300 craft villages in Hanoi and other craft villages nationwide, said Deputy Director of Hanoi Department of Industry and Trade Tran Thi Phuong Lan.
She made the statement at a press conference held in Hanoi on July 21 to announce the opening of the Hanoi Gift Show 2015 from October 27 to 30.
Lan, who is also head of the Organising Board of the Hanoi Gift Show 2015, said this is the fifth year the show will be held at the Vietnam Exhibition - Fair Centre at No.148 Giang Vo, Hanoi following the success of the show in previous years.
Thanks to the annual gift show, the export revenue of handicraft products has increased each year and the 2014 Gift Show posted over US$15 million worth of export contracts, Lan noted.
She said that this year's event is expected to showcase nearly 600 pavilions, an expansion of 40% compared to the last year's figures, and will display five major product groups - home decor and handicrafts; indoor and outdoor furniture; home textiles and embroidery; personal accessories; and gifts and ethnic items.
The Organising Board hopes to attract the participation of 600 importers from the US, EU, Japan, Russia, Taiwan (China), the Repubic of Korea, Australia and others, along with more than 200 domestic enterprises and establishments from 30 provinces and cities nationwide.
Speaking at the press conference, Vice President and General Secretary of the Vietnam Association for Handicraft Exporters (Vietcraft) Le Ba Ngoc said the Hanoi Gift Show 2015 is being held as part of a loop of major trade fairs in Asia and is expected to bring Vietnamese handicraft products to international consumers.
He added that this year's show will invite at least 90% of Vietnamese enterprises capable of exporting handicraft products to attend the show, while reducing the number of household and group productions in order to seek more export opportunities.
According to the Vietcraft Vice President, the highlight of this year's show is a special display area named 'One Village One Product Vietnam 2015' (OVOP Vietnam 2015) which will include nearly 200 pavilions showcasing special products from the craft villages of Vietnam, Laos, Myanmar and others.
The theme of this year's OVOP is textiles and embroidery which will provide visitors with different textile and embroidery products made in traditional villages and by ethnic people, Ngoc said.
The OVOP will also introduce visitors to new designs by international design experts and five product categories of handicrafts, natural cosmetics, spices, drinks and processed food.
The annual Hanoi Gift Show has been held since 2011 by Hanoi's Department of Industry and Trade in co-ordination with Vietcraft with the aim of introducing and boosting export opportunities for Hanoi and Vietnamese handicraft products.
Northeast Thailand, lucrative market for Vietnamese enterprises
The northeastern region of Thailand, Isan, is a lucrative market for Vietnamese businesses to penetrate and gain a foothold in the Thai market as the two countries are striving to raise two-way trade to US$15 billion by 2020.
Thailand is currently Vietnam's largest trade partner among ASEAN member countries. The two countries posted a two-way trade revenue of US$10.6 billion in 2014 and nearly US$4.4 billion in the first five month of 2015.
However, Vietnam has faced an annual trade deficit of over US$3 billion with Thailand since 2012, according to the General Department of Vietnam Customs. While Thai commodities have entered Vietnam en masse, the presence of Vietnamese goods in Thailand is minimal. Popular Vietnamese goods sold at large supermarkets in Thailand are G7 coffee, cakes and candy. Many other types of electronic goods and apparel are produced in Vietnam but are branded by other countries.
Nguyen Thanh Hai, Chief of the Vietnam Office of Commercial Affairs in Thailand said that Vietnamese and Thai goods are quite similar, but Thai goods have built up and affirmed their brand, quality and reputation for a long time making Thai goods highly welcomed in Vietnam.
In the meantime, Thai people do not know much about the brands and quality of Vietnamese goods. Therefore, Vietnamese goods should work at entering niche markets before expanding into other markets, Hai noted.
Northeast Thailand, or Isan is one of the niche markets for Vietnamese enterprises with 20 provinces located in the heart of the Khorat Plateau, with the frontier of Laos to the north and east, and with Cambodia to the southeast.
The region is vast with an area of 160,000 km2 and a population of about 21 million. Due to the geographical conditions and harsh climate, Isaan is the poorest region in Thailand. With considerable investment from the Thai government in recent years, this region has seen strong economic development despite the political turbulence for more than a year.
This region will become more important in the future upon the completion of the East-West Economic Corridor stretching from Mawlamyine port in Myanmar to Da Nang in Vietnam. At that time, Vietnamese goods transiting through Laos will quickly and easily enter Northeast Thailand with lower transportation costs. In addition, more factories and distribution centres will also be built along the Economic Corridor after the establishment of the ASEAN Community in late 2015.
Isan is also home to the largest number of Vietnamese people in Thailand with more than 100,000 people who are consider a force supporting Vietnamese enterprises in the local market. Vietnamese enterprises can also receive support from more than 1,000 Vietnamese enterprises who are running business in this region including many thriving ones recognised by the local administration.
According to the Vietnam Office of Commercial Affairs in Thailand, the needs and tastes of Thai consumers in Isaan are moderate and they do not require very expensive, high-end goods. Vietnamese goods are of good quality with reasonable prices suited to the income and needs of the local people. Thanks to the presence of the Vietnamese community in this region over the past 100 years, local Thais are familiar with Vietnamese food and commodities, and they will accept Vietnamese goods more easily than Thais in other regions.
Several Vietnamese goods are present in Isaan and have built up their own prestige including Trung Nguyen coffee, sedge mat and cold sheet pads. Many Vietnamese enterprises brought their products to the Udon Thani Trade Fair held in early July and were appreciated by the local Thai people. The Thais are very interested in Vietnamese fine arts, foodstuffs, and traditional garments and textiles.
Hai said Vietnamese businesses should build channels to disseminate information and promote Vietnamese goods to Thai people. He noted that the Vietnam Office of Commercial Affairs in Thailand is working to build a centre in Thailand to introduce Vietnamese goods to the Thai people.
Waterway routes expected to boost HCM City’s passenger transport
The Ho Chi Minh City (HCMC) People’s Committee has recently approved a project to construct two public passenger water transport routes, aiming to satisfy local citizens’ increasing demand for travel by water in urban areas
The project will be implemented according to the build-own-operate (BOO) format with total investment capital of nearly VND128 billion (US$5.88 million).
Scheduled to be completed by the end of next year, the two new routes are expected to contribute significantly to reducing overload for road traffic, promoting waterway tourism activities, and reducing travel time and air pollution in the inner city.
The routes will be built on the Saigon River and the canals of Thanh Da, Ben Nghe and Tau Hu, through Districts 1, 2, 4, 5, 6, 8, Binh Thanh and Thu Duc.
The first route spans 10.8km from Bach Dang Wharf to the Saigon River section through Thu Duc District’s Linh Dong commune, consisting of seven terminals for passenger drop-off and pick-up.
The 10.3km second route starts from Bach Dang Wharf to Lo Gom Wharf in District 6 and also features seven terminals.
As planned, the city will put into operation 10 means of transport with a minimum capacity of 60 seats each from now until 2020, while those of greater capacity will be scheduled in the following period depending on demand on the routes.
Hai Phong attracts US$381 million FDI in first half
Foreign investors pledged to invest nearly US$381 million in the northern port city of Hai Phong in the first six months of 2015, the city’s economic zone authority HEZA has said.
Specifically, investment licences were granted to 20 new projects with registered capital totalling US$241 million, while investors filed to poured an additional US$140 million into nine existing projects.
The foreign direct investment (FDI) pledges in the first half of 2015 dropped 36% compared with the same period last year and were equivalent to one fourth of the 2015 target.
HEZA’s Deputy Head Mai Xuan Hoa said the largest new project was an electronic board assembly facility by the Korean company Heangsung Electronics, which has a capital of US$100 million.
The remaining projects are mainly in the supporting industries to provide parts and components for existing large projects by LG Electronics, Kyocera and Fuji Xerox.
In order to meet the target to attract US$1.5 billion in FDI in 2015, the Hai Phong People’s Committee has asked HEZA and relevant agencies to organise investment promotion activities, including working with the leading exhibition organiser Reed Tradex.
The HEZA portal has also been improved with more content about the city’s investment environment available in Vietnamese, English and Japanese.
