Ba Ria-Vung Tau Province sees huge flow of FDI capital
The Department of Planning and Investment of Ba Ria-Vung Tau Province announced that it has licensed two foreign direct investment projects with a total registered capital of US$11.2 million in the first two months of this year.
By February this year, the province had 301 valid FDI projects with total registered capital of $27.7 billion, of which 130 projects had investments of $8.18 billion for industrial parks.
Implemented investment capital in the first two months of this year is estimated at $130 million, of which capital from foreign companies was $120 million. Accumulated implemented investment capital by February was $7.7 billion, accounting for 27.8 percent of total registered capital.
Vietnam, Customs Union kick off FTA talks
PM Nguyen Tan Dung and Chairman of the Eurasian Economic Commission’s Board Viktor Borisovich Khristenko on March 28 launched free trade agreement negotiations between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan.
The announcement was made following a meeting between Dung and Khristenko in Hanoi during the latter’s working visit to Vietnam.
Dung affirmed that Vietnam will do its utmost to successfully complete the negotiations with member states of the Customs Union, for mutual benefits and fairness.
They both agreed that the FTA will open up opportunities for cooperation in economics, trade and investment between the two sides.
Later the same day, the two chief negotiators, Vietnamese Minister of Industry and Trade Vu Huy Hoang and Trade Minister of the Eurasian Economic Commission Andrey Slepnev signed a joint notice on the first working session between the two sides.
During this session, the two sides will discuss in details about the scope and areas covered by the FTA, and the structure and methods of negotiations. They will especially consider the sensitive areas of each country and a disparity in the development levels between parties concerned.
The two ministers agreed that once the FTA is signed, the continued trade and investment liberalisation will help raise bilateral trade value to US$10 billion and beyond before 2020. It will also help foster the political, economic, trade, investment and cultural relations between Vietnam and the Customs Union.
Two-way trade between Vietnam and the Customs Union hit US$2.7 billion in 2012.
Danang-Hong Kong air route opens
Hong Kong Dragon Airlines Limited (Dragonair) launched a direct air route between Danang and Hong Kong on March 28.
Dragonair will operate three flights departing from Danang (Vietnam) to Hong Kong (China) on Tuesdays, Thursdays and Sundays.
A return ticket costs US$266.
Danang is the airline’s second Vietnamese destination of Dragonair after Hanoi.
Using Airbus A320s, the new route will help to bring foreign passengers to Vietnam’s coastal central city and provide Vietnamese passengers with more options to travel to other global destinations via Hong Kong
Established in 1985, Dragonair is an international airline, subsidiary of Hong Kong’s flag carrier, Cathay Pacific.
Seminar seeks ways to develop industry
A seminar on developing industrial strategies and clusters was held in Hanoi on March 28.
The event, jointly organised by the Vietnam Chamber of Commerce and Industry (VCCI) and the Japan Economic Foundation (JEF), offered a chance for participants to discuss issues relating to the development of some potential industries.
VCCI General Secretary Pham Thi Thu Hang suggested that during the global economic integration, Vietnam should improve its competitiveness, work out strategies and focus on developing clusters of industries to achieve set targets.
Shesaid the Vietnam-Japan economic partnership agreement and joint statements are opportunities for Japan to help Vietnam build an industrialisation strategy.
These documents can also bridge the two countries’ businesses and help Vietnam attract foreign direct investment (FDI). In 2012, Japan remained Vietnam’s largest FDI supplier, in both the number of projects and capital, Hang noted.
Noriyuki Yonemura, JEF Secretary-General, said that Japan has used industrial strategies as an important tool for developing the sector, adding that experiences gained during its industrialisation can help Vietnam boost its own process.
Japan will assist Vietnam to develop support and electronics industries and food processing, he said, expressing his hope that with the development of Vietnam, Japan will find more investment opportunities, thus contributing to increasing FDI capital in Vietnam.
At the event, participants exchanged views on potential sectors that both countries prioritise, including household electricity, electronics, food processing, shipbuilding, farming machines, the environment, energy saving and automobile manufacturing.
RoK, Vietnam share auditing experience
Government General Inspector Huynh Phong Tranh asked the Republic of Korea’s Board of Audit and Inspection (BAI) to share its experience in inspection and auditing, during a working session on March 28.
Tranh is leading a delegation from the Government Inspectorate of Vietnam (GIV) on a visit to the RoK from March 25-29.
At the working session in Seoul with the BAI Chairman, the government general inspector, who is also a member of Central Steering Committee on Anti-corruption, briefed his host on the outcomes of the cooperation between the GIV and RoK’s Anti-corruption and Civil Rights Commission (ACRC) over the past time.
Kun said the Memorandum of Understanding signed between the GIV and the ACRC on March 27 is a foundation for further coordination and mutual support between the two sides in fighting corruption and ensuring citizens’ rights in each country.
He also pledged to work with relevant agencies of his country to promote bilateral cooperation in all fields of common interests.
BAI has coordinated with the Republic of Korea International Cooperation Agency (KOICA) in building a mid-term project providing technical assistance and capacity strengthening training to the GIV through training courses in the RoK.
2,000 taels of gold sold in first bidding
As many as 2,000 taels of gold were sold for VND43.81 million (about US$2,100) each in the first gold bullion bidding held by the State Bank of Vietnam (SBV) on March 28.
Two out of the 21 registered credit institutions and enterprises won the bidding. The sold amount is part of 26,000 taels put out for sale.
This was organised in line with a SBV Circular on gold bullion trading in the domestic market and the SBV Governor on the process of gold bullion trading.
Through the sale, SBV aims to raise the gold supply and to stabilise the market.
Vietnam weathers global downturn well: HSBC
Vietnam maintained double-digit export growth last year, weathering the global downturn extremely well, according to a HSBC report.
In its Global Connection Report released in HCM City on March 28, HSBC noted that the Southeast nation’s export earnings grew by 20 percent driven by telecoms, plastics, clothing and apparels.
Its GDP growth of 5 percent a year remains sustainable in the medium term as the growing internal market boosts FDI, as tourism and agricultural exports help finance industrial upgrading, and as new power plants end the perennial energy shortages.
And a widening range of industrial exports, higher reserves and a larger home market may reduce the volatility of growth.
The bank said by 2030, China will have overtaken the US as Vietnam’s largest trading partner. Exports to Asia (excluding Japan) are forecast to grow by more than 15 percent a year out to 2020.
Apart from China, Bangladesh, India, Indonesia and Malaysia will also be fast growing export partners for Vietnam.
Plans to expand the ASEAN Free Trade Agreement to zero tariffs on all goods by 2015 will be an additional factor supporting Vietnam’s trade with other economies in the region over the medium term.
HSBC forecast that over the next two decades, China will overtake the US as Vietnam’s largest export market. But by 2030 the US and Japan will still be among Vietnam’s top three export partners, partly reflecting Vietnam’s product mix.
Vietnam’s exports are largely weighted towards clothing and apparel, textiles and wood manufactures and telecoms equipment and these are key sectors which the advanced economies tend to need to import in quantity.
Vietnam is well located to take advantage of emerging Asia’s undisputed status as the most dynamic trading region in the world. China, India, Malaysia, Indonesia, Bangladesh and the Republic of Korea will all be among the ten fastest growing export routes over the next twenty years.
Export growth to Europe (excluding Russia) is expected to average almost 10 percent a year from 2013 to 2020. Export growth to Australia, New Zealand and Oceania will pick up sharply in the longer term and will average 10 percent from 2016 to 2020.
Exports to Latin America will grow by an average of more than 10 percent from 2013-20, with trade routes to Brazil proving particularly dynamic.
Jasmine Lau, an HSBC executive, praised Vietnam’s efforts in containing inflation, stabilising the exchange rate, and settling bad debts.
She said Vietnam is a potential market and one of the bank’s priorities in its business strategy.
Sowing of summer-autumn rice crop begins in Mekong Delta
The Ministry of Agriculture and Rural Development said that the Mekong Delta has finished sowing more than 300,000 hectares of the summer-autumn rice crop.
The Mekong Delta plans to cultivate 1.68 million hectares of this crop, with expected productivity of 5.5 tons per hectare and output of 9.3 million tons.
However, severe water shortage and increased salt intrusion remains a hindrance, while diseases and insect attacks on standing crops may lower or damage rice production.
The Ministry of Agriculture and Rural Development has instructed the Department of Cultivation and local departments of agriculture and rural development to keep a close eye on weather and disease conditions. They should also dredge canals for better access to irrigation water.
According to the Vietnam Food Association, businesses have exported 906,173 tons of rice since the beginning of this year, bringing in about US$410 million revenue.
ANZ says inflation will continue to fall
Vietnam’s consumer price index (CPI) in March fell to 6.64 percent, year on year, compared to 7.02 percent in February.
The monthly CPI level fell by 0.19 percent, according to the Australia and New Zealand (ANZ) Bank’s latest report released on March 25.
All CPI components registered significantly slower sequential gains. The transport, and food, beverage and tobacco components even registered negative month-on-month figures.
The month-on-month drop was partly due to the de-escalating of seasonal high prices during the lunar New Year (Tet) holidays but, according to the report, the key factor moving forward is healthcare .
Healthcare was the main driver of inflation for most of the second half of 2012. From July 2012 to January 2013, month-on- month readings for this component ranged from 3.4 to as high as 17 percent. However, healthcare prices increased less than 1 percent per month during the period.
Given the faster-than-expected slowing of healthcare related inflation, the ANZ is revising its inflation forecast for 2013 from 8-10 percent to an average of 6-8 percent. The bank also sees a good chance of headline inflation ending the year at slightly above 6 percent.
The State Bank of Vietnam (SBV) has already expressed its willingness to further reduce rates if inflation remains on track at 6 percent through the end the year.
With domestic growth still grindingly slow and the effects of banking system reforms likely to take some time before credit can flow back into the economy, the ANZ says that rate cuts could be implemented to help ease some of the constraints on the demand for capital loans.
Binh Duong licenses Japanese project
The Binh Duong Provincial People’s Committee granted an investment license on March 25 to the Japan-invested Maruzen Foods Vietnam project worth more than US$100 million.
This is the fifth factory belonging to Maruzen Foods Japan- a large economic group which specialises in producing and trading high-quality food and beverages.
The factory is being built on 129,000 m2 in the My Phuoc 3 Industrial Park and is scheduled to enter operation in April 2014.
Maruzen Foods Japan General Director, Yasufumi Kasuga, said that Binh Duong is an ideal location for this factory that meets the company’s demands for favorable infrastructure and a secure investment environment.
Vietnam, Finland foster trade links
Investment opportunities and tools to boost trade links between Vietnam and Finland were discussed at a seminar in Hanoi on March 25 to mark the 40th anniversary of diplomatic ties between the two countries.
Vice President of the Vietnam Chamber of Commerce and Industry (VCCI) Doan Duy Khuong said that two-way trade turnover between Vietnam and Finland increased more than 40 percent from US$210 million in 2011 to US$300 million in 2012.
Vietnam’s key exports to Finland include coffee, rubber, footwear, garments and textiles, fine arts, wood products, plastics, bicycles and spare parts, while it imports machinery, equipment, mass media products, garments and textiles, plastics, chemical products, electric equipment, components, iron and steel from Finland.
Khuong said by the end of 2012, Finland had eight projects in Vietnam capitalized at more than US$336 million, ranking 26th among the 98 nations and territories currently investing in Vietnam. The Finnish projects are focused on garments, textile, and wood products, as well as fishery.
Finnish ambassador to Vietnam, Kimmo Lahdevirta, acknowledged both nations’ efforts to boost investment and import and export activities. He said that his country has developed environmentally friendly technologies to cope with climate change that could be beneficial for Vietnam. He also said there are bright prospects for cooperation between Finland and Vietnam in the forestry sector.
Finland is focused on investing in the field of energy, particularly the development of renewable energy sources.
Finland has also expressed interest in cooperating with Vietnam in other fields such as infrastructure, construction, mining, environmental technology, and raw materials.
The seminar offered Vietnamese businesses an opportunity to access the Finnish market as well as other nations in Northern Europe.
Paper industry shows impressive growth
The paper industry has grown rapidly at a rate of 15-17 percent over the past five years, producing more than 2 million tonnes and supplying 64 percent of the domestic market annually.
A report from the Vietnam Pulp and Paper Association (VPPA) showed that the country’s paper consumption reached 2.9 million tones last year. Average consumption per capita in Vietnam rose from 26.44kg in 2010 to 29.61kg in 2011 and 37.2kg in 2012.
VPPA Secretary General Vu Ngoc Bao said last year’s paper exports to 18 countries, mostly to the US, Taiwan and Japan, was estimated at US$425 million, less than half the value of paper products for domestic use.
Although the domestic production of pulp jumped remarkably from 345,000 tonnes in 2010 to 373,400 tonnes in 2011 and 484,300 tonnes in 2012, it was far from meeting local demands. And Vietnam had to import a similar amount of pulp and paper.
In fact, Vietnam has huge potential for develop the paper industry as it owns large areas of forest which are yet to be fully exploited.
Most of the shavings from gum trees and acacia hybrids are shipped abroad with volumes jumping 10-fold over recent times, from 400,000 tonnes in 2001 to more than 5.4 million tonnes in 2011, making Vietnam the largest exporter of such shavings.
By a curious paradox, China and Japan purchased wood shavings at a low price of US$110-120 per tonne and used them to produce and resell pulp for around US$900-1,000 per tonne.
To deal with the shortage of materials Vietnam has concentrated on recycling used paper, including old corrugated containers (OCC), old magazines (OMG), old newspapers (ONP) and residential mixed paper (RMP), which are imported from the US, Japan and New Zealand.
Nearly 100 percent of packaging paper, 90 percent of tissue and 60 percent of newspapers in Vietnam are now made from recycled paper.
Last year, the total amount of recycled paper consumed reached 1.45 million tonnes, 987,100 tonnes of which are locally made and 463,000 tonnes imported.
In 2013 the paper industry is forecast to face snags in finding outlets for its products as the economic recession has led stockpiles of paper.
Statistics from the Ministry of Industry and Trade (MoIT) said the amount of paper in stock has increased by 33.7 percent in the first two months of this year compared to the same period two years ago.
VPPA Secretary General Bao said due to a decline in paper consumption, some domestic producers have had to reduce or even stop their operations to minimise their stock holdings.
In addition, there is fierce competition between the sales arms of these producers, Bao added.
The MoIT predicted that the total paper production out put will reach 2.18 million tonnes in 2013, 17.7 percent higher than last year.
However, something of a paradox remains as Vietnam still has to import about 1.3 million tonnes of assorted paper worth US$1.35 billion to meet local demands.
Bach Long Vi celebrates 20 years of establishment
The offshore district of Bach Long Vi should move quickly to become a seafood processing and fishing logistics centre for northern coastal provinces, said Vice President Nguyen Thi Doan.
The State leader attended the celebration of the 20th founding anniversary of Bach Long Vi island district in the northern port city of Haiphong on March 25.
Speaking at the event, Doan asked the district to pay due attention to enhancing the quality of cultural activities, healthcare and education-training services, protecting the environment and natural resources, and working out solutions to spur its sustainable development.
She suggested the local administration build passenger ships, ports and anchorages, a fresh water reservoir, and offer incentives to businesses to develop production and services.
Over the past 20 years, Bach Long Vi district has gradually developed a complete road, electricity, communication, and water infrastructure together with socio-cultural facilities.
The district’s GDP averages 12 percent annually, with per capita income reaching VND40 million last year.
Angola learns about Bac Ninh’s FDI attraction
The delegation of the Angolan Presidential Office led by Florbela Rocha Araujo, Secretary for Judicial and Legal Affairs, made a fact-finding trip to northern Bac Ninh province on March 25 to learn about its experience in attracting foreign direct investment (FDI).
Deputy Chairman of the provincial People’s Committee Nguyen Tien Nhuong briefed the guests on the province’s socio-economic achievements.
Amid the economic slowdown last year, Bac Ninh still maintained a double-digit economic growth. The province is among the three localities which recorded the biggest industrial production value in the country bringing back over US$13 billion, he said.
The leader also expressed his wish to share the province’s experience with Angola in investment promotion, contributing to fostering the friendship between the two peoples.
Araujo affirmed that experience gained during the trip will help his country build a better investment environment.
On the occasion, Nhuong and the Angolan Ambassador to Vietnam signed a memorandum of understanding on cooperation in forestry exploitation and processing, and the supply of construction workers in oil and gas to the African country.
The same day, the delegation visited several FDI firms at the Vietnam – Singapore industrial park (VSIP) in the locality.
Foreigners contribute opinions to PPP regulations
Around 50 delegates from foreign investors, financial organisations and consultation companies examined Vietnam’s revised regulations on the pilot public-private partnership (PPP) in Singapore on March 25.
At the workshop, Deputy Minister of Planning and Investment (MPI) Dao Quang Thu said that from now to 2020, Vietnam needs about US$30-40 billion in investment capital each year to develop key infrastructure systems, including transport, electricity and water supplies.
Half of the total will be mobilized through traditional investment channels.
The country attaches great importance to cooperation forms between the State and private sectors to develop infrastructure, he said.
Thu also stressed that Vietnam is preparing all necessary conditions to implement the PPP scheme, in which completing a legal framework for PPP is extremely important.
According to the draft revision, State capital in PPP projects can be up to 49 percent of the total while investors can enjoy more preferences.
Priority areas for PPP schemes will be expanded to include information technology, agricultural infrastructure, education and government office buildings.
MPI leaders also pledged to complete regulations in the first half of this year as scheduled to establish a more suitable legal framework on PPP and turn it into an attractive sector for foreign private areas.
Japan cements ties with Vietnam in PPP projects
Japan on Thursday signed a covenant with Vietnam to promote public-private partnership (PPP) in a move to engage deeper in developing infrastructure seen as a bottleneck in Vietnam’s economic growth.
The Ministry of Planning and Investment signed a memorandum of understanding with Japan Bank for International Cooperation (JBIC) in Hanoi on Thursday which encourages Japanese investors to develop infrastructure in Vietnam. The two sides pledged to jointly formulate highly-feasible PPP projects in Vietnam that will serve as a catalyst to boost other PPP projects in the country.
In fact, Vietnam has been actively amending its legal corridor to woo more private investors, especially those from Japan, to develop the country’s infrastructure, said Le Van Tang, head of the Bidding Management Department.
The latest draft of the PPP legal framework suggests a maximum 49% of State contribution to a PPP project, instead of only 30% as provided for in the current regulations, he said. In case it is deemed necessary for the State share to be higher than 49%, a final Government say would be required.
Tang noted that many private investors had not been happy with the current 30% State share cap, and this regulatory limit has hindered some PPP projects.
“This is the biggest hindrance. Some highly-viable PPP projects that require a higher State stake have been dismissed,” he said.
Minister of Planning and Investment Bui Quang Vinh remarked that changes to the PPP framework are being conducted at the request of the Government in a bid to align the local rules with international practices so as to attract more investors.
“New regulations must be suitable with Vietnam’s conditions, but must also help attract investors from other economic sectors,” Vinh said. The minister pinned high hopes that the deeper involvement by the State in terms of capital contribution coupled with better administrative paperwork would help appeal more investors.
Minister Vinh revealed that the Vietnamese Government has mapped out a budget plan of as much as VND20 trillion, or nearly US$1 billion, to be used as reciprocal capital for PPP projects in the 2014-15 period. The budget could be bigger if there are good PPP projects.
JBIC, meanwhile, stressed the need for a binding mechanism on risk sharing as it should be the most important principle in the relationship between the State and private investors.
The optimum risk-sharing mechanism will help minimize risks and save on time, and bolster efficiency, transparency and equality among stakeholders, to which great importance must be attached if Vietnam wants to attract more PPP projects, said Hiroshi Wanatabe, CEO, Executive Managing Director of JBIC.
He said that Japanese investors have keen interest in PPP projects in Vietnam where the demand for infrastructure investment amounts to hundreds of billions of U.S. dollars in the next ten years.
“Currently, all nations are cutting down on their government budgets, so the two sides should work to attract more private capital,” Wanatabe said, adding he would call for more Japanese investors to invest in Vietnam, especially in PPP projects.
Hanoi pledges financial aid for enterprises
Hanoi’s government pledged to launch various monetary and financial solution packages to support businesses in the city.
At a meeting with entrepreneurs last Friday, Hanoi leaders said the city would extract VND50 billion from the budget for trade promotion in order to tackle inventory. In addition, the municipal authorities will grant an aid of VND508 billion for infrastructure development in the city’s outskirts.
The city will give VND328 billion to businesses under the program to stabilize prices of essential items in the capital. The municipal government also committed to accelerate the disbursement of nearly VND24 trillion for 671 infrastructure projects in the city.
The total amount of taxes and fees eligible for reduction and payment extension in 2013 is more than VND14.4 trillion, including VND10 trillion worth of land use fee payments, said the capital city’s government.
The city deploys an interest rate subsidy program worth VND100 billion and a VND80-billion credit guarantee fund for small and medium-sized enterprises.
Ten banks have committed to offer around VND7 trillion worth of business loans, export loans and home loans with preferential interest rates.
To deal with 6,000 unsold apartments in the Hanoi property market, the city will consider changing commercial houses into low-cost and resettlement houses and houses for State employees.
Moreover, the city will help low-income earners and civil servants access soft loans to rent or buy low-cost houses or commercial condos of less than 70 square meters priced below VND15 million per square meter.
Doan Trong Ly, chairman of Animal Production Processing and Import Export Company (Aprocimex), said enterprises were struggling with high interest sum payments to banks, while their assets were also mortgaged at banks. “Lending rates at home are way too high compared to other countries,” he said.
Do Quang Hien, chairman of Saigon Hanoi Bank (SHB), who also serves as chairman of the Hanoi Association of Small and Medium Enterprises, said: “All lenders require collateral, but small and medium-sized enterprises do not have assets for collateral.”
Tran Anh Vuong, vice chairman of the Hanoi Young Business Association, stressed the city’s support programs did not target the right recipients. He said: “If the city still owes businesses capital construction debts, it should immediately pay businesses. Support for active enterprises is the most effective.”
HCM City urged to change software park land policy
The management authority of Quang Trung Software City (QTSC) is seeking approval from the HCMC government to adjust land policy applicable to the area to help tenants there deal with financial constraints.
Chu Tien Dung, chairman of Quang Trung Software City Development Company, said tenants of the park are having difficulties with land procedures given the current unclear policy on land rental.
For instance, Dung said, the municipal government in 2009 directed the re-calculation of QTSC’s land rents based on central and municipal regulations under which tenants had to make annual payments.
A lot of investors want to make a one-off rent payment for a period of ten to 30 years but they are not allowed to do so because the park’s land prices are subject to fast-changing market levels.
The policy has caused difficulties for investors as they are unable to take out bank loans to carry out the projects, Dung noted. Moreover, investors active in software processing and information technology (IT) services industries are treated as realty developers, so they must be subject to corporate income tax for property companies, he clarified.
This is why many tenants are hesitant to pour money into constructing infrastructure in the software park, Dung said. Besides, the city also sets land rent in the park in accordance with market movements, making life even harder for investors.
The IT industry is entitled to priority on land tax and policy, Dung said, but land rent based on market prices has discouraged tenants from investing into the facility.
To help tenants overcome the difficulties, Dung proposed the local government reconsider the policy of land leasing and land allocation for the park.
He also called for local relevant authorities to let these entities enjoy a lower corporate income tax as well.
HCM City sees foreign currency credit down 3.68%
Foreign currency credit in HCMC this year has slumped a staggering 3.68% against the end of last year, according to the HCMC branch of the State Bank of Vietnam (SBV).
Foreign currency credit in the city’s banking system shrank 8.78% last year. The fall in January-March foreign currency credit has pushed the city’s credit growth down to a mere 0.26% as total outstanding loans in Vietnam dong have risen 1.38% in the period.
The sharp slide of foreign currency credit started in the middle of last year due partly to the central bank’s credit tightening policy.
At present, only exporters who generate foreign currency revenues can take out foreign currency loans and then convert them into Vietnam dong to finance their operations. But importers are disallowed to borrow foreign currency despite their huge demand while other companies have to buy foreign currency from local banks.
An executive of a bank with abundant foreign currency said foreign currency credit at his bank had declined about 4%. He attributed this poor performance to the current low demand for foreign currency among importers of materials and machinery. Meanwhile, seafood exporters and importers are struggling with persistent woes, resulting in a drop in foreign currency borrowing, he said.
The executive said rumors about a possible dong depreciation at the start of the year had also discouraged businesses from borrowing foreign currency for fear of exchange rate risks.
An official of the central bank noted it is untrue that lower interest rates for the dong have led local companies to borrow the local currency given the stable exchange rate. In fact, he said, the difference between interest rates for dong and U.S. dollar remains considerable, with the rate for U.S. dollars averaging out at 6% and that for dong at around 12% for priority sectors.
Many banks at a 2012 review meeting of the banking sector in HCMC complained about a decline in foreign currency credit, citing the limited number of entities eligible to borrow foreign currency. But the central bank insisted that scaling down foreign currency credit growth is also a step toward shifting from lending foreign currency to trading it in a bid to effectively control dollarization in the economy.
Sale of drought insurance for coffee suspended
Coffee output in the 2013-2014 crop may fall 30-35% due to prolonged drought in the Central Highlands, according to the latest forecast of the Vietnam Coffee and Cocoa Association (Vicofa).
Severe drought has hit 55,000 hectares of coffee among the total 500,000 hectares in the Central Highlands, in which 95 hectares has withered and died, said Vicofa.
Rainfall this year is about 30% lower than the average level of previous years. Reservoirs in Daklak’s eastern districts like Lak, Eakar and Madrak is now extremely short of water.
Some 70% of the coffee growing area in the Central Highlands is awaiting rain. Farmers predicted drought would considerably reduce coffee output this crop.
Le Thanh Long, a coffee grower in Krong Buk District, Daklak Province, said 40% of the coffee trees in his farm had withered.
“Other coffee farms in the area face the same situation. It has not rained for long and underground water has dried up. Although we run machines at full capacity, there is not enough water for coffee watering,” he told the Daily.
According to a foreign coffee company, there were rains lasting from tens of minutes to one hour in most provinces in the Central Highlands last week. The rainfall might keep some coffee growing areas from dying of water shortage, said the company.
However, the departments of agriculture and rural development of the Central Highlands provinces reported the rainfall was not abundant enough to help coffee trees survive the prolonged drought, said Vicofa general secretary Nguyen Viet Vinh.
Therefore, Vicofa forecast coffee output in the 2013-2014 crop might drop 30-35%. In addition, if there was no heavy rain in the Central Highlands from now to June and July, it would be more likely that coffee bean quality in the next crop would suffer, said Vinh.
The 2012-2013 coffee crop has wrapped up, with an estimated output of only 1.2 million tons, a 30% decline against the previous crop.
* Although 90% of the country’s coffee trees are grown in the Central Highlands, coffee in the provinces of Gia Lai, Daklak, Dak Nong, Lam Dong and Kon Tum heavily depends on rain. Seeing this as an opportunity, Bao Minh Insurance Corporation has launched the program of drought insurance for coffee.
However, the insurer has stopped offering drought insurance for coffee in Daklak due to losses, said Ho Hai Dang, deputy director of the agriculture insurance division of Bao Minh.
“In the two years 2011 and 2012, Bao Minh sold only more than 100 drought insurance policies. The proceeds was VND110 million, but the compensation was VND157 million. So, we stops providing this coverage in 2013 for fear of further losses,” he said.
Agriculture insurance, or any type of insurance, is based on the principle that the majority supports the minority, but drought insurance fails to catch the attention of people, said Dang. For Bao Minh to continue with the drought insurance program, he said localities, particularly Daklak, should have policies to support his firm.
Daklak is the country’s largest coffee growing area with over 200,000 hectares.
Doosan Vina secures multimillion dollar contract
Doosan Vina on Wednesday signed a contract worth nearly US$50 million with Doosan Power System of India for the design and manufacture of a supercritical pressure boiler for a coal-fired thermal power plant.
The 800MW boiler will be installed at the Lara power plant in Central India, Doosan Vietnam general director Hang Ha Ryu said in a statement on Thursday. Last October, Doosan Vina signed a contract and is now fabricating two 800MW boilers for the Kudgi Power Plant project, also in India.
This boiler will provide 2,550 tons of steam per hour. The large-capacity boiler will operate under extreme temperatures and pressures, at 569 Celsius degrees and 271kgf per square centimeter respectively.
“The Lara contract is a further confirmation of the growing reputation of Doosan Vina and testimony to the technical skills and engineering standards of the Vietnamese,” Ryu said. This contract provides experience for Vietnamese workers in the design and manufacture of boilers for the power industry.
Accor continues expansion with three new hotels
The international hotel operator Accor is strengthening its position in Vietnam’s hospitality industry by adding three new hotels in major tourist destinations Sapa, Phu Quoc and Vung Tau to its management portfolio.
The hotel operator announced on Thursday to have signed three new Mercure hotels in the three cities, namely Mercure Sapa, Mercure Phu Quoc Resort and Mercure Vung Tau.
“Accor is proud to sign three new Mercure hotels in Vietnam, strengthening our leading position in the country,” Patrick Basset, senior vice president for Accor Thailand, Vietnam, Cambodia, Laos and the Philippines, said in a statement.
Basset said that with over 6.8 million international visitors last year and a growing number of domestic travelers that are now looking for new in-country destinations, Accor anticipated that the three cities mentioned above would soon emerge as top leisure spots in Vietnam alongside established ones like Nha Trang, Halong Bay and Hue.
Of the three, Mercure Sapa, located in Sapa Town in the northwest province of Lao Cai, is scheduled to join the hospitality market with 160 guest rooms and other serviced facilities.
Meanwhile, Mercure Phu Quoc Resort is scheduled to open in 2014 with 160 guest rooms. The resort has its own private beachfront and is around 10 minutes away from the new Phu Quoc International Airport
At the same time, Accor plans to have its first Mercure hotel brand in the coastal city of Vung Tau next year. When in place, Mercure Vung Tau will provide the tourist destination with 117 guest rooms, two restaurants, meeting rooms, swimming pool, fitness center and spa facilities.
Last June, Accor started running its first ibis hotel brand in Vietnam by launching the Ibis Saigon South hotel in HCMC’s District 7. The hotel provides 160 guest rooms and other serviced facilities.
The hotel operator is running 13 hotels across its brands collection and plans to manage some 30 hotels in the country in the years to come.
Big C launches first green hypermarket
Retailer Big C on Saturday inaugurated a hypermarket in Green Square commercial center, the first project installed with solar battery system for lighting in Vietnam, in response to the Earth Hour campaign.
The investor has spent over VND11 billion in the 212-kWp solar energy system installed on the roof of the parking place of Big C Di An supermarket, which will help save energy and reduce carbon dioxide gas emissions.
This system will be connected to the building’s electricity network, producing around 230,000 kWh of electricity, or 7% of total energy consumption of the commercial center, and reducing over 150 tons of carbon dioxide each year.
According to the investor, Big C Di An supermarket will save 30% of energy consumption compared to normal shopping centers. The center uses fluorescent lamps T5, which helps save 35% of energy compared to fluorescent lamps T8, and takes natural light with see-through glazed doors.
The center also has an energy supervision and management system to control energy consumptions at all units, uncovering shortcomings and facilitating equipment investment decisions.
Located in Binh Duong Province, the project includes a basement, two commercial stories and an office story. In Big C Di An’s area, there is a supermarket covering 5,000 square meters and 40 stalls of fashion, accessory items, cuisine and entertainment zones.
First condos of Tokyu Binh Duong go on sale
Sora Gardens, an apartment project in Tokyu Binh Duong Garden City developed by Becamex Tokyu Co. Ltd., was put on sale Wednesday to mark the first anniversary of the joint venture company.
Sora Gardens comprises two 24-storey towers with over 400 apartments, expected to be completed in 2014. It is the first component of the US$1.2-billion urban project Tokyu Binh Duong Garden City that is underway now.
Drawing on the experience of Japan’s Tokyu Corporation, Becamex Tokyu will offer customers high-quality apartments with comfortable living space. The average apartment price of this project is estimated at US$1,000 per square meter, or VND1.38-2.33 billion per flat.
At the anniversary ceremony on Wednesday, Becamex Tokyu signed a deal with Vietcombank, VietinBank and Eximbank to extend credit support to the project’s customers.
The joint venture company intends to open an exhibition center in Binh Duong New City to introduce two model apartments to customers. It is expected that the center will be opened in April after Becamex Tokyu completes the foundation of the project.
Sora Gardens, about 30 kilometers from HCMC, is located in Binh Duong New City with a total area of some 1,000 hectares, where the administrative office of Binh Duong Province will be relocated next year. After selling the condos of Sora Gardens, Becamex Tokyu plans to launch low-rise houses such as villas and townhouses.
Tokyu Binh Duong Garden City is developed on around 110 hectares at a total cost of VND25 trillion, or some US$1.2 billion. When completed, the project will supply more than 7,500 apartments, houses, recreational facilities, along with commercial and office space.
Homebuyers vent anger at foot-dragging project
Dozens of buyers of apartments of the PetroVietnam Landmark project in HCMC’s District 2 crowded the project’s construction site on Saturday, demanding the project owner to quickly hand over the condos after long delays.
The angry homebuyers brought banners asking the investor, PetroVietnam Construction Land Corporation (PVC Land), to keep its promises by quickly handing over the apartments as they have paid billions of Vietnam dong to the project.
Some buyers said they signed contracts to buy apartments in the second quarter of 2011. According to contracts signed, the investor had to transfer apartments in late 2011, but basic construction of the project at Cat Lai intersection has yet to be completed.
The investor once informed customers that the completion deadline would be extended and that the apartments would be handed over in April, 2012. However, some components of the project have not been finished on schedule because many home buyers do not make prompt payments, making the investor unable to accelerate the progress, the developer said.
According to buyers, if the investor does not comply with the contracts, they will have the court solve the dispute.
PetroVietnam Landmark is one of the sensational projects with a strong price reduction in 2011. At that time, there were around 85 apartments of the project sold at VND15.5 million per square meter, a steep reduction from the initial VND21 million.
HCM City will spur trade ties with Myanmar
HCMC will create more favorable conditions for local companies to invest in Myanmar and expand trade ties with the ASEAN country, HCMC Chairman Le Hoang Quan said at a meeting with Myanmar’s Vice President Nyan Tun last Friday.
The city since 2010 has sent six business delegations to Myanmar with an aim to boost bilateral trading relationship, Quan told the Myanmar dignitary, who was in Vietnam last week for a visit. He announced the city’s government in June will cooperate with the Vietnam Chamber of Commerce and Industry to hold an investment road show in Myanmar.
“Vietnam and Myanmar have achieved impressive developments in terms of trade and investment over the past time. To continue maintaining and accelerating bilateral trade, the city will encourage local firms to increase investment into Myanmar,” Quan said.
For instance, he said, Saigon Trading Group (Satra) has set up a representative office in Myanmar. Similarly, Saigontourist Holding Company now is in preparations for developing a hotel in Myanmar and a local pharmaceutical company has also cooperated with a Myanmar partner to build a joint venture medicine plant there.
Speaking at the meeting, Vice President Nyan Tun pledged to support Vietnamese companies to invest into his nation in the near future.
“Myanmar enacted the new foreign investment law in 2012. We offer many incentives to foreign enterprises investing in the country, with more liberal investment policies,” he said. He informed Myanmar has opened three more economic zones to lure foreign investors.
Bilateral trade totaled US$117.8 million last year, jumping 42.9% year-on-year. Vietnam’s exports to Myanmar reached a combined US$13.7 million in January this year as reported by the General Department of Customs, rising 1.8% against the end of last year, with major products like steel and iron products, machinery and equipment, garment and plastic items.
Seafood rejects cost nation US$14 million
Vietnam incurs a loss of more than US$14 million annually as the major markets of Europe, the U.S., Japan and Australia return imported seafood products.
There are several reasons for product return, but the main one is contamination, said the United Nations Industrial Development Organization (UNIDO) at a workshop themed “Meeting standards – winning markets: how to address compliance challenges of the seafood value chain” held in Hanoi last week.
In the EU and the U.S., Vietnam suffered the most among the exporters whose seafood products were rejected, with 160 and 380 cases of product returns respectively in the period from 2002 to 2010.
Similarly, in Japan, Vietnam topped the list of exporting countries whose fishery products were returned the most, with over 120 cases in the 2006-2010 period.
In the Australian market, Vietnam ranked fourth after Indonesia, India and China in terms of seafood product return, with nearly 350 cases, said Spencer Henson from the Institute of Development Studies (IDS).
Apart from contamination “veterinary drug residue is an emerging issue for imports into the EU; other pollutants pose a problem for imports into Japan,” he said.
Seafood is one of the spearhead industries of Vietnam. In 2012, seafood exports brought in over US$6 billion, accounting for 5-6% of total exports.
The three largest importers of Vietnamese seafood, the EU, the U.S. and Japan, represent more than 60% of the country’s annual seafood export turnover, said Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Export and Producers (VASEP).
However, the biggest challenge for the local seafood industry is the increasingly stricter requirements for food safety, traceability, environmental responsibility and resource protection, he said.
Speaking at the workshop, many participants said that since the seafood export quantity was large, it was understandable that the volume of products returned was considerable. Therefore, it is necessary to look at the ratio of returned products to the total exports to have an objective assessment of Vietnamese seafood quality and the adaptability of local enterprises to the global playground.
UNIDO suggested Vietnam should support and timely inform producers of the constantly changing requirements of importing markets. In addition, local producers need to use drugs and chemicals properly.
There should be a mechanism to foster development of the leading enterprises by promoting the application of the sale guarantee model, helping improve product quality. Moreover, the State should grant technical and financial support to help new businesses access international markets.
Vietnam seen as attractive destination for French investors
Many French companies involved in high technology and consumer goods areas are showing keen interest in Vietnam’s investment environment, French officials said on Thursday.
Pierre-Jean Malgouyres, chairman of the French Chamber of Commerce and Industry in Vietnam, told a press briefing in HCMC that he expected the France-Vietnam Business Forum 2013 slated for April 7 in HCMC could usher in a new wave of French investment.
The event will witness more than 1,000 meetings and exchanges for investment cooperation between 127 French companies and 500 local partners. Multiple French participants are cosmetics producers like Abiocom, Boccard, Matis Sas and Med in Spa.
French firms invested in Vietnam with a combined value of US$3 billion in 2012, involving foodstuff, construction materials and pharmaceutical industries, Pierre-Jean said. There are about 300 French companies in operation in Vietnam, including hotel management Accor Group and L’Oreal cosmetics maker, he added.
Speaking with the Daily, Nguyen Ngoc Tuyet Trinh of L’Oreal Vietnam Company said her firm’s products only got annual sales growth of 7-8% in other markets but posted an increase of a staggering 17% in Vietnam, showing a strong appetite for the items.
Trinh’s company, thereby, is looking to construct a plant at home to supply products for local sale and export to minimize the amount imported from France and other countries, Trinh said.
Meanwhile, Marc Gagnard, director of the French trade commission Ubifrance in Vietnam, said Vietnam now is an attractive destination to many French investors in areas like software, video game, smart phone applications and tablet computers.
Officials meet 500 businesses to spur investment
More than 500 local and foreign companies began a two-day conference with Government officials to thrash out ways to boost investment into the country’s central coast region.
Van Huu Chien, chairman of Danang City and head of the conference organizing committee, told the meeting in Danang on Thursday that the event was aimed at identifying potentials and advantages of the central coast to effectively lure investment projects.
The meeting also offers an opportunity for local and international investors to work with leaders of central agencies and provincial governments to remove hindrances to investment activities in the region, he said.
Impressive FDI attraction results reaped in Q1
Foreign direct investment (FDI) has grown strongly in the first quarter after a long period of decline in both FDI pledges and disbursements.
So far in the first quarter, Vietnam has lured 191 new FDI projects with total registered capital of over US$2.9 billion, up 2.2% year-on-year. However, 71 projects have raised capital by a combined US$3.1 billion, 3.7 times higher than the same period last year.
In total, US$6.03 billion worth of fresh and additional FDI has been poured into the country, a staggering rise of 63.6% over the year-ago period. This is an impressive growth given the drastic drops in FDI in the past two years, said the Foreign Investment Agency (FIA).
This positive result is attributed to Nghi Son Oil Refinery and Petrochemical Co. Ltd. in Thanh Hoa, with a capital increase of US$2.8 billion. Besides, Samsung has registered a new project worth US$2 billion in Thai Nguyen.
FDI disbursement has also improved much despite the persistent woes. In the year to date, some US$2.7 billion has been disbursed, up 7.1% year-on-year, which is described as a very robust result.
Moreover, foreign-invested enterprises (FIEs) have achieved satisfactory business results. They have exported over US$19.2 billion worth of products, including crude oil, picking up 25.6% against the same period last year and accounting for 64.8% of the country’s total export turnover.
Excluding crude oil, exports of FIEs have brought in more than US$17.3 billion, rising 27.1% year-on-year and standing at 58.4% of the total export turnover.
Meanwhile, FIEs have imported US$16.1 billion worth of products in the first quarter, an increase of 25.5% over the same period last year. As such, the foreign-invested sector enjoys a trade surplus of US$3.1 billion, versus US$481 million of the whole country.
In the first quarter of 2013, foreign investors have poured money into 15 sectors, with processing-manufacturing remaining the strongest magnet. Processing-manufacturing has attracted 84 projects with total newly-registered and additional capital of over US$5.5 billion, or 91.8% of the total figure.
Real estate ranks second with US$249.8 million, accounting for nearly 4.1% of the total FDI. Wholesale, retail and repair come third with 29 new projects and total fresh and additional capital of US$85.2 million.
Japan is the largest investor among 31 nations and territories with investment in Vietnam in the first quarter, pledging about US$3.15 billion, making up 52.3% of total investment in Vietnam.
Singapore and South Korea occupy the following places, with US$2.27 billion, or 37.8% of total FDI, and US$156.9 million, 2.6%, respectively.
With the capital increase of Nghi Son Oil Refinery, Thanh Hoa has attracted the most FDI with US$2.8 billion, or 46.4% of the total amount, followed by Thai Nguyen with US$2.01 billion, or 33.4%.
Local investors told to take prudence in Singapore
Vietnamese entrepreneurs need to practice prudence when investing in Singapore although this country is described as an attractive destination for investment, heard a workshop on overseas investment opportunities for Vietnamese businesses.
Singapore has a favorable geographic location, a reliable banking system, good services, simple transactions, modern infrastructure and multilingual people. At present, many small companies in this country are mired in troubles, so their stock prices are very low, making it favorable for financially-capable investors, said Padraig Seif, a lawyer from Singapore.
To establish a company in Singapore, an investor needs statutory capital of only one Singapore dollar. However, financial issues must be transparent and there must be a Singaporean on the board of directors.
In addition, investors need to comprehend some rules in Singapore, such as how to quickly undergo legal procedures and how to apply for tax cut and exemption, said Seif.
Corporate income tax in Singapore is 16%, but companies hiring workers in the host country can enjoy tax reductions, he noted.
Banks in Singapore require properties as collateral for loans. They can offer lending rates of only 1% or as much as 18-19% depending on credit appraisals, said the Singaporean lawyer.
Singapore was the sixth largest destination for Vietnam overseas investment last year, with four projects worth US$63 million. As of end-2012, Vietnam had registered 46 projects in Singapore with total capital of US$149 million.
Vietnamese investors in Singapore are mainly State-owned enterprises and joint stock companies where the State holds dominant stakes.
The workshop on overseas investment opportunities for Vietnamese businesses was organized by Doanh Nhan Sai Gon newspaper in HCMC last weekend.
Corporate tax at 20% now: expert suggests
Opinions differ between the National Assembly and the Ministry of Finance as to whether corporate income tax should be lowered to 23% or 20%, but economist Pham Chi Lan said the tax should be slashed to 20% immediately.
Enterprises in Vietnam are mired in troubles, especially financial distress, so tax cuts will be an effective remedy for them, she said in an interview.
Corporate income tax in Vietnam is higher than in neighboring countries, while they have a better business environment, she noted. Tax reductions will help local enterprises compete fairly with rivals in the region.
A lot of Vietnamese firms are making investment overseas. She said high tax at home might push them away and at the same time, make Vietnam less attractive than other nations.
Tax breaks would ensure fairness, as the huge revenue from corporate income tax payments is being spent inefficiently on public investment and State-owned enterprises. “We cannot let the majority feed the minority anymore,” Lan stressed.
Since the State is cutting down on public investments, smaller budget revenues will of course pile pressure on State agencies and force them to allocate State money in a wiser way.
Given the above reasons, Lan said: “It’s time for tax reductions, immediately and strongly, to 20% rather than 23%.”
Such a decision should be made to bring down the number of bankrupt firms. In the first two months, bankrupt companies outnumber newly-established ones, she said.
Though corporate income tax cuts will lead to a drop in the State budget revenue, it will stimulate enterprises to expand operations and thus they will have more taxable incomes. More importantly, tax reductions will boost consumption and help cope with huge inventory, which State budget can never help settle.
The worry about a State budget revenue loss due to tax cuts is rooted in the mindset that the State economic sector plays the leading role. However, State-owned enterprises have exposed a slew of shortcomings, leading the State to restructure them and reduce spending on them.
Therefore, such a mindset should be changed as the context has already changed, said the economist.
Deputies of the National Assembly, as representatives of the people and enterprises, should use their votes to rescue enterprises. “I hope the National Assembly deputies understand and soon make their decision on cutting corporate income tax to 20%,” she said.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR