BUSINESS IN BRIEF 15/4 Toyota Vietnam enjoys exponential growth in Q1 Toyota Vietnam (TMV) sold 2,712 cars in March, up 12% from the same period last year, marking three consecutive months of increased revenue. In the first quarter, TMV’s total sales hit 7,427 units, or 14% higher than the previous year. Three models-Camry, Altis & Vios- all manufactured in Vietnam, achieved higher year-on-year profits. In particular, Innova saw an impressive growth of 84%, remaining TMV’s best-seller on the Vietnamese market. Completely built units (CBU) automobiles such as Hilux, Hiace, Land Cruiser and Land Cruiser Prado enjoyed increased trade compared to last year’s corresponding period. Hilux continued taking the top spot in sales with 164 vehicles, up 37%. VietinBank to take over PG Bank Petrolimex Group Commercial Joint Stock Bank (PG Bank), owned by Vietnam's giant oil distributor, Petrolimex, has announced its restructuring plan for 2014 in which the Vietnam Bank for Industry and Trade (VietinBank) may take over it. PG Bank's board of directors found VietinBank to be the most suitable partner for the plan. The two banks will swap shares but keep their current organisation structures and names so that PG Bank will become VietinBank's affiliate. PG Bank will ask its shareholders to allow VietinBank to issue more shares before carrying out the share-swapping plan. Afterwards, Vietinbank will own a 99% share at PG Bank. It is expected that around 0.82 of a share of PG Bank will be equal to one share of VietinBank. According to PG Bank, the plan is in accordance with government's master plan for the restructuring Vietnam's banking sector. After the takeover, Petrolimex's shares in PG Bank will be reduced to 20% by 2015.  If PG Bank shareholders approve, the plan will be submitted to the authorities and then to its general meeting of shareholders for final decisions. Along with the restructuring plan, PG Bank also submitted its operation plan for 2014, in which total outstanding loans are expected to be allowed to rise by 6%. PG Bank's goal for revenue is five times higher than last year, and they hope to reduce the bad debt rate to 3%. They sold VND752 billion of bad debt to Vietnam Assets Management Company (VAMC) and dealt with another VND629 billion. Retail market sets stage for price competition Rental price competition is expected to rise with the retail market coming under greater pressure due to Vietnam’s upcoming World Trade Organization commitments allowing foreign retailers full access to the market early next year. From January 11, 2015, Vietnam will allow the establishment of wholly foreign owned retail businesses. Foreign firms are currently limited to forming joint ventures with Vietnamese partners, or franchising. Nguyen Hong Son, head of Valuation & Financial Advisory of Savills’ Hanoi office, said that foreign players were preparing to take advantage of the WTO policy. He said recent events in the capital city such as the opening of Lotte mart Dong Da, leasing the four-floor outlet at the capital’s Mipec Tower and the debut of a Robins of Department Store under Thailand’s Central Group at the Vincom Mega Mall Royal City were evidence of this. According to Son, the implementation of Vietnam’s WTO commitments would also lead to new, as well as old, retail operators entering or expanding their presence in the country. That, he said, would likely lead to greater profits from leasing retail space as demand rises. “However, once new supply comes into plays, tenants will have a greater ability to negotiate rents and other terms,” he added. According to Savills’ latest report, in the first quarter of this year two new retail venues were added to the Hanoi landscape with the total stock hitting approximately 1 million square metres, up 1% on-quarter and 36% on-year. Shopping centres dominate the market, supplying approximately 570,000 square metres, or 55%. Hanoi’s retail property market has seen a downward trend in recent times, with average rents dropping 4% on-quarter and 6% on-year in the first three months of 2014, to VND1.1 million (US$50) per square metre per month. Buildings in the city centre marked the highest rents at round VND2.1 million (US$100) per square metre and secondary areas at VND 860,000 per square metre. Hanoi’s shopping centres, department stores and hypermarkets have maintained stable occupancies since the first quarter of last year. Savills observed poor shopping volume and low foot traffic in several large shopping centres and department stores, suggesting soft performance. As such, long-term rental affordability may be questionable. The Hanoi market is expected to have approximately 100 new retail projects by the second quarter that would supply an additional 1.8 million square metres, of which 800,000 square metres is due to go on line by the end of 2015. At present, Vietnam’s available and potential retail space is well beyond that of neighbours such as Hong Kong, Thailand and Malaysia. Vietnam Report, a business survey company, revealed that retail ranked sixth among the top 10 highest ROA (return on asset) industries in Vietnam. Businesses seen as foundation for economic growth in 2014 Businesses that struggled to survive between the years 2011 and 2013 are now leaders in terms of both business administration and independent business strategy. Stabilizing the national economy and controlling inflation in 2013 will facilitate economic growth in 2014 and subsequent years. According to economist Dr Vu Dinh Anh, the overall economic picture is brighter in 2014 than in previous years, provided economic restructuring is further accelerated. The national economy grew at a rate of more than 5.4% in 2013. Excess stock levels and bad debts were reduced. The economy’s total credit increased 12.5% with lending interest rates equivalent to 2005–2006 levels, indicating business vitality despite ongoing difficulties. Dr Le Danh said macroeconomic conditions suggest the Vietnamese Government will proceed with economic stabilisation and inflation control. Danh attributes Vietnam’s recent relatively sluggish economic growth to low purchasing power and stagnant credit that defied limited inflation and lower interest rates. Some of the instability and weaknesses from 2013 and earlier are expected to carry over into 2014. The 61,000 businesses that were dissolved or ceased operations in 2013 pushed the three-year (2011–2013) cumulative total to 16,000. This has restricted market supply, budget revenue collection, production, employment, purchasing power, and inventory liquidation. Economic restructuring hoping to fuel investment growth relies on private businesses and foreign investment. Dr Anh believes building an equitable investment environment that rewards efficiency is absolutely crucial. Anh stresses foreign investors want to see a Vietnamese investment environment promoting international economic integration and according with international standards of fairness and transparency. The Vietnam Chamber of Commerce and Industry (VCCI) says recent studies conducted by domestic and foreign organisations reveal Vietnamese and foreign investors have renewed confidence in the Vietnamese economy’s mid and long-term prospects. . Out of 500 leading Vietnamese businesses, 60% reported 2013’s performance was better than a year earlier, and 80% have plans to expand operations in 2014. Many major foreign groups have similar expansion ambitions. The US fast food giant McDonald- a typical case in point- opened its first HCM City restaurant in early this year. Vinh Phuc works to attract more Korean investors The People’s Committee of the northern province of Vinh Phuc in conjunction with the Vietnamese Embassy in the Republic of Korea held a conference on April 11 in Seoul to call for more investment to the province. Addressing the event, Vietnamese Ambassador Pham Huu Chi came up with the needs and business opportunities in Vietnam as well as in Vinh Phuc - a neighbouring province of Hanoi - in particular. Meanwhile, Pham Van Vong, Secretary of the provincial Party Committee, introduced to RoK companies the locality’s potential, advantages as well as business environment and preferential policies. RoK investors are leading in the number of projects in Vinh Phuc, with 59 ones, and stand third in terms of investment capital with US$508 million, Vong said. He elaborated that his locality is striving to become an industrial province by 2015, and stands ready to welcome RoK enterprises with support in licensing procedures and human resources training. During their stay, Vinh Phuc’s officials also made a fact-finding tours to and held investment promotions in Bussan city and Chungcheongbuk province, which are among the largest economic hubs of the RoK. 350 businesses join int’l trade fair at Hue Festival An international trade fair taking place from April 12-18 kicked off in the central city of Hue under the framework of Hue Festival 2014. The event, which is also part of a national trade promotion programme, is being jointly sponsored by the Ministry of Industry and Trade and the Thua Thien Hue provincial People’s Committee. The week-long fair attracted 600 pavilions from 350 businesses of 26 provinces and cities and 50 stalls of foreign firms from Thailand, Laos, Japan, Germany and the US. During the fair, the organizing board will grant certificates of recognition of two specialties of Hue city. The best pavilion will also be selected for an award, and a seminar will be held to discuss issues related to economic integration and business opportunities. The fair provides a good chance for local businesses to advertise their brand names, promote technology transfer, and seek foreign trade partners. In addition, it aims to raise public awareness of boosting the movement “Vietnamese people prioritize using made-in-Vietnam goods”. Quang Ninh holds dialogue on business development Quang Ninh Provincial Party officials and over 300 members of the local business community gathered for a dialogue on April 12 discussing alternative methods to promote business and production in the province. Committee Secretary Pham Minh Chinh asked relevant agencies to strive to maintain a healthy positive competitive business climate and ensure transparency in the performance of their duties. In addition, he asked businesses to actively and fully cooperate with local authorities to ensure harmonious relations and promote stability and cohesiveness among the people, the business community and the state. Over 20 delegates from the business community, local and foreign investors posed direct questions to provincial leaders with a focus on the four major issues of land, environment, banking loans, tax policies and support to training human resources. During the event, participants also discussed policies, solutions for the province’s socio-economic development as well as soliciting opinions from the business community to give recommendations to help businesses overcome difficulties. Support industry forum to take place in Hanoi Hanoi is set to host the 9th Vietnam Support Industry Forum on May 8 aimed at promoting the development of businesses supplying parts and components to the manufacturing sector. The event, the result of a joint effort of Reed Tradex Company and the Hanoi Trade Promotion Centre (HTPC), will offer the insights of leading government and industry experts on the subject as well as share their practical experience in the industry. Duangdej Yuaikwamdee, Deputy Executive Director of Reed Tradex Company, said he greatly values the development of Vietnam’s support industries. “To achieve sustainable growth and attract more foreign investment, Vietnam should restructure its industrial sector and focus on developing support industries to ensure the industrial value chain,” he said. The increasing number of projects on the Vietnamese market gives more chances to those producers involved in the support industries. As a result, there will be a rising demand for advanced technology and modern production methods, he noted. The support industry for the automobile manufacturing sector has achieved great success in Vietnam. The presence of giant manufacturers like Honda has attracted many investors to engage in this field in the domestic market. From now to 2020, Vietnam plans to focus on five industrial sectors, including automobile, electronics, information technology, footwear, and garments and textiles. Recent statistics of the Ministry of Industry and Trade (MoIT) showed that export value from machinery, equipment, and accessories hit US$1.53 billion in the first quarter of 2014, up 9.7% from the same quarter in 2013. Support industry products were also included in Vietnam’s top 10 hard currency earners (over US$1 billion each). Vietnam, France export value hits nearly US$362 mil Two-way trade volume between Vietnam and France in the first two months of 2014 rose slightly by 3.1% from a year earlier to nearly US$362 million, according to recently released official statistics. Key export items in the two month period included footwear, telephones and spare parts, garments and textiles, home appliances, farm produce, electronic products, and rubber. The export value from telephones and spare parts hit over US$154.98 million, representing an increase of 20.6% from last year’s same period accounting for more than 40% of total export value. France is generally considered by industry analysts as one of the most lucrative markets in the European Union (EU) for Vietnamese exports, which has enjoyed stable growth in market share in recent years. Tea industry urged to adopt VietGAP Tea growers and enterprises should step up application of national quality standards and improve product packaging and design if they are to reverse a first quarter decline in exports, experts say. A report in the Industry and Trade newspaper cited the experts as saying the failure to adopt VietGAP (national Good Agricultural Practice) standards has hurt the industry, with Vietnamese tea fetching lower prices than the produce of other countries. VietGap sets criteria for selection of varieties and rootstocks, land management, application of fertilisers and additives as well as chemicals (including crop protection products). The report quoted Doan Xuan Hoa, deputy head of the Agro-Forestry Processing and Salt Industry Department under the Ministry of Agriculture and Rural Development, as saying policy incentives were needed to have more farmers and enterprises adopt VietGap standards for their tea plantations. According to the Ministry of Agriculture and Rural Development, in the first quarter of 2014, tea exports fell year-on-year by 15.4 per cent in volume and 14 per cent in value to 24,000 tonnes and US$37 million respectively. Tea exports to Pakistan, the largest importer of Vietnamese tea, fell 13 per cent in volume and two per cent in value, the report said. Nguyen Huu Tai, chairman of the Viet Nam Tea Association (Vitas), blamed the "unsatisfactory" export performance on several difficulties faced by exporters in buying, distributing and shipping tea products. For instance, the unstable political situation in major importing countries like Pakistan and Afghanistan has negatively affected exports, he said. Tai also said he remained optimistic despite the first quarter decline in exports. Vitas estimates Viet Nam will export 138,000 tonnes of tea this year to earn $222 million, more or less matching last year's figures. The association plans to help its members participate in several international tea exhibitions in the UAE and Thailand this year to help them seek more overseas markets, Tai said. Cocoa shortage provides opportunity for farmers The global supply of cocoa will not keep up with demand for the next five to 10 years, which could result in a bright future for Viet Nam's cocoa industry, delegates told a forum held in Binh Phuoc Province on Thursday. "Demand for chocolate is surging worldwide, particularly in Asia," said Nguyen Vinh Thanh, cocoa sourcing manager for Cargill Viet Nam. Besides traditional markets like the US and Europe, the demand for cocoa from China, India and Indonesia has increased recently, he said. However, production cannot keep up with demand since many major producing countries, including Ivory Coast, Ghana and Indonesia, have aging trees that are producing fewer beans. The market imbalance has driven up prices, Thanh said, adding that the prices could rise much higher than current levels. Nguyen Van Thiet, UTZ Certified representative in Viet Nam, said in the past five years, cocoa prices, like many other farm produce, had fluctuated but not fallen that much, compared to other agricultural products like rubber and coffee. According to the Crop Production Department, the cocoa plantation area in Viet Nam has increased to 22,000 ha from 9,000ha in 2007, providing 5,000 tonnes of dried beans in 2013. Despite the potential of the sector, many delegates at the forum with cocoa farmers agreed that the sector had not yet reached its potential due to poor farming practices, limited technological transfer, pests and diseases, and scattered and small-scale farms. Pham Hong Duc Phuoc of the HCM City's Agricultural and Forestry University, said the potential for cocoa development in Viet Nam was great but challenges was great too. "With the climate and soil condition here, cocoa's productivity can yield an average of two tonnes of bean per hectare and even more, but it has not reached that much," he said. Nguyen Van Hoa, deputy director of the Crop Production Department, attributed the situation to farmers' poor understanding of growing techniques and insufficient investment. Luong Van Thao, a farmer in Tan Hung Commune, Dong Phu District of Binh Phuoc Province, told Viet Nam News that he had 8,000ha of cocoa intercropping fields with cashew. "But my cocoa has offered very low yield with many trees not even yielding fruit," he added. "I didn't know about cocoa farming techniques or how to apply proper fertilisers," he said, adding that he had just followed the methods of other farmers. Hoa said compared to other industrial trees like coffee, cashew and rubber, cocoa is still a new tree for most farmers in Viet Nam. Farmers must learn the new techniques to ensure success, he added. To achieve the greatest benefits for the largest number of farmers, Mars Incorporated has developed an outreach initiative to help Viet Nam build four Cocoa Development Centres (CDC) in the major growing areas of Dak Lak, Ben Tre, Binh Phuoc and Ba Ria-Vung Tau provinces, according to Dinh Hai Lam, Viet Nam Cocoa Development Manager for Mars Incorporated. The centres are part of the Viet Nam – Netherlands Public Private Partnership for sustainable cocoa development, with members including the Vietnamese and Netherlands governments, Rabobank, Mars Incorporated and Cargill. The PPP project aims to improve the lives of cocoa farmers and their families, and to secure long-term sustainability of cocoa production. Last Thursday, a Cocoa Development Centre was opened in Duc Lieu Commune in Bu Dang District of Binh Phuoc Province to help farmers plant cocoa in a sustainable way. The centre, which covers three hecaters, will provide farmers with needed cocoa expertise, demonstrations of high-yielding farms, and new high-yield varieties of cacao, Lam said, adding that it would also help ensure cocoa consumption. Phan Van Don, deputy director of Binh Phuoc Province's Department of Agriculture and Rural Development, said: "The centre will help create linkage in the cocoa value chain to reduce intermediate costs and increase profits for farmers." He said that farmers in Binh Phuoc, with the help of the centre, would prefer cultivating cocoa by intercropping with cashew gardens. Currently, a tonne of cocoa is priced at VND58 million (US$2,746) to VND60 million ($2,840) and even VND62.8 million for UTZ-certified beans, Thanh said. Intercropping cocoa in cashew gardens will help increase farmers' income while not affecting cashew yield, he added. Viet Nam plans to have 50,000 ha under cocoa cultivation and produce about 100,000 tonnes of fermented beans by 2020, Hoa said. Indian, Vietnamese firms look to boost investment Trade between India and Viet Nam has room for further development as economic cooperation still falls short of potential and expectations, Deputy Chairman of HCM City People's Committee Le Manh Ha has said. Speaking at a networking event last week with the Indian business community, he told the general consul of India, Deepak Mittal, that good political relations had laid a strong foundation for bilateral trade and investment cooperation, particularly since the countries signed a Strategic Partnership agreement in 2007. However, trade between HCM City and India remained modest, with total trade turnover of US$ 700 million in 2013. As of the end of 2013, the city had 26 Indian-invested projects worth around US$5.4 million. "This networking evening is essential to bring our businesses closer and untap potential and investment and trade opportunities," he said. Several Indian companies specialising in petroleum, medicine and agriculture are currently seeking investment opportunities in Viet Nam. "The opening of a direct air route is being discussed, which will help boost economic and cultural exchange," he said. According to Mohan Ramesh Anand, chairman of the Indian Business Chamber Viet Nam, which has 209 members, strong growth occurred last year in business and cultural activities between the two countries. Total trade increased 20 times over the last 10 years, with India now among the top 10 trading partners of Viet Nam. In 2013, total trade turnover reached US$5.24 billion, an increase of 32.8 percent against 2012. The volume totals more than US$7 billion if commodities traded to a third country are counted. "Incham Viet Nam believes that Indian economic presence in Viet Nam in 2014 will be significant and calls on Viet Nam to explore more aggressively the opportunities for benefits in the large and growing market in India," said Ramesh. As of 2013, Indian enterprises invested in 68 projects in Viet Nam with capital of US$936 million in various sectors, including oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, IT and agricultural processing. Currently, the biggest Indian project in Viet Nam is from ONGC in offshore drilling, and the second is the TATA POWER power plant in Mekong Delta's Soc Trang Province. Meanwhile, Vietnamese enterprises have invested US$8 billion in India, according to Incham. The networking night was held for the first time to establish better relations between Viet Nam and India's business communities. The event was co-organised with the Malaysian Business Chamber and Singapore Business Chamber, on the occasion of a visit to Viet Nam by a delegation from the Indian Textile Accessories and Machinery Manufacturers Association. Garment sector eyes localisation of inputs The domestic garment and textile industry aims to reach a localisation rate of 60 per cent by 2015 to increase profits and competitiveness, and reduce the need for the imports of raw materials, according to the vice president of the Viet Nam National Textile and Garment Group (Vinatex). Le Trung Hai, who spoke with the media during the recent Saigon Tex exhibition for international garment and textile manufacturers and accessories makers, said the localisation figure would increase to 70 per cent after 2015. Hai said this effort was being made to increase the export value of the industry, which depends heavily on imported raw materials and outsourcing for its major foreign clients. The move to increase the localisation rate is especially important because Viet Nam is currently negotiating the Trans Pacific Partnership (TPP) Agreement and other regional trade and tax agreements. To enjoy low tax from these trade agreements, Viet Nam will be required to use domestic raw materials. In addition to increasing the localisation rate, domestic garment and textile companies are also aiming to increase the Free on Board (FOB) rate from the current 38 per cent to more than 50 per cent by 2015. Moreover, the Original Designed Manufacturer (ODM) rate would rise to nearly 10 per cent by 2015 from the current rate, which is now under 5 per cent. To achieve the targets, many projects to develop raw materials are being carried out nationwide. According to Vinatex, many cotton farms with a size of up to 1,500 ha now exist in provinces like Dac Lac and Ninh Thuan. Vinatex worked with the Viet Nam Oil and Gas Group to produce materials to weave fabric, and the industry as a whole has hired and worked with foreign experts to set up projects to develop regions to plant raw materials. In addition, construction of many weaving plants nationwide has taken place. In 2013, export turnover of the industry reached US$20.4 billion, an increase of 18 per cent year-on-year. National carrier to offer more domestic flights Viet Nam Airlines (VNA), the national carrier, plans to increase the frequency on several domestic routes to meet the increasing market demand during the April 30 and May 1 holidays. From April 30 to May 1, VNA will increase 342 flights on 16 domestic routes, up 20 per cent compared to the normal schedule with an increase of 58,700 seats. OceanBank offers low rate loans to builders OceanBank will lend VND1 trillion to construction enterprises at 8.5 per cent annual interest rate or 2 to 3 per cent lower than the normal interest rate. The bank also plans to offer several incentives through a safety-net program. The program aims to assist construction enterprises in solving difficulties and promoting business development by providing capital for them to pay the cost of contract performance in accordance with project estimation, such as payment for raw material, goods, payment of salaries, transport cost, and rent cost. Central city starts on unbaked brick plant The central city has commenced construction of the biggest unbaked brick plant in Hoa Vang district with a capacity of 110 million bricks per year. The plant received a total investment of US$4.5 million from Toan Hoa Vinh trading and service joint-stock company and is slated to start delivery by this September. Once the plant becomes operational, it will be able to meet the demand to use unbaked bricks following the Government's programme on development of unbaked constructional material by 2020 and reducing carbon emissions in the environment. According to a forecast by the Viet Nam Association of Construction Material, Viet Nam's construction industry will need 42 billion bricks in 2020 with a consumption of 5 million tonnes of coal and an emission of 17 million tonnes of carbon. Viet Nam's unbaked brick plants can produce 6 billion bricks. Government holds off cement loans on concerns of oversupply The Government is not encouraging more investment in cement projects despite the industry reporting a first quarter increase in consumption due to higher domestic market demand. Industry observers say this makes sense because the market is still marked by significant oversupply. Citing the Viet Nam Cement Industrial Corporation, the Price Management Department has reported that the output and consumption of cement in March was higher than February as the "construction season" has begun. An output of 5.19 million tonnes and consumption of 1.92 million tonnes marked a month-on-month increase of 63.7 per cent and 69.5 per cent respectively. Corresponding first quarter figures of 11.58 million tonnes and 10.23 million tonnes marked respective year-on-year increases of 9.8 per cent and 6.7 per cent, the department said. Meanwhile, the Dau tu (Vietnam Investment Review) newspaper, cited the Construction Ministry as estimating total demand for cement this year increasing by 1.5-3 per cent over 2013 to reach 62-63 million tonnes, with the domestic market accounting for 48.5-49 million tonnes. The cement industry has a production capacity of 72 million tonnes at present and this is expected to rise as new projects start production in 2016. The Government has therefore declined to provide its guarantee for loans that the Tan Thang Cement Joint Stock Company wants to take from foreign credit organisations for completing a new factory that it began constructing in 2010. The factory, which has a designed capacity of 1.9 million tonnes of cement each year, is expected to cost VND3.644 trillion ($172.7 million). Infrastructure construction is complete and preparations are on to install production lines. The company expects to market its products in 2016. The Construction Ministry has said that most of the projects that have received Government guarantees for foreign loans are facing insolvency. These include projects implemented by the Dong Banh, Ha Long, and Song Thao cement companies According to the Viet Nam Association of Financial Investors (VAFI), many cement companies that have taken foreign loans have had their operational efficiency reduced by subsequent increases in financial fees and interest rates, as well as the fall in value of the Vietnamese dong against foreign currencies. Automobile sales rise for 12 straight months March marked the 12th consecutive month when Vietnam’s automobile industry saw its sales increase again in March with 9,313 vehicles sold compared to 7,314 in February. According to the Vietnam Automobile Manufacturers’ Association (VAMA), the Truong Hai Auto Corporation (Thaco) accounted for 36 percent of the sold units, followed by Toyota with 29 percent. Ford and Honda gained the third and fourth positions in March with 9 percent and 6 percent, respectively. VAMA forecasts sales of about 120,000 automobile units in 2014, up 9 percent from a year earlier. Pepper farmers expect bumper harvest, good prices Vietnamese pepper farmers are expecting a bumper year with an estimated output of 15,000 tonnes, up nearly 30,000 tonnes against last year, partly thanks to favourable weather conditions. Their joy is boosted with prices ranging between 133,000 – 140,000 VND (6.3 – 6.6 USD) per kilogram while pepper-growing countries of Brazil and Indonesia are hit hard by a recent severe drought spell, said Vice Chairman of the Vietnam Pepper Association (VPA) Do Ha Nam. According to the VPA, the Central Highlands province of Dak Nong has recorded higher year-on-year yield with some households seeing a rise of 30-40 percent. Growers in Dak Lak and Gia Lai provinces in the region also see abundant crops that go up 20-30 percent. During January-March, Vietnam exported 49,000 tonnes of pepper, earning 332 million USD, up 29.5 percent in volume and over 32 percent in value. Real estate ranks second in FDI attraction With Sun Wah involved in a major residential project in HCMC, the nation’s foreign direct investment (FDI) capital flows into the real estate sector ranked second in the first quarter. According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, a Hong Kong investor invested over US$200 million in the condo building project in the city, sending investment capital in the realty sector rising. FIA did not disclose the name of the investor. However, a source from the HCMC Department of Planning and Investment said the project earlier belonged to domestic enterprises under the name of Bay Water Co. Ltd. Then, British Virgin Islands-registered Sun Wah Vietnam Real Estate Limited made a huge contribution to the project, turning it into a foreign-invested concern. A reliable source told the Daily that Bay Water now has three partners – Construction Joint Stock Company No. 5 with a 26% stake, Sa To Investment Co. Ltd. with 26% and Sun Wah Vietnam Real Estate Limited with 48%. In the first quarter, the nation approved five FDI projects in the real estate sector with the total registered capital amounting to over US$288 million. The figure made up 8.6% of total pledged FDI capital, ranking second among the sectors with FDI involvement. Meanwhile, the manufacturing and processing sector came in first with 141 projects worth US$2.3 billion, or 70% of the total FDI capital. Quang Binh attracts 13 new investment projects Quang Binh Province has handed investment certificates to 13 projects, 12 of them belonging to local investors, at an investment promotion conference. The 13 projects have total pledged capital of VND8.5 trillion, with VND8.4 trillion (US$398.58 million) of it from the 12 domestic undertakings, said the Quang Binh People’s Committee and Bank for Investment and Development of Vietnam (BIDV), organizers of the conference. Sun Group Corporation based in Danang City will develop two tourism projects – Phong Nha-Ke Bang tourist area worth some VND3 trillion (US$142.35 million), and Bao Ninh-Hai Van luxury resort capitalized at about VND2 trillion (US$94.9 million). Vietnam National Textile and Garment Group (Vinatex) is involved in three projects in the province. They are a fiber plant in Gia Ninh Commune, Quang Ninh District at a total cost of VND300 billion (US$14.2 million) and two export apparel facilities worth VND200 billion in total. Truong Thinh JSC based in Hanoi will spend VND650 billion (US$30.8 million) building Bao Ninh urban area in Dong Hoi City. FLC Group, also in Hanoi, will invest VND1.6 trillion in Hon La 2 industrial zone and Saigon Co.op will open a new Co.opmart supermarket in Dong Hoi City with an investment of VND100 billion (US$4,745). Also at the conference last week, five enterprises, four of them Vietnamese, signed memorandums of understanding (MOU) with total pledged investment capital of around VND12 trillion (US$569.4 billion). Among them, Vinatex signed an MOU to develop material areas for fiber plants and a yarn and dyeing complex at an estimated cost of VND4.5 trillion (US$213.5 million) while Vietnam Rubber Group will invest an estimated VND1.4 trillion (US$66.4 million) in an MDF wood processing factory. The sole foreign firm that signed an MOU at the conference is Petrolimex Laos Ltd, which wants to invest US$200 million to develop a bonded warehouse at Hon La port with a storage capacity of 300,000-500,000 cubic meters. Quang Binh authorities promised preferential treatments for investors in the province including land and water surface rent incentives, and support for staff training, infrastructure and site clearance. In 2014-2015, Quang Binh Province needs investments in 40 projects in six fields including infrastructure for industrial parks, trade and tourism development, industrial and agricultural production, education, and healthcare. City has 76 projects behind schedule HCMC now has 76 projects worth nearly VND12.9 trillion (US$612 million) making slow progress or falling behind schedule, city authorities said in a report recently sent to the Ministry of Planning and Investment. The main reasons cited by these projects is slow site clearance compensation, and rising prices of building materials, according to the city government, Eleven of those projects are related to schools and the rest to irrigation, drainage, wastewater treatment, bridge construction, and road expansion. The investor of the Suoi Nhum drainage system for a 3,000-hectare basin in District 9 has disbursed just VND182 billion of a VND237 billion (US$11.2 million) budget earmarked for the project due to slow site clearance compensation. The widening of the 8km Provincial Road 10 connecting Binh Chanh and Binh Tan districts with total capital of VND1 trillion (US$47.4 million) was originally planned for completion last year but 54 households affected by the project have yet to move. The slow rehabilitation of the polluted Ba Bo canal in Thu Duc District results from the slow process of clearing land for a lake for water storage, a bridge across the canal, sewers and roads. Export goods amassing rule relaxed The Ministry of Finance has taken a fresh move to ease a General Department of Customs rule that requires exporters to amass all their goods at designated areas for customs inspections rather than file tariff declarations first as earlier done. According to a new guidance document of the ministry, exporters of agro-aqua-forestry products, garments and footwear will not have to gather their goods at a specified location before working with the customs. Yet they are required to let the customs know the place where they transport their products to for export. To enjoy this preferential treatment, those exporters have been operational for more than one year and has generated export revenue of more than US$2 million a year. For products that are not easy to be amassed as they must be kept in a special storage environment such as minerals, fresh seafood and frozen food, exporters will only inform the customs of the place for pre-export storage and the means of transport used. The goods amassing rule is aimed at preventing trade fraud, falsification of export documentation and smuggling. In case enterprises do not declare the place where they amass their export goods in the customs declaration file, they could be added into the watchlist, face an administrative sanction and have to deposit all their goods at a location chosen by the customs. Saigon Tex opens on April 10, features 500 firms Saigon Tex 2014, an international textile-garment, material and machinery exhibition, will begin from on April 10 and last until Sunday at Tan Binh Exhibition and Convention Center in HCMC, featuring around 500 local and international firms. The exhibition is jointly held by the Vietnam National Textile and Garment Group, the Vietnam Chamber of Commerce and Industry, Hong Kong Exhibition Joint Stock Company and VCCI Exhibition Service Company. It is expected to appeal to some 500 local and foreign companies. Local enterprises will have a chance to build business links with textile material and technology suppliers from Belgium, the Czech Republic, China, France, India, Italy and Japan, among others. According to the organizers, the number of participating companies is nearly 40% higher than in Saigon Tex 2013, with enterprises from Asia and Europe growing 10%. This time there are 283 firms from China attending the event, up by 100 from last year. The exhibition is projected to lure around 8,000 corporate visitors in the textile-garment industry along with 2,000 visitors from other sectors. Regarding Vietnam’s textile-garment industry, big enterprises forecast the industry’s exports this year to be better than last year, with this year’s export sales growth estimated at 30%. Textile-garment exports registered a year-on-year rise of 18.7% to more than US$20 billion last year, with textile contributing US$17.9 billion and yarn US$2.1 billion, the Vietnam Textile and Apparel Association reports. Apparel and textile exports are expected to hit US$26 billion this year while many industry players said they had secured sufficient orders for all of 2014. Ethanol plants keep running up losses Domestic ethanol manufacturing facilities have been operating at low capacity due to low local consumer demand for bio-petrol E5 and poor ethanol export prices. The nation now has six ethanol plants using cassava as a feedstock with a total capacity of 535 million liters a year. However, they lose around VND434 for each liter of ethanol sold. According to a report of the science and technology department under the Ministry of Industry and Trade announced at a conference in Quang Ngai Province on Tuesday, the capacity can meet demands of E5 and E10 bio-gasoline makers in 2014 and the following years. Vietnam National Oil & Gas Group (PetroVietnam) has developed three ethanol plants but one of them has been suspended. In addition, there are four other operational plants nationwide with a combined capacity of 335 million liters a year;  they are Dong Xanh in Quang Nam Province, Tung Lam in Dong Nai Province, Dai Viet in Dak Nong Province and Bioethanol Dak To in Kontum Province. Slow development of a bio-gasoline distribution network has delivered a blow to the ethanol plants. PetroVietnam Oil Corporation (PV Oil) now has five E5 petrol processing stations in Haiphong, HCMC, Danang, Vung Tau and Can Tho with a combined mixing output of 72,000 cubic meters a year. E5 petrol has 5% bio-ethanol content. PV Oil has plans to invest in two more plants with one in Ha Tinh Province and the other in Can Tho City. PV Oil is piloting selling E5 gasoline at nine filling stations in Quang Nam, Quang Ngai and Ba Ria-Vung Tau provinces. Concerning the ethanol use plan, PetroVietnam chairman Phung Dinh Thuc in recent talks with the media said the product would be used in seven cities and provinces until December and across the nation in 2015. However, ethanol from PetroVietnam’s plants is exported at a price below cost. Currently, it costs VND17,000-18,000 to turn out a liter of ethanol but its export price is a mere VND15,000, Thuc said. Given the Government-approved ethanol use plan, ethanol producers can expect better sales and farmers can see higher cassava consumption. The plan, however, may not go as scheduled due to the poor operations of the ethanol plants now. According the science and technology department, the 100 million liters/year ethanol plant in Tam Nong District in Phu Tho Province has halted operation due to poorer-than-expected bio-petrol sales, throwing a lot of cassava farmers in the province into a difficult position. Fuel price stabilization fund underutilized The balance of the fuel price stabilization fund had amounted to more than VND842 billion by the end of March, the highest since last June. Statistics recently released by the Ministry of Finance show the total amount raised for the fund in quarter one and kept at fuel trading houses was over VND1 trillion while only VND370.7 billion was used by fuel trading firms to offset their losses. The balances at trading firms were different. At many firms like Petrolimex and Saigon Petro, the balances were large while those at PV Oil and Nam Viet Oil were negative. The balance last June was only VND55 billion, over VND58 billion last September and nearly VND170 billion last December. Therefore, the VND842 billion balance is surprisingly high. This is because the Ministry of Finance once said the fund did not have much money left, so it allowed traders to revise up fuel retail prices. The fuel price stabilization fund is contributed by consumers when buying fuels; a fixed amount of VND300 is added to each liter or kilogram of fuel retailed. Consumers previously did not know how the fund is used but since last July the Ministry of Finance has publicized statistics about the fund. In a related development, according to the Vietnam Petroleum Association (Vinpa), fuel trading firms are earning VND145 from each liter of petrol sold, VND95 from each liter of diesel, VND111 from each liter of kerosene and VND72 from each kilogram of heavy fuel oil. Relevant authorities on March 31 issued a decision governing fuel retail prices, under which the interval between two price adjustments is 10 days. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR