VinaCapital hooks up foreign investors

Scores of heavy-weight foreign investors have been hooked up with opportunities in Vietnam thanks to VinaCapital’s annual investor conference.

“Our goal is to provide investors with an open dialogue surrounding the investment environment in Vietnam,” said Don Lam, CEO and co-founder of VinaCapital.

“Just one question they asked me: when will the Vietnamese economy become stable. The answer after one day of presentations and discussions is the Vietnamese economy is getting back on the track of stability,” he said.

Lam said investors would take a “wait-and-see attitude” until the beginning of 2013 to make investment decisions.

This year’s conference saw 75 investors roll up, against 50 last year.

“It has been a challenging past 12 months, but we still firmly believe in Vietnam’s long-term growth potential, one of which we feel is the best in the region,” said Lam, a frequent speaker at international investment seminars and featured as Vietnam’s “Mr. Wall Street” in Fortune magazine.

The two-day conference last week in Ho Chi Minh City included updates on Vietnam’s capital markets from Saigon Securities Inc’s director David Kadarauch, Vietnam’s real estate market by Savills Vietnam deputy managing director Troy Griffiths, Vietnam’s private equity market by Grant Thornton Vietnam senior manager Dung Trinh and on infrastructure by Asian Development Bank principal country specialist Yumiko Tamura.

To put VinaCapital’s performance into focus, its three London Stock Exchange-traded investment funds VinaCapital Vietnam Opportunity Fund (VOF), VinaLand (VNL) and Vietnam Infrastructure Limited (VNL) have a total of $1.5 billion in assets under management as of September 2012.

VinaCapital’s managing director Andy Ho said over the past year, VOF invested in listed companies, Military Bank and Dabaco Vietnam that manufactures and trades cattle food, veterinary medicine, insecticides, and other agricultural products. VOF currently manages $725 million.

Ho added VOF had withdrawn capital from Indochina Food, a major sugar company with facilities in Cambodia, after more than three years’ investment because it sold stakes “at a good price”. He said profit from this investment was a two-fold increase and VOF withdrew capital for other investments.

During 2012-2013, VOF continues to invest in listed companies, and work with foreign companies to buy into Vietnamese companies where foreign investors have an interest.

As for VinaLand its Azura Tower, part of the World Trade Center project in central Danang city, was completed with the first phase of handovers taking place in 2012’s second quarter.

Ho said VinaLand currently had investments in 36 property projects and would continue these investments, but not make new ones.

Lam said VinaLand was focusing on garden housing, with its affiliate VinaLiving responsible for the segment “because VinaLiving has already established its brand in this section.”

Over the past year, Vietnam Infrastructure Limited (VNI) invested $13 million, increasing its stake in VNC-55 Infrastructure Investment, a base transceiver station specialist. Combing this investment with VNI’s previous investments in Global Infrastructure Investment, Mobile Infrastructure Development Company and Mobile Information Services, it now owns approximately 2,000 existing BTSs nationwide.

Earlier this month, VinaWealth Fund Management - 49 per cent owned by VinaCapital, gave Standard Chartered Vietnam the thumbs up to be the custodian for its first private employee benefit fund, a newly-established open-ended fund.

Economy still a conundrum

High inventory levels and the related pileup of bad debts have left policy-makers scrambling for solutions.

The National Assembly’s Standing Committee last week agreed that high inventory levels in real estate construction and other sectors had resulted in many bankruptcies and unpaid debts.

“High inventory levels and bad debts have a close relation. If the problem of high inventory levels is settled, bad debts are also solved,” said Phung Quoc Hien, chairman of the National Assembly Committee for Finance and Budget.

According to a Ministry of Planning and Investment (MPI) report released at the session, the inventory indexes of several industries as of September 1 were still high. For example, the inventory index of the processing-manufacturing industry rose 20.4 per cent year-on-year, plastics 50.6 per cent, cement 50.2 per cent, iron and steel 40.6 per cent, medicine 40.3 per cent, apparel 39.4 per cent, automobile 37.8 per cent and poultry feed 37 per cent.

MPI Minister Bui Quang Vinh affirmed “the real estate inventory is surely very huge.” National Assembly Chairman Nguyen Sinh Hung said: “As I know, the banking system’s total outstanding loans now reach VND2,000 trillion ($96.6 billion), of which the real estate sector accounts for up to 50 per cent.”

State Bank Deputy Governor Nguyen Dong Tien and the National Assembly Economic Committee chairman Nguyen Van Giau said the outstanding real estate loans accounted for 5 per cent, or some VND140 trillion ($6.7 billion), of the banking system’s total outstanding loans.

Hung, however, said the actual figure must be much higher.

“A lot of apartments, villas and semi-detached houses have found no buyers,” Hung said.

“A huge number of housing works are delayed, causing a huge inventory of building materials such as cement and steel. Because the project owners are unable to sell their housing products, they cannot pay debts for banks. Thus, the outstanding loans of the property sector are extremely big.”

Hung said from now to the end of 2012 and in the first half of 2013, the inventory level and bad debts must go down. He suggested banks consider increasing consumption loans and loans for housing to unblock the real estate market.

In order to deal with high inventory level, Vinh suggested urgent solutions to boost production and consumption of goods such as cement and steel, increase the disbursement of overseas development aid and social investment, plus expand domestic and foreign consumption markets, and help business access soft loans to recover production.

According to the MPI’s report, the number of businesses halting operations due to difficulties reached more than 40,000 in the year until now.

Hung asked the government to propose specific solutions for the problems.

Japanese firms offer shelter from the storm

Vietnamese textile-garment and footwear export firms have scaled up cooperation with Japanese partners to withstand the current economic storm.

Giditex just launched its third production factory - an offspring of cooperation between Giditex and Japan-based Tamurakoma Company - which specialises in making products under the Onward brand for export to Japan.

Earlier, Giditex met four Japanese businesses Apron, Tamurakoma, Togashi Hosei and Yamatoya Co, that are Giditex customers who wanted to place further export orders in 2013.

Donagamex, a Vinatex member with a fair export growth to Japanese market, received a customer group from Japan and in the year ending September, Donagamex posted export value of approximately $50 million, of this $24 million came from export orders with Japan.

“Maintaining double-digit export growth to the Japanese market is a dream to export businesses in the context of falling export orders from key import markets,” said Donagamex’s chairman Bui The Kich.

Bac Giang Garment also eyed 14 per cent export growth to Japan in the first three quarters.

At this time, the company has secured export orders to Japan for 2012’s full year with key export items of jackets, overcoats, raincoats, jeans, shorts and sports-wear. Export value to Japan represented 18 per cent of the company’s full year export value target of around $90 million in 2012, according to a company source.

According to Vietnam Textile Apparel Association, demand for Chinese-made clothing from big import markets like US, EU and Japan took a plunge, leaving scores of garment exporters struggling.

Vietnam Leather and Footwear Association deputy general secretary Nguyen Thi Tong said signing new export orders was hard in 2012, however, with Japanese market local firms had made use of every opportunity to boost export to this country.
Vietnam’s textile-garment export was $1.33 billion in September, down 12.3 per cent against August, bringing the sector’s total export value in the first nine months to $11.1 billion, surging 7.3 per cent on-year.

Export value to Japan reached $1.45 billion, or 18.7 per cent jump on-year. Vietnam’s footwear export value amounted $463 million in September, down 24.7 per cent against August, bringing the sector’s total export value in the year ending September to $5.22 billion, up 12.5 per cent on-year.
The export value to Japan hit $245 million, up 33.5 per cent on-year.

French nuclear power companies to visit Vietnam

A delegation of representatives of French nuclear power managers and producers is about to visit Vietnam to participate in the fifth international exhibition on the nuclear power industry.

The exhibition to be participated by a number of leading nuclear power companies around the world is planned to be held from October 25th-27th in the Viet-Xo Friendship Cultural Palace, Hanoi.

France is one of the countries with rich experience in nuclear power. According to French officials, the country is ready to share this experience with Vietnam with a view to backing its newly-founded industry.

During the visit to Vietnam, the French delegation is also expected to participate in several seminars to be held in the time of the exhibition.

Mr. Bernard Bigot, General Manager of the Commission on Atomic and Alternative Energy (CEA), is expected to introduce French nuclear technology and experience with Vietnamese partners at these seminars.

Academic slams privileged State firms as ‘inefficient'
Restructuring State-owned enterprises should be speeded up to improve their efficiency and create fair competition among various economic sectors, a conference heard in HCM City last Saturday.

At the event organised by the University of Economics and Law and the International Business Knowledge Corporation, experts, researchers, economic managers, and entrepreneurs discussed the role of SoEs in the market economy and the need and ways to restructure them.

Dr Nguyen Van Luan, deputy rector of the University of Economics and Law, said SoEs occupied key sectors of the economy and contributed to the country's economic development in the past, but their performance had not been commensurate with the preferential treatment they get.

They are inefficient users of land, other fixed assets, financial resources, and labour, he said, adding that their growth was mainly based on exploitation of natural resources, and their efficiency was low compared to other sectors, he added.

Nguyen Van Trinh, another deputy rector, said SoEs' bad debts were at an alarming level and becoming a burden on the economy.

They get huge investments from the Government, but contribute little to GDP compared to the non-State sector, he said.

For instance, in 2006-10, despite the sinking of massive quantities of public funds in the sector, it contributed only around 28 per cent of GDP compared to 46 per cent by the non-State sector, he said.

SoEs needed to be restructured, he said.

Delegates suggested that the Government only retain State enterprises that provide essential public services, though it has to restructure their management mechanism.

As for enterprises operating in sectors in which non-State firms also operate, the Government must quickly restructure them by equitisation and other means, improve their management, and intensify State oversight, they said.

"Equitisation is the shortest way to re-establish market discipline at SoEs," Trinh said, adding that the Government should accelerate the equitisation process.

The country has 5,000 State-owned enterprises, including 1,300 that are fully owned and 3,500 are majority-owned by the State.

The Government plans to reduce the number of fully State-owned firms to around 600 by 2015.

Lotteria CEO presented with friendship insignia

Cho Young-jin, CEO of Lotteria Co., Ltd from the Republic of Korea was awarded the “For Peace and Friendship among Nations” insignia his contributions to social and charitable activities in Vietnam.

Addressing the ceremony in Hanoi on October 20, President of the Vietnam Union of Friendship Organisations (VUFO) Vu Xuan Hong said apart from sponsoring the TV programme “Cau thu ti hon”, Lotteria has engaged in combating HIV/AIDS, building houses for the poor in Ho Chi Minh city, helping natural disaster victims in Da Nang alongside joining voluntary work at SOS children’s village in Hanoi.

For his part, Cho expressed his honour to receive the VUFO’s award, saying that he will continue to implement social and cultural activities, contributing to fostering and developing friendship between the two countries’ people.

Entering Vietnam in 1998, Lotteria has so far opened more than 140 branches in the Southeast Asian nation.-VNA

HCM City prepares for new financial centre

Ho Chi Minh City ’s Department of Transport plans to kick off construction of four main roads at Thu Thiem new urban area in District 2, the city’s new financial centre, in June 2013.

With a total cost of around 10 trillion VND, the project will include an arch avenue, a central lake-side road, a Saigon River-side road and an overpass across the southern ecological garden.

To ensure progress of the project, the HCM City People’s Committee has assigned the Investment and Construction Board of the Thu Thiem new urban area to work with Vietnam Infrastructure Development and Finance Investment Joint Stock Company (VIDFI) to complete promptly all technical designs and procedures of the project.

According to Trang Bao Son, deputy head of Thu Thiem new urban area management board, the four roads are expected to be completed in 2015, giving the start for the formation of the Thu Thiem new urban area.

The area is located in Thu Thien peninsula, which closely connects two lands raised by the Saigon river, include An Khanh, Thu Thiem, An Loi Dong, Binh An and Binh Khanh wards of district 2, and faces the city’s existing centre by Saigon River.

It is considered a heart of the city in the 21 st century with functions of a new modern urban area, financial, commercial and service centre.-VNA

Delta province leads nation in rice production

The Mekong Delta province of Kien Giang expects to produce a record-high amount of paddy this year, with an estimated 4.2 million tonnes, up nearly 293,000 tonnes against last year.

This is the second consecutive year that the province has led the country in rice production, according to the province's Department of Agriculture and Rural Development.

The output rose after farmers west of the Hau River shifted from growing vegetables and fruit to rice. Shrimp farmers in Long Xuyen Quadrilateral also began cultivating rice as well.

In addition, rainy weather helped provide more irrigation water. Silt had also built up from last year's flood season, helping farmers raise bumper harvests.

Advanced farming techniques and the use of disease-resistant rice as well contributed to the higher rice yield.

This year, the province has planted a total of 700,000 ha of rice with an average yield of six tonnes per hectare.

Of the crops, the winter-spring and summer-autumn crops are the two main crops, accounting for more than 85 percent of the province's total rice output.

For the winter-spring crop in the 2012-13 period, the province will plant 295,000 ha of short-term rice varieties that mature in less than 100 days and have a high yield and quality.

Farmers in the province have been encouraged to plant at least 15-20 percent of fragrant rice.-VNA

Exports hit more than US$88 billion

As of October 15, exports had reached US$88.2 billion, a year-on-year increase of 18.5 percent, and imports hit US$88.66 billion, up 6.8 percent.

As a result, Vietnam ran a trade deficit of US$463 million, in more than 10 months of the year, according to the General Department of Customs.

Garments topped the list of the country’s exported commodities with a total value of more than US$12 billion, a year-on-year increase of 7.4 percent, followed by telephones and components, crude oil, computers, electronic products and components.

The EU is Vietnam's biggest importer of phone handsets and components, around US$3.72 billion, increasing twofold and accounting for 43 percent of the country’s total export value. It is followed by the United Arab Emirates at US$1.04billion, Russia at US$520 million, and Hong Kong at US$383 million.

Expressway through Da Nang gets nod

The 140km Da Nang-Quang Ngai Expressway Development project will start construction next June, the deputy director of the Transport Ministry's Project Managing Unit (PMU), Nguyen Trung Sy, has announced.

He said work on the project would commence near Ky Lam bridge in the Dien Ban District of central Quang Nam Province.

VND29 trillion (US$1.4 billion) would be invested in the four-lane express link, with $635 million coming from the World Bank and $673 million from the Japan International Co-operation Agency (JICA). The road will allow vehicles to travel at 120km per hour and reduce travelling time between the two provinces from three hours to two.

The completed project will cover an area of 963 hectares through Da Nang city and the provinces of Quang Nam and Quang Ngai. The planned route runs through private land and property, and site clearance compensation has cost VND1 trillion ($48 million).

In a meeting with World Bank representative Paul Valley, Da Nang city's administration agreed to complete land clearance and begin resettlement next month.

Deputy chairman of the city's people's committee, Phung Tan Viet, confirmed that the city has sped up the site clearance process to allow work on the project to begin soon.

Da Nang, which will contain a 8km section of the expressway, will handover the first cleared site - in Hoa Nhon commune - to developers on October 26.

Slow projects under threat of cancellation

Property projects that have yet to implement site clearance and compensation agreements despite being granted licences should be suspended, Construction Minister Trinh Dinh Dung told developers in an industry meeting last Saturday.

Dung said if real estate developers insisted on investing in these long gestating projects like they did during the property market boom several years ago, they would face losses and potential bankruptcy.

"We should have policies that encourage businesses to suspend incomplete projects in order to help them avoid further losses," Dung stressed.

Speaking with the HCM City Association of Real Estate Developers, Dung said that in order to make more effective policies the Ministry is now very closely monitoring the current demand and supply situation for property.

The Ministry is also classifying the present status of each ongoing project to find those that have yet to implement site clearance and compensation procedures, especially in Ha Noi and HCM City.

"Based on research we will compile statistics on the number of projects and their scale in each locality and ensure that they are appropriate for supplying the demand there," he added.

Representatives of the developers at the meeting also requested that the Ministry reviews policies on investment procedures, interest rates and land use fees.

According to figures released by the HCM City People's Committee, the city is forecast to have a population of near 10 million people by 2025, in addition to 2.5 million non-residents with temporary stays of under six months.

Just over 7 million residents will live in inner-city districts, with about 3 million in suburban districts.

To meet demand the city is expected to allocate up to 100,000 ha for construction, with 49,000 ha in inner districts and 40,000 to 50,000 ha in suburban districts.

Of the 882 housing projects that have been licensed in the city, investors have completed land hand-overs, site-clearance compensation and infrastructure development for 785 projects.

More than 50 per cent of the compensation needed for site clearance has been completed for 45 projects. Fifty-two projects have completed less than 50 per cent of the compensation for site clearance.

Most of the 1,143 property projects to develop warehouses, office buildings and business centres have completed compensation for site clearance.

According to the city People's Committee, most delays in compensation for site clearance are projects that are funded from the State budget.

Banks breach rate cap to attract deposits

Small and large banks nationwide are competing with one another to attract much-needed deposits and improve their liquidity.

Although the interest rate on dong deposits was capped at 9 per cent per year by the State Bank of Viet Nam, several commercial banks have still been illegally raising interest rates on loans in both Vietnamese dong and US dollars to improve liquidity.

Small banks are offering much higher interest rates than larger ones, with rates going up to 11-13 per cent per year for deposits in dong based on their terms.

To dodge the SBV's 9 per cent cap, promotion programmes, gifts and cash are being offered by banks to encourage people to deposit their savings.

For example, some banks give depositors savings books with an interest rate of 9 per cent per year, as regulated.

But when the customer makes the deposit, the bank subtracts the difference between the regulated interest rate and the offered bank rate, and gives the customer upfront an amount of cash equivalent to the difference, depending on the length of the deposit term.

By doing this, it is less likely that banks' illegal actions will be discovered when inspected.

Previously, banks had competed with each other to increase the interest rates of dong deposits only, but now lenders have raised the rate on deposits in US dollars from the regulated 2 per cent per year to 4-5 per cent.

Tran Thanh Tam of Tan Binh District said he had deposited only US$20,000 at a commercial bank's branch in the district and was offered a 3 per cent interest rate.

"I could have received a higher rate if my deposit had been higher," Tam said.

Promotions with attractive gifts and bonuses are also being used by many commercial banks to attract depositors.

In mid-October, the HCM City Housing Development Bank (HDBank) launched the promotion "Bounteous Privileges – Abundant love" with more than 48,000 gifts for customers.

This promotion is for individual customers who deposit VND5 million or $500 with a minimum term of four months. They also receive scratch cards and have the opportunity to receive valuable gifts.

Meanwhile, depositors at the Southern Commercial Joint-Stock Bank also receive cards and prize codes that gives them a chance to win one kilo of gold.

People who deposit VND20 million or more at the Military Commercial Joint-Stock Company are able to win a special prize valued at 18 kilos of gold.

As a result, by the end of September, the banking sector's deposit capital grew by 11 per cent compared with last year's figure, while credit growth was only 1.8 per cent, according to the General Statistics Office.

According to the central bank's report, bad-debt ratios at banks, accounting for 8.6 per cent of the country's total loans, are the main reason behind the interest-rate race.

The actual bad-debt ratios at banks is much higher, and could increase because the business health of enterprises has been getting worse, according to experts.

In addition, many small banks have not had assets to use as collateral to borrow capital on the inter-bank market, and have not had valuable papers to borrow capital in open-market operations (OMO).

This situation has forced banks to mobilise capital to ensure liquidity.

Also, enterprises have higher capital demand near the end of the year, which has pushed banks to mobilise more capital.

Experts said that the current bank violations of regulations were not new, and were difficult to control.

The central bank recently announced a draft decree that would impose new penalties for violations in monetary and banking activities. It is expected to effectively prevent bank violations.

Under the draft, banks that show signs of mobilising capital at interest rates higher than the regulated ones will be fined between VND500 million and VND1 billion.

Dr. Le Tham Duong of HCM City Banking University said the penalty was sufficient, but that other strict punishment measures should be used as well to ensure compliance.

Liberal casino rules sought to help tourism

Hoteliers from HCM City have raised concerns about the draft decree on casino management that the Finance Ministry submitted to the National Assembly Standing Committee on October 8.

The draft decree states that only foreigners and overseas Vietnamese holding foreign passports are allowed to enter the casinos.

Also, only five-star hotels would be allowed to open casinos, compared to current regulations, which allow four-star hotels in HCM City and three-star hotels in other cities to have casinos.

Current regulations allow 75 machines for each four-star hotel and 100 machines for each five-star hotel.

According to the HCM City's Department of Culture, Sports and Tourism, more than 10 hotels in HCM City have licences to operate casinos, including the four-star hotels Duxton and De Nhat and the five-star Rex, Majestic, Caravelle, Sheraton Sai Gon Hotel&Towers, Equatorial and Movenpick.

Tao Van Nghe, general director of the Rex Hotel, told Thoi Bao Kinh Te Sai Gon (Sai Gon Economic Times), that the five-star standard was determined according to service quality, not the number of rooms. "Thus, there are many five-star hotels with fewer rooms than lower-grade hotels."

Dang Huy Hai, deputy general director of the 533-room New World Hotel, said the Government should allow four-star hotels to carry on with their casino service, saying there was no major difference in service quality between these two kinds of hotels.

He said authorities should take a more liberal view of casino services and consider it a way to attract tourists.

Tourism and trade centres with international air gateways like HCM City should build a casino-tourism-entertainment complex to lure visitors, stimulating tourism development, he added.

Under the proposed decree, the Finance Ministry said that investors must have at least US$4 billion worth of capital and 10 years of experience in tourism management to be allowed to open casinos in Viet Nam.

Also, investors would receive an operation licence when they complete construction on a tourism, service and entertainment complex where the casino is located.

They are also required to have brand-new machines with adequate origins and technical certificates at their venues.

As for whether Viet Nam should be more open to casinos, many experts support the idea but warn that administrative authorities should be cautious.

Dr Le Dang Doanh, a renowned economist from Ha Noi, advised the Government of Viet Nam to ensure that casino operations remain under the authorities' close scrutiny.

Casinos are complicated businesses, even though they bring in huge profits. Even developed Singapore has failed to adequately prevent the negative societal effects of gambling, said Doanh.

He asked authorities to learn from the lessons gained at Do Son Casino in the northern city of Hai Phong, where local gamblers have offered bribes so they could play. However, many have ended up losing all of their property.

Doanh added that the casinos should only be located on islands such as Phu Quoc in southern Kien Giang Province and Van Don in northern Quang Ninh Province.

"It's not an appropriate move to put a casino near cultural and political centres, or in areas with high population density," he said.

Meanwhile, Professor Nguyen Mai, the former deputy chairman of the State Committee for Cooperation and Investment, who supports casino operations in Viet Nam, said the country should limit the number of casinos.

Travel firms turn their back on traditional fests

Local travel agencies are not warming to the idea proposed by the National Administration for Tourism and the Hai Phong authority for next year's Song Hong (Red River) Delta – Hai Phong National Tourism Year 2013.

According to VNAT's general director Nguyen Van Tuan, some 30 festivals would be organised within the framework of National Tourism Year 2013 which would take place in Hai Phong and 12 other provinces and cities. But the news about the event, which aims to attract Vietnamese and foreign travellers, has not attracted much attention from tour operators.

The organisers have designed many traditional festivals for the national programme. However, travel agencies want to see attractive tourist products and an improvement in tourism infrastructure rather than costly traditional festivals.

Nguyen Van My, director of the HCM City-based Lua Viet Travel Agency, said tour operators were not interested in traditional festivals.

My explained that when a traditional festival was organised in a locality, the service fees tend to soar in the city, making it difficult for travel agencies to book hotel rooms for tourists.

"Why don't we turn the Bach Dang River area, where there are iron stakes used to fight against Chinese invaders, into an excursion site? Why do we have to place the historical stakes in museums?" My was quoted as saying in Sai Gon Tiep Thi (Sai Gon Marketing) newspaper.

Travel firms also said the national tourism year campaigns were not taken seriously because there were no original tourism products, and tourism sites had not been improved. In addition, there has been little improvement in infrastructure over the last eight campaigns.

Meanwhile, VNAT has not been able to assess the efficiency of the national tourism year campaigns in relation to investment costs.

Rice shortage looming

Chinese traders' purchases of large volumes of rice over the last several months could lead to shortages facing northern provinces, according to the Viet Nam Food Association (VFA).

To ensure food security for the region during this period, VFA has asked the Northern Food Corp (Vinafood 1) to draw up an inventory of the volume of rice in stock from its subsidiaries, according to the VFA chairman, Truong Thanh Phong, who spoke at a meeting held recently to review rice exports for the first nine months of the year.

Phong asked VFA members not to hastily sign contracts for export of large volumes of rice and urged them to keep a close eye on rice trade through the border with Cambodia and China.

Phong said he was concerned that "statistics on unplanned exports of Vietnamese rice to Cambodia and imports of Cambodian paddy to Viet Nam were unavailable."

Experts estimate that 500,000 tonnes of paddy have been sold fromViet Nam to Thailand via Cambodia through unplanned border trade this year, without quotas and contracts signed in advance.

Nguyen Van Tien, general director of the An Giang Import-Export Co. (Angimex), said that in August alone, more than 400,000 tonnes of Vietnamese rice had been transported to Cambodia for export to Thailand via the southwestern provinces that share a border with Cambodia.

At the My Thoi Port in An Giang Province, 570,000 tonnes of rice were shipped in August.

Only 100,000 tonnes of this amount were slated for buyers who had already signed quotas with Vietnamese firms.

Despite large volumes of rice sold to Cambodia and China in unplanned trade, VFA said that rice exports in 2012 would exceed last year's figures.

VFA members have large volumes of rice in reserve, so they can meet all the signed export quotas and ensure national food security while waiting for next year's rice crops, according to Phong.

The VFA said that paddy/rice prices had risen again in the Cuu Long (Mekong) Delta after rainy days in the last two weeks.

On Monday afternoon, traders in the provinces of Dong Thap, An Giang and Vinh Long purchased dried normal paddy for VND5,800 per kilo and fragrant paddy for VND6,500 to VND6,600 per kilo.

Traders from Dong Thap, Tien Giang and Can Tho also bought unpolished rice to be processed into 5 per cent broken rice for VND7,900 per kilo and 15 per cent broken rice for VND7,700 per kilo.

Early this month, paddy prices in the Cuu Long (Mekong) Delta dropped from VND4,900 – 5,000 per kilo from mid-September to VND3,600-4,400 per kilo, because the rainy weather had affected rice quality, Phong said.

Businesses earmark $314 million to stock up for Tet

HCM City businesses have earmarked more than VND6.6 trillion (US$314.4 million) to stock up for Tet (Lunar New Year) in early February, the Department of Industry and Trade has said.

This was nearly VND1.3 trillion (61.9 million) higher than last year.

It included around VND3.5 trillion for goods to be sold under the city's annual price-stabilisation programme, or more than 20 per cent higher than last year.

Though there are four months to go for the Lunar New Year, businesses have been exhorted to ensure stable supply during the festive season, Nguyen Thi Hong, deputy chairwoman of the city People's Committee, said.

The administration has told them to strengthen their direct retail channels, eliminating intermediaries, to prevent prices from rising.

According to the department, despite the continuing economic slowdown and low demand, businesses are committed to ensuring sufficient supply during Tet.

Many companies plan to achieve double the supply target set by the city for the New Year. These include products that make up more than 50 per cent of market demand – like cooking oil, sugar, poultry meat and eggs, and processed foods.

The city has an extensive distribution network, but the important thing is to create a close link between businesses and customers, Hong said.

Distribution of goods was a major focus this year, she said. To do that, the city has sought close co-ordination among relevant departments, sectors, districts and market management boards.

She called on relevant agencies to continue to monitor the market and step in when needed to ensure stable supply as well as prices.

Construction company uses SAP solutions

The Licogi 16 Joint-Stock Company is successfully been using the SAP Enterprise Resource Planning solutions after seven months of installation.

This SAP solution, designed for engineering, construction and operations, is used by more than 1,000 enterprises worldwide.

"The solution helps our company to save expenditures and take advantage of all of our available resources," Vu Cong Hung, general director of Licogi 16, said at a launch ceremony held in HCM City last Thursday.

The SAP solution allows enterprises manage all income, expenditures, storage level, debt, production processes and financial risks of all their member companies as well as suppliers, subcontractors and clients.

The provider of the SAP solution, the FPT Information System, has provided Licogi 16 with management controls for accounting and finance; governance accounting; integrated accounting; goods and storage management; real estate leasing and selling management; report systems; and project management.

New projects worth $79.4m registered

The southern province of Ben Tre has licensed eight new foreign-invested projects capitalised at US$79.4 million during the January-September period, doubling the figure from the same period last year.

The province has also allowed three existing projects to raise their capital by approximately $10 million.

As of September, the province is home to 41 foreign-invested projects worth a combined $309 million.

Cleantech shrugs off bleak outlook

Business leaders in the cleantech sector remain very positive about their growth prospects over the next 12 months, according to a study carried out by the Grant Thornton International Business Report (IBR).

The global survey found the sector expanding rapidly despite pervading economic uncertainties like the eurozone crisis.

The Vietnamese cleantech industry is expected to continue to grow partly because of Power Master Plan VII, which calls for an increased focus on clean technology for power production with technical assistance from the Viet Nam Energy and Environment Partnership (Denmark), and potential technology transfer programmes with Japan.

To date, Viet Nam has received significant support from international partners in implementing cleantech programmes, projects and initiatives.

The IBR survey indicates that 68 per cent of cleantech businesses expect to increase revenues over the next 12 months compared with 52 per cent of businesses globally.

Similarly, 62 per cent expect profits to rise compared with just 38 per cent locally. Cleantech leaders also appear to be investing in the long-term growth of their businesses: 52 per cent expect to increase R&D spending over the next 12 months and 51 per cent plan to invest more in plant and machinery, both well above global averages.

Their optimism is borne out by the growth rates experienced in the sector over recent years.

According to a recent report by the World Wide Fund for Nature (WWF), the sector globally expanded by 31 per cent each year in 2009 and 2010. Although it slowed to 10 per cent in 2011, this is still well above average GDP growth rates.

The major constraint on expansion for cleantech businesses is red tape, cited by 41 per cent of businesses, compared to the all-sector average of 34 per cent.

A lack of skilled workers is cited as a growth constraint by a further 38 per cent of businesses in the sector, ten percentage points up on the all-sector average.

The scarcity of talent perhaps explains why 79 per cent of businesses in the sector are offering workers a pay rise over the next 12 months, compared with just 68 per cent of all businesses.

Tom Prescott, Tax Consultant for Grant Thornton Viet Nam, said, "Eligible Vietnamese cleantech businesses may be able to access subsidies and tax incentives if they can successfully navigate the red tape.

"In addition, the cleantech industry may also passively benefit from the increased duties imposed on activities which fall under the remit of the Environmental Protection Tax, such as the use of plastic bags and potentially hazardous materials," he added.

"Cleantech is still a relatively young sector so it not surprising to see innovation outgrowing talent. However, with unemployment rates high, particularly in many mature markets, rapid growth in the sector clearly offers an opportunity for economies to boost employment and output," said Nathan Goode of Grant Thornton.

Cashew industry falls on hard times

Many companies in the cashew industry are facing losses and bankruptcy as they face stiff challenges caused by low prices and banking pressures, according to the Viet Nam Cashew Association.

Nguyen Duc Thanh, vice chairman of the association, said exact figures about cashew processors and exporters in deep trouble were not available, but "it must be 50-70 per cent."

"Prices has fallen sharply. In addition, inventory is high. Meanwhile, they need to get the money back to pay bank loans. So they are forced to accept losses," Thanh told Viet Nam News.

This year, banks were refusing to issue Letters of Credit (L/Cs) for cashew processors and exporters, making it difficult for the latter to do business, said another industry insider who did not want to be named.

The association has reported that the current price of raw cashew was just VND18,000 (US$0.85) per kilo, a year-on-year decline of 30 per cent on average during the first nine months.

Due to falling prices, export turnover has not significantly increased compared with last year as traders cannot afford to sell what they had purchased at higher prices earlier.

In the first nine months of this year, the country shipped 160,000 tonnes of cashew worth US$1.08 billion, according to the association.

The US, China and the Netherlands have remained the biggest markets for Vietnamese cashew.

The association forecast that cashew export would continue to decline in the final quarter of this year due to low supply.

"In the final quarter, there will be no supply. Companies have no raw material to process and export, so exports will fall by around 50 per cent for sure," Thanh said.

In the beginning of this year, the association had targeted an export turnover of $1.5 billion for 2012. It has since reduced the target to $1.2 billion, $200 million less than last year.

Demand from importers has been low, the association said. It said that most companies were unable to sign contracts with partners in the EU, the US and even China.

Meanwhile, cashew exporters are facing challenges caused by material shortages as local farmers have cut down cashew trees to plant another crops.

This means local firms have to import an estimated 400,000 tonnes of raw cashew instead of around 300,000 tonnes in previous years.

With many companies joining the industry, lured by the potential for high profits, proper management has been difficult to ensure stable quality and prices, the association said.