BUSINESS IN BRIEF 14/4

Shares gain despite investor caution last week

Cautious psychology continued last week with eased liquidity, though the benchmark indices still managed to advance.

On HCM City Stock Exchange, the VN-Index added 1.27 per cent to close the week at 600.57 points, while the HNX-Index on the northern bourse gained 0.84 per cent to end at 87.49 points.

On the two first trading days of the week, the benchmark indices rose thank to gains of large-cap stocks, including PetroVietnam Gas Corporation (GAS), Vinamilk (VNM), Masan Group (MSN) and insurance Bao Viet Holdings (BVH).

However, with the trading volume and value seen declining, investors remained cautious. The matching volumes on HCM City Stock Exchange and Ha Noi Exchange decreased, respectively, 13 per cent and 15 per cent over the previous week.

Meanwhile, profit-booking pressures intensified on the two last trading days of the week the markets were closed on Wednesday for a public holiday.

Also, the upward trend was reversed after the VN-Index approached the 610-point level. Selling activities were strong on blue chips, especially as strong net selling by foreign investors last week put the market under pressure, although they had returned to net buying the previous week.

During last week, the net selling value of foreign investors reached VND503 billion (US$23.9 million), mainly on PetroVietnam Fertilisers and Chemicals Corporation (DPM), real estate developer Vingroup (VIC) and Hoang Anh Gia Lai (HAG).

However, Masan Group (MSN) and PetroVietnam Gas Corporation (GAS), together with stocks in the securities sector, continued to attract capital inflow, even when the market posted losses. Also, GAS on Friday increased by 2.2 per cent to VND94,500 ($4.5) per share.

MSN added 1 per cent to be traded at VND98,000 ($4.7) on a high dividend payout ratio and target of $1 billion turnover for this year. Gains of GAS and MSN helped narrow the market loss on Friday.

The index for stocks in the securities sector also posted the highest increased rate last week, at 4.96 per cent.

On the southern bourse, an average of 116 million shares were traded per session, with an average value of nearly VND2.4 trillion ($114.2 million), respectively 12 per cent and 4 per cent lower than the previous week.

The average trading volume and value on the capital city's exchange were 19 per cent and 16 per cent lower, respectively, at 71.8 million shares and VND858 billion ($40.8 million).

According to BIDV Securities, the Vn-Index would continue to consolidate around the 600-point level this week with low trading volume of around 100 million shares. The company said that investment chances for short-term profit takings were small.

Several securities firms forecast that the market would continue to face difficulties this week, as the benchmark indices was on a sensitive resistance band, warning short-term investors to be cautious.

However, Rong Viet Securities expected the market would improve this week as business results of some large companies would be unveiled this week and become a market stimulator. 

Economy recovering but demand improving slowly

The country’s economic recovery has started to gain traction but aggregate demand has yet to strengthen, according to the National Financial Supervisory Commission.

A report by the commission on forecasts for the first quarter and the whole year said the pace of consumption recovery is slow with retail sales of goods and services (the price factor excluded) rising only 5.1% reported in quarter one, not much higher than in the same period of previous years (4.5% in 2013 and 5% in 2012).

Private investments have not improved much, which is evident in a credit contraction in quarter one. Credit growth was 1.17% and 0.22% in the first quarter in 2013 and 2012 respectively.

Meanwhile, spending on investment development declined 4.9% in the quarter while last year’s first quarter saw a slight drop of 0.3%. Economic growth is thus quite low compared to economic potentials.

Agriculture, especially rice, is facing difficulties in output and price. Although rice farmers have a bumper harvest, consumption of rice is still tough given the mounting pressure from Thailand’s ending the rice subsidy scheme and China’s food self-sufficiency policy.

Growth momentum depends much on the foreign investment sector. Export revenues (crude oil excluded) of the sector leapt 18.9% in the first quarter while those of the domestic sector edged up a mere 2.8%.

The report points out that it is necessary to continue stimulating consumer demand, supporting farmers in terms of produce prices, lowering interest rates, and helping enterprises and producers gain easier access to bank loans.

Besides, disbursements of investment capital sourced from the budget and government bond sales should be accelerated. Prices of essential goods and services, the exchange rate and aggregate demand should be regulated in harmony with monetary and fiscal policies, said the report.

However, the report showed optimism, saying the economy is back to the growth trajectory although the rate is modest. Economic growth is forecast to be higher in the coming quarters, so the possibility of achieving 5.8% growth is high.

Vietinbank may acquire Petrolimex's PGBank

PGBank, a small in-house bank of Petrolimex, may sell 99 per cent of its stake to the second-largest bank by assets, Vietinbank, as part of its restructuring process.

The acquisition plan, which was presented in a report prepared for PGBank's annual shareholder meeting next Friday, is viewed as "the most advanced."

If approved by PGBank's shareholders, Vietinbank will issue additional shares to acquire PGBank.

The share swap ratio of PGBank and Vietinbank is expected to be no less than 0.82:1.

Accordingly, PGBank will become a banking unit under Vietinbank, yet will continue to retain PGBank's trading brand and the operation system and management will remain unchanged.

PGBank plans to quadruple its pre-tax profit to VND250 billion (US$11.85 million) .

Last year, the Petrolimex bank recorded a total outstanding loan of VND13.86 trillion ($657 million), up 0.6 per cent against 2012. Bad debt ratio recorded at the end of 2013 was brought to 2.98 per cent, from 9.81 per cent by the end of last September or 9.09 per cent in 2012.

As of December 31, 2013, the bank's total assets were recorded at VND24.87 trillion ($1.2 billion), up 29 per cent against 2012.

The restructuring process at PGBank is part of the government's direction that aims to reduce the ownership of the major fuel importer and marketer, Petrolimex, from 40 per cent to 20 per cent next year. Petrolimex will have to withdraw its investment in PGBank.

The plan of PGBank and Vietinbank is not the first proposal of its kind. Since the beginning of this year, Southern Bank and Sacombank, Mekong Housing Bank and Maritime Bank also went through similar restructuring.

More border gates benefit from tax breaks

The Ministry of Finance has issued Circular 40/2014/TT-BTC, which guides the application of preferential import tax on goods from Cambodia.

As compared with the previous Circular 82/2012/TT-BTC, the latest circular mentions more details and more product lines in the list of imported goods allowed to enjoy a preferential import tax rate of zero per cent.

In addition, seven border gates are permitted to enjoy clearance for imported goods with preferential tax rate of zero per cent for products from Cambodia.

The circular came into effect from January 1, 2014, and will expire on December 30, 2015.

Laos Petro to invest in bonded warehouse, oil pipeline

Laos Petro Join Stock Company plans to invest US$200 million in a bonded warehouse and oil pipeline from Hon La of Quang Binh Province to Khammouna Province (Laos).

Laos Petro Join Stock Company has proposed this investment plan to the Quang Binh Provincial People's Committee of Viet Nam.

The project includes the bonded warehouse, with a capacity of 300,000-500,000 cubic metres, used for temporarily handling imported gasoline that will be re-exported to Laos, a jetty system to handle 50,000 tonnes vessels, 300 kilometres long oil pipelines from Hon La to Khammouna Province and the bonded warehouse in Khammouna Province with a capacity of 200,000 cubic metres.

Ministry wants new housing projects stopped

The Ministry of Construction has made a proposal to Prime Minister Nguyen Tan Dung about requiring localities to stop allowing new residential projects this year.

The ministry said the proposal was being made due to a large inventory in the property market, and that the supply of high-end housing was higher than the supply of low and middle-level segments.

Reports from 61 localities from across the country showed that there are around 3,200 housing projects being constructed, accounting for 81 per cent of the total with an area of 81,500ha. Fifty-two provinces and cities in the country have requested adjusted planning of 45 projects with an area of 21,000ha.

Ariston Thermo opens new plant in Bac Ninh

Ariston Thermo, Italian heating and water heating manufacturer, opened a new manufacturing plant in Tien Son Industrial Park of Bac Ninh Province.

This is the company's first plant in Viet Nam and the second-largest in Asia. Covering an area of over 50,000sq.m, the plant, set up with an investment of US$18 million, will employ about 300 people and produce up to 1,000,000 electric water heaters per year.

"With today's opening, we strengthen our production capacity within the countries of Southeast Asia, an area of strong growth in which Viet Nam is the focus of our development strategy," said Chairman of Ariston Thermo Paolo Merloni.

With the new plant, Ariston Thermo has set a goal expanding its business in the local market and in other countries of Southeast Asia.

Toyota to recall 42,772 vehicles

Toyota Viet Nam (TMV) said it is preparing to recall 42,772 units of Innova and Fortuner for checking and replacing the spiral cable of driver's airbag.

The malfunctioning spiral cable may prevent the airbag from opening in the event of a crash. The total number of vehicles that the TMV plans to recall includes 40,241 Innova units produced from January 7, 2006, to January 19, 2010, and 2,531 Fortuner units produced from February 1, 2009, to January 19, 2010, the Japanese-invested car maker said in a statement sent to Viet Nam News.

The move follows a global recall of vehicles, due to faulty airbags, by Toyota Motor Corporation (TMC) that effected 3.5 million vehicles produced in North

America, Europe, Australia and Japan. Vehicles in Africa, Middle East and Asia were also recalled.

According to the TMC, the driver's airbag module in the vehicles in question contains electrical connections housed in a spiral cable assembly, which includes a Flexible Flat Cable (FFC).

The FFC could contact a small point of the retainer and become damaged when the steering wheel is turned. This damage could occur to a circuit on the FFC that provides connectivity to the driver's airbag module.

If the connectivity is lost, the airbag warning lamp will light up and the driver's airbag can get deactivated, causing it to not deploy in the event of a crash.

Under detailed guidelines from the TMC, the TMV will carry out the checking and replacing of the spiral cable of driver's airbag free of cost.

The TMV said it has been reporting the details of the campaign to recall the vehicles to Viet Nam Register as well as managing logistics to facilitate an early recall.

"Immediately after approval by Viet Nam Register, the TMV will send official and detailed information of the campaign to customers and mass media in Viet Nam," said a representative from TMV.

Last December, Toyota Motor Viet Nam also recalled 126 Land Cruiser Prado and Hiace for checking the valve springs. In November 2012, it recalled 5,299 units of the Corolla Altis and Vios to check and repair faulty power-window master switches.

While the TMC – the world's biggest automaker - sold nearly 10 million vehicles last year, its Viet Nam's subsidiary, the TMV, sold 31,000 vehicles in the same period.

Viet Nam needs holistic agriculture strategy

Viet Nam needs to look at food security from a more comprehensive perspective, officials and experts say.

Tran Van Viet, an expert from the National Assembly's Economic Committee, said agriculture should not only used to feed people, but to feed them properly.

"Food security, climate-smart agriculture and green growth have become the motivation for the farm sector in recent years," he said.

Nguyen Van Bo, director of the Viet Nam Academy of Agriculture Sciences (VAAS), said it was not possible to look at food security, poverty, hunger, climate change, and environmental sustainable development separately.

He said Viet Nam was one of five countries in the world that would suffer the most from climate change and that it was of critical importance that development scenarios be built.

A model for smart agriculture was initiated in 2011 with support from the Food and Agriculture Organisation.

It was held in the three northern provinces of Yen Bai, Son La and Dien Bien.

Viet said the term "green growth" had become a development strategy in Viet Nam. He added that to make it work, researchers and policy makers had to define actions that the Government had to make.

Nguyen Do Anh Tuan, deputy director of the Institute of Policy and Strategies for Agriculture and Rural Development (IPSARD), suggested several changes in terms of policy making.

These include shifting from protecting rice-planting areas to protecting agricultural land and from developing rice production to improving food quality. He also recommended that instead of expanding agriculture areas, Viet Nam improves agriculture productivity with the support of science and technology.

Tuan also mentioned the need to invest in technology for the post-harvest period instead of focusing only on production and to organise large-scale regional production instead of small-scale, scattered production.

Another important suggestion that Tuan made was that the Government support farmers from vulnerable groups so that they could make higher profits. Besides, he said, the Government should let the market run its own course instead of intervening and should help the country focus on its strengths in order to boost international integration.

Vietnam’s cooperative potential introduced in France

Evaluating the huge potential of cooperation between Vietnam and France in economics, culture and human resources was the focus of discussions at a recent seminar held in Tours France, the capital of the Indre Et Loire department.

The event, part of activities marking the Vietnam Year in France, attracted representatives from Indre Et Loire, neighboring areas in the region and French friends seeking investment opportunities in Vietnam.

Speaking at the seminar, Tours Deputy Mayor Christophe Bouchet, said that Vietnam’s open-door policies and renewal process serve to greatly enhance cooperative opportunities between the two nations, noting that the historical relations and similarities in culture only serve to solidify the relationship.

“Exploiting the advantages to their fullest and capitalizing on the benefits of  cultural heritage, the Loire Valley region of Tours has boosted cooperative activities to become a dynamic and long-term economic and trade partner with Vietnam,” he said.

Cultural exchanges have been held through photo exhibitions, art performances and film screening in the framework of activities of the Touraine-Vietnam Friendship Association, further bolstering cooperation between the two nations he added.

At the seminar, leading governmental and business officials of Indre Et Loire introduced programmes to support Vietnam in vocational training. The managing board of the University of Tours also designed training programs to meet the requirements for Vietnam’s development.

For his part, Vietnamese ambassador to France, Duong Chi Dung highlighted the initiative to organize the seminar, which evidences the strong bonds of friendship between French localities and Vietnam. He reviewed cooperative relations in all fields, especially in economics with the operation of over 300 French businesses in Vietnam and a two-way turnover in 2013 reaching EUR3.5 billion.

The Vietnamese diplomat highlighted huge economic potential between the two nations and encouraged businesses of Indre Et Loire to invest in Vietnam.

Nguyen Canh Tuong, Vietnamese embassy trade counselor in France also delivered a report introducing Vietnam’s emerging economy, investment opportunities for key areas-- garments and textiles, leather footwear, farm produce and seafood processing, information and technology, biology, electronic engineering, and infrastructure development. .

Road maintenance to cost $332m

The National Road Maintenance Fund needed more than VND7 trillion (US$332 million) to repair and upgrade roads this year, Chief of the fund's Central Council Le Hoang Minh has said.

Of this amount, VND4.6 trillion ($218 million) is expected to come from vehicle registrations. The rest will be provided by the State budget.

Figures from the council show that more than VND1 trillion ($47 million) was collected from registration stations nationwide in the first three months of this year, accounting for 23.5 per cent of the estimated amount for the whole year.

Nearly VND5.4 trillion ($256 million), which will account for 65 per cent of the fund, will be spent on managing and upgrading national highways. The rest will be allocated to provinces and cities to help them maintain and upgrade roads.

Out of the nation's 63 cities and provinces, 62 have set up their own road maintenance funds and 47 have councils to manage the funds.

Last year, the National Road Maintenance Fund, which was established in 2012, collected nearly VND7 trillion.

It spent VND6.4 trillion ($303 million) on regular road maintenance and management, buying toll collection rights for a toll station on National Highway No.1 and establishing mobile truck weighing stations.

Statistics from the Ministry of Transport last year showed that there were more than 37 million motorbikes and two million cars in Viet Nam. The Government hopes to reduce the number of motorbikes to 36 million by 2020.

The amount of road maintenance fees vehicle owners are required to pay is decided by provincial and municipal People's Committees.

Lending rates at 2005-2006 levels

Lending rates currently hover at 2005-06 levels, less than half the 2011 rates, according to the State Bank of Viet Nam's Monetary Policy Department.

Lending interest rates in Vietnamese dong are currently at 8 per cent for the five prioritised sectors (agricultural producers, exporters, small- and medium-sized enterprises (SMEs), supporting industries and hi-tech businesses).

Other sectors are charged lending rates of 9-10.5 per cent for short-term loans and 11-12.5 per cent for medium- and long-term loans. Businesses with healthy and transparent financial positions and viable business plans can borrow at 6-7 per cent per year.

Last year, SBV Governor Nguyen Van Binh called on credit institutions to cut lending rates below 13 per cent for existing loans. Loans with rates of 13 per cent, which are mainly for consumption, currently account for roughly 17-18 per cent of banks' total outstanding loans, much lower than the rate of 31 per cent from late June last year.

The Government asked the banking industry last month to further lower interest rates on existing loans to remove difficulties for enterprises.

SBV Deputy Governor Nguyen Phuoc Thanh said that the banking industry would follow this directive, trying to cut interest rates of existing loans to roughly 10 per cent from the current 12-13 per cent.

If lending rates remain as high as 13 per cent, firms will not be able to repay loans and will be forced to close, Thanh said, so banks should cut rates to save not only firms but also themselves.

Fuel prices slashed, petrol stays unchanged

The ministries of Finance and Industry and Trade yesterday asked retailers to cut price of all kinds of fuel except petrol.

Accordingly, the diesel price was cut by VND90 per litre to VND22,510 (US$1.07) while that of mazut and kerosene was reduced by VND100 and VND130 per litre to VND18,660 ($0.88) and VND18,360 ($0.87) respectively.

The price of petrol remained unchanged at VND24,690 ($1.17) per litre.

The ministries also wanted the use of the price stabilisation fund for petroleum products to be minimised. The fund, built on contributions from the firms' selling prices, is mostly used to offset losses during delays to adjust local prices after international prices increase.

Accordingly, the payback on petrol was reduced from VND200 to VND50 per litre, while that on diesel, kerosene, and mazut remained unchanged at zero dong per litre.

The cut in payback on petrol prices was based on the estimation that traders were making a profit of nearly VND200 per litre on petrol at current prices.

According to the Ministry of Finance, the petrol price stabilisation fund stood at VND840 billion ($39 million) at the end of the first quarter of this year.

It noted that the fund balance at the end of this quarter of Viet Nam National Petroleum Group (Petrolimex) and the Military Petroleum Corporation was VND649.3 billion ($30.9 million) and VND154 billion ($7.3 million) respectively.

The HCM City Oil and Gas Company and Thanh Le import-export company have a fund balance of VND100 billion ($4.7 million) and VND109 billion ($4.8 million) respectively, while Hai Ha Waterway Transportation Company has VND26 billion ($1.23 million).

SBIC not ready for equitisation

The Shipbuilding Industry Corporation (SBIC) is asking the Government for a special mechanism to deal with debts and negative equities of its subsidiaries before equitisation in the next 20 months.

SBIC's Chairman Nguyen Ngoc Su made the revelation at a recent training workshop on equitisation. Most of the SBIC subsidiaries are suffering cumulative losses and grand negative equities.

"Currently, the key challenge is that big negative equities are at a complete standstill during the debt restructuring processes. It is mandatory for companies to turn equities into a positive status before equitising," Su pointed out.

Accordingly, SBIC expects the Government to allow its subsidiaries to transfer debts to the mother corporation. Debt compensation will be provisionally made by revenues from initial public offerings (IPOs).

If IPOs fail to settle the debts, SBIC will seek the government's continued support throughout the debt restructuring and loss compensating process.

SBIC, formally known as Vinashin, intends to privatise four one-member limited companies, such as Vinashin Corrugated Iron Company, Chan May Port, Ha Long, and Cam Ranh shipyards in 2014.

Five others slated to go public next year are Thinh Long, Sai Gon Shipbuilding and Marine Industry Company, Sai Gon Shipbuilding Industry Company, Bach Dang, and Pha Rung shipbuilding companies.

In Viet Nam, IPO and listing are separate processes.

SBIC has completed its first phase of the restructuring process. In the second phase, the government has permitted the restructuring of debts including the Government-guaranteed debt, debt from the official development assistance, and the amount lent to Vinashin.

Therefore, SBIC has VND21 trillion (US$1 billion) of domestic debt and about $35 million of foreign debts.

In October last year, Viet Nam listed Government-guaranteed bonds at the Singapore Stock Exchange in a bid to salvage the troubled, debt-laden Vinashin in repaying its creditors.

The move was aimed to help the State-run Vinashin cover a foreign loan worth $600 million, which was considered crucial for the group to repay the foreign debts and enable it to accelerate the much-needed restructuring of the corporation.

The bonds will be issued for 12-year terms with an annual interest rate of 1 per cent.

The restructuring of Vinashin was ordered in 2010 after government inspectors uncovered the group's financial malpractices. By the end of 2009, the company was neck deep in debts amounting to more than VND86.7 trillion or $4.1 billion.

HCM City to sell all State-owned houses

The municipal People's Committee said it has completed the sale of State-owned houses in the city to meet the urgent demands of families and beneficiaries of social policies.

Statistics from the city showed that it had sold 93,600 State-owned houses till date, accounting for 98 per cent of the total.

In 2010, the city sold 92,500 similar houses with a total area of 5.1 million square metres for VND5.86 billion, or US$279 million. The money has been reinvested in housing projects.

The city has 102,000 State-owned houses.

Banks cut rates on capital surplus

Many banks have slashed interest rates to below the ceiling level of 6 per cent regulated by the central bank amid abundant capital.

Deposit interest rates listed at the Viet Nam Export Import Bank (Eximbank) for the term ranging from one to three months has been cut to 5.7 per cent from the previous 6 per cent rate. The deposit interest rate for the 4-5 month term has also been slashed to 5.98 per cent from 6 per cent.

Sacombank has also cut the deposit rate for the term of between seven and 11 months. The annual rate of 6.55 per cent has been applied to the 7-8 month term, while 6.7 per cent has been set for a 9-10 month term and 6.8 per cent for the 11-month term.

According to the central bank, credit in the first quarter this year rose only 0.01 per cent, showing that banks are enjoying a surplus of capital.

Despite the abundant capital, interest rates are still above the deposit rate ceiling in some ailing banks, according to the Phap luat TP HCM newspaper.

Deputy Governor of the State Bank of Viet Nam (SBV) Nguyen Phuoc Thanh said that the interest rates over the deposit rate ceiling had greatly reduced, showing that in spite of solid liquidity in some aspects of the banking system, it was not a uniform trend.

He explained that the liquidity of some ailing banks was so restricted that it was forcing them to try to attract depositors with interest rates above the ceiling rate.

Thanh said that the central bank would plan to boost competition in the banking sector by solidifying the banking industry through restructures and weeding out weak banks.

In a foreacast on credit sector trends in the second quarter of this year released last week, most credit institutions said deposit and lending rates in Vietnamese dong would continue to decline this year.

Vinatex announces investment plans

Viet Nam National Textile Garment Group (Vinatex) will invest VND4.8 trillion (US$228.5 million) in three projects in the central province of Quang Binh.

According to information published on Vinatex's website, the projects that were granted licences were a fibre plant and a garment factory in Quang Phuc Ward, Ba Don Town and a garment factory in the Gia Ninh Commune, Quang Ninh District.

In addition to the three projects , the group has signed a memorandum of cooperation with the Quang Binh Province for four other projects, such as the research and development of cotton and eucalyptus materials for the group's spinning mills, investment research for the construction of a fibre plant in Quang Ninh District, investment research for a fibre weaving and dyeing complex in Bac Quan Hau Industrial Park, and an investment survey related to garment factories for export in the Le Thuy and Quang Trach Districts.

According to Vinatex, Quang Binh Province has committed to offer its preferential policies for their projects, while the Bank for Investment and Development of Viet Nam (BIDV) has signed a principle agreement to arrange capital for them.

On April 5, Quang Binh Province held its first conference to promote local investment, in which about 200 delegates participated. According to the province, it now has 276 registered projects with a total capital of some VND100 trillion (US$4.8 billion).  

New power calculations

Prime Minister Nguyen Tan Dung has issued a decision on electricity retail prices that will apply to six price levels instead of the current seven levels.

The decision, which will take effect from the beginning of June, stipulates that power tariffs for households consuming 0-50kWh will be 92 per cent of the average price, 95 per cent for 51-100kWh, 110 per cent for 101-200kWh, 138 per cent for 201-300kWh, 154 per cent for 301-400kWh and 159 per cent for more than 401kWh.

The current regulation divides power retail prices into seven levels. Accordingly, the first level of 0-50kWh has been established for poor households, while the remaining six levels have been applied to all households.

Customers would therefore enjoy cheaper prices if their consumption fell into the fifth bracket of 301-400kWh.

Retail power tariffs will also be adjusted for industrial activities.

The new decision stipulates a common price for two groups of production and water-pumping sectors instead of the current two levels of pricing. The new tariff will be one per cent higher than the current price.

Retail prices applied to businesses will also be reduced by five per cent during normal business hours, three per cent during off-peak hours and eight per cent during rush hours for 6-22kV.

Stable price initiative a success

The city's market stabilisation programmme, with its diverse, high quality products and reasonable prices, has become an effective way to regulate and stabilise market prices.

Speaking at a conference yesterday, Le Ngoc Dao, deputy director of the city's Industry and Trade Department, said the programme had promoted trade co-operation between HCM City and other neighbouring provinces, and had created favourable conditions for the city's enterprises to work with others to invest in production, connect supply and demand, and ensure a stable supply for the city.

Last year, the city did not use the State budget to support enterprises in the programme but invited credit institutions to provide preferential interest rates on loans.

Five credit institutions and 59 enterprises joined the programme in 2013. They provided VND860 billion (US$42.5 million) in short-term loans with an interest rate of 6 per cent per year and VND1.1 trillion ($53 million) for medium- and long-term loans at 10 per cent per year.

The programme accounted for 25-40 per cent of market demand, an increase of 15-30 per cent in comparison with 2012.

Selling prices for products in the programme were 5-10 per cent lower than market prices.

The programme comprises four groups, including basic foodstuff, milk, essential medicine, and goods for students.

The basic foodstuff includes rice, sugar, cooking oil, meat, eggs, processed food, vegetables, fruit and seafood.

Enterprises have provided 350 kinds of food and the total value for products of the programme in 2013 and Lunar New Year 2014 was VND12.5 trillion ($600 million), an increase of 46 per cent compared to 2012.

Many participating enterprises have expanded their production for the programme because of increased capital and soft loans provided to them.

For example, the Sai Gon Trade Corporation now has cold storage with a capacity of 21,000 tonnes for goods at the Binh Dien wholesale market.

Meanwhile, the Sai Gon Co-op has invested in three storage and delivery centres in Hau Giang and Binh Duong provinces and has updated equipment for their logistics system.

In addition, the Ba Huan limited company has invested in an 18-ha farm for poultry and eggs.

The programme aims to bring essential food for all customers in supermarkets, shops, traditional markets, industrial and processing zones, and restaurant owners who provide meals for enterprises, factories and schools.

The programme has 8,200 points of sale, an increase of 1,270 since its inception. The number of selling places in the city outskirts has increased from 54 in 2008 to 815.

Student uniforms, notebooks and schoolbags have been provided to 2 million students in the city under the programme.

In 2013, 13 enterprises joined the programme, with turnover of VND411 billion ($20 million), an increase of nearly 11 per cent compared with 2012.

Many promotion campaigns were carried out, including cuts in prices by 25-30 per cent, and donations of notebooks to poor students in rural areas. There are 769 selling places around the city.

Milk was included in the programme for the third year, with participation of the companies Vinamilk and Nutifood, which have taken 30 per cent of market share.

These two companies have provided 32 types of products with nearly 15,000 tonnes and revenue was VND1.26 trillion ($60 million), an increase of 45.5 per cent compared with 2012.

Vinamilk's products were tested as having the same quality as imported products, but the price was half of the latter.

Milk products purchased in the programme were brought to 1,563 schools, 284 factories and 31 enterprises in industrial and processing zones

This is also the third year that essential medicine was included in the programme.

In 2013, there were 13 local leading pharmaceutical companies with 392 products taking part in the programme, an increase of 307 compared with 2012.

There were 2,756 selling points for drugs, an increase of 732 compared to 2012, at 2,054 private pharmacies, 108 hospital pharmacies and 594 enterprises' shops.

"The programme has improved enterprises' abilities and encouraged customers to use and buy local products," Dao added.

The current programme implementation end on March 2015.

Japanese investors eye IT business opportunities in Da Nang

The central city of Da Nang is now home to about 100 Japanese businesses, and 70 of them are manufacturing companies with a total investment of over 330 million USD, the Da Nang Online reported on April 10.

These companies are involved in, for example, producing electronic components, developing software outsourcing, manufacturing pulp and nets for export, and processing seafood and agricultural products. They have created over 25,000 jobs for local residents.

The Vice Chairman of the Japan Information Technology Service Industry Association (JISA), Mr Takashi Igarashi, said that after Ha n oi and Ho Chi Minh City, Da Nang was Viet n am’s third most attractive location in 2013, as perceived by JISA.

He also expressed his belief that Japanese businesses would seek more investment opportunities and partners in the city’s IT sector in 2014 and in the years ahead.

Da Nang is one out of the 3 largest information technology (IT) hubs in the country. In addition, the city is seeing a boom in new software parks and dedicated IT zones which cover thousands of hectares to welcome investors. Between January and September 2013, 5 new Japanese-invested IT projects worth 31.4 million USD were granted investment licences.

These positive results have been attributed to the city’s favourable investment climate. Da Nang is emerging as one of the most attractive locations in Vietnam for Japanese investors. The General Manager of the Tokyo Keiki Precision

Technology Company, Mr Michio Saruhashi, said that his company had made the right decision when it chose the Hoa Khanh Industrial Zone in Da Nang as the place to set up a plant to produce hydraulic equipment for the Asian region.

He also remarked that the city was attractive to his company due to the very favourable conditions for foreign investors which have been created by the local authorities.

He added that recommendations from existing city-based Japanese businesses was another reason for encouraging his company to invest here.

A representative of the Mabuchi Motor Da Nang Company said that his company decided to invest in Da Nang due to the city’s preferential policies for foreign investment and its competitive human resources. The company's earnings growth has been sustained over the past 8 years since it began operating in 2006. The company has helped to provide stable jobs for thousands of local people.

Grasshoppers attack crops in Cao Bang

Swarms of grasshoppers are threatening crops in many localities in the northern mountainous province of Cao Bang.

The worst affected are Hoa An and Thong Nong districts, with 11 out of 21 communes and towns in Hoa An, and 7 out of 11 communes in Thong Nong reporting large numbers of the insect.

The grasshoppers are swarming along banks of streams and rivers, with an average density of 200-300 individuals per square meter, and even 1,000-1,500 grasshoppers every square meter in some locations, according to local authorities.

The pests have destroyed 12 hectares of plants, and start attacking corn and rice fields.

The province has set up a steering committee to coordinate efforts to deal with the pests.

Vietnam shares environmental protection with Laos

Vietnamese environment officials shared experience in natural resources management and environmental protection with the Lao National Assembly’s representatives in Vientiane on April 10 as part of their working visit to Laos.

At the working session, attended by NA Chairwoman Pani Zathotu and vice chairpersons, Minister of Natural Resources and Environment Nguyen Minh Quang briefed his hosts on the management of land, mineral and water resources and the environmental protection in Vietnam .

He also spoke of challenges and lessons drawn from the reality so that the country can make timely polices and laws on natural resources management and environmental protection, thus boosting its socio-economic development on a right track.

As the two countries share similarities in natural conditions and socio-economic institution, Vietnam ’s experience could help Laos in building policies in these fields, he said.

The minister also expressed his wish that the two sides will increase cooperation and professional exchanges in State management in general and in the management of natural resources in particular.

The Lao representatives appreciated Vietnam’s valuable experience, expressing wish for receiving the country’s continued assistance in these fields.-

Landville given final warning

South Korea’s Landville Energy has failed to persuade the Ninh Thuan Provincial People’s Committee to extend the timeline for studying the feasibility of a wind farm in the province.

Ninh Thuan province has told the South Korean firm to make clear its intentions Photo: Le Toan

The provincial committee, in an announcement sent to the company late last month, said that it would not extend the timeline for Landville Energy’s feasibility study, and that Landville Energy should file an investment application to the committee no later than June 2014.

Landville Energy received the green light from the province to conduct a feasibility study into the project in August 2013. The investor had to complete the study and submit its investment application to the provincial committee within six months. The details of the project such as investment cost and capacity were not unveiled.

“The company has not yet completed all the procedures and has failed to complete its feasibility study on time. Therefore, the provincial committee may reject the proposal,” the Ninh Thuan Provincial People’s Committee said in the announcement.

The local authorities have also ordered the company to make a commitment to put the wind farm into operation by the first quarter of 2016.

“If Landville Energy fails to meet the June deadline for filing an investment application, the provincial committee will assume the company no longer wants to invest in this project, and the committee will withdraw its in-principle approval from the project,” the committee stated, adding that the province would not compensate any costs relating to the feasibility study.

The threat by the Ninh Thuan Provincial People’s Committee reflects the province’s policy to weed out weak investors from potential wind farm projects in a context where many domestic and foreign investors in the renewable energy sector are planning to flock to the province.

Located in the southern-central coastal region, Ninh Thuan is said to be an ideal site for wind power. According to a World Bank survey, the province boasts ideal 7-7.5 metre per second gusts of wind at a height of 65 metres.

The Ninh Thuan Provincial Department of Planning and Investment reported that five investors had received licences to develop wind farms with the total capacity of 344 megawatts (MW) in the province so far. Belgium’s Enfinity Asia Pacific Limited secured an investment certificate for building a $251 million wind farm in March 2011.

Covering an area of 553 hectares in Thuan Nam and Ninh Phuoc districts, Enfinity’s project has the total capacity of around 124.5MW, making it one of the largest wind power projects in Vietnam.

Vinexad building sale faces shareholder doubts

Late last week, Vietnam Trading Expo and Advertising Joint Stock Company (Vinexad) faced strong disagreement from its shareholders over a proposal to sell its office building on Dinh Le Street, next to Hoan Kiem Lake.

The shareholders argued the company’s management board did not provide information on the sale, such as the potential buyer, the price of the building, how its value had been appraised or plans for the capital raised by the sale.

They said the lack of information made them feel the sale was not transparent, or feasible.

According to Nguyen Khac Luan, chairman of Vinexad, the board only wanted in-principle approval from shareholders and then once approved would take the aforementioned steps.

According to some shareholders, the proposal was not in their best interest.

Others claimed that if the proposal was approved, the management board would be given total control of the sale and shareholders would only informed after it was complete.

At a meeting last week held in Hanoi, shareholders required the board to clarify all unanswered questions such as the evaluation of the land area, the assets located on site and the advantages of its central location, as well as many others.

Vinexad has claimed its financial difficulties stem from inefficient operations, caused in part by the building’s old age which makes it undesirable for potential tenants.

The 1,500 square metre building has a lease contract through 2026.

It has been plagued by vacancies since 2013 when the rental market slumped.

Vinexad added that building could not be redesigned as a high-rise as it is faced by the limited height requirements for properties around the lake.

The proposal to sell the building was finally approved by the stakeholders in-principle but the board is required to make a detailed plan which it will propose at the next meeting for further consideration.

Vacant villas overtaken by squatters

Hanoi is now home to more than 1,000 unused villas and semi-detached houses. They have become temporary homes to poor people trading in low-end services and street vendors.

According to a survey conducted by Lao Dong newspaper, a range of villas valued in the billions of dong in residential areas such as Xa La, Van Quan, Me Tri, Co Nhue and Viet Hung are unused.

These areas are located along new, expanded streets, have convenient transport access, and are near public facilities such as schools, supermarkets and hospitals.

But for several reasons they lacked paying tenants and have been occupied by the homeless.

According to Nguyen Van M, the owner of a villa in Xa La in Hanoi’s Ha Dong district, he bought the house six years ago without any fixtures or fittings. Because his business is performing poorly, he has been unable to finish it and instead leases it out for only VND10 million per month.

“I am luckier than many others whose villas are unused and have deteriorated,” M said.

As well as the above districts, villas in the urban areas of An Sinh My Dinh 2 in Tu Liem district and Phap Van-Tu Hiep in Hoang Mai district are also sitting unfinished and have become the haunts of thieves and drug addicts.

According to the Hanoi Municipal People’s Committee, in 2013 Hanoi was home to more than 650 bare-shell villas and 600 finished semi-detached houses that were vacant.

The committee plans to map out fines or taxes to force owners to finish construction. But many developers don’t have the capital resources to do so.

Dang Hung Vo, senior consultant of the Ministry of Natural Resources and Environment, said the vacant villas were a result of the property boom and bust. “These villas are owned by wealthy people who bought them for speculation, but not living,” he added.

Vo said this was because Vietnam still had no tax on second-home ownership. “Therefore, we need to add a tax on second houses to resolve this problem,” Vo said.

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

tax breaks, Road maintenance, Lending rates, equitisation
 
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