BUSINESS IN BRIEF 13/1

Blue chips and financial shares lead nationwide stock surge

Vietnamese stocks enjoyed an impressive increase last week, thanks to trading on blue chips and securities shares.

On the HCM City Stock Exchange, the VN-Index gained 2.7 per cent, compared to the previous Friday's close to 518.94 points. The average trading value was VND1.27 trillion (US$59.9 billion) per session on an average volume of 82.4 million shares, climbing some 25 per cent, compared to the preceding week's level.

Also, the HNX-Index on the Ha Noi Stock Exchange rallied 4.1 per cent to 70.76 points. Trading value and volume averaged VND466.7 billion ($22 million) and 54.6 million shares, jumping nearly 45 per cent over the previous week.

Last week, foreign investors favoured large-cap stocks and securities shares, with five of the most purchased stocks listed in Ha Noi coming from securities firms. The total net buying value on both bourses reached VND326 billion ($15.37 million). Since the beginning of 2014, their value exceeded VND386 billion ($18.2 million).

The market also received a boost from the Government's decree to increase foreign stakes in credit institutions from 15 to 20 per cent. Banking shares rose sharply following the news.

However, as liquidity had not shown dramatic changes, it was preferred to invest in shares with good basics, rather than those that were speculative, said Maritime Bank Securities Co's chief economist Le Duc Khanh.

Also, Vietcombank's analyst Tran Huu Phuc suggested investing a 70-80 percentage of portfolios into blue chips, especially Saigon Securities Inc (SSI), Refrigeration Electric Engineering (REE) and software producer FPT (FPT), which were those reaching their limits for foreign ownership, though expected to be lifted in the near future.

The market advanced almost the entire week, before stumbling on Friday. Unlike other analysts, Nguyen Huu Viet from International Royal Securities said, "If the slowdown continues in the next one or two trading days, I'll be more cautious, reducing the proportion of good basics stocks to 20-30 per cent and selling off speculative stocks."

Meanwhile, FPT Securities Co's analyst Le Thi Bich Hang was positive about the medium-term increase. "Short-term investors can choose among businesses reporting good performances during the last fiscal year," she added.

Of note, several companies have reported profits beyond their expectations, such as REE, gas trading company CNG Vietnam (CNG), property developer F.I.T (FIT) and steelmaker Hoa Sen (HSG). 

Gov’t to borrow VND100 trillion through bond sales

The Government has plans to raise VND100 trillion through government bond sales in the domestic market this year, according to a report announced by the Ministry of Finance.

The ministry fulfilled last year’s G-bond issue target, raising over VND181 trillion. The sum made a great contribution to the State budget balance.

The ministry continues to consider bond issues as the main capital mobilization channel for the Government, the report said.

In addition, although macro economic and financial uncertainties remain, the stock market saw strong growth in 2013. Trading value jumped over 30% against 2012 while bond trading value has posted up the highest growth rate in Asia.

The VN-Index advanced by 22%. Market capitalization reached 31% of gross domestic product (GDP) while foreign portfolio investment value rose by around US$3.5 billion from late 2012.

According to State management agencies, the positive growth will facilitate development of the equity market in the following years, support capital mobilization and equitization of State-owned enterprises.

The nation’s public debt is estimated at 56.2% of GDP at the end of this year, government debt at 42.6% of GDP and overseas debt at 39.5% of GDP. The figures are still within the safety zone and do not cause huge impacts on the macro economy, the report said.

Da Lat offers finance for flower growers

Flower cultivation in the Central Highland province of Lam Dong will see a growth spurt as flower growers will be offered preferential loans.

Flower growing enterprises and households will soon be prioritised for preferential loans to help them implement technological innovations and develop businesses.

The provincial People's Committee is collaborating with banks to launch a preferential package worth VND4 trillion (US$190.5 million) for flower growers in the region to promote the application of advanced technologies, said Pham S, vice chairman of the committee.

He said that the province plans to provide a boost to flower growing, with a special focus on selling flowers in pots instead of selling stems and flowering branches.

This is due to the fact that the demand for potted flowering plants is on the rise in both domestic and foreign markets.

At present, the province has 7,100ha of flower farms, mostly in Da Lat City and the districts of Duc Trong, Lac Duong and Don Duong.

Last year, the region produced about 2.1 billion flowering branches, of which 220 million were exported. The major flower importing markets include Japan, Australia, Taiwan, Singapore, Thailand and Malaysia.

Each hectare of flowering fields in the province helped generate VND122.2 million ($5,800) last year, which is 2.5 times higher than average revenues of the entire country.

Further statistics show that there are flower fields of 38,000ha that generate revenues of VND100 million – 250 million ($4,700 -$12,000) per hectare per year, about 15,250ha with a revenue of VND250 million – 500 million ($12,000 -$24,000) and over 10,000ha with a revenue of VND500 million – VND1 billion ($48,000).

Vice chairman Pham S said that growing high quality flowers has been the strength of the province for decades due to many reasons, such as its ideal climate, the expansion of flower growing areas and the improved cultivating and processing technologies.

However, there are a few challenges that still need to be dealt with, such as the lack of market information, technology and the limited capacity of local enterprises.

It is for these reasons that financial assistance was a basic need, he added. This would help flower growers promote scientific and technological applications in the business. A similar model when applied to coffee production proved effective.

The province was also urged to improve linkage with neighbouring localities, in terms of human resource training, technology transfer and market expansion, because the coastal southern central region and Mekong Delta region, including HCM City, are major markets and transportation hubs.

Agriculture expert Duong Ngoc Thi from the Institute of Policy and Strategy for Agriculture and Rural Development said that flowers growers needed aid to be able to access preferential loans for hi-tech farming.

He suggested that the province outline a long-term strategy for flower and vegetable cultivation, which would provide growers the ability to forecast market demand and human resources and to use planning and facilities for processing, production and trade.

Plant tissue culture zone comes into operation in HCMC

The Ho Chi Minh City Biotechnology Centre (HBTC) launched a dedicated zone for plant tissue culture in District 12 on January 4.

It is expected to be a centre for scientists to conduct research and apply biotechnology into the plantation of vegetables, flower, ornamental and medicinal plants.

In addition, it will be used as a place to store the genomes of selected plants and created new plants with desired traits.

The plant tissue culture zone of the HBTC is billed as the most modern research laboratory on plants in the southern region.

It includes greenhouses and net houses equipped with computer-controlled irrigation and cooling systems, said HBTC Director Duong Hoa Xo.

Other facilities of the HBTC is scheduled for completion by the end of 2015.

HSBC forecasts bright year for Vietnamese exports

The future is looking bright for export-oriented businesses, according to a forecast by economists at the Hong Kong and Shanghai Banking Corporation (HSBC).

In their latest report, the HSBC said the reason is simple: Vietnam’s economy is export-dependent, with overseas shipment of goods comprising 81% of GDP in 2012.

Despite a faltering global demand in 2013 and declining commodity prices, exports managed a respectable expansion of 15.4% principally due to to a rebound in the garment and textile sectors as well as an increase in foreign investment in the electronics sector, it said.

The report showed that Vietnam’s disbursed FDI went up 9.9% and its pledged FDI also saw a sharp increase, which provides an impetus for further accelerating exports in 2014.

According to HSBC, Vietnam had a US$900-million trade surplus in 2013, following only a marginal surplus in 2012. While this helped improve the country’s macro stability, it also exposes the weakness in Vietnam’s domestic demand.

Export businesses, especially foreign-invested manufacturing firms, will provide a much needed boost to Vietnam’s growth. The HSBC December PMI shows an acceleration of output for the manufacturing sector, which rose to 51.8, the highest level since April 2011.

HSBC forecasts Vietnam’s output will continue to trend upwards in the coming months as inventories have stayed low while orders are picking up.

The increase of new orders, coupled with reduced inventories, means that output will likely rise in the coming months to match the demand for goods. The sharp increase of quantity of purchases reflects anticipation of rising demand.

Inflation trended downwards to an average 6.6% year-on-year in 2013 from 9.3% in 2012 and is likely to accelerate slightly in 2014 due to higher energy and food prices, the report noted.

With US and EU GDP expected to expand in 2014, the most likely scenario is that the demand for Vietnamese goods will increase, especially for such goods as apparel and electronics and the manufacturing sector to continue its upward trend.

The most positive news from the PMI is the sharp rise of the employment sub-index which reflects the country’s competitiveness in labour-intensive manufacturing accounting for high inflows of foreign investment in 2013.

Dong Nai targets US$12 bil from exports

Southern Dong Nai province has set a target to increase exports by 9-10% over last year and earn a total of US$11.8-11.9 billion this year.

To fulfill the target, the provincial Industry and Trade Department has developed an action plan focusing on tasks and solutions to assist enterprises clear bad debts and expand markets.

Department Director Le Van Danh said that his agency has improved the quality of information related to its market forecast and has updated policies on import-export  

activities and is providing businesses with better and more comprehensive information pertaining to the Free Trade Agreements (FTA) negotiations between Vietnam and other nations.

In the future, the department plans toorganise a delegation of businesses aimed at penetrating such markets as Cambodia, Germany, Dubai, Ukraine, Russia, Myanmar, the US, ASEAN, India and China.

Last year, Dong Nai raked in over US$10.8 billion from exports, up 9.4% compared to the previous year.

The highest export earnings came from the US (US$3.1 billion), followed by Japan (nearly US$1.2 billion) and China (more than US$1 billion).

Vietnamese and Thai local firms discuss cooperation opportunities

More than 50 business representatives from the central province of Ha Tinh and Thailand’s Nakhon Phanom province met in Ha Tinh city on January 5 to seek cooperation opportunities.

Their discussion was focused on industry, agriculture, science and technology, aqualcultre and seafood processing, health care, education and tourism.

Representatives from the Thai companies said they hope Vietnamese partners will offer the best possible conditions for their investment in the Vung Ang and Cau Treo economic zones while Ha Tinh businesses said they also have the same desire to run investment in Thailand.

The two provinces proposed mechanisms and policies to their authorities with a view to promoting investment and economic and trade links between Vietnam and Thailand.

Ninh Thuan nuclear project requires comprehensive implementation

Deputy Prime Minister Hoang Trung Hai has asked relevant agencies and ministries to take every effort to ensure the progress and efficiency of the Ninh Thuan Nuclear Power Plant project.

He made the request while chairing a meeting of the National Steering Committee for Ninh Thuan Nuclear Power Plant on January 2 held to supervise and direct the implementation of the Vietnam's first nuclear power plant.

At the meeting, Vietnam Electricity (EVN) reported on the implementation of the project components invested in by EVN, including the file approving the project location, the investment report, comparisons between technological designs of Ninh Thuan 1 Nuclear Power Plant. Issues related to feasibility studies and consultation on the The Ninh  

Thuan 2 Nuclear Power Plant project were also discussed at the meeting.

Other agencies involved in the project made reports on infrastructure projects, human resource training and residential migration and resettlement, among other necessary steps to serve the nuclear power project.

The Deputy PM asked the Ministry of Industry and Trade to review the overall progress of the project to map the progress of specific tasks to allow component items to be carried out properly as planned, particularly those related to technology and operational training issues.

In addition, he directed the Ministry of Science and Technology to implement the dossier on the plant's location, assess the environmental impacts and building up legal documents and mechanisms for the project.

Stock market offers rich opportunities

With a gradual improvement in the economy, many experts believe that the stock market could be the most attractive investment channel in the new year.

Based on the economy’s results this year in conjunction with the predicted effects of the government’s policies next year, experts believe that the real estate market will not necessarily experience an easy recovery and the gold and foreign currency markets are likely to remain tightly controlled.

Financial expert Nguyen Tri Hieu was upbeat about the stock market’s prospects. “In a positive scenario, the VN-Index will increase by at least 30 per cent compared with the end of 2013, equal to 600-650 points in 2014,” he said.

The attractiveness of the stock market is said to be result of positive macroeconomic developments.

According to economist Vu Dinh Anh, a low consumer price index (CPI) has helped create the conditions to stabilise the macro economy and implement solutions to enhance gross domestic product (GDP) growth in 2014. Anh claimed the GDP growth of 5.8 per cent and the CPI target of 7 per cent next year were quite achievable. These indicators were sufficient grounds for optimism about the stock market, he claimed.

The more healthy economy would also help listed companies recover. Tran Van Dung, chairman and general director of Hanoi Stock Exchange (HNX) said inventories among listed firm were decreasing, their losses were smaller and profits higher. In the coming time, as the economy recovered more, listed enterprises would post brighter profit forecasts.

“These will be the basic factors that will help the stock market in 2014, thereby offering more attractive investment opportunities to investors,” said Dung.

Tran Quang Vinh, investment director of Thien Viet Securities Company said the stock market was recovering well with improved liquidity and was receiving greater interest from foreign investors.

An additional factor that could point to a resurgence of the stock market next year included the potential lifting of the 60 per cent cap for foreign share ownership for listed companies, which was mentioned in the draft decision submitted to the prime minister by the State Securities Commission last November.

“In addition, the positive progress in negotiating the Trans Pacific Partnership (TPP) might generate sharp changes in the stock market in 2014,” said Tran Minh Hoang from Vietcombank Securities Company.

Grounds for optimism as market thaws

The residential for sale market is ending the year with signs of recovery.

The Ho Chi Minh City residential market segment seems to be showing signs of a cautious revival. Buyer interest has increased off the back of cheaper credit and valuations almost falling to cost price, bolstered by a rash of incentive programmes.

According to figures from CBRE, prices over the wider apartment for sale market fell some 30 per cent compared to their peak in 2007, and prices and have now reached levels deemed to be what the market feels is affordable.

Well located good quality developments are registering higher sales. Those include the Estella, Vista, Sunrise City and Nam Long’s E-home projects.

The catalyst appears to be discounts and extended payment terms that allow buyers to make payments over three to five years and furniture packages. Higher sales in these projects have been consistently reported since early this year, and this trend is expected to continue into next year.

Meanwhile, the Hanoi residential market after a year of remarkable price cuts has seen developers promote bare-shell products.

Popular developments have included Mulberry Lane and Mandarin Garden. A series of low-end projects with thousands of small sized units at affordable prices have also seen a peak in sales, including Golden Silk, Tan Tay Do and Sails Tower.

Dang Ngoc Chau, senior manager for residential project marketing at CBRE, said after the stagnation of recent years, the residential market in Ho Chi Minh has turned into a property buffet party for residential purchasers.

“The weak market has spurred a range of incentive programmes that have sparked some interest. Hanoi developers have offered early hand-over arrangements and improved project utilities and offered reduced or free management fees. Vingroup’s Royal City and Time City projects offered buyers a 10-year exclusion on management fees which helped stimulate buyer interest. Hanoi buyers are still however adapting a wait and see approach,” said Chau from CBRE.

In Hanoi, recent months have reflected a remarkable increase in residential selling, especially for mid and low-end housing

A range of projects have been opened for sale in the market, such as Tan Tay Do, Van Phu, Sky Garden, Golden West, Discovery Complex and many others.

According to experts, the key factor remained price. Developers who understood that demand for mid and low-end residential remained very high and were focusing on developing projects for this market segment would do well.

According to Trinh Dinh Dung, Minister of Construction, property inventories compared to the same period of last year had fallen.

Figures from Ministry of Construction revealed that unsold residential developments had remarkably reduced in the closing months of 2013.

Despite the end of the year prediction that VND96,800 billion of property would still remain in stock, this figure was 25 per cent lower that in the first quarter of the year.

However Dung added that positive signs could be seen in the low-end and social housing projects. Transactions in this segment had doubled compared to the first two quarters of the year.

Buy-to-let offers ideal investments

Buy-to-let property has been highlighted as a possible bright point in an otherwise gloomy property market.

According to Truong An Duong, head of the Ho Chi Minh City research department from Savills Vietnam, at the peak of the residential market several years ago, individual investors and speculators tended to focus on capital gain potential when evaluating an asset.

“However, this investment psychology has changed drastically. Besides the capital gain aspect, investors now also pay attention the property’s ability to bring in a stable flow of revenue,” Duong said.

The instability of gold or stock markets has also encouraged individual investors to lean towards the buy-to-let option.

He said in some of the projects Savills was selling there were an increasing number of apartments that have been bought and leased out.

Savills’ study shows that the current gross yields from buying and leasing apartments have reached 4 to 6 per cent per year.

Due to the interest rate ceiling being continuously adjusted downward since last year, this yield rate is quite attractive to investors, especially those who have favoured real estate as an investment channel.

For buy-to-let investors, having a stable source of tenants remains critical when reaching a purchase decision.

Some developers have offered numerous programmes to support purchasers of buy-to-let apartments, such as guarantees of leasing revenue during the first year, or aid in searching for tenants without commission fees.

Some developers offer buyers flexible payment schedules such as partial payment upon handover, with the remainder being paid during the next two to three years with little or no interest.

Reasonable prices are another reason that the buy-to-let option has attracted investors.

Buy-to-let apartments on mid to high-end developments are preferred by most foreigners who currently work and reside in the cities.

Besides expatriates who reside in serviced apartments or villas, foreigners with a more limited housing budget opt to rent buy-to-let apartments.

The rent for buy-to-let units is normally 20 to 30 per cent lower than serviced apartments in the same location and development.

Foreign Direct Investment (FDI) inflows to Vietnam have recovered, which is also a positive indicator that demand for mid to high-end apartments may increase.

Ho Chi Minh City’s districts 1 and 3, the eastern area around District 2 and Binh Thanh and the south around District 7 and Phu My Hung New Urban Area are some of the most popular areas.

Foreign tenants often prefer Grade A or Grade B apartments.

There are a range of housing for lease in Hanoi, from high-end apartments (100 to 150 square metres) leased at VND18 to 30 million per month per unit, mid-end apartments from VND12 to 18 million per unit per month, and low-quality houses at VND1.5 to 2 million per unit per month.

Rice prices inch up in Mekong delta

The Vietnam Food Association said that in December, enterprises have exported over 303 tons of rice, worth US$153.5 million. The whole year export is 6.5 million tons of rice achieving US$2.9 billion.

By the afternoon of December 30, traders in Dong Thap and Kien Giang provinces in the Mekong delta proposed to pay VND5,100-5,300 a kilogram for fresh normal rice; VND5,400-5,400 a kilogram for fresh long grain type and VND 6,200 a kilogram for aromatic long-grain rice.

While 5-percent broken rice was quoted at VND8, 300-8,400 per kilogram, 15 percent broken rice is at VND7, 950-8,050 a kilogram and 25 percent broken rice at VND7, 750-7,850 a kilogram.

It means that rice in the Mekong delta is being sold at high price. With this price, farmers will realize a considerable profit from VND20-35 million per hectare.

Soc Trang sustains strong economic growth

The Mekong Delta province of Soc Trang is poised to achieve impressive socio-economic growth in 2013, at around 9.78%, well above the 8.14% recorded last year. Its per capita gross domestic product reaches an estimated VND30 million. The province’s agriculture, manufacturing and investment also post encouraging results.

So far this year, the province has granted licenses for 11 projects with combined capital of nearly VND592 billion (US$28 million). The provincial leaders have also met 28 delegates who want to explore opportunities for investment in Soc Trang. On December 11, a mission from the Japan External Trade Organization (JETRO) HCMC, led by Kenji Omi, paid a visit to Soc Trang to learn about the province’s investment environment, especially in industrial parks and complexes, services and tourism. On the same day, the province’s vice chairman Le Thanh Tri met representatives of the Netherlands’ Royal Haskoning DHV and Vietnam Ocean Shipping Joint Stock Co. to discuss the possibility of seaport investment in Tran De District.

On November 25, at the Mekong Delta Economic Corporation Forum held in Vinh Long Province, Soc Trang’s leaders met the Indian consul general in HCMC, Deepak Mittal, to talk about cooperation in trade, investment, culture, education and human resources.

In June, Korean Daelim Industrial Co. and East-West Korea Power Co. signed a memorandum of understanding with Soc Trang Province on investment in a coal-fired power plant worth US$3.6 billion in Long Phu District.

In the agricultural sector, the province has harvested 2.2 million tons of rice this year, mainly thanks to the large-scale paddy fields covering 24,688 hectares that help increase productivity by 5-7% and decrease production cost by 12% compared to the fields that use traditional cultivation methods. The level of mechanization in rice harvest has now risen to 80% from the 25% in 2010, with 650 combine harvesters sponsored by the province. This helps improve rice quality and profit for farmers, and cut costs. The fishery sector also fares well, whose farming area covers 68,750ha, of which 15,686ha is for rearing white-legged shrimp, up 6.7% and 3.5 times respectively, against 2012. The total fishery production in 2013 is estimated at 197,000 tons, up 8.83% from last year.

Manufacturing and export have also recovered. A majority of main exports are on the rise, raising total industrial production value to VND8,090 billion. Production of baked bricks is up by 25.64%, followed by rice with 24.65%, frozen fish paste with 3.5%, sugar with 2.39% and frozen shrimp with 0.03%. Furthermore, the province has earned US$480.9 million in export revenue, up 11.63% against 2012, of which seafood contributes US$450.5 million, up 26.21%.

Goods supply and demand are stable while inflation is controlled. Total retail sales have reached VND37,000 billion, up 17% against 2012. The consumer price index is estimated to be lower than 6%.

In banking, this year’s total deposits are estimated to reach VND13,645 billion, up 15% compared to 2012. Loan interests continue the downward trend, at 9% per year in agriculture and export (down 2.9%), 11.5% per year in manufacturing (down 3.1%) and 13.8% in the smokeless industry (down 2.2%).

Soc Trang has collected VND1,702 billion for the provincial budget, of which VND30 billion is from import and export. The province also expects to disburse almost VND1,790 billion, including official development assistance (ODA) capital, to carry out 87 projects, 42 of them to be completed within this year.

Cultural and social issues have also witnessed improvement. Social welfare is properly conducted and the poverty reduction target is attainable. Most of those who had great contributions to the country have earned medium incomes. The settlement of lawsuits and complaints of residents and the fight against corruption have been implemented effectively.

Only 30% of real estate firms expected to survive through next year

Only 20-30% of Vietnamese real estate firms are forecast to survive through the next year, said Vice Chairman of HCM City Real Estate Association Nguyen Van Duc.

Only 30% of real estate firms expected to survive through next year

Duc, who also serves as Deputy Director of Dat Lanh Real Estate Company, said “A range of idle property projects give proof of the sluggish real estate market, forcing many companies to sell them to other firms."

He added that solutions to save the market should have been made in 2011, and that now it is too late to improve the situation and the solutions presented this year will be ineffective.

“This year's VND30 trillion (USD1.42 billion) package from the government to save the property market has also failed to significantly change the situation. To date, only 2% of this package has just been disbursed,” Duc said.

He added that the Ministry of Construction has failed to accurately assess the market as well as cumbersome and complicated procedures facing companies in turning social housing projects into commercial housing projects.

Despite the package, people have been facing administrative procedures and other difficulties in getting loans through banks. They must provide proof of their assets, the value of their homes and income, among other requirements.

The Ministry has issued a circular to instruct the areas which are being converted from large apartments into small ones, but the procedures last between three and six months.

This year, for example, there has not been any social housing project in HCM City to come into operation. The period between approval of a project and its coming into operation remains a long one.

According to Mr. Duc, not only the prices of homes and land, but also prices of petrol, motorbikes and food play a factor. He added that tt is important to raise  incomes as well as reduce property prices.

When undertaking estate projects, investors pay for building materials and other costs upfront, but in a fluctuating market it has been difficult for them to ascertain the worth of these projects in when finished, especially considering fluctuations in interest rates.

Textile exports forecast to grow

The Viet Nam Textile and Apparel Association (VITAS) expects the export value of the textile and apparel industry to show strong growth this year, an official of the association said.

Le Tien Truong, VITAS' deputy chairman, told online news ven.vn that according to the global economic forecasts by the World Bank and the International Monetary Fund, the world economy's outlook is expected to improve in 2014, as large economies, such as the US, the EU, Japan and South Korea, have seen recovery.

An improving global economy will be favourable for Viet Nam, in general, and the local textile and garment industry, in particular, because the county will be able to boost its level of exports to the international markets, he said.

Therefore, the exports of textile and apparel by value could rise 12 per cent in 2014 from the previous year, he added.

To reach that target, the export industry will have to continue implementing its solution systems, which have ensured, thus far, that the industry has not remained backward, Truong noted.

Hence, the industry focuses on quality, price, the speed of supplying products to the market and the ability to provide customer care services, which are likely to ensure the nation's exports retain their competitive edge.

Truong said 2013 was a successful year for Viet Nam's textile and garment industry as exports rose to US$20 billion.

That represents a year-on-year increase of 18.6 per cent to $17.9 billion for textile and garment exports and a 15.7 per cent surge to $2.1 billion for fibre products.

The Viet Nam Textile and Garment Group had reported a gain of 11.2 per cent from 2012's figure to $2.91 billion in 2013.

The industry boasted a trade surplus of $5.12 billion last year, with imports of raw materials estimated at $14.88 billion. Local demand for textiles and apparel also increased 12 per cent, he added.

Truong noted that an accurate market forecast is important for the success of the industry as it provides a framework for enterprises to base their production and business plans.

Garment exports went up 13 per cent to the US and Japan each, while they expanded 30 per cent to $1.3 billion to South Korea.

The industry also has a strong potential to export products to the EU market. Every year, the EU spend around $250 billion to import the staple, while Viet Nam's exports to the EU were estimated at about $2.4-$2.5 billion last year.

That means Viet Nam has a small market share in the EU, and the EU will, therefore, continue being an important destination for Viet Nam's textile and garment exports in the future. Additionally, garment and textile exporters are paying increasing attention to two other large markets, India and the Middle East, Truong said.

Ministry to stabilise energy prices

The prices of petrol and gas will continue to be partly market-driven and partly managed by the State in 2014.

The management of petrol and oil prices would include monitoring price movements in the global energy market.

However, to ensure stability of local energy prices, the State, especially the Ministry of Finance and the Ministry of Industry and Trade, will continue to manage the prices of petrol and oil with the help of the price stabilisation fund and subsidies.

In 2013, the local prices of petrol and gas were relatively stable because of the use of the price stabilisation fund and subsidies, even though prices in the international petrol and gas market were volatile, according to the Ministry of Finance.

Last year, there were 11 adjustments in local petrol and gas prices, including six downward adjustments that lowered the price by a total of VND2,160 per litre, and upward adjustments that increased the price by a total of VND3,200 per litre. Overall, the prices of petrol and gas surged 4.48 per cent from their levels in 2012.

The price adjustments were in compliance with the market regulations issued by the Ministry of Finance and the Ministry of Industry and trade.

The most recent adjustment in energy prices took place on December 18: the price of A95 petrol rose VND580 per litre to VND24,710, while the price of A92 petrol was raised to VND24,210. The price of diesel was increased by VND650 per litre to VND22,960, while the kerosene price was hiked by VND380 per litre to VND22,400.

Several companies and households are worried about another hike in energy prices before the Tet festival because that will lead to hikes in the prices of goods and services.

Nguyen Van Thanh, chairman of the Viet Nam Automobile Transport Association, told the Viet Nam News Agency that several transport companies are planning to increase transport fees, adding that this could have an impact on ordinary consumers, as the Tet festival approaches.

The Ministry of Finance acknowledged that an increase in prices is likely due to a surge in petrol and oil prices in the global market. Without a price hike, domestic petrol dealers could face losses.

Finance Minister Dinh Tien Dung pointed out that every adjustment of petrol and oil prices in the domestic market is aimed at ensuring the stability of the economy and curbing inflation by preventing sudden or large increases in energy prices.

The ministry will consider the interests of ordinary consumers first, followed by the interests of companies and the State when it decides to hike energy prices again, according to Dung.

Nguyen Anh Tuan, head of the Price Management Department under the Ministry of Finance, said the prices of petrol and oil are managed under regulations contained in Decree 84/2009/ND-CP on trading petrol and oil.

The country imports 70 per cent for its demand of petrol and oil, so it is highly vulnerable to changes in global prices, Tuan added.

The two ministries do not decide specific prices for petrol dealers; only ceiling and floor prices are established.

The regulation aims to encourage enterprises to choose partners who can provide a reasonable trading system, which can reduce costs and offer appropriate selling prices to consumers.

Price policies to boost market transparency

Viet Nam's price administration and stabilisation policies, especially for essential goods, will keep following market mechanisms and the rules of balancing cross interests this year.

Economist Vu Dinh Anh said market prices in 2014 will see a certain impact from traditional price policies and a temporary decline in gross investment and consumption.

The relaxation of fiscal policies and the issuance of VND17 trillion (US$809 million) worth of investment bonds during 2011-15 will also affect prices on the ground.

The government's attempts to help enterprises overcome crises and accelerate economic growth will help to circulate the widespread flow of money more rapidly, and this will likely put some pressure on inflation.

Economists argue that any change in prices this year should depend on the administration of electricity, coal, fuel, healthcare services, and education.

Tran Van Hieu, deputy minister of finance, confirmed that essential items will be managed according to the market-oriented principles formed by the State's administration.

Experts called for a flexible approach to issuing, allocating and implementing policies with a provision for minimising the impact on the market. The State was also expected to apply anti-monopolistic measures to raise competitiveness.

Prices will be publicised to reinforce public scrutiny.

Prime Minister Nguyen Tan Dung instructed the Ministry of Finance (MoF) to improve price administration for goods, especially essential items, to curb speculation and unreasonable prices.

In an attempt to control and stabilise prices prior to and during Lunar New Year 2014 (Tet), MoF collaborated with the Ministry of Industry and Trade to investigate the prices and quality of commodities and essential goods that will be used during the festive season.

Nguyen Anh Tuan, head of the Price Administration Department, noted that the initial investigation showed that the market had a stable supply of goods, so there will not be much pressure on price administration.

Price administration in 2013 has been well appraised. MoF's Price Administration Department explained that the movements of prices last year were the same as those seen every year. The department's efforts helped keep the prices reasonable and stable.

Hue IPs aim for $141m in 2014

The central province of Thua Thien-Hue has set a target of earning about VND3 trillion (US$141 million) from its industrial parks (IPs) in 2014.

The province also hopes to achieve an industrial production value of about VND10 trillion ($470 million) this year.

Towards these goals, it will focus on completing four IP projects approved by the government: Chan May IP in Phu Loc District, Phu Bai IP in Huong Thuy town, Tu Ha IP in Huong Tra town and Phong Dien IP in Phong Dien District.

It will also allocate land lots to develop other IPs in the districts of Phu Vang, Phu Loc and Quang Dien, while establishing 16 small-scale industrial clusters in the province with a total area of about 650 hectares.

In 2013, the province granted investment certificates to nine new projects and allowed three others to increase their investment capital, with a total registered capital of almost VND1.9 trillion ($89.3 million).

The province's industrial parks have established 87 projects so far, with a total investment capital of VND17.7 trillion ($831.9 million).

SOEs named for ADB reform project

Three Vietnamese State-owned enterprises (SOEs) will be selected for the SoE Reform and Corporate Governance Facilitation Programme - Project 3, funded by the Asian Development Bank.

The loan will be guaranteed by the Government, according to the Ministry of Finance.

The programme runs from December 2009 to December 2015, with a total value of US$630 million: $600 million from Ordinary Capital Resources and $30 million from the Asian Development Fund.

Top carmaker delays on greener Euro 4 standards

Truong Hai Auto Corporation, the largest domestic automobile company in Vietnam, has obtained the Government’s permission to extend the timeline for its manufacturing of Euro 2- and Euro 3-standard engines. Vietnam Investment Review reports.

In an announcement sent to the company late last month, Deputy Prime Minister Hoang Trung Hai stated the Prime Minister had agreed “in-principle” to allow Chu Lai-Truong Hai engine plant “to manufacture and sell 100,000 diesel auto engines until the end of 2018”.

The permission followed a plea by the corporation and Quang Nam province People’s Committee to allow the automobile maker to continue manufacturing and selling the more polluting Euro 2 and Euro 3-standard engine models after January 1.

According to a Government decision issued back in 2011, all cars and motorbikes manufactured or imported in Vietnam would have to meet Euro 4 emission standards from January 1, 2017 instead of the current Euro 2 and 3 standards.

During the two-year extension, Truong Hai must prepare investment plans and upgrade production lines to manufacture higher standard engines.

Chu Lai-Truong Hai was the first auto engine factory in Vietnam, intended to increase the localisation rate for the automobile industry. The project, situated in Chu Lai Economic Zone, Quang Nam province, is worth 182 million USD.

According to Truong Hai, it has signed a technology transfer contract with the Republic of Korea’s Hyundai Motor Company to produce about 20,000 Euro 2 and Euro 3 emission standard engines annually.

Under the Government’s roadmap, Chu Lai-Truong Hai would have to stop manufacturing Euro 2- and Euro 3-standard engines in January 2017. The company had called for a revised timescale as the implementation of higher production standards would make it difficult to produce sufficient numbers of the current engine types within just three years.

Quang Nam People’s Committee pointed out that the technology upgrade for manufacturing Euro 4 engines in such a short time would be very costly, backing the manufacturer’s request to extend the timeline for manufacturing Euro 2 and Euro 3 engines.

Truong Hai previously obtained preferential incentives from the Government for the project when recognised as a key national engineering project.

This status allowed the company to take loans up to 85 percent of project’s total value from the Vietnam Development Bank with a preferential interest rate over 12 years. Truong Hai would also receive a government guarantee when borrowing capital from foreign credit providers. The company enjoys hugely discounted import and export taxes.

Vietnam’s automobile industry is beset by relatively scattered designs and low rates of domestication which remain at 7–10 percent for cars and 35-40 percent for trucks.

It has yet to meet the domestic consumer demand that has continued to increase over the past two decades. Its focus on assembly has prevented it from developing a complete manufacturing plant.

Bac Lieu salt receives geographical indication protection

The National Office of Intellectual Property under the Ministry of Science and Technology has recognised the protection of geographical indications for salt – a product of the Mekong Delta province of Bac Lieu.

According to Huynh Minh Hoang, director of the provincial Department of Science and Technology, the protection is granted to salt produced in areas of Vinh Thinh and Vinh Hau communes in Hoa Binh district, and Long Dien Dong, Long Dien Tay and Dien Hai communes in Dong Hai district, where the natural conditions are favourable for salt production.

Since the 18 th century, Bac Lieu solar salt has been famous for its high proportions of Natri Clorua, Magnesium, Calcium and a low ratio of sulphate, making it moreish.

Making salt is a traditional trade of people in Hoa Binh and Dong Hai districts of Bac Lieu. The product has been used widely in Vietnam and exported to some countries, mostly Japan.

The protection of geographical indications for Bac Lieu salt is expected to enhance the trademark of the product in both domestic and foreign markets.

Bac Lieu aims to develop spearhead economic sector in 2014

The Mekong delta province of Bac Lieu has set a target for 2014 to harvest 1 million tonnes of rice and 275,000 tonnes of aquatic products, which are components of its spearhead economic sector .

The province advocates maintaining the current rice cultivation area, taking proactive control of pandemics along with multiplying efficient production models including the large-scale field one.

Its agricultural sector is also about to help local farmers apply advanced technology in production to generate high-yield and low-cost produce.

In addition, the locality intends to better the collaboration of the sides involved in the large-scale field model and other collaborative models as well as help enterprises invest in places which are imbedded with high-quality materials for export.

In terms of aquatic cultivation, Bac Lieu will home in on developing offshore exploitation and breeding cages of aquatic varieties such as mudskipper and prawn under the VietGAP standards in hope to help locals diversify their income streams and contribute to mitigating environmental pollution.

In particular, the local agricultural sector encourages farmers to adopt high-tech and intensive prawn breeding models.

Despite difficulties facing local agriculture and aquaculture production last year, it still produced 990,500 tonnes of rice and 263,000 tonnes of aquatic products, more than double the yearly target.

Tien Giang supports farmers with high-yield fruits

The Mekong Delta province of Tien Giang is undertaking a number of programmes to help local farmers improve the quality of their fruit varieties to raise their incomes.

The move is part of the Quality and Safety Enhancement of Agricultural Products and Biogas Development (QSEAP) project funded by the Asian Development Bank (ADB) during the 2010-2015 period.

Last year, Tien Giang province spent over 5.8 billion VND (272,600 USD) helping farmers plant more than 5.5 million Queen pineapples and nearly 17,000 dragon fruits that are productive and of high quality.

The locality boasts an area of over 70,000 hectares for fruit cultivation, the largest orchard acreage in the delta, producing nearly one million tonnes of various fruits, including special ones such as Hoa Loc mango, Tan Lap pineapple, Vinh Kim star apple, Ngu Hiep durian and Co Co grapefruit.-

Gemadept sold tower

HoSE-listed Gemadept Corporation has sold the 22-floor Gemadept Tower in Ho Chi Minh City, bringing in a hefty cash sum to be used for investment in logistics and port projects.

Gemadept concluded the deal in December with four subsidiaries of Korean CJ Group, according to a company release. The proceeds from the transaction was recorded in the 2013 income statement.

Instead of selling the asset directly, Gemadept founded the wholly-owned firm Marproco, using the tower as paid-in capital, then sold its interest in the newly-established concern.

However, Gemadept only sold 85 per cent of Marproco this year, with the remaining 15 per cent reserved for 2014.

Gemadept’s moves to sharply increase Marproco’s charter capital to VND936 billion ($44.3 million) from the previous VND6 billion ($284,158), has caused Vietcombank Securities (VCBS) to estimate the building’s value at VND930 billion ($44 million). As the asset has input costs of VND218.4 billion ($10.3 million), the deal has earned the company VND711.6 billion ($33.7 million).

The building earned Gemadept more than VND64 billion ($3 million) from office leasing in the first nine months of 2013, figures unchanged against the same period last year. Gemadept reported total sales of VND1.827 trillion ($86.53 million) and pre-tax profit of VND186.5 billion ($8.83 million) in the same period. With shareholder targets for whole year sales and pre-tax profit set at VND2.3 trillion ($108.93 million) and VND500 billion ($23.7 million) respectively, the company looks set to meet their expectations comfortably through the sale of the Gemadept Tower.

Gemadept will use the proceeds to invest in logistics and port projects, but specific details have not yet been released.

The firm now operates four ports in the country with two others under construction.

HCM City export processing, industrial zones draw US$576 million investment

According to the Ho Chi Minh City Export Processing and Industrial Zones Authority, total newly-registered and adjusted investment capital reached US$576.77 million by the end of December 2013, achieving 115.35 percent of the plan, up 40.09 percent compared to previous year.

Of which, foreign investment capital was at $358.55 million, up 72.7 percent over the previous year while local investment nearly touched VND4.58 trillion ($218.21 million), up 6.91 percent compared to that in 2012.

In 2013, 20 projects had to temporarily call halt to operations or stop operations, comprising of 13 foreign direct investment projects with total investment of $18.37 million and 7 local projects with total investment of VND122.8 billion.

32 other projects liquidated ahead of schedule due to ineffectiveness with five FDI projects with total investment of $6 million moving to other locations out of the industrial zone, and 27 local projects with total investment of nearly VND2.08 trillion.

In addition, 35 projects had to reduce by 20-30 percent of its capacity due to economic difficulties.

Last year, Japan was the biggest investors with investment accounting for 47.38 percent of total investment, followed by Singapore with 26.27 percent, and Australia with 14.26 percent.

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

bond, HSBC, Stock market, Mekong delta, Textile exports, SOEs
 
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