BUSINESS IN BRIEF 23/10 Techcombank appointed to support Metro No.2 project On October 13 the governor of the State Bank of Vietnam (SBV) issued Decision No. 2054/QD-SB on appointing Techcombank to support the Sustainable Urban Transport project, namely Metro No. 2, sponsored by the Asian Development Bank (ADB). In the decision the governor ordered Techcombank’s general director to carry out provisions set forth in Decree No.38/2013/ND-CP on managing and using ODA fund and preferential loans from donors and to closely follow regulations established in guiding documents issued by the SBV and Ministry of Finance as well as ADB provisions, to best serve the project. The metro No.2 with a length of nearly 20 kilometres will start at Thu Thiem New Urban Area and end at the An Suong Station. The total investment capital for the project is $1.37 billion. In particular, ADB approved to lend $540 million, the German Reconstruction Credit Institute (KfW) with $313 million and the European Investment Bank (EIB) with $195 million. The $326 million remaining would be taken from the counterpart funds of Vietnam. Viettel gets ready to post first class fourth quarter results Military-run Viettel Post Joint Stock Corporation is dreaming about a successful fourth-quarter profit harvest. Viettel Post last week announced that it had planned to reap the total fourth-quarter turnover of VND516 billion ($24.57 million), up 14.7 per cent on-quarter. It is expected that total turnover for the whole 2014 will be more than VND1.7 trillion ($80.95 million), up 57 per cent against last year. The turnover of the corporation’s core business areas including express delivery and stationery will be VND302 billion ($14.38 million) and 20.4 billion (971,400), respectively. Viettel Post also expected to earn a pre-tax profit of nearly VND49 billion ($2.33 million) within this year, and contribute VND61.1 billion ($2.9 million) to the state coffers. The corporation said that these feasible targets were inspired by its good third-quarter business results. Specifically, Viettel Post’s third-quarter turnover reached VND451 billion ($21.47 million), with a pre-tax profit of VND13 billion ($619,000), up 6 per cent on-quarter and 59 per cent on-year. The total third-quarter contribution to the state budget was VND15.3 billion ($728,570), up 43 per cent on-year. In this year’s third quarter, the corporation successfully expanded its service network to South Korea and Malaysia, raising its overseas offices to five countries. The corporation in the third quarter also boosted co-operation with Vietnam Airlines in selling air tickets, while successfully established its stationery and logistics projects. Earlier, Viettel Post set a revenue target of $190.5 million by 2019, with an average annual growth rate of 20-23 per cent. Also by 2019, the corporation’s post-tax profit will hit $2.33 million, up 13-15 per cent, per year, and with a dividend payment rate of 15 per cent, per year. The corporation’s total assets will be valued at $28.6 million, annually up 18 per cent by 2019, according to the corporation’s targets. Yen Bai encourages concentrated processing tech The northern province of Yen Bai is giving priority to mining enterprises that apply concentrated processing technology so as to raise the mineral content of extracted ores from 20-25 per cent to 65 per cent. The Yen Bai Provincial Department of Natural Resources and Environment deputy director Ha Manh Cuong announced this decision and said it was a response to the licensing of many mining projects that have been largely ineffective at removing anything but iron ores. Cuong said the technology could help make full use of local mineral resources, reduce waste, and protect the environment. Furthermore, he underscored that Yen Bai would be more supportive of mining firms that have identified buyers.  Yen Bai reportedly has iron reserves totalling 91 million tonnes. Minh Duc Mining JSC is one of only a handful of firms that will benefit from this policy. Minh Duc opened a VND650 billion ($30.9 million) mine that applies concentrated processing technology in Yen Bai in February 2014. “We went to China and found technologies that could help us boost the iron content of ore to 64.8 per cent,” said Hien, the firm’s general director. In 2012, after two years of exploration, Minh Duc was licensed to exploit 10 million tonnes of iron ores from Yen Bai’s Mountain 300 iron mine over 30 years. “The firm will soon be licensed to exploit additional six million tonnes. We are thankful for the support we have received from the provincial authorities, as we are not the only firm looking into this golden land,” Hien added. The manufacturer runs a deep iron processing line with the capacity of over 80,000 tonnes of concentrated ores per year. “We are waiting for the state’s permission to import two similar lines, raising the  total capacity to 250,000 tonnes per year,” she explained. As of June 2014, Minh Duc had delivered 15,000 tonnes of concentrated magnetite iron ores to the Vietnam-China Iron and Steel Company, located 250 kilometres away, at a selling price of VND1.8 million ($86) per tonne. However, tax policies are still burdensome to many mining firms like Minh Duc. According to the company’s general director, at a mining cost of VND1 million ($47.6) per tonne, along with VND500,000 ($23.8) in taxes and environmental protection fees, profit margins are thin. President of the Lao Cai Young Entrepreneur Association Nguyen Huy Long said that deep processing technology not only maximised the output of natural resources, but also reduced transportation costs. “Instead of carrying 720 tonnes of low-quality iron ores, mining companies only pay for around 200 tonnes of concentrated ores. Concentrated processing has proven to be highly efficient and the state should get behind firms that apply this technology,” he said. As a northern mountainous province, mining is one of the leading industries in Yen Bai. The area is rich in minerals including one billion cubic metres of white limestone, 91 million tonnes of iron ores, and 150,000 tonnes of kaolin clay. So far  Yen Bai has licensed 36 iron mining operations for 27 companies, of which two were issued by the Ministry of Natural Resources and Environment to Development Number One Single Member Ltd, and Minh Duc Mining JSC. The other 34 were issued by the Yen Bai Provincial People’s Committee. Cai Mep-Thi Vai authority proposed The Ba Ria-Vung Tau Provincial People’s Committee has proposed the Vietnamese government to establish a port authority to administer the Cai Mep-Thi Vai port complex in a bid to optimise its investment efficiency. The proposal complies with a recent prime ministerial decision approving a transport sector restructuring plan that will serve industrialisation and modernisation for sustainable development through 2020 in the province. In the plan, the Cai Mep-Thi Vai port complex is specified as a top investment priority area to be developed into a modern port venue. Under the Ba Ria-Vung Tau Provincial People’s Committee proposal, the port authority will be a state management agency directly run by the provincial people’s committee which oversees the investment and operational activities of area seaports, as well as associated logistic centres. Other functions such as land fund management, infrastructure investment for leasing services, and supply of maritime services at port venues and logistic centres will be assumed by a specific business under the direct management of the port authority. If the proposal is green-lighted, the port authority of Ba Ria-Vung Tau will develop in two phases. First, in a five-year plan beginning in 2015, the Cai Mep-Thi Vai port complex management unit will be created to act as a state management agency under the provincial people’s committee direction. In the second phase, which starts in 2020, the port authority will be created through organisational change from the Cai Mep-Thi Vai port complex management unit. According to Deputy Chairman of the Ba Ria-Vung Tau Provincial People’s Committee Ho Van Nien, through field surveys conducted throughout Asia and Europe, port authorities have proven to be quite effective models in respect to business management. They have brought multiple benefits to business communities, particularly with the application of a one-stop-shop mechanism for conducting administrative procedures. “Applying the port authority model is a smart move, matching the world development trend,” Nien said. Earlier this year, the Vietnamese government allowed the Vietnam Maritime Administration to pilot the model at some ports. Ba Ria-Vung Tau has lodged its proposal and is awaiting the government’s final decision before proceeding at its Cai Mep-Thi Vai port complex. In fact, Cai Mep-Thi Vai has become an international transshipment port venue in the last five years. Many problems, however, persist with local port system management, including the lack of consistency among diverse state management agencies. The put-through cargo volumes at the Cai Mep-Thi Vai port complex remain rather low, at 550,000 TEUs in 2011, increasing to 950,000 TEUs in 2012 and 2013. In the first four months of this year, the port group only received 348,000 TEUs, meaning about 15 per cent of port capacity was tapped, causing great waste. As the cargo volume is far below port capacity, there has been fierce competition among ports in this area to attract customers. Some ports have cut fee levels - an imprudent move that has lowered port investment efficiency. Current procedures still prove cumbersome, causing inconveniences to ship consigners. Ba Ria-Vung Tau is currently home to 52 port projects worth VND134.2 trillion ($7.06 billion) in the total committed investment capital. In the first nine months of 2014, the disbursed sum of the province’s seaport projects mounted to VND1.516 trillion ($72 million), bringing the total realised capital of seaport projects in the province to VND42.1 trillion ($200 million) by September 2014, according to the Ba Ria-Vung Tau Provincial Department of Transport. Ocean Dune golf course controversy continues The developer of the controversial Ocean Dune golf course in Phan Thiet of the central province of Binh Thuan last week was requested by the Ministry of Construction to justify transforming the site into a new urban township. In a document sent to the Ministry of Planning and Investment (MPI) and Rang Dong Group – the developer of the Ocean Dune - the Ministry of Construction (MoC) requested clarifications on how to harmonise the interests of the state, the community, the developer and golf club members. The MPI previously sent a memo to related bodies, to collect suggestions on Rang Dong Group’s proposal to transform the existing and largely underused golf course into an urban township. The company cited huge losses incurred in the operation of the course as reasoning for its decision. However on its return submission, the MoC claimed that the proposal from the MPI only referred to removing the Ocean Dune from the national golf course development plan, but not transforming it to an urban township. “The MoC requested the MPI add the information on how to actually implement the proposed change,” the MoC said. The debate on the move of the Ocean Dune into an urban township has gone on for many years. Located in the central province of Binh Thuan’s Phan Thiet city, the course was built in 1993 by a Hong Kong-based investor, with famous golf billionaire Larry Hillblom recruited as a consultant. At the time, the local authorities gave them an investment certificate with the hope of developing the local site of Phan Thiet into an attractive tourist destination. However, continuous losses have forced Rang Dong Group, which bought the golf course in 2013, to convert it to a new urban township. According to a report from the Binh Thuan Taxation Department, over the last 10 years, total losses sustained by the golf course have reached VND115 billion ($5.4 million), and it has not contributed anything towards the local state budget. Rang Dong Group’s chairman Nguyen Van Dong, said that changing the function of the golf course would also free up much needed space for local housing. With an estimated investment capital of around VND3 trillion ($142.8 million), a third of the investment will be put into infrastructure such as roads, power and water, drainage and parks. Dong said that changing the function would massively increase the efficiency of the land use and bring an estimated VND1 trillion ($47.6 million) in land taxes to the provincial budget. The group chairman added that apart from commercial housing, the investor would develop the Blue Sea Street urban township into a modern, environmentally-friendly part of the city. However the existing members at the Ocean Dune golf course have opposed the move, claiming that Rang Dong’s unilateral decision to close the course infringed upon the legal interests and property rights of the members. According to Dong, of the 180 members in the Ocean Dune golf course database, 70 have been unavailable for contact for the last five to 10 years, while 80 other members had agreed to move to the Sea Links golf course, a nearby golf course also owned by Rang Dong Group. Twenty other members agreed to accept financial compensation. Capital suffers office for lease redundancy The opening of several new developments has added to Hanoi’s already over-supplied office-for-lease market Photo: Le Toan The grade A segment in the third quarter of this year received more than 45,000 square metres due to the new building. The occupancy rate of the whole Hanoi market reduced, the huge supply and low tenancy of this project. Cushman & Wakefield Vietnam announced that Hanoi witnessed the market entry of the Lotte Grade A project and the Ho Guom Plaza, which possessed the second largest leasable area among grade A buildings and one Grade B building. The total office space in Hanoi increased to more than 1.1 million square metres, representing an increase of 5.3 per cent quarter-on-quarter. This glut saw average asking rents for grade A buildings in central Hanoi to fall 0.8 per cent over the quarter. However, Grade A in non-CBD Hanoi increased 9.9 per cent quarter-on-quarter in terms of average asking rent rate due to the significantly higher than average asking rent charged by the Lotte Centre. “The participation of the Lotte Hanoi Centre is has pushed supply to exceed demand and increase the competitiveness of the market,” said Alex Crane, director of Office Leasing of Cushman & Wakefield Vietnam. “We predict that falls in rent will take longer in the Hanoi market.” With more Grade B supply entering the market, average rents for Grade B offices in Hanoi continued to decline by 1.7 per cent. The occupancy rate across all grades in Hanoi saw a decrease this quarter. Grade A showed the decline of 7.8 per cent while grade B recorded a drop of only 0.8 per cent quarter-on-quarter. In another report released by Savills Vietnam, they announced that in the first nine months of this year, the occupancy of the whole market reduced by 1.5 per cent compared with the previous quarter. Among these, Grade A saw the highest fall of more than six per cent. High vacancies have been seen in the PVI Tower, the Charmvit Tower and the VCCI Tower. In the Charmvit Tower, at least 70 per cent is vacant, while the PVI Tower’s occupancy remained very modest. Savills Vietnam reported that the occupancy rate of office for lease in Hanoi centre was only 67 per cent in the first nine months of this year. Moreover, the supply will increase more in the end of this year, when an additional 60,000 square metres is added to the market from five projects. Supply, meanwhile, will sharply increase in 2015 and 2016 when more than 600,000 square metres. As tenants continue to relocate out of the city centre, Grade A office buildings in the centre will have to continue to reduce rents an aim to keep existing tenants and attract new customers. Vietnam overtakes China as biggest catfish exporter to Brazil Vietnam has taken the lead in terms of frozen catfish filet exports to Brazil away from China with approximately 44,000 tonnes in the last eight months. China only exported 33,000 tonnes of fish, such as Pollock, salmon and cod, to Brazil in the same period. By September 15 the value of Vietnamese catfish exported to Brazil reached $86.2 million, an increase of 19 per cent compared to the same period last year and accounted for 7.3 per cent of the country’s total fish exports. Vietnamese catfish is well-received in the Brazilian market with strong growth in terms of volume and respectable increase in price. Brazil is the second largest importer of catfish filets from Vietnam after the US. The South American country is an emerging market with a growing middle class that is contributing to the steady consumption of seafood products. In 2013 Brazil was named among the top 10 seafood importers from Vietnam with the total value of $123 million, of which catfish accounted for 99 per cent with a value of $122 million. Three Mekong Delta localities boost tourism linkages Leaders of three Mekong Delta localities of An Giang, Kien Giang and Can Tho have recently gathered in Rach Gia city to discuss ways to beef up their tourism linkages. The event was organized by the General Department of Tourism with the support of the EU-funded Environmental and Socially Responsible Tourism Capacity Development Program (ESRT). The three localities lie in a key tourism region of the country in accordance with the Master plan on national tourism development until 2020 with a vision towards 2030. The local leaders stressed the need to work out major orientations for tourism development in their localities without damaging the environment. The Program Director, Mr. Do Quoc Tri, said that training workshops on responsible tourism will be provided for the three local Departments of Culture, Sports and Tourism in the coming months. He underlined the importance of the private sector’s engagement as well as the role of the local tourism associations in tourism management. At the meeting, the three localities inked an agreement which figures out four areas of cooperation, namely tourism management policy development, tourism product development, tourism promotion, and human resource development. The Environmental and Socially Responsible Tourism Capacity Development Program was designed to mainstream responsible tourism principles into Viet Nam’s tourism sector to enhance competitiveness and contributing to achieving the Socio-Economic Development Plan (SEDP). It has provided technical assistance for eight Northwest provinces of Hoa Binh, Son La, Dien Bien, Lai Chau, Phu Tho, Yen Bai, Lao Cai and Ha Giang and three Central Coastal localities of Hue, Quang Nam and Da Nang. Cashew nut export brings US$1.5 billion in nine months Vietnam exported 225,000 ton cashew nuts yielding US$1.46 billion in the first nine months this year, up 19.6 percent in volume and 21.8 percent in value compared to the same period last year. According to reports at a seminar recently hosted in the southern province of Binh Phuoc, the export output reached 27,000 tons bringing US$175 million in September. Vietnam would harvest 500,000 ton cashew nuts this year and have to import another 500,000 tons to process for exports from the Africa and Southeast Asia. Binh Phuoc and Dong Nai are the two largest cashew growing provinces in Vietnam. Competition focuses on students' case-study Students will analyse case studies of real-life business situations and propose solutions in a competition held by market-research giant Nielsen Vietnam in HCM City and Ha Noi on October 21-23 and October 28-31 respectively. To register for the fifth annual Nielsen Case Competition, students are requested to submit an introduction letter and academic transcripts from universities as well as social activity certifications. India to lodge anti-dumping lawsuit against Viet Nam's plastics machine exports India's Directorate General of Anti-Dumping and Allied Duties (DGAD) plans to lodge an anti-dumping lawsuit against plastics processing machines and injection moulding machines imported from the Philippines, Malaysia and Viet Nam. The lawsuit was prompted by a petition from the Plastics Machinery Manufacturers Association of India, according to the Vietnam Competition Authority (VCA). DGAD's investigation conducted from April 2013 to March 2014 showed that the Philippines, Malaysia and Vietnam exported plastics processing machines at low prices, causing considerable damage to the Indian industrial sector. Exporters from those Southeast Asian countries have 40 days to send their feedback to the DGAD under the Indian Ministry of Commerce and Industry. India's latest anti-dumping lawsuit is the fifth of its kind against Vietnamese exports. In 2008, India imposed an anti-dumping duty of 60-174 per cent against plastics processing machines imported from China. Farmers to get preferential loans The State Bank of Viet Nam approved the addition of 19 projects to a pilot programme that offers preferential loans for agricultural development. The beneficiaries of the soft loans are 19 projects from 16 cities and provinces nationwide. They will get a total of VND1.926 trillion (US$90.42 million) at preferential interest rates of 7 per cent per year for short-term loans, 10 per cent for medium-term loans and 10.5 per cent for long-term loans. Short-term loans will be given to farmers to buy fertilisers, seedlings and poultry and livestock breeds, as well as agricultural equipment. The medium and long-term loans will support investments in infrastructure and equipment to develop hi-tech models. The southern province of Soc Trang will get the largest amount of VND385 billion ($18 million). The northern mountainous province of Tuyen Quang will get VND285.5 billion ($13.4 million) and the central province of Ha Tinh will receive VND192.14 billion ($9 million). The loans aim to forge financial connectivity between businesses and farmers for new farming models, such as large-scale rice farms and application of advanced technology. The central bank, in conjunction with the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology, has been implementing the programme since May this year. A total loan of VND2.65 trillion ($124.41 million) has been so far disbursed under the programme. According to the central bank, many of these models have shown their effectiveness in several areas, such as the large-scale rice field model in An Giang province, the hi-tech vegetable and flower production model in Lam Dong province and the dairy farming and milk production model in the central Nghe An province. The central bank said that after the two-year trial period, the organisers will work together on policies to implement the programme on a larger scale. German firms to look at local market during Asia-Pacific meet A meeting of leading German companies in Viet Nam will be an opportunity to promote trade and investment between Viet Nam and Germany, and other European Union countries, said experts. According to the official website of the Asia-Pacific Conference of German Business (APK), its 14th conference will be held from November 20 to 22 in HCM City. In recent years, Viet Nam has attracted an increasing number of foreign investors due to the country's fast-growing economy and geographical advantages. With the conference taking place in HCM City, Viet Nam will host this event for the very first time. The conference has been organised biannually in Asia since 1986, and has become the largest German networking event in the region, attracting political as well as business leaders, reported the website. This year's conference theme is "Understanding Trends and Perspectives". The combined economies in the Asia-Pacific region are playing an ever-more important role in global trade, as per their share in world population and GDP. The 14th APK will focus on industries and trends of the future, where co-operation between businesses in Germany and the Asia-Pacific can thrive. During the two-day conference, some 750 participants will have ample opportunities to speak, listen, network and contemplate concepts and solutions for a sustainable future. German Ambassador to Viet Nam Jutta Frasch said that more than 160 German companies in Viet Nam create jobs and contribute to the development of the Vietnamese economy. A clear sign of trust of the German companies in Viet Nam is the APK conference being held this November in HCM City. Frasch said that Viet Nam has had fast and strong economic integration via free-trade agreements and the Vietnamese government has strived to complete economic policies. These are attractive points for German companies, reported the Vietnam News Agency (VNA). Meanwhile, Vietnamese enterprises have limited foreign direct investment opportunities in Germany due to capital and trade barriers, she said. However, a few Vietnamese enterprises have opened their businesses in Germany, such as FPT and Vietinbank. The free-trade agreement between Viet Nam and the EU is expected to be a chance to increase investment between Germany and Viet Nam. Germany will transfer technology to Viet Nam, while Viet Nam can export more consumer goods to Germany and other countries in the EU, she said. The Trade Office of Viet Nam in Germany said that the ongoing industrial revolution in Germany will bring good opportunities for Vietnamese companies in receiving technological transfers from Germany. Germany will also be an attractive market for Vietnamese goods and a favourable place for local products entering other EU markets, including France, Netherlands, Austria, Poland and Belgium. According to the Europe Department of Viet Nam's Ministry of Industry and Trade, the trade value between Viet Nam and Germany reached US$4.95 billion by August 2014. Germany has had 238 investment projects in Viet Nam with a total registered capital of $1.34 million. Many leading German hi-tech brands such as Mercedes Benz, Siemens, Bosch, Adidas and Xella have had efficient operations in Viet Nam. Several large German firms, therefore, see Viet Nam as a potential market that can replace China. Law could simplify buying homes Viet Nam is considering changing the amended Housing Law, which is now under discussion, to make it easier for foreigners and Vietnamese expatriates to buy houses in the country. Out of 126 foreign home-buyers, 80 per cent are individuals while the rest are businesses. The low figure is attributed to the fact that buying property is currently more expensive than renting. Once foreign nationals own a residence, they are not allowed to sublet the property even if it is not fully occupied or left vacant when their employees return home. This is one of the reasons why many foreigners are not interested in the market. Meantime, several enterprises build residential areas specifically for their employees to cut costs and manage their staff better. In some cases, home-seekers find it hard to find suitable apartments near their respective workplaces. Of the buyers, foreign nationals married to Vietnamese citizens make up as much as 80 per cent while individual investors or business executives account for only 15 per cent. Employed foreign individuals with college degrees represent a mere 5 per cent. So far, no foreign nationals possessing the special skills and merits which the President and Prime Minister are seeking have bought homes in Viet Nam. The home property market is showing signs of recovery, mostly in the mid-range sector, whereas a majority of high-end residences remain empty. Therefore, drawing foreign capital inflows into the real estate market is seen as an immediate on-the-spot export, said Deputy Construction Minister Nguyen Tran Nam, adding that this would make Viet Nam more competitive with regard to housing ownership policies for foreign nationals. The expansion of housing purchase regulations for foreign individuals and organisations has received public approval. It will encourage foreign investors to acquire and own houses in Viet Nam, thereby attracting investments and mobilising resources, expertise, and technology, as well as contributing to the domestic property market and international integration process. However, in order to open the sector without losing control, regulations must be put in place at all stages, from issuing policy to monitoring implementation. Regulations on residency in Viet Nam and other legal provisions to prevent speculation and manipulation of the property market, as well as money laundering, will be tightened, and a legal framework and jurisdiction will be set up. Foreign individuals and organisations who purchase and own houses in Viet Nam are subject to the same entitlements and obligations as their Vietnamese counterparts. In addition, they must also comply with certain provisions. Accordingly, owners who are foreign nationals are entitled to lease their properties for purposes permitted by Vietnamese laws, but they must pay income tax on their rent and give written notice to housing management authorities at provincial levels. In addition, owners who are foreign organisations are only entitled to use their houses for accommodating their personnel. Subletting the property or using it as office space is prohibited. Financial transactions for purchasing or leasing the property must be completed via financial credit institutions legally operating in Viet Nam. According to the draft law, foreigners, excluding diplomats and those who work for non-governmental organisations, will be allowed to buy and own property in Viet Nam once they obtain a work permit. Foreign invested-enterprises, branches and representative offices of foreign companies, foreign investment funds and foreign banks shall also be entitled to purchase and own houses in Viet Nam. In addition to apartments, foreign individuals and organisations shall be permitted to own villas or townhouses as part of commercial housing development projects where foreigners are not restricted and prohibited to live, as stipulated by the Ministries of Defence and Public Security. Foreign individuals shall have the right to own houses for no longer than 50 years from the date of receiving the house ownership certificate. Extensions will be allowed but must be in compliance with existing laws. Long-term and permanent ownership of houses is allowed for foreigners married to Vietnamese citizens. Meanwhile, organisations shall be allowed to own houses for no longer than the term stated in the investment certificate that they have been granted, including extensions. The house ownership term starts on the issue date clarified on the certificate. Exports to Canada see growth The volume of Vietnamese exports to Canada has increased by 17 per cent annually, said Zaki Munshi, Asia Project Manager of the Trade Facilitation Office Canada on Thursday. At a conference held by the Viet Nam Chamber of Commerce and Industry (VCCI) and Trade Facilitation Office Canada, Munshi said that the bilateral trade has increased significantly in recent years. According to VCCI, Viet Nam's turnover from exports to Canada reached US$1.31 billion in the first eight months, an increase of 41 per cent over the same period in 2013. The major Vietnamese export products include garments, seafood, footwear and handicrafts. VCCI's HCM City branch Director Vo Tan Thanh said that Canada is a potential market having many similarities with the market in the United States. Meanwhile, Canadian Consul General in the city, Wayne Robson estimated that Viet Nam is among the 25 countries that have been given priority to access the Canadian market. Garment sector urged to tighten operations Garment and textile businesses should assume defensive postures to maintain market share and tighten up operations, as a precaution against decline, said Hoang Ve Dung, deputy general director of the Viet Nam National Textile and Garment Group (Vinatex). A trending downturn in the overall number of manufacturing orders could signify deterioration in the business in 2015, according to the General Statistics Office of Viet Nam. But Dung said the shortage of orders appears temporary, and does not betray a long-term market downturn. Vietnamese garment and textile exports jumped 18.9 per cent in the last nine months to US$15.5 billion, buoyed by growth in traditional markets such as the US, the EU, Japan and the Republic of Korea. Dung's advice to businesses translates to focusing on shoring up weak spots in marketing, boosting trade promotion to existing partners with a view to not losing any customers and keeping a close eye on the company's purse strings. Business plans should be strictly aimed at maintaining the company's existing market share, Dung said. To this end, domestic businesses should become more proactive through participating in public events such as fashion shows and exhibitions. The Vietnamese garment sector is facing fierce competition from Bangladesh, India and Indonesia, which have more material and labour resources. Local garment and textile businesses have been greatly affected by other nations, especially China, which can lower product prices to attract customers. Vietnamese businesses are likely to lose on their home turf in 2015, unable to compete. But these businesses have already started renovating their methods of production from outsourcing activities to Freight on Board and Original Design Manufacturers models, which is a step in the right direction, Dung said. Free trade agreements between Viet Nam and the EU and the Customs Union of Russia, Belarus and Kazakhstan and the Trans Pacific Partnership (TPP) bring hope for the future of the industry. These agreements will open up future opportunities for the sector, but first businesses need to play defence and focus on improving their competitiveness. Hanoi Gift Show 2014 ready for kick-off Preparations have been completed for the Hanoi Gift Show 2014 – the city’s only specialised handicraft and gift fair – as announced by the organising board at a press conference on October 21. The third annual event will last four days from October 27-30 at Vietnam Exhibition & Fair Centre, gathering nearly 300 exhibitors from Hanoi and other localities nationwide including Ho Chi Minh City, Da Nang, Thai Binh, Binh Duong, Dong Nai, Ninh Binh and Nam Dinh. The show will accommodate 700 pavilions in Buildings A1, A3 and D, showcasing five main groups of items: home décor and handicrafts, indoor and outdoor furniture, home textiles and embroidery, gifts and ethnic items, and personal accessories. Over 85% of the booths belong to enterprises with huge export potential, which affirms the status and prestige of the fair, said Dao Thu Vinh, deputy Director of Hanoi Department of Industry and Trade. There will also be a separate display area for the introduction of the prize winning handicraft product models in the design contests held on the sidelines of the show over the past three years, Vinh added. According to Le Ba Ngoc, Vice Chairman and General Secretary of the Vietnam Handicraft Exporters Association (Vietcraft), the 2014 show expects to welcome about 10,000 domestic commercial guests and roughly 600 foreign importers from 30 nations and territories around the world, focusing on major markets including the US, Japan, Australia, EU, Russia, Taiwan (China) and New Zealand. International importers at the show with annual incomes exceeding US$100 million include Ian Snow Ltd, Scotts & Co. and Istok Ltd (Britain); Adonto and Sansiro (Brazil); Overstock and My Spirit (USA); Komeri Co., Ltd (Japan); Gemini Overseas (India) and Home Retail Group (Hong Kong), Ngoc said. He added that some preferential policies will be implemented to support the registered international importers including free visas and guest pick-up at airports, fact-finding tours to Hanoi’s famous craft villages, and free consultations on handicraft-related issues in Vietnam. More than 150 booths will be arranged in Building A3 to exhibit sophisticated and well-designed products manufactured by enterprises in the ‘One Village One Product’ (OVOP) movement, both from Vietnam and other regional countries including Indonesia, Laos and Nepal. The OVOP area has become an important highlight of the Hanoi Gift Show, brining prestige to the export community as well as to international buyers in the previous two editions. This year, OVOP will introduce several unique groups of items in fashion, tourism gifts, flowers and trademark building. Following a ‘Vietnamese Pottery Space’ in 2013, OVOP 2014 will bring participants to a ‘Rattan and Bamboo Space’ with a wide range of both modern and traditional rattan and bamboo handicraft items being displayed on an area of 1,000sq.m. The four-day event, co-organised by Hanoi Department of Industry and Trade and Vietcraft, provides an ideal platform for enterprises operating in the handicraft industry to advertise and introduce products to foreign importers with the aim of expanding markets and seeking new co-operative partners. Vingroup opens shopping centre in Ha Long Vingroup Joint Stock Company (Vingroup) officially launched a shopping and entertainment complex meeting international standards in Ha Long City in the northern province of Quang Ninh on October 19. With four stories and one basement, Vincom Center Ha Long is built on a total area of over 3.7 hectares and is modeled after European royal architecture. The fashion center and supermarket are two other noteworthy facilities at Vincom Center Ha Long. The fashion centre features products of renowned domestic and international brands while the 3,500-square-meter supermarket offers essential goods for consumers. A highlight of the centre is an ice-rink measuring over 1,000 square meters, which can serve up to 100 ice skaters at a time. Other attractions in this new facility include a gaming centre with hundreds of slot machines, a playground for children along and a five-screen movie theater for cinema lovers. Vincom Center Ha Long is the first shopping mall and entertainment centre outside Hanoi and Ho Chi Minh City of Vincom Retail Joint Stock Company under Vingroup. With three Vincom trade centres and two Vincom Mega Malls in Ho Chi Minh City and Hanoi, Vingroup is now the leader in the country’s modern retail business sector. After Vincom Center Ha Long, the group is scheduled to continue to expand its retail system to other cities and provinces, with Hai Phong city and Da Nang city coming in next on the list. VietinBank offers preferential loans to HCMC firms Branches of the Vietnam Bank for Industry and Trade (VietinBank) last Saturday clinched contracts to provide low-interest loans worth more than VND15.5 trillion to 115 enterprises in HCMC. The loan deals were struck as part of the bank-business connectivity program aimed to help companies borrow at preferential interest rates. As part of the program, VietinBank and the HCMC Union of Business Associations (Huba) inked a cooperation agreement over the weekend to support enterprises operating in the city. VietinBank chairman Nguyen Van Thang said the bank’s total outstanding loans for HCMC-based enterprises are VND70 trillion. In the year to date, VietinBank has implemented a dozen of preferential credit packages worth nearly VND230 trillion with the lowest interest rate of 5% applied to corporate borrowers in various sectors. Thang said the packages are expected to offer businesses lending with reasonable interest rates and simplified procedures to recover production and trading activities. Companies in the city had borrowed a total of VND2.5 trillion from VietinBank as of early October, accounting for 17% of the total lending by banks for corporate borrowers under the bank-enterprise connectivity program. At the present, the city government and VietinBank are conducting a number of programs to fuel social-economic development and sales, and aid enterprises in their production and trading plans. SCG Young Leaders 2014 aims to build Vietnam’s future leaders SCG Young Leaders, an annual program initiated by Thailand’s conglomerate SCG, has rolled out the second year with 40 talented candidates who are third- and fourth-year students from top universities in HCMC. This year, its SCG Young Leaders full-day training program taking place early this month carried the topic “How to become a future leader”. This program is aimed to provide participants with fundamental leadership knowledge, opportunities to work with other local and foreign young leaders, and a chance in exchanging experiences in teamwork, delivering presentations and doing tests. Especially, through the Dominance – Influence – Steadiness – Compliance lesson, many candidates understood their ability and knew how to recognize others. It helped these future leaders be more confident in leading staff and exploring their potential. In addition, the Emotional-Intelligent lesson also equipped them with tools to test their strengths and weaknesses as well as have a positive thinking. On this occasion, the participants applied their knowledge via fact-finding activities, and learned SCG’s alumni’s big experiences about how knowledge and skills can become the key driver of success stories. “Being ASEAN’s sustainable business leader, SCG commits to continuously provide study and development opportunities for the young generation, who is vital to Vietnam’s future prosperity,” said Phira Kulkattimas, Corporate Human Resources Director of SCG in Vietnam. He added, “SCG Young Leaders is part of our human resource development strategy, which is aimed to support the development of young talents in the region and give them valuable career opportunities at SCG’s operations across ASEAN.” Started in 2013, SCG Young Leaders has involved the participation of many students. It is one of SCG’s most typical corporate social responsibility programs in Vietnam focused on human resource development, in addition to SCG International Internship, SCG Future Engineers and SCG Sharing the Dream Scholarship for high school students. Luxury condos, villas to go up at Ho Tram Strip Upper-class condominiums and villas will be built at Ho Tram Strip, a mammoth project which groups integrated resort and residential developments on more than 164 hectares of land along a 2.2-kilometer seaside strip of Ba-Ria-Vung Tau Province. Investors of the project made the announcement of the new residential offering at the multi-billion-dollar project in the southern province over the weekend when a golf course called The Bluffs Ho Tram Strip was officially opened. Legendary golfer Greg Norman joined a ribbon cutting ceremony for the course he designed. Harbinger Capital Principal and Ho Tram Strip investor Philip Falcone took the opportunity to announce that the Ho Tram Project Company would be developing condominiums and villas for both international and domestic investors. “This is a chance for everyone to own a piece of the Ho Tram Strip,” Falcone said. Stephen Shoemaker, chairman and CEO of Asian Coast Development Limited, detailed luxury villas and several vacation condominiums will be available for investment, with detailed plans to be announced soon. Open for preview play since early 2014, The Bluffs Ho Tram Strip has already been nominated for three Asia Pacific golf awards, including Best New Golf Course in Asia Pacific, Best Golf Course in Vietnam and Best Golf Course Superintendent (Ali Macfadyen). French company, not Japan, to fund Vietnam airport project A French company, not Japan, would be seeking US$2 billion for a major project to develop an international airport in Long Thanh in the southern province of Dong Nai, according to a Tuoi Tre newspaper report. In an online talk on Long Thanh International Airport project organized last Friday by the Government web portal, Deputy Minister of Transport Pham Quy Tieu said Japan had pledged to provide US$2 billion for the project but shortly after that, the Japanese embassy rejected the information. The embassy said the Japanese government had yet to make an official decision on financing Long Thanh airport project, says the report. Japanese Prime Minister Shinzo Abe did say at a Japan-Vietnam leaders meeting in mid-December last year that Japan would step up cooperation with Vietnam in a number of projects, including Long Thanh airport. Deputy Minister Tieu told Tuoi Tre that the information about Japan’s funding Long Thanh airport project was false. He noted ADPi, a leading airport design firm of France, had promised to arrange commercial loans totaling US$2 billion for the project while Japan had yet to decide on a specific funding amount. Since this is a huge airport project, the Ministry of Transport will be looking for different sources of finance for it. The ministry is calling for private investors to participate in the project. Private investment will be one of the main capital sources for the airport covering 5,000 hectares in the southern province, Tieu told the online talk, which took place one day after the ministry’s press briefing to respond to questions about the feasibility of the project. There would be opportunities for domestic and foreign investors to take part in building terminals and storage and service facilities at the planned airport while the State budget will fund the development of runways and taxiways as well as site clearance and resettlement areas for affected households. Tieu said the State budget is expected to finance some VND85 trillion for the first phase of the project, including less than VND47.86 trillion from official development assistance (ODA) loans. Airports Corporation of Vietnam (ACV), the developer of the airport, would re-borrow ODA loans from the Government, according to him. The first phase of the project is estimated to cost VND165 trillion (more than US$7.8 billion), with Phase 1a in 2016-2023 accounting for over US$5.66 billion and Phase 1b in 2023-2025 requiring some US$2.18 billion. The structure of capital sources for the project, according to aviation expert Luong Hoai Nam, is feasible as with the participation of private investors, calculations related to economic efficiency of the project would be more accurate. Nam said it is not too difficult for the developer to mobilize funds from domestic and foreign investors as a number of foreign investors have expressed strong interest in airport projects in Vietnam. “As far as I know, there are many foreign investors keen on airport projects in Hue, Cam Ranh and Lam Dong,” he said. Regarding concerns about the possibility of the project causing public debt to snowball, Tieu said this is not a big concern as the feasibility of debt payment is high. “Preliminary calculations showed the economic internal rate of return (EIRR) of the airport project would be 22.1% while that of other public projects in Vietnam is 10-12%,” Tieu said. Foreign net selling forecast to ease in Q4 Maybank Kim Eng Securities Company (MBKE) in a recent report projected that foreign net selling would drop in the fourth quarter of this year after foreign investors net sold over VND1.2 trillion on the Hochiminh Stock Exchange (HOSE) in July-September. The brokerage said in the report that the figure was not a surprise as foreigners net purchased a hefty VND5 trillion in the second quarter of this year. Therefore, the strong rise in foreign net sale value in the third quarter was predictable. However, foreigners have net bought over VND4.7 trillion on HOSE since early this year. In comparison to regional markets, the Vietnam stock market remains attractive to international investors, so foreigners are likely to reduce selling in the coming time, it said. MBKE also predicted that the market would maintain a slight rally in the coming time. Aside from the possible fall in foreign net selling value, cyclical factors showed that the market usually moves up in the last quarter. As observed by MBKE, the market advanced in the last quarter of 2012 and 2013. In addition, the market since 2012 has seen an growth outlook in medium to long terms with an average growth rate of around 23% annually. Since early this year, the VN-Index has gained 18.6%, including 3.6% in the third quarter. If the VN-Index maintains the same growth rate as in previous years, the main index would still increase 4-5% in the last three months of this year. However, the market may continue its correction since early September before picking up, MBKE said. MBKE also predicted that listed enterprises would report better earnings results in the coming time, especially those in the fields of oil and gas, seafood, consumer goods and real estate (medium-class segment). In addition, the stock market remains a more attractive investment vehicle than bank deposits, gold, foreign currency and real estate. Banks are now offering mobilization rates in Vietnam dong from 5.5-6.5% per annum and may maintain the low levels in the future. For foreign currency, the dong-U.S. dollar increased sharply at both official and unofficial channels in the last days of the third quarter but the central bank has not taken major steps to adjust the exchange rate given strong foreign reserves and trade surplus. The firm noted that the real estate market is recovering slowly. “This is not a profitable investment vehicle for us,” it said. Vietnam not subject to Toyota recall program Japan’s automaker Toyota has announced to recall 1.75 million autos on global markets to check and fix a brake-related fault and other technical issues, but there are no cars in Vietnam subject to the recall program. Toyota Vietnam said in a statement that the recall program is not applicable to the Vietnamese market as the autos to be recalled, including luxury models Lexus and Crown Majesta, have not been imported by the company for sale here in the local market. Toyota Vietnam said it has officially imported Lexus cars into Vietnam for less than one year but these units are not entitled to the recall program. According to Toyota, a technical fault has been found at the brake system of over 802,000 Lexus and Crown Majesta autos manufactured in Japan and China from June 2007 to June 2012. The defect could lead to a reduced performance of the brake. The Japanese automaker will replace a rubber part in the brake system to prevent brake oil leaks. If the leak has already happened, the company will replace the brake booster in the system. For the other 759,000 autos of the recall program, the company has detected a technical fault at the fuel line which might cause fuel leaks and lead to fire risks. This fault has been found in the Lexus cars produced from January 2005 and September 2010 for the United States, Japan, Europe and the Middle East. Toyota is also recalling about 109,000 Corolla Rumion and Auris units made in Japan from October 2006 to October 2014 for checks and equipment replacement if necessary. So far, the car manufacturer has not received any claims about the accidents related to the above-mentioned faults. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR