BUSINESS IN BRIEF 12/7 Thai Nguyen’s industrial parks attractive to investors Industrial parks (IPs) in the northern province of Thai Nguyen drew 17 new projects in the first half of this year, including 13 foreign direct investment (FDI) ones, according to the provincial IP Management Board. The figure brought the number of investment projects in Thai Nguyen to over 150, including 74 FDI projects and 77 domestic ones with total investment capital of 7 billion USD and 11.7 trillion VND (508 million USD), respectively. From January to June, over 70 foreign business delegations, mainly from the Republic of Korea and Japan, came to study investment opportunities in the province. According to the board’s statistics, IP-based firms in Thai Nguyen contributed over 3.7 trillion VND (160 million USD) to the State budget in the first six months of the year, an increase of 7.4 times against the same period last year. The total export value of those enterprises in the period reached 8.62 billion USD, up 7.75 percent. The provincial industrial parks also created over 89,000 jobs, up 25 percent compared to 2015. To attract more investment, the management board is focusing on completing procedures to build the infrastructure of the Song Cong II Industrial Park and accelerating the implementation of the second phase of Yen Binh Industrial Zone project, said Head of the board Phan Manh Cuong. Cattle supply from Australia still suspended   Australia has still suspended livestock supply to some facilities in Viet Nam for investigation due to missing international animal welfare standards, reported the Australian Embassy in Ha Noi. While other facilities are able to receive Australian cattle, Australia's Department of Agriculture and Water Resources has begun a thorough investigation and directed exporters to suspend supply to 16 abattoirs and two feedlots in Viet Nam after having sufficient evidence that ESCAS control and traceability requirements and animal welfare requirements were not being met for Australian cattle at the facilities, Amy Guihot, agricultural counsellor from the Australian Embassy in Ha Noi told Việt Nam News via email. Australia implemented the Exporter Supply Chain Assurance System (ESCAS) to ensure that exported Australian livestock are handled in accordance with international animal welfare standards and to provide a mechanism to deal with animal welfare issues when they occur. "The suspensions at this stage apply only to the above mentioned facilities. Other ESCAS approved facilities in Viet Nam are still able to receive Australian cattle," the Australian Embassy said. "The suspensions will remain in place until the investigation is complete or there is enough information available to make informed decisions about various supply chain participants, (including exporters, importers, facilities and independent auditors)," it said. Tong Xuan Chinh, deputy head of the Ministry of Agriculture and Rural Development's Animal Husbandry Department, said the department would increase awareness on the standards while abattoirs must have a slaughtering certificate to meeting regulations of cattle exporting countries. Meanwhile, the department and the Veterinary Department would work with Australia to get information about ESCAS for local businesses, abattoirs and feedlots, Chinh said. Viet Nam has regulations on humane animal slaughter at the Law on Veterinary that came into effect from July 1, 2016. The law has general regulations so the state should have specific regulations like ESCAS and regulations on conditions for abattoirs. The state should promote inspection and supervision of abattoirs and if the abattoirs having Australian cattle must ensure to meet ESCAS standards. According to the Australian Embassy, Australia's agricultural exports to Viet Nam were valued at US$2.1 billion in 2015, including $346 million from live cattle exports. Coffee prices hit 11 month high Vietnamese coffee price hit a near 11 month high this week in wake of the global price hike. According to the Viet Nam Industry and Trade Information Centre under the Ministry of Industry and Trade, Viet Nam robusta coffee in the local market on Monday rose to VND37.7-38 million (US$1,670-1,690) per tonne, up from last week's VND36-36.3 million. Local coffee growers this week have also accelerated their sales as the price hike offers good returns. September robusta coffee futures in the New York's Intercontinental Exchange (ICE) also rose 1.3 per cent to $1,768 per tonne on Monday, the highest close since July 1, 2015. The September contract has risen 11.3 per cent so far in 2016 and is headed towards a key psychological level of $1,800 per tonne. However, industry insiders forecast strong selling to cash in on high prices could put a brake on the London price. According to the industry insiders, the global coffee price hike was due to concerns of low yields in the world's largest coffee producers of Brazil, Viet Nam and Indonesia. In Viet Nam, according to a report from the United States Department of Agriculture (USDA)'s Foreign Agricultural Service early this month, coffee production could drop up to 7 per cent in 2016 and 2017, to 27.3 million bags over the previous crop, due to adverse weather conditions. The report even forecast a 15 per cent decline in coffee production in case the drought is prolonged and followed by unfavourable rains caused by La Nina. Global consumption in the 2016-17 season is forecast to rise by 1.1 per cent to a record high of 150.8 million 60-kg bags, according to the USDA. According to the Ministry of Agriculture and Rural Development, coffee exports of Viet Nam, the world's largest robusta coffee exporter, reached an estimated 1.32 million tonnes in the first nine months of the 2015-16 crop year ending September, up 32 per cent from a year earlier. Preferential loans for 15 HCMC firms Fifteen companies situated in HCM City's processing zones and industrial parks have got total bank loans of nearly VND1.2 trillion (US$54 million) at preferential interest rates under a programme initiated by the central bank and the Government. The State Bank of Viet Nam's HCM City branch in collaboration with the Department of Industry and Trade and the HCM City Export Processing and Industrial Zone Authority (Hepza) organised a ceremony to sign credit contracts between companies and banks at Hepza on Tuesday. Around VND5.5 trillion ($246.6 million) has been lent to 562 enterprises under the programme this year, Nguyen Hoang Minh, deputy director of the SBV's HCM City branch, said. The banking – enterprises linkage programme was instituted four years ago to ease the funding and interest difficulties faced by companies based in the city, he said. As of May 31 this year around VND93.17 trillion ($4.17 billion) has been disbursed, with a maximum interest rate of 7 per cent for short-term loans and around 9 per cent for medium- and long-term loans, he said. Through the rest of this year the SBV would continue to co-operate with the department and Hepza to promote the programme to enable more businesses to get loans, he said. He said this year 16 banks have pledged to earmark VND211.548 billion ($9.48 billion) and $15 million to provide preferential loans to small and medium-sized enterprises and firms in supporting industries, agriculture, and the city's price stabilisation programme. AEC to do wonders to Vietnamese property market The key principles of the AEC is to facilitate a single market and production base, the free movement of goods, services, investment, and ease the cross border flow of capital all of which bodes well for each sector of the real estate in Vietnam. The assessment has been made by Alex Crane, general manager for Cushman & Wakefield Vietnam. Production in Vietnam is a core driver of the economy and the largest impact of the AEC which is already noticeable will be felt in key sectors, such as consumer goods, agricultural products, light manufacturing (garments, electronics), and logistics and warehousing. We are already seeing increased demand from overseas operators in these industries, either as new entrants to the market or by expansion of existing operations. The anticipated increase in employment in the industrial sector translates into a significant amount of industrial land required by occupiers and investors. The other draw from a real estate perspective is that industrial pricing is already stable, and is likely to remain stable over the longer term, making forecasting from an investor/occupier perspective more clear-cut and reliable. In addition the AEC will also support the Vietnamese middle class, as it will extend to support services, financial services and healthcare, all of which are direct drivers for the office markets in key commercial hubs, not to mention the year-on-year anticipated growth in natural absorption as the market matures. We may see a trend in retail for more regional brands to offer better pricing for the growing middle class, something retailers have not yet been able to fully provide and we are already noticing improved performance in regional retail in touristic/tourism areas currently catering for Asian visitors. A by-product of AEC investment into real estate will then extend to infrastructure and Vietnam is already well-placed for improvements compared to other large commercial centres. Infrastructure has a natural link with real estate, and there will and should be reciprocal knock-on benefits to both the commercial and residential sectors, as access routes and logistics improve. In addition to the effects of increased occupancy rates and investor demand, financial maturity is set to improve and Vietnam is taking a big stride already with Circular 36. This kind of supportive legislative framework directed at the real estate market has been initiated by the relaxation of the foreign ownership for both commercial and residential properties and the easing of the foreign ownership limits in local companies. The latter will more directly impact sectors such as manufacturing, finance, and insurance as well as quality professionally-led development and investment into property companies, asset firms, and projects. Foreign ownership in residential property is still limited and is not a foundation to build a market, but we foresee better performance in the second overseas home market segment, which may lead to the establishment of a retirement property market for regional buyers. The foundations for the AEC are a long time in the making and we have seen benefits already in the kind of legislation that underpins the real estate sector. As it stands, Vietnam is performing better than its neighbours with regard to prospective growth and the outlook is very positive, driven by the commercial sector. Vietnam’s housing market improves in Q2: report The apartment markets in Hanoi and Ho Chi Minh City showed positive signs in the second quarter, property consultancy company Savills Vietnam has said. In the capital city, the total primary apartment stock was 17,370 units, up 7% over the first quarter and 29% year-on-year. There were approximately 6,000 deals, an increase of 30% over the same period last year. In Ho Chi Minh City, 19 new projects and fresh supply from an existing project added more than 8,700 units for an increase of 15% over the first quarter. There was strong absorption across all segments, with over 6,900 sales, up 34% year-on-year. According to Savills, from the third quarter this year to 2018, more than 35,000 units are expected to enter the market in the southern metropolis. Some developers have begun making strategic movements toward denser populated districts in the west of the city. Savills' data painted a different picture from what other companies may have suggested. CBRE Vietnam last week said sales dropped by 35% quarter-to-quarter to 5,887 units in HCMC and by 7.2% to 4,806 units in Hanoi. Formosa asked to change technology in wake of fish death scandal Taiwan’s Formosa Plastics Group must replace the current technology at its Vietnamese steel making plant, which was responsible for killing dozens of metric tons of fish, Vietnam’s science ministry said on July 5. Vietnam will closely oversee the technology change at the Formosa steel mill in the north-central province of Ha Tinh, which is also part of a five-point commitment the Taiwanese firm has made after its role in the environmental disaster was revealed last week. “Under our supervision, Formosa will have to change some types of technology at their steel mill, in line with what their leaders had promised,” Deputy Minister of Science and Technology Pham Cong Tac said at a ministry press briefing in Hanoi. The Vietnamese government announced on June 30 the results of a two-month inspection into the mass fish deaths observed between April and May along the coast of Ha Tinh and three other provinces, Quang Binh, Quang Tri and Thua Thien-Hue. The investigation, with more than 100 scientists involved, found that untreated wastewater from the Ha Tinh steel plant of Formosa, containing such toxic substances as phenol, cyanide and ferric hydroxide, had been dumped into the ocean, leading to the fish deaths. The Taiwanese admitted its wrongdoing and made five commitments, including apologizing to Vietnam, paying US$500 million in damages, and improving its steelmaking technology. Scientists have found that the direct cause of the fish deaths was wastewater resulting from a technology known as wet-quenching coke, in which the coke is sprayed with water for cooling, resulting in high CO2 emissions and thermal energy loss. In steelmaking, coke is used as a fuel and as a reducing agent in smelting iron ore in a blast furnace. The Formosa plant in Vietnam currently deploys these pieces of technology. It is suggested that Formosa switch to the dry-quenching coke method, in which coke is cooled using an inert gas, to avoid repeating its mistake. Formosa had initially intended to apply the dry cooling technology, but eventually adapted the wet-quenching method to save costs. This leads to the question as to which Vietnamese bodies are responsible for allowing the use of the polluting technology at the steel plant in Ha Tinh. The answer from the science ministry, giving by a top official at the same meeting in Hanoi, was “it wasn’t me.” Do Hoai Nam, head of the technology evaluation and assessment agency within the science ministry, told reporters that the ‘role allocation’ in the case of the Formosa project is clear. The science ministry only had a role in the prefeasibility study, whereas the Ha Tinh administration was responsible for issuing the investment approval and the Ministry of Industry and Trade was accountable for backing the technology plan of the Taiwanese developer, Nam elaborated. Nam said when the Ha Tinh administration sought advice from the science ministry on the technology plan of the Formosa steel mill, the response was that the blast furnace technology the Taiwanese proposed using is “common, but not modern, in the world.” “As the project was at that time in the prefeasibility stage, we could not say anything more specific,” Nam explained. The official then confirmed that it was the industry ministry that eventually approved the technology plan for Formosa. “We were not directly involved in the technology evaluation and assessment for [this] project,” he underlined. Interestingly enough, the industry ministry also ducked responsibility for the incident as alleged by its technology counterpart. Asked about the statement Nam made at the press meeting, Minister of Industry and Trade Tran Tuan Anh asserted that his ministry never assessed the wet-quenching coke technology or allowed Formosa to use it. “It is not among the designated functions of the Ministry of Industry and Trade to do so,” he said. “Our ministry is not a [technology] evaluation agency.” Long An pulp mill spectacularly ignored by investors The VND3 trillion ($134.5 million) Phuong Nam pulp mill managed by state-run Vietnam Paper Corporation in the southern province of Long An has been put on sale for numerous years now, however, no investors seem to eye the project. The mill’s construction was kicked off in March 2006, with the initial investment capital of VND1.487 trillion ($66.3 million) by Transport and Communication Development Investment Company (Tradico). The mill was expected to produce the best quality pulp in Vietnam, reaching European standards. At the time, the province encouraged farmers to grow jute on nearly 9,000 hectares in Thanh Hoa, Moc Hoa, and Tan Thanh districts to supply materials for the mill. In 2007, the mill entered its test run, and in November Tradico decided to increase the total investment capital to VND2.286 trillion ($102.5 million). However, the test run was suspended due to the breakdown of the machinery. In 2009, Tradico was licensed to transfer the pulp mill to Vietnam Paper Corporation. The expected cost of the project increased to VND3 trillion ($134.5 million). However, after Vietnam Paper Corporation took over the mill, it was upgraded and started operation again, but the malfunctions remained. Vietnam Paper Corporation invited both international and domestic experts to deal with the malfunctions, but ultimately failed. As a result, the entirety of the machinery was abandoned and the 9,000 hectare jute growing area was wiped clean. According to a representative of the Long An Department of Industry and Trade, the mill had to suspend operation due to unsuitable technology and machinery. However, when VIR’s reporter contacted another representative of the department to request information about the origin of the technology and machinery as well as solutions to deal with the unmarketable mill, the representative refused to comment and said that the department did not manage the project’s operation. According to the Saigon Times Daily, in April 2014, the prime minister directed the Ministry of Industry and Trade to coordinate efforts with the Ministry of Finance and Long An authorities to deal with the project, including the sale. However, as of now, no investors have registered to buy the project. Viglacera finds Cuban partner to deepen global penetration Vietnam Glass and Ceramics for Construction Corporation (Viglacera) and Cuban El Grupo Empresarial Industrial de la Construccion (Geicon) have officially decided to establish a joint venture producing ceramics, sanitary wares, and tiles in October. In October 2014, the two sides signed a memorandum of understanding (MOU) to set up a joint venture that would invest in two factories producing bathroom fixtures and tiles in San Jose and Santa Cruz. Once the joint venture is established, it is expected to meet the demand for construction material in Cuba and Latin America. The Cuban market has a high demand for construction materials, as the country is encouraging investment in housing and tourism infrastructure. Since early 2014, Viglacera has sent two groups of technology specialists to work with construction material factories in Cuba. Viglacera general director Nguyen Anh Tuan stated at the MOU signing ceremony that the company’s products are present all over the world and its co-operation with Geicon would help deepen its presence in the Cuban market and consequently raise its export revenue. Geicon, under the Cuban Ministry of Construction, is comprised of 24 companies with a combined workforce of 16,000 people and annual sales revenue of more than 220 million pesos ($8.3 million). Viglacera focuses on producing and selling construction materials and developing industrial parks, infrastructure, and real estate. In the first quarter of this year, the company earned VND1.923 trillion ($86.3 million) in revenue and VND434.1 billion ($19.5 million) in profit. VICEM considering filling the void behind LafargeHolcim State-owned Vietnam Cement Industry Corporation (VICEM), which holds 35 per cent of Holcim Vietnam, its joint venture with LafargeHolcim, is considering buying up the stake that the multinational cement producer is putting up for sale. Luong Quang Khai, chairman of Vicem’s board of members said at a recent interview with VIR that LafargeHolcim talked to Vicem about divesting from the joint venture in March. LafargeHolcim will hold a public bid to find a partner and will announce the new owner at the end of July. “Vicem wants to take the wheel in its joint ventures and to increase its holdings,” Khai said, “but it depends on the price LafargeHolcim sets, as well as Vicem and its consultants’ valuation of the company and its growth prospect.” “I cannot yet say whether Vicem is going to buy the whole stake or a part, or even sell its holding,” he said, adding that if a capable investor takes over from LafargeHolcim, Holcim Vietnam is going to continue growing. Regarding allegations that LafargeHolcim’s sale is due to the saturation of the Vietnamese cement market, Khai refused to comment, but noted that it is totally normal for Lafarge and Holcim, after their merger last year, to restructure their operations in  foreign markets, including Vietnam. Holcim Vietnam presently holds 26 per cent of the domestic market, while Lafarge Vietnam takes another 12 per cent, with their main products being cement, concrete, and aggregates. According to industry insiders, Vietnam’s cement output is estimated at 81.56 million tonnes a year, while the consumption in 2016 is estimated to fall between 75 and 77 million tones, presenting an oversupply. Later this year, Song Lam cement production plant will open its gates to produce an annual four million tonnes, which is expected to intensify competition amongst domestic cement manufacturers. Yet foreign and domestic players alike have not given up on the market. Earlier, in April, Thai conglomerate Siam Cement Group (SCG) said it was planning to wholly or partially acquire another cement plant in Vietnam, to ride the wave of an expected increase in construction projects due to the increasing GDP. In mid-June, cement producer Tan Thang Cement Joint Stock Company signed an engineering and procurement contract with system and service supplier FLSmidth for the main equipment to a green-field cement plant in the central province of Nghe An. Once completed, the cement plant will have a capacity of 5,000 tonnes a day. FLSmidth’s executive vice president of the Cement Division Per Mejnert Kristensen commented that after a number of years seeing limited growth, the Vietnamese cement market “is starting to pick up again.” Stoxplus teams up with HOSE to increase foreign appeal Business information firm Stoxplus partners up with the Ho Chi Minh Stock Exchange to help Vietnam attract long-term foreign investment. Stoxplus and Ho Chi Minh Stock Exchange (HOSE) signed a Memorandum of Understanding on July 6 in which the two parties agreed on a widescope collaboration to develop the Vietnamese stock market and lure foreign investors. Firstly, Stoxplus and HOSE will conduct a survey on lifting the foreign ownership limit at listed Vietnamese companies. According to Stoxplus, only 13 firms have eased the ceiling since the implementation of Decree No.60/2015/ND-CP in September 2015. An in-depth survey and analysis are thus crucial to understand the challenges and difficulties that hinder this progress at listed Vietnamese companies. Secondly, Stoxplus and HOSE will support listed firms to disclose information in English, which is necessary to serve international investors. An improvement in information disclosure will also boost market transparency and upgrade investor relations standards in Vietnam. Thirdly, the two parties will evaluate the quality of corporate governance at listed companies, based on the regulations in Circular No.155/2015/TT-BTC. “Vietnam is striving to reach the “emerging market” status on the Morgan Stanley Capital International index, so we believe that improvements in corporate governance, information disclosure, and lifting the foreign ownership limit are vital. Through this collaboration with HOSE, we would like to help improve the transparency and attractiveness of the Vietnamese market in the eyes of overseas investors,” said Nguyen Quang Thuan, CEO of Stoxplus. Meanwhile, deputy CEO of HOSE Tran Anh Dao expressed hope that the survey will encourage listed firms to elaborate on any difficulties that prevent them from scrapping their foreign ownership cap. HOSE representatives will use this information to propose suggestions to the Ministry of Finance and other relevant governmental bodies. Findings of the Stoxplus-HOSE survey will be released in the fourth quarter of 2016. VNG moves into electronics and home appliances VNG Corporation, the leading games provider and publisher in Vietnam, has suddenly announced it will expand into other sectors such as manufacturing electronic components and retailing electronics and household electrical appliances. The move was announced at its shareholders meeting on June 30 and it is also looking into retailing household items such as beds, wardrobes, furniture, and lamps. VNG targets revenue of VND2.6 trillion ($115 million) this year, a 23 per cent increase year-on-year, with pre-tax profit of VND361 billion ($16 million), up 16 per cent. At the shareholders meeting it proposed not paying a dividend due to its plans to reinvest in strategic products. Last year it recorded revenue of nearly VND2.1 trillion ($93.3 million) and posted an after-tax profit of VND231 billion ($10.2 million). The profit primarily came from investments in associated companies, while profit from its core business of games showed signs of slowing down. Revenue in its core business stood at VND1.6 trillion ($72 million) in 2015, up 8.2 per cent year-on-year but its profit was down VND11 billion ($495,000). The development of social networking and free games has presented problems for many games providers and publishers. VNG is now promoting online entertainment on the digital platform. Mr. Le Hong Minh, CEO of VNG, was previously entangled in a scandal relating to corporate debt. He borrowed VND251 billion ($11.2 million) from VNG at an interest rate of 4.2 per cent per year. His interest payments had totaled VND20 billion ($900,000) by the end of 2015. When asked by VET about the issue, Mr. Ho Minh Tu, Manager of the External Relations Department, declined to comment. In mid-May last year VNG also announced its acquisition of a 38 per cent stake (3,716,187 shares) in the Ti Ki JSC, the managing unit of the Tiki.vn e-commerce sites, for VND383 billion ($17 million). VNG is the No. 1 games provider and publisher in Vietnam and was established in 2004. Charter capital stands at VND324 billion ($14.4 million) and total assets VND2.7 trillion ($120 million). It mainly imports games from China and South Korea, but in recent years has invested in the research and production of games under its own brand. It now also manages the aggregated news site Zing.vn. Maritime Securities Incorporation to increase charter capital after listing Maritime Securities Incorporation (MSI) will double its charter capital via issuing additional stock after listing on the Hanoi Stock Exchange (HNX). Charter capital will increase to VND600 billion ($26.80 million) from the current VND300 billion ($13.44 million), according to Mr. Mac Quang Huy, CEO of MSI. The firm will conduct the plan adopted at the 2016 Annual General Meeting by issuing additional stock to existing shareholders and strategic shareholders and introducing an employee stock ownership plan (ESOP). “The plan will be flexible and depend on the market situation and the company’s circumstances at that time,” Mr. Huy told VET. The timing of the IPO is yet to be set but Mr. Huy said that MSI has submitted listing documents to HNX and registered the security code MSI with the Vietnam Securities Depository (VSD). After HNX approves the listing MSI will determine the timing of the IPO, which is expected to be in the third quarter. “We also have a plan to issue corporate bond to mobilize capital to meet expansion needs as the market develops,” Mr. Huy added. According to the company’s financial report, as at April 30 the booking value of MSI shares was VND15,855 ($0.71). The offering price will be decided based on comparisons with other listed securities firms. According to Mr. Huy, ratios such as the price-to-book ratio (P/B) and price-earnings ratio (P/E) of other securities firms of similar size will be considered for use as a benchmark in determining the offering price of MSI to attract investors. The P/B of current listed securities firms is from 1 to 1.8. There are now 27 securities firms listed on the two Vietnamese stock markets, of which eight are listed on HSX and 19 on HNX. SSI has the leading market cap on HSX, with VND10.43 trillion ($467.57 million) and a P/B of 1.57, followed by PAN with VND4.33 trillion ($194.11 million) and 1.56 and HCM with VND4.2 trillion ($188.28 million) and 1.81. On HNX, VND has the leading market cap, of VND1.98 trillion ($88.76 million) and a P/B of 1.01, followed by KLS with VND1.95 trillion ($87.41 million) and 0.86. In 2015 MSI recorded revenue of VND231.5 billion ($10.37 million), in which brokerage activities contributed VND44.2 billion ($1.98 million), investment VND81 billion ($3.63 million), underwriting activities VND16.3 billion ($730,729), consultancy activities VND14.6 billion ($654,518), and other activities the remainder. After-tax profit was VND45 billion ($2.01 million), some VND13 billion ($582,790) lower than 2014’s result. MSI was previously Standard Securities, licensed in 2008, before securing Maritime Bank as a strategic shareholder in 2011 and changing its name to Maritime Securities Incorporation. Mr. Huy said that the purpose of the listing is to mobilize capital in the stock market and bolster transparency. “We are fully prepared and are seeking strategic shareholders and other funds to accompany MSI on its journey to sustainable development,” he added. Positive performance from landed property in Q2 Landed property saw active performance in both the Ho Chi Minh City and Hanoi markets during the second quarter, according to the latest reports from real estate consultants. There were 820 landed property sales in Ho Chi Minh City, for growth of 81 per cent quarter-on-quarter and 110 per cent year-on-year, according to Savills Vietnam. Historically a townhouse in Ho Chi Minh City was three times more costly than a high-end apartment. This has now fallen to 1.7 times in newly-developed areas and is well within reach for many. Savills Vietnam also forecast that landed property demand in 2016 would be 103 per cent higher year-on-year in Ho Chi Minh City and 88 per cent higher in Hanoi. Compared to regional peers with similar population densities, such as Kuala Lumpur, Bangkok and Jakarta, Ho Chi Minh City and Hanoi’s primary supply of landed housing (less than 10 per cent) is relatively small, leaving ample room for future growth. The local landed property market promotes sustainability due to a healthy purchaser structure, according to Mr. Troy Griffiths, Deputy Managing Director at Savills Vietnam. “End-users account for the majority of purchasers, with speculators less than 10 per cent,” he added. Investors are substantial in the townhouse segment, prompting an expanding rental market in the near future. “Townhouses have outperformed other residential asset classes in investment returns thanks to land value appreciation and stable rentals,” he went on. In this quarter Hanoi’s landed property market saw eight newly-launched projects, including Vinhomes Thang Long, Gamuda Phase 2 (semi-detached villas), FLC Eco House, Park Hill Shophouse, The Boutique Shophouse (Times City), Lucky House, Thanh Ha B and 622 Minh Khai, adding a total of 1,592 units to the market, or equal to the number of new launches in 2015, according to CBRE Vietnam’s second quarter report. New projects are mainly located in districts that are 7-10 km away from Hanoi’s CBD with abundant land banks, such as Ha Dong, Hoai Duc, Long Bien, Tu Liem and Hoang Mai, said Ms. Nguyen Hoai An, Director of CBRE Vietnam. “While a dominant portion of shophouses were reported to launch in Quarter 1, that of villas and terraced houses returned to be recorded in Quarter 2, taking up 89 per cent of new launches,” Ms. An said.   The average secondary price increased 2.9 per cent quarter-on-quarter and 1.7 per cent year-on-year. Core urban districts with completed infrastructure and available amenities such as Cau Giay, Ha Dong and Hoang Mai continued to witness increases of 0.5-6 per cent quarter-on-quarter in secondary price. In the meantime, suburban districts such as Gia Lam, Hoai Duc and Me Linh saw decreases, ranging from 0.4 per cent to 2.7 per cent quarter-on-quarter. In addition, average secondary prices of landed projects in core urban districts were 1.1 to 2 times higher than the primary prices, CBRE Vietnam’s report noted. Meanwhile, thanks to high-end projects that have already been launched in this quarter, average primary prices recorded in suburban districts were much higher than average secondary prices. This is expected to enhance the secondary value of projects in suburban districts in upcoming quarters. Five-star hotel and apartment complex launched in Hanoi Hanoi’s hotel and commercial apartment sectors have recently welcomed a newcomer in the form of the Hanoi Water Tower JSC, which has introduced the Hanoi Aqua Central five-star hotel and apartment complex. The complex boasts a contemporary design and an elegant style, developed on 6,800 sq m at 44 Yen Phu Street in the capital. Hanoi Aqua Central comprises one five-star hotel and one 21-storey apartment tower, offering a full suite of modern facilities: a shopping center, a supermarket, an indoor swimming pool, a gym, an outdoor play area, a kindergarten, and cafés and restaurants. The apartment tower has 238 apartments and penthouses, all of which are meticulously designed to embody a sense of luxury and range from three to four bedrooms and 117 to 146 sq m, with interiors imported from Europe, Japan and the US. The conceptual design space is a highlight of Hanoi Aqua Central. With a unique built-in garden, each apartment features an internal green space connected to an outdoor patio, maximizing natural light and ventilation. The project developer has appointed Savills Vietnam as its lead sales and property management partner. Hanoi Aqua Central is expected to attract a considerable number of purchasers interested in high quality residential property in Hanoi’s city center. Located near the Old Quarter, Hanoi Aqua Central has spectacular views overlooking the ancient streets, West Lake, Truc Bach Lake and Hoan Kiem Lake, and the Red River and Long Bien Bridge. Key locations in Hanoi are within easy reach and Noi Bai International Airport is only 30 minutes away. Hanoi is still regarded as a market of potential for hotel developers. According to the Hanoi Statistics Office there were approximately 2.05 million international visitors to the capital in the second quarter, up 34 per cent year-on-year. Among others, Pan Pacific Hotels Group (PPHG) has also recently announced the launch of the Pan Pacific Hotels and Resorts brand in Vietnam in the fourth quarter of this year with the introduction of Pan Pacific Hanoi. The property, already a city icon, was acquired by PPHG in 2001 through a joint venture with the Hanoi Construction Corporation and has been operating as the Sofitel Plaza Hanoi in a prime location by West Lake.   “Having a brand-defining hotel in Hanoi is part of our strategy to establish our presence in key gateway cities in the Asia Pacific region,” said Mr. Bernold Schroeder, CEO of Pan Pacific Hotels Group. “We are committed to Vietnam as a strategic growth market as it ushers in a new phase of exciting developments in travel and tourism.” Thirty-three projects are planned to enter the market from the third quarter onwards, of which 15 will supply approximately 4,700 rooms, according to Savills Vietnam. 10 most prestigious banks in 2016 announced The Vietnam Report Corporation yesterday announced officialy the list of 10 most prestigious Vietnamese Commercial Banks in 2016. Banks which are ranked in the top group based on three main factors including financial capacity through the latest financial report; having prestige to media organizations & appreciated by media coding and survey from consumers of banking products and sevices. In addition, the capital & revenue growth rate are aslo two more factors to evaluate the bank's position. Accordingly, 10 banks which have finance capacity, business experience, growth potentiality and receiving active appreciation on quality of products and services for the term 2015- 2016 include, 1. Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) 2. The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) 3. Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) 4. Asia Commercial Joint Stock Bank (ACB) 5. The Vietnam Technological and Commercial Joint Stock Bank (Techcombank) 6. Military Commercial Joint Stock Bank (MBBank) 7. Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) 8. Tien Phong Joint Stock Bank (TPBank) 9. Saigon- Hanoi Joint Stock Bank (SHB) 10. Saigon Commercial Joint Stock Bank (SCB) State Capital Investment Corporation defends high wages The State Capital Investment Corporation (SCIC) has had to justify its wages and staff bonuses for 2015 after public dismay. The SCIC is the sovereign wealth fund of Vietnam established in 2005. The establishment is aimed to enhance the efficient use of state capital. The SCIC manages over 500 enterprises that are operating in various sectors, such as financial services, energy, manufacturing, telecommunications, transportation, consumer products, health care, and information technology. A recent report from the SCIC on July 6 stirred public controversy because of extremely high salaries paid to top managers in 2015. General Director Lai Van Dao earned USD63,600, four vice directors earned USD59,000 and control supervisor earned USD50,000. Last year, total payment for 273 employees at SCIC amounted to USD5.5m of which a huge proportion, USD3.2m, was for top managers. According to the SCIC, the salaries in 2015 were much higher than the previous year because they claimed they had achieved a tremendous growth in revenue. The company's revenue reached USD481.8m, an increase by 45% over 2014. Post-tax profit was USD363.6m. In December 2014, the Ministry of Finance issued Decision 3369 about new financial regulations so SCIC decided to group the payments of 2014 and 2015 together. According to SCIC, the wages and bonuses are paid in accordance with the law. The salaries included some payments in 2014 that hadn't been paid. SCIC said the total payment for each employee contained basic wages, medical and social insurance, union fees, unemployment insurance, lunches, telephone bills and some pre-paid payments. HCM City collects nearly VND1,300 billion in tax arrears The Ho Chi Minh City Tax Department announced that it has collected VND1,296 billion in tax arrears and fines from 8,566 businesses in the first half of 2016. Meanwhile, the Ho Chi Minh City Tax Department also inspected 774 documents worth VND535 billion. In the first six months of the year, Ho Chi Minh City’s tax industry collected VND96,661 billion, or 49.37% of mandatory forecasts in 2016, up 9.53% compared to the previous year. The collected taxes from manufacturing businesses reached VND57,904 billion, or 49.40% of this year’s mandatory forecasts, up 17.57% from a year earlier. The excise tax in the first six months of year increased 28.23% compared to the previous year. Meanwhile, the value added tax in the first half of 2016 increased 14.82% against last year. As of June 30, tax arrears totaled VND11,785 billion, down 5.6% compared to December 31, 2015. NFSC sees deposit rates rising further The National Financial Supervisory Commission (NFSC) has said that deposit rates, especially for medium- and long-term tenors, might edge higher in the coming months at small banks. Banks will need to raise more medium- and long-term capital from depositors to restructure their capital sources as required by the central bank’s Circular 06 2016/TT-NHNN, NFSC said in a report released on July 5. According to the NFSC report on economic conditions in the first half and projections for the second half, Vietnam dong liquidity was ample in the first six months as capital mobilization shot up while credit growth was nearly unchanged from a year earlier. Besides, the State Bank of Vietnam (SBV) acquired large sums of foreign currency, thus injecting big amounts of dong into the economy. In the first quarter, interest rates for Vietnam dong deposits with long-term tenors inched up 10-50 basis points against end-2015 and up 30-70 basis points against the same period last year. Deposit rates were stable in quarter two. Meanwhile, quarter one saw lending rates rising by 20-50 basis points against the end of last year and fell slightly at major banks following the Prime Minister’s order to support businesses.   From mid-June, some small banks began revising up long-term deposit rates by 70 basis points compared to end-2015 to restructure their capital sources in line with Circular 06. According to NFSC, ample liquidity in the banking system could help meet credit demand at year-end. Pressure on Government bond yields could ease as G-bond sales in the second half will just fulfill 20% of the full-year target.     Lending rates may be adjusted down to support enterprises if there is no external shock and inflation, and the dong-U.S. dollar exchange rate is stable. In addition, banks will have to minimize their operation costs to support the Government’s easy monetary policy.   NFSC said the forex market and the dong-dollar exchange rate were relatively stable in the first six months. The committee explained the dollar dropped sharply against other currencies on world markets as the U.S. Federal Reserve delayed an interest rate hike plan. Besides, Vietnam enjoyed a trade surplus in the first half and disbursements of foreign direct investment (FDI) capital increased strongly. NFSC said the dong-dollar exchange rate would fluctuate in the remaining months of 2016 due to higher company demand for the greenback to settle import payments and a possible interest rate hike by the Fed at the end of the year. If interest rates increase in America, the dollar would appreciate on world markets and impact the dong-dollar exchange rate.   In addition, China’s yuan is predicted to continue depreciating against the dollar in the next six months due to macro-economic uncertainties weighing on the world’s second biggest economy, possible impacts of the Fed’s rate spike and fluctuations of other currencies. HCMC needs larger exhibition venue HCMC lacks international-standard venues where major foreign firms can come to exhibit their products, an expert said. BT Tee, deputy chief of Singapore Exhibition Services’ Vietnam representative office, told a press conference on exhibition venues in HCMC on July 5 that foreign firms that join exhibitions here in the city for the first time are potential investors. It would be a lot easier to attract them if there is a better site for big exhibitions, said Tee, who has over 15 years’ experience in organizing fairs and exhibitions. Tee said an economic hub like HCMC needs at least two international-standard exhibition centers. Malaysia’s Kuala Lumpur has two centers while the number is three in Singapore and four in Indonesia, he noted. Tee said the Tan Binh Exhibition and Convention Center (TBECC) in Tan Binh District is small while the bigger Saigon Exhibition and Convention Center (SECC) is often overwhelmed with a large number of events. Sometimes extra booths are set up outside the main venue of SECC during huge annual exhibitions, including Vietbuild and MTA Vietnam, Tee said. He noted SECC has a total area of around 20,000 square meters while Singapore has an exhibition center covering 100,000 square meters. Exhibitors said the city’s high economic growth, driven by the fast-growing industrial sector, has augmented demand of enterprises to showcase their products and services. Therefore, the city needs to develop more facilities and expand the current exhibition sites to woo foreign firms. At a meeting with HCMC chairman Nguyen Thanh Phong last month, Nguyen Quoc Khanh, chairman of the Handicraft and Wood Industry Association of HCMC, complained about SECC’s limited size, proposing the city build a larger exhibition and convention center. The city government has sought approval from the Prime Minister to pick a consortium to develop a 12-hectare international exhibition center in District 2. MTA Vietnam 2016, an international exhibition on precision engineering, machine tools and metalworking, is taking place at SECC until July 8. The event, in its 14th year, has attracted the participation of 416 local and foreign exhibitors. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR