BUSINESS IN BRIEF 20/5 Nutrition industry grows well: Nielsen Despite the continued slowdown in the economy, Vietnam’s nutrition industry saw a robust growth in the last 12 months, and local consumers still rate health as a major concern, only behind the economy and job security, according to findings from Nielsen’s Health and Nutrition Forum in HCMC on Thursday. According Nielsen, in spite of the softer economic numbers, certain categories that are perceived as healthy or nutritious by Vietnamese consumers are seeing double-digit growth. The total fast-moving consumer goods (FMCG) category, excluding beer, has seen 11% volume growth in the last 12 months ending in March 2013 compared with a year ago, and 15% sales growth. Growth in volume and sales of milk-based products also reached 19% and 22% compared with a year ago respectively. Vaughan Ryan, managing director of Nielsen Vietnam, said in a media release that the strong numbers indicate the growing importance of health-conscious consumption by Vietnamese consumers even with tougher economic time. In addition, Vietnam also saw a 24% volume growth of instant milk drink in the 12 months versus a year earlier, and 127% and 46% growth of sports drink and healthy food/drink respectively. “The Vietnamese have a simple perception of healthy food, 94% agree it should be safe/hygienic, along with 91% stating it should be fresh,” stated Vaughan Ryan. Communicating sufficient nutritional ingredients is a driver in achieving brand salience in the current Vietnamese health and nutrition landscape, according to Nielsen findings. The key factors considered when purchasing healthy/nutritional food are sufficient nutritional ingredients (36%), reduced risk of disease (25%), and affordability (23%). Nielsen Holdings N.V. is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows, and related properties. Life made easier for foreign homebuyers The Ministry of Construction will relax regulations to make it easier for foreigners and overseas Vietnamese to buy homes in Vietnam, said Deputy Minister of Construction Nguyen Tran Nam. He was speaking at a review conference in HCMC on Thursday on implementation of the Housing Law, the Property Trading Law and Resolution 19/2008/QH12 of the National Assembly. The number of foreigners and overseas Vietnamese owning homes in Vietnam has risen since the Housing Law and the policy for foreign organizations and individuals to buy houses in Vietnam were adopted. Statistics of the Ministry of Natural Resources and Environment show that 489 houses and apartments are possessed by foreign individuals (106 units) and overseas Vietnamese (383 units). Sixteen cities and provinces have granted foreigners and overseas Vietnamese land use right and home ownership certificates. Foreign homeowners in Vietnam are from various countries and territories including the U.S., China, Japan, South Korea, Malaysia, Singapore, Germany, Cuba and Taiwan. However, the number of foreigners and overseas Vietnamese owning homes in Vietnam is still limited because of stringent regulations, according to the Housing and Real Estate Market Management Department under the construction ministry. “Just 106 foreign home owners in Vietnam is a really modest number as more than 80,000 foreigners are currently living and working in Vietnam,” said Dao Trung Chinh, deputy head of the General Department of Land Administration under the environment ministry. To buy a home in Vietnam, foreign individuals must have permission from competent agencies for residing in Vietnam for one year or more and are not entitled to privileges. As for enterprises, they must have investment certificates or equivalent papers granted by State agencies. In fact, since the country opened the door to foreign investors, foreigners have indirectly possessed land in Vietnam. For example, foreign investors are allowed to acquire a 49% stake in a company holding real estate, meaning they have indirect ownership of it. Nguyen Van Danh, deputy director of the HCMC Department of Construction, remarked requirements on the conditions for overseas Vietnamese and foreign organizations and individuals to possess homes in Vietnam are rigid and complicated. The construction ministry promised to relax regulations, allowing overseas Vietnamese to receive land use rights to build houses in Vietnam. As for foreign individuals and organizations, home ownership conditions can be eased. The ministry proposed amending the Property Trading Law, allowing foreign-invested enterprises to rent real estate for sublease and to purchase office space. U.S. second biggest retailer seeking local suppliers Kroger, the second biggest retailer in the United States in terms of revenue after Wal-Mart, says it is looking for Vietnamese suppliers to provide products to supermarket chains stateside as well as crude materials to plants under its management. Tim Kelbel, vice president of corporate brand and global supply of Kroger, said on Monday that his group is seeking suppliers of finished products for distribution at its retail system. Besides, local enterprises can also provide raw materials to Kroger’s plants, he told a seminar arranged by the Vietnam Trade Promotion Agency in HCMC on Monday to help Vietnamese entities look for partners to penetrate the U.S. market. According to Kelbel, Kroger plans to import around US$5-6 billion annually, of which 4-5% should be contributed by Vietnam. Kroger now is importing Vietnamese coffee with an annual value of about US$50 million. This is the first time the group has come to Vietnam, since it has purchased Vietnamese goods via intermediate companies over the years. Kroger is looking for many items in the country, including seafood, rice, pepper, cashew, canned vegetables and fruits and coconut. In addition, the firm is seeking non-food items like wooden products, clothing, cosmetic and gloves. Suppliers of Kroger are required to meet its criteria or to be in the process of acquiring international accreditation certificates such as HACCP or Global GAP. Kroger will begin purchasing commodities from Vietnamese partners by small orders and raise the scale after exploring the local market for a while. Besides seeking Vietnamese exporters for the U.S. market, Kroger also looks for local importers and distributors for products bearing its brand. Kroger is the second biggest retail group in the U.S. in terms of revenue after Wal-Mart, with its total sales of US$96.8 billion reported last year and an expected US$100 billion in sales for this year. Kroger has 34 distribution centers and more than 2,400 supermarkets and multi-department stores in 31 states, 786 convenient stores, 328 jewelry outlets and 37 foodstuff processing factories in the U.S. Vietnam is seeking ways to boost trade via cooperation with foreign large retailers like South Korea’s Lotte, Italy’s Coop and Germany’s Metro Cash & Carry. However, not all Vietnamese entities show a keen interest in approaching foreign supermarket chains. Many local firms said selling products directly to supermarkets overseas is somehow inconvenient, citing deferred payment of up to 90 days by the foreign buyers. KyungBang inaugurates yarn facility in Binh Duong South Korean firm KyungBang has commissioned a US$40 million high-quality cotton yarn factory in Ben Cat District in the southern province of Binh Duong. The facility covers over 16 hectares in Bau Bang Industrial Park, and has a designed production capacity of 6,600 tons of yarn annually. Lee Kap Soo, general director of KyungBang Vietnam, said quality cotton for the highly automated plant was imported from the U.S., Brazil and Australia. The company will supply local textile and garment firms that have contracts with customers abroad, Soo said, adding his firm has secured contracts with more than 10 Vietnamese clients. The factory is part of KyungBang’s broader plan to invest US$140 million in Bau Bang IP. In the second and third phases, the company will expand production by four times to enhance its ability to supply local and foreign customers. KyungBang signed a contract to lease land to set up shop in Vietnam in 2008 but its project was delayed later due to the global financial crisis. Despite the continued local and international economic woes last year, the firm decided to proceed with its project in Vietnam, Soo said. Soo said this was because his company had seen greater growth potential in Vietnam than elsewhere in the region. Big C looking for local suppliers The owner of supermarket chain Big C is focusing on seeking local partners who are able to supply goods for the Big C system in certain provinces or across the country. As part of the program “Cooperation development with small- and medium-sized companies” held by Big C and the industry and trade departments of the northern provinces of Ninh Binh and Phu Tho from last Thursday to Friday, representatives of the Big C purchasing center signed trading collaboration agreements with eight local suppliers of vegetables, fish, beef and pork among others with a total value of about VND5 billion. According to Big C, the collaboration is part of the seminar on solutions for boosting the development of local producers in Ninh Binh City in Ninh Binh Province and Viet Tri City in Phu Tho Province which attracted over 120 enterprises, producers and agricultural cooperatives in the localities. Through the seminar, local entities and producers have a chance to look into purchasing policies and models of the French retailer, especially its requirements for goods and quality. After that, local producers will map out new orientations for their products for sustainable development while the agreements signed in the seminar would open up more chances for local partners to promote and improve their positions in the market. In addition to cutting deals with the suppliers, Big C purchasing staff after the seminar met corporate participants to better understand their products and then choose the most potential suppliers to continue to boost purchases, Big C representatives said. Those products meeting Big C criteria will be put on the shelves of Big C Ninh Binh and Big C Viet Tri which will be operational within this year. Specially, the most potential products of these entities will also be sold in the whole system of Big C nationwide. The seminar is an effort of Big C to increase the localization ratio of its commodities in the system of 22 supermarkets at home, contributing to speeding up development of local industries accordingly. Also, this is a good chance for Big C to approach local suppliers directly and find local specialties to diversify consumer items. After organizing six seminars in Hue, Nghe An, Nam Dinh, Ninh Binh and Phu Tho provinces, Big C up to now has joined hands with 98 small- and medium-sized enterprises in these provinces with a total contract value of roughly VND105 billion. Big C said it is looking to maximize the presence of home-made products in the system. At the moment, up to some 95% of around 50,000 products on sale at every Big C supermarket are domestic items. Developers woo homebuyers via interest-free plans There is a fierce competition among condo project owners who are rolling out attractive sale plans including those for interest-free installments. Many housing developers this year have actively launched their products since early this year instead of keeping a ‘wait-and-see’ attitude as seen last year. Their sales policies focus on seeking affordable financial solutions for homebuyers. For instance, Thuy Loi 4A Realty Investment Joint Stock Company last Saturday introduced the model apartment of The Hyco4 Tower project located on Nguyen Xi Street in Ward 26 in HCMC’s Binh Thanh District. The realty developer also marketed the project’s condos at the same time. Around half of 60 apartments offered for sale this time have found buyers already, said Him Lam Co., as the project’s distributor. Homebuyers will make a down payment of 50%, with the remainder to be paid over a period of 24 months with a zero interest rate. The Hyco4 Tower is comprised of three 17-floor blocks, with 330 apartments measuring from 52 square meters to 94 square meters each and priced at VND1.2-2 billion a unit. It will be complete soon and delivered to homebuyers in the third quarter. The project owner expects such flexible prices and payment methods to help lure those in need of housing. Similarly, Nam Viet Real Estate Joint Stock Company is preparing to sell, by installment plan, 100 condos of the Hung Phat project located on the corner of Le Van Luong and Dao Su Tich streets in HCMC’s outlying district of Nha Be. According to Nam Viet, apartments of 55-97 square meters each will be offered from VND14.7 million a square meter. Homebuyers will make a down payment of 60% of the apartment value and then move in their finished homes. They will pay the remainder over two years without interest. One of the housing projects that offer the longest installment plan is the TDH-Truong Tho in Thu Duc District and the TDH-Phuoc Binh in District 9 developed by Thu Duc Housing Development Corporation, or Thuduc House. Thuduc House last Friday organized TDH-Golden Transaction Day to sell the remaining units of the scheme. There, homebuyers who make a down payment of 40% can take over the homes and will pay the remainder over five years with a zero interest rate. Specially, they will be given a discount of up to around VND315 million for a one-off payment. HCM City hotels slash room rates With the number of international tourists declining for the three straight months, many hotels in HCM City are cutting room rates. The sales manager of a five-star hotel said the hotel was now offering rooms at just VND2.1 million (US$100) per night, VND1 million less than a month ago. An international hotel in downtown HCM City lowered room rates from over VND3 million a week ago to VND2.2 million per night. Currently guests can get a five-star room at $80 per night, a rate unheard of in the past. According to tourism authorities, Viet Nam received 614,000 foreign tourists in April, down 2.4 per cent compared with the same period last year.- Drink firms hit by foreign rivals Domestic beverage companies were falling into difficulties due to competition from foreign rivals, heard participants said at a workshop on Tuesday. According to the Viet Nam Beverage Association (VBA), only a small number of domestic enterprises were able to co-exist in a market dominated by foreign giants. Most recently, the Tribeco brand fell into the hands of Uni-President Group – the biggest shareholder in Tribeco Sai Gon before the company dissolved, the VBA said. Tribeco posted a four-year loss of VND300 billion (US$14.2 million) before being acquired by its Taiwanese rival. According to Phan Dang Tuat, chairman of the Sai Gon Beverage Company, domestic drinks companies were struggling to cope with an inundation of fake and low quality wine and widespread advertising campaigns by their international competitors. With the advertising and marketing cap at 10 per cent as regulated, domestic enterprises could not compete with their foreign counterparts, Tuat said, adding that their larger rivals sometimes spent up to 30 per cent of their expenses on advertising as they did not face any restrictions. Unless the cap was removed, domestic companies would be unable to protect their brands over the next decade, he said. Tuan also expressed concern over the penetration of many foreign companies, pointing out that Masan Group recently bought the Phu Yen beer factory and Aneuser-Busch InBev Group planned to enter the Vietnamese market next year. The VBA cited a report by the Ministry of Planning and Investment which said that some foreign enterprises used price transferring, causing losses to the State budget as well as forcing Vietnamese enterprises to quit joint-ventures. A representative from the General Depar©ctment of Taxation speaking at the workshop said that unhealthy competition resulting from price transferring had caused the disappearance of many Vietnamese beverage brands. However, it was very difficult to prove a company had committed price transferring, he added. According to Tran Qui Thanh, general director of Tan Hiep Phat Group, domestic enterprises needed support to ensure healthy competition which was crucial to protecting consumers. Luong Van Tu, president of the Viet Nam Coffee and Cacao Association, said technical barriers in line with international commitments should be set up to protect domestic production, while State agencies should enhance management to prevent unhealthy competition such as dumping, price transferring and fake and low-quality products. A programme to encourage consumers to use made-in-Viet Nam beverage products was necessary, while domestic enterprises needed to raise their awareness and knowledge of competition laws, experts said. Chinese province struts its stuff at City fair More than 110 companies from the south-eastern Chinese province of Zhejiang have brought their products to an exhibition which opened yesterday in HCM City, hoping to strike up more partnerships than they managed to at earlier fairs in Ha Noi. The three-day Zhejiang Fair Viet Nam at the Tan Binh Exhibition and Convention Center, features machinery and equipment, especially for the textile and garments industry, building and interior decoration materials, electrical-electronic home appliances, stationery, and others. Zhejiang is a trade powerhouse in China with exports of US$225 billion last year. Viet Nam's exports last year, in comparison, were worth $115 billion. A similar exhibition in Ha Noi in 2011 saw around 80 business contracts being signed, and this increased to 120 last year, according to the organiser Vietnam Exhibition and Advertising Company (Vinexad). Last year Zhejiang's exports to Viet Nam topped $2.46 billion, mostly of raw materials for the textile and garments industry, steel and pharmaceuticals. Its imports, mainly of crude oil, rubber, and plastic materials, were worth $990 million. Viet Nam has invested $22 million in 24 projects in the textile and garments, chemicals, and machinery industries in Zhejiang. The Chinese province has invested $450 million in 164 projects in Viet Nam, mainly in light industry Yamaha recalls scooters due to fuel leak fears Yamaha Viet Nam is recalling 83,000 Nozza scooters nation-wide due to possible gasoline leakages from the pipe connecting the fuel tank to the engine. The Japanese motorbike maker said it will fix and replace all the pipes and their holding systems, which were not correctly assembled and positioned during manufacture. They said that frequently used motorbikes were more likely to suffer leaks. The recall applies to the model produced between August 20 2011 and March 30 2013, Yamaha Vietnam said. Nozza owners could bring their bikes to Yamaha dealers for the repair and replacement work, which would take about 30 minutes and be free of charge, the company said. Yamaha Vietnam's parent company, Yamaha Motor Corp, recalled all 2009 Zuma 125 (YW125Y) scooters in February, about 8,700 units, because internal fuel pump components were not properly cleared. Any fault could have led to an inadequate supply of fuel causing the engine to stall, increasing the risk of a crash. Honda Vietnam last year also recalled some 152,050 Wave RSX motorbikes due to rear lamp problems. Rates, risk keys to micro-finance Sustainable interest rates and risk management were the hot topics during a seminar on the country's micro-finance institutions held yesterday in Ha Noi. The event was organised by the International Finance Corporation (IFC) in collaboration with Switzerland's Ministry of the Economy, Tinh Thuong One Member Liability Limited Micro-finance Institution (TYM) and the Viet Nam Micro-finance Working Group (MFWG). International and domestic experts said the seminar had offered an insight into the issues surrounding the application of interest rates in micro-finance institutions. Through practice and experience, the IFC's working group concluded that the interest rates of micro-finance institutions were not really higher than other credit institutions and did not adversely affect their customers. They said that the specific characteristics and activities of micro-finance institutions should be considered in order to assess and develop appropriate interest rate policies. Risk management procedures were also discussed by the experts. Andrew Pospielovsky, an IFC's consultant, said that managing risks to any financial institution required risk identification, assessment, measurement, reduction, monitoring and evaluation. Andrew Pospielovsky said the building of risk management culture was something micro-finance institutions had been urgently doing, particularly in the period of transition and growth. The seminar reflected that micro-finance has been officially recognised in Viet Nam and is now part of the national financial system and has contributed towards the country's economic development. The sector is growing sustainably in accordance with standards and social responsibility. Bird's nest consumers wary of flu Despite the announcement by Ninh Thuan Province authorities that the A/H5N1 bird flu epidemic is over, local demand for bird's nest products has failed to recover. At a meeting on Wednesday, Nguyen Trong Tan, marketing director of Yen Viet JSC, said the outbreak of the disease has dragged down demand for bird's nest. Swallow farming households in the central region have been unable to sell their products for over a month despite falling prices, according to a report from Yen Viet.To reassure customers, authorities announced that the bird flu outbreak among swallows has passed and demand for their nest is expected to recover soon. "After swallows tested positive for the A/H5N1 bird flu virus, we took samples of bird's nests for testing, and all were negative," Nguyen Xuan Binh, director of the HCM City Zone VI Animal Health Centre, said.City consumers should therefore not be worried about the safety of using bird's nest and related items, he added. Doosun to build packaging plant Northern Thai Nguyen Province on Tuesday granted an investment licence to the foreign Doosun Industries Viet Nam Limited Company to build a hi-tech plant for the manufacture of packaging. Accordingly, Doosun will pour US$14 million into building the plant on a 1.5-ha site on the Nguyen Gon Industrial Cluster of Song Cong town, with construction slated for completion by September and production set to officially start in October. The plant will have the capacity to produce 10,000 tonnes per year. Shipbuilders start work on 4 tugs The Ha Long Shipbuilding Co Ltd, a member of the Viet Nam Shipbuilding Industry Group (Vinashin), started work on Wednesday on the construction of four tugs for Damen Shipyards Group of Holland. Each ATD 2412 tug measures 24.74 metres long, 12.63 metres wide and 4.6 metres high with a capacity to hold 298 tonnes. The ships will be handed over to Damen Group within 14 months. The same day, Vinashin's Nam Trieu Shipbuilding Industry Corporation transferred a 56,200 tonne ship named Vosco Sunrise to Viet Nam Ocean Shipping JSC. This is the largest ever cargo ship Nam Trieu has built for a domestic partner. The 190m long ship is designed by IHI-MU of Japan and equipped with modern facilities to meet standards of all seaports worldwide. The Vosco Sunrise has already embarked to Singapore on its maiden voyage. Career firm expands operations in VN The US-based human resources solution provider CareerBuilder on Tuesday announced plans to expand its operations in Viet Nam by opening a representative office in the country. The presence of CareerBuilder in Ha Noi is aimed to realise the company's wish of becoming a bridge between employers and their potential employees while also providing ideal job opportunities for Vietnamese candidates. Established in 1995, CareerBuilder, which is owned by Gannett Co Inc, Tribune Co and The McClatchy Co, is the largest online career site in the US with more than 24 million unique visitors, one million jobs and 50 million resumes. The company marked an important step in its Asian expansion with the acquisition of the Viet Nam Online Network, which owns and operates Kiemviec.com and HR Viet Nam. Kiemviec.com is Viet Nam's second largest online career search site by revenue and first by number of registered users while HR Viet Nam specialises in recruitment services and HR solutions for employers. Motor show to introduce auto brands The Viet Nam Motor show 2013 will take place in HCM City from October 23 – 27, and is expected to attract 14 domestically and internationally respected auto brands. According to the Viet Nam Automobile Manufacturers Association (VAMA), as well as VAMA members Ford, GM, Hino, Honda, Mercedes-Benz, Suzuki, Toyota and Vinastar, six imported car trademarks will also be featured at the event. The show, organised by the CIS-Le Bros joint venture, will serve as a bridge for strengthening the relationship between automotive businesses and their Vietnamese customers, contributing to the further development of Viet Nam's domestic automobile industry. It will introduce consumers to the industry's latest technologies and provides a forum for managers, policy makers, producers, and importers to discuss strategies that will encourage the growth of the Vietnamese car market. Lending over 4 months up 2.1% The outstanding loans given by commercial banks have increased 2.11 per cent since December, according to the State Bank of Viet Nam (SBV). Foreign currency loans declined by 7.2 per cent, but dong-denominated loans climbed 4.15 per cent. Lending to agriculture and rural areas rose 3.1 per cent during the four-month period, as Government policies to support agriculture and rural areas helped farmers and rural traders increase borrowing to expand production and business. Real estate loans also went up 1.1 per cent in the first four months and both yearly deposit and lending interest rates were reduced by roughly 2-3 percentage points against early this year To further help businesses, the central bank required four State-owned commercial banks to bring all their yearly lending rates below 13 per cent. SBV also asked credit institutions to boost lending to prioritised industries, including agriculture, exports, supporting industries and small- and medium-sized enterprises. The lending interest rate cap for the industries is 10 per cent. Total deposits by the end of April also expanded 5.2 per cent from last December. Meanwhile, the SBV plans to carry out inspections at 18 Vietnamese lenders and seven foreign banks this year. In the first quarter of the year, the central bank conducted 301 inspections, of which 145 were scheduled, 39 were unscheduled and 117 were examinations. During a planned examination of BaoVietBank in May, the central bank branch in HaNoi will examine the bank's credit activities, finances and prudential ratios. Employee apartment construction begins Construction began yesterday for the first apartment block for local workers in the Le Mon industrial zone in northern central Thanh Hoa Province. The zone has more than 30 enterprises with some 17,000 workers. The accommodation project, with a total area of 30,000sq m, will be conducted in two phases. The first phase is expected to be finished in 2015 and provide houses for 1,500 workers, while the second phase was to finish in 2018. The total investment for the first phase was estimated at VND116 billion (US$5.5 million). Electronics sector strives to attract FDI Product restructuring imbalances and general underwhelming competitiveness means the electronics sector needs to unite if breakthroughs in attracting FDI are desired. At the recent 18th World Electronics Forum, the Vietnam Electronics Enterprises’ Association (VEEA) said that since 2005, the electronics sector—one of the ten largest in terms of Vietnam’s exports—has posted annual export turnovers exceeding US$1 billion. Over the past three years, export turnover has increased from US$3.4 billion in 2010, to US$6.98 billion in 2011, and to US$20.5 billion in 2012. Computer and related component exports hit US$7.9 billion in turnover and mobile phones and components US$12.6 billion. Crude oil’s export turnover was surpassed for the first time. Deputy Prime Minister Nguyen Thien Nhan said that although the electronics industry has recorded notable achievements, its assembly outsourcing foundations mean its products have little added value. Support industries have developed slowly and are yet to meet manufacturers’ requirements. Excluding foreign-invested enterprises boasting huge capital resources and advanced technologies, Vietnam’s electronics enterprises have limited financial capacities and technologies that struggle to compete in the global value chain. Impressive export turnover and innovative products have allowed FDI enterprises to punch above their weight in Vietnam’s electronics industry. Although the number of FDI enterprises amounts to only one-third of electronics enterprises in Vietnam, they control up to 80 percent of the domestic market share and contribute more than 90 percent of the sector’s export turnover. There is an imbalance in product restructuring between consumer electronics products and specialised electronics products. There is also an imbalance between product assembly and the production of spare parts, components, and materials. The number of enterprises focusing on spare part, component, and material production is one fourth of the enterprises specialising in product assembly. Localisation rates stand at just 20–30 percent, thanks mostly to packaging, plastics, and mechanics. The rate of investment for technology upgrades remains at a low 0.3–0.5 percent of total revenue compared to 5 percent in India and 10 percent in the Republic of Korea. VEEA President Le Ngoc Son said Vietnam’s electronic sector boasts great potential to develop if it can overcome persistent shortcomings and seize the opportunities arising from international integration and globalisation. According to Deputy Planning and Investment Minister Nguyen Van Hieu, the State has offered incentive policies to the hi-tech industry—especially in electronic and information technology commodity production—in order to encourage foreign investment in Vietnam. Hieu cited Canon Group’s investment in what will become the world’s largest production printer complex, spanning across Hanoi, Bac Ninh, and Bac Giang. Nidec Group has also decided to invest US$1 billion in the south during the next five years. Kyocera Agency will invest nearly US$400 million in building its own telecommunications and electronics equipment and manufacturing factory. Other Japanese companies are also investing heavily in Vietnam. Many spare parts and components manufacturers have identified the Vietnamese market’s advantages, fuelling the new Japanese investment wave. Vietnam has entered the world electronics industry’s spotlight. Deputy Minister of Information and Communications Nguyen Minh Hong pledged the Ministry will make great efforts to perfect its development policy mechanisms and implement the Government initiatives designed to encourage local and foreign investors to support Vietnam’s booming electronics sector. DHL invests US$13 million in Vietnam supply chain The global leader for contract logistics solutions, DHL, announced on May 16 that it will inject US$13 million into Vietnam through 2015. The company expects to increase its staff by 170 percent, creating more than 1,400 new jobs and employing 2,200 people by 2015. The new DHL investment in Vietnam will include increasing its warehouse space by more than 50 percent, from 91,000m2 to 141,000m2, as well as growing its vehicle fleet by over 160 percent and deploying more than 100 vehicles in the next two years. DHL is also building a second distribution center in Bac Ninh province and expanding its office in Hanoi to control all its operations in northern Vietnam. The DHL supply chain is owned by Deutsche Post DHL and has been operating in Vietnam since 2001. US$370 million from pepper exports in four months Vietnam exported more than 38,000 tonnes of pepper in the first four months of 2013, earning US$370 million and improving on last year’s revenue by 30 percent. The Vietnam Pepper Association (VPA) predicts over 90 million tonnes of pepper will be shipped abroad by the end of this year. Vietnam is currently the world leader in terms of pepper output (about 120,000 tonnes annually). However, 70 percent of pepper exports are in the form of raw materials with low value. The country exports pepper to more than 90 countries and territories, but most consumers are unaware their spices originate in Vietnam as products are usually processed and packaged overseas. Six foreign-invested businesses are purchasing and processing pepper in Vietnam. They contributed nearly 40 percent of Vietnam’s total pepper export turnover last year. VPA Chairman Do Ha Nam said pepper businesses should accelerate their restructuring and work together to maintain their global market share. He thinks local exporters need to hone their competitive edge to stay ahead of foreign rivals. Listed firms switch to personal sources of capital Despite lower interest rates, many enterprises are still finding it hard to access bank loans and are turning to personal channels to source capital to main their business. Listed firms switch to have personal capital sources instead of bank loans A report by Ninh Van Bay Travel Real Estate Joint Stock Company showed that the company borrowed over VND60 billion (USD2.86 million) as short-term loans from the chairman of the company’s Board of Directors Le Xuan Hai and his family during the first quarter of this year. Even though the interest rates have yet to be made public, the company’s financial expenses during the quarter sharply fell to VND1.2 billion (USD57,292), compared to nearly VND12 billion (USD572,929) of the same period last year. NVT’s business has improved as it made a pre-tax profit of over VND10 billion (USD477,440) after incurring losses for two consecutive years. An audited report by Hoang Quan Consulting Trading Service Real Estate Corporation in 2012 showed that the company borrowed approximately VND130 billion (USD6.2 million) from some members of the board of directors by the end of last year. The company explained that due to funding shortfall, the company borrowed VND77.8 billion (USD3.71 million) from Truong Anh Tuan, the board’s chairman and VND49 billion (USD2.33 million) from Nguyen Thi Dieu Phuong, a member of the board. The same situation is recorded at several other listed companies such as THV, BAS and TAS. Many other companies have focused on raising capital from their staff, shareholders and strategic investors instead of depending on bank loans in order to maintain their operations. This situation is a result of a fact that amid economic difficulties and high rates of bad debts, banks have become more hesitant in lending to enterprises. While the deposit interest rates have been rapidly cut to 7% per year, the process of lowering lending interest rates seems to be rather slow as the cut depends of the capacity of the banking sector. Many said that it would take a considerable time to see lending rates to fall from 10%-12% per year. Vinacomin claims end to Nhon Co bauxite project would cause major losses Vinacomin said that it had considered a halt to the Nhan Co bauxite project, but was scared about the major losses in its investment. At a press conference of the group on May 16, Vinacomin spokesman Nguyen Tien Chinh said, “We’ve spent a huge amount of money on the project. The EPC contract has been signed. How can we deal with the contract as a result of a halt in the project?” “Vinacomin has ever thought of stopping the project as well as its impact, but we didn’t dare because we may face big losses,” he added, emphasising that the group will continue the project. The Nhan Co bauxite project in Dak Nong has a design capacity of 650,000 tonnes per year. By April this year, total disbursement of Nhan Co aluminum project had reached VND6.836 trillion (USD325.2 million), including VND4.6 trillion (USD219.04 million) from the EPC contract. Up to 72 out of 73 items in the contract have been implemented. The Nhan Co aluminum project is expected to come into operation in mid-2014. A number of experts and scientists proposed the halt of Nhan Co aluminum project and urged Vinacomin to quickly assess the Tan Rai aluminum project’s efficiency to decide whether continue the Nhan Co aluminum project or not. According to experts, the transport distance of 260km from Nhan Co aluminum plant to the port is a major difficulty if Vinacomin does not have a solution to mitigate the transport costs. Vinacmoin said it had not bought transport vechicles for both projects but hired other firms. It had calculated the costs carefully in an efficiency assessment. “We wanted to listen to the proposals for consideration. Being an investor, we will be responsible for Nhan Co aluminum project’s efficiency. We can say for sure that in terms of design and careful consideration, the project is feasible,” Mr. Chinh noted. He also disclosed that the government had approved Vinacomin’s approval to slash aluminum export taxes to 0% from the level of 15-40% set by the National Assembly. Real estate bailout package to support low-income earners The long awaited VND30 trillion credit package to stimulate the real estate market will be officially launched June 1, according to the State Bank of Vietnam (SBV). Low-income people, state officials and soldiers will be able to borrow at preferential rates in order to buy homes smaller than 70 square metres and under VND15 million per square metre (USD720). In addition, investors of social housing can borrow from this package. People who wish to access preferential loans to buy social housing will also be given support. SBV stated that the interest rate will be kept at 6% throughout the year and into the first month of 2014, at which time the state bank will announce the new rates for the next year. SBV has asked banks to keep interest rates low for the next 10 years. After this period loans will be given dependent on individuals' financial capacity. Nguyen Viet Manh, head of SBV's credit department said the main goal is to support low-income people and buyers of social housing, with hope that such support will also make impact on the real estate market. However many people have expressed worries that the supply of affordable housing is already low, and that increased demand could lead to a serious shortage. In response Nguyen Tran Nam, Deputy Minister of Construction, said that currently there are tens of thousands of affordable homes and that there are five to seven more affordable housing projects slated to break ground in May. Possible speculation has also been the source of worry for many who have warned that careful monitoring by local authorities will be necessary in order to avoid increased real estate speculation as a result of the programme. The Ministry of Construction will also identify industries that will have access to preferential loans. Incentives for foreign hi-tech firms spotlighted A number of policies and measures to support foreign direct investment (FDI) firms working in hi-tech sector were introduced at an international workshop in Hanoi on May 15. The event was co-hosted by the Ministry of Science and Technology and the Association of Republic of Korea (RoK) Enterprises in Vietnam. Addressing the opening ceremony, Deputy Minister of Science and Technology Tran Viet Thanh stressed that the Government of Vietnam always pays due attention to working out policies and measures to support FDI companies, particularly those operating in the field of high technology. He added that enterprises granted licenses to work in the hi-tech sector in Vietnam are eligible to tax and fee incentives. RoK Ambassador to Vietnam Ha Chan-ho affirmed that the Vietnamese Government has issued policies to strongly facilitate investment and research in the field over the past time. Participants at the workshop also learned about mechanisms and procedures to apply for licenses to operate in the field. They shared experience and chances to invest in promising localities like the central coastal city of Da Nang. Over the past time, the Vietnam - RoK cooperation has kept growing in various realms. The RoK has become Vietnam’s leading trade and investment partner, with 1,500 firms operating in the country. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR