BUSINESS IN BRIEF 22/7

Chinese farm produce floods Vietnam market

Massive quantities of Chinese agricultural products are routinely smuggled into the Vietnamese market, despite repeated warnings of pesticide residues.

The produce is often laced with a toxic cocktail of pesticide residues causing leading agricultural experts to raise the alarm that Vietnamese consumers may be unwittingly exposed to hazardous levels of pesticides.

The Hanoi-based Long Bien wholesale market, the largest farm produce market in northern Vietnam, imports between 200-300 tonnes of grapes, apples, cabbages, tomatoes, carrots, potatoes and onions from China every day.

These products are mixed with similar Vietnamese fruits and vegetables in retail markets, making it difficult for consumers to distinguish with the naked eye.

Tran Thu Huong, a consumer in Hanoi’s Thanh Xuan district, said that most of the cabbages, tomatoes, carrots, and potatoes available at her nearby markets are imported from China.

“My family refuses to buy these products because we are afraid of unsafe food and the plethora of chemicals they contain,” she shared.

A recent survey conducted by the Ministry of Agricultural and Rural Development (MARD) reveals that most markets in Hanoi are selling Chinese fruits and vegetables.

Since 2013 the Plant Protection Department (PPD) has found 17 shipments of grapes, lemons, carrots, apples, and oranges, about 300 tonnes in weight imported into Vietnam, had pesticide residues exceeding the authorized levels. These fruits were labeled with Vietnamese brand to disguise their true origin.

However, because of deceptive product labeling and other illicit business practices, consumers may not fully realize the produce is from China and be fully cognizant of the dangers it poses to their health and well being.

Nguyen Thi Nui, a retailer at Trung Hoa market in Hanoi, said she sells tens of 100kg packages of fruits and vegetables weekly which are imported from China and suggests that consumers pay close attention to the price of the produce.

“The prices of higher quality Made-in-Vietnam products are often two or three times higher than the inferior produce imported from the Chinese market,” she said.

Huynh Tan Dat, a food hygiene and safety expert, stressed the need to step up measures to better detect imported farm produce and beef up inspection of it.

“It is fundamentally essential to identify and certify product origin and quality before being shipped into the domestic market,” Dat said. “The PPD will strictly examine batches of Chinese goods in line with current regulations and international practice in order to ensure food hygiene and safety in Vietnam.”

Local oil prices cut following global drop

The ministries of Industry and Trade and Finance released a joint statement yesterday asking fuel wholesalers to reduce retail prices of oil by VND136-174 (6-8 US cents) a litre starting from 5pm yesterday.

Petrol prices were increased in Viet Nam on July 7 but, since then, the global price has declined slightly.

The ministries told traders not to increase petrol prices because, by using the price stabilisation fund they could mitigate any losses.

The retail price of petrol remains at VND25,640 ($1.22) per litre.

Under Government's Decree 84/2009/ND-CP traders can adjust petrol prices up to 7 per cent in line with world prices.

According to the two ministries, prices for diesel oil and kerosene have risen on world markets.

Therefore, they were told to cut prices by VND136-174 per litre.

Hanoi halts work on urban area

The People's Committee of Ha Noi has approved a proposal to stop development of Parcel B of Gamuda City, following a request by the investor of the project.

The investor, Gamuda Land Viet Nam, had stopped the project because it faced numerous difficulties in developing the tract.

The committee requested the Ha Noi Planning and Architecture Department to adjust the plan of the project according to a directive to move existing residential areas and to find other investors to develop Parcel B under the building and transfer (BT) mode.

Gamuda Land Viet Nam LLC General Director Cheong Ho Kuan said in order to implement the project, the land clearance and compensation had to be implemented by local authorities, specifically Hoang Mai People's Committee and Hoang Mai Land Fund Centre. The developer has to advance the fee for land clearance to ensure progress and he will be reimbursed for that amount.

Regarding Parcel B of Yen So Park project, due to changes in regulations that dramatically increased land compensation costs from US$20 million for both Parcel A & B (allowed in the IC dated Dec 3rd 1997) to an estimated $150 million for only Parcel B, the developer was not able to advance the compensation amount for the authorities to clear the land, he said.

"According to the Document 140/VP-UB on 8/7/2014 issued by HPC, Parcel B will work in the BT mode now. In case the local authority completes the land compensation for Parcel B, Gamuda will pursue the project. The change of investment mode for Parcel B is under the HPC's jurisdiction and the developer has to comply with the HPC's decision," Cheong Ho Kuan said.

Regarding the local property market, Kuan said the first half of this year witnessed an increase in property transactions, particularly in high-quality homes at affordable prices, in both landed and apartment segments.

Buyers invest in quality products of credible and committed developers who showcased their ongoing projects with basic facilities and amenities, he said.

Taiwan invests in textiles factory

Tai Yuen Co Ltd, a subsidiary company of the Taiwan-based Yun Lon Group, was given an investment licence yesterday to build a textile mill worth US$150 million in the northern province of Ha Nam.

The project, covering around 24 ha in Dong Van II Industrial Park, Duy Tien district, is expected to employ 5,000 workers.

Construction will begin in August and is expected to be completed within a year. Once operational, the mill will require around 1,500 cubic metres of water for its daily operation in the first phase and 2,500 cubic metres in the second phase.

Ninh Thuan wine festival attracts thousands of visitors

More than 50,000 visitors attended the international grape and wine festival which was wrapped up in Ninh Thuan province on July 19, according to statistics released by the organizing board.

During the three-day event, visitors had an opportunity to savour the distinctive taste of great wines from 11 nations and localities nationwide and participate in fascinating folk games, boat races, photo exhibitions and a special art performance by local and foreign dancers and music bands.

Seminars were held during the event to discuss orientations for developing grape wine and tourism activities in the central coastal province.

The festival, co-organised by the provincial People’s Committee and King Star joint stock company, helped introduce Ninh Thuan province with the largest acreage of grape cultivation in Vietnam and honour growers who have applied advanced technologies to increase the economic value of local grapes.

In addition, the event offered a chance to introduce the region’s tourism potential and grape wine processing as well as increasing trade exchange between local and foreign businesses.

Vietnamese products faked overseas

More than 60% of “Made-in-Vietnam” products manufactured abroad and imported back into Vietnam are either pirated or counterfeit.

The information was revealed by by Nguyen Vu Hai, Director of the Anti-counterfeit goods centre, at a seminar in HCM City on July 19 discussing measures to counter infringements upon trademarks of local businesses.

Hai said such a violation of intellectual property rights has not only negatively impacted the image of Vietnamese products both at home and abroad, but has significantly cut into business sales.

Participants at the seminar pointed out a number of difficulties in dealing with counterfeit products, including ineffective coordination between relevant agencies and local producers.

A recent survey showed that counterfeit and low-quality products are marketed everywhere in Vietnam, from remote rural to the large metropolitan areas. Many product imitations are even sold at renowned supermarkets in Hanoi and Ho Chi Minh City.

Ben Luc-Long Thanh highway construction starts in HCM City

Prime Minister Nguyen Tan Dung on July 19 attended a ground-breaking ceremony of Ben Luc-Long Thanh highway (bidding package J2) in Can Gio district, HCM City.

The road project, the largest of its kind in the south, has total investment capital of over US$1.6 billion. The more than 57km long and four-lane highway is designed for vehicles to run at a maximum speed of approximately 100km per hour.

The bidding package J2 costs workers nearly VND2,500 billion to build a 4.7 km section, including Cha and Can bridges crossing Can Gio district.

The highway, which will go through HCM City, and provinces of Long An and Dong Nai, is expected to promote socio-economic development in the key southern economic region, especially the south eastern area.

It will also help fully tap the region’s advantages, attract investment, and develop tourism in the three localities. The highway is scheduled to be open to traffic in 2018.

Addressing the ceremony, PM Dung asked localities and contractors to pay attention to site clearance and carry out the project on schedule, meeting technical specifications.

Singapore companies wish to invest in Vinh Phuc province

KinderWorld Education Group will soon conduct three investment projects in Vietnam’s northern Vinh Phuc province, said its Chairman Ricky Tan at a roundtable on investment opportunities in the province held in Singapore on July 18.

He said that KinderWorld has so far invested US$40 million in 15 projects throughout Vietnam, becoming Singapore’s largest investor in Vietnam’s education sector.

In the next decade, the group will pour US$100 million into three projects in Vinh Phuc province, namely the Adventure and Eco-Tourism Education, the Singapore-Vietnam International School and the Singapore Education Metropolis.

“We chose Vinh Phuc as our next destination because of its strategic location, infrastructure and policy relating to foreign investment, especially the policy on land clearance and assignment,” said the Chairman.

Another Singapore-based company wishing to invest in Vinh Phuc province is ReEx Capital Asia, which specialises in clean energy.

Its CEO YanisBoudjouher said that after this seminar, the company’s officers will go to the province “to talk waste energy opportunities there”.

“It will be great interest for us to go and visit the province in order to see how it can help developers and investors of projects like waste treatment,” he added.

According to YanisBoudjouher, his company plans to invest in a waste treatment facility in Vinh Phuc province besides the one in Hanoi.

Delegates from Amata Corporation PLC also showed their interest in the investment climate in Vinh Phuc province. Lena Ng, Board advisor, inquired into the province’s policy on personnel training. She said since Amata Corporation PLC set up an establishment in Bien Hoa 20 years ago, the company has benefited from investment in Vietnam thanks to the strong policy of the Vietnamese government.

“We are also looking for expanded projects in other parts of Vietnam,” she added.

At the round table, Chairman of Vinh Phuc Provincial People’s Committee Phung Quang Hung assured that his province will creates the most favourable conditions for Singapore investors to gain success in the locality.

He revealed that the province is calling for foreign investment in tourism, healthcare and education.

“This time, we are looking towards investors from Singapore , Malaysia and Indonesia as the three countries have higher development levels in some aspects than Vietnam and they are suitable for VinhPhuc to learn from,” he said.

As of June 2014, VinhPhuc had attracted 158 foreign direct investment projects with a combined registered capital of US$3 billion. Of which, only seven projects worth US$250 million were invested by Singapore.

Taiwanese textile firm receives investment certificate

Tai Yuan Vietnam Co., Ltd, a Taiwanese firm specialising in yarn and textile products, on July 18 received an investment licence for the construction of its plant in northern Ha Nam province.

The firm will invest US$150 million to build the plant on a 24 ha plot in the Dong Van II Industrial Park in Duy Tien district.

It is expected to become operational in August 2005, generating jobs for 700 labourers.

Speaking at the licence handover ceremony, Chairman of the provincial People’s Committee Mai Tien Dung asked local authorities to create favourable conditions for the investor to complete its investment procedures quickly.

Zheng Yuan Tai, director of the company pledged to abide by the locality’s regulations on investment and environment in implementing the project.

In recent years, Ha Nam’s authorities have put in place preferential policies to lure foreign investment. So far this year, it has attracted 13 foreign projects, bringing the total foreign capital invested in the locality to nearly US$1 billion.

Japanese firms seek investment opportunities in Ha Nam

A delegation of Japanese entrepreneurs has made a fact-finding tour of the northern province of Ha Nam to seek investment opportunities in the locality.

At a working session with the provincial leaders on July 18, representatives from 26 Japanese businesses spoke highly of the local investment climate, especially favourable policies and increasingly improved infrastructure.

Hirokazu Yamaoka, former Chief Representative of the Japan External Trade Organisation (JETRO) in Vietnam , said they saw a growing competition in foreign investment attraction among localities which has resulted in better transport facilities and streamlined administrative procedures.

These entrepreneurs are willing to invest in Vietnam , he said, adding that JETRO will continue to support them after they decide to operate in Vietnamese localities.

Chairman of the provincial People’s Committee Mai Tien Dung valued Japanese firms’ operation in Ha Nam in the past years, affirming that his province welcomes and gives priority to businesses from Japan, particularly those of small and medium sizes and in support industries.

Binh Dinh to get tough on foot-dragging investor

The central province of Binh Dinh’s authorities have urged the investor of the Vinh Hoi Bay Resort and Spa to start work on the project prior to this October; otherwise, the project would face the axe, said a provincial leader.

This strong measure is not only meant to hasten the progress of this capital-intensive tourism project, but also serves as a warning to other slow projects in the province, said Mai Thanh Thang, vice chairman of the province.

This project by Vietnamese American Hotel and Resort Co. Ltd. requires nearly VND4 trillion of investment to develop facilities over 300 hectares. It has been two years behind schedule, so Binh Dinh issued a “make or break” warning, saying the project could be awarded to another investor if the current project owner fails to put it on the run before the end of this year.   

“Apart from this project, other slow-moving ones are also being probed. Investors may have trouble with capital shortages as the economy is still mired in difficulties, yet they cannot prolong the execution time indefinitely,” he told the Daily on Tuesday on the sidelines of a press conference to introduce the upcoming International Festival of Traditional Martial Arts in Binh Dinh.

Among many tourism investments in Binh Dinh, there are six major projects with investment capital of up to trillions of Vietnam dong. However, only three of them are under implementation.

Along with pushing up the progress of current tourism projects, the province also invites new investors to resort, ecotourism and sea tourism projects in Quy Nhon City and Phu Cat District.

According to Thang, in the next two years, Binh Dinh tourism will make significant growth when the VND3.5-trillion Vinpearl project of hotel, amusement park and cable car goes into operation. To prepare for the influx of tourist arrivals, the province has upgraded Quang Trung Museum, Nguyen Sinh Sac Memorial Complex and so on.

Last year, Binh Dinh welcomed approximately 1.7 million tourists last year, rising 30% compared to 2012.

The fifth International Festival of Traditional Martial Arts will take place on August 1-4. The event includes competitions, traditional martial arts shows, exchanges among martial art clubs, and art, cultural activities and cuisine in Quy Nhon City and other districts like Tay Son, Tuy Phuoc and An Nhon.

So far, there have been 55 international martial art groups and 30 domestic ones putting their names down for the event.

Vietnam expected to import 150,000 Aussie cows this year

The Vietnam National Animal Husbandry Association has adjusted up its projection that Vietnam will import some 150,000 cows from Australia in 2014 given strong demand in the first months of this year.

Earlier, the association estimated the number of cows imported from Australia for this year at 120,000, according to Nguyen Dang Vang, chairman of the association.

Data from Australia showed Down Under exported 527,000 cows by the end of May and 72,000 of the cattle were shipped to Vietnam.

The association attributed rising cow imports from Australia to shrinking supply from Laos and Cambodia. Combined cow imports from these two neighboring countries stood at 180,000 head in 2012 but fell to 96,000 last year while the volume of Australian cows imported into Vietnam was more than 3,000 in 2012 and surged to nearly 67,000 last year.

More local companies have invested in technology and modern slaughterhouses to cash in on the increasing demand for Australian beef in this country.

Vissan is a big consumer of Australian cows although it is not a direct importer but buy Aussie cows via a number of intermediary firms. “Every day, Vissan slaughters 50 Australian cows to supply beef to the supermarkets and food stores in HCMC,” said Van Duc Muoi, general director of the company.

Rising demand has led to higher retail prices of Australian beef on the Vietnamese market and Vang from the Vietnam National Animal Husbandry Association confirmed this as an “unavoidable trend.” He said cow supply from Australia does not increase while demand surges in foreign markets, including Indonesia.

Vang said the price of Australian beef was from only US$2.4 a kilo last year but surged to US$3.2 a kilo this year.

Luu Son Thuy, director of Thuy Ha Company which is one of the major importers of Australian cows in southern Vietnam, said the firm has suspended cow imports from Australia for three months due to higher prices. Moreover, the frozen buffalo meat imported from India has piled pressure on Australian beef retailers as the first is priced at only VND40,000-50,000 a kilo.

Thuy said before the suspension, Thuy Ha ordered 12,000 cows on board every ship that ran from Australia to Vietnam.

Australia opens anti-dumping probe into steel imports

Australia’s Anti-Dumping Commission has decided to launch an anti-dumping investigation into the galvanized steel products imported from Vietnam and India, announced the Vietnam Competition Authority under the Ministry of Industry and Trade.

The authority said the decision came after BlueScope Steel Limited filed for a dumping margin of 16.26% applied to the Vietnamese steel products exported to Australia.

BlueScope Steel claimed the steel products imported from Vietnam were sold at lower prices than the average market levels, causing significant injury for that country’s steel industry through reductions in the profits of enterprises and jobs for locals.

According to the plaintiff, Australia imported around 12,524 tons of galvanized steel from Vietnam, accounting for 6.9% of the country’s total imports of this product.

Among Vietnam’s galvanized steel products exported to Australia, some are imposed a duty rate of 4% and some enjoy tariff breaks.

This is the second anti-dumping case against Vietnam’s imports in Australia after the transformers last year.

In January last year, Indonesia decided to take safeguard measures against flat-rolled iron or non-alloy steel products imported from a number of countries, including Vietnam. This case began after PT Bluescope Steel Indonesia and PT Sunrise Steel petitioned to the Indonesian Trade Safeguard Committee on December 2012.

Those companies claimed that they had been threatened or suffered serious losses by increasing steel imports and urged Indonesia authorities to apply safeguard measures against steel imports.

HCM City to issue VND3-trillion bonds in Q3

The HCMC government has plans to issue VND3 trillion worth of municipal bonds in the third quarter of this year to raise funds for projects in the city, including infrastructure development.

According to a municipal bond issuance scheme presented to the HCMC People’s Council last week, the city wants to issue VND1.5 trillion worth of bonds in each of August and September.

The bonds will bear a face value of VND100,000 each and tenors of three and five years to facilitate the long investment durations of infrastructure projects and ease debt settlement pressure on the local budget. Currently, commercial banks are the main investors of municipal bonds, according to the scheme.

As banks usually face liquidity challenges at the year-end, the city will focus on bond issuance in two rounds in the third quarter.

In December 2013, the People’s Council issued a resolution approving the total investments of over VND14.4 trillion in basic construction this year, excluding official development assistance (ODA) capital. During this year, the city government is allowed to mobilize other sources to supplement the investment capital.

All the proceeds from the bond issuance will go to the city’s coffers and the government will later use it to allocate to 60 projects in the city.

VID Public Bank to turn 100% foreign-owned

VID Public Bank (VPB), the biggest joint venture bank in Vietnam in terms of network, will turn 100% foreign-owned as the Bank for Investment and Development of Vietnam (BIDV) has agreed to sell its entire stake to the foreign partner.

BIDV on July 15 clinched a deal to transfer its 50% stake in VPB to Malaysia’s Public Bank Berhad (PBB), the holder of the remaining stake. The move was aimed to help BIDV restructure its operations.

Both sides also inked a stake transfer plan that will be presented to the central bank for official approval. The Malaysian bank will also apply to establish a new 100% foreign-owned bank in the country.

BIDV did not mention specifics in the transfer contract at a press briefing after the signing ceremony on July 15. However, it is estimated that transfer value of the deal is rather high.

BIDV chairman Tran Bac Ha said the bank sold its 50% stake at a price higher than the par value of VND10,000 each share.

VPB was established in 1992 as a 50:50 joint-venture bank between BIDV and PBB. The lender, one of the two first joint venture banks in the country, now has total chartered capital of US$62.5 million.

Ha said the joint venture bank has made gains over the past 22 years and BIDV has recovered all its capital contribution. Therefore, BIDV enjoys all the proceeds from the transfer deal and will use it to improve its financial capability.

Prime Minister Nguyen Tan Dung and the central bank’s governor Nguyen Van Binh have given the nod to BIDV’s divestiture, Ha added.

Headquartered in Hanoi, VPB has seven branches across the nation. Its total assets are over US$356 million and its total outstanding loans more than US$222 million.

Hanwha Life raises chartered capital

Hanwha Life Vietnam has announced to increase its chartered capital in Vietnam to nearly VND1.9 trillion, bringing the Korean life insurer to the top three in terms of chartered capital in the local market.

Back Jong Kook, general director of Hanwha Life Vietnam, said in a statement released on July 15 that the move is a commitment of Hanwha Life to long-term and sustainable operations in Vietnam.

Higher chartered capital will help the insurer improve business activities and competitiveness, enhance its products and service quality and human resources, and reach out to more customers in this market.

The capital increase has shown Hanwha Group’s strong belief in and high expectations for the potential of Vietnam’s life insurance market.

Hanwha Life Vietnam has over 200 staff and 12,000 financial consultants working in 35 offices nationwide serving 46,000 customers and their families after more than five years of doing business in this market. This year, the company will open more offices in Hue City, Lam Dong and Thai Nguyen provinces.

Sugarcane growers learn the ropes

Many agriculture experts and sugarcane growers gathered at a recent international seminar in HCMC to share experiences in and learn how to apply scientific and technological advances to improve sugarcane yields.

Proper investments in technologies and irrigation systems can help increase yields by 1.5 times or even twice, successful sugarcane growers said at the seminar on the solutions for farmers to reduce input costs and improve earnings organized by Thanh Thanh Cong (TTC) Group in HCMC on Monday.

Huynh Van Giao, a sugarcane grower in the central province of Khanh Hoa, said his investment in a self-made system used water from natural resources to irrigate 40 hectares of sugarcane has borne fruit and one hectare now can produce 71.5 tons of sugarcane, instead of 55 tons before.

Le Ngoc Tinh from the southern province of Tay Ninh said using high-quality sugarcane seedlings of previous crops for the new crop has helped bring in eight tons of sugar per hectare of sugarcane, which is equivalent to Thailand’s average level and nearly three tons of sugar higher than the country’s average.

At the seminar, experts from Australia, the United States and other countries having a developed sugarcane industry shared the models and advanced technologies of the world to produce sugarcane at low costs.

Experts from sugarcane research institutes of Vietnam and the Philippines also touched on the solutions to control some common insects on sugarcane.

Demand for senior staff at apparel firms jumps

For the first time, apparel became one of the top five sectors in terms of recruitment demand for senior employees in the second quarter of this year as indicated in a recent report by Navigos Search.

The job service provider cited apparel enterprises’ efforts to recruit more senior staff in preparation for capitalizing on the opportunities from the trade pacts which Vietnam is expected to join soon, including the Trans-Pacific Partnership (TPP) agreement. Apparel is one of the sectors to benefit most from tariff cuts and breaks for exports to participating markets of this agreement.

Representatives of textile and garment companies confirmed to the Daily that they are investing in production expansion and human resource development to cash in on the opportunities from the TPP agreement whose negotiations are poised for completion this year.

In its latest report, Navigos Search said the industries having the highest recruitment demand for senior personnel in the second quarter were manufacturing, accounting for 17% of the total demand, followed by retail and consumer products with 14%, finance-banking-insurance with 10%, information technology with 9% and apparel with 7%.

Recruitment demand in HCMC was higher than in Hanoi from April to June. The highest monthly salary in the period was VND161 million (over US$7,600) paid by a biology technology firm in HCMC for its business director while the top pay in Hanoi was reported for the personnel director of a manufacturing group.

In the second quarter, the sales and marketing sectors in HCMC offered the highest salaries from US$1,000 per month while those working in financial services, technology, sales and marketing fields in Hanoi got the highest pay.

Navigos Search predicted the three sectors having the highest demand for senior staff in the third quarter would be information technology, consumer products, and apparel, making up 19%, 13% and 11% of the total demand based on figures of the first 10 days of this month.

Apparel sector lures most FDI in city’s IPs

* More than 82% of foreign direct investments (FDI) registered in HCMC’s export processing zones (EPZs) and industrial parks (IPs) in the first six months flowed into the textile and garment sector.

In the first half of this year, HCMC’s EPZs and IPs attracted nearly US$265 million of FDI, increasing 80% over the same period last year, the HCMC Export Processing and Industrial Zones Authority (Hepza) announced on July 15 at a press conference on operations of EPZs and IPs.

Tran Viet Ha, investment director of Hepza, said 82.44% of the investment during the period was pledged for the apparel sector. Meanwhile, supporting and hi-tech industries attracted little FDI, with the plastic and rubber sector accounting for only 7.68% of the total investment, and mechanical engineering and electronics making up 4.51% and 0.36% respectively.

As the global apparel market was predicted to grow 3.5% this year while Vietnam is expected to sign the Trans-Pacific Partnership (TPP) agreement, which will offer investors a 0% tariff when shipping products to TPP member markets, foreign apparel investors have focused their investment in the country, Ha explained.

In the meantime, many apparel investors are working with Hepza to set up shop in the city’s IPs, meaning the investment capital for the city’s textile and garment industry will continue rising, he said.

According to Hepza, EPZs and IPs in the first six months attracted more than VND1.447 trillion (US$68.8 million) of domestic investments pledged in 37 fresh and operational projects, increasing 1.2% over last year.

As of June, more than 1,300 investment projects with total registered capital of more than US$8 billion remained active in EPZs and IPs in HCMC, including 520 foreign-invested projects and more than 780 domestic-invested ones.

Total import-export turnover of the city’s EPZs and IPs in the year’s first half was estimated at US$2.3 billion, rising 4.5% over last year.

Investors upbeat about Q2 earnings

The local stock market recovered on July 14 after two falling sessions as investors accumulated selective blue-chips with high expectations of promising earnings results in the second quarter.

According to Viet Capital Securities Company (VCSC), GAS, VNM and PVD led the rally, contributing 61% of the VN-Index’s gain. The three heavyweights along with other blue-chips pushed the main index to close at its intraday high of 586.23, up 0.59% against last Friday.

However, liquidity tapered off by 13% in volume and 4.5% in value on the Hochiminh Stock Exchange (HOSE) as investors remained indecisive. There were sizable put-through transactions on MBB shares totaling VND40 billion.

On the Hanoi market, PVS also led the HNX-Index to close at an intraday high of 79.49, rising 1.11% from the session earlier. Liquidity tumbled 42% in volume and 26% in value to 34.4 million shares worth VND466 billion.

Foreigners maintained its net selling position for the second consecutive day on the HOSE at VND46 billion while extending its net buying streak on the northern bourse with VND10 billion injected.

VCSC said investors in general were still cautious as prices of over 300 out of around 700 stocks on both exchanges were unchanged. On the other hand, so far this month, foreigners have net bought VND107 billion worth of shares on the southern bourse and VND199 billion on the northern exchange.

The firm also noted that Mobile World Investment Corporation (MWG) debuted on HOSE with 62.7 million shares traded at a reference price of VND68,000 each on July 14. The trading band was +/- 20%.

The ticker rocketed to the ceiling price of VND81,500 right at the opening and by the close, bids for 1.4 million shares found no sellers.

“We currently have a ‘buy’ recommendation on MWG with a target price of VND102,000 (not adjusted because of the post-listing bonus share issuance at the ratio of 1,000:557),” VCSC said.

Quoting Petrotimes, Viet Dragon Securities Company said China might have to remove its oil rig out of the current position on July 15 to avoid Typhoon Rammasun. If this comes true, local investors will view it as positive news though the stock market has already recovered significantly after the East Sea incident.

“We think that investor sentiment will remain stable this week but the stock indexes are expected to move in a narrow range as investors still wait for more supporting information,” the firm said.

Firms bemoan difficulties posed by new Land Law

No sooner than the new Land Law came into force in early July had infrastructure developers in HCMC pointed out its inadequacies and requested authorities to fix them.

At a workshop on possible impacts of the 2013 Land Law on infrastructure developers held last week, companies said they encounter many difficulties caused by the law, which took effect on July 1.

Under Article 149.2, for instance, companies building infrastructure for industrial parks and export processing zones and paying land rent to the State annually are only allowed to lease land with rent to be paid annually by tenants. Meanwhile, those paying a lump sum rent to the State are allowed to lease land with payments to be paid once or annually.

According to Tran Hong Son, general director of Long Hau Joint Stock Company, most infrastructure developers normally pay land rent to the State annually and lease land to tenants with one-time payments, as provided for in the 2003 Land Law. Such provisions enabled developers to have capital for their investments while tenants can use land as mortgage for loans.

“But with the new regulation, this practice is made impossible,” he said.

Even worse, some provisions are retrospective, causing a huge problem for infrastructure developers. Article 210.2 of the new law requires them to pay land a lump sum rent to the State if they had collected lump sums from tenants prior to July 1.

As calculated by Son, with articles 149.2 and 210.2, Long Hau Joint Stock Company has to pay around VND385 billion at once to the State as Long Hau Industrial Park has had 70% of its area occupied.

The problem Long Hau Joint Stock Company faces also concerns other infrastructure developers like Hiep Phuoc Industrial Park Joint Stock Company and Tan Thuan Industrial Promotion Company.

Therefore, Nguyen Van Be, chairman of the Hepza Business Association, proposed the State allow infrastructure developers to pay land rent in different phases over a period of five years, starting from July 1.

However, according to Tran Dinh Hanh, deputy director of the Economic and Land Development Department under the General Department of Land Administration, the new regulations are reasonable as “benefits of infrastructure developers go alongside their obligations,” which means when companies pay land rent to the State annually, they only can collect annual rent from customers.

Meanwhile, Phan Chanh Duong, an expert in infrastructure development, said that the new regulations are only reasonable when they apply to business deals after July 1, not before July 1. The principle of non-retrospection should be respected, he explained.

Tan Cang-Cat Lai takes fewer containers

The Tan Cang-Cat Lai Terminal in HCMC’s District 2 will take the containers transported by road only and refuse to allow in those arriving by waterway from next month to ease cargo backlogs.

However, the terminal will continue allowing in the goods from Cai Mep and other ports under Saigon New Port Corporation, said Tran Khanh Hoang, deputy general director of the corporation.

Hoang told reporters last week that Tan Cang-Cat Lai Terminal has for years taken many more shipments from many ports in HCMC, Ba Ria-Vung Tau Province and elsewhere in Vietnam, making it difficult to ensure service quality.

Hoang said to reduce piling pressure on Tan Cang-Cat Lai Terminal, the corporation will cooperate with other ports in HCMC and put into service more ports, including Hiep Phuoc in Nha Be District and Phu Huu Port in District 9.    

Representatives of many companies told the Daily that they had had to wait weeks to complete customs procedures and to have their import and export goods cleared.

They attributed implementation of the Vietnam Automated Cargo Clearance and Port Consolidated System (VNACCS) and limited screening capacity at the Tan Cang-Cat Lai Terminal to slow clearance of their goods.

Sources told the Daily that up to 500 good containers had been stuck at the terminal as of last Friday. An import-export firm in HCMC said it has waited days to have its only three containers cleared.

The Ministry of Transport’s tightened controls on overloaded trucks have worsened cargo congestion at the Tan Cang-Cat Lai Terminal. As a result, transport companies now do not want to transport containers exceeding weight limits.

Due to the ministry’s truck weight limits, many import-export companies have had their goods transported by waterway to inland container depots. After customs clearance, these goods are then loaded into containers for being carried by barge to seaport facilities, including Tan Cang-Cat Lai.  

In addition to Tan Cang-Cat Lai Terminal, the Tan Cang-Cai Mep Terminal in Ba Ria-Vung Tau Province also has to deal with serious cargo backlogs. In the first half of this year, these facilities posted throughput growth of 12.6% and 39% respectively compared to the year-earlier period.

VAMA revises up auto sales forecast

The Vietnam Auto Manufacturers Association (VAMA) has again adjusted up its auto sales projection to 130,000 units for this year from its previously predicted 125,000 given strong increases in recent months.

In its report released last week, VAMA said last month saw auto sales growing 23% year-on-year to 11,884 units, making June the 15th rising month for the local auto market. The number included 7,407 cars and 4,477 trucks.

In the first six months of this year, members of VAMA that dominate the auto market sold 65,400 cars, rising by 31% over the same period last year.

Given increasing sales since early this year, at the end of the first quarter, VAMA revised up its auto sales prediction to 125,000 units for this year versus 120,000 units in its earlier forecast. Again, the association expected that 130,000 autos would be delivered to buyers in 2014.

Market insiders said the expanding car market has been supported by a significant reduction by five percentage points to 10% in registration fees for new cars under 10 seats in HCMC since early this year.

The Ministry of Transport’s strict controls on overloaded trucks to ensure traffic safety have forced transport companies to invest in new trucks to meet the demand of their customers and to avoid violating the regulation on weight limits.

Major truck producers in Vietnam, including Huyndai and Thaco Truck, said the regulation has helped boost their truck sales in recent months.

Experts said VAMA made a modest forecast adjustment to 130,000 units this year based on the facts that the country is still facing the economic slowdown and many enterprises have scaled down production and suspended operations. But, if auto sales growth persists, the association will continue to revise its auto sales forecast in the coming months.

Truong Hai Auto Corporation (Thaco) and other local automakers are pinning high hopes that 140,000 autos will be consumed this year, which is equivalent to the figures in 2010 and 2011.

Thaco is looking to a sales volume of 23,444 units in the second half of this year, surging 31% over the first half.

China warns of food safety of some Vietnam confectionaries

China has warned of food safety of certain confectionary products and higher-than-permitted pesticide residue in some of the fruits imported from Vietnam.

China raised the alarming bell only one month after Vietnam publicized that eight types of fruit and vegetable imported from China contained chemical residue exceeding the allowable thresholds.   

The National Agro-Foresty-Fisheries Quality Assurance Department (Nafiqad) said it got a document from the General Administration of Quality Supervision, Inspection and Quarantine of China (AQSIQ) informing some Vietnamese foods exported to China from 2013 to April 2014 did not meet food safety criteria.

The claimed substandard products include coconut-flavored bread, tapioca, biscuits, cakes, custards and lotus seeds. These items are administered by the Ministry of Industry and Trade.

In a document sent to the Science and Technology Department under the ministry, Nafiqad’s deputy head Phung Huu Hao urged the ministry to check and report to China the final results as well as preventive measures to avoid China’s strict controls on Vietnamese food imports.

Hao said the inspections of Chinese and Vietnamese competent agencies into import food products are normal and are not “an economic retaliatory action” as some people assumed.

Figures of the General Administration of Customs showed Vietnamese exported nearly US$17.7 million worth of confectionaries and cereal-related items to China in the first five months of 2014. The imports of the same products from the neighboring market in the period were almost US$4.3 million.      

In late May this year, Hanoi Police confiscated 11 tons of sweets, salted apricots and pistachios originated from China as the owner failed to show any papers proving the origin and food safety certificates for these products.

Earlier, the Department of Food Safety under the Ministry of Health destroyed 23 tons of candies and salted apricots imported from China since these products did not meet food safety requirements.  

HCMC targets 10% GDP growth this year

HCMC will exert effort to achieve a gross domestic product (GDP) growth rate of 9.5-10% this year as approved by the HCMC People’s Council.

To realize the target, the city will have to obtain GDP growth from 10.8-11.8% in the second half of this year after posting an economic expansion of 8.2% in the first six months of this year, according to resolutions passed by the HCMC People’s Council on the final day of its 14th session last Friday.

The council also requested related agencies to prioritize and speed up implementation of key infrastructure projects, including Pham Van Dong Street, Thanh Da Canal Bridge, urban and water infrastructure projects in the coming time. The city also aims that 100% of local households will have access to clean water at the end of this year.

The council also suggested reviewing all the projects under construction in the city and taking measures against the investors who fail to fully implement infrastructure works that connect to surrounding areas.

As for environmental protection, the city government was told to move Biochemistry Fertilizer Company in Cu Chi District out of residential areas and properly treat polluted areas in districts 9 and Thu Duc.

Regarding administrative reforms, the council demanded that relevant agencies should apply numerous measures, enhance inspections and tackle the government officials with inappropriate behaviors toward citizens.

HCMC chairman Le Hoang Quan said economic and political situations in the world and the region, especially the East Sea, were forecast to develop unpredictably and cause negative impacts on economic, cultural and social development in HCMC and the country as a whole.

This requires the government and citizens in HCMC to stay close together to deal with challenges and overcome difficulties, he said.

Speaking to reporters on the sidelines of the session, Quan said total investments in the city economy often rose strongly in previous years. However, actualized capital made up a low ratio due to the struggling property market.

Earlier, at the closing session of the 18th session of the HCMC Party Committee, Party chief Le Thanh Hai said the city’s total investment growth had slowed over the past three years. This is a worrying sign that the city’s economy is not in good shape and economic growth in the following years might be dampened.

In 2011, the city’s total investments advanced 19.3% against the previous year, but the growth slowed to 6.9% in 2012, 3.7% in 2013 and 3.2% in the first six months of 2014. Hai blamed tightened public spending for the slowdown in recent years.

LAF’s new products post good sales

Long An Food Processing Export Joint Stock Company (LAF) have seen its Osca and Pika sell like hot cakes one month after the company launched these roasted cashew and peanut products on the domestic market and became an affiliate of Pan Pacific Corporation (PAN).

After buying 23.03% of chartered capital of LAF in June, leaders of PAN and LAF mapped out a development strategy for the company. Accordingly, LAF added Osca roasted cashew nuts and Pika roasted peanuts to its product line with expectations to create a new consumption trend in Vietnam in addition to exporting crude cashew nuts to European, American and Asian markets.

The company said Osca and Pika will be available at 5,000 and 10,000 stores respectively in the country towards the year of this year.

LAF has got orders from regular customers in Canada, Dubai, the Philippines, Hong Kong and China for the new products.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
Chinese farm produce, cow import, Land Law, VAMA
 
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