BUSINESS IN BRIEF 3/5

Vietcombank finances VND700 billion for Hai Phong container port

Vietcombank has signed an agreement to provide a VND700 billion (US$32.2 million) loan to VIP Green Port JSC for construction of a container port in northern Hai Phong city.

The container port, at a total cost of VND1.373 trillion (US$63.2 million), is expected to meet demand for goods transport and economic development in the area.

Construction of the project will include two phases, at VND971 billion (US$44.7 million) and VND402 billion (US$18.5 million) respectively.

Head of Vietcombank Hai Phong Nguyen Van Viet said the agreement reflected the bank’s active participation in the development of port services in Hai Phong city.

He assured that Vietcombank would fully comply with obligations under the contract and provide the most convenient financial services for VIP Green Port JSC to implement the project effectively.

A representative of VIP Green Port JSC said Vietcombank’s loans would help the company accelerate construction of the container port and expand its business in the future.

Local firms lack knowledge of FTAs

Many local enterprises do not know much about the TPP and the AEC free trade agreements (FTAs) that are expected to be signed this year.

Adequate knowledge about these FTAs would help domestic firms in Viet Nam prepare for business integration at a global and regional scale.

The Viet Nam Chamber of Industry and Commerce (VCCI)'s survey for the provincial competitiveness index (PCI) 2015 reported that 30 per cent of the interviewees among enterprises in Viet Nam did not have enough information about Viet Nam having negotiated to join the Trans Pacific Partnership (TPP) agreement.

Of these, 31.5 per cent were private enterprises and 29.8 per cent were foreign-invested enterprises, said Dau Anh Tuan, the head of VCCI's legal department.

The survey also said domestic enterprises in Viet Nam expected the State to support enterprises in drawing advantages from the TPP and solving difficulties after joining the TPP and the ASEAN Economic Community (AEC), he said.

Tuan said enterprises did not have much information about the TPP and AEC so they needed guidance to prepare well for the impact stemming from the FTAs, reported the Vietnam News Agency.

The AEC is expected to be formed this year, but 76 per cent of Viet Nam's enterprises have no information about the AEC, 94 per cent of them had no knowledge of the AEC negotiation rounds and 63 per cent said they did not know anything about the business opportunities or the challenges stemming from Viet Nam joining the AEC, another survey said.

To Hoai Nam, vice chairman and general director of the Viet Nam's Small and Medium- sized Enterprises, said Viet Nam's enterprises were aware of the competitive abilities of large international enterprises, but they did not possess any knowledge about the competitive abilities of firms in the ASEAN region so they had not developed clear solutions to compete with these rivals.

Meanwhile, Nam said, about 10,000 enterprises from ASEAN, such as Singapore and Thailand, had already visited Viet Nam this year for conducting market studies.

These regional enterprises had actively sought market information and a chance for entering Viet Nam's market, which was considered a potential market, and they would not wait until the AEC was officially established at the end of this year, he said.

Tran Dinh Thien, the director of the Viet Nam Economic Research Institute, was concerned that Viet Nam had negotiated to sign several FTAs, but the local enterprises had low competitive abilities, poor national management ability and low labour productivity, compared with other enterprises in the region and the world.

Farm exports generate US$9.13 billion in revenue

Vietnam exports from agriculture, forestry and fishery in April hit US$2.61 billion, bringing the sector’s total export value for the first four months to US$9.13 billion.

The Ministry of Agriculture and Rural Development (MARD) reported that agricultural products for the January-April period fetched US$4.47 billion, down 6%. Several products showed strong declines, including rice (9.2%) and coffee (39.3%).

Only cashew nut grew in both volume at 85,000 tonnes, up 14.4% and value at US$635 million, up 36.3%.

From January leading up to April, fisheries exports reached US$1.87 billion, dipping 16.6%.

Meanwhile, exports of forestry products increased year-on-year by 6.7% to US$2.18 billion.

Vietnam hiked 3G subscription fees twice in 2013.

Another factor that keeps consumers skeptical of the survey’s findings is that it is sponsored by three biggest mobile carriers in Vietnam, namely Vinaphone, MobiFone, and Viettel.

Breakthroughs in HCMC trade field through 40 years

Ho Chi Minh City has obtained many breakthroughs to become a modern and important trade center of the country after 40 years of the Reunification Day and 30 years of innovation and development.

The city has made great efforts to remove 10 downgraded wholesale markets from the center area for the construction of Vo Van Kiet Boulevard and build three new wholesale markets in the outskirts including Binh Dien, Hoc Mon and Thu Duc.

Local authorities have successfully assisted traders to operate in the new markets making the city sole locality nationwide successful in building and effectively exploiting wholesale markets.

Thenceforth HCMC has continued relocating hundreds of markets from roadbeds and upgrading other markets in districts.

These changes were recorded after 2000.

Five years after the city carried out open-door economic policy in 1991-2000, the people’s lives have been improved leading to higher shopping demand and facilitating economic sectors to attend in trade and distribution fields.

The first supermarket of the city--Minimart was opened in October 1993. Only when Saigon Co.op launched its first supermarket in February 1996, HCMC saw real changes in the trade field.

Afterwards, a lot of other supermarkets continued appearing in Districts 1, 3, and 5 and quickly spread to the environs such as Go Vap and Tan Binh.

The phase after 2005 marked a vigorous shift of trade cooperative stores into modern Co.op supermarkets.

Vietnam officially became a WTO member in January 2007. This blew a fresh air breath to the city’s trade as well as other service fields.

Conducting WTO commitments, the country has opened its door to foreign businesses to attend in local distribution system.

Five years later, the market saw a full attendance of large retailers in the world, prompting local businesses to improve its management and organization ability.

After forty years of establishment and development, HCMC distribution system has much developed in volume and quality.

Various distribution types such as markets, trade centers, convenient stores, boutiques, and e-commerce have more and more developed and contributed to comprehensive changes of the city’s trade field countenance.

HCMC has 240 markets, 40 trade centers, nearly 200 supermarkets, over 700 convenience stores, and 8,967 subsidized goods outlets this year.

The city has not only been able to balance goods supply and demand but also boost exports and imports.

Export turnover reached US$850,000 in 1990, which surged to nearly US$2.6 billion five years later. The turnover continued growing more than 10 percent a year to top US$200 billion in 2007-2014.

HCMC became the first locality nationwide with an export turnover of over US$32 billion last year, accounting for one third of the country’s total number.

The ratio of technological, processing and manufacturing products occupied for 70 percent of the total export turnover and agro-aqua and forestry group held 22 percent.

Commodities from HCMC have been shipped to over 200 nations and territories. Goods quality has better met requirements of most importers.

HCMC has led the country in implementing new policies and mechanisms to stabilize goods supply-demand and prices, such as programs on price subsidization, bank and business connectivity, trade cooperation between HCMC and other provinces and cities.

From these programs, the city has gathered and built up a strong business group who are able to supply the market with a large amount of commodities at stable prices.

Last year, trade and service revenue contributed to 59.2 percent of HCMC Gross Domestic Product with the revenue of VND655.37 trillion (US$30.36 billion), a year on year increase of 12.7 percent. Of these, trade held 75.4 percent, up 13.9 percent.

Forty years have gone by with many obtained achievements. However there are some problems for the city to clear to continue promoting its advantages, exploiting potentials, and develop into the country’s largest trade and service center.

Ministry wants local investor to develop Ba Son area

The Ministry of Defense has proposed the Government allow HCMC Commercial Service Joint Stock Company to develop commercial and service facilities in the premises of Ba Son Shipyard in District 1.

In Document 2490/BQP-CNQP signed by Deputy Minister Truong Quang Khanh, the ministry requested the affiliate of Vingroup be permitted to buy the existing assets and land in Ba Son area.

The report said the ministry assigned the General Department of Defense Industry and Ba Son Corporation on March 27 to consider picking an investor to buy the properties and land in Ba Son area. The ministry chose the company after considering the proposals of the General Department of Defense Industry and the HCMC government.

The ministry explained that the selection is in line with a scheme approved by the Prime Minister late last year for selling the assets and transferring the land use right in Ba Son area to a competent investor.

The investor chosen to develop the area must be experienced in managing and implementing large-scale property projects and financially capable to advance capital (around VND4.5 trillion this year and next) to accelerate relocation and construction of a new shipyard for Ba Son, pay enough money for land and meet other criteria related to financial aid for Ba Son Corporation.

In the report, the ministry suggested the zoning plan for development of the existing Ba Son area should harmonize the HCMC government’s socioeconomic development strategy and produce huge revenue for the defense industry.

The selection of a Vietnamese investor for Saigon-Ba Son complex is to ensure national interests and support the development of local enterprises and economic growth.

Meanwhile, picking a foreign investor for the area will take much more time to complete legal procedures for land allocation and this will affect the relocation process of the shipyard. Besides, it is not easy to assess the financial capability and experience of foreign investors as well as to monitor their operations in case of urgency for local and national defense and security.

The ministry also requested HCMC and relevant ministries and agencies to create favorable conditions for the quick completion of legal procedures concerning the sale of assets and the land use right transfer.

Vinasun to buy 1,100 new taxicabs this year

Shareholders of Vinasun Corporation have passed a plan to purchase at least 1,100 new taxicabs by the end of this year to raise its total fleet to 6,129 and expand operations in HCMC.

The corporation will liquidate 700 old cars as part of its plan to increase revenue this year, heard its annual general meeting in HCMC last week. It had had 5,729 taxicabs as of the end of last year.

Vinasun targets total revenue of VND3.88 trillion this year, up 3.1% over last year and after-tax profit of VND266 billion. The corporation will give bonus shares to shareholders at a 100:20 ratio to revise up its chartered capital to VND678.6 billion from the current VND565.5 billion.

Dang Phuoc Thanh, chairman of Vinasun, told the meeting that the enterprise obtained revenue of VND3.77 trillion (US$175.3 million) last year, up 19.38% year-on-year and 9% higher than the whole year’s target.

The corporation’s after-tax profit totaled VND314 billion in 2014, rising by 39.86 % versus a year earlier and beating the full-year target by 22.15%.

Vinasun paid a 2013 dividend in cash for shareholders at 20% and advanced a 2014 first round dividend in cash for them at 10% last year.

The corporation also issued shares for shareholders at a 100:30 ratio to raise its chartered capital to VND565.5 billion from VND435 billion in the same year.

Vinasun has launched Vinasun App for the iOs, Android and Windows phone operating systems to enable clients to book its taxi services via smartphones in additional to traditional channels.

The corporation had had 15,990 employees as of the end of last year and each of its taxi drivers could earn an average monthly income of VND8.6 million.

No evidence of Toyota’s shift to auto imports - ministry

Deputy Minister of Industry and Trade Tran Tuan Anh said there has been no proof that Toyota Vietnam would shift from manufacturing to importing autos in 2018 if the Government declines financial aid for it.

Anh told the ministry’s media conference in Hanoi on Monday that the ministry had a dialogue on auto industry development policies earlier on the same day with relevant agencies and auto firms in Vietnam. At the event, Toyota Vietnam proposed favorable import and special consumption tax policies to enable enterprises to contribute more to the development of the auto industry.

“It is baseless to say that Toyota has requested the Government to cover losses or offer subsidies totaling dozens of trillions of dong to support domestic auto production,” Anh said.

Earlier, news reports said the Japanese automaker would leave or stay depending on whether the Government continues backing the auto industry.

As reported by the news site VietnamNet, a source from the Ministry of Industry and Trade said the ministry would disapprove of Toyota’s request for financial support after 2018 as it goes against the country’s WTO commitments to equal treatment for enterprises.

In addition to the proposal to cut special consumption and import taxes, Toyota expected the Government to cover half the price differential between domestically assembled and imported vehicles.

Such financial support is against WTO’s equal treatment rules and the Government cannot provide direct assistance in terms of product price but ensure fair competition for firms from different economic sectors. Besides, Toyota did not explain how Vietnam would benefit from its proposal.

More effort needed to develop market economy in Vietnam – experts

Experts said at a seminar in Hanoi last Friday that Vietnam should work harder to move towards a modern market economy.

The seminar was held to announce a report on the state of the market economy in Vietnam. The 500-page report was a joint effort of experts from the Central Institute for Economic Management, the Vietnam Chamber of Commerce and Industry, the Vietnam Institute of Economics, and the Center for Policy and Economic Studies with support of Friedrich Naumann Institute of Germany.

Chu Hao, director of Tri Thuc Publishing House, underlined the importance of building adequate institutions for a market economy, saying market economy still has a lot of shortcomings but nothing else is better than it at the moment.

Economic expert Pham Chi Lan said Vietnam should have had a better market economy than it is now.

“Vietnam has been embracing a market economy but with a mindset of ‘one step forward, one step back’. It even took two steps back after its accession to the World Trade Organization, which has caused the economy to slow since then,” Lan said.

The Government has concentrated more resources on the State corporate sector than the private sector, leading many private companies to go bust. “This reflects a indecisive policy to develop a market economy,” Lan said.

Hans-Jorg Brunner from the German embassy in Hanoi said a German company wanted to sell its project in Vietnam but Vietnamese authorities stepped in by conducting a tax audit. Six months later, they provided audit results for local media instead of the company.

The media reported the firm had evaded tax, Brunner, adding there remains much to do in Vietnam to completely shift to a market economy.

Dinh Tuan Minh, the chief author of the report, said the transformation of Vietnam’s centralized and subsidized economy into a market economy was marked by the 1992 Constitution.

Overall, Vietnam’s economic liberalization indicators improved in 2000-2006 but have shown

signs of slowing since 2012. That is why the liberalization of the economy has been ranked in the lower half of the region and the world, Minh said.

Finance ministry reveals extra int’l bond issue

The Ministry of Finance has sent the Government an international bond issue plan for the 2016-2020 period after the successful US$1 billion sovereign bond issue last November.

At a press conference in Hanoi on Saturday, Deputy Minister of Finance Do Hoang Anh Tuan told the Daily that the ministry presented the scheme at the government meeting in April.

If the scheme gets ‘in principle’ approval from the Government and the National Assembly, the ministry will conduct bond issues on international financial markets. The agency has yet to calculate a specific bond volume for the issues, which aim to restructure foreign loans with high interest rates thanks to Vietnam’s better credit ratings.

Earlier, Fitch Ratings upgraded Vietnam’s long-term foreign and local currency issuer default ratings to B+ from BB- while Moody’s lifted Vietnam from B2 to B1.

Besides, the plan will raise funds for projects with medium- and long-term credit payment and good solvency. The new loans will gradually replace official development assistance (ODA) capital because as a middle-income country, Vietnam has to meet more conditions in getting the capital source.

The ministry will weigh the upcoming bond issues so that public debt will be kept at below 65% of the nation’s gross domestic product (GDP) and ensure that bonds would bring in more benefits than ODA loans. The credits should support the economy and at the same time relevant risks must be put under control, Tuan said.

In early November 2014, the Ministry of Finance successfully sold US$1 billion worth of government bonds with an annual fixed coupon of 4.8%.

Vietnam’s international bonds issued in 2005 and 2010 came with respective annual coupons of 6.875% and 6.755%.

Deutsche Bank, HSBC and Standard Chartered Bank were hired to manage the issue and swap/buy back old bonds.

The successful issue has helped the nation save around US$32.5 million in bond yield payment in 10 years. It also restructures 54.4% of 2005’s bonds and 25.4% of 2010’s bonds with total savings of US$13.9 million.

HCM City urges road maintenance fee collection from motorbikes

The government of HCMC has urged local agencies to make quick preparations for collecting an annual road maintenance fee from motorcycles in the city as approved by the municipal People’s Council.

The owners of motorbikes registered in other localities can pay the fee, which ranges from VND50,000 to VND150,000 per year, at competent agencies in HCMC if they live and work in this city, according to the decision.

The HCMC People’s Committee issued the decision last week, or nearly four months after the HCMC People’s Council approved the road maintenance fee collection plan.

At an extraordinary meeting in late December last year, the council approved collecting the road maintenance fee from motorbikes from early this year as proposed by the city government. Accordingly, local citizens are permitted to pay the fee at the offices of communes, wards and towns.

The annual charges are VND50,000 per unit for motorcycles with engine capacity of 100cc or below, VND100,000 for bikes of over 100cc to less than 175cc and VND150,000 for 175cc or above.

The charges are VND10,000 and VND30,000 lower for bikes of less than 100cc and 100cc to less than 175cc respectively as proposed earlier by the HCMC Department of Transport.

According to the decision, motorcycle owners will have to pay the fee by July 31 for the whole 2015 for the bikes registered before January 1 this year.

Fee collections will be made in July for the motorcycles registered before the end of June from 2016 and January for the vehicles registered before the end of December.

Migrant workers are allowed to pay the road fee in HCMC and the city’s residents can pay the fee for their bikes in other provinces, according to the decision. Motorcycles registered by police and armed forces, and poor people are exempted from the fee.

Earlier, the city government said late payers may be fined up to three times over the fee.

Speaking at the council’s meeting, HCMC vice chairman Nguyen Huu Tin said that motorcycle owners who are late in paying the maintenance road fee will be fined in accordance with the Ministry of Finance’s Circular 186/2013/TT-BTC.

Ward- and town-level authorities will be allowed to retain 10% of the total fee revenue they collect in the first year to cover collection cost while the percentage for communes is 20%. Districts will use the remaining revenue to develop rural transport systems and maintain roads.

Experts calculated the city government will be able to collect around VND300 billion for road upgrade and repair if the lowest fee level of VND50,000 per motorcycle is applied to less than six million bikes. This number of bikes excluded more than one million owned by migrant workers as of late last year.

HCMC will collect the road fee in accordance with the establishment, management, and use of the nation’s Road Maintenance Fund. Accordingly, owners of motorized vehicles were supported to pay the road maintenance fee as contribution to the fund from June 2012, but the Government later postponed the fee collection until January 2013 to share difficulties with people during the year of economic slowdown.

HCMC has continued to delay the road fee collection though all other localities have started their fee collections since 2013.

Gov’t wants banking sector restructuring on fast track

Prime Minister Nguyen Tan Dung has called on relevant agencies to step up the nation’s bank restructuring scheme and deal with ailing banks in the country.

In a statement released after the cabinet meeting on Saturday, the Prime Minister urged the second stage of the project be put on fast track while bad debts must be settled effectively.

The message came at a time when many banks are holding their annual general meetings and the State Bank of Vietnam has announced to acquire all Ocean Bank shares at zero dong each. Earlier, the central bank took over Vietnam Construction Bank (VNCB).

The central bank also restricts dividend payments at other banks to help them retain profit for restructuring. Therefore, a number of banks have delayed their AGMs while others have offered lower-than-expected dividend or even held back dividend payment.

The government meeting, the central bank and other agencies were told to consider raising the foreign ownership limit at local banks. Currently, foreign ownership is capped at 30% of a bank’s chartered capital.

*The central bank last Saturday issued a decision allowing Mekong Housing Bank (MHB) to be merged into the Bank for Investment and Development of Vietnam (BIDV). The decision will take effect on May 5.

On the same day, the State Securities Commission issued a certificate on share issue for the lenders’ share swap at a 1:1 ratio.

The merger deal has met all legal procedures, according to the central bank.

The steering committee for the merger plan and board members of the two banks met on Saturday to draw up a roadmap for merger.

From May 5 to 10, BIDV will dispatch its officials to supervise and prepare for the takeover of MHB facilities (including the head office, branches and member units). MHB’s banking units will be handed over to BIDV between May 11 and May 17.

BIDV is obliged to take over all properties, rights, duties and legitimate interests of MHB and conduct business registration procedures.

The handover is scheduled to finish on May 22. BIDV will have to complete the share swap to turn MHB shareholders into BIDV shareholders.

Both sides are expected to sign an official merger minutes on May 25. The MHB brand will no longer exist as the merged bank will be named BIDV.

BIDV chairman Tran Bac Ha said the bank will adjust its 2015-2017 business plan after the merger. BIDV will take care of the interests of employees after the merger.

Business startups soar in April

The General Statistics Office (GSO) has put the number of businesses established this month at more than 9,180, up 24.6% from the same period last year.

These business startups in April have total registered capital of more than VND51 trillion, up 13% against the same month last year.

The new enterprises are up nearly 74% in number and over 52% in capital month-on-month.

April has seen 2,726 enterprises resuming operations, a month-on-month decline of 24%. However, 3,670 ailing firms have suspended production and business, soaring 58.5% compared to last month, and 684 companies have been dissolved, up 34%.

This year some 28,235 enterprises have been set up with combined capital of VND162.5 trillion, rising by 9.7% and 13.3% respectively compared to a year earlier.

The newly established businesses have generated 427,900 jobs, up 19.2% year-on-year.

In addition, 6,834 operational companies have added a total of VND223 trillion to their capital in January-April.

According to the GSO, an improvement in economic growth has allowed more than 6,310 suspended enterprises to get back to business, up 7.7% year-on-year.

The number of enterprises having halted operations and been dissolved in the year to April is down 0.8% year-on-year to 3,249. Most of them are small with registered capital of less than VND10 billion each.

Around 19,035 enterprises have suspended operations in the period, up 4.5% from a year ago.

Danatol takes legal action against Sun Land

Danang-based Danatol Joint Stock Company has sued Sun Land, a member of Sun Group and the owner of Ba Na Hills resort on Ba Na Mountain in Danang City, for restricting road access to the peak of Ba Na Hill.

Nguyen Trung Dan, chairman of Danatol, said the court of Hoa Vang District in Danang City had agreed to handle the case in which Sun Land is alleged to set up barriers on the road leading to the peak of Ba Na and cause the road to deteriorate.

Dan requests Sun Land remove the barriers and repair the road to make it easy for people to go up the top of Ba Na Hill by road.

Earlier, Ba Na Cable Car Service Joint Stock Company, another member of Sun Group and the operator of Ba Na Hills resort, sent a document to the government of Danang city denying blocking the road as reported by local media.

The enterprise said it had not prevented people from using the road as it just warned locals and tourists of not trekking up Ba Na.

In the document, the company proposed the city allow it to manage the road so that it can use its own budget to maintain the road.  

The city planned to upgrade the road at an estimated cost of VND396 billion in 2011 but delayed it later before assigning Ba Na Cable Car Service Joint Stock Company to manage and maintain it in May 2014.

RMIT partners with biotech center

RMIT Vietnam has joined hands with the Biotechnology Center of HCMC to contribute to the development of human resources and the biotechnology industry in Vietnam.

The joint approach towards developing the country’s biotechnology professions was outlined in a memorandum of understanding (MOU) which RMIT clinched with the center in HCMC last week.

The university said in a statement that the two-year agreement contains many significant programs and activities to enhance mutual support and cooperation in education and research across biotechnology and to provide more internship opportunities for RMIT Vietnam students.

As part of the deal, the university will provide English language training for staff of the center to achieve proficiency in academic English as well as master a number of skills required for tertiary education overseas.

The Australian-invested school will also deliver undergraduate and postgraduate programs, and research opportunities in biotechnology either at RMIT Vietnam or RMIT Australia. Short-term training programs in biotechnology are also being developed.

The center agreed to offer advice for biotechnology courses offered at RMIT Vietnam; and support research discussions, seminars and academic meetings, and internship opportunities for students.

Meanwhile, RMIT Vietnam President Professor Gael McDonald said the deal ensures the university will continue to run courses relevant to the Vietnamese market and contribute to this growing industry.

Stricter inspections imposed on cold-rolled steel imports

Customs agencies have applied stricter inspections to cold-rolled stainless steel imported into Vietnam to prevent trade fraud after the product was added to the list of imported products with origin risks.

Cold-rolled stainless steel, including coils and sheets 3.5 millimeters thick or thinner, are included in the list of imported products with origin risks, according to the General Department of Customs’ Decision 817/QD-TCHQ with effect last Friday.

The department issued the decision last week after some importers faked documents to falsify origins of the product to avoid Vietnam’s anti-dumping tax.

According to the Vietnam Competition Authority, after the Ministry of Industry and Trade issued Decision 7896/QD-BCT on September 5, 2014 to slap anti-dumping duties on certain stainless steel products imported from China, Taiwan, Indonesia and Malaysia, many enterprises have falsified origins of these products to dodge anti-dumping duties.

In addition to cold-rolled stainless steel, three other products identified with origin risks are the steel alloys containing boron, Q-mobile phones and baked tiles imported from China.

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

Vietcombank finances VND700 billion for Hai Phong container port, Local firms lack knowledge of FTAs, Farm exports generate US$9.13 billion in revenue, Ministry wants local investor to develop Ba Son area
 
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