BUSINESS IN BRIEF 29/1

Honda, Mazda, Ford post sharp sales growth

The automobile industry’s sales last year grew less than 20% versus the previous year but Honda, Mazda and Ford bucked the trend, obtaining much higher sales growth.

The three automakers have been unable to meet orders for certain models as pre-Tet demand is running high.

Honda Vietnam sold 710 units in December alone, the highest monthly sales figure in 2013 and also since July 2008.

Given the impressive year-end performance, the firm’s total sales volume in all of 2013 leapt 254% year-on-year to more than 4,500 units. Such a staggering spike is ascribed to strong sales of CR-V 2013 and Honda City – the two new models of Honda.

The launch in March in 2013 of the fourth generation Honda CR-V stirred up the local SUV segment with nearly 2,200 units sold, doubling that in 2012.

After seven months of its debut on the market in mid-2013, Honda City found 1,500 buyers.

According to Honda Vietnam, it often takes buyers one to two months to take delivery. In the lead up to Tet holiday, which starts in late January, customers should place orders two months in advance. Those ordering City and CR-V this time around can only take delivery after Tet.

Ford Vietnam also reported its sales jumping 71% year-on-year to roughly 8,100 units in 2013. The firm therefore became one of the best performers in the industry last year, with market share of 7.4%, 2.2 percentage points higher than in 2012.

Jesus Metelo Arias, general director of Ford Vietnam, attributed stronger demand for Ford Transit to the firm’s hefty sales in 2013. Ford Transit helped put the company on top of the commercial automobile segment with about 2,100 units sold, up 172% year-on-year. This is the highest annual sales volume of Ford Transit so far.

For the new model Ford Ranger, Ford Vietnam sold around 1,800 units, a pickup of 189% year-on-year. In the meantime, the company put Focus car sales volume at some 1,200 units, soaring 37% year-on-year.

Ford Escape and Everest SUVs also contributed to Ford’s impressive sales. There were 845 Escape units sold, a rise of 56%, while Everest sales inched up 41% to 1,300 units.

The introduction of the new version of Ford Fiesta with the EcoBoost 1.0L engine has helped stir up local demand, Arias noted, adding customers now had to wait for about one month to take delivery.

VinaMazda specializing in assembling and importing Mazda cars is recognized as having the highest sales growth in 2013. Statistics from the Vietnam Auto Manufacturers’ Association (VAMA) show VinaMazda sold nearly 4,100 units last year, leaping 354% year-on-year.

U.S. dollar weakens against Vietnam dong

The U.S. dollar has weakened slightly against Vietnam dong these days as corporate demands for the greenback have been falling, bankers said.

Local enterprises usually have strong demands for foreign currencies to pay for import orders prior to the Lunar New Year holiday, or Tet, but this year’s foreign currency needs are low, prompting banks to revise down prices of the greenback.

By late last year, Vietcombank quoted U.S. dollar at VND21,090 and VND21,125 for buying and selling respectively but reduced the rate to VND21,070 and VND21,110 on Monday. Meanwhile, ACB bought and sold the greenback at VND21,080 and VND21,120, down from VND21,095 and VND21,135 on December 30, 2013 respectively.

The dollar has been traded at around VND21,090-21,100 on the inter-bank market, nearly the same at those posted up by banks.

Pham Linh, deputy general director of Orient Commercial Bank (OCB), said that foreign currency demands from businesses have declined compared to previous years while exporters are still selling foreign currencies to the bank.

A specialist at BIDV said that foreign currency supply has exceeded demand on the inter-bank market. Liquidity on the market has been high as members have offered buying and selling prices close to those quoted by banks.

Maybe, local businesses have got into financial troubles, so they do not have demands for foreign currencies to pay import bills. Meanwhile, exporters have been still providing foreign currencies to banks, making supply outpace demand and dragging dollar prices down, the specialist said.

In recent months, some individuals have withdrawn dollar accounts and turned the greenback into dong to enjoy higher deposit rates.

Earlier, after the central bank depreciated Vietnam dong by 1% against the dollar on the inter-bank market last June, individuals and enterprises reduced dollar sales to banks but then increased dollar sales two months later, he added.

At present, dong deposit rates are from 7-8% per annum while dollar deposit rate is capped at just 1.25% per annum. If the dong-dollar exchange rate remains stable, keeping the dong is more lucrative than the greenback.

The exchange rate is expected to be stabilized this year. The central bank’s governor in his new year’s message said that the exchange rate will not rise over 2% within 2014.

Earlier, HSBC Bank has predicted the dong to remain stable this year thanks to supports of foreign direct investment capital (FDI), overseas remittances and export growths.

The BIDV specialist said that the dong would devalue by a maximum 1.3% this year as macroeconomic factors such as FDI, official development assistance (ODA) capital, overseas remittances and foreign reserves have been improved.

VRA says rubber price stable but low this year

The Vietnam Rubber Association (VRA) forecasts that the rubber price will be stable at a low range of around US$2,500-2,700 per ton this year, equivalent to some VND52 million per ton.

At a review meeting of VRA last Friday, VRA Chairman Tran Ngoc Thuan said that the forecast was based on changes in supply and demand on the global rubber market.

“There will not be sharp price changes in the coming time, and the price will not hit VND90 million a ton as seen in 2011 due to short supply. It is now time for the stable price,” Thuan said.

As the rubber price declined last year, revenues and profits of rubber firms dropped accordingly. For instance, Vietnam Rubber Group’s pre-tax profit last year tumbled by nearly 52% to VND5.57 trillion compared to VND11.84 trillion in 2011.

The sharp price fall last year made deep inroads into the country’s rubber export revenue.

Vietnam exported 846,000 tons of rubber and earned US$3.3 billion in 2011, up 8% in volume and 27.5% in value compared to 2010.

A year later the export volume exceeded one million ton but the value fell 12% to only US$2.85 billion. The price freefall continued into 2013, as the country earned only US$2.5 billion though the shipment rose 7% to nearly 1.1 million tons.

This year’s rubber export price is forecast to be similar to last year’s level of VND51.8 million, which was far lower than VND62.7 million a ton in 2012 and VND91.6 million in 2011.

The current rubber price in southeastern and Central Highlands provinces is fluctuating around VND41 million a ton while the price on the Tokyo market last Friday was equivalent to VND53.8 million a ton.

VND500 bil. for Da Nhim hydropower plant expansion

Da Nhim-Ham Thuan-Da Mi Hydropower Plant Joint Stock Company will begin work on a project to expand Da Nhim hydropower plant’s capacity by 80MW in September at a total cost of some VND500 billion, said an executive of the operator.

The expansion is expected to help increase the capacity of the hydropower plant in the south-central coastal province of Ninh Thuan to 240MW and supply an additional power output of roughly 100 million kWh a year. It will also improve irrigation for lower areas with an additional 56 million cubic meters of water, said Le Van Quang, deputy director of Da Nhim-Ham Thuan-Da Mi.

Having been in operation since 1961, the hydropower plant in the last five decades has generated a combined 38 billion kWh of power for the country.

As scheduled, the expansion scheme will kick off in September and will be put into operation after 26 months of construction, Quang informed.

400 hectares of rice in city to wither on lack of water

Nearly 400 hectares of winter-spring rice in Tan Thoi Nhi Commune, HCMC’s outlying district of Hoc Mon is facing a severe shortage of water as pollution in Thay Cai and An Ha canals is badly worsening.

Water in Thay Cai canal’s section from An Ha canal to Thay Cai bridge is black with a film of oil and nasty smell. Besides, pollution criteria such as COD and BOD5 exceed the permitted levels many times, according to inspection results of HCMC Irrigation Management Company.

Speaking to the Daily on Monday, director Nguyen Van Dam said that there was nearly 400 hectares of rice fields near Thay Cai and An Ha canals menaced with water shortage as farmers have been warned by the company not to take in water from the canals.

According to Dam, it is now the dry season and the end of the year, so enterprises in Tan Phu Trung Industrial Park and along the canals boost production activity, resulting in increasing pollution in the canals.

The company has reduced the use of water in Thay Cai and An Ha canals though this is just a temporary solution as the water demand in the winter-spring crop is high.

According to an environment officer at the HCMC Export Processing and Industrial Zones Authority (Hepza), Tan Phu Trung IP is home to 45 operational enterprises.

In April, 2012 the company reported over 9,000 hectares of crops and fish farming in Binh Chanh, Cu Chi and Hoc Mon districts heavily affected by polluted water in Thay Cai, An Ha and Rach Tra canals.

Banks’ investment assignment lawful

Local credit institutions are still allowed to perform assigned investment or entrust a third party to make investment if the practices are mentioned in their operation licenses, said an official of the central bank.

Assigned investment refers to making investments in sectors such as securities and real estate on behalf of others.

Earlier, some banks took advantage of this investment form to evade regulations on credit growth rate ceiling. For instance, a bank could entrust a third party to give loans to borrowers so that its credit growth will not exceed the given cap. However, entrusted capital is counted in the credit growth of banks now.

A banker said the central bank has tightened supervision over assigned investment in lenders. Therefore, banks which have yet to obtain licenses for the practices cannot provide investment assignment services.

SOE dividends yet to be fully counted, says ministry

Exact earnings from dividends and real profits of State-owned enterprises (SOEs) will be announced in March or April but taxes collected from the sources have been based on interim results, said an official of the Ministry of Finance.

The interim results are relatively correct, the official told the Daily while explaining the collection of over VND20 trillion worth of dividends and profits of SOEs in the last month of December. The source brought State budget collection to higher than last year’s target.

The collection was made following the National Assembly’s (NA) resolution and the Government’s Decree No. 204/2013/ND-CP. Last year was the first time SOEs had to submit dividends earned from affiliates and associated firms to the State budget.

Speaking at the press briefing a week ago, Minister of Finance Dinh Tien Dung said that Stage budget collection was 0.4% higher than estimation in 2013. Collection of SOEs’ dividends at joint stock firms and 75% of profits of Vietsovpetro helped the ministry fulfill the target.

By late 2013, the budget collection was VND16 trillion higher than that reported to the NA earlier. Over VND20 trillion of dividends and real profits of SOEs was submitted to the budget.

The additional collection secured payment of VND14.8 trillion worth of value added tax debts incurred in 2013 as requested by the NA.

Over VND20 trillion mentioned above has been transferred to the account of the State Treasury. However, SOEs have yet to pay up 100% of dividends and profits to the budget, the official said.

Since mid 2013, the General Department of Tax and the State Treasury discussed collection ratios in SOEs.

Military-run telecom group Viettel, PetroVietnam, MobiFone, PetroVietnam Exploration Production Corporation and Vinacomin contributed the most to the State budget last year.

The Government has still left a part of profits at SOEs so as they can re-invest and pay for debts. Before 2013, 100% of dividends and profits were left to the discretion of State-owned enterprises.

As planned, the ministry will collect dividends and profits from over 100 enterprises. In recent time, the ministry has just collected from over 20 State-owned groups and corporations, still modest compared to the total number of SOEs in the country.

In 2014, State budget collection is estimated at nearly VND783 trillion, including VND539 trillion of domestic sources.

At the end of 2012, the nation had 846 enterprises wholly owned by the State. The firms posted up combined pre-tax profit of nearly VND167 trillion, up 12% against 2011.

Imports of confectionery decline

Last year’s value and volume of confectionery and cereal products imported via official channels dropped much from the previous year, which can be attributed to increased domestic production that helped replace imports.

According to statistics of the General Department of Customs, the import value in December was over US$33.9 million, up 28.6% from November. The rise was due to a stronger demand for such products in the lead to the Lunar New Year, or Tet.

However, the total import of last year was recorded at over US$242 million, dropping by nearly 22% from 2012.

Nguyen Thi Anh Hoa, general director of Citimart supermarket chain, told the Daily that the import prices did not drop, so the lower import value was due to a sharp fall in volume.

“In fact, prices increased slightly in terms of the U.S. dollar, but if they are paid in Japanese yen, the prices dropped,” she said.

Ngo Thi Phuong Thao, communications director at Bibica, agreed on the point, saying the import prices of confectionery rose by some 10% last year.

Bibica’s confectionery production volume for the Lunar New Year holiday has exceeded the target by 5%, with Goody and Happy cakes increasing by 250% and 50% respectively, indicating consumers’ strong favor for the local products.

However, according to Thao, Bibica’s higher domestic production volume mean consumers are shifting from imported products to local ones.

“The consumption volumes do not inch up this year and even decline compared to last year. But the products consumers buy change this year as they prefer local products with higher quality but softer prices,” Thao said.

According to Thao, imports of confectionery having no labels and via unofficial channels have dropped as consumers worry over safety of such products.

Speaking to the Daily, Ung Thi Lien, a trader at Binh Tay market, said that not only her stall but also other stalls only sold products of big production facilities or imported products with clear origins and food safety certificates.

Rice price falls despite better outlook in 2014

Rice prices have fallen at home these days, which is ascribed to the approaching Lunar New Year holiday, or Tet, when local traders are watching further moves on the global market and the 2013-2014 winter-spring crop being harvested in the Mekong Delta. Despite this, more export opportunities are foreseeable.

In particular, the fresh paddy IR 50404 is now selling at VND4,700-4,800 a kilo in Dong Thap, An Giang and other provinces, dipping roughly VND100 per kilo compared to a fortnight ago.

Ngo Ngoc Yen, director of Yen Ngoc Company in HCMC’s Tan Phu District, said the rice variety IR 50404 of the 2013-2014 winter-spring crop was traded at VND7,200-7,300 a kilo on Tuesday at Ba Dac wholesale market in Tien Giang Province, slipping VND50-100 per kilo compared to a week ago. The fine-processed product of this type is being sold at VND10,200-10,300 a kilo at present.

Nguyen Thanh Phong, director of Van Loi 2 Company in Tien Giang Province, cited three main reasons for the price fall in recent days.

The first reason is that local demand has tumbled owing to the approaching Tet holiday, he said. The second reason is that rice exporters are keeping a “wait-and-see” attitude to cope with the unpredictable global market movements after hearing that Thailand will offload its mounting rice stockpiles at prices as low as seen in late 2013.

Besides, Phong also attributed the price fall to the current harvest season of the winter-spring crop in the delta, with a rise in yield projected.

Yen deemed the price fall in the final days before Tet as a normal phenomenon, saying further price cuts might be seen after the traditional holiday.

Despite the price fall in the country, Vietnamese rice exporters have foreseen more business opportunities with a surge in global demand expected this year. As per a forecast by the U.S. Department of Agriculture (USDA), global rice output will increase by some 1.6 million tons or 0.34% while demand will go up by up to 6.1 million tons, or 1.31%.

If these forecasts turn real, the chances of increasing rice exports will be ample for global rice suppliers, including Vietnam, India and Thailand as the top three in 2013.

Furthermore, rice exporters also pin high hope on better rice exports this year in the context that the 2013 rice export contracts carried over to this year at member companies of the Vietnam Food Association amount to roughly 1.6 million tons.

In the first week of January, Vietnam shipped abroad 138,000 tons, rising 42.7% on the year-earlier period, while Thailand exported 165,000 tons, and India delivered 115,000 tons, rising by 5.77% and 21% respectively.

According to the rice trade website Oryza.com, Thailand on Monday offered its high-grade rice 100B equal to Vietnam’s 5%-broken rice at US$450-560 a ton, rising by some US$60-70, while Vietnam’s offered a stable price of US$400-410 a ton of quality rice.

Realty firms fail to recover capital despite good sales

The local real estate market saw busier trading in the final half of 2013 but some enterprises in the industry still failed to recover capital.

One director of a real estate company said that capital recovery is too slow although the firm has reported strong sales. Some enterprises sold hundreds of apartments last year but are still struggling to pay wages and bonuses for employees before the Lunar New Year holiday, or Tet.

To raise product sales, most enterprises have offered installment payments and financial solutions for customers. Some have extended payment schedules over several years, so they cannot recover investment capital quickly.

The land lot segment has also reported a similar situation. An enterprise sold 300 land lots last year but has received mostly deposits. The firm expects to recover capital after Tet.

Earnings from property sales are almost the only cash source for real estate firms now as savings from previous years have run dry.

Concerning market developments last year, CBRE Vietnam Company said that the number of successful transactions increased strongly, focusing on the low-cost housing segment. Besides gifts and discounts, many investors have launched payment schedule extensions to lure customers.

This year, transactions are expected to improve at projects developed earlier than scheduled or those with prestigious investors and financial support programs for homebuyers.

A survey of Savills Vietnam shows that of 6,400 apartments launched in 2013, around 5,800 condos were consumed, up 46% against the previous year.

According to some market research firms, HCMC has 17,200 condos in stockpile, including high-class apartments in districts 2 and 7 and low-cost condos in outlying districts such as Binh Tan, Tan Phu and Binh Chanh.

SHTP exports pick up only US$520 million

The export value of enterprises in the Saigon Hi-Tech Park (SHTP) is estimated at more than US$2.75 billion in 2013, growing only US$520 million compared to the figure in 2012.

According to the SHTP management, the performance has met the year’s minimum target of US$2.7 billion but failed to reach the US$3 billion as expected earlier. Meanwhile, companies in the facility had spent a combined US$2.3 billion importing materials and components last year.

The accumulated production value of SHTP enterprises has totaled over US$7 billion since early 2002, with their export revenue amounting to more than US$6.9 billion. However, the import value accumulated so far by the companies posted up to roughly US$6.2 billion, putting their trade surplus at around US$770 million.

Earlier, Le Hoai Quoc, head of SHTP management, told the Daily that the lower-than-expected added value of products by the companies and their rising imports were partly because of the easy investment attraction in the first phase. Initially, when selecting projects and assessing their technologies, the management only paid attention to the reputation of many investors who only specialized in assembling by using large numbers of unskilled laborers. Currently, enterprises on the park are employing nearly 18,000 workers.

More importantly, Quoc said, as the local supporting industries are too underdeveloped to meet requirements of foreign companies, they have had to resort to material and component imports to carry out production.

In order to improve and foster investment in producing added value items, SHTP now is classifying its businesses to identify which enterprises have made investments in research and development (R&D) activities in production as well as using multiple local employees. This aims to pick up hi-tech companies to recommend them as applicants for special incentives on hi-tech investment, meaning other enterprises will have their investment incentives reduced.

As such, to make new investments in SHTP, companies need to have globally-popular brands besides committing to developing R&D activities rather than pouring money into production to cash in on low labor costs only, said the leader.

In fact, a foreign company when investing in SHTP should have to deploy R&D projects and production at the same time. This means the investor needs to show the added value they could create at SHTP. The careful, initial project screening is to eliminate enterprises taking advantage of State investment incentives for low technology operation.

Also, SHTP has already established land sources to build workshops for enterprises in supporting industries, with the factories for lease set to be completed in about six months. In 2013, seven local and foreign projects had been licensed into SHTP with total registered capital of nearly US$237 million, with foreign investment only reaching just over US$75 million.

Overall, the facility has attracted 75 local and foreign projects costing a combined US$2.5 billion. Of which, there are 42 local schemes totaling over US$630 million and 33 foreign-invested projects worth over US$1.8 billion. Some 38 projects are already in operation.

Delta needs to build its brands

Creating trade marks for the Mekong Delta's key products is an urgent task since the lack of popular brand names limits their competitiveness, experts have said.

The delta, which leads the country in rice, fruit, and aquaculture output, is home to many specialities like Cho Dao fragrant rice, Lo Ren star apple, and Phu Quoc fish sauce.

But these appellations of origin lack strong brand names to compete in the global market, according to Duong Quoc Xuan, deputy head of the South-west Region Steering Committee.

This affects the image and revenues of the delta's producers.

Tran Huu Hiep, head of the committee's Economic Department, said rice, fruits, and fisheries products from the delta made up a large part of the country's exports, yet most of them lack strong brand names.

The tasks of creating brand names for key products with geographical indications and co-operation between the Government, farmers, scientists, and companies had been set in the past but not implemented as hoped, he said.

According to companies and authorities, among the hurdles to developing brand names is that products and services have not been identified for focusing investment.

Enterprises do not co-operate for the task of identifying and developing strong brands.

Hiep said the delta should have a trademark strategy with appropriate policies and co-ordinated efforts with regard to planning, investment, production, and market connectivity to create strong brands.

"Building brand names for the delta's key products is an urgent task for improving their competiveness at home and abroad."

In enterprises' efforts to build brand names, the responsibilities and rights of participating partners should be identified clearly, he said.

Huynh Truong Vinh, director of the Hau Giang Province Department of Science and Technology, said the creation of brands would also result in co-operation among the delta's provinces. Now, without such co-operation, when an exporter gets a large order, they cannot fulfil the order since they lack capacity.

This has also affected the export of Nam Roi grapefruit and Hoa Loc mango, two of the delta's specialties.

According to research by the Viet Nam Farmers Association in HCM City, Da Nang, and Can Tho, if a product has a known brand name, Vietnamese consumers are willing to pay a 10-15 per cent premium for it.

Local property market recovering

The local real-estate market has been signalling a recovery this year, according to experts.

Construction Minister Trinh Dinh Dung claimed confidence in the local real estate market is on the rise because more people are considering apartments and small housing units, culminating in an increase in successful property transactions, reported Dau tu (Investment) newspaper.

The structure of property products has changed and the prices of these have dropped, warming up the market since the end of 2013, Dung said. Therefore, the total value of property products nationwide at the end of 2013 dropped by 26.5 per cent to VND94.5 trillion (US$4.5 billion), as against the first quarter of 2013.

Luong Tri Thin, chairman and general director of Green Land Group, told Dau tu Bat dong san newspaper that the market would benefit greatly in promoting signs of recovery, including a recovery in money supply and loans from banks to property buyers and investors.

He noted that this year, the market will continue to face challenges, but difficulties experienced by the local property market will reduce by 60-70 per cent compared with 2013, which was a very difficult year for the local property market.

Le Chi Hieu, chairman of Thu Duc House Development Company (TDH), pointed out that opportunities in the local market in the coming months will focus on sales of small apartments with all facilities included because this segment sees high demand and low supply.

However, construction minister Dung stated that there are many challenges affecting the market, so the ministry of construction will work closely with the relevant ministries and sectors as well as the authorities of cities and provinces to resolve any difficulties faced by the market and to increase the efficiency of state property market management policies.

In the near term, the state will continue applying policies and offering support packages for enterprises and the local property market, such as reductions in corporate income for enterprises, ceiling interest rates for short-term loans, and value-added tax for commercial apartments with a total floor area of less than 70 square metres and a selling price of VND15 million ($714.3) per square metre.

He said the ministry will propose more favourable conditions for foreigners buying houses and apartments in Viet Nam to attract more customers to the local property market.

The ministry's statistics showed that successful transactions of smaller apartments in the second half of 2013 had doubled when compared with the first half of the year.

In Ha Noi, an estimated 6,450 real estate transactions were conducted, about half of which were conducted during the fourth quarter of last year.

Transactions in HCM City numbered 9,360, with nearly 70 per cent of them seen in the second half of the year.

Regarding the real estate inventory, the ministry explained that more than 20,000 apartment units remained unsold in Ha Noi and HCM City, presenting a loss of VND24 trillion ($1.14 billion). The land inventory was estimated to be worth VND34.89 trillion ($1.67 billion).

High vacancies remain in retail rentals

Rental in retail spaces in the capital city are witnessing a gradual decrease, as high vacancy rates and a large increase in new stock in the short term suggest pressure on rental levels.

According to Cushman&Wakefield Viet Nam, in 2013 many well-known international trademarks joined the Vietnamese retail market. At the same time, many property projects were completed and offered large shopping spaces, thus causing high vacancy rates, reports Vietnam Economics Times.

Also, several property developers had to improve their retail spaces and offer many promotions and incentives for leasers.

According to Richard Leech, managing director of CBRE, retail space in the capital city in the fourth quarter of 2013 witnessed the beginning of property projects developed by giant property developers, such as Vincom Megamall and Times City, offering more than 110,00 square metres of shopping space.

Two other projects, including Ocean Mall in Trung Hoa-Nhan Chinh, offered space of 18,500 square metres, along with Hong Ha centre, with a total retail space of more than 4,000 square metres in the city downtown. Meanwhile, Ha Thanh Plaza in Thai Thinh, Dong Da District, has closed for renovations.

As a result, by the end of 2013, total retail space for lease reached about 569,660 square metres, or a year-on-year increase of 91 per cent.

In addition, shopping spaces also witnessed the opening of 15 electronics centres and 14 supermarkets, to mark a strong growth in this segment.

It was also reported that the average price of total leased shopping space reached $41.4 per square metre, or a decrease of 11.9 per cent against the previous quarter.

The vacancy rates throughout the entire market as of the end of 2013 reached 15.9 per cent, or a year-on-year rise of 2.1 per cent.

Some shopping centers have seen the highest vacancy of 23.5 per cent, or a year-on-year increase of 17.8 per cent.

Also, vacancy rates of trade centres reached 15.5 per cent, which was attributed to the withdrawal of those leasing in many trade centres.

It was reported that in the fourth quarter last year, 324 new leasers occupied trade centres, while 140 others closed their shops in the same places.

According to statistics from Savills Viet Nam, the capital city is expected to see a significant supply from 99 property projects, with a space of 1.8 million square metres for retail space.

From 2014 to 2016, about 880,000 square metres are expected to be offered to the market. The districts in the city's downtown will supply a centre business district retail areas of 42 per cent.

The suburban areas rank second with 40 per cent. It is predicted that property developers will see fierce competition due to oversupply of retail spaces.

Further, the Ministry of Industry and Trade reports that foreign retailers accounted for more than 40 per cent of the total 700 supermarkets in Viet Nam. In addition, 31 of the total 125 trade centres have foreign investment capital, showing high interest by foreign investors in the retail market in Viet Nam.

Businesses encouraged to restructure

Vietnamese companies should restructure and streamline their operations in 2014 to maximise efficiencies, the Chairman of the Viet Nam Chamber of Commerce and Industry (VCCI), Vu Tien Loc said.

The official told The Voice of Viet Nam (VOV) radio station that companies should reassess their corporate plans and strategies for coping with business risks if they hope to gain a competitive advantage in the global markets, while expanding their businesses.

Last year was a difficult year for businesses, with the number of companies either temporarily or permanently shutting down increasing dramatically.

However, some businesses managed to not only survive but thrive in the market, thanks to strategically implemented business strategies, he noted.

One good example of a successful company is VinaCommodities, which specialises in exporting and importing farm produce and plant oils.

The company not only maintained its production activities but expanded them by successfully launching a line of high-end products in the domestic market.

The VOV quoted Tran Van Toan, president of the management board of VinaCommodities, as saying that by comprehensively tapping into its advantages and establishing an effective risk management system, the company successfully maintained the growth rate of over 40 per cent in 2013.

Currently, the company has more than 500 employees. It plans to recruit more employees this year, as it continues to expand production capacity and attempts to achieve a growth target of 50 per cent.

Toan also noted that the signing of the Trans-Pacific Partnership (TPP) Agreement in 2014 will create favourable conditions and increase the opportunities for businesses to penetrate foreign markets.

Director of the Tuan Hung Construction and Technology Joint Stock Company Le Xuan Hung remarked that last year, his company chose to invest its capital and human resources only in highly feasible projects.

Concurrently, it spent a large amount of time and effort in locating partners and co-operating with large companies in order to reduce risks, he told the radio station.

Another factor that helped his company overcome difficulties was the special attention paid to human resources.

As a result, the staff has remained loyal and helped in accomplishing the company's goals.

VCCI Chairman Loc said that despite the economic challenges of 2013, over 50,000 newly established businesses and 10,000 businesses resumed production activities.

The outlook for 2014 remains challenging. Gaining or maintaining a firm foothold in the local market remains critically important to businesses, added Loc.

He strongly recommended that companies restructure and streamline their operations, focusing on key areas for development. In addition, companies should implement modern management techniques, including the latest scientific and technological advances.

Japan laps up Vietnamese goods

Viet Nam's export turnover to Japan increased to US$13.65 billion in 2013, a spike of 4.5 per cent over the previous year, according to the General Department of Customs.

Garments topped the list of export staples, earning $2.38 billion, accounting for 20 per cent of the country's total. Japan currently consumes more than 13 per cent of Viet Nam's garment exports.

Crude oil and means of transport and tools followed with earnings of $2.08 billion and $1.85 billion, respectively.

Despite an export value of $248.2 million, chemicals achieved the highest growth of 56.2 per cent.

Other products with high growth included wood and timber products ($819.9 million, up 22.5 per cent); footwear ($389.3 million, up 18.6 per cent); and bags, wallets, suitcases, hats, and umbrellas ($235.3 million, up 33.1 per cent).

Japan has agreed to increase the maximum residue limit (MRL) of Ethoxyquin, an antioxidant preservative used in fish meal, in Vietnamese shrimp – a move that will benefit shrimp businesses, according to the Viet Nam Association of Seafood Exporters and Producers.

The association said that the Japan Ministry of Health, Labour and Welfare on Tuesday decided to raise Ethoxyquin MRL by 20 fold from 0.01 ppm (parts per million) to 0.2 ppm and will remove regulations on inspections for 100 per cent of shrimp shipments imported from Viet Nam.

This shows the efforts made by Vietnamese management agencies and businesses in controlling Ethoxyquin residue in farmed shrimp, the association said.

Japan introduced Ethoxyquin regulations in 2012, putting Vietnamese shrimp exports at a disadvantage. The shipment to Japan in 2012 was only $617.7 million.

The association expects that Viet Nam's shrimp exports to Japan will increase significantly this year both in volume and value, thanks to the new regulations, a decreasing supply, and increasing global prices.

Remittances shift trend to production last year

Nearly 70 percent of remittances in 2013 was poured into business and production, serving to extricate difficulties for enterprises and household businesses, according to the Government Portal.

The inflow of remittances increased constantly from 8.26 billion USD in 2010 to 9 billion USD in 2011, 10 billion in 2012 USD and 11 billion in 2013 USD. Vietnam continued to be in top 10 remittance recipients.

Noticeably, the money no longer focused on the real estate sector.

A survey conducted by the National Financial Supervision Committee in 2011 showed that 52 percent of the money sent to some 4,000 households was invested in the real estate sector, and the rest came to bank savings and consumption activities.

The trend reversed in the last 10 months of 2013. In Ho Chi Minh City, the real estate sector absorbed only 21 percent of remittances, a sharp declined in comparison with the 52 percent in 2011 and the 23 percent in 2012.

A report on the 2014 macro-economic performance compiled by the Bank for Investment and Development of Vietnam also said that remittances are shifting from real estate to production.

The trend was forecast to continue in 2014 and the inflow would pick up 10 percent.-

Foreign tourists to Vietnam surge in January

The number of foreign tourists to Vietnam in the first month of 2014 is estimated at 722,350, up 7.5 percent from last December and 21 percent against 2013’s January.

According to the General Statistics Office, the Russian market recorded the highest rise, with 89 percent, followed by Hong Kong (China) (87 percent), Germany (58 percent), the Philippines (21 percent), and Norway (20 percent).

Of the month’s figure, 382,000 came to Ho Chi Minh City, representing a year-on-year rise of 12 percent.

Vietnam’s tourism sector plans to receive 8 million international tourists, serve 37.5 million domestic tourists and earn 230 billion VND (10.8 million USD) this year.

The Ministry of Culture, Sports and Tourism has devised a plan for 2014, based on the strategy and the master plan on developing tourism to 2020, with a vision to 2030 and the national action plan on tourism for the 2013-2020 period.

It will focus on improving tourism products and service quality, addressing the sector’s shortcomings and organising successfully the National Tourism Year 2014 in the Central Highland province of Lam Dong and other regional provinces, as well as preparing for the National Tourism Year 2015 in central Thanh Hoa province.

In 2013, Vietnam received 7,572,352 international tourists, a 10.6 percent rise over 2012, bringing 200 trillion VND (9.4 billion USD) for the state coffer.

Most of international markets saw increases: Russia (71.1 percent), China (33.5 percent), Thailand (19.3 percent), New Zealand (16.3 percent), Indonesia (15.7 percent), Belgium (14.1 percent), and Malaysia (13.5 percent).-

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

U.S. dollar, rubber, SOE, Rice price, property market
 
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