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BUSINESS
IN BRIEF 7/4
Building
int'l brand beneficial to products: official
Building
international brand for craft village products in
Brand name plays an
important role in the development of handicraft products, the official was
quoted by the Vietnam Economic Times as saying at her recent meeting with the
Hanoi Department of Industry and Trade.
Craft villages and
their products are the capital’s specific characteristic, she said, adding
that Hanoi should focus on developing craft villages, closely managing
product quality and promoting the building of international brand for products.
She suggested
“We do not need to
build many brands at the same time. The building of international brand for a
product will significantly contribute to promoting the brand of
In particular,
companies in craft villages such as
However, due to the
lack of brand name, products have not been yet sold at higher prices. Duc
Phong company director Thai Dai Phong said that while labeling international
brand, foreign companies could sell products at higher prices.
According to the
department’s statistics, the city has 1,350 craft villages, of which 286
villages have been recognised.
In recent years,
especially since 2009, craft villages have strongly developed. The number of
manufacturing facilities in craft villages rises to 175,889 compared to
163,150 in 2009, while that of companies and cooperatives in Hanoi craft
villages has also strongly increased with 2,063 joint stock companies, 4,562
limited liability companies, 1,466 private companies and 164 cooperatives.
The rapid
development of the villages has also greatly contributed to the capital’s
economic development.
Thuong Tin
district’s Ha Thai Lacquer Village, Gia Lam district’s
Head of the d
epartment’s Bureau of Small Scale Industry Management and Trade Village Trinh
Thi Hong Loan said that thanks to efforts of the city’s industry and trade
sector, craft villages have strongly developed. The city has focused on
supporting vocational training, trade promotion, technology application in
production and infrastructure for craft villages.
In the 2009-2013
period,
Amended
Investment Law to further empower enterprises
With the aim of
giving more autonomy for investors, improving the investment environment in
the direction of transparency, and increasing benefits for investors and
businesses, the Ministry of Planning and Investment recently held a workshop
to collect comments from experts and foreign investors to amend and complete
the Investment Law, said the Vietnam Business Forum, a weekly magazine of the
Vietnam Chamber of Commerce and Industry.
The amendments were
drafted on the basis of perfecting mechanisms and policies, creating a clear
legal framework, creating strong transition procedures in the implementation
of investment projects; resolving the difficulties in investing activities of
the enterprises, improving the effectiveness and efficiency of state
management of investment activities; and creating a legal basis to
consolidate and strengthen incentives and protection of foreign investment, a
ccording to Deputy Minister Dang Huy Dong.
After eight years
in practice, although the 2005 Investment Law has expanded autonomy and
improved the business environment, some contents of this law reveal
inadequacies such as the areas which are encouraged in the law are quite
extensive, inconsistent and not really focused on attracting investment
projects with high quality and efficiency; and the regulations on investment
procedures and project implementation are still complicated.
According to Quach
Ngoc Tuan, Deputy Director of Legal Affairs and member of the draft law
compiling board, the scopes of the amended law include investment activities
in
For foreign
investors, defining this concept is an important basis for the application of
investment procedures and conditions for foreign investors in accordance with
domestic law and international treaties. However, in the workshop, many
experts suggested that the concept of "enterprises with foreign owned
capital comprise any enterprise established by a foreign investor" is
not specific. It should clearly define the capital ratio of foreign investors
in enterprise for it to be considered an enterprise with foreign owned
capital.
Regarding procedures
to establish enterprises and investment projects, in the draft law,
fundamental rules of procedure to implement investment projects are amended
towards clearly defining requirements of investors in the process of
preparing for investment and responsibility of local authorities in providing
information about land planning and construction; investment registration
certificates are replaced to reflect investment purposes, the nature of this
paper is to note that investors register to implement investment projects;
the project area to implement procedures for granting investment registration
certificates is narrowed; the one-stop shop mechanism is set to receive and
resolve investment and construction procedures; and the records and
verification projects are specified.
Representative of
the Vietnam National Oil and Gas Group (PVN) said now is a high time to amend
the Investment Law as localities and businesses are waiting for foreign
investment. However, at this point, there are still problems at the stage of
business registration or granting investment certificate.
On the concept of
investment fields and investment incentives, the draft also affirms the
principle of equal treatment, fair and not discriminate between domestic and
foreign investors. In addition, it continues to expand, encourage investment
projects using high technology, new technology, environmental protection,
production and use of clean energy, investing in agriculture - rural, farming,
forestry, fisheries and development projects of education, training, health
care, etc.
For overseas
investments, under the old Investment Law and Decree 78/2006/ND-CP, depending
on the size of investment capital, certificates for overseas investments
serves as a business registration or under the investigation of overseas
investment projects associated with the establishment of legal persons
abroad. But the draft aims to amend and supplement a number of articles such
as confirming investors must be responsible for the operational efficiency of
investment, additional investment activities abroad which are encouraged such
as market expansion, exploitation of natural resources in invested country,
supplying raw materials for domestic production, and applying overseas
investment registration procedures in the foreign exchange management bodies.
"Domestic
investment and overseas investment are separate issues. Because
According to many
participants, the one-stop shop mechanism is implemented at the local level
only in the stage of receiving and returning administrative results, but in
fact investors must file documents with many different specialised agencies
of the provincial People's Committees. Survey results show that investors
must perform an average of 18 procedures related to land, construction,
deployment environment for investment projects. Many businesses also said
that procedures in construction and land are the most cumbersome.
Currently, the
project of Investment Law amendment is included in the programme to build
laws and ordinances of the National Assembly in 2014. Lawmakers will soon
approve to enact this important law to create a basis for increasing funding
to attract foreign investment and boost economic development in the future.
New pact to
yield export benefits
A free-trade
agreement (FTA) between
This will create
many tariff advantages for
According to the
ministry, the revenues earned from Vietnamese exports to
In 2013,
The fourth round of
negotiations over an FTA between
The FTA is expected
to pave the way for Vietnamese businesses to access a new, larger market with
preferential tariffs.
According to the
Viet Nam Trade Office in Russia, once the FTA is completed, many non-tariff
barriers such as customs procedures, payment of goods and technical
regulations, among others, in the union's markets will be removed, many taxes
will be cut and services and investment development conditions will become
more favorable.
In 2013, the
textile exports to
The Viet Nam
National Textile and Garment Group (Vinatex) said that with a population of
143 million, tariff preferences related to
Trade Counselor in
Russia Pham Quang Niem said, the biggest problem for Vietnamese exporters is
the absence of a centralised, stable trade transaction organisation in
For better access
of the Russian market, Niem said that the enterprises should participate in
annual fairs and exhibitions to introduce their products to Russian partners
directly because they prefer that way to seek information through websites. This
should be done while entering into joint ventures with Russian partners to
establish enterprises which will process Vietnamese products in both
countries to help increase sales in
SMEs seek
financial support
Small and
medium-sized enterprises (SMEs) and micro enterprises (MEs) are facing
barriers in accessing trade financing, despite their remarkable contribution
to the economy.
Cao Sy Kiem, the
chairman of the Viet Nam Association of Small and Medium Enterprises claimed
that Vietnamese SMEs accounted for 95–97 per cent of the total businesses and
employed more than half of the labour force in the business sector. They also
produce 40-50 per cent of the consumer goods exported by the country.
Speaking at the
conference on APEC Public–Private Dialogue on Addressing Impediments of SMEs
and MEs in Accessing Trade Finance held in Ha Noi yesterday, Kiem noted that
SMEs have been an important factor, actively contributing to social stability
and poverty eradication in all regions of the country, especially in the
remote and mountainous areas.
However, majority
of the SMEs and MEs lacked the required capital to expand their production
and businesses. It has been a difficult task for the enterprises to mobilise
capital from the market through stocks, shares, and bonds, as most of them
were not qualified to be listed on the stock exchange.
In addition, joint
mobilised capitals were rare among the businesses due to the high interest
rate, while the possibility of using external loans, such as ODA, was still limited.
"It is this
reason that most SMEs and MEs had to depend on bank loans, which accounted
for 80-90 per cent of their capital," he emphasised.
Most of the bank
loans provided to the businesses were short term and were not linked with
businesses and production circles.
SMEs and MEs have
also had to go through complicated procedures in order to access the loans.
"Another
barrier faced by the enterprises is a lack of clear and concrete guidance for
implementation of policies relating to finance, money, trade, and investment,
though the Government has issued several policies to promote the development
of SMEs," he remarked.
The law on SMEs has
not been issued, thus creating a differential treatment without equality with
other sectors.
He recommended to
swiftly develop and approve the law regarding SMEs and specify current
viewpoints, policies, and mechanisms, such as tax extension and prioritised
export credits for SMEs.
Sharing his
viewpoint, Dinh Manh Hung, the deputy director of the Viet Nam Chamber of Commerce
and Industry stated that in 2013, the access of businesses to bank loans was
more difficult than it was in 2012, although they had expected it to become
easier by December 2012.
"In fact, the
bank interest rate in 2013 had decreased by about 2-3 per cent as compared to
that during the end of 2012, but still rather higher than other businesses,
especially SMEs," Hung reported.
He suggested that
SMEs and MEs should regularly update government policies to make use of
incentives in order to overcome the barriers.
They were urged to
continue to implement the Business Process Re-engineering program as well as
differentiating capital sources in order to reduce the risk rather than
depend solely on the credit offered by banks.
Hung also requested
the government to provide enterprises the opportunities to borrow loans by
continuing to implement non-performing loans' solutions, to categorise debts,
and to streamline the payment period.
Hongyeol Lee, the
head of South Korean the Small and Medium Business Administration (SMBA)'s
international marketing department shared the country's experiences in
providing support to SMEs.
He noted that the
SMBA tailored the export and import finance structure to support SMEs during
the respective stages of the entire process. It also increased SMEs' access
to finance by establishing SME exclusive financial guarantee fund with the
purpose of extending credit guarantees for the liabilities of promising SMEs,
which lacked tangible collateral.
Microsoft
system proving beneficial to VNG business
VNG Corporation,
founded in September 2004, is a leading digital content provider and the
number-one technology company in
Not only dominating
the online games by publishing, producing and exporting successfully many
games on the market such as Vo Lam Truyen Ky, Kiem The, Thuan Thien Kiem, Khu
Vuon Tren May and Galaxy Pirates VNG has also been successful in many other
fields, such as digital content and community connection (News Zing, Zing MP3
and Zing Me), e-commerce (123.vn, 123mua.vn), CSM management software and
Zalo - Vietnamese communication and multimedia application on mobile phones.
Millions of
Vietnamese people are entertaining themselves, connecting people, doing
online shopping, and joining in community activities using VNG's products.
VNG is currently
using diversified infrastructure and information platform for more than 1,300
servers and endpoint equipments, including 800 computers to serve 1,200
direct users. To improve the operational efficiency of more than 30 service
groups, meet the highest demand of community, VNG is using diversified
technologies in the platform of Windows, Linux, and Unix.
he biggest
challenge to VNG is to integrate divergent technology platform into
convergent one, making convenient for end users and standardise the supply
process and improve the service quality.
By deploying
Microsoft System Centre 2012, VNG has found out a solution which is
seamlessly integrated with existing divergent infrastructure, saving cost for
new infrastructure investment, and increasing the internal employees’
satisfaction.
Previously, while
using Microsoft technology and open source platform from VMWare for Data
Centre, different systems have not been integrated smoothly, the installation
and management of application require entire IT human resources.
The requirement for
human resources and installation time had slowed down the system productivity
and caused unnecessary disruption.
VNG has decided to
use Microsoft System Centre 2012 as this solution is capable to delivering
unified management across on-premises, service provider, not only providing
self-service for user, but also ensuring system security, and managing hybrid
environments.
By deploying
Microsoft System Centre 2012, VNG has achieved the goal of building ‘IT as a
service’ and creating the flexibility for users.
Deploying Microsoft
System Centre 2012, VNG has improved internal operational efficiency, both IT
department and all employees. As a consequence, operational productivity and
system security has been also enhanced bringing the capability to provide the
services to millions of customers.
"Managing a
data centre with diversified device and platform is regularly complicated,
costly and less effective. System Centre 2012 supports comprehensive
management capabilities at the enterprise level for the application that is
integrated throughout the cloud, from the environment of the service provider
to the enterprise environment ", stressed Vu Minh Tri, Microsoft
Microsoft System
Centre 2012 provides the ability to automate and integrate service management
activities, then IT department that can help automate system tasks to meet
the requirements of users and customers much more quickly, efficiently and
higher accuracy. Specifically, this system enables remote control to update
and deploy applications, no longer requiring IT staffs to manual configure at
every endpoint equipment. At the same time, Microsoft solutions have helped
every VNG employee proactively handle their desired tasks related to IT
applications.
In addition to save
tangible expenses for installing new infrastructure, this also keeps VNG on
with regular operation without any disruption while new system is deployed
and trained. Advanced technology platform plus the advanced features of
Microsoft System Centre effectively helped VNG comprehensively monitoring the
system, smoothly operating with higher efficiency, and closely managing
endpoint equipments in entire system.
"System Centre
2012 allows us to well manage diversified IT environments including Windows,
Linux and other open source software. With its commitment to better interact
with the open source software, Microsoft has shown real commitment in every
products like System Centre 2012," said Nguyen Thanh Phong, director of
VNG’s IT Department.
“Instead of
recruiting additional IT manpower to serve growing IT system, VNG has been
deploying VNG appstore and getting closer to the goal providing "IT as a
service ", helped VNG reduce 50 per cent in the resources required to
support software installation and management and exceed 99.9 per cent of the
system availability,” Phong added.
With the distinct
of a technology company, VNG's 2,000 employees including 1,200 direct users
on 800 computers in
Fecon nails
$26m in Q1contracts
Vietnam’s
Foundation Engineering and Underground Construction JSC or Fecon – a leading
contractor for foundation materials won several major contracts in the first
quarter of 2014 valued at more than VND550 billion ($26.2 million).
Shortly after
reaching a VND200 billion ($9.5 million) deal to do work on the $9 billion
Nghi Son oil refinery and petrochemical complex, Fecon came to another
agreement for the same project valued at VND20 billion ($950,000).
Immediately after,
Fecon received a letter of approval from
The company so far
has won some packages with the Nghi Son project with the total value reaching
VND280 billion ($13.3 million).
Also recently,
Fecon signed a VND28 billion ($1.3 million) contract with Bridgestone
In the first
quarter of this year alone Fecon has secured orders from several pivotal
national projects. Its total contract value thus far has reached VND550
billion ($26.2 million), 30 per cent of its annual revenue target.
In terms of the
company’s business last year, it reported VND1.594 trillion ($76 million) in
the total asset value and VND1.204 trillion ($57.3 million) in net revenue,
30 per cent up on-year. It saw post-tax profits of VND116 billion ($5.5
million), earnings per share were VND4,694 and dividends paid out 20 per cent
(10 per cent in cash and 10 per cent in shares).
The company’s goals
for this year include the revenue of VND1.5 trillion ($71.4 million)
after-tax profit of VND148 billion (7.5 million) and a dividend payout of 15
per cent (cash).
Yarn sales
drive E-land Thanh Cong profits
Korean-backed
E-land Thanh Cong Company has high hopes pinned on yarn sales as its sales
have increased significantly over the past year.
The Ho Chi Minh City-based
textile and garment factory, 45 per cent owned by South Korean conglomerate
E-land, reported profits from its yarn business in 2013 against losses in
2012, CEO Lee Eun Hong announced at the company’s annual shareholders meeting
on March 29.
The executive added
that last year E-land Thanh Cong restructured the US dollar long-term loans
for its Tay Ninh spinning project from 8 to 4.3 per cent, reducing outlay.
Given high hopes on
continued yarn sales and the apparel business, expected to get a boost from
the pending Trans-Pacific Partnership (TPP) agreement, the company is eyeing
sales of $133 million for 2014, 11 per cent up on-year and a considerably
higher profit increase of 33 per cent.
The yarn business
is instrumental in generating this growth, Thanh Cong’s chief strategy
officer Tran Nhu Tung told VIR.
He said sales could
not go beyond the planned increase, as the company’s facilities were already
operating at full capacity. However, E-Land Thanh Cong is mobilising $30
million for another major plant in the Mekong Delta
He said
construction would begin very soon and the first stage was set go operational
by the end of the year, producing garments. He added that stage two would be
knitting and stage three would be pollution-free dyeing. The company
estimates 3,500 workers will be needed in total and investment is being
sourced from both bank loans and private investors.
The company’s 2013
dividend payout was 10 per cent and for this year is planned at 12 per cent.
Standard
Chartered Bank Vietnam awarded Golden Dragon Award 2013
Standard Chartered
Bank Vietnam was just honoured the Golden Dragon Award 2013 for ‘Most
Favourite International Bank’.
The Golden Dragon
Awards are presented annually by the Vietnam Economic Times in collaboration
with the Foreign Investment Agency and the Ministry of Planning and
Investment, to recognise and celebrate foreign-invested enterprises for their
significant contributions to Vietnam.
This is the seventh
consecutive year that Standard Chartered has won this prestigious award.
As a leading
international bank with a long history in Vietnam, Standard Chartered has
been at the forefront of driving innovation and the introduction of world
class expertise in the country.
In raising the bar
for the entire industry, Standard Chartered has helped to create a more
robust financial services sector in Vietnam.
Nirukt Sapru,
general director of Standard Chartered Bank (Vietnam), said: “2014 is a very
special year for Standard Chartered in Vietnam as it marks the 110th
anniversary of the opening of our first branch in the country. Being
recognised again as the ‘Most Favourite International Bank’ is a significant
achievement and it has helped to make our anniversary celebration even more
meaningful.”
“Standard Chartered
is deeply committed to Vietnam. We will continue to support Vietnam’s efforts
to attain sustainable economic growth and strive to offer more innovative
banking products and services for our clients and customers,” he asserted.
Standard Chartered
Vietnam’s achievements have been recognised both globally and locally.
Last year, the Bank
was named ‘Best consumer internet bank 2013’ by Global Finance and ‘Best
service provider in Vietnam’ in the three categories: Best Cash Management
Provider, Best Structured Trade Finance Provider and Best eSolutions Partner
Bank by the Asset.
Additionally, the
State Bank of Vietnam Governor presented Standard Chartered with the
‘Excellent Labour Collective 2012’ award in recognition of its many
contributions to the country.
Denmark
increases private sector support
The Danish Business
Partnerships Progamme announced on March 28 that it would increase support to
development of the private sector in Vetnam with a focus on the areas of food
safety and clean technology.
Since 1997, the
programme granted more than $74 million to 300 pilot projects and to more
than 150 long-term partnerships, several of which are still in business, even
after the conclusion of Danida’s financial support.
”I strongly believe
the Danish Business Partnerships Programme, together with other Danida
business support instruments, can contribute to poverty reduction and
sustainable development in Vietnam. Denmark, Danish companies and partners
stand by Vietnam with our knowledge and know-how in the areas of food safety
and clean technology,” said Danish ambassador to Vietnam John Nielsen.
Despite Vietnam’s
recent years of economic growth, there is still demand for support in
mutualising it with sustainability. Danida’s Business Partnerships Programme
would address this, including support of green technology transfer, job
creation and improving the environment.
Cement
makers fail in energy-saving drive
Many cement makers
have failed to implement waste heat gas generator systems as regulated.
Under Vietnam’s
cement industry development plan until 2020 with a vision towards 2030, all
cement plants having capacity of equal or more than 2,500 tonnes of clinker
per day have to apply the waste heat gas generator system (WHGG) to save at
least 20 per cent of their electricity consumption by 2015.
“Except for Holcim
and Ha Tien 2, we have not seen any cement plants investing in the system at
the moment. Most of cement plants are facing financial difficulties due to
high debt and weak domestic demand, so they can’t invest in the system by
themselves,” according to Stockplus financial media corporation’s release
last year.
“We believe that
there will be an extension from the Vietnamese government in relation to
compliance on the matter,” said Nguyen Quang Thuan, Stockplus’ CEO.
Nguyen Quang Cung,
chairman of the Vietnam Cement Association admitted to the delayed investment
in the WHGG. “However, there won’t be an extension. The cement makers will be
forced to implement this on time,” he said.
Nguyen Cong Minh Bao,
director of Sustainable Development of Holcim Vietnam, which invested $18
million in a WHGG in 2012, said Vietnam should not extend the deadline.
According to Bao, currently, 60 per cent of Chinese firms apply the system in
China and the WHGG is an intrinsic component of a new project.
Holcim Vietnam’s
WHGG has an output capacity of 44 million kWh per year. It will be enough to
serve the firm’s Hon Chong Cement Factory for 88 days of operation, meaning
Holcim Vietnam will save 9,000 tonnes of coal and reduce 25,300 tonnes of
carbon dioxide gas per year.
Vietnam’s cement
sector is considered as one of the country’s most energy intensive
industries. Under the third draft of the retail pricing scheme conducted by
the state-run Electricity of Vietnam (EVN) last year, steel and cement
producers using power voltages of 110kV or higher during peak hour would pay
10 per cent more than the asking price for their normal power. Overall, the
draft would dish out a power tariff hike of 2-16 per cent to steel and cement
producers.
Vietnam
oversupplied 8-12 million tonnes of cement every year during 2010- 2012. The
oversupply was due to a mushrooming in the number of cement manufacturing
plants in recent years. At present, Vietnam has 106 cement factories with
total annual output capacity of 63 million tonnes of cement.
The Ministry of
Construction estimated the domestic cement consumption would reach 62-63
million tonnes this year, a mere1.5-3 per cent increase in comparison with
2013. It is expected that Vietnam would export 14 million tonnes of cement
this year, equal to last year.
Lotte Mart
expands chain footprint to the capital
South Korea’s
supermarket giant Lotte Mart inaugurated the first giant new shopping centre
in the northern area in Hanoi’s Mipec Tower last week as part of its
aggressive expansion in the run-up to Vietnam opening the doors to foreign
retailers.
According to
Vietnam’s World Trade Organization (WTO) commitments, from January 11, 2015,
Vietnam would permit the establishment of wholly foreign owned retail
businesses. Currently, foreign firms are constrained by being forced to enter
into joint ventures with Vietnamese partners or via franchising.
According to Hong
Won Sik, general director of Lotte Mart Vietnam, there will have an
investment wave from foreign retailers in Vietnam as WTO commitments take
effect next year.
He said that at
that time, Vietnam’s retail market would become more competitive and Lotte
had therefore concentrated on establishing a firm foothold before the
floodgates opened.
Sik revealed that
by the end of this year, Lotte Mart would open more three shopping centres in
Hanoi, Ho Chi Minh City and Ba Ria-Vung Tau. The South Korean retailer aimed
to expand its chain to 60 supermarkets nationwide by 2020.
Lotte Mart Dong Da,
its first shopping centre in Hanoi, is its seventh in Vietnam. The $25
million 20,000 square-metre four floor leased outlet at Mipec Tower will
offer a shopping experience including a range of entertainment services and
supermarket.
Lotte Mart entered
Vietnam in 2006 as a joint venture with a local partner based in Ho Chi Minh
City. According to the investment certificate that Lotte Mart won in October
2006, the firm boasted the initial investment capital of $65 million, with
the local partner Minh Van Company, holding a 20 per cent stake.
In October 2012
Lotte Mart received Ho Chi Minh City authorities’ approval to turn its joint
venture into a 100 per cent foreign-invested company. At the same time, the
Korean investor raised its chartered capital to $120 million with an aim to
developing more projects in Vietnam in the future.
Lotte Mart now has
six retail centres in Ho Chi Minh City, Dong Nai, Danang, Binh Duong and Binh
Thuan.
Spanish
enticed by array of major infrastructure projects
A delegation of
over 30 Spanish businesses arrived in Hanoi last week to express interest in
possible investment in transport infrastructure, energy, shipbuilding, water
and wastewater treatment and technology. The tour included representatives
from leading Spanish companies.
José Manuel
García-Margallo, Spain’s Minister of Foreign Affairs and Co-operation, who
led the mission, told a meeting at the Ministry of Planning and Investment
(MPI) that Spanish companies were keen to seek opportunities in Vietnam
considering its potential growth.
José Manuel
Revuelta Lapique, president of shipbuilder Navantia said: “We’re a major
shipbuilding company with lots of experience. We know that shipbuilding is an
important industry in Vietnam and we want to share our experience with
Vietnamese partners.”
The Spanish
companies were particularly interested in transport infrastructure including
railways, motorways and airports.
“We’ve participated
in motorway, railway and metro projects in many countries. We want to know
more about Vietnam’s road infrastructure plans and what models they’re
interested in adopting, whether its Public-Private Partnership (PPP) or other
alternatives that the Vietnamese government is prioritising,” said Juan José
García Gabián, general director of CAF.
MPI Minister Bui
Quang Vinh said the Spanish companies shared similar investment interests
with the Vietnamese government. Vinh said Vietnam needed $400 billion for
developing the country’s infrastructure until 2020.
The minister also
introduced the visitors to major transport infrastructure projects that
Vietnam was seeking investment for, including the Long Thanh International
Airport project in the southern province of Dong Nai.
Vietnam is also
co-operating with the Japan International Co-operation Agency to study an
upgrade to the existing north-south railway route or construction of a new
route capable of reaching 160 kilometres per hour.
The country is
considering hi-speed railway projects for the Hanoi to Vinh and Ho Chi Minh
City to Nha Trang routes and projects to upgrade rail links between Hanoi and
Haiphong, Hanoi and Lao Cai and Hanoi and Thai Nguyen.
“Spain has a good
railway network. We’d be happy to see Spanish involvement in the sector,”
Vinh said.
He added that the $883
million metro project in Ho Chi Minh City had already received a $200 million
pledge from the Spanish government but the domestic component of the funding
was currently nearly $700 million short.
Delayed
super-project bitter taste
A $300 million
solar battery complex, once a joint deal between the United Arab Emirates’
Global Sphere Group and local partner Worldtech JSC, which failed to
materialise has adversely affected certain groups of people, reported
newswire Vietnamnet.
Last year the
project’s kick-off ceremony took place jubilantly at Phong Dien Industrial
Park in central Thua Thien Hue province in early January.
It was planned to
go on-line after 30 months construction, turning out environmentally-friendly
products and using renewable energy sources for power generation to reduce
pollution.
But after this
grand ceremony, the project has seen no progress. Its construction site is
empty with only the remnant of an incomplete warehouse.
While at first the
investor rented an office and purchased materials to build a warehouse,
after, all the people simply vanished.
According to Doan
Vien and wife Le Thi Hai, who live in the area, deputy head of the local
project management unit Cao Xuan Hai rented their house for the project
office; they lived there in six months, then the investors gradually left
until there were none left.
“They still owe us
over VND30 million ($1,400) in rental and food expenses,” Vien said.
Similarly, Nguyen
Minh Hoang who also lives in the area, said the investor owes him VND15 million
($700) for workers’ wages to build the warehouse.
Le Xuan Luong, an
owner of a building material shop, said the project owed him around VND20
million ($950).
Head of Thua Thien
Hue Industrial Zone Authority Nguyen Huu Tran attributed Global Sphere’s project
delay and disappearance to a cancelled contract with local partner Worldtech.
“In September last
year, the authority amended the project’s investment certificate. Worldtech,
facing capital distress, was sourcing a new partner for the project. We will
urge the investor to pick up the pace,” he said.
Tran added that
under current regulations, the project would potentially have its investment
certificate revoked if it failed to make progress within a year.
Regarding the owed
moneys, Tran said the authority would seek the funds from the investor.
State bank
governor suggests lower lending rates
Lending rates may
go down by another 1-2 per cent this year.
This was the
message State Bank Governor Nguyen Van Binh delivered at a recent meeting
with the Mekong Delta province of An Giang.
“Given favourable
lending conditions, credit institutions may reduce lending rates by 1-2 per
cent,” said Binh.
He added that with
inflation forecasted at around 6 per cent in 2014, interest rates were likely
to remain at the current level. But he said that if conditions became
appropriate, banks could lower their rates, but by a maximum of 1-2 per cent.
Earlier last month,
Nguyen Thi Hong, head of the Monetary Policy Department under the State Bank
also said lending rates could go down given the right conditions in terms of
the economy, the banking sector context and risk management.
MobileWorld
announces share HSX share issue
MobileWorld,
Vietnam’s top mobile retailer, announced it planned to list 63 million shares
on the HSX in June.
This follows
shareholder approval of its listing plans on February 10. As of 2013, the
company operated 213 mobile shops located in every province throughout the
country and another 12 electronics shops under the name Electronic World in
the south.
Last year the group
announced sales of VND9.5 trillion ($452.38 million), up 28 per cent on-year
and pre-tax profits of VND351 billion ($16.7 million), up 108.2 per cent
on-year.
Profit growth saw
such high percentage growth thanks to 25 per cent revenue growth from shops
as the group closed underperforming stores, 822 per cent increases from the
group’s rebates following early payments to manufacturers, and a 52 per cent
decline in financial expenses thanks to lower interest rates. The mobile
segment in general enjoyed a good year with 17.3 per cent in sales while the
electronics segment saw a drop of 22.2 per cent.
MobileWorld’s
strategy is to expand its electronics chains with the goal of seeing growth
equal to that of the mobile industry and thereby taking the lead as the
number one mobile and electronics retailer. Their strategy is price
competitiveness with superior service.
Up to now the
company’s electronics stores total 13 with 4 in Ho Chi Minh City and another
9 in southern provinces with average store revenue of VND9.7 billion per
month.
This year the
company plans to open several new stores in the south, but has no plans for
the north due to a perceived low demand in the market. It also announced it
has plans to move into consumer segments beyond just IT and electronic
appliances.
In response to the
share issue announcement, Ho Chi Minh City Securities Company reported in its
newsletter that it believed MobileWorld would continue to see strong earnings
thanks to growing consumer demand.
It added that the
firm would see sales of VND13.7 trillion ($652.38 million) this year, up 44
per cent against 2013 with after-tax net profits of VND366 billion ($17.4
million), up 42 per cent. They estimated earnings per share of VND5,384.
Green
Valley condo garners rave reviews
Phu My Hung
Development Corp launched the first phase of Green Valley project on March 23
that captured the attention of 200 customers from Ho Chi Minh City, Hanoi and
provinces throughout the country. Indeed, 70 per cent of the 156 apartments
in the first phase have been deposited by customers right at the launching
event.
Green Valley is the
second apartment project overlooking the Saigon South Golf Course and scenic
river after Happy Valley apartment project. On-site facilities include
swimming pool, flower garden and convenience stores. Each apartment also has
sufficient parking space for a car and two motorbikes, providing a much
welcome bonus in a city notorious for its lack of parking. There's also
spacious parking space for visitors.
Thanks to its
convenient location, residents can also easily access District 1 and 3 by
about 20 minute drive. With a variety of apartment sizes at affordable
prices, Green Valley offers a rare opportunity to purchase Phu My Hung condo
as this is the Phu My Hung’s second condo project for middle-income earners
since Sky garden 2004.
It’s no surprise
that the motto “easy to buy, easy to sell, easy to lease,” has become a
popular expression when referring to Green Valley. Phu My Hung Development
Corp. has been trying to add extra values and benefits via comprehensive
investments in infrastructure and facilities. As a result, the appearance of
Phu My Hung City Center is growing at multiplying rate over 15-year
development.
A large foreign
community occupying up to 40% of total residents here has been developed such
as Chinese, Japanese, Korean, etc. in line with a modern educational system
concentrating many international schools such as SSIS, Japanese School,
Taipei School and Korean School. A positive sign for foreigners is that
several foreign individuals have been able to complete the procedure to get
the Certificate of house ownership in this urban area since the beginning of
2014. Phu My Hung Development Corp. also offers a long-term leasing programme
for expatriates who are residing in Vietnam but remain ineligible to purchase
a house. During the leasing contract, individuals and corporate customers can
receive whole-hearted supports from Phu My Hung Development Corp. to convert
from leasing to purchasing when they are qualified to make house purchases in
Vietnam.
The second phase of
the Green Valley apartment project is expected to be launched by end of April
2014.
Agriculture
sector sees cheap funds beyond reach
The central bank
has decided to cut lending rates for the aquaculture sector but most
enterprises are still finding it difficult to access low-interest loans.
According to
Document No. 1691 released on March 19, the central bank has told
Vietcombank, VietinBank, BIDV, Agribank and MHB to cut the lending rate cap
for the sector to 8% per annum, the next move after the ceiling deposit rate
was slashed to 6% per annum on the previous day.
However, many enterprises
and farming households still bemoan a host of hindrances to bank loans.
Speaking to the
Daily, Nguyen Ngoc Hai, head of Thoi An Tra fish farming cooperative in Can
Tho City, said that lending conditions of banks were not suitable to the
current market conditions.
Banks do not make
unsecured loans and they require borrowers to have mortgage assets. However,
farmers had already used all their properties as collateral for bank loans to
finance their losses over the years, so they were unable to take out more
bank loans now, Hai said.
Nguyen Van Kich,
general director of Cafatex Group in Hau Giang Province, said that to speed
up development of the sector, the central bank should create favorable
conditions for borrowing and cut lending rates to 4-6% per annum.
Vo Dong Duc,
director of Can Tho Seafood Import-Export Joint Stock Company, said the Tra
fish farming industry had been trapped in a chronic supply-demand imbalance,
export risks and falling prices. Many firms in the industry have suffered
losses.
Banks had been
cautious in extending loans to seafood firms due to high risks in the
industry. Credit ceilings for the sector now range from 40 to 60% of those in
2012, Duc said.
Nguyen Van Nhiem,
chairman of My Thanh shrimp association in Soc Trang Province, said that
credit approval was a little bit easier than in his locality. Besides secured
loans, Agribank has also given loans to enterprises having feasible projects
and whose debts have been rescheduled.
Speaking at a
recent seminar in the Mekong Delta, Nguyen Viet Manh, head of the credit
department under the central bank, said that farm produce and fruits were
strengths of the region, but the products usually face high risks due to
global prices and anti-dumping laws.
In addition,
unhealthy competition and ineffective investment of some enterprises have
made banks hesitant at extending loans to this sector, he said.
VND8.3
trillion loans for enterprises to stabilize prices
Eight banks have
signed up for HCMC’s market stabilization program this year, offering
combined loans worth VND8.3 trillion (US$393.5 million) for enterprises to
help stabilize the prices of dairy products, schooling items, essential
foods, core pharmaceuticals and others in this city.
This year’s program
will start tomorrow and be financed with the loans that are more than four
times higher than last year’s program.
Nguyen Hoang Minh,
deputy director of the State Bank of Vietnam’s HCMC branch, said among the
eight banks, the Vietnam Bank for Agriculture and Rural Development (Agribank),
Vietnam Export Import Bank (Eximbank), Saigon Thuong tin Commercial Joint
Stock Bank (Sacombank), Bank for Investment and Development of Vietnam (BIDV)
and Vietnam Bank for Industry and Trade (Vietinbank) had joined the program
since last year. Newcomers are the Military Bank (MB), Dong A Bank and
Housing Development Bank (HD Bank).
Participating
enterprises of the program would get short-term loans with an annual interest
rate of 6% and long-term loans with 8-10%, Minh said.
Minh said last
year’s price stabilization program generated many benefits for the lenders,
including the opportunities for brand building, expanding relations with
corporate borrowers, helping stabilize product prices and rein in inflation
in HCMC. This was why more banks wanted to join this year, he added.
According to the
HCMC Department of Industry and Trade, the loans with soft interest rates are
on offer for not only product producers and suppliers of the program but also
related entities, including husbandry farms and vegetable cooperatives.
This year, the
program has attracted 64 entities, or five more than the number of last year.
With their own capital and the loans from the banks, participating
enterprises will have to prepare the goods volumes that are 20-30% higher
than those of last year and account for 20-60% of the city’s demand.
The department also
said more efforts would be made to distribute the products of agricultural
cooperatives and those items produced in accordance with the Vietnamese Good
Agriculture Practice (VietGap) standards and Global Good Agriculture Practice
(GlobalGap) criteria so as to provide consumers with qualified products at
reasonable prices.
The program will
last until March 31, 2015.
The program was
initiated by the HCMC People’s Committee in 2002.
In the first years,
participating enterprises of the program got interest-free funds from the
city’s budget to stabilize prices of essential food items during the Lunar
New Year, or Tet. Later, more products were added and the program ran for a
longer period, from early April a year to the end of March of next year.
Banks started to
take part in the program last year by lending to the participants at soft
interest rates.
Up to now, 50
cities and provinces across the country have carried out a similar market
stabilization program.
Vietnam’s
GDP could grow 13.6% in 2025, says Harvard professor
Vietnam will enjoy
strong economic and trade expansion if the country signs the Trans-Pacific
Partnership (TPP) agreement, with gross domestic product (GDP) growth forecast
at 13.6% in 2025, said Professor Robert Z Lawrence from Harvard Kennedy
School.
Speaking at an
international workshop on economic reform in Hanoi City on Tuesday, Lawrence
said Vietnam’s exports and gross national product (GNP) would grow faster than
other TPP participating nations given tax barrier removals by large markets
such as the U.S. and Japan.
The TPP is a free
trade agreement currently being negotiated between 12 countries including the
U.S., Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore,
Malaysia, Brunei, Vietnam and Japan.
Vietnam’s GDP
growth rate may reach 13.6% in 2025, much higher than 0.4% of the U.S., 2.2%
of Japan, 1.4% of Peru and 6.15% of Malaysia. Meanwhile, Vietnam’s exports
will surge by 37.3%, higher than 4.4% of the U.S., 14% of Japan and 12.4% of
Malaysia, the professor said.
Vietnam’s economy
expanded by 5.42% last year. The GDP in the first quarter grew 4.96%,
slightly higher than the rate in the same period of 2012 and 2013 (4.75% and
4.76% respectively).
Vo Tri Thanh,
deputy director of the Central Institute for Economic Management (CIEM), said
that the professor’s estimations were sound though his foundations were
unclear.
However, Thanh
explained that this did not mean that Vietnam could benefit the most from
TPP. “Vietnam has a low starting point, so the nation can spring up at the
highest speed compared to other countries,” he said.
Lawrence said that
implementation of TPP commitments will help speed up domestic economic
restructuring. Vietnam is striving for internal reforms during TPP
negotiations, including reforms of institutions, State-owned enterprises
(SOEs) and the banking system.
At present, SOEs
usually receive favorable policies to access low-interest capital sources.
The enterprises also see little impact from normal rules and get tax
incentives and priority in signing procurement contracts.
CIEM director
Nguyen Dinh Cung said that SOEs’ contributions did not correspond to
priorities they have got.
Around 1,000 SOEs
account for 45% of the total investment and fixed asset and 27% of the total
outstanding loan. However, they contribute less than 17% of industrial output
and generate jobs for just 1% of people of working age.
Lawrence said the
SOEs chapter for the TPP negotiations would discuss natural competition
between SOEs and private enterprises, transparency and financial structure of
SOEs.
Therefore, TPP
could be a fulcrum for domestic reforms, the professor said.
In addition, there
would be adjustments in the local market when the TPP agreement is signed and
some farmers and producers will be replaced.
Enterprises must
renovate operations and some would have to struggle against the process, he
added.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Chủ Nhật, 6 tháng 4, 2014
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