BUSINESS IN BRIEF 10/2 Screening to continue in property market The real estate market will probably continue to undergo screening this year, so more quick-buck opportunists will be eliminated, leaving the playground for professional and financially healthy investors. Statistics of the Ministry of Construction show that 2,600 out of 56,000 enterprises active in construction and property trading dissolved or suspended operations in 2012. Among them, 2,110 were construction firms and the others were real estate companies, up 6% and 24% against 2011 respectively. It is believed that if the market continued the current trend, the number of disbanded and inactive businesses would rise further. From another angle, this would be beneficial to the market for eliminating the profiteering property traders  Le Chi Hieu, general director of Thuduc Housing Development Corp. (Thuduc House), said 2013 would be a year for brave investors with enough money to buy cheap projects to further grow and wait for the market recovery. The make-or-break movement depends on talent and skills of each investor. The important thing is which segment they will choose, high-end or low-end. The market is leaning towards the low-cost segment, targeting low-income earners. The Government’s Resolution 02 issued early this year is also aimed at removing difficulties for this segment, focusing on condos of below 70 square meters each, priced at VND15 million per square meter. The central bank’s governor Nguyen Van Binh in a directive on the monetary policy released last Thursday said the central bank would join hands with the construction ministry to draw up and issue a guideline for lending to buyers of low-cost houses and investors converting their projects into low-cost ones. He added the central bank would set aside a sum for refinancing with reasonable terms and interest rates in a bid to help banks give loans to the aforementioned borrowers in the spirit of Resolution 02. It is still unknown if this remedy will be effective, but the market has recorded positive changes as a number of enterprises decided to shift their projects to the low-cost segment. In the northern market, at least four projects have been turned into low-cost housing projects. They are the apartment project AZ Thang Long of Thang Long Confectionery Co. Ltd., the high-rise commercial housing project Song Da developed by Song Da Urban Development Joint-stock Co. in Ha Dong District, the urban project Trung Van of Hanoi Construction Investment JSC in Tu Liem District, and the project of Tourist Material Joint-stock Co. The shift towards the low-end segment is understandable since low-cost home developers can enjoy preferential loans, land use fee and corporate income tax. In the southern market, several realty firms have increased investment in the low-cost housing segment, which will lead to a larger supply of budget condos in the coming time. In particular, Le Thanh Commercial Construction Co. is seeking permission for investment in two apartment projects in HCMC’s Binh Tan District. The company’s director Le Huu Nghia informed his firm would build a low-cost housing project consisting of 2,500 apartments and a commercial one with about 900 flats. Similarly, Thuduc House will develop small-sized apartments called S-Home, with each unit covering 40-60 square meters. The company plans to launch 700-1,000 S-Home apartments in District 9 and Thu Duc District in the coming time. It is unknown how the market will respond to this kind of apartment, as well as how the supporting polices for the market will be carried out. However, one thing for sure is that with many projects in the low-end segment, a fierce competition will take place. Resettlement houses in Dong Nai handed over Around 100 resettlement houses in the Hung Long Open Economic Ecological Urban Area in Dong Nai Province were handed over to households in Long Thanh District on Thursday, five years after the project was kicked off. According to the project’s investor, Dong Nai Agriculture Service Cooperative Alliance (DonaCoop), the technical infrastructure of the project’s first phase has been completed. The complex, also known as DreamLand City, covers 1,500 hectares and consists of five component projects with an initial investment of around US$2 billion. Bui Thanh Truc, general director of DonaCoop, said that protracted economic difficulties in the past time have partly affected the slow progress of the project. DonaCoop will complete major roads of the urban area in April and carry out the second phase of components projects next year. Truc said that DonaCoop would continue to transfer an additional 200 houses for customers in the fourth quarter and 500 more houses late next year. The project’s investor will sound out the purchasing power by launching the sale of some 300 land lots and townhouses by March and launch 700 more products this year. The selling price has yet to be announced. Dalat Hasfarm imports more flowers for Tet Dalat Hasfarm has imported five more tons of flowers for the Tet holiday, 2.5 times higher than last year, including flower types that are quite new at home. Nguyen Hong Chuong, marketing director of Dalat Hasfarm, said his firm imported many kinds of strange flowers such as Forsythia, Ilex and Ecuador rose. These flowers are priced between several thousand dong and hundreds of thousands of dong each branch. Dalat Hasfarm this year launches onto the market about three million flower branches, a pickup of 10% against last year, Chuong said.  Besides, the company also offers a vast array of locally-grown types like yellow daisy or lily with prices rising 5-10%.  The firm has also prepared flowers for the upcoming Valentine’s Day falling on the fifth day of the first lunar month. SCG Vietnam posts strong sales growth Thailand’s SCG Group said its business in Vietnam had fared well with last year’s sales revenue surging 11% year-on-year, encouraging the group to strengthen investment into the nation. SCG Group in a statement reported revenue of some VND1.7 trillion or US$83 million for last year’s fourth quarter, a pickup of 15% over the year-ago period. It attributed the sales increase to the rising demand for packaging paper products. As such, SCG’s total sales in Vietnam reached around VND6.74 trillion or US$325 million in all 2012, rising 11% year-on-year. SCG has recently cut a deal with Prime Group Co., the nation’s largest brick and tile producer, to acquire an 85% stake in the latter with a total value of VND4.8 trillion or US$234 million. SCG said it is expanding investment in ASEAN, focusing on Indonesia, Vietnam and Myanmar. It will also pour a budget of roughly VND1.43 trillion or US$70 million into researching and developing products and services with highly added values. The group has since last year acquired and purchased equities of four local entities. These include a 99% stake in Buu Long Investment and Industry JSC in Dong Nai Province, and majority stakes in Thieu Nien Tien Phong Plastic Co., Binh Minh Plastic Co. and Prime Group. Since its entry into Vietnam 21 years ago, SCG has had 17 subsidiaries here with assets totaling more than US$370 million and revenue at US$300 million. The group is looking to invest in other areas in Vietnam, including an oil refinery complex in the south which will cost an estimated US$4.5 billion. SCG as one of the leading industrial groups in South East Asia is active in a wide range of industries, especially in oil, paper, cement, building materials and distribution. Vinacomin sells VND2.5 trillion of bonds Vietnam National Coal and Mineral Industries Group, or Vinacomin, on January 18 issued VND2.5 trillion worth of five-year bonds with the coupon of 14.5% in the first year. A source told the Daily that institutional investors expressed stronger response towards this issuance compared to the previous one last July. Vinacomin at that time sold only 17% of the VND3 trillion worth of bonds launched on the local market due to a lower than expected coupon. This issuance aims to raise fund for the company to increase operation scale and finance its projects. These bonds carry a face value of VND1 billion each. ANZ Vietnam Bank and Vietnam Bank for Industry and Trade (VietinBank) are consultants and bond sale agents for Vinacomin. VietinBank Securities Company is the management, depository and payment agent. The coupon offered by Vinacomin is higher than that on the primary government bond market. From the second year, the coupon will be calculated by the average of 12-month dong deposit rates of four large banks plus 3.6% per year. The four large banks in this calculation is Bank for Investment and Development of Vietnam, Bank for Foreign Trade of Vietnam, VietinBank and Vietnam Bank for Agriculture and Rural Development. The floating coupon rate will be paid every three months while the principle will be paid at maturity time. Given the Ministry of Industry and Trade’s master plan of the coal industry, the nation is expected to turn out over 66-70 million tons of commercial coal until 2020 and over 75 million tons until 2030. The Red River basin is expected to produce 10 million tons. The sector is therefore expected to need around VND317 trillion to realize these targets from now to 2020, or VND35.3 trillion each year, causing a big challenge to enterprises in the sector. Vietnam Steel Corporation (VnSteel) last month also issued VND500 billion worth of corporate bonds for three branches of VietinBank, including VND200 billion for the Ba Dinh branch, VND200 billion for the Dong Da branch and VND100 billion for the Song Cong branch. The coupon of these three-year bonds is paid every three month, fixed at 16% per annum for the first two maturity periods. The next coupons will be calculated by reference interest plus 4% per year. Vietinbank will have to take VnSteel bonds into account of its credit growth while those buying bonds of Vinacomin will also count these bonds into the corporate credit growth. More new bank notes for Tet Changing new bank notes at the HCMC branch of the State Bank of Vietnam (SBV) has become a much more common practice in recent days, especially with Tet around the corner. Nguyen Hoang Minh, deputy director of SBV’s HCMC branch, said his agency had launched onto the market a large volume of new bank notes with face values of below VND100,000. Not many bank notes whose face values were VND20,000 and VND5,000 were prepared by SBV last year, he noted. Every bank will be allowed to change different amounts for new bank notes, Minh said, adding the sum of each lender will be decided based on its operational scale and capital mobilization ability. The department in charge of changing new bank notes at the central bank’s HCMC branch this week has been busy serving branches of local banks asking for small change amounting to several billion dong each. An executive of a branch said the money volume his bank changed this year is much higher than last year and consists of different values. Thanks to the abundant money supply, fees for changing new bank notes at local websites this year are not as high as last year. On 5giay.com, Enbac.com or quabieusap.vn, money changing is not restricted in terms of volume, with the fees ranging from 5% to 10% equivalent to last year’s level. The central bank earlier announced that it had already prepared enough cash to meet local payment demand during Tet including both old and new types. As the money authority really cares about the local custom of giving lucky money with new bank notes, it has released a reasonable amount of new money into circulation before Tet accordingly. FPT earns big profit in 2012 The Hanoi-based FPT Group achieved a pre-tax profit of some VND2.4 trillion and an after-tax profit of about VND1.98 trillion in 2012, according to the group’s executives. FPT as of the end of last year had enjoyed around VND25.35 trillion in revenue or over US$1.2 billion. The parent company reported roughly VND1.54 trillion in after-tax profit with an earning per share of VND5,660 and contributed approximately VND3.71 trillion to the State budget in 2012. Core business areas of FPT including telecom services, digital content, software and computer services still maintained strong growth last year. Revenue that FPT pocketed from these areas in 2012 grew 25%, with pre-tax profits marking up 28% versus a year earlier. The software export segment alone gained a growth rate of 34%, and it is ascribable to the group’s strategy for focusing on expanding foreign markets in the backdrop of the unfavorable market conditions at home. Closing the year 2012, FPT had nearly 15,000 staff members, up 24% year-on-year, with FPT Software alone currently employing more than 4,000 staff. Dragon fruit farmers enjoy bumper harvest The price of dragon fruits, especially red-fleshed ones, suddenly rises towards the Lunar New Year holiday when fruits are almost ripe, bringing good profits for farmers in Long An Province. Nguyen Phuong Linh, owner of a red-fleshed orchard of 5,000 square meters in the province’s Chau Thanh District, said that a trader agreed to buy his fruits at VND45,000 per kilogram. His dragon fruit seedlings were bought from Southern Fruits Research Institute, and the first crop was produced after 21 months with a yield of 2,500 kilograms. Although with the first crop with low yield, Linh still earns big profits thanks to the high price. Dragon fruits farmed in Linh’s orchard will be sold to a trader who will then export to China before the holiday. Besides, the price of white-fleshed dragon fruits has also risen to VND16,000-17,000 per kilogram. The Lunar New Year holiday is a good chance for dragon fruit export to China, some other Asian countries and countries having a large number of Asians such as the U.S., Australia and Canada. District chairmen responsible for pollution Chairmen of city districts will be responsible if production facilities cause environmental pollution, said HCMC vice chairman Nguyen Huu Tin at a meeting with the city’s Department of Natural Resources and Environment last week. According to the department, there needs to be stricter sanctions for production facilities causing pollution, especially in District 12 and Binh Tan District. Besides, pollution in industrial parks is also a concern. Among 30 industrial parks of the city’s planning, there are 17 which have yet to have management units, finished infrastructure and central wastewater treatment systems. Besides, many enterprises do not treat wastewater or treat it improperly to cut costs. The department targets that all serious pollution caused by facilities will be solved this year. Currently, two facilities causing serious pollution which have not been tackled properly are Ha Tien cement factory and Ba Son shipyard. However, there are many agencies which have the duty of inspecting the environmental pollution. Therefore, it is necessary to have a clear division to avoid agencies shirking responsibilities and troubling enterprises. Clothing exports surge by 28 pct Export revenue of textiles and garments surged 28.4 per cent to $1.05 billion in the first month of the year, according to the Ministry of Industry and Trade. The ministry also reported that production of woven fabrics made from synthetic and artificial fibers reached 81.8 million square metres, a 12.9 per cent increase, while clothing for adults also surged 21.6 per cent to 184.8 million units. Natural fabrics output in January increased 2.2 per cent to 22.1 million square metres. Most Vietnamese garment and textile enterprises reported having received orders to the end of the first quarter. A number of large businesses even received orders for the second and third quarters. The ministry said that this is an optimistic sign for the textile and garment industry and suggested firms invest more in boosting the image of Vietnamese products overseas. Textile and garment producers should also focus on making their own materials to minimise dependence on imports, the ministry said. Vietnam’s textile and garment industry ailment to grow by 12-15 per cent this year and earn export revenues of 18.5-$19 billion. The US is expected to remain Vietnam’s largest textile and garment importer with an import value of $8.5 billion, up 11 per cent against last year. Exports to Japan and the EU are also estimated to reach $2.4 billion each while shipments to the Republic of Korea are expected to surge 15 per cent to $1.5 billion. Vietnam ranks 5th among biggest aquaculture exporters to US Vietnam ranks 5th among 130 biggest exporters of aquaculture to the US market, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). Vietnamese aquaculture products dominated 7pct of market share value and over 8pct in terms of import quantity the US. Of the aquaculture exports, trout expanded sharply 88pct in value, however, shrimp export declined 14pct against 2011 as shrimp reserve in the US surged in the second half. Tuna shipment fell 6pct in quantity but picked up 26pct in value. Meanwhile, export of tra fish increased by 17pct. China, Canada, Thailand, Indonesia are the top aquaculture exporters to the US with respective percentages of 16pct, 12.3pct, 7pct and 5.5pct. Customs system a weight off firms’ minds The recently improved customs clearance system is expected to ease firms’ burdens. Online customs procedures have been jumpstarted from early 2013 and Haiphong Customs Department was the first body embracing the system to help streamline the system. As planned, the system will work around the clock every day, as opposed to the current working hour system. According to customs bodies, e-customs could help firms save around 20 per cent in expenses. Particularly, with e-customs businesses can save diverse sorts such as relevant travel and human resources expenses. Hanoi customs held a ceremony marking official launch of the system in early February 2013. “Online customs settlement has gone smoothly, effectively serving the business community,” said Hanoi Customs Department deputy head Nguyen Van Hong. “The customs bodies, however, need active support and cooperation from businesses. To ensure the system can operate without a hitch, firms need to provide information precisely and in full.” Toto Vietnam Company Limited, a leading sanitary products maker based in Hanoi’s Thang Long Industrial Zone, annually exports a huge volume of goods, thereby cargo-handling progress is crucial to help the firm meet its partner demands for goods delivery. “We believe some past problems involving with the transmission channel or less compatibility between customs’ and our business IT system would be tackled with the improved [e-customs clearance] system,” said a firm source. General Department of Customs (GDC) Information Technology and Customs Statistics Department deputy head Nguyen Tran Hieu said besides upgrading the system nationwide, the GDC would set close eyes on any possible trouble voiced by tax bureaus. Hieu said e-customs in the spirit of Decree 87/2012/ND-CP and Ministry of Finance’s Circular 196/2012/TT-BTC was one of steps in the customs procedure simplification and modernisation roadmap. The customs sector will work with relevant government agencies to have customs procedures settle through single-window in the upcoming time. That was because some items still demand import-export permits, making firms to go back and forth to licencing and customs bodies to get their cargos pass through customs check. State pumps petrol changes The government’s proposed plan to suspend A83 gasoline usage is coming into sharp focus. In the past the Ministry of Industry and Trade (MoIT) was assigned to mull a suitable roadmap to suspend import, production and distribution of non-lead A83 gasoline. “The decision on halting A83 gasoline circulation also relies on checks on how much A83 gasoline volume remains at production and distribution businesses as well as the time required for consumption, to ensure firms not being hurt by the decision,” said MoIT’s Domestic Market Department head Vo Van Quyen. “The department is doing its utmost to handle the proposal.” From the part of businesses, PV Oil is currently the biggest A83 gasoline maker in Vietnam and it sold 293,000cum of the product made itself in 2012. However, among businesses getting the right to import petroleum products only PV Oil registered to either produce or import for sale of 150,000cu.m of A83 gasoline in 2013. PV Oil has contemplated a plan to double the production capacity of its hydrocarbon liquid mixture processing plant in southern Ba Ria-Vung Tau province’s Phu My Industrial Park in parallel to bettering the product quality. Industry experts, however, assumed PV Oil planned to upgrade its condensate plant has bogged down in difficulties. In reality, turning condensate into A83 gasoline is less costly as the octane rate in condensate is tantamount to that in A83 gasoline. However, several more admixtures would be needed to raise the octane rate to turn condensate into A92 gasoline. If doing so the cost of A92 gasoline will be dearer than current A92 gasoline price. Asked by the VIR about its plan on churn out A92 gasoline through upgrading existing Ba Ria-Vung Tau plant, PV Oil general director Nguyen Xuan Son said the business would stop producing A83 gasoline if the government decided on suspending A83 gasoline circulation. Saigon Petro general director Dang Vinh Sang said the government’s plan to suspend A83 gasoline circulation would not affect its petroleum business. “We will stop manufacturing and trading in A83 gasoline if it was proposed by the government.” Ceasing A83 gasoline circulation was first proposed by relevant government agencies in 2007.   Viettel targets profit of VND34.6 trillion in 2013 The Defence Telecommunications Group Viettel earned revenue of VND141.4 trillion and profit of VND 27.5 trillion in 2012, the group announced on February 3rd. Along with its high growth rate, last year, Viettel contributed VND12 trillion to the State budget and donated VND 80 billion to social welfare, increasing 20 and 25 per cent, respectively, against 2011. Also in 2012, Viettel received licenses to invest in the 7 markets of Laos, Cambodia, Timor-Leste, Mozambique, Cameroon, Haiti and Peru. Especially in Mozambique, Viettel’s subsidiary (Movitel) earned profits just 6 months after it began operation. Movitel is Vietnam's most effective project in Africa since 2008. In 2013, the group targets to increase sales between 15 and 20 per cent to reach VND162 trillion in revenue and 34.6 trillion in profit. Besides, Viettel plans to invest $175 million in foreign markets and earn $120 million from its products in these markets. Masan Consumer to buy 24.9 per cent of Vinh Hao Masan Group said its subsidiary Masan Consumer would purchase 24.9 per cent of Vinh Hao Mineral Water Company. Established in 1930, southern Binh Thuan province’s Vinh Hao was the first domestic mineral water producer in Vietnam and is today one of the most recognised and trusted brands in the bottled beverage sector in the country. Its portfolio comprises of mineral water, purified water and mineral water-based soft drinks. Masan Consumer is a market leader in sauces, instant noodles and instant coffee. On the back of the transaction, Masan Consumer plans to launch a cash tender offer process at similar commercial terms to increase its stake. Masan Group said the contemplated purchase and tender offer were subject to customary corporate and regulatory approvals. Masan is one of Vietnam’s largest private sector business groups, with its score business including consumer goods, mining and banking. Da Nang earns 1.5 billion USD from exports The central city of Da Nang earned 1.5 billion USD from exports last year, of which the industrial exports accounted for 86 percent. “It’s the first time the city has achieved the figure. However, it’s also a significant growth of exports during the economic downturn,” Vice Chairman of the city’s People’s Committee Phung Tan Viet said at a year-end meeting with the city’s industry and trade department. The vice chairman added that foreign-invested businesses contributed 53 percent of the city’s total export revenues in 2012. According to the industry and trade department, the city’s industrial production value reached 14.6 trillion VND (695 million USD) last year, an 8.6 percent increase in comparison with 2011. Da Nang attracted 241 foreign-invested projects with a total capital of 3.6 billion USD, while the tourism sector hosted over 2.6 million tourists, bringing in 2.6 trillion VND (124 million USD). Two new flyovers for Hanoi A ceremony to mark the start of construction on two steel flyovers at Hanoi’s Dai Co Viet-Tran Khat Chan and Kim Ma-Nguyen Chi Thanh intersections was held in the city on February 6. The flyover at Kim Ma-Nguyen Chi Thanh junction will be 16 metres wide and 278 metres long, and will cost around 360 billion VND (18 million USD). The flyover at Dai Co Viet-Tran Khat Chan junction will be 11 metres wide and 352 metres long, and will cost over 181 billion VND (9 million USD). The two projects will be completed by October, 2013. SW urged to clear production hurdles The Southwestern Region Steering Committee convened a conference in the Mekong Delta city of Can Tho on February 5 to review last year’s activities and set new tasks for this year. Speaking at the event, Deputy Prime Minister Vu Van Ninh, who is also head of the committee, lauded the region’s economic growth of nearly 10 percent, higher than the national average. Per capita income was 32.3 million VND (1,500 USD), which, according to him, was impressive considering the nation’s economic turmoil. Ninh pointed out weaknesses in the region’s socio-economic development, such as unsustainable economic growth, inefficient policies for key national products, the slow uptake of technology in production, and poor coordination between ministries, departments and local authorities. He asked the region to focus on developing the industry and remove obstacles in production and the property market, and tackle bad debt. Ninh said localities must work closely with ministries and departments to reform education and training, and implement social welfare policies, especially for poor people, ethnic minorities and beneficiary households. The region needs to boost socio-economic development in line with developing agriculture and new rural areas, he said. The committee was also asked to ensure a warm New Year festival for all the people in the region. The committee will aim to contain inflation, stabilise the macro-economy with 11 percent economic growth, raise the average per capita income to 37 million VND (1,760 USD) per annum, and generate 11 billion USD from exports (a year-on-year increase of 10 percent) this year. It also expects to reduce the rate of poor households by 2 percent, generate 350,000 jobs and ensure 95 percent of people living in urban areas have clean water this year. Mekong Delta experiences worse salt penetration According to the National Hydro Meteorological Forecasting Center, the Mekong Delta will undergo a shortage of freshwater and worse salt penetration during the dry season this year. Water level in the upper reaches of Mekong River will be much lower than average level of several years. Salt penetration will occur earlier compared to previous years on rivers like Vam Co, Tien, Hau, Doc, Cai Lon, Ham Luong and Co Chien, where salt water might penetrate 55-70 kilometers inland.  In Soc Trang Province, drought has worsened salt intrusion to reduce output of tens of thousands of hectares of winter spring rice area and threaten another 20,000 hectares. Provincial authorities have instructed residents in communes along the Hau River to fortify the embankment system to prevent salt water from further penetrating into rice fields. They have also dredged canals and conserved freshwater to cope with drought.  The salt penetration has caused a scarcity of freshwater in Binh Dai and Ba Tri Districts in Ben Tre Province over the last one month. At present, local people have to pay VND30,000-60,000 for a cubic meter of freshwater. Viettel provides ethnic minority language mobile phone services Ethnic minorities have at last been offered mobile phone services in their own languages by the Viettel  telecommunications group.  Mobile phone coverage in some of Vietnam’s more remote and mountainous areas, which are traditionally home to higher concentrations of ethnic groups has been limited due to cost and low population density. The military-run telecommunications giants will also offer new content such as news, music and agriculture and other farming tips in ethnic languages. Deputy Head of the Government Committee for Ethnic Minorities Hoang Xuan Luong praised Viettel’s move at a recent press conference. Some nine million of Vietnam’s 12 million ethnic people currently do not use any mobile telecom services.  Vietnam needs 133 bln kWh of power in 2013 Vietnam plans to generate and import over 133.4 billion kWh of electricity in 2013, a year-on-year increase of 11 percent, to meet national demand. The plan, recently approved by the Ministry of Industry and Trade, aims to ensure a stable supply of power in 2013. Vietnam will import 3.7 billion kWh of electricity from China, 1 billion kWh more than last year. To realise the plan, the ministry asked State-owned Electricity of Vietnam (EVN) to coordinate with power generators to manage the operation of oil-burning thermal electricity plants and gas turbine power plants. EVN was urged to enhance the usable capacity of the plants it manages and maximise the use of all power sources to guarantee supply. The National Power Transmission Corporation has been tasked to channel all sources of energy so that key power projects in the south can be implemented and upgraded. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR