BUSINESS IN BRIEF 18/1 Prospects for labour export Vietnam is expected to send 85,000 guest workers abroad in 2013, says Le Van Thanh, deputy head of the Overseas Labour Management Department under the Ministry of Labour, Invalids and Social Affairs (MOLISA). Thanh says about 80,000 Vietnamese workers were sent to foreign countries last year, fulfilling 89 percent of the set target. It was understood that the rate of unemployment remained high in many foreign countries in the context of slow global economic recovery. He is still optimistic about prospects for labour export in 2013, saying that Vietnam’s major labour markets such as Japan, Taiwan, Malaysia, the Republic of Korea, and the Middle East need more guest workers, including those from Vietnam. At present, Japan is short of about 500,000 nurses and Germany also in need of medical workers. Other countries namely Finland and Saudi Arabia are keen to employ graduates from medical colleges and universities in Vietnam, Thanh says. Up to now, nearly 800 Vietnamese guest workers have returned to Libya as the political crisis is now in remission. Qatar is asking Vietnam to train guest workers for the Qatar construction sector, Thanh adds. So, he emphasizes the need to increase the quality of guest workers and improve foreign languages for Vietnamese students who wish to work abroad, especially in the fields of health care, engineering, construction and welding. Thanh says in 2013 the labour export sector will focus on traditional markets such as Russia, the RoK, Taiwan and Malaysia, while seeking new markets. Vietnam and Russia are negotiating to sign a labour cooperation agreement by the end of this year. HCM city targets 4.1 million int’l visitors in 2013 Ho Chi Minh City‘s tourism sector expects to welcome 4.1 international visitors and earn VND81,970 billion in revenue. To achieve the target, it will focus on building the image of Ho Chi Minh City as a friendly, attractive and safe destination, pushing through administrative reform, and speeding up tourism growth on the basis of international cooperation and effective competitiveness. The city will make greater efforts to improve tourism services and human resource training. In 2012, it received 3.8 million foreign tourists ( up 8.5 percent against 2011and 5 percent above its yearly target), accounting for 56 percent of the total number of foreigners arrivals in Vietnam. Tourism earnings reached more than VND71 trillion ( up 25.3 percent compared to the same period last year), accounting for  44.5 percent of the country’s total figure and about 11 percent of the city’s GDP. Fusion Maia Danang among world’s best hotels The Fusion Maia Danang Resort has been included in the 2013 edition of the Tatler Travel Guide, listed among the world’s 101 best hotels. According to the guide’s representatives, Fusion Maia earned its place with the uniformly rave reviews it had received from previous patrons. “It’s fantastic. Cheeky, fresh, and cutting edge, the resort is on almost 19 miles of rockless sand and water. It’s laid out with airy spaces and zen-calm architecture; the villas have large private pools in fern-walled gardens just yards from the sea”, said the guide’s and Travel Editor Melinda Stevens. The prestigious Tatler Travel Guide picks its 101 best hotels in the world annually. Fusion Maia Danang was also the only Vietnamese hotel to receive thespecial award in 2012. HCMC, Vietnam Airlines team up to stimulate travel demand The Ho Chi Minh City Tourism Association (HTA) has cooperated with the national flag carrier Vietnam Airlines to launch a discount programme with the aim of stimulating domestic travel demand in 2013. Hoang Thi Khanh, HTA Vice Chairwoman, said the initiative will discount both flights and tours, contributing to price stabilisation in the national tourism market. The programme helps address the illogical fact that foreign travel tour prices are often cheaper than domestic travel. A similar discount programme has run since May 2012, drawing the participation of many local travel operators and achieving many good results. Vietnam Airlines held sales reducing select ticket prices by 45 to 52 percent. Travel agencies also slashed tour prices by 40 to 45 percent. By the end of 2012, the programme serviced 15,810 visitors on tours from HCM City to southern and Central Highland destinations like Phu Quoc, Con Dao, Da Lat, and Buon Me Thuot. Many tours also ventured to the northern and central regions. Garment industry sets high export targets for 2013 The garment and textile sector has set an export target of US$18.5-19 billion in 2013, said Le Tien Truong, Deputy Director General of Vietnam National Textile and Garment Group (Vinatex), at a press briefing recently. Vinatex will follow a strategy of fast growth, high efficiency, and suitable usage of investment capital in 2013, Truong said. The garment and textile sector earned $17.2 billion in revenue from exports last year. Vietnamese made garments are on the list of priorities of many foreign importers, as they are able to compete with developed countries on textiles such as China, Mexico or Bangladesh. For the 2015 development plan, Vision 2020 that was approved by the Prime Minister, the textile industry set forth the goal of an annual growth of 12-14 percent and export growth of 15 percent, Truong added. According to Truong, many businesses have received orders for the entire first quarter of the year. However, the sector will continue facing a lot of difficulties related to consumption markets, source of goods, clients etc. In order to develop the garment and textile industry in a sustainable manner, this year Vinatex will focus investment on building knitting factories and yarn-dyed plants in the north and south, and develop material sources. The US, Japan and the European Union still remain the mainstay markets for the textile sector in 2013. The Republic of Korea is also a new destination which contributed more than US$1 billion to Vinatex’s export turnover last year. In the last two months of 2012, more than 10 foreign enterprises dealing in fiber, spinning, weaving and dyeing from countries with a developed textile industry, such as Texhong, Sunrise (China), Toray International and Mitsui (Japan), Lenzing (Austria)--came to Vietnam to look for investment opportunities. Vietnam Bank for Social Policies to provide loans to poor The Vietnam Bank for Social Policies announced a credit plan for 2013 by which VND8,300 billion (US$398,000) will be allocated for loans to the poor and beneficiaries of social welfare policies. The bank plans to issue bonds, strengthen mobilization of capital from residents and resolve remaining debts. The expected total capital for the year will reach VND130,326 billion ($6,253,000). By the end of 2012, the bank’s capital was around VND119,026 billion ($5,709,686), an increase of VND13,536 billion from previous year, and loan dispersal was at VND33,806 billion. The bank provided loan to 12.3 million poor people and beneficiaries of social welfare policies, and to students for continuing their education. Vietnam increases cashew exports to India Vietnam ships more than 160,000 tons of cashew nuts abroad annually, and has become the largest cashew nut exporter to the US. India lost its status as top cashew nut exporter to Vietnam four years back and is now a major importer of cashew nuts from Vietnam, according to the Ministry of Trade and Industry. In the first eight months of 2012, India imported 3,245 tons of cashew nuts at an average price of Rs163.38 per kg. A large portion of that volume was supplied by Vietnam. According to the Cashew Export Promotion Council of India, huge volumes of cashew imports are likely to continue in the future. India’s cashew nut demand is increasing, both for household consumption and food processing. Vietnam is a promising source of broken cashew nuts; local exporters are therefore keen to capitalize on the Indian market. Cashew Export Promotion Council of India estimates India needs at least 700,000 tons of imported cashew nuts for its food processing industry. Smuggling runs rampant along border Authorities are trying to contain cigarette smuggling activities which have been on the rise as Tet nears. The smugglers often use motorbikes to transport their goods on the route from Ben Cau District in Tay Ninh Province to Duc Hue District in Long An Province. The smugglers are especially active in Tay Ninh Province, transporting and selling their goods along the rivers, where wholesalers wait for their deliveries. The shipments cigarettes will then be sent to HCM City. Taking advantages of the network of rivers and fields along the border area between Vietnam and Cambodia, the smugglers are constantly on the move to avoid policing agencies. Other areas such as Thuong Phuoc Border Gate or the border area in An Giang Province are also extremely active with smugglers. According to the Vietnam Tobacco Association, the brands Jet and Hero are widely being smuggled into the country. These brands are produced by Indonesian-owned Sumatra Company, however they are not very popular in Indonesia. So they are imported into Cambodia because of favourable tax policies, then find their way into Vietnam. Recently, the HCM City police raided seven locations in Hoc Mon District, seizing nearly 100,000 boxes of smuggled cigarettes despite resistance from the smugglers and their effort to hide the goods.  HCMC police raid the smuggled tobacco warehouse The Vietnam Tobacco Association said the illegally imported cigarettes have taken nearly 20% of the domestic market share. The contraband was estimated to have caused a loss of VND4.3 trillion to the state budget in 2012. Domestic suppliers of raw materials for cigarette manufacturers have also suffered, with 43,000 labourers unemployed and about 10,000 ha of tobacco growing land left fallow for four to five months. On January 11, a conference to popularise Circular 36 was held by the Steering Committee against smuggling, fake goods and trade frauds with Vietnam Tobacco Association. The circular gives details about how to deal with violations in cigarette business, smuggled materials and smuggled alcohol. According to the circular, a smuggler caught with between 1,500 to 4,500 boxes of tobacco should face 6 months to 3 years in prison, while those caught with 4,500 to 13,500 boxes should face 3-7 years in prison and 7-15 years for people who smuggle over 13,500 boxes. "The new circular with stricter penalties will help prevent smuggling activities, ensure that there's less loss to tax revenue and create a level playing field for legitimate enterprises," Pham Kien Nghiep, General Secretary of the Vietnam Tobacco Association said. C.P admits ‘unreasonable egg price hike’ C.P Vietnam Livestock Corp. on Monday admitted it had unreasonably increased chicken egg price from VND21,500 to VND29,500 per ten-egg carton and promised to adjust the price in the next few days. The HCMC Department of Industry and Trade had a meeting with C.P at its headquarters in Dong Nai on Monday in order to figure out the reason why C.P has constantly raised egg prices since the year’s beginning. Speaking to the Daily after the meeting, Le Ngoc Dao, deputy director of the department, provided data showing that egg supply for the HCMC market was sufficient, and thus undersupply could not be used as an excuse for egg price hike. A representative of C.P reportedly said at the meeting that from January 4 to 11, the firm had raised price of chicken eggs from VND21,500 to VND29,500 per carton, or an increase of VND8,000 a carton within seven days. The representative admitted this was an unreasonable move and said C.P would soon adjust the price. Because C.P general director did not attend the meeting on Monday, the firm will give its official feedback on Thursday. The specific price reduction will be provided on that day. Prior to January 1, C.P supplied eggs to supermarkets at VND21,500 per carton. Given the cost of buying eggs from farms at VND15,500 a carton, C.P earned a profit of VND6,000 from each carton, said Dao. “From now to the Lunar New Year 2013, egg prices will be kept at VND23,500 per carton. Therefore, C.P should adjust prices to below this level,” she said. A farm owner currently working for C.P informed it costs VND1,500 to produce an egg, which is sold to C.P at VND1,550 under a long-term contract. His farm supplies around 110,000 eggs to C.P every day. As he has signed a long-term contract, he cannot raise selling prices, even though farm owners in Dong Nai and Binh Phuoc are selling eggs at high prices. Meanwhile, owner of a farm in Dong Nai said he is selling eggs at VND2,500 each, while the production cost is VND1,400 an egg. The egg price hike of C.P has led to higher prices quoted at other companies and farms. Therefore, the HCMC trade department supposed that major livestock firms were joining hands to push up prices, and if so, they are violating the Competition Law. This Friday, the department will have a meeting with Emivest, another large egg supplier for HCMC. In case the company failed to explain why it raised prices, the department would propose the Vietnam Competition Authority under the Ministry of Industry and Trade and the General Department of Taxation launch a price inspection. Businesses likely to issue own C/O In the future, local businesses may be allowed to issue certificates of origin (C/O) on their own in order to enjoy preferential tariffs from the free trade agreements (FTAs) involving Vietnam. The Ministry of Industry and Trade is drawing up a scheme allowing enterprises to grant themselves C/O if they satisfy all the criteria of origin. This means they will not need to ask the authorities for C/O, said Phan Van Chinh, director of the trade ministry’s Import-Export Department at an online conference last week. This scheme is aimed to help local businesses seize the opportunities resulting from the FTAs to be signed in the near future, such as the Trans-Pacific Partnership (TPP). Chinh informed Vietnam has signed eight bilateral and multilateral FTAs. Exports to the FTA partner nations accounted for 46.7% of the country’s total exports in 2012, or US$53.5 billion over US$114.6 billion. Once Vietnam signs TPP and an FTA with the European Union (EU), FTA markets will represent around 86% of the country’s total exports. The ratio of C/O use to total exports increased in recent years, from 9.43% in 2009 to 15% in 2011 and 15.7% in 2012, making up 33.6% of Vietnam’s total exports to FTA markets last year. South Korea is where Vietnamese enterprises gained the most from preferential tariffs, at up to 76% in 2012. Japan to become Vietnam’s second biggest textile buyer Japan will likely surpass the European Union (EU) to become the second largest importer of Vietnam’s textile-garment products in 2013, according to the Vietnam Textile and Apparel Association (VITAS). As per a forecast of VITAS issued last Saturday, Vietnam’s textile-garment exports to Japan will continue to rise nearly 18% this year with a turnover of over US$2.37 billion. Last year, Vietnam exported US$2 billion worth of textile-garment products to Japan, a growth of 17% from 2011. As such, Japan is forecast to surpass EU to become the second largest textile-garment importer of Vietnam. EU is currently accounting for some 14% of the textile-garment export turnover of Vietnam. In 2012, Vietnam’s textile-garment exports to the EU brought in US$2.45 billion, down 13.5% compared to 2011, and are forecast to fetch US$2.37 billion this year, down 2.8% year-on-year. According to VITAS, textile-garment exports to Japan are surging as Vietnamese traders are enjoying tax incentives from bilateral and multilateral trade agreements with Japan. In addition, Japanese companies are shifting their investment from China to Southeast Asian nations, including Vietnam, due to the labor cost burden in China. Marubeni Corporation of Japan, for example, plans to increase the rate of production in Southeast Asia from 15% to 30% by March 2014, according to VITAS. In 2013, apparel products such as children’s clothing, jackets and T-shirts will continue to be Vietnam’s major export items to Japan. At present, China is the largest textile-garment supplier to Japan, with a turnover of US$31.1 billion in 2012, followed by the EU (US$2.1 billion) and Vietnam. However, Vietnam’s textile-garment exports to Japan last year achieved the highest growth rate, 17%, while China recorded a 0.75% growth. Hanoi retail space to face tougher competition Project owners of the retail space segment in Hanoi will face a fiercer competition in the near future as new supply is rising while the current economic conditions remain unfavorable, many market research companies said. According to a recent report of Knight Frank Vietnam, the present economic difficulties along with increasing unemployment had eroded incomes of many households in the capital city in the last quarter of 2012. This had negatively affected business activities of retailers in Hanoi during the period. Meanwhile, statistics earlier announced by Savills Vietnam shows that the Hanoi retail space segment in the third quarter of 2012 had shrunk in terms of rents and occupancy, with occupancy rate of commercial centers falling to a mere 88%. Similarly, the average rent of the segment in the third quarter had continued falling by six percentage points against the previous quarter. The retail space segment in Hanoi now is facing a fierce competition from the upgrade of traditional markets in the city that has been on the rise these days. In the meantime, there was an extra supply of a huge retail area in the Hanoi market in the fourth quarter last year, such as 18,000 square meters of the Indochina Plaza Hanoi project and 31,700 square meters of the Me Linh Plaza Ha Dong project. CB Richard Ellis Vietnam expects the northern market to have more retail space supply thanks to the 12,000-square meter Trang Tien Plaza project that will resume operation this quarter. Besides, the Royal City project will come into operation in July and the Vincom Mega Mall project covering 230,000 square meters is set for operation in the fourth quarter this year in the city. Knight Frank in the reports indicates that leasing prices at prime sites had still remained unchanged in the last quarter. However, it said, local owners of buildings outside the central area had no choices but to offer big promotions in an effort to retain and entice retailers. Exports run into excessive trade defense Vietnam is boosting export of several items to other ASEAN countries but it is facing unfair trade defense in the host countries, according to a former trade official. As Vietnam is growing more slowly than other ASEAN nations, it is at a disadvantage in the ASEAN Free Trade Area, always having trade deficits with other members. Still, for the long-term goal, the country has to open the door to other ASEAN members, said Luong Van Tu, former deputy minister of trade, in an article in Cong Thuong newspaper. Local firms are boosting exports to other ASEAN nations in a bid to reduce trade deficits. However, they run into anti-dumping lawsuits and trade defense put up by enterprises and trade associations in the host countries, who say that rapid export growth is a threat to their domestic production. On August 10, 2012, the Malaysian Iron and Steel Industry Federation warned it would file a lawsuit against Vietnam if the overflow of Vietnamese galvanized and color-coated steel sheets into Malaysia was not timely settled On October 1, 2012, the metal-plated and color-coated steel sheet association of Thailand issued warning against dumping of Vietnamese steel sheets in Thailand. On December 12, 2012, Indonesian steel firms Bluescope and Sunrise sent a petition to the Indonesia Trade Safeguard Committee, asking for a trade defense instrument against flat-rolled steel imports. In the same month, the Indonesia Anti-Dumping Committee announced Vietnam’s cold-rolled steel exported to Indonesia will be levied anti-dumping duties of 13.5-36.6%. This is a result of the investigation against steel imports from Vietnam and other countries initiated on June 24, 2011. Realty firms lukewarm to market rescue solutions A number of property firms believe that Resolution 02 of the Government will be unable to save the ailing market. A senior source from a realty company described the recently-issued resolution as a slight breeze sweeping through the frozen real estate market, but it has yet to touch on the key issues of the market, namely large-sized and high-end apartments. Under the spirit of the resolution, commercial houses can be converted into low-cost homes. Moreover, a 50% value-added tax reduction is given to low-cost house developers, while those developing apartments smaller than 70 square meters and priced below VND15 million per square meter enjoy a 30% tax cut from July 1 to June 30, 2014. In addition, the resolution says that low-cost house buyers should be offered low-interest loans with repayment schedules meeting their financial capability. The resolution mainly focuses on the low-cost housing segment and orientates the market towards this segment. However, in this segment, the unsold products are mostly large-sized apartments and their volume is not high, the source remarked. In order to unfreeze the real estate market, the entire inventory volume should be settled. Focusing on a small volume will not resolve anything, the source stressed. Property firms are blamed for not building small-sized apartments, but they actually cannot do so because of regulation. At present, apartment project owners must comply with the ratio 1:2:1, meaning 25% of the apartments are small-sized, 50% are medium-sized and 25% are large-sized. Many enterprises want this regulation to be removed. Phung Van Nang, general director of Nam Viet Real Estate JSC, said that as the solutions are aimed at low-cost apartments, this won’t have much effect on the market. The demand in the low-cost housing segment is still considerable, so this segment does not actually need the help, he said. A market study of CB Richard Ellis Vietnam (CBRE) shows that the demand for condos priced at VND10-14 million psm is still very high. Property project owners with medium-sized apartments whose prices range from VND600 million to VND1 billion per unit have also recorded good sales results. No new project satisfies the conditions of the resolution. Therefore, the market does not pin hopes on conversion of high-end condos into small-sized ones with reasonable prices, said property firms. 120 more apartments to go on sale The Screc II Metro Apartment project developed by Saigon Investment-Construction & Real Estate Joint Stock Company in HCMC’s District 2 will go on sale on January 20. The project is under construction in the new urban area An Phu-An Khanh. It comprises two 18-story blocks with 120 apartments covering 89-110 square meters each and a commercial center. Hung Thinh Land, distributor of the project, informs the apartment price is VND17 million per square meter. It is scheduled that the apartments will be handed over in October this year. Sacombank lends VND50 bil. to SMEs in Can Gio Saigon Thuong Tin Commercial Bank, or Sacombank, last Friday clinched a deal to give VND50 billion worth of soft loans to 16 small and medium-sized enterprises (SMEs) and households in the outlying district of Can Gio. The loan package includes VND20 billion with an interest rate of 11% per annum and VND30 billion with a rate of 12% per annum. Borrowers are those working in the farming, forestry and fishing sectors. These loans aim to encourage local SMEs and households to shift to the urban agriculture industry under a plan of the city government in the 2011-2015 period. Last year, Sacombank launched over 22 loan packages worth over VND16 trillion and US$180 million for 2,300 SMEs and those in important sectors such as export and import and rural development. Established in 2010, Sacombank’s Can Thanh transaction office up to now has mobilized VND100 billion and posted total outstanding loan of VND66 billion. VDB bad debts revealed Bad debts at Vietnam Development Bank (VDB) by the end of 2010 had reached over VND38.1 trillion, accounting for 12.57% of its total outstanding loans, according to the Government Inspectorate. The Government Inspectorate has focused on detecting the violations of the State-run bank in capital mobilization, debt classification, lending for investment and export, risk management and guarantee for loans of enterprises. Inspectors have paid due attention to bad debts at VDB because the bank is a financial vehicle for the Government to implement socio-economic policies and grant certain loans, said Ngo Van Khanh, deputy inspector general of the Government Inspectorate, at a meeting on the inspection results last Friday. Bad debts at VDB by the end of 2010 at more than VND38.1 trillion was VND15 trillion higher than the figure that the bank reported. Specifically, unsettled bad debts from VDB’s predecessors had amounted to over VND5.2 trillion and bad debts from lending programs assigned by the Government had reached VND6.18 trillion. Bad debts from ODA lending had stood at VND2.2 trillion and debts owed by Vinashin alone were VND3.79 trillion. From 2008 to 2010, VDB did not adhere to the rules of capital mobilization properly. The bank is only allowed to raise funds with interest rates equal to the market levels when it has fully used interest-free or low-interest capital sources, but this regulation has led to inefficient capital use. In regards to pilot lending programs, VDB was found granting loans unduly, going against the regulations of the Government on credit for investment and export. The outstanding loans of the bank’s pilot lending program as of October 31, 2011 had amounted to VND260 billion, in which bad debts made up 85.27%. “It is very difficult to fully recover this sum,” said the Government Inspectorate. VDB has also committed many violations in lending for investment and export, giving loans worth trillions of dong to many unqualified projects. For example, the lender has committed violations in loan disbursement for 41 out of 159 projects with total outstanding loans of VND3.16 trillion. Among those, it faces a high risk of capital loss in 33 shipbuilding projects with total loans of some VND3 trillion, said the Government Inspectorate. A number of projects are incomplete, so their owners do not have money to repay debts. Meanwhile, collaterals are properties acquired or developed on the loans, making it difficult to handle and posing a high risk of capital loss. “This issue needs special care,” the Government Inspectorate stated. To deal with this issue, the Government Inspectorate suggested the Ministry of Finance request VDB and relevant local governments to review each project and then propose solutions. Moreover, specific violations in the lending process should be strictly handled. Vending machine uses mobile network accounts The HCMC University of Technology’s Faculty of Mechanical Engineering has invented the vending machine mVendTek from upgrading the vending machine using coins into using mobile network accounts. Nguyen Tinh, head of the project, said that to use the machine, customers have to have money in a mobile network account, call to the number of the machine and the select the drinks available at the machine. According to Tinh, mVendTek is placed at the university for test-use first. If it works well, the Faculty of Mechanical Engineering and Tan Tien Viet Service and Trading Co. will install more machines of this kind at other schools and hospitals. Orchid prices to soar during Tet Orchid prices in the HCMC market will likely shoot up during the Lunar New Year holiday due to undersupply. Orchid supply from Dalat may only meet 30% of demand because of a poor crop, while supply in HCMC is shrinking fast. In Nha Be, Cu Chi and Hoc Mon, known as the orchid garden of HCMC, a lot of farming households are still busy improving orchid seedlings, so they have few products for sale. Huynh Van Hung, owner of orchid farm Huynh Hung covering over 5,000 square meters in Nhon Duc Commune, Nha Be District, told the Daily that the output of his farm is very low, and thus the sales volume is negligible. Similarly, the owner of an orchid farm in Cu Chi said he was hesitant to sell his flower to traders given the anticipated undersupply. “I have only a few this year. There is no need to sell them early. There are a lot of days left until the peak season. It is so easy to sell at inappropriate prices now,” said Nguyen Van Tai, owner of a 5,500-square-meter orchid farm in Cu Chi’s Trung An Commune.  Cu Chi District this year has 130 hectares of orchid farming, up 20 hectares against 2011. “Not only do migrants come here to set up new farms, but local farmers have also expanded their flower farms,” said Pham Anh Dung, chairman of Cu Chi District Ornamental Plant Association “Both orchids and cymbidiums will sell well at Tet holiday, maybe because people increasingly prefer orchids to apricot and peach blossoms. Prices may be 20-30% higher than last year, though. For example, the new variety Mokara may be quoted at VND200,000-300,000 per basket of two branches,” he predicted. HCM City’s agriculture yields VND239 mil. a hectare Agricultural production revenue of HCMC averaged out at VND239 million a hectare in 2012, surging VND43 million a hectare from 2011 and nearly VND99 million a hectare against 2010. At a review meeting of the agricultural sector held by the city’s Department of Agriculture and Rural Development in HCMC last Friday, Le Thanh Liem, director of the department, ascribed the improved yield to policies on changing into urban agriculture. For instance, he said, the city has replaced rice farming areas by high-value crops such as ornamental plants, clean vegetables and cow farming. As of the end of last month, the growing area of flowers and ornamental plants totaled more than 2,000 hectares and that of vegetables was 14,500 hectares, the agricultural department reports. Meanwhile, the number of dairy cows in the city amounted to 113,500 head of cattle, a rise of some 7% over 2011, with roughly 90,000 milky cows providing an average of 15.1 kilos of milk a head a day. The city’s husbandry industry contributed the highest value with around VND6.1 trillion, followed by vegetables and ornamental trees with over VND3 trillion and seafood farming with more than VND2.6 trillion, all higher than the 2011 records. As such, the production value of the municipal agriculture, forestry and fishing industries posted growth of 6% compared to 2011, 1.76 times higher than the nation’s rate. The department in the meeting set growth target of the local agriculture, forestry and fishing industries at 6% for the year 2013. VietJetAir expands aircraft fleet VietJetAir said on Monday it has just added one aircraft to its expanding fleet of Airbus A320s a month before the low-cost airline commences its international service between HCMC and Bangkok. The carrier’s sixth narrow-body aircraft has its front section emblazoned with Vietnam’s official tourism logo and slogan: a stylized five-petal lotus accompanied by ‘Vietnam - Timeless Charm’ words and the latter part colored red and yellow, representing the national flag of Vietnam. Desmond Lin, business development director at VietJetAir, said the airline would promote Vietnam as a destination for travelers and businesspeople across the globe. He furthered the new aircraft would help the carrier meet increasing travel demand during the upcoming Lunar New Year holiday, or Tet, before supporting its international service scheme. VietJetAir plans to have up to 15 aircraft by 2015 with three to five aircraft to arrive this year, according to Lin. “We are confident there is plenty of room for growth with our business model of quality flights and low-cost fares,” Lin said. VietJetAir currently serves domestic flights linking HCMC, Hanoi, Dalat, Danang, Phu Quoc, Hue, Nha Trang, Vinh and Haiphong. The airline will launch its first international HCMC-Bangkok route on February 10 this year, and have plans for services connecting HCMC and Hanoi to other Southeast and Northeast Asian countries before the end of 2013. KPMG opens representative office in Thanh Hoa city KPMG Limited has been licenced by Thanh Hoa Department of Planning and Investment to officially open its representative office in central Thanh Hoa province’s Thanh Hoa City. Nghi Son Economic Zone in Thanh Hoa is where Nghi Son Refinery and Petrochemical Complex project is located, with many other large projects slated in the near future. Nghi Son Refinery and Petrochemical Complex project is the largest-ever foreign direct investment project in Vietnam. In order to give maximum support to the project’s investors, contractors and sub-contractors, KPMG has made an additional investment with its presence in Thanh Hoa. The opening of the KPMG representative office will also pave the way for new cooperation opportunities for other projects, contractors, and companies in Thanh Hoa city and nearby provinces in the northern central region. “This is KPMG's third office in Vietnam, and recognises the huge importance of the Nghi Son project to our valuable clients," said Warrick Cleine, KPMG's CEO for Vietnam and Cambodia. "We look forward to providing world class audit, tax and advisory services in Thanh Hoa, as we already do in Hanoi and Ho Chi Minh City”. KPMG’s representative office will be located in Dong Huong commune, Thanh Hoa City. KPMG in Vietnam is one of the leading professional services firms, with over 950 staff working from our offices in Ho Chi Minh City and Hanoi. The firm works with its colleagues across Asia and around the world to provide a broad range of services. KPMG is a global network of professional firms providing audit, tax and advisory services. It operates in 156 countries and has 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. Each KPMG firm is a legally distinct and separate entity and describes itself as such. IZ investors set to get twinkle in their eyes The Mekong Delta’s Can Tho city is scaling up efforts to charm various industrial zone investors. City-based relevant state agencies were recently urged by local authorities to accelerate industrial zone (IZ) construction in the area and they must review IZ infrastructure investor capacity and take action towards delayed project investors. “Delayed projects shall have their investment licences taken back to replace with other more viable ones, if important,” said Can Tho City People’s Committee deputy chairman Vo Thanh Thong. “The project’s slow progress was largely attributed to still high land rent and constant [compensation and resettlement] policy changes,” said Nguyen Tien Dung, director of Building Materials, Construction and Trading Company’s Can Tho city branch and developer of Hung Phu 2A IZ in the city. Dung said the company had pumped VND170 billion ($8.1 million) into the IZ, but just had 30ha in cleared land and charmed four investment projects. Cai Rang District People’s Committee deputy chairman Tran Thanh Can said the district paid special attention to IZ investors. “However, not land was cleared in the district in 2012 as investors were bogged down in hardships,” said Can. To facilitate IZ infrastructure development, Can Tho City Export Processing and Industrial Zones Authority asked the city’s management to map out a specific incentive regime in the spirit of Resolution 45-NQ/TW of the Politburo covering ‘building and developing Can Tho city during the course of national industrialisation and modernisation,’ according to authority head Vo Thanh Hung. Proposed incentives include tax reduction/exemption and preferential lending to IZ infrastructure investors, a shift from IZ land leases to land allocation while collecting land rent, a change to the Hung Phu 2B IZ model into a hi-tech park and land rental downward revisions in some IZ areas. “These proposals were basically accepted, except the shift of land leases into land allocation which is a big policy still without precedent, so we need comments from central management bodies,” said Thong. Can Tho city is home to five operating IZs (Tra Noc I, Tra Noc II, Hung Phu I, Hung Phu 2A and Thot Not) attracting 206 projects leasing around 565ha of industrial land worth $1.8 billion in total committed capital, including 22 foreign direct investment projects worth $181 million. Of the remaining IZs, the 67ha Hung Phu 2B is in the compensation stage while Thot Not IZ’s second phase (400ha), O Mon (600ha) and Bac O Mon (400ha) are in the planning stage with construction slated from 2015. ANZ to stretch its working hours ANZ Vietnam will open three of its full service branches in Ho Chi Minh City on Saturdays to bring greater flexibility, access and convenience to customers. ANZ was the only foreign bank in Vietnam to open on Saturdays in Hanoi from June 2010 and is now the only foreign bank to open on Saturdays in Ho Chi Minh City. ANZ Vietnam head of Retail Banking Duong Duc Hung, said: “ANZ recognises the changing needs of customers and the increasing importance of flexible banking options. By offering Saturday branch banking hours, we are providing our customers with greater convenience and access to our services. “Our end goal is to continue to engage with our customers and enhance the ease of the banking experience with ANZ,” added Hung. ANZ was among the first international banks to operate in Vietnam, establishing its first office in 1993. The bank has 10 branches and transaction points in Vietnam. Industrial machine looks to muscle up The industry and trade management authorities’ key tasks in 2013 are coming into sharp focus. In the recent past, Prime Minister Nguyen Tan Dung asked the Ministry of Industry and Trade (MoIT) to concentrate efforts into tackling hardships to support production, business for domestic market expansion, set close eyes on imports, clear unsold stock and make the most of existing export markets to boost export growth in a sustainable manner. Accordingly, transforming the economy’s structure in parallel with reforming the growth model, bettering productivity, quality, ramping up the production of items with high comparative advantages to boost exports, shielding domestic production will continue to be the sector’s central tasks in 2013. This year, the industry and trade sector will rake in $126 billion in exports, surging 10 per cent against 2012 and report $136 billion in total import value and peg the rate of trade deficit over total export value at around 8 per cent. To make these goals come true in the context the world economy is till in the fix with slow recovery in the global trade businesses are in urgent need for the industry and trade sector’s timely support, particularly in trade promotion searching for potential export markets. Deputy chairman of Danang’s People’s Committee Phung Tan Viet expected businesses based in Danang would benefit more from the MoIT’s trade promotion programmes to help them widen output markets for their products. Vietnam Petroleum Group chairman Bui Ngoc Bao said the long-lasting application of measures for market price stabilisation had put remarkable pressures on firms. Accordingly, the group just posted VND20 billion ($950,000) profits from petroleum trading out of its VND1.050 trillion ($50 million) profits in 2012. Bao proposed the state to maintain stable tax policies in 2013 to avoid putting extra burdens on firms. Vietnam Association of Seafood Producers and Exporters (VASEP) secretary Truong Dinh Hoe said 2012 was the year the seafood sector posted slowest growth pace of just 0.7 per cent in the past years due to incurring trade barriers from import markets and firms’ shortages of capital. Hence, VASEP proposes the MoIT to shortly devise plans and resort to support from foreign consultants to develop compatible trade promotion programmes to help broaden export markets. Seafood businesses are also starved of credit support from the state to help them materialise set targets in 2013. Mekong Cap aims to add value Founded in 1993, An Giang Plant Protection Joint Stock Company is the leading distributor and a manufacturer of crop protection chemicals (CPC) in Vietnam. With a nationwide distribution network of 25 branches and nearly 500 large-sized wholesale agents, the company controls 30 per cent market share of CPC. Since 2010, An Giang has expanded into the rice processing and trading business, with a goal of becoming the leading vertically-integrated agricultural service provider in Vietnam by 2015. As the result of this strategy, An Giang had four rice factories in operation by the end of 2012 with maximum designed capacity of 200,000 tonnes of paddy per year from each factory. In next six years, the agriculture company plans to own 12 rice processing factories serving a total farming area of 316,000 hectares, equivalent to 8.1 per cent of Mekong Delta farming area. There are many reasons for the success of An Giang in recent years - the financial investment from Mekong Capital in 2008 is one of those. After partnering with An Giang, Mekong Capital has made contributions to the company’s strategic and high-level development. Most recently, for example, during the process of developing a financial plan for An Giang’s rice business for 2012-2015, Mekong Capital advised An Giang on financial modeling techniques and ways to optimise profits. As a result, the company has finalised a robust financial plan to achieve its vision of becoming the leading vertically integrated agriculture company in Vietnam. An Giang Plant Protection Joint Stock Company is just one of more than 20 fast-growing Vietnamese companies that Mekong Capital has invested in. Some of the firm’s portfolio include MobileWorld, Golden Gate, Phu Nhuan Jewelry (PNJ), Traphaco, Asia Chemical Corp Nam Long, Masan Food, International Consumer Products Corporation (ICP) and Saigon Gas. As in the case of An Giang, Mekong Capital says its goal is to add value to each of investments, beyond what would be expected from a passive investor. Therefore, Mekong Capital works closely with investee companies to empower their management, leadership and corporate cultures in ways that lead to sustainable net profit growth and long-term shareholder value creation. “During the course of working closely with more than 20 investee companies on post-investment value creation projects, we have continuously refined our approach by identifying what was working, what was not working, and what was missing,” said Mekong Capital managing partner Chris Freund. MobileWorld, for instance, has added over 200 retail outlets, assumed national market leadership in mobile device retailing, created a new concept and brand around consumer electronics. Its revenues have grown at a 60 per cent annual rate with the turnover in 2011 of $255 million, during the partnership with Mekong Capital. Since 2007, Mobile World has created nearly 8,000 jobs spread across every province in Vietnam. “We trust each other and can share anything, and they support us with valuable guidance,” said Nguyen Duc Tai, CEO and co-founder of MobileWorld. “Sometimes we are in touch several times a week. At the end of the day, we are all committed to the same long-term objective of building Mobile World into the leading retail company in all the product segments it operates.” PNJ is considered another successful story. “We found a mutual understanding and trust while working with Mekong Capital,” said Nguyen Thi Cuc, vice general director of PNJ. “An investment by Mekong Capital not only reflects the success of PNJ but also fuels the company to strengthen its market leadership while pursuing long-term growth strategy.” Since investing in PNJ, Mekong Capital has supported the company reach out to experts in retail sales management with the intention of implementing key performance indicators for sales management as the industry leaders in the retail sector. In addition, Mekong Capital introduced PNJ to best practices in the investor relations function and provided coaching on best practices in financial budgeting to the finance team to implement significant improvements in its investor relation programme and budgeting process in 2013. Another company that has achieved significant success since the investment of Mekong Capital is Nam Long, a property developer. Recently, Nam Long has made remarkable progress in developing their EHome brand of affordable housing in the Ho Chi Minh City area. Despite the dire property market, Nam Long company sold 239 of 333 apartment units at the EHome3 project in Binh Tan district, and 85 of 140 townhouses at the EHome4 project in Binh Duong province during the last five months of 2012. This sales performance reaffirms the strong consumer interest for the EHome brand, and the viability of the affordable housing segment of the market in general. “We partner with the senior management of our investee companies to create a clear vision for their future, with measurable targets, normally for a five-year period. This will be a vision in which we can both own, and this shared vision is the foundation of our partnership,” said Mekong Capital’s principal Pham Vu Thanh Giang At Nam Long, Mekong Capital encouraged the company to focus its business model on a single business line—affordable housing—while the luxury segment is oversupplied. So far, the company completed its 2012 to 2017 planning for EHome, yielding approximately 13,000 affordable housing units in total across eight projects, with about 2,000 units launched annually. Mekong Capital’s post-investment value creation programme began with the launch of its first fund, Mekong Enterprise Fund, in 2002. As the first investment fund established in Vietnam after the Asian financial crisis, Mekong Enterprise Fund was also the first private equity investor in Vietnam to employ a comprehensive post-investment value creation programme. With a commitment to making significant positive impact on the long-term value of each of investee companies, Mekong Capital says it seeks to constantly provide support to investee companies to increase long-term value by setting long-term targets and formulating clear strategies to achieve those targets, recruiting and developing extraordinary management teams, promoting excellence in financial reporting and corporate governance, working out to eliminate anything standing in the way of achieving those targets. “Mekong Capital is one of the few private equity focused fund management firms in Vietnam that committed in long-term growth and adding significant value to investee companies as a shareholder,” said ICP’s CEO Phan Quoc Cong. “During our partnership, Mekong Capital greatly contributed into setting up our transparent corporate governance and strong corporate culture.” Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR