BUSINESS IN BRIEF 12/7 Seminar discusses commercial conciliation Experts from the Ministry of Justice and the United States Agency for International Development (USAID), examined a draft decree on commercial conciliation in HCM City on July 10. Nguyen Van Bon, Deputy Head of the Justice Ministry’s Legal Aid Department, said conciliation has proved more effective in settling trade disputes in comparison with other ways, such as court and arbitration. In commercial conciliation, concerned parties are satisfied by a shared win-win solution instead of becoming winners and losers defined by courts or arbitrators, Bon said. In recent years, trade disputes have been escalating in business operations. The decree on commercial conciliation is expected to lead to disputes being handled in a more flexible and effective manner, facilitating business operations and consolidating partnerships. Star – a USAID-funded project, involved in commercial conciliation in Vietnam – pointed out some shortcomings related to infrastructure, human resources, capacity, and legal regulations on conciliation services. World’s tiniest electric unicycle on sale in Vietnam The Solowheel or Airwheel, weighing less than 10kg, is now being sold on the Vietnamese market. This vehicle aims to promote energy saving, ease traffic congestion and be environmentally friendly. The self-balancing unicycles, 45cm high and 40cm wide, are manufactured in the US and China, using electric engines. Riders use their legs to control the vehicle, which is convenient for travelling short distances. Solowheel can carry up to 120kg and can travel up to 15km per battery charge, with a recharge time of 45 minutes. Maximum speed is estimated at 18km/h. The price of this monocycle is hovering around US$1,700 per unit in the US. A vehicle of the same kind produced in China sells for around US$500. Local businesses attend Singapore gift show Six Vietnamese businesses are showcasing their products at Singapore Gifts and Premiums Fair 2013 from July 10-12. They are displaying fine art handicrafts, jewelleries, horn-, bone -and paper-made items, stuffed animals, wool toys, and rice paintings. Among the participating businesses, Thien Thuong Trading Company Limited attended the show last year and it has since received Singaporean orders worth nearly SGD200,000. Vuong Sinh Soai, a Thien Thuong representative, said that the company’s hand-made wooden boats have been exported to the US and Europe, and through the fair, Thien Thuong wants to reach out to wider Asian markets, especially Singapore and Hong Kong.   Coming to the fair, Ban Tay Viet (Vietnamese Hands) Company is marketing rice paintings which have received great attention from foreign businesses. Rohana Rahman, a Malaysian manager of a handicraft network in many European countries, said she was impressed with the idea of making paintings from rice. Finland’s HEF Group director Jyri Jarock said he likes Vietnamese rice paintings. They both promised to contact the Vietnamese company to place orders. The fair has attracted businesses from more than 30 countries and territories, including Australia, Germany, Italia, the US, Britain, the Republic of Korea, China, Hong Kong, Taiwan, Cambodia, Indonesia, Malaysia and Vietnam. Vietnam outlook rated stable, but wide reforms needed Global ratings firm Standard and Poor (S&P) has retained its BB-long term and B short term sovereign credit ratings on Vietnam, and said the country’s outlook is stable. It also affirmed a BB- issue rating on Vietnam’s senior unsecured bonds and a BB+ long term and a B short term ASEAN regional scale rating on the country. The transfer convertibility assessment remains graded as BB-. According to S&P, the ratings on Vietnam reflect its low-income economy, its weak fiscal position, a developing monetary and financial framework and the possibility that its involving policy framework could weaken sovereign risk indicators. “Vietnam’s macroeconomic conditions reflect the Government’s policy choices which emphasize stability and the need to address structural shortcomings in the banking and State-owned sectors in particular,” said S&P credit analyst Agost Bernard. “Stabilization measures undertaken since 2011 have considerably reduced macroeconomic imbalances, improved confidence in the local currency, and led to somewhat greater perceived policy credibility.” S&P said Vietnam is supported by a moderate and improving external position, with sovereign external borrowings remaining modest and at a low cost and long maturity. They projected that the gross external debt of the country will remain below 50% of the gross domestic product (GDP) during the next three years. The rating agency expected Vietnam will maintain an appropriately tight economic policy stance that allows reform of banks and other sectors to progress while maintaining macroeconomic stability. France – a