BUSINESS IN BRIEF 21/5 Exports to India rise sharply April’s two-way trade turnover between Vietnam and India hit US$498.4 million, up 77.7 percent compared to the same period last year. The General Department of Vietnam Customs reports that Vietnam’s exports to India hit US$247.8 million, an increase of 105 percent, while imports from India rose 57.7 percent to US$250.6 million. As a result, the trade deficit declined by 91.7 percent. Overall bilateral trade value in the first four months of this year totalled US$1.8 billion, a year-on-year increase of 48.8 percent. During this period, Vietnam’s exports to India were valued at US$780.2 million, an increase of 71 percent. The US$1.024 billion worth of imports from India represents an increase of 35.4 percent. The trade deficit has fallen by 8.7 percent. Hanoi exhibition promotes energy conservation The fifth Hanoi international Energy Technology and Environment exhibition (Entech Hanoi 2013) will be held in the Vietnam Exhibition Centre from May 29–31. One hundred businesses from Vietnam, the Republic of Korea, Taiwan (China), and Japan will display products and services at 200 stalls. The event is designed to showcase the energy-saving and environmentally friendly technologies of Vietnam and the world, with energy sources spanning gas, soil, biomass, thermal, hydro, atomic, coal, recycling, wind, solar, and waste treatment. This year’s event also includes a special display celebrating the achievements from the five previous Entech Hanoi exhibitions. The exhibition’s framework encompasses a number of workshops and competitions about energy-saving solutions and environmental protection. Vietnam-Cambodia trade up in four months Two-way trade between Vietnam and Cambodia reached US$1.3 billion in the first four months of this year, a year-on-year increase of 10 percent. According to the Vietnamese Trade Office in Cambodia, Vietnam earned US$1.049 billion from exports  to the neighbouring country while it imported US$253 million worth of goods from Cambodia. The total value of Vietnam’s main export items to Cambodia, including vegetables and textiles, hit US$1.8 million, double the amount for the same period last year. However, high-value goods such as petroleum and steel saw a slight fall from last year’s same period.. Vietnam is importing an increasing number of goods from Cambodia, including corn, tobacco materials, rubber and timber, and it is currently the Cambodia’s second largest trade partner after Thailand. Last year’s two-way trade turnover between the two countries gained US$3.3 billion, up 17 percent against 2011. Interest rates unlikely to drop further Interest rates may not be lowered for fear that local consumers will stop depositing their money in banks. Ngo Quang Luong, a senior official from the State Bank of Vietnam (SBV), said at a recent seminar that the Bank for Foreign Trade of Vietnam (Vietcombank)’s recent adjustments to deposit interest rates has enabled the bank to offer some of the lowest lending rates at present. Deputy Director of the Banking Academy, To Ngoc Hung, said banks are currently enjoying an abundance of capital thanks to Government incentives to inject more funds into the national economy. Many businesses have changed their operational formats and are seeking new investment opportunities, but quite a few are still facing difficulties and finding it hard to make a profit. Therefore, banks must carefully consider what businesses actually need in terms of capital. “This is the core matter the banking industry needs to address in order to stimulate credit growth,” Hung noted. Nguyen Duc Huong, Deputy Chairman of Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank), said banks are enjoying abundant capital resources but they face a “liquidity trap” that is more dangerous than a rising bad debt ratio. “If the lending rate drops to less than 9 percent and deposit rates are reduced to 6 percent, customers will buy US dollars or invest in the stock market instead of putting their money in banks. As a result, banks could get caught in a trap,” he analyzed. A recent Banking Academy survey showed that Vietnam’s aggregate demand growth in the first quarter of this year was rather low and State budget investment fell by 4.9 percent from the same period last year. According to the survey, interest rates do not play a key role in boosting credit growth. It reported that nearly 70 percent of businesses can handle a rate of more than 12 percent. The fact is that banks are in a fix to offer loans at the adjusted rate of 12 percent for fear of bad debts. Nguyen Duc Trung, Deputy Head of the Banking Academy’s Institute for Banking Research, attributed low credit growth to a sharp decrease in purchasing power that has led to decreased production and business operations. Economist Nguyen Tri Hieu expressed his concerns about bank liquidity, saying that the 101-percent ratio between lending and mobilized loans was previously considered a bad rate. However, the current 95-percent figure is regarded as a positive sign. “The fact that credit growth was estimated at 1.5 percent for the past four consecutive months, while mobilized loans grew by more than 5 percent creates a significant challenge,” he said. Hieu was worried that banks are enjoying benefits as businesses are facing losses. Many banks claim they have high bad debt ratios and losses, yet they still make profits and pay dividends. Banks should disburse their mobilized capital by offering trust loans for businesses to help them iron snags. In the US, Hieu said, newly-established businesses are allowed to access bank loans despite their losses if their independently audited financial reports are transparent, which is not the case in Vietnam. He also stressed the need to clearly identify the purpose of loans. “It’s essential for businesses to be audited before they are allowed to get trust loans,” he noted. Hieu’s view was shared by Mr. Hung from the Banking Academy, who affirmed that top priority should be given to helping businesses continue operating. It is always difficult to address this thorny problem because businesses cannot pay back their loans, even at a zero interest rate, if they suffer heavy losses. Local firms seek investment in US supermarket chains The HCM City branch of the Vietnam Chamber of Commerce and Industry (VCCI) organized a seminar on May 18 to introduce investment opportunities in US supermarket chains. Participants were given information on socio-economic development in the US and its import-export policies, making it possible for Vietnamese businesses to access opportunities to profit in the world’s largest economy. The seminar explained that US consumers preferring natural products free of chemicals has increased the purchasing power of such products in recent years. Shopping malls, supermarkets, and trade centres in the US are able to meet all customer demands, from agricultural produce to ready-made food. Jason Brown, Senior Vice President of Business Development of Lucky’s Farmers Market, said his firm is expanding its supermarket network in the central US, and is offering many incentives to attract foreign investors, including those from Vietnam. Lucky’s Farmers Market specializes in supplying raw farm products at reasonable prices, he said. The Kroger retailer came to Vietnam earlier seeking supply sources for its supermarkets and processing factories. This group is looking for a range of products, such as seafood, fruit, and vegetables with globally recognized certificates of export quality. Ten Vietnamese businesses have already signed contracts to provide cashew nuts for Kroger’s supermarkets and convenience stores. Coffee growers receive preferential credit loans Coffee growers will be provided preferential credit loans worth VND 8,000-10,000 billion from now to 2016, including more than VND3,099 billion for those in the Central Highland province of Lam Dong. The information was released by Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh at a recent conference held in Lam Dong to implement a credit loan programmes for the coffee sector in the 2013-2015 period. Under the programme, local coffee farmers will enjoy low interest rates (around 10 percent/year). The SBV will channel more than VND5,000 through the Bank for Agriculture and Rural Development (Agribank) to carry out the programme. Governor Binh stressed the need to assist Central Highland coffee growers in increasing coffee quality and productivity. According Lam Dong’s 2013-2015 plan, the province will develop a coffee area of 22,982 hectare with a total investment of over VND4,428 billion, including VND3,099 billion funded by Agribank. Vietnam exports 33,000 tonnes rice to Haiti The General Director of the Haiti Bureau of Monetization of Development Aid Programs (BMPAD), Michael Lecorps, has spoken highly of Vietnam’s rice quality. He said Haiti imported 400 tonnes of rice from Vietnam in March and will import another 33,000 tonnes in the coming week to control soaring domestic rice prices. There is a plan afoot to import a huge volume of high-quality rice at reasonable prices. Vietnamese rice is cheaper in price than other kinds of rice but easier to cook than imported from nearby countries. During his visit to Vietnam last December, Haiti Prime Minister Salvador Lamothe said Haiti consumes around 400,000 tonnes of rice a year but its domestic rice production is just 100,000 tonnes. Japanese sanitary company prepares for heavy investment in Binh Duong Japan's Lixil Group wants to expand its American Standard sanitary ware factory in the southern province of Binh Duong, Group Chairman Toshimasa Iue said during a recent visit to the province to seek investment opportunities. Its original factory, with initial invested capital of US$16.5 million, went into operation in 1997. The factory is capable of producing 400,000 units of products annually. In 2011, American Standard decided to double its production capacity and now plans to increase productivity to meet rising consumer demand. Last November, the group opened a $441 million factory producing building materials in Long Duc Industrial Zone in the southern province of Dong Nai. Lixil now has 11 factories in Viet Nam and has committed to investing more in the country in the next decade.- Vietnam Airlines asked to increase HCM City-Thanh Hoa flights The government of the north-central province of Thanh Hoa proposed Vietnam Airlines (VNA) increase the number of flights it offers between HCM City and the province. The airline currently runs five flights per week, but citing increasing demand from travellers, the province requested it add two to five more. The province also petitioned VNA to open new routes connecting Thanh Hoa with Da Nang and the Central Highlands region. BR-VT starts work on industrial zone to attract Japanese tenants Dong A-Chau Duc Joint Stock Company began construction of Da Bac Industrial Zone in southern Ba Ria-Vung Tau Province on Wednesday, aiming to attract Japanese investors. Da Bac IZ covers 75ha in Chau Duc District. According to the investment plan, the zone's cleared land and workshops will be ready for Japanese investors in this year's fourth quarter. This is the first industrial zone in the province to target Japanese investments. Vung Tau City also called on enterprises in Japan's Kawasaki City to invest in the zone. The province plans to develop more specialized industrial parks and industrial zones for supporting industries. Property inventories on the rise during first quarter Inventories of apartments nation-wide soared 20 per cent as of March over the figure at the end of last year, reaching more than 33,852 units. Meanwhile land inventories rose 3 per cent to 1 million square metres. According to Vu Xuan Thien, Deputy Director of the Real Estate Market and Housing Management, the statistics failed to reflect the real inventories in the property market. He said that a number of projects which remained unfinished or had not been implemented were still not accounted into the ministry's statistics of property inventories. There were about 3,700 real estate projects nation-wide currently. The construction ministry would continue to check property projects to eliminate those infeasible. Dong Nai close to population overflow Southern Dong Nai Province needed around 3 million square metres of housing spaces per year to meet the residential demand by 2020. Aaccording to deputy director of the provincial Department of Construction Nguyen Thanh Lam, the demand of capital for housing development was estimated at VND31.45 trillion (US$1.5 billion). Currently, about 324,000 residents were in need of buying or renting houses. The figure would be increased to 650,000 by 2015 and 784,000 by 2020. Three commercial projects in the provinces were proposed to be converted into houses for low-income earners with a total of 1,600 apartments, to date. The province also had 72 housing projects for workers with a total area of 650ha. However, incentives of loans and taxes should be provided to investors of worker housing projects to encourage them, he said. Capital urged to tackle land violations The Ha Noi People's Committee has ordered handling of land violations and projects under slow implementation to be hastened. The handling must be finished by the end of September and reported to the city's People's Committee within October. Projects which failed to have violations handled before the deadline would be revoked. According to the department's report, in the first quarter of this year, the city decided to confiscate more than 27,560 square metres of two organisations which was found to violate the land regulations. In 2012, a total of more than 8 million square metres was confiscated in the city. Thirty-nine projects lose licences Southern Dong Nai Province proposed to the provincial People's Committee to revoke licences of 39 property projects, worth totally US$2.1 billion, due to the stagnant implementation. Many projects in the province were under slow implementation, the department said. Statistics showed that projects which were finished or put into operation accounted for only 30-40 per cent of the total number. Currently, there were 225 real estate projects in the province, 12 of which were of foreign investors. Viet-Han Corporation executives register to sell 12.28% stake Two executives of Viet-Han Corporation, a communications equipment manufacturer listed on the HCM City exchange, plan to sell a large volume of company shares over the next two months. General Director Huynh Tan Chung has registered to sell more than 3 million shares, equivalent to a 12.28 per cent of the company's stake, from May 21 to June 21. Earlier, Chairman Dinh Cong Trang also announced he would unload 13.9 per cent, or 3.47 million shares, from May 15 to June 14. Both executives said the sales were aimed at restructuring their investment portfolios. VHG reported a Q1 loss of nearly VND9.7 billion (US$462,000), its eighth consecutive quarterly loss. Software company FPT posts $30m profit in first quarter Software producer FPT Corp (FPT) reported a net profit of VND622 billion (US$29.6 million) in the first four months of this year. Most of its businesses saw positive growth, with software development for the domestic market up 76 per cent over the same period last year, software exports up 39 per cent, IT services up 24 per cent, and telecommunications services up 17 per cent. The corporation's revenue totalled nearly VND7.62 trillion ($362.9 million), or 28 per cent of the yearly target. Earnings per share reached VND1,694. Jewellery company profits down due to low gold sales Phu Nhuan Jewellery Co (PNJ)'s first quarter net profits fell 28.5 per cent year-on-year, reaching just VND66 billion (US$3.1 million). Its gross revenue was also down over 13 per cent to nearly VND1.77 trillion ($84.3 million), the company reported. Both sales and financial costs declined from 23-32 per cent compared to the same period last year, but its net profit still fell due to lower incomes from gold sales and other discount promotion programmes, PNJ explained. At the end of March, the company's total assets reached over VND2.68 trillion ($127.6 million), up 5 per cent over the beginning of the year, while cash and equivalents rose 27.8 per cent to nearly VND599 billion ($28.5 million). CNG Viet Nam plans to sell stake in PVS Gas as part of restructuring CNG Viet Nam planned to divest all of its holdings in PV Gas (GAS) next month, selling 100,000 GAS shares with the aim of restructuring its investment portfolio, the company announced. The price of GAS has been increasing for almost a week, reaching VND54,500 (US$2.60) a share, the highest level since its debut on the stock exchange. CNG Viet Nam expects to earn around VND5.5 billion ($262,000) from the sale. Lower interest rate hoped to encourage spending The lower deposit interest rate is expected to boost investments in the stock market, but the fact that billions of dong are sitting idly in investors' accounts tells a different story. First-quarter business reports of 95 securities companies showed that investors' accounts contained more than VND7 trillion (US$333.3 million), up VND450 billion ($21.4 million) compared to the beginning of the year, according to online newspaper Tri Thuc Tre. Saigon Securities Inc (SSI) topped other brokerages in terms of "inactive" money with over VND820 billion ($39 million) lying unused in investors' accounts. HCM Securities and Kim Long Securities followed with around VND600 billion ($28.6 million) each. At smaller companies (FPT Securities, VPBank Securities, Military Bank Securities, Bao Viet Securities and Viet Dragon Securities), the amount of idle money ranged from VND200-400 billion ($9.5-19.1 million). In contrast, liquidity on both national stock exchanges tended to decrease. The daily trading value on the HCM City Stock Exchange fell from VND1.7 trillion ($81 million) in January to around VND900 billion ($42.9 million) in April. The figure on the Ha Noi Stock Exchange also declined, falling from more than VND400 billion ($19 million) in January to below VND300 billion ($14 million) in April. Liquidity in May rose slightly over the previous months but remained modest on both exchanges. According to Nguyen Bich Ngoc, a Ha Noi-based investor, the current deposit interest rates were no longer attractive to investors, who wanted to keep money available in securities accounts to make quick investments when opportunities arose. Interest rates for terms less than 12 months at commercial banks now range from 5-7.5 per cent per year, the lowest level over the past 10 years. Meanwhile, many securities firms are offering an interest rate of about five per cent per year for a one-week term. "The stock market is becoming one of the most attractive investment channels now after deposit rate cuts by many banks. But since it's risky, I'll choose to keep money both in banks and securities firms," Ngoc said. Petrol companies debate changes to stabilisation fund Petrol wholesalers yesterday gathered to make recommendations on an amended decision on fuel trading drafted by the Ministry of Industry and Trade. At a meeting to adjust and supplement Decision 84/2009/ND-CP, the Viet Nam Petroleum Association proposed that traders be allowed to adjust up retail prices if the reference price increases by 3 per cent instead of 5 per cent as drafted by the Ministry of Industry and Trade. Petrolimex chairman Bui Ngoc Bao said a fuel-price hike of 5 per cent was equal to VND1,000 per litre, which was significant. This meant an increase of 3 per cent or VND400-600 was more rational and would be easier to get consumers to accept. At the meet, the association also proposed two options for a petrol price stabilisation fund, including closing the fund. The association said when wholesale traders were allowed to decide retail prices and people accepted them, the fund was unnecessary. Furthermore, closing the fund would help cut and stabilise input prices and make prices more transparent. Also, if the current 30 day petrol stockpile was used effectively, it could be one of the best ways of stabilising prices. The second option was to rename the fund the Financial Reserve Fund and place it under the control of the Prime Minister. The association suggested if the fund continuously existed, fuel traders would deduct 0.5 per cent of their turnover or use a part of their pre-tax profits to source for the fund. The fund was established in 2009 and has been used and kept by petroleum traders to offset loses because of fluctuations in market prices. It collects VND300-500 per litre on the retail price of petrol. Central coast eyes huge tourist wave Tourism investors are hoping the central coast will become a new Phuket or Bali, and have continued to build resorts and other tourism destinations in the region despite the recession and property-market slump. The Liberated Saigon quoted an investor as saying it is difficult to find beaches as beautiful as the ones between Da Nang and Quang Nam. Many investors with deep pockets have continued to build resorts unlike in the large cities where the real-estate market has been down for long. Da Nang has recently seen the opening of hotels like InterContinental, Crowne Plaza, Mercure, Fusion Maia, Hyatt Regency, and Novotel Han Premier with more than 2,000 rooms. More are set to open soon. Nguyen Duc Quynh, deputy director of Furama Resort, told the newspaper that besides the high-quality resorts, three golf courses increase the competitiveness of the central region. Nguyen Thi Kim Nu, general director of the Thien Kim property trading floor, said there is a scarcity of beachfront land, with most of the land from Lang Co to Hoi An already being taken. Besides, the province's policy of revoking the licence if an investor delayed a project also kept the market on its toes, she added. Authorities in the central region have given a boost to tourism by improving infrastructure including airport, roads, and bridges. State Bank package fires property market Property developers are beginning to sell apartments in anticipation of the State Bank's credit package of VND30,000 billion (US$1.5 billion) for builders, the Sai Gon Giai Phong ( Liberated Saigon) newspaper reported. One developer, the Thuy Loi 4A Property Investment Joint Stock Co, for example, showed a sample apartment in its Hyco4 Tower project to customers last week. The company asked potential buyers to put down at least 50 per cent of the apartment value and the remaining payments within 24 months at zero interest rate. Located in HCM City's Binh Thanh District, the project consists of 330 apartments covering 52sq.m, 77sq.m and 81sq.m, with the price from VND1.2 -2 billion. The building is expected to be handed over to customers in the third quarter of the year. Nguyen Quoc Chinh, the company's deputy director, said the company chose this period for apartment sales because of the State Bank of Viet Nam's credit support package. The State Bank's credit stimulus package, which amounts to VND30,000 billion (nearly US$1.5 billion), is expected to shore up the real estate sector. Preferential interest rates will be an added incentive for the real estate industry. Thirty-five per cent of the total bank package will be used to lend to project investors. Buyers will be able to borrow no more than 85 per cent of the property's value. The package is targeted at investors who are pouring money into social housing projects; commercial residential housing under 70sq.m and under VND15 million per square metre; and low-income earners, as well as other key groups. Another company expected to borrow money from the bank is Hung Loc Phat Production and Construction Ltd Co, an investor in the Hung Phat apartment project located in Nha Be District. Construction was underway on 56-97sq.m apartments. Le Huu Nghia, director of Le Thanh Trading and Construction, said the package would help recover market confidence and wipe out "the waiting psychology" of customers. Low- and medium-priced projects that offer apartments valued under VND1 billion are expected to sell well. Viettel mulls ambitious expansion Leading telecom service provider Viettel said it planned to expand to developing countries in 2015. "We are considering to invest in Myanmar, Kenya, Venezuela, Tanzania, Burkina Faso, Argentina, Cuba and Swaziland," said Viettel's deputy director Nguyen Van Tinh. Tinh said markets in developed countries were already saturated while investing in developing countries would lead to fast expansion and avoid stiff competition. Viettel has over 60 million subscribers in six countries and a revenue of VND15 trillion million (US$714.3 million) in 2012, accounted for 10.6 per cent of the company's total turnover last year. Tinh said Viettel had surpassed 80 competitors to come to the final round of bidding to provide a mobile phone service in Myanmar. "The winner will be announced by the end of next month," he said. Viettel, which has 40 per cent of market share in Viet Nam, aims to increase sales by between 15 per cent and 20 per cent in 2013 to VND162 trillion ($7.71 billion) and targets profit of VND34.6 trillion ($1.65 billion) for the year. Investors eye up industry potential More local and foreign investors are seeking investment opportunities in the country's industrial, economic and export processing zones – underlining the need for these zones to improve their internal infrastructure. The assessment was made by head of the Ministry of Planning and Investment's Foreign Investment Agency Do Nhat Hoang. Over the past 20 years, industrial, economic and export processing zones have become an attractive destination for investors, especially foreign ones. As of early this year, the country's 280 established industrial and export processing zones had drawn above US$64.8 billion in foreign direct investment (FDI), according to head of the ministry's Economic Zones Management Department Vu Dai Thang. Over half of the total had been already disbursed. Annually, FDI deposited in these zones accounted for between 40 and 45 per cent of the total FDI registered in the country, he revealed. Thang suggested the zones focus on attracting advanced technology projects as well as those that aimed to strengthen industrial links between the zones. Coastal economic zones have also seen increased interest from investors, he said, attracting 144 foreign-invested projects with capital totalling $38.4 billion. These projects take up 40 per cent of the zones' total area for industrial production, tourism and services, he added. The export value of enterprises in industrial, economic and export processing zones accounted for 25-30 per cent of the national export turnover in recent years. But despite these encouraging achievements, many zones still find it difficult to attract FDI. Chairman of the Foreign-Invested Enterprises Association Nguyen Mai said the legal framework for managing and developing the zones remained incomplete, and preferential policies had been revised several times after their issuance, resulting in difficulties for investors. Other reasons cited were inadequate infrastructure, a shortage of skilled workers and ineffective investment promotion programmes. HCM City okays expansion to ferry station The HCM City administration has approved the expansion of the Cat Lai ferry stations connecting HCM City's District 2 with Dong Nai Province's Nhon Trach District. The work, to cope with the crush and reduce waiting time for passengers, is expected to cost around VND100 billion (US$4.8 million) and take six months. The Department of Planning and Investment has been ordered to earmark funds for the project. The work would involve upgrading the roads leading to the stations on both sides of the Dong Nai River, and building one more pier on either bank, Tran Minh Thanh, the director of the Cat Lai Ferry Station, said. There are 11 ferries in all, but only eight can berth at any given time, four on either bank. Around 50,000 people use the service every day, with the number surging to 93,000 during festivals. A ferry can carry between 450 and 700 passengers. The number of passengers using the service has been increasing by 10 –15 per cent on average every year. This year the number has increased by 12 per cent over the same period last year, according to the station. When the work is completed, the ferries are expected to carry 100,000 people a day while cutting waiting time by half. The Cat Lai ferry is popular with people travelling from HCM City to Ba Ria - Vung Tau and Dong Nai provinces since it helps shorten the distance by nearly 20km compared to travelling by National Highways 1 and 51. Kien Giang hot for thermal plant progress Southern Kien Giang Province authorities are impatient with the long delay in building a huge thermal power plant in Kien Luong District. Recently the Cuu Long (Mekong) Delta province's administration ordered the planning and investment and industry and trade departments to work with the UK's Graham Bell and Associates Ltd to look for new investors for the US$6.7 billion Kien Luong thermal power project. The deadline for starting work – by current licensee Tan Tao Investment and Industry Corporation (ITACO) – is June end, and the company seems unlikely to do so. In mid-April, after knowing the status of the project, GBA wrote to the Kien Giang People's Committee, asking for an opportunity to study it and find new investors. The committee then ordered the departments to meet with GBA representatives on May 20. The three-stage project includes a 4,400 – 5,200 MW thermal power plant and the Nam Du Deep Sea Port on An Son Island, 60km from the plant. The proposed $800 million port, which can berth ships of 150,000DWT and handle 50 million tonnes of coal for the proposed plant and others in the south, has also been a non-starter. At a meeting in late April Minister of Industry and Trade Vu Huy Hoang told Kien Giang authorities to seek approval from the Government to revoke the licence issued to ITACO and find a new investor. Hoang was quoted as saying that investors from Australia, France, India, Russia, and South Korea with the required financial and technological capability have shown interest in the project. In late April deputy chairman of Kien Giang, Pham Vu Hong, said the project was likely to be halted if ITACO fails to raise funds for the power plant by June 30. Despite being licensed five years ago, the project has barely made headway. The first phase of the project was scheduled to go on stream at the end of this year. ITACO, a subsidiary of Tan Tao Group, said land acquisition for Kien Luong 1 was completed over 18 months ago, but the project has made no progress due to lack of funds. ITACO's general director, Thai Van Men, said the bank has agreed to provide credit for the project, but requires a Government Guarantee and Undertaking which has not been forthcoming so far. Le Khac Ghi, director of the provincial Department of Planning and Investment, said the investor of a project must bring in at least 20 per cent of the cost to be eligible for a loan. "Regardless of loans and credit, the investor must bring in at least 20 per cent of the cost of the project. Therefore, Tan Tao must provide at least $1.4 billion." The stalled project presents a major obstacle, hindering the country's economic and energy development and making it difficult for the province to attract other investors with deeper pockets, he said. Investment in Cambodia up Viet Nam's investment in Cambodia has increased significantly in the last three years, but a mechanism to encourage and oversee investments in prioritised sectors is needed, according to diplomatic sources. Tan Nguyen Tien, head of the economic section at the Vietnamese embassy in Phnom Penh, said Viet Nam's investments in Cambodia quadrupled from $566 million in 41 projects in 2010 to $2.5 billion last year. Viet Nam has in fact become one of the top five investors in the neighbouring country. Cambodia is the second largest destination out of 50 countries and territories for Vietnamese investment. Viet Nam's investment contributes to 5 per cent of Cambodia's GDP and has created over 30,000 jobs. Tien said Vietnam Airlines' direct services between the two countries and Viettel's telecom service in Cambodia have helped boost Vietnamese investment in that country. Besides, the increasing Vietnamese investment in Cambodia is drawing a growing number of Vietnamese travellers. Vietnamese are, in fact, the biggest group of visitors to the country. Tien said Vietnamese investments in Cambodia included many projects in forestry – agriculture, energy, banking, aviation and telecom sectors. There are also four projects in the energy sector with a total investment of nearly $800 million, five in finance-banking with $250 million, one telecom project capitalised at $150 million, and a civil aviation project worth $100 million. Vietnamese FDI in Cambodia is expected to top $4 billion by 2015, and trade between the countries to increase from $3 billion last year to $5 billion by 2015. The incremental investment will create an estimated 80,000 jobs and contribute $300 million to the country's coffers annually, Tien said. "The geographical proximity between the two countries will help bring more Vietnamese investors to Cambodia to explore business and investment opportunities," Tien was quoted by the Viet Nam Economic Times as saying. But a better co-operation mechanism is needed to oversee economic sectors that require FDI and make Viet Nam's investment a cornerstone for co-operation between the two countries, he said Call to produce less rice With the global supply of rice exceeding demand and leading to lower prices, the Viet Nam Food Association has asked the Ministry of Agriculture and Rural Development to consider reducing the area under rice to reduce the risk faced by farmers. The VFA is concerned about finding markets for Vietnamese rice at a time when the global market is stagnant. Pham Van Du, deputy head of the Cultivation Department, said it takes time to reduce the area under rice. Besides, the VFA has to specify the varieties of rice and volumes that would be exported and their annual output, he said. It also has to spell out the volume of rice to be decreased or increased so that the department can make comprehensive areawise plans. When the area under rice cultivation is reduced, a number of farmers will switch to maize and soybean, which cost Viet Nam some $3.7 billion per year in imports. Du said growing maize and soybean is not difficult for farmers, but selling them is if the animal husbandry sector seeks to purchase imported maize and soybeans instead of local produce. "Government agencies must be fully aware of how much and where a farm produce will be sold before encouraging farmers to grow that crop," he said. Prof Vo Tong Xuan, director of Tan Tao University, said the Government should take comprehensive measures to create markets for agricultural produce. He quoted the example of the Malaysian Government which "has taken measures to make palm oil one of the country's major export products." Dong Nai set to revoke 39 project licences The Dong Nai Department of Planning and Investment has asked the provincial authorities to revoke the licence of 39 projects worth US$2.195 billion because they have been delayed for too long. Four of these are FDI projects. The department said the province has issued a large number of licences, but only 30-40 per cent of the projects are fully operational or being implemented. It noted that many projects have been allowed to extend their deadlines, but they have made no progress to date. SaigonCo.op joint venture opens outlet The Saigon Co.op – FairPrice joint venture late last week opened its first Co.opXtra Plus hypermarket in HCM City's Thu Duc District. The VND200 billion (over US$9.5 million) Co.opXtra Plus Thu Duc, a combination of a hypermarket and a large-scale distribution chain, is expected to meet the demands of all kinds of customers, from individuals and households to companies, schools and restaurants. The 15,000sq.m outlet stocks some 50,000 different products along with support services and related activities Nutritious food sector has growth spurt Despite the continued slowdown in the economy, Viet Nam's nutrition industry saw robust growth in the last 12 months, with local consumers still rating health as a major concern behind the economy and job security, according to a recent report from market-research company Nielsen. The findings were released at a Nielsen's Health and Nutrition Forum last week in HCM City. The slowdown in the Vietnamese economy, with continued sluggishness in the real estate and banking market, has spread into 2013 and is still affecting certain industries. Despite the efforts from the Government, the International Monetary Fund has recently revised Viet Nam growth numbers from 5.8 per cent to 5.2 per cent for 2013. According to Nielsen, in spite of the softer economic numbers, certain categories perceived as healthy or nutritious by consumers were seeing double-digit growth. The total Fast-Moving Consumer Goods (FMCG) category, excluding beer, has seen 11 per cent volume and 15 per cent sales growth over a one-year period. Growth in volume and sales of milk-based products has reached 19-22 per cent, respectively, compared with a year ago. Vaughan Ryan, managing director of Nielsen Viet Nam, said in a press release that strong numbers indicated the growing importance of health-conscious consumption, even in tougher economic times. He said the Vietnamese had a simple perception of healthy food, with 94 per cent agreeing that it should be safe or hygienic, along with 91 per cent stating it should be fresh. Consumers perceive healthy food as products such as liquid milk (90 per cent), low-cholesterol oil (73 per cent), and organic food (63 per cent), along with a few other dairy products, Ryan said. According to Nielsen findings, information about sufficient nutritional ingredients is a driver in achieving brand salience in Viet Nam. The key factors considered when purchasing healthy food are sufficient nutritional ingredients (36 per cent), reduced risk of disease (25 per cent) and affordability (23 per cent), followed by other minor factors. Trust is at the core of driving any engagement and success when it comes to health and nutrition in Viet Nam. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR