BUSINESS IN BRIEF 22/3

Higher competitiveness needed to fuel growth

The government of HCMC needs to make greater effort to improve labor productivity and competitiveness if the city wants to serve as the strong locomotive of the country’s economy, said the head of the Party Central Committee’s Economic Commission.

The city is coping with a series of challenges related to economic growth and urban management, Vuong Dinh Hue told a seminar on HCMC with 40 years of development and integration, organized on March 17 by the city government and the Vietnam Fatherland Front Committee in HCMC.

Hue said the competitiveness of local enterprises which are the drivers of the city’s economic growth, is not strong and that they are now grappling with difficulties as the nation is integrating deeper into the regional and global economies.

To prop up socio-economic development in the years to come, the city should focus on a growth model that boosts labor productivity and competitiveness, research and development (R&D), industrial restructuring with modern technology and local content in its products, and development of industrial clusters and supporting industries.

Hue suggested the city ask the Government for appropriate policies, especially those for financial autonomy to enable it to become the main growth engine of the economy.

It is important for HCMC to strengthen connectivity with localities in the Southern Focal Economic Zone in terms of economic growth and transport infrastructure, as well as develop material supplies for safe farm produce processing.

Former Prime Minister Phan Van Khai told the seminar that the city has become an important city of the country. The fast expansion of the labor force, successful poverty alleviation and the improvement of living standards in the outlying districts have been among the outstanding achievements of the city since 1975, when the city was liberated, paving the way for the reunification of the country.

However, Khai urged HCMC to put urban infrastructure development on faster track with more resources on zoning and planning management to support strong economic growth.

Tran Du Lich, deputy head of the HCMC delegation of National Assembly deputies, pointed out problems with the economic structure, urban infrastructure and public administration.

Lich told the seminar that the low efficiency and overlapping functions of the public administration have put the brakes on economic reform and on development of a healthy business environment.

But HCMC chairman Le Hoang Quan insisted the city had obtained strong economic growth and economic restructuring had been implemented effectively in the past years. The city’s gross domestic product (GDP) was US$5.3 billion in 2000 but rose to more than US$40 billion last year.

As of the end of last year, the city had had three export processing zones, 13 industrial parks, 37 commercial centers, 175 supermarkets, 240 traditional wet markets, and 723 convenience stores.

The city targets GDP per capita of over US$5,538 this year compared to US$5,131 last year and the average annual income of VND16 million per household, equivalent to the world’s level.

Fuji Xerox Haiphong to raise localisation to 90 per cent

Fuji Xerox Haiphong hopes domestically produced parts will contribute over 90 per cent of the product value generated in its first Vietnam-based plant.

“It would be nice to have 100 per cent, but the problem is we cannot source them,” said president Tadahito Yamamoto.

Domestically produced parts now make up 50 per cent of the value Fuji Xerox generates at Haiphong plant. However, Fuji Xerox Haiphong’s current suppliers are not Vietnamese firms but Japanese, Taiwanese and Chinese firms located in the country.

Apart from raising the localisation rate, the firm also intends to raise the capacity of the plant to its full level from the current 50 per cent and turn it into a production hub that will serve the entirety of the fast growing Asia Pacific region.

Fuji Xerox Haiphong started production in November 2013. The plant, which cost $120 million, is located in the Vietnam-Singapore Industrial Park in the northern port city of Haiphong and has an area of 57,563 square metres. Its products include multifunctional colour printers and LED printers, with the capacity of two million units per year.

Fuji Xerox targets to raise the portion of overseas revenue to 60 per cent of its total revenue in the course of the next two years, according to president Yamamoto. To reach the target, the firm is increasing marketing activities in growing markets such as Vietnam and Cambodia.

MK Smart becomes first JCB card manufacturer in Vietnam

MK Smart JSC, a member of MK Group, recently announced the company has been certified by JCB International Limited (JCBI), the international operations subsidiary of JCB Limited, to be the first JCB card manufacturer in Vietnam.

MK Smart factory based in Hanoi’s Quang Minh industrial zone has proven to completely satisfy the stringent requirements of JCBI for security and information technology infrastructure, two most important requirements for a financial card manufacturer.

Besides, the factory has closed production process, from the stage of receiving information from client to finished product delivery.

This process is closely monitored by qualified technical department with hi-tech infrastructure, ensuring efficiency and absolute security.

“MK Smart’s earning certification by JCBI has confirmed the leading position of MK Smart in Vietnam card industry, especially in financial and banking sector,” said Nguyen Hai Ha, CEO of MK Smart, in a company recent statement.

“This is a strong proof for the quality and technology of MK Smart products.  JCBI certificate allows MK Smart to provide JCB cards with competitive price and fast delivery,” Ha added.

MK Smart JSC, established in 2003, is the only company in Vietnam capable of producing EMV smart card and SIM card with international standard. Until March 2015, MK Smart is the very first company in Vietnam achieving four certificates of GSMA, VISA, MasterCard and JCB for card manufacturer.

JCB is a major global payment brand and a leading credit card issuer and acquirer in Japan. JCB cards are now issued in 17 countries and territories, with more than 88 million card members.

Vietnam to hand over $100mn oil rig to Brunei in June

Vietnam is about to finish building an oil and gas platform to export to Brunei in June in accordance with a US$100 million agreement approved by the former’s PTSC Mechanical and Construction Company and the latter’s Total E&P Borneo B.V. in February last year.

Dong Xuan Thang – director of the PTSC Mechanical and Construction Company, an arm of the Vietnam National Oil and Gas Group (PetroVietnam) – said his firm has completed the construction of the 1,200 ton base (or jacket) of the platform.

Now, it is building the topside of the platform, weighing nearly 3,000 tons, in Vung Tau of the southern Vietnamese province of Ba Ria-Vung Tau.

The two parts of the platform, named the Marahaja Lela South (MLS), will be taken offshore and delivered to the investor, Total E&P Borneo B.V., in June.

In February last year, PTSC M&C and MLS signed a contract to provide engineering, procurement, construction, and commissioning services of the MLS platform to be located in water at a depth of 63 meters offshore Brunei. The value of the contract is $100 million.

In November 2014, PTSC built and exported to India the $70 million topside of the central platform HRD for the Indian Oil and Natural Gas Corporation.

Impact assessments to become the norm

Detailed environmental impact assessment reports will become the norm for investment projects in certain sectors in Vietnam, according to new government regulations.

The government has enacted Decree 18/2015/ND-CP on environmental protection zoning, strategic environment assessments, environmental impact assessments (EIA), and environmental protection planning. Under the decree which will take effect on April 1, 113 types of projects like infrastructure construction, energy, irrigation, mineral exploitation, oil and gas, and waste treatment will be compelled to undertake EIAs.

An EIA includes an analysis and prediction of the potential environmental impact of specific investments, proposing measures to protect the environment and potential ways of minimising environmental pollution. EIAs may be carried out by project licence-holders or by organisations that specialise in conducting such reports.

Investors will also be compelled to carry out public consultation with communal people’s committees, local organisations, and members of the public who will be affected by the projects.

Under the decree, EIAs will be appraised by the Ministry of Natural Resources and Environment, other relevant ministries as appropriate, and provincial people’s committees.

Although businesses are currently obliged to carry out EIAs, the enforcement of this regulation has remained lax.

“Many National Assembly members said it is necessary to force enterprises to carry out EIAs before their projects are implemented. This will help businesses to understand their commitments to environmental protection,” said the National Assembly’s Committee for Science, Technology and Environment vice chairman Vo Tuan Nhan.

He said the flouting of EIAs by businesses had led to an increasingly bad environmental situation.

“They implement EIAs just for form’s sake, and never put the EIAs into practice,” he stressed.

Tran Xuan Vinh, vice head of the central province of Quang Nam’s National Assembly delegation, said one of the biggest causes behind Vietnam’s increasing environmental pollution was the poor quality of EIAs.

“The EIA for one project is simply copied for another project. For example, the EIA reports for the Song Tranh 2 and A Vuong hydropower projects are almost identical, and were done within a short period of time,” he said.

Vietnam Association for Environmental Impact Assessment president Nguyen Khac Kinh said that forcing enterprises to carry out EIAs was good, but how to actually force businesses to implement EIAs was another problem.

Positively grasping opportunities brought by multi-lateral agreements

Joining negotiations for the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) not only brings enormous economic interests to member countries, but also deepens trade ties between Vietnam, Australia and New Zealand.

At a press briefing in February launching the 40th anniversary of the establishment of diplomatic relations between New Zealand and Vietnam, New Zealand ambassador to Vietnam Haike Manning affirmed that many products from New Zealand, such as milk, apples, kiwifruits and wines, can be found in many supermarkets and retail outlets in Vietnam while the oceanic consumers are gradually becoming more aware of Vietnam’s farm products, including coffee, pepper, cashew nuts and tropical fruits.

It can be said that agricultural products play an important part in trade relations between the two countries. Many competitive agricultural products from the oceanic country are available in Vietnam while the country has various tropical farm products which New Zealand has not got. The main exports of New Zealand to Vietnam are milk (52%) and wood products (11%).

The first visit to Vietnam of New Zealand's special agricultural trade envoy Mike Petersen at the end of 2014 affirmed the oceanic country’s commitment to boosting agricultural commercial co-operation and supporting agricultural development in the country.

According to the New Zealand Embassy in Hanoi, New Zealand continues to be an effective donor of development aid to Vietnam, especially in agricultural projects. The oceanic country has helped Vietnam develop value chains in agricultural and livestock production to benefit farmers and enhance capacity for medium and small-sized entrepreneurs through sharing experience and specialised knowledge.

The recent notable co-operative project, which has been jointly implemented by the Institute for Crop and Food Research of New Zealand and a number of agricultural research institutes of Vietnam, has helped create a new high-value dragon fruit hybrid. The achieved results have brought facelifts to rural areas in the Mekong Delta region, raising farmers’ income significantly and creating an effective model contributing to developing and improving agricultural policies for Vietnam. Vietnam is boosting dairy projects while New Zealand veterinary experts are researching into ways to help New Zealand cows adapt to Vietnam’s conditions.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, Australia is an important investment partner of Vietnam. By the end of 2014, Australia had 320 foreign direct investment (FDI) projects which were still effective in the country with a total US$1.65 billion registered capital, ranking 19th among 101 nations and territories investing in Vietnam.

In 2014, Australia invested in 24 new projects in Vietnam, ranking 16th among 60 nations and territories investing in the country, with a total newly registered capital of US$30.73 million and US$112.11 million added registered capital in six projects. The total newly registered and added capital of Australian investors in 2014 was US$142.84 million.

The processing and manufacturing industry saw the most Australian projects, totalling 119 with the total US$1.03 billion investment capital, accounting for 62.7% of Australia’s registered investment capital in Vietnam. Agro-forestry-fisheries took second place with 15 projects with the total investment capital of US$115.42 million, accounting for 7% of the total registered investment capital in the country.

To enhance investment co-operation between Vietnam and Australia, both countries should further enhance favourable conditions for business communities to meet and exchange ideas to boost trade and investment.

With the policy of multilateralising and diversifying external economic relations and efforts in improving the investment environment to attract further FDI and elevate the capital’s use effectiveness, it can be forecasted that FDI flow into Vietnam will increase in the future, in which there will be further projects of Australian investors.

Vietnam, Australia and New Zealand are joining negotiations for RCEP and TPP. If the agreements are realized effectively, they will not only benefit participant countries economically, but also contribute to deepening trade ties between Vietnam and Australia and New Zealand.

The agreements will open up great opportunities for Vietnamese exports, particularly farm products, textile, garment and footwear, to penetrate Australia and New Zealand markets. They will also facilitate investment flow from the two oceanic countries to pour into Vietnam.

Quang Tri introduces business opportunities to Thai firms

More than 70 Thai enterprises were briefed on potential investment opportunities at a conference held by the central Quang Tri province People’s Committee.

The conference, taking place on March 18 in the capital city of Dong Ha, aimed to provide Thai companies with a comprehensive understanding of the province’s advantages and potential to help encourage relevant and promising business ideas.

Thai investors asked a number of clarifying questions on land-lease contracts, the province’s policy on natural resources and the protection of foreign companies, worker salaries, tariffs and procedures for bank loans.

Responding to concerns from Thai investors, the province’s Deputy Chairman Ha Sy Dong said that Quang Tri will create favourable conditions for Thai enterprises to rapidly and effectively implement investment projects.

Around 1,200 local and foreign enterprises have been registered in the province with a total capital of US$2.36 billion, yet only three are Thai businesses.

Vietnam to look into surcharges set by foreign shipping lines

Vietnam will inspect foreign shipping lines for allegedly imposing unreasonable surcharges on local traders, the Government Office said on March 18.

The ministries of finance, transport, and industry and trade will review all the surcharges to see if they violate Vietnam’s Competition Law as well as international norms and punish violators accordingly, it said.

Following the inspection, the ministries will also seek the government’s approval for a proposed list of shipping surcharges that can be applied in Vietnam.

Last August, trade associations and authorities lamented that many foreign shipping companies levied unreasonable fees on Vietnamese exporters and importers.

They said there were 10 kinds of surcharges in total, many of which were unreasonable.

The Vietnam Leather, Footwear and Handbag Association for instance said its members must pay US$110 million of surcharges each year to shipping firms.

Bui Thien Thu, deputy chief of the Vietnam Maritime Administration, told Thoi Bao Kinh Te Sai Gon (Saigon Times) that Vietnamese companies must resort to foreign shipping firms as the domestic fleet is incapable of handling all the cargo.

Thu said shipping surcharges are included in transport fees.

Foreign shipping firms usually reduced transport fees to lure Vietnamese companies, but then they increased shipping surcharges to make up for the discount, he said.

Licogi to sell 35% stake to Khu Dong

Infrastructure Development and Construction Corporation (Licogi) announced its strategic investor will be Khu Dong Real Estate Investment Limited Company, which will buy a 35 per cent stake in the firm.

Licogi also said it would sell 31.5 million shares to the investor before the initial public offering (IPO) on April 13 in Ha Noi.

As planned, the corporation will offer nearly 21.27 million shares, or 23.63 per cent, in an IPO on the northern bourse at VND10,000 (US$0.48) per share.

Licogi did not declare the price of shares sold to Khu Dong Real Estate Investment Company, but said it would not be lower than the starting price.

After the sale, plus a 40 per cent stake owned by the State, Licogi would have charter capital of VND900 billion ($42.86 million).

Licogi is headquartered in Ha Noi's Thanh Xuan District and belongs to the construction ministry. It is involved in construction work in urban areas, industrial parks and traffic infrastructure, as well as hydroelectric and thermo-electric projects.

Licogi has also developed several large real estate projects in urban areas in Hoang Mai and Cau Giay Districts of Ha Noi, Ha Long and Uong Bi in the northern province of Quang Ninh and others in Phu Tho and Dong Nai provinces.

Khu Dong Real Estate Investment Company was founded in HCM City in 2009 with a charter capital of VND800 billion ($37.5 million). The company owns the Villa Park in Bung Ong Thoan Road, District 9, in HCM City.

Vinatex to build textile and garment factory complex

The Viet Nam National Textile and Garment Group (Vinatex) will commence the construction of a factory complex in the central Quang Nam Province on March 25,

The model of factory complex in central Quang Nam Province. The complex will supply materials to cities and provinces nationwide.

Spread over 20ha in Que Son District, the VND1.14 trillion (US$53.5 million) project will include a fibre factory that will produce 4,600 tonnes of products per year, a textile and dyeing factory with a 5,000–tonne annual capacity, and Huong An garment factory with 20 knitwear production lines, which will produce 20 to 25 million products per year.

Vinatex will also build a factory that will treat 5,000cu.m of wastewater per day to serve the production needs at the complex.

After it becomes operational, the complex will supply materials to cities and provinces nationwide, including Da Nang, Phu Yen and Ha Tinh. It will also create diversified and high-quality textile and garment products to meet the domestic and export market demands.   

The project's first phase is expected to earn nearly VND1.7 trillion in revenue per year, contributing about VND30 billion ($1.4 million) to VND35 billion ($1.64 million) to the local budget, and generating stable jobs for about 2,000 workers with an average income of VND4 million ($187.7) to VND5 million ($234.7) per head per month.

The group plans to spend VND9.4 trillion (US$4.4 billion) on textile and garment, weaving and dyeing and infrastructure projects in the 2015-17 period. About 60 per cent of the capital will be poured into weaving, dyeing and infrastructure projects to lure other businesses.

In 2015, nearly VND2,425 billion ($113.8 million) will be disbursed for the above-mentioned projects.

Vinatex has equitised its operations from January 1 this year. It has set a target for its parent company to earn VND900 billion ($42.25 million) in revenue, and an after-tax profit of VND288.4 billion ($135.39 million) in 2015.

What can be seen from February’s economic data?

In late 2014 many experts forecast that the Vietnamese economy in 2015 would continue to experience high growth and low inflation, something which may come true given recent economic data.

The consumer price index (CPI) in February, at the time of the Lunar New Year, fell by 0.05% from the previous month for the first time in many years — the fourth consecutive decline in recent months. Such data shows that actual economic developments came in line with the forecast. During the Lunar New Year, prices did not rise and even fell slightly, which was good news for wage earners and made consumers in general feel more confident in the local currency. However from a regulatory view, the underlying cause of this abnormal phenomenon should be determined and analysed in order to address concerns that this may signal deflation and a reduction in purchasing power.

Commenting on this matter, Minister of Planning and Investment Bui Quang Vinh gave an explanation that has received widespread agreement. He said the continuous decline of CPI is not the result of deflation but of sharp cuts to petrol and oil prices as a consequence of falling global prices.

Energy output accounts for a large proportion of the price of many goods and services and the sharp and consecutive reduction in fuel prices have lowered the price index of transport, housing and building materials. Such a price fall also acts as a stimulus to investment for development and social consumption, in contrast with deflation. The economy is considered to be in a period of deflation when supply outstrips demand, unsold goods rise and services slump, which leads to a downturn in the production of goods and services. In Vietnam, retail sales in the first two months of 2015 were still buoyant as evidenced by a sharp 10.7% rise, compared with the respective increases of 3.6% and 6.2% during the same period in 2013 and 2014.

It is notable that core inflation, which excludes items such as food, energy and State-controlled commodities and services, rose 0.36% in February against the previous month and 0.6% over December of last year. Average prices in the first two months of 2015 rose 2.4% year on year. Meanwhile the index of industrial production (IIP) also went up by 12%, compared with an increase of 5.4% recorded a year earlier.

In addition to the reduction in petrol and oil prices, another factor causing the CPI in February to go down was the effort of local authorities who sought to stabilise prices with an abundant supply of goods. Moreover, price regulation of goods previously controlled by the State has been shifted to a market-based mechanism with measures relevant to reality and more respect for market forces. At the same time, the gradual loosening of credit policy such as cutting medium and long-term interest rates and increasing loans, has led the economy to grow in an environment of stable currency values and commodity prices.

A combination of these positive figures reveals an economic picture with bright prospects, helping to bolster the confidence of investors and consumers in the most promising period ahead in recent years. However the opportunity to foster higher and more sustainable growth in this period lies in the effort of both the business community and the political system.

Small and medium-sized enterprises, accounting for 97% of total enterprises in Vietnam and contributing 40% of GDP, have created many jobs and overcome recent challenges in an effective manner. However there are also enterprises that do not create any new value and succumb to foreign enterprises to earn meagre profits as distributors of imported goods. Such enterprises should raise their competitiveness and strengthen cooperation for mutual development. On the other hand, lax credit management, a reason behind market crashes and fraud cases in the previous years, definitely will not be able to happen again given the stronger management that has been put in place. Therefore, without the help of administrative measures, the State Bank of Vietnam can still encourage and support commercial banks to lend more in a healthy manner to prop up economic growth.

Property prices are another influential factor and should be brought down closer to real values affordable to home buyers, who should switch from hoarding money and waiting for further price declines, to seizing opportunities to purchase necessary goods, especially buying land and homes or building and repairing homes.

These above-mentioned analyses and comments are increasingly considered correct and reliable, coinciding with comments from respected organisations and individuals such as former UK Prime Minister Tony Blair’s speech during his meeting with Prime Minister Nguyen Tan Dung. The former UK prime minister praised Vietnam’s economic achievements and said that it is time for Vietnam to build on these accomplishments to lift its development.

VND10.85 trillion for 2015 price subsidization program

Ten banks will provide businesses with a total of VND10.85 trillion (US$505.24 million) in loans to implement the price subsidization program in Ho Chi Minh City this year.

That was announced at a meeting chaired by the city People's Committee Deputy Chairwoman Nguyen Thi Hong on March 18 to review the program's implementation last year and launch 2015 plan.

The city Department of Industry and Trade reported that 86 businesses are expected to attend in the program this year including 76 goods suppliers and ten banks.

The program will be carried out from April 1, 2015 until March 31, 2016.

According to Ms. Hong, the program was appreciated for its practical efficiency by the city leaders and citizens last year. She prompted relevant agencies and businesses to better using the program's logo on products as well as at shops and supermarkets to improve consumers' awareness of subsidized products.

Workshop discusses university’s role in social enterprise development

A workshop was held March 16-17 to highlight the role of higher education and research institutions in the development of social enterprises in Vietnam.

At the workshop, 120 delegates, including researchers, lecturers and education managers from universities, and representatives of civil organisations and social enterprises, had an opportunity to learn about the role of their own institutions in promoting and supporting the development of the sector, important in addressing environmental and social issues.

The event, organised by the British Council and the National Economic University (NEU), aimed to promote teaching activities and research on social enterprises in Vietnam and the region.

According to the British Council, the workshop sought to strengthen the commitment of universities in incorporating content about social enterprises in their programmes in order to establish an academic network on this matter.

Participants at the workshop analysed the status of social enterprises in Vietnam and shared their experience in developing this business sector and the role of research institutes in the region and the world.

NEU Rector Tran Tho Dat said that in order to encourage the establishment and development of social enterprises in Vietnam, a strengthened role of universities and research institutions is needed, in addition to the support of the Government and non-governmental organisations.

Through their teaching and research activities, universities and research institutions can bring social enterprises closer to the community, help policy-makers introduce appropriate policies to support this type of business and help entrepreneurs to select effective ways to develop their businesses.

ECI Saigon, TEC in construction engineers training deal

Saigon Engineering Construction Investment Corporation (ECI Saigon) on March 18 clinched a cooperation agreement with the HCMC Vocational College of Economics and Technology (TEC) to help train construction engineers and employ graduates from the school.

Nguyen Dang Ly, president of TEC, said students of the school’s construction faculty can work as apprentices at ECI Saigon so that they can get practical knowledge and experiences and develop important skills for teamwork and planning.

ECI Saigon will employee graduates with good academic results as part of the agreement.

Truong Phu Cuong, general director of ECI Saigon, said university graduates usually lack soft skills and practical experiences. Therefore, the company hopes the collaboration with TEC will equip students with practical knowledge and skills so that they can work for the enterprise immediately after graduation.  

According to the HCMC Center of Forecasting Manpower Needs and Labor Market, local firms in the architecture and construction sectors need to recruit 11,000 people a year, or around 4% of the total demand. More job opportunities will be opened for laborers in these sectors when the ASEAN Economic Community is established at the end of this year.

VietJetAir determined to take over operation rights to airport terminal

VietJet Aviation Joint Stock Company has shown its determination to secure the right to operate Terminal 1 (T1) at Noi Bai International Airport in Hanoi as it has rewritten to the Ministry of Transport asking for approval.

The no-frills carrier said it would partner with some local investors to operate the domestic terminal at the second biggest international airport in Vietnam after Tan Son Nhat International Airport in HCMC if the terminal is transferred to it.

Nguyen Thanh Ha, chairwoman of VietJetAir, was quoted by local media as saying that VietJetAir, the second largest airline in Vietnam, is drawing up a scheme to operate T1 for submission to the ministry for consideration.

Ha said VietJetAir pledged to operate the terminal in line with aviation security and safety regulations and ensure the quality and transparency of services it provides at the terminal.

The airline proposed the ministry permit it to work with the Civil Aviation Authority of Vietnam (CAAV), Airports Corporation of Vietnam (ACV) and other entities under its management to collect related data to complete the scheme.

Last month, VietJetAir requested the ministry to transfer the T1 operation right to it within 20 years. Days after, the State-owned Vietnam Airlines Corporation followed suit, proposing buying the whole terminal for its own flights.

Vietnam Airlines chairman Pham Viet Thanh was quoted by Vietnam News Agency as saying that owning a terminal would enable it to reduce operation costs, enhance the business efficiency of waiting lounges, check-in counters and other facilities, and improve passenger services at the terminal.

The national flag carrier wants to use its own capital and raise money from other sources to buy the terminal.

Jetstar Pacific Airlines is seeking the ministry’s nod to own the operation rights to the old passenger terminal at Danang International Airport for a period of 20 to 50 years for low-cost services. Meanwhile, T&T Group has expressed interest in buying Phu Quoc International Airport off mainland Kien Giang Province.

The local enterprises have expressed keen interest in investing in airports after Transport Minister Dinh La Thang told agencies under the ministry to map out plans to sell the operation rights to Phu Quoc airport and part of T1 at Noi Bai airport this year to raise funds for other projects.

Rice prices drop in delta before delivery to Philippines

Prices of unprocessed rice and paddy in the Mekong Delta have fallen although the nation’s rice stockpiling scheme for the winter-spring crop has not ended and Vietnam will be delivering rice to the Philippines at the end of this month.

Rice export firms in the region now buy fresh IR 50404 paddy (unhusked rice) at VND4,200-4,350 per kilo and unprocessed rice at VND6,300-6,400, down VND50-100 a kilogram compared to early this week.

As observed by the Daily, prices in the region rose by VND100-150 to VND4,300-4,450 a kilogram of fresh IR 50404 paddy and VND6,400-6,500 a kilogram of unprocessed rice several days after the Government approved the rice storage program between March 1 and April 15.

The prices were equal to the levels prior to the Government’s approval for the rice stockpiling program and Vietnam Southern Food Corporation’s (Vinafood 2) winning of a contract to sell 300,000 tons of rice to the Philippines late last month.

The price drop is attributable to shrinking export prices, which stand at US$365-375 a ton of 5% broken rice and US$340-350 a ton of 25% broken rice.

At a tender organized by the National Food Authority of the Philippines on February 27, Vinafood 2 was awarded the contract when it agreed to revise down its bids to US$441 a ton for the first 150,000 tons of rice and US$421 for the remaining 150,000 tons after Thailand secured 200,000 tons out of the 500,000 tons on offer at the tender.

The winning bids are CIF (cost, insurance and freight) prices and the export price offered to enterprises chosen for the stockpiling program is around US$360 a ton, according to Pham Thanh Tho, deputy director of food at An Giang Plant Protection Joint Stock Company (AGPPS). AGPPS is one of the enterprises authorized to carry out the contract.

Oversupply is another reason. Enterprises have bought 120,000 tons out of one million tons of rice for temporary storage under the program, while farmers in the region have harvested 900,000 hectares out of 1.5 million hectares of paddy in the 2014-2015 winter-spring crop.

The Vietnam Food Association (VFA) estimated Vietnam had exported nearly 444,000 tons of rice worth more than US$200 million as of mid-March.

Jan-Feb real estate deals soar in two biggest cities

The number of successful real estate deals in HCMC and Hanoi surged in the first two months of this year compared to the same period last year, with transactions in February alone rising by at least two-fold year-on-year, according to the Vietnam Real Estate Association (VNREA).

The latest report by VNREA showed that there were more than 2,300 successful land and home transactions in the two biggest cities of Vietnam last month.

Last month saw some 1,200 land lots and apartments changing hands in Hanoi, down around 20% over the previous month but doubling the deals in February 2014. The number of signed property contracts in the capital city in the first month of this year tripled year-on-year to some 1,500.

In HCMC, transactions last month reached around 1,100, triple the volume of the same period last year. Customers registered to buy land and homes at the projects with good progress and in good locations in districts 2, 4, 6 and 7.

VNREA said the prices of land lots and apartments in the period inched up 1% to 10% despite strong demand, especially in the apartment segment after the Lunar New Year holiday (Tet).

As observed by the Daily, major real estate enterprises in HCMC have been busy after the Tet break, which ended on February 24. Successful deals in the first week after the nine-day holiday ranged from 10 to 50 at Hung Thinh Land, Hoang Anh Saigon, Novaland, Nam Long, Him Lam Land, and Dat Xanh.

Given the recovering property market, Hung Thinh Land plans to put up for sale 5,000 apartments for medium and high-income earners this year, while Him Lam Land will have 2,000 apartments and land lots priced at VND1-3 billion on offer.

Ngo Quang Phuc, deputy general director of Him Lam Land, said customers will benefit from more products available on the market rather than property investors.

“To attract buyers, investors must compete with one another, set seasonable prices and offer the best payment and financial support policies possible,” Phuc said.

VNREA estimated the value of real estate inventories at more than VND73.15 trillion as of the end of February, down nearly VND234 billion compared to the end of January this year. Of which, the inventories of apartments were 15,000 units and housing land lots over 8.6 million square meters.

No Government guarantees for finance organizations possible

The Ministry of Finance is considering lifting Government guarantees for finance and credit institutions as part of a scheme to cope with the public debt issue.

The Government still provides credit guarantees for enterprises in all economic sectors, especially the State sector, finance and credit institutions, and policy banks like Vietnam Bank for Social Policies and Vietnam Development Bank.

The ministry is reviewing the implementation of the Law on Public Debt Management and will send a report to the Prime Minister in the third quarter. The ministry is expected to propose amendments to the credit guarantee policy. However, credit guarantees for policy banks are not mentioned in the proposal.

Truong Hung Long, director of the ministry’s Debt Management and External Finance Department, recently told reporters that public debt may surge close to the upper limit approved by the National Assembly (NA) this year. Therefore, the nation must review all loans and borrowers.

In a report the Government sent to the NA last October, public debt had been swelling fast and had almost hit the safety level of 65% of gross domestic product (GDP).

Ending 2014, public debt was put at 60.3% of GDP and the figure may reach 64% of GDP at the end of this year. Of the figure, government-backed loans had been soaring 50% a year on average.

The Government guaranteed around VND500 trillion worth of credit last year and expects to guarantee another VND642 trillion this year. The ministry so far has not broken down credit for each sector as mentioned above.

At present, the Government mainly backs banks to lend to huge projects, mostly those in the power sector.

For instance, in August 2014, the Government issued a letter of guarantee for a loan worth over US$157 million from LienVietPostBank to finance a hydropower plant in Laos. If the borrower, Viet Lao Power Joint Stock Company, fails to pay the loan, the Finance Ministry will have to settle the debt.

According to the ministry, the removal of Government guarantees for finance institutions will make it possible to focus resources on key projects approved by the NA or the Government and arrest the rapid rise of public debt.

In fact, the ministry is building up a medium-term program on international government bond issue to mobilize long and medium-term capital, restructure short-term loans, reduce costs and diversify capital sources for development investment. The ultimate goal is to reduce dependence on the Government’s credit guarantees.

Korean enterprises propose investment in Ba Son area

The EUNSAN Shipping & Aircargo Co. Ltd and OUE Ltd from the Republic of Korea have proposed a US$5 billion project in the Ba Son Shipyard area in Ho Chi Minh city.

HCMC has approved a master plan to develop the premises of the current military-owned Ba Son Shipyard in a prime location in the downtown area into a major commercial, financial and services center.

The architecture of constructions there will be in harmony with Thu Thiem 2 bridge and the Metro line 1 which connects Ben Thanh Market and Suoi Tien Theme Park in the city.

EUNSAN is a resourceful and proficient NO.1 freight forwarding company with a worldwide network of agencies.

Meanwhile, OUE Limited is a diversified real estate owner, developer and operator with a real estate portfolio located in prime locations in Asia and the US.

If the proposal is approved, the project will be implemented on Vietnam’s 70th National Day (September 2).

Vietnam looks to develop low-carbon industrial parks

The Danang seafood service and Lien Chieu industrial parks have been selected to develop a low-carbon model and assist businesses to cut emissions under a project started in 2012.

Initial results from the project that was designed to run till 2015 showed the reduction of 1,600 tonnes of CO2 emissions through the implementation of activities to reduce greenhouse gas emissions.

The information was unveiled at a workshop on building low-carbon industrial parks held in Hanoi on March 19, according to the Quan doi Nhan dan (People’s Army) newspaper.

Co-hosted by the Industrial Policy and Strategy Institute and the Asia Fund, the event was part of a project funded by the UK’s Ministry of Foreign Affairs.

Solutions and assisting policies for enterprises in Vietnam’s industrial parks in line with the low-carbon model based on the Danang results were also discussed at the event.

Cam Ranh airport’s new terminal to be built

Representatives of the Khanh Hoa provincial People’s Committee and the Vietnam Airlines Corporation had a working session on the investments and construction of a new terminal for Cam Ranh International Airport in Nha Trang city, on March 19.

The airdrome is one of the country’s four airports seeing a rapid growth in terms of the number of passengers.

In 2014, the airport welcomed over 2 million visitors, exceeding its designed capacity of 1.5 million passengers, and the flow is expected to grow to 4 million passengers in 2020.

The airport is overloaded and is currently unable to meet demand, Director of Cam Ranh International Airport Phan Le Hoan, said, stressing the need to build Terminal 2.

According to a preliminary draft project, the new terminal has a total investment of over VND1 trillion  (US$46.5 million) covering 15,000 square metres of land and will be used to serve international flights. The existing terminal will serve domestic flights.

Chairman of the provincial People’s Committee Nguyen Chien Thang said the project is in line with the province’s development strategy in an attempt to bring Khanh Hoa to become a socio-economic hub in the southern central region.

Earlier, the province implemented a project to build the runway No.2 for the airport. The project, which has a total investment of nearly VND1 trillion sourced from the State’s budget, is expected to put into operation in early 2018.

Bad US weather hurts VN seafood exporters

Vietnamese seafood exporters are expected to encounter difficulties due to bad weather in the United States and the recent depreciation of the euro against the US dollar.

Data from the Ministry of Agriculture and Rural Development showed that the country's seafood exports during the first two months of the year touched US$907 million, down 9.4% over the same period last year.

Exports to the United States, the largest importer during January, dropped sharply by 37% to around US$90 million, compared with the same period last year.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), told online newspaper ndh.vn that the slump was due to seafood demand in the United Stated having been adjusted in view of increased buying at the end of last year.

In addition, seafood inventory in the United States last year was deemed relatively high, resulting in imports being halved after reviewing consumption trends this year.

Another reason was the record cold weather, preventing Americans from stepping out and shopping.

The latest report from the US Department of Commerce released on March 12 showed that its retail revenue in February also slipped 0.6%, marking the third consecutive month seeing a slump.

Domestic seafood exports to the European Union and Japan, the biggest import market following the United States, were also reduced because of the depreciation of the euro against the US dollar.

The currency has fallen by more than 12% against the US dollar over the last two months to its lowest level in 12 years. This has forced importers to spend more euros to buy US dollar and resulted in Vietnamese exports becoming more expensive, despite selling prices remaining unchanged in dollar terms.

Hoe said nearly 90% of Vietnamese seafood export transactions were calculated in US dollar. This was the reason that any change in foreign exchange would also impact exporters.

The depreciation in the yen was also creating difficulties for Vietnam's seafood exports.

Exports to the market during January were 10% lower at US$75 million, than a year ago.

VASEP's Hoe said it was hard to forecast the prospects of seafood exports. Even though the United States sharply cut anti-dumping tariffs imposed on Vietnamese shrimp from 6.37% to 0.93%, this would not boost purchases immediately as the new tariffs would only take effect in July.

However, the decision had raised the expectations of exporters for future business. Earlier, VASEP had set a seafood export target of US$8 billion for 2015.

Nine unauthorised cable channels halted

Nine unauthorised foreign channels will stop airing in Vietnam, stated Truong Minh Tuan, Deputy Minister of Information and Communications, on March 19.

Three local cable network providers -VTV Cab, AVG, and Viettel- have long broadcasted those channels without official approval, including True Sport HD, OPT1, Golf HD, Russia Today, True Tennis HD, and four VOD piloting channels.

After a careful inspection, the Authority of Broadcasting and Electronic Information under the Ministry of Information and Communications required that all three broadcasters halt the telecast of the nine channels and submit detailed reports.

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

VietJetAir determined to take over operation rights to airport terminal, Jan-Feb real estate deals soar in two biggest cities, Vietnam to look into surcharges set by foreign shipping lines, Licogi to sell 35% stake to Khu Dong
 
*
*
*
  Send