Last update 3/29/2012 7:00:00 AM (GMT+7)
  

BUSINESS IN BRIEF 29/3
State agencies waste valuable land plots

Vietnam is wasting huge amounts of land and income from land rental due to lax management.

On March 23, the National Property Administration (NPA) under the Ministry of Finance held a conference on getting value for money from land and public property for social-economic development for the 2011-2020 period.

According to NPA, state agencies occupy 1.5 billion square metres of land worth VND594 trillion (over USD28 billion). In addition, more than 100,000 square metres of housing worth VND138 billion (USD6.6 million) also belong to these agencies. Real estate belonging to state agencies accounted for 97.2% of the total asset of state enterprises.

About 155 million square metres of land which are mostly found in favourable locations with high commercial value are owned by state-controlled enterprises.

One of these cases is headquarters of the Electricity Group of Vietnam (EVN). The building is located directly opposite Hoan Kiem Lake in Hanoi. Another example is the office of Vietnam Railways on Ham Nghi Street, District 1 in Ho Chi Minh City.

At the end of 2011, 3.4 billion square metres of land and 106 million metres of housing had been compiled from information gathered from 71 ministries and departments, 17 state-owned enterprises and 51 cities and provinces.

These agencies all gave proposals for alternative land use. However, the NPA said it has ruled out all the proposals since the solutions aimed to retain land, rather than using it for greater social benefit.

Vast amounts of neglected land is also a major problem as state-controlled companies have taken advantage of preferential land policies for financial purposes or even left the land vacant. For example, 1,200 hectares of land belong to financially troubled shipbuilder Vinashin has been left abandoned, despite the corporation suffering a huge capital shortage, it still wants to retain the land for real estate speculation.

Pham Dinh Cuong, Head of NPA said the state needs to pay attention to the land-use incomes at a time when the national budget is facing difficulties. He proposed several solutions such as removing privileges for state enterprises. "Lands at preferential locations bring huge profits and it would be a waste to use such land to build corporate headquarters." He said.

According to the draft plan the NPA suggested two ways of collect revenue from state-owned land.

The first was to have an annual revenue of VND81,646 billion (USD3.9 billion) from land use and rental fees, taxes on land transfers or non-agricultural land use.

The second option could bring annual revenue of VND98,624 billion (USD4.7 billion) assuming that land prices will increase 20% in conjunction with increased property taxes.

The Ministry of Finance said that during the 2011-2020 period, income from land rent will play an increasingly important role in the state budget. He further said, "The income may be even higher because prices are reaching real market prices."

Blue chips lead City recovery
 
Stocks on the HCM City Stock Exchange edged up on late buying yesterday afternoon, led by a recovery in blue chips.

The benchmark VN-Index regained over 2 points from the morning's loss to close yesterday up 0.09 per cent to 446.32. The volume of trades decreased 32 per cent from the previous session, however, totalling 82 million shares. The value of trades topped VND1.4 trillion (US$67 million), while advancers pipped decliners overall by 116-107.

Twelve codes saw trading volumes in excess of a million, most of which were banking, securities company, construction and mining shares. Sacombank Securities (SBS) was the most-active share, with 7.2 million changing hands.

Twenty of the 30 leading shares by capitalisation and liquidity rallied while only seven declined, helping lift the VN30 Index by 0.42 per cent to a close of 504.54.

FPT Securities Co analysts said investors had increased buying following Tuesday's correction on fears of missing the chance of picking up cheap shares. "The correction was momentary and technical," they said on the company's website. "Rallying is the major trend."

Stocks were sold off on Tuesday due to rumours that State agencies might begin inspections of margin trading activities in securities companies, according to HCM Securities Co analysts. Regulations required margins to be kept below 40 per cent, and brokerages are not allowed to provide loans in excess of 5 per cent of the company's total charter capital.

On the Ha Noi Stock Exchange, the HNX-Index also reversed the morning's losses, finishing up by 0.77 per cent to 75.53 points, with gainers outnumbering losers by 167-90.

The value of trades on the northern bourse dropped 19 per cent from Tuesday, totalling VND947.6 billion ($45.1 million), while the volume of trades fell 15 per cent to about 105 million shares.

Habubank (HBB) continued as the most-active share on a volume of 15.45 million.

Foreign investors increased their buys shaprly yesterday, picking up a combined VND436.5 billion ($20.8 million) worth of shares on both exchanges.

Stocks plunge on both exchanges
 
Shares declined substantially yesterday on both of the nation's stock exchanges, with the afternoon session widening morning losses as sales snowballed.

On the HCM City Stock Exchange, the VN-Index slid by 2.9 per cent to close at 445.92 points. The value of trades soared by nearly 26 per cent over Monday's session, totalling VND1.6 trillion (US$77 million), while volume jumped 28.6 per cent to nearly 121 million shares.

Of the 30 leading shares by market capitalisation and liquidity, 27 declined, driving the VN30 Index down by 2.87 per cent at 502.47 points. Only Tan Tao Investment Industry (ITA) and Becamex Infrastructure Development (IJC) bucked the trend, both closing up by 0.9 per cent after flirting with their ceiling prices during morning trades.

Decliners outnumbered advancers by 178-75 overall, with Sacombank Securities Co (SBS) the most-active share with 6.3 million traded. SBS finished down 4.6 per cent to VND6,300 per share.

Analysts said it was normal to see a correcting session after shares had advanced almost continuously over the past three months, with many doubling or even tripling their prices.

"Leading stocks have come very close to their peak of September 2011, so it's a quite sensitive stage and the probability of an adjustment is large," BIDV Securities Co analysts wrote in a report, adding that positive economic data had already reflected in share price rises in recent weeks.

On the Ha Noi Stock Exchange yesterday, the HNX-Index declined by an even more substantial 3.56 per cent to conclude the day's trades at 74.95 points. Only 90 shares gained out of a total of 398 codes.

Volume increased by 20 per cent to nearly 123.5 million shares, worth a total of nearly VND1.17 trillion ($55.7 million).

Habubank (HBB) continued to dominate trading in Ha Noi with 17.3 million shares exchanged, though it fell 6.7 per cent to VND7,000 per share.

At the beginning of yesterday's morning and afternoon sessions, some brokerages reported that they could not connect to the Ha Noi Stock Exchange's trading system which caused delays in placing orders for investors.

The Ha Noi exchange has not given a word on this issue but it warned Rubber Securities Co on Monday on suspicion of spreading a virus into the exchange's trading system and the systems of other securities firms.

Foreign investors continued to express their faith in Vietnamese stocks by investing nearly VND126 billion in a net buy of nearly 7 million shares on both markets yesterday.

Trade ministry revokes business license of Mekong Petroleum JSC

The deputy minister of Industry and Trade just signed a decision to revoke the export and import license of Mekong Petroleum Joint Stock Co.   

The company was granted the license in  January 2010, and the withdrawal came from the proposal of the company and Vietnam Oil and Gas Group (PetroVietnam) for re-adjusting quotas to affiliates.

Earlier, the ministry also withdrew the license of Vietnam National Shipping Lines (Vinalines) due to the fact the corporation had not made any imports in a number of months in late 2011 to 2012.

Currently there are now only 10 petrol importers in the country.

VK Architects & Engineers to shape an international hospital in Vietnam

Belgium-based VK Architects & Engineers has recently partnered with Rang Dong Medical Joint Stock Company (Rang Dong JSC) to develop new VietSing International Hospital, one of the first private medical hospitals in Hanoi.

The 350-bed international hospital would be located at Minh Khai commune, Tu Liem district, Hanoi. The new hospital is the second medical project of Rang Dong JSC apart from its first VietSing International Clinic established in 2007.

As a strategic partner of Rang Dong JSC, VK Architects & Engineers, a recognised leader in the healthcare industry with 60 years of experiences is the designer of the new hospital. Unlike other architectural firms, VK Architects & Engineers is a fully integrated healthcare design firm that provides a complete architectural and engineering solution for its healthcare clients.

From the beginning of each hospital design, VK Architects & Engineers takes all disciplines into account. This integrated design process enhances functionality and operational efficiency, reduces the life cycle cost and maximises flexibility and extendibility.

Medical equipment and future medical technology are of course also taken into consideration.

“The clinic was built and operated according to international standards in the late twentieth century. We want to ensure that it incorporates all of the latest green technology,” said Kenneth Groosman, Business Director Healthcare of VK Architects & Engineers.

Grossman added that Rang Dong JSC and VK Architects & Engineers committed to build Vietsing International Hospital as a “flagship” hospital model and a symbol of friendship between Belgium and Vietnam.

According to Rang Dong JSC’s CEO Nguyen Minh Son, the company recognised that a patient friendly atmosphere and pleasant working conditions created a high-quality healing environment.
With partnership with foreign partner VK Architects & Engineers, it hoped the new hospital would meet the high-quality healing environment.

“This new hospital is a response to the official request from the Ministry of Health to achieve five private hospitals over 10,000 people by 2015,” stated a press release.

Cai Mep provides a shelter for ships

State support is crucial for shipping firms and port businesses to keep their heads above water amid a hostile business climate.

In mid-March 2012, the Ministry of Finance (MoF) issued Circular 41/2012/TT-BTC guiding fee collections on big ships with a capacity of 50,000 dead weight tonnes (DWT) anchored in southern Ba Ria-Vung Tau province’s Cai Mep-Thi Vai port complex.  
When ships land at Vietnam’s first international transit port they will enjoy a 40 per cent reduction in navigation fees and tonnage dues while pilotage fees will be halved against those regulated in MoF’s Decision 98/2008/QD-BTC.

The incentive is remarkable because for ships of above 100,000DWT landing on Cai Mep-Thi Vai port group, ship owners can save $5,000 in navigation fees, $1,536 in tonnage dues and at least $170 fee for each mile under pilotage.

Vietnam Maritime Administration (VMA) deputy head Bui Thien Thu said Circular 41 was an extension of fee preferences which were introduced by the MoF in late October 2010 and expired by the end of 2011 to attract big international ships to Cai Mep-Thi Vai port groups.

In early 2012, representatives from big international shipping firm alliances like OOCL, NYK and Hapag Lloyd AG, Maersk Vietnam, Yang Ming and K Lines filled petitions to the Ministry of Transport (MoT) asking for further fee incentives.

The representatives argued it was currently too costly for big ships to call on Cai Mep-Thi Vai just to load with several hundred 20-foot equivalent units (TEUs).

“If fees are not competitive, paring down the number of ships calling on Vietnam ports would be inevitable because shipping firms are in dire straits,” said Hanjin Shipping Vietnam general director Park Hoon.

Like shipping firms, foreign-invested seaport businesses in Cai Mep-Thi Vai area also proposed to hold on fee preferences for ships. In late December 2011, Cap Mep International Terminal Company Limited (CMIT) - a joint venture between Saigon Port Authority and Denmark-based APM Terminal - even sent a document to the MoT and VMA asking for fee reduction towards 15,000DWT ships.

“Cai Mep-Thi Vai port area is less charming as expected, causing headaches to investors who put several hundred million US dollars into port infrastructure development. Both port operators and shipping firms need further support from the state to weather the storm in the face of tough business climate,” said CMIT’s deputy general director Nguyen Xuan Ky.

VMA figures show that foreign ships calling on Cai Mep-Thi Vai port group has dived in recent years, driving port firms into a pricing race which had driven down loading/discharging fees to quite low levels.  

“It would be a real problem if Cai Mep-Thi Vai port group lost its charm as an international transit port as by that time Vietnamese exports need to transit at ports in Singapore or Taiwan before heading to overseas markets,” said Thu.

Real estate project tops FDI attraction list

The US$1.2 billion Tokyu Binh Duong Garden City project took the lead in attracting foreign direct investment (FDI) in the first three months of the year.

The real estate project has been licensed in March and will be jointly developed by Vietnam’s Becamex IDC and Japan’s Tokyu Corporation.

According to the Foreign Investment Agency, the project has helped raise total registered FDI capital in March to US$1.23 billion, equivalent to the whole of the total registered FDI capital of the two previous months.

Processing and manufacturing industries ranked second, with 51 newly-licensed projects and 25 operational projects registering to increase capital, capitalised at US$1.17 billion, accounting for 44.6 percent of the total registered investment capital.

Transport and warehousing placed third, with total newly-licensed and increased capital reaching US$180 million.

The large-scale projects in March all belong to Japanese investors, including the US$1.2 billion Tokyu Binh Duong Garden City project, the US$575 million project of the Bridgestone Tyre Co, Ltd, and the US$180 million project of the Oshima Shipbuilding Group.

It is estimated that Vietnam has disbursed US$252 billion in FDI in the first quarter, equivalent to 99.2 percent of the same period last year. In March alone, FDI disbursement reached US$1.52 billion.
   
Fake, low-quality fertilisers flood market

The Vietnamese fertiliser market remains unstable because of rampant distribution of fake and low quality fertilisers and this has also affected agricultural production, a senior government official says.

In a recent conference in HCM City, Vo Van Quyen, deputy head of the Market Management Department under the Ministry of Industry and Trade, more than 300 violations of quality and fake products are discovered a year on average in the industry.

Most of the violations had to do with fake fertilisers carrying labels of prestigious brands, he said.

According to the Cultivation Department under the Ministry of Agriculture and Rural Development (MARD), a majority of substandard products available in the market were nitrogen, phosphorous and potassium (NPK) fertilisers because these were in high demand and easy to mix.

Recently, authorised agencies found five establishments in the southern provinces of Binh Thuan and Binh Duong as well as HCM City making substandard fertilisers under a big trademark. Tests of samples taken showed much lower than advertised nutrient content.

More seriously, inspectors found potassium fertiliser samples produced by a company in Can Tho containing just salt and colouring.

Le Quoc Phong, general director of the Binh Dien Fertiliser Company and the deputy chairman of the Viet Nam Fertiliser Association, said many small establishments were taking advantage of loose management to make substandard products and sell them in remote areas at cheap prices.

To deter such practices, Phong said the Government should tighten management from the point of issuing business licences onwards.

He also called for heavier punishment against those found making fake or poor quality fertilisers, saying current penalties were not strict enough to discourage the manufacturers from persisting with their fraudulent activities.

The agriculture ministry has recently issued a directive on enhancing management, inspection and dealing with violations in production and trading of agricultural materials.

The directive requires inspectors to seal all fake or substandard products they uncover, ask producers to recall those already sold and announce on the media the names of violating products and their producers.

Many experts have said agencies like the ministries of Public Security, Industry and Trade and MARD as well as the Viet Nam Fertiliser Association should strengthen co-operation with each other in implementing policies aimed at preventing the production, trade and use of fake and/or substandard fertilisers.

They say relevant agencies should strictly impose eligibility conditions on fertiliser production. Individuals and organisations wanting to produce or trade fertiliser products had to meet set criteria regarding production capacity, equipment, other facilities and environmental friendliness, they said.

In particular, they had to strictly comply with quality standards, they added.

The country produced 5.64 million tonnes of fertiliser and imported 3.63 million tonnes last year, meeting the demand for domestic agricultural production, said Truong Hop Tac of the Cultivation Department.

The country would need about 9.9 million tonnes of fertilisers of all kinds this year, with domestic production estimated at 7.25 million tonnes, he said.

Seafood sales hit by quarantine fees

The Viet Nam Association of Seafood Exporters and Producers (VASEP) has asked the ministries of Finance and Agriculture and Rural Development to reconsider the quarantine fee levels applied on imported seafood batches in order to help companies reduce costs and increase competitiveness.

Many seafood companies are saying that the quarantine fees stipulated in a new Ministry of Finance's circular, effective starting this month, have increased too much from the levels regulated in the ministry's previous circular, which was issued in late 2010.

Under the old circular, seafood bore a general fee of VND285,000 (US$13.7) per batch regardless of size, number of containers, or weight.

In the new document, quarantine fees are VND200,000 ($9.6) for a batch weighing below 12 tonnes and VND400,000 ($19.2) for a batch weighing 12-24 tonnes.

With this regulation, fees multiply in direct proportion to weight, said the association.

Specifically, the fee would be VND400,000 for a container weighing 24 tonnes, VND800,000 ($38.4) for two containers weighing a combined 48 tonnes, and VND1,200,000 ($57.6) for three containers weighing a total of 72 tonnes.

Compared with the previous general levels, these figures increase 40.35 per cent, 180.7 per cent and 321 per cent, respectively.

VASEP said that as materials from both domestic and foreign markets were currently scarce, many companies were having to import materials in large volumes in order to cut costs, actively produce and implement contracts, and assure jobs for workers.

Besides, it said, this year would be a very tough year for seafood enterprises as credit policy has tightened and input costs, including that of power, water, petrol and packing, had increased 10-35 per cent over last year.

"The increase in quarantine fees according to the new regulation is unreasonable and cause more costs for enterprises," the association wrote in official dispatches sent to the ministry late last week.

Viet Nam and Japan to boost energy saving, conservation ties

A seminar on experiences and experiments in energy conservation and environmental management in Japan was held in Ha Noi yesterday.

The seminar focused on introducing Japanese experiments as well as specific experiences of Japanese companies regarding information technology in disaster prevention and energy conservation.

A memorandum of understanding between the Ministry of Information and Communications of Viet Nam (Viet Nam MIC) and the Ministry of Internal Affairs and Communications of Japan (Japan MIC) was signed in September 2010. The two sides agreed to co-operate in applying information technology to environmental activities and energy saving practices through a pilot project (Viet Nam-Japan ICT Field Experiment Project Trial) in 2012.

The project is aimed at the prevention of natural disasters and saving energy through information and communication systems and sensor networks.

The project is done by Mitsubishi Research Institute (MRI), under the supervision and budgeting of Japan MIC and the Viet Nam National Institute of Software and Digital Content Industry (NISCI) – Viet Nam MIC.

The results of the pilot project will provide an important basis for the approval of official development assistance to expand the environmental monitoring and natural disaster warning system in Vietnamese localities, which may extend to other Southeast Asian nations.

At the conference, Director General of the IT Application Department under the Viet Nam MIC, Nguyen Thanh Phuc said that energy conservation is an urgent concern. In Viet Nam, efficient energy saving is becoming particularly important in the midst of the great energy losses in production and transportation.

Meanwhile, Japan's frequent natural disasters like earthquakes, volcanoes, tsunamis have made Japan focus research in IT on disaster management, environmental protection and energy conservation.

Phuc hopes that the seminar will bring more useful information for both Viet Nam and Japan and promote co-operation between MICs and businesses in both countries.

Steelmaker aims for $19m in annual net profit

Pomina Steel Mill (POM) aims to earn VND14.4 trillion (US$685.7 million) in net revenue and VND400 billion ($19 million) in net profit this year.

Dividends are expected to be paid at 15 per cent.

Meanwhile, the company estimates that financial costs will increase due to the long-term debt of its steel complex project and rising loan interests in dong.

Last year, Pomina had a net profit of VND404.24 billion ($19.2 million), or 66 per cent of the annual plan. Dividends last year might be paid at 15 per cent, lower than the 20 per cent rate earlier last year.

Wood processor to issue $7.1 million worth of bonds

Truong Thanh Furniture Corp (TTF) will issue VND150 billion (US$7.1 million) worth of bonds to strategic partners, particularly those operating in the wood processing sector, according to a recent shareholder meeting.

The bonds will probably be convertible. Par value of the three-year bonds will be VND10 million ($470), including warrants. Converting value will not exceed 20 per cent of the company's charter capital.

In addition, Truong Thanh has agreed to postpone the stock swap ratio for its merger with two subsidiaries until next month.

Ha Noi Stock Exchange applies interest rate curve

The Ha Noi Stock Exchange announced late last week that it would put an interest rate curve into operation by the second quarter of this year to facilitate professional bond market development.

The exchange said it had put the curve on trial to positive results.

FDI disbursement hits $2.5b in Q1
 
Total foreign direct investment (FDI) disbursement in the first quarter reached almost the exact same figure as during the same period last year, according to preliminary Foreign Investment Agency (FIA) statistics.

Disbursement reached US$1.52 billion in March, bringing total FDI disbursement for the first three months to $2.52 billion, or 99.2 per cent of last year's figure.

However, Viet Nam only attracted total registered capital of $2.63 billion in FDI, a decrease of 36.4 per cent against the same period last year, according to the FIA, run by the Ministry of Planning and Investment.

Of the total amount, the country lured only $2.26 billion in newly-registered capital from 120 new projects in the first quarter, a 22.8 per cent reduction from 2011, while 29 projects registered only $368 million in added capital, or 30.4 per cent of last year's figure.

Regarding investment sectors, real estate came out top due to the $1.2 billion Becamex -Tokyu Joint Venture between Becamex IDC and Japan's Tokyu Group in the Tokyu Binh Duong Urban Area.

The project also pushed total registered FDI capital in March to $1.23 billion, the same number as the total registered capital for the first two months of the year, the agency said.

The processing and manufacturing industry came second, with 51 newly registered and 25 capital-increasing projects, to reach a total of $1.17 billion, accounting for 44.6 per cent of total national FDI.

The transport and storage sectors attracted the third largest FDI capital at $180 million.

Japan remained the largest investor out of 26 nations and territories in the first quarter of this year, the agency confirmed.

Japanese projects with the large investments during the first three months included Tokyu Binh Duong Urban Area ($1.2 billion), Bridgestone Viet Nam Tyre Production ($574.8 million) and Oshima Shipbuilding Viet Nam ($180 million).

Southern Binh Duong Province attracted the most FDI capital at $1.36 billion, with northern Hai Phong City in second at $605 million and central Khanh Hoa Province in third with $180 million.

Vietnam, Thailand boost investment cooperation

Vietnamese and Thai businesses have agreed to invest in border economic zones (EZs).

Seven agreements were signed by enterprises from the central province of Ha Tinh (Vietnam) and Nakhon Phanom province (Thailand) on March 26 within the framework of an investment promotion conference on Cau Treo International Border Gate Economic Zone.

On this occasion, leaders of the two provinces pledged to promote cooperation in education, traffic, trade and tourism.

Accordingly, Ha Tinh and Nakhon Phanom will speed up the connection of traffic routes and create favorable conditions for bilateral trade exchange.

Economic and trade relations between Vietnam and Thailand have constantly developed in recent years, with the two-way turnover reaching US$9.3 billion in 2011.

At present, Thailand has 264 projects in Vietnam with a total capitalization of US$6.7 billion, ranking 11th among foreign investors in the S-shaped country.

Agricultural, forestry, aquatic exports fetch nearly US$5.9 billion

(VOV) - Vietnam’s export earnings from agricultural, forestry, and aquatic products in the first three months of 2012 reached nearly US$5.9 billion, approximately equal to last year’s first-quarter figure.

The Ministry of Agriculture and Rural Development (MARD) attributed this to negative fluctuations in the world economy.

The agricultural staples earned $3.2 billion 14 percent lower than in the same period last year, while earnings from seafood and forestry products were estimated at $1.2 billion and $922 million, respectively.

Even with less pressure from Thailand, Vietnam still faced tough competition from other rice exporters like India, Myanmar, and Pakistan, which offer rice at lower prices.

The country exported 1.3 million tonnes of rice in the first quarter to fetch US$681 million, 32 percent and 29.5 percent lower in volume and value as compared with the same period last year.

Indonesia remained the largest importer of Vietnamese rice, accounting for one third of Vietnam’s total rice exports in terms of both volume and value. The markets of Hong Kong, Taiwan, and mainland China also showed some encouraging signs of bouncing back.

The global economic meltdown has also pushed rubber exports into a gloomy state, causing a sharp decline in price.

In the first quarter, Vietnam’s rubber exports rose dramatically by more than 40 percent in volume but decreased by 10 percent in value. For instance, 228,000 tonnes of rubber could earn US$640 million.

Judging from a dramatic drop in coffee consumption in Europe, Vietnam decided to ship large volumes to new markets such as Indonesia, Algeria, and Mexico.

But its total coffee exports decreased by 12 percent in volume and 14.3 percent in value.

The amount of tea exported to Pakistan, a large importer of Vietnamese tea, equalled only two thirds of that for the same quarter last year. However, tea exports to other markets grew dramatically - Indonesia (three times), Saudi Arabia (nearly 2.5 times), Poland (over 40 percent), and the US (30 percent).

In the first quarter, Vietnam exported a total of 29,000 tonnes of tea and earned US$41 million, up 14.5 percent and 17 percent, respectively, from a year earlier.

In addition, Vietnam exported only 24,000 tonnes of pepper, down 7.5 percent in volume but earned US$164 million, up 29 percent in value compared to the same period last year.

Vietnam’s seafood exports fell sharply in the EU market but increased considerably in other markets - Japan (by 22.9 percent), the Republic of Korea (by 23.8 percent), and Mexico (by 65.9 percent).

Regarding seafood exporting businesses, the MARD emphasized the need to ensure food safety and hygiene standards.

Chile hopes to lead Vietnam’s wine market

Chile could replace France as the largest provider of wine in the Vietnamese market once the Chile - Vietnam free trade agreement (FTA) takes effect, said a former Chilean trade union official.

When the FTA is implemented, the import tax on Chilean wine shipped to Vietnam will drop from 56 percent to 20 percent this year and will approach zero over the next 11 years, said Rene Merino, the former president of Vinos de Chile, who accompanied Chilean President Sebastian Pinera during his recent Vietnam visit.

Chilean wine now accounts for 20 percent of the Vietnamese market, second only to France, which claims 35 percent.

According to preliminary statistics released by Chilean customs, Chile exported US$10 million worth of wine to Vietnam in 2011.

About 30 Chilean wine producers are currently exporting their products to Vietnam.

Chile, which is the largest exporter of wine in Latin America, was placed only seventh among wine suppliers to Vietnam in 2002.

De Vicente, director of the Chilean government’s trade promotion agency, said the bilateral FTA will open doors for Chile’s industrial products and fruit, including grapes, kiwis, pomegranates, and cherries, to penetrate the Vietnamese market, while Vietnam can increase its exports of wooden products, fruit and fish to Chile.

First e-commerce school opens in Vietnam

EduBiz, the first electronic commerce (e-commerce) school in Vietnam, was officially inaugurated on March 26 by the PeaceSoft Company.

The school focuses on online transaction floor practice so that after completing the courses, students will be qualified in the field of e-commerce and meet the demands of major companies, said EduBiz Director Tran Anh Tu.

EduBiz offers three-month courses that include topics such as e-commerce transaction security, trans-border trade, and law, morality, and social affairs in e-commerce.

Each course costs VND6 million and EduBiz is now running an initial promotion offering a 25 percent discount on school fees for students registering before March 31.   

Sacombank named best Vietnamese retail bank

The Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) has been named Vietnam’s Best Retail Bank for the year 2012 by The Asian Banker.
 
The Vietnamese bank met all the criteria for value brands, financial performance, sustainability of revenues, the viability of retail strategy, sales capability, capacity, risk management processes and information technology, the abundance of products and services, capable of penetrating the retail market, human resources and development potential in the future.

Sacombank was the only bank in Vietnam to be given the Excellence in Retail Financial Services Awards by the magazine.

The Asian Banker is one of the world’s leading magazines for strategic information on financial services in the Asia-Pacific and Middle East regions.

Sacombank was previously awarded the Best Foreign Exchange Provider 2012 by the Global Finance magazine in the US.

Firms pushed back against the wall

Businesses continue to run into head winds with no sign of the economic storm easing.

According to Ministry of Planning and Investment’s (MPI) Business Registration Management Department, businesses registered for dissolving nearly doubled in February 2012 against March (1,001 against 663 firms).

The department admitted for the first time since the Enterprise Law came into force in 1999, firms dissolving sharply hiked in 2012 against previous years.

In 2011, 7,611 businesses were registered to go bust whereas 53,792 were categorised in the group of those having to temporarily cease operations or delay tax payments.

However, these figures were just regarded as the tip of the iceberg. In fact, many firms did not report on their going out of business to relevant state agencies.

Ho Chi Minh City Handicraft and Wood Industry Association (HAWA) deputy chairman Tran Quoc Manh said: “That was why actual figures may outrun declared ones.”

Manh said HAWA member units having to temporarily halt operations kept growing in number on the back of constantly augmenting input costs.

“Banks are experiencing restructuring with stricter lending procedures. This made it tough for firms to get loans,” said Manh.

Vietnam Chamber of Commerce and Industry (VCCI) 2011 annual report on businesses released in mid-March 2012 showed that firms in surveyed fields including food processing, leather and footwear, logistics, tourism and motorised vehicles incurred big losses have increased from 2008 until present.

Accordingly, firms bogged down in losses in tourism sector mounted to 45 per cent in total while 46 per cent of firms manufacturing motorised vehicles were found underperformed in 2010.

VCCI’s general secretary Pham Thi Thu Hang pointed out escalating production costs and grey export and domestic market perspectives as main causes behind this poor scene.

“Firms expect revenue to contract, indicating possible high losses,” said Hang.

The Vietnam case is not unique as according to the Organisation for Economic Cooperation and Development (OECD) figures in its member countries the rate of new businesses survived after one year in operation was 80-85 per cent in services and 85-90 per cent in manufacturing fields in 2011. In the UK, just 70 per cent of firms remained alive after three years in operation while in the US, less than 50 per cent of firms kept on running after five years in existence.
 
$1bn park supports key sector

Three domestic firms last week inked a strategic cooperation deal to build a $1 billion  industrial park in the capital to muscle up supporting industries.

Industrial property developer N&G Corp, electronics and IT firm Hanel and DOJI Gold & Gems Group will develop the Hanoi Southern Supporting Industrial Park (Hanssip), based on the expansion of Dai Xuyen industrial cluster, covering 700 hectares in Phu Xuyen district, the southern gateway to Hanoi. It is situated on the main Phap Van-Cau Gie-Ninh Binh expressway and National Road 1A, about 85 kilometres from Haiphong port and 60km from Noi Bai international airport.

The specialised industrial park will welcome supporting industries, mainly hi-tech part production for textile and garments, leather and footwear, electronics-informatics, automobile and motorbike manufacturing sectors. The industrial park will meet Japanese supporting industry standards and include an urban service, logistics and trading area, plus banks, healthcare services and schools to ensure good living conditions for workers and experts working at the park.

“We are determined to develop Hanssip, contributing to the development of supporting industries in Hanoi and in Vietnam,” said N&G Corp chairman Nguyen Hoang. Hoang told VIR that N&G Corp, Hanel and DOJI late last week arrived in Tokyo to sign a cooperation deal with Shimizu Group, one of Japan’s top-five leading architectural, engineering and general contracting firm, to jointly develop Hanssip.

Hanssip is the second industrial park in the north specialised in attracting supporting industry investors. Privately-run Kinh Bac Corporation in 2009 developed an industrial park in northern Bac Ninh province, 40 kilometres from Hanoi, to lure Japanese investors operating in supporting industries.

In another development, construction started last week at Long Duc Industrial Park in southern Dong Nai province. Developed by the joint venture involving Japanese firms Sojitz Corporation, Daiwa House Industry and Kobelco Eco-Solutions and local partner Donafoods, the $50 million park also prioritises attracting Japanese investors in supporting industries.

In Vietnam’s economic development strategy for 2011-2020, the Vietnamese government considers developing supporting industries as an important task to help slash the trade deficit and make Vietnam an industrialised country by 2020. “Businesses conducting production activities in Hanssip will receive much support such as quick and simple procedures, tax incentives, workforce training assistance and particularly flexible bank loans,” Hoang said.

Nguyen Huy Tuong, vice chairman of Hanoi Municipal People’s Committee said Hanoi was now home to eight industrial parks, but all were fully occupied. Meanwhile, the city has planned to relocate thousands of manufacturing facilities from inner city areas and Hanssip will be a destination for the relocated enterprises.

Hanssip will also help develop the Phu Xuyen satellite urban area as per Hanoi’s master plan vision to 2050.

Green garment ventures seeing red

Textile and garment investors are struggling to attract investment for hi-tech, green technology ventures.

Vinatex said several new investment projects faced difficulties as localities have a cautious approach towards textile projects due to environmental concerns.

Deputy director Tran Quoc Van at Hung Yen province’s Department of Planning and Investment said the province welcomed textile and garment projects setting up shop in its specialised industrial zone catering to the textile and garment sector.

Thanh Hoa province Party secretary Mai Van Ninh said the provincial authorities upheld sector development, but they would now focus on attracting sectors with the possibility for generating greater added value.

Like Hung Yen and Thanh Hoa, other localities like southern Dong Nai and Binh Duong were also cautious about textile and garment investors.

Under Vietnam’s textile and garment development planning to 2020, the country will continue expanding the sector scope with an estimated investment reaching VND43 trillion ($2.04 billion) during the period.

The sector figures show that by late 2011, nearly two million labourers worked in the textile and garment industry with incomes averaging VND3 million ($140) per month, tantamount to around VND40 million ($1,900) per year. The sector’s payroll for these around two million workers will be approximately $4 billion per year, a remarkable figure.

Korean Chamber of Commerce in Vietnam general secretary Hong Sun said Vietnam should continue attracting investment into garment, footwear and leather production, because it would take time for unskilled labourers to shift into hi-tech projects.

“Hi-tech demands a good infrastructure and quality human resources. When these factors are up to scratch investors will eagerly climb onboard,” said Sun, adding that some well performing hi-tech projects in Vietnam like Intel were struggling to find sufficient human resources.

“With its current status as one of top five countries in [textile garment] export value globally, the sector’s growth momentum would keep on in the next two to three decades,” said Vinatex’s chairman Vu Duc Giang.

General director Nguyen Thi Thanh Huyen at Garment 10 Joint Stock Corporation, one of Vietnam’s foremost apparel companies, said despite current hostile climate in 2011 the parent company alone reaped VND32.5 billion ($1.5 million) profits, paid VND37 billion ($1.76 million) into social insurance funds, reported $69 million in sales in both export and domestic market and gave jobs to over 9,000 labourers.

Bleak outlook for sea transport sector

Local shipping lines have lost ground to international rivals in recent years and the situation is projected to worsen unless prompt coping actions are taken, said the Vietnamese Ship Owners' Association (VSA).
Do Xuan Quynh, general secretary of VSA, said foreign shipping firms had established an overwhelming presence on domestic and international sea transport routes.

A series of international maritime conventions to which Vietnam is a signatory, such as Marpol 73/78, require enterprises in the industry to invest heavily in maintenance and operations to ensure safety for vessels. And foreign ships are required to adhere to the regulations set by a nation that is a signatory to such conventions; otherwise, they will be fined.

The countries which Vietnamese-registered ships are sailing to are all members of those conventions. Meanwhile, on the domestic front, owners of dry- and loose-cargo vessels are struggling with falling freightage but rising costs, Quynh said.

The director of a transport company, who declined to be named, pointed out that increasingly high cost was one of the reasons behind the woes faced by the local shipping sector. “Exorbitant lending rates have thrown many sea transport firms into the red as up to 80% of their working capital comes from bank loans,” he noted.

Last year saw a couple of shipping lines putting up their vessels for sale to raise funds for paying bank loans or cutting back their work force to survive tough times.

Ironically, Vietnam Sea Transport and Chartering Joint Stock Company (Vitranschart) made a profit of VND240 billion last year as indicated in its financial report thanks to the sale of three ships. The company also sold two other vessels in a fleet restructuring plan.

The nation has about 600 ships active on international routes with a combined capacity of 4.5 million DWT but a majority of them are chartered by foreign firms because most Vietnamese companies choose FOB format for their export operations.

“Local vessels are responsible for a mere 7-8% of the country’s total export and import volume,” Quynh said.

VSA forecast the sea transport market, especially for dry goods, would continue to be in distress in 2012-2013.
 
Provinces befuddled by gov’t restrictions on new IPs

Some provinces have let developers of already-approved industrial parks (IP) continue their projects but others have got confused over how to do with the licensed IP projects since the Prime Minister ordered a halt to new IP developments.

The Vietnam Singapore Industrial Park Joint Venture Co. Ltd. (VSIP) said it was still going on with its industrial, service and urban complex project on 1,000 hectares in the central province of Quang Ngai. This will be VSIP’s first integrated industrial-service-urban complex in the central region and its fifth nationwide.

Though the project is awaiting regulatory approval, it should not be considered a new IP project as stipulated in the Prime Minister’s Directive 07, according to VSIP, because the project is included in the master plan for the Dung Quat Economic Zone in Quang Ngai.

Sharing this view, the Dung Quat Economic Zone Authority said the VSIP project is one of the IPs to be developed under the Government-approved master plan for the economic zone, so it is not affected by the directive.

Similarly, according to the HCMC Export Processing and Industrial Zones Authority (Hepza), of the total 6,000 hectares zoned for IP development approved by the Government, the already-licensed projects cover less than 4,000 hectares. Therefore, the city will either grant new investment certificates or allow the operational IPs to expand in the coming time.

In particular, Hepza will develop Dong Nam, Phuoc Hiep and Xuan Thoi Thuong industrial parks, or press on with the second phase of Hiep Phuoc Industrial Park.

Meanwhile, Long An Province is wondering how to handle the projects not yet licensed. According to the Long An Industrial Park Authority, 21 industrial parks have gone up in the province, out of the 30 approved by the Government. The province has not known how to deal with the remaining nine since Directive 07 came out.

Different provinces have different interpretations of the directive. Some still license new IPs in line with the approved zoning plans while others suspend issuing new licenses for fear of violating the directive.

The halt to new IPs as specified in the directive is aimed at making the most of existing economic zones, industrial parks and industrial clusters, of which a majority are operating far below capacity.

The Ministry of Planning and Investment is tasked with reviewing the implementation of the IP development policy, and coordinating with relevant agencies to assess the operations of economic zones and industrial parks and propose measures for improving their efficiency.
 
Vietnamese confectionery giant Bibica may lose its brand to Lotte

Bien Hoa Confectionery Joint Stock Company (Bibica) shareholders are worried that the company’s brand name may die out and be replaced by South Korean brand, Lotte.

The company’s name will be changed into Lotte-Bibica Joint Stock Company when a plant in the northern province of Hung Yen is built, Bibica Chairman Jung Woo Lee, said at the firm’s shareholder meeting on March 24.

According to several Vietnamese shareholders, with a current ownership of 38% and chairmanship, Lotte is gradually increasing its power in Bibica.

Lotte’s plans to take over Bibica were developed several years ago. It took the first step by buying 4.6 million shares or 30.15% stake in Bibica in 2007.

A year later, the South Korean firm increased its ownership in Bibica by 5.5% to 35.65%.

Its current stake in Bibica has reached 38% with the rest scattered among a lot of Vietnamese shareholders.

Despite having yet to reach the maximum 49% stake allowed in Bibica, Lotte is managing the entire technology and development strategies as well as chairmanship in the company.

Two Lotte officials currently hold the most important positions in Bibica, including chairman of board of directors and financial manager.

“Lotte’s purchase of Bibica’s shares is the fastest and the most effective way for it to enter the Vietnamese confectionery market. The move will create a firm foundation for Lotte to develop its distribution network, production facilities and trademark,” a Bibica shareholder admitted.

Currently, Bibica is the second biggest confectionery producer in Vietnam by productivity after Kinh Do.

With one plant in the southern province of Bien Hoa and another in Hanoi’s Gia Lam District, the company produces around 15,000 tonnes of confectionery per year.

 
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