BUSINESS IN BRIEF 28/12

EC drops anti-subsidy probe into PSF products

Following a 12 month enquiry, the European Commission (EC) has recently decided not to impose anti-subsidy duties against Vietnamese imports of polyester staple fibres (PSF), according to the Vietnam Competition Authority (VCA).

In particular, the VCA found that Vietnam’s subsidy margin, which is 1.25%,  does not exceed the maximum allowed rate of 2% and therefore the subsidy investigation should be ended.

Earlier on December 19, 2013, the European Man-made Fibres Association lodged a complaint requesting the EU impose anti-subsidy duties on PSF exports from Vietnam.

The examination period was from October 1, 2012 to September 30, 2013. Accordingly, Vietnam’s preferential and incentive policies and programmes were thoroughly reviewed by the EU.

The MoIT effectively co-ordinated with relevant agencies and localities to respond fully and accurately to the questionnaire sent by the EU a VCA representative said, adding that after one year of looking into the matter the EU has quashed the complaint, finding it has no basis in fact.

This concludes the first EC’s anti-subsidy investigation into Vietnam’s PSF products and the results are of great significance and should establish good precedents in the event of any similar complaints in the future, the representative concluded.

Japanese IT firms zone in on Vietnam

Vietnam remains one of preferred destinations of Japanese information and technology companies.

Japanese-backed information and technology firm SETA International Asia Company is among many Japanese information and technology firms who see opportunities in Vietnam.

“In 2014, our main focus was on the export of Vietnamese manufactured products to Japan. However, in 2015, SETA will target three  sectors including website production, security and cloud services, with expected revenue of $1 million. We will also open a branch in the central city of Danang next year,” SETA’s marketing representative Nguyen Huong Giang told VIR.

Earlier this month, Japan’s Econtext Asia Limited announced a subscription agreement with Japan’s SBI Holdings, Inc. and Beenos Inc. to co-invest in FPT Corporation’s Sendo. The three Japanese firms will hold a 33 per cent stake of the domestic firm.

“Vietnam becomes the fourth country in Econtext Asia’s outreach strategy to develop its business in Asia after China, Indonesia and India. In the future, we plan to develop Sendo to become the largest online marketplace in Vietnam and contribute to the growth of e-commerce market by enhancing online payment and related infrastructure and services through Sendo’s SenPay payment system,” said an Econtext Asia statement.

“Many Japanese information and communications technology (ICT) companies are interested in Vietnam. We would like to highlight that Vietnamese ICT engineers are laborious and skillful. That is why Japanese ICT companies select Vietnam as their business partners,” senior economic researcher of the Japanese Embassy to Vietnam Hirotsugu Terado told VIR, while citing the Ministry of Planning and Investment as reporting that there were 117 Japanese ICT projects in Vietnam in 2013, occupying 7.6 per cent of the total Japanese investment in the country, and 58 projects in this year’s first half, accounting for 8.8 per cent of the total Japanese investment in the country.

At the Japan ICT Day 2014 held in Hanoi in late October, 167 Japanese IT firms came to Vietnam in search of investment and business opportunities, including many big firms like NTT, Canon, Panasonic, Toshiba and Sumitomo.

NTT Data Vietnam gained the revenue of $7.5 million in 2013, up 33 per cent on-year. This year it has established its third office in Danang, increasing its workforce to 190 people.

According to the IT Promotion Agency of Japan (IPA), Vietnam has remained Japan’s second largest IT partner since 2012 with 31.5 per cent of Japanese firms preferring partners in Vietnam compared to 20.6 per cent for India and 16.7 per cent for China in a recent IPA survey.

Japan’s Sapporo IT Front recently agreed a deal with the Vietnam Software and IT Services Association to implement a project on developing IT human resources in Vietnam. The Japan International Co-operation Agency also agreed to provide 60 million yen ($510,000) for the project between 2014 and 2016, aiming at providing IT training courses for Vietnamese companies.

According to the Vietnam Software and IT Services Association during the 2012-2013 period the local  software revenue increased 52 times to reach nearly $3 billion, while the hardware revenue grew 70.5 times to reach $36.8 billion.

Last year, Ho Chi Minh City was ranked 16th and Hanoi 23rd in the list of the top 100 outsourcing destinations by Tholons, an advisory firm for global outsourcing and investments.

Slow BOT projects face huge fines

Build-own-operate and independent power plant developers which miss their construction deadlines will face fines of $200,000 per 60 days behind schedule.

This stringent measure has been suggested by the Ministry of Finance (MoF) to the Ministry of Industry and Trade’s (MoIT) draft measures to speed up the contruction of power plants, so as to ensure power supply plans remain on track.

In addition to the fines facing tardy investors, the MoIT can report unreliable investors to the prime minister for dismissal.

However, the MoF stated that “The punishment only applies to investors making slow progress on projects that they have control over.”

“Progress targets should be major milestones over the span of the projects,” the MoF added.

Vietnam’s electricity demand is expected to see a remarkable increase of more than 10 per cent per annum in the coming years due to rising population and economic growth. Southern Vietnam in particular, the country’s largest economic hub including Ho Chi Minh City, faces a critical situation in relate to the current imbalance between the existing supply and the increasing demand for electricity. There is therefore an urgent need for the development of power generation plants throughout the region.

Over the past 15 years, only five power plants have been licensed to foreign investors under the build-own-operate (BOT) model. They are Phu My 3, Phu My 2.2, Mong Duong 2, Hai Duong, and Vinh Tan 1.

The list of foreign-invested BOT power projects will increase as several foreign companies are currently in negotiations, or are conducting feasibility studies for developing power plants nationwide such as South Korea’s Samsung C&T Corporation, India’s Tata Power, Singapore’s Sembcorp Industries and Thailand’s EGATI.

Industrial insiders said that the negotiation over power prices between foreign power plant investors and the state-run Electricity of Vietnam (EVN), the country’s sole electricity buyer, was a headache that could possibly lengthen construction deadlines.

Vietcombank to provide financial services to power project

The State Bank of Viet Nam's governor has permitted Vietcombank (VCB) to provide financial services to a World Bank-sponsored power project.

The project aims to increase the capacity, efficiency and security of electricity transmission lines in the regions that play an important role in the country's economic development, including the expanded areas of Ha Noi, HCM City, Cuu Long (Mekong) river delta and the central region.

The project is estimated to cost US$731.25 million, of which $500 million will be borrowed from the International Bank for Reconstruction and Development, an international financial institution of the World Bank which offers loans to middle-income developing countries.   

The financial support from World Bank is being given as per agreement No 8417-VN, signed by the representatives of the Vietnamese government and the bank on November 12, 2014.

The National Power Transmission Corporation under the Electricity of Viet Nam will be responsible for providing the rest of the capital of $231.25 million.

The governor has asked the VCB general director to strictly follow the government's regulations on using finance resources of the official development assistance and favourable loans, as well as the World Bank's guidelines on providing financial services to the project.

MoC proposes salvaging seven social housing projects

The Ministry of Construction (MoC) has made a proposal to the State Bank of Vietnam (SBV) to grant financial support to seven social housing projects across the country.

Flats for low-income earners in Viet Hung residential area in Ha Noi's Gia Lam District. The Construction Ministry urges the Government to grant favourable loans to seven social housing project across the country. – Photo Tienphong

These projects are scheduled to provide a total of 2,700 flats between 2015 and 2017.

The proposal indicates that the project to receive the most financial support should be the one in Tac Cau fish port in the southern province of Kien Giang's Chau Thanh District. This project aims to build 1,000 flats on an area of more than 7.5ha and will be implemented by Nghi Xuan Construction, Trade and Tourism Company. The project is estimated to cost VND465 billion ($21.8 million). The MoC suggested that SBV grant a loan of VND100 billion ($4.7million) to the project to guarantee the achievement of its scheduled completion by 2017.

The second prioritised project is the one for the workers of Giao Long Industrial Zone in Chau Thanh District in Ben Tre Province. For this project, the MoC has suggested a loan of VND50 billion ($2.3 million). The VND146 billion ($6.8 million)-project is scheduled for completion by 2016. It covers an area of 1.5ha, which will provide 396 flats. It is currently being implemented by Ben Tre House Construction and Trade and ATC companies.

Another project, proposed by the MoC to receive a VND50 billion loan package, is located in the northern province of Vinh Phuc's Vinh Yen City. This covers an area of 4.4ha, which will offer 745 flats for low-income people and workers. The project is worth VND432 billion ($20.3 million).

In the southern province of Dong Nai's Cam My District, a social housing project with an investment of VND114 billion ($5.3 million) is designed to provide 252 flats on an area of 2ha. The MoC suggests granting a loan of VND30 billion ($1.4million) for this project.

Loans of VND15–25 billion ($700,000 –1.17 million) each have been proposed for three other social housing projects as well.

Vietnam-India trade on upward trend

Two-way trade between Vietnam and India is on an upward trend and likely to reach the target of 15 billion USD by 2020, said Vo Tan Thanh, Director of the Ho Chi Minh City branch of the Vietnam Chamber of Commerce and Industry.

At a workshop on the countries’ trade and investment cooperation opportunities on December 23, Thanh further said Vietnam is suffering from a considerable deficit in trade with India, thus the two sides need to devise effective measures to improve the trade balance through supporting businesses, especially Vietnamese ones, in promoting trade and investment.

Indian Consul General in HCM City Smita Pant said that once coming into force, the Trans-Pacific Partnership (TPP) agreement will be an important bridge linking Vietnam with partner countries, including India.

More and more Indian companies have noticed Vietnam as a potential market with a number of major advantages and opportunities of regional and international integration, she noted, adding that enterprises from her country are keen on expanding credit, aviation, and tourism ties with Vietnam to facilitate trade and investment activities.

During the first 11 months of 2014, bilateral trade was posted at nearly 5.19 billion USD, of which Vietnamese exports to India were worth over 2.27 billion USD, according to the Ministry of Industry and Trade’s Africa, West and South Asia Markets Department.

Vietnam mainly ships mobile phones and components, chemicals, textile fibre, coffee, and pepper to India while importing machinery and spare parts, pharmaceutical, cotton, steel, animal feed, and plastic materials.

Vietnam needs to develop market economy institutions

Vietnam should develop market economy institutions in the context of integration and create a favourable business climate in order to attract more investment, heard a conference in Hanoi on December 22.

Participants at the event held that the joining of regional cooperation agreements under roadmaps will provide Vietnam with more opportunities to catch up with other countries in the region.

Institutional reforms in Vietnam need to target the people’s direct and indirect supervision rights through elected agencies, the press and associations, they said, adding that the people also have the rights to access information, question officials and dismiss appointed ones.

If Vietnam cannot solve issues related to group interests, it will find hard to make progress in economic institution reforms, with low competitiveness, expanded rich-poor development gap, and increasing environmental pollution, they said.

The conference, themed “Developing market economy institutions in the context of integration: International experience and implications for Vietnam ”, was jointly held by the Central Institute for Economic Management (CIEM) under Ministry if Plan and Investment and the World Bank.

WB pledges US$200 mil. for cement firms to generate electricity

The World Bank is expected to provide US$200 million loans for domestic cement enterprises to invest in technology to collect heat from their kilns to generate electricity, according to the Vietnam National Cement Association (VNCA).

VNCA said the financing pledge is part of the international lender’s program to finance efficient energy consumption for the local cement industry.

The association’s chairman Nguyen Quang Cung told the Daily that the WB has guaranteed the US$200 million but its funding might double to US$400 million depending on how fast the cement sector grows.

More cement firms in the world have turned to use refuse as a fuel for their cement factories. Some local enterprises have followed suit and switched to using refuse, mainly ashes from thermal power plants, as one of their input material sources, Cung said.

Domestic cement firms are also pouring investments in technology to collect heat from their cement kilns to generate electricity, and this move can help them save up to 30% of the electricity they consume.

Cung gave an example that Holcim and Ha Tien 2 in southern Vietnam, and Chinfon and Cong Thanh in the north have invested in heat collection systems.

In 2012, Holcim Vietnam Ltd. switched on its 6.3-MW power generation plant using heat from the kiln of its cement factory in the Mekong Delta province of Kien Giang. This US$18-million facility can generate 44 million kWh per year, which is sufficient for the Holcim cement factory to operate in 88 days or 18,300 households to use in one year.

Huynh Kim Tuoc, director of the Energy Conservation Center HCMC, said the potential to use heat from cement kilns to run power stations is huge and this electricity source can account for 20% of the power consumption volume of the cement sector.

If all 80 operational cement factories nationwide can make full use of heat at their kilns, the electricity generation volume can be up to 200 MW. This volume is equivalent to the output of a large-scale power plant and is significant for the power-guzzling cement sector.

VNCA estimated 70 million tons of cement and clinker has been sold this year and 19.5 million tons of which has been exported with combined revenue of US$900 million, a year-on-year rise of 30% in volume.

Cement and clinker from Vietnam are mostly shipped to Bangladesh, Myanmar and Indonesia at prices of US$38-40 per ton and US$55-60 per ton respectively.

Cung said almost all local enterprises have reported profits as cement prices on global markets are 5-10% higher than domestic prices.

Le Van Toi, head of the Ministry of Construction’s Building Material Department, said this year’s cement export prices are higher than last year thanks to thorough market surveys and close cooperation among cement makers.

This year, cement exports make up 25% and the rest is clinker compared to 20% in previous years.

VNCA put cement exports next year at around 20 million.

Ba Huan opens poultry processing plant in Long An

Ba Huan Co. Ltd. has commissioned the first phase of a poultry processing plant covering seven hectares in Duc Hoa District in the southern province of Long An.

The first phase of the project cost some VND60 billion (over US$2.8 million), excluding land-use right transfer cost.

Pham Thi Huan, director of the company, said the facility consists of a poultry slaughterhouse and a European-technology food processing line with respective capacities of 1,500-2,500 poultry per hour and 5-10 tons a day.

Huan said the major products include chicken, chicken sausages, eggs, flans and other ready-to-eat chicken products, and will be mainly sold on the domestic market.

The plant is part of the enterprise’s strategy to develop a closed system from farming to processing poultry to ensure food safety and hygiene.

Earlier this year, Ba Huan invested heavily in an automated line using Dutch technology in HCMC’s Binh Chanh District to process 180,000 clean eggs per hour.

In addition, the company has spent VND320 billion developing a poultry farm on 18 hectares in Tan Uyen District in the southern province of Binh Duong. This farm has around 500,000 chickens and can supply some 400,000 eggs a day.

The firm’s products are now distributed via 430 wholesalers and retailers as well as wet markets nationwide. Major egg buyers of Ba Huan are big food and confectionery companies such as Kinh Do, ABC, Nhu Lan, Dong Khanh and Hy Lam Mon.

HCM City’s CPI growth put at 1.65% this year

The consumer price index (CPI) in HCMC continues its decline this month and the 0.36% fall in the final month of the year against November helps the city keep the year’s CPI growth at only 1.65%.

Data released by the HCMC Statistics Office on December 22 showed that five out of 11 groups of items in the basket of commodities used to calculate the CPI have fallen in prices this month. Meanwhile, slight price hikes are recorded in five groups and the price of one group is unchanged.

The groups with the sharpest price decline are transport and post with a fall of 3.56% against November, mainly owning to the fuel price cuts on November 22 and December 6, followed by the group of housing, electricity, water, cooking gas and building materials with a 0.95% drop.

The price of beverages-tobacco and culture-entertainment services posts a slight slump.

Meanwhile, the commodities with modest price hikes this month are up between 0.02% and 0.7%.

The catering services group, the most weighted in the basket of commodities, picks up 0.17% this month, with foods rising by 0.24% and foodstuffs by 0.26%, but dining out services are unchanged. With a 0.7% increase, post and telecom is the group with the strongest price rise this month.

Education is the only group to have its price unchanged compared to last month.

Overall, the CPI in HCMC is down 0.36% this month compared to last month and inches up 1.65% this year compared to December of last year.

The groups of housing, gas and building materials and transport and post have experienced considerable price declines in the past 12 months with 5.13% and 6.77% respectively.

Meanwhile, significant price hikes are reported for the group of medicine and healthcare services with 8.58% and the education group with 20.47%.

In Hanoi, the CPI goes down 0.23% in December and inches up 1.55% this year.

With such figures, it is likely that the country’s inflation this year will not be higher than 3%.

The General Statistics Office is expected to release the national CPI tomorrow.

TPBank lends US$10 million to Flexcom

Tien Phong Bank (TPBank) has clinched a credit agreement to provide US$10 million for Flexcom Vietnam Co. Ltd. (Flexcom Vina), a producer of plastic printed circuit boards for Samsung Electronics Vietnam and for export.

According to TPBank, the South Korean company has two plants in the northern province of Bac Ninh and is Samsung’s biggest supplier of plastic printed circuit boards in Vietnam. It also assembles electronic products.

Flexcom Vina expected TPBank’s loan would support its expansion plans in order to meet the increasing demand of Samsung Electronics Vietnam for production of electronic devices and cellphones at its factories in the northern provinces of Thai Nguyen and Bac Ninh.

Besides the credit deal, TPBank plans to fund Flexcom Vina’s production lines.

TPBank said it is willing to finance foreign-invested and domestic enterprises in supporting industries in the local market.

Nguyen Hung, general director of TPBank, said in a statement that expanding trade between Vietnam and South Korea, particularly when the two countries sign a free trade agreement (FTA) next year, would create opportunities for banks and enterprises of the two countries to cooperate as well as help Vietnam attract more companies in high-tech and supporting industries from South Korea.

Plant protection drug firms concerned about draft circular

Enterprises in the plant protection drug sector have voiced their outcry over the possible negative impact of a draft circular governing the sector if it takes effect.

The local plant protection drug sector will not grow strongly and sustainably if the draft circular is applied, heard a conference on problems related to the management of plant protection products in Hanoi last week.

Dam Quang Thang, chairman of the Chemical and Agriculture Association in Hanoi, said some 30% of the world’s total crops are damaged by pests and diseases. Therefore, plant protection drugs play an important role in agricultural production.

However, the production of plant protection drugs in Vietnam cannot meet domestic demand and enterprises in this sector are facing a host of difficulties with many caused by regulations.

Many regulations in the draft circular are not practical and consistent with the prevailing rules, leaders of the Vietnam Pesticide Association (VIPA), pointed out.

Tran Quang Hung, chairman of VIPA, gave an example that if a Vietnamese firm wanted to get approval for selling a type of imported insecticide in Vietnam, it should submit all documents proving that it has been authorized by its foreign partner which produces and sells the insecticide and a competent agency’s certification for the ability and permission of this partner to turn out the insecticide.

“This condition is unnecessary and in contrast with the trade liberalization trend in the world as generic materials are allowed for free commercialization when the patents granted for them expire,” Hung said.   

Hung said it is not easy to get such authorization and certification as required by the draft circular.

According to VIPA, the draft circular contains many regulations which will hinder trading and production of plant protection drugs in Vietnam.

“It seems that administering agencies want to take an easy task for them and leave a difficult one on plant protection drug enterprises,” VIPA’s vice chairman Nguyen Van Thieu said and added that most provisions in the draft circular look unrealistic.

Hung warned that it is difficult for relevant agencies to implement regulations in the draft circular and it costs dearly for enterprises if it is applied.

According to participants at the conference, the draft circular will make it difficult for Vietnamese enterprises to compete with their foreign counterparts from other regional countries when the ASEAN Economic Community (AEC) is formed next year as planned, when many plant protection drugs will be imported thanks to lower tariffs and less barriers.

HCM City ensures supply of Tet goods

Enterprises in Ho Chi Minh City have completed plans to prepare goods for the Tet holiday, which falls next year on February 19.

Van Duc Muoi, General Director of Vissan Limited Company, which processes and trades fresh and frozen meat and meat-related foods, told Vietnam News that the company had prepared 46,000 pigs, 2,000 cows and 4,000 tonnes of processed food to serve customers, 10 percent higher than the previous Tet.

"There will be no price shock during Tet," he said, adding that "we will slash prices sharply on days near Tet to stimulate consumption".

Many poultry and egg providers like Ba Huan and Vinh Thanh Dat plan to increase supply by 10-15 percent for Tet.

As for confectionery products, most producers plan to increase supply and offer many kinds at a wide price range to meet varying tastes and budgets of customers.

The Bien Hoa Confectionery Corporation (Bibica) plans to supply 1,350 tonnes of confectionery and chocolate for Tet, up 20 percent over the previous year.

The Kinh Do Confectionery Joint Stock Company has said it plans to supply 5,000 tonnes of confectionery for Tet, 500 tonnes higher than last year's holiday period.

Le Thi Thanh Lam, Deputy General Director of Saigon Food Company, said the company would supply the market 550 tonnes of food, a year-on-year increase of 5-10 percent.

Supermarkets have also increased supply of essential goods to meet demand in the run-up to Tet and after Tet.

Saigon Co.op has increased supply of essential goods by two to three times compared to normal months to ensure adequate supply during the holiday. About 90,000 tonnes of goods are expected to be supplied via its chain in three months before, during and after Tet, which is 15 percent higher than last year's Tet.

Besides essential items sold at 10 percent lower than the market price under the city's price stabilisation programme, Saigon Co.op, in collaboration with suppliers, will slash prices by 10-50 percent on thousands of other items.

It also plans to organise at least 141 mobile sales trips to the city's remote districts as well as industrial parks and export processing zones to serve buyers.

Similarity, Big C supermarket chain, which expects a 15 percent increase in demand, carried out purchasing measures to ensure supply and stable prices.

Besides preparing abundant sources of confectionery, fruits, home decor items, the supermarket will have about 420 tonnes of fresh meat to serve customers during the holiday.

This year, it launched 17 kinds of gift baskets and boxes at prices from 59,900 VND to 1.7 million VND (from 2.85 USD to 80 USD).

Until the end of February, it is offering a discount of up to 50 percent on nearly 4,000 Tet products.

Supermarket chain Lotte Mart of the Republic of Korea is also introducing various kinds of Tet gift baskets to meet customers' demand.

It expects sales to go up by 25 percent for gift baskets and 60 percent for meat, eggs, banh chung (square glutinous rice cakes), banh tet (cylindrical glutinous rice cakes) and fruits and vegetables.

Retailers plan to increase the number of cashiers and other activities to ensure convenience and safety for customers during the peak purchasing season.

Government urges implementation of PPP projects

Deputy Prime Minister Hoang Trung Hai has instructed the Ministry of Planning and Investment to urgently guide and speed up local and central agencies to determine suitable fields, choose potential projects with the high ability of capital reclaiming, draw up an investment list under Public Private Partnership (PPP) form.

He instructed the Ministry of Transport, Construction, Industry and Trade, and Agriculture and Rural Development to review the list of PPP projects in four potential fields.

Of which, the Ministry of Transport will select projects in highway, railway, seaport, airport fields while the Ministry of Construction will generate those in the field of solid waste and wastewater treatment and urban water supply.

The Ministry of Industry and Trade will choose projects in fields such as energy and wholesale markets and the Ministry of Agriculture and Rural Development will make its choice in rural clean water, small irrigation works, pumping stations, storage and afforestation.

Deputy PM Hai said that fund preparations for PPP projects have been done. Hence the Ministry of Planning and Investment should chair and work with relevant ministries to pick out the most feasible projects for implementation. Once having found investors, they should reclaim costs spent on the preparations of the projects to reproduce capital source for other potential PPP projects.

He commissioned the ministry to examine, synthesize and do statistics on the Government's financial duty in PPP projects that have been signed with investors to have an assistance mechanism for this kind of projects and ensure effective investment.

The ministries should organize an inspection over the implementation of PPP projects report to the Prime Minister next year, he added.

Vietnam launches first rice bran oil product

Cai Lan Oils & Fat Industries Co., Ltd (Calofic) introduced a new line of its Neptune oil brand on December 17 -  a premium rice bran oil – marking Vietnam’s first foray into the refined rice bran oil market.

Recent scientific research has shown that the outer bran layer of the rice grain is rich in nutrients such as Omega 3, 6 and 9, Gamma-Oryzanol, Phytosterols and Vitamin E. As such, it is ideal for producing a premium vegetable oil that can be beneficial to both health and beauty.

Many countries around the world consider rice bran oil one of the most healthy vegetable oils. In Japan, this oil is used for cooking in kindergartens and primary schools. In the US and EU, rice bran oil is considered a very health alternative to traditional cooking oils.

Vietnam’s most popular cooking oil brand Neptune has now successfully produced rice bran oil using technology from Desmet Ballestra Group, a Belgium-based supplier of oil extraction systems. The technology helps retain maximum nutritional value in rice oil in accordance with the strict standards of developed nations and meets the demand for high quality products in the domestic market.

Thanks to the successful launch of its rice bran oil, Calofic is the only company in Vietnam to have joined the International Association of Rice Bran Oil (IARBO). Most importantly, Vietnam, as the second biggest rice exporter in the world, has great potential for developing rice bran oil products.

MWG sets $1 billion revenue target for 2015

MobileWorld (HOSE: MWG) has set its sights on revenue of VND23.590 trillion ($1.1 billion) in 2015, up 50 per cent on-year.

The country’s leading retailer of mobile phones and electronics plans to reap VND2 billion ($93.5 million) from ecommerce alone. It also plans to open 120 new stores to raise its market share to 40 per cent.

In November, MWG reported revenue of VND1.620 trillion ($75.7 million) while its 11-month figure was VND14.063 trillion ($567.7 million), exceeding its annual target by 8 per cent.

MWG, Vietnam’s biggest mobile phone retailer by number of outlets, has two distribution chains: thegioididong.com and dienmay.com. The former chain is currently distributing digital mobile devices (mobile phones, tablets, laptops and accessories) throughout the 63 cities and provinces in Vietnam via a network of more than 320 stores. The first store was launched in 2004.

The latter, dienmay.com, specialises in the distribution of consumer electronics (televisions, karaoke machines, refrigerators, washing machines and rice cookers among others) and digital products (mobile phones, tablets, laptops and accessories). This distribution network has 13 stores, all of which are located in the south.

Newly equitised airport firm holds first shareholders meeting

Southern Airport Services Company held its first shareholders’ meeting this December as part of its official transformation into a joint stock company.

The meeting marked the debut of Southern Airport Service Company (SASCO)’s board of directors for 2015 to 2019. The board consists of five members with Doan Thi Mai Huong elected as both chairwoman and CEO. Le Hong Thuy Tien, the representative of SASCO’s strategic investors (which hold 23.6 per cent) also joined the board. The remaining three members are Phan Vu Tuan, Dang Tuan Tu, and Phan Le Hoan.

SASCO has a chartered capital of VND1.3 trillion ($60.8 million) and the company has predicted that its after-tax profits for 2014 will stand at VND129 billion ($6.14 million). It forecasted a 30 per cent growth rate in 2015 and 2017 profits of VND187 billion ($8.9 million).

The meeting introduced A&C Co., Ltd as SASCO’s auditing firm for next year. SASCO is also scheduled to list on UpCOM and the Ho Chi Minh Stock Exchange (HOSE) in early 2015.

Back in September, SASCO made headlines when it sold all of the 31 million shares it had put up for its IPO. The average price per share was VND19.330 ($0.92), double the pre-IPO price. Through the share offer SASCO successfully raised VND601 billion ($28.62 million).

Established in 1993, SASCO is ranked among the 500 largest firms in Vietnam. The company provides a wide range of services for Tan Son Nhat Airport, including duty-free shops, VIP waiting areas, restaurant chains, transportation, spas, airport advertising and many others. SASCO currently has 1.447 employees.

SASCO is among a number of state-owned air services firms that went public in 2014. Vietnam Airlines, Saigon Ground Services (SAGS) and Noi Bai Cargo all held their IPOs this year. Major conglomerate Airports Corporation of Vietnam is scheduled to equitise in the first quarter of 2015.

MoC proposes salvaging seven social housing projects

The Ministry of Construction (MoC) has made a proposal to the State Bank of Vietnam (SBV) to grant financial support to seven social housing projects across the country.

Flats for low-income earners in Viet Hung residential area in Ha Noi's Gia Lam District. The Construction Ministry urges the Government to grant favourable loans to seven social housing project across the country. – Photo Tienphong

These projects are scheduled to provide a total of 2,700 flats between 2015 and 2017.

The proposal indicates that the project to receive the most financial support should be the one in Tac Cau fish port in the southern province of Kien Giang's Chau Thanh District. This project aims to build 1,000 flats on an area of more than 7.5ha and will be implemented by Nghi Xuan Construction, Trade and Tourism Company. The project is estimated to cost VND465 billion ($21.8 million). The MoC suggested that SBV grant a loan of VND100 billion ($4.7million) to the project to guarantee the achievement of its scheduled completion by 2017.

The second prioritised project is the one for the workers of Giao Long Industrial Zone in Chau Thanh District in Ben Tre Province. For this project, the MoC has suggested a loan of VND50 billion ($2.3 million). The VND146 billion ($6.8 million)-project is scheduled for completion by 2016. It covers an area of 1.5ha, which will provide 396 flats. It is currently being implemented by Ben Tre House Construction and Trade and ATC companies.

Another project, proposed by the MoC to receive a VND50 billion loan package, is located in the northern province of Vinh Phuc's Vinh Yen City. This covers an area of 4.4ha, which will offer 745 flats for low-income people and workers. The project is worth VND432 billion ($20.3 million).

In the southern province of Dong Nai's Cam My District, a social housing project with an investment of VND114 billion ($5.3 million) is designed to provide 252 flats on an area of 2ha. The MoC suggests granting a loan of VND30 billion ($1.4million) for this project.

Loans of VND15–25 billion ($700,000 –1.17 million) each have been proposed for three other social housing projects as well.

BOT project to connect highways through Bac Ninh, Hai Duong provinces

A Build-operate-transfer project, with a total investment of VND1,679 billion (US$79 million), will be carried out to build and upgrade a part of Highway 38 which connects Highway 1 with Highway 5 through Bac Ninh and Hai Duong provinces.

The information is included in an official contract signed by the Ministry of Transportation and other three Vietnamese contractors in Hanoi on December 24.

The investment comprises over VND242 billion (US$11.4 million) of the investor and over VND1,436 billion (US$67.5 million) of credit loans.

As planned, the 28.6km route will be completed in 2016, facilitating transportation to Noi Bai International Airport and Cai Lan Deepwater Port in Quang Ninh province and enhancing development connectivity in the northern key economic region.

Speaking at the signing ceremony, Deputy Minister of Transportation Nguyen Van Cong stressed the project’s urgency to meet increasing transportation demand and ensure safe transportation on Highway 38 through Bac Ninh and Hai Duong provinces for socio-economic development of both provinces and the northeast region.

He asked contractors to mobilise resources to fulfill the project on schedule with required quality while urging local authorities to boost site clearance and support contractors to implement the project effectively.

Vietnam’s insurance premiums up 14.2%

The local insurance market is expected to obtain nearly VND52.7 trillion, or around US$2.47 billion, in total premiums this year, up 14.2% against 2013, Vietnamplus reports.

According to the Ministry of Finance, insurance companies have paid out over VND18.5 trillion (US$869.5 million) for customers this year. The figures suggest that the market has maintained stable growth despite tough global and local economic conditions.

However, the market potential has yet to be fully tapped. Mobilization capital use effect and the capital ratio for long-term investment are still limited, the ministry said.

The insurance industry targets a growth rate of 12-15% next year.

The ministry will raise requirements in business establishment licensing to improve financial capability and corporate governance.

The nation aims to focus on comprehensive development of the insurance industry. Organizations and individuals are encouraged to buy insurance products to secure financial stability, it added.

Next year, the ministry will call for enterprises to launch products for the primary industries, remote areas and low-income earners.

The market now has 30 non-life insurers, 17 life insurers, 12 insurance brokerages and two reinsurers. They have a total equity of nearly VND41 trillion, rising 11.4% against the previous year.

By the end of 2014, the insurers will have total assets of over VND154 trillion (US$7.2 billion), up 15.2% from 2013.

HCM City’s real estate market still in distress

Although the real estate market in HCMC has shown positive signs of recovery this year, the HCMC Real Estate Association (HoREA) said on December 23 the worst is not yet over.

Tough property market conditions have hit many property enterprises, credit institutions, building material producers and suppliers, the labor market and low-income buyers, HoREA said in a report on the property market in 2014 and predictions for 2015.

HoREA gave figures to illustrate its argument. By this time, the city has around 1,400 housing projects and only 426 projects of them are complete while 201 other projects are under construction, the association said.

More than half of the projects (689 projects) have stalled and 85 others have had their licenses withdrawn or canceled.

Disbursements in the VND30-trillion preferential home loan program have remained slow as only 12% of the sum has been disbursed for homebuyers nationwide so far.

According to the State Bank of Vietnam in HCMC, local banks had disbursed VND658 billion (US$30.9 million) within the program for two real estate firms and more than VND390 billion (US$18.3 million) for 1,444 individual home buyers as of the end of October.

But the association noted the property market is on the way to recovery.

Apartments measuring less than 70 square meters and costing less than VND15 million (over US$700) per square meter have been selling well over the past years. The projects in this segment are those developed by Thu Duc House, Le Thanh, Nam Long, Hung Thinh, Phu Khang, C.T Group, Hung Ngan, Phuoc Thanh, Dat Xanh and An Gia.

A number of luxury housing projects of Van Thinh Phat, Novaland, Phu Long, Khang Dien, Him Lam, Phu My Hung, SSG, Dai Quang Minh, Vingroup, Keppel Land, CapitaLand, Thu Duc House and C.T Group have found many buyers thanks to their good locations and reputation.

HoREA said merger and acquisition (M&A) activity has turned active in the property sector this year.

Novaland, Hung Thinh, Phuc Khang, Phat Dat, An Gia and Dat Xanh have acquired or partnered with investors of half-done projects to design products appropriate for the market.

HoREA said such deals have contributed to easing home inventories and bad debts of investors with weak financial capabilities, and helped provide the market with products more attractive and affordable to many buyers.

Large property firms in HCMC are anticipating better prospects for the real estate market next year. They forecast small and medium-sized apartments with reasonable prices and street-front land lots will continue attracting buyers in 2015.

Uber must pay 10% tax once licensed in Vietnam: taxman

Uber will have to pay 10 percent taxes on its total revenue if it is licensed to legally operate in Vietnam, according to the General Taxation Department under the Ministry of Finance.

Vietnam will tax Uber once it is allowed to legitimately offer services in the country, Deputy Minister of Finance Do Hoang Anh Tuan said on Wednesday.

The General Taxation Department under the ministry elaborated that Uber will have to pay a five percent corporate income tax on the total revenue it earns from the local market if the company is licensed.

It added that Uber International B.V., which pockets 20 percent of what passengers pay for Uber services, will have to pay another five percent value added tax on its turnover in the Vietnamese market in that case.  

For the local transport firms directly partnering with Uber International B.V., they will have to pay tax on the remaining 80 percent of the payment.

In addition, those businesses will also be liable for some other fees and all other kinds of taxes arising in Vietnam that the taxman cannot collect from Uber, the department said.

The General Taxation Department added that Uber’s is a new business model in Vietnam, which is expected to expand to other fields such as tourism, hospitality, and aviation in the future.

To manage earnings from those services, the department suggested working with the Ministry of Industry and Trade and the State Bank of Vietnam on verifying non-cash transactions or intermediary payment services.

FDI disbursement up 7.4% despite fall in pledges

Disbursement of foreign direct investment (FDI) in 2014 reached US$12.35 billion as of December 15, up 7.4% from the previous year, the Foreign Investment Agency (FIA) has reported.

The FIA says total pledges during the period fell by 6.5% year on year, but exceeded the full-year target by 19%.

Export revenue by the foreign sector, including oil companies, is estimated at US$101.59 billion, up 15.2% from a year earlier and accounting for 68% of Vietnam’s total export value.

With oil revenues excluded, the sector brought in US$94.41 billion in the last twelve months, a year-on-year rise of 16.7%.

At the same time, foreign-invested enterprises imported goods worth US$84.56 billion, posting a trade surplus of US$17.03.

According to the FIA, manufacturing is the strongest magnet for foreign investment, attracting nearly US$14.5 billion in 774 projects, making up 71.6% of total FDI pledges in 2014.

The property and construction sectors come second and third, with pledges worth US$2.54 billion and US$1.05 billion respectively.

The Republic of Korea takes the lead among the countries and territories investing in Vietnam with US$7.32 billion, followed by Hong Kong, Singapore and Japan.

The northern province of Thai Nguyen is the most attractive destination to foreign investor, receiving US$3.35 billion, equivalent to 15.4% of total investment pledges in 2014.

Ho Chi Minh City and Dong Nai province came second and third with US$3.1 billion and US$1.83 billion.

SCG named Asean Admired Brand

ASEAN’s leading industrial conglomerate SCG has just received ASEAN’s Golden Trophy 2014 and the award of “ASEAN Admired Brand”.

This award is a proven record for SCG’s effort in the past 100 years to build sustainable brand and trusted quality of products and services, contributing to prosperity and promote Vietnam’s better economy.

“SCG is honoured to receive this award. This recognition has once again reflected our determination to become a good corporate citizenship in Vietnam. Following our vision to become ASEAN sustainable business leader, SCG has been continually expanding our investment across the region, which facilitates better the transition of technology and management know-how across ASEAN countries,” said Sangchai Wiriyaumpaiwong, general director of Vina Kraft Paper, a subsidiary of SCG.

SCG comprises three core businesses including SCG Cement-Building Materials, SCG Chemicals and SCG Paper. With more than 200 companies under its umbrella and approximately 47,000 employees, SCG creates and distributes innovative products and services that respond to the current and future needs of consumers.

SCG began its regional expansion with Vietnam as its strategic hub in 1992. Currently, SCG has 20 operations in Vietnam with more than $615 million of the total assets and employs more than 6,500 local employees.

The award is jointly organised by the Ministry of Industry and Trade, Ho Chi Minh City Union of Friendship Organisations, Vietnam – ASEAN Friendship Organisation, Ho Chi Minh City Television and SEATime Magazine, on the occasion of ASEAN’s 47th founding anniversary.

There are four categories within the award scheme: “ASEAN Admired Brand”, “ASEAN Excellent Enterprise and Business Man”, “ASEAN Quality Products and Services” and “ASEAN Favourite Destination”. The participants including enterprises and organisations operating in any sector within ASEAN community are able join by direct application or nomination by prestigious organizations.

“This award is part of the Vietnamese government’s policy on economic reforms and international integration, helping strengthen the friendship within and support the establishment of ASEAN Economic Community in 2015. Besides, the achievements will encourage enterprises and organisations to churn out better quality services and products,” said Ho Chi Minh City Union of Friendship Organisations president Le Hung Quoc.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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