BUSINESS IN BRIEF 20/7

Vietnam making great strides as a footwear supplier

Domestic and foreign-invested enterprises (FIEs) in the leather and footwear sector continue to experience impressive growth, ranking Vietnam the second largest global exporter of footwear.

In the first six months of the year, the nation’s footwear exports jumped 17.8% year-on-year to US$4.8 billion, according to the Vietnam Leather and Footwear Association (Lefaso), and economists are now forecasting them to surpass the US$11 billion benchmark by the end of the year.

The rebounding economies in the US and the EU are one of the key factors giving rise to the increased global demand.  The footwear sector is experiencing but an equally important factor is the free trade pacts that are poised for signature.

The Trans-Pacific Partnership (TPP) Agreement and Vietnam-EU Free Trade Agreement (VEFTA) are likely to be signed later this year or early next year, and the optimism they are generating has touched off tremendous investment into the leather and footwear sector.

Numerous foreign invested projects are sprouting up throughout country installed with the latest state-of-the-art technologies, modernised and streamlined facilities that are contributing directly to raising the sectors added value in the production process.

Foreign material suppliers are pouring huge investment into the sector forging their niches in the Vietnamese markets and prospering, and are aggressively seizing every opportunity to cooperate with Vietnamese partners.

With unanimity, they are reporting they consider 2014 as a pivotal year as they jockey to lay the foundation and get in position to benefit from the increased trading activities in the future once the TPP and VEFTA come into effect.

“Vietnam is the centre of focus by material suppliers at the 16th International Shoe and Leather Expo opened in HCM City on July 16,” Tran Vi Co, Director of Hien Dat Exhibition and Trading Services Company.

The number of foreign participants at the expo has increased by nearly 20% compared to last year and this year’s event has attracted a remarkable 150 businesses from 18 countries and territories, he added.

The opportunities are real, but whether domestic businesses will rise to the occasion and seize them remains an open question, he concludes.

Lefaso President Nguyen Duc Thuan emphasised that the increase in the use of domestic materials has been drawing much attention. The leather sector has historically used only 30% domestic materials.

In the future, this will increase significantly, Thuan said, adding the country is developing two leather industrial zones in two main regions. Furthermore, smaller IZs are in various stages of development in key regions to produce other materials, such as synthetic leather, shoes’ soles, and decorating materials.

The HCM City is going through a revolutionary transformation into a centre for supplying and exchanging materials for the whole sector.

The sector has set a target of using 100% of domestic tanned leather by 2020 and 50% of synthetic leather and 70% of shoes’ soles by 2050, Thuan said.

Currently, Lefaso devised measures to help the sector develop sustainably in the future. Training is one of its priorities. Accordingly, a human resource-training centre will be set up in the southern region in 2015.

Alcatel launches OmniSwitch 6860 and OmniVista 2500

French Alcatel Lucent Enterprise unveiled last week a new technology to address the challenges created by increased connectivity and the popularity of new applications used by businesses in Viet Nam.

The new technology including OmniSwitch 6860; the OmniVista 2500 network management system; and a range of additional network capabilities is one part of the company's unified access approach for both wired and wireless networks.

According to the company, these new technologies would give IT departments more visibility and control of their networks, while allowing employees and customers the flexibility to use applications they need on a range of devices, including personal or business devices. Hoa Phat sells more steel plates

The Hoa Phat Group sold 445,000 steel plates used in construction in the first six months of this year, representing a 37.74 per cent increase on last year.

According to a recent production report, the company's steel sales accounted for 18 per cent of the domestic market, a 15.2 per cent jump on that reported in 2013. It is the first time that its sales in central and southern Viet Nam have increased by the same amount, with approximately 45,000 tonnes in each area. The surge may partly be due to the expansion of its production in the second quarter in the central city of Da Nang to meet market demand in the central region and the Central Highlands.

Vietnamese tourists to RoK rise sharply

The number of Vietnamese tourists travelling to the Republic of Korea (RoK) jumped 29.8% year-on-year reaching 57,275 in the first five months of the year.

The information was released by Kang Sungghil, chief representative of RoK Tourism Organization in Vietnam at a seminar in Ho Chi Minh City on July 11.

The country expects to welcome over 140,000 Vietnamese visitors this year, Sungghil said.

At the conference, Yoo Seoung O, a representative from the RoK Consulate General in Ho Chi Minh City, said that more than 3,000 Vietnamese tourists came to the RoK through travel awards in the first half of 2014, up 32% compared to the same period last year.

It is most likely that the number will keep increasing rapidly in the coming time, he added.

IPs, EPZs lure large FDI garment projects

Industrial parks and export processing zones in HCM City attracted US$333.47 million in investment for the first half of the year, an increase of 55 per cent compared to the same period last year.

According to the HCM City Export Processing and Industrial Zones Authority (HEPZA), foreign enterprises invested $264.67 million of the total amount, a jump of 80 per cent compared to the same period last year,

The textile and garment industry received nearly $200 million, accounting for 82 per cent of total foreign direct investment during the period, according to Tran Viet Ha, head of HEPZA's Investment Management Department.

Ha attributed the surge in FDI projects in the textile and garment industry to the country's accession to the Trans-Pacific Partnership.

In particular, the Worldon Viet Nam Co.Ltd invested $140 million to build a garment factory in Dong Nam Industrial Park, while Sheico Viet Nam Co. Ltd. invested in a $50 million plant to produce fabric and garments.

Many projects in the garment and textile sector will likely pour more money into IPs and EPZs in HCM City this year, Ha said at a press meeting held yesterday.

In the first half of the year, domestic enterprises have invested a total of $68.8 million, a year-on-year increase of 1.2 per cent.

In addition, export turnover for enterprises in IPs and EPZs rose by 4.5 per cent to reach $2.3 billion.

HEPZA will develop industrial parks for support industries to attract investment in the mechanics, electronics and informatics sectors, said Ho Xuan Lam, head of HEPZA's administrative office.

Nearly 590 hectares of Hiep Phuoc Industrial Park-Phase II and 230 hectares of Le Minh Xuan No.3 Industrial Park will be set aside for the development of support industries, Lam said.

More than 271,800 labourers are working for enterprises in IPs and EPZs, an increase of 3,570 labourers compared to the same period last year.

Hanwha Life Vietnam to increase charter capital

Hanwha Life Vietnam is going to increase its charter capital in Viet Nam to nearly VND1.9 trillion or US$103 million – making it one of the top three life insurers in the market.

The capital injection by Hanwha Life Vietnam has been approved by the Ministry of Finance, and shows the company's belief in the Vietnamese life insurance market.

Hanwha Life Vietnam has also announced positive business results in first half year, drawing premiums of VND98.4 billion, an increase of 173 per cent compared with the same period last year.

New initiative for safe vegetable production in Vietnam

A cooperative project between Vietnam and Japan has helped set up the Basic GAP process for safe vegetable production, which gives farmers simpler technical requirements.

GAP-based vegetable production projects have faced difficulties during the implementation stemming from complicated procedures and uncertain markets for participants. However, demand for safe vegetables continues to rise along with food safety concerns.

In response to the situation, the Vietnamese Ministry of Agriculture and Rural Development (MARD) recently issued guidance for the implementation of the Basic GAP, which is based off of the VietGAP process, but simpler and easier to practise while still ensuring food safety.

The Basic GAP process was set up with technical assistance from the Japanese International Cooperation Agency (JICA) in order to help enhance safe vegetable productivity and improve quality.

The new process requires participating farmers to comply with only 26 requirements, while VietGAP had 65.

The project began July 2010 on a combined area of 500 hectares in six northern localities including Hung Yen, Ha Nam, Quang Ninh, Thai Binh, Hoa Binh and Haiphong, with its major products being cabbage, kohlrabi, and cauliflower. For about three and a half years farmers were trained how to properly use pesticides and chemical fertilizers. This helps both save costs and protect the environment.

“Public awareness has been gradually heightened and many were happy to produce safe vegetables with less investment,” Tran Xuan Dinh, Deputy Director of the MARD’s Department of Plantation, said at a recent press conference.

Nguyen Thi Vang, Deputy Director of Ha Nam provincial Department of Agriculture and Rural Development said, “Previously farmers used pesticides and chemical fertilizers improperly, without concern for food safety or the impact on the environment. Now, they know how to buy the correct pesticides for specific circumstances, so they can save on expenses."

She noted that Basic GAP input costs are more than 5% lower than normal, but economic value is around 8% higher, adding that the sales prices would be higher when they were properly labelled.

“Vegetables produced under the Basic GAP process are safe enough for Vietnamese consumers, but might not to be suitable for export to Japan right now. When Vietnamese farmers are familiar with the first 26 criteria they can choose to add further requirements to qualify for VietGAP, and then comply with the even stricter requirements of some foreign markets,” Yamatomo Satoshi, JICA’s senior agricultural adviser said.

Deputy PM orders restructuring of agro-forestry firms

At a Hanoi meeting on July 15, Deputy Prime Minister Vu Van Ninh ordered agro-forestry companies to continue their restructuring for better performance and efficiency.

The State will still hold a 100 percent-stake in firms based in far-flung areas strategic to national defence and security while for those on the waiting list of equitisation, it will keep 65 percent of capital and gradually phase out the control, Ninh said, but warned that it must be done with thorough consideration.

About a plan to establish limited liability companies active in developing both raw materials and processing industry, he suggested them team up together to build large-scale production clusters, a step which, he said, is a leverage to reach out to more markets across the country.

For incompetent enterprises, Ninh demanded them halt operations and transfer their land to local authorities, and this must be done as soon as possible.

After receiving plots, localities must screen those in demand to offer leases, draw geological maps and grant land use licenses no later than 2015, he said, adding that land zoning must be tailored to meet the needs of each company.

Participants also learned about the Government’s action plan and regulations on revamping natural forests.

Vietnam business association in Angola to take shape

The executive board of the Vietnamese people association in Angola has agreed on the establishment of a business association to support one another in their operation.

The agreement was reached at a recent conference in Luanda with the participation of representatives of over 40 Vietnamese enterprises in trade, health, and civilian construction.

Delegates highlighted the need to seek measures to boost the linkage and information sharing among entrepreneurs.

More than 45,000 Vietnamese are living in Angola.-

Long An aims to enlarge aquaculture area

The Mekong Delta province of Long An has planned to expand its aquaculture area to 7,900 ha by 2015 and 11,200 ha by 2020.

With the expansion, the locality hopes to produce 37,400 and 56,800 tonnes of products in 2015 and 2020 respectively, according to a plan announced on July 14.

Under the scheme, the farming area will be divided into three main zones by 2020. Zone 1 covers 5,777 ha in the districts of Tan Hung, Vinh Hung, Moc Hoa, Tan Thanh,Thu Thua, Duc Hue and Kien Tuong town. Zone 2 encompasses 734 ha in the northeast districts of Duc Hoa and Ben Luc, and Tan An city. Zone 3 will include a salty-brackish ecology area in Can Giuoc, Can Duoc, Chau Thanh and Tan Tru districts with a land area of 4,769 ha.

The locality will also set up aquaculture preservation zones with a total area of over 200 ha in several districts in Dong Thap Muoi area, while bringing the total number of breeding farms to 100, which are capable of churning out 2.3 billion of breeds by 2020.

To realise the targets, the local agricultural sector will focusing on developing technical infrastructure, applying scientific and technological advances in production, training workforce, protecting the environment and diversifying various models of production, processing and exploitation, among others.

Scientists aim to further promote local engineering

Vietnamese scientists have recently made considerable progresses in the field of engineering, said the Vietnam Economic News.

The Vietnam Forestry University, Hanoi University of Science and Technology and Military Technical Academy have successfully built a fire fighting equipment that is believed to be the first of its kind made in Southeast Asia.

Although it has been put into operation for only a short time in Kon Tum and Hoa Binh provinces and the Southwestern region, the equipment has been highly appreciated by the localities. The equipment has contributed to reduce economic losses to about 150 billion VND a year due to forest fires.

The second example is the computed scanning equipment (Gorbit) which was produced by researchers from the Centre for Application of Nuclear Technique in Industry (Vietnam Atomic Energy Institute).

The quality of machine was recognised by the International Atomic Energy Agency (IAEA) and IAEA placed orders for some member countries.

Scientists from Quang Trung Mechanical Enterprise have also successfully manufactured super weight cranes with a localization rate of up to 90 percent. In addition, Vietnam has now mastered a series of modern manufacturing technologies like the CNC machine tool, the 2ANSHA mobile hydraulic roof support for exploiting pit coal, 36,000cu.m per hour capacity water pump, 100 tonnes per hour stone grinding machines, construction of high speed ships at 25 miles per hour and tankers of 3,500 deadweight tonnage.

Deputy Head of the National Department of Science and Technology Information Le Thi Khanh Van said to promote domestic engineering, Vietnam needs to focus on developing some selected high value products with favourable market conditions and issue policies to promote sales for these products.

A representative from BKMech Co, Ltd, a successful enterprise in researching and manufacturing CNC machine tool said tax incentives need to be applied on enterprises using domestically-made machines while import tax rates of similar products need to be increased.

Vietnam should also cut the tax rates of input machine components and encourage more local enterprises to participate in the field of engineering.-

Korean medical equipment plant operational in Binh Duong

A Korean-invested medical equipment factory became operational in the Vietnam – Singapore Industrial Park 2, the southern province of Binh Duong , on July 15.

The plant of the Republic of Korea ’s Sewoon Medical Vina Co. Ltd. has a total investment of more than 148 billion VND (over 7 million USD).

Chairman of the provincial People’s Committee Le Thanh Cung said Binh Duong is working to attract more investment into areas using high technologies such as medicine and electronics.

In the first half of 2014, the inflow of foreign direct investment into the province topped 1 billion USD, 400 million USD of which was poured into 83 new projects and the rest was added to 69 existing ones.-

Investors eye on dairy industry

With an average annual growth rate of 15-20 percent, the dairy industry has potential to attract investment despite the current economic difficulties.

Last month, Vinacafe Bien Hoa Company, known as a coffee manufacturer, announced its intention to join in dairy industry. Economists said that the coffee manufacturer’s ambitious plan to “encroach” dairy industry will make the market more excited as food producer Masan, which reportedly obtain 53.2 percent of Vinacafe Bien Hoa’s shares, always surprises its counterparts and competitors.

While Vinacafe Bien Hoa is nurturing the plan to encroach the dairy industry, property developer Hoang Anh Gia Lai Company officially participated into the industry by cooperating with Nutifood, a local milk producer.

Hoang Anh Gia Lai spent around 6.3 trillion VND (297 million USD) on milky cow farms to raise 120,000 cattle. Nutifood will consume milk to make dairy products to the market. Accordingly, Nutifood also invested in 5 trillion VND (236 million USD) milk processing plant imported from German and Sweden.

Nutifood’s has tiny market share. Currently Vinamilk has a 50 percent market share, next followed by Friesland Campina with 25 percent, TH True Milk with 7 percent and Dalat Milk, Ba Vi, Longthanh Milk, Nutifood and Vixumilk take up little market share.

It is questioned whether Nutifood will make a breakthrough in gaining market share with the assistance of Hoang Anh Gia Lai as other manufacturers are trying to keep or even expand its market share.

Vinamilk planned to increase its selling costs to 30 percent though it has raised the selling cost to 40 percent in 2013 compared to 2012’s.

The announcement of Hoang Anh Gia Lai or Vinacafe Bien Hoa’s encroachment into dairy industry will come as no surprise for everyone as the industry is so attractive to investors. Vietnamese consume little milk than other Asian countries.

For instance, in 2013, Vietnam consumed 15 litres of milk per person per year while it is 35 litres per person per year in Thailand and it is 45 liter in Singapore. Vietnamese parents will cut down upon over other expense to buy milk with the hope of improving their children’s height.

To maintain and expand market share, most of enterprises have their own strategies to invest in milk cow farms, production and marketing. Vinamilk is nurturing the ambition for 3 billion USD turnover in 2017 and becoming one of 50 world biggest milk manufacturers.

From 2007, Vinamilk has invested in 800 billion VND (37.7 million USD) building five big milk cow farms to raise around 8,000 Australian-imported cattle which produce 90 tonnes of milk every day. In the future, the company will build more farms worth 3 trillion VND (141.6 million USD) in the southern province of Tay Ninh, the central province of Ha Tinh and two farms in the northern province of Thanh Hoa. In addition, Vinamilk also promoted its investment projects in abroad.

The TH True Milk planed to operate Mega Plant with capacity of 1.700 tonnes of milk per day or 500 million liters a year. The TH True Milk has reached turnover of 6 trillion VND after three year operation. It targets to capture 15 trillion VND (708 million USD) in 2015 and 23 trillion VND in 2017 and take up 50 percent of dairy market share.

In addition to investment in farms and plants, these companies will boost advertising campaign.

Work on 500kW Mekong Delta transmission line to start soon

Construction of the 500kV Phu Mon-O Mon power transmission line is scheduled to commence in the third quarter this year, helping ensure a stable supply of power for part of the Mekong delta region.

The 90km line, expected to be completed by the fourth quarter of 2015, passes three Mekong Delta localities of Soc Trang, Hau Giang and Can Tho.

It has a total investment of 2.8 trillion VND (131.6 million USD), sourced from the Japanese NEXI Bank and contribution by the Vietnam National Power Transmission Corporation (EVN NPT) – the project investor.

The Southern Vietnam Power Project Management Board under the EVN NPT is working with the localities to step up ground clearance for the project as well as the compensation for locals living in the project site.

Transport firms mull higher fares on increased fuel prices

Cargo and passenger transport enterprises have kept their fares unchanged for now, but said they would revise up charges if fuel prices remain high for long.

In the field of passenger transportation, Ta Long Hy, chairman of the HCMC Taxi Association, said taxi companies have not raised fares. However, to share the burden with taxi drivers, enterprises are offering financial support, especially for those drivers who cover long distances.

He added the association also advised its member companies to maintain fares. However, if the petrol price remains high in the coming time, businesses will be forced to raise their charges to offset the increased cost.

Freight transport is in the same situation. Do Xuan Phu, director of Minh Lien Transport Company, said he was not raising the fees because the adjustment would lead to many problems, such as renegotiations of contracts signed earlier with customers.

Trinh Chau Khanh, director of Kim Loi Minh Transport Company, said the latest petrol price hike has caused the transport cost by containers from HCMC to other provinces such as Binh Duong and Dong Nai to increase by VND100,000-200,000 per container.

On Monday, the price of RON 92 petrol rose by VND410 to VND25,640 per liter while diesel, kerosene and heavy fuel oil marked up by VND290 per liter and VND130 per kilogram respectively.

Mobile carriers enhance security for subscribers

Vinaphone’s users will be protected more cautiously by security apps provided by this mobile carrier and its security partners, while previously, MobiFone had provided the ESET security package for its customers.

As malicious codes enabling theft of money from subscribers’ accounts via text messages are becoming popular, mobile providers have to boost protection for their customers.

Doan Xuan Hop, deputy head of Vinaphone’s sales office, said in an online exchange organized by Phap Luat Online that Vinaphone along with several securities firms will develop security apps to protect subscribers.

In case Vinaphone determines content providers (CP) automatically send malicious codes, hidden in apps, to customers with a mercenary motive, the customers will be refunded in case of losses.

Once spam messages are detected, Vinaphone will lock the SMS gateway or the subscriber number, or even stop the contract with individuals or partners committing the breach.

Hop said that Vinaphone does not charge extra fees for blocking spam messages.

However, the Daily has found out that Vinaphone launched a service named SMS Blocking with a monthly charge of VND10,000. When subscribers call to Vinaphone service center to ask for blocking spam messages, they are advised to register SMS Blocking.

Earlier, MobiFone had joined hands with ESET, an IT security company, to provide security apps for mobile subscribers. MobiFone users can access ESET Security software for mobile phone via text message registration.

Subscribers who are using Mobile Internet package or cell phones with suitable connectivity features can register for ESET software. This service charges VND70,000 per license code for 30 days.

Grant Thornton, RMA offer brand evaluation

The auditing and consulting firm Grant Thornton and the brand services provider Richard Moore Associates (RMA) on Wednesday announced the brand evaluation service for Vietnamese enterprises.

With this service, Grant Thornton and RMA will help local companies accurately assess their brands, work out development solutions and maximize brand value.

According to Nguyen Vinh Ha, advisory service partner at Grant Thornton, the approach taken by Grant Thornton and RMA not only determines the value of brands like what the traditional approach does, but also consider brands in correlation with business operations and the market.

The method helps identify strengths, weaknesses and solutions to promote brands and increase the added value for businesses. The result of a brand evaluation also brings about long-term benefits, she said.

Previously, Grant Thornton has evaluated brands of many businesses in Vietnam for different purposes like mergers, acquisitions and equitization, and applied the intangible asset valuation method under international standards.

With such a method, there are two data inputs: financial information and information about the markets. Grant Thornton also adopted other methods to double-check the results of the main method, Ha said.

Talking about the brand evaluation and business evaluation market in Vietnam, Ha said that the demand is on the rise due to the increase of acquisitions, mergers and franchise as well as the equitization need. However, there has not been an international agency specializing in brand evaluation in Vietnam and there are few capable agencies offering the brand evaluation service, she added.

Outlets for Mekong Delta farm produce discussed

Many government officials took part in a conference held in the Mekong Delta city of Can Tho on Wednesday to discuss solutions to the sluggish consumption of farm produce aggravated by tensions in the East Sea.

Speaking at the meeting, Deputy Prime Minister Vu Van Ninh, who also serves as chief of the Southwest Steering Committee, urged local authorities to take measures to help local enterprises cope with market upheavals triggered by the East Sea tensions.

The deputy prime minister also requested the relevant ministries and departments to jointly upgrade transport infrastructure and develop human resources, boost agricultural restructuring, and submit proposals on economic development to the Government for approval.

Le Vinh Tan, vice chief of the Party Central Committee’s Economic Commission, said the January-June export of farm produce and the agricultural industry in general faced numerous obstacles. Therefore, it is necessary to collaborate with other foreign countries such as Israel, Japan and South Korea to apply modern technology to raise added values for farm produce.

To attract more investors into the sector, Tan suggested there should be separate incentives for rice and tra fish as the national staple items.

According to the Ministry of Science and Technology, the Mekong Delta is the country’s main food supplier, but its farm produce has little added value. To improve the situation, it is crucial to invest more into science and technology in the region.

“The Ministry of Agricultural and Rural Development recommends choosing good strains of rice to make high-quality products with higher value of US$600-800 or even US$1,000 a ton,” said Deputy Minister of Agriculture and Rural Development Le Quoc Doanh.

Regarding infrastructure, Deputy Minister of Transport Nguyen Van The said the road network in the Mekong Delta will be more convenient when projects to build four axis routes are completed. A section that links HCMC’s Cu Chi with Dong Thap, An Giang and Kien Giang will be opened to traffic in 2017, he noted.

Nguyen Phong Quang, vice chief of the Southwest Steering Committee, said the delta should also focus on policies to develop Phu Quoc Island and work with other relevant ministries and departments to introduce scientific and technological advancements as recommended at the Mekong Delta Economic Cooperation in Soc Trang 2014.

Office rents in Hanoi fall further, says Savills

The Hanoi office leasing price has dropped further to VND374.500 per square meter a month, down 2% and 12% against in the first quarter and the same period of last year respectively, according to a study of Savills Vietnam.

Savills said the rents for all the three grades have continued the downtrend since the second quarter of 2012, falling 3% for Grade-A and Grade-C and 0.6% for Grade-B compared to the first quarter.

Savills added Hanoi will have an additional 85,000 square meters of office space from five projects as of the end of this year, with Lotte Center Hanoi alone supplying 45,000 square meters. By 2016, 27 more projects with 500,000 square meters of office space will join the market.

With the large amount of office space for lease in the future, real estate experts predict the average rent will continue to fall in Hanoi.

While the office rents go down, the occupancy reached 76 % in the second quarter, up four and two percentage points against the first quarter and the same period of last year respectively.

Half of the leasing demands are in the city center while the requirements for larger office space are mainly in Hanoi’s western region.

In the second quarter, three new office buildings in Hoan Kiem and Hai Ba Trung districts joined the market, providing some 34,000 square meters, taking the total amount of office space in the capital city to 1.4 million square meters, an increase of 20% compared to the same period of last year.

Prices of villas and semi-detached houses in Hanoi have also tumbled due to the competition from apartments.

Savills stated that the average primary price is some VND41.7 million per square meter for villas and VND41.5 million for semi-detached houses. The highest price is around VND105 million per square meter in Tay Ho District while the lowest is VND18 million in Quoc Oai District.

In the second quarter, Hanoi had 29,400 new villas and semi-detached houses from 105 projects.

However, Savills said a joint circular of the Ministry of Natural Resources and Environment, the Ministry of Construction and the central bank allowing for mortgage of future properties for bank loans will improve market demand of villas and detached houses in the next time.

The report also showed that the market segment of mid-end apartments in Hanoi enjoys better purchasing power than high-end and budget apartments.

In the last quarter, there were 1,900 apartments sold, up 54% quarter on quarter due to good purchasing power of Grade-B houses and projects that have the fast pace of construction.

FPT Shop looks to VND4 trillion revenue

FPT Retail, the operator of FPT Shop chain, expects that this chain will post revenue of VND4 trillion this year, backed by surging earnings in the first half of this year.

Sales of FPT Shop soared 180% in the first six months of this year compared to the same period of last year but its online shopping earnings rose a staggering 600% in the period.  

To realize the revenue target, FPT Retail is pressing on with plans to open many stores this year. As of June, FPT Shop had more than 120 stores in 58 provinces and cities, and the target number for this year is 150 shops, which help bring about a revenue of VND4 trillion and a profit of VND24 billion.

At the beginning of June, FPT Retail opened four shops in HCMC, the Mekong Delta city of Can Tho, the central provinces of Quang Nam and Binh Duong. These new facilities have been operating pretty well and earn daily sales of VND370-500 million.

Nguyen Bach Diep, general director of FPT Retail, said as the firm is striving to speed up expansion of retail channels nationwide via shops, the Internet and telephones.

Real estate still magnet for FDI

Though overall foreign direct investment (FDI) attraction in Vietnam declined strongly in the first six months of this year, real estate and construction sectors continued to see strong FDI inflows.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, there were 17 new projects in the real estate trading sector with the total newly registered and additional capital of US$692 million, an increase of 65% from the same period of 2013. In terms of value, the sector ranked second behind the manufacturing and processing industry only.

More foreign investors also joined the construction industry during the period, pouring US$465 million into 62 projects, up 520% year-on-year.

The figures suggested that many property groups from Korea, Singapore, Hong Kong and Japan were trying to complete projects underway or develop new projects in the country after staying quiet for a long time.

Notably, China’s Texhong Group Joint Stock Company won approval to develop Hai Ha Industrial Park (IP) in Quang Ninh Province. The project will cover 660 hectares with total capital of US$215 million.

Texhong has plans to pour around US$950 million into the total area set aside for the IP in the Hai Ha Seaport IP covering 3,000 hectares. Meanwhile, Bay Water Co. Ltd. and Jen Capital also put huge capital into condo projects in HCMC.

According to the ministry, the real estate market up to now has attracted 423 FDI projects with total registered capital of nearly US$50 billion, or nearly 20.7% of the total FDI capital.

Meanwhile, there have been over 1,100 FDI projects in the construction sector with a total value of US$10.7 billion, or 4.5% of the total.

Experts in the industry said that foreign capital inflows have helped improve infrastructure in large cities and brought advanced construction tech into the country.

Some localities expect to see stronger FDI inflows into the real estate market in the coming time. United Arab Emirates’ Nakheel Group has plans to develop Halong Star tourism complex in Quang Ninh Province, covering 125 hectares with total capital of US$550 million.

A consortium between Korea’s Lotte Group and Japanese investors will develop a smart complex in Thu Thiem new urban area in HCMC’s District 2 with a total investment of US$2 billion.

Neil MacGregor, managing director of property services firm Savills Vietnam, said that the local real estate market is now attractive as it has just bounced back from the bottom. Idle capital of regional investors remains huge and they highly appreciate the real estate market in Vietnam compared to other countries such as Thailand and Indonesia, he said.

Poultry egg prices up 8-10%

The HCMC Department of Industry and Trade has announced increases of 8-10% in the prices of poultry eggs, which are one of the products subject to the city’s price stabilization program, as demand is on the rise.

Accordingly, participating supermarkets of the program have been allowed to mark up chicken eggs and duck eggs by VND2,000 and VND3,000 per box of 10 eggs since confectionery firms are buying poultry eggs in bulk and use eggs as one of the main ingredients for their moon cakes for the upcoming Mid-Autumn Festival.

Truong Tri Thien, general director of Vinh Thanh Dat Co. Ltd., confirmed that prices of fowl eggs have increased since July, which is more than one and a half months ahead of the Mid-Autumn Festival.

Ba Huan Co., Ltd., one of the largest suppliers of poultry eggs on the domestic market, has increased prices of poultry eggs since late last week when the demand for this product started to surged.

Retailers and traders at many markets in HCMC have adjusted prices of poultry eggs up VND3,000-5,000 per box.

The first few months of this year saw poultry egg prices soar to VND27,000-33,000 per box for chicken eggs and to VND32,000-35,000 per box for duck eggs. Some sellers at small markets even raised the prices to VND35,000-37,000 per box.

Furniture villages face bankruptcy due to FLEGT VPA

Many craft villages making wooden furniture in Vietnam will face bankruptcy due to stringent requirements relating to timber origins of the European Union (EU) as the major furniture importer.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Products Association, predicted a large number of petty wood firms will be on the edge of bankruptcy if they fail to adapt themselves to the new rules.

In a seminar to promote domestic wood products on Wednesday, Quyen informed Vietnam and the EU have been in talks over Forest Law Enforcement, Governance and Trade (FLEGT) and Voluntary Partnership Agreement (VPA) since 2010, and the agreement is to be concluded this year.

According to the draft agreement, wood makers have to prove the legal origins of their products. However, many small-scale enterprises in Vietnamese craft villages mainly do business without caring about the origins of timber. As a result, the production is considered illegal and cannot be shipped to the EU, or even remained unsold in domestic market.

Besides, despite the diversification of products, the production at craft villages has no trade names and contracts. It is made and sold in the free market only.

Many woodworking enterprises explained that they only make products for domestic consumption, so there is no need to care about the new rules of FLEGT VPA.

In the first half of this year, Vietnam imported US$1.1 billion worth of timber out of the plan to import US$1.4 billion worth for the whole year.

Quyen asserted that, sooner or later, Vietnam’s regulations of wood origin management will be made compatible with the rules on FLEGT VPA. At that time, all domestic products will have to be traceable in terms of origin.

In his opinion, the Government needs to clarify this for wood firms before it is too late.

Vinalines wants debt transferred to DATC

Vietnam National Shipping Lines (Vinalines) has asked Debt and Asset Trading Company (DATC) to buy the VND11 trillion-plus debt it owes to credit institutions, and promised to do whatever it could to settle debt payment for the company under the Ministry of Finance.

A source told the Daily that Vinalines would not be able to generate profits at least in the next two years after the Government has approved a number of restructuring and equitization measures for the State-owned corporation. Therefore, the debt-ridden conglomerate is seeking more solutions to minimize original debt, thus reducing losses and making profits in the future.

According to a government decision in early May, Vinalines’ debt worth VND11.4 trillion at 22 credit institutions would be restructured. Vietnam Development Bank (VDB) and other lenders have agreed to reschedule loans and to cut or write off its bank loan interest for at least two years.

However, Vinalines said it still could not balance its financial situation and make profits despite the support, which helps the corporation save its loan interest of more than VND1.5 trillion. And in 2015 and 2016, the debt payment pressure will emerge again.

If the corporation continues to operate inefficiently, it will fail to pay debt and even the company’s restructuring plan may not bear fruit as expected.

Therefore, Vinalines has petitioned to the Government, the Ministry of Transport and Ministry of Finance to allow DATC to buy its debt at the institutions at a reasonably discount rate as per the nature of each debt. Then, Vinalines will take over the debt again at the price DATC has paid plus management service fees.

If the suggestion was approved, DATC would be the new owner of Vinalines’ debt instead of banks. The funds that Vinalines will need to pay the DATC will come from its divestiture from and equitization of the 37 businesses where the corporation holds stakes.

Earlier, the Government gave the nod to Vinalines to reduce its holdings at ports by selling infective assets, using proceeds from the ports’ initial public offerings (IPOs) and selling additional stakes to raise cash for debt payment.

If Vinalines fails to clear all debt, DATC will have the right to convert the debt into capital contribution at Vinalines’ companies with an appropriate ownership rate.

The corporation said if its proposal was accepted, the Government would not have to consider issuing guaranteed bonds to settle the debt, which is the same measure applied to national shipbuilding group Vinashin.

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

garment, dairy industry, Transport firms, Office rents, Vinalines
 
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