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BUSINESS
IN BRIEF 10/3
Airlines
rush to the bottom for slow season
Airlines in
On the occasion of
launching its 22th air route linking HCM City and Dalat, VietjetAir has
provided up to 30,000 tickets, some for as little as VND22,000 each.
Before Tet, the
airline had another campaign of offering discount tickets for just VND9,000
VND for some domestic routes.
National flag
carrier Vietnam Airlines announced that from March 15, it will not apply the
surcharge of VND50,000 for economy class and VND90,000 for business class.
They opted to allow their agents decide if they want to lower the price to
better compete.
International
airlines have not missed out on the trend. From March 30, All Nippon Airways
will start a promotional programme offering a return ticket of just USD650
from
Cathay Pacific will
extend a 50% discount on March 31 to about 50 destinations, including the
routes from
Some other foreign
airlines in
Despite cheap
tickets, many complain about difficulties with booking. The numbers of
available tickets is usually limited, leaving some customers without adequate
time.
VNDirect
connected to global network
VnDirect Securities
Company has become the first Vietnamese broker joining the global network of
the
A representative of
Fidessa said in a statement released on Monday that this is the first step of
Fidessa in serving foreign investors who are interested in the local market.
VNDirect’s participation in the network will help clients place buy and sell
orders automatically and prevent risks related to manual transactions.
This move is part
of Fidessa’s strategy to serve online transaction demands in
Last year, VNDirect
introduced DMA and STP, two solutions allowing online transactions to go
directly to Bloomberg EMSX and Fidessa systems.
Fidessa Group is
providing market analysis, transaction system and investment infrastructure
services for financial institutions worldwide.
Shipments
of garment and coal pick up in Feb.
In the first two
months, export of garments and textiles and coal increased by 44.9% and 4%
against the same period last year.
The Ministry of
Industry and Trade reported that garment and textile production were better
with contracts secured stably in number and recovering export markets.
Garment and textile
shipments valued at US$ 1.3 billion in February, up 44.9% against the same
period last year. In the January-February period, the sum went up 30.1%
against the same period last year.
Meanwhile,
according to the Viet Nam National Coal and Mineral Industries Group
(Vinacomin), coal production touched 6.58 million tons in the first two
months, accounting for 104% of the same period in 2013.
Up to 1.44 million
tons of coalwere shipped abroad, meeting 18% of the year's plan and
representing 68% of the same period last year. Domestic consumption was 4.38
million tons, equal to the same period last year.
Due to the slow
granting of coal exploration licenses, a large number of small-scale projects
were slowly put into operation, said Vinacomin Deputy Director General Nguyen
Van Bien.
He suggested
relevant ministries speed up the process to ensure coal production meets the
set target.
Canon
up-phases Bac Ninh factory
Japanese laser
printer manufacturer Canon just inaugurated the second phase of its factory
in
The expansion has
an investment of $27 million and will bring output up to 10.8 million
products a year and employ 5,400 local workers by 2016.
The investment in
The company entered
The factory in Tien
Son was built in 2007. Over the past seven years Canon has already increased
its production capacity at this factory from two million to eight million
products annually.
Promises of
cheap credit prove hard to cash in on
Firms are still
struggling to access low-cost lending despite falling interest rates.
General director of
state-owned Vietnam National Coffee Corporation (Vinacafe) Nguyen Nam Hai
said up to 65 per cent of their coffee areas were planted with old trees that
needed replacing, but member firms were short of capital but couldn’t take
additional loans due to outstanding debts.
Therefore for
Vinacafe and other coffee firms, lower interest rates were not of top
importance, instead it was the ability to access capital.
Despite agriculture
being a priority sector for lending, many agricultural export businesses
claimed they could not access credit in the past year.
In response the
Ministry of Agriculture and Rural Development’s Agro-Forestry Processing and
Salt Industry Department recently proposed that banks reschedule loans for
export processing firms, providing them a chance to get new loans at more
reasonable interest rates of about 9 per cent per year.
The department also
asked the government to cut the interest rate of investment development
credit to 5-6 per cent per year from a current 11.5 per cent to benefit firms
in the agricultural sector.
Vehicle and part
manufacturers are also in a critical state.
In a recent letter
to the prime minister, Bui Ngoc Huyen, chairman of leading Vietnamese
car-maker Xuan Kien Auto Joint Stock Company (Vinaxuki) said capital
shortages were the biggest problem firms were facing.
