BUSINESS IN BRIEF 8/3 Nghe An to develop key economic areas The central Nghe An province will build three key economic zones that are expected to accelerate the local socio-economic development, according to the provincial department of planning and investment. Accordingly, these economic areas will comprise Vinh City, Cua Lo Town and the southeastern districts along with the southern area of Nghe An and the neighbouring Ha Tinh Province's northern area; the Hoang Mai–Quynh Luu area, the southern area of Thanh Hoa Province and the northern area of Nghe An; and western Nghe An, with the centre being Nghia Dan District–Thai Hoa Town–Quy Hop District. To successfully implement these economic models, the province has so far determined the functions, position and demands for investment in these areas and has focused on planning as approved by the government. The province is also working hard to study and build mechanisms and policies related to land rent, site clearance, capital and technical assistance, among others to attract investors to projects, and to facilitate enterprises and people to effectively make use of the advantages and potential of the projects. In addition, Nghe An will focus on thoroughly realising its functions towards the north-central region and the whole country, making full use of the potential and strengths of other localities; exploiting regional markets to facilitate regional development; and coordinating with Thanh Hoa and Ha Tinh provinces to create the so-called regional linkage for mutual assistance and development. According to the development scheme, Vinh City will be upgraded into a central hub of the north-central region in terms of finance, trade, tourism and science and technology, as well as information technology, hi-tech, health and culture, besides sports and education and training. Meanwhile, Cua Lo Town will be the spearhead and development axis, and industrial zones in this economic area will develop multi-sectoral and multi-functional industries, concentrating on electronics, automobile manufacturing, industrial and hi-tech machines and devices, and pharmaceutical production. To that end, the districts of Hung Nguyen, Nam Dan and Nghi Loc in the vicinity will become significant satellites connecting Vinh City and Cua Lo Town. The Hoang Mai – Quynh Luu economic area aims to develop the Hoang Mai and Dong Hoi industrial zones, focusing on key industries such as cement, thermo-electricity, steel refining and construction materials, besides mechanics, chemicals, seaports and sea tourism, as well as recreational tourism, aquaculture and seafood fishing and processing. The western Nghe An economic area will develop the Nghia Dan hi-tech zone with the aim of developing the regional economy, focusing on advantageous products such as forest produce, rubber, tea and sugarcane, as well as livestock, hydroelectricity, meat processing and mineral exploitation, besides processing; and on exploiting and processing tin, ashlar paving stones and white stone powder to meet the national demand and for exports. Rice exporters worry as competition grows Vietnam's rice exports have dropped sharply in value after Thailand began dumping surplus grain on the market, China placed restrictions on imports, and India and Myanmar cut their prices. Market share is being eroded due to cheaper rice from Thailand, which is running down its inventories, with Vietnam having lost 60 percent of its Africa market. Vietnam has had to cut prices to USD375 and USD350 a tonne, depending on grade, but the Vietnam Food Association (VFA) is optimistic. Prices are now USD30 a tonne lower than Thailand, and Vietnam can regain market share in Africa. VFA secretary Huynh Minh Hue said exports for early February stood at 270,000 tonnes of rice, down 35 percent for the same time last year, with first quarter exports expected to total 800,000 tonnes. "This is quite a modest number," Hue said. "Usually, we can export as much as 1.4m tonnes in the first quarter." Compounding the problem of falling prices is concern about a decline in orders from major customers in China. In 2014, Vietnam exported 2.1m tonnes of rice to China, accounting for 30 percent of the country's total rice exports. It sold a further 1.5m tonnes in unofficial border trade. But China is cracking down on this unofficial market , one trader saying the border has been closed to rice since July. China has not yet set a rice import quota. The VFA anticipates China will import 4m tonnes this year, but has already signed a 2m tonne contract with Thailand, and Myanmar is expected to be a supplier. "Aside from Thailand, the China market will be shared between Vietnam, Myanmar, Pakistan and Cambodia. We'll lose huge market share there, so we need to increase exports to Africa," Hue said. The Centre for Agrarian System Research and Development said that stockpiling was not an option for Vietnam, as the government does not buy rice directly from farmers but through traders, who would have to lower their offer prices to cover additional costs. HCM City SMEs need support to borrow from banks Leaders of businesses in HCMC, particularly small and medium enterprises (SMEs), have asked the government of HCMC for support to gain easier access to bank loans and enjoy low land and factory rentals. Hang Vay Chi, general director of Viet Huong Joint Stock Company, told a meeting between the city’s leaders with 120 businesses yesterday that it was hard for SMEs to borrow from banks. He proposed the city establish a fund for SMEs with 10-20 employees each and help them find land and factory space at low rents. Huynh Van Minh, chairman of the HCMC Business Association, warned that SMEs will have to cope with more challenges between now and 2020 when Vietnam fulfills its commitments to more bilateral and multilateral trade agreements. Besides the financing issue, Minh called for the city government to improve the quality of human resources and further simplify administrative procedures to assist enterprises in better dealing with challenges from the nation’s further integration into the regional and global economies. Minh suggested that in the long term the city should open a business school to develop human resources for enterprises. Banks said they do not lack capital to lend to enterprises but borrowing from banks is tough for enterprises, Minh said. He pointed out the low disbursement rate of 10% of the VND30-trillion home loan package in the past year as a case in point. Nguyen Xuan Han, general director of Phu Nhuan Services Joint Stock Company (Maseco), said domestic enterprises are struggling to survive and retain market share on both home and overseas markets. More Vietnamese brands have fallen into the hands of foreign firms. Therefore, Han said local enterprises are in dire need of more supporting policies and easier procedures from the Government to ride out the challenges arising from the country’s deeper integration. Han bemoaned that it took him nearly four months to complete procedures and get certification from seven to eight agencies for renewing his APEC business card. “I think procedures remain too complicated and make life hard for businesses,” he said. Le Thanh Hai, secretary of the HCMC Party Committee, told the meeting that a host of challenges will be ahead this year, so enterprises should prepare for that. He stressed the city government will try to improve the business environment. HCMC’s vice chairman Tat Thanh Cang said the city is set to reduce the time for enterprises to prepare, file and pay taxes to 121.5 hours a year in 2015 from the 167 hours last year, insurance payment to 49.5 hours from 108 hours, customs clearance to 13 days from 14 days, and business startups to a maximum of six days. HSBC predicts further OMO rate cut soon HSBC Bank said that there is room for another 50-basic-point cut in the open market operations (OMO) rate and that this could come this week as the headline consumer price index (CPI) is projected to stay below 1% until August. In a report released on March 3, the bank said that inflation fell further close to zero. In February, it rose a meager 0.3% year-on-year, a slowdown from an already low January figure of 0.9%. While this does not raise concerns regarding the health of the economy, as it was primarily due to the sharp drop of transportation costs, the question of a rate reduction looms. Inflation is likely to hover between 0% and 1% in the next five months before rising to 2.8% year-on-year by the end of this year. Therefore, the central bank can create looser credit conditions by lowering the OMO rate by 50 basic points to 4.5% to lower funding costs, it said. In addition, even as inflation gradually edges up in the coming months, the favorable base effect and lingering impact of a lower oil price will keep price pressure subdued. Inflation will gradually trend upward in the second half on higher social spending costs, a potential electricity hike, stronger economic activity and an unfavorable base effect. Thus, in the short term, headline inflation should remain subdued. Even when they rise, they are still expected to remain well within the Government’s target of less than 5% for 2015. The bank forecast year-end inflation would be 2.8% year-on-year, a sharp rise from the current 0.3%. Explaining the modest OMO rate cut, HSBC said there are plenty of risks for the central bank to be cautious. Oil prices are volatile. The U.S. Federal Reserve is likely to hike rates this year and coupled with this, demand remains firm and there is an unfavorable base effect waiting in the second half of this year. The bank said Vietnam has ‘good’ deflation, which means most of the decline is due to an oil supply shock rather than a demand weakness. This means that the economy should feel an income boost in the last six months, as it pays less for oil. Already, the oil balance turned positive in February and is only marginally negative year-to-date (US$17 million). Both the fall of input prices and relative labor cost competitiveness has helped the manufacturing sector rising since September 2013. Despite sluggish external demand – new export orders contracted in February – the manufacturing Purchasing Managers’ Index (PMI) inched up to 51.7 in February from 51.5. HSBC expects output to remain robust as new orders exceed inventories. Doosan Vina ships first pressure vessels to Nghi Son project Doosan Vina’s Chemical Processing Equipment shop last week made its first shipment of high-tech pressure vessels in the Year of the Goat to the petrochemical refinery project Nghi Son, which is now under construction in the northern province of Thanh Hoa. The first shipment to the Nghi Son refinery and petrochemical (NSRP) project included 19 high-tech pressure vessels with a combined weight of 210 tons. The first batch took eight months to be completed and the largest tank of the shipment was 4.48 meters in diameter and 19 meters long, and weighed over 36 tons. The company said loading the high tech pressure vessels at its dedicated port in the Dung Quat Economic Zone in the central province of Quang Ngai took a day and the journey to the Nghi Son refinery and petrochemical complex in Thanh Hoa is scheduled to take five days. The NSRP project was signed in March last year for 30 high tech pressure vessels. Work commenced on the US$9-billion Nghi Son project covering 400 hectares in the Nghi Son Economic Zone in October 2013. Its main products include high octane unleaded gasoline, fuel oil and bitumen, and petrochemical products such as polypropylene and polyethylene terephthalate (PET) and associated feedstock. Local firms boost fuel imports as global prices up Domestic fuel trading firms have stepped up imports in anticipation of higher profit as global oil prices are recovering. A fuel wholesaler in the southern region told the Daily on March 3 that fuel prices in Singapore have inched up several U.S. cents per barrel a day in the past days. The average 15-day price, from February 17 to March 3, increased remarkably against that of 15 days earlier. “The base prices of gasoline and diesel, based on import prices, tariffs and other charges, were VND2,700 per liter and VND1,500 per liter higher than retail prices respectively,” said the wholesaler. He added retailers have purchased more fuels than usual as they predicted that retail fuel prices on the domestic market would rise soon. The retail prices are adjusted by the ministries of finance, and industry-trade in a period of 15 days. On February 24, the ministries decided to use the country’s fuel price stabilization fund to keep domestic retail prices unchanged despite rising import prices. VND1,350-2,448 per litter/kilogram is soured from the fund to cover the differentials. As scheduled, the ministry may adjust up fuel prices on March 10. Fuel imports and oil exports decline in Jan-Feb * Turnover from fuel imports and crude oil exports fell strongly in the first two months of this year, but budget collections via the customs from these sources remained stable. The General Department of Customs reported that Vietnam exported 1.62 million tons of crude oil worth US$604 million in January-February, up 37% in volume but down 41% in value against the same period last year. Meanwhile, the country imported nearly 1.3 million tons of fuels valued at US$621 million, down 7.6% in volume and 52.2% in value year-on-year.    The report also showed that VND37.46 trillion was collected for the State budget from fuel imports and exports, meeting 14.4% of the year’s target and up 8.4% over the same two months of last year. For foreign trade, the department said, the country’s imports and exports totaled US$46 billion in the first two months, rising by 12.3% year-on-year. Of which, exports accounted for US$23 billion. Phone and component exports topped the list with turnover of US$4 billion, up 15% year-on-year, followed by apparel with over US$3.4 billion and footwear with some US$1.9 billion. In January-February, imports of machine and equipment increased nearly 48% year-on-year to US$4.52 billion; computers, electronics and components by 32% to nearly US$3.3 billion; and phones and phone parts by more than 26% to over US$1.5 billion. E-commerce sites attract more corporate clients Local e-commerce websites have reported transactions of higher value thanks to the participation of more enterprises. More business to customer (B2C) deals have been carried out via popular e-commerce sites such as vatgia.com, chodientu.vn, 5giay.vn and enbac.com this year. Previously, trading on those sites was mainly customer to customer (C2C) oriented. Phan Quy Long, head of the goods management department of chodientu.vn, said the e-commerce site has more than five million accounts and more than one million accounts have posted products for sale on the site. On chodientu.vn, the number of C2C transactions is higher than those for B2C. However, the trading value registered by B2C deals has increased strongly and accounted for more than half of the total, he said. The number of enterprises selling products on other sites, including 5giay.vn, vatgia.com, enbac.com have also surged, leading to transaction value increases on those sites. Nguyen Ngoc Diep, general director of Vietnam Price Joint Stock Company (vatgia.com), said the increase in B2C transactions has helped the company post a total trading value of around US$1 million along with one million hits a day. Listed firms seek investment equality Listed companies will receive less foreign capital than those that are not listed unless the Government approves a policy to allow foreign investors to purchase more domestic shares, Dau Tu Chung Khoan Magazine reported on Wednesday. This is the challenge for listed companies which have comparative advantages in liquidity and follow the rules on information security compared to the non-listed. Last year, foreign investors spent a lot to buy shares in non-listed Vietnamese companies - and they will continue their expansion this year. In December, International Dairy Products (IPD) sold 70 per cent of its shares, worth US$45 million, to Daiwa PI Partners, a Japanese corporation, and VinaCapital Corporation. VinaCapital recently said it planned to buy 2 million shares, equal to 2.6 per cent of ownership, of the Quang Ngai Sugar Joint Stock Company. In addition, the Thai Berli Jucker Corporation (BJC) is planning to buy 40 per cent of shares in the Saigon Beer-Alcohol-Beverage Joint Stock Corporation (Sabeco). BJC offers Sabeco a price of VND80,000 per share, which was 60 per cent higher than the current Sabeco's stock price on the market. Experts said that foreign investors would have more investment opportunities when Viet Nam opens its market to match the WTO's rules - and follows other free-trade agreements. According to the head of a Japanese company in Viet Nam, foreign investors are seeking to make investments in Vietnamese companies, as they aim for control over those companies once the investments are completed. It is impossible for them to control listed companies as current regulations only allow them to own a maximum of 49 per cent of company's shares. Foreign corporations also make investments in non-listed firms as they do not want to lag behind competitors in highly potential fields including food and beverage production. Furthermore, the ASEAN Economic Community, which will be founded at the end of this year and the Tran-Pacific Partnership (TPP), which is expected to be signed by the end of the first half, will also help turn Viet Nam into a good business environment for foreign investors. Firms urged to give staff incentives Vietnamese companies need to improve the quality of their human resources to compete with their rivals in an increasingly globalised world, vice president of Human Resources Department of Unilever Viet Nam Nguyen Tam Trang said yesterday at an awards ceremony to honour the100 Viet Nam Best Places To Work 2014. "Companies need to train staff thoroughly in both skills and career ethics so we can have more results in future," Trang said, adding that the Vietnamese workforce was second to none but younger compared to many other countries. The survey of the best places to work was conducted online by Nielsen, a global market research firm, from October 2014 – January 2015 with 15,578 respondents working in 24 industries nationwide. The ceremony was organised by Nielsen and Anphabe, the biggest career network of management professionals in Viet Nam. Unilever was voted as best place to work across industries for two consecutive years (2013 and 2014). It was also considered the most attractive employer brand in terms of growth opportunity and company reputation. Trang said Unilever's training programmes include Leaders Grow Leaders, which focuses on staff helping other staff. "Key to success is to always consider human resources as most valuable asset of a company and the commitment to grow and retain them," she said. Vu Minh Tri, general director of Microsoft Viet Nam, said that attracting top talent was a key to success since people would grow with business success. Tri said salary was not the only factor that attracted top talent. Companies should target a specific talent pool, he said, and offer a healthy competitive environment and support employees' career paths. The ceremony honored the top companies in their respective fields, which were Nike in apparel/footwear, HSBC in banking/finance, Prudential in insurance, Holcim in manufacturing and Cargill in agriculture/food/forestry. Vinamilk was voted as the best employer in the categories of rewards and work/ life quality. Intel received the award for best performance in the culture and values category, and Microsoft in the leadership category. Compared to 2013, more Vietnamese enterprises were listed in the top 100 (20 companies compared to 14 last year). VinGroup ranked at the top in real estate and VietJetAir in hospitality/tourism. Some Vietnamese companies jumped to higher spots, including Viettel (from 25 to 14), Techcombank (from 74 to 24) and ICP (from 93 to 75). Other brands had high rankings despite being included for the first time, Mobifone (12), PNJ (41) and The gioi di dong (57). Employers in healthcare and dairy manufacturing companies became more attractive, such as Vinamilk (from 3 to 2), Abbott (from 6 to 4), Nutifood (32, first time in the top 100), Sanofi (from 73 to 59), and Mead Johnson Nutrition (from 92 to 73). Working professionals have also become more demanding when choosing a workplace that aligns with their career objectives. In six career drivers, the Total Rewards category was the most important. Compared to last year, employees were less demanding in base salary or bonuses, and instead focused on benefits. Leadership and company reputation were considered as top career drivers since they can lead a company through hardship and guarantee employees' job security. When applying for jobs, employees said they were concerned about leadership, attractive benefits, inspiring vision and clear strategy. If employers do not satisfy their employees in competitive base salary as well as fairness and respect, they will leave. In order to attract and retain talent, companies should offer remuneration to meet talents' diverse needs. Companies told to target BoP market The "Base of the pyramid" (BoP) consumers, considered the largest, but poorest socio-economic group, should also be regarded as customers from a business perspective, and enterprises should focus on this market. The statement was made by Curtis Peterson, director of the Pears Programme for Global Innovation of Tel Aviv University, at a seminar held yesterday in Ha Noi. BoP is the socio-economic segment that primarily works and lives in the informal community. The BoP market is the traditional targeted beneficiary of international development efforts. Peterson said that out of the 6.5 billion global population, 4.9 billion live in the BoP group with an annual income of US$3,000. Among them, 3.1 billion earn less than $2.5 per day and 1.4 billion earn less than $1.25 per day. In Viet Nam alone, he estimated that people earn $2,000 per year with an average income of $5 per day. "About a third or half of the Vietnamese people live at the base of the pyramid. With its population of 90 million, the market is large because the BoP group accounts for 39 million," he stated. The difference between BoP and traditional businesses is of critical value to customers, impacts products and services, and also drives growth in the business. Peterson emphasized on the importance of partnerships. He said small and medium-sized (SMEs) in Viet Nam should partner with other businesses to take advantage of their scale and to expand their business. The enterprises should also provide a high volume of products to sell to the BoP group, because the revenue earned is smaller, he added. Peterson pointed out that Israel, with its strength of technology, will be willing to support Vietnamese enterprises to develop products for the BoP market. Luu Duc Khai, director of the Rural Economic Development Policies Department under the Central Institute for Economic Management, said Viet Nam's poverty reduction rate has fallen remarkably, but falls in the same scale in the region. "The BoP market in every region is not the same. The northern part of Viet Nam has the highest number of poor people," he said, suggesting that the government formulate policies to develop microfinance that contributes to reducing poverty and increasing annual income for households through credit provisions. Khai also said enterprises need to take the lead in terms of technology and market, and share risks with their partners. The seminar was organised by the Embassy of Israel in Viet Nam in cooperation with Vietnam Chamber of Commerce and Industry (VCCI) - Can Tho branch. Denmark to become trade partner After signing numerous cooperation agreements with Viet Nam, Denmark is quickly becoming a potential trade and investment partner of the country, paving the way for enterprises to promote exports, vietnamplus.vn reported. The online newspaper quoted the Ministry of Industry and Trade as saying that Denmark has been implementing trade liberalisation policies to create favourable conditions for foreign enterprises to enter its market. Looking forward, Danish enterprises plan to visit Viet Nam to seek partners in agriculture and food, and uncover additional collaborative opportunities between the two countries. According to data from the Ministry, bilateral trade between the two countries raked in US$479 million in 2014, providing Viet Nam with total export revenue of $303 million, an annual increase of 13.2 per cent, from its key exports: garments, footwear, wooden furniture and electricity appliances. VPBank and VCCI to help SMEs VPBank and the Viet Nam Chamber of Commerce and Industry (VCCI) on Wednesday signed a strategic cooperation agreement to support small and medium-scale enterprises (SMEs). The two will help improve SMEs' competitiveness and access to banking products and services in the modern business environment. As per the agreement, the two sides will also collaborate in five sectors, including information exchange, professional training, organising conferences, business consultancy and brand name development. The bank's representative said it is aiming to become one of the leading banks of the country, and provide the best financial services to SMEs during the next five years as these businesses are imparting crucial momentum to the economy. Vinacomin earns $737m The Viet Nam National Coal and Mineral Industries Group (Vinacomin) reported total revenue of VND15.7 trillion (US$737 million) during the first two months of 2015, vietnamplus.vn said. During the period, the group produced 6.4 million tonnes of rough coal, equivalent to 15.7 per cent of the annual target and sold 4.8 million tonnes of coal, achieving 12.7 per cent of its target. The group aims to produce 40.8 tonnes of coal this year, with consumption expected to be 38 million tonnes. Of the total, coal exports will amount to 3 million tonnes, while 35 million tonnes will be allocated for domestic consumption. Vinacomin also aims to earn more than VND114 trillion ($5.3 billion) in revenue. VPBank and VCCI to help SMEs VPBank and the Viet Nam Chamber of Commerce and Industry (VCCI) on Wednesday signed a strategic cooperation agreement to support small and medium-scale enterprises (SMEs). The two will help improve SMEs' competitiveness and access to banking products and services in the modern business environment. As per the agreement, the two sides will also collaborate in five sectors, including information exchange, professional training, organising conferences, business consultancy and brand name development. The bank's representative said it is aiming to become one of the leading banks of the country, and provide the best financial services to SMEs during the next five years as these businesses are imparting crucial momentum to the economy. Can Tho aims for $1.45b in exports The Cuu Long (Mekong) Delta city of Can Tho will accelerate exports for eight major products in an attempt to reap an export turnover of US$1.45 billion this year, according to the municipal Department of Industry and Trade. These eight reviewed items are rice, seafood, processed agricultural goods, textile and garment, pharmaceuticals, leather, feathers, fine arts and handicrafts. The city earned $147 million from exports over past two months, down 5.8 per cent year-on-year, with several exports recording turnover decreases, such as handicrafts (down 64.7 per cent), rice (down 13.2 per cent) and seafood (11.2 per cent). Agro-forestry-fish exports decline 1.9% Viet Nam's exports of agricultural, forestry and fisheries products reached US$1.78 billion in February, taking the sector's total export value in the first two months to $4.177 billion, a year-on-year decrease of 1.9 per cent. According to the Ministry of Agriculture and Rural Development, the export value of major farm produce was $1.87 billion, down 5.3 per cent. Fisheries exports reached $907 million, a decrease of 9.4 per cent. Bucking the trend, the export value of forestry products increased year-on-year by 7.9 per cent to $989 million. Rice export volume in February reached 200,000 tonnes with a value of $90 million, pushing figures for the first two months to 526,000 tonnes and $243 million respectively. This marked year-on-year decreases of 33.1 per cent in volume and 34 per cent in value. February's coffee shipments reached 110,000 tonnes for an export value of $230 million, taking the first two months' total to 242,000 tonnes and $511 million. Germany and the US continue to be two largest importers of Vietnamese coffee. Rubber export stood at 137,000 tonnes for nearly $202 million, marking a 30.5 per cent growth in volume but a 6.3 per cent decrease in value over the same period last year. In January this year, average rubber export prices reached $1,423 per tonne or a year-on-year decrease of 31.27 per cent. Tea exports for the first two months declined 3.3 per cent, but value went up 5.1 per cent year on year. In February, tea shipments of 6,000 tonnes were worth $10 million, taking the total of first two months to 16,000 tonnes and $28 million. In the first two months, pepper exports reached 22,000 tonnes for an export value of $199 million, a year-on-year reduction of 8.7 per cent in volume, but a 24 per cent growth in value. Cashew kernel is the only produce that saw growth both in volume and value. Cashew kernel export volumes for the first two months reached 36,000 tonnes for a value of $261 million tonnes, year-on-year increases of 14.2 per cent and 36.8 per cent respectively. LVI to expand investments in Laos in 2015 Lao-Viet Insurance Joint Venture Company (LVI) has revealed plans to expand its operation in Laos during the course of 2015 by establishing more branches in key regions and increasing its chartered capital by $5 million, according to LVI’s general director Pham Duc Hau. Besides, LVI targets to boost total revenue to $14.5 million as well as pre-tax profit to $1.6 million and make positive steps in keeping abreast with Lao leading insurer, Allianz General Laos. According to the plan, LVI will establish a new branch in Pakse province, equipped with an online insurance office and a customer service centre while simultaneously issuing more shares for the Association of Vietnam Investors in Laos to create connection with Vietnamese corporate projects running in Laos. “Laos is considered a potential environment for insurance firms due to its rapid growth. Notably, in 2007, this country’s total premium revenue was $21 million. The figure increased to $80 million in 2013 and is forecasted to reach $135 million this year,” Hau added. In 2008, the Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (BIC) cooperated with the Lao-Viet Joint Venture Bank (LVB) and the Banque Pour Le Commerce Exterior Laos to establish the LVI -the first foreign insurance joint venture by a Vietnamese company with a total chartered capital of $3 million. In 2013, BIC purchased the entire LVB share volume to own a 65 per cent stake in it. During the 2012-2014 period, LVI has become one of the two biggest insurance companies in Laos, producing impressive growth in terms of basic financial ratios reporting an average of 38 per cent annual premium revenue growth and pre-tax profit growth of 71 per cent per year. In 2014 alone, LVI’s total premium revenue hit $11.5 million with pre-tax profits of $1.36 million, an increase of 28 per cent and 82 per cent on year, respectively. Lotte buys controlling stake in Ho Chi Minh City’s Diamond Plaza: media South Korean conglomerate Lotte has replaced a compatriot company in the joint venture that owns the Diamond Plaza trade center in downtown Ho Chi Minh City, a Vietnamese newswire reported Thursday. The 20-story building is now operated by a joint venture between Vietnam’s Construction Corporation No.1 (CC1) and Lotte, instead of the Posco Engineering & Construction Co. (POSEC), The Saigon Times Online quoted Lotte’s chairman Shin Dong Bin as saying on Wednesday. Shin revealed the move during a meeting with Ho Chi Minh City’s chairman Le Hoang Quan, where they discussed several investment plans, including the construction of a US$2 billion Eco Smart City, the South Korean company is eying in the southern Vietnamese metropolis. In August 2000 CC1 and POSEC, a subsidiary of South Korean steel making giant POSCO, inaugurated the $60 million Diamond Plaza in one of the prime locations in District 1. The complex of office buildings, apartments, and trade centers is situated at the Le Duan – Pham Ngoc Thach intersection, facing the back of the iconic Saigon Notre-Dame Basilica. The prime location enables Diamond Plaza to attract famous brands to its trade center, as well as big companies to hire its offices. The Lotte chairman said his conglomerate had acquired 70 percent of the building, but refused to elaborate on how much it had paid Posco. The Saigon Times Online said the partnership transfer has been confirmed by reliable sources. The newswire, however, cited an authorized source from the city’s Department of Planning and Investment as saying that the department had yet to receive any official file on the issue. Lotte’s acquisition of the controlling stake in Diamond Plaza is seen as another step in its plan to penetrate further into the Vietnamese real estate market, particularly the commercial property sector, through mergers and acquisitions. In April last year, the five-star Legend Saigon hotel that faces the Saigon River in District 1 was renamed Lotte Legend Saigon, much to the public’s surprise. Lotte reportedly acquired a 70 percent stake in the 283-room hotel from Japan’s Kotobuki in 2013 and became its largest shareholder,The Saigon Times Online said, citing sources with knowledge of the matter. The South Korean conglomerate is also likely to acquire local supermarket chains. Pico Plaza in Tan Binh District has recently been turned into Lotte Mart even though the company did not release any official information on the change. Lotte had previously turned a Pico Plaza in Hanoi into one of its supermarkets, according to The Saigon Times Online. Vietnam Airlines aim high in post-equitisation period The national flag carrier Vietnam Airlines is set to pursue an ambitious plan to rapidly grow into a regional heavyweight player in the near future. Accordingly, in light of its development strategy orientation for 2015-2018, apart from retaining its pole position in the domestic aviation industry, Vietnam Airlines has also set the goal of gaining a dominant share in the Mekong sub-region. Specifically, during 2015-2018 the company aims to transport about 84.9 million passengers, signifying a 16.1 per cent planned annual growth and 0.976 million tonnes of freight, a planned increase by 13.9 per cent. Total revenue is expected to hit VND383.6 trillion ($17.9 billion), with VND293.6 trillion ($13.7 billion) to come from the parent company and post-tax profits as a share of its consolidated average equity (ROE) rate to reach 7.13 per cent. “These targets, if approved by the shareholders at the upcoming general shareholders meeting (GSM), would post a remarkable challenge to Vietnam Airlines, demanding the company to create breakthroughs in development in the last two years of the three-year plan. Its top priority tasks in the near term should be striving to halt its share going downward in the domestic transportation market and boosting efficiency of strategic international routes,” commented a company shareholder. Besides business plan, in the upcoming GSM slated to take place on March 12, the company plans to seek shareholders’ approval to sell two Boeing 777-200ERs which have been in use since 2003. This is part of the company’s efforts to comprehensively restructure its (aviation) fleet to ameliorate service quality, striving to achieve the vision of growing into a four-star player within this year. This year has also seen Vietnam Airlines spending a huge sum reaching up to VND22.9 trillion ($1.07 billion), its biggest ever amount of annual investment to date, aimed to facilitate the company’s restructuring efforts. As a frame of reference, this figure is approximately 2.4 times the amount spent during the 2014 financial year. Most of this sum will be turned to the purchasing of seven modern aircrafts, specifically three A321s and four Boeing 787s. Source : VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR