BUSINESS IN BRIEF 4/8
Fewer Mekong fields used for cash
crops
Fewer rice fields will be converted to cash crops in
the ongoing summer-autumn crop in the Mekong Delta this year as farmers lack
stable outlets, according to the Ministry of Agriculture and Rural
Development's (MARD) Plant Cultivation Department.
Since saltwater intrusion occurs every year in the
delta, converting ineffective rice fields to other crops is necessary to
reduce risks and save water. Profits from cash crops can also increase
farmers' incomes.
In 2014-15, the delta, the country's rice granary,
converted 112,000 ha of rice fields to cash crops, but only 45,200 ha of rice
fields will be converted this year.
The decline is due to unstable outlets, weak linkages
between farmers and companies, and a shortage of concentrated cultivation
areas for cash crops, according to the Plant Cultivation Department.
MARD said that a total of 200,000 ha of rice fields
would be converted to cash crop cultivation in the Mekong Delta from now to
2020.
Experts have said that preferential policies and more
mechanisation are needed to promote the conversion of rice fields to other
crops.
The converted areas for the summer-autumn crop this
year are located mostly in Vinh Long, Dong Thap, Tien Giang, An Giang and
Long An provinces.
The crops are sweet potato, vegetables, aquatic
species, sesame, watermelon, corn, chilli, dragonfruit and others.
In An Giang Province, farmers will switch to growing
sesame and corn on 2,700 ha of rice fields in the summer-autumn crop.
Nguyen Thanh Phong, a farmer in Long Xuyen City's My
Hoa Hung Commune in An Giang, said his rice fields had been converted to sesame
cultivation in the summer-autumn crop.
"Sesame earned a profit of VND30 million
(US$1,300) per ha last year, higher than rice cultivation," he said.
Tran Anh Chau, chairman of the My Hoa Hung Commune
Farmers Association, said the model of rotating sesame and rice cultivation
on the same fields had offered higher profits.
"But the outlet for sesame was still not stable,
as farmers had to sell directly to traders, without guaranteed prices,"
he said.
Tran Ba Hoang, deputy director of Tien Giang Province's
Department of Agriculture and Rural Development, said farmers had been
encouraged to reduce one rice crop a year to grow other cash crops.
However, the cultivation of corn and bean varieties
used to produce animal food has not attracted farmers and companies, as
production costs are higher than imported corn and beans.
Deposit interest rates up at banks
Many commercial banks have raised deposit interest
rates over the past few weeks for all tenures, raising concerns about an
imminent lending interest rate hike.
Maritime Bank is the latest bank to have raised its
short-term Vietnamese dong deposit rates by 0.2 per cent per year to touch
4.9-5.2 per cent as of July 26.
On June 20, Maritime Bank also increased its short-term
deposit rates by 0.1 per cent.
SCB has also announced, effective from July 25, a sharp
rise of 0.4 per cent in the one-month deposit rate, which is now 5.4 per
cent.
VBBank also raised its rate on July 13, making it the
third increase of the bank's rate in July. During the month, the bank mainly
increased long-term deposit rates.
Accordingly, VBBank's rates for 15- to 18-month
deposits are up 0.2 per cent to touch 6.8-7.2 per cent and for 24- to
36-month deposits, the rates have risen by 0.3 per cent to reach 7.6-7.7 per
cent.
Previously, in a new rate list announced on July 12,
Asia Commercial Bank (ACB) also increased its short-term deposit rates by 0.2
per cent to touch 4.6-4.9 per cent.
VietABank announced the first rate increase this year
for deposits of more than six months on July 11. Accordingly, nine-month and
12-month deposits have rates of 6.9 per cent and 7.5 per cent, respectively,
up 0.2 per cent. There is an increase of 0.3 per cent for 13-month deposits
and 15- to 36-month deposits, lifting the rates to touch 7.6 per cent and 7.7
per cent, respectively.
Due to the deposit rate hikes, there is some concern
that a lending interest rate hike is imminent.
However, the State Bank of Viet Nam (SBV) said in a
report released last week that it would ask commercial banks to keep the
rates stable over the remaining months of the year.
SBV said it would continuously instruct commercial
banks to balance their mobilised capital sources and lending capital sources
to stabilise deposit interest rates in the remaining months of the year.
Better business performance and lower input costs are
also required for maintaining lower lending rates.
Vinamilk earns 32% higher H1 profit
Vietnam Dairy Products Joint Stock Company (Vinamilk)
announced that its parent company earned more than VND21 trillion (US$940
million ) in revenue and VND4.8 trillion in after–tax profit in the first
half, an increase of 17 per cent and 32 per cent year-on-year, respectively
During the period, Vinamilk saw strong expansion of its
foreign market. In the first half of 2016, the local dairy giant reported the
revenue and gross profit's growth in its foreign market of 11 and 57 per
cent, respectively.
The growth of revenue and gross profit earned by the
firm in Viet Nam were 18 and 24 per cent, respectively
As per the Q2 financial statement, the parent company
earned VND11.65 trillion in net sales, up 16 per cent year-on-year. It also
reported after-tax profit of VND2.7 trillion in the quarter, an increase of
28 per cent year-on-year.
A Vinamilk representative said it achieved better
results because it focused on product groups with greater efficiency. At the
same time, it had to pay less income tax during the period, compared with the
same period in the previous year.
Always figuring among the top three shares in the
market in terms of value, each Vinamilk share (VNM) ended at VND156,000 each
on HCM Stock Exchange on August 1.
G-bonds: easy to sell, hard to
disburse
The state treasury of Viet Nam plans to issue
government bonds worth VND50 trillion (US$2.24 billion) in the third quarter
of 2016.
Accordingly, the treasury will issue five-year bonds
worth VND22 trillion, seven-year bonds worth VND10 trillion, 15-year bonds
worth VND7 trillion and the longest term of 30-year bonds worth VND3
trillion.
According to the treasury, the capital mobilisation
channel from G-bonds was good in the first half of the year when it sold
bonds worth more VND182 trillion, nearly 83 per cent of the earlier plan for
the year. After the first half, the treasury has revised its plan to issue
more government bonds in 2016 by adding bonds worth another VND30 trillion.
So, it aims to issue G-bonds worth VND250 trillion for the whole year under the
new plan.
While the G-bond mobilisation was considered
successful, the process of G-bond disbursement was slow and failed to support
the GDP growth in the context of low economic growth in the first six months,
according to the planning and investment ministry (MPI).
MPI said all ministries, sectors and localities
disbursed about VND81.8 trillion (US$3.6 billion) of public investment
capital in the first five months of this year, completing 32.6 per cent of
the disbursement plan for 2016.
MPI said complicated procedures and slow processes in
some ministries and localities caused the problem, stating some with the
lowest disbursement percentages included the national defence ministry with
9.8 per cent, Hà Nội City with 2.9 per cent, Phú Thọ Province with 2.6 per
cent and Tiền Giang Province with 2.3 per cent, besides Sơn La Province with
1.1 per cent.
On July 7, Prime Minister Nguyen Xuan Phuc asked all
relevant agencies and local authorities to fast-track the disbursement of
public investment capital to accomplish socio-economic development targets by
the end of 2016.
HP to recall computer batteries for
fire hazard
The Hewlett-Packard Viet Nam Co, Ltd and the Viet Nam
Competition Authority (VCA) under the Ministry of Industry and Trade
announced the company's battery recall programme.
These batteries, which were produced between March 2013
and August 2015, have the potential to overheat, posing a fire and burn
hazard to customers.
The affected batteries were shipped with HP 450, HP
240, HP 246, HP ProBook 440 G0, HP ProBook 440 G1, HP 1000 or were sold as
accessories or spares, or provided as replacements through Support, the
ictnews.vn reported.
The serial numbers of products with potentially
affected batteries follow the patterns of xxx311xxxx - xxx444xxxx.
The VCA recommended users check their battery codes at
HP's official website: www.hp.com/go/batteryprogram2016.
Users have been asked to stop using the batteries and
to remove them before contacting HP for further support, VCA said.
LTE smartphones the future for VN
As global sales of LTE smartphones have surpassed 3G
smartphones, LTE has become vital in the global telecommunication market and
is important for Việt Nam's telecom industry to move with the times from the
early stage of network deployment, said Dongsu Shin, vice president and head
of planning, Networks Business Division at Samsung Electronics.
Shin told the event ‘LTE Technologies and Services'
that Samsung would continue making innovations in the Vietnamese LTE market
as a long-term partner.
LTE is one of the latest mobile telecom technologies,
also called 4th Generation (4G), providing end-users with mobile data more
than 10 times faster than 3G at its maximum speed. This is equivalent to
downloading a multimedia file, such as a video of 100 megabytes to a LTE
smartphone in 3 seconds.
With broadband data speed and its extended capacity,
LTE can dramatically increase the availability of multimedia services to
users and impact on diverse industries by building an IP-based ecosystem.
As the number of LTE subscription grows, the mobile
eco-system will create more dynamic opportunities for business, so telecom
service providers should lay the foundations to make these changes possible.
"Deploying a 4G LTE network does not only mean
building the network, but it also means providing consistent upgrades for
better user experience while it is also essential to research and apply
future ready technologies," said Professor Nguyen Huu Thanh, Dean of
Communication Engineering Department in Ha Noi University of Science and
Technology.
The event in conjunction with the IEEE Sixth
International Conference on Communications and Electronics (IEEE ICCE 2016)
to share experiences in 4G LTE and beyond between South Korea and Vietnam. As
many as 50 leaders from the governments, academia, telecom operators and
equipment providers in IT participated and covered various topics.
IEEE ICCE 2016 aimed to share experiences in
technologies, business, and academic research that LTE-leading countries such
as South Korea, which adapted to LTE earlier, have witnessed for many years
and to promote activities among academia, industry, operators, and institutes
between the two countries.
Samsung participated in the Viet Nam-Korea LTE Vision
workshop in April in which mobile telecommunication leaders from the
government, operators and solution providers in both countries attended to
promote interest in LTE technologies. This time, Samsung expanded its
activities into academia with regards to the IT industry so that LTE
technologies can be adopted and researched while the ecosystem is created in
Viet Nam.
Vpresso expands franchise model in
Vietnam
May Emerald Company from the Republic of Korea (RoK)
which owns Vpresso coffee brand name will grow its footprint in Vietnam by
opening more chains of shops operating under a franchise model in the time
ahead, said its General Director Sung Seung Hoon.
Vpresso appeared in Hanoi in 2011 with an initial
investment capital of US$100,000 and the figure has now increased to
US$500,000. Vpresso, with 9 coffee shops and two restaurants in Hanoi, has
become a familiar brand name for numerous coffee addicts and young people.
It has granted franchise to three other shops and on
August 1, Vpresso opened the 12th shop at 45 Ly Quoc Su Street in Hanoi with
the purpose of raising the number of shops to 20-50 in Hanoi as well as in Ho
Chi Minh City and Danang in the future.
Mr Hoon said Vietnam is a powerful coffee producer and
boasts great potential for expanding the coffee market under which Vpresso is
able to diversify its products to meet customers’ growing demand.
Vpresso’s coffee beans are bought from the central
highlands city of Da Lat, and then processed with different special flavors.
Medical market set for private
investment
Tasco Joint Stock Company is seeking to form
international partnerships to pursue large upcoming projects.
Tasco, one of Vietnam’s biggest private transport
infrastructure developers in Vietnam, is working on plan to co-operate with
some state-run hospitals to develop their satellite hospitals. This will ease
existing hospital overloads.
‘We have studied medical development models in other
countries, and we want to co-operate with partners from Singapore, Japan,
France, Colombia, and the US who have strong financial capacity and
years-long experience in the medical sector’, Tasco’s chairman Pham Quang
Dung told VIR.
However, he admitted that Tasco’s plan was encountering
some challenges. Under several current rules, when a private firm invests in
public hospitals, it is not allowed to own land where the hospitals are
located. This means that private firms cannot use that land for collateral to
get bank loans.
Tasco is an example of the growing trend among private
firms to penetrate lucrative and sensitive sectors like the healthcare sector
to gain potential untapped profits. Vietnamese nationals spend billions of
dollars on medical care abroad a year.
In 2016, Vietnam has witnessed a bustling year of
foreign capital flows in the medical market. In early July of this year,
Japan’s Taisho Pharmaceutical Holdings completed acquisition of a 24.5 stake
in Vietnam’s biggest publicly traded drug maker Hau Giang Pharmaceutical JSC
from 34 foreign investors.
In late June, Malaysia’s Navis Capital partners
completed a partnership deal with Hanoi French Hospital (HFH) at an
undisclosed value. HFH operates a 70-bed hospital in Hanoi.
Adding more to the list is VinaCapital Vietnam
Opportunity Fund (VOF), who announced just a few months ago that it had
invested US$9 million into Thai Hoa International Hospital to acquire a
controlling stake in the healthcare facility located in the southern province
of Dong Thap. Meanwhile, assert manager Sam acquired a 15% stake in Ho Chi
Minh City-based medicine distributor My Chau Investment Corporation.
Pharma Group- the Pharmaceutical Sector Committee of
EuroCham- believed that the formation of the ASEAN Economic Community, the
signing of the EU-Vietnam Free Trade Agreement (FTA), and the Trans-Pacific
Partnership has provided Vietnam with a regional competitive advantage in
terms of attracting foreign investors.
‘This could possibly put Vietnam on the road to
becoming an ASEAN hub for innovative pharmaceutical manufacturing. But the
window of opportunity is short with FTAs scheduled for other countries in the
region in the next two three years, so this is the right time for
Vietnam to take action’, said Pharma Group.
Vietnam’s hotel transactions among
top in Asia-Pacific
Vietnam came as the fourth top market in Asia Pacific
in terms of hotel investment volumes in the first half of 2016, with more
activities expected during the rest of year, according to a new report.
The property consultancy Jones Lang LaSalle (JLL) said
in its Hotel Investment Highlights report that transactions in Vietnam in the
first six months hit US$237.6 million, which is only after the volumes in
Japan, Australia and mainland China but beating Taiwan’s and Thailand’s.
A US$74.9 million deal for InterContinental Asiana
Saigon in Ho Chi Minh City was among the top ten during the period.
Total transactions in the region climbed 13.2% to
US$3.8 billion from a year ago, including more than half, or US$2.1 billion,
from Japan market, which is expected to continue to dominate investment
volume for the remainder of the year.
But there will also be stronger buying activity in
Vietnam, as well as Korea, Myanmar and Thailand, according to JLL
representatives.
“Despite the relatively sharp pricing in first-tier
cities, there remains significant appetite from investors for deals in markets
with strong domestic and international visitation fundamentals,” Mark Durran,
Managing Director of JLL’s Hotels & Hospitality Group in Australasia,
said in a press release.
“Investors are also expanding their focus to
second-tier markets in search of higher yielding opportunities,” he said.
Vietnam’s tourist arrivals grew 21% in first six months
and the country hopes to reach its goal of receiving 8.5 million foreign
visitors by the end of the year, 7% increase from 2015.
AASC hosts conference to promote
global cooperation
International auditing and consulting companies are
seeking ways to increase co-operation, in order to best serve their clients
investing in foreign countries.
Last week, 60 representatives from companies based in
more than 18 countries gathered at the three-day HLB International Asia
Pacific Regional Conference to share experiences and knowledge. HLB
International is a global network of independent professional accounting
firms and business advisers present in 130 countries worldwide. The
conference, titled “Cross-border Investment – Challenges and Prospects”, is
hosted by auditing firm AASC, a member of HLB International.
According to Do Manh Cuong, deputy general director of
AASC, cross-border investment is booming and legally facilitated by a number
of common economic zones, free trade areas and bilateral or multilateral
agreements.
“Particularly, within our Asia Pacific region, since
1989, we had the Asia-Pacific Economic Cooperation comprised of 21 economies
with the objective of ‘creating and advancing free trade for Asian-Pacific
prosperity’, by ‘promoting balanced, inclusive, sustainable, innovative, and
secure growth by accelerating regional economic integration’. Most recently,
in 2015, the establishment of the ASEAN Economic Community (AEC) is also
regarded as another ‘milestone in regional economic integration’,” Cuong said
in his opening speech.
The lower tariffs in the free trade agreements (FTAs)
that Vietnam has been joining will spur foreign trade and direct investment
in the country, and more Vietnamese firms will expand to regional markets,
creating tremendous growth potential for auditing firms.
It also means international accounting, auditing, and
consulting firms should be working closely in order to provide no-border
service for clients.
The conference, Cuong said, was a special occasion for
members of HLB International to “engage in an open and constructive
discussion, as well as create more effective and tighter connections”.
Robert Gerard Tautges, chief executive officer of HLB
International, said that the prospects of international investment into
Vietnam were endless. “Vietnam is a very important country. It has an
educated workforce and natural resources and many countries are looking to
invest into Vietnam,” he said, adding that the conference aimed to bring
member companies together so that they could take advantage of cross-border
investment.
Tautges stressed the importance of having AASC in HLB
International’s network. “AASC will help others that want to invest into
Vietnam or their clients who look to invest outside of Vietnam,” he said.
Recently, Vietnam has seen a surge in foreign direct
investment (FDI). According to the Foreign Investment Agency, in the first
seven months Vietnam attracted US$12.94 billion in FDI, up 46.9 per cent
year-on-year. The disbursed capital reached US$8.55 billion, up 15.5 per cent
year-on-year. The AEC, as well as the FTAs that Vietnam signed, have been a
strong motivation for capital flows into the country.
Established in Vietnam by the Ministry of Finance in
1991, AASC is widely regarded as one of the first two auditing companies to
lay the foundation for the development of Vietnam’s Law on Independent Audit.
As of now the company has ventured outside of Vietnam
to provide auditing and consulting services to clients in Thailand, Laos,
Cambodia, and Indonesia, and has been involved in multiple projects of the
World Bank and Asian Development Bank.
Vietnam’s fiscal and monetary market
stable following Brexit
Britain’s decision to withdrawal from the EU, known as
Brexit, has had an impact on the global economy and on Vietnam’s fiscal and
monetary market and investment flow. But the latter will be minimal thanks to
proper and timely responses.
Vietnam’s stock market lost more than US$1 billion as
Brexit wreaked havoc worldwide. But following a sharp decline on June 24th,
the market recovered.
At a press conference to review the implementation of
fiscal and monetary missions and the state budget in the first half of this
year and announce targets for the remaining months, the Finance Ministry said
Brexit will not heavily impact the Vietnamese financial market.
Nguyen Mai Phuong, Director in charge of analysis with
brokerage firm VNDirect, said domestic listed companies will barely be
affected.
“The number of securities trading accounts of foreign
investors in Vietnam increased significantly in the first half of this year
due to domestic and foreign investors’ increased trust in the market. The
market is ready for a boom. Vietnam’s securities market is mainly affected by
policies and investor psychology. Trading on June 24th, 2016 declined
primarily because of psychological factors”, said Le Duc Khanh, strategy
director for the Maritime Bank Securities Company.
Many Vietnamese economists say Brexit will not heavily
impact the flow of direct investment capital from the EU and Britain to
Vietnam because Britain’s investment in Vietnam remains modest.
To date, the EU’s registered capital for Vietnam is about
US$100 billion, of which Britain has 266 projects worth US$3.5 billion.
“In the current situation, investors will shift their
capital to safer markets. Vietnam will likely benefit from this situation, if
it opens its policies and takes full advantage of integration. Indirect
investment capital flows in the stock market may be affected, but direct
investment capital in the real economy will be less affected”, said Can Van
Luc, a member of the National Financial and Monetary Advisory Council.
According to foreign economists, Brexit will not have a
great impact on Vietnam’s economy but will create opportunities for Vietnam’s
fiscal and monetary market and investment attraction.
The Finance Ministry said recently that Brexit will not
negatively affect Vietnam’s public debt.
Vo Huu Hien, Deputy Director of the Debt Management and
External Finance Department, says Brexit has caused the British pound to
depreciate about 8%. The Chinese yuan has also depreciated. The Japanese yen
is still appreciating.
Hien says in the structure of Vietnam's public debt
right now, government debt in Vietnam dong accounts for about 55%, debt in
US$ accounts for 16%, and yen debt about 13%.
“The State Bank made appropriate exchange rate
adjustments after Brexit, so exchange rate fluctuations have had little
impact on public debt. For example, British pounds are just 2% of the debt
structure, but the British pound depreciated 8%, benefitting Vietnam.
Depreciation of the Euro also benefited Vietnam’s public debt. By contrast,
appreciation of the yen increased Vietnam’s debt. But, in general, Brexit
hasn’t had a major impact on public debt in Vietnam”, said Mr Hien.
Vietfish 2016 exhibition scheduled
for early August
Around 200 seafood exporters and processors from
Vietnam and 14 foreign countries and territories will gather at the biggest
event of the industry - the 2016 Vietnam Fisheries International Exhibition
(Vietfish 2016) - being held in Ho Chi Minh City from August 3-5.
Organised by the Vietnam Association of Seafood
Exporters and Processors (VASEP), this is the 17th consecutive year that
Vietfish has been oragnised to connect domestic and foreign seafood producers
and processors.
Under the theme “Asia’s Home of Seafood,” the
exhibition will feature 350 booths by companies from Vietnam, Malaysia,
Thailand, China, Germany, Japan, the US, Singapore, Indonesia and the
Philippines.
During the three day exhibition, conferences will be
organised to discuss urgent issues relating to seafood certificates and
technology for microbiological control and freezing.
Companies will have access to the most advanced
technologies and new trends in the world seafood market to help upgrade
production and strengthen business operation.
Along with offering a series of co-operation
opportunities, Vietfish 2016 will give customers chances to try special and
delicious seafood dishes made from tra fish, shrimp, tuna, cuttlefish and
octopus.
The Vietnamese seafood industry, with several
State-owned companies, earned an export turnover of US$300 million in the
1990s. Twenty years later, the figure had jumped by 26 times, reaching US$8
billion in 2014. The industry has an average growth of 30% a year.
Currently, the country is ranked third in the list of
the biggest seafood producers in the world, following China and India. In
terms of exports, it is listed fourth after China, Norway and Thailand.
With diverse products and high volume, seafood processing
and exporting has become a key part of Vietnam’s economy, becoming a leading
sector in integration thanks to advantages of the Trans-Pacific Partnership
Agreement and free trade agreements that Vietnam has signed with other
countries.
This year, VASEP predicts total export turnover will
reach over US$7 billion, up 6.3% over 2015.
Economy slows, forcing re-think on
‘inclusive growth’
Expansion of the nation’s gross domestic product has
slowed to 5.52% in the first half of 2016 hurt by a crippling drought linked
to the El Nino weather phenomenon, says the General Statistics Office.
Crop output from farming in the agriculture, forestry
and fishing segments of the economy were a drag, as they often are,
experiencing two-tenths of one percent negative growth in the first six
months of the year.
One of the worst droughts to strike Vietnam in nearly a
century combined with rising sea waters has taken a heavy toll and could cast
a shadow on the economy for years to come, says the Ministry of Agriculture
and Rural Development (MARD).
Dang Kim Son, former head of MARD’s think-tank, the
Institute of Policy and Strategy for Agriculture and Rural Development
(IPSARD), at a recent business forum in Hanoi, was uncharacteristically
blunt.
With more than 50% of the country's workforce engaged
in agriculture, the drought has exacerbated troubles in an economy already
weighed down by a slowdown in the rate of growth of manufacturing and
exports.
Rural households are being hit by a perfect storm, said
Mr Son, with the drought not only drying up farmland— but cash flows and
profits as crop yields in the hardest hit central region dwindle.
This year, paddy rice fields have resembled parched
deserts capes as farmers wait for a rainy season that is late to arrive.
Smallholder farmers, who grow watermelons and orange trees about 40 miles
from the East Sea, have seen crop-ruining salinity intrude farther inland
than ever before.
Then there are the dams. China has built seven
hydropower dams on the upper Mekong, known locally as the Lancang, and plans
to add 21 more. Laos and Cambodia intend to build 11 hydropower dams on the
lower Mekong, with two in Laos currently under construction.
The biggest impact from dams is the trapping of silt,
said Mr Son. He said the silt is needed to replenish nutrients that wash away
during the monsoon season in the Mekong Delta, and also to sustain the delta
against rising sea levels.
Without the sediment, the low-lying delta is eroding
and actually sinking and destroying valuable crop and fish farming lands.
Nguyen Do Anh Tuan, the current director of IPSARD, in
turn pointed out that the stagnation of farming poses a big challenge to
‘inclusive growth’—ensuring poor, largely uneducated, Vietnamese participate
in the overall economy's expansion.
Over one-half of Vietnamese still work in farming and
the economic segment gives them a chance to eke out a living even though they
have a less formal education, he said, adding that few have attained
education or skills beyond the basic primary level.
Farmers in Vietnam are largely engrossed in subsistence
farming. They don’t enjoy economies of scale and lack capital to expand, said
Mr Tuan, and suffer the high costs of production and poor access to markets.
All of this in addition to the current drought conditions.
Mr Tuan underscored the point that farming is the
perennial obstacle to ‘inclusive growth’ and underlined the importance for
the government to rethink its strategies here.
Vietnam as a nation needs to pursue a steady course of
supporting the drivers of transformation to reach its ambitious target of
attaining growth to get to middle income status while promoting more
inclusive development.
Economic transformation takes time, but policy makers
must focus on those drivers and redouble their efforts to get farmers better
educated, out of agriculture and into higher paying jobs in the urban and
industrial areas of the country.
Annual Report Awards celebrates
immense improvements
The 9th Vietnam Annual Report Awards Ceremony honours
its 50 winners on July 29 at the Ho Chi Minh Stock Exchange.
The winners are the best reports out of the 136
finalists who have been selected from 600 listed companies on the Ho Chi Minh
Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX). In the winners’
list, 34 reports belong to firms listed on the HOSE and 16 on the HNX.
The awards are classified into three categories,
including Top 10 (the 10 reports with the highest scores), Top 30 (the next
20 reports), and Top 50 (the remaining 20 reports in the Top 50 list). From
the winners, the Selection Board will also choose a report with excellent
content and presentation for the Outstanding Award.
The three companies with the most drastically improved
reports will also receive the Outstanding Improvements Award.
In addition, the Selection Board will pick the three
best contents on corporate governance, including one First Prize, one Second
Prize, and one Third Prize.
Meanwhile, the Sustainability Reporting Awards will be
handed out to five firms, including a First and Second Prize and three
Consolation Prizes in three categories: completeness, reliability, and
presentation. The World Bank’s International Finance Corporation (IFC) and
Britain-based global Association of Chartered Certified Accountants (ACCA)
have joined the Selection Board for this award, selecting five winners out of
420 reports that included sustainable development issues.
Minister of Finance Dinh Tien Dung noted that the
Annual Report Awards (ARA) provided the market with an independent and objective
assessment of firms’ annual reports. More transparent annual reports will
help improve the Vietnamese market and attract long-term large investment
flows.
Meanwhile, Ngo Viet Hoang Giao, board member and deputy
CEO of HOSE, head of the Organising Committee and the Selection Board,
highlighted the tremendous quantitative increase of reports with a
sustainability dimension.
The standards of corporate governance reporting have
improved this year, as 105 out of 136 finalists (77 per cent) earned at least
average marks. The figure was 60 per cent in 2015 and only 40 per cent in
2014.
This improvement was applauded by Pham Nguyen Vinh,
business development director and head of Responsible Investing at Dragon
Capital. He noted that global investors are now unlikely to pour capital into
firms that profess to low standards of corporate governance, social
responsibility, and environmental awareness.
“Improvements in annual reports have shown firms’
determination to open themselves to investors. As a result, everyone’s
efforts to create the best report in their ability should be celebrated,”
said Le Trong Minh, VIR’s editor-in-chief and co-head of the Organising
Committee.
ARA have been co-organised by HOSE and VIR since 2008.
The awards are sponsored solely by Dragon Capital and received support from
the State Securities Commission, HNX, IFC, and ACCA, to boost the
transparency of the Vietnamese market.
Japan’s ANA completes purchase of
Vietnam Airlines stake: report
Japan’s ANA Holdings has completed a US$108 million
deal to buy an 8.8% stake in Vietnam Airlines, news website Deal Street Asia
reported on July 28.
Vietnam Airlines reportedly will hold an extraordinary
meeting prior to September 30 in order to elect ANA representatives to the
board, and adopt a plan to increase charter capital by issuing additional
shares to its existing shareholders.
Under the strategic partnership, the two airlines will
launch codeshare arrangements, which will cover 30 major domestic routes
within Japan and Vietnam and 10 international routes between the two
countries.
Vietnam Airlines has said it will continue to look for
potential investors to cut the state ownership to 65%.
The Vietnamese carrier sold 49 million shares, or a
3.5% stake, in an IPO in November 2014 for about US$51.3 million.
Chief Executive Officer Pham Ngoc Minh told Bloomberg
in April that the airline expected to list its shares on the Ho Chi Minh City
Stock Exchange “later this year” after closing the deal with ANA and
fulfilling some procedural requirements of the exchange.
Three MoC enterprises propose IPOs
for Q3
Three State-owned enterprises (SOEs) in the
construction sector are to propose conducting their initial public offering
(IPO) during the third quarter of 2016, according to a Ministry of
Construction (MoC) report released on July 21.
After a three-year overhaul, the Song Da Corporation,
the Housing and Urban Development Corporation (HUD), and the Urban and
Industrial Zone Development Investment Corporation (IDICO) are expected to
finalize their businesses valuations and propose IPO plans to the Prime
Minister shortly.
Song Da Corporation, HUD, IDICO, and the Vietnam Cement
Industry Corporation (Vicem) are the last four critical enterprises of MoC to
not have undergone equitization. Ten of MoC’s 14 such enterprises had done so
by the end of 2014.
According to MoC the four have experienced difficulties
during their equitization process. Song Da and Vicem’s planned to conduct
their IPO in the first quarter of this year but were delayed by the transfer
of the loss-making Ha Long Cement Company.
Song Da was reportedly trying to sell its entire
holding of 26.1 million shares in the Vietnam Italy Steel Company (VIS),
equal to 53.04 per cent of the total. It was unable to divest the shares
during July as planned due to market volatilities.
According to the report, nine MoC corporations divested
a total of VND193.4 billion ($8.8 million) worth of investments for VND233.5
billion ($10.6 million), equal to 120 per cent.
Shareholder meetings approved the equitization plans of
the Construction Corporation No.1 (CC1), the Building Materials Corporation
No.1 (FICO), the Construction Machinery Corporation (COMA), and the Vietnam
National Construction Consultants Corporation (VNCC).
Production value of MoC enterprises reached VND76.1
trillion ($3.4 billion) in the first half, reaching 47.2 per cent of the
target.
Value was down against the first half of 2015 due to
divestments from subsidiaries of some of the parents companies. Construction
value stood at VND28.5 trillion ($1.3 billion), equal to 46.6 per cent of the
target and representing 89.6 per cent of result in the same period last year.
Total output significantly declined compared to the
same period last year, as old contracts come to an end and new contracts are
either being identified or still in the middle of negotiations.
The value of building materials reached VND31.6
trillion ($1.4 billion), equal to 48.5 per cent of the target and 109.2 per
cent of the result in the first half of 2015. Consulting value stood at VND1
trillion ($44.8 million), or 46.9 per cent of the target and 164.2 per cent
of the first half last year. Other production value was VND14.9 trillion
($668 million), or 45.9 per cent of the plan and equal to 100.5 per cent of
last year.
Some enterprises recorded higher growth in their
production activities year-on-year while others saw lower than expected
growth and a decline year-on-year, including Song Da, HUD, the Song Hong
Corporation, and the Vietnam Water Supply Sewerage and Environment
Construction Investment Corporation (Viwaseen).
The real estate market saw steady growth in the first
half due to increases in outstanding credit and a decline in inventory.
There was also a steady increase in the number of
transactions. House prices were stable compared to 2015 and inventory mainly
consisted of land plots from undeveloped projects.
As at the end of May the government’s $1.5 billion
housing credit support package had disbursed a total of $1.1 billion. Total
outstanding credit in the real estate sector as at the end of April stood at
VND415.4 trillion ($18.6 billion), up 5.76 per cent compared to the end of
2015.
Masan Group revenue up 84% in 1H
The Masan Group earned revenue of more than $855
million in the first half of this year, an 84 per cent increase year-on-year,
of which revenue from animal feed accounted for 60 per cent of total revenue.
Net profit stood at over VND1 trillion ($45 million),
three-fold higher than the VND364 billion ($16.3 million) recorded in the
first half of last year.
Company leaders predict annual revenue will come in at
25 per cent higher than the target set earlier in the year.
One factor pushing up Masan’s profits was growth in
animal feed from its subsidiary Masan Nutri-Science (MNS), which brought in
VND11 trillion ($495 million), up 14 per cent year-on-year.
While the animal feed sector grew strongly, fast-moving
consumer goods (FMCG) saw lower growth in the first six half, especially in
sauces, with revenue from instant noodles declining. Total revenue from FMCG
stood at over VND6.3 trillion ($283.5 million), up 7.9 per cent year-on-year,
with growth in sauces at just 4 per cent while instant noodle sales shrunk 11
per cent.
Techcombank, in which Masan owns 34.4 per cent, also
announced its business results for the first half. Pre-tax profit reached
over VND1.5 trillion ($67.5 million), up 53.8 per cent year-on-year. Its bad
debt ratio remained at 1.87 per cent and its capital adequacy ratio (CAR) was
14.3 per cent as at June 30, much higher than the State’s requirement of 9
per cent.
Masan’s mining concern, Masan Resources (MSR), recorded
revenue of over VND1.7 trillion ($76.5 million), up 45.3 per cent
year-on-year despite low commodity prices. Net profit was VND70 billion
($3.15 million).
The Nui Phao mine project in northern Thai Nguyen
province has an important role to play for the group and MSR is to continue
improving its production efficiency and reduce costs.
The Ministry of Natural Resources and Environment
(MoNRE) recently announced it will conduct an inspection at Nui Phao in
August, after claims of environmental pollution were made.
The ministry also asked the Nui Phao Mining Company,
the project owner and a subsidiary of MSR, to evaluate the impact of the
project on the environment and the lives of local people. Based on the
company’s report, the ministry and local authorities will decide whether it
is necessary to relocate nearby villages. It also asked for plans for an
automatic observation system for wastewater, under Decree No. 38/2015 from the
government.
In response, MSR announced it is ready to welcome the
inspection team and the media to the Nui Phao project.
The project was licensed in 2005 and has significant
deposits of tungsten, fluorspar, bismuth and copper, and is the world’s
largest tungsten mine outside of China. It covers an area of 9.21 sq km in
Dai Tu district.
In 2010 MSR acquired the project from Dragon Capital, a
Vietnam-focused financial institution, and other stakeholders. The mine began
commercial operations in the first quarter of 2014.
The Masan Group is one of Vietnam’s largest companies,
focused on domestic consumption and building leading businesses in the
branded food and beverage sector and in the animal nutrition value chain.
In addition to MSR its businesses include Masan
Consumer Holdings, the producer of some of Vietnam’s most trusted and loved
brands in food and beverages, such as Chin-su, Nam Ngu, Tam Thai Tu, Omachi,
Kokomi, Vinacafe, Wake-up, Vinh Hao, and Su Tu Trang, and Masan
Nutri-Science, Vietnam’s largest animal feed company, with brands including
Proconco and Anco.
Đồng Nai wants Investment Law update
The southern province of Dong Nai has urged relevant
agencies to amend the Investment Law so that it covers the change in
ownership of companies that are bought by foreign investors.
"The adjustment is very necessary [since]
Vietnamese individuals set up businesses and then sell their shares to
foreign investors," Cao Tien Dung, director of the province Department
of Planning and Investment, told the Ministry of Planning and Investment at a
meeting early this week.
These enterprises then become foreign-invested
companies and State management offices find it hard to manage them since the
laws lack the provisions required for it, he said.
Deputy Minister of Planning and Investment Nguyen Van
Hieu promised to take up the issue with the Government.
"Dong Nai Province has a developed industry and is
one of the five provinces that make the biggest contributions to the State
budget," he said.
"The province has achieved growth of around 7.85
per cent in the first six months of the year, higher than the national
average."
But he urged the province to promote exports, which
have risen by only 5.3 per cent year-on-year in the first half to US$7.4
billion.
The province has achieved revenues of VND20.5 trillion
($919 million), or 49 per cent of the yearly plan and a 9 per cent
year-on-year increase.
Total domestic investment was worth VND7.65 trillion,
85 per cent of the full-year plan, and foreign investment, $1.34 billion, 34
per cent higher year-on-year.
To achieve the year's economic-socio development
targets, the province has cut expenses, improved the efficiency of public
investment and of State-owned projects, continued to fix the difficulties
faced by businesses, speeded up investment in industrial projects, focused on
creating proper policies and mechanisms to attract investment for industrial
parks and processing zones and explored solutions to encourage exports, Dung
said.
"Dong Nai will focus on solutions to capitalise on
advantages and mitigate disadvantages faced by our key export products while
integrating into the international economy and from the ASEAN Economic
Community, Free Trade Agreements and Trans-Pacific Partnership."
He promised that assistance would be provided to small-
and medium-sized enterprises, especially start-ups and creative businesses.
Hieu said: "I strongly believe that Dong Nai will
be able to achieve all of its 2016 socio-economic targets."
High-profit shrimp farming model grows
A "super-intensive" farming model, which
raises white-legged shrimp in greenhouses in the Mekong Delta province of Bạc
Liêu, has expanded after generating high profits.
The Hải Nguyên Company in Bạc Liêu City was the first
company using the model in the delta, which is more environmentally friendly
than traditional shrimp models.
In 2011, when shrimp disease outbreaks occurred on a
large scale in the delta, Đinh Vũ Hải, the company director, chose to use the
new breeding model.
The shrimp ponds, which are protected in greenhouses,
are equipped with airlift pumps in the pond beds and fans at the pond
surface, to provide oxygen for the shrimp. The pond beds are covered with
plastic sheets.
The density in the so-called super-intensive farming
models is 200-250 shrimp per sq.m, while density is 100-150 shrimp per sq.m
in intensive models.
After a farming period of 75-90 days, the white-legged
shrimp are harvested, usually with yields of 60-70 tonnes per hectare.
With a 60ha-farming area, Hải's company harvests about
900-1,000 tonnes of white-legged shrimp a year and earns profits of VNĐ100
billion (US$4.5 million).
The model requires high investment costs, but it
reduces pollution as it does not use antibiotics and chemicals, according to
Hải.
Many farms and other companies are using the model in
Bạc Liêu and other provinces.
The Trúc Anh Production and Trading Company Limited in
Bạc Liêu's Vĩnh Trạc Đong, for instance, raises white-legged shrimp under
this model.
Lê Anh Xuân, director of Trúc Anh, said his company
used probiotics to breed shrimp.
"Our company has piloted the model on an area of 1
ha with investment capital of VNĐ10 billion ($450,000)," he said.
Last year, the Việt-Úc Group, Việt Nam's leading
supplier of shrimp fries, began its project of super-intensive farming of
white-legged shrimp in greenhouses in Bạc Liêu and achieved good results.
The group now farms white-legged shrimp using this
model in Bạc Liêu and the central province of Binh Định. It is expected to
expand to 1,000ha by 2018.
The Việt-Úc Group has also helped farmers in Bạc Liêu
and Cà Mau provinces and HCM City to breed shrimp.
Trần Ngọc Hải, deputy head of Cần Thơ University's
Fishery Faculty, said one of the best features of the model was that
temperatures in ponds could be controlled, which is important for raising
shrimp.
Normally, when there are heavy rains or hot sunshine,
the temperature in ponds will change rapidly, affecting the health of shrimp.
In addition, the super-intensive model also reduces
pollution and the spread of germs from the ponds.
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR
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Thứ Năm, 4 tháng 8, 2016
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