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BUSINESS IN BRIEF 30/4
The Ministry of Agriculture a nd Rural Development has
recommended that the State's budget concentrate on developing infrastructure
and logistic facilities for five regional fishery centres along the
Vietnamese coastline.
The five centres are located in coastal provinces of Khanh
Hoa, Ba Ria Vung Tau, Kien Giang in the South,
The recommendation was made at an online conference between
Deputy Prime Minister Vu Van Ninh and concerned localities to discuss
Government Decision 67. The decision set goals for the development of
Deputy minister of MARD Vo Vam Tam said 22 cities and 28
provinces directly under the umbrella of Decision 67 had finished compiling
their lists of eligible recipients for financial support to upgrade their
fishing boats. Commercial banks committed VND243 billion (US$11.5 million) to
upgrade 28 of the fishing boats with mortgage term of 11 years and
disbursement rate from 60 to 95 per cent.
Fishermen from 21 of the 28 coastal communes in Viet Nam
bought insurance policies for their boats, equipment and personal accidents
with total amount up to VND2,700 billion ($127.4 million).
The country's effort to build a full fleet of steel-hulled
fishing boats is on the right track with more than 50 per cent of the planned
fishing boats getting steel-hulls and 60 per cent with more than 800hp.
However, a MARD report indicated that there were limitations
to the programme and issues with the current policy.
A number of localities and fishermen experienced difficulty
with the administrative procedures required to secure the upgrade funds for
their boats.
There have been complaints by fishermen that there were so
many legal documents that it made it almost impossibly difficult to follow
them all.
Some localities are blamed for failing to co-ordinate efforts
and implement supporting policies to boost the development of local fishing
industries. Others said they were simply waiting to learn more about what to
do before taking steps by themselves.
Issues with current credit policies also arose. Some credit
policies offered interest rates at 7 per cent to fishermen but involved too
many administrative procedures that it discouraged many from taking advantage
of the deal.
Other fishermen weren't eligible for a loan unless they agreed
to upgrade their boat engines even if they only wanted the loan to purchase
or upgrade fishing equipment.
MARD made several recommendations to improve the effectiveness
of policies aimed at boosting the fishing industry, like granting loans
without the engine-upgrade requirement if the boat already has at least
400hp, and designing a variety of boat models more compatible with
traditional fishing practices.
VASCO starts Can Tho - Da Lat flight
The Vietnam Air Services Company (VASCO) will launch a new
flight route connecting the southern Can Tho Province and the central
highlands city of
Vasco and Vietravel inked a partnership with the governments
of Can Tho and
Vu Duc Bien, deputy director of VASCO, said it would operate
its 65-seat ATR72 aircraft on two flights a week on Thursday and Sunday
during the first period and increase the fight frequency based on demand.
Bien said it currently took one hour and five minutes for the
flight between Da Lat, an attractive tourist destination in the Central
Highland region, and Can Tho City, the tourist and economic hub of the Mekong
Delta.
The route will help save much time for visitors. According to
the Deputy Chairman of the Lam Dong People's Committee, Nguyen Van Yen, his
province received more than 1 million visitors from the southern provinces
each year. Without a flight, they must spend more than 12 hours on a bus
between the two destinations.
The international airport in Can Tho received more than
1,05,279 passengers in the first quarter of 2015, reflecting an increase of
64 per cent over the same period last year. The new route is expected to
boost the development of tourism, as well as help facilitate the transport of
fruits and vegetables between the two provinces.
As the flight operator, Vietravel, would book at least 40
seats on each flight, while the last 25 seats would be sold at a promotional
price of VND990,000 (US$45.8) for a one-way ticket.
With two decade-long operational experience, VASCO currently
operates in passenger transportation on routes from
Life insurance records strong growth in first two months
The Vietnamese life insurance segment recorded a strong growth
in total premiums, total value of new business and contract numbers in the
first two months of this year, implying the beginning of the economic
recovery.
Growth rates averaged around 6.03 per cent on year in the
first quarter, a five-year record high, showed a recent report by the
Insurance Supervisory Authority (ISA) under the Ministry of Finance.
The segment’s total value of new business (VONB) soared by 44
per cent on year to VND1.249 trillion ($59.47 million) between January and
February, when life insurance companies signed 179,828 contracts.
Mixed insurance accounted for 43 per cent of total revenues,
while investment-linked insurance, Term Life Insurance and pension insurance
made up 39.89 per cent, a growth of 4.74 per cent and 0.64 per cent,
respectively. Other services including whole life insurance, pure endowment
insurance and annuity insurance accounted for 1.2 per cent.
Industrial insiders attributed the strong growth in VONB
between January and February to efforts exerted by top insurers to maintain
their market share and positive business results among the wave of newcomers.
The launch of a strategy to introduce new products among insurers in late
2014 has also contributed to the growth.
Prudential, Manulife, Dai-ichi, Hanwha Life,
In terms of new business market share, Baoviet Insurance took
the lead with 23.11 per cent, followed by Prudential with 22.1 per cent,
Manulife 12.26 per cent, AIA 10.43 per cent, Dai-ichi 9.35 per cent, Generali
6.33 per cent, ACE Life 4.18 per cent, Hanwha Life 3.29 per cent, Prevoir
2.09 per cent, PVI Sun Life 1.58 per cent, Aviva 0.79 per cent and Cathay 0.7
per cent. (we could make this into a table?)
Hanwha Life Vietnam saw its value of new business grow by 126
per cent, to nearly VND50 billion ($2.38 million) in the first two months,
while Generali Vietnam’s premiums rose by nearly 300 per cent on year in
2014. Generali also took the lead among the insurers that had the highest
average value per new contract of VND30.92 million ($1,472).
Data from the ISA has also estimated that total premiums of
life insurance players in the first two months were at VND3.074
trillion ($146.38 million), up 25 per cent from the same period last year.
The number of valid contracts has also increased by 13.5 per cent to nearly
5.85 million.
In terms of premium market share, as of end-February 2015,
Prudential took the lead with 30.1 per cent, followed by Baoviet Insurance
with 27,7 per cent, Manulife 12.1 per cent, AIA 10.7 per cent, Dai-ichi 7.7
per cent, ACE 4 per cent, Generali and Hanwha 2.1 per cent each and Prevoir
1.2 per cent.
However, life insurers need to take proper measures to
maintain their growth rates in the coming months as failure of some players
would adversely affect market performance. In fact, many insurers’ yearly
business results failed to meet market expectations, although they reported a
strong growth in revenue the first months. For example, in the first half of
2014, a strong increase of 244 per cent in the number of insurance contracts
failed to cover a fall of 12 per cent in the figure of individual contracts,
according to statistics by the Association of Vietnamese Insurers.
In 2013, PVI Sunlife made a record revenue of VND1 trillion
($47.6 million) after nearly one year of operation, contributing to the
segment’s increasing total VONB to nearly 47 per cent, to VND7.603 trillion
($363.05 million). However, in 2014, this newcomer had its ranking fallen to
9th from the earlier 3rd in terms of new business market share with 2.56 per
cent.
200 enterprises attend 2015 Vietnamese high quality goods fair
The Vietnamese High-Quality Goods Association said the
Vietnamese high-quality products fair will be organized in Phu Tho Indoor
Stadium’s District 11 of Ho Chi Minh City from April 28 to May 5.
The fair themed “The creative and innovative initiatives to
enhance business’s competition in the integration environment” will set up
many activities, aiming to help businesses develop the domestic market as
well as penetrate the regional leading markets.
The fair attracts over 700 stalls of 200 enterprises and the
association said that Vietnamese enterprises will introduce thousands of
products with favorable cost and high quality to consumers through the fair.
Export of Vietnamese tropical fruits increased
Nguyen Huu Dat, director of the
n the first quarter this year, 169 batches of dragon fruits
have been exported to nations in the world; of them, 227.4 tons, 189 tons, 3
tons went to Japan; South Korea and New Zealand. The center liaised with the
US Center to check 197 batches of dragon fruits (or 532.9 tons); 67 batches
of rambutan (or 146.9 tons); 17 batches of longan (or 22.4 tons) into
American market
Accordingly, only in the first quarter this year, 952.4 tons
of dragons, nearly 147 tons of rambutan, 22.4 tons of longan and 57 tons of
mangos have been sold into the
Binh Dinh grants investment certificate for FLC Group
The management board of Binh Dinh Economic Zone yesterday
granted the investment certificate in
The Nhon Ly project has the investment capital of VND
3,5trillion, covering an area of 162.5 hectares in Nhon Ly -Cat Tien tourism
area in Nhon Hoi economic zone in the central province of Binh Dinh.
FLC Group said the project is expected to be completed in 2018
with many high-level items such as rerosrt, hotels, entertainment areas and
buildings.
Sharp rise in imports of Chinese machinery
The General Department of Customs said that in the first three
months of 2015,
Bui Ngoc Son, head of the international relations division of
the Institute for the World Economics and Politics, said China was selling
obsolete machinery as it modernises, offering Vietnam cheaper prices than
equipment from Japan or Germany.
Imports included complete assembly lines, office equipment,
plastic molding machines and hydropower plant machinery.
Son said problems were emerging in the bilateral trade, where
that state-owned enterprises import cheap machinery from
He cited the case of Vietnam Shipping Lines (Vinalines)
importing an old Russia floating dock through a Singapore broker in
2007. Vinalines bought the dock at USD9m from the broker, while the
Russian owner, Nakhodka Co, had offered to sell it for USD5m. After the deal,
the broker ttransferred USD1.7m to officials of Vinalines.
“This is a loophole in Vietnam’s marco-economic management
policies," Son said. "Not much attention is paid to the quality of
imported machinery, so long as they work."
He raised concerns about lax management of state-owned
enterprises.
Tourism firms enjoy bumper holiday week
Tour companies are having a bumper holiday season, with most
out-bound and in-bound tours sold out for Reunification Day on April 30 and
the May Day holiday on May 1, with few slots left for remaining travel.
Many tourism firms report the demand for this year's long
six-day holiday is up sharply on previous years, and popular tours sold out
two months ago.
Travellers have been attracted by the long holiday break,
attractive promotional campaigns and discounted tickets. The recent spate of
hot weather has made sea and mountain resorts extremely popular.
Unlike Tet, when family commitments occupy much of the holiday
break, Reunification Day and May Day allow people to simply enjoy themselves,
tour companies say.
Vietravel Company said it had taken bookings from 20,000
customers, up 50 percent on last year. CP Hanoi Redtour reported 6,000
customer, an increase by 30 percent.
Many firms are seeing an average 50 percent jump in business.
Representative from Vietnam Airlines said 545 flights have
been added during the April 25 to May 4 period, an increase of 17.8 percent
on normal schedules and 82.9 percent more than last year.
"The most sought-after flights are from Hanoi and HCM
City to Danang, Phu Quoc and Nha Trang," he said.
Vietnam Airlines has added 106 flights to Phu Quoc Island, but
with the boost in ticket sales the airline is worried about airport
congestion and the increased likelihood of delays.
Jetstar Pacific has increased flight numbers, but has been
unable to meet demand.
There has also been a surge in demand for rail and bus
tickets, with more staff being added for the holiday period to handle
increased frequency of services.
Hanoi to drop stagnant FDI projects
Hanoi authorities said they would drop foreign direct
investment (FDI) projects that are behind schedule or where investors are
found to be unable to follow through on commitments.
“Investors need to proactively speed up the implementation of
their projects,” said Nguyen Ngoc Tuan, vice chairman of the municipal
People’s Committee. “We’ll take measures to deal with stagnant projects and
even withdraw investment licenses of investors who are proved to be
incompetent.”
By the end of 2014, Hanoi had attracted 3,169 projects with a
combined registered capital of USD26.3bn by investors from 63 countries and
territories. Total capital disbursement was USD11.3bn, or 52 percent of total
registered capital.
In the first quarter of this year, Hanoi approved a further 80
FDI projects worth USD160.2m.
The municipal Department of Planning and Investment said 12
projects have yet to start due to planning-related issues, while eight had
encountered problems with site clearance and 13 projects had met with other
difficulties.
Nguyen Ngoc Tuan has asked local departments and relevant
agencies to work out solutions to support investors.
To that end, the Department of Architecture Planning will
examine the city’s planning regulations and make a response to investors in
May, and the Site Clearance Board will try to resolve problems with land use
so projects can get back on schedule.
Vietnam Airlines told to intensify staff checks after gold
smuggling case
Vietnamese aviation authorities have asked national carrier
Vietnam Airlines to increase internal staff supervision after a pilot was
arrested in South Korea for smuggling six kilograms of gold.
On March 10, pilot Nguyen Van Dung and flight attendant Nguyen
Tuan Phong, off Vietnam Airlines’ Flight VN426 from Hanoi to Busan, were
arrested at Gimhae International Airport for trying to smuggle six kilograms
of gold in their shoes.
The Vietnam Civil Aviation Authority (CAAV) alleged there was
a lack of supervision of staff by Vietnam Airlines, security checks were
inefficient, and there were loopholes in the Transport Ministry's action
programme on anti-trade fraud and smuggling.
Pending the outcome of an investigation into the gold
smuggling case, the CAAV asked Vietnam Airlines to intensify internal
supervision over its pilots and flight attendants to prevent similar
incidents.
The Airport Corporation of Vietnam has been ordered to review
its internal security checks at airports, especially for international flights.
Authorities at Hanoi's Noi Bai International Airport have
reviewed security camera footage at the airport, but found no irregularities.
Vietnamese aviation authorities are coordinating with South
Korean authorities in the investigation.
Vietnam consumer confidence dips for second month - survey
Vietnam’s consumer confidence has continued dropping slightly
this month although the economy has shown clearer signs of recovery as
reflected in a recent survey of ANZ Vietnam Bank.
The ANZ-Roy Morgan Vietnam Consumer Confidence has fallen for
the second month to 140.2, down 1.3 points, this month with the fall driven
by small declines in four components of the survey. Despite the fall, the
index remains well above its 2014 average of 133.3.
In terms of personal finances now, 35% of Vietnamese, down one
percentage point, said their families are ‘better off’ financially than this
time last year compared to 19% (unchanged) who said their families are ‘worse
off’ financially, the lowest for this indicator for more than a year since
March 2014.
Of the respondents, 57% of Vietnamese, down one percentage
point, expect their families to be ‘better off’ financially this time next
year compared to just 5%, up one percentage point, who expect to be ‘worse
off’ financially.
In addition, 55% of Vietnamese, unchanged, said Vietnam will
have ‘good times’ financially during the next 12 months and only 11%, up two
percentage points, expect ‘bad times’ financially.
Finally, 47% of Vietnamese, up one percentage point, said now
is a ‘good time to buy’ major household items compared to 15%, up three
percentage points, who said now is a ‘bad time to buy’ major household items,
the highest for this indicator since September 2014.
Glenn Maguire, ANZ chief economist for South Asia, ASEAN &
Pacific, said though headline consumer confidence continued to pull back
slightly in April, the details of the survey are consistent with an economy
where the domestic components of growth are finally gaining surer recovery
traction.
“Our broad macro assessment is that the Vietnamese economy has
now bottomed and we foresee an ongoing recovery for 2015 and 2016. Indeed, we
recently revised our gross domestic product (GDP) growth forecasts for 2015
and 2016 to 6.5%,” Maguire said in the report.
The transmission mechanism of a firming economic recovery to
consumer confidence should be relatively straightforward. In the first
quarter, industry growth posted its fastest pace of growth in the past three
years in line with stronger growth in industrial production.
“As this translates to firmer output and most probably
employment, we would expect to see both confidence and aggregate income
formation improving over coming quarters. The ongoing firming recovery should
create an environment where households become more confident to spend,
further strengthening the recovery in domestic demand,” the expert said.
The obvious caveat is that for an emerging economy, this
transmission mechanism may play out with uncertain lags or be only partially
transmitted given high savings rates. Still, the Vietnamese economy appears
to be entering a sweeter spot and both consumer confidence and spending will
play a key role in ensuring that is where the economy is likely to stay in
the medium term.
HCM City imports up, exports down in January-April
Imports in HCMC have increased 15.5% while exports (including
crude oil) have dipped in the first four months of this year, heard a review
meeting in the city yesterday.
A report released at the four-month review meeting showed
imports have neared US$10.2 billion between January and April, up 15.5%
against the same period last year.
Businesses in HCMC have imported more dairy products,
materials for apparel and footwear production, steel and iron,
pharmaceuticals and plastic items in the first four months of this year.
Imports of dairy products have risen by 13.7%; garment,
textile and shoe materials by 7.3%; cloth by 1.8%, steel and iron by 28.4%,
pharmaceuticals by 4.6% and plastic products by 1.4%.
This is a good sign as local enterprises have speeded up
imports to meet their growing production demands, according to Thai Van Re,
director of the HCMC Department of Planning and Investment.
Meanwhile, the city has reported exports of nearly US$9.3
billion in the first four months, down 3.4% year-on-year. Excluding crude
oil, export value is put at over US$8 billion, a year-on-year rise of 8.3%.
Besides, total outstanding loans in the city have reached
VND1,100 trillion (US$50.9 billion), rising by 16% year-on-year. This
indicates that production and business activities have turned bustling.
Re said total investments in basic construction have exceeded
VND26.8 trillion, marking a 4.5% year-on-year increase compared to 2.1% in 2014’s
first four months.
Dao Thi Huong Lan, director of the HCMC Department of Finance,
said budget collections have reached over VND98 trillion in the period, up
9.63% year-on-year. Of the figure, the economic sector has contributed
VND41.2 trillion, a 9.21% increase.
Budget collections from both foreign-invested and
non-State-owned enterprises have edged up, Lan said.
According to the HCMC Institute for Development Studies,
medium and long-term credits have grown and market confidence and industrial
indexes have improved. The number of suspended enterprises is just 3.8% of
newly established firms in the period, proving stability and positive
business improvements.
However, imports of steel and iron and dairy products remain
high, suggesting that local manufacturers still rely much on foreign markets,
the institute said.
Customs officers accused of asking for bribes
Representatives of many enterprises said at a dialogue in HCMC
on April 23 that they had had to pay informal fees for customs officers to
have their goods cleared as scheduled otherwise they would cope with a host
of difficulties.
Dinh Cong Khuong, chairman of Khuong Mai Steel Service and
Trading Co. Ltd., told the dialogue with leaders of the HCMC Department of
Customs that customs officers often insisted on determining higher prices for
its steel imports than the levels the firm declared based on contracts,
letters of credit and bank transfers.
He gave an example that Khuong Mai imported a batch of goods
at US$370 a ton but customs officers required the company to register up to
US$640 a ton.
“Yesterday, we imported goods at US$373 a ton but port customs
officers wanted the figure to be US$400 a ton. Our employees told me that the
goods would be cleared with US$373 a ton if they paid them VND1 million (less
than US$50),” Khuong said.
A representative of another steel company said his company
recently imported rolled steel products from China via Haiphong Port with a
certificate of origin and documents proving that these products are subject
to special import tax incentives, but a 5% tax rate was still applied as we
forgot enclosing these papers with the customs declaration form.
“We finally discovered our mistake and requested attaching the
documents to the form but the customs agency at the port asked for half of
the tax differential if we wanted our request to be met,” the representative
said.
Executives of other companies questioned why they had had to
complete more procedures and be subject to more checks to have their imports
cleared at border gates. For instance, CGM Vietnam complained that it was
asked to submit print customs declaration forms though the shipping line made
it online.
Nguyen Quoc Toan, deputy head of the import-export tax
division at the HCMC Department of Customs, told the dialogue that the agency
does not allow its officers to demand informal fees and enterprises should
provide the names of those officers to help the agency deal with them.
Toan, however, said many enterprises have been requested to
adjust prices of their imports though they have submitted sufficient papers
as import tax collections associate with tax revenue for the State budget.
Enterprises need to ask customs officers to clarify their cases and send
their comments to customs leaders if they do not agree with the way customs
officers deal with their shipments.
“Enterprises should be well aware of relevant regulations,”
Toan said.
Nguyen Thanh Long, deputy head of the management supervision
division of the HCMC Department of Customs, said enterprises can request customs
officers compensate the unexpected fees for their goods subject to further
checks if customs officers do not detect any problem with their shipments.
First gas turbine reconditioning workshop in Vietnam
inaugurated
The Vietnam Electricity Group (EVN) and France’s Alstom held a
ceremony on April 24 at Phu My 1 Industrial Park, Tan Thanh district, Ba
Ria-Vung Tau province to inaugurate the first gas turbine reconditioning
workshop in Vietnam.
The ceremony was attended by Deputy Prime Minister Hoang Trung
Hai, leaders of Ba Ria-Vung Tau province and representative of the Vietnam
Electricity Group (EVN), as well as France’s Alstom.
The EUR 22million project, which is part of the joint venture
formed in 2012 between Alstom and EVN, will create about 150 new jobs. It
covers 5,500 square metres and houses the latest machinery for the
reconditioning of hot gas path parts, many of which are available for the
first time in South-East Asia.
At full capacity, the workshop will be able to refurbish
several hundred sets of gas turbine components per year. It is already
setting the benchmark in terms of EHS (Environment, Health and Safety), with
some 2,000 hours of trainings in the past year, and a total of 500 days
without LTAs (Lost Time Accidents) since the beginning of operations in
December 2013.
Addressing the ceremony, Deputy Prime Minister Hoang Trung Hai
said the establishment of the joint venture was meant to assist electricity
consumers, first in Vietnam. The project will later be expanded to Southeast
Asia and across Asia.
Japan's Nitori to build second furniture plant in Vietnam
Japan's Nitori Holdings Co.,Ltd has announced it will build a
second furniture production plant in Ba Ria-Vung Tau province after the first
one of its kind in Hanoi.
The plant, which is scheduled to be a large-scale operation,
will be built in 2017 on an area of 400,000 square metres. The plant will
produce materials and spare parts for furniture products, along with
producing assembly line items which will be exported and sold in Japan.
The capacity of the plant has yet to be confirmed but it is
expected to be 2.5 times higher than the plant in Hanoi. It will produce key
products such as cupboards, sofas and cushions, and it is scheduled to put
into operation in February 2018.
Nitori Holdings, the largest group of its kind in Japan,
currently has two furniture plants in Indonesia and Vietnam. It owns a chain
of more than 340 furniture stores in Japan and 27 in the US, China and Taiwan
(China).
Nitori plans to open more than 40 stores in Japan and14 abroad
in 2015 ─ it expects to increase the number of stores to 1,000 by 2022.
Experts propose flexible forex policy
Economic experts have suggested the State Bank of Vietnam
(SBV) adopt a flexible foreign exchange policy and adjust it based on supply
and demand, instead of forcing the Vietnam dong-U.S. dollar exchange rate to
move within 2% a year.
Dr. Nguyen Thuong Lang from National Economics University said
the SBV should stop the scheme to devalue Vietnam dong by only 2% every year
as there are no scientific foundations for this. Instead, the central bank
should let market forces to decide the price of the greenback on the local
market.
Lang acknowledged that the SBV’s forex rate policy has
produced positive effects, helping stabilize the value of the domestic
currency during the economic slowdown. But he noted that as the balance of
payments has run a surplus in three consecutive years, the 2% dong
devaluation plan every year is unnecessary.
Besides, implementing the plan is against the basic rules of a
market economy.
However, Nguyen Thi Hong, deputy governor of the central bank,
told the Spring Economic Forum 2015 in Nghe An Province on Wednesday that as
the forex rate is a sensitive issue as it is driven by many factors including
supply and demand, psychology and expectations, the central bank controls it
based on developments of the entire economy.
This year, the central bank will still stick to keeping the
forex rate move within a 2% band based on exports and imports, foreign
reserves, balance of payments, inflation and public debt influence. However,
the agency will closely follow market developments to adopt suitable
policies, Hong said.
She said strong forex rate fluctuations in recent days are
normal.
Dr. Nguyen Duc Do from the Institute of Economics and Finance
cast doubt on dollar speculation given forex rate fluctuations though the
central bank said there was strong dollar supply.
Do proposed if Vietnam’s economy grows 6-6.2% this year and
deflation is in sight, the central bank should consider devaluing the dong
devaluation by 3%, especially when the task to lower bank interest rates by
one to 1.5 percentage points is difficult to realize amid the current context
of bad debt, budget deficit and high public debt.
Local cashew processors on tenterhook
Africa’s cashew yield falls by 15-30% this year have made
domestic cashew processors worried about possible material shortages as
Vietnam imports a large volume of unprocessed cashew from the continent.
Ghana, a big exporter of unprocessed cashew in Africa, is
expected to yield only 730,000 tons of cashew this year, down 23%, according
to Ecobank, a bank which is present in 36 African countries.
Many other African countries have reported their cashew yields
would be affected by unfavorable weather conditions this year.
Besides Ghana, Ivory Coast, Nigeria and Benin are among the
major cashew growing countries in Africa.
The Vietnam Cashew Association (Vinacas) said limited supply
has forced many local enterprises to scramble for unprocessed cashew at a
higher price, at US$1,300 per ton, up US$100-200 against the previous year.
Nguyen Duc Thanh, chairman of Vinacas, said enterprises would
earn no profit if they import cashew at higher prices for export processing.
Vinacas said this could hardly be a tactic by African cashew
exporters to push up the price of this farm produce. Whether their output
drops or not will be made known at the end of June when the harvest season in
Africa ends.
According to the Ministry of Agriculture and Rural
Development, the average export price of cashew nuts was US$7,138 per ton in
the first two months of this year, up nearly 17% against the same period last
year.
Though cashew exports dropped 1.3% in volume in the first
quarter of this year, the value picked up almost 15%. In the period, Vietnam
exported 51,000 tons of cashew worth US$370 million and imported 145,000 tons
of raw cashew, or 2.75 times higher than the January-March period of last
year.
Last year, Vietnam exported 306,000 tons of cashew nuts,
equivalent to around 900,000 tons of raw cashew. The country imported nearly
579,000 tons of unprocessed cashew.
More office tenants return to CBDs
More companies have come back to lease offices in the central
business districts (CBD) of HCMC as the cityscape has changed for the better
and the rent gap between office buildings in the downtown area and fringe
areas has narrowed.
Property service provider CB Richard Ellis Vietnam (CBRE) said
there have been significant cityscape changes in the center of the city over
the past time, especially since work started last year on a project to
transform Nguyen Hue Boulevard in District 1 into a pedestrian-only street,
and new hotel and office buildings were put into service.
Greg Ohan, director of office services at CBRE Vietnam, said
those changes have captured the attention of domestic and multinational
corporations in the CBDs.
Data of CBRE showed many tenants left offices in the downtown
area five or eight years ago to cut costs but they had begun to return since
rent for offices in the center of the city has almost matched that in
out-of-town areas.
The monthly rental of Grade B offices outside the CBDs has
risen to nearly US$22 per square meter compared to US$15 five years ago, and
tends to advance. Meanwhile, the average rental in the downtown area has been
stable in recent years at around US$32-35 per square meter per month.
The office rental in the CBD area is forecast to stay the same
from now until the end of the year.
According to another property service provider Cushman &
Wakefield Vietnam, total Grade A office supply in the city will increase 25%
in the second quarter of this year when Vietcombank Tower in District 1 is
put into service.
More Grade A office space will pile pressure on this segment
as its occupancy has fallen over the past two years.
At present, nine Grade A buildings in HCMC supply more than
150,000 square meters of office space with the average occupancy rate of
around 91%.
As for the Grade B segment, the city has 47 office buildings,
offering around 671,000 square meters of office space with the average
occupancy rate of around 94%.
Vietnam Thuong Tin Commercial Joint Stock Bank (VietBank)
opened its head office building on Nguyen Thi Minh Khai Street in District 3
on Tuesday, providing 15,000 square meters of Grade A office space for the
market.
Rice farmers to get more financial support
The Government will provide farmers with VND1 million for each
hectare under rice cultivation in the coming time, up VND500,000 against the
current level.
More financial support for rice farmers is specified in the
Government’s Decree 35/2015/ND-CP on management and use of rice farming land.
The decree will come into force on July 1.
Le Thanh Tung from the Department of Crop Production said the
rise in financial aid for farmers from VND500,000 to VND1 million per hectare
will be of great help for rice growers at a time when their profit is being
affected by many factors.
Though Decree 35 aims to maintain 3.8 million hectares of land
for rice farming, farmers are still permitted to grow other crops on land for
rice farming is not cost-efficient.
The Ministry of Agriculture and Rural Development has plans to
plant high-yielding crops on around 112,000 hectares inappropriate for rice
farming. When farmers shift to new crops, they will get financial support of
VND1-2 million to buy seeds.
According to the Department of Crop Production, many farmers
in Binh Thuan and Long An provinces have planted dragon fruit on their rice
farms as profit from dragon fruit is 6-10 times higher than rice.
Construction ministry backs more cement exports
Further cement production is not encouraged as it guzzles much
electricity and pollutes the environment, but Deputy Minister of Construction
Nguyen Tran Nam told a seminar in Hanoi on April 23 that cement exports
should be promoted as local material supply is abundant.
Nam said Vietnam still had to import cement in 2009, and
exported 1.2 million tons and imported one million tons of cement in 2010.
However, four years later, the country produced 71 million tons and exported
21 million tons worth nearly US$1 billion.
Nam said he threw support behind more cement exports to back
local producers, especially at a time when domestic consumption is declining.
The country has more than 12 billion tons of limestone, which
is enough for cement production for hundreds of years.
According to Deputy Minister of Industry and Trade Tran Tuan
Anh, the quality of Vietnamese-made cement has improved and is recognized by
importing markets. Cement export is no longer a short-term solution as it has
helped reduce inventories and balance supply and demand on the domestic
market.
However, the biggest problem of the cement industry, according
to Nam, is that enterprises are competing with one another by undercutting
prices instead of improving product quality and seeking consumption markets.
Anh said cement exports are not sustainable. Cement exporters
are mainly small, have not gained much international trade experience and
cannot meet strict requirements of importers.
Nguyen Anh Quan, head of markets at Vietnam Cement Industry
Corporation (Vicem), said Vietnam has emerged as a major cement exporting
country in the region in recent years. However, local enterprises lack
cooperation, he added.
“Many partners told us that domestic enterprises often
undercut their prices to attract customers even though their customers do not
force them to do so,” Quan said.
He added that while the world cement price rises by US$4, the
price in Vietnam picks up US$1, and when the world price falls by US$0.5, the
domestic price declines by up to US$2.
Cement exports will not be as favorable as last year as global
supply surges, piling pressure on cement exporters in Vietnam. Some big
exporters like Japan, South Korea, China, Thailand and India will increase
their shipments and commission more production lines.
In addition, import demand in some markets like Indonesia,
Malaysia, the Philippines and Taiwan are lower than forecast. “The cement
price this year has dropped significantly against last year,” Quan said.
Cement makers at the seminar emphasized the need to have a
channel for them to get market updates so as to avoid losses in case of
market volatility.
HBC targets after-tax profit of VND180 billion this year
Hoa Binh Construction & Real Estate Corporation (HBC) is
looking to after-tax profit of VND180 billion (US$8.4 million) on revenue of
VND5.3 trillion this year, up 2.5-fold and 40% against last year’s earnings
respectively.
HBC plans to pay a 2015 dividend in cash for shareholders at
15% and issue 1.3 million employee stock ownership plan (ESOP) shares at VND10,000
each, heard the corporation’s annual general meeting in HCMC on Wednesday.
In addition, the corporation will issue an additional 20
million shares for strategic investors at VND10,000 each to raise its
chartered capital and mobilize funds for business operations.
Le Viet Hai, chairman of HBC, said the corporation has chosen
2015 as the beginning of a new business era with an aim to post revenue of
VND45 trillion in 2024. To realize this target, it will expand operations to
infrastructure development projects, realty trading and building management.
HBC earned over VND3.5 trillion in net revenue while its
holding company gained VND71 billion in after-tax profit last year, rising by
2.5% and 2.7-fold year-on-year respectively. However, the results just met
70% and 40% of the whole year’s targets due to the property market slowdown
and losses of its affiliates.
HBC said it would pay a 2014 dividend in cash at 15% and give
bonus shares at a 10:3 ratio to shareholders.
Last year, the corporation won contracts for 22 projects
having a combined over one million square meters of floor space.
Experts: Forex volatility, bad debt still cause for concern
Exchange rate fluctuations and bad debts in the banking system
remain big worries for the local economy, according to experts who on April
21 start attending the two-day Spring Economic Forum 2015 in the central
province of Nghe An.
Ha Huy Tuan, vice chairman of the National Financial
Supervisory Commission, said this year’s exchange rate would be under more
pressure than last year.
According to Tuan, the exchange rate is still affected by
multiple factors though it was adjusted up by 1% early this year and would
not be revised up more than 2% in a year as targeted by the central bank.
There is little room left for the exchange rate movement this
year while the price of the U.S. dollar has been firmer against many foreign
currencies and is projected to further appreciate this June.
Le Dinh An, former director of the National Center for
Socioeconomic Information and Forecast, said the dollar is on the rise and
the strong depreciation of other currencies will continue. This will make
Vietnam dong appreciate but reduce the competitiveness of Vietnamese goods
exported to foreign countries.
According to An, enterprises and individuals tend to keep more
dollars, especially when the deposit interest rate of this currency remains
low. Policymakers need to take into consideration long-term benefits of the
economy to decide whether or not to adjust the exchange rate in line with
supply and demand.
An said the central bank’s plan to keep the exchange rate
stable might work as incoming remittances reached US$12.1 billion last year
and are predicted to grow by 10% a year. Last year, foreign direct investment
(FDI) disbursements amounted to US$12.4 billion, up 7.4% against 2013, and
foreign reserves reached around US$36 billion.
Tran Dinh Thien, director of the Vietnam Institute of
Economics, said the pegging of the local currency to the dollar helps reduce
transaction costs and risks but poses risks in a developing financial market
like in Vietnam.
The Vietnam dong is overvalued, piling pressure on the
exchange rate and market stability.
Regarding bad debt, An said the settlement of bad debts is
improving as the central bank has decided to issue VND80 trillion worth of
special five-year bonds to Vietnam Asset Management Company (VAMC) to buy bad
debts at credit institutions. Besides, the central bank has proposed the
Government adjust the duties of VAMC to enable it to better handle bad debts,
targeting to bring the bad debt ratio down to less than 3% this year.
According to Thien, the major challenge of the
financial-monetary market lies in the restructuring of the banking sector and
the settlement of bad debts in the system.
VAMC has bought VND125-130 trillion of bad debts from banks.
However, as of December 24 last year, it was able to recover around VND4.16
trillion.
Thien said the financial-monetary market was more stable last
year than in the two previous years. Nevertheless, the management and
supervision capacities of the entire system remain limited and this can be
seen via growing bad debts and non-market measures used to settle bad debts.
Ministry told to review Quang Ninh airport project
The Government has ordered the Ministry of Transport to work
with relevant agencies to review the master zoning plan for the Quang Ninh
airport project in the northern province of the same name.
The order came after authorities detected the
build-operate-transfer (BOT) airport project was drawn up based on the design
and technical figures of Phan Thiet airport in the central
According to the Government Office’s announcement last week,
the Government wanted ministries to check and report the zoning plan,
investment capital and effectiveness of the project in June this year.
The province postponed the groundbreaking ceremony for the
project at the end of March and attributed it to an incomplete road leading
to the construction site of the airport.
However, the Construction Management Department under the
Ministry of Construction later said some data of Quang Ninh airport project
had been copied from that of Phan Thiet airport, rendering the project
irrelevant.
The provincial government said the groundbreaking delay was
necessary for relevant parties to collect comments from ministries and
agencies on the feasibility study of the project before work on the project
starts.
Quang Ninh airport covers an area of 290 hectares in Doan Ket
Commune in Van Don District. The airport is designed to have one runway
meeting 4E standards of the International Civil Aviation Organization (ICAO)
and a parking area for at least four Boeing B777 and Airbus A321 aircraft.
The project would require nearly VND7.5 trillion, including
more than VND5.25 trillion for construction and equipment, and VND734.2
billion for site clearance. The project’s main investor, Sun Group, expects
to recover the investment over 45 years.
Source :
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Năm, 30 tháng 4, 2015
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