big trading partner of Vietnam France is Vietnam’s third largest trading partner, with two-way trade turnover reaching US$3.2 billion last year. It is the second biggest European investor in Vietnam with capitalisation of US$3.1 billion. It is also the leading European aid donor for Vietnam, actively contributing to the country’s socio-economic development and poverty reduction. Phan Long, Vice Chairman of the HCM City Union of Friendship Organisations (HUFO) unveiled these impressive statistics at a meeting on July 10 to mark French National Day (July 14). Long emphasised that in recent years, bilateral friendship and multifaceted cooperative relations between Vietnam and France have developed strongly under a motto of “ Traditional friendship, long-lasting and comprehensive cooperation in the 21st century”. The close relations have helped the two countries develop and obtain important results. In HCM City, French businesses are operating a number of economic, trade and infrastructure projects and non-governmental organisations have taken part in many projects related to the environment, education, training, health care and HIV/AIDS prevention. French Consul-General Fabrice Mauries spoke highly of the fine Vietnam-France relationship. A wide range of activities has been held in the France-Vietnam Year in 2013, especially in HCM City. The French International School has attracted a large number of students, including Vietnamese. PM encourages US investment Vietnam will create the best possible conditions for foreign investors, including those from the US, to establish long-term partnerships and operate efficiently in the country. Prime Minister Nguyen Tan Dung made the statement while receiving Kenneth Juster, managing director of the global investment firm Warburg Pincus in Hanoi on July 10. Dung noted that the US is one of Vietnam’s leading investors and trading partners. Vietnam, the US and other partners are currently negotiating the trans-Pacific Partnership agreement (TPP), and once the agreement is signed, it will help increase two-way trade and US investment in Vietnam, he said. He asked Juster to lobby US conglomerates to support Vietnam in TPP negotiations so as to conclude them as scheduled.   He also expressed his belief that Warbug Pincus will carry out other investment affairs following its first one in Vietnam’s Vingroup. The US investment firm entered a partnership deal with Vietnam’s Vingroup in May 2013, becoming a strategic partner. A Warburg Pincus affiliate decided to spend US$200 million buying 20% of a Vingroup affiliate’s share, specialising in retails. For his part, Juster proposed that the Vietnamese government facilitate US operations in Vietnam. Established in New York in 1966, Warburg Pincus has developed 14 investment funds and injected more than US$45 billion into nearly 700 firms in 35 countries across the globe. Additional 1 mln EUR for developing tourism workforce The Ministry of Culture, Sports and Tourism (MCST) has been allowed to add 1 million EUR as non-refundable aid from the Government of Luxembourg to continue implementing a project to strengthen human resources in the hospitality and tourism sector in Vietnam. The project has been jointly conducted by the MCST and the Luxembourg Agency for Development Cooperation since 2010 to advance the capacity of four hotel schools in Hanoi , Hue , Ho Chi Minh City and Vung Tau. It also aims to propagate best practices in newer hotel schools in Hai Phong, Da Nang, Da Lat, Nha Trang and Can Tho. In 2013, the project will support the Hue Tourism College in operating the Villa Hue and provide equipment for practice to the Da Nang Vocational Tourism College. The project will end by late 2014. 550 mln USD tourism, residential project restarts Dubai property developer Limitless will this year restart its Halong Star mixed-use residential and tourism project in the northern province of Quang Ninh, which was delayed for several years due to the company’s financial difficulties. According to a memorandum of understanding on the project’s implementation signed recently by representatives of Quang Ninh province and Limitless, the 550 million USD project will cover 125 hectares of land. The project will feature a 250-room five-star hotel, a 100-room luxury boutique hotel, 226 top-end villas, 85 luxury townhouses, 114 apartments, and a trade centre. In May, Limitless signed a new joint venture agreement for the construction of Halong Star with Hanoi-based Sovico Holding. RoK invests US$50 million in textile project in Ben Tre The Ben Tre Industrial Parks Authority licensed Japan-based Unisoll Vina Company Ltd to build garment and textiles factory in the Giao Long Industrial Park on July 9. The US$50-million factory, covering an area of 25 hectares, is designed to have an annual capacity of 90 million units, mainly for export. This is the largest foreign- invested project in the field of garment and textiles in Ben Tre provinces, which will provide jobs for more than 11,000 Vietnamese laborers. The project is divided into 3 phases including construction, equipment installation, and operation. Vietnam exports rice to Mexico Five Vietnamese businesses have sold more than 2,693 tonnes of rice to Mexico since early this year. 2013 is the first year Vietnam start exporting rice to this market, said Nguyen Van Nga, Head of the Zone 2 Plant Quarantine Sub-Department of the Plant Protection Department under the Ministry of Agriculture and Rural Development.   Nga described Mexico as a demanding market with strict requirements on rice imports such as certificates of origin for imported batches and plant quarantine certificates. Last year, representatives from the Plant Protection Department worked with Mexico’s food safety and hygiene agencies to learn about requirements on standard rice production procedures. In June alone, Vietnam earned over US$293 million from its exports of nearly 700,000 tonnes of rice, according to the Vietnam Food Association. Its rice exports in the first half of the year reached 3.4 million tonnes worth US$1.5 billion, less than half of the total turnover of US$3.3 billion from 7.5 million tonnes last year. Asset management company begins operations The Vietnam Asset Management Company (VAMC) officially opened for business on July 9 with the aim of resolving bad debts and stimulating credit growth. The wholly State-owned company, with a charter capital of US$23.8 million, will be managed, supervised and inspected by the State Bank of Vietnam (SBV). VAMC is permitted to issue special bonds to buy bad debts from credit organizations and will recover debts and put collateral up for sale as well as restructuring debts. It will also adjust conditions on loans and convert debt into equity. It is allowed to act as a broker to trade debts and assets, make financial investments and purchase sales as well as auction off assets and provide guarantees for businesses and individuals, helping them have easier access to bank loans. Nestlé inaugurates new coffee factory in Dong Nai Nestlé, the world's biggest food maker, inaugurated a new Nestle Tri An coffee factory in Dong Nai’s Amata industrial zone on July 9. Built with an annual capacity to produce 32,500 tonnes of coffee for both local consumption and export, the factory has generated more than 200 new jobs for local labourers. The factory applies the latest processing technologies to save energy and water. Nestlé is involved in a cooperation project with the Vietnamese Ministry of Agriculture and Rural Development to help coffee growers increase productivity. Nestle operates 500 factories in 86 countries over the world, of which Vietnam has 5 factories including one in Bien Hoa Industrial Zone 2. Business, production activities see bright prospects in second half of 2013 The country’s production and business activities are expected to improve in the second half of the year, according to a survey released by the Vietnam Chamber of Commerce and Industry (VCCI) in Ho Chi Minh City on July 9. In the Vietnam Business Insight Survey for the first half of the year, many enterprises agreed that there were big improvements in policy making and macro governance. According to the survey, in the second half of the year, 66.7 percent of businesses plan to maintain their business scale, 22 percent to expand their business, and 10.9 percent to seek new contracts (only 0.3 percent to end operations) – which is a positive signal of growing business confidence. In the first half, nearly 39,000 new enterprises were set up with a total capital of VND194 trillion, a rise of 7.6 percent over the second half of last year. However, the percentage of enterprises seeking bank loans dropped to 54 percent compared to 57.3 percent last year. However, 69 percent of enterprises were unable to find suitable solutions to market their product and relied on using conventional ways by seeking new export markets, reducing prices and strengthening advertising activities. About 15 percent of enterprises agreed that economic policies and macro-economic management to facilitate business and production activities, support market expansion and resolve bad debts were highly effectively but 27 percent said they proved to have little impact. To improve business and production activities in the second half of the year, experts proposed that the Government launch support programs for businesses, issue suitable tax policies as well as facilitating export activities. Quang Ninh businesses seek to penetrate Dubai market Businesses in the northern province of Quang Ninh would benefit from penetrating the Dubai market, said economists at a seminar on July 9. The seminar was co-organised by the Quang Ninh Investment Promotion and Support Board and Dubai-based Vchoice Goods and Service Export Promotion Company of Vietnam. According to Tran Dinh Thien, Director of the Vietnam Institute of Economics, Dubai offers good opportunities for Quang Ninh businesses. Dubai, one of the seven emirates that make up the United Arab Emirates, is known as the gateway to the Middle East, Southwest Asia and Africa. Dubai is the world’s most attractive duty-free market as businesses pay a very low rate of import tax, ranging from 0-5 percent. At the seminar, economists advised Vietnamese businesses to approach the Dubai market by studying their rivals, building brand names and seeking support from the Vietnamese business community in Dubai. They said that Quang Ninh province has many goods and services suitable for the market, especially Ha Long Bay tourism, farm produce and aquatic products. Vietnam’s Malaysian exports increase by 23.2 percent Vietnam’s trade office in Malaysia has reported export turnover to the Malaysian market totalled US$1.97 billion after the first six months of the year, up 23.2 percent from 2012’s same period. Vietnam’s key Malaysian export commodities are crude oil, electronics and components, telephones, rubber, rice, and iron and steel in various grades and gauges. Crude oil leads exports with US$493.5 million in turnover, followed by computers, electronics, and spare parts (US$415.2 million), telephones and components (US$264.5 million), and rubber (US$148.8 million). Vietnam imported Malaysian goods worth US$1.7 billion—a rise of 26 percent against the same period last year—bringing total half-yearly bilateral trade value to US$3.67 billion (up 24.5 percent on 2012). Vietnam’s key imports from Malaysia include computers, electronics and spare parts; petroleum; animal fats and vegetable oils; crude oil; and plastics. With 441 valid Vietnam-based investment projects, capitalised at US$10.21 billion, Malaysia ranks it eighth out of the country’s 100 nation and territory investment partners. Fisheries Livelihoods Programme under review A July 9 conference was held in Hanoi to review the Regional Fisheries Livelihoods Programme in South and Southeast Asia (RFLP). The programme was funded by the Spanish Government, coordinated by the Food Agriculture Organisation (FAO), and implemented in six regional nations. Its Vietnamese iteration has been implemented in the provinces of Quang Tri, Quang Nam, and Thua Thien-Hue. Deputy Directorate of Fisheries Head Nguyen Huy Dien  emphasised that the valuable lessons learned from implementing the RFLP will be shared with the rest of the nation and region. The programme’s results contribute to improving coastal fishing community, living conditions, and central Vietnam’s future sustainable development. Javier de Isturiz, the Spanish Embassy in Vietnam’s Deputy Head of Mission, hopes the programme will encourage sustainable seafood resource management, reduce the risks facing fishing communities, improve aquatic product quality, and expand market chains.  It also seeks to help fishing families increase their income and gain access to credit services. After three years of implementation, RFLP Vietnam has established 14 fishing associations and trained 6,841 people on issues related to fishing management, maritime safety, disaster prevention and control, food processing and preservation, gender integration, and basic microfinance. Programme helps improve SMEs’ export competitiveness A four-year programme to raise the export competitiveness of small and medium-sized enterprises (SMEs) through local trade promotion was introduced by the Ministry of Industry and Trade (MoIT) in central city of Danang on July 9. The programme follows a US$3.89 million Swiss State Secretariat for Economic Affairs (SECO) project to support trade promotion and export development in Vietnam. It focuses on enhancing Vietnam Trade Promotion Agency (VTPA) and trade association capacity. The SECO will provide US$3.32 million, with the remainder sourced from the VTPA and select local organisations. In addition, the programme will assist with the establishment of the National Export Council to improve monitoring standards and review the implementation of the national import-export strategy. The programme will be carried out in cities and provinces nationwide selected on the basis of their trade support capacity and sustainable export development potential. Stability rocked by lowering bank loans There is growing concern about the decision of financial institutions to lower interest rates as banks are struggling to ensure the adequate supply of capital. One to six month interest rates for bank deposits have fallen to 7% since June 28, with priority ceiling loan rates hovering around 9%. This is putting banks in a fix. One reason cited by VPBank Director General Nguyen Duc Vinh is that only a couple of every 10 businesses can meet the conditions required to borrow capital. Vinh argues that banks are under pressure to inject capital into the economy, but it is no easy task due to the limited number of eligible businesses which are affected by the weak purchasing power. Banks cannot simply lower credit standards as it is just a hasty action, he adds. Vice General Director of the Bank for Investment and Development of Vietnam (BIDV) Phan Thi Chinh says banks are managing hard to attract any businesses with AA confidence index or above. Rates can drop from an annual 8% one day to 7.5%, 7%, or even 6% only a few days later, posing a serious threat to the integrity of the banking system. As a case in point one business aimed for only VND80–100 billion in profit in the first half of the year but finally earned more than VND200 billion, including VND120 billion from borrowing capital at a low rate and then re-depositing it at a higher rate. Many of the banks with interest rates hovering around 6% are foreign invested which are capitalizing on the interest rate parity between VND and foreign currencies. Commercial bank leaders support the State Bank of Vietnam’s decision to lower loan rates and remove deposit ceiling rates as the liquidity of the banking system is improving to a certain extent. In fact, as some institutions have much more capital than others. It’s practical to remove deposit ceiling rates to help weaker banks. But credit quality remains a matter in question. Vinh says in response to the falling credit growth some banks have taken rash measures like debt re-purchases and lax personal loan standards. Chinh says the percentage of bad clients has increased from 30% to 50–60% at present. Chinh warns the State Bank of Vietnam should consider lowering interest rates based on the flow of national capital. If it falls to help stimulate the economic growth there is risk that inflation will rear its ugly head again sooner or later. PVN powers past H1 target PetroVietnam (PVN) has announced a post-tax revenue of VND27.5 trillion (US$1.3 billion) in the first six months of the year, representing a 53.2 per cent year-on-year increase. Le Minh Hong, PVN's deputy general director, revealed the figures at a press conference held in Ha Noi yesterday. He said that the group has met all of its targets for the first six months and improved from last year. Accordingly, the combined revenue of the company, including all of its subsidiaries, totalled VND364.3 trillion, accounting for 56.3 per cent of the year's targets. In the first half of the year, the group contributed VND82.8 trillion to the State budget - VND11.9 trillion higher than the set target. Hong added that in terms of corporate finance criteria, PVN posted total revenue of VND181.3 trillion, 16.5 per cent above its targets. He claimed the group's oil production was 13.64 million tonnes, an increase of 4.6 per cent over the corresponding period last year. It also produced and supplied 9.05 billion kWh to the national power grid, representing a 17 per cent increase over last year. It discovered four new gas mines and began the exploitation of three new mines. PVN produced 3.27 million tonnes of petrol in the six-month period, posting 28.3 per cent over the same period last year. PVN's chairman Phung Dinh Thuc said total oil production was still higher than the set target despite some mines seeing decreasing capacity and suffering from lower oil prices. Speaking at the conference, Thuc said plans for restructuring were underway having been approved by the Prime Minister at the beginning of the year. He said that 19 of the group's companies this month would be updated about the restructure and provided with clear guidelines. "The divestment from non-core businesses has faced with difficulties. The issue has been centred around timing, as we want to ensure State-owned capital is stable at the highest level," he said, adding that they have been waiting for the Finance Ministry to offer guidance for restructuring loss-making companies. He said the group would focus on five core businesses after completing its restructure. In the second quarter, PVN planned to raise its oil and gas production to 12.37 million tonnes of oil equivalent (TOE), including 7.85 million tonnes of crude oil and 4.52 billion cubic metres of gas. It has targeted a turnover of VND331 trillion in the last six months of the year, bringing the total of the whole year to VND696 trillion. If this happens, the group would contribute VND77.6 trillion to the State budget in the period, increasing 8 per cent compared to set targets. PVN expects to sign 2-5 new oil contracts and bring five mines into operation including two in the country and three others overseas. Exchange watchdog puts firms under supervision The Ha Noi Stock Exchange has decided to put shares of Golden Bridge Viet Nam Securities Co (GBS) and Chi Linh Materials and House Development Co (MCL) under control and traded in restricted time from today. Both companies have violated regulations on information disclosure. If they failed to fix the shortcomings by July 31, their listings would be suspended, the watchdog announced. Southern company plans 70 per cent dividend Tay Ninh Cable Car Tour (TCT) plans to pay a significantly high 70 per cent dividend for the 2012 fiscal year. The company made a profit last year, with many indicators exceeding the year's targets. Earning per share ratio (EPS) reached VND12,748 (US$0.6) and total revenue grew by 13.23 per cent, while profit rose by 14.75 per cent. The company expects revenue this year to rise 23.5 per cent to VND99.46 billion ($4.7 million), but estimates profit will decline 8.1 per cent to VND57.46 billion ($2.7 million). TCT's value yesterday shed 3.6 per cent to VND152,300 per share ($7.1). SBV sells off 40,000 taels of gold The State Bank of Viet Nam (SBV) sold all 40,000 taels of gold it put up for auction yesterday. Thirteen credit institutions bought the gold with winning prices ranging from VND37.48-37.7 million (US$1,784-1,795) per tael. Gold prices in the local market fluctuated yesterday morning during the auction, but the fluctuations were in a narrower band than those during previous auctions. The gold price increased by only VND50,000($2.2) over Monday's price. In the afternoon, the SJC gold price was listed at VND37.3-37.7 million ($1,776-1,784) per tael (buy-sell). After more than one week, SBV has sold most of the 160,000 taels that were on offer, despite many experts saying gold demand from businesses and banks was still very high. Since 28 March, SBV has held 41 auctions, selling 1.169 million taels or about 43 tonnes of gold. New VN Talent Awards benefit society Nhan Tai Dat Viet 2013 (the 2013 Vietnamese Talent Awards) has been expanded to include mobile content and environmental issues, the organisers have said. The annual awards, now in their ninth year, were originally set up to search for new talent and products in the fields of IT, applied sciences, medicine and pharmacy. Organised by VNPT Group, Viet Nam Television and the Dan Tri online newspaper, the awards this year have included two additional prizes for an IT solution/product which benefits the society as well as a prize for creative youth, contestants under 20 years old. In the field of applied sciences, the awards will be granted to scientists who have made outstanding achievements in mathematics, physics, mechanics and chemistry and have applied their work in a practical manner, with a beneficial economic/social effect. Based on their scientific and practical values, the winners will take home VND100 million for first prize, VND50 million for second with VND30 million for third place. Consolation prizes of VND20 million will also be awarded. The deadline for applications is August 31. The awards ceremony will be held in Ha Noi on November 20 and will be broadcast live on VTV and the VnMedia online newspaper. Large inventories plague local companies Inventory is still a major concern for Vietnamese businesses, according to a survey released yesterday at a seminar held in HCM City. Nearly 63 per cent of surveyed businesses said that it remained a concern during the first six months of this year, compared to 73 per cent in the last six months of 2012. The survey was conducted by the Viet Nam Chamber of Commerce and Industry (VCCI) in May and early June, with the participation of 700 businesses nationwide. The aim was to give an overall view of the business environment as well as attitude toward Government policies. The seminar was organised by VCCI under the sponsorship of VPBank. Doan Thi Quyen of the VCCI's Enterprise Development Institute said that businesses had faced difficulties in finding buyers. To solve inventory back-up, survey respondents said they were looking for new export markets (49.9 per cent), and cutting prices and offering promotions (28.7 per cent). Only 8.9 per cent of businesses said they were taking goods to rural areas for sale. The survey showed that the business and production situation in the first six months of this year was worse than in the last six months of 2012. Profits on each product unit saw the sharpest decline, followed by low productivity per machine and a drop in the number of orders. However, Vietnamese enterprises said they thought the situation would improve in the last six months of 2013. According to the survey, in the first six months of the year, 54 per cent of businesses said they needed to borrow capital from banks, while the figure was 57.3 per cent in the last six months of 2012. Quyen said although the Government had asked the State Bank of Viet Nam to lower interest rates, fewer businesses had been asking for loans. Among the businesses that need bank loans, only 36 per cent of them have received approval from banks to borrow loans. Money from loans have been used mostly for new business plans and expenses (salaries, debts and payments to suppliers), according to survey respondents. For the rest of 2013, 66.7 per cent of surveyed businesses said they would keep production scales unchanged and 22 per cent said they would expand production. More than 28 per cent said they hoped for more export opportunities and 18 per cent said they wanted the State to offer more financial support to businesses. The survey showed that macroeconomic policies had improved compared to last year, with new tax policies and a stable legal environment. At the seminar, Dang Duc Thanh, a member of the VCCI's executive committee, said that Vietnamese businesses should focus on restructuring their companies. He said they should reduce reliance on bank capital and try to have a 1:1 ratio of bank capital and their own capital. In the past, borrowed bank capital was three to 10 times higher than business-owned capital, leading to an increase in bad debt at banks, he said. "Businesses need to be proactive in seeking many different capital sources to replace bank capital, including the issuance of corporate bonds and more joint-venture cooperation," he said. Thanh suggested that the Government consider re-adjusting lending interest rates to 7 per cent per year as other countries (Thailand, Singapore) in the region have done. Many countries such as Taiwan and Japan have issued low lending interest rates of 2 per cent and 1 per cent per year, respectively. Vu Kim Hanh, chairman of the High Quality Vietnamese Products Business Association, said that businesses should also renovate technology and improve management to increase competitiveness. To accomplish this, Government support was needed, he said. Businesses also needed help to take goods to rural areas for sale. Hanh emphasised that multinational corporations had become dominant players in the department store and supermarket fields, so local players must improve competitiveness to survive. Investing in property shares is still a risky business Property shares have always been a favourite choice with investors in recent years due to their high liquidity and good returns. However, how to pick a good share has now become more challenging, given the current economic difficulties some businesses are in. After a series of dreary profit reports from most real estate companies this year, investing in property shares can actually bring in large profits. According to a report by the VNDirect Securities Company, the share prices of most real estate firms saw a 10-50 per cent increase in the first six months of this year. Cotec Invesment&Land-House Development (CLG) was the biggest winner, rising by 200 per cent while the Hoa Binh Construction and Real Estate (HBC), Kinh Bac City Development (KBC), Tan Tao Investment Industry (ITA) and Hoang Quan Consulting Trading Services (HQC,) all rose by around 40 per cent. Not all the winners turned out profitable however. KBC posted losses of VND53 billion ($2.5 million) in the first quarter. CLG reported a tiny profit of only VND700 million ($33,300) during the same period, while others such as ITA or HQC had profits of just several billions of dong. At the end of March, almost 40 per cent of listed real estate companies had reported a loss. Market insiders predict that the profits of these companies could also fall in the second quarter as many of the problems affecting the property market remain unresolved. Although the Government approved a stimulus package of VND30 trillion ($1.43 billion) to kick start the real estate market, many analysts doubt the impact of this policy given the small amount of money compared to the market as a whole, as well as the lack of legal basis for the stimulus. Investing in property shares nowadays is also risky as most property companies have reviewed their business targets down for this year, due to high levels of unsold housing and high interest rates for borrowers. Some could even be forced to delist their shares due to cumulative losses such as the Dream House Investment Corp (DRH). This company incurred losses of more than VND27.6 billion ($1.3 million) over the past two years. In the first quarter of this year DRH posted a net profit of just VND300 million ($14,200). Air China launches HCM City route Air China, China's flagship air carrier, has announced it will launch a new air route between HCM City and Houston via Beijing on July 11. There will be four round-trip flights on Tuesday, Thursday, Saturday and Sunday using new generation Boeing 777-300ER aircraft, making Houston the company's fifth gateway in North America, in addition to New York, Los Angeles, San Francisco and Vancouver. Houston has the third-largest Vietnamese community in the US, with more than 60,000 Vietnamese people and Vietnamese-Americans. On the occasion, the airline has also launched a promotion, offering one-way tickets at US$370, excluding taxes and fees. Milk plant opens in Nghe An The Prime Ministers of Viet Nam and Laos cut the ribbon to inaugurate the first phase of a fresh milk processing plant, one of the largest in Southeast Asia, in central Nghe An province yesterday. The processing plant has been funded by TH Group, and is designed to process 500,000 tonnes of milk per year by 2017. The plant's first phase will see 200,000 tonnes of fresh milk being processed every year. The plant is part of TH Group's US$1.2 billion project to develop large-scale dairy farms and the milk processing industry in general. Besides the new plant, the project's first phase also saw farms raise up to 45,000 cows on 8,100ha of pasture. The group aims to increase its herd to 137,000 head by 2017, providing half of the country's supplies of fresh milk. Speaking at the event, Dung praised the company's investment to produce and process milk as well as for using top-quality cows to ensure adequate supplies. He said this is in the right direction to follow, and in accordance with Government policies to encourage the food processing industry and use locally sourced materials. The factory will create numerous jobs for local people, reduce Viet Nam's dependence on imported milk and promote Viet Nam's dairy industry to the rest of the world, he added. Earlier the same day, the two Prime Ministers visited a rubber plantation belonging to the Nghe An Rubber Investment and Development JSC in Thanh Duc commune, Thanh Chuong district. Demand low for duty-free Vietnam products A majority of products for which foreign visitors have requested VAT refunds are imported high-end items, indicating international tourists have little demand for locally made goods. Around 320 foreigners had VAT refunded at Tan Son Nhat International Airport a month on average, according to statistics released by end-March. As of March 31, 2013, or eight months after the launch of a pilot VAT refunding scheme for foreign visitors, 2,591 foreigners got back VND96.46 billion in VAT in the city, the HCMC Department of Culture, Sports and Tourism reports, citing the city’s Department of Customs. The commodities with VAT refunded are mainly high-class cosmetics and fashion items of global brands that are available at local commercial centers. Foreign tourists can get refunds up to 85% of the paid VAT sum under a trial program which lasts until June, 2014. Auto sales rebound, fee cut to fuel growth Auto sales in June inched up slightly against the preceding month, but rose sharply year-on-year, with the industry forecast to attain higher growth following a car registration fee cut in Hanoi. Toyota Vietnam last month sold 2,858 vehicles, an increase of only 80 units month-on-month but nearly 1,200 units year-on-year. Honda Vietnam recorded a sales volume of 483 units, nearly 200 units higher than the previous month and a four-fold rise from the same period last year. Visuco (Suzuki) sold 376 vehicles in June, up 15 units month-on-month, but compared to the year-ago period, the volume nearly doubled. Isuzu Vietnam’s sales were nearly 180 units, some 20 higher than May and more than twice the figure in the same period last year. VinaMazda achieved a sales volume of 300 units, up 50 over the preceding month. Other auto firms reported their sales remained unchanged or declined slightly in June, but grew significantly against the same period last year. Ford Vietnam last month sold 581 vehicles, up 140 units year-on-year. Vinastar recorded double year-on-year growth with 160 vehicles finding buyers in June. GM Vietnam sold 305 units, a rise of 40 units over the same period last year. Overall, around 8,250 vehicles were sold last month, nearly 2,400 units higher than in the year-ago period. To achieve such positive results, automakers said they had launched many new car models to attract buyers. In addition, some firms have adopted preferential sales policies, with direct discounts, registration fee support and car accessories given to customers. Auto traders forecast the market would continue to move up as the registration fee for under-10-seat cars is slashed from 15% to 12% in Hanoi, the nation’s biggest auto consuming city. In the first six months, Vietnam imported an estimated 16,000 completely built-up (CBU) vehicles, worth US$308 million, up 17.8% in volume and 7.5% in value compared to the same period last year. The recovery rate is not significant given the sharp drop in CBU car imports in the first half of 2012, down 59% in volume and 54.7% in value. The CBU car import volume in the past four months has remained stable at 3,000 units per month, but the value has grown steadily from US$48 million in March to US$50 million in April and US$66 million in May. The import value in June is estimated to dip to US$55 million, according to the General Statistics Office. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR