BUSINESS IN BRIEF 20/1

Ministry maintains fuel prices

The Ministry of Finance on Wednesday sent a document to domestic fuel wholesalers directing them to maintain the current retail prices of petrol as Tet (Lunar New Year) approaches.

The ministry's calculations show that the retail prices of petroleum products are currently lower than the base price by VND52-VND849 per litre.

Companies have been asked to sell gasoline and kerosene without making any profit, while the profit on diesel has been cut from VND300 per litre to VND250 per litre.

The move is aimed at stabilising the price of fuel, with the intention of preventing food price hikes before the Lunar New Year.

The ministry has also directed wholesalers to stop claiming money from the price stabilisation fund for selling diesel. Moreover, the subsidy on kerosene was slashed from VND890 per litre to VND520 per litre.

Local petroleum wholesalers said they are suffering losses amounting to VND605 per litre of fuel sold to consumers. In addition, they are losing VND52 and VND849 per litre of diesel and oil sold, respectively.

BIDV lends Vinatex $600m

The Bank for Investment and Development of Viet Nam (BIDV) has signed an agreement to lend the Viet Nam National Textile and Garment Group (Vinatex) US$600 million in the period 2014-16.

The agreement was signed on Wednesday in the central coastal province of Binh Dinh.

Vinatex's borrowing resources include a short-term loan of $250 million and a medium and long term loan of $350 million.

The loans will be used for improving the efficiency of its production and business operations in order to prepare for Viet Nam's participation in Trans-Pacific Partnership (TPP), as well as for investing in projects of the corporation and its member companies.

Tran Bac Ha, chairman of BIDV's management board, said that with BIDV's support, Vinatex in particular and the Vietnamese textile industry in general will prepare carefully for the participation in TPP.

At the signing ceremony, Vinatex expressed its intention to build a weaving and dyeing factory, manufacture 60 million products a year and invest $30 million to construct eight to10 factories for manufacturing and export.

It also plans to build a chain of supermarkets and direct selling in the province's Quy Nhon City and in its towns and districts.

Tran Quang Nghi, general director of Vinatex, said that the corporation requires $600 million to add to the working capital of its member companies and to construct a textile complex in the province.

He said that he expects the localisation rate of the textile industry to reach 60 per cent in 2015 and 70 per cent by 2020.

Leather and footwear firms set to increase exports

The leather and footwear industry exported goods worth US$10.3 billion last year, an increase of 18 per cent over the value of exports in 2012.

Last year's export value of footwear products was estimated at $8.4 billion, 15 per cent higher than the previous year, while the export value of handbags surged 26 per cent from the previous year to $1.9 billion, according to the Viet Nam Leather and Footwear Association(Lefaso).

Ngo Dai Quang, director of the Viet Nam Leather and Footwear Research Institute, was quoted by the Thoi bao Kinh Doanh (Business Times) newspaper as saying that the exports of Viet Nam's leather and footwear products to the United States (US) and the European Union (EU) last year are estimated at $3.4 billion for each market.

Regarding the US market which annually demands around 2.2 million pairs of shoes, footwear manufacturers could earn $60 billion in revenue each year, Quang noted, adding local footwear firms have ample opportunities to export their products to the US in the future.

As the industry increased the use of local inputs for production, it only paid $3.7 billion for raw material imports last year, which widened the trade surplus to $6.6 billion, noted Nguyen Duc Thuan, Lefaso's chairman.

Local firms are expected to export more products this year due to a growing trend of shifting export orders from China to other countries, such as Viet Nam, Thuan added.

Several large companies, including Nike and Adidas, have increased orders in Viet Nam to gain access to lower tariffs and a relatively better-skilled workforce, the association said.

To benefit from preferential tariffs under various free trade agreements and the Trans Pacific Partnership Agreement, several foreign companies of ancillary industries have also made investments in Viet Nam.

Thuan said local firms would strive to expand investments, increase production scales and improve the quality of their products to compete with foreign-investor-driven firms in Viet Nam.

The export markets of Viet Nam's leather and footwear are the European Union, the US, the United Kingdom, Belgium, Germany, Japan, the Netherlands, China, Brazil and Spain.

Currently, the country is also targeting new export markets, such as Eastern Europe countries, the Middle East and Africa.

Debt collection efforts needed

Deputy Prime Minister Vu Van Ninh has asked tax officials to continue designing policies that reduce the difficulties faced by businesses and promote growth in 2014.

Speaking at a conference on Tuesday to review the success of tax collections in 2013, Ninh said it is necessary to classify debts clearly and outline plans to collect and settle persistent debts.

He said increased efforts should be undertaken by those responsible for the taxation system to prevent fraudulent transfer pricing, limit tax refunds and hasten administrative reforms.

Efforts should also be undertaken to apply information technology in tax management and improve staff training, he noted.

Tax officials and organisations should also continue to encourage coordination with others and enhance dialogue with enterprises, he stressed.

According to Bui Van Nam, General Director of the General Department of Taxation, in 2014, efforts will be made to exceed the target for state budget collections by a minimum of 5 per cent, while intensifying tax inspections in at least 14.65 per cent of the total operating enterprises.

Efforts will also be undertaken to enhance the control of tax refunds in accordance with the law, especially in the case of value-added tax.

The tax department will also strive to provide access to an e-tax service for 90 per cent of business taxpayers to enable them to submit their declarations online, Nam added.

He said that negotiations for double taxation avoidance agreements with other countries and territories will also be stepped up. There will also be greater transparency in investments, equipment purchases and staff recruitment.

According to the General Department of Taxation, VND676.696 trillion (US$31.8 billion) was collected as tax in 2013, equivalent to 105 per cent of the target and 112.7 per cent higher than the tax collected in 2012.

Of the total tax, the tax collected from crude oil sales was VND120.436 trillion ($5.64 billion), while domestic tax collections were VND556.260 trillion ($26.144 billion), equivalent to 102 per cent of the target and 17.8 per cent higher from 2012's figure.

Forty-seven of the 63 localities nationwide accomplished their targets, while tax arrears collected after inspections amounted to nearly VND13.2 trillion ($602.4 million). The reduction in losses was estimated at VND11.4 trillion ($537.21 million), the department noted.

As of November 30, 2013, 52 per cent of all tax debts had been collected, the department added. A debt increase of over 30 per cent was seen in as many as 30 localities, while seven localities experienced a decline.

Foreign investors dominate retail

Vietnamese retailers risk losing the domestic market, which will soon be dominated by foreign ones, the Lao dong (The Labour) newspaper reported on Wednesday.

Currently, Viet Nam has about 700 supermarkets and trade centres, 40 per cent of which are owned by foreign retailers.

Officials at the Ministry of Industry and Trade, say that the domestic commodity market will see a growth rate of 14 per cent on average this year and next.

Looking at projections for 2015, total retail sales through modern distribution channels will have risen to 40 per cent, while traditional channels will retain the majority, with 60 per cent.

Insiders say Viet Nam is a growing potential retail market with a population of 90 million – as the average income per capita of Vietnamese people rises, so does retail demand.

New additions to the Vietnamese retail market from overseas, such as Lotte Mart, Aeon, and Parkson, illustrate the increasing appeal of the market.

Korea's leading retail corporation, Lotte Mart has just opened its fourth trade centre in HCM City and by 2020, Lotte Mart will have 60 outlets throughout the country.

Aeon, one of Japan's leading retail groups, recently opened its first branch in Viet Nam at the Tan Phu Celadon Mall in HCM City's Tan Phu District. The second branch, at the Binh Duong Canary mall is expected to open in October.

Established Malaysian department store chain Parkson, recently opened its ninth outlet in Viet Nam. Alongside HCM City, Parkson also has outlets in Ha Noi, and Hai Phong. The Parkson group recently revealed plans to open two or three outlets every year. The next phase is set to include Da Nang, Can Tho, Nha Trang and Bien Hoa.

Do Van Binh, chairman of Song Bac Joint Stock Co. said under the agreements of the WTO, as of January 11, 2015, Viet Nam will allow foreign retailers to set up businesses with 100 per cent foreign capital.

Moreover, when Viet Nam joins the Trans Pacific Partnership, the import tax rate will be decreased to zero per cent, benefitting consumers who will be able to access high quality products from US and Japan.

However this will pose risks and challenges for Vietnamese businesses.

Vu Vinh Phu, chairman of the Supermarket Association, said when TPP comes into effect, domestic businesses must actively reinvent themselves to improve the quality of their products and lower their prices to increase competition, if they do not want to lose domestic market to foreign retailers.

But similarly, Vietnamese businesses will be able to access advanced management technology brought over by foreign retailers, he said.

Some domestic retailers are increasing their expansion plans, such as the Ha Noi Trade Corporation (Hapro) and Fivimart. By 2020, Fivimart plans to open 30 outlets throughout the country.

Imported flower prices inch up at Tet

Due to prolonged cold weather, local fresh flower prices are expected to rise sharply for the Tet holiday, at up to 15-20% year-on-year, while a mild rise in the prices of imported high-class flowers is foreseeable.

Nguyen Hoang Xuan Danh, sales and distribution director of Dalat Hasfarm, said that his firm still maintains the prices of imported flower species as normal.

According to Danh, local demand for fresh high-end flowers is rising. Dalat Hasfarm’s sales volume reached some three tons of flowers in the previous Tet, which is expected to soar by two tons this year. Therefore, Danh’s company has continued importing high-class flower varieties from the Netherlands and Ecuador among others besides providing local flowers grown in Dalat to serve the Tet market.

Hoang Ngoc Khoa, manager of the high-end flower store chain Flower Box, informed that his enterprise has still imported foreign species like last year, including Taiwan’s orchid, Ecuador roses, the Netherlands’ forsythia, Thailand’s purple orchid and others.

Flower prices at Flower Box stores before Tet are stable compared to normal days, exclusive of some rare species posting price hikes of 10-20%.

Trademark strategy for Mekong Delta needed: economist

An economist has called for a trademark strategy exclusively designed for the Mekong Delta, plus a string of comprehensive policies ranging from planning, investment, production to market connectivity in a bid to improve its brand recognition both at home and abroad.

Tran Huu Hiep, head of the Economics Department under the Steering Committee for the South-western Region said at a workshop in the southern city of Can Tho on January 14 that it is urgent to build trademarks for key products in the region.

As the leading Vietnamese area in terms of rice, seafood and a variety of well-known fruits, the Mekong Delta earns its reputation for such key brand names as Cho Dao fragrant rice, Lo Ren star apple, Phu Quoc fish sauce, not to mention its processed tra and shrimp products.

Regional firms, which fail to make their own brands known, have fallen behind their rivals in export markets.

Participants pointed this to the fact that the Mekong Delta has yet to identify any potential product or service that needs stronger investment. Added to this, its enterprises tend to operate on their own, leading to weak connections with their partners to establish strong trademarks.

Duong Quoc Xuan, deputy head of the committee, said regional firms and localities should learn more about building a trademark identification system via the event.

He urged the National Office of Intellectual Property to offer relevant information while evaluating intellectual properties. According to him, there should be a mechanism to protect and develop intellectual assets in the region.

The workshop was a joint effort between the Ministry of Science and Technology’s National Office of Intellectual Property and the Steering Committee for the South-western Region.-

Experts propose border trading to enhance rice export

Following the difficulties in rice export in 2013, experts are suggesting that border trading could be a way for the sector to flourish in 2014.

According to the Vietnam Food Association (VFA), last year the country shipped abroad 6.68 million tonnes of rice for nearly 2.9 billion USD, down 1 million tonnes over 2012.

However, the actual rice amount that Vietnam sold to foreign countries, including through land border gates, was 8.2 million tonnes with nearly 2 million tonnes exported in small volumes through border trading.

According to Truong Thanh Phong, VFA Chairman, the difficulties encountered by Vietnamese rice exporters last year were due to decreasing demand from traditional markets in Southeast Asia. In the last six months of 2013, Indonesia ceased its rice imports, while a sharp drop was seen in the Philippines and Malaysia , he cited.

Furthermore, a high rice global inventory was another reason behind the drop in Vietnam’s export, he said, noting that Thailand’s 2013 inventory was about 5 million tonnes, while that of Indian was even higher.

In the context of dramatic decrease in imports in Asian markets, Vietnam still exported rice to China through border trade. However, this did not help much as foreign currency earned was low.

At the same time, Vietnamese enterprises still purchased rice with high prices in an effort to ensure at least 30 percent of profit for farmers, causing high export prices and decreasing Vietnamese rice’s competitiveness against Thailand and India .

Experts predict that rice export will still face difficulties in 2014 due to both price and quality, requiring changes in the rice sector.

According to Lam Anh Tuan, Director of the Thinh Phat Food Company from the Mekong Delta province of Ben Tre , together with official export method, border trade will also help Vietnam sell out its rice production.

Tuan proposed that the Government design more support policies allowing enterprises sell rice abroad through way of border trade when the inventory is high and global prices fall.

Sharing Tuan’s opinion, VFA Chairman Phong said despite difficulties posed by border trade with high risk of trade fraud as well as tax refund and balance, the method is also effective to ensure rice sales.

Besides, Vietnam needs to focus on developing its rice trademark in line with improving rice quality, he said, adding that the VFA will coordinate with rice institutes to choose Jasmine 85 as the official rice variety for high-grade exports in 2014.

VFA also suggested that authorised agencies in localities increase communications among farmers on decreasing the cultivation of low-grade varieties.

According to Dr. Pham Van Du, deputy director of the Department of Cultivation under the Ministry of Agriculture and Rural Development, the ministry instructed localities to limit the cultivation of low-grade rice varieties to 5 percent of total acreage, while encouraging enterprises to collaborate with farmers to develop rice material areas and form rice production chains to increase rice value.

Although Vietnam was strong in low-grade rice production, it should focus more on producing higher quality rice to enhance competitiveness and meet requirements of new markets of Latin American and European countries, said Duong Phuong Thao, deputy head of the Import-Export Department under the Ministry of Industry and Trade.

She revealed that the ministry is also strengthening trade promotion to help Vietnamese rice access new markets. The ministry also recommends enterprises to be more active in expanding rice material areas to produce high quality rice to ensure rice provision to partners.-

Hundreds projects given go-ahead on Phu Quoc Island

The Mekong Delta province of Kien Giang has granted investment certificates to 20 new projects looking to develop Phu Quoc Island in 2014, raising the total number in the area to 194.

The authorities of Phu Quoc island district have introduced many policies to solve difficulties facing investors and enterprises operating in the locality.

Phu Quoc has proposed that the Prime Minister establish a Phu Quoc Economic Zone and issue clear guidelines for the development of the island.

Accordingly, investors running projects on the island will receive the highest support for industrial parks, export processing zones and economic zones.

During the 2014-2015 period, investment will be poured into building the transport system on the island, including a major axis connecting the northern and southern sections with roads around the island, in addition to an airport and a seaport. There are also to be a number of projects on socio-economic development, health care, education and the urban environment.

Investors in and outside the country are also being encouraged to inject money into building waste and sewage treatment systems, high-quality hospitals, and training centres for the trade and tourism sectors.

Work to protect the environment and deal with climate change and rising sea levels in connection with tourism development will be promoted during the period.

Kien Giang province’s authorities will also focus on amending, adjusting and completing plans to strictly manage land resources suitable with its socio-economic development plans.

Phu Quoc Island posts an annual economic growth rate of over 24.5 percent, a 5.2-fold increase from 2004 when the Prime Minister approved its overall development plan. Its per capita income in 2013 is estimated to reach 70.3 million VND (3,500 USD).-

Industry-trade ministry urged to remove difficulties for businesses

Prime Minister Nguyen Tan Dung has instructed the Ministry of Industry and Trade (MoIT) to give a shot in the arm to local businesses in 2014 as economic restructuring continues apace.

Addressing MoIT’s New Year conference in Hanoi on January 10, the PM said the ministry should focus its full attention on introducing policies that assist the building of domestic brands and fully develop support industries, thus increasing the technological and local content of made-in-Vietnam products and allowing a step by step switch from subcontracting and assembling to designing and manufacturing.

PM Dung suggested that the “Vietnamese people using Vietnamese goods” campaign should be further expanded, while the ministry must play a more active role in negotiating free trade agreements (FTA) and popularising already-signed deals so that domestic enterprises can make full use of the available preferential treatment.

He also demanded that the ministry strengthen market management in order to curb the abundance of fake goods, trade fraud and smuggling, while ensuring the supply-demand balance for essential commodities.

The leader noted that the application of a market pricing mechanism on electricity, coal and petrol should continue to be implemented in line with the set roadmap in a transparent manner, taking into account the need to keep inflation under control. At the same time, there should be appropriate policies to support the poor and beneficiaries of social welfare.

The Government leader commended the MoIT for the work it had done in 2013 in the context of the economic downturn. He said the ministry’s efforts have resulted in quarterly increases in industrial production and sharp decreases in inventory index. The domestic market has maintained a healthy growth while exports have surpassed the set targets.

According to reports at the conference, the industrial production index saw a 5.9 percent rise in 2013, compared to 5.8 percent in 2012. Total retail and services revenues for the year rose by an estimated 12.6 percent from the previous year. The country earned more than 132 billion USD from exports, up 15.4 percent from the 2012 figure and higher than the yearly target set by the National Assembly.

The ministry is resolved to continue with institutional reforms and completing the legal framework for the industry and trade sector with the goal of creating a fair business environment in line with the socialist-oriented market economy and international practice.

Sustainable development of export is also high on the ministry’s working agency for 2014, together with restructuring industrial production and developing support industries.

Rattan exports hit 225 million USD in 2013

The exports of the rattan industry climbed to nearly 225 million USD last year, according to statistics from the Ministry of Industry and Trade.

The ministry said that Vietnam's rattan products were exported to over 120 countries and territories.

The United States ranks as the top export destination, accounting for over 19 percent of Vietnam's rattan exports, while Japan is the second-largest market, with a 17 percent share.

Nevertheless, Vietnam's rattan industry exports account for less than 3 percent of the global rattan market.-

Mekong Can Tho city sets 1.65 billion USD export

The Mekong delta city of Can Tho has set a target of earning an export value of 1.65 billion USD in 2014, including 516.5 million USD from rice, and 488 million USD from seafood.

The goal is 150 million USD higher than that in 2013, according to the municipal Trade and Industry Department.

Duong Nghia Hiep, vice director of the department revealed that the city plans to export 1 million tonnes of rice, 140,000 tonnes above the volume recorded in 2013.

Rice exporters have been directed to push up promotion activities and seek more outlets in Asia, Africa, the European Union and North America.

Meanwhile rice businesses have invested heavily in modern processing, polishing and packaging technology to raise the quality of their exported rice.

They have proactively dealt with foreign customers and consumers to better serve their needs.

In seafood, Can Tho plans to sell 200,000 tonnes of mainly shrimp and tra fish abroad, 30,000 tonnes higher than 2013’s figure.

In order to increase the added value for the product, the city has reinforced the monitoring of the quality and safety of exports to meet stricter requirements of foreign markets.

The city plans to expand its aquaculture area to 14,000 hectares along with working with localities in the Mekong delta region to ensure the supply of fish and shrimp for processing export products are met.

Can Tho has trade relationships with over 80 countries and territories from across the world. Besides the traditional markets of Japan, the US and the EU, the city has also expanded its export markets to the Middle East, North Africa and Eastern Europe.

It is currently leading regional localities in per capita income, with 62.9 million VND (2,989 USD), 357 USD above last year’s level.-

TPP lures swarms of garment producers

An element of the proposed Trans-Pacific Partnership Agreement is helping Vietnam coax more foreign garment and textile makers.

Northeastern Quang Ninh province’s Department of Planning and Investment said the Trans-Pacific Partnership (TPP), currently under negotiation, was making the province a hot destination for garment and textile firms looking to establish factories as their products are exported to TPP member nations and would enjoy a 0 per cent tax rate on imports.

Under the TPP’s ‘yarn forward’ rule of origin, to be eligible for a 0 per cent import tax rate – instead of the existing 17-20 per cent - all manufacturing processes including yarn spinning, knitting, and dyeing must be carried out in a TPP member country.

The department’s deputy director Do Minh Tuan said Hong Kong’s Black Peony is planning to build a $100 million jeans factory at Hai Yen Industrial Park. TAL Hong Kong  

Development Company and Sri Lanka’s Hidramani Group were also reportedly working with provincial authorities to build garment factories in Dong Mai Industrial Park.

In the middle of last year, TAL director Roger Lee told Vietnam’s Ministry of Planning and Investment that the company wished to expand its investments in the country by another $200 million due to the benefits it would receive from the TPP. It currently has a $40 million factory established in 2004 making fabrics, garments, and textiles.

In another report, in 2013 Quang Ninh authorities worked with China’s Texhong Textile Group to organize promotion conferences that lured nearly 50 textile and garment firms from Hong Kong and China. They said they plan to continue these efforts in 2014.

In July 2013, Texhong started operating its $200 million first phase fabric plant in Quang Ninh and began construction on its $400 million second phase, to become operational within this year.

Quang Ninh is not the only locality attracting foreign garment and textile firms.

South Korea’s Hyosung, the world’s largest spandex producer announced in late June 2013 that it planned to expand its production facility of its Creora brand spandex in the southern province of Dong Nai.

Hyosung president C.H. Lee Hyosung said this was to better serve the needs of Southeast Asia in anticipation of the approval of the TPP and its yarn forward rule of origin.

In May 2013, South Korean textile and garment maker KyungBang inaugurated a $40 million high-quality cotton yarn factory with 25,920 spindles in the southern province of Binh Duong. When the investment is expanded to its second and third phases, it will be the largest in Asia.

“Once these factories are fully operational, other textile and garment firms will be able to source input materials in Vietnam and meet the yarn forward rule,” said Nhu. 

Hoa, a Viet Capital Securities Company senior analyst who recently compiled a report on the TPP’s potential impact on Vietnam’s textile and garment industry.

According to the report, if the rule is carried out, Vietnam would be highly attractive to foreign fibre, cloth, and apparel producers who would build factories to supply the many garment producers already in the country who currently have to import 80 per cent of their materials from non-TPP members China, Taiwan, and South Korea.

At current, Vietnam exports 55 per cent of its garment and textile products to the US, 18 per cent to Europe, and 12 per cent to Japan.

The General Statistics Office reported that Vietnam’s garment and textile export turnover for 2013 hit $17.9 billion, up 18.6 per cent on-year.

The TPP is expected to be signed in 2014 and is a multilateral trade pact of the pacific region with 12 member countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam. Once signed, the pact will cover nearly 40 per cent of global gross domestic product.

BIDV announces new timeline for HoSE listing

Vietnam’s third largest bank BIDV has announced it will move forward on its plan to list on the stock market, now aimed at April.

On December 31 the Ho Chi Minh City Stock Exchange (HoSE) announced it had approved the listing documents for the Bank for Investment and Development of Vietnam (BIDV). The bank will still need to finalise the documents to be officially listed on the exchange.

A BIDV representative said the bank was now finishing the documents and that details will be officially announced at an appropriate time.

The announcement comes as one in a series of delays in the listing of BIDV. Observers expected the lender would be approved for listing in November 2013, after filing its documents in October and that it would list within 90 days of this approval.

According to HoSE regulations, once a company’s documents are officially approved it must list within 90 days.

As such, if BIDV completes its final documents within January, as expected, it must list by April at the latest.

The bank completed a set of the documents over a year ago in September 2012, but was asked to supplement additional information before receiving approval to list and in  

January 2013, the bank announced it would delay its issue due to unfavourable market conditions.

BIDV’s listing has been long awaited by the HoSE because of the large volume of shares to hit the market. It is expected to become a pillar of the VN-Index, together with GAS (PVGas), VCB (Vietcombank), MSN (Masan) and VIC (Vincom).

The bank held an IPO in late-December 2011 at a price of VND18,600 ($0.88) with the planned debut price to not be lower than 1.5 times that of the IPO price – VND27,800 ($1.32).

However, a report in mid-November 2013 by Ho Chi Minh Securities Company (HSC) argued that BIDV’s IPO-based listing price would be a hard sell to investors.

HSC’s estimation was based on BIDV’s business performance from the third quarter 2013 where its Price to Book (P/B) ratio was 1.54 with an expected drop in 2014 to 1.42, much higher than the average P/B of listed banks, at 1.2.

Currently, BIDV shares on the over the counter market are going for around VND13,000-16,000 ($0.62-$0.76). Vietinbank and Vietcombank stand at similar levels with  

January 3’s share prices at VND16,300 ($0.77) and VND 27,200 ($1.29), respectively.

Key criteria for awards is transparency

Vietnam’s 2014 Annual Report Awards programme will see judges concentrate on the transparency of company reports, rather than business success.

This year’s event was rolled out in Ho Chi Minh City last week, two months earlier than in previous years, so that the competitors could make better preparations for this year’s changes.

The theme “Corporate Governance towards Sustainable Development” intends to encourage listed firms to improve their business reports and the overall quality of published materials on corporate governance, no matter how they perform this management. As usual, norms, transparency, professionalism and creativity continue to be the major focus of the awards.

The competition is for all annual reports from enterprises listed on both the Ho Chi Minh Stock Exchange (HoSE) and Hanoi Stock Exchange (HNX). To enter, the reports need to have been submitted to both of the country’s stock markets and cover the 2013 fiscal year.

This is the seventh year that the event has taken place with HoSE and VIR’s sister publication Dau tu Chung khoan (Securities Investment) as joint organisers and fund management company Dragon Capital as the sponsor.

At the press conference to launch the event, VIR’s Editor-in-chief Dr. Nguyen Anh Tuan said the competition would see two new points.

Judging in the preliminary round will involve in-depth analysis on the contents of the reports. It will focus on corporate governance reporting, especially regarding community outreach and sustainable development.

Secondly, starting from 2014, preliminary round marks will have a greater impact on the final results, with the new proportions being 20 per cent and 80 per cent, respectively.

The judging panel will consist of five members instead of a previous seven and include representatives of World Bank arm International Finance Corporation (IFC) who will continue their involvement.

This year will also see a new award for the best corporate governance reporting, in addition to the official Top 10, Top 30 and Top 50 awards.

HoSE deputy CEO Tran Anh Dao said the organising committee expected the listed companies to pay more attention to corporate governance reporting so that they could build a firm foundation to deal with today’s economic uncertainties.

Regarding the Sustainability Reporting Awards (SRA) first introduced last year, this year’s programme continues to see the IFC and the UK-based Association of Chartered Certified Accountants’ (ACCA) participation. SRA aims at encouraging listed companies to publicise issues related to the environment and society, as well as to raise awareness over sustainable development.

SRA also serves as preparatory ground for listed companies as Vietnam will soon introduce a law on sustainable development.

Nguyen Viet Thinh from PricewaterhouseCoopers, chief of the SRA judging team, said the assessment was based on how companies incorporate sustainable growth into their business strategy.

Pham Nguyen Vinh, business development director at Dragon Capital, the exclusive sponsor for the programme over the past six years, said “This year’s introduction of corporate governance awards is another milestone following last year’s introduction of the sustainability reporting awards.”

This year’s entries must be submitted to HoSE and HNX by April 21. The preliminary round will finish by May 30 and final round completed not later than June 20. The awards ceremony will be held in mid-July.

Saigon Co.op set for department store debut

Vietnam’s top retailer Saigon Co.op opened its first department store in the country while German retailer Metro Group has announced it wants to sell its Vietnam cash and carry business.

The Sense City department store, which covers 22,000 square metres at the heart of the Mekong Delta economic hub of Can Tho City will officially open on January 20, Saigon Co.op chairman Nguyen Ngoc Hoa announced in Ho Chi Minh City last week.

Sense City, run by Saigon Co.op Investment Development (SCID), includes a Saigon Co.op supermarket, cinema, bowling alley, child playground, shops, food and beverage, lifestyle and entertainment. The shopping centre also boasts Burger King, Lotteria and Jollibee fast food outlets.

He added that it had cost over VND200 billion (over $9.5 million) to build the store and to install equipment, along with VND100 billion spent on stocking product. Saigon Co.op’s Can Tho City Trading Company partner invested in Sense City but will not run the business.

SCID general director Nguyen Thi Tranh said another Saigon Co.op department store would open in the nearby Mekong Delta province of Ben Tre in the near future. They will then break ground for the third, located in nearby Ca Mau later this year. She also confirmed that the company would open more department stores in Ho Chi Minh City during 2015-2016, but would not disclose the locations.

Saigon Co.op and Mapletree Investments Pte Ltd (Mapletree), a fully-owned subsidiary of Singapore’s Temasek Holdings are also developing SC VivoCity, a $100 million one-stop mall being built in Ho Chi Minh City’s District 7 as a joint venture.

SC VivoCity will feature up to 72,000 square metres of retail space, embracing the attributes of Singapore’s iconic VivoCity mall, an award-winning retail destination in Singapore. Saigon Co.op will collaborate with NTUC FairPrice Singapore to set up their new Co-op Xtra hypermarket in the mall.

German retailer Metro however is seeking buyers to sell it Vietnam business, which includes 19 cash and carry wholesale centres in major cities such as Binh Duong, Can Tho, Haiphong, Hanoi and Ho Chi Minh City, reported the Wall Street Journal. The paper claimed Metro Vietnam could be valued at more than $500 million.

Aeon seeks to rapidly open more Vietnam shopping malls

Aeon, Japan’s biggest supermarket chain, has officially launched its first Vietnam shopping mall as part of its Asia shift strategy.

At the Aeon Mall Tan Phu Celadon grand opening in Ho Chi Minh City January 11, Aeon president Motoya Okada said his group was seeking to operate up to 20 shopping malls in Vietnam by 2020.

Vietnam is the third foreign country, after China and Malaysia, to have an Aeon shopping mall.

Okada said one of the key targets of Aeon in Vietnam was to win the heart of Vietnamese consumers. Towards this end, in addition to high quality products and service, Aeon Vietnam focuses on human capital development to create embedded staff.

“For example, since our Aeon Mall Tan Phu soft opening on January 1, we’ve seen a need to rapidly expand the parking lots here. One more thing is we need to quickly develop our second and third malls in Vietnam.”

The second one is set for opening this October in nearby Binh Duong province, and the third in Hanoi next year.

When asked about Aeon’s specific strategies to deal with fierce competition in the Vietnamese retail sector where foreign popular players have been operating for years, Okada said: “We have our own strategies, whatever other retailers’ strategies are.”

The first Aeon shopping mall in Vietnam, located in Ho Chi Minh City’s Tan Phu district, includes a mall with a total floor space of 50,000 square metres together with 1,500 staff, and a general merchandise stores (GMS) section with 23,000 square metres and 500 staff. One-third of the goods and products at the mall comes from Japan, another  

one-third are Vietnamese products, and the rest are other imports.

Aeon’s $135-million Vietnam arm’s cores are retail, developing shopping malls, GMS, export and import business.

The group in 2013 shipped about $60 million worth of Vietnamese products to Japan, Aeon vice president Nagahisa Oyama said, adding it expected the performance to scale up year after year.

Tax department failure hurts energy project

The Mong Duong II BOT Power Project has faced difficulties in importing process because of a bureaucratic failure which has seen the contractor waiting months for a $17.52 million VAT refund.

The AES-VCM Mong Duong Power Company Limited, the investor in the Mong Duong II BOT Power Project, has just sent a document to the Ministry of Finance (MoF) and Ministry of Industry and Trade (MoIT) raising difficulties it has faced in importing goods for construction of the project due to late value added tax refunds.

According to the company, the Quang Ninh Department of Taxation agreed to a VAT refund of VND230.29 billion ($10.97 million) in October, 2013.

The department then agreed in December last year to provide an additional VAT refund of VND137.5 billion ($6.55 million) to the company, bringing the total refunded VAT the company was entitled to up to VND367.7 billion ($17.52 million).

According to regulations on VAT refunds, companies should wait no longer than three days, but this deadline has been ignored by both the local authority and the General Department of Taxation.

David Stone, managing director of the AES-VCM Mong Duong Power Company Limited, said that the Quang Ninh Department of Taxation explained that the VAT refund had been delayed as it exceeded the department’s tax refund budget for the fourth quarter of 2013.

Therefore, the department sent a proposal to the General Department of Taxation (GDT) to supplement Quang Ninh’s tax refund spending limit.

Stone, however stressed that the late VAT refund made it difficult for the company to continue importing goods for the project due to cash flow problems caused by the delay.

“The project is now at its peak period, with construction and testing activities to be carried out which need capital to pay contractors. In November and December in particular, the company needed VND140 billion for payments,” he added.

To overcome these difficulties, while awaiting the GDT to resolve the issue, the company also proposed the GDT allow it carry on with imports without having to make VAT payment on the goods. He also asked that the company not be subject to penalties for late VAT payments.

However, this proposal was rejected by the General Department of Customs which said that this was impossible and that the company must pay tax in accordance with existing regulations, despite the department flouting its own legally specified deadlines.

Profits soar for Vietnam Airlines

The domestic aviation market witnessed a strong rebound last year thanks to 21 per cent growth in passenger numbers and fierce competition between state giant Vietnam Airlines and budget carrier VietJetAir.

National flag carrier Vietnam Airlines is the only one of the country’s existing four air carriers to have announced its 2013 business results so far, and despite the tough business climate and limited airport infrastructure, the national airline fared fairly well.

Vietnam Airlines reported a 62 per cent increase in profits, totalling VND140 billion ($6.6 million), this was despite revenue standing at VND54.1 trillion ($2.5 billion) tantamount to 98 per cent of the company’s set target.

In its core field of transport services, the airline saw marked improvements, handling 14.71 million passengers, including 8.77 million local travellers, up 17 per cent.

“The efficient use of our resources reflected significant improvements, with passenger numbers up 5.9 per cent and seat occupancy rates 2.8 per cent higher than planned,” said Vietnam Airlines’ chairman Pham Viet Thanh.

Thanh said with a seat occupancy rate surpassing 81 per cent on inland routes, Vietnam Airlines had steadily developed in the recent years. With a near 50 per cent share of the passenger market on international and local routes, Vietnam Airlines’ business indices were an important gauge of the Vietnamese aviation market’s performance in 2013.

Statistics by the Civil Aviation Administration of Vietnam (CAAV) showed that Vietnamese air carriers transported an estimated 29.5 million passengers and 630,000 tonnes of freight last year, representing a 16.7 per cent and 19.6 per cent on-year increase, respectively. A total of 14.5 million passengers flew on domestic routes, a 19.3 per cent leap against 2012.

According to Minister of Transport Dinh La Thang, last year had been a good year for the domestic sector. The minister cited private budget carrier VietJetAir’s announcement in the third quarter that the firm was already profitable.

CAAV forecast the domestic aviation market would grow at a double digit rate this year thanks to a rosier global economic outlook and Vietnam’s greater attraction as a tourism destination.

Thanh added that market competition had ramped up as low-cost VietJetAir was trying to garner a bigger market share via route and cabin crew expansion.

Construction starts on StarLake

South Korea’s Tay Ho Tay Development, the developer of Hanoi’s $2.5 billion urban development project StarLake, will begin construction later this month

A source from Tay Ho Tay Development said that the first infrastructure systems will be started in March this year. The whole project’s infrastructure is estimated to take two years to complete, while the first low-rise villas will open in the fourth quarter of 2014.

In November last year, the developer received a $200 million cash injection from the Korean Development Bank for the project’s first phase, thus far totally invested by Daewoo E&C.

According to a high ranking official from the developer, the cash will enable Daewoo E&C run the project over the next two years and have its infrastructure systems up and running immediately after getting land clearance from the Hanoi Municipal People’s Committee.

Hanoi Municipal People’s Committee Chairman Nguyen The Thao said that StarLake, which is expected to be complete by 2016, will make a significant contribution to the capital’s landscape. However, the project has faced difficulties for many years, including a lack of capital, zoning changes and land clearance compensation. Thao now claims that the issues have been overcome.

StarLake requires a total investment fund of around $2.5 billion and is planned to be a modern, environmentally-friendly urban area by 2019, housing 25,000 residents. The project will include a promenade, parks, trees and lakes alongside the more traditional urban structures, as well as 25 hectares of open space devoted to public activities and a headquarters building.

The developer hopes it will be a cultural hub and an international, commercial and financial centre.

The project spans the Tay Ho, Cau Giay and Tu Liem districts of Hanoi and joins up with the diplomatic area in the north with road links to the city’s spacious main arteries.  

It also plans to link up with a range of other key projects in Hanoi such as the road connecting the Nhat Tan Bridge and the Noi Bai International Airport and ring roads 1, 2 and 3.

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

fuel prices, Debt collection, Foreign investors, rice export, Phu Quoc
 
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