BUSINESS IN BRIEF 23/1

MBKE raises chartered capital to over VND829 billion

Maybank Kim Eng Securities Company (MBKE) has gained State Securities Commission of Vietnam approval to raise its chartered capital by over VND214 billion to around VND829 billion (US$40 million).

Nguyen Hoang Thien Truc, general director of MBKE, said the increase is part of its plan to become one of the biggest stock brokerages in the country. With more capital, the company can better support clients to do business this year as the domestic economy is projected to fare better than last year.

The company adjusted up its chartered capital for the second time to VND615 billion from VND300 billion in May last year.

This year, the company intends to launch the KE-Communication utility on www.ketrade.com.vn to help brokerages share information with and give advice to stock traders online. It also plans to introduce a new trading application for mobile devices including cell phones and iPads to assist clients in getting market updates and forecasts.   

MBKE, a member of Maybank Kim Eng Group, started operation in Vietnam in April 2008 and was among the top ten brokerages in terms of market share last year.

Drug imports from 6 foreign firms halted

The Drug Administration of Viet Nam announced yesterday that it had decided to temporarily halt processing applications from six foreign drug companies and one local company. This means that these companies will not be able to register their products in Viet Nam nor import their products to Viet Nam.

The companies were found to have violated the appropriate procedures to register their medicines.

Four of the companies come from India, one from Pakistan, one from Hong Kong and one from Viet Nam.

The decision will be effective for at least 12 months.

Major urbanisation effort underway in northern mountainous region

Construction of five urban infrastructure projects in Thai Nguyen kicked off yesterday, officially putting in motion the US$301 million National Urban Development Programme in the Northern Mountainous Region (NUDNMR).

Thai Nguyen was the first city to carry out the programme. Other cities and towns in Bac Kan, Cao Bang, Dien Bien, Hoa Binh, Tuyen Quang and Yen Bai provinces will follow after they complete the necessary land clearance.

"These construction projects will improve urban infrastructure and environmental sanitation and raise the living standard of local residents," Deputy Prime Minister Hoang Trung Hai said at the construction launching ceremony.

He added that the programme would also strengthen the capacity of participating provinces to plan, implement and sustain urban infrastructure.

"This will be a great motivation for sustainable socio-economic development in the cities and towns in the region," said Hai.

World Bank Country Director for Viet Nam Victoria Kwakwa said that experiences gathered from implementing the programme would help form an effective model to apply in other cities and towns across the country, in which infrastructure investment would come hand-in-hand with enhancing authorities' urban management capacity.

NUDNMR is the second programme in Viet Nam to implement the Programme-for-Result financing model, which links the disbursement of funds directly to the delivery of results.

The programme has $250 million in funding from the World Bank and about $51.8 million from the Vietnamese Government.

VNPT Da Nang to start e-bill service soon

The Viet Nam Posts and Telecommunications Group (VNPT) and the Viet Nam Data Communication Company (VDC) are jointly providing electronic billing for customers using information technology and telecom services in Da Nang.

Customers will find it easy to track bills, complete tax statistics and reports, and collate data. The new service will also reduce costs for VNPT Da Nang.

Ho Van Cu, deputy director of VNPT's Da Nang branch, said that the firm has completed the installation and will provide e-bills in the first quarter of the year.

To send or receive e-bills, customers need to go to http://hoadon.vnptdanang.vn and log into the system with their usernames and passwords.

Six companies are providing e-bills in Da Nang, including FPT Telecom Company and the Central Power Corporation.

Da Nang is the fifth place in which VNPT has implemented the e-bill service, after Ha Noi, HCM City, Hai Phong and Thanh Hoa.

Businesses expect further interest rate cuts in 2015

Despite the interest rate reduction on bank loans during the past year, domestic producers expect commercial banks to further cut rates this year.

They added that such high rates have made Vietnamese products less competitive in both the domestic and international markets.

The President of the Animal Production Processing Import and Export Co., Doan Trong Ly told the Nguoi lao dong (The Labourer) newspaper that only Vietinbank had cut its interest rate from 9 per cent to 8.7 per cent so far this year. Other banks still kept their rates unchanged, Ly said, adding that his company was borrowing from Agribank at the rate of 9 to 10 per cent annually.

He added that most Vietnamese businesses were forced to take bank loans at an annual interest rate of 8.9 to 10 per cent, while their rivals in other countries could access such loans at only 2 to 3 per cent.

Small and medium-sized enterprises get loans at even higher rates of 12 per cent.

Ly said the reduction in lending interest rates was too slow and not commensurate with deposit interest rate cuts. It was also not reasonable as Viet Nam's inflation was currently near the same level as other countries' but Viet Nam's lending interest rates were two to three times higher than the inflation rate.

According to the central bank's Monetary Policy Department, the lending interest rate this year declined by approximately 2 percentage points, which brings the rate to the same level seen during the 2005 to 2006 period.

Commercial banks have also cut rates for previous loans. Currently, loans with lending interest rates of more than 15 per cent and 13 per cent account for roughly 3.9 per cent and 10.65 per cent of the loans offered, respectively. These values are lower, compared with the 6.3 per cent and 19.72 per cent recorded in December last year.

The Director of the Bank for Investment and Development at Viet Nam's Training Centre, Can Van Luc suggested that the central bank scrutinise further cuts in deposit interest rates before removing the rate cap.

He said the administrative regulation currently has no effect as commercial banks' liquidity is good, adding that it will help banks to further cut lending rates by 0.5 to 1 percentage points.

Vinacafé cooperates with Vietnam Airlines

Vinacafé Bien Hoa ("Vinacafé"), one of the leading non-alcoholic beverage companies in Vietnam, today announced its instant coffee to be served on both domestic and international flights of Vietnam Airlines since Jan 2015.

Vinacafe has relentless efforts in product innovation, capacity expansion as well as further investment in work-in-class technology to introduce several new products in oder to meet diversified taste and preference of consumers.

To present on Vietnam Airlines, Vinacafé has to beat up other coffee brands, including local and international brands thanks for its outstanding quality and subtantially heritage brand with more than 45 years, representing the original flavor of Vietnamese coffee.

Nguyen Tan Ky, Chief Executive Officer of Vinacafé said: “Vinacafé Bien Hoa is the only coffee company being rewarded as The National Brand for four years in a row. In the meantime, Vietnam Airlines recorded an impressive growth in recent years. Therefore, this is a great opportunity for Vinacafé to continue expanding the domestic market as well as reaching our arms to international markets at the fastest pace".

Last year sees strong luxury car sales

Sellers and distributors of luxury cars reported stronger-than-expected sales on the domestic market last year, with some brands recording the highest sales ever.

Mercedes-Benz Vietnam posted a sales growth rate of a staggering 43% with 2,467 units sold last year, the highest sales since the start of its Vietnam operations in 1995. With this result, Vietnam emerged as the fastest growing market for Mercedes-Benz in Asia.

Among 19 new products that the only luxury auto manufacturer having a factory in Vietnam launched on the local market last year, E-Class was the best-selling model with 635 units delivered to customers, followed by S-Class with 376 units.

BMW also reported the highest sales growth after eight years in this market.

Horst Herdtle, general director of Euro Auto, the official importer and distributor of BMW cars in the country, said Euro Auto was the luxury auto brand that had posted steady sales growth in the past eight years in Vietnam.

Euro Auto registered a robust sales rise of 32% last year when the company sold nearly 1,300 cars, and 2014 was the first year it sold more than 1,000 units.

Demand for expensive cars imported from Japan grew strongly last year. For instance, more than 385 Lexus cars handed to customers one year after the luxury car brand was officially launched in Vietnam.

Most of the luxury cars sold on the domestic market are imported from Japan and Europe, except for several models of Mercedes-Benz Vietnam assembled in Vietnam. This contributed to increasing auto imports in the country.

According to the General Statistics Office, the country spent US$1.57 billion importing 72,000 completely built-up (CBU) autos last year, up a staggering 103.8% in volume and 117.3% in value against the previous year.

Swiss firms invest US$1.94 billion in Vietnam

As of December 15, 2014, Switzerland has 101 projects with a total registered capital of about US$1.94 billion in Vietnam, ranking 18 among 101 countries and territories investing in the country, according to the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

Swiss projects have an average capital of US$19.2 compared with US$14.3 million worth of average capital for FDI projects in Vietnam.

So far, Switzerland has invested in 14 out of all 18 economic sectors in Vietnam focusing on processing, manufacturing, electricity, agriculture, information and communication, and real estate.

Swiss investors are now present in 16 out of the country’s 63 provinces and cities.

Two top destinations in terms of Swiss investment include Kien Giang with four projects attracting US$1.11 billion and accounting for 57% of total investment capital, followed by Dong Nai, including eight projects worth US$470 billion and 24%.

Meanwhile, Ho Chi Minh City and Hanoi have won the majority of projects from Switzerland. Ho Chi Minh City attracted 45 projects worth US$67 million, accounting for 45% of total number of projects; Hanoi attracted 20 projects worth US$67 million and 20%.

Hanoi’s CPI sees slight drop in January

Hanoi’s consumer price index (CPI) in January has dropped by 0.17 percent since December as a result of recent reductions in petrol, oil and gas prices.

Ripples from this price cut have also been felt in transportation service, housing, electricity, water, and construction material costs, decreasing by 1.18 percent from last month.

Meanwhile, the prices of restaurant services, beverages and tobacco, and entertainment and tourism services rose modestly by 0.38 percent, 0.21 percent, and 0.05 percent respectively.

The garment and food industries saw relatively sharp price increases due to changing weather conditions and recent price increases in poultry and aquatic products.

Rang Dong Group seals deal for Phan Thiet airport project

Domestic Rang Dong Group is to construct Phan Thiet Airport under the build, operate, and transfer model in the central province of Binh Thuan, the first of its kind in the country’s civil aviation sector.

Last week, chairman of the Binh Thuan Provincial People’s Committee Le Tien Phuong signed the approval of the tender result for the construction of the $263.2 million airport.

Accordingly, Phan Thiet Airport is scheduled to be put into operation in 2018. Once finished, the infrastructure developer will be licensed to exploit business opportunities here for a period of 81 years.

Situated in Phan Thiet city, the airport will cover 543 hectares, and will be developed to meet International Civil Aviation Organisation 4C grade standards. It will be capable of receiving ATR72-600, F70, BAE146-300, and Bombardier size planes.

Director of Rang Dong Group Nguyen Van Dong told VIR that the company was keen to invest in the airport in order to bolster its projects in the province including hotels and a golf course.

Phuong said the airport would spur the province’s socio-economic development by enhancing its investment attractiveness, luring more new projects, and accelerating the implementation of registered projects.

The airport will also boost tourism by cutting the travel times to the popular holiday destination. Furthermore, Binh Thuan has great potential for mining and energy. With titanium reserves of 600 million tonnes, Song Binh and Thang Hai industrial zones are calling for investment in titanium processing.

The province also boasts thermal power, hydropower, and wind power, promoting its importance as a national power production hub.

“Investment flows will contribute to Binh Thuan’s economic restructuring in tourism, titanium processing and energy,” said Nguyen Duc Hoa, director of the Binh Thuan Provincial Department of Planning and Investment.

Rang Dong Group, which was founded in 1991, operates in tourism, traffic infrastructure, golf courses, mining, forest plantation, and real estate trading. The group currently operates Ocean Vista Apartments in Mui Ne’s Sea Links City.

Foreign textile firms reel out new investments in anticipation of TPP

Foreign enterprises are ramping up their investments in Vietnam’s textile and garment sector in preparation of the potential Trans-Pacific Partnership.

Two foreign-invested  firms would add nearly $180 million in the total investment capital to their projects in Ho Chi Minh City.

Director of Worldon Vietnam Ma Jianrong said that his company would expand its production capacity with an increase of $160 million in the investment capital. In 2014, the company was granted an investment certificate to make high-class products for well-known brands like Uniqlo, Nike, Adidas and Puma. The company developed a garment facility covering 45 hectares in the second city’s Cu Chi Southeast Industrial Park, including a centre for fashion design and garment manufacturing.

“In light of a favourable investment environment and positive forecasts for production, the company decided to raise its investment capital from $140 million to $300 million,” said Jianrong.

Meanwhile, the Korean-based Nobland announced that it would invest an additional $18 million in its factory in the city’s Tan Thoi Hiep Industrial Zone, an increase of $61 million in the company’s current investment capital.

Nobland first entered Vietnam in 2002 with a $3-million garment plant equipped with 15 production lines. After 12 years, the company’s investment in the country has reached $43 million and they currently run three factories, with the annual total output of 74 million products.

Director of the Ho Chi Minh City Industrial and Export Processing Zones Management Authority’s (Hepza) Investment Management Division Tran Viet Ha said that these moves indicated a growing tendency among foreign-invested textile and garment firms to increase investments in Vietnam ahead of the possible Trans-Pacific Partnership (TPP) deal.

According to Hepza’s statistics, dozens of foreign investors, mainly from South Korea, China, Hong Kong and Taiwan, have recently  lodged applications to increase their investments in Vietnam’s apparel sector.

In this context, some big state-owned firms are accelerating their business operations before the country’s garment exports reap the benefit of zero per cent tariffs that are supposed to come into effect if the TPP is signed.

State-run Vinatex, for example, announced it would  invest in more than 30 major projects to develop supply chain links among its subsidiaries during 2015-2017. Last week, the group announced it would build a fibre, weaving, dying and garment complex and upgrade its existing facility worth more than $714 million in the central province of Quang Nam this year.

Last year, according to the Ministry of Industry and Trade, Vietnam’s garment and textile export turnover hit nearly $20.76 billion, up nearly 15.8 per cent compared to 2013. The country planned to achieve a turnover target of $28-$28.5 billion this year, rising 15.9 per cent on-year. The country’s export turnover to the US market will be $11 billion, Europe with $4 billion, Japan with $2.9 billion, and South Korea with $2.8 billion.

VSIP looks to expand Quang Ngai investment

Industrial land and township developer VSIP will expand the first phase of its VSIP Quang Ngai amid rising investments in the central region.

The Quang Ngai Provincial People’s Committee recently approved the adjustment of the industrial park’s (IP) development plan, allowing the developer to expand the park by nearly 50 per cent to 660 hectares from the initial 458ha.

According to the Management Authority of the Dung Quat Economic Zone - where VSIP Quang Ngai is situated - this expansion demonstrates the developer’s confidence in the growth potential of the central region, following its successes both in the south and in the north. Asides from the expansion of VSIP Quang Ngai, VSIP is looking into developing two more projects in the central provinces, in Nghe An and Binh Dinh, in a bid to respond the growth trends of this region.

Beginning operations as recently as 2013, VSIP - the joint venture between Vietnam’s Becamex IDC and Singapore’s Sembcorp Industries - developed VSIP Quang Ngai as an integrated township and IP. The project covers an area of 1,120ha, roughly half of which is dedicated to industrial land.

VSIP expected that this IP would be a competitive manufacturing base vis-à-vis labour-intensive industries and those eyeing the central region market and the external markets such as Laos, Cambodia, and Eastern Thailand. In addition, VSIP Quang Ngai offers investors preferable incentives under the government-approved Dung Quat Economic Zone scheme. Indeed, this IP is located in one of the few remaining areas in Vietnam where investment incentives are still available.

At present, the IP is home to 10 tenants from six countries with the total registered investment capital of nearly $200 million. King Riches, a subsidiary of Kingmaker Footwear Group, is building a $20 million factory in the park. URC Central Co. of the Philippines, known for its Jack & Jill brand of potato chips, started construction of its $35 million plant in the park while China’s Hebei Xindadong Textiles Co. is developing its $60 million textile manufacturing plant.

The Dung Quat Economic Zone Management Authority announced that it would attract around $2.1 billion of foreign direct investments to Dung Quat this year.

Vietnam cbank to impose immediate fine on banks with out-of-cash ATMs

The inspection and monitoring agency under the Ho Chi Minh City branch of the State Bank of Vietnam will inspect a number of automated teller machines (ATM) across the city and imposeimmediate fines on banks that operate problematic ATMs.

A team of inspectors will be formed to carry out the task, an agency representative told Tuoi Tre (Youth) newspaper.

Inspections will focus on ATMs installed at citywide industrial parks and export processing zones, where millions of workers are paid via cards, whereas the machines fall short of demand and regularly break down, he said.

The agency is considering sanctioning banks that violate Government Decree No. 96, the spokesperson added.

The decree, which took effect on December 12, set a maximum fine of VND15 million (US$700) for banks that let their ATMs run out of cash and fail to meet cash withdrawal demand.

Penalties ranging from VND10 million ($466) to VND15 million ($700) will be slapped on such breaches as failing to report when an ATM is out of order for 24 straight hours; inappropriate relocation or suspension of the operations of ATMs; having unstable electricity supply for the machines, which causes them to ‘swallow’ customers’ cards when the power is out; and failing to maintain customer care services.

“Whenever it receives a complaint about the ATMs, the agency will send personnel to check and determine the issue,” the source from the inspection and monitoring agency said.

“The agency officials will work directly with the bank that runs the machine and will book the case or impose fines if clear evidence is provided.”

The agency will tighten the procedures of licensing new ATMs for banks that fail to meet demand from their customers.

The move is intended to improve the quality of ATM services, which were repeatedly slammed by cardholders in 2014, he said.

Although Government Decree No. 96 has been in place for a month, no banks have ever been fined over their out-of-cash ATMs.

On January 11, as observed by a Tuoi Tre correspondent, dozens of workers at the Linh Trung Export Processing Zone in Thu Duc District ‘besieged’ 14 Vietcombank ATMs inside the park, but few were lucky enough to come back with cash.

Although most of the machines did not run out of cash, they repeatedly ran error messages and one of them was completely out of order.

Elsewhere, in the Dong An Industrial Park in the southern province of Binh Duong, there are seven ATMs operated by Agribank, Techcombank and Vietcombank.

Workers could only draw cash of low face values from two of the three Vietcombank ATMs, while the remaining one occasionally broke down, according to an observation the same day by Tuoi Tre. Techcombank and Vietcombank each have two machines but none of them had any cash left.

A VietinBank machine nearby also failed workers as it was shut down for maintenance.

Truong Thi Anh, a worker, said she spent a whole morning going from machine to machine but was still unable to withdraw any money.

“There are dozens of thousands of workers here but only eight ATMs, none of which have stable operations,” she lamented.

A Techcombank representative told Tuoi Tre that the bank has 60 ATMs across Binh Duong, home to many industrial parks and export processing zones.

Although Techcombank pays close attention to replenishing its machines on time, the ATMs usually become overloaded during weekends or the days when workers receive salaries.

Meanwhile, a representative with the Vietcombank branch at the Linh Trung Export Processing Zone, said it is normal for ATMs to break down because “they are machines anyway.”

An official from the central bank’s Ho Chi Minh City branch admitted toTuoi Tre on January 14 that no banks have been fined for violating decree No. 96, but refused to elaborate on the reason why.

Chu Lai anticipates virtuous cycle

The Chu Lai Open Economic Zone in the central province of Quang Nam is hoping for a virtuous cycle of investments to develop to follow the arrival of some major international investors.

According to the Chu Lai Open Economic Zone Authority, South Korea’s largest garment and textile manufacturer Panko – is studying an investment plan in the economic zone, which it said to be similar to its investment in the southern province of Binh Duong.

The Quang Nam Provincial People’s Committee also reported that Hong Kong casino operator Chow Tai Fook Group was interested in investing $4 billion into an integrated casino and resort of asset management firm VinaCapital.

In addition to these projects, the local authorities are calling for investments into an electricity generation and gas treatment complex in the zone and negotiating with a Japanese car maker on a plan to develop the zone into the country’s automobile manufacturing hub.

“After 12 years of quiet development, foreign companies are increasingly showing their confidence in Chu Lai,” said Do Xuan Dien, deputy director of the Chu Lai Open Economic Zone Management Authority.

The lack of key projects was blamed on the lack of interest in Chu Lai among foreign investors, but this is set to change as the local authorities believed the zone would rapidly become a popular destination for potential foreign investors.

Chu Lai is located about 100 kilometres south of the central city of Danang. When establishing the zone in 2003, the government hailed it as a major driver for Quang Nam’s socio-economic development. However, the development of this zone has failed to meet expectations.

Statistics from the Chu Lai Open Economic Zone Management Authority show the zone attracted 94 investment projects with the total registered investment capital of around $1.4 billion over the past six years. Of which, 67 projects are operational, generating $345 million of export value in 2014 and creating over 1,000 jobs.

Chu Lai’s attractiveness has been dwarfed by its  neighbouring Dung Quat Economic Zone in Quang Ngai province. Established in 2005, Dung Quat is now home to 122 projects with $8.7 billion of the total registered investment capital.

Vietnam cbank stocking foreign currencies after intervening in forex market

The State Bank of Vietnam (SBV) is buying foreign currencies from the local market to increase the national foreign exchange reserves, a move it stopped for five months already, Nguyen Van Binh, Governor of the central bank, said at a conference in Hanoi on Saturday.

The exchange rate between the Vietnamese dong and the U.S. dollar has been stabilized after the SBV devalued the dong by one percent earlier this month to stop market expectation of further depreciation of the local currency against the greenback, Binh said.

The rate adjustment, taking effect on January 7, has limited the speculation of the greenback and bolstered the SBV’s foreign exchange policy, Binh said at the conference.

Regarding the future exchange rate, Binh reiterated the SBV’s orientation announced earlier this year that the dong will not be devalued by over two percent against the greenback.

With national foreign exchange reserves at over US$35 billion, this helps the central bank to make any necessary intervention at any time it wants to stabilize the market, Binh asserted.

By the end of last week, the price of the U.S. dollar traded on the interbank market had continued to fall – compared to the previous week – to around VND21,340-21,344, down VND20 week-over-week and below the price set by the transaction office of the SBV at VND21,350.

After the decision to adjust the exchange rate, the supply of foreign currency was smooth and plentiful, and the SBV began to buy from the beginning of last week when a number of commercial banks wanted to sell, according to newswire VnEconomy.

The scale of the SBV’s purchase has yet to be revealed, the newswire said.

Last month, the central bank sold more than $1 billion to stabilize the local foreign exchange market.

In recent times, the Lunar New Year (or Tet in Vietnamese) has been a time of abundant supply of foreign currency, due to rising inward remittances from overseas Vietnamese and Vietnamese people working abroad and increased demand for the Vietnamese dong for payment, according to the SBV.

Tet begins on February 19 this year but festive preparations will start around a week before it, and the celebratory atmosphere lasting four to five days after that date.

Remittances are estimated to top $12 billion last year, the highest rate ever. The SBV has forecast that the figure will rise to $13-14 billion in 2015.

Ford Vietnam’s sales up 71% to record high in 2014

Ford Vietnam’s retail sales soared 71% to a record of nearly 14,000 units in 2014, driven by strong performance across its entire lineup in Vietnam.

Strong sales helped Ford gain a market share of 8.9% in Vietnam, up 1.5 percentage points from the previous year.

The carmaker also ended the year with December sales rising by 64% year on year to an all-time monthly total of 1,650 units.

Ford Vietnam’s managing director Jesus Metelo Arias said 2014 was a fantastic year and the company is pleased to be able to continue serving Vietnamese customers with their expanding showroom of Ford vehicles.

He added that the continued expansion of the company’s nationwide dealer network would help the Ford brand to become more accessible to customers across Vietnam.

Economic efficiency vital for Vietnam

The World Bank (WB) has said Vietnam might obtain GDP growth of 7%, instead of 5.6%, this year if the country makes clear what it wants.

The point was raised by Professor David Dapice at Harvard University at a seminar on the world economic outlook and its impact on Vietnam, which was organized in HCMC last Friday by PACE Institute of Management (PACE).

Prof. Dapice, who is an expert in Vietnam and Southeast Asia, said return on investment (ROI) in Vietnam remains low as investment activity is more influenced by political factors than economic efficiency.

The Government often pours a lot of money into infrastructure projects in provinces without caring much about economic efficiency, he noted, adding much capital could not go to the right place, making its use inefficient.

Politically influenced decisions may make certain groups of people pleased but negatively impact on economic growth.

In terms of ROI, Prof. Dapice cited the figures of the World Economic Forum 2014 saying Vietnam’s State budget for infrastructure development accounted for 12% of gross domestic product (GDP) but it scored a mere 3.5 on a scale of 1 to 7 while Indonesia’s respective figures were 7% and 4.5.

When Vietnam joined the World Trade Organization (WTO) in 2007, a group of experts including Prof. Dapice advised the Government to refrain from interfering in the market but this advice had not been taken seriously.

As for China, upon its accession to the WTO, it allowed foreign-invested businesses to invest heavily into a number of sectors, thus forcing local firms to enhance their competitiveness.

State-owned and private businesses are not operating in a level playing field and this is why a number of private firms have resorted to connections with officials to do business, said Prof. Dapice. Such a business practice should be eliminated to create fairness, he added.

Prof. Dapice warned Vietnam should not be pleased with the pace of FDI increase because regionwide the nation’s growth rate has declined over the years.

In 2008, Vietnam attracted 20% of total FDI in Southeast Asia but the percentage dropped to 7% in 2013. The fall is attributed to the serious lack of supporting industries in Vietnam.

Regarding the ASEAN Economic Community (AEC), Vietnam will enjoy a number of advantages for development. The country is likely to woo more investors thanks to its cheaper labor than Thailand and Malaysia.

Disbursements of home loans up in second half

The disbursement pace of the VND30-trillion preferential home loan package in the second half last year doubled that between June 2013 and April 2014 as the Government allowed more people to gain access to such loans.

Minister of Construction Trinh Dinh Dung looked upbeat when he gave the information at a web conference last Friday.

As of December 15, five banks involved in the home loan package lent out nearly VND9.42 trillion, or 31.39% of the total. In June last year only 7.63% of the VND30 trillion found borrowers.

Meanwhile, banks agreed to make VND5.04 trillion loans to 11,626 individual and household clients and disbursed VND3.35 trillion to 11,607 borrowers. Regarding corporate clients, banks pledged around VND4.38 trillion for 34 projects and disbursed VND1.53 trillion for 29 projects.

According to Dung, the disbursement rate has speeded up since the Government issued Resolution 61/NQ-CP amending Resolution 02/NQ-CP to make it possible for more people to access low-interest loans with longer terms. The accelerated rate also results from the implementation of new budget housing projects.

Tran Trong Tuan, director of the HCMC Department of Construction, said HCMC began construction of a low-cost housing project in District 2 and another for military personnel in Go Vap District, raising the number of budget housing projects in the city to 15 with 2,442 apartment units.

The city has so far sold 1,653 budget houses, according to Tuan.

Regarding growth targets of the construction sector, Minister Dung said the development targets of last year were maintained.

The sector’s production output went up 10.2% to VND849 trillion last year. Based on the 2010 base prices, the value was VND676 trillion, up 7.6% against 2013.

The average floor space was 20.6 square meters per person, around one square meter higher than in 2013.

Regarding cement consumption, around 70.6 million tons of cement was sold last year, 10.3% above the target and 15% higher than the previous year.

The central bank has permitted 10 more banks to join the home loan program following Resolution 02/NQ-CP. They are Baoviet Bank, Eximbank, SCB, PVcom Bank, TPBank, OCB, VPBank, SeABank, Nam A Bank and SHB.

The participating banks now number 15. The other five banks are BIDV, VietinBank, Vietcombank, Agribank and MHB.

The farmer’s paradox

Many dairy farmers countrywide are feeling the bitter taste these days when part of their yields cannot be consumed. For years, if not decades, local farmers have suffered from a vicious circle of high productivity and low prices. Under such circumstances, it is farmers who stand to bear the brunt of losses when prices plummet to below the production cost owing to excessive supplies. But, for dairy farmers this time, it is not totally the supply-demand balance that dictates their woes. It is the lack of coordination – and the absence of the State intervention – that leads to the paradox given the fact that local production of milk still falls far short of demand.

As widely covered in local media, scores of farmers from Tu Tra and Da Ron villages in Don Duong District in the Central Highlands province of Lam Dong over the weekend took barrels of fresh milk to a collection point of Dalat Milk and dumped the milk onto the ground there to protest what they claimed as restrictive purchase policy of the firm.

The company, says Nong Nghiep Viet Nam, now adopts a policy to restrict its purchase to 16 liters of milk per dairy cow provided that such cattle are raised under contract with the firm. The company explains that it has to restrict the milk volume per head of cattle to ward off milk of unclear origin whose quality is not ascertained since many other farmers who have not signed contracts with the company may seek to sell milk via contracted farmers. Furthermore, the storing and processing capacity of the company is limited, while the milk production has been rising quickly.

The policy hits farmers dearly.

Pham Hai Thai, a farmer in Tu Tra Village, says in Dan Viet that he is raising ten dairy cows that give 200 liters of milk a day, “but the company is buying only 160 liters a day. The redundant volume is too much to be stored at home and cannot be sold, so the only way is to discard it. Given the current price, we are losing half a million Vietnam dong each day.”

Nguyen Hong Nhat, manager of the dairy cow cooperative Cau Sat in Tu Tra Village, complains in Thanh Nien that  Dalat Milk has signed contracts with farmers for three years, and has consumed all the fresh milk ever since at a stable price. But “its sudden policy to restrict purchase to 16 liters of milk per cow now results in over three tons of fresh milk unconsumed each day.”

The slow consumption of milk is seen not only in Lam Dong, but also elsewhere in the country. An Ninh Thu Do reports that farmers in Hanoi City’s Gia Lam District are in the same boat as the processor IDP is seeking to restrict purchase of fresh milk. A representative of IDP explains that the milk volume supplied by farmers having contract with the company has been rising, from some 5.5 tons a day last summer to 6.5 tons now.

In addition, the contract IDP signed with farmers has expired, and has not been renewed. An IDP executive explains in Nong Nghiep Viet Nam that “the company in its 2015 plan will focus on fresh milk from Ba Vi nearby. We will continue buying milk from farmers until they find new buyers.” Such a scheme is putting farmers there under tenterhooks.

The real reason behind the slowing purchase is revealed to be a profit-driven one, since local yield now meets only 20% of demand. Ngo Minh Hai, general director of TH True Milk, clarifies in Phu Nu newspaper that the company lowers purchase since the milk price in the world is falling. “If continuing to buy fresh milk in bulk from farmers, the company will suffer losses.”

Commenting on the relation between farmers and enterprises, Ho Cao Viet, an expert with the Institute of Agricultural Science for Southern Vietnam, says in Tuoi Tre that the problem with fresh milk purchase is inevitable, since farmers have long attended to production without paying due care to market signals.

The State should step in, giving guidelines to farmers to help match their production with the market demand, Tuoi Tre cites Professor Nguyen Quoc Vong at RMIT.

Market factors have not been taken into account, leading to huge losses for farmers, and it has been widely reported how dragon fruit, water melon, litchee and various other types of farm produce, including milk this time, have been repeatedly wasted due to low prices. It is a big paradox for farmers when their efforts to raise productivity normally do not pay off. “It is also a big paradox for the economy when Vietnam still lacks milk for processing, when many children do not have milk to drink, and when enterprises still spend billions of U.S. dollars each year to import milk products for local consumption,” says Tuoi Tre.

Central Highlands region records highest food productivity

Food production in the Central Highlands region experienced a robust year with the highest ever recorded output of 2.56 million tonnes in 2014, representing an increase of 100,000 tonnes from previous year, according to the Steering Committee for the Central Highlands.

Dak Lak led regional province in food production with nearly 1.24 million tonnes, followed by Gia Lai with 568,000 tonnes.

The results were attributed to a number of measures taken by the provinces, such as the enlargement of cultivation areas to over 238,000 hectares and investment in 2,000 water resource constructions.

In addition, farmers brought hybrid and certified rice varieties such as ML48, OM900, CT16 and HT1 into mass production, helping to generate high yields.

A number of workshops were organised to introduce new hybrid rice and corn varieties, cultivation techniques, and pilot large-scale field models as well as to connect famers, businesses, scientists, and managers.

Thanks to these efforts, the region has not only ensured food security but also produced enough food to export and sell in other provinces, thus increasing the farmers’ income and improving their quality of life.

Local farmers are currently planting winter-spring crops and upgrading water resource systems serving the cultivation of rice and farm produce to further increase productivity.

Vietnam, India eye 15 billion USD bilateral trade revenue in 2020

Vietnam and India have targeted trade revenue of 7 billion USD in 2015, increasing to 15 billion USD by 2020.

These goals were unveiled at the second meeting of the Vietnam-India joint subcommittee in Hanoi on January 20.

During the meeting both sides agreed to enhance strategic partnership, remove trade barriers, and facilitate investments in key industries such as oil and gas and garment and textiles towards the intended growth.

They will continue to strengthen collaboration within the ASEAN – India framework and advance negotiations of the Regional Comprehensive Economic Partnership (RCEP). A centre for commerce and investment between ASEAN and India is expected to be developed soon.

Addressing the function, Indian Commerce and Industry Deputy Minister Rajeev Kher affirmed that Vietnam continues to be a pillar in his country’s Look East policy.

Cao Quoc Hung, Deputy Minister of Industry and Trade, highlighted positive economic changes resulting from the two countries’ partnership in recent years, adding his wish to enhance the ties even further.

According to official statistics from the Ministry of Industry and Trade, total bilateral trade revenue worth 5.15 billion USD between Vietnam and India from January to November 2014 includes 2.27 billion USD from export and 2.88 billion USD from import, a 4.5 and 12.5 percent respective annual increase.

Vietnam primarily exports electronic products, machines, agricultural goods, and apparel to India, importing fishery products, medicines, and spare parts.

Currently, there are 84 projects across Vietnam invested by India, valued at 258 million USD. Most of the projects belong to the energy and food processing industries.

Vietnam, Singapore trade grows 20 percent

Vietnam-Singapore trade hit 15.6 billion USD (20.4 billion SGD) in 2014, a 20.3 percent surge from 2013, according to the Singapore Department of Statistics.

Vietnam shipped its partner around 3.1 billion USD (4.05 billion SGD) worth of commodities, up 22.4 percent. Primary exports include telephones and electronics goods and components, which brought home 987 million USD (1.32 billion SGD) last year. Other key export products include minerals, coffee, tea, footwear, machines and crude oil.

Singapore’s export to Vietnam also rose significantly, up 20.1 percent to 12.75 billion USD (16.34 billion SGD) last year. Domestic products comprised 5.46 billion USD (7.3 billion SGD), up 18.7 percent, with the remaining exports consisting of the sale of re-exports, up 21.2 percent.

Singapore mainly ships telephones, electronics goods and components, petroleum, plastic and plastic products, books, and photos to Vietnam.-

Ha Nam attracts foreign investors

The northern province of Ha Nam has received positive feedback from foreign investors expressing their satisfaction in the local investment environment.

Ha Nam has one of the most favourable business environments, said Chief Representative of the Japanese External Trade Organisation in Hanoi Atsusuke Kawada during a meeting between foreign investors and local authorities on January 20.

He added that Japanese firms did not see any issues with current investment conditions in the locality.

Meanwhile, a representative from the Hashima Company in Dong Van II industrial park in Duy Tien district hailed provincial efforts in calling for investment and supporting investors in dealing with administrative procedures in a timely fashion.

The province offers attractive preferential policies for investors and has a strong track record of realising its commitments, said Choi Ky Young, who runs Finetek Vietnam, specialising in producing mobile phone screens within the Hoa Mac industrial zone in Duy Tien.

At the same time, Antony Austin Jolly, Director-General of Midway Metals in Chau Son industrial park in Phu Ly city, underscored that Ha Nam did not disappoint. He expressed his confidence in investment attraction policies of the locality and Vietnam in general, as well as the socio-political stability in Vietnam coupled with a young and creative workforce.

Speaking before representatives from more than 120 foreign-investment enterprises in Ha Nam, Chairman of the provincial People’s Committee Nguyen Xuan Dong said luring foreign investment is a top priority for the locality.

Looking forward, the province will focus on enhancing the quality of its workforce, accelerating administrative reform, upgrading its infrastructure, and improving services for local businesses to attract more investors, he revealed.

Also in the meeting, Mai Tien Dung, Secretary of the provincial Party Committee, pledged the province will continue to work closely with businesses and fully implement its commitments. Leaders and officials in Ha Nam are available to provide assistance to local firms in removing obstacles and resolving difficulties, he vowed.

Currently, Ha Nam is hosting 125 foreign direct investment (FDI) firms from 10 countries and territories, primarily from Japan and the Republic of Korea .

In 2014, there were 35 FDI projects totalling over 300 million USD in the province.-

Vietnam steel corp. continues divesting unprofitable units

The Vietnam Steel Corporation (VSC) will continue divesting capital from unprofitable firms after slow progress was made last year.

It will also make necessary changes to the 2015 development strategy to position itself for 2025 goals, including keeping close tabs on its affiliates and joint-ventures while monitoring market developments to purchase raw materials at competitive prices to ensure low-cost outputs.

From the outset of 2015, VSC has directed its units to stockpile enough materials for production, Deputy General Director Vu Ba On told a conference held to evaluate the corporation’s 2014 performance and determine 2015 tasks in Hanoi on January 19.

Technological advances will also be utilised to improve inventory and quality control.

Last year, VSC sold 2.97 million tonnes of steel, a 4.2 percent increase from 2013, with billet steel growing by nearly 40 percent thanks to the inauguration of Lao Cai Iron and Steel Factory in September.

The growth generated total sales of 24.9 trillion VND (1.1 billion USD), an annual reduction of 7.1 percent due to falling market prices, but resulted in over 70 billion VND (3.3 million USD) in profit, doubling its target for the year. Its subsidiary and joint-venture companies earned a pre-tax net income of 847 billion VND (40.3 million USD), marking a 65 percent increase.

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

Maybank Kim Eng, luxury car sales, VNPT, VSIP, Ford Vietnam
 
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