Last update 4/28/2012 7:00:00 AM (GMT+7)

C.T Land, Korean firm cut deal to develop logistics

C.T Land, a subsidiary of C.T Group, on Tuesday signed a memorandum of understanding with CJ GLS Co. Ltd., a unit under South Korea’s CJ Group, to jointly develop the logistics system in Vietnam.

The memorandum allows C.T Land to coordinate with the logistic and shipping company CJ GLS in exploiting the logistics systems, including workshops and warehouses, in Binh Duong in the south, Danang in the central region, and Bac Ninh in the north.

C.T Group has completed C.T Song Than Logistics Complex covering over 7.6 hectares in Thuan An, Binh Duong, comprising normal, specialized and bonded warehouses, processing, packaging and distribution workshops and maintenance facilities.

Under a business cooperation contract, C.T Land will develop storage facilities at agreed locations, while the Korean partner will invest in logistics technology, said C.T Group Chairman Tran Kim Chung.

Chung said his company had invested US$12 million in the logistics center in Binh Duong, and would spent a respective US$15 million and US$8 million developing similar centers in Bac Ninh and Danang.

Later on, C.T Land and CJ GLS will consider establishing a joint-venture company to serve expansion of the logistics system on a national scale.

Through this partnership, CJ Group is enhancing its presence in multiple business fields in Vietnam.

In the field of entertainment, the South Korean group, via its subsidiary CJ CGV, spent some US$73.6 million acquiring Vietnam’s top cinema chain MegaStar in July last year.

Meanwhile, with 36 members under its umbrella, C.T Group is active in several sectors, such as property, retail, construction, financial investment and entertainment.

C.T Group is planning to expand its business into Myanmar. The group has clinched a comprehensive strategic cooperation deal with Myanmar’s Shwe Taung Development Co. Ltd. to develop shopping centers, supermarkets and building materials in Myanmar.

In addition, C.T Group has signed a cooperation agreement with Super One International to supply goods to supermarkets in Myanmar.

Wintek adds huge capital to touch-screen plant

Wintek Vietnam on Tuesday got a certificate to revise up its investment capital for the Bac Giang Province-based touch-screen factory from US$250 million to US$1.12 billion.

In March last year, the affiliate of Wintek Corporation, a Taiwanese maker of touch screens for Apple iPads and iPhones, was licensed to set up shop in Bac Giang’s Quang Chau Industrial Park.

After a year of project implementation, Wintek has found it necessary to add capital, according to Quang Chau Industrial Park Infrastructure Development Company. Therefore, the company has decided to pour an additional US$870 million in the second phase of the project to import more equipment and production lines, and expand the factory to boost production to meet strong demand of mobile phone producers.

The factory will supply touch panels, liquid crystal displays (LCD) and liquid crystal monitors (LCM).

The touch screen plant is now operating on a small scale. When stable production is achieved, the factory will produce billions of dollars worth of products and generate jobs for 10,000 workers, instead of the current 5,000, said the project owner.

In the first phase, Wintek took a lease of nearly 18 hectares of land and purchased 15,400 square meters of factory space in Quang Chau Industrial Park. The industrial park developer has set aside some 100 hectares of land for Wintek to expand production in the next phase.

Quang Chau Industrial Park covering around 500 hectares has been developed by Saigon-Bac Giang Industrial Park JSC, a unit under Saigon Invest Group (SGI). Since it opened to business three years ago, the park has attracted many investors such as Sanyo, Nichirin and Inoue of Japan, Wintek, Universal Microelectronics and LC Tech of Taiwan, Hosiden of South Korea and Crystal of Hong Kong.

Through the capital adjustment, Wintek has become the biggest foreign investor in Bac Giang.

Construction of rice storage facilities behind schedule

Despite the recent deadline extension by the Government, the construction of the country’s rice storehouse system for storing four million tons is falling far behind schedule due to capital shortages and site-clearance difficulties.

The Government has allowed the Ministry of Agriculture and Rural Development to extend the completion schedule of the plan by two years to late 2013, with an aim to build new facilities able to store 2.5 million tons of rice. However, the target to date is only 40% completed, according to the agriculture ministry.

According to the ministry, Vietnam Southern Food Corporation (Vinafood 2) has built storehouses able to stock 711,000 tons, nearly 75% of the plan assigned to this company, while Vietnam Northern Food Corporation (Vinafood 1) has built facilities to store 210,000 tons, or 80% of the scheme.

The construction of the remaining rice storage capacity has been assigned to the Mekong Delta provinces like Long An with facilities for storing 350,000 tons, Dong Thap for 310,000 tons and Hau Giang for 130,000 tons. But none of these localities have kicked off construction as of the end of March this year.

The ministry forecast the total number of rice storehouses in the Mekong Delta would reach three million tons of storage in late 2012, equivalent to 75% of the plan. This means the country’s key rice growing area will have to build new facilities for 500,000 more tons in the last nine months of the year, mostly by Vinafood 1 and 2.

Among 11 provinces in charge of developing new storage facilities for one million ton of rice, only An Giang, Kien Giang and Soc Trang have already assigned enterprises to do the job. These firms, meanwhile, have found it difficult to access bank loans despite a decision by the Prime Minister to support them in realizing the scheme.

Difficulties in the site-clearance process have also hindered related sides from implementing new rice storage facilities construction as expected, the ministry noted.

Even as many provinces have yet to choose enterprises and implementation schedules, it is really hard to turn the plan into reality by late next year. Therefore, the ministry has petitioned the Government for permitting Vinafood 1 and Vinafood 2 to develop new rice storehouses on behalf of such localities.

Foreign currency loans out of reach to exporters

Export businesses nationwide are mired in difficulties again as local commercial banks have started to limit lending in foreign currency for corporate clients, including those who could make repayments in their own foreign exchange revenue.

Nguyen Van Ky, general director of An Giang Fishery Import Export Joint Stock Co., said enterprises in the export and import industry have a huge demand for foreign currency to pay for imported materials and equipment. Although the enterprises can secure debt solvency due to stable foreign currency incomes, many lenders still reject them.

Dang Quoc Hung, director of Kim Boi Handicrafts Co. Ltd. specializing in products made from coconut fibers, also said that he still meet difficulties in borrowing foreign currency from banks although his company is in a priority list for this type of loan.

A financial officer of a foreign bank branch in HCMC said outstanding foreign currency loans of the lender declined in the first months of this year after the central bank tightened inspection into foreign currency lending.

“Given loose management over foreign currency lending earlier, some export and import enterprises reached foreign currency credits as a cheap capital source due to low rates of 5-6% per annum. They wanted to compensate for high dong lending rates of 17-20% per annum,” the officer said.

Truong Van Phuoc, general director of Eximbank, recently told the Daily that the lender had almost halted lending in foreign currency. After the central bank’s Circular 03/2012/TT-NHNN comes into effect from May 2, lending in foreign currency will be impossible.

Therefore, banks will see a fall in foreign currency deposits from individuals and enterprises in the near future, Phuoc said.

Besides, the effects of the regulation still depend on foreign currency volumes kept at commercial banks and sold to the central bank as well as a recurrence of inflation.

Vinatex to invest heavily in fiber sector

Vietnam National Garment and Textile Group (Vinatex) will spend half of its VND24 trillion budget on the fiber sector during the 2011-2015 period.

Vinatex plans to invest in expanding production lines, building fiber and dye factories between now and 2015. Particularly, VND10.42 trillion will be allocated to 20 fiber processing mill projects.

Thanks to the investment strategy, Vinatex’s fiber output will increase at a steady pace, from 112,000 tons in 2011 to 125,500 tons this year and it will hit 231,000 tons by 2015. At present, it generates 21% of the country’s total fiber output of 514,000 tons.

The state-run textile group plans to develop fiber factories in the provinces of Nam Dinh, Thanh Hoa, Nghe An, Hue and Quang Nam.

Apart from fiber production, Vinatex will set aside nearly VND7 trillion to stimulate the dye industry. It will construct 10 more dye factories in a bid to raise its cloth output to 506 million square meters by 2016 from last year’s 231.9 million square meters.

The country’s apparel industry currently is able to dye and finish around 800 million square meters of cloth annually. It must import 5.2 billion square meters of cloth each year to meet apparel production demand.

Total investment capital for the five-year production plan includes VND7.5 trillion from its own budget with the rest mobilized from commercial loans and investment credits, said Vinatex.

Lai Chau hydroelectric plant to operate in 2017

Lai Chau hydroelectric plant will be completed by 2016 and generate power by 2017, said Nguyen Dinh Thao, deputy head of Son La-Lai Chau Hydropower Plant project management unit under Vietnam Electricity (EVN).

Apart from power, the plant will provide water to agriculutural areas in the Red River Delta during the dry season, Thao said at its damming ceremony organized in Lai Chau Province on Tuesday.

Costing VDN35.7 trillion, the plant kicked off construction in January last year. With three generators and a designed capacity of 1,200 MW, it will provide an annual electricity output of around 4.7 billion kWh.

Situated on the upstream of Da River, the plant’s reservoir can store 1.2 billion cubic meters of water and the biggest dam is 120 meters high. Lai Chau Province authorities have resettled over 2,000 households to make room for the plant.

There are three hydropower plants on Da River, namely Hoa Binh, Son La and Lai Chau with designed capacity of 1,920MW, 2,400MW and 1,200MW respectively. They generate a combined power output of 25 kWh annually.

With capacity of 400MW, the fifth generator of Son La hydropower plant is set to merge the national grid by the month-end. Four out of six generators of the plant have become operational as of now.

There will likely be fewer power cuts in this year’s dry season given favorable hydrological conditions, according to the Ministry of Industry and Trade. The water levels in most hydroelectric dams are above normal levels recorded in previous years.

The ministry suggested hydropower plants must stick to regulating plans in an attempt to satisfy domestic power demand during the dry season. Hydroelectric dams must retain current water levels to serve as a back-up for power generation until the end of the dry season.

City needs VND16 trillion to ease hospital overload

HCMC needs investments of some VND15.7 trillion, or US$750 million, to reduce overload at hospitals in the city in the 2012-2015 period, according to the city’s government.

In a report sent to the central Government, the city authorities said the overload at hospitals in HCMC results from a large number of patients coming from other provinces, at between 40% and 60% of the total number.

As the current capital source is insufficient to ease the hospital overload, HCMC has asked for additional Government bonds for key hospital projects in the city.

Specifically, the children’s hospital, oncology hospital and the second branch of Pham Ngoc Thach Medical University are in need of an additional VND5 trillion to be spent from 2013 to 2015.

Currently, HCMC is mapping out a scheme to reduce the hospital overload which will be submitted to the Government. Under the scheme, the city targets to have 5,500 more hospital beds and 15 doctors for every 10,000 people in 2015.

The human resource is also a headache for the city’s healthcare sector, currently with 8.8 doctors for every 10,000 people. Although this rate is three times higher than the country’s average rate, it is still much lower than the global standard.

Due to the human resource shortage, doctors work for both public and private hospitals, and there is brain drain at public hospitals as well as a shortage of doctors at district-level hospitals.

Trade with Laos to reach $1b this year

Viet Nam and Laos expect their trade turnover to reach US$1 billion this year.

Lao Deputy Prime Minister Somsavat Lengsavat made the announcement at a Viet Nam-Laos business seminar in Ha Noi yesterday.

Lengsavat said he highly valued Viet Nam's active contribution to Laos' socio-economic development, which he said had created jobs and boosted the State budget.

He hoped that businesses in the two countries would continue to strengthen co-operation in investment and development, as they had done over the past 50 years.

He asked the two sides to further co-operate in resolving difficulties encountered by firms doing business in the two countries.

Speaking at the seminar, Vietnamese Deputy Prime Minister Nguyen Xuan Phuc urged the two countries to promote ways to support businesses, while regularly organising talks between Government and enterprises to complete agreements on trade and investment.

Phuc also said the two sides needed to focus on projects that involved energy, agricultural development and processing, exploitation and trade.

Statistics from the Vietnamese Ministry of Planning and Investment showed that Viet Nam has 206 investment projects in Laos, with a total registered capital of $34 billion.

The Viet Nam Association of Investors in Laos said Vietnamese projects in Laos had been implemented strictly and had contributed significantly to Laos' economy. Most worthy of note are the Laos-Viet Joint Venture Bank, Hoang Anh Gia Lai Group's rubber projects.

State urged to privatise more sectors

Viet Nam should withdraw capital from State-owned enterprises (SOEs) in non-core sectors such as coffee, rubber and tourism to better manage public debt in the economic downturn, said Dr Vo Dai Luoc, former head of the Institute for World Economy and Politics.

Luoc made this statement at the international workshop on restructuring the economy that wrapped up in Ha Noi yesterday.

He urged the Government to reduce the percentage of SOEs in GDP from current the 35 per cent to 15-20 per cent, a rate comparable to other economies.

Luoc said SOEs should stop non-core business activities, especially in restaurants, hotels and stock market sectors.

"The country should also develop private enterprises to replace SOEs in some areas," he added.

Experts participating in the event agreed that the public debt crisis in Europe would put the world's economy on a downward spiral this year.

They said Viet Nam would be hard pressed to promote trade with Europe since foreign direct investment from the area would be decreased this year.

Dr Nguyen Thang, vice director of the Institute of Social Sciences and Humanities, said restructuring should be implemented first at businesses that took advantage of financial mechanisms to reach a high debt ratio on ownership capital.

Thang said the restructuring process should be transparent and information about SOEs should be published, including the production situation, finances, business targets and profits according to standards for listed companies in stock market.

He said the Government needed to remove preferential treatment for SOEs regarding access to credit sources.

He added that SOEs would not extend their debts while the country would continue to open the market for monopoly sectors to create competition.

"The Government should restructure the electricity and petroleum industries to reduce prices and increase effectiveness."

HCM City to build US$500 mil twin towers

Bitexco, a multi-industry group, announced on April 26 that it will pour US$500 million into a trade centre-office complex to be built in district 1, HCM City.   

The General Director of Bitexco Group, In-Suk Ko, said that The One Ho Chi Minh City will get off the ground on April 27, covering a total area of 8,600 square meters.

The complex will include two towers, a trade centre, offices, and apartments for rent, and a six-star Ritz Carlton hotel.

According to Bitexco Group, the project has demonstrated its determination to maintain and develop investment activities, in spite of difficulties in the national economy and instability in the real estate market.

The complex is expected to be completed and put into operation by 2015.

Established in 1985 as a textile firm, Bitexco has become a multi-industry corporation. It covers real estate investment and development, hydro-power plants, infrastructure, mining and mineral water production.

Long An suspends 20 slow-moving projects

The southern province of Long An has suspended the licences of 20 projects so far this year, revoking land-use rights totalling 1,500ha, Deputy Director of the provincial Department of Planning and Investment Ngo Ly Hoa has said. The province would continue to review projects and respond to difficulties faced by investors in an attempt to hasten the implementation of slow-moving projects, she said.

Habubank announces plan to merge with SHB

Hanoi Building Commercial Joint Stock Bank, or Habubank, yesterday announced its draft plan to merge with the Saigon – Hanoi Bank Commercial Joint Stock Bank (SHB), three days ahead of its annual shareholder meeting.

The draft merger plan will be added to the meeting agenda to seek shareholders’ opinions, a move made as part of the merger process of the two banks, before seeking approval from SHB’s shareholder meeting on May 5, and later, the State Bank of Vietnam (SBV).

Under the merger process, all responsibilities and duties to customers, partners, and employees of Habubank will be transferred to SHB, under the supervision and assistance of SBV.

The brand name Habubank will then no longer exist, as the name of the merged bank will be Saigon – Hanoi Bank Commercial Joint Stock Bank (SHB), which is set to have a total registered capital of nearly VND8.86 trillion (US$425.2 million), and total assets of VND100 trillion.

The merged credit institution expects to serve around 500,000 customers and have 5,000 employees working for it, VnExpress reported.

As both Habubank and SHB are listed on the Hanoi Stock Exchange (HNX), the exchange ratio of the two firms stocks is set as one HBB stock is equal to 0.75 SHB stock.

At yesterday’s closing session, HBB was listed at VND7,000 per share at HNX, while the figure of SHB was VND11,400.

Habubank has opted for the merger plan since its business effectiveness, financial state, and asset quality have been adversely affected by the unsettled loan to Vinashin, the bank stated in its draft plan.

It is also unlikely that the bank will well compete in the sector given its current scale and ability, and the lack of expansion and business development plans, it added.

“Meanwhile, merging with larger banks has become trendy amid the restructuring process of the banking sector, which is backed by administrative authorities,” the bank said.

The Habubank-SHB merger is the second notable such transaction of its kind, following that of three HCMC-based banks last year.

On December 6, 2011, TinNghiaBank, Ficombank, and Saigon Commercial Bank became the country’s first three banks to be merged, with the newly-formed bank named after the latter.

In fact, it has been rumored since early-March that Habubank would merge with SHB, though it was unconfirmed by both of the banks and the central bank.

“The merger is still in the stage of ‘studying each other’,” SHB Chairman Do Quang Hien told the media last week.

In case the plan is approved by the shareholder meetings of each bank, it will still need the final nod from SBV, said Hien.

“This is a lengthy and cautious process since the merger deal must strictly follow appropriate procedures, as well as ensure safety for customers and the whole banking system,” he explained.

Exporters to focus on processed goods

Viet Nam should focus on exporting processed goods to China made with domestic raw materials, experts have recommended.

Speaking at a conference organised yesterday by the HCM City Business Association, Hang Vay Chi, general director of Viet Huong Industrial Park Joint Stock Co, said seafood, fruit, rubber, coffee and cocoa were among the raw materials that Viet Nam could export to China.

However, she stressed that raw-material exports should not be somewhat limited to conserve local resources.

Instead, processed-food exports should be increased by around 10 times since those items are profitable.

"Vietnamese businesses should collaborate with the Chinese distribution system. It is an effective way for the businesses with enough financial capacity to advertise to the local consumers. Currently, China has about 1 million supermarkets, convenience stores included," she said.

Huynh Khanh Hiep, deputy director of the HCM City Department of Industry and Trade, said the department would continue to propose to the Ministry of Industry and Trade to complete the legal framework and trade policies to expand exports in the major regional markets, including China.

Vietnamese exporters should pay more attention to updating bilateral or multilateral agreements with China so as to make good use of preferential-tariff agreements.

There was no need to create more trade promotion programmes to strengthen links with Chinese businesses, he added.

Tran Duc Hanh, an expert at the HCM City's WTO Affairs Consultation Centre, said that to increase competitiveness of Vietnamese goods to China, businesses should create more designs and improve quality.

They should also survey the market so they could develop specialised and particular products in every market segment.

Vietnamese exporters should take advantage of online market-analysis tools of the International Trade Centre, such as the Trade Map, Trade Competitiveness Map, Market Access Map, Standards Map and Investment Map, to seek understanding about markets and partners and to minimise risks.

Le Ngoc Trung, deputy head of the Ministry of Industry and Trade's representative office in HCM City, said trade relations between Viet Nam and China had developed strongly in recent years.

Last year, the import-export turnover of the two countries reached nearly US$36 billion. However, that does not tap the potential that exists.

Last year, Viet Nam's exports reached $11 billion and imports, $25 billion.

Viet Nam needs to reduce the trade gap with China, possibly through speeding up exports through official channels and also through cross-border trade, according to Trung.

Jenny Trinh, general director of the Bank of Communications, who spoke at the seminar, said the bank would provide financial support for exports of seafood, coffee, rubber, cashews and pepper to the Chinese market.

In addition, it would offer support for import of machines, equipment, chemicals and fertilisers, at competitive interest rates, she added.

Suzuki sets up new Vietnam automobile plant

Vietnam Suzuki Corporation, a subsidiary of Japan’s Suzuki Motor Corporation, yesterday broke ground on the construction of its automobile manufacturing plant in Long Binh Industrial Park in the southern province of Dong Nai’s Bien Hoa City.

The Japanese corporation will earmark around US$13 million for this new plant, bringing its total investment in Vietnam to $57.9 million.

“The new auto-making plant, together with the operational motorbike manufacturing facility, is intended to welcome the rise of the Vietnamese automobile market in the future,” said Osamu Suzuki, chairman and CEO of Suzuki Motor Corporation.

In 1996 Vietnam Suzuki Corporation set up its first auto plant in Dong Nai’s Binh Da Industrial Park.

In 2006, the company also built a plant to produce motorbikes in Long Binh IP which is capable of manufacturing 80,000 units a year.

“The new automobile making facility will become operational in 2013, with a capacity of 5,000 vehicles, which will gradually rise to 10,000 vehicles in the following years,” said Osamu.

The plant is part of the company’s plan to market a new small-sized sedan in the future, in addition to the currently manufactured Carry Truck and Carry Van, he added.

FDI hits US$4.2 billion in four months

Vietnam attracted US$4.267 billion in foreign direct investment (FDI) in the first four months of this year, equal to 70 percent of the figure recorded in the same period last year.     U

According to the General Statistics Office (GSO), the total amount of capital disbursed for 168 newly licensed projects was estimated at US$3.6 billion, down by 0.3 percent.

The real estate sector in Binh Duong took lead with a total FDI capital of over US$1.57 billion, followed by Haiphong, Quang Ninh and Ninh Binh.     

Currently, Japan is the biggest investor in Vietnam, with its newly-registered projects estimated at more than US$2.36 billion, (76 percent of the total FDI funding in the first four months).

Vietnamese businesses boost investment in Laos

Vietnamese businesses in Laos will put some large-scale investment projects into operation this year.    

The statement was confirmed at a meeting in Hanoi on April 25 that was jointly held by the National Assembly (NA) Committee for External Relations, the Ministry of Planning and Investment, and the Vietnamese Investors’ Association in Laos.

Present were Vietnam’s NA Chairman Nguyen Sinh Hung, and Deputy Prime Minister Nguyen Xuan Phuc, Laos’ NA Chairwoman Pany Yathotou, and Deputy PM Somsavat Lengsavat, and representatives of 60 Vietnamese and Lao businesses.

At the meeting, Deputy PM Phuc spoke highly of the two countries’ co-ordinated efforts to create favourable conditions for their businesses to strengthen cooperation and investment.    

Laos’ Deputy PM Somsavat Lengsavat praised Vietnamese businesses having actively contributed to the cause of socio-economic development by creating many jobs for Lao people.

He expressed his hope that the trade turnover between the two countries will reach US$1 billion at the end of this year.

He said there have been more than 210 projects in the fields of energy, agriculture and forestry with a total capitalization of US$3.45 billion.

Among those already getting off the ground are a Laos-Vietnam joint venture bank, a rubber planting project by Hoang Anh Gia Lai Group and a rubber and sugar-cane growing project by Vietnam Rubber Group.

Businesses still struggle to access credit

Total credit issued by the nation's banking system shrank by 2.13 per cent in the first quarter, suggesting that despite a recent downward trend in interest rates, many businesses continued to face difficulties accessing bank loans.

The IMF has forecast that total credit growth this year would reach 14 per cent.

Former Minister of Trade Trruong Dinh Tuyen told a conference here this week that to spur credit growth and help small- and medium-sized enterprises access loans, credit insurance funds needed to be activated. Reform of the banking system also needed to be hastened, with priority given to reducing bad debt levels and ensuring liquidity.

When liquidity improved, Viet Nam would be able to focus on boosting economic growth rather than on curbing inflation, Tuyen said.

Central Institute for Economic Management deputy director Vo Tri Thanh said many positive factors helped boost the economy during the first quarter, including lower inflation and interest rates, a firm balance of payments and a significant increase in reserves.

But many potential risks still loomed, he said, with the biggest challenge coming in part from the bad debts in the banking system. The average bank's bad debt ratio now ranged from 3.1 to 3.6 per cent. Such a figure now accounts for about 12-13 per cent of total outstanding loans in the entire banking system.

Meanwhile, Thanh said, the banking system would need another US$5-6 billion to reform and modernise operations.

The Government might support businesses by helping them access credit more easily, rescheduling their debts, lowering corporate income tax rates, supporting agricultural and rural areas and encouraging domestic consumption, he added.

The State Bank has already moved to ask commercial banks to reschedule loans that have become overdue because of negative economic conditions. The restructuring of loans would be done in accordance with State Bank Decision No 783/2005/QD-NHNN of May 2005, which allows commercial banks to restructure borrowers' repayment schedules based on their financial capacity.

The central bank has also requested that commercial banks actively work with borrowers in difficulties to help them access new credit and gradually restore, maintain and expand production.

During the first quarter of this year, the nation's economy grew at about a 4-per-cent annual pace, off from the 6-6.5 per cent target set by the Government. Meanwhile, production has stagnated, causing inventories to pile up and forcing about 12,000 businesses into bankruptcy.