Kien said this was
in part because banks had undervalued collateral.
Despite the State
Bank’s (SBV) commitment to offer priority lending to firms in five set areas,
its reports showed that the property sector had gained the most from bank
loans, growing nearly 37 per cent last year.
That was because
banks could hold property as collateral while they faced a surging threat of
bad debt when lending to production firms.
According to
Vietnam Association of Small and Medium Size Enterprises chairman Cao Si
Kiem, current interest rates, although in a downward trend, have still nearly
double the profitability rate of most firms.
SBV figures showed
that bank credit in January had contracted 0.5 per cent. Some banks were in
an even worse position. For instance, the Ho Chi Minh City-based Orient
Commercial Bank (OCB) saw their credit contract 0.8 per cent in January. “Our
bank only lent to good firms despite having substantial capital,” said OCB’s
deputy general director Pham Linh.
Economists have
indicated bank credit had been largely misdirected because of the
concentration on consumer lending backed by collateral and into government
bonds, rather than channelling money into production which was a real cause
of concern.
The majority of
government bonds were bought by banks, with the State Treasury raising over
VND31.542 trillion ($150 million) from four auctions since early this year.
Affordable
housing developer
Vietnamese property
developer Nam Long, which leads in affordable housing development, has just
announced six new corporate investors including the World Bank’s private
sector lending arm IFC.
The new investors
are both local and foreign. Among them are Bridger Capital and Probus Asia
from overseas, and
Nam Long CEO Nguyen
Vinh Tran announced that IFC will finance his Ho Chi Minh City-based firm to
build 8,000 apartments for mid-income homebuyers in the city by 2017. The
$7.5 million equity investment will support Nam Long’s plan to build more
housing units under its EHome brand. IFC will also aid the company in
improving its environmental and social practices
Nam Long had
separately issued 25.5 million shares to the six investors for VND18,000 (85
cents) each, adding VND255 billion (12.14 million) to its VND955 billion
($45.47 million) chartered capital, bringing the new capital to VND1,210
billion ($57.61 million). The actual proceeds of VND459 billion ($21.85
million) will go to the company’s forthcoming EHome projects.
The company Nam
Long has so far sold more than 3,000 affordable housing units, costing
between $25,000 and $50,000 each. Meanwhile,
Nam Long’s other
strategic investors include Nam Viet, which is fully owned by Goldman Sachs,
Malaysian investment fund ASPL, Mekong Capital-managed VAF Fund, and
Prefab
factories trending now in IPs
Industrial park
developers are turning from long-term land leases to added-value
pre-fabricated factory construction for lease with areas of about 2-3,000
square metres, according to experts.
Industrial park
developers are now including prefab facilities in their rentals to attract
fast paced investors
Jonathan Tizzard,
national head of research and valuation at Cushman & Wakefield, said a
recent trend indicated developers were turning from long-term leases to
dividing the total land area into plots and constructing factories,
warehouses or storage for lease.
According to Ho Chi
Minh City Export Processing and Industrial Zone Authority (HEPZA), in 2013,
the total leased area of warehousing in the city’s industrial parks reached
55,680 square metres, representing a sharp increase of 37 per cent
year-on-year.
“This proved the
demand for this type of industrial property is following an upward trend,”
Tizzard claimed.
“Demand mainly
comes from small and medium foreign invested enterprises (SMEs) support
industries which reflected the local authorities’ success in attracting
support industries,” he pointed out.
Kelvin Teo,
co-chairman of VSIP Group and CEO of Sembcorp Development told VIR that manufacturers
often weigh up different rental options.
“Short-term leases
give manufacturers flexibility to first understand the country’s operating
environment and customer demand before making more long-term investment
decisions,” he said.
For VSIP, the company
is offering ready-built factories (RBF) in VSIP Binh Duong and
“From our
experience, the RBF are popular with some foreign companies who are new to
investing in
The reason for this
move, according to Tizzard, was that those newly established companies
investing in the Vietnam market firstly need to understand the country before
settling down for the long term, and therefore leased warehouses inside IPs
over 2-3 years allow them to pilot manufacturing instead of leasing industrial
land for 50-year periods.
Another reason was
to meet foreign investor demands for convenience.
“In the difficult
economic context, leasing built factories is preferable for new businesses
that want to begin exploiting opportunities in the shortest time,” added
Tizzard.
It is estimated
that factories take at least four to five months to complete with
construction costs ranging from $170 to $400 per square metre depending on
their specialism.
In contrast
industrial warehousing can help enterprises save time and money otherwise
wasted on building infrastructure.
Moreover, most IPs
require upfront full payment for the whole leasing period (averaging 30 to 50
years). Leased factories by contrast can help small foreign companies with
limited initial equity to save money and minimise risks.
Another advantage
of this change is the rent achievable for leasing land with built factories
is still being kept relatively high and stable over quarters despite the
decreasing rent in other segments in the market.
The asking rent
averages from $2 to $6 per square metre per month. Given the increasingly
high demand of SMEs entering
To support this
change, the government has allowed investors who have been issued investment
certificates by December 31, 2012 to amend their business purposes in those
certificates to include warehouse leasing activities.
At the same time,
industrial park managers have been applying policies to support investment
from foreign invested SMEs that will be the main demand driver for built
factory leasing by working with infrastructure development companies to build
qualified warehouses and filtering out enterprises with poor performance to
have more space for building factories/warehouses for new investors.
IP management
bodies are also providing more services to support new enterprises in leasing
factories such as labour recruitment, investment consultancy, training,
accounting and management consultancy.
There are currently
18 operating IPs in
It is predicted
that the total increase in industrial land in Ho Chi Minh City up to 2020
will be approximately 3,000 hectares, a roughly 85 per cent increase from the
fourth quarter of 2013. In terms of the number of IPs, it is forecast that
the 18 current parks will expand and there will be 12 new IPs in operation by
2020.
Meanwhile in
Industrial
inventory index remains high in early 2014
The inventory index
of the manufacturing and processing industry increased by 1.8% month on month
in the first month of the year, and 12.7% against the same period last year.
The figures were
reported by the Ministry of Industry and Trade (MoIT) during a video
conference held on March 3.
Several industries
recorded a high inventory index, including sugar production (up 50.7%), milk
production (up 24.9%), animal and poultry feed production (up 34.8%,)
footwear production (up 36.8%), and pulp production (up 45%).
According to Deputy
Minister of Industry and Trade Do Hai Thang, the high inventories were due to
high accumulated inventories from the previous month and low consumption in
many industries.
Notably, the
consumption of iron, steel and cast iron in January decreased sharply, by
20.8% compared to the same period in 2013. The purchasing power of milk
products, animal and poultry feed and cement products also saw year-on-year
decreases of 2.7%, 1.5% and 9.4% respectively.
To resolve issues
related to inventory, the MoIT directed relevant agencies to continue
deploying effective measures to remove difficulties facing businesses and
offer support in distributing and selling products to reduce inventory.
Domestic enterprises need to seek out new markets and improve competitiveness
to cut down inventories and ensure sustainable development.
GAS shares
running dry on strong foreign demand
The number of
tradable shares, or the free float ratio, of PetroVietnam Gas Corporation
(GAS) is contracting quickly as foreigners are rushing to snap up GAS shares.
Though GAS has
jumped over 100% in price since its debut date, foreigners have picked up
47.8 million GAS shares, or a 2.52% stake. If they continue to acquire more
GAS shares, the firm will become a venture between the State and foreign
investors pretty soon.
According to latest
statistics of the Hochiminh Stock Exchange (HOSE), there had been only 13.3
million tradable GAS shares left, including those held by employees and
internal shareholders, by February 20.
The firm earlier
launched nearly 1.9 billion shares on HOSE, of which the State holds 96.72%.
Therefore, only 61.1 million shares, or 3.28% of the total, have been
tradable on the stock market.
A representative of
a large investment fund said GAS is among the best blue-chips with strong
business results. Taking the lead in terms of market capitalization, GAS
always makes significant impacts on developments of the VN-Index and most
investment funds have put GAS into their portfolios.
Even domestic
organizations have picked GAS for their long-term portfolios. So room for
both foreign and domestic investors may be full soon, the expert said.
During a recent
conference on State enterprise equitization in
Last year, GAS took
the lead among listed enterprises in terms of after-tax profit with nearly
VND12.4 trillion. The figure is expected to grow further this year.
When GAS launched
its initial public offering (IPO) in 2010, a major banking sector investor
and associate individuals acquired a huge volume of GAS shares. At the time,
GAS sold only 64% of the shares offered, of which foreigners bought only 7%.
Foreign investors
were not interested in GAS as they could not predict an exact listing time.
In addition, the stock market was suffering a steep decline and GAS’s net
profit was estimated at around VND4.5 trillion in 2010.
When GAS rose to
VND40,000-50,000 per share, the above holders sold out their GAS shares.
Since then, foreigners have jumped in to buy GAS shares.
Foreign
investors snap up half of Viglacera shares at IPO
Foreign investors
acquired 52% of the shares which State-owned firm Viglacera successfully sold
in an initial public offering (IPO) on the
The company sold a
total of 19.47 million shares worth VND200.58 billion in this IPO auction,
which however accounted for 25.3% of the total offered volume. The average
price per share is VND10,301.
According to the
The
The winning bid was
VND10,200 per share, the same as the reserve price.
After the IPO
auction, the State might sell more preferred shares to staff and eventually
hold an 85.46% stake in Bach Dang.
Brokers:
FOL spike to spur market
Although the market
corrected in the two final sessions last week, securities firms said the
correction phase would finish soon due to a forthcoming foreign limit
ownership (FOL) increase.
Last Friday,
selling remained strong in early trade but then dropped as updates on the
possible FOL increase emerged from a meeting of State Securities Commission
(SSC). SSC said a proposed draft for a new decision regulating FOL in listed
enterprises has been done and was waiting for approval.
In addition, SSC
has been working on an accompanying circular, which will follow the new
decision on FOL.
According to Viet
Capital Securities Company, tickers with foreign room already full like FPT,
REE, TCM and JVC were among the gainers. Meanwhile, the real estate sector
declined the most.
The VN-Index fell
0.08% against the previous day to 570.57. The HNX-Index, meanwhile, bounced
back 0.83% at 80.17.
Both exchanges
reported a total trading value of around VND2.7 trillion, down 49% from the
previous session with a record high in matched trade volume, as investors
turned cautious.
Outstanding
put-through transactions included HAG, KBC and LSS. Foreigners remained net
buyers with a combined value of around VND44 billion.
During the week,
the VN-Index lost 0.29% while the HNX-Index gained 1.79%.
Viet Dragon
Securities Company said the FOL issue is supporting investor sentiment.
However, even if the new FOL rule is announced, it could still be a big
question for the market.
“Right now, we
think there could be two scenarios. First, foreign cash flow would be
strengthened, helping the VN-Index beat the 580-point level successfully.
Otherwise, foreign cash flow would fail to improve and the market could see
more corrections,” the brokerage said in its last Friday’s report.
“Given the FOL
factor, we do not have reasonable grounds for confirming that the correction
phase is over. However, the economic restructuring process, especially
State-owned enterprises reform and supportive solutions for the real estate
sector, has been sped up. Thus, we think that the bullish run of the stock
market will not stop in the coming time,” VDSC added.
Aside from
fundamental sectors, investors can look into foreign cash flow to make
investment decisions. In recent times, foreigners have been focusing on real
estate stocks such as KBC, IJC, DIG, OGC, ITA and DXG.
Experts:
Flappy Bird game exit is huge blow
Flappy Bird heated
up the 25th anniversary ceremony of the Vietnam Association for Information
Processing on Saturday with most participants feeling regret as developer
Nguyen Ha Dong has removed the hit game from Google Play and the iOS App
Store.
Mai Liem Truc,
former deputy minister of posts and telecommunications, said
Nguyen Long,
general secretary of the association, said the information technology (IT)
industry started 2014 with a special event as the mobile game Flappy Bird had
stayed on top of both the iOS App Store and the Google Play Store. However,
authorities have yet to create a favorable environment for IT products.
Bui Manh Hai,
chairman of the association, said
Nguyen Ngoc Binh,
president of the
Mike MacDonald,
chief technology officer of Huawei Group, said that
Nguyen Trung Chinh,
general director of CMC Technology Group, said Flappy Bird has strengthened
the confidence of Vietnamese people and enterprises at development
opportunities in the global IT sector.
Dong has proved
that he as an individual could create a popular product at a low cost for 50
million users worldwide due to his creativity, Chinh said.
Poor
Internet traffic on March 2-9
Internet traffic in
A source from the
Vietnam Post and Telecommunications Group, the operator of the
The AAG system
accounts for a large volume of international Internet traffic of Internet
service providers in the country such as VDC, FPT and Viettel. As a result,
around 80% of Internet users in
Sources from FPT,
Viettel and VDC said these companies would strive to cushion the impact by
using inland backup cable systems.
Speaking to the
Daily, Nguyen Van Khoa, director of FPT Telecom, said that despite high fees
for international traffic volume to be hired from other cable systems when
the AAG system is down, FPT is still hiring other systems to ensure the
impact on its customers will be minimal.
VND1.2 bil.
for HCMC administrative center redesign contest
HCMC will organize
a contest to redesign its administrative center with an estimated cost of
nearly VND1.2 billion.
The administrative
center will be developed in an area surrounded by Le Thanh Ton, Pasteur, Ly
Tu Trong and Dong Khoi streets in District 1.
Those taking part
in the contest need to be capable, known and knowledgeable about
conservation. A list of contestants will be screened by the
The contest will
consist of a preliminary round for design ideas in which a panel of judges
will pick 7 to 9 contestants with excellent ideas to go to the next round.
The plan with the
highest score will be reviewed by the judging panel for improvement, if any.
Then it will go before the HCMC government for approval.
The first prize
winner will get VND300 million with copyright to be protected. Second and
third prize getters will receive VND150 million and VND100 million
respectively while VND50 million will go to consolation prize earner.
Each entry will be
funded with VND20 million no matter whether it wins the contest or not.
SeABank
provides VND4 trillion to support production
The Southeast Asia
Commercial Joint Stock Bank (SeABank) has offered credit packages totaling
VND4 trillion (US$188 million), with preferential annual interest rates from
8.5 percent, to small and medium enterprises (SMEs).
The
packages—intended to assist the businesses in maximising growth opportunities
in 2014 and to supplement capital for production, trade and export—are
available until the end of this year.
SeABank plans to
grant VND3 trillion with annual interest from 8.5 percent to SMEs that need
further working capital or medium-term loans in VND to purchase new assets
for production and trade.
They can also access
short-term loans in USD to supplement working capital and to invest in
sectors where credit development is encouraged under the bank’s 2014 business
plan.
The other package,
of VND1 trillion, is for short-term loans in VND to family enterprises, with
interest rates from 8.8 percent annually.
The establishment
of a concentrated information technology park in Cau Giay district,
Minister of
Information and Communications Nguyen Bac Son made the remark during a
working session with the municipal authorities on February 24, praising the
Hanoi People’s Committee for swiftly getting the zone operative.
He also urged the
city to create preferential policies that will draw more investment to the
zone, saying that it is necessary to solve difficulties facing investors to
help them promote their business and production.
The minister noted
that the municipal authorities should pay attention to calling on domestic
and foreign investors to pour money into the field.
According to Vice
Chairwoman of the Hanoi People’s Committee Nguyen Thi Bich Ngoc, the city has
invested VND30 billion to the infrastructure in the park.
She said the city
also asks related departments and sectors to build appropriate policies and
models for its first concentrated IT park. Three more of its kind will be
built in other districts in the coming time; the city aims for the IT sector
to spearhead the city’s economy by 2015, Ngoc stressed.
On August 28, 2013,
the Cau Giay handicraft and small-scale industrial cluster was recognised as
a concentrated (IT) park in
Covering an area of
8.5 ha, the park houses 306 enterprises, with 11,336 workers. IT firms
account for 28.8 % of the enterprises, such as the Financing and Promoting
Technology Corporation (FPT) and the Military Telecom Corporation (Viettel).
Transfer
pricing out of control in Vietnam
The Government
Inspectorate said management agencies are failing to define databases and
information about transfer pricing of foreign-invested enterprises in
Although the
Ministry of Finance issued several circulars aimed at preventing transfer
pricing, the Government Inspectorate has said they have brought limited
results due to the failure to define transfer pricing information of
foreign-invested companies through their parent companies in foreign
countries.
In addition, the
government admitted that the cooperation between tax and customs agencies
remains lax, which is among causes for current difficulties on the issue.
In 2013, the
Government Inspectorate inspected 399 enterprises at export processing zones
in
It is suspected
that up to USD4.15 million of arrears are owed by 399 enterprises in export
processing zones in the four localities, however, until now, just VND5.47
billion (USD261,900) have been collected.
Many Japanese firms
have reported losses for three consecutive years, including Sumitomo Bakelite
Vietnam, Meiko Electronics Vietnam Ltd. Co. and Toshiba Asia Pacific
Pte. Ltd.
The Government
Inspectorate has proposed that the government instruct the Ministry of
Finance to cooperate with management agencies to revise policies for
detecting and dealing with transfer pricing among foreign-invested companies.
Fishery
products remain key export
Export revenue of
agricultural, forestry and fishery products in February reached an estimated
US$2.08 billion, a 9.4% year-on-year rise as the export of rice, coffee, tea,
cassava and rubber falls in both price and quality, according to the Ministry
of Agriculture and Rural Development.
Fishery and
forestry export has brought about US$919 million and US$837 million
respectively, increasing 23.5% and 30.2% over the same period last year.
The
Meanwhile, 38,000
tonnes of rubber export in February brought US$80 million. In total for the
first two months exports reached 104,000 tonnes, approximately US$215
million, decreasing 25.4% in volume and 43.3% in value compared to the same
period last year.
Export volumes of
tea, cassava and cassava products in the first two months also fell by 18.9%
and 32.7% respectively while the value dropped by 15.5% and 30.6% compared to
the same period last year.
Rice export also
saw 12.3% and 8.4% drops in volume and value in the first two months compared
to the same period last year while coffee export dropped by 13.7% in volume
and 23.4% in value.
HCMC leader
pledges support for businesses
Chairman of the
HCMC People’s Committee Le Hoang Quan has reaffirmed the city’s commitment to
lending a helping hand to businesses, particularly foreign-invested
enterprises, to ensure the efficiency and profitability of their operations.
This was one of the
top priorities Quan mentioned at a meeting with representatives of foreign
and domestic enterprises organized by the European Chamber of Commerce in
“HCMC will make
every effort to help enterprises of all economic sectors operate efficiently
so that they will contribute to the city’s development and state budget,”
Quan said at the meeting with more than 70 representatives of domestic and
foreign companies.
By December last
year, the number of active foreign-invested projects in the city had reached
over 4,920 with total registered capital of US$35.5 billion.
At the meeting held
by EuroCham, Quan stressed a win-win situation for HCMC and investors. “We
have responsibilities for creating favorable conditions for each other,” Quan
said.
He reiterated that
regulations, policies and procedures regarding investment would be
implemented transparently and responsibly.
Preben Hjortlund,
chairman of EuroCham, told the Daily after the meeting that a level-playing
field was one of the concerns for European companies currently operating in
Vietnam in addition to the issue on work permits.
EuroCham’s Business
Climate Index for the fourth quarter of 2013 showed that business confidence
and outlook among European businesses in Vietnam stagnated at 50 of the 100
point scale, the same as in the second and third quarters of last year.
European members
that participated in the survey remained worried about the impact of future
legal changes. However, investment plans and business orders were expected to
increase, which in turn positively impacted recruitment plans.
Another positive
development was an expectation of less impact of inflation on business,
according to the survey.
HCMC leader
pledges support for businesses
Chairman of the
HCMC People’s Committee Le Hoang Quan has reaffirmed the city’s commitment to
lending a helping hand to businesses, particularly foreign-invested
enterprises, to ensure the efficiency and profitability of their operations.
This was one of the
top priorities Quan mentioned at a meeting with representatives of foreign
and domestic enterprises organized by the European Chamber of Commerce in
Vietnam (EuroCham) in HCMC last Friday.
“HCMC will make
every effort to help enterprises of all economic sectors operate efficiently
so that they will contribute to the city’s development and state budget,”
Quan said at the meeting with more than 70 representatives of domestic and
foreign companies.
By December last
year, the number of active foreign-invested projects in the city had reached
over 4,920 with total registered capital of US$35.5 billion.
At the meeting held
by EuroCham, Quan stressed a win-win situation for HCMC and investors. “We
have responsibilities for creating favorable conditions for each other,” Quan
said.
He reiterated that
regulations, policies and procedures regarding investment would be
implemented transparently and responsibly.
Preben Hjortlund,
chairman of EuroCham, told the Daily after the meeting that a level-playing
field was one of the concerns for European companies currently operating in
Vietnam in addition to the issue on work permits.
EuroCham’s Business
Climate Index for the fourth quarter of 2013 showed that business confidence
and outlook among European businesses in Vietnam stagnated at 50 of the 100
point scale, the same as in the second and third quarters of last year.
European members
that participated in the survey remained worried about the impact of future
legal changes. However, investment plans and business orders were expected to
increase, which in turn positively impacted recruitment plans.
Another positive
development was an expectation of less impact of inflation on business,
according to the survey.
European
enterprises develop investment plans and recruitment in Vietnam
There is increasing
confidence for European companies investing in Vietnam, according to the
EuroCham Business Climate Index (BCI) survey released on February 25.
The BDI reached 59
points for the first time since 2012 confirming an optimistic attitude for
European commerce.
Investment plans
and recruitment in the country have increased due to raised orders.
It is a good
recovery sign for the economy, said Csaba Bundik, executive director of
EuroCham Vietnam. He is confident that this is due to the Free Trade
Agreement between Vietnam and the European Union would be signed soon.
Traffic
corporations to launch IPO next month
Many large
corporations in the traffic sector will together launch initial public
offering (IPO) next month with most setting the starting price at VND10,000
each share.
Civil Engineering
Construction Corporation No. 6, or Cienco 6, will offer over 28.7 million
shares, or a 47.87% stake, on March 21 on the Hochiminh Stock Exchange. The
starting price is set at VND10,000 each share.
On the same day, Civil
Engineering Construction Corporation No. 1, or Cienco 1, will also launch
over 16 million shares on the Hanoi market at VND10,000 each.
Cienco 5 will also
launch IPO for over 14.2 million shares, or a 32.38% stake, on March 24 at
the same starting price. On the following day, Cienco 4 will launch its IPO,
offering over 16.1 million shares at VND10,000 each.
On March 26,
Transport Engineering Design Inc. (TEDI) will also offer 2.6 million shares,
or a 20.8% stake, at VND10,000 each. The IPO will take place at 10:00 a.m. at
the Hanoi Stock Exchange.
A source told the
Daily that two to three investors have registered to become strategic
shareholders at some firms such as Cienco 1, 4, 5 and TEDI.
In a related
development, the Ministry of Transport is also speeding up equitization of
units under Vinalines.
According to
reports of the ministry and Vinalines, the enterprise has approved
equitization plans of seven out 16 enterprises that need to go public in the
2012-2015 period.
Vinalines has
completed equitization of two enterprises, Quy Nhon Port and Khuyen Luong
Port while Nha Trang Port has announced evaluation for equitization.
Vinalines is considering documents to establish the corporate values of Quang
Ninh Port, Vinalines Nha Trang Company, Haiphong Port and Danang Port.
For the
equitization plan in 2014, Vinalines will finish equitization of five
enterprises. The group will approve schemes and equitize eight more firms
this year.
The ministry also
has plans to pilot equitization of a hospital within this year.
Brokers
merge to erase bad assets
Vietnam
International Securities Company (VISE) and Dai Tay Duong Securities Company
(OSC) are merging to eliminate bad assets.
The State
Securities Commission (SSC) has given approval in principle to the merger and
both sides are carrying out necessary procedures to realize the scheme. The
deal, once completed, will be the second broker merger after the first
between MB Securities Company and VIT Securities Company in 2013.
Before the merger,
VISE had a chartered capital of over VND200 billion while OSC had VND135
billion. However, the merged broker will have a chartered capital of only
VND60 billion.
Both OSC and VISE
have reported low financial adequacy ratios and faced the danger of being put
under special scrutiny. The merger is considered the best way for them to
eliminate bad assets and retain a healthy financial status.
Before 2010, many
brokers provided margin trading to lend money to investors. When the stock
market plunged into crisis, the enterprises suffered huge losses.
Many firms now
still report assets in the ‘accounts receivable’ column or share-mortgaged
assets in their financial reports. But in fact, the assets have turned into
bad debts and could not be recovered.
VISE during its
extraordinary shareholder meeting in January approved the merger. Shares held
by VISE’s shareholders will be swapped for new shares at the 4:1 ratio while
the ratio for OSC shareholders is 13.5:1.
Over 10 staff
members of OSC will work for VISE and OSC’s investors will receive support to
open accounts at VISE or other brokers.
As of the end of
2013, VISE reported a loss of around VND80 billion while OSC also incurred a
loss.
SSC yet to
approve FOL increase this month
The State
Securities Commission (SSC) will not issue an official decision on foreign
ownership limit (FOL) increase this month as the Government has just finished
fielding suggestions from related agencies.
An SSC leader told
the Daily the Government has just updated information on the issue and has
yet to decide on the FOL draft submitted by SSC. Therefore, the rumor that
the draft would be signed at the end of this month is incorrect.
In the latest
draft, FOL in listed enterprises will be lifted to 60% against the current
level of 49%. In addition, the regulation on industry classification has been
removed.
There will be
special rules for enterprises the State needs to hold a majority stake such
as banks, the official said. For all others, the common cap for foreign
ownership in a listed enterprise is 60%.
After the draft is
passed, listed enterprises will decide their foreign room ratios and register
with SSC without the need to ask for approval from the Ministry of Finance
and the Government. Therefore, foreign room expansion actually will take
place quickly, he said.
According to a
draft circular guiding the decision on the FOL increase, enterprises can
decide their FOL ratios during shareholder meetings or field suggestions of
shareholders in writing. As not all enterprises can organize shareholder
meetings immediately, the latter way will be the better choice.
Foreigners have
paid much attention to the FOL issue as foreign room in promising firms has
been full.
Among 302 stocks
listed on the Hochiminh Stock Exchange, 21 stocks have seen foreign room
filled up, including VNM, DHG, HCM and FPT. The enterprises have reported
strong business results but foreigners could not acquire more shares of those
tickers.
Meanwhile, large
investment funds always eye large-caps with high liquidity. They find it hard
in trading small stocks due to poor liquidity.
According to the
director of an investment fund, the FOL increase, despite at any level, will
help foreigners buy more shares of Vietnamese firms.
Recently, Saigon
Securities Inc. in giving suggestions to SSC over development of the stock
market in 2014 proposed that FOL could be lifted to the maximum rate of 100%.
This move will
allow foreign investors to make maximum investment in shares with voting
rights in public enterprises that the State has no need to hold the majority
control.
If the proposal is
not passed, SSI suggested HOSE to deploy non-voting depository receipt
(NVDR), allowing foreigners to freely acquire shares without the voting
rights in listed enterprises.
Pleiku
Airport to handle big aircraft
The runway at
Pleiku Airport in Gia Lai Province will be extended with an additional 583
meters to 2,400 meters so that the airport can handle A321 aircraft and
equivalent.
According to Le
Manh Hung, general director of Airports Corporation of Vietnam, the project
was expected to be kicked off in May and implemented in 18 months, helping
the airport to accommodate A320/321, ATR72 and F70 aircraft.
The airport will be
expanded to the east so that the runway will be 2,400 meters long and 45
meters wide.
Hong Cong Lu,
permanent vice chairman of Gia Lai Province, said that problems concerning
site clearance and compensation would be solved in the coming time. The
project helps promote the socioeconomic development of not only Gia Lai
Province but also the northern area of the Central Highlands region, he
added.
The Ministry of
Transport has planned to upgrade Pleiku Airport since 2011 with an investment
of over VND2.2 trillion. The upgrade will focus on renovating the airfield,
extending the existing runway, building new taxiways and parking space.
Cement
consumption forecast to rise to 63 million tons
The Ministry of
Construction forecasts this year’s total cement consumption volume to rise by
1.5-3% year-on-year to 62-63 million tons, with the exports of cement and
clinker accounting for 13.5-14 million tons.
According to a
report of the ministry on cement consumption, enterprises sold 61.2 million
tons of cement last year, with the domestic consumption taking up 47.5
million tons, equivalent to 96.5% of the target. However, last year’s cement
export increased strongly by 62% to nearly 14 million tons.
The
lower-than-targeted consumption last year, according to the ministry,
resulted from a series of stagnant construction and real estate projects.
The total capacity
of local cement plants is around 70 million tons. The ministry said it had
checked cement projects implemented in the 2012-2015 period, eliminated nine
projects and delayed seven projects to after 2015.
According to
reports of some big cement producers, their profits earned last year were not
high.
Ha Tien 1 Cement
Co. earned up to VND6.624 trillion in revenue last year but its profit was a
trivial sum of VND2.5 billion. The company made a profit of nearly VND73
billion in the fourth quarter thanks to the increasing selling volume, better
prices and the falling production costs, and thus was able to cover losses
incurred in the third quarter.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Chủ Nhật, 9 tháng 3, 2014
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