Hai Phong’s Vice Chairman Dan Duc Hiep expected to attract more investment in the future as a number of large infrastructure projects are being implemented in the city such as the Lach Huyen Port, Cat Bi Airport upgrade and the Ha Noi-Hai Phong Expressway.-VNA
Vietnam leather industry faces tough challenges
After a few difficult years brought about by the global economic recession, Vietnam’s leather and footwear industry has been a key factor underpinning the resilience of the nation’s economic growth and employment.
Vietnam is now the fourth largest leather and footwear manufacturing country based on volume behind China, India and Brazil, shipping products to more than 800 customers in 50 countries, and the third largest in terms of value after China and Italy.
Manufacturers ship more products to the US, EU and Japanese markets, second only to China and in addition have gained a solid footprint in many other key markets around the globe.
In the six months leading up to July of 2015, export revenues for the industry expanded 18% year-on-year to US$7.10 billion, of which leather accounted for US$1.45 billion, up 27%, and footwear accounted for US$5.70 billion, up 16%, according to the General Department of Vietnam Customs.
However, competitiveness of domestic manufacturers in the industry remains weak and they face innumerable but not insurmountable problems reports the Vietnam Leather and Footwear and Association (LEFASO).
“The leather and footwear industry is facing more challenges than ever before,” said Diep Thanh Kiet, vice president of LEFASO.
On the one hand, global consumers are demanding in terms of expecting new experiences through product development, design and functionality, and domestic manufacturers are weak in these areas.
On the other hand, the lack of a well integrated supply chain and all of the problems associated with sourcing and procuring raw materials is a critically important problem holding the industry back, Kiet said.
As it relates to the availability of raw materials, the industry has access to only a small fraction, about 20% of their needs and must rely heavily on imports from other countries in the region to fill the gap, which adds significant cost and reduces profits in the industry.
Domestic manufacturers are also noticeably lacking in their trade promotion and marketing activities and they must pick up the slack to tap into new markets and get more competitive in this area.
The Vietnam government has also signed free trade agreements (FTAs) with ASEAN, China, Japan, the Republic of Korea, India, Australia and New Zealand and is actively negotiating others.
Deciphering or determining the exact requirements of these FTAs and complying with them poses tremendous challenges for those in the industry, Kiet said.
Most of the FTAs are not expected to have any discernable impact on total exports for 2015 but as they take effect over the next one to two years and tariff reductions are phased in, hopefully things will pan out and the industry will see profitable growth.
Last but not least, the ASEAN Economic Community (AEC) is currently on track to come into existence by December 31, 2015, and its formation may pose the greatest challenge for the industry.
Other ASEAN member countries are currently strong rivals for domestic manufacturers and the tariff reductions brought about by the AEC will augment their competitiveness.
The leather and footwear industry could lose out on their home turf as manufacturers from other ASEAN nations seek to tap into and compete in the domestic market, Kiet underscored.
Ca Mau seafood sector aims to earn 1.65 billion USD from exports
The Ca Mau Association of Seafood Processing and Export (CASEP) of the southernmost province of Ca Mau has set its sights on earning 1.65 billion USD from seafood exports by 2020.
To achieve the goal, CASEP will increase the proportion of added value products to 75 percent and the output of processing facilities to 70 percent of their capacity by 2020.
CASEP will market its products to key markets including the United States, Japan, the EU, China, the Republic of Korea and Russia.
Le Dung, Vice Chairman of the provincial People’s Committee, said the province’s seafood sector would face a myriad of difficulties in the next five years and called on the members of CASEP to unite to overcome the challenges.
He urged enterprises to establish closer ties with farmers to ensure a stable supply of raw materials and to reorganise business activities to effectively utilise loans from banks.
Cau Mau has been the country’s largest seafood exporter, accounting for 16 percent of the total value. The province also make up 30 percent of the country’s total shrimp export value.
Vietnam promotes economic cooperation with Uruguay
Representatives from the Embassy of Vietnam in Argentina and Uruguay and the National Chamber of Commerce and Service of Uruguay held a working session on July 25 on ways to boost economic and trade ties between the two countries.
At the meeting, participants discussed a programme to connect the two countries’ enterprises during a Vietnamese business delegation visit to Argentina scheduled for next August.
A wide range of Vietnamese products for export and the country’s import demands were also introduced.
On the occasion, the embassy’s representatives also held a meeting with officials from the Chamber of Commerce of the Southern Common Market (Mercosur) and the Association of Southeast Asian Nations (ASEAN).
The two sides exchanged views on a plan to implement the agreements reached with Vietnamese enterprises during teh Chamber delegation’s visit to Vietnam, Indonesia, the Philippines and Singapore earlier this month.
The Mercosur-ASEAN Chamber of Commerce was established in June to promote economic, trade and investment cooperation between the two blocs.
Bilateral trade between Vietnam and Uruguay reached 124 million USD last year, of which Vietnam’s exports were valued at 41 million USD.
In the first five months of this year, Vietnam exported goods worth 11 million USD to the southern American country with 25 million USD in imports.
Vietnam exported sports footwear, electronics and marine products to Uruguay, and imported leather, material wood, cereals, beef and cotton.
Nok Air launches flights to HCM City
Budget airline of Thailand Nok Air is expanding its international services with the launch of a new route from Bangkok to HCM City.
The airline is scheduled to start flights between the two cities on October 1 with four weekly flights. The number of flights will be increased to seven per week from October 25.
HCM City will become Nok Air's third active international destination, after Yangon in Myanmar and Hefei in China's Anhui province, launched early this year.
The launch of Nok's flights to HCM City had been put off for years as the airline focused on expanding its domestic network.
Previously, Nok Air used to operate international flights to Hanoi and Bangalore, launched in 2008. However, it suspended these loss-making international flights to focus on expanding the domestic market.
Therefore, the launch of the new air route to HCM City will mark the airline's return to Vietnam after seven years.
New World Bank report casts doubt on Vietnam's actual debt burden
Local economists have advised the government to be extremely careful with spending because its public debt has reached a dangerously high level.
They raised their concerns after the World Bank early this week reported that Vietnam's public debt exceeded US$110 billion last year. The figure is higher than the government's estimate of US$84 billion.
Economist Do Thien Anh Tuan said the government had its own criteria when calculating public debt, so he was not surprised to see the huge mismatch.
The lecturer of the Ho Chi Minh City-based Fulbright Economics Teaching Program said what really worries him is the government's ability to deal with its huge public debt.
In its latest report to the National Assembly, the country's legislative body, the Ministry of Finance said public debt will hit the assembly's limit set at 65% of gross domestic product (GDP) in 2017. But after that the government will try to lower the ratio to 60.2% by 2020.
However, Tuan doubted that the debt will ever reduce.
"Even in the best scenario where the economy grows in a stable manner, Vietnam's public debt will still go up."
Tuan said to reduce public debt, the government will have to be able to deliver a budget surplus and save an amount of at least 1% of GDP every year.
This is a "very difficult" task, considering that the state budget is always in deficit, he said.
The government in fact often asks the National Assembly to let it overspend its revenues.
In 2013 its budget deficit was equivalent to 6.6% of GDP, even higher than the limit of 5.3% previously approved by legislators.
Economist Nguyen Tri Hieu also forecast that with its "current situation" Vietnam's public-debt-to-GDP ratio will soon hit 65%, which he described as as "a dangerous level."
The ratio was about 60.3% at the end of last year, according a government report.
Vo Tri Thanh, deputy chief of the Central Institute for Economic Management, said the amount of public debt is not as important as a country's capacity to repay debts and how effectively it could spend the borrowed money.
He said the government's inefficient use of loans was reflected in the fact that its public spending has been exceeding targets since 2012.
On the other hand, the government has been issuing bonds overseas to refinance existing loans, which is a good solution in a short time, but will become risky in a long term, according to Thanh.
When new loans brought through bonds are not used effectively, the government will lose creditors' trust and its future loans will face higher interest rates, he explained.
Last November the government issued 10-year sovereign bonds worth US$1 billion in the global market for the first time in more than four years, at a yield of 4.8%. In April this year, the finance ministry advised the government to issue more bonds next year.
Tuan also agreed that refinancing with new bonds could cause problems in a long term, saying that it showed a government's previous loans were not planned and used carefully, and that the government was having financial difficulties.
Both Tuan and Hieu advised the government to reduce its role in public sectors, particularly in airports, seaports and railways, and boost private investors' participation.
The World Bank report showed that Vietnam's debt service obligations, including government-guaranteed and government debts, rose to 26% of total revenues in 2014 from 22% in 2010.
Interest payments alone now account for an estimated 7.2% of total budget spending, crowding out other more essential spending, it said.
Business world given credit for rural progress
Viet Nam's countryside has been given a facelift over the last five years following a national programme to develop new rural areas thanks to the contributions of businesses and entrepreneurs nationwide, said Deputy Prime Minister Vu Van Ninh on Saturday.
At a ceremony in Ha Noi, the official said the programme had involved all levels of society, and helped cut the household poverty rate by 2 per cent each year, while doubling the incomes of rural residents. Around 10 per cent of communes and five districts have been recognised as new rural areas.
This was attributed to contributions by businesses and entrepreneurs who had funded roads, schools and hospitals as well as agricultural production and job creation, Ninh said.
He asked ministries, sectors and localities to seriously review the implementation of the prog-ramme and propose measures to attract business investment in agriculture and rural areas.
The official also expressed his hope for more practical contributions by companies and entrepreneurs to rural development and national industrialisation and modernisation.
Also at the ceremony, certificates of merit were presented to 65 companies and 31 entrepreneurs to honour their efforts to rural development.
The national target programme has 19 criteria for new rural areas covering infrastructure, production, living standards, income and culture, among others. A district must have at least 75 per cent of its communes meeting all 19 criteria in order to be named a new rural district.
SBV explains changes to personal loan limit
A representative of the State Bank of Viet Nam has confirmed that individuals can borrow money from banks without any limit if they fulfil the banks' requirements.
The representative said this to resolve the misunderstanding caused by a draft circular on the capital adequacy ratio of credit institutions which was recently released by the central bank to elicit public comments.
The draft's provision about retail credit financing caused many to infer that total outstanding loans for individual borrowers would be capped at VND6 billion (US$275,230).
After the draft was made public, this provision triggered fears that if put into force, it would hamper credit growth and economic growth.
Nguyen Huu Nghia, Chief Inspector at the central bank, was quoted by the Government's e-newspaper as saying that individuals could borrow hundreds of billion dong if they were eligible.
Nghia said the draft regulation on the outstanding loan limit of VND6 billion would be applied to microfinance clients such as low-income individuals and households or micro-enterprises. Microfinance institutions provide financial services, mostly loans, to the poor.
Other financial institutions were not mentioned in the list of entities the circular would regulate, which included only commercial State banks, commercial joint stock banks, venture banks, foreign-invested banks and the branches of foreign banks.
This implies that the draft needs careful revision.
Nguyen Van Thuan, dean of the Finance Faculty of the HCM City Open University, told Nguoi Lao Dong (Labourer) newspaper that even if the VND6 billion outstanding loan limit was applied only to microfinance clients, the regulation would still be unrealistic as microfinance clients were poor and their loans often totalled a few dozen million dong.
Thuan said there should be no cap on outstanding loans for individuals; instead, the central bank could consider providing individuals loans equivalent to 50 per cent or 70 per cent of the value of mortgage assets.
Lawyer Truong Thanh Duc, chair of the legal club of the Viet Nam Banking Association, was quoted by the newspaper as saying that there were already regulations in place which put limits on loans to members of boards of directors, management boards and large stakeholders in firms.
As for other borrowers, the central bank should not place a limit on outstanding loans and should let them have loans based on their solvency and mortgages, Duc said.
The draft includes other changes, including the lowering of the capital adequacy ratio from the current level of 9 per cent to 8 per cent.
The draft circular is expected to improve the operational safety standard of commercial banks in Viet Nam as per the road map of implementation of the Basel 2 standards.
The new regulations are set to be applied from February 1, 2016, in 10 commercial banks which are preparing to pilot the Basel 2 standards.
In middle-income Vietnam, moneybags pay for extravagances in cash
In Vietnam, where GDP per capita was only around US$1,900 in 2013 according to World Bank data, it does not take much time for luxury cars, watches and mobile phones worth up to 237 times that income to find buyers.
The Southeast Asian country spent more than $1.55 billion importing cars in the first six months of this year, a massive 121.6 percent increase in volume and 186 percent rise in value, compared to last year’s first half.
The value of the imported cars was even double the figure in 2013.
Most of the whopping amount was spent on bringing famed luxury brands such as Audi, Jaguar Land Rover, Mercedes, BMW and even Lamborghini and Ferrari to Vietnam, according to local car dealerships.
For Vietnamese moneybags, buying cars worth billions of dong (VND1 billion ~ $46,000) is just like shopping for vegetables at a grocery store.
Lien A Quoc Te Co., the authorized distributor of Germany’s Audi cars in the country, recently launched a promotional campaign on Phu Quoc Island, off the southern province of Kien Giang.
Attendees were allowed to test out the four-door Audi A6 Ultra, worth more than $106,000, and three islanders placed an order for one sedan each shortly after the event.
“A Phu Quoc customer put down a VND20 million [$920] deposit at the event, and came back the following day with VND2.2 billion [$101,056] in cash to finalize the purchase,” Lien A Quoc Te general director Tran Tan Trung recalled.
Trung said his firm has plans to bring 15 Audi TT sedans, priced at least $95,000 each, to Vietnam to test the market.
“But we have received more than 22 orders within only one month,” he said.
As of mid-July, Lien A Quoc Te sold more than 380 Audi cars of all models, 80 units more than the count in the same period last year, according to the general director.
“We expect full-year sales of 710 units, compared to 600 last year,” he said.
A representative of the local importer of cars made by British firm Jaguar Land Rover said the company is expanding at a pace of more than 20 percent in Vietnam.
Jaguar Land Rover opened its second showroom in Ho Chi Minh City, and the fourth of its kind in the Southeast Asian country, last month.
Affluent Vietnamese customers have also placed orders for ten Mercedes-Maybach S600 cars, worth around VND9.6 billion ($451,850) each, a local Mercedes representative revealed in May.
That price is 237 times the GDP per capita of Vietnam in 2013 ($1,900), just in case you may have forgotten it. On a relevant note, officials have projected that income to rise to $2,200 this year.
Mercedes is scheduled to make only 50 such luxury sedans this year, one-fifth of which will go to the Vietnamese market alone.
Last month Vietnam imported four BMW i8s, one Lamborghini Huracan, and one Ferrari F12 Berlinetta, whose manufacturer's suggested retail prices range from $130,000 to $320,000.
Vietnamese with deep pockets are also fond of donning luxury watches and using fancy mobile phones, creating lucrative markets for imported products.
M.N., an attendant at a French luxury store in Ho Chi Minh City, said he had recently sold a watch worth nearly VND2 billion ($91,870) to a female customer, who already bought a VND4.7 billion ($215,893) watch just a few months ago.
The latest timepiece sold to her is the 31st out of 60 limited editions of the famous French brand, N. revealed.
“We had to temporarily close the store for a while and had all of the staff members count the cash she used to pay for the watch,” he said.
The attendant added his store receives around 20 customers on a daily basis, with up to 90 percent being Vietnamese.
“More than 40 percent of our customers usually place pre-orders and pay in cash,” he revealed.
With sales repeatedly soaring, the French watchmaker has added Vietnam to the list of “very potential markets,” whereas the Ho Chi Minh City dealership “has been praised for the achievement,” he said.
In the meantime, sales of deluxe Tag Heuer mobile phones fetching from VND150 million to VND500 million ($6,890-22,967) each in Vietnam posted a 20 percent growth rate in the first half of this year compared to last year, according to the authorized dealership in Vietnam of the Swiss company.
The firm could sell up to 20 devices during peak months and at least four to five handsets in off-peak ones.
“Even the cellphone Meridiist II, which costs VND480 million [$22,049] apiece, could find buyers shortly after it was unveiled [in Vietnam],” the representative said.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

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