BUSINESS IN BRIEF 28/3

Local gold prices dip to six-week low on weak buying

Local gold on March 27 slightly fell by 0.3 percent to reach a six-week low of 35.6 million VND (1,692 USD) per tael, coupled with low trading and narrow interest margins.

In the North, DOJI traded SJC-branded gold bars at 35.61 million VND (buying) and VND35.65 million (selling). In the South, the prices were 35.6-35.65 million VND per tael. One tael is equivalent to 1.2 ounces.

So far this week, local gold has lost 1.1 percent in value.

World spot gold was flat at 1,302.96 USD an ounce on March 27 as the metal's safe-haven appeal was boosted by weaker equities, Reuters reported. The metal fell to a six-week low of 1,298.29 USD in the previous session, trading below the 1,300 USD level briefly before moving back up.

Domestic gold traders claimed that people were selling more gold these days and the purchasing power was rather weak.

A representative of Bao Tin Minh Chau was quoted by Dau Tu (Investment) newspaper as saying that gold was under growing pressure after the US released positive economic data.

In this context, many gold trading companies are turning to jewellery to boost their revenues. However, the market is not bright due to the shortage in supply of gold materials.

"Material supply for gold jewellery is currently falling short and is dependent on the floating sources that cause instability of production. We would like to ask the State Bank of Vietnam (SBV) to allow the companies to import gold materials for domestic jewellery production in order to reduce the current domestic shortage," Tran Nhu My, DOJI's Director, to Dau Tu newspaper.

Earlier this year, a survey by the SBV's HCM City branch revealed that the demand for gold materials among the domestic gold processors and traders was very high. Meanwhile, gold material import was restricted.

The delay in the implementation of competent policies facilitating jewellery processing is believed to have a serious impact on the industry's competitiveness.

One US dollar was exchanged at 21,100-21,135 VND on the parallel market, and at 21,055-21,115 VND at commercial banks.-

US decides to retain tax on imported mattress innersprings

The US has decided to continue imposing an anti-dumping duty on mattress innerspring units imported from China, South Africa and Vietnam.

The US International Trade Commission (USITC) on March 25 determined that the revocation of the existing tariff on uncovered innersprings imported from the three countries would likely cause remarkable economic losses for US-based companies.

According to common regulations, the anti-dumping duty order will be revoked after five years unless the US Department of Commerce and USITC vote against it.

The country imposed the tax for mattress inner springs imported from Vietnam and South Africa for the first time in December 2008 and those from China in February 2009.

The current anti-dumping tax rate on the springs from China, South Africa and Vietnam are 234.51 percent, 121.39 percent and 116.31 percent respectively.-

Highlands firms invest in Laos, Cambodia

Companies based in the Tay Nguyen (Central Highlands) region have invested US$1.5 billion in Laos and Cambodia in the last two years, according to the Central Highlands Steering Committee.

Of the 35 projects they have invested in, Laos accounted for 16 with a combined registered capital of $606.7 million, and Cambodia accounted for the rest.

They were mainly in the agricultural, forestry, and fishery sectors, which accounted for $1.18 billion of the investment.

Ministry to improve steel quality control

The ministries of Industry and Trade and Science and Technology have issued a Joint Circular No. 44 to better manage the quality of domestically produced and imported steels.

Accordingly, domestic steel producers will have to apply the national technical standards on their production. The circular, which will come into effect from June, also makes it mandatory for steel importers to announce the standards applied in their import contracts. Based on the applied standards, the authorities will assess whether the consignments are eligible for import to Viet Nam or not.

According to the domestic steel producers, the circular will not only tighten steel quality management, but will also prevent unhealthy competition from cheap, imported steels in the market.

Addressing a conference on the management of steel production and imports held in Ha Noi on Tuesday, Chu Duc Khai, the vice chairman cum general secretary of the Viet Nam Steel Association (VSA), stated that last year, large amount of steels was imported into the country.

Khai believes that cheap, imported steels sold along with domestically produced steels have affected the reputation of local brands.

He further added that imported rolled steels, containing 0.0008 per cent boron (Bo) element, were labelled as metal to enjoy a tax preferential of zero per cent.

The ministry will be responsible for selecting only those domestic or foreign organisations, which have the ability to clarify the standards.

Sharing his ideas, Nguyen Van Phong, the deputy general director of the NS BlueScope Viet Nam Company was quoted as saying by the online newspaper that the circular will improve steel quality, thus benefiting consumers.

However, Phong noted that if the assessment on steel production and imports was not strictly implemented, steel products will be stuck.

He expects that the relevant agencies will closely cooperate to ensure product quality and shorten evaluation time.

According to a representative from the ministry's Science and Technology Department, both domestic and foreign invested steel producers will have to follow the circular.

As per statistics revealed by the ministry, steel output in the first two months of the year was 283,000 tonnes, a 26 per cent reduction as compared to the same period last year.

The steel production in the association was 255,057 tonnes, posting a 21 per cent decrease over the previous month.

VSA has forecast that this year, the demand for steel will not be high.

The total steel consumption was estimated at 12.2-12.5 million tonnes, increasing 3-5 per cent against 2013.

The ministry also noted that it will collaborate with the Ministry of Science and Technology to conduct check-ups on the quality of steel exported by other countries to Viet Nam.

The costs for conducting the check-ups will be borne by the importers under the Ministry of Finance's regulations.

Rice exports reach 1.31 million tonnes in Q1

Vietnam exported 1.31 million tonnes of rice valued at US$616 million during the first three months of 2014, according to the Ministry of Agriculture and Rural Development.

In March alone, the country shipped 524,000 tonnes, grossing US$243 million in export revenue.

The average export price of rice bumped up 8% compared to Q1 of 2013 to US$486.5 per tonne.

Vietnam’s rice exports to the Philippines saw staggering growth, up over 7 fold in both volume and value against Q1 of 2013.

With these positive results, the Philippines was Vietnam’s largest ricer consumer, accounting for 46.95% of market share, followed by China (23.91%) and Hong Kong (3.8%).

The Vietnam Food Association (VFA) forecasts that Vietnam’s rice exports will cap out at roughly 7 million tonnes this year.

At present, the price of dried paddy at stores in the Mekong River Delta is hovering around VND5,250-5,350 per kilo while the price of long-grain paddy is holding steady at about VND5,550-5,650 per kilo.

The price of 5% broken rice ranges from VND7,750-7,850 per kilo while 15% broken rice varies from VND7,500-7,600 per kilo and 25% broken rice at VND7,250 -7,350 per kilo, depending on locality.

International trade fair attracts businesses

As many as 180 local and foreign businesses are showcasing and promoting their products and services at an international trade fair which opened in Dien Bien province on March 26.

On display at nearly 400 stands are handicrafts, processed industrial products, household utensils, electronics, information technology, and fashions.

The five-day fair offers participating businesses the chance to seek partnerships and expand overseas outlets, especially in Laos, China, and other ASEAN countries.

The fair, held by the VNEXPO International Exhibition Fair Company, is part of the national key trade promotion programme for 2014.

Russian aviation firm launches office in Vietnam

Russian joint stock company Aviazapchast on March 26 officially announced the opening of a representative branch in Hanoi.

Aviazapchast, a leading Russian distributor of aircraft, helicopters, components and aerodrome services, has been a leader in the industry for more than 45 years.

It briefly made an appearance in Vietnam in the late 1960s.

Policy recommendations for new growth model

Vietnam needs to create a new growth model to raise internal strength for a rapid and sustainable development, thus overcoming the middle-income trap.

The proposal was made by Professor Tran Tho Dat, Vice Rector of the National Economics University, at a seminar in Hanoi on March 26.

The Vice Rector of the National Economics University argued that Vietnam’s recent history of growth is the result of extensive factors such as low-cost labour, capital flow and natural resources.

However, after the economic recession in 2009, growth slowed down significantly and has yet to pick up much speed, he said.

“Success may only be reached by shifting to a new growth model that is based on the efficiency of mobilising resources to improve industrial competitiveness, technological standards and productivity,” the Professor said.

He also claimed that increasing links between domestic enterprises and multi-national groups is a sound way to reach this goal.

At the seminar, economic experts also put forth a number of policy recommendations to further improve the role of foreign direct investment (FDI) and create a new sustainable growth momentum for Vietnam by enhancing links between FDI and domestic businesses.

Vietnam must have a feasible industrial development strategy and join the global value chain to raise its internal value, said Duong Dinh Giam, Director of the Industrial Policy and Strategy Institute.

Although Vietnam has become an attractive destination for many multi-national groups, its FDI quality remains low in comparison with other regional countries, in part due to the poor connection between foreign investors and domestic businesses, he added.  

According to Professor Kenichi Ohno from Japan’s National Graduate Institute for Policy Studies (GRIPS), despite a remarkable structure shift from agriculture to industry in the past two decades, Vietnam’s added production value only reached 19.7% in 2010, much lower than those of Thailand, the Republic of Korea (RoK), Malaysia and Indonesia.

The country’s industrialisation remains modest compared to other Asian nations such as China and the RoK, he said.

However, the Japanese expert also acknowledged the Vietnamese Government’s efforts in cooperating with the private sector to create higher internal value.

Vietnam needs to have a FDI marketing strategy, build the capacity for domestic enterprises and increase collaboration between foreign  and local firms while improving logistics services and industrial human resources, he stressed.

Vietnam-Thailand trade increases sharply

Two-way trade between Vietnam and Thailand rose 9.2% in 2013 to US$9.4 billion, according to the Ministry of Industry and Trade.

In the first two months of 2014 alone, bilateral trade value expanded 1.8% to US$1.4 billion.

Currently, Vietnam is Thailand’s seventh largest importer, and Thai commodities make up 5.1% of Vietnam’s total import value.

Thai consumer goods are popular with Vietnamese people (Photo:vinaxad)

Thailand is the 10th largest investor in Vietnam, with more than 300 projects in operation.

Thailand exports plastics, petrol, chemicals, vehicles, steel and machinery to Vietnam. It imports household utensils, steel products, electronics, motorbikes, machinery, equipment, and frozen seafood.

At a press briefing in Hanoi on March 26, Jaruwan Suwannasat, Exhibition Director of the Thailand Convention and Exhibition Bureau (TCEB), noted trade cooperation between Thailand and Vietnam make a considerable contribution to ASEAN’s growth.

She said TCEB will support trade ties between the two countries’ business communities through exhibitions and trade promotions, aiming to raise bilateral trade to US$15 billion by 2020.

ODA disbursement on the rise in Q1

Official Development Assistance (ODA) disbursement in the first quarter of this year is estimated at US$364 million, up 5% from the same period last year.

Of the total, US$331 million is worth of loans and US$33 million in non-refundable aid, according to the Ministry of Planning and Investment.

Two ODA projects were signed in the first quarter: the Vietnam Road Asset Management Project worth US$251.7 million funded by the World Bank and the Vietnam – Finland Innovation Partnership Program (phase 2) worth US$13.56 million funded by Finland.

In the reviewed period, foreign direct investment (FDI) decreased by 49.6% to US$3.334 billion. However, the FDI sector was the main contributor to the country’s US$1 billion trade surplus in three months.

The FDI sector’s export value was estimated at US$20.78 billion (excluding crude oil), accounting for 62.3% of the country’s total export value.

Its import value was US$18.55 billion. Thus, the sector enjoyed a trade surplus of US$3.92 billion (including crude oil) and US$2.23 billion (excluding crude oil).

Vietnam, Spain boost trade promotion

Huge potential for trade cooperation between Vietnam and Spain was introduced at a March 26 meeting in Hanoi by the Spanish Embassy and the Vietnam Chamber of Commerce and Industry (VCCI).

VCCI Vice Chairman Hoang Van Dung emphasised that Vietnam is widely considered an attractive destination for foreign investors, including those from Spain, due to its abundant young labour force, rich natural resources and political stability.

Vietnam offers a variety of incentive policies to international investors, especially in the fields of infrastructure, agriculture, telecommunications, health care, education, tourism, and green growth, he said.

Spanish Ambassador to Vietnam Alfonso Tena said the meeting has created a good chance for the two business communities to strengthen cooperation and seek trade partners.

Spain's Minister of Foreign Affairs and Cooperation José Manual García-Margallo reported his country – the fourth largest economy in the Eurozone – is recovering thanks to its comprehensive administrative, institutional and property market reforms.

Spain is willing to share its experience with other countries in overcoming economic difficulties, he added.

Minister José highlighted that Vietnam’s impressive growth and Spain’s rapid economic recovery have offered an opportunity to boost bilateral cooperation in various fields.

Spanish business representatives answered questions relating to trade and investment.

Two-way trade between Vietnam and Spain hit more than EUR2 billion in 2013. Currently, Spain ranks 59th among foreign investors in Vietnam, with a total registered capitalization of US$30.3 million.

Vietnam, Saudi Arabia meet to promote cooperative ties

Vietnam and Saudi Arabia held the second meeting of their Joint Committee on Economic, Scientific and Technological Cooperation in Hanoi on March 26.

Signatories of the meeting minutes include Deputy Minister of Industry and Trade Le Duong Quang, who headed the Vietnamese team at the committee, and Ahmed H. Salah, Deputy Minister of Economics-Planning and leader of the Saudi Arabian delegation

During the meeting, both sides underscored the implementation of cooperation programmes to ensure energy security and food for the two countries. They also closely explored measures to activate Saudi initiatives on pouring money into foreign markets.

The two sides prioritised bilateral future collaboration in agriculture, oil and gas, and agreed to step up negotiations securing investment protection, marine transportation and cooperation between their press agencies.

Saudi Arabia hopes to sign a memorandum of understanding with the Vietnamese Ministry of Culture, Sports of Tourism in the fields of youth development and sports.

According to the Ministry of Industry and Trade, two-way trade between Vietnam and Saudi Arabia has grown rapidly, hitting 1.71 billion USD in 2013 from 1.04 billion USD from 2011.

Last year, Vietnam’s exports to Saudi Arabia reached 471.4 million USD, with major currency earners being agricultural products, seafood, rice and apparel. Meanwhile, it imported 1.2 billion USD worth of goods from the country.-

Workshop shares Indonesia’s banking reform example

A workshop to introduce Indonesia’s experience in reforming its banking system was held in Hanoi on March 26, with the participation of many researchers and economic experts.

The event is one of a number of cooperative activities organised between the United Nations Development Programme, the Vietnam Academy of Social Sciences and the National Finance Supervision Committee (NFSC).

As well as illustrating banking reform in Indonesia, participants discussed the challenges facing Vietnam in this sector and potential solutions.

Dr. Syafruddin Temenggung, former Chairman of the Indonesian Bank Restructuring Agency (IBRA) said Vietnam should establish a bank deposit insurance system to rebuild the confidence of customers and thus adding prestige to the country’s banking system.

This is the optimal measure for settling credit and banking issues that could have a negative impact for Vietnam’s economy, he noted.

According to Chairman of the NFSC Vu Viet Ngoan, short-term measures recently taken by the Vietnamese Government to contain the spread of financial insecurity and stabilise the trust of the people have proven efficient, as the bad debt rate dropped to just 3.6 percent in 2013.

Ngoan stressed it is necessary for Vietnam to increase the transparency of its financial system, especially restructuring financial supervision and fostering coordination between financial supervision agencies and those operating in policymaking.

Opportunities for unlisted public companies abundant: official

Numerous opportunities remain for unlisted public companies in 2014 to mobilise capital, improve financial strength and access bank loans via the stock market, the Chairman of the State Securities Commission of Vietnam has said.

Speaking at a conference for this group of businesses in Ho Chi Minh City on March 26, Vu Bang further said Vietnam’s macro-economy has thrived since 2013. Many international organisations said the economy has experienced the worst and is now on an upward trend, while the stock market has made an outstanding recovery.

In 2013, foreign direct investment into Vietnam shot up by 54 percent, and investment via the stock market also surged by 34 percent.

In addition, once the Trans-Pacific Partnership agreement is signed, there will be an influx of foreign investment into the country, Bang said.

He went on to claim that the forthcoming derivatives market, which is expected to start operation by the end of 2015, will diversify investment channels and better foreign investment attraction further.

Deputy General Director of the Hanoi Stock Exchange (HNX) Nguyen Anh Phong said listing on stock exchanges such as the HNX, the Ho Chi Minh City Stock Exchange (HOSE) and the unlisted public company market (UPCOM) is an inevitable trend for Vietnamese joint stock companies in the coming time.

EU to offer 400 mln EUR assistance to Vietnam

The European Union (EU) will raise the amount of development assistance for Vietnam to 400 million EUR for the 2014-2020 period, according to Chief Operating Officer of the European External Action Service (EEAS) David O’Sullivan.

The figure is substantially more than the 298 million EUR sum provided from 2007-2013.

Meeting with Deputy Prime Minister Pham Binh Minh in Hanoi on March 26, Sullivan informed his host of the outcomes of the third Vietnam – EU deputy ministerial political consultation and the ninth meeting of the Vietnam – EU Joint Commission recently held in the capital.

He also reaffirmed the EU’s commitment to concluding the Free Trade Agreement (FTA) negotiations with Vietnam this year.

Deputy PM Minh, for his part, suggested that the EU ratify the comprehensive Partnership and Cooperation Agreement framework, and recognise Vietnam as a market economy before concluding the EU – Vietnam FTA talks by this October.

Positive signs for coal industry in early 2014

In the first two months of this year, the coal industry made positive changes with a 4-percent increase in production and nearly 6 million tonnes consumed, contributing to fulfilling the yearly plan.

I n the reviewed period, the corporation mined 6.58 million tonnes of coal, fulfilling 17.4 percent of the yearly plan, the English-language Vietnam Economic News cited sources from the Vietnam National Coal andMineral Industries Corporation (Vinacomin) as saying.

Coal consumption in the first two months of this year reached 5.8 million tonnes. Of this, domestic consumption and exports reached 4.38 and 1.44 million tonnes, accounting for 18 percent and 16 percent of the yearly plan, respectively.

Vinacomin Deputy General Director Nguyen Van Bien said that in the period, coal supply to the power sector also strongly increased, reaching 2.64 million tonnes, an increase of 2 percent compared to the same period last year.

In addition, the supply of the mineral to the fertiliser, paper and cement sectors reached 226,000 tonnes, 24,000 tonnes and 791,000 tonnes, respectively.

According to Vinacomin, coal consumption would increase as Mong Duong II Thermal Power Plant is put into operation this month.

Vinacomin-Cam Pha Port and Logistics Company Deputy Director Nguyen Van Hoan said that the company was quite able to supply coal to Mong Duong II Thermal Power Plant. A 1.7km conveyor with a capacity of 2,400 tonnes per hour was completed in mid-January.

Hoan also said that the company adopted a temporary supply plan with an average volume of 60,000 tonnes per month for the thermal power plant. Once operational, the plant will consume about 20,000-30,000 tonnes of coal per day.

This is a major advantage for coal consumption in Cam Pha district. In addition, it will contribute to balancing energy source and improving efficiency for the national power grid.

Vinacomin has set targets of consuming 35 million tonnes of coal and reaching total revenues of 105.5 trillion VND (nearly 5 trillion USD) for 2014. In addition, the company will focus on stabilising production, promoting consumption and improving product quality.-

Vietnam pushing stock market with various tools

The Vietnamese stock market is preparing to leverage exchange traded funds (ETFs) and would-be derivatives to lure more capital, heard a workshop in Ho Chi Minh City on March 25.

Regulators are speeding up legal and technical preparations so that the first ETFs could start operations in the second quarter of this year, Nguyen Son, head of market development department under the State Securities Commission, was quoted by the Vietnam Investment Review as saying.

ETFs are funds that track specific indices and whose portfolios include a basket of stocks. To date, all operating funds in Vietnam are closed-end.

The Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Exchange (HNX) are finishing rules for product design and trading mechanism of ETF certificates. The Vietnam Securities Depository is completing a project that allows clearing of ETF products and deals with risks related to ETF transaction cancellation.

After all the steps are finished and piloted at stock exchanges, the first ETFs will be launched into transaction.

Also in order to leverage and better facilitate the market, the two bourses would become one in the coming time, before Vietnam’s derivatives market is set to open in 2016, Son said. The Government would soon make the final decision on merging the two stock exchanges.

Regarding derivatives, Prime Minister Nguyen Tan Dung on March 11 approved the project to build up and develop the derivatives market, which would include such new products as share purchase rights, covered warrants, option contracts, as well as traditional products like as shares and bonds.

Son said the derivatives launch over the next two years is seen as another step towards completing the country’s stock market structure, supporting development of bond and stock markets and strengthening the role of the stock market in the financial industry and the entire economy.

The new market would be developed from simple to complicated products, Son told the workshop, co-organised by Vietnam Investment Review and PetroVietnam Securities Inc. (PSI).

The PSI is the manager and operator of PVN-Index, the Vietnam National Oil and Gas Group (PetroVietnam) launched in 2012 to measure the business performance of enterprises in the country’s oil and gas sector.

France-based Intelligent Financial Research & Consulting (IFRC), specialised in the new development of new indexes and in the customised index services, wanted to develop many new products based on PVN-Index, said IFRC founder and CEO Dr. Mai Huu Minh.

He added an idea from PSI and IFRC cooperation was to extend the idea of PetroVietnam to other leading Vietnamese companies like state utility Electricity of Vietnam and Petrolimex.

PVN-Index is currently a basket of 32 share codes, including PVN-10 Index representing the sector’s top 10 companies. The 32 codes account for 20 percent of the market capitalisation.

Corruption makes for expensive projects

After the JTC bribery scandal was exposed, economist Pham Chi Lan said that transport construction projects in Vietnam often have inflated price tags as a result of corruption.

This is not the first time Vietnamese officials have been accused of taking bribes from foreign firms. According to Lan, this will harm the credibility of Vietnamese authorities in the eyes of foreign investors as well as the country's citizens. "Since our management of ODA projects has already shown many shortcomings, I'm not surprised by this allegation. I'm just sad that state agencies don't have the ability to discover this case themselves," she said.

She went on to say that the scale of corruption is likely to increase along with the increase in the scale of projects. Corruption cases in Vietnam continue to appear more severe than in neighbouring countries. Lan then connected the bribery problem with the low quality and high cost of road construction in Vietnam.

She said, "The Minister of Planning and Investment said the projects are three times more expensive than estimations, and the Minister of Transport announced that construction costs are two to three times higher than original estimates. There is simply no other explanation as to why our construction costs are so much higher, and our quality lower, than in US and China. This also exposes a weakness in the system of project planning, bidding, consultancy, supervision and testing."

Speaking on the JTC bribery allegations, which have been widely published in the Japanese media, Lan added that the Ministry of Transport acted quickly and decisively in this case.

In 2007, officials from the Japanese Pacific Consultants International said that they gave thousands of USD to the director of the East-West Highway project, Huynh Ngoc Si, with the expectation of being awarded the contract. However, Vietnamese authorities did not react quickly to those allegations.

"When we hesitate, we take the risk of creating negative impacts. If I remember correctly, Japan threatened to cut its ODA to Vietnam. But I think that since Vietnam only has an average per capita GDP, we should depend less on ODA and more on our own resources," Lan said.

Addressing the number of corruption cases and cases brought to trial, Lan said that the outcomes, even of prominent cases such as that of Duong Chi Dung from Vinalines, were not really satisfying. Large-scale corruption must necessarily involve many people, yet many times only one individual is held to account, she added.  "It's correct to suspend the four officials in this JTC case, but we need to dig deeper for more connections in order to find the root cause."

VND 1.2 trillion for Coc Hai 1 wind power plant

Saigon Industry Corporation, Power Generation Corporation 2 and Electric Power Trading Investment Corporation signed a cooperation document to build Coc Hai 1 Win Power Plant in Ninh Thuan Province on March 25.

The project will cost nearly VND1.2 trillion (US$ 57 million) in two phases.

The first phase will begin June this year costing VND 190 billion (US$ 9 million) to build three 1MW turbines. They are scheduled to complete by the end of this year and begin operation next year.

The plant will be built under low-cost technology and will be able to generate power at a capacity 2.5 times higher than present power plants.

Tra fish price rockets in Mekong Delta

The price of tra fish has continuously increased recently reaching the highest rates in the last two years in the Mekong Delta.

On March 25, processing plants paid VND 25,000-25,500 a kilogram, an increase of VND200-400 over last week.

Farmers profit VND 1,500-2,000 from these prices.

The price increase is due to the scarcity in production, said Nguyen Van Dao, director general of Go Dang Company. Prices are expected to rise further as demand remains high.

US$2 billion investment in Vinh Tan 1 thermal power plant

An engineering, procurement and construction (EPC) contract worth over US$2 billion for construction of the Vinh Tan 1 thermal power plant construction in southern Binh Thuan province, was signed on March 25.

The new 1,200MW plant, which is part of the Vinh Tan Power Centre in Tuy Phong district, Binh Thuan province, including two 600MW units, is funded by the Southern Power Grid Com. Ltd., the China Power International Development Limited Company and the Power Corporation under the Vietnam National Coal-Natural Industries Corporation in a build-operate-transfer contract.

Once construction is complete in 2018 by the China Energy Engineering Group, the plant will be run commercially for 25 years and the investors will hand it over to the State.

The plant is expected to supply about 7 billion kWh annually to the electricity grid to help provide further power for the south and reduce dependence on hydroelectric power, especially in the dry season, as well as the power transferred from the north.

Sea freight charges to rise next month

Shipping lines have announced to increase their sea freight charges by hundreds of U.S. dollars per container shipped from Vietnam to major markets, including the United States, Europe and Australia.

In an announcement sent to customers, the container shipping line Hapag-Lloyd said it would lift the freight charges for goods exported from Vietnam and other countries to the U.S. and Canada. The increases are US$240 for a 20-foot container and US$300 for a 40-foot container.

Cosco and U.S. Lines will also take the same move.

Shipping lines will push up the charges on other routes, with rises of US$150 for a 20-foot container and US$250 for one 40-foot container transported from Asia to Northern Europe countries and the Mediterranean from next month.

Besides, the charges of goods shipped from Vietnam to Australia will be up US$200 and US$400 for 20-foot and 40-foot containers respectively.

For the cargo to be imported into Vietnam, Hapag-Lloyd and other shipping lines plan US$40-100 more from April 15.

The shipping lines explained that the existing charge rates were not sufficient for them to cover the operational costs, including the fuel bills.

However, the director of a foreign shipping line said fuel was just one of the factors for the charge adjustment. He added that big lines were also trying to cover the losses caused by supply outperforming demand.

“There is a gap between the supply of container ships and the demand for cargo transportation,” he said.

FDI firms still want to hold on to investment certificates

While the board in charge of amending the Investment Law is planning to streamline the procedures for establishment of new businesses, many foreign direct investment (FDI) enterprises maintain that they still need investment certificates as they believe this paper is the passport for them to get continued incentives.

Speaking at a dialogue between FDI firms and authorities in HCMC on March 24, Minister of Planning and Investment Bui Quang Vinh said the ministry was seeking to simplify investment procedures through the amendments to the Investment Law and Enterprise Law. Toward this end, the ministry is considering removing the investment certificate and only maintain what would help authorities manage the FDI sector effectively.

However, after three dialogues were held in the north, center and south of the country, the ministry has received mixed feedbacks, with some foreign firms expecting the issuance of investment certificates to be scrapped but others wanting it to stay.

Most firms in the latter group wanted to keep this certificate so that they could enjoy the Government’s incentives prescribed on the certificate. In addition, this is a legal basis for investors to rent land or apply for bank loans, Vinh said.

However, Vinh said the ministry would consider abolishing the issuance of investment certificates, except for conditional industries, and those using much land, possibly polluting the environment or needing licenses to get investment incentives.

In the long term, investors would have no need to obtain any investment certificate any more, Vinh added.

If this comes true, almost all FDI enterprises would just register with authorities to set up a company like domestic investors.

Many FDI firms and representatives of investment licensing agencies at the seminar also complained about time-consuming business establishment procedures.

Le Manh Ha, vice chairman of HCMC, said the city had faced a lot of difficulties in granting investment certificates.

Despite much effort, the city has missed the deadline in giving certificates to investors. Some investors have suffered a delay of nearly eight months due to much time spent on consulting ministries and doing other procedures.

As per the current law, ministries have to comment on an investment project within 15 working days but in most cases, they reply after one or two months, Ha said.

Some foreign firms also bemoaned other challenges in the business environment in Vietnam such as complicated tax and customs procedures and the shortage of skilled labor.

Ministry requests further explanation for huge airport project

Minister of Planning and Investment Bui Quang Vinh returned a report on the big-ticket Long Thanh International Airport project to Airports Corporation of Vietnam (ACV) last Friday, asking the firm to fine-tune it before it can go before the Government.

The State assessment council for the project, headed by the minister himself, was originally scheduled for last Friday to decide whether the project could proceed to the Government and the National Assembly in May.

The project was submitted to the ministry in August last year. According to the Ministry of Transport and ACV, the project would help improve the nation’s air transport capacity. Meanwhile, HCMC-based Tan Son Nhat International Airport with a maximum capacity of 25 million passengers a year will become overloaded in 2016.

The project would be developed in three stages. ACV has presented the first stage between 2016 and 2025, in which an international transshipment terminal would go up with a capacity of 25 million passengers a year.

Last month, the council asked ACV to explain five key issues, including the reason for construction of Long Thanh Airport instead of expanding the Tan Son Nhat airport or upgrading Bien Hoa airport, scale of the project, traffic connectivity issue, site clearance and compensation, cost and economic efficiency.

Speaking at the second assessment meeting last Friday, Minister Vinh said this is a single project that has the biggest cost ever for one stage, at US$7.8 billion, while its land needs will reach the highest level, over 5,000 hectares. Caution should be practiced, he proposed.

“Without a clear explanation, the project could not be passed to the Government and the National Assembly, especially at a time of financial hardship,” Vinh said.

ACV general director Nguyen Nguyen Hung sent a document to the council making clear the five issues. However, it failed to satisfy the inspection group, the assessment council and experts.

Nguyen Xuan Tu, head of an assessment group for the project, said the report did not mention shortcomings and difficulties which Long Thanh airport project might face.

The investor has not made clear whether the planned airport could meet the regional traffic connectivity target or demands and challenges in site clearance, he said.

La Ngoc Khue, former Deputy Minister of Transport, said ACV should provide a clearer explanation for how to raise huge funds.

Minister Vinh requested ACV to make clear the issue and finish the report within 15 days.

Vietnam pushing stock market with ETFs, future derivatives

The Vietnamese stock market is preparing to leverage exchange traded funds (ETFs) and would-be derivatives to lure more capital, heard a workshop in Ho Chi Minh City March 25.

Regulators are speeding up legal and technical preparations so that the first ETFs could start operations in the second quarter of this year, said Nguyen Son, head of market development department under the State Securities Commission.

ETFs are funds that track specific indexes and whose portfolios include a basket of stocks. To date, all operating funds in Vietnam are closed-end funds.

The Ho Chi Minh Stock Exchange (HOSE) and Hanoi Exchange (HNX) are finishing rules for product design and trading mechanism of ETF fund certificates. The Vietnam Securities Depository is completing a project that allows clearing of ETF products and deals with risks related to ETF transaction cancellation.

After all the steps are finished and piloted at stock exchanges, the first ETFs will be launched into transaction.

Also in order to leverage and better facilitate the market, the two bourses would become one in the coming time, before Vietnam’s derivatives market was set to open in 2016, Son said. The Government would soon make the final decision on merging the two stock exchanges.

Regarding derivatives, Vietnamese Prime Minister Nguyen Tan Dung on March 11 approved the project to build up and develop the derivatives market, which would include such new products as share purchase rights, covered warrants, option contracts, as well as traditional products like as shares and bonds.

Son said the derivatives launch over the next two years was seen another step towards completing the country’s stock market structure, supporting development of bond and stock markets and strengthening the role of the stock market in the financial industry and the entire economy.

The new market would be developed from simple to complicated products, Son told the workshop, co-organised by Vietnam Investment Review and PetroVietnam Securities Inc. (PSI).

PSI is the manager and operator of PVN-Index, the Vietnam National Oil and Gas Group (PetroVietnam) launched in 2012 to measure the business performance of enterprises in the country’s oil and gas sector.

France-based Intelligent Financial Research & Consulting (IFRC), specialised in the new development of new indexes and in the customised index services, wanted to develop many new products based on PVN-Index, said IFRC founder and CEO Dr. Mai Huu Minh.

He added an idea from PSI and IFRC cooperation was to extend the idea of PetroVietnam to other leading Vietnamese companies like State utility Electricity of Vietnam and Petrolimex.

PVN-Index is currently a basket of 32 share codes, including PVN-10 Index representing the sector’s top 10 companies. The 32 codes account for 20 per cent of the market capitalisation.

Q1 GDP rises to three-year high

The nation’s gross domestic product (GDP) in the first quarter of 2014 has increased 4.96% over the same period last year, the strongest rise in three years.

The rate is lower than the 5.97% recorded in 2010 and 5.9% in 2011 but higher than the 4.75% achieved in 2012 and 4.76% in 2013, according to a report released by the General Statistics Office (GSO) on March 24.

The primary industry has reported growth of 2.37%, nearly the same as in 2013 at 2.34%. Of the figure, agriculture is up 1.91%, contributing 1.41 percentage points to the total rise, as it accounts for the highest ratio in the industry.

Meanwhile, construction and services have advanced 4.69% and 5.95% respectively, higher than last year’s respective figures at 4.59% and 5.68%.

The GSO’s report said supply and demand remained weak in the first quarter. Notably, the industrial sector, especially manufacturing and processing, and enterprises were still mired in hardship.

On the demand side, the GDP growth rate in the first quarter was similar to 2013 with a heavy reliance on the trade surplus. However, the foreign direct investment (FDI) sector contributed the most to the trade surplus, doubling the domestic sector.

In the January-March period, the nation has generated export sales of over US$33.3 billion, up 14.4% year-on-year, and spent US$32.3 billion on imports, a 12.4% increase. These growth rates are lower than in 2013, at 19.7% and 17% respectively.

In addition, the GSO warns of “silent ownership restructuring” among economic sectors. This suggested that mergers & acquisitions (M&A) turned active with more foreign investors acquiring domestic firms. However, GSO did not provide specific data about the issue.

The report also suggested reconsidering interest rate policies in the banking restructuring scheme as the return on equity of enterprises was low during the 2000-2010 period, reaching the highest at nearly 5% in 2006 and the lowest at 4% in 2010.

Vietnam to import 150,000 cattle from Australia

Vietnam is likely to import more than 150,000 cattle from Australia this year, thus becoming its second largest cattle buyer behind Israel, said Vietnam’s trade commission in Australia in a statement posted on ttnn.com.vn on March 20.

The country imported nearly 67,000 head of cattle last year, a 19-fold surge compared to 3,500 in 2012. This year to date, Vietnam has imported 40,000 cattle.

Vietnam is to import more cattle for meat from Australia because supplies from Southeast Asia are slowing down while the demand for beef is on the rise.

A delegation of government officials and enterprises led by Australian Northern Territory Minister for Industry Willem Westra Van Holthe has paid a visit to Haiphong’s and HCMC’s farming areas and slaughterhouses this month, the commission said. Van Holthe was quoted as saying that the fast growing demand in Vietnam has stabilized export prices of cattle in the northern and southern regions.

First shipments of buffaloes from Australia to Vietnam are considered a promising beginning for the sustainable farming Down Under and help create more jobs for the local people in northern Australia, he said.

However, concerning 600 Australian buffaloes expected to arrive in Vietnam in late February and early March, local veterinary officials said none of the cattle importers have registered quarantine for the shipment.

In accordance with regulations, they have to register for quarantine seven days ahead of delivery to Vietnam.

Amway pours extra US$25 million into new facility

Amway Vietnam Co., Ltd last Friday started work on its second factory in Vietnam at a total cost of over US$25 million, raising its investment capital here in the country to US$33 million.

The new facility will go up at Vietnam-Singapore II Industrial Park in Tan Uyen District in the southern province of Binh Duong. It will cover a total of 54,675 square meters, seven times larger than Amway’s first facility in Amata Industrial Park in neighboring Dong Nai Province.

Set for operation early next year, the plant will have three production lines having a combined capacity of 23,280 products, equivalent to US$200 million per year, and create jobs for over 170 locals.

According to Amway Vietnam, the project is divided into two phases with modern equipment and machinery meeting international standards. The first phase, expected to be up and running in next year’s first quarter, will focus on producing Nutrilite food supplement powder and pellets with a majority of materials imported from the U.S.

In the second phase, which is expected to go into operation in 2017, the plant will produce liquid products.

Doug DeVos, President of Amway, said that since it came to Vietnam in 2008, the firm has achieved steady growth here in Vietnam. This is why Amway has decided to continue its long-term investment pledge in Vietnam by building the second plant to meet the increasing demand of consumers, he added.

The construction of the second plant in Vietnam is part of Amway’s broader plan to export products made by Amway Vietnam to Southeast Asian countries in the near future.

Amway Vietnam reported sales revenues of over US$90 million last year and now has over 300,000 direct distributors.

According to Amway, which is known for its direct selling model, the firm has been in Vietnam for only five years but the Vietnamese market ranks 12th among over 100 countries and territories where Amway is present. With the new plant, Amway hopes Vietnam will become one of its top ten markets in 2016.

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

Rice exports, Aviazapchast, ODA disbursement, coal, stock market, Amway
